Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  August 7, 2018

394548769_bofiholdhoriz400a04aa36.jpg

BofI Holding, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
000-51201
33-0867444
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer Identification
Number)
 
4350 La Jolla Village Drive, Suite 140, San Diego, CA
92122
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code: (858) 350-6200          
 
Not Applicable

(Former name or former address, if changed since last report.)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o                                    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

o                                    Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o






Item 2.02    Results of Operations and Financial Condition

On August 7, 2018, BofI Holding, Inc. (the “Registrant”), parent of BofI Federal Bank, issued a press release announcing its unaudited earnings for the fourth quarter and fiscal year ended June 30, 2018. A copy of the press release and unaudited financial schedules are set forth as Exhibit 99.1 and 99.2 respectively, and are incorporated by reference in this Item 2.02.

Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 2.02 of Form 8-K, including Exhibit 99.1 and 99.2 are being furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise be subject to the liabilities of that section, nor are they incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, regardless of any general incorporation language in such filing.






Item 9.01 Financial Statements and Exhibits

(d)    Exhibits.
Exhibit
 
Description
99.1
 
99.2
 






SIGNATURE

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
BofI Holding, Inc.
 
 
 
Date:
August 7, 2018
By:
/s/ Andrew J. Micheletti
 
 
 
 
Andrew J. Micheletti
 
 
 
EVP and Chief Financial Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


394548769_bofiholdhoriz400a04aa36.jpg

Net Income for the Fourth Quarter of Fiscal 2018 up 14.0% Year-over-Year
BofI Holding, Inc. Announces Record Net Income for Fiscal 2018, up 13.1%

SAN DIEGO, CA – (BUSINESS WIRE) – August 7, 2018 – BofI Holding, Inc. (NASDAQ: BOFI) (BofI), parent company of BofI Federal Bank (the Bank), today announced unaudited financial results for the fourth fiscal quarter ended June 30, 2018. Net income was $37.1 million, an increase of 14.0% over net income of $32.5 million for the quarter ended June 30, 2017. Earnings attributable to BofI’s common stockholders were $37.0 million or $0.58 per diluted share for the fourth quarter of fiscal 2018, an increase of 14.1% from $32.5 million or $0.50 per diluted share for the fourth quarter ended June 30, 2017.

Fourth Quarter Fiscal 2018 Financial Summary:
 
Three Months Ended 
June 30,
 
 
(Dollars in thousands, except per share data)
2018
 
2017
 
% Change
Net interest income
$
87,048

 
$
78,527

 
10.9
%
Non-interest income
$
16,977

 
$
13,533

 
25.4
%
Net income
$
37,117

 
$
32,548

 
14.0
%
Net income attributable to common stockholders
$
37,040

 
$
32,471

 
14.1
%
Diluted EPS
$
0.58

 
$
0.50

 
16.0
%
 
 
 
 
 
 

For the fiscal year ended June 30, 2018, net income was a record $152.4 million, an increase of 13.1% over net income of $134.7 million for the twelve months ended June 30, 2017. Earnings attributable to BofI’s common stockholders were $152.1 million or $2.36 per diluted share for the twelve months ended June 30, 2018, an increase of 13.1% from $134.4 million or $2.07 per diluted share for the twelve months ended June 30, 2017. Record earnings for the fiscal year ended June 30, 2018 were the result of growth in the Bank’s loan and lease portfolio, growth in fee income and a reduced income tax rate. Operating expenses increased due to higher levels of loan originations and deposit activities and due to non-operating expenses including re-branding and purchase accounting amortization.

“We generated strong loan growth in the fourth quarter, led by robust loan originations in jumbo single family mortgage, multifamily, and C&I lending,” stated Greg Garrabrants, President and Chief Executive Officer of BofI. “Our multi-year investments to diversify of our lending are paying off, as reflected in ending loan balances increasing $368 million in the fourth quarter and $1.06 billion in fiscal 2018. Demand for loans remains strong, as evidenced by our $1.2 billion loan pipeline at June 30, 2018.”

“Non-interest expense for the quarter was elevated due to expenses related to Epiq, expenses related to RSUs, deal-related expenses, and investments in rebranding, technology and personnel,” said Andy Micheletti, Executive Vice President and Chief Financial Officer of BofI. “Our efficiency ratio for fiscal 2018 was 39.58%.”

He continued, “Credit quality remains healthy. Non-performing loans to total loans was 37 basis points at June 30, 2018, down from 38 basis points at June 30, 2017. Excluding charge-offs related to the H&R Block tax product loans, our net annualized charge-off ratio was 2 basis points in the fourth quarter of 2018 and 2 basis point for fiscal year 2018.”







Other Highlights:
Total assets reached $9,539.5 million, up $1,037.8 million or 12.2% compared to June 30, 2017
Loan and lease portfolio grew by $1,057.8 million or 14.3% compared to June 30, 2017
Loan and lease originations for investment for the three months ended June 30, 2018 were $1,361.6 million, up 19.3%, or 77.2% annualized, compared to the quarter ended June 30, 2017
Deposits grew by $1,085.8 million or 15.7% compared to June 30, 2017
Asset quality remains strong with total non-performing assets of 0.43% of total assets and non-performing loans and leases equal to 0.37% of total loans at June 30, 2018
Net interest margin was 3.71%, excluding average excess cash balances associated with short-term H&R Block products, the net interest margin was 3.80%
Tangible book value increased to $13.99 per share, up 8.1% compared to June 30, 2017
Fourth Quarter Fiscal 2018 Income Statement Summary
During the quarter ended June 30, 2018, BofI earned $37.1 million or $0.58 per diluted share compared to $32.5 million, or $0.50 per diluted share for the quarter ended June 30, 2017. Net interest income increased $8.5 million or 10.9% for the quarter ended June 30, 2018 compared to June 30, 2017, primarily due to the $1,101.4 million growth in average-earning assets.
The loan and lease loss provision was $3.9 million for the quarter ended June 30, 2018 compared to $0.2 million for the quarter ended June 30, 2017. The increase was primarily due to growth in the loan and lease portfolio during the quarter ended June 30, 2018 and higher loss recoveries in the quarter ended June 30, 2017.
For the fourth quarter ended June 30, 2018, non-interest income was $17.0 million compared to $13.5 million for the three months ended June 30, 2017. The increase year over year was the result of an increase banking service fees and other income of $3.0 million, primarily due to bankruptcy trustee services, and an increase in gain on sale – other of $2.4 million, due to increased sales of structured settlements and lottery receivables, partially offset by a decrease in mortgage banking income of $1.0 million and a decrease in realized gain on sales of securities of $1.0 million.
Non-interest expense or operating costs increased $13.7 million to $49.7 million for the quarter ended June 30, 2018 from $36.0 million for the three months ended June 30, 2017. The increase was mainly a result of an increase in compensation expense of $7.5 million related to staffing added since June 30, 2017, an increase in advertising and promotional of $1.7 million, an increase in other general and administrative expenses of $1.4 million, an increase in data processing and internet expense of $1.3 million and an increase in depreciation and amortization of $1.1 million. The increases in staffing, data processing and internet, and depreciation expense were incurred primarily to support growth of the Bank’s operations as well as the addition of Epiq operations. The increase in advertising and promotional expense were primarily related to increased deposit marketing and lead generation costs.
Our effective tax rate was 26.43% for the three months ended June 30, 2018 compared to 41.75% for the three months ended June 30, 2017. The decrease in our effective income tax rate for the three months ended June 30, 2018 was primarily due to the tax benefit associated with the federal rate reduction under the Tax Cuts and Job Acts of 2017 and tax credits received during fiscal 2018.





Full Year Fiscal 2018 Highlights
Net income reached a record $152.4 million, an increase of 13.1% compared to the fiscal year ended June 30, 2017
Loan and lease originations and purchases for investment for the fiscal year ended June 30, 2018 were $5,922.8 million up 32.8% compared to the year ended June 30, 2017
Net interest margin increased to 4.11% for the fiscal year ended June 30, 2018 from 3.95% for the fiscal year ended June 30, 2017
Return on average assets remained strong at 1.68% for the fiscal year ended June 30, 2018
BofI was named a top five performing large thrift in the U.S. for the tenth consecutive year by SNL Financial/S&P Global Market Intelligence

Balance Sheet Summary
BofI’s total assets increased $1,037.8 million, or 12.2%, to $9,539.5 million, as of June 30, 2018, up from $8,501.7 million at June 30, 2017. The loan and lease portfolio increased $1,057.8 million on a net basis, primarily from portfolio loan and lease originations and purchases of $5,922.8 million less principal repayments and other adjustments of $4,865.0 million. Investment securities decreased $92.5 million primarily due to sales and repays partially offset by purchases. Total liabilities increased by $911.6 million, or 11.9%, to $8,579.0 million at June 30, 2018, up from $7,667.4 million at June 30, 2017. The increase in total liabilities resulted primarily from growth in deposits of $1,085.8 million. Stockholders’ equity increased by $126.3 million, or 15.1%, to $960.5 million at June 30, 2018 from $834.2 million at June 30, 2017. The increase was primarily the result of $152.4 million in net income and $10.4 million of vesting and issuance of RSUs and stock-based compensation expense, partially offset by $35.2 million of stock repurchases, $1.1 million unrealized gain in other comprehensive income, net of tax, and $0.3 million of dividends declared on preferred stock.
The Bank’s Tier 1 core capital to adjusted average assets ratio was 8.88% at June 30, 2018.
Conference Call
A conference call and webcast will be held on Tuesday, August 7, 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, September 7, 2018, at BofI’s website and telephonically by dialing toll-free number 877-660-6853, passcode 13681340.

About BofI Holding, Inc. and BofI Federal Bank
BofI Holding, Inc. (“BOFI”) 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 $9.5 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.







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 new initiatives. 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.


Investor Relations Contact:
Johnny Lai, CFA
VP, Corporate Development & Investor Relations
858-649-2218
jlai@bofi.com






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)
 
(Dollars in thousands)
June 30,
2018
 
June 30,
2017
 
June 30,
2016
Selected Balance Sheet Data:
 
 
 
 
 
Total assets
$
9,539,504

 
$
8,501,680

 
$
7,599,304

Loans and leases—net of allowance for loan and lease losses
8,432,289

 
7,374,493

 
6,354,679

Loans held for sale, at fair value
35,077

 
18,738

 
20,871

Loans held for sale, lower of cost or fair value
2,686

 
6,669

 
33,530

Allowance for loan and lease losses
49,151

 
40,832

 
35,826

Securities—trading

 
8,327

 
7,584

Securities—available-for-sale
180,305

 
264,470

 
265,447

Securities—held-to-maturity

 

 
199,174

Total deposits
7,985,350

 
6,899,507

 
6,044,051

Securities sold under agreements to repurchase

 
20,000

 
35,000

Advances from the FHLB
457,000

 
640,000

 
727,000

Subordinated notes and debentures and other

54,552

 
54,463

 
56,016

Total stockholders’ equity
960,513

 
834,247

 
683,590

 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
Equity to assets at end of period
10.07
%
 
9.81
%
 
8.99
%
BofI Holding, Inc:
 
 
 
 
 
Tier 1 leverage (core) capital to adjusted average assets
9.45
%
 
9.95
%
 
9.12
%
Common equity tier 1 capital (to risk-weighted assets)
13.27
%
 
14.66
%
 
14.42
%
Tier 1 capital (to risk-weighted assets)
13.34
%
 
14.75
%
 
14.53
%
Total capital (to risk-weighted assets)
14.84
%
 
16.38
%
 
16.36
%
BofI Federal Bank:
 
 
 
 
 
Tier 1 leverage (core) capital to adjusted average assets
8.88
%
 
9.60
%
 
8.78
%
Common equity tier 1 capital (to risk-weighted assets)
12.53
%
 
14.25
%
 
14.00
%
Tier 1 capital (to risk-weighted assets)
12.53
%
 
14.25
%
 
14.00
%
Total capital (to risk-weighted assets)
13.27
%
 
14.97
%
 
14.75
%






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 Fiscal year ending
 
June 30,
 
June 30,
(Dollars in thousands, except per share data)
2018
 
2017
 
2018
 
2017
Selected Income Statement Data:
 
 
 
 
 
 
 
Interest and dividend income
$
118,898

 
$
98,543

 
$
475,074

 
$
387,286

Interest expense
31,850

 
20,016

 
106,580

 
74,059

Net interest income
87,048

 
78,527

 
368,494

 
313,227

Provision for loan losses
3,900

 
200

 
25,800

 
11,061

Net interest income after provision for loan losses
83,148

 
78,327

 
342,694

 
302,166

Non-interest income
16,977

 
13,533

 
70,941

 
68,132

Non-interest expense
49,673

 
35,980

 
173,936

 
137,605

Income before income tax expense
50,452

 
55,880

 
239,699

 
232,693

Income tax expense
13,335

 
23,332

 
87,288

 
97,953

Net income
$
37,117

 
$
32,548

 
$
152,411

 
$
134,740

Net income attributable to common stock
$
37,040

 
$
32,471

 
$
152,102

 
$
134,431

 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
Net income:
 
 
 
 
 
 
 
Basic
$
0.58

 
$
0.50

 
$
2.36

 
$
2.07

Diluted
$
0.58

 
$
0.50

 
$
2.36

 
$
2.07

Book value per common share
$
15.24

 
$
13.05

 
$
15.24

 
$
13.05

Tangible book value per common share
$
13.99

 
$
12.94

 
$
13.99

 
$
12.94

 
 
 
 
 
 
 
 
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
Basic
64,087,138

 
64,970,915

 
64,552,725

 
64,850,114

Diluted
64,087,138

 
64,970,915

 
64,552,725

 
64,850,114

Common shares outstanding at end of period
62,688,064

 
63,536,244

 
62,688,064

 
63,536,244

Common shares issued at end of period
65,796,060

 
65,115,932

 
65,796,060

 
65,115,932

 
 
 
 
 
 
 
 
Performance Ratios and Other Data:
 
 
 
 
 
 
 
Loan and lease originations for investment
$
1,361,597

 
$
1,141,710

 
$
5,922,801

 
$
4,182,701

Loan originations for sale
$
288,832

 
$
291,056

 
$
1,564,165

 
$
1,375,443

Loan and lease purchases
$

 
$

 
$

 
$
276,917

Return on average assets
1.56
%
 
1.55
%
 
1.68
%
 
1.68
%
Return on average common stockholders’ equity
15.67
%
 
15.89
%
 
17.05
%
 
17.78
%
Interest rate spread1
3.34
%
 
3.55
%
 
3.79
%
 
3.74
%
Net interest margin2
3.71
%
 
3.80
%
 
4.11
%
 
3.95
%
Efficiency ratio
47.75
%
 
39.08
%
 
39.58
%
 
36.08
%
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
Net annualized charge-offs to average loans and leases
0.70
%
 
0.20
%
 
0.19
%
 
0.06
%
Non-performing loans and leases to total loans and leases
0.37
%
 
0.38
%
 
0.37
%
 
0.38
%
Non-performing assets to total assets
0.43
%
 
0.35
%
 
0.43
%
 
0.35
%
Allowance for loan and lease losses to total loans and leases at end of period
0.58
%
 
0.55
%
 
0.58
%
 
0.55
%
Allowance for loan and lease losses to non-performing loans and leases
157.40
%
 
143.81
%
 
157.40
%
 
143.81
%
_________________________
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






(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


BOFI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
At June 30,
(Dollars in thousands, except par and stated value)
2018
 
2017
ASSETS
 
 
 
Cash and due from banks
$
622,750

 
$
628,172

Federal funds sold
100

 
15,369

Total cash and cash equivalents
622,850

 
643,541

Securities:
 
 
 
Trading

 
8,327

Available for sale
180,305

 
264,470

Stock of the Federal Home Loan Bank, at cost
17,250

 
63,207

Loans held for sale, carried at fair value
35,077

 
18,738

Loans held for sale, carried at lower of cost or fair value
2,686

 
6,669

Loans and leases—net of allowance for loan and lease losses of $49,151 as of June 2018 and $40,832 as of June 2017
8,432,289

 
7,374,493

Accrued interest receivable
26,729

 
20,781

Furniture, equipment and software—net
21,454

 
16,659

Deferred income tax
17,957

 
34,341

Cash surrender value of life insurance
6,358

 
6,174

Mortgage servicing rights, carried at fair value
10,752

 
7,200

Other real estate owned and repossessed vehicles
9,591

 
1,413

Goodwill and other intangible assets—net
67,788

 

Other assets
88,418

 
35,667

TOTAL ASSETS
$
9,539,504

 
$
8,501,680

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
1,015,355

 
$
848,544

Interest bearing
6,969,995

 
6,050,963

Total deposits
7,985,350

 
6,899,507

Securities sold under agreements to repurchase

 
20,000

Advances from the Federal Home Loan Bank
457,000

 
640,000

Subordinated notes and debentures and other
54,552

 
54,463

Accrued interest payable
1,753

 
1,284

Accounts payable and accrued liabilities and other liabilities
80,336

 
52,179

Total liabilities
8,578,991

 
7,667,433

COMMITMENTS AND CONTINGENCIES (Note 14)
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
Preferred stock—$0.01 par value; 1,000,000 shares authorized;
 
 
 
Series A—$10,000 stated value and liquidation preference per share; 515 shares issued and outstanding as of June 2018 and June 2017
5,063

 
5,063

Common stock—$0.01 par value; 150,000,000 shares authorized, 65,796,060 shares issued and 62,688,064 shares outstanding as of June 2018, 65,115,932 shares issued and 63,536,244 shares outstanding as of June 2017
658

 
651

Additional paid-in capital
366,515

 
346,117

Accumulated other comprehensive income (loss)—net of tax
(613
)
 
487

Retained earnings
671,348

 
519,246

Treasury stock, at cost; 3,107,996 shares as of June 2018 and 1,579,688 shares as of June 2017
(82,458
)
 
(37,317
)
Total stockholders’ equity
960,513

 
834,247

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
9,539,504

 
$
8,501,680




S-1



BOFI HOLDING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Quarters Ended June 30,
(Dollars in thousands, except earnings per share)
2018
 
2017
INTEREST AND DIVIDEND INCOME:
 
 
 
Loans and leases, including fees
$
111,481

 
$
93,000

Investments
7,417

 
5,543

Total interest and dividend income
118,898

 
98,543

INTEREST EXPENSE:
 
 
 
Deposits
22,689

 
14,817

Advances from the Federal Home Loan Bank
8,243

 
3,994

Other borrowings
918

 
1,205

Total interest expense
31,850

 
20,016

Net interest income
87,048

 
78,527

Provision for loan and lease losses
3,900

 
200

Net interest income, after provision for loan and lease losses
83,148

 
78,327

NON-INTEREST INCOME:
 
 
 
 
 
 
 
Realized gain (loss) on sale of securities

 
996

Other-than-temporary loss on securities:
 
 
 
Total impairment losses

 
(1,957
)
Loss (gain) recognized in other comprehensive income

 
1,831

Net impairment loss recognized in earnings

 
(126
)
Fair value gain (loss) on trading securities

 
(94
)
Total unrealized loss on securities

 
(220
)
Prepayment penalty fee income
754

 
958

Gain on sale - other
2,846

 
419

Mortgage banking income
1,903

 
2,884

Banking service fees and other income
11,474

 
8,496

Total non-interest income
16,977

 
13,533

NON-INTEREST EXPENSE:
 
 
 
Salaries and related costs
28,665

 
21,211

Data processing and internet
5,209

 
3,913

Advertising and promotional
4,408

 
2,697

Depreciation and amortization
2,855

 
1,778

Occupancy and equipment
1,602

 
1,513

Professional services
1,326

 
1,517

FDIC and regulatory fees
1,522

 
940

Real estate owned and repossessed vehicles
309

 
(5
)
Other general and administrative
3,777

 
2,416

Total non-interest expense
49,673

 
35,980

INCOME BEFORE INCOME TAXES
50,452

 
55,880

INCOME TAXES
13,335

 
23,332

NET INCOME
$
37,117

 
$
32,548

NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
37,040

 
$
32,471

COMPREHENSIVE INCOME
$
37,645

 
$
34,198

Basic earnings per share
$
0.58

 
$
0.50

Diluted earnings per share
$
0.58

 
$
0.50




S-2



BOFI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands, except earnings per share)
2018
 
2017
 
2016
INTEREST AND DIVIDEND INCOME:
 
 
 
 
 
Loans and leases, including fees
$
446,991

 
$
358,849

 
$
291,058

Investments
28,083

 
28,437

 
26,649

Total interest and dividend income
475,074

 
387,286

 
317,707

INTEREST EXPENSE:
 
 
 
 
 
Deposits
79,851

 
56,494

 
42,667

Advances from the Federal Home Loan Bank
22,848

 
12,403

 
11,175

Other borrowings
3,881

 
5,162

 
2,854

Total interest expense
106,580

 
74,059

 
56,696

Net interest income
368,494

 
313,227

 
261,011

Provision for loan and lease losses
25,800

 
11,061

 
9,700

Net interest income, after provision for loan and lease losses
342,694

 
302,166

 
251,311

NON-INTEREST INCOME:
 
 
 
 
 
 
 
 
 
 
 
Realized gain on sale of securities
(18
)
 
3,920

 
1,427

Other-than-temporary loss on securities:
 
 
 
 
 
Total impairment losses
(6,271
)
 
(10,937
)
 
(3,472
)
Loss (gain) recognized in other comprehensive income
6,115

 
8,973

 
2,907

Net impairment loss recognized in earnings
(156
)
 
(1,964
)
 
(565
)
Fair value gain (loss) on trading securities

 
743

 
(248
)
Total unrealized loss on securities
(156
)
 
(1,221
)
 
(813
)
Prepayment penalty fee income
3,862

 
4,574

 
2,914

Gain on sale - other
5,734

 
4,487

 
15,540

Mortgage banking income
13,755

 
14,284

 
11,076

Banking service fees and other income
47,764

 
42,088

 
36,196

Total non-interest income
70,941

 
68,132

 
66,340

NON-INTEREST EXPENSE:
 
 
 
 
 
Salaries and related costs
100,975

 
81,821

 
66,667

Data processing and internet
17,400

 
13,323

 
10,348

Advertising and promotional
15,500

 
9,367

 
6,867

Depreciation and amortization
8,574

 
6,094

 
4,795

Occupancy and equipment
6,063

 
5,612

 
4,326

Professional services
5,280

 
4,980

 
4,700

FDIC and regulatory fees
4,860

 
4,330

 
4,632

Real estate owned and repossessed vehicles
260

 
498

 
(46
)
Other general and administrative
15,024

 
11,580

 
10,467

Total non-interest expense
173,936

 
137,605

 
112,756

INCOME BEFORE INCOME TAXES
239,699

 
232,693

 
204,895

INCOME TAXES
87,288

 
97,953

 
85,604

NET INCOME
$
152,411

 
$
134,740

 
$
119,291

NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
152,102

 
$
134,431

 
$
118,982

COMPREHENSIVE INCOME
$
151,311

 
$
142,531

 
$
121,386

Basic earnings per share
$
2.36

 
$
2.07

 
$
1.85

Diluted earnings per share
$
2.36

 
$
2.07

 
$
1.85







S-3



BOFI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands)
2018
 
2017
 
2016
NET INCOME
$
152,411

 
$
134,740

 
$
119,291

Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $(2,449), $3,363, and $(68) for the years ended June 30, 2018, 2017 and 2016, respectively.
(5,493
)
 
5,218

 
(94
)
Other-than-temporary impairment on securities recognized in other comprehensive income, net of tax expense (benefit) of $1,918, $3,195 and $2,177 for the years ended June 30, 2018, 2017 and 2016, respectively.
4,197

 
4,957

 
3,018

Reclassification of net (gain) loss from available-for-sale securities included in income, net of tax expense (benefit) of $(104), $1,536 and $598 for the years ended June 30, 2018, 2017 and 2016, respectively.
196

 
(2,384
)
 
(829
)
Other comprehensive income (loss)
$
(1,100
)
 
$
7,791

 
$
2,095

Comprehensive income
$
151,311

 
$
142,531

 
$
121,386



S-4



BOFI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 
Preferred Stock
 
Common Stock
 
Additional
Paid-in
Capital
1
 
Retained
Earnings
 
Accumulated Other Comprehensive Income (Loss), Net of
Income Tax
 
Treasury
Stock
 
Total
 
 
 
 
 
Number of Shares
 
 
 
 
 
 
 
(Dollars in thousands)
Shares
 
Amount
 
Issued1
 
Treasury
 
Outstanding1
 
Amount1
 
 
 
 
 
Balance as of June 30, 2015
515

 
$
5,063

 
63,145,364

 
(1,070,360
)
 
62,075,004

 
$
631

 
$
296,042

 
$
265,833

 
$
(9,399
)
 
$
(24,644
)
 
$
533,526

Net income

 

 

 

 

 

 

 
119,291

 

 

 
119,291

Other comprehensive income (loss)

 

 

 

 

 

 

 

 
2,095

 

 
2,095

Cash dividends on preferred stock

 

 

 

 

 

 

 
(309
)
 

 

 
(309
)
Issuance of common stock

 

 
723,808

 

 
723,808

 
7

 
21,113

 

 

 

 
21,120

Stock-based compensation expense

 

 
25,394

 

 
25,394

 
1

 
11,325

 

 

 

 
11,326

Restricted stock unit vesting and tax benefits

 

 
536,528

 
(223,742
)
 
312,786

 
5

 
1,520

 

 

 
(6,141
)
 
(4,616
)
Stock option exercises and tax benefits

 

 
82,400

 

 
82,400

 
1

 
1,156

 

 

 

 
1,157

Balance as of June 30, 2016
515

 
$
5,063

 
64,513,494

 
(1,294,102
)
 
63,219,392

 
$
645

 
$
331,156

 
$
384,815

 
$
(7,304
)
 
$
(30,785
)
 
$
683,590

Net income

 

 

 

 

 

 

 
134,740

 

 

 
134,740

Other comprehensive income (loss)

 

 

 

 

 

 

 

 
7,791

 

 
7,791

Cash dividends on preferred stock

 

 

 

 

 

 

 
(309
)
 

 

 
(309
)
Stock-based compensation expense

 

 
31,674

 

 
31,674

 

 
14,535

 

 

 

 
14,535

Restricted stock unit vesting and tax benefits

 

 
570,764

 
(285,586
)
 
285,178

 
6

 
426

 

 

 
(6,532
)
 
(6,100
)
Balance as of June 30, 2017
515

 
$
5,063

 
65,115,932

 
(1,579,688
)
 
63,536,244

 
$
651

 
$
346,117

 
$
519,246

 
$
487

 
$
(37,317
)
 
$
834,247

Net income

 

 

 

 

 

 

 
152,411

 

 

 
152,411

Other comprehensive income (loss)

 

 

 

 

 

 

 

 
(1,100
)
 

 
(1,100
)
Cash dividends on preferred stock

 

 

 

 

 

 

 
(309
)
 

 

 
(309
)
Repurchase of treasury stock

 

 

 
(1,233,491
)
 
(1,233,491
)
 

 

 

 

 
(35,183
)
 
(35,183
)
Stock-based compensation expense

 

 
50,373

 

 
50,373

 
1

 
20,398

 

 

 

 
20,399

Restricted stock unit vesting and tax benefits

 

 
629,755

 
(294,817
)
 
334,938

 
6

 

 

 

 
(9,958
)
 
(9,952
)
Balance as of June 30, 2018
515

 
$
5,063

 
65,796,060

 
(3,107,996
)
 
62,688,064

 
$
658

 
$
366,515

 
$
671,348

 
$
(613
)
 
$
(82,458
)
 
$
960,513

1- Common stock amounts have been retroactively restated for the fiscal year ended June 30, 2015 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. The par value of common stock remains unchanged at $0.01 per share after the aforementioned forward stock split. As a result, the stated capital attributable to common stock increased proportionately and the additional paid-in capital decreased by the amount by which the stated capital increased.


S-5



BOFI HOLDING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands)
2018
 
2017
 
2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
Net income
$
152,411

 
$
134,740

 
$
119,291

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
Accretion of discounts on securities
(624
)
 
(2,766
)
 
(5,276
)
Net accretion of discounts on loans and leases
(29,381
)
 
(4,859
)
 
959

Amortization of borrowing costs
208

 
208

 

Stock-based compensation expense
20,399

 
14,535

 
11,326

Valuation of financial instruments carried at fair value

 
(743
)
 
248

Net gain on sale of investment securities
18

 
(3,920
)
 
(1,427
)
Impairment charge on securities
156

 
1,964

 
565

Provision for loan and lease losses
25,800

 
11,061

 
9,700

Deferred income taxes
17,034

 
(2,220
)
 
(6,647
)
Origination of loans held for sale
(1,564,165
)
 
(1,375,443
)
 
(1,363,025
)
Unrealized (gain) loss on loans held for sale
(253
)
 
222

 
(97
)
Gain on sales of loans held for sale
(19,489
)
 
(18,771
)
 
(26,616
)
Proceeds from sale of loans held for sale1
1,579,040

 
1,420,031

 
1,441,107

Change in fair value of mortgage servicing rights
83

 
(31
)
 
889

(Gain) loss on sale of other real estate and foreclosed assets
(258
)
 
(42
)
 
(145
)
Depreciation and amortization
8,574

 
6,094

 
4,795

Net changes in assets and liabilities which provide (use) cash:
 
 
 
 
 
Accrued interest receivable
(6,082
)
 
4,511

 
(6,070
)
Other assets
(56,090
)
 
45,762

 
(54,712
)
Accrued interest payable
469

 
(383
)
 
401

Accounts payable and accrued liabilities
27,649

 
466

 
9,513

Net cash provided by (used) in operating activities
$
155,499

 
$
230,416

 
$
134,779

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
Purchases of investment securities
(100,503
)
 
(249,909
)
 
(161,395
)
Proceeds from sales of securities
52,714

 
161,048

 
14,969

Proceeds from repayment of securities
139,338

 
307,456

 
80,009

Purchase of stock of the Federal Home Loan Bank
(33,966
)
 
(66,294
)
 
(136,952
)
Proceeds from redemption of stock of Federal Home Loan Bank
79,923

 
60,210

 
146,099

Origination of loans and leases held for investment
(5,895,902
)
 
(4,068,990
)
 
(3,582,766
)
Proceeds from sale of loans held for investment1
33,134

 

 
82,006

Origination of mortgage warehouse loans, net
(26,899
)
 
(113,711
)
 
(51,145
)
Proceeds from sales of other real estate owned and repossessed assets
1,832

 
367

 
1,478

Cash paid for acquisition
(70,002
)
 

 

Purchases of loans and leases, net of discounts and premiums

 
(269,886
)
 
(140,493
)
Principal repayments on loans and leases
4,818,558

 
3,427,818

 
2,253,017

Purchases of furniture, equipment and software
(11,817
)
 
(8,758
)
 
(10,239
)
Net cash used in investing activities
$
(1,013,590
)
 
$
(820,649
)
 
$
(1,505,412
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
Net increase in deposits
$
1,085,843

 
$
855,456

 
$
1,592,134

Proceeds from the Federal Home Loan Bank advances

 

 
850,000

Repayment of the Federal Home Loan Bank advances
(30,000
)
 
(95,000
)
 
(911,000
)
Net (repayment) proceeds of Federal Home Loan Bank other advances
(153,000
)
 
8,000

 
35,000

Repayments of other borrowings and securities sold under agreements to repurchase
(20,000
)
 
(15,000
)
 

Tax payments related to settlement of restricted stock units
(9,958
)
 
(6,532
)
 
(6,141
)
Repurchase of treasury stock
(35,183
)
 

 

Proceeds from exercise of common stock options

 

 
151

Proceeds from issuance of common stock

 

 
21,120

Tax benefit from exercise of common stock options and vesting of restricted stock grants
7

 
432

 
2,531

Cash dividends paid on preferred stock
(309
)
 
(309
)
 
(309
)
Proceeds from issuance of subordinated notes

 

 
51,000

Net cash provided by financing activities
$
837,400

 
$
747,047

 
$
1,634,486

NET CHANGE IN CASH AND CASH EQUIVALENTS
(20,691
)
 
156,814

 
263,853

CASH AND CASH EQUIVALENTS—Beginning of year
643,541

 
486,727

 
222,874

CASH AND CASH EQUIVALENTS—End of year
$
622,850

 
$
643,541

 
$
486,727

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
 
 
Interest paid on deposits and borrowed funds
$
106,122

 
$
74,442

 
$
56,296

Income taxes paid
$
79,621

 
$
102,482

 
$
89,184

Transfers to other real estate and repossessed vehicles
$
10,113

 
$
1,982

 
$
571

Transfers from loans and leases held for investment to loans held for sale
$
31,207

 
$
2,935

 
$
79,706

Transfers from loans held for sale to loans and leases held for investment
$
3,969

 
$
2,790

 
$
25,141

Securities transferred from held-to-maturity to available for sale portfolio
$

 
$
194,153

 
$

1 For the year ended June 30, 2016, the above statement includes an immaterial correction for the reclassification of proceeds from the sale of loans, which were transferred from loans held-for-investment. This reclassification did not result in any adjustment to the change in cash and cash equivalents.



S-6



LOANS AND LEASES
The following table sets forth the composition of the loan and lease portfolio as of the dates indicated:
(Unaudited)
(Dollars in thousands)
June 30, 2018
 
June 30, 2017
Single family real estate secured:
 
 
 
Mortgage
$
4,198,941

 
$
3,901,754

Home equity
2,306

 
2,092

Warehouse and other1
412,085

 
452,390

Multifamily real estate secured
1,800,919

 
1,619,404

Commercial real estate secured
220,379

 
162,715

Auto and RV secured
213,522

 
154,246

Factoring
169,885

 
160,674

Commercial & Industrial
1,481,051

 
992,232

Other
18,598

 
3,754

  Total gross loans and leases
8,517,686

 
7,449,261

Allowance for loan and lease losses
(49,151
)
 
(40,832
)
Unaccreted discounts and loan and lease fees
(36,246
)
 
(33,936
)
  Total net loans and leases
$
8,432,289

 
$
7,374,493

1. The balance of single family warehouse loans was $175,508 at June 30, 2018 and $187,034 at June 30, 2017. The remainder of the balance was attributable to commercial specialty and lender finance loans secured by single family real estate.



S-7



SECURITIES
The amortized cost, carrying amount and fair value for the major categories of trading and available for sale securities at June 30, 2018 and June 30, 2017 were:
 
June 30, 2018
 
Trading
 
Available for sale
(Unaudited)
(Dollars in thousands)
Fair
Value
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Mortgage-backed securities (RMBS):
 
 
 
 
 
 
 
 
 
U.S agencies1
$

 
$
13,102

 
$
152

 
$
(328
)
 
$
12,926

Non-agency2

 
19,384

 
116

 
(2,057
)
 
17,443

Total mortgage-backed securities

 
32,486

 
268

 
(2,385
)
 
30,369

Other debt securities:
 
 
 
 
 
 
 
 
 
Municipal

 
20,953

 
2

 
(743
)
 
20,212

Non-agency

 
127,558

 
2,267

 
(101
)
 
129,724

Total other debt securities

 
148,511

 
2,269

 
(844
)
 
149,936

Total debt securities
$

 
$
180,997

 
$
2,537

 
$
(3,229
)
 
$
180,305

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
June 30, 2017
 
Trading
 
Available for sale
(Unaudited)
(Dollars in thousands)
Fair
Value
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Mortgage-backed securities (RMBS):
 
 
 
 
 
 
 
 
 
U.S agencies1
$

 
$
27,379

 
$
286

 
$
(459
)
 
$
27,206

Non-agency2

 
65,401

 
7,406

 
(1,304
)
 
71,503

Total mortgage-backed securities

 
92,780

 
7,692

 
(1,763
)
 
98,709

Other debt securities:
 
 
 
 
 
 
 
 
 
Municipal

 
27,568

 
19

 
(424
)
 
27,163

Non-agency
8,327

 
137,172

 
1,517

 
(91
)
 
138,598

Total other debt securities
8,327

 
164,740

 
1,536

 
(515
)
 
165,761

Total debt securities
$
8,327

 
$
257,520

 
$
9,228

 
$
(2,278
)
 
$
264,470

1 U.S. government-backed or government sponsored enterprises including Fannie Mae, Freddie Mac and Ginnie Mae.
2 Private sponsors of securities collateralized primarily by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by prime, Alt-A or pay-option ARM mortgages.


S-8



DEPOSITS
The following table sets forth the composition of the deposit portfolio as of the dates indicated:
 (Unaudited)
June 30, 2018
 
June 30, 2017
(Dollars in thousands)
Amount
 
Rate1
 
Amount
 
Rate1
Non-interest bearing
$
1,015,355

 
%
 
$
848,544

 
%
Interest bearing:
 
 
 
 
 
 
 
Demand
2,519,845

 
1.60
%
 
2,593,491

 
0.89
%
Savings
2,482,430

 
1.31
%
 
2,651,176

 
0.81
%
       Total interest-bearing demand and savings
5,002,275

 
1.46
%
 
5,244,667

 
0.85
%
Time deposits:
 
 
 
 
 
 
 
$250 and under2
1,837,274

 
2.34
%
 
774,627

 
2.54
%
Greater than $250
130,446

 
2.05
%
 
31,669

 
0.39
%
Total time deposits
1,967,720

 
2.32
%
 
806,296

 
2.46
%
Total interest bearing2
6,969,995

 
1.70
%
 
6,050,963

 
1.06
%
Total deposits
$
7,985,350

 
1.48
%
 
$
6,899,507

 
0.93
%
1. Based on weighted-average stated interest rates at end of period.
2. The total interest-bearing includes brokered deposits of $2,055.9 million and $1,104.3 million as of June 30, 2018 and June 30, 2017, respectively, of which $1,692.8 million and $611.0 million, respectively, are time deposits classified as $250 and under.


The number of deposit accounts at the end of each of the last five fiscal years is set forth below:
 
At June 30,
 
2018
 
2017
 
2016
 
2015
 
2014
Non-Interest bearing, prepaid and other
3,535,904

 
3,113,128

 
1,816,266

 
553,245

 
182,011

Checking and savings accounts
270,082

 
274,962

 
292,012

 
31,461

 
24,098

Time deposits
2,309

 
2,748

 
4,807

 
5,515

 
7,571

Total number of deposit accounts
3,808,295

 
3,390,838

 
2,113,085

 
590,221

 
213,680


The net increase of 422,776 of non-interest bearing, prepaid and other accounts for the fiscal year ended June 30, 2018 was primarily the result of increased prepaid and other accounts within two omnibus accounts. Our non-interest bearing, prepaid and other accounts contain two omnibus accounts that when condensed for regulatory reporting purposes result in 7,368 accounts as of June 30, 2018.

S-9



AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
 
For the three months ended June 30,
 
2018
 
2017
(Unaudited)
(Dollars in thousands)
Average
Balance
2
 
Interest
Income /
Expense
 
Average
Yields
Earned /
Rates Paid
1
 
Average
Balance
2
 
Interest
Income /
Expense
 
Average
Yields
Earned /
Rates Paid
1
Assets:
 
 
 
 
 
 
 
 
 
 
 
Loans and leases3,4
$
8,278,746

 
$
111,481

 
5.39
%
 
$
7,176,254

 
$
93,000

 
5.18
%
Interest-earning deposits in other financial institutions
860,052

 
3,788

 
1.76
%
 
763,013

 
1,970

 
1.03
%
Mortgage-backed and other investment securities
180,843

 
2,681

 
5.93
%
 
273,570

 
2,800

 
4.09
%
Stock of Federal Home Loan Bank
54,176

 
948

 
7.00
%
 
59,575

 
773

 
5.19
%
Total interest-earning assets
9,373,817

 
118,898

 
5.07
%
 
8,272,412

 
98,543

 
4.76
%
Non-interest-earning assets
145,478

 
 
 
 
 
108,984

 
 
 
 
Total assets
$
9,519,295

 
 
 
 
 
$
8,381,396

 
 
 
 
Liabilities and Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings
$
4,406,649

 
$
14,867

 
1.35
%
 
$
4,605,501

 
$
9,992

 
0.87
%
Time deposits
1,220,332

 
7,822

 
2.56
%
 
799,483

 
4,826

 
2.41
%
Securities sold under agreements to repurchase

 

 
%
 
27,253

 
298

 
4.37
%
Advances from the FHLB
1,676,439

 
8,243

 
1.97
%
 
1,133,809