Axos Financial, Inc.

Greetings and welcome to the Axos Financial Inc. First Quarter 2026 Earnings Call-In Webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Johnny Lai. Please go ahead.

Thanks, Gary. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial Inc.' 's first quarter 2026 financial results conference call are the company's president and chief executive officer, Greg Gerbrandt, and executive vice president and chief financial officer, Derek Walsh. Greg and Derek will review and comment on the financial and operational results for the quarter 2026 ended September 30th, 2025, and we will be available to answer questions after the prepared remarks. 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. This call is being webcast, and there will be an audio replay available in the investor relations section of the company's website located at AxiosFinancial.com for 30 days. Details for this call were 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 our 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. 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 Access Financial's conference call for the first quarter of fiscal 2026, ended September 30th, 2025. I thank you for your interest in Access Financial. We had a strong start to our fiscal 2026, generating $1.6 billion of net loan growth link quarter, including $1 billion of loans and leases and on-balance sheet securitizations acquired in the Verdant acquisition, which closed on September 30th, 2025. A five basis point link quarter reduction in net charge-offs and a 17% year-over-year increase in book value per share. We continue to generate high returns as evidenced by the nearly 16% return on average common equity and a 1.8 return on average assets in the three months ended September 30, 2025. Other highlights in the quarter include net interest income was $291 million for the three months ended September 30, 2025, increasing by approximately $11 million link quarter, or 15.6% annualized. Net interest income growth benefited from balanced growth across single-family mortgage warehouse, commercial specialty real estate, and auto lending. Net interest income in the prior year's comparable quarter, ending September 30, 2024, included a benefit of approximately $17 million for the prepayment of three FDIC-purchased loans. Excluding that one-time benefit, net interest income was up $16 million, or 5.8%, from fiscal Q1 of 2025 to fiscal Q1 of 2026. Net interest margin was 4.75% for the quarter ended September 30, 2025, down nine basis points from 4.84% in the quarter ended June 30, 2025. Excluding the impact from holding excess liquidity, our net interest margin was roughly flat quarter over quarter. Since the Verdon acquisition closed on 9-30-2025, the transaction did not have any impact on our net interest income or net interest margin in this quarter end. We continue to maintain a best-in-class net interest margin with or without the benefit of the accretion from purchase loans from the FDIC. Non-interest income increased by approximately 13% year-over-year due to higher banking service fees, mortgage banking income, and prepayment penalty fees. Total unbalance sheet deposits increased 6.9% year-over-year to $22.3 billion. Our diverse and granular deposit base across consumer and commercial banking and our securities businesses continues to support our growth and are expected to provide relatively lower cost of funding sources for the loans and leases acquired from Verdant relative to their prior capital structure. Total non-accrual loans, the total loans declined five basis points linked quarter, resulting in our non-accrual loans, the total loans improving from 79 basis points as of June 30th, 2025, ended September 30, 2025, up from $110.7 million in the quarter ended June 30, 2025. Diluted EPS was $1.94 for the quarter ended September 30th compared to $1.92 in the June quarter. Excluding the one-time deal-related expenses and allowance for credit loss adjustment for the verdant acquisition, adjusted net income and adjusted EPS were $119 million in and $2.06 per share, respectively, for the quarter ended September 30th, a 7.3% increase from the linked quarter at almost 30% annually. Total originations for investment, excluding single-family warehouse lending, were over $4.2 billion for the three months ended September 30th, representing an increase of 11% linked quarter or 44% annually. Commercial real estate specialty lending, auto lending, and single-family warehouse had strong originations and net loan growth this quarter. Average loan yields for the three months ended September 30th were 7.99% in line with the prior quarter. Average loan yields for non-purchase loans were 7.66%, and average yields for purchase loans were 15.81%, which includes the accretion of our purchase price discount. The FDIC purchase loans continue to perform and all loans in that portfolio remain current. New loan interest rates for the September quarter were 7.2% in both the multifamily and CNI portfolios and 7.3% in single family and 8.25% in our auto portfolio. Ending deposit balances of $22.3 billion were up 6.9% link quarter and up 11.5% year-over-year. Demand, money market, and savings accounts, representing 94% of total deposits on September 30th, increased by 9% year over year. We have a diverse mix of funding across a variety of business verticals, with consumer and small business representing 57% of total deposits, commercial cash, treasury management, and institutional representing 22%, commercial specialty representing 11%, excess fiduciary services representing ending 5%. Ending non-interest-bearing deposits were approximately $3.4 billion at the September end, quarter end, up by approximately $350 million from the prior quarter. Non-interest-bearing deposit balances benefited from continued growth of our treasury management business and from a large increase in cash sorting deposits that came in toward the end of the quarter. Client cash sorting deposits ended the quarter at around $1.1 billion up by $95 million from the June quarter. In addition to our excess securities deposits on our balance sheet, we had approximately $460 million of deposits off balance sheet at partner banks. 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 4.75% for the quarter ended September 30th, compared to 4.84% in the quarter ended June 30th. We had more excess liquidity in the quarter ended September 30th with average cash balances of approximately $2.5 billion compared to $2.15 billion of average cash balances in the prior quarter. This excess liquidity was a seven basis point drag on our net interest margin. Additionally, we issued approximately $200 million of subordinated debt in September of 2025, which has a fixed annual interest rate of 7% for the first five years. We used part of the proceeds from the $200 million subordinated debt offering to pay off approximately $160 million of existing subordinated debt that was scheduled to move from a fixed annual interest rate of 4.875% to approximately 9% in October. The new subordinated debt issuance reduced our net interest margin by one basis point in the quarter right at September 30, 2025. We expect our consolidated net interest margin FDIC loan purchase accretion to stay at the high end of the 425 to 435 range we have targeted over the past year. While new loan yields are coming in slightly lower in certain lending categories due to recent Fed actions, our goal is to offset lower loan yields with reduced cost of funds. Our loan pipelines have improved over the past few quarters as a result of successfully expanding our distribution channels across commercial lending categories and increased contributions from teams we onboarded over the past few quarters. The floor plan lending team has a nice pipeline. We also believe we've moved past peak levels of prepayment in our multifamily loan portfolio, which have been a significant headwind to net loan growth over the past several quarters. We expect the verdant acquisition to add an incremental $150 to $200 million of net new loans and operating leases per quarter at attractive spreads, starting in the second quarter of this fiscal year, ending December 31st. Taking all these factors into consideration, we expect loan growth to come in at the low to mid-teens range on an annual basis in the remaining nine months of our fiscal year 2026. The credit quality of our loan book continues to be solid, and our historical and current net charge-offs remain low. compared to 71 basis points in the quarter ended June 30, 2025. Non-performing assets declined by approximately $17 million in multifamily and commercial mortgages and by $7.4 million in commercial real estate, partially offset by increases in non-performing assets and single-family mortgages due to a handful of loans with a weighted average loan-to-value of 57%. No new CNI loans were placed on non-accrual this quarter, and the few larger C&I loans currently on non-accrual are still paying as agreed. We did 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 to total assets were down five basis points length quarter and six basis points year-over-year to 11 basis points for the three months ended September 30th. Axios Clearing, which includes our corresponding clearing and RIA custody business, had a good quarter. registration increased from $39.4 billion at June 30 to $43 billion at September 30. Net new assets for our custody business were $1.1 billion in the September quarter, an acceleration in the net new asset momentum we have experienced over the past several quarters. This marks the first time that assets in Axos Clearing's custody and clearing business have exceeded $40 billion. The pipeline for new custody clients remains healthy. We continue to evaluate M&A opportunities to augment growth from existing businesses and team lift-outs. We successfully completed the acquisition of Verdant Commercial Capital, a vendor-based equipment leasing company, at the end of September. Verdant's focus on originating small and mid-ticket leases nationally in six specialty verticals is a great enhancement to our commercial lending franchise. Their 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. Additionally, these long-duration, fixed-rate loans and leases complement our existing floating and hybrid loans in our single-family mortgage and commercial specialty lending businesses. In addition to having access to lower cost of capital and funding, we believe the Verdant team will benefit from our operations and tech support. After meeting with the management, sales, operations, and credit team post-close, we are confident that we'll be able to generate meaningful growth from existing and new vendors and dealers in our six existing verticals. Over the medium to long term, we see additional opportunities to generate incremental growth from entering new verticals as well as cross-selling deposits and floor plan lending to larger strategic dealers and original equipment manufacturers. From a deal perspective, we paid a modest 10% premium on the roughly $40 million of book value of Verdant at September 30th. The seller will also have an opportunity to earn up to $50 million over the next four years if the business generates a greater than 15% return on equity on an annual and cumulative basis. The transaction added approximately $1.2 billion in loan leases and equipment operating leases, which include $1 billion of loans and leases and $213 million of equipment operating leases, which are recorded in other assets. We paid off $87 million of subordinated debt and $242 million of warehouse borrowings at closing and assumed $754 million of long-term securitization financing. that we recorded approximately $1.3 million in dealer-related expenses in this quarter and added $7.8 million to allowances for loan loss. Including the roughly $7.8 million additional CECL reserves that we realized at closing, the total allowance for credit losses for the acquired loans and leases was approximately $15.6 million, or roughly 1.5% of the total outstanding loan and lease balances at September 30th, which we added despite a lost history for Verdant well below 50 basis points annually. Our expectation is this acquisition will be accretive to our earnings per share by 2 to 3 percent in the fiscal year 2026 and by 5 to 6 percent in fiscal 2027. The current regulatory environment provides a favorable backdrop for additional accretive and strategic M&A transactions. Our strong capital, liquidity, and profitability allow us to be disciplined and opportunistic in where we deploy excess capital. we remain hyper-focused on increasing productivity and implementing additional operation improvements to help us become more profitable and scalable. We have rapidly expanded the scope of workflows and use cases for artificial intelligence across the enterprise, including risk and compliance, credit operations, technology, legal, marketing, finance, and accounting, and believe that further AI implementations will enable us to create greater operating leverage and improve the speed, quality, and cost of software development projects and accelerate new product development. AI is having an impact on our efficiency and software development. We are in development on exciting products and technologies across our consumer, commercial, and securities businesses. We are continually enhancing our all-in-one consumer and small business experience with an aggressive and exciting roadmap. This consumer platform is utilized by retail and end clients in our institutional custody and clearing business. We have begun the rollout of our recently developed access professional workstation to selected broker-dealer clients. This professional workstation is a centerpiece of a technological modernization strategy in our securities business that will allow us to integrate banking products in a seamless way for RIAs and brokers to more holistically serve their clients and provide a much more flexible and modern system than many of our large competitors' legacy systems. In closing, I'm excited about the opportunities we have to maintain our positive momentum in fiscal 2026 and beyond. With the Verdant team and other team hires we have made this last year, producing both loans and deposits, we feel more certain in our ability to grow loans in the low to mid-teen range annually, maintain margin in our forecasted range, and other than the costs we added through the acquisition, accomplish our objective to gain operating leverage. Now I'll turn the call over to Derek, who will provide additional details on our financial results.