MetaBank, a unit of Meta Financial Group, has signed an agreement to divest its community bank division to Central Bank.

The sale includes MetaBank’s community bank branches in Iowa and South Dakota.

Overall, the divestment will include transfer of around $270m in deposits and $265m in loans to Central Bank.

As part of the deal, Central Bank will also induct all the existing employees of MetaBank community bank.

Meta Financial Group president and CEO Brad Hanson said: “We are pleased to reach this agreement with Central Bank, which will allow both companies to focus on their core businesses and provide the highest level of service and value to the customers, employees and shareholders.

“This transaction aligns with Meta’s strategy to focus on improving yields from our national lending platforms, growing deposits in our payments division and improving efficiencies by streamlining operations; while serving key markets often overlooked by traditional banks.”

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Once the deal is complete, MetaBank will have around $935m of loans related to its community bank division that will run-off eventually.

The sale is also expected to generate around $18.5m in pre-tax net gain to Meta Financial Group. The proceeds will be utilised for share buyback and other corporate purposes.

The deal is pending regulatory approval, with completion anticipated in the first quarter of 2020.

Set up in 1954, MetaBank offers personal and business banking services and oversees more than $6bn in assets. The lender’s corporate headquarters is located in Sioux Falls, South Dakota.

In September, MetaBank extended its partnership with ATM company NationalLink by another three years.