Axos Financial, Inc. Q1 FY2026 earnings call

• Strong start to fiscal 2026 with $1.6B net loan growth, including $1B from Verdant acquisition. • Net charge-offs down 5 basis points linked quarter, book value per share up 17% YOY. • Net interest income growth from balanced growth in single-family mortgage warehouse, commercial specialty real estate, auto lending. • Noninterest income up due to higher banking service fees, mortgage banking income, prepayment penalty fees. • Axos Clearing assets under custody up from $39.4B to $43B, net new assets $1.1B in Q3. • Completed Verdant acquisition, enhancing commercial lending franchise with low credit losses and tech-enabled model. • AI implementation across enterprise to drive operating leverage and product development.

Net loan growth was $1.6 billion linked quarter, including $1 billion from Verdant acquisition. Net interest income was $291 million, up ~$11 million linked quarter. Net interest margin was 4.75%, down 9 basis points. Noninterest income up ~13% YOY. Total on-balance sheet deposits up 6.9% YOY to $22.3 billion. Net income $112.4 million, diluted EPS $1.94. Verdant acquisition added ~$1.2 billion in loans, leases, etc. Axos Clearing assets under custody up to $43 billion.

• Expect loan growth in low to mid-teens annually in remaining 9 months of fiscal 2026. • Net interest margin ex FDIC loan purchase accretion expected to stay in 4.25%-4.35% range. • Verdant acquisition expected to add $150M-$200M net new loans and operating leases per quarter starting Q2. • Adjusted net income and adjusted EPS up 7.3% linked quarter and ~30% annually.

• Potential fraud risks in lending, including forging documents and title insurance. • Impact of interest rate changes on securities P&L, though team working to grow out of it. • Secured financings for Verdant assets being term securitizations, limiting immediate use of excess cash. • Need to monitor credit quality in late credit cycle and potential aggressive structuring issues.

Q: On credit, any context on pipeline deals and credit approach?

A: Turned down high-profile deals for structural issues, vigilant on fraud, different risks in each segment.

Q: On VCC funding, walk through secured financing?

A: Secured financings are term securitizations to match fund leases, cleanup calls at 10%, monitoring for better pricing.

Q: On capital and loan growth, comfort with capital ratios?

A: Comfortable with capital ratios as ROE over 15%, strong capital accretion, loan loss reserve prudent.

Q: On NDFI issue and collateral management?

A: Different risks by loan type, ways to mitigate fraud like not relying on NDFI info, monitoring nuances.

Q: On floor plan space and securities business?

A: Floor plan team has accepted term sheets, securities business tech modernization with Axos Complete, rollout scheduled.