H&R Block (HRB) Nears 52-Week High After OTS Eliminates 3% Tangible Capital Requirement

May 9, 2008 12:01 PM EDT

Shares of H&R Block, Inc. (NYSE: HRB) are on the move today, gaining 7.5%, on news that the Office of Thrift Supervision has terminated the prior regulatory requirement that H&R Block maintain 3% adjusted tangible capital at the parent company level at all times.

The decision reflects the closing of the sale on April 30, 2008, of the mortgage servicing business of H&R Block’s Option One subsidiary and deleveraging of H&R Block.

Due to its failure to comply with OTS requirements, H&R Block was effectively precluded from repurchasing its own shares in the market until it achieved compliance with the 3% Rule. This implies, now that the capital requirement is terminated, the company can now repurchase shares.

H&R Block Chairman Richard Breeden said the action, "eliminates a significant constraint on the structure of H&R Block's balance sheet." He also said, "We regard this as a highly positive development."

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