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How to Understand Republic's Regulatory Organization of Prepaid and Small Dollar Credit

Adam Rust's picture

Posted November 13, 2012

Given that a number of people have reacted with - let's nicely call it curiousity - to the news about Republic's proposed credit product, I want to spend a few moments going over details in their October 18th filing which

should add some clarity to their business plans.

Setting Up the Background

As a pretext to that, it is important to understand the specifics of Republic Bank's corporate structure.

There are three names within the Republic Bank universe. The parent institution is Republic Bancorp.
It has two subsidiaries: Republic Bank & Trust and Republic Bank.

FDIC Punishes Republic Bank for ECOA, TILA, FTCA Violations

Adam Rust's picture

Posted May 5, 2011

The FDIC has charged Republic Bank for violations of multiple laws and set a civil money penalty of $2 millions for problems with their refund anticipation loan unit.

Republic Bank faces violations of the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, and the Gramm-Leach-Bliley Act. Additionally,

Republic Gives Optimistic Report on Early RALs

Adam Rust's picture

Posted March 1, 2011

Republic Bancorp published a very upbeat update on its early tax season results (see 8-k here).  Republic says that TRS managed to increase net income within its Tax Refunds Solution division by 70 percent, compared to the same period in 2010, due to higher RAC volume, lower-than-expected default rates, and higher RAL margins.

Republic said that it sold 62 percent more RACs through the first two months of 2011,

With FDIC Suggestion, Ohio Valley Walks Away from RALs

Adam Rust's picture

Posted February 14, 2011

Ohio Valley Bancorp's Board of Directors has decided to close down its refund anticipation says the FDIC has recommended the bank to wind down its refund anticipation loan business.  Ohio Valley released the news in an 8-k this morning, although the communication from the FDIC arrived on Feb. 3rd.

There is an interesting wrinkle in the language. Whereas Republic's 8-K describes a "Notice of Charges for an Order to Cease and Desist," Ohio Valley's explanation is more tepid. In their document, it says that the bank received a

Whither Jackson Hewitt?

Adam Rust's picture

Posted November 18, 2010

Tax preparation firm Jackson Hewitt has until Saturday to meet the terms of its line of credit agreement with Wells Fargo.

Wells Fargo stipulated that JTX needed to have full funding for its refund anticipation loan (RALs) offerings for the upcoming tax season.  Currently, Jackson Hewitt has funding lined up with Republic Bank of Kentucky (RBCAA). Republic said that it expects to impose new underwriting criteria. That could mean that fewer consumers will be able to get a RAL in the first place.

The mystery in all of this is Wells. The event of default is a condition that gives Wells the ability to pull

Republic Bank (RBCAA) - One Tough Bank

Adam Rust's picture

Posted February 4, 2010

Republic Bank (RBCAA) is an example of a bank that works hard to make its customers work hard.

Some observers naively examine the low rates of loan defaults on Republic's home mortgage loan operations and assume that it a conservative small-town community bank. Hoover's, a web site operated by Dunn & Bradstreet, makes this comment:

"...perhaps you bank at Republic Bancorp. It's the largest Kentucky-based bank holding company, and parent to Republic Bank & Trust, which has about 40 branches in central Kentucky and southern Indiana. In 2006 the company entered Florida, where it has four branches, via its purchase of Tampa's GulfStream Bank, since renamed Republic Bank. The banks offer checking and savings accounts, investment management, and trust services. Their lending activities mainly consist of residential mortgages (about half of the company's loan portfolio) and commercial real estate loans (almost 30%)."

A closer look shows that Republic's community banking is driven by fee income on overdrafts. Outside of its


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