Axos Financial, Inc. Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $5.15b | Revenue (TTM) = $1.48b
Market Cap = $5.15b | Estimated Revenue = $1.67b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $6.27b | Revenue (TTM) = $1.48b
Enterprise Value = $6.27b | Forward Revenue = $1.67b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Axos Financial, Inc. Stock Analysis
Analyst Opinions
15 Analysts have issued a Axos Financial, Inc. forecast:
Analyst Opinions
15 Analysts have issued a Axos Financial, Inc. forecast:
Axos Financial, Inc. Events
Past Events
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JUL
30
Q4 2026 Earnings Call
about 2 months ago
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APR
30
Q3 2026 Earnings Call
5 months ago
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JAN
29
Q2 2026 Earnings Call
8 months ago
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OCT
30
Q1 2026 Earnings Call
11 months ago
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StocksGuide Free
Axos Financial, Inc. — Q4 2026 Earnings Call
1. Management Discussion
Greetings, and welcome to the Axos Fourth Quarter 2026 Earnings Conference Call Webcast. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to turn the conference over to Johnny Lai, SVP, Corporate Development and IR. Thank you, Johnny. You may begin.
Thanks, Alicia. Good afternoon, everyone, and welcome to our fourth quarter 2026 earnings conference call. Joining us today are the company's President and Chief Executive Officer, Greg Garrabrants; and Executive Vice President and Chief Financial Officer, Derrick Walsh. Greg and Derrick will review and comment on the financial and operational results for the quarter and fiscal year ended June 30, 2026, and we will be available to answer questions after the prepared remarks.
Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties and that management may make additional forward-looking statements in response to your questions. Please refer to the safe harbor statement found in today's earnings press release and in our investor presentation.
This call is being webcast, and there will be an audio replay available in the IR section of the company's website located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release.
Now, I'd like to turn it over to Greg for opening remarks.
Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's fiscal 2026 Earnings Conference Call for the quarter ended June 30, 2026. I thank you for your interest in Axos Financial.
We closed our fiscal 2026 with positive momentum with double-digit year-over-year growth in net interest income, noninterest income, ending loan and deposits, EPS and book value per share. We generated approximately $638 million of net loan growth linked quarter, resulting in a 15% annualized growth in net income. Excluding single-family mortgage warehouse, ending net loan balances increased by $750 million from March 31, 2026 to June 30, 2026. Otherwise highlights in the quarter include noninterest income was $61.9 million for the quarter ended June 30, 2026, up from $41.3 million in the corresponding quarter a year ago.
For the 12 months ended June 30, 2026, noninterest income was $233.6 million compared to $131.1 million in fiscal year 2025. The primary contributor to the year-over-year growth in noninterest income for the 3- and 12-month period were Verdant, prepayment fees and the additional rental income from the commercial office building we purchased in January 2026 to be used as our future headquarters.
Net interest margin was 4.54% for the quarter ended June 30, 2026, roughly flat compared to 4.57% in the prior quarter. Excluding the impact from holding higher average cash balances and the addition of deposits acquired from Jenius Bank, our net interest margin was up slightly quarter-over-quarter.
Noninterest expenses were $205.9 million for the 3 months ended June 30, 2026, up by $20 million linked quarter. Excluding the $21 million accrual related to a legal matter in our clearing business, noninterest expenses were down $1 million linked quarter due to lower advertising, promotion, professional services and other G&A expenses.
We continue to maintain a low operating efficiency ratio despite ongoing investments in product, technology and people. Our bank efficiency ratio was 42.2% for the 12 months ended June 30, 2026, compared to 40.8% in the fiscal year 2025.
Nonperforming assets were $159 million at June 30, 2026, down from $180 million at March 31, 2026, and $175 million at June 30, 2025. We remain well reserved relative to our low current and historic level of net charge-offs with an allowance for credit losses to total loans of 1.34% at June 30, 2026.
Net income was approximately $124.9 million in the quarter ended June 30, 2026, up 12.9% from the $110.7 million in the prior year's fourth quarter. Diluted EPS was $2.16 per share for the quarter ended June 30, 2026, compared to $1.92 per share in the fourth quarter of fiscal 2025, representing a 12.5% year-over-year increase. Excluding the $21 million legal accrual, net income was $141.8 million and diluted earnings per share was $2.46 for the three months ended June 30, 2026, up 28% from the prior year's comparable quarter.
We repurchased $22 million of common stock during the 3 months ended June 30, 2026, at an average price of $87.95 per share. We have approximately $126 million remaining in our current share repurchase authorization. Total originations for investment, excluding single-family warehouse lending, increased 22% on a linked-quarter basis, resulting in ending net loan growth of approximately $750 million. Loan growth was strong in capital call, real estate lender finance, floor plan lending and equipment finance. Jumbo single-family, multifamily and small balance commercial loan balances were roughly flat linked quarter.
Average loan yields for the 3 months ended June 30, 2026, were 7.4%, stable compared to the prior quarter. Average loan yields for nonpurchased loans were 7.2% and average yields for purchased loans was 13%, which includes the accretion of our purchase price discount. The FDIC purchased loans continue to perform and all loans in that portfolio remain current.
New loan rates for the June quarter were 6.9% in our single-family mortgage business, 6.8% in multifamily, 6.6% in C&I lending and 7.8% in our auto portfolio. Ending deposit balances of $24.6 billion were up 17.9% year-over-year. Demand, money market and savings accounts represent 98% of total deposits as of June 30, 2026, increasing by 22% year-over-year.
We have a diverse mix of funding across a variety of business verticals with consumer and small business representing 57% of total deposits, commercial cash, treasury management and institutional representing 20%, commercial specialty representing 14%, Axos Fiduciary Services representing 5% and Axos Securities also representing 5%.
We closed the Jenius deposit acquisition in early May 2026, adding approximately $2.3 billion of deposit balances and over 56,000 consumer savings accounts. We have been successful in cross-selling checking accounts to Jenius customers so far, adding over 3,400 new Axos consumer checking accounts in the few months since we onboarded these Jenius customers to UDB.
Ending noninterest-bearing deposits increased by $439 million linked quarter and $788 million year-over-year to over $3.8 billion as of June 30, 2026. The linked quarter and year-over-year increase in noninterest-bearing deposits is a result of growth in Axos Clearing and Axos Advisory Services cash suite deposits, increased cross-sell from certain commercial lending businesses and growth in our small business deposits.
Client cash sorting deposits ended the quarter around $1.2 billion, up from $1.1 billion at March 31, 2026. In addition to our securities deposits on balance sheet, we had approximately $475 million of deposits off balance sheet at partner banks. We remain focused on adding noninterest-bearing deposits from small business, custody clearing, fiduciary services and commercial and treasury cash management verticals.
Our fund finance business had another strong quarter, contributing over $600 million of net new loan growth in the June quarter. We continue to identify opportunities to deepen our relationships with existing fund finance partners as well as add new fund relationships. Our diverse product and service offerings in commercial cash and treasury management have enabled us to capture low-cost deposits through the fund finance vertical. The growth in our vendor ecosystem continues to gain momentum.
The Verdant Equipment Finance and non-marine floor plan lending teams actively collaborate on a variety of retail and wholesale lending opportunities. Both teams are leveraging their expertise and relationships across their vendor and dealer networks to gain share of wallet and to provide a more seamless and differentiated set of lending solutions to our vendor partners. The floor plan lending business had its strongest quarter to date, growing outstanding loans by over $100 million in the 3 months ended June 30, 2026.
Demand in our commercial specialty real estate fund finance, real estate lender finance and asset-based lending businesses remained strong. Pipelines are up across several lending categories, making us confident that we will generate loan growth in the low to mid-teens on an annual basis this year.
The credit quality of our loan book remains strong, and our historical and current net charge-offs remain low. Net charge-offs were 25 basis points in the quarter ended June 30, 2026, compared to 31 basis points in the prior quarter. We charged off the remaining $10 million of our principal balance in the syndicated C&I cash loan that was put on nonaccrual over a year ago. Excluding the credit charge-off related to that loan, total net charge-offs were $5.9 million in the 3 months ended June 30, 2026, or 9 basis points of net annualized charge-offs to average loans.
Total nonperforming assets were $159 million at June 30, 2026, down approximately $23 million from $180 million at March 31, 2026. Nonperforming assets declined by approximately $21 million in C&I lending and held roughly flat across most other lending categories. Nonaccruals and classified assets remain low across the majority of our real estate backed and structured credits. Total nonperforming assets to total assets was 53 basis points, down 9 basis points from March 31, 2026, and down 18 basis points from June 30, 2025.
We remain well reserved for our low level of credit losses with our allowance for credit loss to nonaccrual loans equal to 221% at June 30, 2026. We had another quarter of double-digit year-over-year growth in noninterest income. Total noninterest income for the 3 months ended June 30, 2026, was $61.9 million, up 50% year-over-year. Banking and service fees in Q4 of 2026 were $36.8 million compared to $9.5 million in the year ago quarter. Verdant was the primary contributor to the year-over-year increase in banking and service fees.
Prepayment penalty fees were $4.2 million compared to $0.2 million in Q4 2025. In Axos Clearing, advisory and broker fees were up year-over-year due to higher asset and transaction-based income. Total assets under custody administration increased by $8.4 billion year-over-year to $47.8 billion. Net new assets were approximately $85 million in the quarter ended June 30, 2026, bringing the net new asset totaled to $2.2 billion for fiscal year 2026.
Cash sorting deposits on and off balance sheet increased by over $100 million linked quarter to $1.67 billion. Ending margin balances were up 36% from the prior fiscal year. Pretax income in fiscal 2026 was $15.4 million on a reported basis and $36.4 million, excluding the $21 million legal accrual in the 12 months ended June 30, 2026, versus $32 million in fiscal year 2025.
We continue to manage our noninterest expense while making investments across existing and new businesses as well as technology and other infrastructure to support future growth across our 3 business segments. Total noninterest expense for the 3 months ended June 30, 2026, were $205.9 million, representing an efficiency ratio of 54.2%. Excluding the $21 million legal accrual and depreciation and amortization expenses, noninterest expenses were $158.1 million, equating to an efficiency ratio of 41.6%, down by 283 basis points from 44.5% in Q4 2025.
We continue to evaluate and execute opportunistic and strategic mergers and acquisitions transactions. So far in calendar 2026, we've announced 3 separate deposit-related acquisitions, including Jenius Bank in February, Capital One in April and Arc Technologies in July. Jenius Bank closed in May, adding approximately $2.3 billion of online savings in over 56,000 accounts. We received regulatory approval for the Capital One IRA savings and CD acquisition in May and are actively working with Capital One on a conversion and a close date in calendar -- in Q3 2026.
We closed the Arc Technologies transaction a few weeks ago. Arc Technologies is a fintech that developed a cash management and debt marketplace technology for businesses. We believe Arc service offers a gap -- offering fills a gap for a segment of businesses previously underserved by Axos that value an AI-enabled digital treasury management solution and access to a wide range of potential lenders. Furthermore, we believe we can leverage the technology and third-party integrations and entitlements Arc has built as a foundation for other consumer and commercial banking services to accelerate our strategic road map.
We are adding a team of talented product, sales and software engineers who will help us accelerate these development efforts. The initial focus will be to integrate Arc into our banking platform to serve our tens of thousands of existing small business clients. We see tremendous opportunities to better serve our existing clients, cross-sell consumer clients with small businesses and accelerate growth in new business banking segments such as early-stage start-ups. By leveraging one set of technologies and entitlements across the full spectrum of the client's life cycles from start-up to a mature small business to a middle market company and beyond, we believe we'll be able to attract, retain and grow with our clients.
Our ability to generate above-industry returns and growth provide us with multiple opportunities to deploy excess capital. In the past 12 months, we funded over $3.5 billion of organic loan growth, added roughly $1.2 billion in leases and on-balance sheet securitizations from Verdant, closed the Jenius Bank and Arc Technologies acquisition and repurchased approximately $22 million of Axos common stock.
We remain highly profitable, generating a return on assets of 1.76% and a return on average common stockholders' equity of 16.32% in the 12 months ended June 30, 2026. Excluding the $21 million legal accrual, our return on assets and return on equity would have been 1.92% and 17.82% this quarter and 1.82% and 16.86% for the fiscal year. We continue to be nimble and opportunistic in deploying our excess capital where we see superior risk-adjusted returns.
Now I'll turn the call over to Derrick, who will provide additional details on our financial results.
Thanks, Doug. A quick reminder that in addition to our press release, an 8-K with supplemental schedules was filed with the SEC today and is available online through EDGAR or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filings for additional details.
Noninterest expenses were approximately $206 million for the 3 months ended June 30, 2026, up by $20 million from $186 million in the 3 months ended March 31, 2026. Salaries and benefit expenses were up $1.1 million linked quarter and professional service fees were down $1.5 million. FDIC and regulatory fees were also down $1.3 million quarter-over-quarter. Excluding the $21 million legal accrual, noninterest expenses in the 3 months ended June 30, 2026, were down by approximately $1 million linked quarter.
Across our noninterest expense categories, we continue to see some of the benefits from operational productivity initiatives, including the increased leverage of AI tools that we have implemented over the past 12 months. Looking ahead, as we integrate Arc Technologies, we expect our noninterest expense run rate to increase by approximately $1 million per month.
Turning to income taxes. Our income tax rate was 19.9% in the 3 months ended June 30, 2026, compared to 24.6% in the prior quarter. The primary reason for the sequential decline in our income tax rate was benefits from restricted stock unit vestings and a favorable change in state taxes and certain discrete items.
While we continue to explore tax credit opportunities that could provide future tax rate benefits, our expectation is to maintain an annual tax rate of approximately 26% to 27%, excluding such potential benefits. Provision for credit losses was $17.8 million in Q4 2026 compared to $41 million in Q3 2026. The primary driver for the quarter-over-quarter decrease in provision for credit losses was a less severe economic outlook and a minor shift of credit model scenario weightings towards baseline. We expect to maintain a loan loss reserve of approximately 1.3% to 1.4% of total loans and leases going forward.
I'll wrap up with our loan pipeline and growth outlook. Our loan pipeline is robust at approximately $2.4 billion as of June 30, 2026, consisting of $637 million of SFR jumbo mortgage, $50 million of gain on sale mortgage, $92 million of multifamily and small business commercial, $68 million of auto and consumer and $1.6 billion across the commercial business lines.
We expect broad-based growth across several lending businesses to drive low to mid-teen organic loan growth in the next year, excluding any potential acquisitions. We deployed some of the Jenius Bank deposits to reduce temporary increases in FHLB borrowings this past quarter and plan to use the remaining Jenius Bank deposits in combination with growth in our consumer and commercial banking deposits to fund our strong loan growth.
With that, I'll turn the call back over to Johnny.
Thanks, Derrick. Alicia, we're ready to take questions.
[Operator Instructions] Our first question comes from the line of David Chiaverini with Jefferies.
2. Question Answer
I wanted to start on the net interest margin. How should we think about the NIM outlook from here? And can you also touch upon your expectations on deposit costs going forward?
Yes. So we believe we'll have a fairly stable net interest margin outlook. And we also think that, that's going to be with fairly stable deposit costs. Now, we obviously have the acquisition from Capital One coming, and there are some deposits that will eventually flow over from Arc because those deposits are controlled by Arc, but are placed at other financial institutions. So we just -- I think the best forecast is relative stability there. And I think that's a reasonable outlook for that.
Got it. And are you observing any increase because you guys are one of the highest growth banks in my coverage, which is great to see. Are you seeing increased competitiveness on the deposit side as you go to market?
I don't know if I'd say increased competitiveness from recent periods. I do think that what you're seeing is that other banks are more willing to adopt a model where they, let's say, bring a companion high-cost savings account and a small business checking account together where that might not have been something you'd see a branch-based bank do, you might see some of them doing that now.
So I do think, obviously, that we've been able to raise the deposits we need to continue to grow our business, but we continue to be focused on it across a variety of different verticals that we continue to add and products we continue to develop. So I don't know if I'd say there's broad-based increase in competition. I just think we are seeing a few folks that it appears that they're having trouble raising deposits, and so they are being maybe a little more aggressive.
Our next question comes from the line of Kyle Peterson with Needham & Company.
I want to start off on loan growth. Great to see the outlook for another strong year. Just wanted to get a sense or any more color if you guys have it on kind of where you guys see the most opportunity or if there's any areas that are giving you maybe a sense of pause just if there's structural issues or competition or people getting too aggressive. So I guess like maybe areas on the asset side where you're more or less excited in the coming year would be helpful.
Yes, it's a good question. I think that given the diversity of our lending businesses, in any one quarter, just the timing of getting deals closed, the pipelines may move around a little bit. But I think we'll have relatively balanced growth across our C&I platform. And I feel like there's -- there may be -- maybe there's some pullback in private credit in certain areas, but I don't really think that's going to translate into a lot of new opportunity for us because I think those credits were sort of outside the box and they may have to adjust more. But that might be something that's a positive in certain cases because I do think that there is some pullback in private credit in certain areas.
We've seen a few deals in our lender finance book that people were threatening maybe to leave because they were going to get higher advance rates from a private credit shop, and then that didn't come to fruition. So there's a little bit there that I think in some cases, maybe private credit will be less likely to be able to take some of our assets because we have great originations. For us, it's always the prepay side that we really have to pay attention to.
So I think it's really pretty balanced growth. We -- I think the most credit-sensitive segment that we're in, which we have to be very thoughtful about is just the direct lending to sponsor-backed companies. And to the extent we've had any kind of losses at Axos, which have been relatively rare, it has been in syndicated loans to -- single asset syndicated loans to companies that go through some sort of issue that there's not diversity in a pool and that kind of thing or hard collateral like we have with most of our loans. So that might be an area. I think it is an area that you have to just be cautious about and think through, make sure the documents are in good shape with respect to LME transactions, things like that.
Great. That's super helpful. And then I wanted to switch over and maybe ask a higher-level question on Arc. It seems like a really interesting acquisition and a good fit. But I wanted to see if you could give us a little more color. I know you guys have said kind of immaterial to results, but just how it expands the product offering, monetization and whether that is helping with deposit growth and fee income, I guess like how do you see that playing out over the long term once it's integrated and onboarded onto the broader platform?
Yes. Kyle, I'm glad to get a chance to talk about that because I wanted to do that. So if you think about where we currently sit right now technologically, we've been opening thousands of small business accounts a month. But the reality of that small business platform is its capacity is limited. It sort of was derived from the consumer platform, and then we added the ability to have checks and debit cards and have essentially an account that is a small business account, but it has features that are similar to the consumer business.
On the other side, we have a very sophisticated treasury management platform with a service offering where folks go through an extensive onboarding process, entitlements process for all their employees, all these other kind of things, and you can do whatever you need to do there even if you're quite a large company. We bank some large companies as their primary bank, and they're able to do a lot. We benchmark ourselves not without any gap, but those gaps are relatively limited even with the larger money center banks.
But in that really squishy middle, there's a lot of small businesses that outgrow us, and they tell us when they leave. They say, look, we really like you guys, but I've got 3 employees now. I need each of them to have a debit card. I need some form of positive pay because I want to let those employees write checks, but I don't want those employees to have access to an unlimited amount of the account. I need incremental fraud protections, things like that. And that's where Arc comes in. I want an expense management platform, something like a ramp has or something like that.
So that's really where Arc comes in. Arc has essentially created a very sophisticated digital platform for start-up businesses and even businesses that are middle market that might have a very specific set of use cases that are maybe -- you might call them TM Lite. But frankly, Arc, it's even better than TM Lite. It's full TM. It doesn't -- it may not have certain features and functionality that our broadest platform has. So we believe that by taking our existing small business clients -- and I'm sorry, there seems to be some noise on here, I don't know. Taking some small business clients and bringing those clients on to Arc, we're going to be able to expand the offering to those clients because they often have other banks that they're using for their more sophisticated services and keep those clients longer.
Now Arc does have an existing client base of Y combinator companies that we're excited to serve, and we think we have other opportunities to serve those clients and grow with them through our technology business. But -- so that's one area. Arc also has been a leader in thinking through how the front-facing, consumer-facing or client-facing side of AI works. And we've done a lot on the AI front internally focused on improving internal operations and all those sorts of things. But we haven't yet had a product that we roll out to clients that will allow them to use artificial intelligence.
And Arc has really figured that out and has done it really well for small business clients. And they've done that through a set of very interesting integrations and then creation of specific agents that are very useful for a small business to run themselves. So that is a broader capability set that we believe we have to really start thinking about for our consumer, small business clients and even our larger commercial clients.
So -- and then the final element is that one of the things that's really helped us grow and scale without having to add a lot of costs on the consumer side is that we control the entire user experience. And that user experience control allows us to really analyze all kinds of inbound calls, allows us to just create workflows that automate certain processes and things. And it's allowed us to really, if we look at it, more than grow our deposit base more than 7x and barely add any new people to that consumer deposit operations process.
We don't have the ability to do that on the commercial side because right now, we don't own all that technology. So although we use great technology there, and it's working, we just switched to a new platform that was top upper right, Gartner Group and whatnot. It's all third party. And so here, this will gradually allow us to develop and utilize a lot of the services that we have in our consumer business. For example, we're rolling out crypto payments, right, in consumer. But that same set of rails may be useful for commercial clients, but Arc can just sort of incorporate that into their platform over time, utilizing all the services that Axos has.
So I think it's a really good fit. And we have so much traction on the small business side that it really is difficult to get that really digital TM style lite experience and get it at a reasonable cost in an automated way. So I think there's a lot here. We've got to get on it. And there are some fees that are generated from it. I think Derrick is being a CFO and sandbagging a little bit. But I think right now, they weren't profitable. So although they are generating fees. And when we move the deposits over, they'll be more benefit than there is cost, but that's going to take a little time because we actually have to integrate their platform into all our APIs. And so we just closed them a couple of weeks ago. We're working on the time frame for that, but we don't quite have it ironed out yet. They believe it's going to be relatively easy, but we want to just make sure that it is, in fact, as fast as the team thinks they can do it.
Our next question comes from the line of David Feaster with Raymond James.
Let's start on -- I mean, look, you guys have been extremely active, right? You got 3 deposit-focused deals in the past 6 months. How -- like how has the integration and conversion been of all these? I mean that's a lot at one time. And I guess, like how have you been able to maybe deploy AI to help you with the integration and conversion? And then what's your appetite for additional deals given all that you've already got going on?
Yes. Well, these deals -- well, there are deals different, but let's just talk about the Jenius and Cap One deals. We've done so many of these just straight raw, no asset deposit deals that the team really has a playbook down. So I have to say that I expected them to do well on Jenius side, but they just did fabulously. I mean, like the number of accounts that were lost, they actually were essentially de minimis. They were next to nothing. There was almost no client complaints. Most -- everybody pretty much stayed. We grew the deposit balances subsequent to that. We got great penetration on -- we had a checking account offer that we -- because Jenius didn't have that, that we had as a companion. So as clients first logged in, they could click a button and get a checking account. Many of them did do that, and we're still seeing traction there. So that was really smooth.
And then given that scalability that we had talked about previously through the platform, there really wasn't -- we were able to -- we did deploy some additional folks in our offshore locations and staff those up like we had done previously, but the calls quickly dissipated because the onboarding was smooth, and it really was very easy and almost kind of a nonevent, frankly. All with a lot of accounts, we're growing a lot every month anyway. So it wasn't -- it was obviously a little bit of a shock, but not much. I think similarly, Capital One should be similar because it's straightforward in the sense it's just a deposit-only acquisition.
And then obviously, we didn't get any people although we hired a few Jenius bank people who were floating around the market who wanted to come to us, and they are good folks, and we're happy to have them. But we didn't have any people come with that. Arc was different in the sense that it was a fintech that we hired teams. They have a unique capability, and that capability now has to be integrated into our UDB platform essentially.
And so there's a little trickiness associated with that because we were like this thing like we're putting in a slider, so you could be on your consumer and small business and you just pull it over like Uber Eats and Uber Ride and then you'd be able to have everything. And we've got to think about how all that works. And so there's some tech stuff. But the team is great. They're super entrepreneurial. And we just have so much stuff going on in the tech side that we need that we had a bunch of recs open for people that we were going to essentially hire who were like that. Like we needed somebody who was going to do consumer and client-facing AI work, and now we have somebody.
So that was really good. I think the tech there is going to put us ahead in our goal of building the platform and building up our small business platform. And then there is -- there are deposits that come with that, but they also did something where they took some of those excess deposits and pushed them into treasuries, and we're charging a fee. So we have to kind of work that. So there's a little bit of integration there. But I don't think it's not going to be overwhelming, particularly given all the tech stuff we have going on here.
So essentially, we believe we're still open for acquisition business. We did Verdant, of course, too, which was a little bit later, but that also has gone very well. So I think if you get the right fit with the teams, then it really works pretty well. So yes, so we're very open. We continue to look. And we think there's a lot of opportunity. We've done a lot of -- I think we -- I sort of feel like we're trying to -- we punch above our weight given our size with the diversity of what we do and the amount of time and effort we spend on building our own technology. And there's lots of banks that are bigger than ours that don't do that, but the technology is very scalable. So the ability to integrate like we did with Jenius and what we'll do with the Cap One side, really doesn't move the needle much on cost.
And I think we've seen that from a standpoint of just some of that noninterest expense being more flat. It's AI, but it's also just scalability across platforms because we have a certain number of platforms. We're spending money on them, and they can take a lot more volume through them without too much incremental cost. I don't know if that's what you're getting at, but there's any follow-up you want...
No, that's super helpful. And then just based on your prepared remarks, it sounds like Verdant and the Marine business really starting to hit stride, collaborating. I was hoping you could elaborate a bit on what you're seeing from those 2 lines and whether any of these new businesses can help with the expansion or cross-sell. Just based on your comments, it sounds like Arc might be an opportunity to help those business lines, but just kind of curious what you're seeing there.
Yes. That's -- yes, it's a very interesting question. Let's start with the lending side first. So the Verdant side, obviously, you're financing individual clients, businesses of vendors that come in and buy equipment. And so those tend to be smaller ticket, but they're very valuable for the vendor because obviously, if they can't sell their product, that's a problem to them. Verdant has a nice white label platform that allows the vendors to have their name on the paper and things like that, which is not completely unique, but if you do it well. And then also, there's a capital markets test that also allows us to sell paper to nonbank lenders. So that allows Verdant to have a higher approval rate, which is important, obviously, for vendors who are trying to sell to clients that are not going to be happy if they get turned down to be able to buy something.
So then conversely, we brought that floor plan team on. And the Verdant team because they have so many salespeople, I mean, they're the biggest sales force we have by far. They're out there talking to all these vendors who also need floor plan because they're going to sell their switches, but they also need floor plan them. So that is generating good results because there's a pipeline for the floor plan side driven by what Verdant does.
Now on the deposit side, we have seen some success there with just working with some of these vendors on their banking arrangements. Certainly, if you've got their floor plan, you're often getting their operating accounts. But I do think there is an opportunity there. We've put some metrics in the Verdant sales team's plans to cross-sell and that sort of thing. But it's much easier to sell the actual vendor themselves on banking if you're doing that floor plan than if -- than trying to actually say that you're going to cross-sell deposits to the end client who buys that equipment. Now that might be something we can do, but I think that's a little more pioneering. But if what happens is when that client logs in and they're logging in from a servicing perspective, which isn't the way it's happening now into, let's say, the Arc platform that is then providing them AI-oriented information and things like that, and they could just sort of click to open the deposit account with some special offer, I think I could eventually see that working.
Frankly, right now, Verdant stuff is serviced to a third party. So there's a lot of work that has to be done there. So that's not as a near term an opportunity as some of the other stuff we're doing. But I do see it as like you touch us, we can bring you into a platform and cross-sell you. I do think there's an opportunity there. But I think this historic platform integrated is special. I mean it does some really neat stuff, and they just didn't have the funding to be able to get it out to as many folks as we are going to be able to do.
That's helpful. And then you talked about most of the credit issues that you've had in the past have been really related to SNCs. Philosophically, I guess, how do you think about SNCs just given that experience? What's your appetite for those today? And is there a need for you to continue to do those? Or is there opportunity for you to maybe agent more of those deals just given a more active approach to managing the relationship and credit?
Yes, we're trying to do that. And we're definitely being more careful about the agents that we choose and looking for philosophical alignment, maybe looking for some more club deals. I think it's interesting because there's a -- I think broadly syndicated stuff, I think, definitely is becoming much and much less interesting. As you get smaller because we do have a syndication desk now, and we have folks that are willing to allow us to agent deals, but there is something around this question of if you get a company that's of a small enough size that you're holding the entire loan and it still is a -- whether it's sponsor-backed or family-owned or whatnot, and it's still a single enterprise that is subject to the faith of the economy and obsolescence of product and customer concentration and all the things that exist, it still might be a good loan, but it is a smaller company.
Whereas sometimes as you get to the club and you get to bigger, you have more resiliency because the company is bigger, but then you end up more under the control of agents or other types of wins that like sometimes the terms are a little bit looser or those bigger companies can throw their weight around a little bit more on the docks or something like that. So -- but yes, no, look, I think it's always an ongoing discussion, and we're not stopping that, but I think we're definitely looking at it and saying, okay, let's make sure that we're really thinking through which agents we want to work with.
Our next question comes from the line of Andrew Liesch with StoneX.
Just want to talk about the deposits that are going to come on from Capital One. I understand that the $2.3 billion from Jenius, you're going to -- you've already used some of that to pay down some of those borrowings. But you had this $3.2 billion coming on with Capital One. Is that all going to fund loan growth? I mean what's your initial thoughts on that? Do you hold that in cash for a little bit until the loan growth comes? How should we think about that new influx?
Right. Yes. I mean I think we're going to look and we're going to see -- I think in general, we'll probably look to -- look at any kind of higher cost, more sort of institutional style deposit relationships and see if we can scale those back without just on a volume basis, maybe not the relationship itself and then allow that to fill back in. So that will be one way to do that. But in general, I would say that, that is the right way to think about it that it will just fund loan growth and allow us to be maybe less aggressive than we would have to be in marketing expense or things like that.
We'll have to look. We kind of -- whether we can -- whether that impacts some of the pricing on some of the other portfolio. But yes, that's basically it. So it would be looking first at institutional type stuff that maybe we don't feel like there's a lot of cross-sell value or things like that. And then from there, it will end up on the balance sheet and to fund loan growth.
We should have at least a quarter overhang of that...
Yes, there'll be a [ hash ].
Normal run rate.
Right. Yes, there'll be overhang for a bit. And that will push down stated NIM, but I mean, obviously won't affect NII, but...
Our next question comes from the line of Kelly Motta with KBW.
I did want to touch on -- you had some really fabulous noninterest-bearing deposit growth this quarter. And I believe in your prepared remarks, you noted that you've been really successful at cross-selling noninterest-bearing accounts to the Jenius, the accounts you brought over from Jenius. Just wondering if you could provide any color or commentary around the drivers of noninterest-bearing growth and what you saw from that channel and your expectations for the continued cross-sell of that ahead?
Right, right. Yes. No, we did have some nice cross-sell on the Jenius deposits on checking. But even given the relatively high number of those, the balances are not so crazy that they move the needle like here. The clearing sweep was around $150 million of that. This direct C&I cross-sell for lending was another $100 million. What we're calling private banking, which is essentially something along some of those things is like another $100 million and then some of the specialty and fund banking was around another $120 million or something. So it was pretty broad-based, but I think it was great, and that was really good. But yes, the cross-sell strategy, I always wanted to work more and faster, but there's a really -- we had a really good quarter there with respect to that.
Got it. That's really helpful. And it seems like with your expectation for stable margin, understanding there's some components here with potential excess liquidity with the timing of things. But it seems like you're poised for another strong double-digit growth in operating revenues in the coming year. Just wondering how we should be thinking about -- I know you've given some commentary about operating leverage and potentially your ability to slow some marketing expenses and other things as you leverage what you've done. Any updated thoughts on that would be helpful.
Yes. We're -- I've given previously that cap that said we wouldn't increase the sum of personnel expenses plus professional services greater than our increase in our revenue, essentially our noninterest income and net interest income. I'm still holding to that, including what we're doing with Arc. But look, I think that -- I think we do see a lot of benefit from AI. We also have just changes that are happening in the company that are really, really positive like the speed at which you can build software also puts pressure on the product team. So we're adding some product people and things like that.
But I feel pretty good about where it is. I think on a conservative basis, saying that we'll have a flat to improving efficiency ratio, I think, is a fair way to say it. But yes, there's -- we kind of -- we did get rid of a lot of the dead weight in the company. There's not a lot of folks that are not performing right now. And so that we're probably at a low level of underperformers even relative to our historic. I think we have an historically low level, but I think we're at a really historically low level now. So that means that there may be a few adds here and there. But it's -- I don't think it's going to be anything -- obviously, Derrick guided on that side with Arc, but also a lot of those folks are folks that we are kind of going to go out and hire anyway.
So that may pull it a little bit forward over what it otherwise would have been. But I feel pretty good about controlling expenses. I mean there's some really big interesting things going on that really have just made a lot of what we're doing just so much more efficient. And so I feel pretty good about that. I know it's not a perfect answer, but I don't want to be overly optimistic, but I think, Derrick, do you have any color there?
Yes. Not a whole lot. The -- obviously, the jump up this past year was primarily due to Verdant. So we won't expect that sort of jump up in depreciation and amortization from those operating leases that it should be -- I think Greg's comment about flat to improving efficiency ratio from where we're at is accurate. And that's excluding the $21 million...
Right, right. Yes, right. Onetime stuff excluded, yes.
Got it. Last question for me, just because most have been asked and answered. Just quickly on the buyback. You were a bit active during the quarter when the stock was trading a bit lower. Fair to say, given your outlook for continued strong growth and potential M&A ahead that you're opportunistic. But may not be repurchasing up here? Or any kind of guidepost in terms of how you're thinking about it, whether it be the earn-back or capital would be helpful.
We're always very flexible with those things. And as the prospects of the company continue to improve, our willingness to buy back stock continues to increase. And so we always look at that as a balance. So I refuse to be pinned down on any such definitive statement as you may say. But when the whims of the market blow against us, it often is a good time for us to jump in there and grab a few shares.
Our last question comes from the line of Tim Coffey with Brean Capital.
How much of the buyback is remaining again? I missed that in your prepared remarks.
A little over $100 million, yes.
Okay. So my core question to kind of start with, is there a through rate between higher rates and lower prepayments as you look at your portfolio?
Yes. Candidly, not in the same way that you would think about in a lot of other banks, I think. And the reason why is we just have such low duration in what we're doing. So we just like on the single-family side, we have a bit of an overhang of lower rates. But frankly, since we had nothing over 5/1 ARMs, most of that stuff that's a little bit lower rate is adjusting. And then the multifamily side, we had shortened that up so much being worried about higher rates. We're super well positioned for that. That stuff is really kind of all -- I mean, almost all at market now. There might be a few $100 million, $500 million or something here or there. So I don't -- and then the rest of it is floating. So -- and it's floating off short indexes. So movements in the long rate kind of -- I think the biggest impact that they have there is they -- I mean, mortgage banking has been frankly...
The MSR portfolio.
The MSR, right. MSR, a little bit of mortgage banking demand, we have to deal with like they've -- even though the jumbo book has been flat, they had a really good origination quarter. I eventually think they're going to grow again. But part of what's happening is as all of those loans that are 4.5% and 5% roll off, people are leaving and because -- and then that has precipitated that not growing as much. Eventually, that will, I think, slow down. We'll be able to grow that a bit. But yes, no, I don't really see -- I understand where that dynamic would come in if we had a longer durated book.
And then on the leasing side, which you do end up with a certain duration on those leases, there is no prepay ability. So it's just you're paying or -- so it is what it is. You don't get to prepay. I mean unless you want to pay.
We love when they do because it reduced the yield.
You can pay everything if you want. But obviously, that's not that good for the client, so they really do it. But yes.
Okay. Well, not a high-quality problem when I pay you back. Looking at noninterest income, if you strip out mortgage banking, is it a reasonable expectation to think that number increases 2% a quarter or so?
Roughly speaking, yes, I think that's reasonable. We obviously had a high prepayment penalty fee income quarter. So that's a little bit abnormal. So if you normalize that and then jump off of that, I think that's reasonable on a quarterly basis.
There are no further questions at this time. I'll pass it back to management for any closing remarks.
Thank you, everybody. We'll talk to you next quarter.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Axos Financial, Inc. — Q3 2026 Earnings Call
1. Management Discussion
Greetings, and welcome to the Axos Bank Third Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions]. As a reminder, this conference is being recorded.
It is now my pleasure to introduce Johnny Lai, Senior Vice President, Corporate Development and Investor Relations. Thank you. You may begin.
Thank you, Diego. Good afternoon, everyone, and thank you for your interest in Axos. Joining us today for Axos Financial, Inc.'s Third Quarter 2026 Financial Results Conference Call are the company's President and Chief Executive Officer, Greg Garrabrants; and Executive Vice President and Chief Financial Officer, Derrick Walsh. Greg and Derrick will provide prepared remarks on the financial and operational results for the quarter ended March 31, 2026, then open up the call to a Q&A.
Before I begin, I'd like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties and that management may make additional forward-looking statements in response to your questions. Please refer to the safe harbor statement found in today's earnings press release and in our investor presentation for additional details. This call is being webcast, and there will be an audio replay available in the Investor Relations section of the company's website located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release.
Before handing over the call to Greg, I'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement and 10-Q for this call. All of these documents can be found on axosfinancial.com.
With that, I'd like to turn the call over to Greg.
Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the third quarter of fiscal 2026 ended March 31, 2026. I thank you for your interest in Axos Financial. We generated another quarter of double-digit year-over-year growth in net interest income, ending loan and deposit balances, earnings per share and book value.
We generated almost $700 million in net loan growth linked quarter, resulting in an 11.2% year-over-year increase in net interest income. Excluding the interest income impact of FDIC-purchased loans and 2 fewer days in the March 31, 2026 quarter compared to December 31, 2025 quarter, net interest income increased by $5.7 million on that linked quarter basis. We continue to generate high returns as evidenced by the over 16% return on average common equity and 1.8% return on assets in the 3 months ended March 31, 2026.
Other highlights in the quarter include: noninterest income was $86 million for the quarter ended March 31, 2026, up from $53 million in the prior quarter and $33.4 million in the corresponding quarter a year ago. Excluding the benefit of the $22 million legal settlement this quarter, noninterest income was up approximately $10 million linked quarter due to higher mortgage banking income, advisory fee and the addition of rental income from the commercial office building we purchased in January of 2026 that will be used as our future headquarters.
Net interest margin was 4.57% for the quarter ended March 31, 2026, compared to 4.94% in the prior quarter. Excluding the impact from the prepayments of FDIC-purchased loans and 2 fewer days in the quarter ended March 31, our net interest margin was down in line with last quarter's guidance of around 10 basis points. We continue to maintain a strong net interest margin with and without the benefit of the accretion from loans purchased from the FDIC, which has now dwindled to around 5 basis points of positive impact.
Noninterest expenses were up $1.4 million linked quarter to $186 million. We are seeing some of the benefits from our operational efficiency initiatives and artificial intelligence on our salaries and benefits, data processing and other G&A expenses. The pending completion of the Jenius Bank deposit acquisition also allowed us to moderate growth in advertising and promotional expenses in the March quarter.
Net income was approximately $124.7 million in the quarter ended March 31, up 18.5% from $105.2 million in the prior year's third quarter. Diluted EPS was $2.15 for the quarter ended March 31 compared to $1.81 in the third quarter of 2025, representing an 18.7% year-over-year increase. Total originations for investment, excluding single-family warehouse lending, were $5.1 billion for the 3 months ended March 31.
Loan growth was strong across a number of lending businesses, including capital calls, real estate lender finance and equipment finance. Jumbo single-family loan balances were up slightly, while single-family warehouse had a seasonal decline of approximately $123 million. Ending loan balances grew by approximately $800 million linked quarter, excluding single-family warehouse. Average loan yields from non-purchased loans for the 3 months ended March 31 were 7.23%, down from 7.63% in the prior quarter.
The sequential decline was driven primarily by the full impact from the 2 25 basis point rate cuts in the calendar Q4 2025. Average loan yields for purchased loans were 12.39% compared to 23.32% in the December 31 quarter. Purchased loan yields from the quarter ended December 31 benefited from one FDI-purchased (sic) [ FDIC-purchased ] loan paying approximately -- paying off and resulting in approximately $17 million of purchase discount accretion that was recognized in interest income. The FDIC-purchased loans continue to perform and all the loans in that portfolio remain current.
New loan interest rates for the March quarter were 6.9% in both the single-family and C&I portfolios, 6.7% in the multifamily portfolio and 7.8% in our auto portfolio. Ending deposit balances were $22.4 billion, up 11.2% year-over-year. Demand, money market and savings accounts represent 97% of total deposits at March 31, increased by 13% year-over-year. We have a diverse mix of funding across a variety of business verticals with consumer and small business representing 52% of total deposits, commercial cash, treasury management and institutional representing 22%, commercial specialty representing 14% Axos Fiduciary Services representing 5%, Axos Securities, 5% and distribution partners representing 1%.
Ending noninterest-bearing deposits were approximately $3.4 billion in the quarter ended March 31, an increase of $143 million from the $3.25 billion in the prior quarter. We deliberately reduced higher cost savings and time deposits and temporarily increased Federal Home Loan Bank advances in anticipation of the roughly $2.3 billion of Jenius Bank deposits coming in the June quarter. Client cash sorting deposits ended the quarter around $1.1 billion.
In addition to our Axos Securities deposits on our balance sheet, we had approximately $415 million of deposits off balance sheet at partner banks. We remain focused on adding noninterest-bearing deposits from small business, custody clearing, fiduciary services and commercial and cash and treasury management verticals.
Our consolidated net interest margin was 4.57% for the quarter ended March 31 compared to 4.94% in the quarter ended December 31. The early payoff of an FDIC purchase loan in that second quarter increased net interest margin by approximately 25 basis points. Excluding the early loan payoffs, the purchased loan yield was 14.2% in the quarter ended December 31 compared to 12.4% in the quarter ended March 31.
With the diminishing impact of the FDIC-purchased loans, we expect reported net interest margin to stay roughly flat on an organic basis, excluding the impact of the deposit purchase premium from the acquired deposits, which we estimate to be around 5 basis points. The diversity of our lending channels provide us with flexibility to maintain strong loan and deposit growth while maintaining our net interest margin. Verdant had another strong quarter, contributing approximately $200 million of new loans and operating leases in the March quarter.
We continue to identify opportunities to deepen our relationships with existing Verdant vendors and dealers as well as accelerate growth in a few existing verticals that were previously constrained by capital and size limitations when Verdant was under private ownership. The synergy between the Verdant and non-marine floor plan lending teams is starting to gain traction. We believe that our ability to provide a comprehensive retail and wholesale lending solution to top-tier original equipment manufacturers is a strategic advantage that we can leverage to win more deals.
Demand in our commercial specialty real estate, fund finance, real estate lender finance and asset-based lending programs remain strong. Pipelines in the jumbo single-family and multifamily areas are rebounding. We are making steady progress growing our loan pipelines in newer lending verticals such as floor plan and retail marine lending. Taking all these factors into consideration, we are confident that we will generate loan growth by the low -- in the low to mid-teens on an annual basis this year.
We had a strong increase in noninterest income as a result of several recurring and nonrecurring item. Mortgage banking income was $3.7 million in the quarter ended March 31, up $2.2 million year-over-year due to a favorable servicing rights fair value adjustment. Advisory fee income was $9.4 million, up $1.3 million year-over-year. Banking and service fees in the quarter included a $22 million onetime favorable legal settlement and the addition of rental income from commercial office properties we purchased in January.
Verdant contributed approximately $23.7 million in noninterest income in the March quarter compared to $18.9 million in the December quarter. The credit quality of our loan book remains strong and our historic and current charge-offs remain low. Net charge-offs were 31 basis points in the quarter ended March 31 compared to 9 basis points in the year ago quarter. We charged off $14 million of our principal balance in the C&I cash flow loan that was put on nonaccrual over a year ago when we allocated a specific loan loss reserve.
The remaining principal balance is approximately $17 million at March 31 on that loan, and we maintain a $10 million specific loan reserve on this balance. Excluding the charge-off related to that loan, total net charge-offs were $5.1 million in the 3 months ended March 31 or 8 basis points of annualized net charge-offs to average loans. Total nonperforming assets were $180.4 million at the end of the quarter, down approximately $5 million from $185 million at the March 31, 2025 quarter.
Nonperforming assets declined by approximately $27 million in the multifamily group and commercial mortgages down by $19 million. One syndicated C&I shared national credit became delinquent this quarter, accounting for a $33 million sequential increase in our nonperforming assets in the C&I loan area. We have taken over as agent in the syndicated loan and are actively working to resolve this nonperforming loan. Total nonperforming assets was 62 basis points at the March 31, 2026 time, down from 71 basis points at June 30, 2025. We remain well reserved for our low levels of credit losses with our allowance for credit losses to nonaccrual loans equal to 192.2% at March 31, 2026.
In Axos Clearing, advisory and broker-dealer fees were up sequentially due to higher asset and transaction-based income. Total assets under custody administration were flat at $44 billion. Net new asset growth of approximately $140 million were offset by a decline in the stock market in the first 3 months of 2026. Cash sorting deposit balances were roughly flat quarter-over-quarter despite significant market volatility. We continue to expand the scope and scale of artificial intelligence across the firm to a wide range of businesses and functional units.
Having established the governance framework and infrastructure to educate, train and deploy AI tools to all Axos team members, we are now focused on scaling the usage of artificial intelligence across more use cases. We have over 500 team members using Claude Enterprise to improve the speed, quality and productivity of various workflows. Since the beginning of calendar 2026, the number of technical users of artificial intelligence tools has increased by 37%, increasing artificial intelligence's share of committed code to 90%.
We are adding specialized agents to test, automate and QC various work products. We continue to evaluate M&A opportunities to augment growth from existing businesses and team lift-outs. The Verdant Equipment Leasing acquisition continues to perform well with good progress across a variety of strategic and operational initiatives. Loan growth remains healthy and profitability continues to improve.
We announced the acquisition of approximately $2.3 billion of online saving deposits from Jenius Bank in February of 2026. These deposits are a perfect fit for us, and we're excited to offer additional banking, lending and securities products to the roughly 60,000 individual Jenius Bank digital banking clients. We received regulatory approval last month and expect to complete the deposit conversion and client onboarding next month.
Last week, we announced a separate deposit acquisition of approximately $3.2 billion of IRA savings and CDs from Capital One. These are granular retirement savings accounts sourced through digital channels. We submitted our bank merger application for this transaction last week and are actively working with Capital One to determine the exact timing and mechanisms of a conversion and close in the second half of calendar 2026.
These 2 opportunistic acquisitions help us with incremental liquidity and funding for future organic and inorganic loan growth opportunities. Our disciplined growth and strong capital allows us to capitalize on organic and inorganic growth. The regulatory environment and dynamics within the banking and fintech landscape have created a wealth of M&A opportunities that we intend to fully review. We continue to invest capital in areas where we see the best risk-adjusted returns and in tools, people and processes that will help us scale.
Now I'll turn the call over to Derrick, who will have additional details on our financial results.
Thanks, Greg. A quick reminder that in addition to our press release, our 10-Q was filed with the SEC today and is available online through EDGAR or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filings for additional details.
Noninterest expenses were approximately $186 million for the 3 months ended March 31, 2026, up by $1.4 million from the $184.6 million in the 3 months ended December 31, 2025. Salaries and benefit expenses were down $0.6 million on a linked quarter basis and professional services fees were up $1.6 million. FDIC and regulatory fees increased $1.6 million quarter-over-quarter, driven primarily by the fiscal year-to-date loan and deposit growth.
Across our noninterest expense categories, we are seeing some of the benefits from operational productivity initiatives, including the increased leverage of our AI tools that we have implemented over the past 12 months. Our income tax rate was 24.6% in the 3 months ended March 31, 2026, compared to the 26.8% in the prior quarter. The primary reason for the sequential decline in our income tax rate was the benefit of RSU vestings and benefits derived from certain tax credits in the current quarter.
While we continue to explore tax credit opportunities that could provide future tax rate benefits, our expectation is to maintain an annual tax rate of approximately 26% to 27%, excluding these potential benefits. Provision for credit losses was $41 million in Q3 '26 compared to $25 million in Q2 '26. The primary driver of the quarter-over-quarter increase in the provision for credit losses was a specific reserve of approximately $20 million for C&I loan. We expect to maintain a loan loss reserve of approximately 1.3% to 1.4% of total loans and leases going forward.
I'll wrap up with our loan pipeline and growth outlook. Our loan pipeline is robust at approximately $2.6 billion as of April 24, 2026, consisting of $611 million of SFR jumbo mortgage, $82 million of gain on sale agency mortgage, $103 million of multifamily and small balance commercial, $83 million of auto and consumer loans and $1.7 billion across the commercial portfolio.
We expect broad-based growth across several lending businesses to drive low to mid-teens organic loan growth in the next year, excluding any potential acquisitions. We will deploy some of the Jenius Bank deposits to reduce the temporary increase in borrowings in the March quarter and plan to use the remaining Jenius Bank deposits in combination with growth in our consumer and commercial banking deposits to fund our strong loan growth.
With that, I'll turn the call back over to Johnny.
Thanks, Derrick. Diego, we're ready to take questions.
[Operator Instructions] Your first question comes from Kyle Peterson with Needham & Company.
2. Question Answer
I want to start off on some of the balance sheet moving pieces. I know there's decent amount of stuff going on with the FHLB stuff and Jenius coming on board. But I guess I noticed the securities balances also went up a decent amount this quarter. So I guess like how much of that is managing some of the liquidity before the Jenius deal closes? Or I guess, do you guys anticipate running at a bit higher securities book in the near term? I just want to think about how we should think about the mix over the next few quarters here.
Yes. The -- if you'll notice, cash went down as well. So we have internal policy minimums for the level of cash or liquid assets that we hold. And what we identified in the marketplace back in October, November was kind of a dislocation where if we bought some treasuries in 3-, 5-, 7-year tenures that -- and we're able to hedge them with a SOFR swap, we could actually generate 30 basis points improvement over holding that cash at the Fed Reserve, which is what we would be doing anyway as part of that liquidity requirement. So that was something. It was the widest that spread had gotten in -- other than on the liberation day.
And so there are -- that was a pretty rare dislocation in the marketplace. So we took that opportunity and acquired some of those treasuries. We still can actually flip them and borrow against them and we -- and they remain liquid since they're -- or remain rate beneficial from a standpoint since they're swapped. So that's why you see that increase in the securities portfolio and that decrease in the cash. So that was around $750 million that we moved into those securities.
Okay. That's helpful. I appreciate all the color there. And then maybe just a follow-up, particularly on capital call, it looks like it had a really nice quarter on the growth front there. So I guess I wanted to see if you guys could give any more color what is either on bigger draws with existing customers? Or how much are you adding new accounts and kind of teams adding the pipeline? Just want to think more about new accounts and clients versus bigger drawdowns and utilization and how sustainable this kind of growth can be at least in the near term?
Yes. Quite a few new clients. I wouldn't say there's any significantly greater drawdowns, although these -- they tend to take a few quarters, the lines we bring on tend to take a few quarters to reach their -- where they tend to be, but bringing on a lot of new clients mostly.
With respect to sustainability, I think that given the diversity of the loan book, it's often the case that different segments will outperform in any one quarter. So I don't expect the cap call side growth will be as big as it was in the next quarter, but I still think it will be pretty decent.
Your next question comes from Gary Tenner with D.A. Davidson.
Just wanted to ask on the credit front. Just looking at the allowance quarter-over-quarter and the increase there, was that pretty exclusively driven by the C&I nonaccrual add in the quarter? Or what other dynamics were at play in terms of the model on the allowance?
The C&I was the biggest aspect of it. There is maybe a little bit tied to obviously the broader economic events or the geopolitical events that obviously flow through the Moody's variables and into the quantitative model, but that C&I addition was the biggest piece of it.
Okay. I appreciate that. And then just in terms of that credit, in particular, could you provide any additional color on the type of credit and timing of resolution, et cetera?
Yes. It was a syndicated shared national credit. We were not bank syndicated credit. We were not the agent. It's -- a lot of times with these agents, I think they've made concessions early on that they probably should have been a little bit tougher on. We're now the agent, and we're working with the sponsor, and we'll see where it goes, but we felt it was obviously -- well, it's prudent to put it on nonaccrual and also to take a significant reserve against it. And I think over the next several quarters, we'll know exactly how that's going to turn out.
Okay. And just related to, Derrick, was there any material impact in terms of reversing interest on that in the quarter?
Not significant.
Your next question comes from David Chiaverini with Jefferies.
Brooks Dutton on for Dave this afternoon. Can you guys help us quantify the impact that temporary borrowings had on NIM this quarter and whether that pressure should reverse as these borrowings roll off given the pending Jenius acquisition?
Sure. So we -- it was maybe a basis point or 2, but for the most part, it was -- we swapped out or allowed a lot of our higher cost deposits to outflow and replace those with deposits. So it really wasn't anything too meaningful from an impact on NIM.
Yes. On the Jenius side, they've been -- that book has been -- they've priced it at a higher price to some extent that we've priced some of our deposits, but we're probably not going to adjust pricing immediately. So I think that although the Jenius acquisition is super helpful from a volume perspective, we don't really intend to try to optimize a few basis points here or there on NIM just to -- we feel pretty good about where NIM is being flattish going forward other than the -- that 5 bps of amortization of the premium.
And I think eventually, we'll kind of be able to normalize that. But I don't want to introduce all those clients to the bank with a rate cut. So we'll probably keep it there. But -- so that's kind of the dynamic.
Your next question comes from Kelly Motta with KBW.
Maybe it's really nice how these 2 deposit acquisitions help provide avenues to fuel what's been really outstanding growth on your part. I'm wondering with -- as we've seen with the -- the Jenius deposits, I apologize, allowing you to maybe be a little more aggressive with repricing your own deposits. I'm wondering how you're viewing the Capital One deposits, maybe average cost of those? And if similarly, that's going to help you further price down funding or it should be kind of a net add to deposits, just as we think through both the margin and overall size of the balance sheet?
Yes. No, those are great questions, Kelly. Thank you. I think that we're kind of looking at these as be as absolutely ensuring that we're able to have the funding for the level of loan growth that we're looking forward to having it. I think certainly, it does ensure that we don't have to price up deposits or to increase marketing budgets in order to fund ourselves, which I think is obviously very helpful. But I wouldn't really model in any significant sort of increase in NIM from our ability to say, well, now we're going to try to price down other deposits just based on having that excess.
I think we feel pretty good. I know I do, and I think Derrick does, too, feel pretty good about the fact that we've been able to manage this rate cycle really well and that we were able to have almost 100 or better than -- we had NIM expansion on the way up and essentially, for the most part, maintain our net interest margin on the way down. And so that is obviously assisted by this. And we probably would have had to increase marketing expense somewhat otherwise or be a little more aggressive on pricing. So I think it will help on balance, but I would -- I think that our guidance on NIM incorporates those acquisitions and how we're thinking about pricing with respect to them.
Got it. So as those come on, just as we kind of like think through the balance sheet then in order to fund your growth, could we see a build in liquidity just as you kind of have the dry powder to deploy? And just trying to properly handicap if there's a bigger balance sheet, but a little pressure from the liquidity build there.
Yes. I think we've strategically positioned the balance sheet for this quarter and this coming quarter's growth. I mean might there be a little overhang potentially for this fiscal Q4 with relation to the Jenius deposits. But I think that, generally speaking, I think we've lined ourselves up well there, not to have much that's worth kind of modeling out.
From the Capital One, it will somewhat depend on the timing of that and of course, on some of our own organic growth and opportunities there. But I would expect that there might be a little bit more of a balance sheet gross up in that kind of later portion of the calendar year 2026 that might roll over into early '27. But again, at that point, with the expectations being greater than $30 billion of assets, and it won't be anything that will be overly significant.
Got it. That's helpful. Maybe a last question for me is in regards to the Verdant acquisition. You've had some really nice boost in your fee income related to that. As you kind of think ahead, given your really strong pipelines across your businesses, how are you thinking through the operating leases versus on balance sheet? And fair to say some additional fee income growth from that? Or should we see more of that added to the loan portfolio here just as you think through your appetite for that?
Yes. It's kind of tough to tell. I think I referenced last quarter that the operating leases are about 1 of every 6 or 1/6 of all the originations roughly. And that could flux up or down depending on just opportunities and the nuances of the accounting around specific leases. So the -- obviously, the objective, both the management team from an incentive standpoint and our business operations back office support are incented to help support and grow that business.
And so I think the overall kind of -- it will be in line with our forecasted loan growth and is incorporated into that. So I guess, in summary, I can't give you a specific number or reference as to how that fee income will grow, but the -- it should generally grow. But I think I wouldn't, I guess, model it too significantly from that standpoint, given it's only 1/6 of the origination volume.
[Operator Instructions] Your next question comes from Liam Coohill with Raymond James.
Liam on for David. On your securities business, it sounds like client acquisition trends remain pretty positive despite the market volatility in the quarter. And we've talked about the opportunity to cross-sell potentially to Jenius customers, but do you maybe see similar opportunity with those Capital One clients? And could you maybe talk about some offerings that could be attractive to them?
Yes. I think over time, the Capital One clients, they were a little sensitive in some periods to certain kinds of cross-sell. They were not sensitive to securities cross-sell. I do think that there would be opportunities there on the Capital One clients with respect to some of those offerings just because these are retirement accounts. Right now, they're very limited in their product types that they have offered and we'll obviously offer them greater product types. We have no restrictions on our ability to cross-sell securities products to those clients. I think over time, as that develops, they can become more general banking clients as well. So I do think there's those opportunities.
That's helpful. And Kelly touched on the operating leases a minute ago, but I was also curious to hear about other core noninterest income trends. I mean, could you discuss where you're seeing success and maybe how you expect core fees to move going forward?
Sure. I think one of the other things that in there, and Greg referenced it in his quotes or in his prepared remarks was that there was roughly $4 million of rental income from our future headquarters as that building is larger than what we would plan to move in. So that there's a good amount of space there that is -- we -- when we acquired it, that is already leased out. So we have some rental income and then there's corresponding depreciation and other expense that was roughly $2 million to $3 million in the noninterest expense this quarter.
But on the staying on the fee income side, that's probably one of the other major items that impacted the fee income this quarter besides, obviously, the Verdant piece and -- the one-time legal settlement. So that's -- otherwise, the growth across that category was driven predominantly by the mortgage banking increase. So there was a positive movement on the valuation of the MSRs at the end of the quarter. And then some of the other fees, advisory, broker-dealer and some of the other just general banking service fees and other income all had more kind of step stone, more increases that weren't overly significant. But I would say, as we grow each of these businesses that we expect those fees to also increase.
Last one for me. Where do you think there is the most opportunity for M&A today? And where are you seeing valuations that are rational? Is that tending to be more lending teams or larger portfolios?
We're really looking at some of each. So if you looked at our portfolio, we've got team acquisitions. We've got fintechs that have some kind of element of their business model that they're really good at something, but they need components that we have. We have banks that we're talking with, large and small. So it's -- and there's always the specialty finance side, too, that we continue to look at. And there, it's teams and businesses.
So we're very disciplined. We talk to people for a long time. We don't rush into things. We make sure that it's going to fit and that we're able to digest it. But -- so it really -- I think there's a lot of idiosyncrasy and a lot of times, the individual circumstances with respect to people funding, just where different individuals and companies are in their life cycle help fuel different opportunities. And so we're always very active. We talk to a lot of people. We have conversations over long periods of time. We try to build relationships.
And then so sometimes it looks like an accident or something happens quickly, but it isn't really that. It's really a pretty deliberate strategy of staying with a lot of different opportunities over time and then building those relationships. And so then when they're ready to transact, we're there for them.
Your next question comes from Edward Hemmelgarn with Shaker Investments.
Could you walk me through the balance of loans throughout the quarter. I mean your -- if I'm looking at it correctly, your average balances barely grew from -- if at all, from the ending balance at December 31. Was there something else going on?
There were some early prepaid during the quarter. So that's what kind of counteracted some of the, obviously, ending quarter growth. So January, we were down at the end of that quarter from kind of the prior -- from the prior month of December. I think that had the biggest impact from that standpoint. On the -- we did grow on the average balance by $1.15 billion of loans. So I'm not sure if maybe there's something -- maybe you're looking at the assets.
The assets did stay relatively flat, and that was as we basically -- we've been sitting on some level of excess cash. And so we did reduce that excess cash. As touched on earlier, some of it went into those investment securities, but it still came down about $800 million on an average balance as we had some surplus in cash previously.
Yes. And we're converting Jenius this weekend. So that will -- then on Monday, those balances will be at the bank. But yes, no, I think you may be comparing like -- I don't know if you're comparing end of period to average, but...
We kind of just surprising because it's the first time I really noticed that there was this much of an adjustment within the quarter. I mean, generally, you have a -- unless something obviously is explaining your average balances grow similar to what the -- or in excess of what your ending balance were the prior quarter?
Yes. There was a couple -- there was a number of prepays, some of which we -- I don't think we were expecting. I think it was in January. But yes, I think average balance still grew, but that is important, right, because you only earn net interest income on what you're putting out. And if you're growing only at the end of the quarter, then that gets reflected next quarter, but not in the current quarter.
So yes, I agree. I think everybody should stop using the quarter end as a mechanism of governing the speed at which they get things done. I agree with you 100%. I'm going to convey that message to everyone in the organization immediately. It will be the first time they've heard it. So...
Your next question comes from Kelly Motta with KBW.
I just had a real quick one. Just wondering, given the really strong loan growth we're seeing, just wondering how the competition is faring and spreads are holding up. I understand there's quite a bit of difference between businesses, but just trying to get a sense of the direction of loan yields from here.
Yes. I feel that spreads are stable, I'd say, from where we are. I think that there was -- to the extent that there was compression, I feel like that I'd say that compression has stopped. I do think that in some instances, there has been -- some of the outflows in private credit and things like that have resulted in just a little bit of a different positive competitive dynamic, but it's not enough to say that you're taking back any of that compression that kind of happened over the prior year.
But I feel pretty good about where we are now in general. I think we've -- I don't predict that we're going to have further spread compression. There'll be a credit here and there that they're going to be bargaining and fighting about. But I think we've done a pretty good job and have a pretty good mix. And then I think also with respect to some of the like Verdant lending is a little bit higher spreads. I think we've got a pretty good mix that allows us to keep spreads where they are.
And there appears to be no additional questions at this time. So I'll hand the floor back to Johnny Lai for closing remarks.
Great. Thanks for everyone for joining us, and we'll talk to you next quarter.
This concludes today's call. All parties may disconnect. Have a good day.
Axos Financial, Inc. — Q3 2026 Earnings Call
Axos Financial, Inc. — Q2 2026 Earnings Call
1. Management Discussion
Greetings, and welcome to the Axos Financial Second Quarter 2026 Earnings Call Webcast. [Operator Instructions] As a reminder, this conference is is being recorded. It is now my pleasure to introduce your host, Johnny Lai, Senior Vice President, Corporate Development and Investor Relations. Thank you, Johnny. You may begin.
Thanks, Alicia. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial, Inc.'s Second Quarter 2026 Financial Results Conference Call are the company's President and Chief Executive Officer, Greg Garrabrants; and Executive Vice President and Chief Financial Officer, Derrick Walsh. Greg and Derrick will provide prepared remarks on the financial and operational results for the quarter ended December 31, 2025, then open up the call for Q&A.
Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties and that management may make additional forward-looking statements in response to your questions. Please refer to the safe harbor statement found in today's earnings press release and in our investor presentation for additional details.
The call is being webcast, and there will be an audio replay available in the Investor Relations section of the company's website located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release.
Before handing the call over to Greg, I'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement and 10-Q for this call. All of these documents can be found on axosfinancial.com.
With that, I'd like to turn the call over to Greg.
Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the quarter ended December 31, 2025. I thank you for your interest in Axos Financial.
We had an outstanding quarter across a variety of growth, credit and profitability metrics. We generated $1.6 billion of net loan growth linked quarter with broad-based growth across several asset-based lending areas, commercial specialty and equity finance verticals, a 19% basis point linked quarter increase in net interest margin, a linked quarter improvement in our nonperforming assets and net charge-off ratios and a 23.3% year-over-year increase in earnings per share. We continue to generate high returns as evidenced by the over 17% return on average common equity and the 1.8% return on assets in the 3 months ended December 31, 2025.
Other highlights in the quarter include: Net interest income was $331.6 million for the 3 months ended December 31, 2025, increasing by approximately $41 million linked quarter or 14%. Net interest income growth benefited from balanced growth across single-family mortgage warehouse, commercial specialty real estate, equipment finance and fund finance. We had one FDIC loan prepaid this quarter, resulting in approximately $17 million of interest income benefit. Excluding that benefit, net interest income was up $23 million or 8% from fiscal Q1 2026 to fiscal Q2 2026. Net interest margin was 4.94% for quarter ended December 31, 2025, up 19 basis points from 4.75% in the quarter ended September 30, 2025. Excluding the impact from the early payoff of an FDIC purchased loan and the impact from the Verdant balance sheet securitization, our net interest margin was 4.72%, roughly flat from the prior quarter. We continue to maintain our best-in-class net interest margin with or without the benefit of the accretion from loans purchased from the FDIC.
Noninterest income increased by approximately $21 million quarter-over-quarter due to higher banking service fees, broker-dealer fee income and prepayment penalty fees. This was the first quarter with noninterest income and noninterest expense contributions from Verdant. Noninterest income from Verdant was approximately $18.9 million in the quarter ended December 31, 2025. Total nonaccrual loans to total loans declined 13 basis points linked quarter, resulting in our nonaccrual loans to total loan ratio improving from 74 basis points as of September 30, 2025, to 61 basis points as of December 31, 2025.
Nonperforming assets declined in single-family mortgage, multifamily and commercial mortgage and stayed roughly flat in commercial real estate and C&I non-real estate lending categories. Net income was approximately $128.4 million in the quarter ended December 2025, up 22.6% from $104.7 million in the prior year second quarter. Diluted earnings per share was $2.22 for the quarter ended December 31, 2025, compared to $1.80 in the prior quarter, representing a 23.3% year-over-year increase.
Total originations for investments, excluding single-family warehouse lending, were $5.6 billion for the 3 months ended December 31, 2025, representing an increase of 35% linked quarter or nearly 140% annualized. Commercial real estate specialty lending, equipment leasing, asset-based lending and single-family warehouse had strong organic originations and net loan growth this quarter. Single-family mortgage ending balances were roughly flat, an improvement from net attrition we experienced over the past 3 years.
Average loan yields from nonpurchased loans for the 3 months ended December 31 were 7.63%, roughly flat from the prior 7.66% in the prior quarter. Average loan yields for purchased loans were 23.32%, which included the accretion of our purchase discount. Purchased loan yields for the quarter ended December 31 benefited from 1 FDIC loan prepayment, resulting in approximately $17.1 million of purchase discount accretion that we recognized in interest income. The FDIC purchased loans continue to perform and all loans in our portfolio remain current.
Ending deposit balances of $23.2 billion were up 44.3% linked quarter and up 16.5% year-over-year. Demand market -- money market and savings accounts representing 96% of total deposits as of December 31 increased by 17% year-over-year. We have a diverse mix of funding across a variety of business verticals with consumer and small business representing 52% of total deposits; commercial cash, treasury management and institutional representing 22%; commercial specialty representing 15%; Axos Fiduciary Services representing 5%; and Axos Securities, which is our custody and clearing, representing 5%.
Average noninterest-bearing deposits were approximately $3.5 billion in the quarter ended December 31 compared to $3 billion in the prior quarter. Client cash sorting deposits ended the quarter around $1.1 billion, up modestly from the September quarter.
In addition to our Axos Security deposits on our balance sheet, we had approximately $460 million of deposits off balance sheet at partner banks. We remain focused on adding noninterest-bearing deposits from our custody clearing, fiduciary services and commercial cash and treasury management verticals. Our consolidated net interest margin was 4.94% for the quarter ended December 31 compared to 4.75% in the quarter ended September 30. We closed the Verdant acquisition on September 30, adding approximately $430 million of loans and leases and approximately $780 million of on-balance sheet securitizations. While the leases are generally accretive to loan yields, the secured financing had a 3 basis point negative impact on our net interest margin in the quarter ended December 31.
One FDIC purchased loan paid off in the December quarter. The net impact from the early FDIC purchase loan payoff and the Verdant secured financing was a 22 basis point boost to this quarter's net interest margin. Given the payoffs and maturities in our FDIC purchased loans, we expect net interest margin accretion from the FDIC purchased loans to be 10 to 15 basis points going forward. The diversity of our lending channels provide us with the flexibility to maintain strong loan growth and credit performance while managing our best-in-class interest margin.
Verdant had a strong quarter as part of Axos, contributing approximately $130 million of net new loans and operating leases in the December quarter. We have already identified several opportunities to deepen our relationship with existing Verdant vendors and dealers as well as accelerate growth in a few existing verticals that were previously constrained by capital and size limitations when Verdant was under private ownership.
Demand in our commercial specialty real estate, fund finance and lender finance, real estate and non-real estate verticals remain strong. We are making steady progress growing our loan pipelines in newer lending verticals such as floor plan and middle market lending. Taking all these factors into consideration, we are confident that we will generate loan growth by low to mid-teens on an annual basis this year.
Given the robust loan growth in the December quarter, we entered January with approximately $800 million higher starting loan balances than the average balances from the prior quarter. We also expect to grow loans in the $600 million to $800 million range this quarter. This strong organic loan growth is allowing us to offset the lower level of accretion that we expect to receive going forward on the FDIC purchase loan portfolio. As a result of strong prepayments and scheduled maturities, the level of regular accretion we expect going forward per quarter on the Signature FDIC loan purchase is approximately $6.5 million. Excluding the onetime gain on the Signature prepayment in this quarter, we received approximately $9 million of Signature FDIC accretion in the December quarter, resulting in a forward-looking reduction of scheduled accretion of approximately $2.5 million. In essence, we have replaced a significant percentage of our Signature loan accretion income with stable core net interest income.
Additionally, the March quarter has 2 fewer days, resulting in approximately 2% net interest income reduction as compared with the 3 other quarters. Finally, we achieved around a 90% downward beta, managing the last 50 basis points of rate cut, resulting in a potential 5 to 6 basis point reduction in our Signature adjusted margin in the March quarter relative to the December quarter, although some of this reduction may be offset by nonrenewals of lower-margin loans and slightly higher average margin of new originations given the robustness of our loan demand.
We had a strong increase in noninterest income as a result of the acquisition of Verdant's operating leases. While we expect that the Verdant loan balance growth is going to be approximately $150 million per quarter, the percentages that are operating leases, which will generate incremental fee income rather than interest income, will fluctuate from quarter-to-quarter depending on the structure of the individual transactions.
The credit quality of our loan book continues to be strong, and our historical and current net charge-offs remain low. Total nonperforming assets improved by approximately $19 million linked quarter, representing 56 basis points of total assets compared to 64 basis points in the prior quarter ended September 30. Nonperforming assets declined by approximately $9.7 million in multifamily and commercial mortgages and by $11.9 million in single-family mortgage. Total nonaccruals in C&I lending were largely unchanged from the prior quarter. We do not anticipate a material loss from loans currently classified as nonperforming in our single-family, multifamily or commercial real estate loan portfolios. Net charge-offs to total assets were down 7 basis points linked quarter and 6 basis points year-over-year to 4 basis points for the 3 months ended December 31. We remain well reserved from our current loan levels for credit loss with our allowance for credit loss to nonaccrual loans equal to 215.8% at December 31.
Axos Securities, which includes our correspondent clearing and RIA custody business, had a good quarter. Total assets under custody administration increased by $43 billion at September 30 to $44.4 billion at December 31. Net new assets for our custody business were nearly $1 billion in the December quarter and $2 billion for the first 6 months of fiscal 2026. Strong organic asset growth and operational improvements contributed to operating income from the Securities segment, improving from $7.8 million in the second quarter to $9.7 million from $7.8 million in Q2 of 2025 to $9.7 million in Q2 of 2026.
We continue to expand the scope and scale of artificial intelligence across the firm to a wide range of businesses and functional units. We are well positioned to use artificial intelligence to increase operating leverage across the enterprise. We are deploying artificial intelligence throughout the software development life cycle. These AI-enabled tools allow us not only to review, document and update code at a faster pace with fewer resources, but they will also allow our team to take on more projects concurrently without the need to increase the pace of new hires or offshoring. Our commercial lending team has expanded the utilization of AI in various credit underwriting and portfolio management workflows, significantly improving the productivity of manual repetitive tasks. We are enhancing our ability to perform more robust compliance and risk monitoring at reduced costs.
We continue to evaluate M&A opportunities to augment growth from existing businesses and team lift-outs. We successfully completed the acquisition of Verdant Commercial Capital, a vendor-based equipment leasing company at the end of the September quarter. Verdant's focus on originating small and mid-ticket leases nationally in 6 specialty verticals is a great addition to our commercial lending franchise. Their strong risk-adjusted returns, history of low credit losses, tech-enabled service model and the entrepreneurial spirit of the team members are a great strategic fit for Axos. We are making good progress integrating the team, systems and processes. We also have spent time with the vertical and functional leaders to identify and prioritize strategic and operational initiatives that will help deepen our relationship with their clients and increase revenue growth and profitability.
Over the next 6 to 12 months, we will more systemically develop cross-sell opportunities for deposits and floor plan lending to a larger set of strategic dealers and OEMs. With a strong start and a solid pipeline, we expect Verdant to achieve EPS accretion at the mid- to high end of our initial projection of 2% to 3% accretion in fiscal 2026 and 5% to 6% accretion in fiscal 2027. I'm excited for the opportunities that we have to maintain our positive momentum in fiscal 2026 and beyond. Our strong and growing capital, diverse lending, deposit and fee income capabilities, operational and credit risk management culture positions us well to capitalize on organic and inorganic growth opportunities. As we make additional progress on various technology and process enhancement initiatives, I remain optimistic that we can deliver positive operating leverage while investing in businesses, systems and people.
Now I'll turn the call over to Derrick, who will provide additional details on our financial results.
Thanks, Greg. A quick reminder that in addition to our press release, our 10-Q was filed with the SEC today and is available online through EDGAR or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filings for additional details.
Noninterest expenses were approximately $184.6 million for the 3 months ended December 31, 2025, compared to $156.3 million in the 3 months ended September 30, 2025. Verdant added approximately $7.8 million in salaries and benefits expenses and $14.8 million in depreciation and amortization expenses. Separately, we had a $7 million increase in other general and administrative expenses related to an accrual for the core Clearing acquisition. Excluding the Verdant-related expenses and the onetime accrual, noninterest expenses were roughly flat quarter-over-quarter. We are committed to keeping our salaries and benefits and professional services expense growth at 30% of our revenue growth or lower on an annual basis.
As we mentioned last quarter, we acquired approximately $1 billion of loans and leases and $213 million of fixed asset operating leases in the Verdant acquisition, which closed on September 30, 2025. As of December 31, $702 million remain as on-balance sheet securitizations. In the quarter ended December 31, 2025, we recorded $24.3 million of interest income from loans and leases and $14.1 million of noninterest income from the operating leases.
Turning to the consolidated entity. Total noninterest income for the 3 months ended December 31, 2025, was $53.4 million, an increase of 65% from the $32.3 million in the prior quarter. Aside from the $18.9 million noninterest income from Verdant, we saw growth in both broker-dealer and advisory fee income compared to the linked quarter.
Provisions for credit losses were $25 million in the quarter ended December 31, 2025, compared to $17.3 million in Q1 of 2026. The primary driver of the quarter-over-quarter increase in provision for credit losses was robust loan growth across our commercial lending categories, which carry a higher provision for each dollar of net loans added compared to single-family and multifamily mortgages. We also added approximately $2.8 million to our provision for unfunded commitments related primarily to our commercial real estate specialty and C&I lending businesses during the quarter.
I'll wrap up with our loan pipeline growth outlook. Our loan pipeline remains healthy at approximately $2.2 billion as of January 23, 2026, consisting of $598 million of single-family residential jumbo mortgage, $75 million of single-family gain on sale mortgage, $200 million of multifamily and small balance commercial, $82 million of auto and consumer and $1.2 billion across commercial.
We expect the combination of strong originations from our commercial lending businesses, growing contributions from incubator businesses such as floor plan and middle market lending and slowing prepayments in our multifamily lending businesses and the incremental contributions from the Verdant Equipment Finance business to drive loan growth in the low to mid-teens year-over-year over the next year.
With that, I'll turn the call back over to Johnny.
Thanks. Alicia, we're ready to take questions.
[Operator Instructions] Our first question comes from the line of David Chiaverini with Jefferies.
2. Question Answer
So I wanted to start with the net interest margin outlook. I think I heard you right that the normalized level was 4.72% and that you expect a 6 basis point decline. So that would imply 4.66%. Just wanted to confirm that I heard that right was the first part. And then could you also talk about how much the average remaining life of the FDIC purchase loans?
Yes. So with respect to the first question on net interest margin, that's correct. I do think because we've had so much robust loan demand, as I said, that I've been able to kind of push up average spreads a little bit. But I think a good conservative approach would be to assume that you're going to have that 5 to 6 basis point decline in the adjusted margin just based on the robust growth we had. We did well on the deposit side, but we did, I think, pretty well on the down beta, but that's where that is. And then with respect to the Signature side, it's almost -- it's like 3 or 4 more years, right?
Correct, yes.
About 3 or 4 more years. So that's 6.5%. It's relatively steady, right? It's a little more -- it's because of just the way the accounting is. So obviously, we could have -- either theoretically, you could have a loss in the portfolio, which we haven't had yet, but you could or you could have a prepayment, which would then accelerate that and then we would describe what the otherwise then new level of accretion would be per quarter.
Great. And in terms of -- you alluded to potential team lift-outs. Can you talk about a pipeline there and what you're seeing?
Well, I think we've done a decent number of team lift-outs. And in a lot of cases, those teams are now adding people where they see opportunities on a more individual basis. So although we clearly -- we look for -- we look at acquisitions, we look at teams, I think we've really done a lot there in the last year, the floor plan team, the tech team, some other geographic teams. And so I think we're probably more likely now in the coming quarter to be a little more focused on developing -- or the coming quarters, a little more focused on developing those teams, adding where necessary. So we've kind of made those investments, and we want to see them kind of come to fruition and get a little more mature.
Great. And then last one for me is just on the portfolio acquisition front. Similar question. Is there much of a pipeline there? Or are you seeing many portfolios for sale?
On the loan side, we have such robust organic growth through our own channels and that we'll see small ones, but I don't really think that's going to be a massive part. I haven't really seen a lot of those. And when they are, they come up, they're sort of a bunch of low-rate multifamily loans where people are trying to pretend that they're not as marked as they should be or whatever. But there's always interesting deals. I mean we're across the spectrum going on, and we are always spending our time thinking about those and making sure we're in the deal flow.
Our next question comes from the line of Kyle Peterson with Needham & Company.
I wanted to start off on the growth outlook. Great to hear the commentary and good to see the balances and the pipelines both looking really good. But in terms of moving forward to kind of support that low to mid-teens outlook here, should we expect more of the same, some of the strength, whether it's CRE specialty, warehouse, leasing and some of these other things. Is it more of the same? Or are there other parts that you are thinking will become more attractive or you see additional opportunities in the next couple of quarters here?
Yes. I think that, obviously, CRESL was heavy growth this quarter. We don't expect that -- we expect it to be a little more balanced next quarter. Fund finance continues to do well. We expect non-real estate lender finance, maybe to have a little bit better quarter or floor plan will start to kick in. So yes, I think it's going to be pretty balanced. And I think Verdant is -- they're a bit of a seasonal business. They tend to have a bigger fourth quarter and first quarter is slower. It's just the way that leasing business is. But we still expect that they're going to be $150 million, $200 million of growth, including all their segments, at least that's what their current projection is. So I think it's going to be pretty balanced. I feel really good about the balance we have across the groups now.
Got it. That's really helpful. And then as a follow-up, I wanted to touch on fee income. I know there's some pieces moving around with Verdant. I think there's some seasonality from some paper statements and stuff. But I guess stripping out that seasonality from that, is this a good run rate moving forward for fee income with Verdant in the fold? Obviously, I know there can be some moving on rates, but in a more stable rate environment, would this quarter be a good jumping off point?
Yes. I think that's right, Kyle. I think the -- we did have the paper statement fee. That was about $1.5 million this past quarter. So impactful, but not overly impactful by any means. And -- but that's the burden income. We expect to be generally consistent through that noninterest income line item and maybe some small growth there as they grow originations. But it's only about 20% or even a little shy of that of their portfolio. So that come through in operating leases. And there's nuances to that with the accounting and as far as the classification as to what hits operating and what hits the net interest income line item. But I think this is a good jumping off point. Have a nice quarter, guys.
Thank you.
Our next question comes from the line of David Feaster with Raymond James.
Greg, I got a high-level one for you. I mean you guys have more going on than any other bank that I know. I mean you've got a ton of growth engines. You've got a lot of irons in the fire, if you will, that you're developing, businesses that you're incubating. Like from your standpoint, what are you most excited about today that you're working on that you think can be maybe most impactful to the business?
Yes, it's an interesting question. I mean I'll dodge it, then I'll answer it. I think one of the reasons that we have continued to do as well as we have for as long as we have is that we do have that balance. And so that balance allows us to have strong growth, but not actually have a rushed growth in anything. So if you really look at the underlying businesses, any one of those businesses isn't growing at a crazy speed usually, but the combination of all of those businesses together end up generating a reasonable level of growth. So in a lot of respects, a lot of the infrastructure that's necessary for those businesses to succeed and to grow and to get operating leverage really rely on a common data infrastructure, common sales force platform that allows us to track what's going on with our teams and all those kind of things. So there's a balance that's been created intentionally as a result of that diversity.
That being said, I think where I'm really excited is that I've always felt like we've had so many better ideas technologically than we were able to fund and that a lot of our fintech competitors because of the nature of how they were able to run money-losing operations for such long periods of time and were measured by clicks or eyeballs when we would be measured by, oh my gosh, $0.01 here and $0.01 there, right? And then now with what I'm seeing with the platforms, just with respect to AI and code development, I really do see a bending of that cost curve with respect to our ability to do a lot more development. So the ability to be able to rapidly respond to customer needs through really staying close to the customer from a platform perspective and then being able to react in more real time to those needs on those platforms, I think is going to be really impactful. And it's not -- it's -- I can feel and taste it in a way that I haven't been able to just based on what I see the speed of some of the things that we're able to do in the new AI software development life cycle.
So I think that's what will be the biggest change and the most exciting change because then you really can innovate in interesting and unique ways, and that's something that really a lot of that innovation has not been limited by our ideas, but it's more been limited by just kind of attempting to balance all the different cost structure factors with the other growth in the businesses.
Okay. That's helpful. I also want to touch on the expansion in CRESL this quarter. Obviously, growth was massive. You alluded to don't run rate this level of growth this next quarter. Can you just touch on what changed to drive that? Like was this just a lot of demand? Did payoffs and paydowns slow? Or did you move upstream a bit and have a few larger deals? I'm just kind of curious if you could talk about what drove the strength?
There was -- the paydown issue was significant. And what had really happened there is we're still -- if you think about these deals as 3-year kind of average lives, there was still -- we had just done some kind of pulling back in certain areas around that time. And so there was some gaps and you could see it and you could kind of predict the enhanced prepays, right? And so if you think about those COVID time frames, think about the length of the deals, there was just time frames where we were -- where we just weren't sure where things were going and we were more cautious, but then you just ended up having little prepay bulges throughout there. So that's one. And then sometimes it just happens. There were some deals that got pushed in different quarters and some went early and it ended up being larger than it was. I don't know, Derrick, if you have anything you want to mention.
No, I think, yes, the repayments -- the headwind that we had talked about for the last year slowing is basically the one word answer to payments.
Yes, yes.
Okay. That's great. And then, look, when you've got that kind of growth, I mean, funding it is not easy. And so your ability to fund loan growth has been really impressive. It looks like it was primarily within specialty deposits and commercial, where you were able to drive a lot of deposit growth. Could you touch on maybe like within those segments, where are you seeing the most opportunity and where you're having the most success driving that growth?
Sure. We did have a good deposit growth quarter, and we were a little sensitive about being maybe as aggressive with the rate reductions that we would normally drive because we've been driving not only to 100% beta, but to an actual neutral NII, and we were able to achieve that pretty much on every rate decline to date. And I think we did a pretty good job here on that side, too, but I did advise on that. I think that when we look forward, a 700, 800, even maybe a little bit more growth number, that number feels good for us from what the organic side looks like. And that probably comes 60-ish percent from consumer and then the rest of it from the commercial and security side with really balance across a lot of different areas. Everything from HOA and title and escrow and just regular operating deposits and all those things, they're all contributing, and those are continuing to allow us to grow.
So I mean, frankly, dealing with down rate environments, when you're doing as aggressive deposit repricing as we are with respect to prior neutralization of NII differences and then 100% plus betas that are associated with that, that does make growth a little harder. But I think having a little bit of stability there, even if it's for a few quarters, will be helpful. I don't think it's absolutely necessary. We could still handle rate declines, but that will be helpful. And obviously, loan growth this quarter was above what we expect to achieve. We've given numbers that it's going to be half that roughly or something around that. So that obviously is much more in line with what our organic capabilities are on the funding side.
Great quarter.
Thank you. Thanks. Thank you, David.
Our next question comes from the line of Gary Tenner with D.A. Davidson.
I just wanted to ask a follow-up on the impact on the fees and expenses. It sounds like the addition on the fee side, was there a greater percentage of their existing assets that were classified as operating leases than maybe expected that drove that larger fee component this quarter?
I don't think so. I think we had referenced -- we had the $200 million -- a little over $200 million that we classified as operating leases last quarter. I think the -- if reflecting back what we might have done was given a net kind of impact of the impact between the depreciation and the fee income and not the gross impact. And so I probably could have done a better job breaking that gross impact in those line items out for everyone. So that might -- I'm not sure if that's what you're referring to, Gary.
Yes. Yes, that might be it, Derrick. So then as we're -- I know you gave kind of the expectation that you're kind of looking to hold expense growth to about 30% of revenue growth. But as we're thinking about the interplay burn specifically between the fee and expense side, that pace of depreciation and amortization growth relative to the pace of fee growth, what would be -- is there a rule of thumb to be thinking about on how those move together?
Yes. And just to clarify that, the 30% refers to the salaries and related costs and professional services combined. So those 2 segments of the noninterest expenses. So that's where that doesn't incorporate the depreciation aspect. But the depreciation will be relatively consistent as we look forward here, maybe a small amount of growth just from new assets that are originated and that will align generally with increases as well on the fee income side. But that the run rate of that depreciation line item, this is kind of that new run rate for it.
Okay. Got it. And then just one other expense question, Derrick. You mentioned a $7 million increase to G&A. What was that related to? I missed the comment there.
That was related to the -- we have subordinated loans that we made a claim on back to the Clearing matter about 7 years ago. And our claim on that was denied. And so that's where the additional $7 million is our estimate of expense that we expect to incur as a relation to that.
And that's a onetime item that was related back to that issue we had all those years ago.
Okay. Great. I appreciate the color there. And then, Greg, just in terms of the Qualia partnership that you announced a short while ago, can you kind of characterize the opportunity that you see through that partnership?
Yes. I think it's significant. They've been a really great partner. We've been exploring just different ways to work together. They're a very innovative financial technology company. And so they obviously are a leader in the escrow space, which helps us. And they have a financial technology that's utilized by a significant part of the escrow industry. And so we have a couple of territories that are exclusive right now to that, and I'm not going to get too much into that. But I think it will be helpful on the deposit side, and that's an interesting specialty deposit vertical, and they're quite an innovative company, and we've got some ideas of stuff to do with them.
Our next question comes from the line of Kelly Motta with KBW.
Maybe circling back to the loan growth guidance. I appreciate that this is particularly strong and to not run rate this CRESL's strength. But with your low mid-teens guidance reiterated, I just wanted to clarify, is that -- I think that was supposed to be for the balance of the year ex Verdant off of this very high level of growth in your second quarter. Does your guidance imply a slowdown in the second half? It seems like pipelines are strong. So just trying to square that.
Yes. No, that's -- I understand where you're going with that. I mean I think we also said just trying to be a little more clarity. We think it's around [ 600 to 800 ] this quarter. Could it be a little higher? Yes, I think lower is unlikely, but that would be not a bad number range. And I don't really think we think that's going to change in the next quarter after that. But it's always hard to have visibility out that far. But I mean, I think we feel pretty good about that. And that does include Verdant, and it also includes me being able to be a little bit tougher on lower rate deals, which is a potential, but I think it's a difficult upside to quantify and maybe one that doesn't materialize with respect to margin.
So I wouldn't put it in the numbers, but it's potentially there. Because frankly, I mean, this is more about where we want to grow from a capital perspective, where we want to grow from a liquidity perspective. And so all that comes together. And I think that 800-ish kind of range, a little lower, a little more is around where we think we can be.
Got it. That's really helpful. It seems like Verdant has been a really nice home run with those folks producing really well. And you touched on some of the synergies you expect from there. I mean, would you expect their pace of growth to kind of continue at the strength that's been here? Just maybe talking a bit more about the flexibility of their balance sheet has enabled them to be more active or if there's kind of a pull-through of that pipeline?
Yes. Thank you, Kelly. Yes. Well, so I do believe that for some of their clients, really great clients they have, I mean, some big corporations and folks that have really great credit profiles, big municipalities, things like that, they were very limited with respect to their ability to serve those clients at the capacity that they have the capability of doing. And so we do add that.
It is a little bit of a cyclical business just from a standpoint of the fourth quarter tends to be a little heavier. And in general, I think that sentiment is right. The teams are getting along extremely well. They're a good cultural fit. I think they see the benefit of being here and integrating with the team, not only are they getting more tech support and help, but they were able to become immediately profitable based on the refinancing of of their subordinated debt and of their lines of credit, which were from JPMorgan and other big banks. So -- and to get deposit funding is obviously really helpful.
So yes, and then I think also -- I mean, frankly, I did not expect this. They've been enthusiastically selling deposits, and that's actually been working, which I'm kind of surprised by, which is cool. I thought that -- but I think they're not only going full bore first, but it helps to add it to the comp plan, I guess. And then, yes, then I think that, obviously, the floor plan business, they've introduced some floor plan transactions because I mean, they've got a lot of salespeople out there talking to a lot of dealers, and those dealers also have floor plan needs. So that's really beginning. We've got a couple of referrals there, but I do think that, that ability to think about that technologically over time can result in some interesting synergies because obviously, they're part of the same ecosystem on the supply chain side with what's being housed on a floor plan line is eventually sold to a client that could be financed through Verdant. So I think that's an interesting. Exactly how that works and how we bring that together, we're working through. But it is -- I think it's -- there are a couple of cool synergistic businesses there.
Thank you. There are no further questions at this time. I'd like to pass the call back over to management for any closing remarks.
Great. Thanks for everyone's interest, and we'll see you at the upcoming conferences. Take care.
Thanks, everybody.
Axos Financial, Inc. — Q2 2026 Earnings Call
Axos Financial, Inc. — Q1 2026 Earnings Call
1. Management Discussion
Greetings, and welcome to the Axos Financial, Inc. First Quarter 2026 Earnings Call and Webcast. [Operator Instructions] Please note, this conference is being recorded.
I will now turn the conference over to your host, Johnny Lai. Please go ahead.
Thanks, Carrie. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial, Inc.'s First Quarter 2026 Financial Results Conference Call are the company's President and Chief Executive Officer, Greg Garrabrants; and Executive Vice President and Chief Financial Officer, Derrick Walsh. Greg and Derrick will review and comment on the financial and operational results for the quarter ended September 30, 2025, and we will be available to answer questions after the prepared remarks.
Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties and that management may make additional forward-looking statements in response to your questions. Please refer to the safe harbor statement found in today's earnings press release and in our investor presentation for additional details. This call is being webcast, and there will be an audio replay available in the Investor Relations section of the company's website located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release.
Before handing the call over to Greg, I'd like to remind our listeners that in addition to the earnings press release, we also issued an earnings supplement and 10-Q for this call. All of the documents can be found on axosfinancial.com.
With that, I'd like to turn the call over to Greg.
Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the first quarter of fiscal 2026 ended September 30, 2025. I thank you for your interest in Axos Financial.
We had a strong start to our fiscal 2026, generating $1.6 billion of net loan growth linked quarter, including $1 billion of loans and leases and on-balance sheet securitizations acquired in the Verdant acquisition, which closed on September 30, 2025. A 5 basis point linked quarter reduction in net charge-offs and a 17% year-over-year increase in book value per share. We continue to generate high returns as evidenced by the nearly 16% return on average common equity and the 1.8% return on average assets in the 3 months ended September 30, 2025.
Other highlights in the quarter include net interest income was $291 million for the 3 months ended September 30, 2025, increasing by approximately $11 million linked quarter or 15.6% annualized. Net interest income growth benefited from balanced growth across single-family mortgage warehouse, commercial specialty real estate and auto lending. Net interest income in the prior year's comparable quarter ending September 30, 2024, included a benefit of approximately $17 million from the prepayment of 3 FDIC purchased loans. Excluding that onetime benefit, net interest income was up $16 million or 5.8% from fiscal Q1 of 2025 to fiscal Q1 of 2026.
Net interest margin was 4.75% for the quarter ended September 30, 2025, down 9 basis points from 4.84% in the quarter ended June 30, 2025. Excluding the impact from holding excess liquidity, our net interest margin was roughly flat quarter-over-quarter. Since the Verdant acquisition closed on 9/30/2025, the transaction did not have any impact on our net interest income or net interest margin in this quarter end. We continue to maintain a best-in-class net interest margin with or without the benefit of the accretion from purchased loans from the FDIC.
Noninterest income increased by approximately 13% year-over-year due to higher banking service fees, mortgage banking income and prepayment penalty fees. Total on-balance sheet deposits increased 6.9% year-over-year to $22.3 billion. Our diverse and granular deposit base across consumer and commercial banking and our securities businesses continues to support our growth and are expected to provide relatively lower cost of funding sources for the loans and leases acquired from Verdant relative to their prior capital structure.
Total nonaccrual loans to total loans declined 5 basis points linked quarter, resulting in our nonaccrual loans to total loans improving from 79 basis points as of June 30, 2025 to 74 basis points as of September 30, 2025. Net income was approximately $112.4 million in the quarter ended September 30, 2025, up from $110.7 million in the quarter ended June 30, 2025. Diluted EPS was $1.94 for the quarter ended September 30 compared to $1.92 in the June quarter. Excluding the onetime deal-related expenses and allowance for credit loss adjustment for the Verdant acquisition, adjusted net income and adjusted EPS were $119 million and a $2.06 per share, respectively, for the quarter ended September 30, a 7.3% increase from the linked quarter and almost 30% annually.
Total originations for investment, excluding single-family warehouse lending, were over $4.2 billion for the 3 months ended September 30, representing an increase of 11% linked quarter or 44% annualized. Commercial real estate specialty lending, auto lending and single-family warehouse had strong originations and net loan growth this quarter. Average loan yields for the 3 months ended September 30 were 7.99%, in line with the prior quarter. Average loan yields for non-purchased loans were 7.66%, and average yields for purchased loans were 15.81%, which includes the accretion of our purchase price discount. The FDIC purchased loans continue to perform and all loans in that portfolio remain current.
New loan interest rates for the September quarter were 7.2% in both the multifamily and C&I portfolios, and 7.3% in single-family, and 8.25% in our auto portfolio. Ending deposit balances of $22.3 billion were up 6.9% linked quarter and up 11.5% year-over-year. Demand money market and savings accounts representing 94% of total deposits at September 30 increased by 9% year-over-year. We have a diverse mix of funding across a variety of business verticals with consumer and small business representing 57% of total deposits, commercial cash, treasury management and institutional representing 22%, commercial specialty representing 11%, Axos Fiduciary Services representing 5% and Axos Securities, which is our custody and clearing business representing 5%.
Ending noninterest-bearing deposits were approximately $3.4 billion at the September end -- quarter end, up by approximately $350 million from the prior quarter. Noninterest-bearing deposit balances benefited from continued growth of our treasury management business and from a large increase in cash sorting deposits that came in toward the end of the quarter. Client cash sorting deposits ended the quarter at around $1.1 billion, up by $95 million from the June quarter.
In addition to our Axos Securities deposits on our balance sheet, we had approximately $460 million of deposits off balance sheet at partner banks. We remain focused on adding noninterest-bearing deposits from our custody, clearing, fiduciary services and commercial cash and treasury management verticals.
Our consolidated net interest margin was 4.75% for the quarter ended September 30 compared to 4.84% in the quarter ended June 30. We had more excess liquidity in the quarter ended September 30 with average cash balances of approximately $2.5 billion compared to $2.15 billion of average cash balances in the prior quarter. This excess liquidity was a 7 basis point drag on our net interest margin. Additionally, we issued approximately $200 million of subordinated debt in September of 2025, which has a fixed annual interest rate of 7% for the first 5 years. We used part of the proceeds from the $200 million subordinated debt offering to pay off approximately $160 million of existing subordinated debt that was scheduled to move from a fixed annual interest rate of 4.875% to approximately 9% in October. The new subordinated debt issuance reduced our net interest margin by 1 basis point in the quarter ended September 30, 2025. We expect our consolidated net interest margin ex FDIC loan purchase accretion to stay at the high end of the 4.25% to 4.35% range we have targeted over the past year.
While new loan yields are coming in slightly lower in certain lending categories due to recent Fed actions, our goal is to offset lower loan yields with reduced cost of funds. Our loan pipelines have improved over the past few quarters as a result of successfully expanding our distribution channels across commercial lending categories and increased contributions from teams we onboarded over the past few quarters. The floor plan lending team has a nice pipeline. We also believe we've moved past peak levels of prepayment in our multifamily loan portfolio, which have been a significant headwind to net loan growth over the past several quarters. We expect the Verdant acquisition to add an incremental $150 million to $200 million of net new loans and operating leases per quarter at attractive spreads starting in the second quarter of this fiscal year ending December 31. Taking all these factors into consideration, we expect loan growth to come in at the low to mid-teens range on an annual basis in the remaining 9 months of our fiscal year 2026.
The credit quality of our loan book continues to be solid and our historical and current net charge-offs remain low. Total nonperforming assets remained flat linked quarter, representing 64 basis points of total assets compared to 71 basis points in the quarter ended June 30, 2025. Nonperforming assets declined by approximately $17 million in multifamily and commercial mortgages and by $7.4 million in commercial real estate, partially offset by increases in nonperforming assets in single-family mortgages due to a handful of loans with a weighted average loan-to-value of 57%.
No new C&I loans were placed on nonaccrual this quarter and a few larger C&I loans currently on nonaccrual are still paying as agreed. We do not anticipate a material loss from loans currently classified as nonperforming in our single-family, multifamily or commercial real estate loan portfolios. Net charge-offs to total assets were down 5 basis points linked quarter and 6 basis points year-over-year to 11 basis points for the 3 months ended September 30.
Axos Clearing, which includes our corresponding clearing and RIA custody business had a good quarter. Total assets under custody or administration increased from $39.4 billion at June 30 to $43 billion at September 30. Net new assets for our custody business were $1.1 billion in the September quarter, an acceleration in the net new asset momentum we have experienced over the past several quarters. This marks the first time that assets in Axos Clearing's custody and clearing business have exceeded $40 billion. The pipeline for new custody clients remains healthy.
We continue to evaluate M&A opportunities to augment growth from existing businesses and team lift-outs. We successfully completed the acquisition of Verdant Commercial Capital, a vendor-based equipment leasing company at the end of September. Verdant's focus on originating small and mid-ticket leases nationally in 6 specialty verticals is a great enhancement to our commercial lending franchise. Their risk-adjusted returns, history of low credit losses, tech-enabled service model and the entrepreneurial spirit of the team members are a great strategic fit for Axos.
Additionally, these long-duration fixed rate loans and leases complement our existing floating and hybrid loans in our single-family mortgage and commercial specialty lending businesses. In addition to having access to lower cost of capital and funding, we believe the Verdant team will benefit from our operations and tech support. After meeting with the management sales, operations and credit team post close, we are confident that we'll be able to generate meaningful growth from existing and new vendors and dealers in our 6 existing verticals. Over the medium to long term, we see additional opportunities to generate incremental growth from entering new verticals as well as cross-selling deposits and floor plan lending to larger strategic dealers and original equipment manufacturers.
From a deal perspective, we paid a modest 10% premium on the roughly $40 million of book value of Verdant at September 30. The seller will also have an opportunity to earn up to $50 million over the next 4 years if the business generates a greater than 15% return on equity on an annual and cumulative basis. The transaction added approximately $1.2 billion in loan, leases and equipment operating leases, which include $1 billion of loans and leases and $213 million of equipment operating leases, which are recorded in other assets. We paid off $87 million of subordinated debt and $242 million of warehouse borrowings at closing and assumed $754 million of long-term securitization financing.
From an income perspective, we recorded approximately $1.3 million in deal-related expenses in this quarter and added $7.8 million to allowances for loan loss, including the roughly $7.8 million additional CECL reserves that we realized at closing, the total allowance for credit losses for the acquired loans and leases was approximately $15.6 million or roughly 1.5% of the total outstanding loan and lease balances at September 30, which we added despite a loss history for Verdant well below 50 basis points annually.
Our expectation is this acquisition will be accretive to our earnings per share by 2% to 3% in the fiscal year 2026 and by 5% to 6% in fiscal 2027. The current regulatory environment provides a favorable backdrop for additional accretive and strategic M&A transactions. Our strong capital, liquidity and profitability allow us to be disciplined and opportunistic in where we deploy excess capital. We remain hyper-focused on increasing productivity and implementing additional operational improvements to help us become more profitable and scalable. We have rapidly expanded the scope of workflows and use cases for artificial intelligence across the enterprise, including risk and compliance, credit, operations, technology, legal, marketing, finance and accounting and believe that further AI implementations will enable us to create greater operating leverage and improve the speed, quality and cost of software development projects and accelerate new product development.
AI is having an impact on our efficiency and software development. We are in development on exciting products and technologies across our consumer, commercial and securities businesses. We are continually enhancing our all-in-one consumer and small business experience with an aggressive and exciting road map. This consumer platform is utilized by retail and end clients in our institutional custody and clearing business. We have begun the rollout of our recently developed Axos Professional Workstation to selected broker-dealer clients. This Professional Workstation is a centerpiece of a technological modernization strategy in our securities business that will allow us to integrate banking products in a seamless way for RIAs and brokers to more holistically serve their clients and provide a much more flexible and modern system than many of our large competitors' legacy systems.
In closing, I'm excited about the opportunities we have to maintain our positive momentum in fiscal 2026 and beyond. With the Verdant team and other team hires we have made this last year, producing both loans and deposits, we feel more certain in our ability to grow loans in the low to mid-teen range annually, maintain margin in our forecasted range and other than the costs we added through the acquisition, accomplish our objective to gain operating leverage.
Now I'll turn the call over to Derrick, who will provide additional details on our financial results.
Thanks, Greg. A quick reminder that in addition to our press release, our 10-Q was filed with the SEC today and is available online through EDGAR or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filings for additional details.
Noninterest expenses were approximately $156 million for the 3 months ended September 30, 2025, up by $5.6 million from the 3 months ended June 30, 2025. Excluding approximately $1.3 million of deal-related expenses from the Verdant acquisition in September, total noninterest expenses were up by approximately $4.3 million on the linked quarter. Salaries and benefit expenses were $76.6 million, up by $1.6 million from the prior quarter ended June 30, 2025. The primary drivers of the quarter-over-quarter increase in salaries and benefits expenses were the addition of the floor plan lending team and a partial quarter of our annual merit compensation increase.
Data and operating processing expenses were $22.1 million compared to $20.4 million in fiscal Q4 2025. The sequential increase in data processing expense was attributed to a handful of projects across different business units. Since we closed the Verdant acquisition on September 30, 2025, it did not have any impact on our operating noninterest expenses. Going forward, we expect the Verdant acquisition to add approximately $8.5 million per quarter in noninterest expenses. We remain focused on optimizing our operating expenses with a specific focus on AI implementation while making prudent investments to deliver positive operating leverage.
As Greg mentioned earlier, we acquired approximately $1 billion of loans and leases and $213 million of fixed asset operating leases in the Verdant acquisition. Of the $1.2 billion of total Verdant loan and leases, approximately $762 million are on-balance sheet securitizations with a weighted average remaining life of 3.7 years. The net loan yield on these assets is between 3.75% to 4.5% above the 90-day SOFR rate. And the net spread of the on-balance sheet securitizations is between 2.57% and 3.07%. The interest income from the $1 billion of loans and leases will be recorded in interest income and the income from the operating leases will be recorded in noninterest income.
For all new loans and leases, we expect to record an allowance for loan loss of approximately 1.5%.
Next, our income tax rate was 25% for the 3 months ended June 30, 2025, compared to 29.4% in the corresponding year ago period. The quarter ended September 30 was the first quarter that benefited from the impact of the new California budget, which included a change in our tax calculation methodology. Additionally, we had approximately a 1.9% benefit in our tax rate from RSU vesting in the September period. Going forward, we still expect our corporate tax rate to be approximately 26% to 27%, consistent with what we have guided previously.
I'll wrap up with our loan pipeline and growth outlook. Our pipeline remains healthy at approximately $2.2 billion worth of loans as of October 24, 2025, consisting of $605 million of single-family residential jumbo mortgage, $78 million of gain on sale mortgage, $352 million of multifamily and small balance commercial loans, $76 million of auto and consumer, and $1.1 billion across our commercial verticals. We expect the combination of strong originations from our commercial lending businesses, growing contributions from incubator businesses such as floor plan lending, slowing prepayments in our multifamily lending business and incremental contributions from the Verdant equipment finance business to drive loan growth in the low to mid-teens year-over-year growth over the next 12 months, excluding the impact of the loan portfolio purchased from the FDIC or any other potential loan or asset acquisitions.
With that, I'll turn the call back over to Johnny.
Thanks, Derrick. We are ready to take questions.
[Operator Instructions] And our first question will come from Kyle Peterson with Needham & Company.
2. Question Answer
I wanted to start off on credit. Obviously, there's been some fairly high-profile headlines of late. Everything in your book looks pretty good. But I guess maybe any context of what you guys are seeing, particularly like in any -- whether it's pipeline deals or anything that is looks a little like spookier or unattractive to you guys? Or I guess, kind of how are you guys thinking about new deals and structure and competition in your approach to credit right now?
Sure. Thanks for the question, Kyle. Good to talk to you. Yes, the -- so just in speaking about the 3 deals that got a lot of press, we had seen those deals and turn those down for a variety of different reasons. We think there was some decent indicators there just based on structure that were problematic. I think that in late stages of credit cycles, people sometimes get pretty sloppy on structure. And frankly, you see that in some of the syndicated deals where the sort of lender-on-lender violence language wasn't as strong as it should have been in certain cases. We're very careful and watchful of that because we believe that, that can be a problem on syndicated deals. We turned down deals for that. We pushed back. That's an area that is less recognized, but a problem.
You don't need -- I personally view it as almost a form of fraud, but you have to just be very thoughtful about that because guys are reading things into this. And it's -- at a minimum, it's extraordinarily aggressive. The other types of more blatant fraud that went on there, like with respect to 1 of the 3 deals was that people are actually forging documents and title insurance and telling banks that they have first liens on assets when they don't. There's always ways of going about trying to stop fraud. And those -- there were ways in what we do that would not have allowed that to happen because we get certain documents directly from title insurers and things that would stop that from happening.
But yes, I mean, look, I think that it's always something that you have to look out for. I've always said I think fraud is one of the most dangerous potential issues that any lender has, particularly when they're secured in the manner that we are. And so in each and every segment, there are different types of risks and opportunities to mitigate those risks. And I think we do a good job with it, but we're continually on guard because people come up with new and interesting ways of doing bad things.
Okay. I appreciate the detailed color there. And then I guess just a follow-up on fee income came in pretty strong this quarter, at least what we had modeled. Just wanted to see, were there any one-timers or like whether it was like a loan sales or anything like I know you guys said last quarter. But I guess anything onetime? And then I guess, just a refresher on any of the fee income potential contributions from Verdant, like if there's any operating leases or anything and how we should be mindful of like the run rate on that from here on out would be great.
Yes, nothing from the fee income that was a one-timer in this past quarter from the Verdant profile. The expectation is a few million dollars will come through in that noninterest income line item as we look forward.
Yes. I think the one thing...
Do you mean per quarter or...
Correct. Yes, per quarter.
Per quarter.
And one thing you do have to just be thoughtful about is I think the team has done a good job on the securities side of growing out of the negative impact that hits their P&L when they -- when rates go down. So that -- there's only some of that's off balance sheet like $500 million or whatever, but that's still out there. It's not massive, but you just should think about it. I mean I think they're going to be able to grow out of it. They did grow out of it. But that's out there. So that's one element that you -- and then obviously, mortgage banking picks up, but there's probably a dead zone in there where somewhere mortgage bank has not picked up, but you end up with lower benefit from the 0 cost deposits through the sweeps.
And moving next to Gary Tenner with D.A. Davidson.
I had a follow-up on VCC. It was my assumption at least that the funding for the loans put on -- or the assets put on balance sheet wasn't to come from your excess cash, but you flagged the secured financing at quarter end. Is there a period of time that you have to keep that? Is it attractive price for you? Can you kind of walk us through that?
Yes. So we would love to take all that out and utilize the excess cash, and it would be a very wonderful day for us and our shareholders. But these are term securitizations. They were done to match fund particular leases. There is -- there are cleanup calls that I think are all at 10%, right Derrick? Yes, they're all at 10%. So they -- as soon as we can clean these up, we will because it would be cheaper to use our own deposits. But yes, they're on balance sheet, they're term financing. We can't do anything with them. I mean, obviously...
We'll monitor them and see if any pricing comes in kind of through Bloomberg and through the markets in the same way that we picked up some of our sub debt at a cheaper rate. We'll do the same thing with the secured financings. If they're trading out there at a discount, we'll be jumping on that.
I don't think that's going to happen. Just frankly, look, it's possible that the performance of the leases have been very, very strong. So there's no credit component to kind of get anyone excited about that. But you never know. I mean maybe somebody owns a small piece and they want to get rid of it or something like that. So we can always look at that. But unfortunately, but they're going to be out.
But I do think that Verdant has a nice pipeline. They're going to be growing. We put that $150 million to $200 million growth target out there. I think they can exceed that and I think they might this quarter. So that also means that there'll be the opportunity to fund those loans with our deposits. And we kind of -- deposits just ended up overshooting this quarter, not only from operational activity, but we were -- we obviously had a big quarter of growth coming. And there was another component is that the timing of the acquisition sort of got delayed, and so they did another securitization. It was a pretty nice and tight spreads. So we talked about it and I said, well, I don't really have an objection to it because there was a bunch of moving pieces to get the deal done.
But so yes, but the good news is we're well set up for strong loan growth. And I think with this deal and everything else we've done, we raised our guidance on loan growth because we had that. Even though we are certainly not hoping to be there that high single digits to low teens, and now we have low teens to mid-single digits or something, but it's mid-teens, right? But in any event, it's better.
Got it. And just to go back to the secured financing, what's the -- just for modeling purposes, kind of what's the carrying cost of this?
Do you have that?
It's a little north or about 5.5%, and they have a 3.7% weighted average in years.
Okay. Great. And then I just did have a follow-up in terms of the purchase loans. It looks like a pretty steep drop in the balance of average purchase loans in the quarter, but it didn't look like any kind of real outsized interest income or accretion benefit. So could you just comment on that? And then if you have it available, what the period end FDIC purchase loans are?
Yes. The -- it was really from the prior quarter. So if you recall, we had a big bump of $12 million in the gain on sale in the mortgage banking last quarter. So that sale occurred in the latter half of June. And so that's why the average balance was much higher for your purchase loans in the June quarter.
And so I think that was the only big one that we've had to pay off during the September -- or I mean, in the June and September quarter. But that loan was a little over $100 million. So I think this quarter's average is relatively reflective of what the ending period figure is.
[Operator Instructions] We'll go next to Kelly Motta with KBW.
The balance sheet growth was remarkable, both organically as well as with the deal that you got. It looks like capital ratios have come down a bit. Greg, can you refresh us on how you're thinking about capital and your comfort here with being able to support potentially mid-teens loan growth, where those capital ratios you're comfortable with letting them go?
Yes. And we've been accumulating capital and discussing that we believe we have excess relative to what we need. So we feel very good about the capital ratios where they are and even having them go down a bit. But the reality for us is we're making over a 15% ROE. So any loan growth that's sub that essentially allows us to stay roughly equal. I mean, obviously, there's some dividends to the holding company, things like that. But within that range, I feel very good about the profitability. And I think just given if you look at the linked quarter income benefit that didn't even include the $1 billion of the Verdant loans, that was nice growth.
So I think that strong income growth and the strong capital accretion is going to work well there. And I think we've done a really good job of bringing our loan loss reserve to a very strong place, including even with Verdant, where I think it was a prudent but conservative decision to bring it to 1.5% given that they've been averaging 25 and 30 basis points of loss over their period. And they've been around 5 years. So that doesn't mean you can guarantee that, but certainly bringing that to 150 is good.
So we feel very good about where we are in loan loss. I feel good about where we're seeing the NPL sort of stuff shake out. I feel like the commercial real estate thing, which everybody had their -- was sort of agitated about has certainly not come to fruition in any respect with respect to us. So yes, I think it's good. And we had much higher capital ratios than, frankly, we've ever had. And so it was built for doing just what we did. And so we felt good about that deal and our ability to do it.
Awesome. You guys certainly make a lot to help replenish those. So in terms of -- Greg, we got the Verdant deal. And in your prepared remarks, it sounds like there might be some more opportunities on the acquisition side. Is there anything you can share with us in terms of types of deals that look attractive, how that's shaping up and kind of the outlook from here?
Yes. Obviously, as I'm sure you well know and have to cover as these banks get together like kids at a frat party. There's a lot of talk about all those things. I mean we're always active in looking and trying to understand what works and what doesn't. We -- in the case of Verdant, for example, it filled this particular niche. It was a good national specialty vertical with bank quality management in an area that we didn't have. So there's a few other of those type of verticals that we always continue to look for and find the right partners.
On the bank side, there's a lot of different ways to look at bank acquisitions and see what works and what doesn't. It has to be obviously the right cultural strategic fit or it has to be an incredible financial bargain. So we're very active in looking, and we'll continue to do that and see what makes sense.
And moving on to David Feaster with Raymond James.
I wanted to talk on this NDFI issue. I mean this has now become a dirty word. And I appreciate your commentary a bit talking about it. But I was just hoping you could elaborate maybe a bit on where -- obviously, there's been some fraud, but where are you seeing the pressure points in the industry, maybe compare and contrast a bit with what you do, the exposures that you've got and how you monitor and manage collateral and the cash flows just to protect yourself because that seems like an incredibly important part about that.
Right, right. Well, so yes, it's a broad category. So if you just sort of go through this logically, single-family mortgage warehouse, right? You have MERS for that. So there was some pretty I mean, obviously, you've been around a long time. I'm not calling you old. I'm just saying you've been around a really, really, really, really long time, David. But you remember like Taylor, Bean & Whitaker and all those kind of things and Colonial and all that sort of stuff where essentially you showed up one day and your loans are pledged to someone else, right?
So that issue, I think, is more solved with MERS than others with respect to the types of loans that go through there. That's the single-family warehouse side now. Then if you think about real estate lender finance, where you have facilities that have crossed assets, what happened with respect to those other institutions was that essentially they were told they had first mortgages because they receive title policies from the borrower themselves and essentially 3 different banks, I think, thought they all had first liens or the first liens that were created by the NDFI, 3 different banks thought they had first liens on those first liens, right?
So there's some pretty clear ways that you can figure that out. One way is not to get the information from the NDFI, right? So at a fundamental level, there's always this question of what do you trust? What do you don't trust? How do you get it? How do you check it, right? And so that is -- there's some pretty clear ways to do that. I'm not going to paint them all out for all my competitors, but just to say that there's ways of making sure that doesn't happen.
Now there's obviously an element of how you monitor that and how you think about that with respect to the timing of it because some lenders cloud title like we do by recording a notice of assignment. So if somebody else tries to lien that particular property, then there's a notice of assignment there, title company won't work through that. Others take the word of their partners for that, right? So you always have these kind of things depending on how you think about it. But frankly, I think it's always interesting to me in banking because it's kind of beautiful to some extent because you get like one thing that happens that's idiosyncratic in a particular problem. And I remember what it was like single-family lending after 2008, '09, and all these people comes to me and say, "Well, I can't believe you're doing single-family mortgages in Florida." And I'm like, "Yes, we weren't doing them when the prices were super high, but now that they've fallen by -- the prices have fallen by 60%, we're now doing it at 40% LTVs." And of course, no, we never lost a single penny on that, and we got higher rates, right?
So I think you have to just ask yourself what specifically are you talking about, right? So there's -- so that collateral is there. Now the type of "NDFI" type of risk associated with non-real estate lender finance, if you actually think about it for even a small amount of time, is a very similar risk to a regular straight ABL deal, right? Like somebody can make up invoices or a factoring. They can make up invoices, they can do all that kind of stuff. And whether you have an NDFI involved or not, if a borrower is committing fraud, the borrower can be committing fraud on the NDFI and on you, right? By like there's banks that finance factor receivable companies, right? So there's an NDFI that's a factor receivable and you're financing that factor receivable. Well, you could have the NDFI to fraud you, you could also have end clients to fraud you.
So we had a small client, a direct borrower where we had a full banking relationship typical middle market [indiscernible] like small business style. And one of the guys made up an invoice, right? And there's different ways to catch them doing that. So I don't -- if you're thinking about capital call lines, then there's a whole different array of risks associated with that because often the LPs are very large funds. And so you're getting them -- the question is how many of those do you get to sign waivers of defenses, right? So there's all kinds of different things like that. I mean I think if you step back and you say, is -- each of these areas have obviously their own benefits and disadvantages. On one hand, you could -- if you put an NDFI between you and a client, if the NDFI is full of bad actors, which by far, the vast majority of them are not, they're highly professional individuals who've worked at some of the biggest and most prestigious institutions in country, their whole life.
I mean, I'm not saying that doesn't mean they can't turn out to be a bad guy and be willing to commit to a life in San Quentin or something, but it's not -- that's not really what happens normally. I think, frankly, you're more likely to -- much more likely to have fraud in small business and direct borrower loans on things like factoring and ABL, potentially than you are in these large cross facilities. And those large cross facilities protect you because any individual idiosyncrasies is there as well as the NDFI capital also protects you from those sorts of things.
So life banking, it's full of trade-offs, right? And you just have to understand the nuances. So that's what it is.
Yes. That's helpful. And I wanted to get a sense on the expansion in that floor plan space with the new team. Just kind of how that build-out and integration has been? It sounds like they've got a nice pipeline. I know we're still in the early stages there, but was just hoping to kind of get an update on that business line and any expectations you might have.
Yes. So they've got some accepted term sheets for some nice lines with some really strong borrowers. The nature of that business requires that for any of the floor plan lines, you have to go out and get MBRAs, which are essentially repurchase obligations of the manufacturers, which is obviously an awesome thing because if somehow the asset doesn't sell, then you can have the manufacturer take it back and pay you off. So we have a lot of those executed in these areas, facilitated by those things.
And so I think we'll -- I think we'll have several hundred million dollars, let's say, by March 31, I would guess. Maybe that's a little aggressive of assets and lines funded in that business.
That's great. And then just last one for me. Just wanted to get an update on the securities business and the white labeling within there of some banking products. I know this is still in the early stages, I believe, still in beta testing. But just kind of curious, maybe the build-out of the tech infrastructure in the securities segment broadly. And then when do you think we can roll out some of that white labeling of the banking products across the platform?
Right, right. So there's really 2 main components to our tech modernization effort in the custody and clearing business. And the team has named it Axos Complete, which is their marketing name for it. What it is, is it's an Axos Professional Workstation. So right now, the workstations that are utilized by the -- particularly the clearing team are truly antiquated FIS and those sort of things. And they're just -- they're not flexible. They're not modern so that they can integrate through API, everything or do they have all the bank's products that we want to be able to have through there.
So that has been a really big push in the development side. It's benefited from AI. It is out now to multiple test, broker-dealers, and we're getting feedback and we have a rollout schedule there. So what's the benefit of that, just specifically with respect to banking, there are a lot of other benefits is that the banking products can be proxy enrolled, enrolled by the RIA. The RIA can get access to SBLOC lending products, secured credit cards, all those kind of things that would be available as they become available at the bank, they can be made available to the RIA and the client and sold through to that client with recommendations to do that, right?
So that's one piece of it. That piece is being rolled out. It will be a 6- to 7-month rollout because we have to train a bunch of folks, and this is really the core system that they were using internally to do all their trading and everything else. And so -- and then the other component of it is really it's one tech build with different ways of looking at it. But essentially, there's the retail platform, which used to call Universal Digital Bank, but as it becomes more and more available to doing a lot of other things besides banking. We're calling it the Axos Client Portal now, and that will allow the end clients of the RIAs and broker-dealers to be able not only to have access to a bunch of workflow to enhance their operations, but also access to products.
So that actually does work and the RIAs are adopting it. The platform that the RIAs use is actually something different. And so over time, we'll bring all of them together on it. There's a few things we have to develop on Axos Professional Workstation to make it be the one workstation for everything, and so that's ongoing.
But I think at the end of all of this, I think we're really going to have an extremely modern tech stack that will be able to be quickly modified and flexible for our institutional and end clients, and really allow a very seamless way of interacting to cross-sell banking products or crypto or whatever we decide to do there. So I think it's really exciting. Everybody is excited about it. And I really -- I do see it even if it's an outsourcing bid or what we're doing internally, how much faster it is to develop. So it's a pretty big project, but it's also going well.
And we'll go next to Tim Coffey with Janney Montgomery Scott.
I'm trying to get my arms around expenses going forward. Obviously, a lot of moving pieces. None of it was...
So am I. Tim, so am I. So am I, Tim.
Okay. Let’s figure this out then. Is my North Star an efficiency ratio? Or is it expenses to average assets?
Well, so what we've been saying as a hard cap, which I am sticking to and I have stuck to, and the Verdant deal throws it a little bit into a little bit into we'll readjust to that with Verdant, rebaseline it. But that our personnel expense and professional services growth will be -- the growth will be below 30% of the net interest income and noninterest income growth. So in other words, if we grow $1 in net interest and noninterest income, we will not grow more than $0.30 in our personnel and our professional services expense.
Now there might be onetime things every now and then or something, but that's a pretty strong rail that we're managing to. And we've been able to do that well. I think AI is helping. We would expect to be able to do that with Verdant too. But we've given you the cost. I mean, Derrick gave you the cost directly of what Verdant is going to add. And then you should just model that in and then expect that, that growth is going to be underneath that. That doesn't give it to you perfectly because obviously, there's other categories of growth besides professional services and personnel, but that's 70-plus percent of it, there's not like there's going to be a ton of occupancy and other things.
And so we're -- we believe we're managing it pretty well. But it's a little bit tough to do it on an efficiency ratio basis because there's obviously movements around margin and onetime payoffs of FDIC loans and all that kind of stuff. I think that's kind of more a way. So if you model in that kind of growth because everybody is watching their Ps and Qs and trying to figure out what they can afford to get to that number, then that's not a bad way to do it.
And this now concludes our question-and-answer session. I would like to turn the floor back over to Johnny Lai for closing comments.
Great. Thanks for everyone's time, and we will talk to you next quarter. Thank you.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Axos Financial, Inc. — Q1 2026 Earnings Call
Financial data from Axos Financial, Inc.
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 1,480 1,480 |
18%
18%
100%
|
|
| - Interest Income | 1,247 1,247 |
11%
11%
84%
|
|
| - Non-Interest Income | 234 234 |
78%
78%
16%
|
|
| Interest Expense | 710 710 |
3%
3%
48%
|
|
| Non-Interest Expense | -733 -733 |
24%
24%
-49%
|
|
| Loan Loss Provisions | 101 101 |
81%
81%
7%
|
|
| Net Profit | 490 490 |
13%
13%
33%
|
|
In millions USD.
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Axos Financial, Inc. Stock News
Company Profile
Axos Financial, Inc. is a holding company, which engages in the provision of banking and financing services. It operates through the following segments: Banking Business, Securities Business, and Corporate. The Banking Business segment includes online banking, concierge banking, prepaid card services, and mortgage, vehicle, and unsecured lending through online and telephonic distribution channels. The Securities Business segment involves the clearing broker-dealer, registered investment advisor, and introducing broker-dealer lines of businesses. The company was founded on July 6, 1999 and is headquartered in Las Vegas, NV.
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| Head office | United States |
| CEO | Mr. Garrabrants |
| Employees | 1,989 |
| Founded | 1999 |
| Website | investors.axosfinancial.com |
