MWABank, the bank launched by Modern Woodmen of America, has reached an agreement with San Diego-based Axos Bank to acquire approximately $225 million of its deposits — marking MWABank's first step toward closing and selling the bank.
Axos, the banking subsidiary of Axos Financial Inc., announced the deposit assumption agreement Thursday in a news release. Axos will acquire about $194 million of checking, savings and money market accounts and $31 million of time deposits from MWABank.
Axos is not assuming any assets, employees or branches in the transaction from MWABank, a wholly owned subsidiary of Rock Island-based Modern Woodmen.
"After considerable deliberation, Modern Woodmen's board of directors decided to sell the bank and focus on our insurance business," Sharon Snawerdt, Modern Woodmen's corporate communications manager, said in an interview Thursday.
She said MWABank is in discussions to sell its other assets and programs, including its mortgage and loan business and credit card business.
Thirty MWABank employees will lose their jobs. They were notified Thursday. Snawerdt said the employees will work for several months until the transaction out of banking is complete.
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Those employees may apply for open positions at Modern Woodmen, which employs nearly 500 people in the Quad-Cities. They also will be provided severance packages and outplacement services.
"MWABank has always made customer service its first priority," MWABank President and CEO Steve Ollenburg said in the release. "So we were very careful to find a good home for our customers. We believe we’ve found that in Axos Bank."
MWA Bank began in 2003 as a direct bank of Modern Woodmen. It principally conducts business via the internet, mail, telephone and other electronic means. Its only traditional banking location is in downtown Rock Island.
"The whole banking business is a different business model than the insurance business," Snawerdt said, adding "That environment has intensified over the last eight years with a lot of costly oversight to remain compliant."
"We are excited about the opportunity to provide comprehensive banking services to MWABank’s retail and business customers and fraternal chapters," Greg Garrabrants, president and CEO of Axos Financial, Inc., said in the release. "Our digital consumer banking platform and service-oriented model are an ideal fit for MWABank’s model of providing high-touch services to clients across the country. We have a proven track record of ensuring a smooth client transition in these types of transactions."
He added the transaction is expected to add thousands of new customers to Axos Bank and further reduce its funding costs. Axos Financial Inc. is the holding company for Axos Bank, a nationwide bank that provides consumer and business banking products through its low-cost distribution channels and affinity partners. It has nearly $10 billion in assets.
Axos will pay no deposit premium and replace higher cost funding with the acquired deposits at closing.
Pending regulatory approvals, the banks expect the transaction to be complete by March 31, 2019.