Meta Financial Group Inc. is exiting the community banking business to focus on its core payments business.

On Wednesday the Sioux Falls, S.D.-based company announced that its wholly owned subsidiary, MetaBank, has entered into an agreement with Central Bank, based in Storm Lake, for the sale of MetaBank’s community bank division. Financial terms of the transaction were not disclosed.

Included in the sale are all 10 of MetaBank’s community bank branches located in Iowa and South Dakota, as well as deposits and fixed assets connected with them, representing approximately $270 million of deposits. Also included in the sale are approximately $265 million of loans. MetaBank has three branch locations in Greater Des Moines.

After the closing of the transaction, MetaBank will retain approximately $935 million of loans associated with MetaBank’s community bank division that will be serviced by Central and will run off over time. The branches will be rebranded as Central Bank following the closing of the transaction.

“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,” said Brad Hanson, president and CEO of Meta Financial Group. “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.”

Tim Brown, chairman and CEO of Central Bank, said: “Central Bank’s focus of dedicating our time and resources to the communities we serve encompasses the true meaning of community banking. We look forward to accomplishing great things for our customers and employees while embracing our core values of providing exceptional service and helping our customers achieve financial success.”

In 2013, Central Bank significantly expanded its Greater Des Moines presence by acquiring Liberty Bank’s remaining seven metro-area branches. With assets exceeding $900 million, Central Bank currently has 17 branch locations in Iowa and South Dakota.

Central Bank has agreed to offer employment to all current MetaBank community bank employees.

John Brown, president and CFO of Central Bank, said: “MetaBank employs experienced and valued bankers who represent our vision of community banking. We look forward to working together to make a stronger community bank, bringing new opportunities to our communities, customers and employees. We are pleased to say customers can carry out banking transactions as usual.” Additional details and updates are expected to be sent to affected customers in the upcoming weeks.

The transaction is expected to result in a pretax net gain to Meta Financial of about $18.5 million. The company intends to deploy capital generated from the sale into share repurchases, as appropriate, and other corporate purposes.

In connection with the divestment of the community bank division, Meta Financial also disposed of assets related to a previously disclosed agricultural relationship that were held in other real estate owned assets, which represented 46 basis points of nonperforming assets as of Sept. 30. The company expects to incur a pre-net loss of about $4.3 million in the quarter ended Dec. 31 related to the disposition of those assets.

The closing of the transaction, which is subject to regulatory approval, is expected late in the first quarter of 2020.