Greetings, and welcome to Axos Financial's Second Quarter 2021 Earnings Results Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I would now like to turn the conference over to your host, Johnny Lai, Vice President of Corporate Development and Investor Relations. Thank you. You may begin.

Thank you, Devin. Good afternoon, everyone. Thanks for your interest in Axos. Joining us today for Axos Financial, Inc.'s second quarter 2020 financial results conference call, are the company's President and Chief Executive Officer, Greg Garrabrants; and Executive Vice President and Chief Financial Officer, Andy Micheletti. Greg and Andy will review and comment on the financial and operational results for the three and six months ended December 31, 2020, and they will be available to answer questions after 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. These forward-looking statements are made on the basis of current views and assumptions of management regarding future events and performance. Actual results could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties. Therefore, the company claims the Safe Harbor protection pertaining to forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. This call is being webcast and there will be an audio replay available in the Investor Relations section of the company's website located at 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 over the call to Greg, I would like to remind listeners that, in addition to the earnings press release and 10-Q, we also issued an earnings supplement for this call. All of these documents can be found on the Axos Financial website. With that, I would like to turn the call over to Greg.

Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the second quarter of fiscal year 2021 ended December 31, 2020. I thank you for your interest in Axos Financial and Axos Bank. We had an outstanding quarter with higher net interest margins, double-digit growth in net interest income and non-interest income and positive operating leverage year-over-year; we combine that with solid credit performance. Axos announced record second fiscal quarter net income of $54.8 million for the three months ended December 31, 2020, up 32.7% compared to the $41.3 million earned for the quarter ended December 31, 2019, despite a $3.5 million increase in our provision for loan losses, increasing to $8 million from $4.5 million in the comparable period. Our pre-tax pre-provision income was $86.5 million, an increase of 38.1% compared to the $62.7 million in the quarter ended December 31, 2019. Axos' return on average equity for Q2, 2021, was 17.3%, and the bank's efficiency ratio was 40.45%. Q2, 2021, diluted earnings per share increased 35.8% to $0.91 per diluted share compared to $0.67 per diluted share in Q2, 2020. Our tangible book value per share was $19.51 at December 31, 2020, up 18% from December 30, 2019. The highlights for this quarter include the following: ending loans and leases increased by approximately $684 million, up 25% annualized from the first quarter of 2021 and up 14.5% year-over-year; strong originations in multifamily, commercial specialty real estate and mortgage warehouse were offset by lower production in lender finance and higher payoffs in jumbo single-family and certain C&I loan portfolios; net interest margin was 3.94% for the second quarter, up 7 basis points from 3.87% in the second quarter of fiscal 2020 and up 10 basis points from 3.84% in the first quarter of fiscal 2021. Loan yields continue to hold up well at an average of 5.16%. Interest-bearing checking and savings deposit cost as of December 31, 2020, were 45 basis points, with $1.8 billion of certificates of deposit acquired primarily from the nationwide acquisition at a cost of 1.71%, increasing the cost of interest-bearing deposits overall to 85 basis points, which is still a 6 basis point improvement from the linked quarter ended September 30, 2020. Net interest margin for the banking business was 4.11% compared to 3.91% in the quarter ended September 30, 2020, and 3.94% in the quarter ended December 31, 2019. PPP loan fees had a negligible impact on our NIM this quarter. Our efficiency ratio for the three months ended December 31, 2020, was 46.86%, an improvement of 480 basis points compared to 51.66% in the comparable period ended December 31, 2019. The efficiency ratio for the banking business segment was 40.45% for the second quarter of 2021, an improvement from 43.81% in the comparable period last year. The year-over-year improvement in overall and business banking efficiency was the result of strong mortgage banking income, net interest margin expansion and double-digit growth in our loan portfolio. Diluted earnings per share was $0.91, up 35.8% compared to $0.67 in the second fiscal quarter of 2020. Our corporate tax rate increased slightly from 29% in the corresponding quarter a year ago to 30.22% this quarter. Capital levels remained strong with Tier 1 leverage ratio of 9.08% at the bank and 8.68% at the holding company, well above our regulatory requirements. Our credit quality remains strong, with no loans in forbearance and only a small percentage that are delinquent on principal and interest payments. Our conservative underwriting with an emphasis on retained asset loans with low LTVs on our balance sheet continues to serve us well. Total loan originations for the second quarter ended December 31, 2020, was $2.04 billion, up 14.2% from the $2.1 billion in the year ago period. Q2 2021 originations were as follows: $455 million of single-family agency gain on sale production; $286 million of single-family jumbo portfolio production; $123 million of multifamily production; $46 million of commercial real estate production; $34 million of auto and unsecured consumer loan production; and $957 million of C&I loan production, resulting in a net increase of $345 million. Our gain on sale mortgage banking group had another strong quarter, generating $10.7 million of mortgage banking income compared to $2.2 million in the corresponding quarter last year. Originations increased by approximately 11.3% linked quarter to $455 million. Low interest rates continue to support strong demand for refinancing and purchase transactions and our efficient, scalable operating model generated gain on sale margins of 390 basis points compared to 394 basis points in the quarter ended September 30, 2020. The outlook for mortgage banking remains strong, although the March quarter generally experiences lower volume due to the holiday season, and we expect some compression in gain on sale margins. Our pipeline of single-family agency mortgages was $399 million as of January 4, 2021. Our mortgage warehouse also benefited from robust market demand for agency mortgages. Ending balances in our mortgage warehouse portfolio increased by $461.4 million or 63.8% from $723.4 million as of September 30, 2020. We continue to expand our relationship with existing mortgage warehouse customers and establish new relationships. Our track record of execution and expertise in agency and non-agency mortgages assist us in growing our warehouse lending business. Our net interest margin for the banking business was 4.11% in the second quarter compared to 3.91% in the prior quarter and 3.94% in the second quarter of fiscal 2020. On the asset side in the banking business, our loan yields continue to hold up with an average loan yield of 5.15% compared to 5.21% in the quarter ended September 30, 2020. The vast majority of our asset-based loans are variable rate loans, with 95% of all variable rate loans being at their floor rate as of December 31, 2020. Yields on loans originated in the quarter ended 12/31/2020 were 4.91% for jumbo single-family, 4.85% for multifamily and 5.93% for C&I loans. Approximately 41% of our loans are 5/1 ARMs with single-family and multifamily mortgages as the underlying collateral. In our C&I loan book, our asset-based lending, lender finance and commercial specialty real estate loan portfolios have rates that adjust to an index. Of the $3.1 billion of lender finance and commercial specialty real estate loans outstanding at 12/31/2020, approximately 90% are at their floor rate. Our equipment leasing portfolio, which accounts for the remaining $130 million of C&I loans outstanding, is comprised of fixed rate loans and leases. We see minimal future adjustments in our existing lending book as a result of floating rate loan adjustments, although some adjustments to loan rates to remain competitive for future originations may be required. Our consumer and commercial deposit businesses continue to benefit from investments we have made in technology, marketing and user experience. Consumer deposits representing approximately 42% of our total deposits as of December 31, 2020, are comprised of consumer direct checking, savings, money market and noninterest-bearing prepaid accounts. Our checking, savings and money market deposit balances increased by approximately $1 billion from 12/31/2019, with strong growth in consumer, small business and commercial deposit accounts and balances. Our consumer checking and small business checking accounts continue to receive accolades for offering the best value and services for our consumers. With more consumers and small business owners choosing digital as their primary channel for conducting banking transactions, we are well-positioned to become their primary bank. Average noninterest-bearing demand deposits were $2 billion in the quarter ended December 31, 2020, up by approximately $136 million from the prior quarter despite exiting our prepaid sponsor relationships with H&R Block and Netspend. We are making good progress in our specialty commercial and treasury management businesses, and we anticipate higher deposit balances in our fiduciary service business in the next 12 months as the number of bankruptcies rise. Our credit quality remains stable. Annualized net charge-offs to average loans and leases was 16 basis points this quarter, compared to 17 basis points in the corresponding period last year. We charged off a portion of an equipment lease to a fracking company that we had a specific reserve on this quarter, accounting for the entire $2.6 million of net charge-off in the C&I non-real estate loan category. Nonperforming assets to total asset ratio was 122 basis points for the quarter ended December 31, 2020, down from 156 basis points in the first quarter of fiscal 2021. Of our nonperforming loans, 77% are single-family first mortgages where we've historically had very low realized losses. Of our nonperforming single-family mortgage loans at December 31, 2020, approximately 85% had estimated current loan-to-values at or below 70% and approximately 95% at or below 80% of our best estimates of current loan to values. Given the low loan-to-values on our single-family mortgages, we do not anticipate incurring material losses on the vast majority of these single-family delinquent loans. Other than the single-family delinquencies, the remaining delinquencies consist of two hotel loans we discussed last quarter, which are around $24.5 million of UPB. We had six multifamily loans that were 30 to 59 days delinquent for a total UPB of around $3.1 million that are at origination loan-to-values of 46% on average, one multifamily loan that is 60 to 90 days delinquent for $1 million with a 44% origination LTV. The only other loan that we have that is delinquent is a loan on a condominium building in Tribeca, with an aggregate balance of $16.6 million; we have placed it on nonaccrual at 12/31/2020. The loan has experienced various delays and several legal challenges in getting the units to market, and we placed a reserve against it that Andy will discuss later. Our loan loss provision this quarter was $8 million, compared to $11.8 million in the September 30, 2020 quarter, and $4.5 million in the quarter ended December 31, 2019. The $8 million loan loss provision this quarter consisted of $3.9 million related to specific nonaccrual loans and $4.1 million related to change in nature and volume of the portfolio. Our total allowance for loan losses was $136.4 million at December 31, 2020, which represents approximately 1.17% of our total loans and leases and approximately 7.5 times our annualized net charge-offs. We are well reserved to withstand a protracted decline in residential and commercial real estate values should that occur. Given the high level of uncertainty regarding the pace and sustainability of the economic rebound, potential changes in fiscal and monetary and regulatory policy, real estate values and inventories and the success of the vaccine rollout in helping consumers and businesses return to pre-pandemic spending levels, we do not anticipate making significant changes to our loan loss provisions in calendar 2021. Approximately 95% of our loans outstanding at December 31, 2020 were collateralized by hard assets with an average loan-to-value in the 50s, including $10.5 billion of real estate assets and $510 million of loans secured primarily by consumer receivables. Multifamily loans representing 16% of our total loan portfolio at 12/31/2020 had a weighted average loan-to-value of 55.7% with no loans in forbearance. Our small balance commercial real estate portfolio of $432 million, representing 3.7% of our total loans at 12/31/2020 had a weighted average loan-to-value of 52%. The average debt service coverage of our small balance commercial real estate portfolio was 1.52 as of December 31, 2020. We have no loans in the small balance portfolio in forbearance as of the end of the quarter or today. Our commercial loan book, including lender finance and specialty commercial real estate, is comprised of loans and lines of credit secured by single-family, multifamily, commercial real estate, land and consumer receivables. The lender finance book is comprised of real estate and non-real estate transactions. The weighted average advance rate on the real estate lender finance book is 28% with no transactions with advance rates greater than 50%. The non-real estate lender finance book backed primarily by consumer loans is approximately $688 million with an average advance rate of 50.4% of the outstanding receivables balance. These structures generally require rapid paydowns in the event of any significant deterioration in the receivables and are also paid down rapidly in the event originations decline. We have no loans in forbearance in our lender finance or commercial specialty real estate book. Our non-real estate consumer lending is comprised of approximately $270 million of auto loans, $58 million of personal unsecured loans and $7.3 million of H&R Block refund advance loans. We lend to prime and super-prime borrowers with an average FICO score of 765 and our auto production average FICO is 760 in our unsecured consumer portfolio. We fully underwrite and service every auto loan we hold on our balance sheet, and the portfolio continues to perform in line with expectations. We continue to generate strong returns with a return on average common shareholder equity of 17.3% and 14.35% in the three months ended December 31, 2020 and December 31, 2019, respectively. Our efficiency ratio for the banking segment was 40.45% for the quarter ended December 31, 2020, compared to 43.81% in the year ago period. A year-over-year improvement in our banking business segment efficiency ratio would have been even better if you exclude the $848,000 FDIC credit we received in the three months ended December 31, 2019. We continue to maintain strong operating efficiencies while investing prudently in each of our business units. Our capital ratios remain strong with Tier 1 leverage to adjusted assets of 8.68% at the holding company and 9.08% at the bank. Our priorities for capital remain organic loan growth, reinvestment in growth initiatives, opportunistic buybacks and accretive M&A. We bought back approximately $4 million of common stock in the December 2020 quarter at an average price of approximately $23 per share. Our loan pipeline remains solid with approximately $1.7 billion of consolidated loans in our pipeline at December 31, 2020, consisting of $399 million of single-family agency gain on sale mortgages, $347 million of jumbo single family mortgages, $225 million of multifamily and small balance commercial real estate loans, $677.5 million of C&I and CRESL loans and $23.1 million of auto and consumer unsecured loans. We expect to be able to continue to grow loans in the high single-digit to low double-digit percentage range throughout the remainder of this calendar year. We have a healthy liquidity position and a diverse set of funding sources. Our on-balance sheet deposits increased by 13.4% year-over-year, with checking and savings deposits increasing by 26.5%. Our consumer, commercial cash and treasury management, small business banking and specialty deposits continue to show solid growth. And currently, we reduced our average interest-bearing funding costs by six basis points linked quarter and 103 basis points year-over-year to 85 basis points. Total client deposits at Axos Clearing were $773 million at 12/31/2020, up 14.9% from the September 30 ending balance. We have the ability to redeploy our off-balance sheet deposits to fund growth of Axos Bank if and when this is economically advantageous to do so. Of that $773 million of low-cost deposits, approximately $333 million are held away at other banks, while the remainder sit on the bank's balance sheet. We also have access to approximately $2.5 billion of FHLB borrowing capacity, in excess of the $183 million we had outstanding at the end of the second quarter. Furthermore, we have $1.8 billion of liquidity available at the Fed discount window as of December 31, 2020. Our Securities business continues to make progress. Axos Clearing increased total tickets processed by almost 14% linked quarter to 1.3 million tickets and ending deposits by approximately 15% linked quarter. We signed three new corresponding clearing clients in the December quarter and signed three new RIA clients this quarter, which will add incremental fee income and low-cost deposits for the two to three quarter lag between signing and onboarding. We're actively talking to introducing broker-dealers and independent RIA firms that are evaluating alternatives to the large custodians for clearing and custody services. The ability for Axos Clearing to generate incremental fee income as well as sticky, low-cost deposits remains an important and differentiating value over the long term. Furthermore, we remain bullish on the medium to long-term cost and revenue synergies provided by Axos Clearing and Axos Invest to our banking business. We transitioned to a tiered pricing model based on assets under management and Axos Invest during the December quarter. Rather than offering a free basic service and charging monthly for various premium services, we now charge clients a flat 24 basis point annual management fee, and they have access to all financial services offered through our digital wealth and financial management platform. We've seen limited attrition in the number of active accounts since we implemented the pricing change, and overall AUM is up approximately 10% from September 30, 2020 to December 31, 2020. We will transition to a self-clearing model later this month with Axos Clearing becoming the clearing firm for Axos Invest. This will make our digital wealth management platform more scalable from a cost perspective over the long run and provide us flexibility to enhance our product offering. We continue to beta test our self-directed trading platform. The preliminary launch date to existing Axos clients will be sometime in the June quarter. This functionality will also be accessible through the consolidated mobile application. By the end of this quarter, we will have integrated Axos Invest functionality into our mobile application so that Axos Invest functionality is available through one consolidated mobile application, significantly improving the user experience and cross-sell potential. We believe we have only scratched the surface in our long-term cross-sell goals and objectives. New products and features within our universal digital banking platform, such as single sign-on for Axos Invest, Axos Trading, and consumer banking, will provide incremental value to our customers, lower acquisition costs, improve retention, and add additional sources of fee income and deposits for the company. We believe many of the changes in consumer behavior over the past years are structural and the vast majority of business and consumer clients will permanently migrate their entire financial lives to digital interactions. Our focus is on acquiring customers that value convenience and service and are willing to do more with Axos over time. Our low-cost nationwide digital platform provides us with the flexibility and agility to mine data and offer consumers the best value to those looking for a superior solution. Now, I'll turn the call over to Andy who will provide additional details on our financial results.

Thanks Greg. First, I wanted to note that in addition to our press release, an 8-K with supplemental schedules and our 10-Q were filed with the SEC today and are available online through EDGAR or through our website at axosfinancial.com. I will provide some very brief comments. Please refer to our press release or the SEC filings for additional details. As Greg mentioned, our provision for credit losses was $8 million for this quarter ended December 31, 2020, down from $11 million for the last quarter ended September 30, 2020, and up from $4.5 million for the second quarter last year, ending December 31, 2019. Also this quarter, we decreased our unfunded loan commitment liability by $1 million due to an overall decrease in the amount of unfunded loan commitments. This $1 million pre-tax benefit was included as a reduction to our other G&A in our non-interest expense for this quarter ended December 31, 2020. The $8 million provision for credit losses this quarter can be summarized as a net $4.1 million related to loan growth and loan mix and $3.9 million related to specific allowances. Of that $3.9 million specific allowance, $3.5 million relates to the condo rehab loan project Greg discussed earlier. Last quarter, we provided $6.5 million specific allowance related to the H&R Block refund advance loans, RAs that were made in 2020. Although we have exited the H&R Block relationship, they agreed to continue to pass-through RA payments through April 30, 2021 due to IRS return processing delays. This quarter, we continue to collect RA payments such that we were able to reallocate $3.5 million of our RA allowance to cover loan growth this quarter. As of December 31, 2020, there were $7.2 million of RA loans left, 100% of which are covered by our allowance for credit losses. With that, I will turn the call back over to Johnny Lai.

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

Our first question comes from the line of Andrew Liesch with Piper Sandler. Proceed with your question.

Hi, guys. Thanks for the color early in the call. I just wanted to cover your loan growth outlook, similar comment before is like high single digit, low double digits, but you're kind of already there in this fiscal year. I think I heard you say calendar year. So, are there any headwinds ahead that could maybe slow this pace of growth, because the pipeline looks great. You've had great growth this quarter. What's giving you some pause right now?

Well, we don't know how quickly warehouse lending will continue as it has been a strong contributor the last couple of quarters. It's uncertain how that will continue. It looks pretty good right now. We actually have a good pipeline of new lines. But, obviously, that's dependent on overall mortgage banking volume. Single-family production declined this quarter. The pipeline is okay; volume usually comes through after the holiday season, and we have seasonal lows historically. We're being very conservative in New York. That was a market for us that we had previously done more business in on the single-family side, and we're doing a lot less now. Those would be the caveats with respect to that. I'm trying to moderate growth expectations so they are not assumed to be what this quarter's loan growth was in subsequent quarters. Andy, do you have anything to add there?

No, it's a great summary. Again, Andrew, it partially depends on where warehouse ends up. It's entirely possible that it could pull back, even dramatically by the time we get to June 30, 2021.

Got it. Okay. That's helpful. And then, if you look at the entire credit quality bucket, it seems like a lot of the issues you mentioned are more unique situations to some borrowers. It seems like your strategy of forcing people to pay rather than grant deferrals is working out really well. Are there any areas you have concern on credit beyond what you mentioned? Are you seeing any weakness in the economy beyond what we would have expected as a result of the pandemic?

Not in the asset classes that we generally work with. Obviously, the two hotels were affected. The reason they weren't resolved was the Oregon foreclosure moratorium. We had an agreement to sell those loans at par plus accrued, and when the moratorium came in place, the fund that was going to buy those loans backed out. On the multifamily side, we have ready buyers for multifamily loans at par plus accrued, and often those loans cure within 15 or 30 days. Sometimes a borrower is a little late and cures. I don't see anything systemic. The New York condominium project is a nice building in a great area, but some legislative and procedural issues arose. The retail tenant was supposed to be moved out, a moratorium prevented that, and the tenant stopped paying. Some governmental interference in private markets is a thematic risk, but given our focus on asset classes that are performing well overall, we don't see it materially impacting our book.

Got it. And it sounds like with these LTVs, for loans that gave you trouble, you at least have willing buyers at low LTVs. So it doesn't seem like loss severity will be meaningful?

Yes. I don't think loss severity will be material. We're talking about some small clips at the top end of the range, not total losses on companies that are no longer viable. We feel quite good about credit and feel very well reserved.

Our next question comes from the line of Gary Tenner with D.A. Davidson. Proceed with your question.

Thanks. I just wanted to ask about mortgage; you partially addressed this. Given the pace of growth you've seen and that you're looking to expand those relationships, mortgage warehouse loans are right at about 10% of loans today. Do you have an internal limit generally for that segment?

We do have an overall limit, but it certainly allows us to exceed where we are. From a risk perspective, absent loans we're purchasing ourselves or loans to very secured conduit relationships, they're government mortgages. We're doing the work to make sure those loans qualify for sale. We're a Fannie Mae direct seller. To the extent there was ever any underlying issue with a mortgage company, we could take that collateral and sell it. The primary issue in mortgage warehouse is fraud, and there are mechanisms and systems shared industry-wide to prevent dual pledging. From a safety perspective, it's a good asset class to grow in: high liquidity and essentially government-guaranteed mortgages. The weakness is that yields are lower than our average loan rate and there's higher volatility associated with that product. If mortgage lending pulls back, there could be margin compression on those lines. So it's a trade-off: liquidity and safety versus lower yields and higher volatility.

Great. I appreciate the detail. As a follow-up, you've mentioned the zero-commission product and self-directed trading getting ready to be launched. Given recent events with Robinhood, any thoughts or ramifications positively or negatively from what's going on?

Axos Clearing has always had retail brokerage accounts, and now we're bringing the product through the platform to expand the service. At a strategic level, individuals want a consolidated relationship between trading/investing and banking. The growth in online trading validates the moves we've been making. Owning the clearing company is important for margin and control of the value stream. Regarding the recent events at some broker-dealers, because we own our own platform, we'll assess and consider responses, including compliance measures like speed bumps, warnings, or reviews for unusual activity. Those are compliance considerations we constantly evaluate. It's too speculative to say today's events will change competitive dynamics materially for us; the product launch is months away. Overall, the events underscore that digital financial services and bundling them is an important strategic direction.

Great. Appreciate it guys.

Our next question comes from the line of Michael Perito with KBW. Please proceed with your question.

Hey, good afternoon guys. Thanks for taking the question. Greg, on the lender finance portfolio: if we look back it was over a couple of billion nine months ago and it's come down another $34 million quarter-over-quarter here. Do you expect that trend to continue to work against near-term growth? Do you think it's close to bottoming out? Can you give us a quick update on your view of that portfolio as you guys have made an effort to run it down over the last year or so?

I think that asset class will shift and become more real estate, hard-asset focused. The reduction was driven by market demand and our customers reducing originations; the market hasn't been there. However, there are lender finance opportunities that are more real estate oriented. I expect the portfolio to stabilize and probably grow a bit as it refocuses, so it's likely done being a drag on loan growth.

Helpful. In your prepared remarks, you mentioned three sizable clients on the clearing side brought on board. Can you give an update on where the efficiency and margin of that business is today? Are you starting to see scalability of the platform or are we still months away?

We're building a custody platform for RIAs and a clearing platform for IBDs and taking our software and using it for client acquisition and retail trading platforms. Competitors are large and have head starts. Axos Clearing is about a month away from launching a comprehensive RIA custody platform. My focus is on the long-term benefits rather than short-term segment profit. The goal is to grow sticky, low-cost deposits over years. Even if clearing is more profitable in a higher rate environment, deposit businesses must be built over decades. We will continue to invest and focus on long-term returns.

That makes sense. On the deposit platform you're building, could you recap how the digital consumer bank grew over the past 12 months? It seemed like a proof of concept in 2020 for many digital banks. How did your digital consumer bank grow and can that continue into this year?

We're seeing tremendous account growth, and nearly every month sets a record for consumer checking account openings and use of direct deposit switch kits. The UFB brand, focused on savings, attracts yield-focused customers. I think over the next couple of years we'll get to average deposit costs in the mid-20 basis point range for the checking and savings mix. The small business side is performing well. The platform improvements in risk engines and automated fulfillment are driving efficiency ratio improvements. Digitizing processes helps compliance, cost, and customer experience. The investments were painful for efficiency in the short term, but they're starting to pay off.

One last question: who is the target consumer for the platform? The big digital players tend to focus on underbanked customers. Are you seeing a broad range of customers? Any additional color would be helpful.

Our consumers tend to be higher-end and carry larger balances compared to some newer digital-only challengers. Those other platforms often target Durbin-exempt transaction revenue. We get a mix of customers, and the trading side will shift more toward millennials. The platform accommodates everyone, and the demographic is different than some other digital-only banks. Regarding crypto, there's a lot of work in that space and it's something under consideration.

Yes, great. Well, thank you guys. Appreciate it.

Our next question comes from the line of David Chiaverini with Wedbush Securities. Please proceed with your question.

Hi, a couple of questions. I'll start with the partnership point: I saw a press release from N26 and the growth they're generating in the U.S. Are you able to disclose how big that relationship is and what your expectations are going forward?

We generally don't discuss partner relationships in detail, except that it is public information that we are their issuer and they hold deposits with us. We like working with them and think they're an innovative business. The market for consumer banking is dominated by large banks and our collaboration does not directly compete with them in a problematic way.

Thanks. On the outlook for net interest income and net interest margin: are you able to provide any commentary on what you're expecting over the next couple of quarters or for fiscal 2021?

An aggressive analyst might be inclined to revise NIM targets upward, but I would advise caution. Warehouse growth is variable. We're continually looking at loan rates and can't predict loan rate compression. We don't expect much compression on the existing book because many loans are at floors. We're also looking at incentives to draw customers into transactional accounts. It's a blend of maintaining margin and supporting loan volume.

Our guidance remains in the 3.8% to 4.0% range for NIM. We're in a low-rate environment; competitive rates are coming down. We've done a good job maintaining margin, but we're balancing margin and loan volume. We've also added $175 million of subordinated debt, yet still improved bank NIM. So it's a balancing act, and 3.8% to 4.0% is an appropriate range.

Got it. Thanks. I believe you commented about loan loss provisions being stable; can you clarify whether you expect provisions to remain at current levels in the next couple of quarters?

We're not seeing any trend that would cause us to expect a prolonged increase in provisions at this time.

I agree with Andy. Also, note that while some banks released reserves this quarter, we do not expect to release reserves. We'll monitor loan volume and economic developments, but don't expect significant reserve releases.

Understood. On self-clearing for Axos Invest, you mentioned midyear—how much in savings could that generate?

The savings are modest relative to the entire franchise; it's not a huge immediate dollar benefit but it improves scalability and product flexibility. It also makes us a more viable custodian for third-party platforms.

It speaks to scalability—once the infrastructure is in place, we can scale at minimal incremental cost.

Thanks. Last one: PPP round two—do you have an expectation for how much you plan to do?

As little as possible. We'll take care of selected clients with strong treasury management relationships. It was useful previously to add capacity when big banks were clogged, but systems have improved, so I wouldn't expect it to be significant for us.

And with that, this concludes our question-and-answer session. I would like to turn the call back over to our management team for any closing remarks.

Thank you, everyone. I appreciate your interest, and we'll talk to you next quarter.

Thank you.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.