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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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, 2001         |  | 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)         

(727) 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.

The aggregate market value of the registrants Common Stock held by
non-affiliates of the Registrant, based upon the average bid and asked prices,
was approximately $159,251,000 on February 21, 2002. As of that date, there
were 11,335,339 shares of the Registrants Common Stock, par value $2.00 per
share, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Companys Proxy Statement for the 2002 Annual Meeting of
Stockholders are incorporated by reference into Part III of this report.



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TABLE OF CONTENTS

PART I

|         |  |                                                                                       |  |   
|-------- |  | ------------------------------------------------------------------------------------- |  | --
|Item 1.  |  | BUSINESS                                                                              |  |   
|         |  |                                                                                       |  |   
|         |  | Background and Prior Operating History                                                |  | 1 
|         |  | Business of Republic Bancshares, Inc.                                                 |  | 2 
|         |  | Subsequent Events                                                                     |  | 3 
|         |  | Critical Accounting Policies                                                          |  | 3 
|         |  | Sources of Funds                                                                      |  | 4 
|         |  | Lending Activities                                                                    |  | 5 
|         |  | Credit Administration                                                                 |  | 7 
|         |  | Asset Quality                                                                         |  | 8 
|         |  | Investment Activities                                                                 |  | 12
|         |  | Employees                                                                             |  | 12
|         |  | Market Area                                                                           |  | 12
|         |  | Market Risk                                                                           |  | 13
|         |  | Supervision and Regulation                                                            |  | 14
|         |  | Effects of Inflation                                                                  |  | 19
|         |  | Changes in Accounting Standards                                                       |  | 20
|Item 2.  |  | PROPERTIES                                                                            |  | 20
|Item 3.  |  | LEGAL PROCEEDINGS                                                                     |  | 20
|Item 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 20
|         |  |                                                                                       |  |   
|PART II 
|         |  |                                                                                       |  |   
|Item 5.  |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS                 |  | 20
|Item 6.  |  | SELECTED CONSOLIDATED FINANCIAL DATA                                                  |  | 21
|Item 7.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  |   
|         |  | Years Ended December 31, 2001 and 2000                                                |  | 23
|         |  | Years Ended December 31, 2000 and 1999                                                |  | 28
|         |  | Selected Quarterly Financial Data                                                     |  | 33
|         |  | Asset/Liability Management and Liquidity                                              |  | 33
|         |  |                                                                                       |  |   
|Item 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 36
|Item 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  |  | 36
|         |  |                                                                                       |  |   
|PART III
|         |  |                                                                                       |  |   
|Item 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  | 36
|Item 11. |  | EXECUTIVE COMPENSATION                                                                |  | 37
|Item 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  | 37
|Item 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  | 37
|         |  |                                                                                       |  |   
|PART IV  |  |                                                                                      
|         |  |                                                                                       |  |   
|Item 14. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                      |  | 38





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Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995

Certain statements contained in this Annual Report on Form 10-K (other than the
financial statements and statements of historical fact), including, without
limitation, statements as to our expectations and beliefs presented under the
caption Managements Discussion and Analysis of Financial Condition and
Results of Operations, may constitute forward-looking statements.
Forward-looking statements are made based upon our expectations and beliefs
concerning events, many of which, by their nature are inherently uncertain and
outside of our control. It is possible that our actual results and financial
condition may differ, possibly materially, from the anticipated results and
financial condition indicated in these forward-looking statements.

We caution readers that the assumptions which form the basis for
forward-looking statements, with respect to or that may impact earnings for the
year ending December 31, 2002 and thereafter, include many factors that are
beyond our ability to control or estimate precisely. Some factors include: the
adequacy of our loan loss allowance; our ability to recover any or all of the
claim under our Financial Institution Bond; the market demand and acceptance of
our loan and deposit products; the impact of competitive products; and changes
in economic conditions, such as inflation or fluctuations in interest rates.

While we periodically reassess material trends and uncertainties affecting our
results of operations and financial condition in connection with our
preparation of managements discussion and analysis contained in our annual
report, we do not intend to review or revise any particular forward-looking
statement referenced herein in light of future events.





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PART I

Item 1.      BUSINESS

Republic Bancshares, Inc. (the Company or Republic or We) is a bank
holding company registered with the Board of Governors of the Federal Reserve
System under the Bank Holding Company Act of 1956 (as amended). We conduct
business mainly through our banking subsidiary, Republic Bank (the Bank); a
Florida-chartered commercial bank headquartered in St. Petersburg, Florida and
provide a broad range of traditional commercial banking services. At December
31, 2001, our branch network consisted of 71 branches throughout Florida and
our consolidated assets totaled $2.5 billion, loans totaled $1.4 billion,
deposits were $2.1 billion and stockholders equity was $172.0 million. The
Banks activities are regulated by the Florida Department of Banking and
Finance (the Department) and the Federal Deposit Insurance Corporation (the
FDIC). Deposits are insured by the FDIC up to applicable limits, and the
Bank is a member of the Federal Home Loan Bank of Atlanta (the FHLB).

Background and Prior Operating History

1994  1999: Expansion of the Retail Banking Franchise
During the latter part of 1994 and throughout 1995, the Bank increased its
retail banking presence on the west coast of Florida. We opened 13 new
branches, increasing our market presence in existing counties and expanding
into Pasco County. In February 1996, we converted to a holding company
structure.

During 1997 and 1998, we further expanded our retail banking franchise via our
acquisition of Firstate Financial, F.A., a thrift institution headquartered in
Orlando, Florida and, in September 1997, we acquired and merged in a
stock-for-stock transaction with F.F.O. Financial Group, Inc. (FFO), St.
Cloud, Florida, the holding company parent of First Federal Savings and Loan
Association of Osceola County. That merger further increased our presence in
central Florida by adding 11 branches in Brevard, Orange and Osceola Counties.
At the time of the merger, FFO had total assets of $328.4 million, total
loans of $222.4 million and total deposits of $281.3 million.

In June 1998, we acquired seven branch offices from BankAmerica, all of which
were located in Florida. At acquisition, these branches had deposit
liabilities of $199.9 million and loans of $114.4 million. We also acquired an
additional BankAmerica branch located in Brunswick, Georgia, which has since
been sold.

On August 13, 1998, we purchased a branch office in Deerfield Beach (Broward
County), Florida from the Dime Savings Bank, F.S.B. At acquisition, the branch
had $206.7 million of deposits.

On November 5, 1998, we acquired Bankers Savings Bank, F.S.B. (BSB), Coral
Gables, Florida, and Lochaven Federal Savings and Loan Association
(Lochaven), Orlando, Florida, in stock-for-stock transactions. At the date
of acquisition, BSB had total assets of $70.0 million, total loans of $46.2
million and total deposits of $61.1 million. Lochaven had total assets of $56.5
million, total loans of $44.8 million and total deposits of $54.0 million.

During 1998, we purchased three branches and leased 22 branches from
BankAmerica that had been closed in connection with their acquisition of
Barnett Banks, N.A. Two of the purchased branches were in Hillsborough County
and the third in Lee County. The leased branches were in Broward, Clay,
Collier, Miami-Dade, Marion, Palm Beach, Pinellas and Volusia Counties. We had
opened three of these branches by the end of 1998 and during 1999 we opened the
remaining branches.

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1996  1998: Non-Traditional Mortgage Banking Activities
In 1996, a mortgage banking operation was initiated that placed an emphasis on
non-traditional mortgage
products but losses from that operation in 1998 caused us to cease those
activities. All out-of-state loan production offices were closed and we
discontinued the telemarketing efforts that were the source of the majority of
the loan originations by that mortgage banking unit. At year-end 1998, a
restructuring charge of $6.7 million was recorded, primarily for severance
benefits payable to mortgage banking employees whose positions were eliminated.

2000  2001: Positioning the Company for the Future
In March 2000, the board of directors of the Company and the Bank announced the
appointment of Mr. William R. Klich as President and Chief Executive Officer of
the Company and the Bank. Mr. Klich has over 31 years of banking experience
and from 1990-1993 was the President and Chief Executive Officer for Coast
Bank, F.S.B., located in Sarasota, Florida. After Coast Bank was acquired by
SunTrust Banks in mid-1993, Mr. Klich remained with SunTrust Bank, Gulf Coast,
as its Corporate Banking Executive. In early 1996, he was promoted to the
position of Chairman and Chief Executive Officer of the $2.4 billion SunTrust
Bank, Gulf Coast, serving Manatee, Sarasota and Charlotte Counties.

During 2000 and 2001, we focused our efforts on positioning the Company for the
future, and implemented these strategic initiatives:



| |  |  | Completed the restructuring of the branch franchise by selling
seven branches and closing four underperforming offices. Two new
offices were opened in 2001, four branch offices are scheduled to
open in 2002 and one underperforming branch will be closed in 2002;                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Rounded out the management team by adding strong, experienced
executives in key areas of the Company;                                                                                                                                                                                  
| |  |  | Restructured holding company debt by adding $15.0 million of
regulatory capital and paying off all senior debt;                                                                                                                                                                        
| |  |  | Strengthened the credit and underwriting process, implementing
a traditional and conservatively-underwritten menu of lending
products and building loan production to an annualized level of over
$900 million per year, based on our production volume for the fourth
quarter of 2001;
| |  |  | Revamped deposit product lines by converting the entire
checking account base into seven new customer-driven products to
reduce, over time, dependence on non-core deposit sources;                                                                                                    
| |  |  | Continued the ongoing Profit Improvement Program, providing
cost-savings to offset the additional expenses from growth in the
loan and deposit production areas;                                                                                                                       
| |  |  | Maintained strong capital and liquidity positions.                                                                                                                                                                                                                                     

Business of Republic Bancshares, Inc.

Our business plan for 2002 and beyond includes a continuation of these
principal business strategies:



| |  |  | Concentration on and expansion of our core market;                                                                                                                                                                                                                      
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Conservative and plain vanilla lending;                                                                                                                                                                                                                             
| |  |  | Diversification of the loan portfolio through the origination
of consumer lending products through our retail banking outlets and
the continued development of commercial lending activities to small
and medium sized businesses as well as high net worth individuals;
| |  |  | Implementation of residential lending as the cornerstone of our retail banking efforts;                                                                                                                                                                                 
| |  |  | Reduction of nonperforming assets.                                                                                                                                                                                                                                      

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Subsequent Events   Sale of the Subordinate Tranche from a High LTV Loan Securitization

In 1998, the Bank securitized and sold $240.0 million of High LTV Loans,
retained the residual interest from the securitization and purchased a $12.0
million subordinate tranche from the securitization for $10.9 million.
In February 2002, the Bank sold the subordinate tranche for net proceeds
approximately equal to the carrying value of the security. The sale
substantially reduces exposure to future losses from High LTV Loan-related
assets.

Critical Accounting Policies

Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, advises all companies to include a
discussion of critical accounting policies or methods used in the preparation
of financial statements. The Notes to the Consolidated Financial Statements
includes a summary of the significant accounting policies and methods used in
the preparation of our Consolidated Financial Statements. The following is a
brief discussion of the more significant accounting policies and methods used
by us. The consolidated financial statements are prepared in accordance with
generally accepted accounting principles, which require us to make estimates
and assumptions. We believe that, of our significant accounting policies, the
following may involve a higher degree of judgment and complexity.

Fair Value.Certain financial instruments are accounted for as trading assets
and are recorded at fair value, with unrealized gains and losses reflected in
results of operations. Fair values are based on listed market prices, where
possible. If listed market prices are not readily available, fair value is
determined based on other relevant factors and methods, including techniques
using present value of cashflows. In preparing fair values using methods other
than listed market prices, we employ financial models to estimate those fair
values. Those pricing models and their underlying assumptions determine the
amount and timing of unrealized gains and losses recognized, and the use of
different pricing models or assumptions could produce different financial
results. To the extent financial instruments have extended maturity dates, the
Companys estimates of fair value may involve greater subjectivity due to the
lack of transparent market data available upon which to base modeling
assumptions. The illiquid nature of certain securities or debt instruments
(such as certain mortgage obligations and mortgage-related loan products) also
requires a high degree of judgment in determining fair value.

Transfers of Financial Assets.From time to time we may engage in
securitization activities. Gains and losses from securitizations are recognized
in the consolidated statements of income when the Company relinquishes control
of the transferred financial assets in accordance with Statement of Financial
Accounting Standards (SFAS) SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities
 a replacement
of FASB Statement No. 125 and other related pronouncements. The gain or loss
on the sale of financial assets depends in part on the previous carrying amount
of the assets involved in the transfer, allocated between the assets sold and
the retained interests based upon their respective fair values at the date of
sale. We recognize any interests in the transferred assets and any
liabilities incurred in securitization transactions on its consolidated
statements of financial condition at fair value. Subsequently, changes in the
fair value of interests accounted for as trading assets are recognized in the
consolidated statements of income. The use of different pricing models or
assumptions could produce different financial results.

Allowance for Loan Losses.The allowance for loan losses is established through
a charge to the provision for loan losses. Provisions are made to reserve for
estimated losses in outstanding loan balances. The allowance for loan losses is
a significant estimate and is regularly evaluated by us for adequacy by taking

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into consideration factors such as changes in the nature and volume of the loan
portfolio; trends in actual and forecasted portfolio credit quality, including
delinquency, charge-off and bankruptcy rates; and current economic conditions
that may affect a borrowers ability to pay. The use of different estimates or
assumptions could produce different provisions for loan losses. Our actual
provision for loan losses in future periods may differ from our estimates.

Income taxes.Our income tax policy records the estimated future tax effects of
temporary differences between the tax bases of assets and liabilities and
amounts reported in the accompanying consolidated balance sheets, as well as
operating loss and tax credit carryforwards. We follow very specific and
detailed guidelines regarding the recoverability of any tax assets recorded on
the balance sheet and provide any necessary allowances if required.

Sources of Funds

Our primary source of funds for lending, investment and other general business
purposes are deposit accounts. In addition to deposits, another principal
source of funds is loan repayments. The Banks loan portfolio contains a
significant amount of seasoned loans that are anticipated to repay rapidly
during the next few years. If necessary, additional funding is available by
borrowing from the FHLB, which has been granted a blanket lien on our
residential loan portfolio as collateral. We have not relied on brokered
deposits in the past and do not foresee a need to do so in the future. To the
extent that short-term financing is required, we intend to rely on repurchase
agreements, FHLB advances, and other traditional money market sources of
funding. For additional discussion of asset/liability management policies and
strategies see Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations  Asset/Liability Management and
Liquidity.

We offer a full range of deposit services, including checking and other
transaction accounts, savings accounts and time deposits. At December 31,
2001, time deposits in amounts of $100,000 or more constituted 12.03% of total
deposits.

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The following table shows the principal types of deposit accounts we offer and
the aggregate amounts of those accounts at December 31, 2001 ($ in thousands):

|                                           |                                  |                  |      |               |      |        |         |                |           |            |       |       |        |  
|------------------------------------------ | -------------------------------- | ---------------- | ---- | ------------- | ---- | ------ | ------- | -------------- | --------- | ---------- | ----- | ----- | ------ | -
|                                           |                                  |                  |      | Weighted      |      |        |         |                |           |            |       |      
|                                           |                                  |                  |      | Average       |      |        |         |                |           | Percent of
|                                           |                                  |                  |      | Interest Rate |      | Amount |         | Total Deposits
|                                           |                                  |                  |      |               |      |        |         |               
|Noninterest bearing                        |                                  |                  | 0.00 | %             |      | $      | 152,972 |                |           |            | 7.18  | %    
|Interest checking                          |                                  |                  | 0.38 |               |      |        | 186,817 |                |           |            | 8.77  |      
|Money market deposits                      |                                  |                  | 2.33 |               |      |        | 394,278 |                |           |            | 18.51 |      
|Savings deposits                           |                                  |                  | 2.06 |               |      |        | 189,557 |                |           |            | 8.90  |      
|Time deposits with original maturities of: |                                  |                  |      |               |      |        |         |                |           |            |       |      
|                                           | One year or less                 |                  |      | 4.80          |      |        |         | 939,220        |           |            |       | 44.09 |       
|                                           | Over one year through five years |                  |      | 5.36          |      |        |         | 267,500        |           |            |       | 12.55 |       
|                                           |                                  |                  |      |               |      |        |         |                |           |            |       |      
|                                           |                                  | Time deposits(1) |      |               | 4.92 |        |         |                | 1,206,720 |            |       |       | 56.64  |  
|                                           |                                  |                  |      |               |      |        |         |                |           |            |       |      
|                                           |                                  | Total deposits   |      |               | 3.44 | %      |         | $              | 2,130,344 |            |       |       | 100.00 | %
|                                           |                                  |                  |      |               |      |        |         |                |           |            |       |      



|(1) |  | Includes time deposits in amounts of $100,000 or more of $256.3
million.
|--- |  | ------------------------------------------------------------------------

At December 31, 2001, scheduled maturities of
our time deposits were as follows ($ in thousands):

|                    |  |        |           |                     |  |            |        |  
|------------------- |  | ------ | --------- | ------------------- |  | ---------- | ------ | -
|Year ended          |  |        |           |                     |  | Percent of
|December 31,        |  | Amount |           | Total Time Deposits
|                    |  |        |           |                    
|2002                |  | $      | 939,220   |                     |  |            | 77.83  | %
|2003                |  |        | 151,013   |                     |  |            | 12.51  |  
|2004                |  |        | 51,052    |                     |  |            | 4.23   |  
|2005                |  |        | 51,708    |                     |  |            | 4.29   |  
|2006                |  |        | 13,468    |                     |  |            | 1.12   |  
|Thereafter          |  |        | 259       |                     |  |            | 0.02   |  
|                    |  |        |           |                     |  |            |        |  
|Total time deposits |  | $      | 1,206,720 |                     |  |            | 100.00 | %
|                    |  |        |           |                     |  |            |        |  

Lending Activities

We originate a full range of traditional lending products for our portfolio,
using conservative underwriting guidelines that were revamped in 2000. Under
our business plan, our residential loan originations will be made in our
Florida markets using strong underwriting standards. Commercial real estate
lending will continue to be an important line of business with this product
line focused on borrowers within Florida. We will strongly emphasize
development of our commercial lending products to small and medium-sized
businesses and high net worth individuals and origination of consumer lending
products, primarily home equity loans. Lending to borrowers outside Florida has
been discontinued. We also discontinued mortgage warehouse lending and reduced
our portfolio balance to $718,000, which was comprised of loan collateral in
various stages of liquidation. Origination of subprime first lien loans and
second lien High LTV Loans was eliminated and these portfolios are
substantially reduced from prior years.

For 2001, loan originations from all product types totaled $703.3 million. Of
this amount, originations of commercial real estate and commercial (business)
loans totaled $312.2 million, consumer loan originations (primarily home equity
loans) totaled $201.9 million and residential loan originations were $189.2
million.

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The following tables show information about our loan portfolio, based on total
dollars and percent of portfolio, by collateral type as of the dates indicated
($ in thousands):

|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           | 
|-------------------------------- | ------------------------------ | --------------------------------- | ----------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | 
|Based on total dollars:          |                                | At December 31,                  
|                                 |                                |                                  
|                                 |                                |                                   |             |         | 2001      |           | 2000      |         | 1999      |           | 1998      |         | 1997     
|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |          
|Real estate mortgage loans:      |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        
|                                 | One-to-four family residential |                                   | $           | 432,803 |           |           | $         | 641,557 |           |           | $         | 720,184 |           |           | $         | 738,489 |           |           | $         | 686,661 |          
|                                 | Multifamily residential        |                                   |             | 62,565  |           |           |           | 85,338  |           |           |           | 80,212  |           |           |           | 92,209  |           |           |           | 84,863  |          
|                                 | Subprime mortgages             |                                   |             | 50,743  |           |           |           | 65,662  |           |           |           | 79,562  |           |           |           | 72,980  |           |           |           |        |          
|                                 | Warehouse lines of credit      |                                   |             | 718     |           |           |           | 39,835  |           |           |           | 96,873  |           |           |           | 132,973 |           |           |           |        |          
|                                 | High LTV loans                 |                                   |             | 29,275  |           |           |           | 37,894  |           |           |           | 92,584  |           |           |           | 116,764 |           |           |           |        |          
|                                 | Commercial real estate         |                                   |             | 498,013 |           |           |           | 555,081 |           |           |           | 587,625 |           |           |           | 510,212 |           |           |           | 330,462 |          
|                                 | Home equity loans              |                                   |             | 217,726 |           |           |           | 137,845 |           |           |           | 118,737 |           |           |           | 104,803 |           |           |           | 47,365  |          
|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        
|Total real estate mortgage loans |                                |                                   | 1,291,843   |         |           |           | 1,563,212 |         |           |           | 1,775,777 |         |           |           | 1,768,430 |         |           |           | 1,149,351 |        
|Commercial (business) loans      |                                |                                   | 108,453     |         |           |           | 124,699   |         |           |           | 90,378    |         |           |           | 84,002    |         |           |           | 39,119    |        
|Consumer loans and other loans   |                                |                                   | 20,715      |         |           |           | 23,431    |         |           |           | 23,737    |         |           |           | 43,857    |         |           |           | 27,430    |        
|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        
|Total portfolio loans            |                                |                                   | 1,421,011   |         |           |           | 1,711,342 |         |           |           | 1,889,892 |         |           |           | 1,896,289 |         |           |           | 1,215,900 |        
|Allowance for loan losses        |                                |                                   | (31,997     | )       |           |           | (33,462   | )       |           |           | (28,177   | )       |           |           | (28,077   | )       |           |           | (22,023   | )      
|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        
|                                 |                                | Portfolio loans, net of allowance |             |         | 1,389,014 |           |           |         | 1,677,880 |           |           |         | 1,861,715 |           |           |         | 1,868,212 |           |           |         | 1,193,877 |          
|Loans held for sale:             |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        
|Residential first mortgage loans |                                |                                   |            |         |           |           |          |         |           |           |          |         |           |           | 184,176   |         |           |           | 141,556   |        
|High LTV loans                   |                                |                                   |            |         |           |           |          |         |           |           |          |         |           |           |          |         |           |           | 45,670    |        
|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        
|                                 |                                | Loans held for sale               |             |         |          |           |           |         |          |           |           |         |          |           |           |         | 184,176   |           |           |         | 187,226   |          
|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        
|                                 |                                |                                   | Total loans |         | $         | 1,389,014 |           |         | $         | 1,677,880 |           |         | $         | 1,861,715 |           |         | $         | 2,052,388 |           |         | $         | 1,381,103 | 
|                                 |                                |                                   |             |         |           |           |           |         |           |           |           |         |           |           |           |         |           |           |           |        

|                                 |                       |              |       |        |      |  |       |        |      |  |       |        |   |  |       |        |   |  |       |        |  
|-------------------------------- | --------------------- | ------------ | ----- | ------ | ---- |  | ----- | ------ | ---- |  | ----- | ------ | - |  | ----- | ------ | - |  | ----- | ------ | -
|Based on percent of portfolio:   |                       | December 31,
|                                 |                       |             
|                                 |                       |              | 2001  |        | 2000 |  | 1999  |        | 1998 |  | 1997 
|                                 |                       |              |       |        |      |  |       |        |      |  |      
|Real estate mortgage loans:      |                       |              |       |        |      |  |       |        |      |  |       |        |   |  |       |        |   |  |       |       
|One-to-four family residential   |                       |              | 30.46 | %      |      |  | 37.49 | %      |      |  | 38.11 | %      |   |  | 38.94 | %      |   |  | 56.47 | %     
|Multifamily residential          |                       |              | 4.40  |        |      |  | 4.99  |        |      |  | 4.24  |        |   |  | 4.86  |        |   |  | 6.98  |       
|Subprime mortgages               |                       |              | 3.57  |        |      |  | 3.84  |        |      |  | 4.21  |        |   |  | 3.85  |        |   |  |      |       
|Warehouse lines of credit        |                       |              | 0.05  |        |      |  | 2.33  |        |      |  | 5.13  |        |   |  | 7.01  |        |   |  |      |       
|High LTV loans                   |                       |              | 2.06  |        |      |  | 2.21  |        |      |  | 4.90  |        |   |  | 6.16  |        |   |  |      |       
|Commercial real estate           |                       |              | 35.05 |        |      |  | 32.43 |        |      |  | 31.09 |        |   |  | 26.91 |        |   |  | 27.18 |       
|Home equity loans                |                       |              | 15.32 |        |      |  | 8.05  |        |      |  | 6.28  |        |   |  | 5.53  |        |   |  | 3.90  |       
|                                 |                       |              |       |        |      |  |       |        |      |  |       |        |   |  |       |        |   |  |       |       
|Total real estate mortgage loans |                       |              | 90.91 |        |      |  | 91.34 |        |      |  | 93.96 |        |   |  | 93.26 |        |   |  | 94.53 |       
|Commercial (business) loans      |                       |              | 7.63  |        |      |  | 7.29  |        |      |  | 4.78  |        |   |  | 4.43  |        |   |  | 3.22  |       
|Consumer loans and other loans   |                       |              | 1.46  |        |      |  | 1.37  |        |      |  | 1.26  |        |   |  | 2.31  |        |   |  | 2.25  |       
|                                 |                       |              |       |        |      |  |       |        |      |  |       |        |   |  |       |        |   |  |       |       
|                                 | Total portfolio loans |              |       | 100.00 | %    |  |       | 100.00 | %    |  |       | 100.00 | % |  |       | 100.00 | % |  |       | 100.00 | %
|                                 |                       |              |       |        |      |  |       |        |      |  |       |        |   |  |       |        |   |  |       |       

6



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##### 



The following table shows the maturities of our real estate secured loans at
December 31, 2001 and 2000. Loans having no stated schedule of repayments and
no stated maturity are reported as due in one year or less.
This table also shows the dollar amount of loans scheduled to mature after one
year, according to their interest rate characteristics ($ in thousands):

|                                                   |                              |             |                   |            |                   |             |         |            |  |   |           |         |  |   |         |        | 
|-------------------------------------------------- | ---------------------------- | ----------- | ----------------- | ---------- | ----------------- | ----------- | ------- | ---------- |  | - | --------- | ------- |  | - | ------- | ------ | 
|                                                   |                              |             | December 31, 2001 |            | December 31, 2000
|                                                   |                              |             |                   |            |                  
|Type of loan:                                      |                              | Real Estate |                   | Commercial |                   | Real Estate |         | Commercial
|                                                   |                              |             |                   |            |                   |             |         |           
|Amounts due:                                       |                              |             |                   |            |                   |             |         |            |  |   |           |         |  |   |         |       
|                                                   | One year or less             |             | $                 | 263,424    |                   |             | $       | 41,717     |  |   | $         | 353,830 |  |   | $       | 56,153 | 
|                                                   | After one through five years |             |                   | 180,231    |                   |             |         | 56,856     |  |   |           | 225,927 |  |   |         | 51,378 | 
|                                                   | More than five years         |             |                   | 848,188    |                   |             |         | 9,880      |  |   |           | 983,455 |  |   |         | 17,168 | 
|                                                   |                              |             |                   |            |                   |             |         |            |  |   |           |         |  |   |         |       
|Total                                              |                              | $           | 1,291,843         |            |                   | $           | 108,453 |            |  | $ | 1,563,212 |         |  | $ | 124,699 |       
|                                                   |                              |             |                   |            |                   |             |         |            |  |   |           |         |  |   |         |       
|Interest rate terms on
amounts due after one year: |                              |             |                   |            |                   |             |         |            |  |   |           |         |  |   |         |       
|                                                   | Adjustable                   |             | $                 | 574,317    |                   |             | $       | 44,941     |  |   | $         | 594,261 |  |   | $       | 43,871 | 
|                                                   | Fixed                        |             |                   | 454,230    |                   |             |         | 21,795     |  |   |           | 615,121 |  |   |         | 24,675 | 
|                                                   |                              |             |                   |            |                   |             |         |            |  |   |           |         |  |   |         |       
|Total                                              |                              | $           | 1,028,547         |            |                   | $           | 66,736  |            |  | $ | 1,209,382 |         |  | $ | 68,546  |       
|                                                   |                              |             |                   |            |                   |             |         |            |  |   |           |         |  |   |         |       

Credit Administration

Our loan approval process provides for various levels of lending authority to
loan officers, the Officers Loan Committee, the Chairman, and the Chief
Executive Officer. In addition, loans in excess of $5.0 million require the
approval of the board of directors Loan Committee or a majority of the full
board prior to funding. Loan purchases, when applicable, are made subject to
the same underwriting standards as loan originations. To achieve consistency
in underwriting policies and procedures, we have centralized the supervision of
our loan approval process and all credit decision functions.

Our real estate lending consists of extensions of credit secured by real estate
mortgages and loans made for the purpose of financing the construction of a
building or other improvements to real estate. Using applicable regulatory
guidelines as our basis, we have adopted comprehensive, written real estate
lending policies that we believe are consistent with safe and sound banking
practices. These lending policies reflect consideration of the Interagency
Guidelines for Real Estate Lending Policies (the Guidelines) adopted by the
federal banking agencies in December 1992, which set forth applicable standards
for real estate lending.

Our lending policy addresses certain lending considerations set forth in the
Guidelines, including loan-to-value (LTV) limits, loan administration
procedures, underwriting standards, portfolio diversification standards and
documentation, approval and reporting requirements. The LTV ratio framework,
with a LTV ratio being the total amount of credit to be extended divided by the
appraised value or purchase price of the property at the time the credit is
originated, has been established for each category of real estate loans. Our
policy, subject to certain approval exceptions, establishes, among other
things, the following maximum LTV limits: raw land (60%); land development
(75%); construction (commercial, multifamily and non-residential)  (80%) and
improved property (60%-85%, depending on collateral type). Loans on
one-to-four family residential (owner occupied) mortgages where the LTV exceeds
95% are not made, and any LTV ratio in excess of 80% generally requires
appropriate insurance or additional security from readily marketable
collateral. The board of directors reviews and approves our lending policies at
least annually.

Our commercial (business) lending is based on a strategy of extending credit to
the Florida business community, with commercial loans being made to small and
medium-sized businesses and high net worth individuals with satisfactory cash
flows.

7



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##### 



We manage our loan portfolio on an ongoing basis using written portfolio
management strategies, guidelines for underwriting standards and risk
assessment, and procedures for ongoing identification and management of
credit deterioration. We undertake regular portfolio reviews to estimate loss
exposure and determine compliance with policies. (See
Item 1. Business  Asset Quality).

Asset Quality

Allowance/Provision for Loan Losses

Loan loss allowance activity during 2001 included $17.0 million of loan
charge-offs (net of recoveries), $613,000 reallocated from the allowance to
loan discounts and a $16.2 million provision for loan losses. Activity during
2000 included a $20.7 million provision for loan losses, loan charge-offs (net
of recoveries) of $15.0 million and $389,000 reallocated from the allowance to
loan discounts.

The allowance for loan losses represents our estimate of an amount adequate to
provide for probable losses inherent in the loan portfolio based on our
historical data and the current status of the loan portfolio. However, there
may be additional risks of losses in the future, which cannot be quantified
precisely or attributed to particular loans or classes of loans. Because those
risks include general economic trends, as well as available information about
conditions affecting individual borrowers, our estimate of the allowance needed
is necessarily an approximation. The allowance is also subject to regulatory
examinations and determinations as to adequacy, which may take into account
such factors as the methodology used to calculate the allowance and the size of
the allowance in comparison to peers identified by the regulatory agencies.

We conduct an ongoing evaluation and grading of the loan portfolio according to
an eight-point rating system. The loan ratings serve as a guideline in
assessing the risk level of a particular loan and provide a basis for the
estimation of the overall allowance necessary based on historical experience.
The Banks Loan Review Department independently rates loans and, on a quarterly
basis, meets with senior management and the loan officers to discuss all loans
that have been identified as potential credit quality problems. The Loan
Review Department reports its findings to the Directors Audit Committee to
ensure independence of the loan grading function.

We believe that our loan loss allowance policy is consistent with policies
established by federal and state regulatory agencies and that the level of our
allowance is appropriate in light of our historical loss experience.
Provisions for loan losses charged to expense during each period are made based
on our estimation of the adequacy of the allowance when compared to the
inherent risk of the existing portfolio.

8



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##### 



The following table shows information concerning the activity in the allowance
for loan losses during the periods indicated ($ in thousands):

|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | - |  | - | ------ | -
|                                                                      |  | Years Ended December 31,
|                                                                      |  |                         
|                                                                      |  | 2001                     |         | 2000 |  | 1999 |         | 1998 |  | 1997
|                                                                      |  |                          |         |      |  |      |         |      |  |     
|Allowance at beginning of period                                      |  | $                        | 33,462  |      |  | $    | 28,177  |      |  | $    | 28,077  |   |  | $ | 22,023 |   |  | $ | 19,774 |  
|Loan discount allocated to/(from)
the allowance for   purchased loans |  |                          | (613    | )    |  |      | (389    | )    |  |      | (195    | ) |  |   | (4,303 | ) |  |   | 171    |  
|Charge-offs:                                                          |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Residential first lien                                                |  |                          | (1,645  | )    |  |      | (2,790  | )    |  |      | (2,980  | ) |  |   | (1,481 | ) |  |   | (974   | )
|Warehouse lines of credit                                             |  |                          | (6,695  | )    |  |      | (5,077  | )    |  |      |        |   |  |   |       |   |  |   |       |  
|Commercial real estate/multi-family                                   |  |                          | (3,527  | )    |  |      | (776    | )    |  |      | (838    | ) |  |   | (266   | ) |  |   | (15    | )
|Commercial (business)                                                 |  |                          | (1,022  | )    |  |      | (68     | )    |  |      | (353    | ) |  |   | (1,450 | ) |  |   | (125   | )
|High LTV                                                              |  |                          | (2,991  | )    |  |      | (6,413  | )    |  |      | (5,357  | ) |  |   |       |   |  |   |       |  
|Home equity                                                           |  |                          | (2,271  | )    |  |      | (1,213  | )    |  |      | (730    | ) |  |   |       |   |  |   |       |  
|Consumer and other loans                                              |  |                          | (700    | )    |  |      | (469    | )    |  |      | (865    | ) |  |   | (1,197 | ) |  |   | (288   | )
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Total charge-offs                                                     |  |                          | (18,851 | )    |  |      | (16,806 | )    |  |      | (11,123 | ) |  |   | (4,394 | ) |  |   | (1,402 | )
|Recoveries:                                                           |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Residential first lien                                                |  |                          | 287     |      |  |      | 260     |      |  |      | 695     |   |  |   | 112    |   |  |   | 3      |  
|Warehouse lines of credit                                             |  |                          | 227     |      |  |      | 51      |      |  |      |        |   |  |   |       |   |  |   |       |  
|Commercial real estate/multi-family                                   |  |                          | 297     |      |  |      | 481     |      |  |      | 18      |   |  |   | 183    |   |  |   | 54     |  
|Commercial loans (business)                                           |  |                          | 206     |      |  |      | 63      |      |  |      | 184     |   |  |   | 48     |   |  |   | 152    |  
|High LTV                                                              |  |                          | 536     |      |  |      | 764     |      |  |      | 301     |   |  |   |       |   |  |   |       |  
|Home equity                                                           |  |                          | 176     |      |  |      | 61      |      |  |      | 52      |   |  |   |       |   |  |   |       |  
|Consumer and other loans                                              |  |                          | 120     |      |  |      | 100     |      |  |      | 245     |   |  |   | 147    |   |  |   | 24     |  
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Total recoveries                                                      |  |                          | 1,849   |      |  |      | 1,780   |      |  |      | 1,495   |   |  |   | 490    |   |  |   | 233    |  
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Net charge-offs                                                       |  |                          | (17,002 | )    |  |      | (15,026 | )    |  |      | (9,628  | ) |  |   | (3,904 | ) |  |   | (1,169 | )
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Provision for loan losses                                             |  |                          | 16,150  |      |  |      | 20,700  |      |  |      | 9,923   |   |  |   | 14,261 |   |  |   | 3,247  |  
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Allowance at end of period                                            |  | $                        | 31,997  |      |  | $    | 33,462  |      |  | $    | 28,177  |   |  | $ | 28,077 |   |  | $ | 22,023 |  
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|Net charge-offs to average loans                                      |  |                          | 1.09    | %    |  |      | 0.82    | %    |  |      | 0.50    | % |  |   | 0.22   | % |  |   | 0.10   | %
|                                                                      |  |                          |         |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  

9



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##### 



The following table shows the allocation of the allowance based on certain
subjective estimates and the percent of the loan portfolio for each category
presented. The amount allocated to a particular segment should not be
construed as the only amount available for future charge-offs that might occur
within that segment. In addition, the amounts allocated by segment may not be
indicative of future charge-off trends.

The allocation of the allowance may change from year to year should we
determine that the risk characteristics of the loan portfolio and off-balance
sheet commitments have changed ($ in thousands):

|                                    |          |        |        |           |      |        |            |           |   |   |       |        |            |  |       |        |  
|----------------------------------- | -------- | ------ | ------ | --------- | ---- | ------ | ---------- | --------- | - | - | ----- | ------ | ---------- |  | ----- | ------ | -
|                                    |          |        | 2001   |           | 2000
|                                    |          |        |        |           |     
|                                    |          |        |        |           |      |        | Percent of |           |   |   |       |        | Percent of
|Allowance Allocation                |          | Amount |        | Portfolio |      | Amount |            | Portfolio
|                                    |          |        |        |           |      |        |            |          
|Performing/not classified:          |          |        |        |           |      |        |            |           |   |   |       |        |            |  |       |       
|Residential loans                   |          | $      | 1,248  |           |      |        | 29.79      | %         |   | $ | 2,109 |        |            |  | 36.35 | %     
|High LTV & subprime loans           |          |        | 4,576  |           |      |        | 5.26       |           |   |   | 6,124 |        |            |  | 5.82  |       
|Warehouse lines of credit           |          |        |       |           |      |        |           |           |   |   | 368   |        |            |  | 1.97  |       
|Commercial (business)               |          |        | 897    |           |      |        | 6.31       |           |   |   | 1,205 |        |            |  | 7.00  |       
|Commercial real estate/multi-family |          |        | 4,238  |           |      |        | 33.14      |           |   |   | 4,924 |        |            |  | 30.21 |       
|Consumer & other                    |          |        | 2,910  |           |      |        | 16.66      |           |   |   | 1,950 |        |            |  | 11.78 |       
|Special mention                     |          |        | 918    |           |      |        | 3.23       |           |   |   |      |        |            |  |      |       
|                                    |          |        |        |           |      |        |            |           |   |   |       |        |            |  |       |       
|                                    | Subtotal |        |        | 14,787    |      |        |            | 94.39     |   |   |       | 16,680 |            |  |       | 93.13  |  
|Nonperforming/classified:           |          |        |        |           |      |        |            |           |   |   |       |        |            |  |       |       
|Special mention                     |          |        |       |           |      |        |           |           |   |   | 1,040 |        |            |  | 3.04  |       
|Substandard & nonperforming         |          |        | 12,860 |           |      |        | 5.53       |           |   |   | 8,668 |        |            |  | 3.48  |       
|Doubtful                            |          |        | 491    |           |      |        | 0.08       |           |   |   | 3,013 |        |            |  | 0.35  |       
|Loss                                |          |        |       |           |      |        |           |           |   |   |      |        |            |  |      |       
|                                    |          |        |        |           |      |        |            |           |   |   |       |        |            |  |       |       
|                                    | Subtotal |        |        | 13,351    |      |        |            | 5.61      |   |   |       | 12,721 |            |  |       | 6.87   |  
|Unfunded portion of closed loans    |          |        | 1,244  |           |      |        |           |           |   |   | 919   |        |            |  |      |       
|Unallocated                         |          |        | 2,615  |           |      |        |           |           |   |   | 3,142 |        |            |  |      |       
|                                    |          |        |        |           |      |        |            |           |   |   |       |        |            |  |       |       
|                                    | Total    |        | $      | 31,997    |      |        |            | 100.00    | % |   | $     | 33,462 |            |  |       | 100.00 | %
|                                    |          |        |        |           |      |        |            |           |   |   |       |        |            |  |       |       

Nonperforming Assets

Nonperforming assets include: (1) loans which are 90 days or more past due; (2)
loans which are less than 90 days past due but where sufficient doubt exists as
to the possibility of collecting additional interest; and (3) other real estate
(ORE) and other assets acquired in satisfaction of a loan. Nonperforming
loans that are restructured and are current as to their revised terms remain in
nonperforming status until there is sufficient payment history to warrant
upgrade to performing status.

As a matter of policy, interest is not accrued on loans past due 90 days or
more unless the loan is both well secured and in process of collection. If
there is sufficient doubt as to the collection of future interest a loan may
also be placed in non-accrual status before becoming 90 days or more past due.
When a loan is placed in non-accrual status, interest accruals cease and
uncollected accrued interest is reversed and charged against current income.
Interest income on non-accrual loans is recognized only when received.

Loans classified as nonaccrual totaled $46.2 million at December 31, 2001,
compared with $49.4 million at December 31, 2000, a decrease of $3.2 million.
At December 31, 2001 and 2000, we had nonperforming assets (including loans
classified as non-accrual) of $63.3 million or 2.57% of total assets and $57.0
million or 2.33% of total assets, respectively. Accruing loans, which were 90
days past due amounted to $12,000 at December 31, 2001 and $1.2 million at
December 31, 2000, and primarily consisted of loans in process of renewal.
(See Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations  Comparison of Balance Sheets at December 31, 2001 and
2000).

10



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##### 



The following table shows information regarding the components of nonperforming
assets at the dates indicated ($ in thousands):

|                                     |  |                 |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|------------------------------------ |  | --------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                     |  | At December 31,
|                                     |  |                
|                                     |  | 2001            |        | 2000 |  | 1999 |        | 1998 |  | 1997
|                                     |  |                 |        |      |  |      |        |      |  |     
|Non-accrual loans:                   |  |                 |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|One-to-four family residential       |  | $               | 7,812  |      |  | $    | 9,808  |      |  | $    | 13,642 |   |  | $ | 19,579 |   |  | $ | 17,101 |  
|Multifamily residential              |  |                 | 231    |      |  |      |       |      |  |      |       |   |  |   | 183    |   |  |   | 194    |  
|Subprime mortgages                   |  |                 | 4,346  |      |  |      | 3,485  |      |  |      | 4,973  |   |  |   | 3,369  |   |  |   |       |  
|Warehouse lines of credit            |  |                 | 718    |      |  |      | 3,029  |      |  |      | 868    |   |  |   |       |   |  |   |       |  
|High LTV loans                       |  |                 | 919    |      |  |      | 477    |      |  |      | 474    |   |  |   |       |   |  |   |       |  
|Commercial real estate               |  |                 | 29,786 |      |  |      | 30,181 |      |  |      | 3,252  |   |  |   | 9,888  |   |  |   | 9,121  |  
|Commercial (business)                |  |                 | 1,196  |      |  |      | 736    |      |  |      | 797    |   |  |   | 1,312  |   |  |   | 2,031  |  
|Home equity and consumer             |  |                 | 1,189  |      |  |      | 1,680  |      |  |      | 973    |   |  |   | 1,261  |   |  |   | 638    |  
|                                     |  |                 |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|Total nonaccrual loans               |  |                 | 46,197 |      |  |      | 49,396 |      |  |      | 24,979 |   |  |   | 35,592 |   |  |   | 29,085 |  
|Other nonperforming receivables      |  |                 | 178    |      |  |      | 639    |      |  |      | 736    |   |  |   | 1,010  |   |  |   | 1,319  |  
|ORE acquired through foreclosure     |  |                 | 16,893 |      |  |      | 5,729  |      |  |      | 5,332  |   |  |   | 4,951  |   |  |   | 8,191  |  
|Accruing loans 90 days past due      |  |                 | 12     |      |  |      | 1,209  |      |  |      | 171    |   |  |   | 1,232  |   |  |   | 196    |  
|                                     |  |                 |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|Nonperforming assets                 |  | $               | 63,280 |      |  | $    | 56,973 |      |  | $    | 31,218 |   |  | $ | 42,785 |   |  | $ | 38,791 |  
|                                     |  |                 |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|Nonperforming loans to loans         |  |                 | 3.25   | %    |  |      | 2.96   | %    |  |      | 1.33   | % |  |   | 1.94   | % |  |   | 2.41   | %
|Nonperforming assets to total assets |  |                 | 2.57   | %    |  |      | 2.33   | %    |  |      | 1.22   | % |  |   | 1.71   | % |  |   | 2.31   | %

Other Real Estate

All ORE assets are recorded at the lower of cost or estimated fair market
value, less selling costs, based on appraisal information that is updated when
a property is taken into ORE and thereafter, when determined appropriate by
management, but no less than annually.

The following table shows information regarding ORE balances, net of
allowances, as of the dates indicated ($ in thousands):

|                                      |  |                 |        |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  
|------------------------------------- |  | --------------- | ------ | ---- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | - |  | - | ----- | -
|                                      |  | At December 31,
|                                      |  |                
|                                      |  | 2001            |        | 2000 |  | 1999 |       | 1998 |  | 1997
|                                      |  |                 |        |      |  |      |       |      |  |     
|Residential houses                    |  | $               | 1,313  |      |  | $    | 2,559 |      |  | $    | 3,245 |   |  | $ | 2,258 |   |  | $ | 2,613 |  
|Vacant land and lots                  |  |                 | 5      |      |  |      |      |      |  |      | 448   |   |  |   | 1,431 |   |  |   | 2,254 |  
|Commercial land developed for sale    |  |                 | 14,233 |      |  |      | 243   |      |  |      |      |   |  |   | 890   |   |  |   | 2,835 |  
|Income-producing commercial buildings |  |                 | 1,342  |      |  |      | 1,522 |      |  |      | 1,190 |   |  |   | 310   |   |  |   | 427   |  
|Vacant commercial buildings           |  |                 |       |      |  |      | 1,405 |      |  |      | 449   |   |  |   | 62    |   |  |   | 62    |  
|                                      |  |                 |        |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  
|Total ORE                             |  | $               | 16,893 |      |  | $    | 5,729 |      |  | $    | 5,332 |   |  | $ | 4,951 |   |  | $ | 8,191 |  
|                                      |  |                 |        |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  
|ORE to total assets                   |  |                 | 0.69   | %    |  |      | 0.23  | %    |  |      | 0.21  | % |  |   | 0.20  | % |  |   | 0.49  | %
|                                      |  |                 |        |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  

Troubled Debt Restructurings

In a troubled debt restructuring (TDR), the creditor allows the debtor
certain concessions that would normally not be granted, such as modifying the
terms of the debt to a basis more favorable than those offered to other
creditors or accepting third-party receivables in lieu of the debt. At
December 31, 2001 and 2000, the loan portfolio included TDRs amounting to
$773,000 and $1.5 million, respectively. All restructured loans, as of
December 31, 2001 and 2000, were performing loans.

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Investment Activities

The investment portfolio serves a primary role in our balance sheet management.
The decision to purchase or sell securities is based upon the current
assessment of economic and financial conditions, including the interest
rate environment and liquidity requirements. Florida statutes require that a
specified minimum amount of liquid assets be maintained based primarily on the
level of deposits. At December 31, 2001 and throughout the year, the amount of
liquid assets maintained exceeded the regulatory minimum.

Employees

At December 31, 2001, we had 896 full-time equivalent employees, none of whom
were represented by a union or other collective bargaining agreement.

Market Area

As of December 31, 2001, we operated 71 full-service branches in 17 counties
throughout Florida, a highly competitive state for financial services of all
kinds. Competition for deposits also exists from money market funds and
credit unions. Consumers can choose from a wide range of suppliers of personal
credit, including credit card companies, consumer finance companies, credit
unions and mortgage bankers, as well as from competing financial institutions
and through alternative delivery channels such as the Internet.

We ranked 12th among holding companies and 18th among all depository
institutions in the state of Florida in terms of deposits held as of June,
2001, the latest date for which data is available. As the following table
indicates, market share ranges from 0.06% in Lee County to 9.48% in Osceola
County.

Branch Deposits in Florida by County
($ in thousands)

|             |       |  |                      |    |                     |   |          |           |         |   |         |           |  |   |            |             |  |  |      |      |  
|------------ | ----- |  | -------------------- | -- | ------------------- | - | -------- | --------- | ------- | - | ------- | --------- |  | - | ---------- | ----------- |  |  | ---- | ---- | -
|             |       |  | At December 31, 2001 |    | As of June 30, 2001
|             |       |  |                      |    |                    
|             |       |  | Number of            |    | Republic            |   | Republic |           | Florida |   | Market 
|             |       |  | Branch Offices       |    | Deposits            |   | Deposits |           | Total   |   | Share  
|             |       |  |                      |    |                     |   |          |           |         |   |        
|Brevard      |       |  | 5                    |    |                     | $ | 175,571  |           |         | $ | 167,725 |           |  | $ | 4,699,213  |             |  |  | 3.57 | %   
|Broward      |       |  | 9                    |    |                     |   | 271,621  |           |         |   | 258,791 |           |  |   | 23,978,501 |             |  |  | 1.08 |     
|Collier      |       |  | 1                    |    |                     |   | 44,787   |           |         |   | 19,710  |           |  |   | 5,194,418  |             |  |  | 0.38 |     
|Hernando     |       |  | 1                    |    |                     |   | 28,483   |           |         |   | 24,515  |           |  |   | 1,935,068  |             |  |  | 1.27 |     
|Hillsborough |       |  | 2                    |    |                     |   | 10,989   |           |         |   | 10,186  |           |  |   | 11,103,340 |             |  |  | 0.09 |     
|Lee          |       |  | 1                    |    |                     |   | 19,774   |           |         |   | 3,909   |           |  |   | 6,124,239  |             |  |  | 0.06 |     
|Manatee      |       |  | 7                    |    |                     |   | 178,670  |           |         |   | 184,457 |           |  |   | 3,121,749  |             |  |  | 5.91 |     
|Marion       |       |  | 3                    |    |                     |   | 75,577   |           |         |   | 70,714  |           |  |   | 2,771,218  |             |  |  | 2.55 |     
|Monroe       |       |  | 4                    |    |                     |   | 98,370   |           |         |   | 87,142  |           |  |   | 1,472,435  |             |  |  | 5.92 |     
|Orange       |       |  | 2                    |    |                     |   | 74,303   |           |         |   | 61,718  |           |  |   | 10,326,586 |             |  |  | 0.60 |     
|Osceola      |       |  | 5                    |    |                     |   | 121,192  |           |         |   | 121,824 |           |  |   | 1,285,161  |             |  |  | 9.48 |     
|Palm Beach   |       |  | 3                    |    |                     |   | 68,791   |           |         |   | 58,010  |           |  |   | 22,096,044 |             |  |  | 0.26 |     
|Pasco        |       |  | 3                    |    |                     |   | 77,997   |           |         |   | 76,076  |           |  |   | 4,208,399  |             |  |  | 1.81 |     
|Pinellas     |       |  | 20                   |    |                     |   | 753,543  |           |         |   | 775,734 |           |  |   | 13,565,454 |             |  |  | 5.72 |     
|Sarasota     |       |  | 3                    |    |                     |   | 84,659   |           |         |   | 85,153  |           |  |   | 7,085,299  |             |  |  | 1.20 |     
|Seminole     |       |  | 1                    |    |                     |   | 29,394   |           |         |   | 31,927  |           |  |   | 3,386,659  |             |  |  | 0.94 |     
|Volusia      |       |  | 1                    |    |                     |   | 16,623   |           |         |   | 17,197  |           |  |   | 5,619,071  |             |  |  | 0.31 |     
|             |       |  |                      |    |                     |   |          |           |         |   |         |           |  |   |            |             |  |  |      |     
|             | Total |  |                      | 71 |                     |   | $        | 2,130,344 |         |   | $       | 2,054,788 |  |   | $          | 127,972,854 |  |  |      | 1.61 | %
|             |       |  |                      |    |                     |   |          |           |         |   |         |           |  |   |            |             |  |  |      |     

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Market Risk

The market risk inherent in market sensitive instruments is the potential loss
arising from changes in interest rates, which cause changes in prices of
marketable equity securities. One of our primary objectives is to reduce
fluctuations in net interest income caused by changes in interest rates. To
manage interest rate risk, the board of directors has established interest-rate
risk policies and procedures, which delegate to the Banks
Asset/Liability Committee the responsibility to monitor and report on
interest-rate risk, devise strategies to manage interest-rate risk, monitor
loan originations and deposit activity, and approve pricing strategies.

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. Trading
securities at year-end 2001 included: (1) a subordinate tranche from a 1998
securitization of High LTV Loans (subsequently sold in February 2002, see
Subsequent Events); (2) the resulting residual interests in cash flows from
the 1997 and 1998 securitizations of High LTV Loans; and (3) the excess spread
on interest-only strips receivable. These trading securities were carried at
estimated market value with any unrealized gains or losses included in the
statement of operations under Gain (losses) on loans and securities, net.
Securities held to maturity were carried at amortized cost.

The table below shows principal amounts and related average interest rates, by
year of maturity or repricing, for market sensitive instruments as of December
31, 2001 ($ in thousands).

|                                               |  |      |           |      |  |      |         |      |  |      |         |            |  |       |         |   |  |   |         |   |  |   |         |   |  |   |           |  
|---------------------------------------------- |  | ---- | --------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | ---------- |  | ----- | ------- | - |  | - | ------- | - |  | - | ------- | - |  | - | --------- | -
|                                               |  | 2002 |           | 2003 |  | 2004 |         | 2005 |  | 2006 |         | Thereafter |  | Total
|                                               |  |      |           |      |  |      |         |      |  |      |         |            |  |      
|Assets                                         |  |      |           |      |  |      |         |      |  |      |         |            |  |       |         |   |  |   |         |   |  |   |         |   |  |   |           |  
|Overnight investments                          |  | $    | 26,753    |      |  | $    |        |      |  | $    |        |            |  | $     |        |   |  | $ |        |   |  | $ |        |   |  | $ | 26,753    |  
|                                               |  |      | 1.14      | %    |  |      |        |      |  |      |        |            |  |       |        |   |  |   |        |   |  |   |        |   |  |   | 1.14      | %
|Fixed rate securities                          |  |      | 96,210    |      |  |      | 56,580  |      |  |      | 35,654  |            |  |       | 24,654  |   |  |   | 23,914  |   |  |   | 24,115  |   |  |   | 261,127   |  
|                                               |  |      | 6.58      | %    |  |      | 6.06    | %    |  |      | 5.84    | %          |  |       | 5.35    | % |  |   | 3.64    | % |  |   | 11.58   | % |  |   | 6.44      | %
|Variable rate securities                       |  |      | 328,564   |      |  |      | 95,941  |      |  |      | 67,965  |            |  |       | 29,444  |   |  |   | 45,656  |   |  |   | 5,369   |   |  |   | 572,939   |  
|                                               |  |      | 6.26      | %    |  |      | 6.20    | %    |  |      | 6.00    | %          |  |       | 6.26    | % |  |   | 6.11    | % |  |   | 6.23    | % |  |   | 6.21      | %
|FHLB stock                                     |  |      | 13,168    |      |  |      |        |      |  |      |        |            |  |       |        |   |  |   |        |   |  |   |        |   |  |   | 13,168    |  
|                                               |  |      | 6.25      | %    |  |      |        |      |  |      |        |            |  |       |        |   |  |   |        |   |  |   |        |   |  |   | 6.25      | %
|Fixed rate loans                               |  |      | 116,344   |      |  |      | 71,486  |      |  |      | 65,412  |            |  |       | 41,733  |   |  |   | 42,540  |   |  |   | 146,930 |   |  |   | 484,445   |  
|                                               |  |      | 8.77      | %    |  |      | 8.69    | %    |  |      | 8.62    | %          |  |       | 8.68    | % |  |   | 8.28    | % |  |   | 5.34    | % |  |   | 7.65      | %
|Variable rate loans                            |  |      | 587,187   |      |  |      | 99,175  |      |  |      | 110,296 |            |  |       | 31,580  |   |  |   | 37,773  |   |  |   | 38,557  |   |  |   | 904,569   |  
|                                               |  |      | 6.51      | %    |  |      | 7.89    | %    |  |      | 8.01    | %          |  |       | 8.00    | % |  |   | 7.30    | % |  |   | 7.87    | % |  |   | 6.99      | %
|Mortgage servicing rights                      |  |      | 2,108     |      |  |      | 2,463   |      |  |      | 686     |            |  |       | 650     |   |  |   | 613     |   |  |   | 3,692   |   |  |   | 10,212    |  
|                                               |  |      |           |      |  |      |         |      |  |      |         |            |  |       |         |   |  |   |         |   |  |   |         |   |  |   |           |  
|Liabilities                                    |  |      |           |      |  |      |         |      |  |      |         |            |  |       |         |   |  |   |         |   |  |   |         |   |  |   |           |  
|Deposits                                       |  |      | 1,329,511 |      |  |      | 245,159 |      |  |      | 110,955 |            |  |       | 103,332 |   |  |   | 188,156 |   |  |   | 153,231 |   |  |   | 2,130,344 |  
|                                               |  |      | 4.06      | %    |  |      | 3.75    | %    |  |      | 3.61    | %          |  |       | 4.17    | % |  |   | 0.90    | % |  |   | .01     | % |  |   | 3.44      | %
|Securities sold under
agreements to repurchase |  |      | 34,169    |      |  |      |        |      |  |      |        |            |  |       |        |   |  |   |        |   |  |   |        |   |  |   | 34,169    |  
|                                               |  |      | 1.38      | %    |  |      |        |      |  |      |        |            |  |       |        |   |  |   |        |   |  |   |        |   |  |   | 1.38      | %
|FHLB advances                                  |  |      | 40,010    |      |  |      | 5,011   |      |  |      | 13      |            |  |       | 14      |   |  |   | 6,515   |   |  |   | 688     |   |  |   | 52,251    |  
|                                               |  |      | 2.16      | %    |  |      | 3.79    | %    |  |      | 6.85    | %          |  |       | 6.85    | % |  |   | 5.03    | % |  |   | 6.85    | % |  |   | 2.74      | %
|Subordinated debt                              |  |      |          |      |  |      |        |      |  |      |        |            |  |       |        |   |  |   |        |   |  |   | 29,287  |   |  |   | 29,287    |  
|                                               |  |      |          |      |  |      |        |      |  |      |        |            |  |       |        |   |  |   |        |   |  |   | 7.17    | % |  |   | 7.17      | %

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For a description of the key assumptions used by us to measure market risk, see
the discussion on interest sensitivity analysis under the caption Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Asset/Liability Management.

Supervision and Regulation

We are extensively regulated under both federal and state law. The following
is a brief summary of certain statutes, rules, and regulations affecting us.
This summary is qualified in its entirety by reference to the particular
statutory and regulatory provisions referenced below and is not intended to be
an exhaustive description of the statutes or regulations applicable to our
business. Supervision, regulation, and examination
by the bank regulatory agencies are intended primarily for the protection of
depositors rather than stockholders.

Regulation of the Company

We are a bank holding company registered with the Federal Reserve under the
Bank Holding Company Act of 1956, as amended (the BHC Act). We are subject to
the applicable provisions of the BHC Act and the supervision, examination, and
regulations of the Federal Reserve.

The BHC Act requires every bank holding company to obtain the prior approval of
the Federal Reserve before: (1) it may acquire direct or indirect ownership or
control of any voting shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control more than five
percent of the voting shares of the bank; (2) it or any of its subsidiaries,
other than a bank, may acquire all or substantially all of the assets of the
bank; or (3) it may merge or consolidate with any other bank holding company.
Similar federal statues require bank holding companies and other companies to
obtain the prior approval of the Office of Thrift and Supervision (OTS)
before acquiring ownership or control of a savings association.

The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business
of banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anti-competitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community served. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the communities
to be served. Considerations of financial resources generally focuses on
capital adequacy, and consideration of convenience and needs issues includes
the parties performance under the Community Reinvestment Act of 1977 (the
CRA).

The BHC Act, as amended by the interstate banking provisions of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the Interstate
Banking Act), authorizes any bank holding company located in Florida to
acquire a bank located in any other state, and any bank holding company located
outside Florida may lawfully acquire any Florida-based bank, regardless of
state law to the contrary, in either case subject to certain
deposit-percentage, aging requirements, and other restrictions. The Interstate
Banking Act also generally provides that national and state-chartered banks may
branch interstate through acquisitions of banks in other states, unless a state
has opted out of the interstate branching provisions of the Interstate
Banking Act prior to June 1, 1997. Neither Florida nor any other state in the
southeastern
United States has opted out. Accordingly, we would have the
ability to acquire a bank in a state in the Southeast and consolidate the newly
acquired bank and the Bank into a single bank with interstate branches.

14



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The BHC Act, as currently in effect, generally prohibits us from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity reasonably can be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.

The Federal Reserve has determined that, as a general matter, bank holding
companies and their non-bank subsidiaries may engage in, among other things,
operating a thrift subsidiary, conducting discount securities brokerage
activities, performing certain data processing services and acting as agent or
broker in selling certain types of insurance in connection with credit
transactions.

The BHC Act does not place territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a bank holding company or its non-bank
subsidiaries to terminate any activity or to terminate its ownership or control
of any subsidiary when it has reasonable cause to believe that continuation of
such activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of the holding
company.

Under Federal Reserve policy, bank holding companies are expected to act as a
source of financial strength and support to their subsidiary banks. This
support may be required at times when, absent such Federal Reserve policy, the
holding company may not be inclined to provide it. In addition, any capital
loans by a bank holding company to any bank subsidiary are subordinate in right
of payment to deposits and to certain other indebtedness of such subsidiary
bank. In the event of a bank holding companys bankruptcy, any commitment by
the bank holding company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank will be assumed by the bankruptcy trustee and
entitled to a priority payment.

The Gramm-Leach-Bliley Act (the Act) amends the BHC Act to authorize new
Financial Holding Companies (FHC). Under the FHC provisions of the Act, a
BHC can qualify to become a FHC if all of its bank and thrift subsidiaries are
well capitalized and well managed and have a CRA rating of satisfactory or
better. Once a BHC becomes a FHC, it is permitted to conduct any securities,
insurance and merchant banking activities, as well as any other activities that
are financial in nature or incidental or complementary to a financial
activity, such as developing financial software, hosting internet web sites
relating to financial matters and operating a travel agency. Under the
regulatory structure prescribed by the Act, the Federal Reserve acts as the
umbrella regulator for the FHC, with each FHC subsidiary subject to
supervision and regulation by its own functional regulator or agency.

The Act also gives banks the option of conducting certain newly permitted
financial activities in a subsidiary rather than using a FHC. Banks that
satisfy the well capitalized, well managed and CRA requirements applicable to
FHCs will be able to establish financial subsidiaries that are permitted to
conduct all financial activities as agency and some financial activities as
principal such as securities underwriting.
The main activities in which
financial subsidiaries currently are prohibited from engaging are insurance
underwriting, real estate development and merchant banking.

15



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Regulation of the Bank

The Bank is organized as a Florida-chartered commercial bank and is regulated
and supervised by the Department. The FDIC serves as its primary federal
regulator and the administrator of the fund that insures the Banks deposits.
The Department and the FDIC conduct regular examinations, reviewing the
adequacy of the loan loss reserves, quality of loans and investments, propriety
of management practices, compliance with laws and regulations, and other
aspects of operations. In addition to these regular examinations, the Bank
must file quarterly reports containing detailed financial statements and
schedules. Federal and Florida banking laws and regulations govern all areas
of the operations of the Bank, including reserves, loans, mortgages, capital,
issuances of securities, payment of dividends, and establishment of branches.
As its primary regulators, the Department and the FDIC have authority to impose
penalties, initiate civil and administrative actions, and take other steps
intended to prevent the Bank from engaging in unsafe or unsound practices. The
Bank is a member of the Bank Insurance Fund (BIF) and, as such, deposits in
the Bank are insured by the FDIC to the maximum extent permissible by law.

The Bank is subject to the provisions of the CRA. Under the CRA, the Bank has
a continuing and affirmative obligation consistent with their safe and sound
operation to help meet the credit needs of their entire communities, including
low and moderate-income individuals and neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions
nor does it limit the Banks discretion to develop the types of products and
services that it believes are best suited to their particular communities,
consistent with the CRA. The CRA requires the appropriate federal bank
regulatory agency (in the case of the Bank, the FDIC) in connection with their
regular examinations, to assess a financial institutions record in meeting the
credit needs of the community serviced by it, including low and moderate-income
neighborhoods. The evaluation focuses on three tests: (1) a lending test, to
evaluate the institutions record of making loans in its service areas; (2) an
investment test, to evaluate the institutions record of investing in community
development projects; and (3) a service test, to evaluate the institutions
delivery of services through its branches and other offices. A federal banking
agencys assessment of a financial institutions CRA record is made available
to the public. Further, such assessment is required whenever the institution
applies to, among other things, establish a new branch that will accept
deposits, relocate an existing office or merge or consolidate with, or acquire
the assets of or assume the liabilities of, a federally-regulated financial
institution. In the case where the Company applies for approval to acquire a
bank or other bank holding company, the federal regulator approving the
transaction will also assess the CRA records of the Bank. The Bank received a
Satisfactory CRA rating in its most recent examination.

Transactions with Affiliates

There are multiple restrictions on the extent to which the Company and any
future non bank subsidiaries can borrow or otherwise obtain credit from the
Bank. There are also restrictions on the Banks purchase of, or investment in,
the securities or other assets of the Company. In the event such transactions
are permissible, they must be on the same terms and circumstances, including
credit standards, that are substantially the same, or at least as favorable to
the Bank, as those prevailing at the time for comparable transactions with
non-affiliated companies. No such transactions existed at December 31, 2001.

16



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Deposit Insurance

The Bank is subject to FDIC deposit insurance assessments. The Bank is subject
to a risk-based assessment system for insured depository institutions that
takes into account the risks attributable to different categories and
concentrations of assets and liabilities. This system assigns an institution
to one of three capital categories: (1) well capitalized; (2) adequately
capitalized; and (3) undercapitalized. An institution is also assigned, by the
FDIC, to one of three supervisory subgroups within each capital group. The
supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institutions primary
federal regulator and information which the FDIC determines to be relevant to
the institutions financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institutions state supervisor). An institutions insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned, and attributed to the deposit insurance funds. Under the
risk-based assessment system, there are nine assessment risk classifications
(i.e., combinations of capital groups and supervisory subgroups) to which
different assessment rates are applied. Assessment rates on deposits for an
institution in the highest category (i.e., well capitalized and healthy)
are less than assessment rates on deposits for an institution in the lowest
category (i.e., undercapitalized and substantial supervisory concern).

The Bank, as a state-chartered commercial bank, is a member of BIF. However as
part of the acquisitions the Bank has undertaken in the past, the Bank acquired
deposits previously insured by the Savings Association Insurance Fund (the
SAIF). Based on these acquisitions, the Bank is required to pay insurance
premiums to the FDIC on a substantial portion of its deposits at the SAIF
assessment rate notwithstanding its status as a BIF member. As of September
30, 2001, the most recent measurement date for assessment purposes,
approximately 63.9% of the Banks deposits was treated as SAIF-insured
deposits, with the remaining 36.1% of deposits being assessed at the BIF rate.
Prior to enactment of the Deposit Insurance Funds Act of 1996 (the Funds
Act), only assessments against SAIF member institutions were available to pay
interest on the so-called FICO Bonds, which were issued by the Financing
Corporation (the FICO) in the late 1980s to fund the resolution of troubled
thrifts. The Funds Act shifted a portion of the FICO funding obligations to the
BIF member institutions beginning in 1997. Through the end of 1999, the FICO
assessment rate on BIF-assessable deposits was required by the statute to be
one-fifth of the SAIF rate. Beginning January 1, 2000, the FDIC equalized the
FICO assessment rates for members of both insurance funds at 0.0212 percent.
In 2001, the Banks total FICO payment obligation was $195,000, $128,000 of
which was attributable to the Banks SAIF-assessable deposits and the balance
of which was attributable to its BIF-assessable deposits.

Capital Requirements

We are required to comply with the capital adequacy standards established by
the Federal Reserve (for the Company), and the FDIC (for the Bank). The minimum
capital requirements applicable to the Company and the Bank are essentially the
same. Failure to meet capital guidelines could subject us to a variety of
enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on our business, including
growth and dividend restrictions. Substantial additional restrictions can be
imposed upon us if we fail to meet applicable capital requirements under the
federal prompt corrective action regulations. As of December 31, 2001, the
Banks capital ratios were considered well capitalized for purposes of the
agencies guidelines.

17



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For additional information regarding capital requirements applicable to the
Company and the Bank and their compliance with such requirements see Note 15.
Regulatory Capital Requirements.

Payment of Dividends

Under Federal law, if, in the opinion of the FDIC, the Bank is engaged in or is
about to engage in an unsafe or unsound practice (which, depending on the
financial condition of the depository institution, could include the payment of
dividends), the FDIC may require, after notice and hearing, that the Bank cease
and desist from such practice. The federal banking agencies have indicated
that paying dividends that deplete a depository institutions capital base to
an inadequate level would be an unsafe and unsound banking practice. Under the
Prompt Corrective Action regulations adopted by the federal banking agencies in
December 1992, the Bank may not pay any dividend to the Company if such payment
would cause it to become undercapitalized. At December 31, 2001, the Banks
regulatory capital ratios exceeded the minimum requirements for a
well-capitalized bank.

As a Florida-chartered commercial bank, the Bank is subject to the laws of
Florida as to the payment of dividends. Under the Florida Financial
Institutions Code, the prior approval of the Department is required if the
total of all dividends declared by a bank in any calendar year will exceed the
sum of a banks net retained profits (net income less any dividends paid) for
that year and its retained net profits for the preceding two years. As of
January 1, 2002, the Bank had a net retained profit deficit for dividend
payment purposes of $9.5 million and is restricted from making dividend
payments to the parent company until that deficit is cured. At December 31,
2001, the Company had unrestricted cash available for debt service payments of
$6.9 million. The Companys annual debt service payments total $4.7 million.

Federal Reserve System

The Federal Reserve system is used primarily for the settlement of funds
between member banks. The Federal Reserve regulations require banks to
maintain noninterest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The Federal Reserve Board
regulations, effective November 19, 2001, generally require that reserves be
maintained against aggregate transaction accounts as follows: (1) for accounts
aggregating $41.3 million or less the reserve requirement is 3.0%; and (2) for
accounts greater than $41.3 million, the reserve requirement is 10.0% against
that portion of total transaction accounts in excess of $41.3 million. The
first $5.7 million of otherwise reservable balances (subject to adjustments by
the Federal Reserve) are exempted from the reserve requirements. The balances
maintained to meet the reserve requirements imposed by the Federal Reserve may
be used to satisfy liquidity requirements imposed by the Department. Because
required reserves must be maintained in the form of either vault cash, a
noninterest bearing account at a Federal Reserve Bank or a pass-through account
as defined by the Federal Reserve, the effect of this reserve requirement is to
reduce the Banks interest earning assets. FHLB system members, including the
Bank, also are authorized to borrow from the Federal Reserve discount window,
but Federal Reserve regulations require institutions to exhaust all FHLB
sources before borrowing from a Federal Reserve Bank.

Federal Home Loan Bank System

The Bank is a member of the Federal Home Loan Bank (FHLB) system. The FHLB
system, which consists of 12 regional Federal Home Loan Banks is governed and
regulated by the Federal Housing Finance Board (the FHFB). The FHLB provides
a central credit facility for member institutions. As a member of the FHLB, we
are required to acquire and hold shares of capital stock in the FHLB in an
amount at least equal to the greater of one percent of the aggregate principal
amount of our unpaid residential mortgage
loans, home purchase contracts and
similar obligations as of the close of each calendar year, or five percent of
our borrowings from the FHLB (including advances and letters of credit issued
by the FHLB on our behalf).

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The FHLB makes advances to members in accordance with policies and procedures
periodically established by the FHFB and the board of directors of the FHLB.
Currently, outstanding advances from the FHLB are required to be secured by a
members shares of stock in the FHLB and by certain types of mortgages and
other assets. Interest rates charged for advances vary depending on maturity,
the cost of funds to the FHLB and the purpose of the borrowing. As of December
31, 2001, we had $52.3 million of outstanding advances from the FHLB with an
unused credit line totaling $396.5 million.

Liquidity

Under Florida banking regulations, we are required to maintain a daily
liquidity position equal to at least 15% of our total transaction accounts and
eight percent of our total non-transaction accounts, less those deposits of
public funds for which security has been pledged as provided by law. We may
satisfy our liquidity requirements with cash on hand (including cash items in
process of collection), deposits held with the Federal Reserve, demand deposits
due from correspondent banks, federal funds sold, interest bearing deposits
maturing in 31 days or less and the market value of certain unencumbered,
rated, investment-grade securities and securities issued by Florida or any
county, municipality of other political subdivision within the state. The
Department and FDIC review our liquidity position as part of their
examinations. If we fail to comply with the liquidity requirements, we
generally may not further diminish liquidity either by making any new loans
(other than by discounting or purchasing bills of exchange payable at sight) or
by paying dividends. At December 31, 2001, using applicable Florida
regulations, the Banks liquidity position was $869.3 million compared to a
minimum position of $183.2 million.

Monetary Policy and Economic Controls

The banking business is affected not only by general economic conditions, but
also by the monetary policies of the Federal Reserve. Changes in the discount
rate on member bank borrowing, availability of borrowing at the discount
window, open market operations, the imposition of changes in reserve
requirements against bank deposits and the imposition of and changes in reserve
requirements against certain borrowings by banks and their affiliates are some
of the instruments of monetary policy available to the Federal Reserve. The
monetary policies have had a significant effect on the operating results of
commercial banks and are expected to continue to do so in the future. The
monetary policies of the Federal Reserve are influenced by various factors,
including inflation, unemployment, short and long-term changes in the
international trade balance and in the fiscal policies of the United States
Government. Future monetary policies and the effect of such policies on the
future business and earnings of the Bank cannot be predicted.

Effects of Inflation

As a financial institution, the majority of our assets are monetary in nature
and, therefore, differ greatly from those of more industrial or commercial
companies that have significant investments in fixed assets. The effects of
inflation on the financial condition and results of operations, therefore, are
less significant than the effects of changes in interest rates. The most
significant effect of inflation is on noninterest expense, which tends to rise
during periods of general inflation.

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Changes in Accounting Standards

The Financial Accounting Standards Board (FASB) regularly issues proposals
and guidelines on the accounting practices of commercial enterprises in general
and financial institutions in particular. For additional information on the
effect of any such issues on our financial condition and results of operation,
see the Notes to Consolidated Financial Statements.

Item 2.      PROPERTIES

Currently, the Bank operates 71 full-service branch banking offices located in
17 Florida counties, of which 35 are leased and 36 are owned. Our branches
have square footage ranging from 43,000 square feet to 1,230 square feet with
lease terms ranging from the year 2002 to the year 2022. Our executive offices
are located at 111 Second Avenue N.E., Suite 300, St. Petersburg, Florida,
33701, where we leased approximately 45,000 square feet of space under a lease
that expires in the year 2004. Our operations and servicing functions are
conducted from a 77,000 square foot owned building located at 1400 66th Street
N., St. Petersburg, FL 33710. We have various options to renew leases at most
of our branch locations. We also have seven facilities that are not used for
banking purposes, one of which is owned and six of which are leased. For
further information regarding our lease obligations, see the Notes to
Consolidated Financial Statements.

Item 3.      LEGAL PROCEEDINGS

We are subject to various legal proceedings in the ordinary course of business.
Based on information presently available, we do not believe that the ultimate
outcome in such proceedings, in the aggregate, would have a material adverse
effect on our financial position or results of operations.

Item 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Information required by this item is incorporated by reference from our Proxy
Statement for the 2002 Annual Meeting.

PART II

Item 5.      MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Trading Market

Our common stock is currently traded on the NASDAQ National Market under the
symbol REPB. The table below shows, the high, low and closing bid
information for the common stock as regularly quoted on the NASDAQ National
Market for the periods indicated.

|                                 |  |      |       |     |  |         |       |  |  |  |       | 
|-------------------------------- |  | ---- | ----- | --- |  | ------- | ----- |  |  |  | ----- | 
|                                 |  | High |       | Low |  | Closing
|                                 |  |      |       |     |  |        
|Quarter ended March 31, 2000     |  |      | 15.88 |     |  |         | 10.63 |  |  |  | 12.63 | 
|Quarter ended June 30, 2000      |  |      | 13.50 |     |  |         | 9.47  |  |  |  | 12.00 | 
|Quarter ended September 30, 2000 |  |      | 12.13 |     |  |         | 9.38  |  |  |  | 9.63  | 
|Quarter ended December 31, 2000  |  |      | 9.84  |     |  |         | 8.63  |  |  |  | 9.25  | 
|Quarter ended March 31, 2001     |  |      | 13.75 |     |  |         | 9.50  |  |  |  | 12.00 | 
|Quarter ended June 30, 2001      |  |      | 16.88 |     |  |         | 11.75 |  |  |  | 16.88 | 
|Quarter ended September 30, 2001 |  |      | 18.90 |     |  |         | 15.67 |  |  |  | 16.97 | 
|Quarter ended December 31, 2001  |  |      | 17.00 |     |  |         | 11.78 |  |  |  | 13.00 | 

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These over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, markdown, or commission and may not necessarily reflect actual
transactions.

Stockholders and Dividends

As of December 31, 2001, there were approximately 2,564 beneficial owners of
our common stock. To date, the Company has not paid dividends on its common
stock. Quarterly dividends on the 75,000 shares of our noncumulative perpetual
preferred convertible stock totaling $.88 per share were paid in 2000 and 2001.
In the second quarter of 2001, the holders of the Companys perpetual preferred
stock converted their holdings into the Companys common stock (See Note 13,
Stockholders Equity).

Item 6.      SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION

The following selected consolidated financial and other information as of and
for each of the years ended December 31, 1997 through 2001, were derived from
the audited consolidated financial statements.

The following information should be read in conjunction with Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations and the consolidated financial statements, related notes and other
financial information presented elsewhere.

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REPUBLIC BANCSHARES, INC.
SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION
($ in thousands, except share data)

|                                                      |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |       | 
|----------------------------------------------------- | --------------------- | - | ------------------------ | ----- | ---- | - | ---------- | ----- | ---- | - | ---------- | ----- |  | - | --------- | ----- |  | - | --------- | ----- | 
|                                                      |                       |   | Years Ended December 31,
|                                                      |                       |   |                         
|                                                      |                       |   | 2001                     |       | 2000 |   | 1999       |       | 1998 |   | 1997      
|                                                      |                       |   |                          |       |      |   |            |       |      |   |           
|RESULTS OF OPERATIONS:                                |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Interest income                                       |                       | $ | 165,348                  |       |      | $ | 197,200    |       |      | $ | 190,763    |       |  | $ | 172,793   |       |  | $ | 117,834   |      
|Interest expense                                      |                       |   | 96,786                   |       |      |   | 107,477    |       |      |   | 98,380     |       |  |   | 89,609    |       |  |   | 60,742    |      
|                                                      |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Net interest income                                   |                       |   | 68,562                   |       |      |   | 89,723     |       |      |   | 92,383     |       |  |   | 83,184    |       |  |   | 57,092    |      
|Loan loss provision                                   |                       |   | 16,150                   |       |      |   | 20,700     |       |      |   | 9,923      |       |  |   | 14,261    |       |  |   | 3,247     |      
|                                                      |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Net interest income after loan loss provision         |                       |   | 52,412                   |       |      |   | 69,023     |       |      |   | 82,460     |       |  |   | 68,923    |       |  |   | 53,845    |      
|Noninterest income                                    |                       |   | 23,029                   |       |      |   | 7,311      |       |      |   | 25,832     |       |  |   | 56,157    |       |  |   | 29,451    |      
|Operating expenses                                    |                       |   | 74,494                   |       |      |   | 75,525     |       |      |   | 84,430     |       |  |   | 129,017   |       |  |   | 65,420    |      
|Other noninterest expense                             |                       |   | 4,471                    |       |      |   | 4,505      |       |      |   | 3,683      |       |  |   | 13,399    |       |  |   | 2,549     |      
|                                                      |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Income (loss) before income taxes
& minority interest |                       |   | (3,524                   | )     |      |   | (3,696     | )     |      |   | 20,179     |       |  |   | (17,336   | )     |  |   | 15,327    |      
|Income tax expense (benefit)                          |                       |   | (1,310                   | )     |      |   | (787       | )     |      |   | 7,800      |       |  |   | (6,602    | )     |  |   | 6,165     |      
|Minority interest from subsidiary trust, net of tax   |                       |   | (1,684                   | )     |      |   | (1,689     | )     |      |   | (1,687     | )     |  |   | (1,687    | )     |  |   | (1,375    | )    
|                                                      |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Net income (loss)                                     |                       | $ | (3,898                   | )     |      | $ | (4,598     | )     |      | $ | 10,692     |       |  | $ | (12,421   | )     |  | $ | 7,787     |      
|                                                      |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Cash net income (loss)(1)                             |                       |   | (1,566                   | )     |      |   | (2,011     |       |      |   | 13,312     |       |  |   | (11,037   | )     |  |   | 8,138     |      
|GAAP earnings (loss) per share  diluted              |                       |   | (0.37                    | )     |      |   | (0.46      | )     |      |   | 0.95       |       |  |   | (1.34     | )     |  |   | 1.01      |      
|Cash earnings (loss) per share  diluted(1)           |                       |   | (0.14                    | )     |      |   | (0.19      | )     |      |   | 1.18       |       |  |   | (1.19     | )     |  |   | 1.03      |      
|Weighted average shares outstanding  diluted         |                       |   | 10,955,118               |       |      |   | 10,555,941 |       |      |   | 11,299,902 |       |  |   | 9,286,813 |       |  |   | 7,920,926 |      
|BALANCE SHEET DATA (at period-end):                   |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Total assets                                          |                       | $ | 2,459,344                |       |      | $ | 2,440,604  |       |      | $ | 2,566,026  |       |  | $ | 2,505,117 |       |  | $ | 1,678,831 |      
|Securities                                            |                       |   | 834,066                  |       |      |   | 406,957    |       |      |   | 453,008    |       |  |   | 129,783   |       |  |   | 115,769   |      
|Loans                                                 |                       |   | 1,421,011                |       |      |   | 1,711,342  |       |      |   | 1,889,892  |       |  |   | 2,080,465 |       |  |   | 1,403,126 |      
|Nonperforming assets                                  |                       |   | 63,280                   |       |      |   | 56,973     |       |      |   | 31,218     |       |  |   | 42,785    |       |  |   | 38,791    |      
|Allowance for loan losses                             |                       |   | 31,997                   |       |      |   | 33,462     |       |      |   | 28,177     |       |  |   | 28,077    |       |  |   | 22,023    |      
|Deposits                                              |                       |   | 2,130,344                |       |      |   | 2,157,817  |       |      |   | 2,293,209  |       |  |   | 2,187,412 |       |  |   | 1,471,679 |      
|Stockholders equity                                  |                       |   | 172,037                  |       |      |   | 172,341    |       |      |   | 170,245    |       |  |   | 163,597   |       |  |   | 102,530   |      
|Book value per share (dollars)                        |                       |   | 15.18                    |       |      |   | 15.24      |       |      |   | 15.06      |       |  |   | 14.77     |       |  |   | 12.28     |      
|Tangible book value per share (dollars)               |                       |   | 13.92                    |       |      |   | 13.54      |       |      |   | 13.12      |       |  |   | 12.55     |       |  |   | 11.71     |      
|SELECTED OPERATING RATIOS:                            |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Return on average assets                              |                       |   | (0.16                    | )%    |      |   | (0.18      | )%    |      |   | 0.42       | %     |  |   | (0.58     | )%    |  |   | 0.53      | %    
|Return on average equity                              |                       |   | (2.20                    | )     |      |   | (2.65      | )     |      |   | 6.39       |       |  |   | (7.91     | )     |  |   | 9.46      |      
|Net interest margin                                   |                       |   | 2.99                     |       |      |   | 3.76       |       |      |   | 3.92       |       |  |   | 4.12      |       |  |   | 4.08      |      
|Operating efficiency ratio                            |                       |   | 81.33                    |       |      |   | 77.83      |       |      |   | 71.42      |       |  |   | 70.12     |       |  |   | 72.35     |      
|Loan loss allowance to portfolio loans                |                       |   | 2.25                     |       |      |   | 1.96       |       |      |   | 1.49       |       |  |   | 1.48      |       |  |   | 1.81      |      
|Loan loss allowance to nonperforming loans            |                       |   | 69.24                    |       |      |   | 66.12      |       |      |   | 112.04     |       |  |   | 76.25     |       |  |   | 75.21     |      
|CAPITAL RATIOS:                                       |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Equity to assets                                      |                       |   | 6.99                     |       |      |   | 7.06       |       |      |   | 6.63       |       |  |   | 6.53      |       |  |   | 6.11      |      
|Equity & minority interest to assets                  |                       |   | 8.16                     |       |      |   | 8.24       |       |      |   | 7.75       |       |  |   | 7.68      |       |  |   | 7.82      |      
|Regulatory ratios  Bank:                             |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|                                                      | Tier 1 (leverage)     |   |                          | 7.94  |      |   |            | 7.18  |      |   |            | 6.78  |  |   |           | 6.66  |  |   |           | 7.07  | 
|                                                      | Tier 1 to risk-assets |   |                          | 13.11 |      |   |            | 11.69 |      |   |            | 10.33 |  |   |           | 9.27  |  |   |           | 10.25 | 
|                                                      | Total capital         |   |                          | 14.39 |      |   |            | 12.94 |      |   |            | 11.63 |  |   |           | 10.56 |  |   |           | 11.52 | 
|Regulatory ratios  Company
Tier 1 (leverage)         |                       |   | 7.21                     |       |      |   | 6.30       |       |      |   | 6.02       |       |  |   | 5.49      |       |  |   | 6.94      |      
|                                                      | Tier 1 to risk-assets |   |                          | 11.90 |      |   |            | 10.27 |      |   |            | 9.17  |  |   |           | 7.72  |  |   |           | 10.05 | 
|                                                      | Total capital         |   |                          | 15.17 |      |   |            | 12.69 |      |   |            | 11.53 |  |   |           | 9.01  |  |   |           | 11.66 | 
|OTHER DATA (at period-end):                           |                       |   |                          |       |      |   |            |       |      |   |            |       |  |   |           |       |  |   |           |      
|Number of branch banking offices                      |                       |   | 71                       |       |      |   | 80         |       |      |   | 81         |       |  |   | 62        |       |  |   | 48        |      
|Number of full-time equivalent employees              |                       |   | 896                      |       |      |   | 995        |       |      |   | 1,000      |       |  |   | 1,733     |       |  |   | 1,165     |      



|(1) |  | Cash net income (loss) and cash earnings (loss) per share is computed by
adding to GAAP net income (loss) the amortization of goodwill and
amortization of premium on deposits, net of the tax effect.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|Item 7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our balance sheets and statements of
operations should be read in conjunction with Item 6. Selected Consolidated
Financial and Other Information, the consolidated financial statements and the
related notes included elsewhere therein.

Years Ended December 31, 2001 and 2000

Comparison of Balance Sheets at December 31, 2001 and 2000

Overview
Our total assets were $2.5 billion at December 31, 2001, and $2.4 billion at
December 31, 2000, an increase of $18.7 million or 0.76%. During 2001, the
Company undertook a strategy to sell those branch offices in areas outside its
desired market area, which reduced asset growth. Excluding those branch sales
transactions, total assets would have increased by $132.9 million.

Securities
During 2001, loan repayments, primarily from discontinued loan products, were
substantial and the additional liquidity from loan runoff was invested in
mortgage securities. At December 31, 2001, securities were $834.1 million,
compared to $407.0 million at December 31, 2000, an increase of $427.1 million
or 104.95%. At December 31, 2001, $792.7 million of securities were classified
as available for sale, $21.5 million were classified as held to maturity and
$19.9 million were trading assets, all of which were mortgage-related
securities. Included in the trading asset category were several investments
acquired in prior years, including: (1) a $10.9 million subordinate tranche
purchased from a securitization of High LTV Loans in June 1998 which has since
been sold (see Item 1  Business-Subsequent Events); (2) $5.8 million in
overcollateralization and residual interests in cash flows from a $60.0 million
securitization in December 1997 and a $240.0 million securitization of High LTV
Loans in June 1998; and (3) $3.2 million representing excess spread on mortgage
servicing rights.

The market values assigned to the MBS classified as available for sale were
derived using market quotations at December 31, 2001. Trading assets are
evaluated at least quarterly with any valuation adjustment reflected as a
trading gain or loss in the statement of operations. Under applicable
accounting rules, use of quoted market values is the preferred method for
valuing trading assets. However, where the market for those assets is illiquid
and price quotations are not readily available, other methods are permitted,
including techniques utilizing the present value of expected cash flows. We
have used present value techniques to value our trading assets.

In the fourth quarter of 2001, we obtained current credit data on the loans
underlying the trading assets related to High LTV Loan securitizations. Based
on that analysis, which indicated some deterioration in the quality of the
loans underlying the residual interest when compared to similar prior analysis,
and on the historical loss history of those loans, an adjustment was made to
the expected cumulative losses on each securitization (expressed as total
lifetime losses as a percent of the original balance of loans in the
securitization). The cumulative loss factor for the securitization completed
in December 1997 was increased from an original estimate of 9.57% to a current
estimate of 19.37%. The cumulative loss factor for the securitization
completed in June 1998 was increased from an original estimate of 10.68% to a
current estimate of 18.36%. As a result of that increase in expected future
losses, a trading loss of $4.0 million was recorded for 2001. We believe these
valuations are a reasonable approximation of the fair market value of the
mortgage related securities classified as trading assets; however, there is no
assurance that we could realize these values if these assets were sold in the
current illiquid market for High LTV-related assets.

23



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##### 



Loans
Total loans were $1.4 billion at December 31, 2001, compared to $1.7 billion at
December 31, 2000, a decrease of $290.3 million, or 17.0%. The decrease was
due to payoffs of discontinued loan products and to the overall rapid decline
in interest rates, which caused loan prepayments to rise. This decline in the
loan portfolio included: (1) $57.2 million from payoffs of out-of-state loans;
(2) a decrease of $44.9 million from loans that were sold in the branch sales;
(3) a $39.1 million decrease in warehouse lines of credit; (4) an $81.3 million
decline from securitizing residential loans into mortgage securities; and (5) a
$67.7 million net decrease in loans within the state of Florida.

Allowance for Loan Losses
The allowance for loan losses amounted to $32.0 million (2.25% of portfolio
loans) at December 31, 2001, compared with $33.5 million (1.96% of portfolio
loans) at December 31, 2000. At December 31, 2001, the ratio of the allowance
for loan losses to nonperforming loans was 69.24% compared to 66.12% at the end
of 2000. During 2001 we recorded a $16.2 million provision for loan losses.
Other activity included $17.0 million of loan charge-offs (net of recoveries)
and $613,000 reallocated from the allowance to loan discount. Net chargeoffs
for the year included losses of $2.5 million on High LTV Loans and $6.5 million
from warehouse lines of credit deemed uncollectible, which included a $5.9
million charge on a warehouse line to a now-defunct warehouse lender. We also
charged off $808,000 of residential loans and $2.1 million of home equity
loans; both comprised primarily of loans originated in the 1997-98 timeframe.

Nonperforming Assets
Nonperforming assets amounted to $63.3 million or 2.57% of total assets at
December 31, 2001, compared with $57.0 million or 2.33% of total assets at
December 31, 2000. Nonperforming loans totaled $46.2 million (or 3.25% of total
loans) at December 31, 2001, a decrease of $4.4 million from December 31, 2000.
Nonperforming one-to-four family residential mortgage loans decreased by $2.3
million, while nonperforming warehouse lines of credit and home equity loans
decreased $3.0 million. ORE increased $11.2 million from $5.7 million at
December 31, 2000, to $16.9 million at December 31, 2001.

Our nonperforming assets at year-end 2001 included a hotel in Wilmington,
Delaware and a residential development in Naples, Florida, which we took
ownership of in 2001, that accounted for $26.2 million or 41.5% of our total
nonperforming assets. Residential loans in various stages of foreclosure
account for an additional 22.4% of our total nonperforming assets.

Deposits
Total deposits were $2.1 billion at December 31, 2001, compared to $2.2 billion
at December 31, 2000, a decrease of $27.5 million or 1.3%. The decline in
deposits was largely due to the branch sales completed in 2001. Excluding
those branch sales, total deposits would have increased by $89.8 million.
Managements business plan includes, as one of the principal strategies, a
reduction in the dependence on time deposits as a source of funds. To this
end, the mix of total deposits during 2001 improved with time deposits reduced
to 56.6% of total deposits at year-end 2001, compared with 62.5% at the end of
2000. Transaction accounts, including checking and money market accounts, were
34.5% of total deposits and savings deposits were 8.9% of the total at year-end
2001 compared to 28.2% and 9.3%, respectively, at the end of 2000. Overall,
since year-end 2000, certificates of deposit declined $142.6 million, of which
$69.9 million resulted from the branch sales. Checking accounts (including
non-retail deposits such as official checks) increased $27.1 million, while
savings deposits decreased by $10.3 million.

24



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##### 



Stockholders Equity
Stockholders equity was $172.0 million at December 31, 2001, or 7.00% of total
assets, compared to $172.3 million or 7.06% of total assets at December 31,
2000. At December 31, 2001, the Banks tier 1 (leverage) capital ratio was
7.94%, its tier 1 risk-based capital ratio was 13.11%, and its total risk-based
capital ratio was 14.39%, all in excess of FDIC guidelines for an institution
to be considered a well-capitalized bank. The same ratios for the Company
were 7.21%, 11.90% and 15.17%.

Comparison of Results of Operations for the Year Ended December 31, 2001 and
2000

OverviewDuring 2001, the Company recorded a $4.0 million writedown to its interest-only
residual investments and a $5.9 million chargeoff of a warehouse line of credit
to Greatstone, a defunct mortgage lender. Both items were major factors
leading to a $3.9 million or $0.37 per share net loss for the full year of
2001. On a cash basis, the 2001 net loss was $1.6 million or $0.14 per share.
Excluding special items from 2001 cash results (which include the above two
charges and $4.5 million in gains on sale of branches), the Company would have
recorded cash basis net income for 2001 of $1.8 million or $0.17 per share.

Analysis of Net Interest Income (see table on page 26)
Net interest margin, the difference between the yield on earning assets and the
cost of funds, including noninterest-bearing sources, was 2.99% for 2001
compared to 3.76% for 2000. On a quarterly basis throughout 2001, net interest
margin fell to a yearly low of 2.91% in the third quarter of 2001 and then
recovered to 3.08% in the fourth quarter. The changes in net interest margin
throughout 2001 reflect the overall rapid decline in market interest rates that
has taken place during the year. The repricing structure of the Companys
earning assets and interest bearing liabilities is asset sensitive, meaning
that asset yield declines faster than funds costs during the first three to
four months following a rate reduction. After that three to four month period
passes, declining funds costs catch up with and then overtake the decline in
asset yield. The series of consecutive rate cuts during 2001 lengthened the
time needed to stabilize the net interest margin. During the fourth quarter of
2001 that stabilization took place with funds costs declining by 68 basis
points while asset yield declined by a lesser amount, 41 basis points. Also
contributing to the decline in net interest margin during the first three
quarters of 2001 was a change in asset mix with a higher percentage of earning
assets invested in mortgage securities and a reduced amount of loans
outstanding. The Companys plan to improve the quality of the loan portfolio,
which included the sale of High LTV Loans, exit from the mortgage warehouse
lending line of business and payoffs of out-of-state loans, all were major
contributors to a decline in average loans outstanding.

25



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##### 



The following table summarizes the average yields earned on interest earning
assets and the average rates paid on interest bearing liabilities for the years
ended December 31, 2001 and 2000 ($ in thousands):

|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |      |  
|--------------------------------------- | -------------------------------------- |  | ------------------------ | --------- | -------- | - | ------ | ------- | ------- |  | -------- | ----- | ------- |  | - | --------- |  | - | ------ | ------- |  |  | ---- | ---- | -
|                                        |                                        |  | Years Ended December 31,
|                                        |                                        |  |                         
|                                        |                                        |  | 2001                     |           | 2000    
|                                        |                                        |  |                          |           |         
|                                        |                                        |  | Average                  |           |          |   |        |         |         |  |          |       | Average |  |   |           |  |   |        |         | 
|                                        |                                        |  | Balance                  |           | Interest |   | Rate   |         | Balance |  | Interest |       | Rate   
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |        
|Summary of Average Rates                |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|Interest earning assets:                |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|                                        | Loans                                  |  | $                        | 1,554,848 |          |   | $      | 124,015 |         |  |          | 7.93  | %       |  | $ | 1,840,150 |  |   | $      | 162,776 |  |  |      | 8.85 | %
|                                        | Securities                             |  |                          | 577,161   |          |   |        | 34,712  |         |  |          | 6.01  |         |  |   | 439,658   |  |   |        | 27,757  |  |  |      | 6.31 |  
|                                        | FHLB stock                             |  |                          | 13,336    |          |   |        | 901     |         |  |          | 6.75  |         |  |   | 13,816    |  |   |        | 1,079   |  |  |      | 7.81 |  
|                                        | Federal funds sold & deposits in banks |  |                          | 125,657   |          |   |        | 5,720   |         |  |          | 4.50  |         |  |   | 87,237    |  |   |        | 5,476   |  |  |      | 6.27 |  
|                                        | Commercial paper                       |  |                          |          |          |   |        |        |         |  |          | 0.00  |         |  |   | 1,877     |  |   |        | 112     |  |  |      | 5.87 |  
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|                                        | Total interest earning assets          |  |                          | 2,271,002 |          |   |        | 165,348 |         |  |          | 7.25  |         |  |   | 2,382,738 |  |   |        | 197,200 |  |  |      | 8.27 |  
|                                        | Noninterest earning assets             |  |                          | 142,211   |          |   |        |         |         |  |          |       |         |  |   | 145,625   |  |   |        |         |  |  |      |      |  
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|                                        | Total assets                           |  | $                        | 2,413,213 |          |   |        |         |         |  |          |       |         |  | $ | 2,528,363 |  |   |        |         |  |  |      |      |  
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|Interest bearing liabilities:           |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|                                        | Interest checking                      |  | $                        | 169,699   |          |   | $      | 846     |         |  |          | 0.50  | %       |  | $ | 180,171   |  |   | $      | 1,396   |  |  |      | 0.77 | %
|                                        | Money market                           |  |                          | 346,902   |          |   |        | 12,152  |         |  |          | 3.50  |         |  |   | 280,593   |  |   |        | 12,252  |  |  |      | 4.37 |  
|                                        | Savings                                |  |                          | 185,812   |          |   |        | 5,519   |         |  |          | 2.97  |         |  |   | 240,026   |  |   |        | 8,320   |  |  |      | 3.46 |  
|                                        | Time deposits                          |  |                          | 1,277,733 |          |   |        | 74,279  |         |  |          | 5.81  |         |  |   | 1,409,303 |  |   |        | 80,926  |  |  |      | 5.74 |  
|                                        | FHLB advances                          |  |                          | 13,260    |          |   |        | 426     |         |  |          | 3.21  |         |  |   | 1,188     |  |   |        | 81      |  |  |      | 6.85 |  
|                                        | Subordinated debt                      |  |                          | 24,110    |          |   |        | 1,761   |         |  |          | 7.30  |         |  |   | 14,690    |  |   |        | 1,062   |  |  |      | 7.23 |  
|                                        | Other holding company debt             |  |                          | 3,805     |          |   |        | 454     |         |  |          | 11.89 |         |  |   | 11,660    |  |   |        | 1,135   |  |  |      | 9.72 |  
|                                        | Other borrowings                       |  |                          | 44,202    |          |   |        | 1,349   |         |  |          | 3.05  |         |  |   | 42,066    |  |   |        | 2,305   |  |  |      | 5.48 |  
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|                                        | Total interest bearing liabilities     |  |                          | 2,065,523 |          |   |        | 96,786  |         |  |          | 4.69  |         |  |   | 2,179,697 |  |   |        | 107,477 |  |  |      | 4.93 |  
|                                        | Noninterest bearing liabilities        |  |                          | 176,750   |          |   |        |         |         |  |          |       |         |  |   | 176,479   |  |   |        |         |  |  |      |      |  
|                                        | Stockholders equity                   |  |                          | 170,940   |          |   |        |         |         |  |          |       |         |  |   | 172,187   |  |   |        |         |  |  |      |      |  
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|                                        | Total liabilities and equity           |  | $                        | 2,413,213 |          |   |        |        |         |  |          |       |         |  | $ | 2,528,363 |  |   |        |        |  |  |      |      |  
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|Net interest income/net interest spread |                                        |  |                          |           |          | $ | 68,562 |         |         |  | 2.56     | %     |         |  |   |           |  | $ | 89,723 |         |  |  | 3.34 | %   
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     
|Net interest margin                     |                                        |  |                          |           |          |   |        |         |         |  | 2.99     | %     |         |  |   |           |  |   |        |         |  |  | 3.76 | %   
|                                        |                                        |  |                          |           |          |   |        |         |         |  |          |       |         |  |   |           |  |   |        |         |  |  |      |     

|                               |                                        |        |                             |         |   |       |         |         |   |   |         |         |  
|------------------------------ | -------------------------------------- | ------ | --------------------------- | ------- | - | ----- | ------- | ------- | - | - | ------- | ------- | -
|                               |                                        |        | Increase (Decrease) Due to: |         |   |       |        
|                               |                                        |        |                             |         |   |       |        
|Changes in Net Interest Income |                                        | Volume |                             | Rate    |   | Total
|                               |                                        |        |                             |         |   |      
|Interest earning assets:       |                                        |        |                             |         |   |       |         |         |   |   |         |        
|                               | Loans                                  |        | $                           | (27,365 | ) |       | $       | (11,396 | ) |   | $       | (38,761 | )
|                               | Securities                             |        |                             | 8,105   |   |       |         | (1,150  | ) |   |         | 6,955   |  
|                               | FHLB stock                             |        |                             | (38     | ) |       |         | (140    | ) |   |         | (178    | )
|                               | Federal funds sold & deposits in banks |        |                             | 1,994   |   |       |         | (1,750  | ) |   |         | 244     |  
|                               | Commercial paper                       |        |                             | (56     | ) |       |         | (56     | ) |   |         | (112    | )
|                               |                                        |        |                             |         |   |       |         |         |   |   |         |        
|                               | Change in interest income              |        |                             | (17,360 | ) |       |         | (14,492 | ) |   |         | (31,852 | )
|                               | Interest bearing liabilities:          |        |                             |         |   |       |         |         |   |   |         |         |  
|                               | Interest checking                      |        |                             | (81     | ) |       |         | (469    | ) |   |         | (550    | )
|                               | Money market                           |        |                             | 2,568   |   |       |         | (2,668  | ) |   |         | (100    | )
|                               | Savings                                |        |                             | (1,908  | ) |       |         | (893    | ) |   |         | (2,801  | )
|                               | Time deposits                          |        |                             | (7,397  | ) |       |         | 750     |   |   |         | (6,647  | )
|                               | FHLB advances                          |        |                             | 406     |   |       |         | (61     | ) |   |         | 345     |  
|                               | Subordinated debt                      |        |                             | 689     |   |       |         | 10      |   |   |         | 699     |  
|                               | Other holding company debt             |        |                             | (918    | ) |       |         | 237     |   |   |         | (681    | )
|                               | Other borrowings                       |        |                             | 106     |   |       |         | (1,062  | ) |   |         | (956    | )
|                               |                                        |        |                             |         |   |       |         |         |   |   |         |        
|                               | Change in interest expense             |        |                             | (6,535  | ) |       |         | (4,156  | ) |   |         | (10,691 | )
|                               |                                        |        |                             |         |   |       |         |         |   |   |         |        
|Change in net interest income  |                                        | $      | (10,825                     | )       |   | $     | (10,336 | )       |   | $ | (21,161 | )      
|                               |                                        |        |                             |         |   |       |         |         |   |   |         |        

26



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##### 



Noninterest Income
Noninterest income for the year ended December 31, 2001, was $23.0 million
compared with $7.3 million for the same period in 2000, an increase of $15.7
million. Gains on sale of new loan production increased by $472,000 to $1.0
million and gains on sale of investments (primarily from securitization and
sale of loans) were $5.3 million, a $5.1 million increase. Also during 2001,
noninterest income included $4.5 million of gains on sale of branch deposits, a
$1.1 million gain of the sale of High LTV Loan servicing rights and a $4.0
million trading loss or writedown on the interest-only residual investment.
For 2000, a $13.5 million writedown to the interest-only residual investment
was recorded. Loan service fee income in 2001 was reduced by the high level of
repayments to the loan servicing portfolio, which required an increased level
of amortization of servicing rights. The following table reflects the
components of noninterest income for the years ended December 31, 2001 and 2000
($ in thousands):

|                                    |  |                                  |        |      |  |            |         |   |  |          |        |  
|----------------------------------- |  | -------------------------------- | ------ | ---- |  | ---------- | ------- | - |  | -------- | ------ | -
|                                    |  | For the Years Ended December 31,
|                                    |  |                                 
|                                    |  |                                  |        |      |  |            |         |   |  | Increase
|                                    |  | 2001                             |        | 2000 |  | (Decrease)
|                                    |  |                                  |        |      |  |           
|Service charges on deposit accounts |  | $                                | 7,714  |      |  | $          | 8,128   |   |  | $        | (414   | )
|Loan service fees                   |  |                                  | 2,208  |      |  |            | 5,951   |   |  |          | (3,743 | )
|Other loan fee income               |  |                                  | 3,689  |      |  |            | 4,324   |   |  |          | (635   | )
|Gain on sale of loans, net          |  |                                  | 1,015  |      |  |            | 543     |   |  |          | 472    |  
|Gain (loss) on sale of investments  |  |                                  | 5,299  |      |  |            | 240     |   |  |          | 5,059  |  
|Trading loss on residuals           |  |                                  | (4,032 | )    |  |            | (13,492 | ) |  |          | 9,460  |  
|Gain on sale of branch deposits     |  |                                  | 4,483  |      |  |            |        |   |  |          | 4,483  |  
|Other income                        |  |                                  | 2,653  |      |  |            | 1,617   |   |  |          | 1,036  |  
|                                    |  |                                  |        |      |  |            |         |   |  |          |        |  
|Total noninterest income            |  | $                                | 23,029 |      |  | $          | 7,311   |   |  | $        | 15,718 |  
|                                    |  |                                  |        |      |  |            |         |   |  |          |        |  

Noninterest Expense
Total noninterest expenses for the year ended December 31, 2001, were $78.9
million, compared with $80.0 million for the same period in 2000, a decrease of
$1.1 million. Operating expenses for the year ended December 31, 2001,
included in the noninterest expense total, were $74.5 million, compared with
$75.5 million for the same period in 2000, a decrease of $1.0 million.

The following table reflects the components of noninterest expense for the
years ended December 31, 2001 and 2000 ($ in thousands):

|                                               |  |                                  |        |      |  |            |        |  |  |          |        |  
|---------------------------------------------- |  | -------------------------------- | ------ | ---- |  | ---------- | ------ |  |  | -------- | ------ | -
|                                               |  | For the Years Ended December 31,
|                                               |  |                                 
|                                               |  |                                  |        |      |  |            |        |  |  | Increase
|                                               |  | 2001                             |        | 2000 |  | (Decrease)
|                                               |  |                                  |        |      |  |           
|Salaries and benefits                          |  | $                                | 38,557 |      |  | $          | 37,456 |  |  | $        | 1,101  |  
|Net occupancy expense                          |  |                                  | 13,362 |      |  |            | 13,646 |  |  |          | (284   | )
|Advertising and marketing                      |  |                                  | 1,640  |      |  |            | 1,037  |  |  |          | 603    |  
|Data processing fees and services              |  |                                  | 7,387  |      |  |            | 8,279  |  |  |          | (892   | )
|Loan collection/repossession costs             |  |                                  | 2,016  |      |  |            | 1,574  |  |  |          | 442    |  
|FDIC and state assessments                     |  |                                  | 687    |      |  |            | 979    |  |  |          | (292   | )
|Telephone expense                              |  |                                  | 1,626  |      |  |            | 1,459  |  |  |          | 167    |  
|Postage and supplies                           |  |                                  | 2,665  |      |  |            | 2,879  |  |  |          | (214   | )
|Legal and professional                         |  |                                  | 1,426  |      |  |            | 1,892  |  |  |          | (466   | )
|Other operating expense                        |  |                                  | 5,128  |      |  |            | 6,324  |  |  |          | (1,196 | )
|                                               |  |                                  |        |      |  |            |        |  |  |          |        |  
|Total operating expenses                       |  |                                  | 74,494 |      |  |            | 75,525 |  |  |          | (1,031 | )
|ORE (income) expense, net of ORE income        |  |                                  | 750    |      |  |            | 422    |  |  |          | 328    |  
|Provision for losses on ORE                    |  |                                  | 272    |      |  |            | 225    |  |  |          | 47     |  
|Amortization of goodwill & premium on deposits |  |                                  | 3,449  |      |  |            | 3,858  |  |  |          | (409   | )
|                                               |  |                                  |        |      |  |            |        |  |  |          |        |  
|Total noninterest expense                      |  | $                                | 78,965 |      |  | $          | 80,030 |  |  | $        | (1,065 | )
|                                               |  |                                  |        |      |  |            |        |  |  |          |        |  

27



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##### 



Years Ended December 31, 2000 and 1999

Comparison of Balance Sheets at December 31, 2000 and 1999

Overview
Total assets were $2.4 billion at December 31, 2000, and $2.6 billion at
December 31, 1999, a decrease of $125.4 million or 4.89%. The mix of our asset
base changed substantially during the year as a result of the reinvestment into
federal funds sold of funds from repayments of loans, primarily warehouse lines
of credit and residential mortgages, and the sale of $41.5 million of High LTV
Loans.

Investment Securities
Investment securities were $407.0 million at the end of 2000 compared to $453.0
million in 1999, a decrease of $46.1 million or 10.2%, mainly as a result of
commercial paper maturing without replacement. At December 31, 2000, $348.5
million of securities were classified as available for sale; $33.8 million were
classified as held to maturity and $24.6 million of mortgage related securities
were trading assets. Included in the trading asset category were: (1) a $10.9
million subordinate tranche purchased from our securitization of High LTV Loans
in June 1988; (2) $10.2 million in overcollateralization and residual interests
in cash flows from a $60.0 million securitization in December 1997 and a $240.0
million securitization in June 1998; and (3) the excess spread on mortgage
servicing rights, which amounted to $3.5 million at year-end 2000.

Loans
Total loans were $1.7 billion at December 31, 2000, compared to $1.9 billion
for the same period in 1999, a decrease of $178.6 million or 9.4%. During the
fourth quarter of 2000, we sold $41.5 million of High LTV Loans that comprised
most of the $54.7 million reduction in that category. Other reductions to the
loan portfolio included: (1) a decline of $57.0 million in warehouse lines of
credit; (2) a decrease of $92.5 million of first lien residential mortgages;
and (3) a decline of $27.4 million of commercial real estate, multifamily,
construction and land development loans. These reductions were partially offset
by a $34.3 million increase in commercial business loans and a $29.6 million
increase in home equity loans that were originated through the Banks retail
network.

Allowance for Loan Losses
The allowance for loan losses amounted to $33.5 million (1.96% of portfolio
loans) at December 31, 2000, compared with $28.2 million (1.49% of portfolio
loans) at December 31, 1999. At December 31, 2000, the allowance for loan
losses included $32.8 million related to loans originated by us and $648,000
from discount allocations for the March 1995 purchased loans. During 2000, we
recorded a $20.7 million provision for loan losses. Other activity included
$15.0 million of loan charge-offs (net of recoveries) and $389,000 reallocated
from the allowance to loan discount. Net chargeoffs for the year included
losses of $5.6 million on High LTV Loans and $5.0 million from warehouse lines
of credit deemed uncollectible. We also charged off $1.6 million of
residential loans and $1.2 million of home equity loans; both comprised
primarily of loans originated in the 1997-98 timeframe.

Nonperforming Assets
Nonperforming assets amounted to $57.0 million or 2.33% of total assets, at
December 31, 2000, compared with $31.2 million, or 1.22% of total assets, at
December 31, 1999. The increase resulted from two loans placed in
nonperforming status in the third quarter of 2000; a $15.3 million loan secured
by a hotel in Wilmington, Delaware, and a $13.1 million residential development
loan in Naples, Florida. These two assets comprised 56.1% of total
nonperforming loans. Nonperforming

28



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##### 



loans totaled $50.6 million (or 2.96% of
total loans) at the end of 2000, an increase of $25.5 million from the prior
year-end. Nonperforming one-to-four family residential mortgage loans
decreased by $4.3 million, while nonperforming warehouse lines of credit and
home equity loans increased $2.8 million. ORE increased $397,000 from $5.3
million at December 31, 1999 to $5.7 million at December 31, 2000.

Deposits
Total deposits were $2.2 billion at December 31, 2000, compared to $2.3 billion
at the prior year-end, a decrease of $135.4 million or 5.90%. The mix of total
deposits during 2000 changed somewhat with time deposits comprising 62.5% of
the total at year-end 2000, compared with 63.1% at the end of 1999.
Transaction accounts, including checking and money market accounts were 28.2%
of total deposits and savings deposits were 9.3% at year-end 2000, compared to
23.4% and 13.5%, respectively at the end of 1999. Overall, since year-end
1999, certificates of deposit have declined $96.9 million, which reflected the
increasingly competitive market for deposit accounts. Checking accounts
(including non-retail deposits such as official checks) decreased $12.8
million, while savings deposits declined by $110.1 million. These reductions
were partially offset by a $84.4 million increase in money market deposits.

Senior Debt
As of December 31, 2000, our senior debt totaled $6.8 million and was comprised
of a loan from SunTrust Bank, N.A. (SunTrust). We restructured the terms of
the senior debt in December 2000 and made a principal reduction of $2.0 million
on January 2, 2001. The $4.8 million remainder was repaid in January 2001.

Stockholders Equity
Stockholders equity was $172.3 million at December 31, 2000, or 7.06% of total
assets, compared to $170.2 million, or 6.63% of total assets, at December 31,
1999. At December 31, 2000, the Banks tier 1 (leverage) capital ratio was
7.18%, its tier 1 risk-based capital ratio was 11.69%, and its total risk based
capital ratio was 12.94%, all in excess of minimum FDIC guidelines for an
institution to be considered a well-capitalized bank, while the same ratios
for the Company were 6.30%, 10.27% and 12.69%.

Comparison of Results of Operations for the Years Ended December 31, 2000 and
1999

Overview
A net loss of $4.6 million or $.46 per share was incurred for 2000 which
included a $13.5 million unrealized trading loss or writedown on the
interest-only residual investments from High LTV Loan securitizations. On a
cash basis, the loss for 2000 was $2.0 million or $0.19 per share. Excluding
the writedown on the residual investment, a cash basis profit of $6.4 million
or $0.61 per share would have been recorded for 2000.

Analysis of Net Interest Income (see table on page 31)
Net interest income for 2000 was $89.7 million compared to $92.4 million for
1999, a $2.7 million or 2.88% decrease. Average asset yield increased 17 basis
points from 8.10% for 1999 to 8.27% for 2000 but the $6.4 million increase in
interest income was more than offset by a $9.1 million increase in interest
expense. The average cost of interest bearing liabilities increased 40 basis
points from 4.53% to 4.93%. Net interest spread, the difference between asset
yield and cost of funds, decreased 23 basis points to 3.34%. Net interest
margin, which includes the benefit of noninterest bearing funds,
decreased from
3.92% for 1999 to 3.76% for 2000. Management estimated that the increase in
nonperforming assets in 2000 reduced net interest income by approximately $1.9
million and reduced the net interest margin by eight basis points or one-half
of the total 16 basis point decrease.

29



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##### 



Noninterest Income
Noninterest income for 2000 was $7.3 million compared with $25.8 million for
1999, a decrease of $18.5 million. There were several reasons for the
reduction, which included: (1) the $13.5 million writedown relating to our
retained interest on High LTV securitizations; (2) gains on sale of branch
deposits of $1.1 million and gains on branch relocations of $1.3 million, both
recorded in 1999; and (3) a $3.1 million
decrease in gains on sale of loans. Service fees on deposits in 2000 improved
by $1.1 million, primarily from the introduction of several new fee-generating
programs.

The following table reflects the components of noninterest income for the years
ended December 31, 2000 and 1999 ($ in thousands):

|                                    |  |                    |         |      |  |            |        |   |  |          |         |  
|----------------------------------- |  | ------------------ | ------- | ---- |  | ---------- | ------ | - |  | -------- | ------- | -
|                                    |  | For the Years     
|                                    |  | Ended December 31,
|                                    |  |                   
|                                    |  |                    |         |      |  |            |        |   |  | Increase
|                                    |  | 2000               |         | 1999 |  | (Decrease)
|                                    |  |                    |         |      |  |           
|Service charges on deposit accounts |  | $                  | 8,128   |      |  | $          | 7,037  |   |  | $        | 1,091   |  
|Loan service fees                   |  |                    | 5,951   |      |  |            | 6,584  |   |  |          | (633    | )
|Other loan fee income               |  |                    | 4,324   |      |  |            | 4,281  |   |  |          | 43      |  
|Gain on sale of loans, net          |  |                    | 543     |      |  |            | 3,602  |   |  |          | (3,059  | )
|Gain on sale of securities, net     |  |                    | 240     |      |  |            |       |   |  |          | 240     |  
|Net trading (loss)                  |  |                    | (13,492 | )    |  |            | (714   | ) |  |          | (12,778 | )
|Gain on sale of branch deposits     |  |                    |        |      |  |            | 1,098  |   |  |          | (1,098  | )
|Gain on branch relocation(s)        |  |                    |        |      |  |            | 1,289  |   |  |          | (1,289  | )
|Other income                        |  |                    | 1,617   |      |  |            | 2,655  |   |  |          | (1,038  | )
|                                    |  |                    |         |      |  |            |        |   |  |          |         |  
|Total noninterest income            |  | $                  | 7,311   |      |  | $          | 25,832 |   |  | $        | (18,521 | )
|                                    |  |                    |         |      |  |            |        |   |  |          |         |  

30



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##### 



The following table summarizes the average yields earned on interest earning
assets and the average rates paid on interest bearing liabilities for the years
ended December 31, 2000 and 1999 ($ in thousands):

|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |      |  
|--------------------------------------- | -------------------------------------- | - | --------- | --------- | -------- | - | ------ | ------- | ------- |  | -------- | ---- | ---- | - | --------- | --------- | ------- | - | ------ | ------- |  |  | ---- | ---- | -
|                                        |                                        |   | 2000      |           | 1999    
|                                        |                                        |   |           |           |         
|                                        |                                        |   | Average   |           |          |   |        |         | Average |  | Average  |      |      |   |           |           | Average
|                                        |                                        |   | Balance   |           | Interest |   | Rate   |         | Balance |  | Interest |      | Rate
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |     
|Summary of Average Rates                |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|Interest earning assets:                |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|                                        | Loans                                  |   | $         | 1,840,150 |          |   | $      | 162,776 |         |  |          | 8.85 | %    |   | $         | 1,916,399 |         |   | $      | 166,656 |  |  |      | 8.70 | %
|                                        | Securities                             |   |           | 439,658   |          |   |        | 27,757  |         |  |          | 6.31 |      |   |           | 304,146   |         |   |        | 17,139  |  |  |      | 5.64 |  
|                                        | FHLB stock                             |   |           | 13,816    |          |   |        | 1,079   |         |  |          | 7.81 |      |   |           | 13,287    |         |   |        | 991     |  |  |      | 7.46 |  
|                                        | Federal funds sold & deposits in banks |   |           | 87,237    |          |   |        | 5,476   |         |  |          | 6.27 |      |   |           | 113,122   |         |   |        | 5,630   |  |  |      | 4.91 |  
|                                        | Commercial paper                       |   |           | 1,877     |          |   |        | 112     |         |  |          | 5.87 |      |   |           | 5,808     |         |   |        | 347     |  |  |      | 5.89 |  
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|                                        | Total interest earning assets          |   |           | 2,382,738 |          |   |        | 197,200 |         |  |          | 8.27 |      |   |           | 2,352,762 |         |   |        | 190,763 |  |  |      | 8.10 |  
|                                        | Noninterest earning assets             |   |           | 145,625   |          |   |        |         |         |  |          |      |      |   |           | 165,995   |         |   |        |         |  |  |      |      |  
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|                                        | Total assets                           |   | $         | 2,528,363 |          |   |        |         |         |  |          |      |      |   | $         | 2,518,757 |         |   |        |         |  |  |      |      |  
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|Interest bearing liabilities:           |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|                                        | Interest checking                      |   | $         | 180,171   |          |   | $      | 1,396   |         |  |          | 0.77 | %    |   | $         | 177,592   |         |   | $      | 1,419   |  |  |      | 0.80 | %
|                                        | Money market                           |   |           | 280,593   |          |   |        | 12,252  |         |  |          | 4.37 |      |   |           | 200,550   |         |   |        | 7,481   |  |  |      | 3.73 |  
|                                        | Savings                                |   |           | 240,026   |          |   |        | 8,320   |         |  |          | 3.46 |      |   |           | 347,255   |         |   |        | 12,747  |  |  |      | 3.67 |  
|                                        | Time deposits                          |   |           | 1,409,303 |          |   |        | 80,926  |         |  |          | 5.74 |      |   |           | 1,371,047 |         |   |        | 72,486  |  |  |      | 5.29 |  
|                                        | FHLB advances                          |   |           | 1,188     |          |   |        | 81      |         |  |          | 6.85 |      |   |           | 3,230     |         |   |        | 164     |  |  |      | 5.06 |  
|                                        | Subordinated debt                      |   |           | 14,690    |          |   |        | 1,062   |         |  |          | 7.23 |      |   |           | 4,003     |         |   |        | 289     |  |  |      | 7.22 |  
|                                        | Other holding company debt             |   |           | 11,660    |          |   |        | 1,135   |         |  |          | 9.72 |      |   |           | 26,671    |         |   |        | 1,988   |  |  |      | 7.45 |  
|                                        | Other borrowings                       |   |           | 42,066    |          |   |        | 2,305   |         |  |          | 5.48 |      |   |           | 39,968    |         |   |        | 1,806   |  |  |      | 4.52 |  
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|                                        | Total interest bearing liabilities     |   |           | 2,179,697 |          |   |        | 107,477 |         |  |          | 4.93 |      |   |           | 2,170,316 |         |   |        | 98,380  |  |  |      | 4.53 |  
|                                        | Noninterest bearing liabilities        |   |           | 176,479   |          |   |        |         |         |  |          |      |      |   |           | 180,860   |         |   |        |         |  |  |      |      |  
|                                        | Stockholders equity                   |   |           | 172,187   |          |   |        |         |         |  |          |      |      |   |           | 167,581   |         |   |        |         |  |  |      |      |  
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|Total liabilities and equity            |                                        | $ | 2,528,363 |           |          |   |       |         |         |  |          |      |      | $ | 2,518,757 |           |         |   |       |         |  |  |      |     
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|Net interest income/net interest spread |                                        |   |           |           |          | $ | 89,723 |         |         |  | 3.34     | %    |      |   |           |           |         | $ | 92,383 |         |  |  | 3.57 | %   
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     
|Net interest margin                     |                                        |   |           |           |          |   |        |         |         |  | 3.76     | %    |      |   |           |           |         |   |        |         |  |  | 3.92 | %   
|                                        |                                        |   |           |           |          |   |        |         |         |  |          |      |      |   |           |           |         |   |        |         |  |  |      |     

|                               |                                        |        |                            |        |   |       |      |       |   |   |        |        |  
|------------------------------ | -------------------------------------- | ------ | -------------------------- | ------ | - | ----- | ---- | ----- | - | - | ------ | ------ | -
|                               |                                        |        | Increase (Decrease) Due to
|                               |                                        |        |                           
|Changes in Net Interest Income |                                        | Volume |                            | Rate   |   | Total
|                               |                                        |        |                            |        |   |      
|Interest earning assets:       |                                        |        |                            |        |   |       |      |       |   |   |        |       
|                               | Loans                                  |        | $                          | (8,046 | ) |       | $    | 4,166 |   |   | $      | (3,880 | )
|                               | Securities                             |        |                            | 10,008 |   |       |      | 610   |   |   |        | 10,618 |  
|                               | FHLB stock                             |        |                            | 42     |   |       |      | 46    |   |   |        | 88     |  
|                               | Federal funds sold & deposits in banks |        |                            | (1,431 | ) |       |      | 1,277 |   |   |        | (154   | )
|                               | Commercial paper                       |        |                            | (234   | ) |       |      | (1    | ) |   |        | (235   | )
|                               |                                        |        |                            |        |   |       |      |       |   |   |        |       
|                               | Total change in interest income        |        |                            | 339    |   |       |      | 6,098 |   |   |        | 6,437  |  
|                               | Interest bearing liabilities:          |        |                            |        |   |       |      |       |   |   |        |        |  
|                               | Interest checking                      |        |                            | 23     |   |       |      | (47   | ) |   |        | (24    | )
|                               | Money market                           |        |                            | 3,349  |   |       |      | 1,422 |   |   |        | 4,771  |  
|                               | Savings                                |        |                            | (4,193 | ) |       |      | (234  | ) |   |        | (4,427 | )
|                               | Time deposits                          |        |                            | 3,925  |   |       |      | 4,515 |   |   |        | 8,440  |  
|                               | FHLB advances                          |        |                            | (148   | ) |       |      | 66    |   |   |        | (82    | )
|                               | Subordinated debt                      |        |                            | 773    |   |       |      |      |   |   |        | 773    |  
|                               | Other holding company debt             |        |                            | (1,309 | ) |       |      | 456   |   |   |        | (853   | )
|                               | Other borrowings                       |        |                            | 121    |   |       |      | 378   |   |   |        | 499    |  
|                               |                                        |        |                            |        |   |       |      |       |   |   |        |       
|                               | Total change in interest expense       |        |                            | 2,541  |   |       |      | 6,556 |   |   |        | 9,097  |  
|                               |                                        |        |                            |        |   |       |      |       |   |   |        |       
|Change in net interest income  |                                        | $      | (2,202                     | )      |   | $     | (458 | )     |   | $ | (2,660 | )     
|                               |                                        |        |                            |        |   |       |      |       |   |   |        |       

31



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Noninterest Expense

Total noninterest expenses for 2000 were $80.0 million compared with $88.1
million for the same period in 1999, a decrease of $8.1 million. Operating
expenses for 2000, included in the noninterest expense total, were $75.5
million compared with $84.4 million, a decrease of $8.9 million. Most of the
decrease resulted from cost savings following discontinuation of mortgage
banking activities in 1999 and several cost containment programs initiated
throughout 2000. Compensation expenses were lower by $4.3 million while costs
associated with postage, supplies and other administrative expenses declined
$3.3 million.

The following table reflects the components of noninterest expense for the
years ended December 31, 2000 and 1999 ($ in thousands):

|                                               |  |                    |        |      |  |            |        |   |  |          |        |  
|---------------------------------------------- |  | ------------------ | ------ | ---- |  | ---------- | ------ | - |  | -------- | ------ | -
|                                               |  | For the Years     
|                                               |  | Ended December 31,
|                                               |  |                   
|                                               |  |                    |        |      |  |            |        |   |  | Increase
|                                               |  | 2000               |        | 1999 |  | (Decrease)
|                                               |  |                    |        |      |  |           
|Salaries and benefits                          |  | $                  | 37,456 |      |  | $          | 41,716 |   |  | $        | (4,260 | )
|Net occupancy expense                          |  |                    | 13,646 |      |  |            | 13,353 |   |  |          | 293    |  
|Advertising and marketing                      |  |                    | 1,037  |      |  |            | 1,103  |   |  |          | (66    | )
|Data processing fees and services              |  |                    | 8,279  |      |  |            | 8,922  |   |  |          | (643   | )
|Loan collection/repossession costs             |  |                    | 1,574  |      |  |            | 1,169  |   |  |          | 405    |  
|FDIC and state assessments                     |  |                    | 979    |      |  |            | 1,613  |   |  |          | (634   | )
|Telephone expense                              |  |                    | 1,459  |      |  |            | 1,760  |   |  |          | (301   | )
|Postage and supplies                           |  |                    | 2,879  |      |  |            | 4,102  |   |  |          | (1,223 | )
|Legal and professional                         |  |                    | 1,892  |      |  |            | 2,292  |   |  |          | (400   | )
|Other operating expense                        |  |                    | 6,324  |      |  |            | 8,400  |   |  |          | (2,076 | )
|                                               |  |                    |        |      |  |            |        |   |  |          |        |  
|Total operating expenses                       |  |                    | 75,525 |      |  |            | 84,430 |   |  |          | (8,905 | )
|ORE (income) expense, net of ORE income        |  |                    | 422    |      |  |            | (307   | ) |  |          | 729    |  
|Provision for losses on ORE                    |  |                    | 225    |      |  |            | 80     |   |  |          | 145    |  
|Amortization of goodwill & premium on deposits |  |                    | 3,858  |      |  |            | 3,910  |   |  |          | (52    | )
|                                               |  |                    |        |      |  |            |        |   |  |          |        |  
|Total noninterest expense                      |  | $                  | 80,030 |      |  | $          | 88,113 |   |  | $        | (8,083 | )
|                                               |  |                    |        |      |  |            |        |   |  |          |        |  

32



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##### 



Selected Quarterly Financial Data

Summarized selected unaudited quarterly financial information for the years
ended December 31, 2001 and 2000 follows ($ in thousands except share data):

|                           |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|-------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ | - |  | - | ------ | -
|                           |  | 2001   
|                           |  |        
|                           |  | First   |        | Second  |  | Third   |        | Fourth 
|                           |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                           |  |         |        |         |  |         |        |        
|Interest income            |  | $       | 45,357 |         |  | $       | 41,542 |         |  | $ | 39,967 |   |  | $ | 38,482 |  
|Interest expense           |  |         | 27,193 |         |  |         | 25,210 |         |  |   | 23,569 |   |  |   | 20,814 |  
|                           |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Net interest income        |  | $       | 18,164 |         |  | $       | 16,332 |         |  | $ | 16,398 |   |  | $ | 17,668 |  
|                           |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Net income                 |  | $       | 1,636  |         |  | $       | 1,691  |         |  | $ | (3,045 | ) |  | $ | (4,180 | )
|                           |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Earnings per share-basic   |  | $       | 0.15   |         |  | $       | 0.15   |         |  | $ | (0.27  | ) |  | $ | (0.37  | )
|                           |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Earnings per share-diluted |  | $       | 0.14   |         |  | $       | 0.15   |         |  | $ | (0.27  | ) |  | $ | (0.37  | )
|                           |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  

|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|--------------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ |  |  | - | ------ | -
|                                  |  | 2000   
|                                  |  |        
|                                  |  | First   |        | Second  |  | Third   |        | Fourth 
|                                  |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                                  |  |         |        |         |  |         |        |        
|Interest income                   |  | $       | 49,587 |         |  | $       | 50,846 |         |  | $ | 49,163 |  |  | $ | 47,604 |  
|Interest expense                  |  |         | 25,915 |         |  |         | 26,836 |         |  |   | 27,217 |  |  |   | 27,509 |  
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Net interest income               |  | $       | 23,672 |         |  | $       | 24,010 |         |  | $ | 21,946 |  |  | $ | 20,095 |  
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Net income (loss)                 |  | $       | 1,649  |         |  | $       | 1,687  |         |  | $ | 1,516  |  |  | $ | (9,450 | )
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Earnings (loss) per share-basic   |  | $       | 0.15   |         |  | $       | 0.15   |         |  | $ | 0.14   |  |  | $ | (0.90  | )
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Earnings (loss) per share-diluted |  | $       | 0.15   |         |  | $       | 0.15   |         |  | $ | 0.13   |  |  | $ | (0.90  | )
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  

Asset/Liability Management and Liquidity

Liquidity

At December 31, 2001, the Banks liquidity ratio, defined as net cash and
investments of $869.3 million divided by net deposits and short-term
liabilities of $2.3 billion, was 40.75% as compared to 26.86% at December 31,
2000. Net liquid assets were $686.2 million in excess of the amount required
by Florida banking regulations.

The Asset/Liability Management Committee (ALCO) reviews our liquidity, which
is our ability to generate sufficient cash flow to meet the funding needs of
current loan demand, deposit withdrawals and other cash demands. The primary
sources of funds consist of deposits, amortization and prepayments of loans,
sales and maturities of investments, other funds from operations and our
capital. We are a member of the FHLB and have the ability to borrow to
supplement our liquidity needs with our borrowing capacity equal to 20% of our
total assets. The Bank also maintains borrowing lines of credit using its
investment portfolio as collateral.

Those FHLB borrowings, known as advances, are secured by the Banks mortgage
loan portfolio, and the terms and rates charged for FHLB advances vary based on
an institutions loan portfolio and in response to general economic conditions.
A variety of borrowing plans is offered by the FHLB, each with its own maturity
and interest rate. The FHLB will consider various factors, including an

33



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institutions regulatory capital position, net income, quality and composition
of assets, lending policies and practices, and level of current borrowings from
all sources, in determining the amount of credit to extend to an
institution. As of December 31, 2001, the Bank had $52.3 million of
outstanding advances from the FHLB. (See Item 1. Business  Supervision and
Regulation  Federal Home Loan Bank System and Liquidity).

Asset/Liability Management

The management of interest-rate risk is one of the most significant factors
affecting the ability to achieve future earnings. One traditional measure of
the mismatch of assets maturing or re-pricing within certain periods, and
liabilities maturing or re-pricing within the same period, is the gap for
such period. Controlling the maturity or re-pricing of an institutions assets
and liabilities in order to minimize interest rate risk is commonly referred to
as gap management. Negative gap occurs when, during a specific time period,
more of an institutions liabilities are scheduled to re-price than its
assets, so that, barring other factors affecting interest income and expense,
in periods of rising interest rates the institutions interest expense would
increase more rapidly than its interest income, and in periods of falling
interest rates the institutions interest expense would decrease more rapidly
than its interest income. Positive gap occurs when more of an institutions
assets are scheduled to re-price than its liabilities, so that, barring other
factors affecting interest income and expense, in periods of falling interest
rates the institutions interest income would decrease more rapidly than its
interest expense, and in periods of rising interest rates the institutions
interest income would increase more rapidly than its interest expense.

In addition to the traditional gap measurement, management also relied on the
measurement of the duration of cash flows for the various assets and
liabilities. Duration is the weighted average of the terms of future cash
flows, where the present values of the cash flows are the weights. This is the
effective term of a series of cash flows, comparable to the term of a zero
coupon (single cash flow) instrument. The effective term is a measure of the
price sensitivity of an instrument: the price of a longer term instrument is
more sensitive than that of a shorter term instrument. At December 31, 2001,
the duration of the Companys assets was 2.1 years while the duration of its
liabilities was 1.7 years.

We strive to maintain a cumulative one-year gap of no more than plus or minus
15% of total assets and to limit the change in net interest income over a
one-year time horizon to no more than 15% of base net interest income, assuming
an immediate and sustained 200 basis point change in market interest rates. We
manage interest rate risk primarily by changing the maturity distribution of
our investment portfolio and emphasizing loan originations carrying variable
interest rates tied to interest-sensitive indices. Additionally, the Bank may
utilize long-term fixed-rate advances from the FHLB to improve the match
between interest earning assets and interest bearing liabilities. Currently,
off-balance-sheet hedging instruments are not used to manage overall interest
rate risk. We may expand our use of off-balance sheet hedging instruments to
manage exposure to overall interest rate risk in the future, subject to board
approval.

The cumulative one-year gap at December 31, 2001, was a negative $218.7
million, or a negative 8.89% (expressed as a percentage of total assets). Our
net interest income sensitivity, assuming an immediate and sustained change in
market interest rates of plus or minus 200 basis points, was a negative 15.30%
change for minus 200 basis points and a negative 2.08% change for plus 200
basis points.

34



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The following table presents the maturities or re-pricing of interest earning
assets and interest bearing liabilities at December 31, 2001. The balances
shown have been derived based on the financial characteristics of the various
assets and liabilities. Adjustable and floating-rate assets are included in the
period in which interest rates are next scheduled to adjust rather than their
scheduled maturity dates. Fixed-rate loans are shown in the periods in which
they are scheduled to be repaid according to contractual amortization and,
where appropriate, prepayment assumptions, based on the coupon rates in the
portfolio have been used to adjust the repayment amounts. Re-pricing of time
deposits is based on their scheduled maturities. Based on an analysis of our
deposit accounts and our experience in the markets in which we operate, we have
incorporated the following core deposit assumptions in the repricing table:

|                  |  |                       |    |             |  |           |    |   |  |  |    |  
|----------------- |  | --------------------- | -- | ----------- |  | --------- | -- | - |  |  | -- | -
|                  |  | Percent Repricing in:
|                  |  |                      
|                  |  | 0-3 months            |    | 4-12 months |  | 1-5 years
|                  |  |                       |    |             |  |          
|Interest checking |  |                       | 3  | %           |  |           | 8  | % |  |  | 89 | %
|Money market      |  |                       | 60 |             |  |           | 18 |   |  |  | 22 |  
|Savings           |  |                       | 8  |             |  |           | 25 |   |  |  | 67 |  

Using those core deposits assumptions as well as current market indications
for the level of asset prepayment activity, the interest rate sensitivity our
balance sheet would be as follows ($ in thousands):

|                                                                                   |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |      |       |   
|---------------------------------------------------------------------------------- | ----------------- | ------------ | ------- | ---------- | ------ | ----------- | ---- | --------- | ---- | ------------ | -------- | ------- | -------- | ------ | ----- | ------ | ---- | ---- | ------- | ------- | ------- |  | ----- | ---- | ---- | ------ | ------- | --- | ------- |  | ---- | ---- | ----- | --
|                                                                                   |                   |              |         | 0-3 months |        | 4-12 months |      | 1-5 Years |      | Over 5 Years
|                                                                                   |                   |              |         |            |        |             |      |           |      |             
|                                                                                   |                   |              |         |            |        |             |      | Yield/    |      |              |          |         |          | Yield/ |       |        |      |      |         | Yield/  |         |  |       |      |      | Yield/ |         |     |         | 
|                                                                                   |                   |              |         | Amount     |        | Rate        |      | Amount    |      | Rate         |          | Amount  |          | Rate   |       | Amount |      | Rate
|                                                                                   |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |     
|Interest earning assets:                                                           |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|Securities                                                                         |                   | $            | 123,764 |            |        |             | 6.40 | %         |      | $            | 301,011  |         |          |        | 6.31  | %      |      | $    | 361,814 |         |         |  | 6.17  | %    |      | $      | 47,478  |     |         |  | 4.42 | %   
|Federal funds sold                                                                 |                   |              | 14,925  |            |        |             | 0.65 |           |      |              |         |         |          |        |      |        |      |      |        |         |         |  |      |      |      |        |        |     |         |  |     |     
|Interest bearing deposits in banks                                                 |                   |              | 11,828  |            |        |             | 1.75 |           |      |              |         |         |          |        |      |        |      |      |        |         |         |  |      |      |      |        |        |     |         |  |     |     
|FHLB stock                                                                         |                   |              | 13,168  |            |        |             | 6.25 |           |      |              |         |         |          |        |      |        |      |      |        |         |         |  |      |      |      |        |        |     |         |  |     |     
|Portfolio loans                                                                    |                   |              | 436,312 |            |        |             | 6.10 |           |      |              | 283,983  |         |          |        | 7.70  |        |      |      | 511,910 |         |         |  | 8.00  |      |      |        | 188,807 |     |         |  | 5.97 |     
|                                                                                   |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|Total interest earning assets                                                      |                   |              | 599,997 |            |        |             | 5.94 |           |      |              | 584,994  |         |          |        | 6.99  |        |      |      | 873,724 |         |         |  | 7.10  |      |      |        | 236,285 |     |         |  | 6.12 |     
|Interest bearing liabilities:                                                      |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|Deposits:                                                                          |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|                                                                                   | Interest checking |              | $       | 4,907      |        |             |      | 0.39      | %    |              | $        | 14,721  |          |        |       | 0.39   | %    |      | $       | 167,190 |         |  |       | 0.38 | %    |        | $       |    |         |  |      |     |      
|                                                                                   | Money market      |              |         | 235,116    |        |             |      | 2.46      |      |              |          | 73,377  |          |        |       | 2.26   |      |      |         | 85,785  |         |  |       | 2.04 |      |        |         |    |         |  |      |     |      
|                                                                                   | Savings           |              |         | 15,542     |        |             |      | 2.27      |      |              |          | 46,629  |          |        |       | 2.27   |      |      |         | 127,387 |         |  |       | 1.96 |      |        |         |    |         |  |      |     |      
|                                                                                   | Time deposits     |              |         | 209,011    |        |             |      | 5.45      |      |              |          | 730,209 |          |        |       | 4.61   |      |      |         | 267,241 |         |  |       | 5.36 |      |        |         | 260 |         |  |      | 5.81 |      
|FHLB advances                                                                      |                   |              | 35,003  |            |        |             | 2.02 |           |      |              | 5,008    |         |          |        | 3.16  |        |      |      | 11,552  |         |         |  | 4.50  |      |      |        | 688     |     |         |  | 6.85 |     
|Outside borrowings                                                                 |                   |              | 34,169  |            |        |             | 1.38 |           |      |              |         |         |          |        |      |        |      |      |        |         |         |  |      |      |      |        |        |     |         |  |     |     
|Holding company debt                                                               |                   |              |        |            |        |             |     |           |      |              |         |         |          |        |      |        |      |      |        |         |         |  |      |      |      |        | 29,287  |     |         |  | 7.17 |     
|                                                                                   |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|Total interest bearing liabilities                                                 |                   |              | 533,748 |            |        |             | 3.50 |           |      |              | 869,943  |         |          |        | 4.21  |        |      |      | 659,155 |         |         |  | 2.99  |      |      |        | 30,235  |     |         |  | 7.15 |     
|Excess (deficiency) of interest-
earning assets over
interest-bearing liabilities: |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|                                                                                   |                   | Period total |         | $          | 66,249 |             |      |           | 2.44 | %            |          | $       | (284,949 | )      |       |        | 2.78 | %    |         | $       | 214,569 |  |       |      | 4.11 | %      |         | $   | 206,050 |  |      |      | (1.03 | )%
|                                                                                   |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|Cumulative                                                                         |                   | $            | 66,249  |            |        |             | 2.44 | %         |      | $            | (218,700 | )       |          |        | 2.51  | %      |      | $    | (4,131  | )       |         |  | 3.09  | %    |      | $      | 201,919 |     |         |  | 2.98 | %   
|                                                                                   |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |     
|Cumulative as a percent
of total assets                                            |                   |              |         |            |        |             | 2.69 | %         |      |              |          |         |          |        | (8.89 | )%     |      |      |         |         |         |  | (0.17 | )%   |      |        |         |     |         |  | 8.21 | %   
|                                                                                   |                   |              |         |            |        |             |      |           |      |              |          |         |          |        |       |        |      |      |         |         |         |  |       |      |      |        |         |     |         |  |      |      |       |   

35



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Item 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item is provided within the consolidated financial
statements and notes thereto.

Item 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There are no items to report.

PART III

Item 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors of the Company

The information relating to the Directors appears in our Proxy Statement for
the 2002 Annual Meeting of Stockholders under the caption Proposal
OneElection of Directors and is incorporated 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 as of December 31, 2001, 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:

William R. Klich(57)  Mr. Klich has served as Director of the Bank,
President and Chief Executive Officer of the Company and the Bank since March
15, 2000. He was previously employed as Chairman and CEO of SunTrust Bank,
Gulf Coast from 1996 to March, 2000, regional corporate banking executive of
SunTrust Bank of Florida from 1993 to 1996 and President and CEO of Coast Bank,
F.S.B. from 1990 to 1993. He has more than 31 years of commercial banking
experience.

Gerald P. Ademy (55) Executive Vice President of Corporate Services for
Republic Bank. Mr. Ademy joined Bank of America in 1986. He held numerous
Asset Management and Real estate Management positions including most recently
Senior Vice President, Commercial Special Assets, Eastern U.S.

William R. Falzone(54)  Mr. Falzone has served as our Treasurer since
March 1996 and Executive Vice President and Chief Financial Officer of the Bank
since February 1994. He was employed at Florida Federal Savings Bank from 1983
through 1991 where he served as Director of Financial Services. Before joining
the Company, he was a Senior Consultant for Stogniew and Associates, a
nationwide consulting firm. He has more than 25 years of banking experience
and is a certified public accountant.

E. Carl Goff(49)  Executive Vice President and Commercial Real Estate
Manager, Mr. Goff joined Republic Bank in April 2000 as Senior Vice President
of Commercial Real Estate. He has over 18 years of commercial real estate
lending experience. Mr. Goff previously served with Barnett and SunTrust
Banks.

36



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##### 



Jon D. Harkins(54)  Mr. Harkins has served as Executive Vice President
and Senior Lending Officer since September 2000. He joined us from First Union
National Bank where he served in various lending and management positions for
25 years. Most recently, he served as Area President for Polk, Pasco and
Highland Counties in Florida.

Mauro A. Harto(41)  Executive Vice President of the Bank and Residential
Lending Manager since May of this year. Mr. Harto formerly was with SunTrust
Bank in Sarasota from 1995-2000 where he served as Executive Vice
President/Residential Lending Division Manager. He has over 15 years
experience in all areas of mortgage production and mortgage operations.

Timothy J. Little(41)  Executive Vice President and Chief Credit Officer
since September 2000. Mr. Little was Senior Vice President and West Coast
Executive/Corporate Services for Huntington National Bank for two and one-half
years. Previously, Mr. Little held numerous management, lending and credit
administration positions with Barnett Bank for 12 years.

Rita J. Lowman(48)  Executive Vice President and Retail Line of Business
Manager, has served in her present position with us since November 2000. Ms.
Lowman joined Bank of America in 1985 and held various line, administrative and
managerial positions including most recently, Consumer Executive/Senior Vice
President of Southwest Florida.

Rudi Thompson(40)  Rudi Thompson joined Republic bank in March 2001 as
Executive Vice President, Human Resources Director. Ms. Thompson previously
served as Corporate First Vice President, Human Resources Relations Management
for SunTrust Banks Central Florida Region.

Item 11.      EXECUTIVE COMPENSATION

Information required by this item appears in our Proxy Statement for the 2002
Annual Meeting of Shareholders under the captions, Executive Compensation and
Benefits and Certain Transactions, and is incorporated by reference.

Item 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this item appears in the Proxy Statement for the 2002
Annual Meeting of Shareholders under the captions Principal Stockholders and
Security Ownership of Management and is hereby incorporated by reference.

Item 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item appears in the Proxy Statement for the 2002
Annual Meeting of Shareholders under caption, Certain transactions and
Compensation Committee Interlocks and Insider Participation and is hereby
incorporated by reference.

37



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PART IV

Item 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K



|    |  |                                                                                  |                                                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The following documents are filed as part of this report at pages 41 through 75.
|   
|    |  | 1.                                                                               | Financial Statements                                                                                                                                                 
|   
|    |  |                                                                                  | Financial Statements of Republic Bancshares, Inc.                                                                                                                    
|   
|    |  |                                                                                  | Report of Independent Certified Public Accountants                                                                                                                   
|   
|    |  |                                                                                  | Consolidated Balance Sheets at December 31, 2001 and 2000                                                                                                            
|   
|    |  |                                                                                  | Consolidated Statements of Operations, Stockholders Equity, Comprehensive Income (Loss), and Cash Flows for:                                                        
|   
|    |  |                                                                                  | Years Ended December 31, 2001, 2000, and 1999                                                                                                                        
|   
|    |  |                                                                                  | Notes to Consolidated Financial Statements                                                                                                                           
|   
|    |  |                                                                                  | All required schedules are included in the financial statements or related notes.                                                                                    
|   
|(b) |  |                                                                                  | A Form 8-K dated May 9, 2001 announcing that the Company intended to commence a private offering of convertible subordinated debentures
is incorporated by reference.
|   
|(c) |  |                                                                                  | Exhibits                                                                                                                                                             
|   
|    |  |                                                                                  | 23.0     Consent of Independent Certified Public Accountants                                                                                                         

38



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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Republic Bancshares, Inc.:

We have audited the accompanying consolidated balance sheets of Republic
Bancshares, Inc. (a Florida corporation) and subsidiaries as of December 31,
2001 and 2000, and the related consolidated statements of operations,
stockholders equity, comprehensive income (loss), and cash flows for each of
the three years in the period ended December 31, 2001. 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 auditing standards generally
accepted in the United States. 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 subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

/s/ ARTHUR ANDERSEN LLP

Tampa, Florida,
     January 28, 2002

39



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REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)

|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |              |           |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----------------- | --------- | ------------ | --------- | ------------ | --------- | --------- | --------- | 
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           | December 31, |           | December 31,
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           | 2001         |           | 2000        
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|ASSETS                                                                                                                                         |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|Cash and due from banks                                                                                                                        |                    | $                                                                                                                                                                                           | 65,370                                     |                   |           | $            | 52,540    |             
|Interest bearing deposits in banks                                                                                                             |                    |                                                                                                                                                                                             | 11,828                                     |                   |           |              | 6,910     |             
|Federal funds sold                                                                                                                             |                    |                                                                                                                                                                                             | 14,925                                     |                   |           |              | 150,212   |             
|Securities:                                                                                                                                    |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               | Available for sale |                                                                                                                                                                                             |                                            | 792,719           |           |              |           | 348,535      |          
|                                                                                                                                               | Held to maturity   |                                                                                                                                                                                             |                                            | 21,470            |           |              |           | 33,844       |          
|                                                                                                                                               | Trading            |                                                                                                                                                                                             |                                            | 19,877            |           |              |           | 24,578       |          
|FHLB stock                                                                                                                                     |                    |                                                                                                                                                                                             | 13,168                                     |                   |           |              | 13,816    |             
|Loans                                                                                                                                          |                    |                                                                                                                                                                                             | 1,421,011                                  |                   |           |              | 1,711,342 |             
|Allowance for loan losses                                                                                                                      |                    |                                                                                                                                                                                             | 31,997                                     |                   |           |              | 33,462    |             
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|Net loans                                                                                                                                      |                    |                                                                                                                                                                                             | 1,389,014                                  |                   |           |              | 1,677,880 |             
|Premises and equipment, net                                                                                                                    |                    |                                                                                                                                                                                             | 42,800                                     |                   |           |              | 47,223    |             
|Other real estate owned, net                                                                                                                   |                    |                                                                                                                                                                                             | 16,893                                     |                   |           |              | 5,729     |             
|Accrued interest receivable                                                                                                                    |                    |                                                                                                                                                                                             | 12,368                                     |                   |           |              | 13,950    |             
|Goodwill                                                                                                                                       |                    |                                                                                                                                                                                             | 2,726                                      |                   |           |              | 3,204     |             
|Premium on deposits                                                                                                                            |                    |                                                                                                                                                                                             | 18,397                                     |                   |           |              | 25,765    |             
|Other assets                                                                                                                                   |                    |                                                                                                                                                                                             | 37,789                                     |                   |           |              | 36,418    |             
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               |                    | Total assets                                                                                                                                                                                |                                            | $                 | 2,459,344 |              |           | $            | 2,440,604 |          
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                           |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|Liabilities:                                                                                                                                   |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               |                    | Deposits-                                                                                                                                                                                  
|                                                                                                                                               |                    |                                                                                                                                                                                             | Noninterest bearing checking               |                   | $         | 152,972      |           |              | $         | 133,950   |          
|                                                                                                                                               |                    |                                                                                                                                                                                             | Interest checking                          |                   |           | 186,817      |           |              |           | 178,777   |          
|                                                                                                                                               |                    |                                                                                                                                                                                             | Money market                               |                   |           | 394,278      |           |              |           | 295,918   |          
|                                                                                                                                               |                    |                                                                                                                                                                                             | Savings                                    |                   |           | 189,557      |           |              |           | 199,875   |          
|                                                                                                                                               |                    |                                                                                                                                                                                             | Time deposits                              |                   |           | 1,206,720    |           |              |           | 1,349,297 |          
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            | Total deposits    |           |              | 2,130,344 |              |           |           | 2,157,817 | 
|                                                                                                                                               |                    | Securities sold under agreements to repurchase                                                                                                                                              |                                            |                   | 34,169    |              |           |              | 41,581    |          
|                                                                                                                                               |                    | FHLB advances                                                                                                                                                                               |                                            |                   | 52,251    |              |           |              | 761       |          
|                                                                                                                                               |                    | Holding company senior debt                                                                                                                                                                 |                                            |                   |          |              |           |              | 6,833     |          
|                                                                                                                                               |                    | Convertible subordinated debt                                                                                                                                                               |                                            |                   | 29,287    |              |           |              | 14,712    |          
|                                                                                                                                               |                    | Term subordinated debt and unsecured notes                                                                                                                                                  |                                            |                   |          |              |           |              | 6,250     |          
|                                                                                                                                               |                    | Other liabilities                                                                                                                                                                           |                                            |                   | 12,506    |              |           |              | 11,559    |          
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            | Total liabilities |           |              | 2,258,557 |              |           |           | 2,239,513 | 
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|Company-obligated mandatorily redeemable preferred
securities of subsidiary trust solely holding junior
subordinated debentures of the Company |                    |                                                                                                                                                                                             | 28,750                                     |                   |           |              | 28,750    |             
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|Stockholders equity:                                                                                                                          |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               |                    | Perpetual preferred convertible stock ($20.00 par, 100,000
shares authorized, none issued and outstanding at December 31, 2001,
75,000 shares issued and outstanding at December 31, 2000.) |                                            |                   |          |              |           |              | 1,500     |          
|                                                                                                                                               |                    | Common stock ($2.00 par, 20,000,000 shares authorized,
11,335,339 and 10,555,989 shares issued and outstanding
at December 31, 2001 and December 31, 2000, respectively.)                   |                                            |                   | 22,671    |              |           |              | 21,112    |          
|Capital surplus                                                                                                                                |                    |                                                                                                                                                                                             | 129,056                                    |                   |           |              | 128,735   |             
|Retained earnings                                                                                                                              |                    |                                                                                                                                                                                             | 17,639                                     |                   |           |              | 21,669    |             
|Net unrealized gain (loss) on available for sale securities,
net of tax effect                                                                 |                    |                                                                                                                                                                                             | 2,671                                      |                   |           |              | (675      | )           
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               |                    |                                                                                                                                                                                             | Total stockholders equity                 |                   |           | 172,037      |           |              |           | 172,341   |          
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             
|                                                                                                                                               |                    |                                                                                                                                                                                             | Total liabilities and stockholders equity |                   | $         | 2,459,344    |           |              | $         | 2,440,604 |          
|                                                                                                                                               |                    |                                                                                                                                                                                             |                                            |                   |           |              |           |             

The accompanying notes are an integral part of these consolidated balance sheets

40



---



##### 



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)

|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |            |        |         |        | 
|------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------- | -------------------------- | ------------------------ | ------ | -------------------------------- | ------ | ---------- | ------ | ------- | ------ | ---------- | ------ | ------- | ------ | 
|                                                              |                                                                          |                     |                            |                          |        | For the Years Ended December 31,
|                                                              |                                                                          |                     |                            |                          |        |                                 
|                                                              |                                                                          |                     |                            |                          |        | 2001                             |        | 2000       |        | 1999   
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |        
|INTEREST INCOME:                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Loans                                                                    |                     | $                          | 124,015                  |        |                                  | $      | 162,776    |        |         | $      | 166,656    |       
|                                                              | Securities                                                               |                     |                            | 34,712                   |        |                                  |        | 27,869     |        |         |        | 17,486     |       
|                                                              | Federal funds sold & other investments                                   |                     |                            | 6,621                    |        |                                  |        | 6,555      |        |         |        | 6,621      |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              |                                                                          |                     | Total interest income      |                          |        | 165,348                          |        |            |        | 197,200 |        |            |        | 190,763 |       
|INTEREST EXPENSE:                                             |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Deposits                                                                 |                     |                            | 92,796                   |        |                                  |        | 102,893    |        |         |        | 94,133     |       
|                                                              | Securities sold under agreement to repurchase                            |                     |                            | 1,349                    |        |                                  |        | 2,305      |        |         |        | 1,806      |       
|                                                              | FHLB advances                                                            |                     |                            | 426                      |        |                                  |        | 81         |        |         |        | 164        |       
|                                                              | Holding company debt                                                     |                     |                            | 2,215                    |        |                                  |        | 2,198      |        |         |        | 2,277      |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Total interest expense                                                   |                     |                            | 96,786                   |        |                                  |        | 107,477    |        |         |        | 98,380     |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              |                                                                          | Net interest income |                            |                          | 68,562 |                                  |        |            | 89,723 |         |        |            | 92,383 |        
|PROVISION FOR LOAN LOSSES                                     |                                                                          |                     | 16,150                     |                          |        |                                  | 20,700 |            |        |         | 9,923  |           
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|NET INTEREST INCOME AFTER                                     |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | PROVISION FOR LOAN LOSSES                                                |                     |                            | 52,412                   |        |                                  |        | 69,023     |        |         |        | 82,460     |       
|NONINTEREST INCOME:                                           |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Service charges on deposit accounts                                      |                     |                            | 7,714                    |        |                                  |        | 8,128      |        |         |        | 7,037      |       
|                                                              | Loan service fees                                                        |                     |                            | 2,208                    |        |                                  |        | 5,951      |        |         |        | 6,584      |       
|                                                              | Other loan fee income                                                    |                     |                            | 3,689                    |        |                                  |        | 4,324      |        |         |        | 4,281      |       
|                                                              | Gains (losses) on loans & securities, net                                |                     |                            | 2,282                    |        |                                  |        | (12,709    | )      |         |        | 2,888      |       
|                                                              | Gains on sale of branches                                                |                     |                            | 4,483                    |        |                                  |        |           |        |         |        |           |       
|                                                              | Other operating income                                                   |                     |                            | 2,653                    |        |                                  |        | 1,617      |        |         |        | 5,042      |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              |                                                                          |                     | Total noninterest income   |                          |        | 23,029                           |        |            |        | 7,311   |        |            |        | 25,832  |       
|NONINTEREST EXPENSES:                                         |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Salaries and employee benefits                                           |                     |                            | 38,557                   |        |                                  |        | 37,456     |        |         |        | 41,716     |       
|                                                              | Net occupancy expense                                                    |                     |                            | 13,362                   |        |                                  |        | 13,646     |        |         |        | 13,353     |       
|                                                              | Advertising and marketing                                                |                     |                            | 1,640                    |        |                                  |        | 1,037      |        |         |        | 1,103      |       
|                                                              | Data & item processing fees and services                                 |                     |                            | 7,387                    |        |                                  |        | 8,279      |        |         |        | 8,922      |       
|                                                              | Loan collection costs                                                    |                     |                            | 2,016                    |        |                                  |        | 1,574      |        |         |        | 1,169      |       
|                                                              | Other operating expenses                                                 |                     |                            | 11,532                   |        |                                  |        | 13,533     |        |         |        | 18,167     |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              |                                                                          |                     |                            | Total operating expenses |        |                                  | 74,494 |            |        |         | 75,525 |            |        |         | 84,430 | 
|                                                              | ORE expense, net                                                         |                     |                            | 1,022                    |        |                                  |        | 647        |        |         |        | (227       | )     
|                                                              | Amortization of goodwill                                                 |                     |                            | 477                      |        |                                  |        | 477        |        |         |        | 477        |       
|                                                              | Amortization of premium on deposits                                      |                     |                            | 2,972                    |        |                                  |        | 3,381      |        |         |        | 3,433      |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              |                                                                          |                     | Total noninterest expenses |                          |        | 78,965                           |        |            |        | 80,030  |        |            |        | 88,113  |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|Income (loss) before income taxes & minority interest         |                                                                          |                     | (3,524                     | )                        |        |                                  | (3,696 | )          |        |         | 20,179 |           
|Income tax expense (benefit)                                  |                                                                          |                     | (1,310                     | )                        |        |                                  | (787   | )          |        |         | 7,800  |           
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|Income (loss) before minority interest                        |                                                                          |                     | (2,214                     | )                        |        |                                  | (2,909 | )          |        |         | 12,379 |           
|Minority interest in income from subsidiary trust, net of tax |                                                                          |                     | (1,684                     | )                        |        |                                  | (1,689 | )          |        |         | (1,687 | )         
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              |                                                                          |                     | NET INCOME (LOSS)          |                          | $      | (3,898                           | )      |            | $      | (4,598  | )      |            | $      | 10,692  |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|PER SHARE DATA:                                               |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Net income (loss) per common share  basic                               |                     | $                          | (0.37                    | )      |                                  | $      | (0.46      | )      |         | $      | 0.99       |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Net income (loss) per common & common equivalent share  diluted         |                     | $                          | (0.37                    | )      |                                  | $      | (0.46      | )      |         | $      | 0.95       |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Weighted average common shares
outstanding  basic                       |                     |                            | 10,955,118               |        |                                  |        | 10,555,941 |        |         |        | 10,484,650 |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           
|                                                              | Weighted average common & common equivalent shares
outstanding  diluted |                     |                            | 10,955,118               |        |                                  |        | 10,555,941 |        |         |        | 11,299,902 |       
|                                                              |                                                                          |                     |                            |                          |        |                                  |        |            |        |         |        |           

The accompanying notes are an integral part of these consolidated statements

41



---



##### 



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
($ in thousands)

|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   |                |   |  |   |         |     |  
|------------------------------------------------------------------------ | ----- | - | ------------------- | - | ------------ | - | ------- | - | -------- | - | ---------- | --- | -------- | - | ------ | - |  | - | -------------- | - |  | - | ------- | --- | -
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   | Net Unrealized |   |  |   |        
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   | Gains/(Losses) |   |  |   |        
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   | on Available   |   |  |   |        
|                                                                         |       |   | Perpetual Preferred |   |              |   |         |   | Capital  |   | Retained   |     | for Sale |   |        |   | 
|                                                                         |       |   | Convertible Stock   |   | Common Stock |   | Surplus |   | Earnings |   | Securities |     | Total   
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |         
|Balance, December 31, 1998                                               |       | $ | 1,500               |   |              | $ | 20,646  |   |          | $ | 125,364    |     |          | $ | 16,103 |   |  | $ | (16            | ) |  | $ | 163,597 |    
|Net income                                                               |       |   |                    |   |              |   |        |   |          |   |           |     |          |   | 10,692 |   |  |   |               |   |  |   | 10,692  |    
|Change in fair value of
available for sale securities,
net of tax effect |       |   |                    |   |              |   |        |   |          |   |           |     |          |   |       |   |  |   | (7,661         | ) |  |   | (7,661  | )  
|Exercise of stock options into
232,695 shares                            |       |   |                    |   |              |   | 466     |   |          |   | 2,313      |     |          |   |       |   |  |   |               |   |  |   | 2,779   |    
|Additional capital surplus from
nonqualified/performance
stock options   |       |   |                    |   |              |   |        |   |          |   | 1,103      |     |          |   |       |   |  |   |               |   |  |   | 1,103   |    
|Dividends on preferred stock                                             |       |   |                    |   |              |   |        |   |          |   |           |     |          |   | (265   | ) |  |   |               |   |  |   | (265    | )  
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   |                |   |  |   |         |    
|Balance, December 31, 1999                                               |       |   | 1,500               |   |              |   | 21,112  |   |          |   | 128,780    |     |          |   | 26,530 |   |  |   | (7,677         | ) |  |   | 170,245 |    
|Net loss                                                                 |       |   |                    |   |              |   |        |   |          |   |           |     |          |   | (4,598 | ) |  |   |               |   |  |   | (4,598  | )  
|Change in fair value of
available for sale securities,
net of tax effect |       |   |                    |   |              |   |        |   |          |   |           |     |          |   |       |   |  |   | 7,002          |   |  |   | 7,002   |    
|Exercise of stock options into
100 shares                                |       |   |                    |   |              |   |        |   |          |   | 1          |     |          |   |       |   |  |   |               |   |  |   | 1       |    
|Dividends on preferred stock                                             |       |   |                    |   |              |   |        |   |          |   |           |     |          |   | (263   | ) |  |   |               |   |  |   | (263    | )  
|                                                                         | Other |   |                     |  |              |   |         |  |          |   |            | (46 | )        |   |        |  |  |   |                |  |  |   |         | (46 | )
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   |                |   |  |   |         |    
|Balance, December 31, 2000                                               |       |   | 1,500               |   |              |   | 21,112  |   |          |   | 128,735    |     |          |   | 21,669 |   |  |   | (675           | ) |  |   | 172,341 |    
|Net loss                                                                 |       |   |                    |   |              |   |        |   |          |   |           |     |          |   | (3,898 | ) |  |   |               |   |  |   | (3,898  | )  
|Change in fair value of
available for sale securities,
net of tax effect |       |   |                    |   |              |   |        |   |          |   |           |     |          |   |       |   |  |   | 3,346          |   |  |   | 3,346   |    
|Exercise of stock options into
29,350 shares                             |       |   |                    |   |              |   | 59      |   |          |   | 299        |     |          |   |       |   |  |   |               |   |  |   | 358     |    
|Conversion of preferred stock
into 750,000 common shares                 |       |   | (1,500              | ) |              |   | 1,500   |   |          |   |           |     |          |   |       |   |  |   |               |   |  |   |        |    
|Dividends on preferred stock                                             |       |   |                    |   |              |   |        |   |          |   |           |     |          |   | (132   | ) |  |   |               |   |  |   | (132    | )  
|Other                                                                    |       |   |                    |   |              |   |        |   |          |   | 22         |     |          |   |       |   |  |   |               |   |  |   | 22      |    
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   |                |   |  |   |         |    
|Balance, December 31, 2001                                               |       | $ |                    |   |              | $ | 22,671  |   |          | $ | 129,056    |     |          | $ | 17,639 |   |  | $ | 2,671          |   |  | $ | 172,037 |    
|                                                                         |       |   |                     |   |              |   |         |   |          |   |            |     |          |   |        |   |  |   |                |   |  |   |         |    

The accompanying notes are an integral part of these consolidated statements

42



---



##### 



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
($ in thousands)

|                                                                                           |                             |   |                                  |      |      |   |        |       |  |   |        |       | 
|------------------------------------------------------------------------------------------ | --------------------------- | - | -------------------------------- | ---- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                                           |                             |   | For the Years Ended December 31,
|                                                                                           |                             |   |                                 
|                                                                                           |                             |   | 2001                             |      | 2000 |   | 1999  
|                                                                                           |                             |   |                                  |      |      |   |       
|Net income (loss)                                                                          |                             | $ | (3,898                           | )    |      | $ | (4,598 | )     |  | $ | 10,692 |      
|Unrealized gains (losses) on available for sale securities:                                |                             |   |                                  |      |      |   |        |       |  |   |        |      
|Unrealized holding gains (losses) arising during the period, net of taxes (1)              |                             |   | 4,987                            |      |      |   | 7,242  |       |  |   | (7,661 | )    
|Less reclassification adjustment for gains realized in net
income (loss), net of taxes (1) |                             |   | (1,641                           | )    |      |   | (240   | )     |  |   |       |      
|                                                                                           |                             |   |                                  |      |      |   |        |       |  |   |        |      
|Net unrealized gains (losses)                                                              |                             |   | 3,346                            |      |      |   | 7,002  |       |  |   | (7,661 | )    
|                                                                                           |                             |   |                                  |      |      |   |        |       |  |   |        |      
|                                                                                           | Comprehensive income (loss) |   | $                                | (552 | )    |   | $      | 2,404 |  |   | $      | 3,031 | 
|                                                                                           |                             |   |                                  |      |      |   |        |       |  |   |        |      



|(1) |  | Income taxes on unrealized holding gains (losses) were an expense of
$3,005 in 2001, $4,364 in 2000 and a benefit of $4,616 in 1999. Income taxes
on gains realized in net income (loss) were $989 and $145 in 2001 and 2000.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated statements

43



---



##### 



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)

|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |          |         |  
|------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------------- | -------- | -------------------------------- | ------ | ---- | -------- | ------- | -------- | - | -------- | -------- | ------- | -
|                                                                                            |                                                     |                                                         |          | For the Years Ended December 31,
|                                                                                            |                                                     |                                                         |          |                                 
|                                                                                            |                                                     |                                                         |          | 2001                             |        | 2000 |          | 1999   
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |        
|OPERATING ACTIVITIES:                                                                       |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|Net income (loss)                                                                           |                                                     | $                                                       | (3,898   | )                                |        | $    | (4,598   | )       |          | $ | 10,692   |         
|Reconciliation of net income (loss) to net cash provided by
(used in) operating activities: |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|Provision for loan and ORE losses                                                           |                                                     |                                                         | 16,315   |                                  |        |      | 20,925   |         |          |   | 10,003   |         
|Depreciation and amortization of goodwill & premium on deposits                             |                                                     |                                                         | 9,464    |                                  |        |      | 10,578   |         |          |   | 10,865   |         
|Amortization of loan premiums/discounts & MSRs                                             |                                                     |                                                         | 1,146    |                                  |        |      | 2,631    |         |          |   | 11,718   |         
|(Gain)/loss on sale of loans and securities, net                                            |                                                     |                                                         | (2,282   | )                                |        |      | 12,709   |         |          |   | (2,888   | )       
|(Gain)/loss on sale of other real estate owned                                              |                                                     |                                                         | 123      |                                  |        |      | 64       |         |          |   | (726     | )       
|(Capitalization) of mortgage servicing                                                      |                                                     |                                                         | (923     | )                                |        |      |         |         |          |   | (3,238   | )       
|(Gain) on sale of branches                                                                  |                                                     |                                                         | (4,483   | )                                |        |      |         |         |          |   |         |         
|(Gain)/loss on disposal of premises and equipment                                           |                                                     |                                                         | 255      |                                  |        |      |         |         |          |   | (621     | )       
|Net decrease/(increase) in deferred tax asset                                               |                                                     |                                                         | (4,612   | )                                |        |      | (3,645   | )       |          |   | 1,156    |         
|Net decrease/(increase) in other assets                                                     |                                                     |                                                         | (3,767   | )                                |        |      | (1,792   | )       |          |   | 16,304   |         
|Net decrease/(increase) in value of performance/nonqualified options                        |                                                     |                                                         | 22       |                                  |        |      | (46      | )       |          |   | 1,103    |         
|Net (decrease)/increase in other liabilities                                                |                                                     |                                                         | 1,275    |                                  |        |      | 2,349    |         |          |   | (12,108  | )       
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|                                                                                            |                                                     | Net cash provided by (used in) operating activities     |          |                                  | 8,635  |      |          |         | 39,175   |   |          |          | 42,260  |  
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|INVESTING ACTIVITIES:                                                                       |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|Net decrease in loans                                                                       |                                                     |                                                         | 130,430  |                                  |        |      | 159,294  |         |          |   | 85,726   |         
|Proceeds from sales and maturities of securities                                            |                                                     |                                                         | 340,590  |                                  |        |      | 85,446   |         |          |   | 148,052  |         
|Principal repayment on securities                                                           |                                                     |                                                         | 208,323  |                                  |        |      | 72,783   |         |          |   | 34,177   |         
|Purchase of commercial paper available for sale                                             |                                                     |                                                         |         |                                  |        |      |         |         |          |   | (39,541  | )       
|Purchase of securities available for sale                                                   |                                                     |                                                         | (886,424 | )                                |        |      | (98,749  | )       |          |   | (363,111 | )       
|Purchase of securities held to maturity                                                     |                                                     |                                                         |         |                                  |        |      | (16,980  | )       |          |   | (33,075  | )       
|(Purchase)/redemption of FHLB stock                                                         |                                                     |                                                         | 648      |                                  |        |      |         |         |          |   | (2,664   | )       
|Disposal/(purchase) of premises and equipment, net                                          |                                                     |                                                         | (3,218   | )                                |        |      | (1,502   | )       |          |   | 1,197    |         
|Proceeds from sale of other real estate owned                                               |                                                     |                                                         | 7,692    |                                  |        |      | 6,665    |         |          |   | 8,566    |         
|Sale of mortgage servicing rights                                                           |                                                     |                                                         | 1,966    |                                  |        |      |         |         |          |   |         |         
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|                                                                                            | Net cash provided by (used in) investing activities |                                                         |          | (199,993                         | )      |      |          | 206,957 |          |   |          | (160,673 | )      
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|FINANCING ACTIVITIES:                                                                       |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|Net increase (decrease) in deposits                                                         |                                                     |                                                         | 89,966   |                                  |        |      | (135,194 | )       |          |   | 95,778   |         
|Net cash paid for branch sales                                                              |                                                     |                                                         | (61,912  | )                                |        |      |         |         |          |   |         |         
|Net increase (decrease) in repurchase agreements                                            |                                                     |                                                         | (7,412   | )                                |        |      | 4,340    |         |          |   | 601      |         
|Proceeds (repayment) from FHLB advances, net                                                |                                                     |                                                         | 51,490   |                                  |        |      | (8       | )       |          |   | (24,231  | )       
|Proceeds from issuance of common stock                                                      |                                                     |                                                         | 358      |                                  |        |      | 1        |         |          |   | 2,779    |         
|Proceeds from holding company debt                                                          |                                                     |                                                         | 14,544   |                                  |        |      | 4,500    |         |          |   | 10,535   |         
|Repayment of holding company debt                                                           |                                                     |                                                         | (13,083  | )                                |        |      | (3,306   | )       |          |   | (15,934  | )       
|Dividends on perpetual preferred convertible stock                                          |                                                     |                                                         | (132     | )                                |        |      | (264     | )       |          |   | (264     | )       
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|                                                                                            |                                                     | Net cash (used in) provided by financing activities     |          |                                  | 73,819 |      |          |         | (129,931 | ) |          |          | 69,264  |  
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                                          |                                                     |                                                         | (117,539 | )                                |        |      | 116,201  |         |          |   | (49,149  | )       
|CASH AND CASH EQUIVALENTS, beginning of year                                                |                                                     |                                                         | 209,662  |                                  |        |      | 93,461   |         |          |   | 142,610  |         
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|CASH AND CASH EQUIVALENTS, end of year                                                      |                                                     | $                                                       | 92,123   |                                  |        | $    | 209,662  |         |          | $ | 93,461   |         
|                                                                                            |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                          |                                                     |                                                         |          |                                  |        |      |          |         |          |   |          |         
|                                                                                            |                                                     | Cash paid during the year for interest                  |          | $                                | 89,083 |      |          | $       | 99,644   |   |          | $        | 98,159  |  
|                                                                                            |                                                     | Cash paid (received) during the year for income taxes   |          |                                  | 8,351  |      |          |         | 4,582    |   |          |          | (10,883 | )
|                                                                                            |                                                     | Non-cash transactions:                                  |          |                                  |        |      |          |         |          |   |          |          |         |  
|                                                                                            |                                                     | Refinancing of unsecured notes                          |          |                                  |       |      |          |         |         |   |          |          | 7,000   |  
|                                                                                            |                                                     | Conversion of perpetual preferred stock to common stock |          |                                  | 1,500  |      |          |         |         |   |          |          |        |  

The accompanying notes are an integral part of these consolidated statements

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REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001

1. BUSINESS:

Basis of Presentation and Organization

The consolidated financial statements of Republic Bancshares, Inc. (the
Company or Republic or We) include the accounts of the Company and its
wholly owned subsidiaries, RBI Capital Trust I (RBI), and Republic Bank (the
Bank) and the Banks wholly-owned subsidiary, Republic Insurance Agency,
Inc. Financial data for 1999 includes results of operations for Republic
Bank, F.S.B., the assets and deposits of which were sold in 1999 and the
thrift was dissolved. All significant intercompany accounts and transactions
have been eliminated. Our primary source of income is from the Bank, which
operates 71 branches throughout Florida. The Banks primary source of revenue
is derived from net interest income on loans and investments. The operations
of the Company are reported as one operating segment.

Sale of Branches

On April 23, 2001, we completed the sale of five branch offices in Miami-Dade
County, Florida, The loans assigned to the branches were purchased at par
value, the fixtures and improvements and other assets assigned to four of the
branches were purchased at their net book value and the buyer assumed $55.0
million of deposit liabilities of all five offices. We recognized a gain of
$3.1 million on the transaction. There was no unamortized deposit premium
associated with these branches.

On May 11, 2001, we completed the sale of two branch offices located in Lake
City and Live Oak, Florida. The loans assigned to the branches were purchased
at par value, the premises and other assets assigned to the two branches were
purchased at their net book value and the buyer assumed $62.3 million of
deposit liabilities. We recognized a gain of $1.4 million on the transaction,
after deduction of the unamortized deposit premium paid to purchase the
branches in 1998.

RBI Capital Trust I

RBI is our wholly owned subsidiary, formed on May 29, 1997, to issue cumulative
trust preferred securities (the Preferred Security or Securities) to the
public. We own all of the securities of RBI that possess general voting
powers. The Preferred Securities, issued through a public offering on July 28,
1997, were sold at their $10 par value. RBI issued 2,875,000 shares of the
Preferred Securities bearing a dividend rate of 9.10% for net proceeds of $27.4
million, after deducting underwriting commissions and other costs. RBI
invested the proceeds in our junior subordinated debt, which also has an
interest rate of 9.10%. The Junior Subordinated Debentures will mature on June
30, 2027 (the Stated Maturity), which date may be shortened to a date not
earlier than June 30, 2002, if certain conditions are met (including the
Company having received prior approval by the Board of Governors of the Federal
Reserve System or any successor agency (the Federal Reserve) if then required
under applicable Federal Reserve capital guidelines or policies). RBIs sole
asset is the holding companys junior subordinated debt. Considered together,
our obligations with respect to the issuance of the preferred securities
constitute a full and unconditional guarantee by the bank holding company of
RBIs obligations with respect to the preferred securities. We used the
proceeds from the junior subordinated debt to increase the Banks equity
capital. Interest on the junior subordinated debentures and distributions on
the Preferred Securities are payable

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quarterly in arrears. Distributions on the
Preferred Securities are cumulative and based upon the liquidation value of $10
per Preferred Security. We have the right, at any time, so long as no event of
default has occurred and is continuing, to defer payments of interest on the
junior subordinated debentures, which will require deferral of distribution on
the Preferred Securities,
for a period not exceeding 20 consecutive quarters, provided, that such
deferral may not extend beyond the stated maturity of the junior subordinated
debentures. If payments are deferred, we will not be permitted to declare cash
dividends. The Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the junior subordinated debentures at
maturity or their earlier redemption. We have the right to redeem the junior
subordinated debentures in whole (but not in part) within 180 days following
certain events whether occurring before or after June 30, 2002. The exercise
of such right is subject to us receiving regulatory approval to do so if then
required under applicable capital guidelines or regulatory policies. In
addition, we have the right, at any time, to shorten the maturity of the junior
subordinated debentures to a date not earlier than June 30, 2002. Exercise of
this right is also subject to receiving regulatory approval to do so if then
required under applicable capital guidelines or regulatory policies.

We have reported our obligation, with respect to the holders of the Preferred
Securities, as a separate line item in the accompanying consolidated balance
sheets under the caption Company-obligated mandatorily redeemable preferred
securities of subsidiary trust solely holding junior subordinated debentures of
the Company. The related dividend expense, net of the tax benefit, is
reported as a separate line item in the accompanying consolidated statements of
operations under the caption Minority interest in income from subsidiary
trust, net of tax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Estimates, Appraisals and Evaluations

The accompanying financial statements, in conformity with accounting principles
generally accepted in the United States, requires management to make 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.

Securities

Securities that we have 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 classified as Available for Sale are those securities that may be
sold prior to maturity as part of asset/liability management or in response to
other factors and are carried at fair value with any unrealized gains or
losses, net of applicable tax effect, reported in a separate component of
stockholders equity. Securities identified as Trading include the
subordinate tranche and the residual interests in cash flows from the
securitization of High LTV Loans and the excess spread, interest-only strip
related to securing first lien, residential loans. Trading securities are
carried at fair value with any unrealized gains or losses included in the
consolidated statements of operations under Gain (loss) on loans and
securities, net.

Interest and dividends on securities and amortization of premiums and accretion
of discounts using the effective interest rate method are together reported as
interest income on securities. Gains and losses realized on sales of securities
are generally determined on the specific identification method and are reported
under Gain (loss) on loans and securities, net.

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Accounting for Mortgage Servicing Rights (MSRs)

MSRs are carried at amortized cost and evaluated for impairment based on their
fair value. We use an automated portfolio analysis system to value our MSRs
at the individual loan level. The model uses current market assumptions for
default probabilities and prepayment speeds based upon individual loan factors,
including interest rate, age, loan type, geography and demographics. The
analysis also takes into consideration the historical aggregate characteristics
of borrowers based on their geographic location. These factors are applied to
each loan based on its own individual characteristics. The valuation is then
stratified based upon predominant characteristics such as agency and interest
rates to determine possible valuation losses within each category. We had no
valuation allowances recorded for the years ended December 31, 2001 and 2000.
The following table shows the amount of MSRs which were capitalized and
amortized, and the fair value of those assets as of December 31, for the
periods indicated ($ in thousands):

|                            |  |      |        |      |  |      |        |   |  |   |        |  
|--------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                            |  | 2001 |        | 2000 |  | 1999
|                            |  |      |        |      |  |     
|Balance, beginning of year  |  | $    | 16,057 |      |  | $    | 20,681 |   |  | $ | 22,930 |  
|Capitalized MSRs           |  |      | 923    |      |  |      |       |   |  |   | 3,238  |  
|Sale of High LTV Loan MSRs |  |      | (1,966 | )    |  |      |       |   |  |   |       |  
|Amortization                |  |      | (4,802 | )    |  |      | (4,624 | ) |  |   | (5,487 | )
|                            |  |      |        |      |  |      |        |   |  |   |        |  
|Balance, end of year        |  | $    | 10,212 |      |  | $    | 16,057 |   |  | $ | 20,681 |  
|                            |  |      |        |      |  |      |        |   |  |   |        |  
|Fair value of MSRs         |  | $    | 12,865 |      |  | $    | 21,888 |   |  | $ | 29,728 |  
|                            |  |      |        |      |  |      |        |   |  |   |        |  
|Discount rate used          |  |      | 9.00   | %    |  |      | 12.00  | % |  |   | 12.00  | %
|                            |  |      |        |      |  |      |        |   |  |   |        |  

Loans

Interest on commercial and real estate loans and substantially all installment
loans is recognized monthly on the loan balance outstanding. Our 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 our opinion, may be doubtful as to the collection of interest or
principal. These loans are designated as nonaccrual and any accrued but
unpaid interest previously recorded is reversed against current period interest
income.

Loan origination and commitment fees, net of certain costs, are deferred and
the amount is amortized as an adjustment to interest income using the effective
interest rate method, 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 term of the loan.

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. Our allowance is an amount that we believe will be adequate
to absorb probable 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.

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Accounting for Impairment of Loans

Our identification of loan impairment on an individual loan basis includes
larger loans which are: (1) nonperforming and have been placed on non-accrual
status; or (2) performing according to all contractual terms of the loan
agreement but may have substantive indication of potential credit weakness.
Other loans outside the scope of SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, primarily smaller loans and loans of a homogeneous
nature, are collectively evaluated for loss.

At December 31, 2001, $61.1 million of loans were considered impaired by us.
Those loans required valuation allowances totaling $10.3 million, which are
included within the overall allowance for loan losses at December 31, 2001. As
of December 31, 2000, $53.4 million of loans were considered impaired by us.
Approximately $45.9 million of these loans required valuation allowances,
totaling $8.9 million, which were included within the overall allowance for
loan losses at December 31, 2000.

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, where 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:

|                           |  |       |      | 
|-------------------------- |  | ----- | ---- | 
|                           |  | YEARS
|                           |  |      
|Buildings and improvements |  |       | 39   | 
|Furniture and equipment    |  |       | 3-7  | 
|Leasehold improvements     |  |       | 5-15 | 

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 (ORE)

ORE represents property acquired through foreclosure proceedings held for sale
and real estate held for investment. ORE is net of a valuation allowance
established to reduce cost to the lower of cost or fair value less to costs to
sell. 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.

Income Taxes

We follow the liability method, which establishes deferred tax assets and
liabilities for the temporary differences between the financial reporting bases
and the tax bases of our 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.

We file consolidated tax returns with the federal and state taxing authorities.
A tax sharing agreement exists between us and our subsidiaries whereby taxes
for the subsidiaries are computed as if the subsidiaries

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were separate
entities. Amounts to be paid or credited with respect to current taxes for the
subsidiary are paid to or received from us.

Goodwill

Goodwill is an intangible asset, which represents the excess of the cost of an
acquired enterprise over the fair market value of identifiable assets less the
fair market value of liabilities acquired in purchase transactions. This
goodwill was acquired in a 1997 acquisition and was being amortized on a
straight-line basis over 10 years.

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 10 years.

Time Deposits

Time deposits in amounts of $100,000 or more were $256.3 million as of December
31, 2001 and the scheduled maturities of those time deposits were as follows ($ in thousands):

|                    |  |        |           |                     |  |            |        |  
|------------------- |  | ------ | --------- | ------------------- |  | ---------- | ------ | -
|Year Ended          |  |        |           |                     |  | Percent of
|December 31,        |  | Amount |           | Total Time Deposits
|                    |  |        |           |                    
|2002                |  | $      | 939,220   |                     |  |            | 77.83  | %
|2003                |  |        | 151,013   |                     |  |            | 12.51  |  
|2004                |  |        | 51,052    |                     |  |            | 4.23   |  
|2005                |  |        | 51,708    |                     |  |            | 4.29   |  
|2006                |  |        | 13,468    |                     |  |            | 1.12   |  
|Thereafter          |  |        | 259       |                     |  |            | 0.02   |  
|                    |  |        |           |                     |  |            |        |  
|Total time deposits |  | $      | 1,206,720 |                     |  |            | 100.00 | %
|                    |  |        |           |                     |  |            |        |  

Stock-Based Compensation Plans

We account for our stock-based compensation plans under Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. We
adopted the disclosure option of SFAS No. 123, Accounting for Stock-Based
Compensation, 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 No. 123 had been adopted.

Accounting for Derivative Instruments and Hedging Activities

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that entities recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. In June 1999, the FASB
issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities  Deferral of the Effective Date of FASB Statement No. 133, which
delayed the date for implementation to all fiscal quarters of all fiscal years
beginning after June 15, 2000. In June 2000, the FASB issued SFAS

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No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities -
an amendment of SFAS No. 133, which amends the accounting and reporting
standards of SFAS No. 133 for certain derivative instruments and certain
hedging activities. The adoption of SFAS No. 133, on January 1, 2001, did not
have a material effect upon our results of operations or financial position.

Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities (a replacement of SFAS No. 125)

In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities (a replacement
of SFAS No. 125). SFAS No. 140 revised the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but carries over most of SFAS No. 125s
provisions without consideration. SFAS No. 140 was effective for transfers and
servicing of financial assets and extinguishment of liabilities occurring after
March 31, 2001, and required additional disclosures relating to previous
securitization transactions and collateral activity for the fiscal years ending
after December 15, 2000. The adoption of SFAS No. 140 did not have a material
effect upon our results of operations or financial position.

Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interest in Securitized Financial Assets

In January 2001, the Emerging Issues Task Force issued EITF 99-20, Recognition
of Interest Income and Impairment on Purchased and Retained Beneficial
Interests in Securitized Financial Assets, which provides guidance on the
method used for the recognition and measurement of interest income and
impairment of those retained interests. EITF 99-20 was effective for quarterly
periods after March 15, 2001. The adoption of EITF 99-20 did not have a
material effect upon our results of operations or financial position.

Financial Accounting and Reporting for Goodwill and Other Intangible Assets
Acquired in a Business Combination at Acquisition

On July 20, 2001, the FASB issued SFAS No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 addresses
financial accounting and reporting for goodwill and other intangible assets
acquired in a business combination at acquisition. SFAS No. 141 requires the
purchase method of accounting to be used for all business combinations
initiated after June 30, 2001; establishes specific criteria for the
recognition of intangible assets separately from goodwill; and requires
unallocated negative goodwill to be written off immediately as an extraordinary
gain (instead of being deferred and amortized). SFAS No. 142 addresses
financial accounting and reporting for intangible assets acquired individually
or with a group of other assets (but not those acquired in a business
combination) at acquisition. SFAS No. 142 also addresses financial accounting
and reporting for goodwill and other intangible assets subsequent to their
acquisition. SFAS No. 142 provides that goodwill will not be amortized but
rather will be tested at least annually for impairment. It also provides that
intangible assets that have finite useful lives will continue to be amortized
over their useful lives, but those lives will no longer be limited to 40 years.
SFAS No. 141 is effective for all business combinations initiated after June
30, 2001, and for all business combinations accounted for by the purchase
method for which the date of acquisition is after June 30, 2001. The
provisions of SFAS No. 142 are effective for fiscal years beginning after
December 15, 2001. The adoption of SFAS No. 141 and SFAS No. 142 are not
expected to have a material effect upon our financial position or results of
operations.

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Accounting for the Impairment or Disposal of Long-Lived Assets

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 replaces SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of and amends APB Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment of a Business and
Extraordinary, Unusual and Infrequent Occurring Events and Transactions. SFAS
No. 144 addresses the financial accounting and reporting for the impairment or
disposal of long-lived assets. SFAS No. 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years, with early application encouraged.
The adoption of SFAS No. 144 is not expected to have a material effect upon our
results of operations or financial position.

Accounting by Certain Entities (Including Entities with Trade Receivables) that
Lend to or Finance the Activities of Others

In December 2001, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 01-6, Accounting by Certain
Entities (including Entities with Trade Receivables) that Lend to or Finance
the Activities of Others. SOP 01-6 clarifies that accounting and financial
reporting practices for lending and financing activities should be the same
regardless of the type of entity engaging in those activities and conforms,
where appropriate, differences among the accounting and financial reporting
provisions previously established by certain AICPA Audit and Accounting guides.
SOP 01-6 is effective for fiscal years beginning after December 15, 2001. The
adoption of SOP 01-6 is not expected to have a material effect upon our results
of operations or financial position.

Cash Equivalents

For purposes of preparing the consolidated statements of cash flows, cash
equivalents are defined to include cash and due from banks, interest bearing
deposits and federal funds sold.

Reclassifications

Certain reclassifications have been made to prior period financial statements
to conform to the 2001 financial statement presentation.

51



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3. SECURITIES:

Our securities consisted primarily of mortgage-related securities (MBS) with
a lesser amount of U.S. Treasury Securities, U.S. Agency Securities and Revenue
Bonds. MBS, sometimes referred to as pass-through certificates, represent an
interest in a pool of loans. The majority of the MBS securities in our
portfolio are issued by three government agencies or corporations: (1) the
Government National Mortgage Association (GNMA); (2) the Federal Home Loan
Mortgage Corporation (FHLMC); and (3) the Federal National Mortgage
Association (FNMA). During 2001, 2000 and 1999, we securitized conventional
and government insured first lien mortgage loans with carrying values at
securitization of $81.3 million, $0 and $85.6 million, respectively. Securities
held to maturity are recorded at amortized cost, while securities available for
sale and trading are recorded at estimated fair value.

The securities portfolio at December 31, 2001 and 2000, is summarized as
follows ($ in thousands):

|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |         | 
|------------------------------------------- | ----------------------------------- | - | --------- | ------- | ---------- | - | ---------- | ----- | ----- | - | ------ | ------ | - | - | ------- | ------- | 
|                                            |                                     |   | Amortized |         | Unrealized |   | Unrealized |       | Fair 
|                                            |                                     |   | Cost      |         | Gains      |   | Losses     |       | Value
|                                            |                                     |   |           |         |            |   |            |       |      
|At December 31, 2001:                       |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Available for sale securities:              |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|U.S. Agency securities                      |                                     | $ | 2,500     |         |            | $ | 48         |       |       | $ |       |        |   | $ | 2,548   |        
|Revenue bonds                               |                                     |   | 2,810     |         |            |   | 47         |       |       |   | (11    | )      |   |   | 2,846   |        
|MBS                                         |                                     |   | 783,129   |         |            |   | 6,426      |       |       |   | (2,230 | )      |   |   | 787,325 |        
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|                                            | Total securities available for sale |   | $         | 788,439 |            |   | $          | 6,521 |       |   | $      | (2,241 | ) |   | $       | 792,719 | 
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Trading securities:                         |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Republic Bank Owner Trust 1998-1 B2         |                                     | $ | 10,863    |         |            | $ |           |       |       | $ |       |        |   | $ | 10,863  |        
|Republic Bank Owner Trust 1997-1 and 1998-1 |                                     |   | 5,855     |         |            |   |           |       |       |   |       |        |   |   | 5,855   |        
|Excess servicing, interest only-strip       |                                     |   | 3,159     |         |            |   |           |       |       |   |       |        |   |   | 3,159   |        
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|                                            | Total trading securities            |   | $         | 19,877  |            |   | $          |      |       |   | $      |       |   |   | $       | 19,877  | 
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Held to maturity:                           |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|                                            | MBS held to maturity                |   | $         | 21,470  |            |   | $          | 953   |       |   | $      |       |   |   | $       | 22,423  | 
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|At December 31, 2000:                       |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Available for sale securities:              |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|U.S. Treasury securities                    |                                     | $ | 9,998     |         |            | $ |           |       |       | $ | (11    | )      |   | $ | 9,987   |        
|U.S. Agency securities                      |                                     |   | 5,000     |         |            |   | 14         |       |       |   |       |        |   |   | 5,014   |        
|Revenue bonds                               |                                     |   | 3,772     |         |            |   | 28         |       |       |   | (14    | )      |   |   | 3,786   |        
|MBS                                         |                                     |   | 330,847   |         |            |   | 885        |       |       |   | (1,984 | )      |   |   | 329,748 |        
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|                                            | Total securities available for sale |   | $         | 349,617 |            |   | $          | 927   |       |   | $      | (2,009 | ) |   | $       | 348,535 | 
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Trading securities:                         |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Republic Bank Owner Trust 1998-1 B2         |                                     | $ | 10,863    |         |            | $ |           |       |       | $ |       |        |   | $ | 10,863  |        
|Republic Bank Owner Trust 1997-1 and 1998-1 |                                     |   | 10,179    |         |            |   |           |       |       |   |       |        |   |   | 10,179  |        
|Excess servicing, interest only-strip       |                                     |   | 3,536     |         |            |   |           |       |       |   |       |        |   |   | 3,536   |        
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|                                            | Total trading securities            |   | $         | 24,578  |            |   | $          |      |       |   | $      |       |   |   | $       | 24,578  | 
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|Held to maturity:                           |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        
|                                            | MBS held to maturity                |   | $         | 33,844  |            |   | $          | 457   |       |   | $      | (39    | ) |   | $       | 34,262  | 
|                                            |                                     |   |           |         |            |   |            |       |       |   |        |        |   |   |         |        

|                              |                  |      |         |         |  |   |         |         | 
|----------------------------- | ---------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|Book Value at December 31:    |                  | 2001 |         | 2000   
|                              |                  |      |         |        
|Available for sale securities |                  | $    | 792,719 |         |  | $ | 348,535 |        
|Trading securities            |                  |      | 19,877  |         |  |   | 24,578  |        
|Held to maturity securities   |                  |      | 21,470  |         |  |   | 33,844  |        
|                              |                  |      |         |         |  |   |         |        
|                              | Total securities |      | $       | 834,066 |  |   | $       | 406,957 | 
|                              |                  |      |         |         |  |   |         |        

52



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The amortized cost, estimated fair value and weighted average yield of
securities at December 31, 2001, grouped by stated maturity of the security are
shown below ($ in thousands):

|                              |                  |   |           |     |            |   |           |        |       |   |         |         |  |   |         |         | 
|----------------------------- | ---------------- | - | --------- | --- | ---------- | - | --------- | ------ | ----- | - | ------- | ------- |  | - | ------- | ------- | 
|                              |                  |   | Less
Than |     | One -
Five |   | Over
Five |        |       |   |        
|                              |                  |   | One
Year  |     | Years      |   | Years     |        | Total
|                              |                  |   |           |     |            |   |           |        |      
|Amortized Cost:               |                  |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|Available for sale securities |                  | $ | 325       |     |            | $ | 13,125    |        |       | $ | 774,989 |         |  | $ | 788,439 |        
|Trading securities            |                  |   |          |     |            |   |          |        |       |   | 19,877  |         |  |   | 19,877  |        
|Held to maturity              |                  |   | 561       |     |            |   | 6,509     |        |       |   | 14,400  |         |  |   | 21,470  |        
|                              |                  |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|                              | Total securities |   | $         | 886 |            |   | $         | 19,634 |       |   | $       | 809,266 |  |   | $       | 829,786 | 
|                              |                  |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|Fair Value:                   |                  |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|Available for sale securities |                  | $ | 330       |     |            | $ | 13,285    |        |       | $ | 779,104 |         |  | $ | 792,719 |        
|Trading securities            |                  |   |          |     |            |   |          |        |       |   | 19,877  |         |  |   | 19,877  |        
|Held to maturity              |                  |   | 569       |     |            |   | 6,700     |        |       |   | 15,154  |         |  |   | 22,423  |        
|                              |                  |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|                              | Total securities |   | $         | 899 |            |   | $         | 19,985 |       |   | $       | 814,135 |  |   | $       | 835,019 | 
|                              |                  |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|Weighted Average Yield:       |                  |   | 6.19      | %   |            |   | 5.94      | %      |       |   | 5.56    | %       |  |   | 5.52    | %      

Proceeds from sales of securities during the years ended December 31, 2001,
2000 and 1999 were $324.8 million, $42.4 million and $0, respectively. Gross
gains of $2.7 million, $245,000 and $0 and gross losses of $2,100, $5,200 and
$0, respectively, were realized on these sales. Securities with book and fair
values of $82.7 million and $83.7 million, respectively, were pledged to secure
repurchase agreements at December 31, 2001. The fair values assigned to the MBS
classified as available for sale were derived using market quotations at
December 31, 2001. Net unrealized holding losses on trading securities of $4.0
million, $13.5 million, and $470,000 were included in income during 2001, 2000,
and 1999, respectively.

Securitized Financial Assets

At December 31, 2001, the trading asset category included a $10.9 million
subordinate tranche purchased from our securitization of High LTV Loans in June
1998, $5.9 million in overcollateralization and residual interests in cash
flows from securitizations in December 1997 and June 1998 and $3.2 million of
excess servicing interest-only strips. We have recorded these assets at our
estimate of their fair value. The other assets category on our balance sheet
included $10.2 million of MSRs.

Trading assets are evaluated at least quarterly with any valuation adjustment
reflected as a trading gain or loss in the consolidated statement of operations
under the caption Gain (loss) on loans and securities, net. Under generally
accepted accounting principles, use of quoted market values is the preferred
method for valuing trading assets. However, where the market for those assets
is illiquid and price quotations are not readily available, other methods are
permitted, including techniques utilizing the present value of expected cash
flows to value our trading assets. We have used a present value methodology to
value trading assets.

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The accounting estimates and judgements used in the valuation of the residual
interests from the December 1997 and June 1998 securitizations are summarized
as follows ($ in thousands):

|                                           |  |           |         |           |  |           |         |   |  |   |         |  
|------------------------------------------ |  | --------- | ------- | --------- |  | --------- | ------- | - |  | - | ------- | -
|                                           |  | Initial   |         | 2001      |  | 2000     
|                                           |  | Valuation |         | Valuation |  | Valuation
|                                           |  |           |         |           |  |          
|December 1997 Securitization               |  |           |         |           |  |           |         |   |  |   |         |  
|Collateral amount                          |  | $         | 60,000  |           |  | $         | 24,965  |   |  | $ | 31,947  |  
|Discount rate                              |  |           | 14.00   | %         |  |           | 15.00   | % |  |   | 15.00   | %
|Prepayment speed                           |  |           | 15.00   |           |  |           | 24.00   |   |  |   | 14.00   |  
|Cumulative lifetime default rate (1)       |  |           | 9.57    |           |  |           | 19.37   |   |  |   | 22.86   |  
|Weighted average remaining life (in years) |  |           | 4.12    |           |  |           | 3.15    |   |  |   | 3.16    |  
|                                           |  |           |         |           |  |           |         |   |  |   |         |  
|June 1998 Securitization                   |  |           |         |           |  |           |         |   |  |   |         |  
|Collateral amount                          |  | $         | 240,000 |           |  | $         | 121,841 |   |  | $ | 159,017 |  
|Discount rate                              |  |           | 15.00   | %         |  |           | 15.00   | % |  |   | 15.00   | %
|Prepayment speed                           |  |           | 15.00   |           |  |           | 27.00   |   |  |   | 12.00   |  
|Cumulative lifetime default rate (1)       |  |           | 10.68   |           |  |           | 18.36   |   |  |   | 19.77   |  
|Weighted average remaining life (in years) |  |           | 4.19    |           |  |           | 2.82    |   |  |   | 3.92    |  



|(1) |  | Expressed as the percent of total defaults over the expected life
of the collateral to the initial collateral amount.
|--- |  | ---------------------------------------------------------------------------------------------------------------------

The following schedule summarizes the status and activity on the assets which
are collateral for the two securitizations ($ in thousands):

|                                            |  |        |       |        |  |   |        |  
|------------------------------------------- |  | ------ | ----- | ------ |  | - | ------ | -
|                                            |  | 1997-1 |       | 1998-1
|                                            |  |        |       |       
|As of December 31, 2001                     |  |        |       |        |  |   |        |  
|Cumulative credit losses, net of recoveries |  | $      | 7,832 |        |  | $ | 24,669 |  
|Cumulative default rate                     |  |        | 13.05 | %      |  |   | 10.28  | %
|Net credit losses in 2001                   |  | $      | 1,663 |        |  | $ | 7,956  |  
|                                            |  |        |       |        |  |   |        |  
|Delinquencies at December 31, 2001:         |  |        |       |        |  |   |        |  
|30-59 days delinquent                       |  | $      | 492   |        |  | $ | 2,224  |  
|60-89 days delinquent                       |  |        | 193   |        |  |   | 782    |  
|90 days and over delinquent                 |  |        | 308   |        |  |   | 1,644  |  
|                                            |  |        |       |        |  |   |        |  
|Total delinquencies                         |  | $      | 993   |        |  | $ | 4,650  |  
|                                            |  |        |       |        |  |   |        |  
|Delinquency rate                            |  |        | 3.98  | %      |  |   | 3.82   | %
|                                            |  |        |       |        |  |   |        |  
|                                            |  |        |       |        |  |   |        |  
|As of December 31, 2000                     |  |        |       |        |  |   |        |  
|Cumulative credit losses, net of recoveries |  | $      | 6,169 |        |  | $ | 16,713 |  
|Cumulative default rate                     |  |        | 10.28 | %      |  |   | 6.96   | %
|Net credit losses in 2000                   |  | $      | 2,431 |        |  | $ | 8,247  |  
|                                            |  |        |       |        |  |   |        |  
|Delinquencies at December 31, 2000:         |  |        |       |        |  |   |        |  
|30-59 days delinquent                       |  | $      | 753   |        |  | $ | 3,714  |  
|60-89 days delinquent                       |  |        | 322   |        |  |   | 1,921  |  
|90 day and over delinquent                  |  |        | 965   |        |  |   | 3,487  |  
|                                            |  |        |       |        |  |   |        |  
|Total delinquencies                         |  | $      | 2,040 |        |  | $ | 9,122  |  
|                                            |  |        |       |        |  |   |        |  
|Delinquency rate                            |  |        | 6.39  | %      |  |   | 5.74   | %
|                                            |  |        |       |        |  |   |        |  

54



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Sensitivity in the Valuation of Securitized Financial Assets- The market
values of the securities resulting from securitization of financial assets are
extremely sensitive to changes in the assumptions used to calculate the
expected cash flows from those assets. The measurements of the sensitivities
presented are hypothetical
and should be used with caution. As the figures indicate, changes in fair
value based on selected variations in assumptions generally cannot be
extrapolated because the relationship of the change in the assumption to the
change in fair value may not be linear. Also, the effect of a variation in a
particular assumption on fair value is calculated without changing any other
assumption; in reality, changes in one factor may result in changes in another
factor (for example, increases in market interest rates may result in lower
prepayments and increased credit losses), which might magnify or counteract the
sensitivities.

Residual Interests in Cashflows from
Securitizing High LTV Loans -Our
approximation of the resulting fair values and the change from the current
valuation due to two alternative changes in the discount rate, the prepayment
speed and the cumulative lifetime default are as follows ($ in thousands):

|                                                                                                                      |  |                   |       |               |  |               |       |   |  |   |       |  
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----- | ------------- |  | ------------- | ----- | - |  | - | ----- | -
|                                                                                                                      |  |                   |       |               |  | To:          
|                                                                                                                      |  |                   |       |               |  |              
|                                                                                                                      |  | From              |       | Pro Forma     |  | Pro Forma    
|December 1997 Securitization ("1997-1")                                                                               |  | Current Valuation |       | Valuation (1) |  | Valuation (2)
|                                                                                                                      |  |                   |       |               |  |              
|If the discount rate was changed:                                                                                     |  |                   | 15.00 | %             |  |               | 25.00 | % |  |   | 30.00 | %
|The current valuation would change:                                                                                   |  | $                 | 3,578 |               |  | $             | 2,892 |   |  | $ | 2,645 |  
|If the prepayment speed was changed:                                                                                  |  |                   | 24.00 | %             |  |               | 35.00 | % |  |   | 40.00 | %
|The current valuation would change:                                                                                   |  | $                 | 3,578 |               |  | $             | 2,828 |   |  | $ | 2,581 |  
|If losses over the remaining life were to
increase by 25% and 35%, the cumulative
lifetime default rate would change: |  |                   | 19.37 | %             |  |               | 21.23 | % |  |   | 21.90 | %
|The current valuation would change:                                                                                   |  | $                 | 3,578 |               |  | $             | 2,857 |   |  | $ | 2,530 |  

|                                                                                                                      |  |                   |       |               |  |               |       |   |  |   |       |  
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----- | ------------- |  | ------------- | ----- | - |  | - | ----- | -
|                                                                                                                      |  |                   |       |               |  | To:          
|                                                                                                                      |  |                   |       |               |  |              
|                                                                                                                      |  | From              |       | Pro Forma     |  | Pro Forma    
|December 1998 Securitization ("1998-1")                                                                               |  | Current Valuation |       | Valuation (1) |  | Valuation (2)
|                                                                                                                      |  |                   |       |               |  |              
|If the discount rate was changed:                                                                                     |  |                   | 15.00 | %             |  |               | 25.00 | % |  |   | 30.00 | %
|The current valuation would change:                                                                                   |  | $                 | 2,528 |               |  | $             | 1,805 |   |  | $ | 1,550 |  
|If the prepayment speed was changed:                                                                                  |  |                   | 27.00 | %             |  |               | 35.00 | % |  |   | 40.00 | %
|The current valuation would change:                                                                                   |  | $                 | 2,528 |               |  | $             | 797   |   |  | $ | 0     |  
|If losses over the remaining life were to
increase by 10% and 25%, the cumulative
lifetime default rate would change: |  |                   | 18.36 | %             |  |               | 19.27 | % |  |   | 20.26 | %
|The current valuation would change:                                                                                   |  | $                 | 2,528 |               |  | $             | 1,137 |   |  | $ | 0     |  

MSRs and Excess Servicing Interest-Only Strips- Our MSRs at December 31,
2001 were $10.2 million representing the capitalized value of the rights to
service $637.9 million of loans. Our excess servicing interest-only strips
were $3.2 million representing the capitalized value of the rights to service
$258.7 million of loans (the $258.7 million of loans with excess servicing is
included in the overall $637.9 million servicing portfolio amount).

55



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At December 31, 2001, the estimated fair value of the MSRs was $12.9 million.
The excess servicing interest-only strips were stated at their fair value of
$3.2 million. Both assets are sensitive to changes in economic conditions,
particularly changes in the expected offering rates for new mortgage loans
which determine expected prepayment speeds, one of the major components of the
valuation. We perform the sensitivity analysis on the MSRs and the excess
servicing interest-only strips as one combined asset.
Our estimate of the change in fair value at December 31, 2001 for a given
change in loan offering rates was as follows:

|                           |  |                      |  | 
|-------------------------- |  | -------------------- |  | 
|If Loan Offering
Rates:    |  | The
MSR Value Would:
|                           |  |                     
|Increased 200 basis points |  | Increase by 32%     
|Increased 400 basis points |  | Increase by 38%     
|Decreased 200 basis points |  | Decrease by 28%     
|Decreased 400 basis points |  | Decrease by 30%     

4. LOANS:

Loans at December 31, 2001 and 2000, are summarized as follows ($ in
thousands):

|                                                        |                                |                                       |         |           |           |      |         |           |           | 
|------------------------------------------------------- | ------------------------------ | ------------------------------------- | ------- | --------- | --------- | ---- | ------- | --------- | --------- | 
|                                                        |                                |                                       |         | 2001      |           | 2000
|                                                        |                                |                                       |         |           |           |     
|Real estate mortgage loans:                             |                                |                                       |         |           |           |      |         |          
|                                                        | One-to-four family residential |                                       | $       | 432,792   |           |      | $       | 641,203   |          
|                                                        | Subprime mortgages             |                                       |         | 50,743    |           |      |         | 65,662    |          
|                                                        | Multifamily residential        |                                       |         | 62,565    |           |      |         | 85,338    |          
|                                                        | Warehouse lines of credit      |                                       |         | 718       |           |      |         | 39,835    |          
|                                                        | Commercial real estate         |                                       |         | 501,030   |           |      |         | 559,014   |          
|                                                        |                                |                                       |         |           |           |      |         |          
|                                                        |                                | Mortgage loans secured by first liens |         |           | 1,047,848 |      |         |           | 1,391,052 | 
|Commercial (business) loans                             |                                |                                       | 108,912 |           |           |      | 125,145 |          
|Home equity loans                                       |                                |                                       | 215,315 |           |           |      | 137,900 |          
|High LTV Loans                                          |                                |                                       | 30,245  |           |           |      | 39,191  |          
|Consumer loans                                          |                                |                                       | 20,719  |           |           |      | 21,624  |          
|                                                        |                                |                                       |         |           |           |      |         |          
|                                                        | Total gross portfolio loans    |                                       |         | 1,423,039 |           |      |         | 1,714,912 |          
|Less-allowance for loan losses                          |                                |                                       | (31,997 | )         |           |      | (33,462 | )        
|Less-premiums and unearned discounts on loans purchased |                                |                                       | (672    | )         |           |      | (239    | )        
|Less-unamortized loan fees, net                         |                                |                                       | (1,356  | )         |           |      | (3,331  | )        
|                                                        |                                |                                       |         |           |           |      |         |          
|                                                        | Total loans held for portfolio |                                       | $       | 1,389,014 |           |      | $       | 1,677,880 |          
|                                                        |                                |                                       |         |           |           |      |         |          

Mortgage loans serviced for others as of December 31, 2001 and 2000, were
$638.0 million and $1.3 billion respectively. Loans on which interest was not
being accrued totaled approximately $46.2 million, $49.4 million, and $25.0
million at December 31, 2001, 2000 and 1999, respectively. Had interest been
accrued on these loans at their originally contracted rates, interest income
would have been increased by approximately $4.3 million, $3.1 million, and $3.0
million in the years ended December 31, 2001, 2000 and 1999, respectively.
Loans past due 90 days or more and still accruing interest at December 31, 2001
and 2000, totaled approximately $12,000 and $1.2 million respectively.
Restructured loans totaled $773,000 and $1.5 million during 2001 and 2000,
respectively.

56



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5. ALLOWANCE FOR LOAN LOSSES:

Changes in the allowance for loan losses were as follows ($ in thousands):

|                             |                                                                      |   |                                  |         |      |   |        |         |   |   |        |         |  
|---------------------------- | -------------------------------------------------------------------- | - | -------------------------------- | ------- | ---- | - | ------ | ------- | - | - | ------ | ------- | -
|                             |                                                                      |   | For the Years Ended December 31,
|                             |                                                                      |   |                                 
|                             |                                                                      |   | 2001                             |         | 2000 |   | 1999  
|                             |                                                                      |   |                                  |         |      |   |       
|Balance at beginning of year |                                                                      | $ | 33,462                           |         |      | $ | 28,177 |         |   | $ | 28,077 |        
|                             | Provision for possible loan losses                                   |   |                                  | 16,150  |      |   |        | 20,700  |   |   |        | 9,923   |  
|                             | Allowance from purchased loans                                       |   |                                  |        |      |   |        |        |   |   |        | 275     |  
|                             | Discount on purchased loans allocated
from allowance for loan losses |   |                                  | (613    | )    |   |        | (389    | ) |   |        | (470    | )
|                             | Loans charged-off                                                    |   |                                  | (18,851 | )    |   |        | (16,806 | ) |   |        | (11,123 | )
|                             | Recoveries of loans charged-off                                      |   |                                  | 1,849   |      |   |        | 1,780   |   |   |        | 1,495   |  
|                             |                                                                      |   |                                  |         |      |   |        |         |   |   |        |        
|Balance at end of year       |                                                                      | $ | 31,997                           |         |      | $ | 33,462 |         |   | $ | 28,177 |        
|                             |                                                                      |   |                                  |         |      |   |        |         |   |   |        |        

6. PREMISES AND EQUIPMENT:

Premises and equipment, net of accumulated depreciation and amortization at
December 31, 2001 and 2000, included ($ in thousands):

|                                               |                              |   |         |        |      |   |         |        | 
|---------------------------------------------- | ---------------------------- | - | ------- | ------ | ---- | - | ------- | ------ | 
|                                               |                              |   | 2001    |        | 2000
|                                               |                              |   |         |        |     
|Land                                           |                              | $ | 9,198   |        |      | $ | 9,662   |       
|Buildings and improvements                     |                              |   | 26,068  |        |      |   | 28,539  |       
|Furniture and equipment                        |                              |   | 29,992  |        |      |   | 30,817  |       
|Leasehold improvements                         |                              |   | 5,651   |        |      |   | 5,202   |       
|Construction in progress                       |                              |   | 1,227   |        |      |   | 162     |       
|                                               |                              |   |         |        |      |   |         |       
|                                               | Total premises and equipment |   |         | 72,136 |      |   |         | 74,382 | 
|Less-accumulated depreciation and amortization |                              |   | (29,336 | )      |      |   | (27,159 | )     
|                                               |                              |   |         |        |      |   |         |       
|                                               | Premises and equipment, net  |   | $       | 42,800 |      |   | $       | 47,223 | 
|                                               |                              |   |         |        |      |   |         |       

Depreciation expense for 2001, 2000 and 1999 was $6.0 million, $6.9 million and
$7.1 million, respectively.

7. OTHER REAL ESTATE:

The carrying value of loans converted to ORE through foreclosure proceedings
totaled $19.0 million, and $7.9 million, for the years ended December 31, 2001
and 2000, respectively. Sales of ORE that were financed by us totaled $0 and
$443,000 for the years ended December 31, 2001 and 2000, respectively.

Changes in the valuation for ORE were as follows ($ in thousands):

|                             |                  |   |                                  |      |      |   |      |     |   |   |       |        |  
|---------------------------- | ---------------- | - | -------------------------------- | ---- | ---- | - | ---- | --- | - | - | ----- | ------ | -
|                             |                  |   | For the Years Ended December 31,
|                             |                  |   |                                 
|                             |                  |   | 2001                             |      | 2000 |   | 1999
|                             |                  |   |                                  |      |      |   |     
|Balance at beginning of year |                  | $ | 305                              |      |      | $ | 138  |     |   | $ | 4,405 |       
|                             | Provision        |   |                                  |     |      |   |      | 225 |   |   |       | 80     |  
|                             | Charge-offs, net |   |                                  | (207 | )    |   |      | (58 | ) |   |       | (4,347 | )
|                             |                  |   |                                  |      |      |   |      |     |   |   |       |       
|Balance at end of year       |                  | $ | 98                               |      |      | $ | 305  |     |   | $ | 138   |       
|                             |                  |   |                                  |      |      |   |      |     |   |   |       |       

State banking regulations require us 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. There are no properties that have
exceeded the five-year holding period limitation.

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8. INCOME TAXES:

The income tax provision or benefit, excluding the income tax benefit related
to the minority interest from subsidiary trust, was comprised of the following
($ in thousands):

|                             |  |                                  |        |      |  |      |        |   |  |   |       | 
|---------------------------- |  | -------------------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ----- | 
|                             |  | For the Years Ended December 31,
|                             |  |                                 
|                             |  | 2001                             |        | 2000 |  | 1999
|                             |  |                                  |        |      |  |     
|Current provision            |  | $                                | 5,922  |      |  | $    | 2,892  |   |  | $ | 6,411 | 
|Deferred provision/(benefit) |  |                                  | (4,612 | )    |  |      | (3,679 | ) |  |   | 1,389 | 
|                             |  |                                  |        |      |  |      |        |   |  |   |       | 
|                             |  | $                                | (1,310 | )    |  | $    | (787   | ) |  | $ | 7,800 | 
|                             |  |                                  |        |      |  |      |        |   |  |   |       | 

At December 31, 2001, we had approximately $5.4 million of remaining federal
and $6.3 million of state net operating loss carryforwards. These
carryforwards expire in the years 2005 through 2019. Recognition of net
operating loss carryforwards incurred prior to 1998 are limited to
approximately $732,000 each year under the rules of Internal Revenue Code
Section 382. 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.

Through mergers in 1997 and 1998, we acquired unrecognized deferred tax
liabilities of approximately $3.2 million, and $86,000, respectively, related
to base year reserves calculated under the thrift bad debt percentage method.
If during any taxable year, we cease to be a bank, these reserves shall be
taxed ratably over the six taxable year period beginning with such taxable
year.

Our effective tax rate varies from the statutory rate of 34%. The reasons for
this difference are as follows ($ in thousands):

|                                            |                                           |                                |        |                                  |        |      |        |      |      |   |       |     |       | 
|------------------------------------------- | ----------------------------------------- | ------------------------------ | ------ | -------------------------------- | ------ | ---- | ------ | ---- | ---- | - | ----- | --- | ----- | 
|                                            |                                           |                                |        | For the Years Ended December 31,
|                                            |                                           |                                |        |                                 
|                                            |                                           |                                |        | 2001                             |        | 2000 |        | 1999
|                                            |                                           |                                |        |                                  |        |      |        |     
|Computed expected tax provision/(benefit) |                                           | $                              | (1,198 | )                                |        | $    | (1,257 | )    |      | $ | 6,861 |    
|Increase (reduction) of taxes:              |                                           |                                |        |                                  |        |      |        |      |      |   |       |    
|                                            | Tax-exempt interest income                |                                | (13    | )                                |        |      | (16    | )    |      |   | (18   | )  
|                                            | Valuation allowance on deferred tax asset |                                |       |                                  |        |      |       |      |      |   | (523  | )  
|                                            | Goodwill amortization                     |                                | 179    |                                  |        |      | 179    |      |      |   | 179   |    
|                                            | State taxes                               |                                | (24    | )                                |        |      | 136    |      |      |   | 841   |    
|                                            | Other                                     |                                |        | (254                             | )      |      |        | 171  |      |   |       | 460 |      
|                                            |                                           |                                |        |                                  |        |      |        |      |      |   |       |    
|                                            |                                           | Actual tax provision (benefit) |        | $                                | (1,310 | )    |        | $    | (787 | ) |       | $   | 7,800 | 
|                                            |                                           |                                |        |                                  |        |      |        |      |      |   |       |    

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Temporary differences created the following deferred tax assets and liabilities
at December 31, 2001 and 2000 ($ in thousands):

|                                                                     |                          |                                |        |                                |        |      |        |        |        |  
|-------------------------------------------------------------------- | ------------------------ | ------------------------------ | ------ | ------------------------------ | ------ | ---- | ------ | ------ | ------ | -
|                                                                     |                          |                                |        | Deferred Tax Asset (Liability)
|                                                                     |                          |                                |        |                               
|                                                                     |                          |                                |        | 2001                           |        | 2000
|                                                                     |                          |                                |        |                                |        |     
|Provision for loan losses-financial expense greater than tax expense |                          | $                              | 12,031 |                                |        | $    | 12,581 |       
|Net operating losses and tax credit carry-forwards                   |                          |                                | 2,078  |                                |        |      | 2,753  |       
|Loan discount accretion-financial income greater than tax income     |                          |                                |       |                                |        |      | (156   | )     
|Financial and tax differences from loan securitizations              |                          |                                | 2,627  |                                |        |      | (168   | )     
|Financial amortization of premium over tax amortization              |                          |                                | 1,545  |                                |        |      | 1,446  |       
|Financial and tax differences from interest on nonaccrual loans      |                          |                                | 151    |                                |        |      | 442    |       
|Other                                                                |                          |                                | 72     |                                |        |      | 249    |       
|                                                                     |                          |                                |        |                                |        |      |        |       
|                                                                     | Gross deferred tax asset |                                |        | 18,504                         |        |      |        | 17,147 |       
|Tax depreciation greater than financial depreciation                 |                          |                                | (1,357 | )                              |        |      | (1,844 | )     
|Financial and tax differences from mortgage servicing rights         |                          |                                | 392    |                                |        |      | (2,328 | )     
|Financial and tax differences on purchase accounting adjustments     |                          |                                | (525   | )                              |        |      | (531   | )     
|Financial and tax differences on FHLB dividends                      |                          |                                | (267   | )                              |        |      | (267   | )     
|Other (net)                                                          |                          |                                | (267   | )                              |        |      | (309   | )     
|                                                                     |                          |                                |        |                                |        |      |        |       
|                                                                     |                          | Gross deferred tax liabilities |        |                                | (2,024 | )    |        |        | (5,279 | )
|Less valuation allowance                                             |                          |                                |       |                                |        |      |       |       
|                                                                     |                          |                                |        |                                |        |      |        |       
|                                                                     |                          | Net deferred tax asset         |        | $                              | 16,480 |      |        | $      | 11,868 |  
|                                                                     |                          |                                |        |                                |        |      |        |       

An amount relating to the unrealized gain on available for sale securities,
which is recorded directly to stockholders equity, and is a component of
comprehensive income, increased by $2.0 million and $4.2 million, in 2001 and
2000, respectively.

9. OTHER BORROWINGS:

FHLB Advances

At December 31, 2001, we were required by our collateral agreement with the
FHLB to maintain qualifying first mortgage loans in an amount equal to at least
100% of the FHLB advances outstanding as collateral. The FHLB advances at
December 31, 2001 and 2000 were collateralized by such loans and securities
totaling $52.3 million and $761,000, respectively, with an unused credit line
of $396.5 million at December 31, 2001. In addition, all of our FHLB stock is
pledged as collateral for such advances.

Maturities and average interest rates of advances from the FHLB as of December
31, 2001 and 2000, were as follows ($ in thousands):

|                            |                 |       |   |                                  |        |      |  |        |      |      |   |     |     |  |  |      |      |  
|--------------------------- | --------------- | ----- | - | -------------------------------- | ------ | ---- |  | ------ | ---- | ---- | - | --- | --- |  |  | ---- | ---- | -
|                            |                 |       |   | Amount and weighted average rate
|                            |                 |       |   | at December 31,                 
|                            |                 |       |   |                                 
|                            |                 |       |   | 2001                             |        | 2000
|                            |                 |       |   |                                  |        |     
|                            |                 |       |   | Amount                           |        | Rate |  | Amount |      | Rate
|                            |                 |       |   |                                  |        |      |  |        |      |     
|Remaining term to maturity: |                 |       |   |                                  |        |      |  |        |      |      |   |     |     |  |  |     
|                            | 1 month or less |       | $ | 30,000                           |        |      |  | 1.83   | %    |      | $ |    |     |  |  |     | %   
|                            | 2-12 months     |       |   | 10,000                           |        |      |  | 3.15   |      |      |   |    |     |  |  |     |     
|                            | 13-24 months    |       |   | 5,000                            |        |      |  | 3.78   |      |      |   |    |     |  |  |     |     
|                            | 25-36 months    |       |   |                                 |        |      |  | 0.00   |      |      |   |    |     |  |  |     |     
|                            | Over 36 months  |       |   | 7,251                            |        |      |  | 5.22   |      |      |   | 761 |     |  |  | 6.85 |     
|                            |                 |       |   |                                  |        |      |  |        |      |      |   |     |     |  |  |     
|                            |                 | Total |   | $                                | 52,251 |      |  |        | 2.74 | %    |   | $   | 761 |  |  |      | 6.85 | %
|                            |                 |       |   |                                  |        |      |  |        |      |      |   |     |     |  |  |     

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7% Convertible Subordinated Debt Due 2014

In September 1999, we completed a private placement of $15.0 million 7.0%
convertible subordinated debentures that mature on October 1, 2014 (the 1999
Debentures) Each $1,000 principal amount of the 1999 Debentures is
convertible at any time by the holder into 55.55556 shares of our $2.00 par
value common stock (a conversion price of $18.00 per share). We can redeem the
1999 Debentures at any time after October 1, 2004 at fixed redemption prices.
The 1999 Debentures may also be redeemed by us without a premium if the closing
price of our common stock equals or exceeds $23.40 for 20 consecutive trading
days.

7% Convertible Subordinated Debentures Due 2011

In May 2001, we completed a private placement of $15.0 million 7% convertible
subordinated debentures maturing April 1, 2011 (the 2001 Debentures). Each
$1,000 principal amount of the 2001 Debentures is convertible by the holder at
any time into 64.1026 shares of our $2.00 par value common stock (a conversion
price of $15.60 per share). The 2001 Debentures can be redeemed by us at any
time after April 1, 2003, without payment of any premium, provided the closing
bid price of our common stock for not less than 20 consecutive trading days
equals or exceeds $20.28. Regardless of the closing bid price of our common
stock, we can redeem the 2001 Debentures at any time after April 1, 2006 at
fixed redemption prices. The 2001 Debentures are subordinate to the 1999
Debentures. The net proceeds from the 2001 Debentures were used to repay $10.0
million of outstanding debt and the balance was used for general corporate
purposes.

Holding Company Senior Debt, Term Subordinated Debt and Unsecured Notes

During 2001 we repaid all of our holding company senior debt, term subordinated
debt and unsecured notes to one of our directors.

Holding Company Senior Debt- The holding company senior debt had a balance of
$6.8 million at the end of 2000. The senior debt was originally borrowed in
September 1998 in the amount of $25.0 million and was guaranteed by Mr. William
R. Hough, our Chairman of the Board and principal shareholder. In September
1999, we paid down the principal amount by $15.0 million to a balance of $10.0
million using the net proceeds from sale of the 1999 Debentures, extended the
maturity to March 31, 2001 and amended the terms so as to require monthly
principal payments of $278,000 plus interest and a $5.0 million balloon payment
on March 24, 2001. In December 2000, we further restructured the senior debt,
made a $2.0 million payment in January 2001, with the $4.8 million remainder to
be fully amortized over an 18-month period beginning in January 2001. The
balance was paid off in May 2001 with the net proceeds from the 2001
Debentures.

Term Subordinated Debt- The term subordinated debt had a balance of $2.8
million at the end of 2000. In December 1998, we borrowed $7.0 million from
certain members of our board of directors on an unsecured basis. In September
1999, we refinanced the unsecured debt to our directors by exchanging with them
$4.3 million of the 1999 Debentures and $2.7 million non-convertible term
subordinated debt, maturing in 2006. The term subordinated debt was paid off
in May 2001 with the net proceeds from the 2001 Debentures.

Unsecured Notes -In 2000, we borrowed $3.5 million on an unsecured, revolving
line of credit basis from Mr. William R. Hough, individually. The proceeds
were used for holding company debt service. The loan was amended in December
2000 to extend the maturity to October 1, 2002. The unsecured notes to Mr.
Hough totaling $3.5 million were paid off in May 2001 with the net proceeds
from the 2001 Debentures.

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10. CREDIT RISK CONCENTRATION, OFF-BALANCE-SHEET RISK, COMMITMENTS AND
CONTINGENCIES

Loans Outside Florida

The majority of the loans outside Florida are located in the states of
California, Texas, Georgia, and in the northeastern United States. At December
31, 2001, the composition of our loan portfolio, according to the location of
the borrower or the real estate taken as underlying collateral, was as follows
($ in thousands):

|                                      |       |        |           |           |  |  |         |        |  
|------------------------------------- | ----- | ------ | --------- | --------- |  |  | ------- | ------ | -
|                                      |       |        |           |           |  |  | Percent
|State                                 |       | Amount |           | of Total 
|                                      |       |        |           |           | 
|Florida                               |       | $      | 1,135,535 |           |  |  | 79.91   | %     
|New England (1)                       |       |        | 70,557    |           |  |  | 4.97    |       
|Georgia                               |       |        | 32,536    |           |  |  | 2.29    |       
|California                            |       |        | 28,621    |           |  |  | 2.01    |       
|Texas                                 |       |        | 17,522    |           |  |  | 1.23    |       
|Virginia                              |       |        | 16,829    |           |  |  | 1.18    |       
|New Jersey                            |       |        | 15,950    |           |  |  | 1.12    |       
|Ohio                                  |       |        | 13,072    |           |  |  | 0.92    |       
|New York                              |       |        | 12,994    |           |  |  | 0.91    |       
|Illinois                              |       |        | 12,921    |           |  |  | 0.91    |       
|North Carolina                        |       |        | 11,480    |           |  |  | 0.81    |       
|Missouri                              |       |        | 10,260    |           |  |  | 0.72    |       
|All other (none greater than $10,000) |       |        | 42,734    |           |  |  | 3.02    |       
|                                      |       |        |           |           |  |  |         |       
|                                      | Total |        | $         | 1,421,011 |  |  |         | 100.00 | %
|                                      |       |        |           |           |  |  |         |       



---

|(1) |  | New England has been defined by us to include the states of Connecticut,
Delaware, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

Off-Balance-Sheet Items

We enter into financial instruments with off-balance-sheet risk in the normal
course of business to meet the financing needs of our customers. These
financial instruments include commitments to extend credit, commercial and
standby letters of credit and unfunded lines of credit. These instruments
involve, to varying degrees, elements of credit and interest-rate risks that
are not recognized in the accompanying consolidated balance sheets.

Our 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. We use the same credit policies in making
commitments and conditional obligations as we do for on-balance-sheet
instruments.

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A summary of financial instruments with off-balance-sheet risk at December 31,
2001, is as follows ($ in thousands):

|                                         |       |   |             |         | 
|---------------------------------------- | ----- | - | ----------- | ------- | 
|                                         |       |   | Contractual
|                                         |       |   | Amount     
|                                         |       |   |            
|Commitments to extend credit             |       | $ | 185,041     |        
|Unfunded lines of credit                 |       |   | 174,182     |        
|Commercial and standby letters of credit |       |   | 3,335       |        
|                                         |       |   |             |        
|                                         | Total |   | $           | 362,558 | 
|                                         |       |   |             |        

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 may expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. We evaluate 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 our credit evaluation of
the counter party. 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
us 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 those involved in extending loan facilities
to customers. Outstanding, unsecured standby letters of credit at December 31,
2001, totaled approximately $3.3 million.

Commitments

We have entered into a number of non-cancelable operating leases primarily for
branch banking locations. At December 31, 2001, minimum rental commitments
based on the remaining noncancelable lease terms were as follows ($ in
thousands):

|                      |                                   |                                 |       |        |        | 
|--------------------- | --------------------------------- | ------------------------------- | ----- | ------ | ------ | 
|2002                  |                                   | $                               | 5,091 |       
|2003                  |                                   |                                 | 4,668 |       
|2004                  |                                   |                                 | 3,859 |       
|2005                  |                                   |                                 | 2,195 |       
|2006                  |                                   |                                 | 1,794 |       
|Thereafter            |                                   |                                 | 9,882 |       
|                      |                                   |                                 |       |       
|                      | Gross operating lease commitments |                                 |       | 27,489 |       
|Less-sublease rentals |                                   |                                 | (698  | )     
|                      |                                   |                                 |       |       
|                      |                                   | Net operating lease commitments |       | $      | 26,791 | 
|                      |                                   |                                 |       |       

Total rent expense for the years ended December 31, 2001, 2000 and 1999, was
$5.6 million, $5.6 million, and $6.0 million, respectively. Total rental
income from subleases for the years ended December 31, 2001, 2000 and 1999, was
$558,000, $1.1 million, and $909,000, respectively. In addition, we are
obligated to make processing payments in relation to our computer facilities of
approximately $1.8 million in 2002.

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Contingencies

We are subject to various legal proceedings in the ordinary course of business.
Based on information presently available, we do not believe that the ultimate
outcome in such proceedings, in the aggregate, would have a material adverse
effect on our financial position or results of operations.

11. EMPLOYEE BENEFIT PLANS:

We have a 401(k) retirement plan that covers substantially all employees. Our
contributions were $214,000, $230,000, and $268,000 in the years ended December
31, 2001, 2000 and 1999, respectively.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS:

Generally, our practice and intent is to hold our financial instruments to
maturity, unless otherwise designated. Where available, quoted market prices
are used to determine fair value, however, most of our financial instruments
lack quoted market prices. We have incorporated what we consider appropriate
estimation methodologies for those financial instruments which lack quoted
market prices which requires that a significant number of assumptions be used
to determine fair value. Those assumptions include subjective assessments of
current market conditions and perceived risks associated with financial
instruments, among other things. A user of these financial statements might
consider different assumptions to be more appropriate which could have a
significant effect on the resulting estimated fair value. The estimated fair
values presented neither include nor give effect to the intangible values
associated with our business, existing customer relationships, and branch
banking network, among other things.

The following estimates of the fair value of financial instruments held by us
include only those instruments that could reasonably be evaluated. Cash and due
from banks and federal funds sold were valued at cost. The securities portfolio
was evaluated using market quotes, where available or fair market values based
on a present value of cash flows technique. The fair value of the loan
portfolio was evaluated using the present value of cash flows, after adjusting
for credit deterioration and prepayment assumptions, based upon current rates
we 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. The value of our mortgage servicing rights was
determined using the discounted cash flows of net income from servicing. 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. Fair
values for time deposits and other borrowings 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 typically result in loans with a market interest rate when funded. The
recorded book value of deferred fee income approximates fair value.

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These evaluations may incorporate specific value to us in accordance with our
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 our overall
value as they exclude intangible aspects such as business and franchise value.
The table below illustrates the estimated fair value of our financial
instruments as of December 31, using the assumptions described above ($ in
thousands):

|                       |                                                            |  |      |           |      |  |   |           | 
|---------------------- | ---------------------------------------------------------- |  | ---- | --------- | ---- |  | - | --------- | 
|                       |                                                            |  | 2001 |           | 2000
|                       |                                                            |  |      |           |     
|Financial Assets:      |                                                            |  |      |           |      |  |   |          
|                       | Cash and due from banks                                    |  | $    | 65,370    |      |  | $ | 52,540    | 
|                       | Interest bearing deposits in banks                         |  |      | 11,828    |      |  |   | 6,910     | 
|                       | Federal funds sold                                         |  |      | 14,925    |      |  |   | 150,212   | 
|                       | Securities                                                 |  |      | 835,019   |      |  |   | 407,375   | 
|                       | Loans                                                      |  |      | 1,445,348 |      |  |   | 1,722,134 | 
|                       | Mortgage servicing rights                                  |  |      | 12,865    |      |  |   | 21,709    | 
|Financial Liabilities: |                                                            |  |      |           |      |  |   |          
|                       | Deposits                                                   |  |      | 2,157,610 |      |  |   | 2,171,134 | 
|                       | Securities sold under agreements to repurchase             |  |      | 34,169    |      |  |   | 41,581    | 
|                       | FHLB advances                                              |  |      | 52,251    |      |  |   | 761       | 
|                       | Holding company senior debt                                |  |      |          |      |  |   | 6,833     | 
|                       | Convertible subordinated debt                              |  |      | 29,287    |      |  |   | 14,712    | 
|                       | Term subordinated debt and holding company unsecured notes |  |      |          |      |  |   | 6,250     | 

13. STOCKHOLDERS EQUITY:

Perpetual Preferred Convertible Stock

In the second quarter of 2001, all of the holders of the Companys 75,000
shares of perpetual preferred stock converted their holdings into the Companys
common stock, increasing the number of common shares outstanding by 750,000.
The preferred stock had a liquidation preference of $88 per share and carried a
noncumulative dividend of $3.52 per year, which was paid quarterly. The
holders of the preferred stock voted with the holders of the common stock and
were entitled to 10 votes per each share of preferred stock.

Dividends

Florida statutes limit the amount of dividends we can pay in any given year to
that years net income plus retained net income from the two preceding years.
Additionally, we cannot pay dividends if payment would cause us to be
undercapitalized as defined by federal regulations.

The terms of our convertible subordinated debt require that we maintain
unrestricted cash in the holding company equivalent to the next two interest
payments as a prerequisite to paying common stock dividends. Under the Florida
Financial Institutions Code, the prior approval of the Department is required
if the total of all dividends declared by a bank in any calendar year exceeds
the sum of the banks net profits for that year and its retained net profits
for the preceding two years. As of January 1, 2002, there was a net retained
deficit for dividend payment purposes of $9.5 million. The holding company had
$6.9 million of unrestricted cash available to it for debt service. Our annual
debt service requirement is approximately $4.7 million per year.

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Non-qualified Stock Options

The board of directors may grant nonqualified options each year. As of
December 31, 2001, 117,400 of such options were outstanding. The per share
exercise price of each stock option is determined by the board of directors at
the date of grant, vesting over a five year period.

1995 Incentive Stock Option Plan

On April 29, 1994, the shareholders approved a qualified incentive stock option
plan for certain key employees. In 1995, the stockholders adopted the Republic
Bancshares, Inc. 1995 Stock Option Plan (the Plan) as a replacement for the
1994 Stock Option Plan. The total number of shares that may be purchased
pursuant to the Plan cannot exceed 1,125,000 shares 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 10 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. In the
event of a change in control, or termination of employment without cause, all
options granted become exercisable immediately. As of December 31, 2001, any
performance options previously granted had all either been exercised or have
expired.

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 at the date
of the option grant. As of December 31, 2001, 627,860 options remained
outstanding under this plan, with 288,994 shares available to be granted at a
future time.

1997 Stock Appreciation Rights Plan

On October 21, 1997, the board of directors approved a Stock Appreciation
Rights Plan (the SAR Plan and SARs). Under the SAR Plan, certain key
employees have been granted the right to receive cash equal to the excess of
the fair market value of a share of our common stock at the time of exercise,
over the fair market value of a share of our common stock at date of grant,
times the number of rights exercised. As of December 31, 2001, 17,900 SARs
granted at the then current market value of $26.675 remained outstanding. No
more than 20% of the SARs may vest annually, beginning at date of grant. The
term of a SAR may vary, but shall not be less than one year or more than 10
years from the date of grant.

We record compensation expense equal to the appreciation of the fair market
value of the stock times the number of outstanding SARs. As of December 31,
2001 and 2000, there had been no appreciation of our common stock over the fair
market value at date of grant. Therefore, compensation expense has been
recorded only for those rights which have been exercised.

Aggregate Stock Option Activity

We have adopted SFAS No. 123 for disclosure purposes only. The fair value of
each option grant has been estimated as of the date of grant using an option
pricing model with the following assumptions (weighted averages) for 2001, 2000
and 1999: risk-free interest rate of 4.54%, 5.08% and 6.34%, respectively,
expected life of seven years, dividend rate of zero percent, and expected
volatility of 32.1% for 2001, 41.1% for 2000 and 24.0% for 1999. The
approximate fair value of the stock options granted in 2001, 2000, and 1999 is
$806,000, $1.3 million and $2.9 million, respectively, which would be amortized
as compensation expense over the five year vesting period of the options.

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Had compensation cost been determined consistent with SFAS No. 123, utilizing
the assumptions detailed above, our net income (loss) and earnings (loss) per
share, as reported, would have been the following pro forma amounts ($ in
thousands except share data):

|                                    |             |  |      |        |      |  |      |        |   |  |   |        | 
|----------------------------------- | ----------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | 
|                                    |             |  | 2001 |        | 2000 |  | 1999
|                                    |             |  |      |        |      |  |     
|Net income (loss)                   |             |  |      |        |      |  |      |        |   |  |   |       
|                                    | As reported |  | $    | (3,898 | )    |  | $    | (4,598 | ) |  | $ | 10,692 | 
|                                    | Pro forma   |  |      | (5,903 | )    |  |      | (5,962 | ) |  |   | 9,452  | 
|Net income (loss) per share-basic   |             |  |      |        |      |  |      |        |   |  |   |       
|                                    | As reported |  |      | (0.37  | )    |  |      | (0.46  | ) |  |   | 0.99   | 
|                                    | Pro forma   |  |      | (0.55  | )    |  |      | (0.59  | ) |  |   | 0.88   | 
|Net income (loss) per share-diluted |             |  |      |        |      |  |      |        |   |  |   |       
|                                    | As reported |  |      | (0.37  | )    |  |      | (0.46  | ) |  |   | 0.95   | 
|                                    | Pro forma   |  |      | (0.55  | )    |  |      | (0.59  | ) |  |   | 0.84   | 

A summary of the status of our stock option plans at December 31, 2001, 2000
and 1999, and for the years then ended is presented in the table below:

|                    |                                         |  |  |          |   |             |   |           |  |             |  |          |   |             |   |       |  |  |  |           |   |  |   |       |  | 
|------------------- | --------------------------------------- |  |  | -------- | - | ----------- | - | --------- |  | ----------- |  | -------- | - | ----------- | - | ----- |  |  |  | --------- | - |  | - | ----- |  | 
|                    |                                         |  |  | 2001     |   | 2000        |   | 1999     
|                    |                                         |  |  |          |   |             |   |          
|                    |                                         |  |  |          |   |             |   | Wtd. Avg. |  |             |  |          |   | Wtd. Avg.   |   |       |  |  |  | Wtd. Avg.
|                    |                                         |  |  | Shares   |   | Exer. Price |   | Shares    |  | Exer. Price |  | Shares   |   | Exer. Price
|                    |                                         |  |  |          |   |             |   |           |  |             |  |          |   |            
|Fixed Options       |                                         |  |  |          |   |             |   |           |  |             |  |          |   |             |   |       |  |  |  |           |   |  |   |      
|                    | Outstanding  beg. of year              |  |  | 645,317  |   |             | $ | 16.86     |  |             |  | 539,557  |   |             | $ | 19.09 |  |  |  | 503,939   |   |  | $ | 20.15 | 
|                    | Granted                                 |  |  | 112,300  |   |             |   | 16.46     |  |             |  | 221,100  |   |             |   | 12.11 |  |  |  | 267,500   |   |  |   | 14.73 | 
|                    | Exercised                               |  |  | (29,350  | ) |             |   | 12.19     |  |             |  | (100     | ) |             |   | 10.88 |  |  |  | (119,595  | ) |  |   | 10.33 | 
|                    | Forfeited/Expired                       |  |  | (100,407 | ) |             |   | 19.79     |  |             |  | (115,240 | ) |             |   | 18.19 |  |  |  | (112,287  | ) |  |   | 22.79 | 
|                    |                                         |  |  |          |   |             |   |           |  |             |  |          |   |             |   |       |  |  |  |           |   |  |   |      
|                    | Outstanding  end of year               |  |  | 627,860  |   |             |   | 16.62     |  |             |  | 645,317  |   |             |   | 16.86 |  |  |  | 539,557   |   |  |   | 19.09 | 
|                    |                                         |  |  |          |   |             |   |           |  |             |  |          |   |             |   |       |  |  |  |           |   |  |   |      
|                    | Exercisable  end of year               |  |  | 332,356  |   |             |   | 18.16     |  |             |  | 308,557  |   |             |   | 18.42 |  |  |  | 234,357   |   |  |   | 19.04 | 
|                    | Wtd. avg. fair value
of options granted |  |  |          |   |             |   | 7.18      |  |             |  |          |   |             |   | 5.78  |  |  |  |           |   |  |   | 10.93 | 
|Performance Options |                                         |  |  |          |   |             |   |           |  |             |  |          |   |             |   |       |  |  |  |           |   |  |   |      
|                    | Outstanding  beg. of year              |  |  |         |   |             |   |          |  |             |  |         |   |             |   |      |  |  |  | 139,100   |   |  |   | 14.79 | 
|                    | Granted                                 |  |  |         |   |             |   |          |  |             |  |         |   |             |   |      |  |  |  |          |   |  |   |      | 
|                    | Exercised                               |  |  |         |   |             |   |          |  |             |  |         |   |             |   |      |  |  |  | (113,100  | ) |  |   | 13.63 | 
|                    | Forfeited/Expired                       |  |  |         |   |             |   |          |  |             |  |         |   |             |   |      |  |  |  | (26,000   | ) |  |   | 19.85 | 
|                    |                                         |  |  |          |   |             |   |           |  |             |  |          |   |             |   |       |  |  |  |           |   |  |   |      
|                    | Outstanding  end of year               |  |  |         |   |             |   |          |  |             |  |         |   |             |   |      |  |  |  |          |   |  |   |      | 
|                    |                                         |  |  |          |   |             |   |           |  |             |  |          |   |             |   |       |  |  |  |           |   |  |   |      
|                    | Exercisable  end of year               |  |  |         |   |             |   |          |  |             |  |         |   |             |   |      |  |  |  |          |   |  |   |      | 

|                    |  |                     |         |                  |  |                  |      |             |  |                  |       |  |  |  |         |  |  |   |       | 
|------------------- |  | ------------------- | ------- | ---------------- |  | ---------------- | ---- | ----------- |  | ---------------- | ----- |  |  |  | ------- |  |  | - | ----- | 
|Options Outstanding |  | Options Exercisable
|                    |  |                    
|                    |  | Number              |         | Weighted-Average |  |                  |      |             |  | Number           |       |  |  | 
|Range of            |  | Outstanding         |         | Remaining        |  | Weighted-Average |      | Exercisable |  | Weighted-Average
|Exercise Prices     |  | at 12/31/01         |         | Contractual Life |  | Exercise Price   |      | at 12/31/01 |  | Exercise Price  
|                    |  |                     |         |                  |  |                  |      |             |  |                 
|$8.75 - 12.85       |  |                     | 193,680 |                  |  |                  | 8.19 |             |  | $                | 11.53 |  |  |  | 75,868  |  |  | $ | 11.62 | 
|12.94 - 17.95       |  |                     | 320,240 |                  |  |                  | 7.79 |             |  |                  | 15.61 |  |  |  | 157,288 |  |  |   | 15.10 | 
|26.68 - 28.94       |  |                     | 113,940 |                  |  |                  | 6.27 |             |  |                  | 28.14 |  |  |  | 99,200  |  |  |   | 28.02 | 

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14. EARNINGS (LOSS) PER SHARE:

Net Income (Loss) Per Common and Common Equivalent Share

Diluted earnings (loss) per common and common equivalent shares have been
computed by dividing net income (loss) 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 had
been exercised, at the average market price for the period, with the proceeds
being used to buy shares from the market (i.e., the treasury stock method) and
the perpetual preferred convertible stock and the convertible subordinated
debentures 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). Basic earnings
(loss) per common share was computed by dividing net income (loss) less
dividends paid on the perpetual preferred convertible stock, by the weighted
average number of shares of common stock outstanding during the year. During
2001, there were 627,860 stock options and 1,794,872 shares related to
convertible subordinated debt which would have been antidilutive. During 2000,
there were 645,317 stock options, 833,334 shares related to convertible
subordinated debt and 750,000 shares related to convertible preferred stock,
which would have been antidilutive. During 1999, there were 298,140 stock
options and 833,334 shares related to convertible subordinated debt, which were
antidilutive.

Diluted and basic earnings per share in 2001 and 2000 were identical. The
table below reconciles the calculation of diluted and basic earnings per share
for 1999 ($ in thousands, except share data):

|        |                                                 |   |        |     |             |  |            |         |          |   |      |   | 
|------- | ----------------------------------------------- | - | ------ | --- | ----------- |  | ---------- | ------- | -------- | - | ---- | - | 
|        |                                                 |   | 1999  
|        |                                                 |   |       
|        |                                                 |   |        |     |             |  | Weighted   |         | Earnings
|        |                                                 |   | Net    |     | Shares      |  | Per       
|        |                                                 |   | Income |     | Outstanding |  | Share     
|        |                                                 |   |        |     |             |  |           
|Basic   |                                                 | $ | 10,427 |     |             |  | 10,484,650 |         |          | $ | 0.99 |  
|        | Stock options                                   |   |        |    |             |  |            | 65,252  |          |   |      |   | 
|        | Convertible perpetual preferred
stock dividends |   |        | 265 |             |  |            | 750,000 |          |   |      |  | 
|        |                                                 |   |        |     |             |  |            |         |          |   |      |  
|Diluted |                                                 | $ | 10,692 |     |             |  | 11,299,902 |         |          | $ | 0.95 |  
|        |                                                 |   |        |     |             |  |            |         |          |   |      |  

15. REGULATORY CAPITAL REQUIREMENTS:

We are required to comply with the three basic measures of capital adequacy
established by the Federal Reserve and the FDIC, two risk-based measures and a
leverage measure. All three applicable capital standards must be satisfied for
a bank holding company or a bank 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 be comprised of
common stock, minority interests in the equity accounts of consolidated
subsidiaries, noncumulative perpetual preferred convertible stock, and a
limited amount of cumulative perpetual preferred convertible 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,

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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
margin 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.

Failure to meet capital guidelines could subject us to a variety of enforcement
remedies, including issuance of a capital directive, the termination of deposit
insurance by the FDIC, a prohibition on the taking of brokered deposits, and
certain other restrictions on our 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.

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As of December 31, 2001 and 2000, we were considered well capitalized
according to the federal banking agencies guidelines. The table which follows
sets forth the amounts of capital and capital ratios as of December 31, 2001 and
2000, and the applicable regulatory minimums ($ in thousands):

|                                           |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  |  |       |  
|------------------------------------------ | ------------------- | -------------------------------------------------- |  | ------- | ------- | ----- |  | ------ | ----- | ----- |  | - | ------- |  |  |  | ----- | -
|                                           |                     |                                                    |  | Company |         | Bank 
|                                           |                     |                                                    |  |         |         |      
|                                           |                     |                                                    |  | Amount  |         | Ratio |  | Amount |       | Ratio
|                                           |                     |                                                    |  |         |         |       |  |        |       |      
|As of December 31, 2001:                   |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|Risk-Based Capital:                        |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|                                           |                     | Tier 1 Capital                                     |  |         |         |       |  |        |       |       |  |   |         |  |  |  |       |  
|                                           |                     | Actual                                             |  | $       | 175,190 |       |  |        | 11.90 | %     |  | $ | 192,808 |  |  |  | 13.11 | %
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 58,889  |       |  |        | 4.00  |       |  |   | 58,842  |  |  |  | 4.00  |  
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 116,301 |       |  |        | 7.90  |       |  |   | 133,966 |  |  |  | 9.11  |  
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 88,263  |  |  |  | 6.00  |  
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 104,545 |  |  |  | 7.11  |  
|                                           |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|                                           |                     | Total Capital                                      |  |         |         |       |  |        |       |       |  |   |         |  |  |  |       |  
|                                           |                     | Actual                                             |  | $       | 223,402 |       |  |        | 15.17 | %     |  | $ | 211,693 |  |  |  | 14.39 | %
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 117,778 |       |  |        | 8.00  |       |  |   | 117,684 |  |  |  | 8.00  |  
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 105,624 |       |  |        | 7.17  |       |  |   | 94,009  |  |  |  | 6.39  |  
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 147,105 |  |  |  | 10.00 |  
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 64,588  |  |  |  | 4.39  |  
|                                           |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|Tier 1 Capital to Total Assets (Leverage): |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|                                           |                     | Actual                                             |  | $       | 175,190 |       |  |        | 7.21  | %     |  | $ | 192,808 |  |  |  | 7.94  | %
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 97,212  |       |  |        | 4.00  |       |  |   | 97,161  |  |  |  | 4.00  |  
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 77,978  |       |  |        | 3.21  |       |  |   | 95,647  |  |  |  | 3.94  |  
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 121,451 |  |  |  | 5.00  |  
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 71,357  |  |  |  | 2.94  |  
|                                           |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|As of December 31, 2000:                   |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|                                           | Risk-Based Capital: |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  |  |      
|                                           |                     | Tier 1 Capital                                     |  |         |         |       |  |        |       |       |  |   |         |  |  |  |       |  
|                                           |                     | Actual                                             |  | $       | 151,969 |       |  |        | 10.27 | %     |  | $ | 172,967 |  |  |  | 11.69 | %
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 59,216  |       |  |        | 4.00  |       |  |   | 59,161  |  |  |  | 4.00  |  
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 92,753  |       |  |        | 6.27  |       |  |   | 113,806 |  |  |  | 7.69  |  
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 88,742  |  |  |  | 6.00  |  
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 84,225  |  |  |  | 5.69  |  
|                                           |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|                                           |                     | Total Capital                                      |  |         |         |       |  |        |       |       |  |   |         |  |  |  |       |  
|                                           |                     | Actual                                             |  | $       | 187,935 |       |  |        | 12.69 | %     |  | $ | 191,455 |  |  |  | 12.94 | %
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 118,431 |       |  |        | 8.00  |       |  |   | 118,323 |  |  |  | 8.00  |  
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 69,504  |       |  |        | 4.69  |       |  |   | 73,132  |  |  |  | 4.94  |  
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 147,903 |  |  |  | 10.00 |  
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 43,552  |  |  |  | 2.94  |  
|                                           |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|Tier 1 Capital to Total Assets (Leverage): |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  | 
|                                           |                     | Actual                                             |  | $       | 151,969 |       |  |        | 6.30  | %     |  | $ | 172,967 |  |  |  | 7.18  | %
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 96,473  |       |  |        | 4.00  |       |  |   | 96,311  |  |  |  | 4.00  |  
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 55,496  |       |  |        | 2.30  |       |  |   | 76,656  |  |  |  | 3.18  |  
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 120,389 |  |  |  | 5.00  |  
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 52,578  |  |  |  | 2.18  |  

69



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##### 



16. RELATED PARTY TRANSACTIONS:

Mr. William R. Hough, is chairman of the board of the Company, a director of
the Company and the Bank, and our largest shareholder. Mr. Hough is also
Chairman Emeritus and the controlling shareholder of William R. Hough & Co.
(WRHC), a NASD-member investment-banking firm. During 1999, we entered into
an agreement with WRHC whereby they would act as our agent in open-market
purchases and sales of securities. WRHC is compensated under that agreement on
a commission basis. During 2001, 2000 and 1999, we purchased $725.6 million,
$114.8 million and $241.3 million respectively, of securities through WRHC and
sold $285.9 million, $41.2 million and $0 of securities through WRHC. We also
periodically purchase securities under agreement to repurchase at a rate based
on the prevailing federal funds rate and one-eighth of one percent, per an
agreement entered into on August 15, 1995. There were no such securities
purchased from WRHC at December 31, 2001 and 2000.

In 2000, we had borrowed from Mr. Hough, individually, $3.5 million on an
unsecured, revolving line of credit basis and $1.5 million via term
subordinated debt. The proceeds were used for holding company debt service. On
May 8, 2001, we repaid both obligations in full.

WRHC participated as a selling agent in the placement of the $15.0 million of
convertible subordinated debentures due 2011 (the Debentures) that were
issued on May 8, 2001 and was paid an $89,000 fee for its sales efforts. Mr.
Hough, individually, purchased $3.7 million of the Debentures. No fee was paid
on sale of the Debentures to Mr. Hough or to any other of our directors who
purchased the Debentures. In September 1999, WRHC acted as sales agent for a
private placement to accredited investors of $15.0 million of our 7.0%
convertible subordinated debentures (the Debentures) maturing on October 1,
2014. WRHC was paid fees in an amount equal to $215,000 and were reimbursed
for their out-of-pocket expenses.

WRHC offers sales of insurance and mutual fund products and investment advisory
services on our premises. Previously we were paid a commission based on the
net profits earned from sales of investment products on our premises. For
2001, that arrangement was amended so that commissions paid to us would be
based on gross revenues. Fee income earned from this relationship was $190,700
and $250,400 during 2001 and 2000, respectively.

Certain other directors and executive officers, members of their immediate
families, and entities with which such persons are associated are customers of
ours. As such, they had transactions in the ordinary course of business with
us. All loans and commitments to lend included in those transactions were made
in the ordinary course of business, upon substantially the same terms.
Features including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and, in our opinion, have
not involved more than the normal risk of collectibility or presented other
unfavorable features.

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##### 



17. BANK HOLDING COMPANY FINANCIAL STATEMENTS:

Republic Bancshares, Inc.
Parent-Only Condensed Balance Sheets
($ in thousands)

|                     |                                                                         |                                          |   |                    |         |      |   |         |         | 
|-------------------- | ----------------------------------------------------------------------- | ---------------------------------------- | - | ------------------ | ------- | ---- | - | ------- | ------- | 
|                     |                                                                         |                                          |   | As of December 31,
|                     |                                                                         |                                          |   |                   
|                     |                                                                         |                                          |   | 2001               |         | 2000
|                     |                                                                         |                                          |   |                    |         |     
|Assets               |                                                                         |                                          |   |                    |         |      |   |        
|                     | Cash                                                                    |                                          | $ | 8,956              |         |      | $ | 1,078   |        
|                     | Investment in wholly-owned subsidiaries                                 |                                          |   | 219,678            |         |      |   | 223,444 |        
|                     | Other assets                                                            |                                          |   | 1,964              |         |      |   | 4,694   |        
|                     |                                                                         |                                          |   |                    |         |      |   |         |        
|                     |                                                                         | Total assets                             |   | $                  | 230,598 |      |   | $       | 229,216 | 
|                     |                                                                         |                                          |   |                    |         |      |   |         |        
|Liabilities          |                                                                         |                                          |   |                    |         |      |   |        
|                     | Holding company senior debt                                             |                                          | $ |                   |         |      | $ | 6,833   |        
|                     | Convertible subordinated debt                                           |                                          |   | 29,287             |         |      |   | 14,712  |        
|                     | Term subordinated debt and unsecured notes                              |                                          |   |                   |         |      |   | 6,250   |        
|                     | Junior subordinated debt to subsidiary                                  |                                          |   | 28,750             |         |      |   | 28,750  |        
|                     | Accrued interest on debt                                                |                                          |   | 524                |         |      |   | 330     |        
|                     |                                                                         |                                          |   |                    |         |      |   |         |        
|                     |                                                                         | Total liabilities                        |   |                    | 58,561  |      |   |         | 56,875  | 
|Stockholders Equity |                                                                         |                                          |   |                    |         |      |   |        
|                     | Perpetual preferred convertible stock                                   |                                          |   |                   |         |      |   | 1,500   |        
|                     | Common stock                                                            |                                          |   | 22,671             |         |      |   | 21,112  |        
|                     | Capital surplus                                                         |                                          |   | 129,056            |         |      |   | 128,735 |        
|                     | Retained earnings                                                       |                                          |   | 17,639             |         |      |   | 21,669  |        
|                     | Net unrealized gain (loss) on available
for sale securities, net of tax |                                          |   | 2,671              |         |      |   | (675    | )      
|                     |                                                                         |                                          |   |                    |         |      |   |         |        
|                     |                                                                         | Total stockholders equity               |   |                    | 172,037 |      |   |         | 172,341 | 
|                     |                                                                         |                                          |   |                    |         |      |   |         |        
|                     |                                                                         | Total liabilities & stockholders equity |   | $                  | 230,598 |      |   | $       | 229,216 | 
|                     |                                                                         |                                          |   |                    |         |      |   |         |        

Republic Bancshares, Inc.


Parent-Only Condensed Statements of Operations


($ in thousands)


|                                                                                              |                   |   |                                  |        |      |   |        |        |   |   |        |        | 
|--------------------------------------------------------------------------------------------- | ----------------- | - | -------------------------------- | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | 
|                                                                                              |                   |   | For the Years Ended December 31,
|                                                                                              |                   |   |                                 
|                                                                                              |                   |   | 2001                             |        | 2000 |   | 1999  
|                                                                                              |                   |   |                                  |        |      |   |       
|Operating Income:                                                                             |                   |   |                                  |        |      |   |        |        |   |   |        |       
|Dividends from bank subsidiary                                                                |                   | $ | 6,412                            |        |      | $ | 854    |        |   | $ | 7,200  |       
|Other income                                                                                  |                   |   |                                 |        |      |   |       |        |   |   | 13     |       
|                                                                                              |                   |   |                                  |        |      |   |        |        |   |   |        |       
|                                                                                              | Total income      |   |                                  | 6,412  |      |   |        | 854    |   |   |        | 7,213  | 
|Operating Expenses:                                                                           |                   |   |                                  |        |      |   |        |        |   |   |        |       
|Interest expense                                                                              |                   |   | 4,832                            |        |      |   | 4,814  |        |   |   | 4,892  |       
|Other expenses                                                                                |                   |   | 304                              |        |      |   | 11     |        |   |   | 3      |       
|                                                                                              |                   |   |                                  |        |      |   |        |        |   |   |        |       
|                                                                                              | Total expenses    |   |                                  | 5,136  |      |   |        | 4,825  |   |   |        | 4,895  | 
|                                                                                              |                   |   |                                  |        |      |   |        |        |   |   |        |       
|Income (loss) before income taxes and equity
in undistributed net income (loss) of subsidiary |                   |   | 1,276                            |        |      |   | (3,971 | )      |   |   | 2,318  |       
|Income tax (benefit)                                                                          |                   |   | (1,964                           | )      |      |   | (1,885 | )      |   |   | (1,812 | )     
|                                                                                              |                   |   |                                  |        |      |   |        |        |   |   |        |       
|Income (loss) before equity in undistributed
net income (loss) of subsidiary                  |                   |   | 3,240                            |        |      |   | (2,086 | )      |   |   | 4,130  |       
|Equity in undistributed net income (loss) of
subsidiary                                       |                   |   | (7,138                           | )      |      |   | (2,512 | )      |   |   | 6,562  |       
|                                                                                              |                   |   |                                  |        |      |   |        |        |   |   |        |       
|                                                                                              | Net income (loss) |   | $                                | (3,898 | )    |   | $      | (4,598 | ) |   | $      | 10,692 | 
|                                                                                              |                   |   |                                  |        |      |   |        |        |   |   |        |       

71



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##### 



Republic Bancshares, Inc.


Parent-Only Condensed Cash Flow Statements


($ in thousands)


|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |         |        |  
|---------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ----- | ------------- | ------------------ | ---- | ------ | ------ | ------ | - | ----- | ------- | ------ | -
|                                                     |                                                                                                    |                                                     |       | For the Years | Ended December 31, |     
|                                                     |                                                                                                    |                                                     |       |               |                    |     
|                                                     |                                                                                                    |                                                     |       | 2001          |                    | 2000 |        | 1999  
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |       
|Operating Activities:                                |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|                                                     | Net income (loss)                                                                                  |                                                     | $     | (3,898        | )                  |      | $      | (4,598 | )      |   | $     | 10,692  |       
|                                                     | Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities: |                                                     |       |               |                    |      |        |        |        |   |       |         |       
|                                                     | Equity in undistributed net income (loss) of subsidiary                                            |                                                     |       | 7,138         |                    |      |        | 2,512  |        |   |       | (6,562  | )     
|                                                     | Expense (income) on performance options                                                            |                                                     |       | 22            |                    |      |        | (46    | )      |   |       | 1,103   |       
|                                                     | Amortization of issuance costs                                                                     |                                                     |       | 31            |                    |      |        | 28     |        |   |       | 3       |       
|                                                     | Net increase (decrease) in other assets                                                            |                                                     |       | 2,730         |                    |      |        | (1,889 | )      |   |       | (1,598  | )     
|                                                     | Net increase in other liabilities                                                                  |                                                     |       | 194           |                    |      |        | 4      |        |   |       | 288     |       
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|                                                     |                                                                                                    | Net cash provided by (used in) operating activities |       |               | 6,217              |      |        |        | (3,989 | ) |       |         | 3,926  |  
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|Investment Activities:                               |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|                                                     | Equity investment in banking subsidiary                                                            |                                                     |       | (26           | )                  |      |        | 41     |        |   |       | (1,251  | )     
|                                                     | Return of investment from savings bank                                                             |                                                     |       |              |                    |      |        |       |        |   |       | 3,127   |       
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|                                                     |                                                                                                    | Net cash provided by (used in) investing activities |       |               | (26                | )    |        |        | 41     |   |       |         | 1,876  |  
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|Financing Activities:                                |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|                                                     | Proceeds from issuance of debt                                                                     |                                                     |       | 14,544        |                    |      |        | 4,500  |        |   |       | 10,531  |       
|                                                     | Repayment of debt                                                                                  |                                                     |       | (13,083       | )                  |      |        | (3,334 | )      |   |       | (15,934 | )     
|                                                     | Proceeds from exercise of stock options                                                            |                                                     |       | 358           |                    |      |        | 1      |        |   |       | 2,779   |       
|                                                     | Dividends on perpetual preferred convertible stock                                                 |                                                     |       | (132          | )                  |      |        | (264   | )      |   |       | (265    | )     
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|                                                     |                                                                                                    | Net cash provided by (used in) financing activities |       |               | 1,687              |      |        |        | 903    |   |       |         | (2,889 | )
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|Net increase (decrease) in cash and cash equivalents |                                                                                                    |                                                     | 7,878 |               |                    |      | (3,045 | )      |        |   | 2,913 |        
|                                                     | Cash and cash equivalents, beginning of year                                                       |                                                     |       | 1,078         |                    |      |        | 4,123  |        |   |       | 1,210   |       
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        
|                                                     | Cash and cash equivalents, end of year                                                             |                                                     | $     | 8,956         |                    |      | $      | 1,078  |        |   | $     | 4,123   |       
|                                                     |                                                                                                    |                                                     |       |               |                    |      |        |        |        |   |       |        

72



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##### 



SIGNATURES

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

| |  |  |     |                                                       
| |  |  | --- | ------------------------------------------------------
| |  |  |     | REPUBLIC BANCSHARES, INC.                             
| |  |  |     |                                                       
| |  |  | By: | /s/ William R. Klich                                  
| |  |  |     |                                                       
| |  |  |     | William R. Klich
President and Chief Executive
Officer
| |  |  |     |                                                       
| |  |  |     | Date: March 5, 2002                                   

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##### 



Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

|                                          |  |               |  |                                                                     
|----------------------------------------- |  | ------------- |  | --------------------------------------------------------------------
|SIGNATURE                                 |  | DATE          |  | TITLE                                                               
|                                          |  |               |  |                                                                     
|/s/ William R. KlichWilliam R. Klich      |  | March 5, 2002 |  | President, and Chief Executive
Officer (principal executive officer)
|                                         
|/s/William R. FalzoneWilliam R. Falzone   |  | March 5, 2002 |  | Treasurer (principal financial and
accounting officer)              
|                                         
|/s/William C. BallardWilliam C. Ballard   |  | March 5, 2002 |  | Director                                                            
|                                         
|/s/Marla M. HoughMarla M. Hough           |  | March 5, 2002 |  | Director                                                            
|                                         
|/s/William R. HoughWilliam R. Hough       |  | March 5, 2002 |  | Director                                                            
|                                         
|/s/Alfred T. MayAlfred T. May             |  | March 5, 2002 |  | Director                                                            
|                                         
|/s/William J. MorrisonWilliam J. Morrison |  | March 5, 2002 |  | Director                                                            
|                                         
|/s/Adelaide A. SinkAdelaide A. Sink       |  | March 5, 2002 |  | Director                                                            
|                                         
|/s/Charles J. ThayerCharles J. Thayer     |  | March 5, 2002 |  | Director                                                            

74



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##### 



INDEX TO EXHIBITS

23.0 Consent of Independent Certified Public Accountants

75