REPUBLIC BANCORP INC /KY/ (Form: 10-Q, Received: 08/14/2001 11:01:19)

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

FORM 10-Q

(Mark One)

ý Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2001

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-24649

REPUBLIC BANCORP, INC.

(Exact name of registrant as specified in its charter)

Kentucky		61-0862051

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

601 West Market Street, Louisville, Kentucky		40202

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (502) 584-3600

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

ý Yes o No

The number of shares outstanding of the issuer’s class of common stock as of the latest practicable date: 14,156,428 shares of Class A Common Stock and 2,083,845 shares of Class B Common Stock as of August 7, 2001.

The Exhibit index is on page 34. This filing contains 44 pages (including this facing sheet).

REPUBLIC BANCORP, INC.
FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures about Market Risk

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings

Item 2.	Changes in Securities

Item 6.	Exhibits and Reports on Form 8-K
	Signatures

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Shareholders
Republic Bancorp, Inc.
Louisville, Kentucky

We have reviewed the consolidated balance sheet of Republic Bancorp, Inc. as of June 30, 2001 and the related consolidated statements of income and comprehensive income for the quarters and six months ended June 30, 2001 and 2000, the consolidated statement of changes in stockholders’ equity for the six months ended June 30, 2001 and the statements of cash flows for the six months ended June 30, 2001 and 2000. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

Crowe, Chizek and Company LLP

Louisville, Kentucky
August 14, 2001

PART I

ITEM 1

REPUBLIC BANCORP, INC.
*CONSOLIDATED BALANCE SHEETS (UNAUDITED) ( dollars in thousands* )**

			June 30,			December 31,
			2001			2000

	ASSETS:
	Cash and due from banks		$	32,878		$	40,215
	Federal funds sold and securities purchased under agreements to resell		2,175
	Securities available for sale		235,221			171,800
	Securities to be held to maturity		1,507			103,768
	Mortgage loans held for sale		13,449			5,229
	Loans, less allowance for loan losses of $7,902 (2001) and $7,862 (2000)		1,162,389			1,136,531
	Federal Home Loan Bank stock		16,770			16,171
	Premises and equipment, net		19,209			19,573
	Other assets and accrued interest receivable		13,247			14,785

	TOTAL		$	1,496,845		$	1,508,072


	LIABILITIES:
	Deposits:
		Non-interest bearing	$	121,727		$	107,317
		Interest bearing	737,369			756,444
	Securities sold under agreements to repurchase and other short-term borrowings		207,189			263,001
	Other borrowed funds		291,057			246,050
	Guaranteed preferred beneficial interests in Company’s subordinated debentures		6,352			6,352
	Other liabilities and accrued interest payable		14,565			11,966

		Total liabilities	1,378,259			1,391,130


	COMMITMENTS AND CONTINGENCIES

	STOCKHOLDERS’ EQUITY:
	Class A and Class B Common stock, no par value		3,934			4,079
	Additional paid-in capital		32,354			33,294
	Retained earnings		84,923			83,345
	Unearned shares in Employee Stock Ownership Plan		(3,168		)	(3,324		)
	Accumulated other comprehensive income (loss)		543			(452		)


		Total stockholders’ equity	118,586			116,942


	TOTAL		$	1,496,845		$	1,508,072

See notes to consolidated financial statements.

REPUBLIC BANCORP, INC.

*CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME ( UNAUDITED* )**
*( in thousands,* except per share data )**

				Three Months Ended					Six Months Ended
				June 30,					June 30,
				2001			2000		2001		2000
INTEREST INCOME:
	Loans, including fees			$	25,321		$	24,366	$	54,013	$	49,173
	Securities
		Taxable		3,313			4,020		7,017		7,808
		Non-taxable		3			21		6		42
	Other			594			310		1,133		776

			Total interest income	29,231			28,717		62,169		57,799


INTEREST EXPENSE:
	Deposits			9,647			9,026		20,525		17,576
	Securities sold under agreements to repurchase and short-term borrowings			1,392			3,226		3,314		6,039
	Other borrowed funds			4,186			3,785		8,048		7,324

			Total interest expense	15,225			16,037		31,887		30,939


NET INTEREST INCOME				14,006			12,680		30,282		26,860

PROVISION FOR LOAN LOSSES				(152		)	432		1,637		967


NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES				14,158			12,248		28,645		25,893


NON-INTEREST INCOME:
	Service charges on deposit accounts			1,436			970		2,788		1,904
	Electronic refund check fees			224			109		2,062		1,064
	Other service charges and fees			460			61		709		143
	Loan servicing income			59			94		135		191
	Net gain on sale of mortgage loans			1,657			388		2,221		589
	Net gain (loss) on sale of securities			570					1,154		(161		)
	Other			393			292		764		607

			Total non-interest income	4,799			1,914		9,833		4,337


NON-INTEREST EXPENSE:
	Salaries and employee benefits			6,404			5,020		13,043		10,627
	Occupancy and equipment			2,282			2,176		4,577		4,357
	Communication and transportation			571			547		1,147		1,046
	Marketing and development			689			351		1,273		734
	Bankshares Tax			378			334		757		669
	Legal Fees			375			54		488		105
	Supplies			261			220		592		483
	Other			1,320			980		2,765		2,274

			Total non-interest expense	12,280			9,682		24,642		20,295


INCOME BEFORE INCOME TAXES				6,677			4,480		13,836		9,935

INCOME TAXES				2,256			1,418		4,591		3,222


NET INCOME				$	4,421		$	3,062	$	9,245	$	6,713

OTHER COMPREHENSIVE INCOME (LOSS),
	NET OF TAX:
	Change in unrealized gain (loss) on securities	$	231		$	309	$	1,754		$	(494	)
	Reclassification of realized amount	(375		)			(759		)	106

	Net unrealized gain/(loss) recognized in comprehensive income	(144		)	309		995			(388		)

COMPREHENSIVE INCOME		$	4,277		$	3,371	$	10,240		$	6,325



EARNINGS PER SHARE
	Class A	$	0.28		$	0.18	$	0.57		$	0.40
	Class B	$	0.27		$	0.18	$	0.56		$	0.40

EARNINGS PER SHARE ASSUMING DILUTION
	Class A	$	0.27		$	0.18	$	0.55		$	0.39
	Class B	$	0.26		$	0.18	$	0.54		$	0.39

See notes to consolidated financial statements.

REPUBLIC BANCORP, INC.

*CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY ( UNAUDITED* )**
*( in thousands, except for per share data* )**


															Unearned
		Common Stock													Shares in			Accumulated
									Additional						Empl. Stock			Other			Total
		Class A		Class B					Paid-In			Retained			Ownership			Comprehensive			Stockholders’
		Shares		Shares		Amount			Capital			Earnings			Plan			Income (Loss)			Equity

BALANCE, January 1, 2001		14,512		2,105		$	4,079		$	33,294		$	83,345		$	(3,324	)	$	(452	)	$	116,942
Conversion of Class B to Class A		37		(37	)
Stock Options exercised, net of stock redeemed		85		15		34			602			(330		)							306
Dividend declared
	Common: Class A ($0.088 per share)											(1,219		)							(1,219		)
	Class B ($0.080 per share)											(167		)							(167		)
Repurchase of Class A Common		(747	)			(179		)	(1,491		)	(5,951		)							(7,621		)
Commitment of 12,102 shares to be released under the Employee Stock Ownership Plan		12							(51		)				156						105
Net change in accumulated other
comprehensive income (loss)																		995			995
Net Income												9,245									9,245

BALANCE, June 30, 2001		13,899		2,083		$	3,934		$	32,354		$	84,923		$	(3,168	)	$	543		$	118,586

See notes to consolidated financial statements.

REPUBLIC BANCORP, INC.

*CONSOLIDATED STATEMENTS OF CASH FLOWS ( UNAUDITED* )**
SIX MONTHS ENDED JUNE 30, 2001 AND 2000 ( i n thousands )

					2001			2000
OPERATING ACTIVITIES:
	Net income				$	9,245		$	6,713
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization, net			1,766			2,073
		FHLB stock dividends			(599		)	(532		)
		Provision for loan losses			1,637			967
		Net (gain) loss on sale of securities			(1,154		)	161
		Net gain on sale of mortgage loans			(2,221		)	(589		)
		Proceeds from sale of mortgage loans held for sale			233,808			56,992
		Origination of mortgage loans held for sale			(239,807		)	(55,042		)
		Employee Stock Ownership Plan expense			105			89
		Changes in assets and liabilities:
			Accrued interest receivable and other assets		1,256			(1,080		)
			Accrued interest payable and other liabilities		2,648			1,357

				Net cash provided by operating activities	6,684			11,109


INVESTING ACTIVITIES:
	Purchases of securities available for sale				(137,920		)	(15,203		)
	Purchases of securities to be held to maturity							(73,044		)
	Proceeds from maturities of securities to be held to maturity							15,486
	Proceeds from maturities and paydowns of securities available for sale				91,732			7,749
	Proceeds from sales of securities available for sale				87,847			27,569
	Net increase in loans				(27,725		)	(76,480		)
	Purchases of premises and equipment, net				(1,560		)	(2,345		)

				Net cash provided by (used in) investing activities	12,374			(116,268		)


FINANCING ACTIVITIES:
	Net increase (decrease) in deposits				(4,665		)	33,085
	Net change in securities sold under agreements to repurchase and other short-term borrowings				(55,812		)	17,226
	Payments on other borrowed funds				(70,807		)	(53,242		)
	Proceeds from other borrowed funds				115,814			69,850
	Common stock options exercised				306
	Repurchase of Class A Common Stock				(7,621		)	(672		)
	Cash dividends paid				(1,435		)	(1,176		)

				Net cash provided by (used in) financing activities	(24,220		)	65,071


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					(5,162		)	(40,088		)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					40,215			67,527


CASH AND CASH EQUIVALENTS, END OF PERIOD					$	35,053		$	27,439

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

	Cash paid during the period for:
		Interest			$	33,008		$	31,263


		Income taxes			$	3,486		$	2,455


SUPPLEMENTAL NONCASH DISCLOSURES:

		Transfers from loans to real estate acquired in settlement of loans			$	230		$	907


		Transfers from securities to be held to maturity to securities available for sale			$	102,153		$

See notes to consolidated financial statements.

REPUBLIC BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION (AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES)

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

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ending June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto-included in Republic’s annual report on Form 10-K for the year ended December 31, 2000.

New Accounting Pronouncements – Effective January 1, 2001, a new accounting standard required all derivatives to be recorded at fair value. Depending on the use of the derivative and whether it qualifies for hedge accounting, gains or losses resulting from changes in the values of those derivatives would either be recorded as a component of net income or as a change in stockholders’ equity. Republic’s use of derivatives is limited. Mandatory forward contracts are used to manage the interest rate risk associated with its mortgage banking transactions. The change in the fair value of the mandatory forward contracts had an insignificant impact on the financial statements during the first and second quarters of 2001.

Also, as allowed with the adoption of this standard, on January 1, 2001, Republic transferred substantially all of its securities in the held to maturity portfolio into the available for sale portfolio. As a result of this transaction, accumulated other comprehensive income increased $273,000.

Reclassifications - Certain amounts have been reclassified in the prior period financial statements to conform to the current period classifications.

2. SECURITIES

Securities Available For Sale:

	June 30, 2001

	*(in thousands)*

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

U.S. Treasury Securities and U.S. Government Agencies	$	54,089	$	639				$	54,728
Mortgage-backed securities	171,056		709		$	(559	)	171,206
Corporate bonds	9,129		33					9,162
Other securities	125							125

Total securities available for sale	$	234,399	$	1,381	$	(559	)	$	235,221

Securities To Be Held To Maturity

	June 30, 2001

	*(in thousands)*

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

U.S. Treasury Securities and U.S. Government Agencies	$	1,000			$	(8	)	$	992
Obligations of state and political subdivisions	200		$	4				204
Mortgage-backed securities	307				(9		)	298

Total securities to be held to maturity	$	1,507	$	4	$	(17	)	$	1,494

Securities having an amortized cost of $190.6 million and a fair value of $191.1 million at June 30, 2001, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes, as required or permitted by law.

3. LOANS

			June 30, 2001		December 31, 2000

			*( in thousands* )**

Residential real estate			$	622,091	$	633,328
Commercial real estate			286,657		256,834
Real estate construction			82,936		77,437
Commercial			29,487		30,008
Consumer			30,415		31,121
Home equity			118,217		115,467
Other			1,693		1,541

		Total loans	1,171,496		1,145,736


Less:
	Unearned interest income and unamortized loan fees		1,205		1,343
	Allowance for loan losses		7,902		7,862


Loans, net			$	1,162,389	$	1,136,531

The following table sets forth the changes in the allowance for loan losses:

		Three months ended June 30,						Six months ended June 30,

		2001			2000			2001			2000
		*( in thousands* )**

Balance, beginning of period		$	7,862		$	7,862		$	7,862		$	7,862
	Provision charged to income	(152		)	432			1,637			967
	Charge-offs	(424		)	(598		)	(2,371		)	(1,437		)
	Recoveries	616			166			774			470


Balance, end of period		$	7,902		$	7,862		$	7,902		$	7,862

Information about Republic’s investment in impaired loans is as follows:

		June 30, 2001		December 31, 2000

		*( in thousands* )**

Loans with no allocated allowance for loan losses		$	0	$		0
Loans with allocated allowance for loan losses		735		767


	Total	$	735	$	767


Amount of the allowance for loan losses allocated		$	390	$		385

Average of impaired loans during the period		751		714

Interest income recognized during impairment		0		0
Cash-basis interest income recognized		0		0

4. DEPOSITS

		June 30, 2001		December 31, 2000

		*( in thousands* )**

Demand (NOW, Super NOW and Money Market)		$	139,395	$	137,272
Internet money market accounts		63,372		69,239
Savings		15,250		12,584
Money market certificates of deposit		107,707		76,818
Individual retirement accounts		33,617		32,933
Certificates of deposit, $100,000 and over		93,746		106,313
Other certificates of deposit		284,282		321,285


Total interest bearing deposits		737,369		756,444

Total non-interest bearing deposits		121,727		107,317


	Total	$	859,096	$	863,761

5. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM BORROWINGS

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

	June 30, 2001			June 30, 2000

	*( in thousands* )**

Average outstanding balance	$	249,547			$	226,742
Average interest rate	4.38		%		5.33		%
Maximum outstanding at month end	$	241,392			$	232,944
End of Period	$	207,189			$	232,944

6. OTHER BORROWED FUNDS

		June 30,		December 31,
		2001		2000

		*(in thousands)*

Federal Home Loan Bank convertible fixed rate advances with weighted average interest rate of 5.42%(1) (2) (3)		$	130,000	$	60,000

Federal Home Loan Bank variable interest rate advances				40,000

Federal Home Loan Bank fixed interest rate advances, with weighted average interest rate of 6.09% at June 30, 2001, due through 2031		161,057		146,050


	Total	$	291,057	$	246,050

	(1) During December 1998, Republic entered into a convertible fixed-rate advance totaling $10 million with a ten-year maturity. The advance was fixed for three years at 4.61%. At the end of the fixed term, the FHLB has the right to convert the fixed rate advance on a quarterly basis to a variable rate advance tied to the three-month LIBOR index. The advance can be prepaid at any quarterly date without penalty, but may not be prepaid at any time during the fixed rate term.

	(2) During the fourth quarter of 2000 and the first quarter of 2001, Republic entered into $95 million in convertible fixed rate advances with maturities of three, five and ten years. These advances have coupons ranging from 4.78% to 6.40% and are fixed for periods of one to five years. At the end of the fixed term, the FHLB has the right to convert the fixed rate advances on a quarterly basis to variable rate advances tied to the three-month LIBOR index. The advances can be prepaid at any quarterly date without penalty, but may not be prepaid at any time during the fixed rate term.

	(3) During the second quarter of 2001, Republic entered into $25 million in convertible fixed rate advances with maturities of ten years. These advances have coupons ranging from 4.40% to 5.20% and are fixed for periods of two to five years. At the end of the fixed term, the FHLB has the right to convert the fixed rate advances on a quarterly basis to variable rate advances tied to the three-month LIBOR index. The advances can be prepaid at any quarterly date without penalty, but may not be prepaid at any time during the fixed rate term.

The Federal Home Loan Bank advances are collateralized by a blanket pledge of eligible real estate loans with an unpaid principal balance of greater than 135% of the outstanding advances. Republic has sufficient collateral to borrow approximately $58 million in additional funds from the Federal Home Loan Bank. Republic also has unsecured lines of credit totaling $40 million and secured lines of $115 million available through various financial institutions that were unused as of June 30, 2001.

Aggregate future principal payments on borrowed funds as of June 30, 2001 are as follows:

Year
		(in thousands)

2001		$	14,000
2002		95,000
2003		90,000
2004		35,000
2005 and beyond		57,057

	Total	$	291,057

7. EARNINGS PER SHARE

A reconciliation of the combined Class A and Class B Common Stock numerators and denominators of the earnings per share and earnings per share assuming dilution computations are presented below.

Class A and B shares participate equally in undistributed earnings. The difference in earnings per share between the two classes of common stock, if any, results solely from the 10% per share dividend premium paid on Class A Common Stock over that paid on Class B Common Stock. The aggregate dividend premium paid on Class A Common Stock for the second quarter of 2001 and 2000 was approximately 0.004 cents and 0.003 cents, respectively, on basic earnings per share. The aggregate dividend premium paid on Class A Common Stock for the six months ended June 30, 2001 and 2000 was approximately 0.008 cents and 0.007 cents, respectively, on basic earnings per share.

		Three months ended				Six months ended
		June 30,				June 30,

		2001		2000		2001		2000
		(in thousands)				(in thousands)

Earnings Per Share:
Net Income available to common shares outstanding		$	4,421	$	3,062	$	9,245	$	6,713


Weighted average shares outstanding		15,926		16,640		16,201		16,656


Earnings per share, basic:
	Class A	$	0.28	$	0.18	$	0.57	$	0.40
	Class B	$	0.27	$	0.18	$	0.56	$	0.40

			Three months ended				Six months ended
			June 30,				June 30,

			2001		2000		2001		2000
			(in thousands )				(in thousands)

Earnings Per Share Assuming Dilution:
Net Income			$	4,421	$	3,062	$	9,245	$	6,713
Add: Interest expense, net of tax benefit, on assumed conversion of guaranteed preferred beneficial interests in Republic’s subordinated debentures			86		87		171		174


Net Income available to common shareholder assuming conversion			$	4,507	$	3,149	$	9,416	$	6,887


Weighted average shares outstanding			15,926		16,640		16,201		16,656
Add dilutive effects of assumed conversion and exercise:
	Convertible guaranteed preferred beneficial interest in Republic’s subordinated debentures		635		635		635		635
	Stock options		342		233		301		298


Weighted average shares and dilutive potential shares outstanding			16,903		17,508		17,137		17,589


Earnings per share assuming dilution:
		Class A	$	0.27	$	0.18	$	0.55	$	0.39
		Class B	$	0.26	$	0.18	$	0.54	$	0.39

	Stock options for 215,000 and 270,000 shares of Class A Common Stock were excluded from the three months ended June 30, 2001 and 2000 earnings per share assuming dilution because their impact was antidilutive.

	Stock options for 253,500 and 275,000 shares of Class A Common Stock were excluded from the six months ended June 30, 2001 and 2000 earnings per share assuming dilution because their impact was antidilutive.

8. SEGMENT INFORMATION

The reportable segments are determined by the products and services offered and are primarily distinguished between banking, tax refund services and mortgage banking. Loans, investments, deposits and fees provide the revenue for banking operations, fees from refund anticipation loans and electronic refund checks provide the revenue for tax refund services; and servicing fees and loan sales provide the revenue for mortgage banking. All operations are domestic.

The accounting policies used are the same as those described in the summary of significant accounting policies. Income taxes and indirect expenses are allocated based on revenue. Transactions among segments are made at fair value. Referral fees paid to the Bank by the Mortgage Banking operations are reflected in other revenue. Information reported internally for performance assessment follows:

	Three Months Ended June 30, 2001

			Tax Refund			Mortgage			Consolidated
	Banking		Services			Banking			Totals

(in thousands)

Net interest income	$	13,631	$	128		$	247		$	14,006
Provision for loan losses	323		(475		)				(152		)
Electronic refund check fees			224						224
Net gain on sale of loans						1,657			1,657
Other revenue	3,550		10			(642		)	2,918
Income tax expense	1,851		91			314			2,256
Segment profit	3,626		157			638			4,421
Segment assets	1,478,043		1,213			17,589			1,496,845

	Three Months Ended June 30, 2000

			Tax Refund			Mortgage			Consolidated
	Banking		Services			Banking			Totals

(in thousands)

Net interest income	$	12,531	$	55		$	94		$	12,680
Provision for loan losses	432								432
Electronic refund check fees			109						109
Net gain on sale of loans						388			388
Other revenue	1,521		29			(133		)	1,417
Income tax expense	1,388		(27		)	57			1,418
Segment profit	3,077		(124		)	109			3,062
Segment assets	1,429,005		689			12,131			1,441,825

	Six Months Ended June 30, 2001

			Tax Refund		Mortgage			Consolidated
	Banking		Services		Banking			Totals

(in thousands)

Net interest income	$	26,646	$	3,269	$	367		$	30,282
Provision for loan losses	568		1,069					1,637
Electronic refund check fees			2,062					2,062
Net gain on sale of loans					2,221			2,221
Other revenue	6,593		15		(1,058		)	5,550
Income tax expense	3,355		930		306			4,591
Segment profit	6,734		1,891		620			9,245
Segment assets	1,478,043		1,213		17,589			1,496,845

	Six Months Ended June 30, 2000

			Tax Refund		Mortgage			Consolidated
	Banking		Services		Banking			Totals

(in thousands)

Net interest income	$	24,371	$	2,332	$	157		$	26,860
Provision for loan losses	620		347					967
Electronic refund check fees			1,064					1,064
Net gain on sale of loans			589					589
Other revenue	2,814		77		(207		)	2,684
Income tax expense	2,386		778		58			3,222
Segment profit	5,091		1,510		112			6,713
Segment assets	1,429,005		689		12,131			1,441,825

PART 1

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Republic Bancorp, Inc. (“Republic” or the “Company”), headquartered in Louisville, Kentucky, was incorporated on January 2, 1974. Republic Bank & Trust Company and Republic Bank & Trust Company of Indiana (collectively “Bank”) are commercial banking and trust corporations organized and chartered under the laws of the Commonwealth of Kentucky and state of Indiana, respectively. Republic Bank & Trust Company is headquartered in Louisville, Kentucky and provides banking services through 21 banking centers throughout Kentucky. Republic Bank & Trust Company of Indiana is headquartered and conducts its banking business in Clarksville, Indiana. The activities of both Banks include the acceptance of deposits for checking, savings and time deposit accounts, making secured and unsecured loans, investing in securities, tax refund processing services, trust and insurance services. The Banks’ lending services include the origination of real estate, commercial and consumer loans. Operating revenues are derived primarily from interest and fees on domestic real estate, commercial and consumer loans, and from interest on securities of the United States Government and Agencies, states, municipalities and corporations. Governmental regulators for Republic include the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (and the Federal Reserve Bank of St. Louis) and the Kentucky and Indiana Departments of Financial Institutions.

Republic has made, and may continue to make, various forward-looking statements with respect to credit quality (including delinquency trends and the Allowance for Loan Losses), corporate objectives and other financial and business matters. When used in this discussion the words “anticipate,” “project,” “expect,” “believe,” and similar expressions are intended to identify forward-looking statements. Republic cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from forward-looking statements.

In addition to factors disclosed by Republic, the following factors, among others, could cause actual results to differ materially from such forward-looking statements: pricing pressures on loan and deposit products; competition; changes in economic conditions both nationally and in the Bank’s markets; the extent and timing of actions of the Federal Reserve Board; customers’ acceptance of the Bank’s products and services; and the extent and timing of legislative and regulatory actions and reforms.

OVERVIEW

Net income for the second quarter of 2001 was $4.4 million, up $1.4 million over the same period in 2000. Second quarter diluted earnings per share increased 50% over the same period in 2000, to $0.27. Republic’s increased earnings were primarily due to increases in net interest income, non-interest income from deposit accounts, gain on sale of loans into the secondary market and security gains. The increase in diluted earnings per share was also caused, in part, by a decrease in weighted average shares and diluted potential shares outstanding resulting from the “Dutch auction” tender offer completed during the first quarter of 2001.

Net income for the six months ended June 30, 2001 was $9.2 million, compared to $6.7 million for the same period in 2000. Republic’s book value per common share, exclusive of accumulated other comprehensive income, increased from $6.79 at June 30, 2000 to $7.39 at June 30, 2001.

Republic’s total assets remained consistent at $1.5 billion at June 30, 2001. Net loans increased $26 million from December 31, 2000 to $1.2 billion at June 30, 2001. Residential real estate loans decreased during 2001 as declining market interest rates caused an increase in 1-4 family refinancing activity into fixed-rate, secondary market loan products. Commercial real estate lending remained strong with originations of loans and lines of credit totaling $115 million for the first six months of 2001. Increased loan volume also resulted in favorable growth of real estate construction portfolio. While overall loan volume remained strong, the percentage of non-performing loans to total loans remained low at 0.55%, as the Bank maintained its underwriting standards and continued its emphasis on secured real estate lending.

REFUNDS NOW

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

During the six months ended June 30, 2001, Refunds Now generated $3.1 million in refund anticipation loan fees, compared to $2.0 million for the same period in 2000. Refunds Now also received $2.1 million in electronic refund check fees in the first six months of 2001, compared to $1.1 million during first half of 2000. In addition, RAL volume was up over 39% from the first six months of 2000. The increase in revenues for Refunds Now resulted from a 47% increase in tax offices served and a 59% increase in the tax refunds processed during the first six months of 2001. Refunds Now expects to continue aggressively marketing its products to additional tax preparers during 2001 for the 2002 tax season. Substantially all of the income realized by the Bank from the activities of Refunds Now is recognized during the first quarter of the year. (For further discussion, see section regarding allowance and provision for loan losses on page 25 of this document.)

RESULTS OF OPERATIONS

Net Interest Income . For the second quarter and the first six months of 2001, the Company was able to increase its net interest income primarily through growth in the average loan portfolio. The growth in the average loan portfolio was principally achieved during the latter half of 2000. The loan portfolio’s total outstanding balance has remained relatively consistent since year-end 2000.

Table 1 and Table 2 provide detailed information as to average balance, interest income/expense, and rates by major balance sheet category for the quarter and six months ended June 30, 2001 and 2000.

Table 1 - Average Balance Sheet Rates for Three Months Ended June 30, 2001 and 2000 ( dollars in thousands )

	Three Months Ended June 30, 2001							Three Months Ended June 30, 2000

	Average					Average		Average					Average
	Balance			Interest		Rate		Balance			Interest		Rate

ASSETS
Earning Assets:

U.S. Treasury and U.S. Government Agency Securities	$	61,774		$	842	5.45	%	$	115,462		$	1,716	5.94	%

State and Political Subdivision Securities	253			3		4.74	%	2,420			55		9.09	%

Other Investments	34,007			537		6.32	%	33,605			539		6.42	%

Mortgage-Backed Securities	160,034			2,227		5.57	%	117,140			1,995		6.81	%

Federal Funds Sold and Securities Purchased Under Agreements to Resell	26,883			301		4.48	%	2,936			46		6.27	%

Total Loans and Fees	1,181,336			25,321		8.57	%	1,103,245			24,366		8.83	%


Total Earning Assets	1,464,287			29,231		7.99	%	1,374,808			28,717		8.36	%


Less: Allowance for Loan Losses	(7,867		)					(7,862		)

Non-Earning Assets:

Cash and Due From Banks	25,867							25,192

Bank Premises and Equipment, Net	19,293							19,437

Other Assets	12,261							14,672


Total Assets	$	1,513,841						$	1,426,247


LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest Bearing Liabilities:

Transaction Accounts	$	206,412		$	1,392	2.70	%	$	125,207		$	820	2.62	%

Money Market Accounts	117,893			1,127		3.82	%	112,245			1,532		5.46	%

Individual Retirement Accounts	33,199			501		6.04	%	29,910			424		5.67	%

Certificates of Deposit and Other Time Deposits	381,649			5,708		5.98	%	456,006			6,250		5.48	%

Repurchase Agreements and Other Short-Term Borrowings	245,478			2,310		3.76	%	234,911			3,226		5.49	%

Other Borrowings	286,077			4,187		5.85	%	247,726			3,785		6.11	%


Total Interest Bearing Liabilities	1,270,708			15,225		4.79	%	1,206,005			16,037		5.32	%

Non-Interest Bearing Liabilities:

Non-Interest Bearing Deposits	111,145							99,835

Other Liabilities	20,850							12,937

Stockholders’ Equity	111,138							107,470


Total Liabilities and Stockholders’ Equity	$	1,513,841						$	1,426,247


Net Interest Income				$	14,006						$	12,680


Net Interest Spread						3.20	%						3.04	%

Net Interest Margin						3.83	%						3.69	%

*Table 2 - Average Balance Sheet Rates for Six Months Ended June 30, 2001 and 2000 ( dollars in thousands* )**

	Six Months Ended June 30, 2001							Six Months Ended June 30, 2000

	Average					Average		Average					Average
	Balance			Interest		Rate		Balance			Interest		Rate

ASSETS
Earning Assets:

U.S. Treasury and U.S. Government Agency Securities	$	81,823		$	2,320	5.67	%	$	118,563		$	3,463	5.84	%

State and Political Subdivision Securities	264			6		4.55	%	3,053			134		8.78	%

Other Investments	34,747			1,121		6.45	%	33,516			1,076		6.42	%

Mortgage-Backed Securities	141,772			4,174		5.89	%	110,785			3,704		6.69	%

Federal Funds Sold and Securities Purchased Under Agreements to Resell	22,112			535		4.84	%	8,772			249		5.68	%

Total Loans and Fees	1,177,539			54,013		9.17	%	1,087,402			49,173		9.04	%


Total Earning Assets	1,458,257			62,169		8.53	%	1,362,091			57,799		8.49	%


Less: Allowance for Loan Losses	(7,865		)					(7,862		)

Non-Earning Assets:
Cash and Due From Banks	25,813							24,761

Bank Premises and Equipment, Net	19,376							19,297

Other Assets	12,885							14,655


Total Assets	$	1,508,466						$	1,412,942


LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest Bearing Liabilities:

Transaction Accounts	$	194,233		$	2,877	2.96	%	$	125,168		$	1,655	2.64	%

Money Market Accounts	119,136			2,577		4.33	%	117,398			2,957		5.04	%

Individual Retirement Accounts	32,927			997		6.06	%	29,825			832		5.58	%

Certificates of Deposit and Other Time Deposits	396,343			11,918		6.01	%	446,373			12,132		5.44	%

Repurchase Agreements and Other Short-Term Borrowings	249,547			5,471		4.38	%	226,742			6,039		5.33	%

Other Borrowings	269,453			8,047		5.97	%	244,021			7,324		6.00	%


Total Interest Bearing Liabilities	1,261,639			31,887		5.05	%	1,189,527			30,939		5.20	%


Non-Interest Bearing Liabilities:

Non-Interest Bearing Deposits	114,445							103,765

Other Liabilities	20,342							12,974

Stockholders’ Equity	112,040							106,676


Total Liabilities and Stockholders’ Equity	$	1,508,466						$	1,412,942


Net Interest Income				$	30,282						$	26,860


Net Interest Spread						3.48	%						3.29	%

Net Interest Margin						4.15	%						3.94	%



For the purposes of these calculations, non-accruing loans are included in the six months average loan amounts outstanding.

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

Table 3 - Volume/Rate Variance Analysis ( in thousands )

			Three months ended June 30, 2001									Six months ended June 30, 2001
			Compared to									Compared to
			Three months ended June 30, 2000									Six months ended June 30, 2000

			Increase/(Decrease)									Increase/(Decrease)
			due to									due to

			Total Net			Total Net
			Change			Volume			Rate			Change			Volume			Rate

Interest Income:

U.S. Treasury and Government Agency Securities			$	(874	)	$	(742	)	$	(132	)	$	(1,143	)	$	(1,045	)	$	(98	)

State and Political Subdivision Securities			(52		)	(34		)	(18		)	(128		)	(84		)	(44		)

Other Investments			(2		)	7			(9		)	45			39			6

Mortgage-Backed Securities			232			642			(410		)	470			950			(480		)

Federal Funds Sold			255			272			(17		)	286			328			(42		)

Total Loans and Fees (1) (2)			955			1,689			(734		)	4,840			4,126			714


	Net Change in Interest Income		514			1,834			(1,320		)	4,370			4,314			56


Interest Expense:

Interest Bearing Transaction Accounts			572			547			25			1,222			1,004			218

Money Market Accounts			(405		)	74			(479		)	(380		)	43			(423		)

Individual Retirement Accounts			77			49			28			165			91			74

Certificates of Deposit and Other Time Deposits			(542		)	(1,079		)	537			(214		)	(1,434		)	1,220

Repurchase Agreements and Other Short-Term Borrowings			(916		)	140			(1,056		)	(568		)	569			(1,137		)

Other Borrowings			402			567			(165		)	723			760			(37		)


	Net Change in Interest Expense		(812		)	298			(1,110		)	948			1,033			(85		)


Increase in Net Interest Income			$	1,326		$	1,535		$	(209	)	$	3,422		$	3,281		$	141



(1)		The amount of fees on loans in total interest income was approximately $737 and $324 for the quarters ended June 30, 2001 and 2000, respectively
(2)		The amount of fees on loans in total interest income was approximately $4.1 million and $2.6 million for the six months ended June 30, 2001 and 2000, respectively.

Non-Interest Income. Non-interest income rose during the second quarter and six-month period ended June 30, 2001, due to increases in gain on sale of loans, service charges on deposits and gain on sale of securities. Electronic Refund Check fees were a key component of non-interest income during the first quarter of 2001 as well, which also attributed to the increase in non-interest income for the six months ended June 30, 2001.

Net gain on sale of loans increased 327% during the second quarter of 2001 and 277% during the first six months of 2001 as declining market interest rates prompted an increase in consumer refinance activity of 1-4 family fixed-rate residential loans, which Republic generally sells into the secondary market. Revenue from mortgage banking activities, principally gains on sale of loans, increased during the three- and six-month periods June 30, 2001, as a result of increased secondary market sales volume. As a percentage of loans sold, gain on sale decreased due primarily to a promotional mortgage loan product that reduced the amount of fees charged to the client. Overall the Bank originated $148 million in mortgage loans available for sale during the second quarter of 2001 compared to $34 million during the same period in 2000. The Bank also originated $240 million in loans available for sale during the six months ended June 30, 2001 compared to $55 million during the same period in 2000. The market’s interest-rate environment heavily influences secondary market residential loan originations and, correspondingly, consumer-refinance activity. Generally, long-term market interest rates during 2001 have been substantially below 2000 levels, which has led to higher secondary market originations and sales volumes this year. Management does not anticipate that this level of 1-4 family refinancing volume will continue at current levels in the near term unless there is a further reduction in long-term market interest rates.

A declining interest-rate environment during the first six months of 2001 also led to an increase in the market value of the available for sale securities portfolio. Republic sold $23 million and $87 million of securities available for sale during the three months and six months ended June 30, 2001 resulting in overall gains of $435,000 and $906,000, respectively. Management elected to sell these securities in order to extend the duration of the overall portfolio and realize an increase in yield due to favorable market conditions. Approximately, $44 million of these securities were subject to rapid prepayment due to the declining interest environment. Republic also had $12 million and $55 million in securities that were called during the second quarter and six months ended June 30, 2001 resulting in additional recognized gains of $135,000 and $248,000, respectively.

Service charges on deposit accounts was positively affected by the Bank’s new “Overdraft Honor” program. Overdraft related fees increased $447,000 for the second quarter of 2001 and $859,000 for the first six months of 2001 compared to the same periods in 2000. The “Overdraft Honor” program permits selected clients to automatically overdraft their accounts up to $500 for the Bank’s customary fee. At June 30, 2001 the Bank had 20,000 clients participating in the program.

The Bank receives substantially all Electronic Refunds Check fees during the first quarter of the fiscal year. Electronic Refund Check fees increased $998,000 during the first six months of 2001. This increase was due to a 65% increase in overall ERC volume compared to prior year resulting from successful marketing efforts during the last half of 2000. The Company plans to continue aggressive marketing strategies to increase its overall market share in this line of business.

Non-Interest Expense . Non-interest expense increased during the second quarter and six-month period ended June 30, 2001 compared to the same period in 2000. The most significant factors comprising the increase in non-interest expense for the second quarter and six months ended June 30, 2001 were increases in salaries and benefits, marketing and legal expenses.

Salary and employee benefits increased for both the three-month and six-month periods ended June 30, 2001. The increase was attributable to annual merit increases and associated incentive compensation accruals, additions to commercial lending and cash management professional sales staff, additions to staff and overtime at Refunds Now and additional staff to support the strong loan origination volume attained during the first six months of 2001. Total full-time equivalent employees (FTE’s) increased to 500 at June 30, 2001 from 467 at June 30, 2000.

Marketing and development increased during the three-month and six-month period ended June 30, 2001. The increase was attributable to the Company’s aggressive direct-mail marketing campaign for the “Absolutely Free Checking” product and enhanced radio marketing for the Bank’s fixed-rate secondary market loan products.

Legal expenses increased $321,000 for the second quarter of 2001 over the same period in 2000 and $383,000 for the six months ended June 30, 2001 over the first six months of 2000. The increase was attributable to the patent litigation at Refunds Now. (For further discussion, see Part II, Item 1, Legal proceedings on page 32 of this 10Q.)

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2001 AND DECEMBER 31, 2000

Securities available for sale. Securities available-for-sale consists primarily of mortgage-backed securities, collateralized mortgage obligations (CMO’s), U.S. Treasury and U.S. Government Agencies. Excluding CMO’s and other mortgage-backed securities, investments in the AFS category have an increased weighted-average maturity of 1.19 years compared to December 31, 2000. Securities available-for-sale increased from $172 million at December 31, 2000 to $235 million at June 30, 2001. On January 1, 2001, Republic reclassified substantially all of its securities to be held to maturity into the available for sale category as permitted by SFAS No. 133.

Securities to be held to maturity . Securities to-be-held-to-maturity decreased from $104 million at December 31, 2000 to $2 million at June 30, 2001. The decrease occurred due to the reclassification of substantially all of these securities into the available for sale category on January 1, 2001.

Mortgage loans held for sale. Mortgage loans held for sale is primarily comprised of fixed-rate, single family residential loans the Company intends to sell into the secondary market. Management has elected to sell the majority of its fixed-rate residential loans into the secondary market in order to reduce its exposure to market interest rate risk. Mortgage loans held for sale increased to $13 million at June 30, 2001 as lower long-term market interest rates has led to an increase in the number of customers electing to refinance into fixed-rate secondary market loan products.

Loans. Net loans, primarily consisting of secured real estate loans, increased slightly by $26 million to $1.2 billion at June 30, 2001. Republic’s commercial real estate lending portfolio increased $29.8 million from December 31, 2000 as a result of the Bank’s continued emphasis on commercial real estate lending. Republic maintained consistent volume in the real estate construction portfolio as a result of steady customer demand. Residential real estate loans declined $11.2 million as consumer refinance activity increased. Many adjustable rate portfolio loans were refinanced into fixed-rate, secondary market loans as consumers elected to take advantage of a generally declining long-term interest rate environment.

Allowance and Provision for Loan Losses . The provision for loan losses was a negative $152,000 in the second quarter of 2001, compared to $432,000 in the second quarter of 2000. For the six months ended June 30, 2001 the provision for loan losses was $1.6 million compared to $1.0 million during the same period in 2000. The negative provision for loan losses of $152,000 during the second quarter of 2001 was due to the stronger than anticipated recoveries of previously charged-off Refund Anticipation Loans from Refunds Now of $475,000.

The higher provision for loan losses in 2001 compared to 2000 was attributable to an increase in estimated losses associated with the higher volume of Refund Anticipation Loans at Refunds Now. Excluding the net charge-offs related to Refunds Now, net charge-offs for the Bank’s traditional loan portfolios decreased from $620,000 for the six months of 2000 to $528,000 during the same period in 2001.

While Refunds Now transaction volume increased, net charge-offs also increased from $347,000 for the six months ended June 30, 2000 to $1.0 million for the same period in 2001. This increase was attributable to higher overall volume, and to a lesser extent, losses attributable to limited errors in information received from third parties that Refunds Now utilizes, in part, in connection with its underwriting criteria. Management anticipates that it will recover a portion of these losses going forward, but the amount of recovery, if any, is not subject to reasonable estimation. Due to the generally fast transaction time associated with the tax refund loan business, traditional bank underwriting criteria cannot be applied; therefore, the Bank is largely dependent on tax refunds being validated and transmitted by the various taxing authorities. These products are thus subject to fluctuating loss percentages that are not readily predictable based on historical experience on a year-to-year basis.

The total allowance for loan losses remained consistent at $7.9 million from December 31, 2000 to June 30, 2001. Management believes, based on information presently available, that it has adequately provided for loan losses at June 30, 2001. Management continues to monitor the commercial real estate loan portfolio closely, recognizing that commercial real estate loans generally carry a greater risk of loss than residential real estate loans. Management believes that it had provided an adequate component within the allowance for loans associated with the growth in commercial real estate lending has been established.

Table 4 below depicts the allowance activity by loan type for the three months ended June 30, 2001 and 2000.

Table 4 - Summary of Loan Loss Experience

			Three months ended						Six months ended
			June 30,						June 30,

			2001			2000			2001			2000

*(in thousands)*

Allowance for loan losses:
	Balance-beginning of period		$	7,862		$	7,862		$	7,862		$	7,862

Charge-offs:
	Real Estate		(93		)	(445		)	(216		)	(576		)
	Commercial		(25		)	(25		)	(41		)	(33		)
	Consumer		(306		)	(128		)	(564		)	(328		)
	Tax Refund Loans								(1,550		)	(500		)

		Total	(424		)	(598		)	(2,371		)	(1,437		)


Recoveries:
	Real Estate		1			36			8			37
	Commercial		5			5			13			5
	Consumer		135			125			272			275
	Tax Refund Loans		475						481			153

		Total	616			166			774			470


Net charge-offs			192			(432		)	(1,597		)	(967		)

Provision for loan losses			(152		)	432			1,637			967


Allowance for loan losses:
	Balance-end of period		$	7,902		$	7,862		$	7,902		$	7,862

Deposits . Total deposits were $859 million at June 30, 2001 compared to $864 million at December 31, 2000. Non-interest bearing deposits increased $14 million since December 31, 2000 to $122 million as management continues to focus on gathering lower cost funds through the Company’s free checking promotion and Cash Management area. Because these funds are primarily transaction based, they are likely to have fluctuating balances from period to period.

Money market certificates of deposit increased $31 million as declining market interest rates prompted certificate of deposit clients to switch their maturing deposits into more liquid investment vehicles. Certificates of deposits decreased $50 million as management pursued a strategy of lowering its rates on high-cost, retail certificates of deposit while utilizing lower-cost, longer-term Federal Home Loan Bank borrowings during the first six months of 2001.

Securities sold under agreements to repurchase and other short-term borrowings . Securities sold under agreements to repurchase and other short-term borrowings declined $56 million. Approximately $30 million of this decrease occurred as funds received from securities sold during the year were utilized to reduce short-term borrowings. In addition, securities sold under agreements to repurchase declined due to decreases in a small number of the Company’s larger cash management accounts. These accounts are subject to large periodic changes in balances; however, the Company continues to maintain positive banking relationships with each of these clients.

Other borrowed funds . Other borrowed funds consists primarily of borrowings from the Federal Home Loan Bank. Management elected to extend borrowings in this category in order to improve its overall interest rate risk position and lower its current cost of funds. The Company borrowed $110 million during 2001 with $40 million fixed for 5 years. The remaining $70 million in borrowings are callable by the Federal Home Loan Bank after their respective fixed-rate periods, ranging from one to five years. These advances have a maturity of five to ten years if not called earlier by the Federal Home Loan Bank.

ASSET QUALITY

Loans, including impaired loans under SFAS 114 and excluding consumer loans, are placed on non-accrual status when they become past due 90 days or more as to principal or interest, unless they are adequately secured and in the process of collection. When loans are placed on non-accrual status, all unpaid accrued interest is reversed. These loans remain on non-accrual status until the borrower demonstrates the ability to remain current or the loan is deemed uncollectible and is charged off. Consumer loans are not placed on non-accrual status but are reviewed periodically and charged off when they reach 120 days past due or are deemed uncollectible. At June 30, 2001, Republic had $314,000 in consumer loans 90 days or more past due compared to $116,000 at December 31, 2000.

T he Bank’s level of delinquent loans increased to 1.50% at June 30, 2001, up from 1.27% at December 31, 2000. Republic experienced an increase in total non-performing loans from $4.1 million at December 31, 2000 to $6.4 million at June 30, 2001. The majority of this increase is attributable to past due loans in the single family residential loan portfolio. These residential loans are typically well secured with minimal risk of significant future losses to the Bank. Additionally, a portion of loans past due have matured, but are pending renewal or are pending refinance. Other real estate owned decreased marginally from $478,000 at December 31, 2000 to $405,000 at June 30, 2001. Management does not consider the overall increase in non-performing assets during the period to be material or indicative of any adverse change in the overall asset quality of the Bank’s loan portfolio.

Table 5 provides information related to non-performing assets and loans 90 days or more past due.

Table 5 - Non-Performing Loans

	June 30,			December 31,
*( dollars in thousands* )**	2001			2000

Loans on non-accrual status	$	5,327		$	3,100
Loans past due 90 days or more	1,055			984


Total non-performing loans	6,382			4,084

Other real estate owned	405			478

Total non-performing assets	$	6,787		$	4,562


Percentage of non-performing loans to total loans	0.55		%	0.36		%

Percentage of non-performing assets to total loans	0.58		%	0.40		%

Republic defines impaired loans to be those commercial real estate and commercial loans greater than $499,999 that management has classified as doubtful (collection of all amounts due is highly questionable or improbable) or loss (all or a portion of the loans have been written off or a specific allowance for loss has been provided). Republic's policy is to charge off all or that portion of its investment in an impaired loan upon a determination it is probable the full amount may not be collected. Impaired loans, which are a component of loans on non-accrual status, decreased from $767,000 at December 31, 2000 to approximately $735,000 at June 30, 2001.

LIQUIDITY

Republic maintains sufficient liquidity to fund loan demand and routine deposit withdrawal activity. Liquidity is managed by retaining sufficient liquid assets in the form of investment securities and core deposits to meet demand. Funding and cash flows can also be realized from the available-for-sale portion of the securities portfolio and paydowns from the loan portfolio. Republic’s banking centers also provide access to retail deposit markets. Approximately $61 million of deposits, repurchase agreements and short-term borrowings collateralized by investment securities, private insurance bonds and Federal Home Loan Bank letters of credit are attributable to three customer relationships at June 30, 2001. These funds are short-term in nature and subject to immediate withdrawal by those entities. Should these funds be withdrawn, Republic has the ability to replenish them through alternative funding sources, including established lines of credit with other financial institutions, the FHLB and brokerage firms. While Republic utilizes numerous funding sources in order to meet liquidity requirements, FHLB borrowings remain a material component of management’s balance sheet strategy. (See Note 6 regarding other borrowed funds for additional information on available credit lines).

CAPITAL

Total capital increased from $117 million at December 31, 2000 to $119 million at June 30, 2001. The increase in capital was primarily attributable to net income during the first six months of 2001, increases in accumulated other comprehensive income and stock options exercised by Republic’s associates. These increases were largely offset by a “Dutch Auction” tender offer completed in March 2001. Republic purchased 747,319 shares of the Company’s Class A Common Stock through a modified Dutch auction tender offer at a cost of $10 per share. The overall reduction to capital attributable to the tender offer was $7.6 million. The offer to purchase commenced February 12, 2001 and expired on March 13, 2001.

Republic’s board of directors approved a Class A share repurchase program of 500,000 shares during 1998 and 1999. Under the repurchase program, Republic repurchased approximately 441,000 shares through December 31, 2000 with a weighted average cost of $9.99, at a total cost of $4.4 million. Republic purchased no shares under this program during the first six months of 2001. Republic is authorized to buyback an additional 59,000 shares of Class A Common Stock under the current program as of June 30, 2001.

During the second quarter of 2001, the board of directors of Republic Bank & Trust Company approved a $5 million dividend to Republic Bancorp, Inc. The Parent Company then utilized the $5 million dividend as a capital contribution to its newly formed, wholly owned banking subsidiary, Republic Bank & Trust Company of Indiana.

Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent on the individual risk profiles of financial institutions. Republic continues to exceed the regulatory requirements for Tier I, Tier I leverage and total risk–based capital. The Bank intends to maintain a capital position that meets or exceeds the "well capitalized" requirements as defined by the FDIC. Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent on the individual risk profiles of financial institutions. Republic’s average capital to average assets ratio was 7.43% at June 30, 2001 compared to 7.58% at December 31, 2000.

Table 6 - Capital Ratios

										Minimum
										Requirement
						Minimum				To Be Well
						Requirement				Capitalized
						For Capital				Under Prompt
						Adequacy				Corrective
As of June 30, 2001		Actual				Purposes				Action Provisions

		Amount		Ratio		Amount		Ratio		Amount		Ratio
		*( dollars in thousands* )**
Total Risk Based Capital (to Risk Weighted Assets)
	Republic Bancorp, Inc.	$	131,165	11.06	%	$	94,853	8	%	$	118,567	10	%
	Republic Bank & Trust Company	121,820		10.31		94,561		8	%	118,201		10	%
	Republic Bank & Trust Company of Indiana	4,996		138.70		288		8	%	360		10	%

Tier I Capital (to Risk Weighted Assets)
	Republic Bancorp, Inc.	$	123,263	10.40	%	$	47,427	4	%	$	71,140	6	%
	Republic Bank & Trust Company	113,958		9.64		47,280		4	%	70,920		6	%
	Republic Bank & Trust Company of Indiana	4,956		137.59		144		4	%	216		6	%

Tier I Leverage Capital (to Average Assets)
	Republic Bancorp, Inc.	$	123,263	8.15	%	$	60,508	4	%	$	75,635	5	%
	Republic Bank & Trust Company	113,958		7.55		60,355		4	%	75,444		5	%
	Republic Bank & Trust Company of Indiana	4,956		101.75		195		4	%	244		5	%

Kentucky banking laws limit the amount of dividends that may be paid to Parent Company by Republic Bank & Trust Company without prior approval of the Kentucky Department of Financial Institutions. Under these laws, the amount of dividends that may be paid in any calendar year is limited to current year's net income, as defined in the laws, combined with the retained net income of the preceding two years, less any dividends declared during those periods. At June 30, 2001, Republic Bank & Trust Company had approximately $8.7 million of retained earnings that could be utilized for payment of dividends if authorized by its board of directors without prior regulatory approval.

Indiana banking laws prohibit the payment of dividends to the Parent Company by Republic Bank & Trust Company of Indiana for a period of three years without prior approval of the Indiana Department of Financial Institutions. These laws also require a minimum Tier I Capital ratio of 8% to be maintained for a period of three years.

ASSET/LIABILITY MANAGEMENT AND MARKET RISK

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

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

Republic’s interest sensitivity profile changed from December 31, 2000 to June 30, 2001 as management pursued a strategy of extending liabilities to reduce the sensitivity of the Company’s balance sheet to fluctuations in market interest rates. Given a sustained 100 basis point downward shock to the yield curve used in the simulation model, Republic’s base net interest income would decrease by an estimated 0.62% at June 30, 2001 compared to an increase of 2.22% at December 31, 2000. Given a 100 basis point increase in the yield curve Republic’s base net interest income would decrease by an estimated 1.94% at June 30, 2001 compared to a decrease of 3.85% at December 31, 2000. Management elected to shift a portion of Republic’s funding from short-term repricing liabilities to longer-term FHLB borrowings with fixed interest rates from one to five years. (See discussion regarding other borrowed funds on page 26 of this document.) In addition to moderating the Company’s interest rate risk position, this strategy minimized potential additional income from future rate decreases and reduced the negative impact on potential income resulting from future rate increases.

The interest sensitivity profile of Republic at any point in time will be affected by a number of factors. These factors include the mix of interest sensitive assets and liabilities as well as their relative pricing schedules. It is also influenced by market interest rates, deposit growth, loan growth, and other factors. The table below is representative only and is not a precise measurement of the effect of changing interest rates on Republic’s net interest income in the future.

Table 7 - Interest Rate Sensitivity

	June 30, 2001

	Decrease in Rates								Increase in Rates

	200			100					100			200
	Basis Points			Basis Points			Base		Basis Points			Basis Points

	*(dollars in thousands)*

Projected interest income
Loans	$	86,899		$	90,612		$	94,517	$	97,804		$	101,114
Investments	11,079			12,362			13,739		14,994			16,300
Short-term investments	344			511			587		535			671

Total interest income	98,322			103,485			108,843		113,333			118,085


Projected interest expense
Deposits	26,255			30,528			34,857		39,342			43,958
Repurchase agreements and other borrowings	19,702			20,178			20,877		21,911			23,205

Total interest expense	45,957			50,706			55,734		61,253			67,163

Net interest income	$	52,365		$	52,779		$	53,109	$	52,080		$	50,922
Change from base	$	(744	)	$	(330	)			$	(1,029	)	$	(2,187	)
% Change from base	-1.40		%	-0.62		%			-1.94		%	-4.12		%

	December 31, 2000

	Decrease in Rates								Increase in Rates

	200			100					100			200
	Basis Points			Basis Points			Base		Basis Points			Basis Points

	*(dollars in thousands)*

Projected interest income
Loans	$	100,645		$	105,004		$	108,130	$	112,093		$	115,729
Investments	14,868			16,447			18,160		19,738			21,027
Short-term investments	246			194			162		89			106

Total interest income	115,759			121,645			126,452		131,920			136,862

Projected interest expense
Deposits	35,333			40,182			43,051		47,458			51,500
Repurchase agreements and other borrowings	23,709			26,784			29,911		33,031			36,026

Total interest expense	59,042			66,966			72,962		80,489			87,526

Net interest income	$	56,717		$	54,679		$	53,490	$	51,431		$	49,336
Change from base	$	3,227		$	1,189				$	(2,059	)	$	(4,154	)
% Change from base	6.03		%	2.22		%			-3.85		%	-7.77		%

NEW ACCOUNTING PRONOUNCEMENTS

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information for this item is incorporated by reference to the Asset /Liability Management and Market Risks section on page 26 and 27 of Part 1, Item 2., Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.

PART II – OTHER INFORMATION

Item 1. Legal proceedings

Reference is made to the Company’s Annual Report on Form 10-K for the period ended December 31, 2000, in which information was reported regarding the litigation brought by Beneficial Franchise Company, Inc. against the Bank and others. There has been no material change in the status of this litigation during the quarter. The Company continues to believe that the allegations in this lawsuit are without merit, and continues to vigorously defend against this lawsuit.

Item 2. Changes in securities

During the second quarter of 2001, Republic issued approximately 15,000 shares of Class A Common Stock upon conversion of shares of Class B Common Stock by shareholders of Republic in accordance with the share-for-share conversion provision option of the Class B Common Stock. The exemption from registration of the newly issued Class A Common Stock relied upon was Section (3)(a)(9) of the Securities Act of 1933.

Item 6. Exhibits and Reports on Form 8-K

The exhibits required by Item 601 of Regulation S-K are attached to and listed in the Exhibit Index on page 35.

SIGNATURES

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

Republic Bancorp, Inc.
(Registrant)

		Principal Executive Officer:

Date:	August 14, 2001	/s/ Steven E. Trager

		Steven E. Trager
		Chief Executive Officer


		Principal Financial Officer:

Date:	August 14, 2001	/s/ Kevin Sipes

		Kevin Sipes
		Chief Financial Officer &
		Chief Accounting Officer

EXHIBIT INDEX

		Incorporated
Exhibit	Description	By Reference To


10.23	Officer Compensation Continuation Agreement with Kevin Sipes	Filed as Exhibit 10.23 on page 35 of this Form 10-Q for the period ended June 30, 2001


11	Statement Regarding Computation of Per Share Earnings	Filed as Exhibit 11 on page 43 of this Form 10-Q for the period ended June 30, 2001

15	Awareness Letter	Filed as Exhibit 15 on page 44 of this Form 10-Q for the period ended June 30, 2001

Exhibit 10.23.
Officer Compensation Continuation Agreement

REPUBLIC BANCORP, INC
REPUBLIC BANK & TRUST COMPANY

OFFICER COMPENSATION CONTINUATION AGREEMENT

This Agreement dated as of the 15 ^th day of June , 2001 (the "Agreement") is made by and between Republic Bancorp, Inc., a Kentucky corporation (the "Company"), and Kevin Sipes (the "Executive"), who is presently Chief Financial Officer of Republic Bank & Trust Company (the "Bank") in consideration of the mutual covenants herein contained and in further consideration of services performed and to be performed by the Executive for the Company and/or its subsidiaries. As of the date of this Agreement, Bank is a wholly-owned subsidiary of the Company. The Bank joins in this Agreement to further accomplish the terms and objectives of this Agreement.
Recitals

A. The Company considers the establishment and maintenance of sound and vital management of the Company and its subsidiaries to be essential to protecting and enhancing the best interests of the Company and its shareholders.

B. The Company recognizes that, as is the case with many bank holding companies, the possibility of a change of control may exist. Such possibility, and the uncertainty and questions which it may raise among management of the Company and its subsidiaries may result in the departure or distraction of key members of management to the detriment of the Company's shareholders.

C. The Company's Board of Directors has determined that appropriate steps should be taken to encourage key members of management of the Company and its subsidiaries, such as the Executive, to remain in the employ of the Company and/or its subsidiaries and perform their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change of control of the Company.

NOW, THEREFORE, in consideration of the foregoing and of the covenants herein contained, the parties hereto agree as follows:

Section 1 — Definitions

For purposes of this Agreement, the following words and terms shall have the following meanings:

1.1 Termination by the Bank of the Executive's employment for "Cause" shall mean termination upon (A) the willful and continued failure by the Executive substantially to perform the Executive's duties with the Bank (other than any such failure resulting from Disability or temporary incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board of Directors of the Bank (the "Bank Board"), which demand specifically identifies the manner in which the Bank Board believes that the Executive has not substantially performed his duties; or (B) the willful engaging by the Executive in gross misconduct materially and demonstrably injurious to the Bank or the Company. For purposes of this definition, no act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's action or omission was in the best interests of the Bank or the Company.

1.2 A "Change in Control " of the Company shall mean (i) an event or series of events which have the effect of any "person" as such term is used in Section 13(d) and 14(d) of the Exchange Act, becoming the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company or the Bank representing a greater percentage of the combined voting power of the Company's or Bank's then outstanding stock, than the Trager Family Members as a group; (ii) an event or series of events which have the effect of decreasing the Trager Family Members' percentage ownership of the combined voting power of the Company's or Bank's then outstanding stock to less than 25%; (ii) any person (including the Company or the Bank) publicly announces an intention to take or to consider taking actions which have consummated would constitute a Change in Control, or (iii) the Company Board adopts a resolution to the effect that a Potential Change in Control for purposes of this Plan has occurred. For purposes of this paragraph, "Trager Family Member" shall mean Bernard M. Trager, Jean S. Trager and any of their lineal descendants, and any corporation, partnership, limited liability company or trust the majority owners or beneficiaries of which are directly or indirectly through another entity Bernard M. Trager, Jean S. Trager, or one or more of their lineal descendants.

1.3 "Compensation" shall mean the Executive's annual base salary at the greater of (A) the highest rate in effect at any time during the twelve months immediately preceding the applicable Date of Termination, or (B) the rate in effect immediately prior to the applicable Change in Control.

1.4 "Contract Period" shall mean the period defined in Section 2 hereof.

1.5 "Date of Termination" shall mean (A) if the Executive's employment is terminated for Good Reason, as defined below, the date specified in the Notice of Termination, as defined in this Section 1.8 below; and (B) if the Executive's employment is terminated for any other reason, the date on which a Notice of Termination is given; provided that , if within 30 days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding and final arbitration award or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected).

1.6 "Disability" shall mean a physical or mental incapacity of the Executive which entitles the Executive to benefits under any long-term disability plan or wage continuation plan applicable to him and maintained by the Company as in effect immediately prior to the applicable Change in Control.

1.7 "Good Reason" shall mean:

(a) Without the Executive's express written consent, the assignment to Executive of any duties inconsistent with, or the reduction of powers or functions associated with, his positions, duties, responsibilities and status with the Company immediately prior to a Change in Control, or any removal of Executive from, or any failure to reelect Executive to, any positions or offices Executive held immediately prior to a Potential Change in Control, except in connection with the termination of Executive's employment at death, for Cause or on account of Retirement or Disability pursuant to the requirements of this Agreement;

(b)
(i) the failure by the Company to continue in effect any employee welfare or pension benefit plans within the meaning of Sections 3(1) and 3(2) of the Employee Retirement Income Security Act of 1974 (the "Plans"), in which Executive was participating immediately prior to a Potential Change in Control (or substitute plans, programs or arrangements providing Executive with substantially similar benefits),

(ii) the taking of any action, or the failure to take any action, by the Company which could (A) adversely affect Executive's participation in, or materially reduce Executive's benefits under, any of the Plans, (B) materially adversely affect the basis for computing benefits under any of the Plans, or (C) deprive Executive of any material fringe benefit enjoyed by Executive immediately prior to a Potential Change in Control, or (iii) the failure by the Company to provide Executive with the number of paid vacation days to which Executive was entitled immediately prior to a Potential Change in Control in accordance with the Company's vacation policy applicable to Executive then in effect;

except, in each case, in connection with the termination of Executive's employment at death, for Cause or on account of Retirement or Disability pursuant to the requirements of this Agreement;

(c) the failure by the Company to obtain an assumption of the obligations of the Company under this Agreement by any successor to the Company;

(d) a reduction by the Bank in the Executive's base salary as in effect on the date hereof or as the same may be increased from time to time, except as part of an across-the-board reduction of base salaries applicable to all salaried employees of the Bank, provided the reduction (or series of reductions) does not exceed 5% of the Executive's base salary prior to such change;

(e) the relocation of the Bank's principal executive offices to a location outside the metropolitan Louisville area; or the Company's requiring the Executive to be based anywhere other than in the metropolitan Louisville area, except for required travel on the Bank's business to an extent substantially consistent with similarly situated executives' business travel obligations;

(f) any purported termination of the Executive's employment during the contract period which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3 below; and for purposes of this Agreement, no such purported termination shall be effective.

1.8 A "Notice of Termination" shall mean a notice, from the Bank or from the Executive, which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated.

1.9 "Plans" shall have the meaning given in Section 1.7(b).

1.10 Any reference to "Subsidiaries" of the Company shall include those subsidiaries owned by the Company directly or owned by the Company indirectly through another company which is wholly-owned by the Company.

Section 2 — Application of Agreement

This Agreement shall apply only to termination of employment of the Executive during a period (the "Contract Period") commencing on the date immediately preceding the date of a Change in Control and terminating on the second anniversary of the date of that Change in Control; provided, however, that each such Change in Control occurs during the period commencing as of January 1, 2001 and terminating at midnight on December 31, 2004 or as further extended pursuant to the following sentence. At midnight on December 31, 2004, and on each annual anniversary of that time and date thereafter, such latter period shall be automatically extended for two additional years, unless on or before such anniversary the Company notifies the Executive in writing that it elects not to extend such period. There is one Contract Period for each Change in Control and there may be multiple Change(s) in Control. With respect to a termination pursuant to Section 3.2 only, the Contract Period shall also include the period from and after a Potential Change in Control. If a Potential Change in Control occurs but a Change in Control does not follow within one year of the Potential Change in Control, the Contract Period shall expire on the one year anniversary of the Potential Change in Control.

Section 3 — Termination

3.1 Procedure for Termination . Any termination by the Bank or by the Executive, pursuant to this Agreement, shall be communicated by Notice of Termination to the other parties hereto. The Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than 51% of the entire membership of the Board of Directors of the Company (the "Company Board") at a meeting of the Company Board called and held for that purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Company Board), finding that in the good faith opinion of the Company Board, the Executive was guilty of conduct set forth in Section 1.1 and specifying the particulars thereof in detail.

3.2 Termination for Cause or Before Contract Period . Upon a termination of the Executive's employment for Cause during the Contract Period, the Executive shall have no right to receive any compensation or benefits hereunder. Upon a termination of the Executive's employment without Cause during the Contract Period, the Executive shall be entitled to receive the benefits provided in Section 3.4 hereof. This Agreement shall not apply to, and the Executive shall have no right to receive any compensation or benefits hereunder in connection with, any termination of the Executive's employment by the Company other than during a Contract Period, and Executive shall remain an "at will" employee until a Contract Period begins.

3.3 Termination for Good Reason . During the Contract Period, the Executive shall be entitled to terminate his employment with the Company and, if such termination is for Good Reason, to receive the benefits provided in Section 3.4 hereof. The Executive shall give the Company Notice of Termination of his employment pursuant to this Section 3.3, and termination of the Executive's employment shall be effective five business days after the Executive gives notice thereof to the Company. This Agreement shall not apply to, and the Executive shall have no right to receive any compensation or benefits hereunder in connection with, any termination of the Executive's employment by the Executive other than during a Contract Period. This Agreement shall not apply to, and the Executive shall have no right to receive any compensation or benefits hereunder in connection with, a termination of the Executive's employment on account of the Executive's death, whether or not during the Contract Period.

3.4 Compensation Upon Termination . If during a Contract Period the Executive's employment shall be terminated by the Bank other than pursuant to death or for Cause, or if the Executive shall terminate his employment for Good Reason, then the Company shall pay, or the Company shall cause the Bank to pay, to the Executive as severance compensation in a lump sum (discounted to present value using the interest rate applicable to a three year certificate of deposit at Republic Bank & Trust Company) on the fifth day following the Date of Termination:

(1) the unpaid balance of the Executive's full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given; and

(2) an amount equal to the Executive's Compensation, divided by 12 and multiplied by the lesser of (i) the number of months remaining in the Contract Period at the Date of Termination, and (ii) 24 (such multiple hereafter referred to as the "Payment Period").

In addition to the severance benefits set forth in (1) and (2) of this Section 3.4, the Company shall, or the Company shall cause the Bank to:

(3) pay all legal fees and expenses incurred by the Executive resulting from termination (including all such fees and expenses, if any, incurred in contesting any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement);

(4) maintain in full force and effect, for the continued benefit of the Executive for the shorter of (1) until the Executive's death (provided that benefits payable to his beneficiaries shall not terminate upon his death), or (2) with respect to any particular Plan, the date he is afforded a comparable benefit at a comparable cost to the Executive by a subsequent employer, or (3) the Payment Period, all Plans in which Executive was entitled to participate immediately prior to the Change of Control (unless Plans generally available to employees of the Bank have been modified since the Change in Control in which case the Plans to be continued shall be those in effect at the Date of Termination, at the level most comparable to that available to the Executive at the Change in Control). In the event that the Executive's participation in any Plan of the Company is prohibited, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive is entitled to receive under Plan, for such period. At the end of the period of coverage, the Executive shall have the option to have assigned to him at no cost and with no apportionment of prepaid premiums, any assignable insurance policy owned by the Bank or the Company relating specifically to the Executive; and

(5) cause all stock options and stock appreciation rights and/or the rights held by the Executive with respect to stock in the Company, immediately prior to the termination, if not otherwise presently exercisable, to become presently exercisable.

3.5 Disability . If during the Contract Period, the Executive's employment shall be terminated, either by the Bank orby the Executive, due to the Executive's Disability, the Company shall pay the Executive as severance compensation the same benefits as set forth in Section 3.4(1)-(5).

3.6 No Mitigation . The Executive shall not be required to mitigate the amount of any payment provided for in this Section 3 by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Section 3 be reduced by any compensation earned by the Executive as the result of employment by another employer after the Date of Termination, or otherwise.

Section 4 — Miscellaneous

4.1 Successors Shall Assume . The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company or the Bank, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company or the Bank would be required to perform if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitled the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if the Executive terminated the Executive's employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as defined in the preamble hereto and any successor to its business and/or assets as aforesaid or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. As used in this Agreement, "Bank" shall mean the Bank as defined in the preamble hereto and any successor to its business and/or assets as aforesaid or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

4.2 Binding Effect . This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate.

4.3 Reduction of Amounts Payable . In no event shall any amount payable under any provision of this Agreement equal or exceed an amount which would cause the Company to forfeit, pursuant to Section 280G(a) of the Internal Revenue Code of 1986, as amended, its deduction for any or all such amounts payable. Pursuant to this Section 4.3, the Company's Compensation Committee has the power to reduce severance benefits payable under this Agreement, if such benefits alone or in conjunction with termination benefits provided under any other Company plan or program, would cause the Company to forfeit otherwise deductible payments; provided , however that no benefits payable under this Agreement shall be reduced pursuant to this Section 4.3 to less than $1.00 below the amount of benefits which the Company can properly deduct under Section 280G(a) of the Internal Revenue Code of 1986, as amended.

4.4 Notice . Any notice or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficiently given for all purposes if mailed by certified mail, postage prepaid and return receipt requested, addressed to the intended recipient at

(a) the addresses set forth below:

                                        (i)          If to the Company:
                                                     Republic Bancorp, Inc.
                                                     601 W. Market St.
                                                     Louisville, Kentucky 40202

All notices to the Company shall be directed to the attention of the Chief Executive Officer of the Company with a copy to the Secretary of the Company and to the Secretary of the Bank.

(ii) If to the Bank:

                                                     Republic Bank & Trust Company
                                                     601 W. Market Street
                                                     Louisville, Kentucky 40202
All notices to the Bank shall be directed to the attention of the Secretary of the Bank with a copy to the Secretary of the Company.

(iii) If to the Executive:

                                                     Kevin Sipes
                                                     Republic Bancorp
                                                     601 West Market Street
                                                     Louisville, KY 40202

(b) Such other address as any of the parties shall specify by written notice to the other parties of this Agreement.

4.5 Payment Obligations Absolute . The Company's obligation to pay the Executive the amounts provided for hereunder shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against him or anyone else, except with respect to tax withholding required pursuant to Section 4.11. All amounts payable by the Company hereunder shall be paid without notice or demand. Except as expressly provided herein, the Company waives all rights which it may now have or may hereafter have conferred upon it, by statute or otherwise, to amend, terminate, cancel or rescind this Agreement in whole or in part. Each and every payment made hereunder by the Company shall be final and the Company shall not seek to recover all or any part of such payment from the Executive or from whomsoever may be entitled thereto, for any reason whatsoever.

4.6 Modifications and Waivers . No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board of Directors of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior or subsequent time.

4.7 Entire Agreement . No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

4.8 Governing Law . The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Kentucky.

4.9 Validity . The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

4.10 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

4.11 Payroll and Withholding Taxes . The Company may withhold from any amounts payable to the Executive hereunder all federal, state, city or other taxes that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation.

IN WITNESS WHEREOF the parties hereto have executed this Agreement, as of the day and year first above written.

	REPUBLIC BANCORP, INC.

/s/ Kevin Sipes
	By	/s/ Steve Trager
Executive
	Title:	President

	Date:	6/22/01




	REPUBLIC BANK & TRUST COMPANY


	By	/s/ Steve Trager

	Title:	CEO

	Date:	6/22/01

Exhibit 11.
Statement Regarding Computation of Per Share Earnings

See Item 1, Note 7 “Earnings Per Share” for calculations.

Exhibit 15.
Awareness Letter

August 14, 2001

Republic Bancorp, Inc.
601 West Market Street
Louisville, Kentucky 40202

We have reviewed, in accordance with standards established by the AICPA, the unaudited interim financial information of Republic Bancorp, Inc. (the Company) as of June 30, 2001 and for the quarters and six months ended June 30, 2001 and 2000 as indicated in our report dated August 14, 2001. Because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which was included in your quarterly report on Form 10-Q, is being incorporated by reference in the Form S-8 Registration statement.

We also are aware that our report referred to above, under Rule 436(c) under the Securities Act of 1933, is not considered a part of the registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act.

Crowe, Chizek and Company LLP