Axos Bank Buys Verdant Commercial Capital for $43.5M

Axos Bank has made its first acquisition since 2019 by purchasing Verdant Commercial Capital, a specialty equipment leasing lender, for $43.5 million in a deal announced on September 22, 2025. The acquisition is expected to close by the end of September 2025 and will add approximately $1.1 billion in loans and leases to Axos’ portfolio.

• Axos Bank will acquire 100% of Verdant Commercial Capital’s membership interests for $43.5 million in cash, including a $4 million premium to book value.

• The deal includes performance incentives, with the potential for up to $50 million in additional payments over four years based on Verdant achieving a return on equity above 15%.

• Verdant specializes in small to mid-ticket equipment leases ranging from $50,000 to $5 million, serving six industry verticals nationwide.

Axos plans to leverage its lower-cost deposit funding to replace Verdant’s higher-cost funding structure, expecting the deal to be accretive to earnings per share by 2-3% in fiscal 2026 and 5-6% in 2027.

The acquisition will also allow Axos to cross-sell commercial deposits and floorplan lending to manufacturers and dealers in sectors such as specialty vehicles, golf, and entertainment.

How will this impact lenders & professionals in commercial finance?

The Axos acquisition marks a shift in specialty finance, with large banks re-entering niche markets and intensifying rate competition, squeezing independent lenders' margins.

Banks like Axos can offer lower-cost funding, challenging smaller firms. Independent lenders must now focus on speed, personalized service, and creative deal structures to differentiate themselves.

• Banks have recently reentered equipment finance after retreating post-2008, now prioritizing growth through acquisitions of specialty lenders to quickly build portfolios and capitalize on attractive risk-adjusted returns.

• As banks scale up in these niches, they will use their capacity to compete on rates and funding terms, often outmatching independents and non-banks, especially for prime borrowers.

• Analysts expect the pace of new bank acquisitions to increase, pressuring margins and driving consolidation among independents that lack rate competitiveness.

Consequences for Borrowers

• Businesses with strong credit may see better rates and broader offerings as banks aggressively pursue equipment finance, while specialized or higher-risk borrowers could face fewer options outside of large institutions.

• Independent lenders are responding by targeting relationships, focusing on fast approvals and flexible terms—especially for startups and companies with unique needs not met by banks’ standard underwriting.

Challenges for Independent Lenders

• Growing regulatory demands and a race to maintain cost of capital are accelerating, prompting independents to diversify funding sources and product lines.

• Many independents fill gaps left by banks, serving clients with less conventional profiles, but as bank competition rises, maintaining liquidity and differentiation becomes more vital.

The verticals most exposed to pressure from bank acquisitions—like Axos buying Verdant—are those with highly standardized assets, because these are easiest for large balance-sheet lenders to underwrite and compete aggressively in.

Most Vulnerable Verticals

• Medical equipment, vehicles (especially fleet and commercial auto), construction equipment, office equipment, and IT/hardware leasing are particularly at risk.

• Sectors where asset value is easily determined and collateral is liquid will attract more bank capital and rate competition, squeezing independent players the hardest.

Timeline for Margin Compression

• The squeeze on independent lenders’ margins often hits in 12–18 months following major bank entry or acquisition cycles—sometimes sooner if several banks move in tandem.

• Increased competition is expected in the next year to year-and-a-half as more banks look to scale through acquisitions, forcing independents to adjust quickly to changing economics.

Tactics Beyond Speed/Service

• Geographic focus: Specialize in underserved regions or local markets where big banks are less nimble or have less penetration.

• Industry or product specialization: Go deep on complex assets (e.g., agricultural machinery, specialty vehicles, or emerging technologies) that banks typically avoid due to unfamiliarity or underwriting complexity.

• Creative structures: Offer non-traditional terms—such as operating leases, seasonal payments, balloon structures, or used/refurbished asset financing—which banks may not match.

• Bundled solutions and consulting: Include value-adds like training, warranty financing, or software/services rolled in, becoming a true partner rather than simply a capital provider.

• Partnerships and syndications: Work with vendors, brokers, or captives to co-lend or share risk in ways that leverage independent agility.

Overall, independent lenders who survive this next cycle will either be true experts in their niche or will have regional/industry relationships that big banks can’t easily replicate.

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