Axos Financial, Inc.

Greetings and welcome to the Axios Financial second quarter 2026 earnings call and webcast. At this time, all participants are in a listen-only mode. The 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Donnie Lai, Senior Vice President, Corporate Development and Investor Relations. Thank you, Donnie. You may begin.

Thanks, Alicia. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial Inc.' 's second 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 provide prepared remarks on the financial and operational results for the quarter ended December 31st, 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 and that's your 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 accessfinancial.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 listeners that in addition to the earnings press release, we also issued an earnings supplement and 10Q 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 December 31st, 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 link quarter with broad-based growth across several asset-based lending areas, commercial specialty, and equity finance verticals. A 19% basis point link quarter increase in net 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 three months ended December 31, 2025. Other highlights in the quarter include net interest income was $331.6 million for the three 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 one FDIC loan prepaid this quarter, resulting in approximately $17 million of interest income benefit. Excluding that benefit, net interest income was up $23 million, or 8%. Net interest margin was 4.94% for quarter end of December 31st, 2025, up 19 basis points from 4.75% in the quarter end of September 30th, 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. 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. million in the quarter ended December 31st, 2025. Total non-accrual loans to total loans declined 13 basis points one quarter, resulting in our non-accrual loans to total loan ratio improving from 74 basis points as of September 30th, 2025 to 61 basis points as of December 31st, 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 December 31st, 2025, compared to $1.80 in the prior quarter, representing a 23.2% 3% year-over-year increase. Total originations for investments excluding single-family warehouse lending were $5.6 billion for the three months ended December 31, 2025, representing an increase of 35% linked quarter or nearly 140% annualized. 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 December 31st 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 December 31st 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 our portfolio remain current. Ending deposit balances of 23.2 billion were up 44.3% link quarter and up 16.5% year over year. 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%, 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-cast sorting deposits ended the quarter around $1.1 billion, up modestly from the September quarter. In addition to our AXO security 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 4.94% 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 on-balance sheet securitizations. While the leases are generally accretive to loan yields, the secured financing had a three-basis point negative impact on our net interest margin in the quarter ended December 31st. One FDIC-purchased loan paid off in the December quarter. The net impact from the early FDIC-purchased loan payoff and the verdant secured financing was a 22-basis point boost to this quarter's net interest margins. 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 provide us with the flexibility to maintain strong loan growth and credit performance while managing our best-in-class interest margin. Verdun had a strong quarter as part of access, contributing approximately 130 million of net loan 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 remain strong. We are making steady progress growing our loan pipelines and 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 $600 to $800 million range this quarter. This strong organic loan growth is allowing us to offset the lower level of accretion that we 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 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 $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 five- to six-basis point reduction in our signature-adjusted margin in the March quarter relative to the December quarter, 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 Verdon'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 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 in CNI 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 and total assets were down seven basis points one quarter and six basis points year-over-year to four 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% at December 31st. EXO 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 September 30th to $44.4 billion at December 31st. 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 from 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 lifecycle. 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 lift-outs. We successfully completed the acquisition of Vertin Commercial Capital, a vendor-based equipment leasing company, at the end of the September quarter. Vertin's focus on originating small and mid-ticket leases nationally in six specialty 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 Access. 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 six 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. I'm excited at 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 Derek, who will provide additional details on our financial results.