PORTERVILLE, Calif. Bank of the Sierra said last week that it has called off its deal to buy $57 million-asset Taft (Calif.) National Bank due to unexpected loan problems at Taft.
The $608 million-asset bank announced in December that it would buy Taft for $7.5 million of cash, or about $28 per share.
Due to unanticipated deterioration in Tafts loan portfolio, it will be setting aside some additional reserves, said James C. Holly, Bank of the Sierras president and chief executive officer, in a statement. The impact of this on Tafts profitability in 2000 has led us to conclude that completing the acquisition is not in Bank of the Sierras best interest at this time.
In a separate announcement, Taft president Charles Byrd confirmed that problem loans had sunk the merger. Neither bank had factored in to the deal agreement the resulting additions to loan-loss reserves, he said.