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Louisiana-based Investar to buy Alabama-based Cheaha for over $41M

Baton Rouge, La.-based Investar Holding Corp., the holding company for Investar Bank NA, has agreed to buy Oxford, Ala.-based Cheaha Financial Group Inc. and its subsidiary, Cheaha Bank, for about $41.1 million, or $80.00 in cash for each share of Cheaha common stock.

The deal is expected to close in the second quarter of 2020, subject to the approval of Cheaha shareholders.

On an aggregate basis, S&P Global Market Intelligence calculates the deal value to be 180.1% of common equity and tangible common equity, and 13.4x earnings. The deal value is also 20.02% of assets and 23.22% of deposits, and the tangible book premium to core deposits ratio is 16.10%. Ratios are based on Cheaha's June 30, 2019, small parent equity and last-12-months net income of $24.1 million and $3.1 million, respectively.

S&P Global Market Intelligence valuations for bank and thrift targets in the Southeast region between Dec. 19, 2018, and Dec. 19, 2019, averaged 156.67% of book and 164.18% of tangible book and had a median of 17.19x last-12-months earnings, on an aggregate basis.

As of Sept. 30, Cheaha Bank, with four branch locations in Calhoun County, Ala., had about $206.7 million in assets, $117.2 million in net loans, $177.1 million in deposits and $27.5 million in stockholder's equity, according to a news release announcing the deal.

Based on S&P Global Market Intelligence data, the acquisition will see Investar enter Calhoun County, Ala., with four branches to be ranked seventh with a 9.05% share of about $1.98 billion in total market deposits.

For the acquisition, Janney Montgomery Scott LLC acted as financial adviser, and Fenimore Kay Harrison & Ford LLP acted as legal counsel to Investar. Maynard Cooper & Gale PC served as legal counsel for Cheaha, and National Capital LLC provided the fairness opinion for Cheaha.

Investar said it also clinched a stock purchase agreement with selected institutional and other accredited investors for a private placement of 1,290,323 shares of its common stock at an offering price of $23.25 per share for total gross proceeds of $30.0 million.

The company intends to use the net proceeds from the offering to support the acquisition of Cheaha and for general corporate purposes, including organic growth and other potential acquisitions.

Janney Montgomery Scott LLC served as lead placement agent, and DA Davidson & Co. acted as co-placement agent for the private placement. Fenimore Kay Harrison & Ford LLP served as legal counsel to Investar, and Vedder Price PC served as legal counsel to the placement agents for the offering.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.

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