Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Day (November 2016)
28 slides from Axos Financial's investor day presentation, Nov 10, 2016
Slide 1: BofI Holding, Inc. Investor Presentation
0 NASDAQ: BOFI November 2016 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: Fiscal 2017 First Quarter Highlights Compared with Fiscal 2016 First Quarter
2 Fiscal 2017 First Quarter Highlights Compared with Fiscal 2016 First Quarter 6,260 7,855 0 2,000 4,000 6,000 8,000 10,000 Q1 2016 Q1 2017 $ Millions Asset Growth 25.5% 25.5 28.9 0 10 20 30 40 Q1 2016 Q1 2017 $ Millions Net Income 13.3% 4,755 6,324 0 2,000 4,000 6,000 8,000 Q1 2016 Q1 2017 $ Millio
Slide 4: Fiscal 2016 Highlights Compared with Fiscal 2015
3 Fiscal 2016 Highlights Compared with Fiscal 2015 5,824 7,601 0 2,000 4,000 6,000 8,000 FY 2015 FY 2016 $ Millions Asset Growth 30.5% 82.7 119.3 0 50 100 150 FY 2015 FY 2016 $ Millions Net Income 44.3% 4,452 6,044 0 2,000 4,000 6,000 8,000 FY 2015 FY 2016 $ Millions Deposit Growth 35.8% 1.34 1.85 0
Slide 5: Diluted EPS and Return on Equity Have Been Consistently Strong
4 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) 1.85 1.35 0.97 0.75 0.61 0.47 0.0 0.5 1.0 1.5 2.0 2014 $ per share 2013 2011 2012 2016 32% CAGR 2015 19.43 18.3417.8917.57 16.95 15.17
Slide 6: Diverse Lending Business
5 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 ABL Warehouse Lending Factoring Bank Loans Auto Overdraft Lines Large Balance Commercial/Specialty Real
Slide 7: Loan Portfolio
6 Loan Portfolio1 100% = $6,606 Million SF – Residential 60% C&I 8% C&I – SF Lender Finance 5% CRE/Home Equity/Consumer and Other 4% Multifamily 21% Factoring 2% 1. Gross loans and leases before premiums, discounts and allowances Loan Diversity – September 30, 2016
Slide 8: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
7 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 52% 52% 52% 54% 55% 57% 57% 58% 58% 58% Average Loan to Value $5,225,319 $5,645,272 $6,034,700 $6,354,679 $6,605,747 $- $1,000
Slide 9: Loan Pipeline Remains Strong
8 Loan Pipeline Remains Strong FY 2017 Q1 $1,105 $135 $970 $113 $180 $132 $545 0 200 400 600 800 1,000 1,200 Total Single Family Warehouse $M Jumbo Single Family Agency Single Family Commercial & Industral Lending Multifamily / Small Balance Commercial Primary Pipeline
Slide 10: Loan Origination Growth
9 0.6 0.7 1.0 2.3 3.3 3.6 0.7 1.1 0.7 1.0 1.4 0 1 2 3 4 5 Loan Origination Growth 69.2% 53.2% 42.0% 42.2% • Organic growth in existing business lines o Multifamily geographic expansion o Agency and jumbo mortgage channel expansion o Small Balance Commercial Real Estate expansion o Large Balance Comm
Slide 11: Deposit Growth in Checking, Business, and Savings While Transforming the Mix of Deposits
10 Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits 19% Checking and other demand deposits 31% Savings Time deposits 50% 44% Checking and other demand deposits 34% Savings Time deposits 17% June 30, 2013 September 30, 2016 Checking Growth (6/2013-
Slide 12: Business Banking Vertical Has Fueled Deposit Growth
11 314 1,420 2,486 3,067 3,162 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 3,000 3,300 Business Deposits by Account Type* Business Banking Deposits ($MM) Q4 13 Q4 14 Q4 15 Q4 16 Percent (%) Q1 17 Our Business Banking Vertical has Fueled our Deposit Growth while Generating Significant Fee Incom
Slide 13: BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States
12 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 14: BofI Customers are Highly Engaged
13 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 15: Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits
14 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 16: Over the Last Five Years, BofI Has Started New Products, Added Channels, Completed Acquisitions
15 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 17: Universal Digital Bank Consumer Platform
16 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 18: Advanced Data Analytics Provides Key Insights Into Customer Engagement
17 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 19: Leveraging Our API Stack to Integrate Into H&R Block's Tax Software
18 We are Also Leveraging Our API Stack to Integrate Our Consumer Enrollment Platform into H&R Block’s Tax Software H&R Block Overview Key Steps for Tax Season 2017 • 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 r
Slide 20: Omni Channel Approach for BofI's 2017 Digital Marketing Strategy
19 Omni Channel Approach for BofI’s 2017 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 21: Bank of Internet Website Upgrade
20 Bank of Internet Website Upgrade Visual Design Research Combined with Improved UI/UX - Usability Backend Performance • Redesigned Bank Of Internet USA website awarded Best-In-Class Website by Interactive Media Awards (IMA) in 2016 • The result has been a significant increase in the organic traffi
Slide 22: Consumer Unsecured
21 Consumer Unsecured • On-line loan application • Lead integration via API’s with lead aggregators • Loan amounts between $5,000 and $35,000 • Terms between 36 and 60 months • Anticipated average credit score between 710 and 725 • Healthy Origination Fees and Interest Rates Website and Product
Slide 23: What makes BofI different compared to other lenders?
22 We ask more questions and interact with the applicant. While speed is important, it is not the sole driver to our platform. Customer experience is essential, but so is making solid credit decisions. We have lower cost of funds and origination costs. We will price our loans properly for the risk t
Slide 24: Bank Provides Appropriate Resources to Manage Credit and Compliance Risk
23 Bank Provides Appropriate Resources to Manage Credit and Compliance Risk Department FTEs June 30, 2013 June 30, 2014 June 30, 2015 June 30, 2016 Credit and Quality Control 27 41 57 65 Risk, Internal Asset Review, Compliance, Audit and BSA 16 26 35 44
Slide 25: Monitoring & Management Oversight: Core Products
24 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 26: Best-in-Class Loan Quality
25 0.02 0.22 0 1 (%) BofI Banks $1-10 bn Total Net Charge-Offs Annualized 1 Loans in non-accrual to total loans1 0.49 1.04 0 1 2 (%) BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 06/30/16. Total charge-offs annualized for BofI reflects only net charge-offs and does not include write-downs
Slide 27: Investment Summary
26 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 28: Contact Information
27 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