SOURCE: B of I Holding, Inc.

January 30, 2007 09:00 ET

B of I Holding, Inc. Announces Increase in 2nd Quarter Earnings

Net Income Up 7.6%, Diluted EPS Up 12.5% Over December 2005

SAN DIEGO, CA -- (MARKET WIRE) -- January 30, 2007 -- B of I Holding, Inc. (B of I or the Company), (NASDAQ: BOFI), parent of Bank of Internet USA (Bank), today announced financial results for its second quarter ended December 31, 2006. Net income increased 7.6% to $807,000 for the second quarter compared to $750,000 for quarter ended December 31, 2005. Earnings per diluted share increased $0.01 or 12.5% to $0.09 for the second quarter compared to $0.08 per diluted share for the quarter ended December 31, 2005.

Second Quarter Highlights:

--  Total assets of $803.4 million, up 17.9% from December 31, 2005.
--  Total deposits of $466.4 million, up 16.8% from December 31, 2005.
--  Asset quality remains strong with no nonperforming loans at December
    31, 2006.
--  Net interest margin was 1.29%, a 2 basis point decrease this quarter
    versus last quarter.
"Our second quarter results are a step in the right direction and an affirmation of the changes to our business we started last quarter," stated Gary Lewis Evans, President and Chief Executive Officer.

"We've made progress on our 'steps to increase shareholder value' that we announced last quarter, including:"

   Originate higher yielding consumer loans -- during the quarter we:
   --  increased our home equity loan portfolio by more than 40% with
       loan originations averaging a 7.15% yield and expanded our
       Internet marketing to customers in 38 additional states, for a
       total of 45 states.
   --  built an RV loan servicing system and began developing indirect
       lending relationships with dealers.

   Leverage value of online assets -- during the quarter we:
   --  signed agreements with Internet affiliate aggregators to promote
       our home equity loans and signed an agreement to provide additional
       online financial products to our customers starting next quarter.
   --  expanded pay-for-performance Internet affiliate marketing and we
       now have hundreds of new websites promoting our home equity loans.
"We will continue to automate and refine our Internet-based scalable operating model as we focus our resources in each of these areas," remarked Mr. Evans. "We remain committed to our low cost, customer friendly, self-service banking model."

Earnings Summary

For the second quarter ending December 31, 2006, net income was $807,000, an increase of 7.6% from the second quarter of last year. Net interest income increased $45,000 in the second quarter of fiscal 2007 compared to the second quarter of last year as a result of increased interest-earning assets, partially offset by a decline in the net interest margin. The net interest margin for the quarter ended December 31, 2006 was 1.29% compared to 1.49% for the quarter ended December 31, 2005. The decline in the net interest margin was due primarily to the continued flattening and the inversion of the yield curve, increasing deposit and borrowing interest costs faster than the increase in yield on mortgage loans and investments. Compared to the quarter ended September 30, 2006, the net interest margin declined two basis points. The provision for loan loss for the quarter was a benefit of $80,000 compared to a provision of $135,000 in the second quarter of the prior year. This quarter's benefit was the result of continued strong overall asset quality and a shift in the mix of asset types, specifically declines in the multifamily and single family mortgage loan portfolios and increases in government-sponsored mortgage-backed securities. Non-interest income for the quarter ended December 31, 2006 compared to the quarter ended December 31, 2005 increased $23,000, due to gain on the sale of mortgage-backed securities, substantially offset by lower mortgage loan prepayment penalty income and mortgage banking fee income. Non-interest expense, or operating expense, increased 13.5% this quarter compared to the same period last year. The operating cost increase was primarily the result of increases for non-cash stock option and stock-based compensation, salaries and benefits, professional services and data processing and Internet expense resulting from increased account activity and new Internet programs and designs.

For the six months ended December 31, 2006, net income was $1,553,000, or $0.17 per diluted share, compared to $1,596,000, or $0.16 per diluted share, for the six months ended December 31, 2005.

Balance Sheet Summary

Total assets increased $65.5 million, or 8.9%, to $803.4 million, as of December 31, 2006, up from $737.8 million at June 30, 2006 and up 17.9% from $681.5 million at December 31, 2005. The increase in total assets this quarter of $37.1 million was the result of purchases of mortgage-backed securities, partially offset by payoffs of multifamily and single family loans. The asset growth this quarter was generally funded by a net increase in deposits totaling $23.0 million and an increase in reverse repurchase borrowings of $15.0 million. During the second quarter ended December 31, 2006, stockholders equity increased $579,000 primarily due to earnings of $807,000 and a stock-based compensation increase of $146,000, reduced by common stock buy-backs and regular dividends to preferred stockholders. During the quarter, B of I repurchased 40,000 shares of its common stock, reducing stockholders equity by $279,000. Under the Company's buy back plan, a total of 309,000 shares or 3.7% of the outstanding shares have been repurchased since the plan was initiated in July of 2005.

Conference Call

B of I Holding, Inc. will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) on Tuesday, January 30, 2007 to discuss financial results for the second quarter ended December 31, 2006. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888-802-8571. International callers should dial 973-582-2794. When prompted by the operator, mention Conference ID 8326151. The conference call will be webcast live and may be accessed at B of I's website, For those unable to participate during the live broadcast, a replay will be available shortly after the call on B of I's website for 90 days.

About B of I Holding, Inc. and Bank of Internet USA

B of I Holding, Inc. is the holding company of Bank of Internet USA and trades on NASDAQ under the symbol BOFI. The 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, single family and home equity loans and securities. Bank of Internet offers its products through its websites at,, and which include deposit accounts, such as free interest-bearing checking accounts with online paid check copies, bill payment and account statements, ATM or Visa® Check Cards and ATM Fee reimbursement anywhere in the world.

Forward-looking Statements

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, the economic effect of international markets and international events such as terrorism, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, risks associated with the conduct of the Company's business over the internet, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect its financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically disclaims any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

All information in this release is as of January 30, 2007. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

                           B of I HOLDING,INC.
               (Dollars in thousands, except per share data)

                                    December 31,   June 30,   December 31,
                                        2006         2006         2005
                                    ------------ ------------ ------------
Selected Balance Sheet Data:
Total assets                        $    803,368 $    737,835 $    681,492
Loans - net of allowance for loan
 losses                                  512,935      533,641      545,208
Loans held for sale                            -            -            -
Allowance for loan losses                  1,370        1,475        1,560

Mortgage-backed securities
 available for sale                      198,532      127,261       79,401
Investment securities held to
 maturity                                 40,027       12,375        7,644
Total deposits                           466,418      424,204      399,387

Securities sold under agreements to
 repurchase                               15,000            -            -
Advances from the FHLB                   242,235      236,177      205,620
Junior subordinated debentures             5,155        5,155        5,155
Total stockholders’ equity                71,428       70,246       68,962

                                At or For the Three     At or For the Six
                                       Months                Months
                                 Ended December 31,    Ended December 31,
                                --------------------  --------------------
                                  2006       2005       2006       2005
                                ---------  ---------- ---------  ----------
Selected Income Statement Data:
Interest and dividend income    $  10,731  $    8,028 $  20,703  $   15,219
Interest expense                    8,228       5,570    15,764      10,294
                                ---------  ---------- ---------  ----------

Net interest income                 2,503       2,458     4,939       4,925
Provision for loan losses             (80)        135      (105)        145
                                ---------  ---------- ---------  ----------
Net interest income after
 provision for loan losses          2,583       2,323     5,044       4,780
Non-interest income                   378         355       745         765
Non-interest expense                1,613       1,421     3,191       2,885
                                ---------  ---------- ---------  ----------
Income before income tax
 expense                            1,348       1,257     2,598       2,660
Income tax expense                    541         507     1,045       1,064
                                ---------  ---------- ---------  ----------
Net income                      $     807  $      750 $   1,553  $    1,596
                                =========  ========== =========  ==========

Net income attributable to
 common stock                   $     728  $      648 $   1,396  $    1,393

Per Share Data:
Net income:
 Basic                          $    0.09  $     0.08 $    0.17  $     0.17
 Diluted                        $    0.09  $     0.08 $    0.17  $     0.16
Book value per common share     $    8.01  $     7.61 $    8.01  $     7.61
Tangible book value per common
 share                          $    8.01  $     7.61 $    8.01  $     7.61
Weighted average number of
 common shares outstanding:
 Basic                          8,276,926   8,262,759 8,312,267   8,281,453
 Diluted                        8,391,284   8,455,897 8,431,413   8,482,301
Common shares outstanding at
 end of period                  8,268,825   8,193,906 8,268,825   8,193,906
Common shares issued at end of
 period                         8,577,825   8,318,406 8,577,825   8,318,406

                           B of I HOLDING,INC.
                          (Dollars in thousands)

                              At or For the Three     At or For the Six
                                    Months                  Months
                              Ended December 31,      Ended December 31,
                            ----------------------  ----------------------
                               2006        2005        2006        2005
                            ----------  ----------  ----------  ----------

Performance Ratios and
 Other Data:
Loan originations           $    2,716  $    1,497  $    5,527  $    4,536
Loan originations for sale       2,363       7,165       3,960      17,887
Loan purchases                   6,117      72,871      30,514     115,116
Return on average assets          0.41%       0.45%       0.40%       0.50%

Return on average common
 stockholders’ equity             4.39%       4.14%       4.24%       4.46%
Interest rate spread(1)           0.90%       1.11%       0.91%       1.16%
Net interest margin(2)            1.29%       1.49%       1.30%       1.55%
Efficiency ratio(3)               56.0%       50.5%       56.1%       50.7%

Capital Ratios:
Equity to assets at end of
 period                           8.89%      10.12%       8.89%      10.12%
Tier 1 leverage (core)
 capital to adjusted
 tangible assets(4)               8.69%       9.07%       8.69%       9.07%
Tier 1 risk-based capital
 ratio(4)                        17.38%      14.46%      17.38%      14.46%
Total risk-based capital
 ratio(4)                        17.72%      14.82%      17.72%      14.82%
Tangible capital to
 tangible assets(4)               8.69%       9.07%       8.69%       9.07%

Asset Quality Ratios:
Net charge-offs to average
 loans outstanding(5)                —           —           —           —
Nonperforming loans to
 total loans(5)                      —           —           —           —
Allowance for loan losses
 to total loans at end of
 period                           0.27%       0.29%       0.27%       0.29%
Allowance for loan losses
 to nonperforming loans(5)           —           —           —           —

 (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 non-interest expense as a percentage of
 the aggregate of net interest income and non-interest income.

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

 (5)  At December  31, 2006 and  2005, B of I had no non-performing loans,
 no foreclosures and no specific loan loss allowances.

Contact Information

  • Contacts:
    B of I Holding, Inc.
    Gary Lewis Evans
    858 350-6213
    Email Contact