H&R Block will sell banking branch to Republic Bank
Andrew C. Grumke | KCBJ
H&R Block Inc. announced it's intention to sell it's banking arm to Republic Bank and Trust Co. July 11, 2013.
- Laura Davison[1]
- Staff Writer- Kansas City Business Journal
H&R Block Inc. said Thursday that it has a deal to sell its banking operation to Republic Bank & Trust Co.[2]
The agreement calls for Kentucky-based Republic Bank & Trust to acquire non-cash assets of H&R Block Bank[3] valued at about $3 million and assume about $470 million in customer deposits. H&R Block and Republic will negotiate a joint marketing plan for certain banking products targeted to Block customers.
The Kansas City-based tax preparer (NYSE: HRB) announced its intentions last October to seek a buyer for its banking business to avoid regulation by the Federal Reserve[4].
H&R Block CEO Bill Cobb[5] called the Fed requirements "cumbersome" in 2012, indicating the benefit of the banking arm wasn't worth the additional hassle.
H&R Block's core business is tax preparation, not banking, and it doesn't offer many of the services a traditional bank does. It doesn't make loans and customers, who are closely tied to the tax business, use preloaded debit cards instead of bank accounts.
The company had revenue of $2.9 billion for the recently completed 2013 fiscal year.
What happens next?
While the agreement is subject to regulatory approval and final negotiation, it calls for Republic to act as the bank for H&R Block's financial services.
After the transaction is completed, H&R Block Bank will surrender its charter and merge with parent company Block Financial, LLC.
H&R Block expects 3 to 4 cents per share in costs related to the sale, which will cut the company's annual net income by 6 to 9 cents per share.
Republic said the acquisition will add 57 to 75 cents per Class A share to its annual earnings, according to Securities and Exchange Commission filings[6].
Laura is an intern from the University of Missouri's School of Journalism.
References
- ^ Laura Davison (feeds.bizjournals.com)
- ^ Republic Bank & Trust Co. (www.bizjournals.com)
- ^ H&R Block Bank (www.bizjournals.com)
- ^ avoid regulation by the Federal Reserve (www.bizjournals.com)
- ^ Bill Cobb (feeds.bizjournals.com)
- ^ Securities and Exchange Commission filings (www.snl.com)