Axos Financial Inc

Pursuant to the requirements of Section 13 or 15(d) 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.

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregory Garrabrants and Derrick K. Walsh, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant as of August 22, 2024 in the capacities indicated:

AXOS FINANCIAL, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Stockholders and Board of Directors

Axos Financial, Inc.

Las Vegas, Nevada

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Axos Financial, Inc. (the “Company”) as of June 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated August 22, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for credit losses

As discussed in Notes 1 and 5 to the consolidated financial statement, the Company records their allowance for credit losses (“ACL”) under Accounting Standards Codification Topic 326, Financial Instruments - Credit Losses (“ASC 326”). The Company’s ACL methodology considers many factors including, but not limited to, historical loss experience, where available, estimated defaults based on portfolio trends, changes in collateral values, portfolio composition and loan concentration, current lending policies and the effects of any new policies. Management’s expectation of future economic conditions is reflected in management’s selection and weighting of economic forecast scenarios.

We identified a critical audit matter related to the weighting of economic forecast scenarios within the Commercial Real Estate (including construction lending) and Commercial & Industrial loan portfolio segments as this assessment utilizes economic forecasts, which are subject to uncertainty, and are based on the Company’s current and expected outlook. Given the significance of the ACL, the sensitivity to the change of the weightings, and the management judgment required, performing audit procedures to evaluate the reasonableness of the weighting of economic forecast scenarios required a high degree of auditor judgment due to the nature of audit evidence and nature and extent of audit effort required to address these matters, including the extent of specialized skill and knowledge needed.

The primary procedures we performed to address this critical audit matter included:

•Testing the design and operating effectiveness of controls over the ACL, including management’s controls over the weighting of economic forecast scenarios;

•Evaluating the reasonableness of the weighting of economic forecast scenarios by assessing the magnitude and directional consistency of changes, or lack thereof, in the level of adjustments as compared to underlying external information sources;

•Considering disconfirming evidence by performing a market analysis to evaluate the appropriateness of conclusions reached; and

•Utilizing professionals with specialized skill and knowledge in valuation and business analytics to assist in evaluating the reasonableness and conceptual soundness of the ACL modeling framework applied in the ACL models by comparing to accounting and industry standards.

PCD - Allowance for credit losses

As discussed in Notes 1, 2 and 5 to the consolidated financial statements, the Company purchased two loan portfolios, comprising of purchased credit deteriorated (“PCD”) and non-PCD loans from the Federal Deposit Insurance Corporation. Of the loans purchased, $170.5 million were determined to be PCD, with an allowance for credit losses at acquisition of $70.1 million. For PCD loans, the initial estimate of expected credit losses is recognized in the allowance for credit losses on the date of acquisition. The initial amortized cost of PCD loans is determined by reducing the loans’ par value by the acquisition date estimate of expected credit losses with any difference between the resulting amount and the loans’ purchase price recorded as a non-credit-related discount. The Company calculates the allowance related to the PCD loans through a model that estimates the probability of default and loss given default.

We identified a critical audit matter related to the initial model set up of the allowance for PCD loans, specifically the evaluation of the reasonableness of the source of the assumptions used to calculate the probability of default and liquidation costs as of acquisition date. Management is required to make significant judgments to determine the third party or internal data source that is most appropriate to utilize within their model, given the Company does not have a history of acquiring PCD loans. Given the judgmental and subjective nature of the assumptions, auditing the allowance related to PCD loans involved a high degree of auditor judgment due to the nature of audit evidence and extent of auditor effort.

The primary procedures we performed to address this critical audit matter included:

•Testing the design and operating effectiveness of controls over the allowance for PCD loans, including management’s controls over the determination of the source of the assumptions used to calculate the probability of default and liquidation costs as of the acquisition date;

•Evaluating management’s process used to develop the assumptions by agreeing them back to source data;

•Utilizing professionals with specialized skills and knowledge in valuation and business analytics to assist in evaluating the reasonableness and conceptual soundness of the methodology utilized to calculate the probability of default and liquidation costs using the selected assumptions by evaluating the relevance of the sources utilized and the consistency of the model with the existing ACL modeling framework; and

•Evaluating the reasonableness and conceptual soundness of the assumptions by assessing the availability of disconfirming evidence as compared to underlying internal and external information sources.

/s/ BDO USA, P.C.

We have served as the Company’s auditor since 2013.

San Diego, California

August 22, 2024

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to the consolidated financial statements.`

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY