Baton Rouge banking company may go public

The Baton Rouge-based bank said a shareholder vote on an initial public offering of stock will be held Oct. 31.

Investar estimated the IPO would generate around $40 million.

The bank has 10 branch offices in Louisiana.

Under the plan, Investar would become a wholly owned subsidiary of Investar Holding Corp. The Federal Reserve System’s board of governors approved a reorganization plan on Sept. 5.

Investar Holding said the size of the stock offering has not been set yet and will depend on market conditions and other factors. The company expects to complete the stock offering in 2014.

This would be the second time in a year that a Louisiana-based bank has gone public. First NBC Bank of New Orleans raised $115 million from its IPO in May.

Before the First NBC Bank offering, John Fields, deputy chief examiner for the state Office of Financial Institutions, which oversees various entities that provide financial services, said it had been as much as a decade since a Louisiana bank went public.

Forbes magazine noted earlier this year that community banks were returning to the IPO market after being forced to the sidelines because of the recession.

The banks were doing public stock offerings to generate liquidity for shareholders and raise money for acquisitions.

Lee Burrows Jr., CEO of Banks Street Partners, an Atlanta investment bank, said bank stocks have rallied in the past six months. Some banks are now trading at 150 percent to 200 percent of book value. At the height of the recession the banks were trading below tangible book value.

“We really haven’t had much of a real estate collapse in Louisiana, Mississippi, Arkansas or Texas,” Burrows said. “Those are great operating environments for community banks.”

If a bank IPO is priced well and the institution has shown an ability to increase revenue, Burrows said, there is investor demand in community bank shares.

Proceeds from Investar’s proposed IPO would be used to support continued growth, company officials said.

Investar Bank — which was founded in 2006 — had total assets of $530 million as of June 30.

In 2011, Investar bought South Louisiana Business Bank in Prairieville. Earlier this year it purchased First Community Bank in Hammond.