Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (November 2014)
28 slides from Axos Financial's investor presentation, Nov 17, 2014
Slide 1: BofI Holding, Inc. Investor Presentation
BofI Holding, Inc. Investor Presentation Greg Garrabrants President and Chief Executive Officer NASDAQ: BOFI November 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: Q1 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 Q1 Fiscal 2015 Financial Highlights Q1 2015 vs. Q1 2014 $1,540.7 $1,068.8 $1,526.2 $342.4 52 bps $17.8 $1.20 46.9% 48.7% 62.7% 72.7% -3 bps 46.5% 41.2% A
Slide 4: 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 134.61 2,224 1.24 16.09 14.33 42.04 1.20 0.39 2011 The Best of the Biggest Thrifts #2 #1 2012 The Best of the Biggest Thrifts BofI Holding, Inc. (BOFI) 1 CA 154.986 2,874.3 1.44 17.
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: 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 1.65% 0.78% 93% Return on equity 19.00% 6.79% 95% G&A 1.39% 2.69% 12% Efficiency ratio 30.99% 68.76% 2% Source: Uniform Bank Performance Report (UBPR) as of 9/30/14 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 (%) 0.71 0.13 Other non-interest expense 0.54 Total non-interest expense 1.38 Core business margin 2.62 1.52 0.36 1.29 3.17 0.40 Banks $1-$10bn2 (%) Net interest income 4.00 3.57 As
Slide 8: Corporate Profile and Vision
7 Corporate Profile and Vision • $4.8 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 • 393 employees ($12.3 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
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
10 185 314 467 688 1,113 1,420 1,700 0 300 600 900 1,200 1,500 1,800 Diversified and Improving Deposit Mix Including Rapidly Increasing Business Banking Deposits 50.6 22.7 4.4 22.3 Checking Money Market Savings CD’s Note: 100% of deposits equals $3,261.8 MM as of 9/30/14 Diversified Deposit Base Rap
Slide 12: Key Growth Areas
11 Key Growth Areas Growth1: 9/2013 - 9/2014 Checking balance 237% MMS balance 34% Savings balance - 27% CD balance - 50% Transaction account balance 145% Key Areas of Growth 1. Growth is shown for core deposits
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: Customers Prefer to Become Aware of Financial Products Through Electronic Channels
14 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 16: Branch Transaction Activity Migrating to Mobile/Online Channels
15 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 17: Branch Traffic has Declined Approximately 4.0% per Year
16 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 18: Rollout of Remote Deposit Capture Impact – Chase Example
17 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 19: Bank Deposit Revenue Sources Reduced; Branch Transaction Cost 40 Times Call Center
18 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/ m
Slide 20: Branch Banks Cannot Cost-Effectively Serve Most Customers
19 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 >$100K in D&I and make up ~55% of reve
Slide 21: Primary Business – Lending
20 Primary Business – Lending Lending Single family Multifamily C&I Lending Gain-on-sale Mortgage Banking Wholesale Jumbo Retail Wholesale Lender Finance ABL • Internet and affinity lead sources • Self-service operation • Low-fixed costs • High-end portfolio lender – “Common Sense" underwriting – Q1
Slide 22: Asset Growth Driven by Strong and Profitable Organic Loan Production
21 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 55% 55% 55% 55% 56% 56% 55% 56% 57% 57% Average Loan to Value $2,433,001 $2,777,325 3,101,408 $3,532,841 $3,959,155 $- $500,000 $
Slide 23: Total Loan Pipeline at Record High
22 Total Loan Pipeline at Record High C&I Multifamily Jumbo Single Family Agency 42 37 67 75 85 344 497 386 445 481 148 92 157 146 156 143 151 167 255 217 0 200 400 600 800 1,000 $MM 677 777 777 921 939 FY Q1 2013 FY Q2 2014 FY Q3 2014 FY Q4 2014 October 31 2015 Loan Pipeline – Last Four Quarters an
Slide 24: Best-in-Class Asset Quality
23 0.55 1.62 0 1 2 3 4 (%) BofI Banks $1-10 bn Non-current (30 days+) loans to total loans1 Assets in non-accrual to total assets1 0.46 0.79 0 1 2 3 4 (%) BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 6/30/14. Total of 451 institutions included in the $1-$10 billion group Best-in-Class Ass
Slide 25: Loan Diversity – September 30, 2014
24 Loan Portfolio1 100% = $4,023 Million SF - Residential 57% C&I 4% C&I - SF Lender Finance 7% CRE 1% Multifamily 27% Home Equity 0% Factoring 3% Consumer and Other 1% 1. Gross loans before premiums, discounts and allowances Loan Diversity – September 30, 2014
Slide 26: Summary of H&R Block Transaction
25 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
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 Contact Information Greg Garrabrants, President and CEO Andy Micheletti, EVP/CFO BofI Holding, Inc. investors@bofi.com www.bofiholding.com Johnny Lai, VP Corporate Development and Investor Relations Phone: 858.649.2218 ext. 1609 Mobile: 858.245.1442 jlai@bofifederalbank.com