So, we’re running a holiday version, short but sweet.
You know the drill … these are business tips Insider Louisville staff and contributors have collected during the past few days, a few of which are NOT double-verified like Insider Louisville’s daily reporting.
But as always, this is information from insider sources with direct knowledge of events.
This is a story we kept thinking we’ll see in the local press, but never do:
• Republic Bank & Trust Co. lost a huge piece of business last week. JHT Tax, based in Virginia Beach, Va., just notified Republic officials they’re ending their tax refund business with Republic a full two years early, according to American Banker. JHT does business as Liberty Tax Service, a franchise business similar to H & R Block, and Republic functions as the bank originator for Liberty’s instant tax refund anticipation loans, which the feds have sought for years to outlaw as usurious. Republic does business as Republic Processing Group. In the bank’s latest Form 8k filing with the Securities and Exchange Commission, dated August 27, Republic execs acknowledge that:
Approximately 19% and 20% of RPG’s gross revenue for the six months ended June 30, 2012 and 2011 was derived from Liberty tax offices. Termination of this contract or a renewal of this contract at substantially different terms will have a material adverse impact to the Company’s results of operations in 2013 and beyond.
When Republic says, “adverse impact on the Company’s results in 2013 and beyond,” they’re not kidding. The end of business with Liberty and other companies leaves Republic, Loiusville’s largest bank by deposits, a $44 million hole to fill. As we’ve reported, RAL represented a whopping 65 percent of Republic’s net income for 2010, and it’s not clear whether Republic can find another niche anywhere near as profitable. Republic’s RAL business had a record year in 2010, generating net income of $44.2 million, or 65 percent of the bank’s total annual net income of $64.8 million, according to the bank’s earnings reports.
In refund anticipation loans, Republic put up the cash for tax processors such as Liberty and the now bankrupt Jackson Hewitt to give instant refunds, taking a fee. The fee was bout $61 for a $1,500 RAL. The loans generally were for a matter of days, so the RAL fee/interest worked out to about a 150-percent annual percentage rate, which consumer groups said was usury, but Republic said was a transaction/processing fee.
This is all something of a moot point. In the 8k, Republic execs say Liberty can’t terminate the contract without cause. We’ll see if they follow through with a suit against Liberty. But in the end, RAL is going the way of the blue goose. As IL reported last last year, Republic settled with the Federal Deposit Insurance Corp, which allied with consumer protection groups to ban RAL, agreeing to end tax-refund loans in 2013.
And why do we keep seeing Republic on stock picking sites such as Seeking Alpha, listed as an undervalued financial stock? What do they know we don’t know?
Banking is a simple business. Banks take deposits and lend them, and the profit is the interest. Sure, there are other businesses such as wealth management, but those business lines will never replace the RAL, which is spectacularly profitable. As we always say, banks are the financial backbone of the community. If they struggle, it cuts the options for business owners.
• On a more positive note, Creative Alliance is celebrating its 25th Anniversary this week. And trust us … Debbie Scoppechio, Joe Adams, Rick Duffy, Toni Clem and company know how to throw a party. The invitation for the Thursday night party lists the entertainment as The Pointer Sisters. The last Creative Alliance party at the 20-year mark featured Kool and the Gang. The 10 year party had Otis Day and the Knights from “Animal House.” So, we see the pattern. More success, more funk. Our insiders say Creative Alliance has survived by focusing on pleasing current clients, not rushing off to find new business. Which we assume is true at all agencies. But Creative Alliance seems to have kept major Louisville-based giants such as KFC for decades. On their website, it states the firm is one of the largest independent agencies in the U.S., with annual billings exceeding $150 million. We count about 120 total employees at the employee-owned agency. Not bad for 2012.
• Look for the “black mold” suits against distillers to go global. The New York Times Melena Ryzik was in Louisville, filing this story last Wednesday about Baudoinia, a type of fungus that lives off ethanol, the alcohol produced in bourbon distillation or any distillation of spirits. Neighborhoods surrounding distilleries get coated with the stuff. From the post:
In June, home and business owners in and around Louisville, part of the Kentucky Bourbon Trail, filed class-action lawsuits in federal and circuit courts against five major distilleries, charging property damage and negligence. In September, with the help of lawyers in Britain, the plaintiffs’ Louisville lawyer, William F. McMurry, plans to bring a similar suit in Scotland, where the fungus is so rampant that it almost seems like part of the architecture. “Every distillery that we’ve tested has had it, as far as I know,” said James Scott, the University of Toronto mycologist who helped identify and name Baudoinia.
This is a plaintiff attorney’s dream … a pollution that links back to some of the most profitable companies in the world including Brown-Forman, William Grant & Sons, LVMH, Diageo and Beam.
• We know we’ve kind of worn everyone out with this, but this is – along the Brownsboro Road corridor – some of the most valuable real estate in Louisville. The Azalea fiasco is apparently about to be resolved, in tandem with the refurbishment of the vacant Dolls Market behind it. The Azalea building, vacant since 1999, sits on property owned by the Bauer family. The historic building dates back to the 19th Century. But our sources say potential purchasers have been put off by the amount of money needed to refurbish the building while keeping its structural integrity required by its historic landmarks designation. Apparently, someone has come up with a concept sharp enough to sever this Gordian knot.
This went out from a major broker to all the other major brokers, who sent it to us:
Former Doll’s market is now available for Lease.
From 5,000 to 23,000 is available. Exciting things are happening on the former Azalea’s property. Be a part of this re-development!
Then, another insider sent us this:
One of my moles knows who’s getting the Azalea property. (The sources) said as soon as the ink is dry on the paperwork, he’ll let it be known.
From the marketing email:
Retail-Commercial For Lease
3620 Brownsboro Road
Louisville, KY 40206
Contiguous Space: 5,000 – 23,000 SF Total Available: 23,000 SF Rental Rate: $20 PSF (Annual) Lease Types: Net Lease