Axos Financial, Inc.

Our Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to our Company’s financial condition and operating results and management’s regular review of the operating results of those services. Our Company operates through two operating segments: the Banking Business Segment and the Securities Business Segment. In order to reconcile the two segments to the consolidated totals, our Company includes corporate activities and intercompany eliminations. Inter-segment transactions are eliminated in consolidation and primarily include non-interest income earned by the Securities Business Segment and non-interest expense incurred by the Banking Business Segment for cash sorting fees related to deposits sourced from Securities Business Segment customers.

The following tables present the operating results of the segments:

Banking Business Segment

For the three months ended September 30, 2026, the Banking Business Segment had income before income taxes of $176.1 million, compared to income before income taxes of $153.8 million for the three months ended September 30, 2025.

For the three months ended September 30, 2026, the Banking Business Segment’s net interest income increased $38.4 million, or 13.4% compared to net interest income for the three months ended September 30, 2025. The increase in net interest income was primarily due to higher interest earned on loans, primarily reflecting higher average balances, partially offset by a decrease in interest income on deposits in other financial institutions, as well as an increase in interest expense on FHLB advances and secured financings.

For the three months ended September 30, 2026, the Banking Business Segment’s non-interest income increased $27.6 million compared to non-interest income for the three months ended September 30, 2025. The increase in non-interest income for the three months ended September 30, 2026 was primarily due to operating lease rental income and other income from the Verdant acquisition, commercial office complex operating lease rental income and higher prepayment penalty income.

For the three months ended September 30, 2026, the Banking Business Segment’s non-interest expense increased $36.5 million, or 28.4%, compared to non-interest expense for the three months ended September 30, 2025. The increase in non-interest expense for the three months ended September 30, 2026 primarily reflected higher depreciation and amortization expense and salaries and related costs.

We consider the ratios shown in the table below to be key indicators of the performance of our Banking Business Segment:

Our Banking Business Segment’s net interest margin exceeds our consolidated net interest margin. Our consolidated net interest margin includes certain items that are not reflected in the calculation of our net interest margin within our Banking Business Segment and reduce our consolidated net interest margin, such as the borrowing costs at our Company and the yields and costs associated with certain items within interest-earning assets and interest-bearing liabilities in our Securities Business Segment, including items related to securities financing operations.

Securities Business Segment

For the three months ended September 30, 2026, our Securities Business Segment had income before income taxes of $10.3 million compared to income before income taxes of $8.3 million for the three months ended September 30, 2025.

For the three months ended September 30, 2026, net interest income increased $2.4 million, or 29.9%, compared to net interest income for the three months ended September 30, 2025. The increase for the three months ended September 30, 2026 was primarily attributable to higher securities borrowed and margin lending balances.

For the three months ended September 30, 2026, non-interest income increased $1.0 million, or 3.5%, compared to the three months ended September 30, 2025, reflecting higher average assets under custody.

For the three months ended September 30, 2026, non-interest expense increased $1.5 million, or 5.2%, compared to the three months ended September 30, 2025, primarily reflecting higher data and operational processing expenses and salaries and related costs.

The following table provides selected information for Axos Clearing: