Axos Financial(US:AX)2025-10-30 20:17Financial Performance - For the three months ended September 30, 2025, net income was $112.352 million, with adjusted earnings of $120.377 million[119]. - The diluted EPS for the same period was $1.94, while the adjusted EPS was $2.07[119]. - Tangible book value per common share increased to $45.22 as of September 30, 2025, compared to $39.22 a year earlier[120]. - Net income for the three months ended September 30, 2025, was $112,352 thousand, slightly up from $112,340 thousand for the same period in 2024, resulting in a diluted earnings per share of $1.94 compared to $1.93[123]. - The effective income tax rate decreased to 25.04% for the three months ended September 30, 2025, from 29.43% in the same period in 2024[137]. Asset and Liability Management - The Company has approximately $27.4 billion in assets and $43.0 billion of assets under custody and/or administration at Axos Clearing LLC[106]. - Total assets increased to $27,431,817 thousand as of September 30, 2025, up from $24,783,078 thousand as of June 30, 2025, and $23,569,084 thousand as of September 30, 2024, representing a year-over-year growth of 16.0%[121]. - Total liabilities increased by $2.5 billion or 11.5% to $24.6 billion at September 30, 2025, mainly due to higher deposit balances and secured financings from the Verdant acquisition[149]. - Stockholders' equity increased by $112.4 million to $2.793 billion at September 30, 2025, driven by net income for the quarter[158]. - The Company and Bank reported Tier 1 capital of $2,587,308, meeting all capital adequacy requirements and classified as "well capitalized" under regulatory standards[173]. Income and Expense Analysis - The Company generated non-interest income from various sources, including fees from loans originated for sale and deposit account service fees[106]. - Non-interest income increased by $3.7 million, or 13.0%, primarily due to higher banking and servicing fee income[134]. - Non-interest expense increased by $8.8 million, or 6.0%, primarily due to higher professional services and data processing expenses[135]. - The provision for credit losses was $17.3 million for the three months ended September 30, 2025, compared to $14.0 million for the same period in 2024[132]. Loan and Deposit Growth - Total deposits rose to $22,264,753 thousand as of September 30, 2025, compared to $20,829,543 thousand as of June 30, 2025, marking an increase of 6.9%[121]. - The company reported a growth in loans held for investment, net, to $1,585,527 thousand for the three months ended September 30, 2025, compared to $49,224 thousand for the same period in 2024, indicating strong loan demand[122]. - Total gross loans reached $23.1 billion at September 30, 2025, up from $21.6 billion at June 30, 2025, with Commercial & Industrial - Non-RE loans increasing to 34.5% of the portfolio[150]. - Total deposits increased by $1.4 billion or 6.9% to $22.3 billion at September 30, 2025, with significant growth in interest-bearing demand and savings accounts[154]. Capital Adequacy and Risk Management - Common equity tier 1 capital to risk-weighted assets was 11.66% as of September 30, 2025, down from 12.52% as of June 30, 2025, reflecting changes in capital adequacy ratios[121]. - The Company and Bank's common equity tier 1 capital ratio to risk-weighted assets was 11.66% as of September 30, 2025, exceeding the minimum requirement of 4.5%[170]. - The Company may need to raise additional capital to support further growth and maintain its "well capitalized" status[170]. - The Company and Bank were in compliance with the capital conservation buffer requirement, with minimums set at 7.0%, 8.5%, and 10.5% for common equity tier 1, tier 1, and total risk-based capital ratios, respectively[174]. Interest Rate Sensitivity - The sensitivity of net interest income to a 200 basis points increase is projected to be a 6.7% change in the first 12 months and 12.5% in the next 12 months[182]. - A 100 basis points increase in interest rates is expected to result in a 3.5% change in net interest income for the first 12 months and 6.2% for the next 12 months[182]. - The market value of equity (MVE) is projected to increase by 4.7% with a 200 basis points rise in interest rates[183]. - A 100 basis points increase in interest rates is expected to lead to a 3.2% increase in MVE[183]. Business Segments Overview - The Banking Business Segment focuses on online banking, mortgage, vehicle, and unsecured lending, serving consumers and small businesses nationwide[113]. - The Securities Business Segment includes clearing broker-dealer and registered investment advisor custody businesses, offering products to both independent customers and Banking Business Segment clients[114]. - The Banking Business Segment's net interest income decreased by $1.3 million, or 0.4%, compared to the same period in 2024[141]. - The Securities Business Segment's net interest income increased by $0.9 million, or 12.8%, compared to the same period in 2024[146]. Credit and Interest Rate Risk - Credit risk in the Securities Business Segment arises from potential non-performance by counterparties, customers, or issuers of securities[187]. - The company conducts periodic credit reviews and monitors position limits for each counterparty to manage credit risk[188]. - Collateral for margin loans and securities lending activities is marked to market daily, with adjustments made as necessary[188]. - The Securities Business Segment is primarily exposed to interest rate risk from interest-earning assets and funding sources, including customer and correspondent cash balances[185].