Business Context and Reporting Period
This Form 8-K is filed by BOFI Holding, Inc. (doing business as Axos Financial, Inc.) for the reporting period ending March 28, 2007. The filing discloses the entry into a material definitive agreement and a related party transaction involving the registrant's wholly-owned subsidiary, Bank of Internet USA.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. The financial impact of the disclosed agreement is variable and cannot be predicted with certainty at this time.
Material Changes and Agreements
- Website Lease Agreement: Bank of Internet USA entered into a five-year agreement with CWI, Inc., effective March 1, 2007, to offer loan and deposit products to CWI's customers.
- Fee Structure: The bank will pay CWI, Inc. a one-time new account fee per product sold, a recurring quarterly fee based on average balances, and share joint advertising costs for the first two years.
- Termination Obligation: Upon termination, the bank is obligated to pay a recurring quarterly fee based on average balances for a period of 36 months.
Related Party Transactions and Risks
Mr. Stephen Adams, a controlling shareholder of CWI, Inc. and beneficial owner of approximately 9.9% of the registrant's common stock, is a party to this transaction. Mr. Adams did not participate in negotiations. Management asserts the terms are competitive and executed in good faith. However, the filing notes significant uncertainty regarding future costs due to the variable nature of the fees and the bank's limited experience with similar marketing agreements.
Investor Verification Checklist
- Verify the specific fee percentages and thresholds in the Website Lease Agreement (Exhibit 10.1), noting that portions were filed separately for confidential treatment.
- Confirm the extent of Mr. Stephen Adams' influence on CWI, Inc. and the registrant's governance.
- Monitor future quarterly reports for the actual financial impact of the recurring fees and advertising costs.
- Review the press release (Exhibit 99.1) for additional details on the strategic partnership.