Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (July 2014)
28 slides from Axos Financial's investor presentation, Jul 29, 2014
Slide 1: BofI Holding, Inc. Investor Presentation
BofI Holding, Inc. Investor Presentation Greg Garrabrants President and Chief Executive Officer July 29, 2014 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: Q3 Fiscal 2014 Financial Highlights
Q3 Fiscal 2014 Financial Highlights Amount Increase Q3 2014 vs. Q3 2013 ($MM or %) (%) Asset growth $889.2 30.0% Deposit growth $730.0 34.7% Loan portfolio growth $906.1 41.3% Return on Equity: 17.94% Loan portfolio origination growth $383.2 230.0% Return on Non-performing assets to Assets: 1.57% to
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 94% on ROE means that the Bank outperformed 94% of all Banks. The 11% G&A ranking means that only 11% 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 3.93 3.55 Salaries and benefits 0.69 1.52 Premises and equipment 0.14 0.38 Other non-interest 0.58 1.17 expense Total non-interest 1.41 3.07 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 • $3.9 billion asset savings and loan holding company1 • 14-year operating history, publicly traded on NASDA
Slide 9: Diversified Branchless Deposit Businesses
Diversified Branchless Deposit Businesses Key Elements Consumer • Demographically targeted brands direct internet • Differentiated products with turn-down product brands options • Exclusive relationships with significant brands, Distribution groups, or employees Partners • Exclusive relationships wi
Slide 10: Distribution Partners
Distribution Partners Focus Current Partner Direct Marketing Retail Event-Based Issuance 9
Slide 11: Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits
Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits Rapid Business Banking Diversified Deposit Base Deposit Growth Percent ($MM) 1,200 1,113 1,100 1,000 900 CD’s 30.6 Checking 800 40.8 688 700 600 500 467 400 314 9.2 300 185 Savings 200 124 19.4 100 0 Money Q
Slide 12: Key Areas of Growth
Key Areas of Growth Growth: Key Growth Areas 3/2013 - 3/2014 Checking balance 397% MMS balance 52% Savings balance - 17% CD balance - 46% Transaction account balance 186% 11
Slide 13: 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 14: 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 15: 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 16: 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 17: 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 18: The Rollout of Remote Deposit Capture has had an Immediate Impact – Chase Example
The Rollout of Remote Deposit Capture has had an Immediate Impact – Chase Example % of Consumer Deposits Through Tellers1 % 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 Banking" 2/2
Slide 19: Bank Deposit Revenue Sources Reduced and 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 20: 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-$25K D&I) 20 70%, Chase 23 has publically sta
Slide 21: Primary Business – Lending
Primary Business – Lending Gain-on-sale • Internet and affinity lead sources Mortgage • Self-service operation • Low-fixed costs Banking • High-end portfolio lender Wholesale – “Common Sense" underwriting Single family Jumbo – Quarter to date average LTV of 59% • Product provides vertical integratio
Slide 22: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Loan Portfolio – End of Last Five Quarters ($ in Thousands) $3,500,000 $3,101,408 $3,000,000 $2,777,325 $2,433,001 $2,500,000 $2,195,331 $2,256,918 $2,000,000 $1,500,000 $1,000,000 $500,000 $‐ Q3 2013 Q4 2013 Q1 2014 Q
Slide 23: Total Loan Pipeline at Record High
Total Loan Pipeline at Record High Loan Pipeline – Last Four Quarters and current $MM 1,000 921 777 777 800 255 677 151 167 600 143 146 92 473 157 148 84 400 106 497 445 386 200 344 204 79 67 75 0 42 37 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 2013 2013 2014 2014 2014 C&I Multifamily Jumbo Single Family Agency
Slide 24: Best-in-Class Asset Quality
Best-in-Class Asset Quality Non-current (30 days+) loans Assets in non-accrual to to total loans1 total assets1 (%) (%) 4 4 3 3 2 1.82 2 1 1 0.87 0.60 0.49 0 0 BofI Banks $1-10 bn BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 3/31/14. Total of 452 institutions included in the $1-$10 billio
Slide 25: Loan Diversity – March 31, 2014
Loan Diversity – March 31, 2014 Loan Portfolio1 100% = $3,154 Million Factoring Home Equity 3% Consumer and 1% Other 1% Multifamily 29% SF - Residential 54% CRE 1% C&I - SF Lender Finance 7% C&I 4% 1. Gross loans before premiums, discounts and allowances 24
Slide 26: Summary of H&R Block Transaction
Summary of H&R Block Transaction • Estimated annualized revenue of $26 million dollars with pre-tax profit of $19-22 million dollars • $450-550 million dollars of deposits between 11 and 15 basis points of cost 300,000 IRA accounts Over 3 million Emerald Card accounts • No deposit premium or pur
Slide 27: 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 28: Contact Information
Contact Information COMPANY Greg Garrabrants, President and CEO BofI Holding, Inc. investors@bofi.com www.bofiholding.com Investor Relations Johnny Lai, CFA, Senior Analyst MZ Group Phone: +1-949-259-4989 Mobile: +1-626-318-0411 jlai@mzgroup.us www.mzgroup.com 27