Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — 2015 Raymond James US Banks Conference
32 slides from Axos Financial's conference presentation, Sep 9, 2015
Slide 1: 2015 Raymond James US Banks Conference
NASDAQ: BOFI September 2015 BOFI HOLDING, INC. 2015 Raymond James US Banks Conference
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: Q4 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 Q4 2015 vs. Q4 2014 $1,420.7 $1,410.4 $1,395.8 $171.4 55 bps $24.4 $1.54 32.3% 46.4% 39.5% 25.2% 9 bps 52.4% 41.3% Amount ($MM or %) Increase (%) Return
Slide 4: BofI is Consistently Ranked among the Best of the Biggest Thrifts
3 #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 BofI Holding, Inc. (BOFI) 1 CA 167.418 3,568.3 1.54 17.79 15.36 40.70 0.63 0.03 BofI is Consistently Ranked among th
Slide 5: 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 1.67% 0.77% 93% Return on equity 18.97% 6.75% 95% G&A 1.37% 2.66% 15% Efficiency ratio 30.52% 67.93% 3% Source: Uniform Bank Performance Report (UBPR) as of 3/31/15 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 (%) 0.69 0.12 Other non-interest expense 0.55 Total non-interest expense 1.36 Core business margin 2.53 1.51 0.35 1.13 2.99 0.52 Banks $1-$10bn2 (%) Net interest income 3.89 3.51 As % of average assets 1. BofI Federal Bank only for the three month
Slide 8: Corporate Profile and Vision
7 Corporate Profile and Vision • $5.8 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 • 467 employees ($12.5 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: Diversified and Improving Deposit Mix
9 688 1,113 1,420 1,700 2,060 2,181 2,449 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 34.4% 36.5% 11.3% 17.8% Checking Money Market Savings CD’s Note: 100% of deposits equals $4,451.9 MM as of 06/30/2015 Diversified Deposit Base Rapid Business Banking Deposit Growth ($MM) Q2 14 Q3 14 Q4 14 Q2
Slide 11: Key Areas of Growth
10 Key Growth Areas Growth1 06/2014 - 06/2015 Checking balance 17% MMS balance 138% Savings balance 130% CD balance - 38% Transaction account balance 58% 1. Growth is shown for core deposits Key Areas of Growth
Slide 12: Building a Better Real-Time Data Engine
11 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 13: Vision for Multi-Channel Customer Service and Transactions
12 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 14: The Tipping Point for Consumer and Business Banking Customers
13 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 15: Retail Customers are Willing to Switch to Branchless Banks
14 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 16: Customers Prefer Electronic Channels for Product Awareness
15 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 17: Splintered Value Chain with Banking Offerings by Non-Banks
16 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 18: Branch Transaction Activity Migrating to Mobile/Online Channels
17 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 19: Branch Traffic has Declined Approximately 4.0% per Year
18 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 20: Remote Deposit Capture Impact – Chase Example
19 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 21: Bank Deposit Revenue Reduced; Branch Transaction Cost 40 Times Call Center
20 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 22: Branch Banks Cannot Cost-Effectively Serve Most Customers
21 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 >$100K in D&I and make up ~55% of reve
Slide 23: Lending Businesses
22 Lending Single family Multifamily C&I Lending Gain-on-sale Mortgage Banking Wholesale Jumbo Retail Wholesale Lender Finance ABL • Internet and affinity lead sources • Self-service operation • Low-fixed costs • High-end portfolio lender – “Common Sense" underwriting – Q4 2015 average LTV of 62% •
Slide 24: Asset Growth Driven by Strong Organic Loan Production
23 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 55% 56% 53% 52% 52% 57% 57% 56% 57% 58% Average Loan to Value $3,532,841 $3,959,155 $4,303,661 $4,641,262 $4,928,618 $- $1,00
Slide 25: Loan Pipeline – Last Five Quarters
24 C&I Multifamily Jumbo Single Family Agency 75 85 63 129 136 445 481 438 412 467 146 156 107 125 102 255 217 241 290 216 0 200 400 600 800 1,000 $MM 939 849 956 FY Q4 2014 FY Q1 2015 FY Q2 2015 FY Q3 2015 FY Q4 2015 Loan Pipeline – Last Five Quarters Total Loan Pipeline At Record High 921 921
Slide 26: Coordinated Banking Digital Strategy
25 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 27: Best-in-Class Loan Quality
26 0.05 0.22 0 1 (%) BofI Banks $1-10 bn Total Charge-Offs1 Loans in non-accrual to total loans1 0.71 1.28 0 1 2 (%) BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 03/31/15 YTD. Total of 480 institutions included in the $1-$10 billion group. Best-in-Class Loan Quality
Slide 28: Loan Diversity – June 30, 2015
27 Loan Portfolio1 100% = $5,001 Million SF - Residential 62% C&I 5% C&I - SF Lender Finance 5% CRE/Home Equity/Consumer and Other 2% Multifamily 24% Factoring 2% 1. Gross loans before premiums, discounts and allowances Loan Diversity – June 30, 2015
Slide 29: H&R Block Transaction Overview
28 H&R Block Transaction Overview 7-Year Program Management Agreement H&R Block Bank Deposit Assumption • Current Emerald prepaid debit card • Emerald Advance Line of Credit • Refund Transfer • Credit Card (run-off) Exclusive cross-sell (future): • Mortgage • IRAs • ~$419 million dollars of deposits
Slide 30: H&R Block Benefits
29 H&R Block Benefits *After OCC review Strategic Benefits • Exclusive cross-sell opportunities for mortgages, IRAs and potentially other products (*) to 1/6 of US households served by H&R Block • 257,000 new deposit accounts with cross-marketing opportunities • Adds consistent, high margin fee-base
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@bofifederalbank.com Contact Information
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