Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (May 2017)
32 slides from Axos Financial's investor presentation, May 2017
Slide 1: BofI Holding, Inc. Investor Presentation May 2017
BOFI HOLDING, INC. Investor Presentation May 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 3.93 3.44 Salaries and benefits 0.80 1.48 Premises and equipment 0.14 0.33 Other non-interest 0.50 1.15 expense Total non-interest 1.44 2.96 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 Third Quarter Highlights Compared with Fiscal 2016 Third Quarter
Fiscal 2017 Third Quarter Highlights Compared with Fiscal 2016 Third Quarter Asset Growth Deposit Growth $ Millions $ Millions 10,000 8,700 8,000 6,800 7,704 12.9% 12.4% 8,000 6,048 6,000 6,000 4,000 4,000 2,000 2,000 0 0 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Net Income Diluted EPS $ Millions $ Diluted EP
Slide 6: Fiscal 2016 Highlights Compared with Fiscal 2015
Fiscal 2016 Highlights Compared with Fiscal 2015 Asset Growth Deposit Growth $ Millions $ Millions 8,000 7,601 8,000 30.5% 6,044 5,824 35.8% 6,000 6,000 4,452 4,000 4,000 2,000 2,000 0 0 FY 2015 FY 2016 FY 2015 FY 2016 Net Income Diluted EPS $ Millions Diluted EPS 150 2 1.85 119.3 38.1% 44.3% 2 1.34
Slide 7: Diluted EPS and Return on Equity Consistently Strong Despite Increase in Tier 1 Capital Ratios
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 % 2.0 20 19.43 1.85 18.34 17.57 17.89 16.95 15.17 1.5 15 32% CAGR 1.35 1.0 0.97 10 0.75 0.61 0.5 0.47 5 0.0 0 2011 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 96% on ROE means that the Bank outperformed 96% of all banks. The 16% G&A ranking means that only 16% 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 Pilot launch in January 2017 Single family Jumbo Warehouse Lending Multifamily Commercial Real Estate Small Balance Commercial Lender Finance Lending ABL C&I Lending Factoring Bank Loans Large Balance Commercial/Specialty Real Estate Small busin
Slide 10: Loan Diversity – March 31, 2017
Loan Diversity – March 31, 2017 Loan Portfolio1 100% = $7,096 Million Factoring 2% Multifamily 22% CRE/Home Equity/Consumer and Other 4% SF – Residential 56% C&I – SF Lender Finance 4% C&I 12% 1. Gross loans and leases before premiums, discounts and allowances 9
Slide 11: Asset Growth Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $8,000,000 $7,020,700 $7,000,000 $6,811,470 $6,549,742 $6,354,679 $6,034,700 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Q3 2016
Slide 12: Loan Pipeline Remains Strong
Loan Pipeline Remains Strong FY 2017 Q3 $M 1,200 $1,009 1,000 $909 $100 $100 800 $141 600 $579 $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 5.0 lines 5 4.3 o Multifamily geographic 1.4 expansion 4 43.3% 5-yr CAGR 1.0 o Agency and jumbo 3.0 mortgage channel 3 0.7 expansion 2.1 2 o Small Balance Commercial 3.6 Real Estate ex
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 While Transforming the Mix
Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits June 30, 2013 March 31, 2017 100% of Deposits = $2.1 billion 100% of Deposits = $6.8 billion Checking and Savings – IRA other demand Time deposits deposits 14% 4% 19% Checking and other demand 43% d
Slide 16: Business Banking Vertical has Fueled Deposit Growth and Fee Income
Our Business Banking Vertical has Fueled our Deposit Growth while Generating Significant Fee Income Business Deposits by Account Type* Business Banking Deposits Percent (%) ($MM) 4,000 3,524 Time Deposits 3,500 4% 3,067 3,000 2,486 2,500 30% 66% 2,000 Savings & MMDA Checking and other demand deposit
Slide 17: Customer Base and Deposit Volume 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 Strong Enough to Change the Deposit Mix
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 integrated to outbound sales group 6,044,051 6,000,000 35.2% • Products and technology integration 5-yr CAGR t
Slide 20: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income FY 2016 Agency Mortgage Jumbo 17% Banking Multifamily Structured Gain on Sale – Settlement 24% Other Other Cash/Treasury Fee Income Management Consumer Deposit Deposit/ Prepaid 55% Service Fees Tax Payments Prepayment 4% Fee * Excludes securities in
Slide 21: Five Years of New Products, Distribution Channels, and Acquisitions
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: Leveraging API Stack to Integrate Enrollment Platform into H&R Block Tax Software
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 • Accelerate cross-selling strategies on • Files 1 in every 7 U.S. tax returns new and existing IRAs •
Slide 26: Omni Channel Approach for 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 (%) (%) 1 2 0.99 1 0.40 0.50 0.05 0 0 BofI Banks $1-10 bn BofI Banks $1-10 bn 1. As reported in FDIC SDI report at 12/31/16. Total of 506 institutions included in the $1-$10 billion group. 28
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 2013 2014 2015 2016 Credit and Quality Control 27 41 57 65 Risk, Internal Asset Review, Compliance, Audit 16 26 35 44 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