8-K: Axos Financial Reports Strong Fiscal Q4 2025 Results Driven by Robust Loan and Deposit Growth

Axos Financial, Inc. announced robust fiscal fourth quarter 2025 results, highlighted by substantial net loan growth of $856 million and increased net income and diluted EPS.

Summary

• Net income for the fiscal fourth quarter ended June 30, 2025, was $110.7 million, an increase of 5.5% compared to $104.9 million for the same period in 2024.
• Diluted earnings per share (EPS) was $1.92 for Q4 FY25, up 6.7% from $1.80 in Q4 FY24.
• Adjusted earnings (Non-GAAP) increased by $5.1 million to $111.8 million, and Adjusted EPS (Non-GAAP) increased by $0.11 to $1.94 for Q4 FY25.
• Net loan growth of $856 million was achieved in the quarter ended June 30, 2025, across consumer and commercial lending categories.
• Ending net loan balances reached $21.0 billion at June 30, 2025, representing a 4% increase from March 31, 2025, or 16% on an annualized basis.
• Net interest margin was 4.84% for Q4 FY25, an increase from 4.78% in the prior quarter.
• Non-interest income increased to $41.3 million for Q4 FY25, up 33.8% from $30.9 million in Q4 FY24, primarily due to a $12.0 million gain on a loan sale.
• Total deposits increased by $1.5 billion, or 7.6%, to $20.8 billion at June 30, 2025, from $19.4 billion at June 30, 2024.
• Non-performing assets to total assets decreased to 0.71% for Q4 FY25, down from 0.79% for Q3 FY25.
• Book value per share increased to $47.46 at June 30, 2025, up 17.9% from $40.26 at June 30, 2024.
• For the full fiscal year ended June 30, 2025, net income was $432.9 million, a decrease of $17.1 million from $450.0 million in FY24, primarily due to a one-time pre-tax gain of approximately $92.4 million in FY24 related to an FDIC Loan Purchase.
• Full fiscal year 2025 diluted EPS was $7.43, a decrease of 3.0% from $7.66 in FY24.
• Adjusted earnings (Non-GAAP) for FY25 increased $41.3 million or 10.4%, and Adjusted EPS (Non-GAAP) increased $0.76 or 11.3%.
• The provision for credit losses was $15.0 million for Q4 FY25, compared to $6.0 million for Q4 FY24, driven by loan growth and the quantitative impact of macroeconomic variables in the commercial real estate allowance for credit losses model.
• Non-interest expense increased by $10.1 million to $150.7 million for Q4 FY25, primarily due to higher salaries and related costs and increased data and operational processing expense.

Sentiment

Score: 8

Explanation: The company reported strong quarterly financial results with significant growth in net income, diluted EPS, loans, and deposits. Key metrics like net interest margin and book value per share also showed positive trends. While full-year net income was down due to a prior one-time gain, adjusted earnings for the full year were up. The reduction in non-performing assets and expected lower future tax rate are also positive indicators. The increase in provision for credit losses and non-interest expense are noted but do not overshadow the overall strong performance.

Positives

• Net income increased to $110.7 million in Q4 FY25 from $104.9 million in Q4 FY24, representing a 5.5% year-over-year growth.
• Diluted EPS grew to $1.92 in Q4 FY25 from $1.80 in Q4 FY24, a 6.7% increase.
• Adjusted earnings (Non-GAAP) and Adjusted EPS (Non-GAAP) also showed strong growth, increasing by 4.8% and 6.0% respectively for the quarter.
• Achieved significant net loan growth of $856 million in Q4 FY25, with ending net loan balances reaching $21.0 billion, an annualized growth rate of 16%.
• Net interest margin improved to 4.84% in Q4 FY25 from 4.78% in the prior quarter, indicating effective interest rate management.
• Non-interest income saw a substantial increase of 33.8% year-over-year and 23.7% linked quarter, boosted by a $12.0 million gain on a loan sale.
• Total deposits grew by $1.5 billion, or 7.6%, to $20.8 billion at June 30, 2025, demonstrating strong funding capabilities.
• Non-performing assets to total assets decreased to 0.71% in Q4 FY25 from 0.79% in Q3 FY25, indicating improved asset quality.
• Total capital to risk-weighted assets strengthened to 15.39% at June 30, 2025, up from 14.84% at June 30, 2024, reflecting robust capital adequacy.
• Book value per share increased significantly by 17.9% to $47.46 at June 30, 2025.
• The effective tax rate is expected to be reduced by three percentage points starting in the period ending September 30, 2025, due to a change in California tax calculation methodology, which will positively impact future earnings.

Negatives

• Full fiscal year 2025 net income decreased by $17.1 million to $432.9 million compared to $450.0 million in FY24, primarily due to a one-time pre-tax gain of $92.4 million in FY24.
• Full fiscal year 2025 diluted EPS decreased by $0.23 or 3.0% to $7.43 compared to $7.66 in FY24, also influenced by the prior year's one-time gain.
• Provision for credit losses increased to $15.0 million in Q4 FY25 from $6.0 million in Q4 FY24, driven by loan growth and the quantitative impact of macroeconomic variables in the commercial real estate allowance for credit losses model.
• Non-interest expense increased by $10.1 million to $150.7 million in Q4 FY25, primarily due to higher salaries and related costs and increased data and operational processing expense.
• Allowance for credit losses loans to non-accrual loans decreased to 170.23% in Q4 FY25 from 229.84% in Q4 FY24, primarily attributable to a change in non-accrual loans.

Risks

• Ability to successfully integrate acquisitions and realize the anticipated benefits of transactions.
• Changes in the interest rate environment.
• Impact of monetary policy.
• Inflation.
• Tariffs.
• Government regulation.
• General economic conditions.
• Changes in the competitive marketplace.
• Conditions in the real estate markets where the company operates.
• Risks associated with credit quality.
• Ability to attract and retain deposits and access other sources of liquidity.
• Outcome and effects of litigation.
• Other factors beyond the company's control.

Future Outlook

The effective tax rate is currently expected to be reduced by three percentage points starting in the period ending September 30, 2025, due to a change in California tax calculation methodology.

Management Comments

• "Grew loans by $856 million in the quarter ended June 30, 2025." Greg Garrabrants, President and Chief Executive Officer.
• "Generated positive loan growth across several consumer and commercial lending categories, including asset-based lending, auto lending, equipment leasing, lender finance, and single-family mortgage." Greg Garrabrants, President and Chief Executive Officer.
• "Our net interest margin remained strong at 4.84% for the three months ended June 30, 2025 compared to 4.78% in the prior quarter." Greg Garrabrants, President and Chief Executive Officer.
• "Net interest income and non-interest income increased by $4.7 million and $7.9 million, respectively, on a linked quarter basis." Derrick Walsh, Chief Financial Officer.
• "Our tax rate was approximately 29% for the quarter ended June 30, 2025, which includes the one-time non-cash deferred tax asset adjustment related to the change in California tax calculation methodology." Derrick Walsh, Chief Financial Officer.
• "Starting in the period ending September 30, 2025, we currently expect our effective tax rate to be reduced by three percentage points due to the change in California tax calculation methodology." Derrick Walsh, Chief Financial Officer.

Industry Context

The results indicate a strong performance in a potentially challenging interest rate environment, with the company successfully growing its loan portfolio and deposits. The increase in net interest margin suggests effective asset-liability management. The growth across diverse lending categories, including asset-based lending, auto lending, equipment leasing, lender finance, and single-family mortgage, indicates a diversified strategy, which can mitigate risks associated with concentration in any single segment, especially given the mention of commercial real estate macroeconomic variables impacting credit loss provisions. The reduction in non-performing assets to total assets is a positive sign for credit quality relative to some industry peers facing headwinds.

Comparison to Industry Standards

• The filing does not provide specific comparable companies or industry benchmarks for direct comparison.
• Axos Financial's net interest margin of 4.84% is generally considered strong within the banking sector, often exceeding the average for larger, more traditional banks, which may have lower margins due to different business models and funding costs.
• The 16% annualized loan growth is robust and likely outperforms many established banks, which often see more modest single-digit growth.
• The non-performing assets to total assets ratio of 0.71% is a positive indicator of asset quality, comparing favorably to some regional banks that have reported higher non-performing loan ratios, particularly in commercial real estate.
• The increase in book value per share by 17.9% is a strong return for shareholders, potentially outpacing many peers in the financial sector.
• The total capital to risk-weighted assets of 15.39% indicates a well-capitalized institution, exceeding typical regulatory minimums and providing a strong buffer against potential losses, which is competitive within the banking industry.

Stakeholder Impact

• Shareholders: Increased diluted EPS, adjusted EPS, and book value per share indicate positive returns and increased equity value. Strong capital ratios and diversified loan growth suggest financial stability.
• Customers: Growth in various lending categories and deposits suggests continued service offerings and potentially competitive rates.
• Employees: Higher salaries and related costs contributed to increased non-interest expense, indicating potential benefits for employees.

Next Steps

• A conference call and webcast will be held on Wednesday, July 30, 2025, at 5:00 PM Eastern / 2:00 PM Pacific.
• A replay of the conference call will be available until August 30, 2025, at Axos' website and telephonically.
• The effective tax rate is expected to be reduced by three percentage points starting in the period ending September 30, 2025.

Key Dates

Recommendation

The filing demonstrates robust financial health and strategic execution. Strong quarterly earnings, significant loan and deposit growth, improving net interest margin, and a declining non-performing asset ratio indicate operational excellence. The substantial increase in book value per share and strong capital ratios underscore the company's financial strength and shareholder value creation. While full-year GAAP net income was impacted by a prior one-time gain, the underlying adjusted earnings growth is impressive. The anticipated reduction in the effective tax rate further enhances future profitability. These factors collectively suggest a strong investment opportunity.

Keywords

Financial Services, Banking, Digital Bank, Loan Growth, Deposits, Net Interest Margin, Earnings, EPS, Credit Quality, Commercial Real Estate, Mortgage, Asset-Based Lending, Equipment Leasing, Lender Finance, Axos Financial, AX, NYSE