Without Payday Loans, Bank Sees Profits Diminish
Various banking institutions around the country have discontinued their business of payday advances. At least one has felt the effects.
Republic Bancorp Inc. posted first-quarter net income of $9.7 million, or 50 cents per Class A share, compared with $13.3 million, or 67 cents per Class A share, during the same quarter in 2005.
Steve Trager, president and CEO, said in a news release that the increase in the company's dividend "displays (the board's) confidence in the long-term outlook for the company."
Net interest income during the first quarter derived $507,000 from the payday loan business, down from $3.3 million from that business during the first quarter 2005.
The decline in net interest income also "was attributable to a decrease in Electronic Refund Check volume, an increase in the segment's cost of funding and an increase in estimated losses within the Refund Anticipation Loan portfolio," the release said.
The company did not disclose the detailed charges resulting from the estimated losses.
"While we fell short of our earnings goal for the first quarter, we experienced a great deal of operational success during our busiest time of the year," Trager said in the release.