Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (February 2022)
41 slides from Axos Financial's investor presentation, February 2022
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation February 2022 NYSE: AX
Slide 2: Safe Harbor
Safe Harbor This presentation contains forw ard-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). The use of future tense or words “future plans,” “believe,” “expect,” “anticipate,” “estimate,” “project,” or the negation thereof or simi
Slide 3: Strong and Experienced Management Team
Strong and Experienced Management Team Greg Garrabrants | President & CEO | A ge: 50 G reg G arrabrants is President and CEO of Axos Bank. Before his senior executive roles at banking institutions, G reg s erved the financial services industry as an investment banker, management consultant, and atto
Slide 4: Axos Financial Overview
Axos Financial Overview Axos Financial, Inc. For the 6 Months Ended • Axos Financial, Inc. was founded in 1999 and is a customer-focused ($ Millions) 12/31/2021 diversified financial services company headquartered in Las Vegas, Market Data as of 2/8/2022 Nevada Market Capitalization $3,319.4 Price /
Slide 5: Our Business Model is More Profitable Because Our Costs are Lower
Our Business Model is More Profitable Because Our Costs are Lower and Our Assets are Higher-Yielding Banks Greater Than Axos Bank1 $10bn2 As % of average assets (%) (%) Net interest income 4.51% 2.19% Salaries and benefits 0.87% 1.03% Premises, equipment and 1.04% 1.11% other non-interest expense To
Slide 6: Three Business Segments Provide the Foundation for Sustained Long-term Growth
Axos Financial’s Three Business Segments Provide the Foundation for Sustained Long-term Growth Investment Thesis › Diverse mix of asset, deposit, and fee income reduces risk and provides multiple growth opportunities in varying environments › Differentiated retail digital strategy from Consumer “onl
Slide 7: Our Model is Built for Increased Digital Interactions
Our Model is Built for Increased Digital Interactions COVID-19 Has Accelerated Adoption of Digital Banking and Wealth Management Consumer Banking Commercial Banking Securities Convenience and superior Providers that integrate Consumers across all age user experience are keys banking with specialized
Slide 8: Over 15 Years of Profitable Growth
Over 15 Years of Profitable Growth ($M) 250 $242 $216 200 $183 $152 $155 150 $135 $119 100 $83 $56 50 $40 $29 $21 $21 $3 $3 $3 $4 $7 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q2 2022 Net Income Annualized Net Income Net Income has continued to grow throug
Slide 9: Efficient Operations and Stable Margins Lead to Superior Profitability
Efficient Operations and Stable Margins Lead to Superior Profitability Efficiency Ratio Net Interest Margin 51.12%(1) 4.16% 47.50% 48.84% 48.74% 3.90% 3.84% 3.76% 3.83% 3.92% 39.58% 36.08% 2.40% 1.91% 1.60% 0.08% 0.10% 0.07% 2017 2018 2019 2020 2021 Q2 2022 2017 2018 2019 2020 2021 Q2 2022 (2) NIM (
Slide 10: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income Q2 2022 YTD Fee Income Fee Income / Revenue Breakdown(1)(2) 17.7% Mortgage 17.4% Banking 16.9% 15% 16.3% 16.4% Broker - 16.2% Dealer 47% Other 11% Deposit / Service Fees 28% 2017 2018 2019 2020 2021 Q2 2022 Note: Company uses a June 30 fiscal year-end. Q2 2022 d
Slide 11: Asset Quality Built to Withstand Economic Cycles
Asset Quality Built to Withstand Economic Cycles 1.42% 1.28% 1.09% 1.07% 0.94% 0.79% 0.77% 0.68% 0.69% 0.52% 0.55% 0.50% 0.43% 0.43% 0.42% 0.42% 0.36% 0.35% 0.23% 0.19% 0.19% 0.14% 0.12% 0.06% 0.06% 0.08% 0.04% 0.03% 0.02% 0.07% 0.01% 0.01% (0.01%) 2009 2010 2011 2012 2013 2014 2015 * 2016 2017 2018
Slide 12: Credit Investor Highlights
Credit Investor Highlights Experienced and “cycle-tested” management team T rack record of c redit discipline, risk management and profitability Differentiated digital platform Fully digital, no branch model provides structural cost advantages over traditional banks Built to capitalize on digi
Slide 13: Loan Portfolio and Credit Quality
Loan Portfolio and Credit Quality
Slide 14: Prudent Loan Growth With Low LTVs
Prudent Loan Growth With Low LTVs Net Loans – Last Five Quarters ($ in Millions) $14,000 $12,607 $11,879 $12,000 $11,610 $11,711 $11,415 Loan Growth Drivers $10,000 • Product Ex pansion $8,000 • R e peating C lient R e lationships $6,000 • R e putation for R e liable $4,000 Ex e cution $2,000 $- Q2
Slide 15: Diverse Lending Across Segments
Diverse Lending Across Segments Category Subcategory % of (Dollars in Millions) Category Total ($M) Subcategory Total ($M) Total Auto & Consumer Other Single Family Jumbo Mortgage $3,686 28.9% $479 $22 Mortgage & $4,282 3.8% 0.2% Warehouse Warehouse Lending $596 4.6% Commercial & Single Family Indus
Slide 16: Diverse Real Estate Mortgage Loans
Diverse Real Estate Mortgage Loans Real Estate Backed Loans by State Real Estate Backed Loans by Type $ Millions $ Millions CRE $467 5% CRESL & Southern CA Construction $3,870 $3,735 39% 37% VA Other $102 $1,128 1% 11% TX Multifamily $144 Lender $2,017 1% Northern CA 20% Finance RE NJ $1,094 $122 $2
Slide 17: CRE Specialty Breakout
CRE Specialty Breakout CRE Specialty $ Millions Self-storage $37 1% Industrial Multifamily $71 $1,353 2% 36% Commercial Notes $89 2% Hotel Retail $345 $172 9% SFR 5% $926 Land 25% $354 10% Office $388 10% Total CRE Specialty: $3.7B As of December 31, 2021 17
Slide 18: Asset-Based Lending Breakout
Asset-Based Lending Breakout Asset-Based Lending $ Millions Commercial Equipment Notes $19 $352 3% 44% Accounts Receivable $71 9% Cash Flow Working Capital $147 $74 Capital Call 19% 9% $130 16% Total Asset-Based Lending: $793M As of December 31, 2021 18
Slide 19: Holistic Credit Risk Management
Holistic Credit Risk Management What We Do Utilize a holistic credit-risk management framework to manage and monitor credit quality at each stage of the loan life cycle, and leverage specialized C redit Tools to optimize monitoring and reporting capabilities Credit Monitoring & Oversight Loan Life P
Slide 20: Allowance for Credit Losses
Allowance for Credit Losses Total ACL / ACL Loans Loans Loan Category ($M) ($M) (%) SFR Family - Mortgage and Warehouse $25.6 $4,281.7 0.60% Multifamily & Commercial Mortgage 13.6 2,483.9 0.55% Commercial Real Estate 67.6 3,857.4 1.75% Commercial & Industrial Non-RE 22.7 1,631.8 1.39% Auto & Consume
Slide 21: Deposit Strategy
QXOS Deposit Strategy
Slide 22: 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 Deposit Composition $ Millions 12/31/2021 13.7% 15,000 5.5-yr C AGR 12,269 12,500 11,337 (1) Savings – IRA 10,816 Tim e deposits 10,000 8,983 2% 7,985 6,900 10% 7,500 6,044 5,000 61%% 2
Slide 23: Customer Base and Deposit Volume is Well Distributed Throughout the United States
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 23
Slide 24: Diversified Deposit Gathering
Diversified Deposit Gathering ‹ Serves 40% of U .S. Chapter 7 bankruptcy trus tees in exclusive relationship ‹ Software allows s ervicing of SEC receivers ‹ Full s ervice digital banking, wealth and non-chapter 7 cases management, and s ecurities trading Fiduciary Consumer Services Direct $1.2 $4.7B
Slide 25: Optionality with Deposits from Axos Securities
Optionality with Deposits from Axos Securities Securities segment provides approximately $2 billion of deposits that can be brought on balance sheet or pushed to partner banks to generate fee income › Provides stable, low/no-cost deposits that can be used to fund Axos Bank’s loan growth › Currently
Slide 26: Capital, Asset-Liability Management, Interest Rate Management and Liquidity
Capital, Asset-Liability Management, Interest Rate Management and Liquidity
Slide 27: Investment Securities Composition
Investment Securities Composition Municipal 3% Agency MBS 21% Non-Agency MBS 42% ABS and Structured 34% Total FMV of Securities: $140 Million 27 Note: Financial Information as of December 31, 2021.
Slide 28: IRR / Rate Sensitivity Analysis
IRR / Rate Sensitivity Analysis Net Interest Income(¹) Market Value of Equity (2) $ Millions $ Millions $602 $594 $1,540 $1,585 $1,589 $1,528 $1,339 10.8% 11.2% 11.3% 11.0% 9.3% $553 $544 $544 2.9% 3.2% 0.0% $527 -100 bps Base +100 bps +200 bps +300 bps (0.8%) (13.0%) -200 bps Base +200 bps % Change
Slide 29: Diversified Funding and Liquidity
Diversified Funding and Liquidity Off Balance Sheet Funding* Axos Fiduciary Services – $23 million Axos Clearing – $725 million (1) FHLB – $5.4 billion Federal Reserve Discount Window – $2.4 billion Consolidated Capital Ratios* 12.16% 10.08% 9.42% 8.73% TCE / TA (2) Tier 1 Leverage Ratio Tier 1 Rati
Slide 30: Historical Interest Coverage
Historical Interest Coverage ($ Thousands) FY 2018 FY 2019 FY 2020 FY 2021 Q2'22 YTD Bank level equity $ 905,159 $ 1,009,678 $ 1,148,527 $ 1,299,911 $ 1,395,737 Consolidated equity 960,513 1,073,050 1,230,846 1,400,936 1,523,157 Double leverage ratio 94% 94% 93% 93% 92% Interest Coverage Earnings: I
Slide 31: Axos Securities
QXOS Axos Securities
Slide 32: Axos Securities Overview
Axos Securities Overview Monetizing synergies by integrating Banking products and services to Securities customers, RIAs, and IBDs Consumer Banking Axos Clearing 69 IBDs Consumer Deposit Accounts Securities Clearing & 200 RIAs 265,000 Clients ODL/Margin Accounts Custody Jumbo Single Family Mortgage
Slide 33: Secular Industry Trends Provide Opportunities for Axos
Secular Industry Trends Provide Opportunities for Axos • RIAs need to reduce costs and streamline back - Fee Compression for office ops Active and Passive Investment Managers • Automation frees up > time/resources for client interactions • Axos to provide bundled securities clearing, Advisors are Le
Slide 34: E*TRADE Advisor Services Acquisition
E*TRADE Advisor Services Acquisition Axos Clearing acquired certain assets and deposits related to E*TRADE Advisor Services (EAS) – closed August 2, 2021 1) $55 million cash purchase price paid at closing from Axos Financial 2) Includes $24.8 billion of custodial assets & ~$1.2 billion low-cost depo
Slide 35: Adds a Scalable Technology Platform
Adds a Scalable Technology Platform Axos Advisor Services Platform Overview Liberty Integrated Platform Liberty Platform Web-based Highly scalable and secure Growth Portfolio Managed Operational Reporting + Mobile capabilities Tools Management Investment Tools Analytics Asset-based pricing &
Slide 36: Long-Term Revenue and Expense Synergies
Long-Term Revenue and Expense Synergies Revenue Synergies* Cost Synergies* Axos Securities: Axos Securities: • Margin Loans • Self-C learing • Securities Lending Axos Custody • Regulatory/C ompliance • Fixed Income Trading • C lient Acquisition C osts • Order Flow • C ustomer Service • White-label R
Slide 37: Appendix
QXOS Appendix
Slide 38: Ratings Profile
Ratings Profile Moody’s Ratings (as of 1/14/2022) Type Rating Outlook Axos Financial, Inc. Long-term Issuer Rating Baa3 Stable Subordinate Regular Bond / Debenture Baa3 N/A Subordinate Shelf Baa3 N/A Senior Unsecured Shelf Baa3 N/A Axos Bank Long-term Issuer Rating Baa3 Stable Adjusted Baseline Cred
Slide 39: Select Financials
Select Financials For the 6 Months Ended FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 12/31/2021 Selected Balance Sheet Data ($ Millions) Total Assets $7,599.3 $8,501.7 $9,539.5 $11,220.2 $13,851.9 $14,265.6 $15,547.9 Net Loans 6,354.7 7,374.5 8,432.3 9,382.1 10,631.3 11,414.8 12,607.2 Loans Held
Slide 40: Non-GAAP Reconciliation
Non-GAAP Reconciliation For the 6 Months Ended $ Millions, except per share data FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 12/31/2021 Total common equity (GAAP) $678.5 $829.2 $955.5 $1,068.0 $1,225.8 $1,400.9 $1,523.2 Less goodwill and other intangible assets 0.0 0.0 67.8 134.9 125.4 116.0 162
Slide 41: Contact Information
Contact Information Greg Garrabrants, President and CEO Derrick Walsh, EVP and CFO Andy Micheletti, EVP of Finance 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
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