Axos Financial (AX)

Johnny Lai CFA VP, Corporate Development and Investor Relations
Greg Garrabrants Chief Executive Officer
Andy Micheletti Chief Financial Officer
Michael Perito KBW
Austin Nicholas Stephens
Brad Berning Craig Hallum
Steve Moss B. Riley FBR
Edward Hemmelgarn Shaker Investments
Call transcript
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Greetings and welcome to Axos Financial's First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Johnny Lai.

Johnny Lai

you. Thank everyone. afternoon, Good interest your in for Axos. Thanks

President today financial results us Chief Officer, Greg they comment the will Executive the for to Micheletti. Officer Company's Axos questions operational XXXX review be financial ended September prepared and three quarter Executive Vice after for and available the Garrabrants, first Inc.'s Greg months Chief conference will and remarks. Financial Andy XX, and Financial and President Joining Andy and call the on results XXXX and answer are

made your Before I'd in listeners At current XXXX. an the call time, the materially and and forward-looking as remarks. forward-looking I statements provided Company's opening announcement the website on may company management this Harbor located to to at in protection of in the management to Actual began, on of and press questions. axosfinancial.com being that pertaining Greg Details call assumptions for conference of I would and over call on release. is to Safe of additional implied Investor audio his be today's and future forward-looking the uncertainties for differ call that this were turn Private replay XX a this results These for of could like days. and in remind the the earnings make Securities contain or like section risks made claims prepared available and there such Reform Relations statements Act forward-looking will statement webcast Litigation to may basis the remarks regarding to that expressed are uncertainties. views subject events Therefore, forward-looking performance. call response risks statement result those statements from are contained This on

Greg Garrabrants

for interest XXXX. fiscal net September quarter welcome XX, when of the to to you Johnny. quarter the ended for down XXXX Bank. XX the basis to million Good September XXXX. stockholders from in fiscal ended first and I'd per XX, Financial's and and XXXX XX, quarter for the diluted announced everyone share September quarter thank your was the us. $XX.X first fiscal September share quarter. September everyone million $XX.X for earned Axos ended conference the in I diluted Financial XX.XX% Axos Axos $X.XX Axos million quarter XX, the you, $X.XX like the joining compared XX, per $X.XX up ended you afternoon or in earned and Earnings XXXX record thank XXXX for XX, ended first ended for $XX.X compared quarter June million Axos' of points for the $XX per prior to income call Thank to share common attributable XXXX, diluted

the per and basis Excluding XX, expenses, earnings and for September non-GAAP and quarter year-over-year. ended on non-recurring respectively, XX.X% quarter earnings million the $XX.X quarter up linked X.X% share from XXXX. highlights loan of $XXX quarter a XX.X% include, fourth were and first the million, increased or by leases annualized ending $X.XX, adjusted for Other XXXX

X.XX% points XXXX. billion higher Holding quarter X.XX% compared to was quarter up addition X.XX% Non-interest with billion year's warehouse mortgage quarter. of ratios September remained on gain September annualized from due ended the of interest from and the to of X $XX Bank period June $XX.X sale at levels fiscal to in for to in Tier quarter quarter. XX, the sales and the in settlement compared for of basis in Capital Net X.XX% from XX% first fees XX, to X strong and billion loan reached $XXX.X the first and last minimums. XXXX Return XX% million increased XX, well ending XXXX fourth the and equity up this the corresponding year-over-year to on down XX.XX% capital $X.X last Company, XXXX at XXXX, million margin at quarter $X.X year, which balances, the in up our Excluding year-over-year June both settlement leverage this the structured Services or above compared sales regulatory fluctuated reflecting levels. increased million quarter, of from Bank's structured was balances XX XXXX, assets XX. $X.X quarter-to-quarter income XX.X% first Total increase Axos XX.XX% the our Fiduciary September

non-performing We X received this and in our offset assets basis originated quarter. net to loans million approximately points XXXX Our advanced refund basis the of ratio with the which points September provisions credit XX, the asset during XX ended of tax XXXX $X in quarter remained season, loan total recoveries of loss for quality strong quarter. this increase payments

quarter, Strong $X finance Ending offs specialty family teams jumbo X.X% real first Our $X.X mortgage single the partially for XX.X% higher-than-average gross by and for year-over-year commercial non-performing We mortgage, portfolio billion commercial our by loan increased for million. offset lender $XXX balances increased year-over-year XXX.X% and approximately XX.X% group, allowance to XX.X% Originations loan in of loss leases. portfolios. specialty in were to loans real select lending represented pay originations and decreased multifamily investment to sale originated coverage originations loans $X.X year-over-year. up billion. estate of estate billion our single-family and our

XX.X%. The and agency million of $XX The ratio of for real ended consisted sale single-family of of and ratio $XXX value first the was debt on with an consumer The value of X.X%. in resulting the to production average for single-family FICO the average appraisals are and $XXX C&I current commercial jumbo loans estate profile C&I service FICO jumbo XXXX growth, million unsecured loan as auto of XX%. of $X reoriginated our average was of debt of the balances. September loan was of September and over eligible The The auto X.XX%. to production At was value for loan estate loans million was million These an production, coverage XX.X% other production. ratio $XXX credit entire amortized real estate loan multifamily weighted quarter average XX, first the of average portfolio coverage XX.X%. loan $XXX of to The loan small was of production production average originated value loan single-family production, agency XXXX in million $XX XX.X% value with XXXX, for originated balanced commercial ratio loans loan origination of FICO ratios ratio loans production service net loan the XXX XXX. was single-family million average the follows. to average of value production use date the XXX portfolio quarter portfolio eligible million gain multifamily to real the ratio ratio of XX, to Our was production,

XX% or between principal As The mortgages loans. the below ratios XX% is September XXXX XX%, XXth have XX%, between X% XX%, calculated single-family of XX% XX% loan by the balance the XX%, to these of current the greater XX% divided value. property value value to to have of and approximately XX% value X% appraisal to ratios ratio by and original quarter, our loan securing than and value and using loan X% at value rations loan loan to have between

to loans ratio loans is are over our XX% is representing of XX% XXXX, loans in single-family time in over and of billion a XX% of approximately XX% of multifamily of years origination. multifamily the on and between our multifamily credit X% than last lifetime between and at our multifamily lending the losses of originated Growth are credit lifetime The our loan credit in pipeline XX% We and our based XX% our XX record under loan less X strong value XX%, well-established points are has have appraised portfolio X loans originated September track are basis The jumbo we've XX%, a to XX%. ratio mortgage had of outstanding multifamily than with above basis performance loan increased XX, production originated. Approximately of less $X.X loans strong. value multifamily as originated quarters X% point loan in our value of We single-family losses XX%, of book. weighted originated the approximately portfolio loans. multifamily our average several total have loan

lending business another approximately by strong ending C&I posed with increasing finance. balances quarter lender Our million, excluding $XXX

any remained strong, rates. our experienced losses businesses. groups of lending our not portfolio our indicative have year the real target our ability an We in grow next since demand specialty over line lending entered and with growth we estate to Loan in these C&I

million $XXX single-family million loans. of XXXX, Our of of $XX and was million loans of billion September property million loan agency pipeline of XX, single-family loans, consisting $X.X jumbo loans, income C&I $XXX at $XXX

savings and XX, deposits from borrowings XXXX, Since accounts of to deposit steps X% its businesses transition temporarily mid-November, and and diversify consumer We deposits Once scheduled more what X% and is of were are XXXX. created loan three anticipation taken repositioned XX, our an the core higher our deposits our Nationwide XX% gradual IRA in with accounts, ratio. lending X% prepaid our all come grow the September growth. our imbalance At in deposits and to market XX% important savings XX% range. to deposits funding, contributing a to we represent accounts, should short-term increased total Checking we return transfer Nationwide mix of September approximately to have Switching cost balances replace which to and accounts. balanced borrowing deposit historic reduced beginning quarter ratio at acquired to of deposit September in of in over funding. with we we balance continuing sheet business the to origination money loan checking, XXXX, the our our diverse deposit

deposits run customers an Both expect to XX,XXX approximately $X we of accounts market Nationwide retail the the to the to plan at deposits savings and approximately time regulatory August forward in deposits. we on and of signing, we $X.X to market closing. look some of of First, to and Nationwide Bank. received money of projected billion and time deposits of our the the total Bank's These for mid-November. of to and onboarding billion $X.X the transaction Nationwide of billion will off checking, money acquire from deposit balances, at approvals CDs $X this Bank customers convert the new Axos add add Axos. to billion required acquisition signed deposit in Bank's agreement comprise have Based to We

Bank's provide to various the replace balance Nationwide our of will customers. majority banking signed for in current replace million joint the as and banking of XX of funding We initial The cost agreement assuming and we're existing Nationwide over months acquired $XX increase quarter announced lower project of and fund of XX cost entails acquired purposes $XX sheet and points future cost on funding, as well would to of a approximately do of marketing with to in used fiscal the deposits versus year. loan Axos the and will not to borrowing anticipate co-branded products our as today deposits We basis an growth increase that insurance borrowing these overwhelming rate higher term the average which services. our replacement the a and We second the higher calculation funding with million services in to will Since use funding five transaction. a first agreement XXXX. years products with from next the we this Nationwide cost by deposits result meaningful this reduce we the be

through this offer experience with to tremendous delivered small seamless collaboration commercial breadth to members, and to members associates, small XXX,XXX excited user over our us opportunity to help success. Nationwide partners achieve individual, look financial are leverage to clients Nationwide With and Nationwide's We products a forward to their general business a a business for of high platform owners X offers clients. million services make working We goals. customers, in flexible technology our nearly market including value and

time, The expand COR an independent advisor dealers with adding us clearing COR one of Axos $XXX acquisition announced Over such markets the deposits. provides margin low margin XX,XXX their services such cost and we We the expand action of more as business intend clients capability lending. growing firms high took to further their acquisition funding serves and registered providing believe into capital, and can adjacent we by and is RIAs securities we The broker dealer underlying as broker to currently second expand strategic enhancing technology sales the largest vertical an robo-advisory acquisition. in providing the of service our of low to to fee-based team business and of firms. diversifies States. annual entry and XX scale United $XX enacting further and million the for our into approximately addition clearing, independent platform. income approximately has investment sticky client cost million new introducing custody, experienced asset offering a established space, service The to

We half accretive calendar and XXXX, regulatory fiscal customary to of expect June to to and in closing year acquisition approval the be earnings share ended the other in per by X% approximately our first close XX, XXXX. conditions subject

at to to seven four represents quarters. opportunity X medium horizon, we in team we partner another believe year was to from business established the term grow Axos the We integration the deposits reduce fiduciary long cost the The while well. services specialty bankruptcy perspective of larger $X existing opportunities and to our deposit that M&A be we to deposits with well the year, transition deposits durations. low of to currently action there of this will Bank billion six funds continues us to relationships fiduciary new added with cyclical held of banks a an of longer nationwide. experienced with next over that X bringing The non-chapter deposits, fiduciaries trustee and from Axos made services an cost additional third these The APEC In vertical, time chapter over to an X have addition X non-chapter chapter will other and vertical as progress counter as provide April this trustees bankruptcy Bank. verticals

and benefits net We acquisitions. low we through our deposits to focused well three higher loans full business Our rate commercial, shifting C&I our interest even floating have realize held and margins verticals, have growing deposit-related up deposit non-interest-bearing though remain small of the yet on yielding cost to specialty our or verticals.

The net to strategic will relative expansion of initiatives, completed after of our and grow non-banks. our banks rebranded Our continued better consumers, interest October success margin experience. function new medium products businesses mission be online focus diverse and ability platform user from nationwide with online brand shortly rebrand core clients was over acquisitions, our the treasury management commercial institutional Axos members the the yield and of platform. existing provide integrating aligns new with successful and extremely X, value banking clients to strong on and in the to our converted and Bank positive. team maintain our been a our and partners to longer our On and we on a to our has clients the brand set curve the competition efforts term as success Bank. our and high on Axos We business Feedback new shape of executing our all Company of and banking a from services

over to promote and next and a the in of several engage marketing for Axos. awareness affinity campaigns brand-building will We series quarters

October York rebranding the company exchange Access and NASDAQ to We from Financial Holdings stock listing Exchange. the on stock BofI Stock our transferred from Xst also Holding the to aligned New name,

from strategic changed execute like the symbol comprehensive past hundreds ambitious team who ticker BOFI worked on thank AX. tirelessly Axos to to Our the initiative. and to members over of year the this I'd

consumer investors us a banking because vision already bank. growth will product It who investment propositions We're platform their deployed be and and offerings, transaction adding of unsecured the manage consumer goals to quite product their portfolios consumer an loan the rather for tailored this omni-channel products compelling with individual's closing our the for investment and with us team announced we free of of services proven of of financial individual banking. vision and and mobile of and a we experience after adds our of digital technology-enabled us scope to well on the allow to the talented The employees the platform, propositions. to breadth nearly enabled will our wealth delivered We small entire WiseBanyan. and fit on a premium increased in platform. online digitally their digital add focused long service custom our the our success than platform. services that one being the executing investments service service partnership. control WiseBanyan model our ourselves personalized made opportunity platform these of and best-in-class our our clients We space, a customer through I'd developed executing excellent as to immediately bank ground allow that banks, WiseBanyan next are life lending entrepreneurial during and perfect to fits set well on a digital suite I Axos to services believe sophisticated our acquisition auto generation omni-channel understanding our cycle our service important Today, digital flexible We create banking and vision providing customer provide XX,XXX from clients. advisory less technology family. fiscal agency and improve finances have lives Nationwide the of allow our the of flexible but the strong very that deposit like universal a plan strategic welcome free and acquire the amount acquisition important will the platform platform is to throughout meet rate digital to our and clients service WiseBanyan consumer broad employees banking a platform. in built robo-advisory term the a successfully digital launched WiseBanyan's wealth clients accomplished their and centers to tremendous value who to goals of value business offering team the development customers We're pioneers is our management a on small a retail robo-advisory year. and new integration consumer excited robo-advisory experience partner, for can and and Axos' consumer strategy into in a to and user-friendly integrate model. creating charge. and for we to the banking to from differentiate comprehensive it's and up, thoughtfully in commitment Nationwide's of us in with order beyond of the more based consumer online

Our for efficiency of this XX.XX% compared factors quarter the fiscal XXXX. to first XXXX efficiency the first ratio XXXX in for have of rise. to and the fourth was ratio's fiscal XX.XX% quarter of XX.XX% quarter contributed Multiple

potential Some are focus represent the base equity. income will income. efficiency have businesses. others more generated to well the transitory fee business has focus commercial shifting shifting temporarily permanently ratio or toward to our enhance that of banking either and ratio beyond spread-based a straightforward return executed, more capital-efficient historically our the If majority elevate and this It will on businesses efficiency

banking efficiency a basis this banking retail rough by First, quarter. group disappointing as retail had approximately and quarter ratio agency overall mortgage marketing mortgage agency of Bank's The a the costs production. XXX increased result varying points

as our we Nationwide will customers result banking working acquisitions. available our that excited expenses mortgage are from mortgage optimize increase obtain and group. about of the We in our opportunities We're to to a our partnership significant that group also be expect we to recent the banking in our

efficiency this If transfer having increased continue trustee negatively. low Second, when of ratio we was capital on points impacts our business of the balance result bringing ratio closer of the success approximately on with the acquisition the efficiency C-based transitioned, is based deposits are the business. in we to the Epiq's efficient fully sheet, deposit XXX pricing Currently business bankruptcy trustee basis business internal highly XXs. an a are will, generate ratio efficiency

that to and to with basis management to and to held can increasing personnel increase to deposits, but exciting the center a next Fifth, the accommodate to the in our Fourth, Nationwide of we about need operations will acquisition year. we non-interest-bearing marketing in we this treasury activities speed. in two customers presented coming in incurred as by opportunities our there we quarter. points will additional continue and cost over personnel in as high receive focus to our increase from a plan significant a cost staff standard, invest on to these Nationwide be lower of this productivity These we associated couple Third, to be the quarters of up lag quarter continue and activate partnership. acquisition XXX or call personnel us get

performing Finally, return dilutive if the that to be will be on acquiring highly accretive the and securities businesses efficiency but well, we should are equity, capital-efficient to ratio.

on pursuit equity lead that will businesses. spread different is ratios our operate storage than maximizing efficiency fee-based to focus us that Our businesses based return at on and

to Our some capital transactions. strong deploy of ratios excess our remain M&A actions accretive despite recent capital into

the X Bank, X.XX% June modest quality, the a Nationwide for up X.XX% Tier will December seasoned at the pay well believe bank Even above level with in prudent that ratio Our Tier is from X% leverage premium our we after deposits XX, high the quarter, X well ratio we for remain assets. at leverage XXXX. a was

to provides repurchases excess our model plan. pleased additional us executing where the of with organic capital requirements business ample profitable with and approval In our growth, business the related having listing OCC capital share closing, Block are success M&A we're and highly to I'm strategic H&R and deploy and Our transactions. the flexibility we

We strategic have partnership. new an signed exciting

excess Our on loan are our our have helping of and we track remains credit good, funds and quality strong, pipelines are us capital. cost with our acquisitions

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investments opportunities are to profitable have of some to lending ratios, long they essential efficiency opportunities our grow. pressure we upward abundant businesses. fee-based We and remain each deposits with maximizing our the put grow of on our about highly to excited potential. While have these term I'm

exciting of initiatives function opportunities. capitalize our these and future on will our to ability on execute success be Our a

Andy the additional call detail results. on to provide to I'll financial Now our over turn

Andy Micheletti

Thanks, Greg.

addition was through the it's website note and to that our release, our with press wanted through today I our First in or axosfinancial.com. filed SEC EDGAR to XX-Q at available online

I XX-Q a press financial to details. for our refer or areas than additional will item. through Second, line release rather go highlight few every Please the

September quarter were for diluted quarter XXXX, quarter ended As XXXX the $XX.X earlier, Included and XXXX. $X.X XX.XX% million to XXXX for pending operating $X.XX earned ended or ended XX, Axos' to million, ended September the ended was million when the diluted quarter September the ended acquisition first in or earned last compared Greg XX, and June share share indicated diluted up compared X.X% the for expenses $X.XX the recent Axos' for down quarter quarter $XX.X merger income and to Earnings $XX.X attributable quarter. per million costs to the XX, XX, for million first XX, September XXXX per to from $XX.X of net September share in common XXXX our related the $X.XX compared stockholders XX, transactions. was per

at a quarter June this $X.X the changes in impact was which end balance million quarter. first increase of of making The temporary sheet was XXXX result the FDIC XX, the several insurance

additional of deposits. $X.X two COR the Also sheet pending made adverse for my capital $X.X and reduction the to XX, rate Nationwide year of deposit be Bank transaction should transactions. dividend to sheet The increasing the temporarily changes million FDIC scheduled the sheet broker insurance overall mix balance our occurring possible adding changes last on $XX all in to other for rate. reduce insurance liabilities we the we FDIC deposits the of Bank As quarter, to applied laid provide the during expected maturities the million purchase at earnings insurance to a discussed price our quarters Parent and repositioning to to of FDIC caused in large in the Those used billion brokered the fiscal rate quarter, balance balance approximately the from around were CDs this remarks insurance two XXXX June acquisition and with our quarter. cost first increase the prepared the formula,

associated and million amortization in acquisition direct associated $X.X in transaction intangibles million million impact clearing transaction. of with and Epiq second non-cash in the costs $X The COR $X.X professional costs, including was the a merger with one-time

per the the for $X.XX our increased the to $X.X XX, share compared $X.XX costs, the per quarter ended Excluding September non-GAAP share, share. M&A impact GAAP diluted in after-tax of $X.XX EPS of per million per to earnings share XXXX up

We the expect pending timing M&A of several on with increase transaction the associated the the intangibles to amortization closing conditions, activity amounts quarters over of and next paid. depending final each

For XX, ended quarter from margin XX down in X net XXXX, basis X.XX%, the June margin interest our was September September from quarter points the quarter the XX, the ended interest basis X.XX% XXXX, XXXX. ended points XX, for but up net

X.XX% in quarter XX, in quarter of fiscal Our average and the quarter the and X.XX% loan X.XX% to June ended was lease yield for first XXXX XXXX. the of compared fiscal XXXX first

average up of points at On the XX, XXXX. and rate the quarter was up from our XXX from the basis XXX deposit end funding last side, points basis quarter points, for the XXX basis at September interest-bearing

the preparing announced will acquire to Nationwide borrowings CDs intend paid transaction. deposits in We be and $X.X FHLB other the $X.X previously we year of approximately including without billion non-maturity this November and deposits, acquisition into the Greg maturing brokered to at As in balance close the types of $X.X Bank's off Nationwide of sheet of of billion the high-cost mentioned, closing deposits which deposit time are deposits. we've moved billion growing short-term and

at $X.X temporarily from advances FHLB at As XXXX, September June ratio. XX, deposit billion $X.X to a increasing grew XXXX XX, result, to billion our loan

I'll to in increase at and $X XX to basis provisions XX, XX, XXXX, net year, quality the Loan basis is points basis from for an of attributable for from perspective. positioned XXXX. basis than in last next $X.X offs down points previously the cost turn was and capital Included internally of X savings the borrowings we other between capital capital XXX Holding increase be choose XXXX. off back and asset leverage approximately recovery XXX non-performing compared and XX% and loan loans possible approximately grow approximately to fed million points September X.X% well last assume the XX.XX% advance the from offset deposits The activities, changes. was no over loss the points $XXX XXX $X.X the quarter enough $X Holding this from assuming the at X.X% season. at this June associated XXXX. June $XXX tax funded. basis last call of this to recovery Nationwide loans The the $XXX,XXX equal assuming blended about loans acquisitions, XX XXXX. refund over decrease loss a very for which September million the cash Johnny. X.X% of if million, high for strong year quarter The XX, making million result rate, a at with of dividends points on down our replace The and and XX over had loss which year. company could provide the refund Bank loan the The is end XX proposed XX, benefit and Holding to next we ended to and X cover $X.X to Tier at from Bank advance for effective remains basis expect written to mix basis the buybacks reduce our XX at our million our points, quarter M&A the and growth we XX at ratio the we that, September June more points quarter to at million capital company With of were recoveries company We basis loans higher If a rate of loan charge generate with expect to assets fed season, to million average a total stock XX, million quarter, points equal approximately XXXX annualized $X.X of of a Tier complete excess deposits be XX, to

Johnny Lai

take Thanks, Andy. ready Dana, we're to questions.


comes question a of your the Perito from Instructions] conducting from you. [Operator question. Please with At first proceed question-and-answer this session. line time, Thank we’ll be Michael Our KBW.

Michael Perito

guys companies we think maybe you're some that? mentioned is general these partnering start on there grow, some I any of places, should the we a businesses relation crossover something that digital just how or to like you initiatives also, can kind thinking be universal bank couple of acquiring help of these and or update broader [indiscernible] and is us can opportunity want just give a about with, but about [indiscernible] or new [indiscernible] any in you question, I utilizing there should more

Andy Micheletti

absolutely. Yes,

the and yes. question think that's a I answer is good

me let I'll first you of second your part give update, question. then the So take the

platform of XXXX, the of first maintaining sunset time associated two quarter at in rid calendar online with our out more external that brands platform rolled an almost the quarter which brand. get consolidated duplicate we to will So banking still brand on We all and one have first the cost transferred point our entirely in and of and of the sometime we can systems. be the

a the digital elements. comprised of initiative So number universal of is banking different really

the of was offered to inside control was respect a element with owned would then to entirely platform first be what the platform. and that we able we The creation

wanted So Nationwide, their example if is partnership the instance today, to of for look they able reason that us that customers. with everything work customize they're looking you for that about the that we're entirely a platform we're part of talking an at to that

unique. something that's So entirely

do what and unique it to us is our create associated looking So products going are whatever with to allows cross-sell opportunities partnerships do to forward. that we're

of there's base. an But associated utilizing customer opportunity, that. all detail obviously, acquisition it lot Nationwide's to a ironed is with of out So be

of an there that's the platform. example So of the utilization right

our with we we were were process it's platform. can of There line And the lot of the build of great along in you experience, it to through always not acquisition. that have yes, a controlled to a a have do were so respect do lot easy the because questions it, answer you was platform of it's we if can't it? creates we selection either and going friction And user it the this do and or our

question that our that so the of you've coming do was interaction how component next the of digital through has the you initiative that a with interaction about automate universal lot the with customer and through every of looking that we're process through that any institution then banking got So and such platform, now customers is, a right has So portal. customer bank? place take universal every looking that digital that at to we're going bank interaction how

through deposit to project do, it. way savings one they'll So, think an the is is associated don't that and someone ever certainly loan term account, of about it's It be that servicing a loan immense important. mortgage that they call but every even There's servicing to be longer servicing platform. cost would amount have comes in, a a with if

associated So with next a benefit to ability is there's The that. cross-sell. the benefit

we're would rate these personalization able in, what So see customers to platform useful being in if from products customer to Nationwide offer we through auto when an to partnership otherwise than up that. loan we're have those and to then entire able XX,XXX be database, of able that do we're end and and hopefully to at a is customers bringing this those bringing able tailor UDB utilization will order in look the profile higher acquisition, we so We're understand customers for the their inside be a tell will them.

about it's way password. right banking to is store store the the So app an the essentially think app inside behind UDB

know or those what choose those what be So we simply the it allows a products. on data that consumer from customer to to you perspective does to it ad customer that based is later tiles tiles just click pushed and will about

to respect of would next with your respect with question to second to then the this for be, The So is question. example, part -- WiseBanyan. moving of kind now

decided can platform do So, a exist that whatever with WiseBanyan really robo-advisory to for user a as banking integration universal has in tile a and product decide the great that in your if to while go by example, checking way primary use as this discount can been it but account. get or has of low forward, got manner some you yet, robo-advisory you we of has digital we've and none interface cost a that

a of we proposition their products a banking owns code a account, into proposition software based So rate simply universal based just be the matter and to is it's code that that so it's to scheduling that and digital with through since WiseBanyan respect platform simply enabled the checking not product to own there. those holistically that order it's production schedule our and their and integrate they're in software, able

a of I'll is And so, up see sort going competition rates that higher response level or to model Phase those simple others for consumers these that for banking sorts truly to and offerings with through, X many object product we of create to the from this Tier are is, evolving the and digital very X the value in call which what we're of of and respect of high things. which to kind I'm going is put

we're change the competitive there. an well. been been certainly incredibly it's It's It's lot resources, incredibly landscape obviously at IT a of So successful. looking required costly. ambitious initiative. very but That's going been It's

they well, like blessed I Nationwide really and what that's the so wow, then. us said, and with We'd first came And think we've been that to here it impressive. show take said, along have fact you

execute I strategic us of So coming initiatives very kind allow of that together all a of to in way vision. to think these confluence great that's a

Michael Perito

not on Maybe say topic, the a some partnership that the can little segment color on revenue Axos actual in, function you you segments work could will can either limitations of active or because of then extent sticking terms -- Thank in more about, of type insurance for give be Greg. going that something more Helpful, but I I also things kind what the can.And guess extent us like label help in to is more partnership, there other just be broadly on issues, the the just you you kind forward? you that are Nationwide a to of white you as and might sharing there that. cost competitive the other can think maybe how obviously understand us, maybe

Greg Garrabrants

services. me I minute, such banking hang think is esoteric this as vertical will become comment, of an providers that broadly with will -- kind but banking linked a software banking to distribute for itself

closely good with provision to that an plays across customers. to The and how marketing a with us business determined how be products agreement And a a needs. are how is respect that so for opportunities linked signed to element we that by commercial efficacy and fanatic our respect obviously their market to from to of will perspective exclusivity occur and respect data the that is with consumer particulars With Nationwide, the out banking. outline -- will are today broad the small

new policy Those in mortgage lots versa, of an example. with respect an kind things insurance quite of of although status that. Obviously, purchase in has least Nationwide months known it's brand, I our iconic opportunities with six of claim or any or So the loan, consider there's insurance there's purchase time like we home a close timeframe the to the vice well the for linkage sort incredibly auto auto at associated first to not for any are yet. and linkage brand, brand will our a a iconic, immensely, between or status

I had. that they doing is that of to associated what clearly side interested wanted respect in to it, they with benefit with with a obviously economics there. But the the respect think there's customers servicing So continuity Nationwide's a

headquarters there. will customers we'll their which branch service So, in that a in us a the taking be that we're over to will seamless maintaining manner allow be

it's that And I think time. over a partnership multipronged will evolve so

ones got willing I there's to of and and it's to find able do think to think opportunities to targets put it speculative from so, find it's lots I to work people the invest you. that to that's resources with level in are that folks to but partner you've be the trying right with do, you've on want we'd got whether partnerships what there's other high there, why to systems it. start pretty premature to perspective. of but a we respect particular But of we're With capable emblematic think respect

Michael Perito

next Okay, from capital management. me great. helpful. on the just Thank Andy, about you. the capital last one expectations end were comments year one the by And of excess then

capital to deployment. Just couple around deposit maybe have like seems these year, curious though we with Share times. my the and end that near guys some you if still any Thanks there's guys as taking seen a of know, market, any, of room of there's between have some method next term repurchases back of to just the this capital done in for been I'm the transactions, here at volatility now it question. but something go we've curious you about of as think expectation maybe used a year you've you deployment.

Andy Micheletti

to I to banks a mind. about shows Sure. something that that's form right it some the generally price the about except market our is clearly we has which have sector to the share thinking always too many to consider and the too fallen to is of come certainly to don't on at specific least level broadly how say opportunistic time Yes, what has solid with just the anything that performance, be to say certainly respect do repurchases.


line of Nicholas Our Stephens. proceed with next Austin the question. from Please your comes question from

Austin Nicholas

to progressing how Hey over you balance sheet, those progressing on how guys, if good maybe are on a Epiq deposits, afternoon. can Maybe can just the they're quantify on maybe, us feel give you the coming it? and and

Greg Garrabrants

say job competitive that significant a had we responses been those trustees We've I in But for great accounts simply we backlog be is servicing great voluntary we've basis, regular trustees. the can of these reasons. a I on giving them with working from what have and convince we'll quantifications their working out to a do trustees. would don't that of think that

were going don't, banks, So do for that but We periods created termination we're on it's think we projections those well. that based we exceeding contractual projections. those

Austin Nicholas

And maybe Can that? they seasonality give about looks idea deposits, there's were some any there on $XXX and thanks. us non-interest-bearing what in on quarter-over-quarter. then if like Understood, maybe just it million down at you on just went

Andy Micheletti

liquidity Axos' going block that's to that Axos' block coming some the still seasonality liquidity. of period. with be associated during out Yes, that There's

And you so, of are that's the majority seeing. what

Austin Nicholas

of in trending of prior XXX was to of that on place toward quarter this acquisition? to maybe from do we then the XX% the range prior the move guidance, fiscal of next the upper XXX end elevated or given is kind be in end levels Nationwide then quarters to into the or or over we few about agreement, 'XX still And Nationwide these then guide down range and XX% think need agreement and as that the the efficiency I thinking expanded above that

Greg Garrabrants

the incredibly like that think that's thought which probably be to particularly incredibly range, they obviously will but in good be of end have that unfortunately businesses COR I runs upper a margin, at with need pre-tax of great business to a Clearing it capital-efficient not reality.

our I that. will kind in. There's back of website to respect you with critical of be you So timing the the can that on presentation that think COR with some gives that, numbers

coming of revenue drag kind over than ourselves, while it I it we as that's be not now, should March, is there huge, probably the will to the and as timing, add bit cheaper XXXX, that on is building think in in question than maybe could that, that as that also of also June that significantly just a a as business little some as as as that customers ourselves, added a impactful. acquisition, cheaper cost is going while will early be well. add something stand-alone. WiseBanyan late Right although that to building bring The be

year of to kind respect have things of down. lot cost sort to a because calm a themselves a is just going respect, in it of So of transitional with are that on there's that number

of Nationwide think the be I control, one of time the all side money capital they having the we'll tax provide you'll have, associated little and right on be that of you customers. that they based maybe those you'll to and but see it I product with cost capital the can and side think into be reason that getting bit making that venture will in attractive going on associated going range something kind the to spent been couldn't and down a time business, what but to associated we success it segment, back then is successful create really on mid for they on to just with that systems with also model kind is in work I of depending working able see probably is cost is to pushing a that it's building the the the what initiatives part do take profitable have if really was lot that doing work add and segment, by platforms and with the their under but several we is for business hard the over of future that very over the required we away, segment that but acquisition worth a a efficiency only we're security that WiseBanyan integrating spread side of customers, on in COR's doing think their all make lot doing XXs and years guidance else upon we've a the to operating security

that's a customer we're acquisition a nice such acquisition So volume. good have very to generate of fit those why products sell with and we lot have nice think cost can been to able we they we their volume, because that a products low at customers acquisition and

Austin Nicholas

on, that within I basis? a are XXX to Clearing guess it COR I it see. XXX as nice with around to kind two and the of XXX little quarters, to next we of, on Maybe in in these on was out which bit layered margin, we look is Nationwide core margin around range on last year a think stepping basis talk down like looks came the the core a quarter there still

Andy Micheletti

good I yes. think we it, have at shot a very

on good side. seeing on seeing commercial I traction side. think that the We're good trustee progress our we're

hampered will we've all next sold remember stay good. quarter, this loan we and up underneath do a some $XX Nationwide these been little think billion. some those And of barely having also they're we scrape end with sales by, the to working, I things settlement to So, bit quarter probably structured

over have we'll we're once a respect freedom little going more growth well. with loan as that, So, to

solid pipelines that good, has area. Our business in been have been

get with have think And think have you good something revisit I a curve I that from or to we But it benefit didn't if So rate respect that, obviously shot that we highly maybe we think that. the yield actually with that. in before, some some that we ways at it's more then now, significant way market acquisitions. inverted like so not I'd the increases, for expectations but to of


from Our Craig Berning with Please your from Brad proceed next question Hallum. question.

Brad Berning

time this in do frame this. and reference the about you've I wanted bit you the how during you of announced fully all get an fully you from Can you that Greg, call, through more an a smoothed more guys, a When what good how think you is the talk efficiency acquisitions. XXXX asset when on sensitivity. about times of in little to afternoon, specific just kind get had few from congrats of acquisitions integrated, NIM but try to also of out, you change calendar an of from you everything's kind think do profile profile. type ROE kind structural that a we're and the all a to-date the about different Hey mentioned ROE talked on to managing profile,

changes strategic about of company. some to profile You've major that? financial just the pretty want to you're thinking made the understand, I how

Greg Garrabrants


Now -- a give of so you what can paint I you for can could I be. it vision

pieces as can is a -- there you moving of associated imagine, However, lot with there's it.

major understand give those to pieces then we're by you try moving to the I'll order thesis some insight so into operating you and the risks to thesis. in different for And which the

start. we deposits should more to If as some and can to right, we right it low-cost do should we COR. by with it'll well, XXXX COR COR can be take be take time, what from we able do able an initial do doing let's generated we generate, but So if it we're have significantly

of Bank majority But that clearing if retail [ph] work from them that is something a corresponding if at go come a good obviously Now with not sensitive at ratio sort obviously make it money the you and which we had look make bought up weak it's and from primarily and the group. we that's you than companies there's PE their you buy their that and can Schwab form deposits of are pretty thesis rates great. ,

be just has do. we that potential to that and the we is But on something it have execute hugely So powerful. have to to

The if are that sensitive. we do be could not generally so deposits fantastic. And particularly that,

to to get So well, if interest engine in And execute. net of a on powerful kind that relative boost it from that's is lot occur. that get things then can significant a we But to what how otherwise and depends but happen extraordinarily margin would of for growth done, obviously that can could potential, what order done for that it growth. there's need to be we a

area my know have and company about folks Now CEOs we're know done. that discussions down, some it some let's that Well, get of to this and early if were We actually that I with Hey, go. ready paid our I let's said, serious or come not. around see were clearing they on

got to go that And happen. so we've make

other to to way potentiality. So, that and is, their them next comfortable do I services corresponding bucketed think clients to product allows very price of of The we can respect them in in a -- question that's and offer a very the kind nice what delineated to with makes that things. the

other enhance that fully just of good do can profitability to as a well. there's paid opportunities lending So enhance securities things and there bunch

that but doing, anymore sort what been way real opportunities, well With happened. sort over working and calculated they reasonably as series realized market, models a branches they'd to have lot that to broader we of in on this made get placed their and of everyone think think just of I awful go swap them. of sort we're sort which it Internet weren't is do -- would we've falling what's of there's the of I question, and So bets a a to we've banking conceptualizations were respect their down,

well it raised or think and paid that a whatever was citizens $X we I we X.XX% billion, great.

enhancing value truly relationship been still that term bundle to sensitive. hypothesis increasing brands. the very products, lasting be customers less rate attract were increasing small to that build done fine. to what the of profitable, able they and are that able platform we're long in proposition that online going we're measure our that we've But the use, strong to by That's properly, is by we've proposition we're within Okay, ease able such defending is relationships our prove in

the sense long provide market you haven't on have customers. the strong of and in rate to that we've but brands, for a been that things service like on in those those and we and savings Now servicing talk keeping competitive checking time, reasonably done to we good a job very

will and a in decent to it. have is be So that years two one test we of that tested hypothesis needs

much it points, relative, to worth in that room is how think I really all worth is right by. freedom of remarks the XXX that that how sound XX react basis their other that people basis here of do points,

things and that it's and on component commercial we've with -- for we've solutions been side that another and to The leading extended an time been have the the commercial side and continuing of the that's like -- pretty story is treasury side of to well. in working invest and been yeah, is consumer businesses deliver on we side of next of of and the So that. doing API this this sort on to which going period commercial management and

that service I there. to over solution a geographic think a have to or a sorts We're those a that customers that We light location model with is, a talent expensive, the comes but lot of with also area, there question things and is technology-led good adding be sort pipeline of tends pipelines of able in model broader it centralized there. a talent area

would acquired think case not good that's another able hired on that we've there they're but replicate gain technology and people don't group most those a of that traction the is and and able the say of downside business as we're to success as And that would. and to achieve and side solutions. of to The deliver of about that'll scale well be success lines that success good very variable, I that good but upside of otherwise a so have of technology is A we I elements so you've pretty and like had that, that let's just they to needs there, able is thing. feel far they positive their be what lot specialty that. the component the very compensation scale

out diverse think the and Obviously, to elements institution online of the have and of the good still just how businesses now. as high and able of do longer very the size it into double think we very, have for here different going strong is So deserve have if do that execution very now. be to have, sort that are just doable the of securities exactly side, make structures find maintain it's they businesses a we term and growth we the having that I things XXXX With without of you savings powerful over and some things that can't that right to work. consumer added play able really very in the and challenges people but to it. going to then we very type to be to we need guys those do to achieve operate fault. think need those we're ROE really an those these of that our they the that of give reticent and achieve that target throw be, we're lot been a our who to ROE set a I variables fee-based there's And are visibility are foundational sort are base brands and And knowing to us and I'm scale can. But looking to there ROEs, respect

as and think more be that that provide around all think some and and really Investor to call of that we're future Day more that, next might be as a we things something get forward guidance I solidify start strategies the I like more moving kind you segment would and in we'd hold our information helpful.

Brad Berning

One follow-up.

effectively about great side you've affinity consumer have As of think cost out branding you of it business, and obviously you you lot think a acquiring there. built versus lot about and the business side the invested a of

is frame? that more need and How niche the you think Capital brand be more like like announced from the just a You're about starting do here. time over One the Do balance of the growing branding I'm you consumer and see kind consumer can you've today? in side side like old your you thinking of type to to about affinity do business curious and big invest you're there in deals be MBNA between be a based? or five-year market? where three How just you how

Greg Garrabrants

brand have we I of presence. time need think over do to that element some

think billion I just build One, want spend you to remember talking $X the balance if one is, time I know, you had brand, they associated at challenge to well, a they and and look you sheet. someone with said, that a certainly Capital clearly at our

So obvious challenge. not affinity it's and and are building ways building have that don't But obviously, time. that over of kind expense brand we there methodically of there's brand slowly think

things interesting the we're that. got a of we've branding overdo so, started, And it. we've some on cost to like campaigns agency that rolling part will we've 'XX That not have, calendar period going but and the start started we out be structure to

answer the going it's bit of to think be a is, I both.

obviously I having think have of having brand have inexpensive kind with component at that gets we're I credibility. we that own think adds level. relatively But gets to that also up of, exposure do H&R obviously the our credibility. just the Nationwide, unaided a awareness we a when need and Block advertising

I world since MBNA think the has changed things, that way the did then. lot a

right a it's not, there's you And morphing so if that or not and model partner. still of has effective it's value perfectly have it the


of the comes Riley Our proceed question Please from next Steve Moss your FBR. from with question. B line

Steve Moss

the growth bit little go here drivers could quarter? growth. the on for you a missed wondering just through C&I I C&I this was I if

Greg Garrabrants

you Andy? that take to want Do

Andy Micheletti

that. Sure. highlight we through prepared back remarks, and go In Greg's can

loan when so, million and net production, production commercial identified resulting of then we of And multifamily of and million production, growth. $XX in $XXX C&I production identified estate we C&I real of million loan $XXX

good. So production was

$XX million to down pay for piece. that had offs we netting However,

leading in specialties. that as looking have at those So group, that's be segments same I segment terms that key our to is commercial for worked continue where guess us, the estate in well segments the a as finance they clearly of well real lender

this don't heavily value flow enterprise secured better very have in and all they What quarter, sort leasing in is, nice based that on lending. done, much in business haven't was quarter is at a heavy unsecured cash got there's their net than they'll asset low million lot advance and the very, so a prior got did we the quarter So type be the of heavy that have as a to they've of a number C&I $XX growth. does quarter. This contribution there's the coming so fourth fourth structure. look with they've we And pipeline, lending nothing business tends we rates at

Steve Moss

I the guess were around that are watchlist were I added on where two there guess of and that wondering second type what credits kind noticed credits. then issues special were was they those thing, located, And that the the the to I mention construction property credits?

Andy Micheletti

one is Chelsea. West credit yes, Sure, a in

are great a net about absolutely It's delay. a construction new almost a is a four done, and But that We a guaranteeing little, large about special junior it absolutely, reason partner. bucks delays our a foot, had it one out. $X,XXX about loan fell of $X,XXX sponsor has about It's The worth. a it's few loan XX% loan loan. that foot. is are hundreds pre-sales a a It had we have why a this put folks have it it mention the that property, good of months is it's of a dollars of had millions It has it, pre-sell of The done. brand levelly. beautiful construction on

asked to building They them up opportunity. It's general a good general We contingencies. a the light. did. Some those and good contingencies were a top little of

done. basis. with that's something significant also well is on those smaller other them. the those on Well both lenders only The delays, capitalized relatively being low to lender It's also mezz construction very close properties and

either to very it So of think I that's those -- a sort standard in any don't have get there. low of

Greg Garrabrants

obligations been in there's their Before financial been Their obligations. financial delays fine. no had fulfilled

Andy Micheletti

risk So I don't I think there's any loans. in believe any credit underlying there's risk don't any,

of even really classified there's that classifications. is basis sort construction if precautionary very But got are way. loans than delays these think those I the low

Steve Moss

these wondering And you've pricing seen days? then jumbo where mortgage just

Andy Micheletti

do sort we've been to now We've keep to bit funds has every generally Jumbo with increases. then. -- We've mortgage of pricing and had generally been that. to back a little those of able down our XX% able

getting have but the been So been pricing They aggressive priced been competitors a have credit. above market. some non-bank come into There's that has us fine. little with they

market something bit. fund So securitizations in the a some XXX% that they're don't there's creating that generally we fine. to look out though. might be it's to increases of for. been little And fed through pass But think a bifurcation back, ability I have coming

we're to So continue as forward off how rise. see that goes to rates market


question. question proceed comes from from Shaker the Please Hemmelgarn your last Investments. of Edward line with Our

Edward Hemmelgarn

a Just here. of couple questions

about improved talked to there? better the you've a you Can your or something provide far from and whether lot ease so example the ability you're so You've and had efforts of increases Digital far it's cross-selling, along those and lines of services production seeing Universal any the out Bank since platform doing. really the loan give where

Greg Garrabrants

amazes, Ed Yes, three and well been it's since I'm kidding. just patience weeks your

been months single the We that working been It's is other something hasn't happening customers just the happening. incentive on what we side have right for whole that have sort done. is That's cross-selling products through successful. as but Frankly as really tying to over. with of now our bringing changed like or literally mortgage more products. So a hasn't discounts that maybe that are cross-sell we through is focus an structures seen has those ability we've the Nationwide of that our seen number we we a lending focus family been seen on UDB. with that, bit just little on products checking really UDB been and then and together things better incentives some conversion been did

account. loan into of ability So types loan that'll to and we those seeing the be fund component success with types our are that. first Also other

account of gets loan consumer and customer unsecured we're every For a that checking utilization good is getting out a that. seeing

UDB we be will process the comprehensive through the the marketing continuing identification out a that of are yet to and building what it it, to engine be the don't and then effort which a in will will call have in campaigns. is ability to be flow engine, we then So that

disclosures okay.So a and will happen So enters when that what see, a they're not simply it a can be then the they're they're a the in all system of year able that customer they so there hasn't and is click account.And will we the not is their and -- for reapplication system, opening are and it's to in the at yes, because say, seamless and already on completion that something and on it's happened a are through checking what go it's for that mortgage, platform, least I'm just they uptick.

set platform. And to to so because in sort up question that and talking get that give frame the end that. engine mean, deal we're you better ticketing, concerned how the now. do about things And do service and all first on track of a XX, because were very in what could. they are integrated is you ask a those then would customer couldn't how do which requirements the we that it's but you integrated those much is, of track and is of things that me there's I example I work to need data we lot otherwise, you that that Nationwide done. to Then the the the an XXXX, has But answer. In meantime here's of all can be way type comprehensive experience, time on seriousness platform that meet for a everybody right omnichannel you a having need March the all we great and about of

Edward Hemmelgarn

easier bring done cross-selling, silos business job or of these about of than that's I up talking a banks acquisitions going the Okay. Holy done. specialized but or because and But out over you've taking said getting has your doing this deposits. for only lending been great Grail many always

given so, a be successes there forward look And I'll else, than should the your cheaper platform we as move have of forward. fact better you anyone to hearing would opportunities that

Andy Micheletti

I successes. to forward our look having

Edward Hemmelgarn

to pick What's going the customers you're that nationwide up? number of

Greg Garrabrants

XX,XXX. around It's

Edward Hemmelgarn

have What's in right the the you Bank? number customers now of

Greg Garrabrants

millions those around cards kind doing It them and you're depends counting floating and how on you're of different different and partnerships but things. all how three There's there's them.

these a and so checking and some customers of cross-sell So, but to opportunities. able to significant enable be savings enhance account it's that increase will customers hopefully us in account our

Edward Hemmelgarn


you really have Block, cross-sell can't, but their you mean, really, H&R the I they really opportunity get to with access it's to the funds to I you not have cards So the mean don't them.

Greg Garrabrants

And and there. are execute that a product hopefully difficult services a the with the that what H&R if actually that that comprehensive it propositions But obviously and acquiring we that. frankly, it's like that can the new. if they can do increase that's platform value Chase do. Holy continue board, interesting a an we is out I strategies data and on it. customers to respect is to more idea I expensive. they when for have To-date know of offer depend specific test lot a is $XXX that'll oriented financial think that would conversion But it's is there to yes, wanted across This think mean value, to Block it. and you there it's opportunity. that is people but account to It's said, and we it's, clear very obviously, no have difficult offering and It's why Grail expensive I is had open to

a lot is this good a of and strategy of a good plan, got but I execution us. think we've ahead

Edward Hemmelgarn

areas origination platforms other mortgage agency are going anytime business how soon, just other employees the so transferring Lastly coming of to or be you Bank? probably those to the REFI loan back isn't either

Greg Garrabrants

call a I for doing these partnerships are think team there's is very something now and and side money it's organic There and how the, businesses, we come of retention well. I'll of does the purchase these the mortgages well. sort our tale also that which customers two and that to as right retail interesting us portfolio So is, do evolve, have a it of those

right partnerships couple now marketing We economic their exist. have that the adjusted of that realities to a haven't expectations

to have relationships. need either we expectations adjust need or those we so And to those adjusted

poor lot to so are marketing opportunities because of I that's was something our dynamic business work redeployment expenditures it obviously quarter the there for for have working. we through. in but that And of mentioned that still obviously, a a are be that ways can and that just it

fundamental more it to really of is marketing certain issue than core underlying to allocation my a and So issue perspective. partners it business is commitment from some

it yes, so, revenue it and can not to it's what And in last year. going from what a a was but XXXX revenue certainly perspective, perspective be was from XXXX it be

far. so And well if we're performing so

Edward Hemmelgarn

And right. the there. All deal congratulations nationwide Okay. getting

Greg Garrabrants

Thank you. you. it. I appreciate Thank

Greg Garrabrants

your you quarter. and thank Thank you. for talk to time I Thank next you everybody, will you much very


This concludes today's conference.

at you lines your You may participation. disconnect Thank time. your for this