STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL MATTERS

12 Months Ended

Dec. 31, 2015

STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL MATTERS

STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL MATTERS

16.STOCKHOLDERS’ EQUITY AND REGULATORY CAPITAL MATTERS

Common Stock —  The Class A Common shares are entitled to cash dividends equal to 110% of the cash dividend paid per share on Class B Common Stock. Class A Common shares have one vote per share and Class B Common shares have ten votes per share. Class B Common shares may be converted, at the option of the holder, to Class A Common shares on a share for share basis. The Class A Common shares are not convertible into any other class of Republic’s capital stock.

Dividend Restrictions — The Parent Company’s principal source of funds for dividend payments are dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid to the Parent Company by the Bank without prior approval of the respective states’ banking regulators. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years. At December 31, 2015, the Bank could, without prior approval, declare dividends of approximately $43 million.

Regulatory Capital Requirements — The Parent Company and the Bank are subject to various regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Republic’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Parent Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off balance sheet items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2015 and 2014, the most recent regulatory notifications categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

New Capital Rules — Effective January 1, 2015 the Company and the Bank became subject to the new capital regulations in accordance with Basel III. The new regulations establish higher minimum risk-based capital ratio requirements, a new common equity Tier 1 risk-based capital ratio and a new capital conservation buffer. The new regulations also include revisions to the definition of capital and changes in the risk-weighting of certain assets. For prompt corrective action, the new regulations establish definitions of “well capitalized” as a 6.5% common equity Tier 1 risk-based capital ratio, an 8.0% Tier 1 risk-based capital ratio, a 10.0% total risk-based capital ratio and a 5.0% Tier 1 leverage ratio.

									Minimum Requirement
									to be Well Capitalized
					Minimum Requirement				Under Prompt
					for Capital Adequacy				Corrective Action
	Actual				Purposes				Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2015
Total capital to risk weighted assets
Republic Bancorp, Inc.	$	631,820	20.58	%	$	245,556	8.00	%		NA	NA
Republic Bank & Trust Company		494,575	16.12			245,426	8.00		$	306,782	10.00	%
Common equity tier 1 capital to risk weighted assets
Republic Bancorp, Inc.		564,329	18.39			138,125	4.50			NA	NA
Republic Bank & Trust Company		467,084	15.23			138,052	4.50			199,408	6.50
Tier 1 (core) capital to risk weighted assets
Republic Bancorp, Inc.		604,329	19.69			184,167	6.00			NA	NA
Republic Bank & Trust Company		467,084	15.23			184,069	6.00			245,426	8.00
Tier 1 leverage capital to average assets
Republic Bancorp, Inc.		604,329	14.82			163,114	4.00			NA	NA
Republic Bank & Trust Company		467,084	11.46			163,018	4.00			203,772	5.00

									Minimum Requirement
									to be Well Capitalized
					Minimum Requirement				Under Prompt
					for Capital Adequacy				Corrective Action
	Actual				Purposes				Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2014
Total capital to risk weighted assets
Republic Bancorp, Inc.	$	608,658	22.17	%	$	219,654	8.00	%		NA	NA
Republic Bank & Trust Company		472,357	17.21			219,526	8.00		$	274,408	10.00	%
Tier 1 (core) capital to risk weighted assets
Republic Bancorp, Inc.		NA	NA			NA	NA			NA	NA
Republic Bank & Trust Company		NA	NA			NA	NA			NA	NA
Tier 1 (core) capital to risk weighted assets
Republic Bancorp, Inc.		584,248	21.28			109,827	4.00			NA	NA
Republic Bank & Trust Company		447,947	16.32			109,763	4.00			164,645	6.00
Tier 1 leverage capital to average assets
Republic Bancorp, Inc.		584,248	15.92			146,765	4.00			NA	NA
Republic Bank & Trust Company		447,947	12.21			146,698	4.00			183,372	5.00

NA - Not applicable.