Axos Financial, Inc. · NYSE:AX
Axos Financial — IPO Roadshow (February 2022)
43 slides from Axos Financial's IPO roadshow presentation, Feb 16, 2022
Slide 1: Axos Financial, Inc. Fixed Income Investor Presentation
Filed Pursuant to Rule 433 Registration No. 333-253797 Issuer Free Writing Prospectus Dated February 16, 2022 Relating to Preliminary Prospectus Supplement dated February 16, 2022 and Prospectus dated March 2, 2021 Axos Financial, Inc. Fixed Income 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: Safe Harbor (continued)
Safe Harbor (continued) This presentation does not constitute or form part of any offer to sell, or a solicitation of an offer to purchase, any securities of the Company. Neither the SEC nor any other regulatory body has approved or disapproved of the securities of the Company or passed upon the acc
Slide 4: Strong and Experienced Management Team
Strong and Experienced Management Team Greg Garrabrants | President & CEO Derrick Walsh | EVP & Chief Financial Officer › President and CEO of Axos Bank since 2007 › Chief Financial Officer of Axos Bank since September 2021 and joined in 2013 › Previously served as an investment banker, management c
Slide 5: Preliminary Term Sheet
Preliminary Term Sheet Issuer (Ticker) Axos Financial, Inc. (AX) Security Subordinated Notes due 2032 Current Security Rating(1) Baa3 by Moody’s; BBB by Kroll Bond Rating Agency Offering Type SEC Registered Term 10 Years Optional Redemption Non-call for 5 years; callable on any interest payment date
Slide 6: Axos Financial Overview
Axos Financial Overview Axos Financial, Inc. For the 6 Months Ended • Axos Financial, Inc. was founded in 1999 and is a customer-focused ($ Millions) 12/31/2021 diversified financial services company headquartered in Las Vegas, Market Data as of 2/8/2022 Nevada Market Capitalization $3,319.4 Price /
Slide 7: Our Business Model is More Profitable Because Our Costs are Lower and Our Assets are Higher-Yielding
Our Business Model is More Profitable Because Our Costs are Lower and Our Assets are Higher-Yielding Banks Greater Than Axos Bank1 $10bn2 As % of average assets (%) (%) Net interest income 4.51% 2.19% Salaries and benefits 0.87% 1.03% Premises, equipment and 1.04% 1.11% other non-interest expense To
Slide 8: Axos Financial's Three Business Segments Provide the Foundation for Sustained Long-term Growth
Axos Financial’s Three Business Segments Provide the Foundation for Sustained Long-term Growth Investment Thesis › Diverse mix of asset, deposit, and fee income reduces risk and provides multiple growth opportunities in varying environments › Differentiated retail digital strategy from Consumer “onl
Slide 9: Our Model is Built for Increased Digital Interactions
Our Model is Built for Increased Digital Interactions COVID-19 Has Accelerated Adoption of Digital Banking and Wealth Management Consumer Banking Commercial Banking Securities Convenience and superior Providers that integrate Consumers across all age user experience are keys banking with specialized
Slide 10: Over 15 Years of Profitable Growth
Over 15 Years of Profitable Growth ($M) 250 $242 $216 200 $183 $152 $155 150 $135 $119 100 $83 $56 50 $40 $29 $21 $21 $3 $3 $3 $4 $7 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q2 2022 Net Income Annualized Net Income Net Income has continued to grow throug
Slide 11: Efficient Operations and Stable Margins Lead to Superior Profitability
Efficient Operations and Stable Margins Lead to Superior Profitability Efficiency Ratio Net Interest Margin (1) 51.12% 4.16% 47.50% 48.84% 48.74% 3.90% 3.84% 3.76% 3.83% 3.92% 39.58% 36.08% 2.40% 1.91% 1.60% 0.08% 0.10% 0.07% 2017 2018 2019 2020 2021 Q2 2022 2017 2018 2019 2020 2021 Q2 2022 (2) NIM
Slide 12: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income Q2 2022 YTD Fee Income Fee Income / Revenue Breakdown(1)(2) 17.7% Mortgage 17.4% Banking 16.9% 15% 16.3% 16.4% Broker - 16.2% Dealer 47% Other 11% Deposit / Service Fees 28% 2017 2018 2019 2020 2021 Q2 2022 Note: Company uses a June 30 fiscal year-end. Q2 2022 d
Slide 13: Asset Quality Built to Withstand Economic Cycles
Asset Quality Built to Withstand Economic Cycles 1.42% 1.28% 1.09% 1.07% 0.94% 0.79% 0.77% 0.68% 0.69% 0.52% 0.55% 0.50% 0.43% 0.43% 0.42% 0.42% 0.36% 0.35% 0.23% 0.19% 0.19% 0.14% 0.12% 0.06% 0.06% 0.08% 0.04% 0.03% 0.02% 0.07% 0.01% 0.01% (0.01%) 2009 2010 2011 2012 2013 2014 2015 * 2016 2017 2018
Slide 14: Credit Investor Highlights
Credit Investor Highlights Experienced and “cycle-tested” management team Track record of credit discipline, risk management and profitability Differentiated digital platform Fully digital, no branch model provides structural cost advantages over traditional banks Built to capitalize on digita
Slide 15: Loan Portfolio and Credit Quality
Loan Portfolio and Credit Quality
Slide 16: Prudent Loan Growth With Low LTVs
Prudent Loan Growth With Low LTVs Net Loans – Last Five Quarters ($ in Millions) $14,000 $12,607 $11,879 $12,000 $11,610 $11,711 $11,415 Loan Growth Drivers $10,000 • Product Expansion $8,000 • Repeating Client Relationships $6,000 • Reputation for Reliable $4,000 Execution $2,000 $- Q2 2021 Q3 2021
Slide 17: Diverse Lending Across Segments
Diverse Lending Across Segments Category Subcategory % of (Dollars in Millions) Category Total ($M) Subcategory Total ($M) Total Auto & Consumer Other Single Family Jumbo Mortgage $3,686 28.9% $479 $22 Mortgage & $4,282 3.8% 0.2% Warehouse Warehouse Lending $596 4.6% Commercial & Single Family Indus
Slide 18: Diverse Real Estate Mortgage Loans
Diverse Real Estate Mortgage Loans Real Estate Backed Loans by State Real Estate Backed Loans by Type $ Millions $ Millions CRE $467 5% CRESL & Southern CA Construction $3,870 $3,735 39% 37% VA Other $102 $1,128 1% 11% TX Multifamily $144 Lender $2,017 1% Northern CA 20% Finance RE NJ $1,094 $122 $2
Slide 19: CRE Specialty Breakout
CRE Specialty Breakout CRE Specialty $ Millions Self-storage $37 1% Industrial Multifamily $71 $1,353 2% 36% Commercial Notes $89 2% Hotel Retail $345 $172 9% SFR 5% $926 Land 25% $354 10% Office $388 10% Total CRE Specialty: $3.7B As of December 31, 2021 19
Slide 20: Asset-Based Lending Breakout
Asset-Based Lending Breakout Asset-Based Lending $ Millions Commercial Equipment Notes $19 $352 3% 44% Accounts Receivable $71 9% Cash Flow Working Capital $147 $74 Capital Call 19% 9% $130 16% Total Asset-Based Lending: $793M As of December 31, 2021 20
Slide 21: Holistic Credit Risk Management
Holistic Credit Risk Management What We Do Utilize a holistic credit-risk management framework to manage and monitor credit quality at each stage of the loan life cycle, and leverage specialized Credit Tools to optimize monitoring and reporting capabilities Credit Monitoring & Oversight Loan Life Po
Slide 22: Allowance for Credit Losses
Allowance for Credit Losses Total ACL / ACL Loans Loans Loan Category ($M) ($M) (%) SFR Family - Mortgage and Warehouse $25.6 $4,281.7 0.60% Multifamily & Commercial Mortgage 13.6 2,483.9 0.55% Commercial Real Estate 67.6 3,857.4 1.75% Commercial & Industrial Non-RE 22.7 1,631.8 1.39% Auto & Consume
Slide 23: Deposit Strategy
AxXxOS Deposit Strategy
Slide 24: 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 Deposit Composition $ Millions 12/31/2021 13.7% 15,000 5.5-yr CAGR 12,269 12,500 11,337 (1) Savings – IRA 10,816 Time deposits 10,000 8,983 2% 7,985 6,900 10% 7,500 6,044 5,000 61%% 2,5
Slide 25: Customer Base and Deposit Volume is Well Distributed Throughout the United States
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 25
Slide 26: Diversified Deposit Gathering
Diversified Deposit Gathering › Serves 40% of U.S. Chapter 7 bankruptcy trustees in exclusive relationship › Software allows servicing of SEC receivers › Full service digital banking, wealth and non-chapter 7 cases management, and securities trading Fiduciary Consumer Services Direct $1.2 $4.7B › Fi
Slide 27: 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 › Currentl
Slide 28: Capital, Asset-Liability Management, Interest Rate Management and Liquidity
Capital, Asset-Liability Management, Interest Rate Management and Liquidity
Slide 29: Investment Securities Composition
Investment Securities Composition Municipal 3% Agency MBS 21% Non-Agency MBS 42% ABS and Structured 34% Total FMV of Securities: $140 Million 29 Note: Financial Information as of December 31, 2021.
Slide 30: IRR / Rate Sensitivity Analysis
IRR / Rate Sensitivity Analysis Net Interest Income(¹) Market Value of Equity(2) $ Millions $ Millions $602 $594 $1,540 $1,585 $1,589 $1,528 $1,339 10.8% 11.2% 11.3% 11.0% $553 9.3% $544 $544 2.9% 3.2% $527 0.0% -100 bps Base +100 bps +200 bps +300 bps (0.8%) (13.0%) -200 bps Base +200 bps % Change
Slide 31: Diversified Funding and Liquidity
Diversified Funding and Liquidity Off Balance Sheet Funding* Axos Fiduciary Services Deposits – $31 million Axos Clearing Deposits – $725 million (1) FHLB – $5.4 billion Federal Reserve Discount Window – $2.4 billion Consolidated Capital Ratios* 12.16% 10.08% 9.42% 8.73% TCE / TA (2) Tier 1 Leverage
Slide 32: Historical Interest Coverage
Historical Interest Coverage ($ Thousands) FY 2018 FY 2019 FY 2020 FY 2021 Q2'22 YTD Pro Forma(1) Bank level equity $ 905,159 $ 1,009,678 $ 1,148,527 $ 1,299,911 $ 1,395,737 $ 1,545,737 Consolidated equity 960,513 1,073,050 1,230,846 1,400,936 1,523,157 1,523,157 Double leverage ratio 94% 94% 93% 93
Slide 33: Axos Securities
AxXxOS Axos Securities
Slide 34: 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 35: 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 Investment Managers • Automation frees up > time/resources for client interactions • Axos to provide bundled securities clearing, Advisors are Lea
Slide 36: 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 & ~$1.2 billion low-cost depo
Slide 37: Adds a Scalable Technology Platform
Adds a Scalable Technology Platform Axos Advisor Services Platform Overview Liberty Integrated Platform Liberty Platform Web-based Highly scalable and secure Growth Portfolio Managed Operational Reporting + Mobile capabilities Tools Management Investment Tools Analytics Asset-based pricing &
Slide 38: Long-Term Revenue and Expense Synergies
Long-Term Revenue and Expense Synergies Revenue Synergies* Cost Synergies* Axos Securities: Axos Securities: • Margin Loans • Self-Clearing • Securities Lending Axos Custody • Regulatory/Compliance • Fixed Income Trading • Client Acquisition Costs • Order Flow • Customer Service • White-label Robo A
Slide 39: Appendix
AxXxOS Appendix
Slide 40: Ratings Profile
Ratings Profile Moody’s Ratings (as of 1/14/2022) Type Rating Outlook Axos Financial, Inc. Long-term Issuer Rating Baa3 Stable Subordinate Regular Bond / Debenture Baa3 N/A Subordinate Shelf Baa3 N/A Senior Unsecured Shelf Baa3 N/A Axos Bank Long-term Issuer Rating Baa3 Stable Adjusted Baseline Cred
Slide 41: Select Financials
Select Financials For the 6 Months Ended FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 12/31/2021 Selected Balance Sheet Data ($ Millions) Total Assets $7,599.3 $8,501.7 $9,539.5 $11,220.2 $13,851.9 $14,265.6 $15,547.9 Net Loans 6,354.7 7,374.5 8,432.3 9,382.1 10,631.3 11,414.8 12,607.2 Loans Held
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation For the 6 Months Ended $ Millions, except per share data FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 12/31/2021 Total common equity (GAAP) $678.5 $829.2 $955.5 $1,068.0 $1,225.8 $1,400.9 $1,523.2 Less goodwill and other intangible assets 0.0 0.0 67.8 134.9 125.4 116.0 162
Slide 43: 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