Axos Financial closed fiscal year 2025 with an impressive fourth quarter, showcasing substantial financial growth and strategic advancements. The institution recorded robust net loan expansion and a notable increase in its net interest margin, alongside a healthy 18% year-over-year surge in book value per share. These achievements underscore the bank's strong financial health and effective operational strategies, signaling continued positive momentum for the upcoming fiscal year.
During the fiscal fourth quarter of 2025, ending June 30, Axos Financial, represented by its leadership including CEO Gregory Garrabrants, EVP and CFO Derrick Walsh, and SVP of Corporate Development and IR Johnny Y. Lai, unveiled a series of strong financial results. The company celebrated its 25th anniversary by demonstrating consistent performance across diverse economic landscapes. Key financial indicators included an $856 million increase in net loans, a 6 basis point rise in net interest margin to 4.84%, and a significant 18% increase in book value per share year-over-year. Return on average common equity stood at 17%, while return on assets reached 1.9% for the quarter. Net interest income climbed to $280 million, a 7.7% increase from the previous year. Total deposits grew 7.6% year-over-year to $20.8 billion, fueled by consumer and commercial banking sectors.
Management emphasized that credit quality remained robust, with nonaccrual loans decreasing by $15 million linked-quarter, reducing the nonaccrual to total loans ratio to 0.79%. Strategic initiatives played a crucial role in these results, including expanding commercial lending distribution channels and integrating new teams. The company also reported a pre-tax gain of $12 million from multifamily loan sales and a $5.5 million non-cash deferred tax impairment. Looking ahead, Axos Financial projects mid-to-high single-digit to low teens organic loan growth for fiscal year 2026, excluding any significant acquisitions. A projected reduction in California's corporate tax rate is expected to further boost net income and EPS by 3 percentage points starting in the September 2025 quarter.
Technological innovation, particularly the integration of artificial intelligence, is a core focus for enhancing operational efficiency and accelerating software development. CEO Garrabrants highlighted AI's potential to automate routine tasks and improve product delivery speed and cost-effectiveness, predicting a positive impact on the bank's operating efficiency ratio. The company continues to explore mergers and acquisitions, focusing on specialty lending and fee-based businesses that align with its strategic growth objectives. Axos Clearing, the custody and clearing business, also reported solid growth, with assets under custody increasing to $39.4 billion and net new assets reaching $215 million, reflecting positive market rebound and client acquisition momentum. The bank's diversified funding sources, including the successful Axos 1 consumer bundle, provide a stable foundation for ongoing organic loan growth, demonstrating a balanced approach to expansion and risk management.
Axos Financial’s strong close to fiscal 2025 underscores its resilience and strategic foresight. The company's significant loan growth, improved net interest margin, and enhanced book value per share reflect a well-executed strategy of diversified deposit gathering and targeted lending. The commitment to technological innovation, particularly AI, positions Axos for future operational efficiencies and accelerated product development. With stable credit quality and a proactive approach to capital deployment, including selective M&A, Axos is poised to continue its trajectory of strong performance and shareholder value creation in fiscal 2026 and beyond.