Axos Targets March 2027 For Bitcoin Purchases In Self-Directed Accounts, With Lending To Follow
The CEO also said prepayment penalty income, which hit $6.8 million last quarter, probably won't repeat as loan growth picks up.
Axos Financial, the digital bank and securities clearing company, expects to let customers buy Bitcoin in its self-directed trading accounts around March 2027, CEO Greg Garrabrants told analysts on the company's earnings call on Thursday. A Bitcoin lending program is meant to follow shortly after.
Bitcoin first, other coins later
Responding to an analyst from Needham about crypto plans, Garrabrants said the feature is an addendum to the self-directed trading account and should be live in the "March 2027-ish timeframe." It will start in beta, he said, to make sure "everything is buttoned up and working properly."
Axos is using a third-party custodian connected through APIs. The product is working in a test environment, and Garrabrants said it would move into production "in the next two to three weeks" for further testing.
A lending program "like the margin program" will follow, after which Axos will assess which other coins to add. He argued that having checking and brokerage accounts in one place gives the company a tight link between money movement and trading.
Prepayment fees expected to fall back
Prepayment penalty fee income rose to $6.8 million in the September quarter from $650,000 a year earlier, which management tied to elevated prepayments in commercial lending. Asked by an analyst from D.A. Davidson whether that would last, Garrabrants said he thinks it will fall this quarter and does not expect it to repeat.
He said loan growth should be better in the quarter, and called the two trends related. Ending loans were $25.9 billion at September 30, up $316.6 million from June, as payoffs and about $290 million of capital call syndications offset strong originations. Management still targets low to mid-teens loan growth for the fiscal year.
Quarter and the deposit pipeline
Axos reported net income of about $129.6 million, up 15.4% from $112.4 million a year earlier, and diluted earnings per share of $2.25 against $1.94. Net interest margin rose 10 basis points from the prior quarter to 4.64%. Net charge-offs were 109 basis points, up from 25, on two cash-flow loans that had already carried specific reserves.
The bank also closed the Capital One deposit acquisition in September, adding about $1.8 billion in IRA savings and CDs. Management expects to migrate about $700 million of deposits from ARC clients now held at partner banks to Axos over the next few quarters, and expects the net interest margin to stay flat over the next few quarters.
Garrabrants said the Bitcoin feature is "pretty close to being done," with production testing set to begin within weeks.
Sources
- Axos Financial: Fiscal Q1 Earnings Snapshot – WTOP News — wtop.com
- Axos Financial Q1 2027 Earnings Call Transcript — benzinga.com
- Axos outlines low to mid-teen loan growth in fiscal 2027 as it targets flat net interest margin (NYSE:AX) — seekingalpha.com
- Compared to Estimates, Axos Financial (AX) Q1 Earnings: A Look at Key Metrics — Yahoo Finance
- Axos Financial (AX) Q1 Earnings and Revenues Top Estimates — Yahoo Finance
