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Jackson Hewitt Technology Services is the latest tax preparer to end its partnership with Republic Bancorp, following the bank's decision to no longer offer refund-anticipation loans.
September 19
Republic Bancorp (RBCAA) in Louisville, Ky., fell well short of analysts' expectations after it slogged through legal disputes with some business partners.
The $3.4 billion-asset company's earnings fell 80% from a year earlier, to $1.3 million. Earnings per share of 7 cents missed the average estimate of analysts polled by Bloomberg by 21 cents.
Republic's overhead costs rose 7% from a year earlier, to $30.3 million. Legal expenses increased 160% from the fourth quarter of 2012, to $1.5 million. These legal costs featured a dispute with Jackson Hewitt Tax Services over the tax preparer's decision to
Republic said in a press release Friday that it resolved its dispute with Jackson Hewitt through arbitration and entered into a new two-year agreement that will run through next year. Republic said it expects the new contract to increase its annual net revenues by about 12% over the next two years.
Republic announced two new efforts that it expects to boost 2014 revenue. It plans to introduce a new correspondent-lending channel early this year, and it launched a new residential loan program in late 2013, which it expects will add $40 million to its loan books by July.
The company also took steps to cut costs. It reduced its work force in the fourth quarter in a move it said should save $2.3 million annually. It also shuttered three low-traffic branches, which it says will cut annual costs by $1 million.
Net interest income fell 12% from a year earlier, to $26.7 million. The net interest margin compressed by 41 basis points from a year earlier, to 3.27%.
Mortgage banking woes also contributed to Republic's tough quarter. Noninterest income fell 24% from a year earlier, to $7.1 million, because mortgage revenue fell to by more than $2 million, to $778,000. Improved service charges and interchange revenue helped offset some of the mortgage dip.
"This past year was challenging in many regards, but we managed to maintain beneficial returns despite industry-wide margin compression," Steve Trager, Republic's chairman and chief executive, said in the release. "While FDIC-assisted bank acquisitions did not materialize for us in 2013, growing our bank and leveraging our capital through acquisitions remains a high priority for our company in 2014."
