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 ...

Financial Data and Key Metrics Changes - The company reported net income of $80 million and earnings per share of $1.32 for Q3 2023, representing year-over-year growth of 29% and 28% respectively [8][11] - Book value per share increased to $31.07, up 17% from the previous year [8] - Net interest margin was 4.42%, down seven basis points from the previous quarter but up 40 basis points year-over-year [9][10] - Total deposits increased by approximately $1 billion linked quarter, reaching $16.7 billion, with a year-over-year growth of approximately 32% [7][12] Business Line Data and Key Metrics Changes - Ending net loans for investment balances were $15.8 billion, up 2% linked quarter and 9% annualized, with growth in single-family mortgage, multifamily, and C&I loans [9] - Loan originations for the quarter were $1.8 billion, down from $2.4 billion in the same quarter last year, with tightened pricing and underwriting guidelines in several categories [28] - Noninterest income for Q3 2023 was $32.2 million, an increase of 12% year-over-year, driven by a 40% increase in broker-dealer fees linked quarter [29] Market Data and Key Metrics Changes - Approximately 57% of loans were floating rate, with the average yield on held-for-investment loans at 7.07%, up 45 basis points from the prior quarter [16] - The company reported a strong capital position with a Tier 1 leverage ratio of 10.2% at the Bank, well above regulatory requirements [11] - The company maintained a diverse deposit base, with 43% demand deposits, 46% savings and money market, and 11% CDs [17] Company Strategy and Development Direction - The company aims to maintain investments in technology and personnel while capitalizing on market dislocations to grow its business [25] - There are plans to expand into new areas and acquire teams, with a focus on enhancing deposit and lending capabilities [38] - The company is strategically positioned to take advantage of reduced competition in the lending market, allowing for better pricing and terms [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's stability and strength amid recent banking industry turmoil, highlighting a robust liquidity position [12] - The outlook for loan growth is projected to be in the high single digits to low teens year-over-year, with net interest margin guidance of 4.25% to 4.35% for the next few quarters [31] - Management noted that maintaining excess liquidity is prudent given the uncertain economic environment [31] Other Important Information - The company repurchased approximately $32 million of common stock in Q3 2023, with an additional $100 million approved for share repurchases [11][30] - The company has a healthy pipeline of new advisory clients, signing 15 new deals with a combined assets under custody of $1 billion [18] Q&A Session Summary Question: How does the liquidity on the balance sheet affect NII? - Management indicated that the liquidity is fairly neutral as it is placed with the Fed, with a slight benefit expected [34] Question: Are there any concerns regarding substandard loans? - Management stated that there are no significant concerns and that the attachment points remain strong [36] Question: What expansion opportunities are being considered? - Management mentioned potential team acquisitions and bulk loan purchases, indicating a positive outlook on deposit growth [38] Question: What is the status of the security segment? - Management highlighted ongoing improvements and the development of a new core processing system to enhance competitiveness [50] Question: What is the onboarding timeline for new RIAs? - Management estimated a six-month timeframe for onboarding new RIAs after contracts are signed [54]

Loan Portfolio - Total loans reached $16020 million, an increase of $371 million from the previous quarter[2] - CRE Specialty loans have a weighted average LTV of 42%, with non-performing loans at $15 million[3] - Single Family Mortgage & Warehouse loans amounted to $3925 million[2] - Multifamily loans reached $2245 million[2] - Commercial & Industrial Non-RE loans increased by $207 million to $1598 million[2] Financial Performance - Net interest income was $198982 thousand for the quarter ended March 31, 2023[42] - Net income was $79850 thousand, with basic earnings per share at $133[42] - Total assets reached $19782481 thousand[39] - Total deposits amounted to $16738869 thousand[39] Capitalization - Equity to assets ratio was 932%[39] - Tier 1 leverage ratio for Axos Financial, Inc was 929%[39]

PART I – FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents the unaudited condensed consolidated financial statements and accompanying notes for the period [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)%20as%20of%20March%2031%2C%202023%20and%20June%2030%2C%202022) Condensed Consolidated Balance Sheets (March 31, 2023 vs. June 30, 2022) | Metric (in thousands) | March 31, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :-------------------- | :------------- | :------------ | :---------------- | :--------- | | **ASSETS** | | | | | | Total cash, cash equivalents, and cash segregated | $2,504,224 | $1,574,699 | $929,525 | 59.03% | | Loans—net | $15,836,255 | $14,091,061 | $1,745,194 | 12.38% | | Total Assets | $19,782,481 | $17,401,165 | $2,381,316 | 13.68% | | **LIABILITIES** | | | | | | Non-interest bearing deposits | $3,172,791 | $5,033,970 | $(1,861,179) | -36.97% | | Interest bearing deposits | $13,566,078 | $8,912,452 | $4,653,626 | 52.21% | | Total deposits | $16,738,869 | $13,946,422 | $2,792,447 | 20.02% | | Total Liabilities | $17,938,377 | $15,758,192 | $2,180,185 | 13.83% | | **STOCKHOLDERS' EQUITY** | | | | | | Total Stockholders' Equity | $1,844,104 | $1,642,973 | $201,131 | 12.24% | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(unaudited)%20for%20the%20three%20and%20nine%20months%20ended%20March%2031%2C%202023%20and%202022) Condensed Consolidated Statements of Income (March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Total interest and dividend income | $307,334 | $160,181 | 91.88% | $810,708 | $475,567 | 70.48% | | Total interest expense | $108,352 | $10,643 | 918.10% | $231,341 | $33,819 | 584.09% | | Net interest income | $198,982 | $149,538 | 33.08% | $579,367 | $441,748 | 31.15% | | Provision for credit losses | $5,500 | $4,500 | 22.22% | $17,750 | $12,500 | 42.00% | | Non-interest income | $32,246 | $28,774 | 12.00% | $87,783 | $86,263 | 1.76% | | Total non-interest expense | $111,044 | $86,819 | 27.90% | $334,659 | $257,269 | 30.08% | | Income before income taxes | $114,684 | $86,993 | 31.83% | $314,741 | $258,242 | 21.80% | | Income taxes | $34,834 | $25,170 | 38.32% | $94,932 | $75,422 | 25.87% | | Net Income | $79,850 | $61,823 | 29.16% | $219,809 | $182,820 | 20.23% | | Basic EPS | $1.33 | $1.04 | 27.88% | $3.67 | $3.07 | 19.54% | | Diluted EPS | $1.32 | $1.02 | 29.41% | $3.63 | $3.02 | 20.20% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(unaudited)%20for%20the%20three%20and%20nine%20months%20ended%20March%2031%2C%202023%20and%202022) Condensed Consolidated Statements of Comprehensive Income (March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Net Income | $79,850 | $61,823 | 29.16% | $219,809 | $182,820 | 20.23% | | Net unrealized gain (loss) from available-for-sale securities, net of income tax | $1,372 | $(2,970) | -146.19% | $(2,640) | $(4,133) | -36.14% | | Other comprehensive income (loss) | $1,372 | $(2,970) | -146.19% | $(2,640) | $(4,133) | -36.14% | | Comprehensive income | $81,222 | $58,853 | 37.99% | $217,169 | $178,687 | 21.54% | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)%20for%20the%20three%20and%20nine%20months%20ended%20March%2031%2C%202023%20and%202022) Condensed Consolidated Statements of Stockholders' Equity (March 31, 2023 vs. June 30, 2022) | Metric (in thousands) | March 31, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :-------------------- | :------------- | :------------ | :---------------- | :--------- | | Common stock | $694 | $689 | $5 | 0.73% | | Additional paid-in capital | $472,933 | $453,784 | $19,149 | 4.22% | | Accumulated other comprehensive income (loss)—net of tax | $(5,573) | $(2,933) | $(2,640) | 89.99% | | Retained earnings | $1,648,253 | $1,428,444 | $219,809 | 15.39% | | Treasury stock, at cost | $(272,203) | $(237,011) | $(35,192) | 14.85% | | Total stockholders' equity | $1,844,104 | $1,642,973 | $201,131 | 12.24% | - The Company repurchased **$31.6 million** of common stock at an average price of **$37.22 per share** during the three and nine months ended March 31, 2023[101](index=101&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20nine%20months%20ended%20March%2031%2C%202023%20and%202022) Condensed Consolidated Statements of Cash Flows (9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | | Net cash provided by operating activities | $119,247 | $69,482 | 71.63% | | Net cash used in investing activities | $(1,807,976) | $(1,724,106) | 4.86% | | Net cash provided by financing activities | $2,618,254 | $1,866,161 | 40.30% | | Net change in cash and cash equivalents | $929,525 | $211,537 | 339.04% | | Cash and cash equivalents—End of period | $2,504,224 | $1,249,314 | 100.45% | - Net increase in deposits was a primary driver for the increase in net cash provided by financing activities, increasing by **$2.79 billion (YoY)**[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Summary of Significant Accounting Policies](index=10&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The Company operates through two segments: **Banking Business** (Axos Bank) and **Securities Business** (Axos Nevada Holding, LLC)[26](index=26&type=chunk) - Reclassifications of certain non-interest income components and cash flow amounts for prior periods were made to conform to current presentation, with **no effect on total non-interest income, net income, financial position, or cash flows**[27](index=27&type=chunk) - The Company plans to adopt ASUs (2020-04, 2021-04, 2022-06) related to reference rate reform in fiscal year 2024, **not expecting a material impact** on its Consolidated Financial Statements[29](index=29&type=chunk) [2. Acquisitions](index=11&type=section&id=2.%20ACQUISITIONS) - On August 2, 2021, Axos Clearing LLC acquired E*TRADE Advisor Services (rebranded as Axos Advisor Services, AAS) for **$54.8 million in cash**[31](index=31&type=chunk) - The acquisition resulted in **$27.1 million** of identifiable intangible assets and **$24.4 million** of goodwill, expected to be tax deductible[33](index=33&type=chunk) Intangible Assets Acquired (as of acquisition date) | Intangible Asset | Fair Value (in thousands) | Useful Lives (Years) | | :--------------- | :------------------------ | :------------------- | | Trade Name | $290 | 0.16 | | Proprietary Technology | $10,990 | 7 | | Customer Relationships | $15,650 | 14 | | Non-Compete Agreements | $130 | 1 | | Total | $27,060 | | [3. Fair Value](index=12&type=section&id=3.%20FAIR%20VALUE) - Non-recurring fair value measurements for other real estate owned and repossessed vehicles resulted in charge-offs of **$535 thousand** for the three months ended March 31, 2023, and **$1,499 thousand** for the nine months ended March 31, 2023[50](index=50&type=chunk) Assets Measured at Fair Value on a Recurring Basis (March 31, 2023) | Asset (in thousands) | Level 2 (Observable Inputs) | Level 3 (Unobservable Inputs) | Total | | :------------------- | :-------------------------- | :---------------------------- | :---- | | Securities—Trading: Municipal | $400 | — | $400 | | Securities—Available-for-sale: Agency MBS | $22,782 | — | $22,782 | | Securities—Available-for-sale: Non-Agency MBS | — | $206,300 | $206,300 | | Securities—Available-for-sale: Municipal | $3,384 | — | $3,384 | | Securities—Available-for-sale: Asset-backed securities and structured notes | $47,146 | — | $47,146 | | Loans held for sale | $7,920 | — | $7,920 | | Mortgage servicing rights | — | $25,396 | $25,396 | | Other assets—Derivative instruments | — | $381 | $381 | Loans Held for Sale at Fair Value (March 31, 2023 vs. June 30, 2022) | Metric (in thousands) | March 31, 2023 | June 30, 2022 | | :-------------------- | :------------- | :------------ | | Aggregate fair value | $7,920 | $4,973 | | Contractual balance | $7,663 | $4,881 | | Unrealized gain | $257 | $92 | [4. Securities](index=18&type=section&id=4.%20SECURITIES) - Unrealized losses on available-for-sale securities are primarily driven by the **increase in interest rates** since the securities were purchased[64](index=64&type=chunk) - As of March 31, 2023, the Company had **twenty-nine securities** in a continuous loss position for more than 12 months and **twenty-five** for less than 12 months[67](index=67&type=chunk) Total Debt Securities (March 31, 2023 vs. June 30, 2022) | Metric (in thousands) | March 31, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :-------------------- | :------------- | :------------ | :---------------- | :--------- | | Trading Securities (Fair Value) | $400 | $1,758 | $(1,358) | -77.25% | | Available-for-sale Securities (Fair Value) | $279,612 | $262,518 | $17,094 | 6.51% | | Total Debt Securities (Fair Value) | $279,612 | $262,518 | $17,094 | 6.51% | | Total Amortized Cost (Available-for-sale) | $286,731 | $265,867 | $20,864 | 7.85% | | Total Unrealized Gains (Available-for-sale) | $1,654 | $1,972 | $(318) | -16.13% | | Total Unrealized Losses (Available-for-sale) | $(8,773) | $(5,321) | $(3,452) | 64.87% | [5. Loans & Allowance for Credit Losses](index=21&type=section&id=5.%20LOANS%20&%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) - The provision for credit losses for the three and nine months ended March 31, 2023, was primarily driven by **loan growth, changes in the macroeconomic environment, and changes in loan product mix**[74](index=74&type=chunk) Loan Portfolio Composition (March 31, 2023 vs. June 30, 2022) | Loan Portfolio (in thousands) | March 31, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :---------------------------- | :------------- | :------------ | :---------------- | :--------- | | Single Family - Mortgage & Warehouse | $4,087,525 | $3,988,462 | $99,063 | 2.48% | | Multifamily and Commercial Mortgage | $3,082,801 | $2,877,680 | $205,121 | 7.13% | | Commercial Real Estate | $5,794,304 | $4,781,044 | $1,013,260 | 21.19% | | Commercial & Industrial - Non-RE | $2,454,839 | $2,028,128 | $426,711 | 21.04% | | Auto & Consumer | $594,596 | $567,228 | $27,368 | 4.82% | | Other | $6,240 | $11,134 | $(4,894) | -43.96% | | Total gross loans and leases | $16,020,305 | $14,253,676 | $1,766,629 | 12.39% | | Allowance for credit losses - loans | $(161,293) | $(148,617) | $(12,676) | 8.53% | Nonaccrual Loans (March 31, 2023 vs. June 30, 2022) | Metric (in thousands) | March 31, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :-------------------- | :------------- | :------------ | :---------------- | :--------- | | Total nonaccrual loans | $95,941 | $118,194 | $(22,253) | -18.83% | | Nonaccrual loans to total loans | 0.60% | 0.83% | -0.23% | -27.71% | [6. Stockholders' Equity and Stock-Based Compensation](index=27&type=section&id=6.%20STOCKHOLDERS'%20EQUITY%20AND%20STOCK-BASED%20COMPENSATION) - The Company repurchased **$31.6 million** of common stock at an average price of **$37.22 per share** during the three and nine months ended March 31, 2023[101](index=101&type=chunk) - On April 26, 2023, the Board of Directors authorized a new program to repurchase up to **$100 million** of common stock, in addition to the existing **$21 million** remaining authorization[101](index=101&type=chunk)[254](index=254&type=chunk) Unrecognized Stock Award Compensation Expense (in thousands) | Fiscal Year | Amount | | :---------- | :----- | | Remainder of fiscal year 2023 | $7,113 | | 2024 | $22,261 | | 2025 | $14,418 | | 2026 | $5,561 | | 2027 | $832 | | Thereafter | $194 | | Total | $50,379 | [7. Earnings Per Common Share](index=28&type=section&id=7.%20EARNINGS%20PER%20COMMON%20SHARE) Earnings Per Common Share (March 31, 2023 vs. 2022) | Metric | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :----- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Basic EPS | $1.33 | $1.04 | 27.88% | $3.67 | $3.07 | 19.54% | | Diluted EPS | $1.32 | $1.02 | 29.41% | $3.63 | $3.02 | 20.20% | | Average common shares issued and outstanding (Basic) | 59,930,634 | 59,542,128 | 0.65% | 59,928,263 | 59,476,488 | 0.76% | | Total dilutive common shares outstanding (Diluted) | 60,627,400 | 60,611,959 | 0.02% | 60,595,414 | 60,605,486 | -0.02% | [8. Commitments and Contingencies](index=28&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) - As of March 31, 2023, the Company had unfunded commitments of **$57.5 million** in fixed rate loans and **$2,816.0 million** in variable rate loans, totaling **$2,873.5 million**[105](index=105&type=chunk) - A jury verdict in the MUFG Union Bank, N.A. v. Axos Bank, et al case awarded damages to Union Bank, which was reduced to **$7.8 million** for tortious interference after a settlement application. The Company recorded a **$16 million** accrued expense related to this litigation[110](index=110&type=chunk) - Axos Clearing's customer activities involve **off-balance-sheet risk** from securities transactions, with clearing agreements requiring broker-dealers to indemnify Axos Clearing for customer failures[106](index=106&type=chunk)[107](index=107&type=chunk) [9. Segment Reporting and Revenue Information](index=30&type=section&id=9.%20SEGMENT%20REPORTING%20AND%20REVENUE%20INFORMATION) - The Company operates through two operating segments: **Banking Business** and **Securities Business**, with performance evaluated based on pre-tax profit or loss[112](index=112&type=chunk)[113](index=113&type=chunk) Segment Income Before Taxes (3 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | Banking Business 2023 | Securities Business 2023 | Corporate/Eliminations 2023 | Consolidated 2023 | Banking Business 2022 | Securities Business 2022 | Corporate/Eliminations 2022 | Consolidated 2022 | | :-------------------- | :-------------------- | :----------------------- | :-------------------------- | :---------------- | :-------------------- | :----------------------- | :-------------------------- | :---------------- | | Net interest income | $196,249 | $6,335 | $(3,602) | $198,982 | $147,828 | $3,377 | $(1,667) | $149,538 | | Provision for credit losses | $5,500 | — | — | $5,500 | $4,500 | — | — | $4,500 | | Non-interest income | $10,685 | $38,298 | $(16,737) | $32,246 | $15,741 | $15,609 | $(2,576) | $28,774 | | Non-interest expense | $98,252 | $25,138 | $(12,346) | $111,044 | $65,076 | $20,242 | $1,501 | $86,819 | | Income before taxes | $103,182 | $19,495 | $(7,993) | $114,684 | $93,993 | $(1,256) | $(5,744) | $86,993 | Segment Income Before Taxes (9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | Banking Business 2023 | Securities Business 2023 | Corporate/Eliminations 2023 | Consolidated 2023 | Banking Business 2022 | Securities Business 2022 | Corporate/Eliminations 2022 | Consolidated 2022 | | :-------------------- | :-------------------- | :----------------------- | :-------------------------- | :---------------- | :-------------------- | :----------------------- | :-------------------------- | :---------------- | | Net interest income | $574,524 | $15,486 | $(10,643) | $579,367 | $432,328 | $14,059 | $(4,639) | $441,748 | | Provision for credit losses | $17,750 | — | — | $17,750 | $12,500 | — | — | $12,500 | | Non-interest income | $31,954 | $103,467 | $(47,638) | $87,783 | $46,864 | $45,169 | $(5,770) | $86,263 | | Non-interest expense | $295,332 | $74,924 | $(35,597) | $334,659 | $190,250 | $61,169 | $5,850 | $257,269 | | Income before taxes | $293,396 | $44,029 | $(22,684) | $314,741 | $276,442 | $(1,941) | $(16,259) | $258,242 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Analyzes operational performance, financial condition, liquidity, and capital resources for the reporting period [General Overview](index=32&type=section&id=General%20Overview) - Axos Financial, Inc. is a diversified financial services company with approximately **$19.8 billion in assets**[125](index=125&type=chunk) - Axos Bank provides consumer and business banking products, while Axos Clearing LLC, Axos Advisor Services, and Axos Invest, Inc. offer securities products and services[125](index=125&type=chunk) - The Company is supervised by the **Federal Reserve**, and Axos Bank is regulated by the **OCC** and **FDIC**. Securities entities are registered with the **SEC** and **FINRA**[126](index=126&type=chunk)[128](index=128&type=chunk) [Segment Information](index=33&type=section&id=Segment%20Information) - The **Banking Business** segment provides online banking, concierge banking, and mortgage, vehicle, and unsecured lending, along with deposit products and cash management services[130](index=130&type=chunk) - The **Securities Business** segment offers comprehensive securities clearing and custody services to introducing broker-dealers and registered investment advisor correspondents, and digital investment advisory services to retail investors[131](index=131&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) - The preparation of condensed consolidated financial statements requires management to make **estimates and assumptions** that affect reported amounts and disclosures[132](index=132&type=chunk) - Critical accounting estimates are those considered most important due to **difficult judgments and inherent uncertainty**, detailed in Note 1 of the 2022 Form 10-K[133](index=133&type=chunk) [Use of Non-GAAP Financial Measures](index=34&type=section&id=USE%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) - Non-GAAP financial measures include **adjusted earnings**, **adjusted earnings per common share**, and **tangible book value per common share**[135](index=135&type=chunk) - Adjusted earnings exclude the after-tax impact of non-recurring acquisition-related costs and other unusual charges to provide an understanding of **core business**[136](index=136&type=chunk) Adjusted Earnings and EPS (Non-GAAP) | Metric (in thousands, except per share) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (GAAP) | $79,850 | $61,823 | $219,809 | $182,820 | | Acquisition-related costs | $2,846 | $2,803 | $8,169 | $8,676 | | Other costs | — | — | $16,000 | — | | Tax effects of adjustments | $(864) | $(811) | $(7,290) | $(2,534) | | Adjusted earnings (Non-GAAP) | $81,832 | $63,815 | $236,688 | $188,962 | | Adjusted EPS (Non-GAAP) | $1.35 | $1.05 | $3.91 | $3.12 | [Selected Financial Information](index=35&type=section&id=SELECTED%20FINANCIAL%20INFORMATION) Selected Balance Sheet Data (March 31, 2023 vs. June 30, 2022 vs. March 31, 2022) | Metric (in thousands) | Mar 31, 2023 | Jun 30, 2022 | Mar 31, 2022 | | :-------------------- | :----------- | :----------- | :----------- | | Total assets | $19,782,481 | $17,401,165 | $16,080,950 | | Loans—net of allowance for credit losses | $15,836,255 | $14,091,061 | $13,093,603 | | Total deposits | $16,738,869 | $13,946,422 | $12,733,002 | | Total stockholders' equity | $1,844,104 | $1,642,973 | $1,585,585 | Capital Ratios (March 31, 2023 vs. June 30, 2022 vs. March 31, 2022) | Metric | Mar 31, 2023 | Jun 30, 2022 | Mar 31, 2022 | | :----- | :----------- | :----------- | :----------- | | Axos Financial, Inc.: Tier 1 leverage | 9.29% | 9.25% | 9.43% | | Axos Financial, Inc.: Total capital | 13.63% | 12.73% | 13.30% | | Axos Bank: Tier 1 leverage | 10.17% | 10.65% | 10.51% | | Axos Bank: Total capital | 12.40% | 12.01% | 12.24% | | Axos Clearing LLC: Net capital | $79,459 | $38,915 | $39,109 | Selected Income Statement Data (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net interest income | $198,982 | $149,538 | $579,367 | $441,748 | | Net income | $79,850 | $61,823 | $219,809 | $182,820 | | Diluted EPS | $1.32 | $1.02 | $3.63 | $3.02 | [Results of Operations](index=37&type=section&id=RESULTS%20OF%20OPERATIONS) Net Income and EPS (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :----- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Net income | $79.9 million | $61.8 million | 29.16% | $219.8 million | $182.8 million | 20.23% | | Diluted EPS | $1.32 | $1.02 | 29.41% | $3.63 | $3.02 | 20.20% | [Net Interest Income](index=37&type=section&id=Net%20Interest%20Income) - Total interest and dividend income increased by **91.9%** for the three months and **70.5%** for the nine months, driven by higher rates and average loan balances[148](index=148&type=chunk) - Total interest expense surged by **918.1%** for the three months and **584.1%** for the nine months, mainly due to higher rates paid on deposits and increased deposit balances[149](index=149&type=chunk) Net Interest Income and Margin (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :----- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Net interest income | $199.0 million | $149.5 million | 33.1% | $579.4 million | $441.7 million | 31.2% | | Net interest margin | 4.42% | 4.02% | 0.40% pts | 4.41% | 4.11% | 0.30% pts | [Provision for Credit Losses](index=40&type=section&id=Provision%20for%20Credit%20Losses) - The increase in provision for credit losses was primarily driven by **loan growth, changes in the macroeconomic environment, and changes in loan product mix**[157](index=157&type=chunk) Provision for Credit Losses (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Provision for credit losses | $5,500 | $4,500 | 22.22% | $17,750 | $12,500 | 42.00% | [Non-Interest Income](index=41&type=section&id=Non-Interest%20Income) - Higher broker-dealer fee income was driven by **higher rates earned on cash sorting balances** at non-affiliated banks, partially offset by lower average cash sorting balances[160](index=160&type=chunk) - Lower mortgage banking income and prepayment penalty fee income were due to **higher mortgage rates, lower originations, and changes in MSR fair value**[160](index=160&type=chunk) Non-Interest Income (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Broker-dealer fee income | $13,745 | $5,174 | 165.65% | $32,735 | $17,968 | 82.19% | | Advisory fee income | $6,879 | $7,739 | -11.11% | $20,821 | $21,078 | -1.22% | | Banking and service fees | $8,443 | $7,278 | 15.90% | $25,100 | $22,444 | 11.84% | | Mortgage banking income | $1,107 | $5,790 | -80.88% | $5,113 | $15,700 | -67.40% | | Prepayment penalty fee income | $2,072 | $2,793 | -25.88% | $4,014 | $9,073 | -55.76% | | Total non-interest income | $32,246 | $28,774 | 12.00% | $87,783 | $86,263 | 1.76% | [Non-Interest Expense](index=41&type=section&id=Non-Interest%20Expense) - Headcount increased by **13% to 1,466** at March 31, 2023, from 1,294 at March 31, 2022, contributing to higher salaries and related costs[163](index=163&type=chunk) - The nine-month increase in general and administrative expenses was primarily due to a **$16.0 million accrual** in Q1 2023 for an adverse legal judgment[169](index=169&type=chunk) Non-Interest Expense (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Salaries and related costs | $53,046 | $43,133 | 23.00% | $149,762 | $123,849 | 20.92% | | Data processing | $15,808 | $12,274 | 28.80% | $44,462 | $36,565 | 21.59% | | Advertising and promotional | $11,786 | $3,357 | 251.10% | $29,055 | $10,131 | 186.79% | | Professional services | $6,747 | $4,346 | 55.29% | $23,289 | $14,834 | 57.00% | | General and administrative expense | $6,898 | $7,230 | -4.59% | $37,672 | $23,951 | 57.29% | | Total non-interest expenses | $111,044 | $86,819 | 27.90% | $334,659 | $257,269 | 30.08% | [Provision for Income Taxes](index=42&type=section&id=Provision%20for%20Income%20Taxes) Income Tax Expense and Effective Tax Rate (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Income tax expense | $34,834 | $25,170 | 38.32% | $94,932 | $75,422 | 25.87% | | Effective income tax rate | 30.37% | 28.93% | 1.44% pts | 30.16% | 29.21% | 0.95% pts | [Segment Results](index=42&type=section&id=SEGMENT%20RESULTS) [Banking Business](index=43&type=section&id=Banking%20Business) - The Banking Business segment's non-interest income decreased due to **lower mortgage banking income** (higher mortgage rates, lower originations, MSR fair value changes) and **lower prepayment penalty income**[188](index=188&type=chunk) Banking Business Segment Performance (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Net interest income | $196,249 | $147,828 | 32.75% | $574,524 | $432,328 | 32.89% | | Non-interest income | $10,685 | $15,741 | -32.12% | $31,954 | $46,864 | -31.81% | | Non-interest expense | $98,252 | $65,076 | 50.98% | $295,332 | $190,250 | 55.23% | | Income before taxes | $103,182 | $93,993 | 9.78% | $293,396 | $276,442 | 6.13% | Banking Business Segment Ratios (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Efficiency ratio | 47.48% | 39.79% | 48.70% | 39.70% | | Return on average assets | 1.61% | 1.84% | 1.59% | 1.89% | | Interest rate spread | 3.55% | 4.06% | 3.71% | 4.17% | | Net interest margin | 4.50% | 4.21% | 4.56% | 4.33% | [Securities Business](index=48&type=section&id=Securities%20Business) - Non-interest income increased significantly due to **higher fees earned on FDIC-insured bank deposits**, including amounts from the Banking Business segment[193](index=193&type=chunk) - Non-interest expense increased due to **higher salaries and related costs** from increased headcount and salaries, and higher professional services expense for the nine-month period[194](index=194&type=chunk) Securities Business Segment Performance (3 & 9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 3 Months Ended Mar 31, 2023 | 3 Months Ended Mar 31, 2022 | YoY Change (%) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Net interest income | $6,335 | $3,377 | 87.60% | $15,486 | $14,059 | 10.15% | | Non-interest income | $38,298 | $15,609 | 145.36% | $103,467 | $45,169 | 129.08% | | Non-interest expense | $25,138 | $20,242 | 24.19% | $74,924 | $61,169 | 22.49% | | Income before taxes | $19,495 | $(1,256) | -1652.07% | $44,029 | $(1,941) | -2378.57% | [Financial Condition](index=48&type=section&id=FINANCIAL%20CONDITION) [Balance Sheet Analysis](index=48&type=section&id=Balance%20Sheet%20Analysis) - Total assets increased by **$2.4 billion**, or **13.7%**, to **$19.8 billion** as of March 31, 2023, from $17.4 billion at June 30, 2022[196](index=196&type=chunk) - The increase in total assets was primarily due to a **$1.7 billion increase in loans** and a **$0.9 billion increase in cash**, cash equivalents and cash segregated[196](index=196&type=chunk) - Total liabilities increased **$2.2 billion**, primarily due to a **$2.8 billion increase in deposits**, partially offset by a $0.4 billion decrease in securities loaned[196](index=196&type=chunk) [Loans](index=49&type=section&id=Loans) - Net loans held for investment increased **12.4% to $15.8 billion** at March 31, 2023, from $14.1 billion at June 30, 2022[198](index=198&type=chunk) - Loan originations totaled **$6.2 billion**, partially offset by repayments of **$4.3 billion**[198](index=198&type=chunk) Loan Portfolio Composition (March 31, 2023 vs. June 30, 2022) | Loan Portfolio | March 31, 2023 (Amount) | March 31, 2023 (Percent) | June 30, 2022 (Amount) | June 30, 2022 (Percent) | | :------------- | :---------------------- | :----------------------- | :--------------------- | :---------------------- | | Commercial Real Estate | $5,794,304 | 36.3% | $4,781,044 | 33.5% | | Single Family - Mortgage & Warehouse | $4,087,525 | 25.5% | $3,988,462 | 28.0% | | Multifamily and Commercial Mortgage | $3,082,801 | 19.2% | $2,877,680 | 20.2% | | Commercial & Industrial - Non-RE | $2,454,839 | 15.3% | $2,028,128 | 14.2% | | Auto & Consumer | $594,596 | 3.7% | $567,228 | 4.0% | | Other | $6,240 | 0.0% | $11,134 | 0.1% | | Total gross loans | $16,020,305 | 100.0% | $14,253,676 | 100.0% | [Asset Quality and Allowance for Credit Losses - Loans](index=49&type=section&id=Asset%20Quality%20and%20Allowance%20for%20Credit%20Losses%20-%20Loans) - The decrease in non-performing assets was primarily attributable to a **decrease in non-accrual single family mortgage loans**[203](index=203&type=chunk) - The Bank had **no performing troubled debt restructurings** as of March 31, 2023 and June 30, 2022[204](index=204&type=chunk) Non-performing Assets (March 31, 2023 vs. June 30, 2022) | Metric (in thousands) | March 31, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :-------------------- | :------------- | :------------ | :---------------- | :--------- | | Total non-performing loans | $95,941 | $118,194 | $(22,253) | -18.83% | | Foreclosed real estate | $4,344 | — | $4,344 | N/A | | Repossessed—Autos | $958 | $798 | $160 | 20.05% | | Total non-performing assets | $101,243 | $118,992 | $(17,749) | -14.92% | | Total non-performing loans as a percentage of total loans | 0.60% | 0.83% | -0.23% pts | -27.71% | | Total non-performing assets as a percentage of total assets | 0.51% | 0.68% | -0.17% pts | -25.00% | [Investment Securities](index=50&type=section&id=Investment%20Securities) - Total investment securities were **$280.0 million** as of March 31, 2023, compared with $264.3 million at June 30, 2022[206](index=206&type=chunk) - During the nine months ended March 31, 2023, the Company purchased a **$30.0 million MBS security** and received principal repayments of approximately **$9.7 million** in its available-for-sale portfolio[206](index=206&type=chunk) [Deposits](index=50&type=section&id=Deposits) - Deposits increased by **$2.8 billion**, or **20.0%**, to **$16.7 billion** at March 31, 2023, from $13.9 billion at June 30, 2022[207](index=207&type=chunk) - Interest-bearing demand and savings increased **$3.9 billion** and time deposits increased **$743.2 million**[207](index=207&type=chunk) - Non-interest bearing deposits decreased **$1.9 billion**, or **37.0%**, to **$3.2 billion** at March 31, 2023, from $5.0 billion at June 30, 2022[207](index=207&type=chunk) Deposit Portfolio Composition (March 31, 2023 vs. June 30, 2022) | Deposit Type (in thousands) | March 31, 2023 (Amount) | March 31, 2023 (Rate) | June 30, 2022 (Amount) | June 30, 2022 (Rate) | | :-------------------------- | :---------------------- | :-------------------- | :--------------------- | :------------------- | | Non-interest bearing | $3,172,791 | —% | $5,033,970 | —% | | Interest bearing: Demand | $4,133,014 | 2.62% | $3,611,889 | 0.61% | | Interest bearing: Savings | $7,634,813 | 3.78% | $4,245,555 | 0.95% | | Total interest-bearing demand and savings | $11,767,827 | 3.37% | $7,857,444 | 0.79% | | Total time deposits | $1,798,251 | 3.95% | $1,055,008 | 1.25% | | Total deposits | $16,738,869 | 2.79% | $13,946,422 | 0.54% | [Borrowings](index=51&type=section&id=Borrowings) - Total borrowings were **$424.3 million** at March 31, 2023, down **$138.4 million**, or **24.6%**, from June 30, 2022[214](index=214&type=chunk) - Weighted average cost of borrowings during the quarter increased to **4.48%** for the quarter ended March 31, 2023, from 2.85% for the quarter ended June 30, 2022[214](index=214&type=chunk) - As of March 31, 2023, FHLB advances consisted of **$90 million** in term loans with a remaining weighted average life of 4.8 years, and the Company had an additional **$2.5 billion** of immediately available, undrawn capacity[215](index=215&type=chunk) [Stockholders' Equity](index=51&type=section&id=Stockholders'%20Equity) - Stockholders' equity increased **$201.1 million to $1,844.1 million** at March 31, 2023, compared to $1,643.0 million at June 30, 2022[216](index=216&type=chunk) - The increase was primarily due to **net income of $219.8 million** and net stock-based compensation activity of $15.6 million, partially offset by purchases of treasury stock[216](index=216&type=chunk) - The Company repurchased **$31.6 million** of common stock at an average price of **$37.22 per share** during the three and nine months ended March 31, 2023[217](index=217&type=chunk) [Liquidity](index=52&type=section&id=LIQUIDITY) - The primary driver behind the increase in net cash inflows from financing activities was a **larger net increase in deposits**[220](index=220&type=chunk) - As of March 31, 2023, the Bank had **$2.45 billion** immediately available and **$4.71 billion** available with additional collateral from the FHLB, and **$3.13 billion** available from the Federal Reserve Bank of San Francisco Discount Window[220](index=220&type=chunk)[221](index=221&type=chunk) Cash Flow Information (9 Months Ended March 31, 2023 vs. 2022) | Metric (in thousands) | 9 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2022 | YoY Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | | Operating Activities | $119,247 | $69,482 | 71.63% | | Investing Activities | $(1,807,976) | $(1,724,106) | 4.86% | | Financing Activities | $2,618,254 | $1,866,161 | 40.30% | [Off-Balance Sheet Commitments](index=52&type=section&id=OFF-BALANCE%20SHEET%20COMMITMENTS) - As of March 31, 2023, the Company had unfunded commitments to originate loans with an aggregate outstanding principal balance of **$2,873.5 million**[223](index=223&type=chunk) - The Company also had commitments to sell loans with an aggregate outstanding principal balance of **$8.5 million**[223](index=223&type=chunk) - Axos Clearing's customer activities involve **off-balance-sheet risk** from potential non-performance by customers or other brokers, with clearing agreements requiring indemnification[224](index=224&type=chunk) [Capital Resources and Requirements](index=53&type=section&id=CAPITAL%20RESOURCES%20AND%20REQUIREMENTS) - As of March 31, 2023, Axos Financial, Inc. and Axos Bank met all capital adequacy requirements and were **"well capitalized"** under the regulatory framework[227](index=227&type=chunk) - The Company and Bank elected the **five-year CECL transition guidance** for calculating regulatory capital, which phases out 25% of the cumulative CECL adjustment per year starting fiscal year 2023[228](index=228&type=chunk) Regulatory Capital Ratios (March 31, 2023 vs. June 30, 2022) | Metric | Axos Financial, Inc. Mar 31, 2023 | Axos Financial, Inc. Jun 30, 2022 | Axos Bank Mar 31, 2023 | Axos Bank Jun 30, 2022 | Minimum Capital Ratio | "Well Capitalized" Ratio | | :----- | :-------------------------------- | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :----------------------- | | Tier 1 leverage | 9.29% | 9.25% | 10.17% | 10.65% | 4.00% | 5.00% | | Common equity tier 1 capital | 10.71% | 9.86% | 11.55% | 11.24% | 4.50% | 6.50% | | Tier 1 capital | 10.71% | 9.86% | 11.55% | 11.24% | 6.00% | 8.00% | | Total capital | 13.63% | 12.73% | 12.40% | 12.01% | 8.00% | 10.00% | [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Details the Company's exposure to market risk, primarily interest rate risk, and its management strategies [Banking Business](index=55&type=section&id=Banking%20Business%20(Market%20Risk)) - The Banking Business measures interest rate sensitivity as the difference between **interest-earning assets and interest-bearing liabilities** that mature or re-price within a given period[237](index=237&type=chunk) - The Bank's overall **asset sensitivity increased** at March 31, 2023, due to a cushion of additional liquidity created in response to unprecedented liquidity stress in the banking industry[243](index=243&type=chunk) Banking Business Net Interest Rate Sensitivity Gap (March 31, 2023) | Metric (in thousands) | Six Months or Less | Over Six Months Through One Year | Over One Year Through Five Years | Over Five Years | Total | | :-------------------- | :----------------- | :------------------------------- | :------------------------------- | :-------------- | :---- | | Net interest rate sensitivity gap | $4,616,613 | $(3,384,583) | $3,543,555 | $88,047 | $4,863,632 | | Cumulative gap | $4,616,613 | $1,232,030 | $4,775,585 | $4,863,632 | $4,863,632 | | Cumulative gap—as % of total interest earning assets | 24.83% | 6.63% | 25.69% | 26.16% | 26.16% | [Securities Business](index=56&type=section&id=Securities%20Business%20(Market%20Risk)) - The Securities Business is exposed to market risk from its role as a **financial intermediary** in customer, broker-dealer, and registered investment advisor transactions, including securities lending and trading activities[245](index=245&type=chunk) - Interest rate risk is managed by setting and monitoring **limits on the size and duration of positions** and the length of time securities can be held[246](index=246&type=chunk) - Credit risk from potential non-performance by counterparties, customers, or issuers is managed by **setting position limits, conducting credit reviews, and using central clearing organizations**[247](index=247&type=chunk) [ITEM 4. Controls and Procedures](index=57&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Confirms the effectiveness of disclosure controls and procedures as of the end of the reporting period - Management concluded that the Company's disclosure controls and procedures were **effective** as of March 31, 2023[248](index=248&type=chunk) - **No changes** in the Company's internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended March 31, 2023[248](index=248&type=chunk) - Control systems provide **reasonable, not absolute, assurance**, and their effectiveness can be impacted by resource constraints, business conditions, or compliance deterioration[249](index=249&type=chunk) PART II – OTHER INFORMATION [ITEM 1. Legal Proceedings](index=58&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Discloses ongoing legal proceedings, including shareholder actions and a significant jury verdict - Six shareholder derivative actions were filed against the Company, with **two dismissed without prejudice** in March 2023, and others stayed pending resolution of a related wrongful termination lawsuit[108](index=108&type=chunk)[109](index=109&type=chunk) - A jury verdict in MUFG Union Bank, N.A. v. Axos Bank, et al awarded damages, which were reduced to **$7.8 million** for tortious interference after a settlement application. The Company accrued **$16 million** for this and believes it has substantial grounds for appeal[110](index=110&type=chunk) [ITEM 1A. Risk Factors](index=58&type=section&id=ITEM%201A.%20RISK%20FACTORS) Summarizes key business and industry risks that could impact the Company's financial results - The Company faces inherent business and industry risks, detailed in its **2022 Form 10-K** and supplemented by its Quarterly Report on Form 10-Q for the period ended December 31, 2022[252](index=252&type=chunk) - Actual results and timing of events could differ materially from forward-looking statements due to risks such as **changes in interest rates, government regulation, economic conditions, and litigation outcomes**[124](index=124&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Reports on common stock repurchases during the quarter and the authorization of a new buyback program - On April 26, 2023, the Board of Directors authorized a new program to repurchase up to **$100 million** of its common stock, in addition to the existing share repurchase plan[254](index=254&type=chunk) Common Stock Repurchases (Quarter Ended March 31, 2023) | Period | Number of Shares Purchased | Average Price Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares Yet Under or That May be Purchased Under the Plans or Programs (in thousands) | | :----- | :------------------------- | :---------------------- | :------------------------------------------------------------------------------- | :----------------------------------------------------------------------------------------------------------- | | March 1, 2023 to March 31, 2023 | 849,081 | $37.22 | 849,081 | $21,159 | | For the Three Months Ended March 31, 2023 | 849,081 | $37.22 | 849,081 | $21,159 | [ITEM 3. Defaults Upon Senior Securities](index=58&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Reports no defaults upon senior securities during the period [ITEM 4. Mine Safety Disclosures](index=59&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) States that mine safety disclosures are not applicable [ITEM 5. Other Information](index=59&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Indicates no other information is reported for the period [ITEM 6. Exhibits](index=59&type=section&id=ITEM%206.%20EXHIBITS) Lists the exhibits filed with the report, including required certifications and XBRL data - Exhibits include CEO and CFO certifications (**Sections 302 and 906 of Sarbanes-Oxley Act**) and Inline XBRL Taxonomy documents[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) [Signatures](index=60&type=section&id=SIGNATURES) Provides the official signatures of the company's executive officers, dating the report - The report is signed by **Gregory Garrabrants, President and Chief Executive Officer**, and **Derrick K. Walsh, Executive Vice President and Chief Financial Officer**, on April 27, 2023[265](index=265&type=chunk)