Axos Financial ((AX)) has held its Q3 earnings call. Read on for the main highlights of the call.
Axos Financial’s recent earnings call painted a picture of solid performance with a mix of challenges and opportunities. The company reported robust loan growth and improvements in key financial metrics such as book value per share and returns on equity and assets. Despite these positive indicators, Axos Financial also faced hurdles, including a decline in net interest margin and an increase in net charge-offs. Nevertheless, the company expressed optimism about future growth, particularly in its securities business.
Strong Net Loan Growth
Axos Financial achieved significant net loan growth, adding over $700 million linked quarter. This growth was driven by strong originations in fund finance, equipment leasing, and lender finance, highlighting the company’s ability to expand its loan portfolio effectively.
Increase in Book Value Per Share
The company reported a notable 19% year-over-year increase in book value per share, reflecting its strong financial performance and ability to enhance shareholder value.
High Returns on Equity and Assets
Axos Financial delivered impressive returns, with a 16% return on average common equity and a 1.8% return on average assets for the quarter, underscoring its efficient use of capital and asset management.
Net Interest Income Growth
Net interest income for the quarter reached $275 million, marking a 5.3% increase from the previous year. This growth in income highlights the company’s ability to generate revenue from its interest-earning assets.
Improvement in Nonaccrual Loans
The company made significant strides in reducing nonaccrual loans, which declined by $66.5 million linked quarter. This improvement reduced the nonaccrual loans to total loan ratio from 1.26% to 89 basis points, indicating better asset quality.
Securities Business Growth
Axos Financial’s securities business segment experienced substantial growth, with pre-tax income increasing by 23.6% year-over-year to $9.1 million. This growth underscores the company’s successful expansion in this area.
Net Interest Margin Decline
Despite overall growth, the company faced a slight decline in net interest margin, which was 4.78% for the quarter, down 5 basis points from the previous year. This decline reflects the challenges in maintaining margin levels amid changing market conditions.
Increase in Net Charge-Offs
The company experienced an increase in net annualized charge-offs to average loans, rising to 9 basis points from 7 basis points in the previous year, indicating a slight deterioration in loan performance.
Loan Yield Pressure
Axos Financial faced pressure on loan yields, with average loan yields for the quarter ending March 31, 2025, at 7.99%, down from 8.37% in the prior quarter, highlighting the competitive lending environment.
Forward-Looking Guidance
Looking ahead, Axos Financial provided forward-looking guidance that includes maintaining a consolidated net interest margin in the range of 4.25% to 4.35% and expecting annual loan growth in the high single-digit to low teens range. These projections indicate the company’s strategic focus on sustaining growth and profitability.
In conclusion, Axos Financial’s earnings call revealed a company navigating both growth and challenges. While the firm demonstrated strong loan growth and financial performance, it also faced pressures on margins and loan yields. The company’s optimistic outlook, particularly in its securities business, suggests a continued focus on expansion and shareholder value enhancement.