A fourth quarter report from Baton Rouge-based Investar Holding Corp. released today shows the parent company of Investar Bank stopped its auto loan originating business during the quarter as it ramped up commercial and industrial lending.
Commercial and industrial lending increased 3.4% during the three-month quarter that ended Dec. 31, and was up 29.1% on the year. Investar’s total lending increased 19.7% in 2015 to $745.4 million. Investar’s total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $207.7 million at the end of 2015, an increase of $33.8 million, or 19.5%, from its business portfolio at the end of 2014.
“We took proactive steps during the quarter to better position the company moving into 2016 by hiring three additional commercial lenders while making the strategic decision to exit the indirect auto loan origination business,” says Investar President and CEO John D’Angelo in a prepared statement. “The decision was based on the operating performance of the indirect auto loan origination business unit and our desire to focus resources on relationship banking opportunities. We believe the shift from transactional banking to relationship banking will enhance value for our shareholders.”
Investar stopped accepting indirect auto loan applications on Dec. 31, which caused it to incur exit costs of approximately $145,000, consisting of $76,000 in severance costs and $69,000 in contract termination costs. The bank says it intends to sell the balance of its indirect auto loans, adding it has already made $300,000 on auto loan sales prior to the end of 2015.
Investar recorded net income of $1.5 million during the fourth quarter, a decline of 27.6% compared to the last quarter of 2014. The decline can “primarily be attributed to a tax credit” Investar received in the final quarter of 2014.
Investar has 11 branches across south Louisiana and 168 full-time employees.
—Steve Sanoski
