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.
Republic Dropping Top RALs to $1,500
Republic 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.
