Friday, February 23, 2007

Mortgage Writedowns hit HR Block

From the Street:

The Kansas City, Mo., company reported its mortgage results as discontinued operations, as it's seeking to sell that business. The mortgage operation posted a loss of $69.7 million, or 22 cents a share, compared to a year-ago net profit of $42.4 million, or 13 cents a share.

The loss from discontinued operations "reflects an increase of loan loss reserves of approximately $111 million," it says.

H&R Block announced in November that it was considering "strategic alternatives" for its subprime mortgage business, Option One, which includes a possible sale. The company said Thursday that it expects to make an announcement about that next month.

According to Yahoo Finance, HR Block has $2.7 billion in current assets. That means this loan loss reserve increase won't send the company into bankruptcy court. But, a $111 million increase is more than a merely inconsequential amount. Other sub-prime lenders are having to make the same increases in their respective loan loss provisions.