UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Periodquarterly period ended September 30, 2021March 31, 2022
TRANSITION REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-37709
ax-20220331_g1.jpg
AXOS FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware33-0867444
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
9205 West Russell Road, Suite 400, Las Vegas, NV 89148
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code: (858) 649-2218
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueAXNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None

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 filerAccelerated 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: 59,495,24259,663,388 shares of common stock, $0.01 par value per share, as of October 20, 2021.April 21, 2022.


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)(Dollars in thousands, except par and stated value)September 30,
2021
June 30,
2021
(Dollars in thousands, except par and stated value)March 31,
2022
June 30,
2021
ASSETSASSETSASSETS
Cash and cash equivalentsCash and cash equivalents$1,000,076 $715,624 Cash and cash equivalents$998,348 $715,624 
Cash segregated for regulatory purposesCash segregated for regulatory purposes269,358 322,153 Cash segregated for regulatory purposes250,966 322,153 
Total cash, cash equivalents, and cash segregatedTotal cash, cash equivalents, and cash segregated1,269,434 1,037,777 Total cash, cash equivalents, and cash segregated1,249,314 1,037,777 
Securities:Securities:Securities:
TradingTrading1,941 1,983 Trading366 1,983 
Available-for-saleAvailable-for-sale135,996 187,335 Available-for-sale229,510 187,335 
Stock of regulatory agenciesStock of regulatory agencies20,368 19,995 Stock of regulatory agencies20,368 19,995 
Loans held for sale, carried at fair valueLoans held for sale, carried at fair value33,344 29,768 Loans held for sale, carried at fair value19,611 29,768 
Loans held for sale, lower of cost or fair valueLoans held for sale, lower of cost or fair value11,949 12,294 Loans held for sale, lower of cost or fair value11,182 12,294 
Loans—net of allowance for credit losses of $136.8 million as of September 30, 2021 and $133.0 million as of June 30, 202111,879,021 11,414,814 
Loans—net of allowance for credit losses of $143.4 million as of March 31, 2022 and $133.0 million as of June 30, 2021Loans—net of allowance for credit losses of $143.4 million as of March 31, 2022 and $133.0 million as of June 30, 202113,093,603 11,414,814 
Mortgage servicing rights, carried at fair valueMortgage servicing rights, carried at fair value18,438 17,911 Mortgage servicing rights, carried at fair value23,519 17,911 
Other real estate owned and repossessed vehiclesOther real estate owned and repossessed vehicles6,320 6,782 Other real estate owned and repossessed vehicles564 6,782 
Goodwill and other intangible assets—netGoodwill and other intangible assets—net164,944 115,972 Goodwill and other intangible assets—net159,150 115,972 
Securities borrowedSecurities borrowed457,282 619,088 Securities borrowed274,644 619,088 
Customer, broker-dealer and clearing receivablesCustomer, broker-dealer and clearing receivables427,169 369,815 Customer, broker-dealer and clearing receivables510,561 369,815 
Other assetsOther assets480,544 432,031 Other assets488,558 432,031 
TOTAL ASSETSTOTAL ASSETS$14,906,750 $14,265,565 TOTAL ASSETS$16,080,950 $14,265,565 
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:Deposits:Deposits:
Non-interest bearingNon-interest bearing$3,632,521 $2,474,424 Non-interest bearing$4,135,278 $2,474,424 
Interest bearingInterest bearing8,114,921 8,341,373 Interest bearing8,597,724 8,341,373 
Total depositsTotal deposits11,747,442 10,815,797 Total deposits12,733,002 10,815,797 
Advances from the Federal Home Loan BankAdvances from the Federal Home Loan Bank157,500 353,500 Advances from the Federal Home Loan Bank152,500 353,500 
Borrowings, subordinated notes and debenturesBorrowings, subordinated notes and debentures255,896 221,358 Borrowings, subordinated notes and debentures381,682 221,358 
Securities loanedSecurities loaned539,505 728,988 Securities loaned447,748 728,988 
Customer, broker-dealer and clearing payablesCustomer, broker-dealer and clearing payables510,040 535,425 Customer, broker-dealer and clearing payables543,905 535,425 
Accounts payable and accrued liabilities and other liabilitiesAccounts payable and accrued liabilities and other liabilities237,746 209,561 Accounts payable and accrued liabilities and other liabilities236,528 209,561 
Total liabilitiesTotal liabilities13,448,129 12,864,629 Total liabilities14,495,365 12,864,629 
STOCKHOLDERS’ EQUITY:STOCKHOLDERS’ EQUITY:STOCKHOLDERS’ EQUITY:
Preferred stock—$0.01 par value; 1,000,000 shares authorized:Preferred stock—$0.01 par value; 1,000,000 shares authorized:Preferred stock—$0.01 par value; 1,000,000 shares authorized:
Common stock—$0.01 par value; 150,000,000 shares authorized; 68,370,617 shares issued and 59,494,633 shares outstanding as of September 30, 2021; 68,069,321 shares issued and 59,317,944 shares outstanding as of June 30, 2021684 681 
Common stock—$0.01 par value; 150,000,000 shares authorized; 68,617,410 shares issued and 59,662,795 shares outstanding as of March 31, 2022; 68,069,321 shares issued and 59,317,944 shares outstanding as of June 30, 2021Common stock—$0.01 par value; 150,000,000 shares authorized; 68,617,410 shares issued and 59,662,795 shares outstanding as of March 31, 2022; 68,069,321 shares issued and 59,317,944 shares outstanding as of June 30, 2021686 681 
Additional paid-in capitalAdditional paid-in capital436,528 432,550 Additional paid-in capital448,428 432,550 
Accumulated other comprehensive income (loss)—net of taxAccumulated other comprehensive income (loss)—net of tax2,000 2,507 Accumulated other comprehensive income (loss)—net of tax(1,626)2,507 
Retained earningsRetained earnings1,247,938 1,187,728 Retained earnings1,370,548 1,187,728 
Treasury stock, at cost; 8,875,984 shares as of September 30, 2021 and 8,751,377 shares as of June 30, 2021(228,529)(222,530)
Treasury stock, at cost; 8,954,615 shares as of March 31, 2022 and 8,751,377 shares as of June 30, 2021Treasury stock, at cost; 8,954,615 shares as of March 31, 2022 and 8,751,377 shares as of June 30, 2021(232,451)(222,530)
Total stockholders’ equityTotal stockholders’ equity1,458,621 1,400,936 Total stockholders’ equity1,585,585 1,400,936 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITYTOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$14,906,750 $14,265,565 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$16,080,950 $14,265,565 

See accompanying notes to the condensed consolidated financial statements.
1

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) 
Three Months EndedThree Months EndedNine Months Ended
September 30,March 31,March 31,
(Dollars in thousands, except earnings per common share)(Dollars in thousands, except earnings per common share)20212020(Dollars in thousands, except earnings per common share)2022202120222021
INTEREST AND DIVIDEND INCOME:INTEREST AND DIVIDEND INCOME:INTEREST AND DIVIDEND INCOME:
Loans, including feesLoans, including fees$149,176 $141,424 Loans, including fees$153,873 $147,936 $452,518 $436,445 
Securities borrowed and customer receivablesSecurities borrowed and customer receivables6,851 5,077 Securities borrowed and customer receivables3,833 4,453 16,050 14,196 
InvestmentsInvestments2,283 3,388 Investments2,475 3,285 6,999 10,301 
Total interest and dividend incomeTotal interest and dividend income158,310 149,889 Total interest and dividend income160,181 155,674 475,567 460,942 
INTEREST EXPENSE:INTEREST EXPENSE:INTEREST EXPENSE:
DepositsDeposits7,712 19,554 Deposits6,924 14,034 22,441 49,683 
Advances from the Federal Home Loan BankAdvances from the Federal Home Loan Bank1,016 1,372 Advances from the Federal Home Loan Bank973 992 2,962 3,690 
Securities loanedSecurities loaned251 124 Securities loaned152 453 621 832 
Other borrowingsOther borrowings2,689 1,512 Other borrowings2,594 4,526 7,795 9,649 
Total interest expenseTotal interest expense11,668 22,562 Total interest expense10,643 20,005 33,819 63,854 
Net interest incomeNet interest income146,642 127,327 Net interest income149,538 135,669 441,748 397,088 
Provision for credit lossesProvision for credit losses4,000 11,800 Provision for credit losses4,500 2,700 12,500 22,500 
Net interest income, after provision for credit lossesNet interest income, after provision for credit losses142,642 115,527 Net interest income, after provision for credit losses145,038 132,969 429,248 374,588 
NON-INTEREST INCOME:NON-INTEREST INCOME:NON-INTEREST INCOME:
Prepayment penalty fee incomePrepayment penalty fee income2,986 1,368 Prepayment penalty fee income2,793 1,342 9,073 4,289 
Gain on sale – otherGain on sale – other17 334 Gain on sale – other61 214 106 704 
Mortgage banking incomeMortgage banking income5,253 19,567 Mortgage banking income5,729 9,037 15,594 39,255 
Broker-dealer fee incomeBroker-dealer fee income11,766 5,702 Broker-dealer fee income12,913 7,942 39,046 19,931 
Banking and service feesBanking and service fees6,680 8,884 Banking and service fees7,278 5,352 22,444 24,281 
Total non-interest incomeTotal non-interest income26,702 35,855 Total non-interest income28,774 23,887 86,263 88,460 
NON-INTEREST EXPENSE:NON-INTEREST EXPENSE:NON-INTEREST EXPENSE:
Salaries and related costsSalaries and related costs40,737 38,623 Salaries and related costs43,133 38,545 123,849 115,367 
Data processingData processing12,092 7,928 Data processing12,274 10,171 36,565 27,772 
Depreciation and amortizationDepreciation and amortization5,728 6,186 Depreciation and amortization6,061 5,865 18,574 17,913 
Advertising and promotionalAdvertising and promotional3,372 2,556 Advertising and promotional3,357 4,261 10,131 10,600 
Professional servicesProfessional services4,545 5,999 Professional services4,346 5,712 14,834 17,340 
Occupancy and equipmentOccupancy and equipment3,181 3,011 Occupancy and equipment3,742 3,096 10,265 9,239 
FDIC and regulatory feesFDIC and regulatory fees2,266 2,692 FDIC and regulatory fees3,115 3,107 7,856 8,400 
Broker-dealer clearing chargesBroker-dealer clearing charges4,005 2,257 Broker-dealer clearing charges3,561 3,278 11,244 7,986 
General and administrative expenseGeneral and administrative expense8,505 6,294 General and administrative expense7,230 6,772 23,951 18,033 
Total non-interest expenseTotal non-interest expense84,431 75,546 Total non-interest expense86,819 80,807 257,269 232,650 
INCOME BEFORE INCOME TAXESINCOME BEFORE INCOME TAXES84,913 75,836 INCOME BEFORE INCOME TAXES86,993 76,049 258,242 230,398 
INCOME TAXESINCOME TAXES24,703 22,814 INCOME TAXES25,170 22,404 75,422 68,946 
NET INCOMENET INCOME$60,210 $53,022 NET INCOME$61,823 $53,645 $182,820 $161,452 
NET INCOME ATTRIBUTABLE TO COMMON STOCKNET INCOME ATTRIBUTABLE TO COMMON STOCK$60,210 $52,945 NET INCOME ATTRIBUTABLE TO COMMON STOCK$61,823 $53,645 $182,820 $161,262 
COMPREHENSIVE INCOMECOMPREHENSIVE INCOME$59,703 $54,304 COMPREHENSIVE INCOME$58,853 $54,687 $178,687 $164,682 
Basic earnings per common shareBasic earnings per common share$1.01 $0.89 Basic earnings per common share$1.04 $0.91 $3.07 $2.72 
Diluted earnings per common shareDiluted earnings per common share$0.99 $0.88 Diluted earnings per common share$1.02 $0.89 $3.02 $2.67 
See accompanying notes to the condensed consolidated financial statements.
2

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months EndedThree Months EndedNine Months Ended
September 30,March 31,March 31,
(Dollars in thousands)(Dollars in thousands)20212020(Dollars in thousands)2022202120222021
NET INCOMENET INCOME$60,210 $53,022 NET INCOME$61,823 $53,645 $182,820 $161,452 
Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $(214) and $503 for the three months ended September 30, 2021 and 2020, respectively.(507)1,282 
Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $(1,238) and $460 for the three and $(1,726) and $1,400 for the nine months ended March 31, 2022 and 2021, respectively.Net unrealized gain (loss) from available-for-sale securities, net of tax expense (benefit) of $(1,238) and $460 for the three and $(1,726) and $1,400 for the nine months ended March 31, 2022 and 2021, respectively.(2,970)1,042 (4,133)3,230 
Other comprehensive income (loss)Other comprehensive income (loss)(507)1,282 Other comprehensive income (loss)(2,970)1,042 (4,133)3,230 
Comprehensive incomeComprehensive income$59,703 $54,304 Comprehensive income$58,853 $54,687 $178,687 $164,682 

See accompanying notes to the condensed consolidated financial statements.
3

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three Months Ended September 30, 2021For the Three Months Ended March 31, 2022
Preferred StockCommon StockAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax
Treasury
Stock
TotalPreferred StockCommon StockAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax
Treasury
Stock
Total
Number of SharesNumber of Shares
(Dollars in thousands)(Dollars in thousands)SharesAmountIssuedTreasuryOutstandingAmount(Dollars in thousands)SharesAmountIssuedTreasuryOutstandingAmount
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 
BALANCE—December 31, 2021BALANCE—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 incomeNet income— — — — — — — 60,210 — — 60,210 Net income— — — — — — — 61,823 — — 61,823 
Other comprehensive income (loss)Other comprehensive income (loss)— — — — — — — — (507)— (507)Other comprehensive income (loss)— — — — — — — — (2,970)— (2,970)
Stock-based compensation expense and restricted stock unit vestingStock-based compensation expense and restricted stock unit vesting— — 301,296 (124,607)176,689 3,978 — — (5,999)(2,018)Stock-based compensation expense
and restricted stock unit vesting
— — 240,573 (76,353)164,220 7,367 — — (3,794)3,575 
BALANCE—September 30, 2021— $— 68,370,617 (8,875,984)59,494,633 $684 $436,528 $1,247,938 $2,000 $(228,529)$1,458,621 
BALANCE—March 31, 2022BALANCE—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
Preferred StockCommon StockAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax
Treasury
Stock
Total
Number of Shares
(Dollars in thousands)SharesAmountIssuedTreasuryOutstandingAmount
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 expense
 and restricted stock unit vesting
— — 548,089 (203,238)344,851 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 

For the Three Months Ended September 30, 2020
Preferred StockCommon StockAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax
Treasury
Stock
Total
Number of Shares
(Dollars in thousands)SharesAmountIssuedTreasuryOutstandingAmount
BALANCE—June 30, 2020515 $5,063 67,323,053 (7,710,418)59,612,635 $673 $411,873 $1,009,299 $(937)$(195,125)$1,230,846 
Cumulative effect of change in accounting principle net of tax, ASU No. 2016-13
— — — —  —  (37,088)— — (37,088)
Net income— — — — — — — 53,022 — — 53,022 
Other comprehensive income (loss)— — — — — — — — 1,282 — 1,282 
Cash dividends on preferred stock— — — — — — — (77)— — (77)
Purchase of treasury stock— — — (582,249)(582,249)— — — — (12,742)(12,742)
Stock-based compensation expense
 and restricted stock unit vesting
— — 299,882 (114,334)185,548 4,412 — — (2,693)1,722 
BALANCE—September 30, 2020515 $5,063 67,622,935 (8,407,001)59,215,934 $676 $416,285 $1,025,156 $345 $(210,560)$1,236,965 
See accompanying notes to the condensed consolidated financial statements.
4

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(Unaudited)
For the Three Months Ended March 31, 2021
Preferred StockCommon StockAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax
Treasury
Stock
Total
Number of Shares
(Dollars in thousands)SharesAmountIssuedTreasuryOutstandingAmount
BALANCE—December 31, 2020— $— 67,668,664 (8,595,842)59,072,822 $677 $420,895 $1,079,828 $1,251 $(215,169)$1,287,482 
Net income— — — — — — — 53,645 — — 53,645 
Other comprehensive income (loss)— — — — — — — — 1,042 — 1,042 
Stock-based compensation expense
 and restricted stock unit vesting
— — 233,575 (68,632)164,943 6,768 — — (3,289)3,481 
BALANCE—March 31, 2021— $— 67,902,239 (8,664,474)59,237,765 $679 $427,663 $1,133,473 $2,293 $(218,458)$1,345,650 
For the Nine Months Ended March 31, 2021
Preferred StockCommon StockAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss),
Net of Income Tax
Treasury
Stock
Total
Number of Shares
(Dollars in thousands)SharesAmountIssuedTreasuryOutstandingAmount
BALANCE—June 30, 2020515 $5,063 67,323,053 (7,710,418)59,612,635 $673 $411,873 $1,009,299 $(937)$(195,125)$1,230,846 
Cumulative effect of change in accounting principle net of tax, adoption of ASU No. 2016-13— — — —  — — (37,088)— — (37,088)
Net income— — — — — — — 161,452 — — 161,452 
Other comprehensive income (loss)— — — — — — — — 3,230 — 3,230 
Cash dividends on preferred stock— — — — — — — (103)— — (103)
Preferred stock - Series A redemption(515)(5,063)— — — — — (87)— — (5,150)
Purchase of treasury stock— — — (753,597)(753,597)— — — — (16,757)(16,757)
Stock-based compensation expense
 and restricted stock unit vesting
— — 579,186 (200,459)378,727 15,790 — — (6,576)9,220 
BALANCE—March 31, 2021— $— 67,902,239 (8,664,474)59,237,765 $679 $427,663 $1,133,473 $2,293 $(218,458)$1,345,650 

See accompanying notes to the condensed consolidated financial statements.
5

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
September 30,March 31,
(Dollars in thousands)(Dollars in thousands)20212020(Dollars in thousands)20222021
CASH FLOWS FROM OPERATING ACTIVITIES:CASH FLOWS FROM OPERATING ACTIVITIES:CASH FLOWS FROM OPERATING ACTIVITIES:
Net incomeNet income$60,210 $53,022 Net income$182,820 $161,452 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Accretion and amortization on securities, netAccretion and amortization on securities, net(104)49 Accretion and amortization on securities, net(297)(124)
Net accretion of discounts on loans and leasesNet accretion of discounts on loans and leases(2,137)(1,492)Net accretion of discounts on loans and leases(5,143)(4,717)
Amortization of borrowing costsAmortization of borrowing costs139 52 Amortization of borrowing costs447 1,431 
Amortization of operating lease right of use assetAmortization of operating lease right of use asset2,346 2,655 Amortization of operating lease right of use asset8,147 7,965 
Stock-based compensation expenseStock-based compensation expense3,981 4,415 Stock-based compensation expense15,883 15,796 
Trading activityTrading activity42 (318)Trading activity1,617 42 
Provision for credit lossesProvision for credit losses4,000 11,800 Provision for credit losses12,500 22,500 
Deferred income taxesDeferred income taxes1,453 (4,264)Deferred income taxes(4,184)(10,388)
Origination of loans held for saleOrigination of loans held for sale(209,967)(440,804)Origination of loans held for sale(569,614)(1,349,683)
Unrealized (gain) loss on loans held for sale(22)(1,303)
Unrealized loss on loans held for saleUnrealized loss on loans held for sale965 781 
Gain on sales of loans held for saleGain on sales of loans held for sale(5,270)(19,901)Gain on sales of loans held for sale(15,700)(39,959)
Proceeds from sale of loans held for saleProceeds from sale of loans held for sale211,674 424,987 Proceeds from sale of loans held for sale592,803 1,378,323 
Amortization and change in fair value of mortgage servicing rightsAmortization and change in fair value of mortgage servicing rights1,185 1,795 Amortization and change in fair value of mortgage servicing rights(1,229)5,266 
(Gain) loss on sale of other real estate and foreclosed assets(33)(128)
(Gain) on sale of other real estate and foreclosed assets(Gain) on sale of other real estate and foreclosed assets(385)(113)
Depreciation and amortizationDepreciation and amortization5,728 6,186 Depreciation and amortization18,574 17,913 
Net changes in assets and liabilities which provide (use) cash:Net changes in assets and liabilities which provide (use) cash:Net changes in assets and liabilities which provide (use) cash:
Securities borrowedSecurities borrowed161,806 (41,102)Securities borrowed344,444 (321,170)
Customer, broker-dealer and clearing receivablesCustomer, broker-dealer and clearing receivables(53,677)(62,859)Customer, broker-dealer and clearing receivables(137,069)(130,797)
Other assetsOther assets(118,876)52,570 Other assets(121,125)40,162 
Securities loanedSecurities loaned(189,483)60,031 Securities loaned(281,240)393,892 
Customer, broker-dealer and clearing payablesCustomer, broker-dealer and clearing payables(25,385)21,814 Customer, broker-dealer and clearing payables8,480 136,063 
Accounts payable and other liabilitiesAccounts payable and other liabilities18,949 (914)Accounts payable and other liabilities14,516 (11,908)
Net cash provided by operating activitiesNet cash provided by operating activities(133,441)66,291 Net cash provided by operating activities65,210 312,727 
CASH FLOWS FROM INVESTING ACTIVITIES:CASH FLOWS FROM INVESTING ACTIVITIES:CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securitiesPurchases of investment securities(7,033)(22,071)Purchases of investment securities(107,286)(66,617)
Proceeds from sales of securitiesProceeds from sales of securities75,022 — Proceeds from sales of securities75,023 — 
Proceeds from repayment of securitiesProceeds from repayment of securities57,756 24,984 Proceeds from repayment of securities59,549 57,518 
Purchase of stock of regulatory agenciesPurchase of stock of regulatory agencies(8,219)— Purchase of stock of regulatory agencies(22,739)(17)
Proceeds from redemption of stock of regulatory agenciesProceeds from redemption of stock of regulatory agencies8,219 — Proceeds from redemption of stock of regulatory agencies22,739 — 
Origination of loans held for investmentOrigination of loans held for investment(2,050,587)(1,081,681)Origination of loans held for investment(7,173,040)(3,936,776)
Proceeds from sale of loans held for investmentProceeds from sale of loans held for investment12,100 9,220 Proceeds from sale of loans held for investment106,324 18,011 
Mortgage warehouse loans activity, netMortgage warehouse loans activity, net(41,692)(249,131)Mortgage warehouse loans activity, net191,291 (493,764)
Proceeds from sales of other real estate owned and repossessed assetsProceeds from sales of other real estate owned and repossessed assets621 487 Proceeds from sales of other real estate owned and repossessed assets7,968 839 
Acquisition of business activity, net of cash paidAcquisition of business activity, net of cash paid(54,597)— Acquisition of business activity, net of cash paid(54,597)— 
Purchases of loans and leases, net of discounts and premiumsPurchases of loans and leases, net of discounts and premiums(7,481)— Purchases of loans and leases, net of discounts and premiums(31,496)(2,184)
Principal repayments on loansPrincipal repayments on loans1,620,886 1,003,843 Principal repayments on loans5,218,247 3,305,931 
Purchases of furniture, equipment, software and intangiblesPurchases of furniture, equipment, software and intangibles(3,943)(1,754)Purchases of furniture, equipment, software and intangibles(11,817)(8,986)
Net cash used in investing activitiesNet cash used in investing activities(398,948)(316,103)Net cash used in investing activities(1,719,834)(1,126,045)
56

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
September 30,March 31,
(Dollars in thousands)(Dollars in thousands)20212020(Dollars in thousands)20222021
CASH FLOWS FROM FINANCING ACTIVITIES:CASH FLOWS FROM FINANCING ACTIVITIES:CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in depositsNet increase in deposits931,645 (781,036)Net increase in deposits1,917,205 275,807 
Payments of the Federal Home Loan Bank term advancesPayments of the Federal Home Loan Bank term advances(10,000)— Payments of the Federal Home Loan Bank term advances(15,000)(65,000)
Net (repayment) proceeds of Federal Home Loan Bank other advances(186,000)— 
Net proceeds (repayments) of other borrowings34,400 45,600 
Net repayment of Federal Home Loan Bank other advancesNet repayment of Federal Home Loan Bank other advances(186,000)(5,000)
Net proceeds of other borrowingsNet proceeds of other borrowings11,800 7,281 
Redemption of subordinated notesRedemption of subordinated notes— (51,000)
Tax payments related to settlement of restricted stock unitsTax payments related to settlement of restricted stock units(5,999)(2,693)Tax payments related to settlement of restricted stock units(9,921)(6,576)
Redemption of preferred stock, Series ARedemption of preferred stock, Series A— (5,150)
Repurchase of treasury stockRepurchase of treasury stock— (12,742)Repurchase of treasury stock— (16,757)
Cash dividends paid on preferred stockCash dividends paid on preferred stock— (77)Cash dividends paid on preferred stock— (103)
Payment of debt issuance costsPayment of debt issuance costs— (2,598)Payment of debt issuance costs(1,923)(2,748)
Proceeds from issuance of subordinated notesProceeds from issuance of subordinated notes— 175,000 Proceeds from issuance of subordinated notes150,000 175,000 
Net cash provided by financing activitiesNet cash provided by financing activities764,046 (578,546)Net cash provided by financing activities1,866,161 305,754 
NET CHANGE IN CASH AND CASH EQUIVALENTSNET CHANGE IN CASH AND CASH EQUIVALENTS231,657 (828,358)NET CHANGE IN CASH AND CASH EQUIVALENTS211,537 (507,564)
CASH AND CASH EQUIVALENTS—Beginning of yearCASH AND CASH EQUIVALENTS—Beginning of year$1,037,777 $1,950,519 CASH AND CASH EQUIVALENTS—Beginning of year$1,037,777 $1,950,519 
CASH AND CASH EQUIVALENTS—End of periodCASH AND CASH EQUIVALENTS—End of period$1,269,434 $1,122,161 CASH AND CASH EQUIVALENTS—End of period$1,249,314 $1,442,955 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits and borrowed fundsInterest paid on deposits and borrowed funds$14,989 $22,316 Interest paid on deposits and borrowed funds$31,974 $59,154 
Income taxes paidIncome taxes paid29,955 16,318 Income taxes paid80,512 72,236 
Transfers to other real estate and repossessed vehiclesTransfers to other real estate and repossessed vehicles140 350 Transfers to other real estate and repossessed vehicles1,186 1,223 
Transfers from loans held for investment to loans held for saleTransfers from loans held for investment to loans held for sale12,100 2,189 Transfers from loans held for investment to loans held for sale105,884 8,680 
Transfers from loans held for sale to loans held for investmentTransfers from loans held for sale to loans held for investment376 27,379 Transfers from loans held for sale to loans held for investment1,410 28,125 
Operating lease liabilities for obtaining right of use assetsOperating lease liabilities for obtaining right of use assets7,842 — Operating lease liabilities for obtaining right of use assets12,009 — 
Impact of adoption of ASU No. 2016-13 on retained earnings
Impact of adoption of ASU No. 2016-13 on retained earnings
— 37,088 
Impact of adoption of ASU No. 2016-13 on retained earnings
— 37,088 
See accompanying notes to the condensed consolidated financial statements.
67

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODPERIODS ENDED SEPTEMBER 30,MARCH 31, 2022 AND 2021 AND 2020
(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 (the “Axos Nevada Holding”) and collectively, the “Company”. 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 threenine months ended September 30, 2021March 31, 2022 are not necessarily indicative of results that may be expected for any other interim period or for the year as a whole. Certain information and note disclosures normally included in the audited annual financial statements prepared in accordance with GAAP have been condensed or omitted 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, 2021 included in our Annual Report on Form 10-K.
Significant Accounting Policies
Our significant accounting policies are described in greater detail in Note 1 - “Summary of Significant Accounting Policies” contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 2021.
New Accounting Standards
No newAccounting Standards Issued But Not Yet Adopted
In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting standardsguidance for troubled debt restructurings by creditors that have yet been adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The amendment would become effective for the fiscal year beginningCompany on July 1, 2021.2023. Early adoption is permitted. The Company is evaluating the impact of ASU 2022-02 on the Company’s consolidated financial statements, but it does not expect the adoption to have a material impact. The Company will be required to update disclosures around financing receivables and net investment in leases.



78

Table of Contents
2.     ACQUISITIONS
On August 2, 2021 the Company’s subsidiary, Axos Clearing, LLC, acquired certain assets and liabilities of E*TRADE Advisor Services (“EAS”), rebranded Axos Advisor Services (“AAS”), 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 initial purchase price of $54.6$54.8 million consistsconsisted entirely of cash consideration paid upon acquisition and is pending final working capital adjustments.
The Company incurred acquisition-related costs totaling $0.04 million for the nine months ended March 31, 2022. There were no costs in the three months ended September 30, 2021.March 31, 2022. These costs are recognized in general and administrative expenses in the unaudited consolidated statements of income.
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 Company allocated the purchase price to the tangible and intangible assets acquired based on information available through September 30, 2021.March 31, 2022. The Company’s accounting for the acquisition has not been finalized as the Company continues to evaluate the working capital adjustment, which is expected to have an immaterial effect on the valueestimated fair values of the goodwill recognized. The allocation will be updated, if necessary, through theacquired assets and assumed liabilities are subject to refinement as additional information relative to closing date fair values becomes available. Any subsequent measurement period which isadjustments to the fair values of acquired assets and liabilities assumed, identifiable intangible assets, or other purchase accounting adjustments will result in adjustments to goodwill no later than one year fromwithin the acquisition date.first 12 months following the closing date of acquisition.
The preliminary allocation of the $54.6 million purchase price consists of $6.5 million of fair value of tangible assets acquired, $3.4 million of liabilities assumed, $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 fair value of tangible assets acquired is $6.4 million and the fair value of liabilities acquired is $3.1 million. Identifiable intangible assets with a finite useful are amortized on a straight-line basis. Goodwill was calculated as the excess of consideration exchanged over the fair value of identifiable net assets acquired. The goodwill includes synergies expected to result from combining the acquired assets and liabilities with existing operations, coupling its custody platform with the Company existing product offerings and leveraging customer relationships through RIAs. The following table summarizes the fair value and useful life of each intangible asset acquired as of the acquisition date:
($ in thousands)Fair ValueUseful Lives (Years)
Trade Name$290 0.16
Proprietary Technology10,990 7
Customer Relationships15,650 14
Non-Compete Agreements130 1
$27,060 

The pro forma results of operations and the results of operations since the acquisition date have not been separately disclosed because the effects were not material to the consolidated financial statements.




89

Table of Contents
3.     FAIR VALUE
Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820, Fair Value Measurement, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2021March 31, 2022 and June 30, 2021. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
September 30, 2021March 31, 2022
(Dollars in thousands)(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
ASSETS:ASSETS:ASSETS:
Securities—Trading: MunicipalSecurities—Trading: Municipal$— $1,941 $— $1,941 Securities—Trading: Municipal$— $366 $— $366 
Securities—Available-for-Sale:Securities—Available-for-Sale:Securities—Available-for-Sale:
Agency Debt1
$— $— $— $— 
Agency MBS1
Agency MBS1
— 24,526 — 24,526 
Agency MBS1
— 27,203 — 27,203 
Non-Agency MBS2
Non-Agency MBS2
— — 59,851 59,851 
Non-Agency MBS2
— — 151,479 151,479 
MunicipalMunicipal— 3,501 — 3,501 Municipal— 3,311 — 3,311 
Asset-backed securities and structured notesAsset-backed securities and structured notes— 48,118 — 48,118 Asset-backed securities and structured notes— 47,517 — 47,517 
Total—Securities—Available-for-SaleTotal—Securities—Available-for-Sale$— $76,145 $59,851 $135,996 Total—Securities—Available-for-Sale$— $78,031 $151,479 $229,510 
Loans Held for SaleLoans Held for Sale$— $33,344 $— $33,344 Loans Held for Sale$— $19,611 $— $19,611 
Mortgage servicing rightsMortgage servicing rights$— $— $18,438 $18,438 Mortgage servicing rights$— $— $23,519 $23,519 
Other assets—Derivative instrumentsOther assets—Derivative instruments$— $— $2,292 $2,292 Other assets—Derivative instruments$— $— $2,154 $2,154 
LIABILITIES:LIABILITIES:LIABILITIES:
Other liabilities—Derivative instruments Other liabilities—Derivative instruments$— $— $66 $66  Other liabilities—Derivative instruments$— $— $1,004 $1,004 
June 30, 2021June 30, 2021
(Dollars in thousands)(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
ASSETS:ASSETS:ASSETS:
Securities—Trading: Municipal
Securities—Trading: Municipal
$— $1,983 $— $1,983 Securities—Trading: Municipal
$— $1,983 $— $1,983 
Securities—Available-for-Sale:Securities—Available-for-Sale:Securities—Available-for-Sale:
Agency Debt1
$— $— $— $— 
Agency MBS1
Agency MBS1
— 23,913 — 23,913 
Agency MBS1
— 23,913 — 23,913 
Non-Agency MBS2
Non-Agency MBS2
— — 67,615 67,615 
Non-Agency MBS2
— — 67,615 67,615 
MunicipalMunicipal— 3,565 — 3,565 Municipal— 3,565 — 3,565 
Asset-backed securities and structured notesAsset-backed securities and structured notes— 92,242 — 92,242 Asset-backed securities and structured notes— 92,242 — 92,242 
Total—Securities—Available-for-SaleTotal—Securities—Available-for-Sale$— $119,720 $67,615 $187,335 Total—Securities—Available-for-Sale$— $119,720 $67,615 $187,335 
Loans Held for SaleLoans Held for Sale$— $29,768 $— $29,768 Loans Held for Sale$— $29,768 $— $29,768 
Mortgage servicing rightsMortgage servicing rights$— $— $17,911 $17,911 Mortgage servicing rights$— $— $17,911 $17,911 
Other assets—Derivative instrumentsOther assets—Derivative instruments$— $— $2,280 $2,280 Other assets—Derivative instruments$— $— $2,280 $2,280 
LIABILITIES:LIABILITIES:LIABILITIES:
Other liabilities—Derivative instrumentsOther liabilities—Derivative instruments$— $— $75 $75 Other liabilities—Derivative instruments$— $— $75 $75 
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.
910

Table of Contents
The following tables present additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
For the Three Months EndedFor the Three Months Ended
September 30, 2021March 31, 2022
(Dollars in thousands)(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBSMortgage Servicing RightsDerivative Instruments, netTotal(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBSMortgage Servicing RightsDerivative Instruments, netTotal
Opening balanceOpening balance$67,615 $17,911 $2,205 $87,731 Opening balance$58,752 $20,110 $1,377 $80,239 
Total gains or losses for the period:Total gains or losses for the period:
Included in earnings—Mortgage banking incomeIncluded in earnings—Mortgage banking income— (1,185)21 (1,164)Included in earnings—Mortgage banking income— 2,316 (227)2,089 
Included in other comprehensive incomeIncluded in other comprehensive income(112)— — (112)Included in other comprehensive income(1,841)— — (1,841)
Purchases, retentions, issues, sales and settlements:Purchases, retentions, issues, sales and settlements:Purchases, retentions, issues, sales and settlements:
Purchases/RetentionsPurchases/Retentions— 1,712 — 1,712 Purchases/Retentions95,000 1,093 — 96,093 
SettlementsSettlements(7,652)— — (7,652)Settlements(432)— — (432)
Closing balanceClosing balance$59,851 $18,438 $2,226 $80,515 Closing balance$151,479 $23,519 $1,150 $176,148 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting periodChange in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,185)$21 $(1,164)Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $2,316 $(227)$2,089 
For the Nine Months Ended
March 31, 2022
(Dollars in thousands)(Dollars in thousands)Securities – Available-for-Sale: Non-Agency RMBSMortgage Servicing RightsDerivative Instruments, netTotal
Opening BalanceOpening Balance$67,615 $17,911 $2,205 $87,731 
Total gains or losses for the period:Total gains or losses for the period:
Included in earnings—Mortgage banking incomeIncluded in earnings—Mortgage banking income— 1,229 (1,055)174 
Included in other comprehensive incomeIncluded in other comprehensive income(2,480)— — (2,480)
Purchases, retentions, issues, sales and settlements:Purchases, retentions, issues, sales and settlements:
Purchases/RetentionsPurchases/Retentions95,000 4,379 — 99,379 
SettlementsSettlements(8,656)— — (8,656)
Closing balanceClosing balance$151,479 $23,519 $1,150 $176,148 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting periodChange in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $1,229 $(1,055)$174 

For the Three Months Ended
September 30, 2020
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBSMortgage Servicing RightsDerivative Instruments, netTotal
Opening balance$18,332 $10,675 $7,416 $36,423 
Included in earnings—Mortgage banking income— (1,795)5,583 3,788 
Included in other comprehensive income(323)— — (323)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 3,250 — 3,250 
Settlements(397)— — (397)
Closing balance$17,612 $12,130 $12,999 $42,741 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,795)$5,583 $3,788 
11

Table of Contents
For the Three Months Ended
March 31, 2021
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBSMortgage Servicing RightsDerivative Instruments, netTotal
Opening balance$17,135 $14,314 $7,979 $39,428 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— (1,221)(1,151)(2,372)
Included in other comprehensive income913 — — 913 
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 3,538 — 3,538 
Settlements(671)— — (671)
Closing balance$17,377 $16,631 $6,828 $40,836 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,221)$(1,151)$(2,372)
For the Nine Months Ended
March 31, 2021
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency RMBSMortgage Servicing RightsDerivative Instruments, netTotal
Opening Balance$18,332 $10,675 $7,416 $36,423 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— (5,266)(588)(5,854)
Included in other comprehensive income607 — — 607 
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 11,222 — 11,222 
Settlements(1,562)— — (1,562)
Closing balance$17,377 $16,631 $6,828 $40,836 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(5,266)$(588)$(5,854)

The table below summarizes the quantitative information about level 3 fair value measurements as of the dates indicated:
September 30, 2021March 31, 2022
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$59,851151,479 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 33.9% (2.3%30.0% (19.3%)
0.0 to 4.7% (0.4%6.7% (2.0%)
0.0 to 68.3% (9.4%(24.9%)
2.7 to 6.3% (3.0%6.5% (2.8%)
Mortgage Servicing Rights$18,43823,519 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
6.99.8 to 37.2% (11.2%51.0% (13.4%)
1.61.4 to 7.7 (6.5)8.6 (7.2)
9.5 to 14.0% (9.6%11.3% (9.5%)
Derivative Instruments$2,2261,150 Sales Comparison ApproachProjected Sales Profit of Underlying Loans0.2(1.0) to 0.9% (0.5%0.2% ((0.2)%)
June 30, 2021
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$67,615 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 25.0% (2.7%)
0.0 to 5.6% (0.6%)
0.0 to 100.0% (19.4%)
2.7 to 7.2% (3.1%)
Mortgage Servicing Rights$17,911 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
7.5 to 37.4% (11.5%)
1.7 to 7.5 (6.4)
9.5 to 13.0% (9.6%)
Derivative Instruments$2,205 Sales Comparison ApproachProjected Sales Profit of Underlying Loans0.2 to 0.5% (0.3%)
1012

Table of Contents
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, and projected loss severity in the event of default. 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:
September 30, 2021March 31, 2022
(Dollars in thousands)(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(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 foreclosed assets:Other real estate owned and foreclosed assets:Other real estate owned and foreclosed assets:
Single family real estate$— $— $6,114 $6,114 
Autos and RVsAutos and RVs— — 206 206 Autos and RVs$— $— $564 $564 
TotalTotal$— $— $6,320 $6,320 Total$— $— $564 $564 
June 30, 2021June 30, 2021
(Dollars in thousands)(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Balance(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Balance
Other real estate owned and foreclosed assets:Other real estate owned and foreclosed assets:Other real estate owned and foreclosed assets:
Single family real estateSingle family real estate$— $— $6,547 $6,547 Single family real estate$— $— $6,547 $6,547 
Autos and RVsAutos and RVs— — 235 235 Autos and RVs— — 235 235 
TotalTotal$— $— $6,782 $6,782 Total$— $— $6,782 $6,782 
Other real estate owned and foreclosed assets, which are measured at the lower of carrying value or fair value less costs to sell, had a net carrying amount of $6,320$564 after charge-offs of $12$79 for the threenine months ended September 30, 2021.March 31, 2022.
The Company has elected the fair value option for Agency loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment.loans. None of these loans are 90 days or more past due nor on nonaccrual as of September 30, 2021March 31, 2022 and June 30, 2021.
As of September 30, 2021March 31, 2022 and June 30, 2021, the aggregate fair value of loans held for sale, carried at fair value, contractual balance (including accrued interest), and unrealized gain (loss) was as follows:
(Dollars in thousands)(Dollars in thousands)September 30, 2021June 30, 2021(Dollars in thousands)March 31, 2022June 30, 2021
Aggregate fair valueAggregate fair value$33,344 $29,768 Aggregate fair value$19,611 $29,768 
Contractual balanceContractual balance32,494 28,940 Contractual balance19,749 28,940 
Unrealized gain$850 $828 
Unrealized gain (loss)Unrealized gain (loss)$(138)$828 
The total amount of gains and losses from changes in fair value included in earnings for the period indicated below for loans held for sale were:
For the Three Months EndedFor the Three Months EndedFor the Nine Months Ended
September 30,March 31,March 31,
(Dollars in thousands)(Dollars in thousands)20212020(Dollars in thousands)2022202120222021
Interest incomeInterest income$200 $382 Interest income$204 $387 $598 $1,189 
Change in fair valueChange in fair value43 6,885 Change in fair value(1,041)(1,829)(2,019)(1,369)
TotalTotal$243 $7,267 Total$(837)$(1,442)$(1,421)$(180)
1113

Table of Contents
The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the periods indicated:
September 30, 2021March 31, 2022
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and foreclosed assets:
Single family real estate$6,114 Sales comparison approachAdjustment for differences between the comparable sales(3.8) to 0.9% (0.1%)
Autos and RVs$206564 Sales comparison approachAdjustment for differences between the comparable sales1.5(10.6) to 21.5% (1.5%15.5% ((2.7)%)
June 30, 2021
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and foreclosed assets:
Single family real estate$6,547 Sales comparison approachAdjustment for differences between the comparable sales(1.5) to 6.1% (2.0%)
Autos and RVs$235 Sales comparison approachAdjustment for differences between the comparable sales(2.1) to 14.7% (2.1%)
1 For other real estate owned and foreclosed assets 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 property being valued having limited comparable sales with similar characteristics at the time the current appraisal is conducted.

1214

Table of Contents
Fair value of Financial Instruments
The carrying amounts and estimated fair values of financial instruments at September 30, 2021March 31, 2022 and June 30, 2021 were as follows:
September 30, 2021March 31, 2022
Fair ValueFair Value
(Dollars in thousands)(Dollars in thousands)Carrying
Amount
Level 1Level 2Level 3Total Fair Value(Dollars in thousands)Carrying
Amount
Level 1Level 2Level 3Total Fair Value
Financial assets:Financial assets:Financial assets:
Cash and cash equivalentsCash and cash equivalents$1,269,434 $1,269,434 $— $— $1,269,434 Cash and cash equivalents$1,249,314 $1,249,314 $— $— $1,249,314 
Securities — tradingSecurities — trading1,941 — 1,941 — 1,941 Securities — trading366 — 366 — 366 
Securities — available-for-saleSecurities — available-for-sale135,996 — 76,145 59,851 135,996 Securities — available-for-sale229,510 — 78,031 151,479 229,510 
Loans held for sale, at fair valueLoans held for sale, at fair value33,344 — 33,344 — 33,344 Loans held for sale, at fair value19,611 — 19,611 — 19,611 
Loans held for sale, at lower of cost or fair valueLoans held for sale, at lower of cost or fair value11,949 — — 12,041 12,041 Loans held for sale, at lower of cost or fair value11,182 — — 11,255 11,255 
Loans held for investment—netLoans held for investment—net11,879,021 — — 12,252,262 12,252,262 Loans held for investment—net13,093,603 — — 13,149,215 13,149,215 
Securities borrowedSecurities borrowed457,282 — — 457,282 457,282 Securities borrowed274,644 — — 263,274 263,274 
Customer, broker-dealer and clearing receivablesCustomer, broker-dealer and clearing receivables427,169 — — 427,297 427,297 Customer, broker-dealer and clearing receivables510,561 — — 502,086 502,086 
Mortgage servicing rightsMortgage servicing rights18,438 — — 18,438 18,438 Mortgage servicing rights23,519 — — 23,519 23,519 
Financial liabilities:Financial liabilities:Financial liabilities:
Total depositsTotal deposits11,747,442 — 11,191,110 — 11,191,110 Total deposits12,733,002 — 11,750,900 — 11,750,900 
Advances from the Federal Home Loan BankAdvances from the Federal Home Loan Bank157,500 — 157,500 — 157,500 Advances from the Federal Home Loan Bank152,500 — 151,017 — 151,017 
Borrowings, subordinated notes and debenturesBorrowings, subordinated notes and debentures255,896 — 251,279 — 251,279 Borrowings, subordinated notes and debentures381,682 — 358,541 — 358,541 
Securities loanedSecurities loaned539,505 — — 541,339 541,339 Securities loaned447,748 — — 449,181 449,181 
Customer, broker-dealer and clearing payablesCustomer, broker-dealer and clearing payables510,040 — — 510,040 510,040 Customer, broker-dealer and clearing payables543,905 — — 532,854 532,854 
June 30, 2021
Fair Value
(Dollars in thousands)Carrying
Amount
Level 1Level 2Level 3Total Fair Value
Financial assets:
Cash and cash equivalents$1,037,777 $1,037,777 $— $— $1,037,777 
Securities — trading1,983 — 1,983 — 1,983 
Securities — available-for-sale187,335 — 119,720 67,615 187,335 
Loans held for sale, at fair value29,768 — 29,768 — 29,768 
Loans held for sale, at lower of cost or fair value12,294 — — 12,336 12,336 
Loans held for investment—net11,414,814 — — 11,833,102 11,833,102 
Securities borrowed619,088 — — 619,274 619,274 
Customer, broker-dealer and clearing receivables369,815 — — 369,815 369,815 
Mortgage servicing rights17,911 — — 17,911 17,911 
Financial liabilities:
Total deposits10,815,797 — 10,297,450 — 10,297,450 
Advances from the Federal Home Loan Bank353,500 — 353,500 — 353,500 
Borrowings, subordinated notes and debentures221,358 — 210,196 — 210,196 
Securities loaned728,988 — — 731,467 731,467 
Customer, broker-dealer and clearing payables535,425 — — 535,425 535,425 
1315

Table of Contents
The methods and assumptions, not previously presented, used to estimate fair value are described as follows: 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 our Form 10-K for the year ended June 30, 2021. The carrying amount of stock of regulatory agencies approximates the estimated fair value of this investment. The fair value of off-balance sheet items is not considered material.
4.     SECURITIES
The amortized cost, carrying amount and fair value for the trading and available-for-sale securities at September 30, 2021March 31, 2022 and June 30, 2021 were:
September 30, 2021March 31, 2022
TradingAvailable-for-saleTradingAvailable-for-sale
(Dollars in thousands)(Dollars in thousands)Fair
Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
(Dollars in thousands)Fair
Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Mortgage-backed securities (MBS):Mortgage-backed securities (MBS):Mortgage-backed securities (MBS):
U.S. agencies1
U.S. agencies1
$— $24,362 $356 $(192)$24,526 
U.S. agencies1
$— $28,853 $43 $(1,693)$27,203 
Non-agency2
Non-agency2
— 57,522 2,718 (389)59,851 
Non-agency2
— 151,517 1,423 (1,461)151,479 
Total mortgage-backed securitiesTotal mortgage-backed securities— 81,884 3,074 (581)84,377 Total mortgage-backed securities— 180,370 1,466 (3,154)178,682 
Non-MBS:Non-MBS:Non-MBS:
MunicipalMunicipal1,941 3,437 64 — 3,501 Municipal366 3,498 — (187)3,311 
Asset-backed securities and structured notesAsset-backed securities and structured notes— 46,889 1,229 — 48,118 Asset-backed securities and structured notes— 46,993 524 — 47,517 
Total Non-MBSTotal Non-MBS1,941 50,326 1,293 — 51,619 Total Non-MBS366 50,491 524 (187)50,828 
Total debt securitiesTotal debt securities$1,941 $132,210 $4,367 $(581)$135,996 Total debt securities$366 $230,861 $1,990 $(3,341)$229,510 
June 30, 2021June 30, 2021
TradingAvailable-for-saleTradingAvailable-for-sale
(Dollars in thousands)(Dollars in thousands)Fair
Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
(Dollars in thousands)Fair
Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Mortgage-backed securities (MBS):Mortgage-backed securities (MBS):Mortgage-backed securities (MBS):
U.S. agencies1
U.S. agencies1
$— $23,639 $420 $(146)$23,913 
U.S. agencies1
$— $23,639 $420 $(146)$23,913 
Non-agency2
Non-agency2
— 65,174 2,862 (421)67,615 
Non-agency2
— 65,174 2,862 (421)67,615 
Total mortgage-backed securitiesTotal mortgage-backed securities— 88,813 3,282 (567)91,528 Total mortgage-backed securities— 88,813 3,282 (567)91,528 
Non-MBS:Non-MBS:Non-MBS:
MunicipalMunicipal1,983 3,466 99 — 3,565 Municipal1,983 3,466 99 — 3,565 
Asset-backed securities and structured notesAsset-backed securities and structured notes— 90,549 1,693 — 92,242 Asset-backed securities and structured notes— 90,549 1,693 — 92,242 
Total Non-MBSTotal Non-MBS1,983 94,015 1,792 — 95,807 Total Non-MBS1,983 94,015 1,792 — 95,807 
Total debt securitiesTotal debt securities$1,983 $182,828 $5,074 $(567)$187,335 Total debt securities$1,983 $182,828 $5,074 $(567)$187,335 
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.

The Company’s non-agency MBS available-for-sale portfolio with a total fair value of $59,851$151,479 at September 30, 2021March 31, 2022 consists of 1416 different issues of super senior securities.
The face amounts of debt securities available-for-sale that were pledged to secure borrowings at September 30, 2021March 31, 2022 and June 30, 2021 were $1.3$1.2 million and $1.4 million, respectively.
1416

Table of Contents
The securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows:
September 30, 2021March 31, 2022
Available-for-sale securities in loss position forAvailable-for-sale securities in loss position for
Less Than
12 Months
More Than
12 Months
TotalLess Than
12 Months
More Than
12 Months
Total
(Dollars in thousands)(Dollars in thousands)Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
(Dollars in thousands)Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
MBS:MBS:MBS:
U.S. agenciesU.S. agencies$11,127 $(192)$— $— $11,127 $(192)U.S. agencies$19,641 $(1,192)$5,167 $(501)$24,808 $(1,693)
Non-agencyNon-agency— — 5,676 (389)5,676 (389)Non-agency43,916 (1,085)5,040 (376)48,956 (1,461)
Total MBSTotal MBS11,127 (192)5,676 (389)16,803 (581)Total MBS63,557 (2,277)10,207 (877)73,764 (3,154)
Non-MBS:Non-MBS:Non-MBS:
U.S. agencies— — — — — — 
Municipal debtMunicipal debt3,311 (187)— — 3,311 (187)
Asset-backed securities and structured notesAsset-backed securities and structured notes— — — — — — 
Total Non-MBSTotal Non-MBS— — — — — — Total Non-MBS3,311 (187)— — 3,311 (187)
Total debt securitiesTotal debt securities$11,127 $(192)$5,676 $(389)$16,803 $(581)Total debt securities$66,868 $(2,464)$10,207 $(877)$77,075 $(3,341)
June 30, 2021June 30, 2021
Available-for-sale securities in loss position forAvailable-for-sale securities in loss position for
Less Than
12 Months
More Than
12 Months
TotalLess Than
12 Months
More Than
12 Months
Total
(Dollars in thousands)(Dollars in thousands)Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
(Dollars in thousands)Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
MBS:MBS:MBS:
U.S. agenciesU.S. agencies$10,001 $(146)$— $— $10,001 $(146)U.S. agencies$10,001 $(146)$— $— $10,001 $(146)
Non-agencyNon-agency— — 6,018 (421)6,018 (421)Non-agency— — 6,018 (421)6,018 (421)
Total MBSTotal MBS10,001 (146)6,018 (421)16,019 (567)Total MBS10,001 (146)6,018 (421)16,019 (567)
Non-MBS:Non-MBS:Non-MBS:
Municipal debtMunicipal debt— — — — — — Municipal debt— — — — — — 
Asset-backed securities and structured notesAsset-backed securities and structured notes— — — — — — Asset-backed securities and structured notes— — — — — — 
Total Non-MBSTotal Non-MBS— — — — — — Total Non-MBS— — — — — — 
Total debt securitiesTotal debt securities$10,001 $(146)$6,018 $(421)$16,019 $(567)Total debt securities$10,001 $(146)$6,018 $(421)$16,019 $(567)
On September 30, 2021,March 31, 2022, there were 712 securities in a continuous loss position for a period of more than 12 months, and 918 securities in a continuous loss position for a period of less than 12 months. At June 30, 2021, there were 7 securities in a continuous loss position for a period of more than 12 months, and 7 securities in a continuous loss position for a period of less than 12 months.
At September 30, 2021,March 31, 2022, 1 non-agency RMBS with a total carrying amount of $2.8$2.4 million was determined to have cumulative credit losses of $0.8 million of which none was recognized in earnings during the three months ended September 30, 2021.March 31, 2022.
During the threenine months ended September 30, 2020,March 31, 2021, the company sold no available-for-sale securities. During the threenine months ended September 30, 2021,March 31, 2022, the company sold no available-for-sale securities.
The Company had recorded unrealized gains and unrealized losses in accumulated other comprehensive loss as follows:
(Dollars in thousands)September 30,
2021
June 30,
2021
Available-for-sale debt securities—net unrealized gains (losses)$3,786 $4,507 
Available-for-sale debt securities—non-credit related losses(845)(845)
Subtotal2,941 3,662 
Tax benefit (expense)(941)(1,155)
Net unrealized gain (loss) on investment securities in accumulated other comprehensive income (loss)$2,000 $2,507 

(Dollars in thousands)March 31,
2022
June 30,
2021
Available-for-sale debt securities—net unrealized gains (losses)$(1,351)$4,507 
Available-for-sale debt securities—non-credit related losses(845)(845)
Subtotal(2,196)3,662 
Tax benefit (expense)570 (1,155)
Net unrealized gain (loss) on investment securities in accumulated other comprehensive income (loss)$(1,626)$2,507 

1517

Table of Contents

5.    LOANS & ALLOWANCE FOR CREDIT LOSSES
The following table sets forth the composition of the loan portfolio as of the dates indicated:
(Dollars in thousands)(Dollars in thousands)September 30, 2021June 30, 2021(Dollars in thousands)March 31, 2022June 30, 2021
Single Family - Mortgage & WarehouseSingle Family - Mortgage & Warehouse$4,341,174 $4,359,472 Single Family - Mortgage & Warehouse$3,972,103 $4,359,472 
Multifamily and Commercial MortgageMultifamily and Commercial Mortgage2,458,200 2,470,454 Multifamily and Commercial Mortgage2,662,517 2,470,454 
Commercial Real EstateCommercial Real Estate3,492,926 3,180,453 Commercial Real Estate4,293,032 3,180,453 
Commercial & Industrial - Non-RECommercial & Industrial - Non-RE1,239,354 1,123,869 Commercial & Industrial - Non-RE1,780,545 1,123,869 
Auto & ConsumerAuto & Consumer446,656 362,180 Auto & Consumer521,936 362,180 
OtherOther42,672 58,316 Other16,125 58,316 
Total gross loans and leases12,020,982 11,554,744 
Total gross loansTotal gross loans13,246,258 11,554,744 
Allowance for credit losses - loansAllowance for credit losses - loans(136,778)(132,958)Allowance for credit losses - loans(143,372)(132,958)
Unaccreted premiums (discounts) and loan and lease fees(5,183)(6,972)
Total net loans and leases$11,879,021 $11,414,814 
Unaccreted premiums (discounts) and loan feesUnaccreted premiums (discounts) and loan fees(9,283)(6,972)
Total net loansTotal net loans$13,093,603 $11,414,814 
16

Table of Contents
The following tables summarize activity in the allowance for credit losses - loans by portfolio classes for the periods indicated.
For the Three Months Ended September 30, 2021For the Three Months Ended March 31, 2022
(Dollars in thousands)(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at July 1, 2021$26,604 $13,146 $57,928 $28,460 $6,519 $301 $132,958 
Balance at January 1, 2022Balance at January 1, 2022$25,580 $13,628 $67,581 $22,716 $10,921 $63 $140,489 
Provision for credit losses - loans(1,351)36 7,295 (5,646)3,626 40 4,000 
Provision (benefit) for credit losses - loansProvision (benefit) for credit losses - loans(3,797)190 2,248 3,525 2,352 (18)4,500 
Charge-offsCharge-offs— — — (322)(394)— (716)Charge-offs— — — — (1,892)— (1,892)
RecoveriesRecoveries76 177 — 27 256 — 536 Recoveries— — 27 242 — 275 
Balance at September 30, 2021$25,329 $13,359 $65,223 $22,519 $10,007 $341 $136,778 
Balance at March 31, 2022Balance at March 31, 2022$21,789 $13,818 $69,829 $26,268 $11,623 $45 $143,372 
For the Three Months Ended September 30, 2020For the Three Months Ended March 31, 2021
(Dollars in thousands)(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at July 1, 2020$25,901 $4,718 $21,052 $9,954 $9,461 $4,721 $75,807 
Effect of Adoption of ASC 326
6,318 7,408 25,893 7,042 610 29 47,300 
Balance at January 1, 2021Balance at January 1, 2021$32,727 $12,889 $56,715 $19,129 $7,413 $7,520 $136,393 
Provision for credit losses - loansProvision for credit losses - loans(2,439)293 2,253 6,512 (1,087)6,268 11,800 Provision for credit losses - loans(2,785)704 (133)4,506 317 91 2,700 
Charge-offsCharge-offs(1,489)— — (213)(736)— (2,438)Charge-offs(110)(177)(255)— (863)— (1,405)
RecoveriesRecoveries16 — — — 430 — 446 Recoveries83 — — 18 318 — 419 
Balance at September 30, 2020$28,307 $12,419 $49,198 $23,295 $8,678 $11,018 $132,915 
Balance at March 31, 2021Balance at March 31, 2021$29,915 $13,416 $56,327 $23,653 $7,185 $7,611 $138,107 
For the Nine Months Ended March 31, 2022
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at July 1, 2021$26,604 $13,146 $57,928 $28,460 $6,519 $301 $132,958 
Provision (benefit) for credit losses - loans(4,966)495 11,901 (1,951)7,277 (256)12,500 
Charge-offs0— — (322)(2,926)— (3,248)
Recoveries151 177 — 81 753 — 1,162 
Balance at March 31, 2022$21,789 $13,818 $69,829 $26,268 $11,623 $45 $143,372 
For the Nine Months Ended March 31, 2021
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Balance at July 1, 2020$25,901 $4,718 $21,052 $9,954 $9,461 $4,721 $75,807 
Effect of Adoption of ASC 3266,318 7,408 25,893 7,042 610 29 47,300 
Provision for credit losses - loans47 1,467 9,637 9,472 (984)2,861 22,500 
Charge-offs(2,469)(177)(255)(2,833)(2,819)— (8,553)
Recoveries118 — — 18 917 — 1,053 
Balance at March 31, 2021$29,915 $13,416 $56,327 $23,653 $7,185 $7,611 $138,107 
18


Table of Contents
Credit Quality Disclosures. Nonaccrual loans consisted of the following as of the dates indicated:
As of September 30, 2021As of March 31, 2022
(Dollars in thousands)(Dollars in thousands)With AllowanceWith No AllowanceTotal(Dollars in thousands)With AllowanceWith No AllowanceTotal
Single Family - Mortgage & WarehouseSingle Family - Mortgage & Warehouse$53,000 $58,257 $111,257 Single Family - Mortgage & Warehouse$52,017 $61,300 $113,317 
Multifamily and Commercial MortgageMultifamily and Commercial Mortgage— 6,964 6,964 Multifamily and Commercial Mortgage2,941 6,727 9,668 
Commercial Real EstateCommercial Real Estate15,539 — 15,539 Commercial Real Estate— 14,952 14,952 
Commercial & Industrial - Non-RECommercial & Industrial - Non-RE— — — Commercial & Industrial - Non-RE— — — 
Auto & ConsumerAuto & Consumer311 63 374 Auto & Consumer62 383 445 
OtherOther— — — Other— 372 372 
Total nonaccrual loans Total nonaccrual loans$68,850 $65,284 $134,134  Total nonaccrual loans$55,020 $83,734 $138,754 
Nonaccrual loans to total loansNonaccrual loans to total loans1.12 %Nonaccrual loans to total loans1.05 %


As of September 30, 2020
(Dollars in thousands)With AllowanceWith No AllowanceTotal
Single Family - Mortgage & Warehouse$76,032 $56,894 $132,926 
Multifamily and Commercial Mortgage31,001 1,847 32,848 
Commercial Real Estate— — — 
Commercial & Industrial - Non-RE5,580 — 5,580 
Auto & Consumer623 131 754 
Other— — — 
     Total nonaccrual loans$113,236 $58,872 $172,108 
Nonaccrual loans to total loans1.56 %
No interest income was recognized on nonaccrual loans in either the three months ended September 30, 2021March 31, 2022 or September 30, 2020.March 31, 2021. No interest income was recognized on nonaccrual loans in either the nine months ended March 31, 2022 or March 31, 2021.

Approximately 0.58%0.53% of our nonaccrual loans at September 30, 2021March 31, 2022 were considered troubled debt restructurings (“TDRs”),TDRs, compared to 0.55% at June 30, 2021. Borrowers that make timely payments after TDRs are considered non-performing for at least six months. Generally, after six months of timely payments, those TDRs are reclassified from the nonaccrual loan category to the performing loan category and any previously deferred interest income is recognized. Approximately 82.94%81.67% of the Bank’s nonaccrual loans are single family first mortgages.
17

Table of Contents
The following tables present the outstanding unpaid balance of loans that are performing and nonaccrual by portfolio class:
September 30, 2021March 31, 2022
(Dollars in thousands)(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
PerformingPerforming$4,229,917 $2,451,236 $3,477,387 $1,239,354 $446,282 $42,672 $11,886,848 Performing$3,858,786 $2,652,850 $4,278,080 $1,780,545 $521,490 $15,753 $13,107,504 
NonaccrualNonaccrual111,257 6,964 15,539 — 374 — 134,134 Nonaccrual113,317 9,667 14,952 — 446 372 138,754 
Total Total$4,341,174 $2,458,200 $3,492,926 $1,239,354 $446,656 $42,672 $12,020,982  Total$3,972,103 $2,662,517 $4,293,032 $1,780,545 $521,936 $16,125 $13,246,258 
June 30, 2021
(Dollars in thousands)Single Family-Mortgage & WarehouseMultifamily and Commercial MortgageCommercial Real EstateCommercial & Industrial - Non-REAuto & ConsumerOtherTotal
Performing$4,253,764 $2,450,026 $3,164,614 $1,120,927 $361,902 $58,316 $11,409,549 
Nonaccrual105,708 20,428 15,839 2,942 278 — 145,195 
          Total$4,359,472 $2,470,454 $3,180,453 $1,123,869 $362,180 $58,316 $11,554,744 

From time to time, the Company modifies loan terms temporarily for borrowers who are experiencing financial stress. These loans are performing and accruing and will generally return to the original loan terms after the modification term expires. The Company had no TDRs classified as performing loans at September 30, 2021March 31, 2022 or June 30, 2021.


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, among other factors. 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, less cost to acquire and sell, of any underlying collateral 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.

1819

Table of Contents
Credit Quality Indicators
The amortized cost basis by fiscal year of origination and credit quality indicator of the Company’s loansloan as of September 30, 2021March 31, 2022 was as follows:
Loans Held for Investment Origination YearRevolving LoansTotalLoans Held for Investment Origination YearRevolving LoansTotal
(Dollars in thousands)(Dollars in thousands)20222021202020192018PriorTotal(Dollars in thousands)20222021202020192018PriorRevolving LoansTotal
Single Family-Mortgage & WarehouseSingle Family-Mortgage & WarehouseSingle Family-Mortgage & Warehouse
PassPass426,455 864,201 600,147 437,648 398,728 818,420 636,138 4,181,737 Pass$1,031,670 $636,313 $477,841 $339,895 $308,360 $609,187 $422,833 $3,826,099 
Special MentionSpecial Mention— 79 2,321 4,020 1,934 6,452 19,678 34,484 Special Mention— — 5,625 2,515 5,470 13,111 — 26,721 
SubstandardSubstandard— 962 31,726 21,071 18,766 52,428 — 124,953 Substandard— 1,181 34,805 19,253 14,723 49,321 — 119,283 
DoubtfulDoubtful— — — — — — — — Doubtful— — — — — — — — 
TotalTotal426,455 865,242 634,194 462,739 419,428 877,300 655,816 4,341,174 Total1,031,670 637,494 518,271 361,663 328,553 671,619 422,833 3,972,103 
Multifamily and Commercial MortgageMultifamily and Commercial MortgageMultifamily and Commercial Mortgage
PassPass125,467 632,033 539,154 339,602 274,135 460,901 — 2,371,292 Pass622,539 584,536 465,708 302,877 236,822 365,615 — 2,578,097 
Special MentionSpecial Mention— — 3,408 17,787 849 2,517 — 24,561 Special Mention— — 1,462 — 667 1,391 — 3,520 
SubstandardSubstandard— 4,934 29,378 3,518 10,459 14,058 — 62,347 Substandard— 5,814 34,780 9,566 12,601 18,139 — 80,900 
DoubtfulDoubtful— — — — — — — — Doubtful— — — — — — — — 
TotalTotal125,467 636,967 571,940 360,907 285,443 477,476 — 2,458,200 Total622,539 590,350 501,950 312,443 250,090 385,145 — 2,662,517 
Commercial Real EstateCommercial Real EstateCommercial Real Estate
PassPass543,531 1,237,401 823,096 446,460 81,563 — 232,244 3,364,295 Pass1,707,928 1,070,879 469,277 298,783 39,156 — 511,527 4,097,550 
Special MentionSpecial Mention— — 70,664 15,487 — — — 86,151 Special Mention— — 12,138 16,628 15,000 — — 43,766 
SubstandardSubstandard— — 24,843 — 15,539 — 2,098 42,480 Substandard— — 88,337 16,380 45,701 — 1,298 151,716 
DoubtfulDoubtful— — — — — — — — Doubtful— — — — — — — — 
TotalTotal543,531 1,237,401 918,603 461,947 97,102 — 234,342 3,492,926 Total1,707,928 1,070,879 569,752 331,791 99,857 — 512,825 4,293,032 
Commercial & Industrial - Non-RECommercial & Industrial - Non-RECommercial & Industrial - Non-RE
PassPass38,438 44,235 81,009 15,678 20,553 5,251 1,018,136 1,223,300 Pass269,404 35,182 76,610 13,316 12,641 152 1,331,399 1,738,704 
Special MentionSpecial Mention— — — 243 1,002 — — 1,245 Special Mention— — — 206 810 — 28,037 29,053 
SubstandardSubstandard— 2,989 11,717 — 103 — — 14,809 Substandard2,988 — 9,800 — — — — 12,788 
DoubtfulDoubtful— — — — — — — — Doubtful— — — — — — — — 
TotalTotal38,438 47,224 92,726 15,921 21,658 5,251 1,018,136 1,239,354 Total272,392 35,182 86,410 13,522 13,451 152 1,359,436 1,780,545 
Auto & ConsumerAuto & ConsumerAuto & Consumer
PassPass116,492 153,678 68,587 60,356 27,664 18,760 — 445,537 Pass274,134 121,317 50,315 43,816 19,404 11,532 — 520,518 
Special MentionSpecial Mention— 79 62 49 30 — — 220 Special Mention49 345 85 19 35 — 540 
SubstandardSubstandard23 125 291 371 68 21 — 899 Substandard213 121 211 255 62 16 — 878 
DoubtfulDoubtful— — — — — — — — Doubtful— — — — — — — — 
TotalTotal116,515 153,882 68,940 60,776 27,762 18,781 — 446,656 Total274,396 121,783 50,611 44,078 19,485 11,583 — 521,936 
OtherOtherOther
PassPass2,088 13,121 24,422 — 1,588 1,453 — 42,672 Pass2,621 10,253 617 — 1,179 1,028 — 15,698 
Special MentionSpecial Mention— — — — — — — — Special Mention— — 21 — — 34 — 55 
SubstandardSubstandard— — — — — — — — Substandard— — 55 — 317 — — 372 
DoubtfulDoubtful— — — — — — — — Doubtful— — — — — — — — 
TotalTotal2,088 13,121 24,422 — 1,588 1,453 — 42,672 Total2,621 10,253 693 — 1,496 1,062 — 16,125 
TotalTotalTotal
PassPass1,252,471 2,944,669 2,136,415 1,299,744 804,231 1,304,785 1,886,518 11,628,833 Pass3,908,296 2,458,480 1,540,368 998,687 617,562 987,514 2,265,759 12,776,666 
Special MentionSpecial Mention— 158 76,455 37,586 3,815 8,969 19,678 146,661 Special Mention49 345 19,331 19,356 21,966 14,571 28,037 103,655 
SubstandardSubstandard23 9,010 97,955 24,960 44,935 66,507 2,098 245,488 Substandard3,201 7,116 167,988 45,454 73,404 67,476 1,298 365,937 
DoubtfulDoubtful— — — — — — — — Doubtful— — — — — — — — 
TotalTotal1,252,494 2,953,837 2,310,825 1,362,290 852,981 1,380,261 1,908,294 12,020,982 Total$3,911,546 $2,465,941 $1,727,687 $1,063,497 $712,932 $1,069,561 $2,295,094 $13,246,258 
As a % of total gross loansAs a % of total gross loans10.42 %24.57 %19.22 %11.33 %7.10 %11.48 %15.87 %100.0 %As a % of total gross loans29.54 %18.62 %13.04 %8.03 %5.38 %8.07 %17.33 %100.0 %

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses - loans. The Company also evaluates credit quality based on the aging status of its loans. During the year, the Company holds certain short-term loans that do not have a fixed maturity date that are treated as delinquent if not paid in full 90 days after the origination date.
The Company took proactive measures to manage loans that became delinquent during the recent economic downturn as a result of the COVID-19 pandemic. As of September 30, 2021,March 31, 2022, no loans were on forbearance status for forbearance granted from any prior date.out of COVID-19. Any forbearance granted out of COVID-19 was for six months or less. Additionally, no forbearance or deferral of payment obligation was granted to any borrower during the three months ended September 30, 2021.


1920

Table of Contents
The following tables provide the outstanding unpaid balance of loans that are past due 30 days or more by portfolio class as of the dates indicated:
September 30, 2021March 31, 2022
(Dollars in thousands)(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal
Single Family-Mortgage & WarehouseSingle Family-Mortgage & Warehouse$34,876 $7,480 $96,850 $139,206 Single Family-Mortgage & Warehouse$19,537 $8,579 $110,099 $138,215 
Multifamily and Commercial MortgageMultifamily and Commercial Mortgage8,071 2,567 1,055 11,693 Multifamily and Commercial Mortgage8,703 10,254 3,667 22,624 
Commercial Real EstateCommercial Real Estate3,100 — — 3,100 Commercial Real Estate— 58,205 1,141 59,346 
Commercial & Industrial - Non-RECommercial & Industrial - Non-RE— — — — Commercial & Industrial - Non-RE— 80 — 80 
Auto & ConsumerAuto & Consumer1,841 363 241 2,445 Auto & Consumer3,558 1,158 406 5,122 
OtherOther216 — — 216 Other147 55 363 565 
TotalTotal$48,104 $10,410 $98,146 $156,660 Total$31,945 $78,331 $115,676 $225,952 
As a % of total gross loansAs a % of total gross loans0.40 %0.09 %0.82 %1.30 %As a % of total gross loans0.24 %0.59 %0.87 %1.71 %

June 30, 2021June 30, 2021
(Dollars in thousands)(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal(Dollars in thousands)30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal
Single Family-Mortgage & WarehouseSingle Family-Mortgage & Warehouse$24,150 $46,552 $69,169 $139,871 Single Family-Mortgage & Warehouse$24,150 $46,552 $69,169 $139,871 
Multifamily and Commercial MortgageMultifamily and Commercial Mortgage7,991 1,816 12,122 21,929 Multifamily and Commercial Mortgage7,991 1,816 12,122 21,929 
Commercial Real EstateCommercial Real Estate36,786 — — 36,786 Commercial Real Estate36,786 — — 36,786 
Commercial & Industrial - Non-RECommercial & Industrial - Non-RE— — 2,960 2,960 Commercial & Industrial - Non-RE— — 2,960 2,960 
Auto & ConsumerAuto & Consumer601 306 235 1,142 Auto & Consumer601 306 235 1,142 
OtherOther— — — — Other— — — — 
TotalTotal$69,528 $48,674 $84,486 $202,688 Total$69,528 $48,674 $84,486 $202,688 
As a % of total gross loans0.60 %0.42 %0.73 %1.75 %
As a % of total gross loans and leasesAs a % of total gross loans and leases0.60 %0.42 %0.73 %1.75 %

Allowance for Credit Losses
The allowance for credit losses is the sum of the allowance for credit losses - loans and the unfunded loan commitment liabilities. Unfunded loan commitment liabilities areis included in “Accounts payable, accrued liabilities and other liabilities” in the unaudited Condensed Consolidated Balance Sheets. Provisions for the unfunded loan commitments are included in “General and administrative expenses” in the unaudited Condensed Consolidated Statements of Income.
The following tables present a summary of the activity in the allowance for credit losses for the periods indicated:
Three Months Ended September 30, 2021Three Months Ended March 31, 2022
(Dollars in thousands)(Dollars in thousands)Allowance for Credit Losses - LoansUnfunded Loan Commitment LiabilitiesTotal Allowance for Credit Losses(Dollars in thousands)Allowance for Credit Losses - LoansUnfunded Loan Commitment LiabilitiesTotal Allowance for Credit Losses
Balance at July 1, 2021$132,958 $5,723 $138,681 
Balance at January 1, 2022Balance at January 1, 2022$140,489 $8,723 $149,212 
Provision for Credit LossesProvision for Credit Losses4,000 2,000 6,000 Provision for Credit Losses4,500 1,000 5,500 
Charge-offsCharge-offs(716)— (716)Charge-offs(1,892)— (1,892)
RecoveriesRecoveries536 — 536 Recoveries275 — 275 
Balance at September 30, 2021$136,778 $7,723 $144,501 
Balance at March 31, 2022Balance at March 31, 2022$143,372 $9,723 $153,095 

Three Months Ended September 30, 2020Three Months Ended March 31, 2021
(Dollars in thousands)(Dollars in thousands)Allowance for Credit Losses - LoansUnfunded Loan Commitment LiabilitiesTotal Allowance for Credit Losses(Dollars in thousands)Allowance for Credit Losses - LoansUnfunded Loan Commitment LiabilitiesTotal Allowance for Credit Losses
Balance at July 1, 2020$75,807 $323 $76,130 
Effect of Adoption of ASC 326
47,300 5,700 53,000 
Balance at January 1, 2021Balance at January 1, 2021$136,393 $5,723 $142,116 
Provision for Credit LossesProvision for Credit Losses11,800 700 12,500 Provision for Credit Losses2,700 — 2,700 
Charge-offsCharge-offs(2,438)— (2,438)Charge-offs(1,405)— (1,405)
RecoveriesRecoveries446 — 446 Recoveries419 — 419 
Balance at September 30, 2020$132,915 $6,723 $139,638 
Balance at March 31, 2021Balance at March 31, 2021$138,107 $5,723 $143,830 
21

Table of Contents
For the Nine Months Ended March 31, 2022
(Dollars in thousands)Allowance for Credit Losses - LoansUnfunded Loan Commitment LiabilitiesTotal Allowance for Credit Losses
Balance at July 1, 2021$132,958 $5,723 $138,681 
Provision for Credit Losses12,500 4,000 16,500 
Charge-offs(3,248)— (3,248)
Recoveries1,162 — 1,162 
Balance at March 31, 2022$143,372 $9,723 $153,095 

For the Nine Months Ended March 31, 2021
(Dollars in thousands)Allowance for Credit Losses - LoansUnfunded Loan Commitment LiabilitiesTotal Allowance for Credit Losses
Balance at July 1, 2020$75,807 $323 $76,130 
Effect of Adoption of ASC 32647,300 5,700 53,000 
Provision for Credit Losses22,500 (300)22,200 
Charge-offs(8,553)— (8,553)
Recoveries1,053 — 1,053 
Balance at March 31, 2021$138,107 $5,723 $143,830 

6.     SUBORDINATED NOTES
In February 2022, the Company completed the sale of $150.0 million aggregate principal amount of its 4.00% Fixed-to-Floating Rate Subordinated Notes (the “Notes”). The Notes are obligations only of Axos Financial, Inc. The Notes mature on March 1, 2032 and accrue interest at a fixed rate per annum equal to 4.00%, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2022. From and including March 1, 2027, to, but excluding March 1, 2032 or the date of early redemption, the Notes will bear interest at a floating rate per annum equal to a benchmark rate of the Three-Month Term SOFR plus a spread of 227 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on June 1, 2027. The Notes may be redeemed on or after March 1, 2027, which date may be extended at the Company’s discretion, at a redemption price equal to principal plus accrued and unpaid interest, subject to certain conditions. Fees and costs incurred in connection with the debt offering amortize to interest expense over the term of the Notes.
20
22

Table of Contents
6.7.    EQUITY AND STOCK-BASED COMPENSATION
Amended and Restated 2014 Stock Incentive Plan. On October 21, 2021 the Company’s stockholders approved the Amended and Restated 2014 Stock Incentive Plan, which reserved 1000000 additional shares for purposes of the Company’s equity compensation.
Restricted Stock Units. During the threenine months ended September 30,March 31, 2022 and 2021, and 2020, the Company granted 298,644526,699 and 435,381614,406 restricted stock unit awards (“RSUs”) to employees and directors, and during the threenine months ended September 30, 2021March 31, 2022 granted 478,353 RSU’s to the chief executive officer, which vest ratably on each of the four fiscal year ends after the issue date. All other RSUs granted during these quarters generally vest over 3 years, one-third on each anniversary date. On October 21, 2021, stockholders approved an additional 1000000 shares for the Company’s equity compensation.
The Company’s pre-tax income and net income for the threenine months ended September 30,March 31, 2022 and 2021 and 2020 include stock award expense of $4.0$15.9 million and $4.4$15.8 million, with total income tax benefit of $1.2$4.6 million and $1.3$4.7 million, respectively. The Company recognizes compensation expense based upon the grant-date fair value divided by the vesting and the service period between each vesting date. At September 30, 2021,March 31, 2022, unrecognized compensation expense related to non-vested awards aggregated to $37.0$43.7 million and is expected to be recognized in future periods as follows:
(Dollars in thousands)(Dollars in thousands)Stock Award
Compensation
Expense
(Dollars in thousands)Stock Award
Compensation
Expense
For the fiscal year remainder:For the fiscal year remainder:For the fiscal year remainder:
20222022$14,021 2022$5,481 
2023202313,740 202318,443 
202420247,900 202413,142 
202520251,271 20255,253 
20262026101 2026989 
ThereafterThereafter400 
TotalTotal$37,033 Total$43,708 

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
Restricted
Stock Units
Weighted-Average
Grant-Date
Fair Value
Non-vested balance at June 30, 2020Non-vested balance at June 30, 20201,445,540 $28.62 Non-vested balance at June 30, 20201,445,540 $28.62 
GrantedGranted617,833 32.12 Granted617,833 32.12 
VestedVested(666,790)29.23 Vested(666,790)29.23 
ForfeitedForfeited(176,113)27.42 Forfeited(176,113)27.42 
Non-vested balance at June 30, 2021Non-vested balance at June 30, 20211,220,470 $30.18 Non-vested balance at June 30, 20211,220,470 $30.18 
GrantedGranted776,997 48.50 Granted1,005,052 48.31 
VestedVested(301,296)28.28 Vested(503,272)29.52 
ForfeitedForfeited(21,423)32.84 Forfeited(123,406)35.58 
Non-vested balance at September 30, 20211,674,748 $39.03 
Non-vested balance at March 31, 2022Non-vested balance at March 31, 20221,598,844 $41.41 
The total fair value of shares vested for the three and nine months ended September 30, 2021March 31, 2022 was $14,485.$9,725 and $24,559. The total fair value of shares vested for the three and nine months ended September 30, 2020March 31, 2021 was $6,602.$8,366 and $16,612.
2123

Table of Contents

7.8.    EARNINGS PER COMMON SHARE
Earnings per common share (“EPS”) areis presented under two formats: basic EPS and diluted EPS. Basic EPS is computed by dividing the net income attributable to common stock (net income after deducting dividends on preferred stock and preferred stock redemption charge) by the sum of the weighted-average number of common shares outstanding during the year and the unvested average of participating RSUs. Diluted EPS is computed by dividing the sum of net income attributable to common stock and dividends on diluted preferred stock by the sum of the weighted-average number of common shares outstanding during the year and the impact of dilutive potential common shares, such as nonparticipating RSUs, stock options and convertible preferred stock.
The unvested stock-based compensation awards issued under the Amended and Restated 2014 Stock Incentive Plan have no stockholder rights, meaning they are not entitled to dividends and are considered nonparticipating. The Company does not include these nonparticipating RSUs in the basic EPS calculation, but are included in the diluted EPS calculation using the treasury stock method.
The following table presents the calculation of basic and diluted EPS:
Three Months EndedThree Months EndedNine Months Ended
September 30,March 31,March 31,
(Dollars in thousands, except per share data)(Dollars in thousands, except per share data)20212020(Dollars in thousands, except per share data)2022202120222021
Earnings Per Common ShareEarnings Per Common ShareEarnings Per Common Share
Net incomeNet income$60,210 $53,022 Net income$61,823 $53,645 $182,820 $161,452 
Preferred stock dividendsPreferred stock dividends— (77)Preferred stock dividends— — — (103)
Preferred stock redemption chargePreferred stock redemption charge— — — (87)
Net income attributable to common stockholdersNet income attributable to common stockholders$60,210 $52,945 Net income attributable to common stockholders$61,823 $53,645 $182,820 $161,262 
Average common shares outstandingAverage common shares outstanding59,390,846 59,509,320 Average common shares outstanding59,542,128 59,118,884 59,476,488 59,225,409 
Total qualifying sharesTotal qualifying shares59,390,846 59,509,320 Total qualifying shares59,542,128 59,118,884 59,476,488 59,225,409 
Earnings per common shareEarnings per common share$1.01 $0.89 Earnings per common share$1.04 $0.91 $3.07 $2.72 
Diluted Earnings Per Common ShareDiluted Earnings Per Common ShareDiluted Earnings Per Common Share
Net income attributable to common stockholdersNet income attributable to common stockholders$60,210 $52,945 Net income attributable to common stockholders$61,823 $53,645 $182,820 $161,262 
Average common shares issued and outstandingAverage common shares issued and outstanding59,390,846 59,509,320 Average common shares issued and outstanding59,542,128 59,118,884 59,476,488 59,225,409 
Dilutive effect of average unvested RSUsDilutive effect of average unvested RSUs1,253,442 417,464 Dilutive effect of average unvested RSUs1,069,831 1,363,849 1,128,998 1,227,811 
Total dilutive common shares outstandingTotal dilutive common shares outstanding60,644,288 59,926,784 Total dilutive common shares outstanding60,611,959 60,482,733 60,605,486 60,453,220 
Diluted earnings per common shareDiluted earnings per common share$0.99 $0.88 Diluted earnings per common share$1.02 $0.89 $3.02 $2.67 

8.9.    COMMITMENTS AND CONTINGENCIES
COVID-19 Impact. The Company has closely monitored the rapid developments of and uncertainties caused by the COVID-19 pandemic. In response to the changes in economic and business conditions as a result of the COVID-19 pandemic, the Company continues to take the necessary and appropriate actions to support customers, employees, partners and shareholders.
The Company took proactive measures to manage loans that became delinquent during the recent economic downturn as a result of the COVID-19 pandemic. As of September 30, 2021,March 31, 2022, no loans were on forbearance status for a forbearance granted from any prior date. Any forbearance granted out of COVID-19 was for six months or less.
The Company will continue to monitor uncertainties caused by and developments of COVID-19.
24

Table of Contents
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 September 30, 2021March 31, 2022 in the corresponding fiscal years:
22

Table of Contents
(Dollars in thousands)(Dollars in thousands)(Dollars in thousands)
Remainder of 2022Remainder of 2022$7,464 Remainder of 2022$2,498 
2023202310,216 202310,595 
202420249,849 202410,287 
202520259,673 202510,119 
202620269,336 20269,791 
ThereafterThereafter35,894 Thereafter38,821 
Total lease paymentsTotal lease payments82,432 Total lease payments82,111 
Less: amount representing interestLess: amount representing interest(9,122)Less: amount representing interest(8,668)
Total Lease LiabilityTotal Lease Liability$73,310 Total Lease Liability$73,443 

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 September 30, 2021,March 31, 2022, the Company had commitments to originate $60.9$160.1 million in fixed rate loans and $1,007.7$2,660.3 million in variable rate loans, totaling an aggregate outstanding principal balance of $1,068.7$2,820.3 million. At September 30, 2021,March 31, 2022, the Company’s fixed rate commitments to originate had a weighted-average rate of 1.92%5.19%. At September 30, 2021,March 31, 2022, the Company also had commitments to sell $56.1$33.0 million in fixed rate loans and none in variable rate loans, totaling an aggregate outstanding principal balance of $56.1$33.0 million.
Commitments to extend credit are agreements to lend to a customer so long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.
At March 31, 2022 the Company had a commitment to fund an equity investment measured at fair value of $10 million. At March 31, 2022, no amounts had been funded related to the investment.
In the normal course of business, Axos Clearing’s customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose Axos Clearing to off-balance-sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and Axos Clearing has to purchase or sell the financial instrument underlying the contract at a loss. Axos Clearing’s clearing agreements with broker-dealers for which it provides clearing services requires them to indemnify Axos Clearing if customers fail to satisfy their contractual obligation.
23

Table of Contents
Litigation. On October 15, 2015, the Company, its Chief Executive Officer and its then Chief Financial Officer were named defendants in a putative class action lawsuit styled Golden v. BofI Holding, Inc., et al, and brought in United States District Court for the Southern District of California (the “Golden Case”). On November 3, 2015, the Company, its Chief Executive Officer and its then Chief Financial Officer were named defendants in a second putative class action lawsuit styled Hazan v. BofI Holding, Inc., et al, and also brought in the United States District Court for the Southern District of California (the “Hazan Case”). On February 1, 2016, the Golden Case and the Hazan Case were consolidated as In re BofI Holding, Inc. Securities Litigation, Case #: 3:15-cv-02324-GPC-KSC (the “Class Action”), and the Houston Municipal Employees Pension System was appointed lead plaintiff. The plaintiffs allege that the Company and other named defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by failing to disclose wrongful conduct that was alleged in a complaint filed in connection with a wrongful termination of employment lawsuit filed on October 13, 2015 (the “Employment Matter”) and that as a result the Company’s statements regarding its internal controls, as well as portions of its financial statements, were false and misleading. On March 21, 2018, the Court entered a final order dismissing the Class Action with prejudice. Subsequently, the plaintiff appealed, the Court overturned the dismissal and the Company is preparing a petition for a rehearing. On April 13, 2022, the parties executed a Stipulation and Agreement of Settlement. The
25

Table of Contents
Stipulation and Agreement of Settlement was submitted to the District Court for approval on April 15, 2022. There is no assurance that approval will be granted. The agreed to settlement amount is not material to the Condensed Consolidated Financial Statements, as of and for the quarter ended March 31, 2022.
On April 3, 2017, the Company, its Chief Executive Officer and its then Chief Financial Officer were named defendants in a putative class action lawsuit styled Mandalevy v. BofI Holding, Inc., et al, and brought in United States District Court for the Southern District of California (the “Mandalevy Case”). The Mandalevy Case seeks monetary damages and other relief on behalf of a putative class that has not been certified by the Court. The complaint in the Mandalevy Case (the “Mandalevy Complaint”) alleges a class period that differs from that alleged in the First Class Action, and that the Company and other named defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by failing to disclose wrongful conduct that was alleged in a March 2017 media article. The Mandalevy Case has not been consolidated into the First Class Action. On December 7, 2018, the Court entered a final order granting the defendants’ motion and dismissing the Mandalevy Case with prejudice. Subsequently, the plaintiff filed a notice of appeal and the Court took the matter under advisement. On November 3, 2020, the Court issued a ruling affirming in part and reversing in part the District Court's Order dismissing the Class Action Second Amended Complaint. The defendants filed a petition for rehearing en banc on November 17, 2020, which petition was denied on December 16, 2020. The defendants filed a motion to dismiss the remanded complaint on February 19, 2021. On January 31, 2022, a Stipulation of Settlement was submitted to the District Court for approval. There is no assurance that approval will be granted. The agreed to settlement amount is not material to the Condensed Consolidated Financial Statements, as of and for the quarter ended March 31, 2022.
The Company and the other named defendants dispute the allegations of wrongdoing advanced by the plaintiffs in the Class Action, the Mandalevy Case, and in the Employment Matter, as well as those plaintiffs’ statement of the underlying factual circumstances, and are vigorously defending each case.
In addition to the First Class Action and the Mandalevy Case, 2 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 6 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 4 above-referenced derivative actions pending before it to be consolidated and appointed lead counsel in the consolidated action. On June 7, 2018, the Court entered an order granting defendant’s motion for judgment on the pleadings, but giving the plaintiffs limited leave to amend by June 28, 2018. The plaintiffs failed to file an amended complaint, and instead plaintiffs filed on June 28, 2018 a motion to stay the case pending resolution of the securities class action and Employment Matter. On August 10, 2018, defendants filed an opposition to plaintiffs’ motion. On September 11, 2018, the plaintiffs filed a second amended complaint. On October 16, 2018, defendants filed a motion to dismiss the second amended complaint. On October 16, 2018, defendants filed a motion to dismiss the second amended complaint. The Court dismissed the second amended complaint with prejudice on May 23, 2019. Subsequently, the plaintiff filed a notice of appeal and opening brief and the Company filed its answering brief. Oral argument was held September 2, 2020 and the Court took the matter under advisement.
24

Table of Contents
The 2 derivative actions pending before the San Diego County Superior Court have been consolidated and have been stayed by agreement of the parties.
In view of the inherent difficulty of predicting the outcome of each legal action, particularly since claimants seek substantial or indeterminate damages, it is not possible to reasonably predict or estimate the eventual loss or range of loss, if any, related to each legal action.action, unless otherwise disclosed above.
2526

Table of Contents
9.10.    SEGMENT REPORTING
There are no material inter-segment sales or transfers. The operating segments reported belowaccounting policies used by each reportable segment are the segmentssame as those discussed in Note 1 - “Organizations and Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the Company for which separate financial information is availableyear ended June 30, 2021. All costs, except certain corporate administration costs and for which segment results are evaluated regularly byincome taxes, have been allocated to the Chief Executive Officer in deciding howreportable segments. Therefore, combined amounts agree to allocate resources and in assessing performance. The Company operates through 2 operating segments: Banking Business and Securities Business.
The Securities Business segment added the RIA custody business from the certain assets and liabilities acquired from EAS. Refer to Note 2 - “Acquisitions” for further detail on the EAS acquisition. Operating results from the EAS acquisition are included in the unaudited condensed consolidated statements of income from the date of acquisition and reported under the Securities Business segment.
totals. In order to reconcile the 2 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:
Three Months Ended September 30, 2021For the Three Months Ended March 31, 2022
(Dollars in thousands)(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest incomeNet interest income$142,241 $6,176 $(1,775)$146,642 Net interest income$147,828 $3,377 $(1,667)$149,538 
Provision for credit lossesProvision for credit losses4,000 — — 4,000 Provision for credit losses4,500 — — 4,500 
Non-interest incomeNon-interest income14,828 13,106 (1,232)26,702 Non-interest income15,741 15,609 (2,576)28,774 
Non-interest expenseNon-interest expense62,725 19,273 2,433 84,431 Non-interest expense65,076 20,242 1,501 86,819 
Income before taxesIncome before taxes$90,344 $$(5,440)$84,913 Income before taxes$93,993 $(1,256)$(5,744)$86,993 
Three Months Ended September 30, 2020For the Three Months Ended March 31, 2021
(Dollars in thousands)(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest incomeNet interest income$123,008 $4,894 $(575)$127,327 Net interest income$135,096 $3,847 $(3,274)$135,669 
Provision for credit lossesProvision for credit losses11,800 — — 11,800 Provision for credit losses2,700 — — 2,700 
Non-interest incomeNon-interest income30,212 5,784 (141)35,855 Non-interest income16,201 8,369 (683)23,887 
Non-interest expenseNon-interest expense61,217 11,352 2,977 75,546 Non-interest expense64,040 13,282 3,485 80,807 
Income before taxesIncome before taxes$80,203 $(674)$(3,693)$75,836 Income before taxes$84,557 $(1,066)$(7,442)$76,049 
As of September 30, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Goodwill$35,721 $59,953 $— $95,674 
Total Assets$13,471,669 $1,357,576 $77,505 $14,906,750 
For the Nine Months Ended March 31, 2022
(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$432,328 $14,059 $(4,639)$441,748 
Provision for credit losses12,500 — — 12,500 
Non-interest income46,864 45,169 (5,770)86,263 
Non-interest expense190,250 61,169 5,850 257,269 
Income before taxes$276,442 $(1,941)$(16,259)$258,242 
As of June 30, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Goodwill$35,721 $35,501 $— $71,222 
Total Assets$12,745,029 $1,450,512 $70,024 $14,265,565 
For the Nine Months Ended March 31, 2021
(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$390,268 $13,002 $(6,182)$397,088 
Provision for credit losses22,500 — — 22,500 
Non-interest income68,708 20,725 (973)88,460 
Non-interest expense187,733 35,946 8,971 232,650 
Income before taxes$248,743 $(2,219)$(16,126)$230,398 




2627

Table of Contents
As of March 31, 2022
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Goodwill$35,721 $59,953 $— $95,674 
Total Assets$14,768,636 $1,246,997 $65,317 $16,080,950 
As of June 30, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Goodwill$35,721 $35,501 $— $71,222 
Total Assets$12,745,029 $1,450,512 $70,024 $14,265,565 

28

Table of Contents
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides information about the results of operations, financial condition, liquidity, off balance sheet items and capital resources of Axos Financial, Inc. and subsidiaries (the(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 Annual Report on Form 10-K for the year ended June 30, 2021, 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 effects on our business of the current novel coronavirus pandemic (“COVID-19”), the Company’s financial prospects and other projections of its performance and asset quality, our ability to continue to grow profitably and increase its business, our ability to continue to diversify lending and deposit franchises, and the anticipated timing and financial performance of other offerings, initiatives, and acquisitions, expectations of the environment in which we operate and projections of future performance. Forward-looking statements are inherently unreliable and actual results may vary. Factors that could cause actual results to differ from these forward-looking statements include uncertainties surrounding the severity, duration, and effects of the COVID-19 pandemic, our ability to successfully integrate acquisitions and realize the anticipated benefits of the transactions, changes in the interest rate environment, inflation, government regulation, general economic conditions, changes in the competitive marketplace, conditions in the real estate markets in which we operate, risks associated with credit quality, the outcome and effects of pending class action litigation filed against the Company and other risk factors discussed under the heading “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021March 31, 2022 and in our Annual Report on Form 10-K for the year ended June 30, 2021, which has been filed with the Securities and Exchange Commission. 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, the holding company for Axos Bank (the “Bank”), is a diversified financial services company with approximately $14.9$16.1 billion in assets that 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 and transaction fees earned from processing payment activity. Our securities products and services are offered through Axos Clearing LLC (“Axos Clearing”) and its business division Axos Advisor Services (“AAS”), formerly E*TRADE Advisor Services, 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 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.
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 (“CFPB”).Bureau.
Axos Clearing is a broker-dealer registered with the SEC and the Financial Industry Regulatory Authority, Inc. (“FINRA”). Axos Invest is a Registered Investment Advisor under the Investment Advisers Act of 1940, that is registered with the SEC, and Axos Invest LLC is an introducing broker-dealer that is registered with the SEC and FINRA.

2729

Table of Contents
Segment Information
The Company determines reportable segments based on what separate financial information is available and what segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance. We operate through two segments: Banking Business and Securities Business.
Banking Business. The Banking Business includes a broad range of banking services including online banking, concierge banking, and mortgage, vehicle and unsecured lending through online and telephonic distribution channels to serve the needs of consumer and small businesses nationally. Our deposit products consist of demand, savings, money market and time deposit accounts. In addition, the Banking Business 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 also 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.
We distribute our loan products through our retail, correspondent and wholesale channels, and the loans we retain are primarily first mortgages secured by single family real property and by multifamily real property as well as commercial & industrial loans to businesses. Our investment securities consist of agency and non-agency mortgage-backed securities, municipal securities and other non-agency debt securities. We believe our flexibility to adjust our asset generation channels has been a competitive advantage allowing us to avoid markets and products where credit fundamentals are poor or risks and rewards are not sufficient to support our required return on equity.
Securities Business. The Securities Business 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 clients. The products offered by the lines of business in the Securities Business primarily generate net interest income and non-banking service fee income.
Securities services includes fully disclosed clearing services through Axos Clearing to FINRA- and SEC-registered member firms for trade execution and clearance as well as back-office services such as record keeping, trade and performance reporting, accounting, general back-office support, securities and margin lending, reorganization assistance and custody of securities. We provide financing to our brokerage customers for their securities trading activities through margin loans that are collateralized by securities, cash, or other acceptable collateral. Securities lending activities include borrowing and lending securities with other broker-dealers. These activities involve borrowing securities to cover short sales and to complete transactions in which clients have failed to deliver securities by the required settlement date, and lending securities to other broker dealers for similar purposes.
Through the RIA custody business, we provide a proprietary, turnkey technology platform for custody services for our RIA customers. This platform provides fee income and service that complement our securities business products, while also generating low cost core deposits.
Axos Invest includes our digital wealth management business, which provides our retail customers with self-directed trading and investment management services through a comprehensive and flexible technology platform.
Segment results are compiled based upon the management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions or in accordance with generally accepted accounting principles.
The Company evaluates performance and allocates resources based on profit or loss from operations. There are no material inter-segment sales or transfers. Certain corporate administration costs and income taxes have not been allocated to the reportable segments. Therefore, in order to reconcile the two segments to the unaudited condensed consolidated totals, we include parent-only activities and intercompany eliminations.
COVID-19 Impact
The Company has closely monitored the rapid developments of and uncertainties caused by the COVID-19 pandemic. In response to the changes in economic and business conditions as a result of the COVID-19 pandemic, the Company continues to take the necessary and appropriate actions to support customers, employees, partners and shareholders.
The Company took proactive measures to manage loans that became delinquent during the economic downturn as a result of the COVID-19 pandemic. As of September 30, 2021,March 31, 2022, no loans were on forbearance status for a forbearance granted from any prior date. Any forbearance granted out of COVID-19 was for six months or less.
2830

Table of Contents
The Company will continue to monitor uncertainties caused by and developments of COVID-19.
Mergers and Acquisitions
From time to time we undertake acquisitions or similar transactions consistent with our Company’s operating and growth strategies. On August 2, 2021 Axos Clearing, LLC, acquired certain assets and liabilities of E*TRADE Advisor Services (“EAS”), rebranded Axos Advisors Services (“AAS”), the registered investment advisor custody business of Morgan Stanley. This business was rebranded as Axos Advisors 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 initial purchase price of $54.6$54.8 million consistsconsisted entirely of cash consideration paid upon acquisition and is pending final working capital adjustments.
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 Company allocated the purchase price to the tangible and intangible assets acquired based on information available through September 30, 2021. The Company’s accounting for the acquisition has not been finalized as the Company continues to evaluate the working capital adjustment, which is expected to have an immaterial effect on the value of the goodwill recognized. The allocation will be updated, if necessary, through the measurement period, which is no later than one year from the acquisition date.March 31, 2022.
Critical Accounting Policies
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 that our estimates and assumptions are reasonable under the circumstances. However, actual results may differ significantly from these estimates and assumptions that could have a material effect on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods.
Our significant accounting policies and practices are described in greater detail in Note 1 - “Summary of Significant Accounting Policies” and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 2021.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to the results presented in accordance with GAAP, this report includes the non-GAAP financial measures such as adjusted earnings, adjusted earnings per common share, and tangible book value per common share. Non-GAAP financial measures have inherent limitations, may not be comparable to similarly titled measures used by other companies and are not audited. Readers should be aware of these limitations and should be cautious as to their reliance on such measures. Although we believe the non-GAAP financial measures disclosed in this report enhance investors’ understanding of our business and performance, 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 Bank’sCompany’s operating performance. We believe excluding the non-recurring acquisition related costs, and other costs (unusual or non-recurring charges) provides investors with an alternative understanding of Axos’ business without these non-recurring costs.
2931

Table of Contents
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 EndedThree Months EndedNine Months Ended
September 30,March 31,March 31,
(Dollars in thousands, except per share amounts)(Dollars in thousands, except per share amounts)20212020(Dollars in thousands, except per share amounts)2022202120222021
Net incomeNet income$60,210 $53,022 Net income$61,823 $53,645 $182,820 $161,452 
Acquisition-related costs
Acquisition-related costs
2,846 2,602 Acquisition-related costs
2,803 2,511 8,676 7,665 
Tax effects of adjustmentsTax effects of adjustments(828)(783)Tax effects of adjustments(811)(740)(2,534)(2,285)
Adjusted earnings (Non-GAAP)Adjusted earnings (Non-GAAP)$62,228 $54,841 Adjusted earnings (Non-GAAP)$63,815 $55,416 $188,962 $166,832 
Adjusted EPS (Non-GAAP)Adjusted EPS (Non-GAAP)$1.03 $0.91 Adjusted EPS (Non-GAAP)$1.05 $0.92 $3.12 $2.76 

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:
September 30,March 31,
(Dollars in thousands)(Dollars in thousands)20212020(Dollars in thousands)20222021
Total stockholders’ equity$1,458,621 $1,236,965 
Less: preferred stock— 5,063 
Common stockholders’ equityCommon stockholders’ equity1,458,621 1,231,902 Common stockholders’ equity$1,585,585 $1,345,650 
Less: mortgage servicing rights, carried at fair valueLess: mortgage servicing rights, carried at fair value18,438 12,130 Less: mortgage servicing rights, carried at fair value23,519 16,631 
Less: goodwill and other intangible assetsLess: goodwill and other intangible assets164,944 122,817 Less: goodwill and other intangible assets159,150 118,133 
Tangible common stockholders’ equity (Non-GAAP)Tangible common stockholders’ equity (Non-GAAP)$1,275,239 $1,096,955 Tangible common stockholders’ equity (Non-GAAP)$1,402,916 $1,210,886 
Common shares outstanding at end of periodCommon shares outstanding at end of period59,494,633 59,215,934 Common shares outstanding at end of period59,662,795 59,237,765 
Tangible book value per common share (Non-GAAP)Tangible book value per common share (Non-GAAP)$21.43 $18.52 Tangible book value per common share (Non-GAAP)$23.51 $20.44 
3032

Table of Contents
SELECTED FINANCIAL DATA
The following tables set forth certain selected financial data concerning the periods indicated:
AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands)(Dollars in thousands)September 30,
2021
June 30,
2021
September 30,
2020
(Dollars in thousands)March 31,
2022
June 30,
2021
March 31,
2021
Selected Balance Sheet Data:Selected Balance Sheet Data:Selected Balance Sheet Data:
Total assetsTotal assets$14,906,750 $14,265,565 $13,382,238 Total assets$16,080,950 $14,265,565 $14,827,874 
Loans—net of allowance for credit lossesLoans—net of allowance for credit losses11,879,021 11,414,814 10,925,450 Loans—net of allowance for credit losses13,093,603 11,414,814 11,711,215 
Loans held for sale, carried at fair valueLoans held for sale, carried at fair value33,344 29,768 89,454 Loans held for sale, carried at fair value19,611 29,768 61,500 
Loans held for sale, lower of cost or fair valueLoans held for sale, lower of cost or fair value11,949 12,294 14,729 Loans held for sale, lower of cost or fair value11,182 12,294 13,371 
Allowance for credit losses - loansAllowance for credit losses - loans136,778 132,958 132,915 Allowance for credit losses - loans143,372 132,958 138,107 
Securities—tradingSecurities—trading1,941 1,983 423 Securities—trading366 1,983 254 
Securities—available-for-saleSecurities—available-for-sale135,996 187,335 203,931 Securities—available-for-sale229,510 187,335 218,962 
Securities borrowedSecurities borrowed457,282 619,088 263,470 Securities borrowed274,644 619,088 543,538 
Customer, broker-dealer and clearing receivablesCustomer, broker-dealer and clearing receivables427,169 369,815 283,125 Customer, broker-dealer and clearing receivables510,561 369,815 351,063 
Total depositsTotal deposits11,747,442 10,815,797 10,555,658 Total deposits12,733,002 10,815,797 11,612,501 
Advances from the FHLBAdvances from the FHLB157,500 353,500 242,500 Advances from the FHLB152,500 353,500 172,500 
Borrowings, subordinated notes and debentures
Borrowings, subordinated notes and debentures
255,896 221,358 453,843 Borrowings, subordinated notes and debentures
381,682 221,358 365,753 
Securities loanedSecurities loaned539,505 728,988 315,976 Securities loaned447,748 728,988 649,837 
Customer, broker-dealer and clearing payablesCustomer, broker-dealer and clearing payables510,040 535,425 369,428 Customer, broker-dealer and clearing payables543,905 535,425 483,677 
Total stockholders’ equityTotal stockholders’ equity1,458,621 1,400,936 1,236,965 Total stockholders’ equity1,585,585 1,400,936 1,345,650 
Capital Ratios:Capital Ratios:Capital Ratios:
Equity to assets at end of periodEquity to assets at end of period9.78 %9.82 %9.24 %Equity to assets at end of period9.86 %9.82 %9.08 %
Axos Financial, Inc.:Axos Financial, Inc.:Axos Financial, Inc.:
Tier 1 leverage (core) capital to adjusted average assetsTier 1 leverage (core) capital to adjusted average assets9.19 %8.82 %8.52 %Tier 1 leverage (core) capital to adjusted average assets9.43 %8.82 %8.99 %
Common equity tier 1 capital (to risk-weighted assets)Common equity tier 1 capital (to risk-weighted assets)10.79 %11.36 %11.08 %Common equity tier 1 capital (to risk-weighted assets)10.23 %11.36 %10.86 %
Tier 1 capital (to risk-weighted assets)Tier 1 capital (to risk-weighted assets)10.79 %11.36 %11.13 %Tier 1 capital (to risk-weighted assets)10.23 %11.36 %10.86 %
Total capital (to risk-weighted assets)Total capital (to risk-weighted assets)13.10 %13.78 %14.39 %Total capital (to risk-weighted assets)13.30 %13.78 %13.32 %
Axos Bank:Axos Bank:Axos Bank:
Tier 1 leverage (core) capital to adjusted average assetsTier 1 leverage (core) capital to adjusted average assets10.14 %9.45 %8.83 %Tier 1 leverage (core) capital to adjusted average assets10.51 %9.45 %9.56 %
Common equity tier 1 capital (to risk-weighted assets)Common equity tier 1 capital (to risk-weighted assets)11.89 %12.28 %11.52 %Common equity tier 1 capital (to risk-weighted assets)11.43 %12.28 %11.74 %
Tier 1 capital (to risk-weighted assets)Tier 1 capital (to risk-weighted assets)11.89 %12.28 %11.52 %Tier 1 capital (to risk-weighted assets)11.43 %12.28 %11.74 %
Total capital (to risk-weighted assets)Total capital (to risk-weighted assets)12.80 %13.21 %12.55 %Total capital (to risk-weighted assets)12.24 %13.21 %12.71 %
Axos Clearing, LLC:Axos Clearing, LLC:Axos Clearing, LLC:
Net capitalNet capital39,663 35,950 34,322 Net capital$39,109 $35,950 33,845 
Excess capitalExcess capital31,435 27,904 28,830 Excess capital$31,612 $27,904 26,338 
Net capital as a percentage of aggregate debit itemsNet capital as a percentage of aggregate debit items9.64 %8.94 %12.50 %Net capital as a percentage of aggregate debit items10.43 %8.94 %9.02 %
Net capital in excess of 5% aggregate debit itemsNet capital in excess of 5% aggregate debit items19,092 15,836 20,590 Net capital in excess of 5% aggregate debit items$20,369 $15,836 15,077 



3133

Table of Contents
AXOS FINANCIAL, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
At or for the Three Months EndedAt or for the Three Months EndedAt or for the Nine Months Ended
September 30,March 31,March 31,
(Dollars in thousands, except per share data)(Dollars in thousands, except per share data)20212020(Dollars in thousands, except per share data)2022202120222021
Selected Income Statement Data:Selected Income Statement Data:Selected Income Statement Data:
Interest and dividend incomeInterest and dividend income$158,310 $149,889 Interest and dividend income$160,181 $155,674 $475,567 $460,942 
Interest expenseInterest expense11,668 22,562 Interest expense10,643 20,005 33,819 63,854 
Net interest incomeNet interest income146,642 127,327 Net interest income149,538 135,669 441,748 397,088 
Provision for credit lossesProvision for credit losses4,000 11,800 Provision for credit losses4,500 2,700 12,500 22,500 
Net interest income after provision for credit lossesNet interest income after provision for credit losses142,642 115,527 Net interest income after provision for credit losses145,038 132,969 429,248 374,588 
Non-interest incomeNon-interest income26,702 35,855 Non-interest income28,774 23,887 86,263 88,460 
Non-interest expenseNon-interest expense84,431 75,546 Non-interest expense86,819 80,807 257,269 232,650 
Income before income tax expenseIncome before income tax expense84,913 75,836 Income before income tax expense86,993 76,049 258,242 230,398 
Income tax expenseIncome tax expense24,703 22,814 Income tax expense25,170 22,404 75,422 68,946 
Net incomeNet income$60,210 $53,022 Net income$61,823 $53,645 $182,820 $161,452 
Net income attributable to common stockNet income attributable to common stock$60,210 $52,945 Net income attributable to common stock$61,823 $53,645 $182,820 $161,262 
Per Common Share Data:Per Common Share Data:Per Common Share Data:
Net income:Net income:Net income:
BasicBasic$1.01 $0.89 Basic$1.04 $0.91 $3.07 $2.72 
DilutedDiluted$0.99 $0.88 Diluted$1.02 $0.89 $3.02 $2.67 
Adjusted earnings (Non-GAAP)Adjusted earnings (Non-GAAP)$1.03 $0.91 Adjusted earnings (Non-GAAP)$1.05 $0.92 $3.12 $2.76 
Book valueBook value$24.52 $20.80 Book value$26.58 $22.72 $26.58 $22.72 
Tangible book value (Non-GAAP)Tangible book value (Non-GAAP)$21.43 $18.52 Tangible book value (Non-GAAP)$23.51 $20.44 $23.51 $20.44 
Weighted average number of common shares outstanding:Weighted average number of common shares outstanding:Weighted average number of common shares outstanding:
Basic Basic59,390,846 59,509,320  Basic59,542,128 59,118,884 59,476,488 59,225,409 
Diluted Diluted60,644,288 59,926,784  Diluted60,611,959 60,482,733 60,605,486 60,453,220 
Common shares outstanding at end of periodCommon shares outstanding at end of period59,494,633 59,215,934 Common shares outstanding at end of period59,662,795 59,237,765 59,662,795 59,237,765 
Common shares issued at end of periodCommon shares issued at end of period68,370,617 67,622,935 Common shares issued at end of period68,617,410 67,902,239 68,617,410 67,902,239 
Performance Ratios and Other Data:Performance Ratios and Other Data:Performance Ratios and Other Data:
Loan originations for investmentLoan originations for investment$2,092,279 $1,330,812 Loan originations for investment$2,363,599 $1,189,750 $6,981,749 $4,430,540 
Loan originations for saleLoan originations for sale$209,967 $440,804 Loan originations for sale$166,327 $418,618 $569,614 $1,349,683 
Return on average assetsReturn on average assets1.66 %1.56 %Return on average assets1.59 %1.52 %1.63 %1.55 %
Return on average common stockholders’ equityReturn on average common stockholders’ equity16.20 %17.26 %Return on average common stockholders’ equity15.89 %16.12 %16.33 %16.90 %
Interest rate spread1
Interest rate spread1
4.04 %3.62 %
Interest rate spread1
3.84 %3.73 %3.93 %3.69 %
Net interest margin2
Net interest margin2
4.22 %3.84 %
Net interest margin2
4.02 %3.96 %4.11 %3.91 %
Net interest margin2 – Banking Business Segment only
4.48 %3.91 %
Net interest margin2 – Banking Business Segment
Net interest margin2 – Banking Business Segment
4.21 %4.23 %4.33 %4.09 %
Efficiency ratio3
Efficiency ratio3
48.71 %46.30 %
Efficiency ratio3
51.26 %50.64 %48.72 %47.91 %
Efficiency ratio3 – Banking Business Segment only
39.93 %39.95 %
Efficiency ratio3 – Banking Business Segment
Efficiency ratio3 – Banking Business Segment
39.79 %42.33 %39.70 %40.90 %
Asset Quality Ratios:Asset Quality Ratios:Asset Quality Ratios:
Net annualized charge-offs to average loansNet annualized charge-offs to average loans0.01 %0.07 %Net annualized charge-offs to average loans0.05 %0.03 %0.02 %0.09 %
Non-performing loans to total loansNon-performing loans to total loans1.12 %1.56 %Non-performing loans to total loans1.05 %1.14 %1.05 %1.14 %
Non-performing assets to total assetsNon-performing assets to total assets0.94 %1.33 %Non-performing assets to total assets0.87 %0.96 %0.87 %0.96 %
Allowance for credit losses - loans to total loans held for investment at end of periodAllowance for credit losses - loans to total loans held for investment at end of period1.14 %1.20 %Allowance for credit losses - loans to total loans held for investment at end of period1.08 %1.16 %1.08 %1.16 %
Allowance for credit losses - loans to non-performing loansAllowance for credit losses - loans to non-performing loans101.97 %77.23 %Allowance for credit losses - loans to non-performing loans103.33 %101.84 %103.33 %101.84 %
1     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.
2    Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.
3 Efficiency ratio represents non-interest expense as a percentage of the aggregate of net interest income and non-interest income.
3234

Table of Contents
RESULTS OF OPERATIONS
Comparison of the Three and Nine Months Ended September 30,March 31, 2022 and 2021 and 2020
For the three months ended September 30, 2021,March 31, 2022, we had net income of $60.2$61.8 million compared to net income of $53.0$53.6 million for the three months ended September 30, 2020.March 31, 2021. Net income attributable to common stockholders was $60.2$61.8 million or $0.99$1.02 per diluted share for the three months ended September 30, 2021March 31, 2022 compared to net income attributable to common stockholdersshareholders of $52.9$53.6 million, or $0.88$0.89 per diluted share for the three months ended September 30, 2020.March 31, 2021.For the nine months ended March 31, 2022, we had net income of $182.8 million compared to net income of $161.5 million for the nine months ended March 31, 2021. Net income attributable to common stockholders was $182.8 million, or $3.02 per diluted share for the nine months ended March 31, 2022 compared to net income attributable to common shareholders of $161.3 million, or $2.67 per diluted share for the nine months ended March 31, 2021.
Adjusted earnings and adjusted EPS, non-GAAP measures, which exclude non-cash amortization expenses and non-recurring costs related to mergers and acquisitions expenses,(including amortization of intangible assets related to acquisitions), increased 13.5%15.2% to $62.2$63.8 million and $1.03, for the quarter ended September 30, 2021 compared14.1% to $54.8 million and $0.91,$1.05, respectively, for the quarter ended September 30, 2020.March 31, 2022 compared to $55.4 million and $0.92, respectively, for the quarter ended March 31, 2021. Adjusted earnings and adjusted EPS increased 13.3% to $189.0 million and 13.0% to $3.12, respectively, for the nine months ended March 31, 2022 compared to $166.8 million and $2.76, respectively, for the nine months ended March 31, 2021.
Net Interest Income
Net interest income for the three and nine months ended September 30, 2021March 31, 2022 totaled $146.6$149.5 million and $441.7 million, an increase of 15.2%10.2% and 11.2%, compared to net interest income of $127.3$135.7 million and $397.1 million for the three and nine months ended September 30, 2020.March 31, 2021, respectively. The growth of net interest incomeincrease for the three and nine months ended September 30, 2021 compared to September 30, 2020 iswere primarily due to increased average earnings assets from net loan portfolio growth and reduced rates paid on interest-bearing demand and savings deposits and time deposits, partially offset by reduced yields on interest earning assets. During the three and nine months ended September 30, 2021,March 31, 2022, average non-interest bearing deposits increased $1,158.1$2,001.2 million and $1,628.7 million, respectively, primarily from the deposits acquired through the acquisition of AAS.
Total interest and dividend income during the three and nine months ended September 30, 2021March 31, 2022 increased 5.6%2.9% to $158.3$160.2 million and 3.2% to $475.6 million, compared to $149.9$155.7 million and $460.9 million during the three and nine months ended September 30, 2020.March 31, 2021, respectively. The increase in interest and dividend income for the three months ended September 30, 2021March 31, 2022 was primarily attributable to the growth in average earning assets from loan originations, partially offset by reduced yields on loans. The average balance of loans increased by 10.7% for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase in interest and dividend income for the nine months ended March 31, 2022 was primarily attributable to the growth in average earning assets from loan originations and securities borrowed and margin lending, partially offset by reduced yields on loans and securities borrowed and margin lending. The average balance of loans and securities borrowed increased by 7.6%8.2% and 84.6%35.6%, respectively, for the threenine months ended September 30, 2021March 31, 2022 compared to the threenine months ended September 30, 2020.March 31, 2021.
Total interest expense was $11.7$10.6 million for the three months ended September 30, 2021,March 31, 2022, a decrease of $10.9$9.4 million or 48.3%46.8% as compared with the quarterthree months ended September 30, 2020.March 31, 2021. Total interest expense was $33.8 million for the nine months ended March 31, 2022, a decrease of $30.0 million or 47.0% as compared with the nine months ended March 31, 2021. The decrease in the average cost of funds rate for the three months ended September 30, 2021March 31, 2022 compared to 20202021 was primarily due to a 3016 basis point decrease in average rates paid on interest-bearing demand and savings deposits due to decreases in prevailing market deposit rates, an 81 basis point decrease in average rates paid on time deposits due to decreases in prevailing deposit rates across the industry and a 33.8%64 basis point decrease in the three month average rates paid on time deposits, due to higher rate time deposits maturing. The decrease in the average balancecost of funds rate for the nine months ended March 31, 2022 compared to 2021 was primarily due to a 22 basis point decrease on interest-bearing demand and savings deposits due to decreases in prevailing deposit rates across the industry and a 71 basis point decrease in the nine month average rates paid on time deposits.deposits, due to higher rate time deposits maturing. During the three and nine months ended September 30, 2021,March 31, 2022, average non-interest bearing deposits increased $1,158.1$2,001.2 million and $1,628.7 million, respectively, primarily from the EASdeposits acquired through the acquisition replacing interest bearing deposits and borrowings.of AAS.
Net interest margin, defined as annualized net interest income divided by average interest-earningearning assets, increased by 386 basis points to 4.22%4.02% for the three months ended September 30, 2021 compared toMarch 31, 2022 from 3.96% for the three months ended September 30, 2020.March 31, 2021, and increased 20 basis points to 4.11% for the nine months ended March 31, 2022 from 3.91% for the nine months ended March 31, 2021. During the three and nine months ended September 30, 2021,March 31, 2022, the primary contributors to the 386 and 20 basis point increase wereincreases, respectively, was the increase in non-interest bearing deposits of $1,158.1which increased $2,001.2 million and $1,628.7 million, respectively, primarily from the deposits acquired through the acquisition of AAS along with a reduction in the level of low-yielding interest-earning deposits in other financial institutions.and decreased rates on interest-bearing deposits.
3335

Table of Contents
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
For the Three Months Ended For the Three Months Ended
September 30,March 31,
20212020 20222021
(Dollars in thousands)(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Assets:Assets:Assets:
Loans3, 4
Loans3, 4
$11,662,383 $149,176 5.12 %$10,842,218 $141,424 5.22 %
Loans3, 4
$12,842,705 $153,873 4.79 %$11,600,551 $147,936 5.10 %
Interest-earning deposits in other financial institutionsInterest-earning deposits in other financial institutions1,163,143 591 0.20 %1,706,582 507 0.12 %Interest-earning deposits in other financial institutions1,286,665 671 0.21 %1,267,091 482 0.15 %
Mortgage-backed and other investment securities4
Mortgage-backed and other investment securities4
156,360 1,421 3.64 %189,631 2,677 5.65 %
Mortgage-backed and other investment securities4
162,400 1,546 3.81 %214,712 2,590 4.83 %
Securities borrowed and margin lending5
Securities borrowed and margin lending5
903,542 6,851 3.03 %489,565 5,077 4.15 %
Securities borrowed and margin lending5
563,018 3,833 2.72 %616,774 4,453 2.89 %
Stock of the regulatory agenciesStock of the regulatory agencies20,694 271 5.24 %20,609 204 3.96 %Stock of the regulatory agencies21,333 258 4.84 %20,612 213 4.13 %
Total interest-earning assetsTotal interest-earning assets13,906,122 158,310 4.55 %13,248,605 149,889 4.53 %Total interest-earning assets14,876,121 160,181 4.31 %13,719,740 155,674 4.54 %
Non-interest-earning assetsNon-interest-earning assets596,295 362,957 Non-interest-earning assets731,997 413,297 
Total assetsTotal assets$14,502,417 $13,611,562 Total assets$15,608,118 $14,133,037 
Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:
Interest-bearing demand and savingsInterest-bearing demand and savings$6,564,620 $3,567 0.22 %$7,052,323 $9,091 0.52 %Interest-bearing demand and savings$6,922,600 $3,808 0.22 %$7,083,540 $6,691 0.38 %
Time depositsTime deposits1,363,061 4,145 1.22 %2,058,540 10,463 2.03 %Time deposits1,194,452 3,116 1.04 %1,748,271 7,343 1.68 %
Securities loanedSecurities loaned365,808 152 0.17 %443,502 453 0.41 %
Securities loaned660,040 251 0.15 %302,601 124 0.16 %
Advances from the FHLBAdvances from the FHLB295,402 1,016 1.38 %242,500 1,372 2.26 %Advances from the FHLB289,289 973 1.35 %194,564 992 2.04 %
Borrowings, subordinated notes and debenturesBorrowings, subordinated notes and debentures223,837 2,689 4.81 %256,563 1,512 2.36 %Borrowings, subordinated notes and debentures295,910 2,594 3.51 %413,858 4,526 4.37 %
Total interest-bearing liabilitiesTotal interest-bearing liabilities9,106,960 11,668 0.51 %9,912,527 22,562 0.91 %Total interest-bearing liabilities9,068,059 10,643 0.47 %9,883,735 20,005 0.81 %
Non-interest-bearing demand depositsNon-interest-bearing demand deposits3,191,171 1,903,205 Non-interest-bearing demand deposits4,210,508 2,209,297 
Other non-interest-bearing liabilitiesOther non-interest-bearing liabilities717,725 563,450 Other non-interest-bearing liabilities772,800 708,542 
Stockholders’ equityStockholders’ equity1,486,561 1,232,380 Stockholders’ equity1,556,751 1,331,463 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$14,502,417 $13,611,562 Total liabilities and stockholders’ equity$15,608,118 $14,133,037 
Net interest incomeNet interest income$146,642 $127,327 Net interest income$149,538 $135,669 
Interest rate spread6
Interest rate spread6
4.04 %3.62 %
Interest rate spread6
3.84 %3.73 %
Net interest margin7
Net interest margin7
4.22 %3.84 %
Net interest margin7
4.02 %3.96 %
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. Loan fee income is not significant. Loans include average balances of $26.7$26.3 million and $27.5$27.1 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 20212022 and 20202021 three-month periods, respectively.
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.



34
36

Table of Contents

Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table presents information regarding (i) average balances; (ii) the total amount of interest income from interest-earning assets and the weighted average yields on such assets; (iii) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities; (iv) net interest income; (v) interest rate spread; and (vi) net interest margin:
 For the Nine Months Ended
March 31,
 20222021
(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Assets:
Loans3, 4
$12,202,523 $452,518 4.94 %$11,281,748 $436,445 5.16 %
Interest-earning deposits in other financial institutions1,232,100 1,904 0.21 %1,491,437 1,482 0.13 %
Mortgage-backed and other investment securities4
152,623 4,304 3.76 %202,327 8,184 5.39 %
Securities borrowed and margin lending5
718,956 16,050 2.98 %530,384 14,196 3.57 %
Stock of the regulatory agencies20,845 791 5.06 %20,611 635 4.11 %
Total interest-earning assets14,327,047 475,567 4.43 %13,526,507 460,942 4.54 %
Non-interest-earning assets624,184 379,629 
Total assets$14,951,231 $13,906,136 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$6,683,286 $11,674 0.23 %$7,117,471 $23,913 0.45 %
Time deposits1,297,870 10,767 1.11 %1,889,983 25,770 1.82 %
Securities loaned489,189 621 0.17 %380,035 832 0.29 %
Advances from the FHLB285,547 2,962 1.38 %224,119 3,690 2.20 %
Borrowings, subordinated notes and debentures264,523 7,795 3.93 %366,407 9,649 3.51 %
Total interest-bearing liabilities9,020,415 33,819 0.50 %9,978,015 63,854 0.85 %
Non-interest-bearing demand deposits3,678,067 2,049,366 
Other non-interest-bearing liabilities760,083 603,999 
Stockholders’ equity1,492,666 1,274,756 
Total liabilities and stockholders’ equity$14,951,231 $13,906,136 
Net interest income$441,748 $397,088 
Interest rate spread6
3.93 %3.69 %
Net interest margin7
4.11 %3.91 %
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. Loan fee income is not significant. Loans include average balances of $26.5 million and $27.3 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2022 and 2021 nine-month periods, respectively.
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.
37

Table of Contents
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table sets forth the effects of changing rates and volumes on our net interest income. Information is provided with respect to (i) effects on interest income and interest expense attributable to changes in volume (changes in volume multiplied by prior rate); (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 Three Months EndedFor the Nine Months Ended
September 30,March 31,March 31,
2021 vs 20202022 vs 20212022 vs 2021
Increase (Decrease) Due to Increase (Decrease) Due toIncrease (Decrease) Due to
(Dollars in thousands)(Dollars in thousands)VolumeRateTotal
Increase
(Decrease)
(Dollars in thousands)VolumeRateTotal
Increase
(Decrease)
VolumeRateTotal
Increase
(Decrease)
Increase (decrease) in interest income:
Increase / (decrease) in interest income:Increase / (decrease) in interest income:
LoansLoans$10,512 $(2,760)$7,752 Loans$15,257 $(9,320)$5,937 $35,013 $(18,940)$16,073 
Interest-earning deposits in other financial institutionsInterest-earning deposits in other financial institutions(193)277 84 Interest-earning deposits in other financial institutions182 189 (301)723 422 
Mortgage-backed and other investment securitiesMortgage-backed and other investment securities(415)(841)(1,256)Mortgage-backed and other investment securities(559)(485)(1,044)(1,739)(2,141)(3,880)
Securities borrowed and margin lendingSecurities borrowed and margin lending3,423 (1,649)1,774 Securities borrowed and margin lending(370)(250)(620)4,470 (2,616)1,854 
Stock of the regulatory agenciesStock of the regulatory agencies66 67 Stock of the regulatory agencies38 45 149 156 
$13,328 $(4,907)$8,421 $14,342 $(9,835)$4,507 $37,450 $(22,825)$14,625 
Increase (decrease) in interest expense:
Increase / (decrease) in interest expense:Increase / (decrease) in interest expense:
Interest-bearing demand and savingsInterest-bearing demand and savings$(591)$(4,933)$(5,524)Interest-bearing demand and savings$(148)$(2,735)$(2,883)$(1,357)$(10,882)$(12,239)
Time depositsTime deposits(2,897)(3,421)(6,318)Time deposits(1,919)(2,308)(4,227)(6,682)(8,321)(15,003)
Securities loanedSecurities loaned(70)(231)(301)194 (405)(211)
Securities loaned135 (8)127 
Advances from the FHLBAdvances from the FHLB256 (612)(356)Advances from the FHLB385 (404)(19)860 (1,588)(728)
Borrowings, subordinated notes and debenturesBorrowings, subordinated notes and debentures(215)1,392 1,177 Borrowings, subordinated notes and debentures
(1,143)(789)(1,932)(2,910)1,056 (1,854)
$(3,312)$(7,582)$(10,894)$(2,895)$(6,467)$(9,362)$(9,895)$(20,140)$(30,035)

Provision for Credit Losses
The provision for credit losses was $4.0$4.5 million for the three months ended September 30, 2021March 31, 2022 compared to $11.8$2.7 million for the three months ended September 30, 2020.March 31, 2021. The provision for credit losses was $12.5 million for the nine months ended March 31, 2022 compared to $22.5 million for the nine months ended March 31, 2021. The increase in the provision for the three months ended March 31, 2022 was due to growth in the loan portfolio. The decrease in the provision for the nine months ended March 31, 2022 was primarily due to a $6.5 million additional reserve for non-recurring Refund Advance loans for the three months ended September 30, 2020, and favorable changes in economic and business conditions resulting from the reduced levels of disruptions from the COVID-19 infectionspandemic between September 30, 2020March 31, 2021 and September 30, 2021. Provisions for credit losses for the three months ended September 30, 2021 were primarily comprised of provisions in commercial real estate and consumer and auto due to growth in these segments of the loan portfolio,March 31, 2022, partially offset by a decrease in provisions for commercialloan growth and industrial - non-RE as a result of changes in loan mix in this loan portfolio segment.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.”



35
38

Table of Contents
Non-Interest Income
The following table sets forth information regarding our non-interest income for the periods shown:
For the Three Months EndedFor the Three Months EndedFor the Nine Months Ended
September 30,March 31,March 31,
(Dollars in thousands)(Dollars in thousands)20212020Inc (Dec)(Dollars in thousands)20222021Inc (Dec)20222021Inc (Dec)
Prepayment penalty fee incomePrepayment penalty fee income$2,986 $1,368 $1,618 Prepayment penalty fee income$2,793 $1,342 $1,451 $9,073 $4,289 $4,784 
Gain on sale – otherGain on sale – other17 334 (317)Gain on sale – other61 214 (153)106 704 (598)
Mortgage banking incomeMortgage banking income5,253 19,567 (14,314)Mortgage banking income5,729 9,037 (3,308)15,594 39,255 (23,661)
Broker-dealer fee incomeBroker-dealer fee income11,766 5,702 6,064 Broker-dealer fee income12,913 7,942 4,971 39,046 19,931 19,115 
Banking and service feesBanking and service fees6,680 8,884 (2,204)Banking and service fees7,278 5,352 1,926 22,444 24,281 (1,837)
Total non-interest incomeTotal non-interest income$26,702 $35,855 $(9,153)Total non-interest income$28,774 $23,887 $4,887 $86,263 $88,460 $(2,197)
Non-interest income decreased $9.2increased $4.9 million to $26.7$28.8 million for the three months ended September 30, 2021March 31, 2022 compared to the three months ended September 30, 2020.March 31, 2021. The decreaseincrease was primarily the result of a decrease$5.0 million increase in broker-dealer fee income driven by custody and mutual fund fees earned by the newly acquired AAS division, an increase of $14.3 million in mortgage banking income, a decrease of $2.2$1.9 million in banking and service fees, primarilyand an increase of $1.5 million in prepayment penalty fee income, partially offset by a decrease of $3.3 million in mortgage banking income. Mortgage banking income for the three months ended March 31, 2022 included a mortgage servicing rights fair market value adjustment of approximately $3.0 million due to expected higher interest rates and slower mortgage prepayments. The fair value adjustment for the three months ended March 31, 2021 was $0.5 million. Non-interest income decreased $2.2 million to $86.3 million for the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021. The change was primarily the result of a $23.7 million decrease in mortgage banking income and a $1.8 million decrease in banking and service fees, from Emerald Prepaid Mastercard® and Refund Transfer products associated with H&R Block that did not recur in the threenine months ended September 30, 2021,March 31, 2022, partially offset by ana $19.1 million increase of $6.1 million in broker-dealer fee income driven by custody and mutual fund fees earned by the newly acquired AAS division and an increase of $1.6$4.8 million in prepayment penalty fee income.



36
39

Table of Contents
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 Three Months EndedFor the Nine Months Ended
September 30,March 31,March 31,
(Dollars in thousands)(Dollars in thousands)20212020Inc (Dec)(Dollars in thousands)20222021Inc (Dec)20222021Inc (Dec)
Salaries and related costsSalaries and related costs$40,737 $38,623 $2,114 Salaries and related costs$43,133 $38,545 $4,588 $123,849 $115,367 $8,482 
Data processingData processing12,092 7,928 4,164 Data processing12,274 10,171 2,103 36,565 27,772 8,793 
Advertising and promotionalAdvertising and promotional3,372 2,556 816 Advertising and promotional3,357 4,261 (904)10,131 10,600 (469)
Depreciation and amortizationDepreciation and amortization5,728 6,186 (458)Depreciation and amortization6,061 5,865 196 18,574 17,913 661 
Professional servicesProfessional services4,545 5,999 (1,454)Professional services4,346 5,712 (1,366)14,834 17,340 (2,506)
Occupancy and equipmentOccupancy and equipment3,181 3,011 170 Occupancy and equipment3,742 3,096 646 10,265 9,239 1,026 
FDIC and regulator fees2,266 2,692 (426)
FDIC and regulatory feesFDIC and regulatory fees3,115 3,107 7,856 8,400 (544)
Broker-dealer clearing chargesBroker-dealer clearing charges4,005 2,257 1,748 Broker-dealer clearing charges3,561 3,278 283 11,244 7,986 3,258 
Other general and administrative8,505 6,294 2,211 
General and administrative expenseGeneral and administrative expense7,230 6,772 458 23,951 18,033 5,918 
Total non-interest expensesTotal non-interest expenses$84,431 $75,546 $8,885 Total non-interest expenses$86,819 $80,807 $6,012 $257,269 $232,650 $24,619 
Non-interest expense, which is comprised of compensation, data processing, depreciation and amortization, advertising and promotional, professional services, occupancy and equipment, FDIC and regulatorregulatory fees, broker-dealer clearing charges and other operating expenses, was $84.4$86.8 million for the three months ended September 30, 2021, up from $75.5March 31, 2022, compared to $80.8 million for the three months ended September 30, 2020.March 31, 2021. Non-interest expense was $257.3 million for the nine months ended March 31, 2022, up from $232.7 million for the nine months ended March 31, 2021. The increase in non-interest expenseincreases for the three and nine months ended September 30, 2021 wasMarch 31, 2022 were generally due to the addition of AAS and the expansion of the CompanyBank operations specifically in areas related to lending and deposits.
Total salaries and related costs increased $2.1$4.6 million to $40.7$43.1 million for the quarterthree months ended September 30, 2021,March 31, 2022 compared to $38.6$38.5 million for the quarterthree months ended September 30, 2020,March 31, 2021 and increased $8.5 million to $123.8 million for the nine months ended March 31, 2022 compared to $115.4 million for the nine months ended March 31, 2021. The increases in compensation expense for the three and nine months ended March 31, 2022 were primarily due to increased staffing levels as a result of the AAS acquisition. Our staff increased to 1,2821,294 from 1,108,1,152, or 15.7%12.3% between September 30, 2021March 31, 2022 and September 30, 2020, which includes the addition of 124 employees for AAS.2021.
Data processing expense increased $4.2$2.1 million for the three months ended September 30,March 31, 2022 compared to three months ended March 31, 2021, and increased $8.8 million for the nine months ended March 31, 2022 compared to the three monthsnine month period ended September 30, 2020. The increase wasMarch 31, 2021, primarily due to additions enhancements to customer interfaces and the Company’s core processing systems.
DepreciationAdvertising and amortizationpromotional expense decreased $0.9 million and $0.5 million for the three and nine months ended September 30, 2021,March 31, 2022, compared to the three and nine months ended September 30, 2020. The decrease largely resulted from useful lives terminating on certain intangible assets acquired through acquisitions that reachedMarch 31, 2021, respectively. Fluctuations are mainly the endresult of their useful lives as planned prior to the three months ended September 30, 2021.changes in mortgage lead generation and deposit marketing costs.
AdvertisingDepreciation and promotionalamortization expense increased $0.8$0.2 million and $0.7 million for the three and nine months ended September 30, 2021,March 31, 2022, compared to the three and nine months ended September 30, 2020.March 31, 2021, respectively. The increase wasincreases for the three and nine months ended March 31, 2022 were primarily due to increased lead generationamortization of intangibles as a result of the AAS acquisition and deposit
marketing costs.depreciation on lending platform enhancements and infrastructure development.
Professional services which include accounting, consultingexpense decreased $1.4 million and legal fees, decreased $1.5$2.5 million for the three and nine months ended September 30, 2021March 31, 2022, compared to the three and nine months ended September 30, 2020. The decrease isMarch 31, 2021, respectively. Professional services charges decreased due primarily the result ofto lower legal expenses.expense during the three and nine months ended March 31, 2022.
Occupancy and equipment expense increased $0.2by $0.6 million and $1.0 million for the three and nine months ended September 30, 2021March 31, 2022 compared to the three and nine months ended September 30, 2020,March 31, 2021, respectively. The changes for the three and nine months ended March 31, 2022 are primarily due to annual cost increases in our office space lease agreements and the addition of an assumed office space lease for our AAS employees.
The
Our cost of our FDIC and OCC standard regulatory chargesfees was flat and decreased $0.4$0.5 million for the three and nine months ended September 30, 2021,March 31, 2022, compared to the three and nine month period ending September 30, 2020last year, respectively. The decrease were due to the changesfavorable fluctuations in the Bank’s mix of liabilities used for the assessment.assessment rate. As an FDIC-insured institution, the Bank is required to pay deposit insurance premiums to the FDIC.
Broker-dealer clearing charges increased $1.7 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. The increase was attributable to increased activity and correlated clearing charges in the Securities Business including the acquisition of AAS.
3740

Table of Contents
Broker-dealer clearing charges increased $0.3 million and $3.3 million for the three and nine months ended March 31, 2022 compared to the three and nine months ended March 31, 2021, respectively. The increases were attributable to the acquisition of AAS and increased clearing charges due to higher activity during the three and nine months ended March 31, 2022.
Other general and administrative costs increased by $2.2$0.5 million and $5.9 million for the three and nine months ended September 30, 2021,March 31, 2022, compared to the three month periodand nine months ended September 30, 2020March 31, 2021, respectively. The increase in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily relateddue to a $2.0$1.0 million provision to allowance for credit lossesthe unfunded loan commitment liability. The increase in the nine months ended March 31, 2022 as compared to March 31, 2021 was primarily due to a $4.0 million provision to the unfunded loan commitment liability and increased travel costs of unfunded commitments.$1.5 million.
Provision for Income Taxes
Income tax expense was $24.7 million for the three months ended September 30, 2021 compared to $22.8 million for three months ended September 30, 2020. Our effective income tax rates (income tax provision divided by net income before income tax) for the three months ended September 30,March 31, 2022 and 2021 were 28.93% and 202029.46%, respectively. Our effective income tax rates for the nine months ended March 31, 2022 and 2021 were 29.09%29.21% and 30.08%29.92%, respectively. The change in effective income tax rates between periods are primarily the result of changes in tax benefits from stock compensation.
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. OurThe Company operates through two operating segments: Banking Business and Securities Business. In order to reconcile the two segments to the unaudited condensed consolidated totals, ourthe Company includes parent-only activities and intercompany eliminations. The following tables present the operating results of the segments:
For the Three Months Ended March 31, 2022
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$147,828 $3,377 $(1,667)$149,538 
Provision for credit losses4,500 — — 4,500 
Non-interest income15,741 15,609 (2,576)28,774 
Non-interest expense65,076 20,242 1,501 86,819 
Income before taxes$93,993 $(1,256)$(5,744)$86,993 
For the Three Months Ended March 31, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$135,096 $3,847 $(3,274)$135,669 
Provision for credit losses2,700 — — 2,700 
Non-interest income16,201 8,369 (683)23,887 
Non-interest expense64,040 13,282 3,485 80,807 
Income before taxes$84,557 $(1,066)$(7,442)$76,049 
Three Months Ended September 30, 2021For the Nine Months Ended March 31, 2022
(Dollars in thousands)(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest incomeNet interest income$142,241 $6,176 $(1,775)$146,642 Net interest income$432,328 $14,059 $(4,639)$441,748 
Provision for credit lossesProvision for credit losses4,000 — — 4,000 Provision for credit losses12,500 — — 12,500 
Non-interest incomeNon-interest income14,828 13,106 (1,232)26,702 Non-interest income46,864 45,169 (5,770)86,263 
Non-interest expenseNon-interest expense62,725 19,273 2,433 84,431 Non-interest expense190,250 61,169 5,850 257,269 
Income before taxesIncome before taxes$90,344 $$(5,440)$84,913 Income before taxes$276,442 $(1,941)$(16,259)$258,242 
Three Months Ended September 30, 2020
(Dollars in thousands)Banking
Business
Securities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$123,008 $4,894 $(575)$127,327 
Provision for credit losses11,800 — — 11,800 
Non-interest income30,212 5,784 (141)35,855 
Non-interest expense61,217 11,352 2,977 75,546 
Income before taxes$80,203 $(674)$(3,693)$75,836 
41

Table of Contents
For the Nine Months Ended March 31, 2021
(Dollars in thousands)Banking BusinessSecurities BusinessCorporate/EliminationsAxos Consolidated
Net interest income$390,268 $13,002 $(6,182)$397,088 
Provision for credit losses22,500 — — 22,500 
Non-interest income68,708 20,725 (973)88,460 
Non-interest expense187,733 35,946 8,971 232,650 
Income before taxes$248,743 $(2,219)$(16,126)$230,398 
Banking Business
For the three months ended September 30, 2021, weMarch 31, 2022, our Banking Business segment had income before taxes of $90.3$94.0 million compared to income before taxes of $80.2$84.6 million for the three months ended September 30, 2020.March 31, 2021. For the nine months ended March 31, 2022, we had income before taxes of $276.4 million compared to income before taxes of $248.7 million for the nine months ended March 31, 2021. For the three months ended September 30,March 31, 2021, the increase in income before taxes was related to increased net interest incomemainly due to an increase in average earning assets,net interest income primarily from a reductiondecline in rates of interest-bearing demand and savings deposits and time deposits, partially offset by a decrease in mortgage banking, compared to the three months ended March 31, 2021. For the nine months ended March 31, 2021, the increase in income before taxes was mainly due to an increase in net interest income primarily from a decline in rates paid onof interest-bearing demand and savings deposits and time deposits and a decrease in the provision for credit losses, partially offset by a decrease in non-interest income primarily driven by decreased mortgage banking, income.compared to the nine months ended March 31, 2021.
We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business segment:
At or for the Three Months Ended
September 30, 2021September 30, 2020
Efficiency ratio39.93 %39.95 %
Return on average assets1.92 %1.78 %
Interest rate spread4.34 %3.70 %
Net interest margin4.48 %3.91 %
38

Table of Contents
At or for the Three Months EndedAt or for the Nine Months Ended
March 31, 2022March 31, 2021March 31, 2022March 31, 2021
Efficiency ratio39.79 %42.33 %39.70 %40.90 %
Return on average assets1.84 %1.81 %1.89 %1.80 %
Interest rate spread4.06 %4.05 %4.17 %3.90 %
Net interest margin4.21 %4.23 %4.33 %4.09 %
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 our HoldingParent Company 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 borrowingssecurities financing operations that particularlytypically decrease net interest margin.

42

Table of Contents
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table presents 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 For the Three Months Ended
September 30,March 31,
20212020 20222021
(Dollars in thousands)(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Assets:Assets:Assets:
Loans3, 4
Loans3, 4
$11,622,074 $148,843 5.12 %$10,790,869 $140,678 5.21 %
Loans3, 4
$12,804,231 $153,363 4.79 %$11,556,228 $147,264 5.10 %
Interest-earning deposits in other financial institutionsInterest-earning deposits in other financial institutions879,856 337 0.15 %1,542,335 392 0.10 %Interest-earning deposits in other financial institutions1,042,552 483 0.19 %949,259 230 0.10 %
Mortgage-backed and other investment securities4
Mortgage-backed and other investment securities4
180,545 1,546 3.43 %227,081 2,856 5.03 %
Mortgage-backed and other investment securities4
185,952 1,661 3.57 %242,422 2,733 4.51 %
Stock of the regulatory agenciesStock of the regulatory agencies17,824 270 6.06 %17,250 203 4.71 %Stock of the regulatory agencies18,215 258 5.67 %17,250 212 4.92 %
Total interest-earning assetsTotal interest-earning assets12,700,299 150,996 4.76 %12,577,535 144,129 4.58 %Total interest-earning assets14,050,950 155,765 4.43 %12,765,159 150,439 4.71 %
Non-interest-earning assetsNon-interest-earning assets286,810 152,209 Non-interest-earning assets297,950 161,541 
Total assetsTotal assets$12,987,109 $12,729,744 Total assets$14,348,900 $12,926,700 
Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:
Interest-bearing demand and savingsInterest-bearing demand and savings$6,614,799 $3,594 0.22 %$7,099,034 $9,155 0.52 %Interest-bearing demand and savings$6,999,385 $3,848 0.22 %$7,256,096 $6,904 0.38 %
Time depositsTime deposits1,363,061 4,145 1.22 %2,058,540 10,463 2.03 %Time deposits1,194,452 3,116 1.04 %1,748,271 7,343 1.68 %
Advances from the FHLBAdvances from the FHLB295,402 1,016 1.38 %242,500 1,372 2.26 %Advances from the FHLB289,289 973 1.35 %194,564 992 2.04 %
Borrowings, subordinated notes and debentures
Borrowings, subordinated notes and debentures
43 — — %151,952 132 0.35 %Borrowings, subordinated notes and debentures
33 — — %120,037 104 0.35 %
Total interest-bearing liabilitiesTotal interest-bearing liabilities8,273,305 8,755 0.42 %9,552,026 21,122 0.88 %Total interest-bearing liabilities8,483,159 7,937 0.37 %9,318,968 15,343 0.66 %
Non-interest-bearing demand depositsNon-interest-bearing demand deposits3,238,709 1,918,856 Non-interest-bearing demand deposits4,269,702 2,239,439 
Other non-interest-bearing liabilitiesOther non-interest-bearing liabilities124,213 135,467 Other non-interest-bearing liabilities135,237 119,605 
Stockholders’ equityStockholders’ equity1,350,882 1,123,395 Stockholders’ equity1,460,802 1,248,688 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$12,987,109 $12,729,744 Total liabilities and stockholders’ equity$14,348,900 $12,926,700 
Net interest incomeNet interest income$142,241 $123,007 Net interest income$147,828 $135,096 
Interest rate spread5
Interest rate spread5
4.34 %3.70 %
Interest rate spread5
4.06 %4.05 %
Net interest margin6
Net interest margin6
4.48 %3.91 %
Net interest margin6
4.21 %4.23 %
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. Loan fee income is not significant. Loans include average balances of $26.7$26.3 million and $27.5$27.1 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 20212022 and 20202021 three-month periods, respectively.
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.




39
43

Table of Contents
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table presents 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 Nine Months Ended
March 31,
 20222021
(Dollars in thousands)
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Average
Balance1
Interest
Income/
Expense
Average Yields
Earned/Rates
Paid2
Assets:
Loans3, 4
$12,163,066 $451,166 4.95 %$11,234,740 $434,269 5.15 %
Interest-earning deposits in other financial institutions961,393 1,196 0.17 %1,245,733 946 0.10 %
Mortgage-backed and other investment securities4
176,570 4,665 3.52 %233,946 8,661 4.94 %
Stock of the regulatory agencies17,811 788 5.90 %17,250 631 4.88 %
Total interest-earning assets13,318,840 457,815 4.58 %12,731,669 444,507 4.66 %
Non-interest-earning assets295,401 157,825 
Total assets$13,614,241 $12,889,494 
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$6,742,803 $11,758 0.23 %$7,248,839 $24,413 0.45 %
Time deposits1,297,870 10,767 1.11 %1,889,983 25,770 1.82 %
Advances from the FHLB285,547 2,962 1.38 %224,119 3,690 2.20 %
Borrowings, subordinated notes and debentures
113 — — %139,925 366 0.35 %
Total interest-bearing liabilities8,326,333 25,487 0.41 %9,502,866 54,239 0.76 %
Non-interest-bearing demand deposits3,760,771 2,070,747 
Other non-interest-bearing liabilities142,212 127,079 
Stockholders’ equity1,384,925 1,188,802 
Total liabilities and stockholders’ equity$13,614,241 $12,889,494 
Net interest income$432,328 $390,268 
Interest rate spread5
4.17 %3.90 %
Net interest margin6
4.33 %4.09 %
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. Loan fee income is not significant. Loans include average balances of $26.5 million and $27.3 million of Community Reinvestment Act loans which are taxed at a reduced rate for the 2022 and 2021 nine-month periods, respectively.
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.


44

Table of Contents
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table sets forth the effects of changing rates and volumes on our net interest income.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); (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 Three Months EndedFor the Nine Months Ended
September 30March 31,March 31,
2021 vs 20202022 vs 20212022 vs 2021
Increase (Decrease) Due to Increase (Decrease) Due toIncrease (Decrease) Due to
(Dollars in thousands)(Dollars in thousands)VolumeRateTotal
Increase
(Decrease)
(Dollars in thousands)VolumeRateTotal
Increase
(Decrease)
VolumeRateTotal
Increase
(Decrease)
Increase / (decrease) in interest income:Increase / (decrease) in interest income:Increase / (decrease) in interest income:
LoansLoans$10,636 $(2,471)$8,165 Loans$15,364 $(9,265)$6,099 $34,423 $(17,526)$16,897 
Interest-earning deposits in other financial institutionsInterest-earning deposits in other financial institutions(204)149 (55)Interest-earning deposits in other financial institutions25 228 253 (260)510 250 
Mortgage-backed and other investment securitiesMortgage-backed and other investment securities(513)(797)(1,310)Mortgage-backed and other investment securities(566)(506)(1,072)(1,840)(2,156)(3,996)
Stock of the regulatory agencies, at costStock of the regulatory agencies, at cost60 67 Stock of the regulatory agencies, at cost13 33 46 22 135 157 
$9,926 $(3,059)$6,867 $14,836 $(9,510)$5,326 $32,345 $(19,037)$13,308 
Increase / (decrease) in interest expense:Increase / (decrease) in interest expense:Increase / (decrease) in interest expense:
Interest-bearing demand and savingsInterest-bearing demand and savings$(588)$(4,973)$(5,561)Interest-bearing demand and savings$(237)$(2,819)$(3,056)$(1,581)$(11,074)$(12,655)
Time depositsTime deposits(2,897)(3,421)(6,318)Time deposits(1,919)(2,308)(4,227)(6,682)(8,321)(15,003)
Advances from the FHLBAdvances from the FHLB256 (612)(356)Advances from the FHLB385 (404)(19)860 (1,588)(728)
Borrowings, subordinated notes and debentures
Borrowings, subordinated notes and debentures
(66)(66)(132)Borrowings, subordinated notes and debentures
(52)(52)(104)(183)(183)(366)
$(3,295)$(9,072)$(12,367)$(1,823)$(5,583)$(7,406)$(7,586)$(21,166)$(28,752)
The Banking Business segment’s net interest income for the three and nine months ended September 30, 2021March 31, 2022 totaled $142.2$147.8 million and $432.3 million, an increase of 15.6%9.4% and an increase of 10.8%, compared to net interest income of $123.0$135.1 million and $390.3 million for the three and nine months ended September 30, 2020.March 31, 2021, respectively. The growth of net interest incomeincrease for the three and nine months ended September 30, 2021 isMarch 31, 2022 was primarily due to an increasethe reduction in average interest-earning assets and lowered funding costs fromthe rates paid on interest-bearing demand and savings deposits, and time deposits.increased interest income due to growth in the loan portfolio, partially offset by reduced yields on interest earning assets.
The Banking Business segment’s non-interest income decreased $15.4 million from $30.2$0.5 million to $14.8$15.7 million and decreased $21.8 million to $46.9 million for the three and nine months ended March 31, 2022 compared to the three and nine months ended March 31, 2021, respectively. The $0.5 million decrease for the three months ended September 30, 2021March 31, 2022 compared to the three months ended September 30, 2020. The $15.4 million decrease in non-interest income for the three months ended September 30,March 31, 2021, was primarilymainly the result of a decrease indecreased mortgage banking income of $14.3$3.3 million and a decreasepartially offset by increases in banking and service fees of $2.2$1.6 million and prepayment penalty fee income of $1.5 million. The $21.8 million decrease for the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021, was mainly the result of decreased mortgage banking income of $23.7 million and decreased banking and service fees of $2.4 million from Emerald Prepaid Mastercard® and Refund Transfer products associated with H&R Block that did not recur for the nine months ended March 31, 2022, partially offset by an increaseincreases in prepayment penalty fee income of $1.6$4.8 million.
The Banking Business segment’s non-interest expense for the three and nine months ended March 31, 2022 increased $1.5$1.0 million forand $2.5 million, respectively, compared to the three and nine months ended March 31, 2021. For the three months ended September 30, 2021March 31, 2022 compared to the three months ended September 30, 2020.March 31, 2021, non-interest expense increased $1.0 million mainly the result of a $1.5 million increase in data processing and a $1.0 million increase in salaries and related costs, partially offset by a $1.0 million decrease in depreciation and amortization. For the threenine months ended September 30, 2021March 31, 2022 compared to the threenine months ended September 30, 2020,March 31, 2021, the $1.5$2.5 million increase of non-interest expense was primarily due to an increase of $3.8a $5.7 million for data processing, an increase in advertising and promotional expenses of $1.9 million, and an increase in other general and administrative costs of $1.7expenses, a $6.2 million increase in data processing expense, and a $3.8 million increase in advertising and promotional expense, partially offset by a $5.4 million decrease of $2.8 million for salaries and related expenses, a $2.9 million decrease in professional servicesfees, a $2.4 million decrease in depreciation and amortization, and a $1.1 million decrease in regulatory fees.
45

Table of $1.6 million.Contents
Securities Business
For the three months ended September 30, 2021,March 31, 2022, our Securities Business segment had incomea loss before taxes of $9.0 thousand$1.3 million compared to a loss before taxes of $0.7$1.1 million for the three months ended September 30, 2020.March 31, 2021. For the nine months ended March 31, 2022, our Securities Business segment had a loss before taxes of $1.9 million compared to a loss before taxes of $2.2 million for the nine months ended March 31, 2021.
Net interest income for the three months ended September 30, 2021, increased $1.3March 31, 2022, decreased $0.5 million to $6.2$3.4 million compared to $4.9 million for the three months ended September 30, 2020,March 31, 2021. Net interest income for the nine months ended March 31, 2022 increased $1.1 million to $14.1 million compared to the nine months ended March 31, 2021. The changes were primarily as a result of increasefluctuations in the average interest-earning balance of securities borrowed and margin lending. In the Securities Business, interest is earned through margin loan balances, securities borrowed, and cash deposit balances. Interest expense is incurred from cash borrowed through bank lines and securities lending.
The non-interestNon-interest income during the three months ended September 30, 2021, was $13.1March 31, 2022, increased $7.2 million to $15.6 million compared to $5.8 million for the three months ended September 30, 2020.March 31, 2021. The increase of $7.3increases were primarily $7.7 million is the result of an increase of $5.3 million
40

Table of Contents
attributable to the addition of AAS custody and mutual funds fees, an increase of $0.8 million of clearing and custodial related fees, an increase of $0.6 million in correspondent fees, an increase of $0.5$2.3 million in fees earned on FDIC insured bank deposits, partially offset by a decrease of $1.8 million in correspondent fees, and a decrease of $1.2 million of clearing and custodial related fees. Non-interest income during the nine months ended March 31, 2022 increased $24.4 million to $45.2 million compared to the nine months ended March 31, 2021. The increases were primarily $21.1 million attributable to the addition of AAS custody and mutual funds fees, an increase of $0.1$4.3 million in fees earned on FDIC insured bank deposits, partially offset by a decrease of $0.9 million in correspondent fees, a decrease of $0.6 million of clearing technology services.and custodial related fees.
Non-interest expense increased $7.9$7.0 million to $19.3$20.2 million for the three months ended September 30, 2021March 31, 2022 from the $11.4$13.3 million for the three months ended September 30, 2020.March 31, 2021. The increase was primarily related to an increase of $4.4$3.0 million in salaries and related expenses related to staffing and the acquisition of AAS, an increase of $1.7$1.2 million depreciation and amortization expense, an increase of $0.9 million in occupancy and equipment, an increase of $0.7 million in data processing. Non-interest expense increased $25.2 million to $61.2 million for the nine months ended March 31, 2022, from $35.9 million for the nine months ended March 31, 2021. The increase was primarily related to an increase of $12.1 million in salaries and related expenses related to staffing and the acquisition of AAS, an increase of $3.3 million in broker-dealer clearing charges, an increase of $0.6$2.9 million depreciation and amortization expense, an increase of $2.5 million in data processing, an increase of $2.0 million occupancy and equipment expense, and an increase of $0.4$1.0 million depreciationadvertising and amortizationpromotional expense. The increases were primarily the result of the addition of AAS.
The following table provides selectedSelected information for Axos Clearing LLCconcerning the Securities segment follows as of orand for the three months ended:
March 31,
(Dollars in thousands)(Dollars in thousands)September 30, 2021September 30, 2020(Dollars in thousands)20222021
Compensation as a % of net revenueCompensation as a % of net revenue43.8 %40.1 %Compensation as a % of net revenue36.7 %32.4 %
FDIC insured deposit program balances at banks (end of period)$1,971,355 $672,822 
FDIC insured program balances (end of period)FDIC insured program balances (end of period)$824,494 $794,614 
Customer margin balances (end of period)Customer margin balances (end of period)$340,995 $252,867 Customer margin balances (end of period)$294,983 $310,695 
Cash reserves for the benefit of customers (end of period)$269,358 $214,550 
Customer funds on deposit, including short credits (end of period)Customer funds on deposit, including short credits (end of period)$250,966 $294,903 
Clearing:Clearing:
Total ticketsTotal tickets1,495,617 1,998,293 
Correspondents (end of period)Correspondents (end of period)68 64 
Securities lending:Securities lending:Securities lending:
Interest-earning assets – stock borrowed (end of period)Interest-earning assets – stock borrowed (end of period)$457,282 $263,470 Interest-earning assets – stock borrowed (end of period)$274,644 $543,538 
Interest-bearing liabilities – stock loaned (end of period)Interest-bearing liabilities – stock loaned (end of period)$539,505 $315,976 Interest-bearing liabilities – stock loaned (end of period)$447,748 $649,837 
4146

Table of Contents
FINANCIAL CONDITION
Balance Sheet Analysis
Our totalTotal assets increased $0.6$1.8 billion, or 4.5%12.7%, to $14.9$16.1 billion, as of September 30, 2021,March 31, 2022, up from $14.3 billion at June 30, 2021. The increase in total assets was primarilymainly due to an increase of $464.2$1.7 billion in net loans held for investment, an increase of $211.5 million in loans. Total liabilities increased $0.6 billion, primarily fromcash and cash equivalents, and an increase of $140.7 million in deposits of $931.6 million,customer, broker-dealer and clearing receivables, partially offset by a decrease of $344.4 million in securities loanedborrowed. Total liabilities increased $1.6 billion, primarily due to growth in deposits of $189.5 million.$1.9 billion, partially offset by a decrease of $201.0 million in advances from the FHLB and a decrease of $281.2 million in securities loaned.
Loans
Net loans held for investment increased 4.1%14.7% to $11.9$13.1 billion at September 30, 2021as of March 31, 2022 from $11.4 billion at June 30, 2021. The increase in the loan portfolio was primarily due to loan originations of $2.1 billion, partially offset by loan repaymentsgrowth in demand for commercial real estate and other adjustments of $1.6 billion.C&I loans.
The following table sets forth the composition of the loan portfolio as of the dates indicated:
September 30, 2021June 30, 2021
(Dollars in thousands)AmountPercentAmountPercent
Single Family - Mortgage & Warehouse$4,341,174 36.1 %$4,359,472 37.8 %
Multifamily and Commercial Mortgage2,458,200 20.4 %2,470,454 21.4 %
Commercial Real Estate3,492,926 29.1 %3,180,453 27.5 %
Commercial & Industrial - Non-RE1,239,354 10.3 %1,123,869 9.7 %
Auto & Consumer446,656 3.7 %362,180 3.1 %
Other42,672 0.4 %58,316 0.5 %
Total gross loans12,020,982 100.0 %11,554,744 100.0 %
Allowance for credit losses - loans(136,778)(132,958)
Unaccreted discounts and loan fees(5,183)(6,972)
Total net loans$11,879,021 $11,414,814 
March 31, 2022June 30, 2021
(Dollars in thousands)AmountPercentAmountPercent
Single Family - Mortgage & Warehouse$3,972,103 30.0 %$4,359,472 37.8 %
Multifamily and Commercial Mortgage2,662,517 20.1 %2,470,454 21.4 %
Commercial Real Estate4,293,032 32.5 %3,180,453 27.5 %
Commercial & Industrial - Non-RE1,780,545 13.4 %1,123,869 9.7 %
Auto & Consumer521,936 3.9 %362,180 3.1 %
Other16,125 0.1 %58,316 0.5 %
Total gross loans13,246,258 100.0 %11,554,744 100.0 %
Allowance for credit losses - loans(143,372)(132,958)
Unaccreted discounts and loan fees(9,283)(6,972)
Total net loans$13,093,603 $11,414,814 
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 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. 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 September 30, 2021,March 31, 2022, the Company had $1,076.9 million$1.1 billion of interest only mortgage loans.
4247

Table of Contents
Asset Quality and Allowance for CreditLoan and Lease Losses - Loans
Non-performing Assets
Non-performing loans are comprised of loans past due 90 days or more on nonaccrual status and other nonaccrual loans. Non-performing assets include non-performing loans plus other real estate owned and repossessed vehicles. At September 30, 2021,March 31, 2022, our non-performing loans totaled $134.1$138.8 million, or 1.12%1.05% of total gross loans and our total non-performing assets totaled $140.5 million, or 0.94% of total assets.
Non-performing loans and foreclosed assets or “non-performing assets” totaled $139.3 million, or 0.87% of total assets.
Non-performing assets consisted of the following as of the dates indicated:
(Dollars in thousands)September 30, 2021June 30, 2021Inc (Dec)
Non-performing assets:
Non-accrual loans:
Single Family - Mortgage & Warehouse$111,257 $105,708 $5,549 
Multifamily and Commercial Mortgage6,964 20,428 (13,464)
Commercial Real Estate15,539 15,839 (300)
Commercial & Industrial - Non-RE— 2,942 (2,942)
Auto & Consumer374 278 96 
Total non-performing loans134,134 145,195 (11,061)
Foreclosed real estate6,114 6,547 (433)
Repossessed—Auto and RV206 235 (29)
Total non-performing assets$140,454 $151,977 $(11,523)
Total non-performing loans as a percentage of total loans1.12 %1.26 %(0.14)%
Total non-performing assets as a percentage of total assets0.94 %1.10 %(0.16)%
(Dollars in thousands)March 31, 2022June 30, 2021Inc (Dec)
Non-performing assets:
Non-accrual loans and leases:
Single Family - Mortgage & Warehouse$113,317 $105,708 $7,609 
Multifamily and Commercial Mortgage9,667 20,428 (10,761)
Commercial Real Estate14,952 15,839 (887)
Commercial & Industrial - Non-RE— 2,942 (2,942)
Auto & Consumer446 278 168 
Other372 — 372 
Total non-performing loans138,754 145,195 (6,441)
Foreclosed real estate— 6,547 (6,547)
Repossessed—Auto and RV564 235 329 
Total non-performing assets$139,318 $151,977 $(12,659)
Total non-performing loans as a percentage of total loans1.05 %1.26 %(0.21)%
Total non-performing assets as a percentage of total assets0.87 %1.07 %(0.20)%
Total non-performing assets decreased from $152.0 million at June 30, 2021 to $140.5$139.3 million at September 30, 2021.March 31, 2022. The decrease in non-performing assets isof approximately $12.7 million, was primarily attributable to resolutions of multifamily, C&I - non-RE, and foreclosed real estate in multifamily and commercial mortgage loans.response to improved macro economic factors. Non-performing single-family loans increased by $7.6 million. The Company ended COVID-19 related forbearance for all single family mortgage borrowers during the quarter ended September 30, 2020. Any forbearance granted out of COVID-19 was for six months or less. The weighted averageweighted-average LTV of the non-performing single family mortgage loans is 51.3%.was 57.2% as of March 31, 2022.
The Bank had no performing troubled debt restructurings at September 30, 2021as of March 31, 2022 and June 30, 2021. 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.
48

Table of Contents
Allowance for Credit Losses - Loans

On July 1, 2020, the Company adopted ASC 326. The update replaces the historical incurred loss model to a current expected loss model, resulting, generally, in earlier recognition of loss. Refer to Note 1 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for furthergreater detail on the accounting adoption along with detail of the processes and approaches involved in determining the allowance for credit losses under the new guidance.
43

Table of Contents
The following table reflects management’s allocation of the allowance for credit losses - loans by loan category and the ratio of each loan category to total loans as of the dates indicated:
September 30, 2021June 30, 2021March 31, 2022June 30, 2021
(Dollars in thousands)(Dollars in thousands)Amount
of
Allowance
Allocation
as a % of
Allowance
Amount
of
Allowance
Allocation
as a % of
Allowance
(Dollars in thousands)Amount
of
Allowance
Allocation
as a % of
Allowance
Amount
of
Allowance
Allocation
as a % of
Allowance
Single Family Real EstateSingle Family Real Estate$25,329 18.5 %$26,604 20.0 %Single Family Real Estate$21,789 15.2 %$26,604 20.0 %
Multifamily Real EstateMultifamily Real Estate13,359 9.8 %13,146 9.9 %Multifamily Real Estate13,818 9.7 %13,146 9.9 %
Commercial Real EstateCommercial Real Estate65,223 47.7 %57,928 43.6 %Commercial Real Estate69,829 48.7 %57,928 43.6 %
Commercial and Industrial - Non-RECommercial and Industrial - Non-RE22,519 16.5 %28,460 21.4 %Commercial and Industrial - Non-RE26,268 18.3 %28,460 21.4 %
Consumer and AutoConsumer and Auto10,007 7.3 %6,519 4.9 %Consumer and Auto11,623 8.1 %6,519 4.9 %
OtherOther341 0.2 %301 0.2 %Other45 — %301 0.2 %
TotalTotal$136,778 100.0 %$132,958 100.0 %Total$143,372 100.0 %$132,958 100.0 %

The provision for credit losses was $4.0$4.5 million for the three months ended September 30, 2021March 31, 2022 compared to $11.8$2.7 million for the three months ended September 30, 2020.March 31, 2021. The provision for credit losses was $12.5 million for the nine months ended March 31, 2022 compared to $22.5 million for the nine months ended March 31, 2021. The increase in the provision for the three months ended March 31, 2022 was due to growth in the loan portfolio. The decrease in the provision for the nine months ended March 31, 2022 was primarily due to a $6.5 million additional reserve for non-recurring Refund Advance loans for the three months ended September 30, 2020, and favorable changes in economic and business conditions resulting from reduced levels of disruptions from the COVID-19 pandemic between September 30, 2020March 31, 2021 and September 30, 2021. Provisions for credit losses for the three months ended September 30, 2021 were primarily comprised of provisions in commercial real estate and consumer and auto due to growth in these segments of the loan portfolio,March 31, 2022, partially offset by a decrease in provisions for commercialloan growth and industrial - non-RE as a result of changes in loan mix in this loan portfolio segment.mix. 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. The resolution of the Bank’s existing other real estate owned and non-performing loans should not have a significant adverse impact on our operating results.
Investment Securities
Total investment securities were $137.9$229.9 million as of September 30, 2021,March 31, 2022, compared with $189.3 million at June 30, 2021. During the threenine months ended September 30, 2021,March 31, 2022, we purchased securities for $7.0$107.3 million and received principal repayments of approximately $57.8$59.5 million in our available-for-sale portfolio. The remainder of the change for the available-for-sale portfolio is attributable to accretion and other activities.
49

Table of Contents
Deposits
Deposits increased by $931.6 million,a net $1.9 billion, or 8.6%17.7%, to $11,747.4 million$12.7 billion at September 30, 2021,March 31, 2022, from $10,815.8 million$10.8 billion at June 30, 2021. Interest bearing deposits decreased $94.1 million and time deposits decreased $132.4 million as higher costing deposits were run off. Non-interest bearing deposits increased $1,158.1 million,$1.7 billion, or 46.8%67.1%, to $3,632.5 million$4.1 billion at September 30, 2021,March 31, 2022, from $2,474.4 million at June 30, 2021, primarily due to deposits provided by the AAS acquisition. Time deposits decreased $471.4 million as higher costing time deposits were run off.
The following table sets forth the composition of the deposit portfolio as of the dates indicated:
September 30, 2021June 30, 2021March 31, 2022June 30, 2021
(Dollars in thousands)(Dollars in thousands)Amount
Rate1
Amount
Rate1
(Dollars in thousands)Amount
Rate1
Amount
Rate1
Non-interest bearingNon-interest bearing$3,632,521 — %$2,474,424 — %Non-interest bearing$4,135,278 — %$2,474,424 — %
Interest-bearing:
Interest bearing:Interest bearing:
DemandDemand3,582,826 0.14 %3,369,845 0.15 %Demand4,247,543 0.19 %3,369,845 0.15 %
SavingsSavings3,151,651 0.22 %3,458,687 0.21 %Savings3,308,736 0.23 %3,458,687 0.21 %
Total interest-bearing demand and savingsTotal interest-bearing demand and savings6,734,477 0.18 %6,828,532 0.18 %Total interest-bearing demand and savings7,556,279 0.21 %6,828,532 0.18 %
Time deposits:Time deposits:Time deposits:
$250 and under2
$250 and under2
962,782 1.31 %1,070,139 1.30 %
$250 and under2
726,161 1.19 %1,070,139 1.30 %
Greater than $250Greater than $250417,662 0.54 %442,702 1.03 %Greater than $250315,284 0.61 %442,702 1.03 %
Total time depositsTotal time deposits1,380,444 1.08 %1,512,841 1.22 %Total time deposits1,041,445 1.02 %1,512,841 1.22 %
Total interest bearing2
Total interest bearing2
8,114,921 0.33 %8,341,373 0.37 %
Total interest bearing2
8,597,724 0.31 %8,341,373 0.37 %
Total depositsTotal deposits$11,747,442 0.23 %$10,815,797 0.29 %Total deposits$12,733,002 0.21 %$10,815,797 0.29 %
1 Based on weighted-average stated interest rates at end of period.
44

Table of Contents
2The total interest-bearinginterest bearing includes brokered deposits of $704.3$803.0 million and $621.4 million as of September 30, 2021March 31, 2022 and June 30, 2021, respectively, of which $370.2$250.0 million and $380.0 million, respectively, are time deposits classified as $250 and under.under.

The following table sets forth the number of deposit accounts by type as of the date indicated:
September 30, 2021June 30, 2021September 30, 2020
Non-interest bearing prepaid and other accounts38,725 36,726 2,887,751 
Interest-bearing checking and savings accounts342,860 336,068314,774 
Time deposits11,082 12,81516,594 
Total number of accounts392,667 385,6093,219,119
March 31, 2022June 30, 2021March 31, 2021
Non-interest bearing, prepaid and other40,958 36,72633,442 
Checking and savings accounts344,176 336,068326,536 
Time deposits9,313 12,81514,430 
Total number of deposit accounts394,447 385,609374,408
Our non-interest bearing, prepaid and other accounts contained two omnibus accounts that when condensed for regulatory reporting purposes result in 29,317 accounts at September 30, 2020. The decrease in the number of accounts is the result of the termination of our third-party prepaid card relationships, such as H&R Block, due to the reduction of our interchange fees effective July 1, 2020 as a result of the Durbin Amendment.
Borrowings
The following table sets forth the composition of our borrowings and the interest rates at the dates indicated:
September 30, 2021June 30, 2021September 30, 2020
(Dollars in thousands)BalanceWeighted Average RateBalanceWeighted Average RateBalanceWeighted Average Rate
FHLB Advances$157,500 2.29 %$353,500 1.18 %$242,500 2.22 %
Borrowings, subordinated notes and debentures255,896 4.05 %221,358 4.68 %453,843 3.14 %
Total borrowings$413,396 3.38 %$574,858 0.73 %$696,343 2.82 %
Weighted average cost of borrowings during the quarter2.85 %2.93 %2.30 %
Borrowings as a percent of total assets2.77 %4.03 %5.20 %

March 31, 2022June 30, 2021March 31, 2021
(Dollars in thousands)BalanceWeighted Average RateBalanceWeighted Average RateBalanceWeighted Average Rate
FHLB Advances$152,5002.30 %$353,5001.18 %$172,5002.26 %
Borrowings, subordinated notes and debentures381,6824.54 %221,3584.68 %365,7533.23 %
Total borrowings$534,1823.90 %$574,8582.53 %$538,2532.92 %
Weighted average cost of borrowings during the quarter2.44 %2.93 %3.63 %
Borrowings as a percent of total assets3.32 %4.03 %3.63 %
At September 30, 2021,March 31, 2022, total borrowings amounted to $413.4$534.2 million, down $161.5$40.7 million, or 28.09%7.1%, from June 30, 2021 and down $282.9$4.1 million or 40.63%0.8% from September 30, 2020.March 31, 2021. Borrowings as a percent of total assets were 2.8%3.32%, 4.0%4.03% and 5.2%3.63% at September 30, 2021,March 31, 2022, June 30, 2021 and September 30, 2020,March 31, 2021, respectively. Weighted average cost of borrowings during the quarter were 2.85%2.44%, 2.93% and 2.30%3.63% for the quarters ended September 30, 2021,March 31, 2022, June 30, 2021 and September 30, 2020,March 31, 2021, respectively.
50

Table of Contents
We regularly use advances from the FHLB to manage our interest rate risk and, to a lesser extent, manage our liquidity position. Generally, FHLB advances with terms between three and ten years have been used to fund the originationpurchase of loanssingle family and multifamily mortgages and to provide us with interest rate risk protection should rates rise.
Stockholders’ Equity
Stockholders’ equity increased $57.7$184.6 million to $1,458.6$1,585.6 million at September 30, 2021March 31, 2022 compared to $1,400.9 million at June 30, 2021. The increase was the result of our net income for the threenine months ended September 30, 2021March 31, 2022 of $60.2$182.8 million, stock compensation expense of $6.0 million, partially offset by stock compensation expense and restricted stock units vesting which combined for a decrease of $2.0 million and a $0.5$4.1 million decrease in other comprehensive income, net of tax.
During the three and nine months ended September 30, 2021,March 31, 2022, the Company did not repurchase any common stock shares. The Company has $52.8 million remaining under the Board authorized stock repurchase program.
45


Table of Contents
LIQUIDITYSecurities Business
Cash flow information is as follows:
For the Three Months Ended
September 30,
(Dollars in thousands)20212020
Operating Activities$(133,441)$66,291 
Investing Activities$(398,948)$(316,103)
Financing Activities$764,046 $(578,546)
DuringFor the three months ended September 30, 2021, weMarch 31, 2022, our Securities Business segment had net cash outflows from operating activitiesa loss before taxes of $133.4$1.3 million compared to inflowsa loss before taxes of $66.3$1.1 million for the three months ended September 30, 2020, primarily dueMarch 31, 2021. For the nine months ended March 31, 2022, our Securities Business segment had a loss before taxes of $1.9 million compared to neta loss before taxes of $2.2 million for the nine months ended March 31, 2021.
Net interest income for each period. Net operating cash inflows and outflows fluctuate primarily duethe three months ended March 31, 2022, decreased $0.5 million to $3.4 million compared to the timingthree months ended March 31, 2021. Net interest income for the nine months ended March 31, 2022 increased $1.1 million to $14.1 million compared to the nine months ended March 31, 2021. The changes were primarily a result of fluctuations in the following: originationsaverage interest-earning balance of loans held for sale, proceeds from loan sales, securities borrowed and loaned,margin lending. In the Securities Business, interest is earned through margin loan balances, securities borrowed, and customer, broker-dealercash deposit balances. Interest expense is incurred from cash borrowed through bank lines and securities lending.
Non-interest income during the three months ended March 31, 2022, increased $7.2 million to $15.6 million compared to the three months ended March 31, 2021. The increases were primarily $7.7 million attributable to the addition of AAS custody and mutual funds fees, an increase of $2.3 million in fees earned on FDIC insured bank deposits, partially offset by a decrease of $1.8 million in correspondent fees, and a decrease of $1.2 million of clearing receivables and payables,custodial related fees. Non-interest income during the nine months ended March 31, 2022 increased $24.4 million to $45.2 million compared to the nine months ended March 31, 2021. The increases were primarily $21.1 million attributable to the addition of AAS custody and changesmutual funds fees, an increase of $4.3 million in other assetsfees earned on FDIC insured bank deposits, partially offset by a decrease of $0.9 million in correspondent fees, a decrease of $0.6 million of clearing and payables were the primary drivers.custodial related fees.
Net cash outflows from investing activities totaled $398.9Non-interest expense increased $7.0 million to $20.2 million for the three months ended September 30, 2021, while outflows totaled $316.1March 31, 2022 from the $13.3 million for the three months ended September 30, 2020.March 31, 2021. The increase in outflows was primarily duerelated to increased originationsan increase of loans partially offset by increased repayments on loans$3.0 million in salaries and related expenses related to staffing and the $54.6acquisition of AAS, an increase of $1.2 million depreciation and amortization expense, an increase of $0.9 million in occupancy and equipment, an increase of $0.7 million in data processing. Non-interest expense increased $25.2 million to $61.2 million for the nine months ended March 31, 2022, from $35.9 million for the nine months ended March 31, 2021. The increase was primarily related to an increase of $12.1 million in salaries and related expenses related to staffing and the acquisition of AAS, an increase of $3.3 million in broker-dealer clearing charges, an increase of $2.9 million depreciation and amortization expense, an increase of $2.5 million in data processing, an increase of $2.0 million occupancy and equipment expense, and an increase of $1.0 million advertising and promotional expense. The increases were primarily the result of the addition of AAS.
Net cash inflows from financing activities totaled $764.0 millionSelected information concerning the Securities segment follows as of and for the three months ended September 30, 2021, compared to net cash outflows from financing activities of $578.5 million for the three months ended September 30, 2020. The primary driver behind the increase in net cash inflows was increased deposits provided by the acquisition of AAS for the three months ended September 30, 2021.ended:
During the three months ended September 30, 2021, 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 September 30, 2021, the Company had $1,709.3 million available immediately and $3,388.7 million available with additional collateral. At September 30, 2021, we also had two unsecured federal funds purchase lines with two different banks totaling $175.0 million, under which no borrowings were outstanding.
The Bank has the ability to borrow short-term from the Federal Reserve Bank of San Francisco Discount Window. At September 30, 2021, the Bank did not have any borrowings outstanding and the amount available from this source was $2,024.3 million. The credit line is collateralized by consumer loans and mortgage-backed securities.
Axos Clearing has a total of $99.4 million uncommitted secured lines of credit available for borrowing as needed. As of September 30, 2021, there was $70.6 million outstanding. These credit facilities bear interest at rates based on the Federal Funds rate and are due upon demand.
Axos Clearing has a $50 million committed unsecured line of credit available for limited purpose borrowing. As of September 30, 2021, there was $0 million outstanding. This credit facility bears interest at rates based on the Federal Funds rate and are due upon demand.
We believe our liquidity sources to be stable and adequate for our anticipated needs and contingencies for the next 12 months and beyond. We believe we have the ability to increase our level of deposits and borrowings to address our liquidity needs for the foreseeable future.
OFF-BALANCE SHEET COMMITMENTS
At September 30, 2021, we had commitments to originate loans with an aggregate outstanding principal balance of $1,068.7 million, and commitments to sell loans with an aggregate outstanding principal balance of $56.1 million. We have no commitments to purchase loans, investment securities or any other unused lines of credit.
In the normal course of business, Axos Clearing’s customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose Axos Clearing to off-balance-sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and Axos Clearing has to purchase or sell the financial instrument underlying the contract at a loss. Axos Clearing’s clearing agreements with broker-dealers for which it provides clearing services requires them to indemnify Axos Clearing if customers fail to satisfy their contractual obligation.
March 31,
(Dollars in thousands)20222021
Compensation as a % of net revenue36.7 %32.4 %
FDIC insured program balances (end of period)$824,494 $794,614 
Customer margin balances (end of period)$294,983 $310,695 
Customer funds on deposit, including short credits (end of period)$250,966 $294,903 
Clearing:
Total tickets1,495,617 1,998,293 
Correspondents (end of period)68 64 
Securities lending:
Interest-earning assets – stock borrowed (end of period)$274,644 $543,538 
Interest-bearing liabilities – stock loaned (end of period)$447,748 $649,837 
46

Table of Contents
CAPITAL RESOURCES AND REQUIREMENTSFINANCIAL CONDITION
Our CompanyBalance Sheet Analysis
Total assets increased $1.8 billion, or 12.7%, to $16.1 billion, as of March 31, 2022, up from $14.3 billion at June 30, 2021. The increase in total assets was mainly due to an increase of $1.7 billion in net loans held for investment, an increase of $211.5 million in cash and cash equivalents, and an increase of $140.7 million in customer, broker-dealer and clearing receivables, partially offset by a decrease of $344.4 million in securities borrowed. Total liabilities increased $1.6 billion, primarily due to growth in deposits of $1.9 billion, partially offset by a decrease of $201.0 million in advances from the FHLB and a decrease of $281.2 million in securities loaned.
Loans
Net loans held for investment increased 14.7% to $13.1 billion as of March 31, 2022 from $11.4 billion at June 30, 2021. The increase in the loan portfolio was primarily due to growth in demand for commercial real estate and C&I loans.
The following table sets forth the composition of the loan portfolio as of the dates indicated:
March 31, 2022June 30, 2021
(Dollars in thousands)AmountPercentAmountPercent
Single Family - Mortgage & Warehouse$3,972,103 30.0 %$4,359,472 37.8 %
Multifamily and Commercial Mortgage2,662,517 20.1 %2,470,454 21.4 %
Commercial Real Estate4,293,032 32.5 %3,180,453 27.5 %
Commercial & Industrial - Non-RE1,780,545 13.4 %1,123,869 9.7 %
Auto & Consumer521,936 3.9 %362,180 3.1 %
Other16,125 0.1 %58,316 0.5 %
Total gross loans13,246,258 100.0 %11,554,744 100.0 %
Allowance for credit losses - loans(143,372)(132,958)
Unaccreted discounts and loan fees(9,283)(6,972)
Total net loans$13,093,603 $11,414,814 
The Bank originates some single family interest only loans with terms that include repayments that are subjectless 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 regulatory capital adequacy requirements promulgatedborrow at LTVs that are lower than standard amortizing ARM loans and by federal bank regulatory agencies. Failure by our Company orcalculating 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. Adverse trends reflected in the Company’s delinquency statistics, grading and classification of interest only loans would be reported to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on our unaudited condensed consolidated financial statements. The Federal Reserve establishes capital requirements for our Companymanagement and the OCC has similar requirements for our Bank. The following tables present regulatory capital information for ourBoard of Directors. As of March 31, 2022, the Company and Bank. Information presented for September 30, 2021, reflects the Basel III capital requirements that became effective January 1, 2015 for both our Company and Bank. Under these capital requirements and the regulatory framework for prompt corrective action, our Company and Bank must meet specific capital guidelines that involve quantitative measureshad $1.1 billion of our Company and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.
Quantitative measures established by regulation require our Company and Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require our Company and Bank maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity tier 1 capital to risk-weighted assets of 4.5%, tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. To be “well capitalized,” our Company and Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. At September 30, 2021, 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 September 30, 2021 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 elected the CECL 5-year transition guidance for calculating regulatory capital ratios and the September 30, 2021 ratios include this election. This guidance allows an entity to add back to capital 100% of the capital impact from the day one CECL transition adjustment and 25% of subsequent increases to the allowance for credit losses through June 30, 2023. This cumulative amount will then be phased out of regulatory capital over the next three years.
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)September 30, 2021June 30,
2021
September 30, 2021June 30,
2021
Regulatory Capital:
Tier 1$1,320 $1,309 $1,313 $1,263 
Common equity tier 1$1,320 $1,309 $1,313 $1,263 
Total capital (to risk-weighted assets)$1,603 $1,588 $1,413 $1,358 
Assets:
Average adjusted$14,365 $14,851 $12,952 $13,360 
Total risk-weighted$12,231 $11,523 $11,043 $10,283 
Regulatory Capital Ratios:
Tier 1 leverage (core) capital to adjusted average assets9.19 %8.82 %10.14 %9.45 %5.00 %4.00 %
Common equity tier 1 capital (to risk-weighted assets)10.79 %11.36 %11.89 %12.28 %6.50 %4.50 %
Tier 1 capital (to risk-weighted assets)10.79 %11.36 %11.89 %12.28 %8.00 %6.00 %
Total capital (to risk-weighted assets)13.10 %13.78 %12.80 %13.21 %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 September 30, 2021, our Company and Bank are 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.interest only mortgage loans.
47

Table of Contents
Asset Quality and Allowance for Loan and Lease Losses
Non-performing Assets
Non-performing loans are comprised of loans past due 90 days or more on nonaccrual status and other nonaccrual loans. Non-performing assets include non-performing loans plus other real estate owned and repossessed vehicles. At March 31, 2022, our non-performing loans totaled $138.8 million, or 1.05% of total gross loans and our non-performing loans and foreclosed assets or “non-performing assets” totaled $139.3 million, or 0.87% of total assets.
Non-performing assets consisted of the following as of the dates indicated:
(Dollars in thousands)March 31, 2022June 30, 2021Inc (Dec)
Non-performing assets:
Non-accrual loans and leases:
Single Family - Mortgage & Warehouse$113,317 $105,708 $7,609 
Multifamily and Commercial Mortgage9,667 20,428 (10,761)
Commercial Real Estate14,952 15,839 (887)
Commercial & Industrial - Non-RE— 2,942 (2,942)
Auto & Consumer446 278 168 
Other372 — 372 
Total non-performing loans138,754 145,195 (6,441)
Foreclosed real estate— 6,547 (6,547)
Repossessed—Auto and RV564 235 329 
Total non-performing assets$139,318 $151,977 $(12,659)
Total non-performing loans as a percentage of total loans1.05 %1.26 %(0.21)%
Total non-performing assets as a percentage of total assets0.87 %1.07 %(0.20)%
Total non-performing assets decreased from $152.0 million at June 30, 2021 to $139.3 million at March 31, 2022. The decrease in non-performing assets of approximately $12.7 million, was primarily attributable to resolutions of multifamily, C&I - non-RE, and foreclosed real estate in response to improved macro economic factors. Non-performing single-family loans increased by $7.6 million. The Company ended COVID-19 related forbearance for all single family mortgage borrowers during the quarter ended September 30, 2020. Any forbearance granted out of COVID-19 was for six months or less. The weighted-average LTV of the non-performing single family mortgage loans was 57.2% as of March 31, 2022.
The Bank had no performing troubled debt restructurings as of March 31, 2022 and June 30, 2021. 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.
48

Table of Contents
Allowance for Credit Losses - Loans

On July 1, 2020, the Company adopted ASC 326. The update replaces the historical incurred loss model to a current expected loss model, resulting, generally, in earlier recognition of loss. Refer to Note 1 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for greater detail on the accounting adoption along with detail of the processes and approaches involved in determining the allowance for credit losses under the new guidance.

The following table reflects management’s allocation of the allowance for credit losses - loans by loan category and the ratio of each loan category to total loans as of the dates indicated:
March 31, 2022June 30, 2021
(Dollars in thousands)Amount
of
Allowance
Allocation
as a % of
Allowance
Amount
of
Allowance
Allocation
as a % of
Allowance
Single Family Real Estate$21,789 15.2 %$26,604 20.0 %
Multifamily Real Estate13,818 9.7 %13,146 9.9 %
Commercial Real Estate69,829 48.7 %57,928 43.6 %
Commercial and Industrial - Non-RE26,268 18.3 %28,460 21.4 %
Consumer and Auto11,623 8.1 %6,519 4.9 %
Other45 — %301 0.2 %
Total$143,372 100.0 %$132,958 100.0 %

The provision for credit losses was $4.5 million for the three months ended March 31, 2022 compared to $2.7 million for the three months ended March 31, 2021. The provision for credit losses was $12.5 million for the nine months ended March 31, 2022 compared to $22.5 million for the nine months ended March 31, 2021. The increase in the provision for the three months ended March 31, 2022 was due to growth in the loan portfolio. The decrease in the provision for the nine months ended March 31, 2022 was due to favorable changes in economic and business conditions resulting from reduced levels of disruptions from the COVID-19 pandemic between March 31, 2021 and March 31, 2022, partially offset by loan growth and changes in loan mix. 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. The resolution of the Bank’s existing other real estate owned and non-performing loans should not have a significant adverse impact on our operating results.
Investment Securities
Total investment securities were $229.9 million as of March 31, 2022, compared with $189.3 million at June 30, 2021. During the nine months ended March 31, 2022, we purchased securities for $107.3 million and received principal repayments of approximately $59.5 million in our available-for-sale portfolio. The remainder of the change for the available-for-sale portfolio is attributable to accretion and other activities.
49

Table of Contents
Deposits
Deposits increased a net $1.9 billion, or 17.7%, to $12.7 billion at March 31, 2022, from $10.8 billion at June 30, 2021. Non-interest bearing deposits increased $1.7 billion, or 67.1%, to $4.1 billion at March 31, 2022, from June 30, 2021, primarily due to deposits provided by the AAS acquisition. Time deposits decreased $471.4 million as higher costing time deposits were run off.
The following table sets forth the composition of the deposit portfolio as of the dates indicated:
March 31, 2022June 30, 2021
(Dollars in thousands)Amount
Rate1
Amount
Rate1
Non-interest bearing$4,135,278 — %$2,474,424 — %
Interest bearing:
Demand4,247,543 0.19 %3,369,845 0.15 %
Savings3,308,736 0.23 %3,458,687 0.21 %
Total interest-bearing demand and savings7,556,279 0.21 %6,828,532 0.18 %
Time deposits:
$250 and under2
726,161 1.19 %1,070,139 1.30 %
Greater than $250315,284 0.61 %442,702 1.03 %
Total time deposits1,041,445 1.02 %1,512,841 1.22 %
Total interest bearing2
8,597,724 0.31 %8,341,373 0.37 %
Total deposits$12,733,002 0.21 %$10,815,797 0.29 %
1 Based on weighted-average stated interest rates at end of period.
2The total interest bearing includes brokered deposits of $803.0 million and $621.4 million as of March 31, 2022 and June 30, 2021, respectively, of which $250.0 million and $380.0 million, respectively, are time deposits classified as $250 and under.

The following table sets forth the number of deposit accounts by type as of the date indicated:
March 31, 2022June 30, 2021March 31, 2021
Non-interest bearing, prepaid and other40,958 36,72633,442 
Checking and savings accounts344,176 336,068326,536 
Time deposits9,313 12,81514,430 
Total number of deposit accounts394,447 385,609374,408

Borrowings
The following table sets forth the composition of our borrowings and the interest rates at the dates indicated:
March 31, 2022June 30, 2021March 31, 2021
(Dollars in thousands)BalanceWeighted Average RateBalanceWeighted Average RateBalanceWeighted Average Rate
FHLB Advances$152,5002.30 %$353,5001.18 %$172,5002.26 %
Borrowings, subordinated notes and debentures381,6824.54 %221,3584.68 %365,7533.23 %
Total borrowings$534,1823.90 %$574,8582.53 %$538,2532.92 %
Weighted average cost of borrowings during the quarter2.44 %2.93 %3.63 %
Borrowings as a percent of total assets3.32 %4.03 %3.63 %
At March 31, 2022, total borrowings amounted to $534.2 million, down $40.7 million, or 7.1%, from June 30, 2021 and down $4.1 million or 0.8% from March 31, 2021. Borrowings as a percent of total assets were 3.32%, 4.03% and 3.63% at March 31, 2022, June 30, 2021 and March 31, 2021, respectively. Weighted average cost of borrowings during the quarter were 2.44%, 2.93% and 3.63% for the quarters ended March 31, 2022, June 30, 2021 and March 31, 2021, respectively.
50

Table of Contents
We regularly use advances from the FHLB to manage our interest rate risk and, to a lesser extent, manage our liquidity position. Generally, FHLB advances with terms between three and ten years have been used to fund the purchase of single family and multifamily mortgages and to provide us with interest rate risk protection should rates rise.
Stockholders’ Equity
Stockholders’ equity increased $184.6 million to $1,585.6 million at March 31, 2022 compared to $1,400.9 million at June 30, 2021. The increase was the result of our net income for the nine months ended March 31, 2022 of $182.8 million, stock compensation expense of $6.0 million, partially offset by a $4.1 million decrease in other comprehensive income, net of tax.
During the three and nine months ended March 31, 2022, the Company did not repurchase any common stock shares. The Company has $52.8 million remaining under the Board authorized stock repurchase program.

Securities Business
Pursuant to the net capital requirements of the Securities Exchange Act of 1934, as amended (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)September 30, 2021June 30, 2021
Net capital$39,663 $35,950 
Excess Capital$31,435 $27,904 
Net capital as a percentage of aggregate debit items9.64 %8.94 %
Net capital in excess of 5% aggregate debit items$19,092 $15,836 
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 September 30, 2021, the Company had a deposit requirement of $241.0 million and maintained a deposit of $214.3 million. On October 1, 2021, the company made a deposit of $31.0 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 September 30, 2021, the Company had a deposit requirement of $47.8 million and maintained a deposit of $55.0 million. On October 1, 2021, the Company made a withdrawal in the amount of $6.9 million.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.
48

Table of Contents
Banking Business
The following table sets forth the amounts of interest earning assets and interest bearing liabilities that were outstanding at September 30, 2021 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
September 30, 2021
(Dollars in thousands)Six Months or LessOver Six
Months Through
One Year
Over One
Year Through
Five Years
Over Five
Years
Total
Interest-earning assets:
Cash and cash equivalents$966,301 $— $— $— $966,301 
Securities1
132,274 1,684 12,025 14,957 160,940 
Stock of the FHLB, at cost17,250 — — — 17,250 
Loans—net of allowance for credit loss7,618,288 1,504,579 2,806,303 46,635 11,975,805 
Loans held for sale45,293 — — — 45,293 
Total interest-earning assets8,779,406 1,506,263 2,818,328 61,592 13,165,589 
Non-interest earning assets— — — — 306,080 
Total assets$8,779,406 $1,506,263 $2,818,328 $61,592 $13,471,669 
Interest-bearing liabilities:
Interest-bearing deposits$6,154,180 $1,513,649 $486,745 $171 $8,154,745 
Advances from the FHLB5,000 40,000 52,500 60,000 157,500 
Borrowings, subordinated notes and debentures126,088 — — 14,000 140,088 
Total interest-bearing liabilities6,285,268 1,553,649 539,245 74,171 8,452,333 
Other non-interest-bearing liabilities— — — — 3,672,639 
Stockholders’ equity— — — — 1,346,697 
Total liabilities and equity$6,285,268 $1,553,649 $539,245 $74,171 $13,471,669 
Net interest rate sensitivity gap$2,494,138 $(47,386)$2,279,083 $(12,579)$4,713,256 
Cumulative gap$2,494,138 $2,446,752 $4,725,835 $4,713,256 $4,713,256 
Net interest rate sensitivity gap—as a % of total interest earning assets18.94 %(0.36)%17.31 %(0.10)%35.80 %
Cumulative gap—as % of total interest earning assets18.94 %18.58 %35.90 %35.80 %35.80 %
1    Comprised of agency and non-agency mortgage-backed securities, municipal securities and other non-agency debt securities, which are classified as available-for-sale.
The above table provides an approximation of the projected re-pricing of assets and liabilities at September 30, 2021 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. 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.
49

Table of Contents
The following table indicates the sensitivity of net interest income movements to parallel instantaneous shocks in interest rates for the future 1-12 months and 13-24 months’ time periods. For purposes of modeling net interest income sensitivity the Bank assumes no growth in the balance sheet other than for retained earnings:
As of September 30, 2021
First 12 MonthsNext 12 Months
(Dollars in thousands)Net Interest IncomePercentage Change from BaseNet Interest IncomePercentage Change from Base
Up 200 basis points$585,772 10.6 %$570,219 11.7 %
Base$529,586 — %$510,581 — %
Down 100 basis points$519,007 (2.0)%$492,226 (3.6)%
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 current treasury and LIBOR yield curves. For rising interest rate scenarios, the base market interest rate forecast was increased by 100, 200 and 300 basis points. For falling interest rate scenarios, we used a 100 basis point decrease due to limitations inherent in the current rate environment.
The following table indicates the sensitivity of market value of equity to the interest rate movement described above:
As of September 30, 2021
(Dollars in thousands)Net
Present Value
Percentage Change from BaseNet
Present
Value as a
Percentage
of Assets
Up 300 basis points$1,645,754 4.6 %12.2 %
Up 200 basis points$1,670,166 6.2 %12.3 %
Up 100 basis points$1,633,809 3.9 %11.9 %
Base$1,572,806 — %11.4 %
Down 100 basis points$1,370,455 (12.9)%9.8 %
The computation of the prospective effects of hypothetical interest rate changes is based on numerous assumptions, including relative levels of interest rates, asset prepayments, 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
For the three months ended March 31, 2022, our Securities Business segment had a loss before taxes of $1.3 million compared to a loss before taxes of $1.1 million for the three months ended March 31, 2021. For the nine months ended March 31, 2022, our Securities Business segment had a loss before taxes of $1.9 million compared to a loss before taxes of $2.2 million for the nine months ended March 31, 2021.
Net interest income for the three months ended March 31, 2022, decreased $0.5 million to $3.4 million compared to the three months ended March 31, 2021. Net interest income for the nine months ended March 31, 2022 increased $1.1 million to $14.1 million compared to the nine months ended March 31, 2021. The changes were primarily a result of fluctuations in the average interest-earning balance of securities borrowed and margin lending. In the Securities Business, interest is earned through margin loan balances, securities borrowed, and cash deposit balances. Interest expense is incurred from cash borrowed through bank lines and securities lending.
Non-interest income during the three months ended March 31, 2022, increased $7.2 million to $15.6 million compared to the three months ended March 31, 2021. The increases were primarily $7.7 million attributable to the addition of AAS custody and mutual funds fees, an increase of $2.3 million in fees earned on FDIC insured bank deposits, partially offset by a decrease of $1.8 million in correspondent fees, and a decrease of $1.2 million of clearing and custodial related fees. Non-interest income during the nine months ended March 31, 2022 increased $24.4 million to $45.2 million compared to the nine months ended March 31, 2021. The increases were primarily $21.1 million attributable to the addition of AAS custody and mutual funds fees, an increase of $4.3 million in fees earned on FDIC insured bank deposits, partially offset by a decrease of $0.9 million in correspondent fees, a decrease of $0.6 million of clearing and custodial related fees.
Non-interest expense increased $7.0 million to $20.2 million for the three months ended March 31, 2022 from the $13.3 million for the three months ended March 31, 2021. The increase was primarily related to an increase of $3.0 million in salaries and related expenses related to staffing and the acquisition of AAS, an increase of $1.2 million depreciation and amortization expense, an increase of $0.9 million in occupancy and equipment, an increase of $0.7 million in data processing. Non-interest expense increased $25.2 million to $61.2 million for the nine months ended March 31, 2022, from $35.9 million for the nine months ended March 31, 2021. The increase was primarily related to an increase of $12.1 million in salaries and related expenses related to staffing and the acquisition of AAS, an increase of $3.3 million in broker-dealer clearing charges, an increase of $2.9 million depreciation and amortization expense, an increase of $2.5 million in data processing, an increase of $2.0 million occupancy and equipment expense, and an increase of $1.0 million advertising and promotional expense. The increases were primarily the result of the addition of AAS.
Selected information concerning the Securities segment follows as of and for the three months ended:
March 31,
(Dollars in thousands)20222021
Compensation as a % of net revenue36.7 %32.4 %
FDIC insured program balances (end of period)$824,494 $794,614 
Customer margin balances (end of period)$294,983 $310,695 
Customer funds on deposit, including short credits (end of period)$250,966 $294,903 
Clearing:
Total tickets1,495,617 1,998,293 
Correspondents (end of period)68 64 
Securities lending:
Interest-earning assets – stock borrowed (end of period)$274,644 $543,538 
Interest-bearing liabilities – stock loaned (end of period)$447,748 $649,837 
46

Table of Contents
FINANCIAL CONDITION
Balance Sheet Analysis
Total assets increased $1.8 billion, or 12.7%, to $16.1 billion, as of March 31, 2022, up from $14.3 billion at June 30, 2021. The increase in total assets was mainly due to an increase of $1.7 billion in net loans held for investment, an increase of $211.5 million in cash and cash equivalents, and an increase of $140.7 million in customer, broker-dealer and clearing receivables, partially offset by a decrease of $344.4 million in securities borrowed. Total liabilities increased $1.6 billion, primarily due to growth in deposits of $1.9 billion, partially offset by a decrease of $201.0 million in advances from the FHLB and a decrease of $281.2 million in securities loaned.
Loans
Net loans held for investment increased 14.7% to $13.1 billion as of March 31, 2022 from $11.4 billion at June 30, 2021. The increase in the loan portfolio was primarily due to growth in demand for commercial real estate and C&I loans.
The following table sets forth the composition of the loan portfolio as of the dates indicated:
March 31, 2022June 30, 2021
(Dollars in thousands)AmountPercentAmountPercent
Single Family - Mortgage & Warehouse$3,972,103 30.0 %$4,359,472 37.8 %
Multifamily and Commercial Mortgage2,662,517 20.1 %2,470,454 21.4 %
Commercial Real Estate4,293,032 32.5 %3,180,453 27.5 %
Commercial & Industrial - Non-RE1,780,545 13.4 %1,123,869 9.7 %
Auto & Consumer521,936 3.9 %362,180 3.1 %
Other16,125 0.1 %58,316 0.5 %
Total gross loans13,246,258 100.0 %11,554,744 100.0 %
Allowance for credit losses - loans(143,372)(132,958)
Unaccreted discounts and loan fees(9,283)(6,972)
Total net loans$13,093,603 $11,414,814 
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 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. 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, 2022, the Company had $1.1 billion of interest only mortgage loans.
47

Table of Contents
Asset Quality and Allowance for Loan and Lease Losses
Non-performing Assets
Non-performing loans are comprised of loans past due 90 days or more on nonaccrual status and other nonaccrual loans. Non-performing assets include non-performing loans plus other real estate owned and repossessed vehicles. At March 31, 2022, our non-performing loans totaled $138.8 million, or 1.05% of total gross loans and our non-performing loans and foreclosed assets or “non-performing assets” totaled $139.3 million, or 0.87% of total assets.
Non-performing assets consisted of the following as of the dates indicated:
(Dollars in thousands)March 31, 2022June 30, 2021Inc (Dec)
Non-performing assets:
Non-accrual loans and leases:
Single Family - Mortgage & Warehouse$113,317 $105,708 $7,609 
Multifamily and Commercial Mortgage9,667 20,428 (10,761)
Commercial Real Estate14,952 15,839 (887)
Commercial & Industrial - Non-RE— 2,942 (2,942)
Auto & Consumer446 278 168 
Other372 — 372 
Total non-performing loans138,754 145,195 (6,441)
Foreclosed real estate— 6,547 (6,547)
Repossessed—Auto and RV564 235 329 
Total non-performing assets$139,318 $151,977 $(12,659)
Total non-performing loans as a percentage of total loans1.05 %1.26 %(0.21)%
Total non-performing assets as a percentage of total assets0.87 %1.07 %(0.20)%
Total non-performing assets decreased from $152.0 million at June 30, 2021 to $139.3 million at March 31, 2022. The decrease in non-performing assets of approximately $12.7 million, was primarily attributable to resolutions of multifamily, C&I - non-RE, and foreclosed real estate in response to improved macro economic factors. Non-performing single-family loans increased by $7.6 million. The Company ended COVID-19 related forbearance for all single family mortgage borrowers during the quarter ended September 30, 2020. Any forbearance granted out of COVID-19 was for six months or less. The weighted-average LTV of the non-performing single family mortgage loans was 57.2% as of March 31, 2022.
The Bank had no performing troubled debt restructurings as of March 31, 2022 and June 30, 2021. 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.
48

Table of Contents
Allowance for Credit Losses - Loans

On July 1, 2020, the Company adopted ASC 326. The update replaces the historical incurred loss model to a current expected loss model, resulting, generally, in earlier recognition of loss. Refer to Note 1 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for greater detail on the accounting adoption along with detail of the processes and approaches involved in determining the allowance for credit losses under the new guidance.

The following table reflects management’s allocation of the allowance for credit losses - loans by loan category and the ratio of each loan category to total loans as of the dates indicated:
March 31, 2022June 30, 2021
(Dollars in thousands)Amount
of
Allowance
Allocation
as a % of
Allowance
Amount
of
Allowance
Allocation
as a % of
Allowance
Single Family Real Estate$21,789 15.2 %$26,604 20.0 %
Multifamily Real Estate13,818 9.7 %13,146 9.9 %
Commercial Real Estate69,829 48.7 %57,928 43.6 %
Commercial and Industrial - Non-RE26,268 18.3 %28,460 21.4 %
Consumer and Auto11,623 8.1 %6,519 4.9 %
Other45 — %301 0.2 %
Total$143,372 100.0 %$132,958 100.0 %

The provision for credit losses was $4.5 million for the three months ended March 31, 2022 compared to $2.7 million for the three months ended March 31, 2021. The provision for credit losses was $12.5 million for the nine months ended March 31, 2022 compared to $22.5 million for the nine months ended March 31, 2021. The increase in the provision for the three months ended March 31, 2022 was due to growth in the loan portfolio. The decrease in the provision for the nine months ended March 31, 2022 was due to favorable changes in economic and business conditions resulting from reduced levels of disruptions from the COVID-19 pandemic between March 31, 2021 and March 31, 2022, partially offset by loan growth and changes in loan mix. 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. The resolution of the Bank’s existing other real estate owned and non-performing loans should not have a significant adverse impact on our operating results.
Investment Securities
Total investment securities were $229.9 million as of March 31, 2022, compared with $189.3 million at June 30, 2021. During the nine months ended March 31, 2022, we purchased securities for $107.3 million and received principal repayments of approximately $59.5 million in our available-for-sale portfolio. The remainder of the change for the available-for-sale portfolio is attributable to accretion and other activities.
49

Table of Contents
Deposits
Deposits increased a net $1.9 billion, or 17.7%, to $12.7 billion at March 31, 2022, from $10.8 billion at June 30, 2021. Non-interest bearing deposits increased $1.7 billion, or 67.1%, to $4.1 billion at March 31, 2022, from June 30, 2021, primarily due to deposits provided by the AAS acquisition. Time deposits decreased $471.4 million as higher costing time deposits were run off.
The following table sets forth the composition of the deposit portfolio as of the dates indicated:
March 31, 2022June 30, 2021
(Dollars in thousands)Amount
Rate1
Amount
Rate1
Non-interest bearing$4,135,278 — %$2,474,424 — %
Interest bearing:
Demand4,247,543 0.19 %3,369,845 0.15 %
Savings3,308,736 0.23 %3,458,687 0.21 %
Total interest-bearing demand and savings7,556,279 0.21 %6,828,532 0.18 %
Time deposits:
$250 and under2
726,161 1.19 %1,070,139 1.30 %
Greater than $250315,284 0.61 %442,702 1.03 %
Total time deposits1,041,445 1.02 %1,512,841 1.22 %
Total interest bearing2
8,597,724 0.31 %8,341,373 0.37 %
Total deposits$12,733,002 0.21 %$10,815,797 0.29 %
1 Based on weighted-average stated interest rates at end of period.
2The total interest bearing includes brokered deposits of $803.0 million and $621.4 million as of March 31, 2022 and June 30, 2021, respectively, of which $250.0 million and $380.0 million, respectively, are time deposits classified as $250 and under.

The following table sets forth the number of deposit accounts by type as of the date indicated:
March 31, 2022June 30, 2021March 31, 2021
Non-interest bearing, prepaid and other40,958 36,72633,442 
Checking and savings accounts344,176 336,068326,536 
Time deposits9,313 12,81514,430 
Total number of deposit accounts394,447 385,609374,408

Borrowings
The following table sets forth the composition of our borrowings and the interest rates at the dates indicated:
March 31, 2022June 30, 2021March 31, 2021
(Dollars in thousands)BalanceWeighted Average RateBalanceWeighted Average RateBalanceWeighted Average Rate
FHLB Advances$152,5002.30 %$353,5001.18 %$172,5002.26 %
Borrowings, subordinated notes and debentures381,6824.54 %221,3584.68 %365,7533.23 %
Total borrowings$534,1823.90 %$574,8582.53 %$538,2532.92 %
Weighted average cost of borrowings during the quarter2.44 %2.93 %3.63 %
Borrowings as a percent of total assets3.32 %4.03 %3.63 %
At March 31, 2022, total borrowings amounted to $534.2 million, down $40.7 million, or 7.1%, from June 30, 2021 and down $4.1 million or 0.8% from March 31, 2021. Borrowings as a percent of total assets were 3.32%, 4.03% and 3.63% at March 31, 2022, June 30, 2021 and March 31, 2021, respectively. Weighted average cost of borrowings during the quarter were 2.44%, 2.93% and 3.63% for the quarters ended March 31, 2022, June 30, 2021 and March 31, 2021, respectively.
50

Table of Contents
We regularly use advances from the FHLB to manage our interest rate risk and, to a lesser extent, manage our liquidity position. Generally, FHLB advances with terms between three and ten years have been used to fund the purchase of single family and multifamily mortgages and to provide us with interest rate risk protection should rates rise.
Stockholders’ Equity
Stockholders’ equity increased $184.6 million to $1,585.6 million at March 31, 2022 compared to $1,400.9 million at June 30, 2021. The increase was the result of our net income for the nine months ended March 31, 2022 of $182.8 million, stock compensation expense of $6.0 million, partially offset by a $4.1 million decrease in other comprehensive income, net of tax.
During the three and nine months ended March 31, 2022, the Company did not repurchase any common stock shares. The Company has $52.8 million remaining under the Board authorized stock repurchase program.

LIQUIDITY
Cash flow information is as follows:
For the Nine Months Ended
March 31,
(Dollars in thousands)20222021
Operating Activities$65,210 $312,727 
Investing Activities$(1,719,834)$(1,126,045)
Financing Activities$1,866,161 $305,754 
During the nine months ended March 31, 2022, we had net cash inflows from operating activities of $65.2 million compared to inflows of $312.7 million for the nine months ended March 31, 2021, primarily due to net income for each period. 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 were the primary drivers.
Net cash outflows from investing activities totaled $1,719.8 million for the nine months ended March 31, 2022, while outflows totaled $1,126.0 million for the nine months ended March 31, 2021. The increase in outflows was primarily due to increased originations of loans partially offset by increased repayments on loans and the $54.8 million acquisition of AAS.
Net cash inflows from financing activities totaled $1,866.2 million for the nine months ended March 31, 2022, compared to net cash outflows from financing activities of $305.8 million for the nine months ended March 31, 2021. The primary driver behind the increase in net cash inflows was increased deposits provided in part, by the acquisition of AAS and by the net proceeds of $148.1 million of subordinated notes in the nine months ended March 31, 2022.
During the nine months ended March 31, 2022, the Bank could borrow up to 40.0% of its total assets from the FHLB. Borrowings are collateralized by the pledge of certain mortgage loans and investment securities to the FHLB. At March 31, 2022, the Company had $1,562.2 million available immediately and $2,783.9 million available with additional collateral. At March 31, 2022, we also had two unsecured federal funds purchase lines with two different banks totaling $175.0 million, under which no borrowings were outstanding.
The Bank has the ability to borrow short-term from the Federal Reserve Bank of San Francisco Discount Window. At March 31, 2022, the Bank did not have any borrowings outstanding and the amount available from this source was $2,800.6 million. The credit line is collateralized by consumer loans and mortgage-backed securities.
Axos Clearing has a total of $170.0 million in uncommitted secured lines of credit for borrowing as needed. As of March 31, 2022, there was $18.0 million outstanding. These credit facilities bear interest at rates based on the Federal Funds rate and are due upon demand.
Axos Clearing has a $75.0 million committed unsecured line of credit available for limited purpose borrowing. As of March 31, 2022, there was $30.0 million outstanding on this credit facility. This credit facility bears interest at rates based on the Federal Funds rate and are due upon demand.
We believe our liquidity sources to be stable and adequate for our anticipated needs and contingencies for the next 12 months and beyond. We believe we have the ability to increase our level of deposits and borrowings to address our liquidity needs for the foreseeable future.
51

Table of Contents
OFF-BALANCE SHEET COMMITMENTS
At March 31, 2022, we had commitments to originate loans with an aggregate outstanding principal balance of $2,820.3 million, and commitments to sell loans with an aggregate outstanding principal balance of $33.0 million. We have no commitments to purchase loans, investment securities or any other unused lines of credit.
At March 31, 2022 we had a commitment to fund an equity investment measured at fair value of $10 million. At March 31, 2022, no amounts had been funded related to the investment.
In the normal course of business, Axos Clearing’s customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose Axos Clearing to off-balance-sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and Axos Clearing has to purchase or sell the financial instrument underlying the contract at a loss. Axos Clearing’s clearing agreements with broker-dealers for which it provides clearing services requires them to indemnify Axos Clearing if customers fail to satisfy their contractual obligation.
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 unaudited condensed consolidated financial statements. The Federal Reserve establishes capital requirements for our Company and the OCC has similar requirements for our Bank. The following tables present regulatory capital information for our Company and Bank. Information presented for March 31, 2022, reflects the Basel III capital requirements that became effective January 1, 2015 for both our Company and Bank. Under these capital requirements and the regulatory framework for prompt corrective action, our Company and Bank must meet specific capital guidelines that involve quantitative measures of our Company and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.
Quantitative measures established by regulation require our Company and Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require our Company and Bank maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity tier 1 capital to risk-weighted assets of 4.5%, tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. To be “well capitalized,” our Company and Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. At March 31, 2022, our Company and Bank met all the capital adequacy requirements to which they were subject and were “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since March 31, 2022 that would materially adversely change the Company’s and Bank’s capital classifications. From time to time, we may need to raise additional capital to support our Company’s and Bank’s further growth and to maintain their “well capitalized” status.
The Company and Bank elected the CECL 5-year transition guidance for calculating regulatory capital ratios and the March 31, 2022 ratios include this election. This guidance allows an entity to add back to capital 100% of the capital impact from the day one CECL transition adjustment and 25% of subsequent increases to the allowance for credit losses through June 30, 2023. This cumulative amount will then be phased out of regulatory capital over the next three years.
52

Table of Contents
The Company’s and Bank’s estimated capital amounts, capital ratios and capital requirements under Basel III were as follows:
Axos Financial, Inc.Axos Bank“Well 
Capitalized”
Ratio
Minimum Capital
Ratio
(Dollars in millions)March 31, 2022June 30,
2021
March 31, 2022June 30,
2021
Regulatory Capital:
Tier 1$1,459 $1,309 $1,505 $1,263 
Common equity tier 1$1,459 $1,309 $1,505 $1,263 
Total capital (to risk-weighted assets)$1,898 $1,588 $1,611 $1,358 
Assets:
Average adjusted$15,477 $14,851 $14,319 $13,360 
Total risk-weighted$14,267 $11,523 $13,162 $10,283 
Regulatory Capital Ratios:
Tier 1 leverage (core) capital to adjusted average assets9.43 %8.82 %10.51 %9.45 %5.00 %4.00 %
Common equity tier 1 capital (to risk-weighted assets)10.23 %11.36 %11.43 %12.28 %6.50 %4.50 %
Tier 1 capital (to risk-weighted assets)10.23 %11.36 %11.43 %12.28 %8.00 %6.00 %
Total capital (to risk-weighted assets)13.30 %13.78 %12.24 %13.21 %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, 2022, our Company and Bank are 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, 2022June 30, 2021
Net capital$39,109 $35,950 
Excess Capital$31,612 $27,904 
Net capital as a percentage of aggregate debit items10.43 %8.94 %
Net capital in excess of 5% aggregate debit items$20,369 $15,836 
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, 2022, the Company had a deposit requirement of $220.5 million and maintained a deposit of $224.6 million. On April 1, 2022, the company made a deposit 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, 2022, the Company had a deposit requirement of $34.3 million and maintained a deposit of $26.4 million. On January 1, 2022, the Company made a deposit in the amount of $8.9 million.
53

Table of Contents
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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, 2022 and the portions of each financial instrument that are expected to mature or reset interest rates in each future period:
Term to Repricing, Repayment, or Maturity at
March 31, 2022
(Dollars in thousands)Six Months or LessOver Six
Months Through
One Year
Over One
Year Through
Five Years
Over Five
Years
Total
Interest-earning assets:
Cash and cash equivalents$973,060 $— $— $— $973,060 
Securities1
219,108 1,465 12,566 19,096 252,235 
Stock of the FHLB, at cost17,250 — — — 17,250 
Loans—net of allowance for credit loss8,522,787 1,489,650 3,119,827 67,795 13,200,059 
Loans held for sale30,793 — — — 30,793 
Total interest-earning assets9,762,998 1,491,115 3,132,393 86,891 14,473,397 
Non-interest earning assets— — — — 295,239 
Total assets$9,762,998 $1,491,115 $3,132,393 $86,891 $14,768,636 
Interest-bearing liabilities:
Interest-bearing deposits$6,787,066 $1,635,122 $328,359 $— $8,750,547 
Advances from the FHLB40,000 22,500 30,000 60,000 152,500 
Total interest-bearing liabilities6,827,066 1,657,622 358,359 60,000 8,903,047 
Other non-interest-bearing liabilities— — — — 4,336,869 
Stockholders’ equity— — — — 1,528,720 
Total liabilities and equity$6,827,066 $1,657,622 $358,359 $60,000 $14,768,636 
Net interest rate sensitivity gap$2,935,932 $(166,507)$2,774,034 $26,891 $5,570,350 
Cumulative gap$2,935,932 $2,769,425 $5,543,459 $5,570,350 $5,570,350 
Net interest rate sensitivity gap—as a % of total interest earning assets20.29 %(1.15)%19.17 %0.19 %38.49 %
Cumulative gap—as % of total interest earning assets20.29 %19.13 %38.30 %38.49 %38.49 %
1    Comprised of agency and non-agency mortgage-backed securities, municipal securities and other non-agency debt securities, which are classified as available-for-sale.
The above table provides an approximation of the projected re-pricing of assets and liabilities at March 31, 2022 on the basis of contractual maturities, adjusted for anticipated prepayments of principal and scheduled rate adjustments. The loan and securities prepayment rates reflected herein are based on historical experience. For the non-maturity deposit liabilities, we use decay rates and rate adjustments based upon our historical experience. Actual repayments of these instruments could vary substantially if future experience differs from our historic experience.
Although “gap” analysis is a useful measurement device available to management in determining the existence of interest rate exposure, its static focus as of a particular date makes it necessary to utilize other techniques in measuring exposure to changes in interest rates. For example, gap analysis is limited in its ability to predict trends in future earnings and makes no
54

Table of Contents
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, the Bank assumes no growth in the balance sheet other than for retained earnings:
As of March 31, 2022
First 12 MonthsNext 12 Months
(Dollars in thousands)Net Interest IncomePercentage Change from BaseNet Interest IncomePercentage Change from Base
Up 200 basis points$659,730 8.7 %$680,228 8.3 %
Base$606,913 — %$628,221 — %
Down 100 basis points$591,220 (2.6)%$598,604 (4.7)%
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 current treasury and LIBOR yield curves. For rising interest rate scenarios, the base market interest rate forecast was increased by 100, 200 and 300 basis points. For falling interest rate scenarios, we used a 100 and 200 basis point decrease due to limitations inherent in the current rate environment.
The following table indicates the sensitivity of market value of equity to the interest rate movement described above:
As of March 31, 2022
(Dollars in thousands)Net
Present Value
Percentage Change from BaseNet
Present
Value as a
Percentage
of Assets
Up 300 basis points$1,707,001 (6.6)%11.9 %
Up 200 basis points$1,784,651 (2.4)%12.3 %
Up 100 basis points$1,831,768 0.2 %12.5 %
Base$1,828,358 — %12.3 %
Down 100 basis points$1,676,314 (8.3)%11.2 %
The computation of the prospective effects of hypothetical interest rate changes is based on numerous assumptions, including relative levels of interest rates, asset prepayments, runoffs in deposits and changes in repricing levels of deposits to general market rates, and should not be relied upon as indicative of actual results. Furthermore, these computations do not take into account any actions that we may undertake in response to future changes in interest rates. Those actions include, but are not limited to, making change in loan and deposit interest rates and changes in our asset and liability mix.
Securities Business
Our Securities Business is exposed to market risk primarily due to its role as a financial intermediary in customer transactions, which may include purchases and sales of securities, securities lending activities, and in our trading activities, which are used to support sales, underwriting and other customer activities. We are subject to the risk of loss that may result from the potential change in value of a financial instrument as a result of fluctuations in interest rates, market prices, investor expectations and changes in credit ratings of the issuer.
Our Securities Business is exposed to interest rate risk as a result of maintaining inventories of interest rate sensitive financial instruments and other interest earning assets including customer and correspondent margin loans and securities borrowing activities. Our exposure to interest rate risk is also from our funding sources including customer and correspondent cash balances, bank borrowings and securities lending activities. Interest rates on customer and correspondent balances and securities produce a positive spread with rates generally fluctuating in parallel.
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. Much 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.
At September 30, 2021, Axos Clearing held municipal obligations. These positions were classified as trading securities and had maturities greater than 10 years.
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
5055

Table of Contents
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 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk.”

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.
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.
5156

Table of Contents
PART II—OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS
The information set forth in Note 89 – “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 business of the Bank. 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 Annual Report on Form 10-K for the year ended June 30, 2021. 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 September 30, 2021.March 31, 2022.
(Dollars in thousands, except per share data)Number
of Shares
Purchased
Average Price
Paid Per Shares
Total Number of
Shares
Purchased as Part of Publicly  Announced
Plans or Programs
Approximate Dollar value of
Shares that May
Yet be Purchased
Under the Plans
or Programs
Stock Repurchases1
Quarter Ended September 30, 2021March 31, 2022
JulyJanuary 1, 20212022 to JulyJanuary 31, 20212022— $— — $— 
AugustFebruary 1, 20212022 to August 31, 2021February 28, 2022— $— — $— 
SeptemberMarch 1, 20212022 to September 30, 2021March 31, 2022— $— — $— 
For the Three Months Ended September 30, 2021March 31, 2022— $— — $52,764 
Stock Retained in Net Settlement2
JulyJanuary 1, 20212022 to JulyJanuary 31, 2021202212,7293,336 
AugustFebruary 1, 20212022 to August 31, 2021February 28, 202282,7971,870 
SeptemberMarch 1, 20212022 to September 30, 2021March 31, 202229,08171,147 
For the Three Months Ended September 30, 2021March 31, 2022124,60776,353 
1 On March 17, 2016, the Board of Directors of the Company authorized a program to repurchase up to $100 million of common stock and extended the program by an additional $100 million on August 2, 2019. 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 In October 2021, the stockholdersConsists of the Company approvedshares withheld from settlement of equity awards under 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 at the vesting price of theobligations associated restricted stock unitwith settlement.


ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4.    MINE SAFETY DISCLOSURES
None.Not applicable.

5257

Table of Contents
ITEM 5.    OTHER INFORMATION
    None.

ITEM 6.EXHIBITS
Exhibit
Number
DescriptionIncorporated By Reference to
10.14.1Amendment to Offer LetterIndenture, dated as of February 24, 2022, between Derrick K. Walsh and Axos Financial, Inc. and U.S. Bank Trust Company, National Association, as trustee
10.24.2Change    
First Supplemental Indenture, dated as
of Control Severance AgreementFebruary 24, 2022, between Derrick K. Walsh and Axos Financial, Inc. and AxosU.S. Bank Trust Company, National Association, as trustee
10.34.3Amended and Restated Employment Agreement between Andrew J. Micheletti and    
Form of Global Note to represent the 4.00% Fixed-to-Floating Rate Subordinated Notes due 2032 of
Axos BankFinancial, Inc. (included in Exhibit 4.2 as Exhibit A)
31.1Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSInline XBRL Instance DocumentThe instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema DocumentFiled herewith.
101.CALInline XBRL Taxonomy Calculation Linkbase DocumentFiled herewith.
101.LABInline XBRL Taxonomy Label Linkbase DocumentFiled herewith.
101.PREInline XBRL Taxonomy Presentation Linkbase DocumentFiled herewith.
101.DEFInline XBRL Taxonomy Definition DocumentFiled herewith.
104Cover Page Interactive Data FileFormatted as Inline XBRL and contained in Exhibit 101



5358

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:OctoberApril 28, 20212022By:    /s/ Gregory Garrabrants
Gregory Garrabrants
President and Chief Executive Officer
(Principal Executive Officer)
Dated:OctoberApril 28, 20212022By:    /s/ Derrick K. Walsh
Derrick K. Walsh
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
5459