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

FORM 10-Q



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

For the quarterly period ended

September 30, 2002

Commission file number 0-27652

REPUBLIC BANCSHARES, INC.

(Exact Name of Registrant As Specified In Its Charter)


|                                        |  |                                  
|--------------------------------------- |  | ---------------------------------
|FLORIDA                                 |  | 59-3347653                       
|(State of incorporation)                |  | (IRS Employer 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)



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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 [  ]

At October 31, 2002, 11,397,879 shares of the registrants $2.00 par value
common stock were outstanding.





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TABLE OF CONTENTS



|                           |                                                                                               |                                                                                            |  |  |  |  |  | 
|-------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ |  |  |  |  |  | 
|                           |                                                                                               | CONSOLIDATED BALANCE SHEETS                                                               
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS                                                     
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY                                           
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                           
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                     
|                           |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                
|                           |                                                                                               | SELECTED QUARTERLY FINANCIAL INFORMATION                                                  
|                           | Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                           |                                                                                               | Comparison of Balance Sheets at September 30, 2002 and December 31, 2001                  
|                           |                                                                                               | Comparison of Results of Operations for the Three Months Ended September 30, 2002 and 2001
|                           | Item 3. INTEREST RATE RISK MANAGEMENT                                                        
|                           | Item 4. Controls and Procedures                                                              
|Part II. OTHER INFORMATION
|                           | Item 1. Legal Proceedings                                                                    
|                           | Item 6. Exhibits and Report on Form 8-K                                                      
|SECTION 302 CERTIFICATION 



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REPUBLIC BANCSHARES, INC.

INDEX

|               |  |                       |    |            |                                                                                       |  |    |                                                                                                                         |  |      |    | 
|-------------- |  | --------------------- | -- | ---------- | ------------------------------------------------------------------------------------- |  | -- | ----------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|               |  |                       |    |            |                                                                                       |  |    |                                                                                                                         |  | Page
|Part I         |  | FINANCIAL INFORMATION |    |            |                                                                                       | 
|               |  |                       |    | Item 1.    | Financial Statements (unaudited)                                                      |  |    |                                                                                                                         | 
|               |  |                       |    |            |                                                                                       |  |    | Consolidated Balance Sheets  September 30, 2002 and December 31, 2001                                                  |  |      | 1  | 
|               |  |                       |    |            |                                                                                       |  |    | Consolidated Statements of Operations 
Three and nine month periods ended September 30, 2002 and 2001                  |  |      | 2  | 
|               |  |                       |    |            |                                                                                       |  |    | Consolidated Statements of Stockholders Equity 
Year ended December 31, 2001 and
nine months ended September 30, 2002 |  |      | 3  | 
|               |  |                       |    |            |                                                                                       |  |    | Consolidated Statements of Comprehensive Income 
Three and nine month periods ended September 30, 2002 and 2001        |  |      | 3  | 
|               |  |                       |    |            |                                                                                       |  |    | Consolidated Statements of Cash Flows 
Nine month periods ended September 30, 2002 and 2001                            |  |      | 4  | 
|               |  |                       |    |            |                                                                                       |  |    | Notes to Consolidated Financial Statements                                                                              |  |      | 5  | 
|               |  |                       |    | Item 2.    | Managements Discussion and Analysis of Financial Condition
and Results of Operations |  |    |                                                                                                                         | 
|               |  |                       |    |            |                                                                                       |  |    | Selected Quarterly Financial Information and Other Data                                                                 |  |      | 15 | 
|               |  |                       |    |            |                                                                                       |  |    | Comparison of Balance Sheets at September 30, 2002 and December 31, 2001                                                |  |      | 18 | 
|               |  |                       |    |            |                                                                                       |  |    | Comparison of Results of Operations for the Three Months and the Nine Months
ended September 30, 2002 and 2001          |  |      | 20 | 
|               |  |                       |    | Item 3.    | Interest Rate Risk Management                                                         |  |    | 25                                                                                                                      | 
|               |  |                       |    | Item 4.    | Controls and Procedures                                                               |  |    | 26                                                                                                                      | 
|Part II        |  | OTHER INFORMATION     |    |            |                                                                                       | 
|               |  |                       |    | Item 1.    | Legal Proceedings                                                                     |  |    | 26                                                                                                                      | 
|               |  |                       |    | Item 6.    | Exhibits and Report on Form 8-K                                                       |  |    | 26                                                                                                                      | 
|               |  |                       |    | SIGNATURES |                                                                                       |  | 27 |                                                                                                                        
|Certifications |  |                       | 28 |           





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

Certain statements contained in this Quarterly Report on Form 10-Q (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 of those
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 quarterly
report, we do not intend to review or revise any particular forward-looking
statement referenced herein.





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REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS


($ in thousands, except share data; unaudited)


|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |           |           |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------------------------------------------ | --------- | ------------- | --------- | ------------ | --------- | --------- | --------- | 
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           | September 30, |           | December 31,
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           | 2002          |           | 2001        
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |             
|ASSETS                                                                                                                                         |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|Cash and due from banks                                                                                                                        |                                                                                                                                                                            | $                            | 51,028                                     |           |               | $         | 65,370       |          
|Interest bearing deposits with banks                                                                                                           |                                                                                                                                                                            |                              | 13,587                                     |           |               |           | 11,828       |          
|Federal funds sold                                                                                                                             |                                                                                                                                                                            |                              | 35,284                                     |           |               |           | 14,925       |          
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|Cash and cash equivalents                                                                                                                      |                                                                                                                                                                            |                              | 99,899                                     |           |               |           | 92,123       |          
|Securities:                                                                                                                                    |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               | Available for sale securities (at fair value)                                                                                                                              |                              |                                            | 791,949   |               |           |              | 792,719   |          
|                                                                                                                                               | Held to maturity securities (at amortized cost)                                                                                                                            |                              |                                            | 14,440    |               |           |              | 21,470    |          
|                                                                                                                                               | Trading securities (at fair value)                                                                                                                                         |                              |                                            | 8,274     |               |           |              | 19,877    |          
|                                                                                                                                               | FHLB stock                                                                                                                                                                 |                              |                                            | 15,261    |               |           |              | 13,168    |          
|                                                                                                                                               | Loans held for sale                                                                                                                                                        |                              |                                            | 12,562    |               |           |              |          |          
|                                                                                                                                               | Loans                                                                                                                                                                      |                              |                                            | 1,469,516 |               |           |              | 1,421,011 |          
|                                                                                                                                               | Allowance for loan losses                                                                                                                                                  |                              |                                            | (31,595   | )             |           |              | (31,997   | )        
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               | Net loans                                                                                                                                                                  |                              |                                            | 1,437,921 |               |           |              | 1,389,014 |          
|                                                                                                                                               | Premises and equipment, net                                                                                                                                                |                              |                                            | 42,574    |               |           |              | 42,800    |          
|                                                                                                                                               | Other real estate owned, net                                                                                                                                               |                              |                                            | 19,129    |               |           |              | 16,893    |          
|                                                                                                                                               | Accrued interest receivable                                                                                                                                                |                              |                                            | 11,112    |               |           |              | 12,368    |          
|                                                                                                                                               | Goodwill                                                                                                                                                                   |                              |                                            | 2,726     |               |           |              | 2,726     |          
|                                                                                                                                               | Premium on deposits                                                                                                                                                        |                              |                                            | 16,322    |               |           |              | 18,397    |          
|                                                                                                                                               | Other assets                                                                                                                                                               |                              |                                            | 39,013    |               |           |              | 37,789    |          
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               |                                                                                                                                                                            |                              | Total assets                               |           | $             | 2,511,182 |              |           | $         | 2,459,344 | 
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                           |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|Liabilities:                                                                                                                                   |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               | Deposits-                                                                                                                                                                  |                              |                                            |           |               |           |              |           |          
|                                                                                                                                               |                                                                                                                                                                            | Noninterest bearing checking |                                            | $         | 165,291       |           |              | $         | 152,972   |          
|                                                                                                                                               |                                                                                                                                                                            | Interest checking            |                                            |           | 191,990       |           |              |           | 186,817   |          
|                                                                                                                                               |                                                                                                                                                                            | Money market                 |                                            |           | 392,367       |           |              |           | 394,278   |          
|                                                                                                                                               |                                                                                                                                                                            | Savings                      |                                            |           | 175,242       |           |              |           | 189,557   |          
|                                                                                                                                               |                                                                                                                                                                            | Time deposits                |                                            |           | 1,224,084     |           |              |           | 1,206,720 |          
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               |                                                                                                                                                                            |                              | Total deposits                             |           |               | 2,148,974 |              |           |           | 2,130,344 | 
|                                                                                                                                               | Securities sold under agreements to repurchase                                                                                                                             |                              |                                            | 34,689    |               |           |              | 34,169    |          
|                                                                                                                                               | FHLB advances                                                                                                                                                              |                              |                                            | 77,243    |               |           |              | 52,251    |          
|                                                                                                                                               | Convertible subordinated debt                                                                                                                                              |                              |                                            | 29,321    |               |           |              | 29,287    |          
|                                                                                                                                               | Other liabilities                                                                                                                                                          |                              |                                            | 11,559    |               |           |              | 12,506    |          
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               |                                                                                                                                                                            |                              | Total liabilities                          |           |               | 2,301,786 |              |           |           | 2,258,557 | 
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|Company-obligated mandatorily redeemable preferred
securities of subsidiary trust solely holding junior
subordinated debentures of the Company |                                                                                                                                                                            |                              | 28,750                                     |           |               |           | 28,750       |          
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|Stockholders equity:                                                                                                                          |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               | Common stock ($2.00 par; 20,000,000 shares authorized; 11,397,669
and 11,335,339 shares issued and outstanding at September 30, 2002
and December 31, 2001, respectively.) |                              |                                            | 22,795    |               |           |              | 22,671    |          
|Capital surplus                                                                                                                                |                                                                                                                                                                            |                              | 129,755                                    |           |               |           | 129,056      |          
|Retained earnings                                                                                                                              |                                                                                                                                                                            |                              | 21,894                                     |           |               |           | 17,639       |          
|Accumulated other comprehensive income                                                                                                         |                                                                                                                                                                            |                              | 6,202                                      |           |               |           | 2,671        |          
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               |                                                                                                                                                                            |                              | Total stockholders equity                 |           |               | 180,646   |              |           |           | 172,037   | 
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          
|                                                                                                                                               |                                                                                                                                                                            |                              | Total liabilities and stockholders equity |           | $             | 2,511,182 |              |           | $         | 2,459,344 | 
|                                                                                                                                               |                                                                                                                                                                            |                              |                                            |           |               |           |              |          

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

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REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS($ in thousands, except share data; unaudited)


|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |            |         | 
|------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------- | ------ | ---------------------------- | ------ | --------------------------- | ------ | ---------- | ------ | ---- | ------ | ---------- | ------- |  | ------ | ---------- | ------- | 
|                                                              |                                                                          |                           |        | Three Months Ended Sept. 30, |        | Nine Months Ended Sept. 30,
|                                                              |                                                                          |                           |        |                              |        |                            
|                                                              |                                                                          |                           |        | 2002                         |        | 2001                        |        | 2002       |        | 2001
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |     
|Interest income:                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Loans                                                                    |                           | $      | 25,400                       |        |                             | $      | 29,402     |        |      | $      | 76,483     |         |  | $      | 96,992     |        
|                                                              | Securities                                                               |                           |        | 10,234                       |        |                             |        | 9,637      |        |      |        | 32,067     |         |  |        | 23,744     |        
|                                                              | Federal funds sold & other investments                                   |                           |        | 277                          |        |                             |        | 928        |        |      |        | 851        |         |  |        | 6,131      |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              |                                                                          | Total interest income     |        |                              | 35,911 |                             |        |            | 39,967 |      |        |            | 109,401 |  |        |            | 126,867 | 
|Interest expense:                                             |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Deposits                                                                 |                           |        | 14,733                       |        |                             |        | 22,664     |        |      |        | 46,998     |         |  |        | 73,071     |        
|                                                              | Securities sold under agreement to repurchase                            |                           |        | 123                          |        |                             |        | 326        |        |      |        | 372        |         |  |        | 1,150      |        
|                                                              | FHLB advances                                                            |                           |        | 361                          |        |                             |        | 45         |        |      |        | 1,556      |         |  |        | 71         |        
|                                                              | Holding company debt                                                     |                           |        | 536                          |        |                             |        | 534        |        |      |        | 1,609      |         |  |        | 1,681      |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              |                                                                          | Total interest expense    |        |                              | 15,753 |                             |        |            | 23,569 |      |        |            | 50,535  |  |        |            | 75,973  | 
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Net interest income                                                      |                           |        | 20,158                       |        |                             |        | 16,398     |        |      |        | 58,866     |         |  |        | 50,894     |        
|                                                              |                                                                          | Provision for loan losses |        |                              | 1,650  |                             |        |            | 6,800  |      |        |            | 4,750   |  |        |            | 11,350  | 
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Net interest income after provision
for loan losses                      |                           |        | 18,508                       |        |                             |        | 9,598      |        |      |        | 54,116     |         |  |        | 39,544     |        
|Noninterest income:                                           |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Service charges on deposit accounts                                      |                           |        | 1,550                        |        |                             |        | 1,768      |        |      |        | 4,724      |         |  |        | 5,661      |        
|                                                              | Loan service fees, net                                                   |                           |        | (630                         | )      |                             |        | 199        |        |      |        | (666       | )       |  |        | 2,183      |        
|                                                              | Other loan fee income                                                    |                           |        | 651                          |        |                             |        | 569        |        |      |        | 1,973      |         |  |        | 2,732      |        
|                                                              | Gains on loans & securities, net                                         |                           |        | 2,133                        |        |                             |        | 1,515      |        |      |        | 3,090      |         |  |        | 4,195      |        
|                                                              | Gain on sale of branches                                                 |                           |        |                             |        |                             |        |           |        |      |        |           |         |  |        | 4,483      |        
|                                                              | Other operating income                                                   |                           |        | 403                          |        |                             |        | 1,598      |        |      |        | 1,548      |         |  |        | 2,382      |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              |                                                                          | Total noninterest income  |        |                              | 4,107  |                             |        |            | 5,649  |      |        |            | 10,669  |  |        |            | 21,636  | 
|Noninterest expense:                                          |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Salaries and employee benefits                                           |                           |        | 9,279                        |        |                             |        | 9,919      |        |      |        | 28,861     |         |  |        | 29,365     |        
|                                                              | Net occupancy expense                                                    |                           |        | 3,254                        |        |                             |        | 3,510      |        |      |        | 9,567      |         |  |        | 10,103     |        
|                                                              | Advertising and marketing                                                |                           |        | 235                          |        |                             |        | 159        |        |      |        | 704        |         |  |        | 1,338      |        
|                                                              | Data & item processing fees and services                                 |                           |        | 1,587                        |        |                             |        | 1,824      |        |      |        | 4,691      |         |  |        | 5,473      |        
|                                                              | Loan collection costs                                                    |                           |        | (105                         | )      |                             |        | 530        |        |      |        | 809        |         |  |        | 1,540      |        
|                                                              | Other operating expenses                                                 |                           |        | 2,950                        |        |                             |        | 2,471      |        |      |        | 8,228      |         |  |        | 7,847      |        
|                                                              | ORE expense, net                                                         |                           |        | 1,323                        |        |                             |        | 32         |        |      |        | 833        |         |  |        | 412        |        
|                                                              | Amortization of goodwill                                                 |                           |        |                             |        |                             |        | 119        |        |      |        |           |         |  |        | 358        |        
|                                                              | Amortization of premium on deposits                                      |                           |        | 692                          |        |                             |        | 692        |        |      |        | 2,075      |         |  |        | 2,280      |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              |                                                                          | Total noninterest expense |        |                              | 19,215 |                             |        |            | 19,256 |      |        |            | 55,768  |  |        |            | 58,716  | 
|Income (loss) before income taxes
& minority interest         |                                                                          |                           | 3,400  |                              |        |                             | (4,009 | )          |        |      | 9,017  |            |         |  | 2,464  |           
|Income tax (expense) benefit                                  |                                                                          |                           | (1,373 | )                            |        |                             | 1,385  |            |        |      | (3,499 | )          |         |  | (919   | )         
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|Income (loss) before minority interest                        |                                                                          |                           | 2,027  |                              |        |                             | (2,624 | )          |        |      | 5,518  |            |         |  | 1,545  |           
|Minority interest in income from subsidiary
trust, net of tax |                                                                          |                           | (421   | )                            |        |                             | (421   | )          |        |      | (1,263 | )          |         |  | (1,263 | )         
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              |                                                                          | Net income (loss)         |        | $                            | 1,606  |                             |        | $          | (3,045 | )    |        | $          | 4,255   |  |        | $          | 282     | 
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|Per share data:                                               |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Basic net income (loss) per common share                                 |                           | $      | 0.14                         |        |                             | $      | (0.27      | )      |      | $      | 0.37       |         |  | $      | 0.01       |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Diluted net income (loss) per common
& common equivalent share           |                           | $      | 0.14                         |        |                             | $      | (0.27      | )      |      | $      | 0.37       |         |  | $      | 0.01       |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Weighted average common shares
outstanding  basic                       |                           |        | 11,385,631                   |        |                             |        | 11,328,559 |        |      |        | 11,363,881 |         |  |        | 10,827,657 |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           
|                                                              | Weighted average common & common
equivalent shares outstanding  diluted |                           |        | 11,501,214                   |        |                             |        | 11,328,559 |        |      |        | 11,452,070 |         |  |        | 10,870,994 |        
|                                                              |                                                                          |                           |        |                              |        |                             |        |            |        |      |        |            |         |  |        |           

The accompanying notes are an integral part of these consolidated statements.

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##### Table of Contents



REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY($ in thousands, except share data; unaudited)


|                                                                         |  |                     |        |              |  |         |        |          |  |          |         |               |  |   |        |   |  |                   |       |   |  |   |         |  
|------------------------------------------------------------------------ |  | ------------------- | ------ | ------------ |  | ------- | ------ | -------- |  | -------- | ------- | ------------- |  | - | ------ | - |  | ----------------- | ----- | - |  | - | ------- | -
|                                                                         |  |                     |        |              |  |         |        |          |  |          |         |               |  |   |        |   |  | Accumulated Other |       |   |  |  
|                                                                         |  | Perpetual Preferred |        |              |  |         |        | Capital  |  | Retained |         | Comprehensive |  |   |        |  
|                                                                         |  | Convertible Stock   |        | Common Stock |  | Surplus |        | Earnings |  | Income   |         | Total        
|                                                                         |  |                     |        |              |  |         |        |          |  |          |         |              
|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   |  
|Conversion of preferred stock
into 750,000 common shares                 |  |                     | (1,500 | )            |  |         | 1,500  |          |  |          |        |               |  |   |       |   |  |                   |      |   |  |   |        |  
|Exercise of stock options into
29,350 shares                             |  |                     |       |              |  |         | 59     |          |  |          | 299     |               |  |   |       |   |  |                   |      |   |  |   | 358     |  
|Dividends on preferred stock                                             |  |                     |       |              |  |         |       |          |  |          |        |               |  |   | (132   | ) |  |                   |      |   |  |   | (132    | )
|Other                                                                    |  |                     |       |              |  |         |       |          |  |          | 22      |               |  |   |       |   |  |                   |      |   |  |   | 22      |  
|                                                                         |  |                     |        |              |  |         |        |          |  |          |         |               |  |   |        |   |  |                   |       |   |  |   |         |  
|Balance, December 31, 2001                                               |  |                     |       |              |  |         | 22,671 |          |  |          | 129,056 |               |  |   | 17,639 |   |  |                   | 2,671 |   |  |   | 172,037 |  
|Net income                                                               |  |                     |       |              |  |         |       |          |  |          |        |               |  |   | 4,255  |   |  |                   |      |   |  |   | 4,255   |  
|Change in fair value of
available for sale securities,
net of tax effect |  |                     |       |              |  |         |       |          |  |          |        |               |  |   |       |   |  |                   | 3,531 |   |  |   | 3,531   |  
|Exercise of stock options
into 62,330 shares                             |  |                     |       |              |  |         | 124    |          |  |          | 699     |               |  |   |       |   |  |                   |      |   |  |   | 823     |  
|                                                                         |  |                     |        |              |  |         |        |          |  |          |         |               |  |   |        |   |  |                   |       |   |  |   |         |  
|Balance, September 30, 2002                                              |  | $                   |       |              |  | $       | 22,795 |          |  | $        | 129,755 |               |  | $ | 21,894 |   |  | $                 | 6,202 |   |  | $ | 180,646 |  
|                                                                         |  |                     |        |              |  |         |        |          |  |          |         |               |  |   |        |   |  |                   |       |   |  |   |         |  

REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME($ in thousands; unaudited)


|                                                  |                                                                                    |                               |       |                              |       |                             |        |       |       |      |       |        |       |   |     |        |       | 
|------------------------------------------------- | ---------------------------------------------------------------------------------- | ----------------------------- | ----- | ---------------------------- | ----- | --------------------------- | ------ | ----- | ----- | ---- | ----- | ------ | ----- | - | --- | ------ | ----- | 
|                                                  |                                                                                    |                               |       | Three Months Ended Sept. 30, |       | Nine Months Ended Sept. 30,
|                                                  |                                                                                    |                               |       |                              |       |                            
|                                                  |                                                                                    |                               |       | 2002                         |       | 2001                        |        | 2002  |       | 2001
|                                                  |                                                                                    |                               |       |                              |       |                             |        |       |       |     
|Net income (loss)                                 |                                                                                    | $                             | 1,606 |                              |       | $                           | (3,045 | )     |       | $    | 4,255 |        |       | $ | 282 |       
|Unrealized gain on available
for sale securities: |                                                                                    |                               |       |                              |       |                             |        |       |       |      |       |        |       |   |     |       
|                                                  | Unrealized holding gain, net
of tax effect during period(1)                        |                               |       | 1,366                        |       |                             |        | 4,279 |       |      |       | 5,521  |       |   |     | 8,329  |      
|                                                  | Less reclassification adjustment for gains
realized in net income, net of taxes(1) |                               |       | (1,592                       | )     |                             |        | (951  | )     |      |       | (1,990 | )     |   |     | (1,586 | )    
|                                                  |                                                                                    |                               |       |                              |       |                             |        |       |       |      |       |        |       |   |     |       
|                                                  |                                                                                    | Net unrealized gains (losses) |       |                              | (226  | )                           |        |       | 3,328 |      |       |        | 3,531 |   |     |        | 6,743 | 
|                                                  |                                                                                    |                               |       |                              |       |                             |        |       |       |      |       |        |       |   |     |       
|                                                  |                                                                                    | Comprehensive income          |       | $                            | 1,380 |                             |        | $     | 283   |      |       | $      | 7,786 |   |     | $      | 7,025 | 
|                                                  |                                                                                    |                               |       |                              |       |                             |        |       |       |      |       |        |       |   |     |       

The accompanying notes are an integral part of these consolidated statements.

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##### Table of Contents



REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS($ in thousands; unaudited)


|                                                                           |                                                          |                                           |        |                             |         |      |         |          |          |  
|-------------------------------------------------------------------------- | -------------------------------------------------------- | ----------------------------------------- | ------ | --------------------------- | ------- | ---- | ------- | -------- | -------- | -
|                                                                           |                                                          |                                           |        | Nine Months Ended Sept. 30,
|                                                                           |                                                          |                                           |        |                            
|                                                                           |                                                          |                                           |        | 2002                        |         | 2001
|                                                                           |                                                          |                                           |        |                             |         |     
|OPERATING ACTIVITIES:                                                      |                                                          |                                           |        |                             |         |      |         |         
|Net income                                                                 |                                                          | $                                         | 4,255  |                             |         | $    | 282     |         
|Reconciliation of net income to net cash
provided by operating activities: |                                                          |                                           |        |                             |         |      |         |         
|                                                                           | Provision for loan and ORE losses                        |                                           |        | 4,850                       |         |      |         | 11,621   |         
|                                                                           | Depreciation of fixed assets                             |                                           |        | 3,903                       |         |      |         | 4,430    |         
|                                                                           | Amortization of goodwill and premium on deposits         |                                           |        | 2,217                       |         |      |         | 2,638    |         
|                                                                           | Amortization of loan premiums, discounts & MSRs          |                                           |        | (840                        | )       |      |         | (2,854   | )       
|                                                                           | (Gain) on sale of loans, net                             |                                           |        | (1,088                      | )       |      |         | (539     | )       
|                                                                           | (Gain)/loss on sale of securities                        |                                           |        | (2,002                      | )       |      |         | (3,655   | )       
|                                                                           | (Gain) on sale of other real estate owned                |                                           |        | (996                        | )       |      |         | (75      | )       
|                                                                           | Capitalization of mortgage servicing                     |                                           |        |                            |         |      |         | 1,630    |         
|                                                                           | (Gain)/loss on disposal of premises and equipment        |                                           |        | (16                         | )       |      |         | (147     | )       
|                                                                           | (Gain) on sale of branches                               |                                           |        |                            |         |      |         | (4,483   | )       
|                                                                           | Net (increase) in deferred tax asset                     |                                           |        | (2,213                      | )       |      |         | (1,453   | )       
|                                                                           | Net (increase)/decrease in other assets                  |                                           |        | (3,775                      | )       |      |         | 114      |         
|                                                                           | Net (decrease)/increase in other liabilities             |                                           |        | (947                        | )       |      |         | 5,833    |         
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|                                                                           |                                                          | Net cash provided by operating activities |        |                             | 3,348   |      |         |          | 13,342   |  
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|INVESTING ACTIVITIES:                                                      |                                                          |                                           |        |                             |         |      |         |         
|                                                                           | Net (increase)/decrease in loans and loans held for sale |                                           |        | (85,438                     | )       |      |         | 123,634  |         
|                                                                           | Proceeds from sales and maturities of securities         |                                           |        | 181,183                     |         |      |         | 263,797  |         
|                                                                           | (Purchase)/redemption of FHLB stock                      |                                           |        | (2,093                      | )       |      |         | 648      |         
|                                                                           | (Purchase) of securities available for sale              |                                           |        | (778,222                    | )       |      |         | (656,177 | )       
|                                                                           | Principal repayment on securities                        |                                           |        | 627,706                     |         |      |         | 136,628  |         
|                                                                           | Purchase (disposal) of premises & equipment              |                                           |        | (3,446                      | )       |      |         | (1,818   | )       
|                                                                           | Proceeds from disposal of premises & equipment           |                                           |        | (215                        | )       |      |         | 682      |         
|                                                                           | Proceeds from sale of other real estate                  |                                           |        | 19,931                      |         |      |         | 5,685    |         
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|                                                                           |                                                          | Net cash (used in) investing activities   |        |                             | (40,594 | )    |         |          | (126,921 | )
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|FINANCING ACTIVITIES:                                                      |                                                          |                                           |        |                             |         |      |         |         
|                                                                           | Net increase in deposits                                 |                                           |        | 18,687                      |         |      |         | 84,799   |         
|                                                                           | Net cash paid for branch sales                           |                                           |        |                            |         |      |         | (61,912  | )       
|                                                                           | Net increase in repurchase agreements                    |                                           |        | 520                         |         |      |         | 4,601    |         
|                                                                           | Proceeds from FHLB advances, net                         |                                           |        | 24,992                      |         |      |         | 21,492   |         
|                                                                           | Proceeds from exercise of stock options                  |                                           |        | 823                         |         |      |         | 324      |         
|                                                                           | Proceeds from issuance of subordinated debt              |                                           |        |                            |         |      |         | 14,472   |         
|                                                                           | Repayment of holding company debt                        |                                           |        |                            |         |      |         | (13,083  | )       
|                                                                           | Dividends on perpetual preferred convertible stock       |                                           |        |                            |         |      |         | (132     | )       
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|                                                                           |                                                          | Net cash provided by financing activities |        |                             | 45,022  |      |         |          | 50,561   |  
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|Net increase/(decrease) in cash and cash equivalents                       |                                                          |                                           | 7,776  |                             |         |      | (63,018 | )       
|Cash and cash equivalents, beginning of period                             |                                                          |                                           | 92,123 |                             |         |      | 209,662 |         
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|Cash and cash equivalents, end of period                                   |                                                          | $                                         | 99,899 |                             |         | $    | 146,644 |         
|                                                                           |                                                          |                                           |        |                             |         |      |         |         
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                         |                                                          |                                           |        |                             |         |      |         |         
|                                                                           | Cash paid during the period for-                         |                                           |        |                             |         |      |         |          |         
|                                                                           |                                                          | Interest                                  |        | $                           | 44,904  |      |         | $        | 67,623   |  
|                                                                           |                                                          | Income taxes                              |        |                             | 1,329   |      |         |          | 8,373    |  

The accompanying notes are an integral part of these consolidated statements.

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REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)


1.    SUMMARY OF SIGNIFICANT ACCOUNTING MATTERS

Basis of Presentation and Organization

In the opinion of management, the accompanying unaudited consolidated financial
statements of Republic Bancshares, Inc. and subsidiaries (referred to herein as
the Company or Republic or We), contain all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly our financial
position as of September 30, 2002 and December 31, 2001, and the results of
operations for the three and nine months ended September 30, 2002 and 2001 and
cash flows for the nine months ended September 30, 2002 and 2001. The
accounting and reporting policies of the Company and its wholly-owned
subsidiaries, Republic Bank (the Bank, including its wholly-owned
subsidiaries, Republic Insurance Agency and Republic SPE, Inc.) and RBI Capital
Trust I (RBI), are in conformity with accounting principles generally
accepted in the United States of America (generally accepted accounting
principles) and prevailing practices within the financial services industry.

The preparation of financial statements in conformity with generally accepted
accounting principles requires that we make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expense during the reporting period. Such
estimates are subject to change in the future as additional information becomes
available or previously existing circumstances are modified.

Our consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated. Our primary source of income is from the Bank and its wholly
owned subsidiaries. The Banks primary source of revenue is derived from net
interest income on earning assets and from fees and charges on loans and
deposits.

These consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in our Annual
Report on Form 10-K, for the year ended December 31, 2001. The operating
results for the three and nine months ended September 30, 2002, are not
necessarily indicative of the operating results to be expected for the fiscal
year ending December 31, 2002.

Critical Accounting Policies

Our accounting and reporting policies and those of our subsidiaries are in
accordance with generally accepted accounting principles and conform to general
practices within the banking industry. Our financial position and results of
operations are affected by the application of accounting policies, including
judgments made to arrive at the carrying value of assets and liabilities and
amounts reported for revenues, expenses and related disclosures. Different
assumptions in the application of these policies could result in material
changes in our consolidated financial position and/or consolidated results of
operations. The critical accounting and reporting policies include the areas of
securities, allowance for loan losses, valuations of residual interests and
mortgage servicing rights from loan sales or securitizations, and income taxes.

Our accounting policies are fundamental to understanding Managements
Discussion and Analysis of Financial Condition and Results of Operations.
Accordingly, our critical accounting policies are discussed in detail in
Republic Bancshares 2001 Annual Report on Form 10-K filed with the Securities
and Exchange Commission. The following is a summary of those accounting
policies.

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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 our asset/liability management strategies or
in response to other factors. These securities are carried at fair value with
any unrealized gains or losses, net of applicable tax effect, reported as a
separate component of stockholders equity. Securities identified as Trading
include the residual interests in cash flows from the securitization of High
LTV Loans in 1997 and 1998 and the excess spread interest-only strips related
to securitization or sale of 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 the caption Gain (loss) on loans
and securities, net.

Interest and dividends on securities include the amortization of premiums and
accretion of discounts using the effective interest rate method and are
together reported as part of 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.

Allowance for loan losses

The allowance for loan losses is established and maintained at levels deemed
adequate to cover losses inherent in the portfolio as of the balance sheet
date. This estimate is based on managements evaluation of the risks in the
loan portfolio and changes in the nature and volume of loan activity. Estimates
for loan losses are derived by analyzing historical loan losses, current trends
in delinquencies and charge-offs, plans for problem loan administration,
changes in the size and composition of the loan portfolio and peer group
information. Periodically, we are examined by the state and federal banking
regulators and the results of those examinations are also incorporated into our
estimation process. Also included in managements estimates for loan losses
are considerations with respect to the impact of economic events, the outcome
of which are uncertain. These events may include, but are not limited to, a
general slowdown in the economy, fluctuations in overall lending rates,
political conditions, legislation that may directly or indirectly affect the
banking industry and economic conditions affecting specific geographical areas
in which we conduct business. This information is compiled and the results are
used to assign risk factors to segments of our loan portfolio. In certain
cases, we may assign risk factors on an individual loan basis. Otherwise, risk
factors are assigned to pools of loans with homogenous characteristics. We may
also carry a portion of our allowance for loan losses without allocation to
individual loans or pools of loans based on information collected regarding the
quality of the loan portfolio, past and future expected trends and overall
economic conditions, among other things.

Valuation of residual interests from securitization of High LTV Loans and
valuation of mortgage servicing rights

Residual interests from securitization of High LTV Loans are accounted for as
trading assets and are evaluated at least quarterly with the valuation
adjustment, if any, 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, the market
for the residual interests on our balance sheet is illiquid and price
quotations are not readily available. In that situation, the accounting rules
permit use of other methods to estimate fair value, including techniques
utilizing the present value of expected cash flows. We have used that present
value methodology to value our trading assets which requires, and is highly
dependent, on the selection of a discount rate, prepayment speed and an
expected loss ratio. A majority of the mortgage loans comprising the
collateral pool underlying the residual interests are secured by junior liens
on residential real estate where, at origination, there was little or no equity
in the property. Also, most of the loans were made

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for the purpose of debt
consolidation and many of the borrowers had previous credit weaknesses,
including bankruptcy, default or an above-average rate of delinquency. The
overall delinquency rate for pools of this type of loan is generally higher
than for pools of first mortgage loans and recovery of defaulted amounts is
difficult to predict. Further, the terms of the securitizations place us in a
first loss position among all security holders in the transactions and the
realization of cashflows to us is expected over an extended period. As a
result, the valuations derived in this process are extremely sensitive to
changes in the assumptions used to calculate the expected cash flows. We are
currently receiving cashflow from one of the residual interests but a second
residual interest is not expected to contribute cashflow to us until well into
future years.

Our mortgage servicing rights and excess servicing interest-only strips from
securitization or sale of first lien mortgage loans are also valued using a
present value of cashflows methodology. Mortgage servicing rights and excess
servicing interest-only strips represent an estimate of the present value of
the future servicing fees arising from the right to service loans for others.
This requires the development of a number of estimates, including anticipated
principal amortization and prepayments of principal. The valuation of these
assets is significantly affected by interest rates, mortgage loan prepayment
speeds and the payment performance of the underlying loans. In general, during
periods of declining interest rates, the value of mortgage servicing assets
declines due to increasing prepayments attributable to increased mortgage
refinance activity. Conversely, during periods of rising interest rates, the
value of servicing assets generally increases due to reduced refinance
activity. We amortize the mortgage servicing rights over the period of
estimated net servicing income based on projections of the amount and timing of
future cash flows. The amount and timing of servicing asset amortization is
adjusted quarterly based on actual results and updated projections. The
mortgage servicing rights are accounted for in the Other Assets category on
our balance sheet and carried at the lower of cost or market value, while the
excess servicing interest-only strips are a trading asset.

Income taxes and the related deferred tax assets and liabilities

The determination of our overall income tax provision is complex and requires
careful analysis. There are significant differences in the timing of
recognition of income tax expense for financial accounting and income tax
purposes in the following areas: (1) loan loss provisions, (2) mortgage
servicing rights amortization and income from residual interests from loan
securitizations, (3) premium amortization on deposits, (4) depreciation of
fixed assets and, (5) net operating loss carryforwards. As a result, our
balance sheet includes a net deferred tax asset with valuation highly dependent
on our ability to generate future taxable income.

Reclassifications

Certain reclassifications may have been made to the prior period consolidated
financial statements to conform to the September 2002 financial statement
presentation. These reclassifications only changed the reporting categories
and did not affect our results of operations or financial position.

Recent Accounting Pronouncements

Statement of Financial Accounting Standard (SFAS) No. 141  Business
Combinations and SFAS No. 142  Goodwill and Other Intangible Assets

On July 20, 2001, the Financial Accounting Standards Board (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.
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

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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. 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 evaluated, at least annually, for impairment. It also provides
for the continued amortization of intangible assets that have finite useful
lives. The Company has not entered into any business combinations since SFAS
No. 141 became effective. The provisions of SFAS No. 142 are effective for
fiscal years beginning after December 15, 2001. The Company adopted the
provisions of SFAS No. 142 effective January 1, 2002. The adoption of SFAS No.
141 and SFAS No. 142 did not have a material effect upon our financial position
or results of operations. Following are the pro forma net income and earnings
per share, had all periods presented been accounted for under SFAS No. 142 ($
in thousands, except share data):

|                                                                         |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |      | 
|------------------------------------------------------------------------ | --------------------------- | - | --------------- | ----- | --------------- | - | ---------- | ------ | ---- | - | ---------- | ----- |  | - | ---------- | ---- | 
|                                                                         |                             |   | Three Months    |       | Nine Months    
|                                                                         |                             |   | Ended Sept. 30, |       | Ended Sept. 30,
|                                                                         |                             |   |                 |       |                
|                                                                         |                             |   | 2002            |       | 2001            |   | 2002       |        | 2001
|                                                                         |                             |   |                 |       |                 |   |            |        |     
|Net income (loss)                                                        |                             | $ | 1,606           |       |                 | $ | (3,045     | )      |      | $ | 4,255      |       |  | $ | 282        |     
|Amortization of goodwill, net of taxes                                   |                             |   |                |       |                 |   | 74         |        |      |   |           |       |  |   | 223        |     
|                                                                         |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |     
|                                                                         | Pro forma net income (loss) |   | $               | 1,606 |                 |   | $          | (2,971 | )    |   | $          | 4,255 |  |   | $          | 505  | 
|                                                                         |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |     
|Pro forma earnings per share:                                            |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |     
|                                                                         | Basic                       |   | $               | 0.14  |                 |   | $          | (0.27  | )    |   | $          | 0.37  |  |   | $          | 0.01 | 
|                                                                         |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |     
|                                                                         | Diluted                     |   | $               | 0.14  |                 |   | $          | (0.27  | )    |   | $          | 0.37  |  |   | $          | 0.01 | 
|                                                                         |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |     
|Weighted average common
shares outstanding  basic                       |                             |   | 11,385,631      |       |                 |   | 11,328,559 |        |      |   | 11,363,881 |       |  |   | 10,827,657 |     
|                                                                         |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |     
|Weighted average common & common
equivalent shares outstanding  diluted |                             |   | 11,501,214      |       |                 |   | 11,328,559 |        |      |   | 11,452,070 |       |  |   | 10,870,994 |     
|                                                                         |                             |   |                 |       |                 |   |            |        |      |   |            |       |  |   |            |     

Intangible assets subject to amortization are comprised of premium on deposits
and mortgage servicing rights, including the excess servicing interest-only
strips and unearned income from sale of servicing rights. Following are gross
carrying amounts and accumulated amortization (where applicable) and the
estimated amortization expense for the three months ended December 31, 2002 and
each of the five succeeding years ($ in thousands):

|                                              |      |   |                     |  |                           |   |              |       |  |   |       |       | 
|--------------------------------------------- | ---- | - | ------------------- |  | ------------------------- | - | ------------ | ----- |  | - | ----- | ----- | 
|                                              |      |   | Premium on Deposits |  | Mortgage Servicing Rights
|                                              |      |   | Gross Carrying      |  | Accumulated               |   | Net Carrying
|                                              |      |   | Amount              |  | Amortization              |   | Value       
|                                              |      |   |                     |  |                           |   |             
|                                              |      | $ | 27,673              |  |                           | $ | (11,351      | )     |  | $ | 7,258 |      
|                                              |      |   |                     |  |                           |   |              |       |  |   |       |      
|Estimated amortization:                       |      |   |                     |  |                           |   |              |       |  |   |       |      
|For the three months ending
December 31, 2002 |      |   |                     |  |                           | $ | 693          |       |  | $ | 433   |      
|For the years ending
December 31:             |      |   |                     |  |                           |   |              |       |  |   |       |      
|                                              | 2003 |   |                     |  |                           |   |              | 2,767 |  |   |       | 1,733 | 
|                                              | 2004 |   |                     |  |                           |   |              | 2,767 |  |   |       | 1,449 | 
|                                              | 2005 |   |                     |  |                           |   |              | 2,767 |  |   |       | 1,104 | 
|                                              | 2006 |   |                     |  |                           |   |              | 2,767 |  |   |       | 844   | 
|                                              | 2007 |   |                     |  |                           |   |              | 2,767 |  |   |       | 651   | 

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SFAS No. 143  Accounting for Asset Retirement Obligations

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible, long-lived assets and the associated retirement costs.
This statement is effective January 1, 2003 and is not expected to have a
material impact on our results of operations or the financial condition of the
Company.

SFAS No. 144  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 Accounting Principles Board 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 did not have a material
effect upon our results of operations or financial position.

SOP 01-6  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 did not have a material effect upon our results of
operations or financial position.

2.    EARNINGS PER SHARE

Diluted earnings per common and common equivalent shares have been computed by
dividing net income by the weighted average common and common equivalent shares
outstanding during the periods. The weighted average common and common
equivalent shares outstanding has been adjusted to include the number of shares
that would have been outstanding if stock options, with an exercise price
greater than the average market price for the period, had been exercised at
that average market price with the proceeds being used to buy shares from the
market (i.e., the treasury stock method). Also, the calculation takes into
consideration the shares that would have been issued from conversion of our
convertible subordinated debentures, if they had been converted to common stock
(i.e., the if converted method.) The effect of converting the convertible
subordinated debentures to common stock in 2002 was antidilutive, therefore,
those shares are excluded from diluted earnings per share. Basic earnings per
common share was computed by dividing net income less dividends paid on the
perpetual preferred convertible stock (in 2001) by the weighted average number
of shares of common stock outstanding during the year.

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The table below reconciles the calculation of the diluted and basic earnings
per share for 2002 and 2001 ($ in thousands, except share data):

|                                                                         |  |                              |       |             |  |          |            |          |  |             |      |       |  |          |        |          |  |  |            |  |  |   |       |  
|------------------------------------------------------------------------ |  | ---------------------------- | ----- | ----------- |  | -------- | ---------- | -------- |  | ----------- | ---- | ----- |  | -------- | ------ | -------- |  |  | ---------- |  |  | - | ----- | -
|                                                                         |  | Three Months Ended Sept. 30,
|                                                                         |  |                             
|                                                                         |  | 2002                         |       | 2001       
|                                                                         |  |                              |       |            
|                                                                         |  |                              |       |             |  | Weighted |            | Earnings |  |             |      |       |  | Weighted |        | Earnings
|                                                                         |  | Net                          |       | Shares      |  | Per      |            | Net      |  | Shares      |      | Per  
|                                                                         |  | Income                       |       | Outstanding |  | Share    |            | Income   |  | Outstanding |      | Share
|                                                                         |  |                              |       |             |  |          |            |          |  |             |      |      
|Net income (loss) attributable
to common stockholders                    |  | $                            | 1,606 |             |  |          |           |          |  |             |     |       |  | $        | (3,045 | )        |  |  |           |  |  |   |      |  
|Basic earnings per share                                                 |  |                              |      |             |  |          | 11,385,631 |          |  | $           | 0.14 |       |  |          |       |          |  |  | 11,328,559 |  |  | $ | (0.27 | )
|Options exercised during
the period-incremental
effect prior to exercise |  |                              |      |             |  |          | 4,583      |          |  |             |     |       |  |          |       |          |  |  |           |  |  |   |      |  
|Weighted average options
outstanding(1)                                  |  |                              |      |             |  |          | 111,000    |          |  |             |     |       |  |          |       |          |  |  |           |  |  |   |      |  
|                                                                         |  |                              |       |             |  |          |            |          |  |             |      |       |  |          |        |          |  |  |            |  |  |   |       |  
|Diluted earnings per share                                               |  | $                            | 1,606 |             |  |          | 11,501,214 |          |  | $           | 0.14 |       |  | $        | (3,045 | )        |  |  | 11,328,559 |  |  | $ | (0.27 | )
|                                                                         |  |                              |       |             |  |          |            |          |  |             |      |       |  |          |        |          |  |  |            |  |  |   |       |  

|                                                                         |  |                             |       |             |  |          |            |          |  |             |      |       |  |          |     |          |  |  |            |  |  |   |      | 
|------------------------------------------------------------------------ |  | --------------------------- | ----- | ----------- |  | -------- | ---------- | -------- |  | ----------- | ---- | ----- |  | -------- | --- | -------- |  |  | ---------- |  |  | - | ---- | 
|                                                                         |  | Nine Months Ended Sept. 30,
|                                                                         |  |                            
|                                                                         |  | 2002                        |       | 2001       
|                                                                         |  |                             |       |            
|                                                                         |  |                             |       |             |  | Weighted |            | Earnings |  |             |      |       |  | Weighted |     | Earnings
|                                                                         |  | Net                         |       | Shares      |  | Per      |            | Net      |  | Shares      |      | Per  
|                                                                         |  | Income                      |       | Outstanding |  | Share    |            | Income   |  | Outstanding |      | Share
|                                                                         |  |                             |       |             |  |          |            |          |  |             |      |      
|Net income attributable
to common stockholders                           |  | $                           | 4,255 |             |  |          |           |          |  |             |     |       |  | $        | 282 |          |  |  |           |  |  |   |     | 
|Basic earnings per share                                                 |  |                             |      |             |  |          | 11,363,881 |          |  | $           | 0.37 |       |  |          |    |          |  |  | 10,827,657 |  |  | $ | 0.01 | 
|Options exercised during
the period-incremental
effect prior to exercise |  |                             |      |             |  |          | 6,805      |          |  |             |     |       |  |          |    |          |  |  | 1,170      |  |  |   |     | 
|Weighted
average options
outstanding(1)                                  |  |                             |      |             |  |          | 81,384     |          |  |             |     |       |  |          |    |          |  |  | 42,167     |  |  |   |     | 
|                                                                         |  |                             |       |             |  |          |            |          |  |             |      |       |  |          |     |          |  |  |            |  |  |   |      | 
|Diluted earnings per share                                               |  | $                           | 4,255 |             |  |          | 11,452,070 |          |  | $           | 0.37 |       |  | $        | 282 |          |  |  | 10,870,994 |  |  | $ | 0.01 | 
|                                                                         |  |                             |       |             |  |          |            |          |  |             |      |       |  |          |     |          |  |  |            |  |  |   |      | 

(1) For the three month periods ended September 30, 2002 and 2001, there were
254,850 and 203,190 of stock options, respectively, and 1,794,862 shares that
would be issued from conversion of convertible subordinated debentures, which
were antidilutive. For the nine month periods ended September 30, 2002 and
2001, there were 308,150 and 336,270, respectively, of stock options and
1,794,862 shares that would be issued from conversion of convertible
subordinated debentures, which were anti-dilutive.

3.    SECURITIES

Our securities totaled $814.7 million at September 30, 2002 and were comprised
primarily of mortgage-backed securities (MBS) with a lesser amount of U.S.
Treasury and federal agency securities and revenue bonds. Included were $791.9
million of securities classified as available for sale, $14.4 million of
securities classified as held to maturity and $8.3 million of securities
classified as trading assets. The market values assigned to the securities
classified as available for sale were determined using market quotations at
September 30, 2002.

Included in the trading asset category were $5.7 million in
overcollateralization and residual interests in cash flows from securitizing
High LTV Loans in 1997 and 1998 (the Residuals) and $2.6 million of excess
servicing interest-only strips on mortgage servicing rights. These trading
assets were valued using a present value of cashflows technique. The Residuals
are valued in much the same way as are the excess servicing interest-only
strips on pools of first lien mortgage loans but also carry an additional
element of credit risk. High LTV loans are mortgage loans underwritten to
borrowers primarily for debt consolidation purposes where the combined
loan-to-value ratio generally exceeds 100%. These loans have
performed with an

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annual loss rate significantly in excess of loss rates for first lien mortgage
loans. The market for High LTV-related assets is illiquid and there are no
readily observable market prices that can be relied on to value these trading
assets. The three key assumptions used in the valuation are the discount rate,
the expected loss ratio and the expected prepayment speed. These assets are
valued at least quarterly with any valuation adjustment reflected as a trading
gain or loss in the statement of operations.

The key assumptions used and the resultant valuation of the Residuals and
excess servicing interest-only strips on mortgage servicing rights at September
30, 2002 were as follows ($ in thousands):

|                                    |  |                |        |                |  |                  |        |   |  |   |         |  
|----------------------------------- |  | -------------- | ------ | -------------- |  | ---------------- | ------ | - |  | - | ------- | -
|                                    |  | December 1997  |        | June 1998      |  | Excess Servicing
|                                    |  | Securitization |        | Securitization |  | Interest-only   
|                                    |  | (1997-1)     |        | (1998-1)     |  | Strips          
|                                    |  |                |        |                |  |                 
|Collateral amount                   |  | $              | 16,968 |                |  | $                | 84,494 |   |  | $ | 216,683 |  
|Discount rate                       |  |                | 15.00  | %              |  |                  | 15.00  | % |  |   | 8.00    | %
|Wtd. avg. remaining life (years)    |  |                | 2.43   |                |  |                  | 2.52   |   |  |   | 3.67    |  
|Cumulative lifetime default rate(1) |  |                | 16.74  | %              |  |                  | 17.20  | % |  |   | N/A     |  
|Prepayment speed                    |  |                | 33.57  | %              |  |                  | 32.81  | % |  |   | 20.00   | %
|Fair value                          |  | $              | 3,195  |                |  | $                | 2,530  |   |  | $ | 2,550   |  



| |  | (1)Expressed as the percent of total defaults over the expected life of
the collateral to the initial collateral amount.
N/A  not applicable
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------

4.    LOANS

Total loans at September 30, 2002 were $1.47 billion compared to $1.42 billion
at December 31, 2001. Mortgage loan servicing rights (both purchased and
originated) amounted to $7.1 million and $10.2 million at September 30, 2002
and December 31, 2001, respectively. Loans on which interest was not being
accrued at September 30, 2002 and December 31, 2001, totaled approximately
$23.0 million and $46.2 million, respectively. Loans past due 90 days or more
and still accruing interest at September 30, 2002 and December 31, 2001,
totaled $21,000 and $12,000, respectively.

Loans at September 30, 2002 and December 31, 2001, are summarized as follows,
based on the underlying collateral, not the primary purpose of the loan ($ in
thousands):

|                            |                                 |                                                    |                                                         |        |               |           |              |   |           |           | 
|--------------------------- | ------------------------------- | -------------------------------------------------- | ------------------------------------------------------- | ------ | ------------- | --------- | ------------ | - | --------- | --------- | 
|                            |                                 |                                                    |                                                         |        | September 30, |           | December 31,
|                            |                                 |                                                    |                                                         |        | 2002          |           | 2001        
|                            |                                 |                                                    |                                                         |        |               |           |             
|Real estate mortgage loans: |                                 |                                                    |                                                         |        |               |           |              |  
|                            |                                 | One-to-four family residential                     |                                                         | $      | 411,875       |           |              | $ | 432,803   |          
|                            |                                 | Subprime mortgages                                 |                                                         |        | 37,247        |           |              |   | 50,743    |          
|                            |                                 | Multifamily residential                            |                                                         |        | 39,138        |           |              |   | 45,264    |          
|                            |                                 | Warehouse lines of credit                          |                                                         |        | 152           |           |              |   | 718       |          
|                            |                                 | Commercial real estate                             |                                                         |        | 543,701       |           |              |   | 515,314   |          
|                            |                                 |                                                    |                                                         |        |               |           |              |  
|                            |                                 |                                                    | Mortgage loans secured by first liens held in portfolio |        |               | 1,032,113 |              |   |           | 1,044,842 | 
|Commercial (business) loans |                                 |                                                    | 113,001                                                 |        |               |           | 108,453      |  
|Home equity loans           |                                 |                                                    | 282,457                                                 |        |               |           | 217,726      |  
|High LTV Loans              |                                 |                                                    | 22,751                                                  |        |               |           | 29,275       |  
|Consumer loans              |                                 |                                                    | 19,194                                                  |        |               |           | 20,715       |  
|                            |                                 |                                                    |                                                         |        |               |           |              |  
|                            |                                 | Total loans held for portfolio                     |                                                         |        | 1,469,516     |           |              |   | 1,421,011 |          
|Allowance for loan losses   |                                 |                                                    | (31,595                                                 | )      |               |           | (31,997      | )
|                            |                                 |                                                    |                                                         |        |               |           |              |  
|                            |                                 | Net loans held for portfolio                       |                                                         |        | 1,437,921     |           |              |   | 1,389,014 |          
|                            | Residential loans held for sale |                                                    |                                                         | 12,562 |               |           |              |  |          
|                            |                                 |                                                    |                                                         |        |               |           |              |  
|                            |                                 | Net loans held-for portfolio & loans held for sale |                                                         | $      | 1,450,483     |           |              | $ | 1,389,014 |          
|                            |                                 |                                                    |                                                         |        |               |           |              |  

At September 30, 2002, the composition of our loans held in portfolio,
according to the location of the borrower or the real estate taken as
underlying collateral, was as follows ($ in thousands):

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|                            |                                |                                     |   |         |           |           |   |            |         |       |   |         |           | 
|--------------------------- | ------------------------------ | ----------------------------------- | - | ------- | --------- | --------- | - | ---------- | ------- | ----- | - | ------- | --------- | 
|                            |                                |                                     |   |         |           |           |   | Outside of |         | Total
|Based on Amounts            |                                | In Florida                          |   | Florida |           | Portfolio
|                            |                                |                                     |   |         |           |          
|Real estate mortgage loans: |                                |                                     |   |         |           |           |   |            |         |       |   |        
|                            | One-to-four family residential |                                     | $ | 323,131 |           |           | $ | 88,744     |         |       | $ | 411,875 |          
|                            | Subprime mortgages             |                                     |   | 11,618  |           |           |   | 25,629     |         |       |   | 37,247  |          
|                            | Multifamily residential        |                                     |   | 33,105  |           |           |   | 6,033      |         |       |   | 39,138  |          
|                            | Warehouse lines of credit      |                                     |   | 152     |           |           |   |           |         |       |   | 152     |          
|                            | Commercial real estate         |                                     |   | 506,066 |           |           |   | 37,635     |         |       |   | 543,701 |          
|                            |                                |                                     |   |         |           |           |   |            |         |       |   |        
|                            |                                | Mortgage loans secured by 1st liens |   |         | 874,072   |           |   |            | 158,041 |       |   |         | 1,032,113 | 
|                            | Commercial (business) loans    |                                     |   | 84,098  |           |           |   | 28,903     |         |       |   | 113,001 |          
|                            | Home equity loans              |                                     |   | 269,500 |           |           |   | 12,957     |         |       |   | 282,457 |          
|                            | High LTV loans                 |                                     |   | 2,299   |           |           |   | 20,452     |         |       |   | 22,751  |          
|                            | Consumer loans                 |                                     |   | 18,656  |           |           |   | 538        |         |       |   | 19,194  |          
|                            |                                |                                     |   |         |           |           |   |            |         |       |   |        
|                            |                                | Total loans held in portfolio       |   | $       | 1,248,625 |           |   | $          | 220,891 |       |   | $       | 1,469,516 | 
|                            |                                |                                     |   |         |           |           |   |            |         |       |   |        

|                            |                                |                                     |  |         |      |   |  |            |      |  
|--------------------------- | ------------------------------ | ----------------------------------- |  | ------- | ---- | - |  | ---------- | ---- | -
|                            |                                |                                     |  |         |      |   |  | Outside of
|As a Percent of Total Loans |                                | In Florida                          |  | Florida
|                            |                                |                                     |  |        
|Real estate mortgage loans: |                                |                                     |  |         |      |   |  |           
|                            | One-to-four family residential |                                     |  | 78.5    | %    |   |  | 21.5       | %   
|                            | Subprime mortgages             |                                     |  | 31.2    |      |   |  | 68.8       |     
|                            | Multifamily residential        |                                     |  | 84.6    |      |   |  | 15.4       |     
|                            | Warehouse lines of credit      |                                     |  | 100.0   |      |   |  |           |     
|                            | Commercial real estate         |                                     |  | 93.1    |      |   |  | 6.9        |     
|                            |                                |                                     |  |         |      |   |  |           
|                            |                                | Mortgage loans secured by 1st liens |  |         | 84.7 |   |  |            | 15.3 |  
|                            | Commercial (business) loans    |                                     |  | 74.4    |      |   |  | 25.6       |     
|                            | Home equity loans              |                                     |  | 95.4    |      |   |  | 4.6        |     
|                            | High LTV loans                 |                                     |  | 10.1    |      |   |  | 89.9       |     
|                            | Consumer loans                 |                                     |  | 97.2    |      |   |  | 2.8        |     
|                            |                                |                                     |  |         |      |   |  |           
|                            |                                | Total loans held in portfolio       |  |         | 85.1 | % |  |            | 14.9 | %
|                            |                                |                                     |  |         |      |   |  |           

5.    ALLOWANCE FOR LOAN LOSSES

In the evaluation of the allowance for loan losses, management segments the
loan portfolio into common risk categories and, within those risk categories,
between loans of a homogenous nature and loans whose characteristics are
non-homogenous. Homogenous types of loans include performing and nonperforming
loans secured by first liens on residential properties, home equity loans and
other types of consumer loans. Also, included in this category are performing
commercial (business) and commercial real estate loans with a total
relationship balance of less than $500,000. Each grouping is evaluated for
impairment through the assignment of a risk factor to assess the exposure to
future loan losses. The loss factors used for these homogenous groupings of
loans are based on historical loss statistics and trends in delinquencies,
previous and current underwriting standards, loan concentrations in geographic
areas or specific industries and loan policies and procedures that may affect
future loan collections.

Non-homogenous loans include commercial (business) and commercial real estate
loans with a relationship balance of $500,000 or more that are either
nonperforming or, are performing and classified as substandard or doubtful
as to repayment. These loans are evaluated individually for impairment based
on our expectation of future cashflows from either sale of collateral or
recovery of amounts from the borrower. The loss estimates for the homogenous and non-homogenous loans are consolidated
to prepare a comprehensive loss estimate of the entire portfolio.

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The allowance for loan losses amounted to $31.6 million and $32.0 million at
September 30, 2002 and December 31, 2001, respectively. Changes in the
allowance for loan losses for the first nine months of the current year
compared to the same period of the previous year were as follows ($ in
thousands):

|                                |                        |   |                             |        |      |   |         |         |  
|------------------------------- | ---------------------- | - | --------------------------- | ------ | ---- | - | ------- | ------- | -
|                                |                        |   | Nine Months Ended Sept. 30,
|                                |                        |   |                            
|                                |                        |   | 2002                        |        | 2001
|                                |                        |   |                             |        |     
|Balance, beginning of period    |                        | $ | 31,997                      |        |      | $ | 33,462  |        
|Provision for loan losses       |                        |   | 4,750                       |        |      |   | 11,350  |        
|Loans charged-off               |                        |   | (6,336                      | )      |      |   | (12,720 | )      
|Recoveries of loans charged-off |                        |   | 1,184                       |        |      |   | 687     |        
|                                |                        |   |                             |        |      |   |         |        
|                                | Net charge-offs        |   |                             | (5,152 | )    |   |         | (12,033 | )
|                                |                        |   |                             |        |      |   |         |        
|                                | Balance, end of period |   | $                           | 31,595 |      |   | $       | 32,779  |  
|                                |                        |   |                             |        |      |   |         |        

6.    RELATED PARTY TRANSACTIONS

Related Party Transactions with Mr. William R. Hough

Mr. William R. Hough is the 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. A summary of the transactions
with Mr. Hough, his immediate family members and his affiliates is as follows:

Securities Purchases and Sales; Investment Services

WRHC is compensated on a commission basis for acting as our agent in
open-market purchases and sales of securities. For the nine months ended
September 30, 2002, we purchased $326.2 million and sold $179.2 million of
mortgage-backed securities through WRHC. We also sold a $10.8 million
subordinate tranche from a High LTV Loan Securitization through WRHC and paid
them a commission of $67,500. We also periodically may purchase securities
under agreement to repurchase from WRHC at a rate based on the prevailing
federal funds rate plus one-eighth of one percent but there were no purchases
of this type during 2002. WRHC also offers sales of insurance and mutual fund
products and provides investment advisory services to customers on our
premises. Fee income earned from this relationship was $221,000 and $108,000
for the nine months ended September 30, 2002 and 2001, respectively. The
investment services and sales agreement expired on October 31, 2002. The
Company and WRHC did not renew the agreement.

Loans to Mr. Hough and His Related Interests

In November 1999, the Bank made a $4.2 million loan to WRH Mortgage, Inc., an
affiliate of Mr. Hough. The Bank has retained $2.8 million of the loan with
the remainder participated to another financial institution on a non-recourse
basis. The loan is secured by improved real estate and office buildings and is
personally guaranteed by Mr. Hough. All principal and interest payments have
been made as agreed and the terms of the loan are comparable to those offered
to non-affiliated borrowers.

Related Party Transactions with Other Directors and Executive Officers

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. Loans and commitments to lend to those persons were comprised solely of
two loans, each

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with a balance of less than $100,000. One loan was made to
finance a personal residence and the second was a commercial business line of
credit. Both loans were current as to payment of principal and interest and
were made in the ordinary course of business, upon substantially the same terms
as offered to non-affiliated borrowers.

7.    HOLDING COMPANY CASHFLOW AND DEBT SERVICE

Florida statutes limit the amount of dividends that can be paid by the Bank to
the Company in any given year to an amount no greater than the Banks net
income for the current year plus retained net income of the Bank from the
preceding two years. As of September 30, 2002, the Bank had a net deficit for
dividend payment purposes of $3.0 million, which restricts the Bank from
further dividend payments to the Company during 2002 until there is a surplus
for dividend payment purposes. On September 30, 2002, the Company had
unrestricted cash to be used for debt service totaling $9.7 million. The
Companys annual debt service requirement is approximately $4.7 million.

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REPUBLIC BANCSHARES, INC.




SELECTED QUARTERLY FINANCIAL INFORMATION


($ in thousands, except share data)


|                                                        |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |       | 
|------------------------------------------------------- | --------------------- | - | -------------- | ----- | --------- | - | ---------- | ----- | --------- | - | ---------- | ----- |  | - | ---------- | ----- |  | - | ---------- | ----- | 
|                                                        |                       |   | Quarters Ended
|                                                        |                       |   |               
|                                                        |                       |   | Sept. 2002     |       | June 2002 |   | Mar. 2002  |       | Dec. 2001 |   | Sept. 2001
|                                                        |                       |   |                |       |           |   |            |       |           |   |           
|RESULTS OF OPERATIONS:                                  |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Interest income                                         |                       | $ | 35,911         |       |           | $ | 36,438     |       |           | $ | 37,051     |       |  | $ | 38,481     |       |  | $ | 39,967     |      
|Interest expense                                        |                       |   | 15,753         |       |           |   | 16,599     |       |           |   | 18,183     |       |  |   | 20,813     |       |  |   | 23,569     |      
|                                                        |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Net interest income                                     |                       |   | 20,158         |       |           |   | 19,839     |       |           |   | 18,868     |       |  |   | 17,668     |       |  |   | 16,398     |      
|Loan loss provision                                     |                       |   | 1,650          |       |           |   | 2,000      |       |           |   | 1,100      |       |  |   | 4,800      |       |  |   | 6,800      |      
|                                                        |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Net interest income after loan loss provision           |                       |   | 18,508         |       |           |   | 17,839     |       |           |   | 17,768     |       |  |   | 12,868     |       |  |   | 9,598      |      
|Noninterest income                                      |                       |   | 4,107          |       |           |   | 3,295      |       |           |   | 3,267      |       |  |   | 1,393      |       |  |   | 5,649      |      
|Noninterest expense                                     |                       |   | 19,215         |       |           |   | 18,212     |       |           |   | 18,341     |       |  |   | 20,249     |       |  |   | 19,256     |      
|                                                        |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Income (loss) before income taxes
and minority interest |                       |   | 3,400          |       |           |   | 2,922      |       |           |   | 2,694      |       |  |   | (5,988     | )     |  |   | (4,009     | )    
|Income tax expense (benefit)                            |                       |   | 1,373          |       |           |   | 1,098      |       |           |   | 1,027      |       |  |   | (2,229     | )     |  |   | (1,385     | )    
|Minority interest from subsidiary trust, net of tax     |                       |   | (421           | )     |           |   | (421       | )     |           |   | (421       | )     |  |   | (421       | )     |  |   | (421       | )    
|                                                        |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Net income (loss)                                       |                       | $ | 1,606          |       |           | $ | 1,403      |       |           | $ | 1,246      |       |  | $ | (4,180     | )     |  | $ | (3,045     | )    
|                                                        |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Earnings (loss) per share  diluted                     |                       | $ | 0.14           |       |           | $ | 0.13       |       |           | $ | 0.11       |       |  | $ | (0.37      | )     |  | $ | (0.27      | )    
|Weighted average shares outstanding  diluted           |                       |   | 11,501,214     |       |           |   | 13,278,763 |       |           |   | 11,373,337 |       |  |   | 11,333,345 |       |  |   | 11,328,559 |      
|BALANCE SHEET DATA (at period-end):                     |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Total assets                                            |                       | $ | 2,511,182      |       |           | $ | 2,477,432  |       |           | $ | 2,513,164  |       |  | $ | 2,459,344  |       |  | $ | 2,448,210  |      
|Securities                                              |                       |   | 814,663        |       |           |   | 822,019    |       |           |   | 852,659    |       |  |   | 834,066    |       |  |   | 743,109    |      
|Loans                                                   |                       |   | 1,482,078      |       |           |   | 1,454,161  |       |           |   | 1,449,688  |       |  |   | 1,421,011  |       |  |   | 1,461,195  |      
|Nonperforming assets                                    |                       |   | 42,175         |       |           |   | 42,356     |       |           |   | 55,899     |       |  |   | 63,280     |       |  |   | 62,818     |      
|Allowance for loan losses                               |                       |   | 31,595         |       |           |   | 30,617     |       |           |   | 30,248     |       |  |   | 31,997     |       |  |   | 32,779     |      
|Deposits                                                |                       |   | 2,148,974      |       |           |   | 2,058,900  |       |           |   | 2,129,196  |       |  |   | 2,130,344  |       |  |   | 2,125,196  |      
|Stockholders equity                                    |                       |   | 180,646        |       |           |   | 179,029    |       |           |   | 169,747    |       |  |   | 172,037    |       |  |   | 179,559    |      
|Book value per share (dollars)                          |                       |   | 15.85          |       |           |   | 15.73      |       |           |   | 14.96      |       |  |   | 15.18      |       |  |   | 15.85      |      
|Tangible book value per share (dollars)                 |                       |   | 14.72          |       |           |   | 14.56      |       |           |   | 13.75      |       |  |   | 13.92      |       |  |   | 14.54      |      
|SELECTED OPERATING RATIOS:                              |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Return on average assets                                |                       |   | 0.26           | %     |           |   | 0.23       | %     |           |   | 0.20       | %     |  |   | (0.68      | )%    |  |   | (0.51      | )%   
|Return on average equity                                |                       |   | 3.57           |       |           |   | 3.26       |       |           |   | 2.95       |       |  |   | (9.24      | )     |  |   | (6.73      | )    
|Net interest margin                                     |                       |   | 3.47           |       |           |   | 3.40       |       |           |   | 3.23       |       |  |   | 3.08       |       |  |   | 2.91       |      
|Operating efficiency ratio                              |                       |   | 70.88          |       |           |   | 77.59      |       |           |   | 80.01      |       |  |   | 98.78      |       |  |   | 83.52      |      
|Loan loss allowance to portfolio loans                  |                       |   | 2.15           |       |           |   | 2.11       |       |           |   | 2.09       |       |  |   | 2.25       |       |  |   | 2.24       |      
|Loan loss allowance to nonperforming loans              |                       |   | 137.10         |       |           |   | 143.16     |       |           |   | 124.89     |       |  |   | 69.24      |       |  |   | 58.72      |      
|CAPITAL RATIOS:                                         |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Equity to assets                                        |                       |   | 7.20           |       |           |   | 7.23       |       |           |   | 6.75       |       |  |   | 6.99       |       |  |   | 7.33       |      
|Equity & minority interest to assets                    |                       |   | 8.34           |       |           |   | 8.39       |       |           |   | 7.90       |       |  |   | 8.16       |       |  |   | 8.50       |      
|Regulatory ratios  Bank:                               |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|                                                        | Tier 1 (leverage)     |   |                | 8.28  |           |   |            | 8.04  |           |   |            | 8.09  |  |   |            | 7.94  |  |   |            | 8.25  | 
|                                                        | Tier 1 to risk assets |   |                | 13.07 |           |   |            | 13.09 |           |   |            | 13.00 |  |   |            | 13.11 |  |   |            | 13.13 | 
|                                                        | Total capital         |   |                | 14.35 |           |   |            | 14.37 |           |   |            | 14.28 |  |   |            | 14.39 |  |   |            | 14.45 | 
|Regulatory ratios  Company:                            |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|                                                        | Tier 1 (leverage)     |   |                | 7.49  |           |   |            | 7.27  |           |   |            | 7.34  |  |   |            | 7.21  |  |   |            | 7.60  | 
|                                                        | Tier 1 to risk assets |   |                | 11.84 |           |   |            | 11.79 |           |   |            | 11.81 |  |   |            | 11.90 |  |   |            | 12.13 | 
|                                                        | Total capital         |   |                | 15.02 |           |   |            | 15.00 |           |   |            | 15.00 |  |   |            | 15.17 |  |   |            | 15.44 | 
|OTHER DATA (at period-end):                             |                       |   |                |       |           |   |            |       |           |   |            |       |  |   |            |       |  |   |            |      
|Number of branch banking offices                        |                       |   | 72             |       |           |   | 72         |       |           |   | 70         |       |  |   | 71         |       |  |   | 71         |      
|Number of full-time equivalent employees                |                       |   | 850            |       |           |   | 841        |       |           |   | 885        |       |  |   | 896        |       |  |   | 921        |      

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REPUBLIC BANCSHARES, INC.
SELECTED QUARTERLY FINANCIAL INFORMATION
($ in thousands)

|                                         |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |           |  
|---------------------------------------- | ---------------------------------- | - | -------------- | --------- | ---- | - | ------ | --------- | ---- | - | ------ | --------- | - | - | ------ | --------- | - | - | ------ | --------- | -
|                                         |                                    |   | Quarters Ended
|                                         |                                    |   |               
|                                         |                                    |   | Sept.          |           | June |   | March  |           | Dec. |   | Sept. 
|                                         |                                    |   | 2002           |           | 2002 |   | 2002   |           | 2001 |   | 2001  
|                                         |                                    |   |                |           |      |   |        |           |      |   |       
|SELECTED AVERAGE BALANCES
& YIELDS/COSTS |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|Average
balances:                        |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|                                         | Total assets                       |   | $              | 2,458,052 |      |   | $      | 2,494,886 |      |   | $      | 2,480,984 |   |   | $      | 2,453,227 |   |   | $      | 2,370,356 |  
|                                         | Earning assets                     |   |                | 2,291,220 |      |   |        | 2,321,158 |      |   |        | 2,318,047 |   |   |        | 2,299,476 |   |   |        | 2,238,227 |  
|                                         | Loans                              |   |                | 1,463,764 |      |   |        | 1,450,587 |      |   |        | 1,439,379 |   |   |        | 1,450,172 |   |   |        | 1,499,189 |  
|                                         | Securities                         |   |                | 785,762   |      |   |        | 833,513   |      |   |        | 830,416   |   |   |        | 783,267   |   |   |        | 645,368   |  
|                                         | Deposits                           |   |                | 1,965,797 |      |   |        | 1,933,900 |      |   |        | 1,996,464 |   |   |        | 1,966,652 |   |   |        | 1,944,376 |  
|                                         | Other interest-bearing liabilities |   |                | 119,556   |      |   |        | 203,599   |      |   |        | 131,117   |   |   |        | 124,523   |   |   |        | 76,892    |  
|                                         | Stockholders equity               |   |                | 179,347   |      |   |        | 172,695   |      |   |        | 171,350   |   |   |        | 179,673   |   |   |        | 179,387   |  
|Average yields/costs:                    |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|                                         | Earning assets                     |   |                | 6.19      | %    |   |        | 6.27      | %    |   |        | 6.41      | % |   |        | 6.67      | % |   |        | 7.09      | %
|                                         | Loans                              |   |                | 6.82      |      |   |        | 6.99      |      |   |        | 7.16      |   |   |        | 7.42      |   |   |        | 7.77      |  
|                                         | Securities                         |   |                | 5.21      |      |   |        | 5.14      |      |   |        | 5.35      |   |   |        | 5.60      |   |   |        | 5.97      |  
|                                         | Deposits                           |   |                | 2.97      |      |   |        | 3.14      |      |   |        | 3.47      |   |   |        | 3.98      |   |   |        | 4.62      |  
|                                         | Other interest-bearing liabilities |   |                | 3.39      |      |   |        | 2.83      |      |   |        | 3.32      |   |   |        | 3.48      |   |   |        | 4.71      |  
|                                         | Total interest-bearing liabilities |   |                | 3.00      | %    |   |        | 3.11      | %    |   |        | 3.46      | % |   |        | 3.95      | % |   |        | 4.63      | %
|NONPERFORMING ASSETS:                    |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|Nonperforming loans:                     |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|Residential first lien                   |                                    | $ | 10,351         |           |      | $ | 7,965  |           |      | $ | 10,638 |           |   | $ | 12,170 |           |   | $ | 14,709 |          
|Warehouse lines of credit                |                                    |   | 152            |           |      |   | 152    |           |      |   | 700    |           |   |   | 718    |           |   |   | 1,804  |          
|Commercial real estate and multifamily   |                                    |   | 8,822          |           |      |   | 10,827 |           |      |   | 10,070 |           |   |   | 30,017 |           |   |   | 35,975 |          
|Commercial (business)                    |                                    |   | 2,396          |           |      |   | 1,098  |           |      |   | 960    |           |   |   | 1,196  |           |   |   | 1,775  |          
|Home equity and consumer                 |                                    |   | 800            |           |      |   | 732    |           |      |   | 848    |           |   |   | 1,189  |           |   |   | 909    |          
|High LTV                                 |                                    |   | 525            |           |      |   | 612    |           |      |   | 1,004  |           |   |   | 919    |           |   |   | 649    |          
|                                         |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|                                         | Total nonperforming loans(1)       |   |                | 23,046    |      |   |        | 21,386    |      |   |        | 24,220    |   |   |        | 46,209    |   |   |        | 55,821    |  
|Other nonperforming receivables          |                                    |   |               |           |      |   |       |           |      |   |       |           |   |   | 178    |           |   |   | 465    |          
|Other real estate:                       |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|Residential                              |                                    |   | 1,290          |           |      |   | 2,033  |           |      |   | 812    |           |   |   | 1,318  |           |   |   | 1,264  |          
|Commercial                               |                                    |   | 17,839         |           |      |   | 18,937 |           |      |   | 30,867 |           |   |   | 15,575 |           |   |   | 5,268  |          
|                                         |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|                                         | Total ORE                          |   |                | 19,129    |      |   |        | 20,970    |      |   |        | 31,679    |   |   |        | 16,893    |   |   |        | 6,532     |  
|                                         |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          
|                                         | Total nonperforming assets         |   | $              | 42,175    |      |   | $      | 42,356    |      |   | $      | 55,899    |   |   | $      | 63,280    |   |   | $      | 62,818    |  
|                                         |                                    |   |                |           |      |   |        |           |      |   |        |           |   |   |        |           |   |   |        |          



| |  | (1)Includes all loans on nonaccrual and all loans 90 days and over past due
and still accruing interest.
| |  | --------------------------------------------------------------------------------------------------------

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REPUBLIC BANCSHARES, INC.
SELECTED QUARTERLY FINANCIAL INFORMATION
($ in thousands)

|                                                              |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |        |  
|------------------------------------------------------------- | -------------------------------- | - | -------------- | ---- | --------- | - | --------- | ------ | --------- | - | ---------- | ------ | - | - | ------ | ------ | - | - | ------ | ------ | -
|                                                              |                                  |   | Quarters Ended
|                                                              |                                  |   |               
|                                                              |                                  |   | Sept. 2002     |      | June 2002 |   | Mar. 2002 |        | Dec. 2001 |   | Sept. 2001
|                                                              |                                  |   |                |      |           |   |           |        |           |   |           
|Loan loss allowance activity:                                 |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       
|Allowance for loan losses at
beginning of period              |                                  | $ | 30,617         |      |           | $ | 30,248    |        |           | $ | 31,997     |        |   | $ | 32,779 |        |   | $ | 34,925 |       
|Loan discount (net) allocated to/
(from) purchased portfolios |                                  |   |               |      |           |   |          |        |           |   |           |        |   |   | (613   | )      |   |   |       |       
|Provision for loan losses                                     |                                  |   | 1,650          |      |           |   | 2,000     |        |           |   | 1,100      |        |   |   | 4,800  |        |   |   | 6,800  |       
|Net (charge-offs)/recoveries:                                 |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       
|Residential first lien                                        |                                  |   | (59            | )    |           |   | (128      | )      |           |   | 29         |        |   |   | (167   | )      |   |   | (249   | )     
|Warehouse lines of credit                                     |                                  |   |               |      |           |   |          |        |           |   |           |        |   |   | (267   | )      |   |   | (6,209 | )     
|Subprime mortgages                                            |                                  |   | (70            | )    |           |   | (93       | )      |           |   | (46        | )      |   |   | (173   | )      |   |   | (102   | )     
|Commercial real estate/multifamily                            |                                  |   | 25             |      |           |   | (48       | )      |           |   | (2,389     | )      |   |   | (3,274 | )      |   |   | 11     |       
|Commercial (business)                                         |                                  |   | (25            | )    |           |   | (263      | )      |           |   | (153       | )      |   |   | (406   | )      |   |   | (429   | )     
|Home equity                                                   |                                  |   | 69             |      |           |   | (157      | )      |           |   | (95        | )      |   |   | (273   | )      |   |   | (1,131 | )     
|Consumer                                                      |                                  |   | (8             | )    |           |   | (34       | )      |           |   | (26        | )      |   |   | (60    | )      |   |   | (31    | )     
|High LTV                                                      |                                  |   | (507           | )    |           |   | (858      | )      |           |   | (128       | )      |   |   | (272   | )      |   |   | (708   | )     
|Other                                                         |                                  |   | (97            | )    |           |   | (50       | )      |           |   | (41        | )      |   |   | (77    | )      |   |   | (98    | )     
|                                                              |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       
|                                                              | Net charge-offs                  |   |                | (672 | )         |   |           | (1,631 | )         |   |            | (2,849 | ) |   |        | (4,969 | ) |   |        | (8,946 | )
|                                                              |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       
|Allowance for loan losses at end of period                    |                                  | $ | 31,595         |      |           | $ | 30,617    |        |           | $ | 30,248     |        |   | $ | 31,997 |        |   | $ | 32,779 |       
|                                                              |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       
|Net charge-offs/(recoveries) to
average loans-annualized:     |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       
|Residential first lien                                        |                                  |   | 0.06           | %    |           |   | 0.13      | %      |           |   | (0.03      | )%     |   |   | 0.15   | %      |   |   | 0.20   | %     
|Warehouse lines of credit                                     |                                  |   |               |      |           |   |          |        |           |   |           |        |   |   | 75.21  |        |   |   | 327.69 |       
|Subprime mortgages                                            |                                  |   | .73            |      |           |   | 0.87      |        |           |   | 0.38       |        |   |   | 1.31   |        |   |   | 0.72   |       
|Commercial real estate/multifamily                            |                                  |   | (0.02          | )    |           |   | 0.03      |        |           |   | 1.72       |        |   |   | 2.24   |        |   |   | (0.01  | )     
|Commercial (business)                                         |                                  |   | 0.08           |      |           |   | 0.84      |        |           |   | 0.48       |        |   |   | 1.19   |        |   |   | 1.23   |       
|Home equity                                                   |                                  |   | (0.10          | )    |           |   | 4.18      |        |           |   | 0.16       |        |   |   | 0.57   |        |   |   | 3.04   |       
|High LTV                                                      |                                  |   | 8.42           |      |           |   | 12.98     |        |           |   | 1.79       |        |   |   | 3.59   |        |   |   | 8.62   |       
|Consumer and other                                            |                                  |   | 0.16           |      |           |   | 0.68      |        |           |   | 0.49       |        |   |   | 1.09   |        |   |   | 0.62   |       
|                                                              |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       
|                                                              | Net charge-offs to average loans |   |                | 0.18 | %         |   |           | 0.45   | %         |   |            | 0.79   | % |   |        | 1.37   | % |   |        | 2.39   | %
|                                                              |                                  |   |                |      |           |   |           |        |           |   |            |        |   |   |        |        |   |   |        |       

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##### Table of Contents






Item 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




Comparison of Balance Sheets at September 30, 2002 and December 31,
2001

Overview

At September 30, 2002, we had total assets of $2.51 billion, stockholders
equity of $180.6 million and a stated book value per share of $15.85. At
year-end 2001 total assets were $2.46 billion, stockholders equity was $172.0
million and the stated book value per share (in dollars) was $15.18. Loans,
net of allowances for loan losses, were $1.45 billion at September 30, 2002, an
increase of $61.5 million from December 31, 2001, while total deposits were
$2.15 billion, an increase of $18.6 million from year-end 2001.

Securities

Securities, primarily mortgage-backed investments issued by one of the federal
guarantee agencies, were $814.7 million at September 30, 2002 as compared to
$834.1 million at the end of last year. At September 30, 2002, $791.9 million
of securities were classified as available for sale, $14.4 million of
securities were classified as held to maturity and $8.3 million of securities
were trading assets. These trading assets consisted of $5.7 million in
overcollateralization and residual interests in cash flows from
securitizations in December 1997 and June 1998 and $2.6 million in the excess
interest-only spread on mortgage servicing rights.

Average total securities for the first nine months of 2002 were $816.6 million,
up $308.1 million, or 60.6%, from the average during the first nine months of
2001. Purchases of new securities in 2002 to replace securities sold and
portfolio amortization totaled $778.2 million for the first nine months of
2002. The annualized yield on average total securities for the first nine
months of 2002 was 5.24%, a decrease of 99 basis points from the yield earned
in the first nine months of 2001. This decline was primarily because purchases
of new securities were at yields below the portfolio average and from downward
repricing of adjustable rate securities.

Loans

Our loan portfolio grew at an average rate of 5.7% in the first nine months of
2002 following a sharp decline in 2001, resulting both from managements
program to reduce credit risk in the portfolio and from the high levels of
prepayments experienced throughout 2001. Total loans (including loans held for
sale) increased by $61.5 million from year-end 2001 to $1.48 billion at
September 30, 2002. Commercial business loans increased $4.5 million,
commercial real estate loans increased $28.4 million and home equity loans
increased $64.7 million, while residential loans decreased $35.0 million,
primarily from repayments of subprime loans and from seasoned loans that were
purchased from others during the mid-1990s. The net change in total loans was
also reduced by the transfer of two nonperforming loans totaling $18.3 million
to the other real estate (ORE) category in the first quarter of 2002.

The annualized yields on residential loans, commercial and commercial real
estate loans, and consumer loans for the first nine months of 2002 were 7.03%,
7.02%, and 8.18%, respectively, resulting in an annualized yield on the total
loan portfolio of 7.00%. The yields on those same categories in the first nine
months of 2001 were 7.82%, 8.02%, and 8.97%, respectively, resulting in an
annualized yield on the total loan portfolio for 2001 of 8.11%. This reflects
a decrease of 111 basis points on the annualized yield on

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the total loan
portfolio during the first nine months of 2002 compared to the same period in
2001. The decrease in yield resulted primarily from the lower overall interest
rate environment. During 2001, the Federal Reserve reduced the federal funds
rate which had a corresponding effect on other market interest rates, primarily
shorter-term interest rates. The majority of our loan portfolio is indexed to
the prime, LIBOR and Treasury interest rates. The average prime interest rate
was 4.75% during the first nine months of 2002 compared to 7.50% for the same
period of 2001, a decrease of 275 basis points. Short term LIBOR and Treasury
rates declined by approximately 245 basis points over the same periods.

Allowance for Loan Losses

The allowance for loan losses amounted to $31.6 million (2.15% of portfolio
loans) at September 30, 2002, compared with $32.0 million (2.25% of portfolio
loans) at December 31, 2001. Activity in the allowance in 2002 included
provisions for loan losses of $4.8 million and net loan charge-offs of $5.2
million. At September 30, 2002, the ratio of the allowance for loan losses to
nonperforming loans was 137.10% compared to 69.24% at the end of 2001.

Nonperforming Assets

Nonperforming assets amounted to $42.2 million (1.68% of total assets) at
September 30, 2002, compared with $63.3 million (2.57% of total assets) at
December 31, 2001, a decrease of $21.1 million. Nonperforming loans declined by
$23.2 million while ORE increased $2.1 million. Commercial real estate
nonperformers declined by $21.0 million, primarily as a result of taking title
of our largest nonperforming real estate property, a hotel in Wilmington,
Delaware, which was transferred into the ORE category during the first quarter
of 2002. The increase in the ORE balance of $2.1 million includes the transfer
of the Wilmington property, partially offset by the sale of the Cypress Woods
Golf and Country Club in Naples, Florida, in the second quarter of 2002.

Deposits

Total deposits were $2.15 billion at September 30, 2002, an $18.6 million
increase from the prior year-end. By category, checking accounts increased by
$17.5 million, while money market and savings accounts decreased by $16.2
million, and time deposits increased by $17.4 million. As of September 30,
2002, we had 43.04% of our deposits in the lower-costing checking, savings and
money market deposit categories.

Federal Home Loan Bank (FHLB) Advances

Advance borrowings from the FHLB, secured by a blanket lien on the Banks
mortgage loan portfolio, increased by $24.9 million from $52.3 million at the
end of 2001 to $77.2 million at September 30, 2002. The proceeds from this
increase in borrowings were used to fund loan and investment growth.

These borrowings had the following rate and maturity characteristics as of
September 30, 2002 ($ in thousands):

|                           |       |        |        |        |  |  |                  |      |  
|-------------------------- | ----- | ------ | ------ | ------ |  |  | ---------------- | ---- | -
|                           |       |        |        |        |  |  | Weighted Average
|Maturing in:               |       | Amount |        | Rate  
|                           |       |        |        |       
|30 days or less  variable |       | $      | 65,000 |        |  |  | 2.17             | %   
|2-12 months  fixed        |       |        | 5,000  |        |  |  | 3.78             |     
|Over 1 year  fixed        |       |        | 7,243  |        |  |  | 5.22             |     
|                           |       |        |        |        |  |  |                  |     
|                           | Total |        | $      | 77,243 |  |  |                  | 2.56 | %
|                           |       |        |        |        |  |  |                  |     

At September 30, 2002, the Bank had a total credit line availability with
the FHLB equal to 20% of its total assets or $502.2 million, of which
$77.2 million had been used.

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##### Table of Contents



Stockholders Equity

Stockholders equity was $180.6 million at September 30, 2002, or 7.19% of
total assets, compared to $172.0 million or 6.99% of total assets at December
31, 2001. The number of common shares outstanding at September 30, 2002 was
11,397,669. The market value of the available for sale segment of the
securities portfolio during the first nine months of 2002 increased relative
to the value at the end of 2001, which resulted in a $3.5 million after-tax
valuation increase on securities classified as available-for-sale.

At September 30, 2002, the Banks tier 1 (leverage) capital ratio was 8.28%,
its tier 1 (risk-based) capital ratio was 13.07%, and its total risk-based
capital ratio was 14.35%, all in excess of minimum FDIC guidelines for an
institution to be considered a well-capitalized bank. The same ratios for
the Company at September 30, 2002, were 7.49%, 11.84%, and 15.02%
respectively.




Comparison of Results of Operations for the Three Months Ended September 30,
2002 and 2001

Overview

Net income for the quarter ended September 30, 2002 was $1.6 million, or $0.14
per share, (on a diluted basis) compared with a loss of $3.0 million, or $0.27
per share on the same basis, for the same period in 2001. Included in the
prior year was a $5.9 million charge-off on a loan to Greatstone Mortgage.
The Company continues to pursue recovery of this matter.

Analysis of Net Interest Income (see
table on page 21)

Net interest income for the three months ended September 30, 2002, was $20.2
million compared with $16.4 million for the same period last year, a $3.8
million or 22.9% increase. Net interest margin in the third quarter of 2002
was 3.47% compared to 2.91% a year ago, a 56 basis point improvement. During
2001, the rapid decline in market interest rates reduced asset yield faster
than we were able to reduce our funding costs. Net interest margin stabilized
in the fourth quarter of 2001 and continued improving through the third
quarter of 2002 as funds cost reductions took effect. Average asset yield
decreased by 90 basis points from 7.09% for the same period in 2001 to 6.19%
for 2002. However, the average cost of interest-bearing liabilities declined
at a faster rate, declining by 163 basis points from 4.63% to 3.00% compared
to the same period a year ago.

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##### Table of Contents



The following table summarizes the average yields earned on interest earning
assets and the average rates paid on interest bearing liabilities for the
three months ended September 30, 2002 and 2001 ($ in thousands):

|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |      |      |  
|----------------------------- | ---------------------------------- | --------------------------------------- | - | -------------------------------- | --------- | ---- | - | ------- | ------ | -------- |  | ------- | ---- | - | - | --------- | --------- | ------- | - | ------ | ------ |  |  | ---- | ---- | -
|                              |                                    |                                         |   | Three Months Ended September 30,
|                              |                                    |                                         |   |                                 
|                              |                                    |                                         |   | 2002                             |           | 2001
|                              |                                    |                                         |   |                                  |           |     
|                              |                                    |                                         |   | Average                          |           |      |   |         |        | Average  |  | Average |      |   |   |           |           | Average
|Summary of Average Rates      |                                    | Balance                                 |   | Interest                         |           | Rate |   | Balance |        | Interest |  | Rate   
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |        
|Interest earning assets:      |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              | Loans                              |                                         | $ | 1,463,764                        |           |      | $ | 25,400  |        |          |  | 6.82    | %    |   | $ | 1,499,189 |           |         | $ | 29,402 |        |  |  | 7.77 | %   
|                              | Securities                         |                                         |   | 785,762                          |           |      |   | 10,235  |        |          |  | 5.21    |      |   |   | 645,368   |           |         |   | 9,637  |        |  |  | 5.97 |     
|                              | Interest bearing deposits in banks |                                         |   | 14,208                           |           |      |   | 32      |        |          |  | 0.89    |      |   |   | 7,409     |           |         |   | 68     |        |  |  | 3.62 |     
|                              | FHLB stock                         |                                         |   | 15,261                           |           |      |   | 192     |        |          |  | 5.00    |      |   |   | 13,168    |           |         |   | 224    |        |  |  | 6.75 |     
|                              | Federal funds sold                 |                                         |   | 12,225                           |           |      |   | 51      |        |          |  | 1.65    |      |   |   | 73,094    |           |         |   | 637    |        |  |  | 3.41 |     
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              | Total interest earning assets      |                                         |   | 2,291,220                        |           |      |   | 35,910  |        |          |  | 6.19    |      |   |   | 2,238,228 |           |         |   | 39,968 |        |  |  | 7.09 |     
|                              | Noninterest earning assets         |                                         |   | 166,832                          |           |      |   |         |        |          |  |         |      |   |   | 132,128   |           |         |   |        |        |  |  |      |     
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              | Total assets                       |                                         | $ | 2,458,052                        |           |      |   |         |        |          |  |         |      |   | $ | 2,370,356 |           |         |   |        |        |  |  |      |     
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|Interest bearing liabilities: |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              | Interest checking                  |                                         | $ | 191,453                          |           |      | $ | 183     |        |          |  | 0.38    | %    |   | $ | 162,516   |           |         | $ | 195    |        |  |  | 0.48 | %   
|                              | Money market                       |                                         |   | 380,815                          |           |      |   | 1,708   |        |          |  | 1.78    |      |   |   | 351,219   |           |         |   | 3,083  |        |  |  | 3.48 |     
|                              | Savings                            |                                         |   | 177,167                          |           |      |   | 638     |        |          |  | 1.43    |      |   |   | 185,120   |           |         |   | 1,422  |        |  |  | 3.05 |     
|                              | Time deposits                      |                                         |   | 1,216,362                        |           |      |   | 12,205  |        |          |  | 3.98    |      |   |   | 1,245,521 |           |         |   | 17,964 |        |  |  | 5.72 |     
|                              | FHLB advances                      |                                         |   | 53,440                           |           |      |   | 361     |        |          |  | 2.68    |      |   |   | 4,026     |           |         |   | 45     |        |  |  | 4.47 |     
|                              | Subordinated debt                  |                                         |   | 29,315                           |           |      |   | 536     |        |          |  | 7.32    |      |   |   | 29,199    |           |         |   | 534    |        |  |  | 7.31 |     
|                              | Other borrowings                   |                                         |   | 36,801                           |           |      |   | 121     |        |          |  | 1.31    |      |   |   | 43,667    |           |         |   | 326    |        |  |  | 2.96 |     
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              | Total interest bearing liabilities |                                         |   | 2,085,353                        |           |      |   | 15,752  |        |          |  | 3.00    |      |   |   | 2,021,268 |           |         |   | 23,569 |        |  |  | 4.63 |     
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              | Noninterest bearing liabilities    |                                         |   | 193,352                          |           |      |   |         |        |          |  |         |      |   |   | 169,701   |           |         |   |        |        |  |  |      |     
|                              | Stockholders equity               |                                         |   | 179,347                          |           |      |   |         |        |          |  |         |      |   |   | 179,387   |           |         |   |        |        |  |  |      |     
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              |                                    | Total liabilities and equity            |   | $                                | 2,458,052 |      |   |         |        |          |  |         |      |   |   | $         | 2,370,356 |         |   |        |        |  |  |      |      |  
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              |                                    | Net interest income/net interest spread |   |                                  |           |      |   | $       | 20,158 |          |  |         | 3.20 | % |   |           |           |         |   | $      | 16,399 |  |  |      | 2.46 | %
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     
|                              |                                    | Net interest margin                     |   |                                  |           |      |   |         |        |          |  |         | 3.47 | % |   |           |           |         |   |        |        |  |  |      | 2.91 | %
|                              |                                    |                                         |   |                                  |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |        |        |  |  |     

|                               |                                    |                                     |   |                            |     |       |   |        |        |   |   |        |        |  
|------------------------------ | ---------------------------------- | ----------------------------------- | - | -------------------------- | --- | ----- | - | ------ | ------ | - | - | ------ | ------ | -
|                               |                                    |                                     |   | Increase (Decrease) Due to
|                               |                                    |                                     |   |                           
|Changes in Net Interest Income |                                    | Volume                              |   | Rate                       |     | Total
|                               |                                    |                                     |   |                            |     |      
|Interest earning assets:       |                                    |                                     |   |                            |     |       |   |        |        |   |   |       
|                               | Loans                              |                                     | $ | 25                         |     |       | $ | (4,027 | )      |   | $ | (4,002 | )     
|                               | Securities                         |                                     |   | 1,287                      |     |       |   | (689   | )      |   |   | 598    |       
|                               | Interest bearing deposits in banks |                                     |   | 36                         |     |       |   | (72    | )      |   |   | (36    | )     
|                               | FHLB stock                         |                                     |   | 32                         |     |       |   | (64    | )      |   |   | (32    | )     
|                               | Federal funds sold                 |                                     |   | (361                       | )   |       |   | (224   | )      |   |   | (585   | )     
|                               |                                    |                                     |   |                            |     |       |   |        |        |   |   |       
|                               | Total change in interest income    |                                     |   | 1,019                      |     |       |   | (5,076 | )      |   |   | (4,057 | )     
|Interest bearing liabilities:  |                                    |                                     |   |                            |     |       |   |        |        |   |   |       
|                               | Interest checking                  |                                     |   | 31                         |     |       |   | (43    | )      |   |   | (12    | )     
|                               | Money market                       |                                     |   | 241                        |     |       |   | (1,616 | )      |   |   | (1,375 | )     
|                               | Savings                            |                                     |   | (59                        | )   |       |   | (726   | )      |   |   | (785   | )     
|                               | Time deposits                      |                                     |   | (439                       | )   |       |   | (5,320 | )      |   |   | (5,759 | )     
|                               | FHLB advances                      |                                     |   | 318                        |     |       |   | (2     | )      |   |   | 316    |       
|                               | Subordinated debt                  |                                     |   | 2                          |     |       |   | 1      |        |   |   | 3      |       
|                               | Other borrowings                   |                                     |   | (45                        | )   |       |   | (160   | )      |   |   | (205   | )     
|                               |                                    |                                     |   |                            |     |       |   |        |        |   |   |       
|                               |                                    | Total change in interest expense    |   |                            | 49  |       |   |        | (7,866 | ) |   |        | (7,817 | )
|                               |                                    |                                     |   |                            |     |       |   |        |        |   |   |       
|                               |                                    | Total change in net interest income |   | $                          | 970 |       |   | $      | 2,790  |   |   | $      | 3,760  |  
|                               |                                    |                                     |   |                            |     |       |   |        |        |   |   |       

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##### Table of Contents



Noninterest Income

Noninterest income for the three months ended September 30, 2002, was $4.1
million compared with $5.6 million for the same period in 2001, a decrease of
$1.5 million. In 2001, a $1.1 million gain was recorded on the sale of High
LTV Loan servicing. Loan service fee revenue, which includes fees from
servicing net of the amortization of loan servicing rights, declined $829,000.
Early payoffs to the servicing portfolio increased significantly which
reduced loan service fee revenues and required an accelerated amortization of
capitalized loan servicing rights. This decrease was partially offset by
gains on sales of loans and securities.

The following table reflects the components of noninterest income for the
three months ended September 30, 2002 and 2001 ($ in thousands):

|                                    |  |                              |       |      |  |            |       |  |  |          |        |  
|----------------------------------- |  | ---------------------------- | ----- | ---- |  | ---------- | ----- |  |  | -------- | ------ | -
|                                    |  | Three Months Ended Sept. 30,
|                                    |  |                             
|                                    |  |                              |       |      |  |            |       |  |  | Increase
|                                    |  | 2002                         |       | 2001 |  | (Decrease)
|                                    |  |                              |       |      |  |           
|Service charges on deposit accounts |  | $                            | 1,550 |      |  | $          | 1,768 |  |  | $        | (218   | )
|Loan service fees                   |  |                              | (630  | )    |  |            | 199   |  |  |          | (829   | )
|Other loan fee income               |  |                              | 651   |      |  |            | 569   |  |  |          | 82     |  
|Gains on sale of loans, net         |  |                              | 459   |      |  |            | 185   |  |  |          | 274    |  
|Gain on sale of securities, net     |  |                              | 1,592 |      |  |            | 951   |  |  |          | 641    |  
|Gain on trading assets, net         |  |                              | 82    |      |  |            | 379   |  |  |          | (297   | )
|Other income                        |  |                              | 403   |      |  |            | 1,598 |  |  |          | (1,195 | )
|                                    |  |                              |       |      |  |            |       |  |  |          |        |  
|Total noninterest income            |  | $                            | 4,107 |      |  | $          | 5,649 |  |  | $        | (1,542 | )
|                                    |  |                              |       |      |  |            |       |  |  |          |        |  

Noninterest Expense

Total expenses for the third quarter of 2002 were $19.2 million compared with
$19.3 million for the same period last year, a decrease of $41,000. Savings
were realized in employee compensation and occupancy, a result of the
Companys ongoing Profit Improvement Program and from closure of
underperforming branches. The net $656,000 increase in the loan collection
costs and ORE expense line items were mainly due to costs associated with our
largest nonperforming real estate property, a hotel in Wilmington, Delaware.

The following table reflects the components of noninterest expense for the
three months ended September 30, 2002 and 2001 ($ in thousands):

|                                               |  |                              |        |      |  |            |        |  |  |          |       |  
|---------------------------------------------- |  | ---------------------------- | ------ | ---- |  | ---------- | ------ |  |  | -------- | ----- | -
|                                               |  | Three Months Ended Sept. 30,
|                                               |  |                             
|                                               |  |                              |        |      |  |            |        |  |  | Increase
|                                               |  | 2002                         |        | 2001 |  | (Decrease)
|                                               |  |                              |        |      |  |           
|Salaries and benefits                          |  | $                            | 9,279  |      |  | $          | 9,919  |  |  | $        | (640  | )
|Net occupancy expense                          |  |                              | 3,254  |      |  |            | 3,510  |  |  |          | (256  | )
|Advertising and marketing                      |  |                              | 235    |      |  |            | 159    |  |  |          | 76    |  
|Data processing fees and services              |  |                              | 1,587  |      |  |            | 1,824  |  |  |          | (237  | )
|Loan collection costs                          |  |                              | (105   | )    |  |            | 530    |  |  |          | (635  | )
|Other operating expense                        |  |                              | 2,950  |      |  |            | 2,471  |  |  |          | 479   |  
|ORE expense, net of ORE income                 |  |                              | 1,323  |      |  |            | 32     |  |  |          | 1,291 |  
|Amortization of goodwill & premium on deposits |  |                              | 692    |      |  |            | 811    |  |  |          | (119  | )
|                                               |  |                              |        |      |  |            |        |  |  |          |       |  
|Total noninterest expense                      |  | $                            | 19,215 |      |  | $          | 19,256 |  |  | $        | (41   | )
|                                               |  |                              |        |      |  |            |        |  |  |          |       |  

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##### Table of Contents



Comparison of Results of Operations for the Nine Months Ended September 30,
2002 and 2001

Overview

Net income for the first nine months ended September 30, was $4.3 million, or
$0.37 per share, (on a diluted basis) for 2002, compared with income of
$282,000, or $0.01 per share on the same basis, for the same period in 2001.
The weighted average number of shares outstanding in 2002 does not include the
shares that would be issued if the subordinated debentures had been converted
to common stock. Although the average market price of the Companys common
stock exceeded the conversion price of the convertible subordinated
debentures, the pro forma effect of conversion was antidilutive.

Analysis of Net Interest Income (see
table on page 24)

Net interest income for the nine months ended September 30, 2002, was $58.9
million compared with $50.9 million for the same period last year, a $7.9
million or 15.66% increase. Net interest margin in the first nine months of
2002 was 3.37% compared to 2.97% a year ago, a 40 basis point improvement.
Average asset yield decreased by 116 basis points from 7.46% for the same
period in 2001 to 6.30% for 2002. The average cost of interest-bearing
liabilities decreased by 175 basis points compared to the same period a year
ago from 4.94% to 3.19%.

Noninterest Income

Noninterest income for the nine months ended September 30, 2002, was $10.7
million compared with $21.6 million for the same period in 2001, a decrease of
$10.9 million. In 2001, noninterest income included a $4.5 million gain on the
sale of branches. Loan service fees declined $2.8 million primarily from a
reduction in the servicing portfolio through sale of servicing of High LTV
Loans in 2001 and from increases in early payoffs on conventional and
government mortgage servicing. This second factor reduced service fee revenue
and required an accelerated amortization of capitalized mortgage servicing
rights.

The following table reflects the components of noninterest income for the nine
months ended September 30, 2002 and 2001 ($ in thousands):

|                                    |  |                             |        |      |  |            |        |  |  |          |         |  
|----------------------------------- |  | --------------------------- | ------ | ---- |  | ---------- | ------ |  |  | -------- | ------- | -
|                                    |  | Nine Months Ended Sept. 30,
|                                    |  |                            
|                                    |  |                             |        |      |  |            |        |  |  | Increase
|                                    |  | 2002                        |        | 2001 |  | (Decrease)
|                                    |  |                             |        |      |  |           
|Service charges on deposit accounts |  | $                           | 4,724  |      |  | $          | 5,661  |  |  | $        | (937    | )
|Loan service fees                   |  |                             | (666   | )    |  |            | 2,183  |  |  |          | (2,849  | )
|Other loan fee income               |  |                             | 1,973  |      |  |            | 2,732  |  |  |          | (759    | )
|Gains on sale of loans, net         |  |                             | 1,088  |      |  |            | 539    |  |  |          | 549     |  
|Gain on sale of securities, net     |  |                             | 1,990  |      |  |            | 1,586  |  |  |          | 404     |  
|Gain (loss) on trading assets, net  |  |                             | 12     |      |  |            | 2,070  |  |  |          | (2,058  | )
|Gain on sale of branches            |  |                             |       |      |  |            | 4,483  |  |  |          | (4,483  | )
|Other income                        |  |                             | 1,548  |      |  |            | 2,382  |  |  |          | (834    | )
|                                    |  |                             |        |      |  |            |        |  |  |          |         |  
|Total noninterest income            |  | $                           | 10,669 |      |  | $          | 21,636 |  |  | $        | (10,967 | )
|                                    |  |                             |        |      |  |            |        |  |  |          |         |  

23



---



##### Table of Contents



The following table summarizes the average yields earned on interest earning
assets and the average rates paid on interest bearing liabilities for the nine
months ended September 30, 2002 and 2001 ($ in thousands):

|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |      |      |  
|----------------------------- | ---------------------------------- | --------------------------------------- | - | ------------------------------- | --------- | ---- | - | ------- | ------ | -------- |  | ------- | ---- | - | - | --------- | --------- | ------- | - | ------- | ------ |  |  | ---- | ---- | -
|                              |                                    |                                         |   | Nine Months Ended September 30,
|                              |                                    |                                         |   |                                
|                              |                                    |                                         |   | 2002                            |           | 2001
|                              |                                    |                                         |   |                                 |           |     
|                              |                                    |                                         |   | Average                         |           |      |   |         |        | Average  |  | Average |      |   |   |           |           | Average
|Summary of Average Rates      |                                    | Balance                                 |   | Interest                        |           | Rate |   | Balance |        | Interest |  | Rate   
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |        
|Interest earning assets:      |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              | Loans                              |                                         | $ | 1,451,407                       |           |      | $ | 76,483  |        |          |  | 7.00    | %    |   | $ | 1,589,950 |           |         | $ | 96,992  |        |  |  | 8.11 | %   
|                              | Securities                         |                                         |   | 816,564                         |           |      |   | 32,067  |        |          |  | 5.24    |      |   |   | 508,458   |           |         |   | 23,744  |        |  |  | 6.23 |     
|                              | Interest bearing deposits in banks |                                         |   | 14,358                          |           |      |   | 100     |        |          |  | 0.93    |      |   |   | 7,533     |           |         |   | 261     |        |  |  | 4.63 |     
|                              | FHLB stock                         |                                         |   | 14,617                          |           |      |   | 591     |        |          |  | 5.40    |      |   |   | 13,393    |           |         |   | 693     |        |  |  | 6.91 |     
|                              | Federal funds sold                 |                                         |   | 13,336                          |           |      |   | 160     |        |          |  | 1.58    |      |   |   | 142,653   |           |         |   | 5,177   |        |  |  | 4.79 |     
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              | Total interest earning assets      |                                         |   | 2,310,282                       |           |      |   | 109,401 |        |          |  | 6.30    |      |   |   | 2,261,987 |           |         |   | 126,867 |        |  |  | 7.46 |     
|                              | Noninterest earning assets         |                                         |   | 167,605                         |           |      |   |         |        |          |  |         |      |   |   | 136,623   |           |         |   |         |        |  |  |      |     
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              | Total assets                       |                                         | $ | 2,477,887                       |           |      |   |         |        |          |  |         |      |   | $ | 2,398,610 |           |         |   |         |        |  |  |      |     
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|Interest bearing liabilities: |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              | Interest checking                  |                                         | $ | 190,978                         |           |      | $ | 547     |        |          |  | 0.38    | %    |   | $ | 168,597   |           |         | $ | 655     |        |  |  | 0.52 | %   
|                              | Money market                       |                                         |   | 397,389                         |           |      |   | 5,614   |        |          |  | 1.89    |      |   |   | 334,088   |           |         |   | 9,791   |        |  |  | 3.92 |     
|                              | Savings                            |                                         |   | 183,186                         |           |      |   | 2,179   |        |          |  | 1.59    |      |   |   | 185,139   |           |         |   | 4,463   |        |  |  | 3.22 |     
|                              | Time deposits                      |                                         |   | 1,193,721                       |           |      |   | 38,657  |        |          |  | 4.33    |      |   |   | 1,296,870 |           |         |   | 58,163  |        |  |  | 6.00 |     
|                              | FHLB advances                      |                                         |   | 85,013                          |           |      |   | 1,557   |        |          |  | 2.45    |      |   |   | 1,860     |           |         |   | 71      |        |  |  | 5.11 |     
|                              | Subordinated debt                  |                                         |   | 29,303                          |           |      |   | 1,609   |        |          |  | 7.32    |      |   |   | 22,396    |           |         |   | 1,227   |        |  |  | 7.30 |     
|                              | Other borrowings                   |                                         |   | 37,066                          |           |      |   | 372     |        |          |  | 1.34    |      |   |   | 47,827    |           |         |   | 1,603   |        |  |  | 4.48 |     
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              | Total interest bearing liabilities |                                         |   | 2,116,656                       |           |      |   | 50,535  |        |          |  | 3.19    |      |   |   | 2,056,777 |           |         |   | 75,973  |        |  |  | 4.94 |     
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              | Noninterest bearing liabilities    |                                         |   | 186,689                         |           |      |   |         |        |          |  |         |      |   |   | 165,445   |           |         |   |         |        |  |  |      |     
|                              | Stockholders equity               |                                         |   | 174,542                         |           |      |   |         |        |          |  |         |      |   |   | 176,388   |           |         |   |         |        |  |  |      |     
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              |                                    | Total liabilities and equity            |   | $                               | 2,477,887 |      |   |         |        |          |  |         |      |   |   | $         | 2,398,610 |         |   |         |        |  |  |      |      |  
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              |                                    | Net interest income/net interest spread |   |                                 |           |      |   | $       | 58,866 |          |  |         | 3.10 | % |   |           |           |         |   | $       | 50,894 |  |  |      | 2.52 | %
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     
|                              |                                    | Net interest margin                     |   |                                 |           |      |   |         |        |          |  |         | 3.37 | % |   |           |           |         |   |         |        |  |  |      | 2.97 | %
|                              |                                    |                                         |   |                                 |           |      |   |         |        |          |  |         |      |   |   |           |           |         |   |         |        |  |  |     

|                               |                                    |                                     |   |                            |        |       |   |         |         |   |   |         |         |  
|------------------------------ | ---------------------------------- | ----------------------------------- | - | -------------------------- | ------ | ----- | - | ------- | ------- | - | - | ------- | ------- | -
|                               |                                    |                                     |   | Increase (Decrease) Due to
|                               |                                    |                                     |   |                           
|Changes in Net Interest Income |                                    | Volume                              |   | Rate                       |        | Total
|                               |                                    |                                     |   |                            |        |      
|Interest earning assets:       |                                    |                                     |   |                            |        |       |   |         |         |   |   |        
|                               | Loans                              |                                     | $ | (6,654                     | )      |       | $ | (13,854 | )       |   | $ | (20,508 | )      
|                               | Securities                         |                                     |   | 10,837                     |        |       |   | (2,514  | )       |   |   | 8,323   |        
|                               | Interest bearing deposits in banks |                                     |   | 136                        |        |       |   | (297    | )       |   |   | (161    | )      
|                               | FHLB stock                         |                                     |   | 59                         |        |       |   | (161    | )       |   |   | (102    | )      
|                               | Federal funds sold                 |                                     |   | (2,886                     | )      |       |   | (2,132  | )       |   |   | (5,018  | )      
|                               |                                    |                                     |   |                            |        |       |   |         |         |   |   |        
|                               | Total change in interest income    |                                     |   | 1,492                      |        |       |   | (18,958 | )       |   |   | (17,466 | )      
|Interest bearing liabilities:  |                                    |                                     |   |                            |        |       |   |         |         |   |   |        
|                               | Interest checking                  |                                     |   | 79                         |        |       |   | (187    | )       |   |   | (108    | )      
|                               | Money market                       |                                     |   | 1,598                      |        |       |   | (5,774  | )       |   |   | (4,176  | )      
|                               | Savings                            |                                     |   | (47                        | )      |       |   | (2,237  | )       |   |   | (2,284  | )      
|                               | Time deposits                      |                                     |   | (5,476                     | )      |       |   | (14,030 | )       |   |   | (19,506 | )      
|                               | FHLB advances                      |                                     |   | 1,501                      |        |       |   | (16     | )       |   |   | 1,485   |        
|                               | Subordinated debt                  |                                     |   | 379                        |        |       |   | 3       |         |   |   | 382     |        
|                               | Other borrowings                   |                                     |   | (365                       | )      |       |   | (866    | )       |   |   | (1,231  | )      
|                               |                                    |                                     |   |                            |        |       |   |         |         |   |   |        
|                               |                                    | Total change in interest expense    |   |                            | (2,331 | )     |   |         | (23,107 | ) |   |         | (25,438 | )
|                               |                                    |                                     |   |                            |        |       |   |         |         |   |   |        
|                               |                                    | Total change in net interest income |   | $                          | 3,823  |       |   | $       | 4,149   |   |   | $       | 7,972   |  
|                               |                                    |                                     |   |                            |        |       |   |         |         |   |   |        

24



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##### Table of Contents



Noninterest Expense

Total expenses for the first nine months of 2002 were $55.8 million compared
with $58.7 million for the same period last year, a decrease of $2.9 million
or 5.02%. Salaries and benefits decreased $504,000 or 1.72%, as savings from
reduced staffing in administrative and support areas offset costs from
growing the loan and deposit production capabilities.

The following table reflects the components of noninterest expense for the
nine months ended September 30, 2002 and 2001 ($ in thousands):

|                                               |  |                                         |        |      |  |            |        |  |  |          |        |  
|---------------------------------------------- |  | --------------------------------------- | ------ | ---- |  | ---------- | ------ |  |  | -------- | ------ | -
|                                               |  | For the Nine Months Ended September 30,
|                                               |  |                                        
|                                               |  |                                         |        |      |  |            |        |  |  | Increase
|                                               |  | 2002                                    |        | 2001 |  | (Decrease)
|                                               |  |                                         |        |      |  |           
|Salaries and benefits                          |  | $                                       | 28,861 |      |  | $          | 29,365 |  |  | $        | (504   | )
|Net occupancy expense                          |  |                                         | 9,567  |      |  |            | 10,103 |  |  |          | (536   | )
|Advertising and marketing                      |  |                                         | 704    |      |  |            | 1,338  |  |  |          | (634   | )
|Data processing fees and services              |  |                                         | 4,691  |      |  |            | 5,473  |  |  |          | (782   | )
|Loan collection costs                          |  |                                         | 809    |      |  |            | 1,540  |  |  |          | (731   | )
|Other operating expense                        |  |                                         | 8,228  |      |  |            | 7,847  |  |  |          | 381    |  
|ORE expense, net of ORE income                 |  |                                         | 833    |      |  |            | 412    |  |  |          | 421    |  
|Amortization of goodwill & premium on deposits |  |                                         | 2,075  |      |  |            | 2,638  |  |  |          | (563   | )
|                                               |  |                                         |        |      |  |            |        |  |  |          |        |  
|Total noninterest expense                      |  | $                                       | 55,768 |      |  | $          | 58,716 |  |  | $        | (2,948 | )
|                                               |  |                                         |        |      |  |            |        |  |  |          |        |  




Item 3.    INTEREST RATE RISK MANAGEMENT

The primary objective of interest rate risk management is to minimize the
effect that changes in interest rates have on net interest income. The Asset/Liability
Management Committee (ALCO) meets at least quarterly to monitor
interest rate risk in the loan, investment and liability portfolios.

Management uses simulation software to measure asset and liability duration and
the sensitivity of projected net interest income to changes in interest rates.
The simulation process takes into account the current contractual agreements
with customers on deposits, borrowings, loans, investments and any commitments
to enter into those transactions in the future. Also considered are the current
volumes, average rates and scheduled maturities and payments of asset and
liability portfolios, together with projected prepayments and new business
volumes. At September 30, 2002, the duration of the Companys assets was 1.87
years while the duration of its liabilities and equity was 1.86 years.

The following table shows the effect that the indicated changes in interest
rates would have on net interest income, projected for the next 12 months under
a static interest rate scenario. Each change in interest rates is ramped pro
rata over a 12 month time horizon. The resulting change in net interest income
from the static interest rate projection provides one measure of sensitivity in
relation to changing interest rates, given the assumptions used in this
process.

The percentage change projected for net interest income from a static rate
projection, assuming a rate shock ramped over a 12 month period, was as
follows:

|                          |  |          |       |   
|------------------------- |  | -------- | ----- | --
|If interest rates:        |  | Change-%
|                          |  |         
|Increase 100 basis points |  |          | (0.12 | )%
|Increase 200 basis points |  |          | (0.47 | ) 
|Decrease 100 basis points |  |          | (0.66 | ) 
|Decrease 200 basis points |  |          | (3.00 | ) 

25



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##### Table of Contents






Item 4.    Controls and Procedures



|(a) |  | Evaluation of Disclosure Controls and Procedures: An evaluation of the
Companys disclosure controls and procedures (as defined in Section
13(a)-14(c) of the Securities Exchange Act of 1934 (the Act)) was
carried out under the supervision and with the participation of the Chief
Executive Officer, Chief Financial Officer and several other members of
the Companys senior management within the 90-day period preceding the
filing date of this quarterly report. The Chief Executive Officer and
Chief Financial Officer concluded that disclosure controls and procedures
as currently in effect are effective in ensuring that the information
required to be disclosed in the reports filed or submitted under the Act
is (i) accumulated and communicated to the Companys management, including
the Chief Executive Officer and Chief Financial Officer, in a timely
manner, and (ii) recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Changes in Internal Controls: In the quarter ended September 30, 2002,
the Company did not make any significant changes in nor were there any
necessary corrective actions regarding its internal controls or other
factors that could significantly affect these controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         




Part II.     OTHER INFORMATION




Item 1.    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 6.    Exhibits and Report on Form 8-K



| | The following report on Form 8-K was filed during the quarter for which
this report is filed:
| | ---------------------------------------------------------------------------------------------



| |  |  | Report on Form 8-K, dated August 8, 2002, filed August 14, 2002, -
Announced the certification of the Chief Executive and Chief Financial
officers pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 of the Companys report
on Form 10-Q for the quarter ended June 30,2002.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26



---



##### Table of Contents



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

|      |  |                   |  |                           |  |                                                                                     
|----- |  | ----------------- |  | ------------------------- |  | ------------------------------------------------------------------------------------
|      |  |                   |  | REPUBLIC BANCSHARES, INC.
|      |  |                   |  |                           |  |                                                                                     
|Date: |  | November 12, 2002 |  | By:                       |  | /s/ William R. Klich                                                                
|      |  |                   |  |                           |  |                                                                                     
|      |  |                   |  |                           |  | William R. Klich
President and Chief Executive Officer
(principal executive officer)
|      |  |                   |  |                           |  |                                                                                     
|Date: |  | November 12, 2002 |  | By:                       |  | /s/ William R. Falzone                                                              
|      |  |                   |  |                           |  |                                                                                     
|      |  |                   |  |                           |  | William R. Falzone
Treasurer (principal financial and
accounting officer)           

27



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##### Table of Contents






SECTION 302 CERTIFICATION

I, William R. Klich, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Republic
Bancshares, Inc.;                                                                                                                                                                                                                                                       
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                            
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                              



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls.                                                                                                                                            



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |                   |  |                           |  |                                          
|----- |  | ----------------- |  | ------------------------- |  | -----------------------------------------
|      |  |                   |  | REPUBLIC BANCSHARES, INC.
|      |  |                   |  |                           |  |                                          
|Date: |  | November 12, 2002 |  | By:                       |  | /s/ William R. Klich                     
|      |  |                   |  |                           |  |                                          
|      |  |                   |  |                           |  | William R. Klich, Chief Executive Officer
|      |  |                   |  |                           |  |                                          

28



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##### Table of Contents



SECTION 302 CERTIFICATION

I, William R. Falzone, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Republic
Bancshares, Inc.;                                                                                                                                                                                                                                                       
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                            
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                              



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls.                                                                                                                                            



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |                   |  |                           |  |                                     
|----- |  | ----------------- |  | ------------------------- |  | ------------------------------------
|      |  |                   |  | REPUBLIC BANCSHARES, INC.
|      |  |                   |  |                           |  |                                     
|Date: |  | November 12, 2002 |  | By:                       |  | /s/ William R. Falzone              
|      |  |                   |  |                           |  |                                     
|      |  |                   |  |                           |  | William R. Falzone, V.P. & Treasurer

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