Axos Financial - Earnings Call - Q4 2025

Executive Summary

• Q4 FY25 delivered solid growth: diluted EPS $1.92, up 6.7% YoY; net income $110.7M; net interest margin expanded to 4.84% and loans grew $856M sequentially; adjusted EPS $1.94.
• Against S&P Global consensus, EPS beat while revenue slightly missed: Q4 FY25 EPS $1.94 vs $1.81 estimate (beat); revenue $306.45M vs $312.29M estimate (miss)*.
• NPA/Assets and non‑accrual ratios improved sequentially; deposits rose 7.6% YoY to $20.83B; book value/share up 17.9% YoY to $47.46.
• Management guided tax rate down ~3ppt to ~26–27% beginning Sep quarter, expects FY26 organic loan growth toward mid-to-high end of high single-digits to low teens, and NIM ex-FDIC accretion to remain at or slightly above the 4.25–4.35% target range.
• Catalysts: tax-rate step-down, continued loan growth momentum, margin durability, and potential M&A/team lift-outs; one‑time $12M loan sale gain helped non‑interest income; expense adds from floor plan team and merit increases will be watched.

What Went Well and What Went Wrong

What Went Well

• Record-like loan growth: net loans +$856M QoQ (+4% or +16% annualized), driven by asset‑based lending, auto, equipment leasing, lender finance, and single-family mortgage.
• Margin resilience: consolidated NIM 4.84% vs 4.78% prior quarter; net interest income rose $4.7M QoQ.
• Credit metrics improved: NPA/Assets 0.71% (vs 0.79% prior quarter); non‑accrual loans decreased sequentially in C&I and CRE.
• CEO tone on AI: “We believe we will see benefits in our operating efficiency from the implementation of artificial intelligence across the organization…”.

What Went Wrong

• Provision for credit losses increased to $15.0M (vs $14.5M in Q3 and $6.0M in prior-year quarter), reflecting loan growth and CRE macro inputs.
• Expense pressure: non‑interest expense rose to $150.7M (vs $146.3M in Q3 and $140.5M YoY); upcoming floor plan team costs (~$1M/quarter) and ~4% merit increases in September add to OpEx.
• S&P “Revenue” missed consensus in Q4 despite strong company-reported NII and fee gains; reliance on one‑time $12M loan sale gain elevated non‑interest income.

Transcript

Johnny Lai (SVP of Corporate Development and Investor Relations)

Good afternoon, everyone, and thanks for your interest in Axos. Joining us today for Axos Financial Inc's fourth quarter and fiscal 2025 financial results conference call are the company's President and Chief Executive Officer, Greg Garrabrants, and Executive Vice President and Chief Financial Officer, Derrick Walsh. Greg and Derrick will review and comment on the financial and operational results for the quarter and fiscal year ended June 30, 2025, and we will be available to answer questions after the prepared remarks. Before I begin, I'd 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 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'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement and a case with additional financial schedules. All of these documents can be found on axosfinancial.com. With that, I'd like to turn the call over to Greg.

Greg Garrabrants (President and CEO)

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 fourth quarter of fiscal 2025, ended June 30, 2025. I thank you for your interest in Axos Financial and Axos Bank. We delivered strong results this quarter, generating $856 million of net loan growth linked quarter, six basis points of net interest margin expansion, and an 18% year-over-year increase in book value per share. We continue to generate high returns, as evidenced by the 17% return on average common equity and the 1.9% return on assets in the three months ended June 30, 2025. Other highlights in the quarter include net interest income was $280 million for the three months ended June 30, 2025, up 7.7% from the $260 million in the prior year period.

Net interest margin was 4.84% for the quarter ended June 30, 2025, up six basis points from the 4.78% in the quarter ended March 31, 2025. One loan from the FDIC purchase pool paid off this quarter, and that accelerated accretion of the purchase price discount increased our net interest income by approximately $450,000. We continue to maintain a best-in-class net interest margin with or without the benefit of the accretion from loans purchased from the FDIC. Total on-balance sheet deposits increased 7.6% year-over-year to $21 million. Our diverse and granular deposit base across consumer and commercial banking and our securities businesses continue to support our organic loan growth. We managed our operating expenses well this quarter.

Total non-interest expenses for the quarter ended June 30, 2025, were up by 3% from the prior quarter, excluding the reversal of a legal accrual in the prior quarter, which reduced other G&A expenses by approximately $2 million. Total non-interest expenses were up $2.5 million from March to June. Total non-accrual loans declined by $15 million linked quarter, resulting in our non-accrual loans to total loans ratio improving by 89 basis points in the quarter ended March 31, 2025, to 79 basis points as of June 30, 2025. Net income was approximately $110.7 million in the quarter ended June 30, 2025, compared to $105.2 million in the quarter ended March 31. Diluted EPS was $1.92 for the quarter ended June 30, 2025, compared to $1.81 in the March quarter. We had a few non-recurring items this quarter that impacted our net income and EPS.

We recognized a $12 million pre-tax gain from the sale of multifamily loans that were included in mortgage banking income. We also recognized a one-time non-cash deferred tax impairment that increased our net income tax by $5.5 million. Excluding the impact from those two non-recurring items, our adjusted net income and adjusted earnings per diluted share would have been $107.7 million and $1.87 per share, respectively. We took advantage of the temporary market downturn in April to repurchase approximately $31 million of common stock at an average price of $59 per share. Total originations for investment, excluding single-family warehouse lending, increased 5% on a linked quarter basis, resulting in net loan growth in loans for investment of approximately $856 million for the three months ended June 30, 2025, representing an increase of 4.2% linked quarter or 16% annualized.

Asset-based lending, commercial real estate, specialty lending, equipment leasing, lender finance, and single-family warehouse had strong originations and net loan growth this quarter. Additionally, we grew ending loan balances in single-family mortgage for the second consecutive quarter. Average loan yields for the three months ended June 30, 2025, were 8%, flat compared to the prior quarter. Average loan yields for non-purchased loans were 7.66%, and average yields for purchased loans were 14.9%, which includes the accretion of our purchase price discount. The FDIC purchased loans continue to perform, and all loans in the portfolio remain current. New loan interest rates were the following: single-family mortgage 7.2%, multifamily 7.1%, C&I 7.8%, and auto 8.3%. Ending deposit balances were $20.8 billion, and they were up 3.4% linked quarter and up 7.6% year-over-year. Demand, money market, and savings accounts representing 95% of total deposits at June 30, 2025, increased by 7% year-over-year.

We have a diverse mix of funding across a variety of business verticals, with consumer and small business representing 59% of total deposits, commercial cash, treasury management, and institutional representing 20%, commercial specialty representing 11%, Axos Fiduciary Services representing 5%, and Axos Securities, which is our custody and clearing business, representing 5%. Total non-interest bearing deposits were approximately $3 billion at the end of the quarter, up slightly from the prior quarter. Client cash sorting deposits ended the quarter around $980 million, up from $900 million at March 31, 2025. We remain focused on adding new assets from existing and new advisors to grow our assets under custody and cash balances. In addition, our Axos Securities deposits on our balance sheet, we had approximately $450 million of deposits off balance sheet at partner banks.

Our consolidated net interest margin was 4.84% for the quarter ended June 30, 2025, compared to 4.78% in the quarter ended March 31, 2025. We are seeing strong growth in accounts and balances from our Axos ONE consumer bundle deposit product, which includes a checking and a savings account. Growth in Axos ONE and other deposit businesses, including our commercial cash and treasury management and specialty businesses, has provided us with sufficient funding to support our strong organic loan growth. We are also making excellent progress cross-selling deposits across our lending businesses. We expect our consolidated net interest margin ex-FDIC loan purchase accretion to stay at the high or slightly above the 4.25%-4.35% range we have targeted over the past year.

While new loan yields are coming in slightly lower in many lending categories we compete in, we continue to offset some of that pressure through refinancing or paying off lower yielding single-family and multifamily loans originated two to three years ago. Our loan pipelines have improved over the past few quarters as a result of successfully expanding our distribution channels across certain commercial lending categories and contributions from teams we have onboarded over the past 12 months. We also believe we have moved past our peak level of prepayments in our commercial specialty real estate portfolio, which had been a significant headwind to net loan growth for the past several quarters. Taking all of these factors into consideration, we expect organic loan growth to come in toward the mid to high end of our single-digit and low-teens range on an annual basis in fiscal 2026.

The credit quality of our loan book continues to be solid, and our historic and current net charge-offs remain low. Total non-performing assets declined by $13.4 million linked quarter, representing 71 basis points of total assets compared to 79 basis points in the quarter ended March 31, 2025. The sequential decrease in non-accrual loans was primarily driven by $9.4 million in our C&I portfolio and $4.9 million in our commercial real estate lending business. We did not anticipate a material loss from loans currently classified as non-performing in our single-family, multifamily, or commercial real estate loan portfolio. Our commercial real estate specialty portfolio continues to perform very well and in line with expectations. Non-accrual C&I loan balances at June 30, 2025, were down by approximately $9.4 million from the prior quarter.

The two largest C&I loans we have on non-accrual continue to be up to date on their payments, and no new C&I loans were placed on non-accrual in the quarter. We continue to monitor the credit trends across all loan portfolios and have not seen any broad-based deterioration in any individual lending category. Axos Clearing, which includes our correspondent clearing and RIA custody business, had a good quarter. Total assets under custody increased from $37.1 billion at March 31, 2025, to $39.4 billion at June 30, 2025. Net new assets for our custody business increased by $215 million in the June quarter, extending the positive net new asset momentum we have experienced over the past several quarters. The stock market has rebounded off its year-to-date lows, and many of our custody clients continue to generate positive assets under management growth.

The pipeline for new custody clients remains healthy for small and large RIA firms, underpinning our optimism in continued net positive net new asset growth in our securities business. Total deposits at Axos Clearing were $1.4 billion at the end of the quarter, up $90 million from where they were in the prior quarter. Of the $1.4 billion of deposits from Axos Clearing, approximately $990 million were on the balance sheet and $450 million were held at partner banks. The slight sequential increase in deposits is encouraging given the strong rally in the stock market. While it's difficult to be absolutely certain that cash sorting has bottomed, we believe that clients and advisors are becoming less focused on maximizing yield in their sweep accounts compared to a year ago.

Many of our commercial lending and deposit teams, including our life science and technology business and our middle market banking teams that we have added over the prior few quarters, are now producing nicely and contributing to loan and commercial deposit growth. We onboarded a new floor plan lending team that will help us scale our floor plan lending business. We continue to evaluate M&A opportunities to augment growth from our existing businesses and team liftouts. The pace and quality of M&A opportunities have increased over the past few months, and seller expectations have become more reasonable. We are evaluating specialty lending and non-banking businesses that generate asset and transaction-based income and low-cost deposits. Our strong capital, liquidity, and profitability allow us to be disciplined in how and where we deploy capital to ensure the investments meet our strategic evaluation hurdles. We ended fiscal 2025 with positive momentum.

Loan growth accelerated in the back half of the year, our credit quality was strong, and our net interest margin remained above our long-term target. We expect the change in the income tax calculation methodology for the state of California will reduce our income tax rate by 3%, starting in the September 30, 2025 quarter, boosting our net income and EPS in fiscal 2026 and beyond. With this being the 25th anniversary of Axos Bank, we are proud of delivering consistent performance through a variety of economic, geopolitical, and regulatory environments. I'm even more excited about the opportunities that we have in each of our businesses. We remain hyper-focused on executing our strategic and operational initiatives. These include investments in technology and operations to scale businesses and roll out new products faster while maintaining a best-in-class operating efficiency ratio.

We believe we will see benefits in our operating efficiency from the implementation of artificial intelligence across the organization and believe that its implementation will enable us to create greater operating leverage and improve the speed, quality, and cost of software development projects and accelerate new product delivery. We believe that we can deploy our capital in a disciplined manner in our existing and new businesses to further diversify our lending, funding, and fee-based income. We have a lot of runway in each of our businesses, and I feel confident that our teams and our leaders will deliver the results that our shareholders have come to expect from us. Now I'll turn the call over to Derrick, who will provide additional details on our financial results.

Derrick Walsh (EVP and CFO)

Thanks, Greg. Quick reminder that in addition to our press release, an 8-K with supplemental schedules was filed with the SEC today and is available online through EDGAR or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filing for additional details. Non-interest expenses were approximately $151 million for the three months ended June 30, 2025, up by $4.4 million from the three months ended March 31, 2025. Excluding approximately $1.9 million reversal of a legal accrual in the March 31st quarter, total non-interest expenses were up by approximately $2.5 million in the linked quarter. Salaries and benefit expenses were $74.9 million, roughly flat from the prior quarter ended March 31st. Professional services expenses were $10.4 million compared to $8.2 million in fiscal Q3 2025.

The sequential increase in professional services expense was attributed to a handful of services across different business units. Looking ahead to the September quarter, we recently added a floor plan financing team that adds an incremental $1 million of expense per quarter. September is when we have our annual merit compensation increase, which we estimate to be about 4%. We remain focused on managing our expenses while making strategic investments in a controlled manner in order to maintain our operating efficiency ratio. Next, our income tax rate was 29% for the three months ended June 30, 2025, compared to 27.4% in the corresponding year-ago period. Our income tax expense in Q4 2025 included a one-time non-cash deferred tax impairment related to the change in the taxation of financial institutions that I mentioned on last quarter's call.

The California budget proposal went into effect on June 30, 2025, which required us to reassess the value of our deferred tax assets. That resulted in a $5.6 million one-time non-cash impairment charge in the quarter ended June 30, 2025. Our income tax expense for the quarter ended June 30, 2025, benefited from the increase in our stock price from June 30, 2024 to June 30, 2025, which is one factor used to calculate our CEO's stock-based incentive compensation. The net impact of the deferred tax asset remeasurement and stock-based incentive compensation calculation, combined with higher pre-tax income, was a $2.3 million increase in our income tax expense in Q4 2025. Starting in the quarter ending September 30, 2025, and going forward, we expect our corporate tax rate to be approximately 26% to 27%, an improvement of three percentage points from the previously 29% to 30%.

I'll wrap up with our loan pipeline and growth outlook. Our loan pipeline remains healthy at approximately $2 billion as of July 25, 2025, consisting of $532 million of single-family residential jumbo mortgage, $49 million of gain-on-sale mortgage, $302 million of multifamily and small business commercial, $73 million of auto and consumer, and $1.1 billion in commercial lending. We are not seeing any material impacts from imposed or proposed tariffs on loan demand so far, and we believe that we will be able to grow loan balances organically at the midpoint to high end of our high single-digits to low teens year-over-year growth target over the next 12 months, excluding the impact of the loan portfolio purchase from the FDIC or any other potential loan or asset acquisitions. With that, I'll turn the call back over to Johnny.

Johnny Lai (SVP of Corporate Development and Investor Relations)

Thank you, Derrick. Alicia, we're ready to take questions.

Operator (participant)

We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation pin 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. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Kyle Peterson with Needham & Co. Please proceed.

Kyle Peterson (Senior Analyst)

Great. Good afternoon. Thanks, guys. I want to start off on loan yields and that kind of side of the net interest margin. It sounds like maybe there might be a little more pricing pressure and yields on new loans might be lower, but then it could be a partial offset on prepaid being a little slower. I guess, how do you guys view the net impact of those? I guess, is the NIM outlook, it sounds fairly consistent with last quarter? Are those kind of a rough wash, or how are you guys looking at the different pieces there?

Greg Garrabrants (President and CEO)

I think they're fairly consistent. You know, for a lot of these businesses, like the capital call side and whatnot, they have a lot of deposits that come with them, and the middle market business also has that too. While loan yields might be a little tighter, there's an offsetting benefit on the funding side, which results in a decent net. I think if I were to take a guess, I'd say that just the credit spread side has been more consistent this quarter with the last quarter.

I wouldn't say there's that much incremental pressure, but it is very different than it was a year ago, just with respect to, particularly in some of the C&I club deals and some of the syndicated deals. There are just a lot of banks that are kind of pushing into that space, I think, because they don't maybe want to grow as much in commercial real estate, and that's pushed it down a bit. I think this is somewhat of, obviously, a forecast, but I think we're going to be able to keep it pretty consistent. It could be a basis point or two either way. It's not that much of a science.

Kyle Peterson (Senior Analyst)

Okay, that's helpful. Greg, I know we've kind of chatted in the past, and you've mentioned different dynamics and how you're leveraging AI to longer-term press on margins and CapEx growth. Could you remind us how you are thinking about expense growth relative to revenue, how you guys are using tech and AI in your day-to-day? I think it'd be really helpful for everyone on the call.

Greg Garrabrants (President and CEO)

Right. What we had previously set as a target was that we wanted to ensure that our personnel and professional services cost growth did not exceed 30% of our net interest income and non-interest income growth. Now, you know, we are adding, we just added a team there, so that's definitely a target over the year. We added a fairly expensive floor plan team. They're great folks. We expect them to be able to produce, but it'll take a couple quarters to really get that running. In general, with respect to artificial intelligence, there's just so much opportunity, and we are taking advantage of that opportunity now. It's making people more efficient, and it's taking a lot of routine tasks and automating them. The ability to take unstructured data out of documents, for example, you know, we obviously, let's say you get a big legal agreement for a commercial loan.

Previously, it would take an attorney quite a bit of time to go through and make sure all the covenants were extracted and placed into the commercial origination system. Now, AI can read that. It can present it to the attorney, make sure that it's correct. When the attorney makes corrections, it will auto learn off that and then allow that process to be just a lot faster. It doesn't mean that we're relying entirely on that agent, but it makes that process a lot faster. That agent can then auto-upload those covenants into the system for tracking. There are lots of examples like that that are going on. We've got a pretty active task force pushing on the tools and then on the processes we want to work through. I do really believe that it is going to bend the cost curve in the operations side.

On the software development side, obviously, we have so many cool and interesting things we want to do. Previously, we had been limited by the speed at which the coders can code. There are just so many really incredible breakthroughs that are occurring at such a rapid pace in the software development process. One recent example is, we use a software that essentially creates the screens called the Figma, which are just what the user experience is supposed to look like and that sort of thing. They rolled out their AI product just this month. The team is telling me it takes less than 10% of the time now to basically take a product from conceptualization and get that all organized and get the field validations done and get the user experience ready to be shown and reviewed by the folks that are going to review it.

That's just one example, but there's just a lot of stuff going on that I'm pretty excited about. I think it is going to bend the cost curve, and it also, I don't think we'll be successful unless we can say that we're able to deliver a more, better product faster and cheaper, on the software side.

Derrick Walsh (EVP and CFO)

Awesome. Thank you very much, and nice quarter.

Greg Garrabrants (President and CEO)

Thank you.

Operator (participant)

Thank you. Our next question comes from the line of David Feaster with Raymond James. Please proceed.

David Feaster (Director)

Hi. Good afternoon, everybody.

Greg Garrabrants (President and CEO)

Hey, David.

Derrick Walsh (EVP and CFO)

Hi, David.

David Feaster (Director)

Maybe just, you know, we touched on the loan side a bit. Let's touch on the funding side. Obviously, you've had a lot of success driving deposit growth. You, I mean, notable success in the consumer direct side, had some nice tailwinds in the specialty deposits and the commercial and treasury management too. I was just, where do you see the most opportunity on the funding side today? How is pricing competition there as industry loan growth is picking up? Just your thoughts on your ability to continue to manage deposit costs lower and still grow?

Greg Garrabrants (President and CEO)

I think it really depends on the vertical. Some of the new verticals we've added do come with some pretty nice compensating deposit balances, so those are going to be more favorably priced in general. I do think that as industry loan growth picks up, we might see even some of these middle market clients as we sort of start to take clients and things like that. We've seen some of the competitors try to retain those clients by getting aggressive on the deposit rate. I think if our loan growth is accelerated, it's reasonable that there might be a slightly higher funding cost associated with that.

If the loan growth is, let's say, you know, we're at the higher end of our high single digits, low double digits, but if we had loan growth similar to what we had this quarter every quarter in the next fiscal year, then I think that might put a little pressure on funding costs. Of course, it's hard to say because the Axos ONE product is doing very well. The funding cost there is, you know, it can be reasonable depending upon the mix of checking and savings accounts that come in, and a variety of factors there. I think it's not a bad modeling exercise to say if we're growing a lot faster, then there might be a little pressure on funding costs.

If we do a big acquisition or even a moderately sized acquisition of an asset pool or a specialty lending business, then that might put a little pressure on growth on the funding side for a little while.

David Feaster (Director)

Okay. Got it. Even if you did have outsized growth and maybe a little margin pressure, it's not hard to still see a really strong NII growth profile. You're obviously having a lot of success on the fee side and gaining share with the securities side. It sounds like the pipeline is doing pretty good. Do you think that you can keep the fee income growth in line with NII, or what initiatives maybe that you have to help support fee revenue growth, hopefully keeping that proportion relatively stable?

Greg Garrabrants (President and CEO)

Yeah. I think, I mean, you remember there was, yeah, I look, we did have, we did have a good growth from the market and then decent growth on net new assets. It's not quite where we want to be. There is a nice pipeline, though. There's some wins that are coming through and getting onboarded that are decent size this coming quarter and the next quarter, which should boost that net new asset growth number. I think that, you know, we're doing a lot of development on the software technology to be able to have an extremely compelling product. I think we, you know, we have a good product, but it needs to get better to be best in class. I think the biggest part of our growth in the fee income side is clearly going to be on the securities side in this rate environment.

We are making good progress there. To say that that is going to increase at the same level, I think we've got, you know, we've got goals for that, and some of the technology is going to have to come in place and get some adoption there to make that happen. I think we can do it, but it'll be a little difficult, I think. It won't be, it's not impossible, but it won't be easy.

David Feaster (Director)

Okay. Lastly, just touching on the capital front, you're still accreting capital, extremely profitable, even with accreting capital in excess of your organic growth. I just kind of wanted to touch on your capital priorities here. The stock's moved, which is great. It makes buybacks a little less attractive, though. I know the excess capital isn't burning a hole in your pocket, but just wanted to get a sense of your capital priorities. It sounds like M&As might be more in the cards today. It sounds like conversations are pretty good, but just kind of curious some of the types of things you're considering.

Greg Garrabrants (President and CEO)

Yeah, you know, we have a good organic growth pipeline. We're still looking at different M&A opportunities in a variety of places. We look at fee income businesses. We look at specialty finance businesses if they're a good fit. That's always a good place to deploy capital if it's synergistic. Yeah, you know, we'll continue to monitor that. We obviously bought back some stock this quarter, but there's been obviously a big move in the stock price too. We still like where we are and feel good about being able to generate earnings that are supportive of that share price. I think it's all in play. Organic loan growth remains a priority for us.

David Feaster (Director)

Terrific. Thanks, everybody.

Greg Garrabrants (President and CEO)

Thank you, David.

Operator (participant)

Thank you. Our next question comes from a line of Gary Tenner with D.A. Davidson. Please proceed.

Gary Tenner (Senior Research Analyst)

Thanks. Good afternoon. Question on the multifamily loan sale. Just curious about, you know, the kind of reasoning behind it. Obviously, the yields must have been pretty good there given the gain that you picked up. Just curious about the thought process around that. Obviously, you had great net loan growth regardless, but, you know, any color.

Greg Garrabrants (President and CEO)

Oh, yeah. I think when we look at loans and we see what we think about them from a standpoint of where they are from a credit perspective and look at what we think about them, there were some good buyers that were interested in some loans. We decided to sell that particular loan.

Gary Tenner (Senior Research Analyst)

Was that a single loan, just a single large loan, or a basket of loans?

Greg Garrabrants (President and CEO)

It was a few others.

Yeah. There was a handful of loans that were sold.

Gary Tenner (Senior Research Analyst)

All right. Great. As you think about 2026, and I know that you, Greg, you mentioned expectations of being towards the mid to higher part of your loan growth range. Obviously, C&I has been pretty strong throughout fiscal 2025, and now you saw CRE, you know, this current quarter really pick up. Those two, I would imagine, are the largest drivers, probably the vast majority of loan growth for the year. Is there anything else that you think could accelerate?

Greg Garrabrants (President and CEO)

Yeah, I think capital call can do something. I think the lender finance businesses, both real estate and non-real estate, can as well. Jumbo mortgage started to grow again. It's not going to be massive, but the pipeline there is pretty good. I think we could have pretty balanced loan growth across, but those are probably the biggest categories. The good part of our business is it's just so diverse that you may have some movements within quarters, but we can look across the board and look at the pipelines and see where we are there. I mean, CRE is a little tough because sometimes our prepayments can come there that are relatively unexpected and move that number around. I think we can be much more certain about the aggregate number than about the individual categories.

Gary Tenner (Senior Research Analyst)

Okay. If I could ask one more question, you kind of reiterated the goal on the comp line to not exceed 30% of revenue growth or NII growth. In terms of the tax benefit that you're getting from the California change, I guess the question would be, does that free up any additional resource for investment, or that goes to the bottom line?

Greg Garrabrants (President and CEO)

No, that goes to the bottom line.

Gary Tenner (Senior Research Analyst)

I think the executives wish it would, but Greg is holding us tight.

Greg Garrabrants (President and CEO)

No, it's a disciplined measure. To my knowledge, nobody was actually involved with the lobbying of the California Legislature to give us such a, that beneficence and basically pound other banks that are not located in California. In all seriousness, I think that is a pre-tax. It's just a very simple number. If you take the revenue growth from non-interest revenue and interest revenue, you add it up, you look at the difference. Obviously, there could be some one-time items in there, and you don't have compensation or professional services expenses additively grow, and it's a pre-tax ratio. That's what it is. I think, obviously, at any one quarter, we hired this floor plan team. Derrick said that's going to cost about $1 million a quarter. Over the year, we intend to hit that number and make sure that that happens.

That's not saying that we can't do better with AI and whatever it is, but that's a public goal that the team is going to hit.

Gary Tenner (Senior Research Analyst)

Got it. Thank you.

Operator (participant)

Thank you. Our next question comes from a line of Kelly Motta with KBW. Please proceed.

Kelly Motta (Director and Equity Research Analyst)

Hey, good afternoon. Thanks for the question and congrats on 25 years. Very, very cool you get to celebrate on the 4th of July. Greg, maybe with the GENIUS Act coming out, I believe before the Silvergate blow-up, you were potentially looking into stablecoin and digital assets. Can you refresh us now that there's additional color as to, in a more conducive regulatory environment, if there's any update as to how you're thinking about it and interest in pursuing it?

Greg Garrabrants (President and CEO)

Yeah, sure. There are still some things that are in process. I'll give you some preliminary thoughts, and then there will be others to come. In our self-directed business, we've been allowing the crypto trading side. We haven't really pushed it very much with allowing the ETFs and those sort of things on the crypto side. We've been allowing that for a while. Our self-directed business needs to have some technological upgrades just from a standpoint of the user experience. It's not really as competitive as it should be and hasn't been a big focus for us. I think given that the crypto side could become more important, that might be a vehicle for some of the transactional-related and payment-related activities that are there because we're already doing that. We can expand that a little bit or make the user experience better.

We did not, when the administration changed, with respect to what we've done on the crypto banking side, there was a complex set of rules around what we would accept and what we wouldn't based on a risk profile around what different companies were doing and whether or not there was regulatory clarity around how those companies were being treated. When the administration changed, we've been more willing to look at those accounts and those sort of things and do that. With respect to how I'm thinking and how we're thinking broadly about stablecoin, I'd say that I'm not going to have a lot of public comments on that now, but we are focused on it and thinking through it and looking at exactly how it should integrate into everything we're doing.

Obviously, a lot of change and movement recently, and we're thinking hard about it and paying attention to it.

Kelly Motta (Director and Equity Research Analyst)

Got it. Thanks for the color. That's helpful. Maybe switching to the funding side, you had some nice EOP growth in non-interest bearing this quarter. Wondering if there was any end-of-period flows that impacted that. Just more broadly speaking, which areas of the business are seeing the best growth in just core operating accounts? Because you did have very nice deposit growth this quarter.

Greg Garrabrants (President and CEO)

Yeah, the specialty, the commercial specialty side has some real bright spots and continues to grow there. The tech business that we brought on through that team is doing well and bringing on a lot of core deposits there. It's nice to see some success with that team, and that's been steady. The middle market team as well is doing the same thing, and then a lot of cross-sell across all the lending verticals. I think we do a really good job on the payment side and with the API infrastructure we have on the commercial side that leads a lot of clients who have some pretty sophisticated payment needs to choose us. Those are nice clients because when they integrate with us from a software perspective, they tend to be pretty sticky.

It really hasn't been any one thing, but it's been a lot across the board in those categories that I just talked about.

Kelly Motta (Director and Equity Research Analyst)

Got it. That's helpful. Maybe last question for me. It seems like asset quality held in really strong. Just wondering, Greg, any areas that you're, you know, any update as to what you're looking at and watching more carefully? Just to round out questions on credit, that would be.

Greg Garrabrants (President and CEO)

Sure. Yeah, I think the commercial real estate side looks really, really good. And then on the C&I side, as we continue to work with different banks and do club stuff and things like that and do some syndications, I expect that we'll always have a handful of stuff rattling around. In most cases, I think those things will work out reasonably well, just given the enterprise value of the businesses. I think on the C&I side, we've had, if you look at our, I mean, I think our credit losses are, I don't think we've really had any of any, right? In all our time in multifamily, a couple basis points maybe in 25 years, in single-family the same way.

I think that the C&I side, as we're doing more sort of average bank stuff, we'll probably have, hopefully, we'll do better than average, but there'll always be, I think, something there, but nothing of any significant materiality.

Kelly Motta (Director and Equity Research Analyst)

Great. Thank you for the time. I'll step back next quarter.

Greg Garrabrants (President and CEO)

Okay, thank you.

Derrick Walsh (EVP and CFO)

Thanks, Kelly.

Johnny Lai (SVP of Corporate Development and Investor Relations)

Thank you, Kelly.

Operator (participant)

Thank you. There are no further questions at this time. I'd like to pass the call back over to Johnny Lai for any closing remarks.

Johnny Lai (SVP of Corporate Development and Investor Relations)

Great. Thanks for everyone's participation, and we'll talk to you next quarter.

Operator (participant)

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.