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Liberty Cancels RAC Agreement with Republic

Adam Rust's picture

Posted August 30, 2012

Republic Bank and JTH Financial, the corporate umbrella organization above Liberty Tax, have terminated their agreement to provide tax refund checks.

Last spring marked the end for Republic's refund anticipation loan but it had been assumed that the bank would

continue of offer RACs. That could still happen if the parties agree to a new contract, but for now it seems as if that possibility is still not yet realized.

Republic said that it received a termination notice on Monday (August 27th) from Liberty. In the filing released yesterday, Republic notes that Liberty still said that they have interest in working with Republic in the future. Thus, this announcement may only be the first step in a process of renegotiation.

Nonetheless, this news could undermine Republic's business model. Republic noted that revenues derived from their contract with Liberty made up 19 percent of gross in the six months ending on June 30th, 2012.

The news also provokes the question of "if not Republic, then who" with regard to Liberty's ongoing tax product offerings. It probably means that a non-bank partner has been found with pockets so large as to be able to cash flow millions of dollars in advances at one time.

This morning, Republic's Executive Vice President of Retail Banking sold $43,000 in common stock.