Republic in Ky. Misses in 2Q on Loss of Refund-Loan Program

Profits at Republic Bancorp (RBCAA) fell in the second quarter as the Louisville, Ky., company continues to suffer from the loss of its lucrative tax-refund anticipation loan program.

The $3.3 billion-asset lender reported Thursday a second-quarter profit of $6.1 million, down 36% from the second quarter of 2012. Per-share earnings of 30 cents were 8 cents below the average estimates of analysts polled by Bloomberg.

Noninterest income fell 23%, to $10.8 million, as refund-transfer fees dropped 73%, to $1.7 million.

In 2011, after an extended dispute with the Federal Deposit Insurance Corp., Republic agreed to stop offering short-term loans against its customers' projected tax refunds; 2012 was the final year of the program.

Upticks in other fee revenue partially offset the loss of refund-loan income. Service charges on deposit accounts increased 6%, to $3.5 million, and mortgage-banking revenue rose 11%, to $2.2 million.

Net interest income rose 2%, to $28.8 million, and Republic's net interest margin expanded by 3 basis points, to 3.56%.

The provision for loan losses rose 94% but remained relatively low, at $905,000, and nonperforming loans dropped by 20%, to $17.5 million.

Last week, Republic agreed to buy the deposits of H&R Block Bank in a deal that would help rehabilitate its tax business.