<PAGE>

                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                   For the fiscal year ended December 31, 1998
                          Commission file number 0-8597

                             THE REPUBLIC CORPORATION
             (Exact name of registrant as specified in its charter)

                TEXAS                                          74-0911766    
     (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                      Identification No.)

     5340 Weslayan, P.O. Box 270462
              Houston, Texas                                     77277
 (Address of principal executive offices)                     (Zip Code)

       Registrant's telephone number, including area code: (713) 993-9200

            Securities registered pursuant to Section (b) of the Act:

    Title of Each Class             Name of Each Exchange on Which Registered
    -------------------             -----------------------------------------
           None                                       None

            Securities registered pursuant to Section (g) of the Act:
     750,000 shares Common stock, par value $1 per share, of which 356,844 are
     outstanding including 23,119 held in treasury.

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

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

     Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K (&229.405 of this chapter) is not contained 
herein, and will not be contained, to the best of registrant's knowledge, in 
definitive proxy or information statements incorporated by reference in Part 
III of this Form 10-K or any amendment to this Form 10-K. (X)

     State the aggregate market value of the voting stock held by 
non-affiliates of the registrant:

                         $624,115 as of January 31, 1999

     Indicate the number of shares outstanding of each of the registrant's 
classes of common stock as of the latest practicable date:

                       Common Stock par value $1 per share
               333,725 shares outstanding as of December 31, 1998

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

<PAGE>

                              REPUBLIC CORPORATION
                                    FORM 10-K
                                      INDEX

<TABLE>
<CAPTION>
                                                                  PAGE
                                                                  ----
<S>                                                               <C>
IMPORTANT TERMS . . . . . . . . . . . . . . . . . . . . . . . .

PART I

   ITEM 1.   BUSINESS . . . . . . . . . . . . . . . . . . . . .    1-12

   ITEM 2.   PROPERTIES . . . . . . . . . . . . . . . . . . . .    12

   ITEM 3.   LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . .    12

   ITEM 4.   SUBMISSION OF MATTERS TO A VOTE
             OF SECURITIES HOLDERS. . . . . . . . . . . . . . .    12

PART II

   ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY
             AND RELATED STOCKHOLDER MATTERS. . . . . . . . . .    12

   ITEM 6.   SELECTED FINANCIAL DATA. . . . . . . . . . . . . .    13

   ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . .    14-19

   ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . .    20-40

   ITEM 9.   CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . .    41

PART III

   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS
             OF THE REGISTRANT. . . . . . . . . . . . . . . . .    42

   ITEM 11.  EXECUTIVE COMPENSATION . . . . . . . . . . . . . .    43

   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN
             BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . .    44

   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . .    45

PART IV

   ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
             AND REPORTS ON FORM 8-K. . . . . . . . . . . . . .    46-47

   SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . .    48

   SUPPLEMENTAL INFORMATION . . . . . . . . . . . . . . . . . .    49

</TABLE>

<PAGE>

                                 IMPORTANT TERMS

"Registrant" - THE REPUBLIC CORPORATION, a Texas Corporation whose sole 
purpose is the holding and managing of The First National Bank in Trinidad.

"Bank" - The First National Bank in Trinidad is a commercial bank located in 
Trinidad, Colorado and Walsenburg, Colorado, also referred to as the 
"Subsidiary Bank".

"FRB" - The Board of Governors of the Federal Reserve System, the Agency 
which has responsibility for administering the Bank Holding Company Act of 
1956, as amended.

<PAGE>

                                     PART I

ITEM I. Business

                            THE REPUBLIC CORPORATION

     GENERAL. On January 11, 1955, the Registrant was chartered under the 
laws of the State of Texas as Columbia General Investment Corporation, 
conducting business in mortgage banking until 1963. In 1960, Columbia General 
Investment Corporation acquired The Republic Corporation. Shortly thereafter, 
the name Columbia General Investment Corporation was changed to The Republic 
Corporation. Also in 1960, the Registrant acquired 75% of the outstanding 
stock of the First National Bank in Trinidad, Colorado. In 1961, an 
additional 23% of the stock was purchased, and since then, only qualifying 
shares for directors and officers of the Bank have been held by other than 
the Registrant.

     Since discontinuing mortgage banking operations in 1963, the Registrant 
has carried on no significant operations other than as an advisor to the 
Bank. In this advisory position, the Registrant coordinates general policies 
and activities, and assumes primary responsibility for all major decisions of 
the Bank.

     SUPERVISION AND REGULATION. THE REGISTRANT is a registered bank holding 
company under the Bank Holding Company Act of 1956 (the "Act"), and is 
subject to the supervision of, and regulation by, the Board of Governors of 
the Federal Reserve System (the "Board"). Under the Act, a bank holding 
company may engage in banking, managing or controlling banks, furnishing or 
performing services for banks it controls, and conducting activities that the 
Board has determined to be closely related to banking. The Registrant must 
obtain approval of the Board before acquiring control of a bank or acquiring 
more than 5 percent of the outstanding voting shares of a company engaged in 
a "bank-related" business. Under the Act and state laws, the Registrant is 
subject to certain restrictions as to states in which the Registrant can 
acquire a bank. National banks are subject to the supervision of, and are 
examined by the Comptroller of the Currency. State banks are subject to the 
supervision of the regulatory authorities of the states in which they are 
located. The subsidiary bank of the Registrant is a member of the Federal 
Deposit Insurance Corporation, and as such is subject to examination thereby. 
In private, the primary federal regulator makes regular examinations of the 
subsidiary bank subject to its regulatory review or participates in joint 
examinations with other federal regulators. Areas subject to regulation by 
federal and state authorities include the allowance for credit losses, 
investments, loans, mergers, issuance of securities, payment of dividends, 
establishment of branches and other aspects of operations.

                                        1

<PAGE>

     BUSINESS. The Registrant is a holding company whose sole business 
purpose is to hold the stock of the Bank. The operation of the Bank is 
described as follows:

                         FIRST NATIONAL BANK IN TRINIDAD
                                 SUBSIDIARY BANK

BUSINESS.

     OPERATION OF THE SUBSIDIARY BANK. The Board of Directors and officers of 
the subsidiary bank are responsible for its operation. However, the Republic 
Corporation, as the controlling stockholder, coordinates the establishment of 
goals, objectives and policies for the entire organization, assists the 
subsidiary bank in the attainment of these objectives and monitors adherence 
to established policies. The company also monitors adherence to lending and 
accounting policies, budgetary goals and long-range plans.

     The bank provides the following services:

     COMMERCIAL BANKING SERVICES. The Bank provides a broad range of 
financial services to a diversified group of commercial, industrial and 
financial customers in Southern Colorado. Services provided to commercial 
customers include short and medium term loans, revolving credit arrangements, 
trade financing, energy related financing, real estate construction lending, 
capital equipment financing and letters of credit.

     CONSUMER SERVICES. The Bank provides a diverse range of personal 
services to individuals including savings and time deposit accounts, 
installment lending, bank check guarantee cards, checking accounts, N.O.W. 
accounts, mortgage loans, safe deposit facilities, IRA services, money market 
deposits, and automatic teller facilities.

EMPLOYEES.  The Bank had 64 full time equivalent employees on December 31, 1998.

                                        2

<PAGE>

COMPETITION

     The Bank's primary market area is Trinidad, Colorado, Walsenburg, 
Colorado and the surrounding communities. In this market are two other banks 
and a savings and loan association. The deposits of the Bank are larger than 
those of the savings and loan and larger than those of the other banks. The 
Bank competes with these institutions in obtaining new deposits, making 
loans, and providing additional banking services.

     The principal methods of competition in the industry are price (i.e. 
interest rates and fees) and service. Inasmuch as rate and fee structures at 
all local competitors are somewhat similarly constrained by net interest 
income objectives, competitive pressure and the restraint that must 
necessarily be exercised in smaller communities of modest means, the primary 
arena for competition is service. Community banks are uniquely able to 
provide the type of personal service that is typically of greatest value in 
smaller, less populated markets such as Las Animas and Huerfano Counties. The 
ability of the bank to successfully market this type of service delivery, 
along with a reasonable selection of more modern and less personal means of 
access, will determine its ultimate competitive success.

MONETARY POLICY.

     The earnings and growth of the banking industry and of the Bank are 
affected not only by general economic conditions, but also by the credit 
policies of monetary authorities, particularly the Federal Reserve System. An 
important function of the Federal Reserve System is to regulate the national 
supply of bank credit in order to combat recession and curb inflationary 
pressures. Among the instruments of monetary policy used by the Federal 
Reserve System to implement these objectives are open market operations in 
U.S. Government securities, changes in the discount rate on member bank 
borrowings and changes in reserve requirements against member bank deposits. 
These means are used in varying combinations to influence overall growth of 
bank loans, investments and deposits and may also affect interest rates 
charged on loans or paid for deposits.

     The monetary policies of the Federal Reserve System have had a 
significant effect on the operating results of commercial banks in the past 
and are expected to continue to do so in the future. Because of changing 
conditions in the national and international economy and in the money 
markets, and as a result of actions by monetary and fiscal authorities, 
including the Federal Reserve System, interest rates, credits and 
availability and deposit levels may change due to circumstances beyond the 
control of The Republic Corporation or the Bank.

STATISTICAL DATA.  The following sets forth certain statistical data 
regarding the Republic Corporation.

I.   DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY: INTEREST
     RATES AND DIFFERENTIAL

BALANCE SHEET ANALYSIS

     The following three tables present the consolidated monthly average 
balance sheet, taxable equivalent interest revenue, interest expense, and 
average yields and rates.

                                        3

<PAGE>

     Interest income on non-taxable investment securities has been adjusted 
to reflect the tax benefit of tax exempt income at a marginal rate of 38% for 
each year presented.

     Non-accruing loans are included for purposes of the analysis of interest 
earnings on loans.

                                    TABLE #1

<TABLE>
<CAPTION>

Year Ended December 31, 1998                          Average      Interest       Yield/
(Dollars in Thousands)                                Balance      Rev./Exp.      Rate
<S>                                                   <C>          <C>            <C>
ASSETS
  Investment securities:
    Taxable. . . . . . . . . . . . . . . . . . . . .  $ 23,399     $ 1,335        5.7%
    Tax exempt . . . . . . . . . . . . . . . . . . .        --          --        --
  Loans. . . . . . . . . . . . . . . . . . . . . . .    87,275       7,683        8.8%
    Less: Reserve for loan loss. . . . . . . . . . .    (1,145)
  Funds sold . . . . . . . . . . . . . . . . . . . .    12,435         665        5.3%
                                                      --------     -------        ----
     Total Earning Assets. . . . . . . . . . . . . .   121,964       9,683        7.9%
                                                      --------     -------        ----
  Cash and due from banks. . . . . . . . . . . . . .     3,696
  Other assets . . . . . . . . . . . . . . . . . . .     4,224
                                                      --------     
    TOTAL ASSETS . . . . . . . . . . . . . . . . . .  $129,884
                                                      --------     
                                                      --------     

LIABILITIES AND STOCKHOLDERS' EQUITY
  Interest bearing demand deposits . . . . . . . . .  $ 35,669     $ 1,295        3.6%
  Savings deposits . . . . . . . . . . . . . . . . .     9,282         252        2.7%
  Time deposits. . . . . . . . . . . . . . . . . . .    55,591       3,024        5.4%
                                                      --------     -------        ----
    TOTAL INTEREST BEARING LIABILITIES . . . . . . .   100,542       4,571        4.5%
                                                      --------     -------        ----
NET INTEREST REVENUE . . . . . . . . . . . . . . . .               $ 5,112        3.4%
                                                                   -------
                                                                   -------
NET INTEREST REVENUE TO EARNING ASSETS . . . . . . .                              4.2%
  Demand deposits (non-interest bearing) . . . . . .  $ 16,114
  Other liabilities. . . . . . . . . . . . . . . . .     1,463
  Stockholders' equity . . . . . . . . . . . . . . .    11,765
                                                      --------     
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . .  $129,884
                                                      --------     
                                                      --------     

</TABLE>

                                        4

<PAGE>

                                    TABLE #2

<TABLE>
<CAPTION>
Year Ended December 31, 1997                          Average      Interest       Yield/
(Dollars in Thousands)                                Balance      Rev./Exp.      Rate
<S>                                                   <C>          <C>            <C>
ASSETS
  Investment securities:
    Taxable. . . . . . . . . . . . . . . . . . . . .  $ 20,588     $ 1,112        5.4%
    Tax exempt . . . . . . . . . . . . . . . . . . .        --          --        --
  Loans. . . . . . . . . . . . . . . . . . . . . . .    75,870       6,796        8.9%
    Less: Reserve for loan loss. . . . . . . . . . .    (1,049)
  Funds sold . . . . . . . . . . . . . . . . . . . .    20,917       1,129        5.4%
                                                      --------     -------        ----
    Total Earnings Assets                              116,326       9,037        7.8%
                                                      --------     -------        ----

  Cash and due from banks. . . . . . . . . . . . . .     2,250
  Other assets . . . . . . . . . . . . . . . . . . .     3,462
                                                      --------     

    TOTAL ASSETS . . . . . . . . . . . . . . . . . .  $122,038
                                                      --------     
                                                      --------     

LIABILITIES AND STOCKHOLDERS' EQUITY
  Interest bearing demand deposits . . . . . . . . .  $ 31,498     $ 1,105        3.5%
  Savings deposits . . . . . . . . . . . . . . . . .     9,381         259        2.8%
  Time deposit . . . . . . . . . . . . . . . . . . .    54,614       3,087        5.7%
                                                      --------     -------        ----
    TOTAL INTEREST BEARING LIABILITIES . . . . . . .    95,493       4,451        4.7%
                                                      --------     -------        ----
NET INTEREST REVENUE . . . . . . . . . . . . . . . .               $ 4,586        3.1%
                                                                   -------
                                                                   -------
NET INTEREST REVENUE TO EARNING ASSETS . . . . . . .                              3.9%
  Demand deposits (non-interest bearing) . . . . . .  $ 14,315
  Other liabilities. . . . . . . . . . . . . . . . .     1,409
  Stockholders' Equity . . . . . . . . . . . . . . .    10,821
                                                      --------     
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . .  $122,038
                                                      --------     
                                                      --------     

</TABLE>

                                        5

<PAGE>

                                    TABLE #3

<TABLE>
<CAPTION>
Year Ended December 31, 1996                          Average      Interest       Yield/
(Dollars in Thousands)                                Balance      Rev./Exp.      Rate
<S>                                                   <C>          <C>            <C>
ASSETS
  Investment securities:
    Taxable. . . . . . . . . . . . . . . . . . . . .  $ 10,006     $   653        6.5%
    Tax exempt . . . . . . . . . . . . . . . . . . .        --          --        --
  Loans. . . . . . . . . . . . . . . . . . . . . . .    68,841       6,184        9.0%
    Less: Reserve for loan loss. . . . . . . . . . .      (956)
  Funds sold . . . . . . . . . . . . . . . . . . . .    27,844       1,483        5.3%
                                                      --------     -------        ----
    Total Earning Assets . . . . . . . . . . . . . .   105,735       8,320        7.9%
                                                      --------     -------        ----

  Cash and due from banks. . . . . . . . . . . . . .     2,776
  Other assets . . . . . . . . . . . . . . . . . . .     3,486
                                                      --------
    TOTAL ASSETS . . . . . . . . . . . . . . . . . .  $111,997
                                                      --------
                                                      --------

LIABILITIES AND STOCKHOLDERS' EQUITY
  Interest bearing demand deposits . . . . . . . . .  $ 29,339     $ 1,004        3.4%
  Savings deposits . . . . . . . . . . . . . . . . .     9,703         268        2.8%
  Time deposits. . . . . . . . . . . . . . . . . . .    49,773       2,852        5.7%
                                                      --------     -------        ----
    TOTAL INTEREST BEARING LIABILITIES . . . . . . .    88,815       4,124        4.6%
                                                      --------     -------        ----
NET INTEREST REVENUE . . . . . . . . . . . . . . . .               $ 4,196        3.3%
                                                                   -------
                                                                   -------
NET INTEREST REVENUE TO EARNING ASSETS                                            4.0%
  Demand deposits (non-interest bearing) . . . . . .  $ 12,596
  Other liabilities. . . . . . . . . . . . . . . . .     1,338
  Stockholders' equity . . . . . . . . . . . . . . .     9,248
                                                      --------     
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . .  $111,997
                                                      --------     
                                                      --------     

</TABLE>

                                        6

<PAGE>

     The following table presents statistical information regarding the
components of net interest income of the Registrant and an analysis of the
changes in net interest income due to changes in volume and rates.

Analysis of Changes in Components of Net Interest Income
(Dollars in thousands)

                                    TABLE #4

<TABLE>
<CAPTION>
                                                     1998 vs 1997                 1997 vs 1996 
                                                -----------------------     -----------------------
                                                         Yield/                      Yield/
                                                Volume   Rate     Total     Volume   Rate     Total
                                                -----------------------     -----------------------
<S>                                             <C>      <C>      <C>       <C>      <C>      <C>
Increase (decrease) in interest income on:
Loans. . . . . . . . . . . . . . . . . . . . .  $ 963    $ (77)   $ 886     $ 680    $ (68)   $ 612
Investment securities. . . . . . . . . . . . .    160       63      223       589     (130)     459
Federal funds sold . . . . . . . . . . . . . .   (444)     (21)    (465)     (381)      28     (353)
                                                -----    -----    -----     -----    -----    -----
                                                  679      (35)     644       888     (170)     718
                                                -----    -----    -----     -----    -----    -----

Increase (decrease) in interest expense on:
Demand deposits. . . . . . . . . . . . . . . .    159       31      190        72       29      101
Savings. . . . . . . . . . . . . . . . . . . .     (1)      (6)      (7)       (9)       -       (9)
Time deposits. . . . . . . . . . . . . . . . .     99     (162)     (63)      235        -      235
                                                -----    -----    -----     -----    -----    -----
                                                  257     (137)     120       298       29      327
                                                -----    -----    -----     -----    -----    -----
Net interest income. . . . . . . . . . . . . .    422      102      524       590     (199)     391
                                                -----    -----    -----     -----    -----    -----
                                                -----    -----    -----     -----    -----    -----

</TABLE>

     The volume/rate variance was allocated to rate based on the percentage 
increase or decrease in relation to the total previous year rates with the 
remainder allocated to volume.

                                        7

<PAGE>

II.  INVESTMENT PORTFOLIO

     The following table shows the classification of investment securities 
with fixed maturities held at December 31, in each of the past three years 
(including investments held for sale):

                                    TABLE #5

<TABLE>
<CAPTION>
December 31
(Dollars in thousands)                              1998     1997       1996  
------------------------------------------------------------------------------
<S>                                               <C>       <C>       <C>
U.S. Treasury Securities. . . . . . . . . . . .   $  -      $12,036   $10,006
Government Sponsored Agencies . . . . . . . . .    23,865    15,952        --
Other bonds, notes and securities . . . . . . .        24        24        24
                                                  -------   -------   -------
         TOTAL                                    $23,889   $28,012   $10,030
                                                  -------   -------   -------
                                                  -------   -------   -------

</TABLE>

     The following is a table which shows the maturity distribution of 
investment securities and the average taxable equivalent yield by each range. 
Dollars presented are in thousands.

                                    TABLE #6

<TABLE>
<CAPTION>
                                                                Government        Federal
                                            U.S. Treasury       Sponsored       Reserve Bank
                                             Securities         Agencies           Stock
                                            -------------     ------------      ------------
                                            Amount/Yield      Amount/Yield      Amount/Yield
                                            -------------     ------------      ------------
<S>                                         <C>    <C>        <C>    <C>        <C>    <C>
Within one year. . . . . . . . . . . . .      --     --%      $23,865  5.3%     $ --     --%
After one year through five years. . . .      --     --%           --   --%       --     --%
After five years through ten years . . .      --     --%           --   --%       --     --%
After ten years. . . . . . . . . . . . .      --     --%           --   --%       24    7.5%
                                            ----    ----      -------  ----     ----    ----
         TOTAL                              $ --     --%       23,865  5.3%       24    7.5%
                                            ----    ----      -------  ----     ----    ----
                                            ----    ----      -------  ----     ----    ----
</TABLE>

III. LOAN PORTFOLIO

     Domestic loans by category are listed below (dollars in thousands):

                                    TABLE #7

<TABLE>
<CAPTION>
                                          December 31,     December 31,
                                              1998             1997
                                          ------------     ------------
<S>                                       <C>              <C>
Commercial. . . . . . . . . . . . . . .     $  7,371          $  5,762
Agricultural. . . . . . . . . . . . . .        4,156             3,459
Real Estate - Construction. . . . . . .        6,423             1,960
Real Estate - Mortgage. . . . . . . . .       66,652            59,562
Installment loans to individuals. . . .        9,967             8,865
                                            --------          --------
  TOTAL                                     $ 94,569          $ 79,608
                                            --------          --------
                                            --------          --------
</TABLE>

         There were no foreign loans at December 31, 1998 or December 31, 1997.

                                        8

<PAGE>

         Commercial, agricultural and real estate - construction loans at 
December 31, 1998 are presented by maturity as follows (dollars in thousands):

                                     TABLE #8

<TABLE>
<CAPTION>
                                                        Due After
                                    Due in One           One Year          Due After
                                   Year or Less     Through Five Years     Five Years
                                   ------------     ------------------     ----------
<S>                                <C>              <C>                    <C>
Commercial:
  Fixed rates. . . . . . . . . .     2,410                  396                50
  Adjustable rates . . . . . . .       213                4,085               217
Agricultural:
  Fixed rates. . . . . . . . . .     2,080                  528                --
  Adjustable rates . . . . . . .       117                1,431                --
Real Estate - Construction:
  Fixed rates. . . . . . . . . .       576                4,981                --
  Adjustable rates . . . . . . .        --                   34               832

</TABLE>

     Within the loan portfolio are loans which are considered non-performing. 
Included in the table below are past due loans which are defined as past due 
(1) single payment notes - these are considered past due 15 days or more 
after maturity; (2) single payment loans, with interest payable at stated 
intervals, and demand notes - these are considered past due when an interest 
payment is due and unpaid for 15 days; (3) consumer, mortgage, or term 
business installment loans - these loans are past due in whole after one 
installment is due and unpaid for 30 days or one month. When an installment 
payment is past due, the entire unpaid balance is past due; (4) overdrafts 
are considered past due when not paid in 15 days. Such loans remain in past 
due status until all past due payments are made.

                                    TABLE #9

<TABLE>
<CAPTION>
December 31 (Dollars in thousands)                               1998     1997
-------------------------------------------------------------------------------
<S>                                                             <C>     <C>
Non-accrual loans. . . . . . . . . . . . . . . . . . . . . .    $ 351    $  809
Loans which are contractually past due 90 days or more
  as to interest or principal, but have not been put
  on a non-accrual basis (See discussion below). . . . . . .       --        --
Loans restructured to provide concessions to the
  borrower in order to maximize the recovery
  possibility of the bank. . . . . . . . . . . . . . . . . .      714     2,465

</TABLE>

     Foregone interest on restructured loans in 1998 was 15 thousand on 
recognized income of 68 thousand. Interest recognized in 1997 was 141 
thousand with foregone interest of 15 thousand.

     Past due and renegotiated loans as described above are defined as 
non-performing loans for purposes of this discussion.

     Non-accrual loans are defined as loans on which, in the opinion of 
management, the collection of interest has become uncertain. Management 
places loans on non-accrual status when loans become past due thirty days or 
if, in their judgment, the ability of the borrower to service the debt has 
become impaired.

                                        9

<PAGE>

     Interest is not taken into income unless received in cash or until such 
time as the borrower demonstrates the ability to pay interest and principal. 
Placing a loan on non-accrual status for the purpose of income recognition is 
not by itself a reliable indicator of potential loss of principal. Other 
factors, such as the value of the collateral securing the loan and the 
financial condition of the borrower, serve as more reliable indicators of 
potential loss.

     Management has no information that would indicate that any loans on hand 
at December 31, 1998 that are not currently included as non-performing loans 
have possible credit problems that would cause serious doubts as to their 
ability to comply with the current repayment terms or contain uncertainties 
which would have a material impact on future operations or financial position.

IV   SUMMARY OF LOAN LOSS EXPERIENCE

     The table below presents selected information analyzing the allowance 
for loan losses (dollars in thousands):

                                    TABLE #10

<TABLE>
<CAPTION>
                                                     1998         1997  
                                                   --------     --------
<S>                                                <C>          <C>
Balance - Beginning of year . . . . . . . . . . .  $ 1,070      $   964
                                                   -------      -------
Charge-offs:
  Commercial. . . . . . . . . . . . . . . . . . .       20           15
  Agricultural. . . . . . . . . . . . . . . . . .       --           --
  Real Estate - Construction. . . . . . . . . . .       --           --
  Real Estate - Mortgage. . . . . . . . . . . . .       10           33
  Installment loans to individuals. . . . . . . .       98          132
                                                   -------      -------
                                                   $   128      $   180
                                                   -------      -------
Recoveries:
  Commercial. . . . . . . . . . . . . . . . . . .        4      $    14
  Agricultural. . . . . . . . . . . . . . . . . .       --           --
  Real Estate - Construction. . . . . . . . . . .       --           --
  Real Estate - Mortgage. . . . . . . . . . . . .       12            8
  Installment loans to individuals. . . . . . . .       34           34
                                                   -------      -------
                                                   $    50      $    56
                                                   -------      -------
Net Charge-offs (recoveries). . . . . . . . . . .  $   104      $   124
                                                   -------      -------
Provision - Charged to operations . . . . . . . .  $   241      $   230
                                                   -------      -------
Balance - End of Year . . . . . . . . . . . . . .  $ 1,233      $ 1,070
                                                   -------      -------
                                                   -------      -------
Average loan balance outstanding. . . . . . . . .  $87,275      $75,870
                                                   -------      -------
                                                   -------      -------
Percentage of net charge offs to
  average loans outstanding . . . . . . . . . . .      .1%          .2%
                                                   -------      -------
                                                   -------      -------

</TABLE>

     In 1998, provision was made based on the change in net charge-offs, 
significant loan growth and ongoing analysis of problem loans.

     The provision for 1997 decreased from that of 1996. This was mainly due 
to a reduction in charge offs and a small increase in problem loans over the 
prior year.

                                       10

<PAGE>

     The allocation of the allowance is as follows (dollars in thousands):

                                    TABLE #11

<TABLE>
<CAPTION>
                                          December 31,                   December 31,
                                             1998                           1997
                                  ---------------------------    ---------------------------
                                             Percent of Loans               Percent of Loans
                                             in Each Category               in Each Category
                                  Amount      to Total Loans     Amount      to Total Loans 
                                  ------     ----------------    ------     ----------------
<S>                               <C>        <C>                 <C>        <C>
Commercial. . . . . . . . . . .   $    5            7.8%         $    6            7.2%
Agricultural. . . . . . . . . .       20            4.4%             28            4.3%
Real Estate-Construction. . . .       --            6.8%             --            2.5%
Real Estate-Mortgage. . . . . .      194           70.5%             84           74.8%
Installment Loans . . . . . . .       49           10.5%             60           11.2%
Unallocated . . . . . . . . . .      965            N/A             892            N/A 
                                  ------          ------         ------           -----
                                   1,233          100.0%         $1,070            100%
                                  ------          ------         ------           -----
                                  ------          ------         ------           -----
</TABLE>

     The large, unallocated allowance for loan losses is being maintained in 
recognition of several risk factors inherent in the bank's loan portfolio. 
Foremost among these is the large concentration of loans of all types secured 
by real property. While the vast majority of these loans are performing and 
not in need of an allocated allowance, there has been significant growth in 
this area and a noticeable increase in appraised values has occurred. (Please 
see Table #7, P-8). Another significant area of concern is agricultural 
purpose loans. This grouping consists largely of livestock growers in the 
bank's market area and is uniquely vulnerable to adverse weather, crop or 
livestock disease and market price decline. Borrowers of this type that have 
required restructured terms or that have been non-performing receive an 
allocation of the bank's allowance. Those remaining, however, still represent 
a significant potential for loss should circumstances in that sector 
deteriorate further. At the time of this writing, estimated charge-offs for 
the coming year are not expected to exceed $100,000.00 and will be 
concentrated in the commercial and installment areas.

V.   DEPOSITS

     The average amount of deposits and the average rates paid are presented 
in the balance sheet analysis shown previously.

     At December 31, 1998, there existed outstanding time certificates of 
deposit in amounts of $100,000 or more of $15,371,575. The deposits by time 
remaining until maturity were (dollars in thousands):

                                    TABLE #12
<TABLE>
<S>                                            <C>
     3 months or less                          $6,466
     Over 3 through 6 months                    4,481
     Over 6 through 12 months                   4,021
     Over 12 months                               404
                                               ------
                                               15,372
                                               ------
                                               ------
</TABLE>

     As required by the Monetary Control Act of 1980, the reserve balance 
held against deposits at December 31, 1998 was $1,005,000.

                                       11

<PAGE>

                                    TABLE #13

<TABLE>
<CAPTION>
For the year ended December 31                           1998        1997      1996
------------------------------                           ----        ----      ----
<S>                                                      <C>         <C>       <C>
Return on Assets (Net income divided by
  average total assets) . . . . . . . . . . . . . .       .7%          .9%      .8%
Return on Equity (Net income divided by
  average equity) . . . . . . . . . . . . . . . . .      8.0%        10.5%     9.1%
Dividend Payout Ratio (Dividends declared per
  share divided by net income per share)                   0%           0%       0%
Equity to Assets Ratio (Average equity
  divided by average total assets). . . . . . . . .      9.1%         8.9%     8.3%

</TABLE>

ITEM 2. Properties:

     The subsidiary Bank owns a building and annex at 100 East Main Street, 
and the motor-bank facility, 122 East First Street, in which the banking 
operations are carried on in Trinidad, Colorado. Approximately one-third 
(1/3) of the building is utilized by the bank. The remaining space is leased 
to other businesses. Additionally, a bank building in Walsenburg, Colorado 
was acquired in 1992. Banking operations at this location began in October of 
1993. In 1996, two automatic teller locations were added. One is in Trinidad 
and the other is in La Veta, Colorado. A facility with banking operations and 
automated tellers was located in a Trinidad retail superstore and became 
operational in 1998. Properties held as other real estate owned consist of 
real property that has been acquired by the Bank through foreclosure on real 
estate pledged as collateral on loans made by the Bank.

ITEM 3. Legal Proceedings:

     Not applicable.

ITEM 4. Submission of Matters to a Vote of Securities Holders:

     Not applicable.

                                    PART II

ITEM 5. Market for The Republic Corporation's stock.

          (a)  The Articles of Incorporation do not restrict the marketability
               of the Republic Corporation stock. However, due to the limited
               number of shares outstanding, it is not anticipated that an
               active market for the shares will develop. Shares may be
               purchased by The Republic Corporation, but there is no assurance
               that the Corporation will do so.

          (b)  There were approximately 1,757 shareholders as of the date of
               this annual report.

               Holders of Republic Corporation shares are entitled to their
               pro-rata share of any dividends paid on the shares. However,
               because the Corporation has no income other than distributions
               received on its equity in The First National Bank in Trinidad,
               Colorado, its ability to pay dividends depends upon its receipt
               of Bank distributions. Decisions as to the declaration and
               payment of dividends, subject to the availability of funds for
               this purpose, rest exclusively with The Republic Corporation
               Board of Directors.

          (c)  No dividends have been declared in 1998 or 1997 and management
               has no intention to declare dividends in the immediate future.

                                       12

<PAGE>

ITEM 6.        Selected financial data:

        The following table presents certain key financial information.

                                    TABLE #14
<TABLE>
<CAPTION>

Selected Financial Data
Year Ended December 31
(Dollars in thousands)                         1998        1997        1996        1995        1994  
-----------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>         <C>         <C>
Interest income. . . . . . . . . . . . . .     9,683       9,038     $ 8,320     $ 7,648     $ 5,445
Interest expense . . . . . . . . . . . . .     4,571       4,452       4,124       4,168       2,473
                                             -------     -------     -------     -------     -------
  Net interest income. . . . . . . . . . .     5,112       4,586       4,196       3,480       2,972
Provision for Loan Losses. . . . . . . . .       241         230         393       -              --
                                             -------     -------     -------     -------     -------
  Net interest income after
    Provision for loan losses. . . . . . .     4,871       4,356       3,803      3,480        2,972
Non-interest income. . . . . . . . . . . .       597         623         473        389          357
Securities gains . . . . . . . . . . . . .        --          --          --          -           --
Non-interest expense:
  Personnel expenses . . . . . . . . . . .     1,872       1,532       1,391      1,266        1,137
  Other expenses . . . . . . . . . . . . .     2,035       1,587       1,510      1,388        1,329
                                             -------     -------     -------     -------     -------
Income before income taxes . . . . . . . .     1,561       1,860       1,375      1,215          863
Applicable income taxes. . . . . . . . . .       593         699         514        378          284
                                             -------     -------     -------     -------     -------
Income before reduction for minority
  interest or security gains or losses . .       968       1,161         861        837          579
Less minority interest . . . . . . . . . .        23          27          20         20           14
                                             -------     -------     -------     -------     -------
Net Income . . . . . . . . . . . . . . . .   $   945     $ 1,134     $   841     $  817      $   565
                                             -------     -------     -------     -------     -------
                                             -------     -------     -------     -------     -------
Net income per common share (2). . . . . .   $  2.83      $ 3.40     $  2.52     $ 2.44      $  1.69
                                             -------     -------     -------     -------     -------
                                             -------     -------     -------     -------     -------
Dividends declared per common share(2) . .   $     0     $     0     $     0     $    0      $     0
                                             -------     -------     -------     -------     -------
                                             -------     -------     -------     -------     -------

</TABLE>

(2) Net income per common share and dividends declared per common share are in
actual dollars, not thousands.

<TABLE>
<CAPTION>

Selected Year End Balances:
(Dollars in thousands)                  1998      1997       1996      1995      1994  
--------------------------------------------------------------------------------------
<S>                                   <C>        <C>        <C>       <C>       <C>
Loans. . . . . . . . . . . . . . . .   94,569      79,608    71,593    63,425   49,138
Total assets . . . . . . . . . . . .  131,275     125,190   114,963   109,018   97,616
Long-term debt . . . . . . . . . . .      -0-         -0-       -0-       -0-      -0-

</TABLE>

                                       13

<PAGE>

ITEM 7. Management's discussion and analysis of financial condition and results
     of operations:

     FINANCIAL CONDITION

     ASSET QUALITY

                                    TABLE #15

<TABLE>
<CAPTION>

December 31 (dollars in thousands)              1998      1997        1996        1995        1994 
---------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>         <C>         <C>
Nonaccrual loans. . . . . . . . . . . . . .      351       809         759         183         217
Past-due loans* . . . . . . . . . . . . . .       --        --          --          --          --
Restructured loans. . . . . . . . . . . . .      714     2,465       2,148         593         668
                                               -----     -----       -----       -----       -----
  Total problem loans . . . . . . . . . . .    1,065     3,274       2,907         776         885

Foreclosed Assets

  Real estate . . . . . . . . . . . . . . .       48         9         300          --          --
  In-substance foreclosures . . . . . . . .       --        --          --          --          --
  Other . . . . . . . . . . . . . . . . . .       28         5          34          --          --
                                               -----      ----       -----       -----       -----
    Total problem assets. . . . . . . . . .    1,141     3,288       3,241         776         885

Total problem loans as a
  percentage of total loans . . . . . . . .     1.1%      4.1%        4.1%        1.2%         1.8%
Total problem assets as a percentage of
  total loans and foreclosed assets . . . .     1.2%      4.1%        4.5%        1.2%         1.8%

Reserve coverage ratio ** . . . . . . . . .   115.8%     32.7%       33.2%      112.0%       104.6%

</TABLE>

*    Past due loans which are still accruing interest but are contractually
     ninety or more days delinquent as to principal or interest payments

**   Allowance for loan losses divided by problem loans

                                       14

<PAGE>

                                    TABLE #16

                            INTEREST RATE SENSITIVITY

<TABLE>
<CAPTION>

December 31, 1998 (dollars in thousands)
---------------------------------------------------------------------------------------------------------
                                              3 Mo            3-12          1-5           Over
                                             Or Less         Months        Years         5 Years
<S>                                         <C>             <C>           <C>           <C>
Rate Sensitive Assets
(Assets that can be repriced
within x months/years)

Loans *. . . . . . . . . . . . . . . . .     14,456          39,335        40,111           306

Federal Funds Sold . . . . . . . . . . .      5,650             -0-           -0-           -0-

Taxable Securities** . . . . . . . . . .     23,865             -0-           -0-           -0-

Municipal Bonds. . . . . . . . . . . . .        -0-             -0-           -0-           -0-

  TOTAL. . . . . . . . . . . . . . . . .     43,971          39,335        40,111           306

Rate Sensitive Liabilities
(Liabilities that can be
repriced within x months/years)

Time Certificates of Deposit . . . . . .     20,773          31,981         2,749           -0-

NOW Accounts . . . . . . . . . . . . . .      1,703             -0-           -0-           -0-

Super NOW Accounts . . . . . . . . . . .     19,808             -0-           -0-           -0-

Savings Accounts . . . . . . . . . . . .      9,180             -0-           -0-           -0-

MMDA Accounts. . . . . . . . . . . . . .     12,648             -0-           -0-           -0-

  TOTAL. . . . . . . . . . . . . . . . .     64,112          31,981         2,749           -0-

Interest Rate Sensitivity Gap. . . . . .    (20,141)          7,354        37,362           306

Cumulative Interest Rate
  Sensitivity Gap. . . . . . . . . . . .    (20,141)        (12,787)       24,575        24,881

</TABLE>

* Does not include $351 thousand in nonaccruing loans and $10 thousand in
overdrafts.

** Does not include $24 thousand in Federal Reserve Bank Stock.

                                       15

<PAGE>

INVESTMENT SECURITIES

                                    TABLE #17
                                AND FOOTNOTES 1-2

<TABLE>
<CAPTION>
                                        Carrying       Unrealized     Unrealized      Market
                                          Value           Gains         Losses         Value
                                       ----------      ----------     ----------     ----------
<S>                                    <C>             <C>            <C>            <C>
DECEMBER 31, 1998
(1) Held-to-Maturity:
    U.S. Treasury Securities                   --            --              --             --
    Other                              23,864,557         4,493              --     23,869,050
(2) Available-for-Sale Securities
    Carried at Fair Value:
    U.S. Treasury Securities                   --            --              --             --
    Other                                  24,000            --              --         24,000
                                       ----------        ------          ------     ----------
                                       23,888,557            --              --     23,893,050
                                       ----------        ------          ------     ----------
DECEMBER 31, 1997
(1) Held-to-Maturity:
    U.S. Treasury Securities           12,036,450            --           2,700     12,033,750
    Other                              15,951,840            --             284     15,951,556
(2) Available-for-Sale Securities
    Carried at Fair Value:
    U.S. Treasury Securities                   --            --              --             --
    Other                                  24,000            --              --         24,000
                                       ----------        ------          ------     ----------
                                       28,012,290            --           2,984     28,009,306
                                       ----------        ------          ------     ----------
DECEMBER 31, 1996
(1) Held-to-Maturity:
    U.S. Treasury Securities           10,006,368            --          21,993      9,984,375
    Other                                      --            --              --             --
(2) Available-for-Sale Securities
    Carried at Fair Value:
    U.S. Treasury Securities                   --            --              --             --
    Other                                  24,000            --              --         24,000
                                       ----------        ------          ------     ----------
                                       10,030,368            --          21,993     10,008,375
                                       ----------        ------          ------     ----------

</TABLE>

(1) Securities which the Bank has the ability and intent to hold to maturity. 
These securities are stated at cost, adjusted for amortization of premiums 
and accretion of discounts, computed by the interest method. Because 
securities are purchased for investment purposes and quoted market values 
fluctuate during the investment period, gains and losses are recognized upon 
disposition or at such time as management determines that a permanent 
impairment of value had occurred. Cost of securities sold is determined on 
the specific identification method.

(2) Securities that the bank may sell in response to changes in market 
conditions or in the balance sheet objectives of the bank. Securities in this 
category will be reported at the fair market value. Unrealized gains or 
losses (net of tax) will be reported as a separate item in the shareholder's 
equity section of the balance sheet. Adjustments will be recorded at least 
quarterly.

                                       16

<PAGE>

ASSET QUALITY

     Substantially all of the loan balances on nonaccrual status at year end, 
1998 represent chronically past-due credits which have exhibited this pattern 
and associated financial weakness for a protracted period. (Please see Table 
#15, P-14)

     The entire amount of the restructured loan grouping consists of two 
loans to the same agricultural borrower, secured by a large tract of grazing 
land. These loans are vulnerable to adverse weather, disease and market price 
decline and have been at below-market interest rates due to past 
difficulties. The total amount of restructured loans has declined from recent 
periods due to the renewal of other loans at prevailing interest rates where 
circumstances have improved and the borrower's ability to repay has 
sufficiently recovered. (Please see Table #15, P-14)

     Approximately 75% of total charge offs in the past two years consists of 
installment loans to individuals. This is partially reflective of national 
trends regarding personal debt recognition and is the primary reason that the 
bank is continuing its monthly loan loss provision. (Please see Table #10, 
P-10)

     All loan type categories grew in the current year, however, installment 
loans to individuals grew the least, at approximately 12%, whereas real 
estate and construction loans, agricultural loans and commercial loans grew 
approximately 19%, 20% and 28%, respectively. Loans secured by real estate of 
all types represented 77% of total loans at year end, 1998. All of the 
property serving as collateral for these loans lies within Las Animas, 
Huerfano or adjacent counties, with 63% representing finished, 1-4 family 
homes, 25% commercial properties and 3% farm and ranch properties. (Please 
see Table #7, P-8)

     Economic activity in the bank's market area has been suppressed by the 
absence of snowfall and the negative impact this has had on the ski resort in 
Huerfano county and by the cessation of construction at the prison site in 
Las Animas County due to non conforming cement work. In spite of this, other 
construction activity, predominantly residential, is still robust and retail 
activity has continued to grow.

SOURCES AND USES OF FUNDS

     Deposit growth in 1998 was $5,393,552, approximately 63% of 1997 deposit 
growth and approximately 105% of 1996 deposit growth. Although the bank is 
still gathering new deposit relationships, it is undoubtedly true that 
significant numbers of existing or potential depositors are finding yield 
opportunities in the equities markets preferable to deposit products. Loan 
growth of $15,052,296 in 1998 was substantially funded by the previously 
mentioned deposit growth, an approximate reduction of $9,500,000 in 
securities and fed funds sold and $455,158 provided by operating activities. 
(Please see STATEMENT OF CASH FLOWS, P-24-25 and BALANCE SHEET, P-22)

LIQUIDITY

     Average 1998 holdings of cash and due from banks, readily marketable 
securities and federal funds sold totaled approximately 33% of average 
liabilities, down from approximately 39% in 1997 and approximately 40% in 
1996. (Please see Tables 1-3, P-4-6)

                                       17

<PAGE>

     Current securities holdings consist of two $12,000,000 par value, 
FEDERAL HOME LOAN BANK DISCOUNT NOTES which mature within 3 months. One of 
these is pledged to the State of Colorado in order to collateralize uninsured 
public deposits in accordance with State law. The current expectation is that 
the bank will replace these securities with similar instruments when they 
mature. (Please see Table #17, P-16 and NOTE 2, P-29-30)

CAPITAL

     Tier 1 and total risk based capital ratios declined from 15.34% and 
16.60% at year end, 1997 to an estimated 14.29% and 15.54%, respectively, at 
year end, 1998. This was primarily a result of the migration of funds from 
low risk investment asset categories to loan categories, which carry higher 
risk. The leverage ratio rose to 8.98% at year end, 1998 from the year-ago 
level of 8.66%.

RESULTS OF OPERATIONS 

NET INTEREST INCOME

     Net interest income grew $526,000 in 1998, compared with growth of 
$390,000 in 1997. Total net interest income represented 4.15% of average 
earning assets in 1998, compared with 3.91% in 1997. Volume driven increases 
in interest income, particularly loan interest, far exceeded volume driven 
increases in deposit interest expense. Also, declining interest rates had a 
more significant impact on deposit interest expense than on interest income. 
(Please see TABLE #14, P-13, TABLES 1 & 2, P-4-5 and TABLE #4, P-7)

OTHER INCOME AND EXPENSE

     With the exception of professional services, which were in line with 
prior periods, all non interest expense categories grew significantly in 
1998, a phenomenon tied to growth in operating levels, facilities and 
staffing.

     If gains on the sale of other real estate are removed, non interest 
income for 1998 is comparable to the 1997 level. (Please see TABLE #14, P-13 
and STATEMENT OF INCOME, P-22)

     Management is not aware of any regulatory recommendations or other 
trends, events or uncertainties other than factors relating to the year 2000 
that would have or would reasonable be likely to have a material effect on 
liquidity, capital resources or operations of the company.

YEAR 2000 READINESS

     The Bank has made substantial progress in implementing its Y2K 
preparedness plan. The plan consists of the following five phases:

          AWARENESS PHASE - The creation of a basic strategy for project
          management.

          ASSESSMENT PHASE-The identification of mission critical systems and
          equipment as well as customer and provider relationships that may be
          vulnerable to the year 2000 problem.

          RENOVATION PHASE-The upgrading or replacement of systems and equipment
          known to be deficient.

          VALIDATION PHASE-The comprehensive testing of all systems and
          equipment to ensure that they survive each of 13 suspect dates.

                                       18

<PAGE>

          IMPLEMENTATION PHASE-The correction of any deficiencies uncovered in
          the validation phase along with the continued assessment and testing
          of systems and equipment.

     The awareness and assessment phases were completed during the first 
quarter of 1998. The renovation phase was substantially completed by the end 
of 1998 with the exception of credit reporting software at the bank's main 
facility. The replacement of credit reporting software is expected by the end 
of the first quarter of 1999. The validation phase is ongoing and on schedule 
and it is anticipated that all testing will have been performed at least once 
by the end of the first quarter of 1999. Of primary importance during this 
phase is the proxy testing of all applications currently provided by the 
bank's third party provider of computing services. These services are highly 
critical to bank operations and any significant interruption in them could 
materially impact the bank's results. Finally, the implementation phase is 
ongoing and will continue beyond the end of the millennium.

     Management is of the opinion that its readiness plan is more than 
adequate to address the year 2000 threat and that all systems and hardware 
will function as intended when the time comes, without any material adverse 
effect on the company's business. Due to the uniqueness of the year 2000 
issue and the direct impact it can have on bank operations, however, it is 
not possible to escape risk and uncertainty, particularly that which is tied 
to third party service providers. The bank has, as mentioned, an ongoing 
process to monitor these critical third parties and has developed business 
resumption and contingency plans that address failures from these sources. 
Management is not aware of any material expenditures that could be necessary 
in order to complete its year 2000 readiness plan or contingency plans.

                                       19

<PAGE>

ITEM 8. Financial statements and supplementary data.

<TABLE>
<CAPTION>
        Index to Financial Statements of
          The Republic Corporation and Subsidiary                   PAGE
<S>                                                                 <C>
        Accountant's Report. . . . . . . . . . . . . . . . . .          21

        Balance Sheets as of December 31, 1998 and 1997. . . .          22

        Statement of Income for the three years ended
          December 31, 1998. . . . . . . . . . . . . . . . . .          23

        Statement of Cash Flows for the three years ended
          December 31, 1998. . . . . . . . . . . . . . . . . .       24-25

        Statement of Changes in Stockholders' Equity
          for the three years ended December 31, 1998. . . . .          26

        Notes to Financial Statements. . . . . . . . . . . . .       27-40

</TABLE>

                                       20

<PAGE>

DIXON, WALLER & CO., INC.
[LETTERHEAD]

                          INDEPENDENT AUDITOR'S REPORT

The Board of Directors
The Republic Corporation

We have audited the consolidated balance sheets of The Republic Corporation 
as of December 31, 1998 and 1997, and the related consolidated statements of 
income and stockholders' equity and cash flows for each of the three years in 
the period ending December 31, 1998. These financial statements are the 
responsibility of the Corporation's management. Our responsibility is to 
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of The Republic Corporation at 
December 31, 1998 and 1997, and the results of its operations and its cash 
flows, for each of the three years in the period ending December 31, 1998, in 
conformity with generally accepted accounting principles.

Dixon, Waller & Co., Inc.
Trinidad, Colorado
February 5, 1998

                                       21

<PAGE>

                       REPUBLIC CORPORATION AND SUBSIDIARY
                                  Balance Sheet

<TABLE>
<CAPTION>
December 31                                          1998             1997
----------------------------------------------------------------------------
<S>                                              <C>              <C>
Assets

Cash and due from banks (demand). . . . . . . .  $  3,682,131     $  3,467,302
Investment securities:
  Held to maturity
    Market value at 12-31-98 - 23,869,050
    Market value at 12-31-97 - 27,985,306          23,864,557       27,988,290
  Available for Sale. . . . . . . . . . . . . .        24,000           24,000
                                                 ------------     ------------
                                                   27,570,688       31,479,592
                                                 ------------     ------------
Loans . . . . . . . . . . . . . . . . . . . . .    94,569,025       79,608,471
  Plus: Uncollected earned interest . . . . . .       847,969          653,441
  Less: Allowance or losses . . . . . . . . . .    (1,233,000)      (1,070,000)
                                                 ------------     ------------
    NET LOANS AND OTHER RECEIVABLES . . . . . .    94,183,994       79,191,912
                                                 ------------     ------------

Federal funds sold. . . . . . . . . . . . . . .     5,650,000       11,150,000
Property, equipment and vehicles (Net). . . . .     2,610,729        1,842,555
Other real estate . . . . . . . . . . . . . . .        47,658            9,000
Goodwill. . . . . . . . . . . . . . . . . . . .       436,079          436,079
Other assets. . . . . . . . . . . . . . . . . .       776,201        1,080,644
                                                 ------------     ------------
  Total Assets. . . . . . . . . . . . . . . . .   131,275,349      125,189,782
                                                 ------------     ------------
                                                 ------------     ------------

Liabilities and Stockholders' Equity

Deposits (Domestic):
  Demand (noninterest bearing). . . . . . . . .  $ 16,718,279     $ 14,999,271
  Savings, time and demand (interest bearing)     100,632,666       96,958,122
                                                 ------------     ------------
                                                  117,350,945      111,957,393
                                                 ------------     ------------
Accounts payable and accrued interest payable .       985,528        1,153,610
Accrued taxes payable . . . . . . . . . . . . .       641,266          747,184
                                                 ------------     ------------
  Total liabilities . . . . . . . . . . . . . .   118,977,739      113,858,187
                                                 ------------     ------------
Minority Interest in Consolidated Subsidiary. .       264,371          242,912
                                                 ------------     ------------

Stockholders' Equity
  Common stock (par value $1; 750,000 shares
    authorized, 356,844 shares issued
    including stock held in treasury. . . . . .       356,844          356,844
  Additional paid-in capital. . . . . . . . . .       234,931          234,931
  Less cost of treasury stock (23,119 shares
    at 12/31/98, 23,119 shares at 12/31/97) . .       (91,303)         (91,303)
                                                 ------------     ------------
      Total contributed capital . . . . . . . .       500,472          500,472
                                                 ------------     ------------
Retained earnings . . . . . . . . . . . . . . .    11,532,767       10,588,211
                                                 ------------     ------------
  Stockholders' equity. . . . . . . . . . . . .    12,033,239       11,088,683
                                                 ------------     ------------
    Total liabilities and 
      stockholders' equity. . . . . . . . . . .  $131,275,349     $125,189,782
                                                 ------------     ------------
                                                 ------------     ------------

</TABLE>

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

                                       22

<PAGE>

                       REPUBLIC CORPORATION AND SUBSIDIARY
                               Statement of Income

<TABLE>
<CAPTION>
Year Ended December 31                            1998           1997            1996  
------------------------------------------------------------------------------------------
<S>                                            <C>            <C>              <C>
Interest income:
  Interest and fees on loans. . . . . . . .    $7,682,475     $6,796,396       $6,184,010
  Interest on federal funds sold. . . . . .       664,985      1,129,794        1,483,240
  Interest and dividends on investments:
    Securities of U.S. Treasury and
      government sponsored agencies . . . .     1,335,139      1,112,064          652,786
  Obligations of states, political
    subdivisions and other obligations 
    secured by the government . . . . . . .            --             --               -- 
                                               ----------     ----------       ----------
    Total interest on investments . . . . .     1,335,139      1,112,064          652,786 
                                               ----------     ----------       ----------
    Total interest income . . . . . . . . .     9,682,599      9,038,227        8,320,036 
                                               ----------     ----------       ----------
Interest expense:
  Interest on deposits. . . . . . . . . . .     4,571,268      4,452,159        4,124,629 
                                               ----------     ----------       ----------
    Total interest expense. . . . . . . . .     4,571,268      4,452,159        4,124,629 
                                               ----------     ----------       ----------
    Net interest income . . . . . . . . . .     5,111,331      4,586,068        4,195,407
Provision for loan losses . . . . . . . . .       240,895        230,059          392,703 
                                               ----------     ----------       ----------
    Net interest income after
      provision for loan losses . . . . . .     4,870,436      4,356,009        3,802,704
Other income:
    Service charges on deposit accounts . .       203,136        202,137          185,218
    Other service charges,
      commissions and fees. . . . . . . . .       263,849        241,081          191,527
    Gain on sale of securities. . . . . . .            --             --               --
    Gain on Sale - Other Real Estate. . . .        38,760         72,465               --
    Other income. . . . . . . . . . . . . .        91,336        107,609           96,293 
                                               ----------     ----------       ----------
      Total other income. . . . . . . . . .       597,081        623,292          473,038 
                                               ----------     ----------       ----------
Other expenses:
  Salaries and wages. . . . . . . . . . . .     1,649,366      1,347,288        1,217,215
  Employee benefits . . . . . . . . . . . .       222,967        184,852          173,827
  Net occupancy expenses. . . . . . . . . .       171,225        135,321          119,604
  Equipment expense  . . . . .. . . . . . .       144,716         94,652          108,633
  Depreciation other than
    rental property . . . . . . . . . . . .       288,183        197,448          227,772
  Operating Loss. . . . . . . . . . . . . .            --             --               --
  Computer service center . . . . . . . . .       212,117        165,771          119,105
  FDIC Assesment. . . . . . . . . . . . . .        16,692          9,471               --
  Professional services . . . . . . . . . .       122,428        132,906          121,272
  Advertising . . . . . . . . . . . . . . .       163,717        102,234          102,069
  Other operating expenses. . . . . . . . .       915,720        748,933          711,316 
                                               ----------     ----------       ----------
    Total other expenses. . . . . . . . . .     3,907,131      3,118,876        2,900,813 
                                               ----------     ----------       ----------
    Income before income taxes. . . . . . .     1,560,386      1,860,425        1,374,929 
                                               ----------     ----------       ----------
Less applicable income taxes (Current). . .       593,111        699,414          513,814 
                                               ----------     ----------       ----------
  Income before reduction
    for minority interest . . . . . . . . .       967,275      1,161,011          861,115
Less minority interest in income                  (22,719)       (26,986)         (20,248)
                                               ----------     ----------       ----------
  Net income. . . . . . . . . . . . . . . .       944,556      1,134,025          840,867 
                                               ----------     ----------       ----------
                                               ----------     ----------       ----------
  Earnings per share. . . . . . . . . . . .         $2.83          $3.40            $2.52 
                                               ----------     ----------       ----------
                                               ----------     ----------       ----------

</TABLE>

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

                                       23

<PAGE>

                       REPUBLIC CORPORATION AND SUBSIDIARY
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
December 31                                            1998            1997             1996
--------------------------------------------------------------------------------------------
<S>                                            <C>             <C>              <C>
Cash flows and operating activities:
Net income (loss). . . . . . . . . . . .       $    944,556    $  1,134,025     $    840,867
Adjustments to reconcile net income
to net cash provided by operating
activities:
  Depreciation . . . . . . . . . . . . .            291,900         201,164          233,578
  Provision for loan losses. . . . . . .            240,895         230,059          392,703
  Amortization (accretion) of
    discounts and premiums . . . . . . .           (840,807)       (471,569)         (14,464)
  Other real estate gains/net. . . . . .            (38,760)        (72,465)              --
  Re-appraisal - other real estate                                   12,500            9,693
  Gain on sale of securities . . . . . .                 --              --               --
  (Decrease) increase in
    interest payable . . . . . . . . . .           (168,082)        319,597         (174,135)
  (Increase) Decrease in
    interest receivable. . . . . . . . .           (194,528)        (23,764)         (91,959)
  (Increase) decrease in
    other assets . . . . . . . . . . . .            304,443        (192,275)        (217,874)
  Increase (decrease) in
    other liabilities. . . . . . . . . .            (84,459)        213,820          152,896 
                                               ------------    ------------     ------------
      Total adjustments. . . . . . . . .           (489,398)        217,067          290,438 
                                               ------------    ------------     ------------
Net cash provided by (used in)
operating activities . . . . . . . . . .            455,158       1,351,092        1,131,305 
                                               ------------    ------------     ------------
Cash flows from investing activities:
Proceeds from sales of investment
  securities . . . . . . . . . . . . . .                 --              --            5,000
Proceeds from maturities of
  investment securities. . . . . . . . .         70,000,000      61,000,000       10,005,000
Purchase of investment securities. . . .        (65,035,460)    (78,510,353)     (10,024,063)
Loans made to customers-net
  cash activity. . . . . . . . . . . . .        (15,052,296)     (8,011,488)      (8,785,526)
Capital expenditures . . . . . . . . . .         (1,060,074)       (392,333)         (83,150)
Proceeds from sale
  of other real estate . . . . . . . . .             13,949         222,424           12,000 
                                               ------------    ------------     ------------
Net cash provided by
(used in) investing activities . . . . .        (11,133,881)    (25,691,750)      (8,870,739)
                                               ------------    ------------     ------------
Cash flows from financing activities:
Net increase in demand deposits, NOW
accounts, savings accounts and
certificates of deposit. . . . . . . . .          5,393,552       8,559,380        5,125,253
Purchase of treasury stock . . . . . . .                 --              --               --
                                               ------------    ------------     ------------
Net cash provided by
(used in) financing activities . . . . .          5,393,552       8,559,380        5,125,253 
                                               ------------    ------------     ------------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . .         (5,285,171)    (15,781,278)      (2,614,181)

</TABLE>
(Continued)

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

                                       24

<PAGE>

                       REPUBLIC CORPORATION AND SUBSIDIARY
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
December 31                                              1998        1997         1996
------------------------------------------------------------------------------------------
<S>                                                   <C>          <C>         <C>
Cash and cash equivalents at beginning of year:
  Cash and due from banks. . . . . . . . . . . . . .   3,467,302    3,273,580   2,362,761
  Federal funds sold . . . . . . . . . . . . . . . .  11,150,000   27,125,000  30,650,000 
                                                      ----------   ----------  ----------
Cash and cash equivalents
  at beginning of year . . . . . . . . . . . . . . .  14,617,302   30,398,580  33,012,761 
                                                      ----------   ----------  ----------
Cash and cash equivalents at end of year:
  Cash and due from banks. . . . . . . . . . . . . .   3,682,131    3,467,302   3,273,580
  Federal funds sold . . . . . . . . . . . . . . . .   5,650,000   11,150,000  27,125,000
                                                      ----------   ----------  ----------
Cash and cash equivalents
  at end of year . . . . . . . . . . . . . . . . . .   9,332,131   14,617,302  30,398,580
                                                      ----------   ----------  ----------
                                                      ----------   ----------  ----------
Supplemental disclosures of
cash flow information
  Cash paid for interest . . . . . . . . . . . . . .   4,739,350    4,132,562   4,298,764 
                                                      ----------   ----------  ----------
                                                      ----------   ----------  ----------
  Cash paid for income tax . . . . . . . . . . . . .     621,414      678,814     468,289 
                                                      ----------   ----------  ----------
                                                      ----------   ----------  ----------

</TABLE>

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

                                       25

<PAGE>

                       REPUBLIC CORPORATION AND SUBSIDIARY
                  Statement of Changes in Stockholders' Equity

<TABLE>
<CAPTION>

For three                                        Additional    
years ended                           Capital        Paid in      Treasury      Contributed      Retained          Total
December 31,                           Stock         Capital       Stock          Capital        Earnings         Equity 
<S>                                   <C>          <C>            <C>           <C>             <C>             <C>
Balance at 12-31-95                   $356,844     $234,931       $(91,303)     $500,472        $ 8,613,319     $ 9,113,791
Net income                                --           --             --            --              840,867         840,867
Market value adjustment-Securities        --           --             --            --                 --              --
Addition to treasury stock                --           --             --            --                 --              --  
                                      --------     --------       --------      --------        -----------     -----------

Balance at 12-31-96                    356,844      234,931        (91,303)      500,472          9,454,186       9,954,658
Net Income                                --           --             --            --            1,134,025       1,134,025
Market value adjustment-Securities        --           --             --            --                 --              --
Addition to treasury stock                --           --             --            --                 --              --  
                                      --------     --------       --------      --------        -----------     -----------

Balance at 12-31-97                    356,844      234,931        (91,303)      500,472         10,588,211      11,088,683
Net Income                                                                                                    
Market value adjustment-Securities        --           --             --            --              944,556         944,556
                                                                                                              
Additions to treasury stock               --           --             --            --                 --              -- 
                                      --------     --------       --------      --------        -----------     -----------

Balance at 12-31-98                   $356,844     $234,931       $(91,303)     $500,472        $11,532,767     $12,033,239
                                      --------     --------       --------      --------        -----------     -----------
                                      --------     --------       --------      --------        -----------     -----------

</TABLE>

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

                                       26

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

1.   Summary of Significant Accounting Policies.

          PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
     include The Republic Corporation, (Company) and its majority-owned
     subsidiary, The First National Bank in Trinidad (Bank). All major items of
     income and expense are recorded on the accrual basis of accounting, and all
     significant intercompany accounts and transactions have been eliminated.

          INVESTMENT SECURITIES. The investment securities are classified and
     accounted for as follows:

          . Held to Maturity - investment debt securities for which the Bank has
     the ability and intent to hold to maturity. These securities are stated at
     cost, adjusted for amortization of premiums and accretion of discounts,
     computed by the interest method.

          . Available for sale - securities not classified as securities to be
     held to maturity. Unrealized holding gains or losses, net of tax, are
     reported as a separate component of shareholders' equity until realized.

          LOANS. Interest on all loans is credited to interest income as earned
     on the principal amount outstanding. Loans to individuals for household,
     family and other consumer expenditures are principally written at the
     amount disbursed, and interest income is accrued on the outstanding
     principal balance.

          USE OF ESTIMATES. The preparation of financial statements in
     conformity with generally accepted accounting principles requires
     management to 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 revenues and expenses during the reporting period. Actual
     results could differ from those estimates.

          Material estimates that are particularly susceptible to significant
     change relate to the determination of the allowance for losses on loans and
     the valuation of foreclosed real estate. In connection with the
     determination of the estimated losses on loans and foreclosed real estate,
     management obtains independent appraisals for significant properties.

          While management uses available information to recognize losses on
     loans and foreclosed real estate, further reductions in the carrying
     amounts of loans and foreclosed assets may be necessary based on changes in
     local economic conditions. In addition, regulatory agencies, as an integral
     part of their examination process, periodically review the estimated losses
     on loans and foreclosed real estate. Such agencies may require the Company
     to recognize additional losses based on their judgments about information
     available to them at the time of their examination. Because of these
     factors, it is reasonably possible that the estimated losses on loans and
     foreclosed real estate may change materially in the near term. However, the
     amount of the change that is reasonably possible cannot be estimated.

                                       27

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

          INCOME RECOGNITION ON IMPAIRED LOANS. Interest income generally is not
     recognized on specific impaired loans unless the likelihood of further loss
     is remote. Interest payments received on such loans are applied as a
     reduction of the loan principal balance. Interest income on other impaired
     loans is recognized only to the extent of interest payments received.

          ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is
     established through charges to earnings in the form of provisions for loan
     losses. Loan losses or recoveries are charged or credited directly to the
     allowance. In general, the amount charged to earnings each year by the Bank
     is based on management's judgment which takes into consideration a number
     of factors, including (1) loss experience in relation to outstanding loans
     and the existing level of the valuation allowance, (2) a continuing review
     of problem loans and overall portfolio quality, (3) regular examinations
     and appraisals of loan portfolios conducted by Federal supervisory
     authorities, and (4) current and expected economic conditions.

          GOODWILL. The excess of the purchase cost over the net assets of the
     Bank purchased represents goodwill. APB 17, which addresses the
     amortization of intangible assets such as goodwill, is not to be applied
     retroactively to assets acquired before November 1, 1970. Since the
     acquisition of the Bank was made prior to November 1, 1970, the goodwill
     acquired is considered to have continuing value over an indefinite period
     and, therefore, is not being amortized.

          LONG-LIVED ASSETS. The undiscounted future net cash flows of the
     Company are expected to be greater than the net book value of long-lived
     assets (including goodwill) so that recoverability is not determined to be
     impaired.

          PROPERTY AND EQUIPMENT. Bank property and equipment are stated at cost
     less accumulated depreciation. The building and improvements are
     depreciated on the straight-line, declining balance, ACRS and MACRS methods
     over estimated useful lives of 30 years. There is not a material difference
     between the expense recognized using the ACRS and MACRS methods and the
     expense that would be recognized using a method acceptable under generally
     accepted accounting principles. Automobiles are depreciated primarily on
     the straight-line basis over estimated useful lives of 3-4 years. Other
     equipment is depreciated on the straight-line, ACRS and MACRS methods over
     estimated useful lives of 5-10 years.

          The accounting policy is to charge maintenance, repairs, minor
     renewals and betterments of property and equipment to expense in the year
     incurred. Major expenditures for renewals and betterments are capitalized
     and depreciated or amortized over their estimated useful lives. On disposal
     or retirement, the related cost and accumulated depreciation are eliminated
     from the accounts and gain or loss on the transaction is reflected in the
     statement of income.

                                       28

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

          FORECLOSED REAL ESTATE. Foreclosed real estate includes formally
     foreclosed properties.

          At the time of foreclosure, foreclosed real estate is recorded at the
     lower of the carrying amount or fair value less cost to sell, which becomes
     the property's new basis.

          LOAN ORIGINATION FEES AND COSTS. Loan origination fees are of an
     immaterial nature and are recognized as income upon receipt.

          INCOME TAXES. The Company files a consolidated federal income tax
     return with the Bank. The corresponding amount of income tax expense has
     been reflected in the financial statements. All expense recognized is
     current due to the fact that temporary differences in the recognition of
     income and expense for tax and financial statement purposes have created an
     immaterial deferred credit not reflected in the accompanying financial
     statements.

          EMPLOYEE BENEFIT PLANS. The Bank makes payments into a 401K employee
     benefit plan. All employees of the bank are covered, with the Bank paying a
     discretionary percentage of the employee's earnings to the plan. An
     employee can contribute an additional percentage of his/her earnings if so
     desired. The plan is overseen by a board of trustees composed of Bank
     officers.

          EARNINGS PER SHARE COMPUTATIONS. Earnings per share computations are
     based on the weighted average number of common shares outstanding during
     each year.

2.   Investment Securities, including investments held for sale.

                  A schedule of securities is as follows:

<TABLE>
<CAPTION>
                                       December 31, 1998                       December 31, 1997      
                                ------------------------------------   ------------------------------------
                                 Principal       Book       Market      Principal      Book       Market
                                  Amount        Value       Value        Amount        Value      Value
                                ----------   ----------   ----------   ----------   ----------   ----------
<S>                             <C>          <C>          <C>          <C>          <C>          <C>
Government Securities           24,000,000   23,864,557   23,869,050   28,000,000   27,988,290   27,985,306

Obligations of states
and political subdivisions            --           --           --           --           --           --

Other                               24,000       24,000       24,000       24,000       24,000       24,000
                                ----------   ----------   ----------   ----------   ----------   ----------
                                ----------                             ----------   
                                             23,888,557   23,893,050                28,012,290   28,009,306
                                             ----------   ----------                ----------   ----------
                                             ----------   ----------                ----------   ----------

</TABLE>

                                       29

<PAGE>


                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

          The approximate amortized cost of investment securities pledged by the
     Bank to secure public funds on deposit amounted to $11,715,533 at December
     31, 1998 and $11,534,931 at December 31, 1996. Additionally, $249,267 was
     pledged to the Federal Reserve Bank in order to secure treasury, tax and
     loan remittances at December 31, 1998.

              Net gains on the sale of securities were as follows:

<TABLE>
<CAPTION>
                                        1998          1997  
                                      --------      --------
<S>                                   <C>           <C>
GAINS
  U.S. Government Securities             --            --   
                                      --------      --------
LOSSES
  U.S. Government Securities             --            --   
                                      --------      --------
NET GAINS ON SALE OF SECURITIES          --            --   
                                      --------      --------
                                      --------      --------
</TABLE>

     Unrealized gains and losses in the securities portfolio were as follows:

<TABLE>
<CAPTION>
                                      Carrying          Unrealized         Unrealized           Market
                                       Value               Gain               Loss              Value   
                                     ----------          -------             ------           ----------

<S>                                  <C>                 <C>               <C>                <C>
DECEMBER 31, 1998
U.S. Treasury Securities . . . . .         --               --                 --                   --
Government Sponsored Agencies. . .   23,864,557            4,493               --             23,869,050
Other. . . . . . . . . . . . . . .       24,000             --                 --                 24,000
                                     ----------          -------             ------           ----------
                                     23,888,557            4,493               --             23,893,050
                                     ----------          -------             ------           ----------
                                     ----------          -------             ------           ----------
DECEMBER 31, 1997
U.S. Treasury Securities             12,036,450             --                2,700           12,033,750
Government Sponsored Agencies. . .   15,951,840             --                  284           15,951,556
Other. . . . . . . . . . . . . . .       24,000             --                 --                 24,000
                                     ----------          -------             ------           ----------
                                     28,012,290             --                2,984           28,009,306
                                     ----------          -------             ------           ----------
                                     ----------          -------             ------           ----------
</TABLE>

3.   Loans and Other Receivables

       Loans and other receivables are summarized as follows:

<TABLE>
<CAPTION>
                                                        December 31,      
                                                 ---------------------------
Type                                                1998             1997   
----                                             ------------    -----------
<S>                                              <C>             <C>
Real estate. . . . . . . . . . . . . . . . . .   $73,075,345     $61,522,710
Commercial and industrial. . . . . . . . . . .     7,371,019       5,761,796
Agriculture. . . . . . . . . . . . . . . . . .     4,155,528       3,458,889
Loans to individuals for household,
         family and other consumer goods . . .     9,957,149       8,840,179
Other. . . . . . . . . . . . . . . . . . . . .         9,984          24,897
                                                 -----------     -----------
  TOTAL                                          $94,569,025     $79,608,471
                                                 -----------     -----------
                                                 -----------     -----------

</TABLE>

                                       30

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

          The changes in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>
                                                                      December 31,       
                                                         -------------------------------------
                                                            1998          1997         1996  
                                                         ----------    ----------    ---------
<S>                                                      <C>           <C>          <C>
Balance at beginning of year. . . . . . . . . . . . .    $1,070,000    $  964,057    $ 868,026
Provision charged to operating expenses . . . . . . .       240,895       230,059      392,703
Loans charged off . . . . . . . . . . . . . . . . . .       128,284       180,345      322,659
Recoveries on loans previously charged off. . . . . .        50,389        56,229       25,987
                                                         ----------    ----------    ---------
Balance at end of year. . . . . . . . . . . . . . . .     1,233,000     1,070,000    $ 964,057
                                                         ----------    ----------    ---------
                                                         ----------    ----------    ---------
</TABLE>

     At December 31, 1998 and 1997, the total recorded investment in
     impaired loans, all of which had allowances determined in accordance
     with SFAS No. 114 and No. 118, amounted to approximately $1,065,000 and
     $3,274,000 respectively. The average recorded investment in impaired
     loans amounted to approximately $1,656,000 and $3,124,000 for the years
     ended December 31, 1998 and 1997, respectively. The allowance for loan
     losses related to impaired loans amounted to approximately $21,500 and
     $42,853 at December 31, 1998 and 1997, respectively. Interest income on
     impaired loans of $67,703 and $243,569 was recognized for cash payments
     received in 1998 and 1997 respectively.

4.   Property and equipment.

       Property and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                                     December 31,         
                                       ----------------------------------------
                                          1998          1997            1996   
                                       -----------   -----------     -----------
<S>                                    <C>           <C>             <C>
Land . . . . . . . . . . . . . . .     $   134,750   $   114,751     $   114,751
Buildings. . . . . . . . . . . . .       2,815,269     2,202,422       2,029,738
Furniture and equipment. . . . . .       2,002,637     1,590,229       1,370,580
                                       -----------   -----------     -----------
                                         4,952,656     3,907,402       3,515,069
Less accumulated depreciation. . .       2,341,927     2,064,847       1,863,683
                                       -----------   -----------     -----------
  Net. . . . . . . . . . . . . . .       2,610,729     1,842,555       1,651,386
                                       -----------   -----------     -----------
                                       -----------   -----------     -----------

</TABLE>

          Depreciation expense for 1998, 1997 and 1996 was $291,890, $201,164 
     and $233,578, respectively.

5.   Income Taxes.

         The components of the income tax provisions (benefits) are as follows:

                                       31

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

5.   (Continued)

<TABLE>
<CAPTION>
                                                          December 31,        
                                          -------------------------------------------
                                            1998              1997             1996  
                                          --------          --------         --------
<S>                                      <C>               <C>               <C>
Federal provision:
  Current. . . . . . . . . . . .          $579,168          $656,555         $478,584
  Deferred . . . . . . . . . . .              --                --               --   
                                          --------          --------         --------
                                           579,168           656,555          478,584
State provision. . . . . . . . .            13,943            42,859           35,230
                                          --------          --------         --------
  Total. . . . . . . . . . . . .           593,111           699,414         $513,814
                                          --------          --------         --------
                                          --------          --------         --------
</TABLE>

              The difference between the total expected income tax expense
     applying the Federal tax rates and the effective tax rate applicable to
     income are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                       1998                    1997                    1996    
                                ------------------       ------------------      ------------------
                                            % of                     % of                     % of
                                            Pretax                   Pretax                   Pretax
                                Amount      Income       Amount      Income      Amount       Income
                                ------      ------       ------      ------      ------       ------
<S>                             <C>         <C>          <C>         <C>         <C>          <C>
Statutory tax rate Federal . .   530          34           633          34         467           34
State income tax . . . . . . .    22           1            43           2          35            2
Tax exempt revenue . . . . . .    (9)         (1)          (11)         (1)         (5)          --
Accrual to cash adjustment . .    --          --            --          --          --           --
Provision for loan loss. . . .    55           4            36           2          33            2
Other (net). . . . . . . . . .    (5)         --            (2)         --         (16)          (1)
                                ----        ----          ----        ----        ----         ----
         Total . . . . . . . .   593          38           699          37         514           37 
                                ----        ----          ----        ----        ----         ----
                                ----        ----          ----        ----        ----         ----

</TABLE>

6.   Service Commitments.

              Computer and data processing services are provided to the 
     Bank by an outside service center. Expenses incurred for such services 
     during 1998, 1997 and 1996 were $212,117, $165,771 and $119,105, 
     respectively.

7.   Other Real Estate.

              Other real estate consists of properties acquired through
     foreclosure and loans that are classified as in-substance foreclosed
     for which the underlying collateral is real estate.

              No gains or losses were incurred in 1996 on other real estate
     transactions.

              During 1997, other real estate was sold at a gain of $72,465.
     Reductions in the carrying value of other real estate due to
     reappraisal were $12,500.

              Other real estate was sold at a gain of $38,760 in the year
     ended December 31, 1998.

                                       32

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

8.   Certificates of Deposit.

          The Bank has time certificates of deposit in amounts of $100,000 or
     more amounting to $15,371,575 and $14,057,867 at December 31, 1998 and
     1997, respectively. Interest expense for the years ended December 31, 1998,
     1997 and 1996 on this type of deposit was $859,782, $619,979, and $619,605,
     respectively.

          The deposits by time remaining until maturity were (dollars in
     thousands).

<TABLE>
<CAPTION>
<S>                       <C>
3 months or less          $ 6,466
3 to 6 months               4,481
6 to 12 months              4,021
over 12 months                404
                          -------
                          $15,372
                          -------
                          -------
</TABLE>

9.   Regulatory Matters.

          The Bank, as a National Bank, is subject to the dividend restrictions
     set forth by the Comptroller of the Currency. Under such restrictions, the
     Bank may not, without the prior approval of the Comptroller of the
     Currency, declare dividends in excess of the sum of the current year's
     earnings (as defined) plus the retained earnings (as defined) from the
     prior two years. The dividends, as of December 31, 1998, that the Bank
     could declare, without the approval of the Comptroller of the Currency,
     amounted to approximately $2,153,000. The Bank is also required to maintain
     minimum amounts of capital to total "risk weighted" assets, as defined by
     the banking regulators. As of December 31, 1998, Banks are required to have
     minimum Tier 1 and Total capital ratios of 4.00% and 8.00%, respectively.
     The Bank's estimated ratios at December 31, 1998 were $14.29% and 15.54%,
     respectively. The Bank's Tier 1 leverage ratio at December 31, 1998 was
     8.98%. The minimum required leverage ratio for the Bank at December 31,
     1998, was 3.00%.

10.  Supplemental Cash Flow Information

          In 1998 and 1997, the Bank recorded amounts of other real estate
     acquired through foreclosure of $179,209 and $67,000. Of total sales of
     other real estate during 1998 and 1997, $184,851 and $195,566 of the
     purchase price was financed by the Bank, taking the other real estate as
     security. Loans charged off due to foreclosure transactions in 1998, 1997
     and 1996 amounted to $179,209, $67,000 and $322,659. These noncash
     transactions have been excluded from the consolidated statement of cash
     flows.

11.  Financial Position and Results of Operations - Republic Corporation.

          The financial position and results of operations of The Republic
     Corporation (parent only) are as follows:

                                       33

<PAGE>

                            THE REPUBLIC CORPORATION
                                  Balance Sheet

<TABLE>
<CAPTION>
(Note 11 Continued)
December 31                                                            1998            1997
---------------------------------------------------------------------------------------------
<S>                                                             <C>             <C>

Assets

Cash in Bank. . . . . . . . . . . . . . . . . . . . . . . .     $    33,191     $    23,024
Investment in subsidiary - equity method. . . . . . . . . .      11,921,544      10,989,255
Vehicles and equipment (net). . . . . . . . . . . . . . . .            --              --
Receivable - due from subsidiary. . . . . . . . . . . . . .          21,000          19,800
Other assets. . . . . . . . . . . . . . . . . . . . . . . .          56,604          56,604
                                                                -----------     -----------
  Total assets. . . . . . . . . . . . . . . . . . . . . . .      12,033,239     $11,088,683
                                                                -----------     -----------
                                                                -----------     -----------
Liabilities . . . . . . . . . . . . . . . . . . . . . . . .     $      --       $      --    
                                                                -----------     -----------

Stockholders' Equity

Common stock, par value $1.00; authorized 
  750,000 shares, issued 356,844 shares 
  including stock held in treasury of 
  23,119 and 23,119 for 1998 and 1997, respectively . . . .         356,844         356,844
Additional paid in capital. . . . . . . . . . . . . . . . .         234,931         234,931
Less cost of treasury stock (23,119 shares
  at 12-31-98, 23,119 shares at 12-31-97) . . . . . . . . .         (91,303)        (91,303)
                                                                -----------     -----------
    Total contributed capital . . . . . . . . . . . . . . .         500,472         500,472 
                                                                -----------     -----------
Retained earnings . . . . . . . . . . . . . . . . . . . . .      11,532,767      10,588,211 
                                                                -----------     -----------
  Total stockholders' equity. . . . . . . . . . . . . . . .      12,033,239      11,088,683 
                                                                -----------     -----------
  Total liabilities and stockholders' equity. . . . . . . .     $12,033,239     $11,088,683 
                                                                -----------     -----------
                                                                -----------     -----------

</TABLE>

                                       34

<PAGE>

                            THE REPUBLIC CORPORATION
                               Statement of Income

<TABLE>
<CAPTION>

(Note 11 Continued)
Year Ended December 31                                1998           1997         1996
--------------------------------------------------------------------------------------
<S>                                              <C>           <C>           <C>
Income

Investment income in subsidiary
  Dividends received from subsidiary bank. .     $  54,740     $   39,100    $  39,100
  Other income . . . . . . . . . . . . . . .          --             --           --    
                                                 ---------     ----------    ---------
    Total income . . . . . . . . . . . . . .     $  54,740     $   39,100    $  39,100 
                                                 ---------     ----------    ---------

Expenses

Salaries and employee benefits . . . . . . .        46,073         41,073       41,073
Depreciation . . . . . . . . . . . . . . . .          --             --            108
Examination and legal fees . . . . . . . . .        10,468          9,451        9,826
Miscellaneous. . . . . . . . . . . . . . . .          --              100           90
Office . . . . . . . . . . . . . . . . . . .         4,093          4,254        4,406
Taxes. . . . . . . . . . . . . . . . . . . .         3,739          3,300        3,303
Travel . . . . . . . . . . . . . . . . . . .          --             --           --    
                                                 ---------     ----------    ---------
  Total expenses . . . . . . . . . . . . . .        64,373         58,178       58,806 
                                                 ---------     ----------    ---------

Income (Loss) before equity in
  undistributed net income of subsidiary . .        (9,633)       (19,078)     (19,706)

Less applicable income (taxes) benefit . . .        21,000         19,800       20,000 
                                                 ---------     ----------    ---------
                                                    12,267            722          294

Equity in undistributed net income
  (loss) of subsidiary . . . . . . . . . . .       932,289      1,133,303      840,573 
                                                 ---------     ----------    ---------
  Net income (loss). . . . . . . . . . . . .       944,556      1,134,025    $ 840,867 
                                                 ---------     ----------    ---------
                                                 ---------     ----------    ---------
Earnings per share
  Weighted average number of
     shares outstanding. . . . . . . . . . .       333,725        333,725      333,725 
                                                 ---------     ----------    ---------
                                                 ---------     ----------    ---------
  Net income (loss) per common share . . . .     $    2.83     $     3.40    $    2.52 
                                                 ---------     ----------    ---------
                                                 ---------     ----------    ---------

</TABLE>

                                       35

<PAGE>

                            THE REPUBLIC CORPORATION
                             Statement of Cash Flows

<TABLE>
<CAPTION>
(Note 11 Continued)
Year Ended December 31                                         1998           1997           1996 
-----------------------------------------------------------------------------------------------------
<S>                                                        <C>            <C>              <C>
Cash flows from operating activities:

Net income. . . . . . . . . . . . . . . . . . . . . . .    $ 944,556      $ 1,134,025      $ 840,867
Adjustments to reconcile net income to
  net cash provided by operating activities:
  Depreciation. . . . . . . . . . . . . . . . . . . . .         --               --              108
  Dividends received - subsidiary . . . . . . . . . . .      (54,740)         (39,100)       (39,100)
  (Increase) in investment in subsidiary-held 
    on the equity method. . . . . . . . . . . . . . . .     (932,289)      (1,133,303)      (840,573)
  (Increase) decrease in receivable
    from subsidiary-income tax benefit. . . . . . . . .       (2,100)             200           (800)
  Increase (decrease) in current liabilities. . . . . .         --               --             --    
                                                           ---------      -----------      ---------
Net cash (used in) operating activities . . . . . . . .      (44,573)         (38,178)       (39,498)
                                                           ---------      -----------      ---------
Cash flows from investing activities-
  Dividends received. . . . . . . . . . . . . . . . . .       54,740           39,100         39,100 
                                                           ---------      -----------      ---------
Cash flows from financing activities-
  Purchase of treasury stock. . . . . . . . . . . . . .         --               --             --
                                                           ---------      -----------      ---------
  Net increase (decrease) in cash . . . . . . . . . . .       10,167              922           (398)

Cash - beginning of year. . . . . . . . . . . . . . . .       23,024           22,102         22,500
                                                           ---------      -----------      ---------
Cash - end of year. . . . . . . . . . . . . . . . . . .       33,191           23,024         22,102
                                                           ---------      -----------      ---------
                                                           ---------      -----------      ---------
Supplemental disclosures of cash flow information:
  Cash paid for interest. . . . . . . . . . . . . . . .         --               --             --
                                                           ---------      -----------      ---------
                                                           ---------      -----------      ---------
  Cash paid for income taxes. . . . . . . . . . . . . .         --               --             --
                                                           ---------      -----------      ---------
                                                           ---------      -----------      ---------

</TABLE>

                                       36

<PAGE>


                            THE REPUBLIC CORPORATION
                  Statement of Changes in Stockholders' Equity

<TABLE>
<CAPTION>
(Note 11 Continued)
For the Three                                         Additional                   Total
Years Ended                             Capital        Paid in       Treasury    Contributed     Retained
                                         Stock          Capital       Stock        Capital       Earnings  
------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>            <C>         <C>            <C>
Balance at December 31, 1995. . . .    $356,844       $234,931       $(91,303)   $500,472       $ 8,613,319*

Net income. . . . . . . . . . . . .        --             --             --          --         $   840,867

Additions to treasury stock . . . .        --             --             --          --                --    
                                       ---------      --------       --------    --------       -----------

Balance at December 31, 1996. . . .    $356,844       $234,931       $(91,303)   $500,472       $ 9,454,186*

Net income. . . . . . . . . . . . .        --             --             --          --         $ 1,134,025

Additions to treasury stock . . . .        --             --             --          --                --    
                                       ---------      --------       --------    --------       -----------

Balance at December 31, 1997. . . .    $356,844       $234,931       $(91,303)   $500,472       $10,588,211*

Net income. . . . . . . . . . . . .       --              --             --          --         $   944,556

Additions to treasury stock . . . .       --              --             --          --                --    
                                       ---------      --------       --------    --------       -----------

Balance at December 31, 1998. . . .    $356,844       $234,931       $(91,303)   $500,472       $11,532,767*
                                       ---------      --------       --------    --------       -----------
                                       ---------      --------       --------    --------       -----------

</TABLE>

     *On December 31, 1995, 1996, 1997 and 1998 the portion of retained 
earnings resulting from Republic Corporation's equity in the undistributed 
income of its subsidiary was $6,982,005, $7,797,300, $8,637,872 9,771,176 and 
10,703,465 respectively.

12.  Contingent Liabilities and Commitments.

     The consolidated financial statements do not reflect various commitments 
and contingent liabilities which arise in the normal course of business and 
which involve elements of credit risk, interest rate risk and liquidity risk. 
These commitments and contingent liabilities are commitments to extend credit 
and standby letters of credit. A summary of the Bank's commitments and 
contingent liabilities at December 31, 1998, is as follows:

<TABLE>
<S>                                                   <C>
        Commitments to extend credit                    3,775,000
        Standby letters of credit                         488,000

</TABLE>

                                       37

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

12.  (Continued)

     Commitments to extend credit and standby letters of credit all include 
exposure to some credit loss in the event of nonperformance of the customer. 
The Bank's credit policies and procedures for credit commitments and 
financial guarantees are the same as those for extensions of credit that are 
recorded on the consolidated statements of condition. Because these 
instruments have fixed maturity dates, and because many of them expire 
without being drawn upon, they do not generally present any significant 
liquidity risk to the Bank.

13.  Disclosures about the Fair Value of Financial Instruments

     The following disclosures of the estimated fair value of financial 
instruments are made in accordance with the requirements of SFAS No. 107, 
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS. The estimated fair 
value amounts have been determined by the Bank using available market 
information and valuation methodologies. The fair value estimates presented 
are not necessarily indicative of the amounts the company could realize in a 
current market exchange. The use of different market assumptions and/or 
estimation methodologies may have a material impact on the estimated fair 
value amounts. SFAS No. 107 excludes certain financial instruments and all 
non-financial instruments including intangible assets from its disclosure 
requirements. Therefore the aggregate fair value amounts presented herein are 
not indicative of the underlying value of the Bank.

     The following methods and assumptions were used to estimate the fair 
value of each class of financial instruments for which is it practicable to 
estimate that value:

     -    CASH AND DUE FROM BANKS

          The current carrying amount is a reasonable estimate of fair value.

     -    FEDERAL FUNDS SOLD

          The current carrying amount is a reasonable estimate of fair value.

     -    INVESTMENT SECURITIES

          An estimate of the fair value for investment securities is made
          utilizing quoted market prices for publicly traded securities, where
          available. A third-party pricing service that specializes in "matrix
          pricing" and modeling techniques provides estimated fair values for
          securities not actively traded.

                                       38

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

13.  (Continued)

     -    LOANS

          The fair value of loans is estimated by discounting the future cash
          flows using the current rates at which similar loans would be made to
          borrowers with similar credit ratings and for the same remaining
          maturities. Due to the small amount of nonaccrual loans at December
          31, 1998, these loans do not significantly impact the fair value of
          loans.

     -    DEPOSITS

          The fair value of demand deposits, savings accounts and money market
          deposits is the amount payable on demand at the reporting date. The
          fair value of fixed-maturity certificates of deposit is estimated by
          discounting the future cash flows using the rates currently offered
          for deposits of similar remaining maturities.

     -    COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT

          The fair value of commitments is estimated using the fees currently
          charged to enter into similar agreements, taking into account the
          remaining terms of the agreements and the present creditworthiness of
          the customers. For fixed-rate loan commitments, fair value also
          considers the difference between current levels of interest rates and
          the committed rates. The estimated fair value of letters of credit is
          based on the fees currently charged for similar agreements. The
          instruments were determined to have no positive or negative market
          value adjustments and are not listed in the following table.

          The estimated fair value of the Company's financial instruments is as
          follows:

<TABLE>
<CAPTION>
                                           December 31, 1998
                                       ------------------------
                                       Carrying         Fair
                                        Amount          Value  
                                       --------        -------
                                           (In Thousands)
<S>                                   <C>           <C>
Financial assets:
  Cash and due from banks             $   3,682     $   3,682
  Held-to-maturity securities            23,865        23,869
  Other Securities                           24            24
  Federal funds sold                      5,650         5,650
  Loans, net of allowance                93,336        93,416

Financial liabilities:
  Deposits                              117,351       117,358

</TABLE>

                                       39

<PAGE>

                     THE REPUBLIC CORPORATION AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

13.  (Continued)

          The fair value estimates presented herein are based on pertinent
          information available to management as of December 31, 1998. Although
          management is not aware of any factors that would significantly affect
          the estimated fair value amounts, such amounts have not been
          comprehensively revalued for purposes of the financial statements
          since that date and, therefore, current estimates of fair value may
          differ significantly from the amounts presented.

                                       40

<PAGE>

ITEM 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure:

        Not applicable.

                                       41

<PAGE>

                                    PART III

ITEM 10. Directors and executive officers of the Republic Corporation.

     The Republic Corporation's Board of Directors consists of Catherine G. 
Eisemann, J.E. Eisemann, IV and Roger Dean Eisemann. All directors and 
officers are U.S. citizens. Catherine G. Eisemann is the mother of J.E. and 
Roger Dean Eisemann.

<TABLE>
<CAPTION>

                                     TERM OF      PRINCIPAL OCCUPATIONS FOR THE
NAME AND TITLE               AGE     OFFICE             LAST FIVE YEARS      
--------------               ---     ------       -----------------------------
<S>                          <C>     <C>          <C>
Catherine G. Eisemann         72     35 Years     Catherine G. Eisemann has been a Director of 
                                                  The Republic Corporation for 35 years. 
                                                  Mrs. Eisemann was elected President of The 
                                                  Republic Corporation and began serving 
                                                  December 11, 1981.

J.E. Eisemann, IV             51     22 Years     J.E. Eisemann, IV has served as a Director on 
                                                  The Republic Corporation Board for 22 years.
                                                  Mr. Eisemann has been the Vice-President and 
                                                  Director of the Subsidiary Bank for approximately
                                                  21 years.  Mr. Eisemann has served as the Chairman 
                                                  of the Board of The Republic Corporation and 
                                                  Chairman of the Board for the Subsidiary Bank 
                                                  for approximately 17 years.

Roger Dean Eisemann           44     16 Years     Roger Dean Eisemann was elected Secretary and 
                                                  began serving as a director of The Republic
                                                  Corporation in July, 1982.

</TABLE>

     J.E. Eisemann, III was the President and Chairman of the Board of The
Republic Corporation for 25 years. Mr. Eisemann passed away during 1981.

                                       42

<PAGE>

ITEM 11. Executive Compensation.

          EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                       Annual Compensation
                                                 -----------------------------
Name & Principal Position                        Year     Salary        Bonus  
-------------------------                        ----     ------        ------
<S>                                              <C>     <C>           <C>
J.E. Eisemann, IV Chairman of the                1998    $84,773(1)    $6,700(2)
  Board of the Company, Vice                     1997     82,573(1)     7,150(2)
  President of the Company,                      1996     54,193(1)     3,881(2)
  Chairman of the Board & Vice
  President of the Subsidiary Bank

Catherine Eisemann President of the Company      1998    $30,000          -0-
                                                 1997     30,000          -0-
                                                 1996     30,000          -0-

</TABLE>

<TABLE>
<CAPTION>
                                            Restricted      Stock
                                              Stock        Options/      LTIP           All Other
Name & Principal Position                     Awards       SARs(#)     Payouts($)     Compensation
-------------------------                   -----------    --------    ----------     ------------
<S>                                         <C>            <C>         <C>            <C>
J.E. Eisemann, IV                              -0-          -0-          -0-              -0-
  Chairman of the Board of the Company,        -0-          -0-          -0-              -0-
  Vice President of the Company,               -0-          -0-          -0-              -0-
  Chairman of the Board & Vice
  President of the Subsidiary Bank

Catherine Eisemann                             -0-          -0-          -0-              -0-
  President of the Company                     -0-          -0-          -0-              -0-
                                               -0-          -0-          -0-              -0-

</TABLE>

(1) Includes amounts deferred under Section 401(K) of the Internal Revenue 
Code. Amounts deferred by Mr. Eisemann were $3,920 in 1996 $6,500 in 1997 and 
6,700 in 1998.

(2) Includes amounts deferred under Section 401(K) of the Internal Revenue 
Code. Amounts deferred by Mr. Eisemann were $353 in 1996 $650 in 1997 and 670 
in 1998.

                      STOCK OPTIONS/SAR GRANTS IN 1998-NONE
         AGGREGATED STOCK OPTIONS/SAR EXERCISES IN 1998 AND OPTIONS/SAR
                      VALUES AS OF DECEMBER 31 1998 - NONE
                LONG-TERM INCENTIVE PLANS - AWARDS IN 1998 - NONE
                            COMPENSATION OF DIRECTORS
             Director fees are not paid to directors of the Company.
                     EMPLOYMENT CONTRACTS AND TERMINATION OF
                         EMPLOYMENT ARRANGEMENTS - NONE
                   REPORT ON REPRICING OF OPTIONS/SARS - NONE

                                       43

<PAGE>

ITEM 12. Security ownership of certain beneficial owners and management.

     (a)  Security ownership of certain beneficial owners. The following
          schedule reflects security ownership of persons who are the beneficial
          owners of more than 5% of any class of voting securities of The
          Republic Corporation.

<TABLE>
<CAPTION>
                                             Amount and
                                              Nature of        Percent
Name of                       Title of        Beneficial         of
Person (1)                     Class         Ownership (2)     Class 
----------                    --------       -------------     --------
<S>                         <C>              <C>               <C>
Catherine G. Eisemann       Common Stock       193,702         58.0424
3350 McCue, #904
Houston, Texas  77056

</TABLE>

          (1)  All persons shows are officers or directors of The Republic 
               Corporation

          (2)  Shares of The Republic Corporation have not been pledged by the 
               officers or directors of the corporation.

     (b)  Security ownership of management.

          The following schedule reflects security ownership of the officers and
          directors of The Subsidiary Bank:

<TABLE>
<CAPTION>
                                                  Amount and
                                                  Nature of       Percent
Name of Director                   Title of       Beneficial        of
or Officer                          Class         Ownership        Class 
----------------                 ------------     ----------      -------
<S>                              <C>              <C>             <C>
The Republic Corporation(1)      Common Stock      39,100           97.75
Catherine G. Eisemann            Common Stock         100             .25
J.E. Eisemann, IV                Common Stock         100             .25
R. Dean Eisemann                 Common Stock         100             .25
Ralph Gagliardi                  Common Stock         100             .25
Opal Gahm                        Common Stock         100             .25
Johnny Niccoli                   Common Stock         100             .25
Charles Latuda                   Common Stock         100             .25
John Davis                       Common Stock         100             .25
James Cummings                   Common Stock         100             .25

</TABLE>

          (1)  Catherine G. Eisemann owns 58.0424 percent of The Republic
               Corporation.

     (c)  Changes in control.

          The Republic Corporation has the option of repurchasing its own stock,
          thus increasing the ownership percentages of the remaining
          shareholders.

                                       44

<PAGE>


ITEM 13. Certain relationships and related transactions.

          There have been no transactions with management or other related
     parties that would require disclosure under current Securities and Exchange
     Commission regulations. Additionally, no business relationships that would
     require disclosure exist. No directors were indebted to the subsidiary bank
     during 1998.

                                       45

<PAGE>

                                     PART IV

ITEM 14. Exhibits, financial statement, schedules, and reports on Form 8-K.

     (a)  1. The following financial statements and financial statement
             schedules are included in Part II of this report:

             Consolidated statements of the parent and subsidiary bank:

<TABLE>
<S>                                                                              <C>
                Accountant's Report . . . . . . . . . . . . . . . . . . . . .    21

                Balance Sheets as of December 31, 1998 and 1997 . . . . . . .    22

                Statements of Income - years ended 
                  December 31, 1998, 1997 and 1996. . . . . . . . . . . . . .    23

                Statement of Cash Flows -  Years ended 
                  December 31, 1998, 1997 and 1996. . . . . . . . . . . . . .    24-25

                Statement of Changes in Stockholders' Equity-years 
                  ended December 31, 1998, 1997 and 1996. . . . . . . . . . .    26

                Notes to Financial Statements . . . . . . . . . . . . . . . .    27-40

</TABLE>

          2. All other schedules are omitted because they are not applicable, 
             are not required, or because the required information is included
             in the consolidated financial statements or notes thereto.

                                       46

<PAGE>

          3. List of Exhibits.

          The following documents were filed as exhibits to Registration
          Statement Form 10 (which was filed with the Securities and Exchange
          Commission under The Securities Exchange Act of 1934) dated August 23,
          1977.

<TABLE>
<CAPTION>
          Exhibit 
            No.
          --------
<S>                       <C>
            3              The Republic Corporation, Articles of Incorporation 
                           and By-Laws

          22(a) Subsidiary of the Registrant.

</TABLE>

          The First National Bank in Trinidad, Colorado. Incorporated in
          Colorado

(b)  Reports on Form 8-K

     There were no reports on Form 8-K for the three months ended December 31,
     1998.

                                       47

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, Republic Corporation has duly caused this report to be 
signed on its behalf by the undersigned, thereunto duly authorized.

REPUBLIC CORPORATION

    /S/ J.E. Eisemann, IV         Chairman of the Board,          
-----------------------------     Director, Chief Executive     ----------
      J.E. Eisemann, IV           Officer, Chief Financial        Date
                                  and Accounting Officer

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

Signature                         Title                         Date
---------                         -----                         -----

    /S/ J.E. Eisemann, IV         Chairman of the Board,        
-----------------------------     Director, Chief Executive     ----------
      J.E. Eisemann, IV           Officer, Chief Financial 
                                  and Accounting Officer

  /S/ Catherine G. Eisemann       President of the Board        ----------
-----------------------------     and a Director
    Catherine G. Eisemann          

                                       48

<PAGE>

                            SUPPLEMENTAL INFORMATION

The Republic Corporation will send the shareholders an annual report and 
proxy materials subsequent to the filing of this report.

                                       49