2013 Year in Review: BofI Holding in 7 Charts

BofI Holding (AX 2.21%) is the holding company for Bank of Internet, the rapidly growing online-only bank that has had a rather eventful 2013, marked most notably by its stock rising 195% as of the time of writing -- and all you need to know about its financial performance this year is available in seven charts.

Stock performance
BofI has had quite a run in 2013; the chart below shows the daily stock performance through the end of November:

As you can see, the stock has had a mighty impressive run. Interestingly, it has had almost an equal number of days where it was down more than 3% (17) versus when it was up more than 3% (18). In fact, it is easy to think that a stock that has had such spectacular growth would be marked by big gains, but there have been more days when it has fallen by 5% or more (3), than when it has gained 5% or more (2).

Thanks to steady returns, the company has watched its stock price appreciate considerably through the year. But it's vitally important to know that when you buy a stock, you're not simply placing a bet that the stock will go up at a higher rate than when it goes down, but instead you're investing in a company, with the confidence that the company's management will put your money to good use to generate solid returns -- and that's there where BofI has delivered.

Deposits
Of course, at the very core of every bank is its deposit base, and BofI is no exception. And the company has delivered solid growth, with its deposits up 18% since September 2012. All told, in 2013, its deposits have risen by 11% and now stand at $2.2 billion:

Source: Company Investor Relations.

According to the Federal Reserve, deposits at all institutions are up 8.5% over the past year, meaning that BofI is growing its deposits base more than twice as fast as every other bank in the United States.

Loans
While deposits are great, they are considered liabilities for the banks, and they have to use those liabilities to turn them into assets, principally in the form of loans. The loan growth at BofI has also been mighty impressive, with loans up 11% in 2013, and 23% since last September:

Source: Company Investor Relations.

Of course, the loan growth is admirable, but the logical next question becomes, how well is the bank turning those loans into tangible dollars that feed into the bottom line?

Net interest income
Next on the key banking metric list is net interest margin, which is the difference between what a bank earns on its loans compared to what it pays out on its deposits and other debt. BofI has long been able to outperform not only better-known banking peers like Bank of America (BAC 3.35%) and Wells Fargo (WFC 2.74%), but also the national average, as shown in the chart below. As a matter of fact, Wells Fargo has actually seen its net interest margin fall, but BofI has watched its rise:

Source: Company Investor Relations.

Naturally, with BofI watching its loans rise and margins increase, investors may fear that it's growing too quickly, too fast, and that there is entirely too much risk at the bank -- but the next chart should ease that concern.

Non-performing assets / total assets
While gauging the risk of the assets on a bank's balance sheet isn't the easiest thing in the world, a key metric to check is the non-performing assets, and those loans that are more than 90 days past due, as a percentage of total assets:

Source: Company Investor Relations.

Certainly it is encouraging to see the percentage of its assets that are not performing relative to its total assets fall precipitously. When a bank adds loans, increases margins, and reduces the risk on its balance sheet, it is translated straight to the bottom-line returns it can deliver to investors.

Return on assets and return on equity
Thanks to its impressive growth on its balance sheet, BofI Holding has also delivered strong growth in its margins, and so far, 2013 has proved to be no exception. BofI ends its fiscal year in June, and its yearly return on average assets and equity, excluding one-time items, is available in the chart below:

Source: Company Investor Relations.

The 2013 fiscal year proved to once again be a year marked by higher profitability, and with the first quarter of 2014 in the books, it appears as though that trend is poised to continue. All of these things coupled together has led to both earnings per share and tangible book value rising significantly.

Earnings and book value
A key component of banking valuation is its tangible book value, and thanks to all of the factors mentioned above, BofI's earnings per share and tangible book value rose continually quarter after quarter:

Source: Company Investor Relations.

The bottom line
BofI has watched its stock rise so mightily because it has continued to deliver impressive performance. While it remains very expensive with its price to tangible book value of 4.1 (versus a 2.0 multiple in April) compared to the median of the 24 banks in the KBW Bank Index of 1.7, the reality remains that 2013 has been a year of spectacular growth for this small bank in more ways than one.