Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (February 2022)
38 slides from Axos Financial's investor presentation, Feb 1, 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 forward-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 simil
Slide 3: 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 4: 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 Axos1 $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 Total n
Slide 5: Axos Financial's 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 Consumer environments Banking › Differentiated retail digital strategy f
Slide 6: 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 keys to banking with specialized
Slide 7: Fiscal 2022 Second Quarter Highlights
Fiscal 2022 Second Quarter Highlights Compared with Fiscal 2021 Second Quarter Asset Growth Deposit Growth $ Millions $ Millions 15,000 20,000 7.0% 12,269 15,548 11,463 14,393 8.0% 15,000 10,000 10,000 5,000 5,000 0 0 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Diluted EPS Net Income $ Millions $ Diluted EPS 10
Slide 8: Fiscal 2021 Highlights Compared with Fiscal 2020
Fiscal 2021 Highlights Compared with Fiscal 2020 Asset Growth Deposit Growth* $ Millions $ Millions 15,000 15,000 13,852 3.0% 14,266 11,336 -4.6% 10,816 10,000 10,000 5,000 5,000 0 0 FY 2020 FY 2021 FY 2020 FY 2021 Net Income Diluted EPS $ Millions $ Diluted EPS 250 17.6% 215.7 4.00 183.4 3.56 200 3
Slide 9: Diluted EPS and Book Value Per Share Have Been Consistently Strong
Diluted EPS and Book Value Per Share Have Been Consistently Strong Diluted EPS (FY) Book Value Per Share (FY) $ per share $ per share 4.00 25.00 23.62 3.56 17% CAGR 20.56 3.50 13.7% CAGR 2.98 20.00 17.47 3.00 2.48 15.24 2.37 2.50 2.10 15.00 13.05 1.87 2.00 10.73 1.50 10.00 1.00 5.00 0.50 0.00 0.00 2
Slide 10: 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, without HRB 4.50% 4.00% 3.90% 3.84% 3.83% 3.92% 3.76% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% FY2017 FY2018 FY2019 FY2020 FY2021 Axos NIM (excluding HRB) Fed Funds 9
Slide 11: 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 1.92% 0.94% 92% Return on equity 18.43% 9.50% 89% G&A 1.97% 2.36% 29% Efficiency ratio 42.42% 65.68% 9% The 89% on ROE means that the Bank outperformed 89% of all banks. The 29% G&A ranking means that only 2
Slide 12: Net Loan Growth by Category for Second Quarter Ended December 31, 2021
Net Loan Growth by Category for Second Quarter Ended December 31, 2021 $ Millions Q2 FY22 Q1 FY22 Inc (Dec) Single Family Jumbo Mortgage $3,686 $3,685 1 Mortgage & Warehouse SF Warehouse Lending 596 656 (60) Multifamily & Multifamily 2,017 2,007 10 Commercial Mortgage Small Balance 467 451 16 Commer
Slide 13: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $14,000,000 $12,607,179 $11,711,215 $11,879,021 $12,000,000 $11,609,584 $11,414,814 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- Q2 2021 Q3
Slide 14: Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Liability (UCL)
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Liability (UCL) ($ in millions) 155 150 1.0 0.6 0.3 4.0 145 8.7 140 7.7 135 130 140.5 136.8 125 120 September 30, 2021 Gross Gross Provisions for December 31, 2021 ACL + UCL Charge-offs Recoveries credit losses ACL + UCL ACL UCL
Slide 15: Allowance for Credit Losses (ACL) by Loan Category as of December 31, 2021
Allowance for Credit Losses (ACL) by Loan Category as of December 31, 2021 $ Millions Loan Balance ACL $ ACL % Single Family - Mortgage and Warehouse $4,281.6 $25.6 0.60% Multifamily & Commercial Mortgage 2,483.9 13.6 0.55% Commercial Real Estate 3,857.4 67.6 1.75% Loans Commercial & Industrial Non-
Slide 16: Loan Origination Growth
Loan Origination Growth Fiscal Year Loan Originations Future Plans $ Billions › Organic growth in existing 10 12.2% 5-yr CAGR business lines 8.9 9 8.4 8.4 • Multifamily geographic 8 7.5 1.6 expansion 1.5 1.6 7 • Agency and jumbo 1.6 mortgage channel 5.6 6 5.0 expansion 5 1.4 • Large Balance 1.4 Comm
Slide 17: Diversified Deposit Businesses
Diversified Deposit Businesses Key Elements Balance* Consumer ‹ Full service digital banking, wealth $4.7B direct management, and securities trading ‹ Exclusive relationships with significant brands, $1.1B Distribution groups, or employers Partners ‹ Exclusive relationships with brokers and financia
Slide 18: 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 December 31, 2021 100% of Deposits = $2.1 billion 100% of Deposits = $12.3 billion Checking and Savings – IRA other demand Time deposits deposits 2% 19% 10% Checking and other demand d
Slide 19: 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 18
Slide 20: Optionality with Deposits from Axos Securities
Optionality with Deposits from Axos Securities Securities segment provides approximately $2 billion of deposits that can be brought on balance sheet or pushed to partner banks to generate fee income › Provides stable, low/no-cost deposits that can be used to fund Axos Bank’s loan growth › Currently
Slide 21: Commercial Loans and Deposits: 6 years of growth
Commercial Loans and Deposits 6 years of growth Spot Balance ($BN’s) $7 $6.77 $6 $6.53 $5 25.5% CAGR $4 35.0% CAGR $3 $2 $1.73 $1 $1.08 $0 FYE 2015 FYE 2021 Loans Deposits Loan Growth Drivers Deposit Growth Drivers •Product Expansion •Service to Specialty Verticals •Repeating Client Relationships •T
Slide 22: 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 12.3% › Enhanced digital marketing 12,000 5-yr CAGR 11,337 10,816 * automation integrated to outbound 11,000 sales group 10,000 8,983 9,000 › Products and techno
Slide 23: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income *Excludes investment securities gains and losses. ** amount in gain on sale is less than 1% % Fee Income % Fee Income ***Broker-dealer fee income constitutes larger share due to addition Q2 Fiscal 2022* FY 2021* of AAS to Securities Business. Agency Mortgage Ban
Slide 24: 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 25: Securities Strategy
Securities Strategy Leveraging Bank’s existing digital platforms allows for a unique integrated and flexible Banking and Securities product features Onboard Clients Rich Banking and “Single-Pane” Faster Securities features Independent RIAs Introducing Universal Universal Broker-Dealers End Clients E
Slide 26: 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 • Automation frees up > time/resources for client interactions Investment Managers Advisors are Leaving • Axos to provide bundled securities clear
Slide 27: 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 28: 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 29: Long-Term Revenue and Expense Synergies
Long-Term Revenue and Expense Synergies Revenue Synergies* Cost Synergies* Axos Securities: Axos Securities: • Margin Loans • Self-Clearing • Securities Lending Axos Custody • Regulatory/Compliance • Fixed Income Trading • Client Acquisition Costs • Order Flow • Customer Service • White-label Robo A
Slide 30: Business Segment Overview – Axos Invest
Business Segment Overview – Axos Invest Free financial digital advisor that helps clients achieve their goals by Core automating the financial planning process. Services Provides premium packages for clients who want additional value beyond our core services. High Conversion Rates – Platform h
Slide 31: Monetize Clients by Leveraging Data and Personalization at Key Event-Driven Decision Points
Monetize Clients by Leveraging Data and Personalization at Key Event-Driven Decision Points INTEGRATED FINANCIAL PRODUCTS SEEK GUIDANCE New Home + 49% $54,829.19 = Value $550.00 Weekly New Car OF RECOMMENDATIONS Retirem COMPLETED IN 1 WEEK ent Our recommendation engine already has the capability to
Slide 32: Key Goals of Universal Digital Bank
Key Goals of Universal Digital Bank › Increase chances 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 suc
Slide 33: Personalization Solution Will Increase Consumer Engagement and Lifetime Value
Personalization Solution Will Increase Consumer Engagement and Lifetime Value Goal is to present customers with customized and relevant offers at the right time via the right channel Establish a central hub for Target unknown customer information needed prospects and to identify + prioritize lookali
Slide 34: As We Fully Digitize All Front-End Customer Interactions, Operational Efficiency Gains Also Become Possible
As We Fully Digitize All Front-End Customer Interactions, Operational Efficiency Gains Also Become Possible • Provide compelling customer value proposition to use online banking Online Banking • Employ intelligent, personalized, automated campaigns to develop customer confidence in our messages Cust
Slide 35: 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 36: Credit Quality: No Loans in Forbearance
Credit Quality No Loans in Forbearance Loans in Forbearance or 9/30/2021 Loans O/S Deferral % NPAs % Single Family-Mortgage & Warehouse $4,341.2 $0.0 0.00% $111.3 2.56% Multifamily and Commercial Mortgage 2,458.2 0.0 0.00% 6.9 0.28% Commercial Real Estate 3,492.9 0.0 0.00% 15.5 0.44% Commercial & In
Slide 37: Annualized Charge-offs (Recoveries) to Average Loans Outstanding
Annualized Charge-offs (Recoveries) to Average Loans Outstanding % 0.25 0.23 0.20 0.19 0.19 0.15 0.12 0.10 0.08 0.07 0.06 0.06 0.05 0.02 0.01 0.00 -0.05 FY17 FY18 FY19 FY20 FY21 With HRB Without HRB Note I: Company uses a June 30 fiscal year-end. Note II: The Company partnered with H&R Block Bank (H
Slide 38: 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 37
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