8-K: Axos Financial Reports Mixed Q3 Fiscal Year 2025 Results: Loan Growth Strong, Earnings Dip

Axos Financial, Inc. announced its Q3 fiscal year 2025 results, highlighting strong loan growth but a slight decrease in net income and diluted EPS compared to the same period last year.

Summary

• Axos Financial, Inc. reported a net income of $105.2 million and diluted earnings per share (EPS) of $1.81 for the quarter ended March 31, 2025.
• This compares to a net income of $110.7 million and diluted EPS of $1.91 for the quarter ended March 31, 2024.
• Adjusted earnings were $105.0 million, or $1.81 per diluted share, compared to $112.7 million, or $1.94 per diluted share, for the same quarter last year.
• For the nine months ended March 31, 2025, net income was $322.2 million, a decrease of $22.9 million from the previous year.
• Diluted EPS for the nine months was $5.55, compared to $5.88 in the prior year, which included a one-time gain of $92.4 million related to the FDIC Loan Purchase.
• Adjusted earnings for the nine months increased to $325.0 million, or $5.60 per share, compared to $289.3 million, or $4.93 per share, in the prior year.
• Net loan balances reached $20.2 billion at March 31, 2025, up 3.6% from December 31, 2024.
• Total deposits were $20.1 billion at March 31, 2025, an increase of $777.5 million from June 30, 2024.
• Non-performing assets to total assets were 0.79% for the quarter ended March 31, 2025, down from 1.06% for the quarter ended December 31, 2024.
• Net interest margin was 4.78% for the quarter ended March 31, 2025, compared to 4.83% for the quarter ended December 31, 2024.
• The company repurchased approximately $28 million of common stock in the quarter and an additional $30 million in April 2025.
• Book value per share increased to $45.79 at March 31, 2025, up 19.0% from $38.48 at March 31, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While net income and EPS are down, loan growth is strong and asset quality remains good. The company is also actively repurchasing shares, which is a positive sign.

Positives

• Net loan growth was strong, with over $700 million in net loan growth.
• Credit quality remains good, with non-performing and non-accrual loans declining.
• The company deployed excess capital to repurchase approximately $28 million of common stock in the quarter ended March 31, 2025 and an additional $30 million of common stock from April 1, 2025 to April 30, 2025.
• Total deposits increased by $777.5 million since June 30, 2024.
• Book value per share increased to $45.79 at March 31, 2025, up 19.0% from $38.48 at March 31, 2024.
• Total capital to risk-weighted assets was 15.21% for Axos Financial, Inc. at March 31, 2025, up from 14.84% at June 30, 2024.

Negatives

• Net income decreased to $105.2 million, compared to $110.7 million for the same quarter last year.
• Diluted EPS decreased to $1.81, compared to $1.91 for the same quarter last year.
• The provision for credit losses increased to $14.5 million, compared to $6.0 million for the same quarter last year.
• Non-interest expense increased to $146.3 million, compared to $133.2 million for the same quarter last year.

Risks

• Changes in the interest rate environment could impact financial performance.
• General economic conditions and conditions in the real estate markets could affect results.
• The company faces risks associated with credit quality and its ability to attract and retain deposits.
• Litigation outcomes could have an impact on the company's financial results.

Future Outlook

The press release contains forward-looking statements regarding Axos' financial prospects, performance, asset quality, deposit balances, capital ratios, and ability to grow and diversify its business. These statements are based on management's views and assumptions and are subject to risks and uncertainties.

Management Comments

• Greg Garrabrants, President and Chief Executive Officer of Axos, stated, 'We generated over $700 million in net loan growth, the strongest quarter so far in fiscal year 2025.'

Industry Context

Axos Financial operates in the banking and securities industries, facing competition from traditional banks, online lenders, and brokerage firms. The company's focus on low-cost distribution channels and affinity partnerships positions it to compete effectively in the digital banking space.

Comparison to Industry Standards

• Axos's efficiency ratio of 47.36% is comparable to other tech-forward banks, but higher than some traditional banks with established branch networks.
• The company's net interest margin of 4.78% is competitive within the current interest rate environment, but could be impacted by future rate changes.
• Compared to companies like Ally Financial and Capital One, Axos has a smaller consumer loan portfolio and a greater focus on commercial and industrial lending.
• Axos Clearing LLC's net capital as a percentage of aggregate debit items at 26.02% is lower than the previous quarter, but still above regulatory requirements, similar to Interactive Brokers and Charles Schwab.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income and diluted EPS.
• Employees may be affected by changes in operating expenses.
• Customers may benefit from the company's continued growth and diversification of its lending and deposit franchises.

Next Steps

• A conference call and webcast will be held on April 30, 2025, to discuss the results.
• Analysts and investors may dial in and participate in the question/answer session.

Key Dates

Keywords

Axos Financial, Financial Results, Earnings, Loans, Deposits, Net Income, EPS, Bank