Republic Bancorp (RBCAA) is increasing its stake in the tax refund services business by buying the banking operations of H&R Block (HRB).
The $3.3 billion-asset bank in Louisville, Ky., announced late Thursday it had agreed to buy the assets and nearly all the $470 million of deposits of H&R Block Bank in Kansas City, Mo.
The deal, which Republic said it would like to close by the end of the year, is contingent on the companies agreeing on a joint marketing arrangement and a related receivables purchase contract. Those agreements would allow Republic to offer H&R Block-branded financial services and products. Meanwhile, portions of the loans originated by Republic's bank unit may be transferred to an unspecified H&R Block affiliate. Those agreements and regulatory approval must be in place by Sept. 30, Republic said.
The companies did not specify a dollar amount, but said the deal is priced at H&R Block Bank's book value. Republic said the deal could add 57 cents to 75 cents a year to earnings, with the bulk of the earnings accretion happening in the first quarter during tax season.
H&R Block had previously announced a plan to give up its status as a savings and loan holding company so it would no longer be subject to regulation by the Federal Reserve Board.
Republic has a large tax business that processes refund checks and up until the 2012 tax season offered refund anticipation loans. Regulators pressured the company to stop making those loans and the company acquiesced after fighting for more than a year. Since then, the company has been looking for ways to replace that revenue stream.