Form 8-K BofI Holding, Inc. For: Aug 02

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August 2, 2016 4:10 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 2, 2016

BofI HOLDING, INC.

(Exact name of registrant as specified in its charter)



Delaware	000-51201	33-0867444
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)



4350 La Jolla Village Drive, Suite 140, San Diego, CA	92122
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (858) 350-6200

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 2.02 Results of Operations and Financial Condition

On August 2, 2016, BofI Holding, Inc. (the “Registrant”), parent of BofI Federal Bank, issued a press release announcing its unaudited earnings for the fourth quarter and fiscal year ended June 30, 2016. A copy of the press release and unaudited financial schedules are set forth as Exhibit 99.1 and 99.2 respectively, and are incorporated by reference in this Item 2.02.

Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 2.02 of Form 8-K, including Exhibit 99.1 and 99.2 are being furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise be subject to the liabilities of that section, nor are they incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.



Exhibit		Description
99.1		Press Release of BofI Holding, Inc. dated August 2, 2016
99.2		Financial Schedules

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		BofI Holding, Inc.

Date:	August 2, 2016	By:	/s/ Andrew J. Micheletti
			Andrew J. Micheletti
			EVP and Chief Financial Officer

BofI Holding, Inc. Announces Fourth Quarter Net Income of $29.7 million, Up 21.9%

FY 2016 Net Income Increases 44.3% to $119.3 million

SAN DIEGO, CA – (BUSINESS WIRE) – August 2, 2016 – BofI Holding, Inc. (NASDAQ: BOFI) (“BofI”), parent company of BofI Federal Bank (the “Bank”), today announced financial results for the fourth fiscal quarter ended June 30, 2016. Net income was $29.7 million, an increase of 21.9% over net income of $24.4 million for the quarter ended June 30, 2015. Earnings attributable to BofI’s common stockholders were $29.7 million or $0.46 per diluted share for the fourth quarter of fiscal 2016, an increase of 21.9% from $24.3 million or $0.39 per diluted share for the fourth quarter ended June 30, 2015.

Adjusted earnings, a non-GAAP measure, which excludes the after-tax impact of gains and losses associated with our securities portfolio, increased 26.5% to $29.7 million for the quarter ended June 30, 2016 compared to $23.5 million for the quarter ended June 30, 2015.

Fourth Quarter Fiscal 2016 Financial Summary:



	Three Months Ended June 30,
(Dollars in thousands, except per share data)	2016		2015		% Change
Net interest income	$	69,155	$	55,294	25.1%
Non-interest income	$	17,015	$	10,278	65.5%
Net income	$	29,727	$	24,395	21.9%
Adjusted earnings¹	$	29,677	$	23,467	26.5%
Net income attributable to common stockholders	$	29,650	$	24,318	21.9%
Diluted EPS²	$	0.46	$	0.39	17.9%

¹ See “Use of Non-GAAP Financial Measures”

²Per share amounts have been retroactively restated for all prior periods presented to reflect the four-for-one forward split of the Company’s common stock affected in the form of a stock dividend that was distributed on November 17, 2015

For the fiscal year ended June 30, 2016, net income was a record $119.3 million, an increase of 44.3% over net income of $82.7 million for the twelve months ended June 30, 2015. Earnings attributable to BofI’s common stockholders were $119.0 million or $1.85 per diluted share for the twelve months ended June 30, 2016, an increase of 44.4% from $82.4 million or $1.34 per diluted share for the twelve months ended June 30, 2015. Record earnings for the fiscal year ended June 30, 2016 were primarily the result of growth in both the Bank’s loan and lease portfolio and its fee income businesses.

“We finished fiscal 2016 with positive momentum,” stated Greg Garrabrants, President and Chief Executive Officer of BofI. “Loan growth was solid across several of our lending groups, including jumbo single family, multifamily, commercial real estate and C&I lender finance. Strong fee income growth was a key driver in us achieving 1.75% ROA and 19.43% ROE for the full year.” Mr. Garrabrants continued, “Our disciplined credit underwriting and low loan-to-value strategy has resulted in impeccable credit quality, as reflected in our 2 basis points of annualized net charge-offs during the fourth quarter. Our strong capital position and diverse set of businesses across consumer and commercial platforms enable us to invest in our systems, partnerships and personnel to ensure we remain a leader in the next generation of digital banking.”

Other Highlights:


•	Total assets reached $7,601.4 million, up $1,777.6 million or 30.5% compared to June 30, 2015


•	Loan and lease portfolio grew by $1,426.1 million or 28.9% compared to June 30, 2015


•	Loan and lease originations for investment for the three months ended June 30, 2016 were $960.3 million, up 12.0%, or 48.0% annualized, compared to the quarter ended March 31, 2016


•	Deposits grew by $1,592.1 million or 35.8% compared to June 30, 2015


•	Asset quality remains strong with total non-performing assets of 0.42% of total assets and non-performing loans and leases equal to 0.50% of total loans at June 30, 2016


•	Net interest margin was 3.72%; excluding average balances associated with short-term H&R Block products the net interest margin was 3.87%


•	Tangible book value increased to $10.67 per share, up $2.19 per share compared to June 30, 2015

Fourth Quarter Fiscal 2016 Income Statement Summary

During the quarter ended June 30, 2016, BofI earned $29.7 million or $0.46 per diluted share compared to $24.4 million, or $0.39 per diluted share for the quarter ended June 30, 2015. Net interest income increased $13.9 million or 25.1% for the quarter ended June 30, 2016 compared to June 30, 2015, due to the $1,855.5 million growth in average-earning assets.

The loan and lease loss provision was $1.9 million for the quarter ended June 30, 2016 compared to $2.9 million for the quarter ended June 30, 2015. The decrease was primarily due to a change in the loan and lease mix during the quarter ended June 30, 2016.

For the fourth quarter ended June 30, 2016, non-interest income was $17.0 million compared to $10.3 million for the three months ended June 30, 2015. The increase year over year was the result of an increase in banking service fees and other income of $6.4 million, primarily due to H&R Block-branded products and service fee income and an increase in gain on sale - other of $3.8 million, primarily from sales of structured settlements and lottery receivables.

Non-interest expense or operating costs increased $12.2 million to $33.0 million for the quarter ended June 30, 2016 from $20.8 million for the three months ended June 30, 2015. The increase was mainly a result of an increase in compensation expense of $6.8 million related to staffing added since June 30, 2015, an increase in data processing and internet expense of $1.2 million and an increase of $0.9 million in other general and administrative costs. The increases in staffing, data processing and internet expense, and other general and administrative expenses were incurred to support the growth of the Bank’s operations.

“Our average interest-earning loans grew $471.0 million during the three months ended June 30, 2016 compared to our last quarter ended March 31, 2016,” said Andy Micheletti, Executive Vice President and Chief Financial Officer of BofI. “This quarter, excluding the impact from excess liquidity investments related to H&R Block products, our net interest margin was 3.87%, in line with our targeted range of 3.8% to 4.0%. We continued to make investments across a variety of strategic growth initiatives, including C&I lending, consumer lending, specialty deposits and our universal digital banking infrastructure. Despite more volatility in our quarterly efficiency ratio as a result of volatility in tax product revenues, we remain confident we can maintain a best-in-class efficiency ratio.”

Full Year Fiscal 2016 Highlights


•	Net income reached a record $119.3 million, an increase of 44.3% compared to the fiscal year ended June 30, 2015


•	Loan and lease originations and purchases for the fiscal year ended June 30, 2016 were $5,137.4 million up $814.1 million or 18.8% compared to the year ended June 30, 2015


•	Return on average common stockholders’ equity was 19.43%, up from 18.34% for fiscal year 2015


•	Net annualized charge-offs to average loans was a recovery of 1 basis point compared to 3 basis points of net charge-offs for fiscal year 2015


•	Completed a $51 million public offering of 6.25% Subordinated Notes on March 24, 2016


•	BofI was named the top performing large thrift in the U.S. for a fourth consecutive year by SNL Financial/S&P Global Market Intelligence

Balance Sheet Summary

BofI’s total assets increased $1,777.6 million, or 30.5%, to $7,601.4 million, as of June 30, 2016, up from $5,823.7 million at June 30, 2015. The loan and lease portfolio increased $1,426.1 million on a net basis, primarily from portfolio loan and lease originations and purchases of $3,774.4 million less principal repayments and other adjustments of $2,348.3 million. Loans held for sale decreased $48.9 million. Investment securities increased $75.5 million primarily due to purchases. Total liabilities increased by $1,627.6 million, or 30.8%, to $6,917.8 million at June 30, 2016, up from $5,290.2 million at June 30, 2015. The increase in total liabilities resulted primarily from growth in deposits of $1,592.1 million. Stockholders’ equity increased by $150.1 million, or 28.1%, to $683.6 million at June 30, 2016 from $533.5 million at June 30, 2015. The increase was primarily the result of $119.3 million in net income and sales of common stock of $21.1 million, net of commissions and fees.

The Bank’s Tier 1 core capital to adjusted average assets ratio was 8.78% at June 30, 2016.

Conference Call

A conference call and webcast will be held on Tuesday, August 2, 2016 at 4:30 PM Eastern / 1:30 PM Pacific. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial: 877-407-8293. The conference call will be webcast live and may be accessed at BofI’s website, http://www.bofiholding.com. For those unable to listen to the live broadcast, a replay will be available until Thursday, September 1, 2016, at Bofi's website and telephonically by dialing toll-free number 877-660-6853, passcode 13640821.

About BofI Holding, Inc. and BofI Federal Bank

BofI Holding, Inc. (“BOFI”) is the holding company for BofI Federal Bank, a nationwide bank that provides financing for single and multifamily residential properties, small-to-medium size businesses in target sectors, and selected specialty finance receivables. With approximately $7.6 billion in assets, BofI Federal Bank provides consumer and business banking products through its low-cost distribution channels and affinity partners. BofI Holding, Inc.’s common stock is listed on the NASDAQ Global Select Market under the symbol “BOFI” and is a component of the Russell 2000^® Index, the S&P SmallCap 600^® Index, and the KBW Nasdaq Financial Technology Index. For more information on BofI Federal Bank, please visit bofifederalbank.com.

Use of Non-GAAP Financial Measures

In addition to the results presented in accordance with GAAP, this report includes non-GAAP financial measures such as adjusted earnings. Adjusted earnings, previously labeled as “core earnings,” exclude realized and unrealized gains and losses associated with our securities portfolios. Excluding these gains and losses provides investors with an understanding of BofI’s core lending and mortgage banking business. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious as to their use of such measures. Although BofI believes the non-GAAP financial measures disclosed in this report enhance investors’ understanding of its business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures. Below is a reconciliation of GAAP net income to adjusted earnings:



	Three Months Ended						Fiscal Year Ended
	June 30,						June 30,
(Dollars in thousands)	2016			2015			2016			2015
Net income	$	29,727		$	24,395		$	119,291		$	82,682
Realized securities losses (gains)	(508		)	—			(1,427		)	(587		)
FHLB one-time dividend	—			(1,662		)	—			(1,662		)
Unrealized securities losses (gains)	421			67			813			2,599
Tax (provision) benefit	37			667			257			(145		)
Adjusted earnings	$	29,677		$	23,467		$	118,934		$	82,887

Forward-Looking Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including without limitation statements relating to BofI’s financial prospects and other projections of its performance and asset quality, BofI’s ability to grow and increase its business, diversify its lending, the outcome and effects of pending class action litigation recently filed against the Company, and the anticipated timing and financial performance of new initiatives. These forward-looking statements are made on the basis of the views and assumptions of management regarding future events and performance as of the date of this press release. Actual results and the timing of events could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties, including without limitation changes in interest rates, inflation, government regulation, general economic conditions, conditions in the real estate markets in which we operate and other factors beyond our control. These and other risks and uncertainties detailed in BofI’s periodic reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those expressed or implied in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and BofI undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.

Investor Relations Contact:

Johnny Lai, CFA

VP, Corporate Development & Investor Relations

858-649-2218

[email protected]

The following tables set forth certain selected financial data concerning the periods indicated:

BOFI HOLDING, INC. AND SUBSIDIARY

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited – dollars in thousands)



(Dollars in thousands)	June 30, 2016			June 30, 2015			June 30, 2014
Selected Balance Sheet Data:
Total assets	$	7,601,354		$	5,823,719		$	4,402,999
Loans and leases—net of allowance for loan and lease losses	6,354,679			4,928,618			3,532,841
Loans held for sale, at fair value	20,871			25,430			20,575
Loans held for sale, lower of cost or fair value	33,530			77,891			114,796
Allowance for loan and lease losses	35,826			28,327			18,373
Securities—trading	7,584			7,832			8,066
Securities—available-for-sale	265,447			163,361			214,778
Securities—held-to-maturity	199,174			225,555			247,729
Total deposits	6,044,051			4,451,917			3,041,536
Securities sold under agreements to repurchase	35,000			35,000			45,000
Advances from the FHLB	727,000			753,000			910,000
Subordinated notes and debentures and other	58,066			5,155			5,155
Total stockholders’ equity	683,590			533,526			370,778

Capital Ratios:
Equity to assets at end of period	8.99		%	9.16		%	8.42		%
BofI Holding, Inc:
Tier 1 leverage (core) capital to adjusted average assets	9.12		%	9.59		%	*
Common equity tier 1 capital (to risk-weighted assets)	14.42		%	14.98		%	*
Tier 1 capital (to risk-weighted assets)	14.53		%	15.12		%	*
Total capital (to risk-weighted assets)	16.36		%	15.91		%	*
BofI Federal Bank:
Tier 1 leverage (core) capital to adjusted average assets	8.78		%	9.25		%	*
Tier 1 leverage (core) capital to adjusted tangible assets¹	n/a			n/a			8.66		%
Common equity tier 1 capital (to risk-weighted assets)	14.00		%	14.58		%	*
Tier 1 capital (to risk-weighted assets)	14.00		%	14.58		%	14.42		%
Total capital (to risk-weighted assets)	14.75		%	15.38		%	15.11		%

* Selected regulatory capital ratios were not applicable prior to January 1, 2015.

^1. Reflects regulatory capital ratios of BofI Federal Bank. Effective January 1, 2015, the Bank's capital requirements changed the tier 1 leverage ratio from using end of period adjusted tangible assets to using adjusted average assets for the quarter and added a common equity tier 1 capital ratio.

BOFI HOLDING, INC. AND SUBSIDIARY

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited – dollars in thousands, except per share data)



	At or for the Three Months Ended						At or for the Fiscal year ending
	June 30,						June 30,
(Dollars in thousands, except per share data)	2016			2015			2016			2015
Selected Income Statement Data:
Interest and dividend income	$	86,261		$	67,567		$	317,707		$	244,364
Interest expense	17,106			12,273			56,696			45,419
Net interest income	69,155			55,294			261,011			198,945
Provision for loan losses	1,900			2,900			9,700			11,200
Net interest income after provision for loan losses	67,255			52,394			251,311			187,745
Non-interest income	17,015			10,278			66,340			30,590
Non-interest expense	32,985			20,752			112,756			77,478
Income before income tax expense	51,285			41,920			204,895			140,857
Income tax expense	21,558			17,525			85,604			58,175
Net income	$	29,727		$	24,395		$	119,291		$	82,682
Net income attributable to common stock	$	29,650		$	24,318		$	118,982		$	82,373

Per Share Data:
Net income:
Basic¹	$	0.46		$	0.39		$	1.85		$	1.35
Diluted¹	$	0.46		$	0.39		$	1.85		$	1.34
Book value per common share¹	$	10.73		$	8.51		$	10.73		$	8.51
Tangible book value per common share¹	$	10.67		$	8.48		$	10.67		$	8.48

Weighted average number of shares outstanding:
Basic¹	64,474,329			62,830,818			64,265,207			61,177,908
Diluted¹	64,474,864			63,027,386			64,271,052			61,404,364
Common shares outstanding at end of period¹	63,219,392			62,075,004			63,219,392			62,075,004
Common shares issued at end of period¹	64,513,494			63,145,364			64,513,494			63,145,364

Performance Ratios and Other Data:
Loan and lease originations for investment	$	960,334		$	851,889		$	3,633,911		$	3,271,911
Loan originations for sale	$	207,696		$	327,202		$	1,363,025		$	1,048,982
Loan and lease purchases	$	—		$	2,306		$	140,493		$	2,452
Return on average assets	1.57		%	1.73		%	1.75		%	1.61		%
Return on average common stockholders’ equity	17.91		%	18.86		%	19.43		%	18.34		%
Interest rate spread²	3.52		%	3.82		%	3.70		%	3.79		%
Net interest margin³	3.72		%	3.97		%	3.91		%	3.92		%
Efficiency ratio	38.28		%	31.65		%	34.44		%	33.75		%

Asset Quality Ratios:
Net annualized charge-offs to average loans and leases	0.02		%	—		%	(0.01		)%	0.03		%
Non-performing loans and leases to total loans and leases	0.50		%	0.62		%	0.50		%	0.62		%
Non-performing assets to total assets	0.42		%	0.55		%	0.42		%	0.55		%
Allowance for loan and lease losses to total loans and leases at end of period	0.56		%	0.57		%	0.56		%	0.57		%
Allowance for loan and lease losses to non-performing loans and leases	112.45		%	91.88		%	112.45		%	91.88		%

_________________________


^1.	Share and per share amounts have been retroactively restated for all prior periods presented to reflect the four-for-one forward split of the Company’s common stock effected in the form of a stock dividend that was distributed on November 17, 2015


^2.	Interest rate spread represents the difference between the annualized weighted average yield on interest-earning assets and the annualized weighted average rate paid on interest-bearing liabilities


^3.	Net interest margin represents annualized net interest income as a percentage of average interest-earning assets

BOFI HOLDING, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Unaudited)

	At June 30,
(Dollars in thousands, except par and stated value)	2016			2015
ASSETS
Cash and due from banks	$	486,627		$	222,774
Federal funds sold	100			100
Total cash and cash equivalents	486,727			222,874
Securities:
Trading	7,584			7,832
Available for sale	265,447			163,361
Held to maturity—fair value of $202,677 at June 2016 and $228,323 at June 2015	199,174			225,555
Stock of the Federal Home Loan Bank, at cost	57,123			66,270
Loans held for sale, carried at fair value	20,871			25,430
Loans held for sale, carried at lower of cost or fair value	33,530			77,891
Loans and leases—net of allowance for loan and lease losses of $35,826 as of June 2016 and $28,327 as of June 2015	6,354,679			4,928,618
Accrued interest receivable	26,201			20,268
Furniture, equipment and software—net	13,995			8,551
Deferred income tax	39,171			32,955
Cash surrender value of life insurance	5,990			5,806
Mortgage servicing rights, carried at fair value	3,943			2,098
Other real estate owned and repossessed vehicles	252			1,240
Other assets	86,667			34,970
TOTAL ASSETS	$	7,601,354		$	5,823,719

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	588,774		$	309,339
Interest bearing	5,455,277			4,142,578
Total deposits	6,044,051			4,451,917
Securities sold under agreements to repurchase	35,000			35,000
Advances from the Federal Home Loan Bank	727,000			753,000
Subordinated notes and debentures and other	58,066			5,155
Accrued interest payable	1,667			1,266
Accounts payable and accrued liabilities and other liabilities	51,980			43,855
Total liabilities	6,917,764			5,290,193
STOCKHOLDERS’ EQUITY:¹
Preferred stock—$0.01 par value; 1,000,000 shares authorized;
Series A— $10,000 stated value and liquidation preference per share; 515 shares issued and outstanding as of June 2016 and June 2015	5,063			5,063
Common stock—$0.01 par value; 150,000,000 shares authorized, 64,513,494 shares issued and 63,219,392 shares outstanding as of June 2016, 63,145,364 shares issued and 62,075,004 shares outstanding as of June 2015	645			631
Additional paid-in capital	331,156			296,042
Accumulated other comprehensive income (loss) — net of tax	(7,304		)	(9,399		)
Retained earnings	384,815			265,833
Treasury stock, at cost; 1,294,102 shares as of June 2016 and 1,070,360 shares as of June 2015	(30,785		)	(24,644		)
Total stockholders’ equity	683,590			533,526
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,601,354		$	5,823,719

S-1

BOFI HOLDING, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



	For the Quarters Ended June 30,
(Dollars in thousands, except earnings per share)	2016			2015
INTEREST AND DIVIDEND INCOME:
Loans and leases, including fees	$	78,752		$	60,670
Investments	7,509			6,897
Total interest and dividend income	86,261			67,567
INTEREST EXPENSE:
Deposits	12,923			9,593
Advances from the Federal Home Loan Bank	2,878			2,255
Other borrowings	1,305			425
Total interest expense	17,106			12,273
Net interest income	69,155			55,294
Provision for loan and lease losses	1,900			2,900
Net interest income, after provision for loan and lease losses	67,255			52,394
NON-INTEREST INCOME:
Realized gain (loss) on sale of mortgage-backed securities	508			—
Other-than-temporary loss on securities:
Total impairment (losses)	(687		)	(973		)
Loss (gain) recognized in other comprehensive income (loss)	271			812
Net impairment loss recognized in earnings	(416		)	(161		)
Fair value gain (loss) on trading securities	(5		)	94
Total unrealized loss on securities	(421		)	(67		)
Prepayment penalty fee income	737			2,311
Gain on sale - other	5,192			1,368
Mortgage banking income	2,830			4,934
Banking service fees and other income	8,169			1,732
Total non-interest income	17,015			10,278
NON-INTEREST EXPENSE:
Salaries and related costs	18,905			12,109
Professional services	2,034			798
Occupancy and equipment	1,310			803
Data processing and internet	2,944			1,718
Advertising and promotional	2,236			1,843
Depreciation and amortization	1,479			922
Real estate owned and repossessed vehicles	(1		)	(272		)
FDIC and regulatory fees	1,243			926
Other general and administrative	2,835			1,905
Total non-interest expense	32,985			20,752
INCOME BEFORE INCOME TAXES	51,285			41,920
INCOME TAXES	21,558			17,525
NET INCOME	$	29,727		$	24,395
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	29,650		$	24,318
COMPREHENSIVE INCOME	$	25,314		$	23,293
Basic earnings per share¹	$	0.46		$	0.39
Diluted earnings per share¹	$	0.46		$	0.39

S-2

BOFI HOLDING, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Year Ended June 30,
(Dollars in thousands, except earnings per share)	2016			2015			2014
INTEREST AND DIVIDEND INCOME:
Loans and leases, including fees	$	291,058		$	220,486		$	147,664
Investments	26,649			23,878			25,214
Total interest and dividend income	317,707			244,364			172,878
INTEREST EXPENSE:
Deposits	42,667			34,733			24,817
Advances from the Federal Home Loan Bank	11,175			8,910			6,981
Other borrowings	2,854			1,776			3,983
Total interest expense	56,696			45,419			35,781
Net interest income	261,011			198,945			137,097
Provision for loan and lease losses	9,700			11,200			5,350
Net interest income, after provision for loan and lease losses	251,311			187,745			131,747
NON-INTEREST INCOME:
Realized gain (loss) on sale of mortgage-backed securities	1,427			587			208
Other-than-temporary loss on securities:
Total impairment (losses)	(3,472		)	(6,805		)	(2,359		)
Loss (gain) recognized in other comprehensive income (loss)	2,907			4,440			(443		)
Net impairment loss recognized in earnings	(565		)	(2,365		)	(2,802		)
Fair value gain (loss) on trading securities	(248		)	(234		)	954
Total unrealized loss on securities	(813		)	(2,599		)	(1,848		)
Prepayment penalty fee income	2,914			4,695			2,687
Gain on sale - other	15,540			5,793			6,658
Mortgage banking income	11,076			15,264			10,170
Banking service fees and other income	36,196			6,850			4,580
Total non-interest income	66,340			30,590			22,455
NON-INTEREST EXPENSE:
Salaries and related costs	66,667			43,819			32,240
Professional services	4,700			4,122			5,421
Occupancy and equipment	4,326			3,091			2,324
Data processing and internet	10,348			6,632			5,373
Advertising and promotional	6,867			6,060			3,724
Depreciation and amortization	4,795			3,273			2,874
Real estate owned and repossessed vehicles	(46		)	(120		)	(149		)
FDIC and regulatory fees	4,632			3,434			2,343
Other general and administrative	10,467			7,167			5,783
Total non-interest expense	112,756			77,478			59,933
INCOME BEFORE INCOME TAXES	204,895			140,857			94,269
INCOME TAXES	85,604			58,175			38,313
NET INCOME	$	119,291		$	82,682		$	55,956
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	118,982		$	82,373		$	55,647
COMPREHENSIVE INCOME	$	121,386		$	83,649		$	56,390
Basic earnings per share¹	$	1.85		$	1.35		$	0.97
Diluted earnings per share¹	$	1.85		$	1.34		$	0.96

S-3

BOFI HOLDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Year Ended June 30,
(Dollars in thousands)	2016			2015			2014
NET INCOME	$	119,291		$	82,682		$	55,956
Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $(68), $132 and $36 for the years ended June 30, 2016, 2015 and 2014, respectively.	(94		)	180			54
Other-than-temporary impairment on securities recognized in other comprehensive income, net of tax expense (benefit) of $2,177, $832 and $253 for the years ended June 30, 2016, 2015 and 2014, respectively.	3,018			1,139			380
Reclassification of net (gain) loss from available-for-sale securities included in income, net of tax expense (benefit) of $598, $235 and $0 for the years ended June 30, 2016, 2015 and 2014, respectively.	(829		)	(352		)	—
Other comprehensive income (loss)	$	2,095		$	967		$	434
Comprehensive income	$	121,386		$	83,649		$	56,390

S-4

BOFI HOLDING, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

	Preferred Stock			Common Stock						Additional Paid-in Capital¹		Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Income Tax			Treasury Stock			Total
				Number of Shares
(Dollars in thousands)	Shares	Amount		Issued¹	Treasury		Outstanding¹	Amount¹
Balance as of June 30, 2013	515	$	5,063	55,838,204	(904,904	)	54,933,300	$	558	$	155,885	$	127,813		$	(10,800	)	$	(10,257	)	$	268,262
Net income	—	—		—	—		—	—		—		55,956			—			—			55,956
Other comprehensive income (loss)	—	—		—	—		—	—		—		—			434			—			434
Cash dividends on preferred stock	—	—		—	—		—	—		—		(309		)	—			—			(309		)
Issuance of common stock	—	—		2,241,204	—		2,241,204	22		41,561		—			—			—			41,583
Stock-based compensation expense	—	—		—	—		—	—		4,358		—			—			—			4,358
Restricted stock unit vesting and tax benefits	—	—		477,986	(67,018	)	410,968	5		3,466		—			—			(4,855		)	(1,384		)
Stock option exercises and tax benefits	—	—		222,128	—		222,128	2		1,876		—			—			—			1,878
Balance as of June 30, 2014	515	$	5,063	58,779,522	(971,922	)	57,807,600	$	587	$	207,146	$	183,460		$	(10,366	)	$	(15,112	)	$	370,778
Net income	—	—		—	—		—	—		—		82,682			—			—			82,682
Other comprehensive income (loss)	—	—		—	—		—	—		—		—			967			—			967
Cash dividends on preferred stock	—	—		—	—		—	—		—		(309		)	—			—			(309		)
Issuance of common stock	—	—		3,796,356	—		3,796,356	38		75,947		—			—			—			75,985
Stock-based compensation expense	—	—		—	—		—	—		6,648		—			—			—			6,648
Restricted stock unit vesting and tax benefits	—	—		350,947	(56,151	)	294,796	4		2,426		—			—			(5,310		)	(2,880		)
Stock option exercises and tax benefits	—	—		218,539	(42,287	)	176,252	2		3,875		—			—			(4,222		)	(345		)
Balance as of June 30, 2015	515	$	5,063	63,145,364	(1,070,360	)	62,075,004	$	631	$	296,042	$	265,833		$	(9,399	)	$	(24,644	)	$	533,526
Net income	—	—		—	—		—	—		—		119,291			—			—			119,291
Other comprehensive income (loss)	—	—		—	—		—	—		—		—			2,095			—			2,095
Cash dividends on preferred stock	—	—		—	—		—	—		—		(309		)	—			—			(309		)
Issuance of common stock	—	—		723,808	—		723,808	7		21,113		—			—			—			21,120
Stock-based compensation expense	—	—		25,394	—		25,394	1		11,325		—			—			—			11,326
Restricted stock unit vesting and tax benefits	—	—		536,528	(223,742	)	312,786	5		1,520		—			—			(6,141		)	(4,616		)
Stock option exercises and tax benefits	—	—		82,400	—		82,400	1		1,156		—			—			—			1,157
Balance as of June 30, 2016	515	$	5,063	64,513,494	(1,294,102	)	63,219,392	$	645	$	331,156	$	384,815		$	(7,304	)	$	(30,785	)	$	683,590

1- Common stock amounts have been retroactively restated for all prior periods presented to reflect the four-for-one forward split of the Company’s common stock effected in the form of a stock dividend that was distributed on November 17, 2015. The par value of common stock remains unchanged at $0.01 per share after the aforementioned forward stock split. As a result, the stated capital attributable to common stock increased proportionately and the additional paid-in capital decreased by the amount by which the stated capital increased.

S-5

BOFI HOLDING, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Year Ended June 30,
(Dollars in thousands)	2016			2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	119,291		$	82,682		$	55,956
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Accretion of discounts on securities	(5,276		)	(5,517		)	(8,340		)
Net accretion of discounts on loans and leases	959			(27		)	(2,647		)
Stock-based compensation expense	11,326			6,648			4,358
Tax benefit from exercise of common stock options and vesting of restricted stock grants	(2,531		)	(5,526		)	(4,856		)
Valuation of financial instruments carried at fair value	248			234			(955		)
Net gain on sale of investment securities	(1,427		)	(587		)	—
Impairment charge on securities	565			2,365			2,802
Provision for loan and lease losses	9,700			11,200			5,350
Deferred income taxes	(7,134		)	(8,818		)	(2,040		)
Origination of loans held for sale	(1,363,025		)	(1,048,982		)	(741,494		)
Unrealized (gain) loss on loans held for sale	(97		)	119			179
Gain on sales of loans held for sale	(26,616		)	(21,057		)	(17,007		)
Proceeds from sale of loans held for sale	1,523,113			1,114,097			727,265
Change in fair value of mortgage servicing rights	889			265			(45		)
(Gain) loss on sale of other real estate and foreclosed assets	(145		)	(283		)	(350		)
Depreciation and amortization of furniture, equipment and software	4,795			3,273			2,874
Net changes in assets and liabilities which provide (use) cash:
Accrued interest receivable	(6,070		)	(6,405		)	(4,100		)
Other assets	(54,712		)	(17,948		)	(1,224		)
Accrued interest payable	401			(84		)	(324		)
Accounts payable and accrued liabilities	6,390			10,453			5,917
Net cash provided by (used) in operating activities	210,644			116,102			21,319
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities	(161,395		)	(10,464		)	(83,033		)
Proceeds from sales of available-for-sale mortgage-backed securities	14,969			9,539			—
Proceeds from repayment of securities	80,009			80,546			88,086
Purchase of stock of the Federal Home Loan Bank	(136,952		)	(60,870		)	(34,221		)
Proceeds from redemption of stock of Federal Home Loan Bank	146,099			37,370			19,201
Origination of loans and leases held for investment	(3,582,766		)	(3,242,828		)	(2,297,976		)
Origination of mortgage warehouse loans, net	(51,145		)	(29,083		)	—
Proceeds from sales of other real estate owned and repossessed assets	1,478			1,518			2,724
Purchases of loans and leases, net of discounts and premiums	(140,493		)	(2,452		)	(95		)
Principal repayments on loans and leases	2,253,017			1,847,665			990,305
Purchases of furniture, equipment and software	(10,239		)	(5,117		)	(3,163		)
Net cash used in investing activities	$	(1,587,418	)	$	(1,374,176	)	$	(1,318,172	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	$	1,592,134		$	1,410,381		$	949,537
Proceeds from the Federal Home Loan Bank advances	920,000			734,000			950,000
Repayment of the Federal Home Loan Bank advances	(946,000		)	(891,000		)	(630,417		)
Repayments of other borrowings and securities sold under agreements to repurchase	—			(10,000		)	(65,000		)
Proceeds from exercise of common stock options	151			781			500
Proceeds from issuance of common stock	21,120			75,985			41,576
Tax benefit from exercise of common stock options and vesting of restricted stock grants	2,531			5,526			4,856
Cash dividends paid on preferred stock	(309		)	(309		)	(309		)
Proceeds from issuance of subordinated notes	51,000			—			—
Net cash provided by financing activities	1,640,627			1,325,364			1,250,743
NET CHANGE IN CASH AND CASH EQUIVALENTS	263,853			67,290			(46,110		)
CASH AND CASH EQUIVALENTS—Beginning of year	222,874			155,584			201,694
CASH AND CASH EQUIVALENTS—End of year	$	486,727		$	222,874		$	155,584
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits and borrowed funds	$	56,296		$	45,503		$	36,104
Income taxes paid	$	89,184		$	68,481		$	37,339
Transfers to other real estate and repossessed vehicles	$	571		$	2,484		$	1,206
Transfers from loans and leases held for investment to loans held for sale	$	72,920		$	30,000		$	39,799
Transfers from loans held for sale to loans and leases held for investment	$	21,488		$	7,237		$	1,471

S-6

LOANS AND LEASES

The following table sets forth the composition of the loan and lease portfolio as of the dates indicated:



(Unaudited) (Dollars in thousands)	June 30, 2016			June 30, 2015
Single family real estate secured:
Mortgage	$	3,678,520		$	2,980,795
Home equity	2,470			3,604
Warehouse and other¹	537,714			385,413
Multifamily real estate secured	1,373,216			1,185,531
Commercial real estate secured	121,746			61,403
Auto and RV secured	73,676			13,140
Factoring	98,275			122,200
Commercial & Industrial	514,300			248,584
Consumer and other	2,542			601
Total gross loans and leases	6,402,459			5,001,271
Allowance for loan and lease losses	(35,826		)	(28,327		)
Unaccreted discounts and loan and lease fees	(11,954		)	(44,326		)
Total net loans and leases	$	6,354,679		$	4,928,618

1. The balance of single family warehouse loans was $173,148 at June 30, 2016 and $122,003 at June 30, 2015. The remainder of the balance is attributable to single family lender finance loans.

S-7

SECURITIES

The amortized cost, carrying amount and fair value for the major categories of securities trading, available for sale, and held to maturity at June 30, 2016 and June 30, 2015 were:



	June 30, 2016
	Trading		Available for sale									Held to maturity
(Unaudited) (Dollars in thousands)	Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Carrying Amount		Unrecognized Gains		Unrecognized Losses			Fair Value
Mortgage-backed securities (RMBS):
U.S agencies¹	$	—	$	33,256	$	489	$	(23	)	$	33,722	$	35,067	$	843	$	(1	)	$	35,909
Non-agency²	—		9,043		321		—			9,364		128,211		7,095		(10,044		)	125,262
Total mortgage-backed securities	—		42,299		810		(23		)	43,086		163,278		7,938		(10,045		)	161,171
Other debt securities:
U.S. agencies¹	—		—		—		—			—		—		—		—			—
Municipal	—		34,543		185		(10		)	34,718		35,896		5,610		—			41,506
Non-agency	7,584		186,316		1,501		(174		)	187,643		—		—		—			—
Total other debt securities	7,584		220,859		1,686		(184		)	222,361		35,896		5,610		—			41,506
Total debt securities	$	7,584	$	263,158	$	2,496	$	(207	)	$	265,447	$	199,174	$	13,548	$	(10,045	)	$	202,677


	June 30, 2015
	Trading		Available for sale									Held to maturity
(Unaudited) (Dollars in thousands)	Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Carrying Amount		Unrecognized Gains		Unrecognized Losses			Fair Value
Mortgage-backed securities (RMBS):
U.S agencies¹	$	—	$	43,738	$	701	$	(948	)	$	43,491	$	41,993	$	1,398	$	—		$	43,391
Non-agency²	—		23,799		2,835		(1		)	26,633		147,586		10,045		(12,749		)	144,882
Total mortgage-backed securities	—		67,537		3,536		(949		)	70,124		189,579		11,443		(12,749		)	188,273
Other debt securities:
U.S. agencies¹	—		—		—		—			—		—		—		—			—
Municipal	—		21,731		390		(86		)	22,035		35,976		4,074		—			40,050
Non-agency	7,832		70,216		1,271		(285		)	71,202		—		—		—			—
Total other debt securities	7,832		91,947		1,661		(371		)	93,237		35,976		4,074		—			40,050
Total debt securities	$	7,832	$	159,484	$	5,197	$	(1,320	)	$	163,361	$	225,555	$	15,517	$	(12,749	)	$	228,323

¹ U.S. government-backed or government sponsored enterprises including Fannie Mae, Freddie Mac and Ginnie Mae.

² Private sponsors of securities collateralized primarily by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by prime, Alt-A or pay-option ARM mortgages.

S-8

DEPOSITS

The following table sets for the composition of the deposit portfolio as of the dates indicated:



(Unaudited)	June 30, 2016				June 30, 2015
(Dollars in thousands)	Amount		Rate¹		Amount		Rate¹
Non-interest bearing	$	588,774	—	%	$	309,339	—	%
Interest bearing:
Demand	1,916,525		0.63	%	1,224,308		0.48	%
Savings	2,484,994		0.69	%	2,126,792		0.67	%
Total interest-bearing demand and savings	4,401,519		0.66	%	3,351,100		0.60	%
Time deposits:
Under $100	51,849		1.23	%	70,369		1.26	%
$100 or more²	1,001,909		1.99	%	721,109		2.06	%
Total time deposits	1,053,758		1.96	%	791,478		1.99	%
Total interest bearing²	5,455,277		0.91	%	4,142,578		0.87	%
Total deposits	$	6,044,051	0.82	%	$	4,451,917	0.81	%

1. Based on weighted-average stated interest rates at end of period.

2. The total interest-bearing includes brokered deposits of $800.7 million and $661.9 million as of June 30, 2016 and June 30, 2015, respectively, of which

$537.6 million and $356.3 million, respectively, are time deposits classified as $100 or more.

The number of deposit accounts at the end of each of the last five fiscal years is set forth below:



	At June 30,
	2016	2015	2014	2013	2012
Non-Interest bearing, prepaid and other	1,816,266	501,565	182,011	3,124	959
Checking and savings accounts	292,012	31,461	27,250	21,406	18,972
Time deposits	4,807	5,515	7,571	11,103	12,341
Total number of deposit accounts	2,113,085	538,541	216,832	35,633	32,272

The net increase of 1,314,701 of non-interest bearing, prepaid and other accounts and 260,551 interest-bearing checking and savings accounts for the fiscal year ended June 30, 2016 was primarily the result of our acquisition of accounts from H&R Block Bank and the new H&R Block-branded products offered by BofI Federal Bank.

S-9

AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID

The following tables set forth, for the periods indicated, information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:



	For the Fiscal Years Ended June 30,
	2016						2015						2014
(Unaudited)(Dollars in thousands)	Average Balance¹		Interest Income / Expense		Average Yields Earned / Rates Paid		Average Balance¹		Interest Income / Expense		Average Yields Earned / Rates Paid		Average Balance¹		Interest Income / Expense		Average Yields Earned / Rates Paid
Assets:
Loans and leases^2,3	$	5,680,003	$	291,058	5.12	%	$	4,388,336	$	220,486	5.02	%	$	2,850,600	$	147,664	5.18	%
Interest-earning deposits in other financial institutions	498,483		2,070		0.42	%	204,176		511		0.25	%	107,534		275		0.26	%
Mortgage-backed and other investment securities	442,070		18,910		4.28	%	432,948		18,165		4.20	%	480,940		22,566		4.69	%
Stock of Federal Home Loan Bank	62,255		5,669		9.11	%	46,819		5,202		11.11	%	32,115		2,373		7.39	%
Total interest-earning assets	6,682,811		317,707		4.75	%	5,072,279		244,364		4.82	%	3,471,189		172,878		4.98	%
Non-interest-earning assets	140,066						68,039						58,953
Total assets	$	6,822,877					$	5,140,318					$	3,530,142
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings	$	3,649,423	$	24,611	0.67	%	$	2,862,295	$	20,709	0.72	%	$	1,522,884	$	10,723	0.70	%
Time deposits	852,590		18,056		2.12	%	790,661		14,024		1.77	%	876,621		14,094		1.61	%
Securities sold under agreements to repurchase	35,000		1,555		4.44	%	36,562		1,633		4.47	%	85,726		3,840		4.48	%
Advances from the FHLB	855,029		11,175		1.31	%	700,805		8,910		1.27	%	576,307		6,981		1.21	%
Subordinated notes and debentures and other	22,025		1,299		5.90	%	5,155		143		2.77	%	5,155		143		2.77	%
Total interest-bearing liabilities	5,414,067		56,696		1.05	%	4,395,478		45,419		1.03	%	3,066,693		35,781		1.17	%
Non-interest-bearing demand deposits	739,764						255,321						123,859
Other non-interest-bearing liabilities	51,672						35,219						23,549
Stockholders’ equity	617,374						454,300						316,041
Total liabilities and stockholders’ equity	$	6,822,877					$	5,140,318					$	3,530,142
Net interest income			$	261,011					$	198,945					$	137,097
Interest rate spread⁴					3.70	%					3.79	%					3.81	%
Net interest margin⁵					3.91	%					3.92	%					3.95	%

¹ Average balances are obtained from daily data.

² Loans include loans held for sale, loan premiums and unearned fees.

³ Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. Loan fee income is not significant. Also includes $31.0 million, $31.4 million and $32.1 million as of June 30, 2016, 2015 and 2014, respectively, of Community Reinvestment Act loans which are taxed at a reduced rate.

⁴Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.

⁵ Net interest margin represents net interest income as a percentage of average interest-earning assets.

S-10

AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID

The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:



	For the three months ended June 30,
	2016						2015
(Unaudited) (Dollars in thousands)	Average Balance²		Interest Income / Expense		Average Yields Earned / Rates Paid¹		Average Balance²		Interest Income / Expense		Average Yields Earned / Rates Paid¹
Assets:
Loans and leases^3,4	$	6,275,936	$	78,752	5.02	%	$	4,865,501	$	60,670	4.99	%
Interest-earning deposits in other financial institutions	606,231		699		0.46	%	252,539		178		0.28	%
Mortgage-backed and other investment securities	492,158		5,546		4.51	%	405,180		4,086		4.03	%
Stock of Federal Home Loan Bank	54,632		1,264		9.25	%	50,245		2,633		20.96	%
Total interest-earning assets	7,428,957		86,261		4.64	%	5,573,465		67,567		4.85	%
Non-interest-earning assets	139,265						77,234
Total assets	$	7,568,222					$	5,650,699
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings	$	4,303,159	$	7,516	0.70	%	$	3,404,566	$	5,753	0.68	%
Time deposits	999,936		5,407		2.16	%	815,405		3,840		1.88	%
Securities sold under agreements to repurchase	35,000		387		4.42	%	35,008		389		4.44	%
Advances from the FHLB	738,700		2,878		1.56	%	528,365		2,255		1.71	%
Subordinated notes and debentures and other	58,115		918		6.32	%	5,155		36		2.79	%
Total interest-bearing liabilities	6,134,910		17,106		1.12	%	4,788,499		12,273		1.03	%
Non-interest-bearing demand deposits	710,554						301,893
Other non-interest-bearing liabilities	55,524						39,371
Stockholders’ equity	667,234						520,936
Total liabilities and stockholders’ equity	$	7,568,222					$	5,650,699
Net interest income			$	69,155					$	55,294
Interest rate spread⁵					3.52	%					3.82	%
Net interest margin⁶					3.72	%					3.97	%

¹ Annualized.

² Average balances are obtained from daily data.

³ Loans include loans held for sale, loan premiums and unearned fees.

⁴ Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. Loan fee income is not significant. Also, includes $30.7 million and $31.4 million as of June 30, 2016 and 2015 three-month periods respectively, of Community Reinvestment Act loans which are taxed at a reduced rate.

⁵ Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.

⁶ Net interest margin represents net interest income as a percentage of average interest-earning assets.

S-11

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