What happened

Shares of Axos Financial (NYSE:AX) fell 10.3% on March 11, the online financial service provider's second double-digit stock drop in three days, and the continuation of a run that's seen it lose 26% of its value since the beginning of the month. 

Like the Monday sell-off, today's decline wasn't due to anything specific to Axos' business, but broader investor fears about the state of the global economy. The World Health Organization officially labeled coronavirus COVID-19 a pandemic earlier today, sending stocks down sharply in afternoon trading. 

So what

The past few weeks haven't been kind to Axos, or most other bank stocks. The economic impact of coronavirus is already weighing on the global economy. Global travel is falling as businesses and individuals take steps to reduce risk of exposure and spread of COVID-19. This is already costing local businesses billions of dollars in lost business, while major economic indicators like oil demand are expected to fall in the first quarter because of efforts by China and now other countries to arrest the spread of the disease. 

Broken piggy bank.

Image source: Getty Images.

Now what

A combination of interest rate cuts and other actions to boost economic activity may not be enough to counteract people's fears -- and the real risk -- of exposure to coronavirus. And while it's too early to tell, the market is already betting that the banking sector is going to feel the brunt of the impact as businesses and individuals spend and borrow less. 

At least that's the fear. Whether it proves the reality remains to be seen, but the sell-off across the banking sector -- Axos Financial shares are down about the same as mega-banks like U.S. Bancorp (NYSE:USB) and Bank of America (NYSE:BAC) -- so far this year makes it pretty obvious what the concerns are. 

And maybe that worst-case proves to be true, and 2020 is a terrible year for banks, including Axos. But at the same time, Axos also now trades for less than 1 times book value, and 7.1 times last year's earnings. 

Even if 2020 is a terrible year for the entire banking sector, that's an incredibly cheap price for such a high-quality business. Sure, it could fall even further from here, but chances are, investors who buy at this price will look back in a few years and be very glad they did.