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Republic Bank of Kentucky
Things change if regulators pause to think this one over: If any regulatory approvals remain outstanding after September 30th, 2013, then the transaction is put off until at least April 30th, 2014. In other words, if Block has to go through the work of preparing for next spring's tax season,
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.
A new filing from Republic Bank of Kentucky says that the company is not only going to go forward with plans to offer general purpose reloadable prepaid debit cards, but it also intends to roll out new short-term consumer credit products.
Republic will combine its prepaid, short-term credit, and tax services segments into one combined division known
A tax preparer in Texas tells me that Republic is telling its ERO partners that they will be able to offer refund loans for part of the 2012 tax season.
Republic is telling aggregators - the folks that provide middle-path services that help EROS file to the bank - that the FDIC has decided to push back their final hearing with Republic until the first week in February of 2012.
On Friday, I spoke with a Republic salesperson who said that as of last week, they were instructed to tell EROs that they would have bank products in 2012.
A Republic spokesperson emphasized that the most recent 10-q stated that the hearing would take place in September. Republic would indicate any change to that hearing date with the next 10-q, due out before the end of July.
If the hearing is pushed back, then Republic would be able to offer loans through part of the busy
The Internal Revenue Service says that it will not allow consumers to direct any part of their tax refund to pay to settle their tax preparation fees.
The new split refund proposal would have cleared the way to solve a pending problem for consumers. With the likely elimination of refund anticipation loans, consumers will have fewer
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,
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
MetaBank's loss may be Republic's gain.
That could be an unintended consequence of yesterday evening's Supervisory Directive from the OTS that pushed MetaBank out of the refund anticipation loan market.
Republic Bank (Kentucky) is an FDIC-regulated bank that has provided refund loans to Jackson Hewitt for some time. In 2010, Republic stepped in and added to its commitment to Jackson Hewitt after the tax preparer lost their RAL capital from Pacific Capital Bancorp. Republic had made about one-quarter of their RALs. In 2010, they made all Jackson Hewitt's RALs. Jackson Hewitt couldn't find a full replacement for the loss of the PCBC money, so they could only offer RALs in about half of their stores.
This had a significant effect upon Jackson Hewitt. JTX recorded an impairment to goodwill of $274.1