Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Shareholder Meeting (October 2006)
29 slides from Axos Financial's shareholder meeting presentation, Oct 20, 2006
Slide 1: Annual Shareholders Meeting October 19, 2006
Annual Shareholders Meeting October 19, 2006 Exhibit 99.1
Slide 2: Safe Harbor
Safe Harbor 2 Statements contained in the slide show presentation that state expectations or predictions about the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act and the Exchange Act. The Registrant’s actual results could differ mater
Slide 3: Agenda
Agenda 3 • The Bank of Internet Franchise – Building Online Customer Trust for Six Years • Financial Highlights – Fiscal 2006 – Fifth Consecutive Year of Record Earnings • Steps to Build More Shareholder Value – Changes to Meet Challenging Market Conditions • Questions and Answers
Slide 4: Our Focus
Our Focus 4 BofI will be the premier low- cost operator in consumer financial services MISSION STATEMENT
Slide 5: Building Our Online Franchise
Building Our Online Franchise ………. 5 6,367 9,569 13,653 19,827 22,468 10,000 20,000 2002 2003 2004 2005 2006 Total Number of Deposit Accounts * * At each fiscal year end June 30.
Slide 6: Online Deposit Franchise
Online Deposit Franchise ….. 6 • Online Retail Deposit Customers in all 50 states – six years - no brokered deposits • Proprietary Technology & Customer Data Base – six-year proprietary data base of Internet activity support unique fraud control • Proprietary Process – six years of process improveme
Slide 7: What our customers say
7 What our customers say ……… Mr. Evans, I just love doing business with your bank! Last Friday I remembered that I had 2 CDs maturing on 8-13. I also noticed the great interest rate on your 18 month CD. Using the "contact" box on your web site I requested that I wished to redeem the CDs and purchase
Slide 8: Building Online Lending
Building Online Lending…. 8 • Single family online originations for five years • Home equity originations – system built in fiscal 2006 using “best practices” • Unique multifamily online origination site • Years of online authentication and underwriting experience • Disciplined lending and investing
Slide 9: What our customers say
9 What our customers say ……… Dear Mr. Evans: ………… I was completely truthful when I said that it was the easiest and most pleasant and professional loan process I have ever been through. And Ms. Mitchell actually knew her business. This is very unusual in our current environment. I work for a company
Slide 10: Our Franchise Value
Our Franchise Value … 10 We Believe in: • Our People and Our Service Culture • Our Focus on Low Cost Delivery Systems – Regularly changing processes and proprietary software to improve efficiency • Our Consistent, Competitive Product Pricing – Across all product lines – customers trust that they are
Slide 11: Fiscal 2006 Results
11 Fiscal 2006 Results
Slide 12: Fiscal 2006 - Financial Highlights Asset Growth
Fiscal 2006 - Financial Highlights Asset Growth 12 $217.6 $273.5 $405.0 $609.5 $737.8 $0 $200 $400 $600 $800 $1,000 2002 2003 2004 2005 2006 Total Assets ($ in millions) * At each fiscal year end June 30. *
Slide 13: Fiscal 2006 - Financial Highlights Net Interest Income Growth
13 Fiscal 2006 - Financial Highlights Net Interest Income Growth $3,497 $5,088 $6,530 $8,969 $9,955 $0 $2,000 $4,000 $6,000 $8,000 $10,000 2002 2003 2004 2005 2006 Net Interest Income ($ in thousands) * For each fiscal year ended June 30. *
Slide 14: Fiscal 2006 - Financial Highlights Net Income Growth
14 Fiscal 2006 - Financial Highlights Net Income Growth $1,020 $1,730 $2,175 $2,869 $3,266 $- $1,000 $2,000 $3,000 $4,000 2002 2003 2004 2005 2006 Net Income ($ in thousands) * * For each fiscal year ended June 30.
Slide 15: Slide 15
Slide 16: Our Task
Our Task …………… 16 Work to Improve: • Earnings Per Share • Return on Equity • Efficiency Ratio Get to our goals • 10%+ ROE • Less than 40% Efficiency Ratio • $1 Billion in Assets • Continue reducing G&A to average assets
Slide 17: Steps to Build More Shareholder Value in Fiscal 2007
17 Steps to Build More Shareholder Value in Fiscal 2007
Slide 18: Building Shareholder Value: Step One
Building Shareholder Value 18 Step One – Generate Higher Yielding Loans • Originate high-volume online consumer loans • Home Equity Lending Program is up now, expanding from 7 states to all 50 by December 2006 • Other Consumer Secured Loans like Autos & RVs • Hired consumer loan executive to start t
Slide 19: The First - Home Equity Loans
The First - Home Equity Loans 19 • Offering Favorable Rates to Most Credit Worthy Customers • Thru Start up Phase: – $3.1 million in originations, weighted average: – Balance = $80,000 – st Mortgage =$295,000 – Combined Loan to Value= 61% – FICO= 756 – High of 820 and low of 649 – All Debt to Income
Slide 20: Building Shareholder Value: Step Two
Building Shareholder Value 20 Step Two – Match Asset Growth with Higher Yield Loan Production: • Conserve Capital – Can grow assets to $1 Billion - match asset growth with production of higher yielding consumer loans and other opportunities for loans – Seek to replace lower yielding loan principal r
Slide 21: Yield Curve & Net Interest Margin
Yield Curve & Net Interest Margin 2006 - 1.51% B of I Fiscal Yr: NIM% 21 2003 – 2.11% 2004 – 2.04% 2005 – 1.87%
Slide 22: Net Interest Income vs Noninterest Expense
Net Interest Income vs Noninterest Expense 22 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $218,000 $273,000 $405,000 $609,000 $738,000 2002 2003 2004 2005 2006 Assets in Thousands Net Interest Income (in 000s) Noninterest Expense EXCLUDING SALARY & WAGES For the Fiscal Yea
Slide 23: Impact of 25 and 50 bps NIM Growth Hypothetical
Impact of 25 and 50 bps NIM Growth Hypothetical for Fiscal 2005 and 2006 23 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $218,000 $273,000 $405,000 $609,000 $738,000 2002 2003 2004 2005 2006 Assets in Thousands For the Fiscal Years Ended June 30 “Lift” Hypothetical – applyi
Slide 24: Clear Objective
Clear Objective 24 LONG RUN ON AVERAGE Net Interest Margin between 1.75% - 2.25% Operating Expense on Average Assets Between 0.10% - 0.20%
Slide 25: Building Shareholder Value: Step Three
Building Shareholder Value 25 Step Three – Leverage Value of “Online” Assets • Affiliate Marketing Hire one staff member –within 30 days Inbound and Outbound affiliates Establish ties with aggregators • Social Marketing – Affinity Marketing to affinity groups ranging from RV owners to not for profit
Slide 26: Bank of Internet USA website
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Slide 27: Website Re-fresh
Website Re-fresh 27 • Reorganizing for Better Navigation – November 2006
Slide 28: Our Three Steps - summary
Our Three Steps - summary 28 • Generate Higher Yielding Loans • Match Asset Growth with Loan Growth - Conserving Capital, for New Loans / the yield lift • Leverage the Value of “Online” Assets- Affiliate Marketing and Social Networking
Slide 29: Our Task
Our Task …………… 29 Work to Improve: • Earnings Per Share • Return on Equity • Efficiency Ratio Get to our goals • 10%+ ROE • Less than 40% Efficiency Ratio • $1 Billion in Assets • Continue reducing G&A to average assets