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Value

Earnings estimates for BofI Holding Inc. (BOFI - Snapshot Report) have been advancing since this bank holding company posted robust fourth quarter and fiscal 2012 results. The company reached Zacks #1 Rank (Strong Buy) status on August 11 and hit its 52 week high on September 17. In addition, a P/B multiple of just 1.63 makes this stock an attractive value investment.

Impressive Q4 Results

On August 9, BofI Holding recorded fiscal fourth quarter 2012 (ended June 30) earnings per share of 64 cents, outpacing the Zacks Consensus Estimate of 58 cents by 10.3% and last year’s earnings of 50 cents by 28.0%. Results improved mainly due to significant growth in the top line, partially offset by a rise in operating expenses.

Net interest income surged 31.5% from the year-ago quarter to $21.6 million. Furthermore, net interest margin increased 11 basis points (bps) to 3.80%. Likewise, non-interest income also reported a significant jump and stood at $5.0 million, primarily driven by the sale of mortgage loans. Nevertheless, non-interest expenses rose 30.6% to $10.0 million on the back of higher compensation expense.

BofI Holding also witnessed an improvement in its asset quality. As of June 30, 2012, allowance for loan losses declined 29.9% to $9.6 million. Similarly, non-performing assets as a percentage of total assets fell 22 bps to 0.77%.

Surge in Earnings Estimates

Over the last 60 days, the Zacks Consensus Estimate for fiscal 2013 increased 10.8% to $2.66 per share. For 2014, the Zacks Consensus Estimate improved 4.6% to $2.93 over the same time frame.

The estimates reflect year-over-year improvements of about 14.2% for 2013 and 10.3% for 2014.

Valuation Looks Reasonable Along with a low P/B multiple, BofI Holding has a forward P/E ratio as low as 9.7 (A P/E ratio under 15.0 and P/B ratio below 3.0 generally indicate value). The company has a trailing 12-month ROE of 17.2%, compared with the peer group average of 9.3%.

Based in San Diego, California, BofI Holding is the bank holding company for BofI Federal Bank. The company offers innovative banking and lending products and services across the nation. With a market capitalization of about $298.9 million, BofI Holding competes with Pacific Continental Corp. (PCBK) and Heritage Commerce Corp. (HTBK), among others.


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