Axos Financial, Inc. (AX) Q1 2026 Earnings Call Transcript
Net Loan Growth $1.6 billion net loan growth linked quarter, including $1 billion of loans and leases and on-balance sheet securitizations acquired in the Verdant acquisition. This growth was driven by the acquisition and operational performance.
Net Interest Income $291 million for the 3 months ended September 30, 2025, increasing by approximately $11 million linked quarter or 15.6% annualized. Year-over-year, excluding a one-time benefit of $17 million in the prior year, net interest income was up $16 million or 5.8%. Growth was attributed to balanced growth across single-family mortgage warehouse, commercial specialty real estate, and auto lending.
Net Interest Margin 4.75% for the quarter ended September 30, 2025, down 9 basis points from 4.84% in the prior quarter. The decline was due to holding excess liquidity and the issuance of subordinated debt.
Noninterest Income Increased by approximately 13% year-over-year due to higher banking service fees, mortgage banking income, and prepayment penalty fees.
Total Deposits $22.3 billion, up 6.9% linked quarter and 11.5% year-over-year. Growth was supported by a diverse and granular deposit base across consumer and commercial banking and securities businesses.
Net Income Approximately $112.4 million for the quarter ended September 30, 2025, up from $110.7 million in the prior quarter. Adjusted net income was $119 million, a 7.3% increase from the linked quarter and almost 30% annually.
Diluted EPS $1.94 for the quarter ended September 30, 2025, compared to $1.92 in the prior quarter. Adjusted EPS was $2.06, reflecting a 7.3% increase from the linked quarter and almost 30% annually.
Total Originations for Investment Over $4.2 billion for the 3 months ended September 30, 2025, representing an increase of 11% linked quarter or 44% annualized. Growth was driven by commercial real estate specialty lending, auto lending, and single-family warehouse.
Average Loan Yields 7.99% for the 3 months ended September 30, 2025, in line with the prior quarter. Non-purchased loans had yields of 7.66%, while purchased loans had yields of 15.81%.
Nonperforming Assets Represented 64 basis points of total assets, down from 71 basis points in the prior quarter. Declines were seen in multifamily and commercial mortgages, partially offset by increases in single-family mortgages.
Net Charge-Offs Down 5 basis points linked quarter and 6 basis points year-over-year to 11 basis points for the 3 months ended September 30, 2025. This reflects low historical and current net charge-offs.
Assets Under Custody or Administration Increased from $39.4 billion at June 30, 2025, to $43 billion at September 30, 2025. Net new assets for the custody business were $1.1 billion in the September quarter.
Noninterest Expenses Approximately $156 million for the 3 months ended September 30, 2025, up by $5.6 million from the prior quarter. Excluding $1.3 million of deal-related expenses, the increase was $4.3 million, driven by salaries, benefits, and data processing expenses.
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Axos Financial Reports Strong Q2 2026 Earnings Growth
- Significant Loan Growth: Axos Financial achieved $1.6 billion in net loan growth in Q2 2026, encompassing asset-based lending, commercial specialty loans, and equity financing, indicating strong performance across diversified financing operations and expected to enhance market share further.
- Net Interest Income Surge: The company reported net interest income of $331.6 million for the quarter, up approximately $41 million or 14% linked quarter, driven by balanced growth across various lending segments, which bolsters profitability and financial stability.
- Acquisition Impact: The completion of the Verdant acquisition on September 30 added $430 million in loans and $780 million in asset securitizations, contributing $18.9 million in noninterest income, thereby enriching revenue streams and enhancing overall financial performance.
- Optimistic Outlook: Management reiterated an annual loan growth target in the low to mid-teens, projecting loan growth of $600 million to $800 million for the current quarter, reflecting strong demand in commercial lending and a positive market outlook.
Axos Financial Q2 Earnings Exceed Expectations
- Earnings Beat: Axos Financial reported a non-GAAP EPS of $2.25 for Q2, exceeding expectations by $0.18, indicating robust profitability growth.
- Significant Revenue Growth: The company achieved revenues of $385.09 million, reflecting a 25.1% year-over-year increase and surpassing market expectations by $39.2 million, showcasing successful business expansion.
- Loan and Asset Quality Improvement: As of December 31, 2025, net loan balances stood at $24.3 billion, up $1.6 billion year-over-year, while non-performing assets to total assets ratio improved to 0.56%, indicating ongoing asset quality enhancement.
- Deposit and Asset Management Growth: Total deposits reached $23.2 billion as of December 31, 2025, an increase of $2.4 billion from June 2025, with total assets under custody growing to $44.4 billion, reflecting strong performance in client asset management.
