Axos Financial, Inc. (AX) Q3 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the BofI Holding, Inc. Third Quarter 2013 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Wednesday, May 8, 2013. I would now like to turn the conference over to Mark McPartland from MZ Group. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Joining us today for BofI Holding's Third Quarter Financial Results Conference Call are the company's President and Chief Executive Officer, Greg Garrabrants; and the Executive Vice President and Chief Financial Officer, Andy Micheletti. Greg and Andy will review and comment on the financial operational results for the third quarter, and they will be available for -- to answer your questions after the prepared presentation. Before we begin, I'd like to remind our listeners that in this call, prepared remarks may contain forward-looking statements that are subject to risks and uncertainties, and that management may make additional statements in response to your questions. Therefore, the company claims the Safe Harbor protection for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements related to the business of BofI Holdings, Inc. and its subsidiaries can be identified by common used forward-looking terminology, and those statements involve unknown risks and uncertainties, including all business-related risks that are more detailed in the company's Form 10-K, 10-Q and 8-K filings with the SEC. As mentioned, this call is being webcast and there will be an audio replay available in the company's Investor Relations website located at bofiholding.com. All details for this call were provided in the conference call announcement and in the press release earlier today. Now at this time, I'd like to turn the call over to Mr. Greg Garrabrants, who'll provide opening remarks. Greg, the call is yours.

Thank you, Mark. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to BofI Holding's conference call for the third quarter ended March 31, 2013. I thank you for your interest in BofI Holding and BofI Federal Bank. BofI announced record net income for its third quarter ended March 31, 2013, of $10,402,000, up 6.5% when compared to the $9,768,000 earned last quarter, and up 34.8% when compared to the $7,718,000 earned in the third quarter of 2012. Earnings attributable to BofI's common stockholders were $10,053,000 or $0.74 per diluted share for the quarter ended March 31, 2013, compared to $0.70 per diluted share for the quarter ended December 31, 2012, and $0.58 per diluted share for the quarter ended March 31, 2012. Other highlights for the third quarter include: Total assets reached $2,962,000,000 at March 31, 2013, up $87 million compared to the prior quarter and up $684 million for the 2012's fiscal third quarter. Return on equity reached 17.75% for the third quarter. Our net interest margin was 3.74% for the quarter ended March 31, 2013, down 7 basis points from the quarter ended December 31, 2012, but up 2 basis points from the March 31, 2012 quarter. Total deposits reached $2,103,000,000, up $135 million compared to December 31, 2012. Our loan unit originated $497 million in gross loans in the third quarter, excluding warehouse lending production of $609 million. The $497 million of loan production consisted of: $128 million of single-family agency eligible gain on sale production; $109 million of single-family nonagency eligible gain on sale production; $93 million of single-family Jumbo portfolio production; $55 million of secured lender-financed portfolio production; $34 million of multifamily nonagency eligible gain on sale production; $35 million of multifamily portfolio production; and $45 million of C&I and specialty asset production. Overall, our loan pipeline remains strong, and April was a particularly good month, with $194 million in loan production, equaling about 40% of last quarter's loan production in the month of April alone. In April, the bank generated $48 million of single-family Jumbo portfolio production, $37 million of single-family nonagency eligible gain on sale production, $28 million of multifamily production, $55 million of single-family agency eligible gain on sale production, and $27 million of C&I and specialty asset production. We are pleased to see the growth of our newer lending divisions and the diversity of our loan production. Our C&I lending business is generating a growing pipeline and has seen significant increases in activity, including an increasing number of prospects and ongoing discussions. The pipeline of accepted LOIs in the C&I lending business as of April 30 was $77 million, with approximately $25 million of healthcare asset-based transactions. We believe there are significant opportunities to continue to grow our C&I lending business at attractive yields, in our target lending areas. We continue to make progress in growing and enhancing our deposit franchise. Our goal is to increase our shared transaction accounts and develop deeper customer relationships. We have made strong progress on changing the mix of our deposits to become more transaction-focused. From December 2011 to March 2013, we grew our checking account balances by 182%, our money market balances by 98%, while certificate of deposit balances decreased by 28%. Transaction accounts now make up 48% of our deposit base, up from only 39% a year ago. Additionally, in the last year, point-of-sale interchange income has doubled as a result of the success of our Rewards Checking product. Our Business Banking group today has over $250 million of deposits, up from $124 million in the prior quarter. The Business Bank has about 1,000 accounts, with 48% of those balances comprised of checking accounts. We continue to foresee robust growth in our business deposit balances. Our strategic partnership group has a pipeline of highly significant transactions, some of them with the potential to be substantial contributors to deposit and fee income growth, as well as potential distribution outlets for our loan products. Although each of these partnership transactions are individually negotiated and could have a relatively extended development and implementation timeframe, we believe that this group will continue to contribute significantly to both fee income and noninterest-bearing deposit growth in the coming years. The strategic partnership group completed our largest BIN transfer to date, with the onboarding of over 250,000 payroll accounts, totaling over $33 million of deposits. We announced last quarter that we launched our second chance checking account product under the NetBank brand, in order to decrease the number of checking account turndowns and thereby, optimizing our marketing spend, as well as to have a product available to affinity groups with demographic profiles that are a poor fit for our Bank of Internet product. The NetBank product, although still a highly attractive product relative to many branch bank accounts, has the potential to generate significant fee income for the bank as we grow. On the operational side, we recently launched our new multifamily real estate lending system. This state-of-the-art system will significantly enhance the productivity of our multifamily processing and underwriting team, and ensure that the bank has the ability to efficiently process commercial real estate loans. We will also launch our new deposit account opening system this quarter. This system includes enhanced functionality to allow the bank to better optimize its marketing spend, by allowing us to offer realtime cross-selling of deposit and loan products, including courtesy overdraft and overdraft line of credit products to customers, based upon profiles and attributes of each individual customer. Our new system will also offer the NetBank turndown product to customers who do not qualify for the bank's premium deposit products in realtime. Over the next 12 months, we will be able to be device-agnostic, with regard to how customers apply for our products by, for example, allowing customers to start applications on mobile devices, and complete those applications on personal computers or vice versa and utilize your finger to sign signature cards on any touchscreen device. Now I'll turn the call over to Andy, who will provide additional details on our financial results.

Thanks, Greg. First, I wanted to note that in addition to our press release, our 10-Q was filed with the SEC today and is available online through EDGAR or through our website bofiholding.com. Second, I will discuss our quarterly results on a year-over-year basis, meaning fiscal 2013 versus fiscal 2012, as well as this quarter ended December (sic) [March] 31, 2013, versus the second quarter ended December 31, 2012. For the quarter ended March 31, 2013, net income totaled $10,402,000, up 34.8% from the third quarter of fiscal 2012. Diluted earnings were $0.74 per share this quarter, up $0.16 or 27.6% compared to the third quarter of fiscal 2012. Net income increased 6.5%, compared to the second quarter ended December 31, 2012. For the 9 months ended March 31, 2013, net income totaled $29,159,000, up 39.4% compared to fiscal 2012. Diluted earnings were $2.12 per share for the 9 months ended March 31, 2013, up $0.44 or 26.2% compared to fiscal 2012. Excluding the after-tax impact of gains and losses associated with our securities portfolio, core earnings were $10,199,000 for the quarter ended March 31, 2013, up 23.5% year-over-year from the $8,256,000 of core earnings for the third quarter of fiscal 2012, and up from the $10,080,000 in core earnings for the last quarter ended December 31, 2012. Net interest income increased $5,867,000 during the third quarter ended March 31, 2013, compared to the third quarter of fiscal 2012, and increased $1,266,000 compared to the second quarter ended December 31, 2012. This was a result of the increases in average interest earning assets and average interest-bearing liabilities, as well as a decrease in the cost of funds. The net interest margin was 3.74% this quarter compared to 3.72% in the third quarter of fiscal 2012. The cost of funds decreased to 1.32%, down 48 basis points over the third quarter of fiscal 2012, and down 12 basis points compared to the quarter ended December 31, 2012. Provisions for loan loss were $1,550,000 this quarter. They were $2 million in the third quarter of last fiscal year, and $1.95 million for the second quarter ended December 31, 2012. The decrease this quarter was the result of lower charge-offs, which decreased by approximately $929,000 this quarter compared to the third quarter of fiscal 2012. The benefit of the decrease in the charge-offs was partially offset by additional provisions needed for growth in the loan portfolio. Noninterest income for the third quarter of fiscal 2013 was $6,834,000 compared to $3,856,000 in the third quarter of fiscal 2012, and compared to $6,249,000 for the second quarter ended December 31, 2012. Increased sales volumes resulting in higher mortgage banking gains were the primary reason for the variance between the year-over-year quarters. Noninterest expense or operating costs for the third quarter ended March 31, 2013, were $13,921,000 compared to $9,190,000 in operating costs in the second quarter of fiscal 2012, and compared to $12,781,000 in operating costs for the second quarter of fiscal 2013. This quarter, on a year-over-year basis, salaries and compensation expense was up $2,240,000 related to additional staff added since March 31, 2012; the results of an increase in professional services of $495,000; occupancy and equipment expense increased $248,000; advertising and promotional expense increased $232,000; cost associated with real estate-owned and repossessed vehicles increased $259,000; and other G&A increased $964,000. These increases are primarily due to the growth of the bank's lending and deposit operations. Our efficiency ratio was 42.14% for the third quarter of 2013 compared to 37.99% recorded in the third quarter of fiscal 2012, also compared to 40.98% for the second quarter of fiscal 2013. The efficiency ratio is calculated by dividing our operating expenses by the sum of our net interest income and our noninterest income. Shifting now to balance sheet. Our total assets increased $574.8 million or 24.1% to $2,961,000,000 as of March 31, 2013, up from $2,386,000,000 at June 30, 2012. The increase in total assets was primarily due to an increase of $475 million in loans held for investment. Total liabilities increased $520.7 million, primarily due to an increase in deposits of $487 million. In addition, there was an increase in borrowings of $38 million at the Federal Home Loan Bank. Stockholder's equity increased by $54.1 million or 26.2% to $260.7 million at March 31, 2013, up from $206 million at June 30, 2012. The increase was primarily the result of our net income for the 9 months ended March 31, 2013, which was $29.2 million, also the issuance of the convertible Series C preferred stock of $18.6 million and the sale of common stock through our ATM offering of a net of $6.7 million. At March 31, 2013, our Tier 1 core capital ratio for the bank was 8.64%, with $108.3 million of capital in excess of the regulatory definition of well capitalized. With that, I'll turn the call back over to Greg.

Thanks, Andy. Operator, if you can open the call up for questions, we'll take them now. Thank you.

[Operator Instructions] And we'll go first to Andrew Liesch with Sandler O'Neill. Andrew Liesch - Sandler O'Neill + Partners, L.P., Research Division: So the $5.4 million in gain on sale of loans, I'm curious, how much of that was from agency sale through Costco?

Well, we actually don't disclose specific Costco-related numbers, but we will tell you what the agency sales... Andrew Liesch - Sandler O'Neill + Partners, L.P., Research Division: Please, yes.

Yes, so it's $4.4 million, was the agency and the nonagency-originated for sale number. $1 million was the portfolio sale number.

And in that case, that would be all multifamily. Andrew Liesch - Sandler O'Neill + Partners, L.P., Research Division: That's what it looked like. And then, I guess regarding multifamily, how is the environment right now, as we've heard a lot of banks getting into it, and I know you guys have been doing it for basically your whole existence. So what's the competitive nature of that compared to other portfolios right now?

Yes, I think it is very competitive. We've made some management additions in that area to basically get some things done that we needed to get done a little bit faster in that area. I think all of our lending segments are competitive. That probably is the most competitive, though. We do see continued rate compression from our competitors. But we've been able to carve out our niche. That niche has been something we've been able to sustain, but I'm not happy with the growth rate of that production. But I believe that by penetrating some additional markets in certain areas, and then doing some other things that we've been able to do on the single-family side with the multifamily production, we'll be able to get it up. So by way of example, in some areas, we've had -- we haven't had good coverage from the sales force perspective. We've had a lot of luck covering those markets on the single-family side through inside sales teams that are closely managed by senior leaders. So we're working on some operational changes that we're excited about. The new system is very, very good and will allow us to be very efficient in what we do. We're continually looking for market exits as well in that area, including securitizations, and they're not quite there yet but they're getting there. So we'll certainly keep working on that area. But it is tough because the underlying asset has performed so well, that it's become a -- the flavor of the month for most banks. Andrew Liesch - Sandler O'Neill + Partners, L.P., Research Division: Right. I know you're -- to have your groups compete against each other, but just given the nature of what that industry's going through right now with the competitiveness, would you expect more growth coming from the C&I specialty asset, like the factoring loans or multifamily, right now?

That's a good question. I actually -- I don't expect them to compete in silly ways with each other, but that's kind of the idea with having multiple groups, that they are not necessarily competitive with each other, but that there's different levels of opportunity and different market for us, it's a different time, and so there are some diversification there. We see lots and lots of opportunity on the C&I side, and I do think that we have really great opportunity there. But the executive that I've put in charge of accelerating multifamily lending is also very, very strong. And so I wouldn't be surprised if it will take probably maybe 4 to 5 months to see impact, but I wouldn't be surprised if you see growth there as well. It's amazing when you can get right people on the right slots, what you can do, and so we'll see. I actually think we can push through the market and still do well.

We'll go next to Don Worthington with Raymond James. Donald Allen Worthington - Raymond James & Associates, Inc., Research Division: A couple of things. One, in terms of the C&I specialty finance fundings this quarter, $45 million, I think you said it was. How much of that was the healthcare?

Relatively little right now. And the reason why that's the case is those loans tend to have a reasonably long cycle time, and we brought those experts and that team in, probably around 4.5 months ago. And so their pipeline is building, but that was really more the lender-financed side and other focuses besides the healthcare side. So the healthcare side, really, should be additive and there's lots of opportunity there. We're -- obviously, we have to make sure that we have all the operational capacity in place for that, and that's really what I'm worried about more now. The sales team is doing an incredibly good job of bringing attractive deals. And really, we need to just make sure that we enter the market in a way that continues the positive feedback we get, and that we execute on each deal in an efficient and appropriate manner. But -- so the answer to your question is that, that was a very, very small component of the production. Donald Allen Worthington - Raymond James & Associates, Inc., Research Division: Okay. And then anything in the noninterest expense line that you would consider nonrecurring this quarter?

We've been looking at -- in general, from the standpoint of the way you're thinking about some special amount, I would say, generally, no. But what I would say is we've -- I've taken some time with my Chief Performance Officer, to really dig in and do a thorough McKinsey-like study of costs at the bank, and really push on cost efficiencies and look where we can save some money. We have a target efficiency ratio. We want to keep that below 40%. And obviously, when you add the significant talent we did on the C&I side, and they're still in the process of ramping up production, and also on the BIN sponsorship side, we have some very significant transactions that we're working on. But that does take personnel. And so we've -- and we've also hired on the compliance side as well, to beef up that area significantly. So we do think, though, that we have the opportunity to -- yes, we're disciplined on cost. We think we have an opportunity to get even more disciplined and continue to maintain our cost efficiency. And we found lots of little things we can do and some big things that we can do to ensure that we're thoughtful about how we spend shareholder money. Donald Allen Worthington - Raymond James & Associates, Inc., Research Division: Okay. And then I guess my last one was in the warehouse lending area, what did you see there during the quarter in terms of the people you lend to? And was business kind of seasonally down a little bit in the quarter or...

Yes, say, it was. Yes, there was definite seasonality there. And now that's something we see, generally, but that had a significant impact on lending growth in the quarter, where the actual balance in the warehouse lending lines in the quarter fell almost $50 million, $46 million. It is back up and above and beyond the record currently, or around that, the prior high, if just from a balance perspective. Is that right, Andy?

No, not quite there. Why is that growing at a rate...

Okay, yes. No, it's -- but it's substantially back to where it was. It's very close to its peak. But there is -- we were able to power through the decline in mortgage banking very well for a variety of reasons. We found some of our clients on the warehouse lending side have significant drops in production, and we had information from our hedging partners and such that the industry was down almost 40% to 45% on average. We obviously didn't have that decline, and we had a fantastic April but -- and we had a good quarter this quarter, too, despite the fact that -- it's always seasonally slow, right? Really starting from November, you see real declines in commercial loan applications even on the single-family Jumbo side, things just started to slow down. Big houses are out of the market, so you see a lot of that decline. That decline was actually much more significant than our own decline in some of our customers. But what we need to do there is that group is still growing, there's lots of applications, there's lots of growth opportunities. We, like we usually do, we're not absolutely the lowest-priced, but we do have a great value proposition with the proprietary products that we provide to those customers. So we have a good pipeline of new lines coming in place. Peep [ph] things have picked up, but that definitely contributed to a lower asset growth than we otherwise would have had. That was the largest contributor by far.

We'll go next to Julianna Balicka with KBW. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: I wanted to follow up on some questions on the liability side. On the deposit growth, which is really strong this quarter, you discussed some of it coming from the BIN transfer, the $33 million, I believe, you said in payroll accounts. Given some of the events from the first quarter, could you talk about your expectations, how we should think about loan growth for the rest of the calendar year? And also, any seasonality that we should think about for the second quarter, in regards to payroll taxes for those particular accounts?

Yes, that's -- so okay, so I'll take the last question first. I do think that in general, we should see some uptick. The -- when we looked at those -- that historic data, it can be up to 35%, 40% higher. Now given that base, that could increase, let's say, even $20 million would be nice, but not necessarily significant, and that kind of volatility is not a problem to absorb. With regard to other -- we have other transactions that we're working through. They're always uncertain because everybody on that side is a tough bargainer, and so are we, so -- but we do have a lot there, and some of the transfers could be significant, or would be quite significant, from a noninterest-bearing deposit growth perspective. With regard to the rest of the quarter, we had -- I gave the -- our production numbers for April. They were back strongly at $194 million. We're seeing good pipelines. I don't want to go out on a limb and say that we'll have months as strong as we did in April, in May and June. But we're not seeing why we couldn't, although that is -- that's just subject to us continuing to execute. I don't believe you'll have seasonal issues, and we historically have not had seasonal issues this quarter. There's no seasonal impacts. Really, the seasonal impacts occur a little bit in the end of August, around that timeframe for commercial, and then they occur in the holiday season, starting in November, and really, that impacts the pipeline for the first quarter. So this -- I think this quarter should be clean in that regard. The pipeline of the C&I side is very, very large, and the amount of interest is very strong. But part of that is going to be us just making sure that we're able to take on the things that we want to take on, and then execute those in an efficient manner to ensure that we continue to have a good reputation as an executor there. So -- but things are looking pretty good, all in all. Our multifamily is kind of consistent with where it was and slightly up, but not clearly where we want it to be. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And then in terms of the borrowings and the FHLB advances that you increased this quarter and the remix for funded borrowings, are you anticipating any more borrowings, remixes going forward? And you have increased some Fed funds in your average earning assets, so what's kind of a comfortable level for that's back and redeploy back down to?

Right. So there was an increased liquidity on the balance sheet this quarter. We have a -- we're using a very small part of our borrowing capacity with the FHLB. And if you look at it from a historic perspective, we really have increased our deposit funding at a rate that's been much greater than our Federal Home Loan Bank borrowing. The amount of liquidity that we're running at has been something that has -- that we're previously running at, was a bit of an ongoing discussion from a regulatory perspective. And they had certain perspectives on that, that we decided to ensure that they were comfortable with. And so you see higher Fed fund balances and those sort of things accomplished, through both increases and deposits and borrowing. And so that's where -- that's really where that's coming from.

But a relatively small amount of extended FHLB advances are being taken. Roughly about $7 million, $8 million a month, we're extending anywhere from maybe 7 years and this -- in that kind of area. So there's a moderate amount of long-term stuff, but the majority is short term. On the repos, we're actually now within 9 months of losing a large portion of that and being able to reprice. $50 million of the repos will reprice in -- at the end of this fiscal year in total. That's coming off at 4.33%. So that will be a nice hunk to get the repos off. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: So I think it will the price. Will you be renewing them at the current rates, or will you just let them run off...

No. Andy's always said that his career goal was to make it to the point where he could outlive those repos. And so it's my estimate, based on his strong performance and the fact that it's only a year out, that he's actually going to achieve those goals. So no, not only will we not be doing that, we will be cracking open a glass of inexpensive champagne to celebrate the fact that, that's obviously been a significant factor in our funding costs overall, just because of entire rates. So no, we expect to take advantage of that lower cost of funds, and we believe that we can continue to push on lowering our cost of funds. And we have CDs that are rolling off, and they're not coming on at anywhere near the rate we have. So unlike other banks, I think we have the ability to continue to lower our cost of funds, and that reduction is not only going to occur this year through things like that, like the rolling off of the repos, but it will continue into the future because those repos are significant and they go out another year or so after that, too. So I think that's really a good thing. Julianna Balicka - Keefe, Bruyette, & Woods, Inc., Research Division: Very good. And then final question, and I'll step back. I mean, loan yields were stable in the quarter and slightly up relative to the first quarter of this fiscal year. So I mean, when you're seeing where loan pricing is coming in right now in the market, has it reasonably stabilized? Or what are your thoughts, kind of in the next 12 months or so?

Yes, we have actually kept loan pricing very stable and tried to ensure that we could maintain production. So we have not been a repricer. There are certain pieces of the market, of a tax land lending that's been under some pressure. But we're also seeing other areas where we can compensate for that. And we do have specialty divisions that are able to achieve higher yields. But that is a continual source of concern as we watch other banks put pressure on those loan yields. But we've been able to be okay and really compete through a variety of other different mechanisms rather than just on price. So I feel pretty good about us being able to maintain the kind of volumes and growth we have, and even grow those volumes and growth without having to reduce yields. And -- but that is the challenge and it's not insignificant. So I don't want to say it's not a risk, but we're going to work very hard to ensure that we don't have to do that. And I really am hopeful that -- and I think it is quite possible that we're able to keep our -- to reduce our cost of funds at a level that will allow us, to the extent we have margin compression. I'm going to say we have a loan yield compression to be able to not have that translate to margin compression.

[Operator Instructions] We'll go next to Edward Hemmelgarn with Shaker Investments.

Yes. A couple of questions. One, Greg, I think you said in your -- when you were talking about the numbers of originations, you mentioned $45 million in C&I and special loans. And then in the -- in your release, you cited $71.8 million. What's the difference?

Yes. So I think the difference is probably single-family leverage lender-financed.

Yes. So we broke out and as we broke out lender -- in that list that I had, we broke out single-family lender finance. And what that is, is it really is a form of C&I loan. We chose to break it out just because of its significance. But what that involves is working with single-family lenders that often work with fix and flip borrowers or others that are making short-term loans to individuals that are fixing and flipping homes, and we make loans to them to back leverage their portfolio, of either loans or assets. And so that's the differences, that was included in one category and not the other.

Okay. What's ever happened to the outlet that you had set up to take Jumbo and Super Jumbo fixed loans -- fixed term loans?

So that's still going very, very well. And so in this quarter, we had $109 million of Jumbo nonagency gain on sale production.

Okay. So that's where those were at. Okay, I didn't know. Okay.

Yes. And that's been a great relationship. Candidly, they pushed out of the market a little bit, just recently. The securitization -- but that's still a great outlet, it's a good product, there's good demand for it. And so it also helps us have a full suite of products without having to take interest rate risks because we can lay that 30-year fixed rate product off.

Okay. Could you run through those, just the origination numbers again. I mean, you went through them pretty quickly and...

The -- for this quarter?

Yes.

Yes, sure. So $128 million of single-family agency eligible gain on sale production, so that is conforming mortgages, right, that go to government agencies; $109 million of single-family nonagency eligible gain on sale production, that's the 30-year fixed-rate Jumbo; $93 million of single-family Jumbo portfolio production; $55 million of secured lender-financed portfolio production, so that lender-finance would include single-family lender-finance, but lender-finance is a categorization that could include back leveraging of consumer receivables or other receivables as well; $34 million of multifamily nonagency eligible gain on sale production, so that is multifamily production that we intend to sell; $35 million of multifamily portfolio production that we do not intend, obviously, to sell; and $45 million of C&I and specialty asset production, and that includes other C&I and that is factoring.

Factoring.

Factoring, insurance company factoring and receivable factoring in that, too. So...

Okay. The other thing, I was just looking at some of your numbers for the deposit side and you seem to have kind of increased, over the last year, the average size of your account. Has that been just conscientious because you're going to where the money is or...

Well, Business Banking is a lot bigger, so that clearly does increase the size of the accounts. On the consumer side, I wouldn't actually say that's correct. I'd have to look at the numbers in front of me, but I'll tell you, the NetBank accounts that are coming in and the increase in checking account, although they're -- they have good balances relative to other banks, they certainly don't have the size of typical CDs. So I think that what you're looking at is the Business Banking side. And I think you're going to continue to see, on the Business Banking side, account sizes grow. I mean, we want to have accounts with -- to the extent we can get them multiple million dollars, and then that we think that's a very effective size for us. And also, remember what we're doing is we are charging fees on many of these accounts, and the value proposition is that we'll cut 30% off your fee at any bank that you bring your analyzed account saving to. And for that to be something that's meaningful for somebody, they actually have to have a relatively significant number of transactions and activity and that, naturally, is a larger account.

I guess I was primarily looking at the fact that your -- you and your time deposits, your under $100,000 declined from last June and your $100,000 and more went up for like $700 million to $964 million.

Yes. On the time deposit side, we're really not focused on that. Really, those are -- those just end up being largely duration plays. And so what we will do sometimes, we'll go out and we'll be looking at 10-year CDs and those sort of things, and they'll come through brokered -- through brokers and they'll be bigger. So yes, I wouldn't.

Yes. I have no other comments on that.

There are no other questions in the queue at this time.

Okay, great. Thank you very much, everyone, and I appreciate you continuing your interest in the company, and we'll talk to you next quarter. Thanks. Bye.

Bye.

That does conclude today's conference. Thank you for your participation.