Axos Finl Inc (NYSE:AX)

One of the best banks to own is a bank you have never heard of.

Price was $6.66 on Nov-2012, now $33.33

Over the last 8 years, it has done better than all Canadian banks as well as India's superstar bank HDB (HDFC Bank).

It's just not the stock that has done well the business has grown as well.

Total Deposits were at $1.6 billion in 2012, and now at $11 billion
Shareholder equity grew from $206 million in 2012 to $1.6 billion now

The current market cap is $1.97 billion

Why is this bank so good?

Low efficiency ratio (basically lower the better)
Very nice ROE
Reasonably well managed NPA
Lots of room to grow deposits and loans because they are small in sie.
Real reason it is so successful is it is a branchless bank. Bank branches are expensive to maintain and inefficient. They are a huge cost to the bank. To compensate for the lack of branch, Axos gives more interest on checking and savings to attract deposits. The model has worked quite well over the last 8 years. We will see how it goes over the next 8.

With $11 billion at Axos and trillions at JPMorgan, Bank of America, Wells Fargo etc, Axos will never run out of growth prospects.

Banks are limited by their capital for growth. AXOS generates sufficiently high ROE to grow their book value, deposits, loans and profits. EPS now is $3.02 up from 64c in 2012 or $1.88 in 2016

If EPS grows at same pace as in last 4 years, for the next 8 years, we will get EPS of $12.50 by 2028 and stock price around $110 to $150 up from $33.37.

A small cap online bank with no physical branches and two decades of operating history. Loan origination and earnings evidence high double-digit CAGR, while NPA's are well below 1% indicating robust credit quality (even during the pandemic), courtesy of sub 60% LTV's on most of the secured portfolio and prudent underwriting criteria. Efficiency ratio is exceptional given the low overhead model and high NIM. A compounding machine.