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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  July 30, 2019
398967775_axosfinancialcolorpnga20.jpg
Axos Financial, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
001-37709
33-0867444
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer Identification
Number)
 
4350 La Jolla Village Drive, Suite 140, San Diego, CA
92122
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code: (858) 350-6200          
 
Not Applicable

(Former name or former address, if changed since last report.)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o                                    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o                                    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

o                                    Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o






Item 2.02    Results of Operations and Financial Condition

On July 30, 2019, Axos Financial, Inc. (the “Registrant”), parent of Axos Bank, issued a press release announcing its unaudited earnings for the fourth quarter and fiscal year ended June 30, 2019. A copy of the press release and unaudited financial schedules are set forth as Exhibit 99.1 and 99.2 respectively, and are incorporated by reference in this Item 2.02.

Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 2.02 of Form 8-K, including Exhibit 99.1 and 99.2 are being furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise be subject to the liabilities of that section, nor are they incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, regardless of any general incorporation language in such filing.






Item 9.01 Financial Statements and Exhibits

(d)    Exhibits.
Exhibit
 
Description
99.1
 
99.2
 






SIGNATURE

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
Axos Financial, Inc.
 
 
 
Date:
July 30, 2019
By:
/s/ Andrew J. Micheletti
 
 
 
 
Andrew J. Micheletti
 
 
 
EVP and Chief Financial Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


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Axos Financial, Inc. Announces Record Net Income of $155.1 million for Fiscal 2019
Earnings Per Share for the Fourth Quarter of Fiscal 2019 up 13.8% Year-over-Year

SAN DIEGO, CA – (BUSINESS WIRE) – July 30, 2019 – Axos Financial, Inc. (NYSE: AX) (Axos), parent company of Axos Bank (the Bank), today announced unaudited financial results for the fourth fiscal quarter ended June 30, 2019. Net income was $40.6 million, an increase of 9.5% over net income of $37.1 million for the quarter ended June 30, 2018. Earnings attributable to Axos’ common stockholders were $40.6 million or $0.66 per diluted share for the fourth quarter of fiscal 2019, an increase of 9.5% from $37.0 million or $0.58 per diluted share for the fourth quarter ended June 30, 2018.
Adjusted earnings and adjusted earnings per diluted common share (“adjusted EPS”), non-GAAP measures, which excludes non-cash amortization expenses and non-recurring costs related to mergers and acquisitions, and other non-recurring costs increased 11.2% to $42.2 million and increased 15.3% to $0.68, respectively, for the quarter ended June 30, 2019 compared to $37.9 million and $0.59, respectively, for the quarter ended June 30, 2018.

Fourth Quarter Fiscal 2019 Financial Summary:
 
Three Months Ended 
June 30,
 
 
(Dollars in thousands, except per share data)
2019
 
2018
 
% Change
Net interest income
$
100,437

 
$
87,048

 
15.4
%
Non-interest income
$
23,224

 
$
16,977

 
36.8
%
Net income
$
40,634

 
$
37,117

 
9.5
%
Adjusted Earnings (Non-GAAP)1
$
42,158

 
$
37,921

 
11.2
%
Net income attributable to common stockholders
$
40,557

 
$
37,040

 
9.5
%
Diluted EPS
$
0.66

 
$
0.58

 
13.8
%
Adjusted EPS (Non-GAAP)1
$
0.68

 
$
0.59

 
15.3
%
 
 
 
 
 
 
1See “Use of Non-GAAP Financial Measures”
For the fiscal year ended June 30, 2019, net income was a record $155.1 million, an increase of 1.8% over net income of $152.4 million for the twelve months ended June 30, 2018. Earnings attributable to Axos’ common stockholders were $154.8 million or $2.48 per diluted share for the twelve months ended June 30, 2019, an increase of 1.8% from $152.1 million or $2.37 per diluted share for the twelve months ended June 30, 2018. Record earnings for the fiscal year ended June 30, 2019 were primarily the result of growth in the Bank’s loan and lease portfolio, growth in fee income and a reduced income tax rate. Operating expenses increased due to higher levels of loan originations and deposit activities and expenses from our acquired businesses.

“We ended fiscal 2019 with solid momentum, with ending loan and deposit balances increasing by 12.4% and 15.2% annualized on a linked quarter basis, respectively” stated Greg Garrabrants, President and Chief Executive Officer of Axos. “This growth reflects the successful diversification of our lending and deposit franchises. Our efficiency and returns remain best-in-class, with a bank-only efficiency ratio of 40.51% and consolidated return on assets of 1.51% for the year. The investments we are making in our organic and acquired businesses position us well for profitable growth.”






“Our net interest margin remains strong, increasing this quarter by 10 basis points year-over-year,” said Andy Micheletti, Executive Vice President and Chief Financial Officer of Axos. “The improvement was driven by strong growth in our C&I lending, commercial banking and specialty deposit balances. We continue to deploy our excess capital in organic investments and opportunistic share repurchases, buying back approximately $8.6 million of common stock in the quarter ended June 30, 2019.”
Other Highlights:
Total assets reached $11.2 billion, up $1.7 billion or 17.6% compared to June 30, 2018
Loan and lease portfolio grew by $949.8 million or 11.3% compared to June 30, 2018
Loan and lease originations for investment for the three months ended June 30, 2019 were $1,501.4 million, up 10.3% compared to the quarter ended June 30, 2018
Deposits grew by $997.8 million or 12.5% compared to June 30, 2018
Return on average common stockholders’ equity was 15.49% for the three months ended June 30, 2019
Asset quality remains strong with total non-performing assets of 0.50% of total assets and non-performing loans and leases equal to 0.51% of total loans at June 30, 2019
Net interest margin was 3.81%, up 10 basis points from 3.71% for the three months ended June 30, 2018
Book value increased to $17.47 per share, up 14.6% compared to June 30, 2018
Fourth Quarter Fiscal 2019 Income Statement Summary
During the quarter ended June 30, 2019, Axos earned $40.6 million or $0.66 per diluted share compared to $37.1 million, or $0.58 per diluted share for the quarter ended June 30, 2018. Net interest income increased $13.4 million or 15.4% for the quarter ended June 30, 2019 compared to June 30, 2018, primarily due to the $1,179.3 million growth in average-earning assets.
The loan and lease loss provision was $2.8 million for the quarter ended June 30, 2019 compared to $3.9 million for the quarter ended June 30, 2018. The decrease was primarily due to change in the mix of the loan and lease portfolio.
For the fourth quarter ended June 30, 2019, non-interest income was $23.2 million compared to $17.0 million for the three months ended June 30, 2018. The increase year over year was primarily the result of the addition of broker-dealer fee income of $6.7 million, due to our acquisitions, and an increase in prepayment penalty fee income of $1.0 million, an increase in realized gain on sales of securities of $0.8 million, and an increase in mortgage banking income of $0.4 million, partially offset by a decrease in gain on sale – other of $2.3 million, due to decreased sales of structured settlements and lottery receivables, and decreased banking service fees of $0.4 million.
Non-interest expense or operating costs increased $15.9 million to $65.5 million for the quarter ended June 30, 2019 from $49.7 million for the three months ended June 30, 2018. The increase was mainly a result of an increase in compensation expense of $5.2 million related to staffing added since June 30, 2018 related to the addition of Axos Clearing as well as to support growth of the Bank’s operations. Additional contributors to the increase in operating expenses also include an increase in depreciation and amortization of $2.3 million, primarily due to the amortization of intangibles, an increase in data processing and internet expense of $2.1 million, due to software initiatives and enhancements to the Bank’s core processing system, an increase in in professional services of $2.1 million, primarily due to increased legal and consulting fees, an increase of $1.7 million in broker-dealer clearing charges and an increase in other general and administrative expenses of $1.8 million.
Our effective tax rate was 26.55% for the three months ended June 30, 2019 compared to 26.43% for the three months ended June 30, 2018.





Full Year Fiscal 2019 Highlights
Net income reached a record $155.1 million, an increase of 1.8% compared to the fiscal year ended June 30, 2018
Loan and lease originations and purchases for investment for the fiscal year ended June 30, 2019 were $6,945.3 million, up 17.3% compared to the year ended June 30, 2018
Net interest margin for the Banking Business was level at 4.14% for the fiscal years ended June 30, 2019 and 2018, respectively
Efficiency was 40.51% for the banking business segment compared to 34.55% for the fiscal year ended June 30, 2019
Return on average assets remained strong at 1.51% for the fiscal year ended June 30, 2019
Axos was named a top five performing large thrift in the U.S. for the eleventh consecutive year by SNL Financial/S&P Global Market Intelligence

Balance Sheet Summary
Axos’ total assets increased $1,680.7 million, or 17.6%, to $11,220.2 million, as of June 30, 2019, up from $9,539.5 million at June 30, 2018. The loan and lease portfolio increased $949.8 million on a net basis, primarily from portfolio loan and lease originations and purchases of $6,945.3 million less principal repayments and other adjustments of $5,995.5 million. Investment securities increased $47.2 million primarily due to purchases partially offset by sales and repayments. Total liabilities increased by $1,568.2 million, or 18.3%, to $10,147.2 million at June 30, 2019, up from $8,579.0 million at June 30, 2018. The increase in total liabilities resulted primarily from growth in deposits of $997.8 million. Stockholders’ equity increased by $112.5 million, or 11.7%, to $1,073.1 million at June 30, 2019 from $960.5 million at June 30, 2018. The increase was primarily the result of $155.1 million in net income and $13.5 million of vesting and issuance of RSUs and stock-based compensation expense, partially offset by $56.4 million of stock repurchases, $0.6 million unrealized gain in other comprehensive income, net of tax, and $0.3 million of dividends declared on preferred stock.
The Bank’s Tier 1 core capital to adjusted average assets ratio was 9.21% at June 30, 2019.
Conference Call
A conference call and webcast will be held on Tuesday, July 30, 2019 at 5:00 PM Eastern / 2:00 PM Pacific. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial: 877-407-8293. The conference call will be webcast live and may be accessed at Axos’ website, http://www.axosfinancial.com. For those unable to listen to the live broadcast, a replay will be available until, August 30, 2019, at Axos’ website and telephonically by dialing toll-free number 877-660-6853, passcode 13692331.
  
About Axos Financial, Inc. and subsidiaries
The condensed consolidated financial statements include the accounts of Axos Financial, Inc. (“Axos”) and its wholly owned subsidiaries, Axos Bank (the “Bank”) and Axos Nevada Holding, LLC (“Axos Nevada Holding” and collectively, the “Company”). Axos Nevada Holding wholly owns it’s subsidiary Axos Securities, LLC, which wholly owns subsidiaries Axos Clearing, LLC, a clearing broker dealer, Axos Invest, Inc. (doing business as “WiseBanyan”), a registered investment advisor, and WiseBanyan Securities LLC, an introducing broker dealer. With approximately $11.2 billion in assets, Axos Bank provides consumer and business banking products through its low-cost distribution channels and affinity partners. Axos Clearing LLC and WiseBanyan, provide comprehensive securities clearing services to introducing broker-dealers and registered investment advisor correspondents and digital investment advisory services to retail investors, respectively. Axos Financial, Inc.’s common stock is listed on the NYSE under the symbol “AX” and is a component of the Russell 2000® Index and the S&P SmallCap 600® Index. For more information on Axos Bank, please visit axosbank.com.
  
SEGMENT REPORTING

The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial condition and operating results





and management’s regular review of the operating results of those services. The Company operates through two operating segments: Banking Business and Securities Business.
The Banking Business includes a broad range of banking services including online banking, concierge banking, prepaid card services, and mortgage, vehicle and unsecured lending through online and telephonic distribution channels to serve the needs of consumer and small businesses nationally. In addition, the Banking Business focuses on providing deposit products nationwide to industry verticals (e.g., Title and Escrow), cash management products to a variety of businesses, and commercial & industrial and commercial real estate lending to clients. The Banking Business also includes a bankruptcy trustee and fiduciary service that provides specialized software and consulting services to Chapter 7 bankruptcy and non-Chapter 7 trustees and fiduciaries.
The Securities Business includes the Clearing Broker-Dealer, Registered Investment Advisor, and Introducing Broker-Dealer lines of businesses. These lines of business offer products independently to their own customers as well as to Banking Business clients. The products offered by the lines of business in the Securities Business primarily generate net interest and non-banking service fee income.
Segment results are determined based upon the management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions or in accordance with generally accepted accounting principles.
The Company evaluates performance and allocates resources based on profit or loss from operations. All costs, except certain corporate administration costs and related income taxes, have been allocated to the reportable segments. Therefore, combined amounts agree to the consolidated totals.
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:
 
For the Three Months Ended June 30, 2019
(Dollars in thousands)
Banking Business
 
Securities Business
 
Corporate/Eliminations
 
Axos Consolidated
Net interest income
$
96,936

 
$
4,614

 
$
(1,113
)
 
$
100,437

Provision for loan losses
2,800

 

 

 
2,800

Non-interest income
16,454

 
7,001

 
(231
)
 
23,224

Non-interest expense
49,001

 
11,152

 
5,383

 
65,536

Income before taxes
$
61,589

 
$
463

 
$
(6,727
)
 
$
55,325


 
For the Three Months Ended June 30, 2018
(Dollars in thousands)
Banking Business
 
Securities Business
 
Corporate/Eliminations
 
Axos Consolidated
Net interest income
$
87,875

 
$

 
$
(827
)
 
$
87,048

Provision for loan losses
3,900

 

 

 
3,900

Non-interest income
16,977

 

 

 
16,977

Non-interest expense
43,458

 

 
6,215

 
49,673

Income before taxes
$
57,494

 
$

 
$
(7,042
)
 
$
50,452







 
Twelve Months Ended June 30, 2019
(Dollars in thousands)
Banking Business
 
Securities Business
 
Corporate/Eliminations
 
Axos Consolidated
Net interest income
$
404,500

 
$
7,564

 
$
(3,459
)
 
$
408,605

Provision for loan losses
27,350

 

 

 
27,350

Non-interest income
70,917

 
12,071

 
(231
)
 
82,757

Non-interest expense
192,588

 
34,430

 
24,188

 
251,206

Income before taxes
$
255,479

 
$
(14,795
)
 
$
(27,878
)
 
$
212,806


 
Twelve Months Ended June 30, 2018
(Dollars in thousands)
Banking Business
 
Securities Business
 
Corporate/Eliminations
 
Axos Consolidated
Net interest income
$
371,661

 
$

 
$
(3,167
)
 
$
368,494

Provision for loan losses
25,800

 

 

 
25,800

Non-interest income
70,788

 

 
153

 
70,941

Non-interest expense
152,877

 

 
21,059

 
173,936

Income before taxes
$
263,772

 
$

 
$
(24,073
)
 
$
239,699


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 common share, and tangible book value per common share. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious as to their use of 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 net income without the after-tax impact of non-recurring acquisition-related costs, and excess FDIC expense, and other costs (unusual or non-recurring charges), (“adjusted earnings”), a non-GAAP financial measure. Excess FDIC expense is defined as the higher insurance costs associated with increased levels of short-term brokered deposits in anticipation of the acquisition of deposits from Nationwide Bank. Other costs are due to a $15.3 million bad debt expense related to a correspondent customer of our clearing broker-dealer. 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. Excluding the non-recurring acquisition related costs, excessive FDIC expense, and other costs provides investors with an understanding of Axos’ core business.





Below is a reconciliation of net income to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:
 
Three Months Ended
 
Twelve Months Ended
 
June 30,
 
June 30,
(Dollars in thousands, except per share amounts)
2019
 
2018
 
2019
 
2018
Net income
$
40,634

 
$
37,117

 
$
155,131

 
$
152,411

Acquisition-related costs
2,075

 
1,093

 
6,714

 
1,470

Excess FDIC expense

 

 
1,111

 

Other costs

 

 
15,299

 

Income taxes
(551
)
 
(289
)
 
(6,267
)
 
(535
)
Adjusted earnings (Non-GAAP)
$
42,158

 
$
37,921

 
$
171,988

 
$
153,346

Adjusted EPS (Non-GAAP)
$
0.68

 
$
0.59

 
$
2.75

 
$
2.39


We define book value adjusted for goodwill and other intangible assets as tangible book value (“tangible book value”), a non-GAAP financial measure. 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 to tangible book value (Non-GAAP) as of the dates indicated:
 
June 30,
(Dollars in thousands, except per share amounts)
2019
 
2018
Total stockholders’ equity
$
1,073,050

 
$
960,513

Less: preferred stock
5,063

 
5,063

Common stockholders’ equity
1,067,987

 
955,450

Less: mortgage servicing rights, carried at fair value
9,784

 
10,752

Less: goodwill and other intangible assets
134,893

 
67,788

Tangible common stockholders’ equity (Non-GAAP)
$
923,310

 
$
876,910

Common shares outstanding at end of period
61,128,817

 
62,688,064

Tangible book value per common share (Non-GAAP)
$
15.10

 
$
13.99







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 successfully integrate its recent acquisitions and realize the anticipated benefits of the transactions, Axos’ ability to continue to diversify its lending and deposit franchises, the outcome and effects of pending class action litigation filed against the Company, Axos’ ability to continue deploying excess capital in organic investments and share repurchases, and the anticipated timing and financial performance of our 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 changes in interest rates, inflation, government regulation, general economic conditions, conditions in the real estate markets in which we operate and other factors beyond our control. These and other risks and uncertainties detailed in Axos’ periodic reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those expressed or implied in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and Axos undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.



Investor Relations Contact:
Johnny Lai, CFA
VP, Corporate Development & Investor Relations
858-649-2218
jlai@axosfinancial.com







The following tables set forth certain selected financial data concerning the periods indicated:
AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands)
 
(Dollars in thousands)
June 30,
2019
 
June 30,
2018
 
June 30,
2017
Selected Balance Sheet Data:
 
 
 
 
 
Total assets
$
11,220,238

 
$
9,539,504

 
$
8,501,680

Loans and leases—net of allowance for loan and lease losses
9,382,124

 
8,432,289

 
7,374,493

Loans held for sale, at fair value
33,260

 
35,077

 
18,738

Loans held for sale, lower of cost or fair value
4,800

 
2,686

 
6,669

Allowance for loan and lease losses
57,085

 
49,151

 
40,832

Securities—trading

 

 
8,327

Securities—available-for-sale
227,513

 
180,305

 
264,470

Securities borrowed
144,706

 

 

Customer, broker-dealer and clearing receivables
203,192

 

 

Total deposits
8,983,173

 
7,985,350

 
6,899,507

Securities sold under agreements to repurchase

 

 
20,000

Advances from the FHLB
458,500

 
457,000

 
640,000

Borrowings, subordinated notes and debentures
168,929

 
54,552

 
54,463

Securities loaned
198,356

 

 

Customer, broker-dealer and clearing payables
238,604

 

 

Total stockholders’ equity
1,073,050

 
960,513

 
834,247

 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
Equity to assets at end of period
9.56
%
 
10.07
%
 
9.81
%
Axos Financial, Inc:
 
 
 
 
 
Tier 1 leverage (core) capital to adjusted average assets
8.75
%
 
9.45
%
 
9.95
%
Common equity tier 1 capital (to risk-weighted assets)
11.43
%
 
13.27
%
 
14.66
%
Tier 1 capital (to risk-weighted assets)
11.49
%
 
13.34
%
 
14.75
%
Total capital (to risk-weighted assets)
12.91
%
 
14.84
%
 
16.38
%
Axos Bank:
 
 
 
 
 
Tier 1 leverage (core) capital to adjusted average assets
9.21
%
 
8.88
%
 
9.60
%
Common equity tier 1 capital (to risk-weighted assets)
12.14
%
 
12.53
%
 
14.25
%
Tier 1 capital (to risk-weighted assets)
12.14
%
 
12.53
%
 
14.25
%
Total capital (to risk-weighted assets)
12.89
%
 
13.27
%
 
14.97
%
Axos Clearing, LLC:
 
 
 
 
 
Net capital
$
25,027

 
N/A

 
N/A

Excess capital
$
21,199

 
N/A

 
N/A

Net capital as a percentage of aggregate debit items
13.08
%
 
N/A

 
N/A

Net capital in excess of 5% aggregate debit items
$
15,458

 
N/A

 
N/A







AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands, except per share data)
 
At or for the Three Months Ended
 
At or for the Fiscal year ending
 
June 30,
 
June 30,
(Dollars in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Selected Income Statement Data:
 
 
 
 
 
 
 
Interest and dividend income
$
141,643

 
$
118,898

 
$
564,887

 
$
475,074

Interest expense
41,206

 
31,850

 
156,282

 
106,580

Net interest income
100,437

 
87,048

 
408,605

 
368,494

Provision for loan losses
2,800

 
3,900

 
27,350

 
25,800

Net interest income after provision for loan losses
97,637

 
83,148

 
381,255

 
342,694

Non-interest income
23,224

 
16,977

 
82,757

 
70,941

Non-interest expense
65,536

 
49,673

 
251,206

 
173,936

Income before income tax expense
55,325

 
50,452

 
212,806

 
239,699

Income tax expense
14,691

 
13,335

 
57,675

 
87,288

Net income
$
40,634

 
$
37,117

 
$
155,131

 
$
152,411

Net income attributable to common stock
$
40,557

 
$
37,040

 
$
154,822

 
$
152,102

 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
Net income:
 
 
 
 
 
 
 
Basic
$
0.66

 
$
0.59

 
$
2.50

 
$
2.41

Diluted
$
0.66

 
$
0.58

 
$
2.48

 
$
2.37

Book value per common share
$
17.47

 
$
15.24

 
$
17.47

 
$
15.24

Tangible book value per common share (Non-GAAP)
$
15.10

 
$
13.99

 
$
15.10

 
$
13.99

Adjusted earnings per common share (Non-GAAP)
$
0.68

 
$
0.59

 
$
2.75

 
$
2.39

 
 
 
 
 
 
 
 
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
Basic
61,201,994

 
62,648,464

 
61,898,447

 
63,136,232

Diluted
61,634,848

 
63,873,816

 
62,382,065

 
64,147,220

Common shares outstanding at end of period
61,128,817

 
62,688,064

 
61,128,817

 
62,688,064

Common shares issued at end of period
66,563,922

 
65,796,060

 
66,563,922

 
65,796,060

 
 
 
 
 
 
 
 
Performance Ratios and Other Data:
 
 
 
 
 
 
 
Loan and lease originations for investment
$
1,501,357

 
$
1,361,597

 
$
6,934,259

 
$
5,922,801

Loan originations for sale
$
270,905

 
$
288,832

 
$
1,471,906

 
$
1,564,165

Loan and lease purchases
$

 
$

 
$
11,009

 
$

Return on average assets
1.49
%
 
1.56
%
 
1.51
%
 
1.68
%
Return on average common stockholders’ equity
15.49
%
 
15.67
%
 
15.40
%
 
17.05
%
Interest rate spread1
3.39
%
 
3.34
%
 
3.66
%
 
3.79
%
Net interest margin2
3.81
%
 
3.71
%
 
4.07
%
 
4.11
%
Net interest margin2 - Banking Business Segment only
3.87
%
 
3.75
%
 
4.14
%
 
4.14
%
Efficiency ratio
53.00
%
 
47.75
%
 
51.12
%
 
39.58
%
Efficiency ratio - Banking Business Segment only
43.21
%
 
41.45
%
 
40.51
%
 
34.55
%
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
Net annualized charge-offs to average loans and leases
0.65
%
 
0.70
%
 
0.19
%
 
0.19
%
Non-performing loans and leases to total loans and leases
0.51
%
 
0.37
%
 
0.51
%
 
0.37
%
Non-performing assets to total assets
0.50
%
 
0.43
%
 
0.50
%
 
0.43
%
Allowance for loan and lease losses to total loans and leases held for investment at end of period
0.60
%
 
0.58
%
 
0.60
%
 
0.58
%
Allowance for loan and lease losses to non-performing loans and leases
117.84
%
 
157.40
%
 
117.84
%
 
157.40
%
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




(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
At June 30,
(Dollars in thousands, except par and stated value)
2019
 
2018
ASSETS
 
 
 
Cash and due from banks
$
511,125

 
$
622,750

Cash segregated for regulatory purposes
346,143

 

Federal funds sold
100

 
100

Total cash and cash equivalents
857,368

 
622,850

Securities - available for sale
227,513

 
180,305

Stock of regulatory agencies, at cost
20,276

 
17,250

Loans held for sale, carried at fair value
33,260

 
35,077

Loans held for sale, carried at lower of cost or fair value
4,800

 
2,686

Loans and leases—net of allowance of $57,085 as of June 2019 and $49,151 as of June 2018
9,382,124

 
8,432,289

Mortgage servicing rights, carried at fair value
9,784

 
10,752

Other real estate owned and repossessed vehicles
7,485

 
9,591

Securities borrowed
144,706

 

Customer, broker-dealer and clearing receivables
203,192

 

Goodwill and other intangible assets—net
134,893

 
67,788

Other assets
194,837

 
160,916

TOTAL ASSETS
$
11,220,238

 
$
9,539,504

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Deposits:
 
 
 
Non-interest bearing
$
1,441,930

 
$
1,015,355

Interest bearing
7,541,243

 
6,969,995

Total deposits
8,983,173

 
7,985,350

Advances from the Federal Home Loan Bank
458,500

 
457,000

Borrowings, subordinated notes and debentures
168,929

 
54,552

Securities loaned
198,356

 

Customer, broker-dealer and clearing payables
238,604

 

Accounts payable and accrued liabilities and other liabilities
99,626

 
82,089

Total liabilities
10,147,188

 
8,578,991

STOCKHOLDERS’ EQUITY:
 
 
 
Preferred stock—$0.01 par value; 1,000,000 shares authorized;
 
 
 
Series A—$10,000 stated value and liquidation preference per share; 515 shares issued and outstanding as of June 2019 and June 2018
5,063

 
5,063

Common stock—$0.01 par value; 150,000,000 shares authorized, 66,563,922 shares issued and 61,128,817 shares outstanding as of June 2019, 65,796,060 shares issued and 62,688,064 shares outstanding as of June 2018
666

 
658

Additional paid-in capital
389,945

 
366,515

Accumulated other comprehensive income (loss)—net of tax
16

 
(613
)
Retained earnings
826,170

 
671,348

Treasury stock, at cost; 5,435,105 shares as of June 2019 and 3,107,996 shares as of June 2018
(148,810
)
 
(82,458
)
Total stockholders’ equity
1,073,050

 
960,513

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
11,220,238

 
$
9,539,504


S-1



AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Quarters Ended June 30,
(Dollars in thousands, except earnings per share)
2019
 
2018
INTEREST AND DIVIDEND INCOME:
 
 
 
Loans and leases, including fees
$
128,268

 
$
111,481

Securities borrowed and customer receivables
4,776

 

Investments
8,599

 
7,417

Total interest and dividend income
141,643

 
118,898

INTEREST EXPENSE:
 
 
 
Deposits
32,695

 
22,689

Advances from the Federal Home Loan Bank
5,986

 
8,243

Securities loaned
376

 

Other borrowings
2,149

 
918

Total interest expense
41,206

 
31,850

Net interest income
100,437

 
87,048

Provision for loan and lease losses
2,800

 
3,900

Net interest income, after provision for loan and lease losses
97,637

 
83,148

NON-INTEREST INCOME:
 
 
 
Realized gain (loss) on sale of securities
842

 

Prepayment penalty fee income
1,774

 
754

Gain on sale - other
549

 
2,846

Mortgage banking income
2,308

 
1,903

Broker-dealer fee income
6,701

 

Banking and service fees
11,050

 
11,474

Total non-interest income
23,224

 
16,977

NON-INTEREST EXPENSE:
 
 
 
Salaries and related costs
33,909

 
28,665

Data processing and internet
7,358

 
5,209

Advertising and promotional
3,445

 
4,408

Depreciation and amortization
5,123

 
2,855

Broker-dealer clearing charges
1,727

 

Occupancy and equipment
2,588

 
1,602

Professional services
3,427

 
1,326

FDIC and regulatory fees
2,418

 
1,522

Real estate owned and repossessed vehicles
8

 
309

General and administrative expense
5,533

 
3,777

Total non-interest expense
65,536

 
49,673

INCOME BEFORE INCOME TAXES
55,325

 
50,452

INCOME TAXES
14,691

 
13,335

NET INCOME
$
40,634

 
$
37,117

NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
40,557

 
$
37,040

COMPREHENSIVE INCOME
$
41,168

 
$
37,645

Basic earnings per share
$
0.66

 
$
0.59

Diluted earnings per share
$
0.66

 
$
0.58




S-2



AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands, except earnings per share)
2019
 
2018
 
2017
INTEREST AND DIVIDEND INCOME:
 
 
 
 
 
Loans and leases, including fees
$
525,317

 
$
446,991

 
$
358,849

Securities borrowed and customer receivables
8,746

 

 

Investments
30,824

 
28,083

 
28,437

Total interest and dividend income
564,887

 
475,074

 
387,286

INTEREST EXPENSE:
 
 
 
 
 
Deposits
117,080

 
79,851

 
56,494

Advances from the Federal Home Loan Bank
32,834

 
22,848

 
12,403

Securities loaned
748

 

 

Other borrowings
5,620

 
3,881

 
5,162

Total interest expense
156,282

 
106,580

 
74,059

Net interest income
408,605

 
368,494

 
313,227

Provision for loan and lease losses
27,350

 
25,800

 
11,061

Net interest income, after provision for loan and lease losses
381,255

 
342,694

 
302,166

NON-INTEREST INCOME:
 
 
 
 
 
Realized gain (loss) on sale of securities
709

 
(18
)
 
3,920

Other-than-temporary loss on securities:
 
 
 
 
 
Total impairment losses
(1,666
)
 
(6,271
)
 
(10,937
)
Loss (gain) recognized in other comprehensive income
845

 
6,115

 
8,973

Net impairment loss recognized in earnings
(821
)
 
(156
)
 
(1,964
)
Fair value gain (loss) on trading securities

 

 
743

Total unrealized loss on securities
(821
)
 
(156
)
 
(1,221
)
Prepayment penalty fee income
5,851

 
3,862

 
4,574

Gain on sale - other
6,160

 
5,734

 
4,487

Mortgage banking income
5,267

 
13,755

 
14,284

Broker-dealer fee income
11,737

 

 

Banking and service fees
53,854

 
47,764

 
42,088

Total non-interest income
82,757

 
70,941

 
68,132

NON-INTEREST EXPENSE:
 
 
 
 
 
Salaries and related costs
127,433

 
100,975

 
81,821

Data processing and internet
24,150

 
17,400

 
13,323

Advertising and promotional
14,710

 
15,500

 
9,367

Depreciation and amortization
16,471

 
8,574

 
6,094

Occupancy and equipment
8,571

 
6,063

 
5,612

Broker-dealer clearing charges
2,822

 

 

Professional services
11,916

 
5,280

 
4,980

FDIC and regulatory fees
9,005

 
4,860

 
4,330

Real estate owned and repossessed vehicles
913

 
260

 
498

General and administrative expense
35,215

 
15,024

 
11,580

Total non-interest expense
251,206

 
173,936

 
137,605

INCOME BEFORE INCOME TAXES
212,806

 
239,699

 
232,693

INCOME TAXES
57,675

 
87,288

 
97,953

NET INCOME
$
155,131

 
$
152,411

 
$
134,740

NET INCOME ATTRIBUTABLE TO COMMON STOCK
$
154,822

 
$
152,102

 
$
134,431

COMPREHENSIVE INCOME
$
155,760

 
$
151,311

 
$
142,531

Basic earnings per share
$
2.50

 
$
2.41

 
$
2.11

Diluted earnings per share
$
2.48

 
$
2.37

 
$
2.10


S-3



AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands)
2019
 
2018
 
2017
NET INCOME
$
155,131

 
$
152,411

 
$
134,740

Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $562, $(2,449), and $3,363 for the years ended June 30, 2019, 2018 and 2017, respectively.
1,741

 
(5,493
)
 
5,218

Other-than-temporary impairment on securities recognized in other comprehensive income, net of tax expense (benefit) of $(251), $1,918 and $3,195 for the years ended June 30, 2019, 2018 and 2017, respectively.
(594
)
 
4,197

 
4,957

Reclassification of net (gain) loss from available-for-sale securities included in income, net of tax expense (benefit) of $191, $(104) and $1,536 for the years ended June 30, 2019, 2018 and 2017, respectively.
(518
)
 
196

 
(2,384
)
Other comprehensive income (loss)
$
629

 
$
(1,100
)
 
$
7,791

Comprehensive income
$
155,760

 
$
151,311

 
$
142,531



S-4



AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 
Preferred Stock
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated Other Comprehensive Income (Loss), Net of
Income Tax
 
Treasury
Stock
 
Total
 
 
 
 
 
Number of Shares
 
 
 
 
 
 
 
(Dollars in thousands)
Shares
 
Amount
 
Issued
 
Treasury
 
Outstanding
 
Amount
 
 
 
 
 
Balance as of June 30, 2016
515

 
$
5,063

 
64,513,494

 
(1,294,102
)
 
63,219,392

 
$
645

 
$
331,156

 
$
384,815

 
$
(7,304
)
 
$
(30,785
)
 
$
683,590

Net income

 

 

 

 

 

 

 
134,740

 

 

 
134,740

Other comprehensive income (loss)

 

 

 

 

 

 

 

 
7,791

 

 
7,791

Cash dividends on preferred stock

 

 

 

 

 

 

 
(309
)
 

 

 
(309
)
Stock-based compensation expense and restricted stock unit vesting

 

 
602,438

 
(285,586
)
 
316,852

 
6

 
14,961

 

 

 
(6,532
)
 
8,435

Balance as of June 30, 2017
515

 
$
5,063

 
65,115,932

 
(1,579,688
)
 
63,536,244

 
$
651

 
$
346,117

 
$
519,246

 
$
487

 
$
(37,317
)
 
$
834,247

Net income

 

 

 

 

 

 

 
152,411

 

 

 
152,411

Other comprehensive income (loss)

 

 

 

 

 

 

 

 
(1,100
)
 

 
(1,100
)
Cash dividends on preferred stock

 

 

 

 

 

 

 
(309
)
 

 

 
(309
)
Issuance of common stock

 

 

 
(1,233,491
)
 
(1,233,491
)
 

 

 

 

 
(35,183
)
 
(35,183
)
Stock-based compensation expense and restricted stock unit vesting

 

 
680,128

 
(294,817
)
 
385,311

 
7

 
20,398

 

 

 
(9,958
)
 
10,447

Balance as of June 30, 2018
515

 
$
5,063

 
65,796,060

 
(3,107,996
)
 
62,688,064

 
$
658

 
$
366,515

 
$
671,348

 
$
(613
)
 
$
(82,458
)
 
$
960,513

Net income

 

 

 

 

 

 

 
155,131

 

 

 
155,131

Other comprehensive income (loss)

 

 

 

 

 

 

 

 
629

 

 
629

Cash dividends on preferred stock

 

 

 

 

 

 

 
(309
)
 

 

 
(309
)
Purchase of treasury stock

 

 

 
(2,009,352
)
 
(2,009,352
)
 

 

 

 

 
(56,437
)
 
(56,437
)
Stock-based compensation expense and restricted stock unit vesting

 

 
767,862

 
(317,757
)
 
450,105

 
8

 
23,430

 

 

 
(9,915
)
 
13,523

Balance as of June 30, 2019
515

 
$
5,063

 
66,563,922

 
(5,435,105
)
 
61,128,817

 
$
666

 
$
389,945

 
$
826,170

 
$
16

 
$
(148,810
)
 
$
1,073,050



S-5



AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Year Ended June 30,
(Dollars in thousands)
2019
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
Net income
$
155,131

 
$
152,411

 
$
134,740

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
Accretion of discounts on securities
(264
)
 
(624
)
 
(2,766
)
Net accretion of discounts on loans and leases
(30,176
)
 
(29,381
)
 
(4,859
)
Amortization of borrowing costs
208

 
208

 
208

Stock-based compensation expense
23,439

 
20,399

 
14,535

Valuation of financial instruments carried at fair value

 

 
(743
)
Net gain on sale of investment securities
(709
)
 
18

 
(3,920
)
Impairment charge on securities
821

 
156

 
1,964

Provision for loan and lease losses
27,350

 
25,800

 
11,061

Broker-dealer reserve for bad debt
15,298

 

 

Deferred income taxes
(8,686
)
 
17,034

 
(2,220
)
Origination of loans held for sale
(1,471,906
)
 
(1,564,165
)
 
(1,375,443
)
Unrealized (gain) loss on loans held for sale
(252
)
 
(253
)
 
222

Gain on sales of loans held for sale
(11,427
)
 
(19,489
)
 
(18,771
)
Proceeds from sale of loans held for sale
1,481,911

 
1,576,353

 
1,433,068

Change in fair value of mortgage servicing rights
3,362

 
83

 
(31
)
(Gain) loss on sale of other real estate and foreclosed assets
(283
)
 
(258
)
 
(42
)
Depreciation and amortization
16,471

 
8,574

 
6,094

Net changes in assets and liabilities which provide (use) cash:
 
 
 
 
 
Accrued interest receivable
(12,300
)
 
(6,082
)
 
4,511

Securities borrowed
13,192

 

 

Customer, broker-dealer and clearing receivables
13,684

 

 

Other assets
(15,264
)
 
(40,988
)
 
807

Securities loaned
(4,685
)
 

 

Customer, broker-dealer and clearing payables
(1,506
)
 

 

Accrued interest payable
1,129

 
469

 
(383
)
Accounts payable and accrued liabilities
9,883

 
27,650

 
466

Net cash provided by (used) in operating activities
$
204,421

 
$
167,915

 
$
198,498

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
Purchases of investment securities
(146,886
)
 
(100,503
)
 
(249,909
)
Proceeds from sales of securities
15,863

 
52,714

 
161,048

Proceeds from repayment of securities
93,779

 
139,338

 
307,456

Purchase of stock of regulatory agencies
(204,206
)
 
(33,966
)
 
(66,294
)
Proceeds from redemption of stock of regulatory agencies
203,611

 
79,923

 
60,210

Origination of loans and leases held for investment
(6,756,832
)
 
(5,895,902
)
 
(4,068,990
)
Proceeds from sale of loans and leases held for investment
119,881

 
20,719

 
31,918

Origination of mortgage warehouse loans, net
(126,491
)
 
(26,899
)
 
(113,711
)
Proceeds from sales of other real estate owned and repossessed assets
2,202

 
1,832

 
367

Cash paid for deposit acquisition
(14,747
)
 

 

Cash paid for acquisition

 
(70,002
)
 

Acquisition of business activity, net of cash paid
67,343

 

 

Purchases of loans and leases, net of discounts and premiums
(11,525
)
 

 
(269,886
)
Principal repayments on loans and leases
5,846,349

 
4,818,558

 
3,427,818

Purchases of furniture, equipment and software
(20,082
)
 
(11,817
)
 
(8,758
)
Net cash used in investing activities
$
(931,741
)
 
$
(1,026,005
)
 
$
(788,731
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
Net increase in deposits
$
997,823

 
$
1,085,843

 
$
855,456

Repayment of the Federal Home Loan Bank term advances
(147,500
)
 
(30,000
)
 
(95,000
)
Net (repayment) proceeds of Federal Home Loan Bank other advances
149,000

 
(153,000
)
 
8,000

Net (repayment) proceeds of other borrowings
21,700

 
(20,000
)
 
(15,000
)
Tax payments related to settlement of restricted stock units
(9,916
)
 
(9,952
)
 
(6,532
)
Repurchase of treasury stock
(56,437
)
 
(35,183
)
 

Tax benefit from exercise of common stock options and vesting of restricted stock grants

 

 
432

Cash dividends paid on preferred stock
(232
)
 
(309
)
 
(309
)
Net proceeds from issuance of subordinated notes
7,400

 

 

Net cash provided by financing activities
$
961,838

 
$
837,399

 
$
747,047

NET CHANGE IN CASH AND CASH EQUIVALENTS
234,518

 
(20,691
)
 
156,814

CASH AND CASH EQUIVALENTS—Beginning of year
622,850

 
643,541

 
486,727

CASH AND CASH EQUIVALENTS—End of year
$
857,368

 
$
622,850

 
$
643,541

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
 
 
Interest paid on deposits and borrowed funds
$
152,756

 
$
106,112

 
$
74,442

Income taxes paid
$
64,117

 
$
79,628

 
$
102,482

Transfers from loans and leases held for investment to loans held for sale
$
106,911

 
$
31,207

 
$
2,935

Loans held for investment sold, cash not received
$

 
$
17,742

 
$

Securities transferred from held-to-maturity to available for sale portfolio
$

 
$

 
$
194,153

Preferred stock dividends declared but not paid
$
77

 
$

 
$





S-6



LOANS AND LEASES
The following table sets forth the composition of the loan and lease portfolio as of the dates indicated:
(Unaudited)
(Dollars in thousands)
June 30, 2019
 
June 30, 2018
Single family real estate secured:
 
 
 
Mortgage
$
4,278,822

 
$
4,198,941

Home equity
2,258

 
2,306

Warehouse and other1
820,559

 
412,085

Multifamily real estate secured
1,948,513

 
1,800,919

Commercial real estate secured
326,154

 
220,379

Auto and RV secured
290,894

 
213,522

Factoring
93,091

 
169,885

Commercial & Industrial
1,653,314

 
1,481,051

Other
35,705

 
18,598

  Total gross loans and leases
9,449,310

 
8,517,686

Allowance for loan and lease losses
(57,085
)
 
(49,151
)
Unaccreted discounts and loan and lease fees
(10,101
)
 
(36,246
)
  Total net loans and leases
$
9,382,124

 
$
8,432,289

1. The balance of single family warehouse loans was $301,999 at June 30, 2019 and $175,508 at June 30, 2018. The remainder of the balance was attributable to commercial specialty and lender finance loans secured by single family real estate.



S-7



SECURITIES
The amortized cost, carrying amount and fair value for the major categories of trading and available for sale securities at June 30, 2019 and June 30, 2018 were:
 
June 30, 2019
 
Available for sale
(Unaudited)
(Dollars in thousands)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Mortgage-backed securities (RMBS):
 
 
 
 
 
 
 
U.S agencies1
$
9,486

 
$
179

 
$
(79
)
 
$
9,586

Non-agency2
13,489

 
226

 
(690
)
 
13,025

Total mortgage-backed securities
22,975

 
405

 
(769
)
 
22,611

Other debt securities:
 
 
 
 
 
 
 
U.S. agencies1
1,682

 
3

 

 
1,685

Municipal
21,974

 
16

 
(828
)
 
21,162

Non-agency
179,976

 
2,088

 
(9
)
 
182,055

Total other debt securities
203,632

 
2,107

 
(837
)
 
204,902

Total debt securities
$
226,607

 
$
2,512

 
$
(1,606
)
 
$
227,513

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
June 30, 2018
 
Available for sale
(Unaudited)
(Dollars in thousands)
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
Mortgage-backed securities (RMBS):
 
 
 
 
 
 
 
U.S agencies1
$
13,102

 
$
152

 
$
(328
)
 
$
12,926

Non-agency2
19,384

 
116

 
(2,057
)
 
17,443

Total mortgage-backed securities
32,486

 
268

 
(2,385
)
 
30,369

Other debt securities:
 
 
 
 
 
 
 
Municipal
20,953

 
2

 
(743
)
 
20,212

Non-agency
127,558