ACQUISITIONS

12 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

E*TRADE Advisor Services Acquisition. On August 2, 2021, the Company’s subsidiary, Axos Clearing, LLC, acquired certain assets and liabilities of E*TRADE Advisor Services (“EAS”), the registered investment advisor custody business of Morgan Stanley. This business was rebranded as Axos Advisor Services (“AAS”). AAS adds incremental fee income, a turnkey technology platform used by independent registered investment advisors for trading and custody services, and low cost deposits that can be used to generate fee income from other bank partners or to fund loan growth at Axos Bank. The purchase price of $54.8 million consisted entirely of cash consideration paid upon acquisition and working capital adjustments. Non-interest income of $30.2 million was recognized in the year ended June 30, 2022 in the Consolidated Statements of Income for operating results from the date of acquisition.

The Company incurred acquisition-related costs totaling $0.04 million for the year ended June 30, 2022. These costs are recognized in general and administrative expenses in the Consolidated Statements of Income.

The acquisition is accounted for as a business combination under the acquisition method of accounting. Accordingly, tangible and intangible assets acquired (and liabilities assumed) are recorded at their estimated fair values as of the date of acquisition. The final allocation of the $54.8 million purchase price consisted of $14.2 million of fair value of tangible assets acquired, which included $7.8 million of a right-of-use lease asset, $10.9 million of liabilities assumed, which included $7.8 million of a lease liability, $27.1 million of identifiable intangible assets and $24.4 million of goodwill, all of which is expected to be deductible for tax purposes. Identifiable intangible assets with a finite useful are amortized on a straight-line basis. Goodwill was calculated as the excess of consideration exchanged over the fair value of identifiable net assets acquired. The goodwill includes synergies expected to result from combining the acquired assets and liabilities with existing operations, coupling its custody platform with the Company existing product offerings and leveraging customer relationships through RIAs. The following table summarizes the fair value and useful life of each intangible asset acquired as of the acquisition date:


(Dollars in thousands)	Fair Value		Useful Lives (Years)
Trade Name	$	290	0.16
Proprietary Technology	10,990		7
Customer Relationships	15,650		14
Non-Compete Agreements	130		1
Total	$	27,060

The following table presents the results of operations of AAS for the years ended June 30, 2022 and 2021 on an unaudited pro forma basis, as if the acquisition of the entity that was rebranded to AAS had been consummated on July 1, 2020 through the periods shown below. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what the Company’s results of operations would have been if the acquisition of AAS had occurred as of July 1, 2020, or the results of operations for any future periods. Additionally, the information presented as follows does not reflect any synergies or other strategic benefits as a result of acquisition.


	Pro Forma
	Year Ended June 30,
(Dollars in thousands)	2022		2021
Non-interest income	$	32,949	$	30,395

It is not practical to disclose net income on a pro forma basis as the assets and liabilities acquired are a component of a business.