MINIMUM REGULATORY CAPITAL REQUIREMENTS

12 Months Ended

Jun. 30, 2018

Banking and Thrift [Abstract]

MINIMUM REGULATORY CAPITAL REQUIREMENTS

MINIMUM REGULATORY CAPITAL REQUIREMENTS

The Company and Bank are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. Failure by the Company or Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on the consolidated financial statements. The Federal Reserve establishes capital requirements for the Company and the OCC has similar requirements for the Bank. The following tables present regulatory capital information for the Company and Bank. Information presented for June 30, 2018, reflects the Basel III capital requirements that became effective January 1, 2015 for both the Company and Bank. Under these capital requirements and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

Quantitative measures established by regulation require the Company and Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require the Company and Bank maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity tier 1 capital to risk-weighted assets of 4.5%, tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. At June 30, 2018, the Company and Bank met all the capital adequacy requirements to which they were subject. At June 30, 2018, the Company and Bank were “well capitalized” under the regulatory framework for prompt corrective action. To be “well capitalized,” the Company and Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Management believes that no conditions or events have occurred since June 30, 2018 that would materially adversely change the Company’s and Bank’s capital classifications. From time to time, we may need to raise additional capital to support the Company’s and Bank’s further growth and to maintain their “well capitalized” status.

The Bank’s capital amounts, capital ratios and capital requirements under Basel III were as follows:

	BofI Holding, Inc.						BofI Federal Bank						“Well  Capitalized” Ratio		Minimum Capital Ratio
(Dollars in thousands)	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Regulatory Capital:
Tier 1	$	893,338		$	833,759		$	837,985		$	804,317
Common equity tier 1	$	888,275		$	828,696		$	837,985		$	804,317
Total capital (to risk-weighted assets)	$	993,650		$	925,720		$	887,297		$	845,278
Assets:
Average adjusted	$	9,450,894		$	8,380,909		$	9,509,891		$	8,374,509
Total risk-weighted	$	6,694,963		$	5,651,522		$	6,686,634		$	5,645,112
Regulatory Capital Ratios:
Tier 1 leverage (core) capital to adjusted average assets	9.45		%	9.95		%	8.88		%	9.60		%	5.00	%	4.00	%
Common equity tier 1 capital (to risk-weighted assets)	13.27		%	14.66		%	12.53		%	14.25		%	6.50	%	4.50	%
Tier 1 capital (to risk-weighted assets)	13.34		%	14.75		%	12.53		%	14.25		%	8.00	%	6.00	%
Total capital (to risk-weighted assets)	14.84		%	16.38		%	13.27		%	14.97		%	10.00	%	8.00	%

Beginning January 1, 2016, Basel III implements a requirement for all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer will be exclusively composed of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios but not the leverage ratio. At June 30, 2018, the Company and Bank are in compliance with the capital conservation buffer requirement. The three risk-based capital ratios will increase by 0.625% each year through 2019, at which point, the common equity tier 1 risk based, tier 1 risk-based and total risk-based capital ratios will be 7.0%, 8.5% and 10.5%, respectively.

In connection with the approval of the acquisition of the H&R Block Bank deposits on September 1, 2015, the Bank executed a letter agreement with the OCC (the “letter agreement”) to maintain its Tier 1 leverage capital ratio at a minimum of 8.50% for the quarters ended in June, September and December and a minimum of 8.00% for the quarter ended in March, subject to certain adjustments. At June 30, 2018 the Bank is in compliance with this letter agreement. As of August 2018, due to the Bank’s satisfactory operational performance under the letter agreement, the OCC has removed the additional capital maintenance requirements required in the letter agreement.