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H&R Block 2013 Form 10-K 89
NOTE 20: DISCONTINUED OPERATIONS
Discontinued operations consist of our former Business Services segment and SCC. We sold RSM and MCM in fiscal
year 2012. SCC exited its mortgage business in fiscal year 2008.
Results of our discontinued operations are as follows:
(in 000s)
Year ended April 30, 2013 2012 2011
Revenues $ — $ 417,168 $ 828,725
Pretax income (loss) from operations:
RSM and related businesses $1,205 $14,441 $48,021
Mortgage (52,077) (59,702) (20,644)
(50,872) (45,261) 27,377
Income taxes (benefit) (19,662) (13,329) 13,814
Net income (loss) from operations (31,210) (31,932) 13,563
Pretax loss on sales of businesses —(109,719) —
Income tax benefit —(61,615) —
Net loss on sales of businesses —(48,104) —
Net income (loss) from discontinued operations $ (31,210) $ (80,036) $ 13,563
NOTE 21: REGULATORY CAPITAL REQUIREMENTS
HRB Bank is subject to capital guidelines administered by federal banking agencies. Failure to meet minimum capital
requirements can trigger certain mandatory and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on HRB Bank and our consolidated financial statements. All savings
associations are subject to the capital adequacy guidelines and the regulatory framework for prompt corrective action.
HRB Bank must meet specific capital guidelines that involve quantitative measures of HRB Bank's assets, liabilities
and certain off-balance sheet items, as calculated under regulatory accounting practices. HRB Bank's capital amounts
and classification are also subject to qualitative judgments by the regulators about components, risk weightings and
other factors. On August 30, 2012, the OCC published in the Federal Register a formal notice of proposed rulemaking,
which would increase capital requirements for federal savings banks, including HRB Bank. These proposed rules have
been delayed to an unspecified date. HRB Bank files its regulatory Call Report with the OCC on a calendar quarter
basis.
Quantitative measures established by regulation to ensure capital adequacy require HRB Bank to maintain minimum
amounts and ratios of tangible equity, total risk-based capital and Tier 1 capital, as set forth in the table below. As of
April 30, 2013, HRB Bank’s leverage ratio was 33.9%.
As of March 31, 2013, our most recent Call Report filing with the OCC, HRB Bank was a “well capitalized” institution
under the prompt corrective action provisions of the FDIC. The five capital categories are: (1) “well capitalized” (total
risk-based capital ratio of 10%, Tier 1 Risk-based capital ratio of 6% and leverage ratio of 5%); (2) “adequately
capitalized;” (3) “undercapitalized;” (4) “significantly undercapitalized;” and (5) “critically undercapitalized.” There
have been no conditions or events since March 31, 2013 that management believes have caused a change in HRB
Bank’s category.