Q2 2026 Axos Financial Inc Earnings Call

January 29, 2026

Johnny Lai: Thanks, Alicia. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial, Inc.'s Q2 2026 financial results conference call are the company's President and Chief Executive Officer, Gregory Garrabrants, and Executive Vice President and Chief Financial Officer, Derrick Walsh.

The session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Johnny Lai, Senior Vice President, Corporate Development and Industrial Agent. Thank you, Johnny. You may begin.

Thanks Alicia. Good afternoon everyone, and thanks for your interest in axos joining us today. For axos financial. Links second quarter 2026 Financial results conference call are the company's president and chief executive officer. Greg garbrandt.

Greg and Derrick will provide prepared remarks on the financial and operational results for the quarter ended 31 December 2025, then open up the call for Q&A. Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties, and that management may make additional forward-looking statements in response to your questions. Please refer to the safe harbor statement found in today's earnings press release and in our investor presentation for additional details. The call is being webcast, and there will be an audio replay available in the investor relations section of the company's website located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release.

And Executive Vice President and Chief Financial Officer, Derek Walsh Greg and Eric will provide prepared remarks on the financial and operational results for the quarter ended. December 31st 2025. Then open up the call for Q&A.

Q2 2026 Axos Financial Inc Earnings Call

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Axos Financial

Earnings

Q2 2026 Axos Financial Inc Earnings Call

Thursday, January 29th, 2026 at 10:00 PM

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Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties, and that management may make additional forward-looking statements in response to your questions.

Please refer to the Safe Harbor statement found in today's earnings press release and in our investment presentation for additional details.

The best relation section of the company's website, located at axos financial.com for 30 days.

Operator 2: Before handing the call over to Greg, I'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement and 10-Q for this call. All of these documents can be found on axosfinancial.com. With that, I'd like to turn the call over to Greg. Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the quarter ended 31 December 2025. I thank you for your interest in Axos Financial. We had an outstanding quarter across a variety of growth, credit, and profitability metrics. We generated $1.6 billion of net loan growth linked quarter with broad-based growth across several asset-based lending areas, commercial specialty, and equity finance verticals.

Before handing the call over to Greg, I'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement and 10-Q for this call. All of these documents can be found on axosfinancial.com. With that, I'd like to turn the call over to Greg.

For this call, we're provided on the conference call announcement. And in today's earnings press release.

Before handing the call over to Greg, I'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement and 10 Q for this call.

All of these documents can be found on accessfinancial.com.

Gregory Garrabrants: Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the quarter ended 31 December 2025. I thank you for your interest in Axos Financial. We had an outstanding quarter across a variety of growth, credit, and profitability metrics. We generated $1.6 billion of net loan growth linked quarter with broad-based growth across several asset-based lending areas, commercial specialty, and equity finance verticals.

With that, I'd like to turn the call over.

Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the quarter ended December 31, 2025. I thank you for your interest in Axos Financial.

Operator 2: A 19 basis point linked quarter increase in net interest margin, a linked quarter improvement in our non-performing assets and net charge-off ratios, and a 23.3% year-over-year increase in earnings per share. We continue to generate high returns as evidenced by the over 17% return on average common equity and the 1.8% return on assets in the three months ended 31 December 2025. Other highlights in the quarter include net interest income was $331.6 million for the three months ended 31 December 2025, increasing by approximately $41 million linked quarter, or 14%. Net interest income growth benefited from balance growth across single-family mortgage warehouse, commercial real estate specialty lending, equipment finance, and fund finance. We had one FDIC loan prepay this quarter, resulting in approximately $17 million of interest income benefit. Excluding that benefit, net interest income was up $23 million, or 8%, from fiscal Q1 2026 to fiscal Q2 2026.

A 19 basis point linked quarter increase in net interest margin, a linked quarter improvement in our non-performing assets and net charge-off ratios, and a 23.3% year-over-year increase in earnings per share. We continue to generate high returns as evidenced by the over 17% return on average common equity and the 1.8% return on assets in the three months ended 31 December 2025.

Other highlights in the quarter include net interest income was $331.6 million for the three months ended 31 December 2025, increasing by approximately $41 million linked quarter, or 14%. Net interest income growth benefited from balance growth across single-family mortgage warehouse, commercial real estate specialty lending, equipment finance, and fund finance. We had one FDIC loan prepay this quarter, resulting in approximately $17 million of interest income benefit. Excluding that benefit, net interest income was up $23 million, or 8%, from fiscal Q1 2026 to fiscal Q2 2026.

We had an outstanding quarter across a variety of growth credit and profitability metrics. We generated 1.6 billion of net, loan growth, link quarter with broad-based growth, across several asset based lending areas commercial specialty and Equity Finance verticals in 19% basis point, link quarter, increase. And that interest margin, a link quarter improvement in our non-performing assets and net charge off ratios and a 23.3% year-over-year, increase in earnings per share. We continue to generate High returns as evidenced, by the over 17% return on average, common equity, and the 1.8% return on assets in the 3 months, end of December 31st, 2025 other highlights in the quarter include net. Interest income was 331.6 Million.

For the 3 months ended December 31, 2025.

Increasing by approximately $41 million linked quarter, or 14%.

Net interest income growth benefited from balanced growth across single-family mortgage warehouse.

Commercial specialty, real estate equipment, finance and fund Finance.

We had 1 FD loan, uh, prepaid this quarter resulting in approximately 17 million of interest income benefit, excluding that benefit.

Operator 2: Net interest margin was 4.94% for quarter ended 31 December 2025, up 19 basis points from 4.75% in the quarter ended 30 September 2025. Excluding the impact from the early payoff of an FDIC purchased loan and the impact from the burdened balance sheet securitization, our net interest margin was 4.72%, roughly flat from the prior quarter. We continue to maintain our best-in-class net interest margin with or without the benefit of the accretion from loans purchased from the FDIC. Non-interest income increased by approximately $21 million quarter over quarter due to higher banking service fees, broker-dealer fee income, and prepayment penalty fees. This was the first quarter with non-interest income and non-interest expense contributions from Verdant. Non-interest income from Verdant was approximately $18.9 million in the quarter ended 31 December 2025.

Net interest margin was 4.94% for quarter ended 31 December 2025, up 19 basis points from 4.75% in the quarter ended 30 September 2025. Excluding the impact from the early payoff of an FDIC purchased loan and the impact from the burdened balance sheet securitization, our net interest margin was 4.72%, roughly flat from the prior quarter. We continue to maintain our best-in-class net interest margin with or without the benefit of the accretion from loans purchased from the FDIC. Non-interest income increased by approximately $21 million quarter over quarter due to higher banking service fees, broker-dealer fee income, and prepayment penalty fees. This was the first quarter with non-interest income and non-interest expense contributions from Verdant. Non-interest income from Verdant was approximately $18.9 million in the quarter ended 31 December 2025.

Net interest income was up, 23 million or 8% from fiscal, q1 2026 to fiscal Q2 2026.

Net interest margin was 4.94% for the quarter ended December 31, 2025, up 19 basis points from 4.75% in the quarter ended September 30, 2025. Excluding the impact from the early payoff of an FDIC purchase loan and the impact from the Verdant balance sheet securitization, our net interest margin was 4.72%, roughly flat from the prior quarter. We continue to maintain our best-in-class net interest margin, with or without the benefit of the accretion from loans purchased from the FDIC.

Not interesting. Come increased by approximately 21 million quarter of a quarter.

Operator 2: Total non-accrual loans to total loans declined 13 basis points linked quarter, resulting in our non-accrual loans to total loan ratio improving from 74 basis points as of 30 September 2025, to 61 basis points as of 31 December 2025. Non-performing assets declined in single-family mortgage, multifamily, and commercial mortgage, and stayed roughly flat in commercial real estate and C&I non-real estate lending categories. Net income was approximately $128.4 million in the quarter ended December 2025, up 22.6% from $104.7 million in the prior year's second quarter. Diluted earnings per share was $2.22 for the quarter ended 31 December 2025, compared to $1.80 in the prior quarter, representing a 23.3% year-over-year increase. Total originations for investments excluding single-family warehouse lending were $5.6 billion for the three months ended 31 December 2025, representing an increase of 35% linked quarter, or nearly 140% annualized.

Total non-accrual loans to total loans declined 13 basis points linked quarter, resulting in our non-accrual loans to total loan ratio improving from 74 basis points as of 30 September 2025, to 61 basis points as of 31 December 2025. Non-performing assets declined in single-family mortgage, multifamily, and commercial mortgage, and stayed roughly flat in commercial real estate and C&I non-real estate lending categories. Net income was approximately $128.4 million in the quarter ended December 2025, up 22.6% from $104.7 million in the prior year's second quarter. Diluted earnings per share was $2.22 for the quarter ended 31 December 2025, compared to $1.80 in the prior quarter, representing a 23.3% year-over-year increase. Total originations for investments excluding single-family warehouse lending were $5.6 billion for the three months ended 31 December 2025, representing an increase of 35% linked quarter, or nearly 140% annualized.

Due to higher banking service fees broker dealer fee income and prepayment penalty fees. This was the first quarter with non-interest income and non-interest expense contributions from verdant. Non-interest income. From verdant was approximately 18.9 million in the quarter ended December 31st 2025.

Total non-accrual loans, the total loans to

Points as of September 30, 2025, to 61 basis points at the December 30, 2025, non-performing assets. Declined in single family, mortgage multi-family, and commercial mortgage and stayed roughly flat in commercial real estate and CNI, non-real estate lending categories.

Net income was approximately 128.4 million in the quarter. Ended December, 2025 up 22.6% from 104.7 million in the prior Year's second, quarter diluted earnings per share was $2.22 for the quarter end of December. 31st 2025 compared to $1.80 in the prior quarter representing a 23.3% year-over-year increase

Total originations for investments, excluding single family and warehouse lending, were $5.6 billion for the three months ended December 31, 2025.

Representing an increase.

Operator 2: Commercial Real Estate Specialty Lending, equipment leasing, Asset-Based Lending, and single-family warehouse had strong organic originations and net loan growth this quarter. Single-family mortgage ending balances were roughly flat, an improvement from net attrition we experienced over the past three years. Average loan yields from non-purchase loans for the three months ended 31 December were 7.63%, roughly flat from the prior 7.66% in the prior quarter. Average loan yields for purchase loans were 23.32%, which included the accretion of our purchase discount. Purchase loan yields for the quarter ended 31 December benefited from one FDIC loan prepayment, resulting in approximately $17.1 million of purchase discount accretion that we recognized in interest income. The FDIC purchase loans continue to perform, and all loans in that portfolio remain current. Ending deposit balances of $23.2 billion were up 44.3% linked quarter and up 16.5% year-over-year.

Commercial Real Estate Specialty Lending, equipment leasing, Asset-Based Lending, and single-family warehouse had strong organic originations and net loan growth this quarter. Single-family mortgage ending balances were roughly flat, an improvement from net attrition we experienced over the past three years. Average loan yields from non-purchase loans for the three months ended 31 December were 7.63%, roughly flat from the prior 7.66% in the prior quarter. Average loan yields for purchase loans were 23.32%, which included the accretion of our purchase discount. Purchase loan yields for the quarter ended 31 December benefited from one FDIC loan prepayment, resulting in approximately $17.1 million of purchase discount accretion that we recognized in interest income. The FDIC purchase loans continue to perform, and all loans in that portfolio remain current. Ending deposit balances of $23.2 billion were up 44.3% linked quarter and up 16.5% year-over-year.

Or nearly, 140%, annualized commercial real estate specialty, lending and Equipment, leasing asset based lending and single family Warehouse, has strong organic originations and net loan growth. This quarter single family, mortgage, uh, ending balances were

Roughly flat and improvement from net attrition. We experienced over the past 3 years.

Resulting in approximately $17.1 million of purchased discount accretion that we recognized in interest income. The FDIC purchase loans continue to perform, and all loans in that portfolio remain current.

Operator 2: Demand, money market, and savings accounts representing 96% of total deposits as of December 31st increased by 17% year-over-year. We have a diverse mix of funding across a variety of business verticals, with consumer and small business representing 52% of total deposits, commercial, cash, treasury management, and institutional representing 22%, commercial specialty representing 15%, excess fiduciary services representing 5%, and excess securities, which is our custody and clearing, representing 5%. Average non-interest-bearing deposits were approximately $3.5 billion in the quarter ended December 31st, compared to $3 billion in the prior quarter. Client cash sorting deposits ended the quarter around $1.1 billion, up modestly from the September quarter. In addition to our excess security deposits on our balance sheet, we had approximately $460 million of deposits off balance sheet at partner banks.

Demand, money market, and savings accounts representing 96% of total deposits as of December 31st increased by 17% year-over-year. We have a diverse mix of funding across a variety of business verticals, with consumer and small business representing 52% of total deposits, commercial, cash, treasury management, and institutional representing 22%, commercial specialty representing 15%, excess fiduciary services representing 5%, and excess securities, which is our custody and clearing, representing 5%. Average non-interest-bearing deposits were approximately $3.5 billion in the quarter ended December 31st, compared to $3 billion in the prior quarter. Client cash sorting deposits ended the quarter around $1.1 billion, up modestly from the September quarter. In addition to our excess security deposits on our balance sheet, we had approximately $460 million of deposits off balance sheet at partner banks.

Ending deposit balances of $23.2 billion were up 44.3% linked quarter and up 16.5% year-over-year, with money market and savings accounts representing 96% of total deposits. As of December 31st, deposits increased by 17% year-over-year.

We have a diverse mix of funding across a variety.

Of business verticals, with Consumer and Small Business representing 52% of total deposits, and Commercial, Cash Treasury Management, and Institutional representing 22%.

Commercial specialty. Representing 15%.

Excess fiduciary services representing 5% and access to securities which is our custody and clearing representing 5% average is not interest-bearing deposits, were approximately $3.5 billion in the quarter ended December 31st, compared to $3 billion in the prior quarter. Client cash sorting deposits end of the quarter were around $1.1 billion, up modestly from the September quarter.

Operator 2: We remain focused on adding non-interest-bearing deposits from our custody, clearing, fiduciary services, and commercial, cash, and treasury management verticals. Our consolidated net interest margin was 4.94% for the quarter ended 31 December, compared to 4.75% in the quarter ended 30 September. We closed the Verdant acquisition on 30 September, adding approximately $430 million of loans and leases and approximately $780 million of on-balance sheet securitizations. While the leases are generally accretive to loan yields, the secured financing had a 3 basis point negative impact on our net interest margin in the quarter ended 31 December. 1 FDIC purchased loan paid off in the December quarter. The net impact from the early FDIC purchase loan payoff and the Verdant secured financing was a 22 basis point boost to this quarter's net interest margin.

We remain focused on adding non-interest-bearing deposits from our custody, clearing, fiduciary services, and commercial, cash, and treasury management verticals. Our consolidated net interest margin was 4.94% for the quarter ended 31 December, compared to 4.75% in the quarter ended 30 September. We closed the Verdant acquisition on 30 September, adding approximately $430 million of loans and leases and approximately $780 million of on-balance sheet securitizations. While the leases are generally accretive to loan yields, the secured financing had a 3 basis point negative impact on our net interest margin in the quarter ended 31 December. 1 FDIC purchased loan paid off in the December quarter. The net impact from the early FDIC purchase loan payoff and the Verdant secured financing was a 22 basis point boost to this quarter's net interest margin.

In addition to our access security deposits, on our balance sheet we had approximately $460 million of deposits off balance sheet at partner banks.

We remain focused on.

non-interest bearing deposits from our

Clearing fiduciary services and commercial cash and treasury management verticals.

Our Consolidated, net interest margin was 4.94% for the quarter, ended December 31st compared to 4.75% in the quarter ended September 30th. We closed The Verdant acquisition. On September 30th adding approximately 430 million of loans and leases and approximately 780 million of unbalanced sheet securitizations. While the leases are generally accretive to loan yields the secured financing had a 3 basis point negative impact on our net. Interest margin in a quarter ended December 31st.

One FD purchased loan paid off in the December quarter.

Operator 2: Given the payoffs and maturities in our FDIC purchased loans, we expect net interest margin accretion from the FDIC purchased loans to be 10 to 15 basis points going forward. The diversity of our lending channels provides us with the flexibility to maintain strong loan growth and credit performance while managing our best-in-class interest margin. Verdant had a strong quarter as part of Axos, contributing approximately $130 million of net new loans and operating leases in the December quarter. We have already identified several opportunities to deepen our relationship with existing Verdant vendors and dealers, as well as accelerate growth in a few existing verticals that were previously constrained by capital and size limitations when Verdant was under private ownership. Demand in our commercial specialty real estate, fund finance, and lender finance real estate and non-real estate verticals remains strong.

Given the payoffs and maturities in our FDIC purchased loans, we expect net interest margin accretion from the FDIC purchased loans to be 10 to 15 basis points going forward. The diversity of our lending channels provides us with the flexibility to maintain strong loan growth and credit performance while managing our best-in-class interest margin. Verdant had a strong quarter as part of Axos, contributing approximately $130 million of net new loans and operating leases in the December quarter. We have already identified several opportunities to deepen our relationship with existing Verdant vendors and dealers, as well as accelerate growth in a few existing verticals that were previously constrained by capital and size limitations when Verdant was under private ownership. Demand in our commercial specialty real estate, fund finance, and lender finance real estate and non-real estate verticals remains strong.

The net impact from the early FDIC purchase loan payoff and the Verdant secured financing was a 22 basis point boost to this quarter's net interest margin. Given the payoffs and maturities in our FDIC purchase loans, we expect net interest margin accretion from the FDIC purchase loans to be 10 to 15 basis points going forward.

The diversity of our lending channels provides us with the flexibility to maintain strong loan growth and credit performance, while managing our best-in-class interest margins.

Verdun had a strong quarter.

As part of access contributing approximately 130 million of net, loon loans, and operating leases in the December.

We have already identified several opportunities to deepen our relationship with existing Verdant vendors and dealers, as well as accelerate growth in a few existing verticals that were previously constrained by capital and size limitations when Verdant was under private ownership.

Demand in our commercial specialty. Real estate fund.

Operator 2: We are making steady progress growing our loan pipelines in newer lending verticals such as floor plan and middle market lending. Taking all these factors into consideration, we are confident that we will generate loan growth by low to mid-teens on an annual basis this year. Given the robust loan growth in the December quarter, we entered January with approximately $800 million higher starting loan balances than the average balances from the prior quarter. We also expect to grow loans in the $6 to 800 million range this quarter. This strong organic loan growth is allowing us to offset the lower level of accretion that we expect to receive going forward on the FDIC purchase loan portfolio. As a result of strong prepayments and scheduled maturities, the level of regular accretion we expect going forward per quarter on the FDIC loan purchase is approximately $6.5 million.

We are making steady progress growing our loan pipelines in newer lending verticals such as floor plan and middle market lending. Taking all these factors into consideration, we are confident that we will generate loan growth by low to mid-teens on an annual basis this year. Given the robust loan growth in the December quarter, we entered January with approximately $800 million higher starting loan balances than the average balances from the prior quarter. We also expect to grow loans in the $6 to 800 million range this quarter. This strong organic loan growth is allowing us to offset the lower level of accretion that we expect to receive going forward on the FDIC purchase loan portfolio. As a result of strong prepayments and scheduled maturities, the level of regular accretion we expect going forward per quarter on the FDIC loan purchase is approximately $6.5 million.

Finance, real estate and non-real estate verticals remain strong. We are making steady progress growing our loan pipelines in newer lending verticals such as floor plan and Middle Market lending. Taking all these factors into consideration, we are confident that we will generate loan growth in the low to mid-teens on an annual basis this year.

Given the robust loan growth, in the December quarter, we entered January with approximately $800 million higher starting loan balances than the average balances from the prior quarter. We also expect to grow loans in the $600 to $800 million range this quarter.

Operator 2: Excluding the one-time gain on the signature prepayment in this quarter, we received approximately $9 million of signature FDIC accretion in the December quarter, resulting in a forward-looking reduction of scheduled accretion of approximately $2.5 million. In essence, we have replaced a significant percentage of our signature loan accretion income with stable core net interest income. Additionally, the March quarter has two fewer days, resulting in approximately 2% net interest income reduction as compared with the three other quarters. Finally, we achieved around a 90% downward beta managing the last 50 basis points of rate cut, resulting in a potential 5 to 6 basis point reduction in our signature adjusted margin in the March quarter relative to the December quarter.

Excluding the one-time gain on the signature prepayment in this quarter, we received approximately $9 million of signature FDIC accretion in the December quarter, resulting in a forward-looking reduction of scheduled accretion of approximately $2.5 million. In essence, we have replaced a significant percentage of our signature loan accretion income with stable core net interest income. Additionally, the March quarter has two fewer days, resulting in approximately 2% net interest income reduction as compared with the three other quarters. Finally, we achieved around a 90% downward beta managing the last 50 basis points of rate cut, resulting in a potential 5 to 6 basis point reduction in our signature adjusted margin in the March quarter relative to the December quarter.

This strong organic loan growth is allowing us to offset the lower level of accretion that we expect to receive going forward on the FDIC purchase loan for portfolio, as a result of strong prepayments and scheduled maturities. The level of regular accretion we expect going forward for quarter on the signature FDIC loan purchase is approximately 6.5 million.

Excluding the one-time gain on the Signature prepayment in this quarter, we received approximately $9 million of Signature FDIC accretion in the December quarter, resulting in a forward-looking reduction of scheduled accretion of approximately $2.5 million.

Operator 2: Although some of this reduction may be offset by non-renewals of lower margin loans and slightly higher average margin of new originations, given the robustness of our loan demand. We had a strong increase in non-interest income as a result of the acquisition of Verdant's operating leases. While we expect that the Verdant loan balance growth is going to be approximately $150 million per quarter, the percentages that are operating leases, which will generate incremental fee income rather than interest income, will fluctuate from quarter to quarter depending on the structure of the individual transactions. The credit quality of our loan book continues to be strong, and our historical and current net charge-offs remain low. Total non-performing assets improved by approximately $19 million linked quarter, representing 56 basis points of total assets compared to 64 basis points in the prior quarter ended 30 September.

Although some of this reduction may be offset by non-renewals of lower margin loans and slightly higher average margin of new originations, given the robustness of our loan demand. We had a strong increase in non-interest income as a result of the acquisition of Verdant's operating leases. While we expect that the Verdant loan balance growth is going to be approximately $150 million per quarter, the percentages that are operating leases, which will generate incremental fee income rather than interest income, will fluctuate from quarter to quarter depending on the structure of the individual transactions. The credit quality of our loan book continues to be strong, and our historical and current net charge-offs remain low. Total non-performing assets improved by approximately $19 million linked quarter, representing 56 basis points of total assets compared to 64 basis points in the prior quarter ended 30 September.

We had a strong increase in non-interest income, as a result of the acquisition of burdens operating leases.

While we expect that the burden alone, balanced growth is going to be approximately $150 million per quarter. The percentages that are operating leases, which will generate incremental fee income rather than interest income, will fluctuate from quarter to quarter depending on the structure of the individual transactions.

Operator 2: Non-performing assets declined by approximately $9.7 million in multifamily and commercial mortgages and by $11.9 million in single-family mortgage. Total non-accruals and C&I lending were largely unchanged from the prior quarter. We do not anticipate a material loss from loans currently classified as non-performing in our single-family, multifamily, or commercial real estate loan portfolios. Net charge-offs of total assets were down 7 basis points linked quarter and 6 basis points year-over-year to 4 basis points for the three months ended 31 December. We remain well reserved from our current loan levels for credit losses, with our allowance for credit losses to non-accrual loans equal to 215.8% at 31 December. Axos Securities, which includes our correspondent clearing and RIA custody business, had a good quarter. Total assets under custody or administration increased by $43 billion at 30 September to $44.4 billion at 31 December.

Non-performing assets declined by approximately $9.7 million in multifamily and commercial mortgages and by $11.9 million in single-family mortgage. Total non-accruals and C&I lending were largely unchanged from the prior quarter. We do not anticipate a material loss from loans currently classified as non-performing in our single-family, multifamily, or commercial real estate loan portfolios. Net charge-offs of total assets were down 7 basis points linked quarter and 6 basis points year-over-year to 4 basis points for the three months ended 31 December. We remain well reserved from our current loan levels for credit losses, with our allowance for credit losses to non-accrual loans equal to 215.8% at 31 December. Axos Securities, which includes our correspondent clearing and RIA custody business, had a good quarter. Total assets under custody or administration increased by $43 billion at 30 September to $44.4 billion at 31 December.

The credit quality of our loan book continues to be strong, and our historical and current net charge-offs remain low. Total non-performing assets improved by approximately $19 million linked quarter, representing 56 basis points of total assets compared to 64 basis points in the prior quarter ended September 30th. Non-performing assets declined by approximately $9.7 million in multifamily and commercial mortgages, and by $11.9 million in single family mortgage.

Total non-accruals and CNI lending were largely unchanged from the prior quarter. We do not anticipate a material loss from loans currently classified as nominal.

Performance in our single family and multifamily or commercial real estate loan portfolios remains strong. Net charge-offs to total assets were down 7 basis points from the prior quarter and 6 basis points year-over-year, to 4 basis points for the three months ended December 31st. We remain well reserved from our current loan levels for credit loss, with our allowance for credit loss to non-accrual loans equal to 215.8%.

Operator 2: Net new assets for our custody business were nearly $1 billion in the December quarter and $2 billion for the first six months of fiscal 2026. Strong organic asset growth and operational improvements contributed to operating income from the security segment, improving from $7.8 million in the second quarter to $9.7 million, but $7.8 million in Q2 of 2025 to $9.7 million in Q2 of 2026. We continue to expand the scope and scale of artificial intelligence across the firm to a wide range of businesses and functional units. We are well positioned to use artificial intelligence to increase operating leverage across the enterprise. We are deploying artificial intelligence throughout the software development life cycle.

Net new assets for our custody business were nearly $1 billion in the December quarter and $2 billion for the first six months of fiscal 2026. Strong organic asset growth and operational improvements contributed to operating income from the security segment, improving from $7.8 million in the second quarter to $9.7 million, but $7.8 million in Q2 of 2025 to $9.7 million in Q2 of 2026. We continue to expand the scope and scale of artificial intelligence across the firm to a wide range of businesses and functional units. We are well positioned to use artificial intelligence to increase operating leverage across the enterprise. We are deploying artificial intelligence throughout the software development life cycle.

Hexo Securities which includes our corresponding clearing and ra custody business had a good quarter. Total assets under custody Administration, increased by 43 billion at September 30th to 44.41%. For the first 6 months of fiscal 2026, strong organic acid growth and operational improvements contributed to operating income from the security segment improving from 7.8 million in the second quarter to 9.7 million plus 7.8 million in Q2 of 2025 the 9.7 million in Q2 of 2026.

We continue to expand the scope and scale of artificial intelligence across the firm to a wide range of businesses and functions.

Operator 2: These AI-enabled tools allow us not only to review, document, and update code at a faster pace with fewer resources, but they will also allow our team to take on more projects concurrently without the need to increase the pace of new hires or offshoring. Our commercial lending team has expanded the utilization of AI in various credit underwriting and portfolio management workflows, significantly improving the productivity of manual repetitive tasks. We are enhancing our ability to perform more robust compliance and risk monitoring at reduced costs. We continue to evaluate M&A opportunities to augment growth from existing businesses and team liftouts. We successfully completed the acquisition of Verdant Commercial Capital, a vendor-based equipment leasing company at the end of the September quarter. Verdant's focus on originating small and mid-ticket leases nationally in six specialty verticals is a great addition to our commercial lending franchise.

These AI-enabled tools allow us not only to review, document, and update code at a faster pace with fewer resources, but they will also allow our team to take on more projects concurrently without the need to increase the pace of new hires or offshoring. Our commercial lending team has expanded the utilization of AI in various credit underwriting and portfolio management workflows, significantly improving the productivity of manual repetitive tasks. We are enhancing our ability to perform more robust compliance and risk monitoring at reduced costs. We continue to evaluate M&A opportunities to augment growth from existing businesses and team liftouts. We successfully completed the acquisition of Verdant Commercial Capital, a vendor-based equipment leasing company at the end of the September quarter. Verdant's focus on originating small and mid-ticket leases nationally in six specialty verticals is a great addition to our commercial lending franchise.

We are well positioned to use artificial intelligence to increase operating leverage across the Enterprise. We are deploying artificial intelligence throughout the software development life cycle. These AI enabled tools. Allow us not only to review document and update code at a faster Pace with fewer resources. But they will also allow our team to take on more projects. And currently, without the need to increase the pace of new hires or offshoring,

Our commercial lending team has expanded the use utilization of AI in various credit underwriting and portfolio management workflows significantly, improving the productivity of manual, repetitive tasks. We are enhancing our ability to perform more robust, compliance and wrist monitoring at reduced costs.

We continue to evaluate m&a opportunities to augment growth from existing businesses and team lift outs. We successfully completed the acquisition of ver.

A vendor based equipment lease.

Operator 2: Their strong risk-adjusted returns, history of low credit losses, tech-enabled service model, and the entrepreneurial spirit of the team members are a great strategic fit for Axos. We are making good progress integrating the team systems and processes. We also have spent time with the vertical and functional leaders to identify and prioritize strategic and operational initiatives that will help deepen our relationship with their clients and increase revenue, growth, and profitability. Over the next 6 to 12 months, we will more systemically develop cross-sell opportunities for deposits and floor plan lending to a larger set of strategic dealers and OEMs. With a strong start and a solid pipeline, we expect Verdant to achieve EPS accretion at the mid to high end of our initial projection of 2 to 3% accretion in fiscal 2026 and 5 to 6% accretion in fiscal 2027.

Their strong risk-adjusted returns, history of low credit losses, tech-enabled service model, and the entrepreneurial spirit of the team members are a great strategic fit for Axos. We are making good progress integrating the team systems and processes. We also have spent time with the vertical and functional leaders to identify and prioritize strategic and operational initiatives that will help deepen our relationship with their clients and increase revenue, growth, and profitability. Over the next 6 to 12 months, we will more systemically develop cross-sell opportunities for deposits and floor plan lending to a larger set of strategic dealers and OEMs. With a strong start and a solid pipeline, we expect Verdant to achieve EPS accretion at the mid to high end of our initial projection of 2 to 3% accretion in fiscal 2026 and 5 to 6% accretion in fiscal 2027.

At the end of the September quarter, Verticals focused on originating small and mid-ticket leases nationally and six specialty verticals. Verticals is a great addition to our commercial lending franchise. Their strong risk-adjusted returns, history of low credit losses, tech-enabled service model, and the entrepreneurial spirit of the team members are a great strategic fit for Axos. We are making good progress integrating the team, systems, and processes. We also have spent time with the vertical and functional leaders to identify and prioritize strategic and operational initiatives.

That will help deepen our relationship with their clients and increase revenue growth and profitability over the next 6 to 12 months, we will more systemically develop cross-sell opportunities for deposits and floor plan lending to a larger set of strategic dealers and OEMs.

With a strong start and a solid pipeline. We expect, ferdon to achieve EPS, secretion at the mid to high end of our initial projection of 2 to 3%, increase in fiscal 2020.

Operator 2: I'm excited about the opportunities that we have to maintain our positive momentum in fiscal 2026 and beyond. Our strong and growing capital, diverse lending, deposit, and fee income capabilities, operational and credit risk management culture positions us well to capitalize on organic and inorganic growth opportunities. As we make additional progress on various technology and process enhancement initiatives, I remain optimistic that we can deliver positive operating leverage while investing in businesses, systems, and people. Now I'll turn the call over to Derrick, who will provide additional details on our financial results. Thanks, Greg. A quick reminder that in addition to our press release, our 10-Q was filed with the SEC today and is available online through Edgar or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release under SEC filing for additional details.

I'm excited about the opportunities that we have to maintain our positive momentum in fiscal 2026 and beyond. Our strong and growing capital, diverse lending, deposit, and fee income capabilities, operational and credit risk management culture positions us well to capitalize on organic and inorganic growth opportunities. As we make additional progress on various technology and process enhancement initiatives, I remain optimistic that we can deliver positive operating leverage while investing in businesses, systems, and people. Now I'll turn the call over to Derrick, who will provide additional details on our financial results.

I'm excited about the opportunities that we have to maintain our positive momentum.

Fiscal 2026 and Beyond.

Strong and growing capital, diverse lending, deposit and fee income capabilities, and an operational and credit risk management culture position us well to capitalize on our organic and inorganic growth opportunities.

as we make additional progress on various technology and process.

Thanks, Greg. A quick reminder that in addition to our press release, our 10-Q was filed with the SEC today and is available online through Edgar or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release under SEC filing for additional details.

I remain optimistic that we can deliver positive operating leverage while investing in businesses systems, and people now, I'll turn the call over to Derek who will provide additional details on our financial results.

A quick reminder that, in addition to our press release, our 10-Q was filed with the SEC today and is available online through EDGAR, or through our website at axosfinancial.com.

Comments and a few topics. Please refer to our press release and our SEC filing for additional details.

Operator 2: Non-interest expenses were approximately $184.6 million for the three months ended 31 December 2025, compared to $156.3 million in the three months ended 30 September 2025. Verdant added approximately $7.8 million in salaries and benefits expenses and $14.8 million in depreciation and amortization expenses. Separately, we had a $7 million increase in other general and administrative expenses related to an accrual for the core clearing acquisition. Excluding the Verdant-related expenses and the one-time accrual, non-interest expenses were roughly flat quarter-over-quarter. We are committed to keeping our salaries and benefits, and professional services expense growth at 30% of our revenue growth or lower on an annual basis. As we mentioned last quarter, we acquired approximately $1 billion of loans and leases and $213 million of fixed asset operating leases in the Verdant acquisition, which closed on 30 September 2025.

Non-interest expenses were approximately $184.6 million for the three months ended 31 December 2025, compared to $156.3 million in the three months ended 30 September 2025. Verdant added approximately $7.8 million in salaries and benefits expenses and $14.8 million in depreciation and amortization expenses. Separately, we had a $7 million increase in other general and administrative expenses related to an accrual for the core clearing acquisition. Excluding the Verdant-related expenses and the one-time accrual, non-interest expenses were roughly flat quarter-over-quarter. We are committed to keeping our salaries and benefits, and professional services expense growth at 30% of our revenue growth or lower on an annual basis. As we mentioned last quarter, we acquired approximately $1 billion of loans and leases and $213 million of fixed asset operating leases in the Verdant acquisition, which closed on 30 September 2025.

Non-interest expenses were approximately $184.6 million for the three months ended December 31, 2025, compared to $156.3 million.

Verdant added approximately $7.8 million in salaries and benefits expenses and $14.8 million in depreciation and amortization expenses.

Separately, we have a 7 million increase in other General and administrative expenses related to an approval for the core clearing acquisition. Excluding the burden related expenses and the 1-time acral non-interest expenses were roughly flat quarter over quarter.

We are committed to keeping our salaries and benefits and Professional Services expense growth, at 30% of our Revenue growth or lower on an annual basis.

As we mentioned last quarter.

We acquired approximately $1 billion of loans and leases, and $213 million of fixed assets to operating leases in the Verdon acquisition.

Operator 2: As of 31 December 2025, $702 million remain as on-balance sheet securitizations. In the quarter ended 31 December 2025, we recorded $24.3 million of interest income from loans and leases and $14.1 million of non-interest income from the operating leases. Turning to the consolidated entity, total non-interest income for the three months ended 31 December 2025 was $53.4 million, an increase of 65% from the $32.3 million in the prior quarter. Aside from the $18.9 million non-interest income from Verdant, we saw growth in both broker-dealer and advisory fee income compared to the link quarter. Provisions for credit losses were $25 million in the quarter ended 31 December 2025, compared to $17.3 million in Q1 of 2026.

As of 31 December 2025, $702 million remain as on-balance sheet securitizations. In the quarter ended 31 December 2025, we recorded $24.3 million of interest income from loans and leases and $14.1 million of non-interest income from the operating leases. Turning to the consolidated entity, total non-interest income for the three months ended 31 December 2025 was $53.4 million, an increase of 65% from the $32.3 million in the prior quarter. Aside from the $18.9 million non-interest income from Verdant, we saw growth in both broker-dealer and advisory fee income compared to the link quarter. Provisions for credit losses were $25 million in the quarter ended 31 December 2025, compared to $17.3 million in Q1 of 2026.

Which closed on September 30, 2025. As of December 31, $702 million remain on balance sheet securitizations.

In the quarter ended December 31st 2025, we recorded 24.3 million of interest income from loans and leases and 14.1 million of non-interest income from the operating leases.

Turning to the Consolidated entity total, non-interest income for the 3-month end of December. 31st, 2025 was 53.4 million and increase of 65% from the 32.3 million in the prior quarter.

Aside from the 18.99% income from Verda.

We saw a growth in both broker-dealer and advisory fee income compared to the length quarter.

Provisions for credit losses were 25.

Operator 2: The primary driver of the quarter-over-quarter increase in provision for credit losses was robust loan growth across our commercial lending categories, which carry a higher provision for each dollar of net loans added compared to single-family and multifamily mortgages. We also added approximately $2.8 million to our provision for unfunded commitments related primarily to our commercial real estate specialty and C&I lending businesses during the quarter. I'll wrap up with our loan pipeline and growth outlook. Our loan pipeline remains healthy at approximately $2.2 billion as of 23 January 2026, consisting of $598 million of single-family residential jumbo mortgage, $75 million of single-family gain-on-sale mortgage, $200 million of multifamily and small balance commercial, $82 million of auto and consumer, and $1.2 billion across commercial.

The primary driver of the quarter-over-quarter increase in provision for credit losses was robust loan growth across our commercial lending categories, which carry a higher provision for each dollar of net loans added compared to single-family and multifamily mortgages. We also added approximately $2.8 million to our provision for unfunded commitments related primarily to our commercial real estate specialty and C&I lending businesses during the quarter. I'll wrap up with our loan pipeline and growth outlook. Our loan pipeline remains healthy at approximately $2.2 billion as of 23 January 2026, consisting of $598 million of single-family residential jumbo mortgage, $75 million of single-family gain-on-sale mortgage, $200 million of multifamily and small balance commercial, $82 million of auto and consumer, and $1.2 billion across commercial.

25.25 million in the quarter ended December 31st, 2025, compared to 17.11 million and 17.3 million in Q1 of 2026.

The primary driver of the quarter over quarter increase in provision. For credit losses was robust loan growth across our commercial lending categories.

Which carry a higher provision for each dollar of net loans added, compared to single family and multifamily mortgages.

We also added approximately $2.8 million to our provision for unfunded commitments, related primarily to our Commercial Real Estate Specialty and C&I lending businesses during the quarter.

I'll wrap up with our loan pipeline and growth outlook.

Our loan pipeline remains healthy at approximately $2.2 billion as of January 23rd, 2026, consisting of

$598 million of single-family residential jumbo mortgage.

75 million of single family gain on sale mortgage.

Millions of multi-family and small balance commercial.

Operator 2: We expect the combination of strong originations from our commercial lending businesses, growing contributions from incubator businesses such as floor plan and middle market lending, and slowing prepayments in our multifamily lending businesses, and the incremental contributions from the Verdant equipment finance business to drive loan growth in the low to mid-teens year-over-year over the next year. With that, I'll turn the call back over to Johnny. Thanks. Alicia, we're ready to take questions. Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone's keypad. A confirmation code will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

We expect the combination of strong originations from our commercial lending businesses, growing contributions from incubator businesses such as floor plan and middle market lending, and slowing prepayments in our multifamily lending businesses, and the incremental contributions from the Verdant equipment finance business to drive loan growth in the low to mid-teens year-over-year over the next year. With that, I'll turn the call back over to Johnny.

82 million of Auto and consumer and 1.2 billion across commercial.

We expect the combination of strong originations from our commercial lending businesses, growing contributions from incubator businesses such as floorplan and middle market lending, and slowing prepayments in our multifamily lending businesses, along with the incremental contributions from the Verdant Equipment Finance business, to drive loan growth in the low to mid-teens year-over-year over the next year.

Johnny Lai: Thanks. Alicia, we're ready to take questions.

With that, I'll turn the call back over to Johnny.

Operator: Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone's keypad. A confirmation code will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Uh, Alicia. We're ready to take questions.

Conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad,

Indicate, your line is in the question key.

Operator 2: One moment, please, while we pull up a question. Thank you. Our first question comes from the line of David Garrabrants with Jefferies. Please proceed. Hi. Thanks for taking the questions. So I wanted to start with the net interest margin outlook. I think I heard you right, that the normalized level was 4.72 and that you expect a 6 basis point decline, so that would imply 466. Just wanted to confirm that I heard that right, that was the first part. And then could you also talk about how much the average remaining life of the FDIC purchase loans? Yes. So with respect to the first question on interest margin, that's correct.

One moment, please, while we pull up a question. Thank you. Our first question comes from the line of David Garrabrants with Jefferies. Please proceed.

Press 2. If you would like to remove your question from the queue, for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

David Garrabrants: Hi. Thanks for taking the questions. So I wanted to start with the net interest margin outlook. I think I heard you right, that the normalized level was 4.72 and that you expect a 6 basis point decline, so that would imply 466. Just wanted to confirm that I heard that right, that was the first part. And then could you also talk about how much the average remaining life of the FDIC purchase loans?

Thank you. Our first question comes from the line of David Gabrielle Bernini with yes, please.

Gregory Garrabrants: Yes. So with respect to the first question on interest margin, that's correct.

I just wanted to confirm that I heard that right um was the first part and then could you also talk about how much um the average remaining life of the FDIC purchase loans?

Operator 2: I do think because we've had so much robust loan demand, as I said, that I've been able to kind of push up average spreads a little bit, but I think a good conservative approach would be to assume that you're going to have that 5 to 6 basis points decline in the adjusted margin just based on the robust growth we had. We did well on the deposit side, but we did, I think, pretty well on the deposit beta, but that's where that is. And then with respect to the securities side, it's almost like 3 or 4 more years, right? Correct. Yeah. About 3 or 4 more years. So that's 6.5. It's relatively steady, right? It's a little more. It's because of just the way the accounting is.

I do think because we've had so much robust loan demand, as I said, that I've been able to kind of push up average spreads a little bit, but I think a good conservative approach would be to assume that you're going to have that 5 to 6 basis points decline in the adjusted margin just based on the robust growth we had. We did well on the deposit side, but we did, I think, pretty well on the deposit beta, but that's where that is. And then with respect to the securities side, it's almost like 3 or 4 more years, right? Correct. Yeah. About 3 or 4 more years. So that's 6.5. It's relatively steady, right? It's a little more. It's because of just the way the accounting is.

Yes, um, so with respect to the, uh, the first, uh, question on that, interest margin. Uh, that's correct. I, you know, I do think because we've had so much, uh, robust loan demand, as I said, that I've been able to kind of push up average spreads a little bit, but I think a good, conservative approach would be to assume that you're going to have that 5 to 6, uh, basis point, uh, decline in the, um, adjusted, uh, margin just based on, um, you know, the robust growth we had. We, uh, we did well on the deposit side, but we, you know, we, we did, I think, pretty well on the down beta, but that's, uh, that's where that is. And then with respect to the, um, the Signature side—it's almost, it's like 3 or 4 more years, right? Correct. Yeah. It's about 3 or about 3 or 4 more years. Um,

You know, so that's, uh, you know, that's 6 and a half.

Operator 2: So obviously, we could have either theoretically, you could have a loss in the portfolio, which we haven't had yet, but you could, or you could have a prepayment, which would then accelerate that, and then we would describe what the otherwise then new level of accretion would be per quarter. Great. Thanks for that. And in terms of you alluded to potential team liftouts, can you talk about a pipeline there and what you're seeing? Well, I think we've done a decent number of team liftouts, and in a lot of cases, those teams are now adding people where they see opportunities on a more individual basis. So although we clearly look at acquisitions, we look at teams, I think we've really done a lot there in the last year: the floor plan team, the tech team, some other geographic teams.

So obviously, we could have either theoretically, you could have a loss in the portfolio, which we haven't had yet, but you could, or you could have a prepayment, which would then accelerate that, and then we would describe what the otherwise then new level of accretion would be per quarter.

David Garrabrants: Great. Thanks for that. And in terms of you alluded to potential team liftouts, can you talk about a pipeline there and what you're seeing?

Um, you know, it's it's it's relatively steady, right? It's a little more. It's it's because it's just the way the accounting is so, um, obviously we could have, you know, either theoretically, you could have a loss in the portfolio, which we haven't had yet but you could, or you could have a prepayment which would then accelerate that, and then we would describe what the uh, what the otherwise then uh, you know, new level of accretion would be per quarter.

Gregory Garrabrants: Well, I think we've done a decent number of team liftouts, and in a lot of cases, those teams are now adding people where they see opportunities on a more individual basis. So although we clearly look at acquisitions, we look at teams, I think we've really done a lot there in the last year: the floor plan team, the tech team, some other geographic teams.

Great, thanks for that. And in terms of uh, you alluded to uh, potential team lift outs, can you talk about, um, a pipeline there and and what you're seeing

Operator 2: And so I think we're probably more likely now in the coming quarter to be a little more focused on developing, or the coming quarter is a little more focused on developing those teams, adding where necessary. So we've kind of made those investments, and we want to see them kind of come to fruition, get a little more mature. Great. And then last one for me is just on the portfolio acquisition front. Similar question: is there much of a pipeline there, or are you seeing many portfolios for sale? On the loan side, we have such robust organic growth through our own channels that we'll see small ones, but I don't really think that's going to be a massive part. I haven't really seen a lot of those. And when they are, they come up.

And so I think we're probably more likely now in the coming quarter to be a little more focused on developing, or the coming quarter is a little more focused on developing those teams, adding where necessary. So we've kind of made those investments, and we want to see them kind of come to fruition, get a little more mature.

Well, um, you know, I think we we've done a decent number of Team lift outs, and then a lot of cases, those teams are now adding people where they see opportunities on a more individual basis. So although, you know, we clearly we look for we look at Acquisitions, we look at teams, I think we've really done a lot there in the last year. You know, the floor plan team, the tech team, um, some other Geographic teams and and, and so, I think we're probably more likely now in the coming.

Order to be a little more focused on developing or the coming quarters, a little more focused on developing those teams adding where necessary. So we've kind of made those Investments and we want to see them uh kind of uh come to fruition get a little more mature.

David Garrabrants: Great. And then last one for me is just on the portfolio acquisition front. Similar question: is there much of a pipeline there, or are you seeing many portfolios for sale?

Gregory Garrabrants: On the loan side, we have such robust organic growth through our own channels that we'll see small ones, but I don't really think that's going to be a massive part. I haven't really seen a lot of those. And when they are, they come up.

Great. And then, last one for me is just on the portfolio acquisition front. Um, similar question— is there much of a pipeline there? Are you seeing many portfolios for sale?

On the loan side. Um, you know, we have such robust or organic growth through our own channels and um, that we'll we'll see. We'll see small ones but I I don't really think that's going to be a massive part. I haven't.

Operator 2: They're sort of a bunch of low-rate multifamily loans where people are trying to pretend that they're not as marked as they should be or whatever. But there's always interesting deals. I mean, we're across the spectrum going on, and we're always spending our time thinking about those and making sure we're in a deal flow. Great. Thank you. Thank you. Thank you. Our next question comes from the line of Kyle Peterson with Needham & Company. Please proceed. Great. Good afternoon, guys. Thanks for taking the questions. Wanted to start off on the growth outlook. Great to hear the commentary and good to see the balances and the pipelines both looking really good.

They're sort of a bunch of low-rate multifamily loans where people are trying to pretend that they're not as marked as they should be or whatever. But there's always interesting deals. I mean, we're across the spectrum going on, and we're always spending our time thinking about those and making sure we're in a deal flow.

David Garrabrants: Great. Thank you.

Really seen a lot of those and when they are they come up, they're sort of a bunch of low rate, multi family loans, where people are trying to pretend that they're not as marked as they should be or whatever. Um, but you know, there's always interesting, uh, deals. I mean, we're across the Spectrum going on and we, you know, are always spending our time, I thinking about those and, and, uh, making sure we're in the deal flow.

Gregory Garrabrants: Thank you.

Operator: Thank you. Our next question comes from the line of Kyle Peterson with Needham & Company. Please proceed.

Kyle Peterson: Great. Good afternoon, guys. Thanks for taking the questions. Wanted to start off on the growth outlook. Great to hear the commentary and good to see the balances and the pipelines both looking really good.

Welcome to the line of Kyle Peterson with needam and Company, please proceed.

Operator 2: But in terms of moving forward to kind of support that low to mid-teens outlook here, should we expect more of the same, some of the strength, whether it's CRESL, warehouse, leasing, and some of these other things? Is it more of the same, or are there other parts that you are thinking will become more attractive, or you see additional opportunities in the next couple of quarters here? Yeah. I think that obviously CRESL was heavy growth this quarter. We don't expect that. We expect it to be a little more balanced next quarter. Fund finance continues to do well. We expect non-real estate lender finance maybe to have a little bit better quarter. Floor plan will kick in. Floor plan will start to kick in. So yeah, I think it's going to be pretty balanced. And I think Verdant is; they're a bit of a seasonal business.

But in terms of moving forward to kind of support that low to mid-teens outlook here, should we expect more of the same, some of the strength, whether it's CRESL, warehouse, leasing, and some of these other things? Is it more of the same, or are there other parts that you are thinking will become more attractive, or you see additional opportunities in the next couple of quarters here?

Gregory Garrabrants: Yeah. I think that obviously CRESL was heavy growth this quarter. We don't expect that. We expect it to be a little more balanced next quarter. Fund finance continues to do well. We expect non-real estate lender finance maybe to have a little bit better quarter. Floor plan will kick in. Floor plan will start to kick in. So yeah, I think it's going to be pretty balanced. And I think Verdant is; they're a bit of a seasonal business.

Great. Um, good afternoon guys. Thanks for taking the questions. Um, wanted to start off, uh, on the growth Outlook, great to hear the commentary and and good to see, you know, the balances and the pipelines both, you know, looking really good. But, um, you know, in terms of moving forward to kind of support that low to mid teens, uh, outlook here. Should we, you know, expect more of the same? You know, some of the strengths whether it's, you know, serious specialty Warehouse, um, Leasing and some of these other things. So is it more of the same or or are there other parts that you you are thinking will become more attractive or or you see additional opportunities in in the next, uh, couple quarters here.

Operator 2: They tend to have a bigger Q4, and Q1 is slower. It's just the way that leasing business is. But we still expect that they're going to be 150, 200 of growth, including all their segments. At least that's what their current projection is. So I think it's going to be pretty balanced. I feel really good about the balance we have across the groups now. Got it. That's really helpful. And then as a follow-up, wanted to touch on fee income. I know there's some pieces moving around with Verdant, and I think there's some seasonality from some paper statements and stuff. But I guess stripping out that seasonality from that, is this a good run rate moving forward for fee income with Verdant in the fold?

They tend to have a bigger Q4, and Q1 is slower. It's just the way that leasing business is. But we still expect that they're going to be 150, 200 of growth, including all their segments. At least that's what their current projection is. So I think it's going to be pretty balanced. I feel really good about the balance we have across the groups now.

Kyle Peterson: Got it. That's really helpful. And then as a follow-up, wanted to touch on fee income. I know there's some pieces moving around with Verdant, and I think there's some seasonality from some paper statements and stuff. But I guess stripping out that seasonality from that, is this a good run rate moving forward for fee income with Verdant in the fold?

Start to kick in. So yeah. And I think, I think it's going to be pretty balanced and I think verdant is, you know, they're they're a bit of a seasonal business. They tend to have a bigger fourth quarter. And first quarter is slower. It's just the way that, um, leasing business is but I, we still expect that they're going to, um, you know, be 150 200 of growth, um, including all their segments, uh, at least that's what their current projection is. So, yeah, I think it's going to be pretty balanced. I I feel really good about the balance we have, uh, across the groups now,

Operator 2: Obviously, I know there can be some moving on rates, but in a more stable rate environment, would this quarter be a good jumping-off point? Yeah. I think that's right, Kyle. I think we did have the paper statement fee. That was about $1.5 million this past quarter, so impactful, but not overly impactful by any means. But as the Verdant income, we expect to be generally consistent through that non-interest income line item and maybe some small growth there as they grow originations. But it's only about 20% or even a little shy of that of their portfolio. So that comes through in operating leases, and there's nuances to that with the accounting and as far as the classification as to what hits operating and what hits the net interest income line item. But I think this is a good jumping-off point. Okay. That's really helpful.

Obviously, I know there can be some moving on rates, but in a more stable rate environment, would this quarter be a good jumping-off point?

Gregory Garrabrants: Yeah. I think that's right, Kyle. I think we did have the paper statement fee. That was about $1.5 million this past quarter, so impactful, but not overly impactful by any means. But as the Verdant income, we expect to be generally consistent through that non-interest income line item and maybe some small growth there as they grow originations. But it's only about 20% or even a little shy of that of their portfolio. So that comes through in operating leases, and there's nuances to that with the accounting and as far as the classification as to what hits operating and what hits the net interest income line item. But I think this is a good jumping-off point.

Got it. Um, you know that that's really helpful and then, you know, as a as a follow-up 1 day, um, you know, touch on on fee income. I know there's some some pieces moving around, um, you know, with burdens and I think there's some seasonality from, you know, some paper statements and stuff. But I guess stripping out that seasonality from that is, is this a good run rate? Uh, moving forward for for fee income, with burden in the fold. Um, obviously know there can be some, some moving on rates, but, um, in in a more stable rate environment would, uh, you know, this quarter would be a good, uh, jumping off point.

Kyle Peterson: Okay. That's really helpful.

Yeah, I think that's right, Kyle. I think the uh, we did have the paper statement, see that was about a million and a half this past quarter. So in fact, but we're not overly impactful by any means. And, uh, but as the as The Verdant income, we expect to be generally consistent through that non-interest income line item, um, and, and maybe some, uh, some small growth there as they, they grow originations. But, uh, it's it's only about 20% or even a little shy of that of their portfolio. So that come through an operating leases. And there's there's nuances to that with the accounting and as far as, uh, the classification as to what hits operating and what hits the, the net interest income line item, but I think you're this is a good jumping off point.

Operator 2: Thanks for taking my questions, and nice quarter, guys. Thank you. Thank you. Our next question comes from the line of David Feaster with Raymond James. Please proceed. Hey, good morning, everybody, or good afternoon, I guess. Hey, David. How are you doing? Long night for you, huh? I know. Yes. Hi, Greg. I got a high-level one for you. I mean, you guys have more going on than any other bank that I know. I mean, you got a ton of growth engines. You got a lot of irons in the fire, if you will, that you're developing, businesses that you're incubating. From your standpoint, what are you most excited about today that you're working on that you think could be maybe most impactful to the business? Yeah. It's an interesting question. I mean, I'll dodge it, then I'll answer it.

Thanks for taking my questions, and nice quarter, guys.

Gregory Garrabrants: Thank you.

Operator: Thank you. Our next question comes from the line of David Feaster with Raymond James. Please proceed.

Okay, um, that's really helpful. Thanks for, uh, taking my questions, and, uh, next quarter, I guess.

David Feaster: Hey, good morning, everybody, or good afternoon, I guess. Hey, David. How are you doing? Long night for you, huh? I know. Yes. Hi, Greg. I got a high-level one for you. I mean, you guys have more going on than any other bank that I know. I mean, you got a ton of growth engines. You got a lot of irons in the fire, if you will, that you're developing, businesses that you're incubating. From your standpoint, what are you most excited about today that you're working on that you think could be maybe most impactful to the business?

Thank you. Our next question comes from the line of David Fester with Raymond James. Please proceed.

Hey, good morning everybody. Or good afternoon, I guess. Um, hey David, how you doing? Long night for you? I know. Yes. Um,

Gregory Garrabrants: Yeah. It's an interesting question. I mean, I'll dodge it, then I'll answer it.

Hi Greg, I I got a high level 1 for you. I mean you guys have more going on than any other bank that I know. I mean you got a ton of growth engines. You got a lot of irons in the fire. Um if you will that you're you're developing businesses that you're incubating. Um I'm like from your standpoint what are you most excited about today that you're working on that you think could be maybe most impactful to the business.

Yeah, it's an interesting question. I mean,

Operator 2: I think one of the reasons that we have continued to do as well as we have for as long as we have is that we do have that balance. And so that balance allows us to have strong growth but not actually have rushed growth in anything. So if you really look at the underlying businesses, any one of those businesses isn't growing at a crazy speed usually, but the combination of all of those businesses together end up generating a reasonable level of growth. So in a lot of respects, a lot of the infrastructure that's necessary for those businesses to succeed and to grow and to get operating leverage really relies on a common data infrastructure, common Salesforce platform that allows us to track what's going on with our teams and all those kinds of things.

I think one of the reasons that we have continued to do as well as we have for as long as we have is that we do have that balance. And so that balance allows us to have strong growth but not actually have rushed growth in anything. So if you really look at the underlying businesses, any one of those businesses isn't growing at a crazy speed usually, but the combination of all of those businesses together end up generating a reasonable level of growth. So in a lot of respects, a lot of the infrastructure that's necessary for those businesses to succeed and to grow and to get operating leverage really relies on a common data infrastructure, common Salesforce platform that allows us to track what's going on with our teams and all those kinds of things.

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Q2 2026 Axos Financial Inc Earnings Call

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Q2 2026 Axos Financial Inc Earnings Call

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Q2 2026 Axos Financial Inc Earnings Call

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