BofI Holding, Inc. (NASDAQ: BOFI) (“BofI”), parent company of
BofI Federal Bank (the “Bank”), today announced financial
results for the third fiscal quarter ended March 31, 2016. Net
income was a record $35.9 million, an increase of 70.4% over net
income of $21.1 million for the quarter ended March 31, 2015.
Earnings attributable to BofI’s common stockholders were $35.8
million or $0.56 per diluted share for the third quarter of fiscal
2016, an increase of 70.7% from $21.0 million or $0.34 per diluted
share for the third quarter ended March 31, 2015.
Adjusted earnings, a non-GAAP measure, which excludes the
after-tax impact of gains and losses associated with our securities
portfolio, increased 66.9% to $36.0 million for the quarter ended
March 31, 2016 compared to $21.6 million for the quarter ended
March 31, 2015.
Third Quarter Fiscal 2016 Financial
Summary:
Three Months Ended
March 31, (Dollars in thousands, except per share
data) Q3 Fiscal 2016
Q3 Fiscal 2015 % Change
Net interest income $ 69,557 $ 50,665 37.3 %
Non-interest income $ 23,316 $ 8,366 178.7 % Net income $ 35,914 $
21,074 70.4 % Adjusted Earnings1 $ 35,995 $ 21,564 66.9 % Net
income attributable to common stockholders $ 35,837 $ 20,997 70.7 %
Diluted EPS2 $ 0.56 $
0.34 64.7 % 1 See “Use of
Non-GAAP Financial Measures” 2 Per share amounts have been
retroactively restated for all prior periods presented to reflect
the four-for-one forward split of the Company’s common stock
effected in the form of a stock dividend that was distributed on
November 17, 2015
For the nine months ended March 31, 2016, net income was a
record $89.6 million, an increase of 53.7% over net income of $58.3
million for the nine months ended March 31, 2015. Earnings
attributable to BofI’s common stockholders were $89.3 million or
$1.39 per diluted share for the nine months ended March 31,
2016, an increase of 53.9% from $58.1 million or $0.95 per diluted
share for the nine months ended March 31, 2015. Record
earnings for the quarter and for the nine months ended
March 31, 2016 were primarily the result of growth in both the
Bank’s loan and lease portfolio and its fee income businesses.
“We achieved record quarterly earnings and earnings per share as
a result of robust fee income growth, balanced loan growth and
solid net interest margins,” stated Greg Garrabrants, President and
Chief Executive Officer. “Strong growth in fee income from our
H&R Block partnership was a catalyst for our best in class
return on assets and return on equity. We continue to generate
healthy growth in our single family, C&I and warehouse lending
businesses while maintaining a strong core net interest margin and
sound credit quality. We closed the acquisition of certain assets
and operations of Pacific Western Equipment Finance at the end of
the third quarter. The addition of an experienced equipment leasing
team with a nationwide footprint further diversifies our commercial
lending capabilities. With a strong balance sheet, excellent credit
quality and capital flexibility, we will continue to invest in new
growth initiatives and ongoing infrastructure enhancements that
will further improve our customer service and user experience,” Mr.
Garrabrants concluded.
This quarter ended March 31, 2016 was the Bank’s first income
tax preparation season since it entered into its August 2015
long-term agreement with H&R Block, Inc. to offer co-branded
financial products to H&R Block customers. The seasonal impact
of income tax refunds received by H&R Block customers this
quarter caused an expected increase in the Bank’s fee income for
the three months ended March 31, 2016 and an expected temporary
increase in assets and deposits included in the balance sheet of
the Bank at March 31, 2016. Excluding the H&R Block temporary
seasonal growth, consolidated assets and consolidated deposits at
March 31, 2016 would have been $7.2 billion and $5.5 billion,
respectively.
“The net interest margin would have been 4.02% when excluding
the average balances associated with lower yielding excess cash and
the average balances and yield earned on the H&R Block related
loan products during the quarter, which is consistent with our
strong net interest margins reported in previous quarters,” stated
Andy Micheletti, Executive Vice President and Chief Financial
Officer, who continued. “BofI also had strong balance sheet growth
even after excluding the seasonal assets and deposits from the
H&R Block agreement. Asset growth excluding the seasonal growth
this quarter was 29.4% year over year and 29.5% annualized compared
to the last quarter ended December 31, 2015. Similarly, deposit
growth this quarter was 25.9% year over year and 23.2% annualized
growth compared to the last quarter ended December 31, 2015 after
excluding seasonal deposit growth.”
“Also this quarter, management and the Board took additional
steps to position the Company for the future,” added Mr.
Micheletti. “In January, we completed our first rating process and
our Bank and holding company each received investment grade debt
ratings from Kroll Bond Rating Agency. The debt ratings and the
overall strength of BofI’s financial position allowed us to conduct
a public offering at the holding company of investment-grade 6.25%
subordinated notes totaling $51 million of face amount completed in
March. With significant volatility in public equity markets in the
first three months of 2016, management elected to issue debt for
its capital raising activities rather than issuing common equity as
in the past. The proceeds of the notes are expected to be used for
general corporate purposes, possible future acquisitions and growth
opportunities, possible common stock share repurchases, and to
provide new capital to the Bank to support its future growth. Also
in March, the Board authorized a program to repurchase up to $100
million of BOFI common stock at our discretion based on our
assessment of the stock trading price, general market conditions
and other considerations.”
Other Highlights:
- Total assets reached $7,705.6 million,
up $2,177.1 million or 39.4% compared to March 31, 2015
- Loan portfolio grew by $1,393.4 million
or 30.0% compared to March 31, 2015
- Loan originations and purchases for the
three months ended March 31, 2016 were $1,248.5 million, up
17.97% compared to the quarter ended March 31, 2015
- Deposits grew by $1,679.3 million, or
38.4% compared to March 31, 2015
- Asset quality remains strong with total
non-performing assets of 0.31% of total assets and non-performing
loans and leases equal to 0.39% of total loans and leases at
March 31, 2016
- Return on average common stockholders’
equity was 22.59% compared to 17.86% for the three months ended
March 31, 2015
- Tangible book value increased to $10.23
per share, up $2.21 per share compared to March 31, 2015
Third Quarter Fiscal 2016 Income Statement Summary
During the quarter ended March 31, 2016, BofI earned $35.9
million or $0.56 per diluted share compared to $21.1 million, or
$0.34 per diluted share for the quarter ended March 31, 2015.
Net interest income increased $18.9 million or 37.3% for the
quarter ended March 31, 2016 compared to March 31, 2015,
due to the $1.9 billion growth in average-earning assets.
The loan and lease loss provision was $2.0 million for the
quarter ended March 31, 2016 compared to $2.9 million for the
quarter ended March 31, 2015. Non-performing loans as
percentage of total loans was 39 basis points at March 31, 2016
compared to 72 basis points at March 31, 2015 and, for fiscal 2016
year to date, the Bank has experienced a net recovery of $0.8
million. As a result of the decreasing charge-off history, the
additional loss provisions added for loan originations and for the
equipment lease purchase this quarter have been partially reduced
by lower loss rates and lower outstanding balances associated with
certain older vintage loans causing a decline in the provision year
over year.
For the third quarter ended March 31, 2016, non-interest
income was $23.3 million compared to $8.4 million for the three
months ended March 31, 2015. The increase year over year was
the result of an increase in banking service fees and other income
of $16.3 million, primarily due to seasonal H&R Block-branded
products and service fee income.
Non-interest expense or operating costs increased $9.1 million
to $29.4 million for the quarter ended March 31, 2016 from
$20.3 million for the three months ended March 31, 2015. The
increase was mainly a result of an increase in salaries and related
expense of $5.8 million related to staffing added since
March 31, 2015, an increase in data processing and internet
expense of $1.5 million and an increase of $1.4 million in other
general and administrative costs, partially to support seasonal
H&R Block-branded products and services. The increases in
staffing primarily support loan, deposit, data processing and
software initiatives.
Balance Sheet Summary
BofI’s total assets increased $1,881.9 million, or 32.3%, to
$7,705.6 million, as of March 31, 2016, up from $5,823.7
million at June 30, 2015. The loan portfolio increased
$1,106.1 million on a net basis, primarily from portfolio loan
originations and purchases of $2,814.1 million less principal
repayments and other adjustments of $1,708.0 million. Loans held
for sale decreased $0.7 million. Investment securities increased
$100.8 million primarily due to securities purchases. Total
liabilities increased by $1,762.1 million, or 33.3%, to $7,052.3
million at March 31, 2016, up from $5,290.2 million at
June 30, 2015. The increase in total liabilities resulted
primarily from growth in deposits of $1,596.1 million.
Stockholders’ equity increased by $119.8 million, or 22.4%, to
$653.3 million at March 31, 2016 from $533.5 million at
June 30, 2015. The increase was primarily the result of $89.6
million in net income and sale of common stock of $21.1 million,
net of commissions and fees.
The Bank’s Tier 1 core capital to adjusted average assets ratio
was 8.62% at March 31, 2016.
Conference Call
A conference call and webcast will be held on Thursday,
April 28, 2016 at 4:30 PM Eastern / 1:30 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, May
27, 2016, at BofI’s website and telephonically by dialing toll-free
number 877-660-6853, passcode 13634378.
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 $7.7 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 and the
S&P SmallCap 600® 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, previously labeled as “core 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
Nine Months Ended March 31,
March 31, (Dollars in thousands)
2016 2015
2016 2015 Net income $
35,914 $ 21,074 $ 89,564
$ 58,287 Realized securities losses (gains) 14 — (919 ) (587 )
Unrealized securities losses (gains) 125 832 392 2,532 Tax
(provision) benefit (58 ) (342 )
220
(799 ) Adjusted earnings $ 35,995
$ 21,564 $ 89,257
$ 59,433
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 recently 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) March 31,
June 30, March 31,
2016 2015 2015
Selected Balance Sheet Data: Total assets $ 7,705,622 $
5,823,719 $ 5,528,520 Loans and leases—net of allowance for loan
and lease losses 6,034,700 4,928,618 4,641,262 Loans held for sale,
at fair value 42,682 25,430 22,911 Loans held for sale, lower of
cost or fair value 59,988 77,891 85,571 Allowance for loan and
lease losses 36,931 28,327 25,455 Securities—trading 7,589 7,832
7,738 Securities—available-for-sale 278,653 163,361 167,056
Securities—held-to-maturity 211,294 225,555 233,934 Total deposits
6,048,031 4,451,917 4,368,772 Securities sold under agreements to
repurchase 35,000 35,000 35,000 Advances from the FHLB 858,000
753,000 583,000 Subordinated notes and debentures 56,155 5,155
5,155 Total stockholders’ equity 653,289 533,526 496,028
Capital Ratios: Equity to assets at end of period 8.48 %
9.16 % 8.97 % BofI Holding, Inc: Tier 1 leverage (core) capital to
adjusted average assets 8.99 % 9.59 % 9.45 % Common equity tier 1
capital (to risk-weighted assets) 14.29 % 14.98 % 14.77 % Tier 1
capital (to risk-weighted assets) 14.40 % 15.12 % 14.92 % Total
capital (to risk-weighted assets) 16.32 % 15.91 % 15.67 % BofI
Federal Bank: Tier 1 leverage (core) capital to adjusted average
assets 8.62 % 9.25 % 9.32 % Common equity tier 1 capital (to
risk-weighted assets) 13.83 % 14.58 % 14.75 % Tier 1 capital (to
risk-weighted assets) 13.83 % 14.58 % 14.75 % Total capital (to
risk-weighted assets) 14.63 %
15.38 % 15.51 %
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 Nine Months Ended March 31, March 31,
2016
2015 2016 2015
Selected Income Statement Data: Interest and dividend income
$ 84,282 $ 62,911 $ 231,446 $ 176,797 Interest expense
14,725 12,246 39,590
33,146 Net interest income 69,557 50,665 191,856 143,651
Provision for loan and lease losses 2,000
2,900 7,800 8,300 Net interest
income after provision for loan and lease losses 67,557 47,765
184,056 135,351 Non-interest income 23,316 8,366 49,325 20,312
Non-interest expense 29,408 20,343
79,771 56,726 Income before income tax
expense 61,465 35,788 153,610 98,937 Income tax expense
25,551 14,714 64,046
40,650 Net income $ 35,914 $ 21,074 $ 89,564
$ 58,287 Net income attributable to common stock $
35,837 $ 20,997 $ 89,332 $ 58,055
Per Share Data: Net
income: Basic1 $ 0.56 $ 0.34 $ 1.39 $ 0.96 Diluted1 $ 0.56 $ 0.34 $
1.39 $ 0.95 Book value per common share1 $ 10.28 $ 8.03 $ 10.28 $
8.03 Tangible book value per common share1 $ 10.23 $ 8.02 $ 10.23 $
8.02
Weighted average number of shares outstanding:
Basic1 64,485,865 62,180,216 64,195,582 60,714,964 Diluted1
64,486,816 62,417,760 64,203,207 60,951,052 Common shares
outstanding at end of period1 63,060,732 61,140,320 63,060,732
61,140,320 Common shares issued at end of period1 64,177,770
62,135,007 64,177,770 62,135,007
Performance Ratios and
Other Data: Loan originations for investment $ 857,557 $
804,414 $ 2,673,577 $ 2,420,022 Loan originations for sale $
250,876 $ 253,834 $ 1,155,329 $ 721,780 Loan and lease purchases $
140,109 $ 146 $ 140,493 $ 146 Return on average assets 1.95 % 1.58
% 1.82 % 1.56 % Return on average common stockholders’ equity 22.59
% 17.86 % 19.99 % 18.13 % Interest rate spread2 3.55 % 3.72 % 3.77
% 3.77 % Net interest margin3 3.85 % 3.85 % 3.97 % 3.90 %
Efficiency ratio 31.66 % 34.46 % 33.08 % 34.60 %
Asset
Quality Ratios: Net annualized charge-offs to average loans and
leases 0.01 % 0.06 % (0.02 )% 0.04 % Non-performing loans and
leases to total loans and leases 0.39 % 0.72 % 0.39 % 0.72 %
Non-performing assets to total assets 0.31 % 0.65 % 0.31 % 0.65 %
Allowance for loan and lease losses to total loans and leases at
end of period 0.61 % 0.54 % 0.61 % 0.54 % Allowance for loan and
lease losses to non-performing loans and leases
154.06 % 75.55 %
154.06 % 75.55 %
_________________________
1.
Share and per share amounts have been
retroactively restated for all prior periods presented to reflect
the four-for-one forward split of the Company’s common stock
effected in the form of a stock dividend that was distributed on
November 17, 2015
2.
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
3.
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/20160428005882/en/
BofI Holding, Inc.Johnny Lai, CFAVP, Corporate Development &
Investor Relations858-649-2218jlai@bofifederalbank.com
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