Axos Financial Inc. reported third‑quarter fiscal 2026 results on April 30 2026, delivering net income of $124.7 million and diluted earnings per share of $2.15. Net interest income rose 11.2% year‑over‑year to $306.261 million, while non‑interest income surged 157.7% to $85.988 million, largely driven by the operating lease rental income generated by the Verdant acquisition. Total assets increased 18.0% to $29.2 billion and total liabilities grew 18.5% to $26.2 billion, reflecting a $4.5 billion expansion in loans and securities available‑for‑sale. The company recorded a $41.0 million provision for credit losses, up from $14.5 million in the prior year and $25.0 million in the quarter ended December 31 2025.
The GAAP diluted EPS of $2.15 beat consensus estimates of $2.12, a beat of $0.03, largely because loan growth and disciplined expense management kept margins healthy. However, the adjusted EPS of $1.90 fell short of the consensus of $2.13, a miss of $0.23, reflecting the impact of a higher provision for credit losses and the inclusion of a one‑time legal settlement expense. Greg Garrabrants, President and Chief Executive Officer, noted that "Strong loan growth and good expense discipline resulted in double digit year-over-year increases in net interest income and diluted EPS."
Net interest margin contracted to 4.57% from 4.78% year‑over‑year, a decline attributed to lower loan yields following Federal Reserve rate cuts and fewer FDIC‑purchased loan prepayments. Management indicated that, excluding FDIC‑purchased loans, the margin was relatively flat year‑over‑year, suggesting that the core loan portfolio maintained pricing power despite the broader rate environment.
Non‑interest income grew 157.7% year‑over‑year, driven by the Verdant acquisition, which closed on September 30 2025 for $43.5 million in cash. The acquisition added operating lease rental income and expanded Axos’s equipment‑leasing capabilities. A legal settlement also contributed to the surge, adding a one‑time income component that was reflected in the quarter’s non‑interest earnings.
The provision for credit losses increased to $41.0 million from $14.5 million year‑over‑year and from $25.0 million in the prior quarter, reflecting loan growth and specific reserve adjustments. Derrick Walsh, Chief Financial Officer, explained that "Our real estate loans and structured credits continue to perform well, with very low levels of non‑performers and net charge‑offs." He added, "Excluding a specific loan loss reserve in the quarter on one C&I credit, our provision for credit losses was $21.4 million, down from $25.0 million in the quarter ended December 31 2025." The higher provision was driven by the expansion of the loan book and the need to adjust reserves for certain credit lines.
Axos reiterated its guidance for the remainder of fiscal 2026, maintaining confidence in its growth trajectory. Investors responded with mixed sentiment, balancing the revenue beat and strong loan growth against concerns over the adjusted EPS miss and the higher credit‑loss provision. The company also highlighted pending deposit acquisitions, including approximately $2.3 billion in Jenius Bank deposits and $3.2 billion of IRA deposits from Capital One, which are expected to support future funding and loan growth.
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