Axos Financial Inc

Balance Sheet Analysis

Our total assets increased $2.3 billion, or 11.3%, to $22.6 billion at March 31, 2024, from $20.3 billion at June 30, 2023, primarily attributable to an increase in loans. Our total liabilities increased $2.0 billion, or 10.9%, to $20.4 billion at March 31, 2024 from $18.4 billion at June 30, 2023, primarily attributable to an increase in deposits.

Loans

The following table sets forth the composition of the loan portfolio:

1 Includes PCD loans of $285.4 million in Multifamily and Commercial Mortgage and $44.5 million in Commercial Real Estate as of March 31, 2024. For further detail on PCD loans refer to Note 1—“Summary of Significant Accounting Policies”.

The increase in Multifamily and Commercial Mortgage loans and the related impact on the allowance for credit losses and unaccreted discounts and loan fees, was primarily driven by the FDIC Loan Purchase. For further information on the FDIC Loan Purchase, refer to Note 2—“Acquisitions.”The increase in Commercial & Industrial - Non-RE loans reflects the Company’s focus on expanding the sales and operational support teams to drive growth in this sector.

Asset Quality and Allowance for Credit Losses - Loans

Non-performing Assets

Non-performing loans are comprised of those 90 days or more past due and other nonaccrual loans. Loans not yet reaching 90 days past due may be placed on nonaccrual status based on management’s assessment of the aging of contractual principal amounts due, among other factors. For an aging analysis of the Company’s loans held for investment as of March 31, 2024 and June 30, 2023, see Note 5—“Loans and Allowance for Credit Losses” in the Condensed Consolidated Financial Statements. Non-performing assets include non-performing loans plus, other real estate owned and repossessed vehicles.

Non-performing assets consisted of the following:

Total non-performing assets increased to $124.9 million at March 31, 2024 from $95.3 million at June 30, 2023, primarily attributable to increases in single-family mortgage and commercial real estate non-performing loans.

Management establishes an allowance for credit losses based upon its evaluation of the expected lifetime credit losses related to the amortized cost basis of loans on the balance sheet. The net charge-off rate for the three months ended March 31, 2024 was 0.07%, compared to 0.04% for the March 31, 2023. Of the 0.07% of net charge-offs for the three months ended March 31, 2024, 0.04% was related to Auto loans covered by insurance policies. For additional information regarding the Company’s allowance for credit losses see Note 5—“Loans and Allowance for Credit Losses” in the Condensed Consolidated Financial Statements. For a discussion of the provision for credit losses for the three and nine months ended March 31, 2024, see “Results of Operations—Provision for Credit Losses.”We believe that the lower average LTV in the loan portfolio will continue to result in future lower average mortgage loan charge-offs when compared to many other comparable banks. The resolution of existing other real estate owned and non-performing loans should not have a significant adverse impact on our operating results.

Available-for-Sale Securities

Total available-for-sale securities were $207.6 million as of March 31, 2024, compared with $232.4 million at June 30, 2023. During the nine months ended March 31, 2024, we purchased $9.6 million of securities and received proceeds from sales and principal repayments of approximately $39.4 million. The remainder of the change for the available-for-sale portfolio is attributable to changes in the fair value of the securities.

Deposits

Deposits increased by $2.0 billion, or 11.6%, to $19.1 billion at March 31, 2024, from $17.1 billion at June 30, 2023. Interest-bearing demand and savings increased $2.4 billion and time deposits decreased $0.3 billion. Non-interest bearing deposits decreased by $0.1 billion as of March 31, 2024, compared with June 30, 2023.

The following table sets forth the composition of the deposit portfolio:

1 Based on weighted-average stated interest rates at end of period.

2 The total interest-bearing includes brokered deposits of $1,840.0 million and $2,028.5 million as of March 31, 2024 and June 30, 2023, respectively, of which $482.1 million and $690.9 million, respectively, are time deposits classified as $250,000 and under.

The following table sets forth the number of deposit accounts by type:

Total Bank deposits that exceeded the FDIC insurance limit of $250,000 or were not collateralized at both March 31, 2024 and June 30, 2023 were $2.1 billion and $1.7 billion, respectively. The maturities of time deposits that exceeded the FDIC insurance limit were as follows:

Borrowings

The following table sets forth the composition of our borrowings and the interest rates:

We regularly use advances from the FHLB to manage our interest rate risk and, to a lesser extent, manage our liquidity position. Generally, FHLB advances with terms between three and ten years have been used to fund the origination of loans and to provide us with interest rate risk protection should rates rise. On March 6, 2024, the Company repurchased $5.0 million par value of its 4.00% Fixed-to-Floating Rate Subordinated Notes due March 1, 2032. For further information refer to Note 11—“Borrowings, Subordinated Notes and Debentures.”

Stockholders’ Equity

Stockholders’ equity increased $279.1 million to $2,196.3 million at March 31, 2024, compared to $1,917.2 million at June 30, 2023. The increase was primarily the result of net income for the nine months ended March 31, 2024 of $345.1 million partially offset by repurchases of $83.8 million of shares of the Company’s common stock.

During the nine months ended March 31, 2024, the Company repurchased a total of $83.8 million or 2,267,610 shares of common stock at an average price of $36.95 share. On February 12, 2024, the Company announced its Board of Directors’ authorization of a program to repurchase up to $100 million of its common stock. The new share repurchase authorization is in addition to the existing share repurchase plan announced on April 27, 2023, which had approximately $19.8 million remaining as of March 31, 2024. There were no purchases of treasury stock under the new repurchase authorization.