Axos Q2 Fiscal 2024 Earnings Supplement January 30, 2024 NYSE: AX Loan Growth by Category for Second Quarter Ended December 31, 2023 $ Millions Q2 FY24 Q1 FY24 Inc (Dec) Single Family Jumbo Mortgage $ 3,993 $ 4,019 $ (26) Mortgage & Warehouse SF Warehouse Lending 99 295 (196) Multifamily & Multifamily 2,708 2,130 578 Commercial Mortgage* Small Balance Commercial 1,357 832 525 ...

Core Insights - Axos Financial reported a revenue of $352.74 million for the quarter ended December 2023, marking a 54.6% increase year-over-year and a surprise of +42.77% over the Zacks Consensus Estimate of $247.07 million [1] - The earnings per share (EPS) for the quarter was $1.60, compared to $1.38 in the same quarter last year, resulting in an EPS surprise of +15.11% over the consensus estimate of $1.39 [1] Financial Metrics - Net Interest Margin was reported at 4.6%, exceeding the average estimate of 4.3% from four analysts [2] - Efficiency ratio stood at 34.5%, significantly better than the average estimate of 48.7% from four analysts [2] - Net charge-offs to average loans were 0%, compared to the estimated 0.1% from three analysts [2] - Average Interest-Earning Assets reached $20.12 billion, surpassing the average estimate of $19.89 billion from three analysts [2] - Total Non-performing loans were $122.51 million, slightly above the average estimate of $115.70 million from two analysts [2] - Total Non-performing Assets were reported at $129.83 million, compared to the estimated $124.84 million from two analysts [2] - Net Interest Income was $228.61 million, exceeding the average estimate of $215.27 million from four analysts [2] - Mortgage Banking Income was $0.75 million, below the average estimate of $1.22 million from three analysts [2] - Banking and service fees totaled $10.06 million, higher than the average estimate of $8.93 million from two analysts [2] - Prepayment penalty fee income was $1.04 million, lower than the estimated $1.88 million from two analysts [2] Stock Performance - Shares of Axos Financial have returned +4.2% over the past month, outperforming the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

PART I – FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's total assets increased to $21.6 billion, driven by loan growth, while net income significantly rose to $151.8 million due to an acquisition gain Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | | **Total Assets** | $21,623,764 | $20,348,469 | | Loans—net | $18,264,354 | $16,456,728 | | Total Deposits | $18,203,912 | $17,123,108 | | **Total Stockholders' Equity** | $2,078,224 | $1,917,159 | Condensed Consolidated Statements of Income Highlights (in thousands, except EPS) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net Interest Income | $228,606 | $199,910 | | Provision for Credit Losses | $13,500 | $3,001 | | Non-Interest Income | $124,129 | $28,329 | | **Net Income** | **$151,771** | **$81,552** | | **Diluted EPS** | **$2.62** | **$1.35** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details significant accounting policies, recent acquisitions including a major FDIC loan portfolio purchase, and changes in the allowance for credit losses - On December 7, 2023, the Company acquired two loan portfolios from the FDIC with an aggregate unpaid principal balance of **$1.3 billion** for **$901.5 million**, recognizing a **$92.4 million** gain on the transaction[32](index=32&type=chunk) - The allowance for credit losses on loans increased to **$251.7 million** at December 31, 2023, from **$166.7 million** at June 30, 2023, primarily due to loan growth and the acquisition of Purchased Credit Deteriorated (PCD) loans from the FDIC, which added **$70.1 million** to the allowance at acquisition[68](index=68&type=chunk)[70](index=70&type=chunk)[73](index=73&type=chunk) - During the three and six months ended December 31, 2023, the Company repurchased **$58.7 million** (**1,607,301 shares**) and **$83.2 million** (**2,255,509 shares**) of its common stock, respectively[102](index=102&type=chunk) Segment Income Before Taxes (Three Months Ended Dec 31, 2023, in thousands) | Segment | Net Interest Income (in thousands) | Provision for Credit Losses (in thousands) | Non-interest Income (in thousands) | Non-interest Expense (in thousands) | Income Before Taxes (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Banking Business** | $226,635 | $13,500 | $103,779 | $102,282 | $214,632 | | **Securities Business** | $6,080 | $0 | $32,641 | $27,968 | $10,753 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the significant increase in net income, driven by an FDIC loan purchase gain and strong net interest income growth, alongside asset expansion and stable capital ratios [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Net income significantly increased to $151.8 million, primarily driven by a $92.4 million FDIC loan purchase gain and a 14.4% rise in net interest income - Net interest income increased by **14.4%** to **$228.6 million** for the three months ended December 31, 2023, compared to the prior year, driven by a **$2.0 billion** increase in average loan balances and a **156 basis point** increase in rates earned[156](index=156&type=chunk)[157](index=157&type=chunk) - Non-interest income for the quarter increased by **$95.8 million** (**338.2%**) year-over-year, primarily due to a **$92.4 million** gain on the FDIC Loan Purchase[163](index=163&type=chunk) - Non-interest expense increased by **$13.8 million** (**12.8%**) year-over-year, mainly due to a **$9.2 million** rise in salaries and related costs from increased headcount and a **$3.7 million** increase in data processing expenses[164](index=164&type=chunk) - The provision for credit losses was **$13.5 million** for the quarter, up from **$3.0 million** in the prior-year quarter, mainly due to loan growth in the Commercial & Industrial portfolio and loans acquired from the FDIC[161](index=161&type=chunk) [Segment Results](index=42&type=section&id=Segment%20Results) The Banking Business segment's pre-tax income nearly doubled to $214.6 million due to the FDIC acquisition gain, while the Securities Business segment's pre-tax income declined to $10.8 million - The Banking Business segment's income before taxes nearly doubled to **$214.6 million** for the quarter ended Dec 31, 2023, from **$109.3 million** in the prior year, largely due to the FDIC loan purchase gain[175](index=175&type=chunk) - The Securities Business segment's income before taxes decreased to **$10.8 million** for the quarter from **$15.6 million** in the prior year, impacted by lower non-interest income and higher expenses[187](index=187&type=chunk) [Financial Condition](index=47&type=section&id=Financial%20Condition) Total assets reached $21.6 billion, driven by a $2.2 billion increase in the gross loan portfolio, while non-performing assets rose to 0.60% of total assets Loan Portfolio Composition (in thousands) | Loan Category | December 31, 2023 (in thousands) | June 30, 2023 (in thousands) | | :--- | :--- | :--- | | Single Family - Mortgage & Warehouse | $4,092,104 | $4,173,833 | | Multifamily and Commercial Mortgage | $4,065,019 | $3,082,225 | | Commercial Real Estate | $6,043,400 | $6,199,818 | | Commercial & Industrial - Non-RE | $4,177,461 | $2,639,650 | | **Total Gross Loans** | **$18,860,409** | **$16,652,026** | - Total deposits increased by **$1.1 billion** (**6.3%**) to **$18.2 billion** at December 31, 2023, from June 30, 2023, with interest-bearing demand and savings accounts driving the growth[200](index=200&type=chunk) - Non-performing assets rose to **$129.8 million** (**0.60%** of total assets) from **$95.3 million** (**0.47%** of total assets) at June 30, 2023, mainly due to an increase in non-accrual single-family mortgage and commercial real estate loans[196](index=196&type=chunk)[197](index=197&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with substantial borrowing capacity and increased stockholders' equity, remaining 'well capitalized' under all regulatory measures - The company has substantial available liquidity, including **$4.1 billion** in total FHLB borrowing capacity and **$3.1 billion** available from the FRBSF Discount Window as of December 31, 2023[209](index=209&type=chunk) Regulatory Capital Ratios (Axos Financial, Inc.) | Ratio | December 31, 2023 | Requirement for "Well Capitalized" | | :--- | :--- | :--- | | Tier 1 leverage | 9.39% | 5.00% | | Common equity tier 1 capital | 10.97% | 6.50% | | Tier 1 capital | 10.97% | 8.00% | | Total capital | 13.79% | 10.00% | - Stockholders' equity increased by **$161.1 million** in the six months ended December 31, 2023, reflecting **$234.4 million** in net income partially offset by **$83.2 million** in common stock repurchases[206](index=206&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages interest rate risk, showing asset sensitivity with a positive cumulative gap, projecting net interest income benefits from rising rates and minimal equity sensitivity Net Interest Income Sensitivity Analysis (Next 12 Months) | Rate Shock | Net Interest Income (in thousands) | Percentage Change from Base | | :--- | :--- | :--- | | Up 200 bps | $1,074,457 | 10.3% | | Base | $973,901 | — | | Down 200 bps | $894,052 | (8.2)% | - The company has a positive cumulative interest rate sensitivity gap of **$556.4 million** for the next six months, indicating that more assets than liabilities will reprice in that period[227](index=227&type=chunk) [Controls and Procedures](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were effective, with internal controls modified due to a new ERP system implementation during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period[237](index=237&type=chunk) - A new enterprise resource planning (ERP) system was implemented during the quarter, leading to changes in the internal control environment, including automation and modification of certain controls[237](index=237&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=56&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in a consolidated derivative action with an unpredictable outcome and is appealing an adverse judgment with a $16 million accrual - A consolidated derivative action is pending, stemming from a related employment lawsuit. The company intends to vigorously defend against the allegations, but the eventual loss, if any, cannot be reasonably estimated[110](index=110&type=chunk)[111](index=111&type=chunk) - The company is appealing a jury verdict in the MUFG Union Bank, N.A. v. Axos Bank case and has maintained a **$16 million** accrued expense related to this matter[112](index=112&type=chunk) [Risk Factors](index=56&type=section&id=ITEM%201A.%20RISK%20FACTORS) The report refers to the risk factors disclosed in the 2023 Form 10-K, indicating no significant new or changed risks during the quarter - The report refers to the risk factors disclosed in the 2023 Form 10-K, indicating no significant new or changed risks during the quarter[241](index=241&type=chunk) [Issuer Purchases of Equity Securities](index=56&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During the quarter ended December 31, 2023, the company repurchased 1,607,301 shares of its common stock at an average price of $36.49 per share, with $20.5 million remaining for repurchase Share Repurchases for Quarter Ended December 31, 2023 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Oct 2023 | 1,377,080 | $36.56 | | Nov 2023 | 230,221 | $36.09 | | Dec 2023 | 0 | — | | **Total** | **1,607,301** | **$36.49** |

SAN DIEGO--(BUSINESS WIRE)--Axos Financial, Inc. (NYSE: AX), parent of Axos Bank, announced today that leading personal finance website GOBankingRates.com named Axos Bank as a Top Bank in America for “Best Checking Accounts.” This is the seventh time since 2015 that Axos Bank has been featured on the GOBankingRates list of best banks. “We are proud to be recognized as a leader in consumer digital banking,” said Brian Swanson, Axos’ Executive Vice President of Consumer Banking. “Our Essential Checking acc ...

Company Overview - Axos Financial (AX) is expected to report a year-over-year increase in earnings, with a consensus estimate of $1.39 per share, reflecting a change of +0.7% [2] - Revenues are anticipated to be $247.07 million, which is an increase of 8.3% from the previous year [2] Earnings Expectations - The earnings report is scheduled for January 30, 2024, and actual results will significantly influence the stock price [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [2] Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Axos Financial is lower than the consensus estimate, resulting in an Earnings ESP of -0.94% [5] - A negative Earnings ESP reading suggests a lower likelihood of an earnings beat, especially when combined with a Zacks Rank of 2 (Buy) [6][5] Historical Performance - In the last reported quarter, Axos Financial exceeded the consensus EPS estimate of $1.35 by delivering earnings of $1.41, resulting in a surprise of +4.44% [7] - The company has beaten consensus EPS estimates in the last four quarters [7] Industry Context - In comparison, American Express (AXP) is expected to post earnings of $2.65 per share for the same quarter, indicating a year-over-year change of +28% and revenues of $16.03 billion, up 13.1% [9] - American Express also has a negative Earnings ESP of -0.86%, making it difficult to predict an earnings beat despite a Zacks Rank of 2 [9]

Axos Financial, Inc. (NYSE:AX) Q1 2024 Earnings Conference Call October 26, 2023 5:00 PM ET Company Participants Johnny Lai - SVP, Corporate Development and IR Greg Garrabrants - President and CEO Derrick Walsh - EVP and CFO Conference Call Participants Andrew Liesch - Piper Sandler Tim Switzer - KBW David Chiaverini - Wedbush Gary Tenner - D.A. Davidson Operator Greetings. Welcome to Axos Financial Incorporated's First Quarter 2024 Earnings Call and Webcast. [Operator Instructions] Please note, this confer ...

Financial Performance - Axos Financial, Inc. reported net income of $82.645 million for the period ended September 30, 2023, compared to $58.407 million for the same period in 2022, representing an increase of 41.4%[121] - Adjusted earnings for the same period were $84.596 million, up from $71.615 million in 2022, reflecting a growth of 18.0%[121] - The diluted earnings per share (EPS) increased to $1.38 from $0.97, marking a rise of 42.3% year-over-year[121] - Net income for the three months ended September 30, 2023, was $82.6 million, or $1.38 per diluted share, compared to $58.4 million, or $0.97 per diluted share for the same period in 2022, representing a 41.3% increase in net income[130] Asset Growth - The company holds approximately $20.8 billion in total assets and $33.9 billion in assets under custody and/or administration[109] - Total assets increased to $20,825,206 thousand as of September 30, 2023, up from $18,407,078 thousand a year earlier, reflecting a growth of 13.1%[126] - Common stockholders' equity increased to $1.976 billion from $1.701 billion, a growth of 16.1%[122] - The total assets of the company increased by $0.5 billion, or 2.3%, to $20.8 billion as of September 30, 2023, compared to $20.3 billion at June 30, 2023[164] Income and Revenue - Net interest income for the three months ended September 30, 2023, was $211,155 thousand, an increase from $180,475 thousand in the same period of 2022, marking a growth of 16.9%[128] - Non-interest income increased to $34,507 thousand for the three months ended September 30, 2023, compared to $27,208 thousand in the same period of 2022, representing a growth of 27.1%[128] - Total interest and dividend income increased by 62.6%, primarily due to a $118.6 million increase in interest income from loans, driven by a 220 basis point increase in rates earned and a $1.9 billion increase in average balances[136] - Non-interest income increased by $7.3 million, or 27%, primarily due to higher broker-dealer fee income and banking and service fees[141] Efficiency and Ratios - Efficiency ratio improved to 49.05% for the three months ended September 30, 2023, down from 55.90% in the prior year, indicating better operational efficiency[128] - Common equity tier 1 capital to risk-weighted assets was 11.11% as of September 30, 2023, up from 9.97% a year earlier, indicating stronger capital position[126] - The efficiency ratio for the Banking Business segment improved to 45.44% in 2023 from 52.93% in 2022, indicating enhanced operational efficiency[158] Credit Quality - Provision for credit losses decreased to $7,000 thousand for the three months ended September 30, 2023, down from $8,750 thousand in the prior year, indicating improved asset quality[128] - Net annualized charge-offs to average loans decreased to 0.04% for the three months ended September 30, 2023, compared to 0.05% for the same period in 2022, reflecting enhanced credit quality[128] - Non-performing loans totaled $106.9 million, or 0.62% of total gross loans, an increase from 0.52% at June 30, 2023[170] - Total non-performing assets rose to $115.7 million, or 0.56% of total assets, compared to 0.47% at June 30, 2023[170] Capital and Liquidity - The Company and Bank met all capital adequacy requirements as of September 30, 2023, maintaining a Tier 1 capital ratio of 9.27%, exceeding the minimum requirement of 4.0%[191] - Total capital as of September 30, 2023, was $2,340.1 million, with a total risk-based capital ratio of 14.06%, above the required minimum of 10.0%[194] - The Company believes it has adequate liquidity sources to meet anticipated needs and contingencies for both the short- and long-term[183] Stock and Shareholder Activity - The company repurchased 648,208 shares of common stock at an average price of $37.85 per share during the three months ended September 30, 2023[180] - Stockholders' equity increased by $59.0 million to $1.976 billion at September 30, 2023, driven by net income of $82.6 million[180] Market and Interest Rate Risk - The company is exposed to market risk due to fluctuations in interest rates and market prices, impacting its securities business[207] - The company manages interest rate risk by setting limits on the size and duration of positions in its securities business[208]

Securities Portfolio - As of June 30, 2023, the total securities portfolio was $233.1 million, a decrease from $264.3 million in 2022, representing a decline of approximately 11.8%[49] - The available-for-sale securities portfolio comprised $232.4 million, with 67.6% in Alt-A RMBS, 18.2% in CMBS, and 10.3% in agency RMBS[50] - The weighted-average yield on available-for-sale securities was 5.21% as of June 30, 2023[50] Deposits - Total deposits reached $17.1 billion, with 92.3% in demand and savings accounts and 7.7% in time deposits[52] - The number of total deposit accounts increased to 479,279 in 2023, up from 395,699 in 2022, marking an increase of approximately 21%[60] - Interest-bearing checking and savings accounts rose to 427,299 in 2023, driven by enhanced marketing efforts[60] - Total deposits increased to $17,123,108, representing a 22.4% growth from $13,946,422 in the previous year[62] - Total interest-bearing deposits reached $14,224,958, with an average rate of 3.76%, up from $8,912,452 and 0.85% respectively[62] - Demand deposits amounted to $3,334,615, showing a growth rate of 2.43% compared to $3,611,889 in the previous year[62] - Savings deposits increased to $9,575,781, with a rate of 4.20%, compared to $4,245,555 and 0.95% in the prior year[62] - Time deposits totaled $1,314,562, with an average rate of 3.91%, up from $1,055,008 and 1.25% in the previous year[62] Capital and Regulatory Compliance - As of June 30, 2023, the Company and the Bank's capital ratios exceeded the minimums necessary to be considered "well-capitalized" under regulatory requirements[91] - The Regulatory Capital Rules require a minimum "common equity Tier 1" (CET1) ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, and a total risk-based capital ratio of 8.0%[88] - The Company and the Bank elected the current expected credit losses (CECL) five-year transition guidance for calculating regulatory capital ratios, which allows adding back 100% of the capital impact from the day one CECL transition adjustment[90] - The capital regulations require savings associations to maintain tangible capital of at least 1.5% of total adjusted assets[108] - The capital conservation buffer of 2.5% is required for banking institutions to avoid restrictions on capital distributions[88] - The Company is not subject to enhanced stress test regulations as it has total consolidated assets below $100 billion[108] - The Bank was in compliance with the Qualified Thrift Lender (QTL) requirement, maintaining 65% of portfolio assets in qualified thrift investments[112] - Axos Bank was in compliance with the applicable liquidity standard as of June 30, 2023[113] Operational Efficiency and Technology - The company aims to enhance its technology platforms to improve operational efficiency and customer experience[73] - The company emphasizes a comprehensive suite of treasury management products to support deposit acquisition and retention[54] - The company’s deposit operations are centralized, allowing for scalability and lower funding costs compared to traditional branch models[58] Market and Interest Rate Risk - Interest rate risk is the primary market risk, affecting net interest income, net interest margin, and the value of the securities portfolio[347] - A positive interest rate sensitivity gap indicates that interest rate sensitive assets exceed liabilities, which is favorable in a rising interest rate environment[356] - The net interest rate sensitivity gap was $4,648,597, representing 24.41% of total interest-earning assets, highlighting the company's exposure to interest rate changes[358] - The projected net interest income for the next 12 months is $1,064,324, reflecting a 9.7% change from the base[361] - The market value of equity as of June 30, 2023, was $1,843,498, with a sensitivity to interest rate changes showing a decrease of 1.4% with a 200 basis point increase[363] Employee and Competitive Landscape - The company had 1,455 full-time employees as of June 30, 2023, with no labor union representation[76] - The competitive landscape for banking and financial services is intensifying, with the company focusing on superior service and competitive rates to attract deposits[78] Securities Business Regulations - The Bank is subject to extensive laws and regulations governing its securities business, including compliance with the Dodd-Frank Act, which may increase operational costs[135] - The Bank's ability to make capital distributions, such as cash dividends, is limited by OCC regulations, which may affect its financial flexibility[116] - The Bank must disclose its privacy policy under the Gramm-Leach-Bliley Act, informing consumers of their rights regarding information sharing[124] - The Bank is required to comply with U.S. Treasury's Office of Foreign Assets Control sanctions, which could have serious legal and reputational consequences if violated[130] - The broker-dealers are subject to the SEC's customer protection rule, requiring maintenance of physical possession or control of fully-paid securities and certain cash reserves[140] - The Securities Investor Protection Corporation (SIPC) provides protection for customers up to $500,000, with a maximum of $250,000 in cash[140]

Axos Q4 Fiscal 2023 Earnings Supplement ...

Axos Financial, Inc. (NYSE:AX) Q4 2023 Earnings Conference Call July 27, 2023 5:00 PM ET Company Participants Johnny Lai – Senior Vice President, Corporate Development and Investor Relations Greg Garrabrants – President and Chief Executive Officer Derrick Walsh – Executive Vice President and Chief Financial Officer Conference Call Participants Andrew Liesch – Piper Sandler Gary Tenner – D.A. Davidson David Feaster – Raymond James Michael Perito – KBW Operator Greeting, and welcome to the Axos Financial Four ...