Axos Financial, Inc. · NYSE:AX
Axos Financial — BofI Holding — Investor Presentation (February 2017)
29 slides from Axos Financial's investor presentation, Feb 1, 2017
Slide 1: BofI Holding, Inc. Investor Presentation
0 NASDAQ: BOFI February 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: Fiscal 2017 Second Quarter Highlights Compared with Fiscal 2016 Second Quarter
2 Fiscal 2017 Second Quarter Highlights Compared with Fiscal 2016 Second Quarter $ 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% 5,2
Slide 4: Fiscal 2016 Highlights Compared with Fiscal 2015
3 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 5: Diluted EPS and Return on Equity Have Been Consistently Strong
4 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 6: BofI is a Top Quartile Performer Versus Bank Peer Group
5 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 7: Diverse Lending Business
6 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 8: Loan Portfolio – Loan Diversity, December 31, 2016
7 1. Gross loans and leases before premiums, discounts and allowances Loan Portfolio1 100% = $6,878 Million SF – Residential 57% C&I 11% C&I – SF Lender Finance 4% CRE/Home Equity/Consumer and Other 5% Multifamily 21% Factoring 2% Loan Diversity – December 31, 2016
Slide 9: Asset Growth Driven by Strong and Profitable Organic Loan Production
8 Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ 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 $- $1,000
Slide 10: Loan Pipeline Remains Strong
9 $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 $M Jumbo Single Family Agency Single Family Commercial & Industral Lending Multifamily / Small Balance Commercial Primary Pipeline
Slide 11: Loan Origination Growth
10 0.6 0.7 1.0 2.3 3.3 3.6 0.7 1.1 0.7 1.0 1.4 0 1 2 3 4 5 Loan Origination Growth 69.2% 53.2% 42.0% 42.2% • Organic growth in existing business lines o Multifamily geographic expansion o Agency and jumbo mortgage channel expansion o Small Balance Commercial Real Estate expansion o Large Balance Com
Slide 12: Diversified Branchless Deposit Businesses
11 Diversified Branchless Deposit Businesses Key Elements Deposit Consumer direct internet brands Distribution Partners BIN sponsorship • Demographically targeted brands • Differentiated products with turn-down product options Small business banking • Exclusive relationships with significant brands,
Slide 13: Deposit Growth in Checking, Business, and Savings While Transforming the Mix
12 Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits 19% Checking and other demand deposits 31% Savings Time deposits 50% Checking and other demand deposits Savings Time deposits June 30, 2013 December 31, 2016 Checking Growth (6/2013-12/2016) = 61
Slide 14: Business Banking Vertical Has Fueled Deposit Growth
13 64% 29% 7% 314 1,420 2,486 3,067 3,733 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Business Deposits by Account Type* Business Banking Deposits ($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 15: Customer Base and Deposit Volume Well Distributed Throughout the United States
14 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 16: BofI Customers are Highly Engaged
15 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 17: Core Deposit Growth Changing the Deposit Mix
16 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 18: Successfully Started New Products, Added Distribution Channels, Completed Acquisitions
17 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 19: BofI's Business Model Is Differentiated From Other Banks
18 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 20: Universal Digital Bank Consumer Platform
19 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 21: Advanced Data Analytics Provides Key Insights Into Customers
20 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 22: Leveraging API Stack to Integrate Into H&R Block's Tax Software
21 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 23: Omni Channel Approach for 2017 Digital Marketing Strategy
22 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 24: Holistic Credit Risk Management
23 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 25: Monitoring & Management Oversight: Core Products
24 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 26: Best-in-Class Loan Quality
25 (%) BofI Banks $1-10 bn Total Net Charge-Offs Annualized 1 Loans in non-accrual to total loans1 (%) BofI Bank $1-10 bn Best-in-Class Loan Quality 0.01 0.27 0 1 0.63 1.00 0 1 2 1. As reported in FDIC SDI report at 09/30/16. Total of 506 institutions included in the $1-$10 billion group.
Slide 27: 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: Investment Summary
27 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 29: Contact Information
28 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