Axos Q1 Profit Rises 15% as Loans and Deposits Grow

Axos Financial Inc. (NYSE: AX) reported higher fiscal first-quarter earnings as loan and deposit growth supported net interest income and non-interest revenue nearly doubled. Credit indicators were mixed, however, with nonaccrual loans declining while the annualized net charge-off rate rose sharply.

For the three months ended Sept. 30, 2026, net income increased 15% to $129.6 million from $112.4 million a year earlier. Diluted earnings per share rose to $2.25 from $1.94.

Adjusted earnings, which exclude acquisition-related and other specified items, were $134.8 million, or $2.34 per diluted share, compared with $120.4 million, or $2.07 per share, in the prior-year quarter. Axos said its non-GAAP measures should not be considered a substitute for GAAP results and may not be comparable with similarly named measures used by other companies.

Revenue Growth Offset by Higher Costs

Net interest income rose 14% year over year to $331.3 million, while non-interest income increased to $63.8 million from $32.3 million. The provision for credit losses was $24.5 million, up from $17.3 million.

Non-interest expense climbed 25% to $195.4 million, limiting some of the benefit from higher revenue. Pretax income increased to $175.2 million from $149.9 million.

Net interest margin was 4.64%, compared with 4.75% a year earlier and 4.94% in the preceding quarter. The company’s overall efficiency ratio was 49.46%, versus 48.32% a year earlier, while the banking segment’s efficiency ratio was 45.13%, up from 42.89%.

Return on average assets was 1.72%, compared with 1.77% in the year-earlier period. Return on average common equity was 15.66%, versus 15.94%.

Commercial Real Estate Drives Quarterly Loan Growth

Total loans reached $26.36 billion at Sept. 30, rising from $26.10 billion at June 30 and $23.14 billion a year earlier. The $263 million sequential increase was led by commercial real estate specialty loans, which grew by $602 million to $7.87 billion, and real estate lender finance, which increased by $188 million to $1.79 billion.

Those gains were partly offset by a $345 million decline in equipment lending and leasing, a $174 million decrease in non-real-estate asset-based and cash-flow lending, and lower jumbo mortgage, multifamily and small-balance commercial balances.

Commercial real estate was the largest loan category at $9.66 billion, followed by commercial and industrial loans excluding real estate at $9.16 billion. Single-family mortgage and warehouse loans totaled $4.45 billion, while multifamily and commercial mortgage loans were $2.37 billion.

Total deposits were $25.41 billion, up from $23.23 billion at the end of June and $22.26 billion a year earlier. Consumer direct deposits accounted for $14.0 billion, with the remainder spread across specialty deposits, commercial and treasury management, small-business banking, fiduciary services, securities-related balances and distribution partners. Axos said approximately 85% of deposits were FDIC-insured or collateralized. The total excludes about $450 million of off-balance-sheet deposits.

The presentation highlighted continued development of commercial and treasury-management operations through team additions, geographic expansion and cross-selling between banking and securities services. It did not provide a fiscal-year earnings forecast.

Credit Metrics Show Diverging Trends

Nonaccrual loans declined to $155 million from $157 million at June 30 and $170 million a year earlier. They represented 0.59% of total loans, compared with 0.60% in the previous quarter and 0.74% a year earlier. Nonperforming assets equaled 0.51% of total assets, down from 0.64% in the prior-year period.

At the same time, annualized net charge-offs increased to 1.09% of average loans from 0.11% a year earlier. The allowance for credit losses on loans fell to 1.16% of loans held for investment from 1.34% a year earlier. Allowance coverage of nonaccrual loans was 195.79%, compared with 180.41% a year earlier but below 221.07% in the preceding quarter.

Axos ended the quarter with $30.84 billion in assets and $3.29 billion in stockholders’ equity. Book value per common share increased to $57.92 from $49.31 a year earlier, while non-GAAP tangible book value per share rose to $52.68 from $45.22. The company’s common equity Tier 1 capital ratio was 12.22%, and its total capital ratio was 14.81%.