Axos Financial, Inc. · NYSE:AX
Axos Financial — Q1 2024 Earnings Presentation
34 slides from Axos Financial's earnings presentation, Oct 26, 2023
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation November 2, 2023 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 1.63% 0.74% 91% Return on equity 16.56% 7.48% 91% Net interest income 4.38% 2.79% 94% Efficiency ratio 46.19% 70.94% 8% The 91% on ROE means that the Bank outperformed 91% 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 First Quarter 2024 Highlights
Consolidated Fiscal First Quarter 2024 Highlights Compared with Fiscal First Quarter 2023 Asset Growth Deposit Growth $ Millions $ Millions 25,000 20,000 17,566 18,407 13.1% 20,825 20,000 15,177 15.7% 15,000 15,000 10,000 10,000 5,000 5,000 0 0 Q1 2023 Q1 2024 Q1 2023 Q1 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: 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* Stable Net Interest Margin 5.08% 5.33% 4.13% 4.35% 4.36% 3.76% 3.83% 3.92% 2.40% 0.26% 0.08% 0.08% 2019 2020 2021 2022 2023 Q1 2024 NIM Effective Fed Funds rate *NIM excludes impact of HRB; relationship with HRB terminate
Slide 9: 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 September 30, 2023 Variable rate Fixed Fixed 9% 11% 7% 32% Variable rate Hybrid 61% Hybrid 80% 9
Slide 10: Interest Rate Components of Loan & Lease Portfolio
Interest Rate Components of Loan & Lease Portfolio At September 30, 2023 Mix of Loan Repricing Types Fixed/Hybrid Years to Maturity / Repricing* $M 7,000 6,483 6,491 6,543 Fixed 7% 6,000 5,516 5,000 4,000 3,297 Variable Hybrid 3,000 61% 32% 2,139 2,000 944 1,000 455 - Years 1/2 1 2 3 5 10 20 >20 7%
Slide 11: Optionality with Deposits from Axos Securities
Optionality with Deposits from Axos Securities Securities segment provides approximately $1.6 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 › 14 partn
Slide 12: Axos Advisor Services (AAS) Cash Sorting
Axos Advisor Services (AAS) Cash Sorting (in millions) Pace of AAS Cash Sorting Decline Has Decelerated $- $(100) (51) $(200) (188) $(300) $(400) (383) $(500) $(600) $(700) $(800) $(900) (895) $(1,000) Q2 2023 Q3 2023 Q4 2023 Q1 2024 Ending Balance* $1,674 $1,291 $1,103 $1,052 *Total ending AAS clie
Slide 13: Loan Growth by Category for First Quarter Ended September 30, 2023
Loan Growth by Category for First Quarter Ended September 30, 2023 $ millions Q1 FY24 Q4 FY23 Inc (Dec) Single Family Jumbo Mortgage $4,019 $3,924 $95 Mortgage & Warehouse SF Warehouse Lending 295 250 45 Multifamily & Multifamily 2,130 2,236 (106) Commercial Mortgage Small Balance Commercial 832 846
Slide 14: Prudent Loan Growth With Low LTVs
Prudent Loan Growth With Low LTVs Net Loans – Last Five Quarters ($ in Millions) $18,000 $16,955 $16,457 $15,473 $15,836 $16,000 $15,212 Loan Growth $14,000 Drivers $12,000 • Product Expansion $10,000 • Repeating Client Relationships $8,000 • Reputation for $6,000 Reliable Execution $4,000 $2,000 $‐
Slide 15: CRE Specialty Detail as of September 30, 2023
CRE Specialty* Detail as of September 30, 2023 Loan Type Balance (mm) Weighted Avg. LTV Non-Performing Loans (mm) Multifamily $1,804 43% $11 SFR 1,109 37 15 Hotel 1,061 41 0 Industrial 496 39 0 Office 456 38 0 Retail 226 43 0 Other 336 41 0 Total $5,488 41% $26 LTV Distribution <=50% 81% > 50% to 60
Slide 16: CRE Specialty Detail as of September 30, 2023
CRE Specialty* Detail as of September 30, 2023 77% of total CRE Specialty balance at September 30, 2023 is indirect note structures where Axos has first payment priority; these loans carry a weighted-average LTV of 40%. Loan Type Balance (mm) Weighted Avg. LTV Construction $2,355 38% Bridge 2,146 44
Slide 17: Diversified Deposit Gathering
Diversified Deposit Gathering Approximately 90% of deposits are FDIC-insured or collateralized › Serves approximately 40% of U.S. Chapter 7 bankruptcy trustees in exclusive relationship › Full service digital banking, wealth › Software allows servicing of SEC receivers and management, and securities
Slide 18: 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 September 30, 2023 Total Deposits = $2.1 billion Total Deposits = $17.6 billion Checking and other demand Time deposits deposits 19% 6% Checking and 35% other demand deposits Time 50%
Slide 19: 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 19
Slide 20: Non-Interest Income Growth and Diversification
Non-Interest Income Growth and Diversification Year Ended Three Months Ended June 30, 2019 September 30, 2023 Total Non-Interest Income = Total Non-Interest Income = $82.9 million $138.0 million * Mortgage Prepayment Banking and Penalty Servicing Rights Gain on Sale Banking and 7% Service Fees 11% P
Slide 21: Axos Securities Overview
Axos Securities Overview Monetizing synergies by integrating Banking products and services to Securities customers, RIAs, and IBDs Consumer Banking Axos Clearing 64 IBDs Consumer Deposit Accounts Securities Clearing & 236 RIAs ~320,000 Clients ODL/Margin Accounts Custody Jumbo Single Family Mortgage
Slide 22: 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 23: Axos Clearing and Custody Highlights
Axos Clearing and Custody Highlights For the 3 months ended 9/30/2023 Leadership team with more than 100 years Net Interest Securities Lending combined industry Income 3% 2% Custody $ 8,219,291 experience. Margin Lending 10% 21% Custody Clearing Fees & Execution 5,898,748 Proprietary front‐ and
Slide 24: 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 25: Axos Advisor Services (AAS) At A Glance
Axos Advisor Services (AAS) At A Glance Liberty Provides a Comprehensive Turnkey Platform Serving 195 RIAs1,3 Performance Unified ($1M+ AUC) Reporting Managed Accounts Fee Billing Easy ~$33.9B Assets Under Rebalancing Custody2 Tax Automatic Management Reconciliation Tools TAMPs Traditional Small RIA
Slide 26: 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 27: 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 28: 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 29: The Digital Experience Roadmap
The Digital Experience Roadmap We continue to evolve our digital experience and provide modern solutions so financial services providers can have the speed, scalability, and flexibility they need to deliver better client experiences White Label Universal Digital Bank 24/7 White Payment Label Facilit
Slide 30: 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 31: 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 32: Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Reserve
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Reserve (UCL) ($ in millions) 190 1.2 180 0.8 5.8 11.7 10.5 2.4 170 160 150 166.7 170.9 140 130 June 30, 2023 Gross Gross Provisions for September 30, ACL + UCL Charge-offs Recoveries credit losses 2023 ACL + UCL ACL UCL 32
Slide 33: Allowance for Credit Losses (ACL) by Loan Category as of September 30, 2023
Allowance for Credit Losses (ACL) by Loan Category as of September 30, 2023 $ millions Loan Balance ACL $ ACL % Single Family Mortgage & Warehouse $4,314 $17 0.4 % Multifamily & Commercial Mortgage 2,962 16 0.5 % Commercial Real Estate 6,169 71 1.2 % Loans Commercial & Industrial Non-RE 3,209 55 1.7
Slide 34: 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, SVP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 jlai@axosfinancial.com 34