Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (August 2019)
31 slides from Axos Financial's investor presentation, Aug 14, 2019
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation August 2019 NYSE: AX
Slide 2: Safe Harbor
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-looki
Slide 3: Our Business Model is More Profitable Because Our Costs are Lower
Our Business Model is More Profitable Because Our Costs are Lower Banks Greater Than Axos1 $10bn2 As % of average assets (%) (%) Net interest income 5.17 3.02 Salaries and benefits 0.97 1.20 Premises and equipment 0.22 0.24 Other non-interest expense 0.87 1.05 Total non-interest expense 2.06 2.49 Co
Slide 4: Axos' Business Model is Differentiated From Other Banks
Axos’ Business Model is Differentiated From Other Banks Customer Sales Servicing Distribution Acquisition • Digital Marketing • Automated • Self-service • Balance sheet fulfillment • Affinity and • Digital journey • Whole loan sales Distribution • Inbound call center options • Direct banker (call Pa
Slide 5: Fiscal 2019 Highlights Compared with Fiscal 2018
Fiscal 2019 Highlights Compared with Fiscal 2018 Asset Growth Deposit Growth $ Millions $ Millions 15,000 17.6% 10,000 12.5% 8,983 11,220 7,985 9,540 10,000 5,000 5,000 0 0 FY 2018 FY 2019 FY 2018 FY 2019 Net Income Diluted EPS $ Millions $ Diluted EPS 15.1% 12.2% 2.39* 2.75* 153.3* 172.0* 3.00 2.48
Slide 6: Fiscal 2019 Fourth Quarter Highlights Compared with Fiscal 2018 Fourth Quarter
Fiscal 2019 Fourth Quarter Highlights Compared with Fiscal 2018 Fourth Quarter Asset Growth Deposit Growth $ Millions $ Millions 15,000 10,000 12.5% 8,983 17.6% 11,220 7,985 10,000 9,540 5,000 5,000 0 0 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Net Income Diluted EPS $ Millions $ Diluted EPS 60 11.2% 42.2* 1.
Slide 7: Diluted EPS and Return on Equity Have Been Consistently Strong
Diluted EPS and Return on Equity Have Been Consistently Strong Despite Significant Increase in Tier 1 Capital Ratios Diluted EPS (FY) Return On Average Equity (FY) $ per share % 3.0 20 19.43 2.75** 17.89 18.34 17.78 17.05 17.08** 2.48 2.5 21% CAGR 2.37 15.40 2.10 15 2.0 1.87 1.5 10 1.34 1.0 0.96 5 0
Slide 8: Net Interest Margin Has Been Stable/Rising Through a Variety of Interest Rate Cycles
Net Interest Margin Has Been Stable/Rising Through a Variety of Interest Rate Cycles Stable Net Interest Margin 4.50% 4.11% 4.07% 4.00% 3.92% 3.91% 3.95% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% FY2015 FY2016 FY2017 FY2018 FY2019 Axos NIM - reported Fed Funds 7
Slide 9: Axos is a Top Quartile Performer Versus Bank Peer Group
Axos is a Top Quartile Performer Versus Bank Peer Group Axos Bank Peer Group Percentile ROAA 1.74% 1.03% 87% Return on equity 20.15% 9.24% 91% G&A 1.92% 2.61% 25% Efficiency ratio 38.52% 65.21% 11% The 91% on ROE means that the Bank outperformed 91% of all banks. The 25% G&A ranking means that only
Slide 10: Diverse Lending Business
Diverse Lending Business Gain-on-sale Mortgage Banking Single family Jumbo Mortgage Warehouse Lending Multifamily Commercial Real Estate Small Balance Commercial Lender Finance Asset Backed Lending Equipment Leasing Lending C&I Lending Factoring Bank Loans Large Balance Commercial/Specialty Real Est
Slide 11: Loan Diversity – June 30, 2019
Loan Diversity – June 30, 2019 Loan Portfolio1 100% = $9,449 Million Factoring 1% Multifamily 21% CRE/Home Equity/ Consumer and Other 48% SF-Residential 6% C&I – SF Lender Finance C&I 6% 18% 1. Gross loans and leases before unaccreted discounts and loan and lease fees and allowances. 10
Slide 12: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $10,000,000 $9,098,453 $9,382,124 $9,017,550 $8,432,289 $8,654,500 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $‐ Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019
Slide 13: Loan Pipeline Remains Strong
Loan Pipeline Remains Strong FY 2019 Q4 $ Millions 1,400 $1,297 $1,192 $105 1,200 $150 1,000 800 $444 600 $152 400 $446 200 0 Jumbo Agency Commercial Multifamily / Primary Single Family Total Single Single & Industral Small Balance Pipeline Warehouse Family Family Lending Commercial 12
Slide 14: Loan Origination Growth
Loan Origination Growth Fiscal Year Loan Originations Future Plans $ Billions › Organic growth in existing 8.4 business lines 8 7.5 1.5 • Multifamily geographic 7 21.6% expansion 1.6 5-yr CAGR 6 5.6 • Agency and jumbo 5.0 mortgage channel 5 1.4 expansion 4.3 1.4 4 1.0 • Small Balance 3.0 6.9 Commerc
Slide 15: Diversified Online Deposit Businesses
Diversified Online Deposit Businesses Key Elements Consumer ‹ Demographically targeted brands direct internet ‹ Differentiated products with turn-down brands product options ‹ Exclusive relationships with significant Distribution brands, groups, or employees Partners ‹ Exclusive relationships with f
Slide 16: Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits
Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits June 30, 2013 June 30, 2019 100% of Deposits = $2.1 billion 100% of Deposits = $9.0 billion Checking and other demand Savings – IRA deposits Time deposits 3% 19% 26% Checking and other demand 46% de
Slide 17: Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States
Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States Average Deposit Balance Number of Accounts Axos Deposits Have National Reach With Customers in Every State 16
Slide 18: Axos Customers are Highly Engaged
Axos Customers are Highly Engaged Customer Engagement Results Engagement Low Activity High Activity Attributes Low Activity User Basic User Engaged Elite Engaged Engagement Score 0s 0 < S < 30 30 ≤ S < 60 ≥ 60 (0-100) Average Lifetime $100 $4000 $6,000 $50,000 Balance Average # of - <5 7 10 Services
Slide 19: Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits
Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future Plans $ Millions › Enhanced digital marketing 8,983 automation integrated to outbound 9,000 24.2% 7,985 sales group 8,000 5-yr CAGR 6,900 7,000 › Products and technology 6,044 in
Slide 20: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income % Fee Income FY 2019* FY 2018* Agency Mortgage Banking Jumbo 6% 19% Multifamily Structured Settlement Gain on Sale – Other 7% 8% Other Cash/Treasury Management Fee Income Consumer Deposit Deposit/ Service 66% 67% Fees Prepaid Tax Payments 7% 6% Prep
Slide 21: Over the Last Seven Years, Axos Has Successfully Started New Products and Completed Acquisitions
Over the Last Seven Years, Axos Has Successfully Started New Products, Added Distribution Channels, and Completed Acquisitions 2013 2014 2015 2016 2017 2018 2019 New product • Treasury/ • Small • Auto • HRB • Retail Auto • Factoring cash balance franchising • Refund Advance • Universal manage- CRE l
Slide 22: Key Goals of Universal Digital Bank
Key Goals of Universal Digital Bank › Increase chance of offering right product at the right time and Personalization place › Personalization is the right antidote for too much choice, too much content, and not enough time › Eventual artificial intelligence tools assist sale of banking products such
Slide 23: Universal Digital Bank Consumer Platform
Universal Digital Bank Consumer Platform Product Development Cross-sell (In-House Apps) • Trusts • Auto • IRA • Mortgage Consumer Online • Personal loan Banking Platform • Robo-advisor App Store Personalization Management & Segmentation • Third party • Real-time retention services/payments • Next-be
Slide 24: Advanced Data Analytics Provides Key Insights Into Customer Engagement, Profitability, and Retention
Advanced Data Analytics Provides Key Insights Into Customer Engagement, Profitability, and Retention to Enhance Customer Lifetime Throughout the Bank Framework for Data Analysis Key Learnings Retention & Attrition Drivers to Boost Long-Term Customer Engagement Customer Segmentation Methodology to Un
Slide 25: Our Strategic Partnership with H&R Block
Our Strategic Partnership with H&R Block H&R Block Overview Products for 2019 Tax Season › Approximately 10,000 U.S › Refund Transfer branches › Emerald Advance Unsecured Loan › Files 1 in every 7 U.S. tax returns › Emerald Prepaid Card › 19.7 million U.S. tax returns per › Refund Advance Interest-F
Slide 26: Omni Channel Approach for Axos' 2019 Digital Marketing Strategy
Omni Channel Approach for Axos’ 2019 Digital Marketing Strategy User Experience Infrastructure Organizational Marketing automation commitment to user implementation experience Personalization & Data Paid, Social & Mobile strategy Digital personas for personalized Social employee interactions engagem
Slide 27: Holistic Credit Risk Management
Holistic Credit Risk Management What We Do 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 Credit Monitoring & Oversight Loan Life Po
Slide 28: Monitoring & Management Oversight: Core Products
Monitoring & Management Oversight: Core Products Single Family Residential Income Property Lending › Portfolio level monitoring with individual loan › Risk based annual loan review process, with reviews completed on an exception basis 4 levels depending on financial performance (e.g., delinquency, F
Slide 29: Best-in-Class Loan Quality
Best-in-Class Loan Quality Total Net Charge-Offs Loans in non-accrual to Annualized1 total loans1 (%) (%) 1.50 0.59 1.04 0.50 1.00 0.48 0.50 0.04 0.00 0.00 Axos Banks > $10bn Axos Banks >$10bn 1. From FDIC SDI report at 3/31/2019. Total of 141 institutions included in the >$10 billion group. Data re
Slide 30: Investment Summary
Investment Summary Full service online 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
Slide 31: Contact Information
Contact Information Greg Garrabrants, President and CEO Andy Micheletti, EVP/CFO investors@axosfinancial.com www.axosfinancial.com Johnny Lai, VP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 jlai@axosfinancial.com 30