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H&R Block, Inc. Message Board

  • connie91108 connie91108 Oct 10, 2012 1:09 PM Flag

    Block getting out of S&L

    and playing catch-up with TAX to offer RAL?

    Couple years ago, John Hewitt was thinking of buying a bank to offer RAL. He didnot do it after all. So he was either a luck guy or he knew something about the business.

    Without a bank TAX will be the only major player offering RAL in 2013 and Block is playing catch up by getting out of the bank regulation.

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    • Um, he definitely knew something about the business. Federal regulations prohibit tax preparers from loaning tax prep clients their refunds. Think about the conflict of interest that would create. Even when Block offered RALs, they could not be funded thru HRB Bank--hence the contract with HSBC. To my knowledge, all of the banks that funded RALS for the major tax prep chains are now out of the RAL business. Note that the Christmas loans are not RALs but regular bank loans. Is TAX really going to offer refund loans this tax season? What bank are they working with?

      • 2 Replies to wishfulthinkin27
      • TAX has been offering refund loans outside of the RAL program for a couple of years in some states. Only time will tell if they offer them in a lot more this year.

        If they do, they have a great competitive edge for early season clients.

      • Let's hope Block doesn't try to figure out a way to get back into the RAL business. At one point, the first year they couldn't get RAL's, they almost had a loan deal through HRB similar to the Christmas (Emerald Advance), but I don't think they could get it through the regulators. I had very few people complain that first year about lack of RAL's and nobody last year. It's better for the whole industry if RAL's just go away.

    • Block Bank was originally charted to buy mortgages from H&R Block Mortgage and resell them into the market. The selling of Block Bank is a good thing because it's a money losing operation. Anyone who thinks the selling of Block Bank is a bad thing, clearly does not know this company.

      Sentiment: Strong Buy

      • 2 Replies to tackspro
      • It is always good for any company to get rid of its non-profitable side business.

        Correct me if I'm wrong, I don't remenber Block ever made any monies from any of its side business, starting from Compuserve, most of them were losing money after a few year of operations, Other than mortgage, Block's bank was set up to offer bank products, might included RAL, to tax clients.

        As a shareholder, I suggest Block shold invest its profit back to its core business or buying T-bill or T-notes instead of buying any other side business which mostly endup in a losing position.

        Without the losing busines,, Block would payout a lot more dividend every quarter.

      • Not sure I agree. You can't always take a unit's financials in a company statement as a stand alone company. Many companies shift costs to different units depending on how they want to present the information.

        Also the Emerald Card and Christmas loan product is used as a draw for Block's early season clients. Without the loan would they lose some of the early season clientele? I think they would which means it hurts earnings for the tax part of the company as well.

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