What happened
Shares of digital bank Axos Financial(NYSE: AX) traded roughly 9.4% higher as of 12:23 p.m. ET today after the bank reported earnings results for its third fiscal quarter of 2023, which is for the three months ending March 31.
So what
Axos reported diluted earnings per share of $1.32 on total revenue of more than $231 million for the quarter, both numbers that beat analyst estimates.
"We had another strong quarter, with double-digit year-over-year growth in deposits, net interest income, and book value per share," Axos' CEO Greg Garrabrants said in a statement.
He added: "Our strong liquidity, diverse funding, and asset-based lending helped us maintain a 4.42% consolidated net interest margin, despite rising funding costs. With excess capital at the bank, Axos Clearing, and the Holding Company, we are well positioned to capitalize on market dislocations."
Axos grew net interest income, the money banks make on loans and securities after funding those assets with liabilities such as deposits, nicely year over year, but that number came in pretty much flat from the sequential quarter. That's still pretty good, considering how much funding costs have increased for the industry. Axos also announced a new $100 million share repurchase program.
Now what
Management does expect some margin compression in the near term, but it doesn't look too bad.
Currently, Axos trades at around 153% to its tangible book value, or net worth, which isn't that cheap for a bank stock in the current environment. But Axos is putting up good results in a difficult environment, so the company seems well positioned to navigate the rest of the year.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axos Financial. The Motley Fool has a disclosure policy.
