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What changed in Axos Financial, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Axos Financial, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+322 added−336 removedSource: 10-K (2025-08-21) vs 10-K (2024-08-22)

Top changes in Axos Financial, Inc.'s 2025 10-K

322 paragraphs added · 336 removed · 271 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

72 edited+6 added−15 removed101 unchanged
Biggest changeCompetition for those deposits comes from a wide variety of other banks, savings institutions, and credit unions. Money market funds, full-service securities brokerage firms and financial technology companies also compete for these funds. The Banking Business Segment competes for these deposits by offering superior service and a variety of deposit accounts at competitive rates.
Biggest changeThe Banking Business Segment competes for these deposits by offering superior service and a variety of deposit accounts at competitive rates. In real estate lending, we compete against traditional real estate lenders, including large and small savings banks, commercial banks, mortgage bankers, mortgage brokers, insurance companies, private equity firms and hedge funds.
This regulation is intended primarily for the protection of our customers, the deposit insurance fund (“DIF”) and the U.S. financial system and not for the benefit of our security holders.
This regulation is intended primarily for the protection of our customers, the deposit insurance fund (“DIF”), and the U.S. financial system, not for the benefit of our security holders.
Accordingly, investors should monitor our website in addition to following and reviewing our press releases, filings with the SEC and public conference calls and other presentations.
Accordingly, investors should monitor our website in addition to following and reviewing our press releases, filings with the SEC, public conference calls, and other presentations.
Our deposit lines of business include: • Commercial deposits, which primarily include deposits sourced from a targeted set of industry verticals: ◦ Commercial Banking Verticals, which include other middle market industries along with deposit relationships from commercial real estate and commercial & industrial clients ◦ Specialty Deposit Verticals, which include title, escrow, home owner association (“HOA”) and property management, 1031 exchange, trust & estates and payment processors; and ◦ Software Verticals, which include: ▪ Axos Fiduciary Services : A full-service fiduciary team catered specifically to support bankruptcy and non-bankruptcy trustees and fiduciaries with their software and banking needs, and ▪ Zenith Information Systems, Inc .: A business management and entertainment accounting and payroll software offering supported by a dedicated service team. • Consumer deposits, which primarily include retail and small business deposits as well as sweep deposits from financial advisory and clearing firms, including Axos Clearing and its business division, AAS.
Our deposit lines of business include: • Commercial deposits , which primarily include deposits sourced from a targeted set of industry verticals: ◦ Commercial Banking Verticals , which include middle market industries along with deposit relationships from commercial real estate and commercial & industrial clients ◦ Specialty Deposit Verticals , which include title, escrow, home owner association (“HOA”) and property management, 1031 exchange, trust & estates and payment processors; and ◦ Software Verticals , which include: ▪ Axos Fiduciary Services: A full-service fiduciary team catered specifically to support bankruptcy and non-bankruptcy trustees and fiduciaries with their software and banking needs, and ▪ Zenith Information Systems, Inc.: A business management and entertainment accounting and payroll software offering supported by a dedicated service team. • Consumer deposits , which primarily include retail and small business deposits as well as sweep deposits from financial advisory and clearing firms, including Axos Clearing and its business division, AAS.
The USA PATRIOT Act gives the federal government broad powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing could have serious legal and reputational consequences for the institution.
The USA PATRIOT Act gives the federal government broad powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened 9 anti-money laundering requirements. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing could have serious legal and reputational consequences for the institution.
The SEC Form CRS requires registered investment advisors and broker-dealers to deliver to retail investors a succinct, plain English summary about the relationship and services provided by the firm and the required standard of conduct associated with the relationship and services. AVAILABLE INFORMATION Axos Financial, Inc. files reports, proxy and information statements and other information electronically with the SEC.
The SEC Form CRS requires registered investment advisors and broker-dealers to deliver to retail investors a succinct, plain English summary about the relationship and services provided by the firm and the required standard of conduct associated with the relationship and services. 11 AVAILABLE INFORMATION Axos Financial, Inc. files reports, proxy and information statements and other information electronically with the SEC.
Moreover, to the extent the Dodd-Frank Act affects the operations, financial condition, liquidity, and capital requirements of financial institutions with whom we do business, those institutions may seek to pass on increased costs, reduce their capacity to transact, or otherwise present inefficiencies in their interactions with us. Limitation on Businesses.
Moreover, to the extent the Dodd-Frank Act affects the 10 operations, financial condition, liquidity, and capital requirements of financial institutions with whom we do business, those institutions may seek to pass on increased costs, reduce their capacity to transact, or otherwise present inefficiencies in their interactions with us. Limitation on Businesses.
States, the District of Columbia and Puerto Rico, and various other self-regulatory organizations. Axos Clearing also uses various clearing organizations, including the Depository Trust Company, the National Securities Clearing Corporation, Euroclear and the Options Clearing Corporation. 10 Much of the regulation of broker-dealers has been delegated to self-regulatory organizations, principally FINRA, the Municipal Securities Rulemaking Board or national securities exchanges.
States, the District of Columbia, Puerto Rico, and various other self-regulatory organizations. Axos Clearing also uses various clearing organizations, including the Depository Trust Company, the National Securities Clearing Corporation, Euroclear and the Options Clearing Corporation. Much of the regulation of broker-dealers has been delegated to self-regulatory organizations, principally FINRA, the Municipal Securities Rulemaking Board or national securities exchanges.
The laws and regulations of the CFPB and other consumer protection laws and regulations to which the Bank is subject mandate certain disclosure requirements and regulate the manner in which we must deal with customers when taking deposits from, making loans to, or engaging in other types of transactions with, our customers. 9 Privacy Standards and Cybersecurity .
The laws and regulations of the CFPB and other consumer protection laws and regulations to which the Bank is subject mandate certain disclosure requirements and regulate the manner in which we must deal with customers when taking deposits from, making loans to, or engaging in other types of transactions with, our customers. Privacy Standards and Cybersecurity .
Additionally, the Net Capital Rule and certain FINRA rules impose 11 requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to, and approval from, the SEC and FINRA for certain capital withdrawals. Compliance with the net capital requirements may limit our operations, requiring the intensive use of capital.
Additionally, the Net Capital Rule and certain FINRA rules impose requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to, and approval from, the SEC and FINRA for certain capital withdrawals. Compliance with the net capital requirements may limit our operations, requiring the intensive use of capital.
In addition, if the Bank receives a rating of less than 5 satisfactory under the Community Reinvestment Act, we would be prohibited from engaging in any additional activities other than those permissible for bank holding companies that are not financial holding companies.
In addition, if the Bank receives a rating of less than satisfactory under the Community Reinvestment Act, we would be prohibited from engaging in any additional activities other than those permissible for bank holding companies that are not financial holding companies.
In underwriting commercial & industrial – non-real estate loans, we primarily consider the borrowers’ operating cash flows and the value of underlying collateral. Additionally, in our commercial real estate and commercial & industrial – non-real estate loans we typically take a senior lien position in a structured facility collateralized by the underlying assets.
In underwriting commercial & industrial – non-real estate loans, we primarily consider the borrowers’ operating cash flows and the value of underlying collateral. Additionally, in our commercial real estate and commercial & industrial – non-RE loans we typically take a senior lien position in a structured facility collateralized by the underlying assets.
In addition, OCC regulations provide that minimum capital levels greater than those provided in the regulations may be established by the OCC for individual savings associations upon a determination that 7 the savings association’s capital is or may become inadequate in view of its circumstances.
In addition, OCC regulations provide that minimum capital levels greater than those provided in the regulations may be established by the OCC for individual savings associations upon a determination that the savings association’s capital is or may become inadequate in view of its circumstances.
In addition, an institution’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in the OCC, other federal regulatory agencies or the Department of Justice, taking enforcement actions against the institution.
In addition, an institution’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in the OCC, other federal regulatory agencies or 8 the Department of Justice, taking enforcement actions against the institution.
We undertake measures to control access to and/or disclosure of our trade secrets and other confidential and proprietary information. Policing unauthorized use of our intellectual property, trade secrets and other proprietary information is difficult and litigation may be necessary to enforce our intellectual property rights.
We also undertake measures to control access to and/or disclosure of our trade secrets and other confidential and proprietary information. Policing unauthorized use of our intellectual property, trade secrets, and other proprietary information is difficult, and litigation may be necessary to enforce our intellectual property rights.
Our Bank generates non-interest income from consumer and business products, including fees from loans originated for sale, deposit account service fees, prepayment fees, loan servicing fees, as well as technology and payment transaction processing fees.
Our Bank generates non-interest income from consumer and business products and services, including fees from loans originated for sale, deposit account service fees, prepayment fees, loan servicing fees, as well as technology and payment transaction processing fees.
The law limits both the 8 individual and aggregate amount of loans the Bank may make to insiders based, in part, on its capital position and requires certain board approval procedures to be followed.
The law limits both the individual and aggregate amount of loans the Bank may make to insiders based, in part, on its capital position and requires certain board approval procedures to be followed.
The federal banking laws require that appropriate regulatory approvals must be obtained before an individual or company may take actions to “control” a bank or savings association. 6 Volcker Rule.
The federal banking laws require that appropriate regulatory approvals must be obtained before an individual or company may take actions to “control” a bank or savings association. Volcker Rule.
We plan to continue monitoring our capital consistent with the safety and soundness expectations of the Federal Reserve and will continue to use customized stress testing as part of our capital planning process. Standards for Safety and Soundness .
We plan to continue monitoring our capital consistent with the safety and soundness expectations of the Federal Reserve and will continue to use customized stress testing as part of our capital planning process. 7 Standards for Safety and Soundness .
We offer market-based, competitive wages and benefits in the market where we compete for talent. Our key human capital management objectives are to attract, retain and develop the highest quality talent.
We offer market-based, competitive wages and benefits in the markets where we compete for talent. Our key human capital management objectives are to attract, retain and develop the highest quality talent.
Generally, a broker-dealer’s net capital is net worth plus qualified subordinated debt less deductions for non-allowable (or non-liquid) assets and other adjustments and operational charges. As of June 30, 2024, our broker-dealers were in compliance with applicable net capital requirements. The SEC, FINRA and other regulatory organizations impose rules that require notification when net capital falls below certain predefined thresholds.
Generally, a broker-dealer’s net capital is net worth plus qualified subordinated debt less deductions for non-allowable (or non-liquid) assets and other adjustments and operational charges. As of June 30, 2025, our broker-dealers were in compliance with applicable net capital requirements. The SEC, FINRA and other regulatory organizations impose rules that require notification when net capital falls below certain predefined thresholds.
Further, the FDIC can examine any institution that has a substandard regulatory examination score or is considered undercapitalized, so long as the FDIC provides reasonable prior notice to the institution’s primary regulator. Capital regulations applicable to the Bank require the Bank to meet an additional capital standard of tangible capital equal to at least 1.5% of total average adjusted assets.
Further, the FDIC can examine any institution that has a substandard regulatory examination rating or is considered undercapitalized, so long as the FDIC provides reasonable prior notice to the institution’s primary regulator. Capital regulations applicable to the Bank require the Bank to meet an additional capital standard of tangible capital equal to at least 1.5% of total average adjusted assets.
Axos Bank (the “Bank”) provides consumer and commercial banking products through its digital online and mobile banking platforms, low-cost distribution channels and affinity partners.
Axos Bank (the “Bank”) provides consumer and commercial banking products and services through its digital online and mobile banking platforms, low-cost distribution channels and affinity partners.
Financial holding companies are generally permitted to affiliate with securities firms and insurance companies and engage in other activities that are “financial in nature.” Such activities include, among other things, securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking activities; and activities that the Federal Reserve has determined to be closely related to banking.
Financial holding companies are generally permitted to affiliate with securities firms and insurance companies and engage in other activities that are “financial in nature.” Such activities include, among other things, securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and sales; merchant banking; and activities that the Federal Reserve has determined to be closely related to banking.
In general, the prompt corrective action regulation prohibits an FDIC member institution from declaring any dividends, making any other capital distribution, or paying a management fee to a controlling person if, following the distribution or payment, the institution would be within any of the three undercapitalized categories.
In general, the prompt corrective action regulation prohibits an FDIC member institution from declaring any dividends, making any other capital distribution, or paying a management fee to a controlling person if, following the distribution or payment, the institution would be within any of the three undercapitalized categories described above.
Axos Bank is not subject to any such individual minimum regulatory capital requirement and the Bank’s regulatory capital exceeded all minimum regulatory capital requirements as of June 30, 2024. See Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations— “Liquidity and Capital Resources.” Stress Testing.
Axos Bank is not subject to any such individual minimum regulatory capital requirement and the Bank’s regulatory capital exceeded all minimum regulatory capital requirements as of June 30, 2025. See Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations— “Liquidity and Capital Resources.” Stress Testing.
Various aspects of the Regulatory Capital Rules continue to be subject to further evaluation and interpretation by the U.S. banking regulators. As of June 30, 2024, the capital ratios of both the Company and the Bank exceeded the minimums necessary to be considered “well-capitalized” under the capital adequacy requirements.
Various aspects of the Regulatory Capital Rules continue to be subject to further evaluation and interpretation by the U.S. banking regulators. As of June 30, 2025, the capital ratios of both the Company and the Bank exceeded the minimums necessary to be considered “well-capitalized” under the capital adequacy requirements.
For additional information on the Company’s loan portfolio, including asset quality and the allowance for credit losses, see Management’s Discussion and Analysis — “Financial Condition.” Available-for-Sale Securities Portfolio We buy and sell securities to facilitate liquidity and to manage our interest rate risk.
For additional information on the Company’s loan portfolio, including asset quality and the allowance for credit losses, see Management’s Discussion and Analysis — “ Financial Condition .” Available-for-Sale Securities Portfolio We buy and sell available-for-sale securities to facilitate liquidity and to manage our interest rate risk.
The prompt corrective action regulation of the OCC requires mandatory actions and authorizes other discretionary actions to be taken by the OCC against a savings association that falls within undercapitalized capital categories specified in OCC regulations.
The prompt corrective action regulation of the OCC requires mandatory actions and authorizes other discretionary actions to be taken by the OCC against a savings association that falls within the undercapitalized capital categories specified in OCC regulations: undercapitalized, significantly undercapitalized and critically undercapitalized.
These actions include, among other things, the power to enjoin any “unsafe or unsound” banking practices; to require that affirmative action be taken to correct any conditions resulting from any violation of law or unsafe or unsound practice; to issue an administrative order that can be judicially enforced; to require that it increase its capital; to restrict its growth; assess civil monetary penalties against it or its officers or directors; and to remove any of its officers and directors.
These actions include, among other things, the power to enjoin any “unsafe or unsound” banking practices; to require that affirmative action be taken to correct any conditions resulting from any violation of law or unsafe or unsound practice; to issue an administrative order that can be judicially enforced; to require that it increase its capital; to restrict its growth; assess civil monetary penalties against it or its officers or directors; and to remove any of its officers and directors. 6 REGULATION OF AXOS BANK General .
This technology platform provides account servicing capabilities for RIAs, including account opening, money movement, transfer of assets, trading, checking status and communicating with our service team. AAS also provides integrations with third-party platforms, which support a variety of advisor needs including client relationship management, portfolio management, trade order management and financial planning.
This technology platform provides account servicing capabilities for RIAs, including account opening, money movement, transfer of assets, trading, and communication with our service team. AAS also provides integrations with third-party platforms, which support a variety of advisor needs including client relationship management, portfolio management, trade order management and financial planning.
As an FHLB member, the Bank is required to own capital stock in a Federal Home Loan Bank in specified amounts based on either its aggregate outstanding principal amount of its residential mortgage loans, home purchase contracts and similar obligations at the beginning of each calendar year or its outstanding advances from the FHLB. Activities of Subsidiaries .
As an FHLB member, the Bank is required to own capital stock in a Federal Home Loan Bank in specified amounts based on either its aggregate outstanding principal amount of its residential mortgage loans, home purchase contracts and similar obligations at the beginning of each calendar year or its outstanding advances from the FHLB. Federal Reserve Banking System.
Axos Clearing also provides margin loans, which are collateralized by securities, cash, 3 or other acceptable collateral, and conducts securities lending activities, including borrowing and lending securities with other broker-dealers. AAS provides RIAs who custody client accounts at Axos with a proprietary turnkey technology platform with up-to-date client account information as well as trading capabilities.
Axos Clearing also provides margin loans, which are collateralized by securities or cash, and conducts securities lending activities, including borrowing and lending securities with other broker-dealers. 3 AAS provides RIAs who custody client accounts at Axos with a proprietary turnkey technology platform with client-account information as well as trading capabilities.
For additional information on our available-for-sale securities portfolio, refer to Management’s Discussion and Analysis— “Critical Accounting Policies—Securities” and Note 3 — “Fair Value” and Note 4 — “Available-For-Sale Securities” in the Consolidated Financial Statements. Deposits We generate deposits through a variety of channels, including advertisements, sales teams, software company affiliates, financial advisory firms, affinity partnerships and our lending businesses.
For additional information on our available-for-sale securities portfolio, refer to Note 3 — “Fair Value” and Note 4 — “Available-For-Sale Securities” in the Consolidated Financial Statements. Deposits We generate deposits through a variety of channels, including advertisements, sales teams, software company affiliates, financial advisory firms, affinity partnerships and our lending businesses.
HUMAN CAPITAL At June 30, 2024, we had 1,781 full-time employees, which does not include seasonal internship employees. None of our employees are represented by a labor union or are subject to a collective bargaining agreement. We have not experienced any work stoppage and consider our relations with our employees to be satisfactory.
HUMAN CAPITAL At June 30, 2025, we had 1,989 full-time employees, which does not include seasonal interns. None of our employees are represented by a labor union or are subject to a collective bargaining agreement. We have not experienced any work stoppage and consider our relations with our employees to be satisfactory.
Depository institutions with more than $10 billion in assets and their affiliates are subject to direct supervision by the CFPB, including any applicable examination, enforcement and reporting requirements the CFPB may establish. As of June 30, 2024, the Bank had $22.1 billion in total assets, placing the Bank under the direct supervision and oversight of the CFPB.
Depository institutions with more than $10 billion in assets and their affiliates are subject to direct supervision by the CFPB, including any applicable examination, enforcement and reporting requirements the CFPB may establish. As of June 30, 2025, the Bank had $23.9 billion in total assets, placing the Bank under the direct supervision and oversight of the CFPB.
Axos Bank is a member depository institution of the FDIC and its deposits are insured by the DIF up to the applicable limits, which are backed by the full faith and credit of the U.S. Government. The basic deposit insurance limit is $250,000. Regulatory Capital Requirements and Prompt Corrective Action .
Axos Bank is a member depository institution of the FDIC and its deposits are insured by the DIF up to the applicable limits, which are backed by the full faith and credit of the U.S. Government. Regulatory Capital Requirements and Prompt Corrective Action .
Segment Information We conduct business primarily two operating segments: the Banking Business Segment and the Securities Business Segment. For additional information on our business segments, see Note 22 — “Segment Reporting” in the Consolidated Financial Statements. BANKING BUSINESS SEGMENT We distribute our loan products through our retail, correspondent and wholesale channels.
For additional information on our business segments, see Note 22 — “Segment Reporting” in the Consolidated Financial Statements. BANKING BUSINESS SEGMENT We distribute our loan products through our retail, correspondent and wholesale channels.
The Economic Growth, Regulatory Relief, and Consumer Protection Act set the asset threshold for enhanced prudential standards and stress testing at $100 billion of total consolidated assets. Based on asset levels at June 30, 2023, neither the Company nor the Bank are subject to enhanced stress test regulations.
The Economic Growth, Regulatory Relief, and Consumer Protection Act set the asset threshold for enhanced prudential standards and stress testing at $100 billion of total consolidated assets. Neither the Company nor the Bank are subject to enhanced stress test regulations.
In addition, trust preferred securities have been phased out of tier 1 capital for banking organizations that had $15.0 billion or more in total consolidated assets as of December 31, 2009 unless the banking organization grows above $15.0 billion in assets as a result of an acquisition. The Company’s trust preferred securities currently are grandfathered under this provision.
In addition, trust preferred securities have been phased out of tier 1 capital for banking organizations that had $15.0 billion or more in total consolidated assets as of December 31, 2009 unless the banking organization grows above $15.0 billion in assets as a result of an acquisition.
Axos Clearing competes directly with numerous other financial advisory and investment banking firms, broker-dealers and banks, including large national and major regional firms and smaller niche companies, some of whom are not broker-dealers and, therefore, are not subject to the broker-dealer regulatory framework.
Axos Clearing competes directly with numerous other financial advisory and investment banking firms, broker-dealers and banks, including large national and major regional firms and smaller niche companies. Additionally, certain competitors are not broker-dealers and, therefore, are not subject to the broker-dealer regulatory framework.
SECURITIES BUSINESS SEGMENT The Securities Business Segment provides a wide range of investment and wealth management services to individual and institutional clients, primarily through Axos Clearing and its business division, AAS. At June 30, 2024, we provided services to 304 financial organizations, including correspondent broker-dealers and registered investment advisors.
SECURITIES BUSINESS SEGMENT The Securities Business Segment provides a wide range of investment and wealth management services to individual and institutional clients, primarily through Axos Clearing and its business division, AAS. At June 30, 2025, we provided services to 327 financial organizations, including correspondent broker-dealers and RIAs.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS As part of our strategy to protect and enhance our intellectual property, we rely on a variety of legal protections, including copyrights, trademarks, trade secrets, patents, internet domain names and certain contractual restrictions on solicitation and competition, and disclosure and distribution of confidential and proprietary information.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS As part of our strategy to protect and enhance our intellectual property, we rely on a variety of legal protections, including copyrights, trademarks, trade secrets, patents, internet domain name registration, and certain contractual restrictions on solicitation and competition.
The Bank, a federal savings association, has elected to operate as a covered savings association, which became effective in August 2024, and is subject to regulation, examination and supervision by the OCC as its primary regulator, and the FDIC as its deposit insurer.
The Bank, a federal savings association, has elected to operate as a covered savings association and is subject to regulation, examination, and supervision by the OCC as its primary regulator and the FDIC as its deposit insurer.
Our investment policy, as established by our Board of Directors, is designed to maintain liquidity and generate a favorable return on investment without incurring undue interest rate risk, credit risk or asset concentration risk.
Our investment policy is designed to maintain liquidity and generate a favorable return on investment without incurring undue interest rate risk, credit risk or asset concentration risk.
We attempt to mitigate these risks through the structuring of these lending products, adhering to underwriting policies in evaluating the management of the business and the credit-worthiness of borrowers and guarantors. Auto & Consumer Our Auto loans are secured by new and used automobiles (“autos”).
We attempt to mitigate these risks through the structuring of these lending products, adhering to underwriting policies in evaluating the management of the business and the creditworthiness of borrowers and guarantors. Auto & Consumer Our Auto loans are secured by new and used automobiles (“auto”) and are sourced primarily through indirect channels.
The aggregate amount of covered transactions with all affiliates is limited to 20% of a savings institution’s capital and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low-quality assets from affiliates is generally prohibited.
Certain transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low-quality assets from affiliates is generally prohibited.
ITEM 1. BUSINESS Overview Our Company is a technology-driven, diversified financial services company with approximately $22.9 billion in assets and approximately $35.7 billion of assets under custody and/or administration at Axos Clearing LLC (“Axos Clearing”). Our client-centric, technology platforms provide secure and scalable banking, clearing and custody, and investment advisory solutions to retail and business customers.
ITEM 1. BUSINESS Overview Our Company is a technology-driven, diversified financial services company with approximately $24.8 billion in assets and approximately $39.4 billion of assets under custody and/or administration at Axos Clearing LLC (“Axos Clearing”). Our client-centric, technology-enabled services model provides secure and scalable banking, clearing and custody, and investment advisory solutions to retail and business customers.
Such policy requires holding companies to act as a source of financial strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of an institution’s financial distress. The regulatory agencies have yet to issue joint regulations implementing this policy. Change in Control .
Such policy requires holding companies to act as a source of financial strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of an institution’s financial distress. Change in Control .
We source Commercial & Industrial – Non-RE loans through direct-to-borrower origination and through third-party sales referrals. Our Commercial & Industrial – Non-RE loans generally have a variable rate based on SOFR or other interest rate indices, as well as prepayment protection clauses, interest rate floors and rate change caps. Our equipment leases typically have fixed rates.
Our commercial & industrial – non-RE loans generally have a variable rate based on SOFR or other interest rate indices, as well as prepayment protection clauses, interest rate floors and rate change caps. Our equipment leases typically have fixed rates.
Tech nological innovation and capabilities, including changes in product delivery systems and web-based tools, continue to contribute to greater competition in domestic and international financial services markets, and larger competitors may be able to allocate more resources to these technology initiatives.
Tech nological innovation and capabilities, including changes in product delivery systems and web-based tools, continue to contribute to greater competition in domestic and international financial services markets, and larger competitors may be able to allocate more resources to these technological initiatives. SUPERVISION AND REGULATION GENERAL We are subject to comprehensive regulation under state and federal laws.
Our commercial real estate loans generally have a variable rate, based on SOFR, the American Interbank Offered Rate (“Ameribor”) or other interest rate indices, as well as prepayment protection clauses, interest rate floors and rate change caps.
Our commercial real estate loans generally have a variable rate, which is generally based on SOFR, as well as prepayment protection clauses, interest rate floors and rate change caps.
Commercial & Industrial - Non-Real Estate (“Non-RE”) Our Commercial & Industrial – Non-RE loans are typically secured by commercial assets, including, but not limited to, receivables, inventory, equipment and uniform commercial code (“UCC”) all asset filings. Product types include lender finance, asset-based loans, leveraged cash flow loans, insurance premium finance, fund finance, equipment leases, and general commercial and industrial loans.
Commercial & Industrial - Non-Real Estate (“non-RE”) Our commercial & industrial – non-RE loans are typically secured by commercial assets, including, but not limited to, receivables, inventory, equipment and uniform commercial code (“UCC”) all asset filings.
The following discussion summarizes some of the principal areas of regulation applicable to the Bank and its operations. Insurance of Deposit Accounts . The FDIC administers the DIF which insures depositors in certain types of accounts up to a prescribed amount for the loss of any such depositor’s respective deposits due to the failure of an FDIC member depository institution.
The FDIC administers the Deposit Insurance Fund (“DIF”) which insures depositors in certain types of accounts up to a prescribed amount for the loss of any such depositor’s respective deposits due to the failure of an FDIC member depository institution.
This guidance allows an entity to add back to capital 100% of the capital impact from the day one CECL transition adjustment and 25% of subsequent increases to the allowance for credit losses through June 30, 2022. This cumulative amount is being phased out of regulatory capital over the three years beginning July 1, 2022.
This guidance allowed an entity to add back to capital 100% of the capital impact from the day one CECL transition adjustment and 25% of subsequent increases to the allowance for credit losses through June 30, 2022.
We believe our deposit franchise will continue to provide lower all-in funding costs (interest expense plus operating costs) with greater scalability than branch-intensive banking models because the traditional branch model operates with inherently higher fixed operating costs.
We believe our deposit franchise will continue to provide strategic funding advantages with greater scalability than branch-intensive banking models because the traditional branch model operates with limited marketing reach and slower deposit fundraising capabilities, in addition to inherently higher fixed operating costs.
To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future, reward and support employees through competitive pay, benefit and perquisite programs, and evolve and invest in technology, training, tools and resources to enable employees to effectively and efficiently perform their responsibilities and achieve their potential.
To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future, reward and support employees through competitive pay, and provide benefit and perquisite programs.
Bank Secrecy Act and Anti-Money Laundering. The Bank, its affiliated broker-dealers and in certain cases Axos Financial, Inc., are subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the USA PATRIOT Act.
For additional information on our cybersecurity risk management, strategy and governance, see Part I, Item 1C “Cybersecurity.” Bank Secrecy Act and Anti-Money Laundering. The Bank, its affiliated broker-dealers and in certain cases Axos Financial, Inc., are subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the USA PATRIOT Act.
The authority of the Bank to engage in transactions with “affiliates” (i.e., any company that controls or is under common control with it, including the Company and any non-depository institution subsidiaries) is limited by federal law. The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of the savings institution.
For additional information on the Company’s liquidity, see “Liquidity and Capital Resources” in Part II, Item 7. Transactions with Related Parties . The authority of the Bank to engage in transactions with “affiliates” (i.e., any company that controls or is under common control with it, including the Company and any non-depository institution subsidiaries) is limited by federal law.
The Regulatory Capital Rules implement the Basel Committee’s December 2010 capital framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
The Regulatory Capital Rules are intended to measure capital adequacy with regard to a banking organization’s balance sheet, including off-balance sheet exposures such as unused portions of loan commitments, letters of credit, and recourse arrangements. 5 The Regulatory Capital Rules implement the Basel Committee’s December 2010 capital framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
Any such legislation, regulatory changes or amendments could adversely affect us and no assurance can be given as to whether, or in what form, any such changes may occur.
In addition, new and amended legislation, rules and regulations governing the Company are introduced from time to time by the U.S. government and its various agencies. Any such legislation, regulatory changes or amendments could adversely affect us and no assurance can be given as to whether, or in what form, any such changes may occur.
REGULATION OF AXOS BANK General . As a covered savings association, the Bank maintains its charter as a federal savings bank, but is treated as a national bank, except for certain enumerated purposes.
As a covered savings association, the Bank maintains its charter as a federal savings bank, but is treated as a national bank, except for certain enumerated purposes. As such, Axos has the power to engage in the same activities as a national bank, subject to the same authorization, terms, and conditions as a national bank.
In addition, the Company and the Bank elected the current expected credit losses (“CECL”) five-year transition guidance for calculating regulatory capital ratios on July 1, 2020 and the June 30, 2024 ratios include this election.
The Company’s trust preferred securities currently are grandfathered under this provision and therefore continue to be treated as part of tier 1 capital. In addition, the Company and the Bank elected the current expected credit losses (“CECL”) five-year transition guidance for calculating regulatory capital ratios on July 1, 2020, and such election is reflected in the June 30, 2025 ratios.
The Bank must file reports with the OCC and the FDIC and Axos Financial, Inc. with the Federal Reserve, concerning their activities and financial condition. In addition, the Bank is subject to the regulation, examination and supervision by the Consumer Financial Protection Bureau (“CFPB”) with respect to a broad array of federal consumer laws.
In addition, the Bank is subject to the regulation, examination, and supervision by the Consumer Financial Protection Bureau (“CFPB”) with respect to a broad array of federal consumer laws. Our subsidiaries, Axos Clearing LLC and Axos Invest LLC, are broker-dealers and are registered with and subject to regulation by the SEC and FINRA.
Our common stock is listed on the New York Stock Exchange under the ticker symbol “AX” and is a component of the Russell 2000® Index, the KBW Nasdaq Financial Technology Index, the S&P SmallCap 600® Index, the KBW Nasdaq Financial Technology Index, and the Travillian Tech-Forward Bank Index.
Our common stock is listed on the New York Stock Exchange under the ticker symbol “AX” and is a component of the Russell 2000® Index and the S&P SmallCap 600® Index, among other indices. Segment Information We conduct business primarily through two operating segments: the Banking Business Segment and the Securities Business Segment.
We believe this is important to recruiting and retaining talent to allow our organization to achieve its goals and objectives. 4 COMPETITION The market for banking and financial services is intensely competitive, and we expect competition to continue to intensify in the future. The Banking Business Segment attracts deposits through its banking sales force and online acquisition channels.
COMPETITION The market for banking and financial services is intensely competitive, and we expect this competition to continue. The Banking Business Segment primarily attracts deposits through its banking sales force and online acquisition channels. Competition for those deposits comes from a wide variety of depository and non-depository financial institutions.
As such, Axos has the power to engage in the same activities as a national bank, subject to the same authorization, terms, and conditions as a national bank. Furthermore, covered savings associations generally are afforded the same rights and privileges as national banks under the National Bank Act and other applicable federal laws and regulations.
Furthermore, covered savings associations generally are afforded the same rights and privileges as national banks under the National Bank Act and other applicable federal laws and regulations. As a covered savings association, the Bank is not required to comply with the lending limits established by the Home Owners’ Loan Act (“HOLA”) that are applicable to federal savings associations.
As a covered savings association, the Bank is no longer required to satisfy the qualified thrift lender, or “QTL” test.
As a covered savings association, the Bank is no longer required to satisfy the qualified thrift lender, or “QTL” test. Liquidity Standard . Savings associations are required to maintain sufficient liquidity to ensure safe and sound operations. As of June 30, 2025, Axos Bank was in compliance with the applicable liquidity standard.
Auto loans carry a fixed interest rate for periods ranging from three to eight years. Our Consumer loans are fixed rate, unsecured loans to well-qualified, individual borrowers sourced through existing bank customers, lead aggregators and other marketing efforts.
Ongoing collections of insured losses will continue as this population of loans remains active in the portfolio. Our Consumer loans are fixed rate, unsecured loans to well-qualified, individual borrowers sourced through existing bank customers, lead aggregators and other marketing efforts.
We separate ourselves from the competition through our excellence in customer service, including a highly attentive and dedicated workforce, while providing an expanding range of clearing and advisory products and services. SUPERVISION AND REGULATION GENERAL We are subject to comprehensive regulation under state and federal laws.
We separate ourselves from the competition through our excellence in customer service, including a highly attentive and dedicated workforce, while providing an expanding range of clearing and advisory products and services. 4 Many of our current and potential competitors have greater brand recognition, longer operating histories and larger customer bases, and may also have significantly greater financial, marketing and other resources, which may result in further price and customer service competition.
As a covered savings association, the Bank is not required to comply with the lending limits established by the HOLA that are applicable to federal savings associations. Axos Bank is subject to extensive regulation and examination by the OCC, FDIC and the CFPB with respect to federal consumer financial laws.
Axos Bank is subject to extensive regulation and examination by the OCC, FDIC and the CFPB with respect to federal consumer financial laws. The following discussion summarizes some of the principal areas of regulation applicable to the Bank and its operations. Insurance of Deposit Accounts .
As a covered savings association, the Bank is required to become a member of the Federal Reserve System and subscribe to the capital stock of the Federal Reserve Bank of San Francisco (the “FRBSF”). Our subsidiaries, Axos Clearing LLC and Axos Invest LLC, are broker-dealers and are registered with and subject to regulation by the SEC and FINRA.
In connection with its election to operate as a covered savings association, the Bank was required to become a member of the Federal Reserve System and subscribe to the capital stock of the Federal Reserve Bank of San Francisco (the “FRBSF”).The Bank must file reports with the OCC, and the FDIC and Axos Financial, Inc. with the Federal Reserve, concerning their activities and financial condition.
Removed
Loans to subprime borrowers are insured via a default risk mitigation product in which we recoup a large percentage of the deficiency balance on charged off loans. We source auto loans through direct and indirect channels and retain and service all of the auto loans that we originate.
Added
Product types include lender finance, asset-based loans, leveraged cash flow loans, insurance premium finance, capital call facilities, equipment leases, and general working capital commercial and industrial loans. We source commercial & industrial – non-RE loans through direct-to-borrower origination and through third-party sales referrals.
Removed
In real estate lending, we compete against traditional real estate lenders, including large and small savings banks, commercial banks, mortgage bankers and mortgage brokers. Many of our current and potential competitors have greater brand recognition, longer operating histories, larger customer bases and significantly greater financial, marketing and other resources and are capable of providing strong price and customer service competition.
Added
Originations are prime credit quality with a fixed interest rate and terms ranging from three to eight years. We retain and service all of the auto originations. A subset of loans serviced in the portfolio continue to include a legacy product no longer offered on new originations that is composed of default risk-insured subprime borrowers.
Removed
In addition, new and amended legislation, rules and regulations governing the Company are introduced from time to time by the U.S. government and its various agencies, including in response to recent highly-publicized bank failures.
Added
The Company also invests in technology, training, tools and resources to enable employees to effectively and efficiently perform their responsibilities and achieve their potential. We believe this is important to recruiting and retaining talent to allow our organization to achieve its goals and objectives.
Removed
The Regulatory Capital Rules are intended to measure capital adequacy with regard to a banking organization’s balance sheet, including off-balance sheet exposures such as unused portions of loan commitments, letters of credit, and recourse arrangements.
Added
This cumulative amount was phased out of regulatory capital over the three years beginning July 1, 2022, and will no longer be reflected as a regulatory capital adjustment from July 1, 2025 onward.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSimilarly, the attorney general of each state could bring legal action to ensure compliance with state securities laws, and regulatory agencies in foreign countries have similar authority. Our ability to comply with multiple laws and regulations pertaining to the securities industry depends in large part on our ability to establish and maintain an effective compliance function.
Biggest changeClearing securities firms are subject to substantially more regulatory control and examination than introducing brokers that rely on others to perform clearing functions. Similarly, the attorney general of each state could bring legal action to ensure compliance with state securities laws, and regulatory agencies in foreign countries have similar authority.
In addition, our credit risk may be exacerbated when the collateral held by us cannot be liquidated, liquidated timely or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due to us. There is no assurance that any such losses would not materially and adversely affect our results of operations.
In addition, our credit risk may be exacerbated when the collateral held by us cannot be liquidated, liquidated timely, or liquidated at prices sufficient to recover the full amount of the financial instrument exposure due to us. There is no assurance that any such losses would not materially and adversely affect our results of operations.
Although we have developed policies, procedures and processes designed to assist in compliance with these laws and regulations, no assurance can be given that these policies and procedures will be effective in detecting violations of these laws and regulations.
Although we have developed policies, procedures and processes designed to assist in compliance with these laws and regulations, no assurance can be given that these policies, procedures and processes will be effective in detecting violations of these laws and regulations.
If we are required to liquidate the 18 collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected.
If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and shareholders’ equity 18 could be adversely affected.
These methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments. Changes in those methods, estimates and judgments could significantly affect our results of operations.
These methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions; factors may arise over time that lead us to change our methods, estimates and judgments. Changes in those methods, estimates and judgments could significantly affect our results of operations.
These provisions include: • supermajority voting provisions providing that certain sections of our Certificate of Incorporation and our By-laws may not be amended or repealed by our stockholders without the affirmative vote of the holders of at 27 least 75% of the voting power, and requiring the affirmative vote of the holders of at least 75% of the voting power to remove a director or directors and only for cause; • our classified Board of Directors, which may tend to discourage a third-party from making a tender offer or otherwise attempting to obtain control of us since the classification of our Board of Directors generally increases the difficulty of replacing a majority of directors; • advance notice provisions requiring stockholders seeking to nominate candidates to be elected as directors at an annual meeting or to bring business before an annual meeting to comply with the written procedure specified in our By-laws; • the inability of stockholders to act by written consent or to call special meetings; • the ability of our Board of Directors to make, alter or repeal our by-laws; • the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without stockholder approval; • the additional shares of authorized common stock and preferred stock available for issuance under our Certificate of Incorporation, which could be issued at such times, under such circumstances and with such terms and conditions as to impede a change in control.
These provisions include: 27 • supermajority voting provisions providing that certain sections of our Certificate of Incorporation and our By-laws may not be amended or repealed by our stockholders without the affirmative vote of the holders of at least 75% of the voting power, and requiring the affirmative vote of the holders of at least 75% of the voting power to remove a director or directors and only for cause; • our classified Board of Directors, which may tend to discourage a third-party from making a tender offer or otherwise attempting to obtain control of us since the classification of our Board of Directors generally increases the difficulty of replacing a majority of directors; • advance notice provisions requiring stockholders seeking to nominate candidates to be elected as directors at an annual meeting or to bring business before an annual meeting to comply with the written procedure specified in our By-laws; • the inability of stockholders to act by written consent or to call special meetings; • the ability of our Board of Directors to make, alter or repeal our by-laws; • the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without stockholder approval; and • the additional shares of authorized common stock and preferred stock available for issuance under our Certificate of Incorporation, which could be issued at such times, under such circumstances and with such terms and conditions as to impede a change in control.
In addition, if we identify material weaknesses or significant deficiencies in our internal control over financial reporting or are required to restate our financial statements, we could be required to implement expensive and time-consuming remedial measures. We could lose investor 28 confidence in the accuracy and completeness of our financial reports and potentially subject us to litigation.
In addition, if we identify material 28 weaknesses or significant deficiencies in our internal control over financial reporting or are required to restate our financial statements, we could be required to implement expensive and time-consuming remedial measures. We could lose investor confidence in the accuracy and completeness of our financial reports and potentially subject us to litigation.
A worsening of business and economic conditions generally or specifically in the principal markets in which we conduct business could have adverse effects, including the following: • a decrease in the demand for, or the availability of, loans and other products and services we offer; • a decrease in deposit balances, including low-cost and non-interest-bearing deposits, and changes in our interest rate mix toward higher-cost deposits; • an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us, which could lead to higher levels of nonperforming assets, net charge-offs, and provisions for credit losses; • a decrease in the value of loans and other assets secured by collateral such as consumer or commercial real estate; • a decrease in net interest income from our lending and deposit gathering activities; • an impairment of certain intangible assets such as goodwill; • an increase in competition resulting from increasing consolidation within the financial services industry; and 13 • an increase in borrowing costs in excess of changes in the rate at which we reinvest funds.
A worsening of business and economic conditions generally or specifically in the principal markets in which we conduct business could have adverse effects, including the following: • a decrease in the demand for, or the availability of, loans and other products and services we offer; • a decrease in deposit balances, including low-cost and non-interest-bearing deposits, and changes in our interest rate mix toward higher-cost deposits; • an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us, which could lead to higher levels of nonperforming assets, net charge-offs, and provisions for credit losses; • a decrease in the value of loans and other assets secured by collateral such as consumer or commercial real estate; • a decrease in net interest income from our lending and deposit gathering activities; • an impairment of certain intangible assets such as goodwill; • an increase in competition resulting from increasing consolidation within the financial services industry; and • an increase in borrowing costs in excess of changes in the rate at which we reinvest funds.
Our failure to comply with current, or adapt to new or changing, laws, regulations or policies could result in enforcement actions and sanctions against us by regulatory agencies, civil money penalties and/or reputation damage, along with corrective action plans required by regulatory agencies, any of which could have a material adverse effect on our business, 15 financial condition and results of operations, and the value of our common stock.
Our failure to comply with current, or adapt to new or changing, laws, regulations or policies could result in enforcement actions and sanctions against us by regulatory agencies, civil money penalties and/or reputation damage, along with corrective action plans required by regulatory agencies, any of which could have a material adverse effect on our business, financial condition and results of operations, and the value of our common stock.
If our policies, procedures and systems are deemed deficient, we may be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approval to proceed with acquisitions and other strategic transactions, which could negatively impact our business, financial condition, results of operations and prospects.
If our policies, procedures, processes and systems are deemed deficient, we may be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approval to proceed with acquisitions and other strategic transactions, which could negatively impact our business, financial condition, results of operations and prospects.
Any such poor performance could adversely affect our advisory and custody business and the fees that we earn on client assets. 20 Our broker-dealer and advisory businesses are also subject to regulatory requirements and risks discussed above under “Regulation of the Securities Business Segment” in “Supervision and Regulation” and “Our broker-dealer and investment advisory businesses subject us to regulatory risks” herein.
Any such poor performance could adversely affect our advisory and custody business and the fees that we earn on client assets. Our broker-dealer and advisory businesses are also subject to regulatory requirements and risks discussed above under “Regulation of the Securities Business Segment” in “Supervision and Regulation” and “Our broker-dealer and investment advisory businesses subject us to regulatory risks” herein.
The value or market price of our common stock could decline due to any of these identified or other risks, and you could lose all or part of your investment. This report is qualified in its entirety by these risk factors. 12 Risks Relating to Macroeconomic Conditions Changes in interest rates could adversely affect our performance.
The value or market price of our common stock could decline due to any of these identified or other risks, and you could lose all or part of your investment. This report is qualified in its entirety by these risk factors. Risks Relating to Macroeconomic Conditions Changes in interest rates could adversely affect our performance.
If we become subject to significant environmental liabilities, our business, prospects, financial condition and results of operations could be adversely affected. Technology Risks We rely on technology and information systems that may be disrupted, which would pose operational risks. We rely on technology and information systems for, among other things, communications, processing customer transactions, recordkeeping and financial controls.
If we become subject to significant environmental liabilities, our business, prospects, financial condition and results of operations could be adversely affected. 24 Technology Risks We rely on technology and information systems that may be disrupted, which would pose operational risks. We rely on technology and information systems for, among other things, communications, processing customer transactions, recordkeeping and financial controls.
A further downgrade of the credit ratings of the Company or the Bank could adversely affect our access to liquidity and capital and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us or purchase our securities, thereby, potentially reducing our ability to generate earnings.
A downgrade of the credit ratings of the Company or the Bank could adversely affect our access to liquidity and capital and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us or purchase our securities, thereby, potentially reducing our ability to generate earnings.
Additionally, poor investment returns and declines in client assets, due to either general market conditions or under-performance (relative to our competitors or to benchmarks) of our investment products, may affect our ability to retain existing assets, prevent clients from transferring their assets out of products or their accounts, or inhibit our ability to attract new clients or additional assets from existing clients.
Additionally, poor investment returns and declines in client assets, due to either general market conditions or under-performance (relative to our competitors or to benchmarks) of our investment products, may affect our 20 ability to retain existing assets, prevent clients from transferring their assets out of products or their accounts, or inhibit our ability to attract new clients or additional assets from existing clients.
These negative events may cause us to incur losses and may adversely affect our capital, financial condition and results of operations. The specific impact on us of unfavorable or uncertain economic or market conditions is difficult to predict, could be long or short term, and may be direct or indirect.
These negative events may cause us to incur losses and may adversely affect our capital, financial condition and results of operations. 12 The specific impact on us of unfavorable or uncertain economic or market conditions is difficult to predict, could be long or short term, and may be direct or indirect.
The risk that these types of events could seriously harm our business is likely to increase as we add more customers 25 and expand the number of smartphone and internet-based products and services we offer. We have risks of systems failure and disruptions to operations.
The risk that these types of events could seriously harm our business is likely to increase as we add more customers and expand the number of smartphone and internet-based products and services we offer. We have risks of systems failure and disruptions to operations.
In determining the amount of the allowance for loan and lease losses, we make various assumptions and judgments about the collectability of our loan and lease portfolio, including the creditworthiness of our borrowers, the value of the real estate serving as collateral for the repayment of our loans and our loss history.
In determining the amount of the allowance for credit losses, we make various assumptions and judgments about the collectability of our loan and lease portfolio, including the creditworthiness of our borrowers, the value of the real estate serving as collateral for the repayment of our loans and our loss history.
Our results of operations depend to a great extent on our net interest income, which is the difference between the interest rates earned on interest-earning assets such as loans and investment securities, and the interest rates paid on interest-bearing liabilities such as deposits and borrowings.
Our results of operations depend to a great extent on our net interest income, which is the difference between the interest earned on interest-earning assets such as loans and investment securities, and the interest paid on interest-bearing liabilities such as deposits and borrowings.
For further information about our C&I lending business, please refer to “Business - Loan Portfolio - Commercial & Industrial - Non-Real Estate.” 19 While we believe we have established appropriate underwriting and ongoing monitoring policies and procedures for our lending activities, there can be no assurance that such underwriting and ongoing monitoring policies and procedures are, or will continue to be, appropriate or that losses on loans will not require increased allowances for loan and lease losses.
For further information about our commercial and industrial lending business, please refer to “Business - Loan Portfolio - Commercial & Industrial - Non-Real Estate.” While we believe we have established appropriate underwriting and ongoing monitoring policies and procedures for our lending activities, there can be no assurance that such underwriting and ongoing monitoring policies and procedures are, or 19 will continue to be, appropriate or that losses on loans will not require increased allowances for loan and lease losses.
Our ability to attract and maintain depositors during a time of actual or perceived distress or instability in the banking industry may be limited. Additionally, we may accept brokered deposits, which may be more price sensitive than other types of deposits, and may become less available if alternative investments offer higher returns. We rely primarily upon deposits and FHLB advances.
Our ability to attract and maintain depositors during a time of actual or perceived distress or instability in the banking industry may be limited. Additionally, we may acquire brokered deposits, which may be more price sensitive than other types of deposits, and may become less available if alternative investments offer higher returns. We rely primarily upon deposits and FHLB advances.
While the outcome of any legal proceeding is inherently uncertain, we believe any liabilities arising from pending legal matters have been adequately accrued for based on the probability of a charge. However, if actual results differ from our expectations, it could have a material adverse effect on the Company's financial condition, results of operations, or cash flows.
While the outcome of any legal proceeding is inherently uncertain, we believe any liabilities arising from pending legal matters have been adequately accounted for based on the probability of a charge. However, if actual results differ from our expectations, it could have a material adverse effect on the Company's financial condition, results of operations, or cash flows.
A natural disaster or recurring power outages may also impair the value of our largest class of assets, our loan and lease portfolio, which is comprised substantially of real estate loans. Losses from disasters for which borrowers are uninsured or under-insured may reduce borrowers’ ability to repay mortgage loans.
A natural disaster or recurring power outages may also impair the value of our largest class of assets, our loan and lease portfolio, which is substantially composed of real estate loans. Losses from disasters for which borrowers are uninsured or under-insured may reduce borrowers’ ability to repay mortgage loans.
Due to our interconnectivity with these third parties, we may be adversely affected if any of them is subject to a cyber-attack or other privacy or information security event, including those arising due to the use of mobile technology or a third-party cloud environment.
Due to our interconnectivity with these third parties, we may be adversely affected if any of them are subject to a cyber-attack or other privacy or information security event, including those arising due to the use of mobile technology or a third-party cloud environment.
Changes in the local and national economy, the federal and state legislative and regulatory environments for financial institutions, the stock market, interest rates and other external factors (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability, and may materially impact the fair value of publicly traded financial institutions and could result in an impairment charge at a future date.
Changes in the local and national economy, the federal and state legislative and regulatory environments for financial institutions, the stock market, interest rates and other external factors (such as natural disasters or significant world events), including factors described herein, may occur from time to time, often with great unpredictability, and may materially impact the fair value of publicly traded financial institutions and could result in an impairment charge at a future date.
The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results of operations. Such methods, estimates and judgments, include methodologies to value our securities, estimate our allowance for credit losses and the evaluation of goodwill and other intangibles for impairment.
The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results of operations. Such methods, estimates and judgments, include methodologies to value our securities, estimate our allowance for credit losses and evaluate goodwill and other intangibles for impairment.
Our common stock price may fluctuate significantly due to a variety of factors that include the following: • actual or expected variations in quarterly results of operations; • recommendations by securities analysts; • operating and stock price performance of comparable companies, as deemed by investors; • news reports relating to trends, concerns, and other issues in the financial services industry, including bank failures; • perceptions in the marketplace about our Company or competitors; • new technology used, or services offered, by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by, or involving, our Company or competitors; • failure to integrate acquisitions or realize expected benefits from acquisitions; • changes in government regulations; and • geopolitical conditions, such as acts or threats of terrorism or military action.
Our common stock price may fluctuate significantly due to a variety of factors that may include the following: • actual or expected variations in quarterly results of operations; • recommendations by securities analysts; • operating and stock price performance of companies deemed comparable by investors; • news reports relating to trends, concerns, and other issues in the financial services industry; • perceptions in the marketplace about our Company or competitors; • new technology used, or services offered, by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by, or involving, our Company or competitors; • failure to integrate acquisitions or realize expected benefits from acquisitions; • changes in government regulations; • geopolitical conditions, such as acts or threats of terrorism or military action; and • the other factors described herein.
If an actual or perceived breach of our security occurs, including those of our third-party vendors, such as hacking or identity theft, it could cause serious negative consequences, including significant disruption of our operations, misappropriation of confidential information, or damage to computers or systems, and may result in violations of applicable privacy and other laws, financial loss and loss of confidence in our security measures.
If an actual or perceived breach of our security or the security of any our third-party vendors occurs, such as hacking or identity theft, it could cause serious negative consequences, including significant disruption of our operations, misappropriation of confidential information, or damage to computers or systems, and may result in violations of applicable privacy and other laws, financial loss and loss of confidence in our security measures.
Since 2008, Fannie Mae and Freddie Mac have been in conservatorship, with its primary regulator, the Federal Housing Finance Agency, acting as conservator. The United States government may enact structural changes to one or more of the GSEs, including privatization, consolidation and/or a reduction in the ability of GSEs to purchase mortgage loans or guarantee mortgage obligations.
Since 2008, Fannie Mae and Freddie Mac have been in conservatorship, with its primary regulator, the Federal Housing Finance Agency, acting as conservator. The United States government may enact structural changes to one or more of the government-sponsored enterprises (“GSEs”), including privatization, consolidation and/or a reduction in the ability of GSEs to purchase mortgage loans or guarantee mortgage obligations.
Competition for employees is intense in many areas of the financial services industry, and there is a risk that we will not be able to successfully attract, assimilate or retain sufficiently qualified personnel.
Competition for employees is intense in many areas of the financial services industry, and there is a risk that we will not be able to successfully attract, onboard, or retain sufficiently qualified personnel.
Additionally, inflation has led to and may continue to lead to a decrease in consumer and clients purchasing power and negatively affect the need or demand for our products and services.
Additionally, inflation has led to, and may continue to lead to, a decrease in consumer and client purchasing power and negatively affect the need or demand for our products and services.
The loss of the services of any of these individuals or other key employees, whether through termination of employment, disability or otherwise, could have a material adverse effect on our business.
The loss of the services of any of these individuals or other key employees, whether through termination of employment, disability, or other means, could have a material adverse effect on our business.
To the extent that we fail to adequately address the risks associated with non-residential lending, particularly in C&I lending, including loans collateralized by customer securities, we may experience increases in levels of non-performing loans and leases and be forced to record additional provisions for credit losses, which would adversely affect our capital levels and reduce our profitability.
To the extent that we fail to adequately address the risks associated with non-residential lending, particularly in commercial and industrial lending, including loans collateralized by customer securities, we may experience increases in levels of non-performing loans and leases and be forced to record additional provisions for credit losses, which would adversely affect our capital levels and reduce our profitability.
The consequences of the IRA, the enactment of new federal or state tax legislation, or changes in the interpretation of existing law, including provisions impacting income tax rates, apportionment, consolidation or combination, income, expenses, and credits, may have a material adverse effect on our financial condition, results of operations, and liquidity.
The consequences of the IRA, the 2025 change in California state tax law, the enactment of new federal or state tax legislation, or other changes in the interpretation of existing law, including provisions impacting income tax rates, apportionment, consolidation or combination, income, expenses, and credits, may have a material adverse effect on our financial condition, results of operations, and liquidity.
As a result, our operating margins, financial condition and results of operations may be adversely affected. Our business and operating results could be adversely affected by the political environment and governmental fiscal and monetary policies .
As a result, our operating margins, financial condition and results of operations may be adversely affected. The economy, financial services industry and our business and operating results could be adversely affected by the political environment and governmental fiscal and monetary policies .
Our Bank is based in San Diego, California, and approximately 37.3% of our real estate loan portfolio was secured by real estate located in California at June 30, 2024. In addition, some of our computer systems that operate our internet websites and their back-up systems are located in San Diego, California. Historically, California has been vulnerable to natural disasters.
Our Bank is based in San Diego, California, and approximately 35.8% of our real estate loan portfolio was secured by real estate located in California at June 30, 2025. In addition, some of our computer systems that operate our internet websites and their back-up systems are located in San Diego, California. Historically, California has been vulnerable to natural disasters.
General market fluctuations; industry factors; political conditions; and general economic conditions and events, such as economic slowdowns, recessions, interest rate changes, or credit loss trends, could cause our common stock price to decrease regardless of operating results.
General market fluctuations; industry factors; political conditions; and general economic conditions and events, such as economic slowdowns, recessions, interest rate changes, changes in government tariff and trade policies; or credit loss trends, could cause our common stock price to decrease regardless of operating results.
Further, the use of AI by cybercriminals may increase the frequency and severity of cybersecurity attacks against us or our service providers and others on whom we rely.
Further, the use of artificial intelligence (“AI”) by cybercriminals may increase the frequency and severity of cybersecurity attacks against us or our service providers and others on whom we rely.
The development and use of AI present risks and challenges that may adversely impact our business. 26 We or our third-party vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services or products. The development and use of AI presents a number of risks and challenges to our business.
We or our third-party vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services or products. The development and use of AI presents a number of risks and challenges to our business.
AI models, particularly generative AI models, may produce output or take action that is incorrect, that result in the release of private, confidential or proprietary information, that reflect biases included in the data on which they are trained, infringe on the intellectual property rights of others or that is otherwise harmful.
AI models, particularly generative AI models, may produce output or take action that is incorrect, that results in the release of private, confidential, or proprietary information, that reflects biases included in the data on which they are trained, that infringes on the intellectual property rights of others, or that is otherwise harmful.
Commercial real estate markets have been facing downward pressure due in large part to increasing interest rates and declining property values. Accordingly, the federal banking agencies have applied increased regulatory scrutiny to institutions with commercial real estate loan portfolios that are fast growing or large relative to the institutions’ total capital.
Commercial real estate markets may face downward pressure due in part to increasing interest rates and declining property values. Accordingly, the federal banking agencies may apply increased regulatory scrutiny to institutions with commercial real estate loan portfolios that are fast growing or large relative to the institutions’ total capital.
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, and transacting with one another.
At June 30, 2024, approximately 37.3% and 28.8% of our real estate loan portfolio was secured by real estate located in California and New York, respectively. In recent years, there has been significant volatility in real estate values.
At June 30, 2025, approximately 35.8% and 28.2% of our real estate loan portfolio was secured by real estate located in California and New York, respectively. In recent years, there has been significant volatility in real estate values.
At June 30, 2024, our multifamily residential loans were $3.9 billion or 19.5% of our loan portfolio. The payment on such loans is typically dependent on the cash flows generated by the projects, which are affected by the supply and demand for multifamily residential units and commercial property within the relative market.
At June 30, 2025, our multifamily residential loans were $2.9 billion or 13.6% of our loan portfolio. The payment on such loans is typically dependent on the cash flows generated by the projects, which are affected by the supply and demand for multifamily residential units and commercial property within the relative market.
We could be exposed to fraud risks that affect our operations and reputation. 23 We face significant risks related to various types of fraud, including fraud or theft by colleagues or outsiders and unauthorized transactions, which could result in financial loss, litigation, and damage to our reputation.
We face significant risks related to various types of fraud, including fraud or theft by colleagues or outsiders and unauthorized transactions, which could result in financial loss, litigation, and damage to our reputation.
We are exposed to risk of environmental liability with respect to properties to which we take title. 24 In the course of our business, we may foreclose and take title to real estate, including commercial real estate, and could be subject to environmental liabilities with respect to those properties.
In the course of our business, we may foreclose and take title to real estate, including commercial real estate, and could be subject to environmental liabilities with respect to those properties.
Risks Relating to Commercial Loans, Mortgage Loans and Mortgage-Backed Securities Declining real estate values, particularly in California and New York, could reduce the value of our loan and lease portfolio and impair our profitability and financial condition. The majority of the loans in our portfolio are secured by real estate.
Declining real estate values, particularly in California and New York, could reduce the value of our loan and lease portfolio and impair our profitability and financial condition. The majority of the loans in our portfolio are secured by real estate.
Such damage could also adversely affect our ability to raise additional capital. Any such damage to our reputation could have a material adverse effect on our financial condition and results of operations.
Such damage could also adversely affect our ability to raise additional capital. Any such damage to our reputation could have a material adverse effect on our financial condition and results of operations. 23 We could be exposed to fraud risks that affect our operations and reputation.
Events, both actual or rumored, involving limited liquidity, defaults, non-performance or other adverse developments that affect other companies in the financial services industry or the financial services industry generally have in the past, and may in the future, lead to erosion of customer confidence in the financial services industry, deposit volatility, liquidity issues, stock price volatility and other adverse developments, including increased regulatory oversight, increased premiums for the FDIC insurance program, higher capital requirements or changes in the way regulatory capital is calculated, and impositions of additional restrictions through regulatory changes or supervisory or enforcement activities.
These third parties may not be able to meet their financial obligations to our clients or to us, which ultimately could have an adverse impact on us. 13 Events, both actual or rumored, involving limited liquidity, defaults, non-performance or other adverse developments that affect other companies in the financial services industry or the financial services industry generally have in the past, and may in the future, lead to erosion of customer confidence in the financial services industry, deposit volatility, liquidity issues, stock price volatility and other adverse developments, including increased regulatory oversight, increased premiums for the FDIC insurance program, higher capital requirements or changes in the way regulatory capital is calculated, and impositions of additional restrictions through regulatory changes or supervisory or enforcement activities.
During the last three fiscal years we have sold approximately $774.1 million of residential mortgage loans to Fannie Mae and Freddie Mac and into MBS guaranteed by Ginnie Mae. As of June 30, 2024, approximately 19.2% of our securities portfolio consisted of RMBS issued or guaranteed by these GSEs.
During the last three fiscal years we have sold approximately $297.7 million of residential mortgage loans to Fannie Mae and Freddie Mac and into MBS guaranteed by Ginnie Mae. As of June 30, 2025, approximately 70.8% of our securities portfolio consisted of RMBS issued or guaranteed by these entities.
The laws, rules, regulations and supervisory policies governing our business are intended primarily for the protection of our depositors, our customers, the financial system and the FDIC insurance fund, not our stockholders or other creditors and are subject to regular modification and change.
The laws, rules, regulations and supervisory policies governing our business are intended primarily for the protection of our depositors, our customers, the financial system and the FDIC insurance fund, not our stockholders or other creditors and 14 are subject to regular modification and change. New or amended laws, rules, regulations and policies, including those resulting from changes in U.S.
In addition, the Advisers Act imposes numerous obligations on our investment advisory business, including fiduciary duties, disclosure obligations, recordkeeping and reporting requirements, marketing restrictions and general anti-fraud prohibitions.
Federally registered investment advisers are regulated and subject to examination by the SEC. In addition, the Advisers Act imposes numerous obligations on our investment advisory business, including fiduciary duties, disclosure obligations, recordkeeping and reporting requirements, marketing restrictions and general anti-fraud prohibitions.
In addition, interest rate volatility can affect the value of our loans and leases, investments and other interest-rate sensitive assets and our ability to realize gains on the sale or resolution of these assets, which in turn may affect our liquidity. There can be no assurance that we will be able to successfully manage our interest rate risk.
In addition, interest rate volatility can affect the value of our loans and leases, investments and other interest-rate sensitive assets and our ability to realize gains on the sale or resolution of these assets, which in turn may affect our liquidity.
Our business, financial condition and operating results may be adversely affected as a result of new or revised legislation or regulations imposed by the U.S. Congress, the SEC, FINRA or other U.S. and state governmental and regulatory authorities.
The regulatory environment in which our broker-dealer business operates is subject to frequent change. Our business, financial condition and operating results may be adversely affected as a result of new or revised legislation or regulations imposed by the U.S. Congress, the SEC, FINRA or other U.S. federal and state governmental and regulatory authorities.
If we fail to attract and retain the necessary personnel, or if the costs of employee compensation or benefits increase substantially, our business, prospects, financial condition and results of operations could be adversely affected.
If we fail to attract and retain the necessary personnel, or if the costs of employee compensation or benefits increase substantially, our business, prospects, financial condition and results of operations could be adversely affected. We are exposed to risk of environmental liability with respect to properties to which we take title.
At June 30, 2024, $302 million, or 6%, of our commercial real estate specialty loan portfolio was secured by office buildings.
At June 30, 2025, $389.2 million, or 7%, of our commercial real estate specialty loan portfolio was secured by office buildings.
The risks associated with our business become more acute in periods of a slowing economy or slow growth. Furthermore, given our high concentration of loans secured by real estate in California and New York, the Company remains particularly susceptible to a downturn in those states’ economies.
Furthermore, given our high concentration of loans secured by real estate in California and New York, the Company remains particularly susceptible to a downturn in those states’ economies.
Our success depends in large part on the continuing efforts of key executives. If we are unable to retain these key personnel or attract, hire and retain others to oversee and manage our Company, our business could suffer.
If we are unable to retain these key personnel or attract, hire and retain others to oversee and manage our Company, our business could suffer.
Commercial and industrial and commercial real estate loans may expose our company to greater financial and credit risk than other loans. Our commercial and industrial loans as well as our commercial real estate – mortgage portfolio was approximately $5.2 billion and $6.1 billion at June 30, 2024, comprising approximately 26.5% and 30.7% of our total loan portfolio, respectively.
Commercial and industrial and commercial real estate loans may expose our company to greater financial and credit risk than other loans. Our commercial and industrial loan portfolio was approximately $6.8 billion at June 30, 2025, or 31.6% of our total loan portfolio.
Any new laws, rules and regulations could make compliance more difficult, expensive, costly to implement or may otherwise adversely affect our business, financial condition or growth prospects.
It is difficult to predict future changes in regulation or the competitive impact that any such changes would have on our business. Any new laws, rules and regulations could make compliance more difficult, expensive, costly to implement or may otherwise adversely affect our business, financial condition or growth prospects.
New or amended laws, rules, regulations and policies, including potential changes under consideration in response to bank failures, and the upcoming U.S. presidential election, could impact our operations, increase our capital requirements or substantially restrict our growth and adversely affect our ability to operate profitably by making compliance more difficult or expensive, restrict our ability to originate or sell loans, or impact the amount of interest or other charges or fees earned on loans or other products.
Presidential administration, could impact our operations, increase our capital requirements or substantially restrict our growth and adversely affect our ability to operate profitably by making compliance more difficult or expensive, restricting our ability to originate or sell loans, or impacting the amount of interest or other charges or fees earned on loans or other products.
Loan originations and repayment rates tend to increase with declining interest rates and decrease with rising interest rates. Increases in interest rates can negatively impact our business, including a possible reduction in customers’ or potential customers’ desire to borrow money or adversely affecting customers’ ability to repay on outstanding loans by increasing their debt obligations.
Increases in interest rates can negatively impact our business, including a possible reduction in customers’ or potential customers’ desire to borrow money or adversely affecting customers’ ability to repay on outstanding loans by increasing their debt obligations. On the deposit side, increasing interest rates generally lead to higher rates paid for our deposit accounts.
Various federal banking agencies have recently completed significant changes to their respective Community Reinvestment Act regulations. Federal, state or local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans.
Federal, state or local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans.
Negative publicity or information regarding our business and personnel, whether or not accurate or true, may be posted on social media or other Internet forums or published by news organizations.
Negative publicity or information regarding our business and personnel, whether or not accurate or true, may be posted on social media or other Internet forums or published by news organizations. The speed and pervasiveness with which information can be disseminated through these channels, in particular social media, may magnify risks relating to negative publicity.
Selected sources of liquidity may become unavailable to the Bank if it were to no longer be considered “well-capitalized.” A reduction in our credit ratings could adversely affect our access to capital and could increase our cost of funds . 21 The credit rating agencies regularly evaluate the Company and the Bank, and credit ratings are based on a number of factors, including our financial strength and ability to generate earnings, as well as factors not entirely within our control, such as conditions affecting the financial services industry, the economy, and changes in rating methodologies more generally.
The credit rating agencies regularly evaluate the Company and the Bank, and credit ratings are based on a number of factors, including our financial strength and ability to generate earnings, as well as factors not entirely within our control, such as conditions affecting the financial services industry, the economy, and changes in rating methodologies more generally.
The computer systems, internet connectivity and network infrastructure utilized by us and others could be vulnerable to unforeseen problems. This is true of both our internally developed systems and the systems of our third-party service providers. Our operations are dependent upon our ability to protect computer equipment against damage from fire, power loss, telecommunication failure or similar catastrophic events.
The computer systems, internet connectivity and network infrastructure utilized by us and others could be vulnerable to unforeseen problems. This is true of both our internally developed systems and the systems of our third-party service providers.
Commercial loans generally carry large balances and may involve a greater degree of financial and credit risk than other loans. Any significant failure to pay on time by our customers could impact our earnings.
Commercial loans generally carry large balances and may involve a greater degree of financial and credit risk than other loans.
While it is difficult to quantify any future increases in our regulatory compliance burden, the costs associated with regulatory compliance, including the need to hire additional compliance personnel, may continue to increase.
While it is difficult to quantify any future increases in our regulatory compliance burden, the costs associated with regulatory compliance, including the need to hire additional compliance personnel, may continue to increase. We are subject to numerous laws designed to protect consumers, and failure to comply with these laws could lead to a wide variety of sanctions .
FinTechs 22 continue to emerge and compete with traditional financial institutions across a wide variety of products and services. Consumers have demonstrated a growing willingness to obtain banking services from FinTechs.
Technology has also lowered barriers to entry and made it possible for non-bank, financial technology companies (“FinTechs”) to offer products and services traditionally provided by banks. FinTechs continue to emerge and compete with traditional financial institutions across a wide variety of products and services. Consumers have demonstrated a growing willingness to obtain banking services from FinTechs.
Future legislation, regulation, and government policy could affect the banking industry as a whole, including our business and results of operations, in ways that are difficult to predict. In addition, our results of operations could be adversely affected by changes in the way in which existing statutes and regulations are interpreted or applied by courts and government agencies.
Future legislation, regulation, and changes in trade and fiscal policy, including uncertainty surrounding the ongoing operations of the CFPB, could affect the banking industry as a whole, including our business and results of operations, in ways that are difficult to predict.
Declines in real estate markets or sustained economic downturns increases the risk of credit losses or charge-offs related to our loans or foreclosures on certain real estate properties. Underwriting and portfolio management activities cannot completely eliminate all risks related to these loans.
Sustained economic downturns increases the risk of credit losses or charge-offs related to our commercial and industrial loans. Underwriting and portfolio management activities cannot completely eliminate all risks related to these loans. Any significant failure to pay on time or other significant default by our clients would materially and adversely affect us.
Any damage or failure that causes an interruption in our operations could adversely affect our business, prospects, financial condition and results of operations.
Our operations are dependent upon our ability to protect critical infrastructure against damage from fire, power loss, telecommunication failure, or other catastrophic events. 25 Any damage or failure that causes an interruption in our operations could adversely affect our business, prospects, financial condition and results of operations.
We operate in an uncertain economic environment due to a variety of other reasons including, but not limited to, trade policies and tariffs, geopolitical tensions, including escalating military conflicts and tensions in Europe as a result of Russia’s invasion of Ukraine and the ongoing conflict in the Middle East, and volatile energy prices.
We operate in an uncertain economic environment due to a variety of other reasons including, but not limited to, trade policies and disputes, tariffs, geopolitical tensions and global military conflicts, and volatile energy prices. The risks associated with our business become more acute in periods of a slowing economy or slow growth.
New appointments to the Board of Governors of the Federal Reserve could affect monetary policy and interest rates, and changes in 14 fiscal policy could affect broader patterns of trade and economic growth.
Congress and the current administration may also cause broader economic changes due to various changes in the federal government’s approach to regulation and administration. New appointments to the Board of Governors of the Federal Reserve System (the “FRB”) could also affect monetary policy and interest rates.
As a result, a decrease in the Bank’s capital ratios, or a negative evaluation by the FDIC, may increase the Bank’s net funding cost and reduce its earnings. Furthermore, recent activity in the banking industry, including certain highly-publicized bank failures, is expected to cause premiums of the FDIC’s deposit insurance program to increase.
As a result, a decrease in the Bank’s capital ratios, or a negative evaluation by the FDIC, may increase the Bank’s net funding cost and reduce its earnings.
Failure to comply with applicable laws or regulations, or to satisfy our regulators' supervisory expectations, could subject us to supervisory or enforcement action, which could adversely affect our business, financial condition and results of operations.
Potential increased regulatory uncertainty following Loper Bright and delays or other impacts to the federal agency rulemaking process following Executive Order 14215 could adversely impact the financial services industry and the broader economy, as well as our business and operations. 15 Failure to comply with applicable laws or regulations, or to satisfy our regulators' supervisory expectations, could subject us to supervisory or enforcement action, which could adversely affect our business, financial condition and results of operations.
Allegations of violations of securities laws or FINRA rules, even if not ultimately asserted or proved, could substantially impact our results of operations and lead to reputational harm. The regulatory environment in which our broker-dealer business operates is subject to frequent change.
These actions may become more common or frequent, particularly if there is a prolonged decrease in equity prices resulting in investor losses. Allegations of violations of securities laws or FINRA rules, even if not ultimately asserted or proved, could substantially impact our results of operations and lead to reputational harm.
The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. Technology has also lowered barriers to entry and made it possible for non-bank, financial technology companies (“FinTechs”) to offer products and services traditionally provided by banks.
The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and 22 the related income generated from those deposits.
Any significant failure to pay on time or other significant default by our clients would materially and adversely affect us. The commercial real estate loans we make are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings and multi-tenanted light industrial properties.
Our commercial real estate portfolio was approximately $6.9 billion, or 32.2% of our total loan portfolio at June 30, 2025. The commercial real estate loans we make are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings and multi-tenanted light industrial properties.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could have material adverse reputational consequences for us.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could have material adverse reputational consequences for us. State regulators have been increasingly active in implementing privacy and cybersecurity standards and regulations. Many states have also recently implemented or modified their data breach notification and data privacy requirements.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Our Board of Directors includes cybersecurity risk management as part of its general oversight function and oversees the cybersecurity risk management program and any identified cybersecurity risks and incidents. To facilitate its oversight, the Board of Directors receive regular updates from management on cybersecurity.
Biggest changeGovernance Cybersecurity risk management is part of our Board of Directors’ general oversight function, which includes oversight of the cybersecurity risk management program and any identified cybersecurity risks and incidents. To facilitate its oversight, the Board of Directors receives regular updates from management on cybersecurity. Our Chief Risk Officer has primary responsibility for our enterprise risk management program.
Our Chief Risk Officer has primary responsibility for our enterprise risk management program, including oversight of our cybersecurity risk management program. Our Chief Information Security Officer has primary responsibility for our cybersecurity risk management program and supervises the Company’s cybersecurity personnel. Both individuals have extensive work experience in various roles involving risk and compliance, including cybersecurity and information security.
Our Chief Information Security Officer has primary responsibility for our cybersecurity risk management program and supervises the Company’s cybersecurity personnel. Both individuals have extensive work experience in various roles involving risk and compliance, including cybersecurity and information security.
We invest in our people, processes and systems and maintain partnerships with appropriate government and law enforcement agencies to help monitor cybersecurity threats as well as prevent and respond to cybersecurity incidents.
We invest in our people, processes and systems and collaborate with appropriate government and law enforcement agencies to help monitor cybersecurity threats as well as prevent and respond to cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal offices are located at 9205 West Russell Road, Suite 400, Las Vegas, NV 89148. Our Banking and Securities Business Segments both conduct business at this location. Among other additional locations, we have office space located in San Diego, California totaling approximately 186,000 square feet. 29
Biggest changeITEM 2. PROPERTIES Our principal offices are located at 9205 West Russell Road, Suite 400, Las Vegas, NV 89148. Our Banking Business Segment and Securities Business Segments both conduct business at this location. Among other additional locations, we have office space located in San Diego, California totaling approximately 163,528 square feet. 29

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan Category (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted-average exercise price of outstanding options and units granted (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders — $ — 1,755,662 Equity compensation plans not approved by security holders N/A N/A N/A Total — $ — 1,755,662 32 COMPANY STOCK PERFORMANCE The following graph compares the total return of our common stock over the last five fiscal years, starting June 30, 2019 through June 30, 2024, with that of (i) the companies included in the total return for the U.S.
Biggest changeInformation regarding securities authorized for issuance under equity compensation plans is disclosed in Part III, Item 12, and is incorporated herein by this reference. 32 COMPANY STOCK PERFORMANCE The following graph compares the total return of our common stock over the last five fiscal years, starting June 30, 2020 through June 30, 2025, with that of (i) the companies included in the total return for the U.S.
NYSE Index, and (ii) the banks included in the ABA NASDAQ Community Bank Total Return Index (ticker: XABQ). The graph assumes $100 was invested in AX common stock, in U.S. NYSE Composite Total Return Index (ticker: NYATR) and in ABA NASDAQ Community Bank Total Return Index (ticker: XABQ) on June 30, 2019. The indexes assume reinvestment of dividends.
NYSE Index, and (ii) the banks included in the ABA NASDAQ Community Bank Total Return Index (ticker: XABQ). The graph assumes $100 was invested in AX common stock, in U.S. NYSE Composite Total Return Index (ticker: NYATR) and in ABA NASDAQ Community Bank Total Return Index (ticker: XABQ) on June 30, 2020. The indexes assume reinvestment of dividends.
Both of the share repurchase programs will continue in effect until terminated by the Board of Directors of the Company. 2 The Amended and Restated 2014 Stock Incentive Plan permits net settlement of stock issuances related to equity awards for purposes of payment of a grantee’s minimum income tax obligation.
The share repurchase program will continue in effect until terminated by the Board of Directors of the Company. 2 The Amended and Restated 2014 Stock Incentive Plan permits net settlement of stock issuances related to equity awards for purposes of payment of a grantee’s minimum income tax obligation.
On April 27, 2023, the Company announced a program to repurchase up to $100 million of its common stock and on February 12, 2024, the Company announced a program to repurchase up to an additional $100 million of its common stock.
On April 27, 2023, the Company announced a program to repurchase up to $100 million of its common stock and on each of February 12, 2024 and May 12, 2025, the Company announced an additional $100 million increase to the common stock repurchase program.
During the fiscal year ended June 30, 2024, there were 336,110 restricted stock unit award shares which were retained by the Company and converted to cash at the average rate of $48.17 per share to fund the grantee’s income tax obligations. 31 The following table sets forth our market repurchases of Axos common stock and the Axos common shares retained in connection with net settlement of restricted stock unit awards during the fourth fiscal quarter ended June 30, 2024.
During the fiscal year ended June 30, 2025, there were 396,978 restricted stock unit award shares which were retained by the Company and converted to cash at the average rate of $69.63 per share to fund the grantee’s income tax obligations. 31 The following table sets forth our market repurchases of Axos common stock and the Axos common shares retained in connection with net settlement of restricted stock unit awards during the fourth fiscal quarter ended June 30, 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the New York Stock Exchange under the symbol “AX”. There were 56,894,891 shares of common stock outstanding as of August 9, 2024 held by approximately 45,000 holders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the New York Stock Exchange under the symbol “AX”. There were 56,486,144 shares of common stock outstanding as of August 8, 2025 held by approximately 59,000 holders of record.
Period Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs Stock Repurchases 1, 2 (dollars in thousands) April 1, 2024 to April 30, 2024 114,104 $ 49.89 114,104 $ 114,064 May 1, 2024 to May 31, 2024 — — — 114,064 June 1, 2024 to June 30, 2024 159,540 47.28 159,540 106,521 For the Three Months Ended June 30, 2024 273,644 $ 48.37 273,644 $ 106,521 Stock Retained in Net Settlement April 1, 2024 to April 30, 2024 1,432 May 1, 2024 to May 31, 2024 1,190 June 1, 2024 to June 30, 2024 96,707 For the Three Months Ended June 30, 2024 99,329 1 On April 27, 2023, the Company announced a program to repurchase up to $100 million of its common stock and on February 12, 2024, the Company announced a program to repurchase up to $100 million of its common stock.
Period Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs Stock Repurchases 1, 2 (dollars in thousands) April 1, 2025 to April 30, 2025 517,600 $ 59.08 517,600 $ 48,071 May 1, 2025 to May 31, 2025 — — — 148,071 June 1, 2025 to June 30, 2025 — — — 148,071 For the Three Months Ended June 30, 2025 517,600 $ — 517,600 $ 148,071 Stock Retained in Net Settlement April 1, 2025 to April 30, 2025 1,302 May 1, 2025 to May 31, 2025 3,666 June 1, 2025 to June 30, 2025 147,344 For the Three Months Ended June 30, 2025 152,312 1 On April 27, 2023, the Company announced a program to repurchase up to $100 million of its common stock and on each of February 12, 2024 and May 12, 2025, the Company announced an additional $100 million increase to the common stock repurchase program.
The Company has repurchased a total of $97.0 million or 2,541,254 common shares at an average price of $38.18 per share and there remains $106.5 million of availability under the programs. There have been no purchases under the 2024 authorization.
During fiscal year 2025 the Company repurchased a total of $58.5 million or 951,927 common shares at an average price of $61.40 per share and there remains $148.1 million of availability under the program as of June 30, 2025.
Removed
The February 12, 2024 share repurchase authorization is in addition to the existing share repurchase plan announced on April 27, 2023.
Added
Cumulative Return as of June 30, 2020 2021 2022 2023 2024 2025 Axos $ 100.00 $ 210.10 $ 162.36 $ 178.62 $ 258.83 $ 344.38 NYSE 100.00 142.25 127.33 143.08 166.32 192.58 XABQ 100.00 159.42 149.73 123.55 147.89 179.50 ITEM 6. [Reserved] 33
Removed
EQUITY COMPENSATION PLAN INFORMATION The following table provides information regarding the aggregate number of securities to be issued under all of our stock option and equity based compensation plans upon exercise of outstanding options, warrants and other rights and their weighted-average exercise prices as of June 30, 2024.
Removed
There were no securities issued under equity compensation plans not approved by security holders.
Removed
Cumulative Return as of June 30, 2019 2020 2021 2022 2023 2024 Axos $ 100.00 $ 81.03 $ 170.24 $ 131.56 $ 144.73 $ 209.72 NYSE 100.00 93.50 133.01 119.06 133.78 155.51 XABQ 100.00 76.08 121.28 113.91 93.99 108.07 ITEM 6. [Reserved] 33

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth the composition of our loan portfolio: At June 30, 2024 2023 2022 (Dollars in thousands) Amount Percent Amount Percent Amount Percent Single Family - Mortgage & Warehouse $ 4,178,832 21.1 % $ 4,173,833 25.1 % $ 3,988,462 28.0 % Multifamily and Commercial Mortgage 1 3,861,931 19.5 % 3,082,225 18.5 % 2,877,680 20.2 % Commercial Real Estate 1 6,088,622 30.7 % 6,199,818 37.2 % 4,781,044 33.5 % Commercial & Industrial - Non-RE 5,241,766 26.5 % 2,639,650 15.8 % 2,028,128 14.2 % Auto & Consumer 431,660 2.2 % 556,500 3.4 % 578,362 4.1 % Total loans held for investment $ 19,802,811 100 % $ 16,652,026 100 % $ 14,253,676 100 % Allowance for credit losses (260,542) (166,680) (148,617) Unamortized premiums/discounts, net of deferred loan fees (310,884) (28,618) (13,998) Net loans held for investment $ 19,231,385 $ 16,456,728 $ 14,091,061 1 Includes PCD loans of $284.0 million in Multifamily and Commercial Mortgage and $44.5 million in Commercial Real Estate as of June 30, 2024.
Biggest changeThe following table sets forth the composition of our loan portfolio: At June 30, 2025 2024 2023 (Dollars in thousands) Amount Percent Amount Percent Amount Percent Single Family - Mortgage & Warehouse $ 4,395,278 20.4 % $ 4,178,832 21.1 % $ 4,173,833 25.1 % Multifamily and Commercial Mortgage 2,940,739 13.6 % 3,861,931 19.5 % 3,082,225 18.5 % Commercial Real Estate 6,937,187 32.2 % 6,088,622 30.7 % 6,199,818 37.2 % Commercial & Industrial - Non-RE 6,795,497 31.6 % 5,241,766 26.5 % 2,639,650 15.8 % Auto & Consumer 482,996 2.2 % 431,660 2.2 % 556,500 3.4 % Total loans held for investment $ 21,551,697 100 % $ 19,802,811 100 % $ 16,652,026 100 % Allowance for credit losses (290,049) (260,542) (166,680) Unamortized premiums/discounts, net of deferred loan fees (212,038) (310,884) (28,618) Net loans held for investment $ 21,049,610 $ 19,231,385 $ 16,456,728 43 The following table sets forth the amount of loans maturing in our total loans held for investment based on the contractual terms to maturity: Term to Contractual Maturity as of June 30, 2025 (Dollars in thousands) Less Than Three Months Over Three Months Through One Year Over One Year Through Five Years Over 5 Years Through 15 Years Over 15 Years Total Single Family - Mortgage & Warehouse $ 113,043 $ 586,963 $ 74,690 $ 85,373 $ 3,535,209 $ 4,395,278 Multifamily and Commercial Mortgage 19,260 $ 191,796 $ 492,702 1,604,339 632,642 2,940,739 Commercial Real Estate 846,943 $ 1,875,622 $ 4,214,622 — — 6,937,187 Commercial & Industrial - Non-RE 231,722 $ 1,712,988 $ 4,498,511 336,089 16,187 6,795,497 Auto & Consumer 591 3,807 204,555 216,531 57,512 482,996 Total $ 1,211,559 $ 4,371,176 $ 9,485,080 $ 2,242,332 $ 4,241,550 $ 21,551,697 The following table sets forth the amount of our loans at June 30, 2025 that are due after one year and indicates whether they have fixed or floating/adjustable interest rates: (Dollars in thousands) Fixed Floating/ Adjustable 1 Total Single Family - Mortgage & Warehouse $ 188,121 $ 3,507,152 $ 3,695,273 Multifamily and Commercial Mortgage 114,292 2,615,390 2,729,682 Commercial Real Estate 144,472 4,070,150 4,214,622 Commercial & Industrial - Non-RE 630,245 4,220,542 4,850,787 Auto & Consumer 456,633 21,965 478,598 Total $ 1,533,763 $ 14,435,199 $ 15,968,962 1 Included in this category are hybrid mortgages (e.g., 5/1 adjustable rate mortgages) that carry a fixed rate for an introductory term before transitioning to an adjustable rate.
Our sources of liquidity include deposits, borrowings, payments and maturities of outstanding loans, sales of loans, maturities or sales of available-for-sale securities and other short-term investments. While scheduled loan payments and maturing available-for-sale securities and short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition.
Our primary sources of liquidity include deposits, borrowings, payments and maturities of outstanding loans, sales of loans, maturities or sales of available-for-sale securities and other short-term investments. While scheduled loan payments and maturing available-for-sale securities and short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition.
Under these capital requirements and the regulatory framework for prompt corrective action, our Company and Bank must meet specific capital guidelines that involve quantitative measures of our Company and Bank’s assets, liabilities and certain off- 52 balance-sheet items as calculated under regulatory accounting practices.
Under these capital requirements and the regulatory framework for prompt corrective action, our Company and Bank must meet specific capital guidelines that involve quantitative measures of our Company and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices.
Adjusted earnings per diluted common share (“adjusted EPS”) is calculated by dividing non-GAAP adjusted earnings by the average number of diluted common shares outstanding during the period. We believe the non-GAAP measures of adjusted earnings and adjusted EPS provide useful information about the Company’s operating performance.
Adjusted earnings per diluted common share (“adjusted EPS”) is calculated by dividing non-GAAP adjusted earnings by the average number of diluted common shares outstanding during the period. We believe the non-GAAP measures of adjusted earnings and 35 adjusted EPS provide useful information about the Company’s operating performance.
However, 34 actual results may differ significantly from these estimates and assumptions that could have a material effect on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods.
However, actual results may differ significantly from these estimates and assumptions that could have a material effect on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods.
The acquisition of the non-PCD loans and interest rate derivatives was accounted for as a purchase of financial assets and liabilities, and the Company recognized a $92.4 million gain on the transaction included in “Gain on acquisition” in the Consolidated Statement of Income. There were no other significant acquisitions undertaken during fiscal years 2024, 2023 or 2022.
The acquisition of the non-PCD loans and interest rate derivatives was accounted for as a purchase of financial assets and liabilities, and the Company recognized a $92.4 million gain on the transaction included in “Gain on acquisition” in the Consolidated Statement of Income. There were no other significant acquisitions undertaken during fiscal years 2025, 2024 or 2023.
At June 30, 2024, our Company and Bank met all the capital adequacy requirements to which they were subject to and were “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since June 30, 2024 that would materially adversely change the Company’s and Bank’s capital classifications.
At June 30, 2025, our Company and Bank met all the capital adequacy requirements to which they were subject to and were “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since June 30, 2025 that would materially adversely change the Company’s and Bank’s capital classifications.
The following table shows the LTVs of our loan portfolio on weighted-average and median bases at June 30, 2024. The LTVs were calculated by dividing (a) the current outstanding loan principal balance of both the first and second liens of the borrower by (b) the appraisal value at the time of origination of the property securing the loan.
The following table shows the LTVs of our loan portfolio on weighted-average and median bases at June 30, 2025. The LTVs were calculated by dividing (a) the current outstanding loan principal balance of both the first and second liens of the borrower by (b) the appraisal value at the time of origination of the property securing the loan.
Due to the diversified sources of our deposits, while maintaining approximately 90% of our total Bank deposits in insured or collateralized accounts as of June 30, 2024, we believe we have the ability to increase our level of deposits, and have available other potential sources of funding, to address our liquidity needs for the foreseeable future.
Due to the diversified sources of our deposits, while maintaining approximately 90% of our total Bank deposits in insured or collateralized accounts as of June 30, 2025, we believe we have the ability to increase our level of deposits, and have available other potential sources of funding, to address our liquidity needs for the foreseeable future.
For an aging analysis of the Company’s loans held for investment as of June 30, 2024 and 2023, see Note 5—“ Loans & Allowance for Credit Losses ” in the Consolidated Financial Statements. Non-performing assets include nonaccrual loans plus other real estate owned and repossessed vehicles.
For an aging analysis of the Company’s loans held for investment as of June 30, 2025 and 2024, see Note 5—“ Loans & Allowance for Credit Losses ” in the Consolidated Financial Statements. Non-performing assets include nonaccrual loans plus other real estate owned and repossessed vehicles.
Axos Financial, Inc.’s common stock is listed on the NYSE under the symbol “AX” and is a component of the Russell 2000 ® Index and the S&P SmallCap 600 ® Index. MERGERS AND ACQUISITIONS From time to time, we undertake acquisitions or similar transactions consistent with our operating and growth strategies.
Axos Financial, Inc.’s common stock is listed on the NYSE under the symbol “AX” and is a component of the Russell 2000 ® Index and the S&P SmallCap 600 ® Index, among other indices. MERGERS AND ACQUISITIONS From time to time, we undertake acquisitions or similar transactions consistent with our operating and growth strategies.
Our future borrowings will depend on the growth of our lending operations and our exposure to interest rate risk. We expect to continue to use deposits and advances from the FHLB as the primary sources of funding our future asset growth. Axos Clearing has a $150.0 million third-party secured line of credit available for borrowing.
Any future borrowings will depend on the growth of our lending operations and our exposure to interest rate risk, among other factors. We expect to continue to use deposits and advances from the FHLB as the primary sources of funding our future asset growth. Axos Clearing has a $150.0 million third-party secured line of credit available for borrowing.
The transaction was accounted for as an asset acquisition and such assets are included in the Company’s Consolidated Balance Sheets as of June 30, 2024.
The transaction was accounted for as an asset acquisition and such assets are included in the Company’s Consolidated Balance Sheets as of June 30, 2025.
(“Axos”) and its wholly owned subsidiaries, Axos Bank (the “Bank” or “Axos Bank”) and Axos Nevada Holding, LLC (“Axos Nevada Holding”), collectively, the “Company.” Axos, the Bank, two lending-related trust entities and Axos Nevada Holding comprise substantially all of the Company’s assets and liabilities and revenues and expenses.
(“Axos”) and its wholly owned subsidiaries, Axos Bank (the “Bank” or “Axos Bank”) and Axos Nevada Holding, LLC (“Axos Nevada Holding”), collectively, the “Company.” Axos, the Bank, three lending-related entities and Axos Nevada Holding comprise substantially all of the Company’s assets and liabilities and revenues and expenses.
For a discussion of the changes in the allowance for credit losses in fiscal year 2024, see Note 5 — “Loans & Allowance for Credit Losses” in the Consolidated Financial Statements.
For a discussion of the changes in the allowance for credit losses in fiscal year 2025, see Note 5 — “Loans & Allowance for Credit Losses” in the Consolidated Financial Statements.
(“COR Securities”) in an equal principal amount, with a maturity of 15 months, to serve as the source of payment of indemnification obligations of the principal stakeholders of COR Securities under the applicable merger agreement. Interest accrues at a rate of 6.25% per annum. During the fiscal year ended June 30, 2019, $0.1 million of subordinated loans were repaid.
(“COR Securities”) in an equal principal amount, with a maturity of 15 months and a 6.25% interest rate, to serve as the source of payment of indemnification obligations of the principal stakeholders of COR Securities under the applicable merger agreement. During the fiscal year ended June 30, 2019, $0.1 million of subordinated loans were repaid.
For additional information on certain contractual and other obligations, see Note 9— “Other Assets,” Note 11 — “Deposits,” Note 12— “Advances from the Federal Home Loan Bank,” Note 13— “Borrowings, Subordinated Debt and Debentures” and Note 18— “Commitments, Contingencies and Off-Balance Sheet Activities” in the Consolidated Financial Statements. See Item 3. “Legal Proceedings” for further information on pending litigation.
For additional information on certain contractual and other obligations, see Note 9— “Other Assets,” Note 11 — “Deposits,” Note 12— “Advances from the Federal Home Loan Bank,” Note 13— “Borrowings, Subordinated Debt and Debentures” and Note 18— “Commitments, Contingencies and Off-Balance Sheet Activities” in the Consolidated Financial Statements. See Item 3.
For fiscal year 2024, net charge-offs were $9.0 million and increased $2.3 million compared to net charge-offs for fiscal year 2023, primarily due to net charge-offs in the auto and consumer portfolio.
For fiscal year 2024, net charge-offs were $9.0 million and increased $2.3 million compared to net charge-offs for fiscal year 2023, primarily due to net charge-offs in the auto and consumer portfolio. Available-for-Sale Securities.
As of June 30, 2024, there was no amount outstanding. These credit facilities bear interest at rates based on the Federal Funds rate and borrowings are due upon demand. Axos Clearing has a $110.0 million unsecured line of credit available for limited purpose borrowing. As of June 30, 2024, there was no amount outstanding after elimination of intercompany balances.
As of June 30, 2025, there was no amount outstanding. These credit facilities bear interest at rates based on the Federal Funds rate and borrowings are due upon demand. Axos Clearing has a $110.0 million unsecured line of credit available for limited purpose borrowing. As of June 30, 2025, there was no amount outstanding.
For further information on the allowance for credit losses, refer to Note 1 — “Organizations and Summary of Significant Accounting Policies” and Note 5 — “Loans & Allowance for Credit Losses” in the Consolidated Financial Statements. Goodwill and Other Intangible Assets .
For further information on the allowance for credit losses, refer to Note 1 — “Organizations and Summary of Significant Accounting Policies” and Note 5 — “Loans & Allowance for Credit Losses” in the Consolidated Financial Statements.
As of June 30, 2024, Axos Clearing was in compliance with its Customer Reserve Bank Account and PAB Reserve Account deposit requirements. 53
As of June 30, 2025, Axos Clearing was in compliance with its Customer Reserve Bank Account and PAB Reserve Account deposit requirements.
The Bank, its wholly owned subsidiaries, and the activities of two lending-related trust entities, constitute the Banking Business Segment. Axos Nevada Holding owns the companies constituting the Securities Business Segment, including Axos Securities, LLC, Axos Clearing LLC (“Axos Clearing”), a clearing broker-dealer, Axos Invest, Inc., a registered investment advisor, and Axos Invest LLC, an introducing broker-dealer.
The Bank, its wholly owned subsidiaries, and the activities of three lending-related entities, constitute the Banking Business Segment. Axos Nevada Holding owns Axos Securities, LLC, which owns Axos Clearing LLC (“Axos Clearing”), a clearing broker-dealer, Axos Invest, Inc., a registered investment advisor, and Axos Invest LLC, an introducing broker-dealer.
As a percentage of the outstanding loan balance, the Company’s allowance was 1.34% and 1.00% at June 30, 2024 and 2023, respectively. Provisions for credit losses were $32.8 million and $24.8 million for fiscal year 2024 and 2023, respectively.
As a percentage of the outstanding loan balance, the Company’s allowance was 1.36% and 1.34% at June 30, 2025 and 2024, respectively. Provisions for credit losses were $55.1 million and $32.8 million for fiscal year 2025 and 2024, respectively.
Our net interest income is reduced by our current estimate of credit losses. We earn non-interest income primarily from mortgage banking activities, banking products and service activity, asset custody services, broker-dealer clearing and related services, prepayment fee income from multifamily and commercial borrowers who repay their loans before maturity and from gains on sales of other loans and available-for-sale securities.
We earn non-interest income primarily from mortgage banking activities, banking products and service activity, asset custody services, broker-dealer clearing and related services, prepayment fee income from multifamily and commercial borrowers who repay their loans before maturity and from gains on sales of other loans and available-for-sale securities. Losses on sales of available-for-sale securities reduce non-interest income.
This credit facility bears interest at rates based on the Federal Funds rate and borrowings are due upon demand. The unsecured line of credit requires Axos Clearing to 51 operate in accordance with specific covenants with respect to capital and debt ratios. Axos Clearing was in compliance with all covenants as of June 30, 2024.
This credit facility bears interest at rates based on the Federal Funds rate and borrowings are due upon demand. The unsecured line of credit requires Axos Clearing to operate in accordance with specific covenants with respect to capital and debt ratios.
On March 6, 2024, the Company paid $4.2 million to repurchase $5.0 million par value of its 2032 Notes resulting in a pre-tax non-cash gain on extinguishment of $0.7 million, after accounting for unamortized issuance costs and accrued interest.
On June 5, 2025, the Company paid $1.4 million to repurchase $1.5 million par value of its 2032 Notes resulting in a pre-tax non-cash gain on extinguishment of $0.1 million, after accounting for unamortized issuance costs and accrued interest.
Non-performing assets as a percentage of total assets increased to 0.51% at June 30, 2024 from 0.47% at June 30, 2023. 48 Allowance for Credit Losses - Loans .
Non-performing assets as a percentage of total assets increased to 0.71% at June 30, 2025 from 0.51% at June 30, 2024. 45 Allowance for Credit Losses - Loans .
The Company has made an indemnification claim against the $7.4 million remaining amount. In September 2020, the Company completed the sale of $175 million aggregate principal amount of its 4.875% Fixed-to-Floating Rate Subordinated Notes due October 1, 2030 (the “2030 Notes”).
As of June 30, 2025, an indemnification claim against the $7.4 million remains pending. In September 2020, the Company completed the sale of $175 million aggregate principal amount of its 4.875% Fixed-to-Floating Rate Subordinated Notes due October 1, 2030 (the “2030 Notes”).
The Company’s and Bank’s capital ratios and requirements were as follows: Minimum Capital Requirement Minimum Capital Requirement with Capital Buffer Minimum to Be Well Capitalized June 30, 2024 2023 Regulatory Capital Ratios (Company): Tier 1 leverage ratio 9.43 % 8.96 % 4.00 % 4.00 % N/A Common equity tier 1 capital ratio 12.01 % 10.94 % 4.50 % 7.00 % N/A Tier 1 risk-based capital ratio 12.01 % 10.94 % 6.00 % 8.50 % N/A Total risk-based capital ratio 14.84 % 13.82 % 8.00 % 10.50 % N/A Regulatory Capital Ratios (Bank): Tier 1 leverage ratio 9.74 % 9.68 % 4.00 % 4.00 % 5.00 % Common equity tier 1 capital ratio 12.74 % 11.63 % 4.50 % 7.00 % 6.50 % Tier 1 risk-based capital ratio 12.74 % 11.63 % 6.00 % 8.50 % 8.00 % Total risk-based capital ratio 13.81 % 12.50 % 8.00 % 10.50 % 10.00 % Axos Clearing Capital Requirements.
The Company’s and Bank’s capital ratios and requirements were as follows: Minimum Capital Requirement Minimum Capital Requirement with Capital Buffer Minimum to Be Well Capitalized June 30, 2025 2024 Regulatory Capital Ratios (Company): Tier 1 leverage ratio 10.73 % 9.43 % 4.00 % 4.00 % N/A Common equity tier 1 capital ratio 12.52 % 12.01 % 4.50 % 7.00 % N/A Tier 1 risk-based capital ratio 12.52 % 12.01 % 6.00 % 8.50 % N/A Total risk-based capital ratio 15.28 % 14.84 % 8.00 % 10.50 % N/A Regulatory Capital Ratios (Bank): Tier 1 leverage ratio 10.23 % 9.74 % 4.00 % 4.00 % 5.00 % Common equity tier 1 capital ratio 12.42 % 12.74 % 4.50 % 7.00 % 6.50 % Tier 1 risk-based capital ratio 12.42 % 12.74 % 6.00 % 8.50 % 8.00 % Total risk-based capital ratio 13.70 % 13.81 % 8.00 % 10.50 % 10.00 % Axos Clearing Capital Requirements.
We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business Segment: Fiscal Year Ended June 30, 2024 June 30, 2023 Efficiency ratio 38.42 % 47.82 % Return on average assets 2.20 % 1.60 % Interest rate spread 3.66 % 3.56 % Net interest margin 4.68 % 4.48 % Our Banking Business Segment’s net interest margin exceeds our consolidated net interest margin.
We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business Segment: Fiscal Year Ended June 30, 2025 June 30, 2024 Efficiency ratio 40.80 % 38.42 % Return on average assets 2.02 % 2.20 % Interest rate spread 4.03 % 3.66 % Net interest margin 4.95 % 4.68 % Our Banking Business Segment’s net interest margin exceeds our consolidated net interest margin.
The following table shows the largest states and regions ranked by location of these properties: At June 30, 2024 Percentage of Loan Principal Secured by Real Estate Located in State or Region State or Region Total Real Estate Loans Single Family Mortgage Multifamily real estate secured Commercial Real Estate California—south 1 30.7 % 55.7 % 42.5 % 6.1 % California—north 2 6.6 % 13.6 % 7.1 % 1.4 % New York 28.8 % 11.7 % 38.9 % 34.2 % Florida 7.2 % 5.4 % 4.1 % 10.4 % New Jersey 4.2 % 0.7 % 3.8 % 6.8 % Texas 3.8 % 1.0 % 0.5 % 7.7 % Arizona 2.8 % 1.2 % 0.1 % 5.5 % Illinois 1.7 % 0.4 % 0.5 % 3.4 % Georgia 1.6 % 1.6 % 0.1 % 2.6 % Washington, D.C. 1.5 % 0.2 % 0.1 % 3.3 % All other states 11.1 % 8.5 % 2.3 % 18.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % 1 Consists of loans secured by real property in California with ZIP Code ranges from 90001 to 92999. 2 Consists of loans secured by real property in California with ZIP Code ranges from 93000 to 96161. 47 The ratio of the loan amount to the value of the property securing the loan is called the loan-to-value ratio (“LTV”).
The following table shows the largest states and regions ranked by location of these properties: At June 30, 2025 Percentage of Loan Principal Secured by Real Estate Located in State or Region State or Region Total Real Estate Loans Single Family Mortgage Multifamily real estate secured Commercial Real Estate California—south 1 28.7 % 56.3 % 41.2 % 6.0 % California—north 2 7.1 % 14.2 % 7.3 % 2.5 % New York 28.2 % 8.6 % 37.1 % 36.8 % Florida 12.0 % 4.7 % 5.4 % 19.5 % Texas 5.5 % 1.1 % 0.6 % 10.2 % New Jersey 2.7 % 1.0 % 5.2 % 2.7 % Nevada 2.4 % 1.5 % 0.5 % 3.8 % Georgia 1.7 % 1.9 % — % 2.2 % Arizona 1.3 % 2.9 % 0.2 % 0.7 % South Carolina 1.2 % 0.1 % — % 2.5 % All other states 9.2 % 7.7 % 2.5 % 13.1 % Total 100 % 100 % 100 % 100 % 1 Consists of loans secured by real property in California with ZIP Code ranges from 90001 to 92999. 2 Consists of loans secured by real property in California with ZIP Code ranges from 93000 to 96161. 44 The ratio of the loan amount to the value of the property securing the loan is called the loan-to-value ratio (“LTV”).
Selected information concerning Axos Clearing follows as of each date indicated: June 30, (Dollars in thousands) 2024 2023 FDIC insured program balances at banks $ 1,289,105 $ 1,627,053 Margin balances $ 219,848 $ 205,880 Cash reserves for the benefit of customers $ 113,676 $ 149,059 Securities lending: Interest-earning assets – stock borrowed $ 67,212 $ 134,339 Interest-bearing liabilities – stock loaned $ 74,177 $ 159,832 COMPARISON OF THE FISCAL YEARS ENDED JUNE 30, 2023 AND JUNE 30, 2022 For a comparison of our fiscal year 2023 results compared to fiscal year 2022 results, see Part II, Item 7, “Comparison of the Fiscal Years Ended June 30, 2023 and June 30, 2022” in the Annual Report on Form 10-K for the fiscal year-ended June 30, 2023 filed with the SEC.
Selected information concerning Axos Clearing follows as of each date indicated: June 30, (Dollars in thousands) 2025 2024 FDIC insured program balances at banks $ 1,444,830 $ 1,289,105 Margin balances $ 229,387 $ 219,848 Cash reserves for the benefit of customers $ 146,835 $ 113,676 Securities lending: Interest-earning assets – stock borrowed $ 139,396 $ 67,212 Interest-bearing liabilities – stock loaned $ 139,426 $ 74,177 COMPARISON OF THE FISCAL YEARS ENDED JUNE 30, 2024 AND JUNE 30, 2023 For a comparison of our fiscal year 2024 results compared to fiscal year 2023 results, see Part II, Item 7, “Comparison of the Fiscal Years Ended June 30, 2024 and June 30, 2023” in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the SEC.
At June 30, 2024, the Bank did not have any borrowings outstanding and the amount available from this source was $6,976.2 million. Borrowings are collateralized by pledging commercial loans and consumer loans. At June 30, 2024, the Bank had $8,197.2 million of loans pledged to the FRBSF.
At June 30, 2025, the Bank did not have any borrowings outstanding and the amount available from this source was $7,046.5 million. Borrowings are collateralized by pledging commercial loans and consumer loans. At June 30, 2025, the Bank had $8,227.7 million of loans pledged to the FRBSF.
In fiscal year 2024, this cumulative amount is phased out of regulatory capital at 50% and the cumulative amount will be 100% phased out of regulatory capital beginning in fiscal year 2026.
In fiscal year 2025, this cumulative amount was phased out of regulatory capital at 75% and the cumulative amount will be 100% phased out of regulatory capital beginning in fiscal year 2026.
Additionally, management performs a qualitative assessment to address inherent limitations in the model and data. Qualitative criteria used in the assessment, as outlined in Note 1 — “ Organizations and Summary of Significant Accounting Policies ” in the Consolidated Financial Statements, can require significant judgment and is subject to uncertainty.
Qualitative criteria used in the assessment, as outlined in Note 1 — “ Organizations and Summary of Significant Accounting Policies ” in the Consolidated Financial Statements, can require significant judgment and is subject to uncertainty.
With approximately $22.9 billion in assets, Axos Bank provides consumer and business banking products through its low-cost distribution channels and affinity partners. Axos Clearing and Axos Invest LLC, provide comprehensive securities clearing services to introducing broker-dealers and registered investment advisor correspondents and digital investment advisory services to retail investors, respectively.
Axos Securities, LLC and its consolidated subsidiaries constitute the Securities Business Segment. Axos Bank provides consumer and business banking products through its low-cost distribution channels and affinity partners. Axos Clearing and Axos Invest LLC, provide comprehensive securities clearing services to introducing broker-dealers and registered investment advisor correspondents and digital investment advisory services to retail investors, respectively.
Non-performing assets consisted of the following: At June 30, (Dollars in thousands) 2024 2023 2022 Non-performing assets: Nonaccrual loans: Single Family - Mortgage & Warehouse $ 45,711 $ 30,714 $ 66,424 Multifamily and Commercial Mortgage 35,054 35,103 33,410 Commercial Real Estate 26,102 14,852 14,852 Commercial & Industrial - Non-RE 4,020 2,989 2,989 Auto & Consumer 2,472 3,502 519 Total nonaccrual loans 113,359 87,160 118,194 Foreclosed real estate 1,840 6,966 — Repossessed - Autos 610 1,133 798 Total non-performing assets $ 115,809 $ 95,259 $ 118,992 Total nonaccrual loans as a percentage of total loans 0.57 % 0.52 % 0.83 % Total non-performing assets as a percentage of total assets 0.51 % 0.47 % 0.68 % Our non-performing assets increased to $115.8 million at June 30, 2024 from $95.3 million at June 30, 2023.
Non-performing assets consisted of the following: At June 30, (Dollars in thousands) 2025 2024 2023 Non-performing assets: Nonaccrual loans: Single Family - Mortgage & Warehouse $ 44,196 $ 45,711 $ 30,714 Multifamily and Commercial Mortgage 33,037 35,054 35,103 Commercial Real Estate 29,223 26,102 14,852 Commercial & Industrial - Non-RE 61,804 4,020 2,989 Auto & Consumer 2,126 2,472 3,502 Total nonaccrual loans 170,386 113,359 87,160 Foreclosed real estate 4,535 1,840 6,966 Repossessed - Autos 505 610 1,133 Total non-performing assets $ 175,426 $ 115,809 $ 95,259 Total nonaccrual loans as a percentage of total loans 0.79 % 0.57 % 0.52 % Total non-performing assets as a percentage of total assets 0.71 % 0.51 % 0.47 % Our non-performing assets increased to $175.4 million at June 30, 2025 from $115.8 million at June 30, 2024.
We believe tangible book value per common share is useful in evaluating the Company’s capital strength, financial condition, and ability to manage potential losses. 36 Below is a reconciliation of total stockholders’ equity, the nearest comparable GAAP measure, to tangible book value (Non-GAAP) as of the dates indicated: At the Fiscal Years Ended June 30, (Dollars in thousands, except per share amounts) 2024 2023 2022 Common stockholders’ equity $ 2,290,596 $ 1,917,159 $ 1,642,973 Less: servicing rights, carried at fair value 28,924 25,443 25,213 Less: goodwill and intangible assets—net 141,769 152,149 156,405 Tangible common stockholders’ equity (Non-GAAP) $ 2,119,903 $ 1,739,567 $ 1,461,355 Common shares outstanding at end of period 56,894,565 58,943,035 59,777,949 Book value per common share $ 40.26 $ 32.53 $ 27.48 Less: servicing rights, carried at fair value per common share $ 0.51 $ 0.44 $ 0.42 Less: goodwill and other intangible assets—net per common share $ 2.49 $ 2.58 $ 2.61 Tangible book value per common share (Non-GAAP) $ 37.26 $ 29.51 $ 24.45 37 FINANCIAL HIGHLIGHTS The following selected consolidated financial information should be read in conjunction with Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and footnotes included elsewhere in this report.
Below is a reconciliation of total stockholders’ equity, the nearest comparable GAAP measure, to tangible book value (Non-GAAP) as of the dates indicated: At the Fiscal Years Ended June 30, (Dollars in thousands, except per share amounts) 2025 2024 2023 Common stockholders’ equity $ 2,680,677 $ 2,290,596 $ 1,917,159 Less: servicing rights, carried at fair value 27,218 28,924 25,443 Less: goodwill and intangible assets—net 134,502 141,769 152,149 Tangible common stockholders’ equity (Non-GAAP) $ 2,518,957 $ 2,119,903 $ 1,739,567 Common shares outstanding at end of period 56,483,617 56,894,565 58,943,035 Book value per common share $ 47.46 $ 40.26 $ 32.53 Less: servicing rights, carried at fair value per common share $ 0.48 $ 0.51 $ 0.44 Less: goodwill and other intangible assets—net per common share $ 2.38 $ 2.49 $ 2.58 Tangible book value per common share (Non-GAAP) $ 44.60 $ 37.26 $ 29.51 36 FINANCIAL HIGHLIGHTS The following selected consolidated financial information should be read in conjunction with Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and footnotes included elsewhere in this report.
To be “well capitalized,” our Company and Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively.
To be “well capitalized,” our Company and Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Additionally, the Bank is required to maintain a tangible capital ratio equal to at least 1.5% of total average adjusted assets.
At or for the Fiscal Years Ended June 30, (Dollars in thousands, except per share amounts) 2024 2023 2022 Selected Balance Sheet Data: Total assets $ 22,855,334 $ 20,348,469 $ 17,401,165 Loans—net of allowance for credit losses 19,231,385 16,456,728 14,091,061 Loans held for sale, carried at fair value 16,482 23,203 4,973 Loans held for sale, lower of cost or fair value — 776 10,938 Allowance for credit losses 260,542 166,680 148,617 Trading securities 353 758 1,758 Available-for-sale securities 141,611 232,350 262,518 Securities borrowed 67,212 134,339 338,980 Customer, broker-dealer and clearing receivables 240,028 374,074 417,417 Total deposits 19,359,217 17,123,108 13,946,422 Advances from the Federal Home Loan Bank 90,000 90,000 117,500 Borrowings, subordinated debentures and other borrowings 325,679 361,779 445,244 Securities loaned 74,177 159,832 474,400 Customer, broker-dealer and clearing payables 301,127 445,477 511,654 Total stockholders’ equity 2,290,596 1,917,159 1,642,973 Selected Income Statement Data: Interest and dividend income $ 1,655,607 $ 1,157,138 $ 659,728 Interest expense 694,178 374,017 52,570 Net interest income 961,429 783,121 607,158 Provision for credit losses 32,500 24,250 23,750 Net interest income, after provision for credit losses 928,929 758,871 583,408 Non-interest income 222,660 120,488 113,363 Non-interest expense 516,108 447,615 356,812 Income before income tax expense 635,481 431,744 339,959 Income taxes 185,473 124,579 99,243 Net income $ 450,008 $ 307,165 $ 240,716 Per Common Share Data: Net income: Basic $ 7.82 $ 5.15 $ 4.04 Diluted $ 7.66 $ 5.07 $ 3.97 Adjusted earnings per common share (Non-GAAP 1 ) $ 6.74 $ 5.39 $ 4.23 Book value per common share $ 40.26 $ 32.53 $ 27.48 Tangible book value per common share (Non-GAAP 1 ) $ 37.26 $ 29.51 $ 24.45 Weighted-average number of common shares outstanding: Basic 57,509,029 59,691,541 59,523,626 Diluted 58,725,636 60,566,854 60,610,954 Common shares outstanding at end of period 56,894,565 58,943,035 59,777,949 Common shares issued at end of period 70,221,632 69,465,446 68,859,722 38 At or for the Fiscal Years Ended June 30, (Dollars in thousands, except per share amounts) 2024 2023 2022 Performance Ratios and Other Data: Loan originations for investment $ 10,388,439 $ 8,452,215 $ 10,366,796 Loan originations for sale $ 197,305 $ 160,607 $ 656,487 Loan purchases $ 841,838 $ 1,564 $ 31,667 Return on average assets 2.08 % 1.64 % 1.57 % Return on average common stockholders’ equity 21.64 % 17.22 % 15.61 % Interest rate spread 2 3.62 % 3.44 % 3.91 % Net interest margin 3 4.62 % 4.35 % 4.13 % Net interest margin - Banking Business Segment only 3 4.68 % 4.48 % 4.36 % Efficiency ratio 4 43.59 % 49.54 % 49.52 % Efficiency ratio - Banking Business Segment only 4 38.42 % 47.82 % 40.81 % Capital Ratios: Equity to assets at end of period 10.02 % 9.42 % 9.44 % Axos Financial, Inc.: Tier 1 leverage (to adjusted average assets) 9.43 % 8.96 % 9.25 % Common equity tier 1 capital (to risk-weighted assets) 12.01 % 10.94 % 9.86 % Tier 1 capital (to risk-weighted assets) 12.01 % 10.94 % 9.86 % Total capital (to risk-weighted assets) 14.84 % 13.82 % 12.73 % Axos Bank: Tier 1 leverage (to adjusted average assets) 9.74 % 9.68 % 10.65 % Common equity tier 1 capital (to risk-weighted assets) 12.74 % 11.63 % 11.24 % Tier 1 capital (to risk-weighted assets) 12.74 % 11.63 % 11.24 % Total capital (to risk-weighted assets) 13.81 % 12.50 % 12.01 % Axos Clearing LLC: Net capital $ 101,462 $ 35,221 $ 38,915 Excess capital $ 96,654 $ 29,905 $ 32.665 Net capital as percentage of aggregate debit item 42.21 % 13.25 % 12.45 % Net capital in excess of 5% aggregate debit item $ 89,442 $ 21,930 $ 23,290 Asset Quality Ratios: Net charge-offs to average loans outstanding 0.05 % 0.04 % 0.02 % Nonaccrual loans and leases to total loans 0.57 % 0.52 % 0.83 % Non-performing assets to total assets 0.51 % 0.47 % 0.68 % Allowance for credit losses - loans to total loans held for investment 5 1.34 % 1.00 % 1.04 % Allowance for credit losses - loans to nonaccrual loans 5 229.84 % 191.23 % 125.74 % 1 See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Use of Non-GAAP Financial Measures.” 2 Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate paid on interest-bearing liabilities. 3 Net interest margin represents net interest income as a percentage of average interest-earning assets. 4 Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income. 5 The increase in the ratios of the allowance for credit losses - loans to total loans held for investment and the allowance for credit losses - loans to non-performing assets at June 30, 2024 was primarily attributable to the allowance for credit losses related to the PCD loans acquired in the FDIC Loan Purchase.
At or for the Fiscal Years Ended June 30, (Dollars in thousands, except per share amounts) 2025 2024 2023 Selected Balance Sheet Data: Total assets $ 24,783,078 $ 22,855,334 $ 20,348,469 Loans—net of allowance for credit losses 21,049,610 19,231,385 16,456,728 Loans held for sale, carried at fair value 10,012 16,482 23,203 Allowance for credit losses 290,049 260,542 166,680 Trading securities 649 353 758 Available-for-sale securities 66,008 141,611 232,350 Securities borrowed 139,396 67,212 134,339 Customer, broker-dealer and clearing receivables 252,720 240,028 374,074 Total deposits 20,829,543 19,359,217 17,123,108 Advances from the Federal Home Loan Bank 60,000 90,000 90,000 Borrowings, subordinated debentures and other borrowings 312,671 325,679 361,779 Securities loaned 139,426 74,177 159,832 Customer, broker-dealer and clearing payables 350,606 301,127 445,477 Total stockholders’ equity 2,680,677 2,290,596 1,917,159 Selected Income Statement Data: Interest and dividend income $ 1,815,465 $ 1,655,607 $ 1,157,138 Interest expense 687,693 694,178 374,017 Net interest income 1,127,772 961,429 783,121 Provision for credit losses 55,745 32,500 24,250 Net interest income, after provision for credit losses 1,072,027 928,929 758,871 Non-interest income 131,066 222,660 120,488 Non-interest expense 589,698 516,108 447,615 Income before income tax expense 613,395 635,481 431,744 Income taxes 180,487 185,473 124,579 Net income $ 432,908 $ 450,008 $ 307,165 Per Common Share Data: Net income: Basic $ 7.61 $ 7.82 $ 5.15 Diluted $ 7.43 $ 7.66 $ 5.07 Adjusted earnings per common share (Non-GAAP 1 ) $ 7.50 $ 6.74 $ 5.39 Book value per common share $ 47.46 $ 40.26 $ 32.53 Tangible book value per common share (Non-GAAP 1 ) $ 44.60 $ 37.26 $ 29.51 Weighted-average number of common shares outstanding: Basic 56,862,630 57,509,029 59,691,541 Diluted 58,241,421 58,725,636 60,566,854 Common shares outstanding at end of period 56,483,617 56,894,565 58,943,035 Common shares issued at end of period 71,101,642 70,221,632 69,465,446 37 At or for the Fiscal Years Ended June 30, (Dollars in thousands, except per share amounts) 2025 2024 2023 Performance Ratios and Other Data: Growth in loans held for investment, net $ 1,818,225 $ 2,774,657 $ 2,365,667 Loan originations for sale $ 199,845 $ 197,305 $ 160,607 Return on average assets 1.82 % 2.08 % 1.64 % Return on average common stockholders’ equity 17.30 % 21.64 % 17.22 % Interest rate spread 2 3.97 % 3.62 % 3.44 % Net interest margin 3 4.90 % 4.62 % 4.35 % Net interest margin - Banking Business Segment only 3 4.95 % 4.68 % 4.48 % Efficiency ratio 4 46.84 % 43.59 % 49.54 % Efficiency ratio - Banking Business Segment only 4 40.80 % 38.42 % 47.82 % Capital Ratios: Equity to assets at end of period 10.82 % 10.02 % 9.42 % Axos Financial, Inc.: Tier 1 leverage (to adjusted average assets) 10.73 % 9.43 % 8.96 % Common equity tier 1 capital (to risk-weighted assets) 12.52 % 12.01 % 10.94 % Tier 1 capital (to risk-weighted assets) 12.52 % 12.01 % 10.94 % Total capital (to risk-weighted assets) 15.28 % 14.84 % 13.82 % Axos Bank: Tier 1 leverage (to adjusted average assets) 10.23 % 9.74 % 9.68 % Common equity tier 1 capital (to risk-weighted assets) 12.42 % 12.74 % 11.63 % Tier 1 capital (to risk-weighted assets) 12.42 % 12.74 % 11.63 % Total capital (to risk-weighted assets) 13.70 % 13.81 % 12.50 % Axos Clearing LLC: Net capital $ 86,996 $ 101,462 $ 35,221 Excess capital $ 81,834 $ 96,654 $ 29,905 Net capital as percentage of aggregate debit item 33.71 % 42.21 % 13.25 % Net capital in excess of 5% aggregate debit item $ 74,091 $ 89,442 $ 21,930 Asset Quality Ratios: Net charge-offs to average loans outstanding 0.13 % 0.05 % 0.04 % Nonaccrual loans and leases to total loans 0.79 % 0.57 % 0.52 % Non-performing assets to total assets 0.71 % 0.51 % 0.47 % Allowance for credit losses - loans to total loans held for investment 1.36 % 1.34 % 1.00 % Allowance for credit losses - loans to nonaccrual loans 5 170.23 % 229.84 % 191.23 % 1 See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Use of Non-GAAP Financial Measures.” 2 Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate paid on interest-bearing liabilities. 3 Net interest margin represents net interest income as a percentage of average interest-earning assets. 4 Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income. 5 The decrease in the allowance for credit losses - loans to nonaccrual loans as of June 30, 2025 is primarily attributable to the change in nonaccrual loans.
On April 6, 2024, the Company paid $4.8 million to repurchase $5.0 million par value of its 2032 Notes resulting in a pre-tax non-cash gain on extinguishment of $0.2 million, after accounting for unamortized issuance costs and accrued interest.
On July 15, 2024, the Company paid $2.6 million to repurchase $3.0 million par value of its 4.00% Fixed-to-Floating Rate Subordinated Notes due March 1, 2032 resulting in a pre-tax non-cash gain on extinguishment of $0.4 million, after accounting for unamortized issuance costs and accrued interest.
In December 2004, we completed a transaction that resulted in the issuance of $5.2 million of junior subordinated debentures for our Company with a stated maturity date of February 23, 2035.
Axos Clearing was in compliance with all covenants as of June 30, 2025. 48 In December 2004, we completed a transaction that resulted in the issuance of $5.2 million of junior subordinated debentures for our Company with a stated maturity date of February 23, 2035.
Interest accrues at the rate of three-month term SOFR plus 26.161 basis points, for a rate of 7.99% as of June 30, 2024, with interest paid quarterly. In January 2019, we issued subordinated notes totaling $7.5 million to the principal stockholders of Cor Securities Holdings, Inc.
Interest accrues at the rate of three-month term SOFR plus a 2.41% margin and a 0.26% spread adjustment, for a rate of 6.99% as of June 30, 2025, with interest paid quarterly. In January 2019, we issued subordinated loans totaling $7.5 million to the principal stockholders of Cor Securities Holdings, Inc.
The Federal Reserve establishes capital requirements for our Company and the OCC has similar requirements for our Bank. The following tables present regulatory capital information for our Company and Bank. Information presented for June 30, 2024, reflects the Basel III capital requirements for both our Company and Bank.
The following tables present regulatory capital information for our Company and Bank. Information presented for June 30, 2025, reflects the Basel III capital requirements for both our Company and Bank.
The number of deposit accounts at the end of each of the last three fiscal years is set forth below: At June 30, 2024 2023 2022 Non-interest-bearing 55,772 45,640 42,372 Interest-bearing checking and savings accounts 495,070 427,299 344,593 Time deposits 4,696 6,340 8,734 Total number of deposit accounts 555,538 479,279 395,699 For fiscal year 2024, the number of interest-bearing checking and savings accounts grew primarily due to a higher number of consumer deposit accounts from increased marketing efforts.
The number of deposit accounts at the end of each of the last three fiscal years is set forth below: At June 30, 2025 2024 2023 Non-interest-bearing 50,967 55,772 45,640 Interest-bearing checking and savings accounts 546,678 495,070 427,299 Time deposits 2,956 4,696 6,340 Total number of deposit accounts 600,601 555,538 479,279 For fiscal year 2025, the number of interest-bearing checking and savings accounts grew primarily due to a higher number of consumer deposit accounts.
For fiscal year 2024, income tax expense increased $60.9 million, or 48.9% compared to income tax expense in fiscal year 2023. The fiscal year 2024 effective tax rate of 29.19%, increased by 0.34% compared to fiscal year 2023. The Company received federal and state tax credits for both fiscal years ended June 30, 2024 and 2023.
Income Tax Expense . For fiscal year 2025, income tax expense decreased $5.0 million, or 2.7% compared to income tax expense in fiscal year 2024. The fiscal year 2025 effective tax rate of 29.42%, increased by 0.23% compared to fiscal year 2024. The Company received federal and state tax credits for both fiscal years ended June 30, 2025 and 2024.
Consolidated and Bank Capital Requirements . Our Company and Bank are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. Failure by our Company or Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on our Consolidated Financial Statements.
Failure by our Company or Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on our Consolidated Financial Statements. The Federal Reserve establishes capital requirements for our Company and the OCC has similar requirements for our Bank.
The following table sets forth the changes in our allowance for credit losses, by portfolio class for the dates indicated: (Dollars in thousands) Single Family - Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Total Total Allowance as a % of Total Loans Balance at June 30, 2021 $ 26,604 $ 13,146 $ 57,928 $ 28,460 $ 6,820 $ 132,958 1.15 % Provision for credit losses (7,009) 1,332 11,411 2,544 10,222 18,500 Charge-offs (82) — — (322) (4,024) (4,428) Recoveries 157 177 — 126 1,127 1,587 Balance at June 30, 2022 19,670 14,655 69,339 30,808 14,145 148,617 1.04 % Provision for credit losses (2,302) 2,193 3,416 15,521 5,922 24,750 Charge-offs (314) — — — (9,142) (9,456) Recoveries 449 — — 18 2,302 2,769 Balance at June 30, 2023 17,503 16,848 72,755 46,347 13,227 166,680 1.00 % Allowance for credit losses at acquisition of PCD loans — 58,997 11,125 — — 70,122 Provision for credit losses (489) (4,434) 3,900 29,769 4,004 32,750 Charge-offs (172) (640) — (84) (11,013) (11,909) Recoveries 101 — — — 2,798 2,899 Balance at June 30, 2024 $ 16,943 $ 70,771 $ 87,780 $ 76,032 $ 9,016 $ 260,542 1.34 % Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2024 — % 0.02 % — % — % 1.70 % 0.05 % Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2023 — % — % — % — % 1.10 % 0.04 % Net Charge-Offs (Recoveries) to Average Loans - Fiscal Year Ended June 30, 2022 — % (0.01) % — % 0.01 % 0.57 % 0.02 % The Company’s allowance for credit losses increased $93.9 million or 56.3% at June 30, 2024 from June 30, 2023.
The following table sets forth the changes in our allowance for credit losses, by portfolio class for the dates indicated: (Dollars in thousands) Single Family - Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Total Total Allowance as a % of Total Loans Balance at June 30, 2022 $ 19,670 $ 14,655 $ 69,339 $ 30,808 $ 14,145 $ 148,617 1.04 % Provision for credit losses (2,302) 2,193 3,416 15,521 5,922 24,750 Charge-offs (314) — — — (9,142) (9,456) Recoveries 449 — — 18 2,302 2,769 Balance at June 30, 2023 17,503 16,848 72,755 46,347 13,227 166,680 1.00 % Allowance for credit losses at acquisition of PCD loans — 58,997 11,125 — — 70,122 Provision for credit losses (489) (4,434) 3,900 29,769 4,004 32,750 Charge-offs (172) (640) — (84) (11,013) (11,909) Recoveries 101 — — — 2,798 2,899 Balance at June 30, 2024 16,943 70,771 87,780 76,032 9,016 260,542 1.34 % Provision for credit losses (1,858) (36,655) 25,934 54,432 13,224 55,077 Charge-offs (3,036) (8,565) (165) (8,825) (9,715) (30,306) Recoveries 62 689 255 — 3,730 4,736 Balance at June 30, 2025 $ 12,111 $ 26,240 $ 113,804 $ 121,639 $ 16,255 $ 290,049 1.36 % Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2025 0.14 % 0.52 % — % 0.28 % 3.02 % 0.13 % Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2024 — % 0.02 % — % — % 1.70 % 0.05 % Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2023 — % — % — % — % 1.10 % 0.04 % The Company’s allowance for credit losses increased $29.5 million or 11.3% at June 30, 2025 from June 30, 2024.
Losses on sales of available-for-sale securities reduce non-interest income. The largest component of non-interest expense is salary and benefits, which is a function of the number of personnel, which increased to 1,781 full-time employees at June 30, 2024, from 1,455 full-time employees at June 30, 2023.
The largest component of non-interest expense is salary and benefits, which is a function of the number of personnel, which increased to 1,989 full-time employees at June 30, 2025, from 1,781 full-time employees at June 30, 2024.
Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. 40 RESULTS OF OPERATIONS Our results of operations depend on our net interest income, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Our net interest income is subject to competitive factors in online banking and other markets.
RESULTS OF OPERATIONS Our results of operations depend on our net interest income, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Our net interest income is subject to competitive factors in online banking and other markets. Our net interest income is reduced by our current estimate of credit losses.
For the fiscal year 2024, the Securities Business Segment’s non-interest expense increased $12.5 million, or 12.2%, compared to non-interest expense in fiscal year ended June 30, 2023, primarily related to higher salaries and related costs and broker-dealer clearing charges.
For the fiscal year 2025, the Securities Business Segment’s non-interest expense decreased $0.5 million, or 0.4%, compared to non-interest expense in fiscal year ended June 30, 2024, primarily related to lower broker-dealer clearing charges.
Below is a reconciliation of net income and diluted EPS, the nearest comparable GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP): For Fiscal Year Ended June 30, (Dollars in thousands, except per share amounts) 2024 2023 2022 Net income $ 450,008 $ 307,165 $ 240,716 FDIC Loan Purchase - Gain on purchase (92,397) — — FDIC Loan Purchase - Provision for credit losses 4,648 — — Acquisition-related costs 10,843 10,948 11,355 Other costs 1 — 16,000 10,975 Income tax effect 22,446 (7,776) (6,519) Adjusted earnings (Non-GAAP) 395,548 326,337 256,527 Average dilutive common shares outstanding 58,725,636 60,566,854 60,610,954 Diluted EPS $ 7.66 $ 5.07 $ 3.97 FDIC Loan Purchase - Gain on purchase (1.57) — — FDIC Loan Purchase - Provision for credit losses 0.08 — — Acquisition-related costs 0.18 0.18 0.19 Other costs 1 — 0.27 0.18 Income tax effect $ 0.39 $ (0.13) $ (0.11) Adjusted EPS (Non-GAAP) $ 6.74 $ 5.39 $ 4.23 1 Other costs for the fiscal year ended June 30, 2023 include an accrual as a result of an adverse legal judgement that has not been finalized.
Below is a reconciliation of net income and diluted EPS, the nearest comparable GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP): For Fiscal Year Ended June 30, (Dollars in thousands, except per share amounts) 2025 2024 2023 Net income $ 432,908 $ 450,008 $ 307,165 FDIC Loan Purchase - Gain on purchase — (92,397) — FDIC Loan Purchase - Provision for credit losses — 4,648 — Acquisition-related costs 7,408 10,843 10,948 Other costs 1 (1,878) — 16,000 Income tax effect (1,627) 22,446 (7,776) Adjusted earnings (Non-GAAP) 436,811 395,548 326,337 Average dilutive common shares outstanding 58,241,421 58,725,636 60,566,854 Diluted EPS $ 7.43 $ 7.66 $ 5.07 FDIC Loan Purchase - Gain on purchase — (1.57) — FDIC Loan Purchase - Provision for credit losses — 0.08 — Acquisition-related costs 0.13 0.18 0.18 Other costs 1 (0.03) — 0.27 Income tax effect $ (0.03) $ 0.39 $ (0.13) Adjusted EPS (Non-GAAP) $ 7.50 $ 6.74 $ 5.39 1 Other costs for the fiscal year ended 2025 primarily reflects the payment of a legal judgment at an amount less than previously accrued and for the fiscal year ended June 30, 2023 reflects the original accrual for such legal judgment.
COMPARISON OF THE FISCAL YEARS ENDED JUNE 30, 2024 AND JUNE 30, 2023 Net Interest Income . The following table sets forth the effects of changing rates and volumes on our net interest income.
Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. 39 COMPARISON OF THE FISCAL YEARS ENDED JUNE 30, 2025 AND JUNE 30, 2024 Net Interest Income . The following table sets forth the effects of changing rates and volumes on our net interest income.
For the fiscal year 2024, the Banking Business Segment’s net interest income increased $174.5 million, or 22.5%, compared to net interest income in fiscal year 2023.
For the fiscal year 2025, the Banking Business Segment’s net interest income increased $163.3 million, or 17.2%, compared to net interest income in fiscal year 2024.
Rate Paid Non-interest-bearing $ 2,769,272 $ — — $ 3,730,524 $ — — $ 3,927,195 $ — — Interest-bearing: Demand $ 3,702,727 $ 170,140 4.59 % $ 4,047,717 $ 99,119 2.45 % $ 3,873,382 $ 12,429 0.32 % Savings 10,649,842 456,538 4.29 % 6,164,020 206,536 3.35 % 2,899,939 7,624 0.26 % Time deposits 1,062,644 43,892 4.13 % 1,225,537 33,826 2.76 % 1,226,774 13,567 1.11 % Total interest-bearing deposits $ 15,415,213 $ 670,570 4.37 % $ 11,437,274 $ 339,481 2.97 % $ 8,000,095 $ 33,620 0.42 % Total deposits $ 18,184,485 $ 670,570 3.69 % $ 15,167,798 $ 339,481 2.24 % $ 11,927,290 $ 33,620 0.28 % Total deposits that exceeded the FDIC insurance limit of $250 or were not collateralized at June 30, 2024 and 2023 , were $2.1 billion and $1.7 billion, respectively.
Rate Paid Non-interest-bearing $ 2,968,839 $ — — $ 2,769,272 $ — — $ 3,730,524 $ — — Interest-bearing: Demand 3,613,524 152,064 4.21 % 3,702,727 170,140 4.59 % 4,047,717 99,119 2.45 % Savings 12,567,490 480,855 3.83 % 10,649,842 456,538 4.29 % 6,164,020 206,536 3.35 % Time deposits 859,400 34,834 4.05 % 1,062,644 43,892 4.13 % 1,225,537 33,826 2.76 % Total interest-bearing deposits 17,040,414 667,753 3.92 % 15,415,213 670,570 4.37 % 11,437,274 339,481 2.97 % Total deposits $ 20,009,253 $ 667,753 3.34 % $ 18,184,485 $ 670,570 3.69 % $ 15,167,798 $ 339,481 2.24 % Total deposits that exceeded the FDIC insurance limit or were not collateralized at June 30, 2025 and 2024 , were $2.6 billion and $2.1 billion, respectively.
The increase in non-performing assets during the fiscal year ended June 30, 2024 was primarily the result of an increase in non-performing loans of $26.2 million partially offset by a decrease in other real estate owned and repossessed vehicles of $5.6 million.
The increase in non-performing assets during the fiscal year ended June 30, 2025 was primarily the result of an increase in non-accrual loans of $57.0 million, specifically commercial & industrial - Non-RE, and an increase in other real estate owned and repossessed vehicles of $2.6 million.
The non-cash gains are recorded in “General and administrative expense” in the Consolidated Statement of Income for the fiscal year ended June 30, 2024. In February 2024, we filed a new shelf registration with the SEC which allows us to issue up to $500.0 million through the sale of common stock, preferred stock, debt securities, warrants, subscription rights and units.
In February 2024, the Company filed a new shelf registration with the SEC which allows us to issue up to $500.0 million through the sale of common stock, preferred stock, debt securities, warrants, subscription rights and units.
See Note 2—“Acquisitions” in the Consolidated Financial Statements for additional information. 39 AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted-average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted-average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin: For the Fiscal Years Ended June 30, 2024 2023 2022 (Dollars in thousands) Average Balance 1 Interest Income / Expense Average Yields Earned / Rates Paid Average Balance 1 Interest Income / Expense Average Yields Earned / Rates Paid Average Balance 1 Interest Income / Expense Average Yields Earned / Rates Paid Assets: Loans 2,3 $ 18,010,709 $ 1,499,572 8.33 % $ 15,571,290 $ 1,048,874 6.74 % $ 12,576,873 $ 626,628 4.98 % Non-purchased loans 17,458,451 1,405,202 8.05 % 15,571,290 1,048,874 6.74 % 12,576,873 626,628 4.98 % Purchased loans 4 552,258 94,370 17.09 % — — — % — — — % Interest-earning deposits in other financial institutions 2,242,226 120,861 5.39 % 1,761,902 73,467 4.17 % 1,233,983 4,501 0.36 % Mortgage-backed and other securities 218,565 11,234 5.14 % 259,473 14,669 5.65 % 176,951 6,952 3.93 % Securities borrowed and margin lending 4 329,154 22,407 6.81 % 388,386 18,657 4.80 % 687,363 20,512 2.98 % Stock of the regulatory agencies 17,250 1,533 8.89 % 20,936 1,471 7.03 % 21,844 1,135 5.20 % Total interest-earning assets 20,817,904 $ 1,655,607 7.95 % 18,001,987 $ 1,157,138 6.43 % 14,697,014 $ 659,728 4.49 % Non-interest-earning assets 811,032 735,783 658,494 Total assets $ 21,628,936 $ 18,737,770 $ 15,355,508 Liabilities and Stockholders’ Equity: Interest-bearing demand and savings $ 14,352,569 $ 626,678 4.37 % $ 10,211,737 $ 305,655 2.99 % $ 6,773,321 $ 20,053 0.30 % Time deposits 1,062,644 43,892 4.13 % 1,225,537 33,826 2.76 % 1,226,774 13,567 1.11 % Securities loaned 153,552 2,214 1.44 % 303,932 3,673 1.21 % 469,051 1,124 0.24 % Advances from the FHLB 107,454 3,087 2.87 % 423,612 12,644 2.98 % 349,796 4,625 1.32 % Borrowings, subordinated notes and debentures 358,452 18,307 5.11 % 362,733 18,219 5.02 % 302,454 13,201 4.36 % Total interest-bearing liabilities 16,034,671 $ 694,178 4.33 % 12,527,551 $ 374,017 2.99 % 9,121,396 $ 52,570 0.58 % Non-interest-bearing demand deposits 2,769,272 3,730,524 3,927,195 Other non-interest-bearing liabilities 745,472 695,617 764,542 Stockholders’ equity 2,079,521 1,784,078 1,542,375 Total liabilities and stockholders’ equity $ 21,628,936 $ 18,737,770 $ 15,355,508 Net interest income $ 961,429 $ 783,121 $ 607,158 Interest rate spread 6 3.62 % 3.44 % 3.91 % Net interest margin 7 4.62 % 4.35 % 4.13 % 1.
Other factors that affect our results of operations include expenses relating to data and operational processing, advertising, depreciation, occupancy, professional services, and other miscellaneous expenses. 38 AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted-average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted-average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin: For the Fiscal Years Ended June 30, 2025 2024 2023 (Dollars in thousands) Average Balance 1 Interest Income / Expense Average Yields Earned / Rates Paid Average Balance 1 Interest Income / Expense Average Yields Earned / Rates Paid Average Balance 1 Interest Income / Expense Average Yields Earned / Rates Paid Assets: Loans 2,3 $ 19,853,221 $ 1,654,784 8.34 % $ 18,010,709 $ 1,499,572 8.33 % $ 15,571,290 $ 1,048,874 6.74 % Non-purchased loans 18,880,093 1,494,140 7.91 % 17,458,451 1,405,202 8.05 % 15,571,290 1,048,874 6.74 % Purchased loans 4 973,128 160,644 16.51 % 552,258 94,370 17.09 % — — — % Interest-earning deposits in other financial institutions 2,665,865 128,073 4.80 % 2,242,226 120,861 5.39 % 1,761,902 73,467 4.17 % Mortgage-backed and other securities 109,405 5,181 4.74 % 218,565 11,234 5.14 % 259,473 14,669 5.65 % Securities borrowed and margin lending 4 344,055 25,492 7.41 % 329,154 22,407 6.81 % 388,386 18,657 4.80 % Stock of the regulatory agencies 26,930 1,935 7.19 % 17,250 1,533 8.89 % 20,936 1,471 7.03 % Total interest-earning assets 22,999,476 $ 1,815,465 7.89 % 20,817,904 $ 1,655,607 7.95 % 18,001,987 $ 1,157,138 6.43 % Non-interest-earning assets 775,958 811,032 735,783 Total assets $ 23,775,434 $ 21,628,936 $ 18,737,770 Liabilities and Stockholders’ Equity: Interest-bearing demand and savings $ 16,181,014 $ 632,919 3.91 % $ 14,352,569 $ 626,678 4.37 % $ 10,211,737 $ 305,655 2.99 % Time deposits 859,400 34,834 4.05 % 1,062,644 43,892 4.13 % 1,225,537 33,826 2.76 % Securities loaned 113,330 1,830 1.61 % 153,552 2,214 1.44 % 303,932 3,673 1.21 % Advances from the FHLB 74,385 1,652 2.22 % 107,454 3,087 2.87 % 423,612 12,644 2.98 % Borrowings, subordinated notes and debentures 332,665 16,458 4.95 % 358,452 18,307 5.11 % 362,733 18,219 5.02 % Total interest-bearing liabilities 17,560,794 $ 687,693 3.92 % 16,034,671 $ 694,178 4.33 % 12,527,551 $ 374,017 2.99 % Non-interest-bearing demand deposits 2,968,839 2,769,272 3,730,524 Other non-interest-bearing liabilities 743,920 745,472 695,617 Stockholders’ equity 2,501,881 2,079,521 1,784,078 Total liabilities and stockholders’ equity $ 23,775,434 $ 21,628,936 $ 18,737,770 Net interest income $ 1,127,772 $ 961,429 $ 783,121 Interest rate spread 6 3.97 % 3.62 % 3.44 % Net interest margin 7 4.90 % 4.62 % 4.35 % 1.
Interest expense is incurred from cash borrowed through bank lines and securities lending. 45 For the fiscal year 2024, the Securities Business Segment’s non-interest income decreased $12.1 million, or 8.6%, compared to fiscal year 2023, primarily attributable to lower broker-dealer fee income, resulting from lower cash-sorting balances at non-affiliated banks, partially offset by increased advisory fee income.
Interest expense is incurred from cash borrowed through bank lines and securities lending. For the fiscal year 2025, the Securities Business Segment’s non-interest income decreased $9.9 million, or 7.7%, compared to fiscal year 2024, primarily attributable to lower broker-dealer fee income on lower rates earned on cash sorting balances.
In February 2022, the Company completed the sale of $150 million aggregate principal amount of its 4.00% Fixed-to-Floating Rate Subordinated Notes (the “2032 Notes”). The 2032 Notes are obligations only of Axos Financial, Inc.
The non-cash gain is recorded in “General and administrative expense” in the Consolidated Statements of Income for the fiscal year ended June 30, 2025. In February 2022, the Company completed the sale of $150 million aggregate principal amount of its 4.00% Fixed-to-Floating Rate Subordinated Notes (the “2032 Notes”). The 2032 Notes are obligations only of Axos Financial, Inc.
In addition, these critical accounting estimates are discussed further in Note 1 — “ Organizations and Summary of Significant Accounting Policies ” in the Consolidated Financial Statements. Securities . The Company’s securities held as trading and held as available for sale are carried at fair value.
In addition, these critical accounting estimates are discussed further in Note 1 — “ Organizations and Summary of Significant Accounting Policies ” in the Consolidated Financial Statements. 34 Allowance for Credit Losses .
See “Asset Quality and Allowance for Credit Losses - Loans” for discussion of our allowance for credit losses and the related provision for credit losses. 41 Non-interest Income .
Provision for Credit Losses . For fiscal year 2025, provision for credit losses increased $23.2 million compared to the provision for credit losses in fiscal year 2024. See “Asset Quality and Allowance for Credit Losses - Loans” for discussion of our allowance for credit losses and the related provision for credit losses. Non-interest Income .
As of June 30, 2024, the Company pledged $4,942.8 million of loans and $149.0 thousand of securities to the FHLB to secure its borrowings. At June 30, 2024, we had $275.0 million in unsecured federal funds lines of credit with six major banks under which there were no borrowings outstanding. The Bank can borrow short-term from the FRBSF Discount Window.
At June 30, 2025, we had $250.0 million in unsecured federal funds lines of credit with five major banks under which there were no borrowings outstanding. The Bank has the ability to borrow short-term from the FRBSF Discount Window.
The following table sets forth information regarding our non-interest income: For the Fiscal Year Ended June 30, (Dollars in thousands) 2024 2023 Inc (Dec) Broker-dealer fee income $ 48,136 $ 46,503 $ 1,633 Advisory fee income 31,335 28,324 3,011 Banking and service fees 35,723 32,938 2,785 Mortgage banking and servicing rights income 10,000 7,101 2,899 Prepayment penalty fee income 5,069 5,622 (553) Gain on acquisition 92,397 — 92,397 Total non-interest income $ 222,660 $ 120,488 $ 102,172 For fiscal year 2024, non-interest income increased $102.2 million, or 84.8% compared to non-interest income in fiscal year 2023.
The following table sets forth information regarding our non-interest income: For the Fiscal Year Ended June 30, (Dollars in thousands) 2025 2024 Inc (Dec) Broker-dealer fee income $ 45,233 $ 48,136 $ (2,903) Advisory fee income 31,794 31,335 459 Banking and service fees 38,195 35,723 2,472 Mortgage banking and servicing rights income 13,007 10,000 3,007 Prepayment penalty fee income 2,837 5,069 (2,232) Gain on acquisition — 92,397 (92,397) Total non-interest income $ 131,066 $ 222,660 $ (91,594) For fiscal year 2025, non-interest income decreased $91.6 million, or 41.1% compared to non-interest income in fiscal year 2024.
Other costs for the fiscal year ended June 30, 2022 reflect a one-time resolution of a contractual claim. We define “tangible book value,” a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. Tangible book value is calculated using common stockholders’ equity minus servicing rights, goodwill and other intangible assets.
We define “tangible book value,” a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. Tangible book value is calculated using common stockholders’ equity minus servicing rights, goodwill and other intangible assets. Tangible book value per common share is calculated by dividing tangible book value by the common shares outstanding at the end of the period.
The increase in total liabilities primarily reflects growth in deposits of $2.2 billion. Stockholders’ equity increased by $373.4 million, or 19.5%, to $2.3 billion at June 30, 2024, up from $1.9 billion at June 30, 2023. The increase in stockholders’ equity primarily reflects net income of $450.0 million, partially offset by repurchases of $97.0 million of treasury stock.
Total liabilities increased by $1.5 billion or 7.5%, to $22.1 billion at June 30, 2025, up from $20.6 billion at June 30, 2024. The increase in total liabilities primarily reflects growth in deposits of $1.5 billion. Stockholders’ equity increased by $390.1 million, or 17.0%, to $2.7 billion at June 30, 2025, up from $2.3 billion at June 30, 2024.
Economic forecasts that impacted management’s assessment of scenario weightings included interest rates, inflation, supply chain constraints and geopolitical unrest. Changes in one or more of these variables can cause a significant change in the estimate of the allowance for credit losses. There were no significant changes in these variables during the fiscal year ended June 30, 2024.
Economic forecasts that impacted management’s assessment of scenario weightings included interest rates, inflation, changes in trade policies, and geopolitical unrest. Changes in one or more of these variables can cause a significant change in the estimate of the allowance for credit losses. Additionally, management performs a qualitative assessment to address inherent limitations in the model and data.
The increase in total assets primarily reflects growth in total loans of $2.8 billion on a net basis, driven by an increase in commercial and industrial - non-real estate loans, reflecting higher balances in capital call facilities. Total liabilities increased by $2.2 billion or 11.6%, to $20.6 billion at June 30, 2024, up from $18.4 billion at June 30, 2023.
FINANCIAL CONDITION Our total assets increased $1.9 billion, or 8.4%, to $24.8 billion, as of June 30, 2025, up from $22.9 billion at June 30, 2024. The increase in total assets primarily reflects growth in total loans of $1.8 billion on a net basis, driven by increases in the commercial & industrial - non-RE and commercial real estate portfolios.
These tax credits decreased the effective tax rate by approximately 0.58% and 0.45%, respectively. SEGMENT RESULTS The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial condition and operating results and management’s regular review of the operating results of those services.
SEGMENT RESULTS The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial condition and operating results and management’s regular review of the operating results of those services. The Company operates through two operating segments: the Banking Business Segment and the Securities Business Segment.
We are subject to federal and state income taxes, and our effective tax rates were 29.19%, 28.85% and 29.19% for the fiscal years ended June 30, 2024, 2023, and 2022, respectively. Other factors that affect our results of operations include expenses relating to data and operational processing, advertising, depreciation, occupancy, professional services, and other miscellaneous expenses.
We are subject to federal and state income taxes, and our effective tax rates were 29.42%, 29.19% and 28.85% for the fiscal years ended June 30, 2025, 2024, and 2023, respectively.
The following tables present the operating results of the segments: Fiscal Year Ended June 30, 2024 (Dollars in thousands) Banking Business Segment Securities Business Segment Corporate/Eliminations Axos Consolidated Net interest income $ 950,832 $ 26,207 $ (15,610) $ 961,429 Provision for credit losses 32,500 — — $ 32,500 Non-interest income 139,071 129,020 (45,431) $ 222,660 Non-interest expense 418,695 115,091 (17,678) $ 516,108 Income (loss) before taxes $ 638,708 $ 40,136 $ (43,363) $ 635,481 Fiscal Year Ended June 30, 2023 (Dollars in thousands) Banking Business Segment Securities Business Segment Corporate/Eliminations Axos Consolidated Net interest income $ 776,294 $ 21,042 $ (14,215) $ 783,121 Provision for credit losses 24,250 — — $ 24,250 Non-interest income 42,260 141,107 (62,879) $ 120,488 Non-interest expense 391,411 102,572 (46,368) $ 447,615 Income (loss) before taxes $ 402,893 $ 59,577 $ (30,726) $ 431,744 Banking Business Segment For the fiscal year ended June 30, 2024, we had pre-tax income of $638.7 million compared to pre-tax income of $402.9 million for the fiscal year ended June 30, 2023.
The following tables present the operating results of the segments: Fiscal Year Ended June 30, 2025 (Dollars in thousands) Banking Business Segment Securities Business Segment Corporate/Eliminations Axos Consolidated Net interest income $ 1,114,173 $ 28,431 $ (14,832) $ 1,127,772 Provision for credit losses 55,745 — — $ 55,745 Non-interest income 46,430 119,138 (34,502) $ 131,066 Non-interest expense 473,545 114,627 1,526 $ 589,698 Income (loss) before taxes $ 631,313 $ 32,942 $ (50,860) $ 613,395 41 Fiscal Year Ended June 30, 2024 (Dollars in thousands) Banking Business Segment Securities Business Segment Corporate/Eliminations Axos Consolidated Net interest income $ 950,832 $ 26,207 $ (15,610) $ 961,429 Provision for credit losses 32,500 — — $ 32,500 Non-interest income 139,071 129,020 (45,431) $ 222,660 Non-interest expense 418,695 115,091 (17,678) $ 516,108 Income (loss) before taxes $ 638,708 $ 40,136 $ (43,363) $ 635,481 Banking Business Segment For the fiscal year ended June 30, 2025, Banking Business Segment had pre-tax income of $631.3 million compared to pre-tax income of $638.7 million for the fiscal year ended June 30, 2024.
The net capital position of Axos Clearing was as follows: (Dollars in thousands) June 30, 2024 June 30, 2023 Net capital $ 101,462 $ 35,221 Excess capital $ 96,654 $ 29,905 Net capital as a percentage of aggregate debit items 42.21 % 13.25 % Net capital in excess of 5% aggregate debit items $ 89,442 $ 21,930 Axos Clearing, as a clearing broker, is subject to SEC Customer Protection Rule (Rule 15c3-3 of the Exchange Act) which requires segregation of funds in a special reserve account for the exclusive benefit of customers (“Customer Reserve Bank Account”) and proprietary accounts of brokers (“PAB Reserve Account”).
Under the alternate method, the Company may not repay subordinated debt, pay cash distributions, or make any unsecured advances or loans to its parent or employees if such payment would result in net capital of less than 5% of aggregate debit balances or less than 120% of its minimum dollar requirement. 50 The net capital position of Axos Clearing was as follows: (Dollars in thousands) June 30, 2025 June 30, 2024 Net capital $ 86,996 $ 101,462 Excess capital $ 81,834 $ 96,654 Net capital as a percentage of aggregate debit items 33.71 % 42.21 % Net capital in excess of 5% aggregate debit items $ 74,091 $ 89,442 Axos Clearing, as a clearing broker, is subject to SEC Customer Protection Rule (Rule 15c3-3 of the Exchange Act) which requires segregation of funds in a special reserve account for the exclusive benefit of customers (“Customer Reserve Bank Account”) and proprietary accounts of brokers (“PAB Reserve Account”).
Inter-segment transactions are eliminated in consolidation and primarily include non-interest income earned by the Securities Business Segment and non-interest expense incurred by the 42 Banking Business Segment for cash sorting fees related to deposits sourced from Securities Business Segment customers, as well as interest expense paid by the Banking Business Segment to each of the wholly-owned subsidiaries of the Company and to the Company itself for their operating cash held on deposit with the Banking Business Segment.
In order to reconcile the two segments to the consolidated totals, the Company includes parent-only activities and intercompany eliminations. Inter-segment transactions are eliminated in consolidation and primarily include non-interest income earned by the Securities Business Segment and non-interest expense incurred by the Banking Business Segment for cash sorting fees related to deposits sourced from Securities Business Segment customers.
The following table sets forth information regarding our non-interest expense for the periods shown: For the Fiscal Year Ended June 30, (Dollars in thousands) 2024 2023 Inc (Dec) Salaries and related costs $ 250,873 $ 204,271 $ 46,602 Data and operational processing 69,370 60,557 8,813 Depreciation and amortization 27,086 23,387 3,699 Advertising and promotional 42,797 37,150 5,647 Professional services 36,532 29,268 7,264 Occupancy and equipment 16,704 15,647 1,057 FDIC and regulatory fees 20,546 15,534 5,012 Broker-dealer clearing charges 18,260 13,433 4,827 General and administrative expense 33,940 48,368 (14,428) Total non-interest expense $ 516,108 $ 447,615 $ 68,493 For fiscal year 2024, non-interest expense increased $68.5 million, or 15.3%, compared to fiscal year 2023, primarily due to increases of: • $46.6 million in salaries and related costs primarily due to increased headcount and salaries, reflecting increases in the broker-dealer and lending businesses; • $8.8 million in data and operational processing expense primarily due to ongoing enhancements of core processing systems, customer interfaces and custody technology programs; and • $7.3 million in professional services primarily due to increased legal and consulting services.
The following table sets forth information regarding our non-interest expense for the periods shown: For the Fiscal Year Ended June 30, (Dollars in thousands) 2025 2024 Inc (Dec) Salaries and related costs $ 297,955 $ 250,873 $ 47,082 Data and operational processing 80,433 69,370 11,063 Depreciation and amortization 29,019 27,086 1,933 Advertising and promotional 47,760 42,797 4,963 Professional services 37,572 36,532 1,040 Occupancy and equipment 17,705 16,704 1,001 FDIC and regulatory fees 27,558 20,546 7,012 Broker-dealer clearing charges 17,065 18,260 (1,195) General and administrative expense 34,631 33,940 691 Total non-interest expense $ 589,698 $ 516,108 $ 73,590 For fiscal year 2025, non-interest expense increased $73.6 million, or 14.3%, compared to fiscal year 2024, primarily due to increases of: • $47.1 million in salaries and related costs primarily due to increased headcount and salaries to support continued growth in the business; • $11.1 million in data and operational processing expense to support the Company’s growth and continued investments in technology; and • $7.0 million in FDIC and regulatory fees primarily due to higher FDIC assessments, reflecting growth in deposits as well as special assessments in response to failures of other financial institutions.
The increase in non-interest income was primarily the result of a gain on FDIC Loan Purchase and an increase in mortgage banking servicing rights income from a marine loan servicing rights fair value gain. For the fiscal year 2024, the Banking Business Segment’s non-interest expense increased $27.3 million, or 7.0%, compared to non-interest expense in fiscal 2023.
For the fiscal year 2025, the Banking Business Segment’s non-interest income decreased $92.6 million, or 66.6%, compared to non-interest income in fiscal year 2024. The decrease in non-interest income was primarily the result of the absence of the gain on the FDIC Loan Purchase as compared to fiscal year 2024.
Based on loans and securities pledged at June 30, 2024, we had a total borrowing availability of an additional $3,012.6 million available immediately and an additional $4,229.1 million available with additional collateral, for advances from the FHLB for terms of up to ten years.
Based on loans and securities pledged at June 30, 2025, we had $2,799.2 million available immediately and an additional $4,925.6 million available with additional collateral and the Company had $4,284.7 million of loans and $127 thousand of securities pledged to the FHLB.
The maturities of certificates of deposit that exceeded the FDIC insurance limit of $250 at June 30, 2024 are as follows: (Dollars in thousands) June 30, 2024 3 months or less $ 138,769 3 months to 6 months 198,566 6 months to 12 months 28,832 Over 12 months 4,738 Total $ 370,905 LIQUIDITY AND CAPITAL RESOURCES Liquidity .
The maturities of non-collateralized time deposits that exceeded the FDIC insurance limit were as follows: (Dollars in thousands) June 30, 2025 3 months or less $ 6,527 3 months to 6 months 1,607 6 months to 12 months 8,619 Over 12 months 1,728 Total $ 18,481 LIQUIDITY AND CAPITAL RESOURCES Liquidity .
The increase in non-interest expense was primarily driven by increased salaries and related costs reflecting growth in lending business. Securities Business Segment For the fiscal year ended June 30, 2024, our Securities Business Segment had income before taxes of $40.1 million compared to income before taxes of $59.6 million for the fiscal year ended June 30, 2023.
For the fiscal year 2025, the Banking Business Segment’s non-interest expense increased $54.9 million, or 13.1%, compared to non-interest expense in fiscal 2024. The increase in non-interest expense was primarily driven by higher salaries and related costs.
The following table presents the fair value of the available-for-sale securities portfolio: (Dollars in thousands) June 30, 2024 $ 141,611 June 30, 2023 232,350 June 30, 2022 262,518 49 The following table sets forth the expected maturity distribution of our mortgage-backed securities (“MBS”) and the contractual maturity distribution of our non-MBS securities and the weighted-average yield for each range of maturities: At June 30, 2024 Total Amount Due Within One Year Due After One but within Five Years Due After Five but within Ten Years Due After Ten Years (Dollars in thousands) Amount Yield 1 Amount Yield 1 Amount Yield 1 Amount Yield 1 Amount Yield 1 Available-for-sale MBS: Agency 2 $ 29,835 2.84 % $ 7,122 2.69 % $ 13,862 3.02 % $ 6,682 2.90 % $ 2,169 1.94 % Non-Agency 3 110,658 5.80 % 103,991 5.64 % 4,665 7.52 % 1,407 7.68 % 595 16.84 % Total MBS $ 140,493 5.17 % $ 111,113 5.45 % $ 18,527 4.16 % $ 8,089 3.73 % $ 2,764 5.15 % Municipal 3,788 3.57 % — — % — — % — — % 3,788 3.57 % Available-for-sale—Amortized Cost $ 144,281 5.13 % $ 111,113 5.45 % $ 18,527 4.16 % $ 8,089 3.73 % $ 6,552 4.23 % Available-for-sale—Fair Value $ 141,611 5.14 % $ 110,283 5.45 % $ 17,388 4.16 % $ 7,636 3.73 % $ 6,304 4.23 % 1 Weighted-average yield is based on amortized cost of the securities.
The following table presents the fair value of the available-for-sale securities portfolio: (Dollars in thousands) June 30, 2025 $ 66,008 June 30, 2024 141,611 June 30, 2023 232,350 46 The following table sets forth the expected maturity distribution of our mortgage-backed securities (“MBS”) and the contractual maturity distribution of our non-MBS securities and the weighted-average yield for each range of maturities: At June 30, 2025 Total Amount Due Within One Year Due After One but within Five Years Due After Five but within Ten Years Due After Ten Years (Dollars in thousands) Amount Yield 1 Amount Yield 1 Amount Yield 1 Amount Yield 1 Amount Yield 1 Available-for-sale MBS: Agency 2 $ 48,229 3.76 % $ 11,537 3.93 % $ 29,753 3.94 % $ 5,158 2.93 % $ 1,781 1.94 % Non-Agency 3 14,395 7.60 % 10,975 6.46 % 1,442 10.85 % 1,203 10.21 % 775 13.80 % Total MBS $ 62,624 4.64 % $ 22,512 5.16 % $ 31,195 4.26 % $ 6,361 4.31 % $ 2,556 5.53 % Municipal 3,682 4.12 % — — % — — % — — % 3,682 4.12 % Available-for-sale—Amortized Cost $ 66,306 4.61 % $ 22,512 5.16 % $ 31,195 4.26 % $ 6,361 4.31 % $ 6,238 4.70 % Available-for-sale—Fair Value $ 66,008 4.61 % $ 22,375 5.16 % $ 30,806 4.26 % $ 6,416 4.31 % $ 6,411 4.70 % 1 Weighted-average yield is based on amortized cost of the securities.
For fiscal year 2024, interest income increased $498.5 million, or 43.1%, compared to interest income in fiscal year 2023, primarily reflecting higher rates earned and average balances of loans and interest-earning deposits in other financial institutions. Interest Expense .
For fiscal year 2025, interest income increased $159.9 million, or 9.7%, compared to interest income in fiscal year 2024, primarily reflecting higher interest earned on loans, mainly attributable to higher loan balances. Interest Expense .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBanking Business Segment The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities that were outstanding at June 30, 2024 and the portions of each financial instrument that are expected to mature or reset interest rates in each future period: Term to Repricing, Repayment, or Maturity at June 30, 2024 (Dollars in thousands) Six Months or Less Over Six Months Through One Year Over One Year through Five Years Over Five Years Total Interest-earning assets: Cash and cash equivalents $ 1,996,470 $ — $ — $ — $ 1,996,470 Mortgage-backed and other securities 1 109,264 3,131 13,283 15,933 $ 141,611 Stock of the FHLB, at cost 17,250 — — — $ 17,250 Loans 2 13,533,178 1,522,351 3,942,999 232,758 $ 19,231,286 Loans held for sale 16,482 — — — $ 16,482 Total interest-earning assets 15,672,644 1,525,482 3,956,282 248,691 21,403,099 Non-interest-earning assets — — — — $ 762,528 Total assets $ 15,672,644 $ 1,525,482 $ 3,956,282 $ 248,691 $ 22,165,627 Interest-bearing liabilities: Interest-bearing deposits 3 $ 15,166,641 $ 1,241,069 $ 25,268 $ 12 $ 16,432,990 Advances from the FHLB 30,000 — — 60,000 $ 90,000 Total interest-bearing liabilities 15,196,641 1,241,069 25,268 60,012 16,522,990 Other non-interest-bearing liabilities — — — — $ 3,344,124 Stockholders’ equity — — — — $ 2,298,513 Total liabilities and equity $ 15,196,641 $ 1,241,069 $ 25,268 $ 60,012 $ 22,165,627 Net interest rate sensitivity gap $ 476,003 $ 284,413 $ 3,931,014 $ 188,679 $ 4,880,109 Cumulative gap $ 476,003 $ 760,416 $ 4,691,430 $ 4,880,109 $ 4,880,109 Net interest rate sensitivity gap—as a % of total interest-earning assets 2.22 % 1.33 % 18.37 % 0.88 % 22.80 % Cumulative gap—as a % of total cumulative interest-earning assets 2.22 % 3.55 % 21.92 % 22.80 % 22.80 % 1 Comprised of U.S. government securities, mortgage-backed securities and other securities.
Biggest changeConversely, absent any subsequent asset and liability actions by management, during a period of falling interest rates, an institution with a positive gap would tend to have its assets reprice at a faster rate than one with a negative gap, which would tend to reduce the growth in its net interest income. 52 Banking Business Segment The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities that were outstanding at June 30, 2025 and the portions of each financial instrument that are expected to mature or reset interest rates in each future period: Term to Repricing, Repayment, or Maturity at June 30, 2025 (Dollars in thousands) Six Months or Less Over Six Months Through One Year Over One Year through Five Years Over Five Years Total Interest-earning assets: Cash and cash equivalents $ 2,005,060 $ — $ — $ — $ 2,005,060 Mortgage-backed and other securities 1 33,651 4,432 16,941 10,984 $ 66,008 Stock of regulatory agencies 29,600 — — — $ 29,600 Loans 2 14,885,635 1,645,693 4,370,650 147,632 $ 21,049,610 Loans held for sale 10,012 — — — $ 10,012 Total interest-earning assets 16,963,958 1,650,125 4,387,591 158,616 23,160,290 Non-interest-earning assets — — — — $ 828,458 Total assets $ 16,963,958 $ 1,650,125 $ 4,387,591 $ 158,616 $ 23,988,748 Interest-bearing liabilities: Interest-bearing deposits 3 $ 17,381,443 $ 313,606 $ 167,817 $ — $ 17,862,866 Advances from the FHLB — — 60,000 — $ 60,000 Total interest-bearing liabilities 17,381,443 313,606 227,817 — 17,922,866 Other non-interest-bearing liabilities — — — — $ 3,451,680 Stockholders’ equity — — — — $ 2,614,202 Total liabilities and equity $ 17,381,443 $ 313,606 $ 227,817 $ — $ 23,988,748 Net interest rate sensitivity gap $ (417,485) $ 1,336,519 $ 4,159,774 $ 158,616 $ 5,237,424 Cumulative gap $ (417,485) $ 919,034 $ 5,078,808 $ 5,237,424 $ 5,237,424 Net interest rate sensitivity gap—as a % of total interest-earning assets (1.80) % 5.77 % 17.96 % 0.68 % 22.61 % Cumulative gap—as a % of total cumulative interest-earning assets (1.80) % 3.97 % 21.93 % 22.61 % 22.61 % 1 Comprised of U.S. government securities, mortgage-backed securities and other securities.
The majority of the interest rates on customer and correspondent margin loans are indexed and can vary daily. Our funding sources are generally short term with interest rates that can vary daily.
The majority of the interest rates on customer and correspondent margin loans are generally indexed and can vary daily. Our funding sources are generally short term with interest rates that can vary daily.
The above table provides an approximation of the projected re-pricing of assets and liabilities at June 30, 2024 on the basis of contractual maturities, adjusted for anticipated prepayments of principal and scheduled rate adjustments. The loan and securities prepayment rates reflected are based on historical experience.
The above table provides an approximation of the projected re-pricing of assets and liabilities at June 30, 2025 on the basis of contractual maturities, adjusted for anticipated prepayments of principal and scheduled rate adjustments. The loan and securities prepayment rates reflected are based on historical experience.
Changes in interest rates can have a variety of effects on our business. In particular, changes in interest rates affect our net interest income, net interest margin, net income, the value of our securities portfolio, the volume of loans originated, and the amount of gain or loss on the sale of our loans.
Changes in interest rates can have a variety of effects on our business. In particular, changes in interest rates affect our net interest income, net interest margin, net income, the value of our securities portfolio and interest rate derivatives, the volume of loans originated, and the amount of gain or loss on the sale of our loans.
If market rates rise by more than the interest rate cap, we will not be able to increase these loan rates above the interest rate cap. The principal objective of our asset/liability management is to manage the sensitivity of market value of equity (“MVE”) to changing interest rates.
If market rates rise by more than the interest rate cap, we will not be able to increase these loan rates above the interest rate cap. The principal objective of our asset/liability management is to manage the sensitivity of market value of equity (“MVE”) and net interest income to changing interest rates.
A portion of the Bank’s deposits are based on administrative rates controlled by management and the remaining portion are directly tied to Fed Funds. Therefore, if liability-linked indices rise faster than asset-linked indices and there are no other changes in our asset/liability mix, our net interest income will likely decline due to basis risk. Prepayment Risk .
A portion of the Bank’s deposits are based on administrative rates controlled by management and the remaining portion are directly tied to Fed Funds. Therefore, if liability-linked indices fall faster than asset-linked indices and there are no other changes in our asset/liability mix, our net interest income will likely increase due to basis risk. Prepayment Risk .
This feature prevents the loan from repricing to a level that exceeds the cap’s specified interest rate, thus adversely affecting net interest income in periods of relatively high interest rates. On a weighted-average basis, our adjustable rate loans at June 30, 2024 had lifetime rate caps that were 526 basis points greater than their current stated note rates.
This feature prevents the loan from repricing to a level that exceeds the cap’s specified interest rate, thus adversely affecting net interest income in periods of relatively high interest rates. On a weighted-average basis, our adjustable rate loans at June 30, 2025 had 51 lifetime rate caps that were 519 basis points greater than their current stated note rates.
If our interest-bearing liabilities lag in repricing is shorter, or reprices faster, than our interest-earning assets lag, then it would result in a reduction to our net interest income. Basis Risk . Basis risk occurs when assets and liabilities have similar repricing timing but repricing is based on different market interest rate indices.
If our interest-bearing liabilities lag in repricing is shorter, or reprices faster, than our interest-earning assets lag, then it would result in an increase to our net interest income. Basis Risk . Basis risk occurs when assets and liabilities have similar repricing timing but repricing is based on different market interest rate indices.
Asset/liability management is governed by policies reviewed and approved annually by our Board of Directors. Our Board of Directors has delegated the responsibility to oversee the administration of these policies to the Bank’s asset/liability committee (“ALCO”). The interest rate risk strategy currently deployed by ALCO is to primarily use “natural” balance sheet hedging.
Asset/liability management is governed by policies reviewed and approved annually by our Board of Directors. Our Board of Directors has delegated the responsibility to oversee the administration of these policies to the Bank’s asset/liability committee (“ALCO”). The interest rate risk strategy currently deployed by ALCO is to primarily use on-balance sheet products for balance sheet hedging.
At least once a quarter, ALCO members report to our Board of Directors the status of our interest rate risk profile. 54 We measure interest rate sensitivity as the difference between amounts of interest-earning assets and interest-bearing liabilities that mature within a given period of time.
At least once a quarter, ALCO members report to our Board of Directors the status of our interest rate risk profile. We measure interest rate sensitivity as the difference between amounts of interest-earning assets and interest-bearing liabilities that mature or contractually re-price within a given period of time.
In a rising interest rate environment, an institution with a positive gap would generally be expected, absent the effects of other factors, to experience a greater increase in its yield on assets relative to its cost on liabilities, and thus an increase in its net interest income.
For example, in a falling interest rate environment, an institution with a positive gap would generally be expected, absent the effects of other factors, to experience a greater decrease in its yield on assets relative to its cost on liabilities, and thus a decrease in its net interest income.
A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities and negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets.
A gap is considered positive (or asset sensitive) when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities and negative (or liability sensitive) when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets.
Our earning assets that reprice are directly tied to various indices, such as: U.S. Treasury, SOFR, Ameribor, Bloomberg Short Term Bank Yield Index (“BSBY”), Federal Funds (“Fed Funds”), Interest Rate on Excess Reserves (“IOER”) and Prime. Generally, our deposit rates are not directly tied to these same indices.
Our earning assets that reprice are directly tied to various indices, such as: U.S. Treasury, SOFR, Ameribor, Federal Funds (“Fed Funds”), Interest Rate on Excess Reserves (“IOER”) and Prime. Generally, our deposit rates are not directly tied to these same indices.
Our Securities Business Segment is exposed to interest rate risk as a result of maintaining inventories of interest rate sensitive financial instruments and other interest-earning assets including customer and correspondent margin loans and securities borrowing activities. Our exposure to interest rate risk is also from our funding sources including customer and correspondent cash balances, bank borrowings and securities lending activities.
Our Securities Business Segment is primarily exposed to interest rate risk as a result of generating interest-earning assets including customer and correspondent margin loans, and its securities borrowing activities. Our exposure to interest rate risk is also from our funding sources including customer and correspondent cash balances, bank borrowings and securities lending activities.
For purposes of modeling net interest income sensitivity the Bank assumes no growth in the balance sheet other than for retained earnings: As of June 30, 2024 First 12 Months Next 12 Months (Dollars in thousands) Net Interest Income Percentage Change from Base Net Interest Income Percentage Change from Base Up 200 basis points $ 1,135,401 9.4 % $ 1,207,819 5.6 % Base $ 1,037,790 — % $ 1,143,255 — % Down 200 basis points $ 938,090 (9.6) % $ 1,072,185 (6.2) % We attempt to measure the effect market interest rate changes will have on the net present value of assets and liabilities, which is defined as market value of equity.
For purposes of modeling net interest income sensitivity the Bank assumes no growth in the balance sheet other than for retained earnings: As of June 30, 2025 First 12 Months Next 12 Months (Dollars in thousands) Percentage Change from Base Percentage Change from Base Up 200 basis points 8.4 % 14.5 % Up 100 Basis points 4.2 % 7.0 % Down 100 basis points (2.9) % (4.3) % Down 200 basis points (3.2) % (5.2) % We attempt to measure the effect market interest rate changes will have on the net present value of assets and liabilities, which is defined as market value of equity.
For example, gap analysis is limited in its ability to predict trends in future earnings and makes no 55 assumptions about changes in prepayment tendencies, deposit or loan maturity preferences or repricing time lags that may occur in response to a change in the interest rate environment.
For example, gap analysis is limited in its ability to predict trends in future earnings and makes no assumptions about changes in prepayment tendencies, deposit or loan maturity preferences or repricing time lags that may occur in response to a change in the interest rate environment. 53 The following table indicates the sensitivity of net interest income movements to parallel instantaneous shocks in interest rates for the 1-12 months’ and 13-24 months’ time periods.
The following table indicates the sensitivity of MVE to the interest rate movement as described above: As of June 30, 2024 (Dollars in thousands) Market Value of Equity Percentage Change from Base MVE as a Percentage of Assets Up 200 basis points $ 2,525,333 (0.9) % 11.5 % Up 100 basis points $ 2,550,197 0.1 % 11.5 % Base $ 2,548,547 — % 11.5 % Down 100 basis points $ 2,561,280 0.5 % 11.4 % Down 200 basis points $ 2,540,087 (0.3) % 11.3 % The computation of the prospective effects of hypothetical interest rate changes is based on numerous assumptions, including relative levels of interest rates, asset prepayments, runoffs in deposits and changes in repricing levels of deposits to general market rates, and should not be relied upon as indicative of actual results.
The following table indicates the sensitivity of MVE to the interest rate movement as described above: As of June 30, 2025 (Dollars in thousands) Percentage Change from Base Up 200 basis points 3.8 % Up 100 basis points 2.5 % Down 100 basis points (3.3) % Down 200 basis points (6.5) % The computation of the prospective effects of hypothetical interest rate changes is based on numerous assumptions, including relative levels of interest rates, asset prepayments (including replacing floating rate loan run-off with loans having similar spread and floor features), runoffs in deposits and changes in repricing levels of deposits to general market rates, and should not be relied upon as indicative of actual results.
This risk is managed by setting and monitoring position limits for each counterparty, conducting periodic credit reviews of counterparties, reviewing concentrations of securities and conducting business through central clearing organizations. Collateral underlying margin loans to customers and correspondents and underlying securities lending activities is marked to market daily and additional collateral is obtained or refunded, as necessary.
Our Securities Business Segment is engaged in various brokerage and trading activities that expose us to credit risk arising from potential non-performance from counterparties, customers or issuers of securities. This risk is managed by setting and monitoring position limits for each counterparty, conducting periodic credit reviews of counterparties, reviewing concentrations of securities and conducting business through central clearing organizations.
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Similarly, absent any subsequent asset and liability actions by management, during a period of falling interest rates, however, an institution with a positive gap would tend to have its assets reprice at a faster rate than one with a negative gap, which would tend to reduce the growth in its net interest income.
Added
Collateral underlying margin loans to customers and correspondents, and with respect to securities lending activities, is marked to market daily and additional collateral is obtained or refunded, as necessary. 54
Removed
The following table indicates the sensitivity of net interest income movements to parallel instantaneous shocks in interest rates for the 1-12 months’ and 13-24 months’ time periods.
Removed
At June 30, 2024, Axos Clearing held municipal obligations classified as trading securities and had maturities greater than 10 years. 56 Our Securities Business Segment is engaged in various brokerage and trading activities that expose us to credit risk arising from potential non-performance from counterparties, customers or issuers of securities.

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