H&R Block will sell bank to BofI Holding

H&R Block rises after finding a new buyer for its bank unit: BofI, parent of Bank of Internet

Associated Press

NEW YORK (AP) -- H&R Block said Thursday it has a new deal to sell its banking business, this time to BofI Holding Inc., the parent company of Bank of Internet.

The companies did not disclose terms of the deal. In addition to acquiring the H&R Block Bank business, BofI Federal Bank will offer H&R Block-brand financial programs like Emerald Prepaid Master Card and Emerald Advance lines of credit under a program management agreement between the two companies.

H&R Block shares rose $2.13, or 7.5 percent, to $30.55 in aftermarket trading.

In the current fiscal year, H&R Block expects to take one-time charges costing about a penny per share, and it will recognize a loss of about 3 cents per share on the sale. It said divesting the bank will reduce its annual net income by 7 to 9 cents per share starting in its next fiscal year.

BofI, which is based in San Diego, said it expects $26 million to $28 million in annual revenue from the program-management part of the deal.

In July, H&R Block Inc. agreed to sell its bank assets to Republic Bank and Trust Co., a subsidiary of Republic Bancorp Inc. As a condition of the deal, Republic applied with regulators to convert into a national bank. It ultimately withdrew its application, and H&R Block terminated the sale arrangement.

Block, of Kansas City, Mo., said it wanted to partner with a lender to expand its financial services business, and did not want to be regulated as a savings and loan holding company by the Federal Reserve.

On a down day for the markets, shares of H&R Block fell 2.6 percent to $28.42 and shares of BofI Holding Inc. sank 3 percent to $74.44 before the deal was announced. BofI shares jumped $5.06, or 6.8 percent, to $79.50 aftermarket.

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