Axos Financial(US:AX)2025-08-21 20:05Employment and Human Capital - As of June 30, 2025, the Company had 1,989 full-time employees, with no labor union representation[42]. - The Company’s human capital management objectives include attracting and retaining high-quality talent through competitive pay and benefits[43]. Regulatory Compliance and Oversight - The Company is subject to comprehensive regulation under state and federal laws, primarily for customer protection and financial system stability[47]. - The Bank is subject to extensive regulation and examination by the OCC, FDIC, and CFPB regarding federal consumer financial laws[62]. - The Bank is required to maintain sufficient liquidity to ensure safe and sound operations and was in compliance with the applicable liquidity standard as of June 30, 2025[72]. - The Bank's ability to make capital distributions, such as cash dividends, is limited by OCC regulations[75]. - The Bank is subject to the Bank Secrecy Act and anti-money laundering laws, requiring the establishment of a risk-based system of internal controls[83][84]. - The Bank's authority to engage in transactions with affiliates is limited by federal law, with aggregate amounts restricted to 20% of the institution's capital and surplus[73]. - Compliance with the Advisers Act imposes fiduciary duties and various obligations on the investment advisory business, with potential enforcement proceedings for violations[90]. - Significant new rules from the SEC and the Dodd-Frank Act may increase operational costs and affect financial institutions' interactions with Axos Financial[91]. Financial Performance and Capital Management - The Company’s capital ratios exceeded the minimums necessary to be considered "well-capitalized" under regulatory requirements as of June 30, 2025[57]. - Axos Bank's total assets reached $23.9 billion as of June 30, 2025, placing it under the direct supervision of the CFPB[81]. - The Bank's regulatory capital exceeded all minimum regulatory capital requirements as of June 30, 2025, with a tangible capital standard of at least 1.5% of total average adjusted assets[69][68]. - The total liabilities and equity stood at $23,988,748, with stockholders' equity amounting to $2,614,202[312]. Business Operations and Services - The Securities Business Segment provided services to 327 financial organizations, including correspondent broker-dealers and RIAs as of June 30, 2025[34]. - The Company generates deposits through various channels, including advertisements and partnerships, aiming for greater scalability than traditional branch models[33]. - Axos Clearing offers fully disclosed clearing services and margin loans, contributing to both fee and interest income for the Securities Business Segment[35][38]. - The Company undertakes acquisitions consistent with its growth strategies, although specific details on recent transactions were not provided[40]. - Axos Financial's broker-dealers are in compliance with applicable net capital requirements as of June 30, 2025[94]. Risk Management - The Company manages credit risk in its non-agency securities by assessing historic credit performance and enhancements like subordination and over-collateralization[32]. - The Company employs risk management strategies by setting limits on the size and duration of securities positions to mitigate interest rate risk[318]. - The Company actively manages credit risk through position limits and periodic credit reviews of counterparties in its Securities Business Segment[319]. Interest Rate Risk - The primary market risk faced by Axos Financial is interest rate risk, which affects net interest income, net interest margin, and the value of the securities portfolio[302]. - Interest rate sensitivity is measured as the difference between interest-earning assets and interest-bearing liabilities that mature or reprice within a given period[309]. - A positive interest rate sensitivity gap indicates that interest rate sensitive assets exceed liabilities, which is favorable in a rising interest rate environment[310]. - The net interest rate sensitivity gap was $5,237,424, with a cumulative gap of 22.61% of total interest-earning assets[312]. - A 200 basis points increase in interest rates is projected to result in an 8.4% increase in net interest income over the first 12 months[314]. - The company anticipates a 3.8% increase in market value of equity (MVE) with a 200 basis points rise in interest rates[315]. - The Securities Business Segment is primarily exposed to interest rate risk from margin loans and securities borrowing activities[316]. - As of June 30, 2025, adjustable rate loans had lifetime rate caps that were 519 basis points greater than their current stated note rates[307]. - Interest-bearing deposits totaled $17,862,866, indicating a strong funding base for the banking operations[312].