Axos Financial (AX) Q2 2025 earnings summary

Executive summary

• Net income for Q2 FY2025 was $104.7M with diluted EPS of $1.80, down from $151.8M and $2.62 year-over-year; adjusted EPS (Non-GAAP) was $1.82, reflecting adjustments for non-recurring items and excluding the prior year's FDIC gain.

• Net interest income grew 22.5% year-over-year to $280.1M, driven by higher loan balances and interest-earning deposits.

• Book value per share increased 20.9% year-over-year to $44.17, and tangible book value per share rose to $41.27.

• Total assets reached $23.7B as of December 31, 2024, up 3.7% from June 30, 2024.

• Non-interest income fell sharply to $27.8M, mainly due to the absence of the prior year's $92.4M FDIC Loan Purchase gain.

Financial highlights

• Net interest margin was 4.83% for Q2 FY2025, up from 4.55% a year ago; efficiency ratio increased to 47.2% from 34.5% year-over-year.

• Provision for credit losses was $12.2M, down from $13.5M year-over-year.

• Allowance for credit losses to total loans was 1.37%, with nonaccrual loans rising to 1.26% of total loans.

• Return on average assets was 1.74% and return on average equity was 16.97% for the quarter.

• Total deposits increased to $19.9B, with 90% FDIC-insured or collateralized and diversified sources.

Outlook and guidance

• Management expects continued loan growth, stable liquidity, and capital ratios well above regulatory minimums.

• Net interest margin remains above target, with deposit costs reduced by 51 basis points sequentially.

• 63% of fixed and hybrid rate loans will reprice within 3 years, and 91% within 5 years, indicating sensitivity to interest rate changes.

• Anticipate high single-digit organic loan growth year-over-year for the remainder of fiscal 2025, excluding FDIC or other acquisitions.

• Loan pipeline as of January 22, 2025, was $2.1B, with strong contributions from Single Family, Multifamily, and Commercial loans.