Financial Data and Key Metrics - Net interest income for Q2 2025 was $280 million, up 22.5% YoY from $228.6 million in the prior period [7][8] - Net interest margin was 4.83% for Q2 2025, up 28 basis points YoY but down from 5.17% in Q1 2025 [9] - Tangible book value per share grew 21% YoY [7] - Return on average common equity was 17%, and return on assets was 1.7% for Q2 2025 [7] - Net income was $104 million, compared to $152.8 million in the same period last year [13] - Non-GAAP adjusted EPS was $1.82 for Q2 2025 [14] Business Line Performance - Loan originations were strong at $3.5 billion, with growth in single-family mortgage warehouse and C&I loan balances [15] - Auto loan portfolio saw its first sequential increase since Q1 2023 [16] - Average loan yields for non-purchased loans were 8.08%, while purchased loans yielded 13.92% [17] - Lender finance, fund finance, and equipment leasing had strong originations and net loan growth [16] - Single-family jumbo mortgage pipeline increased from $345 million to $496 million due to competitive exits and rate reductions [15] Market Performance - Total on-balance sheet deposits increased 9.5% YoY to $19.9 billion [10] - Demand, money market, and savings accounts represented 96% of total deposits, growing 10.6% YoY [19] - Consumer and small business deposits accounted for 60% of total deposits, while commercial TM and institutions represented 20% [19] - Axos Clearing deposits grew to $1.36 billion, up $104 million from the prior quarter [36] Strategy and Industry Competition - The company is focused on reducing headwinds in single-family jumbo mortgages and expects flat to slightly up growth in multifamily hybrid ARMs [15] - The company is leveraging low-code software development and AI to enhance operational efficiency [39] - The company is exploring inorganic growth opportunities, including potential acquisitions in specialty finance businesses [44][101] - The company is actively engaging with private credit partners to leverage the growth of the ecosystem [43] Management Commentary on Operating Environment and Future Outlook - Management expects the consolidated net interest margin to remain at the high end or slightly exceed the 4.25% to 4.35% target range [25] - The company is optimistic about organic loan growth returning, with expectations of high single-digit YoY growth in the remaining quarters of fiscal 2025 [51] - Management is cautious about expense growth and is focused on maintaining discipline while investing in technology and operational efficiency [92][93] Other Important Information - The company announced a $150 million at-the-market shelf offering to capitalize on potential strategic opportunities [45] - The company is actively working on AI use cases to enhance efficiency and reduce project timelines [39] - The company is realigning back-office servicing functions in its clearing and custody business to improve efficiency [38] Q&A Summary Question: Deposit Cost Trends - The company has successfully repriced higher-cost deposits and expects further opportunities to improve deposit mix over time [55][56] - Management believes the company can offset declines in interest income by repricing deposits, as demonstrated in Q2 2025 [57] Question: Net Interest Margin Drivers - The company attributes the strong net interest margin to a combination of asset-side growth (e.g., competitive exits in mortgage lending) and deposit repricing [58][59] - Excess liquidity has been a drag on net interest margin, but the company expects to grow into this liquidity with improved loan growth [62] Question: Crypto Engagement - The company is awaiting clearer regulatory guidance before reengaging in the crypto space [66][67] - Management emphasized the need for comprehensive regulatory clarity from both the SEC and primary regulators [67] Question: Non-Performing Assets (NPAs) - The increase in NPAs was attributed to specific idiosyncratic circumstances, particularly in real estate-backed loans [70][71] - Management is confident in the credit quality of the loan book and does not anticipate material losses from current non-performing loans [30][74] Question: Loan Demand and Growth Opportunities - The company sees strong demand in cap call, real estate lender finance, and other segments, with a $2.1 billion loan pipeline as of January 22, 2025 [50][83] - Management expects to stem runoff in single-family jumbo and multifamily loans, with potential for growth in these areas [81][89] Question: Expense Management and Operating Leverage - The company is focused on maintaining expense discipline while investing in technology and operational efficiency [92][93] - Management highlighted the use of AI and low-code platforms to drive productivity and reduce project timelines [94] Question: Capital Deployment and M&A - The company is exploring inorganic growth opportunities, particularly in specialty finance businesses [101] - The $150 million ATM offering is a proactive step to position the company for potential strategic acquisitions [102] Question: Provision for Credit Losses - The provision for credit losses was $12 million in Q2 2025, down from $13.5 million YoY, driven by lower net loan growth [48] - The company's allowance for credit losses to total loans held for investment was 1.37%, up slightly from 1.34% in Q1 2025 [49] Question: Fee Income Growth - The company expects fee income growth to be driven by its securities business, particularly Axos Advisory Services [123] - Management is optimistic about net new asset growth in the custody and clearing businesses [124] Question: Share Repurchases - The company remains disciplined in capital deployment, prioritizing organic growth and opportunistic share repurchases [133] - Management is optimistic about loan growth but remains cautious about capital allocation [131]

Axos Q2 Fiscal 2025 Earnings Supplement January 28, 2025 NYSE: AX Loan Growth by Category | | | | | | | $ Millions | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Q2 FY25 | | Q1 FY25 | | Inc (Dec) | | | Single Family Mortgage & | Jumbo Mortgage | $ | 3,641 | $ | 3,807 | $ | (166) | | | Warehouse | SF Warehouse Lending | | 509 | | 345 | | 164 | | | Multifamily & Commercial | Multifamily | | 2,148 | | 2,363 | | (215) | | | Mortgage | Small Balance Commercial | | 1,283 | | 1,284 | | (1) ...

Core Insights - Axos Financial reported a revenue of $307.9 million for the quarter ended December 2024, which is a decrease of 12.7% compared to the same period last year [1] - The earnings per share (EPS) for the quarter was $1.82, an increase from $1.60 in the year-ago quarter [1] - The reported revenue exceeded the Zacks Consensus Estimate of $303.64 million, resulting in a surprise of +1.40% [1] - The company also delivered an EPS surprise of +3.41%, with the consensus EPS estimate being $1.76 [1] Financial Metrics - The efficiency ratio was reported at 47.2%, better than the four-analyst average estimate of 48.4% [4] - The net interest margin stood at 4.8%, slightly above the average estimate of 4.7% based on four analysts [4] - Net annualized charge-offs to average loans were 0.1%, matching the three-analyst average estimate [4] - Total non-interest income was reported at $27.80 million, below the average estimate of $31.91 million based on four analysts [4] - Net interest income was $280.10 million, exceeding the average estimate of $272 million from four analysts [4] Stock Performance - Over the past month, shares of Axos Financial have returned +2.3%, outperforming the Zacks S&P 500 composite's +0.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it may perform in line with the broader market in the near term [3]

Core Insights - Axos Financial reported quarterly earnings of $1.82 per share, exceeding the Zacks Consensus Estimate of $1.76 per share, and showing an increase from $1.60 per share a year ago, resulting in an earnings surprise of 3.41% [1] - The company achieved revenues of $307.9 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.40%, although this represents a decline from year-ago revenues of $352.74 million [2] - Axos Financial has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.72 on revenues of $303.05 million, while for the current fiscal year, the estimate is $7.08 on revenues of $1.23 billion [7] - The estimate revisions trend for Axos Financial is currently mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Financial - Miscellaneous Services industry, to which Axos Financial belongs, is currently ranked in the bottom 49% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Axos Financial's stock performance [5]

Core Insights - Axos Financial reported mixed results for Q2 of fiscal 2025, with adjusted EPS of $1.82 exceeding analyst expectations of $1.75, while revenue of $280.1 million fell short of the $303 million estimate [1][6]. Financial Performance - Adjusted EPS increased by 13.8% year-over-year from $1.60 in Q2 2024 [3]. - Revenue grew by 22.5% year-over-year, but non-interest income (NII) saw a significant decline of 77.6% compared to Q2 2024 due to losses in mortgage banking and broker-dealer fees [3][6]. - Net interest income was reported at $280.1 million, up from $228.6 million in the previous year [3][6]. - The net interest margin improved to 4.83%, an increase of 28 basis points from 4.55% a year earlier [3][7]. - Book value per share rose by 20.9% to $44.17, while tangible book value per share increased by 23.4% to $41.27 [3]. Business Overview - Axos Financial operates as a technology-driven financial institution, focusing on digital platforms for retail banking and investment advisory services, which reduces reliance on physical branches [4]. - The company aims to enhance customer experiences through scalable technology solutions and has been expanding its digital banking capabilities [4][5]. Operational Efficiency - The company maintained strong operational efficiency, with non-interest expenses slightly declining to $145.3 million [7]. - Loan growth in commercial, industrial, and auto sectors contributed to a stable deposit base, achieving a 5.9% annualized growth in deposits [8]. Credit Quality and Provisions - The provision for credit losses was $12.2 million, an improvement from $13.5 million in Q2 2024, although issues with credit quality in the commercial sector and increased non-performing assets were noted [9]. Future Outlook - Management did not provide specific forward guidance but indicated expectations for positive loan growth and a focus on expanding the digital platform [10]. - The company targets high single-digit annual growth rates for loans, supported by strategic hiring and new asset acquisition strategies [11].

Financial Performance - For the three months ended December 31, 2024, net income was $104.7 million, while adjusted earnings were $105.8 million [129]. - The diluted EPS for the three months ended December 31, 2024, was $1.80, and the adjusted EPS was $1.82 [129]. - For the three months ended December 31, 2024, net income was $104.7 million, or $1.80 per diluted share, compared to $151.8 million, or $2.62 per diluted share for the same period in 2023 [133]. - Non-interest income for the three months ended December 31, 2024, was $27.8 million, a significant decrease from $124.1 million in the same period of 2023 [132]. - The efficiency ratio for the three months ended December 31, 2024, was 47.20%, compared to 34.54% for the same period in 2023, indicating increased operational costs relative to income [132]. - The return on average assets for the three months ended December 31, 2024, was 1.74%, down from 2.90% in the same period of 2023 [132]. - Income before income taxes for the Banking Business Segment was $152.9 million for the three months ended December 31, 2024, down from $214.6 million in the prior year [157]. Assets and Deposits - The company has approximately $23.7 billion in assets and $37.7 billion in assets under custody and/or administration at Axos Clearing LLC [115]. - Total assets increased to $23.7 billion as of December 31, 2024, up from $22.9 billion as of June 30, 2024, and $21.6 billion as of December 31, 2023 [131]. - Total deposits reached $19.9 billion as of December 31, 2024, compared to $19.4 billion as of June 30, 2024, and $18.2 billion as of December 31, 2023 [131]. - The total number of deposit accounts increased to 580,151 at December 31, 2024, from 555,538 at June 30, 2024 [174]. Income and Expenses - Net interest income for the three months ended December 31, 2024, was $280.1 million, compared to $228.6 million for the same period in 2023, reflecting a growth of 22.5% [132]. - Total interest expense increased by 6.0% for the three months ended December 31, 2024, mainly due to an $11.3 million rise in interest expense on demand and savings deposits [146]. - Total non-interest expense increased by $23.5 million, or 19.3%, for the three months ended December 31, 2024, primarily due to higher salaries and related costs [152]. - Non-interest income decreased by $96.3 million, or 77.6%, for the three months ended December 31, 2024, primarily due to the absence of the gain on the FDIC Loan Purchase in the prior year [152]. Capital and Liquidity - The common equity tier 1 capital ratio was 12.42% as of December 31, 2024, compared to 12.01% as of June 30, 2024, indicating improved capital strength [131]. - The Tier 1 leverage ratio was 10.02% as of December 31, 2024, exceeding the minimum requirement of 5.00% [191]. - The company and Bank met all capital adequacy requirements as of December 31, 2024, and were classified as "well capitalized" under regulatory standards [189]. - As of December 31, 2024, the Company had $2,839.1 million available immediately and $4,812.6 million available with additional collateral from the FHLB, indicating strong liquidity [181]. Interest Income and Rate Sensitivity - The average yield on loans increased to 8.37% for the three months ended December 31, 2024, compared to 8.18% for the same period in 2023 [134]. - The interest rate spread improved to 3.91% for the three months ended December 31, 2024, compared to 3.58% for the same period in 2023 [134]. - A 200 basis points increase in interest rates is projected to result in a 5.5% increase in net interest income for the first 12 months [202]. - The sensitivity of market value of equity (MVE) to a 200 basis points increase in interest rates is estimated at a decrease of 1.2% [203]. Regulatory Compliance - The company is subject to regulation by the Federal Reserve and the Office of the Comptroller of the Currency [116][118]. - The company emphasizes the importance of non-GAAP financial measures, with adjusted earnings providing insight into core business performance [128]. Business Segments - The banking business segment focuses on providing a wide range of banking services, including online banking and various lending products [122]. - The securities business segment includes clearing broker-dealer and registered investment advisor custody services [123]. - The company generates non-interest income from various sources, including fees from loans originated for sale and technology transaction processing fees [115].

Loan Growth and Deposits - Loan growth in Q2 Fiscal 2025 reached $3.61 billion, a decrease of 1.66% compared to Q1 Fiscal 2025[2] - Total deposits as of December 31, 2024, amounted to $11.9 billion in consumer direct deposits[12] - $3 billion of deposits adjust with the Federal Funds rate, enhancing deposit rate optionality[10] - Approximately 90% of deposits are FDIC-insured or collateralized, indicating strong risk management[11] - The diversified deposit gathering business lines include $1.1 billion in fiduciary services and $3.5 billion in commercial and treasury management[12] - The company has $450 million of off-balance sheet deposits from Axos Securities, contributing to liquidity[10] Credit Quality and Allowance for Credit Losses - The allowance for credit losses (ACL) and unfunded loan commitments reserve (UCL) totaled $5.8 million[15] - As of December 31, 2024, the Allowance for Credit Losses (ACL) by loan category shows a total of $2,026 million, with a percentage of 1.3% based on gross unpaid principal balance[18] - The credit quality report indicates that non-accrual loans totaled $1,826 million, representing 0.65% of total loans outstanding[19] - The ACL percentage for commercial real estate loans was reported at 1.26%[18] - The allowance for credit losses to loans held for investment was 1.37%, consistent with the previous quarter, indicating stable asset quality[23] Loan Performance - The total loans outstanding as of December 31, 2024, were $18,860 million[19] - Single-family mortgage loans accounted for $409 million, with a non-accrual percentage of 1.33%[19] - Multi-family and commercial mortgage loans were reported at $406 million, with a non-accrual percentage of 0.92%[19] - Commercial real estate loans stood at $604 million, with a non-accrual percentage of 0.43%[19] - Consumer loans, including auto loans, totaled $483 million, with a non-accrual percentage of 0.41%[19] Financial Performance Metrics - Net interest income for the three months ended December 31, 2024, was $280.1 million, compared to $292.0 million for the previous quarter, reflecting a decrease of 6.5%[23] - Net income for the three months ended December 31, 2024, was $104.7 million, compared to $112.3 million in the previous quarter, representing a decline of 5.1%[23] - The efficiency ratio improved to 47.20% from 45.99% in the previous quarter, indicating enhanced operational efficiency[24] - Return on average assets was 1.74%, down from 1.92% in the previous quarter, reflecting a decrease of 18.8%[23] - Return on average common stockholders' equity was 16.97%, compared to 19.12% in the previous quarter, a decline of 11.2%[23] - The net interest margin was 4.83%, down from 5.17% in the previous quarter, indicating a contraction of 6.6%[24] - Non-interest expense was $145.3 million, compared to $147.5 million in the previous quarter, showing a decrease of 1.5%[23] Asset and Equity Growth - Total assets increased to $23,709,422 from $23,569,084, reflecting a growth of 0.6%[21] - Total stockholders' equity rose to $2,521,962 from $2,405,728, representing an increase of 4.8%[21] - Book value per common share improved to $44.17 from $42.14, a growth of 4.8%[21] - Total stockholders' equity as of December 31, 2024, was $2.52 billion, compared to $2.40 billion as of December 31, 2023, reflecting a year-over-year increase of 5%[29] - Tangible book value per common share (non-GAAP) increased to $2.35 as of December 31, 2024, from $2.23 as of December 31, 2023, representing a growth of 5.4%[29] Future Outlook and Strategic Initiatives - The company aims to enhance its credit quality metrics through strategic initiatives in risk management and loan underwriting[20] - Future outlook includes a focus on expanding into new markets and enhancing product offerings to improve overall financial performance[20] - The company is focused on expanding its market presence and enhancing its product offerings through strategic initiatives and potential acquisitions[30] - The management team emphasized ongoing investments in new technologies and product development to drive future growth[30] - Future guidance indicates a positive outlook for revenue growth driven by increased customer acquisition and retention strategies[30] - The company plans to leverage its existing infrastructure to support new product launches and market expansion efforts[30]

Wall Street analysts expect Axos Financial (AX) to post quarterly earnings of $1.76 per share in its upcoming report, which indicates a year-over-year increase of 10%. Revenues are expected to be $303.03 million, down 14.1% from the year-ago quarter.Over the past 30 days, the consensus EPS estimate for the quarter has remained unchanged. This demonstrates the covering analysts' collective reassessment of their initial projections during this period.Prior to a company's earnings release, it is of utmost impo ...

Axos Financial, Inc. (NYSE: AX ), incorporated in 1999 and headquartered in Las Vegas, NV, is a financial services company that primarily offers deposit accounts and mortgage loans through an online banking model.I am a self-taught value investor focusing on Equity REITs, ETFs, special-situation opportunities, portfolio management, and factor investing. My goal is to generate above-average returns with below-average volatility. My ideas are usually long-term but I will respond appropriately to unexpected ev ...

For the quarter ended September 2024, Axos Financial (AX) reported revenue of $320.66 million, up 30.5% over the same period last year. EPS came in at $1.96, compared to $1.41 in the year-ago quarter. The reported revenue represents a surprise of +7.03% over the Zacks Consensus Estimate of $299.59 million. With the consensus EPS estimate being $1.80, the EPS surprise was +8.89%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to deter ...