BofI Federal Bank: Annals of the Bank of Misery

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If you put together all the chief executive officers from the financial services industry in one room and asked them, “Who looks back on the years 2007 to 2009 with fondness?” it’s a very safe bet that only one hand would be raised.

That hand would be on the arm of a man named Gregory Garrabrants.

Don’t feel badly if the name doesn’t ring a bell. The enterprise Garrabrants has run since October 2007, BofI Federal Bank — a bank in La Jolla, California — is about as unlikely an institution to have prospered in those years as can be imagined.

As banks, thrifts and mortgage-finance companies were busy collapsing or receiving multiple federal bailouts, especially in Southern California (the epicenter of the global financial crisis), BofI was just beginning an earnings streak that’s seen its bottom line grow at a compounded annual rate of 44 percent since Garrabrants was hired.

Those are not bad returns for a CEO to deliver, especially for someone like Garrabrants, considering his previous job: chief of business development for Prices reflect a November 2015 4-for-1 stock split. Source: Prices reflect a November 2015 4-for-1 In the middle bubble, the hypothetical question that could be posed to the auditor goes to the heart of this matter: “Does each transferee have the right to pledge or exchange the assets it received, and no constraint on the transferee provides more than a trivial benefit to the transferor?”

Based on Gilbert’s responses, it appears the answer for BofI is “no.”


BofI investors should settle down and get comfortable with the BFSes and Quick Bridges of the world, since the bank is making a big commitment to what’s called “the lending marketplace,” a series of lending platforms that seek to connect pooled lenders and borrowers.

To that end, in April the bank extended a $400 million loan to Victory Park Capital, a private equity firm whose portfolio includes numerous investments across the subprime spectrum, including AvantCredit, Borro, Kabbage and FastTrak Legal Funding.

The Victory Park Capital loan appears to have been secured by holdings in several Victory Park funds, according to Uniform Commercial Code liens that BofI filed (see pages 55 and 56). Richard Levy, Victory Park’s general partner, didn’t respond to several emails seeking comment.

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