AX

Image source: The Motley Fool. Thursday, July 30, 2025, at 5 p.m. ET SVP, corporate development and IR - Johnny Y. Lai President and Chief Executive Officer - Gregory Garrabrants Executive Vice President, and Chief Financial Officer - Derrick Walsh Operator: Greetings, and welcome to the Axos Financial 4 Quarter 25 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Johnny Y. Lai, SVP, corporate development and IR. Thank you, John. You may begin. Johnny Y. Lai: Thanks, Alicia. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial Inc. Fourth quarter and fiscal 25 financial results conference call are the company's President and Chief Executive Officer, Gregory Garrabrants and Executive Vice President, and Chief Financial Officer, Derrick Walsh. Gregory and Derrick will review and comment on the financial and operational results for the quarter and fiscal year ended 06/30/2025. And we will be available to answer questions after the prepared remarks. Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward looking statements that are subject to risks and uncertainties that management may make additional forward looking statements in response to your questions. Please refer to the Safe Harbor statement found in today's earnings press release and in our investor presentation for additional details. This call is being webcast and there will be an audio replay available in the investor Relations section of the company's website. Located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release. Before handing over the call to Gregory, I would like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement in an 8-K with additional financial schedules. All of these documents can be found on Axos Financial.com. With that, I would like to turn the call over to Gregory. Gregory Garrabrants: Thank you, John. Good afternoon, everyone, and thank you for joining us. I would like to welcome everyone to Axos Financial's conference call for the fourth quarter of fiscal 25. Ended 06/30/2025. I thank you for your interest in Axos Financial and Axos Bank. We delivered strong results this quarter, generating $856 million of net loan growth linked-quarter, 6 basis points of net interest margin expansion and an 18% year over year increase in book value per share. We continue to generate high returns as evidenced by the 17% return on average common equity and a 1.9% return on assets in the 3 months ended 06/30/2025. Other highlights in the quarter include net interest income was $280 million for the 3 months ended 06/30/2025, up 7.7% from the $260 million in the prior year period. Net interest margin was 4.84% for the quarter ended 06/30/2025, up 6 basis points from the 4.78% in the quarter ended 03/31/2025. 1 loan from the FDIC purchase pool paid off this quarter and that accelerated accretion of the purchase price discount increased our net interest income by approximately $450 thousand We continue to maintain a best in class net interest margin without the benefit of the accretion from loans purchased from the FDIC. Total on balance sheet deposits increased 7.6% year over year to $21 million. Our diverse and granular deposit base across consumer and commercial banking and our securities businesses continue to support our organic loan growth. We managed our operating expenses well this quarter. Total non interest expenses for the quarter ended 06/30/2025 were up by 3% from the prior quarter. Excluding the reversal of a legal accrual in the prior quarter, we reduced other G&A expenses by approximately $2 million Total non interest expenses were up $2.5 million from March to June. Total nonaccrual loans declined $15 million linked-quarter resulting in our nonaccrual loans to total loans ratio improving by 89 basis points in the quarter ended 03/31/2025 to 79 basis points as of 06/30/2025. Net income was approximately $1.107 billion in the quarter ended 06/30/2025, compared to $105.2 million in the quarter ended March 31. Diluted EPS was $1.92 for the quarter ended 06/30/2025, compared to $1.81 in the March quarter. We had a few non recurring items this quarter that impacted our net income and EPS. We recognized a $12 million pre tax gain from the sale of multifamily loans that were included in mortgage banking income. We also recognized a onetime noncash deferred tax impairment that increased our net income tax by $5.5 million Excluding the impact from those 2 nonrecurring items, our adjusted net income and adjusted earnings per diluted share would have been $107.7 million and $1.87 per share respectively. We took advantage of the temporary market downturn in April to repurchase approximately $31 million of common stock at an average price of $59 per share. Total originations for investment excluding single family warehouse lending increased 5% on a linked quarter basis, resulting in net loan growth in loans for investment of approximately $856 million for the 3 months ended 06/30/2025, representing an increase of 4.2% linked quarter or 16% annualized. Asset based lending, commercial real estate specialty equipment leasing, lender finance, and single family warehouse had strong originations and net loan growth this quarter. Additionally, we grew ending loan balances in single family mortgage for the 2nd consecutive quarter. Average loan yields for the 3 months ended 06/30/2025 were 8.0% flat compared to the prior quarter. Average loan yields for non purchased loans were 7.66% and average yields for purchased loans were 14.9% which includes the accretion of our purchase price discount. The FDIC purchase loans continue to perform and all loans in the portfolio remain current. New loan interest rates were the following. Single family mortgage 7.2%, multifamily 7.1%, C&I, 7.8%, and auto, 8.3%. Ending deposit balances were $20.8 billion and they were up 3.4% linked quarter and up 7.6% year over year. Demand, money market and savings accounts representing 95% of total deposits at 06/30/2025 increased by 7% year over year. We have a diverse mix of funding across a variety of business verticals with consumer and small business representing 59% of total deposits commercial cash, treasury management and institutional representing 20%, Commercial specialty representing 11%, Axos Fiduciary Services representing 5%, and Axos Security which is our custody and clearing business representing 5%. Total non interest bearing deposits were approximately $3 billion at the end of the quarter, up slightly from the prior quarter. Client cash sorting deposits ended the quarter around $980 million up from $900 million at 03/31/2025. We remain focused on adding new assets from existing and new advisors to grow our assets under custody and cash balances. In addition, our excess securities deposits on our balance sheet, we had approximately $450 million of deposits off balance sheet at partner banks. Our consolidated net interest margin was 4.84% for the quarter 06/30/2025, compared to 4.78% in the quarter ended 03/31/2025. We are seeing strong growth in accounts and balances from our Axos 1 consumer bundle deposit product, which includes a checking and a savings account. Growth in Axos 1 and other deposit businesses, including our commercial cash and treasury management specialty businesses has provided us with sufficient funding to support our strong organic loan growth. We are also making excellent progress cross-selling deposits across our lending businesses. We expect our consolidated net interest margin ex FDIC loan purchase accretion to stay at the high or slightly above the 4.25% to 4.35% range we have targeted over the past year. While new loan yields are coming in slightly lower in many lending categories we compete in, we continue to offset some of that pressure through refinancing or paying off lower yielding single family and multifamily loans originated 2 to 3 years ago. Our loan pipelines have improved over the past few quarters as a result of successfully expanding our distribution channels across certain commercial lending categories and contributions from teams we have onboarded over the past 12 months. We also believe we have moved past our peak level of prepayments in our commercial specialty real estate portfolio, which had been a significant headwind to net loan growth for the past several quarters. Taking all of these factors into consideration, we expect organic loan growth to come in toward the mid to high end of our single digit and low teens range on an annual basis in fiscal 26. The credit quality of our loan book continues to be solid and our historic and current net charge offs remained low. Total nonperforming assets declined $13.4 million linked quarter representing 71 basis points of total assets compared to 79 basis points in the quarter ended 03/31/2025. The sequential decrease in non accrual loans were primarily driven by $9.4 million in our C&I portfolio and $4.9 million in our commercial real estate lending business. We did not anticipate a material loss from loans currently classified as non performing in our single family, multifamily or commercial real estate loan portfolio. Our commercial real estate specialty portfolio continues to perform very well and in line with expectations. Nonaccrual C&I loan balances at 06/30/2025 were down by approximately $9.4 million from the prior quarter. The 2 largest C&I loans we have on nonaccrual continue to be up to date on their payments and no new C&I loans were placed on nonaccrual in the quarter. We continue to monitor the credit trends across all loan portfolios and have not seen any broad based deterioration in any individual lending category. Axos Clearing, which includes our correspondent clearing and RIA custody had a good quarter. Total assets under custody increased from $37.1 billion at 03/31/2025, to $39.4 billion at 06/30/2025. Net new assets for our custody business increased $215 million in the June quarter, extending the positive net new asset momentum we have experienced over the past several quarters. The stock market has rebounded off its year to date lows and many of our custody clients continue to generate positive assets under management growth. The pipeline for new custody clients remains healthy for small and large RIA firms, underpinning our optimism and continued net positive net new asset growth in our securities business. Total deposits at Axos Clearing were $1.4 billion at the end of the quarter, up $90 million from where they were in the prior quarter. Of the $1.4 billion of deposits from Axos Clearing, approximately $990 million were on the balance sheet and $4 million were held at partner banks. The slight sequential increase in deposits is encouraging given the strong rally in the stock market. While it is difficult to be absolute that cash sorting has bottomed, we believe that clients and advisors becoming less focused on maximizing yield in their sweep accounts compared to a year ago. Many of our commercial lending and deposit teams, including our life science and technology business and our middle market banking teams, that we have added over the past few quarters are now producing nicely and contributing to loan and commercial deposit growth. We on boarded a new floor plan lending team that will help us scale our floor plan lending We continue to evaluate M&A opportunities to augment growth from our existing businesses and team lift outs. The pace and quality of M&A opportunities have increased over the past few months and seller expectations have become more reasonable. We are evaluating specialty lending and nonbanking businesses that generate asset and transaction based income and low cost deposits. Our strong capital, liquidity and profitability allow us to be disciplined in how and where we deploy capital to ensure the investments meet our strategic and valuation hurdles. We ended fiscal 25 with positive momentum. Loan growth accelerated in the back half of the year Our credit quality was strong. Our net interest margin remained above our long term target. We expect a change in the income tax calculation methodology for the state of California will reduce our income tax rate by 3 percentage points starting in the 09/30/2025 quarter, boosting our net income and EPS in fiscal 26 and beyond. With this being the 20 fifth anniversary of Axos Bank, we are proud of delivering consistent performance through a variety of economic, geopolitical and regulatory environments. I am even more excited about the opportunities that we have in each of our businesses. We remain hyper focused on executing our strategic and operational initiatives. These include investments in technology and operations to scale businesses and roll out new products faster while maintaining a best in class operating efficiency ratio. We believe we will see benefits in our operating efficiency from the implementation of artificial intelligence across the organization and believe that its implementation will enable us to create greater operating leverage and improve the speed, quality, and cost of software development projects and accelerate new product delivery. We believe that we can deploy our capital in a disciplined manner in the our existing and new businesses to further diversify our lending, funding, and fee based income. We have a lot of runway in each of our businesses. I feel confident that our teams and our leaders will deliver the results that our shareholders have come to expect from us. Now I will turn the call over to Derrick, who will provide additional details on our financial results. Derrick K. Walsh: Thanks, Gregory. Quick reminder that in addition to our press release, an 8 ks with supplemental schedules was filed with the SEC today, are available online through EDGAR, or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filing for additional details. Noninterest expenses were approximately $151 million for the 3 months ended 06/30/2025, up $4.4 million from the 3 months ended 03/31/2025. Excluding approximately $1.9 million reversal of a legal accrual in the March 31st quarter, total non interest expenses were up by approximately $2.5 million in the linked quarter. Salaries and benefit expenses of $74.9 million was roughly flat from the prior quarter ended March 31. Professional services expenses were $10.4 million compared to $8.2 million in fiscal Q3 25. The sequential increase in professional services expense was attributed to a handful of services across different business units. Looking ahead to the September quarter, we recently added a floor plan financing team that adds an incremental $1 million of expense per quarter. And as a reminder, September is when we have our annual merit compensation increase, which we estimate to be about 4%. Remain focused on managing our expenses while making strategic investments in a controlled manner in order to maintain our operating efficiency ratio. Next, our income tax rate was 29% for the 3 months ended 06/30/2025, compared to 27.4% in the corresponding year ago period. Our income tax expense in Q4 25 included a onetime noncash deferred tax impairment related to the change in the taxation of financial institutions that I mentioned on last quarter's call. The California budget proposal went into effect on 06/30/2025. Which required us to reassess the value of our deferred tax assets. That resulted in a $5.6 million onetime noncash impairment charge in the quarter ended 06/30/2025. Our income tax expense for the quarter ended 06/30/2025 benefited from the increase in our stock price from June 30, 2024 to June 30, 2025. Which is 1 factor used to calculate our CEO stock based incentive compensation. Net impact of the deferred tax asset remeasurement and stock based incentive compensation calculation combined with higher pretax income was a $2.3 million increase in our income tax expense in Q4 25. Starting in the quarter ending 09/30/2025 and going forward, we expect our corporate tax rate to be approximately 26% to 27%, an improvement of 3 percentage points from the previously guided 29% to 30%. I will wrap up with our loan pipeline and growth outlook. Our loan pipeline remains healthy at $2 billion as of 07/25/2025. Consisting of $532 million of single family residential jumbo mortgage. $49 million of gain on sale mortgage, $302 million of multifamily and small business commercial, $73 million of auto and consumer, and $1.1 billion in commercial lending. We are not seeing any material impacts from imposed or proposed tariffs on loan demand so far. And we believe that we will be able to grow loan balances organically at the midpoint to high end of our high single digits to low teens year over year growth target over the next 12 months, excluding the impact of the loan portfolio purchased from the FDIC or any other potential loan or asset acquisitions. With that, I will turn the call back over to John. Johnny Y. Lai: Thank you, Derrick. Alicia, we are ready to take questions. Operator: Will now be conducting a question and answer session. You would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. 1 moment, please, while we poll for questions. Thank you. Our first question comes from the line of Kyle Peterson with Needham & Company. Please proceed. Kyle Peterson: Great. Good afternoon. Thanks, guys. I want to start off on loan yields and that kind of the net interest margin. Gregory Garrabrants: It sounds like maybe there might be a little more pricing pressure in and yields on new loans might be lower, but then it could be a partial offset on, prepays being a little slower. I guess, like, do you guys view, like, the net impact of those? And I guess, the NIM outlook, it sounds fairly consistent with last quarter? Are those kind of a rough wash? Or how are you guys looking at different pieces there? I think they are fairly consistent. For a lot of these businesses like the CapCall side and whatnot, they have a lot deposits that come with them, and the middle market business also has that too. So loan yields might be a little tighter, there is an offsetting benefit on the funding side. Which results in a decent net. I think if I were to take a guess, I would say that I think that the credit spread side is been more consistent this quarter with the last quarter. So I would not say there is that much incremental pressure, but it is just it is very different than it was a year ago just with respect to you know, particularly in some of the C and I club deals and some of the syndicated deals, there is just a lot of banks that are kind of pushing into that space. I think if they do not maybe want to grow as much in commercial real estate and that is pushed it down a bit. I think this is somewhat of obviously, a forecast, but I think it is we are going to be able to keep it pretty consistent, I think. But it could be a basis point or 2 either way, sure. it is--you know, it is not that much of a science. Kyle Peterson: Okay. that is helpful. And then Gregory, I know we have, kind of chatted in the past, and you have mentioned different dynamics and kinda how you are kind of leveraging AI to longer term kind of press on margins and cap on expense growth. I guess, could you remind us like how you are thinking about expense growth relative to revenue, how you guys are using whether it is tech and AI in your day to day. I think that would be really helpful for everyone on the call. Gregory Garrabrants: Right. What we had previously said is a target that we wanted to ensure that our personnel and professional services cost growth did not exceed 30% of our net interest income and noninterest income growth. Now, we are adding we just added a team there. So that is definitely a target over the year. We added a fairly expensive floor plan team. They are great folks. We expect them to be able to produce, but it will take a couple of quarters to really get that running. But just in general, with respect to artificial intelligence, there is just so much opportunity and we are taking advantage of that opportunity now. And it is making people more efficient, it is taking a lot of routine tasks and, automating them. And so the ability to take, unstructured data out of documents. You know, for example, we obviously you know, we have let's say you get a you have a big, a big, legal agreement for a for a commercial loan. And, previously, it would take an attorney, quite a bit of time to go through and make sure all the covenants were extracted and placed into the commercial originations system. Now, AI can read that It can present it to the attorney, make sure that it is correct. When the attorney makes corrections, it will auto learn off that. And then, you know, allow that process to be just a lot faster. Does not mean that we are relying entirely on that agent, but it makes that process a lot faster. That agent can then auto upload those covenants into the system for tracking. So, I mean, there is lots of examples like that. That are going on. We have got a pretty active task force. Pushing on the tools and then on the processes we want to, work through. But I do really believe that it is going to bend the cost curve in the operations side. And then on the on the software development side, obviously, we have so many cool and interesting things we wanna do. And previously, we have been limited by the speed at which the, the coders can code And, there is just so many really incredible breakthroughs that are occurring at such a rapid pace in the software development process. 1 recent example is we use a software that essentially creates the screens and called the FIGMAs, right, which are just the sort of what the user experience supposed to look like and that sort of thing. And they rolled out their AI product just, this month, and I and the team is telling me it takes less than 10% of the time now to basically take a product from conceptualization and get that all organized and get the field validations done and get the user experience, you know, ready to be shown and reviewed by the folks that are going to review it. So that is just 1 example. But there is just a lot of stuff going on that I am I am pretty excited about. So yeah. And I think it is going to bend the cost curve, and it also, I do not think, will be successful unless we can say that we are able to deliver more and better products faster and cheaper. On the software side. Awesome. Thank you very much, and nice quarter. Operator: Thank you. Thank you. Our next question comes from the line of David Feaster. With Raymond James. Please proceed. David Feaster: Hi. Good afternoon, everybody. Gregory Garrabrants: Hi, David. David Feaster: Maybe just--we touched on the loan side a bit. Let's let's touch on the funding side. Obviously, you have had a lot of success driving deposit growth. I mean, notable success in the consumer direct side. It had some nice tailwinds in the specialty deposits and commercial and treasury management too. I was just wondering where do you where do you see the most opportunity on the funding side today? How's pricing competition there? as industry loan growth is picking up? And just your thoughts on your ability to continue to manage deposit costs lower and still grow. Gregory Garrabrants: Yeah. Well, I think I think it really depends on the vertical. And some of the new verticals we have added do come with some pretty nice compensating deposit balances. And so those are going to be more favorably priced in general. But I do think that as industry loan growth picks up, we might see even some of these middle market clients as we sort of start to take clients and things like that. 've seen some of the competitors try to retain those clients by getting aggressive on the deposit rates. So you know, I think if our loan growth has accelerated, it is reasonable to think that there might be a slightly higher funding cost associated with that if the loan growth is let's say, you know, we said we are at the higher end of our high single digits, low double digits, but if we had loan growth similar to what we had this quarter, every quarter in the next fiscal year, then I think that might put a little pressure on funding costs. Of course, it is hard to say because, the Axos 1 product is doing very well. The funding cost there is you know, it is it could be reasonable depending upon the maximum checking and savings accounts that come in. And a variety of factors there. So But I think it is not a bad modeling exercise to say if we are growing a lot faster, then there might be a little pressure on funding costs. Or if we do a big acquisition or even a moderately sized acquisition of an asset pool or a specialty lending business then that might put a little pressure on the funding side for a little while. David Feaster: Got it. But, you know, with that, I mean, even if you did have outside growth and maybe a little margin pressure, it is not hard to still see a really strong NII growth profile. You know, you are you are obviously having a lot of success on the fee side and gaining share with the security side. Sounds like pipeline is doing pretty good. You think that the you can keep the fee income growth in line with NII, or what initiatives maybe that you have to help support fee revenue growth maybe, hopefully, keeping that proportion relatively stable? Gregory Garrabrants: Yeah. I think I mean, remember, there was yes, look, we did have did have good growth from the market and then decent growth on, net new assets. it is not quite where we want to be There is a nice pipeline, though. There are some wins that are coming through and getting onboarded that are decent size. This coming quarter and the next quarter. I think Which should boost that new asset growth number. But that you know, we are we are doing a lot of development on the software technology to be able to have an extremely compelling product. And I think we have a good product, but it needs to get better to be best in class. And I think there is I think that the biggest part of our growth in the fee income side is clearly going to be on the security side in this rate environment. And we are making good progress there. But to say that is going to increase at the same level I think we have got you know, we have got goals for that, and some of the technology is gonna have to come in place. And get some adoption there to make that happen. So I am I think we can do it, but it will be it will be a little difficult, I think. It will not be it is not impossible, but it will not be easy. David Feaster: Okay. Then lastly, just touching on the capital front. I mean, you are still accreting capital. Extremely profitable even with accreting capital in excess of your organic growth. I just kinda wanted to touch on your capital priorities here. You know, stocks moved, which is great. You know, makes buybacks a little less attractive, though. And I know the excess capital is not burning a hole in your pocket. Just wanted to get a sense of your capital priorities. It sounds like M&A might be more in the cards today. Like conversations are pretty good, but just kinda curious some of the types of things you are considering. Gregory Garrabrants: Yes. Well, we have a good organic growth pipeline. We are still looking at different M&A opportunities. In a variety of places. We look at fee income businesses. We look at specialty finance businesses if they are a good fit. So, you know, that is always a good place to deploy capital if it is synergistic. And yeah, then, you know, we will just we will continue to monitor that. We obviously bought back some stock this quarter, but there is been obviously a big move in the stock price too. We still like where we are. And feel good about being able to generate earnings that are supportive of that share price. But, yeah, mean, I think I think it is all in play and, you know, but organic loan growth remains a priority, for us. Operator: Perfect. Thanks, everybody. Thank you, David. Thank you. Our next question comes from the line of Gary Tenner with D. A. David. Please proceed. Gary Tenner: Thanks. Good afternoon. Question on the multifamily loan sale. Just curious about kind of the reasoning behind it. Obviously, yields must have been pretty good there given the gain that you picked up. So just curious about the thought process. Around that. Obviously, you had great net loan growth regardless. But you know, any color? Gregory Garrabrants: Yes. It was I think when we look at loans and we see what we think about them from a standpoint of where they are from a credit perspective and look at what we think about them. And so there was some good buyers that were interested in some loans, and so we decided to sell, that particular loan. Gary Tenner: Was that a single loan? Just single large loan or a basket of loans? Gregory Garrabrants: It was a few others. Yeah. there is a handful of loans that were sold. Gary Tenner: Okay. Alright. Great. And then as you think about 2026, and I know that you have Gregory, you mentioned you know, expectations of being towards the mid to higher part of your loan growth range. Gregory Garrabrants: Obviously, C and I has been pretty strong throughout fiscal 25, and now you saw CRESL this current quarter really pick up. So those 2, I would imagine, are the largest drivers, probably the vast majority of loan growth for the year. Is there anything else that you think could accelerate? I think cap call can do something. I think the lender finance businesses, both real estate and non real estate can as well. You know, jumbo mortgage started to grow again. it is not gonna be massive, but the pipeline there is pretty good. So I think we can have pretty balanced loan growth. Across. But those are probably the biggest categories. I mean, I think that we have a lot of the good the good part of our business is it is just so diverse that you may have, some movements, within quarters, but we can look across the board and look at the pipelines and see where we are there. I mean, Crestle is a little tough because sometimes our prepayments can come there that are relatively and move that number around. So I think we can be much more certain about aggregate numbers than about the individual categories. Gary Tenner: Okay. And like, ask 1 more question. You kinda reiterated the goal on the kind of comp line to not exceed 30%. Of revenue growth or NII growth? So in terms of the tax benefit that you are getting from the California change, you know, I guess the question would be, does that free up any additional resource for investment or that goes to bottom line? Derrick K. Walsh: No, that goes to bottom line. Gregory Garrabrants: I think the executives wish it was, but Gregory told the nuts tight. No, it is a it is a discipline measure and to my knowledge, nobody was actually involved with the lobbying of California legislature to give us such a beneficence and basically pound other banks that are not located in California. So know I mean, in all seriousness, I think that is a that is a pretax. it is just a very simple number. it is if you take the revenue growth from noninterest, revenue and interest revenue you add it up, you look at the difference. Obviously, there could be some onetime items in there. And you, do not have compensation or professional services expenses additively grow that, and it is a pretax ratio. So that is what it is. And I think, obviously, look, at any 1 quarter, we hired this floor plan team, Derrick said that is going to cost about $1 million a quarter. But I mean, over the year, we intend to hit that number and make sure that happens. And that is that is not saying that we cannot do better with AI and whatever it is, but that is that is a public goal that the team you know, is gonna hit. Operator: Got it. Thank you. Thank you. The next question comes from the line of Kelly Moda with KBW. Please proceed. Kelly Motta: Hey, good afternoon. Thanks for the question and congrats on 25 years. Very cool you get to celebrate on fourth of July. Gregory, maybe with the Genius Act coming out, I believe before the Silvergate blowup, you were potentially looking into Stablecoin and digital assets. Can you refresh us now that there is additional color as to a more conducive regulatory environment, how if there is any update as to how you are thinking about it and interest in, pursuing it? Gregory Garrabrants: Yes, sure. And there is still some things that I may be that are in process. So I will give you some preliminary thoughts. And then there will be others to come. In our self directed business, we have been allowing you know, the crypto trading side. We have not really pushed it very much with allowing the ETFs and sorts of things on the crypto side. We have been allowing that for a while. Our self directed business is pretty it needs to you know, have some technological sort of upgrades just from a standpoint of the user experience and stuff. it is not really as competitive as it should be and has not been a big focus for us. But I think given that, you know, that the crypto side could you know, become more important, that might be a vehicle for some of those, you know, some of the transactional related and payment related activities that are there because we are already doing that. And thus, we can expand that a little bit or make the user experience better. You know, we, did not when the administration changed, you know, we have with respect to what we have done on the crypto banking side, you know, there was a it was a complex set of sort rules around what we would accept and what we would not based on sort of risk profile around what different companies were doing and, whether or not there was regulatory clarity around how those companies were being treated. And so you know, when the administration changed, we have been more willing to look at those accounts and those sorts of things and kind of do that. With respect to you know, how I am thinking and how we are thinking broadly about you know, stablecoin, I would say that I am not going to have a lot of public comments on that now. But we are focused on it and thinking through it and looking at exactly you know, how it should how it should integrate into, everything we are doing. So obviously a lot of change and movement recently and know, we are thinking hard about it and paying attention to it. Kelly Motta: Got it. Thanks for the color. that is helpful. Maybe switching to the funding side. You had some nice EOP growth that is not interest bearing this quarter. Wondering if there was any end of period flows that impacted that and just more broadly speaking, where's which areas of the business are seeing the best growth in just core operating accounts? Because you did have very positive growth this quarter? Gregory Garrabrants: Yes. Specialty the commercial specialty side has some real bright spots and continues to grow there. The tech business that we, that we brought on through that team is doing well and bringing on a lot of core deposits there. it is nice to see some success with that team, and that is been steady. And then the middle market team as well is doing the same thing. And then a lot of cross sell across all the lending verticals. I think we do a really good job on the payment side and with the API infrastructure we have on the commercial side that leads a lot of clients who have some pretty sophisticated payment needs to choose us. Those are nice clients because when they integrate with us from a software perspective, they tend to be pretty sticky. So, you know, there really has not been any 1 thing, but it is been a lot, you know, across the board in those, categories that I just talked about. Kelly Motta: Got it. that is helpful. Maybe last question for me. It seems like asset quality held in really strong just wondering, Gregory, any areas that you are--any update as to what you are looking at and watching more carefully? Just to round out the questions on credit. Gregory Garrabrants: That would be Sure. Sure. Yes, I think the commercial real estate side looks really, really good. And then on the C&I side, as we continue to work with different banks and do club stuff and things like that and do some syndications. You know, I expect that--you know, we will always have a handful of stuff rattling around But, in most cases, I think those things will work out. Reasonably well just given the enterprise value of the businesses. But I think on the C&I side, I think it will you know, we have had--if you look at our I mean, I think our you know, our CRESL losses are I think I do not think we have really had any--you know, of any And then I think in all our time in multifamily, you know, a couple of basis points maybe in 25 years, single family, the same way. You know, I think that on the C&I side, as we are doing more sort of like average bank stuff. We will probably have you know, hopefully, we will do better than average, but, you know, there will always be, you know, I think, something there, but nothing of any significant materiality. So Great. Kelly Motta: Thank you for the time. I will step back. Nice quarter. Gregory Garrabrants: Okay. Thank you. Thanks, Kelly. Thank you, Kelly. Operator: Thank you. There are no further questions at this time. I would like to pass the callback over to Johnny Lai for any closing remarks. Johnny Y. Lai: Great. Thanks for everyone's participation, and we will talk to you next quarter. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Axos Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Axos Financial wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $395,463!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,268,290!* Now, it’s worth noting Stock Advisor’s total average return is 927% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 4, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Axos Financial. The Motley Fool has a disclosure policy. Axos Financial (AX) Q4 2025 Earnings Call Transcript was originally published by The Motley Fool

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Axos Financial (AX) has drawn fresh attention after reporting fourth quarter results for the period ended June 30, 2026, along with an update on its recently completed share repurchase program. See our latest analysis for Axos Financial. Axos Financial's recent earnings beat and completed buyback have arrived alongside strong momentum, with a 16.06% year to date share price return and a 121.56% total shareholder return over three years. This suggests investors have been steadily repricing both growth prospects and perceived risk. If Axos Financial's results have you thinking more broadly about where growth and business execution might line up, this can be a good moment to broaden your search and uncover 18 top founder-led companies For Axos Financial, the recent climb in the share price sits alongside solid reported earnings and a completed buyback. Is the valuation now mostly about stronger fundamentals, or has sentiment moved ahead of the business? At a last close of $101.41 versus a fair value narrative of $111.00, Axos Financial is framed as modestly undervalued, with that view built on specific growth and profitability assumptions rather than short term trading moves. Read the complete narrative. Want to see what has to happen for Axos Financial to reach that fair value? The narrative leans heavily on compounding revenue, firm margins and a future earnings multiple that assumes continued execution without stretching into hype territory. Result: Fair Value of $111.00 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Axos Financial still faces two key swing factors: pressure on net interest margins and any credit stress in niche lending, which could quickly challenge this upbeat valuation story. Find out about the key risks to this Axos Financial narrative. Given the mixed sentiment around Axos Financial, with both clear risks and potential rewards in play, it makes sense to review the underlying data now and stress test your own thesis alongside the 3 key rewards and 1 important warning sign. Do not stop your research with Axos Financial. Use the Simply Wall Street Screener to compare other opportunities and keep your watchlist focused and intentional. Target quality at a discount by scanning for companies that look mispriced on fundamentals and growth with the 55 high quality undervalued stocks Protect your downside by focusing on companies with stronger finances and steady profiles using the 81 resilient stocks with low risk scores Spot future standouts early by reviewing lesser known businesses with solid metrics through the screener containing 19 high quality undiscovered gems This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include AX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Axos Financial, Inc? Here are five stocks we like better. Strong fiscal fourth-quarter results: Net income rose 12.9% year over year to $124.9 million and diluted EPS increased 12.5% to $2.16. Excluding a $21 million legal accrual, net income was $141.8 million and EPS was $2.46, up 28%. Growth remained broad based: Net loans increased by approximately $638 million sequentially, while deposits rose 17.9% year over year to $24.6 billion. Management expects low-to-mid-teens organic loan growth in the coming year. Credit metrics improved as Axos expanded strategically: Non-performing assets and net charge-offs declined, while the company repurchased $22 million of stock. Recent acquisitions—including Jenius Bank, Capital One deposits and Arc Technologies—are intended to strengthen funding and expand digital, small-business and AI-enabled banking capabilities. Willing and Abel: Berkshire's New CEO Makes Huge Portfolio Changes in Q1 Axos Financial (NYSE:AX) closed fiscal 2026 with double-digit growth in net interest income, non-interest income, loans, deposits, earnings per share and book value per share, President and Chief Executive Officer Greg Garrabrants said during the company’s fourth-quarter earnings call. For the quarter ended June 30, 2026, net income was approximately $124.9 million, up 12.9% from $110.7 million in the prior-year quarter. Diluted earnings per share rose 12.5% year over year to $2.16. Excluding a $21 million legal accrual related to its clearing business, Axos reported net income of $141.8 million and diluted EPS of $2.46, up 28% from the comparable fiscal 2025 period. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Capital One’s Big Bet Faces Rising Credit Risk The company generated approximately $638 million in net loan growth from the prior quarter. Excluding single-family mortgage warehouse lending, ending net loans increased by about $750 million from March 31. Garrabrants said the company expects low-to-mid-teens annual organic loan growth in the coming year, supported by demand across commercial specialty real estate, fund finance, real estate lender finance and asset-based lending. Axos’s fund finance business contributed more than $600 million of net new loan growth during the June quarter. The floor plan lending operation recorded its strongest quarter to date, with outstanding loans rising by more than $100 million. Capital call lending, real estate lender finance and equipment finance also contributed to growth, while jumbo single-family, multifamily and small-balance commercial loan balances were roughly flat sequentially. → Microsoft Just Flipped the AI Spending Narrative Overnight A Quiet Outperformer With a Catastrophe Caveat Average loan yields were 7.4% for the quarter, unchanged from the prior quarter. Average yields on non-purchase loans were 7.2%, while purchase loans yielded 13%, including the accretion of purchase-price discounts. Garrabrants said all loans in the FDIC purchase portfolio remained current. Net interest margin was 4.54%, compared with 4.57% in the preceding quarter. Garrabrants said the outlook calls for a “fairly stable” margin and deposit costs, although the pending transfer of Capital One deposits could result in a temporary cash overhang that would reduce reported margin without affecting net interest income. → Carrier Earnings Could Send the Stock to a New All-Time High Ending deposits totaled $24.6 billion, up 17.9% year over year. Demand, money market and savings accounts accounted for 98% of total deposits. The company completed its Jenius Bank deposit acquisition in May, adding about $2.3 billion in deposits across more than 56,000 consumer savings accounts. Axos said it has opened more than 3,400 consumer checking accounts for former Jenius customers since onboarding the accounts. Non-interest-bearing deposits rose $439 million from the prior quarter and $788 million from a year earlier to more than $3.8 billion. During the question-and-answer session, Garrabrants said the quarter’s growth in non-interest-bearing deposits was broad based, including approximately $150 million from clearing sweeps, about $100 million from direct commercial-and-industrial lending cross-sell, roughly $100 million from private banking and about $120 million from specialty and fund banking. Non-interest income increased 50% year over year to $61.9 million in the fourth quarter, compared with $41.3 million a year earlier. For fiscal 2026, non-interest income reached $233.6 million, up from $131.1 million in fiscal 2025. Banking and service fees totaled $36.8 million in the quarter, compared with $9.5 million in the year-earlier period. Garrabrants identified Verdant as the principal contributor to the increase, while prepayment penalty fees rose to $4.2 million from $0.2 million. Axos Clearing also benefited from higher asset- and transaction-based advisory and broker fees. Assets under custody or administration increased $8.4 billion year over year to $47.8 billion. Net new assets were about $85 million in the fourth quarter and $2.2 billion for the fiscal year. Ending margin balances were up 36% from the prior fiscal year. Non-interest expense was $205.9 million, up $20 million sequentially, primarily due to the $21 million legal accrual. Excluding that accrual, expenses declined by about $1 million from the prior quarter. Chief Financial Officer Derrick Walsh said the company has seen productivity benefits from operational initiatives and greater use of artificial intelligence tools. Walsh said the integration of Arc Technologies is expected to increase the non-interest expense run rate by approximately $1 million per month. Management said it expects a flat to improving efficiency ratio, excluding one-time items. Non-performing assets declined to $159 million at June 30 from $180 million at March 31 and $175 million a year earlier. Non-performing assets represented 53 basis points of total assets, down nine basis points from the prior quarter and 18 basis points year over year. Net charge-offs were 25 basis points in the quarter, compared with 31 basis points in the preceding quarter. The company charged off the remaining $10 million principal balance of a syndicated C&I cash loan that had been placed on non-accrual more than a year earlier. Excluding that loan, net charge-offs were $5.9 million, or nine basis points of annualized average loans. Axos’s allowance for credit losses was 1.34% of total loans at quarter-end and equaled 221% of non-accrual loans. Walsh said the company expects to maintain loan-loss reserves of about 1.3% to 1.4% of total loans and leases. The company repurchased $22 million of common stock during the quarter at an average price of $87.95 per share, leaving approximately $126 million under its authorization, according to prepared remarks. Garrabrants said management remains opportunistic on repurchases and balances buybacks with growth and acquisition opportunities. Axos announced three deposit-focused acquisitions during calendar 2026: Jenius Bank in February, Capital One’s IRA savings and certificate-of-deposit portfolio in April, and Arc Technologies in July. The Capital One transaction received regulatory approval in May, and Axos said it is working toward a conversion and closing date in the third quarter. The Arc transaction closed a few weeks before the earnings call. Garrabrants said Arc provides an AI-enabled cash-management and debt-marketplace platform aimed at businesses, including startups and middle-market clients. Axos plans initially to integrate Arc into its banking platform for its existing small-business customers. Management said Arc could help bridge a product gap for small businesses that have outgrown basic small-business banking products but do not need the full onboarding and service model of the company’s larger treasury-management platform. Garrabrants also said the acquired technology could expand client-facing AI capabilities and potentially support further commercial-platform automation. Axos reported a loan pipeline of approximately $2.4 billion at June 30, including $1.6 billion across commercial business lines. Walsh said remaining Jenius deposits, together with growth in consumer and commercial banking deposits, are expected to help fund planned loan expansion. Axos Financial, Inc (NYSE: AX) is a diversified online banking and financial services holding company headquartered in San Diego, California. The firm traces its origins to 1999 with the launch of Bank of Internet USA and rebranded as Axos Financial in December 2018 to reflect an expanded suite of digital offerings. Axos Financial operates through its wholly owned subsidiary, Axos Bank, providing a technology-driven banking platform that serves both retail and commercial clients across the United States. Through its digital banking platform, Axos Financial delivers a range of deposit products, including checking and savings accounts, money market and certificate of deposit accounts, as well as individual retirement accounts. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Axos Financial Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Image source: The Motley Fool. Thursday, July 30, 2025 at 5:00 p.m. ET SVP, corporate development and IR - Johnny Y. Lai President and Chief Executive Officer - Gregory Garrabrants Executive Vice President, and Chief Financial Officer - Derrick Walsh Operator: Greetings, and welcome to the Axos Financial 4 Quarter 25 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Johnny Y. Lai, SVP, corporate development and IR. Thank you, John. You may begin. Johnny Y. Lai: Thanks, Alicia. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial Inc. Fourth quarter and fiscal 25 financial results conference call are the company's President and Chief Executive Officer, Gregory Garrabrants and Executive Vice President, and Chief Financial Officer, Derrick Walsh. Gregory and Derrick will review and comment on the financial and operational results for the quarter and fiscal year ended 06/30/2025. And we will be available to answer questions after the prepared remarks. Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward looking statements that are subject to risks and uncertainties that management may make additional forward looking statements in response to your questions. Please refer to the Safe Harbor statement found in today's earnings press release and in our investor presentation for additional details. This call is being webcast and there will be an audio replay available in the investor Relations section of the company's website. Located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release. Before handing over the call to Gregory, I would like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement in an 8-K with additional financial schedules. All of these documents can be found on Axos Financial.com. With that, I would like to turn the call over to Gregory. Gregory Garrabrants: Thank you, John. Good afternoon, everyone, and thank you for joining us. I would like to welcome everyone to Axos Financial's conference call for the fourth quarter of fiscal 25. Ended 06/30/2025. I thank you for your interest in Axos Financial and Axos Bank. We delivered strong results this quarter, generating $856 million of net loan growth linked-quarter, 6 basis points of net interest margin expansion and an 18% year over year increase in book value per share. We continue to generate high returns as evidenced by the 17% return on average common equity and a 1.9% return on assets in the 3 months ended 06/30/2025. Other highlights in the quarter include net interest income was $280 million for the 3 months ended 06/30/2025, up 7.7% from the $260 million in the prior year period. Net interest margin was 4.84% for the quarter ended 06/30/2025, up 6 basis points from the 4.78% in the quarter ended 03/31/2025. 1 loan from the FDIC purchase pool paid off this quarter and that accelerated accretion of the purchase price discount increased our net interest income by approximately $450 thousand We continue to maintain a best in class net interest margin without the benefit of the accretion from loans purchased from the FDIC. Total on balance sheet deposits increased 7.6% year over year to $21 million. Our diverse and granular deposit base across consumer and commercial banking and our securities businesses continue to support our organic loan growth. We managed our operating expenses well this quarter. Total non interest expenses for the quarter ended 06/30/2025 were up by 3% from the prior quarter. Excluding the reversal of a legal accrual in the prior quarter, we reduced other G&A expenses by approximately $2 million Total non interest expenses were up $2.5 million from March to June. Total nonaccrual loans declined $15 million linked-quarter resulting in our nonaccrual loans to total loans ratio improving by 89 basis points in the quarter ended 03/31/2025 to 79 basis points as of 06/30/2025. Net income was approximately $1.107 billion in the quarter ended 06/30/2025, compared to $105.2 million in the quarter ended March 31. Diluted EPS was $1.92 for the quarter ended 06/30/2025, compared to $1.81 in the March quarter. We had a few non recurring items this quarter that impacted our net income and EPS. We recognized a $12 million pre tax gain from the sale of multifamily loans that were included in mortgage banking income. We also recognized a onetime noncash deferred tax impairment that increased our net income tax by $5.5 million Excluding the impact from those 2 nonrecurring items, our adjusted net income and adjusted earnings per diluted share would have been $107.7 million and $1.87 per share respectively. We took advantage of the temporary market downturn in April to repurchase approximately $31 million of common stock at an average price of $59 per share. Total originations for investment excluding single family warehouse lending increased 5% on a linked quarter basis, resulting in net loan growth in loans for investment of approximately $856 million for the 3 months ended 06/30/2025, representing an increase of 4.2% linked quarter or 16% annualized. Asset based lending, commercial real estate specialty equipment leasing, lender finance, and single family warehouse had strong originations and net loan growth this quarter. Additionally, we grew ending loan balances in single family mortgage for the 2nd consecutive quarter. Average loan yields for the 3 months ended 06/30/2025 were 8.0% flat compared to the prior quarter. Average loan yields for non purchased loans were 7.66% and average yields for purchased loans were 14.9% which includes the accretion of our purchase price discount. The FDIC purchase loans continue to perform and all loans in the portfolio remain current. New loan interest rates were the following. Single family mortgage 7.2%, multifamily 7.1%, C&I, 7.8%, and auto, 8.3%. Ending deposit balances were $20.8 billion and they were up 3.4% linked quarter and up 7.6% year over year. Demand, money market and savings accounts representing 95% of total deposits at 06/30/2025 increased by 7% year over year. We have a diverse mix of funding across a variety of business verticals with consumer and small business representing 59% of total deposits commercial cash, treasury management and institutional representing 20%, Commercial specialty representing 11%, Axos Fiduciary Services representing 5%, and Axos Security which is our custody and clearing business representing 5%. Total non interest bearing deposits were approximately $3 billion at the end of the quarter, up slightly from the prior quarter. Client cash sorting deposits ended the quarter around $980 million up from $900 million at 03/31/2025. We remain focused on adding new assets from existing and new advisors to grow our assets under custody and cash balances. In addition, our excess securities deposits on our balance sheet, we had approximately $450 million of deposits off balance sheet at partner banks. Our consolidated net interest margin was 4.84% for the quarter 06/30/2025, compared to 4.78% in the quarter ended 03/31/2025. We are seeing strong growth in accounts and balances from our Axos 1 consumer bundle deposit product, which includes a checking and a savings account. Growth in Axos 1 and other deposit businesses, including our commercial cash and treasury management specialty businesses has provided us with sufficient funding to support our strong organic loan growth. We are also making excellent progress cross-selling deposits across our lending businesses. We expect our consolidated net interest margin ex FDIC loan purchase accretion to stay at the high or slightly above the 4.25% to 4.35% range we have targeted over the past year. While new loan yields are coming in slightly lower in many lending categories we compete in, we continue to offset some of that pressure through refinancing or paying off lower yielding single family and multifamily loans originated 2 to 3 years ago. Our loan pipelines have improved over the past few quarters as a result of successfully expanding our distribution channels across certain commercial lending categories and contributions from teams we have onboarded over the past 12 months. We also believe we have moved past our peak level of prepayments in our commercial specialty real estate portfolio, which had been a significant headwind to net loan growth for the past several quarters. Taking all of these factors into consideration, we expect organic loan growth to come in toward the mid to high end of our single digit and low teens range on an annual basis in fiscal 26. The credit quality of our loan book continues to be solid and our historic and current net charge offs remained low. Total nonperforming assets declined $13.4 million linked quarter representing 71 basis points of total assets compared to 79 basis points in the quarter ended 03/31/2025. The sequential decrease in non accrual loans were primarily driven by $9.4 million in our C&I portfolio and $4.9 million in our commercial real estate lending business. We did not anticipate a material loss from loans currently classified as non performing in our single family, multifamily or commercial real estate loan portfolio. Our commercial real estate specialty portfolio continues to perform very well and in line with expectations. Nonaccrual C&I loan balances at 06/30/2025 were down by approximately $9.4 million from the prior quarter. The 2 largest C&I loans we have on nonaccrual continue to be up to date on their payments and no new C&I loans were placed on nonaccrual in the quarter. We continue to monitor the credit trends across all loan portfolios and have not seen any broad based deterioration in any individual lending category. Axos Clearing, which includes our correspondent clearing and RIA custody had a good quarter. Total assets under custody increased from $37.1 billion at 03/31/2025, to $39.4 billion at 06/30/2025. Net new assets for our custody business increased $215 million in the June quarter, extending the positive net new asset momentum we have experienced over the past several quarters. The stock market has rebounded off its year to date lows and many of our custody clients continue to generate positive assets under management growth. The pipeline for new custody clients remains healthy for small and large RIA firms, underpinning our optimism and continued net positive net new asset growth in our securities business. Total deposits at Axos Clearing were $1.4 billion at the end of the quarter, up $90 million from where they were in the prior quarter. Of the $1.4 billion of deposits from Axos Clearing, approximately $990 million were on the balance sheet and $4 million were held at partner banks. The slight sequential increase in deposits is encouraging given the strong rally in the stock market. While it is difficult to be absolute that cash sorting has bottomed, we believe that clients and advisors becoming less focused on maximizing yield in their sweep accounts compared to a year ago. Many of our commercial lending and deposit teams, including our life science and technology business and our middle market banking teams, that we have added over the past few quarters are now producing nicely and contributing to loan and commercial deposit growth. We on boarded a new floor plan lending team that will help us scale our floor plan lending We continue to evaluate M&A opportunities to augment growth from our existing businesses and team lift outs. The pace and quality of M&A opportunities have increased over the past few months and seller expectations have become more reasonable. We are evaluating specialty lending and nonbanking businesses that generate asset and transaction based income and low cost deposits. Our strong capital, liquidity and profitability allow us to be disciplined in how and where we deploy capital to ensure the investments meet our strategic and valuation hurdles. We ended fiscal 25 with positive momentum. Loan growth accelerated in the back half of the year Our credit quality was strong. Our net interest margin remained above our long term target. We expect a change in the income tax calculation methodology for the state of California will reduce our income tax rate by 3 percentage points starting in the 09/30/2025 quarter, boosting our net income and EPS in fiscal 26 and beyond. With this being the 20 fifth anniversary of Axos Bank, we are proud of delivering consistent performance through a variety of economic, geopolitical and regulatory environments. I am even more excited about the opportunities that we have in each of our businesses. We remain hyper focused on executing our strategic and operational initiatives. These include investments in technology and operations to scale businesses and roll out new products faster while maintaining a best in class operating efficiency ratio. We believe we will see benefits in our operating efficiency from the implementation of artificial intelligence across the organization and believe that its implementation will enable us to create greater operating leverage and improve the speed, quality, and cost of software development projects and accelerate new product delivery. We believe that we can deploy our capital in a disciplined manner in the our existing and new businesses to further diversify our lending, funding, and fee based income. We have a lot of runway in each of our businesses. I feel confident that our teams and our leaders will deliver the results that our shareholders have come to expect from us. Now I will turn the call over to Derrick, who will provide additional details on our financial results. Derrick K. Walsh: Thanks, Gregory. Quick reminder that in addition to our press release, an 8 ks with supplemental schedules was filed with the SEC today, are available online through EDGAR, or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filing for additional details. Noninterest expenses were approximately $151 million for the 3 months ended 06/30/2025, up $4.4 million from the 3 months ended 03/31/2025. Excluding approximately $1.9 million reversal of a legal accrual in the March 31st quarter, total non interest expenses were up by approximately $2.5 million in the linked quarter. Salaries and benefit expenses of $74.9 million was roughly flat from the prior quarter ended March 31. Professional services expenses were $10.4 million compared to $8.2 million in fiscal Q3 25. The sequential increase in professional services expense was attributed to a handful of services across different business units. Looking ahead to the September quarter, we recently added a floor plan financing team that adds an incremental $1 million of expense per quarter. And as a reminder, September is when we have our annual merit compensation increase, which we estimate to be about 4%. Remain focused on managing our expenses while making strategic investments in a controlled manner in order to maintain our operating efficiency ratio. Next, our income tax rate was 29% for the 3 months ended 06/30/2025, compared to 27.4% in the corresponding year ago period. Our income tax expense in Q4 25 included a onetime noncash deferred tax impairment related to the change in the taxation of financial institutions that I mentioned on last quarter's call. The California budget proposal went into effect on 06/30/2025. Which required us to reassess the value of our deferred tax assets. That resulted in a $5.6 million onetime noncash impairment charge in the quarter ended 06/30/2025. Our income tax expense for the quarter ended 06/30/2025 benefited from the increase in our stock price from June 30, 2024 to June 30, 2025. Which is 1 factor used to calculate our CEO stock based incentive compensation. Net impact of the deferred tax asset remeasurement and stock based incentive compensation calculation combined with higher pretax income was a $2.3 million increase in our income tax expense in Q4 25. Starting in the quarter ending 09/30/2025 and going forward, we expect our corporate tax rate to be approximately 26% to 27%, an improvement of 3 percentage points from the previously guided 29% to 30%. I will wrap up with our loan pipeline and growth outlook. Our loan pipeline remains healthy at $2 billion as of 07/25/2025. Consisting of $532 million of single family residential jumbo mortgage. $49 million of gain on sale mortgage, $302 million of multifamily and small business commercial, $73 million of auto and consumer, and $1.1 billion in commercial lending. We are not seeing any material impacts from imposed or proposed tariffs on loan demand so far. And we believe that we will be able to grow loan balances organically at the midpoint to high end of our high single digits to low teens year over year growth target over the next 12 months, excluding the impact of the loan portfolio purchased from the FDIC or any other potential loan or asset acquisitions. With that, I will turn the call back over to John. Johnny Y. Lai: Thank you, Derrick. Alicia, we are ready to take questions. Operator: Will now be conducting a question and answer session. You would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. 1 moment, please, while we poll for questions. Thank you. Our first question comes from the line of Kyle Peterson with Needham & Company. Please proceed. Kyle Peterson: Great. Good afternoon. Thanks, guys. I want to start off on loan yields and that kind of the net interest margin. Gregory Garrabrants: It sounds like maybe there might be a little more pricing pressure in and yields on new loans might be lower, but then it could be a partial offset on, prepays being a little slower. I guess, like, do you guys view, like, the net impact of those? And I guess, the NIM outlook, it sounds fairly consistent with last quarter? Are those kind of a rough wash? Or how are you guys looking at different pieces there? I think they are fairly consistent. For a lot of these businesses like the CapCall side and whatnot, they have a lot deposits that come with them, and the middle market business also has that too. So loan yields might be a little tighter, there is an offsetting benefit on the funding side. Which results in a decent net. I think if I were to take a guess, I would say that I think that the credit spread side is been more consistent this quarter with the last quarter. So I would not say there is that much incremental pressure, but it is just it is very different than it was a year ago just with respect to you know, particularly in some of the C and I club deals and some of the syndicated deals, there is just a lot of banks that are kind of pushing into that space. I think if they do not maybe want to grow as much in commercial real estate and that is pushed it down a bit. I think this is somewhat of obviously, a forecast, but I think it is we are going to be able to keep it pretty consistent, I think. But it could be a basis point or 2 either way, sure. it is--you know, it is not that much of a science. Kyle Peterson: Okay. that is helpful. And then Gregory, I know we have, kind of chatted in the past, and you have mentioned different dynamics and kinda how you are kind of leveraging AI to longer term kind of press on margins and cap on expense growth. I guess, could you remind us like how you are thinking about expense growth relative to revenue, how you guys are using whether it is tech and AI in your day to day. I think that would be really helpful for everyone on the call. Gregory Garrabrants: Right. What we had previously said is a target that we wanted to ensure that our personnel and professional services cost growth did not exceed 30% of our net interest income and noninterest income growth. Now, we are adding we just added a team there. So that is definitely a target over the year. We added a fairly expensive floor plan team. They are great folks. We expect them to be able to produce, but it will take a couple of quarters to really get that running. But just in general, with respect to artificial intelligence, there is just so much opportunity and we are taking advantage of that opportunity now. And it is making people more efficient, it is taking a lot of routine tasks and, automating them. And so the ability to take, unstructured data out of documents. You know, for example, we obviously you know, we have let's say you get a you have a big, a big, legal agreement for a for a commercial loan. And, previously, it would take an attorney, quite a bit of time to go through and make sure all the covenants were extracted and placed into the commercial originations system. Now, AI can read that It can present it to the attorney, make sure that it is correct. When the attorney makes corrections, it will auto learn off that. And then, you know, allow that process to be just a lot faster. Does not mean that we are relying entirely on that agent, but it makes that process a lot faster. That agent can then auto upload those covenants into the system for tracking. So, I mean, there is lots of examples like that. That are going on. We have got a pretty active task force. Pushing on the tools and then on the processes we want to, work through. But I do really believe that it is going to bend the cost curve in the operations side. And then on the on the software development side, obviously, we have so many cool and interesting things we wanna do. And previously, we have been limited by the speed at which the, the coders can code And, there is just so many really incredible breakthroughs that are occurring at such a rapid pace in the software development process. 1 recent example is we use a software that essentially creates the screens and called the FIGMAs, right, which are just the sort of what the user experience supposed to look like and that sort of thing. And they rolled out their AI product just, this month, and I and the team is telling me it takes less than 10% of the time now to basically take a product from conceptualization and get that all organized and get the field validations done and get the user experience, you know, ready to be shown and reviewed by the folks that are going to review it. So that is just 1 example. But there is just a lot of stuff going on that I am I am pretty excited about. So yeah. And I think it is going to bend the cost curve, and it also, I do not think, will be successful unless we can say that we are able to deliver more and better products faster and cheaper. On the software side. Awesome. Thank you very much, and nice quarter. Operator: Thank you. Thank you. Our next question comes from the line of David Feaster. With Raymond James. Please proceed. David Feaster: Hi. Good afternoon, everybody. Gregory Garrabrants: Hi, David. David Feaster: Maybe just--we touched on the loan side a bit. Let's let's touch on the funding side. Obviously, you have had a lot of success driving deposit growth. I mean, notable success in the consumer direct side. It had some nice tailwinds in the specialty deposits and commercial and treasury management too. I was just wondering where do you where do you see the most opportunity on the funding side today? How's pricing competition there? as industry loan growth is picking up? And just your thoughts on your ability to continue to manage deposit costs lower and still grow. Gregory Garrabrants: Yeah. Well, I think I think it really depends on the vertical. And some of the new verticals we have added do come with some pretty nice compensating deposit balances. And so those are going to be more favorably priced in general. But I do think that as industry loan growth picks up, we might see even some of these middle market clients as we sort of start to take clients and things like that. 've seen some of the competitors try to retain those clients by getting aggressive on the deposit rates. So you know, I think if our loan growth has accelerated, it is reasonable to think that there might be a slightly higher funding cost associated with that if the loan growth is let's say, you know, we said we are at the higher end of our high single digits, low double digits, but if we had loan growth similar to what we had this quarter, every quarter in the next fiscal year, then I think that might put a little pressure on funding costs. Of course, it is hard to say because, the Axos 1 product is doing very well. The funding cost there is you know, it is it could be reasonable depending upon the maximum checking and savings accounts that come in. And a variety of factors there. So But I think it is not a bad modeling exercise to say if we are growing a lot faster, then there might be a little pressure on funding costs. Or if we do a big acquisition or even a moderately sized acquisition of an asset pool or a specialty lending business then that might put a little pressure on the funding side for a little while. David Feaster: Got it. But, you know, with that, I mean, even if you did have outside growth and maybe a little margin pressure, it is not hard to still see a really strong NII growth profile. You know, you are you are obviously having a lot of success on the fee side and gaining share with the security side. Sounds like pipeline is doing pretty good. You think that the you can keep the fee income growth in line with NII, or what initiatives maybe that you have to help support fee revenue growth maybe, hopefully, keeping that proportion relatively stable? Gregory Garrabrants: Yeah. I think I mean, remember, there was yes, look, we did have did have good growth from the market and then decent growth on, net new assets. it is not quite where we want to be There is a nice pipeline, though. There are some wins that are coming through and getting onboarded that are decent size. This coming quarter and the next quarter. I think Which should boost that new asset growth number. But that you know, we are we are doing a lot of development on the software technology to be able to have an extremely compelling product. And I think we have a good product, but it needs to get better to be best in class. And I think there is I think that the biggest part of our growth in the fee income side is clearly going to be on the security side in this rate environment. And we are making good progress there. But to say that is going to increase at the same level I think we have got you know, we have got goals for that, and some of the technology is gonna have to come in place. And get some adoption there to make that happen. So I am I think we can do it, but it will be it will be a little difficult, I think. It will not be it is not impossible, but it will not be easy. David Feaster: Okay. Then lastly, just touching on the capital front. I mean, you are still accreting capital. Extremely profitable even with accreting capital in excess of your organic growth. I just kinda wanted to touch on your capital priorities here. You know, stocks moved, which is great. You know, makes buybacks a little less attractive, though. And I know the excess capital is not burning a hole in your pocket. Just wanted to get a sense of your capital priorities. It sounds like M&A might be more in the cards today. Like conversations are pretty good, but just kinda curious some of the types of things you are considering. Gregory Garrabrants: Yes. Well, we have a good organic growth pipeline. We are still looking at different M&A opportunities. In a variety of places. We look at fee income businesses. We look at specialty finance businesses if they are a good fit. So, you know, that is always a good place to deploy capital if it is synergistic. And yeah, then, you know, we will just we will continue to monitor that. We obviously bought back some stock this quarter, but there is been obviously a big move in the stock price too. We still like where we are. And feel good about being able to generate earnings that are supportive of that share price. But, yeah, mean, I think I think it is all in play and, you know, but organic loan growth remains a priority, for us. Operator: Perfect. Thanks, everybody. Thank you, David. Thank you. Our next question comes from the line of Gary Tenner with D. A. David. Please proceed. Gary Tenner: Thanks. Good afternoon. Question on the multifamily loan sale. Just curious about kind of the reasoning behind it. Obviously, yields must have been pretty good there given the gain that you picked up. So just curious about the thought process. Around that. Obviously, you had great net loan growth regardless. But you know, any color? Gregory Garrabrants: Yes. It was I think when we look at loans and we see what we think about them from a standpoint of where they are from a credit perspective and look at what we think about them. And so there was some good buyers that were interested in some loans, and so we decided to sell, that particular loan. Gary Tenner: Was that a single loan? Just single large loan or a basket of loans? Gregory Garrabrants: It was a few others. Yeah. there is a handful of loans that were sold. Gary Tenner: Okay. Alright. Great. And then as you think about 2026, and I know that you have Gregory, you mentioned you know, expectations of being towards the mid to higher part of your loan growth range. Gregory Garrabrants: Obviously, C and I has been pretty strong throughout fiscal 25, and now you saw CRESL this current quarter really pick up. So those 2, I would imagine, are the largest drivers, probably the vast majority of loan growth for the year. Is there anything else that you think could accelerate? I think cap call can do something. I think the lender finance businesses, both real estate and non real estate can as well. You know, jumbo mortgage started to grow again. it is not gonna be massive, but the pipeline there is pretty good. So I think we can have pretty balanced loan growth. Across. But those are probably the biggest categories. I mean, I think that we have a lot of the good the good part of our business is it is just so diverse that you may have, some movements, within quarters, but we can look across the board and look at the pipelines and see where we are there. I mean, Crestle is a little tough because sometimes our prepayments can come there that are relatively and move that number around. So I think we can be much more certain about aggregate numbers than about the individual categories. Gary Tenner: Okay. And like, ask 1 more question. You kinda reiterated the goal on the kind of comp line to not exceed 30%. Of revenue growth or NII growth? So in terms of the tax benefit that you are getting from the California change, you know, I guess the question would be, does that free up any additional resource for investment or that goes to bottom line? Derrick K. Walsh: No, that goes to bottom line. Gregory Garrabrants: I think the executives wish it was, but Gregory told the nuts tight. No, it is a it is a discipline measure and to my knowledge, nobody was actually involved with the lobbying of California legislature to give us such a beneficence and basically pound other banks that are not located in California. So know I mean, in all seriousness, I think that is a that is a pretax. it is just a very simple number. it is if you take the revenue growth from noninterest, revenue and interest revenue you add it up, you look at the difference. Obviously, there could be some onetime items in there. And you, do not have compensation or professional services expenses additively grow that, and it is a pretax ratio. So that is what it is. And I think, obviously, look, at any 1 quarter, we hired this floor plan team, Derrick said that is going to cost about $1 million a quarter. But I mean, over the year, we intend to hit that number and make sure that happens. And that is that is not saying that we cannot do better with AI and whatever it is, but that is that is a public goal that the team you know, is gonna hit. Operator: Got it. Thank you. Thank you. The next question comes from the line of Kelly Moda with KBW. Please proceed. Kelly Motta: Hey, good afternoon. Thanks for the question and congrats on 25 years. Very cool you get to celebrate on fourth of July. Gregory, maybe with the Genius Act coming out, I believe before the Silvergate blowup, you were potentially looking into Stablecoin and digital assets. Can you refresh us now that there is additional color as to a more conducive regulatory environment, how if there is any update as to how you are thinking about it and interest in, pursuing it? Gregory Garrabrants: Yes, sure. And there is still some things that I may be that are in process. So I will give you some preliminary thoughts. And then there will be others to come. In our self directed business, we have been allowing you know, the crypto trading side. We have not really pushed it very much with allowing the ETFs and sorts of things on the crypto side. We have been allowing that for a while. Our self directed business is pretty it needs to you know, have some technological sort of upgrades just from a standpoint of the user experience and stuff. it is not really as competitive as it should be and has not been a big focus for us. But I think given that, you know, that the crypto side could you know, become more important, that might be a vehicle for some of those, you know, some of the transactional related and payment related activities that are there because we are already doing that. And thus, we can expand that a little bit or make the user experience better. You know, we, did not when the administration changed, you know, we have with respect to what we have done on the crypto banking side, you know, there was a it was a complex set of sort rules around what we would accept and what we would not based on sort of risk profile around what different companies were doing and, whether or not there was regulatory clarity around how those companies were being treated. And so you know, when the administration changed, we have been more willing to look at those accounts and those sorts of things and kind of do that. With respect to you know, how I am thinking and how we are thinking broadly about you know, stablecoin, I would say that I am not going to have a lot of public comments on that now. But we are focused on it and thinking through it and looking at exactly you know, how it should how it should integrate into, everything we are doing. So obviously a lot of change and movement recently and know, we are thinking hard about it and paying attention to it. Kelly Motta: Got it. Thanks for the color. that is helpful. Maybe switching to the funding side. You had some nice EOP growth that is not interest bearing this quarter. Wondering if there was any end of period flows that impacted that and just more broadly speaking, where's which areas of the business are seeing the best growth in just core operating accounts? Because you did have very positive growth this quarter? Gregory Garrabrants: Yes. Specialty the commercial specialty side has some real bright spots and continues to grow there. The tech business that we, that we brought on through that team is doing well and bringing on a lot of core deposits there. it is nice to see some success with that team, and that is been steady. And then the middle market team as well is doing the same thing. And then a lot of cross sell across all the lending verticals. I think we do a really good job on the payment side and with the API infrastructure we have on the commercial side that leads a lot of clients who have some pretty sophisticated payment needs to choose us. Those are nice clients because when they integrate with us from a software perspective, they tend to be pretty sticky. So, you know, there really has not been any 1 thing, but it is been a lot, you know, across the board in those, categories that I just talked about. Kelly Motta: Got it. that is helpful. Maybe last question for me. It seems like asset quality held in really strong just wondering, Gregory, any areas that you are--any update as to what you are looking at and watching more carefully? Just to round out the questions on credit. Gregory Garrabrants: That would be Sure. Sure. Yes, I think the commercial real estate side looks really, really good. And then on the C&I side, as we continue to work with different banks and do club stuff and things like that and do some syndications. You know, I expect that--you know, we will always have a handful of stuff rattling around But, in most cases, I think those things will work out. Reasonably well just given the enterprise value of the businesses. But I think on the C&I side, I think it will you know, we have had--if you look at our I mean, I think our you know, our CRESL losses are I think I do not think we have really had any--you know, of any And then I think in all our time in multifamily, you know, a couple of basis points maybe in 25 years, single family, the same way. You know, I think that on the C&I side, as we are doing more sort of like average bank stuff. We will probably have you know, hopefully, we will do better than average, but, you know, there will always be, you know, I think, something there, but nothing of any significant materiality. So Great. Kelly Motta: Thank you for the time. I will step back. Nice quarter. Gregory Garrabrants: Okay. Thank you. Thanks, Kelly. Thank you, Kelly. Operator: Thank you. There are no further questions at this time. I would like to pass the callback over to Johnny Lai for any closing remarks. Johnny Y. Lai: Great. Thanks for everyone's participation, and we will talk to you next quarter. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Axos Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Axos Financial wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,081!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,166,221!* Now, it’s worth noting Stock Advisor’s total average return is 889% — a market-crushing outperformance compared to 203% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of July 30, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Axos Financial. The Motley Fool has a disclosure policy. Axos Financial (AX) Q4 2025 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Axos Financial Inc (NYSE:AX) delivered double-digit year-over-year growth in net interest income, non-interest income, ending loans, deposits, EPS, and book value per share. Non-interest income surged 50% year-over-year in Q4 2026, driven by Verdant, prepayment fees, and rental income from the new headquarters. Loan growth was robust, with $638 million net growth in the quarter and a strong pipeline of $2.4 billion, supporting low-to-mid-teens annual growth outlook. Credit quality improved, with non-performing assets down to $159 million from $180 million in the prior quarter, and net charge-offs at just 9 basis points excluding a one-time charge. The company successfully closed the Genius Bank deposit acquisition, adding $2.3 billion in deposits and 56,000 accounts with minimal attrition, and is actively cross-selling checking accounts. Management expects a stable net interest margin and deposit costs, with a flat to improving efficiency ratio, indicating strong operational leverage. Axos Financial Inc (NYSE:AX) continues to generate high returns, with ROA of 1.76% and ROE of 16.32% for fiscal 2026, excluding the legal accrual. The acquisition of ARC Technologies is expected to enhance the small business platform with AI-enabled treasury management, potentially driving future growth and cross-sell opportunities. Non-interest expenses increased by $20 million linked-quarter, primarily due to a $21 million legal accrual in the clearing business, which negatively impacted reported earnings. Net interest margin was roughly flat at 4.54%, and the addition of Genius Bank deposits and higher cash balances could pressure margin in the near term. The company faces potential integration risks from multiple acquisitions (Genius, Capital One, ARC) executed in a short period, which could strain resources. There is ongoing credit risk in the syndicated C&I cash flow loan portfolio, as evidenced by a $10 million charge-off during the quarter, and management remains cautious on this segment. The tax rate is expected to rise to 26-27% annually, excluding discrete benefits, which could reduce future net income growth. The Capital One deposit acquisition may lead to temporary excess liquidity, potentially diluting net interest margin until deployed into loans. Competition in deposit gathering is increasing, with some banks becoming more aggressive, which could pressure deposit costs or require higher marketing spend. Warning! GuruFocus has detected 7 Warning Sign with AX. Is AX fairly valued? Test your thesis with our free DCF calculator. Q: How should we think about the net interest margin (NIM) outlook from here, and what are your expectations on deposit costs going forward?A: Greg Gerabrandt, President and CEO, stated that the company expects a fairly stable net interest margin outlook with stable deposit costs. He noted that upcoming acquisitions, such as Capital One and ARC, will bring in deposits, but the best forecast is relative stability in NIM. Q: Are you observing any increased competitiveness on the deposit side as you go to market?A: Greg Gerabrandt, President and CEO, responded that while some banks are adopting more aggressive models, such as pairing high-cost savings accounts with small business checking, he doesn't see a broad-based increase in competition. He noted that some competitors appear to be struggling to raise deposits and are being more aggressive as a result. Q: Can you provide more color on where you see the most opportunity for loan growth and any areas that give you pause?A: Greg Gerabrandt, President and CEO, highlighted balanced growth across the C&I platform, with potential benefits from a pullback in private credit. He noted that the most credit-sensitive segment is direct lending to sponsor-backed companies, where past losses have occurred, and emphasized the need for caution and strong documentation in those deals. Q: Can you elaborate on the ARC acquisition and how it expands your product offering, monetization, and long-term integration?A: Greg Gerabrandt, President and CEO, explained that ARC fills a gap for small businesses that outgrow Axos's current platform. ARC provides a sophisticated digital treasury management and expense management solution, including AI-enabled features. The acquisition will allow Axos to cross-sell to existing clients, serve Y Combinator companies, and leverage ARC's technology to accelerate its strategic roadmap, though integration will take time. Q: How has the integration and conversion of the recent deposit-focused deals (Genius Bank, Capital One, ARC) been, and what is your appetite for additional deals?A: Greg Gerabrandt, President and CEO, reported that the Genius Bank integration was exceptionally smooth with minimal account attrition and strong cross-sell of checking accounts. He expects Capital One to be similar. ARC is a different type of integration, involving technology and team integration, but the company remains open to more M&A opportunities given its scalable technology platform. Q: Can you elaborate on the collaboration between Verdant and the floor plan lending business and any cross-sell opportunities?A: Greg Gerabrandt, President and CEO, noted that Verdant's large sales force is generating a strong pipeline for floor plan lending. While there is some success in cross-selling deposits to vendors, the near-term opportunity is more on the lending side. He sees potential for the ARC platform to enable future cross-selling to end clients who finance equipment. Q: Given past credit issues with syndicated loans, what is your current appetite for SNICs, and is there an opportunity to agent more deals?A: Greg Gerabrandt, President and CEO, stated that Axos is being more careful about the agents it chooses and is looking for philosophical alignment, possibly favoring club deals. He noted that while broadly syndicated loans are becoming less interesting, the company has a syndication desk and is willing to agent deals, but remains cautious about single-enterprise risk. Q: With the $3.2 billion in deposits coming from Capital One, will that all fund loan growth, and how should we think about the influx?A: Greg Gerabrandt, President and CEO, said the deposits will primarily fund loan growth. The company may first scale back higher-cost institutional deposit relationships and then allow the new deposits to fill in. There will be a temporary cash overhang that could push down the stated NIM, but it won't affect net interest income. Q: Can you provide color on the drivers of non-interest-bearing deposit growth and expectations for continued cross-sell?A: Greg Gerabrandt, President and CEO, attributed the growth to broad-based drivers, including clearing sweep deposits, direct C&I cross-sell, private banking, and specialty fund banking. He noted strong cross-sell success with Genius customers and expects continued traction, though he would like it to work faster. Q: Given your outlook for strong growth and potential M&A, how should we think about the buyback?A: Greg Gerabrandt, President and CEO, stated that the company remains flexible with buybacks, increasing willingness as prospects improve. He noted that market dips often present good opportunities to repurchase shares, but declined to provide a definitive guidepost. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

LAS VEGAS, July 30, 2026--(BUSINESS WIRE)--Axos Financial, Inc. (NYSE: AX) ("Axos" or the "Company") today announced unaudited financial results for the fourth fiscal quarter ended June 30, 2026. Net income was $124.9 million and diluted earnings per share ("EPS") was $2.16 for the quarter ended June 30, 2026. Net income for the quarter ended June 30, 2025 was $110.7 million and diluted EPS was $1.92. Adjusted earnings and adjusted earnings per diluted common share ("Adjusted EPS"), non-GAAP measures described further below, increased $34.4 million to $146.2 million and increased $0.59 to $2.53, respectively, for the quarter ended June 30, 2026, compared to $111.8 million and $1.94, respectively, for the quarter ended June 30, 2025. Fourth Quarter Fiscal 2026 Financial Summary For the year ended June 30, 2026 net income was $490.4 million, an increase of $57.5 million from net income of $432.9 million for the year ended June 30, 2025. Diluted EPS was $8.48 for the year ended June 30, 2026, an increase of $1.05, or 14.1%, as compared to diluted EPS of $7.43 for the year ended June 30, 2025. For the year ended June 30, 2026 adjusted earnings (a non-GAAP financial measure) increased $69.1 million, and Adjusted EPS (a non-GAAP financial measure) increased $1.24. "We ended our fiscal 2026 with solid results. Double digit year-over-year increases in net interest income and non-interest income resulted in a 12.5% and 17.6% increase in our diluted earnings per share and book value per share, respectively," stated Greg Garrabrants, President and Chief Executive Officer of Axos. "Our net interest margin remains best-in-class, fueled by solid loan growth across consumer and commercial lending categories. We closed the Jenius Bank acquisition in May, adding approximately $2.3 billion of deposits." "We continue to manage our non-interest expenses while investing in our businesses, technologies and people," said Derrick Walsh, Chief Financial Officer of Axos. "Excluding a $21.0 million accrual related to a legal matter in Axos Clearing, our non-interest expenses for the three months ended June 30, 2026 were down by approximately $1.0 million compared to the prior quarter. We remain well reserved relative to our low level of credit losses, as reflected in our allowance for credit losses to total non-accrual loans of 221% at June 30, 2026. Excluding a $10.0 million net charge-off of a C&I cash flow loan we previously reserved for, our annualized net charge-offs to average loans would have been 0.09%, improved from the year ago quarter." Other Highlights Ending net loan balances were $25.6 billion at June 30, 2026, reflecting a net change in loans of $637.9 million for the three months ended June 30, 2026 Non-performing assets to total assets were 0.53% as of June 30, 2026, down from 0.71% as of June 30, 2025 Non-interest income was $61.9 million for the three months ended June 30, 2026, up 49.9% from $41.3 million for the three months ended June 30, 2025 Total deposits were $24.6 billion at June 30, 2026, an increase of $3.7 billion, or 17.9%, from $20.8 billion at June 30, 2025, including a deposit acquisition of approximately $2.3 billion, which closed in the three months ended June 30, 2026 Assets under custody and/or administration at Axos Clearing LLC increased to $47.8 billion at June 30, 2026, compared to $39.4 billion at June 30, 2025 The Company repurchased $22.0 million of Axos common stock during the three months ended June 30, 2026, at an average price of $87.95 per share Book value per share increased to $55.81 at June 30, 2026, up 17.6% from $47.46 at June 30, 2025 On July 20, 2026, we closed the previously announced acquisition of Arc Technologies, Inc., a cash management platform for small businesses Fourth Quarter Fiscal 2026 Income Statement Summary Net income was $124.9 million and diluted EPS was $2.16 for the three months ended June 30, 2026, compared to net income of $110.7 million and diluted EPS of $1.92 for the three months ended June 30, 2025. Net interest income increased $37.7 million, or 13.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to an increase in interest income earned on loans, partially offset by a decrease on interest income on deposits in other financial institutions and increases in interest expense on advances from the Federal Home Loan Bank and on secured financings. The provision for credit losses was $17.9 million for the three months ended June 30, 2026, compared to $15.0 million for the three months ended June 30, 2025. The provision for credit losses for the three months ended June 30, 2026, was primarily driven by loan growth and an increase in specific reserves on individually assessed loans, partially offset by an improved macroeconomic outlook reflected in the forecast scenarios used in the allowance for credit losses model. Non-interest income increased to $61.9 million for the three months ended June 30, 2026, compared to $41.3 million for the three months ended June 30, 2025. The increase was primarily due to operating lease rental and other income from the acquisition of Verdant Commercial Capital, LLC ("Verdant") and higher prepayment penalty income, partially offset by the absence of a $12.0 million gain recognized on a loan sale in the prior year quarter. Non-interest expense, comprised of various operating expenses, increased $55.3 million to $205.9 million for the three months ended June 30, 2026, from $150.7 million for the three months ended June 30, 2025. The increase was primarily due to a $21.0 million accrual related to a FINRA arbitration matter in the three months ended June 30, 2026, increased depreciation and amortization expense, mainly attributable to the Verdant and deposit acquisitions, and an increase in salaries and related costs. Balance Sheet Summary Axos’ total assets increased by $5.2 billion, or 20.9%, to $30.0 billion, at June 30, 2026, from $24.8 billion at June 30, 2025, primarily attributable to an increase in loans and securities available-for-sale, partially offset by lower cash and cash equivalents. Total liabilities increased by $4.7 billion, or 21.2%, to $26.8 billion at June 30, 2026, from $22.1 billion at June 30, 2025, primarily attributable to higher deposit balances, as well as secured financings assumed as part of the Verdant acquisition. Stockholders’ equity increased $485.7 million, or 18.1%, to $3.2 billion at June 30, 2026, from $2.7 billion at June 30, 2025, primarily due to net income of $490.4 million. Conference Call A conference call and webcast will be held on Thursday, July 30, 2026, 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 August 30, 2026 at Axos’ website and telephonically by dialing toll-free number 877-660-6853, passcode 13761332. About Axos Financial, Inc. and Subsidiaries Axos Financial, Inc., with approximately $30.0 billion in consolidated assets as of June 30, 2026, is the holding company for Axos Bank, Axos Clearing LLC and Axos Invest, Inc. Axos Bank provides consumer and business banking products nationwide through its low-cost distribution channels and affinity partners. Axos Clearing LLC (including its business division Axos Advisor Services), with approximately $47.8 billion of assets under custody and/or administration as of June 30, 2026, and Axos Invest, Inc., provide comprehensive securities clearing 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 and the S&P SmallCap 600® Index, among other indices. For more information on Axos Financial, Inc., please visit http://investors.axosfinancial.com. Segment Reporting The Company operates through two segments: the Banking Business Segment and the Securities Business Segment. In order to reconcile the two segments to the consolidated totals, the Company includes corporate 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. The following tables present the operating results of the segments: Use of Non-GAAP Financial Measures In addition to the results presented in accordance with accounting principles generally accepted in the United States of America ("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 items (including amortization of intangible assets related to acquisitions) and other costs (unusual or non-recurring charges). 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 comparable GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown: 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 servicing rights, goodwill and other intangible assets. Tangible book value per common share 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 comparable GAAP measure, to tangible book value per common share (non-GAAP) as of the dates indicated: 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’ deposit balances and capital ratios, 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, expectations of the environment in which Axos operates and projections of future performance. 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 Axos’ ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, monetary policy, inflation, tariffs, government regulation, general economic conditions, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, our ability to attract and retain deposits and access other sources of liquidity, and 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, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2025, could cause actual results to differ materially from those expressed or implied in any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Axos undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All written and oral forward-looking statements made in connection with this press release, which are attributable to us or persons acting on Axos’ behalf are expressly qualified in their entirety by the foregoing information. View source version on businesswire.com: https://www.businesswire.com/news/home/20260730727486/en/ Contacts Investor Relations Contact:Johnny Lai, CFASVP, Corporate Development & Investor [email protected]

Axos Financial (AX) came out with quarterly earnings of $2.53 per share, beating the Zacks Consensus Estimate of $2.15 per share. This compares to earnings of $1.94 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +17.67%. A quarter ago, it was expected that this bank holding company would post earnings of $2.13 per share when it actually produced earnings of $1.9, delivering a surprise of -10.8%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Axos Financial, which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $379.77 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.91%. This compares to year-ago revenues of $321.45 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Axos Financial shares have added about 14% since the beginning of the year versus the S&P 500's gain of 6.9%. While Axos Financial has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Axos Financial was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.22 on $383.95 million in revenues for the coming quarter and $9.56 on $1.6 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Miscellaneous Services is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Burford Capital Limited (BUR), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This company is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of -79.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Burford Capital Limited's revenues are expected to be $87.62 million, down 54.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AXOS FINANCIAL, INC (AX) : Free Stock Analysis Report Burford Capital Limited (BUR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research