Axos Financial EPS Surges Past Forecast

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].