AX 8-K
Axos Financial, Inc. (AX)
8-K
2021-07-29
For: 2021-07-29
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 29, 2021
(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) (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 29, 2021, Axos Financial, Inc. (the “Registrant”) issued a press release announcing its fourth quarter results of operations for the period ended June 30, 2021. The press release is set forth as Exhibit 99.1 and is incorporated by reference in this Item 2.02.
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 | ||||||||
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 29, 2021 | By: | /s/ Andrew J. Micheletti | |||||||||||
| Andrew J. Micheletti | ||||||||||||||
| EVP and Chief Financial Officer | ||||||||||||||
Axos Financial, Inc. Announces Record Net Income of $215.7 million for Fiscal 2021
Earnings Per Share for the Fourth Quarter of Fiscal 2021 up 20.0% Year-over-Year
SAN DIEGO, CA – (BUSINESS WIRE) – July 29, 2021 – 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, 2021. Net income for the quarter was $54.3 million, an increase of 19.8% over net income of $45.3 million for the quarter ended June 30, 2020. Earnings attributable to Axos’ common stockholders were $54.3 million or $0.90 per diluted share for the fourth quarter of fiscal 2021, an increase of 20.0% from $45.2 million or $0.75 per diluted share for the fourth quarter ended June 30, 2020.
Adjusted earnings and adjusted earnings per diluted common share (“Adjusted EPS”), non-GAAP measures, which exclude non-cash amortization expenses and other non-recurring costs increased 18.6% to $55.8 million and 17.9% to $0.92, respectively, for the quarter ended June 30, 2021 compared to $47.1 million and $0.78, respectively, for the quarter ended June 30, 2020.
Fourth Quarter Fiscal 2021 Financial Summary:
| Three Months Ended June 30, | |||||||||||||||||
| (Dollars in thousands, except per share data) | 2021 | 2020 | % Change | ||||||||||||||
| Net interest income | $ | 141,654 | $ | 117,272 | 20.8 | % | |||||||||||
| Non-interest income | $ | 16,801 | $ | 28,702 | (41.5) | % | |||||||||||
| Net income | $ | 54,255 | $ | 45,300 | 19.8 | % | |||||||||||
Adjusted Earnings (Non-GAAP)1 | $ | 55,811 | $ | 47,052 | 18.6 | % | |||||||||||
| Net income attributable to common stockholders | $ | 54,255 | $ | 45,223 | 20.0 | % | |||||||||||
| Diluted EPS | $ | 0.90 | $ | 0.75 | 20.0 | % | |||||||||||
Adjusted EPS (Non-GAAP)1 | $ | 0.92 | $ | 0.78 | 17.9 | % | |||||||||||
1 See “Use of Non-GAAP Financial Measures”
For the fiscal year ended June 30, 2021, net income was a record $215.7 million, an increase of 17.6% over net income of $183.4 million for the twelve months ended June 30, 2020. Earnings attributable to Axos’ common stockholders were $215.5 million or $3.56 per diluted share for the twelve months ended June 30, 2021, an increase of 17.7% from $183.1 million or $2.98 per diluted share for the twelve months ended June 30, 2020. Record earnings for the fiscal year ended June 30, 2021 were primarily the result of growth in interest-earning assets and reduced cost of interest-earning liabilities. Operating expenses increased to support growth of the Bank due to higher levels of loan originations and deposit activities.
“We finished the year with strong net interest income growth of 4.4% over the linked quarter and 20.8% year-over-year as a result of solid growth in average assets and a stable net interest margin,” stated Greg Garrabrants, President and Chief Executive Officer of Axos. “Our Securities Business generated double-digit growth in margin balances and stock lending, resulting in a $0.5 million pretax income contribution this quarter. We see tremendous opportunities to deliver positive operating leverage in our securities clearing and custody businesses as we expand our product capabilities and scale.”
“We generated solid loan growth of 3.4% over the linked quarter and 20.3% year-over-year excluding single-family jumbo mortgages and single-family warehouse loans,” stated Andy Micheletti, Executive Vice President and Chief Financial Officer of Axos. “Our credit quality remains good, with 7 basis points of net annualized charge-offs to average loans excluding seasonal tax loan products in our fiscal 2021. We had another strong year in returns, with a ROE of 16.51% and a ROA of 1.52% for the twelve months ended June 30, 2021.”
Other Highlights:
•Net interest margin was 3.92%, up 3 basis points from 3.89% for the three months ended June 30, 2020
•Average funding costs were 61 basis points for the three months ended June 30, 2021 compared to 1.25% for the three months ended June 30, 2020
•Pretax income for the Securities Business was $0.5 million compared to a pretax loss of $1.6 million in the three months ended June 30, 2020
•Average loan balances for the three months ended June 30, 2021 grew $914.4 million, or 8.6%, compared to the three months ended June 30, 2020
•Loan originations for investment for the three months ended June 30, 2021 increased by 38.4% to $1,824.5 million compared to $1,317.8 million for the quarter ended June 30, 2020
•Return on average common stockholders’ equity was 15.56% for the three months ended June 30, 2021
•Total net annualized charge-offs to average loans, excluding seasonal tax loan products, were 0.01% for the three months ended June 30, 2021
•Tangible book value increased to $21.36 per share, up 16.8% compared to June 30, 2020
Fourth Quarter Fiscal 2021 Income Statement Summary
During the quarter ended June 30, 2021, Axos earned $54.3 million or $0.90 per diluted share compared to $45.3 million, or $0.75 per diluted share for the quarter ended June 30, 2020. Net interest income increased $24.4 million or 20.8% for the quarter ended June 30, 2021 compared to June 30, 2020, primarily due to the lower cost of deposits and borrowing resulting from interest rate reductions and increases in non-interest-bearing demand deposits.
The provision for credit losses was $1.3 million for the quarter ended June 30, 2021 compared to $6.5 million for the quarter ended June 30, 2020. The decrease was primarily due to overall loan portfolio decline and changes in the loan mix.
For the fourth quarter ended June 30, 2021, non-interest income was $16.8 million compared to $28.7 million for the three months ended June 30, 2020. The decrease year over year was primarily the result of decreases in mortgage banking fee income of $9.8 million and a decrease in banking and service fees of $3.8 million, partially offset by an increase in prepayment penalty fee income of $1.7 million and an increase in broker-dealer fee income of $0.7 million.
Non-interest expense or operating costs increased $10.3 million to $81.9 million for the quarter ended June 30, 2021 from $71.5 million for the three months ended June 30, 2020. The increase was mainly a result of an increase in data processing of $4.1 million, due to software initiatives and enhancements to the Bank’s core processing system. Additional contributors to the increase in operating expenses were an increase in other general and administrative of $2.9 million, an increase in professional services of $1.7 million, an increase of $1.0 million in broker-dealer clearing charges, an increase in occupancy and equipment related expenses of $1.0 million, and an increase in advertising and promotional expenses of $0.8 million.
Our effective tax rate was 27.99% for the three months ended June 30, 2021 compared to 33.31% for the three months ended June 30, 2020. The decrease in the tax rate for the three months ended June 30, 2021, is primarily due to a tax benefit from stock compensation during the quarter ended June 30, 2021, compared to a write off of a deferred tax asset for stock compensation that wasn’t expected to be realized in the future, which resulted in $2.0 million of additional expense for the three months ended June 30, 2020.
Full Year Fiscal 2021 Highlights
•Net income reached a record $215.7 million, an increase of 17.6% compared to the fiscal year ended June 30, 2020
•Earnings per diluted share outstanding were $3.56, up 19.5% from $2.98 in the fiscal year ended June 30, 2020
•Loan originations for investment for the fiscal year ended June 30, 2021 were $7,304.4 million, up 7.4% compared to the fiscal year ended June 30, 2020
•Net interest margin for the Banking Business decreased to 4.11% for the fiscal year ended June 30, 2021 compared to 4.19% for the fiscal year ended June 30, 2020
•Mortgage banking income increased by 104.2% to $42.2 million for the twelve months ended June 30, 2021
•Efficiency for the Banking Business was 41.95% for the fiscal year ended June 30, 2021 compared to 39.81% for the fiscal year ended June 30, 2020
•Return on average assets remained strong at 1.52% for the fiscal year ended June 30, 2021
Balance Sheet Summary
Axos’ total assets increased $413.7 million, or 3.0%, to $14,265.6 million, as of June 30, 2021, up from $13,851.9 million at June 30, 2020. The loan portfolio increased $783.5 million or 7.4%on a net basis. Total cash decreased by $912.7 million primarily due to decreased deposits. Total liabilities increased by $243.6 million, or 1.9%, to $12,864.6 million at June 30, 2021, up from $12,621.1 million at June 30, 2020. The increase in total liabilities resulted primarily from growth in securities loaned of $473.0 million, advances from the Federal Home Loan Bank of $111.0 million and customer and broker-dealer payables of $187.8 million, partially offset by decreased deposits of $520.9 million. Stockholders’ equity increased by $170.1 million, or 13.8%, to $1,400.9 million at June 30, 2021 from $1,230.8 million at June 30, 2020. The increase was primarily the result of $215.7 million in net income and $10.0 million of vesting and issuance of RSUs and stock-based compensation expense, partially offset by a $37.0 million adjustment to retained earnings for the adoption of ASC 326, $16.8 million of stock repurchases, $5.2 million for redemption of series-A preferred stock, $3.4 million of unrealized loss in other comprehensive income, net of tax, and $0.1 million of dividends declared on preferred stock.
The Bank’s Tier 1 core capital to adjusted average assets ratio was 9.45% at June 30, 2021.
Conference Call
A conference call and webcast will be held on Thursday, July 29, 2021 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 may be accessed at Axos’ website, http://www.axosfinancial.com. For those unable to listen to the live broadcast, a replay will be available until, August 29, 2021, at Axos’ website and telephonically by dialing toll-free number 877-660-6853, passcode 13721053.
About Axos Financial, Inc. and subsidiaries
The condensed consolidated financial statements include the accounts of Axos Financial, Inc. (“Axos”) and its wholly owned subsidiaries, Axos Bank (the “Bank”) and Axos Nevada Holding, LLC (“Axos Nevada Holding” and collectively, the “Company”). 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 $14.3 billion in assets, Axos Bank provides consumer and business banking products through its low-cost distribution channels and affinity partners. Axos Clearing LLC 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 and the S&P SmallCap 600® Index. For more information on Axos Bank, please visit axosbank.com.
SEGMENT REPORTING
The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial condition and operating results and the CEO’s evaluation of the operating results of those services in deciding how to allocate resources and assess performance. 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.
The following tables present the operating results of the segments and reconciliations:
| For the Three Months Ended June 30, 2021 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 137,493 | $ | 5,744 | $ | (1,583) | $ | 141,654 | |||||||||||||||
| Provision for loan losses | 1,250 | — | — | 1,250 | |||||||||||||||||||
| Non-interest income | 10,442 | 6,902 | (543) | 16,801 | |||||||||||||||||||
| Non-interest expense | 66,863 | 12,149 | 2,848 | 81,860 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 79,822 | $ | 497 | $ | (4,974) | $ | 75,345 | |||||||||||||||
| For the Three Months Ended June 30, 2020 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 114,264 | $ | 3,493 | $ | (485) | $ | 117,272 | |||||||||||||||
| Provision for loan losses | 6,500 | — | — | 6,500 | |||||||||||||||||||
| Non-interest income | 23,100 | 5,730 | (128) | 28,702 | |||||||||||||||||||
| Non-interest expense | 56,348 | 10,869 | 4,327 | 71,544 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 74,516 | $ | (1,646) | $ | (4,940) | $ | 67,930 | |||||||||||||||
| Twelve Months Ended June 30, 2021 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 527,760 | $ | 18,746 | $ | (7,764) | $ | 538,742 | |||||||||||||||
| Provision for loan losses | 23,750 | — | — | 23,750 | |||||||||||||||||||
| Non-interest income | 79,150 | 27,627 | (1,516) | 105,261 | |||||||||||||||||||
| Non-interest expense | 254,596 | 48,095 | 11,819 | 314,510 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 328,564 | $ | (1,722) | $ | (21,099) | $ | 305,743 | |||||||||||||||
| Twelve Months Ended June 30, 2020 | |||||||||||||||||||||||
| (Dollars in thousands) | Banking Business | Securities Business | Corporate/Eliminations | Axos Consolidated | |||||||||||||||||||
| Net interest income | $ | 464,448 | $ | 16,630 | $ | (3,467) | $ | 477,611 | |||||||||||||||
| Provision for loan losses | 42,200 | — | — | 42,200 | |||||||||||||||||||
| Non-interest income | 80,374 | 24,817 | (2,204) | 102,987 | |||||||||||||||||||
| Non-interest expense | 216,895 | 43,525 | 15,346 | 275,766 | |||||||||||||||||||
| Income (Loss) before income taxes | $ | 285,727 | $ | (2,078) | $ | (21,017) | $ | 262,632 | |||||||||||||||
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with GAAP, this report 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), as adjusted earnings, a non-GAAP financial measure. 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 Bank’s operating performance. We believe excluding the non-recurring acquisition related costs and other (unusual or non-recurring) 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 | Twelve Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Net income | $ | 54,255 | $ | 45,300 | $ | 215,707 | $ | 183,438 | |||||||||||||||
| Acquisition-related costs | 2,161 | 2,627 | 9,826 | 10,108 | |||||||||||||||||||
| Income taxes | (605) | (875) | (2,894) | (3,048) | |||||||||||||||||||
| Adjusted earnings (Non-GAAP) | $ | 55,811 | $ | 47,052 | $ | 222,639 | $ | 190,498 | |||||||||||||||
| Adjusted EPS (Non-GAAP) | $ | 0.92 | $ | 0.78 | $ | 3.68 | $ | 3.10 | |||||||||||||||
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 (Non-GAAP) as of the dates indicated:
| June 30, | |||||||||||
| (Dollars in thousands, except per share amounts) | 2021 | 2020 | |||||||||
| Total stockholders’ equity | $ | 1,400,936 | $ | 1,230,846 | |||||||
| Less: preferred stock | — | 5,063 | |||||||||
| Common stockholders’ equity | 1,400,936 | 1,225,783 | |||||||||
| Less: mortgage servicing rights, carried at fair value | 17,911 | 10,675 | |||||||||
| Less: goodwill and other intangible assets | 115,972 | 125,389 | |||||||||
| Tangible common stockholders’ equity (Non-GAAP) | $ | 1,267,053 | $ | 1,089,719 | |||||||
| Common shares outstanding at end of period | 59,317,944 | 59,612,635 | |||||||||
| Tangible book value per common share (Non-GAAP) | $ | 21.36 | $ | 18.28 | |||||||
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’ ability to continue to grow profitably and increase its business, following closing, Axos’ ability to integrate E*TRADE Advisor Services and realize the benefits of the transaction, Axos’ ability to continue to diversify its lending and deposit franchises and the anticipated timing and financial performance of other offerings, initiatives, and acquisitions. 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 uncertainties surrounding the severity, duration, and effects of the COVID-19 pandemic, Axos’ ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, inflation, government regulation, general economic conditions, conditions in the real estate markets in which we operate, risks associated with credit quality, the outcome and effects of pending class action litigation filed against the Company and other factors beyond our control. These and other risks and uncertainties detailed in Axos’ periodic reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those expressed or implied in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and Axos undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.
Investor Relations Contact:
Johnny Lai, CFA
VP, Corporate Development & Investor Relations
1-858-649-2218
The following tables set forth certain selected financial data concerning the periods indicated:
AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands)
| (Dollars in thousands) | June 30, 2021 | June 30, 2020 | June 30, 2019 | ||||||||||||||
| Selected Balance Sheet Data: | |||||||||||||||||
| Total assets | $ | 14,265,565 | $ | 13,851,900 | $ | 11,220,238 | |||||||||||
| Loans—net of allowance for credit losses | 11,414,814 | 10,631,349 | 9,382,124 | ||||||||||||||
| Loans held for sale, carried at fair value | 29,768 | 51,995 | 33,260 | ||||||||||||||
| Loans held for sale, lower of cost or fair value | 12,294 | 44,565 | 4,800 | ||||||||||||||
| Allowance for credit losses - loans | 132,958 | 75,807 | 57,085 | ||||||||||||||
| Securities—trading | 1,983 | 105 | — | ||||||||||||||
| Securities—available-for-sale | 187,335 | 187,627 | 227,513 | ||||||||||||||
| Securities borrowed | 619,088 | 222,368 | 144,706 | ||||||||||||||
| Customer, broker-dealer and clearing receivables | 369,815 | 220,266 | 203,192 | ||||||||||||||
| Total deposits | 10,815,797 | 11,336,694 | 8,983,173 | ||||||||||||||
| Advances from the FHLB | 353,500 | 242,500 | 458,500 | ||||||||||||||
| Borrowings, subordinated notes and debentures | 221,358 | 235,789 | 168,929 | ||||||||||||||
| Securities loaned | 728,988 | 255,945 | 198,356 | ||||||||||||||
| Customer, broker-dealer and clearing payables | 535,425 | 347,614 | 238,604 | ||||||||||||||
| Total stockholders’ equity | 1,400,936 | 1,230,846 | 1,073,050 | ||||||||||||||
| Capital Ratios: | |||||||||||||||||
| Equity to assets at end of period | 9.82 | % | 8.89 | % | 9.56 | % | |||||||||||
| Axos Financial, Inc.: | |||||||||||||||||
| Tier 1 leverage (core) capital to adjusted average assets | 8.82 | % | 8.97 | % | 8.75 | % | |||||||||||
| Common equity tier 1 capital (to risk-weighted assets) | 11.36 | % | 11.22 | % | 11.43 | % | |||||||||||
| Tier 1 capital (to risk-weighted assets) | 11.36 | % | 11.27 | % | 11.49 | % | |||||||||||
| Total capital (to risk-weighted assets) | 13.78 | % | 12.64 | % | 12.91 | % | |||||||||||
| Axos Bank: | |||||||||||||||||
| Tier 1 leverage (core) capital to adjusted average assets | 9.45 | % | 9.25 | % | 9.21 | % | |||||||||||
| Common equity tier 1 capital (to risk-weighted assets) | 12.28 | % | 11.79 | % | 12.14 | % | |||||||||||
| Tier 1 capital (to risk-weighted assets) | 12.28 | % | 11.79 | % | 12.14 | % | |||||||||||
| Total capital (to risk-weighted assets) | 13.21 | % | 12.62 | % | 12.89 | % | |||||||||||
| Axos Clearing, LLC: | |||||||||||||||||
| Net capital | $ | 35,950 | $ | 34,022 | $ | 25,027 | |||||||||||
| Excess capital | $ | 27,904 | $ | 29,450 | $ | 21,199 | |||||||||||
| Net capital as a percentage of aggregate debit items | 8.94 | % | 14.88 | % | 13.08 | % | |||||||||||
| Net capital in excess of 5% aggregate debit items | $ | 15,836 | $ | 22,593 | $ | 15,458 | |||||||||||
AXOS FINANCIAL, INC. AND SUBSIDIARIES
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 ending | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| (Dollars in thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Selected Income Statement Data: | |||||||||||||||||||||||
| Interest and dividend income | $ | 156,921 | $ | 144,143 | $ | 617,863 | $ | 622,839 | |||||||||||||||
| Interest expense | 15,267 | 26,871 | 79,121 | 145,228 | |||||||||||||||||||
| Net interest income | 141,654 | 117,272 | 538,742 | 477,611 | |||||||||||||||||||
| Provision for credit losses | 1,250 | 6,500 | 23,750 | 42,200 | |||||||||||||||||||
| Net interest income after provision for loan losses | 140,404 | 110,772 | 514,992 | 435,411 | |||||||||||||||||||
| Non-interest income | 16,801 | 28,702 | 105,261 | 102,987 | |||||||||||||||||||
| Non-interest expense | 81,860 | 71,544 | 314,510 | 275,766 | |||||||||||||||||||
| Income before income tax expense | 75,345 | 67,930 | 305,743 | 262,632 | |||||||||||||||||||
| Income tax expense | 21,090 | 22,630 | 90,036 | 79,194 | |||||||||||||||||||
| Net income | $ | 54,255 | $ | 45,300 | $ | 215,707 | $ | 183,438 | |||||||||||||||
| Net income attributable to common stock | $ | 54,255 | $ | 45,223 | $ | 215,518 | $ | 183,129 | |||||||||||||||
| Per Share Data: | |||||||||||||||||||||||
| Net income: | |||||||||||||||||||||||
Basic | $ | 0.92 | $ | 0.76 | $ | 3.64 | $ | 3.01 | |||||||||||||||
Diluted | $ | 0.90 | $ | 0.75 | $ | 3.56 | $ | 2.98 | |||||||||||||||
| Adjusted earnings per common share (Non-GAAP) | $ | 0.92 | $ | 0.78 | $ | 3.68 | $ | 3.10 | |||||||||||||||
| Book value per common share | $ | 23.62 | $ | 20.56 | $ | 23.62 | $ | 20.56 | |||||||||||||||
| Tangible book value per common share (Non-GAAP) | $ | 21.36 | $ | 18.28 | $ | 21.36 | $ | 18.28 | |||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
Basic | 59,241,753 | 59,648,076 | 59,229,495 | 60,794,555 | |||||||||||||||||||
Diluted | 60,546,574 | 60,158,545 | 60,519,611 | 61,437,635 | |||||||||||||||||||
| Common shares outstanding at end of period | 59,317,944 | 59,612,635 | 59,317,944 | 59,612,635 | |||||||||||||||||||
| Common shares issued at end of period | 68,069,321 | 67,323,053 | 68,069,321 | 67,323,053 | |||||||||||||||||||
| Performance Ratios and Other Data: | |||||||||||||||||||||||
| Loan originations for investment | $ | 1,824,527 | $ | 1,317,826 | $ | 7,304,414 | $ | 6,797,971 | |||||||||||||||
| Loan originations for sale | $ | 259,017 | $ | 315,349 | $ | 1,608,700 | $ | 1,601,579 | |||||||||||||||
| Loan purchases | $ | 1,435 | $ | — | $ | 3,619 | $ | — | |||||||||||||||
| Return on average assets | 1.46 | % | 1.45 | % | 1.52 | % | 1.53 | % | |||||||||||||||
| Return on average common stockholders’ equity | 15.56 | % | 14.71 | % | 16.51 | % | 15.65 | % | |||||||||||||||
Interest rate spread1 | 3.73 | % | 3.53 | % | 3.70 | % | 3.65 | % | |||||||||||||||
Net interest margin2 | 3.92 | % | 3.89 | % | 3.92 | % | 4.12 | % | |||||||||||||||
Net interest margin2 - Banking Business Segment only | 4.16 | % | 3.95 | % | 4.11 | % | 4.19 | % | |||||||||||||||
Efficiency ratio3 | 51.66 | % | 49.01 | % | 48.84 | % | 47.50 | % | |||||||||||||||
Efficiency ratio3 - Banking Business Segment only | 45.20 | % | 41.02 | % | 41.95 | % | 39.81 | % | |||||||||||||||
| Asset Quality Ratios: | |||||||||||||||||||||||
| Net annualized charge-offs to average loans | 0.22 | % | 0.67 | % | 0.12 | % | 0.23 | % | |||||||||||||||
| Net annualized charge-offs to average loans, excluding seasonal tax loan products | 0.01 | % | 0.05 | % | 0.07 | % | 0.08 | % | |||||||||||||||
| Non-performing loans to total loans | 1.26 | % | 0.82 | % | 1.26 | % | 0.82 | % | |||||||||||||||
| Non-performing assets to total assets | 1.07 | % | 0.68 | % | 1.07 | % | 0.68 | % | |||||||||||||||
| Allowance for credit losses to total loans held for investment at end of period | 1.15 | % | 0.71 | % | 1.15 | % | 0.71 | % | |||||||||||||||
| Allowance for credit losses to non-performing loans | 91.57 | % | 86.20 | % | 91.57 | % | 86.20 | % | |||||||||||||||
1. 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
2. Net interest margin represents annualized net interest income as a percentage of average interest-earning assets
3. Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income.
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| At June 30, | |||||||||||
| (Dollars in thousands, except par and stated value) | 2021 | 2020 | |||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ | 715,624 | $ | 1,756,477 | |||||||
| Cash segregated for regulatory purposes | 322,153 | 194,042 | |||||||||
| Total cash, cash equivalents, cash segregated | 1,037,777 | 1,950,519 | |||||||||
| Securities: | |||||||||||
| Trading | 1,983 | 105 | |||||||||
| Available-for-sale | 187,335 | 187,627 | |||||||||
| Stock of regulatory agencies | 19,995 | 20,610 | |||||||||
| Loans held for sale, carried at fair value | 29,768 | 51,995 | |||||||||
| Loans held for sale, lower of cost or fair value | 12,294 | 44,565 | |||||||||
| Loans—net of allowance for credit losses of $133.0 million as of June 2021 and $75.8 million as of June 2020 | 11,414,814 | 10,631,349 | |||||||||
| Mortgage servicing rights, carried at fair value | 17,911 | 10,675 | |||||||||
| Other real estate owned and repossessed vehicles | 6,782 | 6,408 | |||||||||
| Securities borrowed | 619,088 | 222,368 | |||||||||
| Customer, broker-dealer and clearing receivables | 369,815 | 220,266 | |||||||||
| Goodwill and other intangible assets—net | 115,972 | 125,389 | |||||||||
| Other assets | 432,031 | 380,024 | |||||||||
| TOTAL ASSETS | $ | 14,265,565 | $ | 13,851,900 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Deposits: | |||||||||||
| Non-interest bearing | $ | 2,474,424 | $ | 1,936,661 | |||||||
| Interest bearing | 8,341,373 | 9,400,033 | |||||||||
| Total deposits | 10,815,797 | 11,336,694 | |||||||||
| Advances from the Federal Home Loan Bank | 353,500 | 242,500 | |||||||||
| Borrowings, subordinated notes and debentures | 221,358 | 235,789 | |||||||||
| Securities loaned | 728,988 | 255,945 | |||||||||
| Customer, broker-dealer and clearing payables | 535,425 | 347,614 | |||||||||
| Accounts payable and accrued liabilities and other liabilities | 209,561 | 202,512 | |||||||||
| Total liabilities | 12,864,629 | 12,621,054 | |||||||||
| STOCKHOLDERS’ EQUITY: | |||||||||||
| Preferred stock—$0.01 par value; 1,000,000 shares authorized; | |||||||||||
| Series A—$10,000 stated value and liquidation preference per share; 0 shares issued and outstanding as of June 2021 and 515 shares issued and outstanding as of June 2020 | — | 5,063 | |||||||||
| Common stock—$0.01 par value; 150,000,000 shares authorized, 68,069,321 shares issued and 59,317,944 shares outstanding as of June 2021, 67,323,053 shares issued and 59,612,635 shares outstanding as of June 2020 | 681 | 673 | |||||||||
| Additional paid-in capital | 432,550 | 411,873 | |||||||||
| Accumulated other comprehensive income (loss)—net of tax | 2,507 | (937) | |||||||||
| Retained earnings | 1,187,728 | 1,009,299 | |||||||||
| Treasury stock, at cost; 8,751,377 shares as of June 2021 and 7,710,418 shares as of June 2020 | (222,530) | (195,125) | |||||||||
| Total stockholders’ equity | 1,400,936 | 1,230,846 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 14,265,565 | $ | 13,851,900 | |||||||
S-1
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the Quarters Ended June 30, | |||||||||||
| (Dollars in thousands, except earnings per share) | 2021 | 2020 | |||||||||
| INTEREST AND DIVIDEND INCOME: | |||||||||||
| Loans, including fees | $ | 147,965 | $ | 137,194 | |||||||
| Securities borrowed and customer receivables | 6,270 | 3,560 | |||||||||
| Investments | 2,686 | 3,389 | |||||||||
| Total interest and dividend income | 156,921 | 144,143 | |||||||||
| INTEREST EXPENSE: | |||||||||||
| Deposits | 10,846 | 23,942 | |||||||||
| Advances from the Federal Home Loan Bank | 982 | 1,777 | |||||||||
| Securities loaned | 664 | 115 | |||||||||
| Other borrowings | 2,775 | 1,037 | |||||||||
| Total interest expense | 15,267 | 26,871 | |||||||||
| Net interest income | 141,654 | 117,272 | |||||||||
| Provision for credit losses | 1,250 | 6,500 | |||||||||
| Net interest income, after provision for credit losses | 140,404 | 110,772 | |||||||||
| NON-INTEREST INCOME: | |||||||||||
| Prepayment penalty fee income | 2,877 | 1,169 | |||||||||
| Gain on sale - other | (213) | 517 | |||||||||
| Mortgage banking income | 2,895 | 12,673 | |||||||||
| Broker-dealer fee income | 6,386 | 5,670 | |||||||||
| Banking and service fees | 4,856 | 8,673 | |||||||||
| Total non-interest income | 16,801 | 28,702 | |||||||||
| NON-INTEREST EXPENSE: | |||||||||||
| Salaries and related costs | 37,209 | 37,409 | |||||||||
| Data processing | 12,947 | 8,887 | |||||||||
| Depreciation and amortization | 6,211 | 6,982 | |||||||||
| Professional services | 4,901 | 3,163 | |||||||||
| Advertising and promotional | 3,612 | 2,803 | |||||||||
| Occupancy and equipment | 4,163 | 3,180 | |||||||||
| Broker-dealer clearing charges | 3,166 | 2,162 | |||||||||
| FDIC and regulatory fees | 2,203 | 2,395 | |||||||||
| General and administrative expense | 7,448 | 4,563 | |||||||||
| Total non-interest expense | 81,860 | 71,544 | |||||||||
| INCOME BEFORE INCOME TAXES | 75,345 | 67,930 | |||||||||
| INCOME TAXES | 21,090 | 22,630 | |||||||||
| NET INCOME | $ | 54,255 | $ | 45,300 | |||||||
| NET INCOME ATTRIBUTABLE TO COMMON STOCK | $ | 54,255 | $ | 45,223 | |||||||
| COMPREHENSIVE INCOME | $ | 54,469 | $ | 47,089 | |||||||
| Basic earnings per share | $ | 0.92 | $ | 0.76 | |||||||
| Diluted earnings per share | $ | 0.90 | $ | 0.75 | |||||||
S-2
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Year Ended June 30, | |||||||||||||||||
| (Dollars in thousands, except earnings per share) | 2021 | 2020 | 2019 | ||||||||||||||
| INTEREST AND DIVIDEND INCOME: | |||||||||||||||||
| Loans, including fees | $ | 584,410 | $ | 582,748 | $ | 525,317 | |||||||||||
| Securities borrowed and customer receivables | 20,466 | 16,585 | 8,746 | ||||||||||||||
| Investments | 12,987 | 23,506 | 30,824 | ||||||||||||||
| Total interest and dividend income | 617,863 | 622,839 | 564,887 | ||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||
| Deposits | 60,529 | 126,916 | 117,080 | ||||||||||||||
| Advances from the Federal Home Loan Bank | 4,672 | 11,988 | 32,834 | ||||||||||||||
| Securities loaned | 1,496 | 679 | 748 | ||||||||||||||
| Other borrowings | 12,424 | 5,645 | 5,620 | ||||||||||||||
| Total interest expense | 79,121 | 145,228 | 156,282 | ||||||||||||||
| Net interest income | 538,742 | 477,611 | 408,605 | ||||||||||||||
| Provision for credit losses | 23,750 | 42,200 | 27,350 | ||||||||||||||
| Net interest income, after provision for credit losses | 514,992 | 435,411 | 381,255 | ||||||||||||||
| NON-INTEREST INCOME: | |||||||||||||||||
| Realized gain (loss) on sale of securities | — | — | 709 | ||||||||||||||
| Other-than-temporary loss on securities: | |||||||||||||||||
| Other-than-temporary loss on securities: | — | — | (1,666) | ||||||||||||||
| Less: Portion of other temporary impairment losses recognized in OCI | — | — | 845 | ||||||||||||||
| Change to net impairment losses recognized in earnings on securities | — | — | (821) | ||||||||||||||
| Total unrealized loss on securities | — | — | (821) | ||||||||||||||
| Prepayment penalty fee income | 7,166 | 5,993 | 5,851 | ||||||||||||||
| Gain on sale - other | 491 | 6,871 | 6,160 | ||||||||||||||
| Mortgage banking income | 42,150 | 20,646 | 5,267 | ||||||||||||||
| Broker-dealer fee income | 26,317 | 23,210 | 11,737 | ||||||||||||||
| Banking and service fees | 29,137 | 46,267 | 53,854 | ||||||||||||||
| Total non-interest income | 105,261 | 102,987 | 82,757 | ||||||||||||||
| NON-INTEREST EXPENSE: | |||||||||||||||||
| Salaries and related costs | 152,576 | 144,341 | 127,433 | ||||||||||||||
| Data processing | 40,719 | 30,671 | 24,150 | ||||||||||||||
| Depreciation and amortization | 24,124 | 24,443 | 16,471 | ||||||||||||||
| Professional services | 22,241 | 11,095 | 11,916 | ||||||||||||||
| Advertising and promotional | 14,212 | 14,523 | 14,710 | ||||||||||||||
| Occupancy and equipment | 13,402 | 12,059 | 8,571 | ||||||||||||||
| Broker-dealer clearing charges | 11,152 | 8,210 | 2,822 | ||||||||||||||
| FDIC and regulatory fees | 10,603 | 5,538 | 9,005 | ||||||||||||||
| General and administrative expense | 25,481 | 24,886 | 36,128 | ||||||||||||||
| Total non-interest expense | 314,510 | 275,766 | 251,206 | ||||||||||||||
| INCOME BEFORE INCOME TAXES | 305,743 | 262,632 | 212,806 | ||||||||||||||
| INCOME TAXES | 90,036 | 79,194 | 57,675 | ||||||||||||||
| NET INCOME | $ | 215,707 | $ | 183,438 | $ | 155,131 | |||||||||||
| NET INCOME ATTRIBUTABLE TO COMMON STOCK | $ | 215,518 | $ | 183,129 | $ | 154,822 | |||||||||||
| COMPREHENSIVE INCOME | $ | 219,151 | $ | 182,485 | $ | 155,760 | |||||||||||
| Basic earnings per share | $ | 3.64 | $ | 3.01 | $ | 2.50 | |||||||||||
| Diluted earnings per share | $ | 3.56 | $ | 2.98 | $ | 2.48 | |||||||||||
S-3
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Year Ended June 30, | |||||||||||||||||
| (Dollars in thousands) | 2021 | 2020 | 2019 | ||||||||||||||
| NET INCOME | $ | 215,707 | $ | 183,438 | $ | 155,131 | |||||||||||
| Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $1,495, $(381), and $562 for the years ended June 30, 2021, 2020 and 2019, respectively. | 3,444 | (953) | 1,741 | ||||||||||||||
| Other-than-temporary impairment on securities sold, reclassified in other comprehensive income, net of tax expense (benefit) of $0, $0, and $(251) for the years ended June 30, 2021, 2020 and 2019, respectively. | — | — | (594) | ||||||||||||||
| Reclassification of net (gain) loss from available-for-sale securities included in income, net of tax expense (benefit) of $0, $0, and $191 for the years ended June 30, 2021, 2020 and 2019, respectively. | — | — | (518) | ||||||||||||||
| Other comprehensive income (loss) | $ | 3,444 | $ | (953) | $ | 629 | |||||||||||
| Comprehensive income | $ | 219,151 | $ | 182,485 | $ | 155,760 | |||||||||||
S-4
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Income Tax | Treasury Stock | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Shares | Amount | Issued | Treasury | Outstanding | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2018 | 515 | $ | 5,063 | 65,796,060 | (3,107,996) | 62,688,064 | $ | 658 | $ | 366,515 | $ | 671,348 | $ | (613) | $ | (82,458) | $ | 960,513 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 155,131 | — | — | 155,131 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | — | 629 | — | 629 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends on preferred stock | — | — | — | — | — | — | — | (309) | — | — | (309) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | (2,009,352) | (2,009,352) | — | — | — | — | (56,437) | (56,437) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense and restricted stock unit vesting | — | — | 767,862 | (317,757) | 450,105 | 8 | 23,430 | — | — | (9,915) | 13,523 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2019 | 515 | $ | 5,063 | 66,563,922 | (5,435,105) | 61,128,817 | $ | 666 | $ | 389,945 | $ | 826,170 | $ | 16 | $ | (148,810) | $ | 1,073,050 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 183,438 | — | — | 183,438 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | — | (953) | — | (953) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends on preferred stock | — | — | — | — | — | — | — | (309) | — | — | (309) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | (1,970,464) | (1,970,464) | — | — | — | — | (38,858) | (38,858) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense and restricted stock unit vesting | — | — | 759,131 | (304,849) | 454,282 | 7 | 21,928 | — | — | (7,457) | 14,478 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2020 | 515 | $ | 5,063 | 67,323,053 | (7,710,418) | 59,612,635 | $ | 673 | $ | 411,873 | $ | 1,009,299 | $ | (937) | $ | (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 expense and restricted stock unit vesting | — | — | 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 | $ | 1,187,728 | $ | 2,507 | $ | (222,530) | $ | 1,400,936 | |||||||||||||||||||||||||||||||||||||||||||||||
S-5
AXOS FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||||||||
| Year Ended June 30, | |||||||||||||||||
| (Dollars in thousands) | 2021 | 2020 | 2019 | ||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||
| Net income | $ | 215,707 | $ | 183,438 | $ | 155,131 | |||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||
| Accretion and amortization on securities, net | (365) | 291 | (264) | ||||||||||||||
| Net accretion of discounts on loans | (7,050) | (35,493) | (30,176) | ||||||||||||||
| Amortization of borrowing costs | 1,569 | 208 | 208 | ||||||||||||||
| Amortization of operating lease right of use asset | 10,598 | 10,543 | — | ||||||||||||||
| Stock-based compensation expense | 20,685 | 21,935 | 23,439 | ||||||||||||||
| Trading activity, (net) | (1,878) | 1,217 | — | ||||||||||||||
| Net (gain) loss on sale of investment securities | — | — | (709) | ||||||||||||||
| Impairment charge on securities | — | — | 821 | ||||||||||||||
| Provision for credit losses | 23,750 | 42,200 | 27,350 | ||||||||||||||
| Broker-dealer reserve for bad debt | — | — | 15,298 | ||||||||||||||
| Deferred income taxes | (8,828) | (6,551) | (8,686) | ||||||||||||||
| Origination of loans held for sale | (1,608,700) | (1,601,579) | (1,471,906) | ||||||||||||||
| Unrealized (gain) loss on loans held for sale | 1,469 | (1,360) | (252) | ||||||||||||||
| Gain on sales of loans held for sale | (42,641) | (27,517) | (11,427) | ||||||||||||||
| Proceeds from sale of loans held for sale | 1,671,515 | 1,614,379 | 1,481,911 | ||||||||||||||
| Amortization and change in fair value of mortgage servicing rights | 6,319 | 5,806 | 3,362 | ||||||||||||||
| (Gain) loss on sale of other real estate and foreclosed assets | (201) | (449) | (283) | ||||||||||||||
| Depreciation and amortization | 24,124 | 24,443 | 16,471 | ||||||||||||||
| Net changes in assets and liabilities which provide (use) cash: | |||||||||||||||||
| Securities borrowed | (396,720) | (77,662) | 13,192 | ||||||||||||||
| Customer, broker-dealer and clearing receivables | (149,549) | (17,074) | 13,684 | ||||||||||||||
| Other assets | (7,259) | (36,979) | (27,564) | ||||||||||||||
| Securities loaned | 473,043 | 57,589 | (4,685) | ||||||||||||||
| Customer, broker-dealer and clearing payables | 187,811 | 109,010 | (1,506) | ||||||||||||||
| Accounts payable and other liabilities | (817) | 17,723 | 11,012 | ||||||||||||||
| Net cash provided by operating activities | $ | 412,582 | $ | 284,118 | $ | 204,421 | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||
| Purchases of investment securities | (122,338) | (304,930) | (146,886) | ||||||||||||||
| Proceeds from sales of securities | 3,600 | — | 15,863 | ||||||||||||||
| Proceeds from repayment of securities | 71,067 | 325,704 | 93,779 | ||||||||||||||
| Purchase of stock of regulatory agencies | (305) | (55,870) | (204,206) | ||||||||||||||
| Proceeds from redemption of stock of regulatory agencies | 920 | 55,536 | 203,611 | ||||||||||||||
| Origination of loans held for investment | (5,761,303) | (6,573,568) | (6,756,832) | ||||||||||||||
| Proceeds from sale of loans and leases held for investment | 80,049 | 37,300 | 119,881 | ||||||||||||||
| Mortgage warehouse loans activity, net | (139,806) | (172,319) | (126,491) | ||||||||||||||
| Proceeds from sales of other real estate owned and repossessed assets | 1,586 | 2,241 | 2,202 | ||||||||||||||
| Cash paid for deposit acquisition | — | — | (14,747) | ||||||||||||||
| Acquisition of business activity, net of cash paid | — | — | 67,343 | ||||||||||||||
| Purchases of loans, net of discounts and premiums | (3,619) | — | (11,525) | ||||||||||||||
| Principal repayments on loans | 5,013,817 | 5,349,800 | 5,846,349 | ||||||||||||||
| Purchases of furniture, equipment, software and intangibles | (10,437) | (12,333) | (20,082) | ||||||||||||||
| Net cash used in investing activities | $ | (866,769) | $ | (1,348,439) | $ | (931,741) | |||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||
| Net increase (decrease) in deposits | (520,897) | 2,353,521 | 997,823 | ||||||||||||||
| Proceeds from the Federal Home Loan Bank term advances | — | 65,000 | — | ||||||||||||||
| Repayments of the Federal Home Loan Bank term advances | (70,000) | (55,000) | (147,500) | ||||||||||||||
| Net (repayment) proceeds of Federal Home Loan Bank other advances | 181,000 | (226,000) | 149,000 | ||||||||||||||
| Redemption of subordinated notes | (51,000) | — | — | ||||||||||||||
| Repayment of Paycheck Protection Program Liquidity Facility advances | (151,952) | — | — | ||||||||||||||
| Proceeds from Paycheck Protection Program Liquidity Facility advances | — | 151,952 | — | ||||||||||||||
| Net (repayment) proceeds of other borrowings | 14,700 | (85,300) | 21,700 | ||||||||||||||
| Tax payments related to settlement of restricted stock units | (10,648) | (7,457) | (9,916) | ||||||||||||||
| Repurchase of treasury stock | (16,757) | (38,858) | (56,437) | ||||||||||||||
| Redemption of preferred stock, Series A | (5,150) | — | — | ||||||||||||||
| Cash dividends paid on preferred stock | (103) | (386) | (232) | ||||||||||||||
| Payment of debt issuance costs | (2,748) | — | — | ||||||||||||||
| Proceeds from issuance of subordinated notes | 175,000 | — | 7,400 | ||||||||||||||
| Net cash provided by financing activities | $ | (458,555) | $ | 2,157,472 | $ | 961,838 | |||||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (912,742) | 1,093,151 | 234,518 | ||||||||||||||
| CASH AND CASH EQUIVALENTS—Beginning of year | 1,950,519 | 857,368 | 622,850 | ||||||||||||||
| CASH AND CASH EQUIVALENTS—End of year | $ | 1,037,777 | $ | 1,950,519 | $ | 857,368 | |||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||||||||
| Interest paid on interest-bearing liabilities | $ | 77,995 | $ | 145,452 | $ | 152,756 | |||||||||||
| Income taxes paid | 92,506 | 80,430 | 64,117 | ||||||||||||||
| Transfers to other real estate and repossessed vehicles | 1,903 | 1,315 | 850 | ||||||||||||||
| Transfers from loans and leases held for investment to loans held for sale | 71,136 | 141,849 | 106,911 | ||||||||||||||
| Transfers from loans held for sale to loans and leases held for investment | 29,616 | — | 1,714 | ||||||||||||||
| Securities transferred from available-for-sale portfolio to other assets | 70,751 | 17,482 | — | ||||||||||||||
| Loans held for investment sold, cash not received | — | 61,029 | — | ||||||||||||||
| Operating lease liabilities for obtaining right of use assets | — | 82,950 | — | ||||||||||||||
| Preferred stock dividends declared but not paid | — | — | 77 | ||||||||||||||
| Impact of adoption of ASU No. 2016-13 on retained earnings | 37,088 | — | — | ||||||||||||||
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, 2021 | June 30, 2020 | |||||||||
| Single Family - Mortgage & Warehouse | $ | 4,359,472 | $ | 4,722,304 | |||||||
| Multifamily and Commercial Mortgage | 2,470,454 | 2,263,054 | |||||||||
| Commercial Real Estate | 3,180,453 | 2,297,920 | |||||||||
| Commercial & Industrial - Non-RE | 1,123,869 | 885,320 | |||||||||
| Auto & Consumer | 362,180 | 341,365 | |||||||||
| Other | 58,316 | 193,479 | |||||||||
| Total gross loans | 11,554,744 | 10,703,442 | |||||||||
| Allowance for credit losses - loans | (132,958) | (75,807) | |||||||||
| Unaccreted premiums (discounts) and loan and lease fees | (6,972) | 3,714 | |||||||||
| Total net loans | $ | 11,414,814 | $ | 10,631,349 | |||||||
S-7
SECURITIES
The amortized cost, carrying amount and fair value for the trading and available for sale securities at June 30, 2021 and June 30, 2020 were:
| June 30, 2021 | |||||||||||||||||||||||||||||
| 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 | $ | — | $ | 23,639 | $ | 420 | $ | (146) | $ | 23,913 | |||||||||||||||||||
Non-agency2 | — | 65,174 | 2,862 | (421) | 67,615 | ||||||||||||||||||||||||
| Total mortgage-backed securities | — | 88,813 | 3,282 | (567) | 91,528 | ||||||||||||||||||||||||
| Non-MBS: | |||||||||||||||||||||||||||||
U.S. agencies1 | — | — | — | — | — | ||||||||||||||||||||||||
| Municipal | 1,983 | 3,466 | 99 | — | 3,565 | ||||||||||||||||||||||||
| Asset-backed securities and structured notes | — | 90,549 | 1,693 | — | 92,242 | ||||||||||||||||||||||||
| Total other debt securities | 1,983 | 94,015 | 1,792 | — | 95,807 | ||||||||||||||||||||||||
| Total debt securities | $ | 1,983 | $ | 182,828 | $ | 5,074 | $ | (567) | $ | 187,335 | |||||||||||||||||||
| June 30, 2020 | |||||||||||||||||||||||||||||
| 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 | $ | — | $ | 16,192 | $ | 634 | $ | — | $ | 16,826 | |||||||||||||||||||
Non-agency2 | — | 18,180 | 1,024 | (872) | 18,332 | ||||||||||||||||||||||||
| Total mortgage-backed securities | — | 34,372 | 1,658 | (872) | 35,158 | ||||||||||||||||||||||||
| Non-MBS: | |||||||||||||||||||||||||||||
U.S. agencies1 | — | 1,799 | — | — | 1,799 | ||||||||||||||||||||||||
| Municipal | 105 | 10,550 | 44 | (194) | 10,400 | ||||||||||||||||||||||||
| Asset-backed securities and structured notes | — | 141,338 | 1 | (1,069) | 140,270 | ||||||||||||||||||||||||
| Total other debt securities | 105 | 153,687 | 45 | (1,263) | 152,469 | ||||||||||||||||||||||||
| Total debt securities | $ | 105 | $ | 188,059 | $ | 1,703 | $ | (2,135) | $ | 187,627 | |||||||||||||||||||
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 the deposit portfolio as of the dates indicated:
| (Unaudited) | June 30, 2021 | June 30, 2020 | |||||||||||||||||||||
| (Dollars in thousands) | Amount | Rate1 | Amount | Rate1 | |||||||||||||||||||
| Non-interest bearing | $ | 2,474,424 | — | % | $ | 1,936,661 | — | % | |||||||||||||||
| Interest bearing: | |||||||||||||||||||||||
| Demand | 3,369,845 | 0.15 | % | 3,456,127 | 0.37 | % | |||||||||||||||||
| Savings | 3,458,687 | 0.21 | % | 3,697,188 | 0.78 | % | |||||||||||||||||
| Total interest-bearing demand and savings | 6,828,532 | 0.18 | % | 7,153,315 | 0.58 | % | |||||||||||||||||
| Time deposits: | |||||||||||||||||||||||
| $250 and under | 1,070,139 | 1.30 | % | 1,584,034 | 2.12 | % | |||||||||||||||||
| Greater than $250 | 442,702 | 1.03 | % | 662,684 | 1.39 | % | |||||||||||||||||
| Total time deposits | 1,512,841 | 1.22 | % | 2,246,718 | 1.91 | % | |||||||||||||||||
Total interest bearing2 | 8,341,373 | 0.37 | % | 9,400,033 | 0.90 | % | |||||||||||||||||
| Total deposits | $ | 10,815,797 | 0.29 | % | $ | 11,336,694 | 0.75 | % | |||||||||||||||
1. Based on weighted-average stated interest rates at end of period.
2. The total interest-bearing includes brokered deposits of $621.4 million and $1,318.0 million as of June 30, 2021 and June 30, 2020, respectively, of which $380.0 million and $603.6 million, respectively, are time deposits classified as $250 and under.
The number of deposit accounts at the end of each of the last five fiscal years is set forth below:
| At June 30, | |||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
| Non-interest-bearing, prepaid and other | 36,726 | 3,361,965 | 3,743,334 | 3,535,904 | 3,113,128 | ||||||||||||||||||||||||
| Checking and savings accounts | 336,068 | 310,463 | 311,067 | 270,082 | 274,962 | ||||||||||||||||||||||||
| Time deposits | 12,815 | 18,450 | 23,447 | 2,309 | 2,748 | ||||||||||||||||||||||||
| Total number of deposit accounts | 385,609 | 3,690,878 | 4,077,848 | 3,808,295 | 3,390,838 | ||||||||||||||||||||||||
Our non-interest bearing, prepaid and other accounts contained two omnibus accounts that when condensed for regulatory reporting purposes result in 27,108 accounts, 16,706 accounts, 7,370 accounts, and 5,636 accounts for the years ended June 30, 2020, 2019, 2018, and 2017, respectively. The two omnibus accounts represented $351.9 million, $446.5 million, $402.9 million, and $366.8 million at June 30, 2020, 2019, 2018, and 2017, respectively. The decrease in the number of accounts is the result of the termination of our third-party prepaid card relationships, such as H&R Block, due to the reduction of our interchange fees effective July 1, 2020 as a result of the Durbin Amendment. See the Regulation of Banking Business in our Form 10-K for the year ended June 30, 2020 for additional information.
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, | |||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| (Unaudited) (Dollars in thousands) | Average Balance2 | Interest Income / Expense | Average Yields Earned / Rates Paid1 | Average Balance2 | Interest Income / Expense | Average Yields Earned / Rates Paid1 | |||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
Loans3,4 | $ | 11,485,248 | $ | 147,965 | 5.15 | % | $ | 10,570,886 | $ | 137,194 | 5.19 | % | |||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | 1,930,140 | 703 | 0.15 | % | 930,622 | 365 | 0.16 | % | |||||||||||||||||||||||||||
Securities4 | 158,221 | 1,376 | 3.48 | % | 231,396 | 2,858 | 4.94 | % | |||||||||||||||||||||||||||
| Securities borrowed and margin lending | 864,702 | 6,270 | 2.90 | % | 297,163 | 3,560 | 4.79 | % | |||||||||||||||||||||||||||
| Stock of the regulatory agencies | 20,520 | 607 | 11.83 | % | 28,719 | 166 | 2.31 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 14,458,831 | 156,921 | 4.34 | % | 12,058,786 | 144,143 | 4.78 | % | |||||||||||||||||||||||||||
| Non-interest-earning assets | 438,287 | 411,004 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 14,897,118 | $ | 12,469,790 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand and savings | $ | 7,441,814 | $ | 5,118 | 0.28 | % | $ | 5,092,648 | $ | 10,222 | 0.80 | % | |||||||||||||||||||||||
| Time deposits | 1,632,525 | 5,728 | 1.40 | % | 2,446,915 | 13,720 | 2.24 | % | |||||||||||||||||||||||||||
| Securities loaned | 412,385 | 664 | 0.64 | % | 153,573 | 115 | 0.30 | % | |||||||||||||||||||||||||||
| Advances from the FHLB | 171,808 | 982 | 2.29 | % | 807,680 | 1,777 | 0.88 | % | |||||||||||||||||||||||||||
| Borrowings, subordinated notes and debentures | 274,664 | 2,775 | 4.04 | % | 83,228 | 1,037 | 4.98 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 9,933,196 | 15,267 | 0.61 | % | 8,584,044 | 26,871 | 1.25 | % | |||||||||||||||||||||||||||
| Non-interest-bearing demand deposits | 2,586,766 | 2,139,803 | |||||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 981,989 | 510,889 | |||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,395,167 | 1,235,054 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 14,897,118 | $ | 12,469,790 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 141,654 | $ | 117,272 | |||||||||||||||||||||||||||||||
Interest rate spread5 | 3.73 | % | 3.53 | % | |||||||||||||||||||||||||||||||
Net interest margin6 | 3.92 | % | 3.89 | % | |||||||||||||||||||||||||||||||
1 Annualized.
2 Average balances are obtained from daily data.
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. Loans include average balances of $26.9 million and $27.7 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2021 and 2020 three-month periods respectively.
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-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, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 11,332,020 | $ | 584,410 | 5.16 | % | $ | 10,149,867 | $ | 582,748 | 5.74 | % | $ | 8,974,820 | $ | 525,317 | 5.85 | % | |||||||||||||||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | 1,600,811 | 2,185 | 0.14 | % | 833,612 | 10,906 | 1.31 | % | 631,228 | 13,495 | 2.14 | % | |||||||||||||||||||||||||||||||||||||||||
Securities3 | 192,420 | 9,560 | 4.97 | % | 217,598 | 11,061 | 5.08 | % | 210,189 | 13,943 | 6.63 | % | |||||||||||||||||||||||||||||||||||||||||
| Securities borrowed and margin lending | 613,735 | 20,466 | 3.33 | % | 362,063 | 16,585 | 4.58 | % | 173,829 | 8,746 | 5.03 | % | |||||||||||||||||||||||||||||||||||||||||
| Stock of the regulatory agencies | 20,588 | 1,242 | 6.03 | % | 28,776 | 1,539 | 5.35 | % | 41,078 | 3,386 | 8.24 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 13,759,574 | 617,863 | 4.49 | % | 11,591,916 | 622,839 | 5.37 | % | 10,031,144 | 564,887 | 5.63 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets | 394,085 | 395,789 | 234,993 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 14,153,659 | $ | 11,987,705 | $ | 10,266,137 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing demand and savings | $ | 7,204,698 | $ | 29,031 | 0.40 | % | $ | 4,844,700 | $ | 66,883 | 1.38 | % | $ | 3,906,833 | $ | 61,391 | 1.57 | % | |||||||||||||||||||||||||||||||||||
| Time deposits | 1,825,795 | 31,498 | 1.73 | % | 2,482,151 | 60,033 | 2.42 | % | 2,322,039 | 55,689 | 2.40 | % | |||||||||||||||||||||||||||||||||||||||||
| Securities loaned | 412,385 | 1,496 | 0.36 | % | 247,420 | 679 | 0.27 | % | 221,469 | 748 | 0.34 | % | |||||||||||||||||||||||||||||||||||||||||
| Advances from the FHLB | 211,077 | 4,672 | 2.21 | % | 747,358 | 11,988 | 1.60 | % | 1,397,460 | 32,834 | 2.35 | % | |||||||||||||||||||||||||||||||||||||||||
| Borrowings, subordinated notes and debentures | 340,699 | 12,424 | 3.65 | % | 103,652 | 5,645 | 5.45 | % | 104,287 | 5,620 | 5.39 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 9,994,654 | 79,121 | 0.79 | % | 8,425,281 | 145,228 | 1.72 | % | 7,952,088 | 156,282 | 1.97 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing demand deposits | 2,182,009 | 1,990,005 | 1,227,285 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 671,581 | 397,506 | 76,651 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,305,415 | 1,174,913 | 1,010,113 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 14,153,659 | $ | 11,987,705 | $ | 10,266,137 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 538,742 | $ | 477,611 | $ | 408,605 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate spread4 | 3.70 | % | 3.65 | % | 3.66 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin5 | 3.92 | % | 4.12 | % | 4.07 | % | |||||||||||||||||||||||||||||||||||||||||||||||
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. Loans include average balances of $27.2 million, $28.0 million, and $28.7 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2021 2020, and 2019 fiscal years respectively.
4 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.
5 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 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, 2021 and 2020:
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, | |||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| (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 | $ | 11,444,379 | $ | 147,235 | 5.15 | % | $ | 10,516,828 | $ | 136,532 | 5.19 | % | |||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | 1,579,835 | 413 | 0.10 | % | 763,989 | 192 | 0.10 | % | |||||||||||||||||||||||||||
Securities4 | 182,874 | 1,505 | 3.29 | % | 269,288 | 3,137 | 4.66 | % | |||||||||||||||||||||||||||
| Stock of the regulatory agencies | 17,250 | 301 | 6.98 | % | 25,474 | 165 | 2.59 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 13,224,338 | 149,454 | 4.52 | % | 11,575,579 | 140,026 | 4.84 | % | |||||||||||||||||||||||||||
| Non-interest-earning assets | 217,543 | 185,795 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 13,441,881 | $ | 11,761,374 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand and savings | $ | 7,553,737 | $ | 5,213 | 0.28 | % | $ | 5,108,866 | $ | 10,254 | 0.80 | % | |||||||||||||||||||||||
| Time deposits | 1,632,525 | 5,728 | 1.40 | % | 2,446,915 | 13,720 | 2.24 | % | |||||||||||||||||||||||||||
| Advances from the FHLB | 171,808 | 982 | 2.29 | % | 807,680 | 1,777 | 0.88 | % | |||||||||||||||||||||||||||
| Borrowings, subordinated notes and debentures | 44,983 | 40 | 0.36 | % | 12,416 | 11 | 0.35 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 9,403,053 | 11,963 | 0.51 | % | 8,375,877 | 25,762 | 1.23 | % | |||||||||||||||||||||||||||
| Non-interest-bearing demand deposits | 2,629,016 | 2,148,671 | |||||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 104,885 | 98,020 | |||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,304,927 | 1,138,806 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 13,441,881 | $ | 11,761,374 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 137,491 | $ | 114,264 | |||||||||||||||||||||||||||||||
Interest rate spread5 | 4.01 | % | 3.61 | % | |||||||||||||||||||||||||||||||
Net interest margin6 | 4.16 | % | 3.95 | % | |||||||||||||||||||||||||||||||
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. Loans include average balances of $26.9 million and $27.7 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2021 and 2020 three-month periods respectively.
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 annualized net interest income as a percentage of average interest-earning assets.
S-12
SECURITIES BUSINESS
Selected information concerning Axos Clearing LLC follows as of and for the three months ended:
| (Dollars in thousands) | June 30, 2021 | June 30, 2020 | |||||||||
| Compensation as a % of net revenue | 32.4 | % | 39.2 | % | |||||||
| FDIC insured program balances at banks (end of period) | $ | 730,248 | $ | 450,251 | |||||||
| Customer margin balances (end of period) | $ | 327,148 | $ | 206,702 | |||||||
| Customer funds on deposit, including short credits (end of period) | $ | 322,153 | $ | 194,042 | |||||||
| Clearing: | |||||||||||
| Total tickets | 2,053,362 | 1,228,635 | |||||||||
| Correspondents (end of period) | 69 | 61 | |||||||||
| Securities lending: | |||||||||||
| Interest-earning assets – stock borrowed (end of period) | $ | 619,088 | $ | 222,368 | |||||||
| Interest-bearing liabilities – stock loaned (end of period) | $ | 728,988 | $ | 255,945 | |||||||
S-13
Axos Q4 2021 Earnings Supplement July 29, 2021 NYSE: AX
Safe Harbor 1 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). The words “believe,” “expect,” “anticipate,” “estimate,” “project,” or the negation thereof or similar expressions constitute forward-looking statements within the meaning of the Reform Act. These statements may include, but are not limited to, projections of revenues, income or loss, projected consummation of pending acquisitions, including the acquisition of E*TRADE Advisor Services, estimates of capital expenditures, plans for future operations, products or services, the effects of the COVID-19 pandemic, and financing needs or plans, as well as assumptions relating to these matters. Such statements involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance looking statements. For a discussion of these factors, we refer you to the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended June 30, 2020 and our last earnings press release. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or by any other person or entity that the objectives and plans of the Company will be achieved. For all forward-looking statements, the Company claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. or achievements expressed or implied by such forward-
2 Net Loan Growth by Category for Fourth Quarter Ended June 30, 2021 Loans & Leases Single Family Mortgage & Warehouse Multifamily & SB Commercial Mortgage Commercial Real Estate Auto & Consumer Jumbo Mortgage Multifamily Small Balance Commercial Lender Finance RE SF Warehouse Lending SBLOC & Other Auto CRE Specialty Unsecured / OD Equipment Leasing Q4 FY21 $ Millions Other PPP Refund Advance & Other Q3 FY21 $3,745 614 2,020 450 3,090 91 112 300 62 55 4 ($186) (354) 57 (11) 179 (41) (9) 34 4 (6) Inc (Dec) $3,931 968 1,963 461 2,911 132 121 266 58 125 10 Commercial & Industrial Non-RE Lender Finance Non RE 580 523 57 432 387 45 $11,555 $11,856 $(301) (70)
Change in Allowance for Credit Losses (ACL) & Unfunded Loan Commitments Liability (UCL) ($ in millions) 3
4 Allowance for Credit Losses (ACL) by Loan and Lease Category at June 30, 2021 Loans & Leases Single Family - Mortgage and Warehouse Multifamily & SB Commercial Mortgage Commercial Real Estate Auto & Consumer Loan Balance $ Millions Other ACL $ $4,359.5 2,470.4 3,180.4 362.2 58.3 ACL % Commercial & Industrial Non-RE 1,123.9 $11,554.7 13.2 57.9 6.5 0.3 28.5 $26.6 $133.0 1.15% 1.82% 0.53% 0.61% 0.51% 1.79% 2.54%
Credit Quality No Loans in Forbearance 5 3/31/2021 Loans O/S Loans in Forbearance or Deferral % NPAs % Single Family-Mortgage & Warehouse $4,899.2 $0.0 0.00% $85.0 1.74% Multifamily and Commercial Mortgage $2,424.2 $0.0 0.00% $30.8 1.27% Commercial Real Estate $3,042.9 $0.0 0.00% $16.4 0.54% Commercial & Industrial - Non-RE $1,030.9 $0.0 0.00% $3.0 0.29% Auto & Consumer $323.6 $0.0 0.00% $0.4 0.12% Other $135.7 $0.0 0.00% $0.0 0.00% Total $11,856.5 $0.0 0.00% $135.6 1.14% 6/30/2021 Loans O/S Loans in Forbearance or Deferral % NPAs % Single Family-Mortgage & Warehouse $4,359.5 $0.0 0.00% $105.7 2.42% Multifamily and Commercial Mortgage $2,470.4 $0.0 0.00% $20.4 0.83% Commercial Real Estate $3,180.4 $0.0 0.00% $15.8 0.50% Commercial & Industrial - Non-RE $1,123.9 $0.0 0.00% $2.9 0.26% Auto & Consumer $362.2 $0.0 0.00% $0.3 0.08% Other $58.3 $0.0 0.00% $0.0 0.00% Total $11,554.7 $0.0 0.00% $145.1 1.26% Change from 3/31/21 to 6/30/21 Loans O/S Loans in Forbearance or Deferral NPAs Single Family-Mortgage & Warehouse -$539.7 $0.0 $20.7 Multifamily and Commercial Mortgage $46.2 $0.0 -$10.4 Commercial Real Estate $137.5 $0.0 -$0.6 Commercial & Industrial - Non-RE $93.0 $0.0 -$0.1 Auto & Consumer $38.6 $0.0 -$0.1 Other -$77.4 $0.0 $0.0 Total -$301.8 $0.0 $9.5
6 Greg Garrabrants, President and CEO Andy Micheletti, EVP/CFO [email protected] www.axosfinancial.com Johnny Lai, VP Corporate Development and Investor Relations Phone: 858.649.2218 Mobile: 858.245.1442 [email protected] Contact Information