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Investar Holding Corporation Announces 2019 Second Quarter Results

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BATON ROUGE, La., July 25, 2019 (GLOBE NEWSWIRE) -- Investar Holding Corporation (ISTR) (the “Company”), the holding company for Investar Bank, National Association (the “Bank”), today announced financial results for the quarter ended June 30, 2019. The Company reported net income of $4.9 million, or $0.48 per diluted common share, for the second quarter of 2019, compared to $3.9 million, or $0.40 per diluted common share, for the quarter ended March 31, 2019, and $3.8 million, or $0.39 per diluted common share, for the quarter ended June 30, 2018.

On a non-GAAP basis, core earnings per diluted common share for the second quarter were $0.47 compared to $0.46 for the first quarter of 2019 and $0.40 for the quarter ended June 30, 2018. Core earnings exclude certain non-operating items including, but not limited to, acquisition expense 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 ended June 30, 2019 and March 31, 2019 include the impact of the Company’s acquisition of Mainland Bank (“Mainland”), which was completed on March 1, 2019. As of the acquisition date, Mainland had approximately $127.1 million in total assets, including $82.4 million in loans, and approximately $107.6 million in deposits. The assets acquired and liabilities assumed have been recorded at fair value in the Company’s consolidated balance sheet and are subject to change pending finalization of all valuations.

Investar Holding Corporation President and Chief Executive Officer John D’Angelo said:

“I am pleased to announce another successful quarter for Investar with record earnings, an improved net interest margin, and solid asset quality. This is the first quarter of operations following the acquisition of Mainland and our financial results reflect the positive impact of the acquisition on our balance sheet and income statement. We look forward to realizing additional benefits from the acquisition going into the next quarter.

We were also excited to announce our charter change during the quarter. We believe the national bank charter fits with our overall multi-state expansion strategy.

We continue to focus on long-term shareholder value and repurchased 197,425 shares of our common stock at an average price of $22.90 during the quarter. Our efforts remain on originating quality loans, having organically grown our portfolio by 3.2% during the second quarter, and on improving our return on assets and efficiency ratios.”

Second Quarter Highlights

  • Net interest margin increased 6 basis points to 3.59% for the quarter ended June 30, 2019 compared to 3.53% for the quarter ended March 31, 2019.

  • Total revenues, or interest and noninterest income, for the quarter ended June 30, 2019 totaled $24.1 million, an increase of $2.2 million, or 9.9%, compared to the quarter ended March 31, 2019, and an increase of $4.9 million, or 25.7%, compared to the quarter ended June 30, 2018.

  • Total loans increased $48.4 million, or 3.2%, to $1.54 billion at June 30, 2019, compared to $1.49 billion at March 31, 2019, and increased $243.0 million, or 18.7% compared to $1.30 billion at June 30, 2018. Excluding the loans acquired in the Mainland acquisition, or $77.5 million at June 30, 2019, total loans increased $52.0 million, or 3.7%, compared to March 31, 2019, and increased $165.5 million, or 12.7%, compared to June 30, 2018.

  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $616.0 million at June 30, 2019, an increase of $53.4 million, or 9.5%, compared to the business lending portfolio of $562.6 million at March 31, 2019, and an increase of $183.1 million, or 42.3%, compared to the business lending portfolio of $432.9 million at June 30, 2018.

  • Credit quality remains strong with nonperforming loans of 0.37% of total loans at June 30, 2019 compared to 0.40% and 0.33% at March 31, 2019 and June 30, 2018, respectively.

  • Total deposits increased $19.4 million, or 1.3%, to $1.55 billion at June 30, 2019, compared to $1.53 billion at March 31, 2019, and increased $321.3 million, or 26.1%, compared to $1.23 billion at June 30, 2018. The Company acquired approximately $107.6 million in deposits from Mainland at the time of acquisition on March 1, 2019, and the remaining increase is due to organic growth.

  • On June 26, 2019, our board of directors approved an additional 300,000 shares of the Company’s common stock for repurchase under the current stock repurchase program. The Company repurchased 197,425 shares of its common stock through its stock repurchase program at an average price of $22.90 during the quarter ended June 30, 2019, leaving 345,041 shares authorized for repurchase under the current stock repurchase plan.

  • On June 20, 2019, the Company announced that the Bank received the necessary regulatory approvals from the Office of the Comptroller of the Currency and the Louisiana Office of Financial Institutions to convert from a Louisiana state bank charter to a national bank charter. The conversion of the Bank to a national bank charter became effective on July 1, 2019, on which date the Bank’s name changed to Investar Bank, National Association.

Loans

Total loans were $1.54 billion at June 30, 2019, an increase of $48.4 million, or 3.2%, compared to March 31, 2019, and an increase of $243.0 million, or 18.7%, compared to June 30, 2018. Excluding the loans acquired in the Mainland acquisition, or $77.5 million at June 30, 2019, total loans increased $52.0 million, or 3.7%, compared to March 31, 2019, and increased $165.5 million, or 12.7%, compared to June 30, 2018. We experienced the majority of our loan growth in the commercial real estate and commercial and industrial portfolios for the quarter ended June 30, 2019 as we remain focused on relationship banking and growing our commercial loan portfolio.

The following table sets forth the composition of the total loan portfolio as of the dates indicated (dollars in thousands).

Linked Quarter Change

Year/Year Change

Percentage of Total Loans

6/30/2019

3/31/2019

6/30/2018

$

%

$

%

6/30/2019

6/30/2018

Mortgage loans on real estate

Construction and development

$

167,232

$

171,483

$

165,395

$

(4,251

)

(2.5

)%

$

1,837

1.1

%

10.9

%

12.7

%

1-4 Family

305,512

299,061

280,335

6,451

2.2

25,177

9.0

19.8

21.6

Multifamily

56,081

57,487

48,838

(1,406

)

(2.4

)

7,243

14.8

3.6

3.8

Farmland

25,203

24,457

20,144

746

3.1

5,059

25.1

1.6

1.5

Commercial real estate

Owner-occupied

339,130

307,108

287,320

32,022

10.4

51,810

18.0

22.0

22.1

Nonowner-occupied

338,426

339,637

292,946

(1,211

)

(0.4

)

45,480

15.5

21.9

22.5

Commercial and industrial

276,902

255,476

145,554

21,426

8.4

131,348

90.2

17.9

11.2

Consumer

34,822

40,210

59,779

(5,388

)

(13.4

)

(24,957

)

(41.7

)

2.3

4.6

Total loans

$

1,543,308

$

1,494,919

$

1,300,311

$

48,389

3.2

%

$

242,997

18.7

%

100

%

100

%

At June 30, 2019, 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 $616.0 million, an increase of $53.4 million, or 9.5%, compared to the business lending portfolio of $562.6 million at March 31, 2019, and an increase of $183.1 million, or 42.3%, compared to the business lending portfolio of $432.9 million at June 30, 2018. The increase in the business lending portfolio compared to March 31, 2019 and June 30, 2018 is mainly attributable to increased production of our Commercial and Industrial Division. The increase in the business lending portfolio compared to June 30, 2018 is also partly attributable loans acquired from Mainland on March 1, 2019, which included owner-occupied commercial real estate and commercial and industrial loans with a total balance of $49.6 million at June 30, 2019.

Consumer loans, including indirect auto loans of $21.6 million, totaled $34.8 million at June 30, 2019, a decrease of $5.4 million, or 13.4%, compared to $40.2 million, including indirect auto loans of $25.9 million, at March 31, 2019, and a decrease of $25.0 million, or 41.7%, compared to $59.8 million, including indirect auto loans of $42.1 million, at June 30, 2018. The decrease in consumer loans is mainly attributable to the scheduled paydowns of this portfolio and is consistent with our business strategy.

Credit Quality

Nonperforming loans were $5.7 million, or 0.37% of total loans, at June 30, 2019, a decrease of $0.3 million compared to $6.0 million, or 0.40% of total loans, at March 31, 2019, and an increase of $1.5 million compared to $4.2 million, or 0.33% of total loans, at June 30, 2018.

The allowance for loan losses was $9.9 million, or 173.43% and 0.64% of nonperforming loans and total loans, respectively, at June 30, 2019, compared to $9.6 million, or 159.93% and 0.64%, respectively, at March 31, 2019, and $8.5 million, or 199.04% and 0.65%, respectively, at June 30, 2018.

The provision for loan losses was $0.4 million for the quarter ended June 30, 2019 compared to $0.3 million for the quarter ended March 31, 2019 and $0.6 million for the quarter ended June 30, 2018. The changes in the provision for loan losses compared to the quarters ended March 31, 2019 and June 30, 2018, are primarily attributable to the changes in incremental loan growth, excluding acquired loan balances, as credit quality and other factors impacting our allowance and related provision were relatively unchanged period over period.

Deposits

Total deposits at June 30, 2019 were $1.55 billion, an increase of $19.4 million, or 1.3%, compared to March 31, 2019, and an increase of $321.3 million, or 26.1%, compared to June 30, 2018.

The following table sets forth the composition of deposits as of the dates indicated (dollars in thousands).

Linked Quarter Change

Year/Year Change

Percentage of
Total Deposits

6/30/2019

3/31/2019

6/30/2018

$

%

$

%

6/30/2019

6/30/2018

Noninterest-bearing demand deposits

$

289,481

$

285,811

$

222,570

$

3,670

1.3

%

$

66,911

30.1

%

18.6

%

18.1

%

Interest-bearing demand deposits

332,754

333,434

231,987

(680

)

(0.2

)

100,767

43.4

21.5

18.8

Money market deposit accounts

177,209

188,373

151,510

(11,164

)

(5.9

)

25,699

17.0

11.4

12.3

Savings accounts

111,222

114,631

117,649

(3,409

)

(3.0

)

(6,427

)

(5.5

)

7.2

9.6

Time deposits

641,552

610,544

507,214

31,008

5.1

134,338

26.5

41.3

41.2

Total deposits

$

1,552,218

$

1,532,793

$

1,230,930

$

19,425

1.3

%

$

321,288

26.1

%

100.0

%

100.0

%

Interest-bearing demand deposits and time deposits increased $100.8 million and $134.3 million, respectively, compared to June 30, 2018. These increases are mainly attributable to the increased rates offered for our interest-bearing demand deposits and time deposits to remain competitive in our markets.

Net Interest Income

Net interest income for the second quarter of 2019 totaled $16.3 million, an increase of $1.2 million, or 7.8%, compared to the first quarter of 2019, and an increase of $2.0 million, or 14.0%, compared to the second quarter of 2018. Included in net interest income for both the quarters ended June 30, 2019 and March 31, 2019 is $0.4 million, and for the quarter ended June 30, 2018 is $0.5 million, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarter ended June 30, 2019 are interest recoveries of $0.1 million on acquired loans.

The increase in net interest income in the second quarter of 2019 compared to the same quarter last year was primarily driven by growth in loan and securities balances and the yields earned on those balances, partially offset by an increase in interest expense as we funded the increase in interest-earning assets with increased deposits and borrowings. Interest income for the second quarter of 2019 increased $4.4 million, with $3.3 million and $1.1 million due to increases in the volume and yield, respectively, of interest-earning assets. This increase in interest income was partially offset by an increase in interest expense of $2.4 million, with $0.4 million and $2.0 million due to increases in the volume and cost, respectively, of interest-bearing liabilities compared to the second quarter of 2018.

The Company’s net interest margin was 3.59% for the quarter ended June 30, 2019 compared to 3.53% for the quarter ended March 31, 2019 and 3.70% for the quarter ended June 30, 2018. The yield on interest-earning assets was 4.93% for the quarter ended June 30, 2019 compared to 4.81% for the quarter ended March 31, 2019 and 4.65% for the quarter ended June 30, 2018. The increase in the net interest margin for the quarter ended June 30, 2019 compared to the quarter ended March 31, 2019 is primarily attributable to the increase in the volume of our interest-earning assets. The decrease in net interest margin for the quarter ended June 30, 2019 compared to the quarter ended June 30, 2018 was driven by an increase in the cost of funds required to fund the increase in assets.

Exclusive of the interest income accretion from the acquisition of loans, discussed above, as well as the $0.1 million of interest recoveries in the quarter ended June 30, 2019, net interest margin was 3.49% for the quarter ended June 30, 2019 compared to 3.43% for the quarter ended March 31, 2019 and 3.56% for the quarter ended June 30, 2018, while the yield on interest-earning assets was 4.82% for the quarter ended June 30, 2019 compared to 4.72% and 4.51% for the quarters ended March 31, 2019 and June 30, 2018, respectively.

The cost of deposits increased 11 basis points to 1.52% for the quarter ended June 30, 2019 compared to 1.41% for the quarter ended March 31, 2019, and increased 55 basis points compared to 0.97% for the quarter ended June 30, 2018. The increase in the cost of deposits compared to the quarters ended March 31, 2019 and June 30, 2018 reflects the increased rates offered during the period for our interest-bearing demand deposits and time deposits to remain competitive in our markets and attract new deposits. The overall costs of funds for the quarter ended June 30, 2019 increased 8 and 48 basis points to 1.67% compared to 1.59% and 1.19% for the quarters ended March 31, 2019 and June 30, 2018, respectively. The increase in the cost of funds at June 30, 2019 compared to March 31, 2019 and June 30, 2018 is mainly a result of an increase in the cost of deposits but is also driven by the increased cost of borrowed funds used to finance loan and investment activity.

Noninterest Income

Noninterest income for the second quarter of 2019 totaled $1.7 million, an increase of $0.5 million, or 36.0%, compared to the first quarter of 2019, and an increase of $0.5 million, or 46.0%, compared to the second quarter of 2018. The increase in noninterest income compared to the quarter ended March 31, 2019 is mainly attributable to a $0.3 million increase other operating income and a $0.2 million increase in the gain on sale of investment securities. Other operating income includes, among other things, various operations fees and income recognized on certain equity method investments. During the second quarter of 2019, we recognized $0.2 million in net gains on the sales of approximately $61.9 million of investment securities as we seek to better position the balance sheet for potential reductions in short term interest rates.

The increase in noninterest income compared to the second quarter of 2018 is primarily a result of a $0.1 million and $0.2 million increase in service charges on deposit accounts and other operating income, respectively, as well as a $0.2 million increase in the gain on sale of investment securities, discussed above.

Noninterest Expense

Noninterest expense for the second quarter of 2019 totaled $11.6 million, an increase of $0.3 million, or 2.2%, compared to the first quarter of 2019, and an increase of $1.4 million, or 13.7%, compared to the second quarter of 2018.

The increase in noninterest expense compared to the quarter ended March 31, 2019 is mainly attributable to increases resulting from the acquisition of Mainland on March 1, 2019. Increases include $0.7 million in salaries and employee benefits, $0.2 in other operating expenses, and $0.1 million in depreciation and amortization and data processing. These increases were partially offset by a $0.9 million decrease in acquisition expense.

The increase in noninterest expense compared to the second quarter of 2018 is primarily attributable to increases in depreciation and amortization, salaries and employee benefits, and other operating expenses. The increase in depreciation and amortization resulted from various projects including equipment upgrades at acquired branches and the launch of the Company’s first interactive teller machine, as well as the acquisition of Mainland, which added fixed assets of approximately $2.6 million. The increase in salaries and employee benefits compared to the second quarter of 2018 is mainly attributable to the staffing mix throughout the year, including the addition of our new Commercial and Industrial Division, which includes five new lenders and related support staff hired during the second quarter of 2018, as well as the additional staff from the Mainland acquisition. The increase in other operating expenses compared to the second quarter of 2018 is primarily driven by increased software expense and debit and credit card activity.

Included in noninterest expense for the quarter ended June 30, 2019 is approximately $0.1 million of legal expense related to the collection efforts from a borrower whose loan was acquired in 2017 and who is currently in bankruptcy. Additional expense may be incurred in future quarters until the bankruptcy proceedings are finalized.

Taxes

The Company recorded income tax expense of $1.2 million for the quarter ended June 30, 2019, which equates to an effective tax rate of 19.8%, an increase from the effective tax rate of 19.6% and a decrease from the effective tax rate of 20.2% for the quarters ended March 31, 2019 and June 30, 2018, respectively. Management expects the Company’s effective tax rate to approximate 20% in 2019.

Basic and Diluted Earnings Per Common Share

The Company reported basic and diluted earnings per common share of $0.49 and $0.48, respectively, for the quarter ended June 30, 2019, an increase of $0.09 and $0.08, respectively, compared to basic and diluted earnings per common share of $0.40 for the quarter ended March 31, 2019, and an increase of $0.10 and $0.09, respectively, compared to basic and diluted earnings per common share of $0.39 for the quarter ended June 30, 2018.

About Investar Holding Corporation

Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, National Association, a national bank. The Bank serves several markets across south Louisiana with 21 branches, and serves the greater Houston market in southeast Texas with three branches. At June 30, 2019, the Company had 283 full-time equivalent employees.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America, or GAAP. These measures and ratios include “tangible common equity,” “tangible assets,” “tangible equity to tangible assets,” “tangible book value per common share,” “core noninterest income,” “core earnings before noninterest expense,” “core noninterest expense,” “core earnings before income tax expense,” “core income tax expense,” “core earnings,” “core efficiency ratio,” “core return on average assets,” “core return on average equity,” “core basic earnings per share,” and “core diluted earnings per share.” Management believes these non-GAAP financial measures provide information useful to investors in understanding the Company’s financial results, and the Company believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting the Company’s business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and the Company strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. A reconciliation of the non-GAAP financial measures disclosed in this press release to the comparable GAAP financial measures is included at the end of the financial statement tables.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events:

  • business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;

  • our ability to achieve organic loan and deposit growth, and the composition of that growth;

  • our ability to identify and enter into agreements to combine with attractive acquisition candidates, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate acquired operations;

  • changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;

  • possible cessation or market replacement of LIBOR and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments and loans;

  • the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;

  • our dependence on our management team, and our ability to attract and retain qualified personnel;

  • changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;

  • inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;

  • the concentration of our business within our geographic areas of operation in Louisiana and Texas; and

  • concentration of credit exposure.

These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Item 1A. “Risk Factors” and in the “Special Note Regarding Forward-Looking Statements” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission.

For further information contact:

Investar Holding Corporation
Chris Hufft
Chief Financial Officer
(225) 227-2215
Chris.Hufft@investarbank.com

INVESTAR HOLDING CORPORATION

SUMMARY FINANCIAL INFORMATION

(Amounts in thousands, except share data)

(Unaudited)

As of and for the three months ended

6/30/2019

3/31/2019

6/30/2018

Linked Quarter

Year/Year

EARNINGS DATA

Total interest income

$

22,388

$

20,686

$

18,009

8.2

%

24.3

%

Total interest expense

6,057

5,530

3,689

9.5

64.2

Net interest income

16,331

15,156

14,320

7.8

14.0

Provision for loan losses

369

265

567

39.2

(34.9

)

Total noninterest income

1,742

1,281

1,193

36.0

46.0

Total noninterest expense

11,554

11,303

10,160

2.2

13.7

Income before income taxes

6,150

4,869

4,786

26.3

28.5

Income tax expense

1,216

952

966

27.7

25.9

Net income

$

4,934

$

3,917

$

3,820

26.0

29.2

AVERAGE BALANCE SHEET DATA

Total assets

$

1,951,559

$

1,854,191

$

1,655,709

5.3

%

17.9

%

Total interest-earning assets

1,823,196

1,743,438

1,553,813

4.6

17.3

Total loans

1,523,004

1,436,798

1,269,894

6.0

19.9

Total interest-bearing deposits

1,236,324

1,183,568

1,001,037

4.5

23.5

Total interest-bearing liabilities

1,455,623

1,413,623

1,247,695

3.0

16.7

Total deposits

1,514,146

1,422,632

1,223,441

6.4

23.8

Total stockholders’ equity

203,911

189,822

175,801

7.4

16.0

PER SHARE DATA

Earnings:

Basic earnings per common share

$

0.49

$

0.40

$

0.39

22.5

%

25.6

%

Diluted earnings per common share

0.48

0.40

0.39

20.0

23.1

Core Earnings(1):

Core basic earnings per common share(1)

0.47

0.47

0.40

17.5

Core diluted earnings per common share(1)

0.47

0.46

0.40

2.2

17.5

Book value per common share

20.68

20.04

18.50

3.2

11.8

Tangible book value per common share(1)

18.02

17.36

16.42

3.8

9.7

Common shares outstanding

9,937,752

10,129,993

9,517,328

(1.9

)

4.4

Weighted average common shares outstanding - basic

10,008,882

9,675,381

9,588,873

3.4

4.4

Weighted average common shares outstanding - diluted

10,104,246

9,770,752

9,648,021

3.4

4.7

PERFORMANCE RATIOS

Return on average assets

1.01

%

0.86

%

0.93

%

17.4

%

8.6

%

Core return on average assets(1)

0.97

0.98

0.94

(1.0

)

3.2

Return on average equity

9.70

8.37

8.72

15.9

11.2

Core return on average equity(1)

9.25

9.62

8.85

(3.8

)

4.5

Net interest margin

3.59

3.53

3.70

1.7

(3.0

)

Net interest income to average assets

3.34

3.31

3.47

0.9

(3.7

)

Noninterest expense to average assets

2.42

2.47

2.46

(2.0

)

(1.6

)

Efficiency ratio(2)

63.93

68.76

65.49

(7.0

)

(2.4

)

Core efficiency ratio(1)

64.96

63.96

64.99

1.6

Dividend payout ratio

11.24

13.13

10.01

(14.4

)

12.3

Net charge-offs to average loans

0.01

0.01

0.02

(50.0

)

(1) Non-GAAP financial measure. See reconciliation.

(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income.


INVESTAR HOLDING CORPORATION

SUMMARY FINANCIAL INFORMATION

(Amounts in thousands, except share data)

(Unaudited)

As of and for the three months ended

6/30/2019

3/31/2019

6/30/2018

Linked Quarter

Year/Year

ASSET QUALITY RATIOS

Nonperforming assets to total assets

0.36

%

0.40

%

0.50

%

(10.0

)%

(28.0

)%

Nonperforming loans to total loans

0.37

0.40

0.33

(7.5

)

12.1

Allowance for loan losses to total loans

0.64

0.64

0.65

(1.5

)

Allowance for loan losses to nonperforming loans

173.43

159.93

199.04

8.4

(12.9

)

CAPITAL RATIOS

Investar Holding Corporation:

Total equity to total assets

10.29

%

10.35

%

10.44

%

(0.6

)%

(1.4

)%

Tangible equity to tangible assets(1)

9.09

9.09

9.38

(3.1

)

Tier 1 leverage ratio

9.59

10.03

10.22

(4.4

)

(6.2

)

Common equity tier 1 capital ratio(2)

10.51

11.07

11.64

(5.1

)

(9.7

)

Tier 1 capital ratio(2)

10.90

11.48

12.11

(5.1

)

(10.0

)

Total capital ratio(2)

12.57

13.23

14.04

(5.0

)

(10.5

)

Investar Bank:

Tier 1 leverage ratio

10.53

10.92

11.14

(3.6

)

(5.5

)

Common equity tier 1 capital ratio(2)

11.97

12.48

13.21

(4.1

)

(9.4

)

Tier 1 capital ratio(2)

11.97

12.48

13.21

(4.1

)

(9.4

)

Total capital ratio(2)

12.56

13.09

13.82

(4.0

)

(9.1

)

(1) Non-GAAP financial measure. See reconciliation.

(2) Estimated for June 30, 2019.


INVESTAR HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)

June 30, 2019

March 31, 2019

June 30, 2018

ASSETS

Cash and due from banks

$

30,400

$

22,535

$

21,338

Interest-bearing balances due from other banks

33,519

47,506

13,483

Federal funds sold

2,362

10

Cash and cash equivalents

63,919

72,403

34,831

Available for sale securities at fair value (amortized cost of $252,554, $265,981, and $247,317, respectively)

253,985

264,257

241,587

Held to maturity securities at amortized cost (estimated fair value of $15,480, $15,816 and $17,064, respectively)

15,473

15,816

17,299

Loans, net of allowance for loan losses of $9,924, $9,642, and $8,451, respectively

1,533,384

1,485,277

1,291,860

Other equity securities

14,537

14,392

13,095

Bank premises and equipment, net of accumulated depreciation of $11,078, $10,513, and $8,805, respectively

46,097

45,717

39,253

Other real estate owned, net

1,529

1,748

4,225

Accrued interest receivable

6,880

6,377

4,842

Deferred tax asset

38

1,429

Goodwill and other intangible assets, net

26,409

27,143

19,952

Bank-owned life insurance

29,204

24,011

23,543

Other assets

5,224

4,715

5,555

Total assets

$

1,996,641

$

1,961,894

$

1,697,471

LIABILITIES

Deposits

Noninterest-bearing

$

289,481

$

285,811

$

222,570

Interest-bearing

1,262,736

1,246,982

1,008,360

Total deposits

1,552,217

1,532,793

1,230,930

Advances from Federal Home Loan Bank

196,600

185,093

237,075

Repurchase agreements

1,876

2,218

16,752

Subordinated debt

18,238

18,227

18,191

Junior subordinated debt

5,871

5,858

5,819

Accrued taxes and other liabilities

16,340

14,691

11,474

Total liabilities

1,791,142

1,758,880

1,520,241

STOCKHOLDERS’ EQUITY

Preferred stock, no par value per share; 5,000,000 shares authorized

Common stock, $1.00 par value per share; 40,000,000 shares authorized; 9,937,752, 10,129,993 and 9,581,034 shares outstanding, respectively

9,938

10,130

9,581

Surplus

140,856

144,813

132,166

Retained earnings

53,492

49,104

39,258

Accumulated other comprehensive loss

1,213

(1,033

)

(3,775

)

Total stockholders’ equity

205,499

203,014

177,230

Total liabilities and stockholders’ equity

$

1,996,641

$

1,961,894

$

1,697,471


INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share data)

(Unaudited)

For the three months ended

June 30, 2019

March 31, 2019

June 30, 2018

INTEREST INCOME

Interest and fees on loans

$

20,233

$

18,544

$

16,223

Interest on investment securities

1,923

1,926

1,644

Other interest income

232

216

142

Total interest income

22,388

20,686

18,009

INTEREST EXPENSE

Interest on deposits

4,684

4,106

2,426

Interest on borrowings

1,373

1,424

1,263

Total interest expense

6,057

5,530

3,689

Net interest income

16,331

15,156

14,320

Provision for loan losses

369

265

567

Net interest income after provision for loan losses

15,962

14,891

13,753

NONINTEREST INCOME

Service charges on deposit accounts

434

400

327

Gain on sale of investment securities, net

227

2

22

Loss on sale of fixed assets, net

(11

)

(1

)

Gain (loss) on sale of other real estate owned, net

13

5

(4

)

Servicing fees and fee income on serviced loans

150

180

253

Interchange fees

291

240

255

Income from bank owned life insurance

170

152

161

Change in the fair value of equity securities

57

172

3

Other operating income

411

130

177

Total noninterest income

1,742

1,281

1,193

Income before noninterest expense

17,704

16,172

14,946

NONINTEREST EXPENSE

Depreciation and amortization

873

764

629

Salaries and employee benefits

7,077

6,415

6,495

Occupancy

454

414

335

Data processing

644

536

565

Marketing

68

51

44

Professional fees

309

305

228

Acquisition expenses

905

Other operating expenses

2,129

1,913

1,864

Total noninterest expense

11,554

11,303

10,160

Income before income tax expense

6,150

4,869

4,786

Income tax expense

1,216

952

966

Net income

$

4,934

$

3,917

$

3,820

EARNINGS PER SHARE

Basic earnings per common share

$

0.49

$

0.40

$

0.39

Diluted earnings per common share

$

0.48

$

0.40

$

0.39

Cash dividends declared per common share

$

0.06

$

0.05

$

0.04


INVESTAR HOLDING CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS

(Amounts in thousands)

(Unaudited)

For the three months ended

June 30, 2019

March 31, 2019

June 30, 2018

Average
Balance

Interest
Income/
Expense

Yield/
Rate

Average
Balance

Interest
Income/
Expense

Yield/
Rate

Average
Balance

Interest
Income/
Expense

Yield/
Rate

Assets

Interest-earning assets:

Loans

$

1,523,004

$

20,233

5.33

%

$

1,436,798

$

18,544

5.23

%

$

1,269,894

$

16,223

5.12

%

Securities:

Taxable

238,150

1,726

2.94

243,065

1,729

2.88

224,263

1,441

2.58

Tax-exempt

31,554

197

2.51

32,325

197

2.47

33,936

203

2.40

Interest-bearing balances with banks

30,488

232

3.05

31,250

216

2.80

25,720

142

2.20

Total interest-earning assets

1,823,196

22,388

4.93

1,743,438

20,686

4.81

1,553,813

18,009

4.65

Cash and due from banks

23,154

20,150

16,690

Intangible assets

26,501

22,301

20,064

Other assets

88,486

77,867

73,312

Allowance for loan losses

(9,778

)

(9,565

)

(8,170

)

Total assets

$

1,951,559

$

1,854,191

$

1,655,709

Liabilities and stockholders’ equity

Interest-bearing liabilities:

Deposits:

Interest-bearing demand deposits

$

504,541

$

1,333

1.06

$

504,123

$

1,353

1.09

$

372,824

$

641

0.69

Savings deposits

113,179

126

0.45

104,503

119

0.46

121,174

138

0.46

Time deposits

618,604

3,225

2.09

574,942

2,634

1.86

507,039

1,647

1.30

Total interest-bearing deposits

1,236,324

4,684

1.52

1,183,568

4,106

1.41

1,001,037

2,426

0.97

Short-term borrowings

127,196

685

2.16

135,894

733

2.19

140,595

579

1.65

Long-term debt

92,103

688

2.99

94,161

691

2.98

106,063

684

2.59

Total interest-bearing liabilities

1,455,623

6,057

1.67

1,413,623

5,530

1.59

1,247,695

3,689

1.19

Noninterest-bearing deposits

277,822

239,064

222,404

Other liabilities

14,203

11,682

9,809

Stockholders’ equity

203,911

189,822

175,801

Total liability and stockholders’ equity

$

1,951,559

$

1,854,191

$

1,655,709

Net interest income/net interest margin

$

16,331

3.59

%

$

15,156

3.53

%

$

14,320

3.70

%


INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

June 30, 2019

March 31, 2019

June 30, 2018

Tangible common equity

Total stockholders’ equity

$

205,499

$

203,014

$

177,230

Adjustments:

Goodwill

21,978

22,489

17,424

Core deposit intangible

4,331

4,554

2,617

Trademark intangible

100

100

100

Tangible common equity

$

179,090

$

175,871

$

157,089

Tangible assets

Total assets

$

1,996,641

$

1,961,894

$

1,697,471

Adjustments:

Goodwill

21,978

22,489

17,424

Core deposit intangible

4,331

4,554

2,617

Trademark intangible

100

100

100

Tangible assets

$

1,970,232

$

1,934,751

$

1,677,330

Common shares outstanding

9,937,752

10,129,993

9,517,328

Tangible equity to tangible assets

9.09

%

9.09

%

9.37

%

Book value per common share

$

20.68

$

20.04

$

18.62

Tangible book value per common share

18.02

17.36

16.51


INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

Three months ended

6/30/2019

3/31/2019

6/30/2018

Net interest income

(a)

$

16,331

$

15,156

$

14,320

Provision for loan losses

369

265

567

Net interest income after provision for loan losses

15,962

14,891

13,753

Noninterest income

(b)

1,742

1,281

1,193

Gain on sale of investment securities, net

(227

)

(2

)

(22

)

(Gain) loss on sale of other real estate owned, net

(13

)

(5

)

4

Loss on sale of fixed assets, net

11

1

Change in the fair value of equity securities

(57

)

(172

)

(3

)

Core noninterest income

(d)

1,456

1,102

1,173

Core earnings before noninterest expense

17,418

15,993

14,926

Total noninterest expense

(c)

11,554

11,303

10,160

Acquisition expense

(905

)

Core noninterest expense

(f)

11,554

10,398

10,071

Core earnings before income tax expense

5,864

5,595

4,855

Core income tax expense(1)

1,161

1,094

981

Core earnings

$

4,703

$

4,501

$

3,874

Core basic earnings per common share

0.47

0.47

0.41

Diluted earnings per common share (GAAP)

$

0.48

$

0.40

$

0.39

(Gain) loss on sale of investment securities, net

(0.01

)

(Gain) loss on sale of other real estate owned, net

Loss on sale of fixed assets, net

Change in the fair value of equity securities

(0.01

)

Acquisition expense

0.07

Nonroutine legal expense

0.01

Core diluted earnings per common share

$

0.47

$

0.46

$

0.40

Efficiency ratio

(c) / (a+b)

63.93

%

68.76

%

65.49

%

Core efficiency ratio

(f) / (a+d)

64.96

%

63.96

%

64.99

%

Core return on average assets(2)

0.98

%

0.98

%

0.94

%

Core return on average equity(2)

9.35

%

9.62

%

8.85

%

Total average assets

$

1,951,559

$

1,854,191

$

1,655,709

Total average stockholders’ equity

203,911

189,822

175,801

(1) Core income tax expense is calculated using the effective tax rates of 19.8%, 19.6% and 20.2% for the quarters ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively.

(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.