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 | 2,267 | (101 | ) | 129,724 | ||||||||||
Total other debt securities | 148,511 | 2,269 | (844 | ) | 149,936 | ||||||||||
Total debt securities | $ | 180,997 | $ | 2,537 | $ | (3,229 | ) | $ | 180,305 |
1 U.S. government-backed or government sponsored enterprises including Fannie Mae, Freddie Mac and Ginnie Mae.
2 Private sponsors of securities collateralized primarily by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by prime, Alt-A or pay-option ARM mortgages.
S-8
DEPOSITS
The following table sets forth the composition of the deposit portfolio as of the dates indicated:
(Unaudited) | June 30, 2019 | June 30, 2018 | |||||||||||
(Dollars in thousands) | Amount | Rate1 | Amount | Rate1 | |||||||||
Non-interest bearing | $ | 1,441,930 | — | % | $ | 1,015,355 | — | % | |||||
Interest bearing: | |||||||||||||
Demand | 2,709,014 | 2.06 | % | 2,519,845 | 1.60 | % | |||||||
Savings | 2,466,214 | 1.48 | % | 2,482,430 | 1.31 | % | |||||||
Total interest-bearing demand and savings | 5,175,228 | 1.78 | % | 5,002,275 | 1.46 | % | |||||||
Time deposits: | |||||||||||||
$250 and under | 1,866,811 | 2.47 | % | 1,837,274 | 2.34 | % | |||||||
Greater than $250 | 499,204 | 2.27 | % | 130,446 | 2.05 | % | |||||||
Total time deposits | 2,366,015 | 2.43 | % | 1,967,720 | 2.32 | % | |||||||
Total interest bearing2 | 7,541,243 | 1.99 | % | 6,969,995 | 1.70 | % | |||||||
Total deposits | $ | 8,983,173 | 1.67 | % | $ | 7,985,350 | 1.48 | % |
1. Based on weighted-average stated interest rates at end of period.
2. The total interest-bearing includes brokered deposits of $1,124.0 million and $2,055.9 million as of June 30, 2019 and June 30, 2018, respectively, of which $796.7 million and $1,692.8 million, respectively, are time deposits classified as $250 and under.
The number of deposit accounts at the end of each of the last five fiscal years is set forth below:
At June 30, | ||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Non-interest-bearing, prepaid and other | 3,743,334 | 3,535,904 | 3,113,128 | 1,816,266 | 553,245 | |||||||||
Checking and savings accounts | 311,067 | 270,082 | 274,962 | 292,012 | 31,461 | |||||||||
Time deposits | 23,447 | 2,309 | 2,748 | 4,807 | 5,515 | |||||||||
Total number of deposit accounts | 4,077,848 | 3,808,295 | 3,390,838 | 2,113,085 | 590,221 |
S-9
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
For the three months ended June 30, | |||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
(Unaudited) (Dollars in thousands) | Average Balance2 | Interest Income / Expense | Average Yields Earned / Rates Paid1 | Average Balance2 | Interest Income / Expense | Average Yields Earned / Rates Paid1 | |||||||||||||||
Assets: | |||||||||||||||||||||
Loans and leases3,4 | $ | 9,234,461 | $ | 128,268 | 5.56 | % | $ | 8,278,746 | $ | 111,481 | 5.39 | % | |||||||||
Interest-earning deposits in other financial institutions | 710,703 | 4,333 | 2.44 | % | 860,052 | 3,788 | 1.76 | % | |||||||||||||
Investment securities4 | 226,523 | 3,778 | 6.67 | % | 180,843 | 2,681 | 5.93 | % | |||||||||||||
Securities borrowed and margin lending | 350,413 | 4,776 | 5.45 | % | — | — | — | % | |||||||||||||
Stock of the regulatory agencies, at cost | 31,054 | 488 | 6.29 | % | 54,176 | 948 | 7.00 | % | |||||||||||||
Total interest-earning assets | 10,553,154 | 141,643 | 5.37 | % | 9,373,817 | 118,898 | 5.07 | % | |||||||||||||
Non-interest-earning assets | 325,078 | 145,478 | |||||||||||||||||||
Total assets | $ | 10,878,232 | $ | 9,519,295 | |||||||||||||||||
Liabilities and Stockholders’ Equity: | |||||||||||||||||||||
Interest-bearing demand and savings | $ | 4,119,350 | $ | 16,921 | 1.64 | % | $ | 4,406,649 | $ | 14,867 | 1.35 | % | |||||||||
Time deposits | 2,625,852 | 15,774 | 2.40 | % | 1,220,332 | 7,822 | 2.56 | % | |||||||||||||
Securities loaned | 478,196 | 376 | 0.31 | % | — | — | — | % | |||||||||||||
Advances from the FHLB | 963,062 | 5,986 | 2.49 | % | 1,676,439 | 8,243 | 1.97 | % | |||||||||||||
Borrowings, subordinated notes and debentures | 154,749 | 2,149 | 5.55 | % | 54,571 | 918 | 6.73 | % | |||||||||||||
Total interest-bearing liabilities | 8,341,209 | 41,206 | 1.98 | % | 7,357,991 | 31,850 | 1.73 | % | |||||||||||||
Non-interest-bearing demand deposits | 1,385,750 | 1,138,226 | |||||||||||||||||||
Other non-interest-bearing liabilities | 98,741 | 72,693 | |||||||||||||||||||
Stockholders’ equity | 1,052,532 | 950,385 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 10,878,232 | $ | 9,519,295 | |||||||||||||||||
Net interest income | $ | 100,437 | $ | 87,048 | |||||||||||||||||
Interest rate spread5 | 3.39 | % | 3.34 | % | |||||||||||||||||
Net interest margin6 | 3.81 | % | 3.71 | % |
1 Annualized.
2 Average balances are obtained from daily data.
3 Loans include loans held for sale, loan premiums and unearned fees.
4 Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. Loan fee income is not significant. Also, includes $28.4 million and $29.1 million as of June 30, 2019 and 2018 three-month periods respectively, of Community Reinvestment Act loans which are taxed at a reduced rate.
5 Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
6 Net interest margin represents net interest income as a percentage of average interest-earning assets.
S-10
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following tables set forth, for the periods indicated, information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
For the Fiscal Years Ended June 30, | ||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||
(Unaudited)(Dollars in thousands) | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid | Average Balance1 | Interest Income / Expense | Average Yields Earned / Rates Paid | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Loans and leases2,3 | $ | 8,974,820 | $ | 525,317 | 5.85 | % | $ | 7,893,072 | $ | 446,991 | 5.66 | % | $ | 6,819,102 | $ | 358,849 | 5.26 | % | ||||||||||||||
Interest-earning deposits in other financial institutions | 631,228 | 13,495 | 2.14 | % | 807,348 | 12,450 | 1.54 | % | 658,580 | 5,204 | 0.79 | % | ||||||||||||||||||||
Investment securities3 | 210,189 | 13,943 | 6.63 | % | 209,434 | 11,335 | 5.41 | % | 393,334 | 16,889 | 4.29 | % | ||||||||||||||||||||
Securities borrowed and margin lending | 173,829 | 8,746 | 5.03 | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||
Stock of the regulatory agencies, at cost | 41,078 | 3,386 | 8.24 | % | 61,222 | 4,298 | 7.02 | % | 55,577 | 6,344 | 11.41 | % | ||||||||||||||||||||
Total interest-earning assets | 10,031,144 | 564,887 | 5.63 | % | 8,971,076 | 475,074 | 5.30 | % | 7,926,593 | 387,286 | 4.89 | % | ||||||||||||||||||||
Non-interest-earning assets | 234,993 | 100,380 | 116,545 | |||||||||||||||||||||||||||||
Total assets | $ | 10,266,137 | $ | 9,071,456 | $ | 8,043,138 | ||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity: | ||||||||||||||||||||||||||||||||
Interest-bearing demand and savings | $ | 3,906,833 | $ | 61,391 | 1.57 | % | $ | 4,706,238 | $ | 54,013 | 1.15 | % | $ | 4,619,769 | $ | 34,556 | 0.75 | % | ||||||||||||||
Time deposits | 2,322,039 | 55,689 | 2.40 | % | 990,635 | 25,838 | 2.61 | % | 941,919 | 21,938 | 2.33 | % | ||||||||||||||||||||
Securities loaned | 221,469 | 748 | 0.34 | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||
Securities sold under agreements to repurchase | — | — | — | % | 5,575 | 229 | 4.11 | % | 33,068 | 1,465 | 4.43 | % | ||||||||||||||||||||
Advances from the FHLB | 1,397,460 | 32,834 | 2.35 | % | 1,296,120 | 22,848 | 1.76 | % | 798,982 | 12,403 | 1.55 | % | ||||||||||||||||||||
Borrowings, subordinated notes and debentures | 104,287 | 5,620 | 5.39 | % | 54,522 | 3,652 | 6.70 | % | 55,873 | 3,697 | 6.62 | % | ||||||||||||||||||||
Total interest-bearing liabilities | 7,952,088 | 156,282 | 1.97 | % | 7,053,090 | 106,580 | 1.51 | % | 6,449,611 | 74,059 | 1.15 | % | ||||||||||||||||||||
Non-interest-bearing demand deposits | 1,227,285 | 1,052,944 | 774,411 | |||||||||||||||||||||||||||||
Other non-interest-bearing liabilities | 76,651 | 68,361 | 58,040 | |||||||||||||||||||||||||||||
Stockholders’ equity | 1,010,113 | 897,061 | 761,076 | |||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 10,266,137 | $ | 9,071,456 | $ | 8,043,138 | ||||||||||||||||||||||||||
Net interest income | $ | 408,605 | $ | 368,494 | $ | 313,227 | ||||||||||||||||||||||||||
Interest rate spread4 | 3.66 | % | 3.79 | % | 3.74 | % | ||||||||||||||||||||||||||
Net interest margin5 | 4.07 | % | 4.11 | % | 3.95 | % |
1 Average balances are obtained from daily data.
2 Loans include loans held for sale, loan premiums and unearned fees.
3 Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. Loan fee income is not significant. Also includes $28.7 million, $29.3 million and $30.3 million as of June 30, 2019, 2018 and 2017, respectively, of Community Reinvestment Act loans which are taxed at a reduced rate.
4 Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
5 Net interest margin represents net interest income as a percentage of average interest-earning assets.
S-11
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
BANKING BUSINESS
The following table presents our Banking segment’s information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin for the three months ended June 30, 2019 and 2018:
For the Three Months Ended | |||||||||||||||||||||
June 30, | |||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
(Dollars in thousands) | Average Balance1 | Interest Income/ Expense | Average Yields Earned/Rates Paid2 | Average Balance1 | Interest Income/ Expense | Average Yields Earned/Rates Paid2 | |||||||||||||||
Assets: | |||||||||||||||||||||
Loans and leases3, 4 | $ | 9,234,449 | $ | 128,268 | 5.56 | % | $ | 8,278,725 | $ | 111,481 | 5.39 | % | |||||||||
Interest-earning deposits in other financial institutions | 524,403 | 3,128 | 2.39 | % | 860,052 | 3,788 | 1.76 | % | |||||||||||||
Investment securities4 | 224,828 | 3,779 | 6.72 | % | 180,843 | 2,681 | 5.93 | % | |||||||||||||
Stock of the regulatory agencies, at cost | 28,414 | 486 | 6.84 | % | 54,176 | 948 | 6.98 | % | |||||||||||||
Total interest-earning assets | 10,012,094 | 135,661 | 5.42 | % | 9,373,796 | 118,898 | 5.07 | % | |||||||||||||
Non-interest-earning assets | 188,959 | 137,014 | |||||||||||||||||||
Total assets | $ | 10,201,053 | $ | 9,510,810 | |||||||||||||||||
Liabilities and Stockholders’ Equity: | |||||||||||||||||||||
Interest-bearing demand and savings | $ | 4,143,734 | $ | 16,964 | 1.64 | % | $ | 4,448,942 | $ | 14,957 | 1.34 | % | |||||||||
Time deposits | 2,625,852 | 15,774 | 2.40 | % | 1,220,332 | 7,822 | 2.56 | % | |||||||||||||
Advances from the FHLB | 963,062 | 5,987 | 2.49 | % | 1,676,439 | 8,243 | 1.97 | % | |||||||||||||
Borrowings, subordinated notes and debentures | 22 | — | — | % | 68 | 1 | 5.88 | % | |||||||||||||
Total interest-bearing liabilities | 7,732,670 | 38,725 | 2.00 | % | 7,345,781 | 31,023 | 1.69 | % | |||||||||||||
Non-interest-bearing demand deposits | 1,389,998 | 1,143,704 | |||||||||||||||||||
Other non-interest-bearing liabilities | 70,848 | 70,349 | |||||||||||||||||||
Stockholders’ equity | 1,007,537 | 950,976 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 10,201,053 | $ | 9,510,810 | |||||||||||||||||
Net interest income | $ | 96,936 | $ | 87,875 | |||||||||||||||||
Interest rate spread5 | 3.42 | % | 3.38 | % | |||||||||||||||||
Net interest margin6 | 3.87 | % | 3.75 | % |
1 | Average balances are obtained from daily data. |
2 | Annualized. |
3 | Loans and leases include loans held for sale, loan premiums and unearned fees. |
4 | Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. Loan fee income is not significant. Also, includes $28.4 million and $29.1 million as of June 30, 2019 and 2018 three-month periods respectively, of Community Reinvestment Act loans which are taxed at a reduced rate. |
5 | Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities. |
6 | Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. |
S-12
SECURITIES BUSINESS
The following table sets forth certain selected information concerning the Securities Business segment:
(Dollars in thousands) | Three months ended June 30, 2019 | ||
Compensation as a % of net revenue | 35.0 | % | |
FDIC insured program balances at banks (end of period) | $ | 341,576 | |
Customer margin balances (end of period) | $ | 189,193 | |
Customer funds on deposit, including short credits (end of period) | $ | 206,469 | |
Clearing: | |||
Total tickets | 595,962 | ||
Correspondents (end of period) | 62 | ||
Securities lending: | |||
Interest-earning assets – stock borrowed (end of period) | $ | 144,706 | |
Interest-bearing liabilities – stock loaned (end of period) | $ | 198,356 |
S-13