Countering any speculation that its lending business may be facing liquidity problems, H&R Block Inc. (NYSE:HRB) today filed with the Securities and Exchange Commission its Form 10-Q for the fiscal 2007 third quarter ended Jan. 31, 2007, after reporting late yesterday in a separate filing with the SEC that it would delay reporting its financials in order to review its Option One business. Housing Wire reported on the delay earlier this morning, which had led some in the industry to question whether Option One was being bitten by a credit crunch similar to other market competitors. Following the announcement of preliminary quarterly results on Feb. 22, the company said in its filing today that it has reduced the carrying value of residual interests in its discontinued mortgage operations by $29.2 million pretax, which resulted in a $15.5 million increase in net loss for the 2007 third quarter to $60.3 million, or 18 cents per diluted share.
“In light of the extreme volatility in the mortgage market, we conducted a rigorous review of the carrying value of all the assets of our Option One Mortgage Corporation subsidiary,â€? said Mark A. Ernst, Chairman and Chief Executive Officer. “We continue to believe that the net asset value in this business is appropriate and prudent. “Option One’s long-term position in the market has been strengthened by the actions we have taken beginning last summer and continuing in the current industry environment,â€? Ernst said. “We are progressing as planned with the previously announced process to sell Option One, and we remain committed to announce results and further steps by the end of this month.â€?
