Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (March 2017)
32 slides from Axos Financial's investor presentation, Mar 24, 2017
Slide 1: BofI Holding, Inc. Investor Presentation March 2017
0 NASDAQ: BOFI March 2017 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: Our Business Model is More Profitable Because Our Costs are Lower
2 Salaries and benefits Premises and equipment BofI1 (%) 0.80 0.14 Other non-interest expense 0.50 Total non-interest expense 1.44 Core business margin 2.49 1.48 0.33 1.15 2.96 0.48 Banks $1-$10bn2 (%) Net interest income 3.93 3.44 As % of average assets 1. For the three months ended 12/31/16 – the
Slide 4: BofI's Business Model Is Differentiated From Other Banks
3 BofI’s Business Model Is Differentiated From Other Banks Customer Acquisition Sales Servicing Distribution • Digital Marketing • Affinity and Distribution Partners • Data mining/target feeding direct marketing • Cross-sell • Automated fulfillment • Inbound call center sales • Outbound call center
Slide 5: Fiscal 2017 Second Quarter Highlights
4 Fiscal 2017 Second Quarter Highlights $ Millions Asset Growth $ Millions Net Income $ Millions Deposit Growth $ Diluted EPS Diluted EPS Return on Equity = 17.49% Return on Assets = 1.66% 6,662 8,168 0 2,000 4,000 6,000 8,000 10,000 Q2 2016 Q2 2017 22.6% 5,200 6,611 0 2,000 4,000 6,000 8,000 Q2 201
Slide 6: Fiscal 2016 Highlights Compared with Fiscal 2015
5 Fiscal 2016 Highlights Compared with Fiscal 2015 5,824 7,601 0 2,000 4,000 6,000 8,000 FY 2015 FY 2016 $ Millions Asset Growth 30.5% 82.7 119.3 0 50 100 150 FY 2015 FY 2016 $ Millions Net Income 44.3% 4,452 6,044 0 2,000 4,000 6,000 8,000 FY 2015 FY 2016 $ Millions Deposit Growth 35.8% 1.34 1.85 0
Slide 7: Diluted EPS and Return on Equity Have Been Consistently Strong
6 Diluted EPS and Return on Equity Have Been Consistently Strong Despite Significant Increase in Tier 1 Capital Ratios Return On Average Equity (FY) Diluted EPS (FY) 1.85 1.35 0.97 0.75 0.61 0.47 0.0 0.5 1.0 1.5 2.0 2014 $ per share 2013 2011 2012 2016 32% CAGR 2015 19.43 18.3417.8917.57 16.95 15.17
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 1.81% 0.78% 93% Return on equity 20.84% 7.00% 95% G&A 1.49% 2.58% 15% Efficiency ratio 31.46% 66.82% 5% Source: Uniform Bank Performance Report (UBPR) as of 12/31/16 Note: Peer group is all savings
Slide 9: Diverse Lending Business
8 Diverse Lending Business Lending Single family Commercial Real Estate C&I Lending Consumer Small business Gain-on-sale Mortgage Banking Jumbo Multifamily Small Balance Commercial Lender Finance ABL Warehouse Lending Factoring Bank Loans Auto Overdraft Lines Large Balance Commercial/Specialty Real
Slide 10: Loan Portfolio – Loan Diversity, December 31, 2016
9 1. Gross loans and leases before premiums, discounts and allowances Loan Portfolio1 100% = $6,878 Million SF – Residential 57% C&I 11% C&I – SF Lender Finance 4% CRE/Home Equity/Consumer and Other 5% Multifamily 21% Factoring 2% Loan Diversity – December 31, 2016
Slide 11: Asset Growth Driven by Strong and Profitable Organic Loan Production
10 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) Multifamily Single family 52% 52% 54% 55% 54% 57% 58% 58% 58% 58% Average Loan to Value $5,645,272 $6,034,700 $6,354,679 $6,605,747 $6,811,470 $- $1,00
Slide 12: Loan Pipeline Remains Strong
11 $1,131 $171 $960 $105 $145 $75$635 0 200 400 600 800 1,000 1,200 Loan Pipeline Remains Strong FY 2017 Q2 Total Single Family Warehouse $M Jumbo Single Family Agency Single Family Commercial & Industral Lending Multifamily / Small Balance Commercial Primary Pipeline
Slide 13: Loan Origination Growth
12 0.6 0.7 1.0 2.3 3.3 3.6 0.7 1.1 0.7 1.0 1.4 0 1 2 3 4 5 Loan Origination Growth 69.2% 53.2% 42.0% 42.2% • Organic growth in existing business lines o Multifamily geographic expansion o Agency and jumbo mortgage channel expansion o Small Balance Commercial Real Estate expansion o Large Balance Com
Slide 14: Diversified Branchless Deposit Businesses
13 Diversified Branchless Deposit Businesses Key Elements Deposit Consumer direct internet brands Distribution Partners BIN sponsorship • Demographically targeted brands • Differentiated products with turn-down product options Small business banking • Exclusive relationships with significant brands,
Slide 15: Deposit Growth in Checking, Business, and Savings While Transforming the Mix
14 Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits 19% Checking and other demand deposits 31% Savings Time deposits 50% Checking and other demand deposits Savings Time deposits June 30, 2013 December 31, 2016 Checking Growth (6/2013-12/2016) = 61
Slide 16: Business Banking Vertical Has Fueled Deposit Growth
15 64% 29% 7% 314 1,420 2,486 3,067 3,733 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Business Deposits by Account Type* Business Banking Deposits ($MM) Q4 13 Q4 14 Q4 15 Q4 16 Percent (%) Q2 17 Our Business Banking Vertical has Fueled our Deposit Growth while Generating Significant Fee Income C
Slide 17: Customer Base and Deposit Volume Well Distributed Throughout the US
16 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
Slide 18: BofI Customers are Highly Engaged
17 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 $100 $4000 $6,000 $50,000 Average # of Services Used - < 5 7 10 Average # of POS -
Slide 19: Core Deposit Growth Changing the Deposit Mix
18 Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future Plans • Enhanced digital marketing automation integrated to outbound sales group • Products and technology integration targeted to specific industry groups • Create differenti
Slide 20: Diversified Fee / Non-Interest Income
19 Diversified Fee / Non-Interest Income * Excludes securities income ^ Assumes estimated non-Emerald Advance-related H&R Block income included in Deposit/Service Fees Fee Income Mortgage Banking Deposit/ Service Fees Agency Jumbo Structured Settlement Other Cash/Treasury Management Consumer Deposit
Slide 21: Five Years of New Products, Distribution Channels and Acquisitions
20 Over the Last Five Years, BofI Has Successfully Started New Products, Added Distribution Channels, and Completed Acquisitions 2010 2011 2012 2013 2014 2015 2016 2017 New product • Agency mortgage • Structured settlement • Business banking • Lottery • Warehouse Lending • Treasury/ cash manage- men
Slide 22: Key Goals of Universal Digital Bank
21 Key Goals of Universal Digital Bank Personalization Self-Service Facilitate Partnerships Customizable Experience Cross-Sell • Artificial intelligence and big data credit models enable quick credit decisions • Customized product recommendations based upon analytical determination of need • Provide
Slide 23: Universal Digital Bank Consumer Platform
22 Universal Digital Bank Consumer Platform Cross-sell Product Development (In-House Apps) Personalization & Segmentation App Store Management • Robo-advisor • Trusts • Third party services/payments • Third-party lending • Auto • IRA • Mortgage • Personal loan • Real-time retention • Next-best actio
Slide 24: Advanced Data Analytics Provides Key Insights Into Customer Engagement
23 Advanced Data Analytics Provides Key Insights Into Customer Engagement, Profitability, and Retention to Enhance Customer Lifetime Throughout the Bank Customer Segmentation Methodology to Understand Usage & Behavior Profitability Analysis at the Individual Customer Level Streamlined Acquisition Pr
Slide 25: Leveraging API Stack to Integrate Into H&R Block's Tax Software
24 We are Also Leveraging Our API Stack to Integrate Our Consumer Enrollment Platform into H&R Block’s Tax Software H&R Block Overview Key Steps for Tax Season 2017 • Approximately 10,000 U.S branches • Files 1 in every 7 U.S. tax returns • 19.7 million U.S. tax returns per year • 83% of customers r
Slide 26: Omni Channel Approach for 2017 Digital Marketing Strategy
25 Omni Channel Approach for BofI’s 2017 Digital Marketing Strategy Digital personas for personalized interactions Introduced BI reporting tool for analytics Enhanced branding, messaging and positioning Social employee engagement Multi-dimensional analysis by geography, customer type, product, media
Slide 27: Holistic Credit Risk Management
26 Holistic Credit Risk Management What We Do Loan Life Cycle Utilize a holistic credit-risk management framework to manage and monitor credit quality at each stage of the loan life cycle, and leverage specialized Credit Tools to optimize monitoring and reporting capabilities Set Appetite Originatio
Slide 28: Monitoring & Management Oversight: Core Products
27 Monitoring & Management Oversight: Core Products • 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 b
Slide 29: Best-in-Class Loan Quality
28 (%) BofI Banks $1-10 bn Total Net Charge-Offs Annualized 1 Loans in non-accrual to total loans1 (%) BofI Banks $1-10 bn Best-in-Class Loan Quality 0.05 0.40 0 1 0.50 0.99 0 1 2 1. As reported in FDIC SDI report at 12/31/16. Total of 506 institutions included in the $1-$10 billion group.
Slide 30: Resources to Manage Credit and Compliance Risk
29 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 31: Investment Summary
30 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 32: Contact Information
31 Greg Garrabrants, President and CEO Andy Micheletti, EVP/CFO [email protected] www.bofiholding.com Johnny Lai, VP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 [email protected] Contact Information