Q1 2022 earnings call. 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 Johnny Lai, Vice President, Investor Relations and Corporate Development. Thank you. You may begin. Thank you, Sherry. Good afternoon, everyone. Thanks for your interest in Axos. Joining us today for Axos Financial, Inc.'s Q1 2022 financial results conference call are the company's President and Chief Executive Officer, Greg Garrabrants, Executive Vice President and Chief Financial Officer, Derrick Walsh, and Executive Vice President, Finance, Andy Micheletti. Greg and Derrick will review and comment on the financial and operational results for the three months ended September 30th, 2021, 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. 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 the call over to Greg, I'd like to remind our listeners that in addition to the earnings press release in 10-Q, we also issued an earnings supplement for this call. All of these documents can be found on our investor relations website. With that, I'll turn it 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 Q1 of fiscal year 2020, ended September 30th, 2021. I thank you for your interest in Axos Financial and Axos Bank. We had an excellent start to our fiscal 2020 with double-digit growth in net interest income, loan originations and earnings per share. We bucked the industry trend and increased our net interest margins on a linked quarter and year-over-year basis on a consolidated level and at the bank. Axos reported Q1 net income of $60.2 million for the three months ended September 30th, 2021, and earnings per diluted share of $0.99, representing year-over-year growth of 13.6% and 12.5%, respectively. Our book value per share was $24.52 at September 30th, 2021, up 17.9% from September 30th, 2020. The highlights this quarter include the following. Ending loan and lease balances were $11.9 billion, up 4.1% linked quarter or 16.3% annualized. Our loan production was strong across a variety of categories, including auto, single-family mortgage, single family warehouse, and various C&I lending types. Net interest margin was 4.22% for the Q1, up from 3.92% in the Q4 of fiscal 2021, and up 38 basis points from 3.84% in the Q1 of 2021. Net interest margin for the banking business was 4.48% compared to 4.11% in the quarter ended June 30th, 2021, and 3.91% for the quarter ended September 30th, 2020, up 57 basis points over the prior year's comparable quarter. We maintained our loan yields at 5.12% and reduced our cost of interest-bearing deposits by 9 basis points linked quarter to 39 basis points. We continue to make steady improvements in our funding mix, with non-interest bearing deposits increasing by approximately $1.5 billion from June 30th, 2021. Non-interest bearing deposits now represent approximately 31% of our total deposits at September 30th, 2021, a significant improvement from 19% in the corresponding period a year ago. Axos Securities contributed to overall earnings for a second consecutive quarter, excluding one-time merger related expenses associated with the E*TRADE Advisor Services acquisition. Axos Clearing, which includes our clearing and custody businesses, generated $1.5 million of pre-tax income. Both the clearing and custody businesses were profitable even after accounting for the non-cash depreciation and amortization expenses associated with the acquisition. Our efficiency ratio for the three months ended September 30th, 2021, was 48.71% compared to 48.84% in the Q4 of 2021. The efficiency ratio for the banking business segment was 39.93% for the Q1 of 2021 versus 41.95% in the Q4 of 2021 as a result of strong net interest income growth. Diluted earnings per share was $0.99, up 12.5% from the $0.88 in the year ago quarter. Our corporate tax rate increased from 28% in the Q4 of 2021 to 29.1% this quarter. We continue to generate strong returns while maintaining excess capital. We generated a return on equity of 16.55% in the Q1 and a return on assets of 1.67%. Capital levels remain strong, with Tier 1 leverage ratio of 10.14% at the bank and 9.22% at the holding company, both well above our regulatory requirement. Our credit quality remains strong with no loans in forbearance and a decline in non-performing assets. Net annualized charge-offs to average loans was 1 basis point, down from 7 basis points in the Q1 of fiscal 2021. Non-performing loans represented 1.12% of total loans at September 30th, 2021, compared to 1.26% at June 30th, 2021. Total loan originations for the Q1 ended September 30th, 2021 were $2.3 billion, up 28% from $1.8 billion in the year ago period. The Q1 2022 originations were as follows. $201 million of single-family agency gain on sale production. $430 million of single-family jumbo portfolio production. $107 million of multifamily production. $25 million of commercial real estate production. $132 million of auto and unsecured consumer loan production and $1.3 billion of C&I and CRE/CL lending production, resulting in a net increase of $429 million of balances. Mortgage banking gain on sale generated $5.3 million of mortgage banking income compared to $2.9 million in the Q4 of 2021 and $19.6 million in the corresponding quarter last year. Originations decreased by approximately 16.9% linked quarter to $201 million, while gain on sale margins increased slightly to 339 basis points from 323 basis points in the Q4 of 2021. The outlook for mortgage banking remains stable from fiscal 2021 Q4 with a solid pipeline and lower expected gain on sale margins. Our pipeline of single family agency mortgages was $184 million at October 25th, 2021. Our single family jumbo mortgage business had a mixed quarter. Loan production was strong at $430 million, while high prepayments resulted in a net $63 million decline in ending loan balances as of September 30th, 2021. We're seeing good demand for our jumbo prime product, and the pipeline has risen since September 30th to slightly under $600 million. The combination of slightly lower prepays and solid new loan originations should allow us to stabilize our single family jumbo loan balances. C&I lending had a very good quarter. Loan originations were $1.3 billion, reflecting strong growth across CRE/CL, construction, and commercial asset-backed lending. Our growing relationships, knowledge in structuring, and selective adjustments in loan pricing on some new deals, and a track record of execution have resulted in a steady expansion in loan production and net balances. Demand remains strong with a backlog of approximately $687 million as of September 30th, 2021. Ending balances in our mortgage warehouse portfolio were $656 million, up $42 million from $614 million at June 30th, 2021. While our single-family warehouse balances will fluctuate based on underlying demand for mortgage refinancing, our goal is to opportunistically grow with new and existing customers. We continue to make improvements in our consumer, commercial, and securities deposit franchises by investing in our front and back-end technologies, customer service, and product capabilities. Consumer deposits, representing approximately 47% of our total deposits as of September 30th, 2021, is comprised of consumer direct checking, savings, money market, and non-interest-bearing accounts. The weighted average demand and savings deposit cost was 18 basis points at September 30th, 2021, down by 26 basis points compared to 41 basis points as of September 30th, 2020. Average non-interest-bearing demand deposits were $3.6 billion in the quarter ended September 30th, 2021, up 46.8% from the prior quarter. Ending time deposits as of September 30th, 2021, were down $132 million linked-quarter and $532.8 million year-over-year as we replaced higher cost non-core CDs with lower cost transactional deposits. Of the approximately $1.44 billion of certificates of deposits as of September 30th, 2021 on the balance sheet, approximately $1 billion at a weighted average rate of 68 basis points will mature in the next 12 months, with the bulk of the runoff expected to occur in the next six months. Our small business and specialty commercial and treasury management businesses, including our fiduciary service businesses, continue to contribute to low cost core deposits. Axos Clearing continues to generate low cost deposits that we're able to put on or off balance sheet. The acquisition of the E*TRADE Advisor Services RIA custody business, which closed on August 2nd, added approximately $1 billion to our September 30th, 2021 ending deposit balances at Axos Bank. We had approximately $714 million of client cash deposits from Axos Clearing at the end of the Q1 of 2022, of which $408 million were placed at partner banks. The flexibility to keep those lower cost deposits off balance sheet and generate fee income from other banks, or to place them on Axos balance sheets to support our bank's loan growth, will be an even bigger advantage when interest rates rise and competition for deposits increase. Our Q1 2022 net interest margin benefited from several factors, some of which are structural and a few that are transitory in nature. First, we significantly reduced our excess liquidity, with average deposits at other financial institutions dropping by approximately $767 million from $1.9 billion in the Q4 of 2021 to $1.1 billion in the Q1 of 2022. We do not anticipate meaningful declines in our excess liquidity going forward. On the loan side, we have successfully held loan yields relatively steady over the past several quarters. However, we have started to selectively reduce pricing on new loans in order to be more competitive for high quality deals. Yields on loans originated in our single family jumbo, multi-family, and C&I lending groups were 4.26%, 4.39%, and 4.2% respectively in the first three months ended 9/30/2021, compared to 5.12% average loan yield in the Q1 that just ended last month. Excuse me. We feel it's prudent to price more competitively on certain high quality deals while maintaining our credit standards and terms, given our success reducing our cost of funds. Lastly, we have dramatically reduced our funding costs across each of our consumer and commercial deposit businesses over the past year in anticipation of having access to over $1 billion of low cost deposits from the RIA custody acquisition. With new interest-bearing deposits coming in at 18 basis points in the Q1 of fiscal 2022, we have transformed our deposit franchise to be much more in line with that of a traditional consumer or commercial bank. As such, our ability to continue reducing our funding costs is more limited than it was a year ago. When you consider all these factors, we are confident that our full-year net interest margin will be at the high end or slightly above that of our 3.8%-4.0% range in fiscal 2022. Our credit quality remains solid. Annualized net charge-offs to average loans and leases, excluding seasonal tax loan products, was 1 basis point this quarter, compared to 7 basis points in the corresponding period last year. We charged off the remaining $7.3 million of refund advance loans outstanding in the Q4 of 2021, all of which were fully provisioned for previously. Non-performing assets to total asset ratio was 94 basis points for the quarter ended September 30th, 2021, down from 107 basis points in the Q4 of fiscal 2021. Of our non-performing loans, 82.94% are single-family first mortgages where we have had historically very low realized losses. Of our non-performing single-family mortgages as of September 30th, 2021, approximately 86% had a current estimated loan to value ratio at or below 70% and approximately 94.5% are 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 our delinquent loans. We had no loans in foreclosure as of September 30th, 2021. Our loan loss provision this quarter was $4 million compared to $1.3 million in the June 30th, 2021 quarter and $11.8 million in the quarter ended September 30th, 2020. The sequential increase in loan loss provisions supports the $464 million increase in ending loan balances. Our total allowance for loan losses was $136.8 million at September 30th, 2021, which represents approximately 1.14% of our total loans and leases, which is approximately 48x our total annualized net charge-offs in the three months ended September 30th, 2021. Our loan pipeline remains solid with approximately $1.7 billion of consolidated loans in the pipeline at September 30th, 2021, consisting of $180 million of single family agency gain on sale mortgages, $514 million of jumbo single family mortgages, $235 million of multifamily and small balance commercial real estate loans, and $687 million of C&I and commercial specialty real estate loans with $94 million of auto and consumer unsecured loans in the pipeline. With healthy demand for loans across multiple loan categories, the slight deceleration in prepayments, we remain confident in our ability to achieve high single digits to low teens loan growth in fiscal 2022. We continue to generate strong returns with return on average common shareholder equity of 16.55% and return on average assets of 1.66% in the three months ended September 30th, 2021, respectively. Our efficiency ratio for the banking segment was 39.93% for the quarter ended September 30th, 2021, compared to 45.2% in the last quarter. In the short two months since we closed the E*TRADE Advisor Services acquisition, we have already identified dozens of cost synergies by streamlining various processes and procedures. We see additional opportunity to generate operating efficiencies from our clearing custody and retail securities business in the next 12-24 months as we further integrate systems, processes, and personnel. Our capital ratios remain strong with tier one leverage to adjusted assets at 9.22% at the holding company and 10.14% at Axos Bank. We have access to approximately $1.7 billion of FHLB borrowing, $1.6 billion in excess of the $158 million we had outstanding at the end of the Q1. Furthermore, we have $2 billion of liquidity available at the Federal Reserve discount window as of September 30th, 2021. Our strong organic growth and returns, coupled with a clean capital structure, allow us to make opportunistic stock buyback and acquisitions such as the E*TRADE Advisor Services acquisition that we announced last quarter. Our securities business had a great quarter with strong growth in fee income and net interest income. Broker-dealer fee income increased 106.4% in the Q1 compared to the corresponding period last year due to the addition of fee income from the AAS acquisition. One-time merger-related expenses. Axos Clearing generated $1.5 million in pre-tax income. Axos Clearing ended the Q1 of fiscal 2022 with approximately $40 billion of assets under custody or administration, including $25 billion of assets under custody and $15 billion of assets under administration in the clearing business. Securities margin balances increased 35% year-over-year to $341 million, while stock lending increased from $263 million in the Q1 of 2021 to $457 million this quarter. FDIC insured deposits held at partner banks were at $712.5 million at 9/30/2021, up from $672 million at June 30th, 2021. AAS, the RIA custody business, had approximately $1.3 billion of total client deposits in Q1 of fiscal 2022, of which $1 billion was held by Axos Bank and $284 million were held by partner banks. We completed the acquisition of the E*TRADE Advisor Services business on August 2nd and rebranded the business Axos Advisor Services. I wanna thank the Axos Clearing, Axos Advisory team and Axos Bank team members who worked tirelessly over the past several months to successfully plan and execute a very complex and rigorous transition and integration plan. The acquisition provides us with a turnkey technology platform and an experienced team of approximately 130 professionals who serve around 190 independent registered investment advisors with approximately $25 billion of assets under custody, including the $1.3 billion of client cash deposits. We see tremendous opportunity to help advisors and their end clients become more successful by growing the scope and volume of custody, lending and banking services we do with them. Axos Advisor Services becoming a part of Axos Securities will provide significant cost and revenue synergies over both short, medium and longer term. For example, by converting the RIA custody business from a bank platform to a broker-dealer platform, we will be able to offer additional products such as margin lending, options trading and securities-based lines of credit to existing and new custody clients. We have identified and started to implement various process improvements through the Axos Advisor Services group that will further improve our customer service levels and help the business become more efficient and scalable. In the next 12 to 18 months, we intend to streamline the custody and clearing systems and workflow to further integrate the businesses. We remain on track to meet or exceed our prior guidance for Axos Advisor Services, and will be slightly accretive to our fiscal 2022 earnings per share. We soft launched our self-directed trading platform at the end of June. Version 1 of our self-directed trading platform offering is focused on existing clients who value the simplicity and convenience of being able to see and transact across various Axos banking and investment products through one online login or mobile application. We deliberately controlled the rollout and limited the amount of marketing campaigns during this initial phase in order to perfect various client onboarding and servicing workflows. We see self-directed trading as an additional customer acquisition tool that will expand in terms of the scope of products over time. Once we reach a larger base of self-directed trading clients, we will start experimenting with cross-sell opportunities across our lending and fee-based businesses, including our Axos Invest robo-advisory. One product under development is our retail crypto trading service, which will allow Axos Invest customers to easily open a crypto trading account, fund the account quickly by transferring funds from an Axos Bank account, trade a limited number of cryptocurrencies and see their positions and values all in an Axos app. The cost of developing and operating a retail crypto trading business is well controlled and we will generate incremental fee-based revenue once clients open accounts and trade. We anticipate launching our retail crypto trading business in the next six months. Investments we have made over the past several years across each of our businesses in consumer, commercial and securities have provided significant strategic and financial rewards to our firm and our shareholders. One example is our deposit platform investments, both organic and through acquisition, that have generated meaningful growth in our non-interest bearing deposits, significantly lowered our cost of interest-bearing deposits, and allowed us the flexibility to earn fees from placing certain deposits at other banking institutions or funding our bank's organic loan growth like we did this quarter. We are making additional investments in the securities business, including adding more talented team members and investing in technology and infrastructure in order to grow the business profitably. As we leverage the expertise and leadership from each of our businesses and further implement cost and revenue synergy initiatives, we see continued opportunity to accelerate top and bottom line growth. Now I'll turn the call over to Andy and Derrick, who'll provide additional details on our financial results. Thanks, Greg. As recently announced on September 27th, after more than 20 years as the Chief Financial Officer of Axos Bank and Axos Financial, I have transitioned my CFO role to Derrick Walsh. Many of you have already met Derrick, who has been with Axos for more than eight years, six years of which were our Chief Accounting Officer. I'm proud to turn over the mic to Derrick, who will cover some additional points on the quarter's results. Thanks, Andy. To start, I'd like to highlight 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 brief comments on a few topics. Please refer to our press release or our SEC filings for additional details. As Greg mentioned, our provision for credit losses was $4 million for this quarter ended September 30th, 2021 u p from $1.3 million for the linked quarter ended June 30th, 2021, and down from the $11.8 million in the quarter ended September 30th, 2020. The increase in the linked quarter provision was due to the quarterly increase in loan balances and the mix of loan types at September 30th, 2021. The decrease in the current quarter from a year ago was primarily due to a $6.5 million reserve for non-recurring refund advance loans for the three months ended September 30th, 2020, as well as favorable changes in economic and business conditions between September 30th, 2020, and September 30th, 2021. As we look forward to additional loan growth over the next year, we expect the loan loss provisions to generally move with the ending balance loan growth. Moving to non-interest expense. For the quarter ended September 30th, 2021, operating expense was $84.4 million, up $2.6 million or 3.1% from the linked quarter ended June 30th, 2021. The primary reason behind the increase in operating expenses is due to the addition of Axos Advisor Services, or AAS, the rebranded E*TRADE Advisor Services business line. AAS was acquired in early August and the full impact of operations is expected in the second fiscal quarter of 2022 and beyond. Salaries and related costs increased by $3.5 million on a linked quarter basis, primarily due to the acquisition of 124 AAS employees and the addition of new employees to support growth in both our banking and securities businesses. Depreciation and amortization expense decreased $0.5 million from $6.2 million at June 30th, 2021 to $5.7 million at September 30th, 2021, primarily due to the completion of amortization of previously acquired software during the June quarter. With the addition of advertising intangible assets for AAS, we would expect depreciation and amortization expense to increase back to the Q4 level. Occupancy costs decreased $1 million on a linked quarter basis, primarily due to a $0.9 million one-time charge that was incurred in the June 30th, 2021 quarter associated with subleasing the New York City office space. Finally, turning to capital. Despite deploying a portion of our excess capital this quarter through the addition of AAS, we are still able to grow tangible capital during the quarter as tangible book value per share increased from $21.36 at June 30th, 2021 to $21.43 at September 30th, 2021. Our capital ratios remain strong with a tier one leverage ratio of 10.14% at Axos Bank and 9.19% at Axos Financial. With that, I'll turn the call back over to Johnny. Thanks, Derrick. Operator, we are ready to take questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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 keys. Our first question is from Michael Perito with KBW. Please proceed. Hey, good afternoon, guys. Thanks for taking my questions. Hey, Michael. Hey, Mike. Derrick, I want to stick with you on the cost stuff that you just ran through for a second here s o it sounds like adjusted for the merger expense and some amortization that was slightly lower than normal. You know, maybe we're in, like, that $82 million ballpark on the core expense figure for the quarter. I guess just kind of a two-part question. One, how much more. I guess I had a little bit higher EAS related expenses than actually came through. I guess, how much more of the full quarter run rate is there to come into that from EAS? Secondly, as we look out over the balance of fiscal 2022 here with some of the initiatives Greg talked about, you know, how should we be thinking about kind of the layer-up of expense growth as you start to roll out things like retail crypto trading and others? Sure. I highlighted the depreciation and amortization expense. You'll see the amortization of the intangibles increase, and we'll return back to kind of more of the Q4 level on that front. We acquired EAS, as a reminder, in early August. We really only had about two-thirds of those expenses in the quarter for September 30th. You could basically take those numbers and take one-third of that increase from Q4 to Q1. That's generally a safe approach as to how to project the going forward that expense run rate. In terms of the any of the upward pressures from some of the initiatives you guys have going on beyond that. I mean, is there some thought process around you can maybe guide us to there, whether it's maybe looking at the efficiency ratio in the banking sub or something else or? I think. Well, the crypto will really come through the securities side of the business. It won't have an impact on the bank efficiency ratio necessarily. The growth from those other initiatives really is s tandard growth rate. There may be a little bit additional expense there, but it's not gonna be some substantial expense increase related to those. The other thing to remember there is a lot of that will also be development as well, which will be capitalized and amortized over a three-year period, most likely. Those are a couple of ways to think about it from that standpoint. Understood. Helpful. Secondly, for me, just I guess with EAS now on board, Greg, you talked about the retail crypto trading for consumers. Is it fair to think about the product and also all the lending, you know, opportunities that you guys have? I mean, is that kind of the full suite of products here on that side of the business or is there other things you think you'll need to kind of evolve in the fairly short term here to continue to be competitive? Assuming that that's most of what you're gonna roll out, do you think that fiscal 2022 could see some decent improvement in just the margins of that business, you know, relative year-over-year? I think it's going to take, probably to say, significant improvement. I think that's gonna be more a fiscal 2023 type event. The reason why is that what we need to do is we have a lot of technology work we have to do, including integrating UDB into those securities businesses. There's a lot of re-engineering on the process side that we need to do, and a lot of those things are linked. In other words, you know, we have a mail room opening checks manually and depositing them into accounts, right? That needs to happen through UDB, right? You know, at this time, we're not gonna be charging customers more for that. Whenever we can increase those efficiencies, we can go get new clients because our costs will be lower, and we'll be able to price better. This is a price competitive business. The pipelines look good, but then when you get to pricing, you need to work through that. Obviously our goal, which I think is an aggressive goal, but one that we've achieved already and will get better, is to essentially make this business work in a zero interest rate environment. Now, you always have to remember though, that, you know, there was, we were paying a couple basis points when rates were 2.25 on clearing, and we're paying a couple basis points today. For every 100 basis points, that's a $20 million drop, you know, right there, you know, to the bottom line. Obviously, you can debate how you think about that given some of it's on balance sheet, some of it is off. You know, this is obviously a rate sensitive business. I think, you know, it helps us, you know, on the asset sensitivity side. Then also these are great customers. There's, you know, 250,000 high net worth customers that we need to be able to access for banking products through a single platform which doesn't exist yet. It's a lot of work to do, and we'll be doing all that work in this next year. The next year is about getting adoption and rolling it out and, you know, and making that happen. If these businesses were good businesses, but they're also from a relative maturity perspective operationally, they just have a lot of room for improvement, which is great because we think we can essentially grow volume and reduce cost at the same time. Helpful. Then just one last quick follow-up on that point and then I'll step back. Just on the sensitivity post EAS here, I mean, and everything else you guys have done over the last two years, I mean, it certainly feels like the balance sheet's much better positioned for higher rates. Just, you know, looking at the deposit mix alone kind of tells the story. Just curious if you can maybe try and put some numbers around that on the short end of the curve here if we start to see some movement. Just any initial thoughts about how this pro forma balance sheet and the NII might react. Yeah, I think from a short term interest rate movements, I think the securities, cash and the non-interest bearing deposits don't move too much given that they're from the bankruptcy side which never gets paid rate and the securities side which doesn't get paid rate. We have some commercial and, you know, those will probably behave like other commercial deposits in the industry. I think the question is, as we continue to move towards growth, I do see a little bit of tightening. I mean, it's little right now of the deposit market with respect to, you know, balances. If rates are going up and we're still growing, then I think we would be paying a little bit more, you know, for those clients. I think one of the things that we're obviously trying to do, you know, we just won Money magazine's Best Online Bank, finally beating Ally. They finally got it straight, right? I'll never know why they possibly would pick Ally. But in any event. You know, I mean, you know, if you open a trading account, if you open an invest account, then you know, that collectively results in a better package of benefits, right? Those sort of accounts should result in enhanced stickiness. We obviously, you know, we haven't been through a rate cycle with all those things, you know, together. I think we're clearly in very good shape. Obviously for growth, we also have a lot of those security deposits off balance sheet as well. We're playing with whether we can raise deposits at a lower cost than others are paying us, which is often the case right now. Will it be the case at a higher interest rate environment? I have no idea, so. Right. Just to be clear, you're basically talking about kind of like some of, like, those reward type programs that we see a lot of, like, the other consumer fintechs out there doing where you w hen you bundle things together. Yeah. Right. Yeah. Subscription type programs where, you know, someone is in self-directed trading and they're getting a lot of research. Are they as rate sensitive on a companion checking account? I think the answer is no, but, you know, that's all those things are there. I look, I think we'll do, you know, pretty well probably. Obviously there's always been correlation between loan growth and deposit rates. I think we have done, you know, really transformed and done a ton on our deposit franchise, and it's obviously showing up in the numbers. Great. Thank you for the insights. I'll let someone else jump in. Appreciate it. Sure. Our next question is from Andrew Liesch with Piper Sandler. Please proceed. Hey, good afternoon, everyone. Hey, Andrew. Question on the loan growth guidance here, moved it up to at the high end, the low teens. It certainly looks like the warehouse business is stabilized, and we're making some moves to help keep the jumbo book from declining too much further with some of the rate competition. What could trip you up and have the loan growth be at that low end? I know we're only a quarter into the fiscal year, but what could trip you up there? Prepayments and C&I or on CRE. You know, there's the great part is those loans are, you know, very good credit quality. The bad part is they pay off quickly. You know, that can happen for all sorts of reasons. That would be one. That would be one area. You know, look, I think our jumbo book is looking better, and we have cut prices. You know, we are definitely trying to defend loan growth, and we've done some rate reductions in order to make that happen as what, you know, when we talked about the rates that are in the current pipeline versus the rates on the books. You know, look, I feel pretty good about it. I know the pipelines are good, but it doesn't take much in prepaid kick-ups as the larger a book gets to move any individual quarter in a way that would not quite meet the number that you're talking about. I mean, that being said, you know, we feel pretty good about it. We said, you know, high single digits, low teens. I think that's conservative probably. I you know it could be a little bit higher, it could be lower. Got it. Helpful. With the margin here up to 4.22%, but again, with some of the rate movements you guys have made, do you think it's topped out here at least until maybe the Fed does something on the short end or LIBOR moves higher? Yeah. Yeah, I think that's a good assumption. Okay. Um, you know, we have. Um. I think, yeah, we do have some little benefit from some deposit runoffs, but you did see the difference in loan rates between what loan rates are coming on and given how quickly our book turns, that'll start flowing through, so. Yeah. Yeah. Great. I'll step back. Thanks. Our next question is from Steve Moss with B. Riley Securities. Please proceed. Good afternoon. Hi, Steve. Maybe just following up on the loan pricing here just a little differently. Just kind of curious. I mean, obviously competitive environment pushing you to cut prices here, but just kind of curious, are you also maybe moving up in terms of loan size, or has there been any change in terms of some of the loans you're pursuing within the C&I and CRE buckets? Not really. I think that's been pretty steady. You know, on the C&I side, that doesn't, that's just a rate, right, Derrick? It doesn't include fees. There's obviously fees get, you know, amortized into the rate and things like that, which boost it. No, I mean, I think that business is pretty, you know, I think our business mix really hasn't changed. It's just a result of, you know, where we think we should be for the deals we want and what we can get. Okay. Just maybe following up on expenses here. You know, I hear you guys in terms of the investments and some of those investments being capitalized here. Just kind of curious how to think of the, you know, expense growth. Kind of sounds like call it an, you know, $85 million-$86 million type expense run rate for the Q3. Just how do we think that's kind of above that range or for the rest of the year? I mean some things to think of again as you look at salaries and benefits. You had only a couple of months of the addition of 124 employees coming on as part of the AAS acquisition. Those only hit for two months of that quarter, a little less than two months. The same idea around the occupancy and equipment so w e assumed an office space lease in the Denver market, and so that's gonna drive that up a hair. Then the data processing and internet is probably gonna be around the range of where it's been, this quarter and last quarter, roughly. That's kind of been the run rate recently. There was probably, I mean, we raises with respect to s alaries and benefits. I drop a 5.56% increase on base salary excluding AAS, just 'cause we didn't. Correct. We do our evaluations annually and then raises are around hit in the end of September. Not much of it hit during the September quarter, so you'll see that increase in Q2. We talked about depreciation, amortization, and broker-dealer clearing charges will increase. Same idea, kind of one-third more from the increase or from the, you'll see a tick up in Q2. There's been some movement, obviously, depending on the market, with regards to how many transactions are flowing through and how hot the markets are from a clearing charges that we incur as a portion of that. Okay, great. That's very helpful. Thank you very much, guys. Good quarter. Thank you. Thank you. Our next question is from Gary Tenner with D.A. Davidson. Please proceed. Thanks. Good afternoon. Hey, Gary. I just have questions. Hey, in terms of the, you know, the off-balance sheet deposits, I think I heard the number in total around $1 billion or $1.1 billion. Is that what I heard at quarter end? No. Off-balance sheet, we have about $650 million-$700 million. Okay. In terms of thinking about kind of volatility of the on-balance sheet deposits, it sounds like right now, Greg, you're saying that you could, you know, get incremental deposits cheaper than what you're getting paid by the other banks. Maybe in the current environment, it's not really an issue or a question in terms of modeling the balance sheet. In a, you know, is this a daily sweep decision, or are you modeling sort of cash needs over a period of time as you work the off-balance sheet deposits? Or are they committed sequentially for some period of time? There are some. The way the commitments generally work is people get to participate in the waterfall, and in some cases we're essentially promising term to the extent that there is money in the waterfall, and then we're, you know, essentially terming out some of those. The terms generally aren't too long. We can get a little bit more rate for that, but it's part of our liquidity planning process with respect to that. Yeah, there's not. What's the longest deal? It's pretty short, right? It's like, is it a couple years. Couple years is our longest deal. It is tied to, we can pull it back if we need to. The default is, the rate just gets adjusted. The higher rate falls back. We still even have the option to pull that money if we need to, as we look at that. Gary, we have more than 10-12 banks that we can allocate to, and we're adding more. Part of the process depends on which banks are interested. It does take a while to set them up into the system. We do have flexibility on a daily basis to move money around to do that. It does require, you know, partner banks that are willing to step up. Okay. Thank you. Just to clarify on the talk about kind of the one-time costs associated with E*TRADE. I know that in the past, the way that y'all highlight the acquisition-related costs in your Q and your press release includes at least partially just kind of regular way amortization of intangibles. The $2.8 million of acquisition-related costs that are highlighted, how much of that is just ongoing amortization of intangibles versus actual non-recurring costs? The bulk of it is advertising intangibles. There was about around $300,000 that was one-time costs. The benefit of being your own investment banker. All right, guys. Thank you. Sorry. Shouldn't say that in front of a bunch of analysts, right? Yeah. Our next question is from Tim Coffey with Janney. Please proceed. Thanks. Good afternoon, everybody. Hey. Hey, Greg, I think in the 10-Q, there's a line item about the borrowed securities and margin lending, about $900 million average balance, 3% yield, which is obviously better than 20 basis points. I'm wondering, do you have any kind of visibility into those balances going forward? Yeah. You know, I think that when people feel good about the markets, they tend to focus, you know, attention on maybe doing a little more borrowing. You know, we think that's a pretty sustainable level. Obviously, some of that, you know, you see some of the stock. We're lending stock, and that has a different rate that's more variable there. But I think that there's going to be over time. I don't think in this year, this is going to be simply the market. It's gonna be market-driven by the customer base, which is slowly growing, and then it'll be reflective of, in general, sort of demand for margin from other broker-dealers. There is, however, a lot of opportunity because over time, we just have to make it happen. It's interesting because AAS was actually part of E*TRADE Bank. They didn't do margin lending. They didn't at all s o there is a whole set of RIAs with, you know, $25 billion of assets under custody with us that want to do margin lending. The system right now doesn't accommodate that s o we are working on that. When that happens, we'll have to see how much demand there is. Then also, you know, through the platform, the ability to do one-touch SBLOC lending, you know, quick margin from self-directed and other things like that is a part of the strategy b ut it's not something that's going to be fiscal 2022 impactful. Okay. Got it. On the rate on those, what's that dependent on? It's negotiated with our broker-dealer clients, who are, you know, there's 75+ independent firms, and we're negotiating with them. You know, they're determining what rate they're gonna bring to their customers, how much they're gonna keep, and how much we're gonna keep. We're working, yeah, jointly on. Okay, great. Staying on that schedule, is there a target rate or balance or percentage basis in terms of cash and cash equivalents, liquidity, basically, that you need to operate your bank going forward? Yeah, I mean, go ahead. I think around where we're at this quarter, the average balance that we had this quarter is probably consistent. It'll flux. It can flux by $100-$200 million, depending on deposit inflows and outflows and just the timing of some of those. They don't always come in exactly when we expect them to come in. They may get delayed by 15-30 days, or they may come in earlier 15-30 days. That's where you'll see that flux but t his quarter is probably a reasonable average, give or take $200 million that we'll be at. Yeah. We have a, you know, I think about 5% on balance sheet liquidity, but at that, at a sort of a place where we wanna not go below. The interesting thing about the securities type deposits is that they really do provide an additional source as well, particularly when they're off balance sheet. We don't count those, of course, but they're there as a component of available liquidity. Okay. You know, sticking on that point, with the maturities in the CD portfolio the next 6 months, and obviously more over the next 12 months, is there a real strong appetite to hold on to some of those at lower rates? Or do you feel like your liquidity and your balance? Sure. Yeah. We, you know, we basically do. I mean, yeah, we renew about, you know, a third of those, and they're at much lower rates, and people are just sticking because there's not a lot of other places to go, things to do. We have conversations with each person to the extent that it's, you know, they're interested in doing that to talk about other options, for them. Yeah. There's a percentage that get maintained. We don't have, frankly, the highest rates in the market. If somebody's very, very rate sensitive and focused, they're gonna be able to find something more, you know, a little more suited to them. We, you know, we're competitive, so we do retain a portion. Okay. Great. Well, I appreciate. Those were all my questions. Thank you. Thank you. Our next question is from David Chiaverini with Wedbush Securities. Please proceed. Hi. Thanks for taking the question. I had a question on products and development because it seems like you're well on your way to building a super app. You can do banking and savings, self-directed trading and investments, peer-to-peer payments, crypto within the next six months. The question is, are there any features missing for you guys to compete with, say, Square's Cash App? Is that something you even aspire to? Well, I think, yeah. I think if to the extent that I mean, talk about Square, like Square's Cash App, for example. I would say that I think frankly, we have a lot of things we do that are much better, right? I mean, by the time we're done with what we're doing, you'll have, you know, small business accounts that can sit right next to your personal accounts open through a universal enrollment. You'll be able to have your crypto trading, your securities, your robo-advisor, and I think we'll be able to build a much more robust. Let's, for example, let's just talk about a robo for example. With what we have in AAS, they have a model management store. Most robos are really simplistic about what models you can choose. Well, our robo will be built into AAS' store. The client will have a lot more model choices that they could use in order to manage their money through the robo side. Yeah, I think we have all the pieces we need to do that. There's just development to make that happen. UDB 2.0 has a planning tab that essentially works through a variety of features and functionality to help people plan their finances, you know, market products based on you know, specific data algorithms that would be most suited to those clients and things like that. Yeah, I think that you know the interesting thing for companies like Square is they're unburdened from making money at any particular time. They have very small accounts often, and but they do have a lot of them, right? But I think our app should be definitely much more functional than theirs, frankly, and much more robust when we're done. That's great color. Thanks for that. Shifting to a housekeeping item. Can you talk about the tax rate going forward? This quarter is roughly where we usually have around a 29% tax rate. That's where we've generally been at over the last few years. There's been some benefit from time to time as a result of the stock comp. As if we have a period where the stock price shoots up and there's vestings of the awards. This relates to the accounting nuance that they built rather than where it used to go through equity. They built it into the tax rate a few years ago. ASU 2016-09 might be somewhat familiar with hearing that on the street before s o that's really what can shift that rate but g enerally, 29 has been right around where we expect to be. Got it. Thanks very much. Our final question is from Edward Hemmelgarn with Shaker Investments. Please proceed. Yeah, I just got one quick question. You talked about the expenses from clearing being another month, right? I would expect that the clearing revenue to go up by an equivalent, you know. Yeah. That's correct. Yes. Of course. Yes. Yeah. Yep. Okay. That's right. One more. You were talking about your UDB with the prior caller with t he app will allow one to do all the things and more that Square does. How would you go about, you know, marketing to a broader audience? Well, I mean, remember Square, the Square's primary business is essentially merchant acquiring, right? That business is a great business. I mean, that's a great, amazing business. Cash App is sort of I don't want to speak for them. I mean, just use as an example because I'm but that's more of a side business that is not related to most of what the core of what they do. I don't even know if they disclose that revenue on that business. I mean, frankly, we clear for them, but you know, so we clear for Cash App actually a nd so, you know, we're familiar with you know, with the volumes and things like that. Anyway, I think that, you know, obviously they have this massive base of consumers because they have this amazing merchant acquiring business. I think the answer to this more broadly is that, there really are two primary mechanisms that we will market. One will be by trying to be a great integrated service provider for RIAs and BDs who need an integrated product set from a technological perspective. The clearing and custody businesses are an accumulation of customers that need services. Those services are non-competitive because we're not running our own RIA network, we're not running our own broker network t o the extent that the robo gets of any size, we're gonna refer those clients out via referral arrangements to our RIA network. There's third-party acquisition of customers, and then there's first-party acquisition of customers, which is through direct marketing, cross-selling, and all the things that you know, we do now to get customers. I think the real differential is, right, if you're selling a customer a checking account, you can pay a certain amount of money on the cost of acquisition. If you're selling that customer loans and checking accounts and securities products, then the cost of acquisition can be reflective of a broader product set and allow you know, more marketing to be done and a greater efficiency when you're measuring that lifetime value and cost of acquisition. You know, I think that's really the trick to make that happen. You can also balance out which particular product has the lowest customer acquisition cost and which one has the best cross-sell, and you run the models on that, and that becomes what the consumer acquisition looks like. Okay. Great execution on acquisition. Oh, thank you. Thanks, Ed. We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing remarks. Thank you everyone. We'll talk to you next quarter. You know, Andy will still be hanging out and Derrick will be doing most of the talking. Do you want me to speak the part next time, Andy? No? Okay. All right. Thanks, everybody. Bye. Bye guys. Ta ke care. Bye. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.