Executive Summary

Axos delivered solid Q1 FY26 with GAAP EPS $1.94 and Adjusted EPS $2.07, driven by $1.6B net loan growth (incl. $1.0B from Verdant) and resilient credit; NIM compressed 9 bps QoQ to 4.75% largely from excess liquidity and a new sub-debt issue .
Versus S&P Global consensus, Axos posted a significant EPS beat (Primary EPS $2.07* vs $1.88*, +$0.19, +10.3%) but a revenue miss ($306.1M* vs $319.2M*, -$13.0M, -4.1%); note “revenue” is S&P’s definition and differs from company-reported NII+non-interest income of $323.4M .
Management raised loan growth outlook to low-to-mid-teens for the remainder of FY26; expects NIM to remain at high end of 4.25%–4.35% target, Verdant to add $150–$200M net new loans/leases per quarter, tax rate ~26–27% .
Key positives: deposit growth (+$1.4B QoQ to $22.3B), higher non-interest-bearing deposits (~$3.4B), AUC/AUA reached $43B, and better asset quality (NPAs/assets 0.64%) .
Stock catalysts: sustained low-teens loan growth from Verdant and floor plan lending, operating leverage from AI/tech modernization, and clarity on revenue trajectory vs consensus definitions .

What Went Well and What Went Wrong

What Went Well

Robust loan growth and deposit funding: $1.6B net loan growth (incl. $1.0B Verdant) and deposits up to $22.3B; non-interest-bearing deposits ~ $3.4B, aided by treasury management and client cash sorting .
Credit quality improved: NPAs/assets fell to 0.64% (from 0.71%); net charge-offs to avg loans down to 0.11% . CEO: “We continue to generate high returns… nearly 16% ROE and 1.8% ROA” .
Strategic M&A and tech: Verdant expected to be EPS accretive (2–3% FY26; 5–6% FY27); expanding AI use cases and launching Axos Professional Workstation to modernize securities platform .

What Went Wrong

Margin compression: NIM fell 9 bps QoQ to 4.75% due to ~7 bps drag from excess liquidity and ~1 bp from new $200M sub debt at 7% .
Lower fee run-rate QoQ: Non-interest income fell to $32.3M from $41.3M in Q4 (prior quarter benefited from a $12M mortgage loan sale gain) .
Efficiency ratio worsened to 48.32% (from 46.87%) as expenses rose (Verdant-related costs and project spend); Verdant expected to add ~$8.5M per quarter to non-interest expense .

Financial Results

Core P&L and Margin Trends

Metric	Q3 2025	Q4 2025	Q1 2026
Net Interest Income ($M)	$275.5	$280.2	$291.1
Non-Interest Income ($M)	$33.4	$41.3	$32.3
Net Income ($M)	$105.2	$110.7	$112.4
Diluted EPS (GAAP) ($)	$1.81	$1.92	$1.94
Adjusted EPS (Non-GAAP) ($)	$1.81	$1.94	$2.07
Net Interest Margin (%)	4.78%	4.84%	4.75%
Efficiency Ratio (%)	47.36%	46.87%	48.32%

YoY context (vs Q1 2025): NII $291.1M vs $292.0M (flat), Non-interest income $32.3M vs $28.6M (+13%), GAAP EPS $1.94 vs $1.93; Adjusted EPS $2.07 vs $1.96 .

Consensus vs Actuals (S&P Global definitions)

Metric (Q1 2026)	Estimate	Actual	Surprise
Primary EPS ($)	1.88*	2.07*	+0.19 (+10.3%)
Revenue ($M)	319.2*	306.1*	-13.0 (-4.1%)

Note: Company-reported “net revenues” (NII + non-interest income) were $323.4M in Q1 FY26, reflecting a different revenue definition than S&P Global’s .
Values marked with * are retrieved from S&P Global.

Segment Breakdown (Q1 2026)

($000s)	Banking Segment	Securities Segment	Corp/Elims	Consolidated
Net Interest Income	287,200	8,194	(4,344)	291,050
Provision for Credit Losses	17,255	—	—	17,255
Non-Interest Income	12,375	29,457	(9,492)	32,340
Non-Interest Expense	128,493	29,367	(1,614)	156,246
Income Before Taxes	153,827	8,284	(12,222)	149,889

Key Performance Indicators

KPI	Q3 2025	Q4 2025	Q1 2026
Loans, net ($B)	$20.19	$21.05	$22.64
Deposits ($B)	$20.14	$20.83	$22.26
NPAs / Assets (%)	0.79%	0.71%	0.64%
Non-Accrual Loans / Loans (%)	0.89%	0.79%	0.74%
Net Charge-offs / Avg Loans (%)	0.09%	0.16%	0.11%
Net Interest Margin (%)	4.78%	4.84%	4.75%
AUC/AUA ($B)	$37.1	$39.4	$43.0
Book Value / Share ($)	$45.79	$47.46	$49.31

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Loan Growth (YoY)	Remaining FY26	High single-digits to low-teens (commentary)	Low-to-mid-teens	Raised
Net Interest Margin (Consolidated)	FY26	Target 4.25%–4.35% (high end)	Maintain at high end of 4.25%–4.35%	Maintained
Verdant Net New Loans/Leases	Starting Q2 FY26	N/A	$150–$200M per quarter	New detail
Verdant EPS Accretion	FY26 / FY27	N/A	+2–3% (FY26); +5–6% (FY27)	New detail
Non-Interest Expense (Verdant)	Run-rate	N/A	+~$8.5M per quarter	New detail
Non-Interest Income (Verdant)	Run-rate	N/A	“A few million per quarter”	New detail
Corporate Tax Rate	Ongoing	~26–27%	~26–27%	Maintained
Funding of Verdant Securitizations	Ongoing	N/A	Replace term securitizations with deposits when callable/advantageous	Clarified

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY25, Q4 FY25)	Current Period (Q1 FY26)	Trend
Loan Growth	Q3: +$707M net growth with ABL, lender finance, equipment leasing strength ; Q4: +$856M net growth	+$1.6B net growth incl. $1.0B Verdant; raised loan growth guide to low/mid-teens	Accelerating
NIM	Q3: 4.78% ; Q4: 4.84%	4.75%; 7 bps drag from excess liquidity; 1 bp from sub-debt; maintain high-end 4.25–4.35% target	Near-term pressure; stable outlook
Credit	Q3/Q4: Improving NPAs	NPAs/assets 0.64%; non-accrual loans 0.74%; NCOs 0.11%	Continued improvement
Deposits	Q3/Q4: steady growth	Total $22.3B; NIB ~ $3.4B; cash sorting $1.1B	Strengthening funding mix
Verdant (M&A)	Announced closing 9/30	Accretive EPS; $150–$200M quarterly production; plan to refinance securitizations with deposits	Strategic expansion
AI/Tech	Ongoing platform work	Expanded AI across functions; Axos Professional Workstation rollout to BDs; enable cross-sell to RIAs/clients	Execution progressing
Expenses/Leverage	Q3/Q4: controlled growth	Guardrail: personnel+prof services growth ≤30% of (NII+non-interest) growth; Verdant adds ~$8.5M/qtr	Discipline reiterated

Management Commentary

“We had a strong start to our fiscal 2026… nearly 16% ROE and 1.8% ROA” .
“We expect our consolidated net interest margin… to stay at the high end of the 4.25% to 4.35% range” .
“We expect the Verdant acquisition to add an incremental $150–$200 million of net new loans and operating leases per quarter… Our expectation is this acquisition will be accretive to our earnings per share by 2–3% in fiscal 2026 and by 5–6% in fiscal 2027” .
“We have rapidly expanded the scope of workflows and use cases for artificial intelligence… to create greater operating leverage and improve the speed, quality, and cost of software development projects” .
Expense discipline: “We will not grow more than $0.30 [expenses] for every $1 of net interest and non-interest income growth” (personnel + professional services) .

Q&A Highlights

Credit/fraud risk controls: Management rejected high-profile deals due to weak structures; emphasized controls (e.g., direct verification with title insurers, noticing assignments) and vigilance across ABL/factoring/capital call lending .
Fee income outlook: No notable one-timers in Q1; Verdant to contribute “a few million” of non-interest income per quarter .
Verdant financing costs: On-balance sheet term securitizations carry ~5.5% cost, ~3.7 years WAM; plan to take out with deposits when feasible (cleanup calls ~10%) .
Capital/ratios: Comfortable letting capital ratios drift down modestly to support mid-teens loan growth given ~16% ROE and strong reserve position .
Floor plan lending: Pipeline building with MVRAs; several hundred million in assets and lines targeted by March 31 .
Securities platform: Axos Professional Workstation in beta with BDs; aims to embed banking products for RIAs/clients over a 6–7 month rollout .

Estimates Context

Q1 FY26 vs S&P Global: Primary EPS beat ($2.07* vs $1.88*), revenue miss ($306.1M* vs $319.2M*). Company’s reported “net revenues” (NII + non-interest income) were $323.4M, underscoring definitional differences in revenue reporting .
Forward look: Q2 FY26 Primary EPS consensus ~ $2.06* and revenue ~$344.6M*, reflecting expected Verdant contribution and seasonal growth. Values retrieved from S&P Global.

Key Takeaways for Investors

EPS quality strong: Adjusted EPS $2.07 benefited from core growth; non-GAAP adjustments primarily reflect Verdant “Day 1” ACL ($7.8M) and $1.3M acquisition costs, offset by tax effects .
NIM near-term drag (excess liquidity, sub-debt) is manageable; management aims to hold NIM at high end of 4.25–4.35% via funding mix and deposit pricing discipline .
Loan growth visibility improved: Verdant’s $150–$200M/qtr plus floor plan ramp support low-to-mid-teens growth guidance; operating leverage expected as AI initiatives scale .
Credit remains a differentiator: NPAs and charge-offs remain low; management highlighting structural discipline and anti-fraud measures amid industry headlines .
Securities/custody momentum: AUC/AUA reached $43B, with tech modernization positioning cross-sell of banking products to RIAs—a multi-year revenue synergy opportunity .
Watchlist for next quarter: pace of Verdant production and integration, progression of NIB deposits, NIM trajectory as excess liquidity normalizes, and expense growth within the 30% guardrail .
Trading angle: EPS upside vs consensus and raised loan growth guide are positive; revenue-definition mismatch vs consensus can create headline volatility—focus on NII, NIM drivers, and adjusted EPS sustainability .

Values marked with * in the Estimates sections are retrieved from S&P Global.

Axos Financial, Inc. (AX)·Q1 2026 Earnings Summary