921557--3/6/2009--REPUBLIC_BANCORP_INC

related topics

{condition, economic, financial}

{regulation, change, law}

{loan, real, estate}

{system, service, information}

{tax, income, asset}

{financial, litigation, operation}

{acquisition, growth, future}

{regulation, government, change}

{provision, law, control}

{control, financial, internal}

{personnel, key, retain}

{interest, director, officer}

{stock, price, operating}

{competitive, industry, competition}

{stock, price, share}

{capital, credit, financial}

The Company s accounting policies and estimates are critical components of the Company s presentation of its financial statements. Management must exercise judgment in selecting and adopting various accounting policies and in applying estimates. Actual outcomes may be materially different than amounts previously estimated. The Company s lines of business and products not typically associated with traditional banking expose the Company s earnings to additional risks and uncertainties. RALs represent a significant business risk, and if the Company terminated the business, it would materially impact the earnings of the Company. The TRS business operating segment represents a significant operational risk, and if the Company were unable to properly service the business, or grow the business, it could materially impact the earnings of the Company. RALs represent a significant compliance and regulatory risk, and if the Company fails to comply with all statutory and regulatory requirements, it could have a material negative impact on the Company s earnings RALs represent a significant liquidity, or funding, risk. Significantly overestimating or underestimating the Company s liquidity or funding needs for the upcoming tax season could have a material negative impact on the Company s overall earnings. Funding for RAL liquidity requirements may also cost more than the Company s current estimates and/or historical experience. RALs represent a significant credit risk, and if the Company is unable to collect a significant portion of its RALs it would materially, negatively impact the earnings of the Company. The Company s Overdraft Honor program represents a significant business risk, and if the Company terminated the program it would materially impact the earnings of the Company. There can be no assurance that the Company s regulators, or others, will not impose additional limitations on this program or prohibit the Company from offering the program. RB T is subject to a Cease and Desist Order (the Order ) from the FDIC. The failure to comply with this Order could result in significant penalties and/or additional sanctions. See Exhibit 10.62 under Part IV of this filing for additional information regarding the Order. The Company owns $14.7 million of investment securities which the Company believes have an elevated level of credit risk and are extremely illiquid. See additional discussion regarding these impairment charges under Footnote 3 Investment Securities of Part II Item 8 Financial Statements and Supplementary Data. Fluctuations in interest rates could reduce profitability . Mortgage banking activities are significantly impacted by changing long-term interest rates. The Company s stock generally has a low average daily trading volume, which limits a stockholder s ability to quickly accumulate or quickly sell large numbers of shares of Republic s stock without causing wide price fluctuations. An investment in the Company s Common Stock is not an insured deposit. The Company s insiders hold voting rights that give them significant control over matters requiring stockholder approval. The Company may need additional capital resources in the future and these capital resources may not be available when needed or at all. The Company s funding sources may prove insufficient to replace deposits and support future growth. Difficult national and local market conditions have adversely affected the financial services industry. There can be no assurance that recently enacted legislation will stabilize the U.S. financial system . The Company s financial condition and profitability depend significantly on local and national economic conditions. Recent financial problems in the automobile industry may negatively affect our primary markets. Recently declining values of real estate may increase our credit losses, which would negatively affect our financial results. Recent unprecedented market volatility and significant stock market decline could negatively affect the Company s financial results. The Company may be adversely affected by the soundness of other financial institutions. Company operations could be harmed by a challenging legal climate. Negative public opinion could damage the Company s reputation and adversely affect earnings. The Company is dependent upon the services of its management team and qualified personnel. The Company s information systems may experience an interruption or breach in security that could impact the Company s operational capabilities. The Company relies heavily on the proper functioning of its technology. The Company may be subject to examinations by taxing authorities which could adversely affect results of operations. If the Company does not maintain strong internal controls and procedures, it may impact profitability. Republic is subject to regulatory capital adequacy guidelines, and if the Company fails to meet these guidelines the Company s financial condition may be adversely affected. The Company s financial condition and earnings could be negatively impacted to the extent the Company relies on information that is false, misleading or inaccurate. Defaults in the repayment of loans may negatively impact the Company Prepayment of loans may negatively impact Republic s business.

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921557--3/6/2009--REPUBLIC_BANCORP_INC_/KY/