Axos Financial, Inc. · NYSE:AX
Axos Financial — Q2 2024 Earnings Presentation
32 slides from Axos Financial's earnings presentation, Jan 30, 2024
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation January 31, 2024 NYSE: AX
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements that involve risks and uncertainties, including without limitation statements relating to Axos Financial, Inc.’s (“Axos”) financial prospects and other projections of its performance and asset quality, Axos’ deposit balances and capit
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: Axos is a Top Performer Versus Bank Peer Group
Axos is a Top Performer Versus Bank Peer Group Axos Bank Peer Group Percentile ROAA 1.64% 0.69% 93% Return on equity 16.54% 7.00% 92% Net interest income 4.41% 2.75% 94% Efficiency ratio 45.85% 71.60% 8% The 92% on ROE means that the Bank outperformed 92% of all banks. The 8% efficiency ratio rankin
Slide 5: Axos Financial's Three Divisions Provide the Foundation for Sustained Long-term Growth
Axos Financial’s Three Divisions 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 Consumer Banking › Differentiated retail digital strategy from “onl
Slide 6: Consolidated Fiscal Second Quarter 2024 Highlights
Consolidated Fiscal Second Quarter 2024 Highlights Compared with Fiscal Second Quarter 2023 Asset Growth Deposit Growth $ Millions $ Millions 25,000 21,623 20,000 18,204 20,000 18,741 15% 15,690 16% 15,000 15,000 10,000 10,000 5,000 5,000 0 0 Q2 2023 Q2 2024 Q2 2023 Q2 2024 Net Income Diluted EPS $
Slide 7: 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 6.00 35.00 32.53 5.07 30.00 16.4% CAGR 27.48 5.00 16.4% CAGR 23.62 3.97 25.00 4.00 3.56 20.56 2.98 20.00 17.47 3.00 15.24 2.37 2.48 15.00 2.00 10.00 1.00 5.00 0.00 0.
Slide 8: FDIC Loan Purchase Summary
FDIC Loan Purchase Summary Acquired $1.25 billion UPB of CRE/Multifamily Loans at 63% of Par Value $300.8 million remaining discount to be recognized over the expected remaining term to maturity of the acquired loans Timing and amount of accretion will depend on: Amount and pace of refinancing/pay
Slide 9: Net Interest Margin has been Stable Through a Variety of Interest Rate Cycles
Net Interest Margin has been Stable Through a Variety of Interest Rate Cycles* Rising Net Interest Margin 5.08% 5.33% 4.35% 4.55% 4.13% 3.76% 3.83% 3.92% 2.40% 0.26% 0.08% 0.08% 2019 2020 2021 2022 2023 Q2 2024 NIM Effective Fed Funds rate *NIM excludes impact of HRB; relationship with HRB terminate
Slide 10: Loan Portfolio More Sensitive to Rate Increases Today
Loan Portfolio More Sensitive to Rate Increases Today Compared to Last Fed Fund Rate Hike Starting in 2015 September 30, 2015 December 31, 2023 Variable rate Fixed Fixed 9% 11% 8% 28% Variable rate Hybrid 64% Hybrid 80% 10
Slide 11: Interest Rate Components of Loan & Lease Portfolio
Interest Rate Components of Loan & Lease Portfolio As of December 31, 2023 Mix of Loan Repricing Types Fixed/Hybrid Years to Maturity / Repricing* Years 9% 17% 35% 53% 84% 99% 100% *Excludes SF Warehouse Lending and Equipment Leasing. The years to repricing assumes no loan prepayments and reflects o
Slide 12: Loan Growth by Category for Second Quarter Ended December 31, 2023
Loan Growth by Category for Second Quarter Ended December 31, 2023 $ Millions Q2 FY24 Q1 FY24 Inc (Dec) Single Family Jumbo Mortgage $ 3,993 $ 4,019 $ (26) Mortgage & Warehouse SF Warehouse Lending 99 295 (196) Multifamily & Multifamily 2,708 2,130 578 Commercial Mortgage* Small Balance Commercial 1
Slide 13: Prudent Loan Growth With Low LTVs
Prudent Loan Growth With Low LTVs Net Loans – Last Five Quarters ($ in Millions) $20,000 $18,264 $18,000 $16,457 $16,955 $15,473 $15,836 Loan Growth $16,000 Drivers $14,000 • Product Expansion $12,000 • Repeating Client $10,000 Relationships $8,000 • Reputation for Reliable $6,000 Execution $4,000 $
Slide 14: LTV Distribution
Commercial Real Estate Specialty* Detail as of December 31, 2023 Non-Performing Loan Type Balance (mm) Weighted Avg. LTV Loans (mm) Multifamily $ 1,829 38 % $ 11 Hotel 1,104 40 — SFR 917 41 15 Office 418 38 — Industrial 513 48 — Retail 232 40 — Other 387 39 — Total $ 5,400 40 % $ 26 LTV Distribution
Slide 15: CRE Specialty Detail as of December 31, 2023
CRE Specialty* Detail as of December 31, 2023 77% of total CRE Specialty balance at December 31, 2023 is indirect note structures where Axos has first payment priority; these loans carry a weighted-average LTV of 38%. Loan Type Balance (mm) Weighted Avg. LTV Construction $2,250 35% Bridge 2,173 43%
Slide 16: Diversified Deposit Gathering
Diversified Deposit Gathering Approximately 90% of deposits are FDIC-insured or collateralized › Serves approximately 40% of U.S. Chapter 7 › Full service digital banking, wealth bankruptcy trustees in exclusive relationship management, and securities trading › Software allows servicing of SEC recei
Slide 17: Deposit Growth in Checking, Business, and Savings
Deposit Growth in Checking, Business, and Savings Was Achieved While Transforming the Mix of Deposits June 30, 2013 December 31, 2023 Total Deposits = $2.1 billion Total Deposits = $18.2 billion Checking and other demand Time deposits deposits 19% 6% Checking and 35% other demand deposits Time 50% d
Slide 18: Customer Base and Deposit Volume is Well Distributed Throughout the United States
Customer Base and Deposit Volume is Well Distributed Throughout the United States Axos Deposits Have National Reach With Customers in Every State 18
Slide 19: Non-Interest Income Growth and Diversification
Non-Interest Income Growth and Diversification Year Ended Three Months Ended June 30, 2019 December 31, 2023 Total Non-Interest Income = Total Non-Interest Income = $82.9 million $124.1 million** Prepayment Broker Dealer penalty fee 3% Fees 2% income Gain on sale Advisory Fees 7% 7% 6% Mortgage 39%
Slide 20: Axos Securities Overview
Axos Securities Overview Monetizing synergies by integrating Banking products and services to Securities customers, RIAs, and IBDs Consumer Banking Axos Clearing 63 IBDs Consumer Deposit Accounts Securities Clearing & 238 RIAs ~315,000 Clients ODL/Margin Accounts Custody Jumbo Single Family Mortgage
Slide 21: Integrated Securities and Banking
Integrated Securities and Banking Leveraging Bank’s existing digital platforms allows for unique integrated and flexible Banking and Securities product features Rich Banking and Onboard Clients Unified Service “Single-Pane” Securities Features Faster Model Banking Salesforce Universal Universal Serv
Slide 22: Axos Clearing and Custody Highlights
Axos Clearing and Custody Highlights For the 3 months ended 12/31/2023 Leadership team with more than 100 years Net Interest Securities Lending combined industry 2% 3% Income Custody $ 7,361,255 experience. Margin Lending 10% 21% Custody Clearing Fees & Execution 6,560,728 Proprietary front‐ and
Slide 23: 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 • Axos to provide bundled securities clearing, Advisors are Leavi
Slide 24: Axos Advisor Services (AAS) At A Glance
Axos Advisor Services (AAS) At A Glance Liberty Provides a Comprehensive Turnkey Platform Performance Unified Serving 201 RIAs1,3 Reporting Managed ($1M+ AUC) Accounts Easy Fee Billing Rebalancing ~$23B Assets Under Custody2 Tax Automatic Management Reconciliation Tools TAMPs Traditional Small RIAs
Slide 25: Axos Clearing Long-Term Revenue and Expense Synergies
Axos Clearing 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-
Slide 26: 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 27: Evolving Capabilities of the UDB Platform
Evolving Capabilities of the UDB Platform UDB offers a growing set of products, capabilities and supported user segments UDB 1.0 UDB 2.0 White Label UDB Banking: Axos deposit products Products + Features Borrowing: Axos loan products Investing: Managed Portfolios, Self Directed Trading Planning: Acc
Slide 28: 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 29: Annualized Charge-offs (Recoveries) to Average Loans Outstanding
Annualized Charge-offs (Recoveries) to Average Loans Outstanding Strong Credit Performance Exhibited through Low Charge-off Ratios % 0.25 0.23 0.20 0.19 0.15 0.12 0.10 0.08 0.07 0.06 0.05 0.04 0.02 0.00 FY19 FY20 FY21 FY22 FY23 With HRB Without HRB Note I: Company uses a June 30 fiscal year-end. Not
Slide 30: Change in Allowance for Credit Losses & Unfunded Loan Commitments Reserve
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Reserve (UCL) ($ in millions) 1.0 12.7 0.6 (2.4) 12.5 11.7 ACL + UCL ACL + UCL 30
Slide 31: Allowance for Credit Losses (ACL) by Loan Category
Allowance for Credit Losses (ACL) by Loan Category as of December 31, 2023 $ Millions Loan Balance ACL $ ACL % Single Family Mortgage & Warehouse $ 4,092 15 0.4 % Multifamily & Commercial Mortgage 4,065 78 1.9 % Commercial Real Estate 6,043 78 1.3 % Loans Commercial & Industrial Non-RE 4,177 69 1.7
Slide 32: Contact Information
Contact Information Greg Garrabrants, President and CEO Derrick Walsh, EVP and CFO investors@axosfinancial.com www.axosfinancial.com Johnny Lai, SVP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 jlai@axosfinancial.com 32