Squeeky Wheel
Growth, event-driven, currencies, macro

Don't Fear BofI Holding's Interest Rate Gap

The big news for BofI Holding (Bank of Internet) (NASDAQ:BOFI) of course is the acquisition of H&R Block's banking business which occurred shortly after I wrote most of this article. This should have big impacts on the short theses recently presented on Seeking Alpha. Clearly this will provide immediate access to a larger deposit base and a lot of loans which will help with the growth the market expects.

The recent short theses here and here both highlight Bank of Internet's large negative one-year interest rate gap. Like all banks, Bank of Internet loans long-term and borrows (deposits) short-term. The danger is that if interest rates rise, the interest paid on the deposits rises faster than interest received...

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