Axos Financial Inc.

01/28/2025 | Press release | Distributed by Public on 01/28/2025 15:11

Axos Financial, Inc. Reports Second Quarter Fiscal Year 2025 Results

LAS VEGAS--(BUSINESS WIRE)-- Axos Financial, Inc. (NYSE: AX) ("Axos" or the "Company") today announced unaudited financial results for the second fiscal quarter ended December 31, 2024. Net income was $104.7 million and diluted earnings per share ("EPS") was $1.80 for the quarter ended December 31, 2024. Net income for the quarter ended December 31, 2023 was $151.8 million and diluted EPS was $2.62, which included a $92.4 million one-time gain associated with the FDIC Loan Purchase during that quarter. Adjusted earnings and adjusted earnings per diluted common share ("Adjusted EPS"), non-GAAP measures described further below, increased $13.4 million to $105.8 million and increased $0.22 to $1.82, respectively, for the quarter ended December 31, 2024, compared to $92.5 million and $1.60, respectively, for the quarter ended December 31, 2023.

Second Quarter Fiscal 2025 Financial Summary

Three Months Ended

December 31,

(Dollars in thousands, except per share data)

2024

2023

% Change

Net interest income

$

280,099

$

228,606

22.5

%

Non-interest income

$

27,799

$

124,129

(77.6

)%

Net income

$

104,687

$

151,771

(31.0

)%

Adjusted earnings (Non-GAAP)1

$

105,829

$

92,452

14.5

%

Diluted EPS

$

1.80

$

2.62

(31.3

)%

Adjusted EPS (Non-GAAP)1

$

1.82

$

1.60

13.8

%

1 See "Use of Non-GAAP Financial Measures"

"Excluding the one-time gain and the provision for credit losses associated with the FDIC Loan Purchase in the prior year quarter, net income and diluted EPS increased by 15.7% and 15.1%, respectively. We generated loan growth across certain commercial and industrial lending categories, single family warehouse and auto," stated Greg Garrabrants, President and Chief Executive Officer of Axos. "Net interest margin of 4.83% in the quarter ended December 31, 2024 was well above our target. We reduced our interest-bearing deposit costs by 51 basis points from the linked quarter while maintaining our ending deposit balances flat. Strong expense management contributed to diluted EPS of $1.80."

Other Highlights

  • Net interest margin was 4.83% for the quarter ended December 31, 2024, compared to 4.55% for the quarter ended December 31, 2023
  • Net interest income was $280.1 million for the three months ended December 31, 2024, compared to $292.0 million for the three months ended September 30, 2024. Excluding the prepayment of three loans purchased from the Federal Deposit Insurance Corporation ("FDIC"), net interest income in the three months ended September 30, 2024 was approximately $275.0 million
  • Non-interest expense was $145.3 million in the three months ended December 31, 2024, down 1.5% from $147.5 million in the three months ended September 30, 2024
  • Total assets were $23.7 billion at December 31, 2024, up $854.1 million, or 7.5% annualized, from $22.9 billion at June 30, 2024
  • Total deposits were $19.9 billion at December 31, 2024, an increase of $575.7 million, or 5.9% annualized, from $19.4 billion at June 30, 2024
  • Axos Advisory Services added $822 million of net new assets under custody during the three months ended December 31, 2024, up from $559 million of net new assets in the three months ended September 30, 2024
  • Total capital to risk-weighted assets was 15.23% for Axos Financial, Inc. at December 31, 2024, up from 14.84% at June 30, 2024
  • Book value per share increased to $44.17 at December 31, 2024 , up 20.9% from $36.53 at December 31, 2023

Second Quarter Fiscal 2025 Income Statement Summary

Net income was $104.7 million and diluted EPS was $1.80 for the three months ended December 31, 2024, compared to net income of $151.8 million and diluted EPS of $2.62 for the three months ended December 31, 2023. Net interest income increased $51.5 million or 22.5% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, primarily due to higher interest income on loans and interest-earnings deposits at other financial institutions, partially offset by higher interest expense on demand and savings deposits, reflecting higher deposit balances, partially offset by lower rates paid.

The provision for credit losses was $12.2 million for the three months ended December 31, 2024, compared to $13.5 million for the three months ended December 31, 2023. The provision for credit losses for the three months ended December 31, 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 commercial real estate mortgage rates.

Non-interest income decreased to $27.8 million for the three months ended December 31, 2024, compared to $124.1 million for the three months ended December 31, 2023. The decrease was primarily due to the absence of the gain on the FDIC Loan Purchase in the prior year period, as well as decreases in mortgage banking and servicing rights income and lower broker-dealer fee income.

Non-interest expense, comprised of various operating expenses, increased $23.5 million to $145.3 million for the three months ended December 31, 2024 from $121.8 million for the three months ended December 31, 2023. The increase was primarily due to higher salaries and related costs, higher professional services expenses and an increase in FDIC and regulatory fees.

Balance Sheet Summary

Axos' total assets increased by $0.9 billion, or 3.7%, to $23.7 billion, at December 31, 2024, from $22.9 billion at June 30, 2024, primarily due to an increase in cash and cash equivalents and loans. Total liabilities increased by $0.6 billion, or 3.0%, to $21.2 billion at December 31, 2024, from $20.6 billion at June 30, 2024, primarily due to higher deposit balances. Stockholders' equity increased by $231.4 million, or 10.1%, to $2.5 billion at December 31, 2024 from $2.3 billion at June 30, 2024, primarily due to net income of $217.0 million.

Conference Call

A conference call and webcast will be held on Tuesday, January 28, 2025, 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 February 28, 2025, at Axos' website and telephonically by dialing toll-free number 877-660-6853, passcode 13750720.

About Axos Financial, Inc. and Subsidiaries

Axos Financial, Inc., with approximately $23.7 billion in consolidated assets as of December 31, 2024, is the holding company for Axos Bank, Axos Clearing LLC and Axos Invest, Inc. Axos Bank provides consumer and business banking products nationwide through its low-cost distribution channels and affinity partners. Axos Clearing LLC (including its business division Axos Advisor Services), with approximately $37.7 billion of assets under custody and/or administration as of December 31, 2024, and Axos Invest, Inc., provide comprehensive securities clearing services to introducing broker-dealers and registered investment advisor correspondents, and digital investment advisory services to retail investors, respectively. Axos Financial, Inc.'s common stock is listed on the NYSE under the symbol "AX" and is a component of the Russell 2000® Index, the S&P SmallCap 600® Index, the KBW Nasdaq Financial Technology Index, and the Travillian Tech-Forward Bank Index. For more information on Axos Financial, Inc., please visit http://investors.axosfinancial.com.

Segment Reporting

The Company operates through two segments: the Banking Business Segment and the Securities Business Segment. In order to reconcile the two segments to the consolidated totals, the Company includes corporate 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.

The following tables present the operating results of the segments:

For the Three Months Ended December 31, 2024

(Dollars in thousands)

Banking
Business Segment

Securities
Business Segment

Corporate/
Eliminations

Axos
Consolidated

Net interest income

$

276,720

$

7,007

$

(3,628

)

$

280,099

Provision for credit losses

12,248

-

-

12,248

Non-interest income

2,948

29,004

(4,153

)

27,799

Non-interest expense

114,536

28,178

2,606

145,320

Income before income taxes

$

152,884

$

7,833

$

(10,387

)

$

150,330

For the Three Months Ended December 31, 2023

(Dollars in thousands)

Banking
Business Segment

Securities
Business Segment

Corporate/
Eliminations

Axos
Consolidated

Net interest income

$

226,635

$

6,080

$

(4,109

)

$

228,606

Provision for credit losses

13,500

-

-

13,500

Non-interest income

103,779

32,641

(12,291

)

124,129

Non-interest expense

102,282

27,968

(8,411

)

121,839

Income before income taxes

$

214,632

$

10,753

$

(7,989

)

$

217,396

For the Six Months Ended December 31, 2024

(Dollars in thousands)

Banking
Business

Securities
Business

Corporate/
Eliminations

Axos
Consolidated

Net interest income

$

565,212

$

14,274

$

(7,339

)

$

572,147

Provision for credit losses

26,248

-

-

26,248

Non-interest income

11,538

58,906

(14,036

)

56,408

Non-interest expense

232,851

56,269

3,665

292,785

Income before income taxes

$

317,651

$

16,911

$

(25,040

)

$

309,522

For the Six Months Ended December 31, 2023

(Dollars in thousands)

Banking
Business

Securities
Business

Corporate/
Eliminations

Axos
Consolidated

Net interest income

$

435,854

$

11,622

$

(7,715

)

$

439,761

Provision for credit losses

20,500

-

-

20,500

Non-interest income

116,336

67,196

(24,896

)

158,636

Non-interest expense

203,068

55,491

(16,214

)

242,345

Income before income taxes

$

328,622

$

23,327

$

(16,397

)

$

335,552

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:

For the Three Months Ended December 31,

For the Six Months Ended December 31,

(Dollars in thousands, except per share data)

2024

2023

2024

2023

Net income

$

104,687

$

151,771

$

217,027

$

234,416

FDIC Loan Purchase - Gain on purchase

-

(92,397

)

-

(92,397

)

FDIC Loan Purchase - Provision for credit losses

-

4,648

-

4,648

Acquisition-related costs

1,645

2,780

4,199

5,570

Income tax effect

(503

)

25,650

(1,255

)

24,811

Adjusted earnings (Non-GAAP)

$

105,829

$

92,452

$

219,971

$

177,048

Average dilutive common shares outstanding

58,226,006

57,932,834

58,262,923

58,930,427

Diluted EPS

$

1.80

$

2.62

$

3.72

$

3.98

FDIC Loan Purchase - Gain on purchase

-

(1.59

)

-

(1.57

)

FDIC Loan Purchase - Provision for credit losses

-

0.08

-

0.08

Acquisition-related costs

0.03

0.05

0.07

0.09

Income tax effect

(0.01

)

0.44

(0.02

)

0.42

Adjusted EPS (Non-GAAP)

$

1.82

$

1.60

$

3.77

$

3.00

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)

December 31,
2024

June 30,
2024

December 31,
2023

Common stockholders' equity

$

2,521,962

$

2,290,596

$

2,078,224

Less: servicing rights, carried at fair value

28,045

28,924

28,043

Less: goodwill and other intangible assets-net

137,570

141,769

146,793

Tangible common stockholders' equity (Non-GAAP)

$

2,356,347

$

2,119,903

$

1,903,388

Common shares outstanding at end of period

57,097,632

56,894,565

56,898,377

Book value per common share

$

44.17

40.26

$

36.53

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

0.49

0.51

0.49

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

2.41

2.49

2.59

Tangible book value per common share (Non-GAAP)

$

41.27

$

37.26

$

33.45

Forward-Looking Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including without limitation statements relating to Axos' financial prospects and other projections of its performance and asset quality, Axos' deposit balances and capital ratios, Axos' ability to continue to grow profitably and increase its business, Axos' ability to continue to diversify its lending and deposit franchises, the anticipated timing and financial performance of other offerings, initiatives, and acquisitions, expectations of the environment in which Axos operates and projections of future performance. These forward-looking statements are made on the basis of the views and assumptions of management regarding future events and performance as of the date of this press release. Actual results and the timing of events could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties, including without limitation Axos' ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, monetary policy, inflation, government regulation, general economic conditions, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, our ability to attract and retain deposits and access other sources of liquidity, and the outcome and effects of litigation and other factors beyond our control. These and other risks and uncertainties detailed in Axos' periodic reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2024, 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)

December 31,
2024

June 30,
2024

December 31,
2023

Selected Balance Sheet Data:

Total assets

$

23,709,422

$

22,855,334

$

21,623,764

Loans-net of allowance for credit losses

19,486,727

19,231,385

18,264,354

Loans held for sale, carried at fair value

25,436

16,482

13,468

Allowance for credit losses

270,605

260,542

251,749

Trading securities

241

353

329

Available-for-sale securities

97,848

141,611

239,812

Securities borrowed

114,672

67,212

145,176

Customer, broker-dealer and clearing receivables

298,887

240,028

265,857

Total deposits

19,934,904

19,359,217

18,203,912

Advances from the Federal Home Loan Bank

60,000

90,000

90,000

Borrowings, subordinated notes and debentures

358,692

325,679

341,086

Securities loaned

135,258

74,177

155,492

Customer, broker-dealer and clearing payables

309,593

301,127

368,885

Total stockholders' equity

$

2,521,962

$

2,290,596

$

2,078,224

Common shares outstanding at end of period

57,097,632

56,894,565

56,898,377

Common shares issued at end of period

70,571,332

70,221,632

69,828,709

Per Common Share Data:

Book value per common share

$

44.17

$

40.26

$

36.53

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

$

41.27

$

37.26

$

33.45

Capital Ratios:

Equity to assets at end of period

10.64

%

10.02

%

9.61

%

Axos Financial, Inc.:

Tier 1 leverage (to adjusted average assets)

10.02

%

9.43

%

9.39

%

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

12.42

%

12.01

%

10.97

%

Tier 1 capital (to risk-weighted assets)

12.42

%

12.01

%

10.97

%

Total capital (to risk-weighted assets)

15.23

%

14.84

%

13.79

%

Axos Bank:

Tier 1 leverage (to adjusted average assets)

9.85

%

9.74

%

10.22

%

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

12.67

%

12.74

%

12.26

%

Tier 1 capital (to risk-weighted assets)

12.67

%

12.74

%

12.26

%

Total capital (to risk-weighted assets)

13.86

%

13.81

%

13.25

%

Axos Clearing LLC:

Net capital

$

83,932

$

101,462

$

103,454

Excess capital

$

78,282

$

96,654

$

98,397

Net capital as a percentage of aggregate debit items

29.71

%

42.21

%

40.92

%

Net capital in excess of 5% aggregate debit items

$

69,805

$

89,442

$

90,812

AXOS FINANCIAL, INC.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

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

As of or for the

Three Months Ended

As of or for the

Six Months Ended

December 31,

December 31,

(Dollars in thousands, except per share data)

2024

2023

2024

2023

Selected Income Statement Data:

Interest and dividend income

$

456,068

$

394,663

$

940,330

$

758,615

Interest expense

175,969

166,057

368,183

318,854

Net interest income

280,099

228,606

572,147

439,761

Provision for credit losses

12,248

13,500

26,248

20,500

Net interest income, after provision for credit losses

267,851

215,106

545,899

419,261

Non-interest income

27,799

124,129

56,408

158,636

Non-interest expense

145,320

121,839

292,785

242,345

Income before income taxes

150,330

217,396

309,522

335,552

Income tax expense

45,643

65,625

92,495

101,136

Net income

$

104,687

$

151,771

$

217,027

$

234,416

Weighted average number of common shares outstanding:

Basic

57,094,153

57,216,621

57,014,412

58,082,830

Diluted

58,226,006

57,932,834

58,262,923

58,930,427

Per Common Share Data:

Net income:

Basic

$

1.83

$

2.65

$

3.81

$

4.04

Diluted

$

1.80

$

2.62

$

3.72

$

3.98

Adjusted earnings per common share (Non-GAAP)1

$

1.82

$

1.60

$

3.77

$

3.00

Performance Ratios and Other Data:

Growth in loans held for investment, net

$

206,118

$

1,309,313

$

255,342

$

1,807,626

Loan originations for sale

66,826

44,325

136,396

96,910

Return on average assets

1.74

%

2.90

%

1.83

%

2.29

%

Return on average common stockholders' equity

16.97

%

30.39

%

18.02

%

23.72

%

Interest rate spread2

3.91

%

3.58

%

4.01

%

3.48

%

Net interest margin3

4.83

%

4.55

%

5.00

%

4.46

%

Net interest margin3 - Banking Business Segment

4.87

%

4.62

%

5.04

%

4.54

%

Efficiency ratio4

47.20

%

34.54

%

46.58

%

40.50

%

Efficiency ratio4 - Banking Business Segment

40.95

%

30.96

%

40.37

%

36.78

%

Asset Quality Ratios:

Net annualized charge-offs to average loans

0.10

%

0.04

%

0.13

%

0.04

%

Non-accrual loans to total loans

1.26

%

0.65

%

1.26

%

0.65

%

Non-performing assets to total assets

1.06

%

0.60

%

1.06

%

0.60

%

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

1.37

%

1.33

%

1.37

%

1.33

%

Allowance for credit losses - loans to non-accrual loans5

107.58

%

205.50

%

107.58

%

205.50

%

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 decrease in the Allowance for credit losses - loans to nonaccrual loans is primarily attributable to the change in nonaccrual loans.

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

Source: Axos Financial, Inc.