AX 8-K
Axos Financial, Inc. (AX)
8-K
2023-07-27
For: 2023-07-27
View Original
Added on
April 10, 2026
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): July 27, 2023
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||||||
(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 | ||||||
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 (see General Instruction A.2. below):
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).
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 July 27, 2023, Axos Financial, Inc. (the “Registrant” or the “Company”) issued a press release announcing its fiscal fourth quarter results of operations for the period ended June 30, 2023. The press release, related financial schedules and earnings supplement presentation are furnished as Exhibits 99.1 through 99.4.
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, 99.3 and 99.4 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 | ||||||||
| 99.4 | ||||||||
| 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.
| Axos Financial, Inc. | ||||||||||||||
| Date: | July 27, 2023 | By: | /s/ Derrick K. Walsh | |||||||||||
| Derrick K. Walsh | ||||||||||||||
| EVP and Chief Financial Officer | ||||||||||||||
Axos Financial, Inc. Announces 52% Growth in Diluted EPS to $1.46
Net Interest Income Increased 23% in Quarter Ended June 2023
LAS VEGAS, NV – (BUSINESS WIRE) – July 27, 2023 – Axos Financial, Inc. (NYSE: AX) (“Axos”), parent company of Axos Bank (the “Bank”), today announced unaudited financial results for the fourth fiscal quarter and full fiscal year ended June 30, 2023. Net income for the quarter was $87.4 million, an increase of 50.9% over net income of $57.9 million for the quarter ended June 30, 2022. Earnings per diluted share for the quarter were $1.46, an increase of $0.50, or 52.1%, as compared to earnings per diluted share of $0.96 for the quarter ended June 30, 2022.
Adjusted earnings and adjusted earnings per diluted common share (“adjusted EPS”), non-GAAP measures, which exclude non-cash amortization expenses and non-recurring costs related to mergers and acquisitions, and other non-recurring costs, increased 32.3% to $89.4 million and 33.9% to $1.50, respectively, for the quarter ended June 30, 2023 compared to $67.6 million and $1.12, respectively, for the quarter ended June 30, 2022.
Fourth Quarter Fiscal 2023 Financial Summary:
| Three Months Ended June 30, | |||||||||||||||||
| (Dollars in thousands, except per share data) | 2023 | 2022 | % Change | ||||||||||||||
| Net interest income | $ | 203,754 | $ | 165,410 | 23.2 | % | |||||||||||
| Non-interest income | $ | 32,705 | $ | 27,100 | 20.7 | % | |||||||||||
| Net income | $ | 87,356 | $ | 57,896 | 50.9 | % | |||||||||||
Adjusted Earnings (Non-GAAP)1 | $ | 89,431 | $ | 67,616 | 32.3 | % | |||||||||||
| Diluted EPS | $ | 1.46 | $ | 0.96 | 52.1 | % | |||||||||||
Adjusted EPS (Non-GAAP)1 | $ | 1.50 | $ | 1.12 | 33.9 | % | |||||||||||
1 See “Use of Non-GAAP Financial Measures”
For the fiscal year ended June 30, 2023, net income was a record $307.2 million, an increase of 27.6% over net income of $240.7 million for the year ended June 30, 2022. Earnings per diluted share was $5.07, an increase of $1.10, or 27.7%, as compared to earnings per diluted share of $3.97 for the year ended June 30, 2022.
“We achieved record earnings and maintained strong credit quality and liquidity in the three and twelve months ended June 30, 2023,” stated Greg Garrabrants, President and Chief Executive Officer of Axos. “Double-digit growth in net interest income and a net interest margin above the high end of our long-term target were the primary contributors to our strong results. Our credit quality remains resilient, supported by our diverse, asset-based lending at low loan-to-values. Our strong balance sheet, with a modest unrealized loss on our securities portfolio equal to less than 0.5% of our shareholders’ equity and a growing deposit base generated by a variety of consumer and commercial banking and securities businesses, positions us well for continued growth.”
“Earnings per diluted share increased 52% year-over-year to $1.46 in the fourth quarter of fiscal 2023, which included $0.08 per diluted share primarily attributed to $5.2 million of one-time tax credits,” stated Derrick Walsh, Executive Vice President and Chief Financial Officer. Even without these non-recurring benefits, our earnings per diluted share would represent year-over-year growth of 44%. Our reported net interest margin of 4.19% and 4.35% for the three and twelve months ended June 30, 2023 was negatively impacted by approximately $1.2 billion of excess liquidity. Excluding the excess liquidity, our net interest margin would have been 4.39% and 4.42% for the fourth quarter and full year 2023, respectively.”
Other Highlights:
•Net loans for investment totaled $16.5 billion at June 30, 2023, an increase of $0.6 billion, or 15.7% annualized, from March 31, 2023
•Deposits increased $0.4 billion, or 9.2% annualized, between March 31, 2023 and June 30, 2023
•Approximately 90% of total deposits were FDIC-insured or collateralized at June 30, 2023
•Pretax income for the Securities Business was $15.5 million and $59.6 million for the three and twelve months ended June 30, 2023
•Percentage of non-performing loans relative to total loans was 0.52% at June 30, 2023, down from 0.60% at March 31, 2023
•Unrealized losses of $9.3 million on the available-for-sale securities portfolio was less than 0.5% of stockholders’ equity at June 30, 2023; no securities were classified as held-to-maturity
•Tier 1 capital to risk weighted assets was 11.63% for the Bank and 10.94% for Axos Financial, Inc. at June 30, 2023, up from 11.55% and 10.71%, respectively, at March 31, 2023
•Book value increased to $32.53 per share, up 18.4% compared to June 30, 2022
•Repurchased $17.7 million of common stock during the quarter ended June 30, 2023
Fourth Quarter Fiscal 2023 Income Statement Summary
Net income was $87.4 million and earnings per diluted share was $1.46 for the three months ended June 30, 2023 compared to net income of $57.9 million and earnings per diluted share of $0.96 for the three months ended June 30, 2022. Net interest income increased to $203.8 million, up 23.2% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, primarily due to higher rates earned and higher average balances in the loan portfolio, partially offset by higher rates paid on deposits and increased deposit balances.
The provision for credit losses was $7.0 million for the three months ended June 30, 2023 compared to $6.0 million for the three months ended June 30, 2022, primarily due to loan growth, changes in the macroeconomic environment and changes in loan product mix.
Non-interest income increased to $32.7 million, up 20.7%, for the three months ended June 30, 2023 from $27.1 million for the three months ended June 30, 2022. The net increase was primarily due to a $8.9 million increase in broker-dealer fee income and a $1.5 million increase in banking and service fees, partially offset by a $2.6 million decrease in prepayment penalty fee income and a $1.5 million decrease in mortgage banking income.
Non-interest expense, comprised of various operating expenses, increased 7.3% to $112.5 million for the three months ended June 30, 2023 from $104.8 million for the three months ended June 30, 2022. The net increase was primarily driven by an increase in salaries and related costs of $11.0 million and higher advertising and promotional expenses of $4.6 million, partially offset by lower general and administrative expenses, reflecting the absence of an $11 million charge due largely to a one-time resolution of a contractual claim in the prior year quarter.
Our effective tax rate was 25.34% for the three months ended June 30, 2023 compared to 29.15% for the three months ended June 30, 2022. The lower tax rate for the three months ended June 30, 2023, was primarily due to the impact of one-time income tax credits recognized in the current quarter.
Full Year Fiscal 2023 Highlights
•Net income reached a record $307.2 million, an increase of 27.6% compared to the fiscal year ended June 30, 2022
•Earnings per diluted share outstanding were $5.07, up 27.7% from $3.97 in the fiscal year ended June 30, 2022
•Deposits increased by $3.2 billion, or 22.8%, to $17.1 billion during the fiscal year ended June 30, 2023
•Net interest margin for the Banking Business segment increased to 4.48% for the fiscal year ended June 30, 2023 compared to 4.36% for the fiscal year ended June 30, 2022
•Efficiency ratio was 49.48% for the fiscal year ended June 30, 2023 compared to 50.25% for the fiscal year ended June 30, 2022
•Return on average assets increased to 1.64% for the fiscal year ended June 30, 2023 from 1.57% for the fiscal year ended June 30, 2022
Balance Sheet Summary
Axos’ total assets increased $2.9 billion or 16.9% to $20.3 billion at June 30, 2023 from June 30, 2022, primarily due to an increase of $2.4 billion in loans held for investment and an increase of $0.8 billion in total cash held. Total liabilities increased $2.7 billion to $18.4 billion at June 30, 2023 from June 30, 2022, primarily due to an increase of $3.2 billion in deposits, partially offset by a $0.3 billion decrease in securities loaned. Stockholders’ equity increased by $274.2 million, or 16.7%, to $1.9 billion at June 30, 2023 from $1.6 billion at June 30, 2022. The increase was primarily the result of net income of $307.2 million and $20.0 million of stock-based compensation activity, partially offset by the repurchase of $49.3 million of common stock.
The Bank’s Tier 1 capital ratio was 11.63% at June 30, 2023 compared to 11.24% at June 30, 2022.
Conference Call
A conference call and webcast will be held on Thursday, July 27, 2023 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 access at Axos’ website, http://www.axosfinancial.com. For those unable to listen to the live broadcast, a replay will be available until August 27, 2023, at the Axos Financial website and telephonically by dialing toll-free number 877-660-6853, passcode 13739708.
About Axos Financial, Inc. and Subsidiaries
The condensed consolidated financial statements include the accounts of Axos Financial, Inc. and its wholly owned subsidiaries, Axos Bank and Axos Nevada Holding, LLC (“Axos Nevada Holding” and collectively, the “Company”). Axos, the Bank and Axos Nevada Holding comprise substantially all of the Company’s assets and liabilities and revenues and expenses. Axos Nevada Holding wholly owns its subsidiary Axos Securities, LLC, which wholly owns subsidiaries Axos Clearing LLC., a clearing broker dealer, Axos Invest, Inc., a registered investment advisor, and Axos Invest, LLC., an introducing broker dealer. With approximately $20.3 billion in consolidated assets, Axos Financial, Inc., through Axos Bank, provides consumer and business banking products through its low-cost distribution channels and affinity partners. Axos Clearing LLC (including its business division AAS), with approximately $34.8 billion of assets under custody and/or administration, and Axos Invest, Inc., provide comprehensive securities clearing and custody 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 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 and reconciliations:
| For the Three Months Ended June 30, 2023 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 201,770 | $ | 5,556 | $ | (3,572) | $ | 203,754 | |||||||||||||||
| Provision for loan losses | 7,000 | — | — | 7,000 | |||||||||||||||||||
| Non-interest income | 10,306 | 37,640 | (15,241) | 32,705 | |||||||||||||||||||
| Non-interest expense | 95,579 | 27,648 | (10,771) | 112,456 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 109,497 | $ | 15,548 | $ | (8,042) | $ | 117,003 | |||||||||||||||
| For the Three Months Ended June 30, 2022 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 165,504 | $ | 3,509 | $ | (3,603) | $ | 165,410 | |||||||||||||||
| Provision for loan losses | 6,000 | — | — | 6,000 | |||||||||||||||||||
| Non-interest income | 14,004 | 18,864 | (5,768) | 27,100 | |||||||||||||||||||
| Non-interest expense | 83,817 | 22,797 | (1,821) | 104,793 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 89,691 | $ | (424) | $ | (7,550) | $ | 81,717 | |||||||||||||||
| Twelve Months Ended June 30, 2023 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 776,294 | $ | 21,042 | $ | (14,215) | $ | 783,121 | |||||||||||||||
| Provision for loan losses | 24,750 | — | — | 24,750 | |||||||||||||||||||
| Non-interest income | 42,260 | 141,107 | (62,879) | 120,488 | |||||||||||||||||||
| Non-interest expense | 390,911 | 102,572 | (46,368) | 447,115 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 402,893 | $ | 59,577 | $ | (30,726) | $ | 431,744 | |||||||||||||||
| Twelve Months Ended June 30, 2022 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 597,833 | $ | 17,580 | $ | (8,255) | $ | 607,158 | |||||||||||||||
| Provision for loan losses | 18,500 | — | — | 18,500 | |||||||||||||||||||
| Non-interest income | 60,881 | 64,069 | (11,587) | 113,363 | |||||||||||||||||||
| Non-interest expense | 274,079 | 84,014 | 3,969 | 362,062 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 366,135 | $ | (2,365) | $ | (23,811) | $ | 339,959 | |||||||||||||||
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with GAAP, this release includes the non-GAAP financial measures 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. As noted below with respect to each measure, we believe the non-GAAP financial measures disclosed in this release enhance investors’ understanding of our business and performance, and our management uses these non-GAAP measures when it internally evaluates the performance of our business and makes operating decisions. However,
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 (including amortization of intangible assets related to acquisitions) 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 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 comparable GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Net income | $ | 87,356 | $ | 57,896 | $ | 307,165 | $ | 240,716 | |||||||||||||||
| Acquisition-related costs | 2,779 | 2,745 | 10,948 | 11,355 | |||||||||||||||||||
Other costs1 | — | 10,975 | 16,000 | 10,975 | |||||||||||||||||||
| Income taxes | (704) | (4,000) | (7,776) | (6,519) | |||||||||||||||||||
| Adjusted earnings (Non-GAAP) | $ | 89,431 | $ | 67,616 | $ | 326,337 | $ | 256,527 | |||||||||||||||
| Average dilutive common shares outstanding | 59,707,871 | 60,508,304 | 60,566,854 | 60,610,954 | |||||||||||||||||||
| Diluted EPS | $ | 1.46 | $ | 0.96 | $ | 5.07 | $ | 3.97 | |||||||||||||||
| Acquisition-related costs | 0.05 | 0.05 | 0.18 | 0.19 | |||||||||||||||||||
Other costs1 | — | 0.18 | 0.27 | 0.18 | |||||||||||||||||||
| Income taxes | (0.01) | (0.07) | (0.13) | (0.11) | |||||||||||||||||||
| Adjusted EPS (Non-GAAP) | $ | 1.50 | $ | 1.12 | $ | 5.39 | $ | 4.23 | |||||||||||||||
1 Other costs for the twelves months ended June 30, 2023 reflect an accrual in the first quarter of 2023 as a result of adverse legal judgment that has not been finalized. Other costs for the three and twelve months ended June 30, 2022 reflect a one-time resolution of a contractual claim.
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 mortgage 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 to tangible book value per common share (Non-GAAP) as of the dates indicated:
| June 30, | |||||||||||
| (Dollars in thousands, except per share amounts) | 2023 | 2022 | |||||||||
| Common stockholders’ equity | $ | 1,917,159 | $ | 1,642,973 | |||||||
| Less: mortgage servicing rights, carried at fair value | 25,443 | 25,213 | |||||||||
| Less: goodwill and other intangible assets | 152,149 | 156,405 | |||||||||
| Tangible common stockholders’ equity (Non-GAAP) | $ | 1,739,567 | $ | 1,461,355 | |||||||
| Common shares outstanding at end of period | 58,943,035 | 59,777,949 | |||||||||
| Book value per common share | $ | 32.53 | $ | 27.48 | |||||||
| Less: mortgage servicing rights, carried at fair value per common share | 0.44 | 0.42 | |||||||||
| Less: goodwill and other intangible assets per common share | 2.58 | 2.61 | |||||||||
| Tangible book value per common share (Non-GAAP) | $ | 29.51 | $ | 24.45 | |||||||
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 2022 Form 10-K, as supplemented by its Quarterly Report on Form 10-Q for the period ended December 31, 2022, 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
The following tables set forth certain selected financial data concerning the periods and the dates indicated:
AXOS FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands)
| (Dollars in thousands) | June 30, 2023 | June 30, 2022 | June 30, 2021 | ||||||||||||||
| Selected Balance Sheet Data: | |||||||||||||||||
| Total assets | $ | 20,348,469 | $ | 17,401,165 | $ | 14,265,565 | |||||||||||
| Loans—net of allowance for credit losses | 16,456,728 | 14,091,061 | 11,414,814 | ||||||||||||||
| Loans held for sale, carried at fair value | 23,203 | 4,973 | 29,768 | ||||||||||||||
| Loans held for sale, lower of cost or fair value | 776 | 10,938 | 12,294 | ||||||||||||||
| Allowance for credit losses - loans | 166,680 | 148,617 | 132,958 | ||||||||||||||
| Securities—trading | 758 | 1,758 | 1,983 | ||||||||||||||
| Securities—available-for-sale | 232,350 | 262,518 | 187,335 | ||||||||||||||
| Securities borrowed | 134,339 | 338,980 | 619,088 | ||||||||||||||
| Customer, broker-dealer and clearing receivables | 374,074 | 417,417 | 369,815 | ||||||||||||||
| Total deposits | 17,123,108 | 13,946,422 | 10,815,797 | ||||||||||||||
| Advances from the FHLB | 90,000 | 117,500 | 353,500 | ||||||||||||||
| Borrowings, subordinated notes and debentures | 361,779 | 445,244 | 221,358 | ||||||||||||||
| Securities loaned | 159,832 | 474,400 | 728,988 | ||||||||||||||
| Customer, broker-dealer and clearing payables | 445,477 | 511,654 | 535,425 | ||||||||||||||
| Total stockholders’ equity | 1,917,159 | 1,642,973 | 1,400,936 | ||||||||||||||
| Capital Ratios: | |||||||||||||||||
| Equity to assets at end of period | 9.42 | % | 9.44 | % | 9.82 | % | |||||||||||
| Axos Financial, Inc.: | |||||||||||||||||
| Tier 1 leverage capital to adjusted average assets | 8.96 | % | 9.25 | % | 8.82 | % | |||||||||||
| Common equity tier 1 capital (to risk-weighted assets) | 10.94 | % | 9.86 | % | 11.36 | % | |||||||||||
| Tier 1 capital (to risk-weighted assets) | 10.94 | % | 9.86 | % | 11.36 | % | |||||||||||
| Total capital (to risk-weighted assets) | 13.82 | % | 12.73 | % | 13.78 | % | |||||||||||
| Axos Bank: | |||||||||||||||||
| Tier 1 leverage capital to adjusted average assets | 9.68 | % | 10.65 | % | 9.45 | % | |||||||||||
| Common equity tier 1 capital (to risk-weighted assets) | 11.63 | % | 11.24 | % | 12.28 | % | |||||||||||
| Tier 1 capital (to risk-weighted assets) | 11.63 | % | 11.24 | % | 12.28 | % | |||||||||||
| Total capital (to risk-weighted assets) | 12.50 | % | 12.01 | % | 13.21 | % | |||||||||||
| Axos Clearing, LLC: | |||||||||||||||||
| Net capital | $ | 35,221 | $ | 38,915 | $ | 35,950 | |||||||||||
| Excess capital | $ | 29,905 | $ | 32,665 | $ | 27,904 | |||||||||||
| Net capital as a percentage of aggregate debit items | 13.25 | % | 12.45 | % | 8.94 | % | |||||||||||
| Net capital in excess of 5% aggregate debit items | $ | 21,930 | $ | 23,290 | $ | 15,836 | |||||||||||
AXOS FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands, except per share data)
| At or for the Three Months Ended | At or for the Fiscal Year Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| (Dollars in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Selected Income Statement Data: | |||||||||||||||||||||||
| Interest and dividend income | $ | 346,430 | $ | 184,161 | $ | 1,157,138 | $ | 659,728 | |||||||||||||||
| Interest expense | 142,676 | 18,751 | 374,017 | 52,570 | |||||||||||||||||||
| Net interest income | 203,754 | 165,410 | 783,121 | 607,158 | |||||||||||||||||||
| Provision for credit losses | 7,000 | 6,000 | 24,750 | 18,500 | |||||||||||||||||||
| Net interest income after provision for loan losses | 196,754 | 159,410 | 758,371 | 588,658 | |||||||||||||||||||
| Non-interest income | 32,705 | 27,100 | 120,488 | 113,363 | |||||||||||||||||||
| Non-interest expense | 112,456 | 104,793 | 447,115 | 362,062 | |||||||||||||||||||
| Income before income tax expense | 117,003 | 81,717 | 431,744 | 339,959 | |||||||||||||||||||
| Income tax expense | 29,647 | 23,821 | 124,579 | 99,243 | |||||||||||||||||||
| Net income | $ | 87,356 | $ | 57,896 | $ | 307,165 | $ | 240,716 | |||||||||||||||
| Per Share Data: | |||||||||||||||||||||||
| Net income: | |||||||||||||||||||||||
Basic | $ | 1.48 | $ | 0.97 | $ | 5.15 | $ | 4.04 | |||||||||||||||
Diluted | $ | 1.46 | $ | 0.96 | $ | 5.07 | $ | 3.97 | |||||||||||||||
Adjusted earnings per common share (Non-GAAP)1 | $ | 1.50 | $ | 1.12 | $ | 5.39 | $ | 4.23 | |||||||||||||||
| Book value | $ | 32.53 | $ | 27.48 | $ | 32.53 | $ | 27.48 | |||||||||||||||
Tangible book value per common share (Non-GAAP)1 | $ | 29.51 | $ | 24.45 | $ | 29.51 | $ | 24.45 | |||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
Basic | 58,981,372 | 59,665,041 | 59,691,541 | 59,523,626 | |||||||||||||||||||
Diluted | 59,707,871 | 60,508,304 | 60,566,854 | 60,610,954 | |||||||||||||||||||
| Common shares outstanding at end of period | 58,943,035 | 59,777,949 | 58,943,035 | 59,777,949 | |||||||||||||||||||
| Common shares issued at end of period | 69,465,446 | 68,859,722 | 69,465,446 | 68,859,722 | |||||||||||||||||||
| Performance Ratios and Other Data: | |||||||||||||||||||||||
| Loan originations for investment | $ | 2,216,764 | $ | 3,152,064 | $ | 8,452,215 | $ | 10,366,796 | |||||||||||||||
| Loan originations for sale | $ | 95,788 | $ | 86,873 | $ | 254,288 | $ | 656,487 | |||||||||||||||
| Return on average assets | 1.73 | % | 1.40 | % | 1.64 | % | 1.57 | % | |||||||||||||||
| Return on average common stockholders’ equity | 18.60 | % | 14.13 | % | 17.22 | % | 15.61 | % | |||||||||||||||
Interest rate spread2 | 3.20 | % | 3.86 | % | 3.44 | % | 3.91 | % | |||||||||||||||
Net interest margin3 | 4.19 | % | 4.19 | % | 4.35 | % | 4.13 | % | |||||||||||||||
Net interest margin3 - Banking Business Segment | 4.26 | % | 4.45 | % | 4.48 | % | 4.36 | % | |||||||||||||||
Efficiency ratio4 | 47.56 | % | 54.44 | % | 49.48 | % | 50.25 | % | |||||||||||||||
Efficiency ratio4 - Banking Business Segment | 45.07 | % | 46.69 | % | 47.76 | % | 41.61 | % | |||||||||||||||
| Asset Quality Ratios: | |||||||||||||||||||||||
| Net annualized charge-offs to average loans | 0.04 | % | 0.02 | % | 0.04 | % | 0.02 | % | |||||||||||||||
| Non-performing loans and leases to total loans | 0.52 | % | 0.83 | % | 0.52 | % | 0.83 | % | |||||||||||||||
| Non-performing assets to total assets | 0.47 | % | 0.68 | % | 0.47 | % | 0.68 | % | |||||||||||||||
| Allowance for credit losses - loans to total loans held for investment | 1.00 | % | 1.04 | % | 1.00 | % | 1.04 | % | |||||||||||||||
| Allowance for credit losses - loans to non-performing loans | 191.23 | % | 125.74 | % | 191.23 | % | 125.74 | % | |||||||||||||||
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.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| At June 30, | |||||||||||
| (Dollars in thousands, except par and stated value) | 2023 | 2022 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,233,027 | $ | 1,202,587 | |||||||
| Cash segregated for regulatory purposes | 149,059 | 372,112 | |||||||||
| Total cash, cash equivalents, cash segregated | 2,382,086 | 1,574,699 | |||||||||
| Securities: | |||||||||||
| Trading | 758 | 1,758 | |||||||||
| Available-for-sale | 232,350 | 262,518 | |||||||||
| Stock of regulatory agencies | 21,510 | 20,368 | |||||||||
| Loans held for sale, carried at fair value | 23,203 | 4,973 | |||||||||
| Loans held for sale, lower of cost or fair value | 776 | 10,938 | |||||||||
Loans—net of allowance for credit losses of $166,680 as of June 2023 and $148,617 as of June 2022 | 16,456,728 | 14,091,061 | |||||||||
| Mortgage servicing rights, carried at fair value | 25,443 | 25,213 | |||||||||
| Securities borrowed | 134,339 | 338,980 | |||||||||
| Customer, broker-dealer and clearing receivables | 374,074 | 417,417 | |||||||||
| Goodwill and other intangible assets—net | 152,149 | 156,405 | |||||||||
| Other assets | 545,053 | 496,835 | |||||||||
| TOTAL ASSETS | $ | 20,348,469 | $ | 17,401,165 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Deposits: | |||||||||||
| Non-interest bearing | $ | 2,898,150 | $ | 5,033,970 | |||||||
| Interest bearing | 14,224,958 | 8,912,452 | |||||||||
| Total deposits | 17,123,108 | 13,946,422 | |||||||||
| Advances from the Federal Home Loan Bank | 90,000 | 117,500 | |||||||||
| Borrowings, subordinated notes and debentures | 361,779 | 445,244 | |||||||||
| Securities loaned | 159,832 | 474,400 | |||||||||
| Customer, broker-dealer and clearing payables | 445,477 | 511,654 | |||||||||
| Accounts payable and other liabilities | 251,114 | 262,972 | |||||||||
| Total liabilities | 18,431,310 | 15,758,192 | |||||||||
| STOCKHOLDERS’ EQUITY: | |||||||||||
| Common stock—$0.01 par value; 150,000,000 shares authorized, 69,465,446 shares issued and 58,943,035 shares outstanding as of June 30, 2023; 68,859,722 shares issued and 59,777,949 shares outstanding as of June 30, 2022 | 695 | 689 | |||||||||
| Additional paid-in capital | 479,878 | 453,784 | |||||||||
| Accumulated other comprehensive income (loss)—net of tax | (6,610) | (2,933) | |||||||||
| Retained earnings | 1,735,609 | 1,428,444 | |||||||||
| Treasury stock, at cost; 10,522,411 shares as of June 30, 2023 and 9,081,773 shares as of June 30, 2022 | (292,413) | (237,011) | |||||||||
| Total stockholders’ equity | 1,917,159 | 1,642,973 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 20,348,469 | $ | 17,401,165 | |||||||
S-1
AXOS FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the Quarters Ended June 30, | |||||||||||
| (Dollars in thousands, except earnings per share) | 2023 | 2022 | |||||||||
| INTEREST AND DIVIDEND INCOME: | |||||||||||
| Loans, including fees | $ | 305,011 | $ | 174,110 | |||||||
| Securities borrowed and customer receivables | 4,815 | 4,462 | |||||||||
| Investments and other | 36,604 | 5,589 | |||||||||
| Total interest and dividend income | 346,430 | 184,161 | |||||||||
| INTEREST EXPENSE: | |||||||||||
| Deposits | 137,189 | 11,179 | |||||||||
| Advances from the Federal Home Loan Bank | 523 | 1,663 | |||||||||
| Securities loaned | 356 | 503 | |||||||||
| Other borrowings | 4,608 | 5,406 | |||||||||
| Total interest expense | 142,676 | 18,751 | |||||||||
| Net interest income | 203,754 | 165,410 | |||||||||
| Provision for credit losses | 7,000 | 6,000 | |||||||||
| Net interest income, after provision for credit losses | 196,754 | 159,410 | |||||||||
| NON-INTEREST INCOME: | |||||||||||
| Broker-dealer fee income | 13,768 | 4,912 | |||||||||
| Advisory fee income | 7,503 | 8,152 | |||||||||
| Banking and service fees | 7,838 | 6,308 | |||||||||
| Mortgage banking income | 1,988 | 3,498 | |||||||||
| Prepayment penalty fee income | 1,608 | 4,230 | |||||||||
| Total non-interest income | 32,705 | 27,100 | |||||||||
| NON-INTEREST EXPENSE: | |||||||||||
| Salaries and related costs | 54,509 | 43,541 | |||||||||
| Data processing | 16,095 | 13,594 | |||||||||
| Depreciation and amortization | 5,665 | 6,022 | |||||||||
| Advertising and promotional | 8,095 | 3,449 | |||||||||
| Professional services | 5,979 | 7,649 | |||||||||
| Occupancy and equipment | 4,037 | 3,480 | |||||||||
| FDIC and regulatory fees | 4,371 | 3,967 | |||||||||
| Broker-dealer clearing charges | 3,509 | 3,940 | |||||||||
| General and administrative expense | 10,196 | 19,151 | |||||||||
| Total non-interest expense | 112,456 | 104,793 | |||||||||
| INCOME BEFORE INCOME TAXES | 117,003 | 81,717 | |||||||||
| INCOME TAXES | 29,647 | 23,821 | |||||||||
| NET INCOME | $ | 87,356 | $ | 57,896 | |||||||
| COMPREHENSIVE INCOME | $ | 86,319 | $ | 56,896 | |||||||
| Basic earnings per share | $ | 1.48 | $ | 0.97 | |||||||
| Diluted earnings per share | $ | 1.46 | $ | 0.96 | |||||||
S-2
AXOS FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Year Ended June 30, | |||||||||||||||||
| (Dollars in thousands, except earnings per share) | 2023 | 2022 | 2021 | ||||||||||||||
| INTEREST AND DIVIDEND INCOME: | |||||||||||||||||
| Loans, including fees | $ | 1,048,874 | $ | 626,628 | $ | 584,410 | |||||||||||
| Securities borrowed and customer receivables | 18,657 | 20,512 | 20,466 | ||||||||||||||
| Investments and other | 89,607 | 12,588 | 12,987 | ||||||||||||||
| Total interest and dividend income | 1,157,138 | 659,728 | 617,863 | ||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||
| Deposits | 339,481 | 33,620 | 60,529 | ||||||||||||||
| Advances from the Federal Home Loan Bank | 12,644 | 4,625 | 4,672 | ||||||||||||||
| Securities loaned | 3,673 | 1,124 | 1,496 | ||||||||||||||
| Other borrowings | 18,219 | 13,201 | 12,424 | ||||||||||||||
| Total interest expense | 374,017 | 52,570 | 79,121 | ||||||||||||||
| Net interest income | 783,121 | 607,158 | 538,742 | ||||||||||||||
| Provision for credit losses | 24,750 | 18,500 | 23,750 | ||||||||||||||
| Net interest income, after provision for credit losses | 758,371 | 588,658 | 514,992 | ||||||||||||||
| NON-INTEREST INCOME: | |||||||||||||||||
| Broker-dealer fee income | 46,503 | 22,880 | 26,317 | ||||||||||||||
| Advisory fee income | 28,324 | 29,230 | — | ||||||||||||||
| Banking and service fees | 32,938 | 28,752 | 29,137 | ||||||||||||||
| Mortgage banking income | 7,101 | 19,198 | 42,641 | ||||||||||||||
| Prepayment penalty fee income | 5,622 | 13,303 | 7,166 | ||||||||||||||
| Total non-interest income | 120,488 | 113,363 | 105,261 | ||||||||||||||
| NON-INTEREST EXPENSE: | |||||||||||||||||
| Salaries and related costs | 204,271 | 167,390 | 152,576 | ||||||||||||||
| Data processing | 60,557 | 50,159 | 40,719 | ||||||||||||||
| Depreciation and amortization | 23,387 | 24,596 | 24,124 | ||||||||||||||
| Advertising and promotional | 37,150 | 13,580 | 14,212 | ||||||||||||||
| Professional services | 29,268 | 22,482 | 22,241 | ||||||||||||||
| Occupancy and equipment | 15,647 | 13,745 | 13,402 | ||||||||||||||
| FDIC and regulatory fees | 15,534 | 11,823 | 10,603 | ||||||||||||||
| Broker-dealer clearing charges | 13,433 | 15,184 | 11,152 | ||||||||||||||
| General and administrative expense | 47,868 | 43,103 | 25,481 | ||||||||||||||
| Total non-interest expense | 447,115 | 362,062 | 314,510 | ||||||||||||||
| INCOME BEFORE INCOME TAXES | 431,744 | 339,959 | 305,743 | ||||||||||||||
| INCOME TAXES | 124,579 | 99,243 | 90,036 | ||||||||||||||
| NET INCOME | $ | 307,165 | $ | 240,716 | $ | 215,707 | |||||||||||
| COMPREHENSIVE INCOME | $ | 303,488 | $ | 235,276 | $ | 219,151 | |||||||||||
| Basic earnings per share | $ | 5.15 | $ | 4.04 | $ | 3.64 | |||||||||||
| Diluted earnings per share | $ | 5.07 | $ | 3.97 | $ | 3.56 | |||||||||||
S-3
AXOS FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Year Ended June 30, | |||||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2021 | ||||||||||||||
| NET INCOME | $ | 307,165 | $ | 240,716 | $ | 215,707 | |||||||||||
| Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $(1,575), $(2,416), and $1,495 for the years ended June 30, 2023, 2022 and 2021, respectively. | (3,677) | (5,440) | 3,444 | ||||||||||||||
| Other comprehensive income (loss) | $ | (3,677) | $ | (5,440) | $ | 3,444 | |||||||||||
| COMPREHENSIVE INCOME | $ | 303,488 | $ | 235,276 | $ | 219,151 | |||||||||||
S-4
AXOS FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss), Net of Income Tax | Retained Earnings | Treasury Stock | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Shares | Amount | Issued | Treasury | Outstanding | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2020 | 515 | $ | 5,063 | 67,323,053 | (7,710,418) | 59,612,635 | $ | 673 | $ | 411,873 | $ | (937) | $ | 1,009,299 | $ | (195,125) | $ | 1,230,846 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cumulative effect of change in accounting principle net of tax, adoption of ASU No. 2016-13 | — | — | — | — | — | — | — | — | (37,088) | — | (37,088) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | 215,707 | — | 215,707 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | 3,444 | — | — | 3,444 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends on preferred stock | — | — | — | — | — | — | — | — | (103) | — | (103) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock - Series A redemption | (515) | (5,063) | — | — | — | — | — | — | (87) | — | (5,150) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | (753,597) | (753,597) | — | — | — | — | (16,757) | (16,757) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | — | — | 746,268 | (287,362) | 458,906 | 8 | 20,677 | — | — | (10,648) | 10,037 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2021 | — | $ | — | 68,069,321 | (8,751,377) | 59,317,944 | $ | 681 | $ | 432,550 | $ | 2,507 | $ | 1,187,728 | $ | (222,530) | $ | 1,400,936 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | 240,716 | — | 240,716 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | (5,440) | — | — | (5,440) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | — | — | 790,401 | (330,396) | 460,005 | 8 | 21,234 | — | — | (14,481) | 6,761 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option exercises and tax benefits | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | — | $ | — | 68,859,722 | (9,081,773) | 59,777,949 | $ | 689 | $ | 453,784 | $ | (2,933) | $ | 1,428,444 | $ | (237,011) | $ | 1,642,973 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 307,165 | — | 307,165 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | (3,677) | — | — | (3,677) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | (1,321,161) | (1,321,161) | — | — | — | — | (49,258) | (49,258) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | — | — | 605,724 | (119,477) | 486,247 | 6 | 26,094 | — | — | (6,144) | 19,956 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | — | $ | — | 69,465,446 | (10,522,411) | 58,943,035 | $ | 695 | $ | 479,878 | $ | (6,610) | $ | 1,735,609 | $ | (292,413) | $ | 1,917,159 | |||||||||||||||||||||||||||||||||||||||||||||||
S-5
AXOS FINANCIAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||||||||
| Year Ended June 30, | |||||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2021 | ||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||
| Net income | $ | 307,165 | $ | 240,716 | $ | 215,707 | |||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||
| Depreciation and amortization | 23,387 | 24,596 | 24,124 | ||||||||||||||
| Other accretion and amortization | (1,616) | 3,933 | 4,752 | ||||||||||||||
| Stock-based compensation expense | 26,100 | 21,242 | 20,685 | ||||||||||||||
| Trading activity | 1,000 | 225 | (1,878) | ||||||||||||||
| Provision for credit losses | 24,750 | 18,500 | 23,750 | ||||||||||||||
| Deferred income taxes | (19,586) | (9,400) | (8,828) | ||||||||||||||
| Origination of loans held for sale | (254,288) | (656,487) | (1,608,700) | ||||||||||||||
| Unrealized and realized gains on loans held for sale | (7,999) | (16,237) | (41,172) | ||||||||||||||
| Proceeds from sale of loans held for sale | 242,772 | 689,530 | 1,671,515 | ||||||||||||||
| Amortization and change in fair value of mortgage servicing rights | 634 | (2,228) | 6,319 | ||||||||||||||
| Net change in assets and liabilities which provide (use) cash: | |||||||||||||||||
| Securities borrowed | 204,641 | 280,108 | (396,720) | ||||||||||||||
| Customer, broker-dealer and clearing receivables | 43,342 | (43,925) | (149,549) | ||||||||||||||
| Other Assets | (13,724) | (107,314) | (7,460) | ||||||||||||||
| Securities loaned | (314,568) | (254,588) | 473,043 | ||||||||||||||
| Customer, broker-dealer and clearing payables | (66,177) | (23,771) | 187,811 | ||||||||||||||
| Accounts payable and other liabilities | (7,874) | 45,382 | (817) | ||||||||||||||
| Net cash provided by operating activities | $ | 187,959 | $ | 210,282 | $ | 412,582 | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||
| Purchases of available-for-sale investment securities | (32,669) | (143,733) | (122,338) | ||||||||||||||
| Proceeds from sale and repayment of available-for-sale investment securities | 57,989 | 131,868 | 74,667 | ||||||||||||||
| Purchase of stock of regulatory agencies | (108,724) | (54,350) | (305) | ||||||||||||||
| Proceeds from redemption of stock of regulatory agencies | 108,724 | 54,350 | 920 | ||||||||||||||
| Origination of loans held for investment | (8,346,443) | (10,325,104) | (5,761,303) | ||||||||||||||
| Proceeds from sale of loans originally classified as held for investment | 14,185 | 106,324 | 80,049 | ||||||||||||||
| Mortgage warehouse loan activity, net | 30,773 | 333,562 | (139,806) | ||||||||||||||
| Proceeds from sale of other real estate owned and repossessed assets | 4,167 | 8,654 | 1,586 | ||||||||||||||
| Proceeds from BOLI claim settlement | 2,778 | — | — | ||||||||||||||
| Acquisition of business activity, net of cash acquired | (5,531) | (54,597) | — | ||||||||||||||
| Purchase of loans and leases, net of discounts and premiums | (1,564) | (33,085) | (3,619) | ||||||||||||||
| Principal repayments on loans | 5,916,179 | 7,220,931 | 5,013,817 | ||||||||||||||
| Purchases of furniture, equipment, software and intangibles | (30,215) | (21,504) | (10,437) | ||||||||||||||
| Net cash used in investing activities | $ | (2,390,351) | $ | (2,776,684) | $ | (866,769) | |||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||
| Net increase in deposits | 3,176,686 | 3,130,625 | (520,897) | ||||||||||||||
| Repayments of the Federal Home Loan Bank term advances | (27,500) | (50,000) | (70,000) | ||||||||||||||
| Net (repayment) proceeds of Federal Home Loan Bank other advances | — | (186,000) | 181,000 | ||||||||||||||
| Net (repayment) proceeds of other borrowings | (84,300) | 75,300 | 14,700 | ||||||||||||||
| Redemption of subordinated notes | — | — | (51,000) | ||||||||||||||
| Repayment of Paycheck Protection Program Liquidity Facility advances | — | — | (151,952) | ||||||||||||||
| Tax payments related to settlement of restricted stock units | (6,144) | (14,481) | (10,648) | ||||||||||||||
| Purchase of treasury stock | (48,963) | — | (16,757) | ||||||||||||||
| Redemption of Preferred Stock, Series A | — | — | (5,150) | ||||||||||||||
| Cash dividends paid on preferred stock | — | — | (103) | ||||||||||||||
| Payment of debt issuance costs | — | (2,120) | (2,748) | ||||||||||||||
| Proceeds from issuance of subordinated notes | — | 150,000 | 175,000 | ||||||||||||||
| Net cash provided by (used in) financing activities | $ | 3,009,779 | $ | 3,103,324 | $ | (458,555) | |||||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | $ | 807,387 | $ | 536,922 | $ | (912,742) | |||||||||||
| CASH AND CASH EQUIVALENTS—Beginning of year | $ | 1,574,699 | $ | 1,037,777 | $ | 1,950,519 | |||||||||||
| CASH AND CASH EQUIVALENTS—End of year | $ | 2,382,086 | $ | 1,574,699 | $ | 1,037,777 | |||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||||||||
| Interest paid on interest-bearing liabilities | $ | 368,311 | $ | 50,269 | $ | 77,995 | |||||||||||
| Income taxes paid | 131,365 | 99,701 | 92,506 | ||||||||||||||
| Transfers to other real estate and repossessed vehicles from loans held for investment | 12,664 | 2,134 | 1,903 | ||||||||||||||
| Transfers from loans held for investment to loans held for sale | 14,185 | 105,884 | 71,136 | ||||||||||||||
| Transfers from loans held for sale to loans and leases held for investment | 690 | 3,098 | 29,616 | ||||||||||||||
| Operating lease liabilities from obtaining right of use assets | 3,400 | 6,876 | — | ||||||||||||||
| Impact of adoption of ASC 326 on retained earnings | — | — | 37,088 | ||||||||||||||
| Securities transferred from available-for-sale portfolio to other assets | — | — | 70,751 | ||||||||||||||
S-6
LOANS & ALLOWANCE FOR CREDIT LOSSES
The following table sets forth the composition of the loan portfolio as of the dates indicated:
| (Unaudited) (Dollars in thousands) | June 30, 2023 | June 30, 2022 | |||||||||
| Single Family - Mortgage & Warehouse | $ | 4,173,833 | $ | 3,988,462 | |||||||
| Multifamily and Commercial Mortgage | 3,082,225 | 2,877,680 | |||||||||
| Commercial Real Estate | 6,199,818 | 4,781,044 | |||||||||
| Commercial & Industrial - Non-RE | 2,639,650 | 2,028,128 | |||||||||
| Auto & Consumer | 546,264 | 567,228 | |||||||||
| Other | 10,236 | 11,134 | |||||||||
| Total gross loans | 16,652,026 | 14,253,676 | |||||||||
| Allowance for credit losses - loans | (166,680) | (148,617) | |||||||||
| Unaccreted premiums (discounts) and loan fees | (28,618) | (13,998) | |||||||||
| Total net loans | $ | 16,456,728 | $ | 14,091,061 | |||||||
S-7
SECURITIES
The amortized cost, carrying amount and fair value for the trading and available-for-sale securities at June 30, 2023 and June 30, 2022 were:
| June 30, 2023 | |||||||||||||||||||||||||||||
| Trading | Available-for-sale | ||||||||||||||||||||||||||||
| (Unaudited) (Dollars in thousands) | Fair Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||
| Mortgage-backed securities (MBS): | |||||||||||||||||||||||||||||
U.S agencies1 | $ | — | $ | 27,024 | $ | — | $ | (3,077) | $ | 23,947 | |||||||||||||||||||
Non-agency2 | — | 210,271 | 711 | (5,977) | 205,005 | ||||||||||||||||||||||||
| Total mortgage-backed securities | 237,295 | 711 | (9,054) | 228,952 | |||||||||||||||||||||||||
| Non-MBS: | |||||||||||||||||||||||||||||
| Municipal | 758 | 3,656 | — | (258) | 3,398 | ||||||||||||||||||||||||
| Asset-backed securities and structured notes | — | — | — | — | — | ||||||||||||||||||||||||
| Total Non-MBS | 758 | 3,656 | — | (258) | 3,398 | ||||||||||||||||||||||||
| Total debt securities | $ | 758 | $ | 240,951 | $ | 711 | $ | (9,312) | $ | 232,350 | |||||||||||||||||||
| June 30, 2022 | |||||||||||||||||||||||||||||
| Trading | Available-for-sale | ||||||||||||||||||||||||||||
| (Unaudited) (Dollars in thousands) | Fair Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||
| Mortgage-backed securities (MBS): | |||||||||||||||||||||||||||||
U.S agencies1 | $ | — | $ | 27,722 | $ | 9 | $ | (2,406) | $ | 25,325 | |||||||||||||||||||
Non-agency2 | — | 187,616 | 1,832 | (2,634) | 186,814 | ||||||||||||||||||||||||
| Total mortgage-backed securities | — | 215,338 | 1,841 | (5,040) | 212,139 | ||||||||||||||||||||||||
| Non-MBS: | |||||||||||||||||||||||||||||
| Municipal | 1,758 | 3,529 | — | (281) | 3,248 | ||||||||||||||||||||||||
| Asset-backed securities and structured notes | — | 47,000 | 131 | — | 47,131 | ||||||||||||||||||||||||
| Total Non-MBS | 1,758 | 50,529 | 131 | (281) | 50,379 | ||||||||||||||||||||||||
| Total debt securities | $ | 1,758 | $ | 265,867 | $ | 1,972 | $ | (5,321) | $ | 262,518 | |||||||||||||||||||
1 Includes securities guaranteed by Ginnie Mae, a U.S. government agency, and the government sponsored enterprises Fannie Mae and Freddie Mac.
2 Private sponsors of securities collateralized primarily by first-lien mortgage loans on commercial properties or by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by Alt-A or pay-option ARM mortgages.
S-8
DEPOSITS
The following table sets forth the composition of deposits by type and weighted average interest rate as of the dates indicated:
| (Unaudited) | June 30, 2023 | June 30, 2022 | |||||||||||||||||||||
| (Dollars in thousands) | Amount | Rate1 | Amount | Rate1 | |||||||||||||||||||
| Non-interest bearing | $ | 2,898,150 | — | % | $ | 5,033,970 | — | % | |||||||||||||||
| Interest bearing: | |||||||||||||||||||||||
| Demand | 3,334,615 | 2.43 | % | 3,611,889 | 0.61 | % | |||||||||||||||||
| Savings | 9,575,781 | 4.20 | % | 4,245,555 | 0.95 | % | |||||||||||||||||
| Total interest-bearing demand and savings | 12,910,396 | 3.74 | % | 7,857,444 | 0.79 | % | |||||||||||||||||
| Time deposits: | |||||||||||||||||||||||
| $250 and under | 932,436 | 3.72 | % | 651,392 | 1.22 | % | |||||||||||||||||
| Greater than $250 | 382,126 | 4.36 | % | 403,616 | 1.41 | % | |||||||||||||||||
| Total time deposits | 1,314,562 | 3.91 | % | 1,055,008 | 1.25 | % | |||||||||||||||||
Total interest bearing2 | 14,224,958 | 3.76 | % | 8,912,452 | 0.85 | % | |||||||||||||||||
| Total deposits | $ | 17,123,108 | 3.12 | % | $ | 13,946,422 | 0.54 | % | |||||||||||||||
1. Based on weighted-average stated interest rates at end of period.
2. The total interest-bearing includes brokered deposits of $2,028.5 million and $1,032.7 million as of June 30, 2023 and June 30, 2022, respectively, of which $691 million and $250 million, respectively, are time deposits classified as $250,000 and under.
The number of deposit accounts at the end of each of the last two fiscal years is set forth below:
| At June 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Non-interest-bearing | 45,640 | 42,372 | |||||||||
| Interest-bearing checking and savings accounts | 427,299 | 344,593 | |||||||||
| Time deposits | 6,340 | 8,734 | |||||||||
| Total number of deposit accounts | 479,279 | 395,699 | |||||||||
S-9
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||||||||||||||
| (Unaudited) (Dollars in thousands) | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid2 | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid2 | |||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
Loans3,4 | $ | 16,242,438 | $ | 305,011 | 7.51 | % | $ | 13,704,420 | $ | 174,110 | 5.08 | % | |||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | 2,601,097 | 32,492 | 5.00 | % | 1,239,655 | 2,597 | 0.84 | % | |||||||||||||||||||||||||||
Mortgage-backed and other investment securities4 | 254,133 | 3,815 | 6.00 | % | 247,655 | 2,648 | 4.28 | % | |||||||||||||||||||||||||||
| Securities borrowed and margin lending | 355,687 | 4,815 | 5.41 | % | 592,234 | 4,462 | 3.01 | % | |||||||||||||||||||||||||||
| Stock of the regulatory agencies | 17,250 | 297 | 6.89 | % | 24,852 | 344 | 5.54 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 19,470,605 | 346,430 | 7.12 | % | 15,808,816 | 184,161 | 4.66 | % | |||||||||||||||||||||||||||
| Non-interest-earning assets | 715,554 | 776,659 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 20,186,159 | $ | 16,585,475 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand and savings | $ | 12,507,836 | $ | 123,146 | 3.94 | % | $ | 7,007,335 | $ | 8,379 | 0.48 | % | |||||||||||||||||||||||
| Time deposits | 1,418,347 | 14,043 | 3.96 | % | 1,012,705 | 2,800 | 1.11 | % | |||||||||||||||||||||||||||
| Securities loaned | 184,608 | 356 | 0.77 | % | 408,416 | 503 | 0.49 | % | |||||||||||||||||||||||||||
| Advances from the FHLB | 90,000 | 523 | 2.32 | % | 543,247 | 1,663 | 1.22 | % | |||||||||||||||||||||||||||
| Borrowings, subordinated notes and debentures | 357,645 | 4,608 | 5.15 | % | 448,548 | 5,406 | 4.82 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 14,558,436 | 142,676 | 3.92 | % | 9,420,251 | 18,751 | 0.80 | % | |||||||||||||||||||||||||||
| Non-interest-bearing demand deposits | 3,117,796 | 4,695,748 | |||||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 631,415 | 829,995 | |||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,878,512 | 1,639,481 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 20,186,159 | $ | 16,585,475 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 203,754 | $ | 165,410 | |||||||||||||||||||||||||||||||
Interest rate spread6 | 3.20 | % | 3.86 | % | |||||||||||||||||||||||||||||||
Net interest margin7 | 4.19 | % | 4.19 | % | |||||||||||||||||||||||||||||||
1 Average balances are obtained from daily data.
2 Annualized.
3 Loans include loans held for sale, loan premiums and unearned fees.
4 Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.
5 Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the unaudited condensed consolidated balance sheets.
6 Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
7 Net interest margin represents net interest income as a percentage of average interest-earning assets.
S-10
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following tables set forth, for the periods indicated, information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
| For the Fiscal Years Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) (Dollars in thousands) | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid | ||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans2,3 | $ | 15,571,290 | $ | 1,048,874 | 6.74 | % | $ | 12,576,873 | $ | 626,628 | 4.98 | % | $ | 11,332,020 | $ | 584,410 | 5.16 | % | |||||||||||||||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | 1,761,902 | 73,467 | 4.17 | % | 1,233,983 | 4,501 | 0.36 | % | 1,600,811 | 2,185 | 0.14 | % | |||||||||||||||||||||||||||||||||||||||||
Mortgage-backed and other investment securities3 | 259,473 | 14,669 | 5.65 | % | 176,951 | 6,952 | 3.93 | % | 192,420 | 9,560 | 4.97 | % | |||||||||||||||||||||||||||||||||||||||||
Securities borrowed and margin lending4 | 388,386 | 18,657 | 4.80 | % | 687,363 | 20,512 | 2.98 | % | 613,735 | 20,466 | 3.33 | % | |||||||||||||||||||||||||||||||||||||||||
| Stock of the regulatory agencies | 20,936 | 1,471 | 7.03 | % | 21,844 | 1,135 | 5.20 | % | 20,588 | 1,242 | 6.03 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 18,001,987 | 1,157,138 | 6.43 | % | 14,697,014 | 659,728 | 4.49 | % | 13,759,574 | 617,863 | 4.49 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets | 735,783 | 658,494 | 394,085 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 18,737,770 | $ | 15,355,508 | $ | 14,153,659 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing demand and savings | $ | 10,211,737 | $ | 305,655 | 2.99 | % | $ | 6,773,321 | $ | 20,053 | 0.30 | % | $ | 7,204,698 | $ | 29,031 | 0.40 | % | |||||||||||||||||||||||||||||||||||
| Time deposits | 1,225,537 | 33,826 | 2.76 | % | 1,226,774 | 13,567 | 1.11 | % | 1,825,795 | 31,498 | 1.73 | % | |||||||||||||||||||||||||||||||||||||||||
| Securities loaned | 303,932 | 3,673 | 1.21 | % | 469,051 | 1,124 | 0.24 | % | 412,385 | 1,496 | 0.36 | % | |||||||||||||||||||||||||||||||||||||||||
| Advances from the FHLB | 423,612 | 12,644 | 2.98 | % | 349,796 | 4,625 | 1.32 | % | 211,077 | 4,672 | 2.21 | % | |||||||||||||||||||||||||||||||||||||||||
| Borrowings, subordinated notes and debentures | 362,733 | 18,219 | 5.02 | % | 302,454 | 13,201 | 4.36 | % | 340,699 | 12,424 | 3.65 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 12,527,551 | 374,017 | 2.99 | % | 9,121,396 | 52,570 | 0.58 | % | 9,994,654 | 79,121 | 0.79 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing demand deposits | 3,730,524 | 3,927,195 | 2,182,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 695,617 | 764,542 | 671,581 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,784,078 | 1,542,375 | 1,305,415 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 18,737,770 | $ | 15,355,508 | $ | 14,153,659 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 783,121 | $ | 607,158 | $ | 538,742 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate spread5 | 3.44 | % | 3.91 | % | 3.70 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin6 | 4.35 | % | 4.13 | % | 3.92 | % | |||||||||||||||||||||||||||||||||||||||||||||||
1 Average balances are obtained from daily data.
2 Loans include loans held for sale, loan premiums and unearned fees.
3 Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. y.
4 Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the unaudited condensed consolidated balance sheets.
5 Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
6 Net interest margin represents net interest income as a percentage of average interest-earning assets.
S-11
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
BANKING BUSINESS
The following table presents our Banking Business segment’s information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin for the three months ended June 30, 2023 and 2022:
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Average Balance1 | Interest Income/ Expense | Average Yields Earned/Rates Paid2 | Average Balance1 | Interest Income/ Expense | Average Yields Earned/Rates Paid2 | |||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
Loans3, 4 | $ | 16,220,701 | $ | 304,676 | 7.51 | % | $ | 13,672,947 | $ | 173,334 | 5.07 | % | |||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | 2,438,379 | 30,693 | 5.03 | % | 929,695 | 1,993 | 0.86 | % | |||||||||||||||||||||||||||
Mortgage-backed and other investment securities4 | 260,538 | 3,850 | 5.91 | % | 265,080 | 2,745 | 4.14 | % | |||||||||||||||||||||||||||
| Stock of the regulatory agencies | 17,250 | 295 | 6.84 | % | 21,734 | 344 | 6.33 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 18,936,868 | 339,514 | 7.17 | % | 14,889,456 | 178,416 | 4.79 | % | |||||||||||||||||||||||||||
| Non-interest-earning assets | 371,710 | 298,721 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 19,308,578 | $ | 15,188,177 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand and savings | $ | 12,570,893 | $ | 123,178 | 3.92 | % | $ | 7,148,061 | $ | 8,449 | 0.47 | % | |||||||||||||||||||||||
| Time deposits | 1,418,347 | 14,043 | 3.96 | % | 1,012,705 | 2,800 | 1.11 | % | |||||||||||||||||||||||||||
| Advances from the FHLB | 90,000 | 523 | 2.32 | % | 543,247 | 1,663 | 1.22 | % | |||||||||||||||||||||||||||
| Borrowings, subordinated notes and debentures | 34 | — | — | % | 33 | — | — | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 14,079,274 | 137,744 | 3.91 | % | 8,704,046 | 12,912 | 0.59 | % | |||||||||||||||||||||||||||
| Non-interest-bearing demand deposits | 3,177,475 | 4,770,915 | |||||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 192,007 | 139,753 | |||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,859,822 | 1,573,463 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 19,308,578 | $ | 15,188,177 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 201,770 | $ | 165,504 | |||||||||||||||||||||||||||||||
Interest rate spread5 | 3.26 | % | 4.20 | % | |||||||||||||||||||||||||||||||
Net interest margin6 | 4.26 | % | 4.45 | % | |||||||||||||||||||||||||||||||
1. Average balances are obtained from daily data.
2. Annualized.
3. Loans include loans held for sale, loan premiums and unearned fees.
4. Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.
5 Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
6 Net interest margin represents net interest income as a percentage of average interest-earning assets.
S-12
SECURITIES BUSINESS
The following table provides selected information for Axos Clearing LLC as of each period indicated:
| (Dollars in thousands) | June 30, 2023 | June 30, 2022 | |||||||||
| FDIC insured deposit program balances at banks | $ | 1,627,053 | $ | 3,452,358 | |||||||
| Cash reserves for the benefit of customers | $ | 149,059 | $ | 372,112 | |||||||
| Securities lending: | |||||||||||
| Interest-earning assets – stock borrowed | $ | 134,339 | $ | 338,980 | |||||||
| Interest-bearing liabilities – stock loaned | $ | 159,832 | $ | 474,400 | |||||||
S-13
Axos Q4 Fiscal 2023 Earnings Supplement July 27, 2023 NYSE: AX
1 Loan Growth by Category for Third Quarter Ended June 30, 2023 $ millions Q4 FY23 Q3 FY23 Inc (Dec) $3,924 $3,925 (1) 250 162 88 2,236 2,245 (9) 846 838 8 5,346 4,952 394 854 842 12 1,696 1,598 98 116 121 (5) 828 736 92 476 518 (42) 70 77 (7) 10 6 4 $16,652 $16,020 $632 Jumbo Mortgage SF Warehouse Lending Multifamily Small Balance Commercial CRE Specialty Lender Finance RE Lender Finance Non-RE Equipment Leasing Asset-Based Lending Auto Unsecured/OD Single Family Mortgage & Warehouse Multifamily & Commercial Mortgage Commercial Real Estate Commercial & Industrial Non-RE Auto & Consumer Other Loans
CRE Specialty Detail as of June 30, 2023 Loan Type Balance (mm) Weighted Avg. LTV Non-Performing Loans (mm) Multifamily $1,746 41% $0 SFR 1,059 42 15 Hotel 921 41 0 Office 552 36 0 Industrial 475 43 0 Other 339 36 0 Retail 254 41 0 Total $5,346 40% $15 <=50% > 50% to 60% >60% to 65% > 65% 80% 15% 2% 3% LTV Distribution 2
Fixed/Hybrid Years to Maturity / Repricing*Mix of Loan Repricing Types Variable 59% Hybrid 34% Fixed 7% 409 880 2,028 2,993 5,526 6,573 6,583 6,632 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1/2 1 2 3 5 10 20 >20 Years $M 7% 13% 32% 49% 100%100%99%89% *Excludes SF Warehouse Lending and Equipment Leasing. The years to repricing assumes no loan prepayments and reflects only contractual terms. Interest Rate Components of Loan & Lease Portfolio At June 30, 2023 3 Of the fixed and hybrid rate loan balances in our portfolio at June 30, 2023, 49% will reprice within 3 years and 89% will reprice within 5 years
4 Consumer Direct Distribution Partners Small Business Banking Commercial / Treasury Management Axos Securities Specialty Deposits Fiduciary Services Diversified Deposit Gathering Business Lines ‹ Full service digital banking, wealth management, and securities trading ‹ White-label banking ‹ Business banking with simple suite of cash management services ‹ Fiduciary services for trustees ‹ 1031 exchange firms ‹ Title and escrow companies ‹ HOA and property management ‹ 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 treasury/cash management ‹ Team enhancements and geographic expansion ‹ Bank and securities cross-sell ‹ Broker-dealer client cash ‹ Broker-dealer reserve accounts $1.1 B $1.0 B $9.5 B $0.7 B $0.3 B $3.5 B $1.0 B Diversified Deposit Gathering Approximately 90% of deposits are FDIC-insured or collateralized *Deposit balances as of 6/30/23 1Excludes approximately $600 million of off-balance sheet deposits 2Excludes approximately $700 million of client deposits held at other banks 1 2
Axos Advisor Services (AAS) Cash Sorting 5 ($895) ($383) ($188) ($1,000) ($900) ($800) ($700) ($600) ($500) ($400) ($300) ($200) ($100) $0 Q2 2023 Q3 2023 Q4 2023 Pace of AAS Cash Sorting Decline Has Decelerated ($ in millions)
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Reserve (UCL) ($ in millions) 161.3 (2.5) 0.9 7.0 166.7 10.5 10.5 120 130 140 150 160 170 March 31, 2023 ACL + UCL Gross Charge-offs Provisions for credit losses Gross Recoveries June 30, 2023 ACL + UCL UCLACL 6
7 Loan Balance Allowance for Credit Losses (ACL) by Loan Category as of June 30, 2023 Loans Single Family - Mortgage and Warehouse Multifamily & Commercial Mortgage Commercial Real Estate Auto & Consumer $ millions Other ACL $ ACL % Commercial & Industrial Non-RE $4,173.8 3,082.2 6,199.8 546.3 10.2 2,639.7 $16,652.0 16.8 72.8 13.2 0.1 46.3 $17.5 $166.7 1.00% 1.17% 0.55% 0.42% 0.14% 2.42% 1.76%
Credit Quality ($ millions) Non‐performing Loans Down Slightly from Prior Quarter 3/31/2023 Loans O/S NPLs % Single Family-Mortgage & Warehouse $4,087.5 $36.2 0.89% Multifamily and Commercial Mortgage 3,082.8 37.4 1.21 Commercial Real Estate 5,794.3 14.9 0.26 Commercial & Industrial - Non-RE 2,454.8 2.9 0.12 Auto & Consumer 594.6 2.0 0.34 Other 6.3 2.5 39.68 Total $16,020.3 $95.9 0.60% 6/30/2023 Loans O/S NPLs % Single Family-Mortgage & Warehouse $4,173.8 $30.7 0.74% Multifamily and Commercial Mortgage 3,082.2 35.1 1.14 Commercial Real Estate 6,199.8 14.9 0.24 Commercial & Industrial - Non-RE 2,639.7 3.0 0.11 Auto & Consumer 546.3 1.5 0.27 Other 10.2 2.0 19.61 Total $16,652.0 $87.2 0.52% Change at 6/30/2023 from 3/31/2023 Loans O/S NPLs Single Family-Mortgage & Warehouse $86.3 $(5.5) Multifamily and Commercial Mortgage (0.6) (2.3) Commercial Real Estate 405.5 (0.0) Commercial & Industrial - Non-RE 184.9 0.1 Auto & Consumer (48.3) (0.5) Other 3.9 (0.5) Total $631.7 $(8.7) 8
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12 Greg Garrabrants, President and CEO Derrick Walsh, EVP and CFO Andy Micheletti, EVP of Finance [email protected] www.axosfinancial.com Johnny Lai, SVP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 [email protected] Contact Information