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IH

Investar Holding Corp (ISTR)·Q1 2025 Earnings Summary

Executive Summary

  • EPS and revenue beat consensus: GAAP diluted EPS was $0.63 vs S&P Global consensus $0.43; “Revenue” (S&P definition) was $23.95M vs $19.95M consensus, driven by a $3.6M negative provision tied to a $3.3M Hurricane Ida recovery and lower funding costs * *. Values retrieved from S&P Global.
  • Net interest margin expanded 22 bps to 2.87% QoQ on deposit cost relief and BTFP repayment; yield on interest-earning assets edged up to 5.39% .
  • Core profitability metrics improved YoY (ROAA 0.94%, ROAE 10.31%), but efficiency ratio worsened QoQ to 79.77% as noninterest income fell 61% vs Q4’s BOLI windfall .
  • Management reiterated balance sheet optimization as the strategy, highlighted CD repricing over the next 2–3 quarters, strong credit quality (NPLs 0.27%), and rising CET1 to 11.16% .

What Went Well and What Went Wrong

What Went Well

  • “Consistent, quality earnings through optimization of our balance sheet”: NIM +22 bps QoQ to 2.87% and overall cost of funds −27 bps QoQ to 3.22% .
  • Credit quality: NPLs fell to 0.27% of loans; allowance coverage of NPLs rose to 473% .
  • Capital and deposit mix: CET1 increased to 11.16%; noninterest-bearing deposits rose $4.6M QoQ; brokered demand deposits reduced to zero .
  • Quote: “Our liability sensitive balance sheet is well-positioned… even better positioned in the event of future rate cuts” — CEO John D’Angelo .

What Went Wrong

  • Efficiency ratio deteriorated to 79.77% from 71.00% in Q4, as noninterest income normalized (−61% QoQ) after Q4 BOLI proceeds .
  • Core profitability excluding hurricane settlement: Core diluted EPS would have been $0.38 and core ROAA 0.57% without the $3.1M favorable pre-tax impact .
  • Loan balances declined $18.5M QoQ (−0.9%) as part of right-sizing, and commercial & industrial loans fell $16.2M QoQ (−3.1%) on reduced line utilization .
  • Deposit costs remain elevated at 3.15% despite QoQ relief; efficiency remains a focus amid inflationary pressures .

Financial Results

Income, EPS, Margin vs prior periods and consensus

MetricQ1 2024Q4 2024Q1 2025
Net Income ($USD)$4.707M $6.107M $6.293M
Diluted EPS (GAAP)$0.48 $0.61 $0.63
Income before noninterest expense ($USD)$21.383M $23.347M $23.952M
Net Interest Margin (%)2.59% 2.65% 2.87%
Cost of Deposits (%)3.31% 3.40% 3.15%
Overall Cost of Funds (%)3.51% 3.49% 3.22%

Segment/portfolio detail (Loans, $USD thousands)

Loan TypeQ1 2024Q4 2024Q1 2025
Construction & Development$173,511 $154,553 $149,275
1–4 Family$414,480 $396,815 $394,735
Multifamily$105,124 $84,576 $103,248
Farmland$7,539 $6,977 $6,718
Owner-Occupied CRE$453,414 $449,259 $449,963
Nonowner-Occupied CRE$495,844 $495,289 $481,905
Commercial & Industrial$518,969 $526,928 $510,765
Consumer$11,697 $10,687 $10,022
Total Loans$2,180,578 $2,125,084 $2,106,631

KPIs and balance sheet

KPIQ1 2024Q4 2024Q1 2025
ROAA (%)0.68% 0.88% 0.94%
ROAE (%)8.28% 9.83% 10.31%
Efficiency Ratio (%)76.62% 71.00% 79.77%
NPLs / Loans (%)0.26% 0.42% 0.27%
CET1 Ratio (%) (Holding Co.)9.79% 10.84% 11.16%
Total Deposits ($USD)$2.207B $2.346B $2.347B
Brokered Demand Deposits ($USD)$0 $47.320M $0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Retail CD portfolio repricingNext 2 quartersNot provided~58% reprices over next two quarters; ~80% over next three quarters Informational update
Dividend per common shareQ1 2025$0.105/share (Q4 level) $0.105/share declared Maintained
Formal financial guidance (revenue/margins/tax)FY/QuarterNone providedNone provided; qualitative focus on balance sheet optimization Maintained (no numeric guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
Balance sheet optimizationCore EPS $0.45; NIM improvement; focus on variable-rate originations Core EPS $0.65 boosted by $3.1M BOLI; redeemed 2029 sub notes; repaid BTFP NIM 2.87%; cost of funds down; loan right-sizing −$18.5M; core diluted EPS would be $0.38 without settlement Continued execution; normalization ex one-offs
Credit qualityNPLs stable; optimization ongoing Asset quality stable; allowance robust NPLs 0.27%; ACL/NPLs 473%; $3.3M recovery from Hurricane Ida claim Strengthened
Tariffs/macroNot highlightedNot highlightedCEO flags volatility from changing tariff policies, inflation uncertainty New macro caution
LiquidityNot highlightedBTFP fully repaid in Q4 $43.5M cash; ~$772.5M available funding; liquidity covers 102% of uninsured deposits Liquidity position reinforced
Technology/digitalNot highlightedDigital transformation and footprint optimization referenced Continuing digital transformation; expense control Ongoing initiative

Management Commentary

  • Strategic focus: “We continued to execute our strategy of consistent, quality earnings through the optimization of our balance sheet… Our liability sensitive balance sheet is well-positioned… even better positioned in the event of future rate cuts.” — John D’Angelo, President & CEO .
  • Funding and liquidity: Cash & equivalents $43.5M; ~$772.5M available funding via FHLB and unsecured lines; liquidity equals ~102% of uninsured deposits ($803.7M) .
  • Credit resolution: $3.3M recovery from Hurricane Ida-impaired relationship; two foreclosed properties remain with $1.7M cost basis actively marketed .

Q&A Highlights

  • An earnings call transcript was not available in the document set or public archives reviewed; therefore, Q&A themes and clarifications could not be verified. We searched for an “earnings call transcript” but found none in SEC or investor relations portals and third-party archives.

Estimates Context

MetricConsensus (S&P Global)Actual (Company)# of Estimates
EPS (Primary)$0.43*$0.64*3*
Revenue (S&P definition)$19.95M*$23.95M*2*

Values retrieved from S&P Global. Note: Revenue here reflects S&P’s bank “revenue” definition; company-reported “Income before noninterest expense” was $23.95M .

Key Takeaways for Investors

  • Beat vs consensus on EPS and revenue, driven by lower funding costs and a significant credit recovery; ex-recovery, core profitability remains steady but less robust (core diluted EPS ~$0.38–$0.39) *.
  • NIM expansion and falling cost of funds are clear positives; management’s CD repricing schedule suggests further funding cost relief into the next 2–3 quarters .
  • Credit metrics improved (NPLs 0.27%, ACL/NPLs 473%) and capital strengthened (CET1 11.16%), lowering risk and supporting buybacks/dividends .
  • Efficiency ratio worsened to ~80% as noninterest income normalized post-Q4 BOLI; focus on digital transformation and branch optimization remains necessary to restore operating leverage .
  • Deposit mix trending better (noninterest-bearing up; brokered demand to zero), but deposit costs still elevated; continued remix should support margins .
  • Near-term trading catalysts: sustained NIM tailwinds, additional credit resolution proceeds, and ongoing buybacks/dividend stability; watch for normalization of provision and noninterest income .
  • Medium-term thesis: liability-sensitive positioning into possible rate cuts, disciplined loan growth in variable-rate categories (69% of originations at 7.6%), capital deployment via repurchases at a discount to TBV .

* Values retrieved from S&P Global.