Republic Bank & Trust

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Republic Bancorp, Inc. is pleased to report net income of $8.4 million for the second quarter of 2010, a $1.5 million increase over the second quarter of 2009. Diluted Earnings per Class A Common Share increased to $0.40 for the quarter. For the first six months of 2010, the Company achieved net income of $53.0 million, a $20.4 million, or 63%, increase over the first six months of 2009. Diluted Earnings per Class A Common Share increased 62% for the first six months of 2010 to $2.54. Return on average assets (“ROA”) and return on average equity (“ROE”) were 2.80% and 30.15% for the six months ended June 30, 2010.

Steve Trager, Republic’s President & CEO noted, “We are extremely proud of our continued strong performance in what remains a difficult economic environment. During the quarter, we were again recognized by a national publication for our continued strong performance. In May, the Company was rated a top 10 performing bank in the 18th annual ranking of the nation’s top financial institutions with assets of $3 billion or more in the American Bankers Association’s Banking Journal. With the best start in our Company’s history through the first six months of this year, we have a tremendous jump on our goal of achieving a top 10 status for 2010 as well.”

Republic Bancorp, Inc. (“Republic” or the “Company”) (NASDAQ: RBCAA), headquartered in Louisville, Kentucky, is the holding company for Republic Bank & Trust Company and Republic Bank.

The following chart highlights Republic’s results of operations for the second quarter and first six months of 2010 compared to the same periods in 2009:

Results of Operations for the Second Quarter of 2010 Compared to the Second Quarter of 2009

Traditional Banking and Mortgage Banking (collectively “Core Banking”)

Net income from Core Banking was $4.2 million for the second quarter of 2010, a $1.6 million decrease from the second quarter of 2009, as the Company continued to position its balance sheet for the future by conservatively investing its growing core deposits into cash-like instruments while building the allowance for loan losses to reflect the current economic environment. “Second quarter core bank performance evidences our successful efforts in growing our core deposit relationships. During the quarter, we grew our core transaction account balances by $71 million. While the short-term cost of generating these excess deposits greatly impacts our current income, it is expected that these deposit relationships will provide a favorable long-term funding source, as we continue to benefit from the market’s comfort with Republic as a safe and secure place for hard earned deposit dollars,” further commented Trager.

While Republic’s Core Banking net interest margin was a healthy 3.65% for the second quarter of 2010, net interest income declined by $791,000, or 3%, during the quarter. “Our continued strong earnings and overall capital strength have allowed us to remain conservative in our lending and investing strategies, generally reinvesting much of our excess cash into lower-yielding, immediately repricing investment instruments. While this strategy continues to negatively impact our current net interest income, it has significantly improved our risk position in the event of a rising interest rate environment. In addition to the Company’s conservative investment strategies, decreased demand for adjustable rate residential loans that the Company retains in its portfolio, combined with continued deleveraging by consumers and small business owners have also contributed to a decrease in loan balances within the Traditional Banking segment,” noted Trager.

Core Banking non-interest income decreased by $1.4 million during the second quarter of 2010 to $7.2 million, with the largest decrease of $2.1 million occurring within the Company’s mortgage banking income category. Despite interest rates at or near record low levels during the second quarter of 2010, overall consumer demand for fixed rate secondary market loan products remained modest due to the many qualified homeowners who have already refinanced their existing mortgage loans. In addition, on-going weakness in the home purchase market continued to negatively impact secondary market loan volume. The Company was able to partially offset the decline in mortgage banking revenue resulting from lower volume by increasing mortgage loan closing costs as Republic remains a preferred lender in its markets.

In other Core Banking non-interest income line items, service charges on deposits declined $1.0 million. The primary driver in this decrease was the discontinuation of the Company’s Currency Connection product, which accounted for approximately $715,000 of the decline in service charges on deposits. Partially offsetting the decline in mortgage banking income and service charges on deposits during the second quarter was a $1.8 million decrease in Other-Than-Temporary-Impairment (“OTTI”) charges associated with the Company’s small private label security portfolio.

Core Banking non-interest expenses declined $953,000, or 4%, for the second quarter of 2010 to $23.2 million. The decrease in non-interest expense was primarily driven by lower FDIC insurance costs, as the Company paid a $1.4 million special assessment during the second quarter of 2009. Excluding the FDIC special assessment, non interest expense increased $447,000, or 2%, for the second quarter.

Core Banking provision for loan losses for the second quarter of 2010 was $5.0 million, a $1.5 million increase over the second quarter of 2009. All of the increase in the provision for the quarter was within the Company’s Florida bank, as this market continues to experience declining property values. Non-performing loans favorably declined nearly $6 million since year end and $2.3 million from March 31, 2010 to $38 million at June 30, 2010. The Traditional Bank’s delinquency ratio improved 26 basis points from year end and 6 basis points from March 31, 2010 to 1.72% at June 30, 2010. Charge-offs within the Traditional Banking segment continued to trend higher during the first six months of 2010. As a result of the on-going volatility in the economic environment, the Company increased its Traditional Bank’s allowance for loan losses during the quarter to 1.21% of total loans, compared to 1.01% at December 31, 2009 and 1.07% at March 31, 2010.

Tax Refund Solutions (“TRS”)

TRS net income was $4.2 million for the second quarter of 2010, an increase of $3.1 million over the same quarter in 2009. The increase in TRS net income versus the second quarter of 2009 was primarily driven by higher volume of Electronic Refund Check (“ERC”) products. TRS net income was also significantly impacted during the second quarter of 2010 by better-than-projected paydowns in outstanding Refund Anticipation Loans (“RALs”) subsequent to March 31, 2010. As a result, the Company recorded a net credit of $2.0 million to its provision for loan losses during the second quarter of 2010 compared to a net credit of $1.8 million in the second quarter of 2009.

CONCLUSION

“As we look ahead to the second half of 2010, our primary focus will remain on continuing to improve our credit quality ratios, while cautiously deploying our cash into assets with the long-term horizon in mind. With our strong capital position, we will continue to resist the temptation of realizing short-term rewards that come with long-term risks. With stockholder’s equity of $366 million and a Tier I Capital ratio more than double the ratio needed to be considered ‘well capitalized’ in the industry, Republic Bancorp remains a safe and sound bank for its deposit clients and a solid long-term investment for its shareholders - giving further credence to our slogan, ‘we were here for you yesterday, we are here for you today, and we will be here for you tomorrow,^®’” concluded Steve Trager.

Republic Bancorp, Inc. (Republic) has 44 banking centers and is the parent company of Republic Bank & Trust Company with 35 banking centers in 13 Kentucky communities - Bowling Green, Covington, Crestwood, Elizabethtown, Florence, Frankfort, Georgetown, Independence, Lexington, Louisville, Owensboro, Shelbyville and Shepherdsville and three banking centers in southern Indiana – Floyds Knobs, Jeffersonville and New Albany. Republic Bank has banking centers in Hudson, Palm Harbor, Port Richey, New Port Richey and Temple Terrace, Florida as well as Cincinnati, Ohio. Republic operates Tax Refund Solutions, a nationwide tax refund loan and check provider. Republic offers internet banking at www.republicbank.com. Republic has $3.1 billion in assets and $1 billion in trust assets under custody and management. Republic is headquartered in Louisville, Kentucky, and Republic's Class A Common Stock is listed under the symbol 'RBCAA' on the NASDAQ Global Select Market.

We were here for you yesterday. We are here for you today. We will be here for you tomorrow. ^®

Statements in this press release relating to Republic’s plans, objectives, or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations. Republic's actual strategies and results in future periods may differ materially from those currently expected due to various risks and uncertainties, including those discussed in Republic’s 2009 Form 10-K and subsequent 10-Qs filed with the Securities and Exchange Commission.

Segment Data:

The reportable segments are determined by the type of products and services offered, distinguished between Traditional Banking, Mortgage Banking and Tax Refund Solutions (“TRS”). They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business (such as branches and subsidiary banks), which are then aggregated if operating performance, products/services, and customers are similar. Loans, investments and deposits provide the majority of the net revenue from Traditional Banking operations; servicing fees and loan sales provide the majority of revenue from Mortgage Banking operations; RAL fees and ERC/ERD fees provide the majority of the revenue from TRS. All Company operations are domestic. Segment information for the three and six months ended June 30, 2010 and 2009 follows:

Source: Republic Bancorp, Inc.

Republic Bancorp, Inc.

Kevin Sipes, 502-560-8628

Executive Vice President and Chief Financial Officer