Axos loads up on more deposits (for free)

Axos Financial in San Diego has agreed to buy $225 million in low-cost deposits from the Modern Woodmen of America, which is closing its direct bank to focus on the insurance business.

MWABank is expected to transfer about $194 million in checking, savings and money market deposits and $31 million of time deposits by the end of the first quarter. The agreement does not include any assets, employees or branches, and Axos will pay no premium for the deposits.

"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,” Greg Garrabrants, president and CEO of Axos Financial, said in a press release Thursday. “We have a proven track record of ensuring a smooth client transition in these types of transactions. We expect this transaction to add thousands of new customers to the bank and further reduce our funding costs.”

The Modern Woodmen of America is a fraternal financial services company that primarily offers insurance policies. That company cited high compliance costs and an intensely competitive environment when it told the Quad City Times that it decided to sell MWA Bank and concetrate on insurance.

Axos has made two similar deals already this year. This summer it agreed to buy $3 billion of deposits from Nationwide after the insurance giant decided to exit the retail banking business. In October, it said it would buy COR Clearing, a correspondent clearing firm that spun off from Mutual of Omaha in 2002. That deal is expected to bring Axos $35 million in annual fee income and $470 million in deposits once it closes.

The $9.7 billion-asset Axos was previously known as BofI Holding and BofI Federal Bank, or Bank of the Internet. The company changed its name on Oct. 1.