Attached files
| file | filename |
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| EX-99.2 - EXHIBIT 99.2 - Axos Financial, Inc. | bofi20160912.pdf |
| 8-K - 8-K - Axos Financial, Inc. | a8-k20160914investorreport.htm |
NASDAQ: BOFI
September 2016
BOFI HOLDING, INC.
Investor Presentation
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-looking statements within
the meaning of the Reform Act. These
statements may include, but are not limited
to, projections of revenues, income or loss,
estimates of capital expenditures, plans for
future operations, products or services, and
financing needs or plans, as well as
assumptions relating to these matters. Such
statements involve risks, uncertainties and other factors that may cause actual results, performance or
achievements of the Company and its subsidiaries to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. For a
discussion of these factors, we refer you to the Company's reports filed with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for the year ended June 30, 2016.
In light of the significant uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by the Company or by any
other person or entity that the objectives and plans of the Company will be achieved. For all forward-
looking statements, the Company claims the protection of the safe-harbor for forward-looking
statements contained in the Reform Act.
2
Fiscal 2016 Fourth Quarter Highlights Compared with Prior Year’s Fiscal Quarter
5,824
7,601
0
2,000
4,000
6,000
8,000
Q4 2015 Q4 2016
$ Millions
Asset Growth
30.5%
24.4
29.7
0
10
20
30
40
Q4 2015 Q4 2016
$ Millions
Net Income
21.9%
4,452
6,044
0
2,000
4,000
6,000
8,000
Q4 2015 Q4 2016
$ Millions
Deposit Growth
35.8%
0.39
0.46
0.00
0.10
0.20
0.30
0.40
0.50
Q4 2015 Q4 2016
$ Diluted EPS
Diluted EPS
17.9%
Return on Equity = 17.91%
Return on Assets = 1.57%
3
Diluted EPS and Return on Equity Have Been
Consistently Strong
Return On Average Equity (FY) Diluted EPS (FY)
0.58
0.72
0.96
1.34
1.85
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
2012 2013 2014 2015 2016
Percent $ Per Share
16.95
17.57
17.89
18.34
19.43
15.50
16.00
16.50
17.00
17.50
18.00
18.50
19.00
19.50
20.00
2012 2013 2014 2015 2016
34% CAGR
4
Corporate Profile and Vision
• $7.6 billion asset savings and loan
holding company1
• 15-year operating history,
publicly traded on NASDAQ (BOFI)
since 2005
• Headquartered in San Diego, CA
• 647 employees
($11.7 million in assets per employee)1
• Market Capitalization of $1.35 billion2
1. As of 06/30/2016
2. As of 09/09/2016 closing price of $21.35 per share
We aspire to be the most innovative
branchless bank in the United States
providing products and services
superior to our branch based
competitors
Vision
Key Facts
5
Source: SNL Financial
2013 The Best of the Biggest Thrifts
#1
BofI Holding, Inc. (BOFI) 1 CA 167.418 3,568.3 1.54 17.79 15.36 40.70 0.63 0.03
BofI is Consistently Ranked among the Best
of the Biggest Thrifts by SNL Financial...
2014 The Best of the Biggest Thrifts
BofI Holding, Inc. (BOFI) 1 CA 172.94 5,194.7 1.56 18.23 27.77 34.40 0.79 0.03
#1
2015 The Best of the Biggest Thrifts
#1
BofI Holding, Inc. (BOFI) 1 CA 169.04 6.66 1.70 18.65 33.50 30.20 -0.01 0.46
6
...and is also a Top Performer among the Broader
Universe of all Public Banks and Thrifts
2014
rank
2013
rank
Total assets
($000)
2013
ROAE
(%)
2013
ROAA
(%)
Non-interest
income/total
revenue (%)
Capital
ratio
(%)
Efficiency
ratio (%)
Non-
performing
loans/total
loans (%)
1 79 Central Pacific Financial Corp., Honolulu, HI $4,741,198 27.7 3.73 28.96 21.6 74.39 2.47
2 N/A Palmetto Bancshares, Inc., Greenville, SC $1,090,229 26.06 2.53 26.36 15.5 77.24 5.45
3 N/A
First National Community Bancorp, Inc.,
Dunmore, PA
$1,003,808 18.72 0.67 17.8 11.6 101.74 0.99
4 4 BofI Holding, Inc., San Diego, CA $3,568,299 17.97 1.6 20.28 15.7 41.12 0.64
5 29 Southside Bancshares, Inc., Tyler, TX $3,445,663 16.5 1.22 19.59 21.7 63.62 0.89
6 6 Bank of the Ozarks, Inc., Little Rock, AR $4,787,068 15.5 2.04 26.64 17.1 47.71 0.26
7 63 Western Alliance Bancorporation, Phoenix, AZ $9,307,095 14.34 1.35 2.79 12.4 55.6 2.45
8 16 First Financial Bankshares, Inc., Abilene, TX $5,222,208 13.75 1.64 26.42 17 52.2 1.05
9 11 Hingham Institution for Savings, Hingham, MA $1,356,441 13.63 1.06 4.14 13.8 43.26 0.55
10 23 Alerus Financial Corporation, Grand Forks, ND $1,380,733 13.58 1.54 63.97 14.3 74.03 0.57
Source: ABA Banking Journal, May 2014
Note: Public banks and thrifts with total assets of $1-10 billion dollars
7
BofI is a Top Quartile Performer Versus
Bank Peer Group
BofI Federal
Bank Peer Group Percentile
ROAA 1.89% 0.75% 92%
Return on equity 22.62% 6.69% 95%
G&A 1.48% 2.60% 16%
Efficiency ratio 30.57% 68.48% 4%
Source: Uniform Bank Performance Report (UBPR) as of 06/30/16
Note: Peer group is all savings banks with assets greater than $1 billion for quarter ended 06/30/16
The 95% on ROE means that the Bank
outperformed 95% of all banks. The
16% G&A ranking means that only 16%
of banks spend less on G&A than BofI.
Peer group includes savings banks
greater than $1 billion dollars.
8
Salaries and benefits
Premises and equipment
BofI1
(%)
0.81
0.15
Other non-interest
expense
0.58
Total non-interest
expense
1.54
Core business margin 2.22
1.47
0.33
1.05
2.85
0.55
Banks
$1-$10bn2
(%)
Net interest income 3.76 3.40
As % of average assets
1. For the three months ended 6/30/16 - the most recent data on FDIC website “Statistics on Depository Institutions Report"
BofI Federal Bank only, excludes BofI Holding, Inc. to compare to FDIC data
2. Commercial banks by asset size. FDIC reported for three months ended 6/30/16. Total of 505 institutions $1-$10 billion
Our Business Model is More Profitable Because
Our Costs are Lower
9
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
Business
banking
• Exclusive relationships with significant brands,
groups, or employees
• Exclusive relationships with financial planners
through BofI Advisor
• Business banking with full suite of cash
management services
• Prepaid program managers with focus on large
national programs
Specialty
deposits
• 1031 exchange firms
• Title and escrow companies
• HOA and property management
• IOLTA accounts
10
Core Deposit Growth Was Sufficiently Strong To
Grow Overall Deposits While Changing The
Deposit Mix
Deposit Growth Future Plans
• Enhanced digital marketing
• Products and technology integration
targeted to specific industry groups
• Create differentiated consumer and
business technology platform
• Focus on customer and user
experience
• Leverage existing and create new
distribution partnerships to reduce
acquisition cost and leverage external
brands
1,615,088
2,091,999
3,041,536
4,451,917
6,044,051
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
$ Thousands
2012 2013 2014 2016 2015
39.1%
4-yr CAGR
% CDs 57% 50% 26% 18% 17%
% Borrowings 23% 23% 22% 14% 11%
11
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%
42%
Checking and
other demand
deposits
36%
Savings
Time deposits
17%
June 30, 2013 June 30, 2016
Checking Growth (6/2013-06/2016) = 537%
Savings Growth (6/2013-06/2016) = 287%
100% of Deposits = $2.1 billion 100% of Deposits = $6.0 billion
5%
Savings - IRA
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
12
BofI Business and Consumer Deposit Base is Well
Diversified by Product Type
Consumer Deposits By Account Type Business Deposits By Account Type
Savings
- IRA
Time Deposits
Checking and other
demand deposits
Savings & MMDA
As of quarter end 6/30/16
13
64%
22%
14%
Checking and other
demand deposits
Time Deposits
Savings & MMDA
9%
22%
47%
21%
Checking and
other demand
deposits
Savings & MMDA
Savings- IRA
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 $300 $1000 $6,000 $50,000
Average # of Services
Used
- < 1 4 8
Average # of POS - < 1 10 24
% of Total Population 23% 13% 41% 24%
% of Total Balance
0% 1% 17% 82%
Retention Moderate Moderate High High
Customer Engagement Results
Note: Study conducted on Rewards Checking
customers
65% of Population or 99% of Balance are
Overall High Engagement
14
15
Inbound
We are Building a Better Real-Time Data Engine to Drive
Customer Touch-Points Based on a Wide Range of Data
Sources
Direct Mail
EMail
Call Center
Website
Mobile app/
SMS
Direct Mail
EMail
Call Center
Website
Mobile app/
SMS
Outbound
• Advanced multichannel integration
• Pervasive analytics utilizing customer data, microsegmentation and predictive modeling
• Real time interactions management for increased conversion rates
• Product offerings and pricing schemes, based on microsegments and optimized by channel
16
Organizational Structure To Be World Class
Digital Bank
Cross-sell
Product
Development
(In-House Apps)
Personalization
& Segmentation
App Store
Management
• Robo-advisor
• Trusts
• Third party
• Auto
• IRA
• Mortgage
• Real-time retention
• Next-best action
• Transaction mining
Core
Platform
Advanced Data Analytics Provides Key Insights Into Customer
Engagement, Profitability, and Retention to Enhance Customer
Lifetime Throughout the Bank
Key Learnings
Framework for Data Analysis
Customer Segmentation
Methodology to
Understand Usage &
Behavior
Profitability Analysis at the
Individual Customer Level
Streamlined Acquisition
Process via Lookalike
Modeling &
Sales Efficiencies
Retention & Attrition Drivers
to Boost Long-Term
Customer Engagement
17
18
Customers Prefer to Become Aware of Financial
Products and Services through Electronic Channels
53% electronic
26% in person
11
15
6
11
36
0 10 20 30 40
Email
Online
Telephone call/online chat/
video conference
In person with account specialist
In person with teller
% of customers
Source: Mercator Advisory Group Customer Monitor Survey Series, Banking and Channels 2013, Question 27
19
Branch Transaction Activity Migrating to
Mobile/Online Channels
U.S. Banking Transactions by Channel
(Billions)1
U.S. Branch Transaction Activity2
(average annual change – 2008-11)
Deposit
Withdrawal
Check
cashing
Total
-7% to -9%
-3% to -6%
-17% to -19%
-4% to -5%
100
75
50
25
0
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Branch Call center ATM Online Mobile
Forecast Actual
1. Source: Tower Group; McKinsey & Co., Novantas. 2. Represents the average annual change measured in 2008-2011
15% of
transactions
at branches
~85% of
transactions
non-branch
20
Bank Deposit Revenue Sources have been Significantly
Reduced and Cost per Branch Transaction is 40 Times
that of a Call Center
Service Charges/Total
Deposits (%)
Source: FDIC; Baird estimates; PNC population
Cost Per Transaction
%
0.40%
2002 2012
0.2
0.65%
0.0
0.8
0.4
0.6
$0.56
Call
center
Online/
mobile
$
$0.10
0
ATM
$0.59
Branch
$3.97
1
4
3
2
21
Diversified Fee / Non-Interest Income
Fee Income
Mortgage
Banking
Deposit/
Service Fees
Agency
Jumbo
Structured Settlement
Other
Treasury
Consumer Deposit
Multifamily
Prepaid
Tax
Prepayment
Fee
Payments
21%
14%
55%
4%
% Fee Income
at 6/30/2015*
% of Fee Income
At 6/30/2016*
47% 17%
* Excludes securities income
Gain on Sale -
Other
18% 24%
22
Diverse Lending Business
Lending
Single
family
Commercial
Real Estate
C&I
Lending
Gain-on-sale
Mortgage Banking
Jumbo
Multifamily
Small Balance
Commercial
Lender Finance
ABL
• Internet and affinity lead sources
• Self-service operation
• Low-fixed costs
• High-end portfolio lender
– “Common Sense" underwriting
– Q4 2016 average LTV of 63%
• High quality originators with average experience of 15+ years
• Call center based originators
• Highly ranked website - apartmentbank.com
• 12-year history as portfolio bank
• High credit quality
• Q4 2016 average LTV of 57% and DSCR of 1.42%
• Real estate and tax lien secured
• Consumer receivable secured
• Business loan secured
• Lower and middle market asset-based
lending
Warehouse Lending
• Product provides vertical integration
and strengthens mortgage banking
relationships
Factoring
• Insurance company secured receivables
• Healthcare receivables
• Other high credit quality receivables
Bank Loans
• Syndicated cash-flow loans
Consumer
Auto
Overdraft Lines
• Incubation business
• Strong affinity fit
• Important component of deposit value
proposition
23
Loan Portfolio1
100% = $6,402 Million
SF - Residential
60%
C&I
8%
C&I - SF Lender
Finance
6%
CRE/Home
Equity/Consumer
and Other
3%
Multifamily
21%
Factoring
2%
1. Gross loans before premiums, discounts and allowances
Loan Diversity – June 30, 2016
24
Our Asset Growth has been Driven by Strong and
Profitable Organic Loan Production
Net Loan Portfolio – End of Last Five Quarters ($ in Thousands)
Multifamily
Single family
52% 52% 52% 52% 54%
58% 57% 57% 58% 58%
Average
Loan to
Value
$4,928,618
$5,225,319
$5,645,272
$6,034,700
$6,354,679
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
25
7 Key Digital Evolution
Strategies
Infrastructure
Data
Content
Business
Process
Analytical
strategy
Social and
mobile
strategy
User
experience
DIGITAL
STRATEGY
2
3
4
5
6
7
1
• Data Driven Marketing
• Persona tailored interactions
• Linked CRMs
• Results oriented data focused
testing on variables- BI- Business
Intelligence, analytics, reporting
• Value stream productivity analysis
• Pin point cost efficiencies and improvements in workflow
• Streamlined compliance, review and approval methodology
• Drive more efficient work at a cost effective ROI
• Optimized SEO – Search Engine
Optimization for organic growth
and keyword monitoring
• Enterprise content management
(e.g., web, Microsites, landing
pages blogs, social media)
• Enhanced touch point
methodology
• Social media
engagement and
listening
• Responsive
design-mobile first
• Digital app store
• Focused CX-
customer
experience on
seamless mobile
functionality
• Multi-dimensional analysis by data
tracking strings for campaigns,
improvements to geo-locate, customer
type, product, traffic source path
• Major focus of UI- User
Interface, UX – User
Experience web design
• Hired Web UI and UX
talent
• Driving consistent user
experience across all
major touch-points
• Enhanced digital marketing technology
stack
• Integrations with BI tool to data warehouse
• Enterprise CRM growth platform for web
traffic growth
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
What is an Integrated Governance, Risk & Compliance
Tool?
Scalable Infrastructure to Support “Big Bank’ Growth
Objectives and Continuing Efficiencies
Management
Framework
Standardized
Risk Scoring
Training
Tools and
Techniques
• 3,000+ processes • Numerical ratings for
each process
• Based on Assurance
Findings
• Ongoing deployment
of assurance
resources to address
root cause failures
• Single IT
infrastructure (Archer)
for monitoring process
compliance
• Enhanced
management
reporting and
business intelligence
27
Credit Monitoring & Management Oversight
• 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 basis (i.e.
delinquency, FICO/LTV degradation).
• FICO pulled twice a year
• AVMs ordered twice a year
• Super jumbo loans receive complete annual
loan review, including updated credit report
• Pledged assets receive refreshed CLTV
rations on a semiannual basis
• Portfolio-level review performed quarterly
Single Family Residential
• Risk based annual loan review process, with
4 levels depending on financial performance
& risk triggers
• Updated financials at least annually
• Updated AVM twice a year
• FICO pulled twice a year
• Updated credit report and property
inspections requested based on risk triggers
• Classified loans receive quarterly review
• Portfolio-level review performed quarterly
• Stress testing performed 2x/year
Multi-Family
C&I - Bridge C&I – Lender Finance
• Loan reviews at least quarterly
• Updated financials at least quarterly
• Borrowing base / custodial reports at least
monthly
• Continuous collateral analytics, with quarterly
validation
List is a sampling and is not meant to be comprehensive
28
Multi-family Stress Testing
• Stress testing allows the portfolio to be examined for adverse macroeconomic conditions.
• Stress testing was performed on the Multi-family portfolio for the 2014-2015 fiscal year
• CCAR scenarios reflect variables & limits currently set by the Federal Reserve Bank
• Under the most severe scenario, the Bank’s Estimated Loss would be .68%, or $7.65M annually
• These modeled losses do not include additional support from guarantors
• Expected Loss is minimal due to low LTV% and strong DSCR
CCAR Scenario Summary Results
Summary Analysis
Scenario PD (%) LS (%) EL (%) EL ($M)
CCAR Baseline 1.67 27.83 0.46 5.24
CCAR Adverse 1.87 29.57 0.55 6.26
CCAR Severe 2.15 31.56 0.68 7.65
PD = Probability of Default; LS = Loss Severity; EL = Estimated Loss
29
30
0.02
0.22
0
1
(%)
BofI Banks $1-10 bn
Total Net Charge-Offs Annualized 1
Loans in non-accrual to
total loans1
0.49
1.04
0
1
2
(%)
BofI Bank $1-10 bn
1. As reported in FDIC SDI report at 06/30/16. Total charge-offs annualized for BofI reflects only net charge-offs and does not include write-downs arising from
transfers of loans to held-for-sale accounts. Total of 505 institutions included in the $1-$10 billion group.
Best-in-Class Loan Quality
31
H&R Block Benefits
*After OCC review
Strategic Benefits
• Exclusive cross-sell opportunities for
mortgages, IRAs and potentially other
products (*) to 1/6 of US households
served by H&R Block
• 257,000 new deposit accounts with
cross-marketing opportunities
• Adds consistent, high margin fee-based
revenues over 7-year term
• Strategic partnership with iconic brand
Financial Benefits
• $31-$34 million annual projected
revenues from three initial products
$13-$16 million after-tax income
Excludes potential benefits from
low-cost deposits & future cross-
sell opportunities
• $419 million IRA and Emerald Card
deposits
No deposit premium paid
11 basis points average cost
• Significantly accretive to ROE and
efficiency ratio
H&R Block Overview Opportunities
• 10,213 U.S branches
• Files 1 in every 7 U.S. tax returns
• 19.7 million U.S. tax returns per year
• 83% of customers receive a refund
• 35% franchise-owned
• 2,400 employees
• 1.3 million visits per month on HRB website
• Social media
• 28,600 Twitter Followers
• 463,000 Facebook fans
• 1.7 Million views on YouTube
• Cross-sell to existing customer base
• Acquire new customers through different sources
• Branches
• Software
• Digital Channels
• Engage franchisees and employees
• Use web real estate to market products
Our H&R Block Partnership Will Allow Us to Reach Over 20
Million Potential Customers
Source: H&R Block
32
HRB
Visitors
20MM
Engaging HRB Customers with the Right Offer at
the Right Time
Leads/ Referrals
Remarketing & Marketing
Database
Customer Segmentation
Real-time Propensity
Marketing Mix Models
Data Append &
Segmentation
Purchase/
Mortgage
IRA
Account
Other
Lending
Targeted Customer Offers
Delivery Method
Deposits
33
34
Over the Last Five Years, BofI Has Successfully
Started New Products, Added Distribution
Channels, and Completed Acquisitions
2010 2011 2012 2013 2014 2015 2016
New
product
• Agency
mortgage
• Structured
settlement
• Business
banking
• Lottery
• Warehouse
Lending
• Treasury/
cash
manage-
ment
• C&I
• Prepaid
• Agency
Servicing
retention
• Small
balance
CRE
• Auto
Distribution/
channel
• Costco
• Retail
agency
mortgage
• BofI
advisor
• Netbank
• Retail
Structured
settlement
• UFB
Direct
• Bank X
• IRA
• Virtus • Wholesale
agency
M&A • Principal
Bank
• Union
Federal
• H&R Block • Leasing
35
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
growth in customers, loans and profits
Robust risk management systems and culture has
resulted in lower credit, counterparty and regulatory
risks
Investment Summary
36
Greg Garrabrants, President and CEO
Andy Micheletti, EVP/CFO
investors@bofi.com
www.bofiholding.com
Johnny Lai, VP Corporate Development and
Investor Relations
Phone: 858.649.2218
Mobile: 858.245.1442
jlai@bofi.com
Contact Information