Magazine article American Banker

Jackson Hewitt Develops Late-Season Refund Loan

Magazine article American Banker

Jackson Hewitt Develops Late-Season Refund Loan

Article excerpt

Jackson Hewitt Tax Service Inc. plans to introduce a loan product today that will let late-season tax filers receive the balance of their refunds two weeks after obtaining a partial refund anticipation loan.

Michael Lister, the Parsippany, N.J., company's chairman and chief executive, said in a conference call Wednesday with analysts that the product was created as an "enhancement" to its refund anticipation loans. The products allow consumers "to take advantage of opportunities right now like booking a trip or paying for a repair."

Jackson Hewitt did not reveal many details about the new product, which would charge consumers who file late in the tax season a fee of less than $14, in addition to normal fees on its refund anticipation loans.

John Neff, an analyst at William Blair & Co. LLC, said the loan is "more of an intermediary product" for consumers who are "a little less urgent" about obtaining the funds. He also said the product was an attempt by Jackson Hewitt to increase business later in the tax season (March and April), when the company says more consumers are filing.

Jackson Hewitt spent the bulk of its third-quarter conference call discussing the shift in customer volume to later in the tax season. "The slow start to the tax season ... more than offset the benefit of an additional day at the end of the quarter as compared to the same period in the prior year," the company said.

For its fiscal third quarter, which ended Jan. 31, Jackson Hewitt reported that its net income rose 13% from a year earlier, to $27.5 million. Earnings of 83 cents a share would have been 3 cents higher if not for litigation costs. The average Wall Street estimate had called for earnings of 92 cents a share.

Fiscal third-quarter revenue grew 20.2%, to $114.4 million, but expenses increased 24%, because of higher marketing and advertising spending, as well as increased operations and labor costs related to opening new locations. …

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