Business Description

Overview Our Company is a technology-driven, diversified financial services company with approximately $30.0 billion in assets and approximately $47.8 billion of assets under custody and/or administration at Axos Clearing LLC (“Axos Clearing”). Our client-centric, technology-enabled services model provides secure and scalable banking, clearing and custody, and investment advisory solutions to retail and business customers. The Bank provides consumer and commercial banking products and services through its digital online and mobile banking platforms, low-cost distribution channels and affinity partners. Our Bank offers deposit and lending products to customers nationwide including consumer and business checking, savings and time deposit accounts and single family and multifamily residential mortgages, commercial real estate mortgages and loans, lender finance loans, asset-based loans, capital call facilities, equipment lending and leasing, auto loans, retail and floor plan marine loans and other consumer loans. Our Bank generates non-interest income from consumer and business products and services, including fees from loans originated for sale, operating lease income, deposit account service fees, prepayment fees, loan servicing fees, as well as technology and payment transaction processing fees, among others. We offer securities products and services to independent registered investment advisors (“RIAs”) and introducing broker-dealers (“IBDs”) through Axos Clearing and Axos Advisor Services (“AAS”) and direct-to-consumer securities trading and digital investment management products through Axos Invest, Inc. (“Axos Invest”). AAS and Axos Clearing generate interest and asset- and transaction-based fee income by providing comprehensive securities custody services to RIAs and clearing, stock lending, and margin lending services to IBDs respectively. Axos Invest generates fee income from self-directed securities trading and digital wealth management services. Our common stock is listed on the New York Stock Exchange under the ticker symbol “AX” and is a component of the Russell 2000® Index and the S&P SmallCap 600® Index, among other indices. Segment Information We conduct business primarily through two operating segments: the Banking Business Segment and the Securities Business Segment. For additional information on our business segments, see Note 23 — “Segment Reporting” in the Consolidated Financial Statements. Banking Business Segment We distribute our loan products through our retail, correspondent and wholesale channels. The loans we retain primarily include first mortgages secured by single family real property, multifamily real property and commercial real property, commercial & industrial loans and leases to businesses, automobile loans and certain other consumer loans. We also invest in debt securities to manage liquidity and interest rate risk. Because risk-adjusted returns available on acquired assets may exceed returns available through retaining assets from our origination channels, we have elected to purchase loans and securities from time to time, and may continue to do so in the future. Our deposit products are sourced from a wide range of retail and commercial distribution channels, and our deposits consist of demand, savings and time deposits. Loan Portfolio Single Family - Mortgage & Warehouse Our Single Family - Mortgage & Warehouse loans are primarily secured by first liens on 1-4 unit residential properties. Loans include fixed- and adjustable-rate single family residential mortgages and home equity lines of credit. We source single family mortgage loans through mortgage brokers, mortgage bankers, financial institutions and direct to consumer. Our adjustable-rate loans have initial fixed-rate periods, generally five, seven, or ten years, before starting a variable rate period, and may also have interest rate floors, ceilings and rate change caps. We also warehouse certain loans for independent mortgage bankers to sell to investors and government agencies. 1 Multifamily and Commercial Mortgage Our Multifamily and Commercial Mortgage loans are primarily secured by multifamily real estate or commercial real estate. Loans often include initial fixed rate periods of either three, five, or seven years before starting a variable rate period, which is based on the Secured Overnight Financing Rate (“SOFR”) or other interest rate indices.…