Axos Financial, Inc. Q1 FY2025 earnings call

• Financial Results: Delivered double-digit year-over-year growth in EPS and book value per share for the 10th consecutive quarter. Net income and EPS increased significantly. - Deposits and Loans: Deposits grew $614 million linked quarter, loans up Y/Y but impacted by prepayments in certain lending groups. - Net Interest Margin: Benefited from FDIC loan payoffs, but NIM excluding that was 4.87%. - Credit Quality: Non-performing assets increased in some segments, but confident in resolving issues. - Axos Clearing: Positive net new asset growth, assets under custody up. - Operational Initiatives: Soft launched white label banking platform, team hires contributing to loan and deposit growth.

Deposits: Increased by approximately $614 million linked quarter, with interest bearing demand and savings deposits driving growth. Demand, money market, and savings accounts represent 96% of total deposits. Loans: Ending loan balances were up 13.7% year-over-year to $19.3 billion. Average loan balances were up $269 million linked quarter. Net Interest Margin: 5.17% for Q1 2025, up 81 basis points from Q1 2024. Excluding FDIC loan payoffs, net interest margin was 4.87%. Net Income: Approximately $112 million in Q1 2025, up 36% Y/Y. EPS was 1.93, up 40% Y/Y. Charge Offs: Net annualized charge offs to average loans were 17 basis points, 15 basis points excluding auto loans covered by insurance. Axos Clearing: Total deposits at Axos Clearing were $1.3 billion as of September 30, net new assets for custody business were $559 million, and assets under custody were $37.4 billion.

• Net Interest Margin: Expect consolidated net interest margin excluding FDIC benefit to stay within 4.25%-4.35%. - Loan Growth: Optimistic to return to targeted range, loan pipeline strong with $1.9 billion in pipeline. - Deposit Costs: Intend to offset deposit cost reductions with floating rate loan interest income reduction.

• Pricing Pressure: Competition leading to tighter spreads in certain verticals. - Prepayments: Elevated prepayments in single-family jumbo mortgage, multifamily, and auto lending affecting loan growth. - Commercial Real Estate: Bridge lenders reaching back earlier impacting some loans. - Documentation Issues: Potential issues with loan restructurings and documentation in certain loans.

Q: Kyle Peterson on competition in new loan deals A: Gregory Garrabrants noted there's pricing pressure in certain verticals but strong demand and added teams.

Q: Andrew Liesch on margin commentary A: Gregory Garrabrants and Derrick Walsh discussed margin range and factors like loan growth and deposit pricing.

Q: Gary Tenner on spreads in C&I A: Gregory Garrabrants talked about club deals and pricing pressure in C&I.

Q: David Feaster on deposit side and white label rollout A: Gregory Garrabrants spoke about deposit growth, new verticals, and white label progress.

Q: Kelly Motta on NPA migration and CRE exposure A: Gregory Garrabrants and Derrick Walsh addressed NPA resolution and CRE growth plans.

Q: Edward Hemmelgarn on pricing and margin range A: Gregory Garrabrants discussed margin range, deposit franchise, and pricing pressure