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| EX-99.2 - EXHIBIT 99.2 - Axos Financial, Inc. | a2016invstrpresentation992.pdf |
| 8-K - 8-K - Axos Financial, Inc. | a8-k20161110investorday.htm |
0 NASDAQ: BOFI
November 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 2017 First Quarter Highlights Compared with
Fiscal 2016 First Quarter
6,260
7,855
0
2,000
4,000
6,000
8,000
10,000
Q1 2016 Q1 2017
$ Millions
Asset Growth
25.5%
25.5
28.9
0
10
20
30
40
Q1 2016 Q1 2017
$ Millions
Net Income
13.3%
4,755
6,324
0
2,000
4,000
6,000
8,000
Q1 2016 Q1 2017
$ Millions
Deposit Growth
33.0%
0.40
0.45
0.00
0.10
0.20
0.30
0.40
0.50
Q1 2016 Q1 2017
$ Diluted EPS
Diluted EPS
12.5%
Return on Equity = 16.59%
Return on Assets = 1.53%
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
1
1
2
2
FY 2015 FY 2016
Diluted EPS
Diluted EPS
38.1%
Return on Equity = 19.43%
Return on Assets = 1.75%
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
0
5
10
15
20
2014
%
2013 2011 2012 2016 2015
Tier 1
leverage
ratio
8.0% 8.6% 8.6% 8.7% 9.6% 9.1%
Book
value per
share
$3.42 $3.95 $4.79 $6.33 $8.51 $10.73
5
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 Estate
H&R Block Franchise Lending
Unsecured Lending
Pilot to be
launched in
January 2017
6
Loan Portfolio1
100% = $6,606 Million
SF – Residential
60%
C&I
8%
C&I – SF Lender
Finance
5%
CRE/Home
Equity/Consumer
and Other
4%
Multifamily
21%
Factoring
2%
1. Gross loans and leases before premiums, discounts and allowances
Loan Diversity – September 30, 2016
7
Our Asset Growth has been Driven by Strong
and Profitable Organic Loan Production
Net Loan Portfolio – End of Last Five Quarters ($ in Thousands)
Multifamily
Single family
52% 52% 52% 54% 55%
57% 57% 58% 58% 58%
Average
Loan to
Value
$5,225,319
$5,645,272
$6,034,700
$6,354,679
$6,605,747
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
8
Loan Pipeline Remains Strong
FY 2017 Q1
$1,105
$135
$970
$113
$180
$132
$545
0
200
400
600
800
1,000
1,200
Total Single Family
Warehouse
$M
Jumbo Single
Family
Agency
Single Family
Commercial
& Industral
Lending
Multifamily /
Small Balance
Commercial
Primary
Pipeline
9
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 Commercial /
Specialty Real Estate
expansion
• Additional C&I verticals/product
expansion
• Retail auto lending launch
• Consumer unsecured installment
lending launch
Annual
growth rate
Fiscal Year Loan Originations Future Plans
43.3%
5-yr CAGR
0.2
2.1
1.4
0.8
4.3
5.0
3.0
$ Billions
2011 2012 2013 2014 2015 2016
Loans for investment Loans for sale
15.6%
10
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%
44%
Checking and
other demand
deposits
34%
Savings
Time deposits
17%
June 30, 2013 September 30, 2016
Checking Growth (6/2013-09/2016) = 615%
Savings Growth (6/2013-09/2016) = 239%
100% of Deposits = $2.1 billion 100% of Deposits = $6.3 billion
5%
Savings – IRA
11
314
1,420
2,486
3,067
3,162
0
300
600
900
1,200
1,500
1,800
2,100
2,400
2,700
3,000
3,300
Business Deposits by Account Type* Business Banking Deposits
($MM)
Q4 13 Q4 14 Q4 15 Q4 16
Percent (%)
Q1 17
Our Business Banking Vertical has Fueled our
Deposit Growth while Generating Significant Fee
Income
64%
25%
11%
Checking and other
demand deposits
Time Deposits
Savings & MMDA
* As of quarter end 9/30/16
12
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
13
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 - < 1 10 25
% of Total Population 22% 15% 41% 23%
% of Total Balance
0% 6% 24% 70%
Retention Moderate Moderate High High
Customer Engagement Results
Note: Study conducted on Rewards Checking customers
64% of Population or 94% of Balance
are Overall High Engagement
14
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 differentiated consumer and
business banking platform
• Enhanced focus on customer service
and user experience
• Leverage existing and create new
distribution partnerships to reduce
acquisition cost and leverage external
brands
4,451,917
3,041,536
2,091,999
1,615,088
1,340,325
6,044,051
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
$ Thousands
2016
35.2%
5-yr CAGR
2015 2014 2013 2012 2011
% CDs1 74% 57% 50% 26% 18%
% Borrowings1 23% 23% 23% 22% 14%
17%
12%
1 as a % of total liabilities
15
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-
ment
• C&I
• Prepaid
• Agency
Servicing
retention
• Small
balance
CRE
• Auto • HRB
franchising
lending
• Retail
Auto
• Refund
Advance
(H&R
Block)
Distribution/
channel
• Costco
• Retail
agency
mortgage
• BofI
advisor
• Netbank
• Retail
Structured
settlement
• UFB
Direct
• Bank X
• IRA
• Virtus • Wholesale
agency
• H&R
Block
retail
stores
M&A • Principal
Bank
• Union
Federal
• H&R Block
Bank
• Equipment
leasing
16
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 action
• Transaction mining
• Personalized alerts
Consumer Online
Banking Platform
17
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
Process via Lookalike
Modeling &
Sales Efficiencies
Retention & Attrition Drivers
to Boost Long-Term
Customer Engagement
Key Learnings Framework for Data Analysis
18
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 receive a refund
• 35% franchise-owned
• Approximately 2,400 employees
• 55 million visits per year on HRB website
• Social media
− 28,600 Twitter Followers
− 463,000 Facebook fans
− 1.7 Million views on YouTube
• Accelerate cross-selling strategies on
new and existing IRAs
• Full integration of IRAs into H&R Block’s
tax agency software (backend enrollment
fully connected)
• IRA offer on HRB website and
datamining on HRB database
19
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, traffic source
Organizational commitment
to user experience Infrastructure
Personalization
& Data
Brand &
Content
Business
Process
Analytical
strategy
Paid,
Social &
Mobile
strategy
User
Experience
DIGITAL
STRATEGY
Marketing automation implementation
20
Bank of Internet Website Upgrade
Visual Design Research Combined with Improved UI/UX - Usability
Backend Performance
• Redesigned Bank Of Internet USA website awarded Best-In-Class Website by
Interactive Media Awards (IMA) in 2016
• The result has been a significant increase in the organic traffic to the site
21
Consumer Unsecured
• On-line loan application
• Lead integration via API’s
with lead aggregators
• Loan amounts between
$5,000 and $35,000
• Terms between 36 and 60
months
• Anticipated average credit
score between 710 and 725
• Healthy Origination Fees
and Interest Rates
Website and Product
22
We ask more
questions
and interact
with the
applicant.
While speed
is important,
it is not the
sole driver to
our platform.
Customer
experience is
essential, but
so is making
solid credit
decisions.
We have
lower cost of
funds and
origination
costs.
We will price
our loans
properly for
the risk that
we are
taking, even
if it means a
slower
growth path.
What makes BofI different compared to
other lenders?
Foundation
of the model
built on
Credit,
Capacity,
Character
and
Conditions.
23
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
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 basis (i.e. delinquency,
FICO/LTV degradation).
• FICO pulled twice a year
• Updated AVMs 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
• Risk based annual loan review process, with 4 levels
depending on financial performance & risk triggers
• Updated financials at least annually
• FICO pulled twice a year
• Updated AVMs 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 twice a year
• 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
Single Family Residential Income Property Lending
C&I - Bridge C&I – Lender Finance
25
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
26
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
27
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