Annual Statements Open main menu
  1. Annual Statements
  2. » Companies
  3. » Axos Financial, Inc.
  4. » Quarter Report: 2022 December (Form 10-Q)

Axos Financial, Inc. - Quarter Report: 2022 December (Form 10-Q)


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, 2022
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-37709
ax-20221231_g1.jpg
AXOS FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware33-0867444
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueAXNew 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: 60,000,709 shares of common stock, $0.01 par value per share, as of January 20, 2023.

Table of Contents
AXOS FINANCIAL, INC.
INDEX
Page

Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par and stated value)
(Unaudited) December 31, 2022
June 30,
2022
ASSETS
Cash and cash equivalents$1,755,603 $1,202,587 
Cash segregated for regulatory purposes196,910 372,112 
Total cash, cash equivalents, and cash segregated1,952,513 1,574,699 
Securities:
Trading372 1,758 
Available-for-sale248,062 262,518 
Stock of regulatory agencies20,881 20,368 
Loans held for sale, carried at fair value4,292 4,973 
Loans held for sale, lower of cost or fair value455 10,938 
Loans—net of allowance for credit losses of $157,218 as of December 31, 2022 and $148,617 as of June 30, 2022
15,473,212 14,091,061 
Mortgage servicing rights, carried at fair value25,526 25,213 
Securities borrowed58,846 338,980 
Customer, broker-dealer and clearing receivables272,579 417,417 
Goodwill and other intangible assets—net157,585 156,405 
Other assets526,712 496,835 
TOTAL ASSETS$18,741,035 $17,401,165 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing3,442,148 5,033,970 
Interest bearing12,248,346 8,912,452 
Total deposits15,690,494 13,946,422 
Advances from the Federal Home Loan Bank100,000 117,500 
Borrowings, subordinated notes and debentures334,077 445,244 
Securities loaned156,008 474,400 
Customer, broker-dealer and clearing payables420,947 511,654 
Accounts payable and other liabilities251,950 262,972 
Total liabilities16,953,476 15,758,192 
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS’ EQUITY:
Common stock—$0.01 par value; 150,000,000 shares authorized; 69,153,591 shares issued and 60,000,079 shares outstanding as of December 31, 2022; 68,859,722 shares issued and 59,777,949 shares outstanding as of June 30, 2022
692 689 
Additional paid-in capital465,350 453,784 
Accumulated other comprehensive income (loss)—net of tax(6,945)(2,933)
Retained earnings1,568,403 1,428,444 
Treasury stock, at cost; 9,153,512 shares as of December 31, 2022 and 9,081,773 shares as of June 30, 2022
(239,941)(237,011)
Total stockholders’ equity1,787,559 1,642,973 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$18,741,035 $17,401,165 

See accompanying notes to the condensed consolidated financial statements.
1
Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) 
Three Months EndedSix Months Ended
December 31,December 31,
(Dollars in thousands, except earnings per common share)2022202120222021
INTEREST AND DIVIDEND INCOME:
Loans, including fees$255,661 $149,469 $463,999 $298,645 
Securities borrowed and customer receivables4,321 5,366 8,705 12,217 
Investments19,606 2,241 30,670 4,524 
Total interest and dividend income279,588 157,076 503,374 315,386 
INTEREST EXPENSE:
Deposits71,348 7,805 103,853 15,517 
Advances from the Federal Home Loan Bank2,504 973 7,667 1,989 
Securities loaned1,067 218 2,010 469 
Other borrowings4,759 2,512 9,459 5,201 
Total interest expense79,678 11,508 122,989 23,176 
Net interest income199,910 145,568 380,385 292,210 
Provision for credit losses3,500 4,000 12,250 8,000 
Net interest income, after provision for credit losses196,410 141,568 368,135 284,210 
NON-INTEREST INCOME:
Broker-dealer fee income9,812 6,332 18,990 12,794 
Advisory fee income6,983 8,035 13,942 13,339 
Banking and service fees10,143 8,486 16,657 15,166 
Mortgage banking income641 4,640 4,006 9,910 
Prepayment penalty fee income750 3,294 1,942 6,280 
Total non-interest income28,329 30,787 55,537 57,489 
NON-INTEREST EXPENSE:
Salaries and related costs49,720 39,979 96,716 80,716 
Data processing14,632 12,199 28,654 24,291 
Depreciation and amortization5,957 6,785 12,051 12,513 
Advertising and promotional10,899 3,402 17,269 6,774 
Professional services8,455 5,943 16,542 10,488 
Occupancy and equipment3,683 3,342 7,737 6,523 
FDIC and regulatory fees3,569 2,475 7,304 4,741 
Broker-dealer clearing charges3,739 3,678 6,568 7,683 
General and administrative expense6,874 8,216 30,774 16,721 
Total non-interest expense107,528 86,019 223,615 170,450 
INCOME BEFORE INCOME TAXES117,211 86,336 200,057 171,249 
INCOME TAXES35,659 25,549 60,098 50,252 
NET INCOME$81,552 $60,787 $139,959 $120,997 
COMPREHENSIVE INCOME$80,377 $60,131 $135,947 $119,834 
Basic earnings per common share$1.36 $1.02 $2.34 $2.04 
Diluted earnings per common share$1.35 $1.00 $2.31 $1.99 
See accompanying notes to the condensed consolidated financial statements.
2
Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months EndedSix Months Ended
December 31,December 31,
(Dollars in thousands)2022202120222021
NET INCOME$81,552 $60,787 $139,959 $120,997 
Net unrealized gain (loss) from available-for-sale securities, net of income tax expense (benefit) of $503 and $(274) for the three months and $1,718 and $(488) for the six months ended December 31, 2022 and 2021, respectively.
(1,175)(656)(4,012)(1,163)
Other comprehensive income (loss)(1,175)(656)(4,012)(1,163)
Comprehensive income$80,377 $60,131 $135,947 $119,834 

See accompanying notes to the condensed consolidated financial statements.
3
Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three Months Ended December 31, 2022
Common StockAdditional Paid-in CapitalRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		Treasury
Stock		Total
Number of Shares
(Dollars in thousands)IssuedTreasuryOutstandingAmount
BALANCE—September 30, 202269,151,152 (9,152,479)59,998,673 $692 $459,101 $1,486,851 $(5,770)$(239,902)$1,700,972 
Net income— — — — — 81,552 — — 81,552 
Other comprehensive income (loss)— — — — — — (1,175)— (1,175)
Stock-based compensation activity2,439 (1,033)1,406 — 6,249 — — (39)6,210 
BALANCE—December 31, 202269,153,591 (9,153,512)60,000,079 $692 $465,350 $1,568,403 $(6,945)$(239,941)$1,787,559 
For the Six Months Ended December 31, 2022
Common StockAdditional Paid-in CapitalRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		Treasury
Stock		Total
Number of Shares
(Dollars in thousands)IssuedTreasuryOutstandingAmount
BALANCE—June 30, 202268,859,722 (9,081,773)59,777,949 $689 $453,784 $1,428,444 $(2,933)$(237,011)$1,642,973 
Net income— — — — — 139,959 — — 139,959 
Other comprehensive income (loss)— — — — — — (4,012)— (4,012)
Stock-based compensation activity293,869 (71,739)222,130 3 11,566 — — (2,930)8,639 
BALANCE—December 31, 202269,153,591 (9,153,512)60,000,079 $692 $465,350 $1,568,403 $(6,945)$(239,941)$1,787,559 

See accompanying notes to the condensed consolidated financial statements.
4
Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(Unaudited)
For the Three Months Ended December 31, 2021
Common StockAdditional Paid-in CapitalRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		Treasury
Stock		Total
Number of Shares
(Dollars in thousands)IssuedTreasuryOutstandingAmount
BALANCE—September 30, 202168,370,617 (8,875,984)59,494,633 $684 $436,528 $1,247,938 $2,000 $(228,529)$1,458,621 
Net income— — — — — 60,787 — — 60,787 
Other comprehensive income (loss)— — — — — — (656)— (656)
Stock-based compensation activity6,220 (2,278)3,942 — 4,533 — — (128)4,405 
BALANCE—December 31, 202168,376,837 (8,878,262)59,498,575 $684 $441,061 $1,308,725 $1,344 $(228,657)$1,523,157 
For the Six Months Ended December 31, 2021
Common StockAdditional Paid-in CapitalRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		Treasury
Stock		Total
Number of Shares
(Dollars in thousands)IssuedTreasuryOutstandingAmount
BALANCE—June 30, 202168,069,321 (8,751,377)59,317,944 $681 $432,550 $1,187,728 $2,507 $(222,530)$1,400,936 
Net income— — — — — 120,997 — — 120,997 
Other comprehensive income (loss)— — — — — — (1,163)— (1,163)
Stock-based compensation activity307,516 (126,885)180,631 3 8,511 — — (6,127)2,387 
BALANCE—December 31, 202168,376,837 (8,878,262)59,498,575 $684 $441,061 $1,308,725 $1,344 $(228,657)$1,523,157 

See accompanying notes to the condensed consolidated financial statements.
5
Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
December 31,
(Dollars in thousands)20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$139,959 $120,997 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion12,580 14,287 
Stock-based compensation expense11,569 8,514 
Trading activity1,386 760 
Provision for credit losses12,250 8,000 
Deferred income taxes7,592 (1,468)
Origination of loans held for sale(113,300)(403,287)
Unrealized and realized gains on loans held for sale(4,115)(8,673)
Proceeds from sale of loans held for sale117,252 410,918 
Amortization and change in fair value of mortgage servicing rights93 1,087 
Net changes in assets and liabilities which provide (use) cash:
Securities borrowed280,134 84,845 
Customer, broker-dealer and clearing receivables144,838 (1,702)
Other assets(19,062)(102,551)
Securities loaned(318,392)(150,226)
Customer, broker-dealer and clearing payables(90,707)(61,069)
Accounts payable and other liabilities(5,001)7,067 
Net cash provided by (used in) operating activities177,076 (72,501)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities— (12,286)
Proceeds from sale and repayment of securities9,111 129,351 
Purchase of stock of regulatory agencies(74,972)(13,631)
Proceeds from redemption of stock of regulatory agencies74,972 13,631 
Origination of loans held for investment(4,499,800)(4,636,661)
Proceeds from sale of loans held for investment13,965 36,943 
Mortgage warehouse loans activity, net136,545 18,511 
Proceeds from sales of other real estate owned and repossessed assets1,229 7,454 
Acquisition of business activity, net of cash acquired (5,531)(54,761)
Purchases of loans and leases, net of discounts and premiums(127)(30,153)
Principal repayments on loans2,947,186 3,413,366 
Purchases of furniture, equipment, software and intangibles(13,982)(8,730)
Net cash used in investing activities(1,411,404)(1,136,966)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits1,744,072 1,453,375 
Payments of the Federal Home Loan Bank term advances(17,500)(10,000)
Net repayment of Federal Home Loan Bank other advances— (186,000)
Net proceeds (repayments) of other borrowings(111,500)38,800 
Tax payments related to settlement of restricted stock units(2,930)(6,127)
Net cash provided by financing activities1,612,142 1,290,048 
NET CHANGE IN CASH AND CASH EQUIVALENTS377,814 80,581 
CASH AND CASH EQUIVALENTS—Beginning of year$1,574,699 $1,037,777 
CASH AND CASH EQUIVALENTS—End of period$1,952,513 $1,118,358 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits and borrowed funds$121,878 $23,429 
Income taxes paid73,129 57,763 
Transfers to other real estate and repossessed vehicles7,228 342 
Transfers from loans held for investment to loans held for sale— 36,943 
Transfers from loans held for sale to loans held for investment690 794 
Operating lease liabilities for obtaining right of use assets— 4,167 
See accompanying notes to the condensed consolidated financial statements.
6
Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2022 AND 2021
(Dollars in thousands, except per share and stated value amounts)
(Unaudited)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements include the accounts of Axos Financial, Inc. (“Axos”) and its wholly owned subsidiaries, Axos Bank (the “Bank”) and Axos Nevada Holding, LLC (“Axos Nevada Holding” and collectively, the “Company”). Axos Bank and its wholly owned subsidiary constitute the Banking Business segment and Axos Nevada Holding wholly owns the companies constituting the Securities Business segment. All significant intercompany balances and transactions have been eliminated in consolidation.
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. Results for the three and six months ended December 31, 2022 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 Securities and Exchange Commission (“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, 2022 included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2022 (“2022 Form 10-K”). A reclassification of certain components of non-interest income for the three and six months ended December 31, 2021 has been made to conform to the current period presentation. This reclassification had no effect on the Company’s total non-interest income, net income, financial position or cash flows. Additional reclassifications of certain amounts in the Condensed Consolidated Statement of Cash Flows for the six months ended December 31, 2021 have been made to conform to the current period presentation. These reclassifications had no effect on the Company’s results of operations or financial position.
Significant Accounting Policies
Our significant accounting policies are described in greater detail in Note 1—“Organizations and Summary of Significant Accounting Policies” contained in the 2022 Form 10-K.
New Accounting Standards
Accounting Standards Issued But Not Yet Adopted
The Financial Accounting Standards Board has issued three Accounting Standards Updates (“ASUs”) (2020-04, 2021-04 and 2022-06) all of which provide guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and other transactions impacted by reference rate reform. The provisions apply only to those transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions are optional and are effective from March 12, 2020 through December 31, 2024. The Company is evaluating the impact on the Company’s Consolidated Financial Statements, but it does not expect any application of the provisions of these ASUs to have a material impact. For a further discussion of new accounting standards issued but not yet adopted which are applicable to the Company see Note 1—“Organizations and Summary of Significant Accounting Policies” contained in the 2022 Form 10-K.
7
Table of Contents
2.     ACQUISITIONS
From time to time the Company completes acquisitions and related corporate activities to supplement the organic growth and development of the business.
On August 2, 2021, the Company’s subsidiary, Axos Clearing LLC, acquired certain assets and liabilities of E*TRADE Advisor Services (“EAS”), the registered investment advisor custody business of Morgan Stanley. This business was rebranded as Axos Advisor Services (“AAS”). AAS adds incremental fee income, a turnkey technology platform used by independent registered investment advisors for trading and custody services, and low cost deposits that can be used to generate fee income from other bank partners or to fund loan growth at Axos Bank. The purchase price of $54.8 million consisted entirely of cash consideration paid upon acquisition and working capital adjustments.
The Company incurred acquisition-related costs totaling $0.04 million in total, all of which were recognized in the year ended June 30, 2022.
The acquisition is accounted for as a business combination under the acquisition method of accounting. Accordingly, tangible and intangible assets acquired (and liabilities assumed) are recorded at their estimated fair values as of the date of acquisition. The preliminary allocation of the $54.6 million purchase price consisted of $14.4 million of fair value of tangible assets acquired (which included $7.8 million of a right-of-use lease asset), $11.3 million of liabilities assumed (which included $7.8 million of a lease liability), $27.1 million of identifiable intangible assets and $24.4 million of goodwill, all of which is expected to be deductible for tax purposes. In December 2021, the Company made a $0.2 million true-up payment based on working capital adjustments, which was recorded as an increase in the purchase price up to $54.8 million with no impact on goodwill or identifiable intangible assets. After the working capital true-up, the final acquisition fair value of tangible assets acquired was $14.2 million and the final acquisition fair value of liabilities acquired was $10.9 million. Goodwill was calculated as the excess of consideration exchanged over the fair value of identifiable net assets acquired. The goodwill includes synergies expected to result from combining the acquired assets and liabilities with existing operations, coupling its custody platform with the Company’s existing product offerings and leveraging customer relationships through registered investment advisors (“RIAs”). The following table summarizes the fair value and useful life of each intangible asset acquired as of the acquisition date:
(Dollars in thousands)Fair ValueUseful Lives (Years)
Trade Name$290 0.16
Proprietary Technology10,990 7
Customer Relationships15,650 14
Non-Compete Agreements130 1
Total$27,060 
The following table presents the results of operations of AAS for the six months ended December 31, 2021 on an unaudited pro forma basis, as if the acquisition of the entity rebranded to AAS had been consummated on July 1, 2020. The results of operations of AAS for the three months ended December 31, 2021 are reflected in the unaudited Condensed Consolidated Statements of Income. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what the Company’s results of operations would have been if the acquisition of EAS had occurred as of July 1, 2020, or the results of operations for any future periods. Additionally, the information presented does not reflect any synergies or other strategic benefits as a result of acquisition.
Pro Forma Revenue
(Dollars in thousands)For the Six Months Ended December 31, 2021
Non-interest income$17,230 
It is not practical to disclose net income on a pro forma basis as the assets and liabilities acquired are a component of a business.
8
Table of Contents
3.     FAIR VALUE
The Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31, 2022 and June 30, 2022 are classified in their entirety based on the lowest level of input significant to the fair value measurement.
December 31, 2022
(Dollars in thousands)Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
ASSETS:
Securities—Trading: Municipal$372 $— $372 
Securities—Available-for-Sale:
Agency MBS1
22,796 — 22,796 
Non-Agency MBS2
— 175,123 175,123 
Municipal3,327 — 3,327 
Asset-backed securities and structured notes46,816 — 46,816 
Total—Securities—Available-for-Sale$72,939 $175,123 $248,062 
Loans Held for Sale$4,292 $— $4,292 
Mortgage servicing rights$— $25,526 $25,526 
Other assets—Derivative instruments$— $136 $136 
LIABILITIES:
   Other liabilities—Derivative instruments$— $118 $118 

June 30, 2022
(Dollars in thousands)Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
ASSETS:
Securities—Trading: Municipal
$1,758 $— $1,758 
Securities—Available-for-Sale:
Agency MBS1
25,325 — 25,325 
Non-Agency MBS2
— 186,814 186,814 
Municipal3,248 — 3,248 
Asset-backed securities and structured notes47,131 — 47,131 
Total—Securities—Available-for-Sale$75,704 $186,814 $262,518 
Loans Held for Sale$4,973 $— $4,973 
Mortgage servicing rights$— $25,213 $25,213 
Other assets—Derivative instruments$— $464 $464 
LIABILITIES:
Other liabilities—Derivative instruments$— $— $— 
1Includes 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 Alt-A or pay-option ARM mortgages.
9
Table of Contents
Additional information is presented below about assets measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value:

For the Three Months Ended
December 31, 2022
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBS
Mortgage Servicing Rights1
Derivative Instruments, netTotal
Opening balance$184,012 $26,373 $535 $210,920 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— (1,046)(517)(1,563)
Included in other comprehensive income(2,143)— — (2,143)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 199 — 199 
Settlements(6,746)— — (6,746)
Closing balance$175,123 $25,526 $18 $200,667 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,046)$(517)$(1,563)
For the Six Months Ended
December 31, 2022
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency RMBS
Mortgage Servicing Rights1
Derivative Instruments, netTotal
Opening Balance$186,814 $25,213 $464 $212,491 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— (93)(446)(539)
Included in other comprehensive income(4,616)— — (4,616)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 406 — 406 
Settlements(7,075)— — (7,075)
Closing balance$175,123 $25,526 $18 $200,667 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(93)$(446)$(539)
1 Earnings from mortgage servicing rights (“MSR”) were attributable to: Time and payoffs, representing a decrease in MSR 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 $0.1 million and $0.5 million for the three and six months ended December 31, 2022, respectively, and a decrease in MSR value resulting from market-driven changes in interest rates of $0.9 million for the three months ended December 31, 2022 and an increase of $0.4 million for the six months ended December 31, 2022. Additions to mortgage servicing rights were retained upon sale of loans held for sale.

10
Table of Contents
For the Three Months Ended
December 31, 2021
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBS
Mortgage Servicing Rights1
Derivative Instruments, netTotal
Opening balance$59,851 $18,438 $2,226 $80,515 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— 97 (849)(752)
Included in other comprehensive income(527)— — (527)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 1,575 — 1,575 
Settlements(572)— — (572)
Closing balance$58,752 $20,110 $1,377 $80,239 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $97 $(849)$(752)
For the Six Months Ended
December 31, 2021
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency RMBS
Mortgage Servicing Rights1
Derivative Instruments, netTotal
Opening Balance$67,615 $17,911 $2,205 $87,731 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— (1,087)(828)(1,915)
Included in other comprehensive income(639)— — (639)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 3,286 — 3,286 
Settlements(8,224)— — (8,224)
Closing balance$58,752 $20,110 $1,377 $80,239 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,087)$(828)$(1,915)
1 Earnings from mortgage servicing rights were attributable to: Time and payoffs, representing a decrease in MSR 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 $1.3 million and $2.8 million for the three and six months ended December 31, 2021, respectively, and an increase in MSR value resulting from market-driven changes in interest rates of $1.4 million and $1.8 million for the three and six months ended December 31, 2021, respectively. Additions to mortgage servicing rights were retained upon sale of loans held for sale.
The table below summarizes the quantitative information about level 3 fair value measurements as of the dates indicated:
December 31, 2022
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$175,123 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 30.0% (21.9%)
0.0 to 6.1% (2.2%)
0.0 to 68.7% (27.4%)
2.6 to 7.1% (2.7%)
Mortgage Servicing Rights$25,526 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
6.2 to 26.4% (11.5%)
0.7 to 12.2 (8.0)
9.5 to 11.5% (9.6%)
Derivative Instruments$18 Sales Comparison ApproachProjected Sales Profit of Underlying Loans
-1.6 to 1.2% (0.1%)
11
Table of Contents
June 30, 2022
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$186,814 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 30.0% (21.4%)
0.0 to 7.9% (2.2%)
0.0 to 68.4% (26.7%)
2.7 to 9.3% (2.8%)
Mortgage Servicing Rights$25,213 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
7.9 to 56.3% (11.0%)
1.2 to 9.9 (8.4)
9.5 to 11.5% (9.5%)
Derivative Instruments$464 Sales Comparison ApproachProjected Sales Profit of Underlying Loans
-3.1 to 0.8% (-1.2%)
The significant unobservable inputs used in the fair value measurement of the Company’s residential mortgage-backed securities are projected prepayment rates, probability of default, projected loss severity in the event of default and discount rate over LIBOR. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the projected loss severity and a directionally opposite change in the assumption used for projected prepayment rates.
The table below summarizes assets measured for impairment on a non-recurring basis:
December 31, 2022
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance
Other real estate owned and repossessed vehicles:
Single family real estate$— $— $4,383 $4,383 
Autos$— $— $1,421 $1,421 
Total$— $— $5,804 $5,804 
June 30, 2022
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance
Other real estate owned and repossessed vehicles:
Autos— — 798 798 
Total$— $— $798 $798 
Non-recurring fair value measurements for other real estate owned and repossessed vehicles represent charge-offs of $657 thousand and $37 thousand for the three months ended December 31, 2022 and December 31, 2021, respectively, and $964 thousand and $49 thousand for the six months ended December 31, 2022 and December 31, 2021, respectively.
The Company has elected the fair value option for Agency loans held for sale. Given these loans are intended for sale, fair value is considered to be the best indicator of the amount to be realized from these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans. None of these loans are 90 days or more past due nor on nonaccrual as of December 31, 2022 and June 30, 2022.
As of December 31, 2022 and June 30, 2022, the aggregate fair value of loans held for sale, carried at fair value, contractual balance (including accrued interest), and unrealized gain was as follows:
(Dollars in thousands)December 31, 2022June 30, 2022
Aggregate fair value$4,292 $4,973 
Contractual balance4,182 4,881 
Unrealized gain$110 $92 
12
Table of Contents
Gains and losses from changes in fair value included in earnings for loans held for sale for the periods indicated below were:
For the Three Months EndedFor the Six Months Ended
December 31,December 31,
(Dollars in thousands)2022202120222021
Interest income$103 $194 $153 $394 
Change in fair value(422)(1,021)(331)(978)
Total $(319)$(827)$(178)$(584)
The following table presents quantitative information about level 3 fair value measurements for other real estate owned and repossessed vehicles measured at fair value on a non-recurring basis at the periods indicated:
December 31, 2022
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and repossessed vehicles:
Single family real estate$4,383 Sales comparison approachAdjustment for differences between the comparable sales
3.5 to 12.1% (4.1%)
Autos$1,421 Sales comparison approachAdjustment for differences between the comparable sales
-20.3 to -7.8% (-9.1%)
June 30, 2022
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and repossessed vehicles:
Autos$798 Sales comparison approachAdjustment for differences between the comparable sales
-17.2 to 4.6% (-7.5%)
1 For other real estate owned and repossessed vehicles the ranges shown may vary positively or negatively based on the comparable sales reported in the current appraisal. In certain instances, the range can be significant due to small sample sizes and in some cases the asset being valued having limited comparable sales with similar characteristics at the time the current appraisal is conducted.

13
Table of Contents
Fair Value of Financial Instruments
Carrying amounts and estimated fair values of financial instruments at December 31, 2022 and June 30, 2022 were:
December 31, 2022
Fair Value
(Dollars in thousands)Carrying
Amount		Level 1Level 2Level 3Total Fair Value
Financial assets:
Cash and cash equivalents$1,952,513 $1,952,513 $— $— $1,952,513 
Securities—trading372 — 372 — 372 
Securities—available-for-sale248,062 — 72,939 175,123 248,062 
Loans held for sale, at fair value4,292 — 4,292 — 4,292 
Loans held for sale, at lower of cost or fair value455 — — 456 456 
Loans held for investment—net15,473,212 — — 15,171,361 15,171,361 
Securities borrowed58,846 — — 60,217 60,217 
Customer, broker-dealer and clearing receivables272,579 — — 281,165 281,165 
Mortgage servicing rights25,526 — — 25,526 25,526 
Financial liabilities:
Total deposits15,690,494 — 14,334,437 — 14,334,437 
Advances from the Federal Home Loan Bank100,000 — 92,471 — 92,471 
Borrowings, subordinated notes and debentures334,077 — 297,252 — 297,252 
Securities loaned156,008 — — 156,039 156,039 
Customer, broker-dealer and clearing payables420,947 — — 420,946 420,946 
June 30, 2022
Fair Value
(Dollars in thousands)Carrying
Amount		Level 1Level 2Level 3Total Fair Value
Financial assets:
Cash and cash equivalents$1,574,699 $1,574,699 $— $— $1,574,699 
Securities—trading1,758 — 1,758 — 1,758 
Securities—available-for-sale262,518 — 75,704 186,814 262,518 
Loans held for sale, at fair value4,973 — 4,973 — 4,973 
Loans held for sale, at lower of cost or fair value10,938 — — 10,985 10,985 
Loans held for investment—net14,091,061 — — 14,015,157 14,015,157 
Securities borrowed338,980 — — 329,963 329,963 
Customer, broker-dealer and clearing receivables417,417 — — 414,383 414,383 
Mortgage servicing rights25,213 — — 25,213 25,213 
Financial liabilities:
Total deposits13,946,422 — 12,812,512 — 12,812,512 
Advances from the Federal Home Loan Bank117,500 — 117,500 — 117,500 
Borrowings, subordinated notes and debentures445,244 — 416,947 — 416,947 
Securities loaned474,400 — — 473,831 473,831 
Customer, broker-dealer and clearing payables511,654 — — 471,859 471,859 
Carrying amount is the estimated fair value for cash and cash equivalents, 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 and loans held for sale can be found in Note 3 – “Fair Value” of the 2022 Form 10-K. The carrying amount of stock of regulatory agencies approximates the estimated fair value of these investments. The fair value of off-balance sheet items is not material.
14
Table of Contents
4.     SECURITIES
The amortized cost, carrying amount and fair value for the trading and available-for-sale securities at December 31, 2022 and June 30, 2022 were:
December 31, 2022
TradingAvailable-for-sale
(Dollars in thousands)Fair
Value		Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair
Value
Mortgage-backed securities (MBS):
U.S. agencies1
$— $26,008 $1 $(3,213)$22,796 
Non-agency2
— 180,541 750 (6,168)175,123 
Total mortgage-backed securities— 206,549 751 (9,381)197,919 
Non-MBS:
Municipal372 3,592 — (265)3,327 
Asset-backed securities and structured notes— 47,000 — (184)46,816 
Total Non-MBS372 50,592 — (449)50,143 
Total debt securities$372 $257,141 $751 $(9,830)$248,062 
June 30, 2022
TradingAvailable-for-sale
(Dollars in thousands)Fair
Value		Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair
Value
Mortgage-backed securities (MBS):
U.S. agencies1
$— $27,722 $9 $(2,406)$25,325 
Non-agency2
— 187,616 1,832 (2,634)186,814 
Total mortgage-backed securities— 215,338 1,841 (5,040)212,139 
Non-MBS:
Municipal1,758 3,529 — (281)3,248 
Asset-backed securities and structured notes— 47,000 131 — 47,131 
Total Non-MBS1,758 50,529 131 (281)50,379 
Total debt securities$1,758 $265,867 $1,972 $(5,321)$262,518 
1Includes securities guaranteed by Ginnie Mae, a U.S. government agency, and the government sponsored enterprises Fannie Mae and Freddie Mac.
2Private 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 Alt-A or pay-option ARM mortgages.
No credit losses were recognized on available-for-sale securities in the three and six months ended December 31, 2022 and December 30, 2021. No allowance for credit losses for available-for-sale debt securities was recorded at December 31, 2022 and June 30, 2022 based on an analysis of: (1) the credit characteristics of the securities, including the forecasted cash flows, credit ratings, credit enhancement, and any external government backing, and (2) whether the Company is intending to sell or is required to sell any securities before recovering the amortized cost basis of the securities.
The Company’s non-agency MBS available-for-sale portfolio, with a total fair value of $175,123 at December 31, 2022, consists of 17 different issues of super senior securities.
The face amounts of debt securities available-for-sale pledged to secure borrowings at December 31, 2022 and June 30, 2022 were $1.1 million and $1.2 million, respectively.
15
Table of Contents
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, 2022
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:
U.S. agencies$6,786 $(470)$15,832 $(2,743)$22,618 $(3,213)
Non-agency126,507 (5,705)4,399 (463)130,906 (6,168)
Total MBS133,293 (6,175)20,231 (3,206)153,524 (9,381)
Non-MBS:
Municipal debt3,327 (265)— — 3,327 (265)
Asset-backed securities and structured notes46,816 (184)— — 46,816 (184)
Total Non-MBS50,143 (449)— — 50,143 (449)
Total debt securities$183,436 $(6,624)$20,231 $(3,206)$203,667 $(9,830)
June 30, 2022
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:
U.S. agencies$16,446 $(1,338)$8,097 $(1,068)$24,543 $(2,406)
Non-agency92,796 (2,204)4,751 (430)97,547 (2,634)
Total MBS109,242 (3,542)12,848 (1,498)122,090 (5,040)
Non-MBS:
Municipal debt3,248 (281)— — 3,248 (281)
Asset-backed securities and structured notes— — — — — — 
Total Non-MBS3,248 (281)— — 3,248 (281)
Total debt securities$112,490 $(3,823)$12,848 $(1,498)$125,338 $(5,321)
On December 31, 2022, there were nineteen securities in a continuous loss position for a period of more than 12 months, and thirty-five securities in a continuous loss position for a period of less than 12 months. At June 30, 2022, there were fourteen securities in a continuous loss position for a period of more than 12 months, and twenty-five securities in a continuous loss position for a period of less than 12 months.
At December 31, 2022, one non-agency MBS with a total carrying amount of $1.4 million was determined to have cumulative credit losses of $0.8 million of which none was recognized in earnings during the three months ended December 31, 2022.
During the six months ended December 31, 2022 the Company sold no available-for-sale securities.
The components of the Company’s accumulated other comprehensive income (loss) are:
(Dollars in thousands)December 31,
2022		June 30,
2022
Available-for-sale debt securities—net unrealized gains (losses)$(9,079)$(3,349)
Available-for-sale debt securities—non-credit related losses(845)(845)
Subtotal(9,924)(4,194)
Tax benefit (expense)2,979 1,261 
Net unrealized gain (loss) on investment securities in accumulated other comprehensive income (loss)$(6,945)$(2,933)

16
Table of Contents
The following table sets forth the expected maturity distribution of our mortgage-backed securities and the contractual maturity distribution of our Non-RMBS securities and the weighted-average yield for each range of maturities:
At December 31, 2022
Total AmountDue Within One YearDue After One but within Five YearsDue After Five but within Ten YearsDue After Ten Years
(Dollars in thousands)Amount
Yield1
Amount
Yield1
Amount
Yield1
Amount
Yield1
Amount
Yield1
Available-for-sale
Mortgage-backed securities:
Agency2
$26,008 1.80 %$4,969 1.88 %$12,531 1.83 %$6,650 1.81 %$1,858 1.41 %
Non-Agency3
180,541 5.18 %867 6.12 %176,931 5.13 %1,912 6.56 %831 11.67 %
Total Mortgage-Backed Securities$206,549 4.76 %$5,836 2.51 %$189,462 4.91 %$8,562 2.87 %$2,689 4.58 %
Non-RMBS
Municipal3,592 3.57 %— — %— — %— — %3,592 3.57 %
Asset-backed securities and structured notes47,000 9.16 %41,249 9.16 %5,751 9.16 %— — %— — %
Total Non-RMBS$50,592 8.77 %$41,249 9.16 %$5,751 9.16 %$— — %$3,592 3.57 %
Available-for-sale—Amortized Cost$257,141 5.54 %$47,085 8.34 %$195,213 5.04 %$8,562 2.87 %$6,281 4.00 %
Available-for-sale—Fair Value$248,062 5.56 %$46,358 8.34 %$188,044 5.04 %$7,674 2.87 %$5,986 4.00 %
Total available-for-sale securities$248,062 5.56 %$46,358 8.34 %$188,044 5.04 %$7,674 2.87 %$5,986 4.00 %
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 first mo prime, Alt-A or pay-option ARM mortgages.
17
Table of Contents
5.    LOANS & ALLOWANCE FOR CREDIT LOSSES
The composition of the loan portfolio was:
(Dollars in thousands)December 31, 2022June 30, 2022
Single Family - Mortgage & Warehouse$3,988,955 $3,988,462 
Multifamily and Commercial Mortgage3,050,128 2,877,680 
Commercial Real Estate5,762,049 4,781,044 
Commercial & Industrial - Non-RE2,208,945 2,028,128 
Auto & Consumer632,183 567,228 
Other7,234 11,134 
Total gross loans and leases15,649,494 14,253,676 
Allowance for credit losses - loans(157,218)(148,617)
Unaccreted premiums (discounts) and loan and lease fees(19,064)(13,998)
Total net loans and leases$15,473,212 $14,091,061 
Activity in the allowance for credit losses by portfolio classes for the periods was:
For the Three Months Ended December 31, 2022
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at October 1, 2022$18,039 $14,649 $73,776 $34,383 $14,595 $30 $155,472 
Provision (benefit) for credit losses - loans1,878 808 (1,608)1,655 776 (9)3,500 
Charge-offs(294)— — — (1,871)— (2,165)
Recoveries8 — — — 403 — 411 
Balance at December 31, 2022$19,631 $15,457 $72,168 $36,038 $13,903 $21 $157,218 
For the Three Months Ended December 31, 2021
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at October 1, 2021$25,329 $13,359 $65,223 $22,519 $10,007 $341 $136,778 
Provision (benefit) for credit losses - loans182 269 2,358 170 1,299 (278)4,000 
Charge-offs— — — — (640)— (640)
Recoveries69 — — 27 255 — 351 
Balance at December 31, 2021$25,580 $13,628 $67,581 $22,716 $10,921 $63 $140,489 
For the Six Months Ended December 31, 2022
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at July 1, 2022$19,670 $14,655 $69,339 $30,808 $14,114 $31 $148,617 
Provision (benefit) for credit losses - loans236 802 2,829 5,212 3,181 (10)12,250 
Charge-offs(298)— — — (4,233)— (4,531)
Recoveries23 — — 18 841 — 882 
Balance at December 31, 2022$19,631 $15,457 $72,168 $36,038 $13,903 $21 $157,218 
For the Six Months Ended December 31, 2021
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at July 1, 2021$26,604 $13,146 $57,928 $28,460 $6,519 $301 $132,958 
Provision (benefit) for credit losses - loans(1,169)305 9,653 (5,476)4,925 (238)8,000 
Charge-offs— — — (322)(1,034)— (1,356)
Recoveries145 177 — 54 511 — 887 
Balance at December 31, 2021$25,580 $13,628 $67,581 $22,716 $10,921 $63 $140,489 
18
Table of Contents
Credit Quality Disclosures. Nonaccrual loans consisted of the following as of the dates indicated:
(Dollars in thousands)As of December 31, 2022
Single Family - Mortgage & Warehouse$39,043 
Multifamily and Commercial Mortgage35,275 
Commercial Real Estate14,852 
Commercial & Industrial - Non-RE2,989 
Auto & Consumer1,447 
Other1,382 
     Total nonaccrual loans$94,988 
Nonaccrual loans to total loans0.61 %
(Dollars in thousands)As of June 30, 2022
Single Family - Mortgage & Warehouse$66,424 
Multifamily and Commercial Mortgage33,410 
Commercial Real Estate14,852 
Commercial & Industrial - Non-RE2,989 
Auto & Consumer439 
Other80 
     Total nonaccrual loans$118,194 
Nonaccrual loans to total loans0.83 %
No interest income was recognized on nonaccrual loans in the three and six months ended December 31, 2022 and three and six months ended December 31, 2021. There were no nonaccrual loans without an allowance for credit losses as of December 31, 2022 and June 30, 2022.
Approximately 1.39% of our nonaccrual loans at December 31, 2022 were considered troubled debt restructurings (“TDRs”), compared to 1.18% at June 30, 2022. Borrowers that make timely payments after TDRs are considered non-performing for at least six months. Generally, after six months of timely payments, those TDRs are reclassified from the nonaccrual loan category to the performing loan category and any previously deferred interest income is recognized. Approximately 41.10% of the Company’s nonaccrual loans are single family first mortgages as of December 31, 2022.
The outstanding unpaid balance of loans that are either performing or nonaccrual by portfolio class was:
December 31, 2022
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Performing$3,949,912 $3,014,853 $5,747,197 $2,205,956 $630,736 $5,852 $15,554,506 
Nonaccrual39,043 35,275 14,852 2,989 1,447 1,382 94,988 
          Total$3,988,955 $3,050,128 $5,762,049 $2,208,945 $632,183 $7,234 $15,649,494 
June 30, 2022
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Performing$3,922,038 $2,844,270 $4,766,192 $2,025,139 $566,789 $11,054 $14,135,482 
Nonaccrual66,424 33,410 14,852 2,989 439 80 118,194 
          Total$3,988,462 $2,877,680 $4,781,044 $2,028,128 $567,228 $11,134 $14,253,676 
From time to time the Company modifies loan terms temporarily for borrowers who are experiencing financial stress. These loans are performing and accruing and generally return to the original loan terms after the modification term expires. The Company had no TDRs classified as performing loans at December 31, 2022 or June 30, 2022.
19
Table of Contents
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. The Company analyzes loans individually by classifying the loans based on credit risk. The Company uses the following definitions for risk ratings.
Pass. Loans classified as pass are well protected by the current net worth and paying capacity of the obligor or by the fair value of any underlying collateral, less cost to acquire and sell in a timely manner.
Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
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.
































20
Table of Contents
The amortized cost basis of the Company’s loans by fiscal year of origination and credit quality indicator are:
December 31, 2022
Loans Held for Investment Origination YearRevolving Loans Total
(Dollars in thousands)20232022202120202019Prior
Single Family-Mortgage & Warehouse
Pass$464,448 $1,386,160 $555,289 $363,250 $264,688 $718,860 $143,354 $3,896,049 
Special Mention— 4,104 956 11,610 14,042 21,554 663 52,929 
Substandard— 549 1,005 3,975 5,335 29,113 — 39,977 
Doubtful— — — — — — — — 
Total464,448 1,390,813 557,250 378,835 284,065 769,527 144,017 3,988,955 
Multifamily and Commercial Mortgage
Pass357,936 982,288 519,340 395,827 238,903 454,957 — 2,949,251 
Special Mention— 9,704 5,935 1,973 3,259 — — 20,871 
Substandard— 3,145 5,737 31,458 7,450 32,216 — 80,006 
Doubtful— — — — — — — — 
Total357,936 995,137 531,012 429,258 249,612 487,173 — 3,050,128 
Commercial Real Estate
Pass901,296 2,669,607 844,296 179,916 118,000 4,000 885,282 5,602,397 
Special Mention— — 31,573 10,818 950 15,000 — 58,341 
Substandard— 17,950 51,724 — 15,487 14,852 1,298 101,311 
Doubtful— — — — — — — — 
Total901,296 2,687,557 927,593 190,734 134,437 33,852 886,580 5,762,049 
Commercial & Industrial - Non-RE
Pass149,777 373,451 34,549 17,809 3,879 504 1,609,675 2,189,644 
Special Mention— 8,474 — — — — — 8,474 
Substandard— 2,989 — 7,838 — — — 10,827 
Doubtful— — — — — — — — 
Total149,777 384,914 34,549 25,647 3,879 504 1,609,675 2,208,945 
Auto & Consumer
Pass162,687 303,542 86,643 32,849 27,563 16,124 — 629,408 
Special Mention27 695 289 43 18 64 — 1,136 
Substandard90 841 307 154 226 21 — 1,639 
Doubtful— — — — — — — — 
Total162,804 305,078 87,239 33,046 27,807 16,209 — 632,183 
Other
Pass513 2,000 1,669 — — 1,402 — 5,584 
Special Mention— — 268 — — — — 268 
Substandard— — 1,205 — — 177 — 1,382 
Doubtful— — — — — — — — 
Total513 2,000 3,142 — — 1,579 — 7,234 
Total
Pass2,036,657 5,717,048 2,041,786 989,651 653,033 1,195,847 2,638,311 15,272,333 
Special Mention27 22,977 39,021 24,444 18,269 36,618 663 142,019 
Substandard90 25,474 59,978 43,425 28,498 76,379 1,298 235,142 
Doubtful— — — — — — — — 
Total$2,036,774$5,765,499$2,140,785$1,057,520$699,800$1,308,844$2,640,272$15,649,494
As a % of total gross loans13.02%36.84%13.68%6.76%4.47%8.36%16.87%100.0%

21
Table of Contents
June 30, 2022
Loans Held for Investment Origination YearRevolving Loans Total
(Dollars in thousands)20222021202020192018Prior
Single Family-Mortgage & Warehouse
Pass$1,484,027 $600,054 $402,712 $303,999 $279,248 $548,703 $241,925 $3,860,668 
Special Mention— — 4,790 2,505 4,125 10,971 38,637 61,028 
Substandard— 2,288 3,928 18,407 5,955 36,188 — 66,766 
Doubtful— — — — — — — — 
Total1,484,027 602,342 411,430 324,911 289,328 595,862 280,562 3,988,462 
Multifamily and Commercial Mortgage
Pass999,819 569,486 429,247 259,161 219,548 316,013 — 2,793,274 
Special Mention1,200 — 534 539 — 968 — 3,241 
Substandard— 5,772 34,343 9,613 7,308 24,129 — 81,165 
Doubtful— — — — — — — — 
Total1,001,019 575,258 464,124 269,313 226,856 341,110 — 2,877,680 
Commercial Real Estate
Pass2,482,366 990,887 358,422 186,800 28,758 — 602,412 4,649,645 
Special Mention— 32,351 12,138 16,487 15,000 — — 75,976 
Substandard— — 12,575 18,043 23,507 — 1,298 55,423 
Doubtful— — — — — — — — 
Total2,482,366 1,023,238 383,135 221,330 67,265 — 603,710 4,781,044 
Commercial & Industrial - Non-RE
Pass435,228 66,226 25,629 61,932 9,268 — 1,388,435 1,986,718 
Special Mention13 — — 186 710 — — 909 
Substandard2,988 28,359 9,154 — — — — 40,501 
Doubtful— — — — — — — — 
Total438,229 94,585 34,783 62,118 9,978 — 1,388,435 2,028,128 
Auto & Consumer
Pass352,468 107,882 43,377 37,008 16,147 8,891 — 565,773 
Special Mention204 188 24 110 — 1 — 527 
Substandard157 311 224 205 25 6 — 928 
Doubtful— — — — — — — — 
Total352,829 108,381 43,625 37,323 16,172 8,898 — 567,228 
Other
Pass3,057 6,185 — — 1,091 721 — 11,054 
Special Mention— — — — — — — — 
Substandard— — 46 — — 34 — 80 
Doubtful— — — — — — — — 
Total3,057 6,185 46 — 1,091 755 — 11,134 
Total
Pass5,756,965 2,340,720 1,259,387 848,900 554,060 874,328 2,232,772 13,867,132 
Special Mention1,417 32,539 17,486 19,827 19,835 11,940 38,637 141,681 
Substandard3,145 36,730 60,270 46,268 36,795 60,357 1,298 244,863 
Doubtful— — — — — — — — 
Total$5,761,527 $2,409,989 $1,337,143 $914,995 $610,690 $946,625 $2,272,707 $14,253,676 
As a % of total gross loans40.42%16.91%9.38%6.42%4.28%6.64%15.95%100.0%
The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses and evaluates credit quality based on the aging status of its loans. Certain short-term loans do not have a fixed maturity date and are treated as delinquent if not paid in full 90 days after the origination date.
22
Table of Contents
The outstanding unpaid balance of loans past due 30 days or more by portfolio class are:
December 31, 2022
(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal
Single Family-Mortgage & Warehouse$20,731 $9,432 $37,421 $67,584 
Multifamily and Commercial Mortgage4,860 8,229 29,548 42,637 
Commercial Real Estate— — 14,852 14,852 
Auto & Consumer5,353 1,278 821 7,452 
Other2,000 1,017 177 3,194 
Total$32,944 $19,956 $82,819 $135,719 
As a % of total gross loans0.21 %0.13 %0.53 %0.87 %
June 30, 2022
(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal
Single Family-Mortgage & Warehouse$5,167 $1,518 $63,286 $69,971 
Multifamily and Commercial Mortgage9,455 2,115 26,556 38,126 
Commercial Real Estate— 14,852 — 14,852 
Auto & Consumer4,865 1,009 466 6,340 
Other413 — 193 606 
Total$19,900 $19,494 $90,501 $129,895 
As a % of total gross loans0.14 %0.14 %0.63 %0.91 %
Loans reaching 90+ days past due are placed on non-accrual as required under Company policy. No loans 90+ days past due were still accruing interest as of December 31, 2022 and June 30, 2022.
Loans in process of foreclosure were $23.6 million and $20.7 million as of December 31, 2022 and June 30, 2022, respectively.
Unfunded Loan Commitment Reserves
Unfunded loan commitment reserves are included in “Accounts payable and other liabilities” in the unaudited Condensed Consolidated Balance Sheets. Provisions for the unfunded loan commitments are included in the unaudited Condensed Consolidated Statements of Income in “General and administrative expenses”.
The following tables present a summary of the activity in the unfunded loan commitment reserves for the periods indicated:
Three Months Ended December 31,
(Dollars in thousands)20222021
BALANCE—beginning October 1$10,973 $7,723 
Provision (benefit)(499)1,000 
BALANCE—end December 31$10,474 $8,723 
Six Months Ended December 31,
(Dollars in thousands)20222021
BALANCE—beginning July 1$10,973 $5,723 
Provision (benefit)(499)3,000 
BALANCE—end December 31$10,474 $8,723 

23
Table of Contents


6.    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 Plan is designed to encourage selected employees and directors to improve operations and increase profits, and to accept or continue employment or association with the Company through participation in the growth in the value of the Company’s common stock. The Company also has an employment agreement with its Chief Executive Officer that authorizes an award of restricted stock units (the “RSU award”). For additional information regarding the Company’s stock-based compensation plans, see Note 16—“Stock-based Compensation” contained in the 2022 Form 10-K.
At December 31, 2022, 1,650,944 shares of common stock remained available for issuance pursuant to grant awards under the 2014 Plan and unrecognized compensation expense related to non-vested awards aggregated to $42.4 million and is expected to be recognized in future periods as follows:
(Dollars in thousands)Stock Award
Compensation
Expense
For the fiscal year remainder:
Remainder of fiscal year 2023$11,973 
202418,856 
20259,293 
20261,926 
2027400 
Total$42,448 
    
The following table presents the status and changes in restricted stock units for the periods indicated:
Restricted
Stock Units		Weighted-Average
Grant-Date
Fair Value
Non-vested balance at June 30, 20221,350,763 $41.16 
Granted407,632 39.03 
Vested(293,869)31.89 
Forfeited(39,444)40.88 
Non-vested balance at December 31, 20221,425,082 $42.47 
    The total fair value of shares vested for the three and six months ended December 31, 2022 was $0.1 million and $12.1 million, respectively. The total fair value of shares vested for the three and six months ended December 31, 2021 was $0.3 million and $14.8 million, respectively. The weighted-average remaining time period until vesting for restricted stock units as of December 31, 2022 was 1.2 years.
24
Table of Contents

7.    EARNINGS PER COMMON SHARE
The following table presents the calculation of basic and diluted EPS:
Three Months EndedSix Months Ended
December 31,December 31,
(Dollars in thousands, except per share data)2022202120222021
Earnings Per Common Share
Net income$81,552 $60,787 $139,959 $120,997 
Average common shares issued and outstanding59,999,573 59,496,489 59,927,078 59,443,667 
Earnings per common share$1.36 $1.02 $2.34 $2.04 
Diluted Earnings Per Common Share
Net income$81,552 $60,787 $139,959 $120,997 
Average common shares issued and outstanding59,999,573 59,496,489 59,927,078 59,443,667 
Dilutive effect of average unvested RSUs515,062 1,259,492 613,275 1,305,716 
Total dilutive common shares outstanding60,514,635 60,755,981 60,540,353 60,749,383 
Diluted earnings per common share$1.35 $1.00 $2.31 $1.99 
8.    COMMITMENTS AND CONTINGENCIES
Operating Leases. The Company leases office space under operating lease agreements scheduled to expire at various dates. The following table represents maturities of lease liabilities as of December 31, 2022 in the corresponding fiscal years:
(Dollars in thousands)
Remainder of fiscal year 2023$5,450 
202410,976 
202511,143 
202610,811 
202710,870 
Thereafter29,177 
Total lease payments78,427 
Less: amount representing interest(7,569)
Total Lease Liability$70,858 
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 unaudited condensed 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.
At December 31, 2022, the Company had commitments to originate $93.3 million in fixed rate loans and $2,956.4 million in variable rate loans, totaling an aggregate principal balance of $3,049.6 million. At December 31, 2022, the Company’s fixed rate commitments to originate had a weighted-average rate of 9.45%. At December 31, 2022, the Company also had commitments to sell $4.6 million in fixed rate loans and no variable rate loans, totaling an aggregate principal balance of $4.6 million.
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. The commitments for equity lines of credit may expire without being drawn upon. Therefore, 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.
25
Table of Contents
In the normal course of business, Axos Clearing’s 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. On October 15, 2015, the Company, its Chief Executive Officer and its Chief Financial Officer were named defendants in a putative class action lawsuit, Golden v. BofI Holding, Inc., et al, and brought in United States District Court for the Southern District of California (the “Golden Case”). On November 3, 2015, the Company, its Chief Executive Officer and its Chief Financial Officer were named defendants in a second putative class action lawsuit, Hazan v. BofI Holding, Inc., et al, and also brought in the United States District Court for the Southern District of California (the “Hazan Case”). On February 1, 2016, the Golden Case and the Hazan Case were consolidated as In re BofI Holding, Inc. Securities Litigation, Case #: 3:15-cv-02324-GPC-KSC (the “HMEPS Class Action”), and the Houston Municipal Employees Pension System was appointed lead plaintiff. The plaintiffs allege that the Company and other named defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by failing to disclose wrongful conduct that was alleged in a complaint filed in connection with a wrongful termination of employment lawsuit filed on October 13, 2015 (the “Employment Matter”) and that as a result the Company’s statements regarding its internal controls, as well as portions of its financial statements, were false and misleading. On April 13, 2022, the parties executed a Stipulation and Agreement of Settlement. The Stipulation and Agreement of Settlement was submitted to the District Court for approval on April 15, 2022. On June 8, 2022, the court granted preliminary approval of the settlement and scheduled a hearing with respect to final approval of the settlement for October 7, 2022. On October 14, 2022, the District Court entered an order granting final approval of such settlement. The settlement was reached because the parties were able to negotiate terms within available insurance coverage and reach a stipulation that specifically provides that (i) all amounts due in connection with the settlement be paid exclusively by the insurers and that defendants have no direct liability in connection therewith, (ii) no wrongdoing be attributed to Axos, its management or its directors, (iii) the settlement is not to be construed as conceding or evidencing the truth or validity of any claim or allegation made by plaintiffs, and (iv) the defendants shall be deemed to have agreed, or otherwise be required, to modify, amend or restate any business practices, policies, procedures, regulatory filings or financial records, as a result thereof.
In addition to the HMEPS Class Action, two separate shareholder derivative actions were filed in December, 2015, purportedly on behalf of the Company. The first derivative action, Calcaterra v. Garrabrants, et al, was filed in the United States District Court for the Southern District of California on December 3, 2015. The second derivative action, Dow v. Micheletti, et al, was filed in the San Diego County Superior Court on December 16, 2015. A third derivative action, DeYoung v. Garrabrants, et al, was filed in the United States District Court for the Southern District of California on January 22, 2016, a fourth derivative action, Yong v. Garrabrants, et al, was filed in the United States District Court for the Southern District of California on January 29, 2016, a fifth derivative action, Laborers Pension Trust Fund of Northern Nevada v. Allrich et al, was filed in the United States District Court for the Southern District of California on February 2, 2016, and a sixth derivative action, Garner v. Garrabrants, et al, was filed in the San Diego County Superior Court on August 10, 2017. Each of these six derivative actions names the Company as a nominal defendant, and certain of its officers and directors as defendants. Each complaint sets forth allegations of breaches of fiduciary duties, gross mismanagement, abuse of control, and unjust enrichment against the defendant officers and directors. The plaintiffs in these derivative actions seek damages in unspecified amounts on the Company’s behalf from the officer and director defendants, certain corporate governance actions, and an award of their costs and attorney’s fees.
The United States District Court for the Southern District of California ordered the six above-referenced derivative actions pending before it to be consolidated and appointed lead counsel in the consolidated action. The matter has been stayed until pending post-trial motions in the Employment Matter are resolved.The two derivative actions pending before the San Diego County Superior Court have been consolidated and have been stayed by agreement of the parties.
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 Union Bank. Such verdict has yet to be reduced to judgment. On November 28, 2022, the Company filed a post-trial motion requesting, among other relief, that the court set aside the verdict and direct a verdict for defendants. The Company continues to believe that the evidence supports the defendants’ understanding of the facts and that meritorious defenses exist to substantially all claims made by Union Bank. In addition, the Company believes that there exist substantial grounds for post-verdict relief and appeal. The Company recorded a $16 million accrued expense in accounts payable and other liabilities on the condensed consolidated balance sheets and in general and administrative expense on the condensed consolidated statements of income as of and for the six months ended December 31, 2022, respectively.
26
Table of Contents
9.    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 and by which segment results are evaluated by the Chief Executive Officer in deciding how to allocate resources and in assessing performance.
The Company evaluates performance and allocates resources based on pre-tax profit or loss from operations. Certain corporate administration costs and income taxes have not been allocated to the reportable segments. The Company operates through two operating segments: Banking Business and Securities Business. 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, as well as interest expense paid by the Banking Business segment to each of the wholly-owned subsidiaries of the Company and to the Company itself for their operating cash held on deposit with the Business Banking segment.
In order to reconcile the two segments to the unaudited condensed consolidated totals, the Company includes parent-only activities and intercompany eliminations. The following tables present the operating results, goodwill, and assets of the segments:
For the Three Months Ended December 31, 2022
(Dollars in thousands)Banking
Business		Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$198,545 $4,876 $(3,511)$199,910 
Provision for credit losses3,500 — — 3,500 
Non-interest income10,557 36,004 (18,232)28,329 
Non-interest expense96,284 25,271 (14,027)107,528 
Income before taxes$109,318 $15,609 $(7,716)$117,211 
For the Three Months Ended December 31, 2021
(Dollars in thousands)Banking
Business		Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$142,259 $4,506 $(1,197)$145,568 
Provision for credit losses4,000 — — 4,000 
Non-interest income16,295 16,454 (1,962)30,787 
Non-interest expense62,449 21,654 1,916 86,019 
Income before taxes$92,105 $(694)$(5,075)$86,336 

For the Six Months Ended December 31, 2022
(Dollars in thousands)Banking
Business		Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$378,275 $9,151 $(7,041)$380,385 
Provision for credit losses12,250 — — 12,250 
Non-interest income21,269 65,169 (30,901)55,537 
Non-interest expense197,080 49,786 (23,251)223,615 
Income before taxes$190,214 $24,534 $(14,691)$200,057 
27
Table of Contents
For the Six Months Ended December 31, 2021
(Dollars in thousands)Banking
Business		Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$284,500 $10,682 $(2,972)$292,210 
Provision for credit losses8,000 — — 8,000 
Non-interest income31,123 29,560 (3,194)57,489 
Non-interest expense125,174 40,927 4,349 170,450 
Income before taxes$182,449 $(685)$(10,515)$171,249 

As of December 31, 2022
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Goodwill$35,721 $61,952 $— $97,673 
Total Assets$17,893,083 $805,243 $42,709 $18,741,035 
As of June 30, 2022
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Goodwill$35,721 $59,953 $— $95,674 
Total Assets$16,002,714 $1,328,558 $69,893 $17,401,165 
Revenue Information. The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 for the periods indicated. For further information of the Company’s recognition of revenue and Topic 606 see Note 1—“Organizations and Summary of Significant Accounting Policies” contained in the 2022 Form 10-K.
For the Three Months EndedFor the Six Months Ended
 December 31,December 31,
(Dollars in thousands)2022202120222021
Advisory fee income$6,983 $8,035 $13,942 $13,339 
Broker-dealer clearing fees4,425 5,343 9,658 11,013 
Deposit service fees2,202 2,406 3,308 3,032 
Card fees2,144 957 2,933 1,964 
Bankruptcy trustee and fiduciary service fees2,167 1,068 2,940 1,848 
    Non-interest income (in-scope Topic 606)17,921 17,809 32,781 31,196 
    Non-interest income (out-of-scope Topic 606)10,408 12,978 22,756 26,293 
    Total non-interest income$28,329 $30,787 $55,537 $57,489 
28
Table of Contents
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, off balance sheet items 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 2022 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 ability to continue to grow profitably and increase our business, our ability to continue to diversify lending and deposit franchises, and 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, including any future impacts of the coronavirus pandemic (“COVID-19”). Forward-looking statements are inherently unreliable and actual results may vary. Factors that could cause actual results to differ from these forward-looking statements include our ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, inflation, government regulation, general economic conditions, including uncertainties surrounding the severity, duration, and effects of the COVID-19 pandemic, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, the outcome and effects of litigation and other risk factors discussed under the heading “Item 1A. Risk Factors” herein and in our 2022 Form 10-K, which has been filed with the SEC. 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 diversified financial services company with approximately $18.7 billion in assets. Axos Bank (the “Bank”) provides consumer and business banking products through its online, low-cost distribution channels and affinity partners. Our Bank has deposit and loan customers nationwide including consumer and business checking, savings and time deposit accounts and financing for single family and multifamily residential properties, small-to-medium size businesses in target sectors, and automobiles. Our Bank generates fee income from consumer and business products including fees from loans originated for sale, deposit account service fees as well as technology and payment transaction processing fees. Our securities products and services are offered through Axos Clearing LLC (“Axos Clearing”) and its business division Axos Advisor Services (“AAS”) and Axos Invest, Inc. (“Axos Invest”), which generate interest and fee income by providing comprehensive securities clearing and custody services to introducing broker-dealers and registered investment advisor correspondents and digital investment advisory services to retail investors, respectively. Axos Invest LLC is an introducing broker-dealer which supports direct trading and Axos Invest, Inc. Axos Financial, Inc.’s common stock is listed on the New York Stock Exchange and is a component of the Russell 2000® Index, the KBW Nasdaq Financial Technology Index, the S&P SmallCap 600® Index, the KBW Nasdaq Financial Technology Index, and the Travillian Tech-Forward Bank Index.

Axos Financial, Inc. is supervised and regulated as a savings and loan 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 bank wholly-owned by our Company and regulated by the Office of the Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation (“FDIC”) 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, and Axos Invest LLC is an introducing broker-dealer that is registered with the SEC and FINRA.

29
Table of Contents
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. The Banking Business segment includes a broad range of banking services including online banking, concierge banking, and mortgage, vehicle and unsecured lending through online and telephonic distribution channels to serve the needs of consumers and small businesses nationally. Our deposit products consist of demand, savings, money market and time deposit accounts. In addition, the Banking Business segment focuses on providing deposit products nationwide to industry verticals (e.g., Title and Escrow), cash 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. The Securities Business segment includes the clearing broker-dealer, registered investment advisor custody business, registered investment advisor, 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 accounting principles generally accepted in the United States of America. 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 Note 1 - “Organizations and Summary of Significant Accounting Policies” and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” contained in the 2022 Form 10-K.
30
Table of Contents
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, 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 costs (including amortization of intangible assets related to acquisitions) and other costs (unusual or non-recurring charges). Adjusted earnings per diluted common share (“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 compatible GAAP measure, to adjusted earnings and adjusted EPS (Non-GAAP) for the periods shown:
Three Months EndedSix Months Ended
December 31,December 31,
(Dollars in thousands, except per share amounts)2022202120222021
Net income$81,552 $60,787 $139,959 $120,997 
Acquisition-related costs
2,590 3,026 5,324 5,872 
Other costs— — 16,000 — 
Tax effects of adjustments(788)(896)(6,406)(1,723)
Adjusted earnings (Non-GAAP)$83,354 $62,917 $154,877 $125,146 
Adjusted EPS (Non-GAAP)$1.38 $1.04 $2.56 $2.06 
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 mortgage 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 compatible GAAP measure, to tangible book value (Non-GAAP) as of the dates indicated:
December 31,
(Dollars in thousands)20222021
Common stockholders’ equity$1,787,559 $1,523,157 
Less: mortgage servicing rights, carried at fair value25,526 20,110 
Less: goodwill and other intangible assets157,585 161,954 
Tangible common stockholders’ equity (Non-GAAP)$1,604,448 $1,341,093 
Common shares outstanding at end of period60,000,079 59,498,575 
Tangible book value per common share (Non-GAAP)$26.74 $22.54 

31
Table of Contents
SELECTED FINANCIAL DATA
The following tables set forth certain selected financial data concerning the periods indicated:
AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands)December 31,
2022		June 30,
2022		December 31,
2021
Selected Balance Sheet Data:
Total assets$18,741,035 $17,401,165 $15,547,947 
Loans—net of allowance for credit losses15,473,212 14,091,061 12,607,179 
Loans held for sale, carried at fair value4,292 4,973 27,428 
Loans held for sale, lower of cost or fair value455 10,938 11,446 
Allowance for credit losses - loans157,218 148,617 140,489 
Securities—trading372 1,758 1,223 
Securities—available-for-sale248,062 262,518 139,581 
Securities borrowed58,846 338,980 534,243 
Customer, broker-dealer and clearing receivables272,579 417,417 429,634 
Total deposits15,690,494 13,946,422 12,269,172 
Advances from the FHLB100,000 117,500 157,500 
Borrowings, subordinated debentures and other borrowings
334,077 445,244 260,435 
Securities loaned156,008 474,400 578,762 
Customer, broker-dealer and clearing payables420,947 511,654 528,796 
Total stockholders’ equity1,787,559 1,642,973 1,523,157 
Capital Ratios:
Equity to assets at end of period9.54 %9.44 %9.80 %
Axos Financial, Inc.:
Tier 1 leverage (to adjusted average assets)9.06 %9.25 %9.42 %
Common equity tier 1 capital (to risk-weighted assets)10.55 %9.86 %10.08 %
Tier 1 capital (to risk-weighted assets)10.55 %9.86 %10.08 %
Total capital (to risk-weighted assets)13.49 %12.73 %12.16 %
Axos Bank:
Tier 1 leverage (to adjusted average assets)10.05 %10.65 %10.13 %
Common equity tier 1 capital (to risk-weighted assets)11.28 %11.24 %10.91 %
Tier 1 capital (to risk-weighted assets)11.28 %11.24 %10.91 %
Total capital (to risk-weighted assets)12.13 %12.01 %11.73 %
Axos Clearing LLC:
Net capital$60,334 $38,915 $39,453 
Excess capital$55,977 $32,665 $32,171 
Net capital as a percentage of aggregate debit items27.69 %12.45 %10.84 %
Net capital in excess of 5% aggregate debit items$49,441 $23,290 $21,249 

32
Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
At or for the Three Months EndedAt or for the Six Months Ended
December 31,December 31,
(Dollars in thousands, except per share data)2022202120222021
Selected Income Statement Data:
Interest and dividend income$279,588 $157,076 $503,374 $315,386 
Interest expense79,678 11,508 122,989 23,176 
Net interest income199,910 145,568 380,385 292,210 
Provision for credit losses3,500 4,000 12,250 8,000 
Net interest income after provision for credit losses196,410 141,568 368,135 284,210 
Non-interest income28,329 30,787 55,537 57,489 
Non-interest expense107,528 86,019 223,615 170,450 
Income before income tax expense117,211 86,336 200,057 171,249 
Income tax expense35,659 25,549 60,098 50,252 
Net income$81,552 $60,787 $139,959 $120,997 
Per Common Share Data:
Net income:
Basic$1.36 $1.02 $2.34 $2.04 
Diluted$1.35 $1.00 $2.31 $1.99 
Adjusted earnings per common share (Non-GAAP)1
$1.38 $1.04 $2.56 $2.06 
Book value per common share$29.79 $25.60 $29.79 $25.60 
Tangible book value per common share (Non-GAAP)1
$26.74 $22.54 $26.74 $22.54 
Weighted average number of common shares outstanding:
     Basic59,999,573 59,496,489 59,927,078 59,443,667 
     Diluted60,514,635 60,755,981 60,540,353 60,749,383 
Common shares outstanding at end of period60,000,079 59,498,575 60,000,079 59,498,575 
Common shares issued at end of period69,153,591 68,376,837 69,153,591 68,376,837 
Performance Ratios and Other Data:
Loan originations for investment$2,013,576 $2,525,871 $4,499,800 $4,618,150 
Loan originations for sale$43,227$193,320$113,300$403,287
Return on average assets1.77 %1.63 %1.55 %1.65 %
Return on average common stockholders’ equity18.71 %16.29 %16.35 %16.51 %
Interest rate spread2
3.64 %3.90 %3.63 %3.97 %
Net interest margin3
4.49 %4.10 %4.38 %4.16 %
Net interest margin3 – Banking Business Segment
4.65 %4.30 %4.58 %4.39 %
Efficiency ratio4
47.11 %48.78 %51.30 %48.74 %
Efficiency ratio4 – Banking Business Segment
46.05 %39.39 %49.33 %39.66 %
Asset Quality Ratios:
Net annualized charge-offs to average loans0.05 %0.01 %0.05 %0.01 %
Non-performing loans and leases to total loans0.61 %1.14 %0.61 %1.14 %
Non-performing assets to total assets0.54 %0.94 %0.54 %0.94 %
Allowance for credit losses - loans to total loans held for investment1.00 %1.10 %1.00 %1.10 %
Allowance for credit losses - loans to non-performing loans165.51 %96.27 %165.51 %96.27 %
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.
33
Table of Contents
RESULTS OF OPERATIONS
Comparison of the Three and Six Months Ended December 31, 2022 and 2021
For the three months ended December 31, 2022, we had net income of $81.6 million, or $1.35 per diluted share, compared to net income of $60.8 million, or $1.00 per diluted share, for the three months ended December 31, 2021. For the six months ended December 31, 2022, we had net income of $140.0 million, or $2.31 per diluted share, compared to net income of $121.0 million, or $1.99 per diluted share for the six months ended December 31, 2021.
Net Interest Income
Net interest income for the three and six months ended December 31, 2022 totaled $199.9 million and $380.4 million, an increase of 37.3% and 30.2%, compared to net interest income of $145.6 million and $292.2 million for the three and six months ended December 31, 2021, respectively. The increase for the three and six months was primarily due to higher average balances and rates earned in the loan portfolio, partially offset by higher rates paid on deposits.
Total interest and dividend income during the three and six months ended December 31, 2022 increased 78.0% to $279.6 million and 59.6% to $503.4 million, compared to $157.1 million and $315.4 million during the three and six months ended December 31, 2021, respectively. The increase in interest and dividend income for the three and six months ended December 31, 2022 was primarily attributable to higher average balances and rates earned in the loan portfolio and higher rates on deposits placed with other financial institutions.
Total interest expense was $79.7 million for the three months ended December 31, 2022, an increase of $68.2 million or 592.4% as compared with the three months ended December 31, 2021. Total interest expense was $123.0 million for the six months ended December 31, 2022, an increase of $99.8 million or 430.7% as compared with the six months ended December 31, 2021. The increase for the three and six months ended December 31, 2022 was primarily attributable to higher rates paid on deposits, as deposit rates continue to increase across the industry. Also contributing to the increase was higher interest expense on advances from the Federal Home Loan Bank (“FHLB”) and other borrowings, which for the three months ended December 31, 2022 was primarily attributable to higher balances of other borrowings and higher rates paid on both FHLB advances and other borrowings, and for the six months ended December 31, 2022, the increase was attributable to higher average balances and higher rates on both FHLB advances and other borrowings.
Net interest margin, defined as annualized net interest income divided by average earning assets, increased 39 basis points to 4.49% for the three months ended December 31, 2022 from 4.10% for the three months ended December 31, 2021, and increased 22 basis points to 4.38% for the six months ended December 31, 2022 from 4.16% for the six months ended December 31, 2021. During the three and six months ended December 31, 2022, the primary contributor to the 39 and 22 basis point increases, respectively, was the increase in interest-earning balances and rates, primarily loans, outpacing the increased cost of our deposits and other funding liabilities.
34
Table of Contents
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following tables present 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,
 20222021
(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
$15,452,232 $255,661 6.62 %$12,116,565 $149,469 4.93 %
Interest-earning deposits in other financial institutions1,664,408 15,614 3.75 %1,247,675 642 0.21 %
Mortgage-backed and other investment securities4
257,133 3,578 5.57 %139,711 1,338 3.83 %
Securities borrowed and margin lending5
409,543 4,321 4.22 %686,920 5,366 3.12 %
Stock of the regulatory agencies18,685 414 8.86 %20,519 261 5.11 %
Total interest-earning assets17,802,001 279,588 6.28 %14,211,390 157,076 4.42 %
Non-interest-earning assets678,531 676,030 
Total assets$18,480,532 $14,887,420 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$9,951,529 $65,028 2.61 %$6,587,348 $4,299 0.26 %
Time deposits1,146,877 6,320 2.20 %1,333,848 3,506 1.05 %
Securities loaned289,782 1,067 1.47 %439,035 218 0.20 %
Advances from the FHLB290,918 2,504 3.44 %272,033 973 1.43 %
Borrowings, subordinated notes and debentures375,331 4,759 5.07 %262,781 2,512 3.82 %
Total interest-bearing liabilities12,054,437 79,678 2.64 %8,895,045 11,508 0.52 %
Non-interest-bearing demand deposits3,941,751 3,734,029 
Other non-interest-bearing liabilities741,066 765,946 
Stockholders’ equity1,743,278 1,492,400 
Total liabilities and stockholders’ equity$18,480,532 $14,887,420 
Net interest income$199,910 $145,568 
Interest rate spread6
3.64 %3.90 %
Net interest margin7
4.49 %4.10 %
1Average balances are obtained from daily data.
2Annualized.
3Loans include loans held for sale, loan premiums and unearned fees.
4Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.
5Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the unaudited condensed consolidated balance sheets.
6Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
7Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.




35
Table of Contents
 For the Six Months Ended
December 31,
 20222021
(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
$15,107,071 $463,999 6.14 %$11,889,439 $298,645 5.02 %
Interest-earning deposits in other financial institutions1,449,814 22,961 3.17 %1,205,409 1,233 0.20 %
Mortgage-backed and other investment securities4
260,102 6,876 5.29 %148,000 2,759 3.73 %
Securities borrowed and margin lending5
537,404 8,705 3.24 %795,231 12,217 3.07 %
Stock of the regulatory agencies23,483 833 7.09 %20,607 532 5.17 %
Total interest-earning assets17,377,874 503,374 5.79 %14,058,686 315,386 4.49 %
Non-interest-earning assets683,127 587,794 
Total assets$18,061,001 $14,646,480 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$8,851,092 $92,737 2.10 %$6,568,907 $7,866 0.24 %
Time deposits1,151,797 11,116 1.93 %1,348,454 7,651 1.13 %
Securities loaned414,362 2,010 0.97 %549,538 469 0.17 %
Advances from the FHLB585,633 7,667 2.62 %283,717 1,989 1.40 %
Borrowings, subordinated notes and debentures377,650 9,459 5.01 %249,170 5,201 4.17 %
Total interest-bearing liabilities11,380,534 122,989 2.16 %8,999,786 23,176 0.52 %
Non-interest-bearing demand deposits4,213,995 3,431,150 
Other non-interest-bearing liabilities754,079 749,781 
Stockholders’ equity1,712,393 1,465,763 
Total liabilities and stockholders’ equity$18,061,001 $14,646,480 
Net interest income$380,385 $292,210 
Interest rate spread6
3.63 %3.97 %
Net interest margin7
4.38 %4.16 %
1Average balances are obtained from daily data.
2Annualized.
3Loans include loans held for sale, loan premiums and unearned fees.
4Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.
5Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the unaudited condensed consolidated balance sheets.
6Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
7Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
36
Table of Contents
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 both, based on their relative absolute values.
 For the Three Months EndedFor the Six Months Ended
December 31,December 31,
2022 vs 20212022 vs 2021
 Increase (Decrease) Due toIncrease (Decrease) Due to
(Dollars in thousands)VolumeRateTotal
Increase
(Decrease)		VolumeRateTotal
Increase
(Decrease)
Increase / (decrease) in interest income:
Loans$47,298 $58,894 $106,192 $90,635 $74,719 $165,354 
Interest-earning deposits in other financial institutions291 14,681 14,972 292 21,436 21,728 
Mortgage-backed and other investment securities1,454 787 2,241 2,654 1,464 4,118 
Securities borrowed and margin lending(2,575)1,530 (1,045)(4,154)642 (3,512)
Stock of the regulatory agencies(25)177 152 82 218 300 
$46,443 $76,069 $122,512 $89,509 $98,479 $187,988 
Increase / (decrease) in interest expense:
Interest-bearing demand and savings$3,248 $57,481 $60,729 $3,642 $81,229 $84,871 
Time deposits(551)3,365 2,814 (1,251)4,716 3,465 
Securities loaned(99)948 849 (142)1,683 1,541 
Advances from the FHLB73 1,458 1,531 3,121 2,557 5,678 
Borrowings, subordinated notes and debentures
1,274 973 2,247 3,062 1,196 4,258 
$3,945 $64,225 $68,170 $8,432 $91,381 $99,813 

Provision for Credit Losses
The provision for credit losses was $3.5 million for the three months ended December 31, 2022 compared to $4.0 million for the three months ended December 31, 2021. The provision for credit losses was $12.3 million for the six months ended December 31, 2022 compared to $8.0 million for the six months ended December 31, 2021. The provision for credit losses for the three and six months ended December 31, 2022 were primarily due to growth in the loan portfolio and changes in loan product mix. Provisions for credit losses are charged to income to bring the allowance for credit losses - loans to a level deemed appropriate by management based on the factors discussed under “Financial Condition—Asset Quality and Allowance for Credit Losses - Loans.”



37
Table of Contents
Non-Interest Income
The following table sets forth information regarding our non-interest income for the periods shown:
For the Three Months EndedFor the Six Months Ended
December 31,December 31,
(Dollars in thousands)20222021Inc (Dec)20222021Inc (Dec)
Broker-dealer fee income$9,812 $6,332 $3,480 $18,990 $12,794 $6,196 
Advisory fee income6,983 8,035 (1,052)13,942 13,339 603 
Banking and service fees10,143 8,486 1,657 16,657 15,166 1,491 
Mortgage banking income641 4,640 (3,999)4,006 9,910 (5,904)
Prepayment penalty fee income750 3,294 (2,544)1,942 6,280 (4,338)
Total non-interest income$28,329 $30,787 $(2,458)$55,537 $57,489 $(1,952)
Non-interest income decreased $2.5 million to $28.3 million for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. The decrease was primarily the result of lower mortgage banking income as higher mortgage rates contributed to lower originations, and the impact of changes in the fair value of our MSRs. Also contributing to the decrease was lower prepayment penalty fee income due to slower prepayments and a decrease in advisory fee income primarily due to lower average assets under custody. These decreases were partially offset by an increase in broker-dealer fee income from higher rates earned on cash sorting balances placed at non-affiliated banks and higher banking and service fees.
Non-interest income decreased $2.0 million to $55.5 million for the six months ended December 31, 2022 compared to the six months ended December 31, 2021. The decrease was primarily the result of lower mortgage banking income as higher mortgage rates contributed to lower originations, and the impact of changes in the fair value of our MSRs. Also contributing to the decrease was lower prepayment penalty fee income due to slower prepayments. Partially offsetting these decreases were higher broker-dealer fee income from higher rates earned on cash sorting balances placed at non-affiliated banks, higher banking and service fees as well as higher advisory fee income as incremental revenues from the AAS acquisition were partially offset by lower average assets under custody.
Non-Interest Expense
    The following table sets forth information regarding our non-interest expense for the periods shown:
 For the Three Months EndedFor the Six Months Ended
December 31,December 31,
(Dollars in thousands)20222021Inc (Dec)20222021Inc (Dec)
Salaries and related costs$49,720 $39,979 $9,741 $96,716 $80,716 $16,000 
Data processing14,632 12,199 2,433 28,654 24,291 4,363 
Depreciation and amortization5,957 6,785 (828)12,051 12,513 (462)
Advertising and promotional10,899 3,402 7,497 17,269 6,774 10,495 
Professional services8,455 5,943 2,512 16,542 10,488 6,054 
Occupancy and equipment3,683 3,342 341 7,737 6,523 1,214 
FDIC and regulatory fees3,569 2,475 1,094 7,304 4,741 2,563 
Broker-dealer clearing charges3,739 3,678 61 6,568 7,683 (1,115)
General and administrative expense6,874 8,216 (1,342)30,774 16,721 14,053 
Total non-interest expenses
$107,528 $86,019 $21,509 $223,615 $170,450 $53,165 
Non-interest expense was $107.5 million for the three months ended December 31, 2022, compared to $86.0 million for the three months ended December 31, 2021. Non-interest expense was $223.6 million for the six months ended December 31, 2022, up from $170.5 million for the six months ended December 31, 2021. The increases for the three and six months ended December 31, 2022 were primarily due to higher salaries and related costs, advertising and promotional expenses, professional services, and for the six months ended December 31, 2022, higher other general and administrative expenses.
Total salaries and related costs increased $9.7 million to $49.7 million for the three months ended December 31, 2022 compared to $40.0 million for the three months ended December 31, 2021 and increased $16.0 million to $96.7 million for the six months ended December 31, 2022 compared to $80.7 million for the six months ended December 31, 2021. The increases in compensation expense for the three and six months ended December 31, 2022 were primarily due to increased headcount as well as an increase in salaries. Our headcount increased to 1,447 from 1,280, or 13% between December 31, 2022 and 2021.
38
Table of Contents
Data processing expense increased $2.4 million for the three months ended December 31, 2022 compared to the three months ended December 31, 2021, and increased $4.4 million for the six months ended December 31, 2022 compared to the six month period ended December 31, 2021, primarily due to enhancements to customer interfaces and the Company’s processing systems.
Depreciation and amortization expense decreased $0.8 million and $0.5 million for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, respectively. The decreases for the three and six months ended December 31, 2022 were primarily due to certain capitalized software becoming fully depreciated, and for the six months ended December 31, 2022, the decrease was partially offset by incremental amortization of intangibles as a result of the AAS acquisition.
Advertising and promotional expense increased $7.5 million and $10.5 million for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, respectively. The increase was primarily due to increased lead generation and deposit marketing costs.
Professional services expense increased $2.5 million and $6.1 million for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, respectively. The increase for the three and six months ended December 31, 2022 was primarily due to higher consulting expenses supporting technology investments and for the six months ended December 31, 2022, the increase was also attributable to higher legal expenses related to litigation.
Occupancy and equipment expense increased by $0.3 million and $1.2 million for the three and six months ended December 31, 2022 compared to the three and six months ended December 31, 2021, respectively. The increases for the three and six months ended December 31, 2022 were primarily due to growth in our office footprint and annual increases on our existing office space.

Our cost of FDIC and regulatory fees increased by $1.1 million and $2.6 million for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, respectively. The changes were due to balance sheet growth and changes in product mix at the Bank. As an FDIC-insured institution, the Bank is required to pay deposit insurance premiums to the FDIC.
Broker-dealer clearing charges for the three months ended December 31, 2022 were relatively unchanged from the three months ended December 31, 2021. Broker-dealer clearing charges decreased $1.1 million for the six months ended December 31, 2022 compared to the six months ended December 31, 2021, primarily due to reduced customer trading activity.
General and administrative costs decreased by $1.3 million and increased by $14.1 million for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, respectively. The decrease for the three months ended December 31, 2022 was primarily due to a net benefit for credit losses for unfunded commitments in the three months ended December 31, 2022 compared to a net provision for the three months ended December 31, 2021. The increase for the six months ended December 31, 2022 was primarily attributable to a $16.0 million accrual in the first quarter of 2023 as a result of an adverse legal judgement that has not been finalized, partially offset by a net benefit for credit losses for unfunded commitments in the six months ended December 31, 2022 compared to a net provision for the six months ended December 31, 2021.
Provision for Income Taxes
Income tax expense was $35.7 million for the three months ended December 31, 2022 compared to $25.5 million for the three months ended December 31, 2021 and $60.1 million for the six months ended December 31, 2022 compared to $50.3 million for the six months ended December 31, 2021. Our effective income tax rates (income tax provision divided by net income before income tax) for the three months ended December 31, 2022 and 2021 were 30.42% and 29.59%, respectively. Our effective income tax rates for the six months ended December 31, 2022 and 2021 were 30.04% and 29.34%, respectively.
SEGMENT RESULTS
Our 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. The Company operates through two operating segments: Banking Business and Securities Business. In order to reconcile the two segments to the unaudited condensed consolidated totals, the Company includes parent-only activities and intercompany eliminations. The following tables present the operating results of the segments:
39
Table of Contents
For the Three Months Ended December 31, 2022
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$198,545 $4,876 $(3,511)$199,910 
Provision for credit losses3,500 — — 3,500 
Non-interest income10,557 36,004 (18,232)28,329 
Non-interest expense96,284 25,271 (14,027)107,528 
Income before taxes$109,318 $15,609 $(7,716)$117,211 
For the Three Months Ended December 31, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$142,259 $4,506 $(1,197)$145,568 
Provision for credit losses4,000 — — 4,000 
Non-interest income16,295 16,454 (1,962)30,787 
Non-interest expense62,449 21,654 1,916 86,019 
Income before taxes$92,105 $(694)$(5,075)$86,336 
For the Six Months Ended December 31, 2022
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$378,275 $9,151 $(7,041)$380,385 
Provision for credit losses12,250 — — 12,250 
Non-interest income21,269 65,169 (30,901)55,537 
Non-interest expense197,080 49,786 (23,251)223,615 
Income before taxes$190,214 $24,534 $(14,691)$200,057 
For the Six Months Ended December 31, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$284,500 $10,682 $(2,972)$292,210 
Provision for credit losses8,000 — — 8,000 
Non-interest income31,123 29,560 (3,194)57,489 
Non-interest expense125,174 40,927 4,349 170,450 
Income before taxes$182,449 $(685)$(10,515)$171,249 
Banking Business
For the three months ended December 31, 2022, our Banking Business segment had income before taxes of $109 million compared to income before taxes of $92.1 million for the three months ended December 31, 2021. For the six months ended December 31, 2022, the Banking Business segment had income before taxes of $190 million compared to income before taxes of $182.4 million for the six months ended December 31, 2021. For the three and six months ended December 31, 2022, the increase in income before taxes compared to the three and six months ended December 31, 2021, was mainly due to an increase in net interest income, partially offset by higher non-interest expense and lower non-interest income.
40
Table of Contents
We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business segment:
At or for the Three Months EndedAt or for the Six Months Ended
December 31, 2022December 31, 2021December 31, 2022December 31, 2021
Efficiency ratio46.05 %39.39 %49.33 %39.66 %
Return on average assets1.75 %1.92 %1.57 %1.92 %
Interest rate spread3.81 %4.14 %3.84 %4.23 %
Net interest margin4.65 %4.30 %4.58 %4.39 %
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 and reduce our consolidated net interest margin, such as the borrowing costs at Axos Financial, Inc. and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities in our Securities Business, including items related to borrowings that particularly decrease net interest margin.

41
Table of Contents
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following tables present our Banking Business segment’s 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,
 20222021
(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
$15,429,873 $255,309 6.62 %$12,076,831 $148,960 4.93 %
Interest-earning deposits in other financial institutions1,362,744 13,126 3.85 %963,533 376 0.16 %
Mortgage-backed and other investment securities4
264,673 3,615 5.46 %163,417 1,458 3.57 %
Stock of the regulatory agencies18,685 411 8.80 %17,402 260 5.98 %
Total interest-earning assets17,075,975 272,461 6.38 %13,221,183 151,054 4.57 %
Non-interest-earning assets341,701 301,502 
Total assets$17,417,676 $13,522,685 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$10,045,861 $65,093 2.59 %$6,619,803 $4,316 0.26 %
Time deposits1,146,877 6,321 2.20 %1,333,848 3,506 1.05 %
Advances from the FHLB290,918 2,504 3.44 %272,033 973 1.43 %
Borrowings, subordinated notes and debentures
33 — — %261 — — %
Total interest-bearing liabilities11,483,689 73,918 2.57 %8,225,945 8,795 0.43 %
Non-interest-bearing demand deposits4,001,370 3,784,965 
Other non-interest-bearing liabilities198,916 131,229 
Stockholders’ equity1,733,701 1,380,546 
Total liabilities and stockholders’ equity$17,417,676 $13,522,685 
Net interest income$198,543 $142,259 
Interest rate spread5
3.81 %4.14 %
Net interest margin6
4.65 %4.30 %
1Average balances are obtained from daily data.
2Annualized.
3Loans include loans held for sale, loan premiums and unearned fees.
4Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.
5Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
6Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.




42
Table of Contents
 For the Six Months Ended
December 31,
 20222021
(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
$15,082,455 $463,319 6.14 %$11,849,452 $297,803 5.03 %
Interest-earning deposits in other financial institutions1,145,975 18,757 3.27 %921,695 713 0.15 %
Mortgage-backed and other investment securities4
270,324 6,986 5.17 %171,981 3,004 3.49 %
Stock of the regulatory agencies23,483 829 7.06 %17,613 530 6.02 %
Total interest-earning assets16,522,237 489,891 5.93 %12,960,741 302,050 4.66 %
Non-interest-earning assets327,034 294,156 
Total assets$16,849,271 $13,254,897 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$8,927,706 $92,833 2.08 %$6,617,301 $7,910 0.24 %
Time deposits1,151,797 11,116 1.93 %1,348,454 7,651 1.13 %
Advances from the FHLB585,633 7,667 2.62 %283,717 1,989 1.40 %
Borrowings, subordinated notes and debentures
27 — — %152 — — %
Total interest-bearing liabilities10,665,163 111,616 2.09 %8,249,624 17,550 0.43 %
Non-interest-bearing demand deposits4,292,481 3,511,837 
Other non-interest-bearing liabilities192,094 141,222 
Stockholders’ equity1,699,533 1,352,214 
Total liabilities and stockholders’ equity$16,849,271 $13,254,897 
Net interest income$378,275 $284,500 
Interest rate spread5
3.84 %4.23 %
Net interest margin6
4.58 %4.39 %
1Average balances are obtained from daily data.
2Annualized.
3Loans include loans held for sale, loan premiums and unearned fees.
4Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.
5Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.
6Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.


43
Table of Contents
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 for our Banking Business segment. 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 both, based on their relative absolute values.
 For the Three Months EndedFor the Six Months Ended
December 31,December 31,
2022 vs 20212022 vs 2021
 Increase (Decrease) Due toIncrease (Decrease) Due to
(Dollars in thousands)VolumeRateTotal
Increase
(Decrease)		VolumeRateTotal
Increase
(Decrease)
Increase / (decrease) in interest income:
Loans$47,590 $58,759 $106,349 $91,506 $74,010 $165,516 
Interest-earning deposits in other financial institutions225 12,525 12,750 208 17,836 18,044 
Mortgage-backed and other investment securities1,163 994 2,157 2,162 1,820 3,982 
Stock of the regulatory agencies, at cost20 131 151 197 102 299 
$48,998 $72,409 $121,407 $94,073 $93,768 $187,841 
Increase / (decrease) in interest expense:
Interest-bearing demand and savings$3,318 $57,459 $60,777 $3,698 $81,225 $84,923 
Time deposits(551)3,366 2,815 (1,251)4,716 3,465 
Advances from the FHLB73 1,458 1,531 3,121 2,557 5,678 
$2,840 $62,283 $65,123 $5,568 $88,498 $94,066 
The Banking Business segment’s net interest income for the three and six months ended December 31, 2022 totaled $198.5 million and $378.3 million, an increase of 39.6% and an increase of 33.0%, compared to net interest income of $142.3 million and $284.5 million for the three and six months ended December 31, 2021, respectively. The increase for the three and six months ended December 31, 2022 was primarily due to higher average balances and rates earned in the loan portfolio, higher rates on deposits placed with other financial institutions and a higher average balance of non-interest bearing deposits, partially offset by higher rates paid on deposits.
The Banking Business segment’s non-interest income decreased $5.7 million to $10.6 million and decreased $9.9 million to $21.3 million for the three and six months ended December 31, 2022 compared to the three and six months ended December 31, 2021, respectively. The decreases for the three and six months ended December 31, 2022 compared to the three and six months ended December 31, 2021, were mainly the result of lower mortgage banking income and prepayment penalty fee income as higher mortgage rates contributed to lower originations and a reduction in the fair value of our MSRs, and slower prepayments, respectively.
The Banking Business segment’s non-interest expense for the three and six months ended December 31, 2022 increased $33.8 million and $71.9 million, respectively, compared to the three and six months ended December 31, 2021. For the three and six months ended December 31, 2022 the increases compared to the three and six months ended December 31, 2021, were primarily due to higher advertising and promotional expenses, primarily due to amounts paid to our Securities Business segment for non-interest bearing deposits, higher salaries and related costs as a result of higher headcount and an increase in salaries, and for the six months ended December 31, 2022, a $16.0 million accrual in the first quarter of 2023 as a result of an adverse legal judgement that has not been finalized.
44
Table of Contents
Securities Business
For the three months ended December 31, 2022, our Securities Business segment had income before taxes of $15.6 million compared to a loss before taxes of $0.7 million for the three months ended December 31, 2021. For the six months ended December 31, 2022, our Securities Business segment had income before taxes of $24.5 million compared to a loss before taxes of $0.7 million for the six months ended December 31, 2021. The increases for both the three and six months ended December 31, 2022 compared to the three and six months ended December 31, 2021 was primarily the result of higher non-interest income, partially offset by higher non-interest expense.
Net interest income for the three months ended December 31, 2022, increased $0.4 million to $4.9 million compared to $4.5 million for the three months ended December 31, 2021 primarily as a result of higher cash deposit balances and rates. Net interest income for the six months ended December 31, 2022 decreased $1.5 million to $9.2 million compared to $10.7 million for the six months ended December 31, 2021 primarily as a result of lower securities lending activity, partially offset by higher cash deposit balances and rates.
Non-interest income for the three months ended December 31, 2022, increased $19.6 million to $36.0 million compared to $16.5 million for the three months ended December 31, 2021. Non-interest income for the six months ended December 31, 2022 increased $35.6 million to $65.2 million compared to $29.6 million for the six months ended December 31, 2021. The increases were primarily a result of an increase in fees earned on FDIC-insured bank deposits, including amounts received from our Banking Business segment.
Non-interest expense for the three months ended December 31, 2022 increased $3.6 million to $25.3 million compared to $21.7 million for the three months ended December 31, 2021. Non-interest expense for the six months ended December 31, 2022 increased $8.9 million to $49.8 million compared to $40.9 million for the six months ended December 31, 2021. The increases were primarily due to higher headcount and an increase in salaries, and for the six months ended December 31, 2022 the increase was also attributable to higher professional services expense.
The following table provides selected information for Axos Clearing LLC as of each period indicated:
(Dollars in thousands)December 31, 2022June 30, 2022
FDIC insured deposit program balances at banks$2,353,167 $3,452,358 
Customer margin balances$206,776 $285,894 
Cash reserves for the benefit of customers$196,910 $372,112 
Securities lending:
Interest-earning assets – securities borrowed$58,846 $338,980 
Interest-bearing liabilities – securities loaned$156,008 $474,400 
FINANCIAL CONDITION
Balance Sheet Analysis
Our total assets increased $1.3 billion, or 7.7%, to $18.7 billion, as of December 31, 2022, up from $17.4 billion at June 30, 2022. The increase in total assets was primarily due to a $1.4 billion increase in loans. Total liabilities increased $1.2 billion, primarily due to a $1.7 billion increase in deposits, partially offset by a $0.3 billion decrease in securities loaned.
45
Table of Contents
Loans
Net loans held for investment increased 9.8% to $15.5 billion at December 31, 2022 from $14.1 billion at June 30, 2022 primarily due to loan originations of $4.5 billion, partially offset by repayments and other changes of $3.1 billion.
The following table sets forth the composition of the loan portfolio as of the dates indicated:
December 31, 2022June 30, 2022
(Dollars in thousands)AmountPercentAmountPercent
Single Family - Mortgage & Warehouse$3,988,955 25.5 %$3,988,462 28.0 %
Multifamily and Commercial Mortgage3,050,128 19.5 %2,877,680 20.2 %
Commercial Real Estate5,762,049 36.9 %4,781,044 33.5 %
Commercial & Industrial - Non-RE2,208,945 14.1 %2,028,128 14.2 %
Auto & Consumer632,183 4.0 %567,228 4.0 %
Other7,234 — %11,134 0.1 %
Total gross loans 15,649,494 100.0 %14,253,676 100.0 %
Allowance for credit losses - loans(157,218)(148,617)
Unaccreted discounts and loan fees(19,064)(13,998)
Total net loans$15,473,212 $14,091,061 
The Bank originates some single family interest only loans with terms that include repayments that are less than the repayments for fully amortizing loans. The Bank’s lending guidelines for interest only loans are adjusted for the increased credit risk associated with these loans by requiring borrowers with such loans to borrow at loan-to-values (“LTVs”) that are lower than standard amortizing ARM loans and by calculating debt to income ratios for qualifying borrowers based upon a fully amortizing payment, not the interest only payment. The Bank monitors and performs reviews of interest only loans as part of its loan portfolio management process. Adverse trends reflected in the Company’s delinquency statistics, grading and classification of interest only loans would be reported to management and the Board of Directors. As of December 31, 2022, the Company had $1.3 billion of interest only mortgage loans with a weighted average LTV of 58.5%.
Asset Quality and Allowance for Credit Losses - Loans
Non-performing Assets
Non-performing loans are comprised of those past due 90 days or more and other nonaccrual loans. Non-performing assets include non-performing loans plus other real estate owned and repossessed vehicles. At December 31, 2022, our non-performing loans totaled $95.0 million, or 0.61% of total gross loans and our total non-performing assets totaled $100.8 million, or 0.54% of total assets.
Non-performing loans and foreclosed assets or “non-performing assets” consisted of the following as of the dates indicated:
(Dollars in thousands)December 31, 2022June 30, 2022Inc (Dec)
Non-performing assets:
Non-accrual loans:
Single Family - Mortgage & Warehouse$39,043 $66,424 $(27,381)
Multifamily and Commercial Mortgage35,275 33,410 1,865 
Commercial Real Estate14,852 14,852 — 
Commercial & Industrial - Non-RE2,989 2,989 — 
Auto & Consumer1,447 439 1,008 
Other1,382 80 1,302 
Total non-performing loans94,988 118,194 (23,206)
Foreclosed real estate4,383 — 4,383 
Repossessed—Autos1,421 798 623 
Total non-performing assets$100,792 $118,992 $(18,200)
Total non-performing loans as a percentage of total loans0.61 %0.83 %(0.22)%
Total non-performing assets as a percentage of total assets0.54 %0.68 %(0.14)%
46
Table of Contents
Total non-performing assets decreased from $119.0 million at June 30, 2022 to $100.8 million at December 31, 2022. The decrease in non-performing assets was primarily attributable to a decrease in non-accrual single family mortgage loans, partially offset by an increase in other non-performing loans and foreclosed real estate. The weighted average LTV of the single family mortgage loans remaining on non-accrual at December 31, 2022 was 59.8%.
The Bank had no performing troubled debt restructurings as of December 31, 2022 and June 30, 2022. A troubled debt restructuring is a concession made to a borrower experiencing financial difficulties, typically permanent or temporary modifications of principal and interest payments or an extension of maturity dates. When a loan is delinquent and classified as a troubled debt restructuring, no interest is accrued until the borrower demonstrates over time (typically six months) that it can make payments. When a loan is considered a troubled debt restructuring and is on nonaccrual, it is considered non-performing and included in the table above.
Management establishes an allowance for credit losses based upon its evaluation of the expected life-time credit losses related to the amortized cost basis of loans on the balance sheet. For additional information regarding the Company’s allowance for credit losses see Note 5 - Loans and Allowance for Credit Losses in the condensed consolidated financial statements. For a discussion of the provision for credit losses for the three and six months ended December 31, 2022, see “Results of Operations—Provision for Credit Losses.” We believe that the lower average LTV in the Bank’s mortgage loan portfolio will continue to result in future lower average mortgage loan charge-offs when compared to many other comparable banks. We do not expect the resolution of the Bank’s existing other real estate owned and non-performing loans will have a significant adverse impact on our operating results.
Investment Securities
Total investment securities was $248.4 million as of December 31, 2022, compared with $264.3 million at June 30, 2022. During the six months ended December 31, 2022, we did not purchase any securities and received principal repayments of approximately $9.1 million in our available-for-sale portfolio. The remainder of the change for the available-for-sale portfolio is attributable to unrealized losses, accretion and other changes.
Deposits
Deposits increased by $1.7 billion, or 12.5%, to $15.7 billion at December 31, 2022, from $13.9 billion at June 30, 2022. Interest-bearing demand and savings increased $3.3 billion and time deposits increased $21.9 million. Non-interest bearing deposits decreased $1.6 billion, or 31.6%, to $3.4 billion at December 31, 2022, from $5.0 billion at June 30, 2022.
The following table sets forth the composition of the deposit portfolio as of the dates indicated:
December 31, 2022June 30, 2022
(Dollars in thousands)Amount
Rate1
Amount
Rate1
Non-interest bearing$3,442,148 — %$5,033,970 — %
Interest bearing:
Demand5,661,863 3.03 %3,611,889 0.61 %
Savings5,509,620 2.93 %4,245,555 0.95 %
Total interest-bearing demand and savings11,171,483 2.98 %7,857,444 0.79 %
Time deposits:
$250 and under2
688,524 1.85 %651,392 1.22 %
Greater than $250388,339 3.50 %403,616 1.41 %
Total time deposits
1,076,863 2.41 %1,055,008 1.25 %
Total interest bearing2
12,248,346 2.93 %8,912,452 0.85 %
Total deposits$15,690,494 2.29 %$13,946,422 0.54 %
1 Based on weighted-average stated interest rates at end of period.
2 The total interest bearing includes brokered deposits of $2,508.8 million and $1,032.7 million as of December 31, 2022 and June 30, 2022, respectively, of which $399.9 million and $250.0 million, respectively, are time deposits classified as $250 and under.

47
Table of Contents
The following table sets forth the number of deposit accounts by type as of the date indicated:
December 31, 2022June 30, 2022December 31, 2021
Non-interest bearing43,747 42,37239,698 
Interest-bearing checking and savings accounts365,714 344,593342,127 
Time deposits7,475 8,73410,234 
Total number of accounts416,936 395,699392,059
Total deposits that exceeded the FDIC insurance limit of $250,000 at December 31, 2022 and June 30, 2022 were $2.0 billion and $2.3 billion, respectively. The maturities of certificates of deposit that exceeded the FDIC insurance limit of $250,000 at December 31, 2022 were as follows:
(Dollars in thousands)December 31, 2022
3 months or less$5,772 
3 months to 6 months1,829 
6 months to 12 months6,222 
Over 12 months11,780 
Total$25,603 

Borrowings
The following table sets forth the composition of our borrowings and the interest rates at the dates indicated:
December 31, 2022June 30, 2022December 31, 2021
(Dollars in thousands)BalanceWeighted Average RateBalanceWeighted Average RateBalanceWeighted Average Rate
FHLB Advances$100,0002.26 %$117,5002.26 %$157,5002.29 %
Borrowings, subordinated notes and debentures334,0774.59 %445,2443.86 %260,4354.37 %
Total borrowings$434,0774.05 %$562,7443.53 %$417,9353.59 %
Weighted average cost of borrowings during the quarter4.36 %2.85 %2.64 %
Borrowings as a percent of total assets2.32 %3.23 %2.69 %
At December 31, 2022, total borrowings amounted to $434.1 million, down $128.7 million, or 22.9%, from June 30, 2022 and up $16.1 million or 3.9% from December 31, 2021. Borrowings as a percent of total assets were 2.32%, 3.23% and 2.69% at December 31, 2022, June 30, 2022 and December 31, 2021, respectively. Weighted average cost of borrowings during the quarter were 4.36%, 2.85% and 2.64% for the quarters ended December 31, 2022, June 30, 2022 and December 31, 2021, respectively.
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 purchase of single family and multifamily mortgages and to provide us with interest rate risk protection should rates rise.
Stockholders’ Equity
Stockholders’ equity increased $144.6 million to $1,787.6 million at December 31, 2022 compared to $1,643.0 million at June 30, 2022. The increase was the result of net income for the six months ended December 31, 2022 of $140.0 million and stock compensation expense and restricted stock unit vesting which combined for an increase of $8.6 million, partially offset by a $4.0 million decrease in accumulated other comprehensive income, net of tax.
During the three and six months ended December 31, 2022, the Company did not repurchase any common stock shares. The Company has $52.8 million remaining under the Board authorized stock repurchase program as of December 31, 2022.

48
Table of Contents
LIQUIDITY
Cash flow information is as follows:
For the Six Months Ended
December 31,
(Dollars in thousands)20222021
Operating Activities$177,076 $(72,501)
Investing Activities$(1,411,404)$(1,136,966)
Financing Activities$1,612,142 $1,290,048 
During the six months ended December 31, 2022, we had net cash inflows from operating activities of $177.1 million compared to outflows of $72.5 million for the six months ended December 31, 2021. 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 $1,411.4 million for the six months ended December 31, 2022, while outflows totaled $1,132.7 million for the six months ended December 31, 2021. The increase in outflows was primarily due to lower principal repayments on loans held for investment, partially offset by lower loan originations.
Net cash inflows from financing activities totaled $1,612.1 million for the six months ended December 31, 2022, compared to net cash inflows from financing activities of $1,290.0 million for the six months ended December 31, 2021. The primary driver behind the increase in net cash inflows was a larger net increase in deposits for the six months ended December 31, 2022.
During the six months ended December 31, 2022, the Bank could borrow up to 40.0% of its total assets from the FHLB. Borrowings are collateralized by the pledge of certain mortgage loans and investment securities to the FHLB. At December 31, 2022, the Company had $2,250.4 million available immediately and $4,677.9 million available with additional collateral. At December 31, 2022, we also had three unsecured federal funds purchase lines with three different banks totaling $200 million, under which no borrowings were outstanding.
The Bank has the ability to borrow short-term from the Federal Reserve Bank of San Francisco Discount Window. At December 31, 2022, the Bank did not have any borrowings outstanding and the amount available from this source was $2,880.6 million. The credit line is collateralized by consumer loans and mortgage-backed securities.
Axos Clearing has a total of $150 million in uncommitted secured lines of credit for borrowing as needed. As of December 31, 2022, there was no amount outstanding. These credit facilities bear interest at rates based on the Federal Funds rate and are due upon demand.
Axos Clearing has a $190 million committed unsecured line of credit available for limited purpose borrowing, which includes $100 million from Axos Financial, Inc. As of December 31, 2022, there was no amount outstanding on this credit facility after elimination of intercompany balances. This credit facility bears interest at rates based on the Federal Funds rate and is due upon demand.
We believe our liquidity sources to be stable and adequate for our anticipated needs and contingencies for the next 12 months and beyond. We believe we have the ability to increase our level of deposits and borrowings to address our liquidity needs for the foreseeable future.
OFF-BALANCE SHEET COMMITMENTS
At December 31, 2022, we had commitments to originate loans with an aggregate outstanding principal balance of $3,049.6 million, and commitments to sell loans with an aggregate outstanding principal balance of $4.6 million. We have no commitments to purchase loans, investment securities or any other unused lines of credit.
In the normal course of business, Axos Clearing’s 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.
49
Table of Contents
CAPITAL RESOURCES AND 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 results of operations or financial condition. The Federal Reserve establishes capital requirements for our Company and the OCC has similar requirements for our 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 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,” 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. At December 31, 2022, our 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, 2022 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 current expected credit losses (“CECL”) transition guidance for calculating regulatory capital and ratios and the December 31, 2022 and June 30, 2022 amounts 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. Beginning with fiscal year 2023, this cumulative amount is phased out of regulatory capital at 25% per year until it is 100% phased out of regulatory capital beginning in fiscal year 2026.
50
Table of Contents
The Company’s and Bank’s estimated capital amounts, capital ratios and capital requirements under Basel III were as follows:
Axos Financial, Inc.Axos Bank“Well 
Capitalized”
Ratio		Minimum Capital
Ratio
(Dollars in millions)December 31, 2022June 30,
2022		December 31, 2022June 30,
2022
Regulatory Capital:
Tier 1 $1,662 $1,522 $1,747 $1,615 
Common equity tier 1 $1,662 $1,522 $1,747 $1,615 
Total capital$2,125 $1,966 $1,878 $1,726 
Assets:
Average adjusted$18,348 $16,461 $17,391 $15,165 
Total risk-weighted $15,751 $15,443 $15,487 $14,366 
Regulatory Capital Ratios:
Tier 1 leverage (to adjusted average assets)9.06 %9.25 %10.05 %10.65 %5.00%4.00%
Common equity tier 1 capital (to risk-weighted assets)10.55 %9.86 %11.28 %11.24 %6.50%4.50%
Tier 1 capital (to risk-weighted assets)10.55 %9.86 %11.28 %11.24 %8.00%6.00%
Total capital (to risk-weighted assets)13.49 %12.73 %12.13 %12.01 %10.00%8.00%
Basel III implemented a requirement for 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, 2022 and June 30, 2022, 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.
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.
The net capital positions of Axos Clearing were as follows:
(Dollars in thousands)December 31, 2022June 30, 2022
Net capital$60,334 $38,915 
Excess Capital$55,977 $32,665 
Net capital as a percentage of aggregate debit items27.69 %12.45 %
Net capital in excess of 5% aggregate debit items$49,441 $23,290 
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 benefit of customers. At December 31, 2022, the Company calculated a deposit requirement of $189.6 million and maintained a deposit of $182.3 million. On January 3, 2023, the Company made a deposit of $16.8 million.
Certain broker-dealers have chosen to maintain brokerage customer accounts at Axos Clearing. To allow these broker-dealers to classify their assets held by the Company as allowable assets in their computation of net capital, the Company
51
Table of Contents
computes a separate reserve requirement for Proprietary Accounts of Brokers (PAB). At December 31, 2022, the Company calculated a deposit requirement of $20.1 million and maintained a deposit of $14.3 million. On January 3, 2023, the Company made a withdrawal in the amount of $6.8 million.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For further discussion of the Company’s market risk, see “Quantitative and Qualitative Disclosures About Market Risk” in the 2022 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. 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. During a period of falling interest rates, however, an institution with a positive gap would tend to have its assets reprice at a faster rate than one with a negative gap, which would tend to reduce the growth in its net interest income.
Banking Business
The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at December 31, 2022 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, 2022
(Dollars in thousands)Six Months or LessOver Six
Months Through
One Year		Over One
Year Through
Five Years		Over Five
Years		Total
Interest-earning assets:
Cash and cash equivalents$1,660,666 $— $— $— $1,660,666 
Securities
225,978 2,541 11,665 15,468 255,652 
Stock of the FHLB, at cost17,250 — — — 17,250 
Loans—net of allowance for credit loss10,178,099 1,263,731 3,987,822 178,500 15,608,152 
Loans held for sale4,747 — — — 4,747 
Total interest-earning assets12,086,740 1,266,272 3,999,487 193,968 17,546,467 
Non-interest earning assets— — — — 346,616 
Total assets$12,086,740 $1,266,272 $3,999,487 $193,968 $17,893,083 
Interest-bearing liabilities:
Interest-bearing deposits$9,438,274 $2,621,885 $289,246 $972 $12,350,377 
Advances from the FHLB10,000 — 30,000 60,000 100,000 
Total interest-bearing liabilities9,448,274 2,621,885 319,246 60,972 12,450,377 
Other non-interest-bearing liabilities— — — — 3,674,965 
Stockholders’ equity— — — — 1,767,741 
Total liabilities and equity$9,448,274 $2,621,885 $319,246 $60,972 $17,893,083 
Net interest rate sensitivity gap$2,638,466 $(1,355,613)$3,680,241 $132,996 $5,096,090 
Cumulative gap$2,638,466 $1,282,853 $4,963,094 $5,096,090 $5,096,090 
Net interest rate sensitivity gap—as a % of total interest earning assets15.04 %(7.73)%20.97 %0.76 %29.04 %
Cumulative gap—as % of total interest earning assets15.04 %7.31 %28.29 %29.04 %29.04 %

The above table provides an approximation of the projected re-pricing of assets and liabilities at December 31, 2022 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 based on historical experience. For the non-maturity deposit liabilities, we
52
Table of Contents
use decay rates and rate adjustments based upon our historical experience. Actual repayments of these instruments could vary substantially if future experience differs from our historic 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.
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, we assume no growth in the balance sheet other than for retained earnings:
As of December 31, 2022
First 12 MonthsNext 12 Months
(Dollars in thousands)Net Interest IncomePercentage Change from BaseNet Interest IncomePercentage Change from Base
Up 200 basis points$763,885 8.8 %$893,723 6.5 %
Base$701,953 — %$839,332 — %
Down 200 basis points$637,273 (9.2)%$773,026 (7.9)%
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 market value of equity 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 market value of equity to the interest rate movement described above:
As of December 31, 2022
(Dollars in thousands)Net
Present Value		Percentage Change from BaseNet
Present
Value as a
Percentage
of Assets
Up 200 basis points$1,710,148 (5.8)%9.9 %
Up 100 basis points$1,780,406 (2.0)%10.2 %
Base$1,816,327 — %10.3 %
Down 100 basis points$1,800,479 (0.9)%10.1 %
Down 200 basis points$1,712,806 (5.7)%9.5 %
The computation of the prospective effects of hypothetical interest rate changes is based on numerous assumptions, including relative levels of interest rates, asset prepayments, 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 change in loan and deposit interest rates and changes in our asset and liability mix.
Securities Business
Our Securities Business 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 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.
53
Table of Contents
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. Many 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.
Our Securities Business 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.
Collateral underlying margin loans to customers and correspondents and with respect to securities lending activities is marked to market daily and additional collateral is required 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, 2022 (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 are 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.
54
Table of Contents
PART II—OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
The information set forth in Note 8 – “Commitments And Contingencies” to the Unaudited 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 Part 1, “Item 1A. Risk Factors” in our 2022 Form 10-K, as supplemented by the risks described below. 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.
Liquidity and access to adequate funding cannot be assured.

Liquidity is essential to our business and the inability to raise funds through deposits, borrowings, equity and debt offerings, or other sources could have a materially adverse effect on our liquidity. The Bank may become unable to meet the cash flow requirements of its customers who may be either depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. Company specific factors such as a decline in our credit rating (for which a rating agency recently announced a review for downgrade), an increase in the cost of capital from financial capital markets, a decrease in business activity due to adverse regulatory action or other company specific event, or a decrease in depositor or investor confidence may impair our access to funding with acceptable terms adequate to finance our activities. General factors related to the financial services industry such as a severe disruption in financial markets, a decrease in industry expectations, or a decrease in business activity due to political or environmental events may impair our access to liquidity. We rely primarily upon deposits and FHLB advances. Our ability to attract deposits could be negatively impacted by a public perception of our financial prospects or by increased deposit rates available at troubled institutions suffering from shortfalls in liquidity. The FHLB advances and the Federal Reserve Bank of San Francisco discount window are subject to regulation and other factors beyond our control. These factors may adversely affect the availability and pricing of advances to members such as the Bank. Selected sources of liquidity may become unavailable to the Bank if it were to no longer be considered “well-capitalized”.
55
Table of Contents
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 shares retained in connection with net settlement of restricted stock awards during the quarter ended December 31, 2022.
(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, 2022
October 1, 2022 to October 31, 2022— $— — $— 
November 1, 2022 to November 30, 2022— $— — $— 
December 1, 2022 to December 31, 2022— $— — $— 
For the Three Months Ended December 31, 2022— $— — $52,764 
Stock Retained in Net Settlement2
October 1, 2022 to October 31, 2022665 
November 1, 2022 to November 30, 2022364 
December 1, 2022 to December 31, 202214 
For the Three Months Ended December 31, 20221,043 
1 On August 2, 2019, the Board of Directors of the Company authorized a program to repurchase up to $100 million of common stock. The share repurchase program will continue in effect until terminated by the Board of Directors of the Company. Purchases were made in open-market transactions.
2 On October 21, 2021, the stockholders of the Company approved the Amended and Restated 2014 Stock Incentive Plan, which, among other changes permitted 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
    None.
56
Table of Contents
ITEM 6.EXHIBITS
Exhibit
Number		DescriptionIncorporated By Reference to
3.1.1Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on July 6, 1999
3.1.2Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware
3.1.3Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on February 25, 2003
3.1.4Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on January 25, 2005
3.1.5Certificate Eliminating Reference to a Series of Shares from the Certificate of Incorporation of the Company
3.1.6Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on October 25, 2013
3.1.7Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on November 5, 2015
3.1.8Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on September 11, 2018
3.1.9Certificate of Elimination relating to the Series A - 6% Cumulative Nonparticipating Perpetual Preferred
3.1.10Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on November 14, 2022
31.1Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSInline XBRL Instance DocumentThe instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema DocumentFiled herewith.
101.CALInline XBRL Taxonomy Calculation Linkbase DocumentFiled herewith.
101.LABInline XBRL Taxonomy Label Linkbase DocumentFiled herewith.
101.PREInline XBRL Taxonomy Presentation Linkbase DocumentFiled herewith.
101.DEFInline XBRL Taxonomy Definition DocumentFiled herewith.
104Cover Page Interactive Data FileFormatted as Inline XBRL and contained in Exhibit 101



57
Table of Contents
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 26, 2023By:    /s/ Gregory Garrabrants
Gregory Garrabrants
President and Chief Executive Officer
(Principal Executive Officer)
Dated:January 26, 2023By:    /s/ Derrick K. Walsh
Derrick K. Walsh
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
58