BOFI is highly efficient.
And it should be.
It has an Efficiency Rate of 31.01 percent. This compares to 69.12 percent for its peer group.
A bank’s efficiency ratio is defined as the ratio of a bank’s non-interest expense to revenues.
Traditional banks have to operate and staff branches. Despite being a $5.2 billion savings and loan, BOFI has only one branch in San Diego. Branches generate revenue but also cost money to operate. Two components of non-interest expense are people and property and equipment. BOFI pays out .71 percent of average assets for salaries and benefits and .13 percent for property and equipment. This compares to 1.47 percent and .36 percent for its peer group, respectively.
Lower non-interest expense can lead to higher profitability, especially if deposit costs are lower due to more funding coming more from transactional accounts and less from interest-paying time deposits.
All of these wonderful return numbers generated by BOFI start with profitability.
Banks, no matter where in the world they are located, can be easy to analyze as long you understand a set of numbers. No one should ever invest in a bank simply based on one or two numbers.
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