Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (September 2017)
32 slides from Axos Financial's investor presentation, September 2017
Slide 1: BofI Holding, Inc. Investor Presentation September 2017
BOFI HOLDING, INC. Investor Presentation September 2017 NASDAQ: BOFI0
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “project,” or the negation thereof or similar expressions constitute forward-looki
Slide 3: Our Business Model is More Profitable Because Our Costs are Lower
Our Business Model is More Profitable Because Our Costs are Lower Banks BofI1 $1-$10bn2 As % of average assets (%) (%) Net interest income 3.77 3.46 Salaries and benefits 0.79 1.48 Premises and equipment 0.15 0.32 Other non-interest 0.53 1.04 expense Total non-interest 1.47 2.84 expense Core busines
Slide 4: BofI's Business Model Is Differentiated From Other Banks
BofI’s Business Model Is Differentiated From Other Banks Customer Sales Servicing Distribution Acquisition • Digital Marketing • Automated • Self-service • Balance sheet fulfillment • Affinity and • Digital journey • Whole loan sales Distribution • Inbound call center options Partners sales • Direct
Slide 5: Fiscal 2017 Highlights Compared with Fiscal 2016
Fiscal 2017 Highlights Compared with Fiscal 2016 Asset Growth Deposit Growth $ Millions $ Millions 10,000 8,000 8,502 6,900 7,559 11.9% 6,044 14.2% 8,000 6,000 6,000 4,000 4,000 2,000 2,000 0 0 FY 2016 FY 2017 FY 2016 FY 2017 Net Income Diluted EPS $ Millions Diluted EPS 150 134.7 2.5 119.3 13.0% 2.
Slide 6: Fiscal 2017 Fourth Quarter Highlights Compared with Fiscal 2016 Fourth Quarter
Fiscal 2017 Fourth Quarter Highlights Compared with Fiscal 2016 Fourth Quarter Asset Growth Deposit Growth $ Millions $ Millions 10,000 8,000 8,502 6,900 8,000 7,559 11.9% 6,044 14.2% 6,000 6,000 4,000 4,000 2,000 2,000 0 0 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Net Income Diluted EPS $ Millions $ Diluted
Slide 7: Diluted EPS and Return on Equity Have Been Consistently Strong
Diluted EPS and Return on Equity Have Been Consistently Strong Despite Significant Increase in Tier 1 Capital Ratios Diluted EPS (FY) Return On Average Equity (FY) $ per share % 2.5 20 19.43 17.89 18.34 17.78 17.57 2.07 16.95 2.0 1.85 15 29% CAGR 1.5 1.34 10 0.96 1.0 0.72 0.58 5 0.5 0.0 0 2012 2013
Slide 8: BofI is a Top Quartile Performer Versus Bank Peer Group
BofI is a Top Quartile Performer Versus Bank Peer Group The 95% on ROE means that the Bank outperformed 95% of all banks. The 15% G&A ranking means that only 15% of banks spend less on G&A than BofI. Peer group includes savings banks greater than $1 billion. BofI Federal Bank Peer Group Percentile R
Slide 9: Diverse Lending Business
Diverse Lending Business Gain-on-sale Mortgage Banking Single family Jumbo Warehouse Lending Multifamily Commercial Real Estate Small Balance Commercial Lender Finance Asset Backed Lending Lending Equipment Leasing C&I Lending Factoring Bank Loans Large Balance Commercial/Specialty Real Estate Small
Slide 10: Loan Diversity – June 30, 2017
Loan Diversity – June 30, 2017 Loan Portfolio1 100% = $7,449 Million Factoring 2% Multifamily 22% CRE/Home Equity/Consumer and Other 4% SF – Residential 55% C&I – SF Lender Finance 4% C&I 13% 1. Gross loans and leases before premiums, discounts and allowances 9
Slide 11: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $8,000,000 $7,374,493 $7,020,700 $7,000,000 $6,811,470 $6,549,742 $6,354,679 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $‐ Q4 2016
Slide 12: Loan Pipeline Remains Strong
Loan Pipeline Remains Strong FY 2017 Q4 $M 1,200 1,000 $962 $902 $60 $77 800 $185 600 $551 $89 400 200 0 Jumbo Single Agency Commercial Multifamily / Primary Single Family Total Family Single Family & Industral Small Balance Pipeline Warehouse Lending Commercial 11
Slide 13: Loan Origination Growth
Loan Origination Growth Fiscal Year Loan Originations Future Plans $ Billions • Organic growth in existing business lines 6 5.6 o Multifamily geographic 5.0 5 1.4 expansion 31.8% 4.3 5-yr CAGR 1.4 o Agency and jumbo 4 1.0 mortgage channel 3.0 expansion 3 0.7 o Small Balance Commercial 2.1 2 4.2 Real
Slide 14: Diversified Branchless Deposit Businesses
Diversified Branchless Deposit Businesses Key Elements Consumer • Demographically targeted brands direct internet • Differentiated products with turn-down product brands options • Exclusive relationships with significant brands, Distribution groups, or employees Partners • Exclusive relationships wi
Slide 15: Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits
Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits June 30, 2013 June 30, 2017 100% of Deposits = $2.1 billion 100% of Deposits = $6.9 billion Checking and Savings – IRA other demand Time deposits deposits 12% 4% 19% Checking and other demand 50% de
Slide 16: Our Business Banking Vertical has Fueled our Deposit Growth
Our Business Banking Vertical has Fueled our Deposit Growth while Generating Significant Fee Income Business Deposits by Account Type* Business Banking Deposits Percent (%) ($MM) 4,000 3,844 Time Deposits 3,500 3% 3,067 3,000 2,449 2,500 56% 2,000 Checking and other Savings & MMDA demand deposits 1,
Slide 17: BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States
BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States Number of Accounts Average Deposit Balance BofI Deposits Have National Reach With Customers in Every State 16
Slide 18: BofI Customers are Highly Engaged
BofI Customers are Highly Engaged Customer Engagement Results Engagement Low Activity High Activity Attributes Low Activity User Basic User Engaged Elite Engaged Engagement Score 0s 0 < S < 30 30 ≤ S < 60 ≥ 60 (0-100) Average Lifetime $100 $4000 $6,000 $50,000 Balance Average # of Services - <5 7 10
Slide 19: Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits
Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future Plans $ Thousands • Enhanced digital marketing automation 7,000,000 6,899,507 integrated to outbound sales group 6,044,051 6,000,000 33.7% • Products and technology integration 5
Slide 20: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income FY 2017* Agency Mortgage Jumbo 22% Banking Multifamily Structured Gain on Sale – Settlement 7% Other Other Cash/Treasury Fee Income Management Consumer Deposit Deposit/ Prepaid 64% Service Fees Tax Payments Prepayment 7% Fee * Excludes securities in
Slide 21: Over the Last Five Years, BofI Has Successfully Started New Products, Added Distribution Channels
Over the Last Five Years, BofI Has Successfully Started New Products, Added Distribution Channels, and Completed Acquisitions 2010 2011 2012 2013 2014 2015 2016 2017 New product • Agency • Business • Warehouse • Treasury/ • Small • Auto • HRB • Retail mortgage banking Lending cash balance franchisin
Slide 22: Key Goals of Universal Digital Bank
Key Goals of Universal Digital Bank • Increase chance of offering right product at the right time and place • Personalization is the right antidote for too much choice, too much content, Personalization and not enough time • Eventual artificial intelligence tools assist sale of banking products such
Slide 23: Universal Digital Bank Consumer Platform
Universal Digital Bank Consumer Platform Product Development Cross-sell (In-House Apps) • Robo-advisor • Auto • Trusts • IRA Consumer Online • Mortgage • Personal loan Banking Platform App Store Personalization Management & Segmentation • Third party • Real-time retention services/payments • Next-be
Slide 24: Advanced Data Analytics Provides Key Insights Into Customer Engagement
Advanced Data Analytics Provides Key Insights Into Customer Engagement, Profitability, and Retention to Enhance Customer Lifetime Throughout the Bank Framework for Data Analysis Key Learnings Retention & Attrition Drivers to Boost Long-Term Customer Engagement Customer Segmentation Methodology to Un
Slide 25: We are Expanding our Strategic Partnership with H&R Block
We are Expanding our Strategic Partnership with H&R Block H&R Block Overview Products for 2018 Tax Season • Approximately 10,000 U.S branches • Refund Transfer • Files 1 in every 7 U.S. tax returns • Emerald Advance Unsecured Loan • 19.7 million U.S. tax returns per year • Emerald Prepaid Card • 83%
Slide 26: Omni Channel Approach for BofI's 2017 Digital Marketing Strategy
Omni Channel Approach for BofI’s 2017 Digital Marketing Strategy Marketing automation implementation Organizational commitment to user experience Infrastructure Digital personas for User personalized interactions Experience Personalization & Data DIGITAL Social employee Paid, STRATEGY engagement Soc
Slide 27: Holistic Credit Risk Management
Holistic Credit Risk Management Utilize a holistic credit-risk management framework to manage and monitor credit quality at each stage of the What We Do loan life cycle, and leverage specialized Credit Tools to optimize monitoring and reporting capabilities Credit Monitoring & Oversight Portfolio Lo
Slide 28: Monitoring & Management Oversight: Core Products
Monitoring & Management Oversight: Core Products Single Family Residential Income Property Lending • Portfolio level monitoring with individual loan reviews • Risk based annual loan review process, with 4 levels completed on an exception basis (i.e. delinquency, depending on financial performance &
Slide 29: Best-in-Class Loan Quality
Best-in-Class Loan Quality Loans in non-accrual to Total Net Charge-Offs Annualized 1 total loans1 (%) (%) 2 0.5 0.25 1 0.89 0.38 0.01* 0 0.0 BofI Banks $1-10 bn BofI Banks $1-10 bn * Excludes charge-offs related to short-term seasonal tax lending products. The charge-off amount reported by FDIC SDI
Slide 30: Bank Provides Appropriate Resources to Manage Credit and Compliance Risk
Bank Provides Appropriate Resources to Manage Credit and Compliance Risk June 30, June 30, June 30, June 30, Department FTEs 2014 2015 2016 2017 Credit and Quality Control 41 57 65 85 Risk, Internal Asset Review, Compliance, Audit 26 35 44 54 and BSA 29
Slide 31: Investment Summary
Investment Summary Full service branchless banking platform with structural cost advantages vs. traditional banks Superior growth and ROE relative to large and small competitors Solid track record of allocating capital to businesses with best risk-adjusted returns New business initiatives will gener
Slide 32: Contact Information
Contact Information Greg Garrabrants, President and CEO Andy Micheletti, EVP/CFO investors@bofi.com www.bofiholding.com Johnny Lai, VP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 jlai@bofi.com 31
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