Wireless Access Code:
9166703926
Steve Trager
President and
Chief Executive Officer
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Company Profile

Second largest Kentucky based bank holding company
with total assets of $3.4 billion at 3/31/11
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Holding Company for Republic Bank & Trust Company
(Kentucky) and Republic Bank (Florida)
» 43 locations in KY, IN, OH, TN and FL
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Diverse Business Operating Segments
» Traditional banking
» Mortgage banking
» Tax Refund Solutions (“TRS”)
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What Are Refund Transfers (RTs)?
In 2012, 108.8 million U.S. taxpayers received refunds.
19.79 million.
 RT: Refund Transfer. Also called:
» RAC: Refund Anticipation Check
» ERC: Electronic Refund Check
 The RT/RAC/ERC are generally the same type of product. None of
these products are RALs (“Refund Anticipation Loans”)
 Popularity of RT product is growing:
» 2012 -- 19.79 million taxpayers used RTs
» 2011 -- 18.74 million taxpayers used RTs
» 2010 -- 12.90 million taxpayers used RTs
Growth of RTs is directly proportionate to the decline in RALs.
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Major Reasons Why Taxpayers Use
A Refund Transfer
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The RT with Efile provides faster refunds for unbanked
customers: a bank account is established for the taxpayer and
permits deposit of an IRS refund allowing them to receive the
benefit of the speed of direct deposit in 7 – 13 days
Without the RT and Efile, it takes the IRS 5-7 weeks to mail
a paper check
RT check customers can pick up their proceeds safely at the
tax office, with no risk of loss or theft from their mailbox
RT also gives taxpayers with no credit card or cash the option
of paying for tax preparation fees from the refund
But for the opportunity to utilize a professional tax preparer,
many filers would not avail themselves of certain federal and
state tax benefits (e.g., EITC)
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Major Reasons Why Taxpayers Use
A Refund Transfer
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RT unbanked customers likely can avoid a “check cashing”
fee (1-3%), e.g., by disbursement on a debit card
Low cost check cashing solutions are also arranged by
financial providers of the product
Some banked taxpayers don’t want the government to know
their bank account number
Some credit card holders still don’t want to use their card on
the Internet
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Best Practices For RT: What Can
We Achieve Together?

Best companies have the following practices
» Transparently differentiate RT fees from fees for tax
preparation
» Additional methods for receipt of the refund and settlement
options are presented (e.g., debit cards, direct deposit etc.)
» Due diligence of tax offices when enrolled to ensure they
meet established standards
» Train tax preparers who offer the product
» Oversee tax preparers with audit programs which include in
office visits and/or mystery shops
» Monitor offices for tax preparation fee abuses and fraud
» Advertising approval process for tax office
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Best Practices For RT: What Can
We Prevent Together?

Worst companies have bad practices
» RT related fees are not differentiated from tax preparation
fees or not adequately disclosed – hard to tell which fee is
which
» No due diligence process when an office is enrolled
» Training is not provided to preparers
» All refund and settlement options are not provided to
consumers
» No oversight of tax offices with audit programs
» Tax preparation fees or fraud is not monitored
» Tax office advertising materials are not reviewed
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RT Is Not A “Finance Charge”
Under TILA
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Office of Comptroller of the Currency guidance indicates
RTs are not “loans”
» Consumer groups have historically agreed with this
distinction
Customers do not pay the fee to tax preparer to obtain an
“extension of credit.” Taxpayers pay participating banks to
set up special bank accounts to receive the tax refund
Unlike cases where courts have found costs to be hidden
“finance charges,” the RT handling fee is plainly disclosed
and not a “hidden” or “buried” charge
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What Are The Differences Between
An RT And A RAL?
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RAL is a loan. A portion of the refund is given in advance to the
taxpayer within 24 hours from when the return is electronically filed.
» Bank risk is that a refund is scheduled to be paid in an average of
12 days, but could be paid much later or not at all
» With a RAL the, “bank” “loss” is the loan amount plus the fee if
the refund is not received.
» In contrast, with an RT, the “loss” for the “bank” is only the RT fee
if the refund has not been received but the service to the consumer
has not been provided
RAL cost is approximately $61 for a $1,500 loan – an RT fee from the
bank is approximately $30
An RT is not a loan: because nothing is provided by the bank in
advance of the refund being received
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Summary
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Customers want Refund Transfers
The fee is reasonable
Disclosures are effective-customers know exactly
what they are getting and what they are paying
Service is of value
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Wireless Access Code:
9166703926