Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (January 2014)
31 slides from Axos Financial's investor presentation, January 2014
Slide 1: BofI Holding, Inc. Investor Presentation
BofI Holding, Inc. Investor Presentation Greg Garrabrants President and Chief Executive Officer January 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: Q1 Fiscal 2014 Financial Highlights
Q1 Fiscal 2014 Financial Highlights Amount Increase Q1 2014 vs. Q1 2013 ($MM or %) (%) Asset growth $666.9 25.5% Deposit growth $340.0 18.3% Loan portfolio growth $520.0 27.2% Return on Equity: 17.7% Loan portfolio origination growth $191.0 68.3% Return on Non-performing assets to Assets: 1.63% tota
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... 2012 The Best of the Biggest Thrifts #1 1 BofI Holding, Inc. (BOFI) CA 154.986 2,874.3 1.44 17.72 14.33 38.05 1.11 0.29 2011 The Best of the Biggest Thrifts #2 2 BofI Holding, Inc. (BOFI) CA 134.61 2,224 1.24 16.09
Slide 5: Also a Top Performer among the Broader Universe of All Public Banks
...and is also a Top Performer among the Broader Universe of All Public Banks and Thrifts Non- 2012 2013 Non-interest Capital performing 2013 2012 Total assets ROAE ROAA income/total ratio Efficiency loans/total rank rank ($000) (%) (%) revenue (%) (%) ratio (%) loans (%) 1 N/A HomeStreet, Seattle,
Slide 6: 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 20% G&A ranking means that only 20% 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 3.66 3.63 Salaries and benefits 0.83 1.53 Premises and equipment 0.16 0.37 Other non-interest 0.67 1.19 expense Total non-interest 1.66 3.09 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 • $3.3 billion asset savings and loan holding company1 • 13-year operating history, publicly traded on NASDA
Slide 9: Well Capitalized for Growth
Well Capitalized for Growth 12-month Growth with Existing Capital at 8% Target and Projected Earnings Over Next Four Quarters $MM 5,000 $732 $4,386 4,000 $370 $3,284 3,000 30% asset 2,000 growth possible with organic earnings and 1,000 excess cash Bank Assets Deploy Existing Capital Leverage Earning
Slide 10: Diversified Branchless Deposit Businesses
Diversified Branchless Deposit Businesses Key Elements Consumer • Demographically targeted brands direct internet • Differentiated products with turn-down product brands options • Exclusive relationships with significant brands, Distribution groups, or employees Partners • Exclusive relationships wi
Slide 11: Distribution Partners
Distribution Partners Focus Current Partner Direct Marketing Retail Event-Based Issuance 10
Slide 12: Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits
Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits Rapid Business Banking Diversified Deposit Base Deposit Growth Percent ($MM) 500 467 Checking 27.2 400 CD’s 314 40.2 300 185 200 124 19.5 Money 100 78 Market 13.1 21 0 Savings Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q
Slide 13: Key Areas of Growth
Key Areas of Growth Growth: Key Growth Areas 09/2012 - 09/2013 Checking balance 258% MMS balance 17% Savings balance -3% CD balance -19% Transaction account balance 85% Gen Y (1978-1994) Number of accounts for segment up 80%, account balances up 72% Gen X (1965-1977) Number of accounts for segment 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 Email • Utilize third party infrastruc
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: 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 90% 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 Cost per Branch Transaction
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-$25K D&I) 20 70%, Chase 23 has publically sta
Slide 21: Primary Business – Lending
Primary Business – Lending Gain-on-sale • Internet and affinity lead sources Mortgage • Self-service operation • Low-fixed costs Banking • High-end portfolio lender Wholesale – “Common Sense" underwriting Single family Jumbo – Quarter to date average LTV of 61% • Product provides vertical integratio
Slide 22: Asset Growth Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Loan Portfolio – End of Last Five Quarters ($ in Thousands) $3,000,000 $2,500,000 $2,433,001 $2,195,331 $2,256,918 $2,155,306 $2,000,000 $1,912,999 $1,500,000 $1,000,000 $500,000 $- Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2
Slide 23: Single Family and Multifamily Portfolio Loan Production Has Increased
Single Family and Multifamily Portfolio Loan Production Has Increased Substantially in the Latest Quarter … Quarterly Loan Production ($MM) Multifamily Single Family 250 250 243 200 200 150 150 141 124 100 100 63 50 50 0 0 June 2013 September 2013 June 2013 September 2013 Pipeline ($MM) 106 148 204
Slide 24: Single Family Production Has Shifted To Jumbo Mortgages
… But Single Family Production Has Shifted To Jumbo Mortgages and Away From Agency Eligible Loans Monthly Loan Production ($MM) Jumbo Mortgages Agency Mortgages $160 $146 $140 $119 $121 $30 $118 $120 $120 $110 $30 $100 $36 $64 $44 $80 $81 $60 $116 $91 $40 $84 $66 $55 $20 $37 $0 May-13 June-13 July-1
Slide 25: First Quarter Loan Growth Reduced by Adjustment in Warehouse and Agency Held For Sale
First Quarter Loan Growth Reduced by Adjustment in Warehouse and Agency Held For Sale of $88 Million $MM 3,000 258 -88 2,504 2,334 Net loan growth 2,000 • Quarter: 8% • Annualized: 32% Adjusted for S.F. Warehouse and agency held for sale 1,000 decline • Quarter: 11% • Annualized: 44% 0 Loans 6/30 Si
Slide 26: Moderate Reduction in Single Family Agency Production From Prior Quarter
Moderate Reduction in Single Family Agency Production From Prior Quarter Compensated by Other Loan Production Areas Loan Pipeline – Last Four Quarters and Current $MM 790 800 677 160 600 143 489 154 473 77 148 84 400 367 66 57 106 425 250 344 200 217 204 93 96 79 42 51 0 FY Q2 FY Q3 FY Q4 FY Q1 10/3
Slide 27: 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 2.14 2 2 0.99 1 1 0.62 0.48 0 0 BofI1 Banks $1-10 bn 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 bill
Slide 28: Loan Diversity – September 30, 2013
Loan Diversity – September 30, 2013 Loan Portfolio1 100% = $2,480 Million Factoring Consumer and 5% Home Equity Other 1% 2% Multifamily SF - Residential 32% 51% CRE 1% C&I - SF Lender Finance C&I 6% 2% 1. Gross loans before premiums, discounts and allowances 27
Slide 29: Non-Interest Income Is Diversified With Significant Growth Outside of Agency Mortgage Banking
Non-Interest Income Is Diversified With Significant Growth Outside of Single Family Agency Mortgage Banking Q1 Q1 ($ in Thousands) Fiscal 2013 Fiscal 2014 Mortgage loan sales: Single family $5,006 $1,301 Multi-family 1,450 685 Other loan sales, primarily -- 3,089 structured settlements Mortgage prep
Slide 30: 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 31: Contact Information
Contact Information 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 30