##### Table of Contents



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

FORM 10-Q

|                    |  |                                                                                        
|------------------- |  | ---------------------------------------------------------------------------------------
|(Mark One)          |  |                                                                                        
|CHECK IN BALLOT BOX |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

Or

|                |  |                                                                                         
|--------------- |  | ----------------------------------------------------------------------------------------
|OPEN BALLOT BOX |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:     0-15734

REPUBLIC BANCORP INC.

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Michigan                                                       |  | 38-2604669                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               |  |                                     
|1070 East Main Street, Owosso, Michigan                        |  | 48867                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

(989) 725-7337



---

(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.

CHECK IN BALLOT BOX 
Yes  OPEN BALLOT BOX  No

APPLICABLE ONLY TO CORPORATE ISSUERS:

---

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

Common Stock Outstanding as of October 31, 2002:

|Common Stock, $5 Par Value |  | 52,462,000 Shares
|-------------------------- |  | -----------------





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TABLE OF CONTENTS



|                                      |                                                                                               |                                                                                                   |  |  |  |  |  | 
|------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION       
|                                      | ITEM 1  Financial Statements                                                                
|                                      |                                                                                               | Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001                       
|                                      |                                                                                               | Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2002 and 2001
|                                      |                                                                                               | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001      
|                                      |                                                                                               | Notes to Consolidated 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 2.Changes in Securities and Use of Proceeds                                             
|                                      | Item 3. Defaults Upon Senior Securities                                                      
|                                      | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                      | Item 5. Other Information                                                                    
|                                      | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                            
|Certifications                       
|Computations of Ratios of Earnings   
|Certification Pursuant to Section 906
|Certification Pursuant to Section 906



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##### Table of Contents



INDEX

|               |  |         |  |                                                                                                   |  |        
|-------------- |  | ------- |  | ------------------------------------------------------------------------------------------------- |  | -------
|PART I.        |  |         |  | FINANCIAL INFORMATION                                                                             |  |        
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 1. |  | Financial Statements (Unaudited)                                                                  |  |        
|               |  |         |  |                                                                                                   |  |        
|               |  |         |  | Consolidated Balance Sheets as of September 30, 2002
and December 31, 2001                        |  | 3      
|               |  |         |  |                                                                                                   |  |        
|               |  |         |  | Consolidated Statements of Income for the Three and Nine
Months Ended September 30, 2002 and 2001 |  | 4      
|               |  |         |  |                                                                                                   |  |        
|               |  |         |  | Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2002 and 2001       |  | 5      
|               |  |         |  |                                                                                                   |  |        
|               |  |         |  | Notes to Consolidated Financial Statements                                                        |  | 6 - 9  
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 2. |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations             |  | 9 - 18 
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                        |  | 19     
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 4. |  | Controls and Procedures                                                                           |  | 19     
|               |  |         |  |                                                                                                   |  |        
|PART II.       |  |         |  | OTHER INFORMATION                                                                                 |  |        
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 1. |  | Legal Proceedings                                                                                 |  | 20     
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 2. |  | Changes in Securities and Use of Proceeds                                                         |  | 20     
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 3. |  | Defaults Upon Senior Securities                                                                   |  | 20     
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 4. |  | Submission of Matters to a Vote of Security Holders                                               |  | 20     
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 5. |  | Other Information                                                                                 |  | 20     
|               |  |         |  |                                                                                                   |  |        
|               |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                  |  | 20     
|               |  |         |  |                                                                                                   |  |        
|SIGNATURE      |  |         |  |                                                                                                   |  | 21     
|               |  |         |  |                                                                                                   |  |        
|Certifications |  |         |  |                                                                                                   |  | 22 - 23

2



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##### Table of Contents












PART I  FINANCIAL INFORMATION
ITEM 1  Financial Statements

REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)

|                                                                                                                              |                                |                                   |                                            |         |               |           |           |              |           |           | 
|----------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | --------------------------------- | ------------------------------------------ | ------- | ------------- | --------- | --------- | ------------ | --------- | --------- | 
|                                                                                                                              |                                |                                   |                                            |         | September 30, |           |           | December 31, |          
|(Dollars in thousands)                                                                                                        |                                | 2002                              |                                            |         | 2001          |          
|                                                                                                                              |                                |                                   |                                            |         |               |          
|ASSETS                                                                                                                        |                                |                                   |                                            |         |               |           |           |             
|Cash and cash equivalents                                                                                                     |                                | $                                 | 83,750                                     |         |               | $         | 76,734    |             
|Mortgage loans held for sale                                                                                                  |                                |                                   | 541,256                                    |         |               |           | 748,463   |             
|Securities available for sale (amortized cost of
$368,172 and $369,492, respectively)                                         |                                |                                   | 373,841                                    |         |               |           | 364,648   |             
|Loans                                                                                                                         |                                |                                   | 3,772,670                                  |         |               |           | 3,458,381 |             
|                                                                                                                              | Less allowance for loan losses |                                   |                                            | (33,124 | )             |           |           | (29,157      | )        
|                                                                                                                              |                                |                                   |                                            |         |               |          
|Net loans                                                                                                                     |                                |                                   | 3,739,546                                  |         |               |           | 3,429,224 |             
|                                                                                                                              |                                |                                   |                                            |         |               |          
|Premises and equipment                                                                                                        |                                |                                   | 28,228                                     |         |               |           | 30,858    |             
|Mortgage servicing rights                                                                                                     |                                |                                   | 2,801                                      |         |               |           | 2,482     |             
|Bank owned life insurance                                                                                                     |                                |                                   | 85,874                                     |         |               |           |          |             
|Other assets                                                                                                                  |                                |                                   | 59,589                                     |         |               |           | 88,196    |             
|                                                                                                                              |                                |                                   |                                            |         |               |          
|                                                                                                                              |                                |                                   | Total assets                               |         | $             | 4,914,885 |           |              | $         | 4,740,605 | 
|                                                                                                                              |                                |                                   |                                            |         |               |          
|LIABILITIES                                                                                                                   |                                |                                   |                                            |         |               |           |           |             
|Noninterest-bearing deposits                                                                                                  |                                | $                                 | 245,547                                    |         |               | $         | 245,395   |             
|Interest-bearing deposits:                                                                                                    |                                |                                   |                                            |         |               |           |           |             
|                                                                                                                              |                                | NOW accounts                      |                                            |         | 163,868       |           |           |              | 153,839   |          
|                                                                                                                              |                                | Savings and money market accounts |                                            |         | 888,275       |           |           |              | 819,674   |          
|                                                                                                                              |                                | Certificates of deposit           |                                            |         | 1,531,569     |           |           |              | 1,534,560 |          
|                                                                                                                              |                                |                                   |                                            |         |               |          
|                                                                                                                              |                                | Total interest-bearing deposits   |                                            |         | 2,583,712     |           |           |              | 2,508,073 |          
|                                                                                                                              |                                |                                   |                                            |         |               |          
|                                                                                                                              |                                | Total deposits                    |                                            |         | 2,829,259     |           |           |              | 2,753,468 |          
|Federal funds purchased and other short-term borrowings                                                                       |                                |                                   | 225,500                                    |         |               |           | 176,500   |             
|FHLB advances                                                                                                                 |                                |                                   | 1,368,670                                  |         |               |           | 1,300,718 |             
|Accrued expenses and other liabilities                                                                                        |                                |                                   | 96,929                                     |         |               |           | 112,783   |             
|Long-term debt                                                                                                                |                                |                                   | 13,500                                     |         |               |           | 13,500    |             
|                                                                                                                              |                                |                                   |                                            |         |               |          
|                                                                                                                              |                                | Total liabilities                 |                                            |         | 4,533,858     |           |           |              | 4,356,969 |          
|Trust preferred securities and preferred stock of
subsidiary                                                                  |                                |                                   | 50,000                                     |         |               |           | 78,719    |             
|SHAREHOLDERS EQUITY                                                                                                          |                                |                                   |                                            |         |               |           |           |             
|Preferred stock, $25 stated value: $2.25 cumulative
and convertible; 5,000,000 shares authorized,
none issued and outstanding |                                |                                   |                                           |         |               |           |          |             
|Common stock, $5 par value, 75,000,000 shares
authorized; 52,629,000 and 53,166,000 issued
and outstanding, respectively      |                                |                                   | 263,144                                    |         |               |           | 265,831   |             
|Capital surplus                                                                                                               |                                |                                   | 31,229                                     |         |               |           | 38,693    |             
|Retained earnings                                                                                                             |                                |                                   | 32,969                                     |         |               |           | 3,542     |             
|Accumulated other comprehensive income (loss)                                                                                 |                                |                                   | 3,685                                      |         |               |           | (3,149    | )           
|                                                                                                                              |                                |                                   |                                            |         |               |          
|                                                                                                                              | Total shareholders equity     |                                   |                                            | 331,027 |               |           |           | 304,917      |          
|                                                                                                                              |                                |                                   |                                            |         |               |          
|                                                                                                                              |                                |                                   | Total liabilities and shareholders equity |         | $             | 4,914,885 |           |              | $         | 4,740,605 | 
|                                                                                                                              |                                |                                   |                                            |         |               |          

See notes to consolidated financial statements.

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REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |         |  |   |         |         | 
|--------------------------------------------------- | ------------------------- | ---- | ------------------ | ------ | ---- | ----------------- | ------ | ------ |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                                    |                           |      | Three Months Ended |        |      | Nine Months Ended |       
|                                                    |                           |      | September 30,      |        |      | September 30,     |       
|(In thousands, except per share data)               |                           | 2002 |                    |        | 2001 |                   |        | 2002   |  |   | 2001    |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Interest Income:                                    |                           |      |                    |        |      |                   |        |        |  |   |         |         |  |   |         |        
|Loans, including fees                               |                           | $    | 65,120             |        |      | $                 | 74,971 |        |  | $ | 198,435 |         |  | $ | 244,737 |        
|Investment securities                               |                           |      | 5,355              |        |      |                   | 4,584  |        |  |   | 15,426  |         |  |   | 12,282  |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|                                                    | Total interest income     |      |                    | 70,475 |      |                   |        | 79,555 |  |   |         | 213,861 |  |   |         | 257,019 | 
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Interest Expense:                                   |                           |      |                    |        |      |                   |        |        |  |   |         |         |  |   |         |        
|Deposits                                            |                           |      | 18,209             |        |      |                   | 27,453 |        |  |   | 57,913  |         |  |   | 91,263  |        
|Short-term borrowings                               |                           |      | 1,008              |        |      |                   | 1,076  |        |  |   | 2,648   |         |  |   | 2,535   |        
|FHLB advances                                       |                           |      | 14,481             |        |      |                   | 15,727 |        |  |   | 42,342  |         |  |   | 55,320  |        
|Long-term debt                                      |                           |      | 241                |        |      |                   | 241    |        |  |   | 724     |         |  |   | 1,209   |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|                                                    | Total interest expense    |      |                    | 33,939 |      |                   |        | 44,497 |  |   |         | 103,627 |  |   |         | 150,327 | 
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Net interest income                                 |                           |      | 36,536             |        |      |                   | 35,058 |        |  |   | 110,234 |         |  |   | 106,692 |        
|Provision for loan losses                           |                           |      | 6,200              |        |      |                   | 2,000  |        |  |   | 11,000  |         |  |   | 6,300   |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Net interest income after provision for loan losses |                           |      | 30,336             |        |      |                   | 33,058 |        |  |   | 99,234  |         |  |   | 100,392 |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Noninterest Income:                                 |                           |      |                    |        |      |                   |        |        |  |   |         |         |  |   |         |        
|Service charges                                     |                           |      | 2,484              |        |      |                   | 2,232  |        |  |   | 6,490   |         |  |   | 5,775   |        
|Mortgage production revenue                         |                           |      | 7,715              |        |      |                   | 6,013  |        |  |   | 23,101  |         |  |   | 40,520  |        
|Net mortgage servicing revenue (expense)            |                           |      | 42                 |        |      |                   | 153    |        |  |   | 318     |         |  |   | (281    | )      
|Gain on sale of securities                          |                           |      | 1,933              |        |      |                   | 404    |        |  |   | 2,751   |         |  |   | 934     |        
|Income from bank owned life insurance               |                           |      | 874                |        |      |                   |       |        |  |   | 874     |         |  |   |        |        
|Other noninterest income                            |                           |      | 1,093              |        |      |                   | 1,176  |        |  |   | 3,181   |         |  |   | 2,540   |        
|Gain on sale of subsidiary                          |                           |      |                   |        |      |                   |       |        |  |   |        |         |  |   | 12,000  |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|                                                    | Total noninterest income  |      |                    | 14,141 |      |                   |        | 9,978  |  |   |         | 36,715  |  |   |         | 61,488  | 
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Noninterest Expense:                                |                           |      |                    |        |      |                   |        |        |  |   |         |         |  |   |         |        
|Salaries and employee benefits                      |                           |      | 13,535             |        |      |                   | 12,198 |        |  |   | 40,412  |         |  |   | 49,152  |        
|Occupancy expense of premises                       |                           |      | 2,467              |        |      |                   | 2,391  |        |  |   | 7,439   |         |  |   | 9,017   |        
|Equipment expense                                   |                           |      | 1,750              |        |      |                   | 1,464  |        |  |   | 5,095   |         |  |   | 6,217   |        
|Other noninterest expense                           |                           |      | 5,290              |        |      |                   | 6,355  |        |  |   | 16,750  |         |  |   | 23,045  |        
|Restructuring costs to exit mortgage servicing      |                           |      |                   |        |      |                   |       |        |  |   |        |         |  |   | 19,000  |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|                                                    | Total noninterest expense |      |                    | 23,042 |      |                   |        | 22,408 |  |   |         | 69,696  |  |   |         | 106,431 | 
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Income before income taxes                          |                           |      | 21,435             |        |      |                   | 20,628 |        |  |   | 66,253  |         |  |   | 55,449  |        
|Provision for income taxes                          |                           |      | 5,910              |        |      |                   | 6,454  |        |  |   | 18,565  |         |  |   | 17,797  |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Income before preferred stock dividends             |                           |      | 15,525             |        |      |                   | 14,174 |        |  |   | 47,688  |         |  |   | 37,652  |        
|Preferred stock dividends                           |                           |      | 1,242              |        |      |                   | 681    |        |  |   | 4,753   |         |  |   | 2,042   |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Net income                                          |                           | $    | 14,283             |        |      | $                 | 13,493 |        |  | $ | 42,935  |         |  | $ | 35,610  |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Basic earnings per share                            |                           | $    | .27                |        |      | $                 | .25    |        |  | $ | .81     |         |  | $ | .65     |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Diluted earnings per share                          |                           | $    | .27                |        |      | $                 | .24    |        |  | $ | .80     |         |  | $ | .64     |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Average common shares outstanding  diluted         |                           |      | 53,671             |        |      |                   | 55,265 |        |  |   | 53,864  |         |  |   | 55,199  |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        
|Cash dividends declared per common share            |                           | $    | .085               |        |      | $                 | .077   |        |  | $ | .255    |         |  | $ | .232    |        
|                                                    |                           |      |                    |        |      |                   |        |        |  |   |         |        

See notes to consolidated financial statements.

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##### Table of Contents






REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

|                                                                             |                                                                                   |                                                           |                                                     |   |            |          |          |   |            |          |  
|---------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------- | --------------------------------------------------- | - | ---------- | -------- | -------- | - | ---------- | -------- | -
|Nine Months Ended September 30 (In thousands)                                |                                                                                   | 2002                                                      |                                                     |   | 2001       |         
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|Cash Flows From Operating Activities:                                        |                                                                                   |                                                           |                                                     |   |            |          |          |  
|Net income                                                                   |                                                                                   | $                                                         | 42,935                                              |   |            | $        | 35,610   |  
|                                                                             | Adjustments to reconcile net income to net cash provided by
operating activities: |                                                           |                                                     |   |            |          |          |   |           
|                                                                             |                                                                                   | Depreciation and amortization                             |                                                     |   | 7,217      |          |          |   | 6,020      |         
|                                                                             |                                                                                   | Amortization and write-down of mortgage servicing rights  |                                                     |   | 861        |          |          |   | 20,253     |         
|                                                                             |                                                                                   | Net gain on sale of mortgage servicing rights             |                                                     |   |           |          |          |   | (21,521    | )       
|                                                                             |                                                                                   | Net gain on sale of securities available for sale         |                                                     |   | (2,751     | )        |          |   | (934       | )       
|                                                                             |                                                                                   | Net gain on sale of SBA and residential real estate loans |                                                     |   | (4,069     | )        |          |   | (1,314     | )       
|                                                                             |                                                                                   | Net gain on sale of subsidiary                            |                                                     |   |           |          |          |   | (12,000    | )       
|                                                                             |                                                                                   | Proceeds from sales of mortgage loans held for sale       |                                                     |   | 1,756,447  |          |          |   | 3,322,772  |         
|                                                                             |                                                                                   | Origination of mortgage loans held for sale               |                                                     |   | (1,549,240 | )        |          |   | (3,505,987 | )       
|                                                                             |                                                                                   | Net decrease in other assets                              |                                                     |   | 15,981     |          |          |   | 28,345     |         
|                                                                             |                                                                                   | Net decrease in other liabilities                         |                                                     |   | (15,854    | )        |          |   | (21,473    | )       
|                                                                             |                                                                                   | Other, net                                                |                                                     |   | 1,948      |          |          |   | (2,094     | )       
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|                                                                             |                                                                                   |                                                           | Total adjustments                                   |   |            | 210,540  |          |   |            | (187,933 | )
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|                                                                             |                                                                                   |                                                           | Net cash provided by (used in) operating activities |   |            | 253,475  |          |   |            | (152,323 | )
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|Cash Flows From Investing Activities:                                        |                                                                                   |                                                           |                                                     |   |            |          |          |  
|Proceeds from sale of securities available for sale                          |                                                                                   |                                                           | 211,455                                             |   |            |          | 117,297  |  
|Proceeds from maturities/payments of securities available for sale           |                                                                                   |                                                           | 42,682                                              |   |            |          | 6,484    |  
|Purchases of securities available for sale                                   |                                                                                   |                                                           | (250,529                                            | ) |            |          | (274,977 | )
|Purchase of bank owned life insurance                                        |                                                                                   |                                                           | (85,000                                             | ) |            |          |         |  
|Proceeds from sale of consumer loans                                         |                                                                                   |                                                           |                                                    |   |            |          | 39,485   |  
|Proceeds from sale of SBA and residential real estate loans                  |                                                                                   |                                                           | 158,772                                             |   |            |          | 62,423   |  
|Net (increase) decrease in loans made to customers                           |                                                                                   |                                                           | (463,298                                            | ) |            |          | 106,478  |  
|Proceeds from sale of subsidiary and payments received on related
borrowings |                                                                                   |                                                           |                                                    |   |            |          | 176,184  |  
|Proceeds from sale of mortgage servicing rights                              |                                                                                   |                                                           |                                                    |   |            |          | 94,250   |  
|Additions to mortgage servicing rights                                       |                                                                                   |                                                           | (1,180                                              | ) |            |          | (46,754  | )
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|                                                                             |                                                                                   |                                                           | Net cash (used in) provided by investing activities |   |            | (387,098 | )        |   |            | 280,870  |  
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|Cash Flows From Financing Activities:                                        |                                                                                   |                                                           |                                                     |   |            |          |          |  
|Net increase (decrease) in deposits                                          |                                                                                   |                                                           | 75,791                                              |   |            |          | (30,544  | )
|Net increase in short-term borrowings                                        |                                                                                   |                                                           | 49,000                                              |   |            |          | 140,271  |  
|Net decrease in short-term FHLB advances                                     |                                                                                   |                                                           | (125,000                                            | ) |            |          | (140,000 | )
|Proceeds from long-term FHLB advances                                        |                                                                                   |                                                           | 192,952                                             |   |            |          | 110,000  |  
|Payments on long-term FHLB advances                                          |                                                                                   |                                                           |                                                    |   |            |          | (171,295 | )
|Payments on long-term debt                                                   |                                                                                   |                                                           |                                                    |   |            |          | (34,000  | )
|Redemption of preferred stock of subsidiary                                  |                                                                                   |                                                           | (30,250                                             | ) |            |          |         |  
|Net proceeds from issuance of common shares                                  |                                                                                   |                                                           | 4,477                                               |   |            |          | 4,384    |  
|Repurchase of common shares                                                  |                                                                                   |                                                           | (12,760                                             | ) |            |          | (9,328   | )
|Dividends paid                                                               |                                                                                   |                                                           | (13,571                                             | ) |            |          | (12,628  | )
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|                                                                             |                                                                                   |                                                           | Net cash provided by (used in) financing activities |   |            | 140,639  |          |   |            | (143,140 | )
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|Net increase (decrease) in cash and cash equivalents                         |                                                                                   |                                                           | 7,016                                               |   |            |          | (14,593  | )
|Cash and cash equivalents at beginning of period                             |                                                                                   |                                                           | 76,734                                              |   |            |          | 82,377   |  
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         
|Cash and cash equivalents at end of period                                   |                                                                                   | $                                                         | 83,750                                              |   |            | $        | 67,784   |  
|                                                                             |                                                                                   |                                                           |                                                     |   |            |         

See notes to consolidated financial statements.

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REPUBLIC BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1  Basis of Presentation

The accompanying unaudited consolidated financial statements of Republic
Bancorp Inc. and Subsidiaries (the Company) have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes necessary for a comprehensive presentation of financial position,
results of operations and cash flow activity required by accounting principles
generally accepted in the United States for complete financial statements. In
the opinion of management, all normal recurring adjustments necessary for a
fair presentation of results have been included. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Companys Annual Report on Form 10-K for the year ended December 31,
2001.

Note 2  Principles of Consolidation

The consolidated financial statements include the accounts of the parent
company, Republic Bancorp Inc., and its wholly-owned banking subsidiary,
Republic Bank (including its subsidiaries D&N Capital Corporation, Quincy
Investment Services, Inc., CAS Properties, Inc., Republic Bank Real Estate
Finance, LLC and Republic Management Company, Inc.) and Republic Capital Trust
I. All significant intercompany accounts and transactions have been eliminated
in consolidation.

Note 3  Consolidated Statements of Cash Flows

Supplemental disclosures of cash flow information for the nine months ended
September 30, include:

|                                 |                  |      |   |        |      |  |   |         | 
|-------------------------------- | ---------------- | ---- | - | ------ | ---- |  | - | ------- | 
|(In thousands)                   |                  | 2002 |   |        | 2001 | 
|                                 |                  |      |   |        |      | 
|Cash paid during the period for: |                  |      |   |        |      |  |   |        
|                                 | Interest         |      | $ | 99,138 |      |  | $ | 157,548 | 
|                                 | Income taxes     |      | $ | 18,626 |      |  |   | 6,819   | 
|Non-cash investing activities:   |                  |      |   |        |      |  |   |        
|                                 | Loan charge-offs |      | $ | 8,077  |      |  | $ | 6,498   | 

Note 4  Comprehensive Income

The following table sets forth the computation of comprehensive income:

|                                                                         |  |                    |        |   |                   |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------ |  | ------------------ | ------ | - | ----------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                         |  | Three Months Ended |        |   | Nine Months Ended |  
|                                                                         |  | September 30,      |        |   | September 30,     |  
|(In thousands)                                                           |  | 2002               |        |   | 2001              |   |        | 2002 |  |   | 2001   |  
|                                                                         |  |                    |        |   |                   |   |        |      |  |   |        |  
|Net income                                                               |  | $                  | 14,283 |   |                   | $ | 13,493 |      |  | $ | 42,935 |   |  | $ | 35,610 |  
|Unrealized holding gains (losses) on securities, net of tax              |  | $                  | 3,967  |   |                   | $ | (342   | )    |  | $ | 8,622  |   |  | $ | (597   | )
|Reclassification adjustment for gains included
in net income, net of tax |  |                    | (1,256 | ) |                   |   | (263   | )    |  |   | (1,788 | ) |  |   | (607   | )
|                                                                         |  |                    |        |   |                   |   |        |      |  |   |        |  
|Net unrealized gains (losses) on securities, net of tax                  |  |                    | 2,711  |   |                   |   | (605   | )    |  |   | 6,834  |   |  |   | (1,204 | )
|                                                                         |  |                    |        |   |                   |   |        |      |  |   |        |  
|Comprehensive income                                                     |  | $                  | 16,994 |   |                   | $ | 12,888 |      |  | $ | 49,769 |   |  | $ | 34,406 |  
|                                                                         |  |                    |        |   |                   |   |        |      |  |   |        |  

Note 5  Intangible Assets

The following table summarizes the Companys core deposit intangible asset which is subject to amortization:

|                               |                          |                |   |       |               |  |   |       |       | 
|------------------------------ | ------------------------ | -------------- | - | ----- | ------------- |  | - | ----- | ----- | 
|(Dollars in thousands)         |                          | Sept. 30, 2002 |   |       | Dec. 31, 2001 | 
|                               |                          |                |   |       |               | 
|Core Deposit Intangible Asset: |                          |                |   |       |               |  |   |      
|                               | Gross carrying amount    |                | $ | 8,749 |               |  | $ | 8,749 |      
|                               | Accumulated amortization |                |   | 2,933 |               |  |   | 2,191 |      
|                               |                          |                |   |       |               | 
|                               |                          | Net book value |   | $     | 5,816         |  |   | $     | 6,558 | 
|                               |                          |                |   |       |               | 

Amortization expense on the core deposit intangible asset totaled $248,000 for
each of the quarters ended September 30, 2002 and 2001, and $990,000 for the
year ended December 31, 2001. The Company expects core deposit intangible
amortization expense to be
$990,000 for each of the years ending December 31, 2002, 2003 and 2004. The
Company expects core deposit intangible amortization expense for the years
ended December 31, 2005 and 2006 to be $945,000 and $936,000, respectively.

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Note 6  Earnings Per Share

The following table sets forth the computation of basic and diluted earnings
per share:

|                                                                                                      |                                |                        |                                  |        |                    |         |            |                   |         |         |            |        |         |         |            |        |         |         | 
|----------------------------------------------------------------------------------------------------- | ------------------------------ | ---------------------- | -------------------------------- | ------ | ------------------ | ------- | ---------- | ----------------- | ------- | ------- | ---------- | ------ | ------- | ------- | ---------- | ------ | ------- | ------- | 
|                                                                                                      |                                |                        |                                  |        | Three Months Ended |         |            | Nine Months Ended |        
|                                                                                                      |                                |                        |                                  |        | September 30,      |         |            | September 30,     |        
|(Dollars in thousands, except per share data)                                                         |                                | 2002                   |                                  |        | 2001               |         |            | 2002              |         |         | 2001       |       
|                                                                                                      |                                |                        |                                  |        |                    |         |            |                   |         |         |            |       
|Numerator for basic and diluted earnings per share:                                                   |                                |                        |                                  |        |                    |         |            |                   |         |         |            |        |         |         |            |       
|                                                                                                      | Net income                     |                        | $                                | 14,283 |                    |         | $          | 13,493            |         |         | $          | 42,935 |         |         | $          | 35,610 |        
|Denominator for basic earnings per share 
weighted-average shares                                    |                                |                        | 52,908,825                       |        |                    |         | 54,408,526 |                   |         |         | 53,036,226 |        |         |         | 54,430,441 |       
|                                                                                                      | Effect of dilutive securities: |                        |                                  |        |                    |         |            |                   |         |         |            |        |         |         |            |        |        
|                                                                                                      |                                | Employee stock options |                                  |        | 702,900            |         |            |                   | 800,111 |         |            |        | 767,505 |         |            |        | 718,240 |        
|                                                                                                      |                                | Warrants               |                                  |        | 58,986             |         |            |                   | 56,460  |         |            |        | 60,262  |         |            |        | 50,668  |        
|                                                                                                      |                                |                        |                                  |        |                    |         |            |                   |         |         |            |       
|                                                                                                      |                                |                        | Dilutive potential common shares |        |                    | 761,886 |            |                   |         | 856,571 |            |        |         | 827,767 |            |        |         | 768,908 | 
|                                                                                                      |                                |                        |                                  |        |                    |         |            |                   |         |         |            |       
|Denominator
for diluted earnings per share  adjusted
weighted-average shares for assumed conversions |                                |                        | 53,670,711                       |        |                    |         | 55,265,097 |                   |         |         | 53,863,993 |        |         |         | 55,199,349 |       
|                                                                                                      |                                |                        |                                  |        |                    |         |            |                   |         |         |            |       
|Basic earnings per share                                                                              |                                | $                      | .27                              |        |                    | $       | .25        |                   |         | $       | .81        |        |         | $       | .65        |       
|                                                                                                      |                                |                        |                                  |        |                    |         |            |                   |         |         |            |       
|Diluted earnings per share                                                                            |                                | $                      | .27                              |        |                    | $       | .24        |                   |         | $       | .80        |        |         | $       | .64        |       
|                                                                                                      |                                |                        |                                  |        |                    |         |            |                   |         |         |            |       

Note 7  Segment Information

The Companys operations are managed as three major business segments: (1)
commercial banking (2) retail banking and (3) mortgage banking. The commercial
banking segment consists of commercial lending to small- and medium-sized
companies, primarily in the form of commercial real estate and Small Business
Administration (SBA) loans. The retail banking segment consists of home equity
lending, other consumer lending and the deposit-gathering function. Deposits
and loan products are offered through 82 retail branch offices of Republic
Bank, which are staffed by personal bankers and loan originators. The mortgage
banking segment is comprised of mortgage loan production and mortgage loan
servicing for others. Mortgage loan production is conducted in 56 offices of
Republic Bank. Treasury and Other is comprised of balance sheet management
activities that include the securities portfolio, residential real estate
mortgage portfolio loans and non-deposit funding. Treasury and Other also
includes unallocated corporate expenses such as corporate overhead, including
accounting and operation costs.

In conjunction with the merger of Republic Bank and D&N Bank in 2000 and the
sale of Market Street Mortgage Corporation in 2001, the Company redefined its
business segments. Amounts for 2001 have been reclassified to conform to the
current year presentation.

The following tables present the financial results of each business segment for
the three and nine months ended September 30, 2002 and 2001.

|                                              |                     |            |         |       |        |   |         |          |  |   |           |       |  |              |          |         |   |   |        |        | 
|--------------------------------------------- | ------------------- | ---------- | ------- | ----- | ------ | - | ------- | -------- |  | - | --------- | ----- |  | ------------ | -------- | ------- | - | - | ------ | ------ | 
|                                              |                     |            |         |       |        |   |         |          |  |   |           |       |  |              | Treasury |         |   |   |        |       
|(In thousands)                                |                     | Commercial |         |       | Retail |   |         | Mortgage |  |   | and Other |       |  | Consolidated |         
|                                              |                     |            |         |       |        |   |         |          |  |   |           |       |  |              |         
|For the Three Months Ended September 30, 2002 |                     |            |         |       |        |   |         |          |  |   |           |       |  |              |          |         |   |   |        |       
|Net interest income from external customers   |                     | $          | 24,676  |       |        | $ | (10,745 | )        |  | $ | 6,337     |       |  | $            | 16,268   |         |   | $ | 36,536 |       
|Internal funding                              |                     |            | (10,627 | )     |        |   | 39,681  |          |  |   | (3,156    | )     |  |              | (25,898  | )       |   |   |       |       
|                                              |                     |            |         |       |        |   |         |          |  |   |           |       |  |              |         
|Net interest income                           |                     |            | 14,049  |       |        |   | 28,936  |          |  |   | 3,181     |       |  |              | (9,630   | )       |   |   | 36,536 |       
|Provision for loan losses                     |                     |            | 2,354   |       |        |   | 357     |          |  |   |          |       |  |              | 3,489    |         |   |   | 6,200  |       
|Noninterest income                            |                     |            | 341     |       |        |   | 2,691   |          |  |   | 10,567    |       |  |              | 542      |         |   |   | 14,141 |       
|Noninterest expense                           |                     |            | 2,710   |       |        |   | 8,040   |          |  |   | 6,944     |       |  |              | 5,348    |         |   |   | 23,042 |       
|                                              |                     |            |         |       |        |   |         |          |  |   |           |       |  |              |         
|                                              | Income before taxes |            |         | 9,326 |        |   |         | 23,230   |  |   |           | 6,804 |  |              |          | (17,925 | ) |   |        | 21,435 | 
|Preferred stock dividend                      |                     |            |        |       |        |   |        |          |  |   |          |       |  |              | 1,242    |         |   |   | 1,242  |       
|Income taxes                                  |                     |            | 3,341   |       |        |   | 8,322   |          |  |   | 2,381     |       |  |              | (8,134   | )       |   |   | 5,910  |       
|                                              |                     |            |         |       |        |   |         |          |  |   |           |       |  |              |         
|Net income                                    |                     | $          | 5,985   |       |        | $ | 14,908  |          |  | $ | 4,423     |       |  | $            | (11,033  | )       |   | $ | 14,283 |       
|                                              |                     |            |         |       |        |   |         |          |  |   |           |       |  |              |         
|Depreciation and amortization                 |                     | $          | 36      |       |        | $ | 785     |          |  | $ | 657       |       |  | $            | 2,014    |         |   | $ | 3,492  |       
|Capital expenditures                          |                     | $          | 20      |       |        | $ | 70      |          |  | $ | 177       |       |  | $            | 677      |         |   | $ | 944    |       
|Net identifiable assets (in millions) (1)     |                     | $          | 1,453   |       |        | $ | 2,931   |          |  | $ | 697       |       |  | $            | (166     | )       |   | $ | 4,915  |       
|Return on equity(2)                           |                     |            | 16.65   | %     |        |   | 23.06   | %        |  |   | 83.85     | %     |  |              | n/m      |         |   |   | 17.33  | %     
|Return on assets                              |                     |            | 1.66    | %     |        |   | 2.10    | %        |  |   | 4.19      | %     |  |              | n/m      |         |   |   | 1.25   | %     
|Efficiency ratio                              |                     |            | 18.83   | %     |        |   | 25.42   | %        |  |   | 50.51     | %     |  |              | n/m      |         |   |   | 47.27  | %     

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Note 7  Segment Information (Continued)

|                                              |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              |          |         |   |   |        |        | 
|--------------------------------------------- | ------------------- | ---------- | ------- | ----- | ------ | - | ------- | ------ |  |  |  | -------- |  | - | --------- | ----- |  | ------------ | -------- | ------- | - | - | ------ | ------ | 
|                                              |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              | Treasury |         |   |   |        |       
|(In thousands)                                |                     | Commercial |         |       | Retail |   |         |        |  |  |  | Mortgage |  |   | and Other |       |  | Consolidated |         
|                                              |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              |         
|For the Three Months Ended September 30, 2001 |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              |          |         |   |   |        |       
|Net interest income from external customers   |                     | $          | 25,207  |       |        | $ | (19,457 | )      |  |  |  |          |  | $ | 9,334     |       |  | $            | 19,974   |         |   | $ | 35,058 |       
|Internal funding                              |                     |            | (12,870 | )     |        |   | 46,762  |        |  |  |  |          |  |   | (5,482    | )     |  |              | (28,410  | )       |   |   |       |       
|                                              |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              |         
|Net interest income                           |                     |            | 12,337  |       |        |   | 27,305  |        |  |  |  |          |  |   | 3,852     |       |  |              | (8,436   | )       |   |   | 35,058 |       
|Provision for loan losses                     |                     |            | 977     |       |        |   | 342     |        |  |  |  |          |  |   |          |       |  |              | 681      |         |   |   | 2,000  |       
|Noninterest income                            |                     |            | 415     |       |        |   | 2,124   |        |  |  |  |          |  |   | 6,166     |       |  |              | 1,273    |         |   |   | 9,978  |       
|Noninterest expense                           |                     |            | 2,357   |       |        |   | 8,575   |        |  |  |  |          |  |   | 5,199     |       |  |              | 6,277    |         |   |   | 22,408 |       
|                                              |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              |         
|                                              | Income before taxes |            |         | 9,418 |        |   |         | 20,512 |  |  |  |          |  |   |           | 4,819 |  |              |          | (14,121 | ) |   |        | 20,628 | 
|Preferred stock dividend                      |                     |            |        |       |        |   |        |        |  |  |  |          |  |   |          |       |  |              | 681      |         |   |   | 681    |       
|Income taxes                                  |                     |            | 3,138   |       |        |   | 6,941   |        |  |  |  |          |  |   | 1,686     |       |  |              | (5,311   | )       |   |   | 6,454  |       
|                                              |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              |         
|Net operating income                          |                     | $          | 6,280   |       |        | $ | 13,571  |        |  |  |  |          |  | $ | 3,133     |       |  | $            | (9,491   | )       |   | $ | 13,493 |       
|                                              |                     |            |         |       |        |   |         |        |  |  |  |          |  |   |           |       |  |              |         
|Depreciation and amortization                 |                     | $          | 29      |       |        | $ | 779     |        |  |  |  |          |  | $ | 406       |       |  | $            | 382      |         |   | $ | 1,596  |       
|Capital expenditures                          |                     | $          | 85      |       |        | $ | 142     |        |  |  |  |          |  | $ | 45        |       |  | $            | 614      |         |   | $ | 886    |       
|Net
identifiable assets (in millions) (1)     |                     | $          | 1,291   |       |        | $ | 2,855   |        |  |  |  |          |  | $ | 515       |       |  | $            | (216     | )       |   | $ | 4,445  |       
|Return on equity(2)                           |                     |            | 19.55   | %     |        |   | 20.74   | %      |  |  |  |          |  |   | 47.09     | %     |  |              | n/m      |         |   |   | 17.31  | %     
|Return on assets                              |                     |            | 1.96    | %     |        |   | 1.89    | %      |  |  |  |          |  |   | 2.35      | %     |  |              | n/m      |         |   |   | 1.22   | %     
|Efficiency ratio                              |                     |            | 18.48   | %     |        |   | 29.14   | %      |  |  |  |          |  |   | 51.90     | %     |  |              | n/m      |         |   |   | 50.21  | %     

|                                             |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |          |         |   |   |         |        | 
|-------------------------------------------- | ------------------- | ---------- | ------- | ------ | ------ | - | ------- | -------- |  | - | --------- | ------ |  | ------------ | -------- | ------- | - | - | ------- | ------ | 
|                                             |                     |            |         |        |        |   |         |          |  |   |           |        |  |              | Treasury |         |   |   |         |       
|(In thousands)                               |                     | Commercial |         |        | Retail |   |         | Mortgage |  |   | and Other |        |  | Consolidated |         
|                                             |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|For the Nine Months Ended September 30, 2002 |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |          |         |   |   |         |       
|Net interest income from external customers  |                     | $          | 73,128  |        |        | $ | (36,673 | )        |  | $ | 24,744    |        |  | $            | 49,035   |         |   | $ | 110,234 |       
|Internal funding                             |                     |            | (32,338 | )      |        |   | 121,716 |          |  |   | (12,358   | )      |  |              | (77,020  | )       |   |   |        |       
|                                             |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|Net interest income                          |                     |            | 40,790  |        |        |   | 85,043  |          |  |   | 12,386    |        |  |              | (27,985  | )       |   |   | 110,234 |       
|Provision for loan losses                    |                     |            | 4,577   |        |        |   | 1,087   |          |  |   |          |        |  |              | 5,336    |         |   |   | 11,000  |       
|Noninterest income                           |                     |            | 1,417   |        |        |   | 6,778   |          |  |   | 24,821    |        |  |              | 3,699    |         |   |   | 36,715  |       
|Noninterest expense                          |                     |            | 7,357   |        |        |   | 23,851  |          |  |   | 20,655    |        |  |              | 17,833   |         |   |   | 69,696  |       
|                                             |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|                                             | Income before taxes |            |         | 30,273 |        |   |         | 66,883   |  |   |           | 16,552 |  |              |          | (47,455 | ) |   |         | 66,253 | 
|Preferred stock dividend                     |                     |            |        |        |        |   |        |          |  |   |          |        |  |              | 4,753    |         |   |   | 4,753   |       
|Income taxes                                 |                     |            | 10,845  |        |        |   | 23,960  |          |  |   | 5,793     |        |  |              | (22,033  | )       |   |   | 18,565  |       
|                                             |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|Net income                                   |                     | $          | 19,428  |        |        | $ | 42,923  |          |  | $ | 10,759    |        |  | $            | (30,175  | )       |   | $ | 42,935  |       
|                                             |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|Depreciation and amortization                |                     | $          | 107     |        |        | $ | 2,374   |          |  | $ | 1,804     |        |  | $            | 3,793    |         |   | $ | 8,078   |       
|Capital expenditures                         |                     | $          | 38      |        |        | $ | 313     |          |  | $ | 475       |        |  | $            | 1,342    |         |   | $ | 2,168   |       
|Net identifiable assets (in millions) (1)    |                     | $          | 1,453   |        |        | $ | 2,931   |          |  | $ | 697       |        |  | $            | (166     | )       |   | $ | 4,915   |       
|Return on equity(2)                          |                     |            | 18.57   | %      |        |   | 22.19   | %        |  |   | 55.24     | %      |  |              | n/m      |         |   |   | 17.85   | %     
|Return on assets                             |                     |            | 1.86    | %      |        |   | 2.02    | %        |  |   | 2.76      | %      |  |              | n/m      |         |   |   | 1.28    | %     
|Efficiency ratio                             |                     |            | 17.43   | %      |        |   | 25.98   | %        |  |   | 55.51     | %      |  |              | n/m      |         |   |   | 48.33   | %     

|                                                |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |          |         |   |   |         |        | 
|----------------------------------------------- | ------------------- | ---------- | ------- | ------ | ------ | - | ------- | -------- |  | - | --------- | ------ |  | ------------ | -------- | ------- | - | - | ------- | ------ | 
|                                                |                     |            |         |        |        |   |         |          |  |   |           |        |  |              | Treasury |         |   |   |         |       
|(In thousands)                                  |                     | Commercial |         |        | Retail |   |         | Mortgage |  |   | and Other |        |  | Consolidated |         
|                                                |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|For
the Nine Months Ended
September 30, 2001(3) |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |          |         |   |   |         |       
|Net interest income from external customers     |                     | $          | 77,512  |        |        | $ | (64,910 | )        |  | $ | 38,536    |        |  | $            | 55,554   |         |   | $ | 106,692 |       
|Internal funding                                |                     |            | (39,246 | )      |        |   | 142,339 |          |  |   | (23,293   | )      |  |              | (79,800  | )       |   |   |        |       
|                                                |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|Net interest income                             |                     |            | 38,266  |        |        |   | 77,429  |          |  |   | 15,243    |        |  |              | (24,246  | )       |   |   | 106,692 |       
|Provision for loan losses                       |                     |            | 3,353   |        |        |   | 518     |          |  |   |          |        |  |              | 2,429    |         |   |   | 6,300   |       
|Noninterest income                              |                     |            | 943     |        |        |   | 5,779   |          |  |   | 40,427    |        |  |              | 2,339    |         |   |   | 49,488  |       
|Noninterest expense                             |                     |            | 7,217   |        |        |   | 23,914  |          |  |   | 39,961    |        |  |              | 16,339   |         |   |   | 87,431  |       
|                                                |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|                                                | Income before taxes |            |         | 28,639 |        |   |         | 58,776   |  |   |           | 15,709 |  |              |          | (40,675 | ) |   |         | 62,449 | 
|Preferred stock dividend                        |                     |            |        |        |        |   |        |          |  |   |          |        |  |              | 2,042    |         |   |   | 2,042   |       
|Income taxes                                    |                     |            | 10,024  |        |        |   | 20,572  |          |  |   | 5,498     |        |  |              | (15,847  | )       |   |   | 20,247  |       
|                                                |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|Net income                                      |                     | $          | 18,615  |        |        | $ | 38,204  |          |  | $ | 10,211    |        |  | $            | (26,870  | )       |   | $ | 40,160  |       
|                                                |                     |            |         |        |        |   |         |          |  |   |           |        |  |              |         
|Depreciation and amortization                   |                     | $          | 114     |        |        | $ | 2,444   |          |  | $ | 6,333     |        |  | $            | 1,425    |         |   | $ | 10,316  |       
|Capital expenditures                            |                     | $          | 169     |        |        | $ | 802     |          |  | $ | 241       |        |  | $            | 1,423    |         |   | $ | 2,635   |       
|Net identifiable assets (in millions)(1)        |                     | $          | 1,291   |        |        | $ | 2,855   |          |  | $ | 515       |        |  | $            | (216     | )       |   | $ | 4,445   |       
|Return on equity(2)                             |                     |            | 20.17   | %      |        |   | 19.55   | %        |  |   | 42.03     | %      |  |              | n/m      |         |   |   | 17.72   | %     
|Return on assets                                |                     |            | 2.02    | %      |        |   | 1.78    | %        |  |   | 1.90      | %      |  |              | n/m      |         |   |   | 1.16    | %     
|Efficiency ratio                                |                     |            | 18.41   | %      |        |   | 28.74   | %        |  |   | 71.78     | %      |  |              | n/m      |         |   |   | 56.32   | %     



---

|(1)                  |  | Treasury and Other net identifiable assets include the securities
portfolio and residential real estate mortgage portfolio loans, net of deposits
in excess of consumer loans credited to the retail segment.  
|-------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)                  |  | Capital is allocated as a percentage of assets for the commercial,
retail and mortgage banking segments at 10%, 10% and 5%, respectively.                                                                      
|(3)                  |  | Amounts exclude impact of $12.0 million pretax gain on sale of subsidiary
recorded in the second quarter and the impact of $19.0 million of pretax
restructuring costs to exit the mortgage servicing business.
|n/m  Not meaningful |  |                                                                                                                                                                                                                

8



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##### Table of Contents



Note 8  Accounting and Financial Reporting Developments

In July 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible
Assets,which drastically changed the accounting for goodwill, and intangible
assets. Under Statement No. 142, goodwill and indefinite lived intangible
assets are no longer amortized but are reviewed annually (or more frequently if
impairment indicators arise) for impairment. Separable intangible assets that
are not deemed to have an indefinite life will continue to be amortized over
their useful lives (but with no maximum life)(see Note 5). The Companys
goodwill balance was $1.2 million at September 30, 2002 and December 31, 2001.
The Companys adoption of Statement No. 142 on January 1, 2002, did not have a
significant effect on the Companys results of operations for the quarter and
nine months ended September 30, 2002 compared to the quarter and nine months
ended September 30, 2001.

Note 9  Preferred Stock of Subsidiary

On July 22, 2002, the Company redeemed all 1,210,000 issued and outstanding
shares of D&N Capital Corporations 9.0% Noncumulative Preferred Stock, Series
A (liquidation preference $25.00 per share) at a redemption price of $25.00 per
share, plus accrued dividends of $0.1375 per share, for cash.

Note 10  Bank Owned Life Insurance

On July 31, 2002, Republic Bank purchased $85 million of separate account bank
owned life insurance to fund future employee benefit costs. Increases in the
cash surrender value resulting from investment returns are recorded in other
income.

Note 11  Subsequent Event

On October 17, 2002, the Board of Directors declared a 10% stock dividend to
shareholders of record on November 8, 2002 and payable on December 2, 2002.
The Board of Directors also amended the 2001 Stock Repurchase Program to allow
for the repurchase of an additional 1,000,000 shares. The 2001 Program now
allows for the repurchase of up to 4,300,000 shares of its common stock on the
open market, or in privately negotiated transactions. Shares acquired under
the Program could be used for stock dividends, employee benefit plans and other
general business purposes.




ITEM 2: Managements Discussion and Analysis of Financial Condition and
Results of Operations

EARNINGS PERFORMANCE

The Company reported net income for the third quarter of 2002 of $14.3 million,
an increase of 6% over net income of $13.5 million for the third quarter of
2001. Diluted earnings per share were $0.27 for the quarter, up 9% from $0.24
earned in 2001. Annualized returns on average assets and average shareholders
equity were 1.25% and 17.33%, respectively, for the quarter ended September 30,
2002. These compare with annualized returns of 1.22% on average assets and
17.31% on average equity for the third quarter of 2001.

Net income for the nine months ended September 30, 2002 was $42.9 million, a 7%
increase over net operating income of $40.2 million earned for the same period
in 2001. For the nine month period ended September 30, 2002, diluted earnings
per share were $0.80, an increase of 10% over the $0.73 earned in 2001.
Annualized returns on average assets and shareholders equity for the first
nine months of 2002 were 1.28% and 17.85%, respectively.

Net operating income in 2001 excludes the $12.0 million pretax gain on sale of
Market Street Mortgage Corporation and $19.0 million of pretax restructuring
costs to exit the mortgage servicing business. Including these items, the
Company reported net income of $35.6 million for the nine months ended
September 30, 2001, or $0.64 per share.

RESULTS OF OPERATIONS

Net Interest Income
The following discussion should be read in conjunction with Tables I and II on
the following pages, which provide detailed analyses of the components
impacting net interest income for the three and nine months ended September 30,
2002 and 2001.

Net interest income, on a fully taxable equivalent (FTE) basis, was $37.6
million for the third quarter of 2002, compared to $36.0 million for the third
quarter of 2001. The increase was primarily the result of an increase in the
Companys average interest-earnings assets of $110 million. The average
portfolio loan balance increased $110 million, or 3% for the third quarter of
2002 compared to 2001. This increase reflects a $162 million, or 13% increase
in average commercial loans offset by a decrease of $51 million, or 3% in
average residential real estate mortgage loans and a decrease of $1 million in
average installment loans. The decrease in average installment loans is the
result of a $64 million decrease in the average indirect installment loan
balance offset by an increase of $63 million in the average direct installment
loan balance. In addition, the average balance of investment securities
increased $99 million,
or 30% for the third quarter of 2002 compared to 2001, and the average mortgage
loans held for sale balance decreased $103 million, or 28%, reflecting the
decreased mortgage loan closing volume during the second quarter of 2002
compared to the corresponding period in 2001.

9



---



##### Table of Contents



Table I  Quarterly Net Interest Income and Rate/Volume Analysis (FTE)

|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |         |      |      |      |      | 
|------------------------------------------------------------ | -------------------------- | ------------------------------- | ------------------------------------------ | --------- | ------------------ | --------- | ------ | ------------------ | ------ | ------ | ------- | ------- | ---- | -------- | --------- | --------- | --------- | --------- | ------ | ------ | ------ | ------- | ---- | ---- | ---- | ---- | 
|                                                             |                            |                                 |                                            |           | Three Months Ended |           |        | Three Months Ended |       
|                                                             |                            |                                 |                                            |           | September 30, 2002 |           |        | September 30, 2001 |       
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |       
|                                                             |                            |                                 |                                            |           | Average            |           |        |                    |        |        |         | Average |      |          | Average   |           |           |           |        |        |        | Average |     
|(Dollar amounts in thousands)                                |                            | Balance                         |                                            |           | Interest           |           |        | Rate               |        |        | Balance |         |      | Interest |           |           | Rate      |          
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |          
|Average Assets:                                              |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |         |      |     
|Short-term investments                                       |                            | $                               | 4,806                                      |           |                    | $         | 27     |                    |        |        | 2.21    | %       |      | $        | 783       |           |           | $         | 7      |        |        |         | 3.53 | %   
|Mortgage loans held for sale                                 |                            |                                 | 268,625                                    |           |                    |           | 4,290  |                    |        |        | 6.39    |         |      |          | 371,944   |           |           |           | 6,656  |        |        |         | 7.16 |     
|Investment securities                                        |                            |                                 | 427,785                                    |           |                    |           | 6,428  |                    |        |        | 5.96    |         |      |          | 328,514   |           |           |           | 5,568  |        |        |         | 6.72 |     
|Portfolio loans(1):                                          |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |         |      |     
|                                                             | Commercial loans           |                                 |                                            | 1,456,255 |                    |           |        | 24,953             |        |        |         | 6.71    |      |          |           | 1,294,169 |           |           |        | 26,406 |        |         |      | 7.98 |     
|                                                             | Real estate mortgage loans |                                 |                                            | 1,627,474 |                    |           |        | 25,687             |        |        |         | 6.31    |      |          |           | 1,678,019 |           |           |        | 29,460 |        |         |      | 7.02 |     
|                                                             | Installment loans          |                                 |                                            | 596,228   |                    |           |        | 10,190             |        |        |         | 6.78    |      |          |           | 597,519   |           |           |        | 12,449 |        |         |      | 8.27 |     
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |          
|                                                             |                            |                                 | Total loans, net
of unearned income        |           |                    | 3,679,957 |        |                    |        | 60,830 |         |         |      | 6.54     |           |           |           | 3,569,707 |        |        |        | 68,315  |      |      |      | 7.58 | 
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |          
|                                                             |                            |                                 | Total interest-earning assets              |           |                    | 4,381,173 |        |                    |        | 71,575 |         |         |      | 6.47     |           |           |           | 4,270,948 |        |        |        | 80,546  |      |      |      | 7.48 | 
|Allowance for loan losses                                    |                            |                                 | (30,344                                    | )         |                    |           |        |                    |        |        |         |         |      |          | (28,846   | )         |           |           |        |        |        |         |      |     
|Cash and due from banks                                      |                            |                                 | 61,446                                     |           |                    |           |        |                    |        |        |         |         |      |          | 61,085    |           |           |           |        |        |        |         |      |     
|Other assets                                                 |                            |                                 | 153,308                                    |           |                    |           |        |                    |        |        |         |         |      |          | 104,533   |           |           |           |        |        |        |         |      |     
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |        
|                                                             |                            |                                 | Total assets                               |           | $                  | 4,565,583 |        |                    |        |        |         |         |      |          |           |           | $         | 4,407,720 |        |        |        |         |      |      |      |      | 
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |        
|Average Liabilities and Shareholders Equity:                |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |         |      |     
|Interest-bearing demand deposits                             |                            | $                               | 162,358                                    |           |                    |           | 279    |                    |        |        | .68     |         |      | $        | 147,490   |           |           |           | 456    |        |        |         | 1.23 |     
|Savings deposits                                             |                            |                                 | 879,180                                    |           |                    |           | 3,961  |                    |        |        | 1.79    |         |      |          | 773,706   |           |           |           | 5,845  |        |        |         | 3.00 |     
|Time deposits                                                |                            |                                 | 1,463,248                                  |           |                    |           | 13,969 |                    |        |        | 3.79    |         |      |          | 1,551,950 |           |           |           | 21,152 |        |        |         | 5.41 |     
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |          
|                                                             |                            | Total interest-bearing deposits |                                            |           | 2,504,786          |           |        |                    | 18,209 |        |         |         | 2.88 |          |           |           | 2,473,146 |           |        |        | 27,453 |         |      |      | 4.40 |     
|Short-term borrowings                                        |                            |                                 | 216,062                                    |           |                    |           | 1,008  |                    |        |        | 1.83    |         |      |          | 115,021   |           |           |           | 1,076  |        |        |         | 3.66 |     
|FHLB advances                                                |                            |                                 | 1,170,192                                  |           |                    |           | 14,481 |                    |        |        | 4.84    |         |      |          | 1,185,631 |           |           |           | 15,727 |        |        |         | 5.19 |     
|Long-term debt                                               |                            |                                 | 13,500                                     |           |                    |           | 241    |                    |        |        | 7.15    |         |      |          | 13,500    |           |           |           | 241    |        |        |         | 7.14 |     
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |          
|                                                             |                            |                                 | Total interest-bearing liabilities         |           |                    | 3,904,540 |        |                    |        | 33,939 |         |         |      | 3.43     |           |           |           | 3,787,298 |        |        |        | 44,497  |      |      |      | 4.64 | 
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |       
|Noninterest-bearing deposits                                 |                            |                                 | 244,053                                    |           |                    |           |        |                    |        |        |         |         |      |          | 232,274   |           |           |           |        |        |        |         |      |     
|Other liabilities                                            |                            |                                 | 30,971                                     |           |                    |           |        |                    |        |        |         |         |      |          | 47,702    |           |           |           |        |        |        |         |      |     
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |        
|                                                             |                            |                                 | Total liabilities                          |           |                    | 4,179,564 |        |                    |        |        |         |         |      |          |           |           |           | 4,067,274 |        |        |        |         |      |      |      |      | 
|Trust preferred securities and preferred
stock of subsidiary |                            |                                 | 56,406                                     |           |                    |           |        |                    |        |        |         |         |      |          | 28,719    |           |           |           |        |        |        |         |      |     
|Shareholders equity                                         |                            |                                 | 329,613                                    |           |                    |           |        |                    |        |        |         |         |      |          | 311,727   |           |           |           |        |        |        |         |      |     
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |        
|                                                             |                            |                                 | Total liabilities and shareholders equity |           | $                  | 4,565,583 |        |                    |        |        |         |         |      |          |           |           | $         | 4,407,720 |        |        |        |         |      |      |      |      | 
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |        
|Net interest income/rate spread (FTE)                        |                            |                                 |                                            |           |                    | $         | 37,636 |                    |        |        | 3.04    | %       |      |          |           |           |           | $         | 36,049 |        |        |         | 2.84 | %   
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |       
|Net interest margin (FTE)                                    |                            |                                 |                                            |           |                    |           |        |                    |        |        | 3.42    | %       |      |          |           |           |           |           |        |        |        |         | 3.36 | %   
|                                                             |                            |                                 |                                            |           |                    |           |        |                    |        |        |         |         |      |          |           |           |           |           |        |        |        |        

|                                      |                            |                                 |                                     |       |         |       |        |            |        |         |        |        |        |         |  
|------------------------------------- | -------------------------- | ------------------------------- | ----------------------------------- | ----- | ------- | ----- | ------ | ---------- | ------ | ------- | ------ | ------ | ------ | ------- | -
|Increase (decrease) due to change in: |                            | Volume(2)                       |                                     |       | Rate(2) |       |        | Net Change |       
|                                      |                            |                                 |                                     |       |         |       |        |            |       
|Short-term investments                |                            | $                               | 24                                  |       |         | $     | (4     | )          |        | $       | 20     |       
|Mortgage loans held for sale          |                            |                                 | (1,706                              | )     |         |       | (660   | )          |        |         | (2,366 | )     
|Investment securities                 |                            |                                 | 1,534                               |       |         |       | (674   | )          |        |         | 860    |       
|Portfolio loans(1):                   |                            |                                 |                                     |       |         |       |        |            |        |         |        |       
|                                      | Commercial loans           |                                 |                                     | 2,979 |         |       |        | (4,432     | )      |         |        | (1,453 | )     
|                                      | Real estate mortgage loans |                                 |                                     | (866  | )       |       |        | (2,907     | )      |         |        | (3,773 | )     
|                                      | Installment loans          |                                 |                                     | (27   | )       |       |        | (2,232     | )      |         |        | (2,259 | )     
|                                      |                            |                                 |                                     |       |         |       |        |            |       
|                                      |                            |                                 | Total loans, net of unearned income |       |         | 2,086 |        |            |        | (9,571  | )      |        |        | (7,485  | )
|                                      |                            |                                 |                                     |       |         |       |        |            |       
|                                      |                            |                                 | Total interest income               |       |         | 1,938 |        |            |        | (10,909 | )      |        |        | (8,971  | )
|Interest-bearing demand deposits      |                            |                                 | 42                                  |       |         |       | (219   | )          |        |         | (177   | )     
|Savings deposits                      |                            |                                 | 706                                 |       |         |       | (2,590 | )          |        |         | (1,884 | )     
|Time deposits                         |                            |                                 | (1,152                              | )     |         |       | (6,031 | )          |        |         | (7,183 | )     
|                                      |                            |                                 |                                     |       |         |       |        |            |       
|                                      |                            | Total interest-bearing deposits |                                     |       | (404    | )     |        |            | (8,840 | )       |        |        | (9,244 | )      
|Short-term borrowings                 |                            |                                 | 627                                 |       |         |       | (695   | )          |        |         | (68    | )     
|FHLB advances                         |                            |                                 | (201                                | )     |         |       | (1,045 | )          |        |         | (1,246 | )     
|Long-term debt                        |                            |                                 |                                    |       |         |       |       |            |        |         |       |       
|                                      |                            |                                 |                                     |       |         |       |        |            |       
|                                      |                            |                                 | Total interest expense              |       |         | 22    |        |            |        | (10,580 | )      |        |        | (10,558 | )
|                                      |                            |                                 |                                     |       |         |       |        |            |       
|                                      |                            |                                 | Net interest income                 |       | $       | 1,916 |        |            | $      | (329    | )      |        | $      | 1,587   |  
|                                      |                            |                                 |                                     |       |         |       |        |            |       



|(1) |  | Non-accrual loans and overdrafts are included in average balances.                                                       
|--- |  | -------------------------------------------------------------------------------------------------------------------------
|(2) |  | Rate/volume variances are proportionately allocated to rate and volume
based on the absolute value of the change in each.

10



---



##### Table of Contents



Table II  Year-to-Date Net Interest Income and Rate/Volume Analysis (FTE)

|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |         |         |      |      |      |      | 
|------------------------------------------------------------ | -------------------------- | ------------------------------- | ----------------------------------- | ------------------------------------------ | --------- | ------------------ | --------- | ------ | ------------------ | ------- | ------- | ---- | ------- | -------- | --------- | --------- | --------- | --------- | --------- | ------ | ------ | ------- | ------- | ---- | ---- | ---- | ---- | 
|                                                             |                            |                                 |                                     |                                            |           | Nine Months Ended  |           |        | Nine Months Ended  |        
|                                                             |                            |                                 |                                     |                                            |           | September 30, 2002 |           |        | September 30, 2001 |        
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |        
|                                                             |                            |                                 |                                     |                                            |           | Average            |           |        |                    |         |         |      | Average |          |           | Average   |           |           |           |        |        |         | Average |     
|(Dollar amounts in thousands)                                |                            | Balance                         |                                     |                                            | Interest  |                    |           | Rate   |                    |         | Balance |      |         | Interest |           |           | Rate      |          
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |          
|Average Assets:                                              |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |         |         |     
|Short-term investments                                       |                            | $                               | 2,232                               |                                            |           | $                  | 35        |        |                    |         | 2.10    | %    |         | $        | 2,720     |           |           | $         | 94        |        |        |         | 4.63    | %   
|Mortgage loans held for sale                                 |                            |                                 | 363,128                             |                                            |           |                    | 18,005    |        |                    |         | 6.61    |      |         |          | 524,455   |           |           |           | 29,383    |        |        |         | 7.47    |     
|Investment securities                                        |                            |                                 | 408,313                             |                                            |           |                    | 18,885    |        |                    |         | 6.18    |      |         |          | 262,917   |           |           |           | 14,119    |        |        |         | 7.18    |     
|Portfolio loans(1):                                          |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |         |         |     
|                                                             | Commercial loans           |                                 |                                     | 1,415,478                                  |           |                    |           | 74,024 |                    |         |         | 6.90 |         |          |           | 1,234,777 |           |           |           | 78,711 |        |         |         | 8.41 |     
|                                                             | Real estate mortgage loans |                                 |                                     | 1,546,865                                  |           |                    |           | 75,508 |                    |         |         | 6.51 |         |          |           | 1,776,498 |           |           |           | 95,828 |        |         |         | 7.19 |     
|                                                             | Installment loans          |                                 |                                     | 589,543                                    |           |                    |           | 30,898 |                    |         |         | 7.01 |         |          |           | 618,701   |           |           |           | 40,815 |        |         |         | 8.82 |     
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |          
|                                                             |                            |                                 | Total loans, net of
unearned
income |                                            |           | 3,551,886          |           |        |                    | 180,430 |         |      |         | 6.75     |           |           |           | 3,629,976 |           |        |        | 215,354 |         |      |      | 7.88 |     
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |          
|                                                             |                            |                                 |                                     | Total interest-earning assets              |           |                    | 4,325,559 |        |                    |         | 217,355 |      |         |          | 6.68      |           |           |           | 4,420,068 |        |        |         | 258,950 |      |      |      | 7.79 | 
|Allowance for loan losses                                    |                            |                                 | (29,760                             | )                                          |           |                    |           |        |                    |         |         |      |         |          | (28,961   | )         |           |           |           |        |        |         |         |     
|Cash and due from banks                                      |                            |                                 | 59,884                              |                                            |           |                    |           |        |                    |         |         |      |         |          | 66,639    |           |           |           |           |        |        |         |         |     
|Other assets                                                 |                            |                                 | 120,079                             |                                            |           |                    |           |        |                    |         |         |      |         |          | 141,889   |           |           |           |           |        |        |         |         |     
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |        
|                                                             |                            |                                 |                                     | Total assets                               |           | $                  | 4,475,762 |        |                    |         |         |      |         |          |           |           |           | $         | 4,599,635 |        |        |         |         |      |      |      |      | 
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |        
|Average Liabilities and
Shareholders Equity:                |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |         |         |     
|Interest-bearing demand deposits                             |                            | $                               | 160,021                             |                                            |           |                    | 782       |        |                    |         | 0.65    |      |         | $        | 146,938   |           |           |           | 1,666     |        |        |         | 1.52    |     
|Savings deposits                                             |                            |                                 | 851,936                             |                                            |           |                    | 11,518    |        |                    |         | 1.81    |      |         |          | 696,523   |           |           |           | 18,076    |        |        |         | 3.47    |     
|Time deposits                                                |                            |                                 | 1,463,288                           |                                            |           |                    | 45,613    |        |                    |         | 4.17    |      |         |          | 1,634,397 |           |           |           | 71,521    |        |        |         | 5.85    |     
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |          
|                                                             |                            | Total interest-bearing deposits |                                     |                                            | 2,475,245 |                    |           |        | 57,913             |         |         |      | 3.13    |          |           |           | 2,477,858 |           |           |        | 91,263 |         |         |      | 4.03 |     
|Short-term borrowings                                        |                            |                                 | 189,897                             |                                            |           |                    | 2,648     |        |                    |         | 1.84    |      |         |          | 77,092    |           |           |           | 2,535     |        |        |         | 4.34    |     
|FHLB advances                                                |                            |                                 | 1,131,522                           |                                            |           |                    | 42,342    |        |                    |         | 4.93    |      |         |          | 1,349,438 |           |           |           | 55,320    |        |        |         | 5.41    |     
|Long-term debt                                               |                            |                                 | 13,500                              |                                            |           |                    | 724       |        |                    |         | 7.15    |      |         |          | 22,333    |           |           |           | 1,209     |        |        |         | 7.22    |     
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |          
|                                                             |                            |                                 |                                     | Total interest-bearing
liabilities         |           |                    | 3,810,164 |        |                    |         | 103,627 |      |         |          | 3.61      |           |           |           | 3,926,721 |        |        |         | 150,327 |      |      |      | 5.09 | 
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |       
|Noninterest-bearing deposits                                 |                            |                                 | 234,177                             |                                            |           |                    |           |        |                    |         |         |      |         |          | 269,676   |           |           |           |           |        |        |         |         |     
|Other liabilities                                            |                            |                                 | 39,683                              |                                            |           |                    |           |        |                    |         |         |      |         |          | 72,362    |           |           |           |           |        |        |         |         |     
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |        
|                                                             |                            |                                 |                                     | Total liabilities                          |           |                    | 4,084,024 |        |                    |         |         |      |         |          |           |           |           |           | 4,268,759 |        |        |         |         |      |      |      |      | 
|Trust preferred securities
and preferred
stock of subsidiary |                            |                                 | 71,119                              |                                            |           |                    |           |        |                    |         |         |      |         |          | 28,719    |           |           |           |           |        |        |         |         |     
|Shareholders equity                                         |                            |                                 | 320,619                             |                                            |           |                    |           |        |                    |         |         |      |         |          | 302,157   |           |           |           |           |        |        |         |         |     
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |        
|                                                             |                            |                                 |                                     | Total liabilities and
shareholders equity |           | $                  | 4,475,762 |        |                    |         |         |      |         |          |           |           |           | $         | 4,599,635 |        |        |         |         |      |      |      |      | 
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |        
|Net interest income/Rate
spread (FTE)                        |                            |                                 |                                     |                                            |           | $                  | 113,728   |        |                    |         | 3.07    | %    |         |          |           |           |           | $         | 108,623   |        |        |         | 2.70    | %   
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |       
|Net interest margin                                          |                            |                                 |                                     |                                            |           |                    |           |        |                    |         | 3.50    | %    |         |          |           |           |           |           |           |        |        |         | 3.27    | %   
|                                                             |                            |                                 |                                     |                                            |           |                    |           |        |                    |         |         |      |         |          |           |           |           |           |           |        |        |        

|                                      |                            |                                 |                                     |         |         |         |         |            |         |         |         |         |         |         |  
|------------------------------------- | -------------------------- | ------------------------------- | ----------------------------------- | ------- | ------- | ------- | ------- | ---------- | ------- | ------- | ------- | ------- | ------- | ------- | -
|Increase (decrease) due to change in: |                            | Volume(2)                       |                                     |         | Rate(2) |         |         | Net Change |        
|                                      |                            |                                 |                                     |         |         |         |         |            |        
|Short-term investments                |                            | $                               | (15                                 | )       |         | $       | (44     | )          |         | $       | (59     | )      
|Mortgage loans held for sale          |                            |                                 | (8,279                              | )       |         |         | (3,099  | )          |         |         | (11,378 | )      
|Investment securities                 |                            |                                 | 6,958                               |         |         |         | (2,192  | )          |         |         | 4,766   |        
|Portfolio loans(1):                   |                            |                                 |                                     |         |         |         |         |            |         |         |         |        
|                                      | Commercial loans           |                                 |                                     | 10,455  |         |         |         | (15,142    | )       |         |         | (4,687  | )      
|                                      | Real estate mortgage loans |                                 |                                     | (11,734 | )       |         |         | (8,586     | )       |         |         | (20,320 | )      
|                                      | Installment loans          |                                 |                                     | (1,852  | )       |         |         | (8,065     | )       |         |         | (9,917  | )      
|                                      |                            |                                 |                                     |         |         |         |         |            |        
|                                      |                            |                                 | Total loans, net of unearned income |         |         | (3,131  | )       |            |         | (31,793 | )       |         |         | (34,924 | )
|                                      |                            |                                 |                                     |         |         |         |         |            |        
|                                      |                            |                                 | Total interest income               |         |         | (4,467  | )       |            |         | (37,128 | )       |         |         | (41,595 | )
|Interest-bearing demand deposits      |                            |                                 | 139                                 |         |         |         | (1,023  | )          |         |         | (884    | )      
|Savings deposits                      |                            |                                 | 3,431                               |         |         |         | (9,989  | )          |         |         | (6,558  | )      
|Time deposits                         |                            |                                 | (6,921                              | )       |         |         | (18,987 | )          |         |         | (25,908 | )      
|                                      |                            |                                 |                                     |         |         |         |         |            |        
|                                      |                            | Total interest-bearing deposits |                                     |         | (3,351  | )       |         |            | (29,999 | )       |         |         | (33,350 | )      
|Short-term borrowings                 |                            |                                 | 2,155                               |         |         |         | (2,042  | )          |         |         | 113     |        
|FHLB advances                         |                            |                                 | (8,376                              | )       |         |         | (4,602  | )          |         |         | (12,978 | )      
|Long-term debt                        |                            |                                 | (473                                | )       |         |         | (12     | )          |         |         | (485    | )      
|                                      |                            |                                 |                                     |         |         |         |         |            |        
|                                      |                            |                                 | Total interest expense              |         |         | (10,045 | )       |            |         | (36,655 | )       |         |         | (46,700 | )
|                                      |                            |                                 |                                     |         |         |         |         |            |        
|                                      |                            |                                 | Net interest income                 |         | $       | 5,578   |         |            | $       | (473    | )       |         | $       | 5,105   |  
|                                      |                            |                                 |                                     |         |         |         |         |            |        



|(1) |  | Non-accrual loans and overdrafts are included in average balances.                                                       
|--- |  | -------------------------------------------------------------------------------------------------------------------------
|(2) |  | Rate/volume variances are proportionately allocated to rate and volume
based on the absolute value of the change in each.

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The net interest margin (FTE) was 3.42% for the quarter ended September 30,
2002, an increase of 6 basis points from 3.36% in 2001. The increase in the
margin was due to the Companys cost of funds on interest-bearing liabilities
decreasing more than the decline in yield on earning assets. Additionally, the
average balances of the Companys higher cost interest-bearing liabilities of
time deposits decreased $89 million compared to the third quarter of 2001.
This decrease was offset by increases in the average balances of lower cost
interest-bearing demand deposits, savings deposits and short-term borrowings of
$221 million, which favorably impacted the Companys net interest margin.

For the nine months ended September 30, 2002, net interest income (FTE) was
$113.7 million, an increase of $5.1 million, or 5%, over the first nine months
of 2001. The increase was primarily the result of an increase in the net
interest margin. The net interest margin (FTE) was 3.50% for the nine months
ended September 30, 2002, an increase of 23 basis points from 3.27% for the
comparable period in 2001. The increase in the margin was due to the Companys
cost of funds on interest-bearing liabilities decreasing more than the decline
in yield on earning assets. Additionally, the average balances of the
Companys higher cost interest-bearing liabilities of time deposits decreased
$171 million compared to the same period of 2001. This decrease was offset by
increases in the average balances of lower cost interest-bearing demand
deposits, savings deposits and short-term borrowings of $281 million, which
favorably impacted the Companys net interest margin.

The Company expects further net interest margin compression in the fourth
quarter of 2002, primarily due to the Companys one-year positive gap (See
Market Risk Management) and an increase in the level of prepayments of the
residential real estate mortgage loan portfolio. Net interest income is
expected to grow during the fourth quarter primarily due to a higher level of
average interest earning assets, including mortgage loans held for sale.

Noninterest Income
Total noninterest income increased $4.2 million, or 42% for the quarter ended
September 30, 2002 compared to the same quarter in 2001. The increase was
primarily due to higher levels of gains on sales of securities and mortgage
loan production revenue and income from bank owned life insurance. Gains on
sale of securities were $1.9 million for the third quarter of 2002, an increase
of $1.5 million compared to the third quarter of 2001. Mortgage loan
production revenue increased due to a higher level of mortgage loan closings.
Additionally, the Company had income of $874,000 from its third quarter
purchase of $85 million of separate account bank owned life insurance, which is
used to fund future employee benefit costs.

Mortgage Banking Revenue
The Company closed $1.14 billion in single-family residential mortgage loans in
the third quarter of 2002, compared to $858 million closed in the same period
last year. The increase in mortgage loan volume was primarily due to the
decrease in interest rates in during the third quarter of 2002 compared to
2001, which resulted in a higher level of mortgage refinance activity.
Refinancings for the third quarter of 2002 represented 65% of total closings
compared to 45% in the third quarter of 2001. During the first nine months of
2002, mortgage loan closings were $2.52 billion, compared to $2.75 billion for
the comparable period in 2001. For comparability purposes, residential
mortgage loan closings exclude Market Street Mortgage loan closings of $1.19
billion for the nine months ended September 30, 2001. During the nine months
ended September 30, 2002, refinancings represented 56% of total closings
compared to 55% for the same period of 2001.

The following table summarizes the Companys income from mortgage banking activities:

|                                                 |                                |      |                    |       |      |                   |       |       |  |   |         |        |  |   |        |        | 
|------------------------------------------------ | ------------------------------ | ---- | ------------------ | ----- | ---- | ----------------- | ----- | ----- |  | - | ------- | ------ |  | - | ------ | ------ | 
|                                                 |                                |      | Three Months Ended |       |      | Nine Months Ended |      
|                                                 |                                |      | September 30,      |       |      | September 30,     |      
|(In thousands)                                   |                                | 2002 |                    |       | 2001 |                   |       | 2002  |  |   | 2001(3) |       
|                                                 |                                |      |                    |       |      |                   |       |       |  |   |         |       
|Mortgage loan production revenue(1)              |                                | $    | 7,715              |       |      | $                 | 6,013 |       |  | $ | 23,101  |        |  | $ | 40,520 |       
|Net mortgage loan servicing (expense) revenue(2) |                                |      | 42                 |       |      |                   | 153   |       |  |   | 318     |        |  |   | (281   | )     
|                                                 |                                |      |                    |       |      |                   |       |       |  |   |         |       
|                                                 | Total mortgage banking revenue |      | $                  | 7,757 |      |                   | $     | 6,166 |  |   | $       | 23,419 |  |   | $      | 40,239 | 
|                                                 |                                |      |                    |       |      |                   |       |       |  |   |         |       



|(1) |  | Includes fee revenue derived from the loan origination process (i.e.,
points collected), gains on the sale of mortgage loans and gains on the
sale of mortgage servicing rights released concurrently with the
underlying loans sold (mortgage loan production revenue), net of
commissions and incentives paid and net deferred mortgage loan origination
fees. Mortgage loan production revenue totaled $8.2 million and $16.6
million for the third quarters of 2002 and 2001, respectively, and $38.7
million and $69.9 million for the nine months ended September 30, 2002 and
2001, respectively. Commissions and incentives paid were $10.2 million and
$8.9 million for the third quarters of 2002 and 2001, respectively, and
$22.4 million and $36.1 million for the nine months ended September 30,
2002 and 2001, respectively. For the third quarter of 2002, net deferred
mortgage loan origination costs totaled $9.7 million compared to net
deferred mortgage loan origination fees of $1.7 million for the third
quarter of 2001. For the nine months ended September 30, 2002 and 2001,
net deferred mortgage loan origination costs totaled $6.8 million and $6.7
million, respectively.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Mortgage loan production revenue also includes gains on sales of mortgage
portfolio loans totaling $579,000 and $429,000 for the third quarters of 2002
and 2001, respectively, and $3.1 million and $860,000 for the nine months
ended September 30, 2002 and 2001, respectively. Mortgage loan portfolio
sales totaled $38.7 million and $27.6 million for the third quarters of 2002
and 2001, respectively, and $140.8 million and $51.9 million, for the nine
months ended September 30, 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(2) |  | Includes servicing fees, late fees and other ancillary charges, net of
amortization of mortgage servicing rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(3) |  | Includes the results of Market Street Mortgage Corporation which was sold
on June 29, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

12



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For the three months ended September 30, 2002, mortgage banking revenue
increased $1.6 million, or 26%, to $7.8 million from $6.2 million a year
earlier. The increase is due to higher mortgage production revenue resulting
from the increase in mortgage loan production volume discussed above. The
higher level of mortgage loan production revenue was offset by a reduction in
mortgage loans held for sale fundings. For the three months ended September
30, 2002, mortgage loans held for sale fundings totaled $319 million, a 57%
decrease from the $740 million sold during the third quarter of 2001. The
ratio of mortgage production revenue to mortgage loans held for sale fundings
was 2.38% for the third quarter of 2002 , compared to 2.18% for the third
quarter of 2001.

For the nine months ended September 30, 2002, mortgage banking revenue
decreased $16.8 million, or 42%, to $23.4 million from $40.2 million for the
same period a year ago. For comparability purposes, excluding the results of
Market Street Mortgage, total mortgage banking revenue for the nine months
ended September 30, 2001 was $23.7 million.

For the quarter ended September 30, 2002, net mortgage loan servicing revenue
was $42,000 compared to $153,000 for the quarter ended September 30, 2001. For
the nine months ended September 30, 2002, net mortgage loan servicing revenue
was $318,000 compared to net mortgage loan servicing expense of $281,000 in
2001. At the end of the first quarter of 2001, the Company elected to exit the
residential mortgage servicing business through the sale of Market Street
Mortgages $1.8 billion mortgage loan servicing portfolio and mortgage
servicing rights were reduced by $16.1 million at March 31, 2001 to reflect the
current market value of the servicing portfolio. Loans serviced for others
averaged $256 million for the third quarter of 2002 compared to $133 million
for the third quarter of 2001. For the nine months ended September 30, 2002
and 2001, mortgage loans serviced for others averaged $222 million and $1.1
billion, respectively.

Noninterest Expense
Total noninterest expense for the quarter ended September 30, 2002 increased
$634,000, or 3%, to $23.0 million compared to $22.4 million for the third
quarter of 2001. The increase is primarily the result of an increase in
salaries and employee benefits offset by decreases in other noninterest expense
in the third quarter of 2002 compared to 2001. Excluding the $19.0 million of
charges related to the exit of the mortgage servicing business and the
noninterest expense of Market Street Mortgage for 2001, total noninterest
expense for the nine months ended September 30, 2002, decreased $736,000, or
1%, to $69.7 million compared to $70.4 million in 2001. This decrease is
primarily the result of a decrease in other noninterest expense in 2002
compared to 2001, partially offset by an increase in salaries and employee
benefits.

BALANCE SHEET ANALYSIS

ASSETS
At September 30, 2002, the Company had $4.91 billion in total assets, an
increase of $174 million, or 4%, from $4.74 billion at December 31, 2001. The
increase is primarily the result of increases in securities available for sale,
portfolio loans and bank owned life insurance, partially offset by a $207
million decrease in the mortgage loans held for sale.

Securities
Investment securities available for sale increased $9 million from December 31,
2001, to $374 million, representing 7.6% of total assets at September 30, 2002.
At December 31, 2001, the investment securities portfolio totaled $365
million, or 7.7% of total assets. During the nine months ended September 30,
2002, the Company sold $209 million of investment securities and realized gross
gains and losses on the sales of available for sale securities of $2.98 million
and $226,000, respectively.

The Companys investment securities portfolio serves as a secondary source of
earnings and contributes to the management of interest rate risk and liquidity
risk. The debt securities portfolio is comprised primarily of municipal
securities and collateralized mortgage obligations. Fixed rate debt securities
within the portfolio, excluding municipal securities, totaled $110.3 million
and $12.9 million at September 30, 2002 and December 31, 2001, respectively.

The following table details the composition, amortized cost and fair value of
the Companys investment securities portfolio at September 30, 2002:

|                   |                                     |                                     |        |                               |         |  |            |        |       |            |       |     |      |           |        |         |         | 
|------------------ | ----------------------------------- | ----------------------------------- | ------ | ----------------------------- | ------- |  | ---------- | ------ | ----- | ---------- | ----- | --- | ---- | --------- | ------ | ------- | ------- | 
|                   |                                     |                                     |        | Securities Available for Sale |        
|                   |                                     |                                     |        |                               |        
|                   |                                     |                                     |        |                               |         |  |            | Gross  |       |            | Gross |     |      | Estimated |       
|                   |                                     |                                     |        | Amortized                     |         |  | Unrealized |        |       | Unrealized |       |     | Fair |          
|(In thousands)     |                                     | Cost                                |        |                               | Gains   |  |            | Losses |       |            | Value |    
|                   |                                     |                                     |        |                               |         |  |            |        |       |            |       |    
|Debt Securities:   |                                     |                                     |        |                               |         |  |            |        |       |            |       |     |      |           |        |        
|                   | Government agency securities        |                                     | $      | 30,551                        |         |  | $          | 113    |       |            | $     | 45  |      |           | $      | 30,619  |        
|                   | Collateralized mortgage obligations |                                     |        | 122,155                       |         |  |            | 1,230  |       |            |       | 396 |      |           |        | 122,989 |        
|                   | Mortgage-backed securities          |                                     |        | 1,168                         |         |  |            | 51     |       |            |       |    |      |           |        | 1,219   |        
|                   | Municipal and other securities      |                                     |        | 135,202                       |         |  |            | 4,716  |       |            |       |    |      |           |        | 139,918 |        
|                   |                                     |                                     |        |                               |         |  |            |        |       |            |       |    
|                   |                                     | Total debt securities               |        |                               | 289,076 |  |            |        | 6,110 |            |       |     | 441  |           |        |         | 294,745 | 
|Investment in FHLB |                                     |                                     | 79,096 |                               |         |  |           |        |       |            |      |     |      |           | 79,096 |        
|                   |                                     |                                     |        |                               |         |  |            |        |       |            |       |     |     
|                   |                                     | Total securities available for sale |        | $                             | 368,172 |  |            | $      | 6,110 |            |       | $   | 441  |           |        | $       | 373,841 | 
|                   |                                     |                                     |        |                               |         |  |            |        |       |            |       |     |     

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Certain securities having a carrying value of approximately $124.0 million and
$8.4 million at September 30, 2002 and December 31, 2001, respectively, were
pledged to secure FHLB advances and public deposits as required by law.

During the third quarter of 2002, the Company sold $126 million of investment
securities, including $81 million of tax-exempt municipal bonds, to fund the
significant growth of mortgage loans held for sale. The Company recognized net
gains totaling $1.93 million from these investment securities sales during the
third quarter. During the fourth quarter of 2002, the Company expects to sell
additional investment securities to fund mortgage loans held for sale.

Mortgage Loans Held for Sale
Mortgage loans held for sale were $541 million at September 30, 2002, a
decrease of $207 million, or 28%, from $748 million at December 31, 2001. The
decrease was primarily due to a decrease in residential mortgage loan closings
during the third quarter of 2002 of $1.1 billion compared to $1.4 billion
closed during the fourth quarter of 2001 (loans closed generally remain in
loans held for sale for 30 to 60 days after closing). In addition, the Company
had a higher percentage of adjustable rate loan closings during the first nine
months of 2002, which are retained as portfolio loans rather than being sold in
the secondary market.

Portfolio Loans
Total portfolio loans were $3.77 billion at September 30, 2002, an increase of
$314 million, or 9%, from $3.46 billion at December 31, 2001. The increase was
due to increases in the commercial real estate mortgage loan, residential real
estate mortgage loan and consumer direct installment loan balances which was
offset by the planned decrease in the consumer indirect loan portfolio. The
commercial real estate mortgage loan portfolio increased $123 million during
the nine months ended September 30, 2002, for an annualized growth rate of 13%,
reflecting continued strong demand for real estate-secured lending in markets
served by the Company. During the nine months ended September 30, 2002 and
2001, the Company closed $31.3 million and $22.9 million in Small Business
Administration (SBA) loans, respectively. The Company sold $13.9 million and
$9.2 million of the guaranteed portion of SBA loans during the nine months
ended September 30, 2002 and 2001, respectively, resulting in corresponding
gains of $1.0 million and $424,000, respectively.

The residential mortgage portfolio loan balance increased $183 million, or 12%,
since year-end 2001 to $1.70 billion at September 30, 2002. The increase in
residential mortgage loans was due to a higher level of loan closings during
the first nine months of 2002 retained as portfolio loans. During the nine
months ended September 30, 2002, the Company added $1.06 billion to the
residential real estate mortgage portfolio, which was offset by loan payoffs
and prepayments of $731 million and portfolio loan sales of $141 million.

The consumer direct installment loan portfolio increased $58 million during the
first nine months of 2002 due to an increase in home equity loan closings. The
consumer indirect installment loan portfolio decreased $41 million during the
first nine months of 2002 due to the anticipated runoff of the indirect
consumer loan portfolio.

The following table provides further information regarding the Companys loan
portfolio:

|                                  |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |           |         |           |         |      |      |       |      | 
|--------------------------------- | ------------------------------- | ----------------- | ---------------------- | ----------------------- | ------- | ------------------ | ------- | ------ | ----------------- | ----- | --------- | --------- | ------- | --------- | ------- | ---- | ---- | ----- | ---- | 
|                                  |                                 |                   |                        |                         |         | September 30, 2002 |         |        | December 31, 2001 |      
|                                  |                                 |                   |                        |                         |         |                    |         |        |                   |      
|(Dollars in thousands)            |                                 | Amount            |                        |                         | Percent |                    |         | Amount |                   |       | Percent   |          
|                                  |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |          
|Commercial loans:                 |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |           |         |           |         |     
|                                  | Commercial and industrial       |                   | $                      | 58,905                  |         |                    |         | 1.6    | %                 |       | $         | 68,428    |         |           |         | 2.0  | %   
|                                  | Commercial real estate mortgage |                   |                        | 1,417,667               |         |                    |         | 37.6   |                   |       |           | 1,294,634 |         |           |         | 37.4 |     
|                                  |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |          
|                                  |                                 |                   | Total commercial loans |                         |         | 1,476,572          |         |        |                   | 39.2  |           |           |         | 1,363,062 |         |      |      | 39.4  |     
|Residential real estate mortgages |                                 |                   | 1,695,120              |                         |         |                    | 44.9    |        |                   |       | 1,511,831 |           |         |           | 43.7    |     
|Installment loans:                |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |           |         |           |         |     
|                                  |                                 | Consumer direct   |                        |                         | 555,367 |                    |         |        | 14.7              |       |           |           | 496,972 |           |         |      | 14.4 |      
|                                  |                                 | Consumer indirect |                        |                         | 45,611  |                    |         |        | 1.2               |       |           |           | 86,516  |           |         |      | 2.5  |      
|                                  |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |          
|                                  |                                 |                   |                        | Total installment loans |         |                    | 600,978 |        |                   |       | 15.9      |           |         |           | 583,488 |      |      |       | 16.9 | 
|                                  |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |          
|                                  |                                 |                   | Total portfolio loans  |                         | $       | 3,772,670          |         |        |                   | 100.0 | %         |           | $       | 3,458,381 |         |      |      | 100.0 | %   
|                                  |                                 |                   |                        |                         |         |                    |         |        |                   |       |           |          

Credit Quality
The Company attempts to minimize credit risk in the loan portfolio by focusing
primarily on real estate-secured lending (i.e., commercial real estate mortgage
and construction loans, residential real estate mortgage and construction
loans, and home equity loans). As of September 30, 2002, such loans comprised
approximately 96% of total portfolio loans. The Companys general policy is to
originate conventional residential real estate mortgages with loan-to-value
ratios of 80% or less; SBA-secured loans or real estate-secured commercial
loans with loan-to-value ratios of 75% or less and secured by personal
guarantees; and home equity loans with combined first and second mortgages with
loan-to-value ratios of 85% or less.

The Company originates primarily conventional mortgage loans secured by
residential properties which conform to the underwriting guidelines for sale to
the Federal National Mortgage Association (Fannie Mae) and the Federal Home
Loan Mortgage Corporation

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(Freddie Mac), or conversion to mortgage-backed
securities issued by the Government National Mortgage Association (GNMA). The
majority of the Companys commercial loans are secured by real estate and are
generally made to small and medium-size businesses. These loans are made at
rates based on the prevailing prime interest rates of Republic Bank, as well as
fixed rates for terms generally ranging from three to five years. Managements
emphasis on real estate-secured lending and adherence to conservative
underwriting standards is reflected in the Companys historically low net
charge-offs.

Non-Performing Assets
Non-performing assets consist of non-accrual loans and other real estate owned
(OREO). OREO represents real estate properties acquired through foreclosure or
by deed in lieu of foreclosure. Commercial loans, residential real estate
mortgage loans and installment loans are generally placed on non-accrual status
when principal or interest is 90 days or more past due, unless the loans are
well-secured and in the process of collection. In all cases, loans may be
placed on non-accrual status earlier when, in the opinion of management,
reasonable doubt exists as to the full, timely collection of interest or
principal.

The following table summarizes the Companys non-performing assets and 90-day
past due loans:

|                                                            |                         |                                                        |                                      |       |               |        |   |              |        |        | 
|----------------------------------------------------------- | ----------------------- | ------------------------------------------------------ | ------------------------------------ | ----- | ------------- | ------ | - | ------------ | ------ | ------ | 
|                                                            |                         |                                                        |                                      |       | September 30, |        |   | December 31, |       
|(Dollars in thousands)                                      |                         | 2002                                                   |                                      |       | 2001          |       
|                                                            |                         |                                                        |                                      |       |               |       
|Non-Performing Assets:                                      |                         |                                                        |                                      |       |               |        |   |             
|                                                            | Non-accrual loans:      |                                                        |                                      |       |               |        |   |              |       
|                                                            |                         | Commercial                                             |                                      | $     | 22,137        |        |   | $            | 6,413  |       
|                                                            |                         | Residential real estate mortgages                      |                                      |       | 11,991        |        |   |              | 18,808 |       
|                                                            |                         | Installment                                            |                                      |       | 2,612         |        |   |              | 2,957  |       
|                                                            |                         |                                                        |                                      |       |               |        |   |             
|                                                            |                         |                                                        | Total non-performing loans           |       |               | 36,740 |   |              |        | 28,178 | 
|                                                            | Other real estate owned |                                                        |                                      | 3,568 |               |        |   | 2,978        |       
|                                                            |                         |                                                        |                                      |       |               |       
|                                                            |                         |                                                        | Total non-performing assets          |       | $             | 40,308 |   |              | $      | 31,156 | 
|                                                            |                         |                                                        |                                      |       |               |       
|Non-performing assets as a percentage of:                   |                         |                                                        |                                      |       |               |        |   |             
|                                                            |                         | Portfolio loans and OREO                               |                                      |       | 1.07          | %      |   |              | .90    | %     
|                                                            |                         | Portfolio loans, mortgage loans held for
sale and OREO |                                      |       | .93           | %      |   |              | .74    | %     
|                                                            |                         | Total assets                                           |                                      |       | .82           | %      |   |              | .66    | %     
|Loans past due 90 days or more and still accruing interest: |                         |                                                        |                                      |       |               |        |   |             
|                                                            | Commercial              |                                                        | $                                    |      |               |        | $ | 144          |       
|                                                            | Residential real estate |                                                        |                                      |      |               |        |   |             |       
|                                                            | Installment             |                                                        |                                      |      |               |        |   |             |       
|                                                            |                         |                                                        |                                      |       |               |       
|                                                            |                         |                                                        | Total loans past due 90 days or more |       | $             |       |   |              | $      | 144    | 
|                                                            |                         |                                                        |                                      |       |               |       

The increase in commercial non-accrual loans at September 30, 2002 compared to
year-end was due primarily to two commercial real estate loan relationships
located in Michigan and Indiana.

At September 30, 2002, approximately $32.8 million, or 0.87% of total portfolio
loans were 30-89 days delinquent, compared to $40.5 million, or 1.17%, at
December 31, 2001.

Provision and Allowance for Loan Losses
The allowance for loan losses represents the Companys estimate of probable
credit losses related to specifically identified loans as well as probable
credit losses inherent in the remainder of the loan portfolio that have been
incurred as of the balance sheet date. The allowance for loan losses is
maintained at an adequate level through additions to the provision for loan
losses. An appropriate level of the risk allocated allowance is determined
based on the application of risk percentages to graded loans by categories.
Specific reserves are established for individual loans when deemed necessary by
management. In addition, management considers other factors when determining
the unallocated allowance, including loan quality, changes in the size and
character of the loan portfolio, consultation with regulatory authorities,
amount of nonperforming loans, delinquency trends and economic conditions and
industry trends.

SFAS No. 114, Accounting By Creditors for Impairment of a Loan, as amended by
SFAS No. 118, considers a loan impaired when it is probable that payment of
principal and interest will not be collected in accordance with the contractual
terms of the original loan agreement. Consistent with this definition, all
non-accrual and restructured loans (with the exception of residential mortgage
and consumer installment loans) are impaired. An impaired loan for which it is
deemed necessary to record a specific allocated allowance may be written down
to the fair value of the underlying collateral via a direct charge-off against
the allowance for loan losses at the time it is determined the loan balance
exceeds the fair value of the collateral. Consequently, those impaired loans
not requiring a
specific allocated allowance represent loans for which the fair value of the
underlying collateral equaled or exceeded the recorded investment in the loan.
All impaired loans were evaluated using the fair value of the underlying
collateral as the measurement method.

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It must be understood, however, that inherent risks and uncertainties related
to the operation of a financial institution require management to rely on
estimates, appraisals and evaluations of loans to prepare the Companys
financial statements. Changes in economic conditions and the financial
prospects of borrowers may result in abrupt changes to the estimates,
appraisals or evaluations used. In addition, if actual circumstances and
losses differ substantially from managements assumptions and estimates, the
allowance for loan losses may not be sufficient to absorb all future losses,
and net income could be significantly impacted.

During the three months ended September 30, 2002, the Company recorded
provision for loan losses of $6.2 million, an increase of $4.0 million from the
comparable period in 2001. The increase was due to higher levels of
non-performing loans and an increase in net charge-offs during the quarter.
Net loan charge-offs increased $1.0 million to $2.9 million for the three
months ended September 30, 2002 compared to $1.9 million for the same period of
2001. The increase is primarily related to charge-offs of one commercial loan
during the quarter.

The Company recorded provision for loan losses of $11 million for the nine
months ended September 30, 2002 compared to $6.3 million for 2001, reflecting
higher levels on non-performing loans and charge-offs during the period.

The Companys provision for loan losses and net charge-offs in the fourth
quarter are expected to be in the range of amounts recorded during the three
quarters of 2002.

The following table provides an analysis of the allowance for loan losses:

|                                                                                             |                                            |                 |        |                   |        |   |        |        |        |  
|-------------------------------------------------------------------------------------------- | ------------------------------------------ | --------------- | ------ | ----------------- | ------ | - | ------ | ------ | ------ | -
|                                                                                             |                                            |                 |        | Nine Months Ended |       
|                                                                                             |                                            |                 |        | September 30,     |       
|                                                                                             |                                            |                 |        |                   |       
|(Dollars in thousands)                                                                       |                                            | 2002            |        |                   | 2001   |  
|                                                                                             |                                            |                 |        |                   |        |  
|Allowance for loan losses:                                                                   |                                            |                 |        |                   |        |   |        |       
|Balance at January 1                                                                         |                                            | $               | 29,157 |                   |        | $ | 28,450 |       
|                                                                                             | Loans charged off                          |                 |        | (8,077            | )      |   |        | (6,498 | )     
|                                                                                             | Recoveries of loans previously charged off |                 |        | 1,044             |        |   |        | 738    |       
|                                                                                             |                                            |                 |        |                   |        |  
|                                                                                             |                                            | Net charge-offs |        |                   | (7,033 | ) |        |        | (5,760 | )
|                                                                                             | Provision charged to expense               |                 |        | 11,000            |        |   |        | 6,300  |       
|                                                                                             |                                            |                 |        |                   |        |  
|Balance at September 30                                                                      |                                            | $               | 33,124 |                   |        | $ | 28,990 |       
|                                                                                             |                                            |                 |        |                   |        |  
|Annualized net charge-offs as a percentage of average loans
(including loans held for sale)  |                                            |                 | .24    | %                 |        |   | .18    | %     
|Allowance for loan losses as a percentage of total portfolio loans
outstanding at period-end |                                            |                 | .88    |                   |        |   | .81    |       
|Allowance for loan losses as a percentage of non-performing loans                            |                                            |                 | 90.16  |                   |        |   | 100.47 |       

Off-Balance Sheet Instruments
At September 30, 2002, the Company had outstanding $480 million of commitments
to fund residential real estate loan applications with agreed-upon rates
(Interest Rate Lock Commitments). Interest Rate Lock Commitments and holding
residential mortgage loans for sale to the secondary market exposes the Company
to interest rate risk during the period from application to when the loan is
sold to the investors. To minimize this exposure to interest rate risk, the
Company enters into firm commitments to sell such mortgage loans and Interest
Rate Lock Commitments at specified future dates to various third parties.

At September 30, 2002, the Company had a total of $948 million in outstanding
mandatory forward commitments to sell residential mortgage loans, which
includes treasury note future contracts with a notional amount of $20 million
and put options to 10-year treasury futures with a notional amount of $5
million. These mandatory forward commitments covered $514 million of mortgage
loans held for sale and $434 million of Interest Rate Lock Commitments. These
outstanding forward commitments to sell mortgage loans are expected to settle
in the fourth quarter of 2002 without producing any material gains or losses.

The Company implemented FAS 133, as amended effective January 1, 2001. The
cumulative effect of the adoption of FAS 133 was not material. For the nine
months ended September 30, 2002, the Companys hedging policies using mandatory
forward commitments and treasury note future contracts, as they relate to
Interest Rate Lock Commitments and mortgage loans held for sale, were highly
effective. Therefore, the impact of FAS 133 on net income was immaterial.

LIABILITIES
Total liabilities were $4.53 billion at September 30, 2002, a $177 million, or
4% increase from $4.36 billion at December 31, 2001. This increase was
primarily due to increases in deposits, short-term borrowings and FHLB
advances, which are used to fund mortgage loans held for sale and loan
portfolio growth.

Deposits
Total deposits increased $76 million, or 3%, to $2.83 billion at September 30,
2002 from $2.75 billion at December 31, 2001. NOW accounts and savings and
money market accounts increased $79 million, while certificates of deposit
decreased $3 million at
September 30, 2002 compared to year-end.

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Short-Term Borrowings
Short-term borrowings with maturities of less than one year, along with the
related average balances and interest rates for the nine months ended September
30, 2002 and the year ended December 31, 2001, were as follows:

|                            |                             |         |                    |         |         |                   |         |         |             |  |         |        |   |         |         |         |        |             |        |        |  |         |      |      |  
|--------------------------- | --------------------------- | ------- | ------------------ | ------- | ------- | ----------------- | ------- | ------- | ----------- |  | ------- | ------ | - | ------- | ------- | ------- | ------ | ----------- | ------ | ------ |  | ------- | ---- | ---- | -
|                            |                             |         | September 30, 2002 |         |         | December 31, 2001 |        
|                            |                             |         |                    |         |         |                   |        
|                            |                             |         |                    |         |         |                   |         |         |             |  | Average |        |   |         |         |         |        |             |        |        |  | Average |     
|                            |                             |         | Ending             |         |         | Average           |         |         | Rate During |  |         | Ending |   |         | Average |         |        | Rate During |       
|(Dollars in thousands)      |                             | Balance |                    |         | Balance |                   |         | Period  |             |  | Balance |        |   | Balance |         |         | Period |            
|                            |                             |         |                    |         |         |                   |         |         |             |  |         |        |   |         |         |         |        |            
|Federal funds purchased     |                             | $       | 225,000            |         |         | $                 | 189,376 |         |             |  | 1.86    | %      |   | $       | 176,000 |         |        | $           | 90,290 |        |  |         | 3.47 | %   
|Other short-term borrowings |                             |         | 500                |         |         |                   | 521     |         |             |  | 1.28    |        |   |         | 500     |         |        |             | 6,140  |        |  |         | 5.28 |     
|                            |                             |         |                    |         |         |                   |         |         |             |  |         |        |   |         |         |         |        |            
|                            | Total short-term borrowings |         | $                  | 225,500 |         |                   | $       | 189,897 |             |  |         | 1.84   | % |         | $       | 176,500 |        |             | $      | 96,430 |  |         |      | 3.54 | %
|                            |                             |         |                    |         |         |                   |         |         |             |  |         |        |   |         |         |         |        |            

At September 30, 2002 and December 31, 2001, other short-term borrowings
consisted of treasury, tax and loan (TT&L) demand notes.

FHLB Advances
Republic Bank routinely utilizes FHLB advances, both on a short- and long-term
basis, to provide funding for mortgage loans held for sale and to minimize the
interest rate risk associated with certain fixed rate commercial and
residential mortgage portfolio loans. These advances are generally secured
under a blanket security agreement by first mortgage loans with an aggregate
book value equal to at least 145% of the advances.

FHLB advances outstanding at September 30, 2002 and December 31, 2001, were as
follows:

|                         |       |         |                    |           |            |                   |      |         |        |   |            |              |  |  |      |      |  
|------------------------ | ----- | ------- | ------------------ | --------- | ---------- | ----------------- | ---- | ------- | ------ | - | ---------- | ------------ |  |  | ---- | ---- | -
|                         |       |         | September 30, 2002 |           |            | December 31, 2001 |     
|                         |       |         |                    |           |            |                   |     
|                         |       |         | Ending             |           |            | Avg. Rate At      |      |         | Ending |   |            | Avg. Rate At | 
|(Dollars in thousands)   |       | Balance |                    |           | Period-End |                   |      | Balance |        |   | Period-End |             
|                         |       |         |                    |           |            |                   |      |         |        |   |            |             
|Short-term FHLB advances |       | $       | 360,000            |           |            |                   | 2.20 | %       |        | $ | 485,000    |              |  |  | 2.69 | %   
|Long-term FHLB advances  |       |         | 1,008,670          |           |            |                   | 5.29 |         |        |   | 815,718    |              |  |  | 5.59 |     
|                         |       |         |                    |           |            |                   |      |         |        |   |            |             
|                         | Total |         | $                  | 1,368,670 |            |                   |      | 4.48    | %      |   | $          | 1,300,718    |  |  |      | 4.51 | %
|                         |       |         |                    |           |            |                   |      |         |        |   |            |             

The long-term FHLB advances have maturities ranging from February 2003 to
October 2017.

Long-Term Debt
Long-term debt at September 30, 2002 and December 31, 2001 consists of $13.5
million of 6.95% Senior Debentures due January 15, 2003.

CAPITAL
Shareholders equity was $331 million at September 30, 2002, a $26 million, or
9%, increase from $305 million at December 31, 2001. This increase primarily
resulted from the retention of $17 million in earnings after the payment of
dividends and the repurchase of 979,000 shares of common stock during the first
nine months of 2002.

The Company is subject to regulatory capital requirements administered by
federal banking agencies. Failure to meet minimum capital requirements can
initiate actions by regulators that, if undertaken, could have an effect on the
Companys financial statements. Capital adequacy guidelines require minimum
capital ratios of 8.00% for Total risk-based capital, 4.00% for Tier 1
risk-based capital and 3.00% for Tier 1 leverage. To be considered
well-capitalized under the regulatory framework for prompt corrective action,
minimum capital ratios of 10.00% for Total risk-based capital, 6.00% for Tier 1
risk-based capital and 5.00% for Tier 1 leverage must be maintained.

As of September 30, 2002, the Company met all capital adequacy requirements to
which it is subject and management does not anticipate any difficulty in
meeting these requirements on an ongoing basis. The Companys capital ratios
were as follows:

|                                           |               |  |       |              |   |  |  |  |  |  |       |  
|------------------------------------------ | ------------- |  | ----- | ------------ | - |  |  |  |  |  | ----- | -
|                                           | September 30, |  |       | December 31, |  
|                                           | 2002          |  |       | 2001         |  
|                                           |               |  |       |              |  
|Total capital to risk-weighted assets(1)   |               |  | 11.88 |              | % |  |  |  |  |  | 12.31 | %
|Tier 1 capital to risk-weighted assets (1) |               |  | 10.90 |              |   |  |  |  |  |  | 11.43 |  
|Tier 1 capital to average assets (1)       |               |  | 8.12  |              |   |  |  |  |  |  | 8.34  |  



|(1) |  | As defined by the regulations.
|--- |  | ------------------------------

As of September 30, 2002, the Companys total risk-based capital was $403
million and Tier 1 risk-based capital was $370 million, an excess of $64
million and $166 million, respectively, over the minimum guidelines prescribed
by regulatory agencies for a well-capitalized institution. In addition,
Republic Bank had regulatory capital ratios in excess of the minimum levels
established for well-capitalized institutions.

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FORWARD-LOOKING STATEMENTS

The section that follows entitled Market Risk Management contains certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve
certain risks, uncertainties, estimates and assumptions by management, which
may cause actual results to differ materially from those contemplated by such
statements.

MARKET RISK MANAGEMENT
Market risk is the risk of loss arising from adverse changes in the fair value
of financial instruments due to changes in interest rates, foreign exchange
rates and equity prices. The Companys market risk exposure is composed
entirely of interest rate risk. Interest rate risk arises in the normal course
of business to the extent that there is a difference between the amount of the
Companys interest-earning assets and interest-bearing liabilities that are
prepaid/withdrawn, reprice or mature in specified periods.

The primary objective of asset and liability management is to maintain
stability in the level of net interest income by producing the optimal yield
and maturity mix of assets and liabilities within the interest rate risk limits
set by the Companys Asset and Liability Management Committee (ALCO) and
consistent with projected liquidity needs and capital adequacy requirements.
The Companys ALCO, which meets weekly, is responsible for reviewing the
interest rate sensitivity position of the Company and establishing policies to
monitor and limit exposure to interest rate risk. Senior management is
responsible for ensuring that the Bank asset and liability management
procedures adhere to corporate policies and risk limits established by its
respective board of directors.

The Company utilizes two complementary quantitative tools to measure and
monitor interest rate risk: static gap analysis and earnings simulation
modeling. Each of these interest rate risk measurements has limitations, but
when evaluated together, they provide a reasonably comprehensive view of the
exposure the Company has to interest rate risk.

Static Gap Analysis:Static gap analysis is utilized at the end of each month
to measure the amount of interest rate risk embedded in the balance sheet as of
a point in time. It does this by comparing the differences in the repricing
characteristics of interest-earning assets and interest-bearing liabilities. A
gap is defined as the difference between the principal amount of
interest-earning assets and interest-bearing liabilities that reprice within a
specified time period. This gap provides a general indication of the
sensitivity of the Companys net interest income to interest rate changes.
Consequently, if more assets than liabilities reprice or mature in a given
period, resulting in an asset sensitive position or positive gap, increases in
market interest rates will generally benefit net interest income because
earning asset rates will reflect the changes more quickly. Alternatively,
where interest-bearing liabilities reprice more quickly than interest-earning
assets, resulting in a liability sensitive position or negative gap, increases
in market interest rates will generally have an adverse impact on net interest
income. At September 30, 2002, the Companys cumulative one-year gap was a
positive 12.22% of total earning assets.

The Companys current policy is to maintain a mix of asset and liabilities with
repricing and maturity characteristics that permit a moderate amount of
short-term interest rate risk based on current interest rate projections,
customer credit demands and deposit preferences. The Company generally
operates in a range of plus or minus 15% of total earning assets for the
cumulative one-year gap. Management believes that this range reduces the
vulnerability of net interest income to large shifts in market interest rates
while allowing the Company to take advantage of fluctuations in current
short-term rates.

Earnings Simulation Modeling:On a monthly basis, the earnings simulation model
is used to quantify the effects of various hypothetical changes in interest
rates on the Companys projected net interest income over the ensuing
twelve-month period. The model permits management to evaluate the effects of
various parallel shifts of the U.S. Treasury yield curve, upward and downward,
on net interest income expected in a stable interest rate environment (i.e.,
base net interest income).

As of September 30, 2002, the earnings simulation model projects the following
changes in net interest income of base net interest income, assuming an
immediate parallel shift in market interest rates:

|                                                          |  |  |      |   |  |  |      |   |  |  |     |   |  |  |      |   |  |  |      |   |  |  |      |  
|--------------------------------------------------------- |  |  | ---- | - |  |  | ---- | - |  |  | --- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|Change in market interest rates in basis points           |  |  | +200 |   |  |  | +100 |   |  |  | +50 |   |  |  | -50  |   |  |  | -100 |   |  |  | -200 |  
|Change in net interest income over
the next twelve months |  |  | 6.1  | % |  |  | 3.6  | % |  |  | 2.1 | % |  |  | -1.9 | % |  |  | -3.6 | % |  |  | -4.5 | %

These projected levels are well within the Companys policy limits. These
results portray the Companys interest rate risk position as asset sensitive
for the one-year horizon. The earnings simulation model assumes that current
balance sheet totals remain constant and all maturities and prepayments of
interest-earning assets and interest-bearing liabilities are reinvested at
current market rates.

18



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##### Table of Contents






ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk are discussed
throughout Managements Discussion and Analysis of Financial Condition and
Results of Operations beginning on page 9 of this report.




ITEM 4: Controls and Procedures

Under the supervision and with the participation of the Companys management,
including the Companys Chief Executive Officer and Chief Financial Officer,
the Company has evaluated the effectiveness of the design and operation of the
Companys disclosure controls and procedures (as defined in Exchange Act Rules
13a-14(c) and 15d-14 (c)) within 90 days prior to the date of this quarterly
report. Based upon that evaluation, the Companys President and Chief
Executive Officer and Executive Vice President, Treasurer and Chief Financial
Officer concluded that these disclosure controls and procedures are effective.
There were no significant changes in the Companys internal controls or in
other factors that could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.

19



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##### Table of Contents






PART II  OTHER INFORMATION



















|        |  |                                                                                                                                                                                                                                                                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 1. |  | Legal Proceedings
In the ordinary course of business, the Company and its subsidiaries
are parties to certain routine litigation. In the opinion of
management, the aggregate liabilities, if any, arising from such legal
proceedings would not have a material adverse effect on the Companys
consolidated financial position, results of operations and liquidity.
|        |  |                                                                                                                                                                                                                                                                                                                                                                       
|Item 2. |  | Changes in Securities
On August 15, 2002, the Board of Directors declared a quarterly
cash dividend of $0.085 per share of common stock, payable on
October 7, 2002 to shareholders of record September 6, 2002.                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                       
|Item 3. |  | Defaults Upon Senior Securities
None                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                       
|Item 4. |  | Submission of Matters to a Vote of Security Holders
None                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                       
|Item 5. |  | Other Information
None                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                       
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                      



| | (a) |  | Exhibits
| | --- |  | --------

|       |  |                                                                                                                                
|------ |  | -------------------------------------------------------------------------------------------------------------------------------
|(12)   |  | Computations of ratios of earnings to fixed charges.                                                                           
|(99.1) |  | Certification of the Chief Executive Officer pursuant to 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of
2002)
|(99.2) |  | Certification of the Chief Financial Officer pursuant to 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of
2002)



| | (b) |  | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                          
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |  | On August 13, 2002, the Company filed a report on Form 8-K reporting
that the Company submitted to the SEC the certifications required by
the Sarbanes-Oxley Act of 2002 in connection with the filing of its
quarterly report on Form 10-Q for the period ended June 30, 2002.                                                                                                                              
|
| |     |  | On September 20, 2002, the Company filed a report on Form 8-K
reporting that Dana M. Cluckey, President and Chief Executive
Officer, and Thomas F. Menacher, Executive Vice President, Treasurer
and Chief Financial Officer, made a presentation at the 2002 RBC
Capital Markets Financial Institutions Conference on Marthas
Vineyard in Massachusetts. A slide show presentation was included by
exhibit.

20



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##### Table of Contents






SIGNATURE

Pursuant to the requirements of the Securities and 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)
|     
|Date: | November 13, 2002 |  |  |  | BY:                               | /s/ Thomas F. MenacherThomas F. Menacher
Executive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and
Accounting Officer)

21



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##### Table of Contents






Certification of Executive Officer

I, Dana M. Cluckey, President and Chief Executive Officer, 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-14 and 15d-14) for the
registrant and we have:                                                                                                      



| | a. |  | designed such disclosure controls and procedures 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 quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. | The registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or
persons performing the equivalent function):
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



| | 6. | The registrants other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 13, 2002

/s/ Dana M. Cluckey

Dana M. CluckeyPresident and Chief Executive Officer
(Principal Executive Officer)

The foregoing certification accompanies the filing and is being furnished
solely pursuant to 18 U.S.C. Section 1350.

22



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##### Table of Contents



Certification of Chief Financial Officer

I, Thomas F. Menacher, Executive Vice President,
Treasurer and Chief Financial
Officer, 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-14 and 15d-14) for the
registrant and we have:                                                                                                      



| | a. |  | designed such disclosure controls and procedures 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 quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. | The registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or
persons performing the equivalent function):
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



| | 6. | The registrants other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 13, 2002

/s/ Thomas F. MenacherThomas F. MenacherExecutive Vice President, Treasurer and Chief Financial Officer
(Principal Financial Officer)

The foregoing certification accompanies the filing and is being furnished
solely pursuant to 18 U.S.C. Section 1350.

23



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##### Table of Contents



10-Q EXHIBIT INDEX

|            |  |                                                                                                                                 |  | 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | 
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                     | 
|            |  |                                                                                                                                 | 
|EX-12       |  | Computations of ratios of earnings to fixed charges.                                                                           
|EX-99.1     |  | Certification of the Chief Executive Officer
pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley
Act of 2002) | 
|EX-99.2     |  | Certification of the Chief Executive Officer
pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley
Act of 2002) |