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Bofi Holding is built on
a foundation of solid banking principles using a new delivery system that allows the
opportunity to drive towards becoming the low cost operator in the industry
Savings & Loans
Bofi Holding, Inc.
12777 High Bluff Drive, Suite 100
San Diego, CA 92130
Gary Lewis Evans
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
November 17, 2005
Gary Lewis Evans
President and CEO
Internet Banking Pioneer. Banker, and Author Gary has spent almost 30 years in both
commercial and savings banking. In 1994 he is credited with creating one of the first
Internet bank marketing sites and in early 1995 opening what may be the first non-USA
based new deposit account from the Internet. In 1996, as Gary was forming the Bank of
Internet USA business and technology plan, he expanded his Internet knowledge by forming
an Internet marketing and development consulting company.
Amongst his publications, Gary co-authored the 1997 McGraw-Hill publication, THE FINANCIAL
INSTITUTIONS INTERNET SOURCEBOOK, and was a key participant in the mid 90s educational
video, THE ABC'S OF INTERNET BANKING, American Bankers Association (ABA).
Gary published the
"Investment Management and Tactics" chapter for the 1989 book SAVINGS AND LOAN
INVESTMENT MANAGEMENT published by Sheshunoff and Company.
Gary is currently a member of
the CFA Institute, Charlottesville Virginia and The CFA Society of San Diego, Inc.
Gary is an active speaker and is currently an
advisory board member and trainer for a Nationwide Bank Board Training & Education
Program and has served on many community boards. He is a past director of the Mid City
Development Corporation (MCDC) a San Diego Redevelopment Board; he is past Director of the
San Diego County Salvation Army Central Advisory Board. He is a former board member,
Treasurer of the San Diego Hospice, and Former Chairman and Treasurer of the San Diego,
Imperial Counties Red Cross.
MS Finance, California State University Northridge
BS Business Administration, Finance, California State University Northridge.
BofI Holding, Inc., is the holding company for Bank of Internet USA, a consumer-focused,
nationwide savings bank operating primarily over the Internet. Its mission is to lower the
cost of banking. For retail consumers that means higher deposit rates and lower mortgage
rates. The bank generates retail deposits and loans in all 50 states and originates loans
for customers directly through its websites, including www.bankofinternet.com,
www.bofi.com and www.apartmentbank.com. It is a unitary savings and loan holding company
and, along with Bank of Internet USA, is subject to primary federal regulation by the OTS.
BofI Holding, Inc. was
incorporated in the State of Delaware on July 6, 1999 for the purpose of organizing and
launching an Internet-based savings bank. The Bank of Internet USA (the "Bank")
opened for business on the Internet July 4, 2000, and is subject to regulation and
examination by the Office of Thrift Supervision ("OTS"), its primary regulator.
The Federal Deposit Insurance Corporation ("FDIC") insures the Banks
deposit accounts up to the maximum allowable by law.
CEOCFO: Mr. Evans, what
was your vision when you started the company and where are you today?
Mr. Evans: Bofi was founded in 1999. The foundation
evolved from what I witnessed first hand during my 35 years in banking. It is an evolution
of the consumer moving away from the need to visit a bank and banking evolving into a
commodity business. Bankers have led the transition from branches, to technology during my
career. We saw significant technology being put in place by banks over the years, credit
cards, debit cards and ATMs. It got to the point where there were smaller and
smaller lines at the bank. For a technology first, the Internet adoption by consumers has
led the banks adoption. In 1992 while I was at a prior bank, I started investigating the
opportunity. The Internet as a bank delivery system evolved out of all of my banking
experience. We want to be prepared to give the consumer what they want; when they
want it; this will lead to profits for our investors.
CEOCFO: How do you reach
Mr. Evans: All of our customers, at least 95% are
reached through the Internet. We have a remarkable amount of referral business; over 6% of
our customers come from referrals.
CEOCFO: Is there a
typical customer you target?
Mr. Evans: We have only been around for a little over
five years and contrary to what many would expect; we have done a significant amount of
business with the senior community. Our typical customer is over 50 years old. We have had
significant press in AARP publications and other magazines read by many seniors, as time
goes on, we will be expanding and marketing to other demographics.
CEOCFO: What are the
main products you offer, and how does it differ from a bricks and mortar bank?
Mr. Evans: We offer a full line of consumer retail
banking products from CDs, checking, savings, home loans, and overdraft protection lines
of credit. When you get down to it we service customers in all fifty states and we offer
everything they need from the consumers point of view.
CEOCFO: What are the
greatest concerns for your customers in banking online?
Mr. Evans: Ten years ago, the biggest topic was
security and hacking, people breaking into the computer and taking their money. I believe
that this has evolved over the years to a greater focus on identity theft. We consider our
system safer than the typical bank. We do not send statements every month with checks, and
other confidential information, all of our information is online and we have a secure site
to protect that data.
CEOCFO: Do your
customers tend to use a variety of your services?
Mr. Evans: We really have developed interesting
relationships with our customers over the years. People often times open an account to see
how it works. Because Internet banking is still new to many people, they like to test us.
After the test they will typically try additional products or open additional deposit
CEOCFO: Will you tell us
about the financial picture of the company today?
Mr. Evans: As of June, which was the time of our most
recently published information; our assets exceed $600 million and we are in compliance
with all regulatory capital requirements. We were profitable within fourteen months of
operation. Profits year over year have grown throughout our life. A big focus for us is to
leverage our recent IPO proceeds while expanding the utilization of the Internet as a
delivery system to increase the efficiency of the bank operations. One of our goals is to
become a low-cost provider in the banking industry.
CEOCFO: Will you tell us
about the competitive landscape?
Mr. Evans: The competition is growing, but there are
only a few pure play Internet banks. There is First Internet Bank of Indiana, NetBank
(wholly owned subsidiary of NetBank, Inc. Nasdaq: NTBK), and ING (ING Group N.V.
NYSE: ING). Those are some of the big competitors in the market place, but we are
seeing a new dimension to Internet banking. Traditional brick and mortar banks
are adding a stand-alone Internet component. An example is Emigrant Direct. Emigrant
Direct has had a long brick and mortar history in New York. They are paying
very competitive rates for money market accounts sourced and delivered over the Internet.
Competition is growing not only from the Internet banking world but from the traditional
bank world, and they are taking specific products and becoming very competitive, which the
Internet facilitates because the Internet allows delivery and use in a much more efficient
CEOCFO: Why should
people choose Bank of Internet USA?
Mr. Evans: Bank of Internet offers the consumer what
they want, and typically offers some of the best rates and fee pricing in the business. We
deliver traditional banking through the Internet efficiently, upon demand and in a very
easy to navigate interface.
CEOCFO: When customers
come to you, do they tend to stay?
Mr. Evans: They do. Our referral business says it all.
Over 6% of our customers bank with us based upon the referral of existing customers. The
retention should not be surprising because we do have a good product, people like the
ease-of-use, the rates, the fees and our structure is very consumer oriented. People do
like our system and we believe that they tend to stay as much as any traditional
CEOCFO: Will you
continue to focus on the consumer?
Mr. Evans: The consumer is our focus and this is a
large market that is underserved because it is often considered a necessary evil. We have
only penetrated minimally at this point in time. We continue to see opportunities with
retail banking, someday we may bank the business sector, but we focus on the consumer at
CEOCFO: What is
Mr. Evans: Apartment Bank is one of our demographically
focused delivery systems that is designed specifically for the owners of apartment
buildings. We drive people to that website where they can complete a loan application, get
current loan rates, process loans and make it very efficient for apartment building owners
to finance their property. This is an example of some of the demographic and target
marketing that we are doing through the Internet. We have created the proprietary back end
technology that drives our efficiency. We have created a significant amount of technology
on both the lending and deposit side that is quite unique and proprietary to us.
CEOCFO: In closing, why
should investors be interested and what should they know that does not jump off the page
when they first look at the company?
Mr. Evans: We are built on a foundation of solid
banking principles and proprietary technology. We have created the technology and process
for a new delivery system that will allow BofI to become the low cost operator in the
consumer finance business. We are successfully addressing banking as a commodity. The
banking branch model has been around since 1904 when Amadeo Peter Giannini started Bank of
Italy. Those were the days when people had to visit a bank. This is no longer the case.
The historic success of branching is undeniable, Bank of Italy became Bank of
America (NYSE: BAC) in the 1920s and the innovation allowed them to become the largest
bank in the world. We see the internet giving us that same type of opportunity of
expanding, growing and giving the customer what they want. Giannini took the branch to the
people when they had to go to the bank. We have re-assed the consumer needs and for people
that do not have to go to the bank, we have a great product and a great business
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