HR Block 2014 Annual Report Download - page 89

H&R Block, Inc. | 2014 Form 10-K 81
The following table sets forth HRB Bank's regulatory capital requirements calculated in its Call Report, as filed with
the Federal Financial Institutions Examination Council (FFIEC):
(dollars in 000s)
Actual Minimum Capital Requirement Minimum to be Well Capitalized
Amount Ratio Amount Ratio Amount Ratio
As of March 31, 2014:
Total risk-based capital ratio (1) $ 563,899 168.5% $ 26,771 8.0% $ 33,464 10.0%
Tier 1 risk-based capital ratio (2) 559,572 167.2% N/A N/A 20,079 6.0%
Tier 1 capital ratio (leverage) (3) 559,572 32.1% 209,041 12.0% (5) 87,101 5.0%
Tangible equity ratio (4) 559,572 32.1% 26,130 1.5% N/A N/A
As of March 31, 2013:
Total risk-based capital ratio (1) $ 506,734 131.6% $ 30,806 8.0% $ 38,508 10.0%
Tier 1 risk-based capital ratio (2) 501,731 130.3% N/A N/A 23,105 6.0%
Tier 1 capital ratio (leverage) (3) 501,731 25.5% 236,315 12.0% (5) 98,464 5.0%
Tangible equity ratio (4) 501,731 25.5% 29,539 1.5% N/A N/A
(1) Total risk-based capital divided by risk-weighted assets.
(2) Tier 1 (core) capital less deduction for low-level recourse and residual interest divided by risk-weighted assets.
(3) Tier 1 (core) capital divided by adjusted total assets.
(4) Tangible capital divided by tangible assets.
(5) Effective April 5, 2012, the minimum capital requirement was changed to 4% by the OCC, although HRB Bank plans to maintain a minimum of 12.0% leverage
capital at the end of each calendar quarter.
Block Financial may make capital contributions to HRB Bank to help HRB Bank meet its capital requirements. Block
Financial made no such capital contributions in fiscal year 2014 or 2013, but contributed $400.0 million during fiscal
year 2012.
A return of capital or dividend paid by HRB Bank must be approved by the OCC and the Federal Reserve. HRB Bank
did not pay any dividends during fiscal year 2014 or 2013. HRB Bank received regulatory approval and subsequently
paid cash dividends and returned capital of $400.0 million during fiscal year 2012. As of April 30, 2014, HRB Bank had
total equity of $585.0 million.
NOTE 20: SEGMENT INFORMATION
Management has determined our reportable segments identified below according to types of services offered and
the manner in which operational decisions are made. Operating results of our reportable segments are all seasonal.
TAX SERVICES – Our Tax Services segment provides assisted income tax return preparation, digital DIY tax solutions
and other services and products related to income tax return preparation to the general public primarily in the U.S.
and its territories, Canada and Australia. We also offer retail banking services in the U.S. through HRB Bank. Major
revenue sources include fees earned for tax preparation services performed at company-owned retail tax offices,
royalties from franchise retail tax offices, sales of tax preparation software, fees for online tax preparation services,
fees from RACs, fees related to H&R Block Prepaid Emerald MasterCard® and interest and fees from EAs.
Our international operations contributed $232.2 million, $249.0 million and $232.8 million in revenues for fiscal
years 2014, 2013 and 2012, respectively.
CORPORATE AND ELIMINATIONS – Results include net interest margin and gains or losses relating to mortgage
loans held for investment and residual interests in securitizations, interest expense on borrowings, other corporate
expenses and eliminations of intercompany activities.
IDENTIFIABLE ASSETS – Identifiable assets are those assets, including goodwill and intangible assets, associated
with a reportable segment. The remaining assets are classified as Corporate assets, which consist primarily of cash
and mortgage loans held for investment. The carrying value of assets held outside the U.S. totaled $303.9 million,
$472.6 million and $201.8 million as of April 30, 2014, 2013 and 2012, respectively.