Axos Financial (AX) 2027 財年第一季法說會：淨利息收益率擴張，維持貸款成長目標

重點摘要

• 截至 2026 年 9 月 30 日止的第一財季，淨利年增 15.4% 至 1.296 億美元，稀釋每股盈餘 (EPS) 年增 16% 至 2.25 美元。
• 淨利息收益率 (NIM) 季增 10 個基點至 4.64%。管理層預期未來幾季 NIM 將大致持平，因為資產敏感度與放款重新定價將抵銷過剩流動性及較高的存款成本。
• 期末放款總額達 259 億美元，季增 3.166 億美元。扣除約 2.9 億美元的資本呼叫 (capital call) 聯貸案後，淨放款餘額增加超過 6 億美元。
• 存款年增 14% 至 254 億美元。Capital One 交易帶來約 18 億美元的個人退休帳戶 (IRA) 儲蓄與定期存單 (CD)，為未來的放款投放提供資金支持。
• 信用成本增加是由於兩筆先前已提列備抵的商業與工業 (C&I) 轉銷壞帳所致。淨轉銷率為 109 個基點，但若扣除這兩筆放款，淨轉銷率僅為 8 個基點；整體放款中有 99.2% 仍維持正常履約。
• 管理層維持 2027 財年有機放款成長率（不含併購）達到 10% 至 15% 中段的目標，並由約 28 億美元的潛在放款管道提供支撐。

核心財務數據

業務與營運表現

用於投資的新增放款（不含單一家庭過渡性貸款）總計 57 億美元，高於去年同期的 42 億美元。成長最為強勁的領域包括商業不動產特種貸款、不動產貸方融資、設備融資及其他汽車貸款。

較高金額的提前清償限制了帳面放款的成長。巨額單戶住宅、多戶住宅及小額商業貸款餘額合計減少約 1.5 億美元。資本呼叫放款餘額減少 3.45 億美元，其中包括因 Axos 擴展其代理行能力而進行聯貸的 2.9 億美元以上放款。

平均放款殖利率季增 11 個基點至 7.48%。Axos 約 75% 的放款為浮動利率，並在指數利率變動後 30 天內重新定價。管理層表示，此結構在利率多變的環境中提供了彈性。

銀行與服務費收入從去年同期的 1,080 萬美元增至 3,520 萬美元，主要歸功於 Verdant。由於商業放款提前還款加速，提前還款違約金收入從 70 萬美元增至 680 萬美元。

證券部門產生 1,030 萬美元的稅前淨利，年增約 24%。保管或管理資產規模增加 50 億美元至 480 億美元，本季淨新增資產總計約 1.95 億美元。

Axos 在過去 12 個月中完成了四筆併購。Capital One 和 Genius Bank 帶來了超過 40 億美元的消費者存款及 13.2 萬個帳戶。Verdant 在交割時貢獻了 12 億美元租賃資產，而 ARC Technologies 則帶來了小型企業金流管理平台以及目前存於合作銀行的約 7 億美元存款。

該公司在本季以每股 86.92 美元的平均價格庫藏股買回 700 萬美元普通股，並於 10 月 1 日至 10 月 23 日期間再買回 700 萬美元。剩餘庫藏股授權額度約為 1.12 億美元。

管理層營運展望

管理層繼續維持截至 2027 年 6 月 30 日止財年的有機放款成長目標為 10% 至 15% 中段（不含併購）。受惠於多個放款類別的潛在業務量以及從 9 月季度延後發放的放款，管理層預期成長速度將較第一季加速。

Axos 預計未來幾季淨利息收益率將大致持平。在截至 12 月的季度中，與 Capital One 存款相關的約 7 億美元平均過剩現金預計將稀釋 NIM，不過管理層仍預期淨利息收入將持續擴大。

該公司預計在 2026 日曆年年底前投放大部分來自 Capital One 交易的過剩流動性。此外，公司還計劃在未來幾季從合作銀行遷移約 7 億美元的 ARC 客戶存款，其中包括數億美元的零成本營運存款。

管理層預計信用損失備抵比率將維持在總放款及租賃資產的 1.1% 至 1.2% 之間。若扣除併購案與一次性項目，每季非利息費用的平均成長預估落在約 300 萬至 500 萬美元之間。

Axos 預計下一季的提前還款違約金收入將會下降，不會重複 2027 財年第一季的高水準。管理層亦指出，隨著公司競逐消費者存款，廣告與行銷支出應會維持高檔。

該公司正在開發比特幣交易功能，作為其自主經紀平台的延伸。管理層預計在 2027 年 3 月前後進行小規模 Beta 測試，隨後將視測試與營運就緒狀況，推出比特幣抵押貸款計畫。

風險與關注焦點

淨轉銷率上升至 109 個基點，主要歸因於兩筆先前已獨立提列備抵的聯貸商業與工業 (C&I) 放款。其中一筆涉及一家受到監管問題影響的醫療保健公司，另一筆則面臨關稅相關壓力。兩者皆為由非銀行機構擔任代理行的巨額交易，Axos 在其中的參貸部位相對較小。

本季有額外的商業與工業放款進入停息 (non-accrual) 狀態。管理層表示，其中一筆放款主要有不動產做為抵押，最近的重估價值接近放款餘額。另一筆營運企業放款則具有較大的潛在損失曝險，不過 Axos 已設立個別備抵。

較高利率可能會減少非隨機性借貸與放款撥貸轉化率。管理層亦指出存款定價持續面臨競爭壓力，並表示存款成本可能會在後續季度追上資產重新定價的速度。

多戶住宅交易活動仍受到買賣雙方對物業價值看法分歧的限制，而部分競爭對手持續在小額多戶住宅放款上實施激進的定價策略。

分析師問答亮點

• 淨利息收益率展望：管理層將近期的 NIM 限制主要歸因於 Capital One 存款帶來的過剩流動性。資產敏感度與高收益放款置換應能支持盈餘，但預計存款重新定價將限制利潤率的進一步擴大。
• 放款需求：潛在業務管道依然十分廣泛。Axos 強調在巨額房屋貸款、設備租賃、存貨融資 (floor plan finance) 及資本呼叫放款方面的機會，儘管較高的利率可能會影響成交率與槓桿決策。
• 併購綜效：Genius Bank 的支票帳戶交叉銷售進展順利，而 Capital One 的交叉銷售仍處於早期階段。Axos 認為有機會向 IRA 客戶提供數位財富管理產品，並利用 ARC 的平台深化小型企業客戶關係。
• 科技與創投曝險：ARC 主要充當存款平台與債務市場經紀商。Axos 表示其資產負債表上基本上沒有直接的創投放款，從而在保留存款與手續費收入機會的同時，限制了直接信用曝險。
• 資金籌集能力：管理層指出了 Axos One、小型企業帳戶、商業金流管理、特種存款以及 ARC 存款遷移，均為實現其放款成長目標的資金來源。
• 信用品質控管：Axos 表示對於聯貸現金流放款的部位規模及非銀行代理行的角色已變得更加審慎，而不動產抵押與結構化信用投資組合表現依然良好。

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管理層陳述

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.

分析師問答

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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