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Republic Bancorp Inc. in Louisville, Ky., reported higher first-quarter profit despite lower volume in its controversial refund-anticipation loan business.
April 21 -
Republic Bancorp Inc. has accused the Federal Deposit Insurance Corp. of multiple abuses of its authority, escalating an ongoing battle over refund-anticipation loans.
March 1 -
Republic Bancorp Inc. is fighting to keep a right that most other banks have surrendered. The Louisville, Ky., company is preparing to square off against the Federal Deposit Insurance Corp. over refund-anticipation loans, a product that regulators have pressured several other lenders to stop making because it is viewed as predatory.
February 15 -
Republic Bancorp said Friday that it had received a notice from the Federal Deposit Insurance Corp. characterizing its practice of funding loans in advance of income tax refunds as "unsafe and unsound."
February 11 -
The Internal Revenue Service, as part of its plan to regulate tax preparers on the federal level, said it will examine refund-anticipation loans and other tax-time financial products, just as banking regulators crack down on some of the few financial institutions that still fund such loans.
January 11
The Federal Deposit Insurance Corp. has upped the ante in its push to force Republic Bank & Trust to stop making refund-anticipation loans.
On Thursday, Republic, of Louisville, Ky., said that the FDIC has amended a notice of charges against the bank to include new violations related to its refund program.
According to the amended notice, which ordered Republic to pay a $2 million fine, the alleged violations were discovered when the FDIC sent hundreds of examiners to the bank's tax preparation partners in February to review the RAL process.
In the initial order, the $3.4 billion-asset Republic was told to wind down its refund-anticipation-loan business, but Republic declined to consent to the order and instead has vigorously defended its practices. Its first-quarter earnings rose 60% from a year earlier, to $71.4 million, largely due to profits from the refund loan business. In a press release Thursday, the company said that just 1.61% of the loans issued in 2011 are unpaid.
"The concerns expressed by the FDIC with regard to the bank's underwriting of financial risk on RALs during this tax season, we believe, were proven to be unfounded in light of our performance," the company said in the press release. "We are disappointed that the FDIC has followed up on this success with an amended notice with further claims of violations associated with the business."
The amended charges say the bank violated several laws and regulations. For example, the FDIC claims the tax preparation staff did not disclose the cost of a refund loan as an annual-percentage rate, which violates the Truth-in-Lending Act. Republic charges $61.22 for the typically short-term loan and caps loans at $1,500.
The bank and the FDIC are expected to square off in front of an administrative law judge in September. Also, in late February Republic sued the FDIC in the U.S. District Court for the Western District of Kentucky, to seek relief from retribution. The FDIC filed a motion to have the case dismissed and last month Republic filed a response.
"The bank looks forward to a fair and objective hearing…and remains optimistic that the prescribed administrative process will enable us to properly present information that will support the bank's disagreement with the FDIC's claims," the company said in the press release.
