HR Block 2009 Annual Report Download - page 27

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Year Ended April 30, 2009 2008 2007
Consumer Financial Services – Operating Results (in 000s)
Interest income:
Mortgage loans, net $ 46,396 $ 74,895 $53,396
Emerald Advance lines of credit 44,171 21,224 –
Other 1,845 7,151 3,531
92,412 103,270 56,927
Interest expense:
Deposits 14,069 42,878 32,128
FHLB advances 5,113 6,008 836
19,182 48,886 32,964
Net interest income 73,230 54,384 23,963
Provision for loan losses (63,897) (42,004) (3,622)
Other 49,389 39,436 20,251
Total revenues
(1)
58,722 51,816 40,592
Non-interest expenses 73,230 40,332 17,506
Pretax income (loss) $(14,508) $ 11,484 $23,086
(1)
Total revenues, less interest expense and provision for loan losses on mortgage loans held for investment.
FISCAL 2009 COMPARED TO FISCAL 2008 – Consumer Financial Services’ revenues, net of interest expense and
provision for loan losses, for fiscal year 2009 increased $6.9 million, or 13.3% over the prior year.
Net interest income increased $18.8 million, or 34.7%, over the prior year. Interest income earned from our
Emerald Advance loan program increased $22.9 million as a result of higher volumes. Interest expense on deposits
declined $28.8 million due to lower interest rates and lower average balances. Interest income on mortgage loans
held for investment declined $28.5 million due to lower balances and an increase in non-accrual loans from
$110.8 million at April 30, 2008 to $222.4 million at April 30, 2009. The following table summarizes the key drivers of
net interest income:
Year Ended April 30, 2009 2008 2009 2008
Average Balance Average Rate Earned (Paid)
(dollars in 000s)
Mortgage loans held for investment, net $839,253 $1,157,360 5.14% 6.40%
Emerald Advance lines of credit 133,252 68,932 35.31% 32.31%
Investments 354,102 196,262 0.50% 3.64%
Deposits, interest-bearing 863,072 904,836 (1.63%) (4.74%)
Our non-performing assets consist of the following:
April 30, 2009 2008
(in 000s)
Impaired loans:
60 – 89 days $ 21,415 $ 18,182
90+ days, non-accrual 121,685 73,600
TDR loans, current 60,044 –
TDR loans, non-accrual 100,697 37,159
303,841 128,941
Real estate owned
(1)
44,533 350
Total non-performing assets $348,374 $129,291
(1)
Includes loans classified as in-substance foreclosures of $27.4 million at April 30, 2009.
H&R BLOCK 2009 Form 10K 23