Indiana-based Old National Bank plans to sell its health savings account business to Kansas City, Mo.-based UMB Bank, the companies announced late Monday.
The deal, which is expected to close in the fourth quarter, includes approximately $500 million in client assets held in approximately 157,000 accounts associated with more than 3,000 employer groups.
The UMB declined to disclose financial terms of the transaction. Both banks are publicly traded companies, but as of Tuesday morning neither UMB nor Old National had disclosed financial terms in any of their public filings. The transaction is expected to close in the fourth quarter, pending regulatory approvals.
Old National’s nine-person HSA team will join UMB Healthcare Services once the transaction closes.
Old National, headquartered in Evansville, got into the HSA business in 2014 when it acquired Fort Wayne-based Tower Financial Corp.
In a public filing on Monday evening, Old National said the divestiture of its HSA business “will allow it to focus on its core banking operations while ensuring that current HSA customers continue to receive exceptional service from a nationally recognized HSA provider”.
UMB, a commercial bank, serves over 1.2 million HSAs totaling over $2.7 billion in assets.
HSAs, which were first enabled by federal law in 2003, are savings accounts that offer individuals a tax-efficient way to set aside money for future medical expenses.
According to a March report by Minneapolis-based Becoming, as of December 31, consumers had a total of $98 billion in assets held in 32.5 million HSA accounts. Becoming predicts that these numbers will reach $150 billion in assets across 38 million accounts by the end of 2024.