SOURCE: BofI Holding, Inc.

BofI Holding, Inc.

February 04, 2010 10:20 ET

BofI Reports Second Quarter Earnings of $5.5 Million; Results Mark New High in Quarterly Earnings and EPS

SAN DIEGO, CA--(Marketwire - February 4, 2010) - BofI Holding, Inc. (BofI or the Company) (NASDAQ: BOFI), parent of Bank of Internet USA (Bank), today announced net income of $5,548,000 for its second quarter ended December 31, 2009 compared to net income of $2,761,000 for the three months ended December 31, 2008. Earnings available to the Company's common stockholders were $5,375,000, or $0.61 per diluted share for the current quarter compared to $2,588,000, or $0.30 per diluted share for the quarter ended December 31, 2008. For the six months ended December 31, 2009, net income totaled $9,256,000 compared to $944,000 for the six months ended December 31, 2008. Diluted earnings per share were $1.02 compared to $0.09 for the six months ended December 31, 2009 and 2008, respectively.

BofI's quarterly net income of $5,548,000 and its quarterly diluted earnings per share of $0.61 were new historic highs for the Company. Net income for the second quarter ended December 31, 2009 increased 100.9% compared to net income for last year's second quarter ended December 31, 2008. Net income for the quarter ended December 31, 2009 included an after-tax increase of $1,426,000 for realized gains on sales, net of unrealized losses on certain mortgage-backed securities. Excluding the net gain, net income would have been $4,122,000 for the quarter ended December 31, 2009, an increase of 49.3% compared to last year. Net income for the six months ended December 31, 2009 increased $8,312,000 compared to the six months ended December 31, 2008. Earnings for the six months ended December 31, 2008 were reduced by a $4,710,000 after-tax loss on the sale of Fannie Mae preferred stock after Fannie Mae was placed in government conservatorship in September of 2008. The increase in quarterly and year-to-date net income was primarily due to higher net interest income resulting from growth in the Bank's average earning assets and increases in the Company's net interest margin.

"I am very pleased with our earnings this quarter given that they were achieved concurrently with a quarter-on-quarter increase in the Bank's Tier 1 leverage ratio from 7.20% to 7.91% and a year-on-year increase of 1.05%, from 6.86% to 7.91%," remarked Greg Garrabrants, President and Chief Executive Officer. "While many institutions have been forced to raise capital through dilutive equity issuances, we have been able to increase our core capital ratios and grow our assets by $43.1 million this year without raising external capital. With our strong capital ratios and our profitable business model we should be able to attain a virtuous cycle of asset and earning growth. Additionally, we believe we can raise capital for specific tangible opportunities on terms we believe are attractive to our shareholders. We continue to execute on our two pronged strategy of taking advantage of current market opportunities to purchase attractively priced high-credit quality assets and investing in our franchise to grow our origination capability and prepare our infrastructure for further expansion. This quarter we added more depth to our management team by hiring a Chief Marketing Officer and a Chief Information Officer; both individuals held those positions at a much larger competitor. In the latter part of the quarter, we hired a strong multifamily origination team that will increase multifamily loan production in subsequent quarters. Our single family gain-on-sale mortgage banking operation continues to grow, not only in terms of increased volume and revenue, but also in terms of marketing and operational efficiency. Although there is still much more to do, we made significant progress investing in and improving our core capabilities as an institution this quarter."

Second Quarter Highlights:

 -- Net interest margin grew to 4.02% in the current quarter, 34.9% over
    the second quarter last year.
 -- Asset quality remains strong, with the principal balance of non-
    performing loans equal to 0.90% of the loan portfolio, and total non-
    performing assets equal to 0.93% of total assets at December 31, 2009.
 -- The allowance for loan loss increased to 81 basis points on total
    loans compared to 52 basis points at the end of the second quarter
    last year.
 -- Total assets reached $1,345.3 million at December 31, 2009, up 10.2%
    compared to the second quarter last year.
 -- Total deposits reached $877.8 million at December 31, 2009, up 38.8%
    compared to the second quarter last year.
 -- The efficiency ratio decreased to 28.6%, an improvement of 16.5%
    compared to the second quarter last year.

Quarter Earnings Summary

For the three months ended December 31, 2009, B of I had net income of $5,548,000 compared to $2,761,000 for last year's second quarter. Net interest income increased $4.2 million for the second quarter ended December 31, 2009 compared to the second quarter last year. Total interest and dividend income during the quarter ended December 31, 2009 increased 12.3%, to $21.9 million, compared to $19.5 million during the quarter ended December 31, 2008. The increase in interest and dividend income for the quarter was primarily attributable to growth in the average balance of loans and investment securities and higher rates earned on new loans and securities. Average interest earning assets increased $114.3 million or 9.7% for the quarter ended December 31, 2009 compared to the quarter ended December 31, 2008. Interest expense decreased due to a 96 basis point decrease in the average funding rate, including a decrease in average rates for time deposits of 92 basis points. The improvement in the net interest margin resulted from specific actions taken by the Bank to manage its assets and liabilities, as well as favorable changes in the U.S. Treasury yield curve and loan risk premiums.

For the second quarter ended December 31, 2009, non-interest income was $2.7 million primarily due to realized gains on the sale of mortgage-backed securities of $6.5 million and mortgage banking income of $0.5 million less unrealized losses from impairments and fair value write-downs of $4.4 million. The Bank has increased its allowance for loan loss from 52 basis points on loans at December 31, 2008 to 81 basis points on loans at December 31, 2009. The provision for loan loss was $1,600,000 in the second quarter ended December 31, 2009, up $475,000 compared to the quarter ended December 31, 2008. The increased provisions for the quarter ended December 31, 2009 were the result of changes in the loan portfolio mix and higher estimated losses from our recreational vehicle portfolio and real estate loan portfolio.

Non-interest expense or operating expense, which is comprised primarily of compensation, data processing and internet expenses, occupancy and other operating expenses, was $4.5 million for the three months ended December 31, 2009, up from $3.0 million for the three months ended December 31, 2008. Contributors to the year-over-year increase in operating expense were the Bank's additional costs for foreclosed real estate, increased compensation expense related to additional staffing and the FDIC's general increase in insurance premiums.

Balance Sheet Summary

The Company's total assets increased $43.1 million, or 3.3%, to $1,345.3 million, as of December 31, 2009, up from $1,302.2 million at June 30, 2009. The increase in total assets was primarily due to the purchases of additional loans and the origination of additional loans held for sale. Total liabilities increased $29.4 million, primarily due to an increase in deposits of $229.3 million, partially offset by a decrease of $199.0 million in borrowings from the Federal Home Loan Bank of San Francisco and the Federal Reserve Discount Window.

Conference Call

A conference call and webcast will be held on Thursday, February 4, 2010 at 5:00 PM Eastern / 2:00 PM Pacific. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 877-718-5099, passcode #9664758. International callers should dial: 719-325-4757, using the same passcode. Digital replay is available by calling 888-203-1112 and using the digital passcode #9664758. The conference call will be webcast live and may be accessed at BofI's website, http://www.bofiholding.com. For those unable to participate during the live broadcast, a replay will be available shortly after the call on the BofIholding.com website for 30 days.

About BofI Holding, Inc. and Bank of Internet USA

BofI Holding, Inc. is the holding company of Bank of Internet USA and trades on NASDAQ under the symbol BOFI. Bank of Internet USA is a consumer focused, FDIC insured, nationwide savings bank operating primarily over the Internet. It offers a variety of consumer banking services, focusing primarily on gathering retail deposits over the Internet and originating and purchasing multifamily and single-family mortgage loans. Bank of Internet USA offers products through its websites at www.bankofinternet.com and www.ApartmentBank.com. Retail deposit products include certificates of deposit, online checking accounts with check images, bill payment, high interest savings accounts, ATM or Visa Check Cards, money market savings accounts, and ATM fee reimbursement anywhere in the world.

Selected Financial Data

The following tables set forth certain selected financial data concerning the periods indicated:

                            BofI HOLDING, INC.
                SELECTED CONSOLIDATED FINANCIAL INFORMATION
              (Dollars in thousands, except per share data)

                                         December    June 30,    December
                                         31, 2009      2009      31, 2008
                                        ----------- ----------- -----------
Selected Balance Sheet Data:
Total assets                            $ 1,345,313 $ 1,302,208 $ 1,220,451
Loans - net of allowance for loan
 losses                                     657,181     615,463     641,475
Loans held for sale                           7,568       3,190       2,917
Allowance for loan losses                     5,449       4,754       3,374
Securities - trading                          4,971       5,445       7,180
Securities - available for sale             263,207     265,807     184,359
Securities - held to maturity               345,692     350,898     320,920
Total deposits                              877,828     648,524     632,493
Securities sold under agreements to
 repurchase                                 130,000     130,000     130,000
Advances from the FHLB                      223,992     262,984     321,977
Federal Reserve Discount Window and
 other borrowings                             5,155     165,155      50,155
Total Stockholders' equity                  102,618      88,939      81,345



                            BofI HOLDING, INC.
                SELECTED CONSOLIDATED FINANCIAL INFORMATION
              (Dollars in thousands, except per share data)


                                At or for the Three     At or for the Six
                                    Months Ended          Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Selected Income Statement
 Data:
Interest and dividend income    $  21,866  $  19,507  $  43,643  $  38,684
Interest expense                    8,890     10,738     18,102     22,103
                                ---------  ---------  ---------  ---------
Net interest income                12,976      8,769     25,541     16,581
Provision for loan losses           1,600      1,125      3,600      1,630
                                ---------  ---------  ---------  ---------
Net interest income after
 provision for loan losses         11,376      7,644     21,941     14,951
Non-interest income (loss)          2,751         14      1,742     (7,910)
Non-interest expense                4,492      3,008      7,769      5,485
                                ---------  ---------  ---------  ---------
Income before income tax
 expense                            9,635      4,650     15,914      1,556
Income tax expense                  4,087      1,889      6,658        612
                                ---------  ---------  ---------  ---------
Net income                      $   5,548  $   2,761  $   9,256  $     944
                                =========  =========  =========  =========
Net income (loss)
 attributable to common stock   $   5,375  $   2,588  $   8,910  $     600

Per Share Data:
Net income:
  Basic                         $    0.64  $    0.31  $    1.07  $    0.07
  Diluted                       $    0.61  $    0.30  $    1.02  $    0.09
Book value per common share     $   11.33  $    8.90  $   11.33  $    8.90
Tangible book value per
 common share                   $   11.33  $    8.90  $   11.33  $    8.90
Weighted average number of
 shares outstanding:
  Basic                         8,422,688  8,332,482  8,302,318  8,384,086
  Diluted                       9,035,686  8,886,687  8,914,177  8,972,573
Common shares outstanding at
 end of period                  8,189,544  8,032,896  8,189,544  8,032,896
Common shares issued at end
 of period                      8,809,466  8,637,373  8,809,466  8,637,373

Performance Ratios and Other
 Data:
Loan originations for
 investment                     $  26,647  $  15,813  $  35,083  $  27,842
Loan originations for sale         30,685      6,513     55,691      6,726
Loan purchases                     54,331     34,276     55,964     49,625
Return on average assets             1.68%      0.92%      1.40%      0.18%
Return on average stockholders'
 equity                             24.63%     14.63%     21.02%      1.58%
Interest rate spread(1)              3.84%      2.74%      3.77%      2.58%
Net interest margin(2)               4.02%      2.98%      3.95%      2.83%
Efficiency ratio(3)                 28.56%     34.20%     28.48%     63.30%
Capital Ratios:
Equity to assets at end of
 period                              7.63%      6.67%      7.63%      6.67%
Tier 1 leverage (core) capital
 to adjusted tangible assets(4)      7.91%      6.86%      7.91%      6.86%
Tier 1 risk-based capital ratio
 (4)                                16.18%     14.40%     16.18%     14.40%
Total risk-based capital ratio
 (4)                                17.01%     14.98%     17.01%     14.98%
Tangible capital to tangible
 assets(4)                           7.91%      6.86%      7.91%      6.86%
Asset Quality Ratios:
Net annualized charge-offs to
 average loans outstanding           0.90%      0.09%      0.93%      0.15%
Nonperforming loans to total
 loans                               0.90%      0.61%      0.90%      0.61%
Nonperforming assets to total
 assets                              0.93%      0.66%      0.93%      0.66%
Allowance for loan losses to
 total loans at end of period        0.81%      0.52%      0.81%      0.52%
Allowance for loan losses to
 nonperforming loans                90.14%     84.37%     90.14%     84.37%

(1) Interest rate spread represents the difference between the annualized
    weighted average yield on interest-earning assets and the weighted
    average rate paid on interest-bearing liabilities.

(2) Net interest margin represents annualized net interest income as a
    percentage of average interest-earning assets.

(3) Efficiency ratio represents noninterest expense as a percentage of the
    aggregate of net interest income and noninterest income.
    For the six months ended December 31, 2008, without the loss of $7.902
    million in noninterest income due to the loss
    on sale of FNMA preferred stock, the efficiency ratio would have been
    33.1%.

(4) Reflects regulatory capital ratios of Bank of Internet USA only.

Contact Information

  • Contact:
    BofI Holding, Inc.
    Gregory Garrabrants
    President & CEO
    858/350-6203
    Email Contact