ISTR: Investar Holding Corporation (NASDAQ: ISTR)

Investar Holding Corporation (NASDAQ: ISTR) (the “Company”), the holding company for Investar Bank, National Association (the “Bank”), freshly declared fiscal results for the quarter finished September 30, 2k19. The Company stated net income of $4.70M, or $0.460 for each diluted common share, for the 3rd-quarter of 2k19, contrast to $4.90M, or $0.480 for each diluted common share, for the quarter finished June 30, 2k19, and $4.00M, or $0.410 for each diluted common share, for the quarter finished September 30, 2k18.

On a non-GAAP basis, core earnings for each diluted common share for the 3rd-quarter were $0.480 contrast to $0.470 for the 2nd-quarter of 2k19 and $0.410 for the quarter finished September 30, 2k18. Core earnings exclude certain non-operating items counting, but not limited to, acquisition cost and changes in the fair value of equity securities (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).

The Company’s balance sheet and statement of income as of and for the three months finished September 30, 2k19 and June 30, 2k19 include the impact of the Company’s acquisition of Mainland Bank (“Mainland”), which was accomplished on March 1, 2k19. As of the acquisition date, Mainland had about $127.10M in total assets, counting $82.40M in loans, and about $107.60M in deposits. The assets attained and liabilities assumed have been recorded at fair value in the Company’s merged balance sheet and are subject to change pending finalization of all valuations.

3rd-Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter finished September 30, 2k19 totalled $24.50M, a boost of $0.30M, or 1.40 percent, contrast to the quarter finished June 30, 2k19, and a boost of $4.50M, or 22.40 percent, contrast to the quarter finished September 30, 2k18.
  • Total loans raised $43.00M, or 2.80 percent, to $1.590B at September 30, 2k19, contrast to $1.540B at June 30, 2k19, and raised $227.90M, or 16.80 percent contrast to $1.360B at September 30, 2k18. Apart From the loans attained in the Mainland acquisition, or $73.20M on September 30, 2k19, total loans raised $47.40M, or 3.20 percent, a contrast to June 30, 2k19, and raised $154.70M, or 11.40 percent, contrast to September 30, 2k18.
  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $632.40M at September 30, 2k19, a boost of $16.40M, or 2.70 percent, contrast to the business lending portfolio of $616.00M at June 30, 2k19, and a boost of $147.70M, or 30.50 percent, contrast to the business lending portfolio of $484.70M at September 30, 2k18.
  • Credit quality remains strong with nonperforming loans of 0.360 percent of total loans at September 30, 2k19 contrast to 0.370 percent and 0.470 percent at June 30, 2k19 and September 30, 2k18, respectively.
  • Total deposits raised $33.10M, or 2.10 percent, to $1.590B at September 30, 2k19, contrast to $1.550B at June 30, 2k19, and raised $289.70M, or 22.40 percent, contrast to $1.300B at September 30, 2k18. The Company attained about $107.60M in deposits from Mainland at the time of acquisition on March 1, 2k19, and the remaining incline is because of organic growth.
  • The Company repurchased 18,707 shares of its common stock through its stock repurchase program at an average price of $22.830 during the quarter finished September 30, 2k19, leaving 326,334 shares authorized for repurchase under the current stock repurchase plan.
  • On July 30, 2k19, the Company declared that it has reached a definitive agreement (the “Merger Agreement”) to acquire Bank of York in York, Alabama. Under the terms of the Merger Agreement, the Company will pay a total amount of cash merger consideration to shareholders of Bank of York equal to $15.00M. Bank of York will also be permitted under the Merger Agreement to make regular and special pre-closing cash distributions to its shareholders in an aggregate amount of about $1.00M. The transaction has received required regulatory and Bank of York shareholder approval, and the Company anticipates it will close the Bank of York acquisition on or about November 1, 2k19, subject to customary closing conditions. Branch and operating system conversions are presently planned to be accomplished in the 2nd-quarter of 2k20. At June 30, 2k19, Bank of York had about $99.50M in assets, $46.00M in net loans, and $82.30M in deposits.

Loans

Total loans were $1.590B on September 30, 2k19, a boost of $43.00M, or 2.80 percent, contrast to June 30, 2k19, and a boost of $227.90M, or 16.80 percent, contrast to September 30, 2k18. Apart From the loans attained in the Mainland acquisition, or $73.20M on September 30, 2k19, total loans raised $47.40M, or 3.20 percent, a contrast to June 30, 2k19, and raised $154.70M, or 11.40 percent, contrast to September 30, 2k18. We practiced the majority of our loan growth in the commercial real estate and commercial and industrial portfolios for the quarter finished September 30, 2k19 as we remain focused on relationship banking and growing our commercial loan portfolio.

At September 30, 2k19, 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 $632.40M, a boost of $16.40M, or 2.70 percent, contrast to the business lending portfolio of $616.00M at June 30, 2k19, and a boost of $147.70M, or 30.50 percent, contrast to the business lending portfolio of $484.70M at September 30, 2k18. The incline in the business lending portfolio contrast to June 30, 2k19 and September 30, 2k18 is mainly attributable to raised production of our Commercial and Industrial Division. The incline in the business lending portfolio contrast to September 30, 2k18 is also partly attributable to loans attained from Mainland on March 1, 2k19, which included owner-occupied commercial real estate and commercial and industrial loans with a total balance of $45.70M at September 30, 2k19.

Consumer loans, counting indirect auto loans of $17.90M, totaled $30.20M at September 30, 2k19, a decline of $4.60M, or 13.30 percent, contrast to $34.80M, counting indirect auto loans of $21.60M, at June 30, 2k19, and a decline of $22.10M, or 42.20 percent, contrast to $52.30M, counting indirect auto loans of $35.90M, at September 30, 2k18. The decline in consumer loans is mainly attributable to the planned pay downs of this portfolio and is consistent with our business strategy.

Credit Quality

Nonperforming loans were $5.70M at September 30, 2k19 and June 30, 2k19, or 0.360 percent and 0.370 percent of total loans, at September 30, 2k19 and June 30, 2k19, respectively, a decline of $0.60M contrast to $6.30M, or 0.470 percent of total loans, at September 30, 2k18.

The allowance for loan losses was $10.30M, or 182.40 percent and 0.650 percent of nonperforming loans and total loans, respectively, at September 30, 2k19, contrast to $9.90M, or 173.430 percent and 0.640 percent, respectively, at June 30, 2k19, and $9.00M, or 142.16 percent and 0.660 percent, respectively, at September 30, 2k18.

The provision for loan losses was $0.50M for the quarter finished September 30, 2k19 contrast to $0.40M for the quarter finished June 30, 2k19 and $0.80M for the quarter finished September 30, 2k18. The changes in the provision for loan losses contrast to the quarters finished June 30, 2k19  and September 30, 2k18, are mainly attributable to the changes in incremental loan growth, apart from attained loan balances, as credit quality and other factors impacting our allowance and related provision were relatively unchanged duration over duration.

Deposits

Total deposits at September 30, 2k19 were $1.590B, a boost of $33.10M, or 2.10 percent, a contrast to June 30, 2k19, and a boost of $289.70M, or 22.40 percent, a contrast to September 30, 2k18. The Company attained about $107.60M in deposits from Mainland at the time of acquisition on March 1, 2k19.