Axos Financial, Inc. Reports Record First Quarter Fiscal 2022 Results
Axos Financial, Inc. (NYSE: AX) reported a 13.6% increase in net income for Q1 FY2022, reaching $60.2 million or $0.99 per diluted share, up from $53.0 million in Q1 FY2021. Adjusted earnings also grew by 13.5% to $62.2 million, while adjusted EPS rose 13.2% to $1.03. Net interest income increased 15.2% to $146.6 million, driven by loan growth of 16.3%. However, non-interest income dropped 25.5% to $26.7 million, primarily due to lower mortgage banking revenue. Total assets increased to $14.9 billion.
- Net income increased by 13.6% to $60.2 million.
- Diluted EPS rose 12.5% to $0.99.
- Net interest income up 15.2% to $146.6 million.
- Net loans increased by $464.2 million or 16.3% annualized.
- Net interest margin increased to 4.22%, up from 3.84% year-over-year.
- Return on equity at 16.2%, reflecting strong profitability.
- Non-interest income decreased by 25.5% to $26.7 million.
- Significant drop in mortgage banking income by $14.3 million.
- Non-interest expenses rose by $8.9 million, impacting profitability.
Diluted Earnings Per Share in First Quarter 2022 up
Adjusted earnings and adjusted earnings per diluted common share (“adjusted EPS”), non-GAAP measures, which exclude non-cash amortization expenses and non-recurring costs related to mergers and acquisitions, and other non-recurring costs increased
First Quarter Fiscal 2022 Financial Summary |
||||||||||
|
Three Months Ended
|
|
|
|||||||
(Dollars in thousands, except per share data) |
2021 |
|
2020 |
|
% Change |
|||||
Net interest income |
$ |
146,642 |
|
|
$ |
127,327 |
|
|
15.2 |
% |
Non-interest income |
$ |
26,702 |
|
|
$ |
35,855 |
|
|
(25.5 |
)% |
Net income |
$ |
60,210 |
|
|
$ |
53,022 |
|
|
13.6 |
% |
Adjusted earnings (Non-GAAP)1 |
$ |
62,228 |
|
|
$ |
54,841 |
|
|
13.5 |
% |
Net income attributable to common stockholders |
$ |
60,210 |
|
|
$ |
52,945 |
|
|
13.7 |
% |
Diluted EPS |
$ |
0.99 |
|
|
$ |
0.88 |
|
|
12.5 |
% |
Adjusted EPS (Non-GAAP)1 |
$ |
1.03 |
|
|
$ |
0.91 |
|
|
13.2 |
% |
1 |
See “Use of Non-GAAP Financial Measures” |
“We generated strong loan growth while increasing our net interest margins,” stated
“We continue to generate strong profitability and returns, as reflected by our
Other Highlights
-
Net loans totaled
at$11.9 billion September 30, 2021 , an increase of from$464.2 million at$11.4 billion June 30, 2021 -
Completed the acquisition of EAS on
August 2, 2021 -
Net interest margin was
4.22% compared to3.84% in the three months endedSeptember 30, 2020 ; average cost on all checking and savings deposits of0.15% compared to0.41% in the three months endedSeptember 30, 2020 -
Return on average common stockholders’ equity was
16.20% for the three months endedSeptember 30, 2021 compared to17.26% for the comparable period one year ago -
Net annualized charge-offs to average loans was 1 basis point, down from 7 basis points for the three months ended
September 30, 2020 -
Book value increased to
per share, up from$24.52 , or$20.80 17.9% atSeptember 30, 2020
First Quarter Fiscal 2022 Income Statement Summary
For the three months ended
The provision for credit losses was
For the three months ended
Non-interest expense, comprised of various operating expenses, increased
Balance Sheet Summary
Axos’ total assets increased
The Bank’s Tier 1 core capital to adjusted average assets ratio was
Conference Call
A conference call and webcast will be held on
About
The condensed consolidated financial statements include the accounts of
Segment Reporting
The Company operates through two segments: Banking Business and Securities Business. In order to reconcile the two segments to the consolidated totals, the Company includes parent-only activities and intercompany eliminations.
The following tables present the operating results of the segments:
|
Three Months Ended |
|||||||||||||||
(Dollars in thousands) |
Banking
|
|
Securities
|
|
Corporate/Eliminations |
|
Axos
|
|||||||||
Net interest income |
$ |
142,241 |
|
|
$ |
6,176 |
|
|
$ |
(1,775 |
) |
|
|
$ |
146,642 |
|
Provision for credit losses |
4,000 |
|
|
— |
|
|
— |
|
|
|
4,000 |
|
||||
Non-interest income |
14,828 |
|
|
13,106 |
|
|
(1,232 |
) |
|
|
26,702 |
|
||||
Non-interest expense |
62,725 |
|
|
19,273 |
|
|
2,433 |
|
|
|
84,431 |
|
||||
Income before taxes |
$ |
90,344 |
|
|
$ |
9 |
|
|
$ |
(5,440 |
) |
|
|
$ |
84,913 |
|
|
Three Months Ended |
||||||||||||||
(Dollars in thousands) |
Banking
|
|
Securities
|
|
Corporate/Eliminations |
|
Axos
|
||||||||
Net interest income |
$ |
123,008 |
|
|
$ |
4,894 |
|
|
$ |
(575) |
|
|
$ |
127,327 |
|
Provision for credit losses |
11,800 |
|
|
— |
|
|
— |
|
|
11,800 |
|
||||
Non-interest income |
30,212 |
|
|
5,784 |
|
|
(141) |
|
|
35,855 |
|
||||
Non-interest expense |
61,217 |
|
|
11,352 |
|
|
2,977 |
|
|
75,546 |
|
||||
Income before taxes |
$ |
80,203 |
|
|
$ |
(674) |
|
|
$ |
(3,693) |
|
|
$ |
75,836 |
|
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with GAAP, this report includes non-GAAP financial measures such as adjusted earnings, adjusted earnings per diluted common share, and tangible book value per common share. Non-GAAP financial measures have inherent limitations, may not be comparable to similarly titled measures used by other companies and are not audited. Readers should be aware of these limitations and should be cautious as to their reliance on such measures. Although we believe the non-GAAP financial measures disclosed in this report enhance investors’ understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures.
We define “adjusted earnings”, a non-GAAP financial measure, as net income without the after-tax impact of non-recurring acquisition-related costs and other costs (unusual or non-recurring charges). Adjusted earnings per diluted common share (“adjusted EPS”), a non-GAAP financial measure, is calculated by dividing non-GAAP adjusted earnings by the average number of diluted common shares outstanding during the period. We believe the non-GAAP measures of adjusted earnings and adjusted EPS provide useful information about the Bank’s operating performance. We believe excluding the non-recurring acquisition related costs and other costs (unusual or non-recurring) provides investors with an alternative understanding of Axos’ core business.
Below is a reconciliation of net income, the nearest compatible GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:
|
Three Months Ended |
||||||
(Dollars in thousands, except per share amounts) |
2021 |
|
2020 |
||||
Net income |
$ |
60,210 |
|
|
$ |
53,022 |
|
Acquisition-related costs |
2,846 |
|
|
2,602 |
|
||
Income taxes |
(828) |
|
|
(783) |
|
||
Adjusted earnings (Non-GAAP) |
$ |
62,228 |
|
|
$ |
54,841 |
|
Adjusted EPS (Non-GAAP) |
$ |
1.03 |
|
|
$ |
0.91 |
|
We define “tangible book value”, a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. Tangible book value is calculated using common stockholders’ equity minus mortgage servicing rights, goodwill and other intangible assets. Tangible book value per common share, a non-GAAP financial measure, is calculated by dividing tangible book value by the common shares outstanding at the end of the period. We believe tangible book value per common share is useful in evaluating the Company’s capital strength, financial condition, and ability to manage potential losses.
Below is a reconciliation of total stockholders’ equity, the nearest compatible GAAP measure, to tangible book value per common share (Non-GAAP) as of the dates indicated:
|
|
||||||
(Dollars in thousands, except per share amounts) |
2021 |
|
2020 |
||||
Total stockholders’ equity |
$ |
1,458,621 |
|
|
$ |
1,236,965 |
|
Less: preferred stock |
— |
|
|
5,063 |
|
||
Common stockholders’ equity |
1,458,621 |
|
|
1,231,902 |
|
||
Less: mortgage servicing rights, carried at fair value |
18,438 |
|
|
12,130 |
|
||
Less: goodwill and other intangible assets |
164,944 |
|
|
122,817 |
|
||
Tangible common stockholders’ equity (Non-GAAP) |
$ |
1,275,239 |
|
|
$ |
1,096,955 |
|
Common shares outstanding at end of period |
59,494,633 |
|
|
59,215,934 |
|
||
Tangible book value per common share (Non-GAAP) |
$ |
21.43 |
|
|
$ |
18.52 |
|
Forward-Looking Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, including without limitation statements relating to Axos’ financial prospects and other projections of its performance and asset quality, Axos’ ability to continue to grow profitably and increase its business, Axos’ ability to continue to diversify its lending and deposit franchises and the anticipated timing and financial performance of other offerings, initiatives, and acquisitions. These forward-looking statements are made on the basis of the views and assumptions of management regarding future events and performance as of the date of this press release. Actual results and the timing of events could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties, including without limitation uncertainties surrounding the severity, duration, and effects of the COVID-19 pandemic, Axos’ ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, inflation, government regulation, general economic conditions, conditions in the real estate markets in which we operate, risks associated with credit quality, the outcome and effects of pending class action litigation filed against the Company and other factors beyond our control. These and other risks and uncertainties detailed in Axos’ periodic reports filed with the
The following tables set forth certain selected financial data concerning the periods indicated:
|
|||||||||||
|
|
|
|
|
|
||||||
Selected Balance Sheet Data: |
|
|
|
|
|
||||||
Total assets |
$ |
14,906,750 |
|
|
$ |
14,265,565 |
|
|
$ |
13,382,238 |
|
Loans—net of allowance for credit losses |
11,879,021 |
|
|
11,414,814 |
|
|
10,925,450 |
|
|||
Loans held for sale, carried at fair value |
33,344 |
|
|
29,768 |
|
|
89,454 |
|
|||
Loans held for sale, lower of cost or fair value |
11,949 |
|
|
12,294 |
|
|
14,729 |
|
|||
Allowance for credit losses - loans |
136,778 |
|
|
132,958 |
|
|
132,915 |
|
|||
Securities—trading |
1,941 |
|
|
1,983 |
|
|
423 |
|
|||
Securities—available-for-sale |
135,996 |
|
|
187,335 |
|
|
203,931 |
|
|||
Securities borrowed |
457,282 |
|
|
619,088 |
|
|
263,470 |
|
|||
Customer, broker-dealer and clearing receivables |
427,169 |
|
|
369,815 |
|
|
283,125 |
|
|||
Total deposits |
11,747,442 |
|
|
10,815,797 |
|
|
10,555,658 |
|
|||
Advances from the FHLB |
157,500 |
|
|
353,500 |
|
|
242,500 |
|
|||
Borrowings, subordinated notes and debentures |
255,896 |
|
|
221,358 |
|
|
453,843 |
|
|||
Securities loaned |
539,505 |
|
|
728,988 |
|
|
315,976 |
|
|||
Customer, broker-dealer and clearing payables |
510,040 |
|
|
535,425 |
|
|
369,428 |
|
|||
Total stockholders’ equity |
1,458,621 |
|
|
1,400,936 |
|
|
1,236,965 |
|
|||
|
|
|
|
|
|
||||||
Capital Ratios: |
|
|
|
|
|
||||||
Equity to assets at end of period |
9.78 |
% |
|
9.82 |
% |
|
9.24 |
% |
|||
|
|
|
|
|
|
||||||
Tier 1 leverage (core) capital to adjusted average assets |
9.19 |
% |
|
8.82 |
% |
|
8.52 |
% |
|||
Common equity tier 1 capital (to risk-weighted assets) |
10.79 |
% |
|
11.36 |
% |
|
11.08 |
% |
|||
Tier 1 capital (to risk-weighted assets) |
10.79 |
% |
|
11.36 |
% |
|
11.13 |
% |
|||
Total capital (to risk-weighted assets) |
13.10 |
% |
|
13.78 |
% |
|
14.39 |
% |
|||
|
|
|
|
|
|
||||||
Tier 1 leverage (core) capital to adjusted average assets |
10.14 |
% |
|
9.45 |
% |
|
8.83 |
% |
|||
Common equity tier 1 capital (to risk-weighted assets) |
11.89 |
% |
|
12.28 |
% |
|
11.52 |
% |
|||
Tier 1 capital (to risk-weighted assets) |
11.89 |
% |
|
12.28 |
% |
|
11.52 |
% |
|||
Total capital (to risk-weighted assets) |
12.80 |
% |
|
13.21 |
% |
|
12.55 |
% |
|||
|
|
|
|
|
|
||||||
Net capital |
$ |
39,663 |
|
|
$ |
35,950 |
|
|
$ |
34,322 |
|
Excess capital |
$ |
31,435 |
|
|
$ |
27,904 |
|
|
$ |
28,830 |
|
Net capital as a percentage of aggregate debit items |
9.64 |
% |
|
8.94 |
% |
|
12.50 |
% |
|||
Net capital in excess of |
$ |
19,092 |
|
|
$ |
15,836 |
|
|
$ |
20,590 |
|
|
|||||||
|
At or for the Three Months Ended |
||||||
|
|
||||||
|
2021 |
|
2020 |
||||
Selected Income Statement Data: |
|
|
|
||||
Interest and dividend income |
$ |
158,310 |
|
|
$ |
149,889 |
|
Interest expense |
11,668 |
|
|
22,562 |
|
||
Net interest income |
146,642 |
|
|
127,327 |
|
||
Provision for credit losses |
4,000 |
|
|
11,800 |
|
||
Net interest income after provision for credit losses |
142,642 |
|
|
115,527 |
|
||
Non-interest income |
26,702 |
|
|
35,855 |
|
||
Non-interest expense |
84,431 |
|
|
75,546 |
|
||
Income before income tax expense |
84,913 |
|
|
75,836 |
|
||
Income tax expense |
24,703 |
|
|
22,814 |
|
||
Net income |
$ |
60,210 |
|
|
$ |
53,022 |
|
Net income attributable to common stock |
$ |
60,210 |
|
|
$ |
52,945 |
|
|
|
|
|
||||
Per Common Share Data: |
|
|
|
||||
Net income: |
|
|
|
||||
Basic |
$ |
1.01 |
|
|
$ |
0.89 |
|
Diluted |
$ |
0.99 |
|
|
$ |
0.88 |
|
Adjusted earnings (Non-GAAP) |
$ |
1.03 |
|
|
$ |
0.91 |
|
Book value |
$ |
24.52 |
|
|
$ |
20.80 |
|
Tangible book value (Non-GAAP) |
$ |
21.43 |
|
|
$ |
18.52 |
|
|
|
|
|
||||
Weighted average number of common shares outstanding: |
|
|
|
||||
Basic |
59,390,846 |
|
|
59,509,320 |
|
||
Diluted |
60,644,288 |
|
|
59,926,784 |
|
||
Common shares outstanding at end of period |
59,494,633 |
|
|
59,215,934 |
|
||
Common shares issued at end of period |
68,370,617 |
|
|
67,622,935 |
|
||
|
|
|
|
||||
Performance Ratios and Other Data: |
|
|
|
||||
Loan originations for investment |
$ |
2,092,279 |
|
|
$ |
1,330,812 |
|
Loan originations for sale |
$ |
209,967 |
|
|
$ |
440,804 |
|
Return on average assets |
1.66 |
% |
|
1.56 |
% |
||
Return on average common stockholders’ equity |
16.20 |
% |
|
17.26 |
% |
||
Interest rate spread1 |
4.04 |
% |
|
3.62 |
% |
||
Net interest margin2 |
4.22 |
% |
|
3.84 |
% |
||
Net interest margin2 – Banking Business Segment only |
4.48 |
% |
|
3.91 |
% |
||
Efficiency ratio3 |
48.71 |
% |
|
46.30 |
% |
||
Efficiency ratio3 – Banking Business Segment only |
39.93 |
% |
|
39.95 |
% |
||
|
|
|
|
||||
Asset Quality Ratios: |
|
|
|
||||
Net annualized charge-offs to average loans |
0.01 |
% |
|
0.07 |
% |
||
Non-performing loans to total loans |
1.12 |
% |
|
1.56 |
% |
||
Non-performing assets to total assets |
0.94 |
% |
|
1.33 |
% |
||
Allowance for credit losses to total loans held for investment at end of period |
1.14 |
% |
|
1.20 |
% |
||
Allowance for credit losses to non-performing loans |
101.97 |
% |
|
77.23 |
% |
1 |
Interest rate spread represents the difference between the annualized weighted average yield on interest-earning assets and the annualized weighted average rate paid on interest-bearing liabilities. |
|
2 |
Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. |
|
3 |
Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006138/en/
Investor Relations Contact:
VP, Corporate Development & Investor Relations
858-649-2218
jlai@axosfinancial.com
Source:
FAQ
What were Axos Financial's Q1 FY2022 earnings results?
How did Axos Financial's revenue change in Q1 FY2022?
What is the current net loan growth for Axos Financial?
What are the key financial metrics for Axos Financial in Q1 FY2022?