UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2006

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

601 West Market Street, Louisville, Kentucky		40202
(Address of principal executive offices)		(Zip Code)

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

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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 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. x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer x Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) o Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

17,284,323 shares of Class A Common Stock, no par value and 2,243,823 shares of Class B Common Stock, no par value were outstanding at July 31, 2006, the latest practicable date.

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.

Item 4.	Controls and Procedures.


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.

Item 1A.	Risk Factors.

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

Item 6.	Exhibits.

EX-31.1	Section 302 Certification of Principal Executive Officer
EX-31.2	Section 302 Certification of Principal Financial Officer
EX-32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C Section 1350
EX-32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C Section 1350

	SIGNATURES

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

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

	June 30,			December 31,
	2006			2005
	(unaudited)
ASSETS:

Cash and cash equivalents	$	74,843		$	77,169
Securities available for sale	384,232			447,865
Securities to be held to maturity (fair value of $57,791 in 2006 and $64,402 in 2005)	58,141			64,298
Mortgage loans held for sale	4,162			6,582
Loans, net of allowance for loan losses of $10,760 and $11,009 (2006 and 2005)	2,182,722			2,049,647
Federal Home Loan Bank stock, at cost	22,351			21,595
Premises and equipment, net	32,062			31,786
Other assets and accrued interest receivable	42,166			36,614

TOTAL ASSETS	$	2,800,679		$	2,735,556

LIABILITIES:

Deposits:
Non-interest-bearing	$	279,800		$	286,484
Interest-bearing	1,321,336			1,316,081
Total deposits	1,601,136			1,602,565

Securities sold under agreements to repurchase and other short-term borrowings	323,334			292,259
Federal Home Loan Bank borrowings	582,378			561,133
Subordinated note	41,240			41,240
Other liabilities and accrued interest payable	26,977			24,785

Total liabilities	2,575,065			2,521,982

STOCKHOLDERS’ EQUITY:

Preferred stock, no par value	—			—
Class A Common Stock and Class B Common Stock, no par value	4,666			4,475
Additional paid in capital	96,331			77,295
Retained earnings	129,663			136,381
Unearned shares in Employee Stock Ownership Plan	(1,244		)	(1,468		)
Accumulated other comprehensive loss	(3,802		)	(3,109		)

Total stockholders’ equity	225,614			213,574

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,800,679		$	2,735,556

See accompanying footnotes to consolidated financial statements.

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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006		2005			2006		2005
INTEREST INCOME:

Loans, including fees	$	35,360	$	28,320		$	73,219	$	63,221
Securities	5,116		4,462			10,251		8,927
Federal Home Loan Bank stock and other	609		620			1,383		1,402
Total interest income	41,085		33,402			84,853		73,550

INTEREST EXPENSE:

Deposits	10,502		7,373			20,509		14,265
Securities sold under agreements to repurchase and other short-term borrowings	3,724		2,450			6,992		4,577
Federal Home Loan Bank borrowings	5,870		4,612			10,979		9,246
Subordinated note	627		—			1,247		—
Total interest expense	20,723		14,435			39,727		28,088

NET INTEREST INCOME	20,362		18,967			45,126		45,462

Provision for loan losses	573		(867		)	1,903		723

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	19,789		19,834			43,223		44,739

NON INTEREST INCOME:

Service charges on deposit accounts	4,615		3,793			8,728		7,055
Electronic refund check fees	523		833			3,951		5,828
Net gain on sale of refund anticipation loans	404		—			2,418		—
Mortgage banking income	487		726			942		1,352
Debit card interchange fee income	899		794			1,739		1,524
Title insurance commissions	403		435			695		785
Other	370		312			651		694
Total non interest income	7,701		6,893			19,124		17,238

NON INTEREST EXPENSES:

Salaries and employee benefits	10,056		9,430			21,424		18,965
Occupancy and equipment, net	3,660		3,332			7,383		6,688
Communication and transportation	595		633			1,302		1,503
Marketing and development	605		513			1,185		1,044
Bankshares tax	546		430			1,102		860
Data processing	564		431			1,094		850
Debit card interchange expense	385		344			773		655
Supplies	310		284			658		525
Other	1,472		1,431			3,113		2,993
Total non interest expenses	18,193		16,828			38,034		34,083

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006			2005		2006			2005

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE	9,297			9,899		24,313			27,894

INCOME TAX EXPENSE FROM CONTINUING OPERATIONS	3,335			3,318		8,504			9,528

INCOME FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE	5,962			6,581		15,809			18,366

INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE INCOME TAX EXPENSE	(3		)	2,057		(177		)	4,398

INCOME TAX EXPENSE (BENEFIT) FROM DISCONTINUED OPERATIONS	(2		)	694		(62		)	1,502

INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE (BENEFIT)	(1		)	1,363		(115		)	2,896

NET INCOME	$	5,961		$	7,944	$	15,694		$	21,262

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Change in unrealized gain (loss) on securities	$	(533	)	$	1,259	$	(693	)	$	(1,078	)
Less: Reclassification of realized amount	—			—		—			—
Net unrealized gain (loss) recognized in comprehensive income	(533		)	1,259		(693		)	(1,078		)

COMPREHENSIVE INCOME	$	5,428		$	9,203	$	15,001		$	20,184

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2006		2005		2006			2005

BASIC EARNINGS PER SHARE FROM CONTINUING OPERATIONS:
Class A Common Stock	$	0.31	$	0.33	$	0.81		$	0.93
Class B Common Stock	0.30		0.32		0.80			0.91

BASIC EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS:
Class A Common Stock	—		0.07		(0.01		)	0.15
Class B Common Stock	—		0.06		(0.01		)	0.13

BASIC EARNINGS PER SHARE:
Class A Common Stock	0.31		0.40		0.81			1.07
Class B Common Stock	0.30		0.39		0.79			1.06

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS:
Class A Common Stock	0.30		0.32		0.79			0.89
Class B Common Stock	0.29		0.31		0.77			0.87

DILUTED EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS:
Class A Common Stock	—		0.07		(0.01		)	0.14
Class B Common Stock	—		0.06		(0.01		)	0.13

DILUTED EARNINGS PER SHARE:
Class A Common Stock	0.30		0.38		0.79			1.03
Class B Common Stock	0.29		0.38		0.77			1.01

See accompanying footnotes to consolidated financial statements.

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

														Unearned
														Shares in
	Common Stock													Employee			Accumulated
	Class A		Class B					Additional						Stock			Other			Total
	Shares		Shares					Paid In			Retained			Ownership			Comprehensive			Stockholders’
(in thousands, except per share data)	Outstanding		Outstanding		Amount			Capital			Earnings			Plan			Loss			Equity

BALANCE, January 1, 2006	17,188		2,249		$	4,475		$	77,295		$	136,381		$	(1,468	)	$	(3,109	)	$	213,574

Net income	—		—		—			—			15,694			—			—			15,694

Net change in accumulated other comprehensive loss	—		—		—			—			—			—			(693		)	(693		)

Dividend declared Common Stock:
Class A ($0.183 per share)	—		—		—			—			(3,157		)	—			—			(3,157		)
Class B ($0.166 per share)	—		—		—			—			(372		)	—			—			(372		)

Stock options exercised, net of shares redeemed	91		—		21			606			(350		)	—			—			277

Repurchase of Class A Common Stock	(29	)	—		(7		)	(144		)	(424		)	—			—			(575		)

Conversion of Class B Common Stock to Class A Common Stock	5		(5	)	—			—			—			—			—			—

Shares committed to be released under the Employee Stock Ownership Plan	20		—		—			172			—			224			—			396

Stock dividend	—		—		177			17,932			(18,109		)	—			—			—

Notes receivable on common stock, net of cash payments	—		—		—			2			—			—			—			2

Deferred compensation expense	—		—		—			65			—			—			—			65

Stock option expense	—		—		—			403			—			—			—			403

BALANCE, June 30, 2006	17,275		2,244		$	4,666		$	96,331		$	129,663		$	(1,244	)	$	(3,802	)	$	225,614

See accompanying footnotes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS ( UNAUDITED )
SIX MONTHS ENDED JUNE 30, 2006 AND 2005 ( in thousands )

	2006			2005
OPERATING ACTIVITIES:
Net income	$	15,694		$	21,262
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, net	2,367			2,260
Federal Home Loan Bank stock dividends	(618		)	(464		)
Provision for loan losses, including provision from discontinued operations	1,583			1,617
Net gain on sale of mortgage loans held for sale	(559		)	(1,056		)
Origination of mortgage loans held for sale	(59,281		)	(84,549		)
Proceeds from sale of mortgage loans held for sale	62,260			92,731
Net gain on sale of refund anticipation loans	2,418			—
Origination of refund anticipation loans sold	213,423			—
Proceeds from sale of refund anticipation loans	(215,841		)	—
Employee Stock Ownership Plan expense	396			445
Deferred compensation plan expense	65			57
Stock option expense	403			—
Changes in other assets and liabilities:
Other assets and accrued interest receivable	(2,243		)	(9,507		)
Other liabilities and accrued interest payable	1,714			10,720
Net cash provided by operating activities	21,781			33,516

INVESTING ACTIVITIES:
Purchases of securities available for sale	(1,058,070		)	(2,321,492		)
Purchases of Federal Home Loan Bank stock	(138		)	(298		)
Proceeds from calls, maturities and paydowns of securities available for sale	1,121,918			2,355,505
Proceeds from calls, maturities and paydowns of securities to be held to maturity	6,143			28,102
Net increase in loans	(135,146		)	(160,325		)
Investment in new market tax credits	(3,040		)	(8,992		)
Purchases of premises and equipment, net	(3,139		)	(961		)
Net cash used in investing activities	(71,472		)	(108,461		)

FINANCING ACTIVITIES:
Net change in deposits	(1,429		)	81,834
Net change in securities sold under agreements to repurchase and other short-term borrowings	31,075			(27,368		)
Payments on Federal Home Loan Bank borrowings	(197,355		)	(22,863		)
Proceeds from Federal Home Loan Bank borrowings	218,600			44,281
Common Stock repurchases	(575		)	(199		)
Net proceeds from Common Stock options exercised	277			32
Cash dividends paid	(3,228		)	(2,743		)
Net cash provided by financing activities	47,365			72,974

NET CHANGE IN CASH AND CASH EQUIVALENTS	(2,326		)	(1,971		)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	77,169			77,850

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	74,843		$	75,879

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	39,111		$	27,002
Income taxes	6,868			7,744

SUPPLEMENTAL NONCASH DISCLOSURES:
Transfers from loans to real estate acquired in settlement of loans	$	490		$	199

See accompanying footnotes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation – The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly-owned subsidiaries: Republic Bank & Trust Company and Republic Bank & Trust Company of Indiana (together referred to as the “Bank”), Republic Funding Company, Republic Invest Co. and Republic Bancorp Capital Trust. Republic Invest Co. includes its subsidiary, Republic Capital LLC. Republic Bancorp Capital Trust is a Delaware statutory business trust that is a wholly-owned unconsolidated finance subsidiary of Republic Bancorp, Inc. The consolidated financial statements also include the wholly-owned subsidiaries of Republic Bank & Trust Company: TRS RAL Funding LLC, Republic Financial Services, LLC and Republic Insurance Agency, LLC. All companies are collectively referred to as “Republic” or the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for quarter and six months ended June 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2005.

New Accounting Standards – In March 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 156 “Accounting for Servicing of Financial Assets – an amendment of FASB Statement No. 140, “ Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125” that changes the accounting for all servicing rights which are recorded as the result of purchasing a servicing right or selling a loan with servicing retained. SFAS No. 156 amends the current accounting guidance for servicing rights in that it allows companies to carry their servicing rights at fair value, where presently servicing rights are assessed for impairment based on their fair value at each reporting date, using lower of cost or market value. This pronouncement is effective January 1, 2007, although adoption is permitted earlier. The Company currently plans to adopt this standard on January 1, 2007.

See Footnote 2 regarding the new accounting pronouncement related to stock options that has impacted Republic’s consolidated financial statements during 2006.

In June 2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,” which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. FIN 48 is effective beginning in 2007. The Company is in the process of evaluating the impact, if any, the adoption of FIN 48 will have on the Company’s financial statements.

Reclassifications – Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. All prior period share and per share data have been restated to reflect the five percent (5%) stock dividend that was declared in the first quarter of 2006.

In February 2006, the Company substantially exited the payday loan segment of business. The payday loan segment of business has been treated as a discontinued operation for financial reporting purposes in accordance with SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” and all applicable current period and prior period data has been restated to reflect operations absent of the payday loan segment of business.

2. STOCK PLANS AND STOCK BASED COMPENSATION

At June 30, 2006, the Company had two stock option plans and a director deferred compensation plan. The stock option plans consist of the 1995 Stock Option Plan (“1995 Plan”) and the 2005 Stock Incentive Plan (“2005 Plan”). With regard to the 1995 Plan, no additional grants were made in 2006 and none will be made in the future. The 2005 Plan permits the grant of stock options and restricted stock awards for up to 3,150,000 shares, of which 3,098,000 shares remain available for issue with 52,000 allocated at June 30, 2006. All shares issued under the above mentioned plans came from authorized and unissued shares.

Effective January 1, 2006, the Company adopted SFAS No. 123R, “Share Based Payment.” The Company elected to utilize the modified prospective transition method; therefore, prior period results were not restated. Prior to the adoption of SFAS 123R, stock based compensation expense related to stock options was not recognized in the results of operations if the exercise price was at least equal to the market value of the common stock on the grant date, in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” All stock options have an exercise price that is at least equal to the fair market value of the Company’s stock on the date the options were granted. As a result, the recognition of stock based compensation expense was limited to the expense attributed to the director deferred compensation plan.

SFAS 123R requires all share based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on the fair value of the options. For options with graded vesting, the Company values the stock option grants and recognizes compensation expense as if each vesting portion of the award was a separate award. Under the modified prospective method, unvested awards and awards that were granted, modified, or settled on or after January 1, 2006 are measured and accounted for in accordance with SFAS 123R. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized.

Under the stock option plans, certain key employees are granted options to purchase shares of Republic’s Common Stock at fair value at the date of the grant. Options granted generally become fully exercisable at the end of five to six years of continued employment and must be exercised within one year from the date they become exercisable. There were no Class B stock options outstanding at June 30, 2006 and December 31, 2005.

The following table summarizes stock option activity:

	Three Months Ended June 30,								Six Months Ended June 30,
	2006				2005				2006				2005
			Weighted				Weighted				Weighted				Weighted
	Options		Average		Options		Average		Options		Average		Options		Average
	Class A		Price		Class A		Price		Class A		Price		Class A		Price
	Shares		Per Share		Shares		Per Share		Shares		Per Share		Shares		Per Share

Outstanding at beginning of period	1,597,299		$	11.91	1,746,629		$	11.30	1,686,442		$	11.60	1,760,805		$	11.29

Granted	—		—		43,050		21.55		—		—		43,050		21.55

Exercised	(30,669	)	8.01		(10,125	)	11.23		(114,715	)	6.34		(17,358	)	11.23

Forfeited	(122,358	)	11.06		(23,353	)	15.25		(127,455	)	11.11		(30,296	)	13.83

Outstanding at end of period	1,444,272		$	12.06	1,756,201		$	11.50	1,444,272		$	12.06	1,756,201		$	11.50

The following table details stock options outstanding:

(dollars in thousands except per share data)	June 30, 2006
Stock options vested and currently exercisable:
Number	62,783
Weighted average exercise price	$	7.25
Aggregate intrinsic value	$	838
Weighted average remaining life (in years)	0.67

Total Options Outstanding:
Aggregate intrinsic value	$	12,400
Weighted average remaining life (in years)	3.06

The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of the Company’s Common Stock as of the reporting date. Stock option compensation expense is recorded as a component of salaries and employee benefits in the consolidated income statement. Since the stock options are incentive stock options and there were no disqualifying dispositions, no tax benefit related to this expense was recognized. No options were granted or modified during the three and six month periods ended June 30, 2006. For the three and six month periods ended June 30, 2005, 43,050 options were granted and no options were modified. The following table provides further detail regarding intrinsic value of options exercised, stock option compensation expense and options granted.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2006		2005		2006		2005

Intrinsic value of options exercised	$	360	$	105	$	1,530	$	202
Stock option compensation expense recorded	$	188	$	—	$	404	$	—
Options granted	—		43,050		—		43,050

Non executive officer employees had loans outstanding of $706,000 and $708,000 at June 30, 2006 and December 31, 2005 that were originated to fund stock option exercises.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes based stock option valuation model. This model requires the input of subjective assumptions that will usually have a significant impact on the fair value estimate. Expected volatilities are based on historical volatility of Republic’s stock, and other factors. Expected dividends are based on dividend trends and the market price of Republic’s stock price at grant. Republic uses historical data to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time of grant. There were no options granted during the three and six month periods ended June 30, 2006.

SFAS 123R requires the recognition of stock based compensation for the number of awards that are ultimately expected to vest. As a result, recognized stock option compensation expense was reduced for estimated forfeitures prior to vesting primarily based on the historical annual forfeiture rate of 3%. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and circumstances. Prior to January 1, 2006, actual forfeitures were accounted for as they occurred for purposes of required pro forma stock compensation disclosures.

Unrecognized stock option compensation expense related to unvested awards (net of estimated forfeitures) for the remainder of 2006 and beyond is estimated as follows:

Year	(in thousands)
July – December 2006	$	432
2007	674
2008	502
2009	334
2010	85
2011	13

Total	$	2,040

In November 2004, the Company’s Board of Directors approved a Non Qualified Deferred Compensation Plan. The Plan governs the deferral of board and committee fees of non-employee members of the Board of Directors. Members of the Board of Directors may defer up to 100% of their board and committee fees for a specified period ranging from two to five years. The value of the deferred compensation account is deemed “invested” in Company stock and is immediately vested. On a quarterly basis, the Company reserves shares of Republic’s stock within the Company’s stock option plan for ultimate distribution to Directors at the end of the deferral period. The Plan has not and will not materially impact the Company, as Director compensation expense will continue to be recorded when incurred.

The following table presents information on director deferred compensation shares outstanding for the periods shown:

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
	Deferred Shares	Weighted Average Market Price at Date of Deferral		Deferred Shares	Weighted Average Market Price at Date of Deferral		Deferred Shares	Weighted Average Market Price at Date of Deferral		Deferred Shares	Weighted Average Market Price at Date of Deferral

Balance, beginning of period	7,951	$	20.47	1,529	$	21.16	5,845	$	20.51	—	$	—
Awarded	1,051	20.60		1,187	20.68		3,157	20.41		2,716	20.95
Released	—	—		—	—		—	—		—	—
Balance, end of period	9,002	20.47		2,716	20.95		9,002	20.47		2,716	20.95

Director deferred compensation has been expensed as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2006		2005		2006		2005

Director Deferred Compensation Expense	$	22	$	25	$	64	$	57

The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of SFAS 123R for the three and six month periods ended June 30, 2005:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
(dollars in thousands, except per share data)	2005		2005

Net income, as reported	$	7,944	$	21,262
Deduct:
Stock based compensation expense determined under the fair value based method, net of tax	227		453
Pro forma net income	$	7,717	$	20,809

Earnings per share from continuing operations, as reported:
Class A Common Share	$	0.33	$	0.93
Class B Common Share	0.32		0.91

Earnings per share, as reported:
Class A Common Share	0.40		1.07
Class B Common Share	0.39		1.06

Pro forma basic earnings per share from continuing operations:
Class A Common Share	0.32		0.90
Class B Common Share	0.31		0.89

Pro forma basic earnings per share:
Class A Common Share	0.39		1.05
Class B Common Share	0.38		1.04

Diluted earnings per share from continuing operations, as reported:
Class A Common Share	0.32		0.89
Class B Common Share	0.31		0.87

Diluted earnings per share, as reported:
Class A Common Share	0.38		1.03
Class B Common Share	0.38		1.01

Pro forma diluted earnings per share from continuing operations:
Class A Common Share	0.31		0.87
Class B Common Share	0.30		0.85

Pro forma diluted earnings per share:
Class A Common Share	0.37		1.01
Class B Common Share	0.37		0.99

3. DISCONTINUED OPERATIONS – PAYDAY LENDING

By letter to Republic Bank & Trust Company dated February 17, 2006, the FDIC cited inherent risks associated with payday lending activities and requested that the Board of Directors consider terminating this line of business. Consequently, on February 24, 2006, Republic Bank & Trust Company and ACE Cash Express, Inc. (“Ace”) amended the agreement regarding Republic Bank & Trust Company’s payday loan activities in Texas, Pennsylvania and Arkansas. With respect to Texas, Republic Bank & Trust Company ceased offering payday loans the week of February 27, 2006. With respect to Arkansas and Pennsylvania, Republic Bank & Trust Company ceased offering payday loans on June 30, 2006. The Company did not incur any additional costs related to the termination of the ACE contract and does not anticipate incurring any additional costs in the future. The Company had payday loans outstanding of $423,000 related to the above contract at June 30, 2006.

By letter to Republic Bank & Trust Company of Indiana dated February 17, 2006, the FDIC cited inherent risks associated with payday lending activities and asked the Board of Directors to consider terminating this line of business. Republic Bank & Trust Company of Indiana voluntarily elected to terminate its Internet payday loan program the week of February 20, 2006. The Internet payday loan program began operating in July 2005 and remained in a developmental stage until its termination date. The Company had no payday loans outstanding related to the above program at June 30, 2006.

The following table illustrates the financial statements of the discontinued operation:

Balance Sheets

(dollars in thousands)	June 30, 2006		December 31, 2005

Cash and cash equivalents	$	326	$	730
Loans	423		5,779
Less Allowance for loan losses	32		682
Net Loans	391		5,097
Premises and equipment, net	—		40
Other assets and accrued interest receivable	23		81

Total assets	$	740	$	5,948

Deposits	$	84	$	459
Federal Home Loan Bank borrowings	339		5,320
Total liabilities	423		5,779

Allocated equity	317		169
Total liabilities and allocated equity	$	740	$	5,948

Statements of Income

	Three Months Ended June 30,					Six Months Ended June 30,
(dollars in thousands)	2006			2005		2006			2005

Interest income:
Loans, including fees	$	18		$	3,320	$	525		$	6,581
Total interest income	18			3,320		525			6,581

Interest expense:
Federal Home Loan Bank borrowings	4			211		30			380
Total interest expense	4			211		30			380

Net interest income	14			3,109		495			6,201
Provision for loan losses	(27		)	664		(320		)	894
Net interest income after provision	41			2,445		815			5,307

Non interest income:
Service charges on deposit accounts	—			8		—			18
Total non interest income	—			8		—			18

Non interest expense:
Salaries and employee benefits	8			62		120			126
Occupancy and equipment, net	—			—		115			—
Marketing and development	—			—		108			—
Data processing expense	—			—		130			—
Other	36			334		519			801
Total non interest expenses	44			396		992			927

Gross operating profit (loss)	(3		)	2,057		(177		)	4,398
Income tax expense (benefit)	(2		)	694		(62		)	1,502
Net income (loss)	$	(1	)	$	1,363	$	(115	)	$	2,896

4. SECURITIES

Securities available for sale:

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30, 2006 (in thousands)	Cost		Gains		Losses			Fair Value

U.S. Treasury securities and U.S. Government agencies	$	249,713	$	—	$	(3,281	)	$	246,432
Mortgage backed securities, including CMOs	140,368		98		(2,666		)	137,800

Total securities available for sale	$	390,081	$	98	$	(5,947	)	$	384,232

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2005 (in thousands)	Cost		Gains		Losses			Fair Value

U.S. Treasury securities and U.S. Government agencies	$	333,348	$	13	$	(3,067	)	$	330,294
Mortgage backed securities, including CMOs	119,300		130		(1,859		)	117,571

Total securities available for sale	$	452,648	$	143	$	(4,926	)	$	447,865

Securities to be held to maturity:

			Gross		Gross
	Amortized		Unrecognized		Unrecognized
June 30, 2006 (in thousands)	Cost		Gains		Losses			Fair Value

U.S. Treasury securities and U.S. Government agencies	$	7,110	$	—	$	(124	)	$	6,986
Mortgage backed securities, including CMOs	51,031		279		(505		)	50,805

Total securities to be held to maturity	$	58,141	$	279	$	(629	)	$	57,791

			Gross		Gross
	Amortized		Unrecognized		Unrecognized
December 31, 2005 (in thousands)	Cost		Gains		Losses			Fair Value

U.S. Treasury securities and U.S. Government agencies	$	12,110	$	—	$	(131	)	$	11,979
Mortgage backed securities, including CMOs	52,188		525		(290		)	52,423

Total securities to be held to maturity	$	64,298	$	525	$	(421	)	$	64,402

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

(in thousands)	June 30, 2006		December 31, 2005
Amortized cost	$	407,577	$	400,986
Fair value	401,964		397,255

5. LOANS AND ALLOWANCE FOR LOAN LOSSES

	June 30,		December 31,
(in thousands)	2006		2005

Residential real estate	$	1,141,051	$	1,056,175
Commercial real estate	609,937		565,970
Real estate construction	91,032		84,850
Commercial	58,126		46,562
Consumer	36,993		35,529
Deferred deposits (“Payday loans”), Discontinued operations	423		5,779
Home equity	255,929		265,895
Total loans	2,193,491		2,060,760
Less:
Unearned interest income and unamortized loan fees	9		104
Allowance for loan losses	10,760		11,009

Loans, net	$	2,182,722	$	2,049,647

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

	June 30,		December 31,
(in thousands)	2006		2005

First lien, single family residential	$	1,008,000	$	938,000
Home equity lines of credit	161,000		169,000
Multi-family, commercial real estate	50,000		56,000

An analysis of the Allowance for loan losses follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2006			2005			2006			2005
Allowance for loan losses at beginning of period	$	11,023		$	13,821		$	11,009		$	13,554

Provision for loan losses from continuing operations	573			(867		)	1,903			723
Provision for loan losses from discontinued operations	(27		)	664			(320		)	894

Charge offs – Banking	(686		)	(288		)	(1,161		)	(634		)
Charge offs – Tax Refund Solutions	(482		)	(285		)	(1,358		)	(2,213		)
Charge offs – Discontinued operations	—			—			(409		)	—

Recoveries – Banking	125			241			323			362
Recoveries – Tax Refund Solutions	219			96			694			696
Recoveries – Discontinued operations	15			—			79			—

Allowance for loan losses at end of period	$	10,760		$	13,382		$	10,760		$	13,382

Information regarding Republic’s impaired loans follows:

	June 30,		December 31,
(in thousands)	2006		2005

Loans with no allocated allowance for loan losses	$	—	$	—
Loans with allocated allowance for loan losses	1,744		1,856

Total	$	1,744	$	1,856

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

Detail of non performing loans and non performing assets is as follows:

(dollars in thousands)	June 30, 2006			December 31, 2005

Loans on non-accrual status	$	6,569		$	5,725
Loans past due 90 days or more and still on accrual	564			295
Total non performing loans	7,133			6,020
Other real estate owned	55			452
Total non performing assets	$	7,188		$	6,472
Non performing loans to total loans	0.33		%	0.29		%
Non performing assets to total loans	0.33			0.31

6. DEPOSITS

	June 30,		December 31,
(in thousands)	2006		2005
Demand (NOW and SuperNOW)	$	204,016	$	262,714
Money market accounts	386,787		322,421
Internet money market accounts	17,241		33,864
Savings	44,319		43,548
Individual retirement accounts	52,036		48,954
Certificates of deposit, $100,000 and over	153,805		168,777
Other certificates of deposit	263,808		282,609
Brokered deposits	199,324		153,194
Total interest-bearing deposits	1,321,336		1,316,081
Total non interest-bearing deposits	279,800		286,484
Total	$	1,601,136	$	1,602,565

7. FEDERAL HOME LOAN BANK (“FHLB”) BORROWINGS

(in thousands)	June 30, 2006		December 31, 2005

FHLB convertible fixed interest rate advances with a weighted average interest rate of 4.93% (1) due through 2011	$	60,000	$	90,000

Overnight FHLB borrowings with a weighted average interest rate of 5.31%	158,600		117,000

FHLB fixed interest rate advances with a weighted average interest rate of 4.07% due through 2010	363,778		354,133

Total FHLB borrowings	$	582,378	$	561,133

(1) Represents convertible borrowings with the FHLB. These borrowings have original fixed rate periods ranging from one to five years with original maturities ranging from three to ten years if not converted earlier by the FHLB. At the end of their respective fixed rate periods, the FHLB has the right to convert the borrowings to floating rate advances tied to LIBOR or the Company can prepay the borrowings at no penalty. The Company has $60 million in these advances that are currently eligible to be converted on their quarterly repricing date. Based on market conditions at this time, management does not believe these advances are likely to be converted in the short-term.

FHLB borrowings are collateralized by a blanket pledge of eligible real estate loans. At June 30, 2006, Republic had available collateral to borrow an additional $191 million from the FHLB. Republic also has unsecured lines of credit totaling $175 million available through various financial institutions.

Aggregate future principal payments on FHLB borrowings, based on contractual maturity date or expected call for the remainder of 2006 and beyond is as follows:

Year	(in thousands)
July – December 2006	$	243,600
2007	90,000
2008	118,500
2009	82,000
2010	42,370
Thereafter	5,908

Total	$	582,378

8. SUBORDINATED NOTE

In 2005, Republic Bancorp Capital Trust (“RBCT”), an unconsolidated trust subsidiary of Republic Bancorp, Inc., issued $40 million in Trust Preferred Securities (“TPS”). The TPS mature on September 30, 2035 and are redeemable at the Company’s option after ten years. The TPS pay a fixed interest rate for 10 years and adjust with LIBOR thereafter. The subordinated debentures are currently treated as Tier 1 Capital for regulatory purposes and the related interest expense, currently payable quarterly at the annual rate of 6.015%, is included in the consolidated financial statements.

9. OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

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

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

As of June 30, 2006, exclusive of mortgage banking loan commitments, Republic had outstanding loan commitments totaling $455 million, which included unfunded home equity lines of credit totaling $282 million. As of December 31, 2005, exclusive of mortgage banking loan commitments, Republic had outstanding loan commitments totaling $475 million, which included unfunded home equity lines of credit totaling $269 million.

Standby letters of credit are conditional commitments issued by Republic to guarantee the performance of a customer to a third party. The terms and risk of loss involved in issuing standby letters of credit are similar to those involved in issuing loan commitments and extending credit. Commitments outstanding under standby letters of credit totaled $10 million at June 30, 2006 and December 31, 2005.

At June 30, 2006 and December 31, 2005 Republic had $72 million in letters of credit from the FHLB issued on behalf of the Bank’s clients. Approximately $12 million of these letters of credit were used as credit enhancements for client bond offerings. The remaining $60 million letter of credit was used to collateralize a public funds deposit, which the Company classifies in short-term borrowings. These letters of credit reduce Republic’s available borrowing line at the FHLB by the above total amount. Republic uses a blanket pledge of eligible real estate loans to secure the letters of credit.

10. EARNINGS PER SHARE

Class A and Class B shares participate equally in undistributed earnings. The difference in earnings per share between the two classes of common stock results solely from the 10% per share dividend premium paid on Class A Common Stock over that paid on Class B Common Stock.

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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(in thousands, except per share data)	2006			2005		2006			2005

Net income from continuing operations	$	5,962		$	6,581	$	15,809		$	18,366
Net income from discontinued operations	(1		)	1,363		(115		)	2,896
Net income, basic and diluted	5,961			7,944		15,694			21,262

Weighted average shares outstanding	19,517			19,842		19,500			19,840
Effect of dilutive securities	513			810		528			850
Average shares outstanding including dilutive securities	20,030			20,652		20,028			20,690

Basic earnings per share from continuing operations:
Class A Common Stock	$	0.31		$	0.33	$	0.81		$	0.93
Class B Common Stock	0.30			0.32		0.80			0.91

Diluted earnings per share from continuing operations:
Class A Common Stock	$	0.30		$	0.32	$	0.79		$	0.89
Class B Common Stock	0.29			0.31		0.77			0.87

Basic earnings per share from discontinued operations:
Class A Common Stock	$	—		$	0.07	$	(0.01	)	$	0.15
Class B Common Stock	—			0.06		(0.01		)	0.13

Diluted earnings per share from discontinued operations:
Class A Common Stock	$	—		$	0.07	$	(0.01	)	$	0.14
Class B Common Stock	—			0.06		(0.01		)	0.13

Basic earnings per share:
Class A Common Stock	$	0.31		$	0.40	$	0.81		$	1.07
Class B Common Stock	0.30			0.39		0.79			1.06

Diluted earnings per share:
Class A Common Stock	$	0.30		$	0.38	$	0.79		$	1.03
Class B Common Stock	0.29			0.38		0.77			1.01

Stock options excluded from the detailed earnings per share calculation because their impact was antidilutive are as follows:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2006	2005	2006	2005

Antidilutive Stock Options	51,869	30,476	51,869	6,615

11. SEGMENT INFORMATION

The reportable segments are determined by the type of products and services offered, distinguished between banking operations, mortgage banking operations, Tax Refund Solutions and Deferred Deposits or Payday Loans. As discussed throughout this document, the Company substantially exited the deferred deposit business during the first quarter of 2006; therefore, segment operations are presented as discontinued operations. Loans, investments and deposits provide the majority of revenue from banking operations; servicing fees and loan sales provide the majority of revenue from mortgage banking operations; RAL fees, ERC fees and Net gain on the sale of Refund Anticipation Loans provide the majority of the revenue from tax refund services; and fees for providing deferred deposits or payday loans have historically represented the primary revenue source for the deferred deposit segment. All Company segments are domestic.

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

Segment information follows:

	Three Months Ended June 30, 2006
(in thousands)	Banking		Tax Refund Solutions			Mortgage Banking			Total Continuing Operations		Discontinued Operations

Net interest income	$	19,896	$	380		$	86		$	20,362	$	14
Provision for loan losses	792		(219		)	—			573		(27		)
Electronic Refund Check fees	—		523			—			523		—
Net gain on sale of RALs	—		404			—			404		—
Mortgage banking income	—		—			487			487		—
Other revenue	6,450		5			(168		)	6,287		—
Income tax expense	2,960		297			78			3,335		(2		)
Net income	5,387		433			142			5,962		(1		)
Segment assets	2,792,125		3,574			4,240			2,799,939		740

	Three Months Ended June 30, 2005
(in thousands)	Banking			Tax Refund Solutions			Mortgage Banking			Total Continuing Operations			Discontinued Operations

Net interest income	$	18,613		$	285		$	69		$	18,967		$	3,109
Provision for loan losses	(823		)	(44		)	—			(867		)	664
Electronic Refund Check Fees	—			833			—			833			—
Mortgage banking income	—			—			726			726			—
Other revenue	5,497			22			(185		)	5,334			8
Income tax expense	3,107			89			122			3,318			694
Net income	6,070			273			238			6,581			1,363
Segment assets	2,537,164			2,856			9,369			2,549,389			45,014

	Six Months Ended June 30, 2006
(in thousands)	Banking		Tax Refund Solutions		Mortgage Banking			Total Continuing Operations		Discontinued Operations

Net interest income	$	39,403	$	5,591	$	132		$	45,126	$	495
Provision for loan losses	1,239		664		—			1,903		(320		)
Electronic Refund Check fees	—		3,951		—			3,951		—
Net gain on sale of RALs	—		2,418		—			2,418		—
Mortgage banking income	—		—		942			942		—
Other revenue	12,106		7		(300		)	11,813		—
Income tax expense	5,472		2,897		135			8,504		(62		)
Net income	10,171		5,387		251			15,809		(115		)
Segment assets	2,792,125		3,574		4,240			2,799,939		740

	Six Months Ended June 30, 2005
(in thousands)	Banking			Tax Refund Solutions		Mortgage Banking			Total Continuing Operations		Discontinued Operations

Net interest income	$	36,568		$	8,722	$	172		$	45,462	$	6,201
Provision for loan losses	(794		)	1,517		—			723		894
Electronic Refund Check Fees	—			5,828		—			5,828		—
Mortgage banking income	—			—		1,352			1,352		—
Other revenue	10,362			65		(369		)	10,058		18
Income tax expense	5,765			3,525		238			9,528		1,502
Net income	11,113			6,794		459			18,366		2,896
Segment assets	2,537,164			2,856		9,369			2,549,389		45,014

12. SECURITIZATION

In January 2006, the Company established a special purpose wholly owned subsidiary corporation of Republic Bank & Trust Company named TRS RAL Funding LLC to securitize a portion of the RAL portfolio to an independent third party. The securitization consisted of a total of $213 million in loans over a four week period in January and February. At March 31, 2006, all loans sold into the securitization had been either fully repaid or charged-off and no securitization related balances were outstanding. Republic Bank & Trust Company acted as the servicer for all such RALs during the securitization period. The potential exists that the Company will post recoveries on loans charged-off in the securitization during the remainder of the year. The Company believes the impact of these recoveries will be immaterial to the financial statements and will recognize such recoveries in subsequent quarters along with recoveries of other charged off RALs not sold in securitization as they are realized.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Republic Bancorp, Inc. (“Republic” or the “Company”) analyzes the major elements of Republic’s consolidated balance sheets and statements of income. Republic, a bank holding company headquartered in Louisville, Kentucky, is the Parent Company of Republic Bank & Trust Company, Republic Bank & Trust Company of Indiana (together referred to as the “Bank”), Republic Funding Company, Republic Invest Co. and Republic Bancorp Capital Trust . Republic Invest Co. includes its subsidiary, Republic Capital LLC. Republic Bancorp Capital Trust is a Delaware statutory business trust that is a 100%-owned unconsolidated finance subsidiary of Republic Bancorp, Inc. The consolidated financial statements also include the wholly-owned subsidiaries of Republic Bank & Trust Company: TRS RAL Funding LLC, Republic Financial Services, LLC and Republic Insurance Agency, LLC. Item 2. “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” should be read in conjunction with Part I., Item 1. “Financial Statements .”

This discussion includes various forward-looking statements with respect to credit quality, including but not limited to, delinquency trends and the adequacy of the allowance for loan losses, banking products, corporate objectives, the Company’s interest rate sensitivity model and other financial and business matters. Broadly speaking, forward-looking statements may include:

· projections of revenue, income, earnings per share, capital expenditures, dividends, capital structure or other financial items;

· descriptions of plans or objectives of the Company’s management for future operations, products or services;

· forecasts of future economic performance; and

· descriptions of assumptions underlying or relating to any of the foregoing.

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

· future credit losses and non-performing assets;

· the adequacy of the allowance for loans losses;

· the future value of mortgage servicing rights;

· the impact of new accounting pronouncements;

· future short-term and long-term interest rate levels and the respective impact on net interest margin, net interest spread, net income, liquidity and capital;

· legal and regulatory matters; and

· future capital expenditures.

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

OVERVIEW

Net income from continuing operations for the quarter ended June 30, 2006 was $6.0 million, representing a decline of $619,000 or 9% compared to the same period in 2005. Diluted earnings per Class A Common Share from continuing operations declined 6% to $0.30 for the quarter ended June 30, 2006 compared to $0.32 for the same period in 2005.

Overall net income for the quarter ended June 30, 2006 was $6.0 million, representing a decline of $2.0 million or 25% compared to the same period in 2005. Diluted earnings per Class A Common Share declined 21% to $0.30 for the quarter ended June 30, 2006 compared to $0.38 for the same period in 2005.

Net income from continuing operations for the six months ended June 30, 2006 was $15.8 million, representing a decline of $2.6 million or 14% compared to the same period in 2005. Diluted earnings per Class A Common Share from continuing operations declined 11% to $0.79 for the six months ended June 30, 2006 compared to $0.89 for the same period in 2005.

Overall net income for the six months ended June 30, 2006 was $15.7 million, representing a decline of $5.6 million or 26% compared to the same period in 2005. Diluted earnings per Class A Common Share from continuing operations declined 23% to $0.79 for the six months ended June 30, 2006 compared to $1.03 for the same period in 2005.

Highlights for the quarter and six months ended June 30, 2006 consist of the following:

· In February 2006, the Bank substantially exited the payday loan business. For financial reporting purposes, the payday loan business segment has been treated as a discontinued operation. All current period and prior period data has been restated to reflect continuing operations absent of the payday loan business.

· Net income from continuing operations decreased for the quarter and six months ended June 30, 2006 compared to the same periods in 2005 due primarily to a decrease in ERC volume at TRS, a higher provision for loan losses within the traditional banking segment and higher overall non interest expenses across the Company.

· For the first time in its history, the Company sold a portion of its Refund Anticipation Loan (“RAL”) portfolio into a securitization during the first quarter of 2006. Under Generally Accepted Accounting Principles (“GAAP”), fees on securitized RALs are classified as non interest income on the face of the income statement. Historically, the Company retained all RALs with their corresponding fees being included in interest income on loans.

· Net interest income within the traditional “Banking” segment increased $2.8 million or 8% during the first six months of 2006 and $1.3 million or 7% for the quarter ended June 30, 2006 compared to same periods in 2005. The increases in net interest income within the traditional “Banking” segment were driven by growth in the loan portfolio, particularly the real estate loan portfolios.

· Net loans, primarily consisting of secured real estate loans, increased by $133 million, or 6% to $2.2 billion during the first six months of 2006. The growth was spread across the residential real estate, commercial real estate, real estate construction and commercial loan portfolios.

· The Company experienced an increase in the provision for loan losses of $1.2 million for the first six months of 2006 and $1.4 million for the quarter ended June 30, 2006 compared to the same periods in the prior year. This increase was most prevalent in the traditional banking segment which increased $2 million for the first six months of 2006 and $1.6 million for the quarter ended June 30, 2006 compared to the same periods in the prior year. The increase in provision expense for both the quarter and six months ended June 30, 2006 was primarily due to growth in the loan portfolio during the current year and a large credit recorded to the provision during the second quarter of 2005 associated with improvements in a few large classified loans.

· Service charges on deposit accounts increased $1.7 million or 24% during the first six months of 2006 and $822,000 or 22% for the quarter ended June 30, 2006 compared to the same periods in 2005. The increases in service charges on deposit accounts for both the quarter and six months ended June 30, 2006 were due to growth in the number of checking accounts and an increase in the Bank’s overdraft fee which became effective August 1, 2005.

· Electronic Refund Check (“ERC”) fees declined $1.9 million or 32% for the six months ended June 30, 2006 compared to the same period in 2005 due primarily to the discontinuation of business relationship with one large tax preparation software partner. Because the substantial majority of the Company’s tax business occurs during the first quarter of each year, most of this decline relates to the first quarter of 2006.

· On June 12, 2006, Republic announced a definitive agreement to acquire GulfStream Community Bank (“GulfStream”) of Port Richey, Florida for $18.1 million in cash. Republic has long had a desire to enter the Florida market by acquiring an institution that embodies similar values as a community-based financial institution with strong credit quality. GulfStream, which began operations in 2000, had total assets of $64 million with total loans of $45 million and total deposits of $54 million as of June 30, 2006. The acquisition is expected to close in the fourth quarter of 2006 and is not expected to impact the Company’s earnings per share in the first year of operations.

BUSINESS SEGMENT COMPOSITION

The Company is divided into four distinct business operating segments: Banking, Tax Refund Solutions, Mortgage Banking and Deferred Deposits or “Payday Loans.” As discussed throughout this document, the Company substantially exited the deferred deposit business during the first quarter of 2006; therefore, its segment operations are presented as discontinued operations. Total assets and net income by segment for the three and six months ended June 30, 2006 and 2005 are presented below:

	Three Months Ended June 30, 2006
(in thousands)	Banking		Tax Refund Solutions		Mortgage Banking		Total Continuing Operations		Discontinued Operations

Net income	$	5,387	$	433	$	142	$	5,962	$	(1	)
Segment assets	2,792,125		3,574		4,240		2,799,939		740

	Three Months Ended June 30, 2005
(in thousands)	Banking		Tax Refund Solutions		Mortgage Banking		Total Continuing Operations		Discontinued Operations

Net income	$	6,070	$	273	$	238	$	6,581	$	1,363
Segment assets	2,537,164		2,856		9,369		2,549,389		45,014

	Six Months Ended June 30, 2006
(in thousands)	Banking		Tax Refund Solutions		Mortgage Banking		Total Continuing Operations		Discontinued Operations

Net income	$	10,171	$	5,387	$	251	$	15,809	$	(115	)
Segment assets	2,792,125		3,574		4,240		2,799,939		740

	Six Months Ended June 30, 2005
(in thousands)	Banking		Tax Refund Solutions		Mortgage Banking		Total Continuing Operations		Discontinued Operations

Net income	$	11,113	$	6,794	$	459	$	18,366	$	2,896
Segment assets	2,537,164		2,856		9,369		2,549,389		45,014

(I) Banking

As of June 30, 2006, Republic had a total of 35 full-service banking centers with 33 located in Kentucky and two in southern Indiana. Republic’s primary market areas are located in metropolitan Louisville, central Kentucky and southern Indiana. Louisville, the largest city in Kentucky, is the location of Republic’s headquarters, as well as 18 additional banking centers. Republic’s central Kentucky market includes 14 banking centers in the following Kentucky cities: Bowling Green (1); Elizabethtown (1); Fort Wright (1); Frankfort (2); Georgetown (1); Lexington, the second largest city in Kentucky (5); Owensboro (2); and Shelbyville (1). The Company reached an agreement during the second quarter of 2006 to enter the Florida market via the acquisition of a $64 million community bank located just north of Tampa. Also, the Company has announced plans to open a Loan Production Office (“LPO”) in Tampa, Florida in 2006. Republic Bank & Trust Company of Indiana has banking centers located in New Albany and Jeffersonville, Indiana. Republic also has two LPOs (“Republic Finance”) located in Louisville, Kentucky that operate as a division of Republic Bank & Trust Company. Republic Finance offers an array of loan products to individuals who may not qualify under the Bank’s standard underwriting guidelines.

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

Banking related operating revenues are derived primarily from interest earned from the Bank’s loan and investment securities portfolios and fee income from loans, deposits and other banking products. The Company has historically extended credit and provided general banking services through its banking center network to individuals and businesses. Over the past several years, the Company has expanded into new lines of business to diversify its asset mix and further enhance its profitability. The Bank principally markets its banking products and services through the following delivery channels:

Mortgage Lending – The Company generally retains adjustable rate residential real estate loans with fixed terms up to ten years. These loans are originated through the Company’s retail banking center network and LPOs. Fixed rate residential real estate loans that are sold into the secondary market, and their accompanying servicing rights, which may be either sold or retained, are included as a component of the Company’s “ Mortgage Banking ” segment and are discussed throughout this document.

Commercial Lending – Commercial loans are primarily real estate secured and are generated through banking centers in the Company’s market areas. The Company makes commercial loans to a variety of industries and promotes this business through focused calling programs, in order to broaden relationships by providing business clients with loan, deposit and cash management services.

Consumer Lending – Traditional consumer loans made by the Bank include home improvement and home equity loans, as well as secured and unsecured personal loans. With the exception of home equity loans, which are actively marketed in conjunction with single family first lien mortgage loans, traditional consumer loan products are not actively promoted in Republic’s markets.

Cash Management Services – Republic provides various deposit products designed for businesses located throughout its market areas. Lockbox processing, business online banking, account reconciliation and Automated Clearing House (“ACH”) processing are additional services offered to businesses through the Cash Management department. The “Premier First” product is the Company’s premium money market sweep account designed for business clients.

Internet Banking – Republic expands its market penetration and service delivery by offering clients Internet banking services and products through its Internet site, www.republicbank.com.

Other Banking Services – The Bank also provides trust services, title insurance products and other related financial institution lines of business.

(II) Tax Refund Solutions (“TRS”)

Republic Bank & Trust Company is one of a limited number of financial institutions that facilitates the payment of federal and state tax refunds through tax preparers located throughout the U.S.. The Company facilitates the payment of these tax refunds through three primary products. For those taxpayers who apply and qualify, the Company offers RALs. RALs are repaid when the taxpayers’ refunds are electronically received by the Company from the government. For those taxpayers who wish to receive their funds electronically via an ACH, the Company will provide an ERC or an Electronic Refund Deposit (“ERD”) to the taxpayer. An ERC/ERD is issued to the taxpayer after the Company has received the tax refund from the federal or state government.

See Footnote 12 of Item 1. “ Financial Statements ” for a description of the securitization that the Company utilized during the first quarter of 2006. This securitization represented the sale of a portion of the RAL portfolio to a financial institution, and except for the capital that was allocated for the small retained interest kept by the Company, it eliminated the funding impact on the regulatory capital ratios of the Company. The net gain on this securitization, which represents the net amount of the fees from the loans, the fees paid by Republic, and the recourse obligation or provision expense incurred by Republic on the sold loans, is classified on the face of the income statement as non interest income under the caption “Net gain on sale of RALs.”

See additional discussion about this product below under Footnote 11 “Segment Information” of Item 1. “Financial Statements.”

(III) Mortgage Banking

Mortgage banking activities primarily include 15, 20 and 30-year fixed rate real estate loans that are sold into the secondary market. Since 2003, Republic historically retained servicing on substantially all loans sold into the secondary market; however, during the second quarter of 2006, the Company began selling the majority of its loans with servicing released. Administration of loans with the servicing retained by the Company includes collecting principal and interest payments, escrowing funds for taxes and insurance and remitting payments to the secondary market investors. A fee is received by Republic for performing these standard servicing functions. See additional discussion about this product under Footnote 11 “Segment Information” of Item 1. “Financial Statements.”

(IV) Discontinued Operations (“Deferred Deposits” or “Payday Lending”)

Payday loans are transactions whereby customers receive cash advances in exchange for a check or authorization to electronically debit the customer’s checking account for the advanced amount plus a fixed fee. Under the Marketer/Servicer model, customers can reclaim their checks in cash for the amount of the advance plus the fee, on or before the due date of the advance. If the customer does not reclaim the check in cash by the advance due date, the check is deposited. Payday loan transactions are recorded as loans on the Company’s financial statements. The corresponding fees are recorded as a component of income from discontinued operations. The Company had $423,000 in payday loans outstanding at June 30, 2006, or less than one half of one percent of total loans outstanding.

The Bank substantially exited the payday loan segment of business during February 2006. This has been treated as a discontinued operation and all current period and prior period data has been restated to reflect operations absent of the payday lending segment of business. The Company completely ceased originating payday loans on June 30, 2006.

See additional discussion about this product under Footnote 3 “Discontinued Operations” and Footnote 11 “Segment Information” of Item 1. “Financial Statements.”

RESULTS OF OPERATIONS

Net Interest Income

The principal source of Republic’s revenue is net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and securities, and the interest expense on liabilities used to fund those assets, such as interest-bearing deposits and borrowings. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.

For the second quarter of 2006 net interest income was $20.4 million, an increase of $1.4 million, or 7%, over the same period in 2005. As illustrated in Table 3, the Company was able to increase its net interest income primarily through growth in the Company’s traditional loan portfolio combined with an increase in yield on new loans and on its investment portfolio, as the Company maintained a short repricing duration on its investments for interest rate risk purposes. The increased interest income from loans and investments was partially offset by increased interest expense on money market accounts and repurchase agreements, which reprice with short-term indices. The Company’s net interest spread from continuing operations declined 16 basis points for the second quarter of 2006 compared to the same period in 2005 while net interest margin from continuing operations declined 2 basis points for the same period.

For the first six months of 2006, net interest income was $45.1 million, a decline of $336,000, or 1%, from the same period in 2005. The Company experienced a $3.1 million or 36% decline in net interest income within the TRS business segment as a direct result of the RAL securitization, which effectively caused $4.2 million in RAL fees to be classified in non interest income because they were related to securitized RALs. The Company experienced a $2.8 million increase in net interest income within the Banking segment which was primarily related to growth in the traditional loan portfolio, particularly within the residential real estate portfolio. Total traditional “Bank” loans increased $281 million from June 30, 2005 to June 30, 2006.

The Company’s net interest spread from continuing operations declined 40 basis points for the first six months of 2006 to 2.82% compared to the same period in 2005, while net interest margin from continuing operations declined 26 basis points to 3.41% for the same period. Approximately 18 basis points of the decline in the net interest margin was the result of the fees on the securitized RALs now being classified in non interest income, while in past years all RALs were retained and their corresponding fees were included as a component of interest income on loans. The remainder of the decline in the net interest margin and net interest spread was the result of an increase in the Company’s cost of funds without a similar corresponding increase in its yield on earning assets. More specifically, this contraction primarily occurred because much of the Company’s funding is derived from large commercial cash management accounts that are tied to immediately repricing indices, while the majority of the Company’s interest earning assets are real estate secured loans that reprice over a longer period. Based on the Company’s current balance sheet structure, management believes that the net interest spread and margin in 2006 will continue to contract unless short-term rates decline significantly from current levels. Management is unable to precisely determine the negative impact of continued contraction on the Company’s net interest spread and margin in the future.

For additional information on the past effect of rising short-term interest rates on Republic’s net interest income, see section titled “Volume/Rate Variance Analysis” in this section of the document. For additional information on the potential future effect of rising short-term interest rates on Republic’s net interest income, see section titled “Interest Rate Sensitivity” in this section of the document. For additional discussion regarding the securitization, see the section titled “Tax Refund Solutions” and Footnote 12 of Item 1. “Financial Statements.”

Table 1 and Table 2 provide detailed information as to average balances, interest income/expense and rates by major balance sheet category for the three and six month periods ended June 30, 2006 and 2005. Table 3 provides an analysis of the changes in net interest income attributable to changes in rates and changes in volume of interest-earning assets and interest-bearing liabilities.

Table 1 – Average Balance Sheets and Interest Rates from Continuing Operations for the Three Months Ended June 30, 2006 and 2005

	June 30, 2006							June 30, 2005
(dollars in thousands)	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate

ASSETS
Earning assets:
Investment securities (1)	$	484,970		$	5,478	4.52	%	$	535,446		$	4,714	3.52	%
Federal funds sold and other	20,867			247		4.73		51,505			368		2.86
Loans and fees (2)	2,156,678			35,360		6.56		1,874,244			28,320		6.04
Total earning assets	2,662,515			41,085		6.17		2,461,195			33,402		5.43

Less: Allowance for loan losses	(11,103		)					(11,191		)

Non-earning assets:
Cash and cash equivalents	53,607							53,127
Premises and equipment, net	32,417							32,677
Other assets (1)	38,091							31,500
Total assets	$	2,775,527						$	2,567,308


LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction accounts	$	265,634		$	565	0.85	%	$	330,345		$	798	0.97	%
Money market accounts	389,109			3,514		3.61		291,359			1,433		1.97
Time deposits	466,599			4,425		3.79		476,496			3,985		3.35
Brokered deposits	184,641			1,998		4.33		137,331			1,157		3.37
Total deposits	1,305,983			10,502		3.22		1,235,531			7,373		2.39

Repurchase agreements and other short-term borrowings	342,753			3,724		4.35		372,348			2,450		2.63
Federal Home Loan Bank borrowings	547,211			5,870		4.29		449,254			4,612		4.11
Subordinated note	41,240			627		6.08		—			—		—
Total interest-bearing liabilities	2,237,187			20,723		3.71		2,057,133			14,435		2.81

Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing deposits	286,620							289,588
Other liabilities	28,403							20,539
Stockholders’ equity	223,853							211,217
Less: Stockholders’ equity allocated to discontinued operations	(536		)					(11,169		)
Total liabilities and stockholders’ equity	$	2,775,527						$	2,567,308

Net interest income				$	20,362						$	18,967

Net interest spread						2.46	%						2.62	%

Net interest margin						3.06	%						3.08	%

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

(2) The amount of loan fee income included in interest income was $536,000 and $558,000 for the three months ended June 30, 2006 and 2005.

Table 2 – Average Balance Sheets and Interest Rates from Continuing Operations for the Six Months Ended June 30, 2006 and 2005

	June 30, 2006							June 30, 2005
(dollars in thousands)	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate

ASSETS
Earning assets:
Investment securities (1)	$	504,447		$	11,330	4.49	%	$	547,849		$	9,391	3.43	%
Federal funds sold and other	13,332			304		4.56		71,626			938		2.62
Loans and fees (2)	2,130,420			73,219		6.87		1,855,528			63,221		6.81
Total earning assets	2,648,199			84,853		6.41		2,475,003			73,550		5.94

Less: Allowance for loan losses	(11,401		)					(11,936		)

Non-earning assets:
Cash and cash equivalents	53,476							56,184
Premises and equipment, net	32,361							33,129
Other assets (1)	36,771							29,418
Total assets	$	2,759,406						$	2,581,798


LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction accounts	$	279,549		$	1,390	0.99	%	$	335,347		$	1,624	0.97	%
Money market accounts	382,863			6,625		3.46		296,140			2,635		1.78
Time deposits	474,960			8,819		3.71		471,905			7,824		3.32
Brokered deposits	175,053			3,675		4.20		132,702			2,182		3.29
Total deposits	1,312,425			20,509		3.13		1,236,094			14,265		2.31

Repurchase agreements and other short-term borrowings	336,031			6,992		4.16		377,726			4,577		2.42
Federal Home Loan Bank borrowings	526,083			10,979		4.17		452,878			9,246		4.08
Subordinated note	41,240			1,247		6.05		—			—		—
Total interest-bearing liabilities	2,215,779			39,727		3.59		2,066,698			28,088		2.72

Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing deposits	294,741							301,540
Other liabilities	29,809							20,924
Stockholders’ equity	220,019							208,206
Less: Stockholders’ equity allocated to discontinued operations	(942		)					(15,570		)
Total liabilities and stockholders’ equity	$	2,759,406						$	2,581,798

Net interest income				$	45,126						$	45,462

Net interest spread						2.82	%						3.22	%

Net interest margin						3.41	%						3.67	%

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

(2) The amount of loan fee income included in interest income was $5.7 million and $9.4 million for the six months ended June 30, 2006 and 2005.

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

Table 3 – Volume/Rate Variance Analysis from Continuing Operations

	Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005									Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005
				Increase/(Decrease) Due to									Increase/(Decrease) Due to
(in thousands)	Total Net Change			Volume			Rate			Total Net Change			Volume			Rate

Interest income:

Investment securities	$	764		$	(476	)	$	1,240		$	1,939		$	(791	)	$	2,730
Federal funds sold and other	(121		)	(287		)	166			(634		)	(1,060		)	426
Loans and fees	7,040			4,651			2,389			9,998			7,185			2,813
Net change in interest income	7,683			3,888			3,795			11,303			5,334			5,969

Interest expense:

Transaction accounts	(233		)	(145		)	(88		)	(234		)	(277		)	43
Money market accounts	2,081			596			1,485			3,990			944			3,046
Time deposits	440			(84		)	524			995			51			944
Brokered deposits	841			461			380			1,493			800			693
Repurchase agreements and other short-term borrowings	1,274			(209		)	1,483			2,415			(554		)	2,969
Federal Home Loan Bank borrowings	1,258			1,043			215			1,733			1,524			209
Subordinated note	627			627			—			1,247			1,247			—
Net change in interest expense	6,288			2,289			3,999			11,639			3,735			7,904


Net change in net interest income	$	1,395		$	1,599		$	(204	)	$	(336	)	$	1,599		$	(1,935	)

Non interest Income

Non interest income increased $1.9 million or 11% during the six months ended June 30, 2006 compared to the same period in 2005, due primarily to an increase in service charges on deposit accounts. For the quarter ended June 30, 2006 non interest income increased $808,000 or 12% over the same period in 2005, due primarily to the same reason.

Service charges on deposit accounts increased $1.7 million or 24% during the first six months of 2006 and $822,000 or 22% for the quarter ended June 30, 2006 compared to the same periods in 2005. The increases were due primarily to growth in the Company’s checking account base in conjunction with the Bank’s “Overdraft Honor” program, which permits selected clients to overdraft their accounts up to a predetermined dollar amount (up to a maximum of $750) for the Bank’s customary overdraft fee. The Company also increased its overdraft fee by 7% in August 2005.

ERC/ERD fees decreased $1.9 million, or 32%, to $4.0 million during the six months ended June 30, 2006 compared to the same period in 2005. This decrease was due to a 27% decline in ERC/ERD volume from the prior year resulting primarily from the discontinuation of a business relationship with one large integrated software partner. The majority of this income was recognized during the first quarter of both years. Because the substantial majority of the Company’s tax business occurs during the first quarter of each year, most of this decline relates to the first quarter of 2006.

Net gain on sale of RALs was $2.4 million for the six months ended June 30, 2006 as the Company completed its first securitization ever of a portion of the RAL portfolio. The majority of this income was recognized during the first quarter of the year. For the second quarter of 2006, the Company recorded a net gain on sale of RALs of $404,000. This gain represents recoveries of loans previously charged off that were sold into the securitization. The potential exists during the remainder of the year that the Company will post additional recoveries of loans previously charged off that were sold into the securitization. The Company believes the impact of these recoveries will be immaterial to the financial statements and will recognize such recoveries in subsequent quarters as they are realized.

Detail of net gain on sale of refund anticipation loans follows:

(in thousands)	Three Months Ended June 30, 2006		Six Months Ended June 30, 2006

Refund anticipation loan fees on securitized RALs	$	—	$	4,230
Credit Losses	404		(1,204		)
Other securitization costs	—		(608		)
Net gain on sale of refund anticipation loans	$	404	$	2,418

See additional discussion under Footnote 11 “Segment Information” and Footnote 12 “Securitization” of Item 1. “Financial Statements.”

Non interest Expenses

Non interest expenses increased $4.0 million or 12% during the six months ended June 30, 2006 compared to the same period in 2005. Salaries and employee benefits increased $2.5 million during this period, attributable to annual merit increases, increased incentive compensation accruals and stock option compensation expense. The Company recorded stock option expense of $404,000 during the first six months of 2006 related to the adoption of SFAS 123R.

For the second quarter of 2006 non interest expenses increased $1.4 million or 8% compared to the same period in 2005. Salaries and employee benefits increased $626,000 or 7% during this period, attributable to the same reasons cited in the preceding paragraph. The Company recorded stock option expense of $188,000 during the second quarter 2006 related to the adoption of SFAS 123R.

Occupancy and equipment expense increased $695,000, or 10%, during the six months ended June 30, 2006 compared to the same period in 2005. The increase in occupancy and equipment was primarily attributable to increased rent and leasehold improvements for the Company’s operations’ areas as well as increased leasing costs and service agreements for the Company’s technology and operating systems.

Occupancy and equipment expense increased $328,000, or 10%, during the quarter ended June 30, 2006 compared to the same period in 2005. The increase in occupancy and equipment was primarily attributable to the reasons cited in the preceding paragraph.

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2006 AND DECEMBER 31, 2005

Investment Securities

Securities available for sale decreased $64 million during the first six months of 2006 while securities to be held to maturity declined $6 million for the same period. The decline in the investment securities portfolio primarily relates to maturing U.S. Government Securities and Agencies that were utilized to fund loan growth.

Loans

Net loans, primarily consisting of secured real estate loans, increased by $133 million to $2.2 billion at June 30, 2006. This growth was primarily in the residential real estate and commercial real estate portfolios and resulted from continued promotion of its discounted closing costs promotions in both product types.

Allowance for Loan Losses and Provision for Loan Losses

The Company experienced an increase in the provision for loan losses of $1.2 million for the first six months of 2006 and $1.4 million for the quarter ended June 30, 2006 compared to the same periods in the prior year. The traditional banking segment accounted for an increase of $2 million for the first six months of 2006 and $1.6 million for the quarter ended June 30, 2006 compared to the same periods in the prior year. The increase in provision expense for both the quarter and six months ended June 30, 2006 was primarily due to growth in the loan portfolio during the current year and a large credit recorded to the provision during the second quarter of 2005 associated with improvements in a few large classified loans.

Also included in the provision for loan losses for the six month periods ended June 30, 2006 and June 30, 2005 were $ 664,000 and $1.5 million for losses associated with RALs retained by the Company. The decrease in the provision associated with RALs resulted primarily from the securitization of a portion of the RAL portfolio during the first quarter of 2006. Accounting for the securitization requires losses on the sold loans to be recorded as a reduction to the gain on sale of RALs in non interest income. (For further detail on losses on RALs sold into the securitization, see section titled “Non Interest income”.)

The allowance for loan losses as a percent of total loans declined slightly to 0.49% at June 30, 2006 as compared to 0.53% as of December 31, 2005. Management believes, based on information presently available, that it has adequately provided for loan losses at June 30, 2006.

An analysis of the changes in the allowance for loan losses and selected ratios follows:

Table 4 – Summary of Loan Loss Experience

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2006			2005			2006			2005
Allowance for loan losses at beginning of period	$	11,023		$	13,821		$	11,009		$	13,554

Charge offs:
Real estate:
Residential	(190		)	(106		)	(490		)	(183		)
Commercial	—			—			(30		)	(102		)
Construction	—			—			—			—
Commercial	(169		)	—			(169		)	—
Consumer	(317		)	(168		)	(408		)	(294		)
Home equity	(10		)	(14		)	(64		)	(55		)
Tax Refund Solutions	(482		)	(285		)	(1,358		)	(2,213		)
Discontinued operations	—			—			(409		)	-
Total	(1,168		)	(573		)	(2,928		)	(2,847		)
Recoveries:
Real estate:
Residential	26			123			54			130
Commercial	2			16			7			20
Construction	5			—			84			-
Commercial	10			5			14			15
Consumer	60			75			139			168
Home equity	22			22			25			29
Tax Refund Solutions	219			96			694			696
Discontinued operations	15			—			79			—
Total	359			337			1,096			1,058

Net loan charge offs / recoveries	(809		)	(236		)	(1,832		)	(1,789		)
Provision for loan losses from continuing operations	573			(867		)	1,903			723
Provision for loan losses from discontinued operations	(27		)	664			(320		)	894
Allowance for loan losses at end of period	$	10,760		$	13,382		$	10,760		$	13,382

Ratios:
Allowance for loan losses to total loans	0.49		%	0.69		%	0.49		%	0.69		%
Net loan charge offs to average loans outstanding from continuing operations (annualized)	0.15			0.05			0.14			0.19
Allowance for loan losses to non performing loans	151			198			151			198

FEDERAL HOME LOAN BANK BORROWINGS

Approximately $60 million of the FHLB borrowings at June 30, 2006 are convertible advances with original fixed rate periods ranging from one to five years and original maturities ranging from three to ten years. At the end of their respective fixed rate periods, the FHLB has the right to convert the borrowings to floating rate advances tied to LIBOR. If the FHLB elects to convert the debt to a floating rate instrument, Republic has the right to pay off the advances without penalty. During the first six months of 2006, the FHLB converted $30 million in advances to floating rate, overnight borrowings. The weighted average coupon on the $60 million remaining at June 30, 2006 was 4.93%. Based on market conditions at this time, management believes it is likely these advances will be converted to floating rate borrowings by the FHLB during 2006.

LIQUIDITY

Republic maintains sufficient liquidity to fund loan demand and routine deposit withdrawal activity. Liquidity is managed by maintaining sufficient liquid assets in the form of investment securities. Funding and cash flows can also be realized by the sale of securities available for sale, principal paydowns on loans and mortgage backed securities (“MBSs”) and proceeds realized from loans held for sale. The Company’s liquidity is impacted by its ability to sell securities, which is limited, due to the level of securities that are needed to secure public deposits, securities sold under agreements to repurchase and for other purposes, as required by law. At June 30, 2006, these securities had a fair market value of $402 million. Republic’s banking centers and its Internet site, www.republicbank.com, provide access to retail deposit markets. These retail deposits, if offered at attractive rates, have historically been a source of additional funding when needed. In addition, brokered certificates of deposit have provided a source of liquidity to the Company when needed to fund loan growth.

Traditionally, the Company has also utilized secured and unsecured borrowing lines to supplement its funding requirements. At June 30, 2006, the Company had capacity with the Federal Home Loan Bank to borrow an additional $191 million. The Company also had $175 million in approved unsecured line of credit facilities available at June 30, 2006 through various third party sources.

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Kentucky and Indiana banking regulations limit the amount of dividends that may be paid to the Parent Company by the Bank without prior approval of the respective states’ banking regulators. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years. At June 30, 2006, Republic Bank & Trust Company and Republic Bank & Trust Company of Indiana could, without prior approval, declare dividends of approximately $41 million and $526,000, respectively. The Company does not plan to pay dividends from Republic Bank & Trust Company of Indiana in the foreseeable future.

CAPITAL

Total stockholders’ equity increased from $214 million at December 31, 2005 to $226 million at June 30, 2006. The increase in stockholders’ equity was primarily attributable to net income earned during 2006 reduced by dividends declared, the repurchase of Company stock and the change in accumulated other comprehensive income/(loss) as a result of a decrease in the value of the available for sale securities portfolio.

See Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” for additional detail regarding stock repurchases and buy back programs.

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

The FDIC has categorized the Bank as well capitalized. To be categorized as well capitalized, the Bank must maintain minimum Total Risk Based, Tier I Risk Based and Tier I Leverage ratios. Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent on the individual risk profiles of financial institutions. Republic continues to exceed the regulatory requirements for Tier I leverage, Tier I risk based and total risk based capital. Republic and the Bank intend to maintain a capital position that meets or exceeds the “well capitalized” requirements as defined by the Federal Reserve and FDIC. Republic’s average capital to average assets ratio was 7.97% at June 30, 2006 compared to 8.00% at December 31, 2005. Formal measurements of the capital ratios for the Company and Republic Bank & Trust Company are performed at each quarter end.

In August 2005, Republic Bancorp Capital Trust (“RBCT”), an unconsolidated trust subsidiary of Republic Bancorp, Inc., issued $40 million in Trust Preferred Securities (“TPS”). The TPS pay a fixed interest rate for 10 years and

adjust with LIBOR thereafter. The TPS mature on September 30, 2035 and are redeemable at the Company’s option after ten years. The subordinated debentures are treated as Tier I capital for regulatory purposes. The sole asset of RBCT represents the proceeds of the offering loaned to Republic Bancorp, Inc. in exchange for subordinated debentures which have terms that are similar to the TPS. The subordinated debentures and the related interest expense, which are payable quarterly at the annual rate of 6.015%, are included in the consolidated financial statements. The proceeds obtained from the TPS offering have been and will continue to be utilized to fund loan growth, support an existing stock repurchase program and for other general business purposes including the acquisition of GulfStream Community Bank in Florida.

The following table sets forth the Company’s risk based capital amounts and ratios as of June 30, 2006 and December 31, 2005.

Table 5 – Capital Ratios

	As of June 30, 2006				As of December 31, 2005
	Actual				Actual
(dollars in thousands)	Amount		Ratio		Amount		Ratio

Total Risk Based Capital (to Risk Weighted Assets)
Republic Bancorp, Inc.	$	281,354	15.41	%	$	267,054	15.03	%
Republic Bank & Trust Co.	234,222		13.26		220,730		12.78
Republic Bank & Trust Co. of Indiana	11,688		20.07		11,488		22.76

Tier I Capital (to Risk Weighted Assets)
Republic Bancorp, Inc.	$	270,594	14.83		$	256,046	14.41
Republic Bank & Trust Co.	200,618		11.35		186,905		10.82
Republic Bank & Trust Co. of Indiana	11,082		19.03		10,855		21.51

Tier I Leverage Capital (to Average Assets)
Republic Bancorp, Inc.	$	270,594	9.75		$	256,046	9.47
Republic Bank & Trust Co.	200,618		7.40		186,905		7.12
Republic Bank & Trust Co. of Indiana	11,082		12.29		10,855		13.62

REGULATORY MATTERS

On July 22, 2005, Republic Bank & Trust Company received a Community Reinvestment Act (“CRA”) performance evaluation prepared as of October 4, 2004 with a “Needs to Improve” rating. Republic Bank & Trust Company voluntarily changed certain procedures and processes to address the Regulation B issues raised by the FDIC during the CRA Evaluation. As required by statute, the FDIC referred their conclusions to the Department of Justice (“DOJ”) for review. Subsequent to June 30, 2006, the Company was notified that the DOJ has referred the Regulation B issue back to the FDIC for administrative handling with no further corrective action required by the DOJ. At this time, the FDIC is considering whether it will require any further corrective actions by Republic. On June 22, 2006, Republic Bank & Trust Company received a subsequent CRA evaluation prepared as of April 10, 2006 in which it received a “Satisfactory” rating.

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

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.

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 evaluated with the model. The model projects the effect of instantaneous movements in interest rates of both 100 and 200 basis point increments equally across all points on the yield curve. These projections are computed based on various assumptions, which are used to determine the 100 and 200 basis point increments, as well as the base case (which is a twelve month projected amount) scenario. Assumptions based on growth expectations and on the historical behavior of Republic’s deposit and loan rates and their related balances in relation to changes in interest rates are also incorporated into the model. These assumptions are inherently uncertain and, as a result, the model cannot 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. Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the yield curve. As with the Company’s previous simulation models, the June 30, 2006 simulation analysis continues to indicate that an increase in interest rates would have a negative effect on net interest income, while a decrease in interest rates would have a positive effect on net interest income.

The following table illustrates Republic’s projected annualized net interest sensitivity profile based on the asset/liability model as of June 30, 2006:

Table 6 – Interest Rate Sensitivity

	Net Interest Income Change

Increase 200 basis points	-8.40	%
Increase 100 basis points	-3.67
Decrease 100 basis points	2.81
Decrease 200 basis points	6.06

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Information required by this item is included under Part I, Item 2., “ Management’s Discussion and Analysis of Financial Condition and Results of Operation” and Item 1A. “Risk Factors.”

Item 4. Controls and Procedures.

As of the end of the period covered by this report, an evaluation was carried out by Republic Bancorp, Inc.’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of operations, Republic and the Bank are defendants in various legal proceedings. In the opinion of management, there is no proceeding pending or, to the knowledge of management, threatened litigation in which an adverse decision could result in a material adverse change in the business or consolidated financial position of Republic or the Bank.

Item 1A. Risk Factors.

Information regarding risk factors appears in the Company’s Form 10-K for the year ending December 31, 2005, under the heading titled “Cautionary Statement Regarding Forward-Looking Statements” and in the Form 10-K Part I, Item 1A. “ Risk Factors .” There has been no material changes from the risk factors previously disclosed in our Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Details of Republic’s Class A Common Stock purchases during the second quarter of 2006 are included in the following table:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plan or Programs
April 1– April 30	14,818		$	19.91	14,818
May 1– May 31	17,599		18.53		17,599
June 1 – June 30	5,869		20.19		5,869
Total	38,286	*	$	19.32	38,286	319,668

* – Includes 9,257 shares repurchased by the Company in connection with stock option exercises.

During the second quarter and six months ended June 30, 2006, the Company repurchased 29,029 shares in addition to the stock option exercises detailed above. During the second quarter of 2006, the Company’s Board of Directors approved the repurchase of an additional 300,000 shares, from time to time, if market conditions are deemed favorable to the Company. During the third quarter of 2005, the Company’s Board of Directors approved the repurchase of 262,500 shares. The repurchase programs will remain effective until the number of shares authorized is repurchased or until Republic’s Board of Directors terminates the program. As of June 30, 2006, the Company had 319,668 shares which could be repurchased under the current stock repurchase programs.

During 2006, Republic issued approximately 5,000 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.

There were no equity securities of the registrant sold without registration during the quarter covered by this report.

Item 6. Exhibits.

(a) Exhibits

The following exhibits are filed or furnished as a part of this report:

Exhibit Number		Description of Exhibit

10.1		Lease between Jaytee Properties and InsBanc, Inc., dated February 3, 2003, relating to 9600 Brownsboro Road, Louisville, KY.

10.2		Assignment and Assumption of Lease by Republic Bank & Trust Company with the consent of Jaytee Properties, dated May 1, 2006, relating to 9600 Brownsboro Road, Louisville, KY.

31.1		Certification of Principal Executive Officer, pursuant to Rules 13a-14(a) of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer, pursuant to Rules 13a-14(a) of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements 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:


	/s/ Steven E. Trager
August 9, 2006		By:	Steven E. Trager
			President and Chief Executive Officer

		Principal Financial Officer:


	/s/ Kevin Sipes
August 9, 2006		By:	Kevin Sipes
			Executive Vice President, Chief Financial
			Officer and Chief Accounting Officer

EXHIBIT 10.1

SPRINGHURST
LOUISVILLE, KENTUCKY

INSBANC, INC.

INDEX TO LEASE

Article		Page

I.	Premises	3

II.	Term	3

III.	Rent	3

IV.	Use	4

V.	Possession	4

VI.	Services to be Provided	4

VII.	Maintenance, Repair, Alterations, Construction	4

VIII.	Access	6

IX.	Damage or Destruction	6

X.	Indemnity	6

XI.	Remedies	7

XII.	Insurance	7

XIII.	Liens	8

XIV.	Assignment; Subletting; Mortgaging	8

XV.	Estoppel Certificate	9

XVI.	Taxes	9

XVII.	Priority of Lease	9

Article		Page

XVIII.	Fixtures and Personal Property; Surrender	10

XIX.	Hold over Tenancy	10

XX.	Waiver of Subrogation	10

XXI.	Notices	10

XXII.	Rights Reserved by Landlord	11

XXIII.	Condemnation	11

XXIV.	Guaranty Provisions	11

XXV.	Miscellaneous Provisions	12

	Exhibit A.	15

	Exhibit B.	16

SPRINGHURST OFFICE LEASE

THIS LEASE, dated this 3rd day of February , 2003, is between Jaytee Properties, a Kentucky general partnership, hereinafter referred to as “Landlord” and Insbanc, Inc., hereinafter referred to as the “Tenant”. As parties hereto, Landlord and Tenant agree:

ARTICLE I. PREMISES

SECTION 1. Tenant leases from Landlord and Landlord leases to Tenant the following described premises (hereinafter called the “Premises”):

Being approximately 1189 square feet of rentable office space

located on the first floor in the Republic Bank Building

(Hereinafter called “the Building”) located at 9600 Brownsboro Road

in Jefferson County, Kentucky.

SECTION 2. The Premises shall be provided in “as is” condition with a Tenant Improvement allowance to be paid by Landlord not to exceed $20.00 per square foot, (Twenty-three Thousand Seven Hundred and Eighty Dollars, $23,780.00) for expenditures related to Tenant’s design and construction of its space. Any remodeling construction and/or redecorating within the Premises shall be performed to the complete and absolute satisfaction of Landlord. The Landlord’s written approval shall be obtained by Tenant prior to commencement of any and all improvements and the construction of improvements shall be supervised and approved by Landlord on a continuous basis.

SECTION 3. This Lease confers no rights with respect to the Building other than tenancy of the Premises and the non-exclusive license to use, during such tenancy, the following facilities provided by Landlord: (i) toilet facilities on the floor which the Premises are located (and such other toilet facilities located elsewhere in the Building as may be designated by Landlord for the general use of tenants); and (ii) the public entrances to, and main floor lobby in, the Building; (iii) the passenger elevators serving the Building; (iv) the areas adjacent to the Building dedicated from time to time for parking purposes by Landlord for the parking of motor vehicles; and (v) the roadways and passageways adjacent to the Building for passage by motor vehicle and on foot, as said roadways and passageways may respectively be dedicated by Landlord.

ARTICLE II. TERM

Landlord leases the Premises to Tenant, and Tenant hires and takes the Premises from Landlord, for a term of five (5) Lease Years commencing on March 1, 2003, (the “Lease Commencement Date”) and expiring at midnight on the last day of the sixtieth month thereafter unless sooner terminated pursuant to the terms hereof. “Lease Year” shall mean a year period beginning on the first day of a month, which is the first calendar month of the term of the Lease and ending on the day before the anniversary of the first day of such year.

ARTICLE III. RENT

SECTION 1. Tenant shall pay to Landlord, at Landlord’s office in the Building or at such place as Landlord may from time to time designate, as rental for the Premises, the sum of One Thousand Nine Hundred and Eighty-one Dollars and 66/100 ($1,981.66) per month (the “Rent”). Rent shall be payable in advance on the first day of each calendar month during the first five Lease Years beginning on the Lease Commencement Date. A TEN PERCENT (10%) late charge shall be added to all rent payments more than ten (10) days past due. Upon execution of this lease, Tenant shall pay a rent deposit in the amount of one month’s rent, said deposit to be held as a security deposit by the Landlord. Checks shall be made payable to Landlord and mailed to:

Jaytee Properties

Republic Corporate Center

601 W, Market Street

Louisville, Kentucky 40202

SECTION 2. In the event that any check which has been remitted to Landlord by Tenant for payment of the Rent, or any other sum payable under this Lease, shall not be honored upon its presentation for payment, then an additional charge of $100.00 shall be imposed on each check not honored.

ARTICLE IV. USE

The Premises are to be used only for the purpose of conducting therein the operation of an insurance or related office facility and for no other business or purpose without the prior written consent of Landlord. Tenant shall not do or permit to be done in or about the Premises anything which is illegal or unlawful; or which is of a hazardous or dangerous nature; or which will increase the rate(s) of insurance upon the Building. Tenant shall (and shall cause its employees to) observe the rules and regulations set forth in Exhibit B attached hereto and made a part hereof, as the same may be amended by Landlord from time to time, and Tenant shall comply with all governmental laws and ordinances and all regulations applicable to the use and occupancy of the Building.

ARTICLE V. POSSESSION

If Landlord permits Tenant to enter into possession of the Premises prior to the Lease Commencement Date, all of the terms and conditions of this Lease shall apply during such prior period. Tenant’s taking of possession of the Premises represents Tenant’s conclusion that the Premises are in good and tenantable condition and acceptable for Tenant’s use thereof as provided in this Lease.

ARTICLE VI. SERVICES TO BE PROVIDED

Landlord shall furnish reasonable amounts of heat, air conditioning, water and elevator service (collectively “Services”) to the Premises during the times and in the manner that Landlord determines appropriate for the furnishing of such services in the Building, all such services being subject to energy availability or Energy Consumption Regulations which may be hereafter promulgated. It is expressly agreed that should any local, state or federal governmental body, agency or public utility restrict or reduce the amount of fuel or energy which may be utilized to provide the utilities and services as specified above, then such restriction or reduction, and the reduction in utilities and services which may result therefrom, shall in no way create or constitute a default on the part of the Landlord, and there shall be no reduction or abatement in the Rent or any other sum payable by Tenant thereunder. Further, Landlord shall not be liable for any injury, damage, inconvenience, or otherwise which may arise or result should the furnishing of any such services by interrupted or prevented by fire, accident, strike, riot, act of God, the making of necessary repairs or improvements, or any other cause beyond the reasonable control or prevention of Landlord, nor, subject only to the provisions of Article XI of this Lease, shall the Rent payable by Tenant hereunder abate.

ARTICLE VII. MAINTENANCE, REPAIR, ALTERATIONS, CONSTRUCTION

SECTION 1. Landlord shall keep and maintain the roof, foundations, floor slab, and all structural walls (including windows and plate glass), gutters and downspouts of the Premises in good order and repair. Landlord shall keep or cause to be kept in good repair all common areas of the Building and appurtenant areas, including lighting systems; drainage systems; mechanical, plumbing, and electrical systems; heat and air conditioning units; ductwork, lines, pipes, and conduits serving the Premises; and parking areas and driveways. Any maintenance, repairs or replacements to any of the foregoing made necessary by any acts or omissions of the Tenant, its agents or employees, shall be paid for by Tenant and Tenant shall reimburse Landlord on demand for the cost of repairing any damage to the Premises or the Building caused by Tenant or its agents or employees. In the event, after reasonable notice to Landlord, Landlord fails to make any repairs as hereinbefore provided, then Tenant shall have the right to make these repairs and deduct the cost thereof from any future rental payments.

SECTION 2. All maintenance, repairs, or replacements relating to the Premises that are not the obligation of Landlord as set forth in Section 1 above shall be the obligation of Tenant and shall be made by Tenant at Tenant’s sole cost and expense. Tenant shall maintain, at its expense, the interior of the Premises in good repair and in a clean and attractive condition. Tenant’s obligation to maintain, repair and replace includes, but is not limited to, all the interior of the Premises. In the event Tenant fails to comply with the requirements of this Section, Landlord may effect such maintenance and repair and the cost thereof, with interest at the rate of 8.5% per annum, shall be payable immediately to Landlord as additional rent. In the event the applicable Statute of the Commonwealth of Kentucky at

any time shall allow for a higher rate of interest under an instrument in writing, then such higher rate shall apply and be payable. If Tenant is a corporation, then the interest rate to be so payable hereunder shall be at the rate of 12% per annum.

SECTION 3. Tenant shall not make any alterations, additions or improvements to the Premises without first obtaining Landlord’s prior written consent. In connection with any such request for Landlord’s consent to such alterations, additions or improvements to the Premises, Landlord may retain the services of an architect and/or engineer; and the reasonable costs for the services of such architect and/or engineer shall be reimbursed to Landlord by Tenant. Landlord may make any repairs for the preservation, safety or improvement of the Premises or the Building. All alterations, and improvements made by Tenant shall become the property of Landlord upon making thereof and shall be surrendered to Landlord upon the expiration of this Lease.

SECTION 4. No construction work shall be undertaken or commenced by Tenant on the Premises until: (a) plans and specifications fully describing the work, or changes to work previously approved, have been submitted to and approved by Landlord, (b) all necessary building permits and all conventional insurance coverages have been obtained by Tenant, (c) proper provision has been made by Tenant for payment in full of the cost of the work, and (d) Landlord has given written notice that the work can proceed, subject to such reasonable conditions as Landlord may impose.

SECTION 5. Tenant shall carry out Tenant’s repair, maintenance, alterations and improvements in the Premises only during times agreed to in advance by Landlord and in a manner, which will not interfere with the rights of other tenants in the Premises. Tenant shall not obstruct or place anything in or on the sidewalks or driveways, or parking facilities outside the Building or in the lobbies, corridors, stairwells or other common areas on the Building, or use such locations for any purpose except access to and exit from the Premises without Landlord’s prior written consent. Landlord may remove at Tenant’s expense any such obstruction without notice or obligation to Tenant. In order it ensure that work proceeds efficiently on the Premises, Landlord or Landlord’s general contractor may from time to time make rules for co-ordination of all construction work, Tenant shall ensure that any designer, contractor and workmen employed by Tenant is informed of and observes such rules, and prior to commencement of any construction work makes appropriate arrangements with Landlord, particularly with respect to:

(a) Material handling and hoisting facilities

(b) Material and equipment storage

(d) Elevator usage

(e) Hours of work and co-ordination of work

(f) Power, heating and washroom facilities

(g) Scheduling

(h) Security

(i) Clean-up

(j) Construction vehicles in parking facility

SECTION 6. Tenant shall ensure that all cutting, drilling, hammering, or other work of a noisy or vibrant nature be conducted outside the normal business hours of tenants occupying the Premises. Tenant shall at all times keep the Premises and adjacent areas free from accumulation of waste material or rubbish caused by his suppliers, contractors or workmen. Landlord may require clean-up on a daily basis and reserves the right to do clean-up at the expense of Tenant if Landlord’s reasonable requirements are not complied with. After the completion of the work, Tenant’s contractor shall forthwith remove all rubbish and all tools, equipment and surplus materials from and about the Premises and shall leave the Premises clean to the satisfaction of Landlord. This final clean-up shall include the cleaning of light fixtures, windows, perimeter radiation units, entries and public space affected by the work. Any damage caused by Tenant’s contractor or sub-trades to the Premises or any property of the Landlord or any Tenant of the Premises shall be repaired forthwith to the satisfaction of Landlord at Tenant’s expense.

SECTION 7. If Tenant’s contractor does not pursue Tenant’s work properly in accordance with the approved plans and specifications, Landlord, after five days notice to Tenant and Tenant’s contractor may remedy the default or make good any deficiencies, and recover the costs incurred therein from Tenant.

SECTION 8. Not more than 15 days from notice by Landlord, Tenant shall reimburse Landlord for the fees payable by Landlord to Landlord’s architect, engineers, or other consultants for examination of Tenant’s plans and specifications and for inspection of work performed by Tenant’s contractors and workmen in accordance therewith.

SECTION 9. In the event of termination of this Lease during the construction phase of any work to be done by Tenant, Landlord may retain for his own use, without payment therefor all or any Tenant work which has been commenced installed or completed, or demolish or remove all or any work and restore the Premises to the condition in which the same were prior to the commencement, installation or completion of all or such of the Tenant’s work as is so demolished or removed and recover the cost of so doing from Tenant.

ARTICLE VIII. ACCESS

Landlord and its agents shall have the right to enter into and upon the Premises at all reasonable times with reasonable notice for the purpose of inspecting, cleaning, repairing, altering or improving the Premises or the Building with the exception of an emergency situation. Landlord shall have the right to show the Premises to prospective tenants during the ninety (90) day period prior to the expiration of the term of this Lease and shall have the right at all reasonable times to show the Premises to prospective purchasers of and lenders upon the Building. Any damage or loss caused to the Premises and/or to the Tenant by any use of or access to the Premises by Landlord shall be repaired by Landlord at Landlord’s expense.

ARTICLE IX. DAMAGE OR DESTRUCTION

SECTION 1. If the Premises are damaged or destroyed, in whole or in substantial part, and Section 2 does not apply, then Landlord may elect to terminate this Lease as of the date of the damage or destruction by notice given to Tenant in writing not more than twenty (20) days following the date of damage or destruction. If Landlord does not elect to terminate, Landlord shall, at Landlord’s expense, proceed to restore the property to substantially the same form, condition and quality as prior to the damage or destruction. If Landlord elects to rebuild and repair, Landlord shall proceed as soon as reasonably possible and thereafter shall proceed without interruption and be completed within one hundred-eighty (180) days after notice has been given of Landlord’s intent to rebuild and repair, except for work stoppages on account of labor disputes and matters not under the control of the Landlord. During such period of repair or restoration, the Rent shall be abated in the same proportion as the unrentable portion of the Premises bears to the entire Premises identified in Section 1 of Article I of the Lease.

SECTION 2. If the Premises are damaged or destroyed, (i) to the extent that more than fifty percent (50%) of the Building is damaged or destroyed, or (ii) to the extent that more than fifty percent (50%) of the Premises are damaged or destroyed, then in such event, Tenant may elect to terminate this Lease as of the date of the damage or destruction by notice given to Landlord in writing not more than twenty (20) days following the date of damage or destruction.

SECTION 3. Notwithstanding anything contained in this Article to the contrary, Landlord shall not be required to repair, replace, restore, or rebuild any property which Tenant shall be entitled to remove from the Premises under the provisions of this Lease; it being agreed that Tenant shall bear the entire risk of loss, damage or destruction of such property while it is in the Building.

SECTION 4. If either party elects to terminate the Lease, Tenant shall be entitled to reimbursement for any prepaid rent or other amounts paid by Tenant and attributable to the unused term of the Lease.

ARTICLE X. INDEMNITY

Tenant shall indemnify and hold Landlord harmless from all loss, damage, liability or expense resulting from an injury to or death of any person or any loss of or damage to any property caused by or resulting from any act of omission of Tenant or any officer, agent, employee, guest, invitee or visitor of Tenant in or about the Premises or the Building, but the foregoing provision shall not be construed to make Tenant responsible for injuries to third parties caused by the negligence of Landlord or any agent or employee of Landlord. The Landlord shall remain responsible for any injury to, or death of any person or any loss of or damage to property sustained by any person whatsoever which may be caused by the Building or any equipment or appurtenances thereto or thereof being or becoming defective or out of repair. Landlord shall be and remain liable for the negligent acts or omissions of Landlord, its agents and employees.

ARTICLE XI. REMEDIES

SECTION 1. If at any time Tenant shall (a) fail to remedy any default in the payment of any sum due under this Lease for ten (10) days after notice; (b) fail to remedy any default with respect to any other of these provisions, covenants or conditions of this Lease to be kept or performed by Tenant, within thirty (30) days after notice (or, in the event the default is of such a nature that it cannot be remedied within said thirty (30) day period, then such additional time as may be necessary for Tenant to cure such default, within the thirty (30) day period and thereafter diligently prosecutes the same to completion); or (c) vacate or abandon the Premises, or fail to conduct business therein, for a period of five (5) consecutive business days, and then fail to reoccupy and reestablish the conduct of business in the Premises within ten (10) days following the date of written notice from Landlord of such failure; then Landlord shall have all such rights and remedies as are provided by law in respect of such default; including, at Landlord’s election, the right to terminate this Lease, and all Tenant’s rights hereunder shall be terminated.

The liability of the Tenant for Rent, and other payments provided for herein shall not be extinguished for the balance of this Lease, and Tenant shall make good to Landlord any deficiency arising from such reletting of the Premises, plus the costs and expenses of renovating, altering and reletting the Premises, and including attorneys’ fees or brokers’ fees incident to Landlord’s reentry or reletting. Tenant shall pay any such deficiency each month, as the amount thereof is ascertained by Landlord, or, at Landlord’s option, Landlord may recover, in addition to any other sums, the amount at the time of judgement by which the unpaid Rent, and other payments for the balance of the term, after judgement, exceeds the amount thereof which Tenant proves could be reasonably avoided, discounted at the rate of 7%. In reletting the Premises, Landlord may grant rent concessions and Tenant shall not be credited therefore. Nothing herein shall be deemed to affect the right of Landlord to recover for indemnification under Article X herein arising prior to the termination of this Lease.

SECTION 2. Landlord shall in no event be in default in the performance of any of its obligations in the Lease contained unless and until Landlord shall have failed to perform such obligation within thirty (30) days, or such additional time as is reasonably required to correct any such default after notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation.

ARTICLE XII. INSURANCE

SECTION 1. Tenant covenants and agrees that from and after the date of delivery of the Premises from Landlord to Tenant and at all times during possession thereof, Tenant will procure and maintain in full force and effect, at its sole cost and expense, the following types of insurance, in the minimum amounts specified below:

A. Public Liability and Property Damage . Personal injury liability, bodily injury liability and property damage insurance in a single limit of not less than One Million Dollars ($1,000,000), of which insurance shall insure the performance by Tenant of the indemnity agreement as to liability for injury to or death of persons and injury or damage to property as provided in Article X hereof. All of such insurance shall be primary and noncontributing with any insurance which may be carried by Landlord. The adequacy of the coverage afforded by said liability and property damage insurance shall be subject to review by Landlord from time to time, and Landlord retains the right to increase or decrease said limits at such times.

B. Tenant Improvements . Insurance covering all of the lease-hold improvements, (excepting only the structural components of the Building and demising partitions), and Tenant’s trade fixtures, and personal property from time to time and/or upon the Premises, in an amount not less than the full replacement cost thereof without deduction for depreciation, providing protection against any peril included within the classification “Fire and Extended Coverage”, together with insurance against sprinkler damage, vandalism and malicious mischief. Any policy proceeds shall be used for the repair or replacement of the property damaged or destroyed unless this Lease shall cease and terminate under the applicable provisions herein. If the Premises shall not be repaired or restored following damage or destruction in accordance with other provisions herein, Landlord shall receive from such insurance proceeds an amount equal to the replacement cost of the Tenant’s leasehold improvements.

C. Business Interruption . Business interruption insurance with sufficient coverage to provide for payment of rent and other fixed costs during any interruption of Tenant’s business by reason of fire or other similar cause.

SECTION 2. All policies shall be for the mutual and joint benefit and protection of Landlord and Tenant, with Landlord being named as an additional insured. Certificates of such policies shall be delivered to Landlord within ten (10) days after delivery of possession of the Premises to Tenant and thereafter within thirty (30) days prior to the expiration of the term of each such policy. All public liability and property damage policies shall contain a provision that Landlord, although named as an insured, shall nevertheless be entitled to recovery under said policies for any loss occasioned to it, its servants, agents, and employees by reason of the acts, omissions and/or negligence of Tenant. As often as any such policy shall expire or terminate, renewal or additional policies shall be procured and maintained by Tenant in like manner and to like extent. All policies of insurance must contain a provision that the company writing said policy will give to Landlord thirty (30) days’ notice, in writing, in advance of any cancellation or lapse, or the effective date of any reduction in the amounts of insurance. All public liability, property damage and other casualty policies shall be written as primary policies, not contributing with and not in excess of coverage which Landlord may carry. Landlord may, from time to time, request Tenant to provide Landlord with a certified copy of all insurance coverage carried by Tenant.

SECTION 3. Tenant agrees to pay to Landlord forthwith upon demand the amount of any increase in premiums for insurance against loss by fire that may be charged during the term of this Lease on the amount of insurance maintained in force by Landlord on the Building, of which the Premises are a part, resulting from Tenant doing any act in or about said Premises which does so increase the insurance rates, whether or not Landlord shall have consented to such act on the part of Tenant. If Tenant installs upon the Premises any electrical equipment which constitutes an overload on the electrical lines of the Premises, Tenant shall at its own expense make whatever changes are necessary to comply with the requirements of the insurance underwriters any governmental authority having jurisdiction thereover, but nothing herein contained shall be deemed to constitute Landlord’s consent to such overloading.

ARTICLE XIII. LIENS

Tenant shall keep the Premises free and clear of, and shall indemnify Landlord against all mechanics’ liens and other liens on account of work done for or materials, supplies and equipment furnished to Tenant by persons claiming under it for maintenance, repairs and alterations. Tenant shall reimburse Landlord for all costs and attorneys’ fees incurred by Landlord in investigating, defending or clearing such lien to be cleared within thirty (30) days of filing of same unless Tenant shall have provided security acceptable to landlord against any loss to Landlord on account thereof. As a condition to Landlord’s consent pursuant to Article VII, Landlord may require Tenant to provide Landlord with reasonable payment and performance bonds of those persons contracted by Tenant to perform work on or in the Premises that could be the subject of such a lien in order to protect the Premises, the Landlord, and any mortgagee from and against liens of mechanics and materialmen performing work in or providing services and equipment to the Premises.

ARTICLE XIV. ASSIGNMENT; SUBLETTING; MORTGAGING

SECTION 1. Tenant shall not voluntarily, involuntarily or by operation of law assign, transfer, mortgage or otherwise encumber all or any part of Tenant’s interest in this Lease, or sublet the Premises or any part thereof, without first obtaining in each and every instance Landlord’s prior written consent. Subject to the foregoing, Tenant shall not assign, transfer or sublet the Premises, or any part thereof, at a rent to Assignee, Transferee or Sublessee, greater than $20.00 per square foot. Any transfer of this Lease by merger, consolidation, or liquidation, or any change in the ownership of, or power to vote the majority of its outstanding voting stock resulting in a change in ownership of more than 50% of the total issued and outstanding shares of Tenant shall constitute an assignment for the purposes of the paragraph. If consent is once given by Landlord to any such assignment or subletting, such consent shall not operate as a waiver of the necessity for obtaining Landlord’s consent to any subsequent assignment or subletting. Any legal costs incurred by Landlord related to such assignment or subletting shall be paid by Tenant to Landlord upon demand. Tenant shall provide Landlord with executed copies of any Assignment. Transfer or Sublease Agreement entered into as provided herein.

ARTICLE XV. ESTOPPEL CERTIFICATE

Tenant shall at any time and from time to time execute, acknowledge and deliver to Landlord a statement in writing certifying: (a) that this Lease is unmodified and in full force and effect (or if there has been any modification hereof that the same is in full force and effect as modified and stating the nature of the modification or modifications); (b) that to the best of its knowledge Landlord is not in default under this Lease (or if any such default exists the specific nature and extent thereof); and (c) the date to which rent and other charges have been paid in advance, if any.

ARTICLE XVI. TAXES

SECTION 1. Tenant shall pay before delinquency any and all taxes and assessments, and license, sales, business, occupation or other taxes, fees or charges levied, assessed or imposed upon its business operations in the Premises.

SECTION 2. Tenant shall pay before delinquency any and all taxes and assessments levied, assessed or imposed upon its trade fixtures, leasehold improvements, merchandise and other personal property in, on, or upon the Premises.

SECTION 3. In the event any taxes, fees or charges referred to in the preceding Section 1 and/or Section 2 shall be assessed, levied or imposed upon in connection with the business or property of Landlord, such assessment, taxes, fees or charges shall be paid by Tenant to Landlord promptly upon Landlord’s request for such payment.

SECTION 4. Landlord shall pay before delinquency any and all costs and expenses of every kind and nature for real estate ad valorem taxes, and/or fees, assessments, charges, or payments in lieu thereof, to the Commonwealth of Kentucky, and/or any political subdivision thereof, including, without limitation, Jefferson County, and/or any city, municipality, agency or special district, the School Board, Water Company, and/or the Metropolitan Sewer District, whether general or special assessments, including, but not limited to, sewer rents, rates and charges; draining fees; water charges; taxes based upon the receipt of rent; and any other federal, state or local government charge, general, special, ordinary or extra-ordinary (but not including income or franchise taxes or any other taxes imposed upon or measured by Tenant’s net income or profits, unless the same is imposed in lieu of real estate taxes), which may now or hereafter be levied or assessed against the Building or the land on which the Building and appurtenant parking areas and driveways are located.

If at any time during the term of this Lease the method of taxation then prevailing shall be altered so that any new tax, assessment, levy, imposition or charge shall be imposed upon Landlord in place or partly in place of any such taxes and shall be measured by or based in whole or in part upon the Building or the rents or other therefrom, then all such new taxes, assessments, levies, imposition or charge shall be imposed upon Landlord. Tenant shall be directly responsible for taxes, if any, on Tenant’s personal property and on the value of Tenant’s special leasehold improvements exclusive of standard building improvements.

ARTICLE XVII. PRIORITY OF LEASE

This Lease shall, unless Landlord otherwise elects, be subordinate to any and all mortgages and other security instruments now existing, or which may hereafter be made covering the Building and/or the real property underlying the same or any portion or portions thereof, and for the full amount of all advances made or to be made thereunder (without regard to the time or character of such advances), together with interest thereon, and subject of all the terms and provisions thereof and to any renewals, extensions, modifications and consolidations thereof; and Tenant covenants within ten days of demand to make, execute, acknowledge and deliver upon request any and all documents or instruments demanded by Landlord which are or may be necessary or proper for more fully and certainly assuring the subordination of this Lease to any such mortgages or other security instruments, provided, however, that any person or persons purchasing or otherwise acquiring any interest at any sale and/or other proceedings under such mortgages or other security instruments may elect to continue this Lease in full force and effect in the same manner, and with like effect as such person or

persons had been named as Landlord herein, and in the event of such election, this Lease shall continue in full force and effect as aforesaid, and Tenant hereby shall continue in full force and effect as aforesaid, and Tenant hereby attorns and agrees to attorn to such person or persons. Tenant hereby irrevocably appoints Landlord the attorney-in-fact of Tenant, to execute and deliver any document provided for herein, for and in the name of Tenant.

ARTICLE XVIII. FIXTURES AND PERSONAL PROPERTY: SURRENDER

SECTION 1. Upon the termination of this Lease, Tenant shall surrender to Landlord the Premises (including, without limitation, all non-moveable leasehold improvements) in good condition and repair reasonable wear, tear and damage by casualty not caused by Tenant or its agents and employees excepted. All improvements, additions, and fixtures made or installed from time-to-time by Landlord to, in, upon, or about the Premises, including, but not limited to, all lighting fixtures, shall be the property of Landlord and upon any such termination, shall be surrendered to Landlord by Tenant without any injury, damage or disturbance thereto or payment thereof.

SECTION 2. All fixtures, furniture, movable partitions, machinery, equipment and other personal property installed or placed in said Premises at the cost of or by Tenant shall at times remain, be considered and treated as personal property of Tenant and in no sense part of the real estate, and Tenant shall have the right at any time during the term of this Leas and any extension thereof, or within a period of ten (10) days after any termination hereof to remove the same or any part threof from said Premises, provided, however, that upon the removal of any such personal property, Tenant agrees to restore area from which the same has been removed to substantially the same condition as it was prior to the installation thereof and to the extent necessary to keep Premises in a leasable and usable condition for future tenants. If Tenant fails to remove any such personal property, Landlord may at Landlord’s option retain all or any such property and title thereto shall thereupon vest in Landlord, Landlord may remove from the Premises and dispose of in any manner all or any of such property, in which latter event Tenant shall, upon demand, pay to Landlord the actual expense of such removal and disposition, and the cost of repair of any and all damage to the Premises resulting from or caused by such removal.

ARTICLE XIX. HOLD OVER TENANCY

If Tenant shall, without execution of a new Lease or written extension, and with consent of Landlord, hold over after the expiration of the terms of this Lease, such tenancy shall be a month-to-month tenancy, which may be terminated as provided by law. During such tenancy, Tenant shall pay to Landlord the greater of (a) the rental rate then being quote by Landlord for comparable space in the Building; or (b) the Rent pursuant to Article III. During such tenancy, Tenant shall be bound by all of the terms, covenants, and conditions as herein specified, as far as applicable; provided, however that if Tenant fails to surrender the Premises upon termination of this Lease, in addition to any other liabilities to Landlord arising therefrom Tenant shall indemnify and hold Landlord harmless from loss or liability resulting from such failure, including any claims made by any succeeding Tenant founded on such failure.

ARTICLE XX. WAIVER OF SUBROGATION

Landlord and Tenant each releases and relieves the other and on behalf of its insurer(s) waives its entire right of recovery against the other for loss or damage arising out of or incident to the perils of fire, explosion, or any other perils generally described in the “extended coverage” insurance endorsements used in Louisville which occur in, on or about the Building and/or the Premises, whether due to the negligence of such other party, its agents or employees, or otherwise.

ARTICLE XXI. NOTICES

Whenever in this Lease it shall be required or permitted that notice, approval, advice, consent, or demand be given or served by either party to this Lease to or on the other, such notice or demand shall not be deemed to have been duly given or served unless in writing and forwarded by certified or registered mail, addressed as follows:

To Landlord:	Jaytee Properties
	Republic Corporate Center
	601 West Market Street
	Louisville, Kentucky 40202-2700
	Attention: Mr. Steven E. Trager

To Tenant:	At the Premises

Either party may change such address by written notice by certified or registered mail to the other.

ARTICLE XXII. RIGHTS RESERVED BY LANDLORD

SECTION 1. Landlord shall have the sole and exclusive right to designate (and from time to time, in its discretion, re-designate) the name, address, number and/or designation of the Building.

SECTION 2. Tenant agrees and understands that the Landlord reserves the right to designate the parking area for Tenant and its employees, in Landlord’s sole discretion, that is determined by Landlord to be in the best interest of all tenants in the Premises. After notice to Tenant of any violation of parking requirements, the vehicle(s) found in violation shall be towed away at the expense of and the responsibility of the Tenant.

ARTICLE XXIII. CONDEMNATION

In the event that during the term of this Lease the Premises as identified in Article I, Section 1 hereof, or any part thereof, or the use or possession thereof, is taken in condemnation proceedings or by any right of eminent domain or for any public or quasi-public use, this Lease and the term hereby granted shall terminate and expire on the date when possession shall be taken by the condemnor, and rent and all other charges payable hereunder shall be apportioned and paid in full up to that date and all prepaid unearned rent and all other charges payable hereunder shall forthwith be repaid by Landlord to Tenant, and Tenant shall not be liable to Landlord for any rent or any other charges payable hereunder, damage, or otherwise, for, or by reason of any matter or thing occurring thereafter. Tenant hereby waives any and all rights in, or to any condemnation awards. In the event that during the term of this Lease a material amount of the parking area or a material amount of the use or possession thereof is taken in condemnation proceedings or by any right of eminent domain or for any public or quasi-public use and no alternative parking is provided, the term of this Lease shall at the option of Tenant cease and terminate from the date of title vesting in such proceeding.

ARTICLE XXIV. GUARANTY PROVISIONS

In consideration of the promises contained in the Lease and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the undersigned Guarantor (if applicable), Guarantor for itself and its successors and assigns, hereby unconditionally and jointly and severally guarantees to Landlord, its successors and assigns, the prompt payment and performance when due of any and all payments and obligations due and owing under this lease from Lessee, including the lease and this guarantee; provided, however, anything contained in this guarantee to the contrary notwithstanding, the maximum aggregate liability of Guarantor hereunder shall not exceed One hundred ten thousand dollars ($118,900.00).

This guarantee shall remain in effect so long as any of the aforesaid obligations have not been fully paid or performed; provided, however, anything contained in this guarantee to the contrary notwithstanding, this guarantee shall terminate on the date of termination of this lease, currently 5 years from the Commencement Date, except that such termination shall not affect the liability of Guarantor with respect to (a) obligations created to incurred prior to such date, or (b) rent, or other amounts, fees, costs, or expenses, including reasonable attorney fees, incurred with respect to such obligations on or after such date.

This guarantee is absolute, continuing and unlimited, without regard to the reliability, validity or enforceability of any liability or obligation of the Tenant hereby guaranteed, Landlord, its successors or assigns, shall not be required to proceed first against the Guarantor or against any other person, firm, corporation, or entity, or any one of them, for payment.

This guarantee is a guarantee of payment, not of collection, and the Guarantor therefore agrees that Landlord shall not be obligated prior to or as a condition of to seek recourse against or receive payment from Guarantor. The liability of Guarantor for payment of the obligations shall be absolute and unconditional.

This guarantee, and all rights and obligations hereunder including matters of construction, validity, and performance, shall be governed by the laws of the Commonwealth of Kentucky and no defense given or allowed by

the laws of any other state or country shall be interposed on any action hereon unless such defense is also given or allowed by the laws of the Commonwealth of Kentucky.

GUARANTOR HEREBY KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY AND OBJECTION TO JURISIDICTION OR VENUE IN CONNECTION WITH ANY ACTION, CLAIM, COUNTERCLAIM, CROSS-CLAIM, OR OTHER LITIGATION OR PROCEEDING, BY WHOMSOEVER COMMENCED, CONNECTED WITH OR ARISING OUT OF THIS LEASE OR THE OBLIGATOINS THEREUNDER.

ARTICLE XXV. MISCELLANEOUS PROVISIONS

SECTION 1. The term “Landlord” as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or co-owners, at the time in question, of the Premises, and in the event of any transfer or transfers of the title of Premises, Landlord herein named (and in case of any subsequent transfers or conveyances, the then grantor) shall be automatically freed and relieved from and after the date of such transfer or conveyance of all liability as respects the performance or any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed.

SECTION 2. The captions of Articles of this Lease are for convenience only and shall not be considered or referred to in resolving questions of interpretation or construction.

SECTION 3. The terms “Landlord and Tenant”, wherever used herein shall be applicable to one or more persons, as the case may be, and the singular shall include he plural, and the neuter shall include the masculine and the feminine, and if there be more than one, the obligations hereof shall be jointly and several.

SECTION 4. The word “person” and the word “persons” wherever used in this Lease shall both include individuals, partnerships, firms, associations, and corporations of any other form of business entity.

SECTION 5. The various rights, options, elections, powers, and remedies contained in this Lease shall be construed as cumulative and no one of them shall be exclusive of any of the others, or of any other legal or equitable remedy which either party might otherwise have in the event of breach or default in the terms thereof, and the exercise of one right or remedy by such party shall not impair its right to any other right or remedy until all obligations upon the other party have been fully performed.

SECTION 6. Time is of the essence with respect to the performance of each of the covenants and agreements under this Lease.

SECTION 7. Each and all of the provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto and, except as set forth in Section 1 of this Article and as otherwise specifically provided elsewhere in this Lease, their respective heirs, executors, administrators, successors, and assigns, subject at all times, nevertheless, to all agreements and restrictions contained elsewhere in this Lease with respect to the assignment, transfer, encumbering or sub-letting of all or any part of Tenant’s interest in this Lease.

SECTION 8. This Lease shall be interpreted in accordance with the law of the Commonwealth of Kentucky.

SECTION 9. No waiver of any default by Tenant hereunder shall be implied from any omission by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver, and that only for the time and to the extent therein stated. The acceptance by Landlord of rent with knowledge of the breach of any of the covenants of this lease by Tenant shall not be deemed a waiver of any such breach. One or more waivers of any breach or covenant, term or condition of this Lease shall not be construed as a waiver of any subsequent breach of the same covenants, term or condition. The consent or approval by Landlord to or of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to waived or render unnecessary Landlord’s consent or approval to or of any subsequent similar acts by Tenant.

SECTION 10. If Tenant shall default in the performance of any covenant on its part to be performed by virtue of any provisions of this Lease, Landlord may, after any notice and the expiration of any period with respect

thereto as required pursuant to the applicable provisions of this Lease, perform the same for the account of Tenant. If Landlord, at any time, is compelled to pay or elects to pay any sum of money or do any acts which would require payment of any sum of money by reason of the failure of Tenant, after any notice and the expiration of any period with respect thereto, as required pursuant to the applicable provisions of the Lease, to comply with any provisions of this Lease, the sum or sums so paid by Landlord with interest, costs and damages, shall be deemed to be additional rental hereunder and shall be due from Tenant to Landlord on the first day of the month following the incurring of such respective expenses, except as otherwise herein specifically provided.

SECTION 11. If Tenant or Landlord shall bring any action for any relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of rent, additional rent or other payments hereunder or possession of the Premises, the losing party shall pay the prevailing party a reasonable sum of attorney’s fees in such suit, at trial and on appeal, and such attorney’s fees shall be deemed to have accrued on the commencement of such action.

SECTION 12. This Lease contains all covenants and agreements between Landlord and Tenant relating in any manner to the rental, use and occupancy of the Premises and Tenant’s licensed use of the Building and other matters set forth in this Lease. No prior agreement or understanding pertaining to the same shall be valid or of any force or effect, and the covenants and agreements of this Lease cannot be altered, changed, modified or added to except in writing signed by Landlord and Tenant. No representation, inducement, understanding or anything of any nature whatsoever made, stated or represented on Landlord’s behalf, either orally or in writing (except this Lease) has induced Tenant to enter into this Lease.

SECTION 13. Any provision or provisions of this Lease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provision hereof, and the remaining provisions hereof shall nevertheless remain in full force or effect.

SECTION 14. Except with respect to those conditions, covenants and agreements of this Lease which by their nature could only be applicable after the commencement of, during or throughout the term of this Lease, all of the other conditions, covenants and agreements of this Lease shall be deemed to be effective as of the date of execution of this Lease.

SECTION 15. Landlord and Tenant each represents that neither is responsible for any real estate brokerage fee and shall indemnify each other against loss, cost, liability or expense incurred by either as a result of any claim asserted by any such broker, finder or other person on the basis on any arrangements or agreements made or alleged to have been made by or on behalf of either Landlord or Tenant, as the case may be.

IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed and delivered as of the day and year first above written.

ATTEST:

JAYTEE PROPERTIES

BY:

/s/ Jan Hyland

BY:

/s/ Steve Trager

NAME:

Steve Trager

TITLE:

General Partner

ATTEST:

ANDERSON INSURANCE AGENCY

BY:

/s/ Linda Lamble

BY:

/s/ Eric E. Anderson

NAME:

Eric E. Anderson

TITLE:

President

GUARANTOR:

NAME:

EXHIBIT A

Landlord shall provide to following base construction for the Premises:

1. Concrete Floor

2. Equipped bathrooms with exterior doors.

3. No interior demising walls.

4. Sprinkler heads.

Electrical specifications provided by Landlord:

1. 200 amp service.

2. RJ 21 telephone outlet.

3. Connection to standard HVAC.

Landlord will provide a Twenty Dollar ($20.00) per square foot Tenant buildout allowance on Tenant’s useable square footage in an amount not to exceed $$22,000.

Tenant shall use only licensed and insured contractors approved by Landlord. Paid contractors will provide Tenant and Landlord proof of insurance and will sign Lien Waivers at the time of Payment. Tenant will submit bills for payment or draws on completed work to Landlord timely as received.

All additional work to be provided by Tenant and approved and supervised by Landlord prior to installation.

EXHIBIT B
RULES AND REGULATIONS

1. No advertisement, sign, lettering, notice or device shall be placed in or upon the Premises or the Building, including any windows, walls and exterior doors, except such as may be approved in writing by Landlord.

2. Lettering upon the doors as required by Tenant shall be made by the sign company designated by Landlord, but the cost shall be paid by Tenant. The directories of the Building will be provided exclusively for the display of the name and location of Tenant and its designated representative only and Landlord reserves the right to exclude any other names therefrom.

3. No additional locks shall be placed upon any doors of the Premises, and Tenant agrees not to have any duplicate keys made without the consent of Landlord. If more than two keys for any door lock are desired, such additional keys shall be paid for by Tenant. Upon termination of this Lease, Tenant shall surrender all keys.

4. No furniture, freight, supplies not carried by hand or equipment of any kind shall be brought into or removed from the Building without the consent of Landlord. Landlord shall have the right to limit the weight and size and to designate the position of all safes and other heavy property brought into the Building. Such furniture, freight, equipment, safes and other heavy property shall be moved in or out of the Building only at the times and in the manner permitted by Landlord. Landlord will not be responsible for loss of or damage to any of the items above referred to, and all damage done to the Premises or the Building by moving or maintaining any of such items shall be repaired at the expense of Tenant. Any merchandise not capable of being carried by hand shall utilize hand trucks equipped with rubber tires and rubber side guards.

5. The entrances, corridors, stairways and elevators shall not be obstructed by Tenant, or used for any other purpose than ingress or egress to and from Premises. Tenant shall not bring into or keep any animal within the Building, or any bicycle or other type of vehicle.

6. Tenant shall not disturb other occupants of the Building by making an undue or unseemly noise, or otherwise. Tenant shall not, without Landlord’s prior written consent, install or operate in or on Premises any machine or machinery causing noise or vibration perceptible outside the Premises, electric heater, stove or machinery or any kind or carry on any mechanical business thereon, or keep or use thereon oils, burning fluids, camphene, kerosene, naphtha, gasoline, or other coustible materials. No explosives shall be brought into the Building.

7. Tenant shall not mark, drive nails, screw or drill into woodwork or plaster, paint or in any way deface the Building or any part thereof, or the Premises or any part thereof, or fixtures therein. The expense of remedying any breakage, damage or stoppage resulting from a violation of this rule shall be borne by Tenant.

8. If Tenant installs upon the Premises any electrical equipment which constitutes an overload on the electrical line serving the Premises or the Building, Tenant shall make all necessary changes to reduce such overload, or at the option of Landlord, eliminate such equipment as Landlord deems necessary to reduce the electrical capacity required to serve the Premises.

9. Canvassing, soliciting, and peddling in the Building is prohibited and Tenant shall cooperate to prevent such activity.

10. The requirements of Tenant will be attended to only upon application at the Landlord’s office in the Building. Building employees shall not perform any work or do anything outside of the regular duties, except on issuance of special instructions from the office of the Building. If the Building employees are made available for the assistance of Tenant, Landlord shall be paid for their services by Tenant at reasonable hourly rates. No Building employee will admit any person (Tenant or otherwise) to any office without specific instructions from the office of the Building.

11. Landlord reserves the right to close and keep locked all entrance and exit doors of the Building on Sundays, legal holidays, and between the hours of 9:00 p.m. of any day and 7:00 a.m. of the following day, and during such further hours as Landlord may deem advisable for the adequate protection of the Building and the property of the tenants. Tenant shall have 24-hour access to the Premises.

12. Landlord has designated the entire Building and all leased premises therein as a NO SMOKING BUILDING. Tenant agrees to use its best efforts to support and enforce the no smoking designation with its employees, agents, guests and invitees.

EXHIBIT 10.2

Assignment and Assumption of Lease by Lessee
with Consent of Lessor

This Assignment and Assumption of Lease by Lessee with Consent of Lessor (“Assignment”), is entered into effective this lst day of May, 2006, by Insbanc, Inc. (“Assignor”), to Republic Bank & Trust Company (“Assignee”) and with the consent of Jaytee Properties (“Lessor”).

For the value received, Assignor assigns and transfers to Assignee that lease, dated February 3, 2003, executed by Assignor as lessee and by Jaytee Properties, as lessor, of the following described premises:

Being approximately 1189 square feet of rentable office space

located on the first floor in the Republic Bank Building

at 9600 Brownsboro Road in Jefferson County, Kentucky,

together with all right, title, and interest in and to the lease and premises, subject to all the conditions and terms contained in the lease, to have and to hold, effective May 1, 2006, until the present term of said lease expires on February 2, 2008.

A copy of the lease is attached hereto and made a part hereof by reference,

Assignor covenants that it is the lawful and sole owner of the lease interest assigned hereunder; that this interest is free from all encumbrances; and that Assignor has performed and/or Lessor has waived all duties and obligations and made all payments required under the terms and conditions of the lease through April 30, 2006.

Assignor hereby assigns all of its right, title and interest in and to the lease to Assignee. Assignee hereby accepts such assignment and assumes and agrees to perform all of Assignor’s obligations, duties and liabilities under the lease arising from and after the date hereof.

Assignee shall indemnify Assignor and hold Assignor harmless and against all loss, claim or expense, including reasonable attorneys’ fees and costs, asserted against or incurred by Assignor by reason of or arising out of the failure of Assignee to perform or assume any duty or obligation required by the Lease to be performed or assumed by Assignee arising from and after the effective date of this Assignment.

Assignee agrees to pay all rent due Lessor as of the effective date of this assignment, and to assume and perform all duties and obligations required by the terms of the lease.

This Assignment shall bind and benefit the parties hereto and their respective successors and assigns.

In Witness Whereof, the parties have signed this Assignment and Consent as of the date set forth above, but actually on the dates set forth below.

Dated: 5/26/06 Assignor: /s/ Eric Anderson

Insbanc, Inc.

Dated: 5/22/06 Assignee: /s/ Michael A. Ringswald, S.V.P

Republic Bank & Trust Company

CONSENT OF LESSOR

Jaytee Properties, the Lessor named in the above assignment of that lease executed on February 3, 2003, consents to that assignment. Lessor also consents to the agreement by Assignee to assume as of May 1, 2006, the payment of rent and performance of all duties and obligations as set forth in the lease that arise on May 1, 2006 continuing forward, and to release Assignor from all obligations, including Assignor’s prior obligation for the payment of rent prior to May 1, 2006, and accepts Assignee as lessee in the place of Assignor from May 1, 2006 through the term of the lease.

Dated: 5/25/06	By:	/s/ Steven E. Trager

		For Jaytee Properties

EXHIBIT 31.1

SECTION 302 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Steven E. Trager, President and Chief Executive Officer of Republic Bancorp, Inc., certify that:

1) I have reviewed this quarterly report on Form 10-Q of Republic Bancorp, Inc.;

2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this quarterly report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Steven E. Trager
President and Chief Executive Officer

Date: August 9, 2006

EXHIBIT 31.2

SECTION 302 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Kevin Sipes, Executive Vice President, Chief Financial Officer and Chief Accounting Officer or Republic Bancorp, Inc, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Republic Bancorp, Inc.;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Kevin Sipes
Executive Vice President , Chief Financial Officer and Chief Accounting Officer

Date: August 9, 2006

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Republic Bancorp, Inc. (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2006

Steven E. Trager

President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350

Date: August 9, 2006

Kevin Sipes

Executive Vice President, Chief Financial Officer and
Chief Accounting Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.