Axos Financial ((AX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Axos Financial’s recent earnings call exuded a generally positive sentiment, underscored by robust loan growth, an expanded net interest margin, and enhanced credit quality. Despite facing challenges such as increased noninterest expenses and pricing pressure on loan yields, the positive developments significantly overshadowed the negatives, painting an optimistic picture for the company’s financial health.
Strong Loan Growth
Axos Financial reported a remarkable $856 million in net loan growth for the quarter, marking a 4.2% increase from the previous quarter or 16% on an annualized basis. This growth underscores the company’s strong lending capabilities and its ability to capitalize on market opportunities.
Net Interest Margin Expansion
The company achieved a net interest margin expansion of 6 basis points, reaching 4.84% for the quarter ending June 30, 2025. This improvement highlights Axos Financial’s effective interest rate management and its ability to enhance profitability through strategic financial maneuvers.
Year-over-Year Increase in Book Value
Axos Financial saw an 18% year-over-year increase in book value per share, reflecting the company’s strong financial performance and its ability to generate shareholder value over the past year.
High Return on Equity and Assets
The company reported a 17% return on average common equity and a 1.9% return on assets for the quarter, showcasing its efficient use of resources and its strong profitability metrics.
Net Interest Income Growth
Net interest income rose to $280 million for the quarter, up 7.7% from the prior year period. This growth indicates Axos Financial’s successful strategies in interest income generation and its robust financial health.
Improved Credit Quality
Axos Financial improved its credit quality, with total nonaccrual loans declining by $15 million from the previous quarter. This improvement reduced the nonaccrual loans to total loans ratio by 89 basis points, highlighting the company’s effective risk management practices.
Tax Rate Reduction
A change in the income tax calculation methodology for California is expected to reduce Axos Financial’s income tax rate by 3 percentage points starting in the September 2025 quarter, potentially boosting future profitability.
Assets Under Custody Growth
The company saw its total assets under custody grow from $37.1 billion to $39.4 billion, with a net new asset increase of $215 million for the June quarter, reflecting strong asset management capabilities.
Stock Repurchase
Axos Financial repurchased approximately $31 million of common stock at an average price of $59 per share during the quarter, demonstrating its commitment to returning value to shareholders.
Nonrecurring Items Impact Income
The company’s net income and EPS were affected by a $12 million pretax gain from the sale of multifamily loans and a $5.5 million noncash deferred tax impairment, indicating the impact of nonrecurring items on financial results.
Increased Noninterest Expenses
Total noninterest expenses rose by 3% from the prior quarter, with professional services expenses increasing to $10.4 million, highlighting areas of cost pressure that the company needs to address.
Loan Yield Pressure
Axos Financial is experiencing slight pressure on new loan yields, reflecting pricing challenges in certain lending categories, which could impact future profitability if not managed effectively.
Forward-Looking Guidance
Looking ahead, Axos Financial provided comprehensive guidance for the fourth quarter of fiscal year 2025. The company anticipates organic loan growth to be in the mid- to high end of the single-digit to low teens range for fiscal 2026. Additionally, a 3 percentage point reduction in their income tax rate is expected due to a change in California’s tax calculation methodology, potentially enhancing future earnings.
In conclusion, Axos Financial’s earnings call highlighted a strong financial performance with significant loan growth, improved margins, and enhanced credit quality. Despite facing some challenges, the overall sentiment remains positive, with forward-looking guidance suggesting continued growth and profitability. Investors and market watchers can remain optimistic about Axos Financial’s trajectory in the coming quarters.