Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Raymond James IIC March 2015
32 slides from Axos Financial's conference presentation, Mar 2, 2015
Slide 1: BofI Holding, Inc. Investor Presentation
BofI Holding, Inc. Investor Presentation Greg Garrabrants President and Chief Executive Officer Raymond James IIC March 2015 NASDAQ: BOFI
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: Q2 Fiscal 2015 Financial Highlights
Q2 Fiscal 2015 Financial Highlights Amount Increase Q2 2015 vs. Q2 2014 ($MM or %) (%) Asset growth $1,626.4 45.6% Deposit growth $1,602.3 66.7% Loan portfolio growth $1,526.3 55.0% Return on Equity: 19.08% Loan portfolio origination growth $205.5 34.4% Return on Non-performing assets to Assets: 1.5
Slide 4: BofI is Consistently Ranked among the Best of the Biggest Thrifts by SNL Financial
BofI is Consistently Ranked among the Best of the Biggest Thrifts by SNL Financial... 2013 The Best of the Biggest Thrifts #1 1 BofI Holding, Inc. (BOFI) CA 167.418 3,568.3 1.54 17.79 15.36 40.70 0.63 0.03 2012 The Best of the Biggest Thrifts #1 1 BofI Holding, Inc. (BOFI) CA 154.986 2,874.3 1.44 17
Slide 5: Top Performer among the Broader Universe of all Public Banks and Thrifts
...and is also a Top Performer among the Broader Universe of all Public Banks and Thrifts Non- 2013 2013 Non-interest Capital performing 2014 2013 Total assets ROAE ROAA income/total ratio Efficiency loans/total rank rank ($000) (%) (%) revenue (%) (%) ratio (%) loans (%) 1 79 Central Pacific Financ
Slide 6: 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 12% G&A ranking means that only 12% of Banks spend less on G&A than BofI. Peer group includes savings banks greater than $1 billion dollars. BofI Federal Bank Peer Group Perc
Slide 7: 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 4.02 3.58 Salaries and benefits 0.71 1.47 Premises and equipment 0.12 0.35 Other non-interest 0.53 1.24 expense Total non-interest 1.36 3.06 expense Core busines
Slide 8: Corporate Profile and Vision
Corporate Profile and Vision Vision We aspire to be the most innovative branchless bank in the United States providing products and services superior to our branch based competitors Key Facts • $5.2 billion asset savings and loan holding company1 • 14-year operating history, publicly traded on NASDA
Slide 9: Diversified Branchless Deposit Businesses
Diversified Branchless Deposit Businesses Key Elements Consumer • Demographically targeted brands direct internet • Differentiated products with turn-down product brands options • Exclusive relationships with significant brands, Distribution groups, or employees Partners • Exclusive relationships wi
Slide 10: Distribution Partners
Distribution Partners Focus Current Partner Direct Marketing Retail Event-Based Issuance 9
Slide 11: Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits
Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits Rapid Business Banking Diversified Deposit Base Deposit Growth Percent ($MM) 2,400 2,060 2,100 CD’s 1,700 20.3 1,800 1,420 41.2% 1,500 Savings 1,200 1,113 Checking 11.8 900 688 600 467 26.7 Money 314 300 Mar
Slide 12: Key Areas of Growth
Key Areas of Growth Growth1 Key Growth Areas 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 11
Slide 13: Building a Better Real-Time Data Engine to Drive Customer Touch-Points
We are Building a Better Real-Time Data Engine to Drive Customer Touch-Points Based on a Wide Range of Data Sources Inbound Outbound Direct Mail Direct Mail EMail EMail Call Center Call Center Website Website Mobile app/ Mobile app/ SMS SMS • Advanced multichannel integration • Pervasive analytics u
Slide 14: BofI's Vision for Multi-Channel Customer Service and Transactions
BofI's Vision for Multi-Channel Customer Service and Transactions • Aggressive outbound − segmented call lists based upon behavioral segmentation (e.g., usage) Voice • Utilization of third party and internal data ATM • Coordinated multi-channel marketing Direct • Utilize third party infrastructure E
Slide 15: The Tipping Point for Consumer and Business Banking Customers
The Tipping Point for Consumer and Business Banking Customers Internet Banking/ New Preferred Method • Consumers are disenchanted with traditional banks % 80 • Cost structure of business and consumer accounts are significant concerns 67 64 60 58 • Technology has removed final barriers to branchless
Slide 16: Retail Customers are Willing to Switch Primary Accounts to Branchless Banks
Retail Customers are Willing to Switch Primary Accounts to Branchless Banks % Willing To Switch Primary Account To % Of Retail Banking Customers - Branchless Bank Transactional vs. Relationship % 40 39% Advice/ relationship 29% 30 29% 27% average 20 16% 71% Transactional 10 0 18-34 35-55 55+ years o
Slide 17: Customers Prefer to Become Aware of Financial Products through Electronic Channels
Customers Prefer to Become Aware of Financial Products and Services through Electronic Channels % of customers Email 36 Online 11 53% electronic Telephone call/online chat/ 6 video conference In person with account specialist 15 26% in person In person with teller 11 0 10 20 30 40 Source: Mercator A
Slide 18: Splintered Value Chain with Primary Banking Offerings by Non-Banks
Splintered Value Chain with Primary Banking Service Offerings by Non-Banks Appear to be Well Accepted Retail Bank Customers Willing To Retail Bank Customers Willing to Bank Bank With Specific Companies With Alternative Providers By Age Square 72% Age PayPal 55% 18-34 72% T-Mobile (U.S. Only) 27% Cos
Slide 19: Branch Transaction Activity Migrating to Mobile/Online Channels
Branch Transaction Activity Migrating to Mobile/Online Channels U.S. Banking Transactions by Channel U.S. Branch Transaction Activity2 (Billions)1 (average annual change – 2008-11) 100 15% of transactions Deposit -7% to -9% at branches 75 ~85% of Withdrawal -3% to -6% transactions 50 non-branch Chec
Slide 20: Branch Traffic has Declined Approximately 4.0% per Year
Branch Traffic has Declined Approximately 4.0% per Year for an Aggregated Decline of 51% Over the Last 16 Years Average Branch Monthly Volume – Teller Transactions Thousands "Branch foot-traffic is 15 plummeting and branches 13.0 ~4.0% CAGR are largely idle, except for 11.4 the activities of the 10.
Slide 21: Rollout of Remote Deposit Capture Impact – Chase Example
The Rollout of Remote Deposit Capture has had an Immediate Impact – Chase Example % of deposit transactions completed at retail branch 100 90 85 39 points 80 74 62 60 55 51 40 20 0 4Q 07 4Q 08 4Q 09 4Q 10 4Q 11 4Q 12 1. Chase data includes non-Chase ATMs Source: Gordon Smith, "Consumer & Community B
Slide 22: Bank Deposit Revenue Sources Reduced; Branch Transaction Cost 40 Times Call Center
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 (%) Cost Per Transaction % $ 3.97 0.8 4 0.65 0.6 3 0.40 0.4 2 0.2 1 0.59 0.56 0.10 0.0 0 2002 2012 Branch ATM Online/ Call mobile center Sourc
Slide 23: Branch Banks Cannot Cost-Effectively Serve Most Customers
Branch Banks Cannot Cost-Effectively Serve Most Customers Segment 5 ($500K+ D&I) 8 >30% of 12 Chase households Segment 4 ($100-$500K D&I) 19 have >$100K 19 in D&I and make up ~55% of revenue Segment 3 ($25-$100K D&I) 21 23 Of the remaining Segment 2 ($5K-$25K D&I) 20 70%, Chase 23 has publically sta
Slide 24: Primary Business – Lending
Primary Business – Lending Gain-on-sale • Internet and affinity lead sources Mortgage • Self-service operation • Low-fixed costs Banking • High-end portfolio lender Wholesale – “Common Sense" underwriting Single family Jumbo – Q2 2015 average LTV of 62% • Product provides vertical integration Wareho
Slide 25: Asset Growth Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Loan Portfolio – End of Last Five Quarters ($ in Thousands) $5,000,000 $4,500,000 $4,303,661 $3,959,155 $4,000,000 $3,532,841 $3,500,000 $3,101,408 $3,000,000 $2,777,325 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500
Slide 26: Total Loan Pipeline Near Record High
Total Loan Pipeline Near Record High Loan Pipeline – Last Four Quarters and Current $MM 1,000 939 921 849 777 217 800 255 241 151 167 156 600 92 146 157 107 400 481 497 445 438 386 200 67 75 85 63 0 37 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 2014 2014 2014 2015 2015 C&I Multifamily Jumbo Single Family Agency
Slide 27: Coordinated Banking Digital Strategy
Coordinated Banking Digital Strategy • New digital marketing technology stack • Enhancements to data warehouse • Enterprise CRM implementation 1 • Consistent user Infrastructure experience across all 2 7 • Unique digital personas for major touch-points tailored interactions • Organizational User Dat
Slide 28: Best-in-Class Asset Quality
Best-in-Class Asset Quality Assets in non-accrual to Total Charge-Offs1 total assets1 (%) (%) 1 1 0.73 0.52 0.31 0.04 0 0 BofI Banks $1-10 bn BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 9/30/14. Total of 463 institutions included in the $1-$10 billion group 27
Slide 29: Loan Diversity – December 31, 2014
Loan Diversity – December 31, 2014 Loan Portfolio1 100% = $4,373 Million Factoring 3% Multifamily 26% CRE/Home Equity/Consumer and Other SF - Residential 1% 60% C&I - SF Lender Finance 7% C&I 3% 1. Gross loans before premiums, discounts and allowances 28
Slide 30: H&R Block Transaction Overview
H&R Block Transaction Overview Program Management H&R Block Bank Deposit Agreement Assumption • Current Emerald prepaid • $450-550 million dollars of debit card deposits between 11 and 15 basis points of cost • Emerald Advance Line of Credit ‒ 300,000 IRA accounts • Refund Transfer ‒ Over 3 million
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 ext. 1609 Mobile: 858.245.1442 jlai@bofifederalbank.com 31