Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (November 2021)
37 slides from Axos Financial's investor presentation, November 2021
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation November 2021 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 4.34% 2.14% Salaries and benefits 0.93% 1.04% Premises, equipment and 1.12% 1.10% 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 First Quarter Highlights Compared with Fiscal 21 First Quarter
Fiscal 2022 First Quarter Highlights Compared with Fiscal 2021 First Quarter Asset Growth Deposit Growth $ Millions $ Millions 15,000 20,000 11,747 11.4% 14,907 10,556 11.3% 15,000 13,382 10,000 10,000 5,000 5,000 0 0 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Net Income Diluted EPS $ 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 First Quarter Ended September 30, 2021
Net Loan Growth by Category for First Quarter Ended September 30, 2021 $ Millions Q1 FY22 Q4 FY21 Inc (Dec) Single Family Jumbo Mortgage $3,685 $3,745 (60) Mortgage & Warehouse SF Warehouse Lending 656 614 42 Multifamily & Multifamily 2,007 2,020 (13) Commercial Mortgage Small Balance 451 450 1 Comm
Slide 13: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $14,000,000 $11,609,584 $11,711,215 $11,414,814 $11,879,021 $12,000,000 $10,925,450 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- Q1 2021 Q2
Slide 14: Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Liability (UCL)
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Liability (UCL) ($ in millions) 150 145 2.0 140 0.7 4.0 7.7 0.5 135 5.7 130 136.8 133.0 125 120 June 30, 2021 Gross Gross Provisions for September 30, ACL + UCL Charge-offs Recoveries credit losses 2021 ACL + UCL ACL UCL 13
Slide 15: Allowance for Credit Losses (ACL) by Loan Category as of September 30, 2021
Allowance for Credit Losses (ACL) by Loan Category as of September 30, 2021 $ Millions Loan Balance ACL $ ACL % Single Family - Mortgage and Warehouse $4,341.2 $25.3 0.58% Multifamily & Commercial Mortgage 2,458.2 13.4 0.55% Commercial Real Estate 3,492.9 65.3 1.87% 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 • Small Balance 1.4 Comm
Slide 17: Diversified Deposit Businesses
Diversified Deposit Businesses Key Elements Consumer ‹ Full service digital banking, wealth direct management, and securities trading ‹ Exclusive relationships with significant brands, Distribution groups, or employers Partners ‹ Exclusive relationships with brokers and financial planners through Ax
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 September 30, 2021 100% of Deposits = $2.1 billion 100% of Deposits = $11.7 billion Checking and Savings – IRA other demand Time deposits deposits 2% 19% 11% Checking and other demand
Slide 19: Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States
Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States Average Deposit Balance Number of Accounts Axos Deposits Have National Reach With Customers in Every State 18
Slide 20: Commercial Loans and Deposits 6 years of growth
Commercial Loans and Deposits 6 years of growth Spot Balance ($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 21: 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 22: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income *Excludes investment securities gains and losses. ** Broker-dealer fee income constitutes larger share due to % Fee Income % Fee Income addition of AAS to Securities Business. Q1 Fiscal 2022* FY 2021* Agency Mortgage Banking Jumbo 19% 39% Multifamily Structured
Slide 23: 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 24: 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 25: 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 Investment Managers interactions Advisors are Leaving • Axos to provide bundled securities clear
Slide 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: Credit Quality No Loans in Forbearance
Credit Quality No Loans in Forbearance Loans in Forbearance or 6/30/2021 Loans O/S Deferral % NPAs % Single Family-Mortgage & Warehouse $4,359.5 $0.0 0.00% $105.7 2.42% Multifamily and Commercial Mortgage $2,470.4 $0.0 0.00% $20.4 0.83% Commercial Real Estate $3,180.4 $0.0 0.00% $15.9 0.50% Commerci
Slide 36: 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 37: 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 36
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