"The approval rates have been reduced to historic lows," said CFO Mark Baumgartner, during an analyst presentation this week. Liberty executives said that the drop in RAL approvals cause a drop in customer satisfaction and a serious decline in referrals.

The RAL business has been hurt by the exit of Santa Barbara Bank & Trust Co. from the loan business, after regulators in December refused to approve the company's participation. That exist has primarily hurt Parsippany, N.J.-based Jackson Hewitt, which competes with Liberty and H&R Block, because Jackson Hewitt was able to get funding for only 50 percent of its anticipated loan volume through Republic Bank & Trust.

However, Baumgartner said that Liberty's stores are showing little difference in performance in areas in which the competitor has RALs and those where it doesn't.

Overall, Liberty has 3,550 offices in North America, which Baumgartner had 450 net new offices compared to last tax season and it is projecting the network to grow by 15 percent to 20 percent this year.  The company also is getting an average 8 percent more per return. The CFO said that stemmed from price increases and higher fees from the effect of increased tax complexity. Baumgartner said while Liberty would normally discount pricing when stores move into new markets, but that discounting to build brand awareness has declined.

Liberty was able to get financing for its RALs through Republic. However, CEO John Hewitt, who founded Liberty after leaving Jackson Hewitt several years ago, said he hopes other banks might enter the RAL market to provide more options. He predicted that RALs are likely to settle into a model with a fair price and that this years interest of 24 percent to 36 percent "is not as onerous as in years past."