Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — The Wall Street Analyst Forum (May 2007)
31 slides from Axos Financial's conference presentation, May 23, 2007
Slide 1: Investor Presentation
ACB INVESTOR PRESENTATION San Francisco CA May 24, 2007 Item 7.01: FD Disclosure
Slide 2: The Wall Street Analyst Forum
The Wall Street Analyst Forum INVESTOR PRESENTATION May 24, 2007
Slide 3: Safe Harbor
2 Safe Harbor 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 4: Equity Snapshot
3 Equity Snapshot Exchange/Symbol: NASDAQ/BOFI Price (05/15/07): $7.20 Shares Outstanding (05/02/07): 8.28M Market Capitalization (05/15/07): $59.62M BV Per Share (03/31/07 - mrq) $8.21 Price/Book (03/31/07 price/mrq) : ..88X Total Assets (03/31/07 - mrq): $846.98M Publicly traded since: March 15, 2
Slide 5: Investment Highlights
4 Investment Highlights • The Internet creates an opportunity for a more efficient banking model • BofI has a unique, low-cost, and scalable operating model • Proprietary software and technology • Strong record of growth and profitability • Portfolio of high quality assets nationwide • Attractive va
Slide 6: Our Focus
5 Our Focus MISSION STATEMENT BofI will be the premier low- cost operator in consumer financial services
Slide 7: Agenda
6 AGENDA • The Bank of Internet Franchise – Building Online Customer Trust for Seven Years – Banking Consumers in all 50 States • Financial Highlights – Five Consecutive Years of Increased Earnings – Two Consecutive Quarters of Increased Earnings • Changes to Meet Challenging Market Conditions – New
Slide 8: Our Business Model – Internet Efficiency
7 Our Business Model – Internet Efficiency 2002 2003 2004 2005 2006 Assets in Thousands Net Interest Income (in 000s) Noninterest Expense EXCLUDING SALARY & WAGES Comparison of Net Interest Income to Operating Cost
Slide 9: Personnel Efficiency
8 Personnel Efficiency Assets Per Employee • At March 31, 2007, B of I had 35 employees or $24.2M in assets per employee. • Typical bank has approximately $6.0M in assets per employee
Slide 10: Income Statement Comparison
9 Income Statement Comparison Common-sized income statement comparison BofI generates earnings through lower costs Source: FDIC - Statistics on Depository Institutions – Year ended 12/31/2006. (1) Excludes operating income and expense of BofI Holding, Inc. Holding company data is also not included i
Slide 11: Building Blocks for Successful Execution
10 Building Blocks for Successful Execution • Outsource core banking system • Proprietary CRM and fraud control • No legacy systems COST EFFECTIVE PROCESS • Assembly-line work flow • Automated deposit & loan processing • Real-time customer information SCALABLE TECHNOLOGY • Superior risk management •
Slide 12: Online Deposit Franchise
11 Online Deposit Franchise ….. • Online Retail Deposit Customers in all 50 states • Proprietary Technology & Customer Data Base – six-year proprietary data base of Internet activity support unique fraud control • Proprietary Process – years of process improvements • Demonstrated Scalability • Targe
Slide 13: Snap Shot of Deposit Growth
12 Snap Shot of Deposit Growth Increase in Deposits (45 days, 3/31/07 – 5/15/07): 5.8% Growth Driving Growth – Time Deposits: $57.3M / 1,673 accounts* WA Rate: 5.22% WA Term: 38.5 months Average Balance: $34K A staff of 10 people opened these retail deposits and serviced 24,000 accounts * - new and
Slide 14: Building Our Online Franchise
13 Building Our Online Franchise ………. * At each fiscal year end June 30 and most recent quarter. *
Slide 15: Building Online Lending
14 Building Online Lending…. • Unique multifamily online origination site • Single family online originations for six years • Years of online authentication and underwriting experience • Home equity originations – system built in fiscal 2006 • Commenced Indirect RV in March – will use experience to
Slide 16: Lending Initiatives – Online Home Equity Snap Shot
15 Lending Initiatives – Online Home Equity Snap Shot Online Origination of Home Equity Loans (45 days, 3/31/07 – 5/15/07): $4.4M funded in 35 states Driving Growth – Best Rates for High Quality Customers: loans WA Rate: 7.12% Average 2 nd Lien Balance: $38k CLTV: 56.1% Average 1 st Lien: $166k Weig
Slide 17: Indirect RV Lending - Adding Risk Adjusted Yield
16 Indirect RV Lending - Adding Risk Adjusted Yield • We believe risk adjusted yields on RV loans are superior to many prime mortgage products in the current environment • Higher rates and larger balances than prime autos • Good demographic match to current customer mix • Indirect dealer network, re
Slide 18: Indirect RV - Industry Lending Data
17 Lending Initiatives Indirect RV - Industry Lending Data Total indirect funded: $6.9B in 2005 Indirect outstanding: $19.0B Avg. down payment: 12% New: 70% Used: 30% Avg. age of used RV: 38 months Avg. 30 day+: .65% SOURCE: RVIA 2005
Slide 19: Delinquency Trends
18 Delinquency Trends SOURCE: RVIA 2005
Slide 20: RV Industry Market
19 RV Industry Market BofI $14.4B Units Sold Owner 384,400 Units 80% Towable 20% MH 17% Goes to Pacific Reg. 3,100 Dealerships Years Old Loves their RV! Married Homeowner $68,000 SOURCE: RVIA 2005
Slide 21: Our Franchise Value
20 Our Franchise Value … • Our People and Our Service Culture • Our Success Building Low Cost Delivery Systems – Regularly changing processes and proprietary software to improve efficiency (Kai-Zen) • Our Consistent, Competitive Pricing – Across all product lines – Customers trust that they are gett
Slide 22: Financial Highlights Net Income Growth
21 Financial Highlights Net Income Growth * For each fiscal year ended June 30 and year-to-date at 3 rd quarter end. *
Slide 23: Asset Growth
22 Asset Growth * At each fiscal year end June 30 and most recent quarter. *
Slide 24: Investment in High Quality Assets
23 Investment in High Quality Assets Multifamily mortgages – 45% Single family mortgage – 13% Commercial real estate loans– 2% RV Loans– 1% Home equity loans– 1% Mortgage-backed securities – 38% FNMA, FHLMC, GNMA NO SUBPRIME LOANS OR SUBPRIME MBS Earning Assets by Type March 31, 2007
Slide 25: Geographic Breakdown
24 Geographic Breakdown Mortgage Loan Principal by Location of Collateral As of March 31, 2007 Includes all Property Types: -Multifamily, -Single family (1 st & 2nd) -Commercial
Slide 26: History of Quality Assets
25 History of Quality Assets Since inception through March 31, 2007, BOFI has had no mortgage-loan: § Write-offs § Foreclosure sales § Restructurings No subprime loans or mortgage-backed securities Loan portfolio is supported by exceptional LTVs With growth in consumer loans, unlikely to continue pe
Slide 27: Stable Deposit Base, Managed Interest Rate Risk
26 Stable Deposit Base, Managed Interest Rate Risk More than 24,000 online deposit customer accounts 34% of accounts are checking and savings (March 31, 2007) No brokered CDs FHLB Advances and Reverse Repurchase Agreements - used as a interest rate hedging vehicle approximately 4.32% at March 31, 20
Slide 28: Last Quarter Financial Data March 2006 and March 2007
27 Last Quarter Financial Data March 2006 and March 2007
Slide 29: Changes for a Challenging Environment
28 Changes for a Challenging Environment • Generate Higher Yielding Consumer Loans – Originate high quality home equity and RV loans nationwide – High volume acquisition through the Internet – A good risk adjusted alternative to a flat yield curve • Leverage the Value of “Online” Assets- Affiliate M
Slide 30: Marketing Initiatives
29 Marketing Initiatives Leverage Value of “Online” Assets Implemented Affiliate Marketing • Social Marketing – Started Affinity Marketing to RV owners through an agreement with Camping WorldStarted – RVBank.com – Pay for performance • Drive Down Account Acquisition Costs – Pay for performance •
Slide 31: Investment Highlights
30 Investment Highlights Attractive valuation The Internet creates an opportunity for a more efficient banking model BofI has a unique, low-cost and scalable operating model Proprietary software and technology Strong record of growth and profitability Portfolio of high quality assets nationwide
BofI Holding — The Wall Street Analyst Forum (May 2007) on 6ix