Axos Financial (AX 4.71%), a digital-focused bank and diversified financial services provider, reported its fourth quarter results for the period ending June 30, 2025, on July 30, 2025. The company announced adjusted earnings per share (Non-GAAP) of $1.94, beating analyst estimates of $1.78. Revenue (GAAP) also topped projections, coming in at $321.4 million versus an expected $312.3 million. These results were powered by strong loan and deposit growth, efficient cost control, and ongoing technology investment. However, the company faced a notable increase in provision for credit losses (GAAP). Overall, the quarter reflected continued progress on growth and digital strategy, balanced against higher risk provisions and expense growth.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Strategic Focus

Axos Financial operates as a tech-driven bank and financial-services provider. Its key activities include consumer and commercial banking, lending, wealth management, and securities services such as investment advisory and clearing. The company has fully digital operations with client-centric online and mobile banking at its core.

It has pursued a dual focus: leveraging proprietary digital technology to grow profits and offering a diversified suite of banking and investment products. Success in its business depends on scaling technology efficiently, maintaining regulatory compliance, managing credit and liquidity risks, and differentiating itself in a highly competitive market.

Quarter Highlights: Growth, Credit, and Tech Investment

In the most recent quarter, Axos saw strong year-over-year gains on many key metrics. Net interest income grew 7.7% for the three months ended June 30, 2025, compared to the same period in 2024, helped by ongoing loan and deposit growth. Total loans increased $856 million, reaching $21.0 billion, a growth rate of 4% sequentially and Loan balances increased 9.4% for the twelve months ended June 30, 2025. Deposit balances of $20.8 billion were up 7.6% from last year. The net interest margin—what banks earn on loans and investments minus what they pay for deposits—rose to 4.84%, up from 4.65% in Q4 FY2024. According to management, lower funding costs for deposit balances played a key role in offsetting market pressures.

Non-interest income, which reflects earnings from services such as mortgage banking and securities operations, jumped 33.8%. The period included a $12.0 million gain from selling mortgage loans, which was specifically cited as a driver in the company’s release. Overall, efficiency also improved: the company’s efficiency ratio—a measure of expenses as a percent of revenue—fell to 46.87%, better than both last year’s 48.31% and prior recent quarters.

Diving into business lines, the banking segment delivered $276.7 million in net interest income (GAAP). The securities segment, which covers the company’s custody, clearing, and investment platform, contributed $7.2 million in net interest income and $29.6 million in non-interest income (GAAP). assets under custody rose to $39.4 billion at quarter-end as of June 30, 2025. Axos introduced a proprietary professional workstation for clearing clients, developed using low-code software—meaning it could be built out more quickly and cost-effectively than traditional systems.

One key area of risk flagged for investors is credit quality. The provision for credit losses leapt to $15.0 million compared to $6.0 million in Q4 FY2024. This increase was tied to both stronger loan growth and updates in the company’s quantitative models, which use external economic forecasts to estimate how much should be set aside for future loan losses. Even with higher reserves, actual net charge-offs—loans unlikely to be collected—remained quite low at 0.16% of average loans (GAAP). Non-performing assets, a measure of loans no longer generating income, declined as a percentage of total assets from the prior quarter, hitting 0.71%, though this was up from 0.51% in Q4 FY2024. Management explained that some problem loans were sold at full value, and credit quality in the company’s real estate portfolio remained sound.

Technology development featured heavily in both expense and strategy. Axos increased investments in artificial intelligence, process automation, and its digital client platforms. These efforts spanned not just banking, but also its direct-to-consumer securities products and new proprietary advisor workstation, all of which seek process efficiency and flexibility. Operating expenses grew 7.2% year over year. The increase was primarily due to higher salaries and related costs, as well as higher data and operational processing expenses.

Axos generated positive loan growth across several consumer and commercial lending categories, including asset-based lending, auto lending, equipment leasing, lender finance, and single-family mortgage. The quarter did not include any major one-time gains or charges outside of regular mark-to-market adjustments and a small legal claim settlement, which was resolved at a lower cost than initially anticipated.

Looking Ahead: Guidance and Watch Points

Management did not provide formal forward guidance numbers for fiscal 2026. However, comments from the Q3 FY2025 earnings call indicated the company expects its net interest margin to remain at the higher end of its 4.25% to 4.35% target range, excluding any benefits from past loan purchases. Axos also projected annual loan growth in the high single-digit to low teens percent range, but cautioned that this could fluctuate due to customer prepayment trends or changing economic conditions.

Looking forward, investors should watch the impact of ongoing technology investments on both revenue and expenses, as well as credit risk in commercial and industrial loans, which are sensitive to economic modeling and potential downturns. Management flagged an expected reduction in the tax rate by 3 percentage points for FY2026 due to a change in California state tax methodology.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.