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Unconventional Career Path Leads to Unconventional Bank

A future 9-to-5 career in banking was not a given in the financial education of Gregory Garrabrants, and the traditional workday clock doesn’t set the pace at BofI Federal Bank, the San Diego-based company he now leads as president and CEO.

“We have a very entrepreneurial style here; it’s not necessarily a 9-to-5 work schedule,” said Garrabrants, 41, whose company has its main offices at UTC and a satellite mortgage office in Carlsbad. “You’ll find people working here up to 7 p.m.”

BofI has also made hay by operating without traditional bank branches, serving its customer base online and more recently through mobile apps, like remote check deposit, which allow consumers to conduct business via their smartphones.

While eliminating the overhead costs associated with running branches, it has also gone after the customer fees long deemed sacred by the banking industry.

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BofI’s Bank of Internet USA division recently announced, for instance, that it has done away with overdraft fees on its rewards checking account, and in most instances it also now waives or reimburses most ATM fees, except for some transactions done via international ATMs.

Small Business Successes

The company has long paid interest rates on checking accounts that are considerably higher than some of the larger brick-and-mortar banks. Garrabrants said services that BofI recently rolled out to small businesses have garnered $100 million in new deposits in the past three months, largely because the company is able to save those smaller firms more than 30 percent in maintenance and transaction fees compared with traditional banks.

The gains on the business accounts come as the company saw its consumer checking account base rise 50 percent over the past year, the CEO said.

The nimble mix of overhead-cutting and technology adoption has apparently helped the company’s bottom line. BofI, which employs 280 and has more than $2.6 billion in assets, last year ranked second in SNL Financial’s national ranking of the 100 best-performing large thrifts.

For Garrabrants, much of this follows a series of educational and postcollege work experiences that didn’t necessarily spell “banker’s life,” but which the CEO says prepared him well for his current job in today’s banking climate.

He graduated from University of Southern California with a bachelor’s degree in industrial and systems engineering, with a minor in economics. He later earned a law degree and a master’s of business administration at Northwestern University.

He began his financial services career at Deloitte Consulting prior to graduate school, and his legal training included corporate and securities work at two prominent law firms, as well as serving as clerk to U.S. District Judge Steven V. Wilson in California’s Central District.

Those were followed by stints as a management consultant at McKinsey & Co.; an investment banker at Goldman Sachs; and head of corporate business development at IndyMac Bank, at the time of his tenure the nation’s seventh largest thrift. IndyMac failed in 2008, and its deposits were sold to Pasadena-based OneWest Bank in 2009.

Garrabrants joined BofI in 2007 as president and CEO, and said all of the nonbanking as well as banking experiences since college prepared him well for challenges he’s now facing in the hyper-competitive banking industry.

Eye-Opening Experiences

“It really gave me a chance to see up close these tough problems that banks deal with, and it prepared me for the real-world consumer issues that we have dealt with here at BofI.”

The industry today is seeking business opportunities at a time of heightened oversight by federal regulators, and low interest rates that have squeezed profit margins on loans.

Garrabrants said BofI in the past two years has responded by beefing up its presence in the recovering mortgage lending sector. Its apartment property loan division now has a $500 million national portfolio, and its single-family loans stand at approximately $1 billion.

The bank has become active in “warehouse” lines of credit, also backing small-business loans offered through U.S. Small Business Administration programs.

It also has ongoing relationships with consumer mortgage programs administered by nonbank players, including one in which it makes its services available to Costco Wholesale’s club members.

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