Bank of the Internet earnings are out and they have beaten expectations on both the top and bottom line. Book value is up to $36.33 per share. There was no mention of the lawsuit by former auditor Matt Erhart or the counter-suit by the company in the press release or SEC filing.
Here is a quick note from the company in their press release:
“We delivered record earnings and margin expansion last quarter,” stated Greg Garrabrants, President and Chief Executive Officer. Mr. Garrabrants continued, “Loan growth was strong across a variety of categories, including jumbo single family, commercial real estate, C&I and auto. We successfully closed the H&R Block agreements, adding over 250,000 new IRA customers and approximately 729,000 new prepaid accounts, further diversifying our deposit base. We see tremendous opportunities to leverage Block’s nationwide footprint and digital channels to provide a variety of services to Block’s customers over time. Coupled with investments we are making in our user experience, technology, and personnel across each of our core businesses, we are well positioned to sustain strong organic growth in revenues and earnings.”
Here are my quick takes for the FY 2016.Q1:
$1.60 EPS (FY 2016.Q1 actual)
$1.50 EPS (FY 2016.Q1 estimate)
$1.20 EPS (FY 2015.Q1 actual)
Net Revenue (Net Interest Income)
$59.128 M (FY 2016.Q1 actual)
$57.06 M (FY 2016.Q1 estimate)
$44.875 M (FY 2015.Q1 actual)
Tangible book value: $36.33 per share (FY 2016.Q1 actual) vs. $27.52 per share (FY 2015.Q1 actual) [+32%]
Total assets: $6,259.6 M (FY 2016.Q1 actual) vs. $4,824.9 M (FY 2015.Q1 actual) [+29.7%]
Loan portfolio growth YoY: $1,266.2 M, +32.0%
Loan originations: $1,097.4 M (FY 2016.Q1 actual) vs. $1,004.7 M (FY 2015.Q1 actual) [+9.2%]
Deposit growth YoY: $1,493.6 M, +45.8%
Non-performing asset ratio: 0.50% (FY 2016.Q1 actual) vs. 0.52% (FY 2015.Q1 actual)
Non-performing loans ratio: 0.57% (FY 2016.Q1 actual) vs. 0.62% (FY 2015.Q1 actual)
Back in July a user noted how quiet the BOFI Rule Breakers board was despite the stellar performance of the stock: http://discussion.fool.com/1069/so-quiet-31834302.aspx?sort=whol…. Oh my how things have quickly changed…
The earnings once again, like they have been for several quarters now were stellar. I must note even better than the past two as the non-performing metrics seem to be improving (as opposed to declining in previous quarters). With the H&R block acquisition closed BOFI’s growth should continue for the next year or so.
Long term we must see if BOFI can continue its excellent growth and metrics as they get larger. As the recent NY Times article and events have revealed, BOFI can get a little “creative” with its loans and gaining deposit customers. This has driven their growth and this should continue as long as management is careful. One macro trend to keep an eye on is home sales which are starting to flatten a bit as prices rise and inventory is lower.
As for the elephant in the room, the allegations by Matt Erhart a former BOFI employee and auditor was not specifically addressed in the release/filing. We should hear more about it and the counter suit in the conference call today at 4:30PM EDT. I plan on doing live posting during the CC. My take on the situation is that I believe the key fraud allegations are false, but management needs to be more careful and needs to take a look on how to manage employees better. Hopefully the company will be able to get through these accusations, regain trust of investors, improve/learn from this situation and become a better company in the long term for it.
BOFI is currently trading at $94.23 (-6.42%) per share in regular market activity. Price to book is currently at 2.59, the lowest it’s been in quite some time.