AX Axos Financial Inc

Axos Financial, Inc. (NYSE: AX) (“Axos” or the “Company”) today announced unaudited financial results for the first fiscal quarter ended September 30, 2024. Net income was $112.3 million, an increase of 35.9% from $82.6 million for the quarter ended September 30, 2023. Diluted earnings per share (“EPS”) were $1.93, an increase of $0.55, or 39.9%, as compared to diluted earnings per share of $1.38 for the quarter ended September 30, 2023.

Adjusted earnings and adjusted earnings per diluted common share (“Adjusted EPS”), non-GAAP measures described further below, increased $29.5 million to $114.1 million and increased $0.55 to $1.96, respectively, for the quarter ended September 30, 2024, compared to $84.6 million and $1.41, respectively, for the quarter ended September 30, 2023.

First Quarter Fiscal 2025 Financial Summary

 

Three Months Ended September 30,

 

 

(Dollars in thousands, except per share data)

 

2024

 

 

2023

 

% Change

Net interest income

$

292,048

 

$

211,155

 

38.3

%

Non-interest income

$

28,609

 

$

34,507

 

(17.1

)%

Net income

$

112,340

 

$

82,645

 

35.9

%

Adjusted earnings (Non-GAAP)1

$

114,142

 

$

84,596

 

34.9

%

Diluted EPS

$

1.93

 

$

1.38

 

39.9

%

Adjusted EPS (Non-GAAP)1

$

1.96

 

$

1.41

 

39.0

%

1 See “Use of Non-GAAP Financial Measures”

 

 

 

 

 

“Net interest income increased by 12.3% and 38.3% linked-quarter and year-over-year, respectively, driven by further expansion in our net interest margin,” stated Greg Garrabrants, President and Chief Executive Officer of Axos. “Excluding the recognition of approximately $17 million of net interest income from the early payoff of certain loans purchased from the FDIC, our net interest margin for the three months ended September 30, 2024 was 4.87%, up 22 basis points from 4.65% last quarter. Diluted EPS was $1.93, an increase of 39.9% year-over-year.”

Other Highlights

• Net interest margin was 5.17% for the quarter ended September 30, 2024, compared to 4.36% for the quarter ended September 30, 2023

• Total assets were $23.6 billion at September 30, 2024, up 3.1%, or 12.4% annualized, from $22.9 million at June 30, 2024

• Total deposits were $20.0 billion at September 30, 2024, an increase of $614.1 million, or 12.7% annualized, from $19.4 billion at June 30, 2024

• Approximately 90% of total deposits were insured by the Federal Deposit Insurance Corporation (“FDIC”) or collateralized at September 30, 2024

• Axos Advisory Services added $559 million of net new assets under custody during the three months ended September 30, 2024

• Total capital to risk-weighted assets was 14.06% for Axos Bank at September 30, 2024, up from 13.81% at June 30, 2024

• Book value per share increased to $42.14 from $40.26 at June 30, 2024

• Return on common equity of 19.12% for the quarter ended September 30, 2024, compared to 16.91% for the quarter ended September 30, 2023

First Quarter Fiscal 2025 Income Statement Summary

Net income was $112.3 million and diluted EPS was $1.93 for the three months ended September 30, 2024, compared to net income of $82.6 million and diluted EPS of $1.38 for the three months ended September 30, 2023. Net interest income increased $80.9 million or 38.3% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to an increase in loan interest income attributable to higher average balances and rates earned, as well as higher discount accretion, partially offset by an increase in deposits interest expense from higher average balances and rates paid.

The provision for credit losses was $14.0 million for the three months ended September 30, 2024, compared to $7.0 million for the three months ended September 30, 2023. The provision for credit losses for the three months ended September 30, 2024, was primarily due to the quantitative impact of macroeconomic variables in the allowance for credit losses model, primarily the U.S. unemployment rate, and increases in specific reserves, mainly in the commercial & industrial - non-RE portfolio, as well as growth in unfunded lending commitments.

Non-interest income decreased to $28.6 million for the three months ended September 30, 2024, compared to $34.5 million for the three months ended September 30, 2023. The decrease was primarily due to decreases in mortgage banking and servicing rights income, broker-dealer fee income and prepayment penalty fee income.

Non-interest expense, comprised of various operating expenses, increased $27.0 million to $147.5 million for the three months ended September 30, 2024 from $120.5 million for the three months ended September 30, 2023. The increase was primarily due to increases in salaries and related expenses and advertising expense.

Balance Sheet Summary

Axos’ total assets increased by $0.7 billion, or 3.1%, to $23.6 billion, at September 30, 2024, from $22.9 billion at June 30, 2024, primarily due to an increase in cash and cash equivalents. Total liabilities increased by $0.6 billion, or 2.9%, to $21.2 billion at September 30, 2024, from $20.6 billion at June 30, 2024, primarily due to an increase in deposits. Stockholders’ equity increased by $115.1 million, or 5.0%, to $2.4 billion at September 30, 2024 from $2.3 billion at June 30, 2024, primarily due to net income of $112.3 million.

Conference Call

A conference call and webcast will be held on Wednesday, October 30, 2024, at 5:00 PM Eastern / 2:00 PM Pacific. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial: 877-407-8293. The conference call will be webcast live, and both the webcast and the earnings supplement may be accessed at Axos’ website, investors.axosfinancial.com. For those unable to listen to the live broadcast, a replay will be available until November 30, 2024, at Axos’ website and telephonically by dialing toll-free number 877-660-6853, passcode 13749171.

About Axos Financial, Inc. and Subsidiaries

Axos Financial, Inc., with approximately $23.6 billion in consolidated assets as of September 30, 2024, is the holding company for Axos Bank, Axos Clearing LLC and Axos Invest, Inc. Axos Bank provides consumer and business banking products nationwide through its low-cost distribution channels and affinity partners. Axos Clearing LLC (including its business division Axos Advisor Services), with approximately $37.4 billion of assets under custody and/or administration as of September 30, 2024, and Axos Invest, Inc., provide comprehensive securities clearing services to introducing broker-dealers and registered investment advisor correspondents, and digital investment advisory services to retail investors, respectively. Axos Financial, Inc.’s common stock is listed on the NYSE under the symbol “AX” and is a component of the Russell 2000® Index, the S&P SmallCap 600® Index, the KBW Nasdaq Financial Technology Index, and the Travillian Tech-Forward Bank Index. For more information on Axos Financial, Inc., please visit http://investors.axosfinancial.com.

Segment Reporting

The Company operates through two segments: the Banking Business Segment and the Securities Business Segment. In order to reconcile the two segments to the consolidated totals, the Company includes parent-only activities and intercompany eliminations. Inter-segment transactions are eliminated in consolidation and primarily include non-interest income earned by the Securities Business Segment and non-interest expense incurred by the Banking Business Segment for cash sorting fees related to deposits sourced from Securities Business Segment customers, as well as interest expense paid by the Banking Business Segment to each of the wholly-owned subsidiaries of the Company and to the Company itself for their operating cash held on deposit with the Business Banking Segment.

The following tables present the operating results of the segments:

 

For the Three Months Ended September 30, 2024

(Dollars in thousands)

Banking Business Segment

 

Securities Business Segment

 

Corporate/ Eliminations

 

Axos Consolidated

Net interest income

$

288,492

 

$

7,267

 

$

(3,711

)

 

$

292,048

Provision for credit losses

 

14,000

 

 

—

 

 

—

 

 

 

14,000

Non-interest income

 

8,590

 

 

29,902

 

 

(9,883

)

 

 

28,609

Non-interest expense

 

118,315

 

 

28,091

 

 

1,059

 

 

 

147,465

Income before income taxes

$

164,767

 

$

9,078

 

$

(14,653

)

 

$

159,192

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2023

(Dollars in thousands)

Banking Business Segment

 

Securities Business Segment

 

Corporate/ Eliminations

 

Axos Consolidated

Net interest income

$

209,219

 

$

5,542

 

$

(3,606

)

 

$

211,155

Provision for credit losses

 

7,000

 

 

—

 

 

—

 

 

 

7,000

Non-interest income

 

12,557

 

 

34,555

 

 

(12,605

)

 

 

34,507

Non-interest expense

 

100,786

 

 

27,523

 

 

(7,803

)

 

 

120,506

Income before income taxes

$

113,990

 

$

12,574

 

$

(8,408

)

 

$

118,156

Use of Non-GAAP Financial Measures

In addition to the results presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), this release includes non-GAAP financial measures such as adjusted earnings, adjusted earnings per diluted common share, and tangible book value per common share. Non-GAAP financial measures have inherent limitations, may not be comparable to similarly titled measures used by other companies and are not audited. Readers should be aware of these limitations and should be cautious as to their reliance on such measures. Although we believe the non-GAAP financial measures disclosed in this release enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures.

We define “adjusted earnings”, a non-GAAP financial measure, as net income without the after-tax impact of non-recurring acquisition-related items (including amortization of intangible assets related to acquisitions) and other costs (unusual or non-recurring charges). Adjusted EPS, a non-GAAP financial measure, is calculated by dividing non-GAAP adjusted earnings by the average number of diluted common shares outstanding during the period. We believe the non-GAAP measures of adjusted earnings and Adjusted EPS provide useful information about Axos’ operating performance. We believe excluding the non-recurring acquisition-related costs and other costs provides investors with an alternative understanding of Axos’ core business.

Below is a reconciliation of net income, the nearest comparable GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:

 

Three Months Ended

 

September 30,

(Dollars in thousands, except per share amounts)

 

2024

 

 

 

2023

 

Net income

$

112,340

 

 

$

82,645

 

Acquisition-related costs

 

2,554

 

 

 

2,790

 

Income tax effect

 

(752

)

 

 

(839

)

Adjusted earnings (Non-GAAP)

$

114,142

 

 

$

84,596

 

 

 

 

 

Average dilutive common shares outstanding

 

58,168,468

 

 

 

59,808,322

 

 

 

 

 

Diluted EPS

$

1.93

 

 

$

1.38

 

Acquisition-related costs

 

0.04

 

 

 

0.05

 

Income tax effect

 

(0.01

)

 

 

(0.02

)

Adjusted EPS (Non-GAAP)

$

1.96

 

 

$

1.41

 

We define “tangible book value”, a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. Tangible book value is calculated using common stockholders’ equity minus servicing rights, goodwill and other intangible assets. Tangible book value per common share is calculated by dividing tangible book value by the common shares outstanding at the end of the period. We believe tangible book value per common share is useful in evaluating the Company’s capital strength, financial condition, and ability to manage potential losses.

Below is a reconciliation of total stockholders’ equity, the nearest comparable GAAP measure, to tangible book value per common share (non-GAAP) as of the dates indicated:

(Dollars in thousands, except per share amounts)

September 30, 2024

 

June 30, 2024

 

September 30, 2023

Common stockholders’ equity

$

2,405,728

 

$

2,290,596

 

$

1,976,208

Less: servicing rights, carried at fair value

 

27,335

 

 

28,924

 

 

29,338

Less: goodwill and intangible assets—net

 

139,215

 

 

141,769

 

 

149,572

Tangible common stockholders’ equity (Non-GAAP)

$

2,239,178

 

$

2,119,903

 

$

1,797,298

 

 

 

 

 

 

Common shares outstanding at end of period

 

57,092,216

 

 

56,894,565

 

 

58,503,976

 

 

 

 

 

 

Book value per common share

$

42.14

 

 

40.26

 

$

33.78

Less: servicing rights, carried at fair value per common share

 

0.48

 

 

0.51

 

 

0.50

Less: goodwill and other intangible assets—net per common share

 

2.44

 

 

2.49

 

 

2.56

Tangible book value per common share (Non-GAAP)

$

39.22

 

$

37.26

 

$

30.72

Forward-Looking Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including without limitation statements relating to Axos’ financial prospects and other projections of its performance and asset quality, Axos’ deposit balances and capital ratios, Axos’ ability to continue to grow profitably and increase its business, Axos’ ability to continue to diversify its lending and deposit franchises, the anticipated timing and financial performance of other offerings, initiatives, and acquisitions, expectations of the environment in which Axos operates and projections of future performance. These forward-looking statements are made on the basis of the views and assumptions of management regarding future events and performance as of the date of this press release. Actual results and the timing of events could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties, including without limitation Axos’ ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, monetary policy, inflation, government regulation, general economic conditions, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, our ability to attract and retain deposits and access other sources of liquidity, and the outcome and effects of litigation and other factors beyond our control. These and other risks and uncertainties detailed in Axos’ periodic reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the “2024 Form 10-K”), could cause actual results to differ materially from those expressed or implied in any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Axos undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All written and oral forward-looking statements made in connection with this press release, which are attributable to us or persons acting on Axos’ behalf are expressly qualified in their entirety by the foregoing information.

AXOS FINANCIAL, INC.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited – dollars in thousands)

 

 

September 30, 2024

 

June 30, 2024

 

September 30, 2023

Selected Balance Sheet Data:

 

 

 

 

 

Total assets

$

23,569,084

 

 

$

22,855,334

 

 

$

20,825,206

 

Loans—net of allowance for credit losses

 

19,280,609

 

 

 

19,231,385

 

 

 

16,955,041

 

Loans held for sale, carried at fair value

 

14,566

 

 

 

16,482

 

 

 

8,014

 

Allowance for credit losses

 

263,854

 

 

 

260,542

 

 

 

170,870

 

Trading securities

 

594

 

 

 

353

 

 

 

640

 

Available-for-sale securities

 

137,996

 

 

 

141,611

 

 

 

236,726

 

Securities borrowed

 

84,326

 

 

 

67,212

 

 

 

96,424

 

Customer, broker-dealer and clearing receivables

 

262,774

 

 

 

240,028

 

 

 

285,423

 

Total deposits

 

19,973,329

 

 

 

19,359,217

 

 

 

17,565,741

 

Advances from the Federal Home Loan Bank

 

90,000

 

 

 

90,000

 

 

 

90,000

 

Borrowings, subordinated notes and debentures

 

313,519

 

 

 

325,679

 

 

 

447,733

 

Securities loaned

 

95,883

 

 

 

74,177

 

 

 

116,446

 

Customer, broker-dealer and clearing payables

 

315,985

 

 

 

301,127

 

 

 

341,915

 

Total stockholders’ equity

$

2,405,728

 

 

$

2,290,596

 

 

$

1,976,208

 

 

 

 

 

 

 

Common shares outstanding at end of period

 

57,092,216

 

 

 

56,894,565

 

 

 

58,503,976

 

Common shares issued at end of period

 

70,562,333

 

 

 

70,221,632

 

 

 

69,826,263

 

 

 

 

 

 

 

Per Common Share Data:

 

 

 

 

 

Book value per common share

$

42.14

 

 

$

40.26

 

 

$

33.78

 

Tangible book value per common share (Non-GAAP)1

$

39.22

 

 

$

37.26

 

 

$

30.72

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

Equity to assets at end of period

 

10.21

%

 

 

10.02

%

 

 

9.49

%

Axos Financial, Inc.:

 

 

 

 

 

Tier 1 leverage (to adjusted average assets)

 

9.78

%

 

 

9.43

%

 

 

9.27

%

Common equity tier 1 capital (to risk-weighted assets)

 

12.44

%

 

 

12.01

%

 

 

11.11

%

Tier 1 capital (to risk-weighted assets)

 

12.44

%

 

 

12.01

%

 

 

11.11

%

Total capital (to risk-weighted assets)

 

15.29

%

 

 

14.84

%

 

 

14.06

%

Axos Bank:

 

 

 

 

 

Tier 1 leverage (to adjusted average assets)

 

9.82

%

 

 

9.74

%

 

 

9.99

%

Common equity tier 1 capital (to risk-weighted assets)

 

12.87

%

 

 

12.74

%

 

 

11.69

%

Tier 1 capital (to risk-weighted assets)

 

12.87

%

 

 

12.74

%

 

 

11.69

%

Total capital (to risk-weighted assets)

 

14.06

%

 

 

13.81

%

 

 

12.65

%

Axos Clearing LLC:

 

 

 

 

 

Net capital

$

85,292

 

 

$

101,462

 

 

$

101,391

 

Excess capital

$

80,081

 

 

$

96,654

 

 

$

96,211

 

Net capital as a percentage of aggregate debit items

 

32.73

%

 

 

42.21

%

 

 

39.14

%

Net capital in excess of 5% aggregate debit items

$

72,264

 

 

$

89,442

 

 

$

88,440

 

 

AXOS FINANCIAL, INC.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited – dollars in thousands, except per share data)

 

 

As of or for the Three Months Ended

 

September 30,

(Dollars in thousands, except per share data)

 

2024

 

 

 

2023

 

Selected Income Statement Data:

 

 

 

Interest and dividend income

$

484,262

 

 

$

363,952

 

Interest expense

 

192,214

 

 

 

152,797

 

Net interest income

 

292,048

 

 

 

211,155

 

Provision for credit losses

 

14,000

 

 

 

7,000

 

Net interest income, after provision for credit losses

 

278,048

 

 

 

204,155

 

Non-interest income

 

28,609

 

 

 

34,507

 

Non-interest expense

 

147,465

 

 

 

120,506

 

Income before income taxes

 

159,192

 

 

 

118,156

 

Income tax expense

 

46,852

 

 

 

35,511

 

Net income

$

112,340

 

 

$

82,645

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

Basic

 

56,934,671

 

 

 

58,949,038

 

Diluted

 

58,168,468

 

 

 

59,808,322

 

 

 

 

 

Per Common Share Data:

 

 

 

Net income:

 

 

 

Basic

$

1.97

 

 

$

1.40

 

Diluted

$

1.93

 

 

$

1.38

 

Adjusted earnings per common share (Non-GAAP)1

$

1.96

 

 

$

1.41

 

 

 

 

 

Performance Ratios and Other Data:

 

 

 

Growth in loans held for investment, net

$

49,224

 

 

$

498,313

 

Loan originations for sale

 

69,570

 

 

 

52,858

 

Return on average assets

 

1.92

%

 

 

1.64

%

Return on average common stockholders’ equity

 

19.12

%

 

 

16.91

%

Interest rate spread2

 

4.13

%

 

 

3.37

%

Net interest margin3

 

5.17

%

 

 

4.36

%

Net interest margin3 – Banking Business Segment

 

5.21

%

 

 

4.46

%

Efficiency ratio4

 

45.99

%

 

 

49.05

%

Efficiency ratio4 – Banking Business Segment

 

39.83

%

 

 

45.44

%

 

 

 

 

Asset Quality Ratios:

 

 

 

Net annualized charge-offs to average loans

 

0.17

%

 

 

0.04

%

Non-accrual loans to total loans

 

0.89

%

 

 

0.62

%

Non-performing assets to total assets

 

0.75

%

 

 

0.56

%

Allowance for credit losses - loans to total loans held for investment5

 

1.35

%

 

 

1.00

%

Allowance for credit losses - loans to non-accrual loans

 

149.32

%

 

 

159.80

%

1

See “Use of Non-GAAP Financial Measures.”

2

Interest rate spread represents the difference between the annualized weighted average yield on interest-earning assets and the annualized weighted average rate paid on interest-bearing liabilities.

3

Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

4

Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income.

5

The increase in the ratio of the allowance for credit losses - loans to total loans held for investment at September 30, 2024 was primarily attributable to the allowance for credit losses related to the purchased credit deteriorated loans acquired in the FDIC Loan Purchase. See Note 2— “Acquisitions” in the 2024 Form 10-K for additional information.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030781202/en/

Investor Relations Contact: Johnny Lai, CFA SVP, Corporate Development & Investor Relations 858-649-2218 jlai@axosfinancial.com