Loan Portfolio up 15.6% Year-over-Year to
$7.9 billion
BofI Holding, Inc. (NASDAQ: BOFI) (“BofI”), parent company of
BofI Federal Bank (the “Bank”), today announced financial
results for the second fiscal quarter ended December 31, 2017.
Net income was $31.7 million, a decrease of 2.0% from $32.3 million
for the quarter ended December 31, 2016. Net income decreased
as a result of the 2017 Tax Cut and Jobs Act (“Tax Act”), which
caused BofI to incur an $8.0 million one-time charge from the
revaluation of its deferred tax assets and liabilities. Earnings
attributable to BofI’s common stockholders were $31.6 million or
$0.49 per diluted share for the second quarter of fiscal 2018, a
decrease of 2.0% from $32.2 million or $0.50 per diluted share for
the second quarter ended December 31, 2016. Non-GAAP net
income and non-GAAP earnings attributable to common stockholders
excluding the deferred tax revaluation were $39.7 million and $39.6
million, respectively, or $0.61 per diluted share for the second
quarter of fiscal 2018, an increase of 22.9% from the second
quarter ended December 31, 2016.
Second Quarter Fiscal 2018 Financial Summary:
GAAP Non-GAAP1
Adjusted for Deferred Tax
Revaluation
Three Months Ended December 31 Three Months Ended
December 31 (Dollars in thousands, except per share
data) Q2 Fiscal 2018 Q2 Fiscal 2017
% Change Q2 Fiscal 2018 Q2
Fiscal 2017 % Change Net interest income $ 84,213
$ 76,361 10.3 % $ 84,213 $ 76,361 10.3 % Non-interest
income $ 17,099 $ 16,700 2.4 % $ 17,099 $ 16,700 2.4 % Net income $
31,658 $ 32,300 (2.0 )% $ 39,690 $ 32,300 22.9 % Net income
attributable to common stockholders $ 31,580 $ 32,222 (2.0 )% $
39,612 $ 32,222 22.9 % Diluted EPS $ 0.49 $
0.50 (2.0 )% $ 0.61 $ 0.50
22.0 %
1 See “Use of Non-GAAP Financial Measures”
“Our net loan balances grew by over $360 million, or 19%
annualized, in the second quarter as a result of strong
originations in single family lending, commercial specialty real
estate lending, commercial and multifamily lender finance, and
equipment leasing,” stated Greg Garrabrants, President and Chief
Executive Officer of BofI. “Our already strong capital and returns
will be further boosted by the Tax Act, even after we reinvest a
portion of the savings in further growth enabling investments.”
“This quarter we started redeploying some of our excess capital,
buying back approximately $28 million of our common stock at a
weighted average price of $28.20 per share,” said Andy Micheletti,
Executive Vice President and Chief Financial Officer of BofI.
“Excluding the one-time deferred tax valuation charge, net income
attributable to common stockholders would have been approximately
$39.6 million, or $0.61 per share, and considering a full quarter’s
weighting impact of our share repurchases, our ROA and ROE would
have been 1.87% and 18.54%, respectively, for the quarter ended
December 31, 2017. With our Tier 1 leverage ratio of 10.26% at
quarter end, our seasonally highest earnings quarter in March, and
the reduced corporate tax rates from the Tax Act, we have ample
flexibility to continue delivering shareholder returns through a
variety of vehicles.”
For the six months ended December 31, 2017, net income was
a record $64.0 million, an increase of 4.6% over net income of
$61.2 million for the six months ended December 31, 2016.
Earnings attributable to BofI’s common stockholders were $63.9
million or $0.98 per diluted share for the six months ended
December 31, 2017, an increase of 4.3% from $61.0 million or
$0.94 per diluted share for the six months ended December 31,
2016. Earnings for the quarter and for the six months ended
December 31, 2017 were primarily the result of growth in the
Bank’s loan and lease portfolio.
Other Highlights:
- Total assets reached $8,916.0 million,
up $748.1 million or 9.2% compared to December 31, 2016
- Loan and lease portfolio grew by
$1,063.0 million or 15.6% compared to December 31, 2016
- Loan and lease originations for the
three months ended December 31, 2017 were $2,054.5 million, up
22.2% compared to the quarter ended December 31, 2016
- Deposits grew by $782.6 million, or
11.8% compared to December 31, 2016
- Net interest margin increased 5 basis
points to 3.94% for the six months ended December 31, 2017 and
was stable at 4.00% for the quarter ended December 31, 2017
compared to December 31, 2016
- Asset quality remains strong with total
non-performing assets of 0.44% of total assets
at December 31, 2017
- Return on average common stockholders’
equity was 14.37% for the three months ended December 31,
2017
- Tangible book value increased to $13.70
per share, up $1.98 per share compared to December 31,
2016
Second Quarter Fiscal 2018 Income Statement Summary
During the quarter ended December 31, 2017, BofI earned
$31.7 million or $0.49 per diluted share compared to $32.3 million,
or $0.50 per diluted share for the quarter ended December 31,
2016. Net interest income increased $7.9 million or 10.3% for the
quarter ended December 31, 2017 compared to December 31,
2016, due to the $788.2 million growth in average-earning
assets.
The loan and lease loss provision was $4.0 million for the
quarter ended December 31, 2017 compared to $4.1 million for
the quarter ended December 31, 2016. The decrease in the
provision is primarily the result of a lower level of net
charge-offs and a change in the mix of loans and leases, partially
offset by loan growth during the three months ended
December 31, 2017.
For the second quarter ended December 31, 2017,
non-interest income was $17.1 million compared to $16.7 million for
the three months ended December 31, 2016. The increase year
over year was the result of increased banking service fees and
other income of $1.7 million, primarily due to increased fees
related to seasonal H&R Block-branded products and service fee
income, a $0.9 million reduction in unrealized loss on securities,
a $0.5 million increase in prepayment penalty fee income, partially
offset by a $1.8 million decrease in realized gain on securities
and a $0.8 million decrease in mortgage banking income.
Non-interest expense or operating costs increased $7.5 million
to $40.8 million for the quarter ended December 31, 2017 from
$33.3 million for the three months ended December 31, 2016.
The increase was mainly a result of an increase in salaries and
related expense of $4.4 million as a result of staffing increases
to support growth in lending and information technology
infrastructure development. Other operating expense increases
include an increase in advertising and promotional of $1.8 million,
an increase of $1.0 million in data processing and internet and an
increase of $0.5 million in depreciation and amortization. The
increases in the other operating costs are primarily to support
loan and deposit growth, as well as data processing, software and
marketing initiatives.
Balance Sheet Summary
BofI’s total assets increased $414.3 million, or 4.9%, to
$8,916.0 million, as of December 31, 2017, up from $8,501.7
million at June 30, 2017. The loan portfolio increased $499.9
million on a net basis, primarily from portfolio loan originations
of $2,328.7 million less principal repayments and other adjustments
of $1,828.8 million. Investment securities decreased $81.1 million
primarily due to sales and principal repayments. Total liabilities
increased by $374.9 million, or 4.9%, to $8,042.3 million at
December 31, 2017, up from $7,667.4 million at June 30,
2017. The increase in total liabilities resulted primarily from
growth in deposits of $493.7 million, partially offset by a
decrease in FHLB borrowings of $97.0 million. Stockholders’ equity
increased by $39.4 million, or 4.7%, to $873.7 million at
December 31, 2017 from $834.2 million at June 30, 2017.
The increase was primarily the result of $64.0 million in net
income, $3.9 million of vesting and issuance of RSUs and
stock-based compensation expense, partially offset by $28.3 million
in stock repurchases and $0.2 million of dividends declared on
preferred stock.
The Bank’s Tier 1 core capital to adjusted average assets ratio
was 10.26% at December 31, 2017.
Conference Call
A conference call and webcast will be held on Tuesday,
January 30, 2018 at 5:00 PM Eastern / 2:00 PM Pacific.
Analysts and investors may dial in and participate in the
question/answer session. To access the call, please dial:
877-407-8293. The conference call will be webcast live and may be
accessed at BofI’s website, http://www.bofiholding.com. For those
unable to listen to the live broadcast, a replay will be available
until Friday, March 2, 2018, at BofI’s website and telephonically
by dialing toll-free number 877-660-6853, passcode 13674938.
About BofI Holding, Inc. and BofI Federal Bank
BofI Holding, Inc. is the holding company for BofI Federal Bank,
a nationwide bank that provides financing for single and
multifamily residential properties, small-to-medium size businesses
in target sectors, and selected specialty finance receivables. With
approximately $8.9 billion in assets, BofI Federal Bank provides
consumer and business banking products through its low-cost
distribution channels and affinity partners. BofI Holding, Inc.’s
common stock is listed on the NASDAQ Global Select Market under the
symbol “BOFI” and is a component of the Russell 2000® Index, the
S&P SmallCap 600® Index, and the KBW Nasdaq Financial
Technology Index. For more information on BofI Federal Bank, please
visit bofifederalbank.com.
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with GAAP,
this report includes non-GAAP financial measures that adjust our
net income, net income attributable to common stockholders and
diluted earnings per common share (“EPS”) calculations for the
one-time charge from the revaluation of BofI’s deferred tax assets
and liabilities as a result of the enactment of the 2017 Tax Cut
and Jobs Act, which we believe provides useful information about
the Company’s operating performance. We previously reported a
non-GAAP financial measure titled "adjusted earnings" that excluded
realized and unrealized gains and losses associated with our
securities portfolio, net of tax. The adjusted earnings financial
measure was removed this period because it no longer provided
useful information for management and did not enhance investors'
understanding of the business and its performance due to the
insignificant nature of the adjustments in recent history. Non-GAAP
financial measures have inherent limitations, are not required to
be uniformly applied and are not audited. Readers should be aware
of these limitations and should be cautious as to their use of such
measures. Although we believe the non-GAAP financial measures
disclosed in this report enhance investors’ understanding of its
business and performance, these non-GAAP measures should not be
considered in isolation, or as a substitute for GAAP basis
financial measures. Below is a reconciliation of GAAP net income,
net income attributable to common stockholders and diluted EPS to
the non-GAAP calculations adjusted for the deferred tax
revaluation:
Three Months Ended December 31, 2017
(Dollars in thousands) GAAP
Deferred TaxAdjustment
Non-GAAP Adjustedfor Deferred
TaxRevaluation
Net income $ 31,658 $ 8,032 $ 39,690 Net income
attributable to common stockholders $ 31,580 $ 8,032 $ 39,612
Diluted EPS $ 0.49 $ 0.12 $ 0.61
For the non-GAAP financial measures of ROA and ROE used in Mr.
Micheletti’s quote above, the statutory federal tax rate used was
21.0%, which is the Company’s tax rate for the quarter ended
December 31, 2017. Based on the changes in the Tax Act, our federal
corporate statutory tax rate will be 28.1% for the quarters ending
March 31, 2018 and June 30, 2018, and 21.0% for the year ending
June 30, 2019.
Forward-Looking Safe Harbor Statement
This press release contains forward-looking statements that
involve risks and uncertainties, including without limitation
statements relating to BofI’s financial prospects and other
projections of its performance and asset quality, BofI’s ability to
grow and increase its business, diversify its lending, the outcome
and effects of pending class action litigation filed against the
Company, and the anticipated timing and financial performance of
offerings, initiatives or acquisitions. These forward-looking
statements are made on the basis of the views and assumptions of
management regarding future events and performance as of the date
of this press release. Actual results and the timing of events
could differ materially from those expressed or implied in such
forward-looking statements as a result of risks and uncertainties,
including without limitation changes in interest rates, inflation,
government regulation, general economic conditions, conditions in
the real estate markets in which we operate and other factors
beyond our control. These and other risks and uncertainties
detailed in BofI’s periodic reports filed with the Securities and
Exchange Commission could cause actual results to differ materially
from those expressed or implied in any forward-looking statements.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements are qualified in
their entirety by this cautionary statement, and BofI undertakes no
obligation to revise or update any forward-looking statements to
reflect events or circumstances after the date of this press
release.
The following tables set forth certain selected financial data
concerning the periods indicated:
BOFI HOLDING, INC. AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL INFORMATION (Unaudited –
dollars in thousands) December 31,
2017 June 30, 2017 December 31,
2016 Selected Balance Sheet Data: Total assets $
8,915,959 $ 8,501,680 $ 8,167,876 Loans and leases—net of allowance
for loan and lease losses 7,874,431 7,374,493 6,811,470 Loans held
for sale, at fair value 24,499 18,738 33,990 Loans held for sale,
lower of cost or fair value 7,067 6,669 15,905 Allowance for loan
and lease losses 45,606 40,832 40,928 Securities—trading — 8,327
8,151 Securities—available-for-sale 191,725 264,470 379,734 Total
deposits 7,393,233 6,899,507 6,610,674 Securities sold under
agreements to repurchase — 20,000 35,000 Advances from the FHLB
543,000 640,000 665,000 Subordinated notes and debentures and other
54,503 54,463 56,408 Total stockholders’ equity 873,663 834,247
753,671
Capital Ratios: Equity to assets at end of
period 9.80 % 9.81 % 9.23 % BofI Holding, Inc: Tier 1 leverage
(core) capital to adjusted average assets 10.26 % 9.95 % 9.71 %
Common equity tier 1 capital (to risk-weighted assets) 14.39 %
14.66 % 14.51 % Tier 1 capital (to risk-weighted assets) 14.48 %
14.75 % 14.61 % Total capital (to risk-weighted assets) 16.08 %
16.38 % 16.39 % BofI Federal Bank: Tier 1 leverage (core) capital
to adjusted average assets 10.26 % 9.60 % 9.36 % Common equity tier
1 capital (to risk-weighted assets) 14.48 % 14.25 % 14.08 % Tier 1
capital (to risk-weighted assets) 14.48 % 14.25 % 14.08 % Total
capital (to risk-weighted assets) 15.24 % 14.97 %
14.88 %
BOFI HOLDING, INC. AND
SUBSIDIARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands, except per share data)
At or for the Three Months Ended At or for the Six
Months Ended December 31, December 31,
2017 2016 2017
2016 Selected Income Statement Data: Interest and
dividend income $ 107,785 $ 94,301 $ 211,296 $ 181,781 Interest
expense 23,572 17,940 46,533 35,640 Net
interest income 84,213 76,361 164,763 146,141 Provision for loan
and lease losses 4,000 4,100 5,000 6,000
Net interest income after provision for loan and lease
losses 80,213 72,261 159,763 140,141 Non-interest income 17,099
16,700 30,439 31,432 Non-interest expense 40,809 33,300
78,829 66,178 Income before income tax expense
56,503 55,661 111,373 105,395 Income tax expense 24,845
23,361 47,332 44,198 Net income $ 31,658
$ 32,300 $ 64,041 $ 61,197 Net income
attributable to common stock $ 31,580 $ 32,222 $ 63,886 $ 61,042
Per Share Data: Net income: Basic $ 0.49 $ 0.50 $
0.98 $ 0.94 Diluted $ 0.49 $ 0.50 $ 0.98 $ 0.94 Book value per
common share $ 13.85 $ 11.82 $ 13.85 $ 11.82 Tangible book value
per common share $ 13.70 $ 11.72 $ 13.70 $ 11.72
Weighted
average number of shares outstanding: Basic 64,984,333
64,861,540 65,014,704 64,724,972 Diluted 64,984,333 64,861,540
65,014,704 64,724,972 Common shares outstanding at end of period
62,720,641 63,359,001 62,720,641 63,359,001 Common shares issued at
end of period 65,444,875 64,761,369 65,444,875 64,761,369
Performance Ratios and Other Data: Loan and lease
originations for investment $ 1,368,229 $ 1,071,713 $ 2,328,741 $
1,996,883 Loan originations for sale $ 686,224 $ 609,361 $
1,016,493 $ 844,456 Return on average assets 1.49 % 1.66 % 1.51 %
1.60 % Return on average common stockholders’ equity 14.37 % 17.49
% 14.80 % 17.05 % Interest rate spread1 3.71 % 3.82 % 3.67 % 3.71 %
Net interest margin2 4.00 % 4.00 % 3.94 % 3.89 % Efficiency ratio
40.28 % 35.78 % 40.38 % 37.27 %
Asset Quality Ratios:
Net annualized charge-offs to average loans and leases 0.03 % 0.05
% 0.01 % 0.03 % Non-performing loans and leases to total loans and
leases 0.38 % 0.50 % 0.38 % 0.50 % Non-performing assets to total
assets 0.44 % 0.43 % 0.44 % 0.43 % Allowance for loan and lease
losses to total loans and leases at end of period 0.57 % 0.60 %
0.57 % 0.60 % Allowance for loan and lease losses to non-performing
loans and leases 152.08 % 118.42 % 152.08 %
118.42 %
1. Interest rate spread represents the difference between the
annualized weighted average yield on interest-earning assets and
the annualized 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
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180130006343/en/
Investor Relations Contact:BofI Holding, Inc.Johnny Lai, CFAVP,
Corporate Development & Investor
Relations858-649-2218jlai@bofifederalbank.com
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