Republic Bancorp 8-K Republic Bancorp Reports Record

 NEWS

www.republicbancorp.com Nasdaq: RBNC

FOR FURTHER INFORMATION:
Thomas F. Menacher	Kristine D. Brenner
Exec.V.P., Treasurer & CFO	Director of Investor Relations
tmenacher@republicbancorp.com	kbrenner@republicbancorp.com
(989) 725-7337	(989) 725-7337

REPUBLIC BANCORP REPORTS RECORD

SECOND QUARTER RESULTS

————————————

Second Quarter 2005 Highlights Include:

·   Record net income of $17.5 million, up 7%

·   Earnings per share of $.25, up 8%

·   Return on equity of 17.00%

·   Total assets exceed $6 billion

·   Non-accrual loans decrease 14%

·   Net charge-off ratio of 12 basis points, well below peer

ANN ARBOR, Michigan—July 14, 2005—Republic Bancorp Inc., (Nasdaq: RBNC), todayannounced record net income for the quarter ended June 30, 2005 of $17,475,000, an increase of 7% over net income of $16,368,000 earned in the second quarter of 2004. Diluted earnings per share were $.25, up 8% from $.23 earned in 2004. Net income generated returns of 1.16% on average assets and 17.00% on average shareholders’ equity for the quarter ended June 30, 2005.

Net income for the six months ended June 30, 2005 was $34,782,000, compared to net income of $32,667,000 earned for the same period in 2004. For the six month period ending June 30, 2005, diluted earnings per share were $.49, an increase of 7% over the $.46 earned in 2004. Annualized returns on average assets and average shareholders’ equity for the first six months of 2005 were 1.17% and 16.88%, respectively.

“We are very pleased to report another record quarter for the Company,” commented Dana M. Cluckey, President and Chief Executive Officer. “Total assets continued to grow exceeding $6 billion, a milestone for the Company. Our balanced business model and focused strategies continue to deliver solid results with strong growth in quality assets and tight control over expenses. The Company also remains in a strong capital position, with Total risk-based capital of 12.5%,” added Mr. Cluckey.

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Results for the second quarter of 2005 reflect solid performance from the Company’s three business lines.

Retail Banking

·   The Company’s installment loan portfolio, primarily home equity loans, grew $81 million, or 12% compared to June 30, 2004.

·   Total deposits during the same period increased $211 million, or 7%.

Commercial Banking

·   The commercial loan portfolio grew $89 million from June 30, 2004, with the commercial real estate mortgage portfolio up 6%. Commercial loan closings were a record $194 million during the second quarter of 2005, up 57% from the second quarter of 2004. Additionally, the Company’s commercial loan pipeline of loans in process continued to increase.

·   SBA loan closings were also strong during the quarter at $15 million, consistent with the second quarter of 2004.

Mortgage Banking

·   During the second quarter of 2005, the Company originated $409 million in single-family residential mortgages, with 40% of these closings being adjustable rate loans. The residential real estate mortgage loan portfolio increased $7 million compared to June 30, 2004. At June 30, 2005, the Company’s mortgage loan pipeline of applications in process was $579 million, an increase of $40 million from March 31, 2005. At June 30, 2005, $152 million of the mortgage loan pipeline represented commitments to fund loan applications with agreed-upon rates, an increase of $8 million over March 31, 2005.

Income Statement

Net interest income increased $2.6 million, or 7%, for the second quarter of 2005 compared to the corresponding period in 2004, due to the growth in average earning assets. For the quarter ended June 30, 2005, the Company’s net interest margin was 2.73%, a decline of 2 basis points from the quarter ended June 30, 2004.

Total noninterest income decreased $3.6 million for the second quarter of 2005 compared to the corresponding period in 2004, due primarily to lower mortgage banking income from lower levels of loan fundings.

Total noninterest expense decreased $2.1 million, or 9%, for the second quarter of 2005 compared to the corresponding period in 2004. The decrease was primarily a result of a decrease of $1.5 million in salaries and employee benefits related to lower employee incentive accruals and a decrease of $601,000 in other noninterest expense primarily reflecting lower residential mortgage closing volume in 2005 compared to 2004.

The Company’s efficiency ratio for the quarter ended June 30, 2005 was 44.01%, which compares favorably to its peer group.

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Asset Quality and Capital

The Company’s asset quality remains very sound. Net charge-offs to total average loans were only 12 basis points for the quarter ended June 30, 2005 and remain substantially below the Company’s peer group. Total non-performing loans decreased $4.5 million, or 14%, from March 31, 2005.

During the second quarter of 2005, the Company repurchased 1,198,500 shares at an average price of $13.79 per share under the 2003 Stock Repurchase Program, which has 78,852 shares available for repurchase at June 30, 2005. In June 2005, the Board of Directors approved the 2005 Stock Repurchase Program authorizing the repurchase of up to 2,000,000 additional shares, or approximately 3% of the shares outstanding. All of the shares under this program are available for repurchase at June 30, 2005.

The Company’s capital ratios continue to be well in excess of the requirements for a well-capitalized bank. At June 30, 2005, the Company’s Total risk-based capital ratio was 12.50% and the Tier 1 leverage ratio was 7.57%.

About the Company

Republic Bancorp Inc., with $6.1 billion in assets, is the third largest bank holding company headquartered in Michigan and the 80^th largest bank holding company in the country. Its subsidiary, Republic Bank, serves customers in Michigan, Ohio and Indiana with 95 retail, commercial and mortgage banking offices and 90 ATMs. Republic has consistently been the #1 Small Business Administration bank lender based in Michigan and one of the Midwest’s top retail mortgage lenders. Republic was named the 3^rd Best Company to Work For by FORTUNE magazine (marking the fifth year on FORTUNE’s “100 Best Companies to Work For”) and named to Working Mother magazine’s list of “100 Best Companies for Working Mothers” for the fourth year in a row.

Information about Republic Bancorp’s financial results and its products and services, including on-line mortgage applications and its Internet banking system, ExpressNet, can be accessed atwww.republicbancorp.com.

Cash Dividend

The Company currently pays an annual cash dividend of $.44 per share, which represents an annual yield of approximately 3% based on the Company’s current stock price.

Safe Harbor Statement

As with any statements other than those reflecting historical facts, forward-looking statements contained in this announcement involve risk, and, as such, future financial performance may differ from current expectations due to a variety of marketplace factors. These factors include, without limitation, those disclosed in Republic Bancorp’s most recent filings on Form 10-K and Form 10-Q with the Securities and Exchange Commission.

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REPUBLIC BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	June 30, 2005			March 31, 2005			Dec. 31, 2004			June 30, 2004
	(Unaudited)			(Unaudited)						(Unaudited)
ASSETS
Cash and cash equivalents	$	55,575		$	54,440		$	53,671		$	60,868
Mortgage loans held for sale		143,589			30,380			105,318			54,836
Securities available for sale		835,285			835,939			620,794			754,632
Securities held to maturity (at cost)		252,527			261,674			222,757			240,081
Loans		4,533,129			4,488,156			4,463,975			4,356,280
Less allowance for loan losses		(41,871	)		(41,855	)		(41,818	)		(43,086	)
Net loans		4,491,258			4,446,301			4,422,157			4,313,194
Federal Home Loan Bank stock (at cost)		80,514			80,514			80,511			80,503
Premises and equipment		25,687			25,630			26,493			27,400
Bank owned life insurance		114,414			113,335			112,978			110,813
Other assets		76,379			75,479			69,298			69,166
Total assets	$	6,075,228		$	5,923,692		$	5,713,977		$	5,711,493
LIABILITIES
Noninterest-bearing deposits	$	308,730		$	287,124		$	274,747		$	294,355
Interest-bearing deposits:
NOW accounts		196,221			194,290			203,553			189,904
Savings and money market accounts		1,000,565			1,070,683			1,103,675			1,065,516
Certificates of deposit under $100,000		704,009			685,134			662,357			665,841
Certificates of deposit $100,000 or greater		825,561			755,515			801,879			608,565
Total interest-bearing deposits		2,726,356			2,705,622			2,771,464			2,529,826
Total deposits		3,035,086			2,992,746			3,046,211			2,824,181
Federal funds purchased and other short-term borrowings		719,775			810,133			538,300			595,147
Short-term FHLB advances		362,500			170,000			215,000			391,000
Long-term FHLB advances and security repurchase agreements		1,434,934			1,432,518			1,390,878			1,411,003
Accrued expenses and other liabilities		63,826			63,347			63,950			58,209
Long-term debt		50,000			50,000			50,000			50,000
Total liabilities		5,666,121			5,518,744			5,304,339			5,329,540
SHAREHOLDERS’ EQUITY
Preferred stock, $25 stated value: $2.25 cumulative
and convertible; 5,000,000 shares authorized,
none issued and outstanding		-			-			-			-
Common stock, $5 par value; 75,000,000 shares
authorized; 69,205,000, 70,274,000, 70,425,000, and 70,439,000 issued and outstanding, respectively		346,026			351,369			352,125			320,177
Capital surplus		47,556			57,578			59,303			53,709
Unearned compensation - restricted stock		(6,323	)		(7,194	)		(3,207	)		(4,197	)
Retained earnings		23,024			13,190			3,634			24,414
Accumulated other comprehensive loss		(1,176	)		(9,995	)		(2,217	)		(12,150	)
Total shareholders’ equity		409,107			404,948			409,638			381,953
Total liabilities and shareholders’ equity	$	6,075,228		$	5,923,692		$	5,713,977		$	5,711,493

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REPUBLIC BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Interest Income
Loans, including fees	$	67,457	$	57,298	$	131,921	$	115,294
Investment securities and FHLB stock dividends		13,280		10,694		24,657		20,517
Total interest income		80,737		67,992		156,578		135,811
Interest Expense
Deposits		16,667		12,667		31,855		25,704
Short-term borrowings		8,325		2,319		13,945		4,337
Long-term FHLB advances and security repurchase agreements		15,919		15,734		31,549		31,544
Long-term debt		1,075		1,075		2,150		2,150
Total interest expense		41,986		31,795		79,499		63,735
Net interest income		38,751		36,197		77,079		72,076
Provision for loan losses		1,400		2,000		2,900		4,500
Net interest income after provision for loan losses		37,351		34,197		74,179		67,576
Noninterest Income
Service charges		3,008		3,005		5,689		5,702
Mortgage banking income		3,232		6,566		9,057		11,740
Gain on sale of securities		292		674		727		1,362
Gain on sale of SBA loans		561		665		953		1,186
Income from bank owned life insurance		1,080		1,180		2,093		2,483
Other noninterest income		713		428		1,405		859
Total noninterest income		8,886		12,518		19,924		23,332
Noninterest Expense
Salaries and employee benefits		12,350		13,835		25,766		25,924
Occupancy expense of premises		2,495		2,476		5,196		5,095
Equipment expense		1,599		1,652		3,223		3,326
Other noninterest expense		4,815		5,416		9,946		10,056
Total noninterest expense		21,259		23,379		44,131		44,401
Income before income taxes		24,978		23,336		49,972		46,507
Provision for income taxes		7,503		6,968		15,190		13,840
Net income	$	17,475	$	16,368	$	34,782	$	32,667
Basic earnings per share	$	.25	$	.23	$	.50	$	.46
Diluted earnings per share	$	.25	$	.23	$	.49	$	.46

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(In thousands, except operating data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Operating Data (in millions):
Residential mortgage loan closings:
Fixed rate	$	246		$	298		$	449		$	540
Adjustable rate		163			321			305			504
Total residential mortgage loan closings	$	409		$	619		$	754		$	1,044
Conventional loans	$	217		$	311		$	411		$	519
Government loans		35			44			65			96
Construction loans		57			76			91			117
Jumbo and other loans		100			188			187			312
Total residential mortgage loan closings	$	409		$	619		$	754		$	1,044
Refinances (percent of total)		33	%		44	%		39	%		45	%
Performance Ratios (annualized for the quarter):
Return on average assets		1.16	%		1.17	%		1.17	%		1.18	%
Return on average equity		17.00	%		17.11	%		16.88	%		17.13	%
Net interest margin		2.73	%		2.75	%		2.76	%		2.79	%
Efficiency ratio(1)		44.01	%		47.64	%		45.00	%		46.22	%
Per Common Share Data:
Average common shares outstanding - diluted		70,526			71,239			70,862			71,161
Cash dividends declared	$	.11		$	.086		$	.22		$	.173
Book value	$	5.91		$	5.42		$	5.91		$	5.42
Tangible book value	$	5.84		$	5.35		$	5.84		$	5.35

	June 30,			Mar. 31,			Dec. 31,			June 30,
	2005			2005			2004			2004
Capital Ratios:
Shareholders’ equity to assets		6.73	%		6.84	%		7.20	%		6.69	%
Tier 1 risk-based capital		11.38	%		11.83	%		11.87	%		11.77	%
Total risk-based capital		12.50	%		12.98	%		12.96	%		12.92	%
Tier 1 leverage		7.57	%		7.91	%		7.94	%		7.82	%

⁽¹⁾ Includes total noninterest expense, divided by total revenue (FTE), excluding gain on sale of securities.

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(Dollars in thousands)

	Three Months Ended								Three Months Ended
	June 30, 2005								June 30, 2004
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
Average Assets:
Short-term investments	$	782		$	4		2.04	%	$	903		$	1		0.65	%
Mortgage loans held for sale		78,096			1,158		5.93			127,606			1,754		5.50
Securities available for sale:
Taxable		634,758			7,337		4.62			515,753			5,010		3.90
Tax-exempt		225,589			3,078		5.47			224,844			3,207		5.72
Securities held to maturity		257,529			2,970		4.61			236,784			2,654		4.48
Portfolio loans:
Commercial loans		1,613,861			26,113		6.40			1,544,344			21,206		5.43
Residential real estate mortgage loans		2,172,126			28,459		5.24			2,014,715			25,684		5.10
Installment loans		747,193			11,727		6.30			656,756			8,654		5.28
Total loans, net of unearned income		4,533,180			66,299		5.83			4,215,815			55,544		5.25
FHLB stock		80,709			855		4.25			80,721			852		4.23
Total interest-earning assets		5,810,643			81,701		5.61			5,402,426			69,022		5.10
Allowance for loan losses		(41,986	)							(42,615	)
Cash and due from banks		46,963								56,025
Other assets		210,222								196,882
Total assets	$	6,025,842							$	5,612,718

Average Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits	$	199,899	$	231	0.46	%	$	191,335	$	131	0.27	%
Savings and money market accounts		997,596		4,035	1.62			1,056,628		3,189	1.21
Certificates of deposit under $100,000		696,431		5,328	3.07			675,236		5,021	2.98
Certificates of deposit $100,000 or greater		836,569		7,073	3.39			658,912		4,326	2.63
Total interest-bearing deposits		2,730,495		16,667	2.45			2,582,111		12,667	1.97
Short-term borrowings		1,076,191		8,325	3.06			854,019		2,319	1.07
Long-term FHLB advances and security repurchase agreements		1,429,282		15,919	4.41			1,421,560		15,734	4.38
Long-term debt		50,000		1,075	8.60			50,000		1,075	8.60
Total interest-bearing liabilities		5,285,968		41,986	3.16			4,907,690		31,795	2.58
Noninterest-bearing deposits		286,356						283,691
Other liabilities		42,342						38,708
Total liabilities		5,614,666						5,230,089
Shareholders’ equity		411,176						382,629
Total liabilities and shareholders’ equity	$	6,025,842					$	5,612,718
Net interest income/rate spread (FTE)			$	39,715	2.45	%			$	37,227	2.52	%
FTE adjustment			$	964					$	1,030
Impact of noninterest- bearing sources of funds					0.28	%					0.23	%
Net interest margin (FTE)					2.73	%					2.75	%

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(Dollars in thousands)

	Six Months Ended								Six Months Ended
	June 30, 2005								June 30, 2004
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
Average Assets:
Short-term investments	$	1,421		$	13		1.77	%	$	671		$	2		0.68	%
Mortgage loans held for sale		95,767			2,820		5.89			110,225			3,128		5.68
Securities available for sale:
Taxable		582,619			13,318		4.55			488,668			9,513		3.90
Tax-exempt		212,788			5,779		5.48			217,422			6,286		5.80
Securities held to maturity		246,181			5,661		4.60			212,724			4,825		4.54
Portfolio loans:
Commercial loans		1,600,064			50,583		6.29			1,535,407			42,323		5.45
Residential real estate mortgage loans		2,146,300			55,965		5.21			2,021,182			52,770		5.22
Installment loans		741,881			22,553		6.13			642,868			17,073		5.33
Total loans, net of unearned income		4,488,245			129,101		5.75			4,199,457			112,166		5.32
FHLB stock		80,710			1,681		4.20			80,727			1,909		4.74
Total interest-earning assets		5,707,731			158,373		5.55			5,309,894			137,829		5.18
Allowance for loan losses		(41,875	)							(41,769	)
Cash and due from banks		49,046								54,154
Other assets		208,535								192,962
Total assets	$	5,923,437							$	5,515,241

Average Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits	$	200,189	$	452	0.46	%	$	187,539	$	255	0.27	%
Savings and money market accounts		1,040,631		8,244	1.60			1,048,983		6,656	1.27
Certificates of deposit under $100,000		685,026		10,206	3.00			677,421		10,170	3.01
Certificates of deposit $100,000 or greater		809,395		12,953	3.23			663,572		8,623	2.61
Total interest-bearing deposits		2,735,241		31,855	2.35			2,577,515		25,704	2.00
Short-term borrowings		985,279		13,945	2.81			790,838		4,337	1.08
Long-term FHLB advances and security repurchase agreements		1,420,863		31,549	4.42			1,408,890		31,544	4.43
Long-term debt		50,000		2,150	8.60			50,000		2,150	8.60
Total interest-bearing liabilities		5,191,383		79,499	3.06			4,827,243		63,735	2.63
Noninterest-bearing deposits		278,231						269,031
Other liabilities		41,710						37,609
Total liabilities		5,511,324						5,133,883
Shareholders’ equity		412,113						381,358
Total liabilities and shareholders’ equity	$	5,923,437					$	5,515,241
Net interest income/rate spread (FTE)			$	78,874	2.49	%			$	74,094	2.55	%
FTE adjustment			$	1,795					$	2,018
Impact of noninterest- bearing sources of funds					0.27	%					0.24	%
Net interest margin (FTE)					2.76	%					2.79	%

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(Dollars in thousands)

	June 30,		March 31,		Dec. 31,		June 30,
	2005		2005		2004		2004
Portfolio Loan Summary:
Commercial loans:
Commercial and industrial	$	29,753	$	31,159	$	32,632	$	40,292
Commercial real estate mortgage		1,612,718		1,565,291		1,542,660		1,512,948
Total commercial loans		1,642,471		1,596,450		1,575,292		1,553,240
Residential real estate mortgages		2,137,046		2,149,917		2,152,720		2,130,310
Installment loans		753,612		741,789		735,963		672,730
Total portfolio loans	$	4,533,129	$	4,488,156	$	4,463,975	$	4,356,280

Non-performing assets:
Non-accrual loans:
Commercial	$	14,550	$	18,705	$	17,744	$	22,889
Residential real estate mortgage		12,202		12,560		10,705		11,476
Installment		1,100		1,095		852		1,070
Total non-accrual loans		27,852		32,360		29,301		35,435
Restructured loans		-		-		-		-
Other real estate owned		8,917		5,163		4,160		3,854
Total non-performing assets	$	36,769	$	37,523	$	33,461	$	39,289

Allowance for Loan Losses (for the quarter):
Balance at beginning of period	$	41,855	$	41,818	$	44,167		$	41,556
Loans charged off:
Commercial		907		579		753			1,131
Residential real estate mortgage		719		594		379			391
Installment		270		527		386			397
Total charge-offs		1,896		1,700		1,518			1,919
Recoveries:
Commercial		242		63		17			1,235
Residential real estate mortgage		17		-		35			-
Installment		253		174		184			214
Total recoveries		512		237		236			1,449
Net charge-offs		1,384		1,463		1,282			470
Provision charged to expense		1,400		1,500		1,750			2,000
Reclassification of allowance for loan losses
on unfunded loan commitments(1)		-		-		(2,817	)		-
Balance at end of period	$	41,871	$	41,855	$	41,818		$	43,086

⁽¹⁾ During the fourth quarter of 2004, the Company reclassified $2.8 million of its allowance for loan losses to a separate allowance for probable credit losses inherent in unfunded loan commitments. Net income and prior period balances were not affected by this reclassification. The separate allowance is included in “accrued expenses and other liabilities”.

Page 10

REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(Dollars in thousands)

	June 30,			March 31,			Dec. 31,			June 30,
	2005			2005			2004			2004
Asset Quality Ratios:
Non-performing assets to loans and
other real estate owned		.81	%		.84	%		.75	%		.90	%
Non-performing assets to total assets		.61	%		.63	%		.59	%		.69	%
Allowance for loan losses
to non-performing loans		150.33	%		129.34	%		142.72	%		121.59	%
Allowance for loan losses to loans		.92	%		.93	%		.94	%		.99	%
Allowance for loan losses to loans (excluding
residential real estate mortgages)		1.75	%		1.79	%		1.81	%		1.94	%
Net charge-offs to average loans:(1)
Commercial loans		.16	%		.13	%		.19	%		(.03	%)
Residential real estate mortgage loans		.13	%		.11	%		.06	%		.08	%
Installment loans		.01	%		.19	%		.11	%		.11	%
Total loans		.12	%		.13	%		.11	%		.04	%

⁽¹⁾ Quarter-to-date, annualized.