Axos Financial (AX) 8-K BofI Holding, Inc. Announces Record Net Income for Fourth Quarter and Fiscal 2009

Exhibit 99.2

BofI HOLDING, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

UNAUDITED

	June 30,
	2009			2008
ASSETS
Cash and due from banks	$	3,441		$	4,214
Federal funds sold		4,965			12,050
Total cash and cash equivalents		8,406			16,264
Time deposits in financial institutions		—			1,980
Investment securities:
Trading		5,445			—
Available for sale		265,807			209,119
Held to maturity		350,898			300,895
Stock of the Federal Home Loan Bank, at cost		18,848			19,395
Loans—net of allowance for loan losses of $4,754 in 2009; $2,710 in 2008		615,463			631,413
Loans held for sale		3,190			—
Accrued interest receivable		5,868			5,740
Furniture, equipment and software—net		436			391
Deferred income tax		3,214			918
Cash surrender value of life insurance		4,730			4,547
Other assets		19,903			3,583
TOTAL	$	1,302,208		$	1,194,245
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	3,509		$	5,509
Interest bearing		645,015			565,195
Total deposits		648,524			570,704
Securities sold under agreements to repurchase		130,000			130,000
Advances from the Federal Home Loan Bank		262,984			398,966
Federal Reserve Discount Window and other borrowings		165,155			5,155
Accrued interest payable		2,108			2,366
Accounts payable and accrued liabilities		4,498			3,972
Total liabilities		1,213,269			1,111,163
STOCKHOLDERS’ EQUITY:
Preferred stock—1,000,000 shares authorized;
Series A—$10,000 stated value; 515 (2009) and 515 (2008) shares issued and outstanding		5,063			5,063
Series B—$1,000 stated value; 4,790 (2009) and 3,750 (2008) shares issued and outstanding		4,767			3,750
Common stock—$0.01 par value; 25,000,000 shares authorized;
8,706,075 shares issued and 8,082,768 shares outstanding (2009);
8,627,840 shares issued and 8,299,563 shares outstanding (2008);		87			86
Additional paid-in capital		61,320			60,684
Accumulated other comprehensive income—net of tax		1,926			1,017
Retained earnings		19,365			14,975
Treasury stock		(3,589	)		(2,493	)
Total stockholders’ equity		88,939			83,082
TOTAL	$	1,302,208		$	1,194,245

BofI HOLDING, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except earnings per share)

UNAUDITED

	Three Months						Year Ended
	Ended June 30,						Ended June 30,
	2009			2008			2009			2008
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$	10,641		$	9,719		$	41,782		$	33,499
Investments		9,912			8,815			35,996			29,802
Total interest and dividend income		20,553			18,534			77,778			63,301
INTEREST EXPENSE:
Deposits		5,337			6,675			23,983			28,358
Advances from the Federal Home Loan Bank		2,358			3,429			11,385			11,417
Other borrowings		1,555			1,463			6,051			5,506
Total interest expense		9,250			11,567			41,419			45,281
Net interest income		11,303			6,967			36,359			18,020
Provision for loan losses		1,900			1,122			4,730			2,226
Net interest income, after provision for loan losses		9,403			5,845			31,629			15,794
NON-INTEREST INCOME:
Prepayment penalty fee income		14			57			64			287
Mortgage banking income		798			—			1,381			2
Gain (loss) on securities		(4	)		(596	)		(8,595	)		711
Banking service fees and other income		115			114			463			379
Total non-interest income		923			(425	)		(6,687	)		1,379
NON-INTEREST EXPENSE:
Salaries, employee benefits and stock-based compensation		1,603			1,388			5,579			5,426
Professional services		439			189			1,419			654
Occupancy and equipment		117			95			442			373
Data processing and internet		216			179			796			656
Advertising and promotional		106			45			560			750
Depreciation and amortization		46			40			171			132
FDIC and OTS regulatory fees		1,025			154			1,658			744
Other general and administrative		667			374			2,269			1,427
Total non-interest expense		4,219			2,464			12,894			10,162
INCOME BEFORE INCOME TAXES		6,107			2,956			12,048			7,011
INCOME TAXES		2,503			1,176			4,906			2,815
NET INCOME	$	3,604		$	1,780		$	7,142		$	4,196
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	3,431		$	1,700		$	6,453		$	3,884
Basic earnings per share	$	0.43		$	0.21		$	0.79		$	0.47
Diluted earnings per share	$	0.41		$	0.20		$	0.78		$	0.46

BofI HOLDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(Dollars in thousands)

UNAUDITED

	Convertible Preferred Stock			Common Stock							Additional Paid-in Capital			Retained Earnings			Accumulated Other Compre- hensive Income Net of Income Tax		Treasury Stock			Compre- hensive Income		Total
				Number of Shares					Amount
	Shares	Amount		Issued	Treasury		Outstanding
BALANCE—June 30, 2008	4,265	$	8,813	8,627,840	(328,277	)	8,299,563		$	86	$	60,684		$	14,975		$	1,017	$	(2,493	)			$	83,082
Comprehensive income:
Net income	—		—	—	—		—			—		—			7,142			—		—		$	7,142		7,142
Net unrealized gain from investment securities—net of income tax expense	—		—	—	—		—			—		—			—			909		—			909		909
Total comprehensive income																						$	8,051
Cash dividends on convertible preferred stock	—		—	—	—		—			—		—			(690	)		—		—					(690	)
Issuance of convertible preferred stock	1,040		1,017	—	—		—			—		—			—			—		—					1,017
Convert preferred stock to common stock	—		—	—	—		—			1		—			—			—		(102	)				(101	)
Stock-based compensation expense	—		—	—	—		—			—		651			—			—		—					651
Restricted stock grants	—		—	50,300	(13,741	)	36,559			—		—			—			—		(12	)				(12	)
Purchase of Treasury Stock	—		—	—	(276,200	)	(276,200	)		—		—			—			—		(982	)				(982	)
Cumulative effect of the adoption of SFAS 159	—		—	—	—		—			—		—			(2,062	)		—		—					(2,062	)
Stock option exercises and tax benefits of equity compensation	—		—	27,935	(5,089	)	22,846			—		(15	)		—			—		—					(15	)
BALANCE—June 30, 2009	5,305	$	9,830	8,706,075	(623,307	)	8,082,768		$	87	$	61,320		$	19,365		$	1,926	$	(3,589	)			$	88,939

BofI HOLDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

UNAUDITED

	Year Ended June 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,142		$	4,196
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization (accretion) of premiums (discounts) on securities		(13,741	)		(1,845	)
Amortization (accretion) of premiums (discounts) on deferred loan fees		(1,906	)		1,942
Amortization of borrowing costs		18			74
Stock-based compensation expense		651			776
Net (gain) loss on sale of investment securities		5,102			(1,711	)
Valuation loss on financial instruments carried at fair value		2,055			—
Impairment charge on securities held to maturity		1,454			—
Impairment charge on preferred stock		—			1,000
Provision for loan losses		4,730			2,226
Deferred income taxes		(1,459	)		(1,741	)
Origination of loans held for sale		(83,741	)		(516	)
Gain on sales of loans held for sale		(1,381	)		(2	)
Proceeds from sale of loans held for sale		81,932			518
Depreciation and amortization		171			132
Stock dividends from the Federal Home Loan Bank		(464	)		(697	)
Net changes in assets and liabilities which provide (use) cash:
Accrued interest receivable		(128	)		273
Other assets		(7,541	)		2,506
Accrued interest payable		(258	)		(346	)
Accounts payable and accrued liabilities		(2,782	)		2,598
Net cash provided by (used in) operating activities		(10,146	)		9,383
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities and time deposits		(310,559	)		(496,351	)
Proceeds from sale of mortgage-backed securities		90,195			212,329
Proceeds from repayment of available for sale securities		113,346			147,776
Purchase of stock of the Federal Home Loan Bank		(2,068	)		(6,258	)
Proceeds from redemption of stock of Federal Home Loan Bank		3,079			219
Origination of loans		(33,170	)		(64,888	)
Proceeds from sales of repossessed assets		3,124			—
Purchases of loans, net of discounts and premiums		(57,410	)		(205,067	)
Principal repayments on loans		94,744			141,796
Purchases of furniture, equipment and software		(216	)		(281	)
Net cash used in investing activities		(98,935	)		(270,725	)

(Continued)

BofI HOLDING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

UNAUDITED

	Year Ended June 30,
	2009			2008
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	$	77,820		$	22,755
Proceeds from the Federal Home Loan Bank advances		113,000			257,000
Repayment of the Federal Home Loan Bank advances		(249,000	)		(85,400	)
Proceeds from repurchase agreements		—			40,000
Proceeds from borrowing at the Fed Discount Window		205,000			—
Repayment of borrowing at the Fed Discount Window		(45,000	)		—
Purchase of treasury stock		(1,006	)		—
Proceeds from exercise of common stock options		1			91
Proceeds from issuance of convertible preferred stock—Series B		1,017			3,750
Tax benefit from exercise of common stock options		(15	)		14
Cash dividends on preferred stock		(594	)		(312	)
Net cash provided by financing activities		101,223			237,898
NET CHANGE IN CASH AND CASH EQUIVALENTS		(7,858	)		(23,444	)
CASH AND CASH EQUIVALENTS—Beginning of year		16,264			39,708
CASH AND CASH EQUIVALENTS—End of year	$	8,406		$	16,264
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits and borrowed funds	$	41,660		$	45,552
Income taxes paid	$	6,737		$	2,675
Transfers to other real estate	$	8,962		$	484
Adoption of fair value: securities transferred from HTM to trading	$	11,055		$	—
Preferred stock dividends declared but not paid	$	96		$	—

LOANS

The following table sets forth the composition of the portfolio of loans held for investment at June 30:

UNAUDITED

	2009					2008
	(Dollars in thousands)
	Amount			Percent		Amount			Percent
Mortgage loans on real estate:
Residential single family (one to four units)	$	165,405		26.3	%	$	165,473		26.2	%
Home equity		32,345		5.1	%		41,977		6.6	%
Residential multifamily (five units or more)		326,938		52.0	%		330,778		52.2	%
Commercial and land		30,002		4.8	%		33,731		5.3	%
Consumer—Recreational vehicle		50,056		8.0	%		56,968		9.0	%
Other		23,872		3.8	%		4,439		0.7	%
Total		628,618		100	%		633,366		100	%
Allowance for loan losses		(4,754	)				(2,710	)
Unamortized premiums, unaccreted (discount)		(8,401	)				757
	$	615,463				$	631,413

INVESTMENT SECURITIES

The amortized cost, carrying amount and fair value for the major categories of investment securities available for sale, held to maturity and trading at June 30, 2009 and 2008 were:

UNAUDITED

	Available for sale				Held to maturity				Trading
	Amortized Cost		Fair Value		Carrying Amount		Fair Value		Fair Value
	( In thousands )
	June 30, 2009
Mortgage-backed securities (RMBS) :
U.S. agencies1	$	79,579	$	81,047	$	18,928	$	19,461	$	—
Non-agency2		111,620		125,759		331,970		325,151		—
Total mortgage-backed securities		191,199		206,806		350,898		344,612		—
Other debt securities:
U.S. agencies1		59,018		59,001		—		—		—
Non-agency3		—		—		—		—		5,445
Total other debt securities		59,018		59,001		—		—		5,445
Total debt securities	$	250,217	$	265,807	$	350,898	$	344,612	$	5,445
	June 30, 2008
Mortgage-backed securities (RMBS):
U.S. agencies	$	198,347	$	200,047	$	21,529	$	21,783
Non-agency		—		—		258,328		265,238
Total mortgage-backed securities		198,347		200,047		279,857		287,021
Other debt securities:
U.S. agencies		—		—		9,983		10,032
Non-agency3		—		—		11,055		7,551
Total other debt securities		—		—		21,038		17,583
Total debt securities		198,347		200,047		300,895		304,604
Equity securities:
U.S. agency preferred		9,072		9,072		—		—
Total investment securities	$	207,419	$	209,119	$	300,895	$	304,604

(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 rated AAA by at least one rating agency and secured by prime, Alt A or pay-option ARM mortgages.

(3) Collateralized debt obligations secured by pools of bank trust preferred. At June 30, 2008 the securities were included in held to maturity and transferred to trading on July 1, 2008 upon adoption of SFAS 159.

DEPOSITS

Deposit accounts are summarized as follows at June 30:

UNAUDITED

	2009				2008
	(Dollars in thousands)
	Amount		Rate*		Amount		Rate*
Non-interest bearing	$	3,509	0.00	%	$	5,509	0.00	%
Interest bearing:
Demand		59,151	1.22	%		61,616	3.22	%
Savings		192,781	1.94	%		56,202	3.38	%
Time deposits:
Under $100		191,021	4.39	%		268,747	4.84	%
$100 or more		202,062	3.85	%		178,630	4.91	%
Total time deposits		393,083	4.11	%		447,377	4.87	%
Total interest bearing		645,015	3.20	%		565,195	4.54	%
Total deposits	$	648,524	3.18	%	$	570,704	4.50	%

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

The following table sets forth the number of deposit accounts by type at the date indicated:

	At June 30,
	2009	2008	2007
Checking and savings accounts	10,685	9,415	8,315
Time deposits	12,757	15,490	17,502
Total number of deposit accounts	23,442	24,905	25,817

Average Balances, Net Interest Income, Yields Earned and Rates Paid

The following tables present 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 and twelve months ended June 30, 2009 and 2008:

UNAUDITED

	For the Three Months Ended June 30,
	2009						2008
	Average Balance		Interest Income / Expense		Rates Earned / Paid1		Average Balance		Interest Income / Expense		Rates Earned / Paid1
		(Dollars in thousands)
Assets
Loans2 3	$	630,134	$	10,641	6.75	%	$	625,144	$	9,719	6.22	%
Federal funds sold		4,470		2	0.18	%		3,396		16	1.88	%
Interest-bearing deposits in other financial institutions		127		—	0.00	%		2,975		38	5.11	%
Investment securities3 4		594,532		9,910	6.67	%		500,323		8,493	6.79	%
Stock of FHLB, at cost		18,850		—	6.00	%		17,854		268	6.00	%
Total interest-earning assets		1,248,113		20,553	6.59	%		1,149,692		18,534	6.45	%
Non-interest earning assets		31,518						15,329
Total assets	$	1,279,631					$	1,165,021
Liabilities and Stockholders’ Equity
Interest-bearing demand and savings	$	243,750	$	1,059	1.74	%	$	107,017	$	860	3.21	%
Time deposits		410,640		4,278	4.17	%		473,594		5,815	4.91	%
Securities sold under agreements to repurchase		130,000		1,421	4.37	%		129,916		1,391	4.28	%
Advances from FHLB		260,841		2,358	3.62	%		363,218		3,429	3.78	%
Other borrowings		136,562		134	0.39	%		5,155		72	5.59	%
Total interest-bearing liabilities		1,181,793		9,250	3.13	%		1,078,900		11,567	4.29	%
Noninterest-bearing demand deposits		4,416						899
Other interest-free liabilities		5,258						6,050
Stockholders’ equity		88,164						79,172
Total liabilities and stockholders’ equity	$	1,279,631					$	1,165,021
Net interest income			$	11,303					$	6,967
Net interest spread5					3.46	%					2.16	%
Net interest margin6					3.62	%					2.42	%

¹ Annualized

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. The rate earned on loans does not include loan prepayment penalty income, which is classified as non-interest income.

⁴ All investments are taxable.

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 annualized as a percentage of average interest-earning assets.

UNAUDITED

	For the Year Ended June 30,
	2009						2008
	Average Balance		Interest Income / Expense		Rates Earned / Paid		Average Balance		Interest Income / Expense		Rates Earned / Paid
		(Dollars in thousands)
Assets
Loans1 2	$	635,780	$	41,782	6.57	%	$	550,307	$	33,499	6.09	%
Federal funds sold		4,008		34	0.85	%		23,147		1,013	4.38	%
Interest-bearing deposits in other financial institutions		442		15	3.39	%		7,821		457	5.84	%
Investment securities2 3		535,918		35,753	6.67	%		451,846		27,524	6.09	%
Stock of FHLB, at cost		19,036		194	1.02	%		14,205		808	5.69	%
Total interest-earning assets		1,195,184		77,778	6.51	%		1,047,326		63,301	6.04	%
Non-interest earning assets		24,930						14,681
Total assets	$	1,220,114					$	1,062,007
Liabilities and Stockholders’ Equity
Interest-bearing demand and savings	$	186,309	$	4,583	2.46	%	$	76,028	$	2,726	3.59	%
Time deposits		433,410		19,400	4.48	%		506,761		25,632	5.06	%
Securities sold under agreements to repurchase		130,000		5,677	4.37	%		118,497		5,137	4.34	%
Advances from FHLB		333,327		11,385	3.42	%		270,022		11,417	4.23	%
Other borrowings		43,679		374	0.86	%		5,155		369	7.16	%
Total interest-bearing liabilities		1,126,725		41,419	3.68	%		976,463		45,281	4.64	%
Noninterest-bearing demand deposits		4,170						3,144
Other interest-free liabilities		6,014						5,553
Stockholders’ equity		83,205						76,847
Total liabilities and stockholders’ equity	$	1,220,114					$	1,062,007
Net interest income			$	36,359					$	18,020
Net interest spread4					2.83	%					1.40	%
Net interest margin5					3.04	%					1.72	%

¹ Loans include loans held for sale, loan premiums and unearned fees.

² 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. The rate earned on loans does not include loan prepayment penalty income, which is classified as non-interest income.

³ All investments are taxable.

⁴ 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.

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