Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (February 2018)
32 slides from Axos Financial's investor presentation, Feb 1, 2018
Slide 1: BofI Holding, Inc. Investor Presentation
0 NASDAQ: BOFI January 2018 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: Our Business Model is More Profitable Because Our Costs are Lower
2 Salaries and benefits Premises and equipment BofI1 (%) 0.83 0.15 Other non-interest expense 0.58 Total non-interest expense 1.56 Core business margin 2.38 1.49 0.32 0.99 2.80 0.68 Banks $1-$10bn2 (%) Net interest income 3.94 3.48 As % of average assets 1. For the three months ended 09/30/17 – the
Slide 4: BofI's Business Model Is Differentiated From Other Banks
3 BofI’s Business Model Is Differentiated From Other Banks Customer Acquisition Sales Servicing Distribution • Digital Marketing • Affinity and Distribution Partners • Data mining/target feeding direct marketing • Cross-sell • Automated fulfillment • Inbound call center sales • Outbound call center
Slide 5: Fiscal 2017 Highlights Compared with Fiscal 2016
4 Fiscal 2017 Highlights Compared with Fiscal 2016 7,559 8,502 0 2,000 4,000 6,000 8,000 10,000 FY 2016 FY 2017 $ Millions Asset Growth 11.9% 119.3 134.7 0 50 100 150 FY 2016 FY 2017 $ Millions Net Income 13.0% 6,044 6,900 0 2,000 4,000 6,000 8,000 FY 2016 FY 2017 $ Millions Deposit Growth 14.2% 1.8
Slide 6: Fiscal 2018 Second Quarter Highlights Compared with Fiscal 2017 Second Quarter
5 Fiscal 2018 Second Quarter Highlights Compared with Fiscal 2017 Second Quarter $ Millions Asset Growth $ Millions Net Income $ Millions Deposit Growth $ Diluted EPS Diluted EPS Non-GAAP Return on Equity = 18.54%* Non-GAAP Return on Assets = 1.87%* GAAP Return on Equity = 14.37% GAAP Return on Asse
Slide 7: Diluted EPS and Return on Equity Have Been Consistently Strong
6 Diluted EPS and Return on Equity Have Been Consistently Strong Despite Significant Increase in Tier 1 Capital Ratios Return On Average Equity (FY) Diluted EPS (FY) 0.58 0.72 0.96 1.34 1.85 2.07 0.0 0.5 1.0 1.5 2.0 2.5 2015 $ per share 2014 2012 2013 2017 29% CAGR 2016 16.95 17.57 17.89 18.34 19.43
Slide 8: BofI is a Top Quartile Performer Versus Bank Peer Group
7 BofI is a Top Quartile Performer Versus Bank Peer Group BofI Federal Bank Peer Group Percentile ROAA 1.82% 0.93% 90% Return on equity 19.52% 8.49% 93% G&A 1.51% 2.60% 19% Efficiency ratio 31.95% 63.09% 5% Source: Uniform Bank Performance Report (UBPR) as of 9/30/2017 Note: Peer group is all saving
Slide 9: Diverse Lending Business
8 Diverse Lending Business Lending Single family Commercial Real Estate C&I Lending Consumer Small business Gain-on-sale Mortgage Banking Jumbo Multifamily Small Balance Commercial Lender Finance Asset Backed Lending Warehouse Lending Factoring Bank Loans Auto Overdraft Lines Large Balance Commercia
Slide 10: Loan Diversity – December 31, 2017
9 1. Gross loans and leases before premiums, discounts and allowances Loan Portfolio1 100% = $7,969 Million SF – Residential 52% C&I 15% C&I – SF Lender Finance 4% CRE/Home Equity/Consumer and Other 6% Multifamily 21% Factoring 2% Loan Diversity – December 31, 2017
Slide 11: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
10 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 54% 55% 54% 58% 58% 58% Average Loan to Value [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] $- $1,000,000 $2,00
Slide 12: Loan Pipeline Remains Strong
11 $441 $115 $294 $131 $981 $70 $1,051 0 200 400 600 800 1,000 1,200 Loan Pipeline Remains Strong FY 2018 Q2 Total Single Family Warehouse $M Jumbo Single Family Agency Single Family Commercial & Industral Lending Multifamily / Small Balance Commercial Primary Pipeline
Slide 13: Loan Origination Growth
12 0.7 1.0 2.3 3.3 3.6 4.2 1.1 0.7 1.0 1.4 1.4 0 1 2 3 4 5 6 Loan Origination Growth 53.2% 42.0% 42.2% • Organic growth in existing business lines o Multifamily geographic expansion o Agency and jumbo mortgage channel expansion o Small Balance Commercial Real Estate expansion o Large Balance Commerc
Slide 14: Diversified Branchless Deposit Businesses
13 Diversified Branchless Deposit Businesses Key Elements Deposit Consumer direct internet brands Distribution Partners BIN sponsorship • Demographically targeted brands • Differentiated products with turn-down product options Small business banking • Exclusive relationships with significant brands,
Slide 15: Deposit Growth in Checking, Business, and Savings Transforming the Mix of Deposits
14 Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits 19% Checking and other demand deposits 31% Savings Time deposits 50% Checking and other demand deposits Savings Time deposits June 30, 2013 December 31, 2017 Checking Growth (6/2013-12/2017) = 85
Slide 16: Our Business Banking Vertical has Fueled our Deposit Growth
15 75% 24% 1% 1,420 2,449 3,067 3,844 4,030 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Q2 18 Business Deposits by Account Type* Business Banking Deposits ($MM) Q4 14 Q4 15 Q4 16 Percent (%) Q4 17 Our Business Banking Vertical has Fueled our Deposit Growth while Generating Significan
Slide 17: BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States
16 BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States BofI Deposits Have National Reach With Customers in Every State Average Deposit Balance Number of Accounts
Slide 18: BofI Customers are Highly Engaged
17 BofI Customers are Highly Engaged Engagement Low Activity High Activity Attributes Low Activity User Basic User Engaged Elite Engaged Engagement Score (0-100) 0s 0 < S < 30 30 ≤ S < 60 ≥ 60 Average Lifetime Balance $100 $4000 $6,000 $50,000 Average # of Services Used - < 5 7 10 Average # of POS -
Slide 19: Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits
18 Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future Plans • Enhanced digital marketing automation integrated to outbound sales group • Products and technology integration targeted to specific industry groups • Create differenti
Slide 20: Diversified Fee / Non-Interest Income
19 Diversified Fee / Non-Interest Income * Excludes securities income Fee Income Mortgage Banking Deposit/ Service Fees Agency Jumbo Structured Settlement Other Cash/Treasury Management Consumer Deposit Multifamily Prepaid Tax Prepayment Fee Payments 64% 7% % Fee Income FY 2017* 22% Gain on Sale – O
Slide 21: Over the Last Five Years, BofI Has Started New Products and Completed Acquisitions
20 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 mortgage • Structured settlement • Business banking • Lottery • Warehouse Lending • Treasury/ cash manage- men
Slide 22: Key Goals of Universal Digital Bank
21 Key Goals of Universal Digital Bank Personalization Self-Service Facilitate Partnerships Customizable Experience Cross-Sell • Artificial intelligence and big data credit models enable quick credit decisions • Customized product recommendations based upon analytical determination of need • Provide
Slide 23: Universal Digital Bank Consumer Platform
22 Universal Digital Bank Consumer Platform Cross-sell Product Development (In-House Apps) Personalization & Segmentation App Store Management • Robo-advisor • Trusts • Third party services/payments • Third-party lending • Auto • IRA • Mortgage • Personal loan • Real-time retention • Next-best actio
Slide 24: Advanced Data Analytics Provides Key Insights Into Customer Engagement
23 Advanced Data Analytics Provides Key Insights Into Customer Engagement, Profitability, and Retention to Enhance Customer Lifetime Throughout the Bank Customer Segmentation Methodology to Understand Usage & Behavior Profitability Analysis at the Individual Customer Level Streamlined Acquisition Pr
Slide 25: We are Expanding our Strategic Partnership with H&R Block
24 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 • Files 1 in every 7 U.S. tax returns • 19.7 million U.S. tax returns per year • 83% of customers receive a refund • 35% franchise-owned • Approximately 2,
Slide 26: Omni Channel Approach for BofI's 2018 Digital Marketing Strategy
25 Omni Channel Approach for BofI’s 2018 Digital Marketing Strategy Digital personas for personalized interactions Introduced BI reporting tool for analytics Enhanced branding, messaging and positioning Social employee engagement Multi-dimensional analysis by geography, customer type, product, media
Slide 27: Holistic Credit Risk Management
26 Holistic Credit Risk Management What We Do Loan Life Cycle Utilize a holistic credit-risk management framework to manage and monitor credit quality at each stage of the loan life cycle, and leverage specialized Credit Tools to optimize monitoring and reporting capabilities Set Appetite Originatio
Slide 28: Monitoring & Management Oversight: Core Products
27 Monitoring & Management Oversight: Core Products • Loan reviews at least quarterly • Project updates at least quarterly • Updated financials at least annually • Site visits & inspections for development projects • Portfolio level monitoring with individual loan reviews completed on an exception b
Slide 29: Best-in-Class Loan Quality
28 (%) BofI Banks $1-10 bn Total Net Charge-Offs Annualized1 Loans in non-accrual to total loans1 (%) BofI Banks $1-10 bn Best-in-Class Loan Quality [CELLR ANGE] [CELLR ANGE] -0.1 0.4 [CELLR ANGE] [CELLR ANGE] 0 1 2 1. From FDIC SDI report at 9/30/17. Total of 511 institutions included in the $1-$10
Slide 30: Bank Provides Appropriate Resources to Manage Credit and Compliance Risk
29 Bank Provides Appropriate Resources to Manage Credit and Compliance Risk Department FTEs June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 Credit and Quality Control 41 57 65 85 Risk, Internal Asset Review, Compliance, Audit and BSA 26 35 44 54
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 Mobile: 858.245.1442 jlai@bofi.com Contact Information