<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-K/A

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                                    Commission File
   December 31, 1996                                           No. 0-27652

                            REPUBLIC BANCSHARES, INC.
             (Exact Name of Registrant As Specified In Its Charter)

         FLORIDA                                            59-3347653
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                       Identification No.)

111 2nd Avenue N.E., St. Petersburg, FL                        33701
   (Address of Principal Office)                             (Zip Code)

                                 (813) 823-7300
              (Registrant's Telephone Number, Including Area Code)

               Securities registered pursuant to Section 12 (b) of
                 the Act: None Securities registered pursuant to
                           Section 12 (g) of the Act:

                               Title of each Class
                               -------------------
                          Common Stock, par value $2.00

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              Yes X             No
                              -----             -------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.|X|

As of May 31, 1997, there were 4,183,507 shares of the Registrant's Common
Stock, par value $2.00 per share, issued and outstanding. Accordingly, the
aggregate market value of the voting stock held by non-affiliates of the
Registrant as of that date was $6,902,786,550.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the 1997 Annual Meeting of
Stockholders, FILED AS EXHIBIT 10.1 TO THE REGISTRANT'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1996, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ON MARCH 31, 1997, are incorporated by reference into Part
III of this report.


<PAGE>   2


<TABLE>
<CAPTION>
                                                         TABLE OF CONTENTS

                                                             PART III


<S>               <C>                                                                                         <C>
Item 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..........................................1
Item 11.          EXECUTIVE COMPENSATION......................................................................2
Item 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..............................2
Item 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................................2
Item 14.          EXHIBITS, FINANCIAL STATEMENTS, SCHEDULE, AND REPORTS ON FORM 8-K...........................2
</TABLE>


<PAGE>   3

         The Registrant hereby amends Item 10 through Item 13 of Part III and
Item 14 of Part IV of its Annual Report on Form 10-K for the year ended 
December 31, 1997, filed on March 31, 1997, to clearly indicate in Item 10 
through Item 13 that certain information is being incorporated by reference 
from the Registrant's proxy material and the location of such proxy material, 
and to provide certain additional information in the footnotes to the Financial 
Statements included in Item 14.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors of Republic Bancshares, Inc (the "Company") and Republic Bank (the
"Bank")

The information relating to the Directors of the Company and the Bank appears in
the Company's Proxy Statement for its 1997 Annual Meeting of Stockholders under
the caption "The Six Nominees Listed Below to Serve as Directors," FILED AS
EXHIBIT 10.1 TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH
31, 1997, and is incorporated herein by reference.

Senior Executive Officers of the Company and Bank

The following list sets forth the name and age of each executive officer of the
Company or the Bank and all positions held by each such officer (and the period
each such position has been held), a brief account of each such officer's
business experience during the past five years and certain other information:

     John W. Sapanski (66)--Chairman of the Board, President and Chief Executive
Officer of both the Company and the Bank. Mr. Sapanski has been Chairman of the
Board and Chief Executive Officer since June 1993. He has 45 years of banking
experience, including service with the Dime Savings Bank in New York, New York
from 1949 to 1987 where he acted as President and Chief Operating Officer from
1981 to 1987 and service with Florida Federal Savings Bank in St. Petersburg,
Florida ("Florida Federal") from 1988 to 1991 where he acted as President and
Chief Executive Officer from 1988 to 1991. Mr. Sapanski was President and Chief
Executive Officer of Florida Federal at the time the OTS placed Florida Federal
in conservatorship. Mr. Sapanski was retained by the Resolution Trust
Corporation (the "RTC"), the conservator for Florida Federal, to assist in
managing the institution in conservatorship until it was sold by the RTC to
First Union Corporation in August 1991.

     Fred Hemmer (42)--Director of the Bank, Senior Executive Vice President of
the Bank in charge of Corporate Banking and Special Assets. Mr. Hemmer has
served as Executive Vice President since joining the Company in 1991. He
previously served as Executive Vice President of Rutenberg Corporation, a real
estate development company based in Clearwater, Florida, from 1980 to 1991. Mr.
Hemmer is a certified public accountant and served with Arthur Andersen & Co.
from 1976 to 1980. Mr. Hemmer is also a licensed real estate broker and
certified general contractor.

     William R. Falzone (49)--Treasurer of the Company, Executive Vice President
and Chief Financial Officer of the Bank. Mr. Falzone joined the Company in
February 1994. He was employed at Florida Federal Savings Bank from 1983 through
1991 where he served as Senior Vice President and Controller and as Director of
Financial Services. Most recently, he was a Senior Consultant for Stogniew and
Associates, a nationwide consulting firm. He has over 20 years of banking
experience and is also a certified public accountant.

     John W. Fischer, Jr. (48)--Executive Vice President of the Bank in charge
of Consumer Banking. Mr. Fischer, who joined the Company in December 1993, has
over 20 years of banking experience in retail branch management, consumer and
residential lending. Mr. Fischer formerly served as Regional Marketing Director
for Western Reserve Life in Clearwater, Regional Vice President of Great Western
Bank in Miami and Executive Vice President/Consumer Financial Services for
Florida Federal Savings Bank in St. Petersburg. Mr. Fischer holds a life,
health, annuity and Series 7 securities license.

                                        1


<PAGE>   4



     Richard C. Gleitsman (43)--Executive Vice President and Chief
Administrative Officer of the Bank. Mr. Gleitsman joined the Company in December
1993, having previously served as Executive Vice President and Regional Manager
of CrossLand Savings Bank since 1986. He has over 25 years of banking experience
in retail branch management, loan servicing, human resources, data processing,
and executive administration.

     Kathleen A. Reinagel (45)--Executive Vice President of the Bank in charge
of Credit and Loan Administration. Ms. Reinagel, who has served in her present
position with the Company since August 1993, has over 20 years of experience in
the lending field with concentration in credit and underwriting, loan
documentation, due diligence and loan review. Ms. Reinagel formerly served as
Vice President of WRH Mortgage, St. Petersburg, Florida and Vice President,
Department Manager of Commercial Real Estate of Florida Federal.

     Steve McWhorter (35)--Division Director in charge of the Mortgage Banking
Division. Mr. McWhorter joined the Bank in April, 1996, having previously served
as Regional Manager of FT Mortgage Company since 1992. He has over 14 years of
experience in the mortgage banking industry.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this item appears under the caption "Executive
Compensation" and "Compensation Committee Interlocks and Insider Participation"
in the Company's Proxy Statement for its 1997 Annual Meeting of Shareholders,
FILED AS EXHIBIT 10.1 TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1996, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 31, 1997, and is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item appears under the caption "Principal
Stockholders" and "Security Ownership of Management" in the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders, FILED AS EXHIBIT 10.1 TO
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996,
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1997, and is
incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item appears under the caption "Certain
Transactions" in the Company's Proxy Statement for its 1997 Annual Meeting of
Shareholders, FILED AS EXHIBIT 10.1 TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON MARCH 31, 1997, and is incorporated herein by reference.

                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENTS, SCHEDULE, AND REPORTS OF FORM 8-K

     (a)            The following documents are filed as part of the report:

                    1. and 2. The financial statements and schedule filed as
                    part of this report are listed separately in the Index to
                    Financial Statements and Schedule beginning on page F-1 of
                    this report.

                    3.  For Exhibits see Item 14(c), below.

     (b)            A report on Form 8-K was filed on December 31, 1996 
                    reporting the pending acquisition of Firstate Financial,
                    F.A., discussions regarding a possible merger with F.F.O.
                    Group, Inc., and completion of the sale of subordinated
                    debentures.

                                        2


<PAGE>   5



     (c)          List of Exhibits:

<TABLE>
<CAPTION>
Exhibit No.       Description

     <S>          <C>                                                
     10.1         The Company's Proxy Statement for its 1997 Annual Meeting of
                  Stockholders, to the extent specifically incorporated be
                  reference.

     23.1         Consent of Arthur Andersen LLP.
</TABLE>

                                        3


<PAGE>   6



                                   SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       REPUBLIC BANCSHARES, INC.


                                       By:/s/ John W. Sapanski
                                          ------------------------------------
                                          John W. Sapanski
                                          Chairman and Chief Executive Officer

                                       Date:   July 22, 1997

                                        4


<PAGE>   7
 
                   REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
REPUBLIC BANCSHARES, INC.
  Report of Independent Certified Public Accountants........  F-2
  Consolidated Balance Sheets at December 31, 1996 and
     1995...................................................  F-3
  Consolidated Statements of Operations for the three years
     ended December 31, 1996, 1995 and 1994.................  F-4
  Consolidated Statements of Stockholders' Equity for the
     three years ended December 31, 1994, 1995 and 1996.....  F-5
  Consolidated Statements of Cash Flows for the years ended
     December 31, 1996, 1995 and 1994.......................  F-6
  Notes to Consolidated Financial Statements................  F-7
</TABLE>



 
                                     F-1
<PAGE>   8
 
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
To the Stockholders and the Board of Directors of Republic Bancshares, Inc.:
 
     We have audited the accompanying consolidated balance sheets of Republic
Bancshares, Inc. (a Florida corporation) and subsidiary as of December 31, 1996
and 1995, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Republic Bancshares, Inc.
and subsidiary as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
 
                                          ARTHUR ANDERSEN LLP
 
Tampa, Florida
  February 7, 1997 (except with
  respect to the matter discussed
  in Note 18, as to which the
  date is March 10, 1997)
 
                                       F-2
<PAGE>   9
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           CONSOLIDATED BALANCE SHEETS -- DECEMBER 31, 1996 AND 1995
                   (DOLLARS IN THOUSANDS, EXCEPT PAR VALUES)
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  1996           1995
                                                              ------------   ------------
<S>                                                           <C>            <C>
                                         ASSETS
Cash and due from banks.....................................    $ 27,810       $ 19,806
Interest bearing deposits in banks..........................         118              2
Investment securities:
  Held to maturity (Note 2).................................          --          7,015
  Available for sale........................................      74,397         38,147
Mortgage backed securities (Note 3):
  Held to maturity..........................................          --         17,112
  Available for sale........................................      20,004          2,527
FHLB stock..................................................       4,830          3,540
Federal funds sold..........................................       8,000         14,621
Loans held for sale (Note 4)................................      36,590          4,711
Loans, net (Notes 4 and 5)..................................     693,270        649,795
Premises and equipment, net (Note 6)........................      19,715         18,991
Other real estate owned (Note 7):
  Acquired through foreclosure, net.........................       7,363          8,064
  Held for investment.......................................          --          2,498
Other assets (Note 8).......................................      15,771         15,166
                                                                --------       --------
          Total assets......................................    $907,868       $801,995
                                                                --------       --------
                          LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits:
     Noninterest-bearing checking...........................    $ 50,060       $ 45,641
     Interest checking......................................      87,639         71,592
     Money market...........................................      32,665         38,535
     Savings................................................     245,951         91,935
     Time deposits (includes $49,323 and $57,213,
      respectively of time deposits of $100,000 or more)....     411,665        495,402
                                                                --------       --------
          Total deposits....................................     827,980        743,105
  Securities sold under agreements to repurchase............      15,372          3,072
  Subordinated debt, 6% rate, matures December 1, 2011,
     (Note 9)...............................................       6,000             --
  Other liabilities.........................................       4,197          4,915
                                                                --------       --------
          Total liabilities.................................     853,549        751,092
                                                                --------       --------
Off-balance-sheet risk, commitments and contingencies (Note
  10)
Stockholders' equity (Note 13):
  Perpetual preferred convertible stock ($20.00 par, 100,000
     shares authorized, 75,000 shares issued and
     outstanding. Liquidation preference $6,600 at December
     31, 1996 and 1995.)....................................       1,500          1,500
  Common stock ($2.00 par, 20,000,000 shares authorized and
     4,183,507 shares issued and outstanding at December 31,
     1996 and 1995).........................................       8,367          8,367
  Capital surplus...........................................      26,699         26,699
  Retained earnings.........................................      17,849         14,329
  Net unrealized gains (losses) on available-for-sale
     securities, net of tax effect..........................         (96)             8
                                                                --------       --------
          Total stockholders' equity........................      54,319         50,903
                                                                --------       --------
          Total liabilities and stockholders' equity........    $907,868       $801,995
                                                                ========       ========
</TABLE>
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                       F-3
<PAGE>   10
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                             ------------------------------------
                                                                1996         1995         1994
                                                             ----------   ----------   ----------
<S>                                                          <C>          <C>          <C>
INTEREST INCOME:
  Interest and fees on loans...............................  $   62,244   $   52,389   $   32,699
  Interest on investment securities........................       1,413        1,431        1,939
  Interest on mortgage-backed securities...................       1,325          827           --
  Interest on federal funds sold...........................       1,633        2,968        2,448
  Interest on other investments............................         332          248           29
                                                             ----------   ----------   ----------
          Total interest income............................      66,947       57,863       37,115
                                                             ----------   ----------   ----------
INTEREST EXPENSE:
  Interest on deposits.....................................      32,426       29,874       16,767
  Interest on FHLB advances................................          52           --           36
  Interest on other borrowings.............................         448          127           68
                                                             ----------   ----------   ----------
          Total interest expense...........................      32,926       30,001       16,871
                                                             ----------   ----------   ----------
          Net interest income..............................      34,021       27,862       20,244
PROVISION FOR LOAN LOSSES (Note 5).........................       1,800        1,685        1,575
                                                             ----------   ----------   ----------
          Net interest income after provision for possible
            loan losses....................................      32,221       26,177       18,669
                                                             ----------   ----------   ----------
NONINTEREST INCOME:
  Service charges and fees on deposits.....................       1,606        1,395        1,247
  Income from mortgage banking activities..................       1,002          124           --
  Gain on sale of ORE -- held for investment...............       1,207           --           --
  Securities gains, net....................................         370           27            1
  Other operating income...................................       1,431        1,205        1,364
                                                             ----------   ----------   ----------
          Total noninterest income.........................       5,616        2,751        2,612
NONINTEREST EXPENSES:
  Salaries and employee benefits...........................      14,309       11,251        7,339
  Net occupancy expense....................................       4,507        3,211        1,308
  Data processing fees.....................................       1,451        1,152        1,472
  FDIC and state assessments...............................         949        1,566        1,187
  Other operating expense..................................       6,136        4,939        3,610
                                                             ----------   ----------   ----------
          Total general and administrative expenses........      27,352       22,119       14,916
  SAIF special assessment..................................       2,539           --           --
  Provisions for losses on ORE.............................       1,611           --           10
  ORE expense, net of ORE income...........................        (172)         289          422
  Amortization of premium on deposits......................         491          450        1,269
                                                             ----------   ----------   ----------
          Total noninterest expenses.......................      31,821       22,858       16,617
                                                             ----------   ----------   ----------
Income before negative goodwill accretion and income
  taxes....................................................       6,016        6,070        4,664
Negative goodwill accretion (Note 1).......................          --        1,578        2,705
                                                             ----------   ----------   ----------
Income before income taxes.................................       6,016        7,648        7,369
Income tax provision (Note 8)..............................       2,232        1,875          468
                                                             ----------   ----------   ----------
          NET INCOME.......................................  $    3,784   $    5,773   $    6,901
                                                             ==========   ==========   ==========
PER SHARE DATA:
     Net income per common and common equivalent share
       (Note 14)...........................................  $      .76   $     1.26   $     1.67
                                                             ==========   ==========   ==========
     Weighted average common and common equivalent shares
       outstanding (Note 14)...............................   4,952,937    4,562,642    4,136,790
                                                             ==========   ==========   ==========
</TABLE>
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                       F-4
<PAGE>   11
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                      PERPETUAL                                                NET UNREALIZED
                                      PREFERRED                                                    GAINS
                                   CONVERTED STOCK      COMMON STOCK                              (LOSSES)
                                   ---------------   ------------------                         ON AVAILABLE
                                   SHARES             SHARES              CAPITAL   RETAINED      FOR SALE
                                   ISSUED   AMOUNT    ISSUED     AMOUNT   SURPLUS   EARNINGS     SECURITIES      TOTAL
                                   ------   ------   ---------   ------   -------   --------   --------------   -------
<S>                                <C>      <C>      <C>         <C>      <C>       <C>        <C>              <C>
BALANCE, DECEMBER 31, 1993.......  75,000   $1,500   3,365,387   $6,731   $19,041   $ 2,182        $  --        $29,454
  Net income.....................      --       --          --       --        --     6,901           --          6,901
  Net unrealized losses on
    available-for-sale
    securities, net of tax
    effect.......................      --       --          --       --        --        --          (54)           (54)
  Proceeds from exercise of stock
    options......................      --       --      14,950       30        98        --           --            128
  Dividends on preferred stock...      --       --          --       --        --      (264)          --           (264)
                                   ------   ------   ---------   ------   -------   -------        -----        -------
BALANCE, DECEMBER 31, 1994.......  75,000    1,500   3,380,337    6,761    19,139     8,819          (54)        36,165
  Net income.....................      --       --          --       --        --     5,773           --          5,773
  Net unrealized gains on
    available-for-sale
    securities, net of tax
    effect.......................      --       --          --       --        --        --           62             62
  Issuance of common stock.......      --       --     800,000    1,600     7,537        --           --          9,137
  Proceeds from exercise of stock
    options......................      --       --       3,170        6        23        --           --             29
  Dividends on preferred stock...      --       --          --       --        --      (263)          --           (263)
                                   ------   ------   ---------   ------   -------   -------        -----        -------
BALANCE, DECEMBER 31, 1995.......  75,000    1,500   4,183,507    8,367    26,699    14,329            8         50,903
  Net income.....................      --       --          --       --        --     3,784           --          3,784
  Net unrealized loss on
    available-for-sale
    securities, net of tax
    effect.......................      --       --          --       --        --        --         (104)          (104)
  Dividends on preferred stock...      --       --          --       --        --      (264)          --           (264)
                                   ------   ------   ---------   ------   -------   -------        -----        -------
BALANCE, DECEMBER 31, 1996.......  75,000   $1,500   4,183,507   $8,367   $26,699   $17,849        $ (96)       $54,319
                                   ======   ======   =========   ======   =======   =======        =====        =======
</TABLE>
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                       F-5
<PAGE>   12
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                   FOR THE YEARS ENDED
                                                                      DECEMBER 31,
                                                            ---------------------------------
                                                              1996        1995        1994
                                                            ---------   ---------   ---------
<S>                                                         <C>         <C>         <C>
OPERATING ACTIVITIES:
  Net income..............................................  $   3,784   $   5,773   $   6,901
  Reconciliation of net income to net cash provided:
     Provision for loan and ORE losses....................      3,411       1,685       1,585
     Depreciation and amortization, net...................     (1,539)        (26)        129
     Amortization of premium and (accretion) of fair
       value, net.........................................        553        (901)     (1,162)
     Gain on sale of loans................................     (1,002)       (124)         --
     Gain on sale of investment securities................       (370)        (27)         --
     Gain on sale of other real estate owned..............     (1,442)         (4)        (89)
     Capitalization of mortgage servicing.................     (1,741)         --          --
     Gain on disposal of premises and equipment...........         (2)         --          75
     Net increase in deferred tax benefit.................     (1,574)     (1,024)         --
     Net (increase) decrease in other assets..............      2,222      (3,455)     (1,887)
     Net increase (decrease) in other liabilities.........       (719)      2,179        (339)
                                                            ---------   ---------   ---------
          Net cash provided by operating activities.......      1,581       4,076       5,213
                                                            ---------   ---------   ---------
INVESTING ACTIVITIES:
  Net (increase) decrease in interest bearing deposits in
     banks................................................       (116)        148         550
  Proceeds from sale of premises and equipment............         --          --          13
  Proceeds from sales and maturities of:
     Investment securities held to maturity...............      7,000      24,000      18,900
     Investment securities available for sale.............     72,545       3,972       6,991
     Mortgage backed securities held to maturity..........     15,455          --          --
     Mortgage backed securities available for sale........      6,393       9,732          --
  Purchase of investment securities held to maturity......         --          --     (19,669)
  Purchase of investment securities available for sale....   (108,636)    (33,083)    (10,989)
  Purchase of mortgage backed securities..................    (20,105)         --          --
  Principal repayment on mortgage backed securities.......      4,431         714          --
  Purchase of FHLB stock..................................     (1,291)     (2,248)     (1,292)
  Net increase in loans...................................    (85,087)   (178,001)   (197,859)
  Purchase of premises and equipment......................     (2,201)     (6,282)     (3,088)
  Proceeds from sale of other real estate owned...........      8,270       3,234       5,260
  Investments in other real estate owned (net)............        232         358      (7,246)
                                                            ---------   ---------   ---------
          Net cash used in investing activities...........   (103,110)   (177,456)   (208,429)
                                                            ---------   ---------   ---------
FINANCING ACTIVITIES:
  Net increase in deposits................................     84,875     159,212      89,551
  Net increase in repurchase agreements...................     12,301         991         916
  Proceeds from issuance of subordinated debt.............      6,000          --          --
  Proceeds from issuance of common stock..................         --       9,166         128
  Dividends on perpetual preferred stock..................       (264)       (263)       (264)
                                                            ---------   ---------   ---------
          Net cash provided by financing activities.......    102,912     169,106      90,331
                                                            ---------   ---------   ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......      1,383      (4,274)   (112,885)
CASH AND CASH EQUIVALENTS, beginning of period............     34,427      38,701     151,586
                                                            ---------   ---------   ---------
CASH AND CASH EQUIVALENTS, end of period..................  $  35,810   $  34,427   $  38,701
                                                            =========   =========   =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for:
     Interest.............................................  $  33,031   $  29,419   $  16,448
     Income taxes.........................................      4,144       1,516       2,222
</TABLE>
 
 The accompanying notes are an integral part of these consolidated statements.
 
                                       F-6
<PAGE>   13
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
BASIS OF PRESENTATION AND ORGANIZATION
 
     The consolidated financial statements of Republic Bancshares, Inc. (the
Company) include the accounts of the Company, and Republic Bank (the "Bank") and
the Bank's wholly-owned subsidiaries, RBREO, Inc., Tampa Bay Equities, Inc., VQH
Development, Inc., and Republic Insurance Agency, Inc. All significant
intercompany accounts and transactions have been eliminated. On November 21,
1995, the Bank's Board of Directors approved for shareholder consideration an
Amended and Restated Plan of Share Exchange and Reorganization (the
"Reorganization") under which the Bank became a wholly-owned subsidiary of
Company. On the effective date and time of the Reorganization, all holders of
shares of the Bank's Common and Preferred Stock at the November 30, 1995 record
date received one share of Company Common Stock for each share of the Bank's
Common Stock held of record and one share of Company Preferred Stock for each
share of the Bank's Preferred Stock held of record. Holders of outstanding
options to purchase or acquire the Bank's Common Stock received options to
purchase an equal number of shares of Company Common Stock. All necessary
governmental and shareholder approvals for the Reorganization were received. The
Company's primary source of income is from its banking subsidiary which operates
32 branches throughout west central Florida. The Bank's primary source of
revenue is derived from net interest income on loans and investments and income
from mortgage banking activities.
 
NEGATIVE GOODWILL
 
     On May 28, 1993 (the "Purchase Date") over 99 percent of the Company's
outstanding common stock was acquired for $4,450,000 (the "Purchase Price").
Also, on May 28, 1993, 583,334 additional shares of common stock were issued for
$3,500,000. The acquisition was accounted for by the purchase method of
accounting. Assets and liabilities were restated based upon their fair value as
of the Purchase Date. The excess of the restated net book value over the
Purchase Price was recorded as a reduction of the non current assets, to the
extent available. The remaining difference was recorded as excess of fair value
over purchase price ("negative goodwill"), as follows (in thousands):
 
<TABLE>
<S>                                                           <C>
Adjustments to fair market value:
  Loans.....................................................  $   596
  Investment securities.....................................      161
  Time deposits.............................................       36
Write-off of noncurrent assets:
  Premises and equipment....................................   (1,432)
  Other assets..............................................      (43)
Adjustments to equity accounts:
  Retained earnings.........................................    1,320
  Capital surplus...........................................    5,224
                                                              -------
Excess of fair value over purchase price....................  $ 5,862
                                                              =======
</TABLE>
 
     The negative goodwill was accreted into income on a straight-line basis
over 26 months beginning May 28, 1993 and ending July 31, 1995, which was based
on the estimated life of the loans, investments and deposits acquired. The
premiums on loans and investment securities and the discount on demand and other
time deposits were amortized into income on a straight-line basis over periods
based on the estimated life of the related loans, securities or deposits ranging
from 12 to 30 months.
 
                                       F-7
<PAGE>   14
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
DEPENDENCE ON ESTIMATES, APPRAISALS AND EVALUATIONS
 
     The financial statements, in conformity with generally accepted accounting
principles, are dependent upon estimates, appraisals and evaluations of loans,
other real estate owned and other assets and liabilities, and disclosure of
contingent assets and liabilities. Changes in such estimates, appraisals and
evaluations might be required because of rapidly changing economic conditions,
changing economic prospects of borrowers and other factors. Actual results may
differ from those estimates.
 
INVESTMENT SECURITIES
 
     Securities that the Company has both the positive intent and ability to
hold to maturity are classified as Held to Maturity and are carried at
historical cost, adjusted for amortization of premiums and accretion of
discounts. Securities Available for Sale, which are those securities that may be
sold prior to maturity as part of asset/liability management or in response to
other factors, are carried at fair value with any valuation adjustment reported
in a separate component of stockholders' equity, net of tax effect.
 
     Interest and dividends on investment securities and amortization of
premiums and accretion of discounts are reported in interest on investment
securities. Gains (losses) realized on sales of investment securities are
generally determined on the specific identification method and are reported
under non-interest income.
 
LOANS
 
     Interest on commercial and real estate loans and substantially all
installment loans is recognized monthly on the loan balance outstanding. The
Company's policy is to discontinue accruing interest on loans 90 days or more
delinquent and restructured loans that have not yet demonstrated a sufficient
payment history, which, in the opinion of management, may be doubtful as to the
collection of interest or principal. These loans are designated as "non-accrual"
and any accrued but unpaid interest previously recorded is reversed against
current period interest revenue.
 
     Loan origination and commitment fees net of certain costs are deferred, and
the amount is amortized as an adjustment to the related loan's yield, generally
over the contractual life of the loan. Unearned discounts and premiums on loans
purchased are deferred and amortized as an adjustment to interest income on a
basis that approximates level rates of return over the terms of the loan.
 
HEDGING CONTRACTS AND LOANS HELD FOR SALE
 
     The Company manages its interest rate market risk on the loans held for
sale and its estimated future commitments to originate and close mortgage loans
for borrowers at fixed prices ("Locked Loans") through hedging techniques which
include derivative contracts and fixed price forward delivery commitments
("Forward Commitments") to sell mortgage- backed securities or specific whole
loans to investors on a mandatory or best efforts basis. The Company records the
inventory of loans held for sale at the lower of cost or market on an aggregate
basis after considering any market value changes in the loans held for sale,
Locked Loans, and Forward Commitments.
 
MORTGAGE SERVICING RIGHTS
 
     On July 1, 1995, SFAS No. 122, "Accounting for Mortgage Servicing Rights,
an amendment of FASB Statement No. 65", was adopted. SFAS No. 122 permits an
allocation of a portion of the cost of loan origination to the rights to service
mortgage loans. Approximately $1,188,000 and $117,000 was capitalized relating
to originated mortgage servicing rights ("OMSRs") during 1996 and 1995,
respectively. As of December 31, 1996 and 1995, the unamortized portion of these
OMSRs were $1,271,000 and $113,000, respectively. For purposes of measuring
impairment, OMSRs are stratified based on the loan type, interest rate and
maturity of the underlying loans.
 
                                       F-8
<PAGE>   15
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENT OF
LIABILITIES
 
     The FASB has issued SFAS No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities", which is effective for
the Company's fiscal year beginning January 1, 1997. SFAS 125 provides standards
for distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. The impact of the adoption of SFAS 125 upon the
results of operations of the Company is not expected to be material.
 
ALLOWANCE FOR LOAN LOSSES
 
     The allowance for loan losses provides for risks of losses inherent in the
credit extension process. Losses and recoveries are either charged or credited
to the allowance. The Company's allowance is an amount that management believes
will be adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of loans and prior
loan loss experience. The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans, and current economic conditions that
may affect the borrower's ability to pay. The evaluations are periodically
reviewed and adjustments are recorded in the period in which changes become
known.
 
ACCOUNTING FOR IMPAIRMENT OF LOANS
 
     The Company's measurement of impaired loans includes those loans which are
nonperforming and have been placed on non-accrual status and those loans which
are performing according to all contractual terms of the loan agreement but may
have substantive indication of potential credit weakness. As of December 31,
1996, $19.3 million of loans were considered impaired by the Company. Of this
amount, $15.4 million were carried on a non-accrual basis. Approximately 17.68%
of these loans were measured for impairment using the fair value of collateral,
while the remaining 82.32% were measured using the present value of the expected
future cash flows discounted at the loan's effective rate. As a result of these
measurements, approximately $17.0 million of these loans required valuation
allowances, totaling $2.2 million, which are included within the overall
allowance for loan losses at December 31, 1996. Residential mortgages and
consumer loans and leases outside the scope of SFAS 114 are collectively
evaluated for impairment. Average impaired loans during 1996 were approximately
$19.8 million and the amount of cash basis interest income recognized on these
loans was $.7 million.
 
     As of December 31, 1995, $20.2 million of loans were considered impaired by
the Company. Of this amount, $14.8 million were carried on a non-accrual basis.
Approximately 7.84% of these loans were measured for impairment using the fair
value of collateral, while the remaining 92.16% were measured using the present
value of the expected future cash flows discounted at the loan's effective rate.
As a result of these measurements, approximately $18.7 million of these loans
required valuation allowances, totaling $2.1 million, which were included within
the overall allowance for loan losses at December 31, 1995. Average impaired
loans during 1995 were approximately $20.7 million, and the amount of cash basis
interest income recognized on these loans was $.6 million.
 
                                       F-9
<PAGE>   16
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
PREMISES AND EQUIPMENT
 
     Premises and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the related assets,
except for leasehold improvements for which the lesser of the estimated useful
life of the asset or the term of the lease is used. The useful lives used in
computing depreciation and amortization are as follows:
 
<TABLE>
<CAPTION>
                                                              YEARS
                                                              ------
<S>                                                           <C>
Buildings and improvements..................................      39
Furniture and equipment.....................................       7
Leasehold improvements......................................  5 - 15
</TABLE>
 
     Gains and losses on routine dispositions are reflected in current
operations. Maintenance, repairs and minor improvements are charged to operating
expenses, and major replacements and improvements are capitalized.
 
OTHER REAL ESTATE
 
     Other real estate owned ("ORE") represents property acquired through
foreclosure proceedings held for sale and real estate held for investment. ORE
is carried at its fair value, net of a valuation allowance established to reduce
cost to fair value. Losses are charged to the valuation allowance and recoveries
are credited to the allowance. Declines in market value and gains and losses on
disposal are reflected in current operations in ORE expense. Recoverable costs
relating to the development and improvement of ORE are capitalized whereas
routine holding costs are charged to expense. The sales of these properties are
dependent upon various market conditions. Management is of the opinion that such
sales will result in net proceeds at least equal to present carrying values.
 
ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS
 
     The FASB issued SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of," which was effective for the
Company's fiscal year beginning January 1, 1996. SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles to be held and used be
reviewed for impairment whenever events or changes in circumstances indicate the
carrying amount of an asset may not be recoverable. If the sum of the expected
future cash flows from the use of the asset and its eventual disposition is less
than the carrying amount of the asset, an impairment loss is recognized. SFAS
No. 121 also requires that certain assets to be disposed of be measured at the
lower of carrying amount or the net realizable value. The impact of adopting
SFAS 121 upon the results of operations of the Company was not material.
 
INCOME TAXES
 
     The Company follows the liability method which establishes deferred tax
assets and liabilities for the temporary differences between the financial
reporting bases and the tax bases of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled. Net deferred tax assets, whose realization is dependent on taxable
earnings of future years, are recognized when a more-likely-than-not criterion
is met, that is, unless a greater than 50% probability exists that the tax
benefits will not actually be realized sometime in the future.
 
     Effective April 1, 1995, federal regulations restricted the amount of
deferred tax assets that can be used to meet regulatory capital requirements to
an amount that the institution expects to realize within one year, or 10% of
Tier 1 capital, whichever is less.
 
                                      F-10
<PAGE>   17
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company and its subsidiary file consolidated tax returns with the
federal and state taxing authorities. A tax sharing agreement exists between the
Company and the Bank whereby taxes for the Bank are computed as if the Bank were
a separate entity. Amounts to be paid or credited with respect to current taxes
are paid to or received from the Company.
 
PREMIUM ON DEPOSITS
 
     A premium on deposits is recorded for the difference between cash received
and the carrying value of deposits acquired in purchase transactions. This
premium is being amortized on a straight-line basis over 3 to 4 years.
Approximately $527,000 and $1,017,000 was included in other assets in the
accompanying financial statements, as of December 31, 1996 and 1995.
 
STOCK-BASED COMPENSATION PLANS
 
     The Company accounts for its stock-based compensation plans under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25). Effective in 1996, the Company adopted the disclosure
option of SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS 123),
which requires that companies not electing to account for stock-based
compensation as prescribed by the statement, disclose the pro forma effects on
earnings and earnings per share as if SFAS 123 had been adopted. Additionally,
certain other disclosures are required with respect to stock compensation and
the assumptions used are to determine the pro forma effects of SFAS 123.
 
CASH EQUIVALENTS
 
     For purposes of preparing the Consolidated Statements of Cash Flows, cash
equivalents are defined to include cash and due from banks and federal funds
sold.
 
RECLASSIFICATIONS
 
     Certain reclassifications have been made to prior period financial
statements to conform with the 1996 financial statement presentation.
 
2.  INVESTMENT SECURITIES:
 
     The Company's investment securities consisted primarily of U.S. Treasury
Bills and Notes. The investment securities of the Company at December 31, 1996
and 1995 are summarized as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                                       ESTIMATED
                                                 AMORTIZED   UNREALIZED   UNREALIZED    MARKET
                                                   COST        GAINS        LOSSES       VALUE
                                                 ---------   ----------   ----------   ---------
<S>                                              <C>         <C>          <C>          <C>
AT DECEMBER 31, 1996:
  Securities available-for-sale:
     U.S. Government Treasuries................   $72,905       $--        $   (53)     $72,852
     Revenue bond..............................     1,545        --             --        1,545
                                                  -------       ---        -------      -------
          Securities available-for-sale........   $74,450       $--        $   (53)     $74,397
                                                  =======       ===        =======      =======
AT DECEMBER 31, 1995:
  U.S. Government Treasuries held to
     maturity..................................   $ 7,015       $--        $    (6)     $ 7,009
  U.S. Government Treasuries available for
     sale......................................    38,121        27             (1)      38,147
                                                  -------       ---        -------      -------
          Total U.S. Treasuries & Federal
            Agency Notes.......................   $45,136       $27        $    (7)     $45,156
                                                  =======       ===        =======      =======
</TABLE>
 
                                      F-11
<PAGE>   18
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
                                                                             1996        1995
                                                                          ----------   ---------
<S>                                              <C>         <C>          <C>          <C>
BOOK VALUE AT DECEMBER 31:
  Securities held to maturity..................                            $    --      $ 7,015
  Securities available-for-sale................                             74,397       38,147
                                                                           -------      -------
          Total U.S. Treasuries................                            $74,397      $45,162
                                                                           =======      =======
</TABLE>
 
     The amortized cost and estimated market value of investment securities at
December 31, 1996, by contractual maturity are shown below (in thousands):
 
<TABLE>
<CAPTION>
                                                                  AVAILABLE-FOR-SALE
                                                           --------------------------------
                                                                       ESTIMATED   WEIGHTED
                                                           AMORTIZED    MARKET     AVERAGE
                                                             COST        VALUE      YIELD
                                                           ---------   ---------   --------
<S>                                                        <C>         <C>         <C>
Due in 1 year or less....................................   $61,367     $61,358      4.84%
Due after 1 year through 5 years.........................    13,083      13,039      6.02
                                                            -------     -------
Total....................................................   $74,450     $74,397      5.05
                                                            =======     =======
</TABLE>
 
     Proceeds from sales of U.S. Treasury and Federal Agency Notes during the
years ended 1996, 1995 and 1994, were $7,545,000, $2,972,000, and $6,991,000,
respectively. Gross losses of $0, $27,891 and $0 were realized for the years
ended December 31, 1996, 1995 and 1994. Gross gains of $45,404, $0, and $1,094,
were realized during the years ended December 31, 1996, 1995 and 1994,
respectively. U.S. Treasuries and Federal Agency Notes with a par value of
$19,000,000 and $8,000,000 at December 31, 1996 and 1995, respectively, were
pledged to secure public deposits and for other purposes.
 
3.  MORTGAGE BACKED SECURITIES:
 
     Mortgage-backed securities ("MBS"), sometimes referred to as pass-through
certificates, represent an interest in a pool of loans. The securities are
issued by three government agencies or corporations: (i) the Government National
Mortgage Association ("GNMA"), (ii) the Federal Home Loan Mortgage Corporation
("FHLMC") and (iii) the Federal National Mortgage Association ("FNMA"). During
1996 and 1995 the Company securitized loans with a carrying value of $6,282,000
and $30,048,000, respectively, through FHLMC. The Company's MBS portfolio at
December 31, 1996 consisted solely of variable rate securities issued by GNMA,
and payments on those securities are backed by that government agency. MBS
securities held to maturity are recorded at amortized cost, while securities
available-for-sale are recorded at estimated market value. Mortgage backed
securities are summarized as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                                       ESTIMATED
                                                 AMORTIZED   UNREALIZED   UNREALIZED    MARKET
                                                   COST        GAINS        LOSSES       VALUE
                                                 ---------   ----------   ----------   ---------
<S>                                              <C>         <C>          <C>          <C>
AT DECEMBER 31, 1996:
  GNMA held to maturity........................   $    --       $ --        $  --       $    --
  GNMA available for sale......................    20,105         --         (101)       20,004
                                                  -------       ----        -----       -------
          Total mortgage backed securities.....   $20,105       $ --        $(101)      $20,004
                                                  =======       ====        =====       =======
AT DECEMBER 31, 1995:
  FHLMC held to maturity.......................   $17,112       $114        $ (20)      $17,206
  FHLMC available for sale.....................     2,540         --          (13)        2,527
                                                  -------       ----        -----       -------
          Total mortgage backed securities.....   $19,652       $114        $ (33)      $19,733
                                                  =======       ====        =====       =======
</TABLE>
 
                                      F-12
<PAGE>   19
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
                                                               1996      1995
                                                              -------   -------
<S>                                                           <C>       <C>
BOOK VALUE AT DECEMBER 31:
  Securities held to maturity...............................  $    --   $17,112
  Securities available-for-sale.............................   20,004     2,527
                                                              -------   -------
          Total MBS.........................................  $20,004   $19,639
                                                              =======   =======
</TABLE>
 
     At December 31, 1996 all MBS securities available for sale were scheduled
to reprice in one year or less.
 
     The amortized cost and estimated market value of the MBS portfolio at
December 31, 1996, by contractual maturity are shown below (in thousands).
Actual maturities may differ from contractual maturities as a result of
prepayments of the underlying mortgages:
 
<TABLE>
<CAPTION>
                                                                  AVAILABLE-FOR-SALE
                                                           --------------------------------
                                                                       ESTIMATED   WEIGHTED
                                                           AMORTIZED    MARKET     AVERAGE
                                                             COST        VALUE      YIELD
                                                           ---------   ---------   --------
<S>                                                        <C>         <C>         <C>
Due after 10 years.......................................   $20,105     $20,004      5.53%
                                                            -------     -------
          Total..........................................   $20,105     $20,004      5.53%
                                                            =======     =======
</TABLE>
 
     During 1996, the Company sold FHLMC securities, with an amortized cost of
$15,455,000, which had previously been classified as "Held-to-Maturity",
recording net gains of $300,201, and purchased GNMA securities. The purpose of
this transaction was to reduce the Company's capital requirements. As a result,
and in compliance with SFAS 115 "Accounting for Certain Investments in Debt and
Equity Securities", all investment securities are classified as
"available-for-sale" as of December 31, 1996.
 
     Proceeds from sales of MBS securities during the years ended December 31,
1996 and 1995 were $21,077,000 and $9,732,000, respectively. Gross gains of
$354,837 and $55,038 and gross losses of $31,845 and $0, respectively, were
realized on these sales. None of the MBS securities were pledged to secure
public deposits or for other purposes at December 31, 1996.
 
4.  LOANS AND LOANS HELD FOR SALE:
 
     Loans at December 31, 1996 and 1995, are summarized as follows (in
thousands):
 
<TABLE>
<CAPTION>
                                                                1996       1995
                                                              --------   --------
<S>                                                           <C>        <C>
Real estate mortgage loans:
  One-to-four family residential............................  $385,701   $386,524
  Multi-family residential..................................    70,967     77,802
  Commercial real estate....................................   182,298    153,193
  Construction/land development.............................    27,050     13,974
Commercial loans............................................    34,617     29,898
Consumer loans..............................................     9,860      6,798
Other loans.................................................     1,294      2,367
                                                              --------   --------
          Total gross portfolio loans.......................   711,787    670,556
Less-allowance for loan losses (Note 5).....................   (13,134)   (14,910)
Less-premiums and unearned discounts on loans purchased.....    (4,731)    (4,561)
Less-unamortized loan fees..................................      (652)    (1,290)
                                                              --------   --------
          Total loans held for portfolio....................   693,270    649,795
Residential loans held for sale.............................    36,590      4,711
                                                              --------   --------
          Total loans.......................................  $729,860   $654,506
                                                              ========   ========
</TABLE>
 
                                      F-13
<PAGE>   20
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     As of December 31, 1996, the Company had $36,590,000 of 1-4 residential
mortgage loans available for sale with a weighted average interest rate of
8.72%. As of December 31, 1995 loans available for sale were approximately
$4,711,000, which approximated market value, with a weighted average interest
rate of 7.47%. Mortgage loans serviced for others as of December 31, 1996 and
1995 were $120,711,000 and $39,951,000, respectively.
 
     Loans on which interest was not being accrued totaled approximately
$15,351,000, $14,813,000, and $12,948,000 at December 31, 1996, 1995 and 1994,
respectively. Had interest been accrued on these loans at their originally
contracted rates, interest income would have been increased by approximately
$1,138,000, $1,329,000, and $647,000 in the years ended December 31, 1996, 1995
and 1994, respectively. Loans past due 90 days or more and still accruing
interest at December 31, 1996 and 1995, totaled approximately $113,000 and
$1,876,000, respectively. The Company restructured loans totaling $2,516,000 and
$145,000 during 1996 and 1995, respectively.
 
5.  ALLOWANCE FOR LOAN LOSSES:
 
     Changes in the allowance for loan losses were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                   DECEMBER 31,
                                                            ---------------------------
                                                             1996      1995      1994
                                                            -------   -------   -------
<S>                                                         <C>       <C>       <C>
Balance,
  beginning of period.....................................  $14,910   $ 7,065   $ 6,539
  Provision for possible loan losses......................    1,800     1,685     1,575
  Discount on purchased loans allocated to (from) loan
     loss reserve.........................................   (1,732)    7,658       643
  Loans charged off.......................................   (2,110)   (1,947)   (1,870)
  Recoveries of loans charged off.........................      266       449       178
                                                            -------   -------   -------
Balance,
  end of period...........................................  $13,134   $14,910   $ 7,065
                                                            =======   =======   =======
</TABLE>
 
     While management believes that the allowance for loan losses is adequate at
December 31, 1996, based on currently available information, future additions to
the allowance may be necessary due to changes in economic conditions,
deterioration of creditworthiness of the borrower, the value of underlying
collateral or other factors. Additionally, the Florida Department of Banking and
Finance, the FDIC, and the Federal Reserve, as an integral part of their regular
examination process, periodically review the allowance for loan losses. These
agencies may require additions to the allowance based on their judgments about
information available to them at the time of examination.
 
     The portion of the allowance for loan losses which arose due to the
allocation of discounts on purchased loans may only be used to absorb losses on
the related acquired loans. As of December 31, 1996 and 1995, approximately
$7,150,000 and $10,249,000 of the reserve had arisen through an allocation of
discounts on purchased loans.
 
                                      F-14
<PAGE>   21
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
6.  PREMISES AND EQUIPMENT:
 
     Premises and equipment at December 31, 1996 and 1995, included (in
thousands):
 
<TABLE>
<CAPTION>
                                                               1996      1995
                                                              -------   -------
<S>                                                           <C>       <C>
Land........................................................  $ 4,951   $ 4,951
Buildings and improvements..................................    9,216     8,671
Furniture and equipment.....................................    7,371     6,120
Leasehold improvements......................................    1,051       903
Construction in progress....................................      268        11
                                                              -------   -------
          Total premises and equipment......................   22,857    20,656
Less-accumulated depreciation and amortization..............   (3,142)   (1,665)
                                                              -------   -------
  Premises and equipment, net...............................  $19,715   $18,991
                                                              =======   =======
</TABLE>
 
7.  OTHER REAL ESTATE (ORE):
 
     State banking regulations require the Company to dispose of all ORE
acquired through foreclosure within five years of acquisition, with a
possibility for additional extensions, each of up to five years. Failure to
receive additional extensions could result in losses on ORE. There were two ORE
properties totaling $4,477,000 at December 31, 1996, which were required to be
disposed of by year-end. The Company has been granted an extension on these
properties by the State. As of December 31, 1996, a third property, in the
amount of approximately $254,000, is required to be disposed of no later than
December 31, 1997. Management expects an extension will also be granted by the
State on this property if not sold. In addition, federal banking regulations had
required the Bank to dispose of one of these properties amounting to $3,200,000
by December 31, 1996 but the FDIC has granted an extension of the holding period
to December 19, 1997. While the current appraisal on this property indicates
that the market value of the tract exceeds its book value, a sale to a party
other than an end-user could result in proceeds below the current book value.
 
     During 1995, the former headquarter building was vacated and that space was
leased to a third party. Since that building was no longer used for banking
purposes, approximately $2,498,000 was transferred from premises and equipment
to ORE held for investment. During 1996, this building was sold and a gain of
$1,207,000 was recorded.
 
     Loans converted to ORE through foreclosure proceedings totaled $6,910,000,
and $2,639,000, for the years ended December 31, 1996 and 1995, respectively.
Sales of ORE that were financed by the Company totaled $3,676,000 and $1,358,000
for the years ended December 31, 1996 and 1995, respectively.
 
     Changes in the valuation allowance for ORE were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                           --------------------------------
                                                             1996        1995        1994
                                                           --------    --------    --------
<S>                                                        <C>         <C>         <C>
BALANCE, beginning of period.............................    $  966      $1,170      $1,718
  Provision..............................................     1,611          --          10
  Charge-offs............................................       (63)       (204)       (558)
                                                             ------      ------      ------
BALANCE, end of period...................................    $2,514      $  966      $1,170
                                                             ======      ======      ======
</TABLE>
 
                                      F-15
<PAGE>   22
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8.  INCOME TAXES:
 
     Income taxes are comprised of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                           --------------------------------
                                                             1996        1995        1994
                                                           --------    --------    --------
<S>                                                        <C>         <C>         <C>
Current provision........................................    $3,744      $2,899      $2,612
Deferred benefit.........................................    (1,512)     (1,024)     (2,144)
                                                             ------      ------      ------
                                                             $2,232      $1,875      $  468
                                                             ======      ======      ======
</TABLE>
 
     At December 31, 1996, the Company had approximately $670,000 of remaining
federal and $2,393,000 of state net operating loss carryforwards. These
carryforwards expire in the years 2006 through 2008.
 
     Following the change of ownership in 1993, recognition of net operating
loss carryforwards were limited to approximately $259,000 each year. If the full
amount of the limitation is not used in any years, the amount not used increases
the allowable limit in the subsequent year.
 
     Deferred tax assets and liabilities were comprised of the following at
December 31, 1996 and 1995 (in thousands):
 
<TABLE>
<CAPTION>
                                                               1996      1995
                                                              ------    ------
<S>                                                           <C>       <C>
Gross deferred tax assets:
  Tax bases over financial bases for loans (loan loss
     reserve & discounts)...................................  $2,329    $1,230
  Financial amortization of premium over tax amortization...     646       533
  Interest on non-accrual loans.............................     315       250
  Tax bases over financial bases for ORE....................   1,286       634
  Net operating losses and tax credit carryforward..........     314       411
  Mark-to-market-loans held for sale........................     232        --
  Other.....................................................     145       160
                                                              ------    ------
          Gross deferred tax asset..........................   5,267     3,218
          Gross deferred tax liabilities....................     567        93
                                                              ------    ------
          Net deferred tax asset............................  $4,700    $3,125
                                                              ======    ======
</TABLE>
 
     The valuation allowance for the deferred tax asset was $1,604,000 at
December 31, 1993. The valuation allowance was subsequently eliminated during
the years ended December 31, 1995 and 1994 by decreases to tax expense of
$177,000 and $1,427,000, respectively. There were no valuation allowances
against the deferred tax asset for the years ended December 31, 1996 and 1995 as
management has determined that it is more likely than not that all of the
deferred tax asset recorded will be realized. The net deferred tax asset
increased during 1996 and 1995 by approximately $63,000 and $38,000,
respectively, relating to the unrealized gain on available for sale securities
which is recorded directly to stockholders' equity.
 
                                      F-16
<PAGE>   23
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company's effective tax rate varies from the statutory rate of 34
percent. The reasons for this difference are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                 FOR THE YEARS ENDED
                                                                    DECEMBER 31,
                                                              -------------------------
                                                               1996     1995     1994
                                                              ------   ------   -------
<S>                                                           <C>      <C>      <C>
Computed "expected" tax provision...........................  $2,045   $2,600   $ 2,505
Increase (reduction) of taxes:
  Tax-exempt interest income................................     (22)     (27)      (29)
  Valuation allowance.......................................      --     (177)   (1,427)
  Amortization of excess of fair value over purchase
     price..................................................      --     (536)   (1,017)
  State taxes...............................................     217      216       265
  Other.....................................................      (8)    (201)      171
                                                              ------   ------   -------
          Total.............................................  $2,232   $1,875   $   468
                                                              ======   ======   =======
</TABLE>
 
9.  SUBORDINATED DEBT:
 
     On December 27, 1996, the Company issued $6,000,000 in convertible
subordinated debentures at a fixed interest rate of 6.00%, interest payable
semi-annually, with a maturity of December 1, 2011. The Company has the right to
redeem the debentures beginning in 2001 at 106% of face value, with the premium
declining 1% per year thereafter and without any premium if the price of the
Company's common stock equals or exceeds 130% of the conversion price for not
less than 20 consecutive trading days. The debentures are convertible by the
holder at any time prior to maturity into the Company's $2.00 par value common
stock at a conversion price of $17.85714 per share (equivalent to a conversion
rate of 56 common shares per $1,000 principal amount of debentures). The Company
incurred $213,000 in issuance costs which will be amortized over 36 months.
 
10.  OFF-BALANCE-SHEET RISK, COMMITMENTS AND CONTINGENCIES:
 
CONCENTRATION OF CREDIT RISK
 
     The Company's core customer loan origination base is located along the west
coast and in central Florida. The majority of the Company's purchased loan
portfolio is concentrated in the states of Florida, California, Texas, and in
the northeastern United States. At December 31, 1996 and 1995, approximately 94
percent of the Company's loan portfolio was secured by real estate. Mortgage
loans secured by 1-4 family properties comprised approximately 60 and 61
percent, respectively, of total mortgage loans at December 31, 1996 and 1995.
 
OFF-BALANCE-SHEET ITEMS
 
     The Company enters into financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers
and to limit exposure to changes in the value of loans held for sale. These
financial instruments include commitments to extend credit, commercial and
standby letters of credit, and forward contracts for the delivery of loans.
These instruments involve, to varying degrees, elements of credit and
interest-rate risk that are not recognized in the accompanying consolidated
balance sheets.
 
     The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instruments discussed above is represented by the
contractual amount of those instruments. The Company uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
 
                                      F-17
<PAGE>   24
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     A summary of financial instruments with off-balance-sheet risk at December
31, 1996, is as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                              CONTRACTUAL
                                                                AMOUNT
                                                              -----------
<S>                                                           <C>
Commitments to extend credit................................   $ 51,754
Unfunded lines of credit....................................     64,604
Commercial and standby letters of credit....................      7,415
                                                               --------
          Total.............................................   $123,773
                                                               ========
</TABLE>
 
     Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the agreement.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained if
deemed necessary upon extension of credit is based on management's credit
evaluation of the counterparty. Collateral held varies but may include premises
and equipment, inventory and accounts receivable. Unfunded lines of credit
represent the undisbursed portion of lines of credit which have been extended to
customers.
 
     Commercial and standby letters of credit are conditional commitments issued
by the Company to guarantee the performance of a customer to a third party which
typically do not extend beyond one year. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. The Company typically holds certificates of deposit as
collateral supporting those commitments, depending on the strength of the
borrower. Outstanding unsecured standby letters of credit at December 31, 1996,
totaled approximately $1,376,000.
 
     At December 31, 1996, in connection with managing the interest rate market
risk on its loans held for sale and Locked Loans totaling $37,416,000, the
Company had outstanding $15,000,000 (estimated fair value of $15,165,000) of
Forward Commitments which expire over the next two months, the period when the
loans are expected to be sold and Locked Loans are expected to close.
 
     The Company reduces its risk of nonperformance under the hedging contracts
by entering into those contracts with reputable security dealers and investors
and evaluating their financial condition. However, there is a risk that certain
of the Locked Loans do not close or are renegotiated in a declining interest
rate market and close at lower prices. The Company reduces this risk by
collecting nonrefundable commitment fees on certain of the Locked Loans and
enters into Forward Commitments to deliver loans to investors primarily on a
best efforts basis.
 
                                      F-18
<PAGE>   25
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
COMMITMENTS
 
     The Company has entered into a number of noncancelable operating leases
primarily for branch banking locations. At December 31, 1996, minimum rental
commitments based on the remaining noncancelable lease terms were as follows (in
thousands):
 
<TABLE>
<S>                                                           <C>
1997........................................................  $ 2,008
1998........................................................    1,809
1999........................................................    1,432
2000........................................................    1,186
2001........................................................    1,123
Thereafter..................................................    3,839
                                                              -------
                                                               11,397
Less-sublease rentals.......................................   (1,063)
                                                              -------
                                                              $10,334
                                                              =======
</TABLE>
 
     Total rent expense for the years ended December 31, 1996, 1995 and 1994 was
$1,653,000, $1,009,000, and $435,000, respectively. Total rental income from
subleases for the years ended December 31, 1996, 1995 and 1994 was $971,000,
$1,113,000, and $1,132,000, respectively.
 
     During 1994 a capital lease obligation of approximately $981,000 was
incurred related to the leasing of data processing equipment with an implicit
rate of 7.49%. Minimum lease payments under this capital lease are approximately
$214,000 in each of the years 1997, 1998 and $107,000 in 1999. In addition, the
Company is obligated to make processing payments in relation to its computer
facilities of approximately $966,000 in each of the years 1997 and 1998,
$1,073,000 in 1999, $1,181,000 in 2000, and $197,000 in 2001.
 
CONTINGENCIES
 
     The Company is subject to various other legal proceedings and claims which
arise in the normal course of business. In the opinion of management, the amount
of liability with respect to these other proceedings would not have a material
effect on the financial statements.
 
11.  EMPLOYEE BENEFIT PLANS
 
     On January 1, 1987, a retirement plan was adopted, covering substantially
all employees, which includes a 401(k) arrangement. Each employee of the Company
automatically becomes eligible to participate in the savings plan on the January
1 immediately following the date on which such employee attains the age of 18
and completes six months of service. An employee must complete 1,000 hours of
service during each subsequent plan year, and failure to complete 1,000 hours of
service in a subsequent plan year will constitute a "one year break in service"
and a forfeiture of eligibility to participate in the plan.
 
     Employees' before-tax contributions are limited based on restrictions
established by the Internal Revenue Service. Employees also may elect to make
after-tax contributions to their account. In each plan year, the Company will
make matching contributions to each account equal to 25% of the employees
elective contributions, but only up to the amount that does not exceed 6% of
compensation. Beginning January 1, 1997, if the Company attains a return on
equity in excess of 10.0% for a quarterly period, the matching contribution will
be increased to 50% for that period, concurrently. Employees are 100% vested at
all times in their contributions and regular matching contributions. In
addition, the 401(k) arrangement plan permits the Company to contribute a
discretionary amount to all of the participants for any plan year, and that
contribution will be allocated among the participants based upon their
respective shares of the total compensation paid during the plan year to all
participants eligible. The Company's contributions were $108,900, $58,200, and
$38,500 in the years ended December 31, 1996, 1995 and 1994, respectively.
 
                                      F-19
<PAGE>   26
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     Generally, the Company's practice and intent is to hold its financial
instruments to maturity, unless otherwise designated. Where available, quoted
market prices are used to determine fair value. However, many of the Company's
financial instruments lack quoted market prices. Although the Company has
incorporated what it considers to be appropriate estimation methodologies for
those financial instruments which lack quoted market prices, a significant
number of assumptions must be used in determining such estimated fair values.
Such assumptions include subjective assessments of current market conditions,
perceived risks associated with these financial instruments and other factors.
Different assumptions might be considered by the user of the financial
statements to be more appropriate, and the use of alternative assumptions or
estimation methodologies could have a significant effect on the resulting
estimated fair values. The estimated fair values presented neither include nor
give effect to the values associated with the Company's business, existing
customer relationships, and branch banking network, amount other things.
 
     The following estimates of the fair value of certain financial instruments
held by the Company include only instruments that could reasonably be evaluated.
The investment securities portfolio was evaluated using market quotes as of
December 31, 1996 and 1995. The fair value of the loan portfolio was evaluated
using market quotes for similar financial instruments, where available.
Otherwise, discounted cash flows, after adjusting for credit deterioration, were
used based upon current rates the Company would use in extending credit with
similar characteristics. These rates may not necessarily be the same as those
which might be used by other financial institutions for similar loans. Cash and
due from banks and federal funds sold were valued at cost. The fair values
disclosed for checking accounts, savings accounts, securities sold under
agreements to repurchase, and certain money market accounts are, by definition,
equal to the amount payable on demand at the reporting date, i.e., their
carrying amounts. Fair values for time deposits are estimated using a discounted
cash flow calculation that applies current interest rates to aggregated expected
maturities. Standby letters of credit and commitments to extend credit were
valued at book value as the majority of these instruments are based on variable
rates.
 
     These evaluations may incorporate specific value to the Company in
accordance with its asset/liability strategies, interest rate projections and
business plans at a specific point in time and therefore, should not necessarily
be viewed as liquidation value. They should also not be used in determining
overall value of the Company due to undisclosed and intangible aspects such as
business and franchise value, and due to changes to assumptions of interest
rates and expected cash flows which might need to be made to reflect
expectations of returns to be earned on instruments with higher credit risks.
 
                                      F-20
<PAGE>   27
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The table below illustrates the estimated fair value of the Company's
financial instruments as of December 31 using the assumptions described above
(in thousands):
 
<TABLE>
<CAPTION>
                                                                1996        1995
                                                              --------    --------
<S>                                                           <C>         <C>
Cash and due from banks.....................................  $ 27,810    $ 19,806
                                                              ========    ========
Interest bearing deposits in banks..........................  $    118    $      2
                                                              ========    ========
Investment securities.......................................  $ 94,401    $ 68,429
                                                              ========    ========
Federal funds sold..........................................  $  8,000    $ 14,621
                                                              ========    ========
Loans.......................................................  $754,445    $681,163
                                                              ========    ========
Mortgage servicing rights...................................  $  1,690    $    113
                                                              ========    ========
Deposits....................................................  $830,562    $746,904
                                                              ========    ========
Securities sold under agreements to repurchase..............  $ 15,372    $  3,072
                                                              ========    ========
Subordinated debt...........................................  $  6,000    $     --
                                                              ========
Standby letters of credit...................................  $  7,415    $  6,178
                                                              ========    ========
Commitments to extend credit and unfunded lines of credit...  $116,358    $103,076
                                                              ========    ========
</TABLE>
 
13.  STOCKHOLDERS' EQUITY:
 
PERPETUAL PREFERRED CONVERTIBLE STOCK
 
     The Company has 75,000 outstanding shares of perpetual preferred
convertible stock. The preferred stock has a liquidation preference of $88 per
share and carries a noncumulative dividend of $3.52 per year, payable quarterly.
Dividends on the preferred stock must be paid before any dividends on common
stock can be paid. Beginning December 16, 1994 and thereafter, the preferred
stock can be converted by the holders into 10 shares of common stock for each
share of preferred stock. The preferred stock was redeemable at the option of
the Company through December 16, 1996, at a price of $96.80 per share. The
holders of the preferred stock vote with the holders of the common stock and are
entitled to 10 votes per share of preferred stock.
 
DIVIDENDS
 
     Florida Statutes limit the amount of dividends the Bank can pay in any
given year to that year's net income plus retained net income from the two
preceding years. Additionally, the Bank and the Company cannot pay dividends
which would cause either to be undercapitalized as defined by federal
regulations.
 
1995 RIGHTS AND PUBLIC STOCK OFFERINGS
 
     On June 27, 1995, an offering was completed to the public and to the
stockholders of 800,000 shares of the $2.00 par value Common Stock. The Common
Stock was offered through a combined subscription Rights Offering and an
underwritten Public Offering (the "Offerings"). The number of shares subscribed
for in the Rights Offering totaled 287,049 with 512,951 shares sold in the
Public Offering. The price per share was $12.50 for the Offerings and net
proceeds amounted to $9,137,000.
 
1993 NON-QUALIFIED STOCK OPTION PLAN
 
     On May 28, 1993, the Company adopted a non-qualified stock option plan (the
Option Plan) which reserved 80,000 shares of common stock for future issuance
under the Option Plan to eligible employees of the Company. As of December 31,
1996, 60,000 options were granted under the Option Plan and 35,000 were
 
                                      F-21
<PAGE>   28
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
outstanding. The per share exercise price of each stock option is determined by
the Board of Directors at the date of grant. The plan terminates in 2003 or at
the discretion of the Board of Directors.
 
1995 INCENTIVE STOCK OPTION PLAN
 
     On April 29, 1994, the shareholders approved a qualified incentive stock
option plan to certain key employees. In connection with the Company's holding
company reorganization and share exchange in which all of the Company's
stockholders became stockholders of the Company, the Company adopted the
Republic Bancshares, Inc. 1995 Stock Option Plan (the "Plan") as a replacement
for the Company's 1994 Stock Option Plan. The Plan was approved by the
stockholders of the Bank at the Bank's Special Meeting held on February 27,
1996. On April 23, 1996, the shareholders approved certain amendments to the
Plan (the "Amendment"). Under the Amendment, the total number of shares that may
be purchased pursuant to the plan cannot exceed 525,000 over the life of the
plan and provides that the maximum number of options granted to any one
individual in any fiscal year under the plan cannot exceed 62,000. There is no
limitation on the annual aggregate number of options to be granted in any fiscal
year. Each option granted under the plan will be exercisable by the grantee
during a term, not to exceed ten years, fixed by the compensation committee of
the Board of Directors ("the Committee"). However, no more than 20% of the
shares subject to such options shall vest annually beginning at date of grant.
However, in the event of a change in control, or termination of employment
without cause, all options granted become exercisable immediately. Options under
the plan, which have been granted to the employees of the Flagship/Capital
mortgage banking division of the Company, vest at the rate of 20% at the end of
each 12 month period over five years, contingent upon that division meeting
specified net income performance goals as set by the Board of Directors. If the
performance goal for each year is not met, then the options that would have
become exercisable at the end of the 12 month period shall expire and be null
and void. In addition, options granted to employees of this division shall not
vest and become exercisable if there is a change in control or a termination of
employment without cause, until the performance goal for at least one year has
been met.
 
     Upon the grant of an option to a key employee, the Committee will fix the
number of shares of common stock that the grantee may purchase upon exercise of
the option, and the price at which the shares may be purchased. The exercise
price for all options shall not be less than the fair market value. During 1996,
1995 and 1994, options to purchase 270,900, 59,700 and 46,450 shares,
respectively, under the incentive stock option plan were granted. Of the options
previously granted, 12,460 shares have expired through the termination of key
employees without having exercised their options, thereby making these options
available for future grants. As of December 31, 1996, 361,470 options remained
outstanding.
 
                                      F-22
<PAGE>   29
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
AGGREGATE STOCK OPTION ACTIVITY
 
     The Company adopted SFAS 123 for disclosure purposes in 1996. For SFAS 123
purposes, the fair value of each option grant has been estimated as of the date
of grant using the Black-Scholes option pricing model with the following
assumptions (weighted averages): risk-free interest rate of 6.42 percent,
expected life of 7 years, dividend rate of zero percent, and expected volatility
of 23 percent. Using these assumptions, the fair value of the stock options
granted in 1996 and 1995 is $1,583,000 and $346,900, respectively, which would
be amortized as compensation expense over the vesting period of the options.
Options vest equally over five years. Had compensation cost been determined
consistent with SFAS 123, utilizing the assumptions detailed above, the
Company's net income and earnings per share as reported would have been the
following pro forma amounts (in thousands except share data):
 
<TABLE>
<CAPTION>
                                                               1996     1995
                                                              ------   ------
<S>                                                           <C>      <C>
Net Income
  As reported...............................................  $3,784   $5,773
  Pro forma.................................................   3,588    5,730
Earnings per share
  As reported...............................................    0.76     1.26
  Pro forma.................................................    0.72     1.26
</TABLE>
 
     Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that expected in future years. A summary of the status
of the Company's stock option plans at December 31, 1996, 1995 and 1994 and for
the years then ended is presented in the table and narrative below:
 
<TABLE>
<CAPTION>
                                          1994                  1995                  1996
                                   -------------------   -------------------   -------------------
                                               WTD.                  WTD.                  WTD.
                                               AVG.                  AVG.                  AVG.
                                   SHARES    EX. PRICE   SHARES    EX. PRICE   SHARES    EX. PRICE
                                   -------   ---------   -------   ---------   -------   ---------
<S>                                <C>       <C>         <C>       <C>         <C>       <C>
FIXED OPTIONS
Outstanding -- beginning of
  year...........................   50,000    $ 6.44      81,500    $ 8.75     131,810    $11.00
Granted..........................   46,450     10.50      59,700     14.00      70,900     13.63
Exercised........................  (14,950)     6.46      (3,170)     9.58          --        --
Forfeited........................       --        --      (6,220)    11.06      (6,240)    13.42
Expired..........................       --        --          --        --          --        --
                                   -------               -------               -------
Outstanding -- end of year.......   81,500      8.75     131,810     11.00     196,470     11.87
                                   =======               =======               =======
Exercisable -- end of year.......   14,340      9.41      45,112      9.07      92,530     10.29
Weighted average fair value of
  options granted................                                     5.81                  5.84
PERFORMANCE OPTIONS
Outstanding -- beg. of year......       --        --          --        --          --
Granted..........................       --        --          --        --     200,000     13.63
Exercised........................       --        --          --        --          --        --
Forfeited........................       --        --          --        --          --        --
Expired..........................       --        --          --        --          --        --
                                   -------               -------               -------
Outstanding -- end of year.......       --        --                    --     200,000     13.63
                                   =======               =======               =======
Exercisable -- end of year.......       --        --          --        --          --        --
Weighted average fair value of
  options granted................                                                           5.84
</TABLE>
 
                                      F-23
<PAGE>   30
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
              OPTIONS OUTSTANDING                                OPTIONS EXERCISABLE
-----------------------------------------------   -------------------------------------------------
   RANGE OF        NUMBER      WEIGHTED-AVERAGE        NUMBER
   EXERCISE      OUTSTANDING      REMAINING       WEIGHTED-AVERAGE   EXERCISABLE   WEIGHTED-AVERAGE
    PRICES       AT 12/31/96   CONTRACTUAL LIFE    EXERCISE PRICE    AT 12/31/96    EXERCISE PRICE
--------------   -----------   ----------------   ----------------   -----------   ----------------
<C>              <C>           <C>                <C>                <C>           <C>
  5.40-10.50        72,370     6.89 years...           $ 8.57          56,630           $ 8.04
 13.63-14.00       324,100     9.21 years...            13.69          35,900            13.86
</TABLE>
 
14.  EARNINGS PER SHARE:
 
  NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
 
     Net income per common and common equivalent share has been computed by
dividing net income by the weighted average common and common equivalent shares
outstanding during the periods. The weighted average common and common
equivalent shares outstanding has been adjusted to include the number of shares
that would have been outstanding if the stock options granted had been
exercised, with the proceeds being used to buy shares from the market (i.e., the
treasury stock method) and the perpetual preferred convertible stock had been
converted to common stock at the earlier of the beginning of the year or the
issue date (i.e., the if-converted method). Net income per common and common
equivalent shares represents both primary and fully diluted per share
information.
 
15.  REGULATORY CAPITAL REQUIREMENTS:
 
     The Company and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve (for the Company) and the FDIC (for
the Bank). There are three basic measures of capital adequacy for banks that
have been promulgated by the Federal Reserve; two risk-based measures and a
leverage measure. All applicable capital standards must be satisfied for a bank
holding company to be considered in compliance.
 
     The minimum guidelines for the ratio ("Risk-Based Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital (i.e., 4.0% of risk-weighted assets) must comprise common
stock, minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% for banks that meet certain
specified criteria, including having the highest regulatory rating. All other
bank holding companies generally are required to maintain a Leverage Ratio of at
least 3.0%, plus an additional cushion of 100 to 200 basis points. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Furthermore, the Federal Reserve has indicated that it
will consider a "tangible Tier I Capital leverage ratio" (deducting all
intangibles) and other indicators of capital strength in evaluating proposals
for expansion or new activities.
 
     The Bank had previously undertaken in writing to the FDIC to achieve a
Leverage Ratio of at least 5.50% by September 30, 1995, which it did, and will
consider raising additional capital or reducing internal growth should the ratio
fall below that level in the future. The Company's leverage ratio requirement
remains at 5.00%. Other than the foregoing commitment, the Bank has not been
advised by the FDIC of any specific minimum capital ratio requirement applicable
to it.
 
     Failure to meet capital guidelines could subject a bank or a bank holding
company to a variety of enforcement remedies, including issuance of a capital
directive, the termination of deposit insurance by the
 
                                      F-24
<PAGE>   31
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
FDIC, a prohibition on the taking of brokered deposits, and certain other
restrictions on its business. Substantial additional restrictions can be imposed
upon FDIC-insured depository institutions that fail to meet applicable capital
requirements under the federal prompt corrective action regulations.
 
     As of December 31, 1996 and 1995, the Company and the Bank were considered
"well capitalized" under the federal banking agencies for prompt corrective
action regulations. The table which follows sets forth the amounts of capital
and capital ratios of the Company and the Bank as of December 31, 1996 and 1995,
and the applicable regulatory minimums (in thousands):
 
<TABLE>
<CAPTION>
                                                                  COMPANY            BANK
                                                              ---------------   ---------------
                                                              AMOUNT    RATIO   AMOUNT    RATIO
                                                              -------   -----   -------   -----
<S>                                                           <C>       <C>     <C>       <C>
AS OF DECEMBER 31, 1996:
RISK-BASED CAPITAL:
  Tier 1 Capital
     Actual.................................................  $51,325    8.82%  $57,113    9.82%
     Minimum required to be "Adequately Capitalized"........   23,268    4.00    23,260    4.00
     Excess over minimum to be "Adequately Capitalized".....   28,057    4.82    33,853    5.82
     To be "Well Capitalized"...............................   34,902    6.00    34,890    6.00
     Excess over "Well Capitalized" requirements............   16,423    2.82    22,223    3.82
          Total Capital.....................................
     Actual.................................................   64,630   11.11    64,418   11.08
     Minimum required to be "Adequately Capitalized"........   46,536    8.00    46,519    8.00
     Excess over minimum to be "Adequately Capitalized".....   18,094    3.11    17,899    3.08
     To be "Well Capitalized"...............................   58,170   10.00    58,149   10.00
     Excess over "Well Capitalized" requirements............    6,460    1.11     6,269    1.08
TIER 1 CAPITAL TO TOTAL ASSETS (LEVERAGE):
  Actual....................................................   51,325    5.90    57,113    6.57
  Minimum required to be "Adequately Capitalized"...........   34,807    4.00    34,798    4.00
  Excess over minimum to be "Adequately Capitalized"........   16,518    1.90    22,315    2.57
  To be "Well Capitalized"..................................   43,509    5.00    47,848    5.50
  Excess over "Well Capitalized" requirements...............    7,816    0.90%    9,265    1.07
AS OF DECEMBER 31, 1995:
RISK-BASED CAPITAL:
  Tier 1 Capital
     Actual.................................................      N/A     N/A    47,940    9.17
     Minimum required to be "Adequately Capitalized"........      N/A     N/A    20,904    4.00
     Excess over minimum to be "Adequately Capitalized".....      N/A     N/A    27,036    5.17
     To be "Well Capitalized"...............................      N/A     N/A    31,356    6.00
     Excess over "Well Capitalized" requirements............      N/A     N/A    16,584    3.17
          Total Capital Actual..............................      N/A     N/A    53,833   10.30
     Minimum required to be "Adequately Capitalized"........      N/A     N/A    41,809    8.00
     Excess over minimum to be "Adequately Capitalized".....      N/A     N/A    12,024    2.30
     To be "Well Capitalized"...............................      N/A     N/A    52,260   10.00
     Excess over "Well Capitalized" requirements............      N/A     N/A     1,573    0.30
TIER 1 CAPITAL TO TOTAL ASSETS (LEVERAGE):
  Actual....................................................      N/A     N/A    47,940    6.00
  Minimum required to be "Adequately Capitalized"...........      N/A     N/A    31,962    4.00
  Excess over minimum to be "Adequately Capitalized"........      N/A     N/A    15,978    2.00
  To be "Well Capitalized"..................................      N/A     N/A    43,948    5.50
  Excess over "Well Capitalized" requirements...............      N/A     N/A     3,992    0.50
</TABLE>
 
                                      F-25
<PAGE>   32
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  RELATED PARTY TRANSACTIONS:
 
     William R. Hough, a director and one of the two controlling shareholders,
is President and the controlling shareholder of William R. Hough & Co., an
NASD-member investment banking firm. In December 1996, the Company offered
$6,000,000 of convertible subordinated debentures through a private placement on
a "best efforts" basis exclusively through William R. Hough & Co. as "Sales
Agent" for the Company. The sales agent agreement provided for the payment to
William R. Hough & Co. of a fee of 1.50% for each $1,000 principal amount of
debentures sold to directors of the Company or their spouses and 3% for each
$1,000 of debentures sold to all others. The total amount of fees paid to
William R. Hough & Company for the sale of the debentures was $162,000. In
addition, the Company agreed to indemnify the sales agent against and contribute
toward certain liabilities, including liabilities under the Securities Act, and
to reimburse William R. Hough & Co. for certain expenses and legal fees related
to the sale of the debentures of approximately $51,000.
 
     In July 1996, William R. Hough & Co. began offering sales of insurance and
mutual fund products and investment advisory services on the premises of the
Company. The Company was paid a monthly fee of $300 for each banking office
participating in the program plus a fee of 15% of the gross commissions earned
from sales of non-insurance products. On January 1, 1997, this agreement was
terminated and replaced with a new agreement where the Company will be paid 50%
of the net profits earned from sales of investment products on the Company's
premises.
 
     In June 1995, in connection with a rights offering of the Company Common
Stock conducted by the Company, William R. Hough & Co. participated as a
soliciting dealer, and as such was entitled to receive solicitation fees in an
amount equal to approximately $11,900. William R. Hough & Co. also participated
in the selling group for the public offering of the Company Common Stock that
took place in conjunction with the rights offering. In connection with the
public offering, William R. Hough & Co. received approximately $18,000 in
discounts and other fees.
 
     In addition, WRH Mortgage, Inc., a related interest of William R. Hough,
acted as the Company's agent in the purchase of two loan pools from the
Resolution Trust Corporation on May 23, 1995 and was paid due diligence fees
totaling $39,997. The Company also entered into an agreement with William R.
Hough & Co. on August 15, 1995 to periodically purchase securities under
agreement to repurchase at a rate based on the prevailing federal funds rate
plus 1/8 of 1%.
 
     Certain directors and executive officers of the Company and Bank, members
of their immediate families, and entities with which such persons are associated
are customers of the Bank. As such, they had transactions in the ordinary course
of business with the Bank during 1996 and will have additional transactions in
the future. All loans and commitments to lend included in those transactions
were made in the ordinary course of business, upon substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and, in the opinion of management,
have not involved more than the normal risk of collectibility or presented other
unfavorable features.
 
                                      F-26
<PAGE>   33
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
17.  BANK HOLDING COMPANY FINANCIAL STATEMENTS:
 
     Condensed financial statements of the Company (Republic Bancshares, Inc.)
are presented below. Amounts shown as investment in the wholly-owned subsidiary
and equity in earnings of the subsidiary are eliminated in consolidation.
 
                           REPUBLIC BANCSHARES, INC.
 
                      PARENT-ONLY CONDENSED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                               1996
                                                              -------
<S>                                                           <C>
ASSETS
  Cash......................................................  $     0
  Investment in wholly-owned subsidiary.....................   60,111
  Prepaid issuance costs -- subordinated debt...............      212
                                                              -------
          Total.............................................  $60,323
                                                              =======
LIABILITIES
  Subordinated debt.........................................  $ 6,000
  Accrued interest on subordinated debt.....................        4
                                                              -------
          Total liabilities.................................    6,004
                                                              -------
STOCKHOLDERS' EQUITY
  Perpetual preferred convertible stock.....................    1,500
  Common stock..............................................    8,367
  Capital surplus...........................................   26,699
  Retained earnings.........................................   17,849
  Unrealized losses on available-for-sale securities........      (96)
                                                              -------
          Total stockholders' equity........................   54,319
                                                              -------
          Total.............................................  $60,323
                                                              =======
</TABLE>
 
                 PARENT-ONLY CONDENSED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                               1996
                                                              ------
<S>                                                           <C>
INCOME
  Dividends from bank.......................................  $  264
  Interest expense on subordinated debt.....................      (5)
  Equity in undistributed net income of subsidiary..........   3,525
                                                              ------
          Net Income........................................  $3,784
                                                              ======
</TABLE>
 
                                      F-27
<PAGE>   34
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
                   PARENT-ONLY CONDENSED CASH FLOW STATEMENT
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                FOR THE YEAR
                                                                    ENDED
                                                              DECEMBER 31, 1996
                                                              -----------------
<S>                                                           <C>
OPERATING ACTIVITIES:
Net Income..................................................      $ $3,784
Reconciliation of net income to net cash provided:
  Interest expense on subordinated debt.....................             5
  Equity in undistributed net income of subsidiary..........        (3,525)
                                                                  --------
          Net cash provided by operating activities.........           264
                                                                  --------
INVESTMENT ACTIVITIES:
Equity investment in banking subsidiary.....................       (56,648)
                                                                  --------
          Net cash used in investing activities.............       (56,648)
                                                                  --------
FINANCING ACTIVITIES:
Issuance of stock and reorganization........................        50,860
Proceeds from issuance of subordinated debt.................         5,788
Dividend Payments on perpetual preferred stock..............          (264)
                                                                  --------
          Net cash provided by investing activities.........        56,384
                                                                  --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........      $     --
                                                                  --------
Cash Balance Beginning......................................      $     --
                                                                  --------
Cash Balance Ending.........................................      $     --
                                                                  ========
</TABLE>
 
18.  MERGERS AND ACQUISITIONS
 
     On December 19, 1996, the Company announced that an agreement had been
reached for the acquisition of Firstate Financial, F.A. ("Firstate"), a thrift
institution headquartered in Orlando, Florida, for a cash purchase price of
$5,501,000. Firstate is not publicly traded. The agreement is subject to final
approval by the Department, FDIC and FRB. At December 31, 1996, Firstate had
total assets of $103,624,000 (unaudited) and total deposits of $84,842,000
(unaudited). Firstate currently maintains a branch office in downtown Orlando
and an office in Winter Park, Florida. The acquisition will be accounted for
using purchase accounting rules.
 
     On March 10, 1997, the Company and F.F.O. Financial Group, Inc., St. Cloud,
Florida ("FFO") announced their board of directors had executed a letter of
intent for the combination of the two companies. FFO has 11 branch offices in
Osceola, Orange and Brevard counties with total assets of $316,949,000 and total
deposits of $286,927,000. Mr. William R. Hough, president of an investment
banking firm in St. Petersburg, Florida, owns a controlling interest in both
companies. Under the terms of the letter of intent, the Company will exchange
shares of Company Common Stock for all of the 8,430,000 outstanding shares of
FFO common stock at a ratio of 0.29 share of the Company for each share of FFO.
In the event that the product of the exchange ratio and the average closing
price of the Company Common Stock on each of the twenty consecutive trading days
ending on the third business day preceding the effective date of the transaction
is below $4.10, the exchange ratio will be adjusted for decreases in the price
of the Company Common Stock price; however, in no event will the exchange ratio
exceed 0.30. FFO has the right to terminate the agreement if the average of the
Company's stock price is less than $13.50. Either party has the right to
terminate the agreement if the merger does not occur by November 1, 1997.
Outstanding options for FFO common stock will be converted into options for
Company Common Stock on the same basis. The transaction will be
 
                                      F-28
<PAGE>   35
 
                     REPUBLIC BANCSHARES, INC. & SUBSIDIARY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
accounted for as a corporate reorganization under which the controlling
shareholder's interest in FFO will be carried forward at its historical cost
while the minority interest in FFO will be recorded at fair value. The
transaction is subject to completion of a definitive agreement, shareholder
approval by the parties, approval by various regulatory authorities, receipt of
opinion that the transaction qualifies as a tax-free reorganization, and receipt
of fairness opinions by each companies' financial advisor.
 
     The above financial information regarding Firstate and FFO was derived from
unaudited financial statements at December 31, 1996.
 
                                      F-29