Hot Stock under Review: Investar Holding Corporation (NASDAQ: ISTR)

On Thursday, Shares of Investar Holding Corporation (NASDAQ: ISTR) declined -0.21% to $24.30. The stock recorded $24.25 as its minimum price and hit the max level of $24.52, during its most recent trading session. It traded total volume of 7,544 shares lower than the average volume of 14.73K shares.

Investar Holding Corporation (ISTR), the holding company for Investar Bank, recently declared financial results for the quarter ended December 31, 2017. The Company stated net income of $2.30M, or $0.25 per diluted common share, for the fourth quarter of 2017, contrast to $2.10M, or $0.24 per diluted common share, for the quarter ended September 30, 2017, and $1.80M, or $0.26 per diluted common share, for the quarter ended December 31, 2016.

Fourth Quarter Highlights:

  • Total revenues, or interest and noninterest income, for the quarter ended December 31, 2017 totaled $16.90M, a boost of $1.30M, or 8.5%, contrast to September 30, 2017, and a boost of $5.00M, or 41.6%, contrast to December 31, 2016.
  • Total loans increased $148.30M, or 13.4%, to $1.30B at December 31, 2017, contrast to $1.10B at September 30, 2017, and increased $365.40M, or 40.9%, contrast to $893.40M at December 31, 2016. Apart From loans attained in the BOJ acquisition, or $100.00M, total loans increased $48.20M, or 4.3%, to $1.20B at December 31, 2017, contrast to $1.10B at September 30, 2017. Apart From loans attained in either the BOJ and Citizens acquisitions, or $217.50M, total loans increased $147.90M, or 16.6%, to $1.00B at December 31, 2017, contrast to $893.40M at December 31, 2016.
  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $407.80M at December 31, 2017, a boost of $65.20M, or 19.0%, contrast to the business lending portfolio of $342.60M at September 30, 2017, and a boost of $142.00M, or 53.4%, contrast to the business lending portfolio of $265.80M at December 31, 2016.
  • Noninterest-bearing deposits increased $41.50M, or 23.7%, to $216.60M at December 31, 2017, contrast to $175.10M at September 30, 2017, and increased $108.20M, or 99.8%, contrast to $108.40M at December 31, 2016. Apart From noninterest-bearing deposits attained in the BOJ acquisition, or $34.00M, noninterest-bearing deposits increased $7.40M, or 4.2%, to $182.60M at December 31, 2017 contrast to $175.10M at September 30, 2017. Apart From noninterest-bearing deposits attained in either the BOJ and Citizens acquisitions, or $77.50M, noninterest-bearing deposits increased $30.70M, or 28.3%, to $139.10M at December 31, 2017, contrast to $108.40M at December 31, 2016.

Loans:

Total loans were $1.30B at December 31, 2017, a boost of $148.30M, or 13.4%, contrast to September 30, 2017, and a boost of $365.40M, or 40.9%, contrast to December 31, 2016. Included in total loans at December 31, 2017 is $100.00M or 7.9% of the total loan portfolio, of loans attained from BOJ. Exclusive of loans attained from BOJ, total loans at December 31, 2017 increased $48.20M, or 4.3%, contrast to $1.10B at September 30, 2017. Exclusive of loans attained from BOJ and Citizens, or $217.50M, total loans increased $147.90M, or 16.6%, contrast to December 31, 2016.

Construction and development loans was $157.70M at December 31, 2017, a boost of $35.20M, or 28.7%, contrast to $122.50M at September 30, 2017, and a boost of $66.90M, or 73.8%, contrast to $90.70M at December 31, 2016. The increase in the construction and development portfolio at December 31, 2017 contrast to September 30, 2017 is partly attributable to the $21.50M balance of these loans attained from BOJ. The increase in this portfolio contrast to December 31, 2016 is mainly a result of organic growth in the Company’s Baton Rouge market where our lenders have great experience and long-standing relationships with local developers.

One-to-four family loans were $276.90M at December 31, 2017, a boost of $24.90M, or 9.9%, contrast to $252.00M at September 30, 2017, and a boost of $99.70M, or 56.3%, contrast to $177.20M at December 31, 2016. The increase in the 1-4 family portfolio is mainly a result of the about $79.40M balance at December 31, 2017 of 1-4 family loans attained from both BOJ and Citizens.

Owner-occupied commercial real estate loans were $272.40M at December 31, 2017, a boost of $55.10M, or 25.3%, contrast to $217.40M at September 30, 2017, and a boost of $92.00M, or 51.0%, contrast to $180.50M at December 31, 2016. The increase in the owner-occupied portfolio is mainly a result of the about $37.70M of these loans attained from both BOJ and Citizens.

At December 31, 2017, the Company’s total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $407.80M, a boost of $65.20M, or 19.0%, contrast to the business lending portfolio of $342.60M at September 30, 2017, and a boost of $142.00M, or 53.4%, contrast to the business lending portfolio of $265.80M at December 31, 2016. Included in the business lending portfolio at December 31, 2017 is $71.10M of loans attained from BOJ and Citizens. The Company continues to focus on relationship banking and growing its commercial loan portfolio.

Consumer loans, counting indirect auto loans of $55.90M, totaled $76.30M at December 31, 2017, a decrease of $7.20M, or 8.6%, contrast to $83.50M, counting indirect auto loans of $64.10M, at September 30, 2017, and a decrease of $32.10M, or 29.6%, contrast to $108.40M, counting indirect auto loans of $92.10M, at December 31, 2016. Apart From consumer loans attained from BOJ, or $1.90M, consumer loans reduced $9.00M, or 10.8%, contrast to September 30, 2017. Apart From consumer loans attained from BOJ and Citizens, or $9.30M, consumer loans reduced $41.40M, or 38.2%, contrast to December 31, 2016. The decrease in consumer loans is attributable to the planned paydowns of this portfolio and is consistent with our business strategy.

Credit Quality

While the Company’s internal focus has been directed toward managing growth and the integration of its recent acquisitions, its commitment to credit quality remains strong. Nonperforming loans were $3.70M, or 0.29% of total loans, at December 31, 2017, a boost of $1.50M contrast to $2.20M, or 0.20% of total loans, at September 30, 2017, and a boost of $1.70M contrast to $2.00M at December 31, 2016. The increase in nonperforming loans at December 31, 2017 contrast to September 30, 2017 and December 31, 2016 is mainly attributable to the acquisition of $1.70M and $0.70M of nonperforming loans from BOJ and Citizens, respectively.

The allowance for loan losses was $7.90M, or 214.43% and 0.63% of nonperforming and total loans, respectively, at December 31, 2017, contrast to $7.60M, or 349.64% and 0.68%, respectively, at September 30, 2017, and $7.10M, or 356.16% and 0.79%, respectively, at December 31, 2016. As a result of the acquisitions of BOJ and Citizens, the Company is holding attained loans that are carried net of a fair value adjustment for credit and interest rate marks and are only included in the allowance calculation to the extent that the reserve requirement exceeds the fair value adjustment.

The provision for loan losses was $0.40M for the quarters ended December 31, 2017, September 30, 2017, and December 31, 2016.

Deposits:

Total deposits at December 31, 2017 were $1.20B, a boost of $123.90M, or 11.2%, contrast to September 30, 2017, and a boost of $317.50M, or 35.0%, contrast to December 31, 2016. The Company attained $126.10M and $212.20M in deposits from the BOJ and Citizens acquisitions, respectively. Exclusive of deposits attained from BOJ, total deposits reduced $2.20M, or 0.2%, contrast to September 30, 2017. Exclusive of deposits attained from BOJ and Citizens, total deposits reduced $11.20M, or 1.2%, contrast to December 31, 2016. The decrease in deposits, exclusive of attained deposits, at December 31, 2017 contrast to December 31, 2016 is mainly because of a decrease in time deposits of $62.30M, or 13.8%, resulting from the Bank’s strategy to decrease its dependence on non-retail certificates of deposit.

Financial Results for the Quarter Ended December 31, 2017:

Net Interest Income:

Net interest income for the fourth quarter of 2017 totaled $12.80M, a boost of $1.30M, or 11.1%, contrast to the third quarter of 2017, and a boost of $4.00M, or 46.0%, contrast to the fourth quarter of 2016. Included in net interest income for the quarters ended December 31, 2017 and September 30, 2017 is $0.20M of interest income accretion from the acquisition of loans during those quarters. The increase in net interest income was mainly driven by growth in loan and securities balances partially offset by a boost in interest expense as we funded the increase in earning assets with increased deposits and borrowings. Net interest income for the fourth quarter of 2017 increased $3.50M and $1.40M because of increases in the volume and yield, respectively, of interest-earning assets, offset slightly by decreases of $0.60M and $0.30M because of the increases in the volume and rate, respectively, of interest-bearing liabilities contrast to the fourth quarter of 2016.

Noninterest Income:

Noninterest income for the fourth quarter of 2017 totaled $1.00M, a decrease of $0.20M, or 17.6%, contrast to the third quarter of 2017, and a boost of $0.10M, or 7.4%, contrast to the fourth quarter of 2016. The decrease in noninterest income when contrast to the quarter ended September 30, 2017 is because of a $0.20M decrease in gain on sale of fixed assets.

Noninterest Expense:

Noninterest expense for the fourth quarter of 2017 totaled $9.60M, a boost of $0.50M, or 5.3%, contrast to the third quarter of 2017, and a boost of $3.00M, or 45.5%, contrast to the fourth quarter of 2016. The increase in noninterest expense contrast to the quarters ended September 30, 2017 and December 31, 2016 is mainly attributable to the increases in both salaries and employee benefits and acquisition expense. The increase in salaries and employee benefits is a result of the increase in employees following the BOJ and Citizens acquisitions, as well as the addition of four commercial lenders in the Baton Rouge, New Orleans and Lafayette markets, and a Community Development Officer and Treasury Management Sales Officer in the New Orleans market during the quarter ended September 30, 2017. The increase in acquisition expense was a result of the Citizens acquisition that was accomplished on July 1, 2017 and the BOJ acquisition that was accomplished on December 1, 2017.

Taxes:

The Company recorded income tax expense of $1.50M for the quarter ended December 31, 2017, which equates to an effective tax rate of 39.5%, a boost from the effective tax rates of 32.6% and 31.5% for the quarters ended September 30, 2017 and December 31, 2016, respectively. The income tax expense for the quarter ended December 31, 2017 includes a one-time charge of $0.30M as a result of the revaluation of the Company’s deferred tax assets and liabilities required following the enactment of the Tax Cuts and Jobs Act. The Company’s final analysis and write-down will be based on a number of factors, counting completion of the Company’s 2017 consolidated tax return. Management anticipates the Company’s effective tax rate to approximate 20% starting in 2018, mainly as a result of the Tax Cuts and Jobs Act.

ISTR has the market capitalization of $214.33M and its EPS growth ratio for the past five years was 49.70%. The return on assets ratio of the Company was 0.60% while its return on investment ratio stands at 25.00%. Price to sales ratio was 4.02 while 62.40% of the stock was owned by institutional investors.

Louis Jensen

Editor

I am Louis Jensen and I’m passionate about business and finance news with over 4 years in the industry starting as a writer working my way up into senior positions. I am the driving force behind thestockgem.com with a vision to broaden the company’s readership throughout 2016. I am an editor and reporter of “Earnings” category.

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