Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (February 2014)
28 slides from Axos Financial's investor presentation, Feb 6, 2014
Slide 1: BofI Holding, Inc. Investor Presentation
BofI Holding, Inc. Investor Presentation Andy Micheletti Executive Vice President and Chief Financial Officer NASDAQ: BOFI February 2014
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: Q2 Fiscal 2014 Financial Highlights
2 Asset growth Deposit growth Loan portfolio growth Loan portfolio origination growth Non-performing assets to total assets Q4 Net Income Diluted EPS Q2 Fiscal 2014 Financial Highlights Q2 2014 vs. Q2 2013 $694.0 $434.8 $622.0 $265.1 49 bps $13.2 $0.91 24.1% 22.1% 28.9% 79.8% -30 bps 34.7% 30.0% Amo
Slide 4: BofI is Consistently Ranked among the Best of the Biggest Thrifts by SNL Financial
3 BofI is Consistently Ranked among the Best of the Biggest Thrifts by SNL Financial... BofI Holding, Inc. (BOFI) 2 CA 127.12 1,736 1.29 15.44 15.16 39.43 1.51 0.45 2010 The Best of the Biggest Thrifts #2 BofI Holding, Inc. (BOFI) 2 CA 134.61 2,224 1.24 16.09 14.33 42.04 1.20 0.39 2011 The Best of t
Slide 5: Top Performer among the Broader Universe of All Public Banks and Thrifts
4 ...and is also a Top Performer among the Broader Universe of All Public Banks and Thrifts 2013 rank 2012 rank Total assets ($000) 2012 ROAE (%) 2013 ROAA (%) Non-interest income/total revenue (%) Capital ratio (%) Efficiency ratio (%) Non- performing loans/total loans (%) 1 N/A HomeStreet, Seattle
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 1.73% 0.71% 92% Return on equity 18.85% 7.13% 96% G&A 1.80% 2.87% 20% Efficiency ratio 37.66% 68.48% 6% Source: Uniform Bank Performance Report (UBPR) as of 9/30/13 Note: Peer group is all savings
Slide 7: Our Business Model is More Profitable Because Our Costs are Lower
6 Our Business Model is More Profitable Because Our Costs are Lower Salaries and benefits Premises and equipment BofI1 (%) 0.83 0.16 Other non-interest expense 0.67 Total non-interest expense 1.66 Core business margin 2.00 1.53 0.37 1.19 3.09 0.54 Banks $1-$10bn2 (%) Net interest income 3.66 3.63 As
Slide 8: Corporate Profile and Vision
7 Corporate Profile and Vision • $3.6 billion asset savings and loan holding company1 • 13-year operating history, publicly traded on NASDAQ (BOFI) since 2005 • Headquartered in single branch location in San Diego, CA • 323 employees ($11.0 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: Distribution Partners Focus
9 Distribution Partners Focus Current Partner Direct Marketing Retail Event-Based Issuance
Slide 11: Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits
10 Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits 35.9 11.5 21.7 30.9 Checking Money Market Savings CD’s Note: 100% of deposits equals $2,403 MM Diversified Deposit Base Rapid Business Banking Deposit Growth 688 467 314 185 124 78 0 100 200 300 400 500 6
Slide 12: Key Growth Areas
11 Key Growth Areas Growth: 12/2012 - 12/2013 Checking balance 281% MMS balance 34% Savings balance - 9% CD balance - 41% Transaction account balance 117% Key Areas of Growth
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) • Utilization of third party and internal data • Coordinated multi-channel marketing • Utilize third party infrastructure (e.g., ATMs to dep
Slide 14: The Tipping Point for Consumer and Business Banking Customers
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, enhanc
Slide 15: Branch Transaction Activity Migrating to Mobile/Online Channels
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 2010
Slide 16: Branch Traffic has Declined Approximately 4.0% per Year
15 Branch Traffic has Declined Approximately 4.0% per Year for an Aggregated Decline of 90% 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 17: The Rollout of Remote Deposit Capture has had an Immediate Impact – Chase Example
16 The Rollout of Remote Deposit Capture has had an Immediate Impact – Chase Example % of Consumer Deposits Through Tellers1 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 p
Slide 18: 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 (%) 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/ mobi
Slide 19: Branch Banks Cannot Cost-Effectively Serve Most Customers
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 >$100K in D&I and make up ~55% of revenue
Slide 20: Primary Business – Lending
19 Primary Business – Lending Lending Single family Multifamily C&I Lending Gain-on-sale Mortgage Banking Wholesale Jumbo Retail Wholesale Lender Finance Healthcare Finance • Internet and affinity lead sources • Self-service operation • Low-fixed costs • High-end portfolio lender – “Common Sense" un
Slide 21: Asset Growth Driven by Strong and Profitable Organic Loan Production
20 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 55% 55% 55% 55% 55% 54% 54% 55% 56% 55% Average Loan to Value $2,155,306 $2,195,331 $2,256,918 $2,433,001 $2,777,325 $- $500,000
Slide 22: Total Loan Pipeline at Record High
21 Total Loan Pipeline at Record High C&I Multifamily Jumbo Single Family Agency 79 217 250 204 344 497 57 66 106 148 92 77 84 143 151 3742 9693 0 200 400 600 800 $MM 367 489 473 677 777 FY Q2 2013 FY Q3 2013 FY Q4 2013 FY Q1 2014 FY Q2 2014 Loan Pipeline – Last Four Quarters and Current
Slide 23: Single Family Production Shifted to Jumbo Mortgages
22 … with Single Family Production shifted to Jumbo Mortgages and Away From Agency Eligible Loans Jumbo Mortgages Agency Mortgages Monthly Loan Production ($MM) $66 $84 $91 $116 $106 $127 $44 $36 $30 $30 $24 $24 $0 $20 $40 $60 $80 $100 $120 $140 $160 July-13 August-13 September-13 October-13 Novembe
Slide 24: Best-in-Class Asset Quality
23 0.62 2.14 0 1 2 3 4 (%) BofI1 Banks $1-10 bn Non-current (30 days+) loans to total loans1 Assets in non-accrual to total assets1 0.48 0.99 0 1 2 3 4 (%) BofI1 Bank $1-10 bn 1. As reported in FDIC SDI report at 9/30/13. Total of 450 institutions included in the $1-$10 billion group Best-in-Class A
Slide 25: Loan Portfolio – Loan Diversity, December 31, 2013
24 Loan Portfolio1 100% = $2,828 Million SF - Residential 52% C&I 3% C&I - SF Lender Finance 7% CRE 1% Multifamily 31% Home Equity 1% Factoring 4% Consumer and Other 1% 1. Gross loans before premiums, discounts and allowances Loan Diversity – December 31, 2013
Slide 26: Non-Interest Income Is Diversified With Significant Growth Outside of Single Family Agency
25 Non-Interest Income Is Diversified With Significant Growth Outside of Single Family Agency Mortgage Banking ($ in Thousands) Q2 Fiscal 2013 Q2 Fiscal 2014 Mortgage loan sales: Single family $4,168 $1,738 Multifamily 1,410 1,400 Other loan sales, primarily structured settlements -- 1,048 Mortgage
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 BofI Holding, Inc. Phone: +1-858-350-6203 greg.garrabants@bofifederalbank.com www.bofiholding.com Investor Relations BofI Holding, Inc. investors@bofi.com www.bofiholding.com Contact Information