ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis contains forward-looking statements that are based upon current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those expressed or implied in our forward-looking statements due to various important factors, including those set forth under “Risk Factors” in Item 1A. and elsewhere in this Annual Report on Form 10-K. The following discussion and analysis should be read together with the Consolidated Financial Statements, including the related notes included elsewhere in this Annual Report on Form 10-K.
OVERVIEW
The Consolidated Financial Statements include the accounts of Axos Financial, Inc. (“Axos”) and its wholly owned subsidiaries, Axos Bank (the “Bank” or “Axos Bank”) and Axos Nevada Holding, LLC (“Axos Nevada Holding”), collectively, the “Company.” Axos, the Bank, three lending-related entities and Axos Nevada Holding comprise substantially all of the Company’s assets and liabilities and revenues and expenses. The Bank, its wholly owned subsidiaries, and the activities of three lending-related entities, constitute the Banking Business Segment. Axos Nevada Holding owns Axos Securities, LLC, which owns Axos Clearing LLC (“Axos Clearing”), a clearing broker-dealer, Axos Invest, Inc., a registered investment advisor, and Axos Invest LLC, an introducing broker-dealer. Axos Securities, LLC and its consolidated subsidiaries constitute the Securities Business Segment. Axos Bank provides consumer and business banking products through its low-cost distribution channels and affinity partners. Axos Clearing and Axos Invest LLC, provide comprehensive securities clearing services to introducing broker-dealers and registered investment advisor correspondents and digital investment advisory services to retail investors, respectively. Axos Financial, Inc.’s common stock is listed on the NYSE under the symbol “AX” and is a component of the Russell 2000 ® Index and the S&P SmallCap 600 ® Index, among other indices.
MERGERS AND ACQUISITIONS
From time to time, we undertake acquisitions or similar transactions consistent with our operating and growth strategies. On August 23, 2023, the Company acquired approximately $52 million of marine floor financing loans at par value along with other assets for an additional $2 million, primarily consisting of servicing rights as well as certain employees. The transaction was accounted for as an asset acquisition and such assets are included in the Company’s Consolidated Balance Sheets as of June 30, 2025.
On December 7, 2023, the Company acquired from the Federal Deposit Insurance Corporation (“FDIC”) two loan portfolios, comprising both purchased credit deteriorated (“PCD”) and non-PCD loans, with an aggregate unpaid principal balance of $1.3 billion at a fair value of $901.5 million, reflecting a non-credit-related discount of $306.8 million and an allowance for credit losses on PCD loans of $70.1 million, (the “FDIC Loan Purchase”). Also included in the acquisition were certain related interest rate derivative assets and liabilities with a fair value of $109.0 million and $104.4 million, respectively, as of the date of the acquisition and whose maturities generally align with those of the loans acquired. The acquisition of the non-PCD loans and interest rate derivatives was accounted for as a purchase of financial assets and liabilities, and the Company recognized a $92.4 million gain on the transaction included in “Gain on acquisition” in the Consolidated Statement of Income.
There were no other significant acquisitions undertaken during fiscal years 2025, 2024 or 2023.
CRITICAL ACCOUNTING ESTIMATES
The following discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements and the notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Consolidated Financial Statements requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the Consolidated Financial Statements. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various factors and circumstances. We believe that our estimates and assumptions are reasonable under the circumstances. However, actual results may differ significantly from these estimates and assumptions that could have a material effect on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods.
Critical accounting estimates are those that 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. We have identified critical accounting policies and estimates below. In addition, these critical accounting estimates are discussed further in Note 1 — “ Organizations and Summary of Significant Accounting Policies ” in the Consolidated Financial Statements.
Allowance for Credit Losses . The Company maintains an allowance for credit losses for its held-for-investment loan and net investment in leases portfolio as well as lending commitments, excluding loans measured at fair value in accordance with applicable accounting standards, which represents management’s estimate of the expected lifetime credit losses on the loans and net investment in leases. The estimate of the allowance for credit losses includes both a quantitative and qualitative assessment, both of which include variables that are subject to uncertainty.
The quantitative assessment reflects modeled outputs utilizing economic scenarios and forecasts, which are subject to uncertainty, and is also based on the Company’s current and expected future economic outlook. Key economic variables considered in the quantitative assessment include factors such as the U.S. unemployment rate and interest rates, both of which impact the default rate of the loan pools. Additionally, the results of the quantitative assessment are impacted by the third-party macroeconomic forecasts across various economic scenarios. The Company periodically reviews and adjusts the weighting of scenarios based on management’s allowance for credit losses (“ACL”) framework. Adjustment of scenario weighting away from the baseline scenario to the adverse scenario should increase the allowance for credit losses on the Company’s held-for-investment loan and net investment in leases portfolio, all else remaining equal. Economic forecasts that impacted management’s assessment of scenario weightings included interest rates, inflation, changes in trade policies, and geopolitical unrest. Changes in one or more of these variables can cause a significant change in the estimate of the allowance for credit losses.
Additionally, management performs a qualitative assessment to address inherent limitations in the model and data. Qualitative criteria used in the assessment, as outlined in Note 1 — “ Organizations and Summary of Significant Accounting Policies ” in the Consolidated Financial Statements, can require significant judgment and is subject to uncertainty.
For further information on the allowance for credit losses, refer to Note 1 — “Organizations and Summary of Significant Accounting Policies” and Note 5 — “Loans & Allowance for Credit Losses” in the Consolidated Financial Statements.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to the results presented in accordance with GAAP, this report includes non-GAAP financial measures such as adjusted earnings, adjusted earnings per common share, 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. We believe the non-GAAP financial measures disclosed in this release enhance investors’ understanding of our business and performance, and our management uses these 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 certain gains and provisions resulting from the Company’s FDIC Loan Purchase), and other costs (unusual or non-recurring charges). Adjusted earnings per diluted common share (“adjusted EPS”) is calculated by dividing non-GAAP adjusted earnings by the average number of diluted common shares outstanding during the period. We believe the non-GAAP measures of adjusted earnings and
adjusted EPS provide useful information about the Company’s operating performance. We believe excluding the non-recurring acquisition-related costs, and other costs provides investors with an alternative understanding our core business.
Below is a reconciliation of net income and diluted EPS, the nearest comparable GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP):
For Fiscal Year Ended June 30,
(Dollars in thousands, except per share amounts)
Net income
FDIC Loan Purchase - Gain on purchase
FDIC Loan Purchase - Provision for credit losses
Acquisition-related costs
Other costs 1
Income tax effect
Adjusted earnings (Non-GAAP)
Average dilutive common shares outstanding
Diluted EPS
FDIC Loan Purchase - Gain on purchase
FDIC Loan Purchase - Provision for credit losses
Acquisition-related costs
Other costs 1
Income tax effect
Adjusted EPS (Non-GAAP)
1 Other costs for the fiscal year ended 2025 primarily reflects the payment of a legal judgment at an amount less than previously accrued and for the fiscal year ended June 30, 2023 reflects the original accrual for such legal judgment.
We define “tangible book value,” a non-GAAP financial measure, as book value adjusted for goodwill and other intangible assets. Tangible book value is calculated using common stockholders’ equity minus servicing rights, goodwill and other intangible assets. Tangible book value per common share is calculated by dividing tangible book value by the common shares outstanding at the end of the period. 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) as of the dates indicated:
At the Fiscal Years Ended June 30,
(Dollars in thousands, except per share amounts)
Common stockholders’ equity
Less: servicing rights, carried at fair value
Less: goodwill and intangible assets—net
Tangible common stockholders’ equity (Non-GAAP)
Common shares outstanding at end of period
Book value per common share
Less: servicing rights, carried at fair value per common share
Less: goodwill and other intangible assets—net per common share
Tangible book value per common share (Non-GAAP)
FINANCIAL HIGHLIGHTS
The following selected consolidated financial information should be read in conjunction with Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and footnotes included elsewhere in this report.
At or for the Fiscal Years Ended June 30,
(Dollars in thousands, except per share amounts)
Selected Balance Sheet Data:
Total assets
Loans—net of allowance for credit losses
Loans held for sale, carried at fair value
Allowance for credit losses
Trading securities
Available-for-sale securities
Securities borrowed
Customer, broker-dealer and clearing receivables
Total deposits
Advances from the Federal Home Loan Bank
Borrowings, subordinated debentures and other borrowings
Securities loaned
Customer, broker-dealer and clearing payables
Total stockholders’ equity
Selected Income Statement Data:
Interest and dividend income
Interest expense
Net interest income
Provision for credit losses
Net interest income, after provision for credit losses
Non-interest income
Non-interest expense
Income before income tax expense
Income taxes
Net income
Per Common Share Data:
Net income:
Basic
Diluted
Adjusted earnings per common share (Non-GAAP 1 )
Book value per common share
Tangible book value per common share (Non-GAAP 1 )
Weighted-average number of common shares outstanding:
Basic
Diluted
Common shares outstanding at end of period
Common shares issued at end of period
At or for the Fiscal Years Ended June 30,
(Dollars in thousands, except per share amounts)
Performance Ratios and Other Data:
Growth in loans held for investment, net
Loan originations for sale
Return on average assets
Return on average common stockholders’ equity
Interest rate spread 2
Net interest margin 3
Net interest margin - Banking Business Segment only 3
Efficiency ratio 4
Efficiency ratio - Banking Business Segment only 4
Capital Ratios:
Equity to assets at end of period
Axos Financial, Inc.:
Tier 1 leverage (to adjusted average assets)
Common equity tier 1 capital (to risk-weighted assets)
Tier 1 capital (to risk-weighted assets)
Total capital (to risk-weighted assets)
Axos Bank:
Tier 1 leverage (to adjusted average assets)
Common equity tier 1 capital (to risk-weighted assets)
Tier 1 capital (to risk-weighted assets)
Total capital (to risk-weighted assets)
Axos Clearing LLC:
Net capital
Excess capital
Net capital as percentage of aggregate debit item
Net capital in excess of 5% aggregate debit item
Asset Quality Ratios:
Net charge-offs to average loans outstanding
Nonaccrual loans and leases to total loans
Non-performing assets to total assets
Allowance for credit losses - loans to total loans held for investment
Allowance for credit losses - loans to nonaccrual loans 5
1 See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Use of Non-GAAP Financial Measures.”
2 Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate paid on interest-bearing liabilities.
3 Net interest margin represents net interest income as a percentage of average interest-earning assets.
4 Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income.
5 The decrease in the allowance for credit losses - loans to nonaccrual loans as of June 30, 2025 is primarily attributable to the change in nonaccrual loans.
RESULTS OF OPERATIONS
Our results of operations depend on our net interest income, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Our net interest income is subject to competitive factors in online banking and other markets. Our net interest income is reduced by our current estimate of credit losses. We earn non-interest income primarily from mortgage banking activities, banking products and service activity, asset custody services, broker-dealer clearing and related services, prepayment fee income from multifamily and commercial borrowers who repay their loans before maturity and from gains on sales of other loans and available-for-sale securities. Losses on sales of available-for-sale securities reduce non-interest income. The largest component of non-interest expense is salary and benefits, which is a function of the number of personnel, which increased to 1,989 full-time employees at June 30, 2025, from 1,781 full-time employees at June 30, 2024. We are subject to federal and state income taxes, and our effective tax rates were 29.42%, 29.19% and 28.85% for the fiscal years ended June 30, 2025, 2024, and 2023, respectively. Other factors that affect our results of operations include expenses relating to data and operational processing, advertising, depreciation, occupancy, professional services, and other miscellaneous expenses.
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted-average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted-average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
For the Fiscal Years Ended June 30,
(Dollars in thousands)
Average
Balance 1
Interest
Income /
Expense
Average
Yields
Earned /
Rates Paid
Average
Balance 1
Interest
Income /
Expense
Average
Yields
Earned /
Rates Paid
Average
Balance 1
Interest
Income /
Expense
Average
Yields
Earned /
Rates Paid
Assets:
Loans 2,3
Non-purchased loans
Purchased loans 4
Interest-earning deposits in other financial institutions
Mortgage-backed and other securities
Securities borrowed and margin lending 4
Stock of the regulatory agencies
Total interest-earning assets
Non-interest-earning assets
Total assets
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings
Time deposits
Securities loaned
Advances from the FHLB
Borrowings, subordinated notes and debentures
Total interest-bearing liabilities
Non-interest-bearing demand deposits
Other non-interest-bearing liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Net interest income
Interest rate spread 6
Net interest margin 7
1. Average balances are obtained from daily data.
2. Loans include loans held for sale, loan premiums and unearned fees.
3. Interest income includes reductions for amortization of loan and available-for-sale securities premiums and earnings from accretion of discounts and loan fees.
4. Purchased loans include loans, loan discounts and unearned fees related to the FDIC Loan Purchase.
5. Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the audited Consolidated Balance Sheets.
6. 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.
7. Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
COMPARISON OF THE FISCAL YEARS ENDED JUNE 30, 2025 AND JUNE 30, 2024
Net Interest Income . The following table sets forth the effects of changing rates and volumes on our net interest income. 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.
Fiscal Year Ended June 30, 2025 vs 2024
Increase (Decrease) Due to
(Dollars in thousands)
Volume
Rate
Total
Increase
(Decrease)
Increase (decrease) in interest income:
Loans
Non-purchased loans
Purchased loans
Interest-earning deposits in other financial institutions
Mortgage-backed and other securities
Securities borrowed and margin lending
Stock of the regulatory agencies
Total increase (decrease) in interest income
Increase (decrease) in interest expense:
Interest-bearing demand and savings
Time deposits
Securities loaned
Advances from the FHLB
Borrowings, subordinated notes and debentures
Total increase (decrease) in interest expense
Interest Income . For fiscal year 2025, interest income increased $159.9 million, or 9.7%, compared to interest income in fiscal year 2024, primarily reflecting higher interest earned on loans, mainly attributable to higher loan balances.
Interest Expense . For fiscal year 2025, interest expense decreased $6.5 million, or 0.9% compared to interest expense in fiscal year 2024, primarily attributable to lower rates on interest bearing demand and savings deposits and lower average time deposits, advances from the FHLB, and other borrowings. These decreases were partially offset by higher interest-bearing demand and savings deposit balances.
Provision for Credit Losses . For fiscal year 2025, provision for credit losses increased $23.2 million compared to the provision for credit losses in fiscal year 2024. See “Asset Quality and Allowance for Credit Losses - Loans” for discussion of our allowance for credit losses and the related provision for credit losses.
Non-interest Income . The following table sets forth information regarding our non-interest income:
For the Fiscal Year Ended June 30,
(Dollars in thousands)
Inc (Dec)
Broker-dealer fee income
Advisory fee income
Banking and service fees
Mortgage banking and servicing rights income
Prepayment penalty fee income
Gain on acquisition
Total non-interest income
For fiscal year 2025, non-interest income decreased $91.6 million, or 41.1% compared to non-interest income in fiscal year 2024. The decrease was primarily the result of the absence of the gain on the FDIC Loan Purchase as compared to fiscal year 2024, as well as a decrease in broker-dealer fee income on lower rates earned on cash sorting balances. These decreases were partially offset by an increase in mortgage banking and servicing rights income, reflecting net gains on loan sales in fiscal year 2025, and higher banking and service fees.
Non-interest Expense . The following table sets forth information regarding our non-interest expense for the periods shown:
For the Fiscal Year Ended June 30,
(Dollars in thousands)
Inc (Dec)
Salaries and related costs
Data and operational processing
Depreciation and amortization
Advertising and promotional
Professional services
Occupancy and equipment
FDIC and regulatory fees
Broker-dealer clearing charges
General and administrative expense
Total non-interest expense
For fiscal year 2025, non-interest expense increased $73.6 million, or 14.3%, compared to fiscal year 2024, primarily due to increases of:
• $47.1 million in salaries and related costs primarily due to increased headcount and salaries to support continued growth in the business;
• $11.1 million in data and operational processing expense to support the Company’s growth and continued investments in technology; and
• $7.0 million in FDIC and regulatory fees primarily due to higher FDIC assessments, reflecting growth in deposits as well as special assessments in response to failures of other financial institutions.
Income Tax Expense . For fiscal year 2025, income tax expense decreased $5.0 million, or 2.7% compared to income tax expense in fiscal year 2024. The fiscal year 2025 effective tax rate of 29.42%, increased by 0.23% compared to fiscal year 2024. The Company received federal and state tax credits for both fiscal years ended June 30, 2025 and 2024. These tax credits decreased the effective tax rate by approximately 0.43% and 0.58%, respectively. Additionally, in June 2025, the State of California adopted its fiscal year 2026 budget, which, among other things, changed the way financial institutions’ multi-state income is apportioned to the State of California. The change required the Company to remeasure its California deferred tax asset and resulted in revaluation of $5.5 million recognized in the fiscal year ended June 30, 2025. The Company estimates the effective tax rate for fiscal years under this tax law will be reduced by approximately 3% compared to the effective tax rate prior to the change in the State of California tax law.
SEGMENT RESULTS
The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial condition and operating results and management’s regular review of the operating results of those services. The Company operates through two operating segments: the Banking Business Segment and the Securities Business Segment. In order to reconcile the two segments to the consolidated totals, the Company includes parent-only activities and intercompany eliminations. Inter-segment transactions are eliminated in consolidation and primarily include non-interest income earned by the Securities Business Segment and non-interest expense incurred by the Banking Business Segment for cash sorting fees related to deposits sourced from Securities Business Segment customers.
The following tables present the operating results of the segments:
Fiscal Year Ended June 30, 2025
(Dollars in thousands)
Banking Business Segment
Securities Business Segment
Corporate/Eliminations
Axos Consolidated
Net interest income
Provision for credit losses
Non-interest income
Non-interest expense
Income (loss) before taxes
Fiscal Year Ended June 30, 2024
(Dollars in thousands)
Banking Business Segment
Securities Business Segment
Corporate/Eliminations
Axos Consolidated
Net interest income
Provision for credit losses
Non-interest income
Non-interest expense
Income (loss) before taxes
Banking Business Segment
For the fiscal year ended June 30, 2025, Banking Business Segment had pre-tax income of $631.3 million compared to pre-tax income of $638.7 million for the fiscal year ended June 30, 2024. For the fiscal year ended June 30, 2025, the decrease in pre-tax income was primarily related to the absence of the gain on the FDIC Loan Purchase as compared to fiscal year 2024 and a higher provision for credit losses, partially offset by higher net interest income.
For the fiscal year 2025, the Banking Business Segment’s net interest income increased $163.3 million, or 17.2%, compared to net interest income in fiscal year 2024. The increase in net interest income is reflective of higher interest earned on loans, mainly attributable to higher loan balances, as well as lower rates on demand and savings deposits and lower average time deposits and advances from the FHLB. These decreases were partially offset by higher interest-bearing demand and savings deposit balances.
For the fiscal year 2025, the Banking Business Segment’s non-interest income decreased $92.6 million, or 66.6%, compared to non-interest income in fiscal year 2024. The decrease in non-interest income was primarily the result of the absence of the gain on the FDIC Loan Purchase as compared to fiscal year 2024.
For the fiscal year 2025, the Banking Business Segment’s non-interest expense increased $54.9 million, or 13.1%, compared to non-interest expense in fiscal 2024. The increase in non-interest expense was primarily driven by higher salaries and related costs.
We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business Segment:
Fiscal Year Ended
June 30, 2025
June 30, 2024
Efficiency ratio
Return on average assets
Interest rate spread
Net interest margin
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 the Company and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities in our Securities Business Segment, including those related to securities financing operations.
Securities Business Segment
For the fiscal year ended June 30, 2025, our Securities Business Segment had income before taxes of $32.9 million compared to income before taxes of $40.1 million for the fiscal year ended June 30, 2024.
For the fiscal year 2025, the Securities Business Segment’s net interest income increased $2.2 million, or 8.5%, compared to fiscal year 2024, resulting from higher net interest income earned in securities lending activities and lower interest expense on borrowings. In the Securities Business Segment, interest is earned through margin loan balances, securities borrowed and cash deposit balances. Interest expense is incurred from cash borrowed through bank lines and securities lending.
For the fiscal year 2025, the Securities Business Segment’s non-interest income decreased $9.9 million, or 7.7%, compared to fiscal year 2024, primarily attributable to lower broker-dealer fee income on lower rates earned on cash sorting balances.
For the fiscal year 2025, the Securities Business Segment’s non-interest expense decreased $0.5 million, or 0.4%, compared to non-interest expense in fiscal year ended June 30, 2024, primarily related to lower broker-dealer clearing charges.
Selected information concerning Axos Clearing follows as of each date indicated:
June 30,
(Dollars in thousands)
FDIC insured program balances at banks
Margin balances
Cash reserves for the benefit of customers
Securities lending:
Interest-earning assets – stock borrowed
Interest-bearing liabilities – stock loaned
COMPARISON OF THE FISCAL YEARS ENDED JUNE 30, 2024 AND JUNE 30, 2023
For a comparison of our fiscal year 2024 results compared to fiscal year 2023 results, see Part II, Item 7, “Comparison of the Fiscal Years Ended June 30, 2024 and June 30, 2023” in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the SEC.
FINANCIAL CONDITION
Our total assets increased $1.9 billion, or 8.4%, to $24.8 billion, as of June 30, 2025, up from $22.9 billion at June 30, 2024. The increase in total assets primarily reflects growth in total loans of $1.8 billion on a net basis, driven by increases in the commercial & industrial - non-RE and commercial real estate portfolios. Total liabilities increased by $1.5 billion or 7.5%, to $22.1 billion at June 30, 2025, up from $20.6 billion at June 30, 2024. The increase in total liabilities primarily reflects growth in deposits of $1.5 billion. Stockholders’ equity increased by $390.1 million, or 17.0%, to $2.7 billion at June 30, 2025, up from $2.3 billion at June 30, 2024. The increase in stockholders’ equity primarily reflects net income of $432.9 million, partially offset by repurchases of $58.5 million of common stock.
Loan Portfolio Composition . The following table sets forth the composition of our loan portfolio:
At June 30,
(Dollars in thousands)
Amount
Percent
Amount
Percent
Amount
Percent
Single Family - Mortgage & Warehouse
Multifamily and Commercial Mortgage
Commercial Real Estate
Commercial & Industrial - Non-RE
Auto & Consumer
Total loans held for investment
Allowance for credit losses
Unamortized premiums/discounts, net of deferred loan fees
Net loans held for investment
The following table sets forth the amount of loans maturing in our total loans held for investment based on the contractual terms to maturity:
Term to Contractual Maturity as of June 30, 2025
(Dollars in thousands)
Less Than Three Months
Over Three Months Through One Year
Over One Year Through Five Years
Over 5 Years Through 15 Years
Over 15 Years
Total
Single Family - Mortgage & Warehouse
Multifamily and Commercial Mortgage
Commercial Real Estate
Commercial & Industrial - Non-RE
Auto & Consumer
Total
The following table sets forth the amount of our loans at June 30, 2025 that are due after one year and indicates whether they have fixed or floating/adjustable interest rates:
(Dollars in thousands)
Fixed
Floating/
Adjustable 1
Total
Single Family - Mortgage & Warehouse
Multifamily and Commercial Mortgage
Commercial Real Estate
Commercial & Industrial - Non-RE
Auto & Consumer
Total
1 Included in this category are hybrid mortgages (e.g., 5/1 adjustable rate mortgages) that carry a fixed rate for an introductory term before transitioning to an adjustable rate.
The majority of our real estate loans are secured by properties located in California and New York. The following table shows the largest states and regions ranked by location of these properties:
At June 30, 2025
Percentage of Loan Principal Secured by Real Estate Located in State or Region
State or Region
Total Real Estate Loans
Single Family Mortgage
Multifamily real estate secured
Commercial
Real Estate
California—south 1
California—north 2
New York
Florida
Texas
New Jersey
Nevada
Georgia
Arizona
South Carolina
All other states
Total
1 Consists of loans secured by real property in California with ZIP Code ranges from 90001 to 92999.
2 Consists of loans secured by real property in California with ZIP Code ranges from 93000 to 96161.
The ratio of the loan amount to the value of the property securing the loan is called the loan-to-value ratio (“LTV”). The following table shows the LTVs of our loan portfolio on weighted-average and median bases at June 30, 2025. The LTVs were calculated by dividing (a) the current outstanding loan principal balance of both the first and second liens of the borrower by (b) the appraisal value at the time of origination of the property securing the loan.
Total Real Estate Loans
Single Family - Mortgage & Warehouse
Multifamily and Commercial Mortgage
Commercial
Real Estate
Weighted-Average LTV
Median LTV
Asset Quality. Loans reaching 90 days past due are generally placed on nonaccrual status. Loans not yet reaching 90 days past due may be placed on non-accrual 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 June 30, 2025 and 2024, see Note 5—“ Loans & Allowance for Credit Losses ” in the Consolidated Financial Statements. Non-performing assets include nonaccrual loans plus other real estate owned and repossessed vehicles.
Non-performing assets consisted of the following:
At June 30,
(Dollars in thousands)
Non-performing assets:
Nonaccrual loans:
Single Family - Mortgage & Warehouse
Multifamily and Commercial Mortgage
Commercial Real Estate
Commercial & Industrial - Non-RE
Auto & Consumer
Total nonaccrual loans
Foreclosed real estate
Repossessed - Autos
Total non-performing assets
Total nonaccrual loans as a percentage of total loans
Total non-performing assets as a percentage of total assets
Our non-performing assets increased to $175.4 million at June 30, 2025 from $115.8 million at June 30, 2024. The increase in non-performing assets during the fiscal year ended June 30, 2025 was primarily the result of an increase in non-accrual loans of $57.0 million, specifically commercial & industrial - Non-RE, and an increase in other real estate owned and repossessed vehicles of $2.6 million. Non-performing assets as a percentage of total assets increased to 0.71% at June 30, 2025 from 0.51% at June 30, 2024.
Allowance for Credit Losses - Loans . The following table sets forth the changes in our allowance for credit losses, by portfolio class for the dates indicated:
(Dollars in thousands)
Single Family - Mortgage & Warehouse
Multifamily and Commercial Mortgage
Commercial Real Estate
Commercial & Industrial - Non-RE
Auto & Consumer
Total
Total Allowance
as a % of Total
Loans
Balance at June 30, 2022
Provision for credit losses
Charge-offs
Recoveries
Balance at June 30, 2023
Allowance for credit losses at acquisition of PCD loans
Provision for credit losses
Charge-offs
Recoveries
Balance at June 30, 2024
Provision for credit losses
Charge-offs
Recoveries
Balance at June 30, 2025
Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2025
Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2024
Net Charge-Offs to Average Loans - Fiscal Year Ended June 30, 2023
The Company’s allowance for credit losses increased $29.5 million or 11.3% at June 30, 2025 from June 30, 2024. As a percentage of the outstanding loan balance, the Company’s allowance was 1.36% and 1.34% at June 30, 2025 and 2024, respectively. Provisions for credit losses were $55.1 million and $32.8 million for fiscal year 2025 and 2024, respectively. For a discussion of the changes in the allowance for credit losses in fiscal year 2025, see Note 5 — “Loans & Allowance for Credit Losses” in the Consolidated Financial Statements.
For fiscal year 2025, net charge-offs were $25.6 million and increased $16.6 million compared to net charge-offs for fiscal year 2024, primarily due to net charge-offs in the commercial & industrial - non-RE and multifamily and commercial mortgage portfolios.
For fiscal year 2024, net charge-offs were $9.0 million and increased $2.3 million compared to net charge-offs for fiscal year 2023, primarily due to net charge-offs in the auto and consumer portfolio.
Available-for-Sale Securities. The following table presents the fair value of the available-for-sale securities portfolio:
(Dollars in thousands)
June 30, 2025
June 30, 2024
June 30, 2023
The following table sets forth the expected maturity distribution of our mortgage-backed securities (“MBS”) and the contractual maturity distribution of our non-MBS securities and the weighted-average yield for each range of maturities:
At June 30, 2025
Total Amount
Due Within One Year
Due After One but within Five Years
Due After Five but within Ten Years
Due After Ten Years
(Dollars in thousands)
Amount
Yield 1
Amount
Yield 1
Amount
Yield 1
Amount
Yield 1
Amount
Yield 1
Available-for-sale
MBS:
Agency 2
Non-Agency 3
Total MBS
Municipal
Available-for-sale—Amortized Cost
Available-for-sale—Fair Value
1 Weighted-average yield is based on amortized cost of the securities. Residential mortgage-backed security yields and maturities include impact of expected prepayments and other timing factors such as interest rate forward curve.
2 Includes securities guaranteed by Ginnie Mae, a U.S. government agency, and the government sponsored enterprises Fannie Mae and Freddie Mac.
3 Private sponsors of securities collateralized primarily by pools of 1-4 family residential, Alt-A or pay-option ARM mortgages and commercial mortgages.
Deposits. The number of deposit accounts at the end of each of the last three fiscal years is set forth below:
At June 30,
Non-interest-bearing
Interest-bearing checking and savings accounts
Time deposits
Total number of deposit accounts
For fiscal year 2025, the number of interest-bearing checking and savings accounts grew primarily due to a higher number of consumer deposit accounts.
The following table sets forth the composition of the deposit portfolio:
At June 30,
(Dollars in thousands)
Amount
Amount
Amount
Non-interest-bearing
Interest-bearing demand and savings
Time deposits
Total interest-bearing
Total deposits 1
1 Total deposits includes brokered deposits of $1,801.1 million and $1,611.6 million as of June 30, 2025 and 2024, respectively, which include brokered time deposits of $700.0 million and $400.0 million as of June 30, 2025 and 2024, respectively.
The following table sets forth the average balance, the interest expense and the average rate paid by type of deposit:
For the Fiscal Year Ended June 30,
(Dollars in thousands)
Average Balance
Interest Expense
Avg. Rate Paid
Average Balance
Interest Expense
Avg. Rate Paid
Average Balance
Interest Expense
Avg. Rate Paid
Non-interest-bearing
Interest-bearing:
Demand
Savings
Time deposits
Total interest-bearing deposits
Total deposits
Total deposits that exceeded the FDIC insurance limit or were not collateralized at June 30, 2025 and 2024 , were $2.6 billion and $2.1 billion, respectively. The maturities of non-collateralized time deposits that exceeded the FDIC insurance limit were as follows:
(Dollars in thousands)
June 30, 2025
3 months or less
3 months to 6 months
6 months to 12 months
Over 12 months
Total
LIQUIDITY AND CAPITAL RESOURCES
Liquidity . Our primary sources of liquidity include deposits, borrowings, payments and maturities of outstanding loans, sales of loans, maturities or sales of available-for-sale securities and other short-term investments. While scheduled loan payments and maturing available-for-sale securities and short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. We generally invest excess funds in overnight deposits and other short-term interest-earning assets. We use cash generated through retail deposits, our largest funding source, to offset the cash utilized in lending and investing activities. Our short-term interest-earning available-for-sale securities are used to provide liquidity for lending and other operational requirements.
Axos Bank can 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. Based on loans and securities pledged at June 30, 2025, we had $2,799.2 million available immediately and an additional $4,925.6 million available with additional collateral and the Company had $4,284.7 million of loans and $127 thousand of securities pledged to the FHLB. At June 30, 2025, we had $250.0 million in unsecured federal funds lines of credit with five major banks under which there were no borrowings outstanding.
The Bank has the ability to borrow short-term from the FRBSF Discount Window. At June 30, 2025, the Bank did not have any borrowings outstanding and the amount available from this source was $7,046.5 million. Borrowings are collateralized by pledging commercial loans and consumer loans. At June 30, 2025, the Bank had $8,227.7 million of loans pledged to the FRBSF.
Any future borrowings will depend on the growth of our lending operations and our exposure to interest rate risk, among other factors. We expect to continue to use deposits and advances from the FHLB as the primary sources of funding our future asset growth.
Axos Clearing has a $150.0 million third-party secured line of credit available for borrowing. As of June 30, 2025, there was no amount outstanding. These credit facilities bear interest at rates based on the Federal Funds rate and borrowings are due upon demand.
Axos Clearing has a $110.0 million unsecured line of credit available for limited purpose borrowing. As of June 30, 2025, there was no amount outstanding. This credit facility bears interest at rates based on the Federal Funds rate and borrowings are due upon demand. The unsecured line of credit requires Axos Clearing to operate in accordance with specific covenants with respect to capital and debt ratios. Axos Clearing was in compliance with all covenants as of June 30, 2025.
In December 2004, we completed a transaction that resulted in the issuance of $5.2 million of junior subordinated debentures for our Company with a stated maturity date of February 23, 2035. We have the right to redeem the debentures in whole (but not in part) on or after specific dates, at a redemption price specified in the indenture plus any accrued but unpaid interest through the redemption date. Interest accrues at the rate of three-month term SOFR plus a 2.41% margin and a 0.26% spread adjustment, for a rate of 6.99% as of June 30, 2025, with interest paid quarterly.
In January 2019, we issued subordinated loans totaling $7.5 million to the principal stockholders of Cor Securities Holdings, Inc. (“COR Securities”) in an equal principal amount, with a maturity of 15 months and a 6.25% interest rate, to serve as the source of payment of indemnification obligations of the principal stakeholders of COR Securities under the applicable merger agreement. During the fiscal year ended June 30, 2019, $0.1 million of subordinated loans were repaid. As of June 30, 2025, an indemnification claim against the $7.4 million remains pending.
In September 2020, the Company completed the sale of $175 million aggregate principal amount of its 4.875% Fixed-to-Floating Rate Subordinated Notes due October 1, 2030 (the “2030 Notes”). The 2030 Notes mature on October 1, 2030 and accrue interest at a fixed rate per annum equal to 4.875%, payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2021. From and including October 1, 2025, to, but excluding October 1, 2030 or the date of early redemption, the 2030 Notes will bear interest at a floating rate per annum equal to the three-month term SOFR plus a spread of 476 basis points, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, commencing on January 2026. The 2030 Notes may be redeemed on or after October 1, 2025, which date may be extended at the Company’s discretion, at a redemption price equal to principal plus accrued and unpaid interest, subject to certain conditions. 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 gain is recorded in “General and administrative expense” in the Consolidated Statements of Income for the fiscal year ended June 30, 2025.
In February 2022, the Company completed the sale of $150 million aggregate principal amount of its 4.00% Fixed-to-Floating Rate Subordinated Notes (the “2032 Notes”). The 2032 Notes are obligations only of Axos Financial, Inc. The 2032 Notes mature on March 1, 2032 and accrue interest at a fixed rate per annum equal to 4.00%, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2022. From and including March 1, 2027, to, but excluding March 1, 2032 or the date of early redemption, the 2032 Notes will bear interest at a floating rate per annum equal to three-month term SOFR plus a spread of 227 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on June 1, 2027. The 2032 Notes may be redeemed on or after March 1, 2027, which date may be extended at the Company’s discretion, at a redemption price equal to principal plus accrued and unpaid interest, subject to certain conditions. Fees and costs incurred in connection with the debt offering amortize to interest expense over the term of the 2032 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 June 5, 2025, the Company paid $1.4 million to repurchase $1.5 million par value of its 2032 Notes resulting in a pre-tax non-cash on extinguishment of $0.1 million, after accounting for unamortized issuance costs and accrued interest. The non-cash is recorded in “General and administrative expense” in the Consolidated Statements of Income for the fiscal year ended June 30, 2025.
In February 2024, the Company filed a new shelf registration with the SEC which allows us to issue up to $500.0 million through the sale of common stock, preferred stock, debt securities, warrants, subscription rights and units. 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 the registration statement filed in February 2024 and a prospectus supplement filed with the SEC on January 28, 2025. No shares of the Company’s common stock have been issued pursuant to this offering.
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 June 30, 2025, we believe we have the ability to increase our level of deposits, and have available other potential sources of funding, to address our liquidity needs for the foreseeable future.
For additional information on certain contractual and other obligations, see Note 9— “Other Assets,” Note 11 — “Deposits,” Note 12— “Advances from the Federal Home Loan Bank,” Note 13— “Borrowings, Subordinated Debt and Debentures” and Note 18— “Commitments, Contingencies and Off-Balance Sheet Activities” in the Consolidated Financial Statements. See Item 3. “Legal Proceedings” for further information on pending litigation.
The Company and Bank Capital Requirements . Our Company and Bank are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. Failure by our Company or Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on our Consolidated Financial Statements. The Federal Reserve establishes capital requirements for our Company and the OCC has similar requirements for our Bank. The following tables present regulatory capital information for our Company and Bank. Information presented for June 30, 2025, reflects the Basel III capital requirements for both our Company and Bank. Under these capital requirements and the regulatory framework for prompt corrective action, our Company and Bank must meet specific capital guidelines that involve quantitative measures of our Company and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.
Quantitative measures established by regulation require our Company and Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require our Company and Bank maintain minimum ratios of core 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,” our Company and Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Additionally, the Bank is required to maintain a tangible capital ratio equal to at least 1.5% of total average adjusted assets. At June 30, 2025, our Company and Bank met all the capital adequacy requirements to which they were subject to and were “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since June 30, 2025 that would materially adversely change the Company’s and Bank’s capital classifications. From time to time, we may need to raise additional capital to support our Company’s and Bank’s further growth and to maintain their “well capitalized” status.
The Company and Bank both elected the five-year 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 the subsequent increases to the allowance for credit losses through June 30, 2022. In fiscal year 2025, this cumulative amount was phased out of regulatory capital at 75% and the cumulative amount will be 100% phased out of regulatory capital beginning in fiscal year 2026.
The Company’s and Bank’s capital ratios and requirements were as follows:
Minimum Capital Requirement
Minimum Capital Requirement with Capital Buffer
Minimum to Be Well
Capitalized
June 30,
Regulatory Capital Ratios (Company):
Tier 1 leverage ratio
Common equity tier 1 capital ratio
Tier 1 risk-based capital ratio
Total risk-based capital ratio
Regulatory Capital Ratios (Bank):
Tier 1 leverage ratio
Common equity tier 1 capital ratio
Tier 1 risk-based capital ratio
Total risk-based capital ratio
Axos Clearing Capital Requirements. 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.
The net capital position of Axos Clearing was as follows:
(Dollars in thousands)
June 30, 2025
June 30, 2024
Net capital
Excess capital
Net capital as a percentage of aggregate debit items
Net capital in excess of 5% aggregate debit items
Axos Clearing, as a clearing broker, is subject to SEC Customer Protection Rule (Rule 15c3-3 of the Exchange Act) which requires segregation of funds in a special reserve account for the exclusive benefit of customers (“Customer Reserve Bank Account”) and proprietary accounts of brokers (“PAB Reserve Account”). As of June 30, 2025, Axos Clearing was in compliance with its Customer Reserve Bank Account and PAB Reserve Account deposit requirements.
