Management's Discussion and Analysis of Financial Condition and Results of Operations of Republic Bancorp, Inc. ("Republic" or the "Company") analyzes the major elements of Republic's consolidated balance sheets and statements of income. Republic, a bank holding company headquartered in Louisville, Kentucky, is the Parent Company of Republic Bank & Trust Company, ("RB&T"), Republic Bank (collectively referred together with RB&T as the "Bank"), Republic Funding Company and Republic Invest Co. On August 15, 2008, the Company filed applications with the Office of Thrift Supervision to merge Republic Bank & Trust Company, a state chartered commercial bank, and Republic Bank, a federally chartered savings bank, into one federally chartered savings bank. Republic Invest Co. includes its subsidiary, Republic Capital LLC. The consolidated financial statements also include the wholly-owned subsidiaries of RB&T:
Republic Financial Services, LLC, TRS RAL Funding, LLC and Republic Insurance Agency, LLC. Republic Bancorp Capital Trust is a Delaware statutory business trust that is a 100%-owned unconsolidated finance subsidiary of Republic Bancorp, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations of Republic should be read in conjunction with Part I Item
1 "Financial Statements."

This discussion includes various forward-looking statements with respect to credit quality, including but not limited to, delinquency trends and the adequacy of the allowance for loan losses, business segments, corporate objectives, the Company's interest rate sensitivity model and other financial and business matters. Broadly speaking, forward-looking statements may include:

† projections of revenue, income, losses, earnings per share, capital expenditures, dividends, capital structure or other financial items;
† descriptions of plans or objectives for future operations, products or services;
† forecasts of future economic performance; and
† descriptions of assumptions underlying or relating to any of the foregoing.

The Company may make forward-looking statements discussing management's expectations about various matters, including:

† future credit losses and non-performing assets;
† the adequacy of the allowance for loans losses;
† the anticipated future cash flows of Refund Anticipation Loans ("RALs"); including those securitized and retained on balance sheet;
† Anticipated future funding sources for TRS;
† the future value of mortgage servicing rights;
† the impact of new accounting pronouncements;
† future short-term and long-term interest rate levels and the respective impact on net interest margin, net interest spread, net income, liquidity and capital;
† legal and regulatory matters; and
† future capital expenditures.

Forward-looking statements discuss matters that are not historical facts. As forward-looking statements discuss future events or conditions, the statements often include words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "should," "will," "would," or similar expressions. Do not rely on forward-looking statements. Forward-looking statements detail management's expectations regarding the future and are not guarantees. Forward-looking statements are assumptions based on information known to management only as of the date the statements are made and management may not update them to reflect changes that occur subsequent to the date the statements are made.

OVERVIEW

Net income for the quarter ended September 30, 2008 was $4.5 million, representing an increase of $270,000, or 6%, compared to the same period in 2007. Diluted earnings per Class A Common Share increased 5% to $0.22 for the quarter ended September 30, 2008 compared to $0.21 for the same period in 2007.

Net income for the nine months ended September 30, 2008 was $33.0 million, representing an increase of $14.5 million, or 79%, compared to the same period in 2007. Diluted earnings per Class A Common Share increased 81% to $1.59 for the nine months ended September 30, 2008 compared to $0.88 for the same period in 2007.

General highlights for the third quarter and nine months ended September 30, 2008 consisted of the following:

† Republic ended the quarter with total assets of $3.0 billion, representing a decline of $126 million, or 4%, compared to September 30, 2007 and a decline of $120 million, or 4%, compared to December 31, 2007. The decrease in total assets was primarily the result of a $79 million decline in loan balances during the year as disciplined pricing measures for the Company's retail portfolio loan products shifted consumer demand to fixed rate loan products, which were sold into the secondary market. In addition, similarly disciplined pricing measures in the commercial lending area, in combination with the Company's traditional underwriting standards and some large maturities during the year, caused a decline in commercial real estate balances.

† Traditional Banking segment net income increased $333,000, or 7%, and $1.9 million, or 14%, for the third quarter and nine months ended September 30, 2008 compared to the same periods in 2007. The rise in traditional banking segment net income was primarily attributable to increases in net interest income and non interest income, partially offset by increases in the provision for loan losses, net losses on calls and impairments of securities and non interest expenses.

† For the first nine months of 2008, Tax Refund Solutions ("TRS") business segment net income increased $11.8 million, or 269%, compared to the same period in 2007. This increase related primarily to the overall growth in product volume coupled with lower estimated RAL losses as a percent of total originations. Total RAL volume (which occurred primarily in the first quarter and includes RALs sold into the securitization) increased from $577 million during 2007 to $1.8 billion during 2008. In addition to the increased RAL volume, Electronic Refund Check ("ERC")/Electronic Refund Deposit ("ERD") volume increased approximately 309%. The increase in volume was attributable to the new business gained through the Jackson Hewitt contracts previously disclosed, as well as significant growth through the Company's independent tax-preparer customer base. The Company recorded a net loss of $967,000 for the third quarter of 2008 compared to a net loss of $924,000 for the same period in 2007. Subsequent to the first quarter of 2008, the results of operations for the TRS segment consist primarily of fixed overhead expenses and adjustments to the segment's estimated residual interest and estimated provision for loan losses, as estimated results become final.

† Net interest income increased $6.2 million, or 29%, and $30.8 million, or 43%, for the third quarter and nine months ended September 30, 2008 compared to the same periods in 2007. The traditional banking segment represented $6.0 million and $17.4 million of the increase for the third quarter and nine months ended September 30, 2008 compared to the same periods in 2007. Net interest income within the traditional Banking segment benefited significantly from declining short-term interest rates in combination with an overall "steepening" of the yield curve, and to a lesser extent, a year-over-year increase in the average balance of the loan portfolio.

† Non interest income declined $4.1 million, or 55%, for the third quarter of 2008 compared to the same period in 2007 due primarily to $5.3 million in OTTI charges recorded for one non agency mortgage backed security and the Company's Federal Home Loan Mortgage Corporation ("FHLMC") preferred stock investment. See additional discussion regarding these impairment charges under Footnote 2 "Securities." Non interest income for the nine months ended September 30, 2008 increased $16.5 million, or 58%. Approximately $22.7 million of the increase was attributable to growth in the Company's tax business at TRS offset which was offset by $8.9 million of OTTI charges recorded during the first nine months of 2008.

† The Company's provision for loan losses favorably declined from $1.4 million during the third quarter of 2007 to $324,000 during the third quarter of 2008. The Company recorded a provision for loan losses of $14.5 million for nine months ended September 30, 2008, as compared to $5.2 million for the same period in 2007.

† The traditional Banking provision for loan losses was $191,000 during the third quarter of 2008 compared to $1.5 million during the same period in 2007. The lower estimated provision for loan losses during the quarter was attributable to a favorable decline in loan balances that the Company considers "substandard" within its allowance calculation. This compares to an unfavorable increase in loan balances that the Company considered "substandard" during the third quarter of 2007. For the nine months ended September 30, 2008 and 2007, the Banking segment provision for loan losses was $6.1 million and $1.9 million. The increase in the bank level provision expense for the nine months ended September 30, 2008 was attributable to the increase in classified, delinquent and non performing loans as well as a $968,000 adjustment to the allowance calculation during the second quarter of 2008 for qualitative factors generally related to the deteriorating real estate market conditions recorded. For the nine months ended September 30, 2008, approximately $2.8 million of the increase related to the specific write down of one land development loan in Florida placed on non accrual during the first quarter of 2008.

† For the nine months ended September 30, 2008 and 2007, the TRS segment provision for loan losses was $8.4 million and $3.3 million. The year to date increase in estimated losses associated with RALs was primarily due the increased volume detailed above. For additional discussion regarding the loan loss reserve estimates for TRS, see Footnote 3 "Loans and Allowance for Loans Losses" of Part I Item 1 "Financial Statements."

† Non interest expenses increased $2.7 million, or 13%, and $15.5 million, or 24%, for the third quarter and nine months ended September 30, 2008 compared to the same periods in 2007. Approximately $937,000 and $12.9 million of the increases were related to TRS and were driven by the significant year-over-year growth in the program as discussed throughout.

BUSINESS SEGMENT COMPOSITION

As of September 30, 2008, the Company was divided into three distinct business operating segments: Banking, Tax Refund Solutions and Mortgage Banking. Net income, total assets and net interest margin by segment for the three and nine month periods ended September 30, 2008 and 2007 are presented below:

                                Three Months Ended September 30, 2008
                                     Tax Refund     Mortgage
(in thousands)          Banking       Solutions      Banking     Total Company

Net income / (loss)   $     5,106    $      (967 )  $     363   $         4,502
Segment assets          2,981,809         56,428        6,817         3,045,054
Net interest margin          3.83 %           NM           NM              3.86 %




                                Three Months Ended September 30, 2007
                                     Tax Refund     Mortgage
(in thousands)          Banking       Solutions      Banking     Total Company

Net income / (loss)   $     4,773    $      (924 )  $     383   $         4,232
Segment assets          3,162,834          3,570        4,513         3,170,917
Net interest margin          2.87 %           NM           NM              2.88 %




                                Nine Months Ended September 30, 2008
                                     Tax Refund     Mortgage
(in thousands)          Banking       Solutions     Banking      Total Company

Net income            $    15,393    $    16,231   $    1,424   $        33,048
Segment assets          2,981,809         56,428        6,817         3,045,054
Net interest margin          3.65 %           NM           NM              4.51 %




                                 Nine Months Ended September 30, 2007
                                     Tax Refund      Mortgage
(in thousands)          Banking       Solutions      Banking      Total Company

Net income (loss)     $    13,467    $     4,397    $      643   $        18,507
Segment assets          3,162,834          3,570         4,513         3,170,917
Net interest margin          2.91 %           NM            NM              3.21 %

(I) Banking

Republic has 45 full-service banking centers with 36 located in Kentucky, five in metropolitan Tampa, Florida, three in southern Indiana and one in metropolitan Cincinnati, Ohio. RB&T's primary market areas are located in metropolitan Louisville, central Kentucky, northern Kentucky and southern Indiana. Louisville, the largest city in Kentucky, is the location of Republic's headquarters, as well as 20 banking centers. RB&T's central Kentucky market includes 12 banking centers in the following Kentucky cities: Bowling Green (1); Elizabethtown (1); Frankfort (1); Georgetown (1); Lexington, the second largest city in Kentucky (5); Owensboro (2); and Shelbyville (1). RB&T's northern Kentucky market includes banking centers in Covington, Florence, Fort Wright and Independence. RB&T also has banking centers located in Floyds Knobs, Jeffersonville and New Albany, Indiana. Republic Bank has locations in Hudson, New Port Richey, Palm Harbor, Port Richey, Temple Terrace, Florida, as well as Cincinnati, Ohio. On August 15, 2008, the Company filed applications with the Office of Thrift Supervision to merge Republic Bank & Trust Company, a state chartered commercial bank, and Republic Bank, a federally chartered savings bank, into one federally chartered savings bank.

Banking related operating revenues are derived primarily from interest earned from the Bank's loan and investment securities and fee income from loans, deposits and other banking products. The Bank has historically extended credit and provided

general banking services through its banking center network to individuals and businesses. The Bank principally markets its banking products and services through the following delivery channels:

Mortgage Lending - The Bank generally retains adjustable rate residential real estate loans with fixed terms up to ten years. These loans are originated through the Bank's retail banking center network. Fixed rate residential real estate loans that are sold into the secondary market, and their accompanying servicing rights, which may be either sold or retained, are included as a component of the Company's "Mortgage Banking" segment and are discussed below and throughout this document.

Commercial Lending - Commercial loans are primarily real estate secured and are generated through banking centers in the Bank's market areas. The Bank makes commercial loans to a variety of industries and promotes this business through focused calling programs in order to broaden relationships by providing business customers with loan, deposit and treasury management services.

Consumer Lending - Traditional consumer loans made by the Bank include home improvement and home equity loans, as well as secured and unsecured personal loans. With the exception of home equity loans, which are actively marketed in conjunction with single family first lien mortgage loans, other traditional consumer loan products are not actively promoted in the Bank's markets.

Treasury Management Services - The Bank provides various deposit products designed for business customers located throughout its market areas. Lockbox processing, remote deposit capture, business online banking, account reconciliation and Automated Clearing House ("ACH") processing are additional services offered to businesses through the Treasury Management Department. The "Premier First"product is the Bank's premium money market sweep account designed for business customers.

Internet Banking - The Bank expands its market penetration and service delivery by offering customers Internet banking services and products through its website, www.republicbank.com.

Other Banking Services - The Bank also provides trust, title insurance and other financial institution related products and services.

(II) Tax Refund Solutions ("TRS")

RB&T, though its TRS business segment, is one of a limited number of financial institutions which facilitates the payment of federal and state tax refunds through third party tax-preparers located throughout the U.S. Substantially all of the business generated by TRS occurs in the first quarter of the year. The Company facilitates the payment of these tax refunds through three primary products: RALs, ERCs and ERDs.

ERCs/ERDs are products whereby a tax refund is issued to the taxpayer after RB&T has received the refund from the federal or state government. There is no credit risk or borrowing cost for the Company because ERCs/ERDs are only delivered to the taxpayer upon receipt of the refund directly from the Internal Revenue Service ("IRS"). Fees earned on ERCs/ERDs are reported as non interest income under the line item "Electronic refund check fees."

RALs are short-term consumer loans offered to taxpayers, secured by their anticipated tax refund, which represents the source of repayment. The Company underwrites the RAL application through an automated credit review process utilizing information contained with the taxpayer's tax return. If the application is approved, the Company advances the amount of the refund due on the taxpayer's return up to specified amounts less the loan fee due to the Company and, if requested by the taxpayer, the fees due for preparation of the return to the tax preparer. As part of the RAL application process, each taxpayer signs an agreement directing the IRS to send the taxpayer's refund directly to the Company. The refund received from the IRS is used by the Company to pay off the RAL. Any amount due the taxpayer above the amount of the RAL is remitted to the taxpayer once the refund is received by the Company. The funds advanced by the Company are generally repaid by the IRS within two weeks. The fees earned on RALs retained on balance sheet are reported as interest income under the line item "Loans, including fees."

While the loan application form is completed by the taxpayer in the tax preparer's office, the credit criteria is established by the Company and the underwriting decision is made by the Company. The Company reviews and evaluates all tax returns to

determine the likelihood of IRS payment. If any attribute of the tax return appears to fall outside of predetermined parameters, the Company will not originate the RAL.

Substantially all RALs issued by the Company each year are made during the first quarter. Losses associated with RALs result from the IRS not remitting taxpayer refunds to the Company associated with a particular tax return. This occurs for a number of reasons, including errors in the tax return and tax return fraud. At March 31st of each year, with adjustments each quarter end thereafter, the Company reserves for its estimated RAL losses based on current year and historical funding patterns and information received from the IRS regarding current year payment processing. The Company applies its loss estimates to both RALs retained on balance sheet and to securitized RALs. The Company applies loss estimates to securitized RALs because the securitization residual is valued based on the future expected cash flows of the securitization, which is significantly influenced by the anticipated credit losses of the underlying RALs. Estimated losses related to securitized RALs are recorded in non interest income as a reduction to "Net RAL securitization income."

The overall earnings of the TRS segment are highly dependent upon the Company's loss estimates for RALs retained on balance sheet and securitized RALs. The Company believes that based on information currently available, it has provided the appropriate amount of reserves for losses associated with RALs. At September 30, 2008, the Company had effectively fully reserved for all uncollected RALs, both securitized and retained on balance sheet. The possibility remains, however, that additional payments could be received from the IRS during the fourth quarter of 2008 resulting in an adjustment to the Company's previous allowance for loan losses and residual interest, or trading security. The Company believes that any payments received from the IRS during the fourth quarter of 2008 will be immaterial and recorded as an adjustment to income if received.

Subsequent to the first quarter of 2008, the results of operations for the TRS segment consist primarily of fixed overhead expenses and adjustments to the segment's estimated residual interest and estimated provision for loan losses as estimated results become final.

TRS Funding

Historically, from mid January to the end of February of each year, RALs which, upon origination, met certain underwriting criteria related to refund amount and Earned Income Tax Credit amount, were classified as loans held for sale and sold into the securitization. All other RALs originated were retained by the Company. There were no RALs held for sale as of any quarter end. The Company retained a related residual value in the securitization, which was classified on the balance sheet as a trading security. The initial residual interest had a weighted average life of approximately one month, and as such, substantially all of its cash flows were received by the end of the first quarter. The disposition of the remaining anticipated cash flows occurred within the remainder of the calendar year. At its initial valuation, and on a quarterly basis thereafter, the Company adjusted the carrying amount of the residual value to its fair value, which was determined based on expected future cash flows and was significantly influenced by the anticipated credit losses of the underlying RALs.

During the first quarters of 2008 and 2007, respectively, the securitization consisted of a total of $1.1 billion and $350 million of RALs originated and sold. The Company's continuing involvement in RALs sold into the securitization was limited to only servicing of the RALs. Compensation for servicing of the RALs securitized was not contingent upon performance of the RALs securitized.

The Company concluded that the transaction was a sale as defined in SFAS 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125." This conclusion was based on, among other things, legal isolation of assets, the ability of the purchaser to pledge or sell the assets, and the absence of a right or obligation of the Company to repurchase the financial assets.

In addition to the securitization structure, the Company also utilized brokered deposits to fund RALs retained on balance sheet. During the fourth quarter of 2007, the Company obtained $272 million in brokered deposits to be utilized to fund the RAL program. These brokered deposits had a life of three months with a weighted average rate of 5.09%. Also, during January of 2008, the Company obtained an additional $200 million in brokered deposits to fund additional RAL demand. These brokered deposits had a three month life and a weighted average rate of 4.95%.

At the time of this filing, the Company has not finalized its funding strategy for the upcoming first quarter 2009 tax season. At this time, management believes it will be able to obtain all of the funding it needs for the upcoming tax season. Similar to the

first quarter of 2008, management is considering funding options, which include a combination of brokered deposits and a securitization structure. In addition, the Company is also in discussion with two large national banks for a significant on-balance sheet line of credit facility secured by RALs. Because of the significant lack of liquidity currently in the credit markets, the Company may not be able to obtain its necessary funding from a securitization structure or from the line of credit facilities with terms acceptable to the Company. If the Company cannot obtain its necessary funding from the securitization structure and/or the line of credit facilities, the Company will rely on other sources of funding such as brokered deposits and other lines of credit and may need to draw on holding company lines of credit to provide additional capital to the Bank. Regardless of the final decision related to the securitization and the on-balance sheet line of credit facilities, the Company will likely begin to increase its brokered deposit balances significantly during the fourth quarter of 2008 in anticipation of the upcoming funding needs for the tax season.

See the section titled "Results of Operations" in Part I Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as Footnote 3 "Loans and Allowance for Loans Losses," Footnote 9 "Segment Information" and Footnote 10 "Securitization" of Part I Item 1 "Financial Statements" and Part II Item 1A "Risk Factors" for additional discussion regarding TRS and the securitization.

(III) Mortgage Banking

Mortgage Banking activities primarily include 15, 20 and 30-year fixed rate real estate loans that are sold into the secondary market. Since 2003, the Bank has historically retained servicing on substantially all loans sold into the secondary market. Administration of loans with the servicing retained by the Bank includes collecting principal and interest payments, escrowing funds for taxes and insurance and remitting payments to the secondary market investors. A fee is received by the Bank for performing these standard servicing functions.

See additional detail regarding Mortgage Banking under Footnote 9 "Segment Information" of Item 1 "Financial Statements."

RESULTS OF OPERATIONS

Tax Refund Solutions ("TRS")

The total volume of tax return refunds processed during the 2008 tax season increased $3.9 billion, or 269%, over the same period in 2007. The Company originated $1.8 billion in RALs during 2008 compared to $577 million for the same period in 2007. Total ERC/ERD volume was $3.6 billion during 2008 compared to $873 million for the same period in 2007. The substantial growth at TRS primarily resulted from successful sales efforts to independent tax preparers and the previously disclosed Jackson Hewitt contracts signed in the latter half of 2007. These new contract opportunities became available to Republic with the announced exiting of the business in early 2007 by a large competitor of Republic.

For the past three years, the Company implemented a RAL securitization to . . .