NASDAQ BOFI - PDF document

1 0 NASDAQ: BOFI May 2017 BOFI HOLDING, IN
0 NASDAQ: BOFI May 2017 BOFI HOLDING, INC. Investor Presentation 1 Safe Harbor Thispresentationcontainsforward-lookingstatementswithinthemeaningofthePrivateSecuritiesLitigationReformActof1995(the“ReformAct”).Thewords“believe,”“expect,”“anticipate,”“estimate,”“project,”orthenegationthereoforsimilarexpressionsconstituteforward-lookingstatementswithinthemeaningoftheReformAct.Thesestatementsmayinclude,butarenotlimitedto,projectionsofrevenues,incomeorloss,estimatesofcapitalexpenditures,plansforfutureoperations,productsorservices,andfinancingneeds

2 orplans,aswellasassumptionsrelatingtothe
orplans,aswellasassumptionsrelatingtothesematters.Such statementsinvolverisks,uncertaintiesandotherfactorsthatmaycauseactualresults,performanceorachievementsoftheCompanyanditssubsidiariestobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedbysuchforward-lookingstatements.Foradiscussionofthesefactors,wereferyoutotheCompany'sreportsfiledwiththeSecuritiesandExchangeCommission,includingitsAnnualReportonForm10-KfortheyearendedJune30,2016.Inlightofthesignificantuncertaintiesinherentintheforward-lookingstatementsinc

3 ludedherein,theinclusionofsuchinformatio
ludedherein,theinclusionofsuchinformationshouldnotberegardedasarepresentationbytheCompanyorbyanyotherpersonorentitythattheobjectivesandplansoftheCompanywillbeachieved.Forallforward-lookingstatements,theCompanyclaimstheprotectionofthesafe-harborforforward-lookingstatementscontainedintheReformAct. 2 Salaries and benefitsPremises and equipment BofI(%)0.800.14Other non-interest expense0.50Total non-interest expense1.44Core business margin2.49 1.480.331.152.960.48 Banks$1-$10bn(%)Net interest income3.933.44 As % of average assets1.For the three mo

4 nths ended 12/31/16 –the most recent dat
nths ended 12/31/16 –the most recent data on FDIC website “Statistics on Depository Institutions Report"BofI Federal Bank only, excludes BofI Holding, Inc. to compare to FDIC data2.Commercial banks by asset size. FDIC reported for threemonths ended 12/31/16. Total of 506 institutions $1-$10 billion Our Business Model is More Profitable Because Our Costs are Lower 3 BofI’s Business Model Is Differentiated From Other Banks Customer Acquisition Sales Servicing Distribution Digital MarketingAffinity and Distribution PartnersData mining/target fee

5 ding direct marketingCross-sellAutomated
ding direct marketingCross-sellAutomated fulfillmentInbound call center salesOutbound call center salesMinimal outside salesSignificant inside salesSelf-serviceDigital journeyDirect banker (call center)Balance sheetWhole loan sales optionsSecuritization Data Driven Insight Integrated Customer Experience Digital Marketing Digitally Enabled Operations Next-Gen TechnologyCore Digital Capabilities 4 Fiscal 2017 Third Quarter Highlights Comparedwith Fiscal 2016 Third Quarter $ MillionsAsset Growth $ MillionsNet Income $ MillionsDeposit Growth $ Di

6 luted EPSDiluted EPS Return on Equity =
luted EPSDiluted EPS Return on Equity = 21.10%Return on Assets = 1.94% 7,7048,700 2,0004,0006,0008,00010,000Q3 2016Q3 2017 12.9% 6,0486,800 2,0004,0006,0008,000Q3 2016Q3 2017 12.4% 35.941.0 1020304050Q3 2016Q3 2017 14.1% 0.560.63 0.000.100.200.300.400.500.600.70Q3 2016Q3 2017 12.5% 5 Fiscal 2016 Highlights Compared with Fiscal 2015 5,824 7,601 0 2,0004,0006,0008,000FY 2015FY 2016 $ MillionsAsset Growth 30.5% 82.7119.3 50100150FY 2015FY 2016 $ MillionsNet Income 44.3% 4,4526,044 2,0004,0006,0008,000FY 2015FY 2016 $ MillionsDeposit Growth 35.8%

7 1.34 1.85 0112 FY 2015FY 2016 Diluted E
1.34 1.85 0112 FY 2015FY 2016 Diluted EPSDiluted EPS 38.1% Return on Equity = 19.43%Return on Assets = 1.75% 6 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 0.00.51.01.52.0 2014$ per share2013201120122016 32% CAGR 2015 19.43 18.34 17.89 17.57 16.95 15.17 101520201420132011201220162015Tier 1 leverage ratio8.0%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 7 BofI is a Top

8 Quartile Performer Versus Bank Peer Grou
Quartile Performer Versus Bank Peer Group BofI Federal BankPeer GroupPercentile ROAA 2.09%0.86%91% Return on equity 23.66%7.94%96% G&A 1.45% 2.54%16% Efficiency ratio 27.09%66.39%4%Source: Uniform Bank Performance Report (UBPR) as of 3/31/2017Note: Peer group is all savings banks with assets greater than $1 billion for quarter ended 3/31/2017 The 96% on ROE means that the Bank outperformed 96% 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 billi

9 on. 8 Diverse Lending Business Lending S
on. 8 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 launch in January 2017 9 1. Gross loans and leases before premiums, discounts and allowancesLoan Portfolio100% = $7,096 Million SF Residential56%C&I12%C&I SF Lender Finance4%CRE/Home

10 Equity/Consumer and Other4%Multifamily2
Equity/Consumer and Other4%Multifamily22%Factoring2% Loan Diversity March31, 2017 10 Our Asset Growth has been Driven by Strong and Profitable Organic Loan ProductionNet Loan Portfolio End of Last Five Quarters ($ in Thousands) MultifamilySingle family52%54%55%54%55%58%58%58%58%58% Average Loan to Value $6,034,700$6,354,679$6,549,742$6,811,470$7,020,700 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017 11 $579$89$141$100$909$100$1,009200400600800 1,0001,200 Loa

11 n Pipeline Remains StrongFY 2017 Q3 Tota
n Pipeline Remains StrongFY 2017 Q3 TotalSingle Family Warehouse$MJumbo Single FamilyAgency Single FamilyCommercial & Industral LendingMultifamily / Small Balance CommercialPrimary Pipeline 12 0.6 0.7 1.0 2.3 3.3 3.6 0.7 1.1 0.7 1.0 1.4 012345 Loan Origination Growth 69.2%53.2%42.0%42.2% Organic growth in existing business linesMultifamily geographic expansionAgency and jumbo mortgage channel expansionSmall Balance Commercial Real Estate expansionLarge Balance Commercial / Specialty Real Estate expansionAdditional C&I verticals/product expans

12 ionRetail auto lending launchConsumer un
ionRetail auto lending launchConsumer unsecured installment lending launchAnnual growth rateFiscal Year Loan OriginationsFuture Plans 43.3% 5-yr CAGR 0.22.11.40.84.35.03.0$ Billions201120122013201420152016 Loans for investmentLoans for sale15.6% 13 Diversified Branchless Deposit Businesses Key Elements Deposit Consumer direct internet brands Distribution Partners BIN sponsorshipDemographically targeted brandsDifferentiated products with turn-down product options Small business banking Exclusive relationships with significant brands, groups, o

13 r employeesExclusive relationships with
r employeesExclusive relationships with financial planners through BofI AdvisorBusiness banking with simple suite of cash management servicesPrepaid program managers with focus on large national programs Specialty deposits1031 exchange firmsTitle and escrow companiesHOA and property management Commercial/Treasury ManagementFull service treasury/cash management 14 Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits 19%Checking and other demand deposits31%SavingsTime deposits50% Checking and oth

14 er demand depositsSavingsTime depositsJu
er demand depositsSavingsTime depositsJune 30, 2013 March 31, 2017 Checking Growth (6/2013-03/2017)=803%Savings Growth (6/2013-03/2017) = 238%100% of Deposits = $2.1 billion100% of Deposits = $6.8 billionSavings IRA 43%39%14%4% 15 66%30%4% 3141,4202,4863,0673,524500 1,0001,5002,0002,5003,0003,5004,000 Business Deposits by Account Type*Business Banking Deposits ($MM)Q4 13Q4 14Q4 15Q4 16Percent (%) Q3 17 Our Business Banking Vertical has Fueledour Deposit Growth while Generating Significant Fee Income Checking and other demand depositsTime Depo

15 sitsSavings & MMDA* As of quarter end 3/
sitsSavings & MMDA* As of quarter end 3/31/17 16 BofICustomer Base and Deposit Volume is Well Distributed Throughout the United States BofIDeposits Have National Reach With Customers in Every State Average Deposit BalanceNumber of Accounts 17 BofICustomers are Highly Engaged EngagementLow ActivityHighActivityAttributesLowActivity UserBasic UserEngagedElite Engaged Engagement Score (0-100)0s0 S 3030 ! S 60# 60 Average Lifetime Balance$100$4000$6,000$50,000Average # of Services Used- 5710Average # of POS- 11025%of Total Population22%15%41%23%%

16 of Total Balance0%6%24%70%RetentionModer
of Total Balance0%6%24%70%RetentionModerateModerateHighHigh Customer Engagement ResultsNote: Study conducted on Rewards Checking customers 64% of Population or 94% of Balance are Overall High Engagement 18 Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future PlansEnhanced digital marketing automation integrated to outbound sales groupProducts and technology integration targeted to specific industry groupsCreate differentiated consumer and business banking platform Enhance

17 d focus on customer service and user exp
d focus on customer service and user experienceLeverage 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 1,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,000 $ Thousands2016 35.2% 5-yr CAGR 20152014201320122011% CDs74%57%50%26%18%% Borrowings23%23%23%22%14%17%12%as a % of total liabilities 19 Diversified Fee / Non-Interest Income * Excludes securities income^ Assumes estimated non-Emerald Advance-related H&R Block i

18 ncome included in Deposit/Service Fees F
ncome included in Deposit/Service Fees Fee Income Mortgage Banking Deposit/ Service Fees Agency Jumbo Structured Settlement Other Cash/Treasury Management Consumer Deposit Multifamily Prepaid Tax PrepaymentFee Payments 55%4%% Fee Income FY 2016 17% Gain on Sale Other 24% 20 Over the Last Five Years, BofI Has Successfully Started New Products, Added Distribution Channels, and Completed Acquisitions 20102011201220132014201520162017 New product • Agency mortgage Structured settlement Business banking • Lottery Warehouse Lending Treasury/ cash

19 manage-ment • C&I • Prepaid • Agency Ser
manage-ment • C&I • Prepaid • Agency Servicing retention • Small balance CRE • Auto • HRB franchising lending • Retail Auto • RefundAdvance(H&RBlock) Unsecured Lending Distribution/channel • Costco • Retail agency mortgage • BofI advisor • Netbank • Retail Structured settlement • UFB Direct • Bank X • IRA • Virtus Wholesale agency • H&RBlockretail stores M&A Principal Bank • Union Federal • H&R Block Bank Equipment leasing 21 Key Goals of Universal Digital Bank Personalization Self elf - f - Service Facilitate Facilitate Partnerships Cu

20 stomizable Customizable Experience Cro
stomizable Customizable Experience Cross ss - s - Sell Artificial intelligence and big data credit models enable quick credit decisionsCustomized product recommendations based upon analytical determination of needProvide holistic and interactive and intuitive design experienceIntegrate online experience with other channelsEasy integration of third-party features (e.g., biometrics)Access to value added tools (e.g., robo-advisory, automated savings features) either proprietary or third partyEnable creative customer acquisition partnersEventua

21 l artificial intelligence tools assist s
l artificial intelligence tools assist sale of banking products such as deposits, loans, and mortgagesProducts optimized by channel, recipient and journeySelf service saves time and cost (e.g., activate and de-activate debit-card in platform, send wires via self-service)Increase chance of offering right product at the right time and placePersonalization is the right antidote for too much choice, too much content, and not enough time 22 Universal Digital Bank Consumer Platform Cross ss - s - sell Product Pr o d u c t Development (In De In In -

22 velopment ev Dev n n - - House Apps) Pe
velopment ev Dev n n - - House Apps) Personalization Personalization & Segmentation App Store App Store Management Robo-advisorTrustsThird party services/paymentsThird-party lendingAutoIRAMortgagePersonal loanReal-time retentionNext-best actionTransaction miningPersonalized alerts Consumer Online Consumer Online Banking Platform 23 Advanced Data Analytics Provides Key Insights Into Customer Engagement, Profitability, and Retention to Enhance Customer Lifetime Throughout the Bank Customer Segmentation Customer Segmentat Methodology to Meth

23 odology to Understand Usage & dersta
odology to Understand Usage & derstand Usa ge Behavior Profitability Analysis at the Profitability Analysis at the Individual Customer Level Streamlined d Acquisition Streamlined d Acquisition Ac Process via Lookalike oc es s vi a Lo ok al Modeling & Modeling & Sales Efficiencies Retention n & Attrition Drivers Retention n & Attritio & to Boost Long itio ong on g - Driver n io n g g - - Term to Boost Long ong g Term Te Te Customer Engagement Key LearningsFramework for Data Analysis 24 We are Also Leveraging Our API Stack to

24 Integrate Our Consumer Enrollment Platfo
Integrate Our Consumer Enrollment Platform into H&R Block’s Tax Software H&R Block Overview Key y Steps s for T T T ax x S S eason n 2017 Approximately 10,000 U.S branchesFiles 1 in every 7 U.S. tax returns19.7 million U.S. tax returns per year83% of customers receive a refund35% franchise-ownedApproximately 2,400 employees55 million visits per year on HRB websiteSocial media28,600 Twitter Followers463,000 Facebook fans1.7 Million views on YouTube 24 Accelerate cross-selling strategies on new and existing IRAs•Full integration of IR

25 As into H&R Block’s tax agency software
As into H&R Block’s tax agency software (backend enrollment fully connected)IRA offer on HRB website and datamining on HRB database 25 Omni Channel Approach for BofI’s 2017 Digital Marketing Strategy Digital personas for personalized interactionsIntroduced BI reporting tool for analyticsEnhanced branding, messaging and positioningSocial employee engagementMulti-dimensional analysis by geography, customer type, product, media, traffic source Organizational commitment to user experience D pe Introduced tool for ana analysis by mertype, mmitme

26 nt e InfrastructurePersonalization& Dat
nt e InfrastructurePersonalization& DataBrand &ContentBusiness Process AnalyticalstrategyPaid, Social & MobilestrategyUser Experience DIGITAL DIGITAL STRATEGY Marketing automation implementation 26 Holistic Credit Risk Management What We Do Loan Life CycleUtilize 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 optimizemonitoring and reporting capabilities Set Appetite Originations Portfolio Portfoli o Management Reporting Special

27 Assets Credit Monitoring & OversightBOF
Assets Credit Monitoring & OversightBOFI Credit Objectives Establish Establish Credit Credit Credit Framework and amework an amework an Culture Safe Growth Monitor Assets Monitor Assets Throughout Throughout Throughout Life Cycle Data ta - ta - Driven Data ta ta - Driven Dr Dr Decision De ci si on De De Decision Decisi Deci si Making Mitigate Miti ga te Problem Loans Example of Credit Tools Board of DirectorsAnnual Strategic PlanCorporate GovernancePolicies & Approval Authorities Credit Tools List is a sampling and is not me

28 ant to be comprehensive 27 Monitoring &
ant to be comprehensive 27 Monitoring & Management Oversight: Core Products Loan reviews at least quarterlyProject updates at least quarterlyUpdated financials at least annuallySite 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 yearUpdated AVMs twice a yearSuper jumbo loans receive complete annual loan review, including updated credit reportPledged assets receive refreshed CLTV rations on a semi

29 annual basisPortfolio-level review perfo
annual basisPortfolio-level review performed quarterly Risk based annual loan review process, with 4 levels depending on financial performance & risk triggersUpdated financials at least annuallyFICO pulled twice a yearUpdated AVMs twice a yearUpdated credit report and property inspections requested based on risk triggersClassified loans receive quarterly reviewPortfolio-level review performed quarterlyStress testing performed twice a year Loan reviews at least quarterlyUpdated financials at least quarterlyBorrowing base / custodial reports at

30 least monthlyContinuous collateral anal
least monthlyContinuous collateral analytics, with quarterly validation List is a sampling and is not meant to be comprehensive f o l i o l e v e l m o n i t o r i n g w i t h i n d i v i d u a l l o a n r e Single FamilyResidential b a s e d a n n u a l l o a n r e v i e w p r o c e s s w i t h 4 Income PropertyLending a t l e a s t q u a r t e r l y C&I Bridge v i e w s a t l e a s t q u a r t e r l y C&I Lender Finance 28 (%)BofIBanks $1-10 bn Total Net Charge-Offs Annualized Loans in non-accrual to total loans(%)BofIBanks $1-10 bn Best-

31 in-Class Loan Quality 0.050.40 01 0.500.
in-Class Loan Quality 0.050.40 01 0.500.99 012 1. As reported in FDIC SDI report at 12/31/16. Total of 506 institutions included in the $1-$10 billion group. 29 Bank Provides Appropriate Resources to Manage Credit and Compliance Risk Department FTEsJune 30, 2013June 30, 2014June 30, 2015June 30, 2016 Credit and Quality Control 27415765 Risk, Internal Asset Review, Compliance,Audit and BSA 16263544 30 Full service branchless banking platform with structural cost advantages vs. traditional banks Superior growth and ROE relative to large and s

32 mall competitors Solid track record of a
mall 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 31 Greg Garrabrants, President and CEOAndy Micheletti, EVP/CFOinvestors@bofi.comwww.bofiholding.comJohnny Lai, VP Corporate Development andInvestor RelationsPhone: 858.649.2218Mobile: 858.245.1442jlai@bofi.com Contact Informatio