Last Update 3/10/25

Investar Holding Corporation (NASDAQ: ISTR) is a regional bank with a focus on commercial and retail banking services. Headquartered in Louisiana, it operates in a competitive sector where financial stability and dividend reliability matter. With a market capitalization of around $172 million, it falls into the small-cap category, which often brings both opportunity and risk.

Over the past year, the stock has moved between $14.60 and $24.81, and it currently trades at $17.04. For dividend investors, the key question is whether ISTR provides a solid and growing income stream while maintaining financial strength. Let’s break it down.

📊 Key Dividend Metrics

💵 Dividend Yield: 2.39%
📅 Ex-Dividend Date: December 31, 2024
💰 Payout Ratio: 20.10%
📈 5-Year Average Yield: 1.98%
🚀 Dividend Growth: Increasing consistently over time
📊 Forward Dividend Rate: $0.42

Dividend Overview

Investar currently offers a 2.39% dividend yield, which is slightly higher than its five-year average of 1.98%. While it’s not the highest yield in the banking sector, it’s consistent, and the payout ratio of just 20.1% indicates that the dividend is well-covered by earnings. This gives the company plenty of room to continue increasing its payouts without overextending its financial resources.

One of the standout aspects of Investar’s dividend policy is its stability. Unlike high-yield stocks that may cut payouts in uncertain times, ISTR has maintained a responsible approach, keeping its dividend sustainable while also reinvesting in its business.

Dividend Growth and Safety

A good dividend stock isn’t just about yield—it’s also about growth and safety. ISTR has been increasing its dividend at a steady pace, making it a reliable choice for investors who want income that keeps up with inflation.

With earnings per share at $1.98 and a quarterly earnings growth rate of 72.6% year-over-year, the company has the financial strength to support its dividend. The low payout ratio further reinforces this, as it suggests that the company could withstand economic downturns without being forced to cut dividends.

In banking, financial stability is crucial when evaluating dividend safety. ISTR’s balance sheet and profitability metrics indicate that the company is in a solid position. Its margins remain strong, and its capital levels support continued dividend payments.

Chart Analysis

Recent Price Action

The stock has been in a clear downtrend since peaking late last year. It reached a high near $25 before rolling over and losing momentum. The recent closing price of $17.53 shows that it has now fallen below both the 50-day and 200-day moving averages, which are often key support levels.

The drop suggests that sellers are in control, and the inability to hold above the 200-day moving average further confirms the weakness. The stock attempted to stabilize in late February but has struggled to gain traction.

Moving Averages

The 50-day moving average is trending downward, crossing below the 200-day moving average, which is a bearish signal often referred to as a death cross. This indicates that the short-term trend is weaker than the long-term trend, which can signal further downside pressure.

The 200-day moving average is flattening out, which suggests that the stock’s longer-term uptrend is losing steam. If the price remains below this level for an extended period, it may act as resistance on any rebound attempts.

Volume Trends

Volume remains relatively low, except for a notable spike in July. That volume surge likely coincided with a major catalyst, such as earnings or news, that caused a sharp move in price. Since then, volume has tapered off, suggesting that the current price action is being driven more by a lack of buying interest rather than aggressive selling.

Relative Strength Index (RSI)

The RSI is sitting at a lower level, but it hasn’t quite reached oversold territory. This suggests that the stock is weak, but not necessarily at a point where buyers are stepping in aggressively. If RSI dips below 30, it could indicate that the stock is oversold and due for a short-term bounce.

However, momentum indicators like RSI can stay low for extended periods in a strong downtrend, so this alone isn’t a signal to expect an immediate reversal.

Support and Resistance

There seems to be some support around the current price level, as the stock is hovering near a previous trading range from earlier in the year. If it breaks below $17, there could be further downside risk.

On the upside, the 200-day moving average will likely act as resistance if the stock attempts a recovery. That level sits near $19, and the 50-day moving average above it would also provide another challenge for the stock to break through.

Analyst Ratings

📉 Downgrades

🔻 KBRA downgraded Investar Holding Corporation’s senior unsecured debt rating from BBB to BBB- and its subordinated debt rating from BBB- to BB+. This downgrade was influenced by concerns over the company’s financial metrics and market conditions at the time.

📊 Analysts cited factors such as credit quality risks and capital efficiency concerns as reasons for the adjustment. The downgrade signaled a more cautious approach to the stock, reflecting the broader uncertainty in regional banking.

📈 Upgrades

🚀 Piper Sandler took a more optimistic stance, upgrading Investar Holding Corporation from Neutral to Overweight and assigning a price target of $13.50. This decision was based on improved financial performance and promising growth prospects.

💰 The bank’s ability to maintain profitability and adapt to changing interest rate environments contributed to the upgrade. Analysts also pointed to expanding net interest margins and solid loan growth as positive catalysts.

🎯 Consensus Price Target

📍 The consensus analyst price target for Investar Holding Corporation is $20.00, which implies a potential downside of approximately 9.83% from the current price of $22.18.

This target reflects a mixed view—while some see strength in the company’s financials, others remain cautious about macroeconomic challenges and market conditions.

Earning Report Summary

Investar Holding Corporation wrapped up the fourth quarter of 2024 on a solid note, reporting $6.1 million in net income, which comes out to $0.61 per share. That’s a noticeable improvement from the previous quarter’s $5.4 million, or $0.54 per share. The bank’s ability to grow net interest income played a big role in this, with a 3.8 percent increase from the second quarter and 2.2 percent growth compared to last year. The main driver? Higher interest income, helped along by loan accretion and interest recoveries.

One of the more positive takeaways was the rise in net interest margin, which climbed to 2.67 percent. That may not sound like much, but it shows that Investar is managing its interest-earning assets effectively. While funding costs did tick up slightly, they weren’t enough to offset the gains in asset yields.

On the balance sheet side, stockholders’ equity jumped by $15.3 million from the prior quarter and $36.8 million year-over-year. That’s largely thanks to an improvement in the value of available-for-sale securities, combined with steady earnings growth. Credit quality also looked better, with nonperforming loans dropping to just 0.26 percent of total loans.

Revenues for the quarter came in at $38.4 million, up 10.4 percent from the previous quarter. Meanwhile, noninterest expenses dipped slightly, which is always a good sign for efficiency. Core noninterest expense also edged lower, reflecting tighter cost management.

A big highlight was the increase in book value per share, which rose 9 percent to $23.26, while tangible book value per share was up 11.3 percent to $18.92. These improvements suggest that despite stock price fluctuations, the company’s underlying financial health remains strong.

Investar also benefited from interest recoveries of about $1.1 million, mainly tied to a commercial oil and gas loan relationship. The bank even refinanced its borrowings under the Federal Reserve’s Bank Term Funding Program, lowering its weighted average borrowing rate from 5.11 percent to 4.83 percent.

One area to watch is credit loss provisions. This quarter’s increase was mainly tied to loan growth, particularly from newly acquired commercial and industrial revolving lines of credit. The previous quarter saw a negative provision, meaning recoveries outweighed losses, but that wasn’t the case this time around.

On the deposit side, brokered time deposits surged to $269.1 million, up from $197.7 million last quarter. This funding strategy is being used to replace short-term borrowings while keeping costs in check.

All in all, Investar had a strong quarter, with earnings growth, stable credit quality, and improving book value—all signs that the bank is staying on solid footing heading into the new year.

Financial Health and Stability

For a bank, balance sheet strength is everything. Investar has a net profit margin of 23.46% and an operating margin of 32.03%, which are strong indicators of efficiency.

Looking at financial stability:

• Total cash holdings are $27.92 million, providing liquidity.
• Book value per share stands at $24.55, meaning the stock is trading below its intrinsic asset value.
• The total debt is $101 million, a manageable level given its profitability.

One of the more compelling aspects of ISTR is that it’s trading at a price-to-book ratio of 0.71. This suggests the stock may be undervalued based on its actual assets. A bank with a price-to-book ratio below 1 often signals a potential bargain if its financial fundamentals remain stable.

Valuation and Stock Performance

At a trailing price-to-earnings (P/E) ratio of 8.6 and a forward P/E of 9.84, ISTR appears reasonably priced compared to its earnings. These valuation multiples indicate that the stock isn’t overvalued, and in fact, it could be considered a discount compared to larger banks.

Other valuation metrics include:

• Price-to-sales ratio of 2.11, which is in a reasonable range for banks.
• A beta of 0.82, meaning the stock has lower volatility compared to the broader market.

One thing to note is the stock’s recent performance. The 50-day moving average sits at $19.58, while the 200-day moving average is $19.03—both higher than the current share price. This suggests some downward momentum, which could be a consideration for investors looking for an entry point.

Risks and Considerations

While Investar has a lot going for it, no investment is without risks. Here are a few factors that could impact its performance:

1️⃣ Interest Rate Sensitivity – As a regional bank, Investar’s profitability depends on interest rates. If rates drop, net interest margin (the difference between what the bank earns on loans and what it pays on deposits) could shrink.

2️⃣ Credit Risk – A slowing economy could lead to increased loan defaults. If a higher percentage of borrowers fail to repay their loans, earnings could take a hit.

3️⃣ Stock Volatility – As a small-cap stock, Investar is more prone to price swings. This means investors should be prepared for some fluctuations in the share price.

4️⃣ Yield Compared to Peers – While 2.39% is decent, some regional banks offer yields above 3% or even 4%. Investors seeking purely high dividend income may find other options more attractive.

Final Thoughts

Investar Holding Corporation is a steady, well-managed regional bank that offers a reliable dividend. With a low payout ratio, solid earnings, and a commitment to increasing its dividend, it provides a good mix of income and financial stability.

The stock is currently trading at a discount relative to its book value, which could present an opportunity for investors looking for value in the banking sector. However, potential risks like interest rate fluctuations and credit quality concerns should be kept in mind.

For those focused on long-term dividend growth, ISTR is worth considering. Its financial foundation is solid, and it has the flexibility to continue growing its payouts over time. While it may not have the highest yield in the sector, its combination of dividend safety and potential capital appreciation makes it an interesting stock to watch.