Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (March 2007)
34 slides from Axos Financial's investor presentation, Mar 15, 2007
Slide 1: Investor Presentation March 13, 2007
Investor Presentation March 13, 2007 Exhibit 99.2
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: Equity Snapshot
Equity Snapshot 3 Exchange/Symbol: NASDAQ/BOFI Price (03/12/07): $ 7.03 Shares Outstanding(01/30/07): 8.28 M Market Capitalization: $58.21 M BV Per Share (12/31/06 - mrq) $8 .01 Price/Book (03/12/07 price/mrq) : .88 X Total Assets (12/31/06 - mrq): $803.4 M Publicly traded since: March 15, 2005 Pric
Slide 4: Agenda
Agenda 4 • The Bank of Internet Franchise – Building Online Customer Trust for Six Years • Financial Highlights – Five Consecutive Years of Increased Earnings – Last Quarter Earnings Up Over Prior Year • Update on Steps to Build More Shareholder Value – Changes to Meet Challenging Market Conditions
Slide 5: Corporate Overview
Corporate Overview BofI Holding, Inc. BofI Trust 1 (Trust Preferred) Bank of Internet USA 5 To be the premier low-cost operator in the consumer financial services industry MISSION STATEMENT • Federally charted savings bank • Regulated by the Office of Thrift Supervision • Deposits insured by the Fed
Slide 6: Investment Highlights
Investment Highlights 6 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 valuation
Slide 7: Our Focus
Our Focus 7 BofI will be the premier low- cost operator in consumer financial services MISSION STATEMENT
Slide 8: Mature Industries Evolving to Lowest Cost Producers
Mature Industries Evolving to Lowest Cost Producers 8
Slide 9: Income Statement Comparison
Income Statement Comparison 9 Common-sized income statement comparison BofI generates higher earnings through lower costs Bank of All S&Ls- Assets Internet USA (1) $500 Mil - $1 Bil ING Bank NetBank (In basis points on average assets) Income: Interest income Interest expense Net interest income Fees
Slide 10: Building Blocks for Successful Execution
Building Blocks for Successful Execution 10 • Outsource core banking system • Proprietary CRM and fraud control • No legacy systems COST EFFECTIVE PROCESS • Assembly-line simplicity • Streamlined deposit & loan approval • Real-time customer information SCALABLE TECHNOLOGY • Superior risk management
Slide 11: Annual Net Interest Income vs Noninterest Expense
Annual Net Interest Income vs Noninterest Expense 11 2002 2003 2004 2005 2006 Assets in Thousands Net Interest Income (in 000s) Noninterest Expense EXCLUDING SALARY & WAGES For the Fiscal Years Ended June 30 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000
Slide 12: Demonstrated Scalability
Demonstrated Scalability 12 $10.4 $13.7 $16.9 $24.4 $29.5 $29.7 Assets per Employee at Fiscal Year End (At Year Ends June 30, and at December 31, 2006) (full-time equivalent employees) (Dollars in millions) Source: FDIC 2002 2003 2004 2005 2006 2006 June 30, December 31, Bank Industry Average
Slide 13: Building Our Online Franchise
Building Our Online Franchise ………. 13 6,367 9,569 13,653 19,827 22,498 24,272 10,000 20,000 2002 2003 2004 2005 2006 December 31, 2006 Total Number of Deposit Accounts * * At each fiscal year end June 30 and most recent quarter.
Slide 14: Online Deposit Franchise
Online Deposit Franchise ….. 14 • 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 – years of process improvements
Slide 15: Building Online Lending
Building Online Lending…. 15 • Single family online originations for five years • Home equity originations – system built in fiscal 2006 using “BofI best practices” • Unique multifamily online origination site • Years of online authentication and underwriting experience • Disciplined lending and inv
Slide 16: Our Franchise Value
Our Franchise Value … 16 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 17: Financial Highlights Asset Growth
Financial Highlights Asset Growth 17 $217.6 $273.5 $405.0 $609.5 $737.8 $803.4 $0 $200 $400 $600 $800 $1,000 2002 2003 2004 2005 2006 December 31, 2006 Total Assets ($ in millions) * At each fiscal year end June 30 and most recent quarter. *
Slide 18: Net Interest Income Growth
18 Net Interest Income Growth $5,088 $6,530 $8,969 $9,955 $4,939 $0 $2,000 $4,000 $6,000 $8,000 $10,000 2003 2004 2005 2006 Six Months Ended December 31, 2006 Net Interest Income ($ in thousands) * For each fiscal year ended June 30 and year to date for last quarter. *
Slide 19: Net Income Growth
19 Net Income Growth $1,730 $2,175 $2,869 $3,266 $1,553 $- $1,000 $2,000 $3,000 $4,000 2003 2004 2005 2006 Six Months Ended December 31, 2006 Net Income ($ in thousands) * * For each fiscal year ended June 30 and year-to-date at most recent quarter..
Slide 20: Investment in High Quality Assets
Investment in High Quality Assets 20 Multifamily mortgages – 49% Single family mortgage – 17% (includes home equity loans) Commercial real estate loans– 2% Mortgage-backed securities – 32% FNMA, FHLMC, GNMA NO SUBPRIME LOANS OR SUBPRIME MBS 2% 17% 32% 49% Investments by Type December 31, 2006
Slide 21: Geographic Breakdown
Geographic Breakdown 21 14% 4% 5% 34% 12% 10% 5% 6% 6% 4% California - Southern California - Northern Washington Colorado Arizona Texas Illinois Florida Oregon All other states Mortgage Loans As of December 31, 2006
Slide 22: History of Quality Assets
History of Quality Assets 22 Since inception through December 31, 2006, 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 Allowance for Loan Losses $0 $500 $1,000 $1,500 Jun-02 Ju
Slide 23: Stable Deposit Base, Managed Interest Rate Risk
Stable Deposit Base, Managed Interest Rate Risk 23 More than 24,000 online deposit customer accounts 34% of accounts are checking and savings (December 31, 2006) More than 95% retail funded deposits – no brokered CDs FHLB Advances and Reverse Repurchase Agreements - Principally used as a interest ra
Slide 24: Last Quarter Financial Data Dec 2005 and Dec 2006
Last Quarter Financial Data Dec 2005 and Dec 2006 24 2005 2006 Net Income (000s) $ $ Diluted Earnings Per Share 0.08 $ 0.09 $ Return on Avg Common Stockholders' Equity 4.14% 4.39% Efficiency Ratio (1) 50.5% 56.0% G & A to Avg Assets 0.85% 0.83% Total Assets (000s) 681,492 $ 803,368 $ Loan Portfolio
Slide 25: Our Task
Our Task …………… 25 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 26: Steps to Build More Shareholder Value in Fiscal 2007
26 Steps to Build More Shareholder Value in Fiscal 2007
Slide 27: Building Shareholder Value: Step One
Building Shareholder Value 27 Step One – Generate Higher Yielding Loans • Originate high-volume online consumer loans- update • Home Equity Lending – expanded to 45 states • Indirect RV Lending- started in March - processing new loans daily • Direct Auto and RV Lending- online software nearly comple
Slide 28: Lending Initiatives – Update
Lending Initiatives – Update 28 Preliminary statistics on our home equity and RV loans at quarter ended March 31, 2007: • - Home equity loan portfolio to have a weighted average rate of approximately 7.20%, an average FICO score of approximately 760 and a combined loan to value of approximately 62%
Slide 29: Building Shareholder Value: Step Two
Building Shareholder Value 29 Step Two – • Deploy Capital with new loan growth – 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 repays with higher rate consumer loa
Slide 30: Yield Curve & Net Interest Margin
Yield Curve & Net Interest Margin 2006 - 1.51% B of I Fiscal Yr: NIM% 30 2003 – 2.11% 2004 – 2.04% 2005 – 1.87%
Slide 31: Impact of Hypothetical NIM Growth
Impact of 25 and 50 bps NIM Growth Hypothetical for Fiscal 2005 and 2006 31 $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 Hypothetical – applying 25 and 50 bps increase to actual average earnings assets of $479 mil and $6
Slide 32: Building Shareholder Value: Step Three
Building Shareholder Value 32 Step Three – Leverage Value of “Online” Assets • Affiliate Marketing – Added more than 100 Internet affiliates • Social Marketing – Affinity Marketing to RV owners next quarter
Slide 33: Our Three Steps - summary
Our Three Steps - summary 33 • Generate Higher Yielding Loans • Match Asset Growth with Loan Growth - Deploy Capital with New Loans / the yield lift • Leverage the Value of “Online” Assets- Affiliate Marketing and Social Networking
Slide 34: Investment Highlights
Investment Highlights 34 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 valuation – bo