BofI Holding, Inc. (BOFI) became a Zacks No. 1 Rank (Strong Buy) on Nov. 15, a week after this financial services provider announced strong fiscal first-quarter results. In addition, a P/B multiple of just 1.4 should make this stock attractive for value investors.
Impressive Fiscal First-Quarter Results
On Nov. 8, BofI Holding earned 67 cents per share in the fiscal first quarter, topping the Zacks Consensus Estimate by 4.7% and the year-ago performance by 15.5%. The company has now reported a positive surprise in three out of the last four quarters. The advance was aided by increased net interest income and non-interest income, partially offset by enhanced non-interest expenses.
Net interest income climbed 23.6% year over year to $22.5 million, driven by strong growth in average earnings assets. Net interest margin expanded five basis points on a year-over-year basis to 3.70%. Additionally, the company's non-interest income surged 58.1% to $6.8 million. However, non-interest expenses escalated 19.8% to $11.5 million, mainly due to increased compensation expenses.
BofI Holding's capital position improved in the quarter. Total assets came in at $2.6 billion, up 23.8% year over year. Total deposits also surged 26.7% to $1.9 billion. Moreover, Tier 1 capital ratio stood at 8.20%, up 12 basis points on a year-over-year basis.
Earnings Momentum on an Upswing
The Zacks Consensus Estimate for fiscal 2013 is up 5.3% in the past 30 days to $2.80, reflecting year-over-year growth of about 20.0%. The Zacks Consensus Estimate for fiscal 2014 has increased 6.5% to $3.12 over the same time frame, implying a year-over-year increase of about 11.6%.
In addition to its low P/B, BofI Holding has a P/E multiple of 9.3 (a P/E ratio under 15.0 and a P/B ratio below 3.0 generally indicate value). The company has a trailing 12-month return on equity of 17.1%, compared with the peer group average of 9.5%. This signifies the efficient reinvestment efforts by the company compared to its peers.
Headquartered in San Diego, Calif., BofI Holding, Inc., the holding company for BofI Federal Bank, provides various financial services to consumers through the Internet in the United States. The company was founded in 1999 and serves about 40,000 retail deposit and loan customers across 50 states. With a market cap of about $302.2 million, BofI Holding competes with Central Valley Community Bancorp (CVCY), among others.