(Source: MARKETWIRE)B of I Holding, Inc. (B of I or the Company) (NASDAQ: BOFI), parent of Bank of Internet USA (Bank), today announced record net income of $3,708,000 for its first quarter ended September 30, 2009, compared to a loss of $1,817,000 for the three months ended September 30, 2008. Earnings available to the Company's common stockholders were $3,535,000, or $0.41 per diluted share for the current quarter compared to a loss of $1,988,000, or $0.24 per diluted share for the quarter ended September 30, 2008. B of I's net interest margin for the first quarter was 3.88%, up 120 basis points over the three-month period ended September 30, 2008 and up 26 basis points from the Company's prior best of 3.62% for the three-month period ended June 30, 2009.

B of I's net income increased 28.2% for the first quarter ended September 30, 2009, compared to net income of $2,893,000 for last year's first quarter, adjusted to exclude the one-time $4,710,000 after-tax loss associated with the Company's decision in September 2008 to sell all of its Fannie Mae preferred stock immediately after the U.S. government put Fannie Mae into conservatorship. Diluted earnings per share were $0.41 this quarter, an increase of 24.2% compared to the $0.33 in diluted earnings per share for the first quarter last year, excluding the loss on the sale of the Fannie Mae preferred stock. The increase in quarterly net income year over year was primarily due to a 60.8% growth in net interest income resulting from the net margin improvement, as well as an 11.1% growth in average earning assets.

"We are pleased with our results this quarter because they were driven by growth in core earnings, higher net interest income and improved operating cost efficiency," remarked Greg Garrabrants, President and Chief Executive Officer. "While many traditional branch banks are struggling with deposit growth and high fixed costs, our single location provides nationwide sourcing of retail deposits and loans through the Internet in a cost effective manner. Our operating efficiency ratio was 28.36% this quarter, significantly better than the average of 68.13% published by the FDIC last quarter for commercial banks in the $1 billion to $10 billion asset range. We continue to find strong values in the wholesale loan purchase market and have been making steady progress in the development of our single and multifamily retail lending platforms. In particular, we continue to see significant competitive exits from the multifamily lending business, providing us a strong tailwind as we place resources towards growing our multifamily originations. I am very optimistic that the current market continues to provide us outstanding growth opportunities."

First Quarter Highlights:

--  Net interest margin grew to 3.88% in the current quarter, up 44.8%
    over the first quarter last year.
--  Asset quality remains strong, with the principal balance of non-
    performing loans equal to 0.76% of the loan portfolio, and total non-
    performing assets equal to 0.73% of total assets at September 30, 2009.
--  Total assets reached $1,324.1 million at September 30, 2009, up 13.1%
    compared to the first quarter last year.
--  Total deposits reached $763.5 million at September 30, 2009, up 37.0%
    compared to the first quarter last year.
    

Quarter Earnings Summary

For the three months ended September 30, 2009, we had net income of $3,708,000 compared to $2,893,000 for last year's first quarter, adjusted to exclude the one-time FNMA loss. Net interest income increased $4.8 million during the first quarter ended September 30, 2009 compared to the first quarter last year and increased $1.3 million compared to the quarter ended June 30, 2009. Total interest and dividend income during the quarter ended September 30, 2009 increased 13.5%, to $21.8 million, compared to $19.2 million during the quarter ended September 30, 2008. The increase in interest and dividend income for the quarter was primarily attributable to growth in the average balance of loans and investment securities and higher rates earned on new loans and securities. Average interest earning assets increased $129.6 million for the quarter ended September 30, 2009 compared to the quarter ended September 30, 2008. Interest expense decreased due to a 114 basis point decrease in the average funding rate, including a decrease in average rates for time deposits of 78 basis points. Similarly, lower rates paid on FHLB advances led to a decrease in FHLB advance funding costs of 50 basis points when comparing the three-month periods ended September 30, 2009 and 2008. The improvement in the net interest margin has resulted from specific actions the Bank has taken to manage its assets and liabilities, as well as general changes in the U.S. Treasury yield curve and loan risk premiums. The Bank's specific actions include selling agency mortgage-backed securities and replacing them with higher yielding loans and non-agency mortgage backed securities.