Axos Financial, Inc.
For the period ended Mar 31, 2026. Filed Apr 30, 2026.
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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.
Mar 31, 2026 · Filed Apr 30, 2026
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3. Fair Value
- FAIR VALUE
The following tables set forth the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2026 and June 30, 2025. Assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement:
| March 31, 2026 | |||
|---|---|---|---|
| (Dollars in thousands) | Significant OtherObservableInputs(Level 2) | SignificantUnobservableInputs(Level 3) | Total |
| ASSETS: | |||
| Trading securities | $444 | $— | $444 |
| Available-for-sale securities: | |||
| United States Treasury securities | 739,575 | — | 739,575 |
| Agency MBS | 57,535 | — | 57,535 |
| Non-Agency MBS | — | 4,329 | 4,329 |
| Total—Available-for-sale securities: | $797,110 | $4,329 | $801,439 |
| Loans held for sale | $23,964 | $— | $23,964 |
| Servicing rights | $— | $26,299 | $26,299 |
| Other assets—Derivative instruments1 | $17,275 | $— | $17,275 |
| LIABILITIES: | |||
| Accounts payable and other liabilities—Derivative instruments | $52,035 | $— | $52,035 |
| Accounts payable and other liabilities—Contingent Consideration | $— | $30,810 | $30,810 |
| June 30, 2025 | ||||
|---|---|---|---|---|
| (Dollars in thousands) · Significant OtherObservableInputs(Level 2) · SignificantUnobservableInputs(Level 3) · Total | ||||
| ASSETS: | ||||
| Trading securities | $649 | $— | $649 | |
| Available-for-sale securities: | ||||
| Agency MBS | 46,757 | — | 46,757 | |
| Non-Agency MBS | — | 15,569 | 15,569 | |
| Municipal | 3,682 | — | 3,682 | |
| Total—Available-for-sale securities: | $50,439 | $15,569 | $66,008 | |
| Loans held for sale | $10,012 | $— | $10,012 | |
| Servicing rights | $— | $27,218 | $27,218 | |
| Other assets—Derivative instruments1 | $17,734 | $— | $17,734 | |
| LIABILITIES: | $— | |||
| Accounts payable and other liabilities—Derivative instruments | $68,498 | $— | $68,498 | |
| 1 Other assets - Derivative instruments are presented net of $44.8 million and $55.4 million of variation margin on centrally-cleared derivatives as of March 31, 2026 and June 30, 2025, respectively. | ||||
The following section describes the valuation methodologies used by the Company to measure various financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified. For additional information on the other valuation methodologies used by the Company, see Note 3—“Fair Value”in the 2025 Form 10-K.
Securities—trading and available-for-sale. During the nine months ended March 31, 2026, the Company purchased United States Treasury securities that it classified as available‑for‑sale. These securities are measured at fair value using quoted prices in active markets for similar assets and are classified under Level 2 of the fair value hierarchy.
Contingent Consideration. The fair value of the Contingent Consideration liability is determined using a Nelson-Siegel stochastic simulation, which models various scenarios based on business forecasts, including monthly asset growth of the Verdant business and other inputs in accordance with the terms of the agreement. The resulting simulated cash flows are then discounted to present value and averaged to determine fair value.
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 Ended | ||||
|---|---|---|---|---|
| March 31, 2026 | ||||
| (Dollars in thousands) | Available-for-sale Securities:Non-Agency MBS | Servicing Rights1 | Accounts payable and other liabilities—Contingent Consideration | Total |
| Opening balance | $6,313 | $25,431 | $30,810 | $62,554 |
| Total gains or losses for the period: | ||||
| Included in earnings—Mortgage banking and servicing rights income | — | 425 | — | 425 |
| Included in other comprehensive income | (413) | — | — | (413) |
| Purchases, retentions, issues, sales and settlements: | ||||
| Purchases/Retentions | — | 443 | — | 443 |
| Settlements | (1,571) | — | — | (1,571) |
| Closing balance | $4,329 | $26,299 | $30,810 | $61,438 |
| Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | $— | $425 | $— | $425 |
| For the Nine Months Ended | |||||
|---|---|---|---|---|---|
| March 31, 2026 | |||||
| (Dollars in thousands) · Available-for-sale Securities:Non-Agency MBS · Servicing Rights1 · Accounts payable and other liabilities—Contingent Consideration · Total | |||||
| Opening Balance | $15,569 | $27,218 | $— | $42,787 | |
| Total gains or losses for the period: | |||||
| Included in earnings—Mortgage banking and servicing rights income | — | (1,953) | — | (1,953) | |
| Included in other comprehensive income | (400) | — | — | (400) | |
| Purchases, retentions, issues, sales and settlements: | |||||
| Purchases/Retentions | — | 1,034 | 30,810 | 31,844 | |
| Settlements | (10,840) | — | (10,840) | ||
| Closing balance | $4,329 | $26,299 | $30,810 | $61,438 | |
| Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | $— | $(1,953) | $— | $(1,953) | |
1 Earnings from servicing rights were attributable to: time and payoffs, representing an increase in servicing rights value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that were paid down or paid off during the period of $0.3 million and $0.9 million for the three months ended and nine months ended March 31, 2026, respectively, and an increase in servicing rights value resulting from market-driven changes in interest rates of $0.7 million for the three months ended March 31, 2026 and a decrease of $1.1 million for the nine months ended March 31, 2026. Additions to servicing rights were related to purchases and servicing rights retained upon sale of loans held for sale.
| For the Three Months Ended | |||
|---|---|---|---|
| March 31, 2025 | |||
| (Dollars in thousands) | Available-for-sale Securities:Non-Agency MBS | Servicing Rights1 | Total |
| Opening balance | $47,412 | $28,045 | $75,457 |
| Total gains or losses for the period: | |||
| Included in earnings—Mortgage banking and servicing rights income | — | (621) | (621) |
| Included in other comprehensive income | 211 | — | 211 |
| Purchases, retentions, issues, sales and settlements: | |||
| Purchases/Retentions | — | 161 | 161 |
| Settlements | (18,322) | — | (18,322) |
| Closing balance | $29,301 | $27,585 | $56,886 |
| Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | $— | $(621) | $(621) |
| For the Nine Months Ended | |||
|---|---|---|---|
| March 31, 2025 | |||
| (Dollars in thousands) | Available-for-sale Securities:Non-Agency MBS | Servicing Rights1 | Total |
| Opening Balance | $110,928 | $28,924 | $139,852 |
| Total gains or losses for the period: | |||
| Included in earnings—Mortgage banking and servicing rights income | — | (1,985) | (1,985) |
| Included in other comprehensive income | 599 | — | 599 |
| Purchases, retentions, issues, sales and settlements: | |||
| Purchases/Retentions | — | 646 | 646 |
| Settlements | (82,226) | — | (82,226) |
| Closing balance | $29,301 | $27,585 | $56,886 |
| Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | $— | $(1,985) | $(1,985) |
1 Earnings from servicing rights were attributable to: time and payoffs, representing a decrease in servicing rights value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that were paid down or paid off during the period of $0.2 million and $1.1 million for the three and nine months ended March 31, 2025, respectively, and a decrease in servicing rights value resulting from market-driven changes in interest rates of $0.4 million for the three months ended March 31, 2025, and a decrease of $0.9 million for the nine months ended March 31, 2025. Additions to servicing rights were related to purchases and servicing rights retained upon sale of loans held for sale.
The table below summarizes the quantitative information about Level 3 fair value measurements:
| March 31, 2026 | ||||
|---|---|---|---|---|
| (Dollars in thousands) | Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average)1 |
| Available-for-sale securities: Non-Agency MBS | $4,329 | Discounted Cash Flow | Projected Constant Prepayment Rate,Projected Constant Default Rate,Projected Loss Severity,Discount Rate over SOFR Swaps,Credit Enhancement | 2.5 to 15.4% (3.5%)1.5 to 1.7% (1.5%)40.0 to 68.9% (60.1%)2.6 to 5.2% (3.5%)0.0 to 66.5% (14.9%) |
| Servicing Rights | $26,299 | Discounted Cash Flow | Projected Constant Prepayment Rate,Life (in years),Discount Rate | 2.0 to 30.1% (9.3%)2.3 to 14.3 (9.3) 9.5 to 11.2% (9.8%) |
| Accounts payable and other liabilities—Contingent Consideration | $30,810 | Nelson-Siegal Stochastic Model | Monthly Asset Growth,Credit Spread | -7.4% to 14.5% (3.6%) 2.9% to 2.9% (2.9%) |
| June 30, 2025 | ||||
|---|---|---|---|---|
| (Dollars in thousands) | Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average)1 |
| Available-for-sale securities: Non-Agency MBS | $15,569 | Discounted Cash Flow | Projected Constant Prepayment Rate,Projected Constant Default Rate,Projected Loss Severity,Discount Rate over SOFR Swaps,Credit Enhancement | 2.5 to 30.0% (22.4%)1.5 to 11.9% (8.7%)35.0 to 68.9% (43.4%)2.5 to 4.1% (2.7%)0.0 to 99.0% (39.2%) |
| Servicing Rights | $27,218 | Discounted Cash Flow | Projected Constant Prepayment Rate,Life (in years),Discount Rate | 5.2 to 26.6% (9.7%)2.5 to 12.8 (9.3) 9.5 to 11.2% (9.8%) |
1 The weighted average for Available-for-sale securities: Non-agency MBS is based on the relative fair value of the securities, for Servicing Rights is based on the relative unpaid principal of the loans being serviced and for Accounts payable and other liabilities—Contingent Consideration.is based on annual projected consideration.
For non-agency mortgage-backed securities, a significant increase (decrease) in default rate, loss severity (potentially offset by the level of credit enhancement) or discount rate in isolation would result in a significantly lower (higher) fair value measurement, while a significant increase in the voluntary prepayment rate would result in a significant increase in fair value if the security is valued below par value, or a significant decrease in fair value if the security is valued above par value. Generally, a change in the assumptions used for the default rate is accompanied by a directionally opposite change in the assumption used for the voluntary prepayment rate.
For servicing rights, significant increases in the voluntary prepayment rate or discount rate in isolation would result in a significantly lower fair value measurement, while a significant increase in expected life in isolation would result in a significantly higher fair value measurement. Generally, a change in the voluntary prepayment rate is accompanied by a directionally opposite change in expected life.
For the Contingent Consideration, a significant increase (decrease) in the asset growth in isolation would result in a significantly higher (lower) fair value measurement, and a significant increase (decrease) in the discount rate in isolation would result in a significantly lower (higher) fair value measurement.
The aggregate fair value of loans held for sale, carried at fair value, the contractual balance (including accrued interest), and the unrealized gain were:
| (Dollars in thousands) | March 31, 2026 | June 30, 2025 |
|---|---|---|
| Aggregate fair value | $23,964 | $10,012 |
| Contractual balance | 23,520 | 9,870 |
| Unrealized gain | $444 | $142 |
The total interest income and amount of gains and losses from changes in fair value included in earnings for loans held for sale, carried at fair value, were:
| For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||
|---|---|---|---|---|
| (Dollars in thousands) | 2026 | 2025 | 2026 | 2025 |
| Interest income | $239 | $212 | $605 | $749 |
| Change in fair value | 709 | 227 | 1,046 | (140) |
| Total | $948 | $439 | $1,651 | $609 |
Fair Value of Financial Instruments
Carrying amounts and estimated fair values of financial instruments at March 31, 2026 and June 30, 2025 were:
| March 31, 2026 | |||||
|---|---|---|---|---|---|
| Fair Value | |||||
| (Dollars in thousands) | CarryingAmount | Level 1 | Level 2 | Level 3 | Total Fair Value |
| Financial assets: | |||||
| Cash, cash equivalents and restricted cash | $1,351,284 | $1,351,284 | $— | $— | $1,351,284 |
| Trading securities | 444 | — | 444 | — | 444 |
| Available-for-sale securities | 801,439 | — | 797,110 | 4,329 | 801,439 |
| Stock of regulatory agencies | 68,085 | — | 68,085 | — | 68,085 |
| Loans held for sale, at fair value | 23,964 | — | 23,964 | — | 23,964 |
| Loans held for investment—net | 24,957,536 | — | — | 25,205,576 | 25,205,576 |
| Securities borrowed | 133,015 | — | — | 131,791 | 131,791 |
| Customer, broker-dealer and clearing receivables | 333,699 | — | — | 331,592 | 331,592 |
| Servicing rights | 26,299 | — | — | 26,299 | 26,299 |
| Other assets - derivative instruments1 | 17,275 | — | 17,275 | — | 17,275 |
| Financial liabilities: | |||||
| Total deposits | 22,388,135 | — | 22,142,496 | — | 22,142,496 |
| Advances from the Federal Home Loan Bank | 1,805,000 | — | 1,802,146 | — | 1,802,146 |
| Secured financings | 634,452 | — | 628,258 | — | 628,258 |
| Borrowings, subordinated notes and debentures | 378,065 | — | 366,435 | — | 366,435 |
| Securities loaned | 148,668 | — | — | 147,904 | 147,904 |
| Customer, broker-dealer and clearing payables | 338,592 | — | — | 338,592 | 338,592 |
| Accounts payable and other liabilities - derivative instruments | 52,035 | — | 52,035 | — | 52,035 |
| Accounts payable and other liabilities - Contingent Consideration | 30,810 | — | — | 30,810 | 30,810 |
| June 30, 2025 | |||||
|---|---|---|---|---|---|
| Fair Value | |||||
| (Dollars in thousands) | CarryingAmount | Level 1 | Level 2 | Level 3 | Total Fair Value |
| Financial assets: | |||||
| Cash, cash equivalents and restricted cash | $2,176,354 | $2,176,354 | $— | $— | $2,176,354 |
| Trading securities | 649 | — | 649 | — | 649 |
| Available-for-sale securities | 66,008 | — | 50,439 | 15,569 | 66,008 |
| Stock of regulatory agencies | 35,163 | — | 35,163 | — | 35,163 |
| Loans held for sale, at fair value | 10,012 | — | 10,012 | — | 10,012 |
| Loans held for investment—net | 21,049,610 | — | — | 21,288,921 | 21,288,921 |
| Securities borrowed | 139,396 | — | — | 138,103 | 138,103 |
| Customer, broker-dealer and clearing receivables | 252,720 | — | — | 251,126 | 251,126 |
| Servicing rights | 27,218 | — | — | 27,218 | 27,218 |
| Other assets - derivative instruments1 | 17,734 | — | 17,734 | — | 17,734 |
| Financial liabilities: | |||||
| Total deposits | 20,829,543 | — | 20,642,953 | — | 20,642,953 |
| Advances from the Federal Home Loan Bank | 60,000 | — | 56,934 | — | 56,934 |
| Borrowings, subordinated notes and debentures | 312,671 | — | 285,282 | — | 285,282 |
| Securities loaned | 139,426 | — | — | 138,698 | 138,698 |
| Customer, broker-dealer and clearing payables | 350,606 | — | — | 350,606 | 350,606 |
| Accounts payable and other liabilities - derivative instruments | 68,498 | — | 68,498 | — | 68,498 |
1 Other assets - derivative assets are presented net of $44.8 million and $55.4 million of variation margin on centrally-cleared derivatives as of March 31, 2026 and June 30, 2025, respectively.
The carrying amount represents the estimated fair value for cash, cash equivalents and restricted cash, stock of regulatory agencies, 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, loans held for sale and derivatives can be found in Note 3—“Fair Value”in the 2025 Form 10-K. The fair value of off-balance sheet items is not considered material.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.