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Republic Dropping Top RALs to $1,500

Republic Bank logoRepublic Bank expects that during the upcoming tax season it will reduce the amount of money available for refund anticipation loans by 50 percent or more while the maximum amount of individual RALs will fall to $1,500. It also said it is shifting much of its RAL funding to the  troubled Jackson Hewitt Tax Service. Republic filed a statement about its program with the SEC the same day that Jackson Hewitt filed documents in which it said it would offer RALs about 4,200 locations.

The Republic statement said that it would shift "a material percentage of its product offerings to Jackson Hewitt Offices while working with an equal or slightly lower overall number of tax preparation offices than it worked with in 2010." Despite these changes, Republic believes it can increase net income from its Tax Refund Services segment if it achieves targets for product volumes and meets its loan loss estimates.

Republic is providing RAL funding for what Jackson Hewitt estimates will be 90 percent of its needs. The bank is also funding all of the tax company's assisted transfer business. While Jackson Hewitt hasn't been able to fund all its loan business, it might end up in better shape than rival H&R Block, which is still in negotiations with its lender, HSBC, after Block sued that bank, claiming that it had not taken steps to ensure that a RAL program could be funded.

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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