HR Block 2012 Annual Report Download - page 44

Supervision – Bank and Holding Companies,” and Item 8, note 21 to the consolidated financial statements, for
additional discussion of HRB Bank’s regulatory capital requirements.
H&R Block, Inc. is a legal entity separate and distinct from its indirect subsidiary, HRB Bank. Various federal
and state statutory and regulatory provisions limit the amount of dividends HRB Bank may pay without
regulatory approval. The ability of HRB Bank to pay dividends in the future is currently, and could be further,
influenced by bank regulatory policies and capital guidelines. See Item 1, “Regulation and Supervision – Bank
and Holding Companies,” for a more detailed discussion of restrictions on payment of dividends.
The federal government, various state, local, provincial and foreign governments, and some self-regulatory
organizations have enacted statutes and ordinances, and/or adopted rules and regulations, regulating aspects of
our business. These aspects include, but are not limited to, commercial income tax return preparers, income tax
courses, the electronic filing of income tax returns, the offering of RACs, the facilitation of RALs, loan
originations and assistance in loan originations, mortgage lending, privacy, consumer protection, franchising,
sales methods and banking. We seek to determine the applicability of such statutes, ordinances, rules and
regulations (collectively, Laws) and comply with those Laws.
From time to time in the ordinary course of business, we receive inquiries from governmental and self-
regulatory agencies regarding the applicability of Laws to our services and products. In response to past inquiries,
we have agreed to comply with such Laws, convinced the authorities that such Laws were not applicable or that
compliance already exists, and/or modified our activities in the applicable jurisdiction to avoid the application of
all or certain parts of such Laws. We believe the past resolution of such inquiries and our ongoing compliance with
Laws has not had a material effect on our consolidated financial statements. We cannot predict what effect future
Laws, changes in interpretations of existing Laws or the results of future regulator inquiries with respect to the
applicability of Laws may have on our consolidated financial position, results of operations and cash flows. See
additional discussion of legal matters in Item 8, note 19 to the consolidated financial statements.
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
This section presents information required by the SEC’s Industry Guide 3, “Statistical Disclosure by Bank
Holding Companies.” The tables in this section include HRB Bank information only.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY; INTEREST RATES AND INTEREST
DIFFERENTIAL – The following table presents average balance data and interest income and expense data for
our banking operations, as well as the related interest yields and rates for fiscal years 2012, 2011 and 2010:
(dollars in 000s)
Year ended April 30, 2012 2011 2010
Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
Interest-earning assets:
Mortgage loans, net $ 448,431 $20,322 4.53% $ 545,052 $ 24,693 4.53% $ 677,115 $ 31,877 4.12%
Federal funds sold 2,315 1 0.04% 2,649 3 0.10% 9,471 9 0.09%
Emerald Advance (1) 87,711 28,982 33.04% 141,127 94,300 35.21% 106,093 77,891 35.21%
Available-for-sale investment securities 250,329 4,178 1.67% 22,243 174 0.78% 25,144 181 0.71%
FHLB stock 3,259 113 3.47% 5,953 171 2.88% 6,703 119 1.77%
Cash and due from banks 732,164 1,806 0.25% 930,666 2,338 0.25% 747,504 1,976 0.26%
1,524,209 $55,402 3.63% 1,647,690 $121,679 7.38% 1,572,030 $112,053 7.00%
Non-interest-earning assets 56,426 57,899 94,499
Total HRB Bank assets $1,580,635 $1,705,589 $1,666,529
Interest-bearing liabilities:
Customer deposits $ 705,593 $ 6,735 0.95% $ 830,597 $ 8,488 1.02% $1,019,664 $ 10,174 1.00%
FHLB borrowing 23,770 572 2.41% 72,534 1,526 2.10% 98,767 1,997 2.02%
729,363 $ 7,307 1.00% 903,131 $ 10,014 1.11% 1,118,431 $ 12,171 1.09%
Non-interest-bearing liabilities 363,990 366,666 267,159
Total liabilities 1,093,353 1,269,797 1,385,590
Total shareholders’ equity 487,282 435,792 280,939
Total liabilities and shareholders’ equity $1,580,635 $1,705,589 $1,666,529
Net yield on interest-earning assets (1) $48,095 3.16% $111,665 6.78% $ 99,882 6.23%
(1) Includes all interest income related to Emerald Advance activities. Amounts recognized as interest income also include certain fees, which are amortized into
interest income over the life of the loan, of $48.5 million and $39.2 million for fiscal years 2011 and 2010, respectively.
30 H&R BLOCK 2012 Form 10K