Pathward Financial in Sioux Falls, S.D., has agreed to sell its commercial insurance premium finance business to AFS IBEX Financial Services.
The $7.5 billion-asset Pathward said in a press release said that AFS, a unit of Honor Capital Holdings, will pay a $31.2 million premium on top of the net asset value of the assets, which was $617.1 million on June 30.
The deal is expected to close by the end of this year.
AFS, which will also assume certain liabilities, will assume real property leases tied to the business.
“We need to have the right-sized balance sheet with an optimized asset mix to deliver on our fiscal 2025 strategy,” Brett Pharr, Pathward’s CEO, said in the press release. The sale “supports our strategy of simplification and gives us the opportunity to accelerate our rotation into higher-yielding assets in verticals where we believe we have a competitive advantage.”
The sale, on its own, should be relatively neutral to fiscal 2024 net income and earnings per share. The deal should be increasingly accretive as it redeploys the capital and deposits into other commercial finance loans.
Colonnade Securities advised Pathward.