Axos Financial, Inc. (NYSE:AX) Q2 2024 Earnings Call Transcript

And come up with our — what we believe is the reasonable estimate for that allowance. And so based on those number of factors and kind of that process, that’s how we ultimately got to the $70 million on that subset of loans.

Greg Garrabrants: But it’s look, I mean, obviously, we’ve always performed well better than our loan loss. And so it’s best to be conservative on these things, right? So…

Gary Tenner: So as we’re thinking about kind of the provision going forward, given that backdrop of those PCD loans and the allowance for that, are those balances and that’s kind of allowance out there for the duration of those specific credits as long as they’re — or unless something thoroughly changes in your expected performance of the credits?

Derrick Walsh: Correct. We will be monitoring them quarter-by-quarter in the same way that monitor our entire loan portfolio, including new originations. The whole portfolio gets analyzed on a quarter-to-quarter basis, depending on the different individual attributes of the loan, if certain aspects are changing, such as delinquencies, credit downgrades and then as well as the, of course, economic aspects of the — in the broader environment and the different inputs that tie into the model there. So the 70 is, of course, the initial number, right, but that could certainly change. Also, obviously, if any of the loans were to prepay that would remove an allowance from it. So that’s another factor that, that could change.

Gary Tenner: Got it. Thank you.

Operator: Thank you. [Operator Instructions]. There are no further questions at this time. I’d now like to turn the floor back over to Johnny Lai for closing comments.

Johnny Lai: Thanks, everyone, for your interest. If you have any additional follow-ups, please contact me. And for those who are going to the JD conference, we’ll see you tomorrow and Thursday. Thanks.

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