Republic Bank ending payday loan business
March 2, 2006 - Louisville, Kentucky
At the urging of the Federal Deposit Insurance Corp., Republic Bank & Trust Co. has decided to end its payday loan business.
In a Feb. 17 letter to the bank, the FDIC "cited inherent risks associated with payday lending activities and asked the bank to consider ending this line of business," according to a filing with the U.S. Securities and Exchange Commission.
Consequently, the Louisville-based bank is getting out of its marketing and servicing agreement with Ace Cash Express Inc., which offers Republic's payday loans in Texas, Pennsylvania and Arkansas.
Republic currently has $2.4 million in loans outstanding through Ace, the filing said.
Republic stopped offering payday loans in Texas on Feb. 27, and it plans to end that business in Arkansas and Pennsylvania on June 30.
During the fourth quarter of 2005, Republic recorded net income of about $299,000 through its partnership with Ace.
Republic Bank & Trust Company of Indiana also received a letter from the FDIC and has opted to terminate its Internet payday loan program, which began operating in July 2005 and has remained in a developmental stage, the filing said. During the fourth quarter of 2005, the bank recorded a net loss of about $517,000 from the program.
Republic Bank & Trust Co., with 32 banking centers in Kentucky, and Republic Bank & Trust Company of Indiana, with two banking centers in Indiana, are subsidiaries of Louisville-based Republic Bancorp Inc. (NASDAQ: RBCAA).
Business First, Staff Writer
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