ax-202404300001299709false00012997092024-04-302024-04-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 2024
Axos Financial, Inc.
(Exact name of registrant as specified in its charter)
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|
| | |
| Delaware | 001-37709 | 33-0867444 |
(State or other jurisdiction of
incorporation) | (Commission File Number) | (IRS Employer Identification
Number) |
9205 West Russell Road, Ste 400
Las Vegas, NV 89148
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (858) 649-2218
| | | | | | | | |
| Securities registered pursuant to Section 12(b) of the Act: |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock, $0.01 par value | AX | New York Stock Exchange |
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On April 30, 2024, Axos Financial, Inc. (the “Registrant” or the “Company”) issued a press release announcing its fiscal third quarter results of operations for the period ended March 31, 2024. The press release is furnished as Exhibit 99.1. In addition, the Registrant is furnishing the related quarterly earnings supplement in two different formats as Exhibits 99.2 and 99.3.
Pursuant to General Instruction B.2. of Form 8-K, the information in this Item 2.02 of Form 8-K, including Exhibit 99.1, 99.2 and 99.3 is being furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise be subject to the liabilities of that section, nor is it incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| | | | | | | | |
| Exhibit | | Description |
| 99.1 | | |
| 99.2 | | |
| 99.3 | | |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | Axos Financial, Inc. |
| | |
| | | |
| Date: | April 30, 2024 | By: | /s/ Derrick K. Walsh | |
| | | | Derrick K. Walsh |
| | | | EVP and Chief Financial Officer |
DocumentAxos Financial, Inc. Reports Third Quarter Fiscal 2024 Results
LAS VEGAS, NV – (BUSINESS WIRE) – April 30, 2024 – Axos Financial, Inc. (NYSE: AX) (“Axos” or the “Company”) today announced unaudited financial results for the third fiscal quarter ended March 31, 2024. Net income was $110.7 million, an increase of 38.7% from $79.9 million for the quarter ended March 31, 2023. Diluted earnings per share (“EPS”) was $1.91, an increase of $0.59, or 44.7%, as compared to diluted earnings per share of $1.32 for the quarter ended March 31, 2023.
Adjusted earnings and adjusted earnings per diluted common share (“Adjusted EPS”), non-GAAP measures described further below, increased $30.8 million to $112.7 million and increased $0.59 to $1.94, respectively, for the quarter ended March 31, 2024, compared to $81.8 million and $1.35, respectively, for the quarter ended March 31, 2023.
Third Quarter Fiscal 2024 Financial Summary
| | | | | | | | | | | | | | | | | |
| | | | | |
| Three Months Ended
March 31, | | |
| (Dollars in thousands, except per share data) | 2024 | | 2023 | | % Change |
| Net interest income | $ | 261,606 | | | $ | 198,982 | | | 31.5 | % |
| Non-interest income | $ | 33,163 | | | $ | 32,246 | | | 2.8 | % |
| Net income | $ | 110,720 | | | $ | 79,850 | | | 38.7 | % |
Adjusted earnings (Non-GAAP)1 | $ | 112,655 | | | $ | 81,832 | | | 37.7 | % |
| Diluted EPS | $ | 1.91 | | | $ | 1.32 | | | 44.7 | % |
Adjusted EPS (Non-GAAP)1 | $ | 1.94 | | | $ | 1.35 | | | 43.7 | % |
1 See “Use of Non-GAAP Financial Measures” | | | | | |
For the nine months ended March 31, 2024, net income was $345.1 million, an increase of 57.0% from net income of $219.8 million for the nine months ended March 31, 2023. Diluted earnings per share were $5.88 for the nine months ended March 31, 2024, an increase of $2.25, or 62.0%, as compared to diluted earnings per share of $3.63 for the nine months ended March 31, 2023.
“We delivered strong earnings per share and book value per share growth, driven by a 14% sequential increase in net interest income and a 5% sequential increase in non-interest income, ex-last quarter’s one-time gain on the FDIC Loan Purchase” stated Greg Garrabrants, President and Chief Executive Officer of Axos. “We generated double-digit deposit growth year-over-year and linked-quarter annualized as a result of our diversified channels across consumer and commercial banking. Despite continued cash sorting declines in our custody business, average non-interest bearing deposit balances increased 2.6% linked quarter, driven by a 7% sequential increase in the number of non-interest bearing deposit accounts.”
“Our asset-based lending at low loan-to-values credit philosophy continues to serve us well, with non-performing assets remaining relatively stable” stated Derrick Walsh, Executive Vice President and Chief Financial Officer of Axos. “We continue to generate excess capital due to our strong returns and net interest margin, with a return on average common stockholders’ equity of 20.71% and a return on average assets of 1.98% in the three months ended March 31, 2024. Our strong capital position allows us to balance organic growth and opportunistic asset, business and talent acquisition with common share repurchases.”
Other Highlights
•Net interest margin was 4.87% for the quarter ended March 31, 2024 compared to 4.42% for the quarter ended March 31, 2023
•Net loans for investment totaled $18.7 billion at March 31, 2024, an increase of $0.5 billion, or 10.3% annualized, from $18.3 billion at December 31, 2023
•Total deposits were $19.1 billion at March 31, 2024, an increase of $2.0 billion, or 15.4% annualized, from $17.1 billion at June 30, 2023; total savings, checking and other demand deposits were $18.1 billion at March 31, 2024, up from $14.9 billion at March 31, 2023
•Approximately 90% of total deposits were FDIC-insured or collateralized at March 31, 2024
•Total capital to risk-weighted assets was 13.49% for Axos Bank at March 31, 2024, up from 12.50% at June 30, 2023
•Book value increased to $38.48 per share, from $31.07 at March 31, 2023, an increase of 23.8%
Third Quarter Fiscal 2024 Income Statement Summary
Net income was $110.7 million and earnings per diluted common share was $1.91 for the three months ended March 31, 2024, compared to net income of $79.9 million and earnings per diluted common share of $1.32 for the three months ended March 31, 2023. Net interest income increased $62.6 million or 31.5% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to an increase in interest income from loans attributable to higher rates earned and higher average balances, partially offset by higher rates paid and higher average interest-bearing deposit balances.
The provision for credit losses was $6.0 million for the three months ended March 31, 2024, compared to $5.5 million for the three months ended March 31, 2023. The provision for credit losses for the three months ended March 31, 2024, was primarily due to loan growth in the Commercial & Industrial - Non-RE portfolio and an increase in the Commercial Real Estate portfolio reflecting changes in the underlying macroeconomic variables.
Non-interest income increased to $33.2 million for the three months ended March 31, 2024, compared to $32.2 million for the three months ended March 31, 2023. The increase was primarily due to higher advisory fee income and higher mortgage banking and servicing rights income, partially offset by a decrease in broker-dealer fee income.
Non-interest expense, comprised of various operating expenses, increased $22.2 million to $133.2 million for the three months ended March 31, 2024 from $111.0 million for the three months ended March 31, 2023. The increase was primarily due to higher salaries and related costs, higher data and operational processing expenses and increased professional services expense, partially offset by a decrease in advertising and promotional expenses.
Balance Sheet Summary
Axos’ total assets increased by $2.3 billion, or 11.3%, to $22.6 billion, at March 31, 2024, from $20.3 billion at June 30, 2023, primarily due to an increase in loans. Total liabilities increased by $2.0 billion, or 10.9%, to $20.4 billion at March 31, 2024, from $18.4 billion at June 30, 2023, primarily due to an increase in deposits. Stockholders’ equity increased by $279.1 million, or 14.6%, to $2.2 billion at March 31, 2024 from $1.9 billion at June 30, 2023, primarily due to net income of $345.1 million, partially offset by purchases of common stock of $83.8 million under the share repurchase program.
Conference Call
A conference call and webcast will be held on Tuesday, April 30, 2024 at 5:00 PM Eastern / 2:00 PM Pacific. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial: 877-407-8293. The conference call will be webcast live, and both the webcast and the earnings supplement may be accessed at Axos’ website, investors.axosfinancial.com. For those unable to listen to the live broadcast, a replay will be available until May 30, 2024, at Axos’ website and telephonically by dialing toll-free number 877-660-6853, passcode 13745514.
About Axos Financial, Inc. and Subsidiaries
Axos Financial, Inc., with approximately $22.6 billion in consolidated assets as of March 31, 2024, is the holding company for Axos Bank, Axos Clearing LLC and Axos Invest, Inc. Axos Bank provides consumer and business banking products nationwide through its low-cost distribution channels and affinity partners. Axos Clearing LLC (including its business division Axos Advisor Services), with approximately $35.0 billion of assets under custody and/or administration as of March 31, 2024, and Axos Invest, Inc., provide comprehensive securities clearing services to introducing broker-dealers and registered investment advisor correspondents, and digital investment advisory services to retail investors, respectively. Axos Financial, Inc.’s common stock is listed on the NYSE under the symbol “AX” and is a component of the Russell 2000® Index, the S&P SmallCap 600® Index, the KBW Nasdaq Financial Technology Index, and the Travillian Tech-Forward Bank Index. For more information on Axos Financial, Inc., please visit http://investors.axosfinancial.com.
Segment Reporting
The Company operates through two segments: Banking Business and Securities Business. In order to reconcile the two segments to the consolidated totals, the Company includes parent-only activities and intercompany eliminations. Inter-segment transactions are eliminated in consolidation and primarily include non-interest income earned by the Securities Business segment and non-interest expense incurred by the Banking Business segment for cash sorting fees related to deposits sourced from Securities Business segment customers, as well as interest expense paid by the Banking Business segment to each of the wholly-owned subsidiaries of the Company and to the Company itself for their operating cash held on deposit with the Business Banking segment.
The following tables present the operating results of the segments:
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended March 31, 2024 |
| (Dollars in thousands) | Banking
Business | | Securities Business | | Corporate/Eliminations | | Axos Consolidated |
| Net interest income | $ | 258,435 | | | $ | 7,133 | | | $ | (3,962) | | | $ | 261,606 | |
| Provision for credit losses | 6,000 | | | — | | | — | | | 6,000 | |
| Non-interest income | 11,908 | | | 32,746 | | | (11,491) | | | 33,163 | |
| Non-interest expense | 104,959 | | | 32,488 | | | (4,219) | | | 133,228 | |
| Income before income taxes | $ | 159,384 | | | $ | 7,391 | | | $ | (11,234) | | | $ | 155,541 | |
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| For the Three Months Ended March 31, 2023 |
| (Dollars in thousands) | Banking
Business | | Securities Business | | Corporate/Eliminations | | Axos Consolidated |
| Net interest income | $ | 196,249 | | | $ | 6,335 | | | $ | (3,602) | | | $ | 198,982 | |
| Provision for credit losses | 5,500 | | | — | | | — | | | 5,500 | |
| Non-interest income | 10,685 | | | 38,298 | | | (16,737) | | | 32,246 | |
| Non-interest expense | 98,252 | | | 25,138 | | | (12,346) | | | 111,044 | |
| Income before income taxes | $ | 103,182 | | | $ | 19,495 | | | $ | (7,993) | | | $ | 114,684 | |
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| For the Nine Months Ended March 31, 2024 |
| (Dollars in thousands) | Banking
Business | | Securities Business | | Corporate/Eliminations | | Axos Consolidated |
| Net interest income | $ | 694,289 | | | $ | 18,755 | | | $ | (11,677) | | | $ | 701,367 | |
| Provision for credit losses | 26,500 | | | — | | | — | | | 26,500 | |
| Non-interest income | 128,244 | | | 99,942 | | | (36,387) | | | 191,799 | |
| Non-interest expense | 308,027 | | | 87,979 | | | (20,433) | | | 375,573 | |
| Income before income taxes | $ | 488,006 | | | $ | 30,718 | | | $ | (27,631) | | | $ | 491,093 | |
| | | | | | | |
| For the Nine Months Ended March 31, 2023 |
| (Dollars in thousands) | Banking
Business | | Securities Business | | Corporate/Eliminations | | Axos Consolidated |
| Net interest income | $ | 574,524 | | | $ | 15,486 | | | $ | (10,643) | | | $ | 579,367 | |
| Provision for credit losses | 17,251 | | | — | | | — | | | 17,251 | |
| Non-interest income | 31,954 | | | 103,467 | | | (47,638) | | | 87,783 | |
| Non-interest expense | 295,831 | | | 74,924 | | | (35,597) | | | 335,158 | |
| Income before income taxes | $ | 293,396 | | | $ | 44,029 | | | $ | (22,684) | | | $ | 314,741 | |
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), this release includes non-GAAP financial measures such as adjusted earnings, adjusted earnings per diluted common share, and tangible book value per common share. Non-GAAP financial measures have inherent limitations, may not be comparable to similarly titled measures used by other companies and are not audited. Readers should be aware of these limitations and should be cautious as to their reliance on such measures. Although we believe the non-GAAP financial measures disclosed in this release enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures.
We define “adjusted earnings”, a non-GAAP financial measure, as net income without the after-tax impact of non-recurring acquisition-related items (including amortization of intangible assets related to acquisitions and certain gains and provisions resulting from the Company’s FDIC Loan Purchase) and other costs (unusual or non-recurring charges). Adjusted EPS, a non-GAAP financial measure, is calculated by dividing non-GAAP adjusted earnings by the average number of diluted common shares outstanding during the period. We believe the non-GAAP measures of adjusted earnings and Adjusted EPS provide useful information about Axos’ operating performance. We believe excluding the non-recurring acquisition-related costs, and other costs provides investors with an alternative understanding of Axos’ core business.
Below is a reconciliation of net income, the nearest compatible GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| March 31, | | March 31, |
| (Dollars in thousands, except per share amounts) | 2024 | | 2023 | | 2024 | | 2023 |
| Net income | $ | 110,720 | | | $ | 79,850 | | | $ | 345,136 | | | $ | 219,809 | |
FDIC Loan Purchase - Gain on purchase1 | — | | | — | | | (92,397) | | | — | |
FDIC Loan Purchase - Provision for credit losses1 | — | | | — | | | 4,648 | | | — | |
| Acquisition-related costs | 2,719 | | | 2,846 | | | 8,289 | | | 8,169 | |
Other costs2 | — | | | — | | | — | | | 16,000 | |
| Income tax effect | (784) | | | (864) | | | 23,616 | | | (7,290) | |
| Adjusted earnings (Non-GAAP) | $ | 112,655 | | | $ | 81,832 | | | $ | 289,292 | | | $ | 236,688 | |
| | | | | | | |
| Average dilutive common shares outstanding | 58,037,698 | | | 60,627,400 | | | 58,707,815 | | | 60,595,414 | |
| | | | | | | |
| Diluted EPS | $ | 1.91 | | | $ | 1.32 | | | $ | 5.88 | | | $ | 3.63 | |
FDIC Loan Purchase - Gain on purchase1 | — | | | — | | | (1.57) | | | — | |
FDIC Loan Purchase - Provision for credit losses1 | — | | | — | | | 0.08 | | | — | |
| Acquisition-related costs | 0.05 | | | 0.04 | | | 0.14 | | | 0.13 | |
Other costs2 | — | | | — | | | — | | | 0.26 | |
| Income tax effect | (0.02) | | | (0.01) | | | 0.40 | | | (0.11) | |
| Adjusted EPS (Non-GAAP) | $ | 1.94 | | | $ | 1.35 | | | $ | 4.93 | | | $ | 3.91 | |
1 During the nine months ended March 31, 2024, the Company completed the purchase from the Federal Deposit Insurance Corporation (“FDIC”) of two performing commercial real estate and multi-family loan pools with a combined unpaid principal balance of approximately $1.25 billion at 63% of par value (the “FDIC Loan Purchase”). |
2 Other costs for the nine months ended March 31, 2023 reflect an accrual recorded in the first quarter of fiscal year 2024 as a result of an adverse legal judgement that has not been finalized. |
We define “tangible book value”, a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. Tangible book value is calculated using common stockholders’ equity minus servicing rights, goodwill and other intangible assets. Tangible book value per common share, a non-GAAP financial measure, is calculated by dividing tangible book value by the common shares outstanding at the end of the period. We believe tangible book value per common share is useful in evaluating the Company’s capital strength, financial condition, and ability to manage potential losses.
Below is a reconciliation of total stockholders’ equity, the nearest compatible GAAP measure, to tangible book value per common share (non-GAAP) as of the dates indicated:
| | | | | | | | | | | |
| March 31, |
| (Dollars in thousands, except per share amounts) | 2024 | | 2023 |
| Common stockholders’ equity | $ | 2,196,293 | | | $ | 1,844,104 | |
| Less: servicing rights, carried at fair value | 28,130 | | | 25,396 | |
| Less: goodwill and intangible assets—net | 144,324 | | | 154,928 | |
| Tangible common stockholders’ equity (Non-GAAP) | $ | 2,023,839 | | | $ | 1,663,780 | |
| | | |
| Common shares outstanding at end of period | 57,079,429 | | | 59,355,124 | |
| | | |
| Book value per common share | 38.48 | | | 31.07 | |
| Less: servicing rights, carried at fair value per common share | 0.49 | | | 0.43 | |
| Less: goodwill and other intangible assets—net per common share | 2.53 | | | 2.61 | |
| Tangible book value per common share (Non-GAAP) | $ | 35.46 | | | $ | 28.03 | |
Forward-Looking Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, including without limitation statements relating to Axos’ financial prospects and other projections of its performance and asset quality, Axos’ deposit balances and capital ratios, Axos’ ability to continue to grow profitably and increase its business, Axos’ ability to continue to diversify its lending and deposit franchises, the anticipated timing and financial performance of other offerings, initiatives, and acquisitions, expectations of the environment in which Axos operates and projections of future performance. These forward-looking statements are made on the basis of the views and assumptions of management regarding future events and performance as of the date of this press release. Actual results and the timing of events could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties, including without limitation Axos’ ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, monetary policy, inflation, government regulation, general economic conditions, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, our ability to attract and retain deposits and access other sources of liquidity, and the outcome and effects of litigation and other factors beyond our control. These and other risks and uncertainties detailed in Axos’ periodic reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2023, could cause actual results to differ materially from those expressed or implied in any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Axos undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All written and oral forward-looking statements made in connection with this press release, which are attributable to us or persons acting on Axos’ behalf are expressly qualified in their entirety by the foregoing information.
Investor Relations Contact:
Johnny Lai, CFA
SVP, Corporate Development & Investor Relations
858-649-2218
jlai@axosfinancial.com
AXOS FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands)
| | | | | | | | | | | | | | | | | |
| March 31,
2024 | | June 30,
2023 | | March 31,
2023 |
| Selected Balance Sheet Data: | | | | | |
| Total assets | $ | 22,642,133 | | | $ | 20,348,469 | | | $ | 19,782,481 | |
| Loans—net of allowance for credit losses | 18,733,455 | | | 16,456,728 | | | 15,836,255 | |
| Loans held for sale, carried at fair value | 16,239 | | | 23,203 | | | 7,920 | |
| Loans held for sale, lower of cost or fair value | — | | | 776 | | | 303 | |
| Allowance for credit losses | 257,522 | | | 166,680 | | | 161,293 | |
| Trading securities | 592 | | | 758 | | | 400 | |
| Available-for-sale securities | 207,582 | | | 232,350 | | | 279,612 | |
| | | | | |
| Securities borrowed | 105,853 | | | 134,339 | | | 87,293 | |
| Customer, broker-dealer and clearing receivables | 292,630 | | | 374,074 | | | 323,359 | |
| Total deposits | 19,103,532 | | | 17,123,108 | | | 16,738,869 | |
| | | | | |
| Advances from the Federal Home Loan Bank | 90,000 | | | 90,000 | | | 90,000 | |
| Borrowings, subordinated notes and debentures | 330,389 | | | 361,779 | | | 334,330 | |
| Securities loaned | 119,800 | | | 159,832 | | | 114,613 | |
| Customer, broker-dealer and clearing payables | 387,176 | | | 445,477 | | | 406,092 | |
| Total stockholders’ equity | 2,196,293 | | | 1,917,159 | | | 1,844,104 | |
| | | | | |
| Capital Ratios: | | | | | |
| Equity to assets at end of period | 9.70 | % | | 9.42 | % | | 9.32 | % |
| Axos Financial, Inc.: | | | | | |
| Tier 1 leverage (to adjusted average assets) | 9.33 | % | | 8.96 | % | | 9.29 | % |
| Common equity tier 1 capital (to risk-weighted assets) | 11.47 | % | | 10.94 | % | | 10.71 | % |
| Tier 1 capital (to risk-weighted assets) | 11.47 | % | | 10.94 | % | | 10.71 | % |
| Total capital (to risk-weighted assets) | 14.26 | % | | 13.82 | % | | 13.63 | % |
| Axos Bank: | | | | | |
| Tier 1 leverage (to adjusted average assets) | 9.86 | % | | 9.68 | % | | 10.17 | % |
| Common equity tier 1 capital (to risk-weighted assets) | 12.47 | % | | 11.63 | % | | 11.55 | % |
| Tier 1 capital (to risk-weighted assets) | 12.47 | % | | 11.63 | % | | 11.55 | % |
| Total capital (to risk-weighted assets) | 13.49 | % | | 12.50 | % | | 12.40 | % |
| Axos Clearing LLC: | | | | | |
| Net capital | $ | 102,963 | | | $ | 35,221 | | | $ | 79,459 | |
| Excess capital | $ | 97,646 | | | $ | 29,905 | | | $ | 74,377 | |
| Net capital as a percentage of aggregate debit items | 38.73 | % | | 13.25 | % | | 31.27 | % |
| Net capital in excess of 5% aggregate debit items | $ | 89,671 | | | $ | 21,930 | | | $ | 66,755 | |
AXOS FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the Three Months Ended | | As of or for the Nine Months Ended |
| March 31, | | March 31, |
| (Dollars in thousands, except per share data) | 2024 | | 2023 | | 2024 | | 2023 |
| Selected Income Statement Data: | | | | | | | |
| Interest and dividend income | $ | 443,564 | | $ | 307,334 | | $ | 1,202,179 | | $ | 810,708 |
| Interest expense | 181,958 | | 108,352 | | 500,812 | | 231,341 |
| Net interest income | 261,606 | | 198,982 | | 701,367 | | 579,367 |
| Provision for credit losses | 6,000 | | 5,500 | | 26,500 | | 17,251 |
| Net interest income, after provision for credit losses | 255,606 | | 193,482 | | 674,867 | | 562,116 |
| Non-interest income | 33,163 | | 32,246 | | 191,799 | | 87,783 |
| Non-interest expense | 133,228 | | 111,044 | | 375,573 | | 335,158 |
| Income before income taxes | 155,541 | | 114,684 | | 491,093 | | 314,741 |
| Income tax expense | 44,821 | | 34,834 | | 145,957 | | 94,932 |
| Net income | $ | 110,720 | | $ | 79,850 | | $ | 345,136 | | $ | 219,809 |
| | | | | | | |
| Per Common Share Data: | | | | | | | |
| Net income: | | | | | | | |
| Basic | $ | 1.94 | | $ | 1.33 | | $ | 5.98 | | $ | 3.67 |
| Diluted | $ | 1.91 | | $ | 1.32 | | $ | 5.88 | | $ | 3.63 |
Adjusted earnings per common share (Non-GAAP)1 | $ | 1.94 | | $ | 1.35 | | $ | 4.93 | | $ | 3.91 |
| Book value per common share | $ | 38.48 | | $ | 31.07 | | $ | 38.48 | | $ | 31.07 |
Tangible book value per common share (Non-GAAP)1 | $ | 35.46 | | $ | 28.03 | | $ | 35.46 | | $ | 28.03 |
| | | | | | | |
| Weighted average number of common shares outstanding: | | | | | | | |
| Basic | 56,932,050 | | 59,930,634 | | 57,699,236 | | 59,928,263 |
| Diluted | 58,037,698 | | 60,627,400 | | 58,707,815 | | 60,595,414 |
| Common shares outstanding at end of period | 57,079,429 | | 59,355,124 | | 57,079,429 | | 59,355,124 |
| Common shares issued at end of period | 70,033,523 | | 69,340,533 | | 70,033,523 | | 69,340,533 |
| | | | | | | |
| Performance Ratios and Other Data: | | | | | | | |
| Loan originations for investment | $ | 2,801,110 | | $ | 1,735,651 | | $ | 8,145,703 | | $ | 6,235,451 |
| Loan originations for sale | 47,821 | | 45,200 | | 144,731 | | 158,500 |
Loan purchases | — | | 787 | | 841,408 | | 914 |
| Return on average assets | 1.98 | % | | 1.71 | % | | 2.18 | % | | 1.60 | % |
| Return on average common stockholders’ equity | 20.71 | % | | 17.42 | % | | 22.65 | % | | 16.73 | % |
Interest rate spread2 | 3.88 | % | | 3.46 | % | | 3.62 | % | | 3.57 | % |
Net interest margin3 | 4.87 | % | | 4.42 | % | | 4.61 | % | | 4.41 | % |
Net interest margin3 – Banking Business Segment | 4.92 | % | | 4.50 | % | | 4.68 | % | | 4.56 | % |
Efficiency ratio4 | 45.20 | % | | 48.02 | % | | 42.05 | % | | 50.24 | % |
Efficiency ratio4 – Banking Business Segment | 38.82 | % | | 47.48 | % | | 37.45 | % | | 48.78 | % |
| | | | | | | |
| Asset Quality Ratios: | | | | | | | |
| Net annualized charge-offs to average loans | 0.07 | % | | 0.04 | % | | 0.05 | % | | 0.04 | % |
| Non-performing loans and leases to total loans | 0.63 | % | | 0.60 | % | | 0.63 | % | | 0.60 | % |
| Non-performing assets to total assets | 0.54 | % | | 0.51 | % | | 0.54 | % | | 0.51 | % |
| Allowance for credit losses - loans to total loans held for investment | 1.36 | % | | 1.01 | % | | 1.36 | % | | 1.01 | % |
| Allowance for credit losses - loans to non-performing loans | 210.95 | % | | 168.12 | % | | 210.95 | % | | 168.12 | % |
1 See “Use of Non-GAAP Financial Measures” herein.
2 Interest rate spread represents the difference between the annualized weighted average yield on interest-earning assets and the annualized weighted average
rate paid on interest-bearing liabilities.
3 Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
4 Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income.
marsupplement
Axos Q3 Fiscal 2024 Earnings Supplement NYSE: AXApril 30, 2024
2 Loan Growth by Category for Second Quarter Ended March 31, 2024 $ Millions SF Warehouse Lending Multifamily Small Balance Commercial Jumbo Mortgage Asset-Based and Cash Flow Lending Lender Finance Non-RE Capital Call Facilities Auto Unsecured/OD Single Family Mortgage & Warehouse Multifamily & Commercial Mortgage Commercial Real Estate Commercial & Industrial Non-RE Auto & Consumer Other Loans Inc (Dec)Q2 FY24Q3 FY24 $ (29)$ 3,993$ 3,964 6099159 (45)2,7082,663 (19)1,3571,338 (180)5,4005,220 50643693 852,2352,320 4281,1891,617 138753891 (20)419399 (8)5951 (3)52 $ 457$ 18,860$ 19,317 Lender Finance RE CRE Specialty
3 FDIC Loan Purchase Metrics as of March 31, 2024 Remaining Term (Months) Weighted- Average LTV Weighted- Average Yield Before Accretion of Discount Unpaid Principal Balance (mm) Loan Type 4752.2 %7.5 %$ 239Office 1838.34.2121Data Center 1742.27.956Land 1551.46.851Other 9270.76.938Industrial 3657.87.434Mixed Use 3649.17.727Retail 3749.6 %6.7 %566Total CRE 14060.86.7347Residential 9474.07.1330 Rent-stabilized / Rent- controlled Multifamily* 11867.2 %6.9 %677Total Multifamily 8159.2 %6.8 %$ 1,243Total *1,456 units out of 1,457 total units are rent-stabilized; only 1 is rent-controlled On December 7, 2023, Axos completed a purchase of $1.25 billion of loans from the FDIC at a 37% discount.
4 Commercial Real Estate Specialty* Detail as of March 31, 2024 Non-Performing Loans (mm)Weighted Avg. LTVBalance (mm)Loan Type $ 1138 %$ 1,971Multifamily —391,045Hotel 1542812SFR —28233Other —37410Office —48554Industrial —46195Retail $ 2640 %$ 5,220Total *Includes Commercial Real Estate Specialty loan portfolio only; see Form 10-Q for the quarterly period ended March 31, 2024 for additional details of other loan categories LTV Distribution
5 Fixed/Hybrid Years to Maturity / Repricing*Mix of Loan Repricing Types *Excludes SF Warehouse Lending and Equipment Leasing. The years to repricing assumes no loan prepayments and reflects only contractual terms. Of the fixed and hybrid rate loan balances in our portfolio at March 31, 2024, 57% will reprice within 3 years and 87% will reprice within 5 years Interest Rate Components of Loan & Lease Portfolio As of March 31, 2024 100%99%87%57%36%21%11% Years
6 Diversified Deposit Gathering Approximately 90% of deposits are FDIC-insured or collateralized *Deposit balances as of March 31, 2024 1Excludes approximately $550 million of off-balance sheet deposits 2Excludes approximately $700 million of client deposits held at other banks › Serves approximately 40% of U.S. Chapter 7 bankruptcy trustees in exclusive relationship › Software allows servicing of SEC receivers and non-chapter 7 cases › Full service digital banking, wealth management, and securities trading › White-label banking › Business banking with simple suite of cash management services › 1031 exchange firms › Title and escrow companies › HOA and property management › Business management and entertainment › Broker-dealer client cash › Broker-dealer reserve accounts › Full service treasury/cash management › Team enhancements and geographic expansion › Bank and securities cross-sell Fiduciary Services $1.2B Consumer Direct $10.9B Specialty Deposits $1.3B2 Distribution Partners $0.5B Axos Securities $0.8B1 Small Business Banking $0.4B Commercial & Treasury Management $4.0B Diversified Deposit Gathering Business Lines
7 Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Reserve (UCL) ($ in millions) ACL + UCL ACL + UCL
8 Allowance for Credit Losses (ACL) by Loan Category as of March 31, 2024 $ Millions ACL %ACL $Loan Balance 0.4 %17$ 4,123 1.9 %764,001 1.4 %835,913 1.5 %724,828 2.2 %10450 — %—2 1.3 %258$ 19,317 Single Family Mortgage & Warehouse Multifamily & Commercial Mortgage Commercial Real Estate Commercial & Industrial Non-RE Auto & Consumer Other Loans
9 Credit Quality ($ millions) %NPLsLoans O/SMarch 31, 2024 1.24%$51$4,123Single Family-Mortgage & Warehouse 0.97394,001Multifamily and Commercial Mortgage 0.44265,913Commercial Real Estate 0.0844,828Commercial & Industrial - Non-RE 0.442450Auto & Consumer —02Other 0.63%$122$19,317Total %NPLsLoans O/SMarch 31, 2023 0.88%$36$4,088Single Family-Mortgage & Warehouse 1.20373,083Multifamily and Commercial Mortgage 0.26155,794Commercial Real Estate 0.1232,455Commercial & Industrial - Non-RE 0.342594Auto & Consumer 50.0036Other 0.60%$96$16,020Total
10 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Selected Balance Sheet Data: $ 19,782,481$ 20,348,469$ 20,825,206$ 21,623,764$ 22,642,133Total assets 15,836,25516,456,72816,955,04118,264,35418,733,455Loans—net of allowance for credit losses 7,92023,2038,01413,46816,239Loans held for sale, carried at fair value 303776———Loans held for sale, lower of cost or fair value 161,293166,680170,870251,749257,522Allowance for credit losses 400758640329592Securities—trading 279,612232,350236,726239,812207,582Securities—available-for-sale 87,293134,33996,424145,176105,853Securities borrowed 323,359374,074285,423265,857292,630Customer, broker-dealer and clearing receivables 16,738,86917,123,10817,565,74118,203,91219,103,532Total deposits 90,00090,00090,00090,00090,000Advances from the FHLB 334,330361,779447,733341,086330,389Borrowings, subordinated notes and debentures 114,613159,832116,446155,492119,800Securities loaned 406,092445,477341,915368,885387,176Customer, broker-dealer and clearing payables 1,844,1041,917,1591,976,2082,078,2242,196,293Total stockholders’ equity Capital Ratios: 9.32 %9.42 %9.49 %9.61 %9.70 %Equity to assets at end of period Axos Financial, Inc.: 9.29 %8.96 %9.27 %9.39 %9.33 %Tier 1 leverage (to adjusted average assets) 10.71 %10.94 %11.11 %10.97 %11.47 %Common equity tier 1 capital (to risk-weighted assets) 10.71 %10.94 %11.11 %10.97 %11.47 %Tier 1 capital (to risk-weighted assets) 13.63 %13.82 %14.06 %13.79 %14.26 %Total capital (to risk-weighted assets) Axos Bank: 10.17 %9.68 %9.99 %10.22 %9.86 %Tier 1 leverage (to adjusted average assets) 11.55 %11.63 %11.69 %12.26 %12.47 %Common equity tier 1 capital (to risk-weighted assets) 11.55 %11.63 %11.69 %12.26 %12.47 %Tier 1 capital (to risk-weighted assets) 12.40 %12.50 %12.65 %13.25 %13.49 %Total capital (to risk-weighted assets) Axos Clearing LLC: $ 79,459$ 35,221$ 101,391$ 103,454$ 102,963Net capital $ 74,377$ 29,905$ 96,211$ 98,397$ 97,646Excess capital 31.27 %13.25 %39.14 %40.92 %38.73 %Net capital as a percentage of aggregate debit items $ 66,755$ 21,930$ 88,440$ 90,812$ 89,671Net capital in excess of 5% aggregate debit items AXOS FINANCIAL, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Unaudited – dollars in thousands)
11 At or For The Three Months Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Selected Income Statement Data: $ 307,334$ 346,430$ 363,952$ 394,663$ 443,564Interest and dividend income 108,352142,676152,797166,057181,958Interest expense 198,982203,754211,155228,606261,606Net interest income 5,5007,0007,00013,5006,000Provision for credit losses 193,482196,754204,155215,106255,606Net interest income, after provision for credit losses 32,246120,48834,507124,12933,163Non-interest income 111,044112,456120,506121,839133,228Non-interest expense 114,684204,786118,156217,396155,541Income before income taxes 34,83429,64735,51165,62544,821Income taxes $ 79,850$ 175,139$ 82,645$ 151,771$ 110,720Net income Per Common Share Data: Net income: $ 1.33$ 1.48$ 1.40$ 2.65$ 1.94Basic $ 1.32$ 1.46$ 1.38$ 2.62$ 1.91Diluted $ 1.35$ 1.50$ 1.41$ 1.60$ 1.94Adjusted earnings per common share (Non-GAAP)1 $ 31.07$ 32.53$ 33.78$ 36.53$ 38.48Book value per common share $ 28.03$ 29.51$ 30.72$ 33.45$ 35.46Tangible book value per common share (Non-GAAP)1 Weighted average number of common shares outstanding: 59,930,63458,981,37258,949,03857,216,62156,932,050Basic 60,627,40059,707,87159,808,32257,932,83458,037,698Diluted 59,355,12458,943,03558,503,97656,898,37757,079,429Common shares outstanding at end of period 69,340,53369,465,44669,826,26369,828,70970,033,523Common shares issued at end of period Performance Ratios and Other Data: $ 1,735,651$ 2,216,764$ 2,605,332$ 2,739,261$ 2,801,110Loan originations for investment 45,20095,78852,85844,32547,821Loan originations for sale 78765051,892789,516—Loan purchases 1.71 %1.73 %1.64 %2.90 %1.98 %Return on average assets 17.42 %18.60 %16.91 %30.39 %20.71 %Return on average common stockholders’ equity 3.46 %3.20 %3.37 %3.58 %3.88 %Interest rate spread2 4.42 %4.19 %4.36 %4.55 %4.87 %Net interest margin3 4.50 %4.26 %4.46 %4.62 %4.92 %Net interest margin3 – Banking Business Segment 48.02 %47.56 %49.05 %34.54 %45.20 %Efficiency ratio4 47.48 %45.07 %45.44 %30.96 %38.82 %Efficiency ratio4 – Banking Business Segment Asset Quality Ratios: 0.04 %0.04 %0.04 %0.04 %0.07 %Net annualized charge-offs to average loans 0.60 %0.52 %0.62 %0.65 %0.63 %Non-performing loans and leases to total loans 0.51 %0.47 %0.56 %0.60 %0.55 %Non-performing assets to total assets 1.01 %1.00 %1.00 %1.33 %1.36 %Allowance for credit losses - loans to total loans held for investment5 168.12 %191.23 %159.80 %205.50 %210.95 %Allowance for credit losses - loans to non-performing loans5 1 See “Use of Non-GAAP Financial Measures” herein. 2 Interest rate spread represents the difference between the annualized weighted average yield on interest-earning assets and the annualized weighted average rate paid on interest-bearing liabilities. 3 Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. 4 Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income. AXOS FINANCIAL, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Unaudited – dollars in thousands)
12 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024(Dollars in thousands, except per share amounts) $ 79,850$ 87,356$ 82,645$ 151,771$ 110,720Net income ———(92,397)—FDIC Loan Purchase - Gain on purchase ———4,648—FDIC Loan Purchase - Provision for credit losses 2,8462,7792,7902,7802,719Acquisition-related costs —————Other costs (864)(704)(839)25,650(784)Income taxes $ 81,832$ 89,431$ 84,596$ 92,452$ 112,655Adjusted earnings (non-GAAP) 60,627,40059,707,87159,808,32257,932,83458,037,698Average dilutive common shares outstanding $ 1.32$ 1.46$ 1.38$ 2.62$ 1.91Diluted EPS ———(1.59)—FDIC Loan Purchase - Gain on Purchase ———0.08—FDIC Loan Purchase - Provision for credit losses 0.040.050.050.050.05Acquisition-related costs —————Other costs (0.01)(0.01)(0.02)0.44(0.02)Income taxes $ 1.35$ 1.50$ 1.41$ 1.60$ 1.94Adjusted EPS (Non-GAAP) We define “tangible book value”, a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. Tangible book value is calculated using common stockholders’ equity minus servicing rights, goodwill and other intangible assets. Tangible book value per common share, a non-GAAP financial measure, is calculated by dividing tangible book value by the common shares outstanding at the end of the period. We believe tangible book value per common share is useful in evaluating the Company’s capital strength, financial condition, and ability to manage potential losses. Below is a reconciliation of total stockholders’ equity, the nearest compatible GAAP measure, to tangible book value per common share (non-GAAP) as of the dates indicated: March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024(Dollars in thousands, except per share amounts) $ 1,844,104$ 1,917,159$ 1,976,208$ 2,078,224$ 2,196,293Common stockholders’ equity 25,39625,44329,33828,04328,130Less: servicing rights, carried at fair value 154,928152,149149,572146,793144,324Less: goodwill and intangible assets $ 1,663,780$ 1,739,567$ 1,797,298$ 1,903,388$ 2,023,839Tangible common stockholders’ equity (Non-GAAP) 59,355,12458,943,03558,503,97656,898,37757,079,429Common shares outstanding at end of period $ 31.07$ 32.53$ 33.78$ 36.53$ 38.48Book value per common share $ 0.43$ 0.44$ 0.50$ 0.49$ 0.49Less: servicing rights, carried at fair value per common share $ 2.61$ 2.58$ 2.56$ 2.59$ 2.53Less: goodwill and other intangible assets per common share $ 28.03$ 29.51$ 30.72$ 33.45$ 35.46Tangible book value per common share (Non-GAAP) Use of Non-GAAP Financial Measures In addition to the results presented in accordance with GAAP, this earnings supplement includes non-GAAP financial measures such as adjusted earnings, adjusted earnings per diluted common share, and tangible book value per common share. Non-GAAP financial measures have inherent limitations, may not be comparable to similarly titled measures used by other companies and are not audited. Readers should be aware of these limitations and should be cautious as to their reliance on such measures. Although we believe the non-GAAP financial measures disclosed in this report enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures. We define “adjusted earnings”, a non-GAAP financial measure, as net income without the after-tax impact of non-recurring acquisition-related costs and other costs (unusual or non-recurring charges). Adjusted earnings per diluted common share (“adjusted EPS”), a non-GAAP financial measure, is calculated by dividing non-GAAP adjusted earnings by the average number of diluted common shares outstanding during the period. We believe the non-GAAP measures of adjusted earnings and adjusted EPS provide useful information about the Company’s operating performance. We believe excluding the non-recurring acquisition related costs and other costs (unusual or non-recurring) provides investors with an alternative understanding of Axos’ core business. Below is a reconciliation of net income, the nearest compatible GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:
13 Greg Garrabrants, President and CEO Derrick Walsh, EVP and CFO 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 Contact Information
