Overview

Axos Financial, Inc. is a technology-driven, diversified financial services company with approximately $23.7 billion in assets and $37.7 billion in assets under custody and/or administration. The company provides secure and scalable banking, clearing and custody, and investment advisory solutions to retail and business customers through its client-centric, technology platforms.

Financial Performance

For the three months ended December 31, 2024, Axos Financial reported net income of $104.7 million, or $1.80 per diluted share, compared to $151.8 million, or $2.62 per diluted share, in the prior year period. For the six months ended December 31, 2024, net income was $217.0 million, or $3.72 per diluted share, compared to $234.4 million, or $3.98 per diluted share, in the prior year period.

The company’s net interest income increased 22.5% to $280.1 million for the three months ended December 31, 2024, and 30.1% to $572.1 million for the six months ended December 31, 2024, compared to the prior year periods. This was primarily due to higher interest income on loans and interest-earning deposits, partially offset by higher interest expense on deposits.

Non-interest income decreased 77.6% to $27.8 million for the three months ended December 31, 2024, and 64.4% to $56.4 million for the six months ended December 31, 2024, compared to the prior year periods. This was mainly due to the absence of a $92.4 million gain on the FDIC Loan Purchase in the prior year.

Non-interest expense increased 19.3% to $145.3 million for the three months ended December 31, 2024, and 20.8% to $292.8 million for the six months ended December 31, 2024, compared to the prior year periods. The increases were primarily driven by higher salaries and related costs, professional services, and FDIC and regulatory fees.

Strengths and Weaknesses

Axos Financial’s key strengths include its diversified business model, strong net interest margin, and robust capital and liquidity positions. The company’s net interest margin of 4.83% for the three months ended December 31, 2024 exceeded the industry average, reflecting its ability to generate attractive yields on its loan portfolio.

However, the company’s reliance on non-interest income, particularly from the FDIC Loan Purchase gain in the prior year, is a potential weakness. The significant decrease in non-interest income in the current year periods highlights the company’s vulnerability to one-time events and the need to diversify its revenue streams further.

Outlook

Going forward, Axos Financial’s focus on organic growth, strategic acquisitions, and continued investment in technology and digital capabilities should support its long-term performance. The company’s strong capital and liquidity positions provide it with the flexibility to navigate potential economic headwinds and pursue new growth opportunities.

Overall, Axos Financial remains a well-positioned, technology-driven financial services provider, but it will need to address its reliance on non-recurring revenue sources to maintain its strong financial performance in the future.