Republic Bancorp 8-K Fourth Quarter Results and Record Earnings In 2005

 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

FOURTH QUARTER RESULTS AND RECORD EARNINGS IN 2005

————————————

2005 Highlights Include:

·   Record net income of $69.2 million

·   Earnings per share of $.90, up 6%

·   Return on equity of 16.90%

·   Commercial loan growth of 8%

·   Efficiency ratio of 46.85%, well below peer

ANN ARBOR, Michigan—January 17, 2006—Republic Bancorp Inc., (Nasdaq: RBNC), today announced record net income for the year ended December 31, 2005 of $69,181,000, compared to net income of $66,684,000 earned in 2004. Diluted earnings per share were $.90, up 6% from $.85 earned in 2004. Net income generated returns of 1.15% on average assets and 16.90% on average shareholders’ equity for the year ended December 31, 2005.

“We are very pleased to report another year of record income for Republic,” commented Dana M. Cluckey, President and Chief Executive Officer. “The Company’s three business lines all contributed to our profitability and growth and worked well together to serve our customers. Our return on equity of approximately 17% continues to be well in excess of our peer group (the largest 51-100 bank holding companies in the country).”

“As we announced last week, we are also very proud to be recognized again as one of America’s 100 Best Companies to Work For by FORTUNE and ranking as the 17^th Best Company to Work For and the top rated bank in the country. As a company, we firmly believe in individual recognition and providing our employees the opportunity for financial and professional growth. All of our employees are shareholders of the Company and we believe that motivated employees will deliver exceptional service to our customers, resulting in increased value for our shareholders,” added Mr. Cluckey.

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Net income for the fourth quarter was $17,177,000, compared to net income of $16,804,000 earned for the same period in 2004. Diluted earnings per share were $.23, an increase of 6% over the $.21 earned in 2004. Annualized returns on average assets and average shareholders’ equity for the fourth quarter 2005 were 1.13% and 16.95%, respectively.

Results for 2005 reflect solid loan closings from each of the Company’s three business lines. The Commercial Banking division had a record $696 million of loan closings, up 23% compared to 2004. Additionally, the commercial division had SBA loan closings of $46 million during 2005. The Company’s commercial loan portfolio grew $123 million to $1.7 billion, or 8% over 2004.

The Retail Banking division had consumer loan closings of $428 million during 2005, primarily home equity lines of credit and term loans. Total retail deposits grew $48 million, or 2% compared to December 31, 2004.

During 2005, the Mortgage Banking division originated $1.5 billion of single family residential mortgages, with 38% of these loan closings being adjustable rate loans. At December 31, 2005, the Company’s mortgage loan pipeline of applicants in process was $303 million.

Income Statement

Net interest income increased $4.2 million, or 3%, for the year ended December 31, 2005 compared to 2004. The increase was primarily the result of a 6% increase in average earning assets for the year. For the quarter and year ended December 31, 2005, the Company’s net interest margin was 2.71% and 2.73%, respectively.

Total noninterest income, excluding mortgage banking income, was $24.6 million for the year ended December 31, 2005, which was consistent with 2004. Other noninterest income for the quarter ended December 31, 2005 includes gains totaling $513,000 from the sale of $16.8 million of consumer loans, as the Company sold higher loan to value loans to manage credit risk in its consumer loan portfolio. Also, during the quarter ended December 31, 2005 and included in other noninterest income, the Company realized proceeds of $516,000 from the demutualization of an insurance company that provided annuity contracts to D&N Bank. An additional $568,000 of proceeds from the sale of the stock is reflected in gain on sale of securities for the quarter ended December 31, 2005.

Mortgage banking income for the year ended December 31, 2005 was $18.7 million, a decrease of 18% from 2004. The decrease was primarily a result of a 17% decrease in mortgage loan sales. Mortgage banking income for the quarter ended December 31, 2005, includes a gain on sale of mortgage servicing rights of $999,000. During the quarter, the Company sold $536 million of mortgage loans serviced for others, of which 52% were mortgage servicing rights originated by the Company during 2005.

Total noninterest expense decreased $814,000, or 1%, for the year ended December 31, 2005 compared to 2004. The decrease was a result of a decrease of $1.3 million in other noninterest expense primarily reflecting lower voice and data communication expenses and other miscellaneous expenses.

The Company’s efficiency ratio for the year ended December 31, 2005 was 46.85%, which compares very favorably to our peer group.

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Asset Quality and Capital

Net charge-offs to total average loans were 12 basis points for the year ended December 31, 2005 and remain substantially below the Company’s peer group. Total non-accrual loans increased $19 million from December 31, 2004, due primarily to increases in commercial loans and residential real estate mortgage loans.

For the year ended December 31, 2005, 3,037,500 shares were repurchased under the Company’s 2003 and 2005 Stock Repurchase Programs. During the fourth quarter of 2005, the Company repurchased 409,000 shares at an average price of $12.67 per share and has 1,062,852 shares available for repurchase at December 31, 2005.

The Company’s capital ratios continue to be well in excess of the requirements for a well-capitalized bank. At December 31, 2005, the Company’s Total risk-based capital ratio was 12.32% 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 81^st 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 17^th Best Company to Work For by FORTUNE magazine (marking the 6^th year on FORTUNE’s “100 Best Companies to Work For” list) and named to Working Mother magazine’s list of “100 Best Companies for Working Mothers” for the fifth year in a row.

Information about Republic Bancorp Inc.’s financial results and its products and services, including on-line banking and mortgage applications can be accessed at www.republicbancorp.com.

Cash Dividend

The Company currently pays an annual cash dividend of $.44 per share, which represents an annual yield of approximately 3.6% 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)

	Dec. 31, 2005			Sept. 30, 2005			June 30, 2005			Dec. 31, 2004
				(Unaudited)			(Unaudited)
ASSETS
Cash and cash equivalents	$	52,527		$	68,395		$	55,575		$	53,671
Mortgage loans held for sale		38,259			91,844			143,589			105,318
Securities available for sale		862,690			831,820			835,285			620,794
Securities held to maturity (at cost)		227,304			237,059			252,527			222,757
Loans		4,628,258			4,585,988			4,533,129			4,463,975
Less allowance for loan losses		(42,122	)		(41,946	)		(41,871	)		(41,818	)
Net loans		4,586,136			4,544,042			4,491,258			4,422,157
Federal Home Loan Bank stock (at cost)		80,525			80,521			80,514			80,511
Premises and equipment		26,586			26,690			25,687			26,493
Bank owned life insurance		116,519			115,498			114,414			112,978
Other assets		91,220			85,613			76,379			69,298
Total assets	$	6,081,766		$	6,081,482		$	6,075,228		$	5,713,977
LIABILITIES
Noninterest-bearing deposits	$	284,932		$	295,124		$	308,730		$	274,747
Interest-bearing deposits:
NOW accounts		187,190			184,476			196,221			203,553
Savings and money market accounts		932,048			977,221			988,449			1,100,333
Retail certificates of deposit		1,102,188			1,049,334			1,013,567			879,361
Wholesale deposits		636,585			708,452			528,119			588,217
Total interest-bearing deposits		2,858,011			2,919,483			2,726,356			2,771,464
Total deposits		3,142,943			3,214,607			3,035,086			3,046,211
Federal funds purchased and other short-term borrowings		709,300			641,200			719,775			538,300
Short-term FHLB advances		218,000			190,000			362,500			215,000
Long-term FHLB advances and security repurchase agreements		1,489,432			1,515,877			1,434,934			1,390,878
Accrued expenses and other liabilities		67,632			64,570			63,826			63,950
Long-term debt		50,000			50,000			50,000			50,000
Total liabilities		5,677,307			5,676,254			5,666,121			5,304,339
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; 100,000,000 shares
authorized; 74,976,000, 75,309,000, 76,126,000, and 77,468,000 issued and outstanding, respectively		374,882			342,315			346,026			352,125
Capital surplus		41,491			40,030			47,556			59,303
Unearned compensation - restricted stock		(4,770	)		(5,623	)		(6,323	)		(3,207	)
Retained earnings		3,114			32,692			23,024			3,634
Accumulated other comprehensive loss		(10,258	)		(4,186	)		(1,176	)		(2,217	)
Total shareholders’ equity		404,459			405,228			409,107			409,638
Total liabilities and shareholders’ equity	$	6,081,766		$	6,081,482		$	6,075,228		$	5,713,977

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REPUBLIC BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

	Three Months Ended				Year Ended
	December 31,				December 31,
	2005		2004		2005		2004
Interest Income
Loans, including fees	$	73,381	$	64,413	$	275,858	$	241,049
Investment securities and FHLB stock dividends		12,890		9,864		50,342		41,330
Total interest income		86,271		74,277		326,200		282,379
Interest Expense
Deposits		21,737		14,451		72,710		53,179
Short-term borrowings		8,823		3,954		31,915		12,237
Long-term FHLB advances and security repurchase agreements		15,759		15,723		63,239		62,813
Long-term debt		1,075		1,075		4,300		4,300
Total interest expense		47,394		35,203		172,164		132,529
Net interest income		38,877		39,074		154,036		149,850
Provision for loan losses		1,500		1,750		5,800		8,500
Net interest income after provision for loan losses		37,377		37,324		148,236		141,350
Noninterest Income
Service charges		3,155		2,841		12,162		11,514
Mortgage banking income		4,856		6,441		18,673		22,739
Gain on sale of securities		611		497		1,785		2,461
Gain on sale of SBA loans		889		1,230		2,470		3,816
Income from bank owned life insurance		1,033		1,095		4,209		4,648
Other noninterest income		1,825		1,034		4,005		2,141
Total noninterest income		12,369		13,138		43,304		47,319
Noninterest Expense
Salaries and employee benefits		16,427		16,862		57,530		56,819
Occupancy expense of premises		2,672		2,584		10,471		10,243
Equipment expense		1,460		1,677		6,248		6,675
Other noninterest expense		4,673		5,203		19,012		20,338
Total noninterest expense		25,232		26,326		93,261		94,075
Income before income taxes		24,514		24,136		98,279		94,594
Provision for income taxes		7,337		7,332		29,098		27,910
Net income	$	17,177	$	16,804	$	69,181	$	66,684
Basic earnings per share	$	.23	$	.22	$	.91	$	.86
Diluted earnings per share	$	.23	$	.21	$	.90	$	.85

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(In thousands, except operating data)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2005			2004			2005			2004
Operating Data (in millions):
Residential mortgage loan closings:
Fixed rate	$	210		$	214		$	950		$	978
Adjustable rate		127			230			576			979
Total residential mortgage loan closings	$	337		$	444		$	1,526		$	1,957
Conventional loans	$	158		$	214		$	785		$	945
Government loans		26			44			133			190
Construction loans		43			65			190			255
Jumbo and other loans		110			121			418			567
Total residential mortgage loan closings	$	337		$	444		$	1,526		$	1,957
Refinances (percent of total)		41	%		38	%		39	%		40	%
Mortgage loan sales	$	240		$	364		$	1,015		$	1,220
Commercial loan closings:
Commercial loans	$	197		$	151		$	696		$	564
SBA loans		11			13			46			53
Total commercial loan closings	$	208		$	164		$	742		$	617
Consumer loan closings:	$	100		$	107		$	428		$	498
Performance Ratios (annualized for the quarter):
Return on average assets		1.13	%		1.17	%		1.15	%		1.18	%
Return on average equity		16.95	%		16.44	%		16.90	%		17.03	%
Net interest margin		2.71	%		2.88	%		2.73	%		2.83	%
Efficiency ratio (1)		49.03	%		50.00	%		46.85	%		47.34	%
Per Common Share Data:
Average common shares outstanding - diluted		75,853			78,567			77,074			78,401
Cash dividends declared	$	.11		$	.10		$	.41		$	.348
Book value	$	5.39		$	5.29		$	5.39		$	5.29
Tangible book value	$	5.34		$	5.22		$	5.34		$	5.22

	Dec. 31,			Sept. 30,			June 30,			Dec. 31,
	2005			2005			2005			2004
Capital Ratios:
Shareholders’ equity to assets		6.65	%		6.66	%		6.73	%		7.17	%
Tier 1 risk-based capital		11.24	%		11.18	%		11.38	%		11.87	%
Total risk-based capital		12.32	%		12.27	%		12.50	%		12.96	%
Tier 1 leverage		7.57	%		7.52	%		7.57	%		7.94	%

⁽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
	December 31, 2005								December 31, 2004
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
Average Assets:
Short-term investments	$	912		$	10		4.54	%	$	689		$	3		1.42	%
Mortgage loans held for sale		67,306			1,014		6.02			143,697			2,091		5.82
Securities available for sale:
Taxable		643,608			7,581		4.71			427,399			4,476		4.19
Tax-exempt		203,611			2,644		5.15			206,777			2,881		5.47
Securities held to maturity		233,391			2,673		4.58			227,877			2,613		4.59
Portfolio loans:
Commercial loans		1,702,473			30,225		6.95			1,570,694			23,575		5.87
Residential real estate mortgage loans		2,168,307			28,987		5.35			2,162,544			28,422		5.26
Installment loans		755,571			13,155		6.91			726,132			10,325		5.64
Total loans, net of unearned income		4,626,351			72,367		6.19			4,459,370			62,322		5.54
FHLB stock		80,521			813		4.01			80,733			829		4.07
Total interest-earning assets		5,855,700			87,102		5.90			5,546,542			75,215		5.38
Allowance for loan losses		(41,999	)							(44,749	)
Cash and due from banks		49,600								56,550
Other assets		226,649								198,569
Total assets	$	6,089,950							$	5,756,912

Average Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits	$	183,100	$	241	0.52	%	$	201,091	$	194	0.38	%
Savings and money market accounts		962,045		5,046	2.08			1,088,437		3,877	1.42
Retail certificates of deposit		1,076,896		9,454	3.48			876,857		6,770	3.06
Wholesale deposits		695,984		6,996	3.99			593,684		3,610	2.41
Total interest-bearing deposits		2,918,025		21,737	2.96			2,760,069		14,451	2.08
Short-term borrowings		849,750		8,823	4.06			818,947		3,954	1.89
Long-term FHLB advances and security repurchase agreements		1,534,208		15,759	4.02			1,394,075		15,723	4.41
Long-term debt		50,000		1,075	8.60			50,000		1,075	8.60
Total interest-bearing liabilities		5,351,983		47,394	3.49			5,023,091		35,203	2.76
Noninterest-bearing deposits		285,165						286,931
Other liabilities		47,539						37,949
Total liabilities		5,684,687						5,347,971
Shareholders’ equity		405,263						408,941
Total liabilities and shareholders’ equity	$	6,089,950					$	5,756,912
Net interest income/rate spread (FTE)			$	39,708	2.41	%			$	40,012	2.62	%
FTE adjustment			$	831					$	938
Impact of noninterest- bearing sources of funds					0.30	%					0.26	%
Net interest margin (FTE)					2.71	%					2.88	%

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(Dollars in thousands)

	Year Ended								Year Ended
	December 31, 2005								December 31, 2004
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
Average Assets:
Short-term investments	$	1,218		$	32		2.64	%	$	585		$	7		1.21	%
Mortgage loans held for sale		95,470			5,644		5.91			119,070			6,862		5.76
Securities available for sale:
Taxable		607,531			28,040		4.62			483,900			19,242		3.98
Tax-exempt		208,178			11,187		5.37			215,707			12,348		5.72
Securities held to maturity		243,142			11,130		4.58			222,358			10,082		4.53
Portfolio loans:
Commercial loans		1,641,529			109,104		6.65			1,546,485			87,973		5.69
Residential real estate mortgage loans		2,149,873			112,968		5.25			2,089,464			109,446		5.24
Installment loans		747,952			48,142		6.44			676,236			36,768		5.42
Total loans, net of unearned income		4,539,354			270,214		5.95			4,312,185			234,187		5.43
FHLB stock		80,614			3,459		4.29			80,722			3,651		4.51
Total interest-earning assets		5,775,507			329,706		5.71			5,434,527			286,379		5.27
Allowance for loan losses		(41,962	)							(43,016	)
Cash and due from banks		49,841								54,642
Other assets		214,205								189,936
Total assets	$	5,997,591							$	5,636,089

Average Liabilities and Shareholders’ Equity:
Interest-bearing demand deposits		$	194,134	$	959	0.49	%	$	192,728	$	600	0.31	%
Savings and money market accounts			1,005,075		17,883	1.78			1,043,983		13,629	1.30
Retail certificates of deposit			1,002,776		33,055	3.30			882,525		27,741	3.14
Wholesale deposits			597,647		20,813	3.48			510,367		11,209	2.19
Total interest-bearing deposits			2,799,632		72,710	2.60			2,629,603		53,179	2.02
Short-term borrowings			960,611		31,915	3.32			852,002		12,237	1.41
Long-term FHLB advances and security repurchase agreements			1,450,456		63,239	4.36			1,400,875		62,813	4.48
Long-term debt			50,000		4,300	8.60			50,000		4,300	8.60
Total interest-bearing liabilities			5,260,699		172,164	3.27			4,932,480		132,529	2.68
Noninterest-bearing deposits			283,451						276,799
Other liabilities			43,986						35,229
Total liabilities			5,588,136						5,244,508
Shareholders’ equity			409,455						391,581
Total liabilities and shareholders’ equity		$	5,997,591					$	5,636,089
Net interest income/rate spread (FTE)				$	157,542	2.44	%			$	153,850	2.59	%
FTE adjustment				$	3,506					$	4,000
Impact of noninterest- bearing sources of funds	��					0.29	%					0.24	%
Net interest margin (FTE)						2.73	%					2.83	%

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(Dollars in thousands)

	Dec. 31,		Sept. 30,		June 30,		Dec. 31,
	2005		2005		2005		2004
Portfolio Loan Summary:
Commercial loans:
Commercial and industrial	$	28,314	$	30,390	$	29,753	$	32,632
Commercial real estate mortgage		1,669,556		1,647,460		1,612,718		1,542,660
Total commercial loans		1,697,870		1,677,850		1,642,471		1,575,292
Residential real estate mortgages		2,193,128		2,146,613		2,137,046		2,152,720
Installment loans		737,260		761,525		753,612		735,963
Total portfolio loans	$	4,628,258	$	4,585,988	$	4,533,129	$	4,463,975

Non-Performing Assets:
Non-accrual loans:
Commercial	$	27,344	$	24,913	$	14,550	$	17,744
Residential real estate mortgage		19,026		13,636		12,202		10,705
Installment		2,413		1,361		1,100		852
Total non-accrual loans		48,783		39,910		27,852		29,301
Other real estate owned:
Commercial		8,575		9,089		4,441		650
Residential real estate mortgage		3,029		3,331		3,399		2,720
Installment		712		687		1,077		790
Total other real estate owned		12,316		13,107		8,917		4,160
Total non-performing assets	$	61,099	$	53,017	$	36,769	$	33,461

Allowance for Loan Losses (for the quarter):
Balance at beginning of period	$	41,946	$	41,871	$	41,855	$	44,167
Loans charged off:
Commercial		1,387		924		907		753
Residential real estate mortgage		340		577		719		379
Installment		294		345		270		386
Total charge-offs		2,021		1,846		1,896		1,518
Recoveries:
Commercial		334		96		242		17
Residential real estate mortgage		135		219		17		35
Installment		228		206		253		184
Total recoveries		697		521		512		236
Net charge-offs		1,324		1,325		1,384		1,282
Provision charged to expense		1,500		1,400		1,400		1,750
Reclassification of allowance for loan losses
on unfunded loan commitments(1)		-		-		-		(2,817	)
Balance at end of period	$	42,122	$	41,946	$	41,871	$	41,818

⁽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”.

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REPUBLIC BANCORP INC.

SUMMARY OF SELECTED FINANCIAL DATA

(Dollars in thousands)

	Dec. 31,			Sept. 30,			June 30,			Dec. 31,
	2005			2005			2005			2004
Asset Quality Ratios:
Non-performing assets to loans and
other real estate owned		1.32	%		1.15	%		.81	%		.75	%
Non-performing assets to total assets		1.00	%		.87	%		.61	%		.59	%
Allowance for loan losses
to non-performing loans		86.35	%		105.10	%		150.33	%		142.72	%
Allowance for loan losses to loans		.91	%		.91	%		.92	%		.94	%
Allowance for loan losses to loans (excluding
residential real estate mortgages)		1.73	%		1.72	%		1.75	%		1.81	%
Net charge-offs to average loans: (1)
Commercial loans		.25	%		.20	%		.16	%		.19	%
Residential real estate mortgage loans		.04	%		.07	%		.13	%		.06	%
Installment loans		.03	%		.07	%		.01	%		.11	%
Total loans		.11	%		.12	%		.12	%		.11	%

⁽¹⁾ Quarter-to-date, annualized.