Axos Financial(US:AX)2022-08-05 00:27Financial Data and Key Metrics Changes - The company reported net income of $57.9 million for Q4 2022, representing a year-over-year growth of 6.7%, and $240.7 million for the fiscal year, an increase of 11.6% [9] - Book value per share increased by 16.3% year-over-year to $27.48 [9] - Net interest margin for Q4 2022 was 4.21%, up 19 basis points from the previous quarter and 29 basis points from the same quarter last year [9][10] - The efficiency ratio for the banking business segment was 46.7% for Q4 2022, which would have been 40.6% excluding a one-time charge of $11 million [11][18] Business Line Data and Key Metrics Changes - Total loan originations for Q4 2022 were $3.2 billion, a 41% increase from $2.3 billion in the same quarter last year [12] - Ending net loans for investment balances were $14.1 billion, up 7.6% linked quarter and 30.4% annualized [9] - C&I loan originations were $2.1 billion, reflecting strong growth across various lending sectors [16] - Auto lending saw ending loan balances increase by 8.7% linked quarter [17] Market Data and Key Metrics Changes - Deposits grew by 9.5% linked quarter to $13.9 billion, with consumer deposits comprising 54% of total deposits [20] - Non-interest bearing deposits increased by approximately $900 million from the previous quarter, representing 36% of total deposits [10][21] - The weighted average demand and savings deposit costs were 29 basis points for Q4 2022, compared to 14 basis points in the previous quarter [21] Company Strategy and Development Direction - The company aims to maintain a net interest margin above its long-term target of 3.8% to 4% and expects mid-teens loan growth for fiscal 2023 [27][33] - Investments in technology and infrastructure are ongoing to enhance operational efficiency and support growth initiatives [36] - The company is focused on expanding its advisory services and increasing assets under custody, targeting a $1 billion growth in this area [51][33] Management's Comments on Operating Environment and Future Outlook - Management noted that while rising interest rates and economic uncertainty present challenges, the company is well-positioned due to its efficient operations and strong credit quality [16][30] - The outlook for loan growth remains positive, with expectations for continued demand across multiple loan categories [33] - Management anticipates that the net interest margin will remain stable, influenced by loan portfolio growth and advisory deposit levels [27][29] Other Important Information - The company added $6 million to its loan loss provision in Q4 2022, reflecting strong loan growth [31] - The total allowance for credit losses was $148.6 million, representing 1.04% of total loans [32] - The company has access to approximately $2 billion of Federal Home Loan Bank borrowings, providing additional liquidity [34] Q&A Session Summary Question: Growth and Competition - Management indicated that while growth is expected to continue, there may be reduced activity in the market due to financial tightening conditions, which have also reduced competition, particularly in the non-bank sector [46][48] Question: Deposit Growth from New Clients - Management targets $1 billion growth in assets under custody, primarily engaging with smaller RIAs, with expectations for meaningful growth over time [51] Question: On-Balance Sheet Deposits - Management discussed the regulatory limitations on certain cash components, indicating that some cash will likely remain off-balance sheet due to these restrictions [55] Question: Balance Sheet Management - Management confirmed the need to maintain a level of deposits at third-party banks to ensure access to those banks over time [60] Question: Expense Growth Rate - Management provided guidance on maintaining a banking efficiency ratio between 41% and 42%, with expected growth in non-interest expenses due to increased headcount and marketing efforts [72]