AX — Axos Financial, Inc.

Axos Financial Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: $128.4 million, up 22.6% year-over-year.
• Earnings Per Share (EPS): $2.22, a 23.3% increase from the prior year.
• Net Loan Growth: $1 billion linked quarter, with strong performance across various lending sectors.
• Net Interest Income: $331.6 million, a 14% increase linked quarter, benefiting from diverse lending growth.
• Net Interest Margin: 4.94%, up 19 basis points from the previous quarter; adjusted margin expected to decline to 4.66%.
• Non-Interest Income: Increased by 65% to $53.4 million, driven by higher banking service fees and contributions from Verdant.
• Total Deposits: $23.2 billion, up 44.3% linked quarter and 16.5% year-over-year.
• Return on Average Common Equity: Over 17%.
• Return on Assets: 1.8%.

2. Strategic Updates and Business Highlights

• Acquisition of Verdant: Closed on September 30, 2025, contributing approximately $130 million in net new loans and operating leases in Q2.
• Growth in Non-Interest Income: Verdant added $18.9 million in non-interest income, enhancing overall revenue.
• AI Integration: Continued deployment of AI across various business units to improve operational efficiency and productivity.
• Diversified Lending: Strong performance in commercial specialty, equipment finance, and asset-based lending, with a healthy loan pipeline of $2.2 billion.

3. Forward Guidance and Outlook

• Loan Growth Expectation: Projecting low to mid-teens growth for the year, with anticipated loan increases of $600 to $800 million in Q3.
• Net Interest Margin Outlook: Expected decline to approximately 4.66% due to robust loan growth and lower accretion from FDIC loans.
• Verdant Growth: Anticipated EPS accretion of 2-3% in fiscal 2026 and 5-6% in fiscal 2027.

4. Bad News, Challenges, or Points of Concern

• Net Interest Margin Pressure: Expected decline in net interest margin due to increased loan growth and reduced accretion from FDIC loans.
• Higher Provisions for Credit Losses: Increased provision for credit losses to $25.25 million, reflecting robust loan growth in higher-risk commercial lending categories.
• Potential for Competitive Pressures: Concerns about maintaining deposit growth amidst a competitive environment and potential rate cuts impacting net interest income.

5. Notable Q&A Insights

• Net Interest Margin Clarification: Management confirmed the expected decline in net interest margin due to robust loan demand and indicated a stable remaining life for FDIC purchase loans of about three to four years.
• Growth Drivers: Management highlighted the balanced growth across various lending sectors, with expectations for continued strength in fund finance and commercial lending.
• Verdant Integration: Positive feedback on the integration of Verdant, with expectations for continued growth and synergies in the coming quarters.
• Team Lift-Outs and M&A Opportunities: Management expressed interest in exploring team lift-outs and potential acquisitions to enhance growth, though current focus is on organic growth.

Overall, Axos Financial reported strong financial performance in Q2 2026, driven by significant loan growth and strategic acquisitions, while also navigating challenges related to net interest margin and credit loss provisions. The outlook remains positive, with expectations for continued growth and operational improvements.