Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (March 2015)
32 slides from Axos Financial's investor presentation, Mar 11, 2015
Slide 1: BofI Holding, Inc. Investor Presentation
NASDAQ: BOFI March 2015 BOFI HOLDING, INC. Investor Presentation
Slide 2: Safe Harbor
1 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-loo
Slide 3: Q2 Fiscal 2015 Financial Highlights
2 Asset growth Deposit growth Loan portfolio growth Loan portfolio origination growth Non-performing assets to total assets Net Income Diluted EPS Q2 2015 vs. Q2 2014 $1,626.4 $1,602.3 $1,526.3 $205.5 69 bps $19.4 $1.26 45.6% 66.7% 55.0% 34.4% 20 bps 47.3% 38.5% Amount ($MM or %) Increase (%) Return
Slide 4: BofI is Consistently Ranked among the Best of the Biggest Thrifts by SNL Financial
3 BofI Holding, Inc. (BOFI) 2 CA 134.61 2,224 1.24 16.09 14.33 42.04 1.20 0.39 2011 The Best of the Biggest Thrifts #2 #1 2012 The Best of the Biggest Thrifts BofI Holding, Inc. (BOFI) 1 CA 154.986 2,874.3 1.44 17.72 14.33 38.05 1.11 0.29 Source: SNL Financial 2013 The Best of the Biggest Thrifts #1
Slide 5: ...and is also a Top Performer among the Broader Universe of all Public Banks
4 ...and is also a Top Performer among the Broader Universe of all Public Banks and Thrifts 2014 rank 2013 rank Total assets ($000) 2013 ROAE (%) 2013 ROAA (%) Non-interest income/total revenue (%) Capital ratio (%) Efficiency ratio (%) Non- performing loans/total loans (%) 1 79 Central Pacific Fina
Slide 6: BofI is a Top Quartile Performer Versus Bank Peer Group
5 BofI is a Top Quartile Performer Versus Bank Peer Group BofI Federal Bank Peer Group Percentile ROAA 1.65% 0.77% 90% Return on equity 19.00% 6.69% 95% G&A 1.38% 2.70% 12% Efficiency ratio 31.01% 69.12% 2% Source: Uniform Bank Performance Report (UBPR) as of 12/31/14 Note: Peer group is all savings
Slide 7: Our Business Model is More Profitable Because Our Costs are Lower
6 Salaries and benefits Premises and equipment BofI1 (%) 0.71 0.13 Other non-interest expense 0.51 Total non-interest expense 1.35 Core business margin 2.63 1.47 0.36 1.28 3.11 0.47 Banks $1-$10bn2 (%) Net interest income 3.98 3.58 As % of average assets 1. BofI Federal Bank only for the three month
Slide 8: Corporate Profile and Vision
7 Corporate Profile and Vision • $5.2 billion asset savings and loan holding company1 • 14-year operating history, publicly traded on NASDAQ (BOFI) since 2005 • Headquartered in single branch location in San Diego, CA • 430 employees ($12.1 million in assets per employee)1 • Market Capitalization of
Slide 9: Diversified Branchless Deposit Businesses
8 Diversified Branchless Deposit Businesses Key Elements Deposit Consumer direct internet brands Distribution Partners BIN sponsorship • Demographically targeted brands • Differentiated products with turn-down product options Business banking • Exclusive relationships with significant brands, groups
Slide 10: Distribution Partners
9 Focus Current Partner Direct Marketing Retail Event-Based Issuance Distribution Partners
Slide 11: Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits
10 314 467 688 1,113 1,420 1,700 2,060 0 300 600 900 1,200 1,500 1,800 2,100 2,400 41.2% 26.7% 11.8% 20.3% Checking Money Market Savings CD’s Note: 100% of deposits equals $4,005.4 MM as of 12/31/14 Diversified Deposit Base Rapid Business Banking Deposit Growth ($MM) Q4 13 Q1 14 Q2 14 Q4 14 Q3 14 Q1
Slide 12: Key Areas of Growth
11 Key Growth Areas Growth1 12/2013 - 12/2014 Checking balance 198% MMS balance 40% Savings balance 56% CD balance - 46% Transaction account balance 132% 1. Growth is shown for core deposits Key Areas of Growth
Slide 13: Building a Better Real-Time Data Engine to Drive Customer Touch-Points
12 Inbound We are Building a Better Real-Time Data Engine to Drive Customer Touch-Points Based on a Wide Range of Data Sources Direct Mail EMail Call Center Website Mobile app/ SMS Direct Mail EMail Call Center Website Mobile app/ SMS Outbound • Advanced multichannel integration • Pervasive analytic
Slide 14: BofI's Vision for Multi-Channel Customer Service and Transactions
13 BofI's Vision for Multi-Channel Customer Service and Transactions • Aggressive outbound − segmented call lists based upon behavioral segmentation (e.g., usage) • Utilization of third party and internal data • Coordinated multi-channel marketing • Utilize third party infrastructure (e.g., ATMs to
Slide 15: The Tipping Point for Consumer and Business Banking Customers
14 The Tipping Point for Consumer and Business Banking Customers • Consumers are disenchanted with traditional banks • Cost structure of business and consumer accounts are significant concerns • Technology has removed final barriers to branchless banking (remote deposit capture, reload networks, enh
Slide 16: Retail Customers are Willing to Switch Primary Accounts to Branchless Banks
15 Retail Customers are Willing to Switch Primary Accounts to Branchless Banks 0 10 20 30 40 16% 39% 29% 55+ years old 18-34 years old % 35-55 years old 27% average Transactional Advice/ relationship 29% 71% Source: The Digital Disruption in Banking, Accenture 2014 % Willing To Switch Primary Accoun
Slide 17: Customers Prefer to Become Aware of Financial Products through Electronic Channels
16 Customers Prefer to Become Aware of Financial Products and Services through Electronic Channels 53% electronic 26% in person 11 15 6 11 36 0 10 20 30 40 Email Online Telephone call/online chat/ video conference In person with account specialist In person with teller % of customers Source: Mercato
Slide 18: Splintered Value Chain with Primary Banking Services Offered by Non-Banks
17 Splintered Value Chain with Primary Banking Service Offerings by Non-Banks Appear to be Well Accepted Retail Bank Customers Willing to Bank With Alternative Providers By Age Retail Bank Customers Willing To Bank With Specific Companies 0 20 40 60 80 18-34 35-54 55+% 72% 55% 27% Age 29% 29% 29% 26
Slide 19: Branch Transaction Activity Migrating to Mobile/Online Channels
18 Branch Transaction Activity Migrating to Mobile/Online Channels U.S. Banking Transactions by Channel (Billions)1 U.S. Branch Transaction Activity2 (average annual change – 2008-11) Deposit Withdrawal Check cashing Total -7% to -9% -3% to -6% -17% to -19% -4% to -5% 100 75 50 25 0 2013 2012 2011 2
Slide 20: Branch Traffic has Declined Approximately 4.0% per Year
19 Branch Traffic has Declined Approximately 4.0% per Year for an Aggregated Decline of 51% Over the Last 16 Years Source: FMSI 2013 Teller Line Study "Branch foot-traffic is plummeting and branches are largely idle, except for the activities of the employees" "Check writing declines 6-10% per year"
Slide 21: The Rollout of Remote Deposit Capture has had an Immediate Impact – Chase Example
20 1. Chase data includes non-Chase ATMs Source: Gordon Smith, "Consumer & Community Banking" 2/26/13, J.P. Morgan & Chase, SNL Financial 51 55 62 74 85 90 0 20 40 60 80 100 39 points 4Q 11 4Q 12 4Q 07 4Q 10 4Q 09 4Q 08 The Rollout of Remote Deposit Capture has had an Immediate Impact – Chase Exampl
Slide 22: Bank Deposit Revenue Sources Reduced and Branch Transaction Cost 40 Times Call Center
21 Bank Deposit Revenue Sources have been Significantly Reduced and Cost per Branch Transaction is 40 Times that of a Call Center Service Charges/Total Deposits (%) Source: FDIC; Baird estimates; PNC population Cost Per Transaction % 0.40% 2002 2012 0.2 0.65% 0.0 0.8 0.4 0.6 $0.56 Call center Online
Slide 23: Branch Banks Cannot Cost-Effectively Serve Most Customers
22 Branch Banks Cannot Cost-Effectively Serve Most Customers Chase 23 23 23 19 12 United States 32 20 21 19 8 Segment 1 (<$5K D&I) Segment 2 ($5K-$25K D&I) Segment 3 ($25-$100K D&I) Segment 4 ($100-$500K D&I) Segment 5 ($500K+ D&I) >30% of Chase households have >$100K in D&I and make up ~55% of reve
Slide 24: Lending Businesses
23 Lending Single family Multifamily C&I Lending Gain-on-sale Mortgage Banking Wholesale Jumbo Retail Wholesale Lender Finance ABL • Internet and affinity lead sources • Self-service operation • Low-fixed costs • High-end portfolio lender – “Common Sense" underwriting – Q2 2015 average LTV of 62% •
Slide 25: Asset Growth Driven by Strong and Profitable Organic Loan Production
24 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 55% 55% 55% 56% 53% 55% 56% 57% 57% 56% Average Loan to Value $2,777,325 $3,101,408 $3,532,841 $3,959,155 $4,303,661 $- $500,000
Slide 26: Loan Pipeline – Total Loan Pipeline Near Record High
25 C&I Multifamily Jumbo Single Family Agency 37 67 75 85 63 497 386 445 481 438 92 157 146 156 107 151 167 255 217 241 0 200 400 600 800 1,000 $MM 777 921 939 849 FY Q2 2014 FY Q3 2014 FY Q4 2014 FY Q1 2015 FY Q2 2015 Loan Pipeline – Last Four Quarters and Current Total Loan Pipeline Near Record Hi
Slide 27: Coordinated Banking Digital Strategy
26 Coordinated Banking Digital Strategy Infrastructure Data Content Business Process Analytical strategy Social and mobile strategy User experience DIGITAL STRATEGY 2 3 4 5 6 7 1 • Unique digital personas for tailored interactions • Linked CRMs • Unique underwriting variables • Cost efficiency, work
Slide 28: Best-in-Class Loan Quality
27 0.03 0.30 0 1 (%) BofI Banks $1-10 bn Total Charge-Offs1 Loans in non-accrual to total loans1 0.78 1.42 0 1 2 (%) BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 12/31/14 YTD. Total of 467 institutions included in the $1-$10 billion group. Best-in-Class Loan Quality
Slide 29: Loan Diversity – December 31, 2014
28 Loan Portfolio1 100% = $4,373 Million SF - Residential 60% C&I 3% C&I - SF Lender Finance 7% CRE/Home Equity/Consumer and Other 1% Multifamily 26% Factoring 3% 1. Gross loans before premiums, discounts and allowances Loan Diversity – December 31, 2014
Slide 30: H&R Block Transaction Overview
29 H&R Block Transaction Overview Program Management Agreement H&R Block Bank Deposit Assumption • Current Emerald prepaid debit card • Emerald Advance Line of Credit • Refund Transfer • $26-$28 million annual projected revenues with pre- tax profit of $19-22 million from three products • Credit Car
Slide 31: Investment Summary
30 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 generate incremental
Slide 32: Contact Information
31 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 ext. 1609 Mobile: 858.245.1442 jlai@bofifederalbank.com Contact Information