Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (February 2020)
30 slides from Axos Financial's investor presentation, February 2020
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation February 2020 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: 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 Banks Greater Than Axos1 $10bn2 As % of average assets (%) (%) Net interest income 3.81 2.93 Salaries and benefits 1.05 1.16 Premises, equipment and 0.85 1.39 other non-interest expense Total non-interest expense 1.90 2.55 Core busine
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: Fiscal 2019 Highlights Compared with Fiscal 2018
Fiscal 2019 Highlights Compared with Fiscal 2018 Asset Growth Deposit Growth $ Millions $ Millions 15,000 17.6% 10,000 12.5% 8,983 11,220 7,985 9,540 10,000 5,000 5,000 0 0 FY 2018 FY 2019 FY 2018 FY 2019 Net Income Diluted EPS $ Millions $ Diluted EPS 15.1% 12.2% 2.39* 2.75* 153.3* 172.0* 3.00 2.48
Slide 7: Diluted EPS and Return on Equity Have Been Consistently Strong
Diluted EPS and Return on Equity Have Been Consistently Strong Diluted EPS (FY) Return On Average Equity (FY) $ per share % 3.0 20 19.43 2.75** 17.89 18.34 17.78 17.05 17.08** 2.48 2.5 21% CAGR 2.37 15.40 2.10 15 2.0 1.87 1.5 10 1.34 1.0 0.96 5 0.5 0.0 0 2014 2015 2016 2017 2018 2019 2014 2015 2016
Slide 8: 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 4.50% 4.11% 4.07% 4.00% 3.92% 3.91% 3.95% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% FY2015 FY2016 FY2017 FY2018 FY2019 Axos NIM - reported Fed Funds 7
Slide 9: 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 1.69% 1.02% 91% Return on equity 19.23% 8.61% 93% G&A 1.92% 2.48% 25% Efficiency ratio 40.19% 66.08% 8% The 93% on ROE means that the Bank outperformed 93% of all banks. The 25% G&A ranking means that only 2
Slide 10: Diverse Lending Businesses Across Banking and Securities Segments
Diverse Lending Businesses Across Banking and Securities Segments … $ Millions FY20 Q2 Gain-on-sale Mortgage Banking $36 Single family Jumbo Mortgage $4,137 Warehouse Lending $432 Multifamily $1,823 Commercial Real Estate Small Balance Commercial $394 Lender Finance / Asset Backed $2,019 Lending Equ
Slide 11: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $12,000,000 $9,784,217 $10,141,397 $10,000,000 $9,382,124 $9,017,550 $9,098,453 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $‐ Q2 2019 Q3 2019 Q4 2019 Q1
Slide 12: Loan Origination Growth
Loan Origination Growth Fiscal Year Loan Originations Future Plans $ Billions › Organic growth in existing 8.4 business lines 8 7.5 1.5 • Multifamily geographic 7 21.6% expansion 1.6 5-yr CAGR 6 5.6 • Agency and jumbo 5.0 mortgage channel 5 1.4 expansion 4.3 1.4 4 1.0 • Small Balance 3.0 6.9 Commerc
Slide 13: 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 A
Slide 14: 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, 2019 100% of Deposits = $2.1 billion 100% of Deposits = $10.1 billion Checking and other demand Savings – IRA deposits 4% 19% Time deposits 23% Checking and other demand d
Slide 15: Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States
Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States Average Deposit Balance Number of Accounts Axos Deposits Have National Reach With Customers in Every State 14
Slide 16: Commercial Loans and Deposits 4 years of growth
Commercial Loans and Deposits 4 years of growth Spot Balance ($BN’s) Loan Growth Drivers Deposit Growth Drivers •Product Expansion •Service to Specialty Verticals •Repeating Client Relationships •Technology and Application Integration •Reputation for Reliable Execution •Reposition as Commercial Bank
Slide 17: 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 8,983 automation integrated to outbound 9,000 24.2% 7,985 sales group 8,000 5-yr CAGR 6,900 7,000 › Products and technology 6,044 in
Slide 18: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income % Fee Income FY 2019* FY 2018* Agency Mortgage Banking Jumbo 6% 19% Multifamily Structured Gain on Sale – Settlement 7% 8% Other Other Cash/Treasury Management Fee Income Consumer Deposit 28% 21% Deposit/ Service Fees Payments Tax 38% 46% Prepaid Pr
Slide 19: Our Strategic Partnership with H&R Block
Our Strategic Partnership with H&R Block H&R Block Overview Products for 2020 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 Advance Interest-F
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 62 IBDs Consumer Deposit Accounts Securities Clearing & 110,000 Clients ODL/Margin Accounts Custody Jumbo Single Family Mortgage Loans Axo
Slide 21: 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 22: Secular Industry Trends Provide Opportunities for Axos
Secular Industry Trends Provide Opportunities for Axos • RIAs needs to reduce costs and Fee Compression for streamline back-office ops Active and Passive Investment Managers • Automation frees up > time/resources for client interactions • Axos to provide bundled securities clearing, Advisors are Lea
Slide 23: 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 24: 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 WISEBANYAN 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 cap
Slide 25: 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 26: 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 27: 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 • Intelligent, personalized, automated campaigns to develop customer confidence in our messages Customer •
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 % 0.20 0.19 0.19 0.15 0.10 0.06 0.06 0.05 0.03 0.02 0.01 0.00 -0.01 -0.01 -0.05 FY15* FY16** FY17 FY18 FY19 With HRB Without HRB *For FY15, there were no co-branded HRB products. **For FY16, there were no HRB related charge-offs with $
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
Axos Financial — Investor Presentation (February 2020) on 6ix