Executive Summary

Q2 FY25 delivered strong core results: net income $104.7M and diluted EPS $1.80; adjusted EPS rose to $1.82 (+13.8% YoY) as prior-year quarter included a one-time $92.4M FDIC gain .
Net interest income was $280.1M (+22.5% YoY); consolidated NIM was 4.83%, with management guiding core NIM (ex-FDIC accretion) to the high end or slightly above the 4.25–4.35% target range, supported by a 51 bps QoQ drop in interest-bearing deposit costs to 3.95% .
Deposits ended at $19.9B, roughly flat QoQ and +9.5% YoY; book value per share rose to $44.17 (+20.9% YoY), CET1 12.42%, total capital 15.23% at the HoldCo .
Stock catalysts: sustained high-end NIM guidance despite competitive lending spreads, disciplined OpEx (-1.5% QoQ), and strategic flexibility via a $150M ATM shelf for accretive acquisitions (no immediate issuance planned) .

What Went Well and What Went Wrong

What Went Well

Net interest margin performance and deposit mix: NIM at 4.83% remained above target; deposit cost repricing lowered interest-bearing deposit costs by 51 bps QoQ to 3.95% while maintaining balances, underpinning NIM resilience .
Capital and book value strength: Total capital (HoldCo) rose to 15.23% from 14.84% (Jun-24); book value per share increased 20.9% YoY to $44.17; TBV/share reached $41.27 .
Strategic optionality and disciplined spending: Management highlighted strong excess capital and an ATM shelf to pursue accretive opportunities, while keeping noninterest expenses down 1.5% QoQ and emphasizing automation/low-code efficiency initiatives .

Quote: “We expect our consolidated net interest margin ex FDIC loan purchases to stay at the high end or slightly exceed the $4.25 to $4.35 range we have targeted over the past year.”

What Went Wrong

Competitive lending spreads and loan mix pressure: Average loan yields fell sequentially (8.37% vs 9.01%) due to loan mix; management noted tighter spreads and selective pricing concessions to retain/drive volume .
Nonperforming asset (NPA) uptick from idiosyncratic items: Increases across jumbo single-family (+$10.4M), multifamily (+$17.8M), and one CRE loan ($14.5M) moved to nonaccrual; one syndicated lender finance SNC saw deterioration though payments are current; management expects minimal loss content .
Fee income softness: Noninterest income declined to $27.8M vs $124.1M YoY (prior-year FDIC gain); MSR marks and clearing fee sensitivities to lower rates weigh on near-term fee trends despite AAS net new assets momentum .

Financial Results

Metric	Q2 2024 (Dec 2023)	Q1 2025 (Sep 2024)	Q2 2025 (Dec 2024)
Net interest income ($MM)	$228.606	$292.048	$280.099
Non-interest income ($MM)	$124.129	$28.609	$27.799
Net income ($MM)	$151.771	$112.340	$104.687
Diluted EPS ($)	$2.62	$1.93	$1.80
Adjusted EPS ($) (Non-GAAP)	$1.60	$1.96	$1.82
Net interest margin (%)	4.55%	5.17%	4.83%
Return on avg assets (%)	2.90%	1.92%	1.74%
ROAE (%)	30.39%	19.12%	16.97%
Efficiency ratio (%)	34.54%	45.99%	47.20%

Segment breakdown (Income before income taxes):

Segment	Q2 2024 (Dec 2023)	Q2 2025 (Dec 2024)
Banking Business ($MM)	$214.632	$152.884
Securities Business ($MM)	$10.753	$7.833
Corporate/Elims ($MM)	$(7.989)	$(10.387)
Consolidated ($MM)	$217.396	$150.330

Key KPIs and balance sheet:

KPI	Q2 2024 (Dec 2023)	Q1 2025 (Sep 2024)	Q2 2025 (Dec 2024)
Total assets ($MM)	$21,623.764	$23,569.084	$23,709.422
Loans, net ACL ($MM)	$18,264.354	$19,280.609	$19,486.727
Total deposits ($MM)	$18,203.912	$19,973.329	$19,934.904
Book value per share ($)	$36.53	$42.14	$44.17
Tangible book value/share ($)	$33.45	$39.22	$41.27
CET1 (HoldCo) (%)	10.97%	12.44%	12.42%
Total capital (HoldCo) (%)	13.79%	15.29%	15.23%
Non-accrual loans / total loans (%)	0.65%	0.89%	1.26%
Net annualized charge-offs (%)	0.04%	0.17%	0.10%
ACL to loans (%)	1.33%	1.35%	1.37%

Credit quality by loan category (non-accrual % of loans outstanding):

Category	Sep 2024	Dec 2024
Single Family – Mortgage & Warehouse	1.42%	1.69%
Multifamily & Commercial Mortgage	0.85%	1.43%
Commercial Real Estate	0.66%	0.97%
C&I – Non-RE	0.82%	1.22%
Auto & Consumer	0.48%	0.48%
Total	0.89%	1.26%

Non-GAAP reconciliation (selected):

Metric	Q2 2024	Q2 2025
Adjusted earnings ($MM)	$92.452	$105.829
Adjusted EPS ($)	$1.60	$1.82
FDIC gain impact on diluted EPS ($)	$(1.59)	—

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated NIM ex-FDIC	FY 2025	4.25%–4.35% range	High end or slightly above 4.25%–4.35%	Raised bias
FDIC accretion NIM benefit	FY 2025	30–35 bps	30–35 bps maintained	Maintained
Organic loan growth	2H FY 2025	High single digits to low teens Y/Y (multi-quarter)	High single digits Y/Y for remaining two quarters	Narrowed/maintained
Interest-bearing deposit costs	Near term	Flex to reprice lower with Fed cuts	Down 51 bps QoQ to 3.95%; continued repricing focus	Lowered (executed)
Operating expenses	Near term	Expect seasonal uptick in Dec; ongoing investment	Down 1.5% QoQ; continued automation/discipline	Better-than-expected

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY24)	Previous Mentions (Q1 FY25)	Current Period (Q2 FY25)	Trend
Core NIM outlook	Banking NIM above 4.25–4.35% guidance; FDIC benefit revised to 30–40 bps	Core NIM guided 4.25–4.35%; FDIC benefit 30–35 bps	Core NIM to high end or slightly above target; excess liquidity drag 18 bps	Improving vs target
Deposit costs/mix	Consumer rates trending down; growth in noninterest-bearing	Preemptive repricing; deposit flexibility with Fed cuts	Interest-bearing costs -51 bps QoQ to 3.95%; mix granularity across verticals	Favorable repricing
Loan pipelines/mix	Fund finance/C&I strong; CRE specialty structured/lower LTV	Healthy $1.9B pipeline; headwinds in hybrid SFR/multi/auto from curve	$2.1B pipeline; better hybrid pipeline; competition tightening spreads	Gradual normalization; competitive
Credit/NPA	CRE specialty nonperformers stable; low loss expectations	SNC nonaccrual (logistics) provision; idiosyncratic NPA upticks; low losses expected	NPA increases in SFR/multi/CRE; lender finance SNC downgrade; minimal losses expected	Elevated but manageable
AI/technology	UDB migration; AI chatbots, low-code productivity	White-label banking for RIAs; AI task force/data layer	Low-code & AI use cases; efficiency gains; external AI partnership (Ascendion)	Expanding adoption
Securities/AAS	Cash sorting near bottom; deposits ~$1.3B; net new assets	Net new assets +$559M; off-balance deposits $450M	Net new assets +$822M; cash sweeps $878M; off-balance $450M	Improving volumes
Regulatory/legal	Short-report response context	Crypto: requires clearer rules; SNC restructuring dispute	Crypto re-engagement only with regulatory clarity; STG litigation noted	Cautious posture
Capital actions	Buybacks; excess capital build	Ongoing buyback consideration	$150M ATM shelf; accretive M&A optionality; no immediate raise	Optionality enhanced

Management Commentary

“Total interest-bearing deposit costs were 3.95%... down 51 basis points from the prior quarter... we have been able to reprice our higher cost consumer and wholesale deposits while maintaining on-balance sheet deposits roughly flat.”
“We expect our consolidated net interest margin ex FDIC loan purchases to stay at the high end or slightly exceed the $4.25 to $4.35 range we have targeted over the past year.”
“The $150 million at-the-market shelf... is a proactive step to capitalize on potentially accretive and strategic opportunities... We do not intend to raise any capital unless we have a clear line of sight.”
CFO: “Provision for credit losses was $12 million... allowance for credit losses to total loans held for investment was 1.37%... We remain well reserved relative to our low historical and current credit loss rates.”
On credit idiosyncrasies: management does not anticipate material losses in SFR/multifamily/CRE NPAs; lender finance SNC remains current with paydowns .

Q&A Highlights

Deposit cost trajectory and repricing ability: Management sees ongoing potential to offset asset-side rate declines by repricing deposits; improvements largely from rate-sensitive deposits .
NIM guidance clarity: Core NIM expected at high end or slightly above target; FDIC accretion contribution remains ~30–35 bps .
NPAs and credit process: Elevated NPAs reflect proactive classification amid documentation/valuation timing; limited loss content expected; litigation underway for syndicated deal .
Expense discipline: Continued focus on automation, low-code development, and cautious hiring to sustain operating leverage .
Crypto stance: No near-term re-engagement absent clearer regulatory frameworks and formal non-objection processes .

Estimates Context

We attempted to retrieve Wall Street consensus (EPS, revenue) via S&P Global but encountered an access limit error at time of query, so benchmark comparisons vs estimates are unavailable for this report. If desired, we can rerun once access is restored to provide beat/miss analysis.

Key Takeaways for Investors

Core NIM resilience: Guidance to the high end/slight exceed of 4.25–4.35% despite competitive spread compression underscores deposit franchise strength and repricing agility .
Deposit cost relief: 51 bps QoQ decline in interest-bearing deposit costs to 3.95% while holding balances flat is a tangible margin tailwind in a lower-rate environment .
Credit manageable: NPAs rose on idiosyncratic items, but management expects minimal losses and notes strong collateral/LTVs and guarantor strength, reducing tail risk .
Capital optionality: Robust capital (CET1 12.42%, total 15.23%) and a $150M ATM shelf provide flexibility for accretive acquisitions without near-term dilution risk .
Fee income trajectory: Securities/AAS net new assets accelerating (+$822M), but rate-sensitive sweep economics may cap near-term fee growth until rates stabilize .
Loan growth outlook: High-single-digit organic loan growth guided for the next two quarters; watch competitive pricing and hybrid pipeline conversion timing .
Actionable: Near-term, the narrative centers on sustaining high-end NIM via deposit repricing and disciplined OpEx; medium-term, accretive M&A optionality and AI/low-code productivity initiatives could expand ROE and fee streams .

Appendix: Additional Q2-related Press Releases

Axos Bank named to Forbes America’s Best Banks list (Feb 12, 2025), highlighting strong NIM, ROA/ROE, CET1, and efficiency ratios in ranking methodology .
Ascendion partnership to modernize Axos’ Zenith platform with AI-enhanced experiences and self-healing systems, supporting commercial banking for high-net-worth clients (Feb 19, 2025) .
Future Capital and Axos Clearing integration enables advisors to manage clients’ held-away 401(k) assets within Axos Complete, supporting AAS growth and advisor workflows (Feb 4, 2025) .

Axos Financial, Inc. (AX)·Q2 2025 Earnings Summary