Axos Financial, Inc. Q4 FY2025 earnings call

• Delivered strong results with $856 million net loan growth linked quarter, 6 basis points net interest margin expansion, and 18% year-over-year increase in book value per share.
• Net interest income was $280 million for Q4 2025, up 7.7% y-o-y. Net interest margin was 4.84%, up 6 bps from prior quarter.
• Managed operating expenses well; total noninterest expenses up 3% from prior quarter, excluding legal accrual reversal.
• Repurchased approximately $31 million of common stock in April. Total originations for investment, excluding single-family warehouse lending, increased 5% linked quarter.
• Credit quality solid; total nonperforming assets declined, nonaccrual loans to total loans ratio improved.
• Axos Clearing had good quarter with assets under custody increasing to $39.4 billion.
• Focus on AI implementation for operating efficiency, aiming to create operating leverage and improve software development.

Loan Segment: Generated $856 million of net loan growth linked quarter. Net interest income was $280 million for the 3 months ended June 30, 2025, up 7.7% from the prior year period. Net interest margin was 4.84% for the quarter ended June 30, 2025, up 6 basis points from the prior quarter. Average loan yields for the 3 months ended June 30, 2025, were 8%, flat compared to the prior quarter. Deposit Segment: Total on-balance sheet deposits increased 7.6% year-over-year to $21 billion. Demand money market and savings accounts, representing 95% of total deposits at June 30, 2025, increased by 7% year-over-year. Axos Clearing: Total assets under custody increased from $37.1 billion at March 31, 2025, to $39.4 billion at June 30, 2025. Net new assets for the custody business increased by $215 million in the June quarter.

• Expect organic loan growth to be in the mid- to high end of single-digit and low teens annual basis in fiscal 2026.
• Income tax rate to be approximately 26%-27% starting Q3 2025, a 3 percentage point improvement from prior rates.
• Loan pipeline remains healthy at approximately $2 billion as of July 25, 2025, consisting of various lending categories.

• Potential funding cost pressure if loan growth accelerates significantly.
• Pricing competition in deposits as industry loan growth picks up.
• Regulatory uncertainties related to crypto and stablecoin integration, impacting business strategies.

Q: Kyle Peterson asked about loan yields and net interest margin outlook, asking how the different pieces like pricing pressure on new loans and prepays offset.

A: Gregory Garrabrants stated that while loan yields might be tighter, there's an offsetting benefit on the funding side from deposits, making it a decent net, and credit spread side has been consistent.

Q: David Feaster inquired about the funding side, deposit growth, and fee income growth.

A: Gregory Garrabrants mentioned the commercial specialty side, tech team, and middle market team are driving deposit growth, and fee income growth is in progress with software technology development to enhance the product.

Q: Gary Tenner asked about the multifamily loan sale and loan growth drivers.

A: Gregory Garrabrants said there were a few multifamily loans sold, and loan growth drivers include cap call, lender finance, jumbo mortgage, with a diverse business leading to balanced loan growth.

Q: Kelly Motta asked about crypto and stablecoin, and deposit growth.

A: Gregory Garrabrants mentioned focusing on crypto and stablecoin integration, with the commercial specialty, tech, and middle market teams driving strong deposit growth across various areas.