Republic Bancorp calls off H&R Block bank deal
Wednesday, October 9, 2013
NEW YORK (AP) — Republic Bancorp is pulling out of a deal to buy tax preparer H&R Block’s banking arm after withdrawing an application to regulators to convert into a national bank.
But H&R Block is still committed to exiting its banking business and will explore other options, said CEO William Cobb during a conference call on Wednesday.
H&R Block had agreed in July to sell its H&R Block Bank assets to Republic Bank and Trust Co., a subsidiary of Republic Bancorp Inc. Financial terms of the transaction were not disclosed.
Republic applied with regulators to convert into a national bank, which was a necessary condition of its deal with H&R Block. The plan was for H&R Block Bank to close by surrendering its charter once the deal was complete.
But Louisville, Ky.-based Republic Bancorp said in a filing with the Securities and Exchange Commission Tuesday that it is withdrawing its pending applications with the Office of the Comptroller of the Currency to convert to a national bank. In turn, H&R Block Inc. notified Republic Bancorp that it plans to end their H&R Block Bank agreement.
Republic Bancorp CEO Steve Trager declined to comment on why the company withdrew its application and said the company is disappointed it couldn’t finalize the transaction. The OCC declined to comment.
H&R Block had hired Goldman Sachs last year to explore options for its banking arm, seeking a way to no longer be regulated as a savings and loan holding company by the Federal Reserve.
Some analysts have suggested H&R Block would be a more attractive takeover target if it sold the bank.
H&R Block said Wednesday that it will explore other options for a deal. Cobb said H&R Block had received “strong and varying interest” from a number of potential suitors previously and that it would restart the process quickly to work out a potential bank sale.
“We’re confident that we will find the right partner,” Cobb said.
H&R Block is still motivated to sell the bank unit but will likely reach less favorable terms with a new buyer than it had struck with Republic, said Moody’s Investor Services.
H&R Block still plans to offer financial services and products through H&R Block Bank for the 2014 tax season.
Republic Bancorp’s stock dropped $2.28, or 8.4 percent, to close at $24.87 Wednesday. Shares of H&R Block, which is based in Kansas City, Mo., fell 6 cents to close at $27.20.
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