Slide 1: BofI Holding, Inc. Investor Presentation
BOFI HOLDING, INC. Investor Presentation August 2016 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: Fiscal 2016 Fourth Quarter Highlights Compared with Prior Year's Fiscal Quarter
Fiscal 2016 Fourth Quarter Highlights Compared with Prior Year’s Fiscal Quarter Asset Growth Deposit Growth $ Millions $ Millions 8,000 7,601 8,000 30.5% 35.8% 6,044 6,000 5,824 6,000 4,452 4,000 4,000 2,000 2,000 0 0 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Net Income Diluted EPS $ Millions $ Diluted EPS 40
Slide 4: Diluted EPS and Return on Equity Have Been Consistently Strong
Diluted EPS and Return on Equity Have Been Consistently Strong Diluted EPS (FY) Return On Average Equity (FY) $ Per Share Percent 1.85 1.60 20.00 19.43 1.40 1.34 19.50 34% CAGR 18.34 1.20 19.00 17.89 1.00 0.96 18.50 17.57 18.00 0.80 0.72 0.58 17.50 16.95 0.60 17.00 0.40 16.50 0.20 16.00 0.00 15.50 2
Slide 5: 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 • $7.6 billion asset savings and loan holding company1 • 15-year operating history, publicly traded on NASDA
Slide 6: 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... 2015 The Best of the Biggest Thrifts #1 1 BofI Holding, Inc. (BOFI) CA 169.04 6.66 1.70 18.65 33.50 30.20 -0.01 0.46 2014 The Best of the Biggest Thrifts #1 1 BofI Holding, Inc. (BOFI) CA 172.94 5,194.7 1.56 18.23
Slide 7: 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 8: BofI is a Top Quartile Performer Versus Bank Peer Group
BofI is a Top Quartile Performer Versus Bank Peer Group The 95% on ROE means that the Bank outperformed 95% of all banks. The 16% G&A ranking means that only 16% 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 9: 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 3.99 3.88 Salaries and benefits 0.75 1.48 Premises and equipment 0.14 0.33 Other non-interest 0.54 1.03 expense Total non-interest 1.43 2.84 expense Core busines
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: Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits
Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future Plans $ Thousands • Enhanced digital marketing 6,044,051 5,000,000 4,451,917 • Products and technology integration 39.1% targeted to specific industry groups 4,000,000 4-yr CAGR
Slide 12: Deposit Growth in Checking, Business, and Savings While Transforming the Mix
Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits June 30, 2013 June 30, 2016 100% of Deposits = $2.1 billion 100% of Deposits = $6.0 billion Checking and Savings - IRA other demand Time deposits deposits 17% 5% 19% Checking and other demand 42% de
Slide 13: BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States
BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States Number of Accounts Average Deposit Balance BofI Deposits Have National Reach With Customers in Every State 12
Slide 14: BofI Business and Consumer Deposit Base is Well Diversified by Product Type
BofI Business and Consumer Deposit Base is Well Diversified by Product Type Consumer Deposits By Account Type Business Deposits By Account Type Savings Savings- IRA Time Deposits - IRA 9% Checking and other 14% demand deposits Checking and 21% other demand Checking and other deposits demand deposits
Slide 15: BofI Customers are Highly Engaged
BofI Customers are Highly Engaged Customer Engagement Results Engagement Low Activity High Activity Attributes Low Activity User Basic User Engaged Elite Engaged Engagement Score (0-100) 0s 0 < S < 30 30 ≤ S < 60 ≥ 60 Average Lifetime Balance $300 $1000 $6,000 $50,000 Average # of Services - <1 4 8
Slide 16: We are Building a Better Real-Time Data Engine to Drive Customer Touch-Points
We are Building a Better Real-Time Data Engine to Drive Customer Touch-Points Based on a Wide Range of Data Sources Inbound Outbound Direct Mail Direct Mail EMail EMail Call Center Call Center Website Website Mobile app/ Mobile app/ SMS SMS • Advanced multichannel integration • Pervasive analytics u
Slide 17: Organizational Structure To Be World Class Digital Bank
Organizational Structure To Be World Class Digital Bank Product Development Cross-sell (In-House Apps) • Robo-advisor • Auto • Trusts • IRA • Mortgage Core Platform App Store Personalization Management & Segmentation • Third party • Real-time retention • Next-best action • Transaction mining 16
Slide 18: Advanced Data Analytics Provides Key Insights Into Customer Engagement
Advanced Data Analytics Provides Key Insights Into Customer Engagement, Profitability, and Retention to Enhance Customer Lifetime Throughout the Bank Key Learnings Framework for Data Analysis Retention & Attrition Drivers to Boost Long-Term Customer Engagement Customer Segmentation Methodology to Un
Slide 19: 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 20: 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 21: 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
Slide 22: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income % of Fee Income at 6/30/2015* At 6/30/2016* Agency Mortgage Banking Jumbo 47% 17% Multifamily Structured Settlement Gain on Sale - 18% 24% Other Other Treasury Fee Income Consumer Deposit Deposit/ Prepaid 21% 55% Service Fees Tax Payments Prepayment
Slide 23: Diverse Lending Business
Diverse Lending Business Gain-on-sale • Internet and affinity lead sources • Self-service operation Mortgage Banking • Low-fixed costs Single • High-end portfolio lender Jumbo – “Common Sense" underwriting family – Q4 2016 average LTV of 63% • Product provides vertical integration Warehouse Lending
Slide 24: Loan Diversity – June 30, 2016
Loan Diversity – June 30, 2016 Loan Portfolio1 100% = $6,402 Million Factoring 2% Multifamily 21% CRE/Home Equity/Consumer and Other 3% C&I - SF Lender SF - Residential Finance 60% 6% C&I 8% 1. Gross loans before premiums, discounts and allowances 23
Slide 25: Our Asset Growth has been Driven by Strong Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $7,000,000 $6,354,679 $6,034,700 $6,000,000 $5,645,272 $5,225,319 $4,928,618 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $‐ Q4 2015 Q1 2016 Q2
Slide 26: 7 Key Digital Evolution Strategies
7 Key Digital Evolution • Enhanced digital marketing technology Strategies stack • Integrations with BI tool to data warehouse • Enterprise CRM growth platform for web traffic growth • Major focus of UI- User Interface, UX – User Experience web design 1 • Hired Web UI and UX Infrastructure talent •
Slide 27: Bank Provides Appropriate Resources to Manage Credit and Compliance Risk
Bank Provides Appropriate Resources to Manage Credit and Compliance Risk June 30, June 30, June 30, June 30, Department FTEs 2013 2014 2015 2016 Credit and Quality Control 27 41 57 65 Risk, Internal Asset Review, Compliance, Audit 16 26 35 44 and BSA 26
Slide 28: What is an Integrated Governance, Risk & Compliance Tool?
What is an Integrated Governance, Risk & Compliance Tool? Management Standardized Tools and Training Framework Risk Scoring Techniques • 3,000+ processes • Numerical ratings for • Ongoing deployment • Single IT each process of assurance infrastructure (Archer) resources to address for monitoring pro
Slide 29: Credit Monitoring & Management Oversight
Credit Monitoring & Management Oversight Single Family Residential Multi-Family • Portfolio level monitoring with individual loan • Risk based annual loan review process, with reviews completed on an exception basis (i.e. 4 levels depending on financial performance delinquency, FICO/LTV degradation)
Slide 30: Multi-family Stress Testing
Multi-family Stress Testing CCAR Scenario Summary Results Scenario PD (%) LS (%) EL (%) EL ($M) CCAR Baseline 1.67 27.83 0.46 5.24 CCAR Adverse 1.87 29.57 0.55 6.26 CCAR Severe 2.15 31.56 0.68 7.65 Summary Analysis • Stress testing allows the portfolio to be examined for adverse macroeconomic condit
Slide 31: Best-in-Class Loan Quality
Best-in-Class Loan Quality Loans in non-accrual to Total Net Charge-Offs Annualized 1 total loans1 (%) (%) 1 2 1.08 1 0.21 0.39 0.01 0 0 BofI Banks $1-10 bn BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 03/31/16. Total of 501 institutions included in the $1-$10 billion group. 30
Slide 32: H&R Block Benefits
H&R Block Benefits Strategic Benefits Financial Benefits • Exclusive cross-sell opportunities for • $31-$34 million annual projected mortgages, IRAs and potentially other revenues from three initial products products (*) to 1/6 of US households served by H&R Block $13-$16 million after-tax income
Slide 33: Our H&R Block Partnership Will Allow Us to Reach Over 20 Million Potential Customers
Our H&R Block Partnership Will Allow Us to Reach Over 20 Million Potential Customers H&R Block Overview Opportunities • 12,000 branches • Cross-sell to existing customer base • 20 million+ customer base • Acquire new customers through different sources • Files 1 in every 7 U.S. tax returns • Branche
Slide 34: Engaging HRB Customers with the Right Offer at the Right Time
Engaging HRB Customers with the Right Offer at the Right Time HRB Visitors Leads/ Referrals 20MM Remarketing & Marketing Database Customer Segmentation Data Append & Segmentation Real-time Propensity Marketing Mix Models Targeted Customer Offers Purchase/ IRA Other Mortgage Deposits Account Lending
Slide 35: Over the Last Five Years, BofI Has Started New Products and Added Channels
Over the Last Five Years, BofI Has Successfully Started New Products, Added Distribution Channels, and Completed Acquisitions 2010 2011 2012 2013 2014 2015 2016 New • Agency • Business • Warehouse • Treasury/ • Auto product mortgage banking Lending cash • Small • Structured • Lottery manage- balance
Slide 36: 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 37: Contact Information
Contact Information Greg Garrabrants, President and CEO Andy Micheletti, EVP/CFO investors@bofi.com www.bofiholding.com Johnny Lai, VP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 jlai@bofi.com 36