Republic Bancorp, Inc.
Annual Report 2002

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REPUBLIC
BANCORP

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The following table sets forth Republic's selected consolidated historical financial information from 1998 through
2002. This information should be read in conjunction with the Consolidated Financial Statements and the related Notes.
Factors affecting the comparability of certain indicated periods are discussed in  "MANAGEMENT'S DISCUSSION AND 
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." 

(dollars in thousands, except per share data)

Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Non-interest income
Gain on sale of deposits
Non-interest expense
Income before taxes
Net income

Balance Sheet Data:
Total assets
Total securities
Total loans, net
Allowance for loan losses
Total deposits
Repurchase agreements 

and other short-term borrowings

Other borrowed funds
Total stockholders' equity

Per Share Data:
Basic Class A Common earnings per share
Basic Class B Common  earnings per share
Diluted Class A Common  earnings per share
Diluted Class B Common earnings per share
Book value (1)
Cash dividends declared per Class A Common
Cash dividends declared per Class B Common

Performance ratios:
Return on average assets
Return on average common equity
Net interest margin
Efficiency ratio

Asset quality ratios:
Non-performing assets to total loans
Net loan charge-offs to average loans
Allowance for loan losses to total loans
Allowance for loan losses to non-performing loans

Capital ratios:
Average stockholders' equity to average total assets
Tier 1 leverage ratio
Tier 1 risk-based capital ratio
Total risk-based capital ratio
Dividend payout ratio

Other key data:
End-of-period full-time equivalent employees
Number of bank offices

(1) Exclusive of accumulated other comprehensive income.

(2) Excludes pre-tax gain of $4.1 million on sale of deposits.

$

2002

106,101
41,761
64,340
3,338
24,522
–
53,839
31,685
20,489

$ 1,752,706
288,459
1,299,915
10,148
1,040,190

224,929
319,299
150,796

Years Ended December 31,
2000

2001

1999

1998

$

117,396
57,917
59,479
3,493
19,741
–
50,340
25,387
16,808

$ 1,590,831
293,945
1,176,094
8,607
866,358

282,023
296,950
125,115

$

118,660
66,851
51,809
1,382
8,859
–
40,029
19,257
12,921

$ 1,508,072
275,568
1,136,531
7,862
863,761

263,001
246,050
116,942

$

$

97,157
49,552
47,605
1,806
10,084
–
37,383
18,500
12,252

92,667
50,174
42,493
3,110
11,396
4,116
33,533
21,362
13,756

$ 1,368,983
214,558
1,031,512
7,862
800,909

$ 1,207,684
216,921
870,031
7,862
747,147

215,718
231,383
103,770

148,659
190,222
103,842

$ 

$

1.23
1.21
1.20
1.19
8.80
0.21
0.19

1.25%

14.44
4.07
61

0.78%
0.15
0.77
103

8.65%
9.02
12.77
13.64
17

570
25

$

1.04
1.03
1.01
0.99
7.75
0.18
0.16

1.10%

13.85
4.04
62

0.48%
0.23
0.73
154

7.96%
8.36
12.44
13.26
17

532
22

0.78
0.77
0.76
0.75
7.06
0.15
0.14

0.89%

11.77
3.71
66

0.40%
0.12
0.69
193

7.58%
8.13
12.01
12.78
19

462
22

$

$

0.73
0.72
0.71
0.69
6.46
0.12
0.11

0.98%
11.90
3.96
65

0.38%
0.19
0.76
213

8.27%
8.61
13.36
14.28
16

467
21

0.87
0.86
0.83
0.82
6.03
0.11
0.10

1.20%
15.82
3.84

62(2)

0.63%
0.40
0.89
158

7.58%
9.29
14.63
15.68
13

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Management's Discussion and Analysis of Financial Condition and Results of Operations of Republic Bancorp, Inc.

(“Republic” or “the Company”) analyzes the major elements of Republic's balance sheets and statements of income.
Republic, a bank holding company headquartered in Louisville, Kentucky, is the parent of Republic Bank & Trust Company
and Republic Bank & Trust Company of Indiana  (collectively “Bank”). This section should be read in conjunction with the
Company's Consolidated Financial Statements and accompanying Notes and other detailed information.

This discussion includes various forward-looking statements with respect to credit quality (including but not limited to

delinquency trends and the adequacy of the allowance for loan losses), corporate objectives, the Company’s interest rate
sensitivity model and other financial and business matters. When used in this discussion the words "anticipate," "project,"
"expect," "believe," and similar expressions are intended to identify forward-looking statements. Republic cautions that
these forward-looking statements are subject to numerous assumptions, risks and uncertainties, all of which may change
over time. Actual results could differ materially from forward-looking statements.

In addition to factors disclosed by Republic elsewhere in this Annual Report, the following factors, among others, could

cause actual results to differ materially from such forward-looking statements: pricing pressures on loan and deposit 
products; competition; changes in economic conditions both nationally and in the Bank's markets; the extent and timing of
actions of the Federal Reserve Board; market acceptance of the Bank's products and services; and, the extent and timing of
legislative or regulatory actions and reforms.

HIGHLIGHTS

Republic reported another solid year of earnings during 2002 as net income reached $20.5 million during the year 

compared to $16.8 million for 2001, an increase of 22%. Diluted earnings per Class A Common shares increased 19% to
$1.20 for the year. On a percentage basis, the increase in diluted earnings per Class A Common shares increased less than
net income primarily due to the conversion of Republic’s guaranteed preferred beneficial interests in the Company’s subordinated
debentures. The rise in earnings for 2002 was primarily attributable to increased net interest income, increased income
associated with the Company’s tax refund processing subsidiary – Refunds Now, gains on the sale of loans into the secondary
market, and service charges on deposits. Republic’s book value per common share, exclusive of accumulated other 
comprehensive income, increased from $7.75 at December 31, 2001 to $8.80 per share at December 31, 2002.
Following is a brief description of a few Company highlights during 2002:

1) Net interest income grew 8.2% during the year as a further decline in short-term market interest rates led to a
continued downward repricing in the Company’s short-term interest bearing liabilities. Republic also continued its
strategy initiated in 2001 of extending maturities on advances from the Federal Home Loan Bank (FHLB) in order to
mitigate the risk of future increases in market interest rates.

2) Republic reported another strong year in its mortgage banking operations as favorable long-term market interest
rates, coupled with the Company’s promotion of its “$999” maximum closing costs product, led to strong gains on
the sale of 1-4 family, fixed-rate residential real estate loans into the secondary market.

3) Refunds Now reported record earnings during 2002 due to a substantial increase in transaction volume related to new
sales. Overall, the number of tax preparers serviced by Refunds Now increased 17% during 2002 compared to the
number serviced in 2001.

4) Service charges on deposit accounts grew significantly during the year as the Company added approximately
17,500 new checking accounts. A large number of these new accounts were added in conjunction with the
Company’s promotion of its “$999” maximum closing cost, fixed-rate mortgage product, which requires a primary
checking account to receive the favorable closing cost rate. The Bank’s “Overdraft Honor” program also played a
positive role in the overall increase in service charges on deposits during 2002.

5) Loans increased $124 million as Republic retained approximately $60 million in fixed-rate, 15-year residential real
estate loans, which the Company has traditionally sold into the secondary market. Republic also experienced a $34
million increase in home equity loans outstanding as the Company added 2,900 new home equity lines of credit
during 2002. These new lines of credit were added primarily from cross-selling opportunities in conjunction with
the Company’s “$999” maximum closing cost, fixed-rate mortgage product.

6) The Company entered into two new arrangements to provide deferred deposit services in at least two additional
states, beginning in December. Management believes these transactions could become a meaningful component of the
Company’s overall profitability over the next few years.

7) Republic opened three new banking centers during 2002 and announced plans for an additional six banking 
centers to be opened in 2003 as the Company continued to take advantage of opportunities to increase market share
as a consequence of the recent sale of two Kentucky-based community bank competitors.

Net income for the year 2001 was $16.8 million, up $3.9 million over the same period in 2000. Earnings per Class A
Common share increased from $0.76 at December 31, 2000 to $1.01 for the year 2001. Republic’s increased earnings were
primarily due to increases in net interest income, service charges on deposit accounts and gain on sale of loans into the 
secondary market.

The following table summarizes selected financial information regarding Republic’s financial performance:

Table 1 - Summary

Years  Ended December 31, (dollars in thousands)

Net income
Diluted Class A earnings per share
Return on Average Assets (ROA)
Return on Average Equity (ROE)

2002

$ 20,489
1.20
1.25%
14.44

2001

$ 16,808
1.01
1.10%
13.85

2000

$ 12,921
0.76
0.89%
11.77

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Republic’s consolidated financial statements and accompanying notes have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reported periods.

Management continually evaluates the Company’s accounting policies and estimates it uses to prepare the consolidated
financial statements.
In general, management’s estimates are based on historical experience, on information from regulators
and third party professionals and on various assumptions that are believed to be reasonable under the facts and circumstances.
Actual results could differ from those estimates made by management.

Republic believes its critical accounting policies and estimates include the valuation of the allowance for loan losses.
Based on management’s calculation, an allowance of $10 million or 0.77% of total loans was an adequate estimate of losses
within the loan portfolio as of December 31, 2002. This estimate resulted in a provision for loan losses on the income 
statement of $3.3 million during 2002.
assumptions used by management in making its determination, the allowance for loan losses and provision for loan losses 
on the income statement could be materially affected. For further discussion of the allowance for loan losses and a detailed
description of the methodology management uses in determining the adequacy of the allowance see section titled Allowance
and Provision for Loan Losses on page 28 of this annual report.

If the mix and amount of future write-off percentages differ significantly from those

DEFERRED DEPOSIT TRANSACTIONS

Deferred deposits are transactions in which a customer typically receives a cash advance against his or her next pay-
check in exchange for a postdated check for the advanced amount plus a fixed fee. The advance provider agrees to delay
presentment of the check for payment until the advance due date, generally about two weeks from the advance date. On or
before the advance due date the customer can present cash in person for the amount of the advance plus a fee and receive
his postdated check in return.
deposited.

If the customer does not return to reclaim his check by the advance due date, the check is

The Company has been conducting a deferred deposit transaction business, in conjunction with third party originators,
on a limited basis since August 2001. The Company recently entered into two new contracts with third party originators and
service providers in order to significantly expand its deferred deposit transaction business. The Company’s total deferred
deposit outstandings averaged under $500,000 during 2002. Management projects these outstandings could reach or
exceed $8 million by the end of the first quarter of 2003, although one of the Company’s third party originators is entering a
new territory, and depending upon its success, outstandings originated through this relationship may exceed these projec-
tions. Based on accounting principles generally accepted in the United States, these transactions are recorded as loans on
the Company’s financial statements and the corresponding fees are recorded as a component of interest income on loans.

The third parties with whom the Company does business have at times experienced legal and or regulatory obstacles in

some states in which they do business. These obstacles have included, without limitation, litigation and government
In some states, laws have been enacted or amended to prohibit or limit their ability to conduct busi-
enforcement actions.
In addition, the Comptroller of the Currency has effectively prohibited national
ness without a financial institution partner.
banks from conducting this business. This has provided opportunities for state-chartered commercial banks to enter the
business and earn additional income with minimal capital outlays.

The legal and regulatory climate for this product continues to change.

In January 2003, the FDIC issued draft guidance

on examinations of bank deferred deposit activities which the FDIC characterizes as presenting substantial credit risks for
lenders, as well as increased transaction, legal and reputation risks when a third party arrangement is used. The FDIC draft
guidance proposes, among other items, that banks hold significantly more capital than would be required for other subprime
type loans, perhaps as much as 100% of deferred deposit transactions outstanding, that allowances for loan and lease losses
be adequate and take into account that many such transactions remain outstanding beyond their initial term due to roll-
overs, that deferred deposit transactions be classified “substandard,” and that transactions that have been outstanding for
more than 60 days generally be classified as “loss”. The draft guidance also proposes limits on the ability of a borrower to

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renew or roll over a deferred deposit transaction and on the number of transactions that can be made to a customer within a
given period of time. The draft guidance requires examiners to assess the bank’s risk management program for third party
marketing and servicing relationships, including the bank’s due diligence process for selecting a third party marketing and
servicing provider and its monitoring of the third party’s activities and performance, and to closely scrutinize the bank’s com-
pliance with consumer protection laws and regulations.

The Company believes that it has adequately considered and addressed the risks associated with its deferred deposit
transaction business, including the risks addressed in the FDIC draft examination guidelines, and that the Company’s size,
technological resources and experience in the successful management of non-traditional product lines, among other factors,
will enable the Company to effectively manage and control its participation in the deferred deposit transaction business.
There can be no assurance, however, that the FDIC or others will not impose additional limitations on or prohibit insured
banks from engaging altogether in deferred deposit transactions, or that the Bank’s ability to continue to engage in the busi-
ness profitably or at all will not be negatively impacted by compliance with applicable laws, regulations and guidelines.

Refunds Now®

Refunds Now is a tax refund processing service for taxpayers receiving both federal and state tax refunds through a
nationwide network of tax preparers. Refund anticipation loans (“RALs”) are made to taxpayers filing income tax returns 
electronically. The RALs are repaid by the taxpayer when the taxpayer’s refunds are electronically received by the Bank from 
governmental taxing authorities. Based on accounting principles generally accepted in the United States, fees from RALs are
included as a component of interest income on loans. Refunds Now also provides electronic refund checks (“ERCs”) to taxpayers.
After receiving refunds electronically from governmental taxing authorities, checks are issued to taxpayers for the amount of
their refund, less fees. Fees on ERCs are included in non-interest income.

RAL fees, net of tax preparer rebates, were $3.3 million in 2002 compared to $3.1 million in 2001 and $2.4 million in

2000. ERC fees, net of tax preparer rebates, were $3.2 million in 2002 compared to $2.1 million in 2001 and $1.1 million in
2000. The rise in fee income was the result of an increase in volume as total tax offices serviced by Refunds Now increased
17% during the 2002 tax season compared to the 2001 tax season. While the transaction volume is primarily a first quarter
event, the tax preparer contracts are actively solicited by the Refunds Now sales force throughout the year for the coming
tax filing season. Republic anticipates that its track record of increased product volume from Refunds Now will continue in
2003; however, management’s projections of losses from RALs remain difficult to predict due primarily to the significant
reliance by the Company on third party government information used to underwrite RALs.
titled Allowance and Provision for Loans Losses on page 28 of this annual report.)

(For further analysis see section

RESULTS OF OPERATIONS
Net Interest Income

The principal source of Republic's revenue is net interest income. Net interest income is the difference between interest

income on interest-earning assets, such as loans and securities, and the interest expense on liabilities used to fund those
assets, such as interest-bearing deposits and borrowings. Net interest income is impacted by both changes in the amount
and composition of interest-earning assets and interest-bearing liabilities as well as market interest rates.

For 2002, net interest income was $64.3 million, up $4.8 million over the $59.5 million attained during 2001. Republic was

primarily able to increase its net interest income through balance sheet growth, particularly through growth in mortgage-
backed securities and loans.

(For further analysis see Volume/Rate Variance Analysis on page 24 of this annual report.)

While the loan portfolio decreased slightly during the first six months of 2002, the Company experienced strong growth

in the loan portfolio during the last six months of 2002, principally in residential real estate loans, commercial real estate
loans and home equity lines of credit. Cash received during 2002 from the sale of loans into the secondary market as well
as sales, calls and prepayments on investment securities was reinvested by the Company into mortgage-backed security
products. The increases in the balances of loans and mortgage-backed securities were the significant factors in the
Company’s overall increase in net interest income comparing 2002 to 2001.

Although, net interest income was higher during 2002 compared to 2001, continued downward repricing of the Bank’s
adjustable rate mortgage portfolio and the early prepayment of higher yielding portfolio loans without a corresponding dollar
for dollar downward repricing of the Bank’s interest bearing liabilities during the year limited the Company’s ability to
increase net interest income through changes in rate. As a result, management elected to retain $60 million in fixed rate,
15-year residential real estate loans beginning in October 2002. The Company funded these loans through FHLB advances
with $10 million borrowed on an overnight basis and the remaining $50 million borrowed with terms of two to six years.
Management anticipates earning an approximate spread of 2.25% during the first year of this transaction, which will positively
affect the Company’s net interest income but will negatively impact the Company’s net interest spread and net interest margin.
The Company also sold approximately $56 million in mortgage-backed investment securities and CMOs during 2002 in
anticipation of rapid prepayments due to declining long-term market interest rates. These securities had a bond equivalent yield
of 5.55% at the time of sale. As an additional response to declining long-term market interest rates and to reduce future 
borrowing costs, Republic prepaid a $25 million advance from the Federal Home Loan Bank with a coupon of 6.40%. Management
anticipates an overall positive effect on net interest income over the next twelve months as a result of these transactions.

Republic’s increase in net interest income resulting from changes in volume during 2001 occurred primarily from
growth in the loan portfolio during the latter half of 2000, as well as an increase in RALs during the 2001 tax season.

Republic also experienced an increase of approximately $11 million in the average outstandings of loans available for sale
during 2001, which are included as a part of total loans on the average balance sheet and volume/rate analyses. On the liability
side, Republic pursued a strategy during 2001 of extending maturities, primarily through advances at the Federal Home Loan
Bank, and not actively pursuing higher cost certificates of deposit. This strategy resulted in many of the Bank’s clients
electing to move maturing CD’s into short-term, interest bearing money market CD accounts in anticipation of future interest
rate increases. As a result, the change in interest expense due to volume was only a slight increase as the reduction in CD’s
was offset by the increase in the money market certificate of deposit accounts, along with other borrowings.

The increase in net interest income resulting from changes in rate during 2001 occurred as the Federal Reserve
decreased short-term interest rates throughout the year. All categories of interest income experienced a reduction due to
rate and primarily all categories of interest expense experienced a reduction due to rate as well. Because Republic’s interest
bearing liabilities generally have a shorter repricing frequency than its interest earning assets, the overall effect to the
Company was an increase in net interest income due to an improved spread.
Management and Market Risk on page 34 of this annual report.)

(For further discussion see Asset/Liability

Table 2 provides detailed information as to average balances, interest income/expense, and rates by major balance
sheet category for 2000 through 2002. Table 3 provides an analysis of the changes in net interest income attributable to
changes in rates and changes in volume of interest-earning assets and interest-bearing liabilities.

Table 2  - Average Balance Sheets and Rates for Years Ended December 31,

Average
Balance

2002

Interest

Average
Rate

Average
Balance

2001

Interest

Average
Rate

Average
Balance

2000

Interest

Average
Rate

ASSETS

Earning assets:
U.S. Treasury and Government 
Agency Securities
State and political  subdivision securities
Mortgage-backed securities
Corporate Bonds
Federal Home Loan Bank Stock
Federal funds sold and other
Total loans and fees(1)

$

44,856
158
244,863
–
17,975
53,560
1,220,046

$

1,710
8
10,509
–
833
887
92,154

3.81% $    66,247
5.06
232
159,495
4.29
10,239
–
16,914
4.63
34,254
1.66
1,185,945
7.55

$  3,574
11
8,606
595
1,140
1,146
102,324

5.39% $ 121,296
1,954
4.74
116,764
5.40
18,216
5.81
15,721
6.74
11,140
3.35
1,111,356
8.63

$  7,155
181
7,956
1,106
1,151
689
100,422

5.90%
9.26
6.81
6.07
7.32
6.18
9.04

Total earning assets

1,581,458

106,101

6.71

1,473,326

117,396

7.97

1,396,447

118,660

8.50

Less: Allowance for loan losses

(9,125)

Non-earning assets:
Cash and due from banks
Bank premises and equipment, net
Other assets

Total assets

30,181
21,298
15,985

$1,639,797

LIABILITIES AND STOCKHOLDERS' EQUITY

(8,061)

27,756
19,462
12,497

(7,862)

25,785
19,580
14,422

$1,524,980

$1,448,372

Interest bearing liabilities:
Transaction accounts
Money market accounts
Individual retirement accounts
Certificates of deposits 

and other time deposits
Repurchase agreements 

and other short-term borrowings

Other borrowings
Total interest bearing liabilities

Non-interest bearing liabilities
Non-interest bearing deposits
Other liabilities
Stockholders' equity

Total liabilities and 
stockholders' equity

Net interest income

Net interest spread

Net interest margin

$ 168,414
222,373
36,713

$

1,639
2,992
1,665

0.97% $ 100,055
225,830
1.35
33,612
4.54

$  1,101
7,737
1,972

1.10% $
3.43
5.87

86,961
171,748
30,884

$  1,754
8,464
1,811

2.02%
4.93
5.86

384,341

16,523

4.30

379,057

21,896

5.78

441,581

25,492

5.77

225,671
291,756
1,329,268

3,246
15,696
41,761

1.44
5.38
3.14

251,068
282,879
1,272,501

8,529
16,682
57,917

3.40
5.90
4.55

243,582
249,315
1,224,071

13,819
15,511
66,851

5.67
6.22
5.46

150,481
18,140
141,908

116,409
14,748
121,322

101,584
12,983
109,734

$1,639,797

$1,524,980

$1,448,372

$ 64,340

$59,479

$51,809

3.57%

4.07%

3.42%

4.04%

3.04%

3.71%

(1) The amount of fee income included in interest on loans was $5,512; $5,593 and $3,520 for the years ended December 31, 2002, 2001 and 2000, respectively.

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Table 3 illustrates the extent to which changes in interest rates and changes in the volume of interest-earning assets

and interest-bearing liabilities affected Republic's interest income and interest expense during the periods indicated.
Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) the
net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the
changes due to volume and the changes due to rate.

Table 3 - Volume/Rate Variance Analysis

Year Ended December 31, 2002
compared to
Year Ended December 31, 2001
Increase/(Decrease)

Year Ended December 31, 2001
compared to
Year Ended December 31, 2000
Increase/(Decrease)

(in thousands)

Total Net
Change

Due To

Volume

Rate

Total Net
Change

Due To

Volume

Rate

Interest income:
U.S. Treasury and Government Agency Securities
State and political subdivision securities
Mortgage backed securities
Corporate Bonds
Federal Home Loan Bank stock
Federal funds sold and other
Total loans and fees

$   (1,864)
(3)
1,903
(595)
(307)
(259)
(10,170)

Total increase (decrease) in interest income

(11,295)

Interest expense:
Interest bearing transaction accounts
Money market accounts
Individual retirement accounts
Certificates of deposit and other time deposits
Repurchase agreements and 
other short-term borrowings

Other borrowings

538
(4,745)
(307)
(5,373)

(5,283)
(986)

Total increase (decrease) in interest expense

(16,156)

$ (977)
(4)
3,924
(595)
68
474
2,874

5,764

678
(117)
170
301

(789)
511

754

$     (887)
1
(2,021)

(375)
(733)
(13,044)

(17,059)

(140)
(4,628)
(477)
(5,674)

(4,494)
(1,497)

(16,910)

$(3,581)
(170)
650
(511)
(11)
457
1,902

(1,264)

(653)
(727)
161
(3,596)

(5,290)
1,171

(8,934)

$(3,014)
(109)
2,525
(465)
84
892
6,558

6,471

234
2,252
160
(3,612)

413
2,010

1,457

$   (567)
(61)
(1,875)
(46)
(95)
(435)
(4,656)

(7,735)

(887)
(2,979)
1
16

(5,703)
(839)

(10,391)

Increase (decrease) in net interest income

$    4,861

$ 5,010

$

(149)

$ 7,670

$ 5,014

$ 2,656

Non-Interest Income

Table 4 - Analysis of Non-Interest Income

(dollars in thousands)

Service charges on deposit accounts
Electronic refund check fees
Title insurance commissions
Net gain on sale of mortgage loans
Net gain (loss) on available for sale securities
Debit card interchange fee income
Other
Total

2002

$   8,314
3,198
2,129
6,998
1,559
1,441
883
$ 24,522

Year Ended December 31,
2001

2000

Percent Increase/(Decrease)
2001/2000
2002/2001

$   6,267
2,087
1,515
6,191
1,864
1,020
797
$ 19,741

$  4,410
1,070
298
1,417
(161)
760
1,065
$  8,859

33%
53
41
13
(16)
41
11
24

42%
95
408
337
NM
34
(25)
123 

Service charges on deposit accounts increased 33% during 2002 compared to 2001, due primarily to an increase in the
Company’s checking account base in conjunction with the Bank’s “Overdraft Honor” program, which permits selected clients
to overdraft their accounts up to $500 for the Bank’s customary fee. Total overdraft fees increased from $4.8 million in 2001
to $6.5 million in 2002 while the total number of accounts eligible for the “Overdraft Honor” program increased to 32,000 at
December 31, 2002. Additionally, the Company’s total number of customer checking accounts, exclusive of commercial
accounts, increased from 34,000 at December 31, 2001 to 42,000 at December 31, 2002. The increase in the number of
retail checking accounts was primarily attributable to the success of the Company’s “$999” maximum closing-costs,
a secondary market loan product, which requires a primary checking account in order for the customer to receive the 
discounted closing fees. The continued success of the “$999” program could significantly impact the growth of the
Company’s checking account base in the future.

In addition, the increase in the Company’s checking account base is also

positively affected by the number of new banking centers, direct mail solicitations and other marketing initiatives. Republic
opened three new banking centers in 2002 and announced plans for six new banking centers to be opened during 2003,
which should positively affect the number of customer checking accounts.

The factors listed in the preceding paragraph that resulted in the increase in the number of customer checking
accounts during 2002 are the same or similar to the factors which resulted in the increase of customer checking accounts
during 2001. Service charges on deposits during 2001 were positively affected by the Company’s “$999” promotion and the
“Overdraft Honor” program. Overdraft related fees increased $1.8 million during 2001 as the Company added over 11,800
new customer retail checking accounts during the year. At December 31, 2001 the Bank had nearly 25,000 accounts 
eligible for the “Overdraft Honor” program.

Electronic refund check (ERC) fees, which are substantially received during the first quarter of the year increased $1.1
million for 2002 compared to 2001. This increase was due primarily to a large increase in overall ERC volume compared to
the prior year resulting from successful marketing efforts during 2001. The Company also experienced significant growth in
ERC fees during 2001 compared to 2000 due primarily to the same circumstances.
titled Refunds Now on page 22 of this annual report.)

(For further information see section

Title insurance commissions increased $614,000 for the year ended December 31, 2002, compared to the same period

in 2001. Title insurance commissions are earned when title insurance policies are sold to clients on newly originated real
estate secured loans. Since a substantial portion of these commissions is earned on policies relating to 1-4 family,
secondary-market real estate loans, the income closely correlates to secondary-market loan origination volume, which was
$791 million during 2002 compared to $548 million during 2001. Management anticipates that title insurance commissions
will stay at or near current levels during the first quarter of 2003, given the amount of secondary market loans in process at
year-end 2002.

Title insurance commissions increased $1.2 million for 2001 over 2000. Because the Bank first began offering this

product on July 1, 2000, the 2000 amount reflects only six months of activity. As a result, title insurance commissions for
2001 reflect a significant increase over 2000. The large volume of refinance activity in 1-4 family, secondary-market real
estate loans during 2001 also contributed to the increase for the year.

Net gain on sale of loans increased $800,000 during 2002 to $7.0 million. Further reductions in long-term market
interest rates during 2002 resulted in an increase in consumer refinance activity for the year. As a percentage of loans sold,
net gains decreased to 0.92% in 2002 compared to 1.20% in 2001. The decrease in gains as a percentage of loans sold
was primarily attributable to a management decision to offer more attractive pricing on its fixed-rate, residential real estate
products in order to gain market share. While attractive pricing reduces the Company’s gains on its sold loans, management
believes that the ability to cross-sell other bank products to customers of its residential real estate products will improve the
Company’s long-term profitability. The Company potentially could have achieved higher gains as a percentage of loans sold
with a risk of lower origination volume by offering less attractive pricing to its loan customers. The Company has also 
traditionally sold the vast majority of its loans servicing released and has been cautious of retaining large amounts of servic-
ing due to the market volatility of the value of the servicing portfolio caused by the potential for rapid prepayments in a
declining market interest rate environment. Management anticipates that origination volume of secondary market loans in
the first quarter of 2003 will likely remain at or above the record level achieved during 2002, however, an increase in 
long-term interest rates during the year could have a significant negative impact on secondary market origination volume.

On July 1, 2002, Republic became subject to new accounting guidance for certain commitments to originate loans.
The new guidance requires loan commitments related to the origination of mortgage loans held for sale to be accounted for
as derivative instruments. To offset the interest rate risk of these loan commitments, Republic enters into forward agreements
to sell loans for corresponding amounts and terms, which are also considered derivatives. Because the fair value of the loan
commitment and sales agreement derivatives substantially offset the impact of adopting this guidance was not material and
substantially all of the gain on sale generated from mortgage banking activities is recorded when closed loans are delivered
into the sales agreements.

Net gain on sale of loans increased 337% during 2001 as declining market interest rates prompted an increase in 
consumer refinance activity of 1-4 family, fixed-rate residential loans. Revenue from mortgage banking activities, principally
gains on sale of loans, increased as a result of higher secondary market sales volume. As a percentage of loans sold, net
gains on sale decreased to 1.20% in 2001 compared to 1.26% in 2000. This reduction was due primarily to the “$999”
promotional mortgage loan product that reduced the amount of fees charged to the client. Although the reduced fees low-
ered the net margin on average loan sales, the promotional program generated significant origination volume. Overall, the
Bank originated $548 million in mortgage loans held for sale during 2001 compared to $110 million during 2000.

Net gain on sale of securities was $1.6 million for 2002 compared to $1.9 million during 2001 with a loss of $161,000
in 2000. Management elected to sell $56 million of the Company’s mortgage-backed securities during 2002 to mitigate the
risk of prepayment of these securities.
annual report.)

(For further discussion see section titled Investment Securities on page 31 of this

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25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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A declining interest-rate environment during 2001 led to a positive change in the market value of the available for sale
securities portfolio with an increase in the risk of prepayment on certain mortgage-backed products. As a result, management
elected to sell a large amount of mortgage-backed securities during 2001. Republic received proceeds of  $122 million on
securities available for sale during 2001 resulting in overall gains of approximately $1.6 million. Republic also had $63 
million in securities that were called during 2001 resulting in recognized gains of an additional $257,000.

Interchange fee income from the Company’s debit card product increased $421,000 during 2002 to $1.4 million and

$260,000 during 2001 to $1.0 million. Debit card fee income is generated from interchange fees paid for usage by the
Company’s customers. The rise in income was due substantially to an increase in the Company’s checking account base,
which is the primary source of debit card customers.
In addition, the Company actively promoted its customers use of the
debit card through various marketing promotions throughout 2001 and 2002.

Non-Interest Expense

Table 5 - Analysis of Non-Interest Expense

Year Ended December 31, (dollars in thousands)

Salaries and employee benefits
Occupancy and equipment
Communication and transportation
Marketing and development
Bankshares tax
Supplies
FHLB prepayment penalty
Outsourced technology services
Other

Total

2002

$28,039
9,984
2,329
2,934
1,727
1,139
1,381
1,575
4,731

$53,839

2001

$25,943
9,073
2,319
2,839
1,513
1,170
1,049
1,134
5,300

$50,340

2000

$20,519
8,825
2,084
1,555
1,339
994
–
1,028
3,685

$40,029

Percent
Increase/(Decrease)

2002/2001

2001/2000

8%
10
0
3
14
(3)
32
39
(11)

7%

26%
3
11
83
13
18
NM*
10
44

26%
*Not meaningful

The increase in salaries and benefits was primarily attributable to annual merit increases and associated incentive 
compensation accruals, additional seasonal staff at Refunds Now and a modest increase to staff to support secondary 
market origination volume. The Company also experienced increased staffing and occupancy expenses in association with
the opening of three new banking centers during 2002. Overall, total full-time equivalent employees (FTEs) increased to
570 at December 31, 2002 from 532 at December 31, 2001. Management expects a continued increase in salary and 
occupancy expenses over the next year due to the planned opening of at least six new banking centers during 2003 with 
the potential for additional locations under active, ongoing review.

Similar to 2002, salary and employee benefits also increased for 2001. The increase was attributable to annual
merit increases and associated incentive compensation accruals, additions to senior level commercial lending and cash
management professional sales staff, additions to staff and overtime at Refunds Now and a significant addition to staff
and overtime to support the strong secondary market loan origination volume during the year. Total FTEs increased to
532 at December 31, 2001 from 462 at December 31, 2000.

The Company and its principal bank subsidiary do not pay a state income tax in Kentucky; however, a tax is assessed
by the state based on average equity over the previous five years. Republic Bank & Trust Company also pays a deposit tax
to the various municipalities in which it is located based on total deposits at that location as of June 30th of each year. Both
of these taxes are classified as bankshares tax on the Company’s financial statements. This category increased for both
2001 and 2002 due to growth in deposits, as well as an increase in Republic Bank & Trust Company’s average five-year
equity. The growth in average five-year equity resulted primarily from earnings and the proceeds generated by the
Company’s initial public offering in July 1998.

The Company recognized prepayment penalties of $1.6 million and $1.1 million on the early termination of advances
from the Federal Home Loan Bank during 2002 and 2001, respectively. The Company elected to incur these penalties in
order to refinance a portion of its advances from the Federal Home Loan Bank into lower-cost borrowings with extended
maturities, taking advantage of the favorable interest rate environment at the time.
FHLB borrowings on page 33 of this annual report.)

(For further information see section titled

Outsourced technology services represents expenses incurred by the Company for third party processing of merchant

credit card transactions for a large cash management client, website hosting for republicbank.com and wire transfer services.
This category increased 39% for 2002 compared to 2001. The increase was attributable to higher rates paid by the
Company for merchant credit card processing. The Company also had higher fees for its website hosting due to an increase
in the number of clients utilizing republicbank.com.
In August 2001 the Company began utilizing a third party wire system in
order to maximize the efficiency and security of the Bank’s wire transfer services. As a result, the Company incurred 
additional expense for five months during 2001 compared to 12 months during 2002.

Other expenses decreased $569,000 during 2002 compared to 2001. The decrease was primarily attributable to legal
expenses associated with certain patent litigation at Refunds Now which the Company incurred during 2001. This litigation
was settled during 2001.

(For further discussion, see Part II, Item 1, Legal proceedings of the Form 10-K.)

FINANCIAL CONDITION

Loan Portfolio

Net loans, primarily consisting of secured real estate loans, increased by $124 million to $1.3 billion at December 31, 2002.

In order to reduce the negative effect of refinance activity within the portfolio during a declining interest rate

Commercial real estate loans are concentrated primarily within the Bank’s existing markets, and are principally 
comprised of loans secured by multi-family investment properties, single-family developments, medical facilities, small 
business owner-occupied offices, retail properties and, to a lesser extent, golf courses. These loans typically have interest
rates that are initially fixed for one to seven years with the remainder of the loan term subject to repricing based on various
market indices.
environment, the Company requires an early termination penalty on substantially all commercial real estate loans for a 
portion of the fixed-term period. Overall, commercial real estate loans increased $53 million from December 31, 2001.
Republic maintained its strict underwriting standards, which includes personal guarantees on substantially all commercial
real estate loans, and pricing requirements during 2002 despite competitive pressures in both areas. As a result, the 
commercial real estate portfolio experienced modest growth compared to prior years. Management anticipates offering a
reduced closing-costs commercial real estate product during 2003 and plans to aggressively market this product through
various media outlets, while maintaining its traditional underwriting standards.

Similar to commercial real estate loans, residential real estate loans typically have fixed interest rate periods of one to

seven years with the remainder of the loan term subject to repricing based on various market indices. These loans also
carry an early termination penalty during a portion of their fixed rate periods in order to lessen the overall negative effect to
the Company of refinancings in a declining interest rate environment. Despite early termination penalties on many of its
portfolio residential real estate loans, the Company continued to experience a high level of refinance activity into fixed-rate
secondary market products during 2002. Overall, residential real estate loans increased by a modest $26 million during
2002. Responding to the high level of refinance activity within the portfolio, management elected to hold $60 million of 
15-year, fixed-rate secondary market eligible loans within the Company’s portfolio during the fourth quarter of 2002. To 
mitigate the interest rate risk, the Company borrowed $60 million in FHLB advances with laddered maturities to fund these
loans. Subject to favorable market conditions, the Company may once again elect to hold a portion of its 15-year, fixed rate
loan originations during 2003 with matched funding from the Federal Home Loan Bank. The Company also continued to
moderate the pricing of its 1-4 family adjustable-rate portfolio loan products during 2002 in an effort to maintain its residential
real estate outstandings.

The consumer loan portfolio principally consists of various short-term, unsecured loans to individual clients. Also included
in this category are deferred deposit transactions, which are considered loans under accounting principles generally accepted
in the United States. The Company had approximately $3 million in deferred deposit transactions outstanding at December
31, 2002, and expects this balance to steadily increase throughout 2003.
(For further discussion, see section titled Deferred
Deposit Transactions on page 21 of this annual report.) 

Home equity loans increased $34 million during 2002 to $159 million. The rise in outstandings was primarily the result
of increased cross-sale opportunities in conjunction with the origination of fixed-rate secondary market loan products as part
of the Company’s “partnership package”. As part of the partnership package, the Company’s fixed-rate, secondary market
loan clients are routinely approved for a home equity line of credit. As a result, the Company opened approximately 2,900
new home equity lines of credit during 2002. At December 31, 2002, Republic clients had $145 million of home equity lines
of credit available for use.

Table 6 - Loans by Type

As of December 31, (in thousands)

2002

2001

2000

1999

1998

Real Estate

Residential
Commercial
Construction

Commercial
Consumer
Home Equity

Total Loans

$   597,797
413,115
68,020
33,341
39,347
159,261

$1,310,881

$   571,959
360,056
70,870
30,627
26,905
125,360

$   633,328
256,834
77,437
30,008
32,662
115,467

$   636,012
163,064
63,928
31,411
42,408
103,833

$ 520,583
118,293
47,396
26,381
59,874
106,845

$1,185,777

$1,145,736

$1,040,656

$ 879,372

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Mortgage loans held for sale is primarily comprised of fixed-rate, 1-4 family residential loans the Company intends to sell

into the secondary market. Management has traditionally elected to sell the majority of its fixed-rate, 1-4 family residential
loans into the secondary market in order to reduce its exposure to market interest rate risk. Mortgage loans held for sale
increased to $66 million at December 31, 2002 due primarily to an increase in 1-4 family secondary market loan originations
during the second half of 2002.
this annual report.)

(See discussion of gain on sale of loans in section titled Non-interest Income on page 25 of

Table 7 illustrates Republic's fixed rate maturities and repricing frequency for the loan portfolio:

Table 7 - Selected Loan Distribution

As of December 31, 2002 (in thousands)

Total

One Year
Or Less

Over One
Through Five Years

Five
Years

Similar to 2001, the Company experienced a modest provision for loan losses during the year of 2002. For the twelve
months ended December 31, 2002, the provision for loan losses was $3.3 million compared to $3.5 million during the year
of 2001.
Included in the provision for loan losses were $47 thousand and $1.0 million for Refund Anticipation Loans (RALs)
during 2002 and 2001, respectively. The substantial decrease in losses associated with RALs during 2002 was primarily the
result of a significant reduction of errors in information received from government entities, which is used to underwrite RALs.
The Company also received better than expected cross-collection of prior year losses. This is largely due to the unusually
high charge-offs experienced during 2001 that in turn led to increased recovery opportunities during the 2002 tax season.
Management does not believe, however, that this low loss rate can be sustained in future periods and expects a loss rate in
2003 closer to historical percentages.

The provision for loan losses was $3.5 million during 2001 compared to $1.4 million during 2000. The higher provision

for loan losses in 2001 was primarily attributable to an increase in losses associated with the higher volume of RALs at
Refunds Now as well as an increase in losses in the 1-4 family residential and commercial real estate portfolios.

Fixed rate maturities:
Real estate

Residential
Commercial
Construction

Commercial
Consumer
Home equity

Total Fixed

Variable rate repricing:
Real estate

Residential
Commercial
Construction

Commercial
Consumer
Home equity

Total Variable

$

112,782
35,612
1,070
13,812
36,687
1,029

$

200,992

$

485,015
377,503
66,950
19,529
2,660
158,232

$ 1,109,889

$   15,756
9,855
405
6,509
25,406
831

$   58,762

$ 193,573
113,582
65,594
16,908
1,657
158,232

$ 549,546

$ 25,997
8,050
632
6,877
6,529
179

$ 48,264

$ 252,720
250,286
1,356
2,621
908

–   

$ 507,891

$ 71,029
17,707
33
426
4,752
19

$ 93,966

$ 38,722
13,635
–
–
95
–

$ 52,452

Allowance and Provision for Loan Losses

Republic maintains an allowance for probable credit losses inherent in the Company’s loan portfolio. Management 
evaluates the adequacy of the allowance for loan losses on a quarterly basis and regularly presents and discusses the 
analysis with the board of directors. Management estimates the allowance required using past loan loss experience, the
nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, economic 
conditions, regulatory guidance and other factors. While management estimates the allowance for loan losses, in part, based
on historical losses within each loan category, estimates for losses within the commercial real estate portfolio are more
dependent upon credit analysis and recent payment performance due to the fact that the Company only began actively 
pursuing commercial real estate loans within the last five years. Allocations of the allowance may be made for specific
loans or loan categories, but the entire allowance is available for any loan that may be charged off. Loan losses are 
charged against the allowance when management deems a loan uncollectible.

Management makes allocations within the allowance for specifically classified loans regardless of loan amount, collateral

or loan type. Loans that are past due 90 days or more and that are not specifically classified are uniformly assigned a 
risk-weighted percentage ranging from 15% to 100% of the loan balance based upon loan type. Management evaluates the
remaining loan portfolio by utilizing the historical loss rate for each respective loan type. Both an average five-year loss rate
and a loss rate based on heavier weighting of the previous two years’ loss experience are utilized in the analysis.
Specialized loan categories are evaluated by utilizing subjective factors in addition to a historical loss calculation to determine a
loss allocation for each of those types. Because this analysis or any similar analysis is an imprecise measure of loss, the
allowance is typically subject to additional adjustments. Therefore, management will also take into account other significant
factors as may be necessary or prudent in order to reflect, properly, potential losses in the total loan portfolio.

The total allowance for loan losses increased $2 million from December 31, 2001 to $10 million at December 31, 2002.
The increase in the allowance for loan losses was due to growth in commercial real estate lending, an overall change in the
product mix within the loan portfolios including growth in deferred deposit transactions, and to account for the modest increase
in non-performing loans. Management believes, based on information presently available, that it has adequately provided for
loan losses at December 31, 2002. Management continues to closely monitor the commercial real estate loan portfolio in 
particular, recognizing that commercial real estate loans generally carry a greater risk of loss than residential real estate loans.

Table 8 - Summary of Loan Loss Experience

Year Ended December 31, (dollars in thousands)

2002

2001

2000

1999

Allowance for loan losses at beginning of year

$ 8,607

$ 7,862

$ 7,862

$ 7,862

Charge-offs:
Real estate

Residential
Commercial
Construction

Commercial
Consumer
Home equity
Tax refund loans

Total

Recoveries:

Real estate

Residential
Commercial
Construction

Commercial
Consumer
Home equity
Tax refund loans

Total

Net loan charge-offs
Provision for loan losses

(706)
(420)
(255)
(444)
(705)
(164)
(1,482)

(4,176)

88
159
12
271
412
2
1,435

2,379

(1,797)
3,338

(798)
(703)
(8)
(114)
(818)
(182)
(1,550)

(4,173)

40
313
–
24
502
65
481

1,425

(2,748)
3,493

1998

$ 8,176

(165)
(500)
(352)
(79)
(2,828)
–
–

(3,924)

7
–
–
4
489
–
–

500

(241)
(571)
(115)
(51)
(734)
(78)
(500)

(2,290)

34
5
–
15
616
9
229

908

(404)
(77)
(61)
(97)
(1,508)
(51)
(200)

(2,398)

15
–
–
8
557
–
12

592

(1,382)
1,382

(1,806)
1,806

(3,424)
3,110

Allowance for loan losses at end of year

$10,148

$ 8,607

$ 7,862

$ 7,862

$ 7,862

Ratios:

Allowance for loan losses to total loans
Net loan charge-offs to average 

loans outstanding for the period

Allowance for loan losses to 
non-performing loans

0.77%

0.73%

0.69%

0.76%

0.89%

0.15

103

0.23

154

0.12

193

0.19

213

0.40

158

Table 9 depicts management's allocation of the allowance for loan losses by loan type. Allowance allocation is based
on management's assessment of economic conditions, past loss experience, loan volume, past-due history and other factors.
Since these factors and management’s assumptions are subject to change, the allocation is not necessarily indicative of
future loan portfolio performance.

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O
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A
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A
L
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S
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O
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F
N
A
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A
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O
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O
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N
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M
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A
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A
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I

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N
O
T
A
R
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P
O
F
O
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T
L
U
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D
N
A
N
O
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D
N
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Table 9 - Management's Allocation of the Allowance for Loan Losses

2002

2001

2000

Percent
of Loans
to Total
Loans

46%
31
5
3
3
12
100%

Allowance

$  1,283
6,986
764
322
700
93
$10,148

Percent
of Loans
to Total
Loans

48%
30
6
3
2
11
100%

Allowance

$

892
5,761
759
458
647
90
$ 8,607

Percent
of Loans
to Total
Loans

55%
22
7
3
3
10
100%

Allowance

$ 1,597
4,322
953
385
517
88
$ 7,862

As of December 31, (dollars in thousands)
Real estate:
Residential
Commercial
Construction

Commercial
Consumer
Home Equity
Total

Asset Quality

Loans, including impaired loans under SFAS 114 and excluding consumer loans, are placed on non-accrual status when
they become past due 90 days or more as to principal or interest, unless they are adequately secured and in the process of
collection. When loans are placed on non-accrual status, all unpaid accrued interest is reversed. These loans remain on
non-accrual status until the borrower demonstrates the ability to remain current or the loan is deemed uncollectible and is
charged off. Consumer loans are not placed on non-accrual status but are reviewed periodically and charged off when they
reach 120 days past due or earlier if they are deemed uncollectible. At December 31, 2002, Republic had $122,000 in 
consumer loans 90 days or more past due compared to $89,000 at December 31, 2001.

The Bank’s level of delinquent loans decreased to 1.02% at December 31, 2002, down from 1.73% at December 31,
2001. The improvement is primarily attributable to a small number of real estate secured loans that reached maturity and
were pending refinance by the Company or another financial institution at December 31, 2001. A majority of these loans
were either paid off by the borrower or refinanced by the Company during 2002, thus resolving their prior past-due status.

Republic experienced an increase in total non-performing loans from $5.6 million at December 31, 2001 to $9.9 million at

December 31, 2002. The increase in non-accrual loans was spread across all major real estate secured lending categories.
The increase in loans past due 90-days or more was primarily attributable to one commercial real estate loan which
matured prior to year-end 2002 and was in the process of being refinanced by the Company. Management believes that
substantially all loans in the non-performing category are well secured with a minimal risk of a material loss. Management
does not consider the increase in non-performing loans indicative of any adverse change in the overall asset quality of the
Company’s total loan portfolio, however, the increase in non-performing loans was taken into consideration in establishing
the Company’s allowance for loan losses.

Table 10 - Non-Performing Assets

As of December 31, (dollars in thousands)

Loans on non-accrual status(1)
Loans past due 90 days or more
Total non-performing loans
Other real estate owned

Total non-performing assets

2002

$ 7,967
1,915
9,882
320
$10,202

2001

$ 5,056
521
5,577
149
$ 5,726

2000

$ 3,100
984
4,084
478
$ 4,562

1999

$ 2,721
968
3,689
218
$ 3,907

1998

$ 3,258
1,731
4,989
540
$ 5,529

Percentage of non-performing loans to total loans
Percentage of non-performing assets to total loans

0.75%
0.78

0.47%
0.48

0.36%
0.40

0.35%
0.38

0.57%
0.63

(1)

Loans on non-accrual status includes impaired loans. See note 4 to the Consolidated Financial Statements for additional discussion on impaired loans.

Republic defines impaired loans to be those commercial loans greater than $499,999 that management has classified
as doubtful (collection of total amount due is highly questionable or improbable) or loss (all or a portion of the loan has
been written off or a specific allowance for loss has been provided). Republic's policy is to charge off all or that portion of
its investment in an impaired loan upon a determination that it is probable the full amount will not be collected. Impaired
loans, which are a component of loans on non-accrual status, increased from $104,000 at December 31, 2001 to $1.2
million at December 31, 2002.

Investment Securities

Table 11 - Invetsment Securities Portfolio 

December 31, (in thousands)

Securities Available for Sale:

U.S. Treasury and government agencies
Mortgage-backed securities, including CMOs
Corporate bonds
Other securities

Total Securities Available for Sale

Securities to be Held to Maturity:

U.S. Treasury and government agencies
States and political subdivisions
Mortgage-backed securities, including CMOs
Total Securities to be Held to Maturity

2002

2001

2000

1999

1998

$  51,123
151,924
–
–
203,047

8,175
100
77,137
85,412

$  32,023
179,576
–
–
211,599

50,995
200
31,151
82,346

$  87,309
65,556
18,810
125
171,800

40,375
275
63,118
103,768

$  97,029
66,340
18,258
–
181,627

25,353
3,775
3,803
32,931

$123,976
47,806
15,154
–
186,936

25,422
4,077
486
29,985

Total

$288,459

$293,945

$275,568

$214,558

$216,921

The investment portfolio primarily consists of U.S. Treasury and other U.S. Government Agency obligations including
mortgage-backed securities and collateralized mortgage obligations (CMOs). The mortgage-backed securities (MBSs) consist
of 15-year fixed, 7-year balloons, 5-year balloons, 7/1 and 5/1 Adjustable Rate Mortgages (ARMs) as well as other adjustable
rate mortgage securities, underwritten and guaranteed by GNMA, FHLMC and FNMA. CMOs held in the investment portfolio
are substantially all floating rate securities that adjust monthly.
management strategy of the investment portfolio is determined by, among other factors, loan demand, deposit mix, liquidity
and collateral needs, the Company’s interest rate risk position and the overall structure of the balance sheet. As of
December 31, 2002, investment securities with a fair value of $257 million and amortized cost of $253 million were utilized
to secure deposits, securities sold under agreements to repurchase and FHLB advances.

In addition to economic and market conditions, the overall

Securities available for sale decreased from $212 million at December 31, 2001 to $203 million at December 31, 2002.
The decrease in the available for sale portfolio was primarily in CMOs, which decreased  $52 million. The decrease in CMOs
was due to prepayments on the underlying collateral resulting from a declining interest rate environment. The decline in
CMOs was partially offset by a $86.6 million increase in agency mortgage-backed securities. The Company also sold
approximately $56 million in mortgage-backed investment securities during the third quarter of 2002 in anticipation of rapid
prepayments due to declining long-term market interest rates. These securities had a bond equivalent yield of 5.55% at the
time of sale and the Company recognized a gain on sale of $1.6 million. Management anticipates CMOs and mortgage-
backed securities held in the portfolio as of December 31, 2002 may experience rapid prepayments during the first quarter
of 2003 given the low interest rate environment at the time. If these prepayments do occur, the overall yield on the investment
portfolio could be negatively impacted.

Securities in the to be held to maturity portfolio increased from $82 million at December 31, 2001 to $85 million at
December 31, 2002. The Company reallocated funds during 2002 from a maturing $50 million short-term Treasury bill into
floating rate CMOs which reprice monthly. Because management viewed these CMOs as a good long-term investment due
to their floating rate structure and attractive interest rate spread compared to U.S. government securities, they were 
classified as to be held to maturity.

Table 12 - Securities Available for Sale

As of December 31, 2002 (dollars in thousands)

U.S. Treasury and U.S. Government Agencies:

Within one year
Over one through five years

Total U.S. Treasury and Government Agencies
Total mortgage-backed securities  and CMOs
Total securities available for sale 

Amortized
Cost

$    4,998
45,177
50,175
148,936
$199,111

Fair Value

$    5,163
45,960
51,123
151,924
$203,047

Average
Maturity
in Years

Weighted
Average
Yield

0.80
1.82
1.72
5.02
4.19

5.46%
3.86
4.02
4.63
4.47

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N
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31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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N
O
T
A
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P
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F
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L
U
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N
A
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D
N
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Table 13 - Securities to be Held to Maturity

FHLB Borrowings

As of December 31, 2002 (in thousands)
U.S. Treasury and U.S. Government Agencies:

Within one year
Over one through five years
Over five through ten years
Total U.S. Treasury and Government Agencies

Obligations of states and political subdivision:

Within one year
Total obligations of state and political subdivisions
Total mortgage-backed securities and CMOs

Total securities to be held to maturity 

Amortized
Cost

$ 1,000
2,179
4,996
8,175

100
100
77,137
$85,412

Fair Value

$     999
2,200
4,996
8,195

102
102
77,186
$85,483

Average
Maturity
in Years

Weighted
Average
Yield

0.85
1.29
9.84
6.46

0.67
0.67
6.71
6.68

2.12%
3.00
2.78
2.76

4.70
4.70
2.89
2.88

Deposits

Total deposits were $1.0 billion at December 31, 2002 compared to $866 million at December 31, 2001. Non-interest
bearing deposits increased $46 million since December 31, 2001 to $175 million. This increase is related to management’s
continued focus on gathering lower cost funds through the Company’s free checking promotions and Cash Management
services. Because these accounts are typically transaction based, they are likely to have fluctuating balances from period to
period. Non-interest bearing deposits also include various escrow accounts, which are subject to balance fluctuations from
period to period as well.

The Bank’s interest-bearing demand accounts, primarily NOW and money markets, increased $175 million during 2002
as the Company heavily promoted the “High Interest Checking” NOW product and the “Premier First” money market product
through direct advertising and premium rate offerings. A significant portion of the increase in these products were from
funds transferred from other Republic Bank accounts such as money market certificates of deposit and securities sold under
agreements to repurchase. New products with premium rate offerings, while attracting client funds from outside the
Company, also negatively impact Republic’s deposit products paying lower rates of interest. The Company also had an
increase in jumbo certificates of deposit during 2002 as this product was heavily promoted in the banking centers and
through Internet banking at various times throughout the first half of the year.

Table 14 - Deposits

December 31, (in thousands)

Demand (NOW, SuperNOW and Money Market)
Savings
Money market certificates of deposit
Individual retirement accounts
Certificates of deposit, $100,000 and over
Other certificates of deposit
Brokered deposits

Total interest bearing deposits

Total non-interest bearing deposits

2002

$   360,777
23,993
80,190
37,530
111,204
249,798
1,238

864,730

175,460

2001

2000

1999

1998

$ 185,447
16,293
155,601
34,299
87,154
258,012
–

736,806

129,552

$ 206,511
12,584
76,818
32,933
106,313
321,185
100

756,444

107,317

$ 204,071
12,158
43,152
29,380
91,848
319,558
16,486

716,653

84,256

$ 179,804
12,330
35,139
23,353
77,365
309,938
28,873

666,802

80,345

Total

$1,040,190

$ 866,358

$ 863,761

$ 800,909

$ 747,147

Securities Sold Under Agreements to Repurchase and Other Short-Term Borrowings

Securities sold under agreements to repurchase and other short-term borrowings decreased $57 million. Approximately
$45 million of this decline was due to a switch in product type by several clients into the Company’s higher yielding “Premier
First” money market product. The remaining decline was primarily due to decreases in a small number of the Company’s
larger cash management accounts. Because these accounts are transaction based, they are inherently subject to large 
periodic balance changes.

FHLB borrowings increased by $22 million during the year to $319 million at December 31, 2002. The increase in 
borrowings was primarily the result of the $60 million in new advances the Company entered into during the fourth quarter
of 2002 to fund the newly originated 15-year, fixed-rate loans that were held within the portfolio. The weighted-average
cost of these advances was 3.23% with a weighted-average maturity of 3.6 years. The increase in FHLB borrowings as a
result of this transaction was partially offset by the maturity of a $30 million advance during August 2002 with a coupon of
6.96%. The Company also elected to prepay a $25 million advance with a coupon of 6.40% during September of 2002 
recognizing a one-time penalty of $1.4 million.

Approximately $115 million of the Company’s advances are fixed with original maturities ranging from two through five

years. Of these fixed rate advances, $60 million is scheduled to mature in January 2003 with a coupon of 5.88%.
Management will likely refinance these advances on an overnight basis in the near-term. Subject to market conditions,
management may elect to extend the maturities on these advances for a longer-term at some time during 2003.

The remaining $204 million in the Company’s borrowings consists of convertible advances with original fixed-rate 
periods ranging from one to five years and original maturities ranging from three to ten years. At the end of their respective
fixed-rate periods, the Federal Home Loan Bank has the right to convert the borrowings to floating-rate advances tied to
LIBOR.
advances without penalty. The Company has $10 million in these advances that are currently eligible to be converted on
their quarterly repricing date. Based on market conditions at this time, management does not believe these advances are
(See Note 9 regarding FHLB borrowings.) 
likely to be converted in the near-term.

If the FHLB elects to convert the debt to a floating rate instrument, Republic also has the right to pay off the

Liquidity

Republic maintains sufficient liquidity to fund loan demand and routine deposit withdrawal activity. Liquidity is man-
aged by retaining sufficient liquid assets in the form of investment securities and core deposits to meet demand. Funding
and cash flows can also be realized by the sale of securities in the available-for-sale portion of the investment portfolio,
principal paydowns on loans and mortgage-backed securities and proceeds realized from the loans held-for-sale category.
Republic’s banking centers and its Internet site, republicbank.com, also provide access to retail deposit markets. These
retail deposits, if offered at attractive rates, have historically been a source of funding when needed. Traditionally, the Bank
has also utilized borrowings from the FHLB to supplement its funding requirements. At December 31, 2002, the Bank had
$42 million of borrowing capacity with the FHLB. While Republic utilizes numerous funding sources in order to meet liquidity
requirements, the Company also has $40 million in approved unsecured line of credit facilities available at December 31, 2002
through various third party sources.

Capital

Total stockholders’ equity increased from $125 million at December 31, 2001 to $151 million at December 31, 2002.
The increase in stockholders’ equity was primarily attributable to net income earned during 2002. There was also a positive
impact on accumulated other comprehensive income as a result of the increased value of the available for sale securities
portfolio.
directors and a $5.1 million conversion of the Company’s guaranteed preferred beneficial interests in Republic’s subordinated
debentures into Class A Common Stock. These debentures were already previously included as a component of capital for
regulatory purposes. (For further discussion of the Company’s guaranteed preferred beneficial interests in Republic’s 
subordinated debentures see Note 10 of the consolidated financial statements included in this annual report.)

In addition, stockholders’ equity increased as a result of stock options exercised by Republic’s employees and

In 1998 and 1999, Republic Bancorp’s board of directors approved a Class A share repurchase program of 500,000
shares. Through December 31, 2002, Republic purchased approximately 471,000 shares with a weighted-average cost of
$10.12, and a total cost of $4.8 million. The Company was authorized to buy back an additional 29,000 shares of Class A
Common Stock under this program as of December 31, 2002.

Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent

on the individual risk profiles of financial institutions. Republic continues to exceed the regulatory requirements for Tier I,
Tier I leverage and total risk-based capital. The Bank intends to maintain a capital position that meets or exceeds the "well
capitalized" requirements as defined by the FDIC. Republic’s average capital to average assets ratio was 8.65% at
December 31, 2002 compared to 7.96% at December 31, 2001. (For further analysis, see Note 13 of the consolidated 
financial statements included in this annual report.)

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33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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N
O
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Off Balance Sheet Arrangements and Aggregate Contractual Obligations

Table 15 – Off balance sheet items

(by thousands)

Stand-by letters of credit
Lease commitments
FHLB letters of credit
Commitments to extend credit
Mortgage Banking Commitments

Rate-lock commitments
Mandatory forward sales contracts

Maturity by Period

Greater than
1 year to
3 years

Greater than
3 years to
5 years

$   13,460
4,394
13,137
11,633

$ 14,727
2,334
14,725
274

Greater than
5 years

$

$ 1,836
15,466
–
3,913

–
–

–
–

–
–

Total

32,542
24,762
107,862
257,621
–
161,648
195,809

Less than
1 year

$   2,519
2,568
80,000
241,801

161,648
195,809

Stand-by letters of credit represent commitments by the Company to repay a third-party beneficiary when a customer
fails to repay a loan or debt instrument. The terms and risk of loss involved in issuing standby letters of credit are similar to
those involved in issuing loan commitments and extending credit.
In addition to credit risk, the Company also has liquidity
risk associated with stand-by letters of credit because funding for these obligations could be required immediately.

Lease commitments represents the total minimum lease payments under noncancelable operating leases.

The Company obtained letters of credit from the FHLB to be used as collateral on public funds deposits and as credit
enhancements for client bond offerings. Approximately $28 million of these letters of credit at December 31, 2002 were
used as credit enhancements for client bond offerings. The remaining $80 million was used to collateralize a public funds
deposit, which the Company classifies as a short-term borrowing. These letters of credit reduce Republic’s available 
borrowing line at the Federal Home Loan Bank by $108 million.

Commitments to extend credit are loan commitments, which assure a borrower of financing for a specified period of

time at a specified rate on a loan Republic intends to hold in its portfolio. The risk to Republic under such commitments is
limited to the terms of the contracts. For example, Republic may not be obligated to advance funds if the customer’s financial
condition deteriorates or if the customer fails to meet specific covenants. An approved, but unfunded, loan commitment 
represents a potential credit risk once the funds are advanced to the customer. This is also a liquidity risk since the 
customer may demand immediate cash that would require funding, and interest rate risk as market interest rates may rise
above the rate committed.

Republic’s mortgage banking activities generally includes two types of commitments by the Company. The first is a rate

lock commitment with the client.
In a rate-lock commitment, a client while in process of obtaining approval for a fixed-rate
secondary market loan can, at his own determination, fix or “lock in” his rate on the loan. The commitments are generally
for periods of 60 to 90 days and are at market rates. To mitigate risk from market interest rate fluctuations and to deliver
these loans into the secondary market, Republic generally enters into mandatory forward sales contracts on rate-lock 
commitments. The Company also has mandatory sales contracts covering loans held for sale, which no longer represent 
a rate-lock commitment.

Asset/Liability Management and Market Risk

Asset/liability management control is designed to ensure safety and soundness, maintain liquidity and regulatory capital

standards, and achieve acceptable net interest income.
interest income as a result of market fluctuations in interest rates. Management, on an ongoing basis, monitors interest rate
and liquidity risk in order to implement appropriate funding and balance sheet strategies. Management considers interest
rate risk to be Republic’s most significant market risk.

Interest rate risk is the exposure to adverse changes in the net

Republic utilizes an earnings simulation model to analyze net interest income sensitivity. Potential changes in market

interest rates and their subsequent effects on net interest income are then evaluated. The model projects the effect of
instantaneous movements in interest rates of both 100 and 200 basis points. Assumptions based on the historical behavior
of Republic’s deposit and loan rates and their related balances in relation to changes in interest rates are also incorporated
into the model. These assumptions are inherently uncertain and, as a result, the model cannot precisely measure future net
interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results
will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes as well as
changes in market conditions and the application and timing of various management strategies.

Republic’s interest sensitivity profile reflected little change from December 31, 2001 to December 31, 2002. Given a sus-

tained 100 basis point downward shock to the yield curve used in the simulation model, Republic’s base net interest income
would decrease by an estimated 1.09% at December 31, 2002 compared to a decrease of 1.22% at December 31, 2001.

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I

Given a 100 basis point increase in the yield curve Republic’s base net interest income would decrease by an estimated
2.48% at December 31, 2002 compared to a decrease of 2.41% at December 31, 2001.

Historically, Republic’s net interest margin declined in a rising interest rate environment. While this fact remains, the
Company improved its risk position in 2001 from rising interest rates by extending advances from the Federal Home Loan
Bank. The Company has generally maintained this improved risk position during 2002.
In a declining interest rate environ-
ment, the Company’s net interest income historically increased. Given the low level of market interest rates as of December
31, 2002, however, the Company may not experience a corresponding improvement in net interest income from a further
decline in market interest rates as the interest paid on selected deposit products may not be subject to further material
reductions.

The interest sensitivity profile of Republic at any point in time will be affected by a number of factors. These factors

include the mix of interest sensitive assets and liabilities as well as their relative pricing schedules.
market interest rates, deposit growth, loan growth, and other factors.

It is also influenced by

Tables 16 and 17 illustrate Republic's estimated annualized earnings sensitivity profile based on the asset/liability

model as of year-end 2002 and year-end 2001, respectively:

Table 16 - Interest Rate Sensitivity for 2002

(dollars in thousands)

Projected interest income
Short-term investments
Investments
Loans, excluding fees

Total interest income

Projected interest expense

Deposits
Securities sold under 

agreements to repurchase

Other borrowed funds

Total interest expense

Net interest income
Change from base
% Change from base

Decrease in Rates
100
200
Basis Points
Basis Points

$       66
8,520
81,382
89,968

16,289

793
13,877
30,959

$

67
9,304
84,232
93,603

17,675

1,161
13,877
32,713

$ 59,009
$ (2,554)

(4.15)%

$ 60,890
(673)
$
(1.09)%

Table 17 - Interest Rate Sensitivity for 2001

(dollars in thousands)

Projected interest income
Short-term investments
Investments
Loans, excluding fees

Total interest income

Projected interest expense

Deposits
Securities sold under 

agreements to repurchase

Other borrowed funds

Total interest expense

Net interest income
Change from base
% Change from base

Decrease in Rates

200
Basis Points

100
Basis Points

$     165
9,374
82,075
91,614

16,068

2,550
15,871
34,489

$ 57,125
$  (2,849)

$     360
10,540
85,238
96,138

17,550

3,355
15,992
36,897

$ 59,241
$    (733)

(4.75)%

(1.22)%

Increase in Rates

100
Basis Points

200
Basis Points

$       549
12,890
90,437
103,876

$

665
14,588
94,513
109,766

Base

$     266
11,173
86,552
97,991

19,681

24,476

2,870
13,877
36,428

$61,563

5,485
13,877
43,838

29,199

8,077
14,060
51,336

$ 60,038
$ (1,525)

(2.48)%

$ 58,430
(3,133)
$
(5.09)%

Increase in Rates

100
Basis Points

200
Basis Points

$     1,614
13,333
92,130
107,077

$     1,893
15,064
95,945
112,902

Base

$       969
11,958
88,517
101,444

20,071

23,919

5,286
16,113
41,470

$ 59,974

8,505
16,124
48,548

27,642

11,730
16,204
55,576

$ 58,529
$    (1,445)

$ 57,326
(2,648)
$

(2.41)%

(4.42)%

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Market and Dividend Information

Republic’s Class A Common Stock is traded on the Nasdaq National Market System (NASDAQ) under the symbol
“RBCAA”. The following table sets forth the high and low closing prices of the Class A Common Stock and the dividends
paid on the Class A Common Stock and Class B Common Stock during the past two years.

Quarter Ended
March 31
June 30
September 30
December 31

Quarter Ended
March 31
June 30
September 30
December 31

Market Value

Dividend

2002

High
$ 13.72
12.65
13.18
12.25

High
$   9.19
13.18
14.51
13.99

Low
$ 10.55
10.56
10.44
10.28

Low
$   6.19
8.13
10.70
12.10

Market Value

2001

Class A
$ 0.044
0.055
0.055
0.055

Class A
$ 0.044
0.044
0.044
0.044

Class B
$ 0.040
0.050
0.050
0.050

Class B
$ 0.040
0.040
0.040
0.040

Dividend

There is no established public trading market for the Class B Common Stock. At February 12, 2003, the Class A
Common Stock was held by 813 shareholders of record, and the Class B Common Stock was held by 208 shareholders of
record. The Company intends to continue its historical practice of paying quarterly cash dividends although there is no
assurance by the board of directors that such dividends will continue to be paid in the future. The payment of dividends in
the future is dependent on future income, financial position, capital requirements, the discretion and judgment of the Board
of Directors and other considerations.
described in Note 13 to the Company’s consolidated financial statements.

In addition, the payment of dividends is subject to the regulatory restrictions

NEW ACCOUNTING PRONOUNCEMENTS

See discussion in Note 1 to financial statements for a discussion of recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information for this item is incorporated by reference to the Asset /Liability Management and Market Risks section

on page 34 through 35 of Part 1, Item 2., Management’s Discussion and Analysis of Financial Condition and Results of
Operations, of this report.

Item 4. Controls and Procedures Disclosure

Within the 90-day period prior to the filing date of this report, an evaluation was carried out under the supervision and

with the participation of Republic’s management, including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) under
the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that the Company’s disclosure controls and procedures are, to the best of their knowledge, effective to ensure
that information required to be disclosed by Republic in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and
forms. Subsequent to the date of their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that
there were no significant changes in Republic’s internal controls or in other factors that could significantly affect its internal
controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
of Republic Bancorp, Inc.

We have audited the accompanying consolidated balance sheets of Republic Bancorp, Inc. and subsidiaries as of December
31, 2002 and 2001, and the related consolidated statements of income and comprehensive income, stockholders’ equity and
cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsi-
bility of Republic’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 dis-
closures in the financial statements. An audit also includes assessing the accounting principles used and significant esti-
mates 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 consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Republic Bancorp, Inc. and subsidiaries as of December 31, 2002 and 2001, and the results of their operations
and their cash flows for each of the three years in the period ending December 31, 2002, in conformity with accounting prin-
ciples generally accepted in the United States of America.

Crowe, Chizek and Company LLP

Louisville, Kentucky
January 10, 2003

36

37

 
 
 
 
 
 
 
 
 
 
December 31, (in thousands, except share data) 

2002

2001

YEARS ENDED DECEMBER 31, (in thousands, except per share data)

2002

ASSETS:

Cash and cash equivalents
Securities available for sale
Securities to be held to maturity
Mortgage loans held for sale
Loans, less allowance for loan losses

of $10,148 and $8,607 (2002 and 2001)

Federal Home Loan Bank stock
Premises and equipment, net
Other assets and accrued interest receivable

TOTAL

LIABILITIES:
Deposits:

Non-interest bearing
Interest bearing

Securities sold under agreements to repurchase

and other short term borrowings

FHLB borrowings
Guaranteed preferred beneficial interests in

Republic’s subordinated debentures

Other liabilities and accrued interest payable

Total liabilities

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:

Preferred stock, no par value, 100,000 shares authorized

Series A 8.5% noncumulative convertible

Class A common stock, no par value, 30,000,000 shares

authorized, 14,852,153 shares (2002) and 
14,027,284 shares (2001) issued and outstanding;  
Class B common stock, no par value,
5,000,000 shares authorized, 1,979,414 shares 
(2002) and 2,078,731 shares (2001) issued and outstanding

Additional paid-in capital
Retained earnings
Unearned shares in employee stock ownership plan
Accumulated other comprehensive income

Total stockholders’ equity

TOTAL

See accompanying notes.

$

39,853
203,047
85,412
65,695

1,299,915
18,324
23,152
17,308

$

35,569
211,599
82,346
35,492

1,176,094
17,375
19,590
12,766

$ 1,752,706

$ 1,590,831

$

175,460
864,730

$

129,552
736,806

224,929
319,299

–
17,492

1,601,910

282,023
296,950

5,852
14,533

1,465,716

–

–

4,120
39,174
107,567
(2,663)
2,598

150,796

$ 1,752,706

3,953
33,017
90,873
(3,005)
277

125,115

$ 1,590,831

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INTEREST INCOME:

Loans, including fees
Securities
Taxable
Non-taxable

Other

Total interest income

INTEREST EXPENSE:

Deposits
Securities sold under agreements to

repurchase
FHLB borrowing

Total interest expense

NET INTEREST INCOME

PROVISION FOR LOAN LOSSES

NET INTEREST INCOME AFTER PROVISION

FOR LOAN LOSSES

NON-INTEREST INCOME:

Service charges on deposit accounts
Electronic refund check fees
Title insurance commissions
Net gain on sale of mortgage loans
Net gain (loss) on sale of securities
Debit card interchange fee income
Other

Total non-interest income

NON-INTEREST EXPENSE:

Salaries and employee benefits
Occupancy and equipment
Communication and transportation
Marketing and development
Bankshares tax
Supplies
FHLB prepayment penalty
Outsourced technology services
Other

Total non-interest expense

INCOME BEFORE INCOME TAXES

INCOME TAXES

NET INCOME

$   92,154

12,219
8
1,720

106,101

22,819

3,246
15,696

41,761

64,340

3,338

61,002

8,314
3,198
2,129
6,998
1,559
1,441
883

24,522

28,039
9,984
2,329
2,934
1,727
1,139
1,381
1,575
4,731

53,839

31,685

11,196

2001

$ 102,324

12,775
11
2,286

117,396

32,706

8,529
16,682

57,917

59,479

3,493

55,986

6,267
2,087
1,515
6,191
1,864
1,020
797

19,741

25,943
9,073
2,319
2,839
1,513
1,170
1,049
1,134
5,300

50,340

25,387

8,579

2000

$ 100,422

16,309
89
1,840

118,660

37,521

13,819
15,511

66,851

51,809

1,382

50,427

4,410
1,070
298
1,417
(161)
760
1,065

8,859

20,519
8,825
2,084
1,555
1,339
994

1,028
3,685

40,029

19,257

6,336

$   20,489

$ 16,808

$ 12,921

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Change in unrealized gain on securities
Reclassification of realized amount
Net unrealized gain recognized in 

comprehensive income

COMPREHENSIVE INCOME

EARNINGS PER SHARE, BASIC

Class A
Class B

EARNINGS PER SHARE ASSUMING DILUTION

Class A 
Class B

See accompanying notes.

$     3,334
(1,013)

2,321

$   22,810

$

1.23
1.21

1.20
1.19

$    1,948
(1,219)

729

$   17,537

$      1.04
1.03

1.01
0.99

$    3,368
106

3,474

$  16,395

$      0.78
0.77

0.76
0.75

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Class A
Shares

14,536

42
(143)

54

23

14,512

155
(763)

48

50

25

14,027

203
(15)

103

508

26

Common Stock
Class B
Shares

2,142

17

(54)

2,105

22

(48)

2,079

3

(103)

Amount

$ 4,099

14
(34)

$ 4,079

44
(182)

12

$ 3,953

49
(3)

121

Additional
Paid In
Capital

$ 33,617

86
(283)

(126)

$ 33,294

808
(1,521)

488

(52)

$ 33,017

1,258
(29)

4,956

(28)

(in thousands, except share data)

BALANCE, January 1, 2000

Stock options exercised, net of shares redeemed
Repurchase of Class A Common
Conversion of Class B Common to  

Class A Common

Commitment of 22,930 shares to be released
under the Employee Stock Ownership Plan

Dividends declared Common:

Class A ($ 0.15125 per share)
Class B ($ 0.13750 per share)
Net changes in accumulated other 

comprehensive income 
Net Income

BALANCE, December 31, 2000

Stock options exercised, net of shares redeemed
Repurchase of Class A Common
Conversion of Class B Common to  

Class A Common

Conversion of Capital Trust Preferred to 

Class A Common

Commitment of 24,649 shares to be released
under the Employee Stock Ownership Plan

Dividends declared Common:
Class A ($ 0.176 per share)
Class B ($ 0.160 per share)
Net changes in accumulated other 

comprehensive income

Net income

BALANCE, December 31, 2001

Stock options exercised, net of shares redeemed
Repurchase of Class A Common
Conversion of Class B Common to  

Class A Common

Conversion of Capital Trust Preferred to

Class A Common

Commitment of 26,499 shares to be released
under the Employee Stock Ownership Plan

Dividends declared Common:
Class A($ 0.209 per share)
Class B($ 0.190 per share)

Net changes in accumulated other 
comprehensive income (loss)

Net income

BALANCE, December 31, 2002

14,852

1,979

$ 4,120

$ 39,174

Retained
Earnings

$  73,600

(691)

(2,194)
(291)

12,921

$  83,345

(385)
(6,113)

(2,449)
(333)

16,808

$   90,873

(203)
(131)

(3,081)
(380)

20,489

$ 107,567

Unearned Shares
in Employee
Stock
Ownership
Plan

Accumulated
Other
Comprehensive
Income (loss) 

$ (3,620)

$ (3,926)

296

3,474

$ (3,324)

$ (452)

319

729

$ (3,005)

$     277

342

2,321

Total
Stockholders’
Equity

$ 103,770

100
(1,008)

170

(2,194)
(291)

3,474
12,921

$ 116,942

467
(7,816)

500

267

(2,449)
(333)

729
16,808

$ 125,115

1,104
(163)

5,077

314

(3,081)
(380)

2,321
20,489

$ (2,663)

$  2,598

$ 150,796

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YEARS ENDED DECEMBER 31, (in thousands)

OPERATING ACTIVITIES:

Net income
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization, net
FHLB stock dividends
Provision for loan losses
Net gain on sale of mortgage loans
Net (gain) loss on sale of securities
Proceeds from sale of mortgage loans held for sale
Origination of mortgage loans held for sale
Employee Stock Ownership Plan expense
Changes in assets and liabilities:

Accrued interest receivable and other assets
Accrued interest payable and other liabilities

Net cash provided by (used in) operating activities

INVESTING ACTIVITIES:

Purchases of securities available for sale
Purchases of securities to be held to maturity
Proceeds from maturities of securities to be held to maturity
Proceeds from maturities and paydowns of securities

available for sale

Proceeds from sales of securities available for sale
Net increase in loans
Net purchases of premises and equipment, net

Net cash used in investing activities

FINANCING ACTIVITIES:

Net increase in deposits
Net increase (decrease) in securities sold under agreements

to repurchase and other short-term borrowings

Payments on other borrowed funds
Proceeds from other borrowed funds
Repurchase of Class A common stock
Redemption of the Company’s guaranteed preferred beneficial

interests in Republic’s subordinated debentures
Proceeds from common stock options exercised
Cash dividends paid

Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS AT END OF YEAR

SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION:
Cash paid during the year for:

Interest
Income taxes

SUPPLEMENTAL NONCASH DISCLOSURES:

Transfers from loans to other real estate owned
Transfers of securities to be held to maturity 

to securities available for sale

Conversion of the Company’s guaranteed preferred 
beneficial interests in Republic’s subordinated 
debentures to Class A Common Stock

Client transfers from securities sold under
agreements to repurchase to deposits

See accompanying notes.

2002

2001 

2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

$ 20,489

$ 16,808

$ 12,921

4,262
(949)
3,338
(6,998)
(1,559)
767,452
(790,657)
314

(4,967)
2,729

(6,546)

(333,751)
(101,590)
98,474

288,937
58,227
(127,929)
(7,560)

(125,192)

134,348

(17,610)
(70,258)
92,607
(163)

(775)
1,104
(3,231)

136,022

3,736
(1,204)
3,493
(6,191)
(1,864)
523,663
(547,735)
267

2,267
2,622

(4,138)

(248,731)
(80,845)
139

191,715
122,516
(43,680)
(3,955)

(62,841)

4,132
(1,117)
1,382
(1,417)
161
113,768
(110,172)
170

(1,196)
998

19,630

(61,159)
(88,109)
17,438

48,248
27,569
(107,842)
(4,613)

(168,468)

2,597

62,852

19,022
(99,837)
150,737
(7,816)

–
467
(2,837)

62,333

47,283
(305,531)
320,198
(1,008)

–
100
(2,368)

121,526

4,284

(4,646)

(27,312)

35,569

$ 39,853

40,215

$ 35,569

67,527

$ 40,215

$ 38,036
11,600

$ 59,076
8,701

$ 66,361
6,284

770

–

5,077

39,484

624

1,441

102,153

–

–

–

–

–

Principles of Consolidation and Business - The consolidated financial statements include the accounts of Republic
Bancorp, Inc. (Parent Company) and its wholly-owned subsidiaries: Republic Bank & Trust Company and Republic Bank & Trust
Company of Indiana (together referred to as “Bank”), Republic Capital Trust and Republic Mortgage Company (collectively
“Republic” or “the Company”). The consolidated financial statements also include the wholly-owned subsidiaries of Republic
Bank & Trust Company: Republic Financial Services, LLC (d/b/a Refunds Now) and Republic Insurance Agency, LLC. All 
significant intercompany balances and transactions have been eliminated.

Republic operates 26 banking centers, primarily in the retail banking industry and conducts its operations predominately

in metropolitan Louisville, central Kentucky, southern Indiana and through an Internet banking software application.
Republic’s consolidated results of operations are dependent upon net interest income, which is the difference between the
interest income on interest-earning assets and the interest expense on interest-bearing liabilities. Principal interest-earning
assets are securities and real estate mortgage, commercial and consumer loans. Interest-bearing liabilities consist of 
interest-bearing deposit accounts and short-term and long-term borrowings.

Other sources of income include fees charged to customers for a variety of banking services such as transaction deposit
accounts and trust services. Republic also generates revenue from its mortgage banking activities, which include the 
origination and sale of loans in the secondary market and servicing loans for others, and through electronic tax refund services.

Republic’s operating expenses consist primarily of salaries and employee benefits, occupancy and equipment expenses,

marketing and development, communications and transportation costs and other general and administrative expenses.
Republic’s results of operations are significantly affected by general economic and competitive conditions, particularly
changes in market interest rates, government policies and actions of regulatory agencies.

Use of Estimates - Financial statements prepared in conformity with accounting principles generally accepted in the
United States of America require management to make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported
amounts of revenues and expenses during the reporting periods. Estimates that are particularly subject to change include
the allowance for loan losses and the fair value of financial instruments. Actual results could differ from these estimates.

Cash Flows - Cash and cash equivalents includes cash, deposits with other financial institutions under 90 days and 

federal funds sold. Net cash flows are reported for loan, deposit and other borrowing transactions.

Securities - Securities to be held to maturity are those which Republic has the positive intent and ability to hold to 
maturity and are reported at cost, adjusted for premiums and discounts that are recognized in interest income using the
interest method over the period to maturity.

Securities available for sale, carried at fair value, consist of securities not classified as trading securities or as held to
maturity securities. Unrealized holding gains and losses, net of tax, on securities available for sale are reported as a separate
component of stockholders’ equity until realized. Gains and losses on the sale of available for sale securities are determined
using the specific-identification method. Premiums and discounts are recognized in interest income using the interest method
over the period to maturity.

In conjunction with Republic’s adoption of new guidance regarding accounting for derivative instruments and hedging

activities, on January 1, 2001 Republic transferred substantially all of its securities classified as held to maturity at that date
to available for sale.

Declines in the fair value of individual securities below their cost that are other than temporary result in write-downs of

the individual securities to their fair value. The related write-downs are included in earnings as realized losses.

Federal Home Loan Bank stock is carried at cost.

Mortgage Banking Activities - Mortgage loans originated and intended for sale in the secondary market are carried at
the lower of aggregate cost or market value. To deliver closed loans to the secondary market and to control its interest rate
risk prior to sale, Republic enters non-exchange traded mandatory forward sales derivative contracts. The aggregate market
value of mortgage loans held for sale considers the price of the sales contracts.

On July 1, 2002, Republic became subject to new accounting guidance for certain commitments to originate loans. The

new guidance requires loan commitments related to the origination of mortgage loans held for sale to be accounted for as
derivative instruments. Republic’s commitments are for fixed rated mortgage loans, generally lasting 60 to 90 days and are
at market rates when initiated. Considered derivatives, Republic had commitments to originate $161 million in loans as of
December 31, 2002, which it intends to sell after the loans are closed. Because sales contract derivatives are entered into

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for amounts and terms offsetting the interest rate risk of loan commitment derivatives and both are carried at their fair value
with changes included in earnings and substantially offset, the impact of adopting this guidance was not material.
Substantially all of the gain on sale generated from mortgage banking activities continues to be recorded when closed loans
are delivered into the sales contracts.

Servicing rights are recognized as assets for purchased rights and for the allocated value of retained servicing rights on

loans sold. Servicing rights are expensed in proportion to, and over the period of, estimated net servicing revenues.
Impairment is evaluated based on the fair value of the rights, using groupings of the underlying loans by interest rates and
then, secondarily, by geographic and prepayment characteristics. Any impairment of a grouping is reported as a valuation
allowance. Republic’s loans sold in the secondary market have been primarily sold with servicing released. Accordingly,
servicing rights have not had a material impact on Republic’s financial position or results of operations.

Loan servicing income is recorded as principal payments are collected and includes servicing fees from investors and

certain charges collected from borrowers, such as late payment fees. Costs of loan servicing are charged to expense as
incurred.

Loans - Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity

or pay-off are reported at their outstanding principal adjusted for any charge-offs, the allowance for loan losses, and any
deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

Interest on loans is computed on the principal balance outstanding. Loan origination fees and certain direct loan 
origination costs relating to successful loan origination efforts are deferred and recognized over the lives of the related loans
as an adjustment to yield.

Generally, the accrual of interest on loans, including impaired loans, is discontinued when it is determined that the 

collection of interest or principal is doubtful, or when a default of interest or principal has existed for 90 days or more,
unless such loans are well secured and in the process of collection.
either applied against principal or reported as interest income, according to management’s judgment as to the collectibility of
principal. When loans are placed on non-accrual status, all unpaid accrued interest is reversed. Such loans remain on
non-accrual status until the borrower demonstrates the ability to remain current or the loan is deemed uncollectible and
is charged off. Consumer loans generally are not placed on non-accrual status but are reviewed periodically and charged
off when deemed uncollectible.

Interest received on non-accrual loans generally is

Republic recognizes interest income on an impaired loan when earned, unless the loan is on non-accrual status, in

which case interest income is recognized when received.

Allowance for Loan Losses - The allowance for loan losses is a valuation allowance for probable incurred credit losses,

increased by the provision for loan losses and decreased by charge-offs less recoveries. Management estimates the 
necessary allowance balance using past loan loss experience, the nature and volume of the portfolio, information about specific
borrower situations, estimated collateral values, economic conditions, regulatory guidance and other factors. Allocations of
the allowance may be made for specific loans or loan categories, but the entire allowance is available for any loan that may
be charged off. Loan losses are charged against the allowance when management deems a loan uncollectible.

A loan is impaired when full payment under the loan terms is not expected. Impairment is evaluated collectively for smaller-

balance loans of similar nature such as residential mortgage and consumer loans, and on an individual loan basis for 
commercial and commercial real estate loans.
is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of 
collateral if repayment is expected solely from the collateral.

If a loan is impaired, a portion of the allowance is allocated so that the loan

Premises and Equipment - Premises and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation is computed over the estimated useful lives of the related assets on the straight-line method. Estimated lives
are 25 to 31 1/2 years for buildings and improvements, 3 to 5 years for furniture, fixtures and equipment and 3 to 9 years
for leasehold improvements.

Long-Lived Assets - Long-lived assets are reviewed for impairment when events indicate their carrying amount may

not be recoverable from future undiscounted cash flows.

If impaired, the assets are recorded at discounted amounts.

Securities Sold under Agreements to Repurchase and Other Short-Term Borrowings - Substantially all repurchase
agreement liabilities represent amounts advanced by customers. Securities are pledged to cover most of these liabilities not
covered by federal deposit insurance. Certain of these liabilities, which are not covered by federal deposit insurance, are
secured by private insurance purchased by Republic rather than by a pledge of securities.

Stock Option Plans - Employee compensation expense under stock option plans is reported using the intrinsic value
method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to
or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect
on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation.

(dollars in thousands,except per share data)

Net income as reported
Deduct:

Stock-based compensation expense 
determined under fair value based method

Pro forma net income

Basic earnings per share as reported

Class A
Class B

Pro forma basic earnings per share

Class A
Class B

Diluted earnings per share as reported

Class A
Class B

Pro forma diluted earnings per share

Class A
Class B

2002

$ 20,489

645
$ 19,844

$

1.23
1.21

1.19
1.18

1.20
1.19

1.17
1.15

2001

$ 16,808

153
$ 16,655

$    1.04
1.03

1.00
0.99

1.01
0.99

0.96
0.95

2000

$ 12,921

353
$ 12,568

$    0.78
0.77

0.76
0.74

0.76
0.75

0.74
0.73

The weighted-average assumptions for options granted during the year and the resulting estimated weighted average fair
values per share used in computing pro forma disclosures are as follows:

Assumptions:

Risk-free interest rate
Expected dividend yield
Expected life (years)
Expected common stock
market price volatility

2002

4.83%
1.97
5.95

32%

2001

4.99%
2.37
6.00

34%

2000

5.33%
2.36
6.00

27%

Estimated fair value per share

$ 3.41

$ 2.46

$ 1.78

Income Taxes - Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the

period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates
are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Employee Stock Ownership Plan - The cost of shares held by the ESOP, but not yet allocated to participants, is shown
as a reduction of stockholders’ equity. Compensation expense is based on the market price of shares as they are committed
to be released to participant accounts. The difference between market price and the cost of shares committed to be
released is recorded as an adjustment to paid in capital. Dividends on allocated ESOP shares reduce retained earnings; divi-
dends on unearned ESOP shares reduce debt and accrued interest.

Financial Instruments - Financial instruments include off-balance sheet credit instruments, such as commitments to
fund loans and standby letters of credit. The face amount for these items represents the exposure to loss, before consider-
ing customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Derivatives - Republic only uses derivative instruments as described in “Mortgage Banking Activities.”

Earnings per Share - Earnings per share are based on income (in the case of Class B Common Stock, less the dividend

preference on Class A Common Stock) divided by the weighted average number of shares outstanding during the period.
Earnings per share assuming dilution shows the effect of additional common shares issuable under stock options and guar-
anteed preferred beneficial interests in Republic's subordinated debentures. All per share amounts have been restated to
reflect the stock splits occurring during the periods presented.

Comprehensive Income - Comprehensive income consists of net income and other comprehensive income. Other
comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as
separate components of equity.

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Segment Information - Segments are parts of a company evaluated by management with separate financial informa-

tion. Republic’s internal information is primarily reported and evaluated in three lines of business – banking, mortgage
banking and Refunds Now.

Reclassifications - Certain amounts presented in prior periods have been restated to conform with the current year

presentation.

New Accounting Pronouncements - On January 1, 2002, Republic adopted a new accounting standard for disclosing

losses on debt extinguishment. Prior standards required all such losses to be reported separately as extraordinary items,
whereas under the new standard, these losses are to be reported as extraordinary item only if the circumstances in which
the debt was extinguished merit such disclosure. As part of its ongoing asset and liability management, Republic periodically
retires certain debt obligations prior to maturity, which under the new standard is not considered extraordinary. As such, the
prepayment penalties incurred by Republic in 2002 on early retirement of FHLB advances were reported as a separate 
caption included in non-interest expense. The prepayment penalties incurred in 2001 were restated to conform with the
2002 presentation.

On July 1, 2002, Republic became subject to new accounting guidance for certain commitments to originate loans as

described in “Mortgage Banking Activities.”

Effective in 2002, a new accounting standard relating to changes in accounting for business combinations and intangible

assets resulted in no effect to the Company since there are no intangible assets included on the balance sheet nor any
recent acquisitions by the Company.

New accounting standards on asset retirement obligations, restructuring activities and exit costs were issued in 2002.

Management determined that when the new accounting standards are adopted in 2003 they will not have a material impact
on the Company’s financial condition or results of operations.

2. RESTRICTIONS ON CASH AND DUE FROM BANKS

Republic is required by the Federal Reserve Bank to maintain average reserve balances. Cash and due from banks in

the consolidated balance sheet includes $3.0 million of reserve balances at December 31, 2002.

3. SECURITIES

Securities available for sale:

December 31, 2002 (in thousands)

U.S. Treasury securities and U.S.

government agencies
Mortgage-backed securities

Total securities available for sale

December 31, 2001 (in thousands)

U.S. Treasury securities and U.S.

government agencies
Mortgage-backed securities

Total securities available for sale

Amortized
Cost

$   50,175
148,936

$ 199,111

Amortized
Cost

$ 31,542
179,636

$ 211,178

Gross
Unrealized
Gains

$ 948
2,990

$ 3,938

Gross
Unrealized
Gains

$   481
798

$ 1,279

Gross
Unrealized
Losses

$

$

–  0
(2)

(2)

Gross
Unrealized
Losses

$

–
(858)

$ (858) 

Fair Value

$ 51,123
151,924

$ 203,047

Fair Value

$  32,023
179,576

$ 211,599

Securities to be held to maturity:

December 31, 2002 (in thousands)

U.S. Treasury securities and U.S.

government agencies

Obligations of state and political

subdivisions

Mortgage-backed securities

Total securities to be held to maturity

December 31, 2001 (in thousands)

U.S. Treasury securities and U.S.

government agencies

Obligations of state and political

subdivisions

Mortgage-backed securities,

including CMOs

Total securities to be held to maturity

Amortized
Cost

$  8,175

100
77,137

$ 85,412

Amortized
Cost

$ 50,995

200

31,151

$ 82,346

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

$ 20

2
115

$ 137

$ –

$  8,195

(66)

$ (66)

102
77,186

$ 85,483

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

$

–

3

10

$ 13

$ (37)

$ 50,958

–

(7)

$ (44)

203

31,154

$ 82,315

Securities pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes, as
required or permitted by law:

December 31 (in thousands)

Amortized cost
Fair value

Sale of securities available for sale 

Proceeds on sales
Proceeds on calls
Gross gains

2002

2001

$ 253,266
257,053

$ 233,600
233,900

58,228
26,500
1,559

122,516
63,000
1,864

The amortized cost and fair value of securities, by contractual maturity, are as follows:

December 31, 2002 (in thousands)

Due in one year or less
Due after one year through five years
Due after five through ten years
Mortgage-backed securities, including CMOs

Total 

Securities
available for sale

Securities to be
held to maturity

Amortized
Cost

$    4,998
45,177
–
148,936

$ 199,111

Fair Value

$

5,163
45,960
–
151,924

$ 203,047

Amortized
Cost

$ 1,100
2,179
4,996
77,137

$ 85,412

Fair Value

$  1,101
2,200
4,996
77,186

$ 85,483

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4. LOANS

December 31, (in thousands)

Residential real estate
Commercial real estate
Real estate construction
Commercial
Consumer
Home equity
Total loans
Less:
Unearned interest income

and unamortized loan fees

Allowance for loan losses

Loans, net

2002

$ 597,797
413,115
68,020
33,341
39,347
159,261
1,310,881

818
10,148

$

2001

571,959
360,056
70,870
30,627
26,905
125,360
1,185,777

1,076
8,607

$ 1,299,915

$ 1,176,094

Republic utilizes eligible real estate loans to collateralize advances and letters of credit from the Federal Home Loan
Bank. At December 31, 2002 and 2001, Republic had $541 million and $526 million in first lien, 1-4 family residential real
estate loans pledged to secure advances and letters of credit from the Federal Home Loan Bank. The Company also had 
$38 million and $12 million in multi-family, commercial real estate loans pledged at December 31, 2002 and 2001, and
$115 million in home equity lines of credit pledged at December 31, 2002.

Activity in the allowance for loan losses is summarized as follows:

December 31, (in thousands)

Balance, beginning of year
Provision for loan losses charged to income
Charge-offs
Recoveries

Balance, end of year

Information about Republic’s impaired loans is as follows:

As of and for the Year Ended December 31, (in thousands)

Year-end loans with no allocated allowance for loan losses
Year-end loans with allocated allowance for loan losses

Total

Amount of the allowance for loan losses allocated
Average of impaired loans during the year
Interest income recognized during impairment
Cash-basis interest income recognized

Nonperforming loans were as follows:

Loans past due 90 days still on accrual
Nonaccrual loans

2002

$ 8,607
3,338
(4,176)
2,379

$ 10,148

2002

$

–
1,152

$ 1,152

$

288
1,369
–
–

1,915
7,967

2001

$ 7,862
3,493
(4,173)
1,425

$ 8,607

2001

$

–
104

$ 104

$   26
707
–
–

521
5,056

2000

$ 7,862
1,382
(2,290)
908

$ 7,862

2000

$

–
767

$ 767

$ 385
714
–
–

984
3,100

Nonperforming loans includes impaired loans and smaller balance homogeneous loans as defined in Note 1.

Loans made to executive officers and directors of Republic and their related interests in the ordinary course of business, subject to 
substantially the same credit policies as other loans and current in their terms, are as follows:

Year ended December 31, 2002 (in thousands)

Balance,
Beginning
Of Period

Change in
Related Party
Status

New
Loans

Balance,
End
Of Period

Repayments

$ 21,565

$ 227

$ 6,348

$ (8,595)

$19,545

5. LOAN SERVICING

Republic was servicing loans for others (primarily FHLMC) totaling $288 million and $243 million at December 31, 2002

and 2001. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, dis-
bursing payments to investors and processing foreclosures.

Activity for capitalized mortgage servicing rights during 2002 and 2001 were as follows:

December 31, (in thousands)

Balance January 1
Additions
Amortized to expense

Balance December 31

Valuation allowance

6. PREMISES AND EQUIPMENT

December 31, (in thousands)

Land

Office buildings and improvements
Furniture, fixtures and equipment
Leasehold improvements

Total premises and equipment
Less accumulated depreciation and amortization

Net premises and equipment

7. DEPOSITS

2002

$   1,885
1,743
(746)

$   2,882

$

–

2002

$   1,822
13,877
24,625
2,500

42,824
19,672

$ 23,152

$

2001

624
1,548
(287)

$ 1,885

$

–

2001

$ 1,822
11,809
19,634
2,037

35,302
15,712

$ 19,590

Time deposits of $100,000 or more were approximately $111 million and $87 million at year-end 2002 and 2001.

At December 31, 2002, the scheduled maturities of time deposits of $100,000 or more are as follows:

(dollars in thousands)

2003
2004
2005
2006
2007 
thereafter

Total

Amount
$ 39,806
17,744
8,131
22,807
22,716
–

$ 111,204

Weighted
Average Rate

3.23%
3.76
4.51
3.96
4.49
–

3.81%

8. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

These liabilities consist of short-term excess funds from correspondent banks, repurchase agreements and overnight
liabilities to deposit customers arising from Republic’s cash management program. While effectively deposit equivalents, the
overnight liabilities to customers are in the form of repurchase agreements or liabilities secured by Federal Home Loan Bank
letters of credit or private insurance policies purchased by Republic. Repurchase agreements collateralized by securities are
treated as financings; accordingly, the securities involved with the agreements are recorded as assets and are held by a
safekeeping agent and the obligations to repurchase the securities are reflected as liabilities. All securities underlying the
agreements were under Republic’s control.

Information concerning securities sold under agreements to repurchase and liabilities secured by insurance policies at year-
end 2002 and 2001 are as follows:

December 31, (in thousands)

Average outstanding balance during the year
Average interest rate during the year
Maximum month end balance during the year

2002

$ 225,671

1.44%

$ 294,915

2001

$ 251,068

3.40%

$ 283,460

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9. FHLB BORROWED FUNDS

December 31, (in thousands)

Federal Home Loan Bank convertible fixed rate advances with 

weighted average interest rate of 5.17% (1) 

Federal Home Loan Bank fixed interest rate advances, with 

weighted average interest rate of 4.60% at 
December 31, 2002, due through 2031

2002

2001

$ 115,000

$ 140,000

204,299

$ 319,299

156,950

$ 296,950

(1) Represents convertible advances with the Federal Home Loan Bank (FHLB). These advances have original fixed-rate periods ranging from one to five
years and original maturities ranging from three to ten years. At the end of their respective fixed-rate periods, the FHLB has the right to convert the borrowings
to floating-rate advances tied to LIBOR. The Company has $10 million in these advances that are currently eligible to be converted on their quarterly repricing
date. Based on market conditions at this time, management does not believe these advances are likely to be converted in the near-term.

Federal Home Loan Bank advances are collateralized by a blanket pledge of eligible real estate loans.

(For additional

information see Note 4 on Loans). At December 31, 2002, Republic had available collateral to borrow an additional $42 
million from the Federal Home Loan Bank. Republic also has unsecured lines of credit totaling $40 million available through
various financial institutions.

Aggregate future principal payments on borrowed funds as of December 31, 2002 are as follows:

Year

2003
2004
2005
2006
2007 and thereafter

(in thousands)

$ 115,000
54,000
30,000
70,000
50,299

$ 319,299

For purposes of this schedule, the $115 million in convertible fixed-rate advances are assumed to be converted on their

applicable quarterly repricing dates. During 2002, the Company prepaid $25 million on 6.40% Federal Home Loan Bank
advances due November 20, 2002. This transaction resulted in a penalty of $1,371,000 or $891,000 net of tax (approximately
$0.05 per share).
2002. This transaction resulted in a penalty of $1,049,000 or $686,000 net of tax (approximately $0.04 per share).

In 2001, the Company prepaid $25 million on 6.69% Federal Home Loan Bank advances due October

10. GUARANTEED PREFERRED BENEFICIAL INTERESTS

In February 1997, Republic Capital Trust (RCT), a trust subsidiary of Republic Bancorp, Inc., completed the private 
placement of 64,520 shares of cumulative trust preferred securities (Trust Preferred Securities) with a liquidation preference
of $100 per security. Each security can be converted into ten shares of Class A Common Stock at the option of the holder.
The sole asset of RCT represents the proceeds of the offering loaned to Republic Bancorp, Inc. in exchange for subordinated
debentures which have  terms that are similar to the Trust Preferred Securities. The subordinated debentures and the related
interest expense, payable quarterly at the annual rate of 8.5%, are included in the consolidated financial statements.

As permitted under the agreement, management redeemed these securities on April 1, 2002. Approximately $800,000

of these securities was redeemed for cash while the remaining $5.1 million were converted into 507,700 shares of the
Company’s Class A Common Stock. This transaction, on an annualized basis, will have a negative impact of approximately
$0.03 on basic earnings per share and will have no effect on dilutive earnings per share.

11. INCOME TAXES

Income tax expense is summarized as follows:

Year Ended December 31, (in thousands)

Current
Deferred expense (benefit)

Total

2002

$11,536
(340)

$11,196

2001

$ 8,687
(108)

$ 8,579

2000

$ 5,904
432

$ 6,336

The provision for income taxes differs from the amount computed at the statutory rate as follows:

Years Ended December 31,

Federal statutory rate
Increase (decrease) resulting from:
Tax-exempt interest income
Other

Effective rate

2002

35.0%

–
0.3

35.3%

2001

35.0%

–
(1.2)

33.8%

2000

35.0%

(0.3)
(1.7)

33.0%

The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities are as follows:

December 31, (in thousands)

Deferred tax assets:
Depreciation
Allowance for loan losses
Accrued expenses
Other

Total deferred tax assets

Deferred tax liabilities:
FHLB dividends
Loan fees
Mortgage servicing rights
Unrealized securities gains
Other

Total deferred tax liabilities

2002

$ 532
2,715
1,098
–

4,345

2,469
294
1,011
1,338
194

5,306

2001

$    755
2,097
–
200

3,052

2,172
183
660
143
–

3,158

Net deferred tax liability, included in other assets

$ (961)

$ (106)

12. EARNINGS PER SHARE

A reconciliation of the combined Class A and B Common Stock numerators and denominators of the earnings per share

and earnings per share assuming dilution computations is presented below.

Class A and B shares participate equally in undistributed earnings. The difference in earnings per share between the

two classes of common stock results solely from the 10% per share dividend premium paid on Class A Common Stock over
that paid on Class B Common Stock as discussed in Note 13. The aggregate dividend premium paid on Class A Common
Stock for 2002, 2001 and 2000 was $279,000, $224,000 and $199,000, or approximately two cents on basic earnings per share.

Basic

Years Ended December 31, (in thousands, except per share data)

2002

2001

2000

Earnings Per Share

Net Income available to common shareholders

Weighted average shares outstanding

Earnings Per Share, basic 

Class A
Class B

Diluted

$ 20,489

16,636

$

1.23
1.21

$ 16,808

16,126

$    1.04
1.03

$ 12,921

16,621

$    0.78
0.77

Years Ended December 31, (in thousands, except per share data)

2002

2001

2000

Earnings Per Share Assuming Dilution

Net Income
Add:

Interest expense, net of tax benefit,
on assumed conversion of guaranteed
preferred beneficial interests in
Republic’s subordinated debentures

Net Income available to common shareholders,
assuming conversion

$ 20,489

$ 16,808

$ 12,921

79

332

348

$ 20,568

$ 17,140

$ 13,269

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Years Ended December 31, (in thousands, except per share data)

Weighted average shares outstanding

Add dilutive effects of assumed conversion and exercise:
Convertible guaranteed preferred beneficial interest in Republic’s
subordinated debentures
Stock options

Weighted average shares and dilutive

potential shares outstanding

Diluted Earnings Per Share 

Class A
Class B

2002

16,636

146
334

2001

16,126

610
356

2000

16,621

635
246

17,116

17,092

17,502

$

1.20
1.19

$    1.01
0.99

$

0.76
0.75

Stock options for 191,000 and 203,000 shares of Class A Common Stock were excluded from the 2002 and 2001 earnings
per share assuming dilution because their impact was antidilutive.

13. STOCKHOLDERS’ EQUITY

Common Stock - The Class A shares are entitled to cash dividends equal to 110% of the cash dividend paid per share
on the Class B Common Stock. Class A shares have one vote per share and Class B shares have ten votes per share. Class
B Common Stock may be converted, at the option of the holder, to Class A Common Stock on a share-for-share basis. The
Class A Common Stock is not convertible into any other class of Republic’s capital stock.

Dividend Limitations - Kentucky banking laws limit the amount of dividends that may be paid to Parent Company by

Republic Bank & Trust Company without prior approval of the Kentucky Department of Financial Institutions. Under these
laws, the amount of dividends that may be paid in any calendar year is limited to current year's net income, as defined in
the laws, combined with the retained net income of the preceding two years, less any dividends declared during those 
periods. At December 31, 2002, Republic Bank & Trust Company had approximately $28 million of retained earnings that
could be utilized for payment of dividends if authorized by its board of directors without prior regulatory approval.
Indiana banking laws prohibit the payment of dividends to the Parent Company by Republic Bank & Trust Company of Indiana
until May 2004 without prior approval of the Indiana Department of Financial Institutions. These laws also require a minimum
Tier I Capital ratio of 8% to be maintained for a period of three years.

Regulatory Capital Requirements - The Parent Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain
mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect
on Republic’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Parent Company and each bank must meet specific capital guidelines that involve quantitative measures of the
bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The 
capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk 
weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Parent Company and each bank
to maintain minimum amounts and ratios (set forth in the table below) of Total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). As of December 31, 2002,
the Parent Company, Republic Bank & Trust Company and Republic Bank & Trust Company of Indiana meet all capital 
adequacy requirements to which they are subject.

The most recent notification from the FDIC categorized each bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well capitalized each bank must maintain minimum Total Risk-Based, Tier
I Risk-Based, and Tier I Leverage ratios as set forth in the table. There are no conditions or events since that notification that
management believes have changed the banks’ capital ratings.

Minimum
Requirement
For Capital
Adequacy
Purposes

Minimum
Requirement
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions

Actual

As of December 31, 2002 (dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total Risk Based Capital (to Risk Weighted Assets)

Republic Bancorp, Inc.
Republic Bank & Trust Co.
Republic Bank & Trust Co. of Indiana

$ 158,044
148,318
5,512

13.64%
13.07
21.52

$ 92,679
90,814
2,049

8%
8
8

$ 115,849
113,518
2,562

10%
10
10

Tier I Capital (to Risk Weighted Assets)

Republic Bancorp, Inc.
Republic Bank & Trust Co.
Republic Bank & Trust Co. of Indiana

Tier I Leverage Capital (to Average Assets)

Republic Bancorp, Inc.
Republic Bank & Trust Co.
Republic Bank & Trust Co. of Indiana

As of December 31, 2001

Total Risk Based Capital (to Risk Weighted Assets)

147,896
138,456
5,226

147,896
138,456
5,226

12.77
12.20
20.40

9.02
8.53
23.15

46,340
45,407
1,025

65,591
64,945
903

4
4
4

4
4
4

69,509
68,111
1,537

81,990
81,181
1,129

6
6
6

5
5
5

Republic Bancorp, Inc.
Republic Bank & Trust Co.
Republic Bank & Trust Co. of Indiana

$ 139,093
129,530
5,179

13.26%
12.49
43.01

$ 83,943
82,980
963

8%
8
8

$ 104,929
103,725
1,204

10%
10
10

Tier I Capital (to Risk Weighted Assets)

Republic Bancorp, Inc.
Republic Bank & Trust Co.
Republic Bank & Trust Co. of Indiana

Tier I Leverage Capital (to Average Assets)

Republic Bancorp, Inc.
Republic Bank & Trust Co.
Republic Bank & Trust Co. of Indiana

130,486
121,068
5,034

130,486
121,068
5,034

12.44
11.67
41.81

8.36
7.79
37.43

41,972
41,490
482

62,448
62,142
538

4
4
4

4
4
4

62,958
62,235
722

78,060
77,678
672

6
6
6

5
5
5

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14. STOCK OPTION PLAN

16. LEASES AND TRANSACTIONS WITH AFFILIATES

Under a stock option plan, certain key employees and directors are granted options to purchase shares of Republic’s
common stock at fair value at the date of the grant. Options granted become fully exercisable at the end of two to six years
of continued employment and must be exercised within one year.

A summary of Republic’s stock option activity and related information for the years ended December 31 follows:

Outstanding beginning of year
Granted
Exercised
Forfeited

Outstanding year end

Options
Class A
Shares

982,750
873,000
(222,000)
(94,750)

1,539,000

Exercisable (vested) end of year

149,500

2002

Weighted
Average
Exercise
Price

$  7.76
10.64
5.99
8.19

$  9.62

$  5.98

Options
Class B
Shares

4,000
–
(4,000)
–

–

–

Weighted
Average
Exercise
Price

$  5.53
–
5.53
–

–

–

2001

Weighted
Average
Exercise
Price

$  7.20
7.57
4.72
7.95

$  7.76

$  5.90

Options
Class B
Shares

30,000
–
(26,000)
–

4,000

4,000

Weighted
Average
Exercise
Price

$  4.18
–
3.97
–

$  5.53

$  5.53

Options
Class A
Shares

1,045,500
194,750
(207,000)
(50,500)

982,750

134,500

2000

Outstanding beginning of year 
Granted
Exercise
Forfeited

Outstanding year end

Exercisable (vested) end of year

Options
Class A Shares

1,126,000
137,000
(90,000)
(127,500)

1,045,500

30,000

Weighted
Average
Exercise Price

Options
Class B Shares

Weighted
Average
Exercise Price

$ 7.08
6.21
3.28
7.82

$ 7.20

$ 5.53

48,000
–
(18,000)
–

30,000

6,000

$ 3.84
–
3.28
–

$ 4.18

$ 5.53

Options outstanding at year-end 2002 were as follows:

Outstanding Class A
Range of Exercise Prices
$5.00 - $7.00
$7.01 - $10.00
$10.01 - $13.00

Outstanding

15. EMPLOYEE BENEFIT PLANS

Remaining
Contractual
Number

Weighted
Average
Life

Weighted
Average
Price

410,250
85,750
1,043,000

1,539,000

2.34
4.00
5.07

4.28

$ 6.19
8.43
11.07

Exercisable

Weighted
Average
Price

$ 5.98
–
–

Number

149,500
–
–

$ 9.62

149,500

$ 5.98

Republic maintains a 401(k) plan for full-time employees who have been employed for 1,000 hours in a plan year and
have reached the age of 21. Participants in the plan had the option to contribute from 1% to 25% of their annual compensation.
Republic matches 50% of participant contributions up to 5% of each participant’s annual compensation. Republic’s 
contribution may increase if the Bank achieves certain operating ratios. Republic’s matching contributions were $637,000;
$506,000 and $269,000 for the years ended December 31, 2002, 2001 and 2000.

On January 29, 1999, Republic formed an Employee Stock Ownership Plan (ESOP) for the benefit of its employees.
The ESOP borrowed $3.9 million from the Parent Company and directly and indirectly purchased 300,000 shares of Class A
Common Stock from Republic’s largest beneficial owner at a market value of $12.91 per share. The purchase price,
determined by an independent pricing committee, was the average closing price for the thirty trading days immediately prior
to the transaction. Shares in the ESOP are allocated to eligible employees based on principal payments over the term of the
loan, which is ten years. Participants become fully vested in allocated shares after five years of credited service and may
receive their distributions in the form of cash or stock.

Shares allocated to participants in the plan
Compensation expense 

2002

26,499
$314,000

2001 

24,649 
$267,000  

2000

22,930  

$170,000

At year-end 2002 the fair value of unallocated shares in the plan was approximately $2.3 million.

Republic leases office facilities from Republic’s Chairman and from partnerships in which Republic’s Chairman and Chief

Executive Officer are partners under operating leases. Rent expense for the years ended December 31, 2002, 2001 and
2000 under these leases was $1,501,000; $1,475,000 and $1,469,000. Total rent expense on all operating leases was
$2,302,000; $2,092,000 and $2,060,000 for the years ended December 31, 2002, 2001 and 2000, respectively. The total
minimum lease commitments under noncancelable operating leases are as follows:

December 31, 2002 (in thousands)

2003
2004
2005
2006
Thereafter

Affiliate

$ 1,632
1,426
969
732
40

$ 4,799

$

Other

936
1,060
939
816
16,212

$ 19,963

Total

$   2,568
2,486
1,908
1,548
16,252

$ 24,762

A director of Republic Bank & Trust Company is a partner in a law firm. Fees paid by Republic to this firm totaled

$91,000; $74,000 and $53,000 for the years ended December 31, 2002, 2001 and 2000.

Prior to July 1, 2000, Banker’s Insurance Agency (BIA), a corporation beneficially owned by Republic’s Chairman and

CEO, sold title insurance to most of the Bank’s mortgage borrowers. Under an agreement between BIA and Republic,
Republic personnel performed certain functions for issuance of the policies. BIA recorded title insurance revenues of
$540,000 from Republic loan clients in 2000. BIA paid Republic $33,000 for services performed by Republic employees 
during the same period. On July 1, 2000, the Bank began selling title insurance directly to its mortgage borrowers.

17. OFF-BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

Republic is a party to financial instruments with off-balance sheet risk in the normal course of business in order to meet
the financing needs of its customers. These financial instruments primarily include commitments to extend credit and standby
letters of credit. The contract or notional amounts of these instruments reflect the potential future obligations of Republic
pursuant to those financial instruments. Creditworthiness for all instruments is evaluated on a case-by-case basis in 
accordance with Republic’s credit policies. Collateral from the customer may be required based on management’s credit
evaluation of the customer and may include business assets of commercial customers as well as personal property and real
estate of individual customers or guarantors.

Republic also extends binding commitments to customers and prospective customers. Such commitments assure the

borrower of financing for a specified period of time at a specified rate. The risk to Republic under such loan commitments is
limited by the terms of the contracts. For example, Republic may not be obligated to advance funds if the customer’s 
financial condition deteriorates or if the customer fails to meet specific covenants. An approved, but unfunded, loan commitment
represents a potential credit risk once the funds are advanced to the customer. This is also a liquidity risk since the customer
may demand immediate cash that would require funding, and interest rate risk as market interest rates may rise above the
rate committed. Republic’s liquidity position is managed to meet its need for funds.
commitments normally expire unused, the total amount of outstanding commitments at any point in time may not require
future funding.

In addition, since a portion of these loan

As of December 31, 2002, exclusive of mortgage-banking loan commitments discussed in Note 1, Republic had 
outstanding loan commitments totaling $258 million which includes unfunded home equity lines of credit totaling $145 
million. These commitments generally have variable rates.

Standby letters of credit are conditional commitments issued by Republic to guarantee the performance of a customer
to a third party. The terms and risk of loss involved in issuing standby letters of credit are similar to those involved in issuing
loan commitments and extending credit. Commitments outstanding under standby letters of credit totaled $33 million at
December 31, 2002.

At December 31, 2002, Republic had $108 million in letters of credit from the Federal Home Loan Bank issued on behalf

of the Bank’s clients. Approximately $28 million of these letters of credit were used as credit enhancements for client bond
offerings. The remaining $80 million was used to collateralize a public funds deposit, which the Company classifies in 
short-term borrowings. These letters of credit reduce Republic’s available borrowing line at the Federal Home Loan Bank by
$108 million. Republic uses a blanket pledge of eligible real estate loans to secure the letters of credit. (For additional 
information see Note 4 on Loans and Note 8 on Short-term borrowings.) 

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18. FAIR VALUE OF FINANCIAL INSTRUMENTS

19. PARENT COMPANY CONDENSED FINANCIAL INFORMATION

The estimated fair value of financial instruments has been determined by Republic using available market information

and appropriate valuation methodologies. However, judgment of management is necessarily required to interpret market
data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of 
the amounts Republic could realize in a market exchange. The use of different market assumptions and/or estimation 
methodologies may have a material effect on the estimated fair value amounts.

December 31, 2002

December 31, 2001

Carrying
Amount

Fair
Value

$

39,853
203,047
85,412
65,695
1,299,915
18,324

$

39,853
203,047
85,448
66,176
1,345,477
18,324

Carrying
Amount

$

35,569
211,599
82,346
35,492
1,176,094
17,375

Fair
Value

$

35,569
211,599
82,315
35,999
1,210,558
17,375

(in thousands)

Assets:

Cash and cash equivalents
Securities available for sale
Securities to be held to maturity
Mortgage loans held for sale
Loans, net
Federal Home Loan Bank stock

Liabilities:
Deposits:

Non interest-bearing accounts
Transaction accounts

$

175,460
464,961

$

175,460
464,959

$

129,552
357,341

$

129,552
357,341

Certificate of deposit and individual
retirement accounts
Securities sold under agreements to
repurchase and other short-term
borrowings

Other borrowed funds

Guaranteed preferred beneficial interests
in Republic’s subordinated debentures

399,769

410,235

379,465

384,323

224,929
319,299

–

224,957
348,226

–

282,023
296,950

5,852

282,145
310,420

5,852

Cash and Cash Equivalents - The carrying amount is a reasonable estimate of fair value.
Securities Available for Sale, Securities to be Held to Maturity and Federal Home Loan Bank Stock - Fair value

equals quoted market price, if available.
market prices for similar securities. For Federal Home Loan Bank stock, the carrying amount is an estimate of fair value.

If a quoted market price is not available, fair value is estimated using quoted 

Loans - The fair value is estimated by discounting the future cash flows using the interest rates at which similar loans

would be made to borrowers with similar credit ratings for the same remaining maturities.

Mortgage Loans Held for Sale - Estimated fair value is defined as the quoted secondary market price for such loans

without regard to Republic’s other commitments to make and sell loans.

Deposits - The fair value of demand deposits, savings accounts and certain money market deposits is the amount
payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the 
interest rates offered for deposits of similar remaining maturities.

Securities Sold Under Agreements to Repurchase and Other Short-Term Borrowings - The carrying amount is 

management’s estimate of fair value.

Guaranteed Preferred Beneficial Interests -  The fair value is estimated based on the estimated present value of

future cash flows using the rates at which similar financings with the same remaining maturities could be obtained.

Other Borrowed Funds - The fair value is estimated based on the estimated present value of future cash outflows

using the rates at which similar loans with the same remaining maturities could be obtained.

Commitments to Extend Credit - The fair value of commitments to extend credit is based upon the difference between

the interest rate at which Republic is committed to make the loans and the rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities, adjusted for the estimated volume of loan 
commitments expected to close. The fair value of such commitments is not material.

Commitments to Sell Loans - The fair value of commitments to sell loans is based upon the difference between the

interest rates at which Republic is committed to sell the loans and the quoted secondary market price for similar loans.
The fair value of such commitments is not material.

The fair value estimates presented herein are based on pertinent information available to management as of December

31, 2002 and 2001. 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 these financial statements since 
that date and, therefore, estimates of fair value may differ significantly from the amounts presented.

BALANCE SHEETS
December 31, (in thousands)

Assets:

Cash and cash equivalents
Due from subsidiaries
Investment in subsidiaries
Other

Total assets

Liabilities and stockholders’ equity:

Long-term debt
Other liabilities
Stockholders’ equity

Total

STATEMENTS OF INCOME
Years Ended December 31, (in thousands)

Income and expense:

Dividends from subsidiary
Interest income
Interest expense
Other expense

Income before income taxes
Income tax benefit

Income before equity in undistributed net income of subsidiaries
Equity in undistributed net income of subsidiaries

2002

2001

$

2,538
3,667
146,575
14

$ 152,794

$

–
1,998
150,796 

$ 152,794

$

1,537
4,552
126,875
18

$ 132,982

$

6,152
1,715
125,115

$ 132,982

2002

2001

2000

$   3,406
211
(129)
(589)

2,899
272

3,171
17,318

$ 15,699
253
(548)
(401)

15,003
297

15,300
1,508

$   3,726
292
(566)
(209)

3,243
254

3,497
9,424

Net income

$ 20,489

$ 16,808

$ 12,921

STATEMENTS OF CASH FLOWS
Years Ended December 31, (in thousands) 

Operating activities:

2002

2001

2000

Net income
Adjustments to reconcile net income to net cash provided by operating activities:

$ 20,489

$ 16,808

$ 12,921

Undistributed net income of subsidiaries
Change in due from subsidiary
Change in other assets
Change in other liabilities

Net cash provided by operating activities

Investment activities:

Dividends on unallocated ESOP shares
Dissolution of Republic Capital Trust common stock
Purchase of common stock of subsidiary bank

Net cash provided by (used in) investing activities

Financing activities:
Dividends paid
Proceeds from stock options exercised
Redemption of the Company’s guaranteed preferred beneficial

interest in Republic’s subordinated debentures

Repurchase of Class A common stock
Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

(17,318)
885
4
53
4,113

(47)
300
–
253

(3,231)
1,104

(1,075)
(163)
(3,365)

1,001

1,537

(1,508)
(440)
105
21
14,986

(43)
–
(5,000)
(5,043)

(2,837)
467

–
(7,816)
(10,186)

(243)

1,780

(9,424)
181
(77)
(21)
3,580

(41)

–    
–    

(41)

(2,368)
100

–
(1,008)
(3,276)

263

1,517

$   2,538

$   1,537

$   1,780

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20. SEGMENT INFORMATION

21. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)

The reportable segments are determined by the type of products and services offered, primarily distinguished between

banking, mortgage banking operations and tax refund services. Loans, investments, and deposits provide the substantial
amount of revenue from the banking operation; servicing fees and loan sales provide the substantial amount of revenue from
mortgage banking; and refund anticipation loan fees and electronic refund check fees provide the substantial amount of
revenue from tax refund services. All three operations are domestic.

The accounting policies used for Republic’s segments are the same as those described in the summary of significant

accounting policies. Income taxes are allocated and indirect expenses are allocated on revenue. Transactions among 
segments are made at fair value.

Information reported internally for performance assessment follows.

(in thousands)

Net interest income
Provision for loan losses
Electronic refund check fees
Net gain on sale of loans
Other revenue
Income tax expense
Segment profit
Segment assets

(in thousands)

Net interest income
Provision for loan losses
Electronic refund check fees
Net gain on sale of loans
Other revenue
Income tax expense
Segment profit
Segment assets

(in thousands)

Net interest income
Provision for loan losses
Electronic refund check fees
Net gain on sale of loans
Other revenue
Income tax expense
Segment profit
Segment assets

Banking

$ 101,513
3,265
–
–
18,349
8,900
16,223
1,685,723

$

$

Banking

55,264
2,389 
–
–
14,031
7,415
13,822
1,549,346

Banking

48,770
1,170
–
–
6,789
5,451
11,202
1,497,843

$

$

$

2002

Tax Refund
Services

Mortgage
Banking

Consolidated
Totals

3,563
73
3,198
–
71
1,419
2,636
1,167

$

1,025
–
–
6,998
(4,094)
877
1,630
65,816

$    106,101
3,338
3,198
6,998
14,326
11,196
20,489
1,752,706

2001

Tax Refund
Services

Mortgage
Banking

Consolidated
Totals

3,278
1,104
2,087
–
36
425
831
507

$         937
–
–
6,191
(2,604)
1,102
2,155
40,978

$     59,479
3,493
2,087
6,191
11,463
8,942
16,808
1,590,831

2000

Tax Refund
Services

Mortgage
Banking

Consolidated
Totals

2,768
212
1,070
–
136
714
1,386
338

$

271
–
–
1,417
(553)
171
333
9,891

$

51,809
1,382
1,070
1,417
6,372
6,336
12,921
1,508,072

Presented below is a summary of the consolidated quarterly financial data for the years ended December 31, 2002 and 2001.

(in thousands, except per share data)

2002:

Interest income
Net interest income
Provision for loan losses
Income before income taxes
Net income
Earnings per share:
Class A Common
Class B Common

Earnings per share assuming dilution:

Class A Common
Class B Common

(in thousands, except per share data)

2001:

Interest income
Net interest income
Provision for loan losses
Income before income taxes
Net income
Earnings per share:
Class A Common
Class B Common

Earnings per share assuming dilution:

Class A Common
Class B Common

Fourth
Quarter

$ 25,498
15,533
1,849
6,351
4,092

0.24
0.24

0.24
0.23

Fourth
Quarter

$ 26,939
15,023
1,287
5,905
3,851

0.24
0.24

0.23
0.23

Third
Quarter

$ 25,647
15,232
265
7,354
4,731

0.28
0.28

0.28
0.27

Third
Quarter

$ 28,288
14,174
569
5,645
3,712

0.23
0.23

0.22
0.22

Second
Quarter

$ 25,627
14,965
(1,473)
7,769
5,007

0.30
0.29

0.29
0.29

Second
Quarter

$ 29,231
14,006
(152)
6,677
4,421

0.28
0.27

0.27
0.26

First
Quarter

$ 29,329
18,610
2,697
10,211
6,659

0.41
0.41

0.40
0.39

First
Quarter

$ 32,938
16,276
1,789
7,160
4,825

0.29
0.29

0.28
0.28

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ANNUAL MEETING
The Annual Meeting of Shareholders of Republic Bancorp, Inc. will be held at 10:00 a.m. (EDT), Thursday, April 10, 2003 in the community
room of Republic Bank - Springhurst, 9600 Brownsboro Road, Louisville, KY  40241.

FINANCIAL INFORMATION
Shareholders may obtain a free copy of the 2002 Form 10-K including financial statements and schedules required to be filed with the
Securities and Exchange Commission by contacting: Kevin Sipes, Executive Vice President and Chief Financial Officer, at the executive
office address listed below or by calling 502-560-8628; or Mike Ringswald, Senior Vice President and General Counsel, 502-561-7128.

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STOCK LISTING
Republic Bancorp, Inc. Class A Common Stock is listed under the symbol “RBCAA” on NASDAQ.

TRANSFER AGENT
Inquiries relating to shareholder records, stock transfers, changes of ownership, changes of address and dividend payments should be
sent to the transfer agent at the following address: Computershare Investor Services, PO Box A3480, Chicago, Illinois 60690-3480

INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants of Republic Bancorp, Inc. are Crowe, Chizek & Company LLP, Louisville, KY.

EXECUTIVE OFFICES
Republic Bancorp, Inc.
601 West Market Street
Louisville, Kentucky  40202
502-584-3600 or outside Louisville 888-584-3600
info@republicbank.com

WEB SITE
www.republicbank.com

BANKING CENTERS
Republic Bank & Trust Company
Bowling Green
Elizabethtown
Frankfort

Lexington

Louisville

1700 Scottsville Road, Bowling Green, KY  42101
690 Ring Road, Elizabethtown, KY  42701
1001 Versailles Road, Frankfort, KY  40601
100 Highway 676, Frankfort, KY  40601
3098 Helmsdale Place, Lexington, KY  40509
641 East Euclid Avenue, Lexington, KY  40502
2401 Harrodsburg Road, Lexington, KY  40504
651 Perimeter Drive, Lexington, KY  40517
3608 Walden Drive, Lexington, KY 40517
3950 Kresge Way, Suite 108, Louisville, KY  40207
2801 Bardstown Road, Louisville, KY  40205

East
West
Andover
Chevy Chase
Harrodsburg Road
Perimeter
Tates Creek Road*
Baptist Hospital East
Bardstown Road
Blankenbaker Parkway 11330 Main Street, Middletown, KY 40243
Brownsboro Road
Corporate Center
Dixie Highway
Fern Creek
Fern Valley Road*
Hikes Point
Hurstbourne Parkway
Jeffersontown*
Jewish Hospital*
Outer Loop
Poplar Level Road*
Prospect
St. Matthews
Springhurst
West Broadway
Owensboro
Shelbyville

4921 Brownsboro Road, Louisville, KY  40222
601 West Market Street, Louisville, KY  40202
5250 Dixie Highway, Louisville, KY  40216
10100 Brookridge Village Blvd, Louisville, KY  40291
3619 Fern Valley Road, Louisville, KY 40219
3902 Taylorsville Road, Louisville, KY 40220
661 South Hurstbourne Parkway, Louisville, KY 40222
3811 Ruckriegel Parkway, Louisville, KY 40299
200 Abraham Flexner Way, Louisville, KY 40202
4655 Outer Loop, Louisville, KY  40219
1420 Poplar Level Road, Louisville, KY 40217
9101 US Hwy 42, Prospect, KY 40059
3726 Lexington Road, Louisville, KY  40207
9600 Brownsboro Road, Louisville, KY  40241
2028 W. Broadway, Louisville, KY  40203
3550 Frederica Street, Owensboro, KY  42301
1614 Midland Trail, Shelbyville, KY  40065

Janet Pierce
Claudio Monzon
Rodney Williams

B.J. Webb
Billy Blair
Jenifer Duncan

Barb Cutter
Lisa George
Terri Schumacher
Eric Higdon
Chip Hancock
Rob Nicolas
Jill Napier

270-782-9111
270-769-6356
502-695-9000
502-875-4300
859-264-0990
859-255-6267
859-224-1183
859-266-1165

502-897-3800
502-459-2200
502-254-7555
502-339-9700
502-584-3600
502-448-7000
502-231-5522

Jacob Call
Steve DeWeese

502-451-2006
502-425-2300

Mary Matheny

502-969-8999

Missy Fultz
Kathy Potts
Mike Elles
Pearlie Walker
Shirley Cecil
Tucker Ballinger

502-228-2755
502-893-2533
502-339-2200
502-772-7500
270-684-3333
502-633-6660

Republic Bank & Trust Company of Indiana

Clarksville
New Albany

610 Eastern Boulevard, Clarksville, IN  47129
3001 Charlestown Crossing Way, New Albany, IN 47150

Kari Thom
Todd Lancaster

812-288-1111
812-949-2600

* Projected to open in 2003

60

Republic Bancorp, Inc.
Directors
Charles E. “Andy” Anderson
President, Anderson Insurance & 
Financial Services
Larry M. Hayes
Deputy Mayor, Louisville Metro
Bill Petter
Vice Chairman, Republic Bancorp, Inc.
Sandra Metts Snowden
President, Realty World – Sandy Metts &
Associates
R. Wayne Stratton, CPA
Member, Jones, Nale & Mattingly PLC
Samuel G. Swope*
Chairman, Swope Automotive Group, Inc.
Bernard M. Trager
Chairman, Republic Bancorp, Inc.
A. Scott Trager
Vice Chairman, Republic Bancorp, Inc.
Steven E. Trager
President and Chief Executive Officer,
Republic Bancorp, Inc.

* Becomes Director Emeritus – April 10, 2003

Republic Bank & Trust Company
Directors
Phillip D. Bond *
Vice President, Metro United Way, Inc.
J. Michael Brown
Partner, Wyatt, Tarrant & Combs, LLP
Stan Curtis
Senior Vice President, Hilliard Lyons
Lawrence C. “Lonnie” Falk
Mayor, City of Prospect
George E. Fischer
Retired - Chairman, SerVend International, Inc.
D. Harry Jones
Executive Vice President, Jones Plastic &
Engineering Corp.
Thomas M. Jurich
Director of Athletics, University of Louisville
Bill Petter
Executive Vice President and Chief Operating
Officer, Republic Bank & Trust Company
Michael T. Rust, FACHE
President, Kentucky Hospital Association
Robert L. Shircliff *
Senior Vice President, Jewish Hospital
HealthCare Services, Inc.
Susan Stout Tamme **
President, Baptist Hospital East
Bernard M. Trager
Chairman of the Executive Committee,
Republic Bank & Trust Company
A. Scott Trager
President, Republic Bank & Trust Company
Steven E. Trager
Chairman and Chief Executive Officer,
Republic Bank & Trust Company

Beverly A. Wheatley
President, Wheatley Roofing Company, Inc.
Doug Wise *
President, Century Investment Group
* Term Expires March 2003
** Republic Bancorp, Inc. Director Nominee

Republic Bank & Trust Company
Advisory Directors
Eastern Kentucky Region 
(Frankfort, Lexington)
Tom Burich
Gordon Duke
Bill Johnson
Jas Sekhon
Dr. Emery Wilson
Western Kentucky 
(Bowling Green, Elizabethtown,
Owensboro)
Mark Harris
Gary Larimore
Dr. William Moss
Bill Osbourne *
Dr. Dattatraya Prajapati
Jody Richards
Kevin Shurn
G. Ted Smith
Jack Wells
Shelbyville
Todd Davis
Dr. Christin E. Honaker

* Term expires February 18, 2003

Republic Bancorp, Inc.
Executive Officers
Bernard M. Trager
Chairman
Steven E. Trager
President and Chief Executive Officer
A. Scott Trager
Vice Chairman
Bill Petter
Vice Chairman
Kevin Sipes
Executive Vice President and 
Chief Financial Officer

Republic Bank & Trust Company
Senior Management
Steven E. Trager
Chairman and Chief Executive Officer 
A. Scott Trager
President
Bill Petter
Executive Vice President and 
Chief Operating Officer
David Vest 
Executive Vice President and 
Chief Lending Officer

Kevin Sipes
Executive Vice President and 
Chief Financial Officer
Jenifer Duncan
Senior Vice President and 
Regional Chief Operating Officer
Ed McDougal
Senior Vice President and 
Regional Sales Manager
Claudio Monzon
Senior Vice President and Regional Managing
Director of Western Kentucky

Bank Administration
Jeff Nelson 
Senior Vice President
Compliance
Garry Throckmorton 
Senior Vice President
Cash Management
Cathy Slider
Senior Vice President
Commercial Lending
Darryl Witten
Senior Vice President
Human Resources
Ruth Gillespie
Senior Vice President
Information Technology
Tom Clausen
Senior Vice President
Legal
Mike Ringswald
Senior Vice President and General Counsel
Loan Administration
Shannon Reid
Senior Vice President
Marketing
Michael Sadofsky
Senior Vice President
Preferred Client Services
John Mason
Senior Vice President
Purchasing & Facilities Management
Rod Gillespie
Senior Vice President
Republic Financial Services
Mike Keene
President
Treasury
Greg Williams
Senior Vice President and Chief Investment
Officer

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Republic Bancorp, Inc.

601 West Market Street

Louisville, KY 40202

(502) 584-3600

or outside Louisville

(888) 584-3600

www.republicbank.com

REPUBLIC
BANCORP

Republic Bancorp, Inc. ("Republic" or "the Company") is a bank holding company headquartered

in Louisville, Kentucky. The Company derives substantially all of its revenue and income from the

operation of its wholly-owned subsidiaries, Republic Bank & Trust Company – a Kentucky 

FINANCIAL HIGHLIGHTS

Years Ended December 31,

chartered bank and trust company and Republic Bank & Trust Company of Indiana – an Indiana

(dollars in thousands, except per share data)

2002

2001

2000

chartered bank and trust company (collectively "Bank"). Republic’s Class A Common Stock trades

on the NASDAQ Stock Market ® under the symbol RBCAA.

Republic Bancorp, Inc. and all its subsidiaries have 26 full-service banking centers.  Republic Bank

& Trust Company has 24 full-service banking centers, 14 of which are located in the metropolitan

Louisville area, including the Company’s principal office.  There are four banking centers located in

Lexington, Kentucky, two in Frankfort, Kentucky and one each in the Kentucky communities of

Bowling Green, Elizabethtown, Owensboro and Shelbyville. We project to open an additional 5

banking centers in 2003.  Republic Bank & Trust Company of Indiana has two full-service banking

centers located in Clarksville and New Albany, Indiana.

At the close of 2002, Republic had assets of nearly $1.8 billion, making the corporation the 

second-largest independent bank holding company in Kentucky. And, because Republic is locally

headquartered, the money we make in our community, stays in our community. 

Locations

Louisville, KY

Lexington KY

Frankfort, KY

Bowling Green, KY

Clarksville, IN

Elizabethtown, KY

Owensboro, KY

Shelbyville, KY

New Albany, IN

Indicates principal office

14

4

2

1

1

1

1

1

1

Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Non-interest income
Non-interest expense
Income before taxes
Net income

$

106, 10 1
41,76 1
64,340

3,338      

24,522
53,839
31,685
20,489

Balance Sheet Data:
Total assets
Total securities
Total loans, net
Allowance for loan losses
Total deposits
Repurchase agreements and other short-term borrowings
Other borrowed funds
Total stockholders' equity

$1,752,706 
288,459 
1,299,915 
10, 148 
1,040, 190 
224,929 
319,299 
150,796 

Per Share Data:
Basic Class A Common earnings per share
Basic Class B Common  earnings per share
Diluted Class A Common  earnings per share
Diluted Class B Common  earnings per share
Book value (1)
Cash dividends declared per Class A Common
Cash dividends declared per Class B Common

Performance ratios:
Return on average assets
Return on average common equity
Net interest margin
Efficiency ratio

(1) Exclusive of accumulated other comprehensive income.

$

1.23 
1.2 1 
1.20    
1.1 9   
8.80  
0.2 1  
0.1 9

%

1.25 
14.44 
4.07 
6 1

$

117,396
57,9 17
59,479
3,493
19,741
50,340
25,387
16,808

$1,590,83 1
293,945 
1, 176,094 
8,607
866,358 
282,023 
296,950 
125, 115 

$

1.04
1.03
1.0 1
0.99
7.75
0.18
0.16

%

1.10
13.85
4.04
62

$

118,660
66,851    
51,809
1,382
8,859
40,029
19,257
12,921

$1,508,072
275,568
1,136,531
7,862
863,76 1
263,001
246,050
116,942

$

0.78
0.77
0.76
0.75
7.06
0.15
0.14

%

0.89
11.77
3.7 1
66

TABLE OF CONTENTS

2  Letter to Shareholders

38 Consolidated Financial Statements

19 Selected Financial Data

43 Notes to Consolidated Financial Statements

20 Management’s Discussion and Analysis

60 Corporate Information

37 Report of Independent Auditors

On the cover: Mike Keene, President – Republic Financial Services; Carolle Jones Clay, V.P. – Community Relations;

Claudio Monzon, Sr. V.P. – Regional Managing Director of Western Kentucky; Amy Lim, V.P. – Commercial Lending

1

Fellow Shareholders,

"Yes, somebody’s listening."  That sentence is the new theme line introduced in Republic Bank’s 2002

television campaign. It embodies our spirit of responsiveness. And, as you’ll see our year unfold in the pages

before you, we have responded quite well. We’ve responded with record income. We’ve responded with

innovative products. We’ve responded with new twists on existing services. We’ve responded with a

continued commitment to empowering our associates to do whatever it takes to meet and exceed 

client needs.

Our listening paid off, because 2002 was another record year of earnings at Republic. Our net income

for the year was $20.5 million, a substantial increase of $3.7 million over 2001. Diluted earnings per Class A

Common stock increased 19% to $1.20. Return on average assets (ROA) and return on average equity

(ROE) were 1.25% and 14.44%, respectively, compared to 1.10% and 13.85% during 2001. Success resulted

from increases in net interest income, commercial and residential mortgage loan volume, income from

Refunds Now® and deposit fees. Our success continued with 17,500 new checking accounts, cash

management growth (primarily business deposits) of more than $80 million, and over $1 billion in new loans

closed, including almost $300 million in commercial real estate loans.

Mortgage banking performance was certainly strong in 2001, and this past year proved to be even

stronger.  For two years, the public has asked for long-term, fixed-rate loans due to the historically low

interest rate environment. Once again, we listened, responding to the need with exemplary client service

and innovative market-leading products such as our "$999" maximum closing cost, residential real

Our success stems not only from listening to our clients, but listening to our hearts, as well. During 2002

we continued to immerse ourselves in community involvement. I am proud and honored that we received The

Federal Home Loan Bank of Cincinnati’s 2002 Community Partnership Award for affordable housing and

community investment achievement, awarded to only one of 750 members from a district comprising

Kentucky, Ohio and Tennessee. I am also proud that we were the

Presenting Sponsor of the Kentucky Derby Festival’s Pegasus Parade,

as well as sponsors of charity walks for the American Heart

Association, Diabetes Association, Title Sponsor of the Boys and

Girls division of the Louisville Invitational Tournament, and

countless other activities.

Yes, we listened a lot in 2002. And we responded well. So well,

in fact, that we were able to open four new banking centers

through March 2003 and have plans to build an additional four new

banking centers in Louisville and one in Lexington, with other new

locations under review. It’s an exciting time for Republic Bank and,

with your help and support, our 600+ associates are dedicated to

respond strongly and boldly, making Republic a solid financial

investment for many years to come.

estate loan product. The result? We surpassed the mark set in 2001 by originating $791 million in 

Sincerely,

fixed-rate, secondary market loans.

As you can see, our traditional bank products were extremely successful, but we also heard the 

need to continue development of new products for the underserved and unbanked customer. 

We responded with "Honor Plus,"  "UltraCash®," "Currency Connection®," and  "Deferred 

Deposit Transactions." 

"Honor Plus" is a card-based demand deposit account with strictly point-of-sale and ATM capabilities,

and after twelve months, offers customers eligibility for a traditional checking account. After just three

months of operation in all banking centers, we have opened over 1,000 accounts with balances of $436,000.

"UltraCash" is another card-based product that gives clients instant access to their money 24 hours 

a day, 7 days a week, while eliminating excessive fees typically associated with cashing checks. This product

has been popular in building relationships with the Hispanic community. UltraCash currently serves 1,000

households and continues to grow.

"Currency Connection" is also a card-based solution for unbanked individuals who currently receive

payroll or government payments via a check. This product, to be offered nationwide, allows their funds to 

be electronically deposited to an account, which may then be accessed with a card via an ATM or 

point-of-sale terminal. "Currency Connection" provides safety and security of funds, and eliminates costly 

check-cashing fees.

"Deferred Deposit Transactions" help customers resolve their short-term cash needs through our

affiliation with a base of over 300 stores throughout the country. We expect to cautiously grow the

number of customers we serve through an expanded regional store base.

Steven E. Trager

President and Chief Executive Officer

RETURN ON
AVERAGE
COMMON EQUITY (%)

RETURN ON
AVERAGE ASSETS (%)

15

14

13

12

11

10

1.40

1.20

1.00

0.80

0.60

0.40

0.20

NET INCOME ($)

In thousands

22,000

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2000

2001

2002

2000

2001

2002

2000

2001

2002

2

3

NEW BANKING CENTER EXPANSION

Republic Bank relies on the contributions and support of many outstanding corporate partners.  

Their continued commitment, trust and dedication positions us to prosper in the years ahead. 

Here are just a few of the many that make us successful.

Andy Mayer, V.P. – Sr. Banking Officer

Rod Gillespie, Sr. V.P. – Facilities, Purchasing & Security

Keri Jones, A.V.P. – Sr. Banking Officer

Jonathan Payne, V.P. – Sr. Banking Officer

Republic opened three new banking centers during 2002 in Louisville and southern Indiana. In March of 2003 

the Company opened a new location in Hikes Point in Louisville, and announced plans for 5 more new banking

centers in Louisville and Lexington throughout 2003. The Company also continues to actively review the

potential for adding new locations in its existing markets going forward.

4

7

$999 MAXIMUM CLOSING COSTS

Commercial Lending:

Tom Fangman, V.P.

Andy Powell, Sr. V.P.

Darryl Witten, Sr. V.P.

Craig Dunn, Sr. V.P.

John Mauldin, Sr. V.P.

Thanks to a dedicated lending force armed with the premier product in the market, the "$999" maximum closing

costs loan, Republic was identified as the leading producer of residential real estate loans in Jefferson County

during 2001. During 2002, Republic dramatically exceeded its 2001 performance. In December of 2002, the

Company rolled out a similar "$999" product for its commercial loan program and hopes to make even greater

strides in its commercial real estate lending during 2003.

8

Janice Kingsolver, V.P. – Loan Operations; Shannon Reid, Sr. V.P. – Loan Administration; Donna Blincoe, V.P. – Loan Operation; Mark Collins, V.P. – Mortgage Banking; David Vest, Executive V.P. – Lending

9

PERSONAL BANKING

Sandy Richardson, V.P. – Retail Bank Administration

Denise Brown, V.P. – Retail Bank Administration

Barbara Trager, V.P. – Bank Administration

Jeff Nelson, Sr. V.P. – Bank Administration

Margaret Wendler, V.P. – Training and Retail Sales

Kay Rothman, A.V.P. – Retail Banking Administration

Jeanette Brown, V.P. – Retail Banking Administration

With the sale of two Kentucky-based competitors during 2002, Republic became the "local" bank of choice in

many of its markets. As a result, the number of households serviced by the Company increased from 54,045 

in 2001 to 61,571 in 2002.

10

Shellie Pearcy, Internet Banking Manager; Patty Walls, A.V.P. – Overdraft Honor Manager; Rebecca Hamilton, V.P. – Telebanking

11

CASH MANAGEMENT

Casey Carwile, Cash Management Officer

Genie Stamper, A.V.P. – Cash Management

Cathy Slider, Sr. V.P. – Cash Management

Sharon McGee, A.V.P. – Cash Management

Steve Bates, Cash Management Officer

Logan Hillyard, Cash Management Officer

Republic’s Cash Management function continued to make great strides during 2002 as the total commercial

account balances increased to over $440 million. The strength of our Business Online Banking product provided

support for our existing customer base and attracted new clients, as well. Our local lockbox processing was

further enhanced during 2002 with additions to the imaging modules for both retail and wholesale lockboxes.

The Company also successfully introduced several new business product offerings including our Premier First

Money Market account, Free Business Checking and Billpay for Business during the year with plans to introduce

“Business Overdraft Honor” during 2003. 

13

Garry Throckmorton, Sr V.P. – Compliance 

Andy Parker, V.P. – Commercial Lending

John Mason, Sr. V.P. – Preferred Client Services 

12

REFUNDS NOW

®

COMMUNITY

Michael Sadofsky, Sr. V.P. – Marketing

Kenny Fox, V.P. – Non Traditional Bank Products

Cheri Shields, A.V.P. – Customer Services Manager

Alan Lodge, Sr. V.P./COO – Refunds Now

Bill Nelson, Sr. V.P.– Sales, Marketing & Customer Service

At Republic, community involvement 

is not just the right thing to do, it is a way

of life. From community cookouts at

banking centers, to sponsorship of the

"Kentucky Derby Festival Pegasus

Parade" and the “Republic Bank Boys’

and Girls’ Louisville Invitational” basketball

tournaments along with countless other

activities, Republic’s involvement in

community activities is second to none.   

During 2002, Republic expanded its tax preparer network by over 17%. As a result, Refunds Now generated 

$6.5 million in revenue, a 25% increase over 2001. Thanks to the technology associated with Refunds Now, the

Company was able to add "Currency Connection" to its product list in 2002 and was able to significantly expand

its "Deferred Deposit" opportunities during the year.

14

15

It takes many talented

professionals to realize the high

caliber of service we offer our

many clients each and every day.

Here are a few of the 600+

associates who help make

Republic the most responsive

bank in our market.

Duane Wilson, V.P. – Collections

Sandra Lamison, V.P. – Commercial Credit

Debbie Rogers, V.P. – Quality Control

Ann Taber, V.P. – Loan Servicing

BEHIND THE SCENES

Mike Rice, V.P. – Tech Support; Brenda Haley, V.P. – Central Operations;

Dennis Lanham, V.P. – PC Support; Tom Clausen, Sr. V.P. – Information Technology; 

Kevin McKay, V.P. – Computer Operations; Mike Mather, V.P. – Systems Programming

Joe Sutter, V.P. – Treasury

Ruth Gillespie, Sr. V.P. – Human Resources

Ann Bauer, V.P. – Internal Audit

Jack Horn, V.P. – Accounting

Mike Ringswald, Sr. V.P. – General Counsel

Greg Williams, Sr. V.P. – Treasury 

17

2002 FINANCIAL REVIEW

18

Steve Trager, President & CEO; Bernard Trager, Chairman; Bill Petter, Vice Chairman; Scott Trager, Vice Chairman; Kevin Sipes, Executive V.P. – CFO

(L. to R.)

Jenifer Duncan – Perimeter

Tucker Ballinger – Shelbyville

Pearlie Walker – W. Broadway

Rodney Williams – Frankfort

Steve DeWeese – Hurstbourne Pkwy.

Barb Cutter – Baptist East

B.J. Webb – Chevy Chase

Jill Napier – Fern Creek

Kari Thom – Clarksville

Mary Matheny – Outer Loop

Jacob Call – Hikes Point

Janet Pierce – Bowling Green

Missy Fultz – Prospect

Todd Lancaster – Charlestown Rd.

Billy Blair – Harrodsburg Rd.

Lisa George – Bardstown Rd.

Terri Schumacher – Blankenbaker Pkwy.

Eric Higdon – Brownsboro Rd.

Kathy Potts – St. Matthews

Shirley Cecil – Owensboro

Ed McDougal – Regional Sales Manager

Rob Nicolas – Dixie Hwy

Mike Elles – Springhurst

Chip Hancock – Corporate Center

Claudio Monzon – Elizabethtown

5

OVERDRAFT
HONOR

COIN TOSS

HONOR PLUS

CURRENCY
CONNECTION

®

ULTRA CASH

®

REFUNDS NOW

®

$999 MORTGAGE

As a service to our personal

As an additional benefit to

"Honor Plus" is a 

Currency Connection is a

existing clients and a way to

card-based demand deposit

national, card-based

checking clients, Republic

permits selected clients to

overdraft their accounts 

up to $500 for the Bank’s

customary fee. This service

allows our clients to avoid

the headaches and excessive

costs of returned checks.

introduce potential clients

to the Company, Republic

installed "Coin Toss" coin

counting machines in the

lobby of each banking

center that are free to the

public.  This compares to

similar coin counting

machines at local retailers

that charge as much as 9%

for a transaction.

account for clients who do

not qualify for a traditional

checking account. Clients

are able to access their

funds through ATMs and

retail point of sale transac-

tions. After 12 months in

good standing, the Honor

Plus client may become

eligible for a traditional

checking account.

solution for "unbanked"

individuals that enables

them to receive payroll or

government payments via

Ultra Cash is another card-

based product designed for

clients, who traditionally

transact their personal

business in cash, offering

them security and funds

direct deposit. This account

access through ATMs and

can be accessed at an ATM

retail point-of-sale

or through a retail 

point-of-sale transaction.

terminals. This product has

been well received in the

local Hispanic market. As a

result, the Company has

hired bilingual customer

service and call center

representatives and made

its ATMs and Infoline

(VRU) bilingual.

®

Through a nation-wide

network of tax preparers,

Republic significantly grew

its market share of Refund

Anticipation Loans and

Electronic Refund Checks

during 2002. These

products allow taxpayers 

to receive their tax refund

checks more quickly

through Republic by

electronic means rather

than the traditional 

paper-check method.

$999 
COMMERCIAL
LENDING

During the fourth quarter

of 2002, Republic began

offering a "$999"

commercial real estate

product that caps all closing

costs, exclusive of title

Beginning in December

2000, Republic capped

closing costs at $999 on 

all fixed-rate residential

mortgage loans. This

market innovation has

enabled the Company to

insurance, at $999. Armed

continue to capture a

significant share of the

home loan refinance

with this market leading

product, the Company

plans to aggressively pursue

activity in 2002. To receive

commercial real estate

the $999 product, clients

were required to maintain 

a primary checking account

with the Bank, and as a

result, the Company’s

checking account base

grew dramatically. Also, as

part of the "Partnership

Package", the Company

routinely approved many 

of these clients for a home

equity line-of-credit at no

additional cost.   

$999Mortgage

loans during 2003.

$999 
COMMERCIAL
LENDING

PREMIER FIRST

Premier First is the

Company’s premium

interest bearing money

market account for business

clients. This product offers

competitive interest rates

that are typically tied to

traditional market indices.

The Premier First money

market account is FDIC

insured up to $100,000 and

is further protected by the

financial strength and

security of Republic.

6