The Republic unit will add to the tax refund business of Green Dot, which owns the Santa Barbara Tax Products Group. Republic expects to provide transition services for the TRS business following the closing and during 2022.
The tax business was hammered by the delayed tax season. For the first quarter ended March 31, the business had a net loss of $97,000 compared to net income of $11.5 million in last year’s corresponding period.
When it released its first-quarter results, Republic noted the issuance of two round of economic stimulus payments hurt demand and applications for Refund Transfers were down 10 percent from the prior year while those for its Easy Advance Loans dropped 30 percent year-over-year. Fees earned on EA Loans dropped to $12.8 million for the first quarter of 2021, down 33.6 percent from $19.3 million the prior year. Refund transfer fees fell 20 percent to $12.7 million from $15.8 million as the number of transfers processed declined at the same rate.
Besides the cash, Republic will also receive “a payment equal to a 95 percent participation interest, at par, for certain loans to TRS business partners owned by the Bank on the closing date” The transaction is expected to close by the end of the year.