53.7 F
San Diego
Thursday, Mar 28, 2024
-Advertisement-

BofI Federal Bank Growing Deposits Through Online Channels

BofI Federal Bank grew its deposits over the last year by more than $1 billion, but it still has far more loans than deposits, a rarity in the banking world.

As of Sept. 30, BofI Federal, the main subsidiary of San Diego-based BofI Holding Inc., reported holding $3.95 billion in loans, and $3.26 billion in deposits. That means its loan to deposit ratio is 1.2 percent. In comparison, U.S. Bank’s LTD ratio is about 92 percent, Bank of America’s is 81 percent, and JPMorgan Chase is 59 percent.

In fact, most banks, no matter what the size, have greater deposits than loans. Banks usually want to keep more cash on hand for lots of reasons, not the least of which is having sufficient cash when their customers ask for it.

To be sure, this is a situation BofI has been aware of for some time.

In April, BofI thought it resolved the issue by agreeing to buy H&R Block Bank, which would have added about $500 million in deposits. However, that deal is apparently still under regulatory scrutiny and it’s unclear when — or if — the transaction will be approved.

In the meantime, BofI CEO Greg Garrabrants said it will continue to push the growth of deposits by expanding its sales team. Eventually, given the bank’s growth rate, BofI’s LTD ratio will come more into balance, he said.

BofI’s deposit growth this year pushed it to the No. 1 spot on the list of locally based banks based on deposits in San Diego County. It supplanted California Bank & Trust, which reported holding $2.8 billion in local deposits. Silvergate Bank is a distant third with $472 million in local deposits.

The amazing thing about this is that BofI has one branch at its headquarters office in Carmel Valley, so all the gains are coming from the bank’s online channel, not from opening branches.

Speaking of growth, it’s hard to beat BofI’s rate over the past year going back to September 2013. It added more than $1.5 billion in assets, or 47 percent, bringing total assets to $4.8 billion. The loan portfolio increased 63 percent to $3.9 billion.

And BofI’s pending loans will push those numbers up again when the bank makes its next quarterly report. At the bank’s quarterly earnings report call with stock analysts, Garrabrants said BofI’s lending pipeline as of Oct. 31 was $939 million, up from $677 million in the same quarter of the prior fiscal year.

Shares of BofI climbed back to just below $80 earlier this month, but fell back to $76.40 as of Nov. 17. Back in March, shares were going for more than $106.

“I think the stock got ahead of itself, and now it’s come down to a more reasonable PE (price to earnings) ratio of 19,” said Bill Gunderson of Gunderson Capital Management in San Diego. “I just purchased more of the shares, and expect it to go above $100 in the next two to three years.”

• • •

Branch shrinkage nationally and locally: The banking industry continues to push more of us to conduct our banking online or through ATMs, which are far less costly than operating full-service branches.

According to a recent report from SNL Financial, a Virginia-based research firm, in the past year, banks have closed a net of 1,462 branches, including a net of 54 in California. The banks that have been the most aggressive in shrinking their branch network are Bank of America, down a net of 148 branches; Sun Trust Bank, down a net of 60; and PNC Financial Group, down 51.

In San Diego, total branches of commercial banks and savings banks as of June 30 were 622, down by a net of 11 branches from the like period of 2013.

The owner of the most branches, as well as the biggest deposit base, in the county is Wells Fargo Bank, which has 104 branches and about $16.5 billion in deposits.

JPMorgan Chase has 95 branches for the second-highest number, while U.S. Bank is third-highest with 81 branches.

• • •

Survey shows optimism: A recent survey conducted on behalf of San Diego based National Funding found that 88 percent of small businesses surveyed have a neutral to positive outlook for the upcoming holiday season. The survey was conducted via telephone with a national representation of 506 small business owners, with small business defined as those with fewer than 100 employees.

In a less-than-shocking finding, the survey said that 4.3 percent of business owners expect to borrow money during the holidays but about 37 percent of those owners said they weren’t confident their banks would provide a loan if they needed one.

David Gilbert, CEO of National Funding, said most times small to medium businesses aren’t looking for long-term financing, especially during the holidays. More often, the owners seek working capital loans, merchant cash advances and equipment leases, all of which are services provided by National Funding.

• • •

Wells Fargo names new region president: Wells Fargo & Co. announced that John Sotoodeh is its new lead president for the bank’s Southwest region, headquartered in Houston. Sotoodeh will replace Paul “Chip” Carlisle, who announced his retirement this year.

Sotoodeh, a 24-year Wells Fargo veteran, currently leads Community Banking for the area that includes San Diego, Los Angeles, Orange, Imperial San Bernardino and Riverside counties. In his new job, he covers the Wells Fargo network of 780 offices for Texas, Arkansas and New Mexico.

Send any news about locally based financial institutions to Mike Allen via email at mallen@sdbj.com. He can be reached at 858-277-6359.

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-