Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Sandler O'Neill & Partners 2012 West Coast Financial Services Conference
23 slides from Axos Financial's conference presentation, Mar 6, 2012
Slide 1: Sandler O'Neill & Partners 2012 West Coast Financial Services Conference
Sandler O'Neill & Partners 2012 West Coast Financial Services Conference March 6, 2012 Andy Micheletti Executive Vice President and Chief Financial Officer
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 2012 Financial Highlights
Q2 Fiscal 2012 Financial Highlights Q2 2012 vs Q2 2011 Amount ($M or %) Increase (%) Asset growth $567.3 33.9% Deposit growth $436.9 39.1% Return on Loan portfolio growth $523.3 52.2% Equity: 15.6% 84.2% Return on Loan origination growth $175.9 Assets: 1.23% Non-performing assets to 64 bps -61 bps t
Slide 4: BofI is Consistently Ranked Among the Best of the Biggest Thrifts by SNL Financial
BofI is Consistently Ranked Among the Best of the Biggest Thrifts by SNL Financial 2010 The Best of the Biggest Thrifts #2 2 BofI Holding, Inc. (BOFI) CA 127.12 1,736 1.29 15.44 15.16 39.43 1.51 0.45 2009 The Best of the Biggest Thrifts #3 3 5 BofI Holding, Inc. (BOFI) CA 89.40 1,401.1 1.16 15.87 13
Slide 5: Comparison of the 2010 SNL Number 1 Thrift and Number 2 Ranked Thrift
Comparison of the 2010 SNL Number 1 Thrift and Number 2 Ranked Thrift For The Year Ended June 30, 2011 Bank of Internet1 Malaga Bank2 2011 ROE (%) 15.2 12.5 2011 Asset Growth ($MM) 519 5 2011 Loan Growth ($MM) 550 11 2010 SNL Thrift Ranking #2 #1 1. Including BofI Holding, Inc. 2. Malaga reports on
Slide 6: BofI is a Top Quartile Performer Versus Thrift Peer Group
BofI is a Top Quartile Performer Versus Thrift Peer Group The 93% on ROE means that the Bank outperformed 93% of all Banks. The 15% G&A ranking means that only 15% of Banks spend less on G&A than BofI. Peer group includes thrifts up to $5 billion dollars. For Quarter Ended June 30, 2011 Bank of Inte
Slide 7: BOFI Trades At An Earnings Multiple Lower Than Our Competitors
BOFI Trades At An Earnings Multiple Lower Than Our Competitors Price/ Share Price LTM Div Equity/ NPAs/ Total price 1-mo. EPS T. Book yield ROAA ROAE assets assets assets Ticker Company State 11/30/11 (%) (x) (%) (%) (%) (%) (%) (%) ($M) CFFC Community Financial Corporation VA 2.60 (13.3) 7.2 29.6 -
Slide 8: 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 3.56 3.63 Salaries and benefits 0.85 1.44 Premises and equipment 0.22 0.37 Other non-interest 0.43 1.33 expense Total non-interest 1.50 3.14 expense Core busine
Slide 9: Resulting In An Efficiency Ratio That Is Consistently One of the Industry's Lowest
… Resulting In An Efficiency Ratio That Is Consistently One of the Industry’s Lowest Efficiency Ratio (BofI Federal Bank, for the fiscal quarter ended) (%) 80 One of the lowest rates in the industry 63.74 60 41.35 35.19 35.45 40 20 0 Q4 ’11 Q1 ‘12 Q2 ‘12 Banks1 1. Reported by FDIC – 429 commercial b
Slide 10: 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 $2.2 billion asset savings and loan holding company1 11 years operating history, publicly traded on NASD
Slide 11: Diversified Branchless Customer Acquisition Channels
Diversified Branchless Customer Acquisition Channels Affinity Bank brands Description Partners Description Consumer online brands • Value-oriented • 45 million members consumer • High-end/older demographic • Airline rewards • 12 million members oriented • Wider demographic • Business checking • 2 mi
Slide 12: Preference Toward Delivery has Shifted Rapidly Toward the Internet Over the Last Four Years
Preference Toward Delivery has Shifted Rapidly Toward the Internet Over the Last Four Years Preferred Banking Method Preferred Banking Method (2007) (2011) Other Internet Other Banking 10% ATM 20% 23% 8% Branches 20% 21% 62% ATM Internet 36% Banking Branches Source: American Banker Association 11
Slide 13: With the Need For Branches to Deposit Checks Dropping Quickly
With the Need For Branches to Deposit Checks Dropping Quickly Avg. deposits per day per branch 300 Check decline without 250 remote deposit capture • 45% decline from 200 2006 to 2011 • Additional decline 150 by 2014 of 90% with Remote 100 Deposit Capture With remote deposit Implementation capture 5
Slide 14: Branch Traffic has Declined Approximately 4.0% Per Year for an Aggregated Decline of 90%
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 15: Branch Banks are Losing Sources of Revenue that Supported "Free" Checking
Branch Banks are Losing Sources of Revenue that Supported "Free" Checking Interchange Income Average Transaction Fee Cents • Interchange is roughly 20% on non- 0.6 interest income 0.44 -55% • $27.5 billion per year of lost 0.4 interchange income 0.21 • Under $10 billion asset size banks 0.2 unaffect
Slide 16: Banks over $50 Billion In Assets Offering Free Checking Dropped to Less than 35% from 96%
Banks over $50 Billion Dollars In Assets Offering Free Checking Dropped to Less than 35% from 96% in One Year Banks greater than $50 billion in assets that offer free checking Thousands 100 96.0% -61.2% 80 Represents a secular trend toward less competitive products at banks 60 with branch-based cost
Slide 17: Enhanced Value Proposition For Deposit Customers
Enhanced Value Proposition For Deposit Customers • Free checking with unlimited ATM reimbursement • Rate rewards features Product • Merchant/purchase rewards • Enhanced call center representatives training Customer • Call center representative extended hours Service • Outbound calling for setup and
Slide 18: CNN Money Recently Highlighted The Bank's Checking Account
CNN Money Recently Highlighted The Bank’s Checking Account In Its Article Describing The Bank As “One of 7 Banks That Is Still Awesome” Note: Information as of October 2011. 17
Slide 19: 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 57% 70%1 • Product provides vertical integ
Slide 20: Our Rapid Asset Growth Has Been Driven by Strong and Profitable Organic Loan Production
Our Rapid Asset Growth Has Been Driven by Strong and Profitable Organic Loan Production Loan Portfolio - End of Last Five Quarters $1,526,523 1,500,000 $ 1,443,860 $ 1,325,301 $ 1,113,813 $ 1,003,250 1,000,000 500,000 0 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Multifamily 52% 53% 54% 54% 53% Avg LTV
Slide 21: Loan Origination Group Production Year over Year
Loan Origination Group Production Year over Year Q2-2012 Q2-2011 ($ Millions) Production Production Pipeline1 Single Family – Gain on Sale $132.8 $80.0 $106.3 Single Family – Jumbo Portfolio 121.5 53.0 163.8 Multifamily – Portfolio 78.4 74.0 56.8 Total $332.7 $207.0 $326.9 1. Applications in as of 2
Slide 22: Best in Class Asset Quality
Best in Class Asset Quality Assets 30-89 days delinquent Assets in non-accrual (%) (%) 3 3 1.79 2 2 1 1 0.70 0.48 0.61 0 0 BofI1 Bank $1-10bn2 BofI1 Bank $1-10bn2 1. BofI Federal Bank only at 12/31/11 (excludes BofI Holding, Inc. to compare to FDIC data) . 2. Commercial banks by asset size. FDIC rep
Slide 23: Loan Diversity – December 31, 2011
Loan Diversity – December 31, 2011 Loan Portfolio1 100% = $1,540 Million Consumer and other Commercial 3 9 SF residential 43 43 Multifamily 2 Home equity 1. Gross loans before premiums, discounts and allowances. 22
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