Republic Bancorp, Inc.
Annual Report 2004

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2 0 0 4   A N N U A L

R E P O R T

 
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 the

"Bank"). Republic’s Class A Common Stock trades on The NASDAQ Stock Market ® under the symbol "RBCAA".

Currently Republic Bank & Trust Company has 31 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 also has two loan 

production offices (“Republic Finance”) located within the Louisville metropolitan area. Republic Bank & Trust

Company of Indiana has two full-service banking centers located in Jeffersonville and New Albany, Indiana. 

At the close of 2004, Republic had assets of approximately $2.5 billion, making the Company the second largest

Kentucky-based bank holding company.  

Bank Offices 

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

Indicates principal office

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F I N A N C I A L H I G H L I G H T S

(dollars in thousands, except per share data)

2004

2003

2002

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 

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

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

$       132,366
42,314
90,052
1,748
27,194
66,016
49,482
32,501 

$    2,498,922
551,593
1,775,545
13,554
1,417,930
364,828
496,387
196,069

$

1.73
1.70
1.66
1.63
24.48
10.38
0.280
0.254

%

1.40
17.50
4.09

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

$   2,128,076
410,931
1,567,993
13,959
1,297,112
220,345
420,178
169,379

$

1.51
1.47
1.48
1.44
17.72
9.03
0.459
0.417

%

1.47
16.88
4.50

$      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

$

1.12
1.10
1.09
1.07
10.22
8.13
0.190
0.172

%

1.25
14.44
4.07

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

2
Letter to Shareholders
19
Selected Consolidated Financial Data
20 Management’s Discussion and Analysis
43 Management’s Report on Internal 
Control Over Financial Reporting

44

45

Report of Independent Registered Public 
Accounting Firm on Internal Control Over 
Financial Reporting
Report of Independent Registered Public 
Accounting Firm on Financial Statements

46 Consolidated Financial Statements
51 Notes to Consolidated Financial Statements
76 Corporate Information

On the Cover Left:  Casey Carwile, V.P. - Cash Management; Sharon McGee, V.P. - Cash Management  
Right: Kari Thom, V.P. - Jeffersonville; Jonathan Payne, Sr. V.P. - Louisville Region; Eric Higdon, V.P. - Springhurst
Bottom: Amy Brown, V.P. - Commercial Lending; Tom Fangman, V.P. - Commercial Lending; Carolle Jones Clay, V.P. - Community Relations

1

Valued Shareholders,

What a rewarding year we've had. Twelve months ago we embarked upon a mission to implement new products

and services and enhance our current offerings. Thanks to the determined efforts of everyone on the Republic

team, I am proud to report that we have had another record setting year, with strong earnings across multiple

business lines complemented by continued improvement of our already solid asset quality. 

2004 was a banner year for Republic with record net income of $32.5 million representing a 15% increase over

2003.  Diluted earnings per Class A Common Share increased to $1.66 in 2004, up from $1.48 in 2003. Growth in

our traditional loan portfolio combined with various cost containment measures all contributed meaningfully to our

success during the year. Solid earnings and strong asset quality within our traditional business lines driven by our

network of 33 banking centers also allowed us to achieve a great deal of success in our non traditional businesses.  

We experienced total asset growth of $371 million during 2004 - ending the year as the rapidly growing, second

largest Kentucky-based bank holding company. Closing the year with nearly $2.5 billion in total assets represents

another significant milestone for Republic.

We once again provided one of the highest returns in our relatively brief history as reflected by a 1.40% return on

average assets (ROA) and a 17.50% return on average equity (ROE) for the year. This solid earnings growth

reflects our ability to produce bottom line results, while at the same time continuing to build upon the value of our

franchise. Every day, our team of dedicated banking professionals demonstrates the Republic commitment to

building market share through superior client service. Our solid results speak for themselves and I am delighted

that our efforts have not gone unnoticed. I am particularly pleased that the market recognized the fundamentals of

our success in 2004 with a 38% increase in our stock price.

Throughout our history, asset quality has remained a primary focus of senior management. We believe there is no

greater measure to the long-term success of a financial institution than asset quality. During 2004, our provision for

loan losses declined to $1.7 million compared to $6.6 million recorded during 2003. Delinquencies and non

performing loans trended lower in the Company’s loan portfolio, as the percentage of delinquent loans to total

loans declined positively to 0.47% at December 31, 2004 compared to 0.82% at December 31, 2003.  In addition,

our percentage of non performing loans to total loans was 0.34% at December 31, 2004 compared to 0.82% at

December 31, 2003.

Total loans increased $207 million during 2004, ending the year with $1.8 billion outstanding. With so many

clients refinancing their home loans in 2003 during the record market low interest rate environment, refinance

activity in the 15 and 30 year fixed rate loan products slowed dramatically during 2004. As a result, we strategically

shifted the focus of our sales force to adjustable rate commercial and residential real estate loans along with prime

based equity lines of credit. Adjustable rate residential real estate loans grew $90 million during 2004 while

commercial real estate loans grew $54 million. Home equity lines of credit grew $52 million during 2004 and

continue to be a primary sales focus due to their monthly repricing and low historical loss rate. 

2

I am very pleased with our deposit growth during the year, as total deposits increased $121 million. Growth in

deposits occurred across multiple categories with the most valuable source of funding, non interest-bearing

deposits, increasing $69 million. We also experienced solid growth in our transaction accounts such as "NOW" 

and "Savings" accounts, as well as our ‘Premier First’ product, our premium money market sweep account designed

for our business clientele. All of the growth in these low cost account categories played a significant role in our

financial success in 2004 and will play a major role in our future success as well. We remain particularly excited

about the Company's new 'Ultimate' consumer checking account product. Republic's sales staff, through

onsite visits, are promoting the 'Ultimate' account to employees of local businesses that are clients of the Bank.

Service charges on deposit accounts continued to grow significantly during

2004, increasing 34% over 2003. Our retail banking center network, the

foundation of the Company, continued to have great success attracting new

relationships throughout, generating an astounding 24,000 new checking

accounts during the year. We believe that our strategically placed 

banking center network has enabled us to reach further into our local 

communities, drawing even more clients to the Company while expanding 

existing relationships.  

Our focus on controlling non interest expenses was very successful in

2004. Non interest expenses increased only 5% for the year despite

twelve full months of overhead associated with our newest banking

centers. Cost containment will remain a focus in 2005; however, the Company remains steadfast in its resolve to

avoid sacrificing long-term shareholder value in order to benefit from short-term economic gain.

Local lockbox processing though our Commercial Cash Management department continues to be an area of great

opportunity. With technology second to none and the ability of our clients to meet fact to face with the

management of Republic’s lockbox services, we believe we can offer products and services that are unrivaled in the

markets in which we compete. Our potential in this area is only limited by the number of business clients within

our local markets.

Our non traditional business lines - Tax Refund Solutions and Deferred Deposits - continued their solid

performance in 2004. These products have enabled us to profitably expand our customer base by fulfilling

consumer demand for convenient and timely short term funding. We remain dedicated to providing customers

with the products they desire at pricing that is appropriate for the risk involved and service required.

As we close another record year, we turn our attention to the promise of 2005. Our goals for the coming year

remain similar to those of the past: improve on what we currently do; develop new and exciting products and

services; and maintain the highest possible asset quality, all in order to provide a sound investment for our

stockholders. The road to continued prosperity, however, remains filled with many challenges. Included among

3

these challenges are rising interest rates, competitive pricing pressures and the ever-increasing costs associated with

being a highly regulated company. All of our associates with the support of our loyal shareholders are ready to face

these challenges head on as we remain unwavering in our commitment to be the premier financial institution in the

Kentucky and southern Indiana markets. Join me as we move into a bright and promising 2005.

Steven E. Trager

President and Chief Executive Officer

NET INCOME ($)

In thousands

DILUTED CLASS A
EARNINGS PER SHARE ($)

34,000

32,000

30,000

28,000

26,000

24,000

22,000

20,000

18,000

16,000

14,000

12,000

1.80

1.60

1.40

1.20

1.00

0.80

0.60

2002

2003

2004

2002

2003

2004

RETURN ON
AVERAGE ASSETS (%)

RETURN ON
AVERAGE EQUITY (%)

MARKET VALUE
PER SHARE ($)

19

18

17

16

15

14

13

12

26

23

20

17

14

11

8

5

2002

2003

2004

2002

2003

2004

2002

2003

2004

1.60

1.50

1.40

1.30

1.20

1.10

1.00

4

R E P U B L I C B A N K C O R P O R AT E C E N T E R
601 W. Market Street, 
Louisville

Compliance
Executive Offices
Finance/Accounting
Information Technology
Internal Audit
Legal

Marketing
Purchasing & Facilities 
Republic Financial Services
Treasury
Trust

R E P U B L I C B A N K P L A C E
661 S. Hurstbourne Parkway, 
Louisville

Cash Management
Commercial Lending
Centralized Lending

R E P U B L I C B A N K B U I L D I N G
9600 Brownsboro Road, 
Louisville

Bank Administration
Human Resources
Training

5

Left: Amy Brown, V.P. - Commercial Lending

Jeff Norton, Sr. V.P. - Commercial Banking

Right: Tom Fangman, V.P. - Commercial Lending

Darryl Witten, Sr. V.P. - Commercial Lending

Above: Joe Hensley, V.P. - Commercial Lending

Scott Blair, A.V.P. - Commercial Lending

John Osbourne, A.V.P. - Commercial Lending

Left: Andy Powell, Sr. V.P. - Commercial Lending

6

Left: Melissa Ledbetter, V.P. - Cash Management

Sharon McGee, V.P. - Cash Management

Right: Logan Hillyard, A.V.P. - Cash Management

Casey Carwile, V.P. - Cash Management

Tom Odle, V.P. - Cash Management

Above: Meredith Brown, V.P. - Cash Management

Jason Morrison, Cash Management Officer

Right: Republic Bank “Community Wide Cleanup”

7

Left: Kay Rothman, V.P. - Bank Administration

Kristeen Pate, Retail Bank Administration Officer

Right: Margaret Wendler, V.P. - Bank Administration

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

Denise Brown, V.P. - Bank Administration

Sandy Richardson, V.P. - Bank Administration

8

Left: Sharon Terrell, Training Development Officer

Laura Dixon, Loan Training Specialist

Right: Scott Norton, Personal Account Specialist

Patty Walls, V.P. - Overdraft Honor

Left: Kari Whited, Internet Banking Manager

Rebecca Hamilton, V.P. - TeleBanking

Below: “Republic Bank Pegasus Parade Preview”

9

Left: Lisa Butcher, Sr. V.P. - Business Development

Right: John Mason, Sr. V.P. - Preferred Client Services

Larry Kozlove, Sr. V.P. - Preferred Client Services

Bottom: Chip Hancock, Sr. V.P. - Business Development

Steve DeWeese, Sr. V.P. - Business Development

10

Above: “Painting the Town Red” –

Republic Bank at the American Heart

Association walk

Left: Jenifer Duncan, Sr. V.P. - Lexington Region

Jonathan Payne, Sr. V.P. - Louisville Region

Right: Kathy Potts, Sr. V.P. - Louisville Region

Tucker Ballinger, Sr. V.P. - Shelbyville, 

Frankfort and Georgetown

Claudio Monzon, Sr. V.P. -

Elizabethtown, Bowling Green

and Owensboro

11

Left: Shonda Manning, A.B.O. - Elizabethtown

Right: Jeff Zinger, A.V.P. - Perimeter

Alan Swift, V.P. - Springhurst

Bottom: David Buchanon, V.P. - Springhurst

Bud Simmons, V.P. - St. Matthews

Republic Bank presents the

Lite Up the Holidays CD

check to St. Joseph’s

Children’s Home

12

Left: Ken Dozer, V.P. - Elizabethtown

Ken Logsdon, Sr. V.P. - Elizabethtown

Right: Beau Baird, V.P. - Fern Creek

Rodney Webber, Bank Officer - Frankfort

Guy Bradley, V.P. - Chevy Chase

Val Owens, A.V.P. - Shelbyville

Mike Tipton, V.P. - Shelbyville

13

Left: Mike Ringswald, Sr. V.P. - General Counsel

Right: Dorothy Pitt, Sr. V.P. - Human Resources

Joe Sutter, V.P. - Trust

Bottom: Ann Bauer, Sr. V.P. - Internal Audit

Garry Throckmorton, Sr. V.P. - Compliance

Republic Bank “Neighborhood Cookout”

14

Left: Greg Williams, Sr. V.P. - Treasury

Tom Clausen, Sr. V.P. - Information Technology

Right: Michael Sadofsky, Sr. V.P. - Marketing

Normanda Caldwell, A.V.P. - Processing

Bottom: Carolle Jones Clay, V.P. - Community Relations

15

Left: Mike Beckwith, Sr. V.P. - Controller

Cathy Slider, Sr. V.P. - Tax Refund Solutions

Right: Mike Keene, President - Republic Financial Services

Matt Matracia, Lending Center Manager - Republic Finance

Brad Cunningham, 

Programming Manager - 

Tax Refund Solutions

Barbara Trager, 

Sr. V.P. - Tax Refund Solutions

Bryan Hendrick, 

V.P. - Deferred Deposits

16

Left: Duane Wilson, Sr. V.P. - Collections

Kent Rohrer, V.P. - Commercial Loan Operations

Right: Donna Blincoe, V.P. - Loan Operations

Sandra Lamison, V.P. - Commercial Credit

Ann Taber, V.P. - Loan Servicing

Shannon Reid, Sr. V.P. - Loan Administration

Janice Kingsolver, V.P. - Loan Processing

Below: Republic Bank Kentucky Derby Festival

“Run for the Rose’ ”

17

2 0 0 4   F I N A N C I A L R E V I E W

18

The following table sets forth Republic's selected consolidated historical financial information from 2000 through 2004. This
information should be read in conjunction with the Consolidated Financial Statements and the related Notes. Factors affect-
ing the comparability of certain indicated periods are discussed in  "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINAN-
CIAL CONDITION AND RESULTS OF OPERATIONS." 

As of and for the Years Ended December 31,
2002

2001

2003

(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

$

2004

132,366
42,314
90,052
1,748
27,194
66,016
49,482
32,501

$ 2,498,922
551,593
1,775,545
13,554
1,417,930

364,828
496,387
196,069

$

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
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 banking centers

1.73
1.70
1.66
1.63
24.48
10.38
0.280
0.254

1.40%
17.50
4.09
56

0.38%
0.13
0.76
221

8.01%
8.03
12.18
13.03
17

611
33

$

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

$ 2,128,076
410,931
1,567,993
13,959
1,297,112

220,345
420,178
169,379

$

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

$

1.51
1.47
1.48
1.44
17.72
9.03
0.459
0.417

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

$

1.12
1.10
1.09
1.07
10.22
8.13
0.190
0.172

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

$

2000

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

$

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

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

282,023
296,950
125,115

263,001
246,050
116,942

$

0.94
0.93
0.91
0.90
12.24
7.05
0.160
0.145

1.10%

13.85
4.04
64

0.48%
0.23
0.73
154

7.96%
8.36
12.44
13.26
17

$

0.71
0.70
0.69
0.68
5.61
6.39
0.137
0.125

0.89%    
11.77
3.71

66     

0.40%
0.12
0.69
193

7.58%   
8.13
12.01
12.78
19

532
22

462
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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 consolidated balance sheets and consolidated statements of
income. Republic, a bank holding company headquartered in Louisville, Kentucky, is the Parent Company of Republic Bank &
Trust Company, Republic Bank & Trust Company of Indiana  (together referred to as the “Bank”), Republic Funding Company
and Republic Invest Co. Republic Invest Co. includes its subsidiary Republic Capital LLC. The Consolidated Financial Statements
also include the wholly-owned subsidiaries of Republic Bank & Trust Company: Republic Financial Services, LLC and Republic
Insurance Agency, LLC. This section should be read in conjunction with the Consolidated Financial Statements and accompa-
nying Notes and other detailed information.

This discussion includes various forward-looking statements with respect to credit quality, including but not limited to, delin-
quency 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 may 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  rely  on  forward-looking  statements.
Forward-looking statements detail management’s expectations about the future and are not guarantees. Forward-looking state-
ments are assumptions based on information known to management 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. (See section titled “Factors that May Affect Future
Results”).

COMPANY OVERVIEW

The Company is divided into four segments. Total assets and net income for the most recent calendar year is provided
below:

As of December 31, 2004 (in thousands)

Banking

Tax Refund
Solutions

Mortgage
Banking

Deferred
Deposits

Consolidated
Totals

Net income
Total assets

Banking

$

19,159     

$

2,430,797

5,529
2,012

$

774
16,496

$

7,039
49,617

$

32,501
2,498,922

As of December 31, 2004, Republic had a total of 31 banking centers in Kentucky and two in southern Indiana. Republic’s 
primary market areas are located in metropolitan Louisville, central Kentucky and southern Indiana. Louisville, the largest city
in  Kentucky, is  the  location  of  Republic’s  headquarters  and  the  location  of  19  banking  centers  at  December  31, 2004. At
December 31, 2004, Republic's central Kentucky market includes 12 banking centers in the following Kentucky cities: Bowling
Green (1); Elizabethtown (1); Frankfort (2); Georgetown (1); Lexington, the second largest city in Kentucky (5); Owensboro  (1); and
Shelbyville (1). Republic Bank & Trust Company of Indiana has banking centers located in New Albany and Jeffersonville, Indiana.
At December 31, 2004, Republic also had one loan production office ("Republic Finance") located in Louisville, Kentucky that
operates as a division of the Bank. Republic Finance offers an array of loan products to individuals who do not qualify under
the Bank's standard underwriting guidelines.

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 Bank mandated policies and guidelines.

20

 
 
 
 
 
 
 
 
 
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. The Company intends to continue to
consider various strategic acquisitions of banks, banking assets or financial services entities related to banking in those geograph-
ical  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.

Banking related operating revenues are derived primarily from interest earned from the Bank’s  loan and investment securities port-
folios 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. 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 adjustable rate mortgage loans with fixed terms up to ten years. Prior to 2002,
the  Company  typically  sold  its  longer  term  fixed  rate  loans  into  the  secondary  market, however, during  2002  and  2003
Republic elected to retain $240 million of 15 and 20-year fixed rate loans as part of a specific retention program. Once
closed, 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 moderating Republic's interest rate risk.

During 2002, Republic began retaining servicing on the majority of its 15, 20 and 30-year fixed rate loans sold into the 
secondary market. When administering loans with the servicing retained, the responsibility of collecting principal and inter-
est 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 loan servicing functions.

Commercial Lending – Commercial loans are primarily real estate secured and are generated through 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 that seek to broaden relationships by providing commercial clients with loan,
deposit and cash management services.

Preferred Client Services – Republic has established relationships with the medical communities in its primary markets. Special
loan and deposit products have been tailored to meet the needs and attract the business of physicians and their practices.

Consumer Lending – Traditional consumer loans made by the Company include home improvement and home equity loans,
automobile 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 single family first lien mortgage loans, traditional consumer
loan products are not actively promoted in Republic’s markets.

Cash Management Services – Republic provides various depository products catered to businesses located throughout its
market areas. Lockbox processing, business online banking, account reconciliation and Automated Clearing House (“ACH”)
processing are just a few of the services offered to businesses through the Cash Management department. The ‘Premier
First’ product represents the Company’s premium money market sweep account designed for business accounts.

Internet Banking – Republic continues to expand its market penetration and service delivery by offering clients Internet
banking  services  through  its  Internet  site  www.republicbank.com. Approximately  38%  of  the  Bank's  existing  checking
account clients utilize Republic's Internet banking services as of December 31, 2004. Republicbank.com is also available
to  clients  outside  of  Kentucky  and  has  accounted  for  nearly  $70  million  in  deposits  from  47  states  and  the  District  of
Columbia as of December 31, 2004.

Other Banking Services – The Bank also provides trust services and engages in life and long-term care insurance and title
insurance sales, item processing and other related financial institution lines of business. At December 31, 2004, Republic
had approximately $65 million in trust assets under management with an additional $1.5 billion in trust assets under custody.

Tax Refund Solutions (formerly known as "Refunds Now")

Republic Bank & Trust Company is one of a limited number of financial institutions which facilitate the payment of federal and state
tax refunds through tax preparers located throughout the United States. The Company facilitates the payment of these tax refunds
through three primary products. For those taxpayers who apply and qualify, the Company will originate a Refund Anticipation Loan
(“RAL”) up to $5,000. RALs are repaid when the taxpayer’s refunds are electronically received by the Company from the govern-
ment. For those taxpayers who do not qualify for a RAL and wish to receive their funds electronically via an ACH, the Company
will provide an Electronic Refund Check (“ERC”) or an Electronic Refund Deposit (“ERD”) to the taxpayer. An ERC/ERD is issued to
the taxpayer after the Company has received the tax refund from the respective federal or state government.

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Mortgage Banking

Mortgage banking activities primarily include 15, 20 and 30-year fixed rate residential real estate originations and servicing.
Servicing  loans  for  others  generally  consists  of  collecting  mortgage  payments, maintaining  escrow  accounts, disbursing 
payments to investors and processing foreclosures.

Deferred Deposits

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” or “payday lending”). Republic agrees to delay presentment
of the check for payment until the advance due date, typically 14 to 30 days from the cash advance date. On or before the
advance due date, the customer can redeem their check in cash for the amount of the advance plus the fee.
If the customer
does not reclaim the check in cash by the advance due date, the check is deposited. 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.
(See additional discussion about this product under section titled “Company Factors”.) 

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, 2004. Any factor described in this
report  or  in  the  Company’s  2004  Annual  Report  on  Form  10-K  could, by  itself  or  with  other  factors, adversely  affect  our 
business, results of operations or financial condition. There may also be other factors not described in this report or in the 2004
Annual Report on Form 10-K which could cause our expectations to differ or could produce significantly different results.

Company Factors

The Parent Company relies on dividends from its subsidiaries for substantially all of its revenue. Republic Bancorp, Inc. is a
separate legal entity from its subsidiaries and it receives substantially all of its cash from dividends from its largest subsidiary,
Republic Bank & Trust Company. Various federal and state laws and regulations limit the amount of dividends that may be paid
to the Parent Company.

The Company’s accounting policies and estimates are critical components of the Company’s presentment of its financial state-
ments. Our  management  must  exercise  judgment  in  selecting  and  adopting  various  accounting  policies  and  in  applying 
estimates. Actual  outcomes  may  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 policies
are described below in the section titled “Critical Accounting Policies and Estimates” 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
amount reserved or recognize a significant provision for impairment of its mortgage servicing rights.

The Company has lines of business and products not typically associated with traditional banking.
In addition to traditional
banking products, i.e. customer loans and deposits, the Company provides RALs, ERCs, mortgage banking products, “Overdraft
Honor” deposit accounts and deferred deposits. Management believes diverse product offerings mitigate the Company’s expo-
sure  to  significant  downturns  in  any  one  segment  of  the  banking  industry;  however, non  traditional  banking  products  also
expose  the  Company’s  earnings  to  additional  risks  and  uncertainties. The  following  details  specific  risk  factors  related  to
Republic’s lines of business:

• RALs represent a significant business risk, and if the Company terminated the business it would materially impact
the earnings of the Company. Tax Refund Solutions offers bank products to facilitate the payment of tax refunds for
customers that electronically file their tax returns across the country. The Company is one of only a few financial 
institutions in the United States that provides this service to taxpayers. Under this program, the taxpayer may receive
a RAL or an ERC.
In return, the Company charges a fee for the service. There is credit risk associated with a RAL
because  the  money  is  disbursed  to  the  client  before  the  Company  receives  the  client’s  refund  from  the  Internal
Revenue Service (“IRS”). There is minimal credit risk with an ERC because the Company does not disburse the funds
to the client until the Company has received the refund from the IRS.

Various consumer groups have, from time to time, questioned the fairness of the Tax Refund Solutions program and
have  accused  this  industry  of  charging  excessive  rates  of  interest  via  the  fee  and  engaging  in  predatory  lending 
practices. Consumer  groups  have  also  claimed  that  customers  are  not  adequately  advised  that  a  RAL  is  a  loan 
product and that alternative, less expensive means of obtaining the refund proceeds are available. Pressure from
these groups, regulatory or legislative changes or material litigation could result in the Company exiting this business at
any time.

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The  Company’s  liquidity  risk  is  also  increased  during  the  first  quarter  of  each  year  due  to  the  RAL  program. The
Company has committed to the electronic filers and tax preparers that it will make RALs available to their customers
under  the  terms  of  its  contracts  with  them. This  requires  the  Company  to  estimate  liquidity  needs  for  the  RAL 
program well in advance of the tax season. If management materially overestimates the need for liquidity during the
tax season, a significant interest expense could be incurred with no offsetting revenue stream. If management mate-
rially underestimates the need for liquidity during the tax season, the Bank could experience a significant shortfall of 
capital needed to fund RALs and could potentially be required to stop originating new loans.

A  competing  RAL  financial  institution  is  currently  defending  two  lawsuits  in  the  state  of  California  relating  to  the
cross-collection provision contained in its RAL contracts with customers. Various companies, including the Company,
have previously entered into agreements to facilitate the cross-collection of RALs. The Company has not been named
as a defendant by the plaintiffs regarding its cross-collection activities with customers. The competing financial insti-
tution, however, has named the Company and other parties pursuant to the indemnity provisions of the contracts that
exist between the various companies regarding the cross-collection of prior year customer indebtedness. The issue
of cross-collection provisions in RAL contracts could result in further litigation exposure for all RAL engaging financial
institutions, including  the  Company, as  consumer  groups  have  now  shown  a  willingness  to  oppose  the  RAL  cross-
collection provisions through litigation.

Exiting this line of business, either voluntarily or involuntarily, would significantly reduce the Company’s earnings.
(See additional discussion about this product in the separate sections titled “Tax Refund Solutions”.)

• 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 banking income. A decline in interest rates generally results in higher demand for mortgage products,
while an increase in rates generally results in a decline in demand. If demand increases, mortgage banking income
will be positively impacted by more gains on sale, however, the valuation of mortgage servicing rights will decrease
In addition to the previously mentioned risks, a decline in demand for
and may result in a significant impairment.
mortgage banking products could also adversely impact other programs/products such as home equity lending, title
insurance commissions and service charges on deposit accounts.

• Deferred deposits represent a significant business risk and if the Company terminated the business it would mate-
rially  impact  the  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” or “payday lending”). Various consumer groups have, from time to time, questioned the fairness of deferred
deposits and have accused this industry of charging excessive rates of interest via the fixed fee and engaging in
predatory lending practices. Various federal and state regulatory agencies have also questioned whether this busi-
ness should be permitted by member banks.

On March 1, 2005, Republic Bank & Trust Company, a subsidiary of Republic Bancorp, Inc., received notification from
the Federal Deposit Insurance Corporation (“FDIC”) regarding revised FDIC Guidance affecting the Bank’s deferred
deposit business, also known as “payday lending”. The revised Guidance requires banks to develop procedures to
ensure deferred deposits are not provided to customers who have had deferred deposits outstanding from any bank
lender for more than three months in the previous 12 months. The Company’s current policies and procedures are to
require a 24 hour “cooling off” period when a customer has had deferred deposits outstanding for a period of 60 con-
secutive days, essentially allowing the customer to have deferred deposits outstanding for more than three months
in the previous 12 months.

The Bank’s total deferred deposits outstanding were approximately $23 million as of March 1, 2005, representing
less than 1% of the Company’s total assets. During the year ended December 31, 2004, net income provided from
the Bank’s deferred deposit line of business was $7.0 million or approximately 21% of net income for the Company.
The Company has been conducting its deferred deposit business with its current third party Marketer/Servicers since
December 2002. Historically, the Company has not incurred any losses in the deferred deposit line of business due
to  prudent  underwriting  standards  and  the  guarantees  of  these  two  Marketer/Servicers. The  guarantees  of  the
Marketer/Servicers are, or course, subject to their ability to perform in accordance with the guarantees. The Company
believes the possibility of incurring any loss is remote due to the guarantee of the Marketer/Servicers.

The  Company  is  currently  analyzing  the  impact  of  the  revised  Guidance  on  its  deferred  deposit  line  of  business.
Because further analysis is required to determine the number of customers who will be affected based on the new
Guidance, the Company is presently not able to determine the impact this revised Guidance will have on net income
in  2005  and  subsequent  years. Management  believes  the  impact  could  be  materially  adverse  to  earnings  of  the
deferred deposit line of business.

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There can be no assurance that the FDIC, state legislatures or others will not impose additional limitations on or pro-
hibit banks from thus engaging altogether in deferred deposits. The potential exists that private litigation or regula-
tory requirements may require the Company to exit from the program in one or more jurisdictions.

The Company operates the deferred deposit business through three separate contracts with two Marketer/Servicers.
Two of these three contracts are set to expire in the fourth quarter of 2005. The remaining contract expires in the
first quarter of 2006. The Company intends to negotiate the renewal of all three contracts prior to their expiration,
however, no guarantees can be made that the contracts will be renewed or that they will be renewed with compara-
If the Company exited this business, either voluntarily or involuntarily, Company earnings would be sig-
ble terms.
nificantly reduced.

The Attorney General of North Carolina issued an investigative demand to one of the Company’s Marketer/Servicers
in  the  state  of  North  Carolina. The  Attorney  General  sought  to  make  a  determination  as  to  whether  or  not  the
Company’s Marketer/Servicer complies with North Carolina statues. The Company’s Marketer/Servicer was asked to
document how it conducts its business in the state of North Carolina and has been asked to disclose its contractual
relationship with the Company and produce other documents relating to the deferred deposit business. The North
Carolina  Commissioner  of  Banks  joined  this  inquiry. Subsequent  to  the  initial  inquiry, the  Commissioner  of  Banks
issued  an  order  for  a  public  hearing  scheduled  for  April  19, 2005  to  further  consider  whether  or  not  the
Marketer/Servicer is complying with North Carolina statutes by engaging in the business of lending in violation of the
North Carolina Consumer Finance Act and other matters. Additionally, the Commissioner will consider whether or not
to issue a cease and desist order or otherwise require the Marketer/Servicer to refrain from violating applicable North
Carolina law. This action may result in the Company being forced to exit the deferred deposit business in the state of
North Carolina which would have a materially adverse effect on the Company’s earnings. (See additional discussion
about this product in the separate sections titled “Deferred Deposits”.)

• The Company’s “Overdraft Honor” program represents a significant business risk, and if the Company terminated
the program it would materially impact the earnings of the Company. Republic’s “Overdraft Honor” program permits
selected clients to overdraft their accounts up to a predetermined dollar amount ranging from $500 to $750 for the
Company’s customary fee. Clients’ checking accounts that have been current for a certain period of time are allowed
the privilege to enter into the program. Under regulatory guidelines, this service is not considered an extension of
credit, but rather is considered a fee for paying checks when sufficient funds are not otherwise available. This fee,
if computed as a percentage of the amount overdrawn, results in an extremely high rate of interest when annualized
and  thus  is  considered  excessive  by  some  consumer  groups. There  can  be  no  assurance, however, that  the
Company’s regulators or others will not impose limitations on this program or that the Company’s ability to offer the
product will not be negatively impacted by regulatory authorities. The Company’s elimination of this program, either
voluntarily or involuntarily, would significantly reduce Company earnings.

Republic’s stock price can be 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, operating and stock price performance of other companies, news reports, results of litigation and changes in gov-
ernment regulations, among other factors. The Company’s stock also generally has a low average daily trading volume, which
limits a person’s ability to quickly accumulate or quickly divest themselves of large blocks of Republic’s stock.
In addition, a
low average daily trading volume can lead to significant price swings even when a relatively small number of shares are being
traded.

Republic may not be able to attract and retain banking clients. Competition in the banking industry coupled with the size of
our institution may limit our ability to attract and retain banking clients.
In particular, Republic’s competitors include several
major financial institutions whose greater resources may afford them a marketplace advantage by enabling them to maintain
numerous banking center locations and mount extensive promotional and advertising campaigns. Additionally, banks and other
financial  institutions  with  larger  capitalization  and  financial  intermediaries  may  not  be  subject  to  the  same  regulatory 
restrictions and may have larger lending limits than the Company. Areas of competition include interest rates for loans and
deposits, efforts to obtain deposits and range of services provided. Republic also faces competition from out of state financial
intermediaries, which have opened low end production offices. Because Republic maintains smaller staffs of associates and
has fewer financial and other resources than larger institutions with which we compete, we may be limited in our ability to
attract a broad segment of customers or dramatically increase market share.
In addition, some of our current commercial
banking  clients  may  seek  alternative  banking  sources  as  they  develop  needs  for  credit  facilities  larger  than  what  we  can
accommodate. If Republic is unable to attract and retain customers, we may be unable to continue our growth and our results
of operations and financial condition may otherwise be negatively impacted.

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Industry Factors

General business and economic conditions can significantly impact the Company’s earnings. General business and economic
conditions in the United States and abroad can impact the Company. Conditions include short-term and long-term interest
rates, inflation, monetary supply and fluctuations in both debt and equity markets and the federal and state economies in which
we operate.

The Company is significantly impacted by the regulatory, fiscal and monetary policies of federal and state governments. The
Board of Governors of the Federal Reserve Bank regulates the supply of money and credit in the United States.
Its policies
determine, in large part, our cost of funds for lending and investing and the return we earn on those loans and investments, all
of which impact our net interest margin.
Its policies can materially affect the value of our financial instruments and earnings
and can also affect our borrowers and their ability to repay their outstanding loans.

The Company and the Bank are heavily regulated at both federal and state levels. This regulatory oversight is primarily intended
to protect depositors, the 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 of Republic. Also,
failure to comply with laws, regulations or policies could result in significant penalties or sanctions by regulatory agencies.

Federal and state laws and regulations govern numerous matters including changes in the ownership or control of banks and
bank  holding  companies, maintenance  of  adequate  capital  and  the  financial  condition  of  a  financial  institution, permissible
types, amounts and terms of extensions of credit and investments, permissible non banking activities, the level of reserves
against  deposits  and  restrictions  on  dividend  payments. Various  federal  and  state  regulatory  agencies  possess  cease  and
desist powers to prevent or remedy unsafe or unsound practices or violations of law by banks subject to their regulations, and
the Federal Reserve Bank possesses similar powers with respect to bank holding companies. These and other restrictions limit
the manner in which Republic conducts its business.

Republic is subject to regulatory capital adequacy guidelines, and if we fail to meet these guidelines our financial condition may
be adversely effected. Under regulatory capital adequacy guidelines and other regulatory requirements, Republic and the Bank
must meet guidelines that include quantitative measures of assets, liabilities and certain off balance sheet items, subject to
qualitative  judgements  by  regulators  about  components, risk  weightings  and  other  factors.
If  Republic  fails  to  meet  these 
minimum capital guidelines and other regulatory requirements, Republic’s financial condition would be materially and adversely
affected. Republic’s failure to maintain the status of  “well capitalized” under our regulatory framework or “well managed”
under regulatory exam procedures could compromise our status as a financial holding company and related eligibility for a
streamlined review process for acquisition proposals and limit financial product diversification.

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, new market entries and acquisition activity. Many
of our competitors have fewer regulatory constraints and some have lower cost structures.

The Company relies on the accuracy and completeness of information provided by vendors, customers and other counterparties.
In deciding whether to extend credit or enter into transactions with other parties, the Company relies on information furnished by
or on behalf of customers or entities related to that customer. Our financial condition and earnings could be negatively impacted
to the extent the Company inadvertently relies on information that is false, misleading or inaccurate.

Defaults in the repayment of loans may negatively impact our business. A borrower’s default on their obligations of one or
more  of  their  loans  may  result  in  lost  principal  and  interest  income  and  increased  operating  expenses  as  a  result  of  the
increased allocation of management time and resources to the collection and work out of the loans. In certain situations where
collection efforts are unsuccessful or acceptable work out arrangements cannot be reached, the Company may have to write
In such situations, the Company may acquire any real estate or other assets, if any, which
off the loan in part or in whole.
In such cases, the amount owed under the default-
secures the loan through foreclosure or other similar available remedies.
ed loan often exceeds the value of the assets acquired.

Fluctuations in interest rates may negatively impact our banking business. Republic’s core source of income from operations
consists of net interest income, which is equal to the difference between interest income received on interest-earning assets
(usually loans and investment securities) and the interest expenses incurred in connection with interest-bearing liabilities (usu-
ally deposits and borrowings). These rates are highly sensitive to many factors beyond our control, including general economic
conditions, both domestic and foreign, and the monetary and fiscal policies of various governmental and regulatory authorities.
Republic’s net interest income can be affected significantly by changes in market interest rates. Changes in relative interest
rates may reduce Republic’s net interest income as the difference between interest income and interest expense decreases.
As a result, Republic has adopted asset and liability management policies to minimize potential adverse effects of changes in
interest rates on net interest income, primarily by altering the mix and maturity of loans, investments and funding sources.
However, even with these policies in place, a change in interest rates could negatively impact our results from operations or
financial position.

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An increase in interest rates could also have a negative impact on Republic’s results of operations by reducing the ability of
our clients to repay their outstanding loans, which could not only result in increased loan defaults, foreclosures and charge offs
but also may likely necessitate further increases to Republic’s allowance for loan losses.

Prepayment of loans may negatively impact Republic’s business. Generally, our clients may prepay the principal amount of
their outstanding loans at any time. The speed at which such prepayments occur, as well as the size of such prepayments, are
within our clients’ discretion.
If clients prepay the principal amount of their loans, and we are unable to lend those funds to
other clients or invest the funds at the same or higher interest rates, Republic’s interest income will be reduced. A significant
reduction in interest income could have a negative impact on Republic’s results of operations and financial condition.

HIGHLIGHTS

Net income for the year ended December 31, 2004 was $32.5 million, representing an increase of $4.3 million or 15% over
the  same  period  in  2003. Diluted  earnings  per  Class A  Common  Stock  increased  from  $1.48  at  2003  to  $1.66  for  2004.
Republic’s  rise  in  earnings  in  2004  was  primarily  due  to  increased  net  interest  income  including  deferred  deposit  fees,
increased service charges on deposit accounts, increased earnings at Tax Refund Solutions and a lower provision for loan losses.
The improvements in revenue served to more than offset the near $8 million decline in mortgage banking income associated
with the prior year record loan origination volume. Following is a brief description of a few Company highlights during 2004.

1) Republic ended the year with total assets of approximately  $2.5 billion, an increase of $371 million or 17% over 
the prior year. As of December 31, 2004, Republic was the second largest  Kentucky based bank holding company.

2)  Net  interest  income  grew  $7.8  million  or  9%  over  the  same  period  in  2003. This  growth  was  driven  by  a 
substantial increase in fees from deferred deposits and RALs. Net interest income also increased from growth 
in the loan portfolio, most notably the residential real estate and home equity loan portfolios.

3) Tax Refund Solutions reported record earnings during 2004 due to a substantial increase in transaction volume.

The increase was attributable to growth in client base resulting from larger rebate incentives paid by the Company
for the more profitable RAL products.

4) Republic opened three new banking centers during 2004 with one additional location under construction sched-
uled to open in 2005. Also, Republic Finance, a division of Republic Bank & Trust Company, was created in 2004.
Republic  Finance  opened  its  first  loan  production  office  during  November  in  Louisville  with  two  additional  offices
opening in 2005.

5) Service charges on deposit accounts continued to increase during the year due to growth in additional checking 

accounts and the Company’s “Overdraft Honor” program.

6) The Company reported deferred deposits outstanding of $36 million at December 31, 2004. The deferred 

deposit program has grown to include two Marketer/Servicers with over 700 stores.

7)  Republic’s  ‘Cash  Management’  line  of  business  grew  Premier  First  account  balances  by  77%  during  2004  to 

$172 million.

Republic reported net income during 2003 of $28.2 million compared to $20.5 million for 2002, an increase of 38%. Diluted
earnings per Class A Common Stock increased 36% to $1.48 for the year ended December 31, 2003. The rise in earnings for
2003 was primarily attributable to increased net interest income from deferred deposits, increased mortgage banking income,
service charges on deposit accounts and increased earnings at Tax Refund Solutions.

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

Table 1 – Summary

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

2004

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

$ 32,501
1.66
1.40%
17.50

2003

$ 28,203
1.48
1.47%
16.88

2002

$ 20,489
1.09
1.25%
14.44

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Republic’s consolidated financial statements and accompanying notes have been prepared in accordance with United States
generally accepted accounting principles. The preparation of these financial statements requires management to make esti-
mates 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.

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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  may  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 finan-
cial condition and operating 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 the 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 United States generally
accepted  accounting  principles. Management  has  discussed  the  methodology  for  the  identification  and  determination  of 
critical accounting policies as well as each identified critical accounting policy 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.

Allowance for Loan Losses – Republic maintains an allowance for probable incurred credit losses inherent in the Company’s
loan portfolio. Management evaluates the adequacy of the allowance for loan losses on a monthly basis and  presents and 
discusses the analysis with the Audit Committee and the board of directors on a quarterly basis. 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 various 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 and 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 man-
agement deems a loan uncollectible.

Management makes allocations within the allowance for loan losses 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 $13.6 million or 0.76% of total loans was an adequate estimate of losses
within the loan portfolio as of December 31, 2004. This estimate resulted in a provision for loan losses on the income state-
ment  of  $1.7  million  during  2004.
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 and
the resulting effect on the income statement could be material.

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, 2004 is $5.3 million.

The carrying value of the MSRs asset is periodically reviewed for impairment based on the fair value of the MSRs, using group-
ings of the underlying loans by interest rates, by geography and by prepayment characteristics. Any impairment of a grouping
would 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 at least a quarterly basis to assist with
the fair value estimate of the MSRs. Based on the estimated fair value at December 31, 2004 and 2003, management deter-
mined 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.

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DEFERRED DEPOSITS

The Company has been conducting a deferred deposit business, in conjunction with third party Marketer/Servicers since August
2001.
In the fourth quarter of 2002, the Company entered into contracts with two third party Marketer/Servicers in order to
increase  its  deferred  deposit  business. During  2003, the  Company  further  expanded  its  relationship  with  one  of  its
Marketer/Servicers and this contributed to a substantial increase in deferred deposits.

FDIC guidance requires that banks limit deferred deposits outstanding 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 Company’s capital lev-
In the
els at December 31, 2004, deferred deposits outstanding were below the Company’s regulatory limit of $41 million.
event that deferred deposits outstanding near the Company's regulatory capital limits, the Company has certain contingency
plans in place that could increase its regulatory capital limits. These plans include providing the Bank with additional capital
through a Parent Company line of credit as well as immediately modifying an intragroup trust preferred structure which would
increase Tier I capital. (See section titled “Capital” for additional discussion regarding the intragroup trust preferred.) 

The FDIC has issued Guidelines for state chartered, nonmember banks that participate in deferred deposit programs with
third  party  contractors. The  FDIC’s  guidance  characterizes  deferred  deposits  as  presenting  substantial  credit  risks  for
lenders, because among other things, the loans are unsecured and the borrowers generally have limited financial resources.
The guidance also elaborates upon 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 lending arrangements, suggesting required capital of as much as 100% of deferred deposits outstanding. The guid-
ance also requires that the allowance for loan and lease losses be adequate and take into account that many such transac-
tions remain outstanding beyond their initial term due to renewals and rollovers, deferred deposits be classified “substandard,”
and 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  and  the  number  of  transactions  that  can  be  entered  into 
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  Marketer/Servicer
providers and its monitoring of the third party’s activities and performance. Banks are also advised to evaluate the third party’s com-
pliance with consumer protection laws and applicable regulations.

Two of the three Marketer/Servicer contracts expire in the fourth quarter of 2005. The remaining contract expires in the first
quarter of 2006. The Company intends to renew all three contracts prior to their expiration, however, no guarantees can be
made that the contracts will be renewed or that they will be renewed with comparable terms. The Company’s earnings will be
materially impacted if it does not renew any of the contracts.

TAX REFUND SOLUTIONS 

For 2004, Tax Refund Solutions generated $8.5 million in RAL fees, compared to $6.7 million for the same period in 2003. Tax
Refund Solutions also received $5.3 million in ERC/ERD fees during 2004, compared to $4.0 million during 2003. The total 
volume of tax return refunds processed during the 2004 tax season was $1.3 billion (approximately $350 million in RALs and
$950 million in ERCs/ERDs), a 31% increase over the volume processed for the 2003 tax season. Overall, total RAL dollars
processed increased 16% during 2004 compared to 2003 while ERC dollars processed rose 35% 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.

For 2004, net interest income was $90.1 million, an increase of $7.8 million or 9% over 2003. Despite an increase in net inter-
est  income  for  the  year, however, the  Company  experienced  a  significant  contraction  in  its  net  interest  spread  and 
margin. Generally, the contraction in Republic's net interest spread and margin occurred due to a reduction in the yield of the
Company's earning assets, including both the loan and investment portfolios.

The yield on the investment portfolio decreased 52 basis points from 2003 to 3.00% in 2004. The decrease in the yield on
investments was primarily due to management's strategy of maintaining short-term maturities and repricing frequencies within
the investment portfolio. Management adopted this strategy in order to moderate Republic's overall risk position from rising
interest rates as the Company's liabilities continue to reprice faster than its assets, commonly referred to as being “liability
sensitive.” Although adopting this strategy benefits the Company's net interest income in a rising interest rate environment, it

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28

 
 
 
 
 
 
 
 
 
negatively impacts the Company's then current earnings due to the lower yield earned on short-term investment securities as
compared to long-term investment securities.

The yield on the loan portfolio decreased 34 basis points from 2003 to 6.91% in 2004. The decrease in the yield on loans was
primarily due to continued refinancings of existing loans within the portfolio, reduced closing fees and competitive pricing asso-
ciated with the Company's traditional loan products, which excludes deferred deposits and RALs. The decline in the yield on
the  traditional  portfolio  was  partially  offset  by  increased  volume  of  deferred  deposits  and  RALs. Gross  fees  from  deferred
deposits increased $4.9 million or 65% over 2003 and gross fees from RALs, increased $1.8 million or 26% over 2003. (See
additional discussion about Deferred Deposits under section titled “Company Factors”.)

Republic's overall cost of funds decreased 11 basis points during 2004 to 2.29%. The decrease in the Company's cost of funds
was due primarily to an increase in shorter-term certificates of deposit (“CDs”) as compared to previous years.

Management  believes, based  on  current  economic  indicators  regarding  short-term  interest  rates, that  the  Company  will 
continue to experience contraction in its net interest spread and margin in 2005. This contraction is expected to occur as the
spread between short-term and long-term interest rates on the yield curve becomes narrower, which is commonly referred to
as  a “flattening” of  the  yield  curve. Generally, as  the  yield  curve  flattens, the  cost  of  Republic's  short-term  liabilities  will
increase while the yield on its longer-term earning assets will remain level or even possibly decline. In a flattening yield curve
environment, the Company will only likely be able to increase its net interest income through growth in earning assets. Any
increase in net interest income from growth in earning assets could be partially or substantially offset by a decrease in the
spread on its earning assets resulting from a flattening yield curve. Management is unable to precisely determine the possible
impact on the Company’s net interest spread and margin in 2005 from a flattening yield curve, if one should occur.

Management anticipates that the Company’s net interest margin and net interest spread will increase significantly during the first
quarter of 2005 compared to the fourth quarter of 2004 due to seasonal RAL activity at Tax Refund Solutions. Because RAL volume
occurs primarily in the first quarter, the net interest spread and net interest margin for the remainder of 2005 will likely decline 
subsequent to the first quarter and will likely be lower than the corresponding periods in 2004.

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. Gross fees from deferred
deposits, which increased $6.2 over the $1.4 million recognized during 2002 and gross 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 reten-
tion 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. These increases
resulted from a sharp decrease in cost of funds without a corresponding decrease in yield on total interest-earning assets.
Republic was able to offset the decrease in yield on its traditional interest-earning assets primarily through increased fees from
deferred deposits and RALs. During the second half of 2003, however, the Company 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 began investing excess cash
on a short-term basis in order to mitigate the potential impact of future interest rate increases on net interest income.

Republic’s cost of funds decreased 74 basis points in 2003 compared to 2002. This decrease was primarily the result of lower
borrowing  costs  from  the  FHLB  and  lower  interest  expense  associated  with  CDs.
Interest  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.
Interest expense on CDs decreased significantly due to the avail-
ability of lower cost funding sources that allowed the Company to generally offer lower priced CD products. As a result of
strategically motivated CD pricing, the Company’s overall average CD balances declined during 2003.

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Table  2  provides  detailed  information  as  to  average  balances, interest  income/expense  and  rates  by  major  balance  sheet 
category for 2002 through 2004. 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(1)
Federal funds sold and other
Total loans and fees(2)
Total earning assets

Average
Balance

2004

Interest

Average
Rate

Average
Balance

2003

Interest

Average
Rate

Average
Balance

2002

Interest 

Average
Rate

$

445,351 
40,725
1,714,128
2,200,204

$  13,380
494
118,492
132,366

3.00% $
1.21
6.91
6.02

316,642
26,792
1,485,024
1,828,458

$  11,136
279
107,645
119,060

3.52% $ 307,852
53,560
1.04
1,220,046
7.25
1,581,458
6.51

$  13,060
887
92,154
106,101

4.24%
1.66
7.55
6.71

Less: Allowance for loan losses

13,975

Non-earning assets:
Cash and cash equivalents
Premises and equipment, net
Other assets(1)

75,234
35,428
21,043

12,305

54,422
29,290
22,928

9,125

30,181
21,298
15,985

Total assets

$ 2,317,934

$ 1,922,793

$ 1,639,797

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing liabilities:

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

$ 325,063
306,253
44,113

$    2,565
3,288
1,548

0.79% $
1.07
3.51

266,316
253,942
39,454

$

2,263
2,193
1,464

0.85% $ 168,414
222,373
0.86
36,713
3.71

$    1,639
2,992
1,665

0.97%
1.35
4.54

378,284
49,996

313,158
427,908

12,310
1,491

4,191
16,921

3.25
2.98

1.34
3.95

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

Total interest-bearing liabilities

1,844,775

42,314

2.29

1,530,006

36,795

2.40

1,329,268

41,761

3.14

Non interest-bearing liabilities and stockholders’ equity:

Non interest-bearing deposits
Other liabilities
Stockholders' equity

Total liabilities and 

stockholders' equity

Net interest income

Net interest spread

Net interest margin

262,763
24,671
185,725

196,442
29,248
167,097

150,481
18,140
141,908

$ 2,317,934

$ 1,922,793

$ 1,639,797

$  90,052

$  82,265

$  64,340

3.73%

4.09%

4.11%

4.50%

3.57%

4.07%

(1) For the purpose of this calculation, the fair market value adjustment on investment securities resulting from SFAS 115 is included as a component of  

other assets.

(2) The amount of fee income included in interest on loans was $23.3 million, $17.3 million and  $5.6 million for the years ended December 31, 2004, 2003

and 2002.

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Table 3 illustrates the extent to which changes in interest rates and changes in the volume of interest-earning assets and inter-
est-bearing liabilities affected Republic's interest income and interest expense during the periods indicated. Information is pro-
vided 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, 2004
compared to
Year Ended December 31, 2003

Year Ended December 31, 2003
compared to
Year Ended December 31, 2002

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

Net change in interest income

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

Net change in interest expense

Total Net
Change

$ 2,244
215
10,847

13,306

302
1,095
84

(502)
279

2,294
1,967

5,519

$ 4,041
163
16,015

20,219

472
502
166

470
(51)

1,504
2,559

5,622

Increase/(Decrease)

Due To

Volume

Rate

Total Net
Change

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

Increase/(Decrease)

Due To

Volume

Rate

$

364
(349)
19,334

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

$ (1,797)
52
(5,168)

(6,913)

12,959

19,349

(6,390)

(170)
593
(82)

(972)
330

790
(592)

(103)

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)

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Net change in net interest income

$ 7,787

$ 14,597

$ (6,810)

$ 17,925

$ 14,635

$ 3,290

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 non interest income
* - Not Meaningful

2004

$ 13,460
5,268
1,515
3,148
-
2,492
1,311

2003

$ 10,019   
3,981
2,532
11,104
-
1,825
1,472

$ 27,194

$ 30,933

2002

$ 7,805
3,198
2,129
6,894
1,559
1,441
1,496

$ 24,522

Percent Increase/(Decrease)
2003/2002

2004/2003

34%
32
(40)
(72)
-
37
(11)

(12)%

28%
24
19
61
NM*
27
(2)

26% 

Service charges on deposit accounts increased 34% during 2004 compared to 2003. 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 overdraft their accounts up to a predetermined dollar amount ranging from $500 to $750 for the Bank’s customary fee.
Additionally, in July 2003 the Company increased its per item overdraft fee by 7%. Total overdraft fees increased from $8.3
million in 2003 to $10.1 million in 2004 while the total number of accounts eligible for the “Overdraft Honor” program increased
to 49,000 at December 31, 2004 from 43,000 at December 31, 2003. Additionally, the Company’s total number of checking
accounts, exclusive of commercial accounts, increased 11% from 54,000 at December 31, 2003 to nearly 60,000 at December
31, 2004. During 2003, the Company experienced a 28% increase in service charges on deposit accounts for substantially
the same reasons as previously discussed for 2004.

31

 
 
 
 
 
 
 
 
 
ERC and ERD fees, the majority of which are received during the first quarter of the calendar year, increased $1.3 million or
32% in 2004. This increase was due primarily to the increase in overall volume compared to the prior year resulting from suc-
cessful marketing efforts and new sales to tax preparers and software providers. The Company also experienced significant
growth in fees during 2003 compared to 2002 due primarily to the same reasons.

Title insurance commissions decreased during 2004, compared to the same period in 2003 due primarily to the decline in 
volume of refinance activity in single family, secondary market real estate loans. 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, secondary market real estate loans, its revenue
closely  correlates  to  secondary  market  loan  origination  volume, which  was  $251  million  during  2004  compared  to  $799 
million during 2003. Conversely, title insurance commissions increased for 2003 over 2002. The large volume of refinance
activity in single family, secondary market real estate loans during this period contributed to the increase for 2003.

Mortgage banking income includes net gain on sale of loans, loan servicing income and amortization of MSRs. Mortgage banking
income decreased nearly $8 million during 2004 due primarily to a $9.9 million decrease in net gain on sale of loans. The
reduction in net gain on sale of loans resulted from a substantial decline in mortgage origination volume of 15 and 30-year
fixed rate residential real estate loans from the record levels attained by the Company in the prior year. The higher volume of
originations during the prior year resulted from aggressive marketing of the Company’s low closing cost loan products and 
sustained consumer demand for fixed rate, first mortgage residential real estate 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, and remaining near those levels throughout
2004. As a percentage of loans sold, net gains decreased to 1.14% in 2004 compared to 1.50% in 2003.

The decrease in net gain on sale of loans during 2004 was partially offset by a $1.2 million decline in amortization expense of MSRs.
This decline in amortization expense resulted from a decrease in prepayments during 2004 on the Company’s servicing portfolio.

Mortgage banking income increased 61% during 2003 compared to 2002 as record low market interest rates prompted an
increase in consumer refinance activity of single family, fixed rate residential loans. Revenue from mortgage banking activi-
ties, principally gain on sale of loans, increased as a result of higher secondary market sales volume. As a percentage of loans
sold, net gain on sale increased 58 basis points to 1.50% in 2003 compared 2002. The increase in gains as a percentage of
loans sold primarily occurred in the first six months of 2003 when 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 thus realizing higher premiums. Overall, the Bank originated $799 million in mortgage loans
held for sale during 2003 compared to $791 million during 2002.

Net gain on sale of securities available for sale was $1.6 million for 2002. Management elected to sell $56 million of the
Company’s mortgage backed securities (“MBSs”) during 2002 to mitigate the risk of prepayments of MBS holdings.

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
Data processing
Other

2004

$ 34,552
13,915
2,809
2,271
1,932
1,385
-
1,602
7,550

2003

$ 32,509
12,416
2,729
2,997
1,980
1,481
-
1,722
7,025

Total non interest expenses

$ 66,016

$ 62,859

2002

$ 28,379
9,984
2,329
2,905
1,727
1,139
1,381
1,575
4,420

$ 53,839

Percent Increase/(Decrease)
2003/2002

2004/2003

6%
12
3
(24)
(2)
(6)
-
(7)
7

5%

15%
24
17
3
15
30
NM
9
59

17%

Salaries and employee benefits increased $2 million or 6% from 2003 to 2004. The increase was primarily attributed to annual
merit increases and associated incentive compensation, additional seasonal staff at Tax Refund Solutions and additional banking
center expansion. Republic opened three new banking centers during 2004 and six new banking centers during 2003. Also,
included within the salaries and employee benefits category is the Company’s deferral for direct expenses on origination of
loans. Republic’s deferral decreased $1.2 million during 2004 compared to 2003 due to a reduction in the volume of new mort-
gage loans originated. The Company’s number of full time equivalent employees (“FTE’s”) decreased to 611 at December 31,
2004 from 645 at December 31, 2003.

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32

 
 
 
 
 
 
 
 
 
Salary and employee benefits also increased for 2003 compared to 2002 primarily attributed to the reasons described above.
The  increase  was  due  to  annual  merit  increases  and  a  modest  increase  in  staff  to  support  secondary  market  origination 
volume. Total FTE’s increased to 645 at December 31, 2003 from 570 at December 31, 2002. Republic’s deferral for direct
expenses on origination of loans increased $432,000 during 2003 compared to 2002 due to the increase in the volume of new
mortgage loans originated.

Occupancy and equipment expense has trended upward during 2004 and 2003 primarily due to banking center expansion.
Republic opened its first loan production office during November 2004 and has announced plans to open one additional banking
center and two additional loan production offices during the first half of 2005.

The Company's marketing and development expense declined 24% during 2004 as the Company reduced its advertising and
marketing efforts primarily as a result of a slowdown in secondary market lending and a Company-wide focus on reducing
expenses during 2004.

Republic recognized FHLB prepayment penalties of $1.4 million on the early termination of advances from the FHLB during
2002. 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 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 $208 million or 13% to nearly $1.8 billion at December
31, 2004. Commercial real estate loans comprise 28% of the total gross loan portfolio and are concentrated primarily within
the Bank’s existing markets. These loans are principally secured by multi-family investment properties, single family develop-
ments, medical  facilities, small  business  owner  occupied  offices, retail  properties  and  hotels. These  loans  typically  have 
interest rates that are initially fixed for one to ten years with the remainder of the loan term subject to repricing based on 
various market indices. In order to reduce the negative effect of refinance activity within the portfolio during a declining inter-
est 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  $54  million  from  December  31, 2003.
Republic’s underwriting standards typically include personal guarantees on most commercial real estate loans. Pricing require-
ments, as well as the Company’s underwriting requirements, led to competitive pressure during 2003 and 2004. As a result,
the commercial real estate portfolio experienced only modest growth compared to previous years.

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  ten  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. Republic offered
market low closing costs on many of its adjustable rate residential real estate products during 2004. With reduced closing
costs and lower interest rates, these loans compared favorably to longer-term, fixed rate secondary market products. Another 
contributing factor in the growth of the residential real estate portfolio during 2004 was the significant slow down in refinanc-
ings as compared to the record levels during 2003.

The consumer loan portfolio principally consists of various short-term, unsecured loans to individual clients. Also included in
this category are deferred deposits, which are considered loans under United States generally accepted accounting principles.
The Company had approximately $36 million in deferred deposits outstanding at December 31, 2004 compared to $28 million
at December 31, 2003.

Home  equity  loans, substantially  all  of  which  are  approved  at  no  more  than  100%  of  loan  to  value, increased  from  $215 
million at December 31, 2003 to $267 million at December 31, 2004. The rise in outstandings was primarily the result of the
Company’s promotional product, which has a zero percent interest rate for an introductory period of the loan. Management
anticipates continuing to offer promotional rate home equity loans during 2005, but will reassess the program based on Federal
Reserve Bank short-term interest rate actions. The Company added nearly 4,000 home equity lines of credit during 2004. At
December 31, 2004, Republic clients had $227 million of home equity line balances available for funding.

In  addition  to  changes  in  the  traditional  loan  portfolio  discussed  in  the  preceding  paragraphs, loans  serviced  for  others  by
Republic  increased  from  $732  million  at  December  31, 2003, to  $843  million  at  December  31, 2004. Loans  serviced  for 
others consist of loans Republic has sold into the secondary market while retaining the servicing of the loans.

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Table 6 – Loans by Type

As of December 31, (in thousands)

2004

2003

2002

2001

2000

Real estate:

Residential
Commercial
Construction

Commercial
Consumer
Home equity

Total loans

$    851,736
495,827
70,220
36,807
67,997
267,231

$

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

$ 1,789,818

$ 1,582,655

$ 1,310,881

$ 1,185,777

$ 1,145,736

Mortgage loans held for sale are primarily comprised of fixed rate, single 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, single family residential loans into
the secondary market in order to reduce its exposure to market interest rate risk. At December 31, 2004, mortgage loans held
for sale increased from the $14 million at year end 2003 to $16 million.

As a result of Republic’s mortgage banking operations, certain loan commitments are accounted for as derivatives. Republic
enters into agreements to sell loans for amounts and terms offsetting the interest rate risk of loans held for sale and loan com-
mitments 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. Substantially all of the gain on sales generated from
mortgage banking activities are recorded when closed loans are delivered pursuant to third party contracts.

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

Table 7 – Selected Loan Distribution

As of December 31, 2004 (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

One Year
Or Less

24,683 
2,858
1,735
6,327
40,489
545

Over One
Through Five
Years

Over
Five
Years

$

69,200  
18,397
599
8,739
4,154
1,003

$  186,996
6,717
19
352
7,939
1,094

$ 280,879   

$

27,972
2,353
15,418
52,582
2,642

$ 381,846  

$

76,637 

$    102,092  

$ 203,117

$

570,857   
467,855
67,867
21,389
15,415
264,589

$    151,300 
151,591
66,680
21,389
11,665
264,589

$    358,927  

$     60,630  

305,540
1,187
-
3,450
-

10,724
-
-
300
-

$ 1,407,972  

$    667,214 

$    669,104  

$     71,654   

Allowance and Provision for Loan Losses

The Company’s provision for loan losses decreased from $6.6 million for 2003 to $1.7 million for 2004. Included in the provi-
sion for loan losses were $1.4 million and $1.9 million for RALs during 2004 and 2003. The decrease in the provision, exclu-
sive of RALs, during 2004 was primarily due to lower levels of charge off activity, lower delinquency trends in the portfolio and
further improvements in overall asset quality. The increase in the provision, exclusive of RALs, during 2003 was primarily due
to an increase in certain classified commercial real estate loans and deferred deposits. The increase in provision associated
with RALs during 2003 was primarily the result of a significant increase in RAL losses, which were attributed to increased volume.

34

 
 
 
 
 
 
 
 
 
I

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The  allowance  for  loan  losses  as  a  percent  of  total  loans  declined  to  0.76%  as  of  December  31, 2004. This  decline  was 
primarily the result of lower historical losses and general improvements in credit quality within the commercial real estate port-
folio. Management  believes, based  on  information  presently  available, that  it  has  adequately  provided  for  loan  losses  at
(For discussion of Republic’s methodology for determining the adequacy of the allowance for loan losses,
December 31, 2004.
see section titled “Critical Accounting Policies and Estimates”).

Table 8 – Summary of Loan Loss Experience
Year Ended December 31, (dollars in thousands)

2004

2003

2002

Allowance for loan losses at beginning of year

$ 13,959

$ 10,148

$   8,607

2001

$ 7,862

2000

$ 7,862

Charge offs:
Real estate:
Residential
Commercial
Construction

Commercial
Consumer
Home equity
Tax Refund Solutions

Total

Recoveries:
Real estate:
Residential
Commercial
Construction

Commercial
Consumer
Home equity
Tax Refund Solutions

Total

Net loan charge offs
Provision for loan losses

(444)
(177)
-
(22)
(868)
(177)
(3,404)

(5,092)

151
284
35
43
348
56
2,022

2,939

(2,153)
1,748

(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

$ 13,554

$ 13,959

$ 10,148

$ 8,607

Ratios:
Allowance for loan losses to total loans
Net loan charge offs to average loans outstanding
Allowance for loan losses to non performing loans

0.76%
0.13
221

0.88%
0.19
108

0.77%
0.15
103

0.73%
0.23
154    

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

(2,290)

34
5
-
15
616
9
229

908

(1,382)
1,382

$ 7,862

0.69%
0.12
193

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

2004

2003

2002

Percent
of Loans
to Total
Loans

48%
28
4
2
4
14

Percent
of Loans
To Total
Loans

48%
28
4
2
4
14

Allowance

$ 1,283
6,986
764
322
700
93

Percent
of Loans
To Total
Loans

46%
31
5
3
3
12

Allowance

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

$   1,580  
8,993
200
331
2,306
144

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

Commercial
Consumer
Home equity

Total

$ 13,554

100%

$ 13,959

100%

$ 10,148

100%

35

 
 
 
 
 
 
 
 
 
Asset Quality

Loans, including impaired loans under SFAS 114, but 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, exclusive of deferred deposits and RALs, 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. Deferred deposits, by contract with the
Company's Marketer/Servicers, are generally charged off 60 days from the day that they become uncollectible. All uncollectible
deferred deposits are subject to a Marketer/Servicer guarantee. RALs traditionally undergo a review in March of each year and
those deemed uncollectible by management are charged off against the allowance for loan losses.

Total non performing loans to total loans decreased to 0.34% at December 31, 2004, down from 0.82% at December 31, 2003,
while  the  total  balance  of  non  performing  loans  decreased  by  $6.8  million  for  the  same  period. The  decrease  in  the  non 
performing loans category was primarily related to several large commercial real estate relationships that paid off or paid down
during 2004.

Table 10 – Non performing Assets

As of December 31, (dollars in thousands)

2004

2003

2002

2001

2000

Loans on non-accrual status(1)
Loans past due 90 and still on accrual

Total non performing loans
Other real estate owned

Total non performing assets

$ 5,763
371

6,134
657

$ 12,466
473

12,939
-

$ 7,967
1,915

9,882
320

$   5,056
521

5,577
149

$   3,100
984

4,084
478

$ 6,791

$ 12,939

$ 10,202

$   5,726

$   4,562

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

0.34%
0.38

0.82%
0.82

0.75%
0.78

0.47%
0.48

0.36%
0.40

(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 real estate loans that management has classified as doubtful (collec-
tion 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 otherwise meet the definition of impaired. Republic's policy is to charge off all or that portion of its invest-
ment 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, decreased  from  $6.2  million  at  December  31, 2003  to  $2.7  million  at
December 31, 2004. At December 31, 2004, the impaired balance was attributable to three commercial real estate lending
relationships.

Investment Securities

Table 11 – Investment Securities Portfolio 

December 31, (in thousands)

2004

2003

2002

2001

2000

Securities Available for Sale:

U.S. Treasury and Government agency securities $ 291,697
161,663
Mortgage backed securities, including CMOs
- 
Corporate bonds
-
Other securities

$ 154,818
140,702
- 
-

$   51,123
151,924
-
-

$   32,023
179,576
-
-

$   87,309
65,556
18,810
125

Total securities available for sale

453,360

295,520

203,047

211,599

171,800

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

20,112
-
78,121

98,233

9,707  

-
105,704

115,411  

8,175  
100
77,137    

85,412 

50,995  
200
31,151    

40,375
275
63,118

82,346    

103,768

Total investment securities

$ 551,593

$ 410,931

$ 288,459

$ 293,945

$ 275,568

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36

 
 
 
 
 
 
 
 
 
Securities available for sale primarily consists of U.S. Treasury and U.S. Government Agency obligations, including agency MBSs
and agency collateralized mortgage obligations (“CMOs”). The MBSs primarily consist of hybrid mortgage securities, 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 month-
ly. The Company primarily uses the securities portfolio as collateral for securities sold under agreements to repurchase  ("repur-
chase agreements") and, along with FHLB borrowings, to mitigate its risk position from changing interest rates. Strategies for
the securities portfolio may also be influenced by economic and market conditions, loan demand, deposit mix, and liquidity
needs.

Securities available for sale increased from $296 million at December 31, 2003 to $453 million at December 31, 2004. The
increase in the available for sale portfolio is substantially attributed to growth in securities that were used as collateral for
repurchase agreements. Because a substantial portion of the Company's existing securities portfolio is pledged as collateral
on repurchase agreements, any increase or decrease in repurchase agreement balances typically leads to a corresponding
increase or decrease of balances within the securities portfolio.

During 2004, Republic purchased $4.1 billion in securities and had maturities of $3.9 billion. Approximately $3.7 billion of the
securities purchased were agency discount notes, which the Company utilized primarily for collateral purposes. The average
yield on these discount notes was 1.31% with an average term of 7 days.

Table 12 – Securities Available for Sale

As of December 31, 2004 (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*

Total securities available for sale 

Table 13 – Securities to be Held to Maturity

As of December 31, 2004 (dollars in thousands)
U.S. Treasury and U.S. Government agency securities:

Over one through five years

Total mortgage backed securities, including CMOs*

Total securities to be held to maturity

Amortized
Cost

$ 112,275   
180,650

292,925
161,179

$ 454,104

Amortized
Cost

$ 20,112
78,121

$ 98,233

Fair Value

$ 112,252   
179,445

291,697
161,663

$ 453,360

Fair Value

$ 20,057
78,072

$ 98,129

Average
Maturity
in Years

0.01
2.57

1.59
7.11

3.55

Average
Maturity
in Years

1.04
4.16

3.52

Weighted
Average
Yield

2.00%
2.96

2.60
4.01

3.10

Weighted
Average
Yield

3.12%
3.64

3.54

* The average maturity of mortgage backed securities, including CMOs, is calculated based on contractual maturity.

Deposits

Total  deposits  were  $1.4  billion  at  December  31, 2004  compared  to  $1.3  billion  at  December  31, 2003. Interest-bearing
deposits  increased  $52  million  while  non  interest-bearing  deposits  increased  $69  million  from  December  31, 2003  to
December 31, 2004.

The increase in non interest-bearing accounts relates primarily to growth in escrow, retail and commercial transaction accounts
across the Company’s retail banking center network.
Interest-bearing accounts experienced increases across several differ-
ent product lines, including demand accounts, money market accounts and certificates of deposit. These increases were par-
tially offset by a decline in Internet money market accounts and brokered deposits.

Demand accounts increased $33 million in 2004 primarily from the promotion of the Company’s “High Interest Checking” product.
Through much of 2004, this product was offered at a premium rate of interest with balances growing over $290 million. When the
Federal Reserve Bank began raising short-term interest rates late in the second quarter, however, management began moderating
the rate on this product to more closely match market levels. As a result, the balances in this product began to decline in the third
quarter of 2004. Management anticipates a strategy that includes continued moderation of the rate paid on this product during the
first quarter of 2005 unless additional funds are needed to meet loan demand or for liquidity purposes.

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37

 
 
 
 
 
 
 
 
 
Money  market  accounts  increased  $60  million  during  2004. The  majority  of  the  increase  was  the  result  of  growth  in  the
Company’s Premier First product. Premier First accounts represent ‘Cash Management’s’ primary product offering for medium
to large business account clients.

Both Internet money market accounts and brokered deposits were utilized in the first quarter of 2004 as a funding mechanism
for RALs. The Internet money market accounts were accumulated beginning in the third quarter of 2003. Upon completion of
the tax season in March 2004, management reduced the rate paid on the Internet money market product and, as anticipated,
began experiencing run-off from these accounts for the remainder of 2004.

The Company acquired brokered deposits beginning in the fourth quarter of 2003. Because the funding needs for RALs are
short-term in nature, a substantial portion of these brokered deposits had maturities of less than one year. The Company will
utilize brokered deposits again in the first quarter of 2005 to partially fund RAL volume. The brokered deposits will have terms
ranging from three months to four years with an average expected term of 12 to 18 months. Management chose to extend
these deposits beyond the 2005 tax season in order to moderate the Company's interest rate risk position in the event of future
market interest rate increases.

Table 14 – Deposits

December 31, (in thousands)

2004

2003

2002

2001

2000

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

$

304,264
184,334
45,076
41,080
71,841
47,324
194,666
221,098
46,254

$

271,022
124,145
96,034
35,735
70,208
42,073
196,026
203,893
64,655

Total interest-bearing deposits
Total non interest-bearing deposits

1,155,937
261,993

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

Total

$ 1,417,930

$ 1,297,112

$ 1,040,190

$ 866,358

$ 863,761

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

Securities sold under agreements to repurchase and other short-term borrowings increased $144 million during 2004. The
majority of this increase was attributable to two new large cash management accounts opened in 2004 with total balances at
year-end of $122 million. In addition, the Company realized an increase in the balance of an existing large account of $10 million
during 2004. Because of the transactional nature of these cash management accounts, repurchase agreement balances are
subject to large fluctuations on a daily basis.

FHLB Borrowings

FHLB Borrowings increased $76 million during the year to $496 million at December 31, 2004. The increase in advances was
primarily utilized to fund the growth in the loan portfolio and to mitigate the Company's exposure to changing market interest rates.

Approximately $381 million of the Company’s advances are fixed, with the majority having original maturities ranging from one
through six years. The current weighted average maturity of all FHLB borrowings outstanding at December 31, 2004 is three
years. Approximately $58 million of these fixed rate borrowings are scheduled to mature in 2005 with a weighted average
coupon rate of 2.57%.

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 rate periods, the
FHLB has the right to convert the borrowings to floating rate advances tied to LIBOR. If the FHLB elects to convert the debt to
a floating rate instrument, Republic also has the right to pay off the advances without penalty. The Company has $90 million
in these advances with a weighted average coupon of 5.17% 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
short-term.

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38

 
 
 
 
 
 
 
 
 
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, www.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 and 2004 to partially fund RALs and in part to fund loan growth. The Company will
increase its utilization of brokered deposits during the first quarter of 2005 to partially fund RALs as well.

Traditionally, the Company has also utilized borrowings from the FHLB to supplement its funding requirements. On December
31, 2004, the Company had capacity with the FHLB to borrow an additional $154 million. While Republic utilizes numerous
funding sources in order to meet liquidity requirements, the Company also has $160 million in approved unsecured line of 
credit facilities available at December 31, 2004 through various third party sources. The purpose of these lines of credit is to
provide short-term working capital to the Bank, if necessary.
In addition to brokered deposits, the Company will also utilize a
mix of overnight borrowings from the FHLB and unsecured credit lines to fund RALs during the 2005 tax season.

Liquidity at the Parent Company level should be considered separately from the consolidated liquidity since there are restric-
tions on the ability of the banking affiliates to distribute funds to the Parent Company. The Parent Company is defined as the
Company  on  an  unconsolidated  basis. As  of  December  31, 2004  the  Parent  Company's  primary  source  of  liquidity  was 
potential dividends from its subsidiaries and existing cash on hand of $4.6 million.

Capital

Total  stockholders’  equity  increased  from  $169  million  at  December  31, 2003  to  $196  million  at  December  31, 2004. The
increase in stockholders’ equity was primarily attributable to net income earned during 2004 and, to a lesser extent, Company
stock option exercises. 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.

During the first quarter of 2004, the Company declared a five percent (5%) stock dividend. The Company also declared a five
percent (5%) stock dividend in January 2005 payable to shareholders of record as of March 25, 2005. For each of the stock
dividends, Class A Shareholders received five additional shares of Class A Common Stock for every 100 shares they owned and
Class B shareholders received the same ratio of Class B Common Stock. A cash payment was paid in lieu of all fractional
shares. All per share and share amounts have been adjusted to reflect both stock dividends.

Prior to 2000, Republic’s board of directors approved a Class A Common Stock repurchase program of 551,250 shares.
In
March 2003, the Company’s board of directors authorized management to purchase an additional 275,625 shares bringing the
total  shares  authorized  for  purchase  to  826,875. The  repurchase  program  will  remain  effective  until  the  number  of  shares
authorized is repurchased or until Republic’s board of directors terminates the program. Republic repurchased 20,580 shares
during 2004 and 27,618 shares during 2003. Through December 31, 2004, Republic has purchased 567,200 shares with a
weighted average cost of $9.74 and a total cost of $5.5 million.

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 8.01% at December 31, 2004 compared to 8.69% at December 31, 2003. Republic has elected and successfully
maintains financial holding company status.

Formal measurements of the capital ratios for the Company and the Republic Bank & Trust Company are done at each quarter
end. However, the Company does more frequent estimates of its capital classification during late January and early February
of each year because of the significant amount of RAL originations. The Company and Republic Bank & Trust Company could
potentially be classified as adequately capitalized as opposed to well capitalized if it were it to do a formal computation in
January or February. Payments are received from the IRS each Friday during the RAL season and if the Company and the Bank
were to be classified as adequately capitalized, generally they would move back into the well capitalized classification with
each payment.

In March 2004, the Company received final regulatory approval to execute an intragroup trust preferred transaction, which will
provide Republic Bank & Trust Company access to additional capital markets, if needed, in the future. On a consolidated basis,
this  transaction  has  had  no  impact  to  the  capital  levels  and  ratios  of  the  Company. The  subordinated  debentures  held  by
Republic Bank & Trust Company, as a result of this transaction, however, are treated as Tier 2 capital based on requirements
administered by the Bank's federal banking agency.
If Republic Bank & Trust Company’s Tier I capital ratios should not meet
the minimum requirement to be well capitalized, the Company could immediately modify the transaction in order to maintain
its well capitalized status.

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39

 
 
 
 
 
 
 
 
 
Off Balance Sheet Arrangements

Table 15 – Off Balance Sheet Arrangements

December 31, 2004 (in thousands)

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

Less than
one year

$

20,738
73,137
357,800

Greater
than one year
to three years

Maturity by Period
Greater
than three years
to five years

$ 2,900
14,724
20,491

$

40
-
330

Greater
than five years

$    109
-
2,941

Total

$   23,787
87,861
381,562

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. The Company
does not deem this risk to be material.

The Company obtained letters of credit from the FHLB to be used as collateral on public funds deposits and as credit enhance-
ments for client bond offerings. Approximately $28 million of these letters of credit at December 31, 2004 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.

Loan commitments generally consist of unfunded home equity lines of credit and commitments related to the origination of
mortgage loans held for sale. These commitments generally have variable rates.

Aggregate Contractual Obligations

Table 16 – Aggregate Contractual Obligations

December 31, 2004 (in thousands)

Deposits
Federal Home Loan Bank borrowings
Lease commitments

Less than
one year

$ 1,071,870
92,570
3,132

Greater
than one year
to three years

$ 264,231
160,000
4,754

Maturity by Period
Greater
than three years
to five years

$ 68,221
150,500
2,748

Greater
than five years

$   13,608
93,317
9,670

Total

$ 1,417,930
496,387
20,304

Total

$ 1,167,572

$ 428,985

$ 221,469

$ 116,595

$ 1,934,621

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. 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 and can be prepaid
these advances without a penalty. Management does not believe these advances will likely be converted in the short-term.

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

Asset/Liability Management and Market Risk

Asset/liability management control is designed to ensure safety and soundness, maintain liquidity and regulatory capital stan-
dards and achieve acceptable net interest income. Interest rate risk is the exposure to adverse changes in net 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 in a fluctuating rate environment.

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 equally across all points on the yield curve. These
projections are computed based on various assumptions, which are used to determine the 100 and 200 basis point increments,
as well as the base case (which is a twelve month projected amount) scenario. 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 

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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 inter-
est rate changes, as well as changes in market conditions and the application and timing of various management strategies.
Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the
yield curve. For example, in the second half of 2004, short-term interest rates increased as much as 125 basis points while
long-term interest rates remained relatively stable.

The interest sensitivity profile of Republic at any point in time will be affected by a number of factors. These factors include
It is also influenced by market
the mix of interest sensitive assets and liabilities, as well as their relative pricing schedules.
interest rates, deposit growth, loan growth and other factors.

The  following  tables  illustrate  Republic’s  estimated  earnings  sensitivity  profile  based  on  the  asset/liability  model  as  of
December 31, 2004 and 2003.

Table 17 – Interest Rate Sensitivity for 2004

Decrease in Rates

Increase in Rates

200
Basis Points

100
Basis Points

Base

100
Basis Points

200
Basis Points

(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

$

282
16,315
98,136

114,733

20,671

4,977
19,294

44,942

$ 69,791

$ (3,116)

(4.27)%

$

278
18,125
102,799

121,202

22,902

5,256
19,668

47,826

$

517
19,798
108,057

128,372

$

707
22,359
113,612

136,678

27,459

8,110
19,896

55,465

34,031

11,902
20,161

66,094

$  73,376

$ 72,907

$ 70,584

$  

965
24,642
118,919

144,526

40,715

15,505
20,965

77,185

$ 67,341

$

(5,566)

$

469

0.64%

$

(2,323)

(3.19)%

(7.63)%

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Table 18 – Interest Rate Sensitivity for 2003

(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

Decrease in Rates

Increase in Rates

200
Basis Points

100
Basis Points

Base

100
Basis Points

200
Basis Points

$

103
6,420
86,782

93,305

17,541

1,018
16,673

35,232

$

70
7,129
90,649

97,848

18,867

1,368
16,714

36,949

$ 58,073

$  (5,467)

$ 60,899

$    (2,641)

(8.60)%

(4.16)%

$

92
10,487
94,814

105,393

$

941
12,920
100,166

114,027

22,555

2,503
16,795

41,853

29,284

5,057
16,749

51,090

$ 63,540

$ 62,937

$

(603)

$     1,303
15,224
105,724

122,251

35,970

7,607
17,214

60,791

$ 61,460

$

(2,080)

(0.95)%

(3.27)%

41

 
 
 
 
 
 
 
 
 
Market and Dividend Information

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

2004

Quarter Ended
March 31
June 30
September 30
December 31

2003

Quarter Ended
March 31
June 30
September 30
December 31

Market Value

Dividend

High
$ 18.73
19.34
22.65
27.88

High
$ 10.98
13.76
17.49
18.62

Market Value

Low
$ 16.64
16.36
17.36
21.75

Low
$   9.80
10.50
12.96
16.66

Class A
$ 0.060
0.073
0.073
0.073

Class A
$ 0.050
0.060
0.060
0.289

Dividend

Class B
$ 0.054
0.067
0.067
0.067

Class B
$ 0.045
0.054
0.054
0.263

There is no established public trading market for the Class B Common Stock. At February 11, 2005, the Class A Common Stock
was held by 816 shareholders of record and the Class B Common Stock was held by 171 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 con-
siderations. The Board of Directors has not approved any additional special cash dividends, such as the amount declared and
paid during the fourth quarter of 2003. The Board of Directors, however did declare a five percent (5%) stock dividend in the
first quarter of 2004 and an additional five percent (5%) stock dividend during the first quarter of 2005. The payment of divi-
dends is subject to the regulatory restrictions described in Note 13 of 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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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Management of Republic Bancorp, Inc. (the “Company”) is responsible for the preparation, integrity, and fair presentation
of the Company’s annual consolidated financial statements and related financial data contained in this report. All information
has been prepared in accordance with United States of America generally accepted accounting principles and, as such, includes
certain amounts that are based on Management’s best estimates and judgments.

The consolidated financial statements presented in this report have been audited by Crowe Chizek and Company LLC, who
have been given unrestricted access to all financial records and related data, including minutes of all meetings of sharehold-
ers, the Board of Directors, and various committees of the Board. Management believes that all representations made to Crowe
Chizek and Company LLC during the audit were valid and appropriate.

Management is responsible for establishing and maintaining internal control over financial reporting presented in conformity
with both United States of America generally accepted accounting principles and the Federal Financial Institutions Examination
Council Instructions for Consolidated Reports of Condition and Income. Two of the objectives of internal control are to provide
reasonable assurance to Management and the Board of Directors that transactions are properly authorized and recorded in our
financial records, and that the preparation of the Company’s financial statements and other financial reporting is done in accor-
dance with Unites States of America generally accepted accounting principles.

Management has made its own assessment of the effectiveness of the Company’s internal control over financial reporting as
of December 31, 2004, in relation to the criteria described in the report, Internal Control — Integrated Framework, issued by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

There are inherent limitations in the effectiveness of internal control, including the possibility of human error and the circum-
vention or overriding of controls. Accordingly, even effective internal control can provide only reasonable assurance with respect
to reliability of financial statements. Furthermore, the effectiveness of internal control can vary with changes in circumstances.
Nonetheless, based on its assessment, Management believes that as of December 31, 2004, Republic Bancorp, Inc.’s internal
control was effective in achieving the objectives stated above. Crowe Chizek and Company LLC has provided its report of this
assessment in a separate report dated March 14, 2005.

The Board of Directors is responsible for reviewing and monitoring the policies and practices employed by Management in
preparing the Company’s financial reporting. This is accomplished through its Audit Committee, which is comprised of direc-
tors who are not officers or associates of the Company. The Audit Committee reviews accounting policies, control procedures,
internal and independent audit reports, and regulatory examination reports with Management, the Company’s internal auditors,
and representatives of Crowe Chizek and Company LLC. Both the Company’s internal auditors and the representatives of Crowe
Chizek and Company LLC have full and free access to the Audit Committee to discuss any issues which arise out of their exam-
inations without Management present.

Bernard M. Trager
Chairman of the Board
Republic Bancorp, Inc.

Steven E. Trager
President and
Chief Executive Officer
Republic Bancorp, Inc.

Kevin Sipes
Executive Vice President and
Chief Financial Officer
Republic Bancorp, Inc.

43

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over
Financial Reporting, that Republic Bancorp, Inc. maintained effective internal control over financial reporting as of December
31, 2004, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations  of  the Treadway  Commission  (“COSO”). Republic  Bancorp, Inc. management  is  responsible  for  maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the
company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of inter-
nal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reli-
ability of financial reporting and the preparation of financial statements for external purposes in accordance with United States
of America generally accepted accounting principles. A company’s internal control over financial reporting includes those poli-
cies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors  of  the  company;  and  (3)  provide  reasonable  assurance  regarding  prevention  or  timely  detection  of  unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In  our  opinion, management’s  assessment  that  Republic  Bancorp, Inc. maintained  effective  internal  control  over  financial
reporting as of December 31, 2004 is fairly stated, in all material respects, based on criteria established in Internal Control –
Integrated Framework issued by the COSO. Also, in our opinion, Republic Bancorp, Inc. maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control –
Integrated Framework issued by the COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the balance sheets of Republic Bancorp, Inc. as of December 31, 2004 and 2003 and the related statements of income and
comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31,
2004 and our report dated March 14, 2005 expressed an unqualified opinion.

Crowe Chizek and Company LLC

Louisville, Kentucky
March 14, 2005

44

REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM ON FINANCIAL STATEMENTS

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,
2004 and 2003 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, 2004. 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 the standards of the Public Company Accounting Oversight Board (United States).
Those  standards  require  that  we  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial 
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial posi-
tion of Republic Bancorp, Inc. and subsidiaries as of December 31, 2004 and 2003 and the results of their operations and their
cash flows for each of the three years in the period ending December 31, 2004, in conformity with United States of America
generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the  effectiveness  of  Republic  Bancorp, Inc.’s  internal  control  over  financial  reporting  as  of  December  31, 2004, based  on 
criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated March 14, 2005 expressed an unqualified opinion.

Crowe Chizek and Company LLC

Louisville, Kentucky
March 14, 2005

45

DECEMBER 31, (in thousands, except share data)

2004

2003

ASSETS:

Cash and cash equivalents
Securities available for sale 
Securities to be held to maturity (fair value 
$98,129 in 2004 and $114,736 in 2003)

Mortgage loans held for sale 
Loans, net of allowance for loan losses

of $13,554 and $13,959 (2004 and 2003)

Federal Home Loan Bank stock, at cost
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

$

77,850
453,360

$

61,181
295,520

98,233
16,485

1,775,545
20,321
33,843
23,285

115,411
13,732

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

$ 2,498,922 

$ 2,128,076

$    261,993
1,155,937
1,417,930

364,828
496,387
23,708

$    193,321
1,103,791
1,297,112

220,345
420,178
21,062

Total liabilities

2,302,853

1,958,697

STOCKHOLDERS’ EQUITY:

Preferred stock, no par value, 100,000 shares authorized
Series A 8.5% non cumulative convertible, none issued
Class A Common Stock, no par value, 30,000,000 shares

authorized, 16,899,905 shares (2004) and 16,795,440 shares (2003)
issued, 16,738,200  shares (2004) and 16,599,388  shares (2003)
outstanding;  Class B Common Stock, no par value,
5,000,000 shares authorized, 2,149,460 shares (2004) and 
2,157,712 shares (2003) issued and outstanding

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

Total stockholders’ equity

-

-

4,381
58,117
135,949
(1,894)
(484)

196,069

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

169,379

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 2,498,922

$ 2,128,076

See accompanying notes to consolidated financial statements.

S
T
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A
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46

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

2004

2003

2002

$ 118,492

$ 107,645

$ 92,154

NET INTEREST INCOME, AFTER PROVISION FOR LOAN LOSSES

88,304

12,558
-
1,316
132,366

21,202

4,191
16,921
42,314

90,052

1,748

13,460
5,268
1,515
3,148
-
2,492
1,311
27,194

34,552
13,915
2,809
2,271
1,932
1,385
-
1,602
7,550
66,016

49,482

16,981

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:

Salaries and employee benefits
Occupancy and equipment, net
Communication and transportation
Marketing and development
Bankshares tax
Supplies
Federal Home Loan Bank prepayment penalties
Data processing 
Other
Total non interest expenses

INCOME BEFORE INCOME TAX EXPENSE 

INCOME TAX EXPENSE

NET INCOME

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Change in unrealized gain (loss) on securities available for sale
Less: Reclassification of realized amount
Net unrealized gain (loss) 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.

10,377
3
1,035
119,060

19,944

1,897
14,954
36,795

82,265

6,574

75,691

10,019
3,981
2,532
11,104
-
1,825
1,472
30,933

32,509
12,416
2,729
2,997
1,980
1,481
-
1,722
7,025
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

7,805
3,198
2,129
6,894
1,559
1,441
1,496
24,522

28,379
9,984
2,329
2,905
1,727
1,139
1,381
1,575
4,420
53,839

31,685

11,196

$ 32,501

$ 28,203

$ 20,489

$ (1,484)
-
(1,484)

$  31,017

$

1.73
1.70

1.66
1.63

$ (1,598)
-
(1,598)

$ 26,605

$

1.51
1.47

1.48
1.44

$

3,334
1,013
2,321

$ 22,810

$      1.12
1.10

1.09
1.07

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A
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E
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T
A
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E
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S
O
F

I

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E
A
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P
R
E
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S
V
E

I

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47

 
 
 
 
 
 
Class A
Shares Outstanding

15,465

YEARS ENDED DECEMBER 31, 2004, 2003 and 2002 
(in thousands, except per share data)

BALANCE, January 1, 2002

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 ($ 0.190 per share)

Class B ($ 0.172 per share)

Net changes in accumulated other comprehensive income (loss)

Net income

BALANCE, December 31, 2002

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 ($ 0.459 per share)

Class B ($ 0.417 per share)

Notes receivable on common stock, net of cash payments

Net changes in accumulated other comprehensive income (loss)

Net income

224

(17)

114

560

29

-

-

-

-

16,375

197

(22)

18

31

-

-

- 

-

-

Common Stock
Class B
Shares Outstanding

2,292

3

-

(114)

-

-

-

-

-

-

2,181

-

(5)

(18)

-

-

-

-

-

-

BALANCE, December 31, 2003

16,599

2,158

Stock options exercised, net of shares redeemed

Repurchase of Class A 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 ($ 0.280 per share)

Class B ($ 0.254 per share)

Stock dividend

Notes receivable on common stock, net of cash payments

Net changes in accumulated other comprehensive income (loss)

Net income

117

(20)

9

33

-

-

-

-

-

-

-

-

(9)

-

-

-

-

-

-

-

Amount

$ 3,953

49

(3)

-

121

-

-

-

-

-

4,120

43

(6)

-

-

-

-

-

-

-

4,157

25

(4)

-

-

-

-

203

-

-

-

BALANCE, December 31, 2004

16,738

2,149

$ 4,381

See accompanying notes to consolidated financial statements.

I

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E

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S
R
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O
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K
C
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S

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48

 
 
 
 
Additional
Paid In
Capital

$ 33,017

1,258

(29)

-

4,956

(28)

-

-

-

-

39,174

1,620

(57)

-

73

-

-

(550)

-

-

40,260

1,494

(62)

-

285

-

-

16,357

(217)

-

-

Retained
Earnings

$ 90,873

(203)

(131)

-

-

-

(3,081)

(380)

-

20,489

107,567

(678)

(316)

-

-

(7,622)

(903)

-

-

28,203

126,251

(725)

(317)

-

-

(4,653)

(548)

(16,560)

-

-

32,501

Unearned
Shares in
Employee
Stock
Ownership
Plan

$ (3,005)

-

-

-

-

342

-

-

-

-

(2,663)

-

-

-

374

-

-

-

-

-

(2,289)

-

-

-

395

-

-

-

-

-

-

Accumulated
Other
Comprehensive
Income (Loss)

Total
Stockholders’
Equity

$    277

$ 125,115

-

-

-

-

-

-

-

2,321

-

2,598

-

-

-

-

-

-

-

(1,598)

-

1,000

-

-

-

-

-

-

-

-

(1,484)

-

1,104

(163)

-

5,077

314

(3,081)

(380)

2,321

20,489

150,796

985

(379)

-

447

(7,622)

(903)

(550)

(1,598)

28,203

169,379

794

(383)

-

680

(4,653)

(548)

-

(217)

(1,484)

32,501

$ 58,117

$ 135,949

$ (1,894)

$ (484)

$ 196,069

49

YEARS ENDED DECEMBER 31, (in thousands)

2004

2003

2002

CASHFLOWS FROM 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

CASHFLOWS FROM 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, maturities and paydowns 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

CASHFLOWS FROM FINANCING ACTIVITIES:
Net change in deposits
Net change 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, net
Cash dividends paid

Net cash provided by financing activities

NET CHANGE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

$ 

32,501

$

28,203

$

20,489

7,313
(822)
1,748
(2,861)
-
(254,421)
254,529
680

(1,572)
2,210
39,305

(4,097,326)
(61,180)
(351)

78,292

3,937,964
-
(211,169)
(5,819)
(359,589)

120,818

144,483
(24,716)
100,925
(383)

-
794
(4,968)
336,953

16,669

61,181

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

31,245
(75,818)
176,697
(379)

-
985
(8,305)
345,518

21,328

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

CASH AND CASH EQUIVALENTS AT END OF YEAR

$

77,850

$

61,181

$    39,853

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

Interest
Income taxes

$

41,981
14,237

$

36,170
16,412

$

38,036
11,600

SUPPLEMENTAL NONCASH DISCLOSURES:
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

Transfers from loans to real estate acquired in settlement of loans

$              -

$            - 

$

5,077

-
1,652

35,829
750

39,484
770

See accompanying notes to consolidated financial statements.

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50

 
 
 
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles  of  Consolidation  and  Nature  of  Operations  –  The  consolidated  financial  statements  include  the  accounts  of
Republic  Bancorp, Inc. (the  “Parent  Company”)  and  its  wholly-owned  subsidiaries: Republic  Bank  &  Trust  Company  and
Republic Bank & Trust Company of Indiana (together referred to as the “Bank”), Republic Funding Company and Republic Invest
Co. Republic Invest Co. includes its subsidiary, Republic Capital LLC. The consolidated financial statements also include the
wholly-owned  subsidiaries  of  Republic  Bank  &  Trust  Company: Republic  Financial  Services, LLC  and  Republic  Insurance
Agency, LLC. All companies are collectively referred to as “Republic” or the “Company”. All significant intercompany balances
and transactions have been eliminated in consolidation.

Republic operates 33 banking centers, primarily in the retail banking industry and conducts its operations predominately in
metropolitan Louisville, Kentucky, central Kentucky, southern Indiana and through an Internet banking software application.
Republic also operates two loan production offices in the Louisville, Kentucky market. Republic’s consolidated results of oper-
ations are dependent upon net interest income, which represents the difference between the interest income and fees on inter-
est-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 primarily consist of interest-bearing deposit
accounts and short-term and long-term borrowings.

Republic  Bank  & Trust  Company  originates  deferred  deposits, which  are  classified  as  consumer  loans, 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” or  “payday  lending”). The  Company  promotes  this  product  through  two  third  party  relationships  known  as
Marketer/Servicers. Republic Bank & Trust Company, through its Marketer/Servicers, originates deferred deposits in Texas,
North Carolina, Pennsylvania and Arkansas.

Republic Bank & Trust Company is one of a limited number of financial institutions, which facilitate the payment of federal and
state tax refunds through tax preparers located throughout the United States. The Company facilitates the payment of these
tax  refunds  through  three  primary  products: Refund  Anticipation  Loans  (“RALs”), Electronic  Refund  Checks  (“ERCs”)  and
Electronic Refund Deposits (“ERDs”). RALs are classified as consumer loans. ERCs and ERDs are products whereby Republic
Bank & Trust Company transmits, via a check or electronic deposit, a taxpayers refund once it is received from the respective
state or federal government.

Other sources of income include fees charged to customers for 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.

Republic’s operating expenses consist primarily of salaries and employee benefits, occupancy and equipment expenses, com-
munication and transportation costs, marketing and development 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 United States generally accepted accounting principles
require management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclo-
sure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Material estimates that are particularly susceptible to significant change in the short-
term relate to the determination of the allowance for loan losses and mortgage servicing rights (“MSRs”). Actual results could
differ from these estimates.

Significant Group Concentrations of Credit Risk – The Company does not have any significant concentrations of credit risk
to any one industry or relationship.

Earnings Concentration – Approximately 39% of net income contribution during 2004 was derived from Tax Refund Solutions
and  Deferred  Deposits  which  consist  of  relationships  which  if  terminated  could  have  a  materially  adverse  impact  on  net
income. (See footnote 21 for additional information.)

Cash and Cash Equivalents – For purpose of the consolidated statement of cash flows, cash and cash equivalents include
cash, deposits with other financial institutions with original maturities under 90 days and federal funds sold.

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 matu-
rity securities. Unrealized holding gains and losses, net of tax, on securities available for sale are reported as a separate com-
ponent 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.

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51

 
 
 
 
Declines in the fair value of securities to be held to maturity and available for sale securities below their cost that are deemed
to be other than temporary are reflected in earnings as realized losses. In estimating other than temporary impairment losses,
management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial
condition and short-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the
issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

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, as  determined  by  aggregate  outstanding  commitments  from  investors  or  current
investor yield requirements. To deliver closed loans to the secondary market and to moderate its interest rate risk prior to sale,
more often than not, Republic enters into non-exchange traded mandatory forward sales contracts, which are considered deriv-
ative  instruments. These  contracts  totaled  $21  million  and  $24  million  at  December  31, 2004  and  2003. The  aggregate 
market value of mortgage loans held for sale takes into consideration the price of the sales contracts.

Loan commitments related to the origination of mortgage loans held for sale are considered derivative instruments. 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 $15 million and $21 million in loans as of December 31, 2004 and 2003 that it intends
to sell or were sold after the loans are or were closed. Sales contract derivatives are entered into for amounts and terms off-
setting the interest rate risk of loan commitment derivatives and loans held for sale, and both are carried at their fair value with
changes included in earnings. 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.

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, loans sold in the secondary market had been primarily sold with servicing released which did not
result  in  an  MSR. Beginning  in  2003, Republic  sold  substantially  all  of  its  loans  into  the  secondary  market  with  servicing
retained and a corresponding MSR. This transaction is posted as a credit to net gain on sale of loans, a component of mort-
gage 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, record-
ed at December 31, 2004 and 2003 is $5.3 million and $4.8 million.

The carrying value of the MSR asset is periodically reviewed for impairment based on the fair value of the MSR, using group-
ings of the underlying loans by interest rates and by geography and prepayment characteristics. Any impairment of a group-
ing 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 generally will decline due to expected prepayments within the
portfolio. Alternatively, during a period of rising interest rates the fair value of MSRs generally will increase as prepayments on
the underlying loans would be expected to decline. Management utilizes an independent third party on at least a quarterly basis
to assist with the fair value estimate of the MSRs. Based on the estimated fair value at December 31, 2004 and 2003, man-
agement 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 bank-
ing 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.

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 estimated lives of the related loans
as a yield  adjustment.

Generally, the accrual of interest on loans, including impaired loans, is discontinued when it is determined that the collection
of interest or principal is doubtful, or when a default of interest or principal has existed for 90 days or more, unless such loans
are well secured and in the process of collection.

Interest received on non-accrual loans generally is 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

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52

 
 
 
 
current or the loan is deemed uncollectible and is charged off. Consumer loans generally are not placed on non-accrual sta-
tus but are reviewed periodically and generally charged off when they reach 120 days past due or are deemed uncollectible.

Allowance for Loan Losses – The allowance for loan losses is established as losses are estimated to have occurred through
the provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes
the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review
of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations
that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as additional infor-
mation becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are classified as
either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established
when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carry-
ing value of that loan. The general component covers non classified loans and is based on historical loss experience adjusted
for qualitative factors. There are underlying uncertainties that could affect management’s estimate of probable losses and there
is a margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and gen-
eral losses in the portfolio.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable
to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.
Factors considered by management in determining impairment include payment status, collateral value and the probability of
collecting  scheduled  principal  and  interest  payments  when  due. Loans  that  experience  insignificant  payment  delays  and 
payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and
payment shortfalls on a case by case basis, taking into consideration all of the circumstances surrounding the loan and the
borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment history and the amount of
the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and
construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the
loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does
not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject
of a restructuring agreement.

Premises and Equipment, Net – 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, three to five years for furniture, fixtures and equipment and three to nine years
for leasehold improvements.

Long Lived Assets – Long lived assets are reviewed for impairment when events indicate their carrying amount may not be
recoverable from future undiscounted cash flows.

If impaired, the assets are recorded at discounted amounts.

Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings – Substantially all securities sold
under agreements to repurchase (“Repurchase Agreements”) 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 security pledges. Other short-
term borrowings primarily consist of 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.

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(dollars in thousands, except per share data)

Net income, as reported

Less: Stock based compensation expense

determined under the fair value based method

Pro forma net income

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

2004

$ 32,501

574
$ 31,927

$

1.73
1.70

1.70
1.67

1.66
1.63

1.63
1.61

2003

$ 28,203

722
$ 27,481

$     1.51
1.47

1.48
1.43

1.48
1.44

1.45
1.40

2002

$ 20,489

645
$ 19,844

$

1.12
1.10

1.10
1.09

1.09
1.07

1.07
1.06

There were 538,125; 101,981 and 962,483 options granted during 2004, 2003 and 2002.

The weighted average assumptions for options granted during the year and the resulting estimated weighted average fair values per share
used in the Black-Scholes option pricing model are as follows:

Assumptions:

Risk free interest rate
Expected dividend yield
Expected life of options (in years)
Expected volatility

2004

2003

2002

3.70%
1.69
5.82

21% 

3.17%
2.05
6.00

24% 

4.83%
1.97
5.95

32%

Estimated fair value per share

$

3.96

$

2.64

$

3.09

In  December  2004, the  Financial Accounting  Standards  Board  (“FASB”)  issued  Statement  of  Financial Accounting  Standard
(“SFAS”) No. 123 (Revised 2004) (“SFAS No. 123R”), “Share-Based Payment”. The Statement focuses primarily on accounting
for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123R requires a
public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the
grant date fair value of the award (with limited exceptions). That cost is measured at fair value and expensed over the period
during which an employee is required to provide service in exchange for the award. The Company will prospectively adopt this
standard on July 1, 2005. Transitionally, compensation cost will  be recorded for prior option grants that vest after the date of
adoption. Exisiting options that will vest after the adoption date are estimated to result in additional compensation expense of
$500,000 during the balance of 2005, $900,000 in 2006, $700,000 in 2007, $500,000 in 2008 and $400,000 in 2009 and
thereafter. The effect on results of operations of future option grants will depend on the level of future option grants and the
calculation of the fair value of the options granted at such future date, as well as the vesting periods provided, and so the future
impact  to  the  results  of  operations  cannot  currently  be  predicted. Upon  adoption, there  will  be  no  significant  effect  on  the
Company’s financial position, as total equity will not change.

Income Taxes – Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the peri-
od in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enact-
ed, 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 committed or allocated to par-
ticipants, is shown as a reduction to 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 com-
mitted to be released is recorded as an adjustment to additional paid in capital. Dividends on allocated ESOP shares reduce
retained earnings and dividends on unearned ESOP shares reduce debt and accrued interest.

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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 cus-
tomer collateral or ability to repay. Such financial instruments are recorded when they are funded. Instruments such as stand-
by letters of credit are considered financial guarantees in accordance with FASB Interpretation No. 45 and are recorded at fair value.

Derivatives – Republic only utilizes derivative instruments as described in the section titled “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.

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. For
purposes  of  all  earnings  per  share  calculations, unallocated  ESOP  shares  are  not  considered  issued  and  outstanding  until
earned. The diluted earnings per share calculation details the effect of additional common shares issuable under stock options
and guaranteed preferred beneficial interests in Republic's subordinated debentures.

Comprehensive Income – Comprehensive income consists of net income and other comprehensive income. Other compre-
hensive 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 represent parts of the Company evaluated by management with separate financial infor-
mation. Republic’s internal information is primarily reported and evaluated in four lines of business – banking, Tax Refund
Solutions, mortgage banking and deferred deposits.

Reclassifications – Certain amounts presented in prior periods have been reclassified to conform with the current year pres-
entation. All prior period share and per share data have been restated to reflect the five percent (5%) stock dividend that was
declared in the first quarter of 2004 and the five percent (5%) stock dividend that was declared in January 2005.

New Accounting Pronouncements – There are no new accounting pronouncements other than SFAS 123R discussed above
under the section titled “Stock Option Plans” that will have a material impact on Republic’s consolidated financial statements.

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 con-
solidated  balance  sheet  includes  $1.4  million  and  $424,000  of  reserve  balances  at  December  31, 2004  and  2003. The
Company does not earn interest on these cash balances.

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3. SECURITIES

Securities available for sale:

December 31, 2004 (in thousands)
U.S. Treasury securities and U.S.

Government agencies

Mortgage backed securities,

including CMOs 

Total 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

Securities to be held to maturity:

December 31, 2004 (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, 2003 (in thousands)
U.S. Treasury securities and U.S.

Government agencies

Mortgage backed securities,

including CMOs

Total securities to be held to maturity

Amortized
Cost

$ 292,925

161,179

$ 454,104

Amortized
Cost

Gross
Unrealized
Gains

$

$

29

755

784

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

$ (1,257)

$ 291,697

(271)

161,663

$ (1,528)

$ 453,360

Gross
Unrealized
Losses

Fair Value

$ 154,533

$

328

$

(43)

$ 154,818

139,472

$ 294,005

1,274

$   1,602

(44)

(87)

$

140,702

$ 295,520

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair Value

$ 20,112

$ 

-

$

(55)

$   20,057

78,121

$ 98,233

131

131

$

(180)

78,072

$

(235)

$   98,129

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair Value

$

9,707

$  

105,704

$ 115,411

18

82

$

-

$     9,725

(775)

105,011

$

100

$

(775)

$ 114,736

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

December 31, 2004 (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 

$   112,275
180,650
161,179

$   454,104

Fair  Value

$ 112,252
179,445
161,663

$ 453,360

Amortized
Cost

$

-
20,112
78,121

$ 98,233

Fair Value

$

-
20,057
78,072

$    98,129

56

 
 
 
 
Securities with unrealized losses not recognized in income at December 31, 2004 and 2003 are as follows:

December 31, 2004 (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

$ 111,951

$ (23)

$ 173,355

$ (1,289)

$ 285,306 

$ (1,312)

- 

-

78,531

(451)

78,531 

(451)

Total

$ 111,951

$ (23)

$ 251,886

$ (1,740)

$ 363,837

$ (1,763)

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)

Total

$ 124,952

$ (29)

$ 128,905

$ (833)

$ 253,857

$ (862)

All unrealized losses are reviewed to determine whether the losses are other than temporary. Management evaluates securi-
ties for other than temporary impairment on a quarterly basis, and more frequently when economic or market conditions war-
rant such evaluation. 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 is 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.

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

December 31, (in thousands)

Amortized cost
Fair value

Details of sales of securities available for sale is as follows:

December 31, (in thousands)

Proceeds on sales
Proceeds on calls
Gross gains

2004

$ 454,483
453,677

$ 

2004

-
34,573
-

2003     

$ 272,801
273,561

2003

$            -

33,740                  

-

2002

$ 58,227
26,500
1,559

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4. LOANS

December 31, (in thousands)

Residential real estate
Commercial real estate
Real estate construction
Commercial
Consumer
Home equity

Total loans
Less:

$

2004

851,736
495,827
70,220
36,807
67,997
267,231

$

2003 

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

1,789,818

1,582,655

Unearned interest income and unamortized loan fees
Allowance for loan losses

719
13,554

703
13,959

Loans, net

$ 1,775,545

$ 1,567,993

The following table illustrates real estate loans pledged to collateralize advances and letters of credit from the FHLB:

December 31, (in thousands)

First lien, single family residential
Multi-family, commercial real estate
Home equity lines of credit
Commercial real estate

An analysis of the Allowance for loan losses follows:

December 31, (in thousands)

Balance, beginning of year
Provision for loan losses
Charge offs – Banking
Charge offs – Tax Refund Solutions
Recoveries – Banking
Recoveries – Tax Refund Solutions

Balance, end of year

2004

$    759,000
55,000
171,000
200,000

$

2004

13,959
1,748
(1,688)
(3,404)
917
2,022

2003

$    703,000
36,000
142,000
-

$

2003

10,148
6,574
(3,227)
(2,300)
2,314
450

$      13,554

$      13,959

Information regarding Republic’s impaired and non performing loans is as follows:

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

Loans with no allocated allowance for loan losses
Loans with allocated allowance for loan losses

Total

Amount of the allowance for loan losses allocated
Average investment in impaired loans
Interest income recognized during impairment
Interest income recognized on a cash basis on impaired loans

$      

$ 

$

2004

-
2,687

2,687

1,065
4,257
-
-

$ 

$

$

2003

-
6,176

6,176

1,484
3,604
-
-

No additional funds are committed to be advanced in connection with the above impaired loans.

Detail of non performing loans is as follows:

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

Loans past due 90 days and still on accrual
Non-accrual loans

Total non performing loans

2004

371
5,763

6,134

$

$

2003

473
12,466

$ 

$ 

12,939

$        9,882

Non performing loans include impaired loans and smaller balance homogeneous loans as defined in Note 1.

58

2002

$        8,607
3,338
(2,694)
(1,482)
944
1,435

$      10,148

$

2002

-
1,152

$        1,152

$

$

288
1,369
-
-

2002

1,915
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Loans made to executive officers and directors of Republic and their related interest in the ordinary course of business, sub-
ject to substantially the same credit policies as other loans and current in their terms, are as follows:

December 31, 2004 (in thousands)

5. MORTGAGE BANKING ACTIVITIES

Balance,
Beginning
of Period

$ 17,575

Change in
Related Party
Status

New
Loans

Repayments

Balance,
End
of Period

$ (2,762)

$ 4,606             $ (4,138)

$ 15,281

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 income (expense) 

Mortgage banking income

2004
$ 2,861
287

$ 3,148

2003
$ 12,718
(1,614)

$ 11,104

2002
$ 6,998
(104)

$ 6,894

Republic serviced loans for others (primarily FHLMC) totaling $843 million and $732 million at December 31, 2004 and 2003.
Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing pay-
ments to investors and processing foreclosures. Net loan servicing income (expense) reflected in the above includes amorti-
zation of servicing rights (see below) and loan servicing income of $1,965,000, $1,293,000, and $642,000 for the years ended
2004, 2003 and 2002. Custodial escrow account balances maintained in connection with serviced loans were $4 million and
$3 million at December 31, 2004 and 2003.

Activity for capitalized mortgage servicing rights is as follows:

December 31, (in thousands) 

Balance, beginning of year                                                       
Additions                                                                              
Amortized to expense

Balance, end of year                                                

Valuation allowance                                                     

2004

$ 4,823
2,176
(1,678)

$ 5,321

$

-

2003

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

$   4,823

$          -

2002  

$ 1,885
1,743
(746)

$ 2,882      

$        -

The fair value of capitalized mortgage servicing rights was $8.8 million and $6.7 million at December 31, 2004 and 2003. Fair
value  for  year  end  2004  was  determined  using  a  discount  rate  of  10%, prepayment  speeds  ranging  from  186%  to  486%,
depending on the stratification of the specific right, and a weighted average default rate of 1.5%.

Amortization expense for the next five years is estimated at approximately $1 million annually; however, actual amortization
expense will be impacted by serviced loan payoffs that occur during each year.

6. PREMISES AND EQUIPMENT

A summary of the cost and accumulated depreciation of premises and equipment follows:

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

2004

$   2,836
21,417
38,600
3,225
30

66,108

32,265

$ 33,843

2003

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

60,288

25,959

$ 34,329

Depreciation expense related to premises and equipment was $6.3 million in 2004, $5.4 million in 2003 and $4 million in 2002.

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7. DEPOSITS

Time deposits of $100,000 or more were $195 million and $196 million at December 31, 2004 and 2003.

At December 31, 2004, the scheduled maturities of all time deposits are as follows:

(dollars in thousands)

2005
2006
2007
2008
2009
Thereafter

Total

Amount

$ 163,283
122,714
141,517
36,705
31,516
13,607

$ 509,342  

Weighted
Average Rate

2.25%
2.80
3.92
3.40
3.67
4.05

3.07

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 insur-
ance policies purchased by Republic. Repurchase agreements collateralized by securities are treated as financings; accord-
ingly, 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
December 31, 2004 and 2003 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

2004

$ 313,158

1.34%

$ 364,828

2003

$ 189,984

1.00%

$ 227,760

At December 31, 2004, all of the Securities Sold Under Agreements to Repurchase had overnight maturities with the excep-
tion of $19 million that had maturities ranging from 146 to 332 days.

9. FHLB BORROWINGS

December 31, (in thousands)

2004

2003

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

$ 115,000

$ 115,000

FHLB fixed interest rate advances from 1.98% to 5.94%,
with a weighted average interest rate of 3.66% at
December 31, 2004, due through 2035

381,387

$ 496,387

305,178

$ 420,178

(1) Represents convertible advances with the FHLB. These advances have original fixed rate periods ranging from one to five years with  original maturities
ranging from three to ten years if not converted earlier by the FHLB. 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 $90  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 short-term.

FHLB advances are collateralized by a blanket pledge of eligible real estate loans. At December 31, 2004, Republic had avail-
able collateral to borrow an additional $154 million from the FHLB. Republic also has unsecured lines of credit totaling $160
million available through various financial institutions.

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Aggregate future principal payments on FHLB borrowings, based on contractual maturity dates as of December 31, 2004 are
as follows:

Year
2005
2006
2007
2008
2009 
Thereafter

Total

(in thousands)
$ 92,500
100,000
60,000
68,500
82,000
93,387

$ 496,387

During 2004 and 2003, the Company did not prepay any FHLB Advances. In 2002, the Company prepaid $25 million on 6.40%
FHLB advances that were due November 2002. The transaction resulted in a penalty of $1.4 million or $891,000 net of tax
($0.045 per Class A and Class B Common share).

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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 could be converted into approximately 11 shares of Class A Common Stock at the option of the hold-
er. The  sole  asset  of  Republic  Capital Trust  represented  the  proceeds  of  the  offering  loaned  to  Republic  Bancorp, Inc. in
exchange for subordinated debentures which had terms that were similar to the Trust Preferred Securities. The subordinated
debentures and the related interest expense, payable quarterly at the annual rate of 8.5%, were 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 were redeemed for cash while the remaining $5.1 million were converted into 559,739 shares of the Company’s
Class A Common Stock.

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INCOME TAXES

11.
Allocation of federal income tax between current and deferred portion is as follows:

Year Ended December 31, (in thousands)

Current
Deferred expense (benefit)

Total

2004

$ 15,566
1,415

$ 16,981

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

Year Ended December 31, (in thousands)

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

2004

35.0%

0.5
(0.6)
(0.6)
34.3%

2003

$ 13,942
1,620

$ 15,562

2003

35.0%

0.2
(0.5)
0.9
35.6%

2002

$ 11,536
(340)

$ 11,196

2002

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:

December 31, (in thousands)

Deferred tax assets:

Allowance for loan losses
Unrealized securities losses 
Accrued expenses

Total deferred tax assets

Deferred tax liabilities:

Depreciation
Federal Home Loan Bank dividends
Loan fees
Mortgage servicing rights
Unrealized securities gains
Other

Total deferred tax liabilities

Net deferred tax liability 

2004

$ 3,956
261
752

4,969

(1,607)
(3,049)
(681)
(1,883)
-
(146)

(7,366)

2003

$ 4,044
-
1,329

5,373

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

(7,131)

$ (2,397)

$ (1,758)

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12. EARNINGS PER SHARE

Class A and Class 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.

A reconciliation of the combined Class A and Class B Common Stock numerators and denominators of the earnings per share
and diluted earnings per share computations is presented below:

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

2004

2003

2002

Basic:

Net income available to common shareholders
Weighted average shares outstanding

Basic Earnings per Share:
Class A Common Stock
Class B Common Stock

Diluted:

Net income available to common shareholders
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

$ 32,501
18,833

$

1.73
1.70

$ 28,203
18,675

$     1.51
1.47

$ 20,489
18,341

$

1.12
1.10

$ 32,501

$ 28,203

$ 20,489

-

-

79

$ 32,501

18,833

-
779

$ 28,203

18,675

-
407

19,082

$ 20,568

18,341

161
368

18,870

Weighted average shares and dilutive potential shares outstanding

19,612

Diluted Earnings Per Share:
Class A Common Stock
Class B Common Stock

$     1.66
1.63

$     1.48
1.44

$     1.09
1.07

There were no antidilutive stock options as of December 31, 2004. Stock options for 22,050 and 210,578 shares of Class A Common
Stock were excluded from the 2003 and 2002 diluted earnings per share calculation 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 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 – The Company’s principal source of funds for dividend payments is dividends received from the Bank.
Kentucky and Indiana banking regulations limit the amount of dividends that may be paid to the Parent Company by the Bank
without prior approval of the respective states’ banking regulators. Under these regulations, the amount of dividends that may
be paid in any calendar year is limited to the current year's net profits, combined with the retained net profits of the preced-
ing two years, subject to the capital requirements described above. During 2005, Republic Bank & Trust Company and Republic
Bank & Trust Company of Indiana could, without prior approval, declare dividends of approximately $39 million and $1 million
plus any 2005 net profits retained to the date of the dividend declaration. The Company currently does not have plans to pay
dividends out of Republic Bank & Trust Company of Indiana.

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  the  Bank  must  meet  specific  capital  guidelines  that  involve  quantitative  measures  of  the  Company’s  assets,

62

 
 
 
 
liabilities and certain off balance sheet items as calculated under regulatory accounting practices. The capital amounts and
classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Parent Company and the Bank to main-
tain minimum amounts and ratios (set forth in the following table) of Total and Tier I capital (as defined in the regulations) to
risk weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). As of December 31, 2004,
the Parent Company and the Bank met all capital adequacy requirements.

The most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the 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 Bank’s capital ratings.

In March 2004, the Company received final regulatory approval to execute an intragroup trust preferred transaction, which will
provide Republic Bank & Trust Company access to additional capital markets, if needed, in the future. On a consolidated basis,
this  transaction  has  had  no  impact  to  the  capital  levels  and  ratios  of  the  Company. The  subordinated  debentures  held  by
Republic Bank & Trust Company, as a result of this transaction, however, are treated as Tier 2 capital based on requirements
If Republic Bank & Trust Company’s Tier I capital ratios should not meet
administered by the Bank's federal banking agency.
the minimum requirement to be well capitalized, the Company could immediately modify the transaction in order to maintain
its well capitalized status.

Minimum
Requirement
for Capital
Adequacy
Purposes

Minimum
Requirement
to be Well
Capitalized Under
Prompt Corrective
Action Provisions

Actual

Amount

Ratio

Amount

Ratio

Amount

Ratio

(dollars in thousands)

As of December 31, 2004

Total Risk Based Capital (to Risk Weighted Assets)

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

$ 209,575
198,146
6,193

13.03%   $ 128,719
125,709
12.61
3,010
16.46

8%
8
8

$ 160,899
157,136
3,763

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, 2003

Total Risk Based Capital (to Risk Weighted Assets)

196,021
161,579
5,756

196,021
161,579
5,756

12.18
10.28
15.30

8.03
6.78
10.53

64,360
62,854
1,505

97,589
95,348
2,187

4
4
4

4
4
4

96,539
94,282
2,258

121,986
119,185
2,734

6
6
6

5
5
5

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

167,897
157,593
5,555

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

4
4
4

84,008
82,278
1,730

103,850
102,632
1,786

6
6
6

5
5
5

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14. STOCK OPTION PLAN

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

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

2004

Weighted
Average
Exercise
Price

$   9.27
17.36
10.13
9.45

Options
Class A
Shares

1,468,059
538,125
(158,769)
(175,765)

Outstanding at

beginning of year

Granted
Exercised
Forfeited

Outstanding at year end
Exercisable (vested) 
at end of year

1,671,650

11.78

37,212

11.79

2002

Weighted
Average
Exercise
Price

$ 7.04
9.65
5.43
7.43

8.73

5.42

Options
Class A
Shares

1,083,482
962,483
(244,755)
(104,462)

1,696,748

164,824

Outstanding at

beginning of year

Granted
Exercised
Forfeited

Outstanding year end
Exercisable (vested) 
at end of year

Options
Class B
Shares

Weighted
Average
Exercise
Price

-
-
-
-

-

-

Options
Class B
Shares

4,410
-
(4,410)
-

-

-

$      -
-
-
-

-

-

Weighted
Average
Exercise
Price

$ 5.02
-
5.02
-

-

-

Options outstanding at December 31, 2004 were as follows:

Outstanding 
Class A Options

Number
Outstanding

Range of Exercise Prices
$5.33 – $6.30
$6.30 – $9.98
$9.99 – $11.86
$11.87 – $17.36 

202,867
765,727
150,230
552,826

Total Outstanding

1,671,650

15. BENEFIT PLANS

Weighted Weighted
Average
Average
Price
Life

2.28
3.70
3.23
5.84

4.19

$   5.79
9.51
11.02
17.31

11.78

2003

Weighted
Average
Exercise
Price

Options
Class B
Shares

$  8.73
12.02
6.85
9.08

9.27

9.61

-
-
-
-

-

-

Weighted
Average
Exercise
Price

$        -
-
-
-

-

-

Options
Class A
Shares

1,696,748
101,981
(259,363)
(71,307)

1,468,059

104,462

Exercisable

Weighted
Average
Price

$

-
-
11.79
-

11.79

Number 

- 
-
37,212
-

37,212

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 compensation.
Republic matches 50% of participant contributions up to 5% of each participant’s annual compensation. Republic’s contribu-
tion may increase if the Bank achieves certain operating ratios. Republic’s matching contributions were $743,000, $750,000
and $637,000 for the years ended December 31, 2004, 2003 and 2002.

64

 
 
 
 
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 330,750 shares of Class A Common
Stock from Republic’s largest beneficial owner at a market value price of $11.71 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 trans-
action. 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 dis-
tributions in the form of cash or stock. At December 31, 2004, approximately 162,000 unallocated shares had a fair value of
$4.0 million.

Year Ended December 31, (in thousands) 

Unearned shares allocated to participants in the plan
Compensation expense 

2004

33,407
$ 680,000

2003

31,405
$ 447,000

2002

29,215
$ 314,000

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

In November 2004, the Company’s Board of Directors approved a Non Qualified Deferred Compensation Plan (the “Plan”). The
Plan governs the deferral of Outside Director’s Board and Committee fees. The value of the deferred compensation account will
be deemed “invested” in Company stock. The Company will fund the liability from the quarterly purchase of Republic’s stock
issued from the Company stock option plan. With respect to calendar years commencing on or after January 1, 2005, Outside
Directors will have the right to defer up to 100% of their Board and Committee meeting fees and will be eligible to defer the
compensation amounts for a specified period ranging from two to five years. The Plan will have no material impact to the
Company in the future, as Director fee compensation expense will continue to be recorded when incurred.

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, Chief Executive Officer and Vice Chairman are partners. Rent expense for the years ended December 31, 2004, 2003
and 2002 under these leases was $1,897,000, $1,867,000 and $1,549,000. Total rent expense on all operating leases was
$3,113,000, $2,698,000 and $2,302,000 for the years ended December 31, 2004, 2003 and 2002. Total minimum lease com-
mitments under non cancelable operating leases are as follows:

December 31, 2004 (in thousands)

2005
2006
2007
2008
2009
Thereafter

Total

$

Affiliate

1,883
1,647
940
666
226
-

$

Other

1,249
1,118
1,048
984
871
9,672

$

5,362

$   14,942

Total

$     3,132
2,765
1,988
1,650
1,097
9,672

$   20,304

A director of Republic Bancorp, Inc. and Republic Bank & Trust Co. is a former partner in a law firm used by Republic. Fees
paid by Republic to this firm totaled $39,000, $73,000 and $91,000 for the years ended December 31, 2004, 2003 and 2002.
In late 2003, the Director left this firm to become partner at another law firm. Fees paid by Republic to this firm totaled $4,000,
$30,000 and $0 for the years ended December 31, 2004, 2003 and 2002.

A director of Republic Bancorp, Inc. is the President and Chief Executive Officer of a company that leases space to Republic.
Fees paid by Republic totaled $14,000, $46,000 and $7,000 for the years ended December 31, 2004, 2003 and 2002.

A director of Republic Bancorp, Inc. is the President of an insurance agency that is agent of record for the Company’s worker’s
compensation insurance. Commissions paid to the Agency totaled $5,000 in 2004. No commissions were received by the
Agency for the years ended December 31, 2003 and 2002.

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 financ-
ing needs of its customers. These financial instruments primarily include commitments to extend credit and standby letters of cred-
it. The contract or notional amounts of these instruments reflect the potential future obligations of Republic pursuant to those finan-
cial instruments. Creditworthiness for all instruments is evaluated on a case by case basis in accordance with Republic’s credit poli-
cies. 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.

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65

 
 
 
 
Republic also extends binding commitments to customers and prospective customers. Such commitments assure the borrower
of financing for a specified period of time at a specified rate. The risk to Republic under such loan commitments is limited by
the terms of the contracts. For example, Republic may not be obligated to advance funds if the customer’s financial condition
deteriorates or if the customer fails to meet specific covenants. An approved but unfunded loan commitment represents a
potential credit risk once the funds are advanced to the customer. This is also a liquidity risk since the customer may demand
immediate cash that would require funding and interest rate risk as market interest rates may rise above the rate committed.
Republic’s liquidity position is managed to meet its need for funds. In addition, since a portion of these loan commitments nor-
mally expire unused, the total amount of outstanding commitments at any point in time may not require future funding.

As of December 31, 2004, exclusive of mortgage banking loan commitments discussed in Note 1, Republic had outstanding
loan  commitments  totaling  $382  million, which  includes  unfunded  home  equity  lines  of  credit  totaling  $227  million. At
December 31, 2003, Republic had outstanding loan commitments totaling $345 million, which included unfunded home equi-
ty 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 com-
mitments and extending credit. Commitments outstanding under standby letters of credit totaled $24 million and $38 million
at December 31, 2004 and 2003.

At  December  31, 2004, 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 remain-
ing $60 million letter of credit was used to collateralize a public funds deposit, which the Company classifies in short-term bor-
rowings. These letters of credit reduce Republic’s available borrowing line at the FHLB by the above total amount. Republic
uses a blanket pledge of eligible real estate loans to secure the letters of credit.

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 methodologies may
have a material effect on the estimated fair value amounts.

December 31, (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

2004

2003

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

$     77,850
453,360
98,233
16,485
1,775,545
20,321
8,846

$     77,850
453,360
98,129
16,552
1,793,069
20,321
8,846

$     61,181
295,520
115,411
13,732
1,567,993
19,148
6,710

$

61,181
295,520
114,736
13,877
1,600,608
19,148
6,710

$ 261,993
646,595

$   261,993
646,595

$ 193,321
597,144

$ 193,321
597,144

509,342

509,896

506,647

513,691

364,828
496,387
3,774

364,828
500,882
3,774

220,345
420,178
3,441

220,345
426,437
3,441

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66

 
 
 
 
Cash and Cash Equivalents – The carrying amount represents 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. The carrying value of FHLB Stock approximates the fair value based on the redemption provisions of the
Federal Home Loan Bank.

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

Loans, net – 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 represents
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 out-
flows using the rates at which similar loans with the same remaining maturities could be obtained.

Accrued Interest Receivable/Payable – The carrying amount represents management’s 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 bor-
rowers with similar credit ratings and for the same remaining maturities, adjusted for the estimated volume of loan commit-
ments expected to close. The fair value of such commitments is not material.

Commitments to Sell Loans and Loan Sales Contracts – The fair value of commitments to sell loans is based upon the dif-
ference 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.

The fair value estimates presented herein are based on pertinent information available to management as of December 31,
2004 and 2003. 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.

N
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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
Other income
Less:

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

2004

2003   

$     4,605
1,894
190,869
2,956

$ 200,324

$     4,255
196,069

$ 200,324

2004

$   28,831
159
36

-
44

28,982
13

28,995
3,506

$

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

2002

$   3,406
211
-

129
589

2,899
272

3,171
17,318

Net income

$   32,501

$   28,203

$ 20,489

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

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

operating activities:

Equity in 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 Republic Invest Co.
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 in cash and cash equivalents

Cash and cash equivalents, beginning of year

2004

2003                  

2002

$   32,501

$   28,203

$ 20,489

(3,506)
685
(2,509)
1,583
28,754

(52)
-
(23,500)
-
(23,552)

(4,968)
794

-
(383)
(4,557)

645

3,960

(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

Cash and cash equivalents, end of year

$     4,605

$

3,960

$   2,538

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20. SEGMENT INFORMATION

The reportable segments are determined by the type of products and services offered, distinguished between banking opera-
tions, mortgage banking operations, Tax Refund Solutions and deferred deposits. Loans, investments and deposits provide the
majority of revenue from banking operations; servicing fees and loan sales provide the majority of revenue from mortgage
banking operations; RAL fees and ERC fees provide the majority of the revenue from tax refund services; and fees for provid-
ing deferred deposits represent the primary revenue source for the deferred deposit segment. All four reportable segments are
domestic.

The accounting policies used for Republic’s reportable segments are the same as those described in the summary of signifi-
cant  accounting  policies. Income  taxes  are  allocated  based  on  income  before  income  tax  expense. Transactions  among
reportable segments are made at fair value.

Segment information for the years ended December 31, is as follows:

(in thousands)

Net interest income
Provision for loan losses
Electronic Refund Check fees
Mortgage banking income
Other revenue
Income tax expense
Net income
Segment assets

(in thousands)
Net interest income
Provision for loan losses
Electronic Refund Check fees
Mortgage banking income
Other revenue
Income tax expense
Net income
Segment assets

(in thousands)

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

$

$

$

Banking

68,881
(516)
-
-
20,182
9,550
19,159
2,430,797

Banking
66,864
4,245
-
-
19,461
8,718
15,801
2,063,676

Banking

59,596
2,391
-
-
18,453
9,189
16,746
1,682,508

2004

Tax Refund
Solutions

Mortgage        
Banking

Deferred
Deposits

Consolidated
Totals

$ 8,523
1,382
5,268
-
(3)
2,889
5,529
2,012

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

$ 12,204
882
-
-
-
4,138
7,039
49,617

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

$

444
-
-
3,148
(1,401)
404
774
16,496

2003

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

2002 

$      90,052
1,748
5,268
3,148
18,778
16,981
32,501
2,498,922

Consolidated
Totals
$      82,265
6,574
3,981
11,104
15,848
15,562
28,203
2,128,076

Tax Refund
Solutions

Mortgage        
Banking

Deferred
Deposits

Consolidated
Totals

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

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

$

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

$

64,340
3,338  
3,198
6,894
14,430
11,196
20,489
1,752,706

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21. SUBSEQUENT EVENT

On  March  1, 2005, Republic  Bank  & Trust  Company, a  subsidiary  of  Republic  Bancorp, Inc., received  notification  from  the
Federal Deposit Insurance Corporation (“FDIC”) regarding revised FDIC Guidance affecting the Bank’s deferred deposit busi-
ness, also known as “payday lending”. The revised Guidance requires banks to develop procedures to ensure deferred deposits
are not provided to customers who have had deferred deposits outstanding from any bank lender for more than three months
in the previous 12 months. The Company’s current policies and procedures are to require a 24 hour “cooling off” period when
a customer has had deferred deposits outstanding for a period of 60 consecutive days, essentially allowing the customer to
have deferred deposits outstanding for more than three months in the previous 12 months.

The Bank’s total deferred deposits outstanding were approximately $23 million as of March 1, 2005, representing less than 1%
of  the  Company’s  total  assets. During  the  year  ended  December  31, 2004, net  income  provided  from  the  Bank’s  deferred
deposit line of business was $7.0 million or approximately 21% of net income for the Company. The Company has been con-
ducting its deferred deposit business with its current third party Marketer/Servicers since December 2002. Historically, the
Company has not incurred any losses in the deferred deposit line of business due to prudent underwriting standards and the
guarantees of these two Marketer/Servicers. The guarantees of the Marketer/Servicers are, or course, subject to their ability to
perform in accordance with the guarantees. The Company believes the possibility of incurring any loss is remote due to the
guarantee of the Marketer/Servicers.

The Company is currently analyzing the impact of the revised Guidance on its deferred deposit line of business. Because fur-
ther analysis is required to determine the number of customers who will be affected based on the new Guidance, the Company
is presently not able to determine the impact this revised Guidance will have on net income in 2005 and subsequent years.
Management believes the impact could be materially adverse to earnings of the deferred deposit line of business.

22. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)

Presented below is a summary of the consolidated quarterly financial data for the years ended December 31, 2004 and 2003.

(in thousands, except per share data)
2004:

Interest income
Net interest income
Provision for loan losses
Net interest income, after 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)
2003:

Interest income
Net interest income
Provision for loan losses
Net interest income, after 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

Fourth
Quarter

$ 33,628
21,498
273
21,225
10,042
6,613

0.35
0.34

0.33
0.33

Fourth
Quarter

$ 29,352
19,409
156
19,253
7,260
4,636

0.25
0.22

0.24
0.22

Third
Quarter

$ 31,161
20,590
(127)
20,717
10,614
6,982

0.37
0.36

0.36
0.35

Third
Quarter

$ 28,579
19,493
223
19,270
9,909
6,349

0.34
0.33

0.33
0.32

Second
Quarter

$ 29,767
20,191
(447)
20,638
11,947
7,851

0.42
0.41

0.40
0.39

Second
Quarter

$ 28,399
19,585
1,854
17,731
11,259
7,267

0.39
0.38

0.38
0.38

First
Quarter

$ 37,810
27,773
2,049
25,724
16,879
11,055

0.59
0.58

0.57
0.56

First
Quarter

$ 32,730
23,778
4,341
19,437
15,338
9,951

0.54
0.53

0.53
0.52

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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
R. Wayne Stratton, CPA
Owner, Jones, Nale & Mattingly PLC
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.

Republic Bank & Trust Company
Directors
Henry M. “Sonny” Altman, Jr.
Owner, Altman Consulting LLC
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 
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.

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)
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
Jody Richards
Kevin Shurn
G. Ted Smith
Jack Wells
Shelbyville
Todd Davis
Brad Montell
R. Lee Shannon CPA

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
Melissa Ledbetter,
Vice President
Collections
Duane Wilson,
Senior Vice President
Compliance
Garry Throckmorton,
Senior Vice President
Controller
Mike Beckwith,
Senior Vice President

Commercial Banking
Jeff Norton,
Senior Vice President
Facilities
Carol James,
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
Brian Sizemore,
Vice President

Republic Financial Services
Mike Keene,
President
Cathy Slider,
Senior Vice President
Barbara Trager,
Senior Vice President

Regional Managing Directors
Tucker Ballinger,
Senior Vice President – Shelbyville, Frankfort and

Georgetown
Jenifer Duncan,
Senior Vice President – Lexington
Claudio Monzon,
Senior Vice President – Elizabethtown,
Bowling Green and Owensboro

Jonathan Payne,
Senior Vice President - Louisville
Kathy Potts,
Senior Vice President - Louisville

Security
Mark Speevak,
Manager

Treasury
Greg Williams,
Senior Vice President and Chief Investment Officer

Trust
Joe Sutter,
Vice President

73

ANNUAL MEETING
The Annual Meeting of Shareholders of Republic Bancorp, Inc. will be held at 10:00 A.M. (EDT), Thursday, April 14, 2005 at Claudia
Sanders Dinner House, 3202 Shelbyville Road, Shelbyville, KY 40065.

FINANCIAL INFORMATION
Shareholders may obtain a copy of the 2004 Form 10-K including financial statements and schedules required to be filed with
the Securities and Exchange Commission free of charge 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 payments
should be sent directly to our transfer agent at the following address: Computershare Investor Services, PO Box 1689, Chicago,
Illinois 60690-1689, 312-360-5350.

INDEPENDENT REGISTERED ACCOUNTING FIRM
The independent registered accounting firm of Republic Bancorp, Inc. is 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

BANK OFFICES AND CHIEF OPERATING OFFICERS
Republic Bank & Trust Company

INTERNET
www.republicbank.com
info@republicbank.com

Bowling Green
Elizabethtown
Frankfort

Georgetown
Lexington

Louisville

Owensboro
Shelbyville

East 
West 

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

Gary Pierce
Claudio Monzon

Rodney Williams
Susan Smith
Scott Osborn
B. J. Webb
Mark Yates
Jenifer Duncan
Cindy Burton
Barb Cutter
Lisa Butcher
Greg Bromley
Keri Jones
Chip Hancock
Melissa Lyons

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, 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, Louisville, KY  40207
9600 Brownsboro Road, Louisville, KY  40241
2028 West Broadway, Louisville, KY  40203
3500 Frederica Street, Owensboro, KY  42301
1614 Midland Trail, Shelbyville, KY  40065

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

Sonia Perez
Jacob Call
Steve DeWeese
Chris Steiner

Republic Finance (A Division of Republic Bank & Trust Company)

Louisville

Cedar Springs
Stony Brook

6844 Bardstown Road, Louisville, KY 40291
9128 Taylorsville Road, Louisville, KY 40299

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

502-420-1888
502-420-1900

Republic Bank & Trust Company of Indiana

Jeffersonville
New Albany

3141 Highway 62, Jeffersonville, IN 47130
3001 Charlestown Crossing, New Albany, IN 47150

Kari Thom
Todd Lancaster

812-282-1200
812-949-2600

76

Banking Center Executives

(First Row) Mary Matheny - Outer Loop, Pearlie Walker - West Broadway, Missy Fultz - Prospect, Chris Steiner - Jefferstown, 
B.J. Webb - Chevy Chase, Todd Lancaster - Charlestown Rd., Melissa Lyons - Dixie Hwy. (Second Row) Ron Jolly - Bardstown Rd.,
Shirley Cecil - Owensboro, Kari Thom - Jeffersonville, Eric Higdon - Springhurst, Cindy Burton - Tates Creek, David Krebs - 
St. Matthews, Rodney Williams - Frankfort (Third Row) Scott Osborn - Andover, Susan Smith - Georgetown, Keri Jones -
Brownsboro Rd., Gary Pierce - Bowling Green, David Jett - New Cut Rd., Steve Coleman - Dixie Hwy., Greg Bromley -
Blankenbaker (Fourth Row) Mark Yates - Harrodsburg Rd., Kent Browning - Hurstbourne, Sonia Perez - Fern Valley Rd., Jacob
Call - Hikes Point, Barb Cutter - Baptist East, Jill Napier - Fern Creek, Andy Mayer - Poplar Level Rd.

Republic Bancorp Executive Officers

Front Row: Bernard Trager, Chairman; Steve Trager, President & Chief Executive Officer; Kevin Sipes, EVP - Chief Financial Officer 

Back Row: Scott Trager, Vice Chairman; Bill Petter, Vice Chairman; David Vest, EVP - Chief Lending Officer

Standing (l to r) J. Michael Brown (RBC), Stan Curtis (RB&T), Laura Douglas (RB&T), Charles E. "Andy" Anderson (RBC), Sue Stout Tamme (RBC), Lawrence C. 

"Lonnie" Falk (RB&T), Henry M. "Sonny" Altman, Jr. (RB&T), George E. Fischer (RB&T), D. Harry Jones (RB&T) Seated(l to r) Michael T. Rust (RB&T), R. Wayne Stratton,

CPA (RBC), Beverly A. Wheatley (RB&T), Thomas M. Jurich (RB&T), Sandra Metts Snowden (RBC) 

Outside Directors for Republic Bancorp (RBC) or Republic Bank & Trust Company (RB&T)

R e p u b l i c   B a n c o r p ,   I n c .

6 0 1   We s t   M a r k e t   S t r e e t

L o u i s v i l l e ,   K Y   4 0 2 0 2

( 5 0 2 )   5 8 4 - 3 6 0 0

o r   o u t s i d e   L o u i s v i l l e

( 8 8 8 )   5 8 4 - 3 6 0 0

w w w . r e p u b l i c b a n k . c o m