Axos Financial, Inc. Q1 FY2026 Earnings Call

Greetings, and welcome to the Axos Financial, Inc. First Quarter 2026 Earnings Call-In Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Johnny Lai. Please go ahead.

Thanks, Carrie. Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial Inc.'s first quarter 2026 financial results conference call are the company's President and Chief Executive Officer, Greg Garabrantz, and Executive Vice President and Chief Financial Officer, Derek Walsh. Greg and Derek will review and comment on the financial and operational results for the quarter ended September 30th, 2025, and we will be available to answer questions after the prepared remarks. Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties, and that management may make additional forward-looking statements in response to your questions. Please refer to the safe harbor statement found in today's earnings press release and in our investor presentation for additional details. This call is being webcast, and there will be an audio replay available in the investor relations section of the company's website located at accessfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release. Before handing the call over to Greg, I'd like to remind our listeners that in addition to the earnings press release, we also issued an earnings supplement in 10Q. These documents can be found on AxosFinancial.com. With that, I'd like to turn the call over to Greg.

Thank you, Johnny. Good afternoon, everyone, and thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the first quarter of fiscal 2026 ended September 30, 2025. I thank you for your interest in Axos Financial. We had a strong start to our fiscal 2026, generating $1.6 billion of net loan growth link quarter, including $1 billion of loans and leases and on-balance sheet securitizations acquired in the verdant acquisition, which closed on September 30, 2025, a five-basis-point link quarter reduction in net charge-offs, and a 17% year-over-year increase in book value per share. We continue to generate high returns, as evidenced by the nearly 16% return on average common equity and the 1.8% return on average assets in the three months ended September 30th, 2025. Other highlights in a quarter include net interest income was $291 million for the three months ended September 30th, 2025, increasing by approximately $11 million in quarter, or 15.6% annualized. Net interest income growth benefited from balanced growth across single-family mortgage warehouse, commercial specialty real estate, and auto lending. Net interest income in the prior year's comparable quarter ending September 30, 2024, included a benefit of approximately $17 million from the prepayment of three FDIC-purchased loans. Excluding that one-time benefit, net interest income was up $16 million, or 5.8 percent, from fiscal Q1 of 2025 to fiscal Q1 of 2026. Net interest margin was 4.75 percent for the quarter ended September 30, of 2025, down nine basis points from 4.84% in a quarter ended June 30, 2025. Excluding the impact from holding excess liquidity, our net interest margin was roughly flat quarter over quarter. Since the Verdon acquisition closed on 9-30-2025, the transaction did not have any impact on our net interest income or net interest margin in this quarter end. We continue to maintain a best-in-class net interest margin with or without the benefit of the accretion from purchase loans from the FDIC. Non-interest income increased by approximately 13% year-over-year due to higher banking service fees, mortgage banking income, and prepayment penalty fees. Total on balance sheet deposits increased 6.9% year-over-year to $22.3 billion. Our diverse and granular deposit base across consumer and commercial banking and our securities businesses continues to support our growth and are expected to provide relatively lower cost of funding sources for the loans and leases acquired from Verdant relative to their prior capital structure points link quarter, resulting in our non-accrual loans, the total loans improving from 79 basis points as of June 30th, 2025, to 74 basis points as of September 30th, 2025. Net income was approximately $112.4 million in the quarter end of September 30th, 2025, up from $110.7 million in the quarter end of June 30th, 2025. Deluded EPS was $1 on September 30th compared to $1.92 in the June quarter. Excluding the one-time deal-related expenses and allowance for credit loss adjustment for the Verdon acquisition, adjusted net income and adjusted EPS were $119 million per share respectively for the quarter ended September 30th, a 7.3% increase from the linked quarter at almost 30% annually. Total originations for investment, excluding single-family warehouse lending, were over $4.2 billion for the three months ended September 30th, representing an increase of 11% lend quarter or 44% annualized. Specialty lending, auto lending, and single-family warehouse had 99% in line with the prior quarter. Average loan yields for non-purchase loans were 7.66%, and average yields for purchase loans were 15.81%, which includes the accretion of our purchase price discount. The FDIC purchase loans continue to perform, and all loans in that portfolio remain current. New loan interest rates for the September quarter were 7.2% in both the multifamily and CNI portfolios and 7.3% in single-family and 8.25% in our auto portfolio. Ending deposit balances of $22.3 billion were up 6.9% link quarter and up 11.5% year-over-year. Demand, money market, and savings accounts representing 94% of total deposits at September 30th increased by 9% year-over-year. We have a diverse mix of funding across a variety of business verticals, with consumer and small business representing 57% of total deposits, commercial cash, treasury management, and institutional representing 22%, percent, commercial specialty representing 11 percent, Axos Fiduciary Services representing 5 percent, and Axos Securities, which is our custody and clearing business, representing 5 percent. Ending non-interest-bearing deposits were approximately $3.4 billion at the September end, quarter end, up by approximately $350 million from the prior quarter. Non-interest-bearing deposit balances benefited from continued growth of our treasury management business and from a large increase in cash-sorting deposits that came in toward the end of the quarter. Client cash-sorting deposits ended the quarter at around $1.1 billion, up by $95 million from the June quarter. In addition to our ExoSecurities deposits on our balance sheet, we had approximately $460 million of deposits off balance sheet of partner banks. We remain focused declaring fiduciary services and commercial cash and treasury management verticals. Our consolidated net interest margin was 4.75% for the quarter ended September 30th, compared to 4.84% in the quarter ended June 30th. We had more excess liquidity in the quarter ended September 30th with average cash balances of approximately $2.5 billion, compared to $2.15 billion of average cash balances in the prior quarter. This excess liquidity was a seven basis point drag on our net interest margin. Additionally, we issued approximately $200 million of subordinated debt in September of 2025, which has a fixed annual interest rate of 7% for the first five years. We used part of the proceeds from the $200 million subordinated debt offering to pay off approximately $160 million of existing subordinated debt that was scheduled to move from a fixed annual interest rate of 4.875% to approximately 9% in October. The new subordinated debt issuance reduced our net interest margin by one basis point in the quarter end of September 30, 2025. We expect our consolidated net interest margin FDIC loan purchase accretion to stay at the high end of the $425 to $435 range we have targeted over the past year. While new loan yields are coming in slightly lower in certain lending categories due to recent Fed actions, our goal is to offset lower loan yields with reduced cost of funds. over the past few quarters as a result of successfully expanding our distribution channels across commercial lending categories and increased contributions from teams we onboarded over the past few quarters. The floor plan lending team has a nice pipeline. We also believe we've moved past peak levels of prepayment in our multifamily loan portfolio, which have been a significant headwind to net loan growth over the past several quarters. We expect the verdant acquisition to add an incremental $150 to $200 million of net new loans and operating leases per quarter at attractive spreads, starting in the year ending December 31st. Taking all these factors into consideration, we expect loan growth to come in at the low to mid-teens range on an annual basis in the remaining nine months of our fiscal year, 2020, be solid, and our historical and current net charge-offs remain low. Total non-performing assets remain flat-linked quarter, representing 64 basis points of total assets compared to 71 basis points in the quarter end of June 30, 2025. Non-performing assets declined by approximately $17 million in multifamily and commercial mortgages and by $7.4 million in commercial real estate, partially offset by increases in non-performing assets in single-family mortgages due to a handful of loans with a weighted average loan to value of 57%. No new C&I loans were placed on non-accrual this quarter, and the few larger C&I loans currently on non-accrual are still paying as agreed. We did not anticipate a material loss from loans currently classified as non-performing in our single-family, multifamily, or commercial real estate loan portfolios. Net charge-offs to total assets were down five basis points link quarter and six basis points year-over-year to 11 basis points for the three months ended September 30th, which includes our correspondent clearing and RIA custody business, had a good quarter. An increase from $39.4 billion at June 30 to $43 billion at September 30. Custody business were $1.1 billion in the September quarter, an acceleration in the net new asset momentum we have experienced over the past the first time that exceeded $40 billion. Custody clients remains healthy. Opportunities to augment growth from existing businesses and team liftouts. We successfully completed the acquisition of Verdon Commercial Capital, a vendor-based equipment leasing company at the end of September. Verdon's focus on originating small and mid-ticket leases nationally in six specialty verticals is a great enhancement to our commercial lending franchise. Credit losses for the team members are a great strategic fit for access. Additionally, these long-duration fixed-rate loans and leases complement our existing floating and hybrid loans in our single-family mortgage and commercial specialty lending businesses. As to lower cost of capital and funding, we believe the Verdant team will benefit from our operations and tech support. After meeting with the management, sales, operations, and credit team post-close, we are confident that we'll be able to generate meaningful growth from existing and new vendors and dealers in our six existing verticals. Over the medium to long term, we see additional opportunities to generate incremental growth from entering new verticals and floor plan lending to larger strategic dealers and original equipment manufacturers. ...percent premium on the roughly $40 million of book value of Verdant at September 30th. ...to earn up to $50 million over the next four years if the business generates a greater than 15% return on equity on an annual and cumulative basis. The transaction added approximately $1.2 billion in loan leases and equipment operating leases, which include $1 billion of loans and leases and $213 million of equipment operating leases, which are recorded in other assets. We paid off $87 million of subordinated debt and $242 million of warehouse borrowings at closing and assumed $754 million of long-term securitization financing. We recorded approximately $1.3 million in deal-related expenses in this quarter and added $7.8 million to allowances for loan loss, including the roughly $7.8 million additional CECL reserves that we realized at closing. the total allowance for credit losses for the acquired loans and leases was approximately $15.6 million, or roughly 1.5% of the total outstanding loan and lease balances at September 30th, which we added despite a loss history perverted well below 50 basis points annually, to our earnings per share by 2% to 3% in the fiscal year 2026 and by 5% to 6% in fiscal 2027. A favorable backdrop for additional accretive and strategic M&A transactions. Our strong capital, liquidity, and profitability allow us to be disciplined and opportunistic in where we deploy excess capital. We remain hyper-faceted in implementing additional operation improvements to help us become more profitable and scalable. A scope of workflows and use cases for artificial intelligence across the enterprise, including risk and compliance, credit operations, technology, legal, marketing, finance, and accounting, and believe that further AI implementations will enable us to create greater operating leverage and improve the speed, quality, and cost of software development projects and accelerate new product development, making an impact on our efficiency in software development. We are in development on exciting products and technologies across our consumer, commercial, and securities businesses. We are continually enhancing our all-in-one consumer and small business experience with an aggressive and exciting roadmap. This consumer platform is utilized by retail and end clients in our institutional custody and clearing business. We have begun the rollout of our recently developed Access Professional Workstation to selected broker-dealer clients. This professional workstation is a centerpiece of a technological modernization strategy in our securities business that will allow us to integrate banking products in a seamless way for RIAs and brokers to more holistically serve their clients and provide a much more flexible and modern system than many of our large competitors' legacy systems. In closing, I'm excited about the opportunities we have to maintain our positive momentum in fiscal 2026 and beyond. With the Verdant team and other team hires we have made this last year, producing both loans and deposits, we feel more certain in our ability to grow loans in the low-to-mid-teen range annually, maintain margin in our forecasted range, and other than the costs we added through the acquisition, accomplish our objective to gain operating leverage on our financial results.

10-Q is filed with the SEC today and is available online through EDGAR or through our website. The months ended September 30, 2025, $6 million from the three months ended June 30, 2020, including approximately $1.3 million of deal-related expenses from the verdant acquisition in September. Total non-interest expenses were upped by approximately $4.3 million on the linked quarter. Salaries and benefit expenses were $76.6 million, up by $1.6 million from the prior quarter end of June 30, 2025. The primary drivers of the quarter-over-quarter increase in salaries and benefits expenses were the addition of the floor plan lending team and a partial quarter acquisition did not have any impact going forward. We remain focused on optimizing our operating expenses with a specific focus on AI implementation while making prudent investments, we acquired approximately $1 billion of loans and leases and $213 million of fixed-asset operating leases in the verdant acquisition. Of the $1.2 billion of total verdant loan and leases, approximately $762 million are on balance sheet securitizations with a weighted average remaining life of 3.7 years. The net loan yield on these assets is between 3.75% to 4.5% above the 90-day SOFR rate. The on-balance sheet securitization is between 2.57% and 3.07%. From the $1 billion of loans and leases will be recorded in interest income, and the income from the operating leases will be recorded in non-interest in 2025, compared to 29.4% in the corresponding year-ago period. The quarter ended September 30th was the first quarter that benefited from the impact of the new California budget or corporate tax rate to be approximately 26% to 27%, consistent with $2 billion worth of loans as of October 24th, 2025, consisting of commercial jumbo mortgage, commercial lending businesses, growing contributions from incubator businesses such as floor plan lending, slowing prepayments, and our...

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. And again, that is star one to ask a question. And our first question will come from Kyle Peterson with Needham & Company.

Great. Thanks. Good afternoon, guys. Appreciate you taking the questions. I wanted to start off on credit. Obviously, there's been some fairly high-profile headlines of late. Everything in your book looks pretty good, but I guess maybe any context of what you guys are seeing, particularly like in any, whether it's pipeline deals or anything that is, looks a little like spookier or unattractive to you guys, or I guess kind of how are you guys thinking about new deals and structure and competition and your approach to credit right now?

Sure. Thanks for the question, Kyle. Good to talk to you. Yeah. Of the, so just in speaking about the three deals that got a lot of press, we had seen those deals and turned those down. reasons. Decent indicators there just based on structure that were problematic. The late stages of credit cycles, people sometimes get pretty sloppy on structure. And frankly, you see that in some of the syndicated deals where the sort of lender-on-lender violence language wasn't as strong as it should have been in certain cases. We're very careful and watchful of that because we believe that that can be a problem on syndicated deals. We turn down deals for that. We push back. I personally view it as almost a form of fraud. I'm thoughtful about that because guys are reading. At a minimum, it's extraordinarily aggressive. The other types of more blatant fraud that went on there, like with respect to one of the three deals, was that people are actually forging documents and title insurance and telling banks that they have first lanes on assets when they don't. You know, there's always ways we do because we get certain documents directly from title insurers and things. But, yeah, I mean, look, something that you have to look at, I think, fraud in the matter that we are used to mitigate those risks. And, you know, I think we do a good job with it, but we're continually on guard because, you know, people come up with new and interesting ways of doing bad things.

Appreciate the detailed color there. And then I guess just a follow-up on fee income came in pretty strong this quarter, at least what we had modeled. Just wanted to see, were there any one-timers or, like, whether it was like a loan sales or anything like I know you guys had last quarter. But I guess anything one time and then I guess just a refresher on any of the fee income potential contributions from Verdant, like if there's any operating leases or anything, and how we should be mindful of like the run rate on that from here on out would be great.

Yeah, nothing from the fee income that was a one-timer.

Do you mean per quarter?

Correct. Yeah, per quarter.

Yeah, per quarter.

And one thing you do have to just be thoughtful about is I think the team's done a good job on the security side of growing or whatever, but that's still out there. And I think they're going to be able to grow out of it. They did grow out of it. But there's probably a dead zone in there where somewhere a mortgage bank is not picked up, but you end up with lower benefit from the zero-cost deposits.

too. Yep. Okay. That's really helpful. Thank you guys and next quarter.

Thank you, Scott. Moving next to Gary Tenner with DA Davidson.

Thanks. Good afternoon. I had a follow-up on BCC. It was my assumption, at least, that the funding for the loans put on or the assets put on balance sheet was going to come from your excess cash that you flagged as secured financing at quarter end. Is there a period of time that you have to keep that? Is it attractive price for you? Can you kind of

walk us through that? Yeah, so we would love to take all that out and utilize the excess cash, and it would be a very wonderful day for us and our shareholders. But these are term securitizations. They were done to match fund particular leases. There are cleanup calls that I think are all at 10%. Derek, yeah, they're all at 10%. So as soon as we can clean these up, we will, because it would be cheaper to use our own deposits. But, yeah, they're on balance sheet. They're term financing. We can't do anything, you know, with them. I mean, obviously.

We'll monitor them and see if any pricing comes in kind of through Bloomberg and through the markets, in the same way that we picked up some of our sub-debt at a cheaper rate, we'll do the same thing with the secured financings. If they're trading out there at a discount, we'll be jumping on that.

Unfortunately, but they're going to fly and they're going to be growing. We put that $150 million to $200 million, exceed that. There will be the opportunity to fund those loans with our – It ended up overshooting this quarter, not only from operational activity, but, you know, we were coming. And there was another component is that the timing of the acquisition sort of got delayed, and so they did another securitization. It wasn't pretty nice and talked about it, and I said, well, I don't really have an objection to it because there was a bunch of moving pieces to get the deal done. But so, yeah, but the good news is we're with everything else we've done. And, you know, we raised our guidance on loan growth, you know, even though we were certainly not hoping to be there, that high single digits to low teens, and now we have or something. But, you know, mid-teens, right?

And just to go back to the security financing, what's the, you know, just for modeling purposes, kind of what's the carrying cost of this?

Do you have that all? Five and a half percent. Okay, great.

Thanks for that. And then I just did have a follow-up. So in terms of the purchase loans, it looks like a pretty steep drop in the balance of average purchase loans in the quarter, but it didn't look like any kind of real outsized interest income or accretion benefit. So could you just comment on that, and then if you have it available, what the period and FDIC purchase loans are?

Yeah, the quarter, so if you recall, we had a big bump of $12 million in the gain on sale in the mortgage banking last quarter. So that sale occurred for your purchase loans in the June quarter. And so I think that was the only big, a little over $100 is relatively reflective.

And as a reminder, that is star one if you'd like to ask a question. We'll go next to Kelly Mata with KBW.

Hey, good afternoon. Thanks for the question. You know, the balance sheet growth was remarkable both organically as well as with the deal that you got. But it looks like capital ratios have come down a bit. Greg, can you refresh us on how you're thinking about capital and your comfort here with being able to support potentially mid-teens loan growth where those capital ratios you're comfortable with letting them go? Thank you.

Yeah, and we've been accumulating capital and discussing that we believe we have excess relative to what we need. So we feel very good about the capital ratios where they are and even having them go down a bit. But, you know, the reality for us is we're making, you know, over, you know, 15, you know, any loan growth that's sub that essentially allows us to stay, you know, roughly equal. I mean, obviously there's some dividends to the holding company, things like that. But within that range, I feel very good about the profitability, and I think a billion dollars of the Verdant loans, you know, that is going to work well there. And, you know, I think we've done a really good job of bringing our loan loss reserve to, you know, a very strong place, including even with Verdant, where I think it was a prudent but conservative decision to bring it to 1.5% given that they've, you know, been averaging, you know, 25 and 30 basis points of loss. And, you know, you can guarantee that, but certainly bringing that to 150 is good. So I feel very good about where we are in loan loss, you know, the NPL sort of stuff, shakeout. I feel like, you know, the commercial real estate thing, which everybody, you know, So certainly a respect with respect to us. So, yeah, I think it's good that we've ever had, and so I did do it.

Awesome. You guys certainly make a lot to help replenish those. So in terms of, like, we got the Verdant deal, and in your prepared remarks it sounds like there might be some more opportunities on the acquisition side. Is there anything you can share with us in terms of types of deals that look attractive, how that's shaping up, and kind of outlook from here?

Yeah. You know, obviously, as I'm sure you well know and, you know, I have to cover as these banks, you know, get together like, you know, kids at a frat party, you know, things. I mean, you know, we're always active and looking and trying to understand what works and what doesn't. You know, in the case of Verdon, for example, it filled a particular niche. You know, it was a good national specialty vertical with bank quality management in an area that we didn't have. So there's a few other of those you need to look for and find the right partners. You know, there's a lot of different ways to look at banks, what works and what doesn't. You know, it has to be, obviously, the right cultural strategic fit, or it has to be an incredible financial bargain. So, you know, we're very active and looking, and, you know, we'll continue to do that and see what makes sense.

Great. Thank you. I'll step back. Thank you.

And moving on to David Feaster with Raymond James.

all right good afternoon everybody hey david hey david um i wanted to i wanted to talk on this this ndfi issue you know i mean this has now become a dirty word and i appreciate your commentary a bit talking about it but i was just hoping you could elaborate maybe a bit on on where you know obviously there's been some fraud but where are you seeing the pressure points in the industry, maybe compare and contrast a bit with what you do, the exposures that you've got, and how you monitor and manage collateral and the cash flows just to protect yourself, because that seems like an incredibly important part about that.

Right, right. Well, so, yeah, it's a broad category. So, if you just sort of go through this logically, you know, single-family mortgage warehouse, right, you have MERS for that. So, you know, there was some, I'm just saying you've been around a really, really, really, really long time, Whitaker and all those kind of things and Colonial and all that sort of stuff where essentially, you know, you showed up one day and you, you know, your loans were pledged to someone else, right? It's more sorrow than others with respect to the types of loans that go through there. That's the single family warehouse side now versus liens, right? So at a fundamental level, there's always this question of what do you trust, what do you don't trust, how do you get it, how do you check it, right? And so now as to lien that particular property, then there's a notice of assignment there. A title company won't work through that. Others take the word of their – think about it. But think, you know, it's always interesting to some extent being in a particular problem. And, you know, I remember, well, it was like single-family lending, and after 2008-09, I have all these people come to me and say, well, I can't believe you're doing single-family mortgages in Florida. And I'm like, yeah, we weren't doing them when the prices were super high, but now that they've fallen by, the prices have fallen by 60%, we're now doing it at 40% LTVs. And, of course, no, we never lost a single penny on that, and we got high rates, right? So I think you have to just ask if a borrower is committing fraud, the borrower can be committing fraud on the NDFI and on you, right, by available companies, right? So there's an NDFI that's a factor receivable, and you're financing that factor receivable. Well, you know, you could have the NDFI to fraud you. You could also have end clients to fraud you. So, you know, we had a small client, a direct borrower, where we had a full banking relationship, typical middle market, like small business style, and one of the guys made up an invoice. Often these are very large funds, and so you're getting them, but you get to some who've worked at, you know, some of the, you know, biggest and most prestigious institutions in the country their whole life. I mean, I'm not saying that doesn't mean they can't turn out to be a bad guy and be willing to, you know, commit to a life in San Quentin or something, but it's not, that's not really what happens normally. I think you're much more likely to have fraud, small business, and direct borrower loans on things like factoring and ABL and these large cross-handified capital from those sorts of things.

So I wanted to get a sense on the expansion in that floor plan space with the new team, you know, just kind of how that build out and integration's been, you know, sounds like they've got a nice pipeline. I know we're still in the early stages there, but was just hoping to kind of get an update on that business line and any expectations you might have.

Yeah, so they've got some accepted term sheets for some nice lines with some really strong borrowers and VRAs, which are essentially repurchase obligations of the manufacturers, which is obviously an awesome thing because if somehow the asset doesn't sell, take it back and pay you off. So we have a lot of those executed in these areas.

I think we'll – and then just last one for me, just wanted to get an update on the securities business and the white labeling within there of some banking products. I know this is still in the early stages, I believe still in beta testing, but just kind of curious, maybe the build out of the tech infrastructure and the securities segment broadly, and then when do you think we can roll out some of that white labeling of the banking products across the platform? Right, right.

So there's like two in, and the team has a marketing name for it. And what it is is it's an access professional workstation. So right now the workstations that are utilized by, you know, FIS and those sort of things, and they're just not flexible, they're not modern so that they can integrate through API everything, or do they have all the bank's products that we want to be able to have through there? So that has been a really big push, all their trading and everything else. And so it's not a universal digital bank, but as it becomes more and more available, we're doing a lot of other things besides calling it the Axel's client portal now, and that will allow the end clients of the RAs and broker-dealers to do something different. And so over time, we'll bring all of that. There's a few things we have to develop a workstation to make it be the one workstation for everything, and so that's ongoing. But I think it's extremely modern, and we'll be able to be quickly to do there.

So excited about it.

That's great. Thanks, everybody. Thank you.

And we'll go next to Tim Coffey with Janie Montgomery-Scott.

Hey, good afternoon, everybody. Hey, guys. I'm trying to get my arms around expenses going forward. So, obviously, a lot of moving pieces, none of it was... So am I, Tim. Well, let's figure this out, then. Is my North Star an efficiency ratio, or is it, you know, expenses to average assets?

Well, so what we've been saying, the Verdon deal throws it a little bit, but that is every now and then or something, But that's a pretty strong goal to do that well, directly model that in and that perfectly because obviously there's other categories of growth besides professional services and personnel, but that's 70-plus percent of it. There's not like there's going to be a ton of occupancy and other things. And so we believe we're managing it pretty well, but it's a little bit tough to do it on an efficiency ratio basis because, you know, there's obviously movements around margin and one-time kind of stuff. I think that's kind of more a way. So if you model in that kind of thing, their P's and Q's and trying to figure out what they can afford to get to that number, then that's not a –

That was my question. Thank you very much. Thank you, Jim.

And this now concludes our question-and-answer session. I would like to turn the floor back over to Johnny Lai for closing comments.

Thanks for everyone's time, and we will talk to you next quarter.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.