Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (November 2020)
35 slides from Axos Financial's investor presentation, November 2020
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation November 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 and Our Assets Higher-Yielding
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 3.79% 2.42% Salaries and benefits 0.96% 1.07% Premises, equipment and 0.89% 1.23% 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 Consumer Banking Commercial Banking Securities Convenience and superior Providers that integrate Consumers across all age user experience keys to banking with specialized and income
Slide 7: Fiscal 2020 Highlights Compared with Fiscal 2019
Fiscal 2020 Highlights Compared with Fiscal 2019 Asset Growth Deposit Growth $ Millions 15,000 23.5% 13,852 $ Millions 11,220 15,000 26.2% 11,337 10,000 8,983 10,000 5,000 5,000 0 0 FY 2019 FY 2020 FY 2019 FY 2020 Net Income Diluted EPS $ Millions $ Diluted EPS 3.10* 12.7% 10.8% 190.5* 2.75* 2.98 17
Slide 8: Fiscal 2021 First Quarter Highlights Compared with Fiscal 2020 First Quarter
Fiscal 2021 First Quarter Highlights Compared with Fiscal 2020 First Quarter Asset Growth Deposit Growth $ Millions 15,000 13,382 $ Millions 13.7% 11,771 15,000 10,556 10,000 9,214 14.6% 10,000 5,000 5,000 0 0 Q1 2020 Q1 2021 Q1 2020 Q1 2021 Net Income Diluted EPS $ Millions $ Diluted EPS 0.91* 100
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) 3.10* 25 $ per share $ per share 2.98 20.56 3.0 2.75* 20 19% CAGR 17.47 2.5 17% CAGR 2.48 2.37 15.24 2.10 15 2.0 13.05 1.87 10.73 1.5 1.34 10 8.51 1.0 5 0.5 0 0.0 2015 2016 2017 2018 2019 20
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 4.50% 4.11% 4.07% 4.12% 3.91% 3.95% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% FY2016 FY2017 FY2018 FY2019 FY2020 Axos NIM - reported 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 1.78% 1.03% 84% Return on equity 20.02% 7.00% 93% G&A 1.93% 2.37% 25% Efficiency ratio 37.79% 66.07% 6% The 93% on ROE means that the Bank outperformed 93% of all banks. The 25% G&A ranking means that only 2
Slide 12: Net Loan Growth by Category for First Quarter Ended September 30, 2020
Net Loan Growth by Category for First Quarter Ended September 30, 2020 $ Millions Q1 FY21 Q4 FY20 Inc (Dec) Jumbo Mortgage $4,212 $4,248 ($36) Single Family Mortgage & Warehouse SF Warehouse Lending 723 474 249 Multifamily & Multifamily 1,904 1,892 12 SB Commercial Mortgage Small Balance 395 371 24
Slide 13: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) $12,000,000 $10,631,349 $10,925,450 $10,372,921 $9,784,217 $10,141,397 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- Q1 2020 Q2 2020 Q3 2020
Slide 14: Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Liability (UCL)
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Liability (UCL) ($ in millions) $M 160 0.7 6.7 140 5.3 5.7 6.5 120 (2.0) 100 47.3 80 0.3 132.9 60 40 75.8 20 0 Provision for 1 June 30, 2020 ACL + UCL 2 CECL Day-1 July 1, 3 Net Charge- offs 4 HRB Refund 5 Other Provisions 6 Sep
Slide 15: Allowance for Credit Losses (ACL) by Loan and Lease Category at September 30, 2020
Allowance for Credit Losses (ACL) by Loan and Lease Category at September 30, 2020 $ Millions Loan Balance ACL $ ACL % Single Family Mortgage and $4,935.4 $28.3 0.57% Warehouse Multifamily & SB Commercial Mortgage $2,299.3 $12.4 0.54% Commercial Real Estate $2,443.7 $49.2 2.01% Loans & Leases Commer
Slide 16: Loan Origination Growth
Loan Origination Growth Fiscal Year Loan Originations Future Plans $ Billions › Organic growth in existing 8.4 8.4 business lines 8 7.5 1.6 • Multifamily geographic 1.5 14.3% 7 5-yr CAGR expansion 1.6 6 5.6 • Agency and jumbo 5.0 mortgage channel 5 1.4 expansion 4.3 1.4 • Small Balance 4 1.0 6.9 6.8
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 A
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, 2020 100% of Deposits = $2.1 billion 100% of Deposits = $10.6 billion Checking and other demand Savings – IRA deposits 3% 19% Time deposits 17% Checking and other demand
Slide 19: Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States
Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States Average Deposit Balance Number of Accounts Axos Deposits Have National Reach With Customers in Every State 18
Slide 20: Commercial Loans and Deposits
Commercial Loans and Deposits 4 years of growth Spot Balance ($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 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 20.6% 11,337 › Enhanced digital marketing 12,000 5-yr CAGR automation integrated to outbound 11,000 8,983 sales group 10,000 7,985 9,000 › Products and technolog
Slide 22: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income % Fee Income Fiscal Q1 2021* FY 2020* Agency Mortgage Banking Jumbo 54% 20% Multifamily Structured Gain on Sale – Settlement 1% 7% Other Other Cash/Treasury Management Fee Income Consumer Deposit 12% 16% Deposit/ Service Fees Payments Tax 13% 29% Pr
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 62 IBDs Consumer Deposit Accounts Securities Clearing & 110,000 Clients ODL/Margin Accounts Custody Jumbo Single Family Mortgage Loans Axo
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 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: Credit Quality
Credit Quality No Loans in Forbearance as of 9/30/20 vs. $132.1 million at 6/30/20 Loans in Loans & Forbearance/Deferra Delinquent Loans in 6/30/2020 Leases ($M) l ($M) % NPAs ($M) % HFS ($M) % Total ($M) % Single Family-Mortgage & Warehouse $4,722.3 $95.8 2.03% $84.0 1.78% $0.0 0.00% $179.8 3.81% M
Slide 33: Asset Quality Built to Withstand Economic Cycles
Asset Quality Built to Withstand Economic Cycles Note I: Company uses a June 30 fiscal year-end. Note II: The Company partnered with H&R Block Bank (HRB) to provide HRB branded financial services products. The partnership was terminated July 1, 2020. *As of September 30, 2020, NPAs / Assets was 1.33
Slide 34: Diversified Funding and Liquidity
Diversified Funding and Liquidity Strong Profitability and Liquidity Support Organic Growth Consumer and Commercial Deposits Non-Interest-Bearing Deposits Axos Advisors Axos Fiduciary Services Consumer Direct Commercial Cash/Treasury Small Business Banking Management Specialty Commercial Deposits Pr
Slide 35: 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 34
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