The parent company of Investar Bank said it will not go ahead with the purchase of Alabama-based Cheaha Financial Group because of the unpredictable economic conditions caused by the coronavirus pandemic.
Investar Holding Corp. said it terminated the agreement to purchase Cheaha because the sale was not closed by June 30. In its second-quarter filing with the U.S. Securities and Exchange Commission, Investar said it was impractical to complete the transaction because of the economic uncertainty caused by the global pandemic.
Investar had announced in December it would purchase Cheaha in a $41.1 million deal that was set to close in the second quarter. Cheaha Bank underwrites loans and sells banking products to individuals and small businesses across four branches in Calhoun County, Alabama.
Cheaha Bank had $117.2 million of net loans and $177.1 million in deposits as of Sept. 30. The bank had $206.7 million in total assets as of third quarter this year.
Investar also announced it will close its Zachary branch at 1112 Church St. in the fourth quarter because of its closeness to other branches. The bank said it will make “strategic staffing reductions at certain other branches," but did not specify numbers or locations.
Investar reported second-quarter earnings of $4.3 million, or 39 cents per share, down slightly from $4.9 million, or 48 cents share, a year ago.
John D’Angelo, Investar president and chief executive officer, said the bank was “significantly impacted” by the pandemic. “Despite the impact of the pandemic, I am very pleased with our results for the second quarter of 2020,” D’Angelo said. “Our company is internally focused on protecting our balance sheet, maintaining strong capital levels and credit quality, and seeking opportunities to improve efficiency through technology, as we believe investments in technology can substantially improve our operating results”
Total revenue for the quarter was $27.7 million, up from $24.1 million a year ago.
Investar instituted a 90-day loan deferral program at the start of the pandemic. As of Wednesday, the balance of the loans remaining on the deferral program was about $116.5 million, or 6% of the total loan portfolio.
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