Axos Financial, Inc. (AX): Boston Consulting Group Matrix [10-2024 Updated]

In the dynamic world of finance, understanding a company's positioning within the Boston Consulting Group Matrix can illuminate its strategic strengths and weaknesses. For Axos Financial, Inc. (AX), 2024 showcases a mix of opportunities and challenges. With a remarkable 38.3% year-over-year growth in net interest income and a solid return on assets, Axos is clearly thriving in certain areas. However, the company also grapples with declining non-interest income and rising operational costs. Dive deeper to explore how Axos Financial's segments classify as Stars, Cash Cows, Dogs, and Question Marks in this insightful analysis.

Background of Axos Financial, Inc. (AX)

Axos Financial, Inc. is a diversified financial services company with approximately $23.6 billion in assets as of September 30, 2024. The company operates primarily through its banking subsidiary, Axos Bank, which provides a wide range of consumer and commercial banking products via digital platforms. This includes services such as consumer and business checking accounts, savings accounts, time deposit accounts, and various types of loans including mortgages and auto loans.

Founded in 2000 and headquartered in San Diego, California, Axos Financial is publicly traded on the New York Stock Exchange under the ticker symbol AX. The company is a component of several indices, including the Russell 2000® Index and the S&P SmallCap 600® Index. As a financial holding company, Axos Financial is regulated by the Board of Governors of the Federal Reserve System, and its bank subsidiary is supervised by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).

Axos Bank has adopted a digital-first approach, focusing on low-cost distribution channels to reach consumers and small businesses nationwide. Its banking services include online banking, concierge banking, and various lending products. Additionally, Axos Financial has a securities business segment through Axos Clearing, which offers clearing and custody services, as well as investment advisory services.

As of September 30, 2024, Axos Financial reported a net income of $112.34 million, with a return on average assets of 1.92% and a return on average common stockholders' equity of 19.12%. The company's solid financial performance is attributed to its diversified revenue streams, including net interest income and non-interest income from its various banking and securities services.

Overall, Axos Financial, Inc. continues to strengthen its position in the financial services industry through innovative digital solutions, strategic acquisitions, and a focus on operational efficiency.

Axos Financial, Inc. (AX) - BCG Matrix: Stars

Strong Growth in Net Interest Income

For the three months ended September 30, 2024, Axos Financial reported a net interest income of $292 million, representing a 38.3% year-over-year increase from $211.2 million during the same period in 2023.

Return on Average Assets

The company achieved a return on average assets of 2.17% for the quarter ending September 30, 2024, an increase from 1.65% in the previous year.

Improvement in Net Interest Margin

Axos Financial's net interest margin improved to 5.21%, up from 4.36% year-over-year.

Significant Rise in Total Deposits

Total deposits rose to $19.97 billion as of September 30, 2024, marking a 3.2% increase from $19.4 billion at June 30, 2024.

Expansion in Loan Portfolio

The net loans portfolio expanded to $19.28 billion as of September 30, 2024, showcasing the growth potential of Axos Financial in a competitive market.

Axos Financial, Inc. (AX) - BCG Matrix: Cash Cows

Consistent Profitability

For Q3 2024, Axos Financial reported a net income of $112.34 million, translating to $1.93 per diluted share compared to $82.65 million, or $1.38 per diluted share, in Q3 2023.

Book Value Per Share

The company maintains a solid book value per share at $42.14, reflecting a strong equity position.

Market Presence

Axos Financial has established a robust market presence in the banking and securities segments, generating stable cash flow. As of September 30, 2024, total assets were approximately $23.40 billion, up from $20.10 billion a year earlier.

Asset Quality

The company exhibits good asset quality with a low nonaccrual loans to total loans ratio at 0.89%, indicating effective risk management and credit quality.

Axos Financial, Inc. (AX) - BCG Matrix: Dogs

Decline in Non-Interest Income

For the three months ended September 30, 2024, Axos Financial reported a decline in non-interest income of $5.9 million, or 17.1%, compared to the same period in the previous year, bringing total non-interest income to $28.6 million from $34.5 million in 2023. This decrease was primarily attributed to:

• Lower mortgage banking and servicing rights income, which fell by $3.4 million, mainly due to the absence of a $1.9 million fair value gain from the prior year.
• A reduction of $1.4 million in broker-dealer fee income.
• A decrease of $1.0 million in prepayment penalty fee income.

Increased Non-Interest Expenses

During the same period, Axos Financial experienced a significant rise in non-interest expenses, which increased by $26.9 million, or 22.4%, from $120.5 million in Q3 2023 to $147.5 million in Q3 2024. Key contributors to this substantial increase included:

• $18.5 million rise in salaries and related costs due to increased headcount and higher salaries.
• $3.9 million in advertising and promotional expenses, primarily linked to deposit marketing.

Underperformance in Securities Business Segment

The Securities Business Segment of Axos Financial also reported a decrease in income before taxes, which fell from $12.6 million in Q3 2023 to $9.1 million in Q3 2024. This represents a decline of $3.5 million, or 27.8%. Contributing factors included:

• A decrease in non-interest income by $4.7 million, or 13.5%, primarily driven by lower broker-dealer fee income.
• An increase in non-interest expense by $0.6 million, or 2.1%, primarily due to higher salaries and related costs.

Axos Financial, Inc. (AX) - BCG Matrix: Question Marks

Rising provision for credit losses, increasing from $7 million to $14 million.

The provision for credit losses was $14.0 million for the three months ended September 30, 2024, compared to $7.0 million for the same period in 2023.

Uncertain growth in non-interest income streams, dependent on market conditions.

For the three months ended September 30, 2024, total non-interest income was $28.609 million, a decrease of $5.898 million, or 17.1%, from $34.507 million in the same period of the previous year.

Potential challenges in maintaining loan growth amid economic fluctuations.

Total gross loans as of September 30, 2024, amounted to $19.826 billion, reflecting a slight increase from $19.803 billion as of June 30, 2024.

Need for strategic focus on enhancing broker-dealer fee income.

Broker-dealer fee income for the three months ended September 30, 2024, was $11.060 million, down from $12.477 million in the same period of 2023, indicating a decrease of $1.417 million.

In summary, Axos Financial, Inc. (AX) demonstrates a dynamic business landscape characterized by strong growth in net interest income and a robust return on assets, positioning it firmly in the Stars quadrant of the BCG Matrix. However, the company also faces challenges, particularly with declining non-interest income and rising expenses, marking its Dogs segment. The Cash Cows reflect consistent profitability and solid market presence, while the Question Marks highlight areas needing strategic focus, especially in managing credit losses and enhancing fee income. Balancing these elements will be crucial for Axos Financial to sustain its growth trajectory in a competitive market.

Article updated on 8 Nov 2024

Resources:

1. Axos Financial, Inc. (AX) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Axos Financial, Inc. (AX)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Axos Financial, Inc. (AX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.