Document
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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, 2020

axosfina24.jpg

Axos Financial, Inc.
(Exact name of registrant as specified in its charter)
Delaware
001-37709
33-0867444
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer Identification
Number)
 9205 West Russell Road, STE 400, Las Vegas, NV                  89148
(Address of principal executive offices)                    (zip code)
Registrant’s telephone number, including area code: (858) 649-2218          
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $.01 par value
AX
New York Stock Exchange
6.25% Subordinated Notes Due 2026
AXO
New York Stock Exchange

Not Applicable

(Former name or former address, if changed since last report.)

 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐                                    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐                                    Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐





Item 2.02    Results of Operations and Financial Condition

On July 29, 2020, Axos Financial, Inc. (the “Registrant”) issued a press release announcing its fourth quarter results of operations for the period ended June 30, 2020. 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 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
 





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, 2020
By:
/s/ Andrew J. Micheletti
 
 
 
 
Andrew J. Micheletti
 
 
 
EVP and Chief Financial Officer




axosfina24.jpg
Axos Financial, Inc. Announces Record Net Income of $183.4 million for Fiscal 2020
Earnings Per Share for the Fourth Quarter of Fiscal 2020 up 13.6% Year-over-Year
SAN DIEGO, CA – (BUSINESS WIRE) – July 29, 2020 – 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, 2020. Net income for the quarter was $45.3 million, an increase of 11.5% over net income of $40.6 million for the quarter ended June 30, 2019. Earnings attributable to Axos’ common stockholders were $45.2 million or $0.75 per diluted share for the fourth quarter of fiscal 2020, an increase of 11.5% from $40.6 million or $0.66 per diluted share for the fourth quarter ended June 30, 2019.
Adjusted earnings and adjusted earnings per diluted common share (“adjusted EPS”), non-GAAP measures, which exclude non-cash amortization expenses, non-recurring costs related to mergers and acquisitions, and other non-recurring costs increased 11.6% to $47.1 million and 14.7% to $0.78, respectively, for the quarter ended June 30, 2020 compared to $42.2 million and $0.68, respectively, for the quarter ended June 30, 2019.

Fourth Quarter Fiscal 2020 Financial Summary:
 
Three Months Ended 
June 30,
 
 
(Dollars in thousands, except per share data)
2020
 
2019
 
% Change
Net interest income
$
117,272

 
$
100,437

 
16.8
%
Non-interest income
$
28,702

 
$
23,224

 
23.6
%
Net income
$
45,300

 
$
40,634

 
11.5
%
Adjusted Earnings (Non-GAAP)1
$
47,052

 
$
42,158

 
11.6
%
Net income attributable to common stockholders
$
45,223

 
$
40,557

 
11.5
%
Diluted EPS
$
0.75

 
$
0.66

 
13.6
%
Adjusted EPS (Non-GAAP)1
$
0.78

 
$
0.68

 
14.7
%
 
 
 
 
 
 
1. See “Use of Non-GAAP Financial Measures”
For the fiscal year ended June 30, 2020, net income was a record $183.4 million, an increase of 18.2% over net income of $155.1 million for the twelve months ended June 30, 2019. Earnings attributable to Axos’ common stockholders were $183.1 million or $2.98 per diluted share for the twelve months ended June 30, 2020, an increase of 18.3% from $154.8 million or $2.48 per diluted share for the twelve months ended June 30, 2019. Record earnings for the fiscal year ended June 30, 2020 were primarily the result of growth in the Bank’s loan and lease portfolio, growth in mortgage banking income and a full year’s activity in broker-dealer fee income. Operating expenses increased to support growth of the bank due to higher levels of loan originations and deposit activities.

“We delivered another strong quarter, with double digit percentage increases in net interest income and non-interest income and disciplined expense controls resulting in a 22.8% increase in our pretax income,” stated Greg Garrabrants, President and Chief Executive Officer of Axos. “We continue to grow our deposit balances while reducing our funding costs, as reflected in the $2.2 billion sequential increase in our checking and savings balances and 52 basis point decline in our interest-bearing liabilities costs. The reduction in funding costs helped drive our net interest margin higher to 3.89% compared to 3.81% in fourth quarter of 2019.”

“Excluding the H&R Block seasonal loan products, our annualized net charge-offs to total loans and leases were 5 basis points for the fourth fiscal quarter of fiscal 2020” said Andy Micheletti, Executive Vice President and Chief Financial Officer of Axos. We ended the quarter with approximately $75.8 million of loan loss reserves, representing 71 basis points of total loans and leases. We remain well-capitalized, with a Tier 1 leverage ratio of 9.25% at the bank and 8.97% at the holding company on June 30, 2020.”





Other Highlights:
•
Net interest margin was 3.89%, up 8 basis points from 3.81% for the three months ended June 30, 2019
•
Efficiency ratio for the Banking Business Segment was 41.02% compared to 43.21% for the three months ended June 30, 2019
•
Total assets reached $13.9 billion, up $2.6 billion or 23.5% compared to June 30, 2019
•
Loan and lease portfolio grew by $1,249.2 million or 13.3% compared to June 30, 2019
•
Loan and lease originations for investment for the three months ended June 30, 2020 were $1,317.8 million compared to $1,501.4 million for the quarter ended June 30, 2019, including approximately $167.2 million of Paycheck Protection Program (“PPP”) loans
•
Loan originations for sale were up 16.4% for the three months ended June 30, 2020, to $315.3 million compared to $270.9 million for the quarter ended June 30, 2019
•
Deposits grew by $2,353.5 million or 26.2% compared to June 30, 2019
•
Strong mortgage banking results contributed to non-interest income increasing 23.6% compared to the three months ended June 30, 2019
•
Return on average common stockholders’ equity was 14.71% for the three months ended June 30, 2020
•
Total non-performing assets were 0.68% of total assets and non-performing loans and leases equal to 0.82% of total loans at June 30, 2020
•
Book value increased to $20.56 per share, up 17.7% compared to June 30, 2019
Fourth Quarter Fiscal 2020 Income Statement Summary
During the quarter ended June 30, 2020, Axos earned $45.3 million or $0.75 per diluted share compared to $40.6 million, or $0.66 per diluted share for the quarter ended June 30, 2019. Net interest income increased $16.8 million or 16.8% for the quarter ended June 30, 2020 compared to June 30, 2019, primarily due to the lower cost of deposits and borrowing resulting from interest rate reductions and increase in non-interest-bearing liabilities.
The loan and lease loss provision was $6.5 million for the quarter ended June 30, 2020 compared to $2.8 million for the quarter ended June 30, 2019. The increase was primarily due to additional provisions for changes in economic and business conditions resulting from the COVID-19 pandemic, overall loan portfolio growth, and changes in the loan mix.
For the fourth quarter ended June 30, 2020, non-interest income was $28.7 million compared to $23.2 million for the three months ended June 30, 2019. The increase year over year was primarily the result of an increase in mortgage banking fee income of $10.4 million partially offset by a decrease in banking service fees of $2.4 million and a decrease in broker-dealer fee income of $1.0 million.
Non-interest expense or operating costs increased $6.0 million to $71.5 million for the quarter ended June 30, 2020 from $65.5 million for the three months ended June 30, 2019. The increase was mainly a result of an increase in compensation expense of $3.5 million related to staffing added since June 30, 2019 to support growth of the Bank’s operations. Additional contributors to the increase in operating expenses were an increase in depreciation and amortization of $1.9 million, primarily due to the amortization of intangibles, an increase in data processing of $1.5 million, due to software initiatives and enhancements to the Bank’s core processing system, and an increase of $0.4 million in broker-dealer clearing charges.
Our effective tax rate was 33.31% for the three months ended June 30, 2020 compared to 26.55% for the three months ended June 30, 2019. The increase in the tax rate for the three months ended June 30, 2020, is primarily due to a write off of a deferred tax asset for stock compensation that isn’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 2020 Highlights
•
Net income reached a record $183.4 million, an increase of 18.2% compared to the fiscal year ended June 30, 2019
•
Loan and lease originations for investment for the fiscal year ended June 30, 2020 were $6,811.2 million, down 1.0% compared to the fiscal year ended June 30, 2019
•
Loan originations for sale for the fiscal year ended June 30, 2020 were $1,601.6 million, up 8.8% compared to the fiscal year ended June 30, 2019
•
Net interest margin for the Banking Business increased to 4.19% for the fiscal year ended June 30, 2020 compared to 4.14% for the fiscal year ended June 30, 2019
•
Efficiency for the Banking Business was 39.81% for the fiscal year ended June 30, 2020 compared to 40.51% for the fiscal year ended June 30, 2019
•
Return on average assets remained strong at 1.53% for the fiscal year ended June 30, 2020

Balance Sheet Summary
Axos’ total assets increased $2,631.7 million, or 23.5%, to $13,851.9 million, as of June 30, 2020, up from $11,220.2 million at June 30, 2019. The loan and lease portfolio increased $1,249.2 million on a net basis, primarily from portfolio loan and lease originations and purchases of $6,811.2 million, less principal repayments and other adjustments of $5,562.0 million. Total cash increased by $1,093.2 million primarily due to increased deposits. Total liabilities increased by $2,473.9 million, or 24.4%, to $12,621.1 million at June 30, 2020, up from $10,147.2 million at June 30, 2019. The increase in total liabilities resulted primarily from growth in deposits of $2,353.5 million. Stockholders’ equity increased by $157.8 million, or 14.7%, to $1,230.8 million at June 30, 2020 from $1,073.1 million at June 30, 2019. The increase was primarily the result of $183.4 million in net income and $14.5 million of vesting and issuance of RSUs and stock-based compensation expense, partially offset by $38.9 million of stock repurchases, $1.0 million of unrealized loss in other comprehensive income, net of tax, and $0.3 million of dividends declared on preferred stock.
The Bank’s Tier 1 core capital to adjusted average assets ratio was 9.25% at June 30, 2020.
Conference Call
A conference call and webcast will be held on Wednesday, July 29, 2020 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, 2020, at Axos’ website and telephonically by dialing toll-free number 877-660-6853, passcode 13706636.
  
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 $13.9 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, 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


 
For the Three Months Ended June 30, 2019
(Dollars in thousands)
Banking Business
 
Securities Business
 
Corporate/Eliminations
 
Axos Consolidated
Net interest income
$
96,936

 
$
4,614

 
$
(1,113
)
 
$
100,437

Provision for loan losses
2,800

 
—

 
—

 
2,800

Non-interest income
16,454

 
7,001

 
(231
)
 
23,224

Non-interest expense
49,001

 
11,152

 
5,383

 
65,536

Income (Loss) before income taxes
$
61,589

 
$
463

 
$
(6,727
)
 
$
55,325


 
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


 
Twelve Months Ended June 30, 2019
(Dollars in thousands)
Banking Business
 
Securities Business
 
Corporate/Eliminations
 
Axos Consolidated
Net interest income
$
404,500

 
$
7,564

 
$
(3,459
)
 
$
408,605

Provision for loan losses
27,350

 
—

 
—

 
27,350

Non-interest income
70,917

 
12,071

 
(231
)
 
82,757

Non-interest expense
192,588

 
34,430

 
24,188

 
251,206

Income (Loss) before income taxes
$
255,479

 
$
(14,795
)
 
$
(27,878
)
 
$
212,806


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, are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious as to their




use of 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 net income without the after-tax impact of non-recurring acquisition-related costs, excess FDIC expense, and other costs (unusual or non-recurring charges), as adjusted earnings, a non-GAAP financial measure. Excess FDIC expense is defined as the higher insurance costs that we incurred associated with increased levels of short-term brokered deposits in anticipation of the acquisition of deposits from Nationwide Bank. In the fiscal year ended June 30, 2019 the other costs are due to a $15.3 million bad debt expense related to a correspondent customer of our clearing broker-dealer. 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. Excluding the non-recurring acquisition related costs, excessive FDIC expense, and other costs provides investors with an understanding of Axos’ core business.
Below is a reconciliation of net income 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)
2020
 
2019
 
2020
 
2019
Net income
$
45,300

 
$
40,634

 
$
183,438

 
$
155,131

Acquisition-related costs
2,627

 
2,075

 
10,108

 
6,714

Excess FDIC expense
—

 
—

 
—

 
1,111

Other costs
—

 
—

 
—

 
15,299

Income taxes
(875
)
 
(551
)
 
(3,048
)
 
(6,267
)
Adjusted earnings (Non-GAAP)
$
47,052

 
$
42,158

 
$
190,498

 
$
171,988

Adjusted EPS (Non-GAAP)
$
0.78

 
$
0.68

 
$
3.10

 
$
2.75


We define book value adjusted for goodwill and other intangible assets as tangible book value (“tangible book value”), a non-GAAP financial measure. 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)
2020
 
2019
Total stockholders’ equity
$
1,230,846

 
$
1,073,050

Less: preferred stock
5,063

 
5,063

Common stockholders’ equity
1,225,783

 
1,067,987

Less: mortgage servicing rights, carried at fair value
10,675

 
9,784

Less: goodwill and other intangible assets
125,389

 
134,893

Tangible common stockholders’ equity (Non-GAAP)
$
1,089,719

 
$
923,310

Common shares outstanding at end of period
59,612,635

 
61,128,817

Tangible book value per common share (Non-GAAP)
$
18.28

 
$
15.10






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, Axos’ ability to successfully integrate its recent acquisitions and realize the anticipated benefits of the transactions, 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, 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
[email protected]






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,
2020
 
June 30,
2019
 
June 30,
2018
Selected Balance Sheet Data:
 
 
 
 
 
Total assets
$
13,851,900

 
$
11,220,238

 
$
9,539,504

Loans and leases—net of allowance for loan and lease losses
10,631,349

 
9,382,124

 
8,432,289

Loans held for sale, at fair value
51,995

 
33,260

 
35,077

Loans held for sale, lower of cost or fair value
44,565

 
4,800

 
2,686

Allowance for loan and lease losses
75,807

 
57,085

 
49,151

Securities—trading
105

 
—

 
—

Securities—available-for-sale
187,627

 
227,513

 
180,305

Securities borrowed
222,368

 
144,706

 
—

Customer, broker-dealer and clearing receivables
220,266

 
203,192

 
—

Total deposits
11,336,694

 
8,983,173

 
7,985,350

Advances from the FHLB
242,500

 
458,500

 
457,000

Borrowings, subordinated notes and debentures
235,789

 
168,929

 
54,552

Securities loaned
255,945

 
198,356

 
—

Customer, broker-dealer and clearing payables
347,614

 
238,604

 
—

Total stockholders’ equity
1,230,846

 
1,073,050

 
960,513

 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
Equity to assets at end of period
8.89
%
 
9.56
%
 
10.07
%
Axos Financial, Inc.:
 
 
 
 
 
Tier 1 leverage (core) capital to adjusted average assets
8.97
%
 
8.75
%
 
9.45
%
Common equity tier 1 capital (to risk-weighted assets)
11.22
%
 
11.43
%
 
13.27
%
Tier 1 capital (to risk-weighted assets)
11.27
%
 
11.49
%
 
13.34
%
Total capital (to risk-weighted assets)
12.64
%
 
12.91
%
 
14.84
%
Axos Bank:
 
 
 
 
 
Tier 1 leverage (core) capital to adjusted average assets
9.25
%
 
9.21
%
 
8.88
%
Common equity tier 1 capital (to risk-weighted assets)
11.79
%
 
12.14
%
 
12.53
%
Tier 1 capital (to risk-weighted assets)
11.79
%
 
12.14
%
 
12.53
%
Total capital (to risk-weighted assets)
12.62
%
 
12.89
%
 
13.27
%
Axos Clearing, LLC:
 
 
 
 
 
Net capital
$
34,022

 
$
25,027

 
N/A

Excess capital
$
29,450

 
$
21,199

 
N/A

Net capital as a percentage of aggregate debit items
14.88
%
 
13.08
%
 
N/A

Net capital in excess of 5% aggregate debit items
$
22,593

 
$
15,458

 
N/A






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)
2020
 
2019
 
2020
 
2019
Selected Income Statement Data:
 
 
 
 
 
 
 
Interest and dividend income
$
144,143

 
$
141,643

 
$
622,839

 
$
564,887

Interest expense
26,871

 
41,206

 
145,228

 
156,282

Net interest income
117,272

 
100,437

 
477,611

 
408,605

Provision for loan losses
6,500

 
2,800

 
42,200

 
27,350

Net interest income after provision for loan losses
110,772

 
97,637

 
435,411

 
381,255

Non-interest income
28,702

 
23,224

 
102,987

 
82,757

Non-interest expense
71,544

 
65,536

 
275,766

 
251,206

Income before income tax expense
67,930

 
55,325

 
262,632

 
212,806

Income tax expense
22,630

 
14,691

 
79,194

 
57,675

Net income
$
45,300

 
$
40,634

 
$
183,438

 
$
155,131

Net income attributable to common stock
$
45,223

 
$
40,557

 
$
183,129

 
$
154,822

 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
Net income:
 
 
 
 
 
 
 
Basic
$
0.76

 
$
0.66

 
$
3.01

 
$
2.50

Diluted
$
0.75

 
$
0.66

 
$
2.98

 
$
2.48

Book value per common share
$
20.56

 
$
17.47

 
$
20.56

 
$
17.47

Tangible book value per common share (Non-GAAP)
$
18.28

 
$
15.10

 
$
18.28

 
$
15.10

Adjusted earnings per common share (Non-GAAP)
$
0.78

 
$
0.68

 
$
3.10

 
$
2.75

 
 
 
 
 
 
 
 
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
Basic
59,648,076

 
61,201,994

 
60,794,555

 
61,898,447

Diluted
60,158,545

 
61,634,848

 
61,437,635

 
62,382,065

Common shares outstanding at end of period
59,612,635

 
61,128,817

 
59,612,635

 
61,128,817

Common shares issued at end of period
67,323,053

 
66,563,922

 
67,323,053

 
66,563,922

 
 
 
 
 
 
 
 
Performance Ratios and Other Data:
 
 
 
 
 
 
 
Loan and lease originations for investment
$
1,317,826

 
$
1,501,357

 
$
6,811,164

 
$
6,934,259

Loan originations for sale
$
315,349

 
$
270,905

 
$
1,601,579

 
$
1,471,906

Loan and lease purchases
$
—

 
$
—

 
$
—

 
$
11,009

Return on average assets
1.45
%
 
1.49
%
 
1.53
%
 
1.51
%
Return on average common stockholders’ equity
14.71
%
 
15.49
%
 
15.65
%
 
15.40
%
Interest rate spread1
3.53
%
 
3.39
%
 
3.65
%
 
3.66
%
Net interest margin2
3.89
%
 
3.81
%
 
4.12
%
 
4.07
%
Net interest margin2 - Banking Business Segment only
3.95
%
 
3.87
%
 
4.19
%
 
4.14
%
Efficiency ratio3
49.01
%
 
53.00
%
 
47.50
%
 
51.12
%
Efficiency ratio3 - Banking Business Segment only
41.02
%
 
43.21
%
 
39.81
%
 
40.51
%
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
Net annualized charge-offs to average loans and leases
0.67
%
 
0.65
%
 
0.23
%
 
0.19
%
Net annualized charge-offs to average loans and leases, excluding seasonal tax loan products
0.05
%
 
0.05
%
 
0.08
%
 
0.06
%
Non-performing loans and leases to total loans and leases
0.82
%
 
0.51
%
 
0.82
%
 
0.51
%
Non-performing assets to total assets
0.68
%
 
0.50
%
 
0.68
%
 
0.50
%
Allowance for loan and lease losses to total loans and leases held for investment at end of period
0.71
%
 
0.60
%
 
0.71
%
 
0.60
%
Allowance for loan and lease losses to non-performing loans and leases
86.20
%
 
117.84
%
 
86.20
%
 
117.84
%
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)
2020
 
2019
ASSETS
 
 
 
Cash and due from banks
$
1,756,477

 
$
511,125

Cash segregated for regulatory purposes
194,042

 
346,143

Federal funds sold
—

 
100

Total cash, cash equivalents, cash segregated, and federal funds sold
1,950,519

 
857,368

Securities:
 
 
 
Trading
105

 
—

Available for sale
187,627

 
227,513

Stock of regulatory agencies
20,610

 
20,276

Loans held for sale, carried at fair value
51,995

 
33,260

Loans held for sale, lower of cost or fair value
44,565

 
4,800

Loans and leases—net of allowance of $75,807 as of June 2020 and $57,085 as of June 2019
10,631,349

 
9,382,124

Mortgage servicing rights, carried at fair value
10,675

 
9,784

Other real estate owned and repossessed vehicles
6,408

 
7,485

Securities borrowed
222,368

 
144,706

Customer, broker-dealer and clearing receivables
220,266

 
203,192

Goodwill and other intangible assets—net
125,389

 
134,893

Other assets
380,024

 
194,837

TOTAL ASSETS
$
13,851,900

 
$
11,220,238

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
1,936,661

 
$
1,441,930

Interest bearing
9,400,033

 
7,541,243

Total deposits
11,336,694

 
8,983,173

Advances from the Federal Home Loan Bank
242,500

 
458,500

Borrowings, subordinated notes and debentures
235,789

 
168,929

Securities loaned
255,945

 
198,356

Customer, broker-dealer and clearing payables
347,614

 
238,604

Accounts payable and accrued liabilities and other liabilities
202,512

 
99,626

Total liabilities
12,621,054

 
10,147,188

STOCKHOLDERS’ EQUITY:
 
 
 
Preferred stock—$0.01 par value; 1,000,000 shares authorized;
 
 
 
Series A—$10,000 stated value and liquidation preference per share; 515 shares issued and outstanding as of June 2020 and June 2019
5,063

 
5,063

Common stock—$0.01 par value; 150,000,000 shares authorized, 67,323,053 shares issued and 59,612,635 shares outstanding as of June 2020, 66,563,922 shares issued and 61,128,817 shares outstanding as of June 2019
673

 
666

Additional paid-in capital
411,873

 
389,945

Accumulated other comprehensive income (loss)—net of tax
(937
)
 
16

Retained earnings
1,009,299

 
826,170

Treasury stock, at cost; 7,710,418 shares as of June 2020 and 5,435,105 shares as of June 2019
(195,125
)
 
(148,810
)
Total stockholders’ equity
1,230,846

 
1,073,050

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
13,851,900

 
$
11,220,238


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)
2020
 
2019
INTEREST AND DIVIDEND INCOME:
 
 
 
Loans and leases, including fees
$
137,194

 
$
128,268

Securities borrowed and customer receivables
3,560

 
4,776

Investments
3,389

 
8,599

Total interest and dividend income
144,143

 
141,643

INTEREST EXPENSE:
 
 
 
Deposits
23,942

 
32,695

Advances from the Federal Home Loan Bank
1,777

 
5,986

Securities loaned
115

 
376

Other borrowings
1,037

 
2,149

Total interest expense
26,871

 
41,206

Net interest income
117,272

 
100,437

Provision for loan and lease losses
6,500

 
2,800

Net interest income, after provision for loan and lease losses
110,772

 
97,637

NON-INTEREST INCOME:
 
 
 
Realized gain (loss) on sale of securities
—

 
842

Prepayment penalty fee income
1,169

 
1,774

Gain on sale - other
517

 
549

Mortgage banking income
12,673

 
2,308

Broker-dealer fee income
5,670

 
6,701

Banking and service fees
8,673

 
11,050

Total non-interest income
28,702

 
23,224

NON-INTEREST EXPENSE:
 
 
 
Salaries and related costs
37,409

 
33,909

Data processing
8,887

 
7,358

Depreciation and amortization
6,982

 
5,123

Advertising and promotional
2,803

 
3,445

Occupancy and equipment
3,180

 
2,588

Professional services
3,163

 
3,427

Broker-dealer clearing charges
2,162

 
1,727

FDIC and regulatory fees
2,395

 
2,418

General and administrative expense
4,563

 
5,541

Total non-interest expense
71,544

 
65,536

INCOME BEFORE INCOME TAXES
67,930

 
55,325

INCOME TAXES
22,630

 
14,691

NET INCOME
$
45,300

 
$
40,634

NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
45,223

 
$
40,557

COMPREHENSIVE INCOME
$
47,089

 
$
41,168

Basic earnings per share
$
0.76

 
$
0.66

Diluted earnings per share
$
0.75

 
$
0.66




S-2


AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands, except earnings per share)
2020
 
2019
 
2018
INTEREST AND DIVIDEND INCOME:
 
 
 
 
 
Loans and leases, including fees
$
582,748

 
$
525,317

 
$
446,991

Securities borrowed and customer receivables
16,585

 
8,746

 
—

Investments
23,506

 
30,824

 
28,083

Total interest and dividend income
622,839

 
564,887

 
475,074

INTEREST EXPENSE:
 
 
 
 
 
Deposits
126,916

 
117,080

 
79,851

Advances from the Federal Home Loan Bank
11,988

 
32,834

 
22,848

Securities loaned
679

 
748

 
—

Other borrowings
5,645

 
5,620

 
3,881

Total interest expense
145,228

 
156,282

 
106,580

Net interest income
477,611

 
408,605

 
368,494

Provision for loan and lease losses
42,200

 
27,350

 
25,800

Net interest income, after provision for loan and lease losses
435,411

 
381,255

 
342,694

NON-INTEREST INCOME:
 
 
 
 
 
Realized gain (loss) on sale of securities
—

 
709

 
(18
)
Other-than-temporary loss on securities:
 
 
 
 
 
Other-than-temporary loss on securities:
—

 
(1,666
)
 
(6,271
)
Less: Portion of other temporary impairment losses recognized in OCI
—

 
845

 
6,115

Change to net impairment losses recognized in earnings on securities
—

 
(821
)
 
(156
)
Prepayment penalty fee income
5,993

 
5,851

 
3,862

Gain on sale - other
6,871

 
6,160

 
5,734

Mortgage banking income
20,646

 
5,267

 
13,755

Broker-dealer fee income
23,210

 
11,737

 
—

Banking and service fees
46,267

 
53,854

 
47,764

Total non-interest income
102,987

 
82,757

 
70,941

NON-INTEREST EXPENSE:
 
 
 
 
 
Salaries and related costs
144,341

 
127,433

 
100,975

Data processing
30,671

 
24,150

 
17,400

Depreciation and amortization
24,443

 
16,471

 
8,574

Advertising and promotional
14,523

 
14,710

 
15,500

Occupancy and equipment
12,059

 
8,571

 
6,063

Professional services
11,095

 
11,916

 
5,280

Broker-dealer clearing charges
8,210

 
2,822

 
—

FDIC and regulatory fees
5,538

 
9,005

 
4,860

General and administrative expense
24,886

 
36,128

 
15,284

Total non-interest expense
275,766

 
251,206

 
173,936

INCOME BEFORE INCOME TAXES
262,632

 
212,806

 
239,699

INCOME TAXES
79,194

 
57,675

 
87,288

NET INCOME
$
183,438

 
$
155,131

 
$
152,411

NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
183,129

 
$
154,822

 
$
152,102

COMPREHENSIVE INCOME
$
182,485

 
$
155,760

 
$
151,311

Basic earnings per share
$
3.01

 
$
2.50

 
$
2.41

Diluted earnings per share
$
2.98

 
$
2.48

 
$
2.37


S-3


AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands)
2020
 
2019
 
2018
NET INCOME
$
183,438

 
$
155,131

 
$
152,411

Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $(381), $562, and $(2,449) for the years ended June 30, 2020, 2019 and 2018, respectively.
(953
)
 
1,741

 
(5,493
)
Other-than-temporary impairment on securities sold, reclassified in other comprehensive income, net of tax expense (benefit) of $0, $(251), and $1,918 for the years ended June 30, 2020, 2019 and 2018, respectively.
—

 
(594
)
 
4,197

Reclassification of net (gain) loss from available-for-sale securities included in income, net of tax expense (benefit) of $0, $191, and $(104) for the years ended June 30, 2020, 2019, and 2018, respectively.
—

 
(518
)
 
196

Other comprehensive income (loss)
$
(953
)
 
$
629

 
$
(1,100
)
Comprehensive income
$
182,485

 
$
155,760

 
$
151,311



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, 2017
515

 
$
5,063

 
65,115,932

 
(1,579,688
)
 
63,536,244

 
$
651

 
$
346,117

 
$
519,246

 
$
487

 
$
(37,317
)
 
$
834,247

Net income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
152,411

 
—

 
—

 
152,411

Other comprehensive income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(1,100
)
 
—

 
(1,100
)
Cash dividends on preferred stock
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(309
)
 
—

 
—

 
(309
)
Purchase of treasury stock
—

 
—

 
—

 
(1,233,491
)
 
(1,233,491
)
 
—

 
—

 
—

 
—

 
(35,183
)
 
(35,183
)
Stock-based compensation expense and restricted stock unit vesting
—

 
—

 
680,128

 
(294,817
)
 
385,311

 
7

 
20,398

 
—

 
—

 
(9,958
)
 
10,447

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



S-5


AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands)
2020
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
Net income
$
183,438

 
$
155,131

 
$
152,411

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
Accretion of discounts on securities
291

 
(264
)
 
(624
)
Net accretion of discounts on loans and leases
(35,493
)
 
(30,176
)
 
(29,381
)
Amortization of borrowing costs
208

 
208

 
208

Amortization of operating lease right of use asset
(6,299
)
 
—

 
—

Stock-based compensation expense
21,935

 
23,439

 
20,399

Trading activity, (net)
1,217

 
—

 
—

Net (gain) loss on sale of investment securities
—

 
(709
)
 
18

Impairment charge on securities
—

 
821

 
156

Provision for loan and lease losses
42,200

 
27,350

 
25,800

Broker-dealer reserve for bad debt
—

 
15,298

 
—

Deferred income taxes
(6,735
)
 
(8,686
)
 
17,034

Origination of loans held for sale
(1,601,579
)
 
(1,471,906
)
 
(1,564,165
)
Unrealized (gain) loss on loans held for sale
(1,360
)
 
(252
)
 
(253
)
Gain on sales of loans held for sale
(27,517
)
 
(11,427
)
 
(19,489
)
Proceeds from sale of loans held for sale
1,614,379

 
1,481,911

 
1,576,353

Change in fair value of mortgage servicing rights
5,806

 
3,362

 
83

(Gain) loss on sale of other real estate and foreclosed assets
(449
)
 
(283
)
 
(258
)
Depreciation and amortization
24,443

 
16,471

 
8,574

Net changes in assets and liabilities which provide (use) cash:
 
 
 
 
 
Securities borrowed
(77,662
)
 
13,192

 
—

Customer, broker-dealer and clearing receivables
(17,074
)
 
13,684

 
—

Other assets
(45,852
)
 
(27,564
)
 
(47,070
)
Securities loaned
57,589

 
(4,685
)
 
—

Customer, broker-dealer and clearing payables
109,010

 
(1,506
)
 
—

Accounts payable and accrued liabilities
26,135

 
11,012

 
28,119

Net cash provided by operating activities
$
266,631

 
$
204,421

 
$
167,915

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
Purchases of investment securities
(304,930
)
 
(146,886
)
 
(100,503
)
Proceeds from sales of securities
—

 
15,863

 
52,714

Proceeds from repayment of securities
343,191

 
93,779

 
139,338

Purchase of stock of regulatory agencies
(55,870
)
 
(204,206
)
 
(33,966
)
Proceeds from redemption of stock of regulatory agencies
55,536

 
203,611

 
79,923

Origination of loans and leases held for investment
(6,586,761
)
 
(6,756,832
)
 
(5,895,902
)
Proceeds from sale of loans and leases held for investment
37,300

 
119,881

 
20,719

Mortgage warehouse loans activity, net
(172,319
)
 
(126,491
)
 
(26,899
)
Proceeds from sales of other real estate owned and repossessed assets
2,241

 
2,202

 
1,832

Cash paid for deposit acquisition
—

 
(14,747
)
 
—

Cash paid for acquisition
—

 
—

 
(70,002
)
Acquisition of business activity, net of cash paid
—

 
67,343

 
—

Purchases of loans and leases, net of discounts and premiums
—

 
(11,525
)
 
—

Principal repayments on loans and leases
5,362,993

 
5,846,349

 
4,818,558

Furniture, equipment and software expenditures
(12,333
)
 
(20,082
)
 
(11,817
)
Net cash used in investing activities
$
(1,330,952
)
 
$
(931,741
)
 
$
(1,026,005
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
Net increase in deposits
$
2,353,521

 
$
997,823

 
$
1,085,843

Net (repayment) proceeds of the Federal Home Loan Bank term advances
10,000

 
(147,500
)
 
(30,000
)
Net (repayment) proceeds of Federal Home Loan Bank other advances
(226,000
)
 
149,000

 
(153,000
)
Net (repayment) proceeds of other borrowings
(85,300
)
 
21,700

 
(20,000
)
Proceeds from Paycheck Protection Program Liquidity Facility advances
151,952

 
—

 
—

Tax payments related to settlement of restricted stock units
(7,457
)
 
(9,916
)
 
(9,952
)
Repurchase of treasury stock
(38,858
)
 
(56,437
)
 
(35,183
)
Cash dividends paid on preferred stock
(386
)
 
(232
)
 
(309
)
Net proceeds from issuance of subordinated notes
—

 
7,400

 
—

Net cash provided by financing activities
$
2,157,472

 
$
961,838

 
$
837,399

NET CHANGE IN CASH AND CASH EQUIVALENTS
1,093,151

 
234,518

 
(20,691
)
CASH AND CASH EQUIVALENTS—Beginning of year
857,368

 
622,850

 
643,541

CASH AND CASH EQUIVALENTS—End of year
$
1,950,519

 
$
857,368

 
$
622,850

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
 
 
Interest paid on deposits and borrowed funds
$
145,452

 
$
152,756

 
$
106,112

Income taxes paid
$
80,430

 
$
64,117

 
$
79,628

Transfers to other real estate and repossessed vehicles
$
1,315

 
$
850

 
$
10,113

Transfers from loans and leases held for investment to loans held for sale
$
141,849

 
$
106,911

 
$
31,207

Transfers from loans held for sale to loans and leases held for investment
$
—

 
$
1,714

 
$
3,969

Loans held for investment sold, cash not received
$
61,029

 
$
—

 
$
17,742

Operating lease liabilities for obtaining right of use assets
$
82,940

 
$
—

 
$
—

Preferred stock dividends declared but not paid
$
—

 
$
77

 
$
—





S-6


LOANS AND LEASES
The following table sets forth the composition of the loan and lease portfolio as of the dates indicated:
(Unaudited)
(Dollars in thousands)
June 30, 2020
 
June 30, 2019
Single family real estate secured:
 
 
 
Mortgage
$
4,244,563

 
$
4,281,080

Warehouse
474,318

 
301,999

Financing1
682,477

 
518,560

Multifamily real estate secured
2,303,216

 
1,948,513

Commercial real estate secured - mortgage
371,176

 
326,154

Auto and RV secured
291,452

 
290,894

Commercial & Industrial
2,094,322

 
1,662,629

Other
241,918

 
119,481

  Total gross loans and leases
10,703,442

 
9,449,310

Allowance for loan and lease losses
(75,807
)
 
(57,085
)
Unaccreted premiums (discounts) and loan and lease fees
3,714

 
(10,101
)
  Total net loans and leases
$
10,631,349

 
$
9,382,124

1. Single family real estate secured: Financing consists of commercial specialty and lender finance loans secured by single family real estate.



S-7


SECURITIES
The amortized cost, carrying amount and fair value for the major categories of trading and available for sale securities at June 30, 2020 and June 30, 2019 were:
 
June 30, 2020
 
Trading
 
Available for sale
(Unaudited)
(Dollars in thousands)
Fair
Value
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Mortgage-backed securities (RMBS):
 
 
 
 
 
 
 
 
 
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

Other debt securities:
 
 
 
 
 
 
 
 
 
U.S. agencies1
—

 
1,799

 
—

 
—

 
1,799

Municipal
105

 
10,550

 
44

 
(194
)
 
10,400

Non-agency
—

 
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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
June 30, 2019
 
Trading
 
Available for sale
(Unaudited)
(Dollars in thousands)
Fair
Value
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Mortgage-backed securities (RMBS):
 
 
 
 
 
 
 
 
 
U.S agencies1
$
—

 
$
9,486

 
$
179

 
$
(79
)
 
$
9,586

Non-agency2
—

 
13,489

 
226

 
(690
)
 
13,025

Total mortgage-backed securities
—

 
22,975

 
405

 
(769
)
 
22,611

Other debt securities:
 
 
 
 
 
 
 
 
 
U.S. agencies1
—

 
1,682

 
3

 
—

 
1,685

Municipal
—

 
21,974

 
16

 
(828
)
 
21,162

Non-agency
—

 
179,976

 
2,088

 
(9
)
 
182,055

Total other debt securities
—

 
203,632

 
2,107

 
(837
)
 
204,902

Total debt securities
$
—

 
$
226,607

 
$
2,512

 
$
(1,606
)
 
$
227,513

1 U.S. government-backed including and Ginnie Mae, or government sponsored enterprises including Fannie Mae and Freddie Mac.
2 Private sponsors of securities collateralized primarily 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, 2020
 
June 30, 2019
(Dollars in thousands)
Amount
 
Rate1
 
Amount
 
Rate1
Non-interest bearing
$
1,936,661

 
—
%
 
$
1,441,930

 
—
%
Interest bearing:
 
 
 
 
 
 
 
Demand
3,456,127

 
0.37
%
 
2,709,014

 
2.06
%
Savings
3,697,188

 
0.78
%
 
2,466,214

 
1.48
%
       Total interest-bearing demand and savings
7,153,315

 
0.58
%
 
5,175,228

 
1.78
%
Time deposits:
 
 
 
 
 
 
 
$250 and under
1,584,034

 
2.12
%
 
1,866,811

 
2.47
%
Greater than $250
662,684

 
1.39
%
 
499,204

 
2.27
%
Total time deposits
2,246,718

 
1.91
%
 
2,366,015

 
2.43
%
Total interest bearing2
9,400,033

 
0.90
%
 
7,541,243

 
1.99
%
Total deposits
$
11,336,694

 
0.75
%
 
$
8,983,173

 
1.67
%
1. Based on weighted-average stated interest rates at end of period.
2. The total interest-bearing includes brokered deposits of $1,318.0 million and $1,124.0 million as of June 30, 2020 and June 30, 2019, respectively, of which $603.6 million and $796.7 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,
 
2020
 
2019
 
2018
 
2017
 
2016
Non-interest-bearing, prepaid and other1
3,361,965

 
3,743,334

 
3,535,904

 
3,113,128

 
1,816,266

Checking and savings accounts
310,463

 
311,067

 
270,082

 
274,962

 
292,012

Time deposits
18,450

 
23,447

 
2,309

 
2,748

 
4,807

Total number of deposit accounts
3,690,878

 
4,077,848

 
3,808,295

 
3,390,838

 
2,113,085

1. Our non-interest bearing, prepaid and other accounts contain two omnibus accounts that when condensed for regulatory
reporting purposes result in 27,108 accounts as of June 30, 2020.



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,
 
2020
 
2019
(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:
 
 
 
 
 
 
 
 
 
 
 
Loans and leases3,4
$
10,570,886

 
$
137,194

 
5.19
%
 
$
9,234,461

 
$
128,268

 
5.56
%
Interest-earning deposits in other financial institutions
930,622

 
365

 
0.16
%
 
710,703

 
4,333

 
2.44
%
Securities4
231,396

 
2,858

 
4.94
%
 
226,523

 
3,778

 
6.67
%
Securities borrowed and margin lending
297,163

 
3,560

 
4.79
%
 
350,413

 
4,776

 
5.45
%
Stock of the regulatory agencies
28,719

 
166

 
2.31
%
 
31,054

 
488

 
6.29
%
Total interest-earning assets
12,058,786

 
144,143

 
4.78
%
 
10,553,154

 
141,643

 
5.37
%
Non-interest-earning assets
411,004

 
 
 
 
 
325,078

 
 
 
 
Total assets
$
12,469,790

 
 
 
 
 
$
10,878,232

 
 
 
 
Liabilities and Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings
$
5,092,648

 
$
10,222

 
0.80
%
 
$
4,119,350

 
$
16,921

 
1.64
%
Time deposits
2,446,915

 
13,720

 
2.24
%
 
2,625,852

 
15,774

 
2.40
%
Securities loaned
153,573

 
115

 
0.30
%
 
478,196

 
376

 
0.31
%
Advances from the FHLB
807,680

 
1,777

 
0.88
%
 
963,062

 
5,986

 
2.49
%
Borrowings, subordinated notes and debentures
83,228

 
1,037

 
4.98
%
 
154,749

 
2,149

 
5.55
%
Total interest-bearing liabilities
8,584,044

 
26,871

 
1.25
%
 
8,341,209

 
41,206

 
1.98
%
Non-interest-bearing demand deposits
2,139,803

 
 
 
 
 
1,385,750

 
 
 
 
Other non-interest-bearing liabilities
510,889

 
 
 
 
 
98,741

 
 
 
 
Stockholders’ equity
1,235,054

 
 
 
 
 
1,052,532

 
 
 
 
Total liabilities and stockholders’ equity
$
12,469,790

 
 
 
 
 
$
10,878,232

 
 
 
 
Net interest income
 
 
$
117,272

 
 
 
 
 
$
100,437

 
 
Interest rate spread5
 
 
 
 
3.53
%
 
 
 
 
 
3.39
%
Net interest margin6
 
 
 
 
3.89
%
 
 
 
 
 
3.81
%
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 and leases include average balances of $27.7 million and $28.4 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2020 and 2019 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,
 
2020
 
2019
 
2018
(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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and leases2,3
$
10,149,867

 
$
582,748

 
5.74
%
 
$
8,974,820

 
$
525,317

 
5.85
%
 
$
7,893,072

 
$
446,991

 
5.66
%
Interest-earning deposits in other financial institutions
833,612

 
10,906

 
1.31
%
 
631,228

 
13,495

 
2.14
%
 
807,348

 
12,450

 
1.54
%
Securities3
217,598

 
11,061

 
5.08
%
 
210,189

 
13,943

 
6.63
%
 
209,434

 
11,335

 
5.41
%
Securities borrowed and margin lending
362,063

 
16,585

 
4.58
%
 
173,829

 
8,746

 
5.03
%
 
N/A

 
N/A

 
—
%
Stock of the regulatory agencies
28,776

 
1,539

 
5.35
%
 
41,078

 
3,386

 
8.24
%
 
61,222

 
4,298

 
7.02
%
Total interest-earning assets
11,591,916

 
622,839

 
5.37
%
 
10,031,144

 
564,887

 
5.63
%
 
8,971,076

 
475,074

 
5.30
%
Non-interest-earning assets
395,789

 
 
 
 
 
234,993

 
 
 
 
 
100,380

 
 
 
 
Total assets
$
11,987,705

 
 
 
 
 
$
10,266,137

 
 
 
 
 
$
9,071,456

 
 
 
 
Liabilities and Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings
$
4,844,700

 
$
66,883

 
1.38
%
 
$
3,906,833

 
$
61,391

 
1.57
%
 
$
4,706,238

 
$
54,013

 
1.15
%
Time deposits
2,482,151

 
60,033

 
2.42
%
 
2,322,039

 
55,689

 
2.40
%
 
990,635

 
25,838

 
2.61
%
Securities loaned
247,420

 
679

 
0.27
%
 
221,469

 
748

 
0.34
%
 
N/A

 
N/A

 
—
%
Securities sold under agreements to repurchase
—

 
—

 
—
%
 
—

 
—

 
—
%
 
5,575

 
229

 
4.11
%
Advances from the FHLB
747,358

 
11,988

 
1.60
%
 
1,397,460

 
32,834

 
2.35
%
 
1,296,120

 
22,848

 
1.76
%
Borrowings, subordinated notes and debentures
103,652

 
5,645

 
5.45
%
 
104,287

 
5,620

 
5.39
%
 
54,522

 
3,652

 
6.70
%
Total interest-bearing liabilities
8,425,281

 
145,228

 
1.72
%
 
7,952,088

 
156,282

 
1.97
%
 
7,053,090

 
106,580

 
1.51
%
Non-interest-bearing demand deposits
1,990,005

 
 
 
 
 
1,227,285

 
 
 
 
 
1,052,944

 
 
 
 
Other non-interest-bearing liabilities
397,506

 
 
 
 
 
76,651

 
 
 
 
 
68,361

 
 
 
 
Stockholders’ equity
1,174,913

 
 
 
 
 
1,010,113

 
 
 
 
 
897,061

 
 
 
 
Total liabilities and stockholders’ equity
$
11,987,705

 
 
 
 
 
$
10,266,137

 
 
 
 
 
$
9,071,456

 
 
 
 
Net interest income
 
 
$
477,611

 
 
 
 
 
$
408,605

 
 
 
 
 
$
368,494

 
 
Interest rate spread4
 
 
 
 
3.65
%
 
 
 
 
 
3.66
%
 
 
 
 
 
3.79
%
Net interest margin5
 
 
 
 
4.12
%
 
 
 
 
 
4.07
%
 
 
 
 
 
4.11
%
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 and leases include average balances of $28.0 million, $28.7 million, and $29.3 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2020 2019, and 2018 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, 2020 and 2019:
 
For the Three Months Ended
 
June 30,
 
2020
 
2019
(Dollars in thousands)
Average
Balance1
 
Interest
Income/
Expense
 
Average Yields
Earned/Rates
Paid2
 
Average
Balance1
 
Interest
Income/
Expense
 
Average Yields
Earned/Rates
Paid2
Assets:
 
 
 
 
 
 
 
 
 
 
 
Loans and leases3, 4
$
10,516,828

 
$
136,532

 
5.19
%
 
$
9,234,449

 
$
128,268

 
5.56
%
Interest-earning deposits in other financial institutions
763,989

 
192

 
0.10
%
 
524,403

 
3,128

 
2.39
%
Securities4
269,288

 
3,137

 
4.66
%
 
224,828

 
3,779

 
6.72
%
Stock of the regulatory agencies
25,474

 
165

 
2.59
%
 
28,414

 
486

 
6.84
%
Total interest-earning assets
11,575,579

 
140,026

 
4.84
%
 
10,012,094

 
135,661

 
5.42
%
Non-interest-earning assets
185,795

 
 
 
 
 
188,959

 
 
 
 
Total assets
$
11,761,374

 
 
 
 
 
$
10,201,053

 
 
 
 
Liabilities and Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings
$
5,108,866

 
$
10,254

 
0.80
%
 
$
4,143,734

 
$
16,964

 
1.64
%
Time deposits
2,446,915

 
13,720

 
2.24
%
 
2,625,852

 
15,774

 
2.40
%
Advances from the FHLB
807,680

 
1,777

 
0.88
%
 
963,062

 
5,987

 
2.49
%
Borrowings, subordinated notes and debentures
12,416

 
11

 
0.35
%
 
22

 
—

 
—
%
Total interest-bearing liabilities
8,375,877

 
25,762

 
1.23
%
 
7,732,670

 
38,725

 
2.00
%
Non-interest-bearing demand deposits
2,148,671

 
 
 
 
 
1,389,998

 
 
 
 
Other non-interest-bearing liabilities
98,020

 
 
 
 
 
70,848

 
 
 
 
Stockholders’ equity
1,138,806

 
 
 
 
 
1,007,537

 
 
 
 
Total liabilities and stockholders’ equity
$
11,761,374

 
 
 
 
 
$
10,201,053

 
 
 
 
Net interest income
 
 
$
114,264

 
 
 
 
 
$
96,936

 
 
Interest rate spread5
 
 
 
 
3.61
%
 
 
 
 
 
3.42
%
Net interest margin6
 
 
 
 
3.95
%
 
 
 
 
 
3.87
%
1. Average balances are obtained from daily data.
2. Annualized.
3. Loans and leases 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 and leases include average balances of $27.7 million and $28.4 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2020 and 2019 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, 2020
 
June 30, 2019
Compensation as a % of net revenue
39.2
%
 
35.0
%
FDIC insured program balances at banks (end of period)
$
450,251

 
$
341,576

Customer margin balances (end of period)
$
206,702

 
$
189,193

Customer funds on deposit, including short credits (end of period)
$
194,042

 
$
206,469

 
 
 
 
Clearing:
 
 
 
Total tickets
1,228,635

 
595,962

Correspondents (end of period)
61

 
62

 
 
 
 
Securities lending:
 
 
 
Interest-earning assets – stock borrowed (end of period)
$
222,368

 
$
144,706

Interest-bearing liabilities – stock loaned (end of period)
$
255,945

 
$
198,356



S-13