Net Income, Up 12.1% Year-over-Year to $32.4
million
BofI Holding, Inc. (NASDAQ: BOFI) (“BofI”), parent company of
BofI Federal Bank (the “Bank”), today announced financial
results for the first fiscal quarter ended September 30, 2017.
Net income was $32.4 million, an increase of 12.1% over net income
of $28.9 million for the quarter ended September 30, 2016.
Earnings attributable to BofI’s common stockholders were $32.3
million or $0.50 per diluted share for the first quarter of fiscal
2018, an increase of 12.1% from $28.8 million or $0.45 per diluted
share for the first quarter ended September 30, 2016.
Adjusted earnings, a non-GAAP measure, which excludes the
after-tax impact of gains and losses associated with our securities
portfolio, increased 14.0% to $32.3 million for the quarter ended
September 30, 2017 compared to $28.3 million for the quarter
ended September 30, 2016.
First Quarter Fiscal 2018 Financial Summary:
Three Months Ended September
30
(Dollars in thousands, except per share data)
Q1 Fiscal 2018 Q1 Fiscal 2017 %
Change Net interest income $ 80,550 $ 69,780 15.4%
Non-interest income $ 13,340 $ 14,732 (9.4)% Net income $ 32,383 $
28,897 12.1% Adjusted earnings1 $ 32,305 $ 28,327 14.0% Net income
attributable to common stockholders $ 32,306 $ 28,820 12.1% Diluted
EPS $ 0.50 $ 0.45 11.1%
1 See “Use of Non-GAAP Financial Measures”
“We generated solid loan growth, with average loan and lease
balances increasing 15.6% year-over-year and 4.4% linked quarter,”
stated Greg Garrabrants, President and Chief Executive Officer of
BofI. “Average loan balances grew faster than ending loan balances
due to a higher rate of pay-offs in September and some large
C&I loans closing after the end of the first quarter.
Furthermore, our net interest margin increased by 7 basis points,
linked quarter, to 3.87%, with higher earning asset yields
offsetting an incremental increase in our funding cost. With a
healthy loan pipeline and continued investments in existing and new
businesses, we are optimistic that BofI will sustain solid loan and
earnings growth.”
“We achieved a 12.1% increase in our net income and a 19.2%
increase in our tangible book value per share in the first quarter,
on a year-over-year basis,” said Andy Micheletti, Executive Vice
President and Chief Financial Officer of BofI. “Our capital and
credit metrics remain strong, with a Bank Tier 1 leverage ratio of
9.95% and a net credit recovery of 1 basis point on average loans
this quarter. Despite an elevated efficiency ratio this quarter due
to growth-related investments and the cyclical nature of our
tax-product revenue, we continue to target a best-in-class
efficiency ratio on an annual basis.”
Other Highlights:
- Total assets reached $8,581.6 million,
up $726.6 million or 9.2% compared to September 30, 2016
- Loan and lease portfolio grew by $963.3
million or 14.7% compared to September 30, 2016
- Loan and lease originations for the
three months ended September 30, 2017 were $1,290.8 million,
up 11.3% compared to the quarter ended September 30, 2016
- Deposits grew by $855.0 million, or
13.5% compared to September 30, 2016
- Asset quality remains strong with total
non-performing assets of 0.39% of total assets at
September 30, 2017
- Return on average common stockholders’
equity was 15.24% for the three months ended September 30,
2017
- Tangible book value increased to $13.41
per share, up $2.16 per share compared to September 30,
2016
First Quarter Fiscal 2018 Income Statement Summary
During the quarter ended September 30, 2017, BofI earned
$32.4 million or $0.50 per diluted share compared to $28.9 million,
or $0.45 per diluted share for the quarter ended September 30,
2016. Net interest income increased $10.8 million or 15.4% for the
quarter ended September 30, 2017 compared to
September 30, 2016, due to the $939 million growth in
average-earning assets.
The loan and lease loss provision was $1.0 million for the
quarter ended September 30, 2017 compared to $1.9 million for
the quarter ended September 30, 2016. The decrease in the
provision is primarily the result of a change in the mix of loans
and net recoveries of $0.3 million, partially offset by loan growth
during the three months ended September 30, 2017.
For the first quarter ended September 30, 2017,
non-interest income was $13.3 million compared to $14.7 million for
the three months ended September 30, 2016. The decrease year
over year was the result of a $1.2 million decrease in gain on sale
– other due to decreased sales of structured settlements, a
decrease in realized gain on securities of $0.7 million, and a
decrease in mortgage banking income of $0.4 million, partially
offset by increased banking service fees and other income of $1.4
million, primarily due to increased fees from business loans and
deposits.
Non-interest expense or operating costs increased $5.1 million
to $38.0 million for the quarter ended September 30, 2017 from
$32.9 million for the three months ended September 30, 2016.
The increase was mainly a result of an increase in salaries and
related expense of $2.7 million as a result of staffing increases.
Other operating expense increases include an increase of $0.9
million in data processing and internet, an increase of $0.5
million in other general and administrative costs, an increase in
advertising and promotional of $0.4 million, and an increase of
$0.4 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 $79.9 million, or 0.9%, to
$8,581.6 million, as of September 30, 2017, up from $8,501.7
million at June 30, 2017. The loan portfolio increased $138.5
million on a net basis, primarily from portfolio loan originations
of $960.5 million less principal repayments and other adjustments
of $822.0 million. Loans held for sale increased $3.6 million.
Investment securities decreased $53.1 million primarily due to
sales and principal repayments. Total liabilities increased by
$47.5 million, or 0.6%, to $7,714.9 million at September 30,
2017, up from $7,667.4 million at June 30, 2017. The increase
in total liabilities resulted primarily from growth in deposits of
$279.3 million partially offset by a decrease in FHLB borrowings of
$240.0 million. Stockholders’ equity increased by $32.4 million, or
3.9%, to $866.7 million at September 30, 2017 from $834.2
million at June 30, 2017. The increase was primarily the
result of $32.4 million in net income.
The Bank’s Tier 1 core capital to adjusted average assets ratio
was 9.95% at September 30, 2017.
Conference Call
A conference call and webcast will be held on Wednesday,
October 25, 2017 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 Saturday, November 25, 2017, at BofI’s website and
telephonically by dialing toll-free number 877-660-6853, passcode
13671458.
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 $8.6 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 such as adjusted
earnings. Adjusted earnings exclude realized and unrealized gains
and losses associated with our securities portfolios. Excluding
these gains and losses provides investors with an understanding of
BofI’s core lending and mortgage banking business. 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 BofI believes 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 to
adjusted earnings:
Three Months Ended September 30, (Dollars
in thousands) 2017 2016 Net income
$ 32,383 $ 28,897 Realized securities losses (gains) (282 )
(990 ) Unrealized securities losses (gains) 149 9 Tax (provision)
benefit 55 411
Adjusted earnings
$ 32,305 $ 28,327
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)
September 30, 2017
June 30, 2017 September 30, 2016
Selected Balance Sheet Data: Total assets $ 8,581,628 $
8,501,680 $ 7,855,043 Loans and leases—net of allowance for loan
and lease losses 7,512,999 7,374,493 6,549,742 Loans held for sale,
at fair value 21,532 18,738 20,611 Loans held for sale, lower of
cost or fair value 7,470 6,669 30,761 Allowance for loan and lease
losses 42,099 40,832 37,596 Securities 219,713 272,797 452,159
Total deposits 7,178,800 6,899,507 6,323,812 Securities sold under
agreements to repurchase 10,000 20,000 35,000 Advances from the
FHLB 400,000 640,000 655,000 Subordinated notes and debentures and
other 54,479 54,463 56,511 Total stockholders’ equity 866,694
834,247 721,859
Capital Ratios: Equity to assets at
end of period 10.10 % 9.81 % 9.19 % BofI Holding, Inc: Tier 1
leverage (core) capital to adjusted average assets 10.29 % 9.95 %
9.55 % Common equity tier 1 capital (to risk-weighted assets) 15.10
% 14.66 % 14.43 % Tier 1 capital (to risk-weighted assets) 15.19 %
14.75 % 14.53 % Total capital (to risk-weighted assets) 16.82 %
16.38 % 16.32 % BofI Federal Bank: Tier 1 leverage (core) capital
to adjusted average assets 9.95 % 9.60 % 9.20 % Common equity tier
1 capital (to risk-weighted assets) 14.70 % 14.25 % 14.01 % Tier 1
capital (to risk-weighted assets) 14.70 % 14.25 % 14.01 % Total
capital (to risk-weighted assets) 15.44 % 14.97 %
14.77 %
BOFI HOLDING, INC. AND
SUBSIDIARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands,
except per share data)
At or for the Three Months Ended September 30,
2017 2016 Selected Income
Statement Data: Interest and dividend income $ 103,511 $ 87,480
Interest expense 22,961 17,700 Net interest income
80,550 69,780 Provision for loan and lease losses 1,000
1,900 Net interest income after provision for loan and lease
losses 79,550 67,880 Non-interest income 13,340 14,732 Non-interest
expense 38,020 32,878 Income before income tax
expense 54,870 49,734 Income tax expense 22,487 20,837
Net income $ 32,383 $ 28,897 Net income
attributable to common stock $ 32,306 $ 28,820
Per Share
Data: Net income: Basic $ 0.50 $ 0.45 Diluted $ 0.50 $ 0.45
Book value per common share $ 13.54 $ 11.32 Tangible book value per
common share $ 13.41 $ 11.25
Weighted average number of
shares outstanding: Basic 65,045,075 64,589,333 Diluted
65,045,075 64,589,333 Common shares outstanding at end of period
63,655,970 63,299,014 Common shares issued at end of period
65,334,353 64,664,045
Performance Ratios and Other
Data: Loan and lease originations for investment $ 960,512 $
925,170 Loan originations for sale $ 330,269 $ 235,095 Return on
average assets 1.54
%
1.53 % Return on average common stockholders’ equity 15.24
%
16.59 % Interest rate spread1 3.62 % 3.61 % Net interest margin2
3.87 % 3.78 % Efficiency ratio 40.49 % 38.90 %
Asset
Quality Ratios: Net annualized charge-offs to average loans and
leases
(0.01)
%
0.01 % Non-performing loans and leases to total loans and leases
0.42 % 0.64 % Non-performing assets to total assets 0.39 % 0.55 %
Allowance for loan and lease losses to total loans and leases at
end of period 0.55 % 0.57 % Allowance for loan and lease losses to
non-performing loans and leases 131.15 % 89.45 %
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/20171025006150/en/
Investor Relations Contact:BofI Holding, Inc.Johnny Lai, CFAVP,
Corporate Development & Investor
Relations858-649-2218jlai@bofifederalbank.com
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