Republic Bancorp, which picked up a lot of the slack when Santa Barbara Bank & Trust was forced from the refund loan business, plans to be highly selective in choosing which customers it works with. And chairman and CEO Steve Trager said in a Webcast this week that it has few worries about replacing any customers that might exit the business and that remark appeared to cover two national tax chains.

"If the best route was to discontinue one of those sources, we could absorb the volume from one of those sources," Trager said. "We are in a position to be very selective in who we are going to service."

Republic picked up only 50 percent of Jackson Hewitt's business, and given uncertainty over what policies the Internal Revenue Service will implement for the next tax season, Republic has already hedged its bets. It amended a contract with Jackson Hewitt, giving Republic until September 30 to drop out of the bank product program instead of June 30 as originally agreed to.

The company had a good tax season in which it served 3 million products to about 2.3 million customers and process about $10.6 billion in electronic refunds, a 30-percent increase over the 2009 tax season. However, refund anticipation loans account for only a third of that, and represented a slight increase over the prior year. That reflected Republic's decision to handpick customers.

Republic also improved the quality of its loans, which the uncollected amounts for the most recent tax season about half what they were the prior year. That put about $16 million to $17 million additional income into Republic's pockets.