Axos Financial, Inc. · NYSE:AX
Axos Financial — Investor Presentation (August 2020)
33 slides from Axos Financial's investor presentation, August 2020
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation August 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 5.16% 2.73% Salaries and benefits 0.97% 1.13% Premises, equipment and 0.97% 1.47% other non-interest expense Total non-interest expense 1.94% 2.60% Cor
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 2020 Fourth Quarter Highlights Compared with Fiscal 2019 Fourth Quarter
Fiscal 2020 Fourth Quarter Highlights Compared with Fiscal 2019 Fourth Quarter Asset Growth Deposit Growth $ Millions 15,000 13,852 $ Millions 23.5% 11,220 15,000 11,337 10,000 8,983 26.2% 10,000 5,000 5,000 0 0 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Net Income Diluted EPS $ Millions $ Diluted EPS 0.78* 10
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 2.03% 0.41% 95% Return on equity 22.26% 5.43% 96% G&A 1.90% 2.61% 22% Efficiency ratio 33.03% 67.38% 4% The 96% on ROE means that the Bank outperformed 96% of all banks. The 22% G&A ranking means that only 2
Slide 12: Diverse Lending Businesses Across Banking and Securities Segments
Diverse Lending Businesses Across Banking and Securities Segments … $ Millions FY20 Q4 Single family Jumbo Mortgage $4,243 Warehouse Lending $474 Multifamily $1,892 Commercial Real Estate Small Balance Commercial $371 Lender Finance / Asset Backed Lending $2,211 Equipment Leasing $156 Lending C&I Le
Slide 13: Conservative Underwriting and Secured Lending Positions Loan Portfolio for Economic Downturn
Conservative Underwriting and Secured Lending Positions Loan Portfolio for Economic Downturn Actively working with borrowers on case-by-case basis for forbearance requests Proactively Managing Bolstered Allowance for Asset-Based Lender* Credit* Loan Loss* 94% of loans are Limited number of loans $75
Slide 14: Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production
Our Asset Growth has been Driven by Strong and Profitable Organic Loan Production Net Loan Portfolio – End of Last Five Quarters ($ in Thousands) 10Q $12,000,000 $10,372,921 $10,631,349 $10,141,397 $10,000,000 $9,382,124 $9,784,217 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- Q4 2019 Q1 2020 Q2 20
Slide 15: 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 16: 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 17: 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 June 30, 2020 100% of Deposits = $2.1 billion 100% of Deposits = $11.3 billion Checking and other demand Savings – IRA deposits 2% 19% Time deposits 20% Checking and other demand depos
Slide 18: Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States
Axos Customer Base and Deposit Volume is Well Distributed Throughout the United States Average Deposit Balance Number of Accounts Axos Deposits Have National Reach With Customers in Every State 17
Slide 19: Commercial Loans and Deposits 4 years of growth
Commercial Loans and Deposits 4 years of growth Spot Balance ($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 20: 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 21: Diversified Fee / Non-Interest Income
Diversified Fee / Non-Interest Income % Fee Income % Fee Income FY 2020* FY 2019* Agency Mortgage Banking Jumbo 20% 6% Multifamily Structured Gain on Sale – Settlement 7% 7% Other Other Cash/Treasury Management Fee Income Consumer Deposit 16% 28% Deposit/ Service Fees Payments Tax 29% 38% Prepaid Pr
Slide 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 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 % 0.25 0.23 0.20 0.19 0.19 0.15 0.10 0.08 0.06 0.06 0.05 0.02 0.01 0.00 -0.01 -0.01 -0.05 FY16* FY17 FY18 FY19 FY20 With HRB Without HRB *For FY16, there were no HRB related charge-offs with $16M of annual average loan balances. 30
Slide 32: 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 33: 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 32