Axos Financial, Inc. · NYSE:AX
Axos Financial — Q2 2023 Earnings Presentation
38 slides from Axos Financial's earnings presentation, Jan 26, 2023
Slide 1: Axos Financial, Inc. Investor Presentation
Axos Financial, Inc. Investor Presentation January 31, 2023 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: 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 1.38% 0.90% 80% Return on equity 15.67% 8.00% 88% G&A 2.16% 2.36% 38% Efficiency ratio 46.34% 65.68% 11% The 88% on ROE means that the Bank outperformed 88% of all banks. The 11% efficiency ratio ranking means that o
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 Second Quarter 2023 Highlights Compared with Fiscal Second Quarter 2022
Consolidated Fiscal Second Quarter 2023 Highlights Compared with Fiscal Second Quarter 2022 Asset Growth Deposit Growth $ Millions $ Millions 20,000 18,741 20,000 21% 15,690 15,548 28% 15,000 15,000 12,269 10,000 10,000 5,000 5,000 0 0 Q2 2022 Q2 2023 Q2 2022 Q2 2023 Net Income Diluted EPS $ Million
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 4.50 30.00 27.48 3.97 4.00 16.1% CAGR 23.62 13.6% CAGR 3.56 25.00 3.50 20.56 2.98 20.00 3.00 17.47 2.37 2.48 15.24 2.50 2.10 15.00 13.05 2.00 1.50 10.00 1.00 5.00 0.5
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 4.49% 4.13% 4.26% 3.84% 3.76% 3.83% 3.92% 4.33% 3.08% 2.40% 1.91% 0.08% 0.08% 0.26% 2018 2019 2020 2021 2022 Q1 2023 Q2 2023 NIM Effective Fed Funds rate * NIM excludes impact of HRB; rel
Slide 9: Loan Portfolio More Sensitive to Rate Increases Today Compared to Last Fed Fund Rate Hike
Loan Portfolio More Sensitive to Rate Increases Today Compared to Last Fed Fund Rate Hike Starting in 2015 September 30, 2015 December 31, 2022 Variable rate Fixed Fixed 9% 12% 8% Variable rate 38% Hybrid 54% 80% Hybrid 9
Slide 10: Interest Rate Components of Loan & Lease Portfolio
Interest Rate Components of Loan & Lease Portfolio At December 31, 2022 Mix of Loan Repricing Types Fixed/Hybrid Years to Maturity / Repricing* $M 8,000 6,910 6,905 Fixed 6,842 7,000 8% 5,706 6,000 5,000 4,000 Variable Hybrid 2,942 54% 38% 3,000 1,718 2,000 1,000 687 414 - Years 1/2 1 2 3 5 10 20 >2
Slide 11: Optionality with Deposits from Axos Securities
Optionality with Deposits from Axos Securities Securities segment provides on average approximately $2.5 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
Slide 12: Axos Advisor Services (AAS) Cash Sorting
Axos Advisor Services (AAS) Cash Sorting AAS Assets Under Custody (AUC) and Cash Ending Balances $30.0 14.0% $26.0 $26.3 $24.7 $25.1 11.9% 11.9% 12.0% $25.0 $22.4 $22.5 $22.5 $21.6 $19.9 $19.4 10.0% $20.0 $17.6 8.4% 7.8% 8.0% 7.4% 7.6% $15.0 6.5% 6.0% 5.7% 5.6% 5.5% $10.0 5.1% 4.0% $5.0 $2.1 $2.7 $2
Slide 13: Loan Growth by Category for Second Quarter Ended December 31, 2022
Loan Growth by Category for Second Quarter Ended December 31, 2022 $ millions Q2 FY23 Q1 FY23 Inc (Dec) Single Family Jumbo Mortgage $3,845 $3,833 $12 Mortgage & Warehouse SF Warehouse Lending 144 177 (33) Multifamily & Multifamily 2,175 2,127 48 Commercial Mortgage Small Balance 37 875 838 Commerci
Slide 14: Prudent Loan Growth With Low LTVs
Prudent Loan Growth With Low LTVs Net Loans – Last Five Quarters ($ in Millions) $18,000 $15,212 $15,473 $16,000 $14,091 Loan Growth $14,000 $13,094 Drivers $12,607 $12,000 • Product Expansion $10,000 • Repeating Client Relationships $8,000 • Reputation for $6,000 Reliable Execution $4,000 $2,000 $‐
Slide 15: Strong Loan Origination Growth
Strong Loan Origination Growth Fiscal Year Loan Originations Future Plans $ Billions › Organic growth in existing 12 11.1 business lines 11 14.5% 5-yr CAGR 0.7 • Multifamily geographic 10 expansion 9 8.4 8.4 8.1 • Small Balance 8 7.5 1.5 Commercial Real Estate 1.6 1.6 7 expansion 5.6 1.6 6 • Large B
Slide 16: Diversified Deposit Gathering
Diversified Deposit Gathering ‹ Serves approximately 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 $
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 December 31, 2022 Total Deposits = $2.1 billion Total Deposits = $15.7 billion Checking and Savings – IRA other demand Time deposits deposits 1% 7% 19% Checking and other demand 34% de
Slide 18: Customer Base and Deposit Volume is Well Distributed Throughout the United States
Customer Base and Deposit Volume is Well Distributed Throughout the United States Axos Deposits Have National Reach With Customers in Every State 18
Slide 19: Commercial Loans and Deposits
Commercial Loans and Deposits Spot Balance ($B’s) $12.0 $10.0 $9.67 $8.0 29.5% CAGR $6.0 $6.45 $4.0 $4.45 28.9% CAGR $3.01 $2.0 $0.0 Jun-19 Jun-22 Loans Deposits Loan Growth Drivers Deposit Growth Drivers • Product Expansion • Unique value proposition • Repeating Client Relationships encompassing in
Slide 20: Non-Interest Income Growth and Diversification
Non-Interest Income Growth and Diversification Year Ended Three Months Ended June 30, 2019 December 31, 2022 Total Non-Interest Income = Total Non-Interest Income = $82.9 million $113.3 million* Prepayment Prepayment Penalty Penalty Gain on Sale Banking and 3% 7% Services Fee 11% Advisory Fee** 8% M
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 70 IBDs Consumer Deposit Accounts Securities Clearing & 220 RIAs 310,000 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 Leadership team with more June 2023 annualized based on 6 months 12/31/22 than 100 years combined Net Interest Income (Expense) Securities Lending 1% industry experience Margin Lending 9% 2% 19% Custody 292 employees across Clearing and Custody Nation’s 8th
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 Performance Unified Serving 182 RIAs1 Reporting Managed ($1M+ AUC) Accounts Easy Fee Billing Rebalancing ~$22B Assets Under Custody2 Tax Automatic Management Reconciliation Tools TAMPs Traditional Small RIAs RI
Slide 26: Axos Clearing Revenue Sensitivity to Key Metrics
Axos Clearing Revenue Sensitivity to Key Metrics Increase in revenue related to key metrics – Illustrative Axos Clearing – excluding AAS AUC Increase Lending Balances Margin Balances Sec Lending Balances $6.91M $13.02M Revenue Revenue $5.18M $9.77M $3.46M $6.51M $6.58M $4.94M $1.73M $3.26M $3.29M $1
Slide 27: 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 28: Axos Invest Managed Portfolios Overview
Axos Invest Managed Portfolios Overview Digital advisor that helps consumers achieve their investing goals Core through asset allocation, diversification, and low-cost ETFs. Services Automatic Rebalancing and Tax Loss Harvesting Services. Generate recurring revenue streams on assets under mana
Slide 29: Axos Invest Self Directed Trading Overview
Axos Invest Self Directed Trading Overview Competitive price discovery and execution of equity, options, ETFs, and Core Mutual Funds integrated with our Universal Digital Banking platform. Services Access to third-party research, alerts, and watch lists. Subscription Program: $10 monthly for e
Slide 30: Axos Invest Managed Portfolios Industry Comparison
Axos Invest Managed Portfolios Industry Comparison Attributes Axos SoFi Betterment Fidelity Go Simple asset Low-cost, integrated Simple ETF allocation allocation and Bank, Borrow, and bundled with SoFi Simplified choice for rebalancing model Business Model and Invest financial suite – loans and free
Slide 31: 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 32: 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 33: 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 34: 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 35: 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 0.02 0.02 0.01 0.00 -0.05 FY18 FY19 FY20 FY21 FY22 With HRB Without HRB Note I: Company uses a June 30 fiscal year-end. Note II: The Company partnered with H&R Block Bank (H
Slide 36: Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Reserve (UCL)
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Reserve (UCL) ($ in millions) 170 0.4 3.5 11.0 (2.2) (0.5) 10.5 160 150 140 155.5 157.2 130 120 September 30, 2022 Gross Gross Provisions for December 31, 2022 ACL + UCL Charge-offs Recoveries credit losses ACL + UCL ACL UCL 36
Slide 37: Allowance for Credit Losses (ACL) by Loan Category as of December 31, 2022
Allowance for Credit Losses (ACL) by Loan Category as of December 31, 2022 $ millions Loan Balance ACL $ ACL % Single Family - Mortgage and Warehouse $3,989.0 $19.6 0.49% Multifamily & Commercial Mortgage 3,050.1 15.5 0.51% Commercial Real Estate 5,762.1 72.2 1.25% Loans Commercial & Industrial Non-
Slide 38: 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 38