• Net Income: Approximately $105 million for the quarter ended June 30, 2024, up 20% year-over-year.

• Earnings Per Share (EPS): $1.80 for the quarter and $7.66 for the fiscal year, representing year-over-year growth of 23% and 51%, respectively.

• Net Interest Margin: 4.65% for the quarter ended June 30, 2024, up from 4.19% a year ago.

• Loan Balances: Ending loan balances increased 2.7% linked quarter and 16.9% year-over-year to $19.2 billion.

• Deposit Growth: Deposits grew by approximately $256 million linked quarter, primarily from non-interest bearing deposits.

• Return on Average Common Shareholder Equity: 18.8% for the quarter and 21.6% for the fiscal year.

• Tangible Book Value Per Share: Increased by 26% year-over-year.

• Loan Originations: $2.5 billion for the quarter, up approximately 11% year-over-year.

• Non-Performing Loans: Total non-performing loans dropped by $9 million linked quarter.

• Allowance for Credit Losses: 1.34% of total loans held for investment.

• Non-Interest Income: Approximately $31 million for the quarter, down from $32.7 million a year ago.

• Share Repurchases: $13.2 million of common stock repurchased in the fourth quarter at an average price of $48 per share.

• Warning! GuruFocus has detected 3 Warning Signs with THRM.

Release Date: July 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Axos Financial Inc (NYSE:AX) reported double-digit year-over-year growth in earnings per share, book value per share, and ending loan balances for the ninth consecutive quarter.

• The company achieved a 26% year-over-year growth in tangible book value per share, driven by strong returns.

• Net interest margin was 4.65% for the quarter, showing an improvement from the previous year.

• Axos Financial Inc (NYSE:AX) increased deposits by $256 million in the fourth quarter, with significant growth in non-interest-bearing deposits.

• The company maintained strong credit quality, with net annualized charge-offs to average loans at only 5 basis points.

Negative Points

• Net interest margin decreased from 4.87% in the previous quarter to 4.65% due to higher excess liquidity.

• Ending balances for multifamily term loans and commercial real estate specialty loans declined by $122 million and $31 million, respectively.

• Non-interest income decreased slightly compared to the previous year, impacted by lower broker dealer fee income and prepayment penalty fees.

• Non-interest expense increased by $7 million due to higher salary, benefits, and professional service expenses.

• The company faced challenges in loan growth due to tighter spreads and fewer projects, impacting overall growth potential.

Q & A Highlights

Q: Can you discuss the deposit growth initiatives and the impact of new hires in treasury management? A: Gregory Garrabrants, President and CEO, explained that Axos Financial has been investing in treasury management teams, adding small, focused teams to enhance deposit growth. The company is also seeing higher levels of operating deposits from evolving loan portfolios, particularly in C&I related categories.

Q: How are funding costs trending, and is there potential for deposit repricing? A: Gregory Garrabrants noted that funding costs are trending down, allowing Axos to cut rates slightly. The company is not experiencing as much pressure on funding costs as before.

Q: What is the feedback on the Universal Digital Bank (UDB) rollout, and how is AI being leveraged? A: The UDB rollout has been positive, with good cross-sell opportunities and account growth. AI is being used in various areas, including chatbots for call diversion and development tools. Axos has an AI task force to explore further opportunities and ensure successful use cases are shared across the company.

Q: Can you explain the decline in broker dealer fee income and its relation to cash balances? A: Gregory Garrabrants mentioned that the decline is partly due to one-time items affecting broker dealer fees. The cash balances have stabilized, and the company is investing in technology and product development to support future growth.

Q: How does Axos plan to manage its net interest margin (NIM) amid potential rate cuts? A: Derrick Walsh, CFO, stated that the guidance for core NIM remains around 4.25% to 4.35%. The company is positioned to adjust rates on its consumer portfolio and expects to manage the impact of rate cuts effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.