Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (September 2016)
37 slides from Axos Financial's investor presentation, Sep 14, 2016
Slide 1: BofI Holding, Inc. Investor Presentation
NASDAQ: BOFI September 2016 BOFI HOLDING, INC. Investor Presentation
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: Fiscal 2016 Fourth Quarter Highlights
2 Fiscal 2016 Fourth Quarter Highlights Compared with Prior Year’s Fiscal Quarter 5,824 7,601 0 2,000 4,000 6,000 8,000 Q4 2015 Q4 2016 $ Millions Asset Growth 30.5% 24.4 29.7 0 10 20 30 40 Q4 2015 Q4 2016 $ Millions Net Income 21.9% 4,452 6,044 0 2,000 4,000 6,000 8,000 Q4 2015 Q4 2016 $ Millions D
Slide 4: Diluted EPS and Return on Equity Have Been Consistently Strong
3 Diluted EPS and Return on Equity Have Been Consistently Strong Return On Average Equity (FY) Diluted EPS (FY) 0.58 0.72 0.96 1.34 1.85 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 2012 2013 2014 2015 2016 Percent $ Per Share 16.95 17.57 17.89 18.34 19.43 15.50 16.00 16.50 17.00 17.50 18.00 18.50 1
Slide 5: Corporate Profile and Vision
4 Corporate Profile and Vision • $7.6 billion asset savings and loan holding company1 • 15-year operating history, publicly traded on NASDAQ (BOFI) since 2005 • Headquartered in San Diego, CA • 647 employees ($11.7 million in assets per employee)1 • Market Capitalization of $1.35 billion2 1. As of 0
Slide 6: BofI is Consistently Ranked among the Best of the Biggest Thrifts
5 Source: SNL Financial 2013 The Best of the Biggest Thrifts #1 BofI Holding, Inc. (BOFI) 1 CA 167.418 3,568.3 1.54 17.79 15.36 40.70 0.63 0.03 BofI is Consistently Ranked among the Best of the Biggest Thrifts by SNL Financial... 2014 The Best of the Biggest Thrifts BofI Holding, Inc. (BOFI) 1 CA 17
Slide 7: Top Performer among the Broader Universe of all Public Banks
6 ...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 8: BofI is a Top Quartile Performer Versus Bank Peer Group
7 BofI is a Top Quartile Performer Versus Bank Peer Group BofI Federal Bank Peer Group Percentile ROAA 1.89% 0.75% 92% Return on equity 22.62% 6.69% 95% G&A 1.48% 2.60% 16% Efficiency ratio 30.57% 68.48% 4% Source: Uniform Bank Performance Report (UBPR) as of 06/30/16 Note: Peer group is all savings
Slide 9: Our Business Model is More Profitable Because Our Costs are Lower
8 Salaries and benefits Premises and equipment BofI1 (%) 0.81 0.15 Other non-interest expense 0.58 Total non-interest expense 1.54 Core business margin 2.22 1.47 0.33 1.05 2.85 0.55 Banks $1-$10bn2 (%) Net interest income 3.76 3.40 As % of average assets 1. For the three months ended 6/30/16 - the m
Slide 10: Diversified Branchless Deposit Businesses
9 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 11: Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits
10 Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future Plans • Enhanced digital marketing • Products and technology integration targeted to specific industry groups • Create differentiated consumer and business technology platform
Slide 12: Deposit Growth in Checking, Business, and Savings Transforming the Mix
11 Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits 19% Checking and other demand deposits 31% Savings Time deposits 50% 42% Checking and other demand deposits 36% Savings Time deposits 17% June 30, 2013 June 30, 2016 Checking Growth (6/2013-06/20
Slide 13: BofI Customer Base and Deposit Volume is Well Distributed
BofI Customer Base and Deposit Volume is Well Distributed Throughout the United States BofI Deposits Have National Reach With Customers in Every State Average Deposit Balance Number of Accounts 12
Slide 14: 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 - IRA Time Deposits Checking and other demand deposits Savings & MMDA As of quarter end 6/30/16 13 64% 22% 14% Checking and other demand deposits Ti
Slide 15: BofI Customers are Highly Engaged
BofI Customers are Highly Engaged 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 Used - < 1 4 8 Average # of POS - < 1
Slide 16: Building a Better Real-Time Data Engine to Drive Customer Touch-Points
15 Inbound We are Building a Better Real-Time Data Engine to Drive Customer Touch-Points Based on a Wide Range of Data Sources Direct Mail EMail Call Center Website Mobile app/ SMS Direct Mail EMail Call Center Website Mobile app/ SMS Outbound • Advanced multichannel integration • Pervasive analytic
Slide 17: Organizational Structure To Be World Class Digital Bank
16 Organizational Structure To Be World Class Digital Bank Cross-sell Product Development (In-House Apps) Personalization & Segmentation App Store Management • Robo-advisor • Trusts • Third party • Auto • IRA • Mortgage • Real-time retention • Next-best action • Transaction mining Core Platform
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 Customer Segmentation Methodology to Understand Usage & Behavior Profitability Analysis at the Individual Cu
Slide 19: Customers Prefer to Become Aware of Products through Electronic Channels
18 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 20: Branch Transaction Activity Migrating to Mobile/Online Channels
19 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 21: Bank Deposit Revenue Sources Reduced; Branch Transaction Cost Is High
20 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
Slide 22: Diversified Fee / Non-Interest Income
21 Diversified Fee / Non-Interest Income Fee Income Mortgage Banking Deposit/ Service Fees Agency Jumbo Structured Settlement Other Treasury Consumer Deposit Multifamily Prepaid Tax Prepayment Fee Payments 21% 14% 55% 4% % Fee Income at 6/30/2015* % of Fee Income At 6/30/2016* 47% 17% * Excludes sec
Slide 23: Diverse Lending Business
22 Diverse Lending Business Lending Single family Commercial Real Estate C&I Lending Gain-on-sale Mortgage Banking Jumbo Multifamily Small Balance Commercial Lender Finance ABL • Internet and affinity lead sources • Self-service operation • Low-fixed costs • High-end portfolio lender – “Common Sense
Slide 24: Loan Portfolio
23 Loan Portfolio1 100% = $6,402 Million SF - Residential 60% C&I 8% C&I - SF Lender Finance 6% CRE/Home Equity/Consumer and Other 3% Multifamily 21% Factoring 2% 1. Gross loans before premiums, discounts and allowances Loan Diversity – June 30, 2016
Slide 25: Asset Growth Driven by Strong and Profitable Organic Loan Production
24 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 52% 52% 52% 52% 54% 58% 57% 57% 58% 58% Average Loan to Value $4,928,618 $5,225,319 $5,645,272 $6,034,700 $6,354,679 $- $1,00
Slide 26: Key Digital Evolution Strategies
25 7 Key Digital Evolution Strategies Infrastructure Data Content Business Process Analytical strategy Social and mobile strategy User experience DIGITAL STRATEGY 2 3 4 5 6 7 1 • Data Driven Marketing • Persona tailored interactions • Linked CRMs • Results oriented data focused testing on variables-
Slide 27: Bank Provides Appropriate Resources to Manage Credit and Compliance Risk
26 Bank Provides Appropriate Resources to Manage Credit and Compliance Risk Department FTEs June 30, 2013 June 30, 2014 June 30, 2015 June 30, 2016 Credit and Quality Control 27 41 57 65 Risk, Internal Asset Review, Compliance, Audit and BSA 16 26 35 44
Slide 28: What is an Integrated Governance, Risk & Compliance Tool?
What is an Integrated Governance, Risk & Compliance Tool? Scalable Infrastructure to Support “Big Bank’ Growth Objectives and Continuing Efficiencies Management Framework Standardized Risk Scoring Training Tools and Techniques • 3,000+ processes • Numerical ratings for each process • Based on Assura
Slide 29: Credit Monitoring & Management Oversight
Credit Monitoring & Management Oversight • Loan reviews at least quarterly • Project updates at least quarterly • Updated financials at least annually • Site visits & inspections for development projects • Portfolio level monitoring with individual loan reviews completed on an exception basis (i.e.
Slide 30: Multi-family Stress Testing
Multi-family Stress Testing • Stress testing allows the portfolio to be examined for adverse macroeconomic conditions. • Stress testing was performed on the Multi-family portfolio for the 2014-2015 fiscal year • CCAR scenarios reflect variables & limits currently set by the Federal Reserve Bank • Un
Slide 31: Best-in-Class Loan Quality
30 0.02 0.22 0 1 (%) BofI Banks $1-10 bn Total Net Charge-Offs Annualized 1 Loans in non-accrual to total loans1 0.49 1.04 0 1 2 (%) BofI Bank $1-10 bn 1. As reported in FDIC SDI report at 06/30/16. Total charge-offs annualized for BofI reflects only net charge-offs and does not include write-downs
Slide 32: H&R Block Benefits
31 H&R Block Benefits *After OCC review Strategic Benefits • Exclusive cross-sell opportunities for mortgages, IRAs and potentially other products (*) to 1/6 of US households served by H&R Block • 257,000 new deposit accounts with cross-marketing opportunities • Adds consistent, high margin fee-base
Slide 33: H&R Block Overview
H&R Block Overview Opportunities • 10,213 U.S branches • Files 1 in every 7 U.S. tax returns • 19.7 million U.S. tax returns per year • 83% of customers receive a refund • 35% franchise-owned • 2,400 employees • 1.3 million visits per month on HRB website • Social media • 28,600 Twitter Followers •
Slide 34: Engaging HRB Customers with the Right Offer at the Right Time
HRB Visitors 20MM Engaging HRB Customers with the Right Offer at the Right Time Leads/ Referrals Remarketing & Marketing Database Customer Segmentation Real-time Propensity Marketing Mix Models Data Append & Segmentation Purchase/ Mortgage IRA Account Other Lending Targeted Customer Offers Delivery
Slide 35: Over Five Years BofI Started New Products, Channels, and Acquisitions
34 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 product • Agency mortgage • Structured settlement • Business banking • Lottery • Warehouse Lending • Treasury/ cash manage- ment • C
Slide 36: Investment Summary
35 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 37: Contact Information
36 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 Contact Information
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