H&R Block Hunts for New Bank Buyer as Republic Deal DiesZeke Faux and Fanni Koszeg
H&R Block Inc., the tax preparer seeking to exit Federal Reserve oversight, resumed its search for buyers of its bank after a deal with Republic Bancorp Inc. collapsed. Republic fell the most in more than two years.
At least six other companies were among potential suitors, and talks will begin with them or others as soon as possible, H&R Block Chief Executive Officer Bill Cobb said today in a conference call with analysts. The decision to abandon the deal, which had been pending before the U.S. Office of the Comptroller of the Currency, was disclosed yesterday in a regulatory filing by Louisville, Kentucky-based Republic.
H&R Block, the biggest U.S. tax preparer, began looking for buyers of the bank last year so the parent company wouldn’t have to meet higher capital standards imposed by the Fed. Selling the bank unit may allow Kansas City, Missouri-based H&R Block to increase its dividend and repurchase more stock.
“We are confident that we will find the right partner,” said Cobb, 57. “We do not believe that this outcome is attributable to concerns by regulators regarding our bank or its services.”
Republic dropped 8.4 percent to $24.87, the most since January 2011. H&R Block slid 0.2 percent to $27.20.
Republic withdrew its OCC application seeking conversion to a national bank from a state bank, which was a condition for completing the purchase, Cobb said.
Republic is disappointed the acquisition won’t be completed and will “continue to serve our customers and communities the right way as we look for opportunities to serve more people in more places,” CEO Steve Trager said in an e-mailed statement.
The tax preparer said it’s too early to give a timeline for a new deal and that it plans to update investors in December.
“H&R Block is going to move on and probably approach suitors No. 2 and 3 for the bank,” Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles, said yesterday in a phone interview. “I’d call it an inconvenience.”
H&R Block said in a Sept. 3 statement that the deal would be delayed after Republic told the tax preparer that the bank wasn’t expecting a decision from the OCC before the end of that month. The company said it plans to continue offering financial services and products to clients through its bank in the 2014 tax season.