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Axos Financial, Inc. Reports First Quarter Fiscal 2023 Results
LAS VEGAS, NV – (BUSINESS WIRE) – October 27, 2022 – Axos Financial, Inc. (NYSE: AX) (“Axos”), today announced unaudited financial results for the first fiscal quarter ended September 30, 2022. Net income was $58.4 million, a decrease of 3% from $60.2 million for the quarter ended September 30, 2021. Diluted earnings per share were $0.97, a decrease of $0.02, or 2%, as compared to diluted earnings per share of $0.99 for the quarter ended September 30, 2021.
Adjusted earnings and adjusted earnings per diluted common share (“adjusted EPS”), non-GAAP measures, which exclude non-cash amortization expenses and non-recurring costs related to mergers and acquisitions, and other non-recurring costs increased 15% to $71.6 million and 15% to $1.18, respectively, for the quarter ended September 30, 2022, compared to $62.2 million and $1.03, respectively, for the quarter ended September 30, 2021.
First Quarter Fiscal 2023 Financial Summary
  Three Months Ended September 30,
(Dollars in thousands, except per share data)20222021% Change
Net interest income$180,475 $146,642 23.1%
Non-interest income$27,208 $26,702 1.9%
Net income$58,407 $60,210 (3.0)%
Adjusted earnings (Non-GAAP)1
$71,615 $62,228 15.1%
Diluted EPS$0.97 $0.99 (2.0)%
Adjusted EPS (Non-GAAP)1
$1.18 $1.03 14.6%
1 See “Use of Non-GAAP Financial Measures”
“We delivered another strong quarter, with double-digit annualized loan, deposit and book value per share growth,” stated Greg Garrabrants, President and Chief Executive Officer of Axos. “Net interest income increased 23.1% year-over-year, propelled by strong loan growth and net interest margin expanding on a consolidated and bank-only basis. Axos Securities continues to benefit from rising interest rates, with $3.3 billion of low-cost deposits and $8.9 million of pretax income. I am extremely excited about the future growth opportunities we have across our securities businesses.”
“We continue to generate profitable growth while maintaining strong capital levels,” stated Derrick Walsh, Executive Vice President and Chief Financial Officer of Axos. “Credit quality in our loan portfolio remains healthy with a non-performing loan ratio of 0.78%. Over the past year, we have demonstrated our asset sensitivity by expanding our net interest margin. We continue to invest prudently in existing and new businesses that will further diversify our loan, deposit and fee income capabilities.”





Other Highlights
•Net loans for investment totaled $15.2 billion at September 30, 2022, an increase of $1.1 billion, or 31.8% annualized, from $14.1 billion at June 30, 2022
•Total deposits totaled $15.2 billion at September 30, 2022, an increase of $1.3 billion, or 35.3% annualized, from $13.9 billion at June 30, 2022
•Net interest margin was 4.26% compared to 4.22% for the three months ended September 30, 2021
•Pretax income for the securities business segment was $8.9 million for the three months ended September 30, 2022, an improvement from a $0.4 million loss for the three months ended June 30, 2022
•Non-performing loans to total loans was 0.78%, down from 0.83% at June 30, 2022
•Book value increased to $28.35 per share, up from $24.52, an increase of 15.6% at September 30, 2021

First Quarter Fiscal 2023 Income Statement Summary
Net income was $58.4 million or $0.97 per diluted common share for the three months ended September 30, 2022, compared to $60.2 million, or $0.99 per diluted common share for the three months ended September 30, 2021. Net interest income increased $33.8 million or 23.1% for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, primarily due to higher average balances and rates earned in the loan portfolio, partially offset by higher rates paid on deposits.
The provision for credit losses was $8.8 million for the three months ended September 30, 2022 compared to $4.0 million for the three months ended September 30, 2021 primarily due to growth in the loan portfolio and changes in loan mix.
Non-interest income increased to $27.2 million for the three months ended September 30, 2022 compared to $26.7 million for the three months ended September 30, 2021. Increases of $2.7 million in broker-dealer fee income and $1.7 million in advisory fee income were mostly offset by decreases of $1.9 million in mortgage banking income and $1.8 million in prepayment penalty fee income.
Non-interest expense, comprised of various operating expenses, increased $31.7 million to $116.1 million for the three months ended September 30, 2022 from $84.4 million for the three months ended September 30, 2021. The increase was primarily attributable to a $16.0 million accrual in the current quarter as a result of an adverse legal judgement that has not been finalized, increased salaries and related costs of $6.3 million, as well as higher professional services expenses of $3.5 million, advertising and promotional expenses of $3.0 million and data processing expenses of $1.9 million.
Balance Sheet Summary
Axos’ total assets increased by $1.0 billion, or 6%, to $18.4 billion, at September 30, 2022, from $17.4 billion at June 30, 2022, primarily due to an increase of $1.1 billion in loans held for investment. Total liabilities increased by $0.9 billion, or 6%, to $16.7 billion at September 30, 2022, from $15.8 billion at June 30, 2022, primarily due to an increase in deposits of $1.3 billion. Stockholders’ equity increased by approximately $58.0 million, or 4%, to $1.7 billion at September 30, 2022 from $1.6 billion at June 30, 2022. The increase was primarily the result of net income of $58.4 million.
The Bank’s Tier 1 capital to adjusted average assets ratio was 10.30% at September 30, 2022 compared to 10.14% at September 30, 2021.


Conference Call
A conference call and webcast will be held on Thursday, October 27, 2022 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 both the webcast and the earnings supplement may be accessed at Axos’ website, investors.axosfinancial.com. For those unable to listen to the live broadcast, a replay will be available until November 27, 2022, at Axos’ website and telephonically by dialing toll-free number 877-660-6853, passcode 13733311.

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 its subsidiary Axos Securities, LLC, which wholly owns subsidiaries Axos Clearing LLC, a clearing broker dealer, Axos Invest, Inc., a registered investment advisor, and Axos Invest LLC, an introducing broker dealer. With approximately $18.4 billion in consolidated assets, Axos Financial, Inc. through Axos Bank provides consumer and business banking products through its low-cost distribution channels and affinity partners. Axos Clearing LLC (including its business division AAS), with approximately $30.3 billion of assets under custody and/or administration, and Axos Invest, Inc., provide comprehensive securities clearing and custody 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, the S&P SmallCap 600® Index, the KBW Nasdaq Financial Technology Index, and the Travillian Tech-Forward Bank Index. For more information on Axos Financial, Inc. please visit investors.axosfinancial.com.
Segment Reporting
The Company operates through two segments: Banking Business and Securities Business. In order to reconcile the two segments to the consolidated totals, the Company includes parent-only activities and intercompany eliminations. Inter-segment transactions are eliminated in consolidation and primarily include non-interest income earned by the Securities Business segment and non-interest expense incurred by the Banking Business segment for cash sorting fees related to deposits sourced from Securities Business segment customers, as well as interest expense paid by the Banking Business segment to each of the wholly-owned subsidiaries of the Company and to the Company itself for their operating cash held on deposit with the Business Banking segment.
The following tables present the operating results of the segments and reconciliations:
Three Months Ended September 30, 2022
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$179,730 $4,275 $(3,530)$180,475 
Provision for credit losses8,750 — — 8,750 
Non-interest income10,712 29,165 (12,669)27,208 
Non-interest expense100,796 24,515 (9,224)116,087 
Income before taxes$80,896 $8,925 $(6,975)$82,846 
Three Months Ended September 30, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$142,241 $6,176 $(1,775)$146,642 
Provision for credit losses4,000 — — 4,000 
Non-interest income14,828 13,106 (1,232)26,702 
Non-interest expense62,725 19,273 2,433 84,431 
Income before taxes$90,344 $9 $(5,440)$84,913 





Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with GAAP, this release includes non-GAAP financial measures such as adjusted earnings, adjusted earnings per diluted common share, and tangible book value per common share. Non-GAAP financial measures have inherent limitations, may not be comparable to similarly titled measures used by other companies and are not audited. Readers should be aware of these limitations and should be cautious as to their reliance on such measures. Although we believe the non-GAAP financial measures disclosed in this release 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 “adjusted earnings”, a non-GAAP financial measure, as net income without the after-tax impact of non-recurring acquisition-related costs (including amortization of intangible assets related to acquisitions) and other costs (unusual or non-recurring charges). 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 Axos’ operating performance. We believe excluding the non-recurring acquisition-related costs, and other costs provides investors with an alternative understanding of Axos’ core business.
Below is a reconciliation of net income, the nearest compatible GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:
Three Months Ended
September 30,
(Dollars in thousands, except per share amounts)20222021
Net income$58,407 $60,210 
Acquisition-related costs
2,734 2,846 
Other costs16,000 — 
Income taxes(5,526)(828)
Adjusted earnings (Non-GAAP)$71,615 $62,228 
Adjusted EPS (Non-GAAP)$1.18 $1.03 
We define “tangible book value”, a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. 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, the nearest compatible GAAP measure, to tangible book value per common share (non-GAAP) as of the dates indicated:
September 30,
(Dollars in thousands, except per share amounts)20222021
Common stockholders’ equity$1,700,972 $1,458,621 
Less: mortgage servicing rights, carried at fair value26,373 18,438 
Less: goodwill and other intangible assets160,429 164,944 
Tangible common stockholders’ equity (Non-GAAP)$1,514,170 $1,275,239 
Common shares outstanding at end of period59,998,673 59,494,633 
Tangible book value per common share (Non-GAAP)$25.24 $21.43 



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 continue to diversify its lending and deposit franchises, the anticipated timing and financial performance of other offerings, initiatives, and acquisitions and expectations of the environment in which Axos operates. 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 uncertainties surrounding the severity, duration, and effects of the COVID-19 pandemic, Axos’ ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, inflation, government regulation, general economic conditions, conditions in the real estate markets in which we operate, risks associated with credit quality, the outcome and effects of litigation 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
SVP, 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)
September 30,
2022		June 30,
2022		September 30,
2021
Selected Balance Sheet Data:
Total assets$18,407,078 $17,401,165 $14,906,750 
Loans—net of allowance for credit losses15,211,573 14,091,061 11,879,021 
Loans held for sale, carried at fair value9,463 4,973 33,344 
Loans held for sale, lower of cost or fair value10,476 10,938 11,949 
Allowance for credit losses - loans155,472 148,617 136,778 
Securities—trading75 1,758 1,941 
Securities—available-for-sale257,634 262,518 135,996 
Securities borrowed87,622 338,980 457,282 
Customer, broker-dealer and clearing receivables410,842 417,417 427,169 
Total deposits15,176,631 13,946,422 11,747,442 
Advances from the FHLB112,500 117,500 157,500 
Borrowings, subordinated notes and debentures425,818 445,244 255,896 
Securities loaned206,889 474,400 539,505 
Customer, broker-dealer and clearing payables500,584 511,654 510,040 
Total stockholders’ equity1,700,972 1,642,973 1,458,621 
Capital Ratios:
Equity to assets at end of period9.24 %9.44 %9.78 %
Axos Financial, Inc.:
Tier 1 leverage (to adjusted average assets)8.98 %9.25 %9.19 %
Common equity tier 1 capital (to risk-weighted assets)9.97 %9.86 %10.79 %
Tier 1 capital (to risk-weighted assets)9.97 %9.86 %10.79 %
Total capital (to risk-weighted assets)12.90 %12.73 %13.10 %
Axos Bank:
Tier 1 leverage (to adjusted average assets)10.30 %10.65 %10.14 %
Common equity tier 1 capital (to risk-weighted assets)10.87 %11.24 %11.89 %
Tier 1 capital (to risk-weighted assets)10.87 %11.24 %11.89 %
Total capital (to risk-weighted assets)11.71 %12.01 %12.80 %
Axos Clearing LLC:
Net capital$49,183 $38,915 $39,663 
Excess capital$42,324 $32,665 $31,435 
Net capital as a percentage of aggregate debit items14.34 %12.45 %9.64 %
Net capital in excess of 5% aggregate debit items$32,035 $23,290 $19,092 




AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited – dollars in thousands, except per share data)
At or for the Three Months Ended
September 30,
20222021
Selected Income Statement Data:
Interest and dividend income$223,786 $158,310 
Interest expense43,311 11,668 
Net interest income180,475 146,642 
Provision for credit losses8,750 4,000 
Net interest income after provision for credit losses171,725 142,642 
Non-interest income27,208 26,702 
Non-interest expense116,087 84,431 
Income before income tax expense82,846 84,913 
Income tax expense24,439 24,703 
Net income$58,407 $60,210 
Per Common Share Data:
Net income:
Basic$0.98 $1.01 
Diluted$0.97 $0.99 
Adjusted earnings per common share (Non-GAAP)1
$1.18 $1.03 
Book value per common share$28.35 $24.52 
Tangible book value per common share (Non-GAAP)1
$25.24 $21.43 
Weighted average number of common shares outstanding:
     Basic59,854,584 59,390,846 
     Diluted60,486,394 60,644,288 
Common shares outstanding at end of period59,998,673 59,494,633 
Common shares issued at end of period69,151,152 68,370,617 
Performance Ratios and Other Data:
Loan originations for investment$2,486,224 $2,092,279 
Loan originations for sale$70,073 $209,967 
Return on average assets1.32 %1.66 %
Return on average common stockholders’ equity13.91 %16.20 %
Interest rate spread2
3.66 %4.04 %
Net interest margin3
4.26 %4.22 %
Net interest margin3 – Banking Business Segment
4.50 %4.48 %
Efficiency ratio4
55.90 %48.71 %
Efficiency ratio4 – Banking Business Segment
52.93 %39.93 %
Asset Quality Ratios:
Net annualized charge-offs to average loans5
0.05 %0.01 %
Non-performing loans and leases to total loans0.78 %1.12 %
Non-performing assets to total assets0.68 %0.94 %
Allowance for credit losses - loans to total loans held for investment1.01 %1.14 %
Allowance for credit losses - loans to non-performing loans129.04 %101.97 %

1    See “Use of Non-GAAP Financial Measures” herein.
2     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.
3    Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
4 Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income.
5 Net charge-offs do not include any amounts transferred to loans held for sale.


AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par and stated value)
(Unaudited) September 30, 2022
June 30,
2022
ASSETS
Cash and cash equivalents$1,369,170 $1,202,587 
Cash segregated for regulatory purposes328,878 372,112 
Total cash, cash equivalents, and cash segregated1,698,048 1,574,699 
Securities:
Trading75 1,758 
Available-for-sale257,634 262,518 
Stock of regulatory agencies20,881 20,368 
Loans held for sale, carried at fair value9,463 4,973 
Loans held for sale, lower of cost or fair value10,476 10,938 
Loans—net of allowance for credit losses of $155,472 as of September 30, 2022 and $148,617 as of June 30, 2022
15,211,573 14,091,061 
Mortgage servicing rights, carried at fair value26,373 25,213 
Securities borrowed87,622 338,980 
Customer, broker-dealer and clearing receivables410,842 417,417 
Goodwill and other intangible assets—net160,429 156,405 
Other assets513,662 496,835 
TOTAL ASSETS$18,407,078 $17,401,165 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing4,626,907 5,033,970 
Interest bearing10,549,724 8,912,452 
Total deposits15,176,631 13,946,422 
Advances from the Federal Home Loan Bank112,500 117,500 
Borrowings, subordinated notes and debentures425,818 445,244 
Securities loaned206,889 474,400 
Customer, broker-dealer and clearing payables500,584 511,654 
Accounts payable and other liabilities283,684 262,972 
Total liabilities16,706,106 15,758,192 
STOCKHOLDERS’ EQUITY:
Common stock—$0.01 par value; 150,000,000 shares authorized; 69,151,152 shares issued and 59,998,673 shares outstanding as of September 30, 2022; 68,859,722 shares issued and 59,777,949 shares outstanding as of June 30, 2022
692 689 
Additional paid-in capital459,101 453,784 
Accumulated other comprehensive income (loss)—net of tax(5,770)(2,933)
Retained earnings1,486,851 1,428,444 
Treasury stock, at cost; 9,152,479 shares as of September 30, 2022 and 9,081,773 shares as of June 30, 2022
(239,902)(237,011)
Total stockholders’ equity1,700,972 1,642,973 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$18,407,078 $17,401,165 


AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) 
Three Months Ended
September 30,
(Dollars in thousands, except earnings per common share)20222021
INTEREST AND DIVIDEND INCOME:
Loans, including fees$208,338 $149,176 
Securities borrowed and customer receivables4,384 6,851 
Investments11,064 2,283 
Total interest and dividend income223,786 158,310 
INTEREST EXPENSE:
Deposits32,505 7,712 
Advances from the Federal Home Loan Bank5,163 1,016 
Securities loaned943 251 
Other borrowings4,700 2,689 
Total interest expense43,311 11,668 
Net interest income180,475 146,642 
Provision for credit losses8,750 4,000 
Net interest income, after provision for credit losses171,725 142,642 
NON-INTEREST INCOME:
Broker-dealer fee income9,178 6,462 
Advisory fee income6,959 5,304 
Banking and service fees6,514 6,680 
Mortgage banking income3,365 5,270 
Prepayment penalty fee income1,192 2,986 
Total non-interest income27,208 26,702 
NON-INTEREST EXPENSE:
Salaries and related costs46,996 40,737 
Data processing14,022 12,092 
Depreciation and amortization6,094 5,728 
Advertising and promotional6,370 3,372 
Professional services8,087 4,545 
Occupancy and equipment4,054 3,181 
FDIC and regulatory fees3,735 2,266 
Broker-dealer clearing charges2,829 4,005 
General and administrative expense23,900 8,505 
Total non-interest expense116,087 84,431 
INCOME BEFORE INCOME TAXES82,846 84,913 
INCOME TAXES24,439 24,703 
NET INCOME$58,407 $60,210 
COMPREHENSIVE INCOME$55,570 $59,703 
Basic earnings per common share$0.98 $1.01 
Diluted earnings per common share$0.97 $0.99 


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
September 30,
20222021
(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Assets:
Loans3, 4
$14,761,077 $208,338 5.65 %$11,662,383 $149,176 5.12 %
Interest-earning deposits in other financial institutions1,235,712 7,347 2.38 %1,163,143 591 0.20 %
Mortgage-backed and other investment securities4
257,119 3,298 5.13 %156,360 1,421 3.64 %
Securities borrowed and margin lending669,150 4,384 2.62 %903,542 6,851 3.03 %
Stock of the regulatory agencies28,281 419 5.93 %20,694 271 5.24 %
Total interest-earning assets16,951,339 223,786 5.28 %13,906,122 158,310 4.55 %
Non-interest-earning assets689,230 596,295 
Total assets$17,640,569 $14,502,417 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$7,715,655 $27,709 1.44 %$6,564,620 $3,567 0.22 %
Time deposits1,156,717 4,796 1.66 %1,363,061 4,145 1.22 %
Securities loaned534,538 943 0.71 %660,040 251 0.15 %
Advances from the FHLB880,348 5,163 2.35 %295,402 1,016 1.38 %
Borrowings, subordinated notes and debentures385,148 4,700 4.88 %223,837 2,689 4.81 %
Total interest-bearing liabilities10,672,406 43,311 1.62 %9,106,960 11,668 0.51 %
Non-interest-bearing demand deposits4,517,918 3,191,171 
Other non-interest-bearing liabilities770,189 717,725 
Stockholders’ equity1,680,056 1,486,561 
Total liabilities and stockholders’ equity$17,640,569 $14,502,417 
Net interest income$180,475 $146,642 
Interest rate spread5
3.66 %4.04 %
Net interest margin6
4.26 %4.22 %
1Average balances are obtained from daily data.
2Annualized.
3Loans include loans held for sale, loan premiums and unearned fees.
4Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. Loans include average balances of $25.9 million and $26.7 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2022 and 2021 three-month periods, respectively.
5Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
6Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.



AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
BANKING BUSINESS
The following table presents our Banking Business 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 September 30, 2022 and 2021:
 For the Three Months Ended
September 30,
 20222021
(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Assets:
Loans3, 4
$14,735,034 $208,010 5.65 %$11,622,074 $148,843 5.12 %
Interest-earning deposits in other financial institutions929,206 5,631 2.42 %879,856 337 0.15 %
Mortgage-backed and other investment securities4
275,975 3,371 4.89 %180,545 1,546 3.43 %
Stock of the regulatory agencies28,281 418 5.91 %17,824 270 6.06 %
Total interest-earning assets15,968,496 217,430 5.45 %12,700,299 150,996 4.76 %
Non-interest-earning assets312,320 286,810 
Total assets$16,280,816 $12,987,109 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$7,809,552 $27,741 1.42 %$6,614,799 $3,594 0.22 %
Time deposits1,156,717 4,796 1.66 %1,363,061 4,145 1.22 %
Advances from the FHLB880,348 5,163 2.35 %295,402 1,016 1.38 %
Borrowings, subordinated notes and debentures
22 — — %43 — — %
Total interest-bearing liabilities9,846,639 37,700 1.53 %8,273,305 8,755 0.42 %
Non-interest-bearing demand deposits4,583,593 3,238,709 
Other non-interest-bearing liabilities190,997 124,213 
Stockholders’ equity1,659,587 1,350,882 
Total liabilities and stockholders’ equity$16,280,816 $12,987,109 
Net interest income$179,730 $142,241 
Interest rate spread5
3.92 %4.34 %
Net interest margin6
4.50 %4.48 %
1Average balances are obtained from daily data.
2Annualized.
3Loans include loans held for sale, loan premiums and unearned fees.
4Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. Loans include average balances of $25.9 million and $26.7 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2022 and 2021 three-month periods, respectively.
5Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
6Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.