Axos Financial Misses EPS but Beats Revenue; Shares Slip 2.5% in After‑Hours Trade

Earnings Summary

- GAAP EPS: $2.15 vs. $2.38 consensus (miss by $0.23)

- Non‑GAAP EPS: $1.90 vs. $2.13 estimate (miss by $0.23)

- Revenue: $392 million vs. $372.5 million estimate (beat by $19.5 million)

- YoY Revenue Growth: 27.0%

- Net Income: $124.7 million, up 18.5% YoY

- Net Interest Income: $306.3 million, up 11.2% YoY

- Non‑interest Income: $86.0 million, up 157.7% YoY (includes $22 million legal settlement)

Guidance & Outlook

The company did not issue full‑year EPS guidance, instead emphasizing operational milestones. Management highlighted the upcoming Jenius Bank deposit acquisition slated for the June quarter, intended to “optimize funding and prepare for additional organic loan growth.” The firm also noted a deliberate reduction in higher‑cost savings and time‑deposit balances ahead of that deal. No specific revenue or EPS targets were disclosed, leaving analysts to extrapolate from the 27% revenue growth and 18.8% EPS increase year‑over‑year.

Conference Call Highlights

- CEO Greg Garrabrants: “Strong loan growth and good expense discipline resulted in double‑digit year‑over‑year increases in net interest income and diluted EPS.” He also pointed out that, excluding the FDIC‑purchased loans and two fewer days in the quarter, net interest income rose $5.7 million linked quarter‑over‑quarter.

- CFO Derrick Walsh: Stressed low credit‑loss rates, with the provision for credit losses falling to $21.4 million (down from $25.0 million a quarter ago) and an allowance covering 195.2% of non‑accrual loans.

- Deposit Strategy: The firm reduced higher‑cost deposits in anticipation of the Jenius acquisition, aiming to improve net interest margin, which slipped modestly to 4.57% from 4.78% YoY.

Market Reaction

Following the earnings release, AX shares fell 2.54% in after‑hours trading, closing at $93.99 versus the prior close of $96.44. The decline reflects investor disappointment over the EPS miss despite the revenue beat, and uncertainty around the timing and impact of the Jenius acquisition.

Analyst Commentary

- MarketBeat noted that “Axos Financial beat analysts’ revenue expectations last quarter, reporting revenues of $385.1 million, up 25.1% year on year,” and highlighted the “impressive beat of analysts’ net interest income estimates.” However, the same source flagged the EPS miss as a downside catalyst, contributing to a modest downgrade from a few analysts who now see the stock as a Hold rather than a Buy.

- MarketWatch analysts pointed to the strong loan‑growth numbers and low non‑performing assets (0.62% of total assets) as positives, but warned that the net interest margin compression and higher credit‑loss provisions could pressure profitability if loan growth slows.

Sector Context

Axos reported results amid a broader earnings season for regional banks, many of which are grappling with higher funding costs and tighter margins. While peers such as KeyCorp and Regions posted modest EPS beats, Axos’ revenue outperformance and aggressive deposit‑acquisition strategy set it apart, though the market remains cautious until the Jenius deal materializes.

Outlook

Looking ahead, Axos’ ability to translate its loan‑growth momentum into sustainable earnings will hinge on:

1. Successful integration of the Jenius Bank deposits and the associated funding cost benefits.

2. Maintaining low credit‑loss ratios as the loan portfolio expands.

3. Managing net interest margin pressure amid a rising rate environment.

Investors will be watching the Q4 2026 earnings release for clues on whether the EPS trajectory can rebound while sustaining revenue growth.