Investar Holdings in Baton Rouge, La., will exit indirect auto lending.

The $938 million-asset company will incur $400,000 in expenses from shutting down the unit, including $300,000 for contract termination costs and $100,000 for severance and employee benefits.

Investar will leave the business because of its operating performance. Indirect comprises 31.5% of Investar's consumer loans, including loans held for sale, and 7.2% of gross loans.

Investar will continue to accept auto loans until the end of the year. Afterward, it will continue to fully fund existing loans. It may reclassify some indirect auto loans as held for sale, if it is unable to sell them before Dec. 31; and it may increase its allowance for loan losses by $500,000.

After it exits indirect auto, Investar plans to shift its focus to relationship banking.

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