Axos Financial(US:AX)2023-04-28 03:41Financial 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]