Axos Financial Boosts Assets with Verdant Acquisition, Net Income Flat

TL;DR

**AX's big bet on equipment leasing with the Verdant acquisition is a growth play, but watch those rising credit loss provisions.**

AI Summary

Axos Financial, Inc. reported a net income of $112.352 million for the three months ended September 30, 2025, a slight increase from $112.340 million in the prior year. Total assets grew significantly to $27.431 billion as of September 30, 2025, up from $24.783 billion as of June 30, 2025. This growth was largely driven by the acquisition of Verdant Commercial Capital, LLC on September 30, 2025, which added approximately $1.2 billion in loans and leases and resulted in $72.767 million in goodwill and other intangible assets. Loans, net of allowance for credit losses, increased to $22.635 billion from $21.049 billion. Total deposits also saw a substantial rise to $22.264 billion from $20.829 billion. Net interest income slightly decreased to $291.050 million from $292.048 million, while the provision for credit losses increased to $17.255 million from $14.000 million. Non-interest income increased to $32.340 million from $28.609 million, primarily due to higher banking and service fees and mortgage banking income. Non-interest expense rose to $156.246 million from $147.465 million, with salaries and related costs increasing to $76.605 million.

Why It Matters

Axos Financial's acquisition of Verdant Commercial Capital, LLC significantly expands its equipment leasing business, a strategic move to diversify revenue streams and enhance scale in a competitive banking landscape. This could lead to increased market share and long-term growth for investors, but also introduces integration risks. For employees, the acquisition means potential new opportunities within an expanded organization. Customers of Verdant will now be part of Axos, potentially benefiting from a larger financial institution's resources. The broader market will watch how Axos integrates Verdant and leverages its new asset base, especially given the slight dip in net interest income and increased provision for credit losses.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant acquisition of Verdant Commercial Capital, LLC, which introduces integration risks and a substantial increase in goodwill and other intangible assets to $205.747 million from $134.502 million. Additionally, the provision for credit losses increased to $17.255 million for the quarter, up from $14.000 million in the prior year, indicating potential future credit quality concerns.

Analyst Insight

Investors should monitor the integration of Verdant Commercial Capital, LLC closely, specifically its contribution to revenue and profitability in upcoming quarters. Evaluate the impact of the increased provision for credit losses on future earnings and assess the quality of the acquired loan portfolio. Consider holding AX shares if the integration proves successful and credit quality remains stable, but be prepared to re-evaluate if integration challenges or further credit deterioration emerge.

Financial Highlights

debt To Equity

8.81

revenue

$323.390M

operating Margin

N/A

total Assets

$27.431B

total Debt

$2.793B

net Income

$112.352M

eps

$1.99

gross Margin

N/A

cash Position

$2.886B

revenue Growth

-0.3%

Revenue Breakdown

Key Numbers

• $112.352M — Net Income (Slight increase from $112.340M in Q3 2024)
• $27.431B — Total Assets (Increased from $24.783B as of June 30, 2025, largely due to acquisition)
• $1.2B — Loans and Leases Acquired (From Verdant Commercial Capital, LLC acquisition)
• $17.255M — Provision for Credit Losses (Increased from $14.000M in Q3 2024)
• $291.050M — Net Interest Income (Slight decrease from $292.048M in Q3 2024)
• $22.635B — Loans (net) (Increased from $21.049B as of June 30, 2025)
• $22.264B — Total Deposits (Increased from $20.829B as of June 30, 2025)
• $72.767M — Goodwill Recognized (From Verdant acquisition, assigned to Banking Business Segment)
• 56,644,002 — Shares Outstanding (As of October 17, 2025)
• $1.99 — Basic EPS (Increased from $1.97 in Q3 2024)

Key Players & Entities

• Axos Financial, Inc. (company) — registrant
• Verdant Commercial Capital, LLC (company) — acquired entity
• Federal Deposit Insurance Corporation (regulator) — seller of loan portfolios
• $112.352 million (dollar_amount) — net income for Q3 2025
• $27.431 billion (dollar_amount) — total assets as of September 30, 2025
• $1.2 billion (dollar_amount) — loans and leases acquired from Verdant
• $17.255 million (dollar_amount) — provision for credit losses for Q3 2025
• $291.050 million (dollar_amount) — net interest income for Q3 2025
• $72.767 million (dollar_amount) — goodwill recognized from Verdant acquisition
• New York Stock Exchange (regulator) — exchange where common stock is registered

FAQ

Risk Factors

• Integration of Acquired Businesses [medium — operational]: The acquisition of Verdant Commercial Capital, LLC introduces risks related to integrating its operations, systems, and personnel. Failure to effectively integrate could disrupt business, impact customer retention, and prevent the realization of expected synergies.
• Credit Risk and Loan Portfolio Quality [high — financial]: The company's loan portfolio, which increased to $22.635 billion, is subject to credit risk. An increase in the provision for credit losses to $17.255 million from $14.000 million indicates potential concerns about borrower repayment capacity, which could lead to higher charge-offs.
• Interest Rate Sensitivity [medium — market]: Net interest income slightly decreased to $291.050 million, suggesting sensitivity to interest rate fluctuations. Changes in market interest rates can impact the net interest margin and profitability.
• Regulatory Compliance and Capital Requirements [high — regulatory]: As a financial institution, Axos is subject to extensive regulation. Changes in regulatory requirements or failure to comply could result in fines, sanctions, or restrictions on operations, impacting financial performance.
• Cybersecurity and Data Breaches [medium — operational]: The company's reliance on technology and digital platforms exposes it to cybersecurity threats. A data breach could lead to financial losses, reputational damage, and regulatory penalties.
• Liquidity Risk [medium — financial]: While total deposits increased to $22.264 billion, managing liquidity is crucial. Significant deposit outflows or an inability to access funding sources could impair the company's ability to meet its obligations.
• Litigation and Legal Proceedings [low — legal]: The company is subject to various legal proceedings and potential litigation. Adverse outcomes could result in significant financial liabilities and reputational harm.

Industry Context

Axos Financial operates in the highly competitive banking and financial services industry. The sector is characterized by increasing digitalization, evolving customer expectations, and a dynamic regulatory environment. Recent consolidation, such as Axos's acquisition of Verdant, highlights a trend towards strategic growth and diversification to enhance market position and service offerings.

Regulatory Implications

Axos Financial is subject to stringent oversight from various regulatory bodies, including the Federal Reserve and OCC. The company must maintain adequate capital levels, adhere to consumer protection laws, and manage risks associated with its lending and deposit-taking activities. The recent acquisition may also bring new regulatory considerations and compliance requirements.

What Investors Should Do

1. Monitor integration progress of Verdant Commercial Capital, LLC.
2. Analyze trends in net interest margin and provision for credit losses.
3. Evaluate the impact of non-interest income growth.
4. Assess the company's capital adequacy and liquidity position.

Key Dates

• 2025-09-30: Acquisition of Verdant Commercial Capital, LLC completed — Significantly increased total assets and loan portfolio, adding $1.2 billion in loans and leases and $72.767 million in goodwill, impacting the company's scale and business mix.
• 2025-09-30: End of the third quarter — Reporting period for the 10-Q, showing net income of $112.352 million and total assets of $27.431 billion.
• 2025-06-30: End of the second quarter — Prior period comparison point for balance sheet items, showing total assets of $24.783 billion and loans of $21.049 billion.
• 2024-09-30: End of the third quarter of the prior year — Comparison period for income statement items, showing net income of $112.340 million and net interest income of $292.048 million.

Glossary

Goodwill and other intangible assets

Represents the excess of the purchase price of an acquired company over the fair value of its identifiable net assets. Intangible assets are non-physical assets like patents or brand names. (The acquisition of Verdant Commercial Capital, LLC resulted in $72.767 million of goodwill and other intangible assets being recognized on the balance sheet.)

Provision for credit losses

An expense recognized by lenders to cover potential losses from loans that may not be repaid. It's an estimate of future loan defaults. (Increased to $17.255 million from $14.000 million, indicating a more conservative outlook on loan portfolio quality or an increase in expected losses.)

Net interest income

The difference between the interest income a financial institution earns from its lending activities and the interest it pays out on deposits and borrowings. (Slightly decreased to $291.050 million, reflecting changes in interest rates and the composition of the company's interest-earning assets and interest-bearing liabilities.)

Non-interest income

Revenue generated by a financial institution from sources other than net interest income, such as fees, service charges, and trading gains. (Increased to $32.340 million, driven by higher banking and service fees and mortgage banking income, diversifying revenue streams.)

Non-interest expense

Operating expenses of a financial institution that are not related to interest payments, such as salaries, rent, and technology costs. (Increased to $156.246 million, with salaries and related costs being a significant component, likely influenced by growth and the recent acquisition.)

Allowance for credit losses

A contra-asset account on the balance sheet that reduces the carrying amount of loans to their estimated net realizable value. (Stood at $307.431 million as of September 30, 2025, reflecting management's assessment of potential loan losses within the portfolio.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Axos Financial reported a slight increase in net income to $112.352 million, while net interest income saw a marginal decrease to $291.050 million. Total assets experienced significant growth, reaching $27.431 billion, largely due to the recent acquisition of Verdant Commercial Capital, LLC. The provision for credit losses increased, signaling a more cautious stance on asset quality, while non-interest income showed robust growth, driven by fees and mortgage banking. Non-interest expenses also rose, reflecting investments in growth and operational costs.

Key Financial Figures

• $0.01 — ange on which registered Common stock, $0.01 par value AX New York Stock Exchange

Filing Documents

• ax-20250930.htm (10-Q) — 2865KB
• ex101cicseveranceagreement.htm (EX-10.1) — 67KB
• ex3112025093010-qexhibitq1.htm (EX-31.1) — 11KB
• ex3122025093010-qexhibitq1.htm (EX-31.2) — 11KB
• ex3212025093010-kexhibitq1.htm (EX-32.1) — 6KB
• ex3222025003010-qexhibitq1.htm (EX-32.2) — 6KB
• ax-20250930_g1.jpg (GRAPHIC) — 29KB
• 0001299709-25-000184.txt ( ) — 15306KB
• ax-20250930.xsd (EX-101.SCH) — 66KB
• ax-20250930_cal.xml (EX-101.CAL) — 158KB
• ax-20250930_def.xml (EX-101.DEF) — 444KB
• ax-20250930_lab.xml (EX-101.LAB) — 907KB
• ax-20250930_pre.xml (EX-101.PRE) — 696KB
• ax-20250930_htm.xml (XML) — 3405KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 1

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS 1 Condensed Consolidated Balance Sheets (unaudited) 1 Condensed Consolidated Statements of Income (unaudited) 2 Condensed Consolidated Statements of Comprehensive Income (unaudited) 3 Condensed Consolidated Statements of Stockholders' Equity (unaudited) 4 Condensed Consolidated Statements of Cash Flows (unaudited) 5 Notes to Condensed Consolidated Financial Statements (unaudited) 6 1. Summary of Significant Accounting Policies 6 2. Acquisitions 8 3. Fair Value 10 4. Available-for-Sale Securities 14 5. Loans & Allowance for Credit Losses 16 6. Derivatives 21 7. Offsetting of Derivatives and Securities Financing Agreements 22 8. Stockholders' Equity and Stock-Based Compensation 23 9. Earnings per Common Share 24 10. Commitments and Contingencies 25 11. Segment Reporting and Revenue Information 26 12. Borrowings, Subordinated Notes and Debentures 27 13. Other Assets 28 14. Variable I nterest Entities 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 30 USE OF NON-GAAP MEASURES 32 SELECTED FINANCIAL INFORMATION 33 RESULTS OF OPERATIONS 35 SEGMENT RESULTS 38 FINANCIAL CONDITION 39 LIQUIDITY 42 CAPITAL RESOURCES AND REQUIREMENTS 43

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 45

CONTROLS AND PROCEDURES

ITEM 4. CONTROLS AND PROCEDURES 47

– OTHER INFORMATION

PART II – OTHER INFORMATION 48

LEGAL PROCEEDINGS

ITEM 1. LEGAL PROCEEDINGS 48

RISK FACTORS

ITEM 1A. RISK FACTORS 48

UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES 48

DEFAULTS UPON SENIOR SECURITIES

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 48

MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES 48

OTHER INFORMATION

ITEM 5. OTHER INFORMATION 48

EXHIBITS

ITEM 6. EXHIBITS 49

SIGNATURES

SIGNATURES 50 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS AXOS FINANCIAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except par value) September 30, 2025 June 30, 2025 ASSETS Cash and cash equivalents $ 2,560,692 $ 1,933,845 Restricted cash 324,903 242,509 Total cash, cash equivalents and restricted cash 2,885,595 2,176,354 Trading securities 533 649 Available-for-sale securities 57,798 66,008 Stock of regulatory agencies 35,299 35,163 Loans held for sale, carried at fair value 12,202 10,012 Loans—net of allowance for credit losses of $ 307,431 as of September 30, 2025 and $ 290,049 as of June 30, 2025 22,635,137 21,049,610 Servicing rights, carried at fair value 26,243 27,218 Securities borrowed 182,518 139,396 Customer, broker-dealer and clearing receivables 263,095 252,720 Goodwill and other intangible assets—net 205,747 134,502 Other assets 1,127,650 891,446 TOTAL ASSETS $ 27,431,817 $ 24,783,078 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest-bearing $ 3,387,318 $ 3,040,696 Interest bearing 18,877,435 17,788,847 Total deposits 22,264,753 20,829,543 Advances from the Federal Home Loan Bank 60,000 60,000 Secured financings 782,423 — Borrowings, subordinated notes and debentures 510,064 312,671 Securities loaned 204,620 139,426 Customer, broker-dealer and clearing payables 385,821 350,606 Accounts payable and other liabilities 431,015 410,155 Total liabilities 24,638,696 22,102,401 COMMITMENTS AND CONTINGENCIES (Note 10) STOCKHOLDERS' EQUITY: Common stock—$ 0.01 par value; 150,000,000 shares authorized; 71,356,152 shares issued and 56,643,547 shares outstanding as of September 30, 2025; 71,101,642 shares issued and 56,483,617 shares outstanding as of June 30, 2025 714 711 Additional paid-in capital 557,740 548,895 Accumulated other comprehensive income (loss)—net of income tax 64 348 Retained earnings 2,730,877 2,618,525 Treasury stock, at cost; 14,712,605 shares as of September 30, 2025 and

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