OTS relaxes H&R Block capital requirement

H&R Block Inc. achieved another goal toward repositioning itself, announcing Friday that the Office of Thrift Supervision has eliminated a financing requirement related to H&R Block Bank.

The OTS previously required Kansas City-based H&R Block (NYSE: HRB) to keep 3 percent of its tangible capital at all times, as long as it owned H&R Block Bank. Tangible capital is physical assets, such as machinery, buildings and land, according to Investopedia.com.

Significant losses from its Option One Mortgage Corp. subsidiary had put H&R Block out of compliance with the rule, and as a result, the company was not allowed to repurchase its shares in the market.

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In a letter Wednesday, the OTS said the shutdown of mortgage loan origination and the sale of Option One's servicing rights reduced Block's risk profile for operating a bank. The OTS said it rescinded the 3 percent requirement as of April 30.

"We are elated with the OTS action, which eliminates a significant constraint on the structure of H&R Block's balance sheet," Block Chairman Richard Breeden in a release. "We are now able to plan for the future of H&R Block Bank with much greater certainty and to look at ways to utilize the highly flexible thrift charter to the advantage of our consumer clients without disadvantaging our shareholders."

Block ranks No. 3 on the Kansas City Business Journal's list of area public companies.