HR Block 2009 Annual Report Download - page 56

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NOTE 4: MARKETABLE SECURITIES AVAILABLE-FOR-SALE
The amortized cost and fair value of securities classified as available-for-sale held at April 30, 2009 and 2008 are
summarized below:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(1)
Fair
Value
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(1)
Fair
Value
April 30, 2009 2008
(in 000s)
Mortgage-backed securities $ 27,466 $ 25 $ (698) $ 26,793 $ 30,809 $ 10 $ (1,418) $ 29,401
Municipal bonds 9,560 491 (4) 10,047 9,449 233 – 9,682
Trust preferred security 3,454 – (3,162) 292 3,500 – (691) 2,809
Residual interests in securitizations 166 5,627 – 5,793 4,289 10,170 – 14,459
Common stock –– – –3,359 586 (113) 3,832
$ 40,646 $ 6,143 $ (3,864) $ 42,925 $ 51,406 $ 10,999 $ (2,222) $ 60,183
(1)
At April 30, 2009, investments with a cost of $30.3 million and gross unrealized losses of $3.9 million had been in continuous loss
position for more than twelve months. At April 30, 2008, investments in common stock with a cost of approximately $33 thousand and
gross unrealized losses of $3 thousand had been in continuous loss position for more than twelve months.
Proceeds from the sales of AFS securities were $8.3 million, $13.9 million and $3.5 million during fiscal years
2009, 2008 and 2007, respectively. Gross realized gains on those sales during fiscal years 2009, 2008 and 2007 were
$0.7 million, $0.4 million and $0.3 million, respectively; gross realized losses were $1.3 million, $0.1 million and
$0.1 million, respectively. During fiscal years 2009 and 2008, we recorded other-than-temporary impairments of
AFS securities totaling $1.5 million and $0.4 million, respectively, due to our inability to hold the investments until
potential recovery of market value.
Contractual maturities of AFS debt securities at April 30, 2009, occur at varying dates over the next one to
28 years, and are set forth in the table below.
Cost Basis Fair Value
(in 000s)
Maturing in:
One year or less $ 1,012 $ 1,028
Two to five years 4,140 4,411
Five to ten years 4,408 4,608
Beyond 3,454 292
$ 13,014 $ 10,339
HRB Bank is required to maintain a restricted investment in FHLB stock for borrowing availability. The cost of
this investment, $6.7 million, represents its redemption value, as these investments do not have a ready market.
NOTE 5: MORTGAGE LOANS HELD FOR INVESTMENT AND RELATED ASSETS
The composition of our mortgage loan portfolio as of April 30, 2009 and 2008 is as follows:
April 30, Amount % of Total Amount % of Total
2009 2008
(dollars in 000s)
Adjustable-rate loans $ 534,943 65% $ 715,919 71%
Fixed-rate loans 286,894 35% 288,721 29%
821,837 100% 1,004,640 100%
Unamortized deferred fees and costs 7,135 7,062
Less: Allowance for loan losses (84,073) (45,401)
$ 744,899 $ 966,301
52 H&R BLOCK 2009 Form 10K