Payday Loan Times

Times haven't changed for Republic Bancorp since it discontinued its payday loan practice. We reported earlier this year that first quarter profits fell after such a decision was reached; the same occurred last quarter.

On Friday, the business reported a 28 percent profit drop for the quarter ending June 30, largely because the company’s results from a year earlier included the aforementioned payday advance business.

Not counting the payday loan revenue, profits were $6 million, down from $6.6 million a year earlier.

“Although we did not post record earnings, we believe our results were solid and are a testament to the core banking principles that we practice each and every day,” Steve Trager, Republic CEO, said in a statement.

He cited the slight difference between the short-term interest rates the bank pays for deposits and the long-term rates it charges for loans as a pressure on profits. The company said its loan portfolio, particularly residential real estate, has lifted banking net interest income. Non-interest income increases included a 24 percent increase in deposit service charges, primarily because of new checking accounts.

The bank did not say it had any plans to bring back offers on bad credit payday loans for its clients.

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.