株探米国株
英語
エドガーで原本を確認する
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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 March 31, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-37709
axosfina13.jpg
AXOS FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0867444
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
9205 West Russell Road, Suite 400, Las Vegas, NV 89148
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code: (858) 649-2218
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.01 par value AX New York Stock Exchange
__________________________________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   ☒  Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer   ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  No
The number of shares outstanding of the registrant’s common stock on the last practicable date: 59,112,591 shares of common stock, $0.01 par value per share, as of April 21, 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
(Unaudited)
(Dollars in thousands, except par and stated value)
March 31,
 2023
 June 30,
2022
ASSETS
Cash and cash equivalents $ 2,324,022  $ 1,202,587 
Cash segregated for regulatory purposes 180,202  372,112 
Total cash, cash equivalents, and cash segregated 2,504,224  1,574,699 
Securities:
Trading 400  1,758 
Available-for-sale 279,612  262,518 
Stock of regulatory agencies 20,889  20,368 
Loans held for sale, carried at fair value 7,920  4,973 
Loans held for sale, lower of cost or fair value 303  10,938 
Loans—net of allowance for credit losses of $161,293 as of March 31, 2023 and $148,617 as of June 30, 2022
 15,836,255  14,091,061 
Mortgage servicing rights, carried at fair value 25,396  25,213 
Securities borrowed 87,293  338,980 
Customer, broker-dealer and clearing receivables 323,359  417,417 
Goodwill and other intangible assets—net 154,928  156,405 
Other assets 541,902  496,835 
TOTAL ASSETS $ 19,782,481  $ 17,401,165 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing 3,172,791  5,033,970 
Interest bearing 13,566,078  8,912,452 
Total deposits 16,738,869  13,946,422 
Advances from the Federal Home Loan Bank 90,000  117,500 
Borrowings, subordinated notes and debentures 334,330  445,244 
Securities loaned 114,613  474,400 
Customer, broker-dealer and clearing payables 406,092  511,654 
Accounts payable and other liabilities 254,473  262,972 
Total liabilities 17,938,377  15,758,192 
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS’ EQUITY:
Common stock—$0.01 par value; 150,000,000 shares authorized; 69,340,533 shares issued and 59,355,124 shares outstanding as of March 31, 2023; 68,859,722 shares issued and 59,777,949 shares outstanding as of June 30, 2022
 694  689 
Additional paid-in capital 472,933  453,784 
Accumulated other comprehensive income (loss)—net of tax (5,573) (2,933)
Retained earnings 1,648,253  1,428,444 
Treasury stock, at cost; 9,985,409 shares as of March 31, 2023 and 9,081,773 shares as of June 30, 2022
 (272,203) (237,011)
Total stockholders’ equity 1,844,104  1,642,973 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 19,782,481  $ 17,401,165 

See accompanying notes to the condensed consolidated financial statements.
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AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) 
Three Months Ended Nine Months Ended
March 31, March 31,
(Dollars in thousands, except earnings per common share) 2023 2022 2023 2022
INTEREST AND DIVIDEND INCOME:
Loans, including fees $ 279,864  $ 153,873  $ 743,863  $ 452,518 
Securities borrowed and customer receivables 5,137  3,833  13,842  16,050 
Investments 22,333  2,475  53,003  6,999 
Total interest and dividend income 307,334  160,181  810,708  475,567 
INTEREST EXPENSE:
Deposits 98,439  6,924  202,292  22,441 
Advances from the Federal Home Loan Bank 4,454  973  12,121  2,962 
Securities loaned 1,307  152  3,317  621 
Other borrowings 4,152  2,594  13,611  7,795 
Total interest expense 108,352  10,643  231,341  33,819 
Net interest income 198,982  149,538  579,367  441,748 
Provision for credit losses 5,500  4,500  17,750  12,500 
Net interest income, after provision for credit losses 193,482  145,038  561,617  429,248 
NON-INTEREST INCOME:
Broker-dealer fee income 13,745  5,174  32,735  17,968 
Advisory fee income 6,879  7,739  20,821  21,078 
Banking and service fees 8,443  7,278  25,100  22,444 
Mortgage banking income 1,107  5,790  5,113  15,700 
Prepayment penalty fee income 2,072  2,793  4,014  9,073 
Total non-interest income 32,246  28,774  87,783  86,263 
NON-INTEREST EXPENSE:
Salaries and related costs 53,046  43,133  149,762  123,849 
Data processing 15,808  12,274  44,462  36,565 
Depreciation and amortization 5,671  6,061  17,722  18,574 
Advertising and promotional 11,786  3,357  29,055  10,131 
Professional services 6,747  4,346  23,289  14,834 
Occupancy and equipment 3,873  3,742  11,610  10,265 
FDIC and regulatory fees 3,859  3,115  11,163  7,856 
Broker-dealer clearing charges 3,356  3,561  9,924  11,244 
General and administrative expense 6,898  7,230  37,672  23,951 
Total non-interest expense 111,044  86,819  334,659  257,269 
INCOME BEFORE INCOME TAXES 114,684  86,993  314,741  258,242 
INCOME TAXES 34,834  25,170  94,932  75,422 
NET INCOME $ 79,850  $ 61,823  $ 219,809  $ 182,820 
COMPREHENSIVE INCOME $ 81,222  $ 58,853  $ 217,169  $ 178,687 
Basic earnings per common share $ 1.33  $ 1.04  $ 3.67  $ 3.07 
Diluted earnings per common share $ 1.32  $ 1.02  $ 3.63  $ 3.02 
See accompanying notes to the condensed consolidated financial statements.
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AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
(Dollars in thousands) 2023 2022 2023 2022
NET INCOME $ 79,850  $ 61,823  $ 219,809  $ 182,820 
Net unrealized gain (loss) from available-for-sale securities, net of income tax expense (benefit) of $588 and $(1,238) for the three months and $(1,130) and $(1,726) for the nine months ended March 31, 2023 and 2022, respectively.
 1,372  (2,970) (2,640) (4,133)
Other comprehensive income (loss) 1,372  (2,970) (2,640) (4,133)
Comprehensive income $ 81,222  $ 58,853  $ 217,169  $ 178,687 

See accompanying notes to the condensed consolidated financial statements.
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AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three Months Ended March 31, 2023
Common Stock Additional Paid-in Capital Retained
Earnings		 Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		 Treasury
Stock		 Total
Number of Shares
(Dollars in thousands) Issued Treasury Outstanding Amount
BALANCE—December 31, 2022 69,153,591  (9,153,512) 60,000,079  $ 692  $ 465,350  $ 1,568,403  $ (6,945) $ (239,941) $ 1,787,559 
Net income —  —  —  —  —  79,850  —  —  79,850 
Other comprehensive income (loss) —  —  —  —  —  —  1,372  —  1,372 
Purchase of treasury stock —  (849,081) (849,081) —  —  —  —  (31,605) (31,605)
Stock-based compensation activity 186,942  17,184  204,126  2  7,583  —  —  (657) 6,928 
BALANCE—March 31, 2023 69,340,533  (9,985,409) 59,355,124  $ 694  $ 472,933  $ 1,648,253  $ (5,573) $ (272,203) $ 1,844,104 
For the Nine Months Ended March 31, 2023
Common Stock Additional Paid-in Capital Retained
Earnings		 Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		 Treasury
Stock		 Total
Number of Shares
(Dollars in thousands) Issued Treasury Outstanding Amount
BALANCE—June 30, 2022 68,859,722  (9,081,773) 59,777,949  $ 689  $ 453,784  $ 1,428,444  $ (2,933) $ (237,011) $ 1,642,973 
Net income —  —  —  —  —  219,809  —  —  219,809 
Other comprehensive income (loss) —  —  —  —  —  —  (2,640) —  (2,640)
Purchase of treasury stock —  (849,081) (849,081) —  —  —  —  (31,605) (31,605)
Stock-based compensation activity 480,811  (54,555) 426,256  5  19,149  —  —  (3,587) 15,567 
BALANCE—March 31, 2023 69,340,533  (9,985,409) 59,355,124  $ 694  $ 472,933  $ 1,648,253  $ (5,573) $ (272,203) $ 1,844,104 

See accompanying notes to the condensed consolidated financial statements.
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AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(Unaudited)
For the Three Months Ended March 31, 2022
Common Stock Additional Paid-in Capital Retained
Earnings		 Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		 Treasury
Stock		 Total
Number of Shares
(Dollars in thousands) Issued Treasury Outstanding Amount
BALANCE—December 31, 2021 68,376,837  (8,878,262) 59,498,575  $ 684  $ 441,061  $ 1,308,725  $ 1,344  $ (228,657) $ 1,523,157 
Net income —  —  —  —  —  61,823  —  —  61,823 
Other comprehensive income (loss) —  —  —  —  —  —  (2,970) —  (2,970)
Stock-based compensation activity 240,573  (76,353) 164,220  2  7,367  —  —  (3,794) 3,575 
BALANCE—March 31, 2022 68,617,410  (8,954,615) 59,662,795  $ 686  $ 448,428  $ 1,370,548  $ (1,626) $ (232,451) $ 1,585,585 
For the Nine Months Ended March 31, 2022
Common Stock Additional Paid-in Capital Retained
Earnings		 Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax		 Treasury
Stock		 Total
Number of Shares
(Dollars in thousands) Issued Treasury Outstanding Amount
BALANCE—June 30, 2021 68,069,321  (8,751,377) 59,317,944  $ 681  $ 432,550  $ 1,187,728  $ 2,507  $ (222,530) $ 1,400,936 
Net income —  —  —  —  —  182,820  —  —  182,820 
Other comprehensive income (loss) —  —  —  —  —  —  (4,133) —  (4,133)
Stock-based compensation activity 548,089  (203,238) 344,851  5  15,878  —  —  (9,921) 5,962 
BALANCE—March 31, 2022 68,617,410  (8,954,615) 59,662,795  $ 686  $ 448,428  $ 1,370,548  $ (1,626) $ (232,451) $ 1,585,585 

See accompanying notes to the condensed consolidated financial statements.
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AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Nine Months Ended
March 31,
(Dollars in thousands) 2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 219,809  $ 182,820 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion 17,098  21,728 
Stock-based compensation expense 19,154  15,883 
Trading activity 1,358  1,617 
Provision for credit losses 17,750  12,500 
Deferred income taxes (10,274) (4,184)
Origination of loans held for sale (158,500) (569,614)
Unrealized and realized gains on loans held for sale (5,650) (15,964)
Proceeds from sale of loans held for sale 160,696  589,653 
Amortization and change in fair value of mortgage servicing rights 375  (1,229)
Net changes in assets and liabilities which provide (use) cash:
Securities borrowed 251,687  344,444 
Customer, broker-dealer and clearing receivables 94,058  (82,629)
Other assets (29,287) (112,859)
Securities loaned (359,787) (281,240)
Customer, broker-dealer and clearing payables (105,562) (45,960)
Accounts payable and other liabilities 6,322  14,516 
Net cash provided by operating activities 119,247  69,482 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investment securities (30,000) (107,286)
Proceeds from sale and repayment of available-for-sale investment securities 9,735  130,300 
Purchase of stock of regulatory agencies (108,724) (22,739)
Proceeds from redemption of stock of regulatory agencies 108,724  22,739 
Origination of loans held for investment (6,235,451) (7,173,040)
Proceeds from sale of loans originally classified as held for investment 14,185  106,324 
Mortgage warehouse loans activity, net 118,185  191,291 
Proceeds from sales of other real estate owned and repossessed assets 2,311  7,968 
Proceeds from BOLI claim settlement 2,778  — 
Acquisition of business activity, net of cash acquired (5,531) (54,597)
Purchases of loans and leases, net of discounts and premiums (914) (31,496)
Principal repayments on loans 4,336,424  5,218,247 
Purchases of furniture, equipment, software and intangibles (19,698) (11,817)
Net cash used in investing activities (1,807,976) (1,724,106)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 2,792,446  1,917,205 
Payments of the Federal Home Loan Bank term advances (27,500) (15,000)
Net repayment of Federal Home Loan Bank other advances —  (186,000)
Net (repayments) proceeds of other borrowings (111,500) 11,800 
Tax payments related to settlement of restricted stock units (3,587) (9,921)
Purchase of treasury stock (31,605) — 
Payment of debt issuance costs —  (1,923)
Proceeds from issuance of subordinated notes —  150,000 
Net cash provided by financing activities 2,618,254  1,866,161 
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AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Nine Months Ended
March 31,
(Dollars in thousands) 2023 2022
NET CHANGE IN CASH AND CASH EQUIVALENTS 929,525  211,537 
CASH AND CASH EQUIVALENTS—Beginning of year $ 1,574,699  $ 1,037,777 
CASH AND CASH EQUIVALENTS—End of period $ 2,504,224  $ 1,249,314 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits and borrowed funds $ 228,369  $ 31,974 
Income taxes paid 108,272  80,512 
Transfers to other real estate and repossessed vehicles 8,206  1,186 
Transfers from loans held for investment to loans held for sale 14,185  105,884 
Transfers from loans held for sale to loans held for investment 690  1,410 
Operating lease liabilities for obtaining right of use assets 1,110  4,167 
See accompanying notes to the condensed consolidated financial statements.
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AXOS FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED MARCH 31, 2023 AND 2022
(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, the Bank and Axos Nevada Holding comprise substantially all of the Company's assets and liabilities and revenues and expenses. 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 nine months ended March 31, 2023 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 nine months ended March 31, 2022 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 nine months ended March 31, 2022 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 plans to adopt these ASUs in fiscal year 2024 and while it is still evaluating the impact on its Consolidated Financial Statements, the Company does not expect the 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.
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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 Value Useful Lives (Years)
Trade Name $ 290  0.16
Proprietary Technology 10,990  7
Customer Relationships 15,650  14
Non-Compete Agreements 130  1
Total $ 27,060 
The following table presents the results of operations of AAS for the nine months ended March 31, 2022 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 March 31, 2022 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 Nine Months Ended March 31, 2022
Non-interest income $ 25,136 
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.
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3.     FAIR VALUE
The Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2023 and June 30, 2022 are classified in their entirety based on the lowest level of input significant to the fair value measurement.
March 31, 2023
(Dollars in thousands) Significant Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Total
ASSETS:
Securities—Trading: Municipal $ 400  $ —  $ 400 
Securities—Available-for-sale:
Agency MBS1
 22,782  —  22,782 
Non-Agency MBS2
 —  206,300  206,300 
Municipal 3,384  —  3,384 
Asset-backed securities and structured notes 47,146  —  47,146 
Total—Securities—Available-for-sale $ 73,312  $ 206,300  $ 279,612 
Loans held for sale $ 7,920  $ —  $ 7,920 
Mortgage servicing rights $ —  $ 25,396  $ 25,396 
Other assets—Derivative instruments $ —  $ 381  $ 381 
LIABILITIES:
   Other liabilities—Derivative instruments $ —  $ 1,037  $ 1,037 

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 
Municipal 3,248  —  3,248 
Asset-backed securities and structured notes 47,131  —  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.
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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
March 31, 2023
(Dollars in thousands) Securities – Available-for-Sale: Non-Agency MBS
Mortgage Servicing Rights1
 Derivative Instruments, net Total
Opening balance $ 175,123  $ 25,526  $ 18  $ 200,667 
Total gains or losses for the period:
Included in earnings—Mortgage banking income —  (282) (674) (956)
Included in other comprehensive income 1,231  —  —  1,231 
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions 30,000  152  —  30,152 
Settlements (54) —  —  (54)
Closing balance $ 206,300  $ 25,396  $ (656) $ 231,040 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period $ —  $ (282) $ (674) $ (956)
For the Nine Months Ended
March 31, 2023
(Dollars in thousands) Securities – Available-for-Sale: Non-Agency RMBS
Mortgage Servicing Rights1
 Derivative Instruments, net Total
Opening Balance $ 186,814  $ 25,213  $ 464  $ 212,491 
Total gains or losses for the period:
Included in earnings—Mortgage banking income —  (375) (1,120) (1,495)
Included in other comprehensive income (3,384) —  —  (3,384)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions 30,000  558  —  30,558 
Settlements (7,130) —  —  (7,130)
Closing balance $ 206,300  $ 25,396  $ (656) $ 231,040 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period $ —  $ (375) $ (1,120) $ (1,495)
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 $0.2 million and $0.7 million for the three and nine months ended March 31, 2023, respectively, and a decrease in MSR value resulting from market-driven changes in interest rates of $0.1 million for the three months ended March 31, 2023 and an increase of $0.3 million for the nine months ended March 31, 2023. Additions to mortgage servicing rights were retained upon sale of loans held for sale.

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For the Three Months Ended
March 31, 2022
(Dollars in thousands) Securities – Available-for-Sale: Non-Agency MBS
Mortgage Servicing Rights1
 Derivative Instruments, net Total
Opening balance $ 58,752  $ 20,110  $ 1,377  $ 80,239 
Total gains or losses for the period:
Included in earnings—Mortgage banking income —  2,316  (227) 2,089 
Included in other comprehensive income (1,841) —  —  (1,841)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions 95,000  1,093  —  96,093 
Settlements (432) —  —  (432)
Closing balance $ 151,479  $ 23,519  $ 1,150  $ 176,148 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period $ —  $ 2,316  $ (227) $ 2,089 
For the Nine Months Ended
March 31, 2022
(Dollars in thousands) Securities – Available-for-Sale: Non-Agency RMBS
Mortgage Servicing Rights1
 Derivative Instruments, net Total
Opening Balance $ 67,615  $ 17,911  $ 2,205  $ 87,731 
Total gains or losses for the period:
Included in earnings—Mortgage banking income —  1,229  (1,055) 174 
Included in other comprehensive income (2,480) —  —  (2,480)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions 95,000  4,379  —  99,379 
Settlements (8,656) —  —  (8,656)
Closing balance $ 151,479  $ 23,519  $ 1,150  $ 176,148 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period $ —  $ 1,229  $ (1,055) $ 174 
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 $0.8 million and $3.6 million for the three and nine months ended March 31, 2022, respectively, and an increase in MSR value resulting from market-driven changes in interest rates of $3.1 million and $4.9 million for the three and nine months ended March 31, 2022, 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:
March 31, 2023
(Dollars in thousands) Fair Value Valuation Technique Unobservable Input Range (Weighted Average)
Securities – Non-agency MBS $ 206,300  Discounted Cash Flow Projected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 30.0% (23.0%)
0.0 to 5.1% (2.3%)
0.0 to 68.7% (28.5%)
2.6 to 6.4% (2.7%)
Mortgage Servicing Rights $ 25,396  Discounted Cash Flow Projected Constant Prepayment Rate,
Life (in years),
Discount Rate
4.6 to 33.1% (9.8%)
0.4 to 15.9 (9.3)
9.5 to 11.5% (9.6%)
Derivative Instruments $ (656) Sales Comparison Approach Projected Sales Profit of Underlying Loans
-1.6 to 0.7% (-0.1%)
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June 30, 2022
(Dollars in thousands) Fair Value Valuation Technique Unobservable Input Range (Weighted Average)
Securities – Non-agency MBS $ 186,814  Discounted Cash Flow Projected 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 Flow Projected 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 Approach Projected 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:
March 31, 2023
(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 $ —  $ —  $ 4,344  $ 4,344 
Autos $ —  $ —  $ 958  $ 958 
Total $ —  $ —  $ 5,302  $ 5,302 
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 $535 thousand and $30 thousand for the three months ended March 31, 2023 and March 31, 2022, respectively, and $1,499 thousand and $79 thousand for the nine months ended March 31, 2023 and March 31, 2022, 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 March 31, 2023 and June 30, 2022.
As of March 31, 2023 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) March 31, 2023 June 30, 2022
Aggregate fair value $ 7,920  $ 4,973 
Contractual balance 7,663  4,881 
Unrealized gain $ 257  $ 92 
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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 Ended For the Nine Months Ended
March 31, March 31,
(Dollars in thousands) 2023 2022 2023 2022
Interest income $ 99  $ 204  $ 252  $ 598 
Change in fair value 51  (1,041) (280) (2,019)
Total $ 150  $ (837) $ (28) $ (1,421)
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:
March 31, 2023
(Dollars in thousands) Fair Value Valuation Technique Unobservable Input
Range (Weighted Average) 1
Other real estate owned and repossessed vehicles:
Single family real estate $ 4,344  Sales comparison approach Adjustment for differences between the comparable sales
3.5 to 12.1% (4.1%)
Autos $ 958  Sales comparison approach Adjustment for differences between the comparable sales
-15.6 to 0.0% (-5.3%)
June 30, 2022
(Dollars in thousands) Fair Value Valuation Technique Unobservable Input
Range (Weighted Average) 1
Other real estate owned and repossessed vehicles:
Autos $ 798  Sales comparison approach Adjustment 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.

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Fair Value of Financial Instruments
Carrying amounts and estimated fair values of financial instruments at March 31, 2023 and June 30, 2022 were:
March 31, 2023
Fair Value
(Dollars in thousands) Carrying
Amount		 Level 1 Level 2 Level 3 Total Fair Value
Financial assets:
Cash and cash equivalents $ 2,504,224  $ 2,504,224  $ —  $ —  $ 2,504,224 
Securities—trading 400  —  400  —  400 
Securities—available-for-sale 279,612  —  73,312  206,300  279,612 
Loans held for sale, at fair value 7,920  —  7,920  —  7,920 
Loans held for sale, at lower of cost or fair value 303  —  —  303  303 
Loans held for investment—net 15,836,255  —  —  15,866,421  15,866,421 
Securities borrowed 87,293  —  —  95,263  95,263 
Customer, broker-dealer and clearing receivables 323,359  —  —  336,843  336,843 
Mortgage servicing rights 25,396  —  —  25,396  25,396 
Financial liabilities:
Total deposits 16,738,869  —  16,675,440  —  16,675,440 
Advances from the Federal Home Loan Bank 90,000  —  83,681  —  83,681 
Borrowings, subordinated notes and debentures 334,330  —  299,981  —  299,981 
Securities loaned 114,613  —  —  114,556  114,556 
Customer, broker-dealer and clearing payables 406,092  —  —  406,092  406,092 
June 30, 2022
Fair Value
(Dollars in thousands) Carrying
Amount		 Level 1 Level 2 Level 3 Total Fair Value
Financial assets:
Cash and cash equivalents $ 1,574,699  $ 1,574,699  $ —  $ —  $ 1,574,699 
Securities—trading 1,758  —  1,758  —  1,758 
Securities—available-for-sale 262,518  —  75,704  186,814  262,518 
Loans held for sale, at fair value 4,973  —  4,973  —  4,973 
Loans held for sale, at lower of cost or fair value 10,938  —  —  10,985  10,985 
Loans held for investment—net 14,091,061  —  —  14,015,157  14,015,157 
Securities borrowed 338,980  —  —  329,963  329,963 
Customer, broker-dealer and clearing receivables 417,417  —  —  414,383  414,383 
Mortgage servicing rights 25,213  —  —  25,213  25,213 
Financial liabilities:
Total deposits 13,946,422  —  12,812,512  —  12,812,512 
Advances from the Federal Home Loan Bank 117,500  —  117,500  —  117,500 
Borrowings, subordinated notes and debentures 445,244  —  416,947  —  416,947 
Securities loaned 474,400  —  —  473,831  473,831 
Customer, broker-dealer and clearing payables 511,654  —  —  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.
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4.     SECURITIES
The amortized cost, carrying amount and fair value for the trading and available-for-sale securities at March 31, 2023 and June 30, 2022 were:
March 31, 2023
Trading Available-for-sale
(Dollars in thousands) Fair
Value		 Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Fair
Value
Mortgage-backed securities (MBS):
U.S. agencies1
 $ —  $ 25,620  $ —  $ (2,838) $ 22,782 
Non-agency2
 —  210,487  1,508  (5,695) 206,300 
Total mortgage-backed securities —  236,107  1,508  (8,533) 229,082 
Non-MBS:
Municipal 400  3,624  —  (240) 3,384 
Asset-backed securities and structured notes —  47,000  146  —  47,146 
Total Non-MBS 400  50,624  146  (240) 50,530 
Total debt securities $ 400  $ 286,731  $ 1,654  $ (8,773) $ 279,612 
June 30, 2022
Trading Available-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:
Municipal 1,758  3,529  —  (281) 3,248 
Asset-backed securities and structured notes —  47,000  131  —  47,131 
Total Non-MBS 1,758  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 nine months ended March 31, 2023 and March 31, 2022. Based on the underlying government guarantees and other credit protection supporting our securities, no allowance for credit losses for available-for-sale debt securities was recorded at March 31, 2023 and June 30, 2022. The Company’s analysis is based on: (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 unrealized losses on available-for-sale securities are primarily driven by the increase in interest rates since the securities were purchased.
The Company’s non-agency MBS available-for-sale portfolio, with a total fair value of $206,300 at March 31, 2023, consists of 18 different issues of super senior securities.
The face amounts of debt securities available-for-sale pledged to secure borrowings at March 31, 2023 and June 30, 2022 were $1.1 million and $1.2 million, respectively.
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Securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were:
March 31, 2023
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 $ 1,657  $ (51) $ 21,051  $ (2,787) $ 22,708  $ (2,838)
Non-agency 84,059  (3,258) 47,310  (2,437) 131,369  (5,695)
Total MBS 85,716  (3,309) 68,361  (5,224) 154,077  (8,533)
Non-MBS:
Municipal debt —  —  3,384  (240) 3,384  (240)
Total Non-MBS —  —  3,384  (240) 3,384  (240)
Total debt securities $ 85,716  $ (3,309) $ 71,745  $ (5,464) $ 157,461  $ (8,773)
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-agency 92,796  (2,204) 4,751  (430) 97,547  (2,634)
Total MBS 109,242  (3,542) 12,848  (1,498) 122,090  (5,040)
Non-MBS:
Municipal debt 3,248  (281) —  —  3,248  (281)
Total Non-MBS 3,248  (281) —  —  3,248  (281)
Total debt securities $ 112,490  $ (3,823) $ 12,848  $ (1,498) $ 125,338  $ (5,321)
On March 31, 2023, there were twenty-nine 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 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 March 31, 2023, one non-agency MBS with a total carrying amount of $1.5 million was determined to have cumulative credit losses of $0.8 million of which none was recognized in earnings during the three months ended March 31, 2023.
During the nine months ended March 31, 2023 the Company sold no available-for-sale securities.
The components of the Company’s accumulated other comprehensive income (loss) are:
(Dollars in thousands) March 31,
2023		 June 30,
2022
Available-for-sale debt securities—net unrealized gains (losses) $ (7,119) $ (3,349)
Available-for-sale debt securities (losses) (845) (845)
Subtotal (7,964) (4,194)
Tax benefit (expense) 2,391  1,261 
Net unrealized gain (loss) on investment securities in accumulated other comprehensive income (loss) $ (5,573) $ (2,933)

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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 March 31, 2023
Total Amount Due Within One Year Due After One but within Five Years Due After Five but within Ten Years Due After Ten Years
(Dollars in thousands) Amount
Yield1
 Amount
Yield1
 Amount
Yield1
 Amount
Yield1
 Amount
Yield1
Available-for-sale
Mortgage-backed securities:
Agency2
 $ 25,620  2.10  % $ 5,087  2.05  % $ 12,293  2.09  % $ 6,459  2.18  % $ 1,781  1.99  %
Non-Agency3
 210,487  5.58  % 6,868  4.13  % 200,227  5.61  % 1,822  5.84  % 1,570  8.59  %
Total Mortgage-Backed Securities $ 236,107  5.20  % $ 11,955  3.25  % $ 212,520  5.40  % $ 8,281  2.98  % $ 3,351  5.08  %
Non-RMBS
Municipal 3,624  3.57  % —  —  % —  —  % —  —  % 3,624  3.57  %
Asset-backed securities and structured notes 47,000  9.53  % 47,000  9.53  % —  —  % —  —  % —  —  %
Total Non-RMBS $ 50,624  9.10  % $ 47,000  9.53  % $ —  —  % $ —  —  % $ 3,624  3.57  %
Available-for-sale—Amortized Cost $ 286,731  5.89  % $ 58,955  8.26  % $ 212,520  5.40  % $ 8,281  2.98  % $ 6,975  4.30  %
Available-for-sale—Fair Value $ 279,612  5.91  % $ 58,326  8.26  % $ 207,028  5.40  % $ 7,494  2.98  % $ 6,764  4.30  %
Total available-for-sale securities $ 279,612  5.91  % $ 58,326  8.26  % $ 207,028  5.40  % $ 7,494  2.98  % $ 6,764  4.30  %
1 Weighted-average yield is based on amortized cost of the securities. Residential mortgage-backed security yields and maturities include impact of expected prepayments and other timing factors such as interest rate forward curve.
2 Includes securities guaranteed by Ginnie Mae, a U.S. government agency, and the government sponsored enterprises Fannie Mae and Freddie Mac.
3 Private sponsors of securities collateralized primarily by pools of 1-4 family residential, Alt-A or pay-option ARM mortgages and commercial mortgages.
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5.    LOANS & ALLOWANCE FOR CREDIT LOSSES
The composition of the loan portfolio was:
(Dollars in thousands) March 31, 2023 June 30, 2022
Single Family - Mortgage & Warehouse $ 4,087,525  $ 3,988,462 
Multifamily and Commercial Mortgage 3,082,801  2,877,680 
Commercial Real Estate 5,794,304  4,781,044 
Commercial & Industrial - Non-RE 2,454,839  2,028,128 
Auto & Consumer 594,596  567,228 
Other 6,240  11,134 
Total gross loans and leases 16,020,305  14,253,676 
Allowance for credit losses - loans (161,293) (148,617)
Unaccreted premiums (discounts) and loan and lease fees (22,757) (13,998)
Total net loans and leases $ 15,836,255  $ 14,091,061 
At March 31, 2023, the Company has pledged $9,308.2 million of loans to the Federal Reserve Bank of San Francisco and to the FHLB.
The provision for credit losses for the three and nine months ended March 31, 2023 was primarily driven by loan growth, changes in the macroeconomic environment, and changes in loan product mix.
Changes in the forecasts of macroeconomic variables drove improvements in the calculations relevant to the probability of default for the Multifamily and Commercial Real Estate portfolios. Loan growth and changes in the product mix within the Commercial and Industrial–Non RE portfolio resulted in an increased allowance.
Loan products within each portfolio contain varying collateral types which impact the estimate of the loss given default utilized in the calculation of the allowance. For further discussion of the model method of estimating expected lifetime credit losses to Note 1—“Organizations and Summary of Significant Accounting Policies” contained in the 2022 Form 10-K.
Activity in the allowance for credit losses by portfolio classes is as follows.
For the Three Months Ended March 31, 2023
(Dollars in thousands) Single Family-Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Other Total
Balance at January 1, 2023 $ 19,631  $ 15,457  $ 72,168  $ 36,038  $ 13,903  $ 21  $ 157,218 
Provision (benefit) for credit losses - loans (1,583) (1,156) (3,782) 10,698  1,329  (6) 5,500 
Charge-offs (9) —  —  —  (2,413) —  (2,422)
Recoveries 413  —  —  —  584  —  997 
Balance at March 31, 2023 $ 18,452  $ 14,301  $ 68,386  $ 46,736  $ 13,403  $ 15  $ 161,293 
For the Three Months Ended March 31, 2022
(Dollars in thousands) Single Family-Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Other Total
Balance at January 1, 2022 $ 25,580  $ 13,628  $ 67,581  $ 22,716  $ 10,921  $ 63  $ 140,489 
Provision (benefit) for credit losses - loans (3,797) 190  2,248  3,525  2,352  (18) 4,500 
Charge-offs —  —  —  —  (1,892) —  (1,892)
Recoveries 6  —  —  27  242  —  275 
Balance at March 31, 2022 $ 21,789  $ 13,818  $ 69,829  $ 26,268  $ 11,623  $ 45  $ 143,372 
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For the Nine Months Ended March 31, 2023
(Dollars in thousands) Single Family-Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Other Total
Balance at July 1, 2022 $ 19,670  $ 14,655  $ 69,339  $ 30,808  $ 14,114  $ 31  $ 148,617 
Provision (benefit) for credit losses - loans (1,347) (354) (953) 15,910  4,510  (16) 17,750 
Charge-offs (307) —  —  —  (6,646) —  (6,953)
Recoveries 436  —  —  18  1,425  —  1,879 
Balance at March 31, 2023 $ 18,452  $ 14,301  $ 68,386  $ 46,736  $ 13,403  $ 15  $ 161,293 
For the Nine Months Ended March 31, 2022
(Dollars in thousands) Single Family-Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Other Total
Balance at July 1, 2021 $ 26,604  $ 13,146  $ 57,928  $ 28,460  $ 6,519  $ 301  $ 132,958 
Provision (benefit) for credit losses - loans (4,966) 495  11,901  (1,951) 7,277  (256) 12,500 
Charge-offs —  —  —  (322) (2,926) —  (3,248)
Recoveries 151  177  —  81  753  —  1,162 
Balance at March 31, 2022 $ 21,789  $ 13,818  $ 69,829  $ 26,268  $ 11,623  $ 45  $ 143,372 
Credit Quality Disclosures. Nonaccrual loans consisted of the following as of the dates indicated:
(Dollars in thousands) As of March 31, 2023
Single Family - Mortgage & Warehouse $ 36,158 
Multifamily and Commercial Mortgage 37,378 
Commercial Real Estate 14,852 
Commercial & Industrial - Non-RE 2,989 
Auto & Consumer 2,029 
Other 2,535 
     Total nonaccrual loans $ 95,941 
Nonaccrual loans to total loans 0.60  %
(Dollars in thousands) As of June 30, 2022
Single Family - Mortgage & Warehouse $ 66,424 
Multifamily and Commercial Mortgage 33,410 
Commercial Real Estate 14,852 
Commercial & Industrial - Non-RE 2,989 
Auto & Consumer 439 
Other 80 
     Total nonaccrual loans $ 118,194 
Nonaccrual loans to total loans 0.83  %
No interest income was recognized on nonaccrual loans in the three and nine months ended March 31, 2023 and three and nine months ended March 31, 2022. There were no nonaccrual loans without an allowance for credit losses as of March 31, 2023 and June 30, 2022.
Approximately 1.30% of our nonaccrual loans at March 31, 2023 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.
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The outstanding unpaid balance of loans that are either performing or nonaccrual by portfolio class was:
March 31, 2023
(Dollars in thousands) Single Family-Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Other Total
Performing $ 4,051,367  $ 3,045,423  $ 5,779,452  $ 2,451,850  $ 592,567  $ 3,705  $ 15,924,364 
Nonaccrual 36,158  37,378  14,852  2,989  2,029  2,535  95,941 
          Total $ 4,087,525  $ 3,082,801  $ 5,794,304  $ 2,454,839  $ 594,596  $ 6,240  $ 16,020,305 
June 30, 2022
(Dollars in thousands) Single Family-Mortgage & Warehouse Multifamily and Commercial Mortgage Commercial Real Estate Commercial & Industrial - Non-RE Auto & Consumer Other Total
Performing $ 3,922,038  $ 2,844,270  $ 4,766,192  $ 2,025,139  $ 566,789  $ 11,054  $ 14,135,482 
Nonaccrual 66,424  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 March 31, 2023 or June 30, 2022.
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.











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The amortized cost basis of the Company’s loans by fiscal year of origination and credit quality indicator are:
March 31, 2023
Loans Held for Investment Origination Year Revolving Loans Total
(Dollars in thousands) 2023 2022 2021 2020 2019 Prior
Single Family-Mortgage & Warehouse
Pass $ 620,354  $ 1,372,470  $ 544,804  $ 340,800  $ 263,386  $ 691,390  $ 162,377  $ 3,995,581 
Special Mention —  1,993  5,010  8,094  14,061  11,851  —  41,009 
Substandard —  3,240  783  17,572  3,166  26,174  —  50,935 
Doubtful —  —  —  —  —  —  —  — 
Total 620,354  1,377,703  550,597  366,466  280,613  729,415  162,377  4,087,525 
Multifamily and Commercial Mortgage
Pass 505,162  973,106  504,075  329,470  225,553  435,306  —  2,972,672 
Special Mention —  15,695  4,653  1,894  8,249  —  —  30,491 
Substandard —  3,146  5,715  31,439  7,399  31,939  —  79,638 
Doubtful —  —  —  —  —  —  —  — 
Total 505,162  991,947  514,443  362,803  241,201  467,245  —  3,082,801 
Commercial Real Estate
Pass 1,100,680  2,500,719  828,507  124,981  118,000  4,000  946,724  5,623,611 
Special Mention —  11,250  26,305  9,618  800  15,000  62,973 
Substandard —  17,950  58,133  —  15,487  14,852  1,298  107,720 
Doubtful —  —  —  —  —  —  — 
Total 1,100,680  2,529,919  912,945  134,599  134,287  33,852  948,022  5,794,304 
Commercial & Industrial - Non-RE
Pass 398,508  367,212  31,722  23,784  2,898  5,575  1,599,806  2,429,505 
Special Mention —  8,348  —  —  —  —  13,997  22,345 
Substandard —  —  —  —  —  2,989  —  2,989 
Doubtful —  —  —  —  —  —  —  — 
Total 398,508  375,560  31,722  23,784  2,898  8,564  1,613,803  2,454,839 
Auto & Consumer
Pass 168,776  279,501  77,909  28,584  23,508  12,770  —  591,048 
Special Mention 389  704  102  41  62  61  —  1,359 
Substandard 368  1,007  403  200  204  7  —  2,189 
Doubtful —  —  —  —  —  —  —  — 
Total 169,533  281,212  78,414  28,825  23,774  12,838  —  594,596 
Other
Pass 1,287  —  1,425  —  —  940  —  3,652 
Special Mention —  —  53  —  —  —  —  53 
Substandard —  2,000  —  —  —  535  —  2,535 
Doubtful —  —  —  —  —  —  —  — 
Total 1,287  2,000  1,478  —  —  1,475  —  6,240 
Total
Pass 2,794,767  5,493,008  1,988,442  847,619  633,345  1,149,981  2,708,907  15,616,069 
Special Mention 389  37,990  36,123  19,647  23,172  26,912  13,997  158,230 
Substandard 368  27,343  65,034  49,211  26,256  76,496  1,298  246,006 
Doubtful —  —  —  —  —  —  —  — 
Total $ 2,795,524  $ 5,558,341  $ 2,089,599  $ 916,477  $ 682,773  $ 1,253,389  $ 2,724,202  $ 16,020,305 
As a % of total gross loans 17.46% 34.70% 13.04% 5.72% 4.26% 7.82% 17.00% 100.0%
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June 30, 2022
Loans Held for Investment Origination Year Revolving Loans Total
(Dollars in thousands) 2022 2021 2020 2019 2018 Prior
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 —  —  —  —  —  —  —  — 
Total 1,484,027  602,342  411,430  324,911  289,328  595,862  280,562  3,988,462 
Multifamily and Commercial Mortgage
Pass 999,819  569,486  429,247  259,161  219,548  316,013  —  2,793,274 
Special Mention 1,200  —  534  539  —  968  —  3,241 
Substandard —  5,772  34,343  9,613  7,308  24,129  —  81,165 
Doubtful —  —  —  —  —  —  —  — 
Total 1,001,019  575,258  464,124  269,313  226,856  341,110  —  2,877,680 
Commercial Real Estate
Pass 2,482,366  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 —  —  —  —  —  —  —  — 
Total 2,482,366  1,023,238  383,135  221,330  67,265  —  603,710  4,781,044 
Commercial & Industrial - Non-RE
Pass 435,228  66,226  25,629  61,932  9,268  —  1,388,435  1,986,718 
Special Mention 13  —  —  186  710  —  —  909 
Substandard 2,988  28,359  9,154  —  —  —  —  40,501 
Doubtful —  —  —  —  —  —  —  — 
Total 438,229  94,585  34,783  62,118  9,978  —  1,388,435  2,028,128 
Auto & Consumer
Pass 352,468  107,882  43,377  37,008  16,147  8,891  —  565,773 
Special Mention 204  188  24  110  —  1  —  527 
Substandard 157  311  224  205  25  6  —  928 
Doubtful —  —  —  —  —  —  —  — 
Total 352,829  108,381  43,625  37,323  16,172  8,898  —  567,228 
Other
Pass 3,057  6,185  —  —  1,091  721  —  11,054 
Special Mention —  —  —  —  —  —  —  — 
Substandard —  —  46  —  —  34  —  80 
Doubtful —  —  —  —  —  —  —  — 
Total 3,057  6,185  46  —  1,091  755  —  11,134 
Total
Pass 5,756,965  2,340,720  1,259,387  848,900  554,060  874,328  2,232,772  13,867,132 
Special Mention 1,417  32,539  17,486  19,827  19,835  11,940  38,637  141,681 
Substandard 3,145  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 loans 40.42% 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.
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The outstanding unpaid balance of loans past due 30 days or more by portfolio class are:
March 31, 2023
(Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total
Single Family-Mortgage & Warehouse $ 13,976  $ 22,447  $ 34,203  $ 70,626 
Multifamily and Commercial Mortgage 4,224  8,112  29,154  41,490 
Commercial Real Estate —  —  14,852  14,852 
Auto & Consumer 4,949  1,431  1,411  7,791 
Other 90  53  2,535  2,678 
Total $ 23,239  $ 32,043  $ 82,155  $ 137,437 
As a % of total gross loans 0.15  % 0.20  % 0.51  % 0.86  %
June 30, 2022
(Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total
Single Family-Mortgage & Warehouse $ 5,167  $ 1,518  $ 63,286  $ 69,971 
Multifamily and Commercial Mortgage 9,455  2,115  26,556  38,126 
Commercial Real Estate —  14,852  —  14,852 
Auto & Consumer 4,865  1,009  466  6,340 
Other 413  —  193  606 
Total $ 19,900  $ 19,494  $ 90,501  $ 129,895 
As a % of total gross loans 0.14  % 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 March 31, 2023 and June 30, 2022.
Loans in process of foreclosure were $24.0 million and $20.7 million as of March 31, 2023 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 March 31,
(Dollars in thousands) 2023 2022
BALANCE—beginning January 1 $ 10,474  $ 8,723 
Provision (benefit) —  1,000 
BALANCE—end March 31 $ 10,474  $ 9,723 
Nine Months Ended March 31,
(Dollars in thousands) 2023 2022
BALANCE—beginning July 1 $ 10,973  $ 5,723 
Provision (benefit) (499) 4,000 
BALANCE—end March 31 $ 10,474  $ 9,723 
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6.    STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
    The Company has an equity incentive plan, the Amended and Restated 2014 Stock Incentive Plan (the “2014 Plan”), which provides for the granting of non-qualified and incentive stock options, restricted stock and restricted stock units, stock appreciation rights and other awards to employees, directors and consultants. The 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 March 31, 2023, 1,347,923 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 $50.4 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 $ 7,113 
2024 22,261 
2025 14,418 
2026 5,561 
2027 832 
Thereafter 194 
Total $ 50,379 
    
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, 2022 1,350,763  $ 41.16 
Granted 735,938  38.52 
Vested (480,811) 34.17 
Forfeited (59,166) 40.56 
Non-vested balance at March 31, 2023 1,546,724  $ 42.10 
    The total fair value of shares vested for the three and nine months ended March 31, 2023 was $7.6 million and $19.7 million, respectively. The total fair value of shares vested for the three and nine months ended March 31, 2022 was $9.7 million and $24.6 million, respectively. The weighted-average remaining time period until vesting for restricted stock units as of March 31, 2023 was 1.3 years.
Common Stock Repurchases. During the three and nine months ended March 31, 2023, the Company repurchased $31.6 million of common stock at an average price of $37.22 per share. On April 26, 2023, the Board of Directors of the Company authorized a program to repurchase up to $100 million of its common stock. The new share repurchase authorization is in addition to the existing share repurchase plan approved on August 2, 2019, which had approximately $21 million remaining as of March 31, 2023. For additional information regarding the Company’s common stock repurchases, see Note 15—“Stockholders’ Equity” contained in the 2022 Form 10-K.
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7.    EARNINGS PER COMMON SHARE
The following table presents the calculation of basic and diluted EPS:
Three Months Ended Nine Months Ended
March 31, March 31,
(Dollars in thousands, except per share data) 2023 2022 2023 2022
Earnings Per Common Share
Net income $ 79,850  $ 61,823  $ 219,809  $ 182,820 
Average common shares issued and outstanding 59,930,634  59,542,128  59,928,263  59,476,488 
Earnings per common share $ 1.33  $ 1.04  $ 3.67  $ 3.07 
Diluted Earnings Per Common Share
Net income $ 79,850  $ 61,823  $ 219,809  $ 182,820 
Average common shares issued and outstanding 59,930,634  59,542,128  59,928,263  59,476,488 
Dilutive effect of average unvested RSUs 696,766  1,069,831  667,151  1,128,998 
Total dilutive common shares outstanding 60,627,400  60,611,959  60,595,414  60,605,486 
Diluted earnings per common share $ 1.32  $ 1.02  $ 3.63  $ 3.02 
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 March 31, 2023 in the corresponding fiscal years:
(Dollars in thousands)
Remainder of fiscal year 2023 $ 2,747 
2024 11,119 
2025 11,296 
2026 10,967 
2027 11,031 
Thereafter 29,861 
Total lease payments 77,021 
Less: amount representing interest (7,291)
Total lease liability $ 69,730 
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 March 31, 2023, the Company had unfunded commitments of $57.5 million in fixed rate loans and $2,816.0 million in variable rate loans, totaling an aggregate principal balance of $2,873.5 million. At March 31, 2023, the Company’s fixed rate commitments to originate had a weighted-average rate of 8.09%. At March 31, 2023, the Company also had commitments to sell $8.5 million in fixed rate loans and no commitments to sell variable rate loans.
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.
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.
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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. 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 pending resolution of post-trial motions filed in a wrongful termination lawsuit upon which the derivative actions are based. The two derivative actions pending before the San Diego County Superior Court were dismissed without prejudice by court order entered on March 29, 2023, pursuant to a stipulation by 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. On March 29, 2023, the court held a hearing on such motions and while denying other relief sought by defendants, held that (1) a related settlement between the plaintiff and Epiq Systems, Inc. must be applied to reduce the verdict prior to prejudgment interest calculations, thereby reducing the net award for tortious interference from $15.8 million to $7.8 million; and (2) pre-judgment interest must be calculated from the mid-point between April 3, 2018, and the date of the judgment to the net tortious interference award. The court’s calculation methodology with respect to pre-judgment interest will save defendants approximately half of the statutory pre-judgement interest that would otherwise be due. 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 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 nine months ended March 31, 2023, respectively. Given the uncertainty of the appellate process, the potential for an appeal by the plaintiff, and other factors that are similarly unknown or currently unquantifiable, the Company has maintained its accrual at March 31, 2023.
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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 March 31, 2023
(Dollars in thousands) Banking
Business		 Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 196,249  $ 6,335  $ (3,602) $ 198,982 
Provision for credit losses 5,500  —  —  5,500 
Non-interest income 10,685  38,298  (16,737) 32,246 
Non-interest expense 98,252  25,138  (12,346) 111,044 
Income before taxes $ 103,182  $ 19,495  $ (7,993) $ 114,684 
For the Three Months Ended March 31, 2022
(Dollars in thousands) Banking
Business		 Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 147,828  $ 3,377  $ (1,667) $ 149,538 
Provision for credit losses 4,500  —  —  4,500 
Non-interest income 15,741  15,609  (2,576) 28,774 
Non-interest expense 65,076  20,242  1,501  86,819 
Income before taxes $ 93,993  $ (1,256) $ (5,744) $ 86,993 

For the Nine Months Ended March 31, 2023
(Dollars in thousands) Banking
Business		 Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 574,524  $ 15,486  $ (10,643) $ 579,367 
Provision for credit losses 17,750  —  —  17,750 
Non-interest income 31,954  103,467  (47,638) 87,783 
Non-interest expense 295,332  74,924  (35,597) 334,659 
Income before taxes $ 293,396  $ 44,029  $ (22,684) $ 314,741 
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For the Nine Months Ended March 31, 2022
(Dollars in thousands) Banking
Business		 Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 432,328  $ 14,059  $ (4,639) $ 441,748 
Provision for credit losses 12,500  —  —  12,500 
Non-interest income 46,864  45,169  (5,770) 86,263 
Non-interest expense 190,250  61,169  5,850  257,269 
Income before taxes $ 276,442  $ (1,941) $ (16,259) $ 258,242 

As of March 31, 2023
(Dollars in thousands) Banking
Business		 Securities Business Corporate/Eliminations Axos Consolidated
Goodwill $ 35,721  $ 61,952  $ —  $ 97,673 
Total Assets $ 18,940,271  $ 765,295  $ 76,915  $ 19,782,481 
As of June 30, 2022
(Dollars in thousands) Banking
Business		 Securities Business Corporate/Eliminations Axos 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 Ended For the Nine Months Ended
  March 31, March 31,
(Dollars in thousands) 2023 2022 2023 2022
Advisory fee income $ 6,879  $ 7,739  $ 20,821  $ 21,078 
Broker-dealer clearing fees 6,228  4,387  15,886  15,400 
Deposit service fees 623  613  3,931  3,645 
Card fees 737  946  3,670  2,910 
Bankruptcy trustee and fiduciary service fees 1,566  877  4,506  2,725 
    Non-interest income (in-scope Topic 606) 16,033  14,562  48,814  45,758 
    Non-interest income (out-of-scope Topic 606) 16,213  14,212  38,969  40,505 
    Total non-interest income $ 32,246  $ 28,774  $ 87,783  $ 86,263 
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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides information about the results of operations, financial condition, liquidity, 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 deposit balances and capital ratios, our ability to continue to grow profitably and increase our business, our ability to continue to diversify lending and deposit franchises, the anticipated timing and financial performance of other offerings, initiatives, and acquisitions, expectations of the environment in which we operate and projections of future performance. Actual results and the timing of events could differ materially from those expressed or implied in such forward-looking statements as a result of risks and uncertainties, including without limitation our ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, monetary policy, inflation, government regulation, general economic conditions, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, our ability to attract and retain deposits and access other sources of liquidity, and the outcome and effects of litigation and other factors beyond our reasonable control. These and other risks and uncertainties are discussed under the heading “Item 1A. Risk Factors” herein and in our 2022 Form 10-K, as supplemented by our Quarterly Report on Form 10-Q for the period ended December 31, 2022, which have been filed with the SEC, could case actual results to differ materially from those expressed or implied in any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All written and oral forward-looking statements made in connection with this report, which are attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing information.
General
Our Company is a diversified financial services company with approximately $19.8 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. 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.

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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.
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, low-cost 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.
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USE OF NON-GAAP FINANCIAL MEASURES
In addition to the results presented in accordance with GAAP, this report includes the non-GAAP financial measures adjusted earnings, adjusted earnings per common share, 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 Ended Nine Months Ended
March 31, March 31,
(Dollars in thousands, except per share amounts) 2023 2022 2023 2022
Net income $ 79,850  $ 61,823  $ 219,809  $ 182,820 
Acquisition-related costs
2,846  2,803  8,169  8,676 
Other costs1
 —  —  16,000  — 
Tax effects of adjustments (864) (811) (7,290) (2,534)
Adjusted earnings (Non-GAAP) $ 81,832  $ 63,815  $ 236,688  $ 188,962 
Adjusted EPS (Non-GAAP) $ 1.35  $ 1.05  $ 3.91  $ 3.12 
1.Other costs for the nine months ended March 31, 2023 reflect an accrual in the first quarter of 2023 as a result of an adverse legal judgement that has not been finalized.
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:
March 31,
(Dollars in thousands) 2023 2022
Common stockholders’ equity $ 1,844,104  $ 1,585,585 
Less: mortgage servicing rights, carried at fair value 25,396  23,519 
Less: goodwill and other intangible assets 154,928  159,150 
Tangible common stockholders’ equity (Non-GAAP) $ 1,663,780  $ 1,402,916 
Common shares outstanding at end of period 59,355,124  59,662,795 
Tangible book value per common share (Non-GAAP) $ 28.03  $ 23.51 

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SELECTED FINANCIAL INFORMATION
The following tables set forth certain selected financial information concerning the periods indicated:
AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands) March 31,
2023		 June 30,
2022		 March 31,
2022
Selected Balance Sheet Data:
Total assets $ 19,782,481  $ 17,401,165  $ 16,080,950 
Loans—net of allowance for credit losses 15,836,255  14,091,061  13,093,603 
Loans held for sale, carried at fair value 7,920  4,973  19,611 
Loans held for sale, lower of cost or fair value 303  10,938  11,182 
Allowance for credit losses - loans 161,293  148,617  143,372 
Securities—trading 400  1,758  366 
Securities—available-for-sale 279,612  262,518  229,510 
Securities borrowed 87,293  338,980  274,644 
Customer, broker-dealer and clearing receivables 323,359  417,417  510,561 
Total deposits 16,738,869  13,946,422  12,733,002 
Advances from the FHLB 90,000  117,500  152,500 
Borrowings, subordinated debentures and other borrowings
 334,330  445,244  381,682 
Securities loaned 114,613  474,400  447,748 
Customer, broker-dealer and clearing payables 406,092  511,654  543,905 
Total stockholders’ equity 1,844,104  1,642,973  1,585,585 
Capital Ratios:
Equity to assets at end of period 9.32  % 9.44  % 9.86  %
Axos Financial, Inc.:
Tier 1 leverage (to adjusted average assets) 9.29  % 9.25  % 9.43  %
Common equity tier 1 capital (to risk-weighted assets) 10.71  % 9.86  % 10.23  %
Tier 1 capital (to risk-weighted assets) 10.71  % 9.86  % 10.23  %
Total capital (to risk-weighted assets) 13.63  % 12.73  % 13.30  %
Axos Bank:
Tier 1 leverage (to adjusted average assets) 10.17  % 10.65  % 10.51  %
Common equity tier 1 capital (to risk-weighted assets) 11.55  % 11.24  % 11.43  %
Tier 1 capital (to risk-weighted assets) 11.55  % 11.24  % 11.43  %
Total capital (to risk-weighted assets) 12.40  % 12.01  % 12.24  %
Axos Clearing LLC:
Net capital $ 79,459  $ 38,915  $ 39,109 
Excess capital $ 74,377  $ 32,665  $ 31,612 
Net capital as a percentage of aggregate debit items 31.27  % 12.45  % 10.43  %
Net capital in excess of 5% aggregate debit items $ 66,755  $ 23,290  $ 20,369 

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AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
At or for the Three Months Ended At or for the Nine Months Ended
March 31, March 31,
(Dollars in thousands, except per share data) 2023 2022 2023 2022
Selected Income Statement Data:
Interest and dividend income $ 307,334  $ 160,181  $ 810,708  $ 475,567 
Interest expense 108,352  10,643  231,341  33,819 
Net interest income 198,982  149,538  579,367  441,748 
Provision for credit losses 5,500  4,500  17,750  12,500 
Net interest income after provision for credit losses 193,482  145,038  561,617  429,248 
Non-interest income 32,246  28,774  87,783  86,263 
Non-interest expense 111,044  86,819  334,659  257,269 
Income before income tax expense 114,684  86,993  314,741  258,242 
Income tax expense 34,834  25,170  94,932  75,422 
Net income $ 79,850  $ 61,823  $ 219,809  $ 182,820 
Per Common Share Data:
Net income:
Basic $ 1.33  $ 1.04  $ 3.67  $ 3.07 
Diluted $ 1.32  $ 1.02  $ 3.63  $ 3.02 
Adjusted earnings per common share (Non-GAAP)1
 $ 1.35  $ 1.05  $ 3.91  $ 3.12 
Book value per common share $ 31.07  $ 26.58  $ 31.07  $ 26.58 
Tangible book value per common share (Non-GAAP)1
 $ 28.03  $ 23.51  $ 28.03  $ 23.51 
Weighted average number of common shares outstanding:
     Basic 59,930,634  59,542,128  59,928,263  59,476,488 
     Diluted 60,627,400  60,611,959  60,595,414  60,605,486 
Common shares outstanding at end of period 59,355,124  59,662,795  59,355,124  59,662,795 
Common shares issued at end of period 69,340,533  68,617,410  69,340,533  68,617,410 
Performance Ratios and Other Data:
Loan originations for investment $ 1,735,651  $ 2,363,599  $ 6,235,451  $ 6,981,749 
Loan originations for sale 45,200 166,327 158,500 569,614
Return on average assets 1.71  % 1.59  % 1.60  % 1.63  %
Return on average common stockholders’ equity 17.42  % 15.89  % 16.73  % 16.33  %
Interest rate spread2
 3.46  % 3.84  % 3.57  % 3.93  %
Net interest margin3
 4.42  % 4.02  % 4.41  % 4.11  %
Net interest margin3 – Banking Business Segment
 4.50  % 4.21  % 4.56  % 4.33  %
Efficiency ratio4
 48.02  % 51.26  % 50.16  % 48.72  %
Efficiency ratio4 – Banking Business Segment
 47.48  % 39.79  % 48.70  % 39.70  %
Asset Quality Ratios:
Net annualized charge-offs to average loans 0.04  % 0.05  % 0.04  % 0.02  %
Non-performing loans and leases to total loans 0.60  % 1.05  % 0.60  % 1.05  %
Non-performing assets to total assets 0.51  % 0.87  % 0.51  % 0.87  %
Allowance for credit losses - loans to total loans held for investment 1.01  % 1.08  % 1.01  % 1.08  %
Allowance for credit losses - loans to non-performing loans 168.12  % 103.33  % 168.12  % 103.33  %
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.
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RESULTS OF OPERATIONS
Comparison of the Three and Nine Months Ended March 31, 2023 and 2022
For the three months ended March 31, 2023, we had net income of $79.9 million, or $1.32 per diluted share, compared to net income of $61.8 million, or $1.02 per diluted share, for the three months ended March 31, 2022. For the nine months ended March 31, 2023, we had net income of $219.8 million, or $3.63 per diluted share, compared to net income of $182.8 million, or $3.02 per diluted share for the nine months ended March 31, 2022.
Net Interest Income
Net interest income for the three and nine months ended March 31, 2023 totaled $199.0 million and $579.4 million, an increase of 33.1% and 31.2%, compared to net interest income of $149.5 million and $441.7 million for the three and nine months ended March 31, 2022, respectively. The increases for the three and nine months were primarily due to higher rates earned and higher average balances in the loan portfolio, partially offset by higher rates paid on deposits and increased deposit balances.
Total interest and dividend income during the three and nine months ended March 31, 2023 increased 91.9% to $307.3 million and 70.5% to $810.7 million, compared to $160.2 million and $475.6 million during the three and nine months ended March 31, 2022, respectively. The increases in interest and dividend income for the three and nine months ended March 31, 2023 were primarily attributable to higher rates earned, higher average balances in the loan portfolio and higher rates on deposits placed with other financial institutions.
Total interest expense was $108.4 million for the three months ended March 31, 2023, an increase of $97.7 million or 918.1% compared with the three months ended March 31, 2022. Total interest expense was $231.3 million for the nine months ended March 31, 2023, an increase of $197.5 million or 584.1% compared with the nine months ended March 31, 2022. The increases for the three and nine months ended March 31, 2023 were primarily attributable to higher rates paid on deposits. Also contributing to the increase was increased average balances of deposits and higher rates paid on FHLB advances.
Net interest margin, defined as annualized net interest income divided by average earning assets, increased 40 basis points to 4.42% for the three months ended March 31, 2023 from 4.02% for the three months ended March 31, 2022, and increased 30 basis points to 4.41% for the nine months ended March 31, 2023 from 4.11% for the nine months ended March 31, 2022. During the three and nine months ended March 31, 2023, the primary contributor to the 40 and 30 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.
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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
March 31,
  2023 2022
(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
 $ 15,842,029  $ 279,864  7.07  % $ 12,842,705  $ 153,873  4.79  %
Interest-earning deposits in other financial institutions 1,551,428  18,014  4.64  % 1,286,665  671  0.21  %
Mortgage-backed and other investment securities4
 263,914  3,978  6.03  % 162,400  1,546  3.81  %
Securities borrowed and margin lending5
 335,125  5,137  6.13  % 563,018  3,833  2.72  %
Stock of the regulatory agencies 19,457  341  7.01  % 21,333  258  4.84  %
Total interest-earning assets 18,011,953  307,334  6.83  % 14,876,121  160,181  4.31  %
Non-interest-earning assets 642,308  731,997 
Total assets $ 18,654,261  $ 15,608,118 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings $ 10,707,667  $ 89,772  3.35  % $ 6,922,600  $ 3,808  0.22  %
Time deposits 1,181,342  8,667  2.93  % 1,194,452  3,116  1.04  %
Securities loaned 198,814  1,307  2.63  % 365,808  152  0.17  %
Advances from the FHLB 429,689  4,454  4.15  % 289,289  973  1.35  %
Borrowings, subordinated notes and debentures 338,175  4,152  4.91  % 295,910  2,594  3.51  %
Total interest-bearing liabilities 12,855,687  108,352  3.37  % 9,068,059  10,643  0.47  %
Non-interest-bearing demand deposits 3,312,618  4,210,508 
Other non-interest-bearing liabilities 652,524  772,800 
Stockholders’ equity 1,833,432  1,556,751 
Total liabilities and stockholders’ equity $ 18,654,261  $ 15,608,118 
Net interest income $ 198,982  $ 149,538 
Interest rate spread6
 3.46  % 3.84  %
Net interest margin7
 4.42  % 4.02  %
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.




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  For the Nine Months Ended
March 31,
  2023 2022
(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
 $ 15,348,412  $ 743,863  6.46  % $ 12,202,523  $ 452,518  4.94  %
Interest-earning deposits in other financial institutions 1,483,191  40,975  3.68  % 1,232,100  1,904  0.21  %
Mortgage-backed and other investment securities4
 261,282  10,854  5.54  % 152,623  4,304  3.76  %
Securities borrowed and margin lending5
 399,246  13,842  4.62  % 718,956  16,050  2.98  %
Stock of the regulatory agencies 22,161  1,174  7.06  % 20,845  791  5.06  %
Total interest-earning assets 17,514,292  810,708  6.17  % 14,327,047  475,567  4.43  %
Non-interest-earning assets 799,594  624,184 
Total assets $ 18,313,886  $ 14,951,231 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings $ 9,466,664  $ 182,509  2.57  % $ 6,683,286  $ 11,674  0.23  %
Time deposits 1,161,502  19,783  2.27  % 1,297,870  10,767  1.11  %
Securities loaned 343,561  3,317  1.29  % 489,189  621  0.17  %
Advances from the FHLB 534,411  12,121  3.02  % 285,547  2,962  1.38  %
Borrowings, subordinated notes and debentures 364,521  13,611  4.98  % 264,523  7,795  3.93  %
Total interest-bearing liabilities 11,870,659  231,341  2.60  % 9,020,415  33,819  0.50  %
Non-interest-bearing demand deposits 3,916,959  3,678,067 
Other non-interest-bearing liabilities 773,961  760,083 
Stockholders’ equity 1,752,307  1,492,666 
Total liabilities and stockholders’ equity $ 18,313,886  $ 14,951,231 
Net interest income $ 579,367  $ 441,748 
Interest rate spread6
 3.57  % 3.93  %
Net interest margin7
 4.41  % 4.11  %
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.
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Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table sets forth the effects of changing rates and volumes on our net interest income. Information is provided with respect to (i) effects on interest income and interest expense attributable to changes in volume (changes in volume multiplied by prior rate); and (ii) effects on interest income and interest expense attributable to changes in rate (changes in rate multiplied by prior volume). The change in interest due to both volume and rate has been allocated proportionally to both, based on their relative absolute values.
  For the Three Months Ended For the Nine Months Ended
March 31, March 31,
2023 vs 2022 2023 vs 2022
  Increase (Decrease) Due to Increase (Decrease) Due to
(Dollars in thousands) Volume Rate Total
Increase
(Decrease)		 Volume Rate Total
Increase
(Decrease)
Increase / (decrease) in interest income:
Loans $ 41,470  $ 84,521  $ 125,991  $ 132,822  $ 158,523  $ 291,345 
Interest-earning deposits in other financial institutions 168  17,175  17,343  475  38,596  39,071 
Mortgage-backed and other investment securities 1,259  1,173  2,432  3,934  2,616  6,550 
Securities borrowed and margin lending (2,025) 3,329  1,304  (8,891) 6,683  (2,208)
Stock of the regulatory agencies (25) 108  83  53  330  383 
$ 40,847  $ 106,306  $ 147,153  $ 128,393  $ 206,748  $ 335,141 
Increase / (decrease) in interest expense:
Interest-bearing demand and savings $ 3,182  $ 82,782  $ 85,964  $ 6,718  $ 164,117  $ 170,835 
Time deposits (34) 5,585  5,551  (1,239) 10,255  9,016 
Securities loaned (102) 1,257  1,155  (239) 2,935  2,696 
Advances from the FHLB 660  2,821  3,481  3,875  5,284  9,159 
Borrowings, subordinated notes and debentures
 411  1,147  1,558  3,408  2,408  5,816 
$ 4,117  $ 93,592  $ 97,709  $ 12,523  $ 184,999  $ 197,522 

Provision for Credit Losses
The provision for credit losses was $5.5 million for the three months ended March 31, 2023 compared to $4.5 million for the three months ended March 31, 2022. The provision for credit losses was $17.8 million for the nine months ended March 31, 2023 compared to $12.5 million for the nine months ended March 31, 2022. The provision for credit losses for the three and nine months ended March 31, 2023 was primarily driven by loan growth, changes in the macroeconomic environment, 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.”



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Non-Interest Income
The following table sets forth information regarding our non-interest income for the periods shown:
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
(Dollars in thousands) 2023 2022 Inc (Dec) 2023 2022 Inc (Dec)
Broker-dealer fee income $ 13,745  $ 5,174  $ 8,571  $ 32,735  $ 17,968  $ 14,767 
Advisory fee income 6,879  7,739  (860) 20,821  21,078  (257)
Banking and service fees 8,443  7,278  1,165  25,100  22,444  2,656 
Mortgage banking income 1,107  5,790  (4,683) 5,113  15,700  (10,587)
Prepayment penalty fee income 2,072  2,793  (721) 4,014  9,073  (5,059)
Total non-interest income $ 32,246  $ 28,774  $ 3,472  $ 87,783  $ 86,263  $ 1,520 
Non-interest income increased $3.5 million to $32.2 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The increase was primarily the result of higher broker-dealer fee income driven by higher rates earned on cash sorting balances at non-affiliated banks, partially offset by lower average cash sorting balances. Also contributing to the increase was higher banking and service fees. The overall increase was partially offset by lower mortgage banking income from the impact of changes in the fair value of our MSRs, as well as higher mortgage rates contributing to lower originations. Also contributing to the offset 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.
Non-interest income increased $1.5 million to $87.8 million for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The increase was primarily the result of higher broker-dealer fee income driven by higher rates earned on cash sorting balances at non-affiliated banks. Also contributing to the increase was higher banking and service fees. The overall increase was partially offset by 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 offset was lower prepayment penalty fee income due to slower prepayments.
Non-Interest Expense
    The following table sets forth information regarding our non-interest expense for the periods shown:
  For the Three Months Ended For the Nine Months Ended
March 31, March 31,
(Dollars in thousands) 2023 2022 Inc (Dec) 2023 2022 Inc (Dec)
Salaries and related costs $ 53,046  $ 43,133  $ 9,913  $ 149,762  $ 123,849  $ 25,913 
Data processing 15,808  12,274  3,534  44,462  36,565  7,897 
Depreciation and amortization 5,671  6,061  (390) 17,722  18,574  (852)
Advertising and promotional 11,786  3,357  8,429  29,055  10,131  18,924 
Professional services 6,747  4,346  2,401  23,289  14,834  8,455 
Occupancy and equipment 3,873  3,742  131  11,610  10,265  1,345 
FDIC and regulatory fees 3,859  3,115  744  11,163  7,856  3,307 
Broker-dealer clearing charges 3,356  3,561  (205) 9,924  11,244  (1,320)
General and administrative expense 6,898  7,230  (332) 37,672  23,951  13,721 
Total non-interest expenses
 $ 111,044  $ 86,819  $ 24,225  $ 334,659  $ 257,269  $ 77,390 
Non-interest expense was $111.0 million for the three months ended March 31, 2023, compared to $86.8 million for the three months ended March 31, 2022. Non-interest expense was $334.7 million for the nine months ended March 31, 2023, up from $257.3 million for the nine months ended March 31, 2022. The increases for the three and the nine months ended March 31, 2023 were primarily due to higher salaries and related costs, advertising and promotional expenses, data processing, professional services, and for the nine months ended March 31, 2023, higher general and administrative expenses.
Total salaries and related costs increased $9.9 million to $53.0 million for the three months ended March 31, 2023 compared to $43.1 million for the three months ended March 31, 2022 and increased $25.9 million to $149.8 million for the nine months ended March 31, 2023 compared to $123.8 million for the nine months ended March 31, 2022. The increases in compensation expense for the three and nine months ended March 31, 2023 were primarily due to increased headcount and salaries. Our headcount increased 13% to 1,466 at March 31, 2023 from 1,294 at March 31, 2022.
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Data processing expense increased $3.5 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022, and increased $7.9 million for the nine months ended March 31, 2023 compared to the nine month period ended March 31, 2022, primarily due to enhancements to customer interfaces and the Company’s processing systems.
Depreciation and amortization expense decreased $0.4 million and $0.9 million for the three and nine months ended March 31, 2023, compared to the three and nine months ended March 31, 2022, respectively. The decreases for the three and nine months ended March 31, 2023 were primarily due to certain capitalized software becoming fully depreciated.
Advertising and promotional expense increased $8.4 million and $18.9 million for the three and nine months ended March 31, 2023, compared to the three and nine months ended March 31, 2022, respectively. The increase was primarily due to increased lead generation and deposit marketing costs.
Professional services expense increased $2.4 million and $8.5 million for the three and nine months ended March 31, 2023, compared to the three and nine months ended March 31, 2022, respectively. The increase for the three and nine months ended March 31, 2023 was primarily due to higher consulting expenses and for the nine months ended March 31, 2023, the increase was also attributable to higher legal expenses related to litigation.
Occupancy and equipment expense increased by $0.1 million and $1.3 million for the three and nine months ended March 31, 2023 compared to the three and nine months ended March 31, 2022, respectively. The increases for the three and nine months ended March 31, 2023 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 $0.7 million and $3.3 million for the three and nine months ended March 31, 2023, compared to the three and nine months ended March 31, 2022, 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 decreased by $0.2 million and $1.3 million for the three and nine months ended March 31, 2023, compared to the three and nine months ended March 31, 2022, respectively, primarily due to reduced customer trading activity in the current year periods.
General and administrative costs decreased by $0.3 million and increased by $13.7 million for the three and nine months ended March 31, 2023, compared to the three and nine months ended March 31, 2022, respectively. The decrease for the three months ended March 31, 2023 was primarily due to no provision for credit losses for unfunded commitments in the three months ended March 31, 2023 compared to a provision for credit losses for unfunded commitments of $1.0 million in the three months ended March 31, 2022. The increase for the nine months ended March 31, 2023 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 of $0.5 million in the nine months ended March 31, 2023, compared to a provision of $4.0 million for the nine months ended March 31, 2022.
Provision for Income Taxes
Income tax expense was $34.8 million for the three months ended March 31, 2023 compared to $25.2 million for the three months ended March 31, 2022 and $94.9 million for the nine months ended March 31, 2023 compared to $75.4 million for the nine months ended March 31, 2022. Our effective income tax rates (income tax provision divided by net income before income tax) for the three months ended March 31, 2023 and 2022 were 30.37% and 28.93%, respectively. Our effective income tax rates for the nine months ended March 31, 2023 and 2022 were 30.16% and 29.21%, 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:
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For the Three Months Ended March 31, 2023
(Dollars in thousands) Banking Business Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 196,249  $ 6,335  $ (3,602) $ 198,982 
Provision for credit losses 5,500  —  —  5,500 
Non-interest income 10,685  38,298  (16,737) 32,246 
Non-interest expense 98,252  25,138  (12,346) 111,044 
Income before taxes $ 103,182  $ 19,495  $ (7,993) $ 114,684 
For the Three Months Ended March 31, 2022
(Dollars in thousands) Banking Business Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 147,828  $ 3,377  $ (1,667) $ 149,538 
Provision for credit losses 4,500  —  —  4,500 
Non-interest income 15,741  15,609  (2,576) 28,774 
Non-interest expense 65,076  20,242  1,501  86,819 
Income before taxes $ 93,993  $ (1,256) $ (5,744) $ 86,993 
For the Nine Months Ended March 31, 2023
(Dollars in thousands) Banking Business Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 574,524  $ 15,486  $ (10,643) $ 579,367 
Provision for credit losses 17,750  —  —  17,750 
Non-interest income 31,954  103,467  (47,638) 87,783 
Non-interest expense 295,332  74,924  (35,597) 334,659 
Income before taxes $ 293,396  $ 44,029  $ (22,684) $ 314,741 
For the Nine Months Ended March 31, 2022
(Dollars in thousands) Banking Business Securities Business Corporate/Eliminations Axos Consolidated
Net interest income $ 432,328  $ 14,059  $ (4,639) $ 441,748 
Provision for credit losses 12,500  —  —  12,500 
Non-interest income 46,864  45,169  (5,770) 86,263 
Non-interest expense 190,250  61,169  5,850  257,269 
Income before taxes $ 276,442  $ (1,941) $ (16,259) $ 258,242 
Banking Business
For the three months ended March 31, 2023, our Banking Business segment had income before taxes of $103 million compared to income before taxes of $94.0 million for the three months ended March 31, 2022. For the nine months ended March 31, 2023, the Banking Business segment had income before taxes of $293 million compared to income before taxes of $276.4 million for the nine months ended March 31, 2022. For the three and nine months ended March 31, 2023, the increase in income before taxes compared to the three and nine months ended March 31, 2022, was mainly due to higher net interest income, partially offset by higher non-interest expense and lower non-interest income.
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We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business segment:
For the Three Months Ended For the Nine Months Ended
March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022
Efficiency ratio 47.48  % 39.79  % 48.70  % 39.70  %
Return on average assets 1.61  % 1.84  % 1.59  % 1.89  %
Interest rate spread 3.55  % 4.06  % 3.71  % 4.17  %
Net interest margin 4.50  % 4.21  % 4.56  % 4.33  %
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.

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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
March 31,
  2023 2022
(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
 $ 15,819,777  $ 279,583  7.07  % $ 12,804,231  $ 153,363  4.79  %
Interest-earning deposits in other financial institutions 1,315,843  15,257  4.64  % 1,042,552  483  0.19  %
Mortgage-backed and other investment securities4
 271,084  4,013  5.92  % 185,952  1,661  3.57  %
Stock of the regulatory agencies 19,457  338  6.95  % 18,215  258  5.67  %
Total interest-earning assets 17,426,161  299,191  6.87  % 14,050,950  155,765  4.43  %
Non-interest-earning assets 356,996  297,950 
Total assets $ 17,783,157  $ 14,348,900 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings $ 10,806,346  $ 89,822  3.32  % $ 6,999,385  $ 3,848  0.22  %
Time deposits 1,181,342  8,667  2.93  % 1,194,452  3,116  1.04  %
Advances from the FHLB 429,689  4,454  4.15  % 289,289  973  1.35  %
Borrowings, subordinated notes and debentures
 57  —  —  % 33  —  —  %
Total interest-bearing liabilities 12,417,434  102,943  3.32  % 8,483,159  7,937  0.37  %
Non-interest-bearing demand deposits 3,380,441  4,269,702 
Other non-interest-bearing liabilities 182,502  135,237 
Stockholders’ equity 1,802,780  1,460,802 
Total liabilities and stockholders’ equity $ 17,783,157  $ 14,348,900 
Net interest income $ 196,248  $ 147,828 
Interest rate spread5
 3.55  % 4.06  %
Net interest margin6
 4.50  % 4.21  %
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.




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  For the Nine Months Ended
March 31,
  2023 2022
(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
 $ 15,324,641  $ 742,902  6.46  % $ 12,163,066  $ 451,166  4.95  %
Interest-earning deposits in other financial institutions 1,201,771  34,014  3.77  % 961,393  1,196  0.17  %
Mortgage-backed and other investment securities4
 270,573  10,999  5.42  % 176,570  4,665  3.52  %
Stock of the regulatory agencies 22,161  1,167  7.02  % 17,811  788  5.90  %
Total interest-earning assets 16,819,146  789,082  6.26  % 13,318,840  457,815  4.58  %
Non-interest-earning assets 336,842  295,401 
Total assets $ 17,155,988  $ 13,614,241 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings $ 9,544,778  $ 182,654  2.55  % $ 6,742,803  $ 11,758  0.23  %
Time deposits 1,161,502  19,783  2.27  % 1,297,870  10,767  1.11  %
Advances from the FHLB 534,411  12,121  3.02  % 285,547  2,962  1.38  %
Borrowings, subordinated notes and debentures
 37  —  —  % 113  —  —  %
Total interest-bearing liabilities 11,240,728  214,558  2.55  % 8,326,333  25,487  0.41  %
Non-interest-bearing demand deposits 3,992,906  3,760,771 
Other non-interest-bearing liabilities 187,976  142,212 
Stockholders’ equity 1,734,378  1,384,925 
Total liabilities and stockholders’ equity $ 17,155,988  $ 13,614,241 
Net interest income $ 574,524  $ 432,328 
Interest rate spread5
 3.71  % 4.17  %
Net interest margin6
 4.56  % 4.33  %
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.


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Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table sets forth the effects of changing rates and volumes on our net interest income 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 Ended For the Nine Months Ended
March 31, March 31,
2023 vs 2022 2023 vs 2022
  Increase (Decrease) Due to Increase (Decrease) Due to
(Dollars in thousands) Volume Rate Total
Increase
(Decrease)		 Volume Rate Total
Increase
(Decrease)
Increase / (decrease) in interest income:
Loans $ 41,779  $ 84,441  $ 126,220  $ 134,219  $ 157,517  $ 291,736 
Interest-earning deposits in other financial institutions 164  14,610  14,774  382  32,436  32,818 
Mortgage-backed and other investment securities 965  1,387  2,352  3,145  3,189  6,334 
Stock of the regulatory agencies, at cost 19  61  80  213  166  379 
$ 42,927  $ 100,499  $ 143,426  $ 137,959  $ 193,308  $ 331,267 
Increase / (decrease) in interest expense:
Interest-bearing demand and savings $ 3,195  $ 82,779  $ 85,974  $ 6,761  $ 164,135  $ 170,896 
Time deposits (34) 5,585  5,551  (1,239) 10,255  9,016 
Advances from the FHLB 660  2,821  3,481  3,875  5,284  9,159 
$ 3,821  $ 91,185  $ 95,006  $ 9,397  $ 179,674  $ 189,071 
The Banking Business segment’s net interest income for the three and nine months ended March 31, 2023 totaled $196.2 million and $574.5 million, an increase of 32.8% and an increase of 32.9%, compared to net interest income of $147.8 million and $432.3 million for the three and nine months ended March 31, 2022, respectively. The increase for the three and nine months ended March 31, 2023 was primarily due to higher rates earned and higher average balances in the loan portfolio, partially offset by higher rates paid on deposits.
The Banking Business segment’s non-interest income decreased $5.1 million to $10.7 million and decreased $14.9 million to $32.0 million for the three and nine months ended March 31, 2023 compared to the three and nine months ended March 31, 2022, respectively. Decreases for the three and nine months ended March 31, 2023 compared to the three and nine months ended March 31, 2022, were mainly the result of lower mortgage banking income as higher mortgage rates contributed to lower originations, the impact of changes in the fair value of our MSRs, as well as lower prepayment penalty income due to slower prepayments.
The Banking Business segment’s non-interest expense for the three and nine months ended March 31, 2023 increased $33.2 million and $105.1 million, respectively, compared to the three and nine months ended March 31, 2022. For the three and nine months ended March 31, 2023 the increases compared to the three and nine months ended March 31, 2022, 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 nine months ended March 31, 2023, a $16.0 million accrual in the first quarter of 2023 as a result of an adverse legal judgement that has not been finalized.
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Securities Business
For the three months ended March 31, 2023, our Securities Business segment had income before taxes of $19.5 million compared to a loss before taxes of $1.3 million for the three months ended March 31, 2022. For the nine months ended March 31, 2023, our Securities Business segment had income before taxes of $44.0 million compared to a loss before taxes of $1.9 million for the nine months ended March 31, 2022. The increases for both the three and nine months ended March 31, 2023 compared to the three and nine months ended March 31, 2022 were primarily the result of higher non-interest income, partially offset by higher non-interest expense.
Net interest income for the three months ended March 31, 2023, increased $3.0 million to $6.3 million compared to $3.4 million for the three months ended March 31, 2022 primarily as a result of higher rates on cash segregated for regulatory purposes. Net interest income for the nine months ended March 31, 2023 increased $1.4 million to $15.5 million compared to $14.1 million for the nine months ended March 31, 2022 primarily as a result of higher cash deposit balances and rates on cash segregated for regulatory purposes, partially offset by lower customer securities lending activity.
Non-interest income for the three months ended March 31, 2023, increased $22.7 million to $38.3 million compared to $15.6 million for the three months ended March 31, 2022. Non-interest income for the nine months ended March 31, 2023 increased $58.3 million to $103.5 million compared to $45.2 million for the nine months ended March 31, 2022. 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 March 31, 2023 increased $4.9 million to $25.1 million compared to $20.2 million for the three months ended March 31, 2022. Non-interest expense for the nine months ended March 31, 2023 increased $13.7 million to $74.9 million compared to $61.2 million for the nine months ended March 31, 2022. The increases were primarily due to higher salaries and related costs on increased headcount and salaries, and for the nine months ended March 31, 2023 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) March 31, 2023 June 30, 2022
FDIC insured deposit program balances at banks $ 1,864,451  $ 3,452,358 
Customer margin balances $ 209,615  $ 285,894 
Cash reserves for the benefit of customers $ 180,202  $ 372,112 
Securities lending:
Interest-earning assets – securities borrowed $ 87,293  $ 338,980 
Interest-bearing liabilities – securities loaned $ 114,613  $ 474,400 
FINANCIAL CONDITION
Balance Sheet Analysis
Our total assets increased $2.4 billion, or 13.7%, to $19.8 billion, as of March 31, 2023, up from $17.4 billion at June 30, 2022. The increase in total assets was primarily due to a $1.7 billion increase in loans and a $0.9 billion increase in cash, cash equivalents and cash segregated, partially offset by a $0.3 billion decrease in securities borrowed. Total liabilities increased $2.2 billion, primarily due to a $2.8 billion increase in deposits, partially offset by a $0.4 billion decrease in securities loaned.
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Loans
Net loans held for investment increased 12.4% to $15.8 billion at March 31, 2023 from $14.1 billion at June 30, 2022 primarily due to loan originations of $6.2 billion, partially offset by repayments of $4.3 billion.
The following table sets forth the composition of the loan portfolio as of the dates indicated:
March 31, 2023 June 30, 2022
(Dollars in thousands) Amount Percent Amount Percent
Single Family - Mortgage & Warehouse $ 4,087,525  25.5  % $ 3,988,462  28.0  %
Multifamily and Commercial Mortgage 3,082,801  19.2  % 2,877,680  20.2  %
Commercial Real Estate 5,794,304  36.3  % 4,781,044  33.5  %
Commercial & Industrial - Non-RE 2,454,839  15.3  % 2,028,128  14.2  %
Auto & Consumer 594,596  3.7  % 567,228  4.0  %
Other 6,240  —  % 11,134  0.1  %
Total gross loans 16,020,305  100.0  % 14,253,676  100.0  %
Allowance for credit losses - loans (161,293) (148,617)
Unaccreted discounts and loan fees (22,757) (13,998)
Total net loans $ 15,836,255  $ 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 March 31, 2023, the Company had $1.3 billion of interest only mortgage loans with a weighted average LTV of 58.4%.
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 March 31, 2023, our non-performing loans totaled $95.9 million, or 0.60% of total gross loans and our total non-performing assets totaled $101.2 million, or 0.51% 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) March 31, 2023 June 30, 2022 Inc (Dec)
Non-performing assets:
Non-accrual loans:
Single Family - Mortgage & Warehouse $ 36,158  $ 66,424  $ (30,266)
Multifamily and Commercial Mortgage 37,378  33,410  3,968 
Commercial Real Estate 14,852  14,852  — 
Commercial & Industrial - Non-RE 2,989  2,989  — 
Auto & Consumer 2,029  439  1,590 
Other 2,535  80  2,455 
Total non-performing loans 95,941  118,194  (22,253)
Foreclosed real estate 4,344  —  4,344 
Repossessed—Autos 958  798  160 
Total non-performing assets $ 101,243  $ 118,992  $ (17,749)
Total non-performing loans as a percentage of total loans 0.60  % 0.83  % (0.23) %
Total non-performing assets as a percentage of total assets 0.51  % 0.68  % (0.17) %
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Total non-performing assets decreased from $119.0 million at June 30, 2022 to $101.2 million at March 31, 2023. 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 March 31, 2023 was 56.7%.
The Bank had no performing troubled debt restructurings as of March 31, 2023 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 lifetime 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 nine months ended March 31, 2023, 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 were $280.0 million as of March 31, 2023, compared with $264.3 million at June 30, 2022. During the nine months ended March 31, 2023, we purchased a $30.0 million MBS security and received principal repayments of approximately $9.7 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 $2.8 billion, or 20.0%, to $16.7 billion at March 31, 2023, from $13.9 billion at June 30, 2022. Interest-bearing demand and savings increased $3.9 billion and time deposits increased $743.2 million. Non-interest bearing deposits decreased $1.9 billion, or 37.0%, to $3.2 billion at March 31, 2023, from $5.0 billion at June 30, 2022.
The following table sets forth the composition of the deposit portfolio as of the dates indicated:
March 31, 2023 June 30, 2022
(Dollars in thousands) Amount
Rate1
 Amount
Rate1
Non-interest bearing $ 3,172,791  —  % $ 5,033,970  —  %
Interest bearing:
Demand 4,133,014  2.62  % 3,611,889  0.61  %
Savings 7,634,813  3.78  % 4,245,555  0.95  %
Total interest-bearing demand and savings 11,767,827  3.37  % 7,857,444  0.79  %
Time deposits:
$250 and under2
 1,416,774  3.94  % 651,392  1.22  %
Greater than $250 381,477  4.09  % 403,616  1.41  %
Total time deposits
 1,798,251  3.95  % 1,055,008  1.25  %
Total interest bearing2
 13,566,078  3.45  % 8,912,452  0.85  %
Total deposits $ 16,738,869  2.79  % $ 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 $2,504.5 million and $1,032.7 million as of March 31, 2023 and June 30, 2022, respectively, of which $1,160.4 million and $250.0 million, respectively, are time deposits classified as $250,000 and under.

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The following table sets forth the number of deposit accounts by type as of the date indicated:
March 31, 2023 June 30, 2022 March 31, 2022
Non-interest bearing 45,018  42,372 40,958 
Interest-bearing checking and savings accounts 404,408  344,593 344,176 
Time deposits 6,729  8,734 9,313 
Total number of accounts 456,155  395,699 394,447
Total Bank deposits that exceeded the FDIC insurance limit of $250,000 at March 31, 2023 and June 30, 2022 were $1.8 billion and $2.3 billion, respectively. The maturities of certificates of deposit that exceeded the FDIC insurance limit of $250,000 at March 31, 2023 were as follows:
(Dollars in thousands) March 31, 2023
3 months or less $ 184,036 
3 months to 6 months 142,127 
6 months to 12 months 20,914 
Over 12 months 34,400 
Total $ 381,477 

Borrowings
The following table sets forth the composition of our borrowings and the interest rates at the dates indicated:
March 31, 2023 June 30, 2022 March 31, 2022
(Dollars in thousands) Balance Weighted Average Rate Balance Weighted Average Rate Balance Weighted Average Rate
FHLB Advances $ 90,000  2.32  % $ 117,500  2.26  % $ 152,500  2.30  %
Borrowings, subordinated notes and debentures 334,330  4.59  % 445,244  3.86  % 381,682  4.54  %
Total borrowings $ 424,330  4.11  % $ 562,744  3.53  % $ 534,182  3.90  %
Weighted average cost of borrowings during the quarter 4.48  % 2.85  % 2.44  %
Borrowings as a percent of total assets 2.14  % 3.23  % 3.32  %
At March 31, 2023, total borrowings were $424.3 million, down $138.4 million, or 24.6%, from June 30, 2022 and down $109.9 million or 20.6% from March 31, 2022. Borrowings as a percent of total assets were 2.14%, 3.23% and 3.32% at March 31, 2023, June 30, 2022 and March 31, 2022, respectively. Weighted average cost of borrowings during the quarter were 4.48%, 2.85% and 2.44% for the quarters ended March 31, 2023, June 30, 2022 and March 31, 2022, 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 original terms between three and ten years have been used to fund the origination and purchase of single family and multifamily mortgages and used in interest rate risk management. As of March 31, 2023, FHLB advances solely consisted of term loans with a remaining weighted average life of 4.8 years totaling $90 million and we have an additional $2.5 billion of immediately available, undrawn capacity with the FHLB.
Stockholders’ Equity
Stockholders’ equity increased $201.1 million to $1,844.1 million at March 31, 2023 compared to $1,643.0 million at June 30, 2022. The increase was primarily due to net income of $219.8 million and net stock-based compensation activity of $15.6 million, partially offset by purchases of treasury stock.
During the three and nine months ended March 31, 2023, the Company repurchased $31.6 million of common stock at an average price of $37.22 per share. The Company has $21.2 million remaining under the Board authorized stock repurchase program as of March 31, 2023.

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LIQUIDITY
Cash flow information is as follows:
For the Nine Months Ended
March 31,
(Dollars in thousands) 2023 2022
Operating Activities $ 119,247  $ 69,482 
Investing Activities $ (1,807,976) $ (1,724,106)
Financing Activities $ 2,618,254  $ 1,866,161 
During the nine months ended March 31, 2023, we had net cash inflows from operating activities of $119.2 million compared to inflows of $69.5 million for the nine months ended March 31, 2022. 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 $1,808.0 million for the nine months ended March 31, 2023, while outflows totaled $1,724.1 million for the nine months ended March 31, 2022. The increase in outflows was primarily due to higher net outflows related to lending activity for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.
Net cash inflows from financing activities totaled $2,618.3 million for the nine months ended March 31, 2023, compared to net cash inflows from financing activities of $1,866.2 million for the nine months ended March 31, 2022. The primary driver behind the increase in net cash inflows was a larger net increase in deposits. As of March 31, 2023, 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 March 31, 2023, the Company had $2,450.9 million available immediately and $4,706.4 million available with additional collateral and had $5,162.9 million of loans and $169 thousand of securities pledged to the FHLB. We also had five unsecured federal funds purchase lines with five different banks totaling $250 million, under which no borrowings were outstanding at March 31, 2023.
The Bank has the ability to borrow short-term from the Federal Reserve Bank of San Francisco Discount Window. At March 31, 2023, the Bank did not have any borrowings outstanding and the amount available from this source was $3,133.7 million. The credit line is collateralized by consumer loans and mortgage-backed securities. At March 31, 2023 we had $4,145.3 million of loans pledged to the Federal Reserve Bank of San Francisco.
Axos Clearing has a total of $150 million in uncommitted secured lines of credit for borrowing as needed. As of March 31, 2023, 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 March 31, 2023, 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 view our liquidity sources to be stable and adequate for our anticipated needs and contingencies for both the short- and long-term. Due to the diversified sources of our deposits, while maintaining approximately 90 percent of our total Bank deposits in insured or collateralized accounts as of March 31, 2023, we believe we have the ability to increase our level of deposits, and have available other potential sources of funding, to address our liquidity needs for the foreseeable future.
OFF-BALANCE SHEET COMMITMENTS
At March 31, 2023, we had unfunded commitments to originate loans with an aggregate outstanding principal balance of $2,873.5 million, and commitments to sell loans with an aggregate outstanding principal balance of $8.5 million. We have no commitments to purchase loans or investment securities as of March 31, 2023.
In the normal course of business, Axos Clearing’s customer, broker-dealer, and registered investment advisor 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.
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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 March 31, 2023, 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 March 31, 2023 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 March 31, 2023 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.
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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) March 31, 2023 June 30,
2022		 March 31, 2023 June 30,
2022
Regulatory Capital:
Tier 1 $ 1,719  $ 1,522  $ 1,815  $ 1,615 
Common equity tier 1 $ 1,719  $ 1,522  $ 1,815  $ 1,615 
Total capital $ 2,187  $ 1,966  $ 1,950  $ 1,726 
Assets:
Average adjusted $ 18,518  $ 16,461  $ 17,852  $ 15,165 
Total risk-weighted $ 16,048  $ 15,443  $ 15,723  $ 14,366 
Regulatory Capital Ratios:
Tier 1 leverage (to adjusted average assets) 9.29  % 9.25  % 10.17  % 10.65  % 5.00% 4.00%
Common equity tier 1 capital (to risk-weighted assets) 10.71  % 9.86  % 11.55  % 11.24  % 6.50% 4.50%
Tier 1 capital (to risk-weighted assets) 10.71  % 9.86  % 11.55  % 11.24  % 8.00% 6.00%
Total capital (to risk-weighted assets) 13.63  % 12.73  % 12.40  % 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 March 31, 2023 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) March 31, 2023 June 30, 2022
Net capital $ 79,459  $ 38,915 
Excess Capital $ 74,377  $ 32,665 
Net capital as a percentage of aggregate debit items 31.27  % 12.45  %
Net capital in excess of 5% aggregate debit items $ 66,755  $ 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 March 31, 2023, the Company calculated a deposit requirement of $142.1 million and maintained a deposit of $158.8 million. On April 3, 2023, the Company made a withdrawal of $6.0 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 computes a separate reserve requirement for Proprietary Accounts of Brokers (“PAB”). At March 31, 2023, the Company calculated a deposit requirement of $14.0 million and maintained a deposit of $21.1 million.
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On April 4, 2023, the Company made a withdrawal of $6.1 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 March 31, 2023 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
March 31, 2023
(Dollars in thousands) Six Months or Less Over Six
Months Through
One Year		 Over One
Year Through
Five Years		 Over Five
Years		 Total
Interest-earning assets:
Cash and cash equivalents $ 2,302,532  $ —  $ —  $ —  $ 2,302,532 
Securities
 257,797  2,392  11,481  15,072  286,742 
Stock of the FHLB, at cost 17,250  —  —  —  17,250 
Loans—net of allowance for credit loss 10,910,546  1,192,912  3,739,309  132,975  15,975,742 
Loans held for sale 8,223  —  —  —  8,223 
Total interest-earning assets 13,496,348  1,195,304  3,750,790  148,047  18,590,489 
Non-interest earning assets —  —  —  —  349,782 
Total assets $ 13,496,348  $ 1,195,304  $ 3,750,790  $ 148,047  $ 18,940,271 
Interest-bearing liabilities:
Interest-bearing deposits $ 8,879,735  $ 4,579,887  $ 177,235  $ —  $ 13,636,857 
Advances from the FHLB —  —  30,000  60,000  90,000 
Total interest-bearing liabilities 8,879,735  4,579,887  207,235  60,000  13,726,857 
Other non-interest-bearing liabilities —  —  —  —  3,377,631 
Stockholders’ equity —  —  —  —  1,835,783 
Total liabilities and equity $ 8,879,735  $ 4,579,887  $ 207,235  $ 60,000  $ 18,940,271 
Net interest rate sensitivity gap $ 4,616,613  $ (3,384,583) $ 3,543,555  $ 88,047  $ 4,863,632 
Cumulative gap $ 4,616,613  $ 1,232,030  $ 4,775,585  $ 4,863,632  $ 4,863,632 
Net interest rate sensitivity gap—as a % of total interest earning assets 24.83  % (18.21) % 19.06  % 0.47  % 26.16  %
Cumulative gap—as % of total interest earning assets 24.83  % 6.63  % 25.69  % 26.16  % 26.16  %

The above table provides an approximation of the projected re-pricing of assets and liabilities at March 31, 2023 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 use decay rates and rate adjustments based upon our historical experience.
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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 March 31, 2023
First 12 Months Next 12 Months
(Dollars in thousands) Net Interest Income Percentage Change from Base Net Interest Income Percentage Change from Base
Up 200 basis points $ 1,005,605  20.6  % $ 988,156  12.2  %
Base $ 834,021  —  % $ 880,568  —  %
Down 200 basis points $ 737,893  (11.5) % $ 795,250  (9.7) %
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 March 31, 2023
(Dollars in thousands) Net
Present Value		 Percentage Change from Base Net
Present
Value as a
Percentage
of Assets
Up 200 basis points $ 1,981,891  3.2  % 10.6  %
Up 100 basis points $ 1,971,727  2.7  % 10.5  %
Base $ 1,919,998  —  % 10.1  %
Down 100 basis points $ 1,837,269  (4.3) % 9.6  %
Down 200 basis points $ 1,699,978  (11.5) % 8.8  %
The banking industry experienced an unprecedented level of liquidity stress during the three months ended March 31, 2023. In response, we created a cushion of additional liquidity above our normal operating levels which increased the Bank’s overall asset sensitivity at March 31, 2023. We believe that as this liquidity cushion is removed, the level of asset sensitivity will decrease, all else being equal.
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, broker-dealer, and registered investment advisor 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.
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Our exposure to interest rate risk is also from our funding sources including customer and correspondent cash balances, bank borrowings and securities lending activities. Interest rates on customer and correspondent balances and securities produce a positive spread with rates generally fluctuating in parallel.
With respect to securities held, our interest rate risk is managed by setting and monitoring limits on the size and duration of positions and on the length of time securities can be held. 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 March 31, 2023 (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.
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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 our Quarterly Report on Form 10-Q for the period ended December 31, 2022. We encourage you to read these factors in their entirety. Moreover, other factors may also exist that we cannot anticipate or that we currently do not consider to be significant based on information that is currently available.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth our market repurchases of Axos common stock and the Axos common shares retained in connection with net settlement of restricted stock awards during the quarter ended March 31, 2023.
(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 March 31, 2023
January 1, 2023 to January 31, 2023 —  $ —  —  $ — 
February 1, 2023 to February 28, 2023 —  $ —  —  $ — 
March 1, 2023 to March 31, 2023 849,081  $ 37.22  849,081  $ 21,159 
For the Three Months Ended March 31, 2023 849,081  $ 37.22  849,081  $ 21,159 
Stock Retained in Net Settlement2
January 1, 2023 to January 31, 2023 432 
February 1, 2023 to February 28, 2023 4,034 
March 1, 2023 to March 31, 2023 73,680 
For the Three Months Ended March 31, 2023 78,146 
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.

On April 26, 2023, the Board of Directors of the Company authorized a program to repurchase up to $100 million of its common stock. The share repurchase authorization is in addition to the existing share repurchase plan approved on August 2, 2019.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.

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ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5.    OTHER INFORMATION
    None.
ITEM 6.EXHIBITS
Exhibit
Number		 Description Incorporated By Reference to
31.1 Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith.
101.CAL Inline XBRL Taxonomy Calculation Linkbase Document Filed herewith.
101.LAB Inline XBRL Taxonomy Label Linkbase Document Filed herewith.
101.PRE Inline XBRL Taxonomy Presentation Linkbase Document Filed herewith.
101.DEF Inline XBRL Taxonomy Definition Document Filed herewith.
104 Cover Page Interactive Data File Formatted as Inline XBRL and contained in Exhibit 101



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: April 27, 2023 By:     /s/ Gregory Garrabrants
Gregory Garrabrants
President and Chief Executive Officer
(Principal Executive Officer)
Dated: April 27, 2023 By:     /s/ Derrick K. Walsh
Derrick K. Walsh
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
58
EX-31.1 2 ex311202333110-qexhibitq3.htm EX-31.1 Document

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory Garrabrants, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Axos Financial, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Dated: April 27, 2023   /s/ GREGORY GARRABRANTS
   
GREGORY GARRABRANTS
President and Chief Executive Officer (Principal Executive Officer)

EX-31.2 3 ex312202333110-qexhibitq3.htm EX-31.2 Document

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Derrick K. Walsh, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Axos Financial, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Dated: April 27, 2023   /s/ DERRICK K. WALSH
   
DERRICK K. WALSH
Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1 4 ex321202333110-qexhibitq3.htm EX-32.1 Document

Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Axos Financial, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Gregory Garrabrants, hereby certify in my capacity as President and Chief Executive Officer of the Company, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
a)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
b)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such Report.
Dated: April 27, 2023   /s/ GREGORY GARRABRANTS
   
GREGORY GARRABRANTS
President and Chief Executive Officer (Principal Executive Officer)

EX-32.2 5 ex322202333110-qexhibitq3.htm EX-32.2 Document

Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Axos Financial, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Derrick K. Walsh, hereby certify in my capacity as Executive Vice President and Chief Financial Officer of the Company, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 that:
a)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
b)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such Report.

Dated: April 27, 2023   /s/ DERRICK K. WALSH
    
DERRICK K. WALSH
Executive Vice President and Chief Financial Officer (Principal Financial Officer)