Business Context and Reporting Period
This Form 8-K filing by BofI Holding, Inc. (the holding company for Bank of Internet USA) reports a material definitive agreement entered into on August 31, 2011. The filing details a registered direct public offering of preferred stock and the subsequent amendment to the company's Articles of Incorporation.
Key Financial Metrics and Transaction Details
- Transaction Type: Sale of 6.0% Series B Non-Cumulative Perpetual Convertible Preferred Stock.
- Shares Issued: 8,667 shares.
- Gross Proceeds: $8,667,000.
- Liquidation Preference: $1,000 per share.
- Dividend Rate: 6.0% non-cumulative.
- Conversion Terms: Convertible at the holder's option into 61.92 shares of common stock per preferred share (approximate conversion price of $16.15 per share).
- Automatic Conversion Trigger: If the common stock closing price exceeds $20.50 for 20 trading days within a 30-day period, the company may force conversion.
- Redemption Terms: Redeemable at the company's option no earlier than three years after issuance at a price of $1,080 (Year 3), $1,050 (Year 4), or $1,030 (Year 5+).
The filing text does not provide specific values for revenue, net profit, operating cash flow, margins, total debt, or liquidity ratios for the reporting period.
Material Changes and Restrictions
The issuance of the Series B Preferred Stock introduces material restrictions on the company's capital structure:
- Dividend Restrictions: The company cannot declare or pay dividends on Junior Securities or Parity Securities if it fails to pay full dividends on the Series B Preferred Stock.
- Repurchase Restrictions: The company's ability to purchase, redeem, or acquire shares of Junior Securities is limited under similar conditions.
- Corporate Governance: A Certificate of Designations was filed with the Delaware Secretary of State on September 1, 2011, formalizing these rights.
Outlook, Risks, and Management Commentary
The filing does not contain forward-looking guidance, management commentary on future performance, or a discussion of general business risks beyond the specific contractual restrictions imposed by the new preferred stock. The primary risk disclosed is the dilution of common equity upon conversion and the constraint on future dividend payments or share repurchases if preferred dividends are not paid.
Key Facts for Investor Verification
- Verify the exact number of common shares outstanding to calculate the potential dilution impact of the 61.92 conversion ratio.
- Confirm the company's current cash position to assess its ability to service the 6.0% non-cumulative dividend obligation.
- Review the full "Certificate of Designations" (Exhibit 3.1) for detailed definitions of "Junior Securities" and "Parity Securities" to understand the full scope of dividend restrictions.
- Monitor the common stock price relative to the $20.50 automatic conversion trigger threshold.