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H&R Block Jumps Most in S&P 500 Index on Bank-Exit Deal

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July 12 (Bloomberg) -- H&R Block Inc., the biggest U.S. tax preparer, gained the most in five weeks after announcing a deal to sell bank assets in an effort to exit Federal Reserve oversight.

H&R Block jumped 69 cents, or 2.3 percent to $30.63 at 4:02 p.m. in New York. The Kansas City, Missouri-based company has surged 65 percent this year.

The tax preparer said late yesterday that the deal with Kentucky’s Republic Bancorp Inc. will reduce earnings by about 6 cents to 9 cents a share on an annual basis. Goldman Sachs Group Inc. was hired last year to evaluate options for H&R Block’s banking unit amid new Fed rules requiring savings and loans to hold more capital.

H&R Block will “trade off some profit for capital-allocation freedom,” Michael Millman of Millman Research Associates said in a note to investors yesterday.

A Republic subsidiary will assume about $470 million in customer deposits if regulators approve the deal, the Louisville-based bank said yesterday in a separate statement. The companies also are negotiating an agreement under which Republic would provide H&R Block-branded financial services to the tax firm’s customers.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net