Core Insights - The article discusses Axos Financial and highlights its potential investment opportunities and market trends [1] Company Overview - Axos Financial is featured in a Motley Fool Scoreboard episode, indicating a focus on its performance and market position [1] Market Trends - The video associated with the article aims to provide insights into market trends relevant to Axos Financial, suggesting a dynamic market environment [1] Investment Opportunities - The content emphasizes the potential investment opportunities within Axos Financial, encouraging viewers to explore these prospects [1]

Company Overview - Axos Financial Inc is a regional U.S. bank headquartered in Las Vegas, Nevada, operating nationwide [1] - The bank offers a diverse range of loan products, including residential mortgages, commercial loans, auto loans, and consumer loans [1] Investment Insights - The author emphasizes a focus on the banking sector, which is often overlooked but holds significant potential for investors [1] - The investment strategy aims for safe yet substantial returns, targeting over 10% per annum [1] - The analysis seeks to enhance awareness and understanding among investors regarding the intricacies of bank stocks [1]

Core Viewpoint - Axos Financial (AX) has experienced significant selling pressure, resulting in a 9.3% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously predicted, indicating potential for recovery [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2] - AX's current RSI reading is 28.89, suggesting that the heavy selling may be exhausting itself and a trend reversal could be imminent [5] Group 2: Fundamental Indicators - Analysts have raised earnings estimates for AX by 1.9% over the last 30 days, which often correlates with price appreciation in the near term [6] - AX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [7]

Axos Financial (AX) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Since a changi ...

Financial Data and Key Metrics - Net interest income for Q2 2025 was $280 million, up 22.5% YoY from $228.6 million in the prior period [7][8] - Net interest margin was 4.83% for Q2 2025, up 28 basis points YoY but down from 5.17% in Q1 2025 [9] - Tangible book value per share grew 21% YoY [7] - Return on average common equity was 17%, and return on assets was 1.7% for Q2 2025 [7] - Net income was $104 million, compared to $152.8 million in the same period last year [13] - Non-GAAP adjusted EPS was $1.82 for Q2 2025 [14] Business Line Performance - Loan originations were strong at $3.5 billion, with growth in single-family mortgage warehouse and C&I loan balances [15] - Auto loan portfolio saw its first sequential increase since Q1 2023 [16] - Average loan yields for non-purchased loans were 8.08%, while purchased loans yielded 13.92% [17] - Lender finance, fund finance, and equipment leasing had strong originations and net loan growth [16] - Single-family jumbo mortgage pipeline increased from $345 million to $496 million due to competitive exits and rate reductions [15] Market Performance - Total on-balance sheet deposits increased 9.5% YoY to $19.9 billion [10] - Demand, money market, and savings accounts represented 96% of total deposits, growing 10.6% YoY [19] - Consumer and small business deposits accounted for 60% of total deposits, while commercial TM and institutions represented 20% [19] - Axos Clearing deposits grew to $1.36 billion, up $104 million from the prior quarter [36] Strategy and Industry Competition - The company is focused on reducing headwinds in single-family jumbo mortgages and expects flat to slightly up growth in multifamily hybrid ARMs [15] - The company is leveraging low-code software development and AI to enhance operational efficiency [39] - The company is exploring inorganic growth opportunities, including potential acquisitions in specialty finance businesses [44][101] - The company is actively engaging with private credit partners to leverage the growth of the ecosystem [43] Management Commentary on Operating Environment and Future Outlook - Management expects the consolidated net interest margin to remain at the high end or slightly exceed the 4.25% to 4.35% target range [25] - The company is optimistic about organic loan growth returning, with expectations of high single-digit YoY growth in the remaining quarters of fiscal 2025 [51] - Management is cautious about expense growth and is focused on maintaining discipline while investing in technology and operational efficiency [92][93] Other Important Information - The company announced a $150 million at-the-market shelf offering to capitalize on potential strategic opportunities [45] - The company is actively working on AI use cases to enhance efficiency and reduce project timelines [39] - The company is realigning back-office servicing functions in its clearing and custody business to improve efficiency [38] Q&A Summary Question: Deposit Cost Trends - The company has successfully repriced higher-cost deposits and expects further opportunities to improve deposit mix over time [55][56] - Management believes the company can offset declines in interest income by repricing deposits, as demonstrated in Q2 2025 [57] Question: Net Interest Margin Drivers - The company attributes the strong net interest margin to a combination of asset-side growth (e.g., competitive exits in mortgage lending) and deposit repricing [58][59] - Excess liquidity has been a drag on net interest margin, but the company expects to grow into this liquidity with improved loan growth [62] Question: Crypto Engagement - The company is awaiting clearer regulatory guidance before reengaging in the crypto space [66][67] - Management emphasized the need for comprehensive regulatory clarity from both the SEC and primary regulators [67] Question: Non-Performing Assets (NPAs) - The increase in NPAs was attributed to specific idiosyncratic circumstances, particularly in real estate-backed loans [70][71] - Management is confident in the credit quality of the loan book and does not anticipate material losses from current non-performing loans [30][74] Question: Loan Demand and Growth Opportunities - The company sees strong demand in cap call, real estate lender finance, and other segments, with a $2.1 billion loan pipeline as of January 22, 2025 [50][83] - Management expects to stem runoff in single-family jumbo and multifamily loans, with potential for growth in these areas [81][89] Question: Expense Management and Operating Leverage - The company is focused on maintaining expense discipline while investing in technology and operational efficiency [92][93] - Management highlighted the use of AI and low-code platforms to drive productivity and reduce project timelines [94] Question: Capital Deployment and M&A - The company is exploring inorganic growth opportunities, particularly in specialty finance businesses [101] - The $150 million ATM offering is a proactive step to position the company for potential strategic acquisitions [102] Question: Provision for Credit Losses - The provision for credit losses was $12 million in Q2 2025, down from $13.5 million YoY, driven by lower net loan growth [48] - The company's allowance for credit losses to total loans held for investment was 1.37%, up slightly from 1.34% in Q1 2025 [49] Question: Fee Income Growth - The company expects fee income growth to be driven by its securities business, particularly Axos Advisory Services [123] - Management is optimistic about net new asset growth in the custody and clearing businesses [124] Question: Share Repurchases - The company remains disciplined in capital deployment, prioritizing organic growth and opportunistic share repurchases [133] - Management is optimistic about loan growth but remains cautious about capital allocation [131]

Axos Q2 Fiscal 2025 Earnings Supplement January 28, 2025 NYSE: AX Loan Growth by Category | | | | | | | $ Millions | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Q2 FY25 | | Q1 FY25 | | Inc (Dec) | | | Single Family Mortgage & | Jumbo Mortgage | $ | 3,641 | $ | 3,807 | $ | (166) | | | Warehouse | SF Warehouse Lending | | 509 | | 345 | | 164 | | | Multifamily & Commercial | Multifamily | | 2,148 | | 2,363 | | (215) | | | Mortgage | Small Balance Commercial | | 1,283 | | 1,284 | | (1) ...

Core Insights - Axos Financial reported a revenue of $307.9 million for the quarter ended December 2024, which is a decrease of 12.7% compared to the same period last year [1] - The earnings per share (EPS) for the quarter was $1.82, an increase from $1.60 in the year-ago quarter [1] - The reported revenue exceeded the Zacks Consensus Estimate of $303.64 million, resulting in a surprise of +1.40% [1] - The company also delivered an EPS surprise of +3.41%, with the consensus EPS estimate being $1.76 [1] Financial Metrics - The efficiency ratio was reported at 47.2%, better than the four-analyst average estimate of 48.4% [4] - The net interest margin stood at 4.8%, slightly above the average estimate of 4.7% based on four analysts [4] - Net annualized charge-offs to average loans were 0.1%, matching the three-analyst average estimate [4] - Total non-interest income was reported at $27.80 million, below the average estimate of $31.91 million based on four analysts [4] - Net interest income was $280.10 million, exceeding the average estimate of $272 million from four analysts [4] Stock Performance - Over the past month, shares of Axos Financial have returned +2.3%, outperforming the Zacks S&P 500 composite's +0.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it may perform in line with the broader market in the near term [3]

Core Insights - Axos Financial reported quarterly earnings of $1.82 per share, exceeding the Zacks Consensus Estimate of $1.76 per share, and showing an increase from $1.60 per share a year ago, resulting in an earnings surprise of 3.41% [1] - The company achieved revenues of $307.9 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.40%, although this represents a decline from year-ago revenues of $352.74 million [2] - Axos Financial has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.72 on revenues of $303.05 million, while for the current fiscal year, the estimate is $7.08 on revenues of $1.23 billion [7] - The estimate revisions trend for Axos Financial is currently mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Financial - Miscellaneous Services industry, to which Axos Financial belongs, is currently ranked in the bottom 49% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Axos Financial's stock performance [5]

Core Insights - Axos Financial reported mixed results for Q2 of fiscal 2025, with adjusted EPS of $1.82 exceeding analyst expectations of $1.75, while revenue of $280.1 million fell short of the $303 million estimate [1][6]. Financial Performance - Adjusted EPS increased by 13.8% year-over-year from $1.60 in Q2 2024 [3]. - Revenue grew by 22.5% year-over-year, but non-interest income (NII) saw a significant decline of 77.6% compared to Q2 2024 due to losses in mortgage banking and broker-dealer fees [3][6]. - Net interest income was reported at $280.1 million, up from $228.6 million in the previous year [3][6]. - The net interest margin improved to 4.83%, an increase of 28 basis points from 4.55% a year earlier [3][7]. - Book value per share rose by 20.9% to $44.17, while tangible book value per share increased by 23.4% to $41.27 [3]. Business Overview - Axos Financial operates as a technology-driven financial institution, focusing on digital platforms for retail banking and investment advisory services, which reduces reliance on physical branches [4]. - The company aims to enhance customer experiences through scalable technology solutions and has been expanding its digital banking capabilities [4][5]. Operational Efficiency - The company maintained strong operational efficiency, with non-interest expenses slightly declining to $145.3 million [7]. - Loan growth in commercial, industrial, and auto sectors contributed to a stable deposit base, achieving a 5.9% annualized growth in deposits [8]. Credit Quality and Provisions - The provision for credit losses was $12.2 million, an improvement from $13.5 million in Q2 2024, although issues with credit quality in the commercial sector and increased non-performing assets were noted [9]. Future Outlook - Management did not provide specific forward guidance but indicated expectations for positive loan growth and a focus on expanding the digital platform [10]. - The company targets high single-digit annual growth rates for loans, supported by strategic hiring and new asset acquisition strategies [11].

Financial Performance - For the three months ended December 31, 2024, net income was $104.7 million, while adjusted earnings were $105.8 million [129]. - The diluted EPS for the three months ended December 31, 2024, was $1.80, and the adjusted EPS was $1.82 [129]. - For the three months ended December 31, 2024, net income was $104.7 million, or $1.80 per diluted share, compared to $151.8 million, or $2.62 per diluted share for the same period in 2023 [133]. - Non-interest income for the three months ended December 31, 2024, was $27.8 million, a significant decrease from $124.1 million in the same period of 2023 [132]. - The efficiency ratio for the three months ended December 31, 2024, was 47.20%, compared to 34.54% for the same period in 2023, indicating increased operational costs relative to income [132]. - The return on average assets for the three months ended December 31, 2024, was 1.74%, down from 2.90% in the same period of 2023 [132]. - Income before income taxes for the Banking Business Segment was $152.9 million for the three months ended December 31, 2024, down from $214.6 million in the prior year [157]. Assets and Deposits - The company has approximately $23.7 billion in assets and $37.7 billion in assets under custody and/or administration at Axos Clearing LLC [115]. - Total assets increased to $23.7 billion as of December 31, 2024, up from $22.9 billion as of June 30, 2024, and $21.6 billion as of December 31, 2023 [131]. - Total deposits reached $19.9 billion as of December 31, 2024, compared to $19.4 billion as of June 30, 2024, and $18.2 billion as of December 31, 2023 [131]. - The total number of deposit accounts increased to 580,151 at December 31, 2024, from 555,538 at June 30, 2024 [174]. Income and Expenses - Net interest income for the three months ended December 31, 2024, was $280.1 million, compared to $228.6 million for the same period in 2023, reflecting a growth of 22.5% [132]. - Total interest expense increased by 6.0% for the three months ended December 31, 2024, mainly due to an $11.3 million rise in interest expense on demand and savings deposits [146]. - Total non-interest expense increased by $23.5 million, or 19.3%, for the three months ended December 31, 2024, primarily due to higher salaries and related costs [152]. - Non-interest income decreased by $96.3 million, or 77.6%, for the three months ended December 31, 2024, primarily due to the absence of the gain on the FDIC Loan Purchase in the prior year [152]. Capital and Liquidity - The common equity tier 1 capital ratio was 12.42% as of December 31, 2024, compared to 12.01% as of June 30, 2024, indicating improved capital strength [131]. - The Tier 1 leverage ratio was 10.02% as of December 31, 2024, exceeding the minimum requirement of 5.00% [191]. - The company and Bank met all capital adequacy requirements as of December 31, 2024, and were classified as "well capitalized" under regulatory standards [189]. - As of December 31, 2024, the Company had $2,839.1 million available immediately and $4,812.6 million available with additional collateral from the FHLB, indicating strong liquidity [181]. Interest Income and Rate Sensitivity - The average yield on loans increased to 8.37% for the three months ended December 31, 2024, compared to 8.18% for the same period in 2023 [134]. - The interest rate spread improved to 3.91% for the three months ended December 31, 2024, compared to 3.58% for the same period in 2023 [134]. - A 200 basis points increase in interest rates is projected to result in a 5.5% increase in net interest income for the first 12 months [202]. - The sensitivity of market value of equity (MVE) to a 200 basis points increase in interest rates is estimated at a decrease of 1.2% [203]. Regulatory Compliance - The company is subject to regulation by the Federal Reserve and the Office of the Comptroller of the Currency [116][118]. - The company emphasizes the importance of non-GAAP financial measures, with adjusted earnings providing insight into core business performance [128]. Business Segments - The banking business segment focuses on providing a wide range of banking services, including online banking and various lending products [122]. - The securities business segment includes clearing broker-dealer and registered investment advisor custody services [123]. - The company generates non-interest income from various sources, including fees from loans originated for sale and technology transaction processing fees [115].