BofI Holding, Inc. (NASDAQ:BOFI) Q2 2015 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 04:30 pm ET

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BofI Holding, Inc. (NASDAQ:BOFI) Q2 2015 Earnings Conference Call - Final Transcript

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Presentation
Executive
Gregory Garrabrants

annualized growth rate. The excellent performance of our lending groups is reflected in $344.5 million of net loan growth this quarter, a 55% increase

Executive
Unidentified Speaker

a 55% increase over the second quarter of 2014. The $1,079,000,000 of production consists of: $88 million of single-family agency eligible gain on sale production; $2 million of single-family non-agency eligible gain on sale production; $426 million of single-family jumbo portfolio production; $67 million of single-family non-agency eligible gain on sale production; $11 million of multi-family non-agency gain on sale production; $111 million of multi-family portfolio production; and $374 million of C&I and specialty asset production. Additionally, our warehouse lending division originated $448 million of single-family production in the second quarter.

Taken together, the bank originated $957 million of loans in the single-family, multi-family and C&I lending groups, an increase of $166 million over the first quarter. Our outlook for loan growth remains positive, with loan pipelines of approximately $849 million at December 31, 2014 including $438 million of jumbo loans, $107 million of multi-family loans and $241 million of C&I loans.

We've seen a pickup in growth in our single-family agency and warehouse lending pipelines so far in January. We continue to make incremental operational improvements in our mortgage operations to more efficiently deploy resources between single-family agency and single-family jumbo lending allowing us to take full advantage of the current market opportunities. We expect to see some uptick in our agency gain on sale revenue in the next quarters.

We're working on longer-term strategies that we believe will allow us to reduce volatility in our single-family agency gain on sale revenue. For the second quarter's originations, the average FICO for single-family agency-eligible production was 765 with an average loan-to-value ratio of 65.9%. The average FICO for the single-family jumbo production was 714 with an average loan-to-value ratio of 62.05%. The average LTV of the originated multi-family loans was 61.49% and the debt service coverage was 1 335.

Our strong credit discipline and low loan-to-value portfolios have resulted in consistently low credit losses and servicing costs. At December 31, 2014, the weighted average loan-to-value ratio of entire portfolio of real estate was only 54%. Total non-performing assets as a percentage of total loans was 80 basis points at December 31, 2014, up from 57 basis points at June 30, 2014.

The increase is primarily attributable to two single-family residences with balance in the $7 million and $5 million with loan-to-value ratios of 70% and 47.6%, respectively. Both properties are located in premier markets with very strong housing market, and we don't expect to incur at any loss on either of these loans. We do not see any early-stage delinquency trends increasing in our portfolio

We generated very strong deposit growth in the second quarter, growing total deposits 66.7% year-over-year and 22.8% on a sequential basis. We made further progress improving the quality of our deposit base by growing checking and savings deposits by approximately $1.6 billion from December 31, 2013 representing growth of 108%. Transaction