This article first appeared on GuruFocus .
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Net Interest Income Growth:11.2% year-over-year increase.
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Net Loan Growth:Approximately $700 million linked quarter.
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Return on Average Common Equity:Over 16% for the quarter.
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Return on Assets:1.8% for the quarter.
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Non-Interest Income:$86 million, up from $53 million in the prior quarter.
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Net Interest Margin:4.57% for the quarter, compared to 4.94% in the prior quarter.
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Non-Interest Expenses:$186 million, up $1.4 million linked quarter.
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Net Income:Approximately $124.7 million, up 18.5% year-over-year.
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Diluted EPS:$2.15, up 18.7% year-over-year.
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Total Originations for Investment:$5.1 billion for the quarter.
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Ending Deposit Balances:$22.4 billion, up 11.2% year-over-year.
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Non-Interest-Bearing Deposits:Approximately $3.4 billion, up $143 million from the prior quarter.
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Net Charge-Offs:31 basis points for the quarter.
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Total Non-Performing Assets:$180.4 million, down approximately $5 million from the prior year.
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Provision for Credit Losses:$41 million for the quarter.
Release Date: April 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Axos Financial Inc ( NYSE:AX ) reported a double-digit year-over-year growth in net interest income, ending loan and deposit balances, earnings per share, and book value.
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The company achieved an 11.2% year-over-year increase in net interest income, with net loan growth of almost $700 million linked quarter.
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Non-interest income rose significantly to $86 million for the quarter, up from $53 million in the prior quarter, driven by higher mortgage banking income, advisory fees, and rental income.
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Axos Financial Inc ( NYSE:AX ) maintained a strong return on average common equity of over 16% and a return on assets of 1.8% for the quarter.
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The company announced the acquisition of $2.3 billion of online savings deposits from Jenius Bank and $3.2 billion of IRA savings and CDs from Capital One, enhancing liquidity and funding for future growth.
Negative Points
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Net interest margin decreased to 4.57% for the quarter, down from 4.94% in the prior quarter, partly due to the impact of FDIC purchased loans and fewer days in the quarter.
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Non-interest expenses increased by $1.4 million linked quarter to $186 million, with higher professional services fees and FDIC and regulatory fees.
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Average loan yields from non-purchase loans declined to 7.23% from 7.63% in the prior quarter, influenced by rate cuts in the previous calendar quarter.
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Total non-performing assets increased in the C&I loan area due to a syndicated C&I share of national credit becoming delinquent, accounting for a $33 million sequential increase.
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Provision for credit losses rose to $41 million in Q3 '26, driven by a specific reserve for a C&I loan, indicating potential credit quality concerns.
Q & A Highlights
Q: How is Axos Financial managing liquidity before the Jenius deal closes, and will the securities book run higher in the near term? A: Derrick Walsh, CFO, explained that Axos identified a market dislocation allowing them to buy treasuries and hedge them with a SOFR swap, improving returns by 30 basis points over holding cash at the Federal Reserve. This strategic move increased the securities portfolio by $750 million while reducing cash.
Q: Can you provide more color on the capital call growth and its sustainability? A: CEO Gregory Garrabrants noted that growth was driven by new clients rather than larger drawdowns. While capital call growth may not be as significant next quarter, it is expected to remain decent due to the diversity of the loan book.
Q: What drove the increase in the allowance for credit losses this quarter? A: Derrick Walsh stated that the primary driver was a specific reserve for a C&I loan, with some influence from broader economic and geopolitical events. The C&I addition was the most significant factor.
Q: How did temporary borrowings impact the net interest margin (NIM) this quarter, and will this pressure reverse with the Jenius acquisition? A: The impact on NIM was minimal, around one or two basis points. The Jenius acquisition will help maintain NIM stability, but immediate pricing adjustments are not planned to optimize NIM.
Q: How do the Jenius and Capital One deposit acquisitions affect Axos's ability to manage deposit pricing and funding? A: Gregory Garrabrants highlighted that these acquisitions ensure funding for loan growth without needing to increase deposit pricing or marketing expenses. While they provide flexibility, significant NIM increases from repricing are not expected.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
