アクソス・フィナンシャル（AX）2027年度第1四半期決算説明会：NIM拡大、融資成長目標を維持

要点

• 2026年9月30日を末日とする第1四半期（会計年度）の純利益は前年同期比15.4%増の1億2,960万ドル、希薄化後EPSは16%増の2.25ドルとなった。
• 純金利マージン（NIM）は前四半期比10ベーシスポイント（bp）拡大して4.64%となった。経営陣は、資産の金利感応度と貸出金の金利改定が余剰流動性や預金コストの上昇を相殺するため、今後数四半期のNIMはおおむね横ばいで推移すると見込んでいる。
• 期末貸出金残高は前四半期比3億1,660万ドル増の259億ドルに達した。約2億9,000万ドルのキャピタルコール・シンジケーションを除くと、純貸出金残高は6億ドル以上増加した。
• 預金は前年同期比14%増の254億ドルとなった。キャピタル・ワンとの取引により約18億ドルのIRA預金および定期預金（CD）が加わり、今後の貸出拡大を支えている。
• 事前につき引当金を計上していた商業・産業（C&I）貸出2件の貸倒償却により、信用コストが増加した。純貸倒償却率は109bpとなったが、これら2件の貸出を除くと8bpであり、全貸出の99.2%は正常先を維持している。
• 経営陣は、買収を除くオーガニックな貸出金成長率について、2027会計年度の目標を10%台前半から半ばに維持した。これは約28億ドルの貸出パイプラインによって裏付けられている。

主要財務データ

事業・営業業績

一戸建て向け倉庫型融資（ウェアハウス・レンディング）を除く投資向け新規貸出実行額は、前年同期の42億ドルから増加して57億ドルとなった。特に商業用不動産向け専門融資、不動産レンダー・ファイナンス、機器ファイナンス、その他の自動車ローンで力強い伸びが見られた。

繰上返済の増加が報告上の貸出成長を抑制した。ジャンボ一戸建て住宅ローン、集合住宅向けローン、少額商業用ローンの合計残高は約1億5,000万ドル減少した。キャピタルコール残高は3億4,500万ドル減少したが、これにはAxosがエージェント機能を拡大する中でシンジケート化した2億9,000万ドル以上の貸出が含まれている。

平均貸出利回りは前四半期比で11bp上昇し7.48%となった。Axosの貸出金の約75%は変動金利であり、指標金利の変更から30日以内に改定される。経営陣は、この構造が金利環境の変化に対して柔軟性をもたらすと述べている。

バンキングおよびサービス手数料収入は、主にVerdantの寄与により、前年同期の1,080万ドルから3,520万ドルに増加した。商業用融資における返済加速に伴い、繰上返済違約金収入は70万ドルから680万ドルに増加した。

証券セグメントの税引前利益は前年同期比約24%増の1,030万ドルとなった。保管・管理資産残高（AUC/AUA）は50億ドル増加して480億ドルとなり、当四半期の純新規資産額は約1億9,500万ドルとなった。

Axosは過去12ヶ月間に4件の買収を完了した。キャピタル・ワンおよびGenius Bankにより、40億ドル以上の個人向け預金と13万2,000口座が追加された。Verdantは買収完了時に12億ドルのリース資産をもたらし、ARC Technologiesは中小企業向け資金管理プラットフォームと、現在パートナー銀行に保有されている約7億ドルの預金をもたらした。

同社は当四半期中に1株あたり平均86.92ドルで700万ドルの普通株式の自社株買いを実施し、10月1日から10月23日までにさらに700万ドルの買戻しを行った。残りの自社株買い授権枠は約1億1,200万ドルとなっている。

経営陣の見通し

経営陣は、買収を除くオーガニックな貸出金成長率について、2027年6月30日終了事業年度の目標を10%台前半から半ばに維持している。複数の融資カテゴリーにおけるパイプラインや、9月四半期からずれ込んだ融資に支えられ、成長速度は第1四半期の水準から加速すると見込んでいる。

Axosは、今後数四半期の純金利マージン（NIM）がおおむね横ばいで推移すると見込んでいる。12月四半期においては、キャピタル・ワンの預金に関連する約7億ドルの平均余剰現金がNIMを押し下げる要因になると予想されるが、経営陣は純金利収入の拡大自体は続くと見込んでいる。

同社は、キャピタル・ワンの取引による余剰流動性の大部分を2026年末までに運用へ回す予定である。また、今後数四半期にかけて、数億ドルの無コスト運用預金を含む約7億ドルのARC顧客預金をパートナー銀行から移行させる計画である。

経営陣は、貸倒引当金比率が総貸出金およびリースの1.1%〜1.2%の範囲内にとどまると予想している。買収や一時的項目を除いた四半期ベースの非金利費用増加額は、平均して約300万ドルから500万ドルの範囲になるとの見通しを示した。

Axosは、次四半期の繰上返済違約金収入が減少し、2027会計年度第1四半期の水準には届かないと見込んでいる。また経営陣は、個人向け預金の獲得競争に伴い、広告宣伝費およびマーケティング費用が高水準で推移する見通しであることを示した。

同社は自社開発のセルフディレクテッド（自主運用型）証券プラットフォームの拡張として、ビットコイン取引の開発を進めている。経営陣はテストと運用の準備状況に応じ、2027年3月頃に限定的なベータ版をローンチし、その後ビットコイン担保融資プログラムを展開する予定である。

リスクと注目点

事前につき引当金が設定されていたシンジケートC&I貸出2件により、純貸倒償却率は109bpに上昇した。1件は規制問題の影響を受けたヘルスケア企業、もう1件は関税関連の圧力を受けた企業に関するものである。どちらも非銀行エージェントによる大型案件であり、Axosの保有ポジションは比較的小規模であった。

当四半期中、追加のC&I貸出が未収金計上停止（ノンアクルーアル）状態となった。経営陣によると、1件は最近の鑑定評価額が貸出残高に近い不動産で大部分が保全されている。もう1件の事業会社向け貸出は潜在的な損失リスクがより大きいが、Axosは個別引当金を計上済みである。

金利上昇により自由裁量の借入や融資成約率が低下する可能性がある。経営陣はまた、預金金利に対する継続的な競争圧力を指摘し、後の四半期において預金コストが資産の金利改定に追いつく可能性があると述べた。

集合住宅市場における取引活動は、物件価格に関する買い手と売り手の意見の不一致により依然として低調である一方、一部の競合他社は比較的小額の集合住宅向けローンで積極的な金利設定を続けている。

アナリスト質疑応答のハイライト

• マージンの見通し：経営陣は、足元のNIM抑制の主因をキャピタル・ワン預金による余剰流動性にあるとしている。資産の金利感応度やより高利回りの貸出への入替が収益を支える見込みだが、預金金利の再改定により追加入替によるマージン拡大は限定的になると予想されている。
• 貸出需要：パイプラインは引き続き広範である。Axosはジャンボ住宅ローン、機器リース、フロアプラン・ファイナンス、キャピタルコール融資での機会を強調したが、金利上昇が成約率やレバレッジ判断に影響を与える可能性がある。
• 買収シナジー：Genius Bankの当座預金口座クロスセルは進展している一方、キャピタル・ワンのクロスセルはまだ初期段階にある。AxosはIRA顧客にデジタル・ウェルス製品を提供し、ARCのプラットフォームを活用して中小企業との関係を深める機会を見出している。
• テクノロジーおよびベンチャーエクスポージャー：ARCは主に預金プラットフォームおよび負債マーケットプレイスのブローカーとして機能している。Axosは直接のオンバランスシート・ベンチャー融資を実質的に保有しておらず、預金や手数料収入の機会を維持しつつ、直接の信用リスクを抑制していると述べた。
• 資金調達能力：経営陣は、貸出成長目標に向けた資金調達源として、Axos One、中小企業口座、商業向け資金管理、専門預金、およびARC預金の移行を挙げた。
• 与信管理：Axosは、不動産担保ローンおよびストラクチャード・クレジット・ポートフォリオのパフォーマンスが引き続き良好である一方、シンジケート型キャッシュフロー・ローンにおけるポジション規模や非銀行エージェントの役割についてより慎重になっていると述べた。

決算説明会全文文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

[Operator Instructions] The call is being recorded. I will now turn the conference over to Johnny Lai, Senior Vice President of Corporate Development and Investor Relations at Axos. Thank you, Johnny. You may begin.

Johnny Lai

Great. Thank you. And good afternoon, everyone. Thanks for your interest in Axos. Joining us today for Axos Financial, Inc.'s first quarter 2027 financial results conference call are the company's President and Chief Executive Officer, Gregory Garrabrants, and Executive Vice President, Derrick Walsh. Gregory and Derrick will review and comment on the financial and operational results for the quarter ended September 30, 2026, 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 has been 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. Before handing this call over to Gregory, I'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement. All of these documents can be found on our Investor Relations website. With that, I'd like to turn the call over to Gregory.

Gregory Garrabrants

Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's first quarter fiscal 2027 earnings conference call for the quarter ended September 30, 2026. I thank you for your interest in Axos Financial. Our core business fundamentals remain strong with double-digit year-over-year growth in our net interest income, non-interest income, ending loan and deposit balances, earnings per share, and book value per share. We continue to manage our interest rate risk well with net interest margins expanding by 10 basis points linked quarter to 4.64%. We remain well positioned for a higher-for-longer interest rate environment with de minimis unrealized losses in our securities portfolio and a $50 million unrealized gain in our loans held for investment. We closed the Capital One deposit acquisition in September, adding approximately $1.8 billion in IRA savings and CDs.

Additionally, our non-interest income growth has been broad-based with contributions from our banking and lending businesses driving a 3.1% sequential increase to $63.8 million in the quarter ended September 30, 2026. Other highlights in the quarter include net interest income increased 4.2% linked quarter, and 13.8% year-over-year, driven primarily by a sequential improvement in our net interest margin and the Verdant acquisition that closed in September 2025, respectively. Ending loan balances were $25.9 billion at September 30, up by $316.6 million quarter-over-quarter. Strong originations were offset by higher levels of payoffs in single-family mortgage and warehouse, multifamily, and small-balance commercial real estate. We syndicated approximately $290 million of our capital call originations prior to the end of the quarter as we continue to build our capacity to agent a wider variety of deals. Excluding capital call syndications, our net loan balances were up by over $600 million this quarter. Elevated levels of prepayments resulted in prepayment penalty fee income increasing from $650,000 in Q1 of 2026 to $6.8 million in Q1 of 2027.

Banking and service fee income was also up significantly year-over-year due to the addition of non-interest income from Verdant and rental income from our future corporate office building. Non-interest expenses were $195.4 million for the three months ended September 30, 2026, down by approximately $10.5 million linked quarter. Our efficiency ratio was 49.46% in the quarter ended September 30, 2026, up slightly from the corresponding period a year ago, primarily due to higher depreciation and amortization expense from the four acquisitions we closed in the past year. Our securities business had a solid quarter. Advisory fee income increased by approximately 10% year-over-year and contributed over $10 million in broker-dealer fee income in the current quarter. Net income was approximately $129.6 million in the quarter ended September 30, 2026, up 15.4% from the $112.4 million in the prior year's first quarter. The diluted earnings per share were $2.25 for the quarter ended September 30, 2026, compared to $1.2 million in the prior year's first quarter, representing a 16% year-over-year increase.

We repurchased $7 million of common stock during the three months ended September 30, 2026, at an average price of $86.92 per share. From October 1 through October 23, we repurchased an additional $7 million of Axos common stock. We have approximately $112 million remaining in our current share repurchase authorization. Total originations for investment, excluding single-family warehouse lending, were $5.7 billion for the three months ended September 30, 2026, compared to $4.2 billion in the first quarter of fiscal 2026. Loan growth was strong in commercial real estate specialty lending, real estate lender finance, equipment finance, and other auto. Jumbo single-family, multifamily, and small-balance commercial loans were down by approximately $150 million quarter-over-quarter combined due to elevated levels of payoffs. Capital calls, which had been a strong growth area over the prior three quarters, saw ending loan balances decline by $345 million in the first quarter of fiscal 2027, with over $290 million of that decline resulting from our decision to sell down several deals that we agent.

We expect capital call balances to resume growth in the December quarter. Closing of a few large loans we anticipate in the September quarter are expected to fund and close in the December quarter this year. Loan demand remains strong. Pipelines are up across several lending categories, making us confident that we will generate loan growth in the low-to-mid teens on an annual basis in fiscal 2027. Average loan yields for the three months ended September 30, 2026, was 7.48% up by 11 basis points from the prior quarter. Average loan yields for non-purchase loans were 7.38%, and average yield for purchase loans were 11.5%, 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 7.1% in single-family residential mortgage, 6.6% in multifamily, 7% in C&I lending, and 7.8% in our auto portfolio. Ending deposit balances were up 14% year-over-year to $25.4 billion as of September 30. Demand, money market, and savings accounts represent approximately 94% of total deposits, increased by 14.5% year-over-year. We have a diverse mix of funding across a variety of business verticals, with consumer and small business representing 61% of total deposits, commercial cash, treasury management, and institutional representing 15%, commercial specialty representing 15%, Axos Fiduciary Services representing 5%, and Axos Securities at 4%. The Capital One IRA deposit acquisition closed September 21, adding approximately $900 million of savings deposits and $900 million of time deposits. We deployed some of the Capital One deposits by proactively reducing wholesale and other non-core deposits in the September quarter. With a strong loan pipeline, we expect to deploy the majority of the excess liquidity from the Capital One deposits by the end of calendar 2026.

Ending non-interest-bearing deposits were approximately $3.6 billion on September 30, 2026, down slightly from $3.8 billion as of June. The linked-quarter change in non-interest-bearing deposits was primarily due to the decline in Axos Securities cash sorting deposits. Client cash sorting deposits ended the quarter at $1.5 billion, and at the end of the quarter down from $1.7 billion at June 30. In addition to our Axos Securities deposits on our balance sheet, we had approximately $450 million of deposits off-balance sheet at partner banks. We continue to add new clients in our small business, cash, treasury management, and specialty deposit businesses. Total non-interest-bearing deposit accounts increased from approximately 58,000 as of June to over 60,000 as of September. Our lending and deposit businesses are well positioned for continued profitable growth.

Approximately 75% of our loans are floating and reprice in 30 days or less with any change in the index rate. Given the dynamic nature of our loan portfolio, we have more flexibility than most other banks to quickly adjust to changes in the macroeconomic and interest rate environment. Our diverse sources of funding provide granular deposits across a variety of consumer, small business, commercial, and specialty accounts. We continue to make incremental progress on deposit cross-sell across a variety of our lending channels. Our recent deposit acquisitions provide us with incremental liquidity to support our budget of double-digit loan growth aspirations. We expect to migrate approximately $700 million of deposit balances from ARC's clients held at partner banks to Axos over the next few quarters. We expect our net interest margin to stay flat over the next few quarters.

Our balance sheet remains asset sensitive, and we expect the benefit from a full quarter of the 25-basis-point September Fed rate hike to be largely offset by a full quarter of excess liquidity from the Capital One deposits in the quarter ended December 31, 2022. We also expect some of the incremental margin benefits as the remaining lower-rate single-family and multifamily mortgages originated prior to the Fed rate hike are replaced with higher yielding loans. In March 2027 quarter and beyond, we anticipate the lag in deposit repricing to counter a significant increase in the cost component of the margin benefits from the next few potential rate hikes. The quality of our loan book remains strong despite two isolated charge-offs we took this quarter. Net charge-offs were 109 basis points compared to 25 basis points in the prior quarter. The increase in the quarter reflected two non-performing C&I loans we had allocated specific reserves for in the prior quarters. So these losses were largely covered by existing loan loss reserves.

The borrowers of the two cash flow loans were in different industries with fundamental and regulatory factors specific to each being the primary contributor to the deterioration in their underlying businesses. Excluding those two charge-offs, annualized net charge-offs to average total loans and leases were eight basis points in line with nine basis points last quarter, which excluded a specific credit charge-off last quarter. 99.2% of our loans are current as of September 30, 2026. Total non-performing assets were $157.5 million, down slightly from June 30. Non-accrual loans declined $1.7 million, including a $5.2 million decline in C&I and held roughly flat elsewhere. Real estate loans represent more than half of our total non-accruals as of September 30. Non-accruals and classified assets remain low across the majority of our real estate-backed and structured credits, and the weighted average loan-to-value of our real estate loans is 50%. We continue to actively monitor and manage loans and take conservative approaches with respect to downgrades and charge-offs.

Loans 90 or more days past due declined 17% to 0.51% of loans, and classified loans declined approximately 19% since June 30, 2026. Non-performing assets to total assets was 51 basis points, down two basis points from June 30 and 13 basis points from September 30, 2025. We believe we are well-reserved overall with specific reserves for a small number of loans that are classified as non-accrual or substandard. Our allowance for credit loss covers 196% of non-accrual loans as of September 30, 2026. We had another quarter of double-digit year-over-year growth in non-interest income. Our sources of asset and transaction-based fees have expanded over time. Total non-interest income for the three months ended September 30, 2026, was $63.8 million, up 97% year-over-year.

Banking and service fees in Q1 2027 were $35.2 million compared to $10.8 million in the year-ago quarter. Verdant was the primary contributor to the year-over-year increase in banking and service fees. Prepayment penalty fees were $6.8 million compared to $0.7 million in Q1 2026, reflecting higher repayments in our commercial lending businesses. In our securities business segment, advisor fees were up year-over-year due to higher asset and transaction-based income. Total assets under custody or administration increased $5 billion year-over-year to $48 billion. Net new assets were approximately $195 million in the quarter ended September 30, 2026, bringing the net new assets to $1.3 billion in the last four quarters. Cash sorting deposits on and off balance sheet decreased by approximately $200 million linked quarter due to the advisors deploying excess cash.

Securities borrowed and securities lending volumes were up in Q1 2027 compared to Q4 2026 due to increased market volatility. Pre-tax income was $10.3 million in the three months ended September 30, 2026, up approximately 24% from $8.3 million in the corresponding year-ago period. We successfully closed four acquisitions over the past 12 months. Each acquisition provided tactical and strategic benefits across different Axos businesses. The Capital One and Genius Bank deposit acquisitions added over $4 billion of consumer deposits and 132,000 new accounts in a demographic that closely resembles our existing consumer client base. We have generated incremental checking relationships with Genius Bank customers, and we are evaluating ways to cross-sell brokerage and digital wealth management products to Capital One's IRA savings and CD customers. Verdant added $1.2 billion in leases and a seasoned credit sales and operations team with deep expertise and relationships across six targeted verticals when the acquisition closed in September 2025.

In the first 12 months since Verdant joined Axos, we have been able to deepen our relationships with key vendors, dealers, and distributors and improve the overall efficiency and profitability in our equipment leasing business. Additionally, the Verdant team added expertise in syndications and securitizations, which will allow us to generate incremental fee income in the equipment leasing and other commercial lending businesses. ARC is a modern technology platform that serves small businesses nationwide. We are focused on integrating their platform into our banking infrastructure to provide clients with seamless technology and banking experience. Once the integration is complete, we'll be able to migrate deposits from new and existing customers at Axos Bank to Axos Bank, adding another source of low-cost deposits. We are actively looking at ways to leverage Axos Bank's deal flow and lending relationships to drive higher volume into ARC's digital debt marketplace. We see the debt marketplace as another way to deepen our relationships with small business clients and generate fee income without taking incremental credit risk.

Furthermore, we believe we can leverage the technology and third-party integrations and entitlements ARC has built as a foundation for other consumer and commercial banking services to accelerate our strategic roadmap. ARC brings a talented team of product sales and software engineers who will help us enhance these development efforts. Our ability to generate above-average returns and growth provides us with multiple opportunities to deploy excess capital. In the last 12 months, ending September 30, 2026, we funded over $3 billion of organic loan growth, added roughly $1.2 billion in leases and on-balance sheet securitizations from Verdant, closed the Genius Bank, Capital One, and ARC Technologies acquisition, and repurchased approximately $29 million of Axos common stock. We remain highly profitable, generating a return on average assets of 1.72% and a return on average common stockholders' equity of 15.66% in the three months ended September 30, 2026. We have consistently achieved industry-leading returns through a variety of interest rate cycles while investing prudently in product technology, marketing risk, and people across each of our businesses. We have invested significant time and resources to establish and refine our AI governance, training, and deployment. The speed and scale and productivity improvements we have seen in various AI projects continue to exceed our expectations.

As we deploy AI deeper into every part of our organization, we see exciting opportunities to deliver more value to our clients, business partners, and team members. Now I'll turn the call over to Derrick, who will provide additional details on our financial results.

Derrick Walsh

Thanks, Gregory. A quick reminder that in addition to our press release, a 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 and our SEC filing for additional details. Non-interest expenses were approximately $195 million for the three months ended September 30, 2026, down by $10.5 million from $206 million in the three months ended June 30, 2026. Salaries and benefit expenses were up by approximately $2 million in the linked quarter due to the addition of ARC Technologies and one additional payday in the September quarter. Data and operational processing expenses were up $1.5 million quarter-over-quarter on increased investment in technology, including the continued deployment of AI across the enterprise. Depreciation and amortization expenses increased by $2.4 million linked quarter, reflecting the amortization of newly acquired intangibles from our acquisitions and depreciation of an infrastructure refresh and expansion.

Excluding the $21 million legal accrual in the prior quarter, non-interest expenses in the three months ended September 30, 2026, were up by approximately $10 million linked quarter due to the items I referenced above. As a reminder, we conduct our annual merit-based compensation reviews in September and see the full-quarter impact starting in the December quarter. Overall, we expect our expense growth to normalize as efficiencies are gained through AI, and we maintain our 30% cap on personnel plus professional fees growth as a percentage of revenue growth. Provision for credit losses was $24.5 million in Q1 2027 compared to $17.9 million in Q4 2026. The provision for credit losses in the quarter was primarily driven by specific reserves in the C&I portfolio, partially offset by a less severe economic outlook. Going forward, we expect to maintain the loan loss reserve where we are currently in the 1.1% to 1.2% of total loans and leases. Turning to capital, over the last few months, we repurchased approximately 160,000 shares of common stock for $14 million and currently have $112 million remaining in our share repurchase authorization plan. At 9/30, our Tier 1 leverage ratio increased 21 basis points to 10.15%, and our total ratio increased 42 basis points to 14.81%. I'll wrap up with our loan pipeline and growth outlook.

Our loan pipeline is robust at approximately $2.8 billion, consisting of $782 million of single-family residential jumbo mortgage, $30 million of SFR gain on sale, $195 million of multifamily and small-balance commercial, $71 million of auto and consumer, $1.7 billion of commercial loans. We expect loan growth to accelerate from the Q1 2027 levels as a result of growth across several lending businesses. We continue to target low-to-mid teen organic loan growth in our fiscal year ending June 30, 2027, excluding any potential acquisitions. We deployed some of the Capital One deposits to reduce higher cost funding and plan to use the remaining in combination with growth in our consumer and commercial banking deposits to fund our future loan growth. With that, I'll turn the call back over to Johnny.

Johnny Lai

Thanks, Derrick. Operator, we're ready to take questions.

Operator

Thank you. We will now be conducting a question and answer session. [Operator Instructions] Our first question is from David Chiaverini with Jefferies LLC. Please proceed with your question.

質疑応答

David Chiaverini

On the net interest margin, nice expansion in the quarter. Sounds like there's some durability to it in coming quarters. I guess in terms of the puts and takes, you mentioned about asset sensitivity, but the lag in deposit repricing could counter the benefits of the asset sensitivity. And then there's the dynamic around the Capital One deposits and the excess liquidity. Can you talk through some of those puts and takes? And if we don't get rate hikes that the forward curve is implying, what would that end up doing to the outlook?

Derrick Walsh

Hey, David. Yes, so for the excess cash and deposits from Capital One, so that'll add approximately a $700 million average asset or excess cash, which is obviously a lower earning asset than our loan yields. And so that's the primary drag for this December quarter. And then what the prepared remarks were saying was that as you look forward, while that drag will be on the NIM this coming quarter, as you get beyond that, that kind of covers that timeframe where deposits start to catch up. And it's a highly competitive deposit environment right now in the industry. So I think that's fairly consistent with maybe what you've heard on other calls. And then from a net interest income standpoint, we are expecting some of that expansion for this coming quarter. It's just that from the NIM perspective, when looking at that percentage ratio, that will be what will be more flattish.

David Chiaverini

And then I wanted to ask on credit quality, about the loans, the C&I loans that were charged off. How long had you been kind of working out those loans? I'm wondering whether this was kind of a sudden change in the performance of these borrowers or if this had been in the works for a while.

Gregory Garrabrants

With respect to one, we had charged off. That was the large charge-off that occurred, was it two quarters ago or last quarter? Which one? That was a couple of quarters. Right. So, yeah, so we had charged that off. We had reserved it several quarters ago. And the nature of the performance was such that we felt like it was the right thing to do to just go ahead and take that charge-off rather than just simply reserve for it. The other was also reserved for a while.

And the performance there had, you know, been known to us for several quarters. We don't feel— we feel like we have a pretty good read on the portfolio, and then we're reserving as we see deterioration in those credits. And so we had created the reserves when we saw any weakness several quarters ago.

Operator

Our next question is from David Feaster with Raymond James.

David Feaster

Hi, good afternoon, everybody. Hey, David. I wanted to touch on the lending side. I'm just curious. You've got such a broad reach and are in so many different asset classes. You talked about the ability to flex certain ones up when things are doing better and vice versa. How's demand from your perspective as rates are rising? Have you seen any of that? Have you seen any shifts in your pipelines or are even things starting to fall out of the pipeline? I know there's some headline, you know, some risk in the mortgage, you know, from rising rates, but curious what you're hearing from clients and what segments you're seeing the best opportunities right now.

Gregory Garrabrants

Yeah. As you said, because we have such a broad array of lending businesses, I'll have to go through each one. Interestingly, although I clearly— single-family mortgage demand is generally down, the securitization for 30-year mortgages, which are our primary competitor in the jumbo space, have actually gapped out pretty decently. And with the rise in the 10-year, that's actually made our business a little more competitive. So we have a larger pipeline there than we've had in a really long time. Now, how much of that pulls through is an interesting question, because there's escrow cancellations, things like that on the purchase side. But that pipeline is actually pretty decent. You know, I think that in some cases, some of the lenders that use us for back leverage when rates are high, rates go up, they look at it and they see if they have a pref rate that they feel like it's not that much of a difference in the carry between calling capital, let's say, and utilizing a line.

There might be some pressure there. You know, frankly, what happened in this quarter, with a relatively lower loan growth, is we had several— well, quite a few, a few more payoffs than we thought. We had several loans that we expected to close that got pushed to this quarter where we expect growth to be better. And then we have been trying to develop our syndication business in the cap call area specifically, because as those lines get more efficiently priced, and we've been having a lot of luck keeping those clients. And so the syndication partners that we have wanted to get their assets level increases prior to the quarter end. So we syndicated almost $300 million of our capital call production in the quarter, which also impacted the end of period loan growth. But in general, we feel pretty good about loan growth getting back to where we hope to be this quarter.

It'll be pretty broad-based, and we feel like there's even some upside there, based on the fact that some of these assets rolled, but I don't want to get ahead of ourselves because I do think that when rates rise, sometimes a lot of these folks, the decision to put leverage on something is somewhat discretionary. And so on the margin, they may think differently.

David Feaster

Okay, that's helpful. And then, look, you've closed a couple of deals. I know it's still early days, right? I mean, they haven't been closed that long, but we've talked about some of the cross-selling opportunities that you've identified across really all three of them. I guess, first off, how's retention been as these are closed? And how's cross-selling, and where are you, you know, kind of where are we at in the integration and the timeline for cross-selling, and where do you see the most opportunities?

Gregory Garrabrants

Yes, well, I think on the Genius side that the checking account cross-sales has been going well. The Cap One deal is a little too early to tell. We do think over time that because most of those accounts were kind of interesting in the sense that they were IRA kind of checking and savings accounts that some of the managed portfolio robo-style products will be interesting to them. That's a little early to tell. On the ARC side, we think that the main benefit there is that the platform is so much more robust than our current small business platform, which is adding quite a few customers every month and quarter, that there'll be a lot more opportunity there as we provide that platform to our small business clients to help them grow. And then, you know, with Verdant, there's been a lot of synergy between that business and the floor plan finance business, because obviously the front side of vendor leasing is a vendor who has inventory on a floor plan. So that's been a really nice synergistic opportunity there.

David Feaster

Okay, that's helpful. And then, you know, just with ARC, maybe a higher level question. You know, with ARC and some of the tech lending, I know there's a lot of folks in the industry that are worried about, you know, a bubble in tech, just given the amount of capital being thrown at it and the significant buildout, you know, as well as the ripple impacts that AI could have on some of the other tech companies. I just wanted to get your thoughts on that at a high level. You know, where you play in venture lending and tech lending and what you're seeing in that space at this point.

Gregory Garrabrants

What ARC's platform is specifically, and then I'll answer the question more broadly. ARC's platform was specifically a deposit competitor to a Brex and a Mercury, and it was really about a feature-rich Treasury management style platform that would enable Treasury management for smaller and mid-tier clients that maybe aren't well suited for larger treasury management platforms. So that had the $700 million of deposits. They're at partner banks now. They're going to migrate over when we get that platform integrated into our core, into our ecosystem. ARC also had, I think, a pretty unique platform that they built, which was essentially using AI. And they have quite a few lenders, well over 150 lenders who have signed up to that platform that are, some are bank lenders, but most are non-bank across a pretty wide spectrum. It does skew a little bit into the venture lending side.

And ARC effectively acts simply as a broker and as a deposit taker. So, if a venture client comes to ARC, the client will get the deposit services through the ARC platform, and then they will, if they want debt, they would have that debt provided by a third party with ARC acting on a brokerage capacity. So in that case, you get the benefit of the deposits and you don't have the loan risk. Now, what we specifically do on balance sheet and venture lending is essentially nothing. We don't really do venture lending. We have the only real exposure there would be in back leverage facilities to the types of clients to the large venture lenders where you have 50 assets in a pool and you're looking at their performance, you know, in that pool and you have borrowing bases and percentage advance rates and concentration limits and those kind of things. So, you know, with respect to software lending, which I would classify, let's say, as non-venture-based, let's say, established, positive EBITDA companies, you know, we have relatively little of that.

We don't have absolutely zero, but it's not very common. And the reason why is that although there certainly are areas where the SaaS apocalypse and whatever you want to call it, are overstated, AI really is changing the dynamic in a lot of these products, and so you know, many of them will take advantage of that, others will be threatened by it. And so really do a lot of direct software lending where that SaaS-oriented software lending. All right. That's terrific. Thanks, everybody. Thank you.

Operator

Our next question is from Gary Tenner with D.A. Davidson. Please proceed with your question.

Gary Tenner

Thank you. Good afternoon. I wanted to ask a follow-up on the asset quality bit. It looks like non-accruals in the C&I segment went down like $5 million. So, could you talk about inflows into non-accrual there following the charge-offs in the quarter?

Gregory Garrabrants

Yes, there are a couple of other credits that we've also have specific reserves on that were placed on non-accrual this quarter. One of them is backed. It is a C&I loan technically, but it's mostly backed by real estate. And we have the real estate value on a recent appraisal at the loan balance. So we don't think there'll be much in loss there. And then we have another cash flow loan that we're going to be able to get back to the state that we have reserves on, but is on non-accrual for this period. That loan has placed on non-accrual this quarter. Okay, and is that loan potentially greater loss content than the commercial, than the other one, the first one? Yes. I think it has definitely higher potential loss content there.

It's an operating business. It has asset value. It's doing things that they need to do to right the ship, but I wouldn't say it's riskless for sure. And we've put a decent size reserve on it.

Gary Tenner

Okay. Thank you. And then just on the prepayment penalty fee income, the last two quarters highest, you know, it's been since what fiscal '22, probably. So any— I know there's not massive visibility here, but any thoughts kind of on that trend continuing for any period of time?

Gregory Garrabrants

Yeah, I don't think it's going to. I think it's going to fall this quarter. We, you know, I don't, I don't, I think that it's obviously a little bit difficult because, you know, the book is so relatively large, but I don't think it'll repeat this quarter. And I think loan growth will be better this quarter. And those two things are related, of course.

Gary Tenner

Yes, okay. Thank you. And just if I could sneak in a last question here. The deposits, the ARC-related deposits that'll come over. What kind of rate would those be ascribed?

Gregory Garrabrants

There's several hundred million that are zero cost and then there are others that are more savings style deposits, which think of them as 80% of Fed funds kind of thing, but there's a couple of $100 million of zero-cost operating there.

Operator

Great. Thank you. Our next question is from Kyle Peterson with Needham and Company. Please proceed with your question.

Kyle Peterson

Good afternoon. Wanted to start off a bit, Gregory, in your prepared remarks, at least you mentioned that you guys are pretty nimble and can move around to where the attractive growth opportunities and pricing and spreads and everything are. So I guess like what are kind of, as you look over these next few quarters with, you know, this current rate macro environment, what are some of those areas, you know, that you think are particularly interesting and that you see opportunities to lean into for loan growth?

Gregory Garrabrants

Yes, you know, right now what's interesting is there's definitely some disruption in a variety of areas, be it that disruption is kind of macro level disruption like I mentioned with the single family conduit, 30-year mortgage kind of gap outs because of the securitization kind of market just requiring a higher spreads to there's been specific both equipment leasing and floor plan competitors who have either sold or are just repositioning their balance sheet, um, in a way that's been providing opportunities just for uh client acquisition. Um, you know, I don't really, frankly, you know, obviously we we've decided, you know, on the cap call side, obviously I think there's there's still a lot of opportunity, but in some cases when we get rate compression there, we'll sell down those loans. So that creates obviously a good deposit dynamic with a good loan, with a good deposit to loan ratio there. But it does reduce volumes. I really feel like our loan growth, each segment, I don't feel like there's any segment that is really not capable of growth. And I think there's enough kind of – there's just an air of disruption that – And I think a lot of other banks are having a little trouble with deposit raising too. So I feel like the loan opportunities are pretty good. You've got to sort it through and make sure that the businesses and the companies can stand high rates, which obviously puts pressure on things.

But I don't really feel like any of the businesses that we have are not capable of growth, with maybe the exception that the 51-arm multifamily business is still suffering from a couple of irrational competitors. And there really hasn't been the adjustment in the cap rates that I think are necessary to get transaction volume going. So I think that, you know, that permanent kind of multifamily loan is the smaller balance. Multifamily loan is a little bit caught up in a buyer-seller disagreement about value where the buyer is right and the seller is wrong, and they just can't figure that out eventually. So that may be one area that's a little bit disrupted there.

Kyle Peterson

And then, you know, maybe a follow-up. You know, I know whether, you know, crypto and blockchain has kind of been an area that you guys have expressed interest in in the past. Obviously, we're getting more regulatory clarity there. But maybe if you could give some more color on what the roadmap looks like, whether it be on the deposit side, lending, you know, advisory, just like how that all fits into, you know, your product roadmap.

Gregory Garrabrants

Right, so we have been building the front end for, and it would be an addendum to our self-directed trading account for the purchase of Bitcoin. That should be live probably in the March 2027-ish timeframe. And we're going to put it in and beta just to make sure everything is buttoned up and working properly. We're using a third-party custodian for that or where the custodian is actually, and we're piping through APIs for that with them. And then we will roll out a Bitcoin lending program that will be like the margin program that will follow shortly after that. And then we're going to assess what other coins we want to add as a for trading within the platform.

And we think that, you know, given the ability to have such a tight linkage between the money movement capabilities of having, you know, checking accounts, and brokerage accounts in one place that there'll be some benefit there. You know, we're starting with Bitcoin. We're going to roll it out slowly, make sure that we have everything straight from an operating perspective. But that's been in the works. It's pretty close to being done. It's working in, not to give too much details, working in a test environment. We're about to, you know, bring it into prod in the next two to three weeks and then go through all the testing there.

Operator

Excellent. Thank you. Our next question is from Andrew Liesch with StoneX Financial. Please proceed with your question.

Andrew Liesch

Good afternoon, guys. Just one more follow-up question on the non-performers or the charge-offs. Were any of these the sort of AB note structures that you'll do with other lenders or non-bank?

Gregory Garrabrants

No, no, they were both, um, they were both syndicated cash flow loans, and they were the only two loans in the entire syndicated cash loan book that had non-bank agents. Got it. Okay. So those are, those, they were, and we were small parts of, in one case it was quite a large loan and then the other, well, the loan, yes, they're both very large loans. In both cases. One was really a regulatory issue, healthcare company, and the other was a tariff-related issue from a very large, I think the loan, total loan size was almost $1 billion. So, they were big loans that had a lot of sponsor equity behind them. We were small pieces of them and those were both non-bank agent deals.

Andrew Liesch

Got it. Did this come out of the annual SNC exam? These two credits?

Gregory Garrabrants

You know, they, they did. There was nothing related to our decision to charge them off related to any kind of regulatory exam, it was our view and decision that, based on where those credits were at that time and based on developments that occurred, that it was instead of having the reserves, they should be charged off.

Andrew Liesch

Got it. Okay. And then, Derrick, on the expenses, advertising costs were up a little bit. I don't know if maybe I missed you mentioned that one. I'm just curious if there's anything unique there. And then I guess more normalized expense growth going forward. Is that more of a comment as to the 30% number that you mentioned, or is there a certain growth rate that you mean?

Derrick Walsh

Yeah, on the marketing, advertising, I referenced the competitive nature of deposits, especially around consumer, and so we expect to continue to spend in that in that arena for the— to remain and as we look forward to fund our growth. So the advertising marketing line item will stay elevated and into the future from where it was over the past year. With regards to expenses overall, I think when you carve out some of the different acquisitions and look at some of that run rate in the past. We've kind of been in that $3 million to $5 million a quarter on an average across a year, right? Right. Certainly some quarters are lower, some quarters are a little higher, but as a kind of run rate average, that's been the ballpark, absent any other acquisitions or one-time anomalies. So that's kind of the range that I would guide towards.

Operator

Our next question is from Kelly Motta with KBW. Please proceed with your question.

Kelly Motta

Hi, thanks for the question. Most of mine have been answered at this point, but I guess just to close the loop on the credit, you guys have been obviously very strong at managing credit. Can you remind us how big the SNCC book is within your loan book?

Derrick Walsh

The cash flow syndicated deals total $459 million of our total loans. So that's that's the kind of area, but all of the vast majority of those are pass rated and are are well performing.

Kelly Motta

And then, you know, you guys have have multiple channels for funding. You know, to, you know, one area other banks are struggling with is the funding, and you know that the tailwinds from ARC, as well as you just have the Capital One deal. Just wondering if you could maybe touch on some other channels where you see as good sources of funding as you look towards that low-to-mid teens loan growth you're looking for this year. Thank you.

Gregory Garrabrants

Yes, well, on the consumer side, our Axos One product is doing very well. The small business accounts are doing well. You know, some of the saving side stuff depends on, you know, where you go from a pricing perspective. So that can be either flat up or tailwind depending on or a headwind depending on how you price that. But the commercial side broadly for us is doing very well. We have really good growth expectations there, and that's comprised of a variety of segments, and, you know, each of those segments can contribute $50 million, $100 million a quarter. So, you know, we really have a lot of growth opportunities there.

Our treasury management platform's very strong. The API connectivity there is strong. All the specialties. The businesses are continuing to grow. So, you know, I think that, you know, really the deposit side is a very multifaceted platform that has a lot of areas that are continuing to do well. And cross-sell in our accounts are also continuing to grow. We continue to win complex treasury management relationships that require a lot of API and IT support from an integration perspective, and we can provide some fairly customized services there that I think are differentiated for an institution of our size.

Operator

Our next question is from Timothy Coffey with D.A. Davidson. Please proceed with your question.

Timothy Coffey

Thanks for the opportunity to ask a question here. You're kind of poking through the queue, and I noticed that your substandard loans are down almost $100 million quarter-over-quarter. Can you kind of talk about some of the things you're doing behind the scenes to improve credit quality?

Gregory Garrabrants

Yes, I mean, I think that the relatively de minimis issues that we've had have been confined to the cash flow book. I think a lot of those loans were made in in very low interest rate environments, and although we did stress test them for increases in interest rates, those interest rate increases have obviously been pretty large. We, in some cases, don't have a lot of control of those deals. Certainly with the two we did have losses on, we're non-bank agents. So that's something easy to control as you watch. The non-bank agents are just probably more willing to provide accommodations to sponsors without maybe being as vulnerable as they are. As taking the required action earlier. So that's something that can happen.

But look, I think there's been some deals that have been hanging around, and a lot of the changes in some of these areas have been either regulatory or tariff related that for some of these businesses that have been more concentrated have really put increased pressure on them. And so, I think there's always refinements that you make and you always learn something with respect to those elements and obviously highly to be highly skeptical of EBITDA adjustments and to and to really look through and think about supply chains and regulatory pressures and regulatory changes that might be possible are obviously important, but they're really very idiosyncratic to a very specific subsegment of deals. And, you know, all the real estate side stuff across the board and all the structured credit continues to, you know, perform extraordinarily well, even with rate increases where we don't expect any losses. And even in the non-accrual portfolio, a significant part of that is single-family lending, which we don't have losses on those loans either cure or they're paid off or sold as they as they get going. So, you know, I think we clearly have become more thoughtful about taking smaller positions in syndicated cash flow deals. But, you know, there's – You know, there has been a lot of change from some of those, those loans, which again isn't a big book, but, you know, when something's originated a very low interest rate, there can be incremental pressure in the current rate environment there.

Gregory Garrabrants

Okay, well, thanks, everybody. We'll talk to you next quarter.

Operator

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.

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