Item 8.01. Other Events

On September 7, 2008, the U.S. Treasury, the Federal Reserve and the Federal Housing Finance Agency (FHFA) announced that the FHFA was putting Fannie Mae and Freddie Mac under conservatorship and giving management control to their regulator, the FHFA. The U.S. Treasury also announced that dividends on Fannie Mae and Freddie Mac common and preferred stock were eliminated.

Bank of Internet USA, (the "Bank"), a wholly-owned subsidiary of BofI Holding, Inc., had 400,000 shares of Fannie Mae Preferred Stock - Series S for a total face value of $10.1 million and a book value of $9.1 million at June 30, 2008.

Based upon the government announcement of the conservatorship and the elimination of dividends on Fannie Mae Preferred stock, the Bank of Internet USA sold at the market open on September 8, 2008 its entire position of 400,000 shares for proceeds of $1.2 million for an estimated after tax loss of $4.7 million.

At June 30, 2008, the Bank had $24.9 million in capital in excess of its "well capitalized" requirement as defined by the Bank's primary regulator the Office of Thrift Supervision. After considering the impact of the loss on the sale of its FNMA Preferred Stock, the Bank remains "well capitalized".

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