The largest tax preparer in the U.S. said late Thursday it did not have to add to its reserves set aside for claims related to its former mortgage business, easing investor concerns.
CEO Allen Bennett said on a conference call with analysts that while investors seem to be concerned about the company's contingent loan repurchase obligations, it "seems to be subject to some speculation that is not based on fact.""We made no change to our aggregate reserve this quarter," Bennett continued. "Recent market speculation regarding potential losses does not relate back to any facts that we have observed. We have not seen any adverse change in our level of claimed payments." H&R Block set aside $243 million in the spring of 2008 for loan repurchases out of Option One. The company has not added to that level, Bennett said. "We believe our financial reserves here are adequate." Oppenheimer analyst Scott Schneeberger noted that "HRB had traded off this week on elevated volume on mortgage putback concerns," adding that "it recouped the week's losses on management addressing these concerns by providing incremental points of data." Schneeberger had an outperform rating on the stock with a price target of $12.57. H&R Block shares dipped to a fresh 52-week low on Thursday after the Treasury Department announced its new pilot program to give prepaid cards to Americans without bank accounts in order to receive their tax refunds.