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01/11 03:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects a positive outlook with strong financial performance, including a 44% annualized growth, reduced nonperforming assets, and increased assets under custody. The Q&A session highlights a cautious but strategic approach to risk management and capital allocation, supporting growth. The company's focus on technology and operational investments, along with a healthy loan pipeline, further bolsters confidence. Despite some lack of detail on acquisitions, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8% in the next two weeks.
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.
AI Implementation: Axos has rapidly expanded the use of AI across various departments, including risk, compliance, credit, operations, technology, legal, marketing, finance, and accounting. This is expected to improve operational efficiency, software development speed, and new product development.
Axos Professional Workstation: The company has begun rolling out a new Axos Professional Workstation to broker-dealer clients, which integrates banking products for RIAs and brokers, offering a modern and flexible system.
Verdant Acquisition: Axos completed the acquisition of Verdant Commercial Capital, adding $1.2 billion in loans and leases. This acquisition is expected to contribute $150-$200 million in net new loans and operating leases per quarter starting Q2 FY2026.
Loan Growth: Axos expects loan growth in the low to mid-teens annually for the remaining nine months of FY2026, supported by the Verdant acquisition and expanded distribution channels.
Net Interest Income: Net interest income increased to $291 million for Q1 FY2026, up $11 million from the previous quarter, driven by growth in single-family mortgage warehouse, commercial specialty real estate, and auto lending.
Deposit Growth: Total deposits increased 6.9% year-over-year to $22.3 billion, with noninterest-bearing deposits growing by $350 million from the prior quarter.
M&A Strategy: Axos is actively evaluating M&A opportunities to augment growth, focusing on accretive and strategic transactions.
Operational Improvements: The company is focused on increasing productivity and operational efficiency through AI and other technological advancements.
Net Interest Margin: The net interest margin decreased from 4.84% to 4.75% due to excess liquidity and the issuance of subordinated debt, which could impact profitability.
Loan Yields: New loan yields are slightly lower in certain lending categories due to recent Federal Reserve actions, potentially affecting revenue growth.
Nonperforming Assets: Nonperforming assets remain flat but include increases in single-family mortgages, which could pose risks if economic conditions worsen.
Verdant Acquisition Costs: The Verdant acquisition added $1.3 million in deal-related expenses and $7.8 million to allowances for loan loss, increasing operational costs.
Regulatory Environment: The regulatory environment is favorable for M&A but could pose challenges if conditions change, impacting strategic growth plans.
Operational Costs: Noninterest expenses increased by $5.6 million, including $8.5 million expected quarterly from the Verdant acquisition, which could pressure margins.
Economic Conditions: Economic uncertainties, including Federal Reserve actions, could impact loan yields and prepayment levels, affecting financial performance.
Loan Growth: The company expects loan growth to be in the low to mid-teens range on an annual basis for the remaining 9 months of fiscal year 2026, driven by strong originations, contributions from new business lines, and the Verdant acquisition.
Net Interest Margin: The consolidated net interest margin is expected to remain at the high end of the 4.25% to 4.35% range, excluding FDIC loan purchase accretion.
Verdant Acquisition Impact: The Verdant acquisition is projected to add $150 million to $200 million of net new loans and operating leases per quarter starting in the second quarter of fiscal 2026. It is expected to be accretive to earnings per share by 2%-3% in fiscal 2026 and 5%-6% in fiscal 2027.
Operational Efficiency: The company plans to leverage artificial intelligence to improve operational efficiency, enhance productivity, and accelerate new product development.
M&A Opportunities: The company is actively evaluating additional M&A opportunities to augment growth and enhance its business portfolio.
Tax Rate: The corporate tax rate is expected to remain approximately 26%-27% going forward.
Loan Pipeline: The loan pipeline as of October 24, 2025, is approximately $2.2 billion, with significant contributions expected from commercial verticals and new business lines.
The selected topic was not discussed during the call.
The earnings call reflects a positive outlook with strong financial performance, including a 44% annualized growth, reduced nonperforming assets, and increased assets under custody. The Q&A session highlights a cautious but strategic approach to risk management and capital allocation, supporting growth. The company's focus on technology and operational investments, along with a healthy loan pipeline, further bolsters confidence. Despite some lack of detail on acquisitions, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8% in the next two weeks.
The earnings call suggests a generally positive outlook with strong net loan growth, effective cost management through AI, and a stable net interest margin. The Q&A section confirms stable credit quality and growth opportunities, despite some pricing pressures. The stock repurchase and strategic investment in technology further bolster the positive sentiment. The market cap indicates a moderate reaction, leading to a 'Positive' prediction of 2% to 8% stock price increase.
The earnings call summary and Q&A reveal a mixed but overall positive sentiment. Financial performance is strong with net loan growth and net interest income up. However, net interest margin slightly declined. Product development and market strategy are promising, with AI and tech investments. Shareholder returns are boosted by a repurchase program. Despite economic uncertainties and competitive pressures, guidance remains optimistic. The market cap suggests moderate sensitivity. Thus, a positive stock price movement (2% to 8%) is expected over the next two weeks.
The earnings call indicates solid financial performance with net loan growth, increased net interest income, and improved net income. The company is cautious about certain segments but remains optimistic about overall loan growth. Despite some margin compression, the outlook remains positive. The Q&A reveals strategic buybacks, limited exposure to construction risks, and investment in AI for efficiency. The market cap suggests moderate volatility, leading to a positive stock price movement prediction (2% to 8%).
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