What happened
Online-only bank BofI Holding (AX 0.28%) reported earnings of $0.61 per share and revenue of $101.31 million for its fiscal second quarter. Both metrics handily beat analysts' expectations.
As of 10:30am EST on Wednesday, BofI was up by 13% to a new all-time high.
BofI's online-only business model is certainly translating into profits. Image source: Getty Images.
So what
The real story here isn't the headline numbers (which were excellent). Instead, the bank's growth during the quarter was extremely impressive. The bank's loan portfolio grew by 19% year-over-year, and the $0.61 EPS represented phenomenal 22% year-over-year growth, excluding a one-time charge related to tax reform.
Additionally, BofI has started buying back shares at a rather aggressive pace. During the quarter, the bank repurchased roughly one million shares, representing about 1.6% of the total.
And believe it or not, the bank is actually getting more profitable. Excluding tax reform, the quarter's return on equity (ROE) and return on assets (ROA) were 18.54% and 1.87%, respectively, above the 17.49% and 1.66% figures a year ago and nearly double the industry benchmarks.
Now what
Going forward, BofI expects an effective tax rate in the 28%-30% range, high for the banking sector, but a welcome change from the 41%-42% the bank has historically paid. BofI's efficiency ratio is expected to be around 40% going forward -- about 20 percentage points better than the average bank -- and the company's ROE is expected to stay around 18%.
With impressive growth, strong profitability, and an upbeat forecast, it's clear that investors are quite pleased with BofI's earnings report.
