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Liberty Tax Cancels Republic Contract

republic bank newThe parent company of Liberty Tax Service has canceled its contract for tax season financial products provided by Republic Bank. And while JTH Tax cites the end of refund loan programs as reason for dropping the bank, Republic Bancorp says there was no good reason for the action. This comes at a time when JTH has invested in another company that provides bank products for tax season, Meta Financial Group.
Both JTH Holdings and Republic Bancorp, the public parents to these companies, filed documents with the SEC reporting the cancellation and giving their interpretation of the event which involved the termination of the Amended and Restated Marketing and Servicing Agreement that was signed in November. The effective date for the contract's end is September 16, although Liberty wrote that it would continue to work with the bank "to modify the terms of the Agreement in a way that may avert the termination."

Republic was to be the exclusive supplier of products such as Refund Anticipation Loans, Electronic Refund Checks and Electronic Refund Deposits under an agreement that was to expire after the 2014 tax season. However, JTH said the Republic was supposed to provide a minimum number of products, which it could no longer do without the availability of RALs, which have been driven from the market by federal regulators.

While Republic's response was that it pledged to keep working toward an agreement, it noted, "that the Bank believes there has been no occurrence that would give rise to termination of the Agreement and that the Bank disagrees with Liberty's interpretation of the Agreement relative to Liberty's ability to terminate. The Bank will continue to evaluate its alternatives as it seeks to protect its rights under the Agreement."

The bank said that Liberty's business represented 19 percent of the revenue for the Republic Processing Group segment for the six months ended June 30 and 20 percent for the same period in 2011.


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