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Axos Financial, Inc.

For the period ended Sep 30, 2025. Filed Oct 30, 2025.

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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Sep 30, 2025 · Filed Oct 30, 2025

AX$93.92+1.3%Stored close · as of Nov 9, 2026

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Contents

Item 2. RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2025 and 2024

For the three months ended September 30, 2025, we had net income of $112.4 million, or $1.94 per diluted share, compared to net income of $112.3 million, or $1.93 per diluted share, for the three months ended September 30, 2024.

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,
September 30, 2025 · September 30, 2024
(Dollars in thousands) · AverageBalance1 · InterestIncome/Expense · Average YieldsEarned/RatesPaid2 · AverageBalance1 · InterestIncome/Expense · Average YieldsEarned/RatesPaid2
Assets:
Loans3, 4$21,507,709$429,5757.99%$19,447,016$438,2299.01%
Non-purchased loans20,642,301395,3627.66%18,469,398382,4598.28%
Purchased loans5865,40834,21315.81%977,61855,77022.82%
Interest-earning deposits in other financial institutions2,538,84428,1954.44%2,680,50337,4255.58%
Mortgage-backed and other securities461,0846704.39%142,7761,9605.49%
Securities borrowed and margin lending6361,9666,7777.49%313,1026,2718.01%
Stock of the regulatory agencies29,6005197.01%19,0123777.93%
Total interest-earning assets24,499,203465,7367.60%22,602,409484,2628.57%
Non-interest-earning assets932,414797,127
Total assets$25,431,617$23,399,536
Liabilities and Stockholders’ Equity:
Interest-bearing demand and savings$17,177,394$157,8443.68%$15,915,785$177,8154.47%
Time deposits1,126,34711,5204.09%871,8769,4544.34%
Securities loaned150,4562850.76%97,2155402.22%
Advances from the FHLB60,0043132.09%90,0005292.35%
Secured financings8,505——%———%
Borrowings, subordinated notes and debentures332,0044,7245.69%323,6973,8764.79%
Total interest-bearing liabilities18,854,710174,6863.71%17,298,573192,2144.44%
Non-interest-bearing demand deposits3,024,0762,971,090
Other non-interest-bearing liabilities733,586779,561
Stockholders’ equity2,819,2452,350,312
Total liabilities and stockholders’ equity$25,431,617$23,399,536
Net interest income$291,050$292,048
Interest rate spread73.89%4.13%
Net interest margin84.75%5.17%
1.Average balances are obtained from daily data.2.Annualized.3.Loans include loans held for sale, loan premiums and unearned fees.4.Interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees.5.Purchased loans include loans, loan discounts and unearned fees related to the FDIC Loan Purchase.6.Margin lending is the significant component of the asset titled customer, broker-dealer and clearing receivables on the unaudited Condensed Consolidated Balance Sheets. 7.Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.8.Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

Average Balances, Net Interest Income, Yields Earned and Rates Paid

The following table sets forth the effects of changing rates and volumes on our net interest income. Information is provided with respect to (i) effects on interest income and interest expense attributable to changes in volume (changes in volume multiplied by prior rate); and (ii) effects on interest income and interest expense attributable to changes in rate (changes in rate multiplied by prior volume). The change in interest due to both volume and rate has been allocated proportionally to each based on the relative changes attributable to volume and changes attributable to rate.

For the Three Months Ended
September 30,
2025 vs 2024
Increase (Decrease) Due to
(Dollars in thousands)VolumeRateTotalIncrease(Decrease)
Increase (decrease) in interest income:
Loans$43,767$(52,421)$(8,654)
Non-purchased loans49,631(36,728)12,903
Purchased loans1(5,864)(15,693)(21,557)
Interest-earning deposits in other financial institutions(1,897)(7,333)(9,230)
Mortgage-backed and other securities(955)(335)(1,290)
Securities borrowed and margin lending932(426)506
Stock of the regulatory agencies190(48)142
Total increase (decrease) in interest income$42,037$(60,563)$(18,526)
Increase (decrease) in interest expense:
Interest-bearing demand and savings$13,282$(33,253)$(19,971)
Time deposits2,636(570)2,066
Securities loaned208(463)(255)
Advances from the FHLB(161)(55)(216)
Secured financings———
Borrowings, subordinated notes and debentures102746848
Total increase (decrease) in interest expense$16,067$(33,595)$(17,528)

1 Purchased loans include loans, loan discounts and unearned fees related to the FDIC Loan Purchase.

Net Interest Income

For the three months ended September 30, 2025, net interest income totaled $291.1 million, a decrease of $1.0 million, or 0.3%, compared to net interest income of $292.0 million for the three months ended September 30, 2024. For the three months ended September 30, 2025, net interest margin decreased by 42 basis points compared to the net interest margin of 5.17% for the three months ended September 30, 2024.

For the three months ended September 30, 2025, total interest and dividend income decreased 3.8% from the three months ended September 30, 2024, primarily due to a $9.2 million decrease in interest income on deposits in other financial institutions, primarily driven by lower rates earned, as well as lower interest earned on loans, reflecting lower rates earned, partially offset by higher average balances.

For the three months ended September 30, 2025, total interest expense decreased 9.1% from the three months ended September 30, 2024, primarily due to a $20.0 million decrease in interest expense on demand and savings deposits, reflecting lower rates paid, partially offset by higher deposit balances.

Provision for Credit Losses

The provision for credit losses was $17.3 million for the three months ended September 30, 2025, compared to $14.0 million for the three months ended September 30, 2024. The provision for credit losses consists of provisions for both funded loans and for unfunded lending commitments. The provision for credit losses for funded loans was $15.3 million for the three months ended September 30, 2025, and was primarily driven by the post-acquisition provision for credit losses on the loans and leases acquired in the Verdant acquisition, as well as loan growth and the impact of macroeconomic variables used in the allowance for credit losses model, primarily the U.S. unemployment rate, consumer price and housing price indices, as well as the five-year U.S. Treasury rate.

The provision for credit losses for unfunded lending commitments of $2.0 million for the three months ended September 30, 2025, was primarily driven by unfunded lending commitment growth, primarily in the commercial real estate and commercial & industrial - non-RE portfolios. Provisions for credit losses are charged to income to bring the allowance for credit losses for loans and unfunded lending commitments to a level deemed appropriate by management based on the factors discussed under the heading “Financial Condition—Asset Quality and Allowance for Credit Losses - Loans.”

Non-Interest Income

The following table sets forth information regarding our non-interest income:

For the Three Months Ended
September 30,
(Dollars in thousands)20252024Inc (Dec)
Broker-dealer fee income$10,948$11,060$(112)
Advisory fee income8,5257,945580
Banking and service fees10,8208,6132,207
Mortgage banking and servicing rights income1,395450945
Prepayment penalty fee income652541111
Total non-interest income$32,340$28,609$3,731

For the three months ended September 30, 2025, non-interest income increased by $3.7 million, or 13.0%, primarily due to an increase in banking and servicing fee income, primarily driven by higher income on BOLI policies, as well as a $0.9 million increase in mortgage banking and servicing rights income, primarily attributable to more favorable servicing rights fair value adjustments in the current period.

Non-Interest Expense

The following table sets forth information regarding our non-interest expense:

For the Three Months Ended
September 30,
(Dollars in thousands)20252024Inc (Dec)
Salaries and related costs$76,605$74,293$2,312
Data and operational processing22,05718,9853,072
Depreciation and amortization8,3417,450891
Advertising and promotional12,20714,253(2,046)
Professional services13,3339,8953,438
Occupancy and equipment4,6204,318302
FDIC and regulatory fees5,6195,956(337)
Broker-dealer clearing charges4,2034,307(104)
General and administrative expense9,2618,0081,253
Total non-interest expense$156,246$147,465$8,781

For the three months ended September 30, 2025, non-interest expense increased $8.8 million, or 6.0%, primarily due to increases of:

$3.4 million in professional services primarily due to higher legal expenses and acquisition-related costs associated with the Verdant acquisition;

$3.1 million in data and operating processing to support the Company’s growth and continued investments in technology; and

$2.3 million in salaries and related costs primarily due to increased headcount and salaries.

These increases were partially offset by a decrease of $2.0 million in advertising and promotional expense primarily as a result of reduced deposit marketing expense in the current period.

Provision for Income Taxes

Income tax expense was $37.5 million for the three months ended September 30, 2025, compared to $46.9 million for three months ended September 30, 2024. Our effective income tax rates for the three months ended September 30, 2025 and 2024 were 25.04% and 29.43%, respectively. The decrease in effective income tax rate for the three months ended September 30, 2025 reflects, in part, a change in the State of California income tax law effective beginning with the Company’s 2026 fiscal year.

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