ax-20241231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-37709

AXOS FINANCIAL, INC.

(Exact name of registrant as specified in its charter)


Delaware						33-0867444
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

9205 West Russell Road, Suite 400, Las Vegas, NV 89148

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (858) 649-2218


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	AX	New York Stock Exchange

__________________________________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of the registrant’s common stock on the last practicable date: 57,098,476 shares of common stock, $0.01 par value per share, as of January 17, 2025.

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AXOS FINANCIAL, INC.

INDEX


			Page
PART I – FINANCIAL INFORMATION			1

ITEM 1. FINANCIAL STATEMENTS			1
Condensed Consolidated Balance Sheets (unaudited)			1
Condensed Consolidated Statements of Income (unaudited)			2
Condensed Consolidated Statements of Comprehensive Income (unaudited)			3
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)			4
Condensed Consolidated Statements of Cash Flows (unaudited)			6
Notes to Condensed Consolidated Financial Statements (unaudited)			8
1. Summary of Significant Accounting Policies			8
2. Fair Value			10
3. Available-for-Sale Securities			15
4. Loans & Allowance for Credit Losses			17
5. Derivatives			23
6. Offsetting of Derivatives and Securities Financing Agreements			24
7. Stockholders’ Equity and Stock-Based Compensation			25
8. Earnings per Common Share			27
9. Commitments and Contingencies			27
10. Segment Reporting and Revenue Information			28
11. Borrowings, Subordinated Notes and Debentures			30
12. Other Assets			30

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			32
USE OF NON-GAAP MEASURES			34
SELECTED FINANCIAL INFORMATION			35
RESULTS OF OPERATIONS			37
SEGMENT RESULTS			42
FINANCIAL CONDITION			44
LIQUIDITY			47

CAPITAL RESOURCES AND REQUIREMENTS			48


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			49

ITEM 4. CONTROLS AND PROCEDURES			52

PART II – OTHER INFORMATION			53

ITEM 1. LEGAL PROCEEDINGS			53

ITEM 1A. RISK FACTORS			53

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES			53

ITEM 3. DEFAULTS UPON SENIOR SECURITIES			53

ITEM 4. MINE SAFETY DISCLOSURES			53

ITEM 5. OTHER INFORMATION			53

ITEM 6. EXHIBITS			54

SIGNATURES			55

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PART I – FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

AXOS FINANCIAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(Dollars in thousands, except par value)	December 31, 2024		June 30, 2024
ASSETS
Cash and cash equivalents	$	2,438,073	$	1,979,979
Restricted cash	235,358		205,797
Total cash, cash equivalents and restricted cash	2,673,431		2,185,776
Trading securities	241		353
Available-for-sale securities	97,848		141,611
Stock of regulatory agencies	34,298		21,957
Loans held for sale, carried at fair value	25,436		16,482

Loans—net of allowance for credit losses of $270,605 as of December 31, 2024 and $260,542 as of June 30, 2024	19,486,727		19,231,385
Servicing rights, carried at fair value	28,045		28,924
Securities borrowed	114,672		67,212
Customer, broker-dealer and clearing receivables	298,887		240,028
Goodwill and other intangible assets—net	137,570		141,769
Other assets	812,267		779,837
TOTAL ASSETS	$	23,709,422	$	22,855,334

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	2,989,759	$	2,975,631
Interest bearing	16,945,145		16,383,586
Total deposits	19,934,904		19,359,217
Advances from the Federal Home Loan Bank	60,000		90,000
Borrowings, subordinated notes and debentures	358,692		325,679
Securities loaned	135,258		74,177
Customer, broker-dealer and clearing payables	309,593		301,127
Accounts payable and other liabilities	389,013		414,538
Total liabilities	21,187,460		20,564,738
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY:
Common stock—$0.01 par value; 150,000,000 shares authorized; 70,571,332 shares issued and 57,097,632 shares outstanding as of December 31, 2024; 70,221,632 shares issued and 56,894,565 shares outstanding as of June 30, 2024	706		702
Additional paid-in capital	528,862		510,232
Accumulated other comprehensive income (loss)—net of income tax	3,007		(2,466)
Retained earnings	2,402,644		2,185,617
Treasury stock, at cost; 13,473,700 shares as of December 31, 2024 and 13,327,067 shares as of June 30, 2024	(413,257)		(403,489)
Total stockholders’ equity	2,521,962		2,290,596
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	23,709,422	$	22,855,334

See accompanying notes to the condensed consolidated financial statements.

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AXOS FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
(Dollars in thousands, except earnings per common share)	2024		2023		2024		2023
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$	410,868	$	357,852	$	849,097	$	684,826
Securities borrowed and customer receivables	6,450		5,467		12,721		10,462
Investments and other	38,750		31,344		78,512		63,327
Total interest and dividend income	456,068		394,663		940,330		758,615
INTEREST EXPENSE:
Deposits	170,859		160,181		358,128		306,291
Advances from the Federal Home Loan Bank	507		530		1,036		1,059
Securities loaned	480		1,010		1,020		1,459
Other borrowings	4,123		4,336		7,999		10,045
Total interest expense	175,969		166,057		368,183		318,854
Net interest income	280,099		228,606		572,147		439,761
Provision for credit losses	12,248		13,500		26,248		20,500
Net interest income, after provision for credit losses	267,851		215,106		545,899		419,261
NON-INTEREST INCOME:
Broker-dealer fee income	11,039		12,519		22,099		24,996
Advisory fee income	7,982		7,362		15,927		15,581
Banking and service fees	9,813		10,061		18,426		18,411
Mortgage banking and servicing rights income	(1,797)		753		(1,347)		4,631
Prepayment penalty fee income	762		1,037		1,303		2,620
Gain on acquisition	—		92,397		—		92,397
Total non-interest income	27,799		124,129		56,408		158,636
NON-INTEREST EXPENSE:
Salaries and related costs	74,097		58,883		148,390		114,694
Data and operational processing	19,314		18,326		38,299		34,410
Depreciation and amortization	7,031		6,488		14,481		12,366
Advertising and promotional	11,045		9,794		25,298		20,169
Professional services	9,072		5,976		18,967		15,787
Occupancy and equipment	4,206		4,001		8,524		7,847
FDIC and regulatory fees	6,992		3,935		12,948		8,384
Broker-dealer clearing charges	4,299		5,948		8,606		9,960
General and administrative expense	9,264		8,488		17,272		18,728
Total non-interest expense	145,320		121,839		292,785		242,345
INCOME BEFORE INCOME TAXES	150,330		217,396		309,522		335,552
INCOME TAXES	45,643		65,625		92,495		101,136
NET INCOME	$	104,687	$	151,771	$	217,027	$	234,416

Basic earnings per common share	$	1.83	$	2.65	$	3.81	$	4.04
Diluted earnings per common share	$	1.80	$	2.62	$	3.72	$	3.98

See accompanying notes to the condensed consolidated financial statements.

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AXOS FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
(Dollars in thousands)	2024		2023		2024		2023
NET INCOME	$	104,687	$	151,771	$	217,027	$	234,416
Net unrealized gain (loss) from available-for-sale securities, net of income tax	(784)		2,469		535		2,691
Net unrealized gain (loss) on cash flow hedges, net of income tax	4,556		—		4,938		—
Other comprehensive income (loss)	3,772		2,469		5,473		2,691
COMPREHENSIVE INCOME	$	108,459	$	154,240	$	222,500	$	237,107

See accompanying notes to the condensed consolidated financial statements.

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AXOS FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


			For the Three Months Ended December 31, 2024
	Common Stock					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss), Net of Income Tax		Retained Earnings		Treasury Stock		Total
		Number of Shares
(Dollars in thousands)			Issued	Treasury	Outstanding											Amount
BALANCE—September 30, 2024			70,562,333	(13,470,117)	57,092,216	$	706	$	520,795	$	(765)	$	2,297,957	$	(412,965)		$	2,405,728
Net income			—	—	—	—		—		—		104,687		—			104,687
Other comprehensive income (loss)			—	—	—	—		—		3,772		—		—			3,772

Stock-based compensation activity			8,999	(3,583)	5,416	—		8,067		—		—		(292)			7,775
BALANCE—December 31, 2024			70,571,332	(13,473,700)	57,097,632	$	706	$	528,862	$	3,007	$	2,402,644	$	(413,257)		$	2,521,962


			For the Six Months Ended December 31, 2024
	Common Stock					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss), Net of Income Tax		Retained Earnings		Treasury Stock		Total
		Number of Shares
(Dollars in thousands)			Issued	Treasury	Outstanding											Amount
BALANCE—June 30, 2024			70,221,632	(13,327,067)	56,894,565	$	702	$	510,232	$	(2,466)	$	2,185,617	$	(403,489)		$	2,290,596
Net income			—	—	—	—		—		—		217,027		—			217,027
Other comprehensive income (loss)			—	—	—	—		—		5,473		—		—			5,473

Stock-based compensation activity			349,700	(146,633)	203,067	4		18,630		—		—		(9,768)			8,866
BALANCE—December 31, 2024			70,571,332	(13,473,700)	57,097,632	$	706	$	528,862	$	3,007	$	2,402,644	$	(413,257)		$	2,521,962

See accompanying notes to the condensed consolidated financial statements.

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AXOS FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



			For the Three Months Ended December 31, 2023
	Common Stock					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss), Net of Income Tax		Retained Earnings		Treasury Stock		Total
		Number of Shares
(Dollars in thousands)			Issued	Treasury	Outstanding											Amount
BALANCE—September 30, 2023			69,826,263	(11,322,287)	58,503,976	$	698	$	486,676	$	(6,388)	$	1,818,254	$	(323,032)		$	1,976,208
Net income			—	—	—	—		—		—		151,771		—			151,771
Other comprehensive income (loss)			—	—	—	—		—		2,469		—		—			2,469
Purchase of treasury stock			—	(1,607,301)	(1,607,301)	—		—		—		—		(58,650)			(58,650)
Stock-based compensation activity			2,446	(744)	1,702	—		6,592		—		—		(166)			6,426
BALANCE—December 31, 2023			69,828,709	(12,930,332)	56,898,377	$	698	$	493,268	$	(3,919)	$	1,970,025	$	(381,848)		$	2,078,224



			For the Six Months Ended December 31, 2023
	Common Stock					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss), Net of Income Tax		Retained Earnings		Treasury Stock		Total
		Number of Shares
(Dollars in thousands)			Issued	Treasury	Outstanding											Amount
BALANCE—June 30, 2023			69,465,446	(10,522,411)	58,943,035	$	695	$	479,878	$	(6,610)	$	1,735,609	$	(292,413)		$	1,917,159
Net income			—	—	—	—		—		—		234,416		—			234,416
Other comprehensive income (loss)			—	—	—	—		—		2,691		—		—			2,691
Purchase of treasury stock			—	(2,255,509)	(2,255,509)	—		—		—		—		(83,186)			(83,186)
Stock-based compensation activity			363,263	(152,412)	210,851	3		13,390		—		—		(6,249)			7,144
BALANCE—December 31, 2023			69,828,709	(12,930,332)	56,898,377	$	698	$	493,268	$	(3,919)	$	1,970,025	$	(381,848)		$	2,078,224

See accompanying notes to the condensed consolidated financial statements.

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AXOS FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	December 31,
(Dollars in thousands)	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	217,027	$	234,416
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	14,481		12,365
Other accretion and amortization	(58,723)		(12,006)
Stock-based compensation expense	19,855		13,393
Trading activity	112		429
Provision for credit losses	26,248		20,500
Deferred income taxes	(15,419)		21,032
Origination of loans held for sale	(136,396)		(96,910)
Unrealized and realized gains on loans held for sale	(1,495)		(3,854)
Proceeds from sale of loans held for sale	133,064		107,846
Change in the fair value of servicing rights	1,278		(1,955)
Gain on FDIC Loan Purchase	—		(92,397)
Gain on repurchase of subordinated notes	(604)		—








Net change in assets and liabilities which provide (use) cash:
Securities borrowed	(47,460)		(10,837)
Customer, broker-dealer and clearing receivables	(58,859)		108,217
Other assets	96,702		(47,390)
Securities loaned	61,081		(4,340)
Customer, broker-dealer and clearing payables	8,466		(76,592)
Accounts payable and other liabilities	(26,060)		(19,183)



Net cash provided by operating activities	233,298		152,734
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities	(22,382)		(9,612)
Proceeds from sale and repayment of available-for-sale securities	67,004		5,952
Purchase of stock of regulatory agencies	(12,446)		—

Net change in loans held for investment	(438,254)		(877,550)
Proceeds from sale of loans originally classified as held for investment	223,011		—
Proceeds from sale of other real estate owned and repossessed assets	999		3,420
Purchase of BOLI policies	(100,000)		—


Purchase of loans and leases, net of discounts and premiums	(1,100)		(841,408)
Purchases of furniture, equipment, software and intangibles	(23,870)		(17,031)
Purchases of other investments	(7,801)		(7,148)
Distributions received from other investments	81		1,508



Net cash used in investing activities	(314,758)		(1,741,869)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	575,687		1,080,804
Repayments of the Federal Home Loan Bank term advances	(30,000)		—

Net (repayment) proceeds of other borrowings	45,000		(21,200)
Payments related to settlement of restricted stock units	(9,769)		(6,249)
Purchase of treasury stock	—		(82,583)
Repurchase of subordinated notes	(11,803)		—













Net cash provided by financing activities	569,115		970,772

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AXOS FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	December 31,
(Dollars in thousands)	2024		2023
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	487,655		(618,363)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of year	$	2,185,776	$	2,382,086
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period	$	2,673,431	$	1,763,723
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on interest-bearing liabilities	367,008		323,042
Income taxes paid	89,508		84,436
Transfers to other real estate and repossessed vehicles from loans held for investment	1,142		3,301
Transfers from loans held for investment to loans held for sale	227,539		2,783

Operating lease liabilities from obtaining right of use assets	2,111		5,767
Non-cash LIHTC investments	—		25,000

See accompanying notes to the condensed consolidated financial statements.

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AXOS FINANCIAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED DECEMBER 31, 2024 AND 2023

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements include the accounts of Axos Financial, Inc. and its wholly owned subsidiaries (“Axos” or the “Company”). Axos Bank (the “Bank”), its wholly owned subsidiaries, the activities of two lending-related trust entities and certain other lending activity constitute the Banking Business Segment, and Axos Securities, LLC and its wholly owned subsidiaries constitute the Securities Business Segment. All significant intercompany balances and transactions have been eliminated in consolidation. The Notes to the Condensed Consolidated Financial Statements are an integral part of the Company’s financial statements. On December 7, 2023, the Company acquired from the Federal Deposit Insurance Corporation (“FDIC”) two loan portfolios with an aggregate unpaid principal balance of $1.3 billion at a 37% discount to par. For additional information on the “FDIC Loan Purchase,” see Note 2—“Acquisitions” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“2024 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”).

The accompanying interim condensed consolidated financial statements, presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), are unaudited and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of financial condition and results of operations for the interim periods. All adjustments are of a normal and recurring nature. Certain amounts reported in prior periods have been reclassified to conform with the current presentation. Results for the three and six months ended December 31, 2024 are not necessarily indicative of results that may be expected for any other interim period or for the year as a whole. Certain information and note disclosures normally included in the audited annual financial statements prepared in accordance with GAAP have been condensed or not repeated herein pursuant to the rules and regulations of the SEC with respect to interim financial reporting. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended June 30, 2024 included in the 2024 Form 10-K.

Significant Accounting Policies

For further information regarding the Company’s significant accounting policies, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2024 Form 10-K. During the six months ended December 31, 2024, there were no significant updates to the Company’s significant accounting policies, other than as noted below and the adoption of the accounting standards noted herein.

Stock of Regulatory Agencies. The Bank is a member of the Federal Home Loan Bank (“FHLB”) system and the Federal Reserve System (the “Federal Reserve”). FHLB members are required to own a certain amount of FHLB stock based on the level of borrowings and other factors while Federal Reserve members are required to own a certain amount of Federal Reserve Bank stock based on the member’s equity capital and surplus. FHLB and Federal Reserve Bank stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Additionally, Axos Clearing, LLC is a member of the Depository Trust & Clearing Corporation (“DTCC”), a financial services company providing clearing and settlement services to the financial markets. Members are required to own a certain amount of DTCC stock based on the clearing levels and other factors. DTCC stock is valued based on information provided by the DTCC, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of carrying value.

Comprehensive Income. Comprehensive income consists of net income and other comprehensive income (“OCI”). OCI includes unrealized gains and losses on available-for-sale securities and gains and losses on derivatives in designated cash flow hedge accounting relationships.

Derivatives. Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as freestanding derivatives. The Company enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into, in order to economically hedge the change in interest rates resulting from its commitments to fund the loans. Changes in the fair values of these derivatives are included in “Mortgage banking and servicing rights income” on the condensed Consolidated Statements of Income.

The Company makes markets in interest rate swap and cap derivatives to facilitate customer demand. The Company enters into offsetting derivative transactions to offset its interest rate risk associated with this customer transaction activity. The

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Company acquired as part of the FDIC Loan Purchase certain customer-facing interest rate derivatives and related market-facing derivatives which offset the Company’s interest rate risk. For additional information on these derivatives see Note 2— “Acquisitions” in the 2024 Form 10-K and Note 5— “Derivatives.” Changes in the fair values of these derivatives, and related fees, are included in “Banking and service fees” on the condensed Consolidated Statements of Income.

Additionally, the Company applies hedge accounting to certain derivative instruments for interest rate risk management purposes. The Company uses such derivative instruments to hedge forecasted variable cash flows from floating-rate deposits. For designated cash flow hedges, changes in the fair value of the derivatives are initially recorded in OCI and subsequently recognized in earnings once the hedged item affects earnings. Derivative gains and losses reclassified to earnings are recognized in interest expense on the condensed Consolidated Statements of Income, consistent with the hedged floating-rate deposits.

Hedge accounting relationships, including the associated risk management objective and strategy, are formally documented at inception. Additionally, the effectiveness of hedge accounting relationships is monitored throughout the duration of the hedge period. Hedge accounting treatment is discontinued either when the derivative is terminated, when it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge or if the Company removes the cash flow hedge designation. If a hedge accounting relationship is terminated, the amount in accumulated other comprehensive income (“AOCI”) is recognized in earnings when the cash flows that were originally hedged affect earnings. However, if the original hedged transaction is deemed probable not to occur, the corresponding amount in AOCI is immediately recognized in income.

Derivative assets and liabilities are not subject to any counterparty netting and are presented at fair value on a gross basis in “Other assets” and “Accounts payable and other liabilities”, respectively, in the condensed Consolidated Balance Sheets. Cash flows related to derivative assets and liabilities are presented in “Net change in assets and liabilities which provide (use) cash-Other Assets” and “Net change in assets and liabilities which provide (use) cash-Accounts payable and other liabilities,” respectively, in the condensed Consolidated Statements of Cash Flows.

New Accounting Standards

Recently Adopted Accounting Standards

On July 1, 2024, the Company adopted Accounting Standards Update (“ASU”) 2023-02 which permits an election, if certain conditions are met, to account for tax equity investments using the proportional amortization method, which was previously limited to low-income housing tax credit (“LIHTC”) investments. As the Company’s tax equity investments solely comprise LIHTC investments accounted for under the proportional amortization method, there was no impact on its financial condition or results of operations upon adoption. For additional information on the Company’s LIHTC investments, see Note 12 – “Other Assets.”

Accounting Standards Issued But Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, which requires disclosure of significant business segment expenses and a description of the composition of other segment expenses by business segment. The ASU also requires disclosure of the title and position of the chief operating decision maker and an explanation of how the chief operating decision maker uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company does not expect any significant impact on its financial condition or results of operations upon adoption.

In December 2023, the FASB issued ASU 2023-09, which requires further granularity on the disclosure of income taxes, including:

•Certain prescribed line items in the income tax rate reconciliation presented both in dollar and percentage terms;

•Income taxes paid, income before income taxes and income taxes disaggregated by federal, state and foreign taxes; and

•Further disaggregation of income taxes paid by any individual jurisdiction equal to or exceeding five percent of total income taxes paid.

This standard is effective for fiscal years beginning after December 15, 2024. The Company does not expect any significant impact on its financial condition or results of operations upon adoption.

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In November 2024, the FASB issued ASU 2024-03, which requires disaggregation of operating expenses by relevant expense caption on the statement of income into prescribed categories, including employee compensation, depreciation and intangible asset amortization. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company does not expect any significant impact on its financial condition or results of operations upon adoption.

2. FAIR VALUE

The following tables set forth the Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31, 2024 and June 30, 2024. Assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement:


	December 31, 2024
(Dollars in thousands)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
ASSETS:
Trading securities		$	241	$	—	$	241
Available-for-sale securities:

Agency MBS		46,904		—		46,904
Non-Agency MBS		—		47,412		47,412
Municipal		3,532		—		3,532

Total—Available-for-sale securities:		$	50,436	$	47,412	$	97,848
Loans held for sale		$	25,436	$	—	$	25,436
Servicing rights		$	—	$	28,045	$	28,045
Other assets—Derivative instruments1		$	16,363	$	—	$	16,363
LIABILITIES:
Accounts payable and other liabilities—Derivative instruments		$	83,957	$	—	$	83,957
1 Other assets - Derivative instruments are presented net of $78.0 million of variation margin on centrally-cleared derivatives as of December 31, 2024.
	June 30, 2024
(Dollars in thousands)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
ASSETS:
Trading securities		$	353	$	—	$	353
Available-for-sale securities:

Agency MBS		27,259		—		27,259
Non-Agency MBS		—		110,928		110,928
Municipal		3,424		—		3,424

Total—Available-for-sale securities:		$	30,683	$	110,928	$	141,611
Loans held for sale		$	16,482	$	—	$	16,482
Servicing rights		$	—	$	28,924	$	28,924
Other assets—Derivative instruments		$	106,796	$	—	$	106,796
LIABILITIES:
Accounts payable and other liabilities—Derivative instruments		$	102,949	$	—	$	102,949

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The following tables present additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:



	For the Three Months Ended
	December 31, 2024
(Dollars in thousands)	Available-for-sale Securities: Non-Agency MBS		Servicing Rights1		Total
Opening balance	$	91,309	$	27,335	$	118,644


Total gains or losses for the period:


Included in earnings—Mortgage banking and servicing rights income	—		487		487
Included in other comprehensive income	(394)		—		(394)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions	—		223		223


Settlements	(43,503)		—		(43,503)
Closing balance	$	47,412	$	28,045	$	75,457

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—	$	487	$	487


	For the Six Months Ended
	December 31, 2024
(Dollars in thousands)	Available-for-sale Securities: Non-Agency MBS		Servicing Rights1		Total
Opening Balance	$	110,928	$	28,924	$	139,852


Total gains or losses for the period:


Included in earnings—Mortgage banking and servicing rights income	—		(1,364)		(1,364)
Included in other comprehensive income	388		—		388
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions	—		485		485


Settlements	(63,904)		—		(63,904)
Closing balance	$	47,412	$	28,045	$	75,457

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—	$	(1,364)	$	(1,364)

1 Earnings from servicing rights were attributable to: time and payoffs, representing a decrease in servicing rights value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that were paid down or paid off during the period of $0.7 million and $0.9 million for the three and six months ended December 31, 2024, respectively, and an increase in servicing rights value resulting from market-driven changes in interest rates of $1.1 million for the three months ended December 31, 2024 and a decrease of $0.5 million for the six months ended December 31, 2024. Additions to servicing rights were related to purchases and servicing rights retained upon sale of loans held for sale.



	For the Three Months Ended
	December 31, 2023
(Dollars in thousands)	Available-for-sale Securities: Non-Agency MBS		Servicing Rights1		Total
Opening balance	$	206,076	$	29,338	$	235,414


Total gains or losses for the period:


Included in earnings—Mortgage banking and servicing rights income	—		(1,494)		(1,494)
Included in other comprehensive income	1,876		—		1,876
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions	—		199		199


Settlements	(244)		—		(244)
Closing balance	$	207,708	$	28,043	$	235,751

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—	$	(1,494)	$	(1,494)

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	For the Six Months Ended
	December 31, 2023
(Dollars in thousands)	Available-for-sale Securities: Non-Agency MBS		Servicing Rights1		Total
Opening Balance	$	205,005	$	25,443	$	230,448


Total gains or losses for the period:


Included in earnings—Mortgage banking and servicing rights income	—		365		365
Included in other comprehensive income	3,191		—		3,191
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions	—		2,235		2,235


Settlements	(488)		—		(488)
Closing balance	$	207,708	$	28,043	$	235,751

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—	$	365	$	365

1 Earnings from servicing rights were attributable to: time and payoffs, representing a decrease in servicing rights value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that were paid down or paid off during the period of $0.3 million and $0.5 million for the three and six months ended December 31, 2023, and a decrease in servicing rights value resulting from market-driven changes in interest rates of $1.2 million for the three months ended December 31, 2023 and an increase of $0.9 million for the six months ended December 31, 2023. Additions to servicing rights were related to purchases and servicing rights retained upon sale of loans held for sale.

The table below summarizes the quantitative information about Level 3 fair value measurements:

December 31, 2024

(Dollars in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)1

Available-for-sale securities: Non-Agency MBS

47,412

Discounted Cash Flow

Projected Constant Prepayment Rate,

Projected Constant Default Rate,

Projected Loss Severity,

Discount Rate over SOFR Swaps,

Credit Enhancement

0.0 to 72.7% (32.9%)

0.0 to 6.4% (2.2%)

0.0 to 68.9% (30.1%)

2.5 to 4.6% (2.6%)

0.2 to 96.8% (27.2%)

Servicing Rights

28,045

Discounted Cash Flow

Projected Constant Prepayment Rate,
Life (in years),
Discount Rate

6.7 to 58.1% (10.4%)

0.0 to 11.1 (8.5)

9.5 to 11.2% (9.8%)

June 30, 2024

(Dollars in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)1

Available-for-sale securities: Non-Agency MBS

110,928

Discounted Cash Flow

Projected Constant Prepayment Rate,

Projected Constant Default Rate,

Projected Loss Severity,

Discount Rate over SOFR Swaps,

Credit Enhancement

0.0 to 72.1% (38.0%)

0.0 to 13.7% (2.8%)

0.0 to 68.9% (32.9%)

2.5 to 4.9% (2.5%)

0.0 to 64.9% (22.8%)

Servicing Rights

28,924

Discounted Cash Flow

Projected Constant Prepayment Rate,
Life (in years),
Discount Rate

5.5 to 95.2% (11.8%)

0.4 to 14.9 (7.9)

9.5 to 11.2% (9.8%)

1 The weighted average for Available-for-sale securities: Non-agency MBS is based on the relative fair value of the securities and for Servicing Rights is based on the relative unpaid principal of the loans being serviced.

For non-agency mortgage-backed securities, a significant increase (decrease) in default rate, loss severity (potentially offset by the level of credit enhancement) or discount rate in isolation would result in a significantly lower (higher) fair value measurement, while a significant increase in the voluntary prepayment rate would result in a significant increase in fair value if the security is valued below par value, or a significant decrease in fair value if the security is valued above par value. Generally, a change in the assumptions used for the default rate is accompanied by a directionally opposite change in the assumption used for the voluntary prepayment rate.

For servicing rights, significant increases in the voluntary prepayment rate or discount rate in isolation would result in a significantly lower fair value measurement, while a significant increase in expected life in isolation would result in a significantly higher fair value measurement. Generally, a change in the voluntary prepayment rate is accompanied by a directionally opposite change in expected life.

The aggregate fair value of loans held for sale, carried at fair value, the contractual balance (including accrued interest), and the unrealized gain were:

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(Dollars in thousands)	December 31, 2024		June 30, 2024
Aggregate fair value	$	25,436	$	16,482
Contractual balance	25,160		15,966
Unrealized gain	$	276	$	516

The total interest income and amount of gains and losses from changes in fair value included in earnings for loans held for sale, carried at fair value, were:


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
(Dollars in thousands)	2024		2023		2024		2023
Interest income	$	249	$	141	$	537	$	330
Change in fair value	(384)		33		(367)		(96)
Total	$	(135)	$	174	$	170	$	234

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Fair Value of Financial Instruments

Carrying amounts and estimated fair values of financial instruments at December 31, 2024 and June 30, 2024 were:


	December 31, 2024
			Fair Value
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash, cash equivalents and restricted cash	$	2,673,431	$	2,673,431	$	—	$	—	$	2,673,431
Trading securities	241		—		241		—		241
Available-for-sale securities	97,848		—		50,436		47,412		97,848
Stock of regulatory agencies	34,298		—		34,298		—		34,298
Loans held for sale, at fair value	25,436		—		25,436		—		25,436

Loans held for investment—net	19,486,727		—		—		19,661,657		19,661,657
Securities borrowed	114,672		—		—		113,565		113,565
Customer, broker-dealer and clearing receivables	298,887		—		—		296,997		296,997
Servicing rights	28,045		—		—		28,045		28,045
Other assets - derivative instruments1	16,363		—		16,363		—		16,363
Financial liabilities:
Total deposits	19,934,904		—		19,604,164		—		19,604,164
Advances from the Federal Home Loan Bank	60,000		—		55,042		—		55,042
Borrowings, subordinated notes and debentures	358,692		—		320,993		—		320,993
Securities loaned	135,258		—		—		134,594		134,594
Customer, broker-dealer and clearing payables	309,593		—		—		309,593		309,593
Accounts payable and other liabilities - derivative instruments	83,957		—		83,957		—		83,957

1 Other Assets - Derivative Assets are presented net of $78.0 million of variation margin on centrally-cleared derivatives as of December 31, 2024.


	June 30, 2024
			Fair Value
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash, cash equivalents and restricted cash	$	2,185,776	$	2,185,776	$	—	$	—	$	2,185,776
Trading securities	353		—		353		—		353
Available-for-sale securities	141,611		—		30,683		110,928		141,611
Stock of regulatory agencies	21,957		—		21,957		—		21,957
Loans held for sale, at fair value	16,482		—		16,482		—		16,482

Loans held for investment—net	19,231,385		—		—		19,209,442		19,209,442
Securities borrowed	67,212		—		—		71,480		71,480
Customer, broker-dealer and clearing receivables	240,028		—		—		249,317		249,317
Servicing rights	28,924		—		—		28,924		28,924
Other assets - derivative instruments	106,796		—		106,796		—		106,796
Financial liabilities:
Total deposits	19,359,217		—		19,217,281		—		19,217,281
Advances from the Federal Home Loan Bank	90,000		—		84,201		—		84,201
Borrowings, subordinated notes and debentures	325,679		—		302,487		—		302,487
Securities loaned	74,177		—		—		74,021		74,021
Customer, broker-dealer and clearing payables	301,127		—		—		301,127		301,127
Accounts payable and other liabilities - derivative instruments	102,949		—		102,949		—		102,949

The carrying amount represents the estimated fair value for cash, cash equivalents and restricted cash, stock of regulatory agencies, interest-bearing deposits, accrued interest receivable and payable, demand deposits, short-term debt, and variable rate loans or deposits that reprice frequently and fully. For fixed rate loans, deposits, borrowings or subordinated debt and for variable rate loans, deposits, borrowings or subordinated debt with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. A discussion of the methods of valuing trading securities, available-for-sale securities, loans held for sale and derivatives can be found in Note 3—“Fair Value” in the 2024 Form 10-K. The fair value of off-balance sheet items is not considered material.

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3. AVAILABLE-FOR-SALE SECURITIES

The amortized cost and fair value of available-for-sale securities were:


	December 31, 2024
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Mortgage-backed securities (MBS):
Agency1	$	49,176	$	61	$	(2,333)	$	46,904
Non-agency2	46,755		933		(276)		47,412
Total mortgage-backed securities	95,931		994		(2,609)		94,316


Municipal	3,856		—		(324)		3,532


Total available-for-sale securities	$	99,787	$	994	$	(2,933)	$	97,848



	June 30, 2024
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Mortgage-backed securities (MBS):
Agency1	$	29,835	$	83	$	(2,659)	$	27,259
Non-agency2	110,658		838		(568)		110,928
Total mortgage-backed securities	140,493		921		(3,227)		138,187


Municipal	3,788		—		(364)		3,424


Total available-for-sale securities	$	144,281	$	921	$	(3,591)	$	141,611

1 Includes securities guaranteed by Ginnie Mae, a U.S. government agency, and the government sponsored enterprises Fannie Mae and Freddie Mac.

2 Private sponsors of securities collateralized primarily by first-lien mortgage loans on commercial properties or by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by prime, Alt-A or pay-option ARM mortgages.

The Company evaluates available-for-sale securities in an unrealized loss position based on an analysis of a number of factors, including, but not limited to: (1) the credit characteristics of the securities, such as the forecasted cash flows, credit ratings, credit enhancement, and government agency or government-sponsored enterprise backing, as applicable, and (2) whether the Company intends to sell or will be required to sell any of the securities before recovering the amortized cost basis. Based on its analysis, the Company determined the unrealized losses on available-for-sale securities are primarily driven by the increase in interest rates since the securities were purchased and, accordingly, no credit losses were recognized on available-for-sale securities in the three and six months ended December 31, 2024 and December 31, 2023. There was no amount in the allowance for credit losses for available-for-sale securities at December 31, 2024 and June 30, 2024.

The face amounts of available-for-sale securities pledged to secure borrowings were $0.7 million and $0.8 million as of December 31, 2024 and June 30, 2024.

There were no sales of available-for-sale securities during the three months and six months ended December 31, 2024. The Company sold a $4.8 million available-for-sale security with no realized gain or loss during the three and six months ended December 31, 2023.

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Securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were:


	December 31, 2024
	Available-for-sale securities in loss position for
	Less Than 12 Months				More Than 12 Months				Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
MBS:
Agency	$	9,102	$	(21)	$	16,479	$	(2,312)	$	25,581	$	(2,333)
Non-agency	—		—		44,866		(276)		44,866		(276)
Total MBS	9,102		(21)		61,345		(2,588)		70,447		(2,609)


Municipal	—		—		3,532		(324)		3,532		(324)


Total available-for-sale securities	$	9,102	$	(21)	$	64,877	$	(2,912)	$	73,979	$	(2,933)

	June 30, 2024
	Available-for-sale securities in loss position for
	Less Than 12 Months				More Than 12 Months				Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
MBS:
Agency	$	2,644	$	(31)	$	19,298	$	(2,628)	$	21,942	$	(2,659)
Non-agency	15		—		78,364		(568)		78,379		(568)
Total MBS	2,659		(31)		97,662		(3,196)		100,321		(3,227)


Municipal	—		—		3,424		(364)		3,424		(364)


Total available-for-sale securities	$	2,659	$	(31)	$	101,086	$	(3,560)	$	103,745	$	(3,591)

The following table sets forth the expected maturity distribution of our mortgage-backed securities, which is based on assumed prepayment rates, and the maturity distribution of our non-MBS, which is based on the contractual maturity:


	As of December 31, 2024
(Dollars in thousands)	Total Amount		Due Within One Year		Due after One but within Five Years		Due after Five but within Ten Years		Due After Ten Years
MBS:
Agency	$	49,176	$	10,960	$	30,660	$	5,769	$	1,787
Non-Agency	$	46,755	$	42,981	$	1,277	$	1,288	$	1,209
Total MBS	$	95,931	$	53,941	$	31,937	$	7,057	$	2,996

Municipal	$	3,856	$	—	$	—	$	—	$	3,856

Available-for-sale—Amortized cost	$	99,787	$	53,941	$	31,937	$	7,057	$	6,852
Available-for-sale—Fair value	$	97,848	$	53,456	$	30,918	$	6,768	$	6,706

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4. LOANS & ALLOWANCE FOR CREDIT LOSSES

The Company categorizes the loan portfolio into five segments: Single Family - Mortgage & Warehouse, Multifamily and Commercial Mortgage, Commercial Real Estate, Commercial & Industrial - Non Real Estate (“Non-RE”) and Auto & Consumer. For further detail of the segments of the Company’s loan portfolio, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2024 Form 10-K.

The following table sets forth the composition of the loan portfolio:


(Dollars in thousands)	December 31, 2024		June 30, 2024
Single Family - Mortgage & Warehouse	$	4,149,778	$	4,178,832
Multifamily and Commercial Mortgage1	3,430,948		3,861,931
Commercial Real Estate1	6,214,834		6,088,622
Commercial & Industrial - Non-RE	5,809,877		5,241,766
Auto & Consumer	420,937		431,660

Total gross loans	20,026,374		19,802,811
Allowance for credit losses - loans	(270,605)		(260,542)
Unaccreted premiums (discounts) and loan fees	(269,042)		(310,884)
Total net loans	$	19,486,727	$	19,231,385

1 Includes purchased credit deteriorated (“PCD”) loans of $281.3 million and $284.0 million in Multifamily and Commercial Mortgage and $44.5 million and $44.5 million in Commercial Real Estate as of December 31, 2024 and June 30, 2024, respectively. For further detail on PCD loans, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2024 Form 10-K.

Accrued interest receivable on loans held for investments totaled $111.3 million and $119.8 million as of December 31, 2024 and June 30, 2024, respectively.

At December 31, 2024 and June 30, 2024, the Company pledged certain loans totaling $4,326.2 million and $4,942.8 million, respectively, to the FHLB and $8,129.0 million and $8,197.2 million, respectively, to the Federal Reserve Bank of San Francisco (“FRBSF”).

The following table presents loan-to-value (“LTV”) for the Company’s real estate loans outstanding as of December 31, 2024:


	Total Real Estate Loans		Single Family - Mortgage & Warehouse		Multifamily and Commercial Mortgage		Commercial Real Estate
Weighted-Average LTV	47.5	%	55.7	%	51.0	%	40.1	%
Median LTV	52.0	%	53.0	%	49.0	%	43.9	%

The following table presents the components of the provision for credit losses:


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
(Dollars in thousands)	2024		2023		2024		2023
Provision for credit losses - loans	$	11,748	$	12,500	$	23,248	$	18,250
Provision for credit losses - unfunded lending commitments	500		1,000		3,000		2,250
Total provision for credit losses	$	12,248	$	13,500	$	26,248	$	20,500

The following tables summarize activity in the allowance for credit losses - loans by portfolio segment:



	For the Three Months Ended December 31, 2024
(Dollars in thousands)	Single Family-Mortgage & Warehouse		Multifamily and Commercial Mortgage		Commercial Real Estate		Commercial & Industrial - Non-RE		Auto & Consumer		Total
Balance at October 1, 2024	$	17,453	$	65,608	$	95,032	$	76,555	$	9,206	$	263,854

Provision (benefit) for credit losses - loans	(1,355)		(6,334)		7,422		8,030		3,985		11,748
Charge-offs	—		(3,197)		—		(130)		(2,495)		(5,822)
Recoveries	6		—		—		—		819		825
Balance at December 31, 2024	$	16,104	$	56,077	$	102,454	$	84,455	$	11,515	$	270,605

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	For the Three Months Ended December 31, 2023
(Dollars in thousands)	Single Family-Mortgage & Warehouse		Multifamily and Commercial Mortgage		Commercial Real Estate		Commercial & Industrial - Non-RE		Auto & Consumer		Total
Balance at October 1, 2023	$	17,426	$	15,874	$	71,355	$	54,592	$	11,623	$	170,870
Allowance for credit losses at acquisition of PCD loans	—		58,972		11,125		—		—		70,097
Provision (benefit) for credit losses - loans	(2,080)		3,507		(4,702)		14,695		1,080		12,500
Charge-offs	—		—		—		(86)		(2,321)		(2,407)
Recoveries	10		—		—		—		679		689
Balance at December 31, 2023	$	15,356	$	78,353	$	77,778	$	69,201	$	11,061	$	251,749



	For the Six Months Ended December 31, 2024
(Dollars in thousands)	Single Family-Mortgage & Warehouse		Multifamily and Commercial Mortgage		Commercial Real Estate		Commercial & Industrial - Non-RE		Auto & Consumer		Total
Balance at July 1, 2024	$	16,943	$	70,771	$	87,780	$	76,032	$	9,016	$	260,542

Provision (benefit) for credit losses - loans	(891)		(8,140)		14,674		11,585		6,020		23,248
Charge-offs	—		(6,554)		—		(3,162)		(5,344)		(15,060)
Recoveries	52		—		—		—		1,823		1,875
Balance at December 31, 2024	$	16,104	$	56,077	$	102,454	$	84,455	$	11,515	$	270,605



	For the Six Months Ended December 31, 2023
(Dollars in thousands)	Single Family-Mortgage & Warehouse		Multifamily and Commercial Mortgage		Commercial Real Estate		Commercial & Industrial - Non-RE		Auto & Consumer		Total
Balance at July 1, 2023	$	17,503	$	16,848	$	72,755	$	46,347	$	13,227	$	166,680
Allowance for credit losses at acquisition of PCD loans	—		58,972		11,125		—		—		70,097
Provision (benefit) for credit losses - loans	(2,090)		2,533		(6,102)		22,940		969		18,250
Charge-offs	(80)		—		—		(86)		(4,602)		(4,768)
Recoveries	23		—		—		—		1,467		1,490
Balance at December 31, 2023	$	15,356	$	78,353	$	77,778	$	69,201	$	11,061	$	251,749

For the three and six months ended December 31, 2024, the allowance for credit losses for loans increased as a result of the provision for credit losses, partially offset by net charge-offs. The provision for credit losses was primarily due to the quantitative impact of macroeconomic variables in the allowance for credit losses model, primarily the U.S. unemployment rate and commercial real estate mortgage rates, as well as loan growth, increases in specific reserves and certain qualitative adjustments, mainly in the commercial & industrial - non-RE portfolio.

Loan products within each portfolio contain varying collateral types which impact the estimate of the loss given default utilized in the calculation of the allowance for credit losses for loans. For further discussion of the model method of estimating expected lifetime credit losses, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2024 Form 10-K.

The following tables present a summary of the activity in the allowance for credit losses for off-balance sheet lending commitments:

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	Three Months Ended December 31,
(Dollars in thousands)	2024		2023
Balance at October 1,	$	12,723	$	11,723
Provision for credit losses - unfunded lending commitments	500		1,000
Balance at December 31,	$	13,223	$	12,723

	Six Months Ended December 31,
(Dollars in thousands)	2024		2023
Balance at July 1,	$	10,223	$	10,473
Provision for credit losses - unfunded lending commitments	3,000		2,250
Balance at December 31,	$	13,223	$	12,723

The increase in the allowance for off-balance sheet lending commitments for the three and six months ended December 31, 2024, was primarily driven by unfunded lending commitment growth, primarily in the commercial & industrial - non-RE portfolio.

Credit Quality Disclosures. The following tables provide the composition of loans that are performing and nonaccrual by portfolio segment:


	December 31, 2024
(Dollars in thousands)	Single Family-Mortgage & Warehouse		Multifamily and Commercial Mortgage		Commercial Real Estate		Commercial & Industrial - Non-RE		Auto & Consumer		Total
Performing	$	4,080,208	$	3,381,791	$	6,155,068	$	5,739,018	$	418,757	$	19,774,842
Nonaccrual	69,570		49,157		59,766		70,859		2,180		251,532
Total	$	4,149,778	$	3,430,948	$	6,214,834	$	5,809,877	$	420,937	$	20,026,374
Nonaccrual loans to total loans											1.26		%


	June 30, 2024
(Dollars in thousands)	Single Family-Mortgage & Warehouse		Multifamily and Commercial Mortgage		Commercial Real Estate		Commercial & Industrial - Non-RE		Auto & Consumer		Total
Performing	$	4,133,121	$	3,826,877	$	6,062,520	$	5,237,746	$	429,188	$	19,689,452
Nonaccrual	45,711		35,054		26,102		4,020		2,472		113,359
Total	$	4,178,832	$	3,861,931	$	6,088,622	$	5,241,766	$	431,660	$	19,802,811
Nonaccrual loans to total loans											0.57		%

There were no nonaccrual loans without an allowance for credit losses as of December 31, 2024 and June 30, 2024. There was no interest income recognized on nonaccrual loans in the three and six months ended December 31, 2024 and 2023. Loans reaching 90 days past due are generally placed on nonaccrual status and risk rated as substandard or doubtful. Loans not yet reaching 90 days past due may be placed on nonaccrual status based on management’s assessment of the aging of contractual principal amounts due, among other factors.

Credit Quality Indicators. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends. In addition to the borrower’s primary source of repayment, in its risk rating process the Company considers all available sources of repayment, including obligor guaranties and liquidations of pledged collateral, where individually or together such sources would fully repay the loan on a timely basis. The Company analyzes loans individually by classifying the loans based on credit risk. The Company uses the following internally-defined risk ratings:

Pass. Loans where repayment in full is expected through any of the borrower’s sources of repayment.

Special Mention. Loans where any credit risk is not considered significant yet require management’s attention given certain currently identified characteristics of the borrower, collateral securing the loan and the obligor’s net worth and paying capacity. If the identified credit risks are not adequately monitored or mitigated, the loan may weaken and the Company’s credit position with respect to the loan may deteriorate in the future.

Substandard. Loans where currently identified characteristics of the borrower, collateral securing the loan and the obligor’s net worth and paying capacity, taken together, could jeopardize the repayment of the debt. A loan not fully supported by at least one available source of repayment and involves a distinct possibility that the Company will sustain some loss in that

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loan if the weakness is not cured. A loan supported by a guaranty, collateral sufficient to incentivize a sale or refinance, or cash flow that is sufficient for timely repayment in full will not be classified as substandard even if the loan has a well-defined weakness in other sources of repayment.

Doubtful. Loans reflecting the same characteristics as those classified as substandard, but for which repayment in full in accordance with the contractual terms is currently considered highly unlikely.

The Company reviews and grades loans following a continuous review process, featuring coverage of all loan types and business lines at least quarterly. Continuous reviewing provides more effective risk monitoring because it immediately tests for potential impacts caused by changes in personnel, policy, products or underwriting standards.

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The following tables present the composition of loans by portfolio segment, fiscal year of origination and credit quality indicator, and the amount of year-to-date gross charge-offs.


	December 31, 2024
	Loans Held for Investment by Fiscal Year of Origination												Revolving Loans		Total
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior
Single Family-Mortgage & Warehouse
Pass	$	228,407	$	358,736	$	502,219	$	1,107,651	$	464,983	$	848,732	$	500,009	$	4,010,737
Special Mention	—		4,119		1,455		19,542		2,978		22,172		8,551		58,817
Substandard	—		1,200		5,704		15,602		5,832		51,886		—		80,224
Doubtful	—		—		—		—		—		—		—		—
Total	228,407		364,055		509,378		1,142,795		473,793		922,790		508,560		4,149,778
Year-to-date gross charge-offs	—		—		—		—		—		—		—		—
Multifamily and Commercial Mortgage
Pass	22,417		29,290		652,116		981,431		468,493		1,099,774		—		3,253,521
Special Mention	—		—		23,199		58,964		4,340		25,096		—		111,599
Substandard	—		—		—		16,035		2,000		47,793		—		65,828
Doubtful	—		—		—		—		—		—		—		—
Total	22,417		29,290		675,315		1,056,430		474,833		1,172,663		—		3,430,948
Year-to-date gross charge-offs	—		—		—		—		—		6,554		—		6,554
Commercial Real Estate
Pass	1,517,172		1,592,351		1,031,855		883,495		143,351		30,000		881,147		6,079,371
Special Mention	—		53,875		—		—		—		—		—		53,875
Substandard	—		—		—		43,525		5,000		29,191		3,872		81,588
Doubtful	—		—		—		—		—		—		—		—
Total	1,517,172		1,646,226		1,031,855		927,020		148,351		59,191		885,019		6,214,834
Year-to-date gross charge-offs	—		—		—		—		—		—		—		—
Commercial & Industrial - Non-RE
Pass	462,836		831,133		405,020		148,634		46,117		41,238		3,552,851		5,487,829
Special Mention	—		16,271		—		—		—		—		7,213		23,484
Substandard	—		14,065		34,532		127,126		3,665		2,989		106,187		288,564
Doubtful	—		—		—		10,000		—		—		—		10,000
Total	462,836		861,469		439,552		285,760		49,782		44,227		3,666,251		5,809,877
Year-to-date gross charge-offs	—		—		130		—		1,032		—		2,000		3,162
Auto & Consumer
Pass	74,619		57,408		93,350		141,743		32,646		18,154		—		417,920
Special Mention	16		27		204		349		91		1		—		688
Substandard	—		225		504		976		156		468		—		2,329
Doubtful	—		—		—		—		—		—		—		—
Total	74,635		57,660		94,058		143,068		32,893		18,623		—		420,937
Year-to-date gross charge-offs	18		281		1,620		2,395		704		326		—		5,344
Total
Pass	2,305,451		2,868,918		2,684,560		3,262,954		1,155,590		2,037,898		4,934,007		19,249,378
Special Mention	16		74,292		24,858		78,855		7,409		47,269		15,764		248,463
Substandard	—		15,490		40,740		203,264		16,653		132,327		110,059		518,533
Doubtful	—		—		—		10,000		—		—		—		10,000
Total	$	2,305,467	$	2,958,700	$	2,750,158	$	3,555,073	$	1,179,652	$	2,217,494	$	5,059,830	$	20,026,374
As a % of total gross loans	11.5%		14.8%		13.7%		17.7%		5.9%		11.1%		25.3%		100.0%
Total year-to-date gross charge-offs	$	18	$	281	$	1,750	$	2,395	$	1,736	$	6,880	$	2,000	$	15,060

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	June 30, 2024
	Loans Held for Investment by Fiscal Year of Origination												Revolving Loans		Total
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior
Single Family-Mortgage & Warehouse
Pass	$	491,822	$	590,060	$	1,200,230	$	487,132	$	291,047	$	720,049	$	256,778	$	4,037,118
Special Mention	31,000		—		24,489		665		6,591		26,873		—		89,618
Substandard	—		283		6,728		—		14,720		30,365		—		52,096
Doubtful	—		—		—		—		—		—		—		—
Total	522,822		590,343		1,231,447		487,797		312,358		777,287		256,778		4,178,832
Year-to-date gross charge-offs	—		—		—		—		—		172		—		172
Multifamily and Commercial Mortgage
Pass	36,058		700,163		994,004		595,299		510,341		811,184		—		3,647,049
Special Mention	—		29,325		46,194		17,478		9,011		10,277		—		112,285
Substandard	—		13,489		12,509		15,507		41,013		20,079		—		102,597
Doubtful	—		—		—		—		—		—		—		—
Total	36,058		742,977		1,052,707		628,284		560,365		841,540		—		3,861,931
Year-to-date gross charge-offs	—		—		—		—		640		—		—		640
Commercial Real Estate
Pass	1,952,001		1,419,399		1,456,643		221,061		7,741		53,000		866,686		5,976,531
Special Mention	—		—		27,452		—		—		—		—		27,452
Substandard	—		5,600		43,700		5,000		—		30,339		—		84,639
Doubtful	—		—		—		—		—		—		—		—
Total	1,952,001		1,424,999		1,527,795		226,061		7,741		83,339		866,686		6,088,622
Year-to-date gross charge-offs	—		—		—		—		—		—		—		—
Commercial & Industrial - Non-RE
Pass	991,497		458,454		238,397		44,923		10,422		12,867		3,295,425		5,051,985
Special Mention	—		1,613		731		1,818		—		—		5,349		9,511
Substandard	—		34,433		122,729		1,031		—		2,988		19,089		180,270
Doubtful	—		—		—		—		—		—		—		—
Total	991,497		494,500		361,857		47,772		10,422		15,855		3,319,863		5,241,766
Year-to-date gross charge-offs	—		—		—		—		—		84		—		84
Auto & Consumer
Pass	65,766		114,615		177,043		43,287		13,402		14,056		—		428,169
Special Mention	33		213		422		176		—		61		—		905
Substandard	142		547		1,264		410		114		109		—		2,586
Doubtful	—		—		—		—		—		—		—		—
Total	65,941		115,375		178,729		43,873		13,516		14,226		—		431,660
Year-to-date gross charge-offs	202		3,471		5,212		1,556		303		269		—		11,013
Total
Pass	3,537,144		3,282,691		4,066,317		1,391,702		832,953		1,611,156		4,418,889		19,140,852
Special Mention	31,033		31,151		99,288		20,137		15,602		37,211		5,349		239,771
Substandard	142		54,352		186,930		21,948		55,847		83,880		19,089		422,188
Doubtful	—		—		—		—		—		—		—		—
Total	$	3,568,319	$	3,368,194	$	4,352,535	$	1,433,787	$	904,402	$	1,732,247	$	4,443,327	$	19,802,811
As a % of total gross loans	18.0%		17.0%		22.0%		7.2%		4.6%		8.8%		22.4%		100%
Total year-to-date gross charge-offs	$	202	$	3,471	$	5,212	$	1,556	$	943	$	525	$	—	$	11,909

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The following tables provide the aging of loans by portfolio segment:


	December 31, 2024
(Dollars in thousands)	Current			30-59 Days			60-89 Days			90+ Days			Total
Single Family-Mortgage & Warehouse	$	4,063,877		$	21,352		$	12,671		$	51,878		$	4,149,778
Multifamily and Commercial Mortgage	3,373,736			8,557			14,818			33,837			3,430,948
Commercial Real Estate	6,126,947			15,000			3,185			69,702			6,214,834
Commercial & Industrial - Non-RE	5,784,695			7,588			—			17,594			5,809,877
Auto & Consumer	413,813			5,502			767			855			420,937


Total	$	19,763,068		$	57,999		$	31,441		$	173,866		$	20,026,374
As a % of total gross loans	98.68		%	0.29		%	0.16		%	0.87		%	100		%


	June 30, 2024
(Dollars in thousands)	Current			30-59 Days			60-89 Days			90+ Days			Total
Single Family-Mortgage & Warehouse	$	4,070,186		$	46,387		$	18,401		$	43,858		$	4,178,832
Multifamily and Commercial Mortgage	3,795,387			13,074			8,554			44,916			3,861,931
Commercial Real Estate	6,024,470			—			25,950			38,202			6,088,622
Commercial & Industrial - Non-RE	5,240,734			—			—			1,032			5,241,766
Auto & Consumer	424,555			4,644			996			1,465			431,660

Total	$	19,555,332		$	64,105		$	53,901		$	129,473		$	19,802,811
As a % of total gross loans	98.75		%	0.33		%	0.27		%	0.65		%	100		%

Loans reaching 90 or more days past due are generally placed on nonaccrual. As of December 31, 2024 and June 30, 2024, there were loans of $34.7 million and $20.2 million, respectively, over 90 days past due and still accruing interest as the Company expects to collect the principal and interest amounts due.

Single family mortgage loans in process of foreclosure were $28.8 million and $20.1 million as of December 31, 2024 and June 30, 2024, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty. The Company may grant certain modifications of loans to borrowers experiencing financial difficulty, which effective following the adoption of ASU 2022-02, are reported as financial difficulty modifications (“FDMs”). The Company’s modification programs provide various modifications to borrowers experiencing financial difficulty which may include interest rate reductions, term extensions, payment delays and/or principal forgiveness. For the three and six months ended December 31, 2024 and 2023, there were no FDMs.

5. DERIVATIVES

For additional information on the Company’s derivative instruments, see Note 1—“Organizations and Summary of Significant Accounting Policies”, Note 3—“Fair Value” and Note 6—“Derivatives” in the 2024 Form 10-K and Note 2—“Fair Value.”

The following table presents the notional amounts and fair values of the Company’s derivative instruments. While the notional amounts give an indication of the volume of the Company’s derivatives activity, the notional amounts significantly exceed, in the Company’s view, the possible losses that could arise from such transactions. For most derivative contracts, the notional amount is not exchanged, rather it is a reference amount used to calculate payments. As of June 30, 2024, there were no derivatives designated in hedge accounting relationships.


	December 31, 2024						June 30, 2024
			Fair Value						Fair Value
(Dollars in thousands)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate contracts	$	400,000	$	7,428	$	—	$	—	$	—	$	—
Derivatives not designated as hedging instruments
Interest rate contracts1	2,593,540		8,935		83,957		2,435,874		106,796		102,949
Total derivatives	$	2,993,540	$	16,363	$	83,957	$	2,435,874	$	106,796	$	102,949

1 Derivative assets are presented net of $78.0 million of variation margin on centrally-cleared derivatives as of December 31, 2024.

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Derivatives designated as hedging instruments

The following table presents pre-tax gains/(losses) on derivative instruments used in cash flow hedge accounting relationships.


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
(Dollars in thousands)	2024		2023		2024		2023
Amounts recorded in OCI	$	8,073	$	—	$	8,626
Amounts reclassified from AOCI to income	(1,478)		—		(1,478)
Total change in OCI for period	$	6,595	$	—	$	7,148	$	—

The Company did not experience any forecasted transactions that failed to occur during the three and six months ended December 31, 2024 or 2023. There are no amounts excluded from the assessment of hedge effectiveness.

As of December 31, 2024, the Company expects that approximately $3.5 million of pre-tax net gain related to cash flow hedges recorded in AOCI will be recognized in income over the next 12 months. The maximum length of time over which forecasted transactions are hedged is approximately 2.7 years.

Derivatives not designated as hedging instruments

The following table presents the pre-tax gains/(losses) related to the Company’s derivative instrument activity recognized in the Condensed Consolidated Statements of Income:


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
(Dollars in thousands)	2024		2023		2024		2023
Banking and service fees	$	(185)	$	50	$	(1,557)	$	390
Mortgage banking and servicing rights income	(134)		231		(385)		508

6. OFFSETTING OF DERIVATIVES AND SECURITIES FINANCING AGREEMENTS

The Company enters into derivatives transactions as part of its mortgage banking activities, market making activity in interest rate swap and cap derivatives to facilitate customer demand and hedging activities related to interest rate risk management, and enters into securities borrowed and securities loaned transactions to facilitate customer match-book activity, cover short positions and support customer securities lending. For additional information on offsetting see Note 7—“Offsetting of Derivatives and Securities Financing Agreements” in the 2024 Form 10-K.

The following tables present information about the offsetting of these instruments and related collateral amounts:


	December 31, 2024
(Dollars in thousands)	Gross Assets / Liabilities		Amounts Offset		Net Balance Sheet Amount		Amounts Not Offset2		Net Assets / Liabilities
Assets:
Securities borrowed	$	114,672	$	—	$	114,672	$	114,672	$	—
Other Assets — Derivative Assets1	16,363		—		16,363		15,221		1,142
Liabilities:
Securities loaned	$	135,258	$	—	$	135,258	$	135,258	$	—
Accounts Payable and Other Liabilities — Derivative Liabilities	83,957		—		83,957		1,147		82,810

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	June 30, 2024
(Dollars in thousands)	Gross Assets / Liabilities		Amounts Offset		Net Balance Sheet Amount		Amounts Not Offset2		Net Assets / Liabilities
Assets:
Securities borrowed	$	67,212	$	—	$	67,212	$	67,212	$	—
Other Assets — Derivative Assets	106,796		—		106,796		18,524		88,272
Liabilities:
Securities loaned	$	74,177	$	—	$	74,177	$	74,177	$	—
Accounts Payable and Other Liabilities — Derivative Liabilities	102,949		—		102,949		414		102,535

1 Other Assets - Derivative Assets are presented net of $78.0 million of variation margin on centrally-cleared derivatives as of December 31, 2024.

2 Amounts not offset reflect cash collateral received on Derivative Assets of $14.2 million and $18.1 million as of December 31, 2024 and June 30, 2024, respectively, and cash collateral placed on Derivative Liabilities of $0.1 million as of December 31, 2024. There was no cash collateral placed on Derivative Liabilities as of June 30, 2024.

The securities loaned transactions represent equities with an overnight and open maturity classification as of both periods presented.

7. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

The Company has an equity incentive plan, the Amended and Restated 2014 Stock Incentive Plan (the “2014 Plan”), which provides for the granting of non-qualified and incentive stock options, restricted stock and restricted stock units, stock appreciation rights and other awards to employees, directors and consultants. The Company also has an employment agreement with its Chief Executive Officer that provides for an award of restricted stock units. For additional information regarding the Company’s stock-based compensation plans, see Note 16—“Stock-Based Compensation” in the 2024 Form 10-K.

At December 31, 2024, 1,251,191 shares of common stock were authorized for future awards under the 2014 Plan. As of December 31, 2024, the total compensation cost not yet recognized related to non-vested awards was $56.6 million, which is expected to be recognized over a weighted-average period of 1.3 years.

The following table presents the status and changes in RSUs:


	RSUs	Weighted-Average Grant-Date Fair Value
Non-vested balance at June 30, 2024	1,541,194	$	43.95
Granted	703,218	64.68
Vested	(349,700)	42.63
Forfeited	(52,114)	47.06
Non-vested balance at December 31, 2024	1,842,598	$	52.02

The total fair value of shares vested for the three and six months ended December 31, 2024 was $0.7 million and $23.2 million, respectively. The total fair value of shares vested for the three and six months ended December 31, 2023 was $0.1 million and $14.9 million, respectively.

Common Stock Repurchases.

The following table presents common stock repurchases:


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
(Dollars in thousands except per share data)	2024		2023		2024		2023
Total repurchase	$	—	$	58,650	$	—	$	83,186
Number of shares repurchased	—		1,607,301		—		2,255,509
Average price paid per share	$	—	$	36.49	$	—	$	36.88

As of December 31, 2024, there was $106.5 million of share repurchase authorization remaining. The share repurchase program will continue in effect until terminated by the Board of Directors of the Company. For additional information regarding the Company’s share repurchase program, see Note 15—“Stockholders' Equity” in the 2024 Form 10-K.

At-the-Market Equity Offering

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with an aggregate offering price of up to $150,000,000. The Company will issue the stock pursuant to a previously effective registration statement and a prospectus supplement filed with the SEC on January 28, 2025.

Accumulated Other Comprehensive Income

AOCI includes the after-tax change in unrealized gains and losses on investment securities and cash flow hedging activities.


	For the Three Months Ended December 31, 2024
(Dollars in thousands)	Unrealized gain (loss) on available-for-sale securities		Cash flow hedges		Accumulated other comprehensive income
Balance at September 30, 2024	$	(1,147)	$	382	$	(765)
Other comprehensive income/(loss)	(784)		4,556		3,772
Balance at December 31, 2024	$	(1,931)	$	4,938	$	3,007


	For the Three Months Ended December 31, 2023
(Dollars in thousands)	Unrealized gain (loss) on available-for-sale securities		Cash flow hedges		Accumulated other comprehensive income
Balance at September 30, 2023	$	(6,388)	$	—	$	(6,388)
Other comprehensive income/(loss)	2,469		—		2,469
Balance at December 31, 2023	$	(3,919)	$	—	$	(3,919)


	For the Six Months Ended December 31, 2024
(Dollars in thousands)	Unrealized gain (loss) on available-for-sale securities		Cash flow hedges		Accumulated other comprehensive income
Balance at June 30, 2024	$	(2,466)	$	—	$	(2,466)
Other comprehensive income/(loss)	535		4,938		5,473
Balance at December 31, 2024	$	(1,931)	$	4,938	$	3,007


	For the Six Months Ended December 31, 2023
(Dollars in thousands)	Unrealized gain (loss) on available-for-sale securities		Cash flow hedges		Accumulated other comprehensive income
Balance at June 30, 2023	$	(6,610)	$	—	$	(6,610)
Other comprehensive income/(loss)	2,691		—		2,691
Balance at December 31, 2023	$	(3,919)	$	—	$	(3,919)

The following table presents the pre-tax and after-tax changes in the components of other comprehensive income.



	For the Three Months Ended December 31, 2024						For the Three Months Ended December 31, 2023
(Dollars in thousands)	Pre-tax		Tax effect		After-tax		Pre-tax		Tax effect		After-tax
Unrealized gain/(loss) on investment securities:
Net unrealized gains/(losses) arising during the period	$	(1,153)	$	369	$	(784)	$	3,527	$	(1,058)	$	2,469
Reclassification adjustment for realized (gains)/losses included in net income	—		—		—		—		—		—
Net change	$	(1,153)	$	369	$	(784)	$	3,527	$	(1,058)	$	2,469
Cash flow hedges:
Net unrealized gains/(losses) arising during the period	$	8,073	$	(2,496)	$	5,577	$	—	$	—	$	—
Reclassification adjustment for realized (gains)/losses included in net income	(1,478)		457		(1,021)		—		—		—
Net change	6,595		(2,039)		4,556		—		—		—
Total other comprehensive income/(loss)	$	5,442	$	(1,670)	$	3,772	$	3,527	$	(1,058)	$	2,469

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	For the Six Months Ended December 31, 2024						For the Six Months Ended December 31, 2023
(Dollars in thousands)	Pre-tax		Tax effect		After-tax		Pre-tax		Tax effect		After-tax
Unrealized gain/(loss) on investment securities:
Net unrealized gains/(losses) arising during the period	$	731	$	(196)	$	535	$	3,861	$	(1,170)	$	2,691
Reclassification adjustment for realized (gains)/losses included in net income	—		—		—		—		—		—
Net change	$	731	$	(196)	$	535	$	3,861	$	(1,170)	$	2,691
Cash flow hedges:
Net unrealized gains/(losses) arising during the period	$	8,626	$	(2,667)	$	5,959	$	—	$	—	$	—
Reclassification adjustment for realized (gains)/losses included in net income	(1,478)		457		(1,021)		—		—		—
Net change	7,148		(2,210)		4,938		—		—		—
Total other comprehensive income	$	7,879	$	(2,406)	$	5,473	$	3,861	$	(1,170)	$	2,691

8. EARNINGS PER COMMON SHARE

The following table presents the calculation of basic and diluted earnings per common share (“EPS”):


	Three Months Ended				Six Months Ended
	December 31,				December 31,
(Dollars in thousands, except per share data)	2024		2023		2024		2023
Earnings Per Common Share
Net income	$	104,687	$	151,771	$	217,027	$	234,416
Average common shares issued and outstanding	57,094,153		57,216,621		57,014,412		58,082,830
Earnings per common share	$	1.83	$	2.65	$	3.81	$	4.04
Diluted Earnings Per Common Share

Average common shares issued and outstanding	57,094,153		57,216,621		57,014,412		58,082,830
Dilutive effect of average unvested RSUs	1,131,853		716,213		1,248,511		847,597
Average dilutive common shares outstanding	58,226,006		57,932,834		58,262,923		58,930,427
Diluted earnings per common share	$	1.80	$	2.62	$	3.72	$	3.98
Weighted average antidilutive common stock equivalents (excluded from the computation of EPS)	32,933		1,598		17,333		837

For further information regarding the Company’s EPS calculation, see Note 17—“Earnings per Common Share” in the 2024 Form 10-K.

9. COMMITMENTS AND CONTINGENCIES

Credit-Related Financial Instruments. The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets.

The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments. The following table presents a summary of off-balance sheet commitments.

Commitments to extend credit are agreements to lend to a customer so long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer. For single family loans classified as held for sale, the Company matches unfunded commitments to originate loans with commitments to sell loans. The Company also has standby letters of credit commitments.

In addition, the Company has $33.8 million of commitments to contribute capital to LIHTC investments included in “Accounts payable and other liabilities” on the Consolidated Balance Sheets. See Note 12—“Other Assets” for additional information on LIHTC investments.

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(dollars in thousands)	December 31, 2024
Commitments to fund loans	$	4,184,973
Commitments to sell loans	$	2,585
Standby letters of credit	$	9,814
Commitments to contribute capital	$	3,513

In the normal course of business, Axos Clearing LLC’s (“Axos Clearing”) customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose Axos Clearing to off-balance-sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and Axos Clearing has to purchase or sell the financial instrument underlying the contract at a loss. Axos Clearing’s clearing agreements with broker-dealers for which it provides clearing services requires them to indemnify Axos Clearing if customers fail to satisfy their contractual obligation.

Litigation. A consolidated derivative action, In re BofI Holding, Inc., Case No. 15cv2722 GPC (KSC), is pending before the United States District Court for the Southern District of California (the “Derivative Action”). The complaint in the Derivative Action sets forth allegations made in a related employment action, Erhart v. BofI Holding Inc., No. 15cv2287 BAS (NLS) (S.D. Cal.) (the “Employment Action”) brought by a former employee of the Company and was stayed pending resolution of the Employment Action. On October 4, 2023, the court hearing the Employment Action entered a final amended judgment awarding damages and attorneys’ fees to the plaintiff. The defendant filed a Notice of Appeal from the Employment Action judgment and all orders merged therein, and the parties have filed opening and responsive briefs and an oral argument was held on January 15, 2025. On January 2, 2024, the Derivative Action plaintiff filed a Third Amended Complaint. On March 5, 2024, the court stayed the case until resolution of the appeal in the Employment Action. The Derivative Action defendants dispute, and intend to vigorously defend against, the allegations raised in the Third Amended Complaint. The Derivative Action plaintiff seeks damages on behalf of the Company with respect to the Employment Action and also seeks damages on behalf of the Company in connection with a now settled securities class action that was also based upon allegations made in the Employment Action and settled within available insurance coverage without attribution of wrongdoing to the Company, its management, or its directors.

In view of the inherent difficulty of predicting the final outcome of the Employment Action it is not possible to reasonably predict or estimate the eventual loss or range of loss, if any, related thereto.

On October 26, 2022, a jury verdict was reached in the case of MUFG Union Bank, N.A. v. Axos Bank, et al, awarding damages to MUFG Union Bank, N.A. Judgment on such verdict was initially entered on June 5, 2023, and a corrected judgment was entered on June 20, 2023. The Company filed a Notice of Appeal to the Supreme Court of the State of New York Appellate Division (the “Appellate Division”) on July 6, 2023, and the plaintiff filed a Notice of Cross-Appeal on July 20, 2023. The Appellate Division held oral arguments on the appeal and cross-appeal on March 5, 2024. On March 26, 2024, the Appellate Division entered an order vacating the finding of liability and award of $2.5 million in damages for plaintiff’s breach of contract claim as well as the associated prejudgment interest. In addition, the Appellate Division rejected plaintiff’s cross appeal. On July 18, 2024, the Appellate Division denied defendants’ motion for leave to appeal and plaintiff’s cross-motion for re-argument or leave to appeal the March 26, 2024 order. On August 19, 2024, the Company and the plaintiff each filed a motion for leave to appeal with the New York Court of Appeals. Oppositions to each motion were filed on September 3, 2024. The Company recorded a $16 million accrued expense in “Accounts payable and other liabilities” on the Consolidated Balance Sheets and in “General and administrative expense” on the Consolidated Statement of Income as of and for the fiscal year ended June 30, 2023, respectively. Given the uncertainty of the appellate process and other factors that are unknown or currently unquantifiable, the Company maintained its accrual at December 31, 2024.

10. SEGMENT REPORTING AND REVENUE INFORMATION

Segment Reporting. The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance. The operating segments and segment results of the Company are determined based upon the management reporting system, which assigns balance sheet and income statement items to each of the business segments.

The Company evaluates performance and allocates resources based on pre-tax profit or loss from operations. Certain corporate administration costs have not been allocated to the reportable segments. The Company operates through two operating segments: Banking Business Segment and Securities Business Segment. 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

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customers. For more information on the Company’s operating segments, see Note 22—“Segment Reporting” in the 2024 Form 10-K.

In order to reconcile the two segments to the consolidated totals, the Company includes corporate activities and intercompany eliminations. The following tables present the operating results, goodwill, and assets of the segments:


	For the Three Months Ended December 31, 2024
(Dollars in thousands)	Banking Business		Securities Business		Corporate/Eliminations		Axos Consolidated
Net interest income	$	276,720	$	7,007	$	(3,628)	$	280,099
Provision for credit losses	12,248		—		—		12,248
Non-interest income	2,948		29,004		(4,153)		27,799
Non-interest expense	114,536		28,178		2,606		145,320
Income before taxes	$	152,884	$	7,833	$	(10,387)	$	150,330

	For the Three Months Ended December 31, 2023
(Dollars in thousands)	Banking Business		Securities Business		Corporate/Eliminations		Axos Consolidated
Net interest income	$	226,635	$	6,080	$	(4,109)	$	228,606
Provision for credit losses	13,500		—		—		13,500
Non-interest income	103,779		32,641		(12,291)		124,129
Non-interest expense	102,282		27,968		(8,411)		121,839
Income before taxes	$	214,632	$	10,753	$	(7,989)	$	217,396

	For the Six Months Ended December 31, 2024
(Dollars in thousands)	Banking Business Segment		Securities Business Segment		Corporate/Eliminations		Axos Consolidated
Net interest income	$	565,212	$	14,274	$	(7,339)	$	572,147
Provision for credit losses	26,248		—		—		26,248
Non-interest income	11,538		58,906		(14,036)		56,408
Non-interest expense	232,851		56,269		3,665		292,785
Income before taxes	$	317,651	$	16,911	$	(25,040)	$	309,522

	For the Six Months Ended December 31, 2023
(Dollars in thousands)	Banking Business Segment		Securities Business Segment		Corporate/Eliminations		Axos Consolidated
Net interest income	$	435,854	$	11,622	$	(7,715)	$	439,761
Provision for credit losses	20,500		—		—		20,500
Non-interest income	116,336		67,196		(24,896)		158,636
Non-interest expense	203,068		55,491		(16,214)		242,345
Income before taxes	$	328,622	$	23,327	$	(16,397)	$	335,552

	As of December 31, 2024
(Dollars in thousands)	Banking Business Segment		Securities Business Segment		Corporate/Eliminations		Axos Consolidated
Goodwill	$	35,721	$	59,953	$	1,999	$	97,673
Total Assets	$	22,919,817	$	751,415	$	38,190	$	23,709,422

	As of June 30, 2024
(Dollars in thousands)	Banking Business Segment		Securities Business Segment		Corporate/Eliminations		Axos Consolidated
Goodwill	$	35,721	$	59,953	$	1,999	$	97,673
Total Assets	$	22,165,627	$	649,254	$	40,453	$	22,855,334

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Revenue Information. The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Accounting Standards Codification (“ASC”) 606 for the periods indicated. For additional information on the Company’s recognition of revenue and ASC 606, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2024 Form 10-K.


	For the Three Months Ended				For the Six Months Ended
	December 31,				December 31,
(Dollars in thousands)	2024		2023		2024		2023
Advisory fee income	$	7,982	$	7,362	$	15,927	$	15,581
Broker-dealer clearing fees	5,706		6,068		10,778		11,603
Deposit service fees	2,537		2,414		3,310		3,094
Card fees	683		732		1,606		1,414
Bankruptcy trustee and fiduciary service fees	1,106		1,397		2,395		2,791
Non-interest income (in-scope of ASC 606)	18,014		17,973		34,016		34,483
Non-interest income (out-of-scope of ASC 606)	9,785		106,156		22,392		124,153
Total non-interest income	$	27,799	$	124,129	$	56,408	$	158,636

11. BORROWINGS, SUBORDINATED NOTES AND DEBENTURES

Subordinated Notes. 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. On September 27, 2024, the Company paid $9.2 million to repurchase $9.5 million par value of its 4.875% Fixed-to-Floating Rate Subordinated Notes due October 1, 2030 resulting in a pre-tax non-cash gain on extinguishment of $0.2 million, after accounting for unamortized issuance costs and accrued interest. The non-cash gains are recorded in “General and administrative expense” in the condensed Consolidated Statements of Income for the six months ended December 31, 2024. For additional information on borrowings, see Note 13—“Borrowings, Subordinated Notes and Debentures” in the 2024 Form 10-K.

12. OTHER ASSETS

“Other Assets” in the Consolidated Balance Sheets primarily comprises bank-owned life insurance (“BOLI”), accrued interest receivable, derivatives, net deferred income tax assets, furniture, equipment and software, right-of-use lease assets, LIHTC investments and other receivables. For additional information on other assets, see Note 9—“Other Assets” in the 2024 Form 10-K. For additional information on accrued interest receivable, see Note 4—“Loans & Allowance for Credit Losses,” for additional information on derivatives, see Note 5—“Derivatives.”

BOLI. The Company purchased $100 million of BOLI policies on the lives of certain executives of the Company during the three months ended December 31, 2024. The Company is the owner and sole beneficiary of the policies.

LIHTC Investments. The Company recognized the following income and tax benefits for its LIHTC investments.


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
(Dollars in thousands)	2024		2023		2024		2023
Tax credits recognized	$	1,386	$	891	$	2,806	$	1,741
Other tax benefits recognized	156		311		468		624
Amortization	(1,247)		(819)		(2,653)		(1,667)
Net benefit (expense) included in income tax expense	295		383		621		698


Other income (loss) included in banking and service fees	—		2		—		2
Net benefit (expense) included in the Consolidated Statements of Income	$	295	$	385	$	621	$	700

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The Company recognized the following investments on its balance sheets.


(Dollars in thousands)	As of December 31, 2024		As of June 30, 2024
LIHTC investments	$	63,059	$	65,873
LIHTC unfunded commitments1	$	33,817	$	40,617

1LIHTC unfunded commitments are included in “Accounts Payable and Other Liabilities” on the Consolidated Balance Sheets.

For the three months ended December 31, 2024 and 2023, there have been no significant modifications or events that resulted in the change in the nature of the LIHTC investments or any changes in the relationship with the underlying project.

For the three months ended December 31, 2024 and 2023, there has been no impairment loss recognized from the forfeiture or ineligibility of income tax credits.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information about the results of operations, financial condition, liquidity, and capital resources of Axos Financial, Inc. and subsidiaries (collectively, “we”, “us” or the “Company”). This information is intended to facilitate the understanding and assessment of significant changes and trends related to our financial condition and the results of our operations. This discussion and analysis should be read in conjunction with our financial information in our 2024 Form 10-K, and the interim unaudited condensed consolidated financial statements and notes thereto contained in this report.

Some matters discussed in this report may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such, may involve risks and uncertainties. These forward-looking statements can be identified by the use of terminology such as “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” “will,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. These forward-looking statements relate to, among other things, the Company’s financial prospects and other projections of our performance and asset quality, our deposit balances and capital ratios, our ability to continue to grow profitably and increase our business, our ability to continue to diversify lending and deposit franchises, the anticipated timing and financial performance of other offerings, initiatives, and acquisitions, expectations of the environment in which we operate and projections of future performance. Actual results and the timing of events could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties, including without limitation our ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, monetary policy, inflation, government regulation, general economic conditions, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, our ability to attract and retain deposits and access other sources of liquidity, and the outcome and effects of litigation and other factors beyond our reasonable control. These and other risks and uncertainties are discussed under the heading “Item 1A. Risk Factors” herein and in our 2024 Form 10-K, which has been filed with the SEC, could cause actual results to differ materially from those expressed or implied in any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All written and oral forward-looking statements made in connection with this report, which are attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing information.

General

Our Company is a technology-driven, diversified financial services company with approximately $23.7 billion in assets and approximately $37.7 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. 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. Our Bank offers deposit and lending products to customers nationwide including consumer and business checking, savings and time deposit accounts and single family and multifamily residential mortgages, commercial real estate mortgages and loans, fund and lender finance loans, asset-based loans, auto loans and other consumer loans. Our Bank generates non-interest income from consumer and business products, including fees from loans originated for sale, deposit account service fees, prepayment fees, as well as technology and payment transaction processing fees. We offer securities products and services to independent registered investment advisors (“RIAs”) and introducing broker dealers (“IBDs”) through Axos Clearing and Axos Advisor Services (“AAS”) and direct-to-consumer securities trading and digital investment management products through Axos Invest, Inc. (“Axos Invest”). AAS and Axos Clearing generate interest and fee income by providing comprehensive securities custody services to RIAs and clearing, stock lending and margin lending services to IBDs, respectively. Axos Invest generates fee income from self-directed securities trading and margin lending and fee income from digital wealth management services to consumers. 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, and the Travillian Tech-Forward Bank Index.

Axos Financial, Inc. is supervised and regulated as a savings and loan holding company that has elected to be treated as a financial holding company by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and is required to file reports with, comply with the rules and regulations of, and is subject to examination by, the Federal Reserve.

Our Bank is a federal savings association, which has elected to operate as a covered savings association. The Bank is regulated by the Office of the Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation (“FDIC”)

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as its deposit insurer. The Bank must file reports with the OCC and the FDIC concerning its activities and financial condition. As a depository institution with more than $10 billion in assets, our Bank and our affiliates are subject to direct supervision by the Consumer Financial Protection Bureau.

Axos Clearing is a broker-dealer registered with the SEC and the Financial Industry Regulatory Authority, Inc. (“FINRA”). Axos Invest is a Registered Investment Advisor under the Investment Advisers Act of 1940, that is registered with the SEC. Axos Invest LLC is an IBD that is registered with the SEC and FINRA.

FDIC Loan Purchase

On December 7, 2023, the Company acquired from the FDIC two loan portfolios with an aggregate unpaid principal balance of $1.3 billion at a 37% discount to par. Given the level of discount at which the loans were purchased, the yield over the remaining life of the loans is expected to exceed that of the Company’s existing loan portfolio prior to the FDIC Loan Purchase. For additional information on the FDIC Loan Purchase, see Note 2—“Acquisitions” in the 2024 Form 10-K.

Segment Information

The Company determines reportable segments based on what separate financial information is available and what segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance. We operate through two segments: the Banking Business Segment and the Securities Business Segment.

Banking Business Segment. The Banking Business Segment includes a broad range of banking services including online banking, concierge banking, and mortgage, vehicle and unsecured lending through online, low-cost distribution channels to serve the needs of consumers and small businesses nationally. In addition, the Banking Business Segment focuses on providing deposit products nationwide to industry verticals (e.g., Title and Escrow), treasury management products to a variety of businesses, and commercial & industrial and commercial real estate lending to clients. The Banking Business Segment includes a bankruptcy trustee and fiduciary service that provides specialized software and consulting services to Chapter 7 bankruptcy and non-Chapter 7 trustees and fiduciaries.

Securities Business Segment. The Securities Business Segment includes the clearing broker-dealer, registered investment advisor custody business, and introducing broker-dealer lines of businesses. These lines of business offer products independently to their own customers as well as to Banking Business Segment clients.

Critical Accounting Estimates

The following discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements and the notes thereto, which have been prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the unaudited condensed consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various factors and circumstances. We believe our estimates and assumptions are reasonable under the circumstances. However, actual results may differ significantly from these estimates and assumptions and could have a material effect on the carrying value of assets and liabilities, our results of operations and/or our cash flows.

Critical accounting estimates are those we consider most important to the portrayal of our financial condition and results of operations because they require our most difficult judgments, often as a result of the need to make estimates that are inherently uncertain. Our critical accounting estimates are described in detail in the 2024 Form 10-K in Note 1—“Organizations and Summary of Significant Accounting Policies” and Item 7—“Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.”

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USE OF NON-GAAP FINANCIAL MEASURES

In addition to the results presented in accordance with GAAP, this report includes the non-GAAP financial measures adjusted earnings, adjusted earnings per common share (“Adjusted EPS”), and tangible book value per common share. Non-GAAP financial measures have inherent limitations, may not be comparable to similarly titled measures used by other companies and are not audited. Readers should be aware of these limitations and should be cautious as to their reliance on such measures. As noted below with respect to each measure, we believe the non-GAAP financial measures disclosed in this report enhance investors’ understanding of our business and performance, and our management uses these non-GAAP measures when it internally evaluates the performance of our business and makes operating decisions. However, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures.

We define “adjusted earnings”, a non-GAAP financial measure, as net income without the after-tax impact of non-recurring acquisition-related items, (including amortization of intangible assets related to acquisitions) and other costs (unusual or non-recurring charges). Adjusted EPS, a non-GAAP financial measure, 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. We believe excluding the non-recurring acquisition-related costs, and other costs provides investors with an alternative understanding of our core business.

Below is a reconciliation of net income, the nearest comparable GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP):


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
(Dollars in thousands, except per share data)	2024		2023		2024		2023
Net income	$	104,687	$	151,771	$	217,027	$	234,416
FDIC Loan Purchase - Gain on purchase	—		(92,397)		—		(92,397)
FDIC Loan Purchase - Provision for credit losses	—		4,648		—		4,648
Acquisition-related costs	1,645		2,780		4,199		5,570

Income tax effect	(503)		25,650		(1,255)		24,811
Adjusted earnings (Non-GAAP)	$	105,829	$	92,452	$	219,971	$	177,048

Average dilutive common shares outstanding	58,226,006		57,932,834		58,262,923		58,930,427

Diluted EPS	$	1.80	$	2.62	$	3.72	$	3.98
FDIC Loan Purchase - Gain on purchase	—		(1.59)		—		(1.57)
FDIC Loan Purchase - Provision for credit losses	—		0.08		—		0.08
Acquisition-related costs	0.03		0.05		0.07		0.09

Income tax effect	(0.01)		0.44		(0.02)		0.42
Adjusted EPS (Non-GAAP)	$	1.82	$	1.60	$	3.77	$	3.00

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, a non-GAAP financial measure, is calculated by dividing tangible book value by the common shares outstanding at the end of the period. 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.

Below is a reconciliation of total stockholders’ equity, the nearest comparable GAAP measure, to tangible book value (Non-GAAP):


(Dollars in thousands, except per share data)	December 31, 2024		June 30, 2024		December 31, 2023
Common stockholders’ equity	$	2,521,962	$	2,290,596	$	2,078,224
Less: servicing rights, carried at fair value	28,045		28,924		28,043
Less: goodwill and other intangible assets—net	137,570		141,769		146,793
Tangible common stockholders’ equity (Non-GAAP)	$	2,356,347	$	2,119,903	$	1,903,388

Common shares outstanding at end of period	57,097,632		56,894,565		56,898,377

Book value per common share	44.17		40.26		36.53
Less: servicing rights, carried at fair value per common share	0.49		0.51		0.49
Less: goodwill and other intangible assets—net per common share	2.41		2.49		2.59
Tangible book value per common share (Non-GAAP)	$	41.27	$	37.26	$	33.45

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SELECTED FINANCIAL INFORMATION


(Dollars in thousands, except per share data)	December 31, 2024			June 30, 2024			December 31, 2023
Selected Balance Sheet Data:
Total assets	$	23,709,422		$	22,855,334		$	21,623,764
Loans—net of allowance for credit losses	19,486,727			19,231,385			18,264,354
Loans held for sale, carried at fair value	25,436			16,482			13,468

Allowance for credit losses	270,605			260,542			251,749
Trading securities	241			353			329
Available-for-sale securities	97,848			141,611			239,812

Securities borrowed	114,672			67,212			145,176
Customer, broker-dealer and clearing receivables	298,887			240,028			265,857
Total deposits	19,934,904			19,359,217			18,203,912

Advances from the Federal Home Loan Bank	60,000			90,000			90,000
Borrowings, subordinated notes and debentures	358,692			325,679			341,086
Securities loaned	135,258			74,177			155,492
Customer, broker-dealer and clearing payables	309,593			301,127			368,885
Total stockholders’ equity	$	2,521,962		$	2,290,596		$	2,078,224

Common shares outstanding at end of period	57,097,632			56,894,565			56,898,377
Common shares issued at end of period	70,571,332			70,221,632			69,828,709

Per Common Share Data:
Book value per common share	$	44.17		$	40.26		$	36.53
Tangible book value per common share (Non-GAAP)1	$	41.27		$	37.26		$	33.45

Capital Ratios:
Equity to assets at end of period	10.64		%	10.02		%	9.61		%
Axos Financial, Inc.:
Tier 1 leverage (to adjusted average assets)	10.02		%	9.43		%	9.39		%
Common equity tier 1 capital (to risk-weighted assets)	12.42		%	12.01		%	10.97		%
Tier 1 capital (to risk-weighted assets)	12.42		%	12.01		%	10.97		%
Total capital (to risk-weighted assets)	15.23		%	14.84		%	13.79		%
Axos Bank:
Tier 1 leverage (to adjusted average assets)	9.85		%	9.74		%	10.22		%
Common equity tier 1 capital (to risk-weighted assets)	12.67		%	12.74		%	12.26		%
Tier 1 capital (to risk-weighted assets)	12.67		%	12.74		%	12.26		%
Total capital (to risk-weighted assets)	13.86		%	13.81		%	13.25		%
Axos Clearing LLC:
Net capital	$	83,932		$	101,462		$	103,454
Excess capital	$	78,282		$	96,654		$	98,397
Net capital as a percentage of aggregate debit items	29.71		%	42.21		%	40.92		%
Net capital in excess of 5% aggregate debit items	$	69,805		$	89,442		$	90,812

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	For the Three Months Ended December 31,						For the Six Months Ended December 31,
(Dollars in thousands, except per share data)	2024			2023			2024			2023
Selected Income Statement Data:
Interest and dividend income	$	456,068		$	394,663		$	940,330		$	758,615
Interest expense	175,969			166,057			368,183			318,854
Net interest income	280,099			228,606			572,147			439,761
Provision for credit losses	12,248			13,500			26,248			20,500
Net interest income, after provision for credit losses	267,851			215,106			545,899			419,261
Non-interest income	27,799			124,129			56,408			158,636
Non-interest expense	145,320			121,839			292,785			242,345
Income before income taxes	150,330			217,396			309,522			335,552
Income taxes	45,643			65,625			92,495			101,136
Net income	$	104,687		$	151,771		$	217,027		$	234,416

Weighted average number of common shares outstanding:
Basic	57,094,153			57,216,621			57,014,412			58,082,830
Diluted	58,226,006			57,932,834			58,262,923			58,930,427

Per Common Share Data:
Net income:
Basic	$	1.83		$	2.65		$	3.81		$	4.04
Diluted	$	1.80		$	2.62		$	3.72		$	3.98
Adjusted earnings per common share (Non-GAAP)1	$	1.82		$	1.60		$	3.77		$	3.00





Performance Ratios and Other Data:
Growth in loans held for investment, net	$	206,118		$	1,309,313		$	255,342		$	1,807,626

Loan originations for sale	$	66,826		$	44,325		$	136,396		$	96,910

Return on average assets	1.74		%	2.90		%	1.83		%	2.29		%
Return on average common stockholders’ equity	16.97		%	30.39		%	18.02		%	23.72		%
Interest rate spread2	3.91		%	3.58		%	4.01		%	3.48		%
Net interest margin3	4.83		%	4.55		%	5.00		%	4.46		%
Net interest margin3 – Banking Business Segment	4.87		%	4.62		%	5.04		%	4.54		%
Efficiency ratio4	47.20		%	34.54		%	46.58		%	40.50		%
Efficiency ratio4 – Banking Business Segment	40.95		%	30.96		%	40.37		%	36.78		%

Asset Quality Ratios:
Net annualized charge-offs to average loans	0.10		%	0.04		%	0.13		%	0.04		%
Nonaccrual loans to total loans	1.26		%	0.65		%	1.26		%	0.65		%
Non-performing assets to total assets	1.06		%	0.60		%	1.06		%	0.60		%
Allowance for credit losses - loans to total loans held for investment	1.37		%	1.33		%	1.37		%	1.33		%
Allowance for credit losses - loans to nonaccrual loans5	107.58		%	205.50		%	107.58		%	205.50		%

1 See “Use of Non-GAAP Financial Measures.”

2 Interest rate spread represents the difference between the annualized weighted average yield on interest-earning assets and the annualized weighted average rate paid on interest-bearing liabilities.

3 Net interest margin represents annualized 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 is primarily attributable to the change in nonaccrual loans. For additional information on non-accrual loans, see “Financial Condition” herein.

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RESULTS OF OPERATIONS

Comparison of the Three and Six Months Ended December 31, 2024 and 2023

For the three months ended December 31, 2024, we had net income of $104.7 million, or $1.80 per diluted share, compared to net income of $151.8 million, or $2.62 per diluted share, for the three months ended December 31, 2023. For the six months ended December 31, 2024, we had net income of $217.0 million, or $3.72 per diluted share, compared to net income of $234.4 million, or $3.98 per diluted share, for the six months ended December 31, 2023.

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 Three Months Ended,
	December 31, 2024						December 31, 2023
(Dollars in thousands)	Average Balance1		Interest Income/ Expense		Average Yields Earned/Rates Paid2		Average Balance1		Interest Income/ Expense		Average Yields Earned/Rates Paid2
Assets:
Loans3, 4	$	19,643,375	$	410,868	8.37	%	$	17,499,840	$	357,852	8.18	%
Non-purchased loans	18,681,035		377,376		8.08	%	17,241,605		345,905		8.02	%
Purchased loans5	962,340		33,492		13.92	%	258,235		11,947		18.51	%
Interest-earning deposits in other financial institutions	3,063,487		36,649		4.79	%	2,023,446		27,737		5.48	%
Mortgage-backed and other securities4	125,692		1,567		4.99	%	238,470		3,200		5.37	%
Securities borrowed and margin lending6	335,965		6,450		7.68	%	336,919		5,467		6.49	%
Stock of the regulatory agencies	29,598		534		7.22	%	17,250		407		9.44	%
Total interest-earning assets	23,198,117		456,068		7.86	%	20,115,925		394,663		7.85	%
Non-interest-earning assets	826,732						810,366
Total assets	$	24,024,849					$	20,926,291
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings	$	16,352,350	$	161,394	3.95	%	$	13,931,565	$	150,107	4.31	%
Time deposits	933,244		9,465		4.06	%	1,002,116		10,074		4.02	%
Securities loaned	113,904		480		1.69	%	181,690		1,010		2.23	%
Advances from the FHLB	87,066		507		2.33	%	90,000		530		2.35	%
Borrowings, subordinated notes and debentures	320,782		4,123		5.14	%	349,862		4,336		4.96	%
Total interest-bearing liabilities	17,807,346		175,969		3.95	%	15,555,233		166,057		4.27	%
Non-interest-bearing demand deposits	2,937,572						2,682,261
Other non-interest-bearing liabilities	812,877						690,854
Stockholders’ equity	2,467,054						1,997,943
Total liabilities and stockholders’ equity	$	24,024,849					$	20,926,291
Net interest income			$	280,099					$	228,606
Interest rate spread7					3.91	%					3.58	%
Net interest margin8					4.83	%					4.55	%
1.Average balances are obtained from daily data. 2.Annualized. 3.Loans include loans held for sale, loan premiums and unearned fees. 4.Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees. 5.Purchased loans include loans, loan discounts and unearned fees related to the FDIC Loan Purchase. 6.Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the unaudited Condensed Consolidated Balance Sheets. 7.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. 8.Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

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	For the Six Months Ended,
	December 31, 2024						December 31, 2023
(Dollars in thousands)	Average Balance1		Interest Income/ Expense		Average Yields Earned/Rates Paid2		Average Balance1		Interest Income/ Expense		Average Yields Earned/Rates Paid2
Assets:
Loans3, 4	$	19,545,195	$	849,097	8.69	%	$	17,075,797	$	684,826	8.02	%
Non-purchased loans	18,574,872		759,835		8.18	%	16,945,974		672,879		7.94	%
Purchased loans5	970,323		89,262		18.40	%	129,823		11,947		18.51	%
Interest-earning deposits in other financial institutions	2,871,995		74,073		5.16	%	2,058,407		56,247		5.47	%
Mortgage-backed and other securities4	134,240		3,527		5.25	%	235,929		6,336		5.37	%
Securities borrowed and margin lending6	324,521		12,721		7.84	%	334,105		10,462		6.26	%
Stock of the regulatory agencies	24,305		912		7.50	%	17,250		744		8.63	%
Total interest-earning assets	22,900,256		940,330		8.21	%	19,721,488		758,615		7.69	%
Non-interest-earning assets	811,450						768,570
Total assets	$	23,711,706					$	20,490,058
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings	$	16,134,067	$	339,209	4.20	%	$	13,389,681	$	284,465	4.25	%
Time deposits	902,560		18,919		4.19	%	1,087,896		21,826		4.01	%
Securities loaned	105,560		1,020		1.93	%	185,198		1,459		1.58	%
Advances from the FHLB	88,534		1,036		2.34	%	90,000		1,059		2.35	%
Borrowings, subordinated notes and debentures	322,239		7,999		4.96	%	384,892		10,045		5.22	%
Total interest-bearing liabilities	17,552,960		368,183		4.20	%	15,137,667		318,854		4.21	%
Non-interest-bearing demand deposits	2,954,332						2,672,180
Other non-interest-bearing liabilities	795,059						703,876
Stockholders’ equity	2,409,355						1,976,335
Total liabilities and stockholders’ equity	$	23,711,706					$	20,490,058
Net interest income			$	572,147					$	439,761
Interest rate spread7					4.01	%					3.48	%
Net interest margin8					5.00	%					4.46	%

1.Average balances are obtained from daily data.

2.Annualized.

3.Loans include loans held for sale, loan premiums and unearned fees.

4.Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.

5.Purchased loans include loans, loan discounts and unearned fees related to the FDIC Loan Purchase.

6.Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the unaudited Condensed Consolidated Balance Sheets.

7.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.

8.Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

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Average Balances, Net Interest Income, Yields Earned and Rates Paid

The following table sets forth the effects of changing rates and volumes on our net interest income. Information is provided with respect to (i) effects on interest income and interest expense attributable to changes in volume (changes in volume multiplied by prior rate); and (ii) effects on interest income and interest expense attributable to changes in rate (changes in rate multiplied by prior volume). The change in interest due to both volume and rate has been allocated proportionally to each based on the relative changes attributable to volume and changes attributable to rate.


	For the Three Months Ended						For the Six Months Ended
	December 31,						December 31,
	2024 vs 2023						2024 vs 2023
	Increase (Decrease) Due to						Increase (Decrease) Due to
(Dollars in thousands)	Volume		Rate		Total Increase (Decrease)		Volume		Rate		Total Increase (Decrease)
Increase (decrease) in interest income:
Loans	$	44,565	$	8,450	$	53,015	$	104,122	$	60,149	$	164,271
Non-purchased loans	19,384		12,086		31,470		26,736		60,220		86,956
Purchased loans1	25,181		(3,636)		21,545		77,386		(71)		77,315
Interest-earning deposits in other financial institutions	12,765		(3,853)		8,912		21,172		(3,346)		17,826
Mortgage-backed and other securities	(1,420)		(213)		(1,633)		(2,670)		(139)		(2,809)
Securities borrowed and margin lending	(15)		998		983		(309)		2,568		2,259
Stock of the regulatory agencies	240		(112)		128		274		(106)		168
Total increase (decrease) in interest income	$	56,135	$	5,270	$	61,405	$	122,589	$	59,126	$	181,715
Increase (decrease) in interest expense:
Interest-bearing demand and savings	$	24,558	$	(13,271)	$	11,287	$	58,103	$	(3,359)	$	54,744
Time deposits	(707)		98		(609)		(3,851)		944		(2,907)
Securities loaned	(320)		(212)		(532)		(717)		278		(439)
Advances from the FHLB	(18)		(4)		(22)		(19)		(4)		(23)
Borrowings, subordinated notes and debentures	(368)		154		(214)		(1,567)		(479)		(2,046)
Total increase (decrease) in interest expense	$	23,145	$	(13,235)	$	9,910	$	51,949	$	(2,620)	$	49,329

1 Purchased loans include loans, loan discounts and unearned fees related to the FDIC Loan Purchase.

Net Interest Income

For the three months ended December 31, 2024, net interest income totaled $280.1 million, an increase of $51.5 million, or 22.5%, compared to net interest income of $228.6 million for the three months ended December 31, 2023. For the three months ended December 31, 2024, net interest margin increased by 28 basis points compared to the net interest margin of 4.55% for the three months ended December 31, 2023.

For the three months ended December 31, 2024, total interest and dividend income increased 15.6% from the three months ended December 31, 2023, primarily due to a $53.0 million increase in interest income on loans, mainly attributable to higher loan balances, and a $8.9 million increase in interest income on interest-earning deposits at other financial institutions.

For the three months ended December 31, 2024, total interest expense increased 6.0% from the three months ended December 31, 2023, primarily due to a $11.3 million increase in interest expense on demand and savings deposits, reflecting higher deposit balances, partially offset by lower rates paid.

For the six months ended December 31, 2024, net interest income totaled $572.1 million, an increase of $132.4 million, or 30.1%, compared to net interest income of $439.8 million for the six months ended December 31, 2023. For the six months ended December 31, 2024, net interest margin increased by 54 basis points compared to the net interest margin of 4.46% for the six months ended December 31, 2023.

For the six months ended December 31, 2024, total interest and dividend income increased 24.0% from the six months ended December 31, 2023, primarily due to a $164.3 million increase in interest income on loans, attributable to higher loan balances and higher rates earned, and a $17.8 million increase in interest income on interest-earning deposits at other financial institutions.

For the six months ended December 31, 2024, total interest expense increased 15.5% from the six months ended December 31, 2023, primarily due to a $54.7 million increase in interest expense on demand and savings deposits, mainly reflecting higher deposit balances.

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Provision for Credit Losses

The provision for credit losses was $12.2 million and $26.2 million for the three and six months ended December 31, 2024, respectively, compared to $13.5 million and $20.5 million for the three and six months ended December 31, 2023, respectively. The provision for credit losses consists of provisions for both funded loans and for unfunded lending commitments. The provision for credit losses for funded loans was $11.7 million and $23.2 million for the three and six months ended December 31, 2024, respectively, and was primarily due to the quantitative impact of macroeconomic variables in the allowance for credit losses model, primarily the U.S. unemployment rate and commercial real estate mortgage rates, as well as loan growth, increases in specific reserves and certain qualitative adjustments, mainly in the commercial & industrial - non-RE portfolio. The provision for credit losses for unfunded lending commitments of $0.5 million and $3.0 million for the three and six months ended December 31, 2024, respectively, was primarily driven by unfunded lending commitment growth, primarily in the commercial & industrial - non-RE portfolio. Provisions for credit losses are charged to income to bring the allowance for credit losses for loans and unfunded lending commitments to a level deemed appropriate by management based on the factors discussed under the heading “Financial Condition—Asset Quality and Allowance for Credit Losses - Loans.”

Non-Interest Income

The following table sets forth information regarding our non-interest income:


	For the Three Months Ended						For the Six Months Ended
	December 31,						December 31,
(Dollars in thousands)	2024		2023		Inc (Dec)		2024		2023		Inc (Dec)
Broker-dealer fee income	$	11,039	$	12,519	$	(1,480)	$	22,099	$	24,996	$	(2,897)
Advisory fee income	7,982		7,362		620		15,927		15,581		346
Banking and service fees	9,813		10,061		(248)		18,426		18,411		15
Mortgage banking and servicing rights income	(1,797)		753		(2,550)		(1,347)		4,631		(5,978)
Prepayment penalty fee income	762		1,037		(275)		1,303		2,620		(1,317)
Gain on acquisition	—		92,397		(92,397)		—		92,397		(92,397)
Total non-interest income	$	27,799	$	124,129	$	(96,330)	$	56,408	$	158,636	$	(102,228)

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For the three months ended December 31, 2024, non-interest income decreased by $96.3 million, or 77.6%, primarily due to the absence of the gain on the FDIC Loan Purchase in the prior year period, as well as decreases of:

•$2.6 million in mortgage banking and servicing rights income, primarily attributable to losses related to loans sold, partially offset by a favorable servicing rights fair value adjustment in the current period; and

•$1.5 million in broker-dealer fee income, primarily attributable to lower average cash-sorting balances.

For the six months ended December 31, 2024, non-interest income decreased by $102.2 million, or 64.4%, primarily due to the absence of the gain on the FDIC Loan Purchase in the prior year period, as well as decreases of:

•$6.0 million in mortgage banking and servicing rights income, primarily attributable to losses related to loans sold and the absence of a $1.9 million fair value gain in the prior year period; and

•$2.9 million in broker-dealer fee income, primarily attributable to lower average cash-sorting balances.

Non-Interest Expense

The following table sets forth information regarding our non-interest expense:


	For the Three Months Ended						For the Six Months Ended
	December 31,						December 31,
(Dollars in thousands)	2024		2023		Inc (Dec)		2024		2023		Inc (Dec)
Salaries and related costs	$	74,097	$	58,883	$	15,214	$	148,390	$	114,694	$	33,696
Data and operational processing	19,314		18,326		988		38,299		34,410		3,889
Depreciation and amortization	7,031		6,488		543		14,481		12,366		2,115
Advertising and promotional	11,045		9,794		1,251		25,298		20,169		5,129
Professional services	9,072		5,976		3,096		18,967		15,787		3,180
Occupancy and equipment	4,206		4,001		205		8,524		7,847		677
FDIC and regulatory fees	6,992		3,935		3,057		12,948		8,384		4,564
Broker-dealer clearing charges	4,299		5,948		(1,649)		8,606		9,960		(1,354)
General and administrative expense	9,264		8,488		776		17,272		18,728		(1,456)
Total non-interest expense	$	145,320	$	121,839	$	23,481	$	292,785	$	242,345	$	50,440

For the three months ended December 31, 2024, non-interest expense increased $23.5 million, or 19.3%, primarily due to increases of:

•$15.2 million in salaries and related costs primarily due to increased headcount and salaries;

•$3.1 million in professional services primarily due to higher consulting and legal expenses; and

•$3.1 million in FDIC and regulatory fees primarily due to higher FDIC assessments.

For the six months ended December 31, 2024, non-interest expense increased $50.4 million, or 20.8%, primarily due to increases of:

•$33.7 million in salaries and related costs primarily due to increased headcount and salaries; and

•$5.1 million in advertising and promotional expenses primarily due to higher marketing expenses, including deposit marketing expense;

•$4.6 million in FDIC and regulatory fees primarily due to higher FDIC assessments; and

•$3.9 million in data and operational processing primarily due to continued investments in technology.

Provision for Income Taxes

Income tax expense was $45.6 million and $92.5 million for the three and six months ended December 31, 2024, respectively, compared to $65.6 million and $101.1 million for three and six months ended December 31, 2023, respectively. Our effective income tax rates for the three months ended December 31, 2024 and 2023 were 30.36% and 30.19%. Our effective income tax rates for the six months ended December 31, 2024 and 2023 were 29.88% and 30.14%, respectively.

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SEGMENT RESULTS

Our Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to our Company’s financial condition and operating results and management’s regular review of the operating results of those services. Our Company operates through two operating segments: the Banking Business Segment and the Securities Business Segment. In order to reconcile the two segments to the consolidated totals, our Company includes corporate 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 tables present the operating results of the segments:


	For the Three Months Ended December 31, 2024
(Dollars in thousands)	Banking Business Segment		Securities Business Segment		Corporate/Eliminations		Axos Consolidated
Net interest income	$	276,720	$	7,007	$	(3,628)	$	280,099
Provision for credit losses	12,248		—		—		12,248
Non-interest income	2,948		29,004		(4,153)		27,799
Non-interest expense	114,536		28,178		2,606		145,320
Income before income taxes	$	152,884	$	7,833	$	(10,387)	$	150,330

	For the Three Months Ended December 31, 2023
(Dollars in thousands)	Banking Business Segment		Securities Business Segment		Corporate/Eliminations		Axos Consolidated
Net interest income	$	226,635	$	6,080	$	(4,109)	$	228,606
Provision for credit losses	13,500		—		—		13,500
Non-interest income	103,779		32,641		(12,291)		124,129
Non-interest expense	102,282		27,968		(8,411)		121,839
Income before income taxes	$	214,632	$	10,753	$	(7,989)	$	217,396

	For the Six Months Ended December 31, 2024
(Dollars in thousands)	Banking Business		Securities Business		Corporate/Eliminations		Axos Consolidated
Net interest income	$	565,212	$	14,274	$	(7,339)	$	572,147
Provision for credit losses	26,248		—		—		26,248
Non-interest income	11,538		58,906		(14,036)		56,408
Non-interest expense	232,851		56,269		3,665		292,785
Income before income taxes	$	317,651	$	16,911	$	(25,040)	$	309,522

	For the Six Months Ended December 31, 2023
(Dollars in thousands)	Banking Business		Securities Business		Corporate/Eliminations		Axos Consolidated
Net interest income	$	435,854	$	11,622	$	(7,715)	$	439,761
Provision for credit losses	20,500		—		—		20,500
Non-interest income	116,336		67,196		(24,896)		158,636
Non-interest expense	203,068		55,491		(16,214)		242,345
Income before income taxes	$	328,622	$	23,327	$	(16,397)	$	335,552

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Banking Business Segment

For the three months ended December 31, 2024, our Banking Business Segment had income before income taxes of $152.9 million, compared to income before income taxes of $214.6 million for the prior year period. For the six months ended December 31, 2024, our Banking Business Segment had income before income taxes of $317.7 million, compared to income before income taxes of $328.6 million for the prior year period.

For the three and six months ended December 31, 2024, the Banking Business Segment’s net interest income increased $50.1 million, or 22.10%, and $129.4 million, or 29.68%, respectively, compared to net interest income for the three and six months ended December 31, 2023, respectively. The increase in net interest income was primarily due to an increase in interest income on loans and interest-earning deposits at other financial institutions, partially offset by higher interest expense on demand and savings deposits.

For the three and six months ended December 31, 2024, the Banking Business Segment’s non-interest income decreased $100.8 million, or 97.2%, and $104.8 million, or 90.1%, respectively, compared to non-interest income for the three and six months ended December 31, 2023. The decrease in non-interest income for the three and six months ended December 31, 2024 was primarily due to absence of the gain on the FDIC Loan Purchase in the current period.

For the three and six months ended December 31, 2024, the Banking Business Segment’s non-interest expense increased $12.3 million, or 12.0%, and $29.8 million, or 14.7%, respectively, compared to non-interest expense for the three and six months ended December 31, 2023. The increase in non-interest expense for the three months ended December 31, 2024 was primarily due to higher salaries and related costs primarily due to increased headcount and salaries.

We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business Segment:


	For the Three Months Ended December 31,				For the Six Months Ended December 31,
	2024		2023		2024		2023
Efficiency ratio	40.95	%	30.96	%	40.37	%	36.78	%
Return on average assets	1.87	%	2.81	%	2.02	%	2.24	%
Interest rate spread	3.96	%	3.63	%	4.05	%	3.53	%
Net interest margin	4.87	%	4.62	%	5.04	%	4.54	%

Our Banking Business Segment’s net interest margin exceeds our consolidated net interest margin. Our consolidated net interest margin includes certain items that are not reflected in the calculation of our net interest margin within our Banking Business Segment and reduce our consolidated net interest margin, such as the borrowing costs at our Company and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities in our Securities Business Segment, including items related to securities financing operations.

Securities Business Segment

For the three and six months ended December 31, 2024, our Securities Business Segment had income before income taxes of $7.8 million and $16.9 million, respectively, compared to income before income taxes of $10.8 million and $23.3 million, respectively, for the three and six months ended December 31, 2023.

For the three months ended December 31, 2024, net interest income increased $0.9 million, or 15.2%, and for the six months ended December 31, 2024, net interest income increased $2.7 million, or 22.8%, respectively, compared to the prior year period. The increases were primarily driven by increased securities borrowing activity in the current year periods.

For the three months ended December 31, 2024, non-interest income decreased $3.6 million, or 11.1%, and for the six months ended December 31, 2024, non-interest income decreased $8.3 million, or 12.3%, respectively, compared to the prior year period. The decreases were primarily driven by lower broker-dealer fee income as a result of lower cash sorting balances in the current year periods.

For the three months ended December 31, 2024, non-interest expense increased $0.2 million or 0.8%, and for the six months ended December 31, 2024, non-interest expense increased $0.8 million, or 1.4%, respectively, compared to the prior year period.

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The following table provides selected information for Axos Clearing:


(Dollars in thousands)	December 31, 2024		June 30, 2024

FDIC insured deposit program balances at banks	$	1,359,139	$	1,289,105
Margin balances	$	274,486	$	219,848
Cash reserves for the benefit of customers	$	126,821	$	113,676





Securities lending:
Interest-earning assets – securities borrowed	$	114,672	$	67,212
Interest-bearing liabilities – securities loaned	$	135,258	$	74,177

FINANCIAL CONDITION

Balance Sheet Analysis

Our total assets increased $0.9 billion, or 3.7%, to $23.7 billion at December 31, 2024, from $22.9 billion at June 30, 2024, primarily attributable to an increase in cash and cash equivalents and loans. Our total liabilities increased $0.6 billion, or 3.0%, to $21.2 billion at December 31, 2024 from $20.6 billion at June 30, 2024, primarily attributable to higher deposit balances.

Loans and Allowance for Credit Losses - Loans

The following table sets forth the composition of the loan portfolio:


	December 31, 2024				June 30, 2024
(Dollars in thousands)	Amount		Percent		Amount		Percent
Single Family - Mortgage & Warehouse	$	4,149,778	20.7	%	$	4,178,832	21.1	%
Multifamily and Commercial Mortgage1	3,430,948		17.1	%	3,861,931		19.5	%
Commercial Real Estate1	6,214,834		31.1	%	6,088,622		30.7	%
Commercial & Industrial - Non-RE	5,809,877		29.0	%	5,241,766		26.5	%
Auto & Consumer	420,937		2.1	%	431,660		2.2	%


Total gross loans	20,026,374		100.0	%	19,802,811		100.0	%
Allowance for credit losses - loans	(270,605)				(260,542)
Unaccreted discounts and loan fees	(269,042)				(310,884)
Total net loans	$	19,486,727			$	19,231,385

1 Includes PCD loans of $281.3 million and $284.0 million in Multifamily and Commercial Mortgage and $44.5 million and $44.5 million in Commercial Real Estate as of December 31, 2024 and June 30, 2024, respectively. For further detail on PCD loans, see Note 1—“Summary of Significant Accounting Policies” in the 2024 Form 10-K.

Management establishes an allowance for credit losses based upon its evaluation of the expected lifetime credit losses related to the amortized cost basis of loans on the balance sheet. The net charge-off rate for the three months ended December 31, 2024 was 0.10%, compared to 0.04% for the three months ended December 31, 2023. The increase in the net charge-off rate was primarily driven by higher net charge-offs in the multifamily and commercial mortgage portfolio. For additional information regarding the Company’s allowance for credit losses, see Note 4—“Loans & Allowance for Credit Losses” in the accompanying interim condensed consolidated financial statements. For a discussion of the provision for credit losses for the three and six months ended December 31, 2024, see Item 2—“Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.” We believe that the lower average LTV in the loan portfolio will continue to result in future lower average mortgage loan charge-offs when compared to many other comparable banks.

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Asset Quality

Non-performing Assets. Loans reaching 90 days past due are generally placed on nonaccrual status. Loans not yet reaching 90 days past due may be placed on nonaccrual status based on management’s assessment of the aging of contractual principal amounts due, among other factors. For an aging analysis of the Company’s loans held for investment as of December 31, 2024 and June 30, 2024, see Note 4—“Loans & Allowance for Credit Losses” in the accompanying interim condensed consolidated financial statements. Non-performing assets include nonaccrual loans plus other real estate owned and repossessed vehicles.

Non-performing assets consisted of the following:


(Dollars in thousands)	December 31, 2024			June 30, 2024			Increase (Decrease)
Non-performing assets:
Nonaccrual loans:
Single Family - Mortgage & Warehouse	$	69,570		$	45,711		$	23,859
Multifamily and Commercial Mortgage	49,157			35,054			14,103
Commercial Real Estate	59,766			26,102			33,664
Commercial & Industrial - Non-RE	70,859			4,020			66,839
Auto & Consumer	2,180			2,472			(292)


Total nonaccrual loans	$	251,532		$	113,359		$	138,173
Foreclosed real estate	75			1,840			(1,765)
Repossessed vehicles—Autos	581			610			(29)
Total non-performing assets	$	252,188		$	115,809		$	136,379
Total nonaccrual loans as a percentage of total loans	1.26		%	0.57		%	0.69		%
Total non-performing assets as a percentage of total assets	1.06		%	0.51		%	0.55		%

Our non-performing assets increased to $252.2 million at December 31, 2024 from $115.8 million at June 30, 2024, primarily as a result of an increase in non-accrual loans of $138.2 million, partially offset by a decrease in other real estate owned and repossessed vehicles of $1.8 million. Non-performing assets as a percentage of total assets increased to 1.06% at December 31, 2024 from 0.51% at June 30, 2024.

Available-for-Sale Securities

Total available-for-sale securities were $97.8 million as of December 31, 2024, compared with $141.6 million at June 30, 2024. During the six months ended December 31, 2024, we purchased $22.4 million of securities and received principal repayments of $67.0 million. The remainder of the change for the available-for-sale securities portfolio is attributable to changes in the fair value of the securities.

Deposits

Deposits increased by $0.6 billion, or 3.0%, to $19.9 billion at December 31, 2024, from $19.4 billion at June 30, 2024. As of December 31, 2024 compared with June 30, 2024, interest-bearing demand and savings increased $629.2 million and non-interest-bearing deposits increased by $14.1 million, while time deposits decreased $67.6 million.

The following table sets forth the composition of the deposit portfolio:


	December 31, 2024		June 30, 2024
(Dollars in thousands)	Amount			Amount
Non-interest-bearing	$	2,989,759		$	2,975,631




Interest-bearing demand and savings	$	16,074,678		$	15,445,490



Time deposits	870,467			938,096
Total interest bearing	$	16,945,145		$	16,383,586
Total deposits1	$	19,934,904		$	19,359,217

1 Total deposits includes brokered deposits of $1,570.8 million and $1,611.6 million as of December 31, 2024 and June 30, 2024, respectively, which include brokered time deposits of $400.0 million and $400.0 million as of December 31, 2024 and June 30, 2024, respectively.

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The following table sets forth the number of deposit accounts by type:


	December 31, 2024	June 30, 2024	December 31, 2023
Non-interest-bearing	48,930	55,772	47,846
Interest-bearing checking and savings accounts	527,590	495,070	461,293
Time deposits	3,631	4,696	5,682
Total number of deposit accounts	580,151	555,538	514,821

Total Bank deposits that exceeded the FDIC insurance limit of $250,000 or were not collateralized at December 31, 2024 and June 30, 2024 were $2.2 billion and $2.1 billion, respectively. The maturities of time deposits that exceeded the FDIC insurance limit were as follows:


(Dollars in thousands)	December 31, 2024
3 months or less	$	148,902
3 months to 6 months	183,537
6 months to 12 months	6,640
Over 12 months	3,479
Total	$	342,558

Borrowings

The following table sets forth the composition of our borrowings and the interest rates:


	December 31, 2024					June 30, 2024					December 31, 2023
(Dollars in thousands)	Balance			Weighted Average Rate		Balance			Weighted Average Rate		Balance			Weighted Average Rate

FHLB Advances	$	60,000		2.07	%	$	90,000		2.32	%	$	90,000		2.32	%
Borrowings, subordinated notes and debentures	358,692			4.86	%	325,679			4.57	%	341,086			4.61	%
Total borrowings	$	418,692		4.46	%	$	415,679		4.08	%	$	431,086		4.13	%

Weighted average cost of borrowings during the quarter	4.54		%			4.61		%			4.43		%
Borrowings as a percent of total assets	1.77		%			1.82		%			1.99		%

We regularly use advances from the FHLB to manage our interest rate risk and, to a lesser extent, manage our liquidity position. Generally, FHLB advances with terms between three and ten years have been used to fund the origination of loans and to provide us with interest rate risk protection should rates rise. 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. On September 27, 2024, the Company paid $9.2 million to repurchase $9.5 million par value of its 4.875% Fixed-to-Floating Rate Subordinated Notes due October 1, 2030. For additional information see Note 11—“Borrowings, Subordinated Notes and Debentures” in the accompanying interim condensed consolidated financial statements.

Stockholders’ Equity

Stockholders’ equity increased $231.4 million to $2,522.0 million at December 31, 2024, compared to $2,290.6 million at June 30, 2024. The increase was primarily the result of net income for the six months ended December 31, 2024 of $217.0 million.

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LIQUIDITY

Cash flow information is as follows:


	For the Six Months Ended
	December 31,
(Dollars in thousands)	2024		2023
Operating Activities	$	233,298	$	152,734
Investing Activities	$	(314,758)	$	(1,741,869)
Financing Activities	$	569,115	$	970,772

During the six months ended December 31, 2024, we had net cash inflows from operating activities of $233.3 million compared to inflows of $152.7 million for the six months ended December 31, 2023. Net operating cash inflows and outflows fluctuate primarily due to the timing of the following: originations of loans held for sale, proceeds from loan sales, securities borrowed and loaned, and customer, broker-dealer and clearing receivables and payables and changes in other assets and payables.

Net cash outflows from investing activities totaled $314.8 million for the six months ended December 31, 2024, while outflows totaled $1,741.9 million for the six months ended December 31, 2023. The decrease in outflows was primarily due to absence of the FDIC Loan Purchase and a lower net change in loans held for investment in the six months ended December 31, 2024 as compared to the six months ended December 31, 2023.

Net cash inflows from financing activities totaled $569.1 million for the six months ended December 31, 2024, compared to net cash inflows from financing activities of $970.8 million for the six months ended December 31, 2023. The decrease in net cash inflows from financing was primarily driven by lower net increase in deposits during the six months ended December 31, 2024.

As of December 31, 2024, the Bank could borrow up to 35% of its total assets from the FHLB. Borrowings are collateralized by pledging certain mortgage loans and available-for-sale securities to the FHLB. At December 31, 2024, the Company had $2,839.1 million available immediately and $4,812.6 million available with additional collateral and the Company had $4,326.2 million of loans and $0.1 million of securities pledged to the FHLB. At December 31, 2024, 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. At December 31, 2024, the Bank did not have any borrowings outstanding and the amount available from this source was $6,947.6 million. Borrowings are collateralized by pledging commercial loans and consumer loans. At December 31, 2024, we had $8,129.0 million of loans pledged to the FRBSF.

Axos Clearing has a $150 million third-party secured line of credit available for borrowing, as needed. As of December 31, 2024, there was no amount outstanding on this credit facility. This credit facility bears interest at rates based on the Federal Funds rate and is due upon demand.

Axos Clearing has a $110 million third-party unsecured line of credit available for limited purpose borrowing. As of December 31, 2024, there was $45 million amount outstanding on this credit facility. This credit facility bears interest at rates based on the Federal Funds rate and is due upon demand.

We view our liquidity sources to be stable and adequate for our anticipated needs and contingencies for both the short- and long-term. Due to the diversified sources of our deposits, while maintaining approximately 90% of our total Bank deposits in insured or collateralized accounts as of December 31, 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.

For additional information on certain contractual and other obligations, see Note 9—“Commitments and Contingencies” and Note 12—“Other Assets”in the accompanying interim condensed consolidated financial statements and refer to Note 11—“Deposits,” Note 12—“Advances from the Federal Home Loan Bank” and Note 13—“Borrowings, Subordinated Notes and Debentures” in the 2024 Form 10-K.

On January 28, 2025, the Company entered into an equity distribution agreement pursuant to which the Company may issue and sell through distribution agents from time to time shares of the Company’s common stock in at-the-market offerings with an aggregate offering price of up to $150,000,000. The Company will issue the stock pursuant to a previously effective registration statement and a prospectus supplement filed with the SEC on January 28, 2025.

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CAPITAL RESOURCES AND REQUIREMENTS

The Company and Bank are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. Failure by the 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 the Company and the OCC has similar requirements for our Bank. The following tables present regulatory capital information for the Company and Bank. Information presented for December 31, 2024 reflects the Basel III capital requirements for both the Company and Bank. Under these capital requirements and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors. As part of its capital management, the Bank may pay dividends to the Company from time to time.

Quantitative measures established by regulation require the Company and Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require the Company and Bank to maintain minimum ratios of tier 1 capital to adjusted average assets of 4.0%, common equity tier 1 capital to risk-weighted assets of 4.5%, tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. To be “well capitalized,” the 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. At December 31, 2024, the Company and Bank met all the capital adequacy requirements to which they were subject and were “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since December 31, 2024 that would materially adversely change the Company’s and Bank’s capital classifications. From time to time, we may need to raise additional capital to support the Company’s and Bank’s further growth and to maintain their “well capitalized” status.

The Company and Bank both elected the five-year current expected credit losses (“CECL”) transition guidance for calculating regulatory capital and ratios. The amounts in the following table reflect this election. This guidance allowed an entity to add back to regulatory capital 100% of the impact of the day-one CECL transition adjustment and 25% of subsequent increases to the allowance for credit losses through June 30, 2022. In fiscal year 2025, this cumulative amount is phased out of regulatory capital at 75% and the cumulative amount will be 100% phased out of regulatory capital beginning in fiscal year 2026.

The Company’s and Bank’s capital ratios and requirements were as follows:


	Axos Financial, Inc.						Axos Bank						“Well Capitalized” Ratio		Minimum Capital Ratio
(Dollars in thousands)	December 31, 2024			June 30, 2024			December 31, 2024			June 30, 2024
Regulatory Capital:
Tier 1	$	2,394,568		$	2,167,781		$	2,295,562		$	2,181,426
Common equity tier 1	$	2,394,568		$	2,167,781		$	2,295,562		$	2,181,426
Total capital	$	2,937,826		$	2,678,489		$	2,510,421		$	2,365,061

Assets:
Average adjusted	$	23,893,592		$	22,979,871		$	23,315,074		$	22,391,541
Total risk-weighted	$	19,287,561		$	18,049,571		$	18,117,890		$	17,128,880

Regulatory Capital Ratios:
Tier 1 leverage (to adjusted average assets)	10.02		%	9.43		%	9.85		%	9.74		%	5.00	%	4.00	%
Common equity tier 1 capital (to risk-weighted assets)	12.42		%	12.01		%	12.67		%	12.74		%	6.50	%	4.50	%
Tier 1 capital (to risk-weighted assets)	12.42		%	12.01		%	12.67		%	12.74		%	8.00	%	6.00	%
Total capital (to risk-weighted assets)	15.23		%	14.84		%	13.86		%	13.81		%	10.00	%	8.00	%

Basel III requires all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively composed of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios but not the leverage ratio. At December 31, 2024 and June 30, 2024, our Company and Bank were in compliance with the capital conservation buffer requirement, which sets the common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratio minimums to 7.0%, 8.5% and 10.5%, respectively.

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Securities Business

Pursuant to the net capital requirements of the Exchange Act, Axos Clearing is subject to the SEC Uniform Net Capital (Rule 15c3-1 of the Exchange Act). Under this rule, the Company has elected to operate under the alternate method and is required to maintain minimum net capital of $250,000 or 2% of aggregate debit balances arising from client transactions, as defined. 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. As part of its capital management, Axos Clearing may make distributions to the Company from time to time.

The net capital position of Axos Clearing was as follows:


(Dollars in thousands)	December 31, 2024			June 30, 2024
Net capital	$	83,932		$	101,462
Excess Capital	$	78,282		$	96,654

Net capital as a percentage of aggregate debit items	29.71		%	42.21		%
Net capital in excess of 5% aggregate debit items	$	69,805		$	89,442

Axos Clearing, as a clearing broker, is subject to the 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”). As of December 31, 2024, Axos Clearing was in compliance with its Customer Reserve Bank Account and PAB Reserve Account deposit requirements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For further discussion of the Company’s market risk, see Item 7A—“Quantitative and Qualitative Disclosures About Market Risk” in the 2024 Form 10-K.

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. The difference, or the interest rate sensitivity gap, provides an indication of the extent to which an institution’s interest rate spread will be affected by changes in interest rates. 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.

Absent any subsequent asset and liability actions by management, in a rising interest rate environment, an institution with a positive gap would be in a better position than an institution with a negative gap to invest in higher yielding assets or to have its asset yields adjusted upward, which would cause the yield on its assets to increase at a faster pace than the cost of its interest-bearing liabilities. Conversely, 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.

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Banking Business Segment

The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at December 31, 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
	December 31, 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	$	2,505,415		$	—		$	—		$	—		$	2,505,415
Available-for-sale securities1	63,964			4,232			17,835			11,817			97,848
Stock of the FHLB, at cost	29,598			—			—			—			29,598
Loans2	13,325,410			1,868,020			4,181,972			111,225			19,486,627
Loans held for sale	25,436			—			—			—			25,436
Total interest-earning assets	15,949,823			1,872,252			4,199,807			123,042			22,144,924
Non-interest-earning assets	—			—			—			—			774,893
Total assets	$	15,949,823		$	1,872,252		$	4,199,807		$	123,042		$	22,919,817
Interest-bearing liabilities:
Interest-bearing deposits3	$	16,800,453		$	45,214		$	221,489		$	—		$	17,067,156

Advances from the FHLB	—			—			60,000			—			60,000

Total interest-bearing liabilities	16,800,453			45,214			281,489			—			17,127,156
Other non-interest-bearing liabilities	—			—			—			—			3,369,753
Stockholders’ equity	—			—			—			—			2,422,908
Total liabilities and equity	$	16,800,453		$	45,214		$	281,489		$	—		$	22,919,817
Net interest rate sensitivity gap	$	(850,630)		$	1,827,038		$	3,918,318		$	123,042		$	5,017,768
Cumulative gap	$	(850,630)		$	976,408		$	4,894,726		$	5,017,768		$	5,017,768
Net interest rate sensitivity gap—as a % of total interest earning assets	(3.84)		%	8.25		%	17.69		%	0.56		%	22.66		%
Cumulative gap—as % of total cumulative interest earning assets	(3.84)		%	4.41		%	22.10		%	22.66		%	22.66		%

1 Comprised of U.S. government securities, mortgage-backed securities and other securities. The table reflects contractual repricing dates.

2 Loans includes loan premiums, discounts and unearned fees. The table reflects either contractual repricing dates or expected maturities.

3 The table assumes that the principal balances for demand deposits and savings accounts will reprice in the first year.

The above table provides an approximation of the projected re-pricing of assets and liabilities at December 31, 2024 on the basis of contractual maturities, adjusted for anticipated prepayments of principal and scheduled rate adjustments. The loan and securities prepayment rates reflected herein are primarily based on modeled cash flows. For the non-maturity deposit liabilities, we use decay rates and rate adjustments based upon our historical experience and the implied forward rate curve, respectively. Actual repayments of these instruments could vary substantially if future experience differs from our historical experience.

Although “gap” analysis is a useful measurement device available to management in determining the existence of interest rate exposure, its static focus as of a particular date makes it necessary to utilize other techniques in measuring exposure to changes in interest rates. 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.

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The following table indicates the sensitivity of net interest income movements to parallel instantaneous shocks in interest rates for the future 1-12 months’ and 13-24 months’ time periods. For purposes of modeling net interest income sensitivity the Company assumes no growth in the balance sheet other than for retained earnings:


	As of December 31, 2024
	First 12 Months		Next 12 Months
(Dollars in thousands)	Percentage Change from Base		Percentage Change from Base
Up 200 basis points	5.5	%	12.3	%
Up 100 basis points	2.8	%	6.2	%

Down 100 basis points	(1.9)	%	(5.3)	%
Down 200 basis points	(2.4)	%	(9.1)	%

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. We analyze the MVE sensitivity to an immediate parallel and sustained shift in interest rates derived from the underlying interest rate curves.

The following table indicates the sensitivity of MVE to the interest rate movement described above:


	As of December 31, 2024
(Dollars in thousands)	Percentage Change from Base

Up 200 basis points	(1.2)	%
Up 100 basis points	0.0	%

Down 100 basis points	(1.2)	%
Down 200 basis points	(2.8)	%

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. Furthermore, these computations do not take into account any actions that we may undertake in response to future changes in interest rates. Those actions include, but are not limited to, making changes in loan and deposit interest rates and changes in our asset and liability mix.

Securities Business Segment

Our Securities Business Segment is exposed to market risk primarily due to its role as a financial intermediary in customer transactions, which may include purchases and sales of securities, securities lending activities, and in our trading activities, which are used to support sales, underwriting and other customer activities. We are subject to the risk of loss that may result from the potential change in value of a financial instrument as a result of fluctuations in interest rates, market prices, investor expectations and changes in credit ratings of the issuer.

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. Interest rates on customer and correspondent balances and securities produce a positive spread with rates generally fluctuating in parallel.

With respect to securities held, our interest rate risk is managed by setting and monitoring limits on the size and duration of positions and on the length of time securities can be held. 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.

As of December 31, 2024, Axos Clearing held municipal obligations classified as trading securities and had maturities greater than 10 years.

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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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.

ITEM 4.CONTROLS AND PROCEDURES

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer along with our Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In addition, there were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2024 (as defined in Exchange Act Rule 13a-15(f)) that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

Management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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PART II—OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

The information set forth in Note 9—“Commitments and Contingencies” in the accompanying interim condensed consolidated financial statements is incorporated herein by reference.

In addition, from time to time we may be a party to other claims or litigation that arise in the ordinary course of business, such as claims to enforce liens, claims involving the origination and servicing of loans, and other issues related to the Company’s business operations. None of such matters are expected to have a material adverse effect on the Company’s financial condition, results of operations or business.

ITEM 1A.RISK FACTORS

We face a variety of risks that are inherent in our business and our industry. These risks are described in more detail under Item 1A—“Risk Factors” in the 2024 Form 10-K. We encourage you to read these factors in their entirety. Moreover, other factors may also exist that we cannot anticipate or that we currently do not consider to be significant based on information that is currently available.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth our market repurchases of Axos common stock and the Axos common stock retained in connection with net settlement of restricted stock unit awards during the three months ended December 31, 2024.


(Dollars in thousands, except per share data)	Number of Shares Purchased	Average Price Paid Per Shares		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 Repurchases1
Quarter Ended December 31, 2024
October 1, 2024 to October 31, 2024	—	$	—	—	$	106,521
November 1, 2024 to November 30, 2024	—	—		—	106,521
December 1, 2024 to December 31, 2024	—	—		—	106,521
For the Three Months Ended December 31, 2024	—	$	—	—	$	106,521

Stock Retained in Net Settlement2
October 1, 2024 to October 31, 2024	86
November 1, 2024 to November 30, 2024	1,018
December 1, 2024 to December 31, 2024	2,479
For the Three Months Ended December 31, 2024	3,583

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. The February 12, 2024 share repurchase authorization is in addition to the existing share repurchase plan announced on April 27, 2023. 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. Stock Retained in Net Settlement was purchased at the vesting price of the associated restricted stock unit.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6.EXHIBITS


Exhibit Number	Description	Incorporated By Reference to







31.1	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.

31.2	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.

32.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

32.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

101.INS	Inline XBRL Instance Document	The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema Document	Filed herewith.

101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document	Filed herewith.

101.LAB	Inline XBRL Taxonomy Label Linkbase Document	Filed herewith.

101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document	Filed herewith.

101.DEF	Inline XBRL Taxonomy Definition Document	Filed herewith.

104	Cover Page Interactive Data File	Formatted as Inline XBRL and contained in Exhibit 101

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Axos Financial, Inc.

Dated:

January 28, 2025

By:

/s/ Gregory Garrabrants

Gregory Garrabrants
President and Chief Executive Officer
(Principal Executive Officer)

Dated:

January 28, 2025

By:

/s/ Derrick K. Walsh

Derrick K. Walsh
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)