Axos Financial, Inc.

5. LOANS & ALLOWANCE FOR CREDIT LOSSES

The Company categorizes the loan portfolio into five segments: Single Family - Mortgage & Warehouse, Multifamily and Commercial Mortgage, Commercial Real Estate, Commercial & Industrial - Non Real Estate (“Non-RE”) and Auto & Consumer. For further detail of the segments of the Company’s loan portfolio, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2025 Form 10-K. The Company acquired approximately $1.0 billion of loans and leases, including $211.0 million of PCD assets, as part of the Verdant acquisition, which was completed on September 30, 2025. The loans and leases acquired in the Verdant acquisition are included in the commercial & industrial - Non-RE portfolio. For additional information on the Verdant acquisition, see Note 2, “Acquisitions.”

The following table sets forth the composition of the loan portfolio:

Accrued interest receivable on loans held for investments totaled $122.6 million and $109.6 million as of December 31, 2025 and June 30, 2025, respectively.

At December 31, 2025 and June 30, 2025, the Company pledged certain loans totaling $4,025.1 million and $4,284.7 million, respectively, to the Federal Home Loan Bank (“FHLB”) and $10,358.8 million and $8,227.7 million, respectively, to the Federal Reserve Bank of San Francisco (“FRBSF”).

The following table presents loan-to-value (“LTV”) for the Company’s real estate loans outstanding as of December 31, 2025:

The following table presents the components of the provision for credit losses:

The following tables summarize activity in the allowance for credit losses - loans by portfolio segment:

For the three and six months ended December 31, 2025, the allowance for credit losses for loans increased primarily due to the provision for credit losses, partially offset by net charge-offs. The provision for credit losses for the three months ended December 31, 2025 reflects loan growth primarily in the commercial real estate and commercial & industrial - Non-RE portfolios, as well as the impact of macroeconomic variables used in the allowance for credit losses model, primarily the forecasted consumer price index, corporate bond yields, and the five-year U.S. Treasury rate. For the six months ended December 31, 2025, the increase in the allowance for credit losses was also due to the Verdant acquisition, which included the acquisition of PCD assets and also resulted in a post-acquisition provision for credit losses on the loans and leases acquired.

Loan products within each portfolio contain varying collateral types which impact the estimate of the loss given default utilized in the calculation of the allowance for credit losses for loans. For further discussion of the model method of estimating expected lifetime credit losses, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2025 Form 10-K.

As part of its lending activities, the Company makes certain off-balance lending commitments. For additional information on these and other commitments, see Note 10—“Commitments and Contingencies.” The following tables present a summary of the activity in the allowance for credit losses for off-balance sheet lending commitments:

The increase in the allowance for off-balance sheet lending commitments for the three and six months ended December 31, 2025, was primarily driven by unfunded lending commitment growth, primarily in the commercial real estate and commercial & industrial - non-RE portfolios.

Credit Quality Disclosures. The following tables provide the composition of loans that are performing and nonaccrual by portfolio segment:

There wereno nonaccrual loans without an allowance for credit losses as of December 31, 2025 and June 30, 2025. There wasno interest income recognized on nonaccrual loans in the three and six months ended December 31, 2025 and 2024. Loans reaching 90 days past due are generally placed on nonaccrual status and risk rated as substandard or doubtful. Loans not yet reaching 90 days past due may be placed on nonaccrual status based on management’s assessment of the aging of contractual principal amounts due, among other factors.

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. In addition to the borrower’s primary source of repayment, in its risk rating process the Company considers all available sources of repayment, including obligor guaranties and liquidations of pledged collateral, where individually or together such sources would fully repay the loan on a timely basis. The Company analyzes loans individually by classifying the loans based on credit risk. The Company uses the following internally-defined risk ratings:

Pass. Loans where repayment in full is expected through any of the borrower’s sources of repayment.

Special Mention. Loans where any credit risk is not considered significant yet require management’s attention given certain currently identified characteristics of the borrower, collateral securing the loan and the obligor’s net worth and paying capacity. If the identified credit risks are not adequately monitored or mitigated, the loan may weaken and the Company’s credit position with respect to the loan may deteriorate in the future.

Substandard. Loans where currently identified characteristics of the borrower, collateral securing the loan and the obligor’s net worth and paying capacity, taken together, could jeopardize the repayment of the debt. A loan not fully supported by at least one available source of repayment and involves a distinct possibility that the Company will sustain some loss in that loan if the weakness is not cured. A loan supported by a guaranty, collateral sufficient to incentivize a sale or refinance, or cash flow that is sufficient for timely repayment in full will not be classified as substandard even if the loan has a well-defined weakness in other sources of repayment.

Doubtful. Loans reflecting the same characteristics as those classified as substandard, but for which repayment in full in accordance with the contractual terms is currently considered highly unlikely.

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.

The following tables present the composition of loans by portfolio segment, fiscal year of origination and credit quality indicator, and the amount of year-to-date gross charge-offs.

The following tables provide the aging of loans by portfolio segment:

Loans reaching 90 or more days past due are generally placed on nonaccrual. As of both December 31, 2025 and June 30, 2025 there wereno loans over 90 days past due and still accruing interest.

Single family mortgage loans in process of foreclosure were $29.0 million and $30.4 million as of December 31, 2025 and June 30, 2025, respectively.

Direct Financing Leases and Sales-Type Leases. The Company acts as a lessor in certain direct financing leases and sales-type leases, which are included in Commercial & Industrial - Non-RE in the preceding tables. The following table presents the aggregate interest income earned under directing financing and sales-type leases for the periods presented. For additional information on these leases, see Note 1—“Organizations and Summary of Significant Accounting Policies” in the 2025 Form 10-K.