Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (October 2018)
30 slides from Axos Financial's investor presentation, Oct 30, 2018
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation October 2018 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 Axos1 $1-$10bn2 As % of average assets (%) (%) Net interest income 3.69 3.57 Salaries and benefits 0.86 1.50 Premises and equipment 0.18 0.32 Other non-interest expense 0.66 1.04 Total non-interest expense 1.70 2.86 Core busines
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 2018 Highlights Compared with Fiscal 2017
Fiscal 2018 Highlights Compared with Fiscal 2017 Asset Growth Deposit Growth $ Millions $ Millions 15,000 10,000 15.7% 12.2% 7,985 9,540 6,900 8,502 10,000 5,000 5,000 0 0 FY 2017 FY 2018 FY 2017 FY 2018 Net Income Diluted EPS $ Millions $ Diluted EPS 14.0% 2.36 200 13.1% 2.50 2.07 152.4 150 134.7 2
Slide 6: Fiscal 2019 First Quarter Highlights Compared with Fiscal 2018 First Quarter
Fiscal 2019 First Quarter Highlights Compared with Fiscal 2018 First Quarter Asset Growth Deposit Growth $ Millions $ Millions 12,000 14.1% 10,000 19.5% 8,578* 9,792 10,000 8,582 7,179 8,000 6,078 6,000 5,000 4,000 2,000 0 0 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Net Income Diluted EPS $ Millions $ Diluted
Slide 7: Diluted EPS and Return on Equity Have Been Consistently Strong Despite Significant Increase in Tier 1 Capital Ratios
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 % 2.5 20 19.43 2.37 17.89 18.34 17.78 17.57 17.05 2.10 2.0 27% CAGR 1.87 15 1.5 1.34 10 1.0 0.96 0.72 5 0.5 0.0 0 2013 2014
Slide 8: 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 1.99% 1.08% 90% Return on equity 21.35% 9.95% 95% G&A 1.69% 2.58% 25% Efficiency ratio 33.25% 62.29% 8% The 95% on ROE means that the Bank outperformed 95% of all banks. The 25% G&A ranking means that only 2
Slide 9: Diverse Lending Business
Diverse Lending Business Gain-on-sale Mortgage Banking Single family Jumbo 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 Estate Small
Slide 10: Loan Diversity – September 30, 2018
Loan Diversity – September 30, 2018 Loan Portfolio1 100% = $8,717 Million Factoring 1% Multifamily 21% CRE/Home Equity/ Consumer and Other 51% SF-Residential 6% C&I – SF Lender Finance C&I 2% 19% 1. Gross loans and leases before unaccreted discounts and loan and lease fees and allowances. 9
Slide 11: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $10,000,000 $8,432,289 $8,654,500 $9,000,000 $7,874,431 $8,064,716 $7,512,999 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000
Slide 12: Loan Pipeline Remains Strong
Loan Pipeline Remains Strong FY 2019 Q1 $ Millions 1,400 $70 $1,273 $1,203 1,200 1,000 $464 800 $154 600 $82 400 $503 200 0 Jumbo Agency Commercial Multifamily / Primary Single Family Total Single Single & Industral Small Balance Pipeline Warehouse Family Family Lending Commercial 11
Slide 13: Loan Origination Growth
Loan Origination Growth Fiscal Year Loan Originations Future Plans $ Billions › Organic growth in existing business lines 8 7.5 • Multifamily geographic 7 expansion 28.5% 1.6 6 5-yr CAGR 5.6 • Agency and jumbo 5.0 mortgage channel 5 1.4 expansion 4.3 1.4 4 1.0 • Small Balance 3.0 Commercial Real Est
Slide 14: 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 15: 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 September 30, 2018 100% of Deposits = $2.1 billion 100% of Deposits = $6.1 billion Checking and other demand Savings – IRA deposits Time deposits 4% 23% 19% Checking and other demand 4
Slide 16: 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 15
Slide 17: 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 18: Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix
Core Deposit Growth Was Sufficiently Strong To Grow Overall Deposits While Changing The Deposit Mix Deposit Growth Future Plans $ Millions › Enhanced digital marketing 7,985 automation integrated to outbound 8,000 sales group 7,000 30.7% 6,900 5-yr CAGR 6,044 6,000 › Products and technology integrat
Slide 19: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income FY 2018* Agency Mortgage Banking Jumbo 19% Multifamily Structured Gain on Sale Settlement – Other 8% Other Cash/Treasury Fee Management Income Consumer Deposit Deposit/ Service Fees Prepaid 67% Tax Payments Prepayment Fee 6% *Excludes securities inc
Slide 20: Over the Last Seven Years, Axos Has Successfully Started New Products, Added Distribution Channels, and Completed Acquisitions
Over the Last Seven Years, Axos Has Successfully Started New Products, Added Distribution Channels, and Completed Acquisitions 2012 2013 2014 2015 2016 2017 2018 New product • Warehouse • Treasury/ • Small • Auto • HRB • Retail Auto • Factoring Lending cash balance franchising • Refund Advance manag
Slide 21: 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 22: Universal Digital Bank Consumer Platform
Universal Digital Bank Consumer Platform Product Development Cross-sell (In-House Apps) • Robo-advisor • Auto • Trusts • IRA • Mortgage Consumer Online • Personal loan Banking Platform App Store Personalization Management & Segmentation • Third party • Real-time retention services/payments • Next-be
Slide 23: 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 24: We are Expanding our Strategic Partnership with H&R Block
We are Expanding 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 A
Slide 25: 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 26: 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 27: 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 28: Best-in-Class Loan Quality
Best-in-Class Loan Quality Total Net Charge-Offs Loans in non-accrual to Annualized1 total loans1 (%) (%) 0.50 1.00 0.85 0.23 0.50 0.37 0.02* 0.00 0.00 Axos Banks $1-10bn Axos Banks $1-10bn * Excludes charge-offs related to short-term seasonal tax lending products. The charge-off amount reported by
Slide 29: Investment Summary
Investment Summary 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 gener
Slide 30: 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 29
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