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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One)  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2004 Or  o
    
    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     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. þ Yes o No Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). þ Yes o 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 April 30, 2004:
Common Stock, $5 Par Value Per Share                                                                           64,008,012 Shares




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INDEX PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003
    
    
    3Consolidated Statements of Income for the Three Months Ended March 31, 2004 and 2003
    
    
    4Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003
    
    
    5Notes to Consolidated Financial Statements
    
    
    6-8Item 2.
    
    Management's Discussion and Analysis of Results of Operations and Financial Condition
    
    
    9-18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    19-20Item 4.
    
    Controls and Procedures
    
    
    20PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    21Item 2.
    
    Changes in Securities and Use of Proceeds
    
    
    21Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    22SIGNATURE
    
    
    
    
    232nd Amended & Restated Directors Compensation PlanComputation of Ratios of Earnings to Fixed Charges302 Certification of Principal Executive Officer302 Certification of Principal Financial OfficerSec. 906 Certification of Chief Executive OfficerSec. 906 Certification of Chief Financial Officer
 2




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PART I  FINANCIAL INFORMATION 
 ITEM 1  Financial Statements 
 REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS March 31,
    
    December 31,(Dollars in thousands)
    
    2004
    
    2003(Unaudited)ASSETSCash and cash equivalents
    
    $
    56,748
    
    
    $
    63,858Mortgage loans held for sale
    
    
    140,848
    
    
    
    135,360Securities available for sale (amortized cost of
$707,236 and $608,677, respectively)
    
    
    713,265
    
    
    
    607,450Securities held to maturity (fair value of $238,604
and $157,067, respectively)
    
    
    235,552
    
    
    
    156,555Loans, net of unearned income
    
    
    4,166,900
    
    
    
    4,157,514Less allowance for loan losses
    
    
    (41,556
    )
    
    
    (40,271
    )Net loans
    
    
    4,125,344
    
    
    
    4,117,243Federal Home Loan Bank stock (at cost)
    
    
    80,503
    
    
    
    80,500Premises and equipment
    
    
    28,570
    
    
    
    26,928Bank owned life insurance
    
    
    109,633
    
    
    
    108,330Other assets
    
    
    59,996
    
    
    
    57,464Total assets
    
    $
    5,550,459
    
    
    $
    5,353,688LIABILITIESNoninterest-bearing deposits
    
    $
    273,056
    
    
    $
    256,265Interest-bearing deposits:NOW accounts
    
    
    182,229
    
    
    
    184,217Savings and money market accounts
    
    
    1,064,319
    
    
    
    1,054,857Certificates of deposit
    
    
    1,370,765
    
    
    
    1,319,930Total interest-bearing deposits
    
    
    2,617,313
    
    
    
    2,559,004Total deposits
    
    
    2,890,369
    
    
    
    2,815,269Federal funds purchased and other short-term borrowings
    
    
    560,044
    
    
    
    491,245Short-term FHLB advances
    
    
    175,000
    
    
    
    280,000Long-term FHLB advances
    
    
    1,429,244
    
    
    
    1,286,726Accrued expenses and other liabilities
    
    
    58,902
    
    
    
    61,028Long-term debt
    
    
    50,000
    
    
    
    50,000Total liabilities
    
    
    5,163,559
    
    
    
    4,984,268SHAREHOLDERS EQUITYPreferred 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; 64,006,000 and 63,527,000, issued and
outstanding, respectively
    
    
    320,028
    
    
    
    317,633Capital surplus
    
    
    53,559
    
    
    
    50,358Unearned compensation  restricted stock
    
    
    (4,731
    )
    
    
    (1,666
    )Retained earnings
    
    
    14,125
    
    
    
    3,893Accumulated other comprehensive income (loss)
    
    
    3,919
    
    
    
    (798
    )Total shareholders equity
    
    
    386,900
    
    
    
    369,420Total liabilities and shareholders equity
    
    $
    5,550,459
    
    
    $
    5,353,688
 See notes to consolidated financial statements. 3




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REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months EndedMarch 31,(In thousands, except per share data)
    
    2004
    
    2003Interest Income:Interest and fees on loans
    
    $
    57,996
    
    
    $
    62,936Interest on investment securities and FHLB stock dividends
    
    
    9,823
    
    
    
    2,814Total interest income
    
    
    67,819
    
    
    
    65,750Interest Expense:Interest on deposits
    
    
    13,037
    
    
    
    15,494Short-term borrowings
    
    
    2,018
    
    
    
    1,511Long-term FHLB advances and reverse repurchase agreements
    
    
    15,810
    
    
    
    13,106Long-term debt
    
    
    1,075
    
    
    
    1,114Total interest expense
    
    
    31,940
    
    
    
    31,225Net interest income
    
    
    35,879
    
    
    
    34,525Provision for loan losses
    
    
    2,500
    
    
    
    3,000Net interest income after provision for loan losses
    
    
    33,379
    
    
    
    31,525Noninterest Income:Mortgage banking income
    
    
    5,174
    
    
    
    9,736Service charges
    
    
    2,697
    
    
    
    2,652Gain on sale of securities
    
    
    688
    
    
    
    448Income from bank owned life insurance
    
    
    1,303
    
    
    
    1,295Other noninterest income
    
    
    952
    
    
    
    730Total noninterest income
    
    
    10,814
    
    
    
    14,861Noninterest Expense:Salaries and employee benefits
    
    
    12,089
    
    
    
    14,415Occupancy expense of premises
    
    
    2,619
    
    
    
    2,643Equipment expense
    
    
    1,674
    
    
    
    1,705Other noninterest expense
    
    
    4,640
    
    
    
    5,619Total noninterest expense
    
    
    21,022
    
    
    
    24,382Income before income taxes
    
    
    23,171
    
    
    
    22,004Provision for income taxes
    
    
    6,872
    
    
    
    6,851Net Income
    
    $
    16,299
    
    
    $
    15,153Basic earnings per share
    
    $
    .26
    
    
    $
    .24Diluted earnings per share
    
    $
    .25
    
    
    $
    .24Average common shares outstanding  diluted
    
    
    64,622
    
    
    
    64,132Cash dividends declared per common share
    
    $
    .095
    
    
    $
    .077
 See notes to consolidated financial statements. 4




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REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31 (In thousands)
    
    2004
    
    2003Cash Flows From Operating Activities:Net income
    
    $
    16,299
    
    
    $
    15,153Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    2,931
    
    
    
    3,306Net gains on sale of securities available for sale
    
    
    (688
    )
    
    
    (448
    )Net gains on sale of commercial and residential real estate loans
    
    
    (1,378
    )
    
    
    (595
    )Proceeds from sale of mortgage loans held for sale
    
    
    256,072
    
    
    
    860,165Origination of mortgage loans held for sale
    
    
    (261,560
    )
    
    
    (523,610
    )Net increase in other assets
    
    
    (9,516
    )
    
    
    (6,100
    )Net (decrease) increase in other liabilities
    
    
    (2,126
    )
    
    
    5,016Other, net
    
    
    1,287
    
    
    
    1,109Total adjustments
    
    
    (14,978
    )
    
    
    338,843Net cash provided by operating activities
    
    
    1,321
    
    
    
    353,996Cash Flows From Investing Activities:Proceeds from sale of securities available for sale
    
    
    41,499
    
    
    
    13,564Proceeds from maturities/payments of securities available for sale
    
    
    61,164
    
    
    
    22,461Proceeds from maturities/principal payments of securities held to maturity
    
    
    6,455
    
    
    
    Purchases of securities available for sale
    
    
    (200,704
    )
    
    
    (106,352
    )Purchases of securities held to maturity
    
    
    (85,443
    )
    
    
    Proceeds from sale of commercial and residential real estate loans
    
    
    56,720
    
    
    
    20,079Net increase in loans made to customers
    
    
    (65,258
    )
    
    
    (217,327
    )Premises and equipment expenditures
    
    
    (3,184
    )
    
    
    (1,229
    )Net cash used in investing activities
    
    
    (188,751
    )
    
    
    (268,804
    )Cash Flows From Financing Activities:Net increase in total deposits
    
    
    75,100
    
    
    
    74,657Net increase in short-term borrowings
    
    
    68,799
    
    
    
    16,840Net decrease in short-term FHLB advances
    
    
    (105,000
    )
    
    
    (180,000
    )Proceeds from long-term FHLB advances and reverse repurchase agreements
    
    
    146,000
    
    
    
    75,000Payments on long-term FHLB advances
    
    
    (3,482
    )
    
    
    (52,275
    )Payments on long-term debt
    
    
    
    
    
    
    (13,500
    )Net proceeds from issuance of common shares
    
    
    5,832
    
    
    
    4,720Repurchase of common shares
    
    
    (889
    )
    
    
    (4,088
    )Dividends paid on common shares
    
    
    (6,040
    )
    
    
    (4,890
    )Net cash provided by (used in) financing activities
    
    
    180,320
    
    
    
    (83,536
    )Net (decrease) increase in cash and cash equivalents
    
    
    (7,110
    )
    
    
    1,656Cash and cash equivalents at beginning of period
    
    
    63,858
    
    
    
    75,625Cash and cash equivalents at end of period
    
    $
    56,748
    
    
    $
    77,281
 See notes to consolidated financial statements. 5




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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 (GAAP) 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, 2003. 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 wholly-owned subsidiaries Quincy Investment
Services, Inc., Republic Bank Real Estate Finance, LLC and Republic Management
Company, Inc.). All significant intercompany accounts and transactions have
been eliminated in consolidation. Effective December 31, 2003, the Company adopted FASB Interpretation No. 46,
Consolidation of Variable Interest Entities(FIN 46). FIN 46 required the
Company to reclassify its trust preferred securities balance of $50 million as
subordinated debt and the dividends paid on its trust preferred securities as
interest expense, where in prior periods dividends on trust preferred
securities were classified as a component of noninterest expense. All prior
periods have been restated to reflect the adoption of FIN 46. Note 3  Consolidated Statements of Cash Flows Supplemental disclosures of cash flow information for the three months ended
March 31, include: (In thousands)
    
    2004
    
    2003Cash paid during the period for:Interest
    
    $
    31,846
    
    
    $
    30,115Income taxes
    
    $
    
    
    
    $
    1,200Non-cash investing activities:Loan charge-offs
    
    $
    1,835
    
    
    $
    2,278
 Note 4  Comprehensive Income The following table sets forth the computation of comprehensive income: Three Months EndedMarch 31,(In thousands)
    
    2004
    
    2003Net income
    
    $
    16,299
    
    
    $
    15,153Unrealized holding gains on securities, net of tax
    
    $
    5,164
    
    
    $
    47Reclassification adjustment for gains included in net income,
net of tax of $241, and $157, respectively
    
    
    (447
    )
    
    
    (291
    )Net unrealized gains (losses) on securities, net of tax
    
    
    4,717
    
    
    
    (244
    )Comprehensive income
    
    $
    21,016
    
    
    $
    14,909
 Note 5  Intangible Assets The following table summarizes the Companys core deposit intangible asset which is subject to amortization: (Dollars in thousands)
    
    March 31, 2004
    
    December 31, 2003Core Deposit Intangible Asset:Gross carrying amount
    
    $
    10,475
    
    
    $
    10,475Accumulated amortization
    
    
    6,144
    
    
    
    5,897Net book value
    
    $
    4,331
    
    
    $
    4,578
 Amortization expense on the core deposit intangible asset totaled $247,500 for
each of the quarters ended March 31, 2004 and 2003, and $990,000 for the year
ended December 31, 2003. The Company expects core deposit intangible
amortization expense to be $990,000, $936,000, $823,000, $823,000 and $663,000
for each of the years ending December 31, 2004, 2005, 2006, 2007 and 2008,
respectively. 6




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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 EndedMarch 31,(Dollars in thousands, except per share data)
    
    2004
    
    2003Numerator for basic and diluted earnings per share:Net income
    
    $
    16,299
    
    
    $
    15,153Denominator for basic earnings per share-
weighted-average shares
    
    
    63,798,581
    
    
    
    63,294,985Effect of dilutive securities:Stock options
    
    
    756,870
    
    
    
    766,145Warrants
    
    
    66,096
    
    
    
    70,843Dilutive potential common shares
    
    
    822,966
    
    
    
    836,988Denominator for diluted earnings per share-adjusted
weighted-average shares for assumed conversions
    
    
    64,621,547
    
    
    
    64,131,973Basic earnings per share
    
    $
    .26
    
    
    $
    .24Diluted earnings per share
    
    $
    .25
    
    
    $
    .24
 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 83 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. Mortgage loan production is conducted
in all 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, data processing, human resources and operation costs. The following table presents the financial results of each business segment for
the three months ended March 31, 2004 and 2003. Treasury(In thousands)
    
    Commercial
    
    Retail
    
    Mortgage
    
    and Other
    
    ConsolidatedFor the Three Months Ended March 31, 2004Net interest income from external customers
    
    $
    20,964
    
    
    $
    (6,773
    )
    
    $
    3,924
    
    
    $
    17,764
    
    
    $
    35,879Internal funding
    
    
    (8,549
    )
    
    
    30,864
    
    
    
    (1,697
    )
    
    
    (20,618
    )
    
    
    Net interest income
    
    
    12,415
    
    
    
    24,091
    
    
    
    2,227
    
    
    
    (2,854
    )
    
    
    35,879Provision for loan losses
    
    
    1,118
    
    
    
    395
    
    
    
    68
    
    
    
    919
    
    
    
    2,500Noninterest income
    
    
    757
    
    
    
    2,805
    
    
    
    5,148
    
    
    
    2,104
    
    
    
    10,814Noninterest expense
    
    
    2,001
    
    
    
    7,604
    
    
    
    5,332
    
    
    
    6,085
    
    
    
    21,022Income before taxes
    
    
    10,053
    
    
    
    18,897
    
    
    
    1,975
    
    
    
    (7,754
    )
    
    
    23,171Income taxes
    
    
    3,587
    
    
    
    6,742
    
    
    
    691
    
    
    
    (4,148
    )
    
    
    6,872Net income
    
    $
    6,466
    
    
    $
    12,155
    
    
    $
    1,284
    
    
    $
    (3,606
    )
    
    $
    16,299Depreciation and amortization
    
    $
    30
    
    
    $
    734
    
    
    $
    450
    
    
    $
    1,717
    
    
    $
    2,931Capital expenditures
    
    $
    20
    
    
    $
    2,363
    
    
    $
    208
    
    
    $
    593
    
    
    $
    3,184Net identifiable assets (in millions)
    
    $
    1,523
    
    
    $
    2,850
    
    
    $
    287
    
    
    $
    890
    
    
    $
    5,550Return on equity(1)
    
    
    17.15
    %
    
    
    36.69
    %
    
    
    34.87
    %
    
    
    n/m
    
    
    
    17.15
    %Return on assets
    
    
    1.72
    %
    
    
    1.75
    %
    
    
    1.74
    %
    
    
    n/m
    
    
    
    1.20
    %Efficiency ratio
    
    
    15.19
    %
    
    
    28.27
    %
    
    
    72.30
    %
    
    
    n/m
    
    
    
    45.70
    %
 7




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Note 7  Segment Information (Continued) Treasury(In thousands)
    
    Commercial
    
    Retail
    
    Mortgage
    
    and Other
    
    ConsolidatedFor the Three Months Ended March 31, 2003Net interest income from external customers
    
    $
    22,941
    
    
    $
    (8,735
    )
    
    $
    8,404
    
    
    $
    11,915
    
    
    $
    34,525Internal funding
    
    
    (9,334
    )
    
    
    34,909
    
    
    
    (3,909
    )
    
    
    (21,666
    )
    
    
    Net interest income
    
    
    13,607
    
    
    
    26,174
    
    
    
    4,495
    
    
    
    (9,751
    )
    
    
    34,525Provision for loan losses
    
    
    2,054
    
    
    
    231
    
    
    
    68
    
    
    
    647
    
    
    
    3,000Noninterest income
    
    
    332
    
    
    
    2,674
    
    
    
    14,425
    
    
    
    (2,570
    )
    
    
    14,861Noninterest expense
    
    
    2,307
    
    
    
    7,747
    
    
    
    7,321
    
    
    
    7,007
    
    
    
    24,382Income before taxes
    
    
    9,578
    
    
    
    20,870
    
    
    
    11,531
    
    
    
    (19,975
    )
    
    
    22,004Income taxes
    
    
    3,417
    
    
    
    7,446
    
    
    
    4,036
    
    
    
    (8,048
    )
    
    
    6,851Net income
    
    $
    6,161
    
    
    $
    13,424
    
    
    $
    7,495
    
    
    $
    (11,927
    )
    
    $
    15,153Depreciation and amortization
    
    $
    32
    
    
    $
    767
    
    
    $
    645
    
    
    $
    1,862
    
    
    $
    3,306Capital expenditures
    
    $
    3
    
    
    $
    589
    
    
    $
    100
    
    
    $
    537
    
    
    $
    1,229Net identifiable assets (in millions)
    
    $
    1,449
    
    
    $
    2,820
    
    
    $
    481
    
    
    $
    (38
    )
    
    $
    4,712Return on equity(1)
    
    
    16.93
    %
    
    
    40.67
    %
    
    
    103.47
    %
    
    
    n/m
    
    
    
    17.88
    %Return on assets
    
    
    1.69
    %
    
    
    1.92
    %
    
    
    5.17
    %
    
    
    n/m
    
    
    
    1.30
    %Efficiency ratio
    
    
    16.55
    %
    
    
    26.85
    %
    
    
    38.69
    %
    
    
    n/m
    
    
    
    49.82
    %
   (1)
 n/m  not meaningful Note 8  Stock Based Compensation Effective January 1, 2003, the Company adopted the fair value method of
recording stock options under SFAS 123. In accordance with the transitional
guidance of SFAS 148, the fair value method of accounting for stock options
will be applied prospectively to awards granted subsequent to January 1, 2003.
During 2003 and in the first quarter of 2004, the Company generally issued
restricted stock in lieu of stock option grants. As a result, the GAAP income
statement impact associated with expensing stock options in the first quarter
of 2004 was immaterial. The income statement impact from expensing stock
options is expected to be immaterial for the remainder of 2004. The following table presents net income and earnings per share had compensation
cost for the Companys stock-based compensation plans been determined in
accordance with SFAS No. 123 for all outstanding and unvested awards for the
three months ended March 31, 2004 and 2003. (Dollars in thousands, except per share data)
    
    2004
    
    2003Net income (as reported)
    
    $
    16,299
    
    
    $
    15,153Add: Stock-based employee compensation expense included
in reported net income, net of related tax effects
    
    
    709
    
    
    
    591Deduct: Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects
    
    
    (849
    )
    
    
    (816
    )Net income (pro forma)
    
    $
    16,159
    
    
    $
    14,928Basic earnings per share (as reported)
    
    $
    .26
    
    
    $
    .24Basic earnings per share (pro forma)
    
    
    .25
    
    
    
    .24Diluted earnings per share (as reported)
    
    $
    .25
    
    
    $
    .24Diluted earnings per share (pro forma)
    
    
    .25
    
    
    
    .23
 Note 9  Legal Proceedings The Company and its Subsidiaries are subject to certain legal actions and
proceedings in the ordinary course of business. Management believes that the
aggregate liability, if any, resulting from such legal actions would not have a
material adverse effect on the Companys financial condition. 8




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##### Table of Contents



ITEM 2: Managements Discussion and Analysis of Financial Condition and Results of Operations EARNINGS PERFORMANCE The Company reported net income for the quarter ended March 31, 2004 of $16.3
million. This compares to net income of $15.2 million for the first quarter of
2003. Diluted earnings per share for the first quarter of 2004 were $.25, up
7% from $.24 earned in 2003. Annualized returns on average assets and average
shareholders equity for the quarter ended March 31, 2004 were 1.20% and
17.15%, respectively. RESULTS OF OPERATIONS Net Interest Income The following discussion should be read in conjunction with Table I on the
following page, which identify and quantify the components impacting net
interest income for the three months ended March 31, 2004 and 2003. Net interest income, on a fully taxable equivalent (FTE) basis, was $36.9
million for the first quarter of 2004 compared to $35.0 million for the first
quarter of 2003. The increase was primarily the result of an increase in the
Companys average interest earning assets of $757 million, or 17%, as the
average balance of total securities increased $668 million, or 347%, and the
average portfolio loan balance increased $432 million, or 12%, during the first
quarter of 2004 compared to 2003. A significant portion of the increase in the
securities balance was utilized to offset the lower levels of mortgage loans
held for sale. The average balance of loans held for sale decreased $345
million to $93 million in the first quarter of 2004 compared to the first
quarter of 2003. The increase in the average portfolio loan balance reflects a
$52 million, or 4%, increase in average commercial loans, a $339 million, or
20%, increase in average residential real estate mortgage loans and a $41
million, or 7%, increase in average installment loans. Average total interest
bearing liabilities increased $723 million for the first quarter of 2004
compared to 2003 primarily due to a $15 million increase in total average
interest-bearing deposits, a $306 million increase in average short-term
borrowings and a $404 million increase in average long-term FHLB advances and
long-term reverse repurchase agreements. The net interest margin (FTE) was 2.82% for the quarter ended March 31, 2004, a
decrease of 31 basis points from 3.13% in 2003. The decrease in the margin was
primarily attributable to the Companys yield on earning assets decreasing more
than the decline in the cost of funds on interest-bearing liabilities as a
result of the Companys asset sensitive position in the declining interest rate
environment over the past twelve months. 9




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##### Table of Contents



Table I  Quarterly Net Interest Income and Rate/Volume Analysis (FTE) Three Months Ended
    
    Three Months EndedMarch 31, 2004
    
    March 31, 2003Average
    
    
    
    
    
    Average
    
    Average
    
    
    
    
    
    Average(Dollar amounts in thousands)
    
    Balance
    
    Interest
    
    Rate
    
    Balance
    
    Interest
    
    RateAverage Assets:Short-term investments
    
    $
    439
    
    
    $
    1
    
    
    
    0.75
    %
    
    $
    225
    
    
    $
    1
    
    
    
    1.82
    %Mortgage loans held for sale
    
    
    92,827
    
    
    
    1,374
    
    
    
    5.92
    
    
    
    437,729
    
    
    
    6,270
    
    
    
    5.73Securities available for sale (2)
    
    
    671,583
    
    
    
    7,583
    
    
    
    4.53
    
    
    
    192,554
    
    
    
    2,152
    
    
    
    4.53Securities held to maturity
    
    
    188,664
    
    
    
    2,170
    
    
    
    4.60
    
    
    
    
    
    
    
    
    
    
    
    Portfolio loans(1):Commercial loans
    
    
    1,526,471
    
    
    
    21,116
    
    
    
    5.47
    
    
    
    1,474,131
    
    
    
    23,159
    
    
    
    6.28Residential real estate mortgage loans
    
    
    2,027,648
    
    
    
    27,086
    
    
    
    5.34
    
    
    
    1,688,890
    
    
    
    24,413
    
    
    
    5.78Installment loans
    
    
    628,980
    
    
    
    8,420
    
    
    
    5.37
    
    
    
    587,865
    
    
    
    9,094
    
    
    
    6.27Total loans, net of unearned income
    
    
    4,183,099
    
    
    
    56,622
    
    
    
    5.39
    
    
    
    3,750,886
    
    
    
    56,666
    
    
    
    6.06Federal Home Loan Bank stock
    
    
    80,734
    
    
    
    1,057
    
    
    
    5.25
    
    
    
    78,468
    
    
    
    1,111
    
    
    
    5.67Total interest-earning assets
    
    
    5,217,346
    
    
    
    68,807
    
    
    
    5.26
    
    
    
    4,459,862
    
    
    
    66,200
    
    
    
    5.95Allowance for loan losses
    
    
    (40,923
    )
    
    
    
    
    
    
    
    
    
    
    (36,508
    )Other assets
    
    
    241,308
    
    
    
    
    
    
    
    
    
    
    
    228,699Total assets
    
    $
    5,417,731
    
    
    
    
    
    
    
    
    
    
    $
    4,652,053Average Liabilities and Shareholders Equity:Interest-bearing demand deposits
    
    $
    183,744
    
    
    $
    124
    
    
    
    0.27
    %
    
    $
    176,421
    
    
    $
    187
    
    
    
    0.43
    %Savings and money market accounts
    
    
    1,041,338
    
    
    
    3,467
    
    
    
    1.34
    
    
    
    929,538
    
    
    
    3,747
    
    
    
    1.64Time deposits
    
    
    1,347,838
    
    
    
    9,446
    
    
    
    2.81
    
    
    
    1,451,829
    
    
    
    11,560
    
    
    
    3.23Total interest-bearing deposits
    
    
    2,572,920
    
    
    
    13,037
    
    
    
    2.03
    
    
    
    2,557,788
    
    
    
    15,494
    
    
    
    2.46Short-term borrowings
    
    
    727,657
    
    
    
    2,018
    
    
    
    1.10
    
    
    
    421,399
    
    
    
    1,511
    
    
    
    1.43Long-term FHLB advances and
reverse repurchase agreements
    
    
    1,396,219
    
    
    
    15,810
    
    
    
    4.48
    
    
    
    992,163
    
    
    
    13,106
    
    
    
    5.28Long-term debt
    
    
    50,000
    
    
    
    1,075
    
    
    
    8.60
    
    
    
    52,250
    
    
    
    1,114
    
    
    
    8.53Total interest-bearing liabilities
    
    
    4,746,796
    
    
    
    31,940
    
    
    
    2.68
    
    
    
    4,023,600
    
    
    
    31,225
    
    
    
    3.13Noninterest-bearing deposits
    
    
    254,371
    
    
    
    
    
    
    
    
    
    
    
    250,820Other liabilities
    
    
    36,479
    
    
    
    
    
    
    
    
    
    
    
    38,677Total liabilities
    
    
    5,037,646
    
    
    
    
    
    
    
    
    
    
    
    4,313,097Shareholders equity
    
    
    380,085
    
    
    
    
    
    
    
    
    
    
    
    338,956Total liabilities and shareholders equity
    
    $
    5,417,731
    
    
    
    
    
    
    
    
    
    
    $
    4,652,053Net interest income/rate spread (FTE)
    
    
    
    
    
    $
    36,867
    
    
    
    2.58
    %
    
    
    
    
    
    $
    34,975
    
    
    
    2.82
    %Net interest margin (FTE)
    
    
    
    
    
    
    
    
    
    
    2.82
    %
    
    
    
    
    
    
    
    
    
    
    3.13
    %
 Increase (decrease) due to change in:
    
    Volume(3)
    
    Rate(3)
    
    Net ChangeShort-term investments
    
    $
    1
    
    
    $
    (1
    )
    
    $
    Mortgage loans held for sale
    
    
    (5,097
    )
    
    
    201
    
    
    
    (4,896
    )Securities available for sale
    
    
    5,431
    
    
    
    
    
    
    
    5,431Securities held to maturity
    
    
    2,170
    
    
    
    
    
    
    
    2,170Portfolio loans(1):Commercial loans
    
    
    848
    
    
    
    (2,891
    )
    
    
    (2,043
    )Residential real estate mortgage loans
    
    
    4,631
    
    
    
    (1,958
    )
    
    
    2,673Installment loans
    
    
    646
    
    
    
    (1,320
    )
    
    
    (674
    )Total loans, net of unearned income
    
    
    6,125
    
    
    
    (6,169
    )
    
    
    (44
    )Federal Home Loan Bank stock
    
    
    31
    
    
    
    (85
    )
    
    
    (54
    )Total interest income
    
    
    8,661
    
    
    
    (6,054
    )
    
    
    2,607Interest-bearing demand deposits
    
    
    8
    
    
    
    (71
    )
    
    
    (63
    )Savings deposits
    
    
    442
    
    
    
    (722
    )
    
    
    (280
    )Time deposits
    
    
    (751
    )
    
    
    (1,363
    )
    
    
    (2,114
    )Total interest-bearing deposits
    
    
    (301
    )
    
    
    (2,156
    )
    
    
    (2,457
    )Short-term borrowings
    
    
    913
    
    
    
    (406
    )
    
    
    507Long-term FHLB advances and
reverse repurchase agreements
    
    
    4,863
    
    
    
    (2,159
    )
    
    
    2,704Long-term debt
    
    
    (48
    )
    
    
    9
    
    
    
    (39
    )Total interest expense
    
    
    5,427
    
    
    
    (4,712
    )
    
    
    715Net interest income
    
    $
    3,234
    
    
    $
    (1,342
    )
    
    $
    1,892
  (1) Non-accrual loans and overdrafts are included in average balances.(2) The FTE adjustment for tax-exempt securities interest income totaled
$988,000 and $450,000 for the quarters ended March 31, 2004 and 2003,
respectively.(3) Rate/volume variances are proportionately allocated to rate and volume
based on the absolute value of the change in each. 10




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##### Table of Contents



Noninterest Income Total noninterest income decreased $4.0 million, or 27%, for the quarter ended
March 31, 2004, compared to the same period in 2003. The decrease was
primarily due to lower levels of mortgage banking income. Details of mortgage
banking income are presented below. Exclusive of mortgage banking income,
noninterest income was $5.6 million for the quarter ended March 31, 2004, an
increase of $515,000, or 10%, over the first quarter of 2003. During the
quarter ended March 31, 2004, gain on sale of securities was $688,000, an
increase of $240,000 from the first quarter of 2003. In addition, the Company
sold $3.8 million of the guaranteed portion of SBA loans during the quarter
ended March 31, 2004, resulting in gains of $521,000, or a $326,000 increase
over the gains on sale of SBA loans during the first quarter of 2003. During
the quarter ended March 31, 2003, the Company sold $1.7 million of SBA loans
for gains of $195,000. The guaranteed portion of SBA loans are regularly sold
to investors and the gains from the sales are included in other noninterest
income. Mortgage Banking Income The Company closed $425 million in single-family residential mortgage loans in
the first quarter of 2004, a decrease of 57% compared to $988 million closed in
the same period last year. Refinancings for the first quarter of 2004
represented 47% of total closings compared to 75% in the first quarter of 2003. For the three months ended March 31, 2004, mortgage banking income decreased
$4.6 million, or 47%, to $5.2 million from $9.7 million a year earlier. The
decrease is primarily due to lower funding levels of loans sold into the
secondary market. Mortgage loans held for sale fundings were $256 million
during the first quarter of 2004 compared to $860 million in the prior year.
The ratio of mortgage loan production income to mortgage loans held for sale
fundings was 2.44% for the first quarter of 2004, compared to 1.95% for the
first of quarter 2003. Mortgage banking income includes fee revenue derived from the loan origination
process (e.g., points collected), gains on the sale of mortgage loans and the
related mortgage servicing rights released concurrently with the underlying
loans sold (mortgage loan production income), net of commissions, incentives
and deferred mortgage loan origination costs and fees for mortgage loans held
for sale and residential real estate portfolio loans as accounted for under
FASB Statement No. 91, Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of Leases(SFAS
91). Mortgage loan production income totaled $6.2 million and $16.8 million
for the first quarter of 2004 and 2003, respectively. Commissions and
incentives paid were $3.4 million and $8.2 million for the first quarter of
2004 and 2003, respectively. The SFAS 91 credit to mortgage banking income
totaled $1.5 million and $753,000 for the first quarter of 2004 and 2003,
respectively. Mortgage banking income also includes gains on sales of mortgage portfolio
loans totaling $857,000 and $400,000 for the first quarters of 2004 and 2003,
respectively. Mortgage loan portfolio sales totaled $51.5 million and $17.8
million for the first quarters of 2004 and 2003, respectively. During the quarter ended March 31, 2004, the Company had mortgage loan
applications of $947 million and at March 31, 2004, the Companys mortgage loan
pipeline of applications in process was $580 million, an increase of 86% over
December 31, 2003. The Company estimates that mortgage applications and
closings for the quarter ended June 30, 2004 will range from $650 to $750
million. Noninterest Expense Total noninterest expense for the quarter ended March 31, 2004 decreased $3.4
million, to $21.0 million compared to $24.4 million for the first quarter of
2003. The decrease was primarily due to decreases in salaries and employee
benefits of $2.3 million related to lower levels of incentive accruals and
related payroll taxes and other noninterest expenses of $1 million. The
decrease in other non-interest expenses reflects a reduction in state income
taxes and lower levels of other expenses, including advertising and data
processing. 11




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##### Table of Contents



BALANCE SHEET ANALYSIS ASSETS At March 31, 2004, the Company had $5.55 billion in total assets, an increase
of $197 million, or 4%, from $5.35 billion at December 31, 2003. The increase
is primarily the result of an increase in the Companys securities available
for sale and securities held to maturity. Investment Securities 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 Companys securities portfolio is comprised principally of U.S.
Government agency securities, municipal securities, collateralized mortgage
obligations and mortgage-backed securities. At March 31, 2004, fixed rate
investment securities within the portfolio, excluding municipal securities,
totaled $570.3 million compared to $404.0 million at December 31, 2003. At
March 31, 2004, $471.9 million of these fixed rate investment securities were
collateralized with 5/1, 7/1 and 10/1 hybrid adjustable rate mortgage loans
which provide for an interest rate reset cap of 2% to 5% at the first reset
date. This compares to $306.7 million at December 31, 2003. Investment securities available for sale totaled $713.3 million at March 31,
2004, a $105.8 million increase from $607.5 million at December 31, 2003,
representing 13% of total assets at March 31, 2004. The increase in the
Companys securities available for sale portfolio was primarily due to the
purchase of collateralized mortgage obligations, collateralized with 5/1 and
7/1 hybrid adjustable rate mortgage loans. Investment securities held to maturity totaled $235.6 million at March 31,
2004, a $79.0 million increase from $156.6 million at December 31, 2003. The
increase in investment securities held to maturity was primarily due to the
purchase of collateralized mortgage obligations, collateralized with 7/1 and
10/1 hybrid adjustable rate mortgage loans. The investment securities held to
maturity portfolio constituted 4% of the Companys total assets at March 31,
2004. During the first quarter of 2004, $146 million of long-term reverse repurchase
agreements with a weighted average cost of funds of 2.65% and an average term
of 3.4 years were utilized to fund approximately 83% of the first quarter
purchases of fixed rate investment securities. The reverse repurchase
agreements minimize the interest rate risk associated with the fixed rate
investment securities purchased. The following table details the composition, amortized cost and fair value of
the Companys investment securities portfolio at
March 31, 2004: Investment SecuritiesGross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    Fair(In thousands)
    
    Cost
    
    Gains
    
    Losses
    
    ValueSecurities Available For Sale (Estimated Fair Value):U.S. Government agency securities
    
    $
    232,161
    
    
    $
    304
    
    
    $
    94
    
    
    $
    232,371Collateralized mortgage obligations
    
    
    164,552
    
    
    
    1,926
    
    
    
    99
    
    
    
    166,379Mortgage-backed securities
    
    
    84,742
    
    
    
    904
    
    
    
    320
    
    
    
    85,326Municipal and other securities
    
    
    225,781
    
    
    
    4,016
    
    
    
    608
    
    
    
    229,189Total securities available for sale
    
    $
    707,236
    
    
    $
    7,150
    
    
    $
    1,121
    
    
    $
    713,265Securities Held To Maturity (At Cost):Collateralized mortgage obligations
    
    $
    213,117
    
    
    $
    2,911
    
    
    $
    159
    
    
    $
    215,869Mortgage-backed securities
    
    
    22,435
    
    
    
    311
    
    
    
    11
    
    
    
    22,735Total securities held to maturity
    
    $
    235,552
    
    
    $
    3,222
    
    
    $
    170
    
    
    $
    238,604
 At March 31, 2004, all of the unrealized losses in the securities portfolio
were comprised of securities guaranteed by U.S. Government agencies, investment
grade municipalities and private label securities rated AAA by the major
rating agencies. The Company believes that the price movements in these
securities are dependent upon the movement in market interest rates,
particularly given the negligible inherent credit risk for these securities.
Securities with unrealized losses totaling less than $100,000 have been in a
continuous unrealized loss position for more than 12 months. The Company has
the ability and intent to hold all securities that are in an unrealized loss
position until maturity or market price recovery. The Company believes that
the unrealized losses in the table above are temporary. Certain securities having a carrying value of $634.7 million and $418.4 million
at March 31, 2004 and December 31, 2003, respectively, were pledged to secure
FHLB advances, reverse repurchase agreements and public deposits as required by
law. 12




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##### Table of Contents



Federal Home Loan Bank Stock As a member of the Federal Home Loan Bank (FHLB) of Indianapolis, the Company
is required to own capital stock in the FHLB. The carrying value of the stock
is at cost, or par. All transactions in the capital stock of the FHLB are
executed at par. The balance of FHLB stock was $80.5 million at March 31, 2004
and December 31, 2003. The Company earned an average dividend of 5.25% on the
FHLB stock during the first quarter of 2004. Mortgage Loans Held for Sale Mortgage loans held for sale were $140.8 million at March 31, 2004, an increase
of $5.5 million from $135.3 million at December 31, 2003. Loans closed
generally remain in loans held for sale for 30 to 60 days after closing. Portfolio Loans Total portfolio loans were $4.17 billion at March 31, 2004, an increase of $9.4
million from $4.16 billion at December 31, 2003. The increase was primarily
due to increases in the commercial and installment portfolio loan balances.
The commercial portfolio loan balance was $1.54 billion at March 31, 2004, an
increase of $21.6 million from $1.52 billion at December 31, 2003. The
increase was concentrated in commercial real estate loans. In addition, the
Company closed $12.3 million in Small Business Administration (SBA) loans
during the three months ended March 31, 2004, an increase of 52% over the first
quarter of 2003. The consumer direct installment loan portfolio increased $23.6 million during
the first three months of 2004, primarily due to an increase in home equity
loan closings. The consumer indirect installment loan portfolio decreased $3.0
million during the first quarter of 2004 due to the anticipated pay-off of
these loans. The residential portfolio loan balance decreased $32.8 million during the first
quarter of 2004 primarily due to the sale of $52 million of fixed-rate loans
and a seasonal decline in the construction loan portfolio of $24 million.
During the first three months of 2004, the Company retained $173 million in
mortgage portfolio loans, 77% of which were adjustable-rate mortgages. Loan
pay-offs for the first quarter of 2004 were $117 million. The following table provides further information regarding the Companys loan
portfolio: March 31, 2004
    
    December 31, 2003(Dollars in thousands)
    
    Amount
    
    Percent
    
    Amount
    
    PercentCommercial loans:Commercial and industrial
    
    $
    38,659
    
    
    
    1.0
    %
    
    $
    38,319
    
    
    
    1.0
    %Commercial real estate mortgage
    
    
    1,504,112
    
    
    
    36.0
    
    
    
    1,482,814
    
    
    
    35.6Total commercial loans
    
    
    1,542,771
    
    
    
    37.0
    
    
    
    1,521,133
    
    
    
    36.6Residential real estate mortgages
    
    
    1,982,025
    
    
    
    47.6
    
    
    
    2,014,809
    
    
    
    48.5Installment loans
    
    
    642,104
    
    
    
    15.4
    
    
    
    621,572
    
    
    
    14.9Total portfolio loans
    
    $
    4,166,900
    
    
    
    100.0
    %
    
    $
    4,157,514
    
    
    
    100.0
    %
 Credit Quality The Company attempts to minimize credit risk in its 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 March 31, 2004, such loans comprised
approximately 98% 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 that are secured by personal
guarantees; and home equity loans with combined first and second mortgages with
loan-to-value ratios of 85% or less. 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 rate of Republic Bank, as well
as fixed rates for terms generally ranging from three to five years. Management
believes that the Companys historically low net charge-offs are reflective of
the emphasis on real estate-secured lending and adherence to conservative
underwriting standards. 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 (Freddie Mac), or for conversion to mortgage-backed
securities issued by the Government National Mortgage Association (GNMA). 13




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##### Table of Contents



Non-Performing Assets Non-performing assets consist of non-accrual loans, restructured loans and
other real estate owned (OREO). OREO represents real estate properties
acquired by the Company through foreclosure or by deed in lieu of foreclosure.
Commercial 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. Residential real estate mortgage loans and
installment loans are placed in non-accrual status at the time the loan is four
scheduled payments past due or 90 days or more past the maturity date of the
loan. 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. When a loan is placed on non-accrual
status, interest accruals cease and any uncollected interest is charged against
current income. Interest subsequently received on non-accrual loans is applied
against the principal balance. The following table summarizes the Companys non-performing assets and 90-day
past due loans: March 31,
    
    December 31,(Dollars in thousands)
    
    2004
    
    2003Non-Performing Assets:Non-accrual loans:Commercial
    
    $
    24,124
    
    
    $
    27,666Residential real estate mortgages
    
    
    11,656
    
    
    
    11,181Installment
    
    
    639
    
    
    
    873Total non-accrual loans
    
    
    36,419
    
    
    
    39,720Other real estate owned
    
    
    3,729
    
    
    
    2,718Total non-performing assets
    
    $
    40,148
    
    
    $
    42,438Non-performing assets as a percentage of:Portfolio loans and OREO
    
    
    .96
    %
    
    
    1.02
    %Portfolio loans, mortgage loans held for
sale and OREO
    
    
    .93
    %
    
    
    .99
    %Total assets
    
    
    .72
    %
    
    
    .79
    %Loans past due 90 days or more and still accruing interest:Commercial
    
    $
    
    
    
    $
    Residential real estate
    
    
    
    
    
    
    Installment
    
    
    
    
    
    
    Total loans past due 90 days or more
    
    $
    
    
    
    $
    
 At March 31, 2004, approximately $16.0 million, or .37% of total loans were
30-89 days delinquent, compared to $28.2 million, or .66%, at December 31,
2003. The Company also maintains a list of potential problem loans (classified
as watch and substandard, but excluding non-accrual and restructured loans)
identified as requiring a higher level of monitoring where known information
about possible borrower credit problems raises serious doubts as to the ability
of such borrowers to comply with the repayment terms. As of March 31, 2004,
total potential problem loans, excluding those categorized as non-accrual
loans, were $30.0 million, or 0.70% of total loans, compared to $30.8 million,
or 0.72% of total loans at December 31, 2003. 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 a level the Company believes is adequate 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. Due to the inherent risks and uncertainties related to the operation of a
financial institution, management must depend on estimates, appraisals and
valuations 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 adversely impacted. During the three months ended March 31, 2004, the Company recorded provision
for loan losses of $2.5 million, a decrease of $500,000 from the comparable
period in 2003. The decrease in the provision was primarily due to a decrease
in net charge-offs during the first quarter of 2004 of $677,000 compared to the
first quarter of 2003. In addition, non-performing assets decreased $2.3
million, or 5%, since December 31, 2003. 14




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##### Table of Contents



Provision and Allowance for Loan Losses (Continued) The following table provides an analysis of the allowance for loan losses: Three Months EndedMarch 31,(Dollars in thousands)
    
    2004
    
    2003Allowance for loan losses:Balance at January 1
    
    $
    40,271
    
    
    $
    36,077Loans charged off
    
    
    (1,835
    )
    
    
    (2,278
    )Recoveries of loans previously charged off
    
    
    620
    
    
    
    386Net charge-offs
    
    
    (1,215
    )
    
    
    (1,892
    )Provision charged to expense
    
    
    2,500
    
    
    
    3,000Balance at March 31
    
    $
    41,556
    
    
    $
    37,185Annualized net charge-offs as a percentage of average loans
(including loans held for sale)
    
    
    .11
    %
    
    
    .18
    %Allowance for loan losses as a percentage of total portfolio loans
outstanding at period-end
    
    
    1.00
    %
    
    
    .96
    %Allowance for loan losses as a percentage of non-performing
loans
    
    
    114.11
    %
    
    
    104.79
    %
 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 (with the exception of residential mortgage and consumer
installment loans) and restructured loans are considered 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. Bank Owned Life Insurance Republic Bank has purchased 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 noninterest income. Off-Balance Sheet Instruments In the normal course of business, the Company becomes a party to transactions
involving financial instruments with off-balance sheet risk to meet the
financing needs of its customers and to manage its own exposure to interest
rate risk. These financial instruments include commitments to extend credit
and standby letters of credit that are not reflected in the consolidated
financial statements. The contractual amounts of these instruments express the
extent of the Companys involvement in these transactions as of the balance
sheet date. These instruments involve, to varying degrees, elements of credit
risk, market risk and liquidity risk in excess of the amount recognized in the
consolidated balance sheets. However, management believes that they do not
represent unusual risks for the Company and management does not anticipate any
significant losses to arise from these transactions. Commitments to extend credit are legally binding agreements to lend cash to a
customer as long as there is no breach of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require the payment of a fee. Standby letters of
credit guarantee the performance of a customer to a third party. The Company
issues these guarantees primarily to support public and private borrowing
arrangements, real estate construction projects, bond financing and similar
transactions. The credit risk associated with commitments to extend credit and standby
letters of credit is essentially the same as that involved with direct lending.
Therefore, these instruments are subject to the Companys loan review and
approval procedures and credit policies. Based upon managements credit
evaluation of the counterparty, the Company may require the counterparty to
provide collateral as security for the agreement, including real estate,
accounts receivable, inventories, and investment securities. The maximum
credit risk associated with these instruments equals their contractual amounts
and assumes that the counterparty defaults and the collateral proves to be
worthless. The total contractual amounts of commitments to extend credit and
standby letters of credit do not necessarily represent future cash
requirements, since many of these agreements may expire without being drawn
upon. The Company has determined the fair value of commitments to extend
credit to be zero. As a result, no liability is recorded for the commitments
to extend credit at March 31, 2004 and December 31, 2003. Deferred revenue
recorded for standby letters of credit was $132,000 and $189,000 at March 31,
2004 and December 31, 2003, respectively. 15




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##### Table of Contents



Off-Balance Sheet Instruments (Continued) The following table presents the contractual amounts of the Companys
off-balance sheet financial instruments outstanding at March 31, 2004 and
December 31, 2003. March 31,
    
    December 31,(In thousands)
    
    2004
    
    2003Financial instruments whose contract amounts represent credit risk:Commitments to fund residential real estate loans
    
    $
    363,756
    
    
    $
    296,978Commitments to fund commercial real estate loans
    
    
    302,057
    
    
    
    306,062Other unused commitments to extend credit, primarily revolving
consumer loans
    
    
    435,918
    
    
    
    421,619Standby letters of credit
    
    
    71,560
    
    
    
    71,834
 Hedging Activities At March 31, 2004, the Company had outstanding $143 million of commitments to
fund residential real estate loan applications with agreed-upon rates
(Interest Rate Lock Commitments or IRLCs). 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
IRLCs at specified future dates to various third parties. At March 31, 2004, the Company had outstanding mandatory forward commitments to
sell $255 million of residential mortgage loans, which includes put options on
10-year treasury futures with a notional amount of $2 million. These mandatory
forward commitments covered $129 million of mortgage loans held for sale and
$126 million of IRLCs. At March 31, 2004, the mortgage loans held for sale
balance included $15 million of loan products for which the Company did not
enter into mandatory forward commitments. The Companys exposure to market
risk was not significantly increased, however, since these loans were committed
to sale to third parties prior to quarter-end. The Company implemented SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities,as amended effective January 1, 2001. For the quarter
ended March 31, 2004, the Companys hedging policies using mandatory forward
commitments and put options on 10-year treasury futures, as they relate to
IRLCs and mortgage loans held for sale, were highly effective. Therefore, the
impact of SFAS 133 on net income was immaterial. The fair value of IRLCs,
mandatory forward commitments and put options was also immaterial at March 31,
2004. LIABILITIES Total liabilities were $5.16 billion at March 31, 2004, a $179 million, or 4%
increase from $4.98 billion at December 31, 2003. This increase was primarily
due to increases in total deposits, short-term borrowings and long-term reverse
repurchase agreements. Deposits Total deposits increased $75 million, or 3%, to $2.89 billion at March 31, 2004
from $2.82 billion at December 31, 2003. Noninterest bearing deposits
increased $17 million, or 7%; savings and money market accounts increased $9
million, or 1%; and certificates of deposit increased $51 million, or 4%, for
the period. Short-Term Borrowings Short-term borrowings with maturities of less than one year, along with the
related average balances and interest rates for the three months ended March
31, 2004 and the year ended December 31, 2003, were as follows: March 31, 2004
    
    December 31, 2003Average
    
    
    
    
    
    
    
    
    
    AverageEnding
    
    Average
    
    Rate During
    
    Ending
    
    Average
    
    Rate During(Dollars in thousands)
    
    Balance
    
    Balance
    
    Period
    
    Balance
    
    Balance
    
    PeriodFederal funds purchased
    
    $
    317,500
    
    
    $
    308,857
    
    
    
    1.08
    %
    
    $
    313,000
    
    
    $
    280,745
    
    
    
    1.21
    %Reverse repurchase agreements
    
    
    242,044
    
    
    
    186,904
    
    
    
    0.94
    
    
    
    177,745
    
    
    
    56,637
    
    
    
    0.91Other short-term borrowings
    
    
    500
    
    
    
    434
    
    
    
    0.78
    
    
    
    500
    
    
    
    339
    
    
    
    0.90Total short-term borrowings
    
    $
    560,044
    
    
    $
    496,195
    
    
    
    1.03
    %
    
    $
    491,245
    
    
    $
    337,721
    
    
    
    1.16
    %
 At March 31, 2004 and December 31, 2003, other short-term borrowings consisted
of treasury, tax and loan (TT&L) demand notes. 16




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##### Table of Contents



Short-Term FHLB Advances Short-term FHLB advances outstanding at March 31, 2004 and December 31, 2003,
were as follows: March 31, 2004
    
    December 31, 2003Average
    
    
    
    
    
    
    
    
    
    AverageEnding
    
    Average
    
    Rate During
    
    Ending
    
    Average
    
    Rate During(Dollars in thousands)
    
    Balance
    
    Balance
    
    Period
    
    Balance
    
    Balance
    
    PeriodShort-term FHLB advances
    
    $
    175,000
    
    
    $
    231,462
    
    
    
    1.25
    %
    
    $
    280,000
    
    
    $
    266,126
    
    
    
    1.38
    %
 Republic Bank routinely borrows short-term advances from the Federal Home Loan
Bank (FHLB) to fund mortgage loans held for sale and a portion of the
investment securities portfolio. These advances are generally secured under a
blanket security agreement by first mortgage loans and investment securities
with an aggregate book value equal to at least 145% of the advances. Long-term FHLB Advances And Reverse Repurchase Agreements Long-term FHLB advances and reverse repurchase agreements outstanding at March
31, 2004 and December 31, 2003, were as follows: March 31, 2004
    
    December 31, 2003Average
    
    
    
    
    
    AverageEnding
    
    Rate At
    
    Ending
    
    Rate At(Dollars in thousands)
    
    Balance
    
    Period-End
    
    Balance
    
    Period-EndLong-term FHLB advances
    
    $
    1,086,794
    
    
    
    5.02
    %
    
    $
    1,090,276
    
    
    
    5.02
    %Long-term reverse repurchase agreements
    
    
    342,450
    
    
    
    2.66
    
    
    
    196,450
    
    
    
    2.67Total
    
    $
    1,429,244
    
    
    
    4.45
    %
    
    $
    1,286,726
    
    
    
    4.66
    %
 Republic Bank routinely utilizes long-term FHLB advances and reverse repurchase
agreements to provide funding to minimize the interest rate risk associated
with certain fixed rate commercial and residential mortgage portfolio loans and
investment securities. The long-term FHLB advances are generally secured under
a blanket security agreement by first mortgage loans and investment securities
with an aggregate book value equal to at least 145% of the advances. The long-term reverse repurchase agreements are secured by certain securities
with a carrying value of $376.7 million. The increase in the long-term reverse
repurchase agreements of $146 million during the first quarter of 2004 was due
to the Company funding approximately 83% of the first quarter purchases of
fixed rate investment securities with reverse repurchase agreements to help
minimize the interest rate risk associated with the securities purchased. The long-term FHLB advances and reverse repurchase agreements have original
maturities ranging from May 2004 to October 2017. CAPITAL Shareholders equity was $386.9 million at March 31, 2004, a $17.5 million, or
5%, increase from $369.4 million at December 31, 2003. This increase in
shareholders equity during the first quarter of 2004 resulted primarily from
net income of $16.3 million, an increase in accumulated other comprehensive
income of $4.7 million and the issuance of shares through the exercise of stock
options, warrants and restricted stock of $2.8 million, offset by $6.1 million
in cash dividends to shareholders and $1.0 million in stock repurchases. The Company is subject to risk-based capital adequacy guidelines that measure
capital relative to risk-weighted assets and off-balance sheet financial
instruments. Capital adequacy guidelines issued by the Federal Reserve Board
require bank holding companies to have a minimum total risk-based capital ratio
of 8.00%, with at least half of total capital in the form of Tier 1, or core
capital. To be considered well-capitalized under the regulatory framework,
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 March 31, 2004, 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: March 31,
    
    December 31,2004
    
    2003Total capital to risk-weighted assets (1)
    
    
    12.99
    %
    
    
    12.85
    %Tier 1 capital to risk-weighted assets (1)
    
    
    11.84
    
    
    
    11.72Tier 1 capital to average assets (1)
    
    
    7.89
    
    
    
    8.04
 (1)   As defined by the regulations. As of March 31, 2004, the Companys total risk-based capital was $469 million
and Tier 1 risk-based capital was $427 million, an excess of $108 million and
$211 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. 17




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##### Table of Contents



ACCOUNTING AND FINANCIAL REPORTING DEVELOPMENTS The Companys consolidated financial statements are prepared based on the
application of accounting policies, the most significant of which are described
in Note 1 to the consolidated financial statements included in the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2003. These
policies require estimates and assumptions which may prove inaccurate or
subject to variations. Changes in underlying factors, assumptions or estimates
could have a material impact on the Companys future financial condition and
results of operations. The most critical of these significant accounting
policies is the policy for the allowance for loan losses. This policy is
discussed more fully on pages 42 and 43 of the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2003. FORWARD-LOOKING STATEMENTS From time to time, the Company may communicate or publish forward-looking
statements relating to such matters as possible or assumed future results of
our operations, anticipated financial performance, business prospects, new
products, and similar matters. These forward-looking statements are subject to
risks and uncertainties. Also, when we use any of the words appropriate,
believes, considers, expects, plans, anticipates, estimates,
seeks, intends, outlook, forecast, target, project, assume,
achievable, potential, strategy, goal, trends, and variations of such
words and similar expressions we are making forward-looking statements. We claim the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995 for all of
our forward-looking statements. We believe that our forward-looking statements
are reasonable. You should not place undue reliance on any such
forward-looking statements, which speak only as of the date made. You should
understand that the following important factors, in addition to those discussed
elsewhere in this Quarterly Report on Form 10-Q, or in our filings with the SEC
(which are accessible on the SECs website at www.sec.gov and on our website at
www.republicbancorp.com), or in our press releases, and in our public documents
to which we refer, could affect our future results and performance. This could
cause those results to differ materially from those expressed in our
forward-looking statements. Factors that might cause such a difference include
the following:  
    
    significantly increased competition from banking and non-banking
institutions;
    
    inflation and changes in the interest rate environment that reduce
our margins or reduce the fair value of financial instruments;
    
    general political, industry and economic conditions, either
domestically or internationally, that are different than expected;
    
    adverse developments concerning credit quality in our business
segments that may result in increases in our provisions for loan losses,
nonperforming assets, net charge-offs and reserve for credit losses and
could cause our earnings to decline;
    
    adverse changes in the securities markets;
    
    legislative or regulatory changes that adversely affect our business;
    
    the ability to enter new markets successfully and capitalize on growth opportunities;
    
    effects of and changes in trade, monetary and fiscal policies and
laws, including interest rate policies of the Federal Reserve board;
    
    timely development of and acceptance of new products and services;
    
    changes in consumer spending, borrowing and savings habits;
    
    effect of changes in accounting policies and practices, as may be
adopted by the bank regulatory agencies, the Financial Accounting
Standards Board or other regulatory agencies;
    
    changes in our organization, compensation and benefit plans;
    
    costs and effects of new litigation or changes in existing litigation
and unexpected or adverse outcomes in such litigation; and
    
    our success in managing risks involved in the foregoing. The Company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such statement is made
to reflect the occurrence of unanticipated events. 18




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##### Table of Contents



ITEM 3: Quantitative and Qualitative Disclosures About Market Risk 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 the amount of interest-bearing
liabilities that are prepaid/withdrawn, reprice or mature in specified periods.
Because the Companys business is subject to many factors beyond its control
(See Forward-Looking Statements on previous page) in managing the Companys
assets and liabilities, and overall exposure to risk, management must rely on
numerous estimates, evaluations and assumptions. Consequently, actual results
could differ materially from those anticipated by management or expressed in
the Companys press releases and public documents. Asset and Liability Management 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. Interest Rate Risk Management 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 at Republic
Bank is responsible for ensuring that the Banks asset and liability management
procedures adhere to corporate policies and risk limits established by their
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. While each of these interest rate risk measurements has limitations,
the Company believes that evaluating these measures together provides a
reasonably comprehensive view of the Companys exposure 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. The Company undertakes this analysis 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. 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 than rates paid on
interest-bearing liabilities. 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 March
31, 2004 the Companys cumulative one-year gap was a positive 9.08% of total
earning assets. The Companys current policy is to maintain a mix of asset and liabilities with
repricing and maturity characteristics that reflect 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 zero to 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. This
range also complements the Companys strong retail mortgage banking franchise. Earnings Simulation Modeling:On a monthly basis, management uses an earnings
simulation model 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 March 31, 2004, the earnings simulation model projects the following
change in net interest income from 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
    
    
    
    -200Change in net interest income over
the next twelve months
    
    
    7.34
    %
    
    
    4.27
    %
    
    
    2.37
    %
    
    
    -2.05
    %
    
    
    -5.20
    %
    
    
    -15.82
    %
 19




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##### Table of Contents



Asset and Liability Management (Continued) 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. Additional quantitative and qualitative disclosures about market risk are
discussed throughout Item 2: Managements Discussion and Analysis of Financial
Condition and Results of Operations beginning on page 9 of this report. 
 ITEM 4: Disclosure Controls and Procedures Internal Controls The Company maintains a system of internal controls that are designed to
provide reasonable assurance that: (i) transactions are executed in accordance
with managements general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with accounting principles generally accepted in the United States,
and to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with managements general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences. 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 internal controls and procedures as of the end of the period covered
by this report (the Evaluation Date). There have been no significant changes
in the Companys internal controls or in other factors that could significantly
affect these controls subsequent to the Evaluation Date. Disclosure Controls And Procedures The Company maintains disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) that are designed to provide reasonable
assurance that the information required to be disclosed in the reports it files
with the SEC is collected and then processed, summarized and disclosed within
the time periods specified in the rules of the SEC. 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 its disclosure controls and
procedures as of the end of the period covered by this report. Based on such
evaluation, the Companys Chief Executive Officer and Chief Financial Officer
have concluded that these procedures are effective. 20




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##### Table of Contents



PART II  OTHER INFORMATION 
 Item 1.
    
    Legal ProceedingsThe Company and its subsidiaries are subject to certain legal actions
and proceedings in the ordinary course of business. Management
believes that the aggregate liability, if any, resulting from such
legal actions would not have a material adverse effect on the Companys
financial condition.
 
 Item 2.
    
    Changes in Securities and Use of ProceedsRepublic Bancorp Inc. Shares Repurchased during the first quarter of 2004 were as follows:
 Total
    
    Average
    
    Shares Purchased
    
    Maximum Shares AvailableShares
    
    Price Paid
    
    as Part of Publicly
    
    to be PurchasedPeriod
    
    Purchased
    
    Per Share
    
    Announced Plans(1)
    
    Under the Plans(1)1/1/04  1/31/04
    
    
    8,000
    
    
    $
    13.84
    
    
    
    8,000
    
    
    
    2,199,8522/1/04  2/29/04
    
    
    57,000
    
    
    
    13.65
    
    
    
    57,000
    
    
    
    2,142,8523/1/04  3/31/04
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,142,852Total First Quarter 2004
    
    
    65,000
    
    
    $
    13.67
    
    
    
    65,000
    
    
    
    2,142,852
 (1) On February 15, 2001, the Board of Directors approved the 2001
Stock Repurchase Program authorizing the repurchase of up to 1,100,000
shares, which was amended in October 2001 to allow for the repurchase
of up to 3,300,00 shares and was further amended in October 2002 to
allow for the repurchase of up to 4,300,000 shares. As of March 31,
2004 no shares were available to repurchase under the 2001 Stock
Repurchase Program. As of December 31, 2003 there were 7,852 shares
available for repurchase under this Program.On July 17, 2003, the Board of Directors approved the 2003 Stock
Repurchase Program authorizing the repurchase of up to 2,200,000
shares. The 2003 Stock Repurchase Program commenced at the conclusion
of the 2001 Stock Repurchase Program. There were 2,142,852 and
2,200,000 shares available for repurchase at March 31, 2004 and
December 31, 2003, respectively.
 
 Item 4.
    
    Submission of Matters to a Vote of Security HoldersRepublic Bancorp Inc. held its 2004 Annual Meeting of Shareholders on
April 28, 2004. The following directors, who constitute the entire
board of directors of Republic Bancorp Inc., were elected at the annual
meeting to serve until the next annual meeting:
 Director
    
    For
    
    AbstentionsJerry D. Campbell
    
    
    54,738,860
    
    
    
    2,579,895Dana M. Cluckey
    
    
    54,703,441
    
    
    
    2,584,715George J. Butvilas
    
    
    54,767,270
    
    
    
    2,581,146Lee E. Benz
    
    
    54,901,215
    
    
    
    2,579,109Mary P. Cauley
    
    
    54,878,336
    
    
    
    2,583,766Richard J. Cramer, Sr.
    
    
    54,673,157
    
    
    
    2,579,109Barry J. Eckhold
    
    
    54,707,219
    
    
    
    2,584,553Gary Hurand
    
    
    54,772,022
    
    
    
    2,579,130Dennis J. Ibold
    
    
    54,779,120
    
    
    
    2,579,815Stanley A. Jacobson
    
    
    54,770,441
    
    
    
    2,579,109John J. Lennon
    
    
    54,781,326
    
    
    
    2,579,257Milton F. Lutz II
    
    
    54,900,705
    
    
    
    2,579,109Sam H. McGoun
    
    
    54,786,515
    
    
    
    2,580,264Kelly E. Miller
    
    
    54,836,725
    
    
    
    2,579,130Randolph P. Piper
    
    
    54,752,831
    
    
    
    2,579,130Dr. Isaac J. Powell
    
    
    54,753,786
    
    
    
    2,579,575William C. Rands III
    
    
    54,803,195
    
    
    
    2,579,575B. Thomas M. Smith, Jr.
    
    
    54,896,717
    
    
    
    2,580,369Dr. Jeoffrey K. Stross
    
    
    54,754,915
    
    
    
    2,579,130Steven E. Zack
    
    
    54,902,861
    
    
    
    2,580,928
 Shareholders also approved the ratification and amendment of the
Directors Compensation Plan. The amendment permits directors who
retire from the Board prior to the mandatory retirement age to receive
a retirement award not to exceed $25,000, payable in stock or in cash.The number of votes cast for and against as well as the number of
abstentions as to the ratification and amendment of the Directors
Compensation Plan are as follows:
 For
    
    Against
    
    AbstainNumber of votes cast:
    
    
    34,425,196
    
    
    
    3,828,329
    
    
    
    310,480
 21




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##### Table of Contents



Item 6.
    
    Exhibits and Reports on Form 8-K
  (a)
    
    Exhibits  (10)
    
    Second amended and restated directors compensation
plan.*(12)
    
    Computations of ratios of earnings to fixed charges.*(31)(a)
    
    Certification of Principal Executive Officer of Republic
Bancorp Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302
of the Sarbanes-Oxley Act of 2002)*(31)(b)
    
    Certification of Principal Financial Officer of Republic
Bancorp Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302
of the Sarbanes-Oxley Act of 2002)*(32)(a)
    
    Certification of the Chief Executive Officer pursuant to 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of
2002).*(32)(b)
    
    Certification of the Chief Financial Officer pursuant to 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of
2002)*  * Filed herewith(b)
    
    Reports on Form 8-KOn January 13, 2004, the Company filed a report on Form 8-K reporting
that the Company released its fourth quarter and year-end results and
held a conference call on January 13, 2004 to discuss the earnings
release. The press release was included as an exhibit.On February 24, 2004, the Company filed a report on Form 8-K
reporting that on February 20, 2004 the Company announced that its
Board of Directors declared a $.095 per share cash dividend to
shareholders of record as of March 12, 2004 and payable April 5,
2004.On February 24, 2004, the Company filed a report on Form 8-K
reporting that Dana M. Cluckey, Republic Bancorps President and
Chief Executive Officer, and Thomas F. Menacher, Executive Vice
President, Treasurer and Chief Financial Officer, made a presentation
on February 24, 2004 at the Midwest 2004 Super-Community Bank
Conference in Chicago, Illinois. The slide show presentation was
included as an exhibit. 22




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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: May 7, 2004
    
    BY:
    
    /s/ Thomas F. MenacherThomas F. Menacher
Executive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
 23




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##### Table of Contents



Exhibit Index  (10)
    
    Second amended and restated directors compensation
plan.*(12)
    
    Computations of ratios of earnings to fixed charges.*(31)(a)
    
    Certification of Principal Executive Officer of Republic
Bancorp Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302
of the Sarbanes-Oxley Act of 2002)*(31)(b)
    
    Certification of Principal Financial Officer of Republic
Bancorp Inc. Pursuant to 15 U.S.C. 78m(a) or 78o(d) (Section 302
of the Sarbanes-Oxley Act of 2002)*(32)(a)
    
    Certification of the Chief Executive Officer pursuant to 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of
2002).*(32)(b)
    
    Certification of the Chief Financial Officer pursuant to 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of
2002)* *Filed herewith