Republic Bancorp, Inc. Annual Report 2003

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FY2003 Annual Report · Republic Bancorp, Inc.

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R E

P U B L

I C

B A N C O R P

2 0 0 3

A N N U A L

R E P O R T

Republic Bancorp, Inc.

601 West Market Street

Louisville, KY 40202

(502) 584-3600

or outside Louisville

(888) 584-3600

www.republicbank.com

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 chartered bank and trust

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

(collectively "Bank"). Republic’s Class A Common Stock trades on the NASDAQ Stock Market ® under the

symbol "RBCAA".

Currently, Republic has 33 full-service banking centers, 19 of which are located in the metropolitan Louisville

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

Kentucky, two in Frankfort, Kentucky and one each in the Kentucky communities of Bowling Green,

Elizabethtown, Georgetown, Owensboro and Shelbyville. Republic Bank & Trust Company of Indiana has

two full-service banking centers located in Clarksville and New Albany, Indiana, with one under construction

in Jeffersonville.

At the close of 2003, Republic had assets of $2.1 billion, making the corporation the second-largest

independent bank holding company in Kentucky.

Locations

Louisville, KY
Lexington KY
Frankfort, KY
Bowling Green, KY
Elizabethtown, KY
Georgetown, KY
Owensboro, KY
Shelbyville, KY
Clarksville, IN
New Albany, IN
Jeffersonville, IN

Indicates principal office

19
5
2
1
1
1
1
1
1
1
1

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

2003

2002

2001

As of and for the Years Ended December 31,

Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Non interest income
Non interest expenses
Income before income tax expense
Net income

119,060

36,795
82,265

6,574

30,933
62,859
43,765
28,203

106,101
41,761
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
Federal Home Loan Bank borrowings
Total stockholders' equity

2,127,771
410,931
1,567,993
13,959
1,297,112
220,040
420,178
169,379

Per Share Data:
Basic Class A Common Stock earnings per share
Basic Class B Common Stock earnings per share
Diluted Class A Common Stock earnings per share
Diluted Class B Common Stock earnings per share
Market value
Book value
Cash dividends declared per Class A Common Stock
Cash dividends declared per Class B Common Stock

Performance ratios:
Return on average assets (ROA)
Return on average equity (ROE)
Net interest margin

1.67
1.62
1.64
1.59

19.54

9.96
0.506
0.460

1.47
16.88
4.50

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

1.2 3
1.21
1.2 0
1 .19
11 .27
8.96
0.209
0.190

1.25
14.44
4.07

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

1.04
1.03
1.01
0 .99
13.49
7.77
0.176
0.160

1.10
13.85
4.04

TABLE OF CONTENTS

2 Letter to Shareholders

44 Consolidated Financial Statements

21 Selected Consolidated Financial Data

49 Notes to Consolidated Financial Statements

22 Management’s Discussion and Analysis

66 Corporate Information

43 Report of Independent Auditors

On the cover: Jonathan Payne - Sr. V. P. – Louisville Region, Cathy Slider - Sr. V.P. – Cash Management, Steve DeWeese - Sr. V.P. – Business Development,

Kathy Potts - Sr. V.P. – Louisville Region, Jenifer Duncan - Sr. V.P. – Lexington Region, Andy Powell - Sr. V.P. – Commercial Lending

Valued Shareholders,

checking account and automatic approval on a home equity line of credit at no additional cost. As a result

of this success, Louisville’s Business First magazine recognized Republic as the number one local mortgage

Proud, Humble, Focused, Passionate, and Enthusiastic. These five words best sum up my feelings coming

originator for the second consecutive year.

out of 2003 and looking ahead to 2004 and beyond.

Deposit fee income also contributed meaningfully to non interest income growing 28% from $8.3 million in

Proud because the past year was one of record earnings and significant growth in our banking centers.

2002 to $10.7 million in 2003. The rise in deposit fee income resulted from growth in Republic’s transaction

Humble because we continue to invest our time and resources into the communities in which we live and

accounts, as we opened nearly 17,000 new accounts during 2003. Certainly our ability to offer competitive

work. Focused on positioning the Company as the Bank of choice in all of our markets. Passionate about

products combined with impecable service through an expanded banking center network continues to

servicing our clients at a level unmatched anywhere in the industry. Enthusiastic for the future because of

attract great numbers of clients.

the strong client relationships we have formed providing us an opportunity to grow for many years to come.

Non interest expenses increased during 2003 primarily resulting from our

In 2003, we made a significant commitment to “Building for our Future”. As a locally owned company, we

investment in six new locations. Although new banking centers typically

remain nimble, able to respond and differentiate ourselves from the competition. We believe our results

do not become profitable for twelve to eighteen months, they enhance

speak for themselves. During 2003 we posted net income of $28.2 million representing a 38% increase or

access to potential new clients and allow us to be closer to our current

$7.7 million over 2002. Diluted earnings per Class A Common Stock increased 37% over 2002 to $1.64.

clients – letting us further expand these vital banking relationships.

We provided one of the highest returns in the Company’s history for our shareholders as reflected by a

These new banking centers represent a tremendous investment for our

1.47% return on average assets (ROA) and a 16.88% return on average equity (ROE) for the year. In

future, but one that we believe is essential for the long-term success of

addition to these solid earnings results, the Company surpassed $2 billion in total assets, a significant

the Company.

milestone in our history.

Another key ingredient to our success is maintaining our high standards

The financial achievements of 2003 resulted from success across many different traditional and non-

of asset quality. Republic’s percentage of delinquent loans to total loans

traditional lines of business. Net interest income increased 28% during the year primarily as a result of

and percentage of non-performing loans to total loans remained below 1% at 0.82% at December 31,

growth in our residential real estate loan portfolio combined with growth in our deferred deposit and

2003, both indicators of strong asset quality. We are extremely proud of our documented track record for

Refund Anticipation Loan programs.

strong asset quality and sound underwriting practices at Republic.

Success on the lending side of the balance sheet was complemented by achievements in our Cash

We look ahead to 2004 with much enthusiasm and tremendous focus. Our goals remain lofty for 2004

Management function, which continued to attract low cost deposits during 2003 primarily through the

despite a projected downturn in secondary market lending and its contributions to the Company’s bottom

"Premier First" product. Our ‘Cash Management’ relationships include many types of businesses such as

line. Our traditional banking strategies in 2004 will be simple and time-tested. In commercial banking, the

professional groups and educational institutions, as well as many major hospitals. Investment in technology

focus will be to grow the balance sheet through the commercial lending and commercial cash management

and recruiting of additional associates in this line of business are important factors that will continue to pay

areas without sacrificing the credit quality we hold so dear. For our retail banking, the focus will be to make

dividends for the Company. We believe that we are uniquely positioned, as the largest Kentucky-owned

our newest banking centers profitable ahead of our already aggressive goals. Matching our success from

financial institution based in our local area, to provide service to any size organization in our communities.

2003 will be a difficult task, but a challenge our 600-plus associates are ready to face.

Non interest income was once again strong for the Company increasing 26% to $30.9 million for the year.

We also remain excited about the prospects for our Refunds Now® and deferred deposit programs in 2004.

When speaking of non interest income we must start with the tremendous effort of our lending staff who

We believe our size and technology provide us the capability to succeed in these businesses. Our senior

originated approximately $800 million in secondary market residential real estate loans. Their efforts

management team remains diligent in its oversight of these two nontraditional lines of business and

contributed not only $11.1 million in mortgage banking income, but forged long-term relationships with

optimistic about their potential contribution in the future.

thousands of new clients through the Company’s partnership package, which includes an "Absolutely Free"

We maintain our belief that investment in the community is paramount to our success. During 2003 we

continued as the proud sponsor of the Kentucky Derby Festival Pegasus Parade and various local high school

basketball tournaments, including being title sponsor of the boys and girls division of the Louisville

Invitational Tournament. We also were contributors of both time and resources to Habitat for Humanity,

Hospice, American Heart Association, MS Society, Juvenile Diabetes Foundation, March of Dimes and Senior

Housing Crime Prevention, just to name a few. We are proud of our participation in these worthy causes

and will continue our commitment in the future of dedicating our time and resources to the communities

where we live and work.

It is my belief that success comes to those who are focused on doing the job at hand with determination

and conviction – the reward is in pushing the limits on what we expect of ourselves, and not with the

expectations of what that success will bring. At Republic, we maintain unwavering adherence to improving

the bottom-line and a commitment to creating an environment where our associates can realize their

potential and excel in serving our clients. Our management team and all of our associates continue to work

tirelessly to position the Company for future success. So, while we are all extremely proud of what we

accomplished in 2003, our associates realize there is much work to be done in order to achieve even greater

success in 2004 and beyond.

Steven E. Trager

President and Chief Executive Officer

RETURN ON
AVERAGE EQUITY (%)

DILUTED CLASS A
COMMON STOCK
EARNINGS PER SHARE ($)

1.80

1.60

1.40

1.20

1.00

0.80

0.60

NET INCOME ($)

In thousands

30,000

28,000

26,000

24,000

22,000

20,000

18,000

16,000

14,000

12,000

10,000

8,000

2001

2002

2003

2001

2002

2003

2001

2002

2003

R E P U B L I C ’ S C O R P O R A T E F A C I L I T I E S

Republic Bank
Corporate Center
601 West Market Street,
Louisville

Cash Management
Compliance
Executive Offices
Finance/Accounting
Information Technology

Internal Audit
Legal
Marketing
Purchasing & Facilities

Management

Republic Financial

Services
Treasury
Trust

Republic Bank Place
661 S. Hurstbourne Parkway,
Louisville

Commercial Lending
Loan Administration
Mortgage

Republic Bank Building
9600 Brownsboro Road,
Louisville

Bank Administration
Human Resources

Banking Center Executives

(3rd Row) Tucker Ballinger – Shelbyville, Steve DeWeese – Hurstbourne, Billy Blair – Harrodsburg Rd., Todd Lancaster – Charlestown Rd.,
Scott Osborn – Andover, Barb Cutter – Baptist East, David Jett – New Cut Rd., Andy Mayer – Poplar Level Rd., Chip Hancock – Corporate Center,
Jacob Call – Hikes Point (2nd Row) Rodney Williams – Frankfort, Mary Matheny – Outer Loop, Jeffrey Zinger – Perimeter Dr., Janet Pierce –
Bowling Green, Eric Higdon – Springhurst, Kari Thom – Clarksville, Cindy Burton – Tates Creek, Jill Napier - Fern Creek, Rob Nicolas – Dixie Hwy.
(1st Row) David Krebs – St. Matthews, B.J. Webb – Chevy Chase, Keri Jones – Brownsboro Rd., Pearlie Walker – West Broadway, Missy Fultz –
Prospect, Steve Coleman – Fern Valley Rd., Larry Stewart – Jeffersontown, Lisa George – Bardstown Rd., Shirley Cecil – Owensboro

C O M M U N I T Y I N V O L V E M E N T

REPUBLIC

“...investment in the community is paramount to our success.”

- Steve Trager
President and CEO

Republic Bank Community Clean-Up
St. Matthews banking center

Republic Bank Girls'
Louisville Invitational Tournament

Republic Bank Team at
American Heart Walk

Republic Bank sponsorship
Green Mile program

Republic Bank – Brightside
Community Wide CleanUp

Republic Bank sponsors
Kentucky Derby Festival's Pegasus Parade

BANCORP

Hikes Point Banking Center
3902 Taylorsville Road
Louisville, Kentucky
Opened March 2003

Left Page: Joe Sutter - V.P./Treasury, Ed McDougal - Sr. V.P./Chief Operating Officer –

Secondary Market Lending Right Page: (Back Row) Sandra Lamison - V.P. –

Commercial Credit, Janice Kingsolver - V.P. – Loan Processing, Kent Rohrer - V.P. –

Commercial Loan Operations, Donna Blincoe - V.P. – Loan Operations (Front Row)

Ann Taber - V.P. – Loan Servicing, Duane Wilson -V.P. – Collections, Shannon Reid -

Sr. V.P. – Loan Administration

Jewish Hospital Banking Center
224 East Muhammad Ali Boulevard
Louisville, Kentucky
Opened May 2003

Left Page: Barb Cutter - V.P., Larry Kozlove - Sr. V.P., John Mason - Sr. V.P.

Right Page: (Back Row) Jeff Norton - Sr. V.P. – Commercial Banking, Commercial

Lending: Tom Fangman - V.P., John Mauldin - Sr. V.P., Craig Dunn - Sr. V.P.

(Front Row) Andy Powell - Sr.V.P., Darryl Witten - Sr. V.P., Bob McQueary - V.P.

Jeffersontown Banking Center
3811 Ruckriegel Parkway
Louisville, Kentucky
Opened May 2003

Left Page: Sharon Terrell - Training Development Officer, Margaret Wendler - V.P. –

Retail Sales & Training, Laura Dixon - Loan Training Specialist Right Page: Ron Jolly -

A.V.P. – Bardstown Road, Greg Siegrist - V.P. – Business Development, Amy Lim - V.P. –

Commercial Lending, Drew Perkins - Banking Officer - Blankenbaker

New Cut Road Banking Center
5125 New Cut Road
Louisville, Kentucky
Opened September 2003

Left Page: Rebecca Hamilton - V.P. – Telebanking, Patty Walls - A.V.P. – Overdraft

Honor, Vikki Kisling - Internet Banking Manager Right Page: Cash Management:

(Back Row) Cathy Slider - Sr.V.P., Jason Morrison - Cash Management Officer, Logan

Hillyard - A.V.P., Casey Carwile - V.P., Sharon McGee - V.P., Meredith Brown - V.P.

(Front Row) Tom Odle - V.P., Kevin Wynne - Cash Management Officer - Tuition First,

Ellen Wilson - Cash Management Officer

Poplar Level Road Banking Center
1420 Poplar Level Road
Louisville, Kentucky
Opened October 2003

Left Page: Kathy Potts - Sr. V.P. – Louisville, Claudio Monzon - Sr.V.P. – Elizabethtown,

Bowling Green, Owensboro, Georgetown, Frankfort, Shelbyville, Jenifer Duncan - Sr.

V.P. – Lexington, Jonathan Payne - Sr. V.P. - Louisville Right Page: (Back Row)

Kay Rothman - V.P. – Bank Administration, Jeanette Brown - V.P. – Bank

Administration, Jeff Nelson - Sr.V.P. – Retail Bank Administration, Denise Brown - V.P.

– Bank Administration (Front Row) Sandy Richardson - V.P. – Bank Administration,

Barbara Trager - V.P. – Bank Administration

Tates Creek Road Banking Center
3608 Walden Drive
Lexington, Kentucky
Opened November 2003

Left Page: (Back Row) Alan Lodge - Sr. V.P. – COO – Refunds Now, Bryan Hendrick -

V.P. – Deferred Deposits, Kenny Fox - V.P. – Currency Connection (Front Row)

Mike Keene – President – Republic Financial Services Right Page: (Back Row) Mike

Ringswald - Sr. V.P. – General Counsel, Mike Beckwith - V.P. – Controller, Ann Bauer -

V.P. – Internal Audit, Jack Horn - V.P. – Accounting, Garry Throckmorton - Sr. V.P. –

Compliance, Paula Langford - V.P. –Trust, (Front Row) Rod Gillespie - Sr. V.P. –

Facilities, Security, Purchasing, Dorothy Pitt - Sr. V.P. – Human Resources,

Greg Williams - Sr.V.P. – Treasury - Chief Investment Officer

Georgetown Banking Center
430 Connector Road
Georgetown, Kentucky
Opened January 2004

Left Page: Carolle Jones Clay - V.P. – Community Relations, Michael Sadofsky - Sr. V.P. –

Marketing Right Page: (Back Row) Mike Rice - V.P. - Tech Support, Mike Mather - V.P.

– Systems Programming, Keith Koebel - A.V.P. – PC Support, Dennis Lanham - V.P. –

PC Support, Kevin McKay - V. P. – Computer Operations (Front Row) Brenda Haley - V.P.

– Central Operations, Tom Clausen - Sr. V.P. – Information Technology, Shellie Pearcy -

Systems Security Administrator

(Back Row) David Vest - Executive V.P. – CLO, Bill Petter - Vice Chairman, Scott Trager -

Vice Chairman (Front Row) Kevin Sipes - Executive V.P. – CFO, Steve Trager - President

and Chief Executive Officer, Bernard Trager - Chairman

2 0 0 3 F I N A N C I A L R E V I E W

The following table sets forth Republic's selected consolidated historical financial information from 1999 through 2003.

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."

As of and for the Years Ended December 31,
2001

2000

2002

(dollars in thousands, except per share data)

Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Non interest income
Non interest expenses
Income before income tax expense
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

Federal Home Loan Bank borrowings
Total stockholders' equity

2003

119,060
36,795
82,265
6,574
30,933
62,859
43,765
28,203

$ 2,127,771
410,931
1,567,993
13,959
1,297,112

220,040
420,178
169,379

Performance Ratios:
Return on average assets (ROA)
Return on average equity (ROE)
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
Tier 1 risk based capital
Total risk based capital
Dividend payout ratio

Other Key Data:
End of period full time equivalent employees
Number of bank offices

1.67
1.62
1.64
1.59
19.54
9.96
0.506
0.460

1.47%
16.88
4.50
56

0.82%
0.19
0.88
108

8.69%
8.08
11.99
12.99
30

645
31

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

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

1.23
1.21
1.20
1.19
11.27
8.96
0.209
0.190

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
13.49
7.77
0.176
0.160

1.10%
13.85
4.04
64

0.48%
0.23
0.73
154

7.96%
8.36
12.44
13.26
17

532
22

1999

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

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

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

263,001
246,050
116,942

215,718
231,383
103,770

0.78
0.77
0.76
0.75
6.19
7.04
0.151
0.138

0.89%

11.77
3.71
66

0.40%
0.12
0.69
193

7.58%
8.13
12.01
12.78
19

0.73
0.72
0.71
0.69
8.56
6.22
0.118
0.108

0.98%
11.90
3.96

0.38%
0.19
0.76
213

8.27%
8.61
13.36
14.28
16

462
22

467
21

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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,
Republic Bank & Trust Company of Indiana (collectively “Bank”) and Republic Funding Company. 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. Broadly speaking, forward-looking statements include:

• projections of the Company’s revenues, income, earnings per share, capital expenditures, dividends, capital

structure or other financial items;

• descriptions of plans or objectives of the Company’s management for future operations, products or services;
• forecasts of Republic’s future economic performance; and
• descriptions of assumptions underlying or relating to any of the foregoing.

The Company may make forward-looking statements discussing management’s expectations about:

• future credit losses and non-performing assets;
• the future value of mortgage servicing rights;
• the impact of new accounting standards;
• future short-term and long-term interest rate levels and their impact on Republic’s net interest margin, net

income, liquidity and capital; and

• future capital expenditures.

Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or
conditions, forward-looking statements often include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” or similar expressions. Do not unduly rely on
forward-looking statements. They detail management’s expectations about the future and are not guarantees. Forward-
looking statements speak only as of the date they are made, and management may not update them to reflect changes that
occur after the date the statements are made.

There are several factors, many beyond management’s control, that could cause results to differ significantly from

management’s expectations. These factors include, among other things, industry factors and company factors.

COMPANY OVERVIEW

As of December 31, 2003, Republic had a total of 29 banking centers in Kentucky communities and two in southern

Indiana. Republic’s two primary market areas are located in North Central and Central Kentucky. The North Central
Kentucky market includes the Louisville metropolitan area. Louisville, the largest city in Kentucky, is the location of
Republic’s headquarters and the location of 18 banking centers at December 31, 2003. Republic's Central Kentucky market
includes 11 banking centers in the following Kentucky cities: Bowling Green (1); Elizabethtown (1); Frankfort (2); Lexington,
the second largest city in Kentucky (5); Owensboro (1); and Shelbyville (1) at December 31, 2003. Republic Bank & Trust
Company of Indiana has offices located in New Albany and Clarksville, Indiana. Republic has also announced plans to open
one additional banking center in its Louisville market and one in both the southern Indiana and Georgetown, Kentucky
markets during early 2004.

Republic has developed a community banking network, with most of its banking centers located either in separate
communities or portions of urban areas that represent distinct communities. Each of Republic's banking centers is managed
by one or more officers with the authority to make loan decisions within Company policies and guidelines.

Republic continues to seek and evaluate additional expansion opportunities, either through the establishment of de novo

banking centers and/or through acquisitions of existing institutions in the financial services industry and ancillary non banking
businesses. The Company intends to continue to consider various strategic acquisitions of banks, banking assets or financial
services entities related to banking in those geographical areas that management believes would complement and increase
Republic's existing business lines, or expansion in new market areas or product lines that management determines would be
in the best interest of the Company and its shareholders.

Republic's operating revenues are derived primarily from interest earned from its loan and investment securities
portfolios and fee income from loan, deposit and other banking products. The Company has historically extended credit and
provided general banking services through its banking center network to individuals, professionals and businesses. Over the
past several years, the Company has begun to seek new lines of business to diversify its asset mix and further enhance its
profitability. While each new line of business reflects the Company's efforts to enrich its asset mix, each of these lines of

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business is an outgrowth of the basic community banking concepts in which the Company has traditionally engaged. The
Company principally markets its products and services through the following delivery channels:

Mortgage Lending - The Company utilizes its banking centers to offer a complete line of single family residential

mortgage products. The Company generally retains mortgage loans with variable rates or adjustable rates or with up to
10-year fixed rate terms. Prior to 2003, the Company typically sold its longer term fixed rate loans into the secondary market,
however, over the past 15 months Republic retained some 15 and 20 year fixed rate loans as part of a specific program.
Once closed, the secondary market loans are sold without recourse to institutional investors. Generally, fixed rate loans in
process or held for sale are covered by forward commitments to these investors, thus limiting Republic's interest rate risk.

During 2002, Republic began a practice of selling the majority of its fixed rate loans with the servicing retained by the

Company. When administering loans with the servicing retained, the responsibility of collecting principal and interest
payments, escrowing for taxes and insurance and remitting payments to the secondary market investors remains with
Republic. A fee is received by Republic for performing these standard servicing functions.

Commercial Lending - Commercial loans are primarily real estate secured and are generated at banking centers in the

Company's market areas. The Company makes commercial loans to a variety of industries, and intends to expand this
business through focused calling programs, seeking to broaden relationships by providing commercial clients with loan,
deposit and cash management services.

Preferred Client Services - Republic has established long standing relationships with the medical communities in its

primary markets. Special loan and deposit products have been tailored to meet the needs of physicians and their practices.

Consumer Lending – Traditional consumer loans made by the Company include automobile loans, home improvement

and home equity loans, operating lines of credit and personal loans (both secured and unsecured). With the exception of
home equity loans, which are actively marketed in conjunction with 1-4 family first lien mortgage loans, traditional consumer
loan products are not aggressively promoted in Republic’s markets.

Specialized Lending - Republic has pursued specialized lending opportunities to complement its traditional lending
programs. One specialized product line includes Refund Anticipation Loans (“RALs”) from Refunds Now®, a program special-
izing in tax refund anticipation services. Additionally, the Company also originates deferred deposit transactions, which are
In a deferred deposit transaction, customers can receive cash advances in
also commonly referred to as “payday loans”.
exchange for a check for the advanced amount plus a fixed fee. See below sections titled “Refunds Now” and “Deferred
Deposit Transactions” for additional information.

Internet Banking - Republic continues to expand its market penetration and service delivery by offering clients Internet

banking services through republicbank.com. Approximately 38% of the Bank's existing checking account clients utilize
Republic's Internet banking services as of December 31, 2003. Republicbank.com is also available to clients outside of
Kentucky and has over $134 million in deposits from 48 states and the District of Columbia as of December 31, 2003.

Other Banking Services - The Bank also provides investment management and trust services and engages in life, long

term care and title insurance sales, item processing and other related financial institution lines of business. At December
31, 2003, Republic had approximately $1 billion in trust assets under custody.

FACTORS THAT MAY AFFECT FUTURE RESULTS

There are factors, many beyond our control, which may significantly change the results or expectations of the Company.

Some of these factors are described below; however, many are described in the sections that follow. There are also other
items, which are included in the Annual Report on Form 10-K for the year ended December 31, 2003. Any factor described
in this report or in the Company’s 2003 Annual Report on Form 10-K could, by itself or with other factors, adversely affect
our business, results of operations or financial condition. There are also other factors not described in this report or in the
2003 Annual Report on Form 10-K which could cause our expectations to differ or could produce significantly different results.

Industry Factors

General business and economic conditions can significantly impact the Company’s earnings. General business
and economic conditions in the United States of America and abroad can impact the company. Conditions include short-term
and long-term interest rates, inflation, monetary supply, fluctuations in both debt and equity markets and the federal and
state economies in which we operate. Economic factors such as a customer’s loss of employment can limit the ability of the
customer to repay principal and interest on their outstanding loan.

The Company’s earnings are significantly impacted by the fiscal and monetary polices of federal and state
governments. The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the
United States of America.

Its polices determine, in large part, our cost of funds for lending and investing and the return we

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earn on those loans and investments, all of which impact our net interest margin.
of our financial instruments and earnings and can also affect our borrowers and their ability to repay their loans.

Its policies can materially affect the value

Republic’s industry is highly competitive. The Company operates in a highly competitive industry that could become
even more competitive as a result of legislation, regulatory and technological changes and continued consolidation. Many of
our competitors have fewer regulatory constraints and some have lower cost structures. Federal legislation could also
provide for changes in the banking laws that could impact the financial condition or results of operations of the Company or
its subsidiaries.

Republic is heavily regulated by federal and state agencies. The holding company and its subsidiary banks are

heavily regulated at the federal and state levels. The regulation is intended to protect the depositors, federal deposit
insurance funds and the banking system as a whole, not the shareholders of the Company. Changes in policies, regulations
and statutes could significantly impact the earnings or products that Republic may deliver. Also, failure to comply with laws,
regulations or policies could result in significant penalties or sanctions by regulatory agencies.

The Company relies on the accuracy and completeness of information provided by vendors, customers and

other counterparties.
on information furnished by or on behalf of customers or related entities to that customer. Our financial condition and
earnings could be negatively impacted to the extent the Company relies on information that is misleading or inaccurate.

In deciding whether to extend credit or enter into transactions with other parties, the Company relies

Company Factors

The holding company relies on dividends from its subsidiaries for most of its revenues. Republic Bancorp, Inc.

It receives substantially all of its revenue from dividends from its largest
is a separate legal entity from its subsidiaries.
subsidiary, Republic Bank & Trust Company. Various federal and state laws and regulations limit the amount of dividends
that may be paid to the holding company.

The Company’s accounting policies and estimates are key to how we present our financial statements.

Republic’s accounting policies and methods are fundamental to how we record and report our financial condition and results
of operations. Our management must exercise judgment in selecting and applying various accounting policies and making
estimates. Actual outcomes can be materially different than amounts previously estimated. Management has identified two
accounting policies as being critical to the presentation of the Company’s financial statements. These polices are described
below in the section titled “Critical Accounting Policies” and relate to the allowance for loan losses and the valuation of
mortgage servicing rights. Because of the inherent uncertainty of estimates, we cannot provide any assurance that the
Company will not significantly increase its allowance for loan losses if actual losses are more than the current amount
reserved or recognize a significant provision for impairment of its mortgage servicing rights.

The Company has lines of business or products other than banking.

In addition to traditional banking, i.e customer
loans and deposits, the Company provides RALs and Electronic Refund Check (“ERCs”), mortgage banking, ‘Overdraft Honor’
and deferred deposit transactions. Management believes this diversity helps mitigate the Company’s exposure to significant
downturns in any one segment of the banking industry; however, it also means that the Company’s earnings could be sub-
ject to different risks and uncertainties. The following details specific risk factors related to Republic’s lines of business:

• Mortgage banking activities can be significantly impacted by interest rates. Changes in interest rates can
impact gain on sale of loans, loan origination fees and loan servicing fees, which account for a significant portion
of mortgage-related revenues. A decline in interest rates generally results in higher demand for mortgage products
while an increase in rates generally results in a slow down in demand.
revenue will be positively impacted by more gains on sale, however, the valuation of mortgage servicing rights will
decrease and may result in a significant impairment.
demand for mortgage banking products could also adversely impact other programs/products in the bank such as,
home equity lending, title insurance commissions and service charges on deposit accounts. See below sections for
additional discussion of mortgage banking activities.

In addition to the previously mentioned risks, a decline in

If demand increases, mortgage banking

• Deferred deposit transactions represent a significant business risk and if the Company terminated the
business it would materially impact earnings of the Company. Deferred deposits are transactions whereby
customers receive cash advances in exchange for a check for the advanced amount plus a fixed fee (commonly
referred to as a “payday loan”). Various consumers groups have, from time to time, questioned the fairness of
deferred deposit transactions and have accused this industry of charging excessive rates of interest via the fee and
engaging in predatory lending practices. Both federal and state regulatory agencies have also questioned whether
this business should be permitted by member Banks. There can be no assurance that the FDIC or others will not
impose additional limitations on or prohibit banks from engaging altogether in deferred deposit transactions. There
also can be no assurances that private litigation might not result from the program, or that the Bank’s ability to
continue to engage in the business profitably or at all will not be negatively impacted by the requirements of

applicable laws, regulations or guidelines. The Company exiting this business, either voluntary or involuntary, would
significantly reduce earnings. See additional discussion about this product in a separate section titled “Deferred Deposit
Transactions” below.

• RALs represent a significant business risk and if the Company terminated the business it would materially
impact earnings of the Company. Republic offers Bank products to facilitate the electronic filing of tax returns
by individuals across the country. The Company is one of only a few financial institutions in the United States of
America that provides this service to potential taxpayers. Under this program, the taxpayer may receive a RAL or
In return the Company charges a fee for service. There is credit risk associated with a RAL because the
an ERC.
money is dispersed to the client before the Bank receives the client’s refund from the Internal Revenue Service
(“IRS”). There is minimal credit risk with an ERC because the Bank does not disperse the funds to the client until
the Company has received the refund from the IRS. Various consumers groups have, from time to time, questioned
the fairness of the Refunds Now program and have accused this industry of charging excessive rates of interest via
the fee and engaging in predatory lending practices. Pressure from these consumer groups could result in the
Company exiting this business at any time. Pressure from these consumer groups to the Company’s regulators
could also cause Republic to exit this line of business at any time. Exiting this line of business, either voluntarily or
involuntarily, would significantly reduce earnings. See additional discussion about this product in section titled
“Refunds Now” below.

• The Company’s ‘Overdraft Honor’ program represents a significant business risk and if the Company
terminated the program it would materially impact earnings of the Company. Republic’s “Overdraft Honor”
program permits selected clients to overdraft their accounts up to $500 for the Bank’s customary fee. Customers’
checking accounts that have been current for a certain period of time are allowed the privilege to enter into the
program. This service is not considered extending credit and is considered providing the customer of the Bank
with a service of paying checks for a fee when sufficient funds are not available. This fee, if computed as a
percentage of the amount overdrawn, can sometimes result in an extremely high rate of interest and thus
be considered excessive by some consumer groups. There can be no assurance, however, that the FDIC or others
will not impose limitations on this program or that the Bank’s ability to engage in the product will not be negatively
impacted by federal or other regulatory authorities. The Company, altering or eliminating this program, either
voluntarily or involuntarily, would significantly reduce earnings.

Republic’s stock price can be extremely volatile. The Company’s stock price can fluctuate widely in response to a
variety of factors. Factors include, actual or anticipated variations in the Company’s quarterly operating results, recommendations
by securities analysts, new technologies, operating and stock price performance of other companies, news reports and
changes in government regulations, just to name a few. The Company also has a low average daily trading volume, which
limits a person’s ability to quickly accumulate or quickly divest himself/herself of Republic’s stock.
daily trading volume can lead to large price swings based on a relatively few number of shares being traded.

In addition, a low average

HIGHLIGHTS

Net income for 2003 was $28.2 million, representing an increase of $7.7 million over 2002. Diluted earnings per Class

A Common Stock increased 37% for the year to $1.64. Republic’s rise in earnings was primarily due to increased net
interest income including deferred deposit transaction, gain on sale of mortgage loans, service charges on deposit accounts
and increased earnings at Refunds Now (as described below). Following is a brief description of a few Company highlights
during 2003:

1) Republic’s total assets surpassed $2 billion during the year ending 2003 with $2.1 billion in total assets. As of
December 31, 2003, Republic was the second largest independently-owned, Kentucky-based bank holding company.

2) Net interest income grew 28% during the year as the Company continued to benefit from a decline in short-term
market interest rates combined with growth in the loan portfolio, particularly in residential real estate loans,
deferred deposit transactions and RALs. The Company continued a program in 2003 of retaining fixed rate resi-
dential real estate loans and funding the loans with long-term Federal Home Loan Bank (“FHLB”) advances and
brokered CDs with laddered maturities while achieving an approximate spread of 2.00%.

3) 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 cost product, led to strong gains on
the sale of 1-4 family, fixed rate residential real estate loans into the secondary market. Altogether, the Company
sold over $850 million in secondary market loans during 2003.

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4) Refunds Now reported record earnings during 2003 due to a substantial increase in transaction volume related
to new sales and a shift in product mix to more RAL products. Overall, the number of tax preparers serviced by
Refunds Now during 2003 increased 79% over 2002 to 5,600 tax offices.

5) Republic opened six new banking centers during 2003 with three additional locations under construction that
are scheduled to open early in 2004.

6) Service charges on deposit accounts increased significantly during the year as the Company’s checking
accounts grew by nearly 10,000 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 fixed closing cost. Service charges on deposit accounts also
benefited from accounts opened at Republic’s six new banking centers during 2003 and from the growth in the
number of accounts eligible for the Company’s “Overdraft Honor” program.

7) Loans increased $272 million or 21% as Republic retained approximately $180 million in fixed rate residential
real estate loans, which the Company traditionally sold into the secondary market. Republic also achieved a $56
million increase in home equity loans outstanding as the Company added over 5,000 new home equity lines of
credit during 2003. These new lines of credit primarily originated from cross-selling opportunities created in
conjunction with the Company’s “$999” mortgage product.

8) The Company grew its deferred deposit transactions outstanding to $28 million at December 31, 2003.

Republic reported net income during 2002 of $20.5 million compared to $16.8 million for 2001, an increase of 22%.

Diluted earnings per Class A Common Stock shares increased 19% to $1.20 for the year ended December 31, 2002. On a
percentage basis, the increase in diluted earnings per Class A Common Stock 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
Refunds Now, gains on the sale of loans into the secondary market and service charges on deposits. Republic’s book value
increased from $7.77 at December 31, 2001 to $8.96 per share at December 31, 2002.

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 earnings per Class A Common Stock
Return on average assets (ROA)
Return on average equity (ROE)

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

2003

$ 28,203
1.64
1.47%
16.88

2002

$ 20,489
1.20
1.25%
14.44

2001

$ 16,808
1.01
1.10%
13.85

Republic’s consolidated financial statements and accompanying notes have been prepared in accordance with accounting

principles generally accepted in the United States of America. 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. Actual results could differ from
those estimates made by management.

Critical accounting policies are those that management believes are the most important to the portrayal of the
Company’s financial condition and results, and require management to make estimates that are difficult, subjective or
complex. Most accounting policies are not considered by management to be critical accounting policies. Several factors are
considered in determining whether or not a policy is critical in the preparation of financial statements. These factors include,
among other things, whether the estimates have a significant impact on the financial statements, the nature of the estimates,
the ability to readily validate the estimates with other information including third parties or available pricing, sensitivity of the
estimates to changes in economic conditions and whether alternative methods of accounting may be utilized under accounting
principles generally accepted in the United States of America. Management has discussed the identification and determination
of critical accounting policies with the Company’s Audit Committee.

Republic believes its critical accounting policies and estimates include the valuation of the allowance for loan losses

and mortgage servicing rights.

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Allowance 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 Audit Committee and 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 capacity, estimated collateral values, economic conditions, regulatory requirements and 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. 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 at the point 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 subject to ongoing adjustments. Therefore, management will also take into account other significant factors as
may be necessary or prudent in order to reflect probable incurred losses in the total loan portfolio.

Based on management’s calculation, an allowance of $14 million or 0.88% of total loans was an adequate estimate of

losses within the loan portfolio as of December 31, 2003. This estimate resulted in a provision for loan losses on the income
statement of $6.6 million during 2003.
If the mix and amount of future charge off percentages differ significantly from those
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.

Mortgage Servicing Rights – Mortgage servicing rights (“MSRs”) represent an estimate of the present value of future
cash servicing income, net of estimated costs that Republic expects to receive on loans sold with servicing retained by the
Company. MSRs are capitalized as separate assets when loans are sold and servicing is retained. This transaction is posted
to net gain on sale of loans, a component of mortgage banking income. The carrying value of MSRs is amortized in
proportion to, and over the period of, net servicing income. The amortization is recorded as a reduction to mortgage banking
income. The total MSR asset, net of amortization, recorded at December 31, 2003 is $5 million.

The carrying value of the MSRs asset is periodically reviewed for impairment based on the fair value of the MSRs, using

groupings of the underlying loans by interest rates and by geography and prepayment characteristics. Any impairment of a
grouping would need to be reported as a valuation allowance. A primary factor influencing the fair value is the estimated life
of the underlying loans serviced. The estimated life of the loans serviced is significantly influenced by market interest rates.
During a period of declining interest rates, the fair value of the MSRs should decline due to expected prepayments within the
portfolio. Alternatively, during a period of rising interest rates the fair value of MSRs should increase as prepayments on the
underlying loans would be expected to decline. Management utilizes an independent third party on a quarterly basis to assist
with the fair value estimate of the MSRs. Based on the estimated fair value at December 31, 2003 and 2002, management
determined no impairment of these assets existed. On an ongoing basis, management considers all relevant factors, in
addition to pricing considerations from other servicers, to estimate the fair value of the MSRs to be recorded when the loans
are initially sold with servicing retained by the Company.

DEFERRED DEPOSIT TRANSACTIONS

Deferred deposits are transactions whereby customers typically receive cash advances in exchange for a check for the
advanced amount plus a fixed fee (commonly referred to as a “payday loan” or “payday lending”). Republic agrees to delay
presentment of the check for payment until the advance due date, typically 14 to 31 days from the cash advance date. On
or before the advance due date, the customer can redeem his or her check in cash for the amount of the advance plus the
If the customer does not reclaim the check in cash by the advance due date, the check is deposited. Based on
fee.
accounting principles generally accepted in the United States of America, 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 Company has been conducting a deferred deposit transaction business, in conjunction with third party

marketer/servicers since August 2001.
party marketer/servicers in order to increase its deferred deposit transaction business. During 2003, the Company further
expanded its relationship with one of its marketer/servicers that contributed to a substantial increase in deferred deposit
transactions. Total outstandings were $28 million at December 31, 2003 compared to $3 million at December 31, 2002.
Management anticipates deferred deposit transactions outstanding will decrease by the end of the first quarter of 2004 due

In the fourth quarter of 2002, the Company entered into contracts with two third

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to seasonality, but does not believe the decrease will exceed 25% of deferred deposit outstandings at December 31, 2003.
FDIC guidance issued in July 2003 requires that banks limit deferred deposit transaction outstandings to the lesser of 25%
of Tier I capital or the amount that actual capital levels exceed the “well-capitalized” classification for Tier I and total capital.
Based on the Bank’s capital levels at year end, deferred deposit transaction outstandings were well below the Bank’s
regulatory limit of $40 million.

The marketer/servicers with which the Company does business have at times experienced legal and or regulatory

obstacles in some states in which they do business.
their ability to conduct business without a financial institution partner.
effectively prohibited national banks from conducting this business. This has provided opportunities for certain state-
chartered commercial banks to enter the business and increase earnings with acceptable capital outlays.

In addition, the Comptroller of the Currency has

In these states, laws have been enacted or amended to prohibit or limit

The legal and regulatory climate for this product also continues to change. The FDIC’s final guidance issued in July
2003 characterizes deferred deposit transactions as presenting substantial credit risks for lenders, because among other
things, the loans are unsecured and the borrower generally has limited financial resources as well as increased transaction,
legal and reputation risks when a third party arrangement is used. This guidance proposes, among other items, that banks
hold significantly more capital than would be required for other sub-prime type loans, suggesting required capital of as much
as 100% of deferred deposit transactions outstanding. The guidance also requires that the allowance for loan and lease
losses be adequate and take into account that many such transactions remain outstanding beyond their initial term due to
renewals and rollovers, that deferred deposit transactions be classified “substandard,” and that transactions outstanding for
more than 60 days generally be classified as “loss.” The guidance also prescribes limits on the ability of a borrower to
renew or rollover a deferred deposit transaction and on the number of transactions that can be entered into with an individual
customer within a given period of time. The 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 third party
marketing and servicing providers and its monitoring of the third party’s activities and performance. Banks are also advised
to carefully evaluate compliance with consumer protection laws and applicable regulations.

The Company believes that it has adequately considered and addressed the risks associated with its deferred deposit

transaction business, including the risks discussed in the FDIC 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 banks from engaging
altogether in deferred deposit transactions, that private litigation might not result from the program, or that the Bank’s ability
to continue to engage in the business profitably or at all will not be negatively impacted by the requirements of applicable
laws, regulations or guidelines.

REFUNDS NOW ®

Refunds Now is a tax refund processing service for taxpayers receiving both federal and state tax refunds through tax
preparers located nationwide. 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.
Refunds Now also provides ERCs and electronic refund deposits (“ERDs”) to taxpayers. After receiving refunds electronically
from governmental taxing authorities, a check or a direct payment to the taxpayer’s account is issued for the amount of the
refund, less fees.

For 2003, Refunds Now generated $6.7 million in RAL fees, compared to $3.3 million for the same period in 2002.
Refunds Now also received $4.0 million in ERC fees during 2003, compared to $3.2 million during 2002. The total volume of
tax return refunds processed during the 2002 tax season was $1.1 billion (approximately $250 million in RALs and $850
Internal analysis of government tax
million in ERCs), a 48% increase over the volume processed for the 2001 tax season.
refund payments to recipients not approved for a RAL during the 2002 tax season resulted in an increase in the number of
RAL applications approved during the 2003 tax season. This resulted in a shift in product mix toward the RAL product.
In
addition, the total number of tax preparers served by Refunds Now during 2003 increased 79% over 2002. Overall, RAL
volume increased 81% during 2003 compared to 2002 while ERC volume rose 102% for the same period.

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.

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For 2003, net interest income was $82.3 million, up $17.9 million over 2002. The Company was able to increase its net

interest income primarily through increased loan volume and a reduction in the Company’s cost of funds. Fees from
deferred deposit transactions, which increased $7.4 million over the $156,000 recognized during 2002 and fees from RALs,
which increased $3.4 million over the $3.3 million recognized during 2002, were major components of the overall increase
for 2003. The Company also experienced an increase in net interest income as a result of growth in the loan
portfolio, resulting primarily from the retention of nearly $240 million in fixed-rate residential real estate loans since October 2002.

Overall, the Company’s net interest spread and net interest margin were higher in 2003 compared to 2002. The
increase in spread and margin resulted from a sharp decrease in cost of funds without a corresponding decrease in yield on
interest-earning assets. Republic was able to minimize the decrease in its yield on interest-earning assets primarily through
increased fees from deferred deposit transactions and RALs. While the Company believes that these fees will continue for
the foreseeable future, as stated above, there is regulatory risk and other risk inherent in these sources of income which
could limit their future availability.

During 2003, the Company also began to experience compression of its net interest spread and margin. This resulted

primarily from the $240 million in residential real estate loans that were retained and funded by fixed rate FHLB borrowings
and brokered deposits achieving a spread of approximately 2.00%. Net interest spread and margin also experienced
compression during the fourth quarter of 2003, as Republic invested excess cash on a short-term basis in order to mitigate
the potential impact of future interest rate increases on net interest income. Management anticipates that the Company’s
net interest margin and net interest spread will increase significantly during the first quarter of 2004 compared to the fourth
quarter of 2003 due to seasonal RAL activity at Refunds Now. Because RAL volume occurs primarily in the first quarter, the
net interest spread and net interest margin for the remainder of 2004 will decline subsequent to the first quarter and could
likely be lower than the corresponding periods in 2003.

Republic’s cost of funds decreased 74 basis points for 2003 compared to 2002. This decrease was primarily the result
Interest

of lower borrowing costs from the FHLB and lower interest expense associated with certificates of deposit (“CDs”).
expense on FHLB borrowings decreased for the year due to the maturity or early payoff of approximately $115 million of
advances with a weighted average cost of 6.29% subsequent to the second quarter of 2002.
decreased significantly due to the availability of lower cost funding sources that allowed the Company to generally lower
pricing on its CD product offerings. As a result of strategic CD pricing, the Company’s overall average CD balances declined
during 2003.

Interest expense on CDs

M
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A
L
Y
S
S
O
F

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N
A
N
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A
L
C
O
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O
N
A
N
D
R
E
S
U
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O
F
O
P
E
R
A
T
O
N
S

For 2002, net interest income was $64.3 million, up $4.8 million over the $59.5 million attained during 2001. Factors
that effected net interest income in 2002 were different than those that affected it in 2003. Republic was primarily able to
increase its net interest income through balance sheet growth, particularly growth in mortgage backed securities (“MBSs”)
and loans.

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 MBSs. The increases in the
balances of loans and MBSs were the significant factors in the Company’s overall increase in net interest income during
2002 compared 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 prepayment of higher yielding portfolio loans limited the Company’s ability to
increase net interest income through changes in rate. To help mitigate this, management elected to retain $60 million in
fixed rate, 15-year residential real estate loans in October 2002. The Company funded these loans through FHLB borrowings
with terms of two to six years. Achieving a spread of approximately 2.25% on this $60 million positively affected the
Company’s net interest income but negatively impacted the Company’s net interest spread and net interest margin.

The Company also sold approximately $56 million in MBSs and collateralized mortgage obligations (“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 in
order to reduce future borrowing costs, Republic prepaid a $25 million advance during 2002 from the FHLB with a coupon of 6.40%.

F
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Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
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T
N
E
M
E
G
A
N
A
M

S
N
O
T
A
R
E
P
O
F
O
S
T
L
U
S
E
R
D
N
A
N
O
T
D
N
O
C
L
A
C
N
A
N
I
F

Table 2 provides detailed information as to average balances, interest income/expense and rates by major balance
sheet category for 2001 through 2003. 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 Interest Rates for Years Ended December 31,

(dollars in thousands)

ASSETS

Earning assets:
Investment securities
Federal funds sold and other
Total loans and fees(1)

Total earning assets

Average
Balance

2003

Interest

Average
Rate

Average
Balance

2002

Interest

Average
Rate

Average
Balance

2001

Interest

Average
Rate

$ 316,642
26,792
1,485,024

$ 11,136
279
107,645

3.52% $
1.04
7.25

307,852
53,560
1,220,046

$ 13,060
887
92,154

4.24% $ 253,127
34,254
1.66
1,185,945
7.55

$ 13,926
1,146
102,324

5.50%
3.35
8.63

1,828,458

119,060

6.51

1,581,458

106,101

6.71

1,473,326

117,396

7.97

Less: Allowance for loan losses

12,305

Non-earning assets:
Cash and cash equivalents
Premises and equipment, net
Other assets

54,422
29,290
22,928

9,125

30,181
21,298
15,985

8,061

27,756
19,462
12,497

Total assets

$ 1,922,793

$ 1,639,797

$ 1,524,980

LIABILITIES AND STOCKHOLDERS' EQUITY

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

and other time deposits

Brokered deposits
Repurchase agreements

and other short-term borrowings
Federal Home Loan Bank borrowings

$ 266,316
253,942
39,454

$ 2,263
2,193
1,464

0.85% $
0.86
3.71

168,414 $ 1,639
2,992
222,373
1,665
36,713

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

$ 1,101
7,737
1,972

1.10%
3.43
5.87

364,560
52,094

189,984
363,656

12,812
1,212

1,897
14,954

3.51
2.33

1.00
4.11

383,450
891

225,671
291,756

16,485
38

3,246
15,696

4.30
4.26

1.44
5.38

379,057
-

21,896
-

251,068
282,879

8,529
16,682

5.78
-

3.40
5.90

Total interest-bearing liabilities

1,530,006

36,795

2.40

1,329,268

41,761

3.14

1,272,501

57,917

4.55

Non interest-bearing liabilities and stockholders’ equity:
Non interest-bearing deposits
Other liabilities
Stockholders' equity

196,442
29,248
167,097

150,481
18,140
141,908

116,409
14,748
121,322

Total liabilities and

stockholders' equity

Net interest income

Net interest spread

Net interest margin

$ 1,922,793

$ 1,639,797

$ 1,524,980

$ 82,265

$ 64,340

$ 59,479

4.11%

4.50%

3.57%

4.07%

3.42%

4.04%

(1) The amount of fee income included in interest on loans was $17,280, $5,512 and $5,593 for the years ended December 31, 2003, 2002 and 2001.

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, 2003
compared to
Year Ended December 31, 2002
Increase/(Decrease)

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

(in thousands)
Interest income:
Investment securities
Federal funds sold and other
Total loans and fees

Total Net
Change

$ (1,924)
(608)
15,491

Due To

Volume

Rate

364
(349)
19,334

$ (2,288)
(259)
(3,843)

Total Net
Change

(866)
(259)
(10,170)

$ 2,676
474
2,874

Due To

Volume

Rate

Total increase (decrease) in interest income

12,959

19,349

(6,390)

(11,295)

6,024

Interest expense:
Transaction accounts
Money market accounts
Individual retirement accounts
Certificates of deposit and

other time deposits

Brokered deposits
Repurchase agreements and
other short-term borrowings

Federal Home Loan Bank borrowings

Total increase (decrease) in interest expense

624
(799)
(201)

(3,673)
1,174

(1,349)
(742)

(4,966)

854
382
118

(781)
1,199

(460)
3,402

4,714

(230)
(1,181)
(319)

(2,892)
(25)

(889)
(4,144)

(9,680)

538
(4,745)
(307)

(5,411)
38

(5,283)
(986)

(16,156)

678
(117)
170

251
38

(789)
511

742

(3,542)
(733)
(13,044)

(17,319)

(140)
(4,628)
(477)

(5,662)
-

(4,494)
(1,497)

(16,898)

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E
M
E
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S
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S
O
N
A
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A
L
Y
S
S
O
F

F
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N
A
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U
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O
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O
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S

Increase (decrease) in net interest income

$ 17,925

$ 14,635

$ 3,290

$ 4,861

$ 5,282

$ (421)

Non Interest Income

Table 4 - Analysis of Non Interest Income

Year Ended December 31, (dollars in thousands)

Service charges on deposit accounts
Electronic refund check fees
Title insurance commissions
Mortgage banking income
Net gain on sale of securities
Debit card interchange fee income
Other

Total

*Not meaningful

2003

$ 10,672
3,981
2,532
11,104
-
1,825
819

2002

$ 8,314
3,198
2,129
6,894
1,559
1,441
987

$ 30,933

$ 24,522

2001

$ 6,267
2,087
1,515
6,438
1,864
1,020
550

$ 19,741

Percent Increase/(Decrease)
2002/2001

2003/2002

28%
24
19
61
NM*
27
(17)

26%

33%
53
41
7
(16)
41
79

24%

Service charges on deposit accounts increased 28% during 2003 compared to 2002. The increase was due primarily to growth
in the Company’s checking account base supported by the Bank’s “Overdraft Honor” program, which permits selected clients to over-
draft their accounts up to $500 for the Bank’s customary fee. Total overdraft fees increased from $6.5 million in 2002 to $8.3 million
in 2003 while the total number of accounts eligible for the “Overdraft Honor” program increased to 43,000 at December 31, 2003
from 32,000 at December 31, 2002. Additionally, the Company’s total number of checking accounts, exclusive of commercial
accounts, increased from 45,000 at December 31, 2002 to 54,000 at December 31, 2003. The increase in the number of retail
checking accounts was primarily attributable to the continued success of the Company’s “$999” maximum closing cost, secondary
market loan product, which requires a primary checking account in order for the customer to receive the discounted closing fees. A
decrease in volume of the “$999” program could negatively impact the number of new Company checking accounts. Conversely,
Republic’s checking account base is expected to be positively impacted by accounts opened at the Company’s newest banking
centers, direct mail solicitations and other marketing initiatives. Republic opened six new banking centers in 2003 and plans to open
three new banking centers in early 2004.

F
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S
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P
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F
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A
N
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C
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N
A
N
I
F

Electronic refund check (ERC) fees, the majority of which are received during the first quarter of the year, increased

$783,000 in 2003. This increase was due primarily to the increase in overall ERC volume compared to the prior year
resulting from successful marketing efforts and an increase in the number of tax preparers. The Company also experienced
significant growth in ERC fees during 2002 compared to 2001 due primarily to the same reasons.

Title insurance commissions increased $403,000 for the year ended December 31, 2003, compared to the same period in
2002. Title insurance commissions are earned when title insurance policies are sold to clients in conjunction with newly originated
real estate secured loans. Since a substantial portion of these commissions are earned on policies relating to single family 1-4
family, secondary market real estate loans, the income closely correlates to secondary market loan origination volume, which was
$863 million during 2003 compared to $791 million during 2002. Management anticipates that title insurance commissions will
decline in the first quarter of 2004 due to an expected reduction in secondary market loan volume.

Title insurance commissions increased $614,000 for 2002 over 2001. The large volume of refinance activity in 1-4 family,

secondary market real estate loans during this period contributed to the increase for the year ended December 31, 2002.

Mortgage banking income includes net gain on sale of loans, loan servicing income and amortization of MSRs.

Mortgage banking income increased $4.2 million during 2003 due primarily to a $5.7 million increase in net gain on sale of
loans resulting from the higher volume of loans sold into the secondary market. This higher volume of loans sold in 2003
resulted from aggressive marketing of the Company’s “$999” loan product and sustained consumer demand for fixed rate,
first mortgage residential loan products due to historically low market interest rates through the first six months of the year.
This demand began to decline substantially during the third quarter of 2003 reaching more traditional lower levels during the
fourth quarter of 2003. As a percentage of loans sold, net gains increased to 1.47% in 2003 compared to 0.92% in 2002.
The increase in gains as a percentage of loans sold primarily occurred in the first six months of 2003. During the first six
months of 2003, interest rates declined sharply, reaching historic lows in mid-June. The Company was able to increase the
gain on sale margins during this declining interest rate environment by selling directly to end investors achieving higher
premiums.
In 2004, the Company does not expect gains as a percentage of loans sold to reach the level attained in 2003
due to higher coverage ratios as well as more competitive pricing to help maintain market share. Overall, the Bank originated
nearly $800 million in mortgage loans held for sale during 2003 compared to $791 million during 2002.

The increase in net gain on sale of loans during 2003 was partially offset by a $2 million increase in amortization
expense of MSRs. This increase primarily resulted from two factors. First, management elected to sell a higher percentage
of loans with servicing retained in 2003 resulting in a larger MSR asset to be amortized compared to 2002. Secondly, a
declining interest rate environment during the first six months of 2003 shortened the estimated life of the expected future
servicing income due to projected prepayments on the underlying loans.

Mortgage banking income increased 7% during 2002 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 0.92% in 2002 compared to 1.20% in 2001. The decrease in gains as a percentage of loans sold
was primarily attributable to management’s decision to offer more competitive pricing on its fixed rate, residential real estate
products in order to gain market share. Overall, the Bank originated $791 million in mortgage loans held for sale during
2002 compared to $548 million during 2001.

Net gain on sale of securities available for sale was $1.6 million for 2002 compared to $1.9 million during 2001.
Management elected to sell $56 million of the Company’s MBSs during 2002 to mitigate the risk of the projected prepayment of
these securities.

Non Interest Expenses

Table 5 – Analysis of Non Interest Expenses

Year Ended December 31, (dollars in thousands)

Salaries and employee benefits
Occupancy and equipment, net
Communication and transportation
Marketing and development
Bankshares tax
Supplies
Federal Home Loan Bank prepayment penalties
Outsourced technology services
Other

2003

$ 32,144
12,416
2,729
3,037
1,980
1,481
-
1,722
7,350

2002

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

Total

$ 62,859

$ 53,839

2001

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

$ 50,340

Percent Increase/(Decrease)
2002/2001

2003/2002

15%
24
17
4
15
30
NM
9
55

17%

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

The increases in salaries and benefits as well as occupancy and equipment were primarily attributable to banking

center expansion. Republic opened two banking centers during the third quarter of 2002 and six banking centers during
2003. The Company also hired additional support staff to service the new banking center expansion activities. Total full time
equivalent employees (FTE’s) increased to 645 at December 31, 2003 from 570 at December 31, 2002.

Salary and employee benefits also increased for 2002 compared to 2001. The increase was primarily attributable to
annual merit increases and associated incentive compensation accruals, additional seasonal staff at Refunds Now and a
modest increase in staff to support secondary market origination volume. Total FTE’s increased to 570 at December 31, 2002
from 532 at December 31, 2001.

The Company recognized prepayment penalties of $1.4 million and $1.0 million on the early termination of advances
from the FHLB during 2002 and 2001. The Company elected to incur these penalties in order to refinance a portion of its
advances from the FHLB into lower cost borrowings with extended maturities, taking advantage of the favorable interest rate
environment at the time.

Other expenses increased $2.6 million during 2003. The increase was primarily related to credit underwriting costs and

correspondent banking expenses associated with the Company’s deferred deposit program.

FINANCIAL CONDITION

Loan Portfolio

Net loans, primarily consisting of secured real estate loans, increased by $268 million to $1.6 billion at December 31,
2003. Commercial real estate loans, which comprise 28% of the total loan portfolio at December 31, 2003, are concentrated
primarily within the Bank’s existing markets. These loans are principally secured by multi-family investment properties, 1-4
family developments, medical facilities, small business owner occupied offices, retail properties and hotels. 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.
during a declining interest rate 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 $29
million from December 31, 2002. During 2003, Republic maintained its underwriting standards, which typically includes
personal guarantees on most commercial real estate loans. Pricing requirements, as well as the Company’s underwriting
requirements, led to competitive pressure during 2003. As a result, the commercial real estate portfolio experienced modest
growth compared to prior years.

In order to reduce the negative effect of refinance activity within the portfolio

Similar to commercial real estate loans, residential real estate loans that are not sold into the secondary market 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 typically carry early termination penalties during a portion of their fixed rate periods in
order to lessen the overall negative effect to the Company of refinancing in a declining interest rate environment. Despite
early termination penalties on many of its portfolio residential real estate loans, the Company experienced a high level of
refinance activity into fixed rate secondary market products during 2003. However, residential real estate loans increased by
$162 million during 2003 due to management’s election to retain three separate pools of secondary market eligible loans
totaling $180 million. The total amount retained over the most recent fifteen-month period totaled approximately $240
million. To fund these loans and mitigate the interest rate risk on this portion of the residential real estate loan portfolio, the
Company borrowed $125 million in FHLB advances with maturities ranging from one to five years and $46 million in
brokered CDs with maturities ranging from one to five years. Management anticipates earning an approximate spread of
2.00% on these transactions, which will positively affect the Company’s net interest income in 2004 but will negatively
impact the Company’s net interest spread and net interest margin.

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 of America. The Company had approximately $28 million in deferred deposit transactions outstanding at
December 31, 2003 compared to $3 million at December 31, 2002.

Home equity loans, substantially all approved at no more than 100% of loan to value, increased from $159 million at
December 31, 2002 to $215 million at December 31, 2003. 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 package, the Company’s fixed rate, secondary market loan clients are
usually approved for a home equity line of credit. The Company increased the number of home equity lines of credit during
2003 by 35%. At December 31, 2003, Republic clients had $207 million of home equity line balances available for funding.

M
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N
A
G
E
M
E
N
T
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D
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C
U
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O
N
A
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D
A
N
A
L
Y
S
S
O
F

F
N
A
N
C
A
L
C
O
N
D
T
O
N
A
N
D
R
E
S
U
L
T
S
O
F
O
P
E
R
A
T
O
N
S

F
O
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
S
'
T
N
E
M
E
G
A
N
A
M

S
N
O
T
A
R
E
P
O
F
O
S
T
L
U
S
E
R
D
N
A
N
O
T
D
N
O
C
L
A
C
N
A
N
I
F

In addition to changes in the traditional loan portfolio, loans serviced for others by Republic increased from $283 million
at December 31, 2002, to $732 million at December 31, 2003. Loans serviced for others consists of loans Republic has sold
into the secondary market while retaining the servicing of the loans. Prior to 2003, Republic sold a substantial portion of its
loans into the secondary market including the corresponding servicing of the loan. Beginning in 2003, Republic began selling a
large portion of its loans directly to third party governmental agencies, which do not purchase the servicing component of
the loan. Management elected to utilize this strategy due to more favorable pricing received from the governmental agencies,
as well as faster funding to the Company for the loans sold. Management will continue to evaluate the feasibility of selling
or retaining the servicing component to third parties.

Table 6 – Loans by Type

As of December 31, (in thousands)
Real estate:

Residential
Commercial
Construction

Commercial
Consumer
Home Equity

Total Loans

2003

2002

2001

2000

1999

$ 762,000
442,083
70,897
34,553
58,034
215,088

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

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

$ 1,582,655

$ 1,310,881

$ 1,185,777

$ 1,145,736

$ 1,040,656

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. Although management elected to retain three separate pools of secondary market eligible
loans in 2003, it has traditionally been the Company’s strategy 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. At December 31, 2003, mortgage
loans held for sale was down significantly from $66 million at year end 2002 to $14 million at year end 2003 due to slow-
down in refinancing activity resulting from rising interest rates during the second half of 2003.

As a result of Republic’s mortgage banking operations, certain loan commitments are accounted for as derivatives.
In
addition, Republic enters into agreements to sell loans for amounts and terms offsetting the interest rate risk of loans held
for sale and loan commitments expected to close. These agreements to sell loans are also accounted for as derivatives.
Sales contract derivatives are entered into for amounts and terms offsetting the interest rate risk of loan commitment
derivatives. Both derivatives are carried at fair value with their changes in fair value included in earnings, which substantially
offset each other. Substantially all of the gain on sales generated from mortgage banking activities continues to be recorded
when closed loans are delivered into the sales contracts.

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

Table 7 – Selected Loan Distribution

As of December 31, 2003 (in thousands)

Total

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

$ 277,680

30,739
1,062
13,452
47,249
1,915

$ 372,097

484,320
411,344
69,835
21,101
10,785
213,173

$ 1,210,558

One Year
Or Less

$ 14,668
5,711
961
7,144
35,633
451

$ 64,568

$ 218,745
153,282
69,619
21,101
8,742
213,173

$ 684,662

Over One
Through Five
Years

Over
Five
Years

$ 59,920

9,045
85
5,976
4,472
514

$ 80,012

$ 248,520
246,164
216
-
2,043
-

$ 496,943

$ 203,092
15,983
16
332
7,144
950

$ 227,517

$ 17,055
11,898
-
-
-
-

$ 28,953

Allowance and Provision for Loan Losses

The Company’s provision for loan losses increased from $3.3 million for 2002 to $6.6 million for 2003.

Included in the
provision for loan losses were $1.9 million and $47,000 for RALs during 2003 and 2002. The increase in provision associated
with RALs during 2003 was primarily the result of the significant increase in RAL losses, which was mostly due to increased
volume.

The increase in the provision, exclusive of Refunds Now, during 2003 was primarily due to an increase in certain classified

commercial real estate loans and deferred deposit transactions. For the twelve months ended December 31, 2002, the
Included in the provision for
provision for loan losses was $3.3 million compared to $3.5 million during the year of 2001.
loan losses was $47,000 and $1.1 million for RALs during 2002 and 2001. 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 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.

The total allowance for loan losses increased $3.8 million from December 31, 2002 to $14 million at December 31,
2003. 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 and the increase in non-performing loans. Management believes, based on
information presently available, that it has adequately provided for loan losses at December 31, 2003. Management continues
to closely monitor the commercial real estate loan portfolio in detail, recognizing that commercial real estate loans generally
carry a greater risk of loss than residential real estate loans.
(For discussion of Republic’s methodology for determining the
adequacy of the allowance for loan losses, see section on Critical Accounting Policies and Estimates.)

Table 8 – Summary of Loan Loss Experience
Year Ended December 31, (dollars in thousands)
Allowance for loan losses at beginning of year

2003
$ 10,148

2002
$ 8,607

2001
$ 7,862

2000
$ 7,862

1999
$ 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

(670)
(1,223)
(135)
(50)
(155)
(994)
(2,300)

(5,527)

448
1,074
300
100
26
366
450

2,764

(2,763)
6,574

(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

Allowance for loan losses at end of year

$ 13,959

$ 10,148

$ 8,607

(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

$ 7,862

(1,806)
1,806

$ 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

0.88%

0.77%

0.73%

0.69%

0.76%

0.19
108

0.15
103

0.23
154

0.12
193

0.19
213

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S
O
N
A
N
D
A
N
A
L
Y
S
S
O
F

F
N
A
N
C
A
L
C
O
N
D
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O
N
A
N
D
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E
S
U
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T
S
O
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O
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A
T
O
N
S

Table 9 depicts management's allocation of the allowance for loan losses by loan type. The 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.

Table 9 – Management's Allocation of the Allowance for Loan Losses

2003

2002

2001

Percent
of Loans
to Total
Loans

48%
28
4
2
4
14

Percent
of Loans
To Total
Loans

46%
31
5
3
3
12

Allowance

892
5,761
759
458
647
90

Percent
of Loans
To Total
Loans

48%
30
6
3
2
11

Allowance

$ 1,283
6,986
764
322
700
93

Allowance

$ 1,502
8,935
805
325
2,263
129

$ 13,959

100%

$ 10,148

100%

$ 8,607

100%

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, 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 are deemed uncollectible.

The Bank’s level of loans delinquent more than 30 days, which excludes non-accrual loans paid current, decreased to

0.82% at December 31, 2003 from 1.02% at December 31, 2002. The change is primarily attributable to a small number of
commercial real estate loans past due at December 31, 2002, that were brought current as of December 31, 2003.

Republic experienced an increase in total non-performing loans from $9.9 million at December 31, 2002 to $12.9
million at December 31, 2003. This increase was concentrated in non-accrual loans. The increase in non-accrual loans is
primarily attributable to a single $5 million commercial real estate development loan. This loan was placed on non-accrual sta-
tus due to inadequate projected cash-flows and real estate collateral to support full repayment. Management believes it has
allocated an appropriate reserve within the allowance for loan losses on this particular commercial real estate loan.

Table 10 – Non-performing Assets

As of December 31, (dollars in thousands)

2003

2002

2001

2000

1999

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

$ 12,466
473

12,939
-

$ 7,967
1,915

9,882
320

$ 5,056
521

5,577
149

$ 3,100
984

4,084
478

$ 2,721
968

3,689
218

$ 12,939

$ 10,202

$ 5,726

$ 4,562

$ 3,907

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

0.82%
0.82

0.75%
0.78

0.47%
0.48

0.36%
0.40

0.35%
0.38

(1) Loans on non-accrual status include 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 that management has classified as doubtful (collection of

total amount due is improbable) or loss (all or a portion of the loan has been written off or a specific allowance for loss has
been provided) or that otherwise met the definition of impaired. 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 $1.2 million at December 31, 2002 to $6.2 million at
December 31, 2003. For discussion of the increase, see the preceding paragraph on non-performing loans which describes
the large increase in non-accrual loans being the same cause of the increase in impaired loans.

F
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S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
S
'
T
N
E
M
E
G
A
N
A
M

S
N
O
T
A
R
E
P
O
F
O
S
T
L
U
S
E
R
D
N
A
N
O
T
D
N
O
C
L
A
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N
A
N
I
F

Investment Securities

Table 11 – Investment Securities Portfolio

December 31, (in thousands)

2003

2002

2001

2000

1999

Securities Available for Sale:

U.S. Treasury and Government agency securities $ 154,818
140,702
Mortgage backed securities, including CMOs
-
Corporate bonds
-
Other securities

$ 51,123
151,924
-
-

$ 32,023
179,576
-
-

$ 87,309
65,556
18,810
125

$ 97,029
66,340
18,258
-

Total Securities Available for Sale

295,520

203,047

211,599

171,800

181,627

Securities to be Held to Maturity:

U.S. Treasury and Government agency securities
States and political subdivisions
Mortgage backed securities, including CMOs

Total Securities to be Held to Maturity

9,707
-
105,704

115,411

8,175
100
77,137

85,412

50,995
200
31,151

82,346

40,375
275
63,118

103,768

25,353
3,775
3,803

32,931

Total

$ 410,931

$ 288,459

$ 293,945

$ 275,568

$ 214,558

The investment portfolio primarily consists of U.S. Treasury and U.S. Government agency securities including MBSs and
CMOs. The 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 Ginnie Mae (GNMA), Freddie Mac
(FHLMC) and Fannie Mae (FNMA). CMOs held in the investment portfolio are substantially all floating rate securities that
adjust monthly.
In addition to economic and market conditions, the overall 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, 2003, investment securities with a fair
value of $274 million and amortized cost of $273 million were utilized to secure deposits and securities sold under agreements
to repurchase.

Securities available for sale primarily consist of U.S. Government Agency obligations, which include agency MBSs and

CMOs. The agency MBSs consist of 15-year fixed and 7-year and 5-year balloons, as well as other adjustable rate mortgage
securities. The Company’s mortgage related floating rate securities include both agency and corporate securities. Securities
available for sale increased from $203 million at December 31, 2002 to $296 million at December 31, 2003. The increase
in the available for sale portfolio is primarily due to the investment of cash being collected in preparation for the 2004 tax
season at Refunds Now.

Table 12 – Securities Available for Sale

As of December 31, 2003 (dollars in thousands)
U.S. Treasury and U.S. Government agency securities:

Within one year
Over one through five years

Total U.S. Treasury and U.S Government

agency securities

Total mortgage backed securities, including CMOs

Amortized
Cost

$ 136,013
18,520

154,533
139,472

Approximate
Fair Value

$ 136,199
18,619

154,818
140,702

Total available for sale investment securities

$ 294,005

$ 295,520

Table 13 – Securities to be Held to Maturity

As of December 31, 2003 (dollars in thousands)
U.S. Treasury and U.S. Government agency securities:

Over one through five years

Total U.S. Treasury and Government agency securities
Total mortgage backed securities, including CMOs

Total securities to be held to maturity

Amortized
Cost

$ 9,707
9,707
105,704

$ 115,411

Approximate
Fair Value

9,725
9,725
105,011

$ 114,736

Average
Maturity
in Years

0.08
2.98

0.43
4.02

2.13

Average
Maturity
in Years

2.67
2.67
15.69

14.59

Weighted
Average
Yield

1.20%
3.43

1.46
4.06

2.70%

Weighted
Average
Yield

3.20%
3.20
2.63

2.68%

M
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A
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A
N
A
L
Y
S
S
O
F

F
N
A
N
C
A
L
C
O
N
D
T
O
N
A
N
D
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S
U
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O
F
O
P
E
R
A
T
O
N
S

Deposits

Total deposits were $1.3 billion at December 31, 2003 compared to $1.0 billion at December 31, 2002. Interest-bearing

deposits increased $239 million while non interest-bearing deposits increased $18 million from December 31, 2002 to
December 31, 2003.

Interest-bearing demand deposit accounts increased $82 million during 2003. This increase was primarily due to the
promotion of the Company’s “High Interest Checking” product, which offers above market interest rates. The Bank’s interest-
bearing money market accounts, excluding Internet money markets and money market certificates of deposit, increased $75
million during 2003. A substantial portion of the increase in this product was from funds transferred from securities sold
under agreements to repurchase into the Company’s “Premier First” product. The “Premier First” account, which is designed
for business clients and provides competitive market rates, is the lead product offered by the Bank’s cash management
department.

The Bank’s Internet money market accounts increased $48 million during 2003 to $96 million. The Company actively

pursued these deposits in anticipation of funding needs at Refunds Now during the 2004 tax season.

Brokered deposits increased $62 million during 2003. Management utilized these deposits to fund, in part, the fixed
rate residential real estate loans retained during the third quarter of 2003. The Company also increased these deposits by
approximately $14 million during December 2003 to fund anticipated RALs during the first quarter of 2004. The Company
may utilize additional brokered deposits in the first quarter of 2004 depending upon the funding needs at Refunds Now.

Table 14 – Deposits

December 31, (in thousands)

2003

2002

2001

2000

1999

Demand (NOW and SuperNOW)
Money market accounts
Internet money market accounts
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

174,872
220,178
96,150
35,735
70,208
42,073
196,026
204,984
63,565

1,103,791
193,321

222,316
90,637
47,824
23,993
80,190
37,530
111,204
249,798
1,238

864,730
175,460

$ 46,532
94,077
44,838
16,293
155,601
34,299
87,154
258,012
-

736,806
129,552

$ 15,156
122,116
69,239
12,584
76,818
32,933
106,313
321,185
100

756,444
107,317

$ 52,199
122,177
29,695
12,158
43,152
29,380
91,848
319,558
16,486

716,653
84,256

Total

$ 1,297,112

$ 1,040,190

$ 866,358

$ 863,761

$ 800,909

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

Securities sold under agreements to repurchase and other short-term borrowings decreased $5 million during 2003.
This category decreased approximately $36 million during the year due to a switch in product type by several clients into the
Company’s higher yielding “Premier First” money market product. This decrease was partially offset by an increase of short-
term funds deposited by a small number of large cash management relationships.

FHLB Borrowings

FHLB advances increased $101 million during the year to $420 million at December 31, 2003. The increase in

advances was primarily utilized to fund the growth in residential real estate loans.

Approximately $305 million of the Company’s advances are fixed with the majority having original maturities ranging
from one through seven years. Of these fixed rate advances, $24 million is scheduled to mature in 2004 with a weighted
average coupon rate of 2.78%.

The remaining $115 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
If the FHLB elects to
rate periods, the FHLB has the right to convert the borrowings to floating rate advances tied to LIBOR.
convert the debt to a floating rate instrument, Republic also has the right to pay off the advances without penalty. The
Company has $55 million in these advances with a weighted-average coupon of 5.45% 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.

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A
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A
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S
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O
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A
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P
O
F
O
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U
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E
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D
N
A
N
O
T
D
N
O
C
L
A
C
N
A
N
I
F

Liquidity

Republic maintains sufficient liquidity to fund loan demand and routine deposit withdrawal activity. Liquidity is managed by
maintaining sufficient liquid assets in the form of investment securities. Funding and cash flows can also be realized by the
sale of securities available for sale, principal paydowns on loans and MBSs and proceeds realized from loans held for sale.
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 additional funding when needed. The
Company utilized brokered deposits during 2003 as a funding source for RALs at Refunds Now and to fund residential real
estate loan growth. The Company may increase its utilization of brokered deposits during the first quarter of 2004 as an
additional funding source for RALs.

Traditionally, the Bank has also utilized borrowings from the FHLB to supplement its funding requirements. On
December 31, 2003, the Company had total borrowing capacity with the FHLB to borrow an additional $112 million. While
Republic utilizes numerous funding sources in order to meet liquidity requirements, the Company also has $110 million in
approved unsecured line of credit facilities available at December 31, 2003 through various third party sources.

Capital

Total stockholders’ equity increased from $151 million at December 31, 2002 to $169 million at December 31, 2003.
The increase in stockholders’ equity was primarily attributable to net income earned during 2003. There was a decline in
accumulated other comprehensive income as a result of a decrease in the value of the available for sale securities portfolio.
In addition, stockholders’ equity increased as a result of stock options exercised by Republic’s employees and directors.

Prior to 2000, Republic Bancorp’s board of directors approved a Class A Common Stock repurchase program of 500,000

shares. Through December 31, 2003, Republic purchased approximately 496,000 shares with a weighted-average cost of
$10.38 and a total cost of $5.1 million.
purchase an additional 250,000 shares bringing the total shares available for purchase to 254,000. The Company does not
plan to aggressively pursue the purchase of these shares in the near term.

In March of 2003, the Company’s board of directors authorized management to

During the fourth quarter of 2003, the Company declared a special cash dividend of $0.253 per share on Class A
Common Stock and $0.23 per share on Class B Common Stock, payable December 17, 2003 to shareholders of record as of
December 2, 2003. The total special dividend payment was $4.3 million. The Board of Directors approved the special
dividend to provide shareholders with a return for the success of 2003 at a level that would still maintain the Company and
Bank capital within the well-capitalized categories. The Board of Directors has not approved any additional special dividends.

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
leverage, Tier I risk-based and total risk based capital. Republic and the Bank intend to maintain a capital position that
meets or exceeds the "well-capitalized" requirements as defined by the Federal Reserve and FDIC. Republic’s average
capital to average assets ratio was 8.69% at December 31, 2003 compared to 8.65% at December 31, 2002. Republic
elected and successfully maintains financial holding company status.

Off Balance Sheet Arrangements

Table 15 – Off Balance Sheet Arrangements

December 31, 2003 (in thousands)

Standby letters of credit
FHLB letters of credit
Commitments to extend credit

Less than
1 year

3,458
60,000
319,800

Greater
than 1 year
to 3 years

$ 33,374
13,137
18,572

Maturity by Period
Greater
than 3 years
to 5 years

930
14,724
1,185

Greater
than 5 years

$ 726
-
5,363

Total

$ 38,488
87,861
344,920

Standby 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.

M
A
N
A
G
E
M
E
N
T
'
S
D
S
C
U
S
S
O
N
A
N
D
A
N
A
L
Y
S
S
O
F

F
N
A
N
C
A
L
C
O
N
D
T
O
N
A
N
D
R
E
S
U
L
T
S
O
F
O
P
E
R
A
T
O
N
S

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, 2003 were
used as credit enhancements for client bond offerings. The remaining $60 million was used to collateralize a public funds
deposit, which the Company classifies as a short-term borrowing.

Aggregate Contractual Obligations

Table 16 – Aggregate Contractual Obligations

December 31, 2003 (in thousands)
Deposits
FHLB borrowings
Lease commitments

Less than
1 year
$ 975,407
24,000
2,912

Greater
than 1 year
to 3 years

$ 86,919
177,570
5,376

Maturity by Period
Greater
than 3 years
to 5 years
$ 175,654
117,500
3,184

Greater
than 5 years
$ 59,132
101,108
9,881

Total

$ 1,297,112
420,178
21,353

Total

$ 1,002,319

$ 269,865

$ 296,338

$ 170,121

$ 1,738,643

Deposits represent non interest bearing, money market, savings, NOW, certificates of deposits, brokered, and all other
deposits held by the Company. Amounts that have an indeterminate maturity period are included in the less than one-year
category above.

FHLB borrowings represent the amounts that are due to the FHLB of Cincinnati. These amounts have fixed maturity

dates. Some of these borrowings, although fixed, are subject to conversion provisions at the option of the FHLB or the
Company can prepay these advances without a penalty. Management does not believe these advances will be converted in
the near term.

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

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 point increments. Assumptions based on growth
expectations and 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 a change from December 31, 2002 to December 31, 2003. 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 4.16% at December 31, 2003 compared to a decrease of 1.09% at December 31, 2002.
Given a 100 basis point increase in the yield curve, Republic’s base net interest income would decrease by an estimated
0.95% at December 31, 2003 compared to a decrease of 2.48% at December 31, 2002.

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. The Company’s interest rate risk position at December
31, 2003 would be more negatively impacted in a decreasing interest rate environment than its interest rate risk position at
December 31, 2002 due primarily to short-term investing strategies of excess cash which management began utilizing during
the latter part of 2003. The Company’s interest rate risk position from rising interest rates improved during this same time
period due to the same short-term investing strategies of excess cash and a lower assumption of prepayments within the
loan and investment portfolios as of December 31, 2003.

It is also influenced by

F
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A
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N
A
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S
D
S
'
T
N
E
M
E
G
A
N
A
M

S
N
O
T
A
R
E
P
O
F
O
S
T
L
U
S
E
R
D
N
A
N
O
T
D
N
O
C
L
A
C
N
A
N
I
F

M
A
N
A
G
E
M
E
N
T
'
S
D
S
C
U
S
S
O
N
A
N
D
A
N
A
L
Y
S
S
O
F

F
N
A
N
C
A
L
C
O
N
D
T
O
N
A
N
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S
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O
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E
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Tables 17 and 18 illustrate Republic's estimated annualized earnings sensitivity profile based on the asset/liability model as
of year end 2003 and 2002:

Table 17 – Interest Rate Sensitivity for 2003

Decrease in Rates

Increase in Rates

200
Basis Points

100
Basis Points

Base

100
Basis Points

200
Basis Points

Table 18 – 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

Federal Home Loan Bank borrowings

Total interest expense

Net interest income

Change from base

% Change from base

(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

Federal Home Loan Bank borrowings

Total interest expense

Net interest income

Change from base

% Change from base

Market and Dividend Information

103
6,420
86,782

93,305

17,541

1,018
16,673

35,232

$ 58,073

$ (5,467)

70
7,129
90,649

97,848

18,867

1,368
16,714

36,949

$ 60,899

$ (2,641)

(8.60)%

(4.16)%

Decrease in Rates

200
Basis Points

100
Basis Points

66
8,520
81,382

89,968

16,289

793
13,877

30,959

$ 59,009

$ (2,554)

67
9,304
84,232

93,608

17,675

1,161
13,877

32,713

$ 60,890

$ (673)

92
10,487
94,814

105,393

22,555

2,503
16,795

41,853

$ 63,540

Base

266
11,173
86,552

97,991

19,681

2,870
13,877

36,428

941
12,920
100,166

114,027

29,284

5,057
16,749

51,090

1,303
15,224
105,724

122,251

35,970

7,607
17,214

60,791

$ 62,937

$ (603)

$ 61,460

(2,080)

(0.95)%

(3.27)%

Increase in Rates

100
Basis Points

200
Basis Points

549
12,890
90,437

103,876

24,476

5,485
13,877

43,838

$ 665
14,588
94,513

109,766

29,199

8,077
14,060

51,336

$ 58,430

(3,133)

$ 61,563

$ 60,038

$ (1,525)

(4.15)%

(1.09)%

(2.48)%

(5.09)%

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
declared 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

Market Value

High
$ 12.10
15.17
19.28
20.53

High
$ 13.72
12.65
13.18
12.25

2003

Low
$ 10.80
11.58
14.29
18.37

2002

Low
$ 10.55
10.56
10.44
10.28

Dividend

Class A
$ 0.055
0.066
0.066
0.319

Class A
$ 0.044
0.055
0.055
0.055

Class B
$ 0.050
0.060
0.060
0.290

Class B
$ 0.040
0.050
0.050
0.050

There is no established public trading market for the Class B Common Stock. At February 6, 2004, the Class A Common
Stock was held by 820 shareholders of record and the Class B Common Stock was held by 182 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. Further, the Board of Directors has not approved any additional special dividends, such as the
amount declared and paid during the fourth quarter of 2003. In addition, the payment of dividends is subject to the regulatory
restrictions described in Note 13 to the Company’s consolidated financial statements.

NEW ACCOUNTING PRONOUNCEMENTS

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

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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, 2003 and 2002, 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, 2003. These financial statements are the
responsibility 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
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the 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, 2003 and 2002, and the results of their operations
and their cash flows for each of the three years in the period ending December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.

Crowe Chizek and Company LLC

Louisville, Kentucky
January 9, 2004

DECEMBER 31, (in thousands, except share data)

2003

2002

ASSETS:

Cash and cash equivalents
Securities available for sale
Securities to be held to maturity (fair value
$114,736 in 2003 and $85,483 in 2002)

Mortgage loans held for sale
Loans, less allowance for loan losses

of $13,959 and $10,148 (2003 and 2002)

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

TOTAL ASSETS

LIABILITIES:
Deposits:

Non interest-bearing
Interest-bearing

Total deposits
Securities sold under agreements to repurchase

and other short-term borrowings
Federal Home Loan Bank borrowings
Other liabilities and accrued interest payable

Total liabilities

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, 15,056,134 shares (2003) and 14,852,153 shares (2002)
issued and outstanding; Class B Common Stock, no par value,
5,000,000 shares authorized, 1,957,108 shares (2003) and
1,979,414 shares (2002) issued and outstanding

Additional paid in capital
Retained earnings
Unearned shares in Employee Stock Ownership Plan
Accumulated other comprehensive income

Total stockholders’ equity

60,876
295,520

39,853
203,047

115,411
13,732

1,567,993
19,148
34,329
20,762

85,412
65,695

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

$ 2,127,771

$ 1,752,706

$ 193,321
1,103,791

1,297,112

220,040
420,178
21,062

1,958,392

$ 175,460
864,730

1,040,190

224,929
319,299
17,492

1,601,910

4,157
40,260
126,251
(2,289)
1,000

169,379

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

150,796

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 2,127,771

$ 1,752,706

See accompanying notes to consolidated financial statements.

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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

75,691

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

2003

2002

2001

$ 107,645

$ 92,154

$ 102,324

INTEREST INCOME:

Loans, including fees
Securities:
Taxable
Non taxable

Federal Home Loan Bank stock and other

Total interest income

INTEREST EXPENSE:

Deposits
Securities sold under agreements to

repurchase and other short-term borrowings

Federal Home Loan Bank borrowings

Total interest expense

NET INTEREST INCOME

PROVISION FOR LOAN LOSSES

NON INTEREST INCOME:

Service charges on deposit accounts
Electronic refund check fees
Title insurance commissions
Mortgage banking income
Net gain on sale of securities
Debit card interchange fee income
Other

Total non interest income

NON INTEREST EXPENSES:

Total non interest expenses

INCOME BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE

NET INCOME

10,377
3
1,035

119,060

19,944

1,897
14,954

36,795

82,265

6,574

10,672
3,981
2,532
11,104
-
1,825
819

30,933

32,144
12,416
2,729
3,037
1,980
1,481
-
1,722
7,350

62,859

43,765

15,562

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
6,894
1,559
1,441
987

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

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
6,438
1,864
1,020
550

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

$ 28,203

$ 20,489

$ 16,808

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Change in unrealized gain on securities
Less: Reclassification of realized amount

Net unrealized gain recognized in comprehensive income

COMPREHENSIVE INCOME

BASIC EARNINGS PER SHARE:
Class A Common Stock
Class B Common Stock

DILUTED EARNINGS PER SHARE:
Class A Common Stock
Class B Common Stock

See accompanying notes to consolidated financial statements.

(1,598)
-

(1,598)

26,605

1.67
1.62

1.64
1.59

$ 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

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E

YEARS ENDED DECEMBER 31, 2003, 2002 and 2001
(in thousands, except per share data)

BALANCE, January 1, 2001

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

Class A Common Stock

Conversion of Capital Trust Preferred to

Class A Common Stock

Shares committed to be released

under the Employee Stock Ownership Plan

Dividends declared Common Stock:
Class A ($ 0.176 per share)
Class B ($ 0.160 per share)

Net changes in accumulated other

comprehensive income (loss)

Net income

BALANCE, December 31, 2001

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

Class A Common Stock

Conversion of Capital Trust Preferred to

Class A Common Stock

Shares committed to be released

under the Employee Stock Ownership Plan

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

Net changes in accumulated other

comprehensive income (loss)

Net income

Common Stock
Class B
Shares

2,105

(48)

2,079

(103)

Amount

$ 4,079

44
(182)

$ 3,953

49
(3)

121

Class A
Shares

14,512

155
(763)

14,027

203
(15)

103

508

BALANCE, December 31, 2002

14,852

1,979

$ 4,120

179
(20)

43
(6)

(5)

(17)

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

Class A Common Stock

Shares committed to be released

under the Employee Stock Ownership Plan

Dividends declared Common Stock:
Class A ($ 0.506 per share)
Class B ($ 0.460 per share)

Notes receivable on common stock, net of

cash payments

Net changes in accumulated other

comprehensive income (loss)

Net income

BALANCE, December 31, 2003

15,056

1,957

$ 4,157

See accompanying notes to consolidated financial statements.

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Additional
Paid In
Capital

$ 33,294

808
(1,521)

488

(52)

$ 33,017

1,258
(29)

4,956

(28)

$ 39,174

1,620
(57)

(550)

Retained
Earnings

$ 83,345

(385)
(6,113)

(2,449)
(333)

16,808

$ 90,873

(203)
(131)

(3,081)
(380)

20,489

$ 107,567

(678)
(316)

(7,622)
(903)

28,203

Unearned
Shares in
Employee
Stock
Ownership
Plan

$ (3,324)

319

Accumulated
Other
Comprehensive
Income (Loss)

$ (452)

729

Total
Stockholders’
Equity

$ 116,942

467
(7,816)

500

267

(2,449)
(333)

729

16,808

$ (3,005)

$ 277

$ 125,115

342

2,321

1,104
(163)

5,077

314

(3,081)
(380)

2,321

20,489

$ (2,663)

$ 2,598

$ 150,796

374

(1,598)

985
(379)

447

(7,622)
(903)

(550)

(1,598)

28,203

$ 40,260

$ 126,251

$ (2,289)

$ 1,000

$ 169,379

YEARS ENDED DECEMBER 31, (in thousands)

2003

2002

2001

OPERATING ACTIVITIES:

Net income
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:

Depreciation and amortization, net
Federal Home Loan Bank stock dividends
Provision for loan losses
Net gain on sale of mortgage loans held for sale
Net gain on sale of securities available for sale
Origination of mortgage loans held for sale
Proceeds from sale of mortgage loans held for sale
Employee Stock Ownership Plan expense

Changes in assets and liabilities:

Other assets and accrued interest receivable
Other liabilities and accrued interest payable

Net cash provided by (used in) operating activities

INVESTING ACTIVITIES:

Purchases of securities available for sale
Purchases of securities to be held to maturity
Purchases of Federal Home Loan Bank stock
Proceeds from calls and maturities of securities

to be held to maturity

Proceeds from calls, maturities and paydowns

of securities available for sale

Proceeds from sales of securities available for sale
Net increase in loans
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 Federal Home Loan Bank borrowings
Proceeds from Federal Home Loan Bank borrowings
Repurchase of 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

28,203

20,489

16,808

6,050
(756)
6,574
(12,718)
-
(798,657)
863,338
447

(1,881)
3,350

93,950

(508,371)
(145,305)
(68)

115,214

412,935
-
(275,952)
(16,593)

(418,140)

221,093

30,940
(75,818)
176,697
(379)

-
985
(8,305)

345,213

21,023

39,853

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

4,284

35,569

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

2,267
2,622

(4,138)

(248,731)
(80,845)
-

139

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

(62,841)

2,597

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

-
467
(2,837)

62,333

(4,646)

40,215

CASH AND CASH EQUIVALENTS AT END OF YEAR

60,876

39,853

35,569

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the year for:

Interest
Income taxes

SUPPLEMENTAL NONCASH DISCLOSURES:

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 into deposits

See accompanying notes to consolidated financial statements.

36,170
16,412

35,829

38,036
11,600

59,076
8,701

$ 102,153

5,077

39,484

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Nature of Operations – 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”), and Republic Funding 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 31 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 and fees 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 providing deferred deposit transactions (payday
loans), Refund Anticipation Loan (“RAL”) fees and Electronic Refund Check (“ERC”) fees.

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

marketing and development, communication 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, mortgage servicing rights (“MSRs”) and the fair value of financial instruments. Actual results
could differ from these estimates.

Cash Flows – Cash and cash equivalents include cash, deposits with other financial institutions under 90 days and

federal funds sold. Net cash flows are reported for lending, 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 nor 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 (“FHLB”) 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 contracts, which are considered derivatives.
The aggregate market value of mortgage loans held for sale considers the price of the sales contracts.

Loan commitments related to the origination of mortgage loans held for sale are considered derivatives. Republic’s
commitments are for fixed rate mortgage loans, generally lasting 60 to 90 days and are at market rates when initiated.
Republic had commitments to originate $35 million and $161 million in loans as of December 31, 2003 and 2002 that it
intends to sell or were sold after the loans are or were closed. Because sales contract derivatives are entered into 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 is 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.

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MSRs represent an estimate of the present value of future cash servicing income, net of estimated costs, the Company
expects to receive on loans sold with servicing retained. MSRs are capitalized as separate assets when loans are sold and
servicing is retained. Prior to 2003, Republic’s loans sold in the secondary market had been primarily sold with servicing
released which did not result in an MSR. Beginning in 2003, Republic primarily sold loans into the secondary market with
servicing retained and a corresponding MSR. This transaction is posted to net gain on sale of loans, a component of
mortgage banking income. The carrying value of MSRs is amortized in proportion to, and over the period of, net servicing
income and this amortization is recorded as a reduction to mortgage banking income. The total MSR asset, net of amortization,
recorded at December 31, 2003 and 2002 is $5 million and $3 million.

The carrying value of the MSRs asset is periodically reviewed for impairment based on the fair value of the MSR, using
groupings of the underlying loans by interest rates and by geography and prepayment characteristics. Any impairment of a
grouping would need to be reported as a valuation allowance. A primary factor influencing the fair value is the estimated life
of the underlying loans serviced. The estimated life of the loans serviced is significantly influenced by market interest rates.
During a period of declining interest rates, the fair value of the MSRs should decline due to expected prepayments within the
portfolio. Alternatively, during a period of rising interest rates the fair value of MSRs should increase as prepayments on the
underlying loans would be expected to decline. Management utilizes an independent third party on a quarterly basis to assist
with the fair value estimate of the MSRs. Based on the estimated fair value at December 31, 2003 and 2002, management
determined no impairment of these assets existed. On an ongoing basis, management considers all relevant factors, in
addition to pricing considerations from other servicers, to estimate the fair value of the MSRs to be recorded when the loans
are initially sold with servicing retained.

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, which are included in
mortgage banking income, 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 balance adjusted for any charge offs, the allowance for loan losses and
any deferred fees or costs on originated 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,
Interest received on non-accrual loans generally is
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 ultimate
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.

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 net of 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 various 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 39 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.

S
T
N
E
M
E
T
A
T
S

L
A
C
N
A
N
F
D
E
T
A
D
L
O
S
N
O
C
O
T

S
E
T
O
N

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 as
they are not covered by federal deposit insurance. Certain of these liabilities are secured by private insurance purchased by
Republic or FHLB letters of credit rather than by a pledge of securities. Other short-term borrowings primarily include federal
funds purchased.

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 Financial Accounting Standards Board (“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, net of tax

Pro forma net income
Basic earnings per share as reported:

Class A Common Stock
Class B Common Stock
Pro forma basic earnings per share:
Class A Common Stock
Class B Common Stock

Diluted earnings per share as reported:

Class A Common Stock
Class B Common Stock

Pro forma diluted earnings per share:

Class A Common Stock
Class B Common Stock

2003
$ 28,203

722

$ 27,481

1.67
1.62

1.63
1.58

1.64
1.59

1.59
1.55

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

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 of options (in years)
Expected volatility

Estimated fair value per share

2003

3.17%
2.05
6.00

24%

2002

4.83%
1.97
5.95

32%

2001

4.99%
2.37
6.00

34%

$ 2.91

$ 3.41

$ 2.46

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 (“ESOP”) – 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;
dividends 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 considering
customer collateral or ability to repay. Such financial instruments are recorded when they are funded.
Instruments, such as
standby letters of credit, that are considered financial guarantees in accordance with FASB Interpretation No. 45 are recorded at
fair value.

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

Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business,

are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
Management does not believe there are any such matters that will have a material effect on the financial statements.

N
O
T
E
S

T
O
C
O
N
S
O
L
D
A
T
E
D
F
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

Earnings Per Share – Earnings per share is based on net 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. ESOP shares are considered outstanding unless unearned. Earnings per share assuming dilution shows the effect of
additional common shares issuable under stock options and guaranteed preferred beneficial interests in Republic's subordi-
nated debentures.

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 a
separate component of equity, net of tax.

Segment Information – Segments are parts of a company evaluated by management with separate financial information.

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

Reclassifications – Certain amounts presented in prior periods have been reclassified to conform with the current year

presentation.

New Accounting Pronouncements – In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
“Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others.” FIN 45 expands disclosures to be made by a guarantor to recognize in its financial statements about its obligations
under certain guarantees and requires the guarantor to recognize a liability for the fair value of an obligation assumed under
a guarantee. The adoption of FIN 45 did not have a material effect on the Company’s consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities.” FIN
46 clarifies the application of ARB No. 51, Consolidated Financial Statements, for certain entities in which equity investors do
not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance
its activities without additional subordinated support from other parties. FIN 46 requires variable interest entities to be con-
solidated by the primary beneficiary which represents the enterprise that will absorb the majority of the variable interest
entities expected losses if they occur, receive a majority of the variable interest entities’ residual return if they occur, or both.
Qualifying special purpose entities are exempt from the consolidation requirement of FIN 46. Although 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, the Company concluded this did not meet the criteria of FIN 46. The adoption of FIN 46
did not have a material effect on the Company’s consolidated financial statements.

In April 2003, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 149, “Amendment of Statement

133 on Derivative Instruments and Hedging Activities.” The Statement amends and clarifies financial accounting and reporting
for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities
under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS 149 clarifies under
what circumstances a contract with an initial net investment meets the characteristic of a derivative, when a derivative
contains a financing component, and amends the definition of to conform it to language used in FIN 45 and other pronounce-
ments. The adoption of SFAS No. 149 did not have a material effect on the Company’s consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of both

Liabilities and Equity.” The Statement establishes standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
within its scope as a liability (or an asset in some circumstances). The adoption of SFAS No. 150 did not have a material
effect on the Company’s consolidated financial statements.

It requires that an issuer classify a financial instrument that is

2. RESTRICTIONS ON CASH AND DUE FROMS

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

the consolidated balance sheet includes $424,000 and $3 million of reserve balances at December 31, 2003 and 2002. The
Company does not earn interest on these cash balances.

S
T
N
E
M
E
T
A
T
S

L
A
C
N
A
N
F
D
E
T
A
D
L
O
S
N
O
C
O
T

S
E
T
O
N

3. SECURITIES

Securities available for sale:

December 31, 2003 (in thousands)
U.S. Treasury securities and U.S.

Government agencies

Mortgage backed securities,

including CMOs

Total securities available for sale

December 31, 2002 (in thousands)
U.S. Treasury securities and U.S.

Government agencies

Mortgage backed securities,

including CMOs

Total securities available for sale

Securities to be held to maturity:

December 31, 2003 (in thousands)
U.S. Treasury securities and U.S.

Government agencies

Mortgage backed securities,

including CMOs

Total 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,

including CMOs

Total securities to be held to maturity

Amortized
Cost

$ 154,533

139,472

$ 294,005

Amortized
Cost

$ 50,175

148,936

$ 199,111

Gross
Unrealized
Gains

328

1,274

$ 1,602

Gross
Unrealized
Gains

948

2,990

$ 3,938

Gross
Unrealized
Losses

Fair Value

$ (43)

$ 154,818

(44)

140,702

$ (87)

$ 295,520

Gross
Unrealized
Losses

(2)

Fair Value

$ 51,123

151,924

$ 203,047

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair Value

9,707

105,704

$ 115,411

$ 100

$ 9,725

(775)

$ (775)

105,011

$ 114,736

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

8,175

Fair Value

$ 8,195

102

(66)

77,186

100

77,137

$ 85,412

115

137

$ (66)

$ 85,483

Securities pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes, as required or per-
mitted by law are as follows:

December 31, (in thousands)
Amortized cost
Fair value

December 31, (in thousands)
Sale of securities available for sale:

Proceeds on sales
Proceeds on calls
Gross gains

2003
$ 272,801
273,561

2003

-
33,740
-

2002

$ 253,266
257,053

2002

$ 58,227

26,500
1,559

2001

$ 122,516
63,000
1,864

N
O
T
E
S

T
O
C
O
N
S
O
L
D
A
T
E
D
F
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

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

December 31, 2003 (in thousands)

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

Total

Securities
available for sale

Securities to be
held to maturity

Amortized
Cost

$ 136,013
18,520
139,472

$ 294,005

Fair Value

$ 136,199
18,619
140,702

$ 295,520

Amortized
Cost

-
9,707
105,704

$ 115,411

Fair Value

-
9,725
105,011

$ 114,736

Securities with unrealized losses not recognized in income are as follows:

December 31, 2003 (in thousands)

U.S. Treasury securities and U.S.

Government agencies

Mortgage backed securities,

including CMOs

Less than 12 months

12 months or more

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

$ 124,952

$ (29)

6,440

$ (14)

$ 131,392

$ (43)

$ -

$ 122,465

$ (819)

$ 122,465

$ (819)

All unrealized losses are reviewed to determine whether the losses are other than temporary. Factors considered include

whether the securities are backed by the U.S. Government or its agencies and concerns surrounding the recovery of full
principal. While it’s likely that management will hold the securities to maturity, even though some are classified as available for
sale, management believes the unrealized losses are market driven and no ultimate loss will occur.

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

2003

762,000
442,083
70,897
34,553
58,034
215,088

2002

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

1,582,655

1,310,881

703
13,959

818
10,148

$ 1,567,993

$ 1,299,915

Republic utilizes eligible real estate loans to collateralize advances and letters of credit from the FHLB. At December 31,
2003 and 2002, Republic had $703 million and $541 million in first lien, 1-4 family residential real estate loans pledged to
secure advances and letters of credit from the FHLB. The Company also had $67 million and $38 million, in multi family,
commercial real estate loans pledged at December 31, 2003 and 2002 and $142 million in home equity lines of credit
pledged at December 31, 2003.

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

2003

$ 10,148
6,574
(5,527)
2,764

$ 13,959

2002

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

$ 10,148

2001

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

$ 8,607

S
T
N
E
M
E
T
A
T
S

L
A
C
N
A
N
F
D
E
T
A
D
L
O
S
N
O
C
O
T

S
E
T
O
N

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

Non-performing loans were as follows:

Loans past due 90 days still on accrual
Nonaccrual loans

2003

$ -
6,176

$ 6,176

$ 1,484
3,604
-
-

473
12,466

2002

$ -
1,152

$ 1,152

288
1,369
-
-

1,915
7,967

2001

-
104

$ 104

26
707
-
-

521
5,056

Non-performing loans include 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:

December 31, 2003 (in thousands)

5. MORTGAGE BANKING ACTIVITIES

Balance,
Beginning
of Period

$ 19,545

Change in
Related Party
Status

New
Loans

Repayments

Balance,
End
of Period

$ (900)

$ 8,737 $ (9,807)

$ 17,575

Mortgage banking activities primarily include residential and commercial mortgage originations and servicing. The following
table presents the components of mortgage banking non interest income:

December 31, (in thousands)

Net gain on sale of mortgage loans held for sale
Net loan servicing (expense) income

Mortgage banking income

2003

$ 12,718
(1,614)

$ 11,104

2002

$ 6,998
(104)

$ 6,894

2001

$ 6,191
247

$ 6,438

Republic serviced loans for others (primarily FHLMC) totaling $732 million and $283 million at December 31, 2003 and

2002. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts,
disbursing payments to investors and processing foreclosures. Loan servicing (expense) income reflected in the above
includes amortization of servicing rights (see below) and loan servicing income of $1,293,000, $642,000 and $534,000 for
the years ended 2003, 2002 and 2001. Custodial escrow account balances maintained in connection with serviced loans
were $3 million and $981,000 at year end December 31, 2003 and 2002.

Activity for capitalized mortgage servicing rights is as follows:

December 31, (in thousands)

Balance January 1
Additions
Amortized to expense

Balance December 31

Valuation allowance

2003

$ 2,882
4,848
(2,907)

$ 4,823

The fair value of mortgage servicing rights was $6.7 million at December 31, 2003.

2002

$ 1,885
1,743
(746)

$ 2,882

$ -

2001

624
1,548
(287)

$ 1,885

$ -

N
O
T
E
S

T
O
C
O
N
S
O
L
D
A
T
E
D
F
N
A
N
C
A
L

S
T
A
T
E
M
E
N
T
S

6. PREMISES AND EQUIPMENT

December 31, (in thousands)

Land
Office buildings and improvements
Furniture, fixtures and equipment
Leasehold improvements
Construction in progress

Total premises and equipment
Less accumulated depreciation and amortization

Premises and equipment, net

2003

$ 2,836
18,959
33,404
3,176
1,913

60,288
25,959

$ 34,329

2002

$ 1,822
13,261
24,440
2,500
801

42,824
19,672

$ 23,152

Depreciation expense related to premises and equipment was $5.4 million in 2003, $4.0 million in 2002 and $3.9 million in 2001.

7. DEPOSITS

Time deposits of $100,000 or more were $196 million and $111 million at year end 2003 and 2002.
The scheduled maturities of all time deposits are as follows:

December 31, 2003 (dollars in thousands)

2004
2005
2006
2007
2008
Thereafter

Total

Amount

$ 184,943
86,919
98,589
77,065
34,925
24,207

$ 506,648

Weighted
Average Rate

2.13%
2.93
3.26
3.99
2.42
0.88

2.73%

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 FHLB 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 2003 and 2002 are as follows:
December 31, (dollars in thousands)

Average outstanding balance during the year
Average interest rate during the year
Maximum month end balance during the year
Weighted average rate at year end

9. FHLB BORROWINGS
December 31, (in thousands)

2003

$ 189,984

1.00%

227,760

0.98%

2002

$ 225,671

1.44%

294,915

1.31%

2003

2002

FHLB convertible fixed interest rate advances from 4.40%
to 6.35%, with a weighted average interest rate of 5.17%(1)

$ 115,000

FHLB fixed interest rate advances from 1.44% to 5.94%,
with a weighted average interest rate of 3.52% at
December 31, 2003, due through 2032

305,178

$ 420,178

204,299

$ 319,299

(1) Represents convertible advances with the 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 or
the Company can prepay the borrowings at no penalty. The Company has $55 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.

S
T
N
E
M
E
T
A
T
S

L
A
C
N
A
N
F
D
E
T
A
D
L
O
S
N
O
C
O
T

S
E
T
O
N

FHLB advances are collateralized by a blanket pledge of eligible real estate loans. At December 31, 2003, Republic had
available collateral to borrow an additional $112 million from the FHLB. Republic also has unsecured lines of credit totaling
$110 million available through various financial institutions.

N
O
T
E
S

Aggregate future principal payments on borrowed funds, based on contractual maturity dates as of December 31, 2003 are
as follows:

Year
2004
2005
2006
2007
2008 and thereafter

Total

(in thousands)
$ 24,000
82,570
95,000
60,000
158,608

$ 420,178

During 2003, the Company did not prepay any FHLB Advances. In 2002, the Company prepaid $25 million on 6.40% FHLB
advances due November 2002. The transaction resulted in a penalty of $1.4 million or $891,000 net of tax ($0.05 per share).

10. GUARANTEED PREFERRED BENEFICIAL INTERESTS

In February 1997, Republic Capital Trust, 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 Republic Capital Trust 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.

INCOME TAXES

11.
Income tax expense is summarized as follows:
Year Ended December 31, (in thousands)

Current
Deferred expense (benefit)

Total

2003

$ 13,942
1,620

$ 15,562

2002

$ 11,536
(340)

$ 11,196

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

Year Ended December 31, (in thousands)

2003

2002

Federal statutory rate
Increase (decrease) resulting from:
State taxes, net of federal benefit
Low income housing tax credit
Other, net
Effective rate

35.0%

0.2
(0.5)
0.9
35.6%

35.0%

-
-
0.3
35.3%

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

2001

$ 8,687
(108)

$ 8,579

2001

35.0%

-
-
(1.2)
33.8%

December 31, (in thousands)

Deferred tax assets:

Depreciation
Allowance for loan losses
Accrued expenses

Total deferred tax assets

Deferred tax liabilities:

Depreciation
FHLB dividends
Loan fees
Mortgage servicing rights
Unrealized securities gains
Other

Total deferred tax liabilities

Net deferred tax liability

2003

-
4,044
1,329

5,373

1,345
2,740
360
1,696
515
475

(7,131)

$ (1,758)

2002

$ 532
2,715
1,098

4,345

-
2,469
294
1,011
1,338
194

5,306

$ (961)

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12. EARNINGS PER SHARE

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

and diluted earnings per share 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 2003, 2002 and 2001 was $691,000, $279,000 and $224,000.

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

Net income available to common shareholders
Weighted average shares outstanding
Basic Earnings per Share:
Class A Common Stock
Class B Common Stock

2003

$ 28,203
16,939

1.67
1.62

2002

$ 20,489
16,636

$ 1.23
1.21

2001

$ 16,808
16,126

1.04
1.03

Diluted:

Net income

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

Weighted average shares outstanding

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 Common Stock
Class B Common Stock

$ 28,203

$ 20,489

$ 16,808

$ 28,203

16,939

-
369

17,308

$ 1.64
1.59

$ 20,568

16,636

146
334

17,116

$ 1.20
1.19

332

$ 17,140

16,126

610
356

17,092

$ 1.01
0.99

Stock options for 20,000 and 191,000 shares of Class A Common Stock were excluded from the 2003 and 2002 earnings
per share assuming dilution because their impact was antidilutive.

13. STOCKHOLDERS’ EQUITY

Common Stock – The Class A Common shares are entitled to cash dividends equal to 110% of the cash dividend paid

per share on the Class B Common Stock. Class A Common shares have one vote per share and Class B Common 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 the 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, combined with
the retained net income of the preceding two years, less any dividends declared during those periods. At December 31,
2003, Republic Bank & Trust Company had $37.4 million of retained earnings that could be utilized for payment of dividends
if authorized by its board of directors without prior regulatory approval subject to capital requirements.

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

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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 following table) of Total and Tier I capital (as defined in the regula-
tions) to risk weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). As of December
31, 2003, the Parent Company, Republic Bank & Trust Company and Republic Bank & Trust Company of Indiana meet all
capital adequacy requirements to which they are subject to.

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

(dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

As of December 31, 2003
Total Risk Based Capital (to Risk Weighted Assets)

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

$ 181,856
171,210
5,897

12.99% $ 112,011
109,074
12.49
2,307
20.45

8%
8
8

$ 140,013
137,130
2,884

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, 2002
Total Risk Based Capital (to Risk Weighted Assets)

167,897
157,593
5,555

11.99
11.49
19.26

8.08
7.68
15.55

56,005
54,852
1,153

83,080
82,106
1,428

4
4
4

84,008
82,278
1,730

103,850
102,632
1,786

6
6
6

5
5
5

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

$ 158,044
148,318
5,512

13.64% $ 92,679
90,814
13.07
2,049
21.52

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

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

69,509
68,111
1,537

81,990
81,181
1,129

6
6
6

5
5
5

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N
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A
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N
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O
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14. STOCK OPTION PLAN

Under the 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:

2003

2002

Options
Class A
Shares

1,539,000
92,500
(235,250)
(64,750)

Weighted
Average
Exercise
Price

$ 9.62
13.25
7.55
10.01

1,331,500

10.22

Outstanding

beginning of year

Granted
Exercised
Forfeited

Outstanding year end
Exercisable

(vested) end of year

94,750

10.60

Options
Class B
Shares

Weighted
Average
Exercise
Price

Options
Class A
Shares

Weighted
Average
Exercise
Price

Options
Class B
Shares

Weighted
Average
Exercise
Price

-
-
-
-

$ -
-
-
-

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

1,539,000

149,500

$ 7.76
10.64
5.99
8.19

9.62

5.98

4,000
-
(4,000)
-

$ 5.53
-
5.53
-

2001

Options
Class A
Shares

Weighted
Average
Exercise
Price

Options
Class B
Shares

Weighted
Average
Exercise
Price

Outstanding

beginning of year

Granted
Exercise
Forfeited

Outstanding year end
Exercisable (vested)

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

982,750

end of year

134,500

7.20
7.57
4.72
7.95

7.76

5.90

30,000
-
(26,000)
-

4,000

$ 4.18
-
3.97
-

5.53

Options outstanding at year end 2003 were as follows:

Remaining
Contractual
Number

Weighted
Average
Life

Weighted
Average
Price

$ 6.35
10.40
12.35
16.02

10.22

Exercisable

Number

32,500
-
62,250
-

94,750

Weighted
Average
Price

$ 6.00
-
13.00
-

10.60

2.83
4.64
2.60
5.71

3.97

Outstanding Class A Options

Range of Exercise Prices
$5.88 - $7.00
$8.13 - $10.60
$10.98 - $13.00
$13.07 - $18.37

227,500
814,250
257,250
32,500

Total Outstanding

1,331,500

15. EMPLOYEE BENEFIT PLANS

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 have the option to contribute from 1% to 25% of their annual compen-
sation. 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 $762,000,
$637,000 and $506,000 for the years ended December 31, 2003, 2002 and 2001.

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 price 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. At year end 2003, approximately 177,000 unallocated shares had a
fair value of $3.5 million.

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Year Ended December 31, (in thousands)

Unearned shares allocated to participants in the plan
Compensation expense

2003

28,485
$ 446,000

2002

26,499
$ 314,000

2001

24,649
$ 267,000

The Company maintains a death benefit for the Chairman of the Company equal to three times the average compensa-
tion paid for the two years proceeding death. Upon a change in control, defined as a sale or assignment of more than 55%
of the outstanding stock of the Company, the benefit is canceled.

16. LEASES AND TRANSACTIONS WITH AFFILIATES

Republic leases office facilities under operating leases from Republic’s Chairman and from partnerships in which
Republic’s Chairman and Chief Executive Officer are partners. Rent expense for the years ended December 31, 2003, 2002
and 2001 under these leases was $1,892,000, $1,549,000 and $1,475,000. Total rent expense on all operating leases was
$2,698,000, $2,302,000 and $2,092,000 for the years ended December 31, 2003, 2002 and 2001. The total minimum lease
commitments under noncancelable operating leases are as follows:

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December 31, 2003 (in thousands)

2004
2005
2006
2007
Thereafter

Total

Affiliate

$ 1,837
1,817
1,553
845
817

$ 6,869

Other

$ 1,075
1,066
940
885
10,518

$ 14,484

Total

$ 2,912
2,883
2,493
1,730
11,335

$ 21,353

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

$73,000, $91,000 and $74,000 for the years ended December 31, 2003, 2002 and 2001.

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 commit-
ment 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
In addition, since a portion of
above the rate committed. Republic’s liquidity position is managed to meet its need for funds.
these loan commitments normally expire unused, the total amount of outstanding commitments at any point in time may not
require future funding.

As of December 31, 2003, exclusive of mortgage banking loan commitments discussed in Note 1, Republic had
outstanding loan commitments totaling $345 million which includes unfunded home equity lines of credit totaling $207
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 $38 million at
December 31, 2003.

At December 31, 2003, Republic had $88 million in letters of credit from the FHLB 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 $60 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 FHLB by $88 million. Republic uses a blanket pledge
of eligible real estate loans to secure the letters of credit.

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18. FAIR VALUE OF FINANCIAL INSTRUMENTS

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 method-
ologies may have a material effect on the estimated fair value amounts.

(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
Accrued interest receivable

Liabilities:

Deposits:

Non interest-bearing accounts
Transaction accounts

Certificate of deposit and individual

retirement accounts

Securities sold under agreements to
repurchase and other short-term
borrowings

Federal Home Loan Bank borrowings
Accrued interest payable

December 31, 2003

December 31, 2002

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

$ 60,876
295,520
115,411
13,732
1,567,993
19,148
6,710

$ 60,876
295,520
114,853
13,877
1,600,608
19,148
6,710

$ 39,853
203,047
85,412
65,695
1,299,915
18,324
6,998

39,853
203,047
85,483
66,176
1,345,477
18,324
6,998

$ 193,321
597,143

$ 175,460
464,961

$ 175,460
464,959

506,648

513,691

399,769

410,235

220,040
420,178
3,441

220,114
426,437
3,441

224,929
319,299
2,816

224,957
348,226
2,816

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. If a quoted market price is not available, fair value is estimated using quoted market
prices for similar securities. For FHLB stock, the carrying amount is an estimate of fair value.

Mortgage Loans Held for Sale – Estimated fair value is based on the corresponding sales contract.

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.

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.

Federal Home Loan Bank Borrowings – 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.

Accrued Interest Receivable/Payable –The carrying amount is a reasonable estimate of fair value.

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.

Financial Guarantees – Estimated fair value is based on current fees or costs that would be charged to enter or

terminate such arrangements and is not material.

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A
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N
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O
N

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

31, 2003 and 2002. 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.

19. PARENT COMPANY CONDENSED FINANCIAL INFORMATION

BALANCE SHEETS
December 31, (in thousands)

Assets:

Cash and cash equivalents
Due from subsidiaries
Investment in subsidiaries
Other assets

Total assets

Liabilities and stockholders’ equity:

Other liabilities
Stockholders’ equity

Total liabilities and stockholders’ equity

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

Income and expenses:

Dividends from subsidiary
Interest income
Interest expense
Other expenses

Income before income taxes
Income tax benefit

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

Net income

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

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

(used in) operating activities:

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

Net cash provided by operating activities

Investing activities:

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

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

2003

2002

$ 3,960
2,579
164,638
425

$ 171,602

$ 2,223
169,379

$ 171,602

2003

$ 9,100
187
-
(480)

8,807
284

9,091
19,112

$ 28,203

2,538
3,667
146,575
14

$ 152,794

1,998
150,796

$ 152,794

2002

3,406
211
(129)
(589)

2,899
272

3,171
17,318

$ 20,489

2001

$ 15,699
253
(548)
(401)

15,003
297

15,300
1,508

$ 16,808

2003

2002

2001

$ 28,203

$ 20,489

$ 16,808

(19,112)
1,088
(11)
(545)
9,623

(102)
-
-
(400)
(502)

(8,305)
985

-
(379)
(7,699)

1,422

2,538

(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

Cash and cash equivalents, end of year

$ 3,960

2,538

$ 1,537

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20. SEGMENT INFORMATION

The reportable segments are determined by the type of products and services offered, primarily distinguished between
banking, mortgage banking operations, deferred deposits 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; fees for providing deferred deposits represent the primary revenue source for the
deferred deposit segment; and refund anticipation loan fees and electronic refund check fees provide the substantial amount
of revenue from tax refund services. All four 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
Mortgage banking income
Other revenue
Income tax expense
Segment profit
Segment assets

(in thousands)

Net interest income
Provision for loan losses
Electronic refund check fees
Mortgage banking income
Other revenue
Income tax expense/(benefit)
Segment profit/(loss)
Segment assets

(in thousands)

Net interest income
Provision for loan losses
Electronic refund check fees
Mortgage banking income
Other revenue
Income tax expense
Segment profit
Segment assets

Banking

66,864
4,245
-
-
19,461
8,718
15,801
2,063,371

Banking

59,596
2,395
-
-
18,453
9,189
16,746
1,682,508

Banking

$ 55,264
2,424
-
-
13,784
7,052
13,822
1,549,346

Tax Refund
Services

$ 6,742
1,850
3,981
-
35
1,930
3,499
1,829

2003
Mortgage
Banking

Deferred
Deposits

Consolidated
Totals

$ 1,353
-
-
11,104
(3,648)
2,795
5,066
13,757

$ 7,306
479
-
-
-
2,119
3,837
48,814

$ 82,265
6,574
3,981
11,104
15,848
15,562
28,203
2,127,771

2002

Tax Refund
Services

Mortgage
Banking

Deferred
Deposits

Consolidated
Totals

$ 3,563
47
3,198
-
71
1,419
2,636
1,167

Tax Refund
Services

$ 3,278
1,069
2,087
-
36
425
831
507

$ 1,025
-
-
6,894
(4,094)
877
1,630
65,816

2001
Mortgage
Banking

$ 937
-
-
6,438
(2,604)
1,102
2,155
40,978

156
900
-
-
-
(289)
(523)
3,215

64,340
3,342
3,198
6,894
14,430
11,196
20,489
1,752,706

Deferred
Deposits

Consolidated
Totals

-
-
-
-
-
-
-
-

59,479
3,493
2,087
6,438
11,216
8,579
16,808
1,590,831

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21. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)
Presented below is a summary of the consolidated quarterly financial data for the years ended December 31, 2003 and 2002.

(in thousands, except per share data)
2003:

Interest income
Net interest income
Provision for loan losses
Income before income tax expense
Net income
Basic earnings per share:
Class A Common Stock
Class B Common Stock
Diluted earnings per share:
Class A Common Stock
Class B Common Stock

(in thousands, except per share data)
2002:

Fourth
Quarter

$ 29,353
19,410
156
7,260
4,637

0.28
0.25

0.27
0.24

Fourth
Quarter

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

0.24
0.24

0.24
0.23

Third
Quarter

$ 28,579
19,493
223
9,909
6,349

0.38
0.37

0.36
0.36

Third
Quarter

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

0.28
0.28

0.28
0.27

Second
Quarter

$ 28,399
19,585
1,854
11,259
7,267

0.43
0.42

0.42
0.41

Second
Quarter

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

0.30
0.29

0.29
0.29

First
Quarter

$ 32,730
23,778
4,341
15,338
9,951

0.59
0.59

0.58
0.58

First
Quarter

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

0.41
0.41

0.40
0.39

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A
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C
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N

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I

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P
R
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C

ANNUAL MEETING
The Annual Meeting of Shareholders of Republic Bancorp, Inc. will be held at 10:00 a.m. (EDT), Thursday, April 15, 2004 at
3202 Shelbyville Road, Shelbyville, KY.

FINANCIAL INFORMATION
Shareholders may obtain a free copy of the 2003 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.

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

TRANSFER AGENT
Inquiries relating to shareholder records, stock transfers, changes of ownership, changes of address and dividend payment
should be sent directly to our transfer agent at the following address: Computershare Investor Services, PO Box 169,
Chicago, Illinois 60690-1689

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

EXECUTIVE OFFICES
Republic Bancorp, Inc.
601 West Market Street
Louisville, Kentucky 40202-2700
502-584-3600 or outside Louisville 888-584-3600

WEB SITE
www.republicbank.com
info@republicbank.com

BANKING CENTERS AND CHIEF OPERATING OFFICERS
Republic Bank & Trust Company
Bowling Green
Elizabethtown
Frankfort

East
West

Georgetown
Lexington

Louisville

Owensboro
Shelbyville

Andover
Chevy Chase
Harrodsburg Road
Perimeter
Tates Creek Road
Baptist Hospital East
Bardstown Road
Blankenbaker Pkwy.
Brownsboro Road
Corporate Center
Dixie Highway
Fern Creek
Fern Valley Road
Hikes Point
Hurstbourne Pkwy
Jeffersontown
Jewish Hospital
New Cut Road
Outer Loop
Poplar Level Road
Prospect
St. Matthews
Springhurst
West Broadway

Janet Pierce
Claudio Monzon

Rodney Williams
Susan Smith
Scott Osborn
B. J. Webb
Billy Blair
Jeffrey Zinger
Cindy Burton
Barb Cutter
Lisa George

1700 Scottsville Road, Bowling Green, KY 42104
1690 Ring Road, Elizabethtown, KY 42701
1001 Versailles Road, Frankfort, KY 40601
100 Highway 676, Frankfort, KY 40601
430 Connector Road, Georgetown, KY 40324
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
11330 Main Street, Middletown, KY 40243
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 Jill Napier
3605 Fern Valley Road, Louisville, KY 40219
3902 Taylorsville Road, Louisville, KY 40220
661 South Hurstbourne Pkwy, Louisville, KY 40222
3811 Ruckriegel Parkway, Louisville, KY 40299
224 East Muhammad Ali Blvd., Louisville, KY 40202
5125 New Cut Road, Louisville, KY 40214
4655 Outer Loop, Louisville, KY 40219
1420 Poplar Level Road, Louisville, KY 40217
9101 US Hwy 42, Prospect, KY 40059
3726 Lexington Road, KY 40207
9600 Brownsboro Road, KY 40241
2028 West Broadway, Louisville, KY 40203
3500 Frederica Street, Owensboro, KY 42301
1614 Midland Trail, Louisville. KY 40065

David Jett
Mary Matheny
Andy Mayer
Missy Fultz
David Krebs
Eric Higdon
Pearlie Walker
Shirley Cecil
Tucker Ballinger

Steve Coleman
Jacob Call
Steve DeWeese
Larry Stewart

Keri Jones
Chip Hancock
Rob Nicolas

Republic Bank & Trust Company of Indiana
Clarksville
New Albany
Jeffersonville*
* Scheduled to open in 2004

610 Eastern Boulevard, Clarksville, IN 47129
3001 Charlestown Crossing, New Albany, IN 47150
3141 Highway 62, Jeffersonville, IN 47130

Kari Thom
Todd Lancaster

270-782-9111
270-769-6356
502-695-9000
502-875-4300
502-570-8868
859-264-0990
859-255-6267
859-224-1183
859-266-1165
859-273-3933
502-897-3800
502-459-2200
502-254-7555
502-339-9700
502-584-3600
502-448-7000
502-231-5522
502-964-8848
502-451-2006
502-425-2300
502-266-5466
502-588-3115
502-363-4644
502-969-8999
502-636-2661
502-228-2755
502-893-2533
502-339-2200
502-772-7500
270-684-3333
502-633-6660

812-288-1111
812-949-2600
812-282-1200

Republic Bancorp, Inc. Directors
Charles E. “Andy” Anderson
President, Anderson Insurance & Financial Services
J. Michael Brown
Member, Stites & Harbison PLLC
Bill Petter
Vice Chairman, Republic Bancorp, Inc.
Sandra Metts Snowden
President, Metts Company Realtors –
Sandy Metts & Associates
R. Wayne Stratton, CPA
Member, Jones, Nale & Mattingly PLC
Samuel G. Swope*
Chairman, Sam Swope Auto Group, LLC
Sue Stout Tamme
President and Chief Executive Officer,
Baptist Hospital East
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.

*Director Emeritus

Republic Bank & Trust Company
Directors
Henry M. “Sonny” Altman, Jr.
Owner, Altman Consulting LLC
J. Michael Brown
Member, Stites & Harbison PLLC
Stan Curtis
Senior Vice President, Hilliard Lyons
Laura Douglas*
Director of External Communications,
LG&E Energy Corp.
Lawrence C. “Lonnie” Falk
Mayor, City of Prospect
George E. Fischer
Retired - Chairman, SerVend International, Inc.
D. Harry Jones
President, Jones Plastic & Engineering Corp.
Thomas M. Jurich
Vice President for Athletics, University of Louisville
Bill Petter
Executive Vice President and Chief Operating
Officer, Republic Bank & Trust Company
Michael T. Rust, FACHE
President and Chief Executive Officer,
Kentucky Hospital Association
Bernard M. Trager
Chairman - 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.

* Term started January 2004

Republic Bank & Trust Company of Indiana
Directors
Bill Petter
Executive Vice President and Chief Operating Officer,
Republic Bank & Trust Company of Indiana
Bernard M. Trager
Director, Republic Bank & Trust Company of Indiana
A. Scott Trager
President, Republic Bank & Trust Company of Indiana
Steven E. Trager
Chairman and Chief Executive Officer,
Republic Bank & Trust Company of Indiana
Kevin Sipes
Executive Vice President and Chief Financial Officer,
Republic Bank & Trust Company of Indiana
Republic Bank & Trust Company
Advisory Directors
Eastern Kentucky Region
(Frankfort and Lexington)
Tom Burich
Gordon Duke
Bill Johnson
Jas Sekhon
Dr. Emery Wilson
Western Kentucky Region (Bowling
Green, Elizabethtown and Owensboro)
Jeffrey Blankley
Mark Harris
Gary Larimore
Dr. William Moss
Terry Patterson
Dr. Dattatraya Prajapati
Jody Richards
Kevin Shurn
G. Ted Smith
Jack Wells
Shelbyville
Todd Davis
Dr. Christin Honaker
R. Lee Shannon CPA*
Brad Montell*

* Term started in 2004
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
David Vest
Executive Vice President and Chief Lending 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
Kevin Sipes
Executive Vice President and Chief Financial Officer
David Vest
Executive Vice President and Chief Lending Officer

Bank Administration
Jeff Nelson,
Senior Vice President
Cash Management
Cathy Slider,
Senior Vice President
Compliance
Garry Throckmorton,
Senior Vice President
Controller
Mike Beckwith,
Vice President
Commercial Banking
Jeff Norton,
Senior Vice President
Commercial Lending
Darryl Witten,
Senior Vice President
Human Resources
Dorothy Pitt,
Senior Vice President
Information Technology
Tom Clausen,
Senior Vice President
Internal Audit
Ann Bauer,
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
Larry Kozlove,
Senior Vice President
John Mason,
Senior Vice President
Purchasing & Facilities Management
Rod Gillespie,
Senior Vice President

Republic Financial Services
Mike Keene,
President

Regional Managing Directors
Jenifer Duncan,
Senior Vice President – Lexington
Claudio Monzon,
Senior Vice President – Western Kentucky
Jonathan Payne,
Senior Vice President - Louisville
Kathy Potts,
Senior Vice President - Louisville

Secondary Market Lending
Ed McDougal,
Senior Vice President and Chief Operating Officer

Treasury
Greg Williams,
Senior Vice President and Chief Investment Officer

Trust
Paula Langford,
Vice President

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