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Investar Holding Corporation Announces 2019 First Quarter Results

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BATON ROUGE, La., April 24, 2019 (GLOBE NEWSWIRE) -- Investar Holding Corporation (ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended March 31, 2019. The Company reported net income of $3.9 million, or $0.40 per diluted common share, for the first quarter of 2019, compared to $3.3 million, or $0.34 per diluted common share, for the quarter ended December 31, 2018, and $2.4 million, or $0.25 per diluted common share, for the quarter ended March 31, 2018.

On a non-GAAP basis, core earnings per diluted common share for the first quarter were $0.46 compared to $0.45 for the fourth quarter of 2018 and $0.40 for the quarter ended March 31, 2018. Core earnings exclude certain non-operating items including, but not limited to, acquisition expense, changes in the fair value of equity securities, and discrete tax items (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 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 favorable earnings, a steady net interest margin, and solid asset quality. On March 1, 2019, we completed our acquisition of Mainland Bank. Following the acquisition, our operating teams successfully completed the operational conversion of Mainland Bank while continuing to provide outstanding service to our customers. Despite the acquisition-related costs we recognized during the quarter, our results reflect the positive effect of the acquisition on our balance sheet and income statement. We look forward to realizing the additional benefits of the acquisition going into the next quarter.

We continue to focus on long-term shareholder value and repurchased 143,774 shares of our common stock at an average price of $23.38 during the quarter. We also continue to focus on quality loans and deposits and improving our return on assets and efficiency ratios, which will assist in delivering on our commitment of growing the franchise and increasing shareholder value.”

First Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter ended March 31, 2019 totaled $22.0 million, an increase of $1.2 million, or 5.8%, compared to the quarter ended December 31, 2018, and an increase of $3.7 million, or 20.3%, compared to the quarter ended March 31, 2018.

  • Total loans increased $94.1 million, or 6.7%, to $1.49 billion at March 31, 2019, compared to $1.40 billion at December 31, 2018, and increased $222.0 million, or 17.4% compared to $1.27 billion at March 31, 2018. Excluding the loans acquired in the Mainland Bank acquisition, or $81.1 million at March 31, 2019, total loans increased $13.0 million, or 0.9%, compared to December 31, 2018, and increased $140.9 million, or 11.1%, compared to March 31, 2018.

  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $562.6 million at March 31, 2019, an increase of $53.5 million, or 10.5%, compared to the business lending portfolio of $509.1 million at December 31, 2018, and an increase of $152.4 million, or 37.2%, compared to the business lending portfolio of $410.2 million at March 31, 2018.

  • Credit quality remains strong with nonperforming loans of 0.40% of total loans at March 31, 2019 compared to 0.42% and 0.44% at December 31, 2018 and March 31, 2018, respectively.

  • Total deposits increased $171.1 million, or 12.6%, to $1.53 billion at March 31, 2019, compared to $1.36 billion at December 31, 2018, and increased $306.1 million, or 25.0%, compared to $1.23 billion at March 31, 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.

  • Net interest margin remained steady at 3.53% for both of the quarters ended March 31, 2019 and December 31, 2018.

  • The Company repurchased 143,774 shares of its common stock through its stock repurchase program at an average price of $23.38 during the quarter ended March 31, 2019, leaving 242,466 shares authorized for repurchase under its current stock repurchase plan.

  • On March 1, 2019, the Company completed the acquisition of Mainland Bank in Texas City, Texas. The conversion of branch and operating systems was also completed in March. Total consideration for the acquisition was approximately $18.6 million in the form of 763,849 shares of the Company’s common stock.

Loans

Total loans were $1.49 billion at March 31, 2019, an increase of $94.1 million, or 6.7%, compared to December 31, 2018, and an increase of $222.0 million, or 17.4%, compared to March 31, 2018. Excluding the loans acquired in the Mainland Bank acquisition, or $81.1 million at March 31, 2019, total loans increased $13.0 million, or 0.9%, compared to December 31, 2018, and increased $140.9 million, or 11.1%, compared to March 31, 2018. We experienced the majority of our loan growth in the commercial real estate and commercial and industrial portfolios for the quarter ended March 31, 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

3/31/2019

12/31/2018

3/31/2018

$

%

$

%

3/31/2019

3/31/2018

Mortgage loans on real estate

Construction and development

$

171,483

$

157,946

$

162,337

$

13,537

8.6

%

$

9,146

5.6

%

11.5

%

12.8

%

1-4 Family

299,061

287,137

277,978

11,924

4.2

21,083

7.6

20.0

21.8

Multifamily

57,487

50,501

54,504

6,986

13.8

2,983

5.5

3.9

4.3

Farmland

24,457

21,356

20,725

3,101

14.5

3,732

18.0

1.6

1.6

Commercial real estate

Owner-occupied

307,108

298,222

274,216

8,886

3.0

32,892

12.0

20.5

21.5

Nonowner-occupied

339,637

328,782

279,939

10,855

3.3

59,698

21.3

22.7

22.0

Commercial and industrial

255,476

210,924

135,965

44,552

21.1

119,511

87.9

17.1

10.7

Consumer

40,210

45,957

67,286

(5,747

)

(12.5

)

(27,076

)

(40.2

)

2.7

5.3

Total loans

$

1,494,919

$

1,400,825

$

1,272,950

$

94,094

6.7

%

$

221,969

17.4

%

100

%

100

%

At March 31, 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 $562.6 million, an increase of $53.5 million, or 10.5%, compared to the business lending portfolio of $509.1 million at December 31, 2018, and an increase of $152.4 million, or 37.2%, compared to the business lending portfolio of $410.2 million at March 31, 2018. The increase in the business lending portfolio compared to December 31, 2018 is mainly attributable to the acquisition of Mainland, which included $53.3 million in owner-occupied commercial real estate and commercial and industrial loans. The increase in the business lending portfolio compared to March 31, 2018 is mainly attributable to growth in commercial and industrial loans primarily resulting from increased production of our Commercial and Industrial Division.

Consumer loans, including indirect auto loans of $25.9 million, totaled $40.2 million at March 31, 2019, a decrease of $5.7 million, or 12.5%, compared to $46.0 million, including indirect auto loans of $30.8 million, at December 31, 2018, and a decrease of $27.1 million, or 40.2%, compared to $67.3 million, including indirect auto loans of $48.8 million, at March 31, 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 $6.0 million, or 0.40% of total loans, at March 31, 2019, an increase of $0.1 million compared to $5.9 million, or 0.42% of total loans, at December 31, 2018, and an increase of $0.5 million compared to $5.5 million, or 0.44% of total loans, at March 31, 2018.

The allowance for loan losses was $9.6 million, or 159.93% and 0.64% of nonperforming loans and total loans, respectively, at March 31, 2019, compared to $9.5 million, or 158.94% and 0.67%, respectively, at December 31, 2018, and $8.1 million, or 146.78% and 0.64%, respectively, at March 31, 2018.

The provision for loan losses was $0.3 million for the quarter ended March 31, 2019 compared to $0.6 million for both of the quarters ended December 31, 2018 and March 31, 2018. The decrease in the provision for loan losses is primarily attributable to lower incremental loan growth, excluding acquired loan balances, in the first quarter of 2019 compared to the quarters ended December 31, 2018 and March 31, 2018 as credit quality and other factors impacting our allowance and related provision were relatively unchanged period over period.

Deposits

Total deposits at March 31, 2019 were $1.53 billion, an increase of $171.1 million, or 12.6%, compared to December 31, 2018, and an increase of $306.1 million, or 25.0%, compared to March 31, 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.

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

3/31/2019

12/31/2018

3/31/2018

$

%

$

%

3/31/2019

3/31/2018

Noninterest-bearing demand deposits

$

285,811

$

217,457

$

221,855

$

68,354

31.4

%

$

63,956

28.8

%

18.6

%

18.1

%

Interest-bearing demand deposits

333,434

295,212

228,269

38,222

12.9

105,165

46.1

21.8

18.6

Money market deposit accounts

188,373

179,340

145,627

9,033

5.0

42,746

29.4

12.3

11.9

Savings accounts

114,631

104,146

124,589

10,485

10.1

(9,958

)

(8.0

)

7.5

10.1

Time deposits

610,544

565,576

506,332

44,968

8.0

104,212

20.6

39.8

41.3

Total deposits

$

1,532,793

$

1,361,731

$

1,226,672

$

171,062

12.6

%

$

306,121

25.0

%

100.0

%

100.0

%

Noninterest-bearing demand deposits increased $68.4 million, or 31.4%, compared to December 31, 2018 and $64.0 million, or 28.8%, compared to March 31, 2018. While much of this growth is attributable to the acquisition of Mainland, noninterest-bearing deposits grew organically by approximately $12.8 million, or 5.9% compared to December 31, 2018. Excluding total deposits from our Texas branches acquired in the Mainland acquisition, or $115.5 million, at March 31, 2019, total deposits increased $55.6 million, or 4.1%, compared to December 31, 2018 and $190.6 million, or 15.5%, compared to March 31, 2018, as we continue to focus on relationship banking and growing our commercial relationships.

Interest-bearing demand deposits and time deposits increased $105.2 million and $104.2 million, respectively, compared to March 31, 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 market in a rising interest rate environment.

Net Interest Income

Net interest income for the first quarter of 2019 totaled $15.2 million, an increase of $0.3 million, or 2.4%, compared to the fourth quarter of 2018, and an increase of $1.3 million, or 9.4%, compared to the first quarter of 2018. Included in net interest income for the quarters ended March 31, 2019, December 31, 2018 and March 31, 2018 is $0.4 million, $0.3 million and $0.7 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarter ended December 31, 2018 is an interest recovery of $0.1 million on an acquired loan.

The increase in net interest income in the first 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 first quarter of 2019 increased $3.5 million, with $2.5 million and $1.0 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 $2.2 million, with $0.4 million and $1.8 million due to increases in the volume and cost, respectively, of interest-bearing liabilities compared to the first quarter of 2018.

The Company’s net interest margin was 3.53% for both of the quarters ended March 31, 2019 and December 31, 2018, compared to 3.70% for the quarter ended March 31, 2018. The yield on interest-earning assets was 4.81% for the quarter ended March 31, 2019 compared to 4.75% for the quarter ended December 31, 2018 and 4.59% for the quarter ended March 31, 2018. The decrease in net interest margin for the quarter ended March 31, 2019 compared to the quarter ended March 31, 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 a $0.1 million interest recovery in the quarter ended December 31, 2018, net interest margin was 3.43% for both of the quarters ended March 31, 2019 and December 31, 2018 compared to 3.52% for the quarter ended March 31, 2018, while the yield on interest-earning assets was 4.72% for the quarter ended March 31, 2019 compared to 4.65% and 4.41% for the quarters ended December 31, 2018 and March 31, 2018, respectively.

The cost of deposits increased 9 basis points to 1.41% for the quarter ended March 31, 2019 compared to 1.32% for the quarter ended December 31, 2018, and increased 50 basis points compared to 0.91% for the quarter ended March 31, 2018. The increase in the cost of deposits compared to the quarters ended December 31, 2018 and March 31, 2018 reflects the increased rates offered for our interest-bearing demand deposits and time deposits to remain competitive in our market in a rising interest rate environment and attract new deposits. The overall costs of funds for the quarter ended March 31, 2019 increased 9 and 49 basis points to 1.59% compared to 1.50% and 1.10% for the quarters ended December 31, 2018 and March 31, 2018, respectively. The increase in the cost of funds at March 31, 2019 compared to December 31, 2018 and March 31, 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 first quarter of 2019 totaled $1.3 million, an increase of $0.4 million, or 53.2%, compared to the fourth quarter of 2018, and an increase of $0.2 million, or 19.5%, compared to the first quarter of 2018. The increase in noninterest income compared to the quarter ended December 31, 2018 is mainly attributable to a $0.5 million increase in the fair value of equity securities.

The increase in noninterest income compared to the first quarter of 2018 is primarily a result of a $0.2 million increase in the fair value of equity securities and a $0.1 million increase in other operating income, partially offset by a $0.1 million decrease in servicing fees and fee income on serviced loans. Other operating income includes, among other things, various operations fees and income recognized on certain equity method investments.

Noninterest Expense

Noninterest expense for the first quarter of 2019 totaled $11.3 million, an increase of $0.4 million, or 3.6%, compared to the fourth quarter of 2018, and an increase of $0.7 million, or 7.0%, compared to the first quarter of 2018.

The increase in noninterest expense compared to the quarter ended December 31, 2018 is mainly attributable to the $0.6 million increase in acquisition expense. This increase and increases in other categories were partially offset by a $0.5 million decrease in other operating expenses. The decrease in other operating expenses was due to a $0.6 million write-down of a property held in other real estate owned that was recorded during the quarter ended December 31, 2018 to reflect the amount of a purchase agreement for the property, which was sold in January 2019.

The increase in noninterest expense compared to the first quarter of 2018 is primarily attributable to increases in depreciation and amortization, salaries and employee benefits, and other operating expenses, partially offset by a decrease in acquisition expense. 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. The increase in salaries and employee benefits compared to the first 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 in the second quarter of 2018, as well as the additional staff from the Mainland acquisition. The increase in other operating expenses compared to the first quarter of 2018 is primarily attributable to increased software expense and debit and credit card activity.

Taxes

The Company recorded income tax expense of $1.0 million for the quarter ended March 31, 2019, which equates to an effective tax rate of 19.6%, an increase from the effective tax rate of 19.5% and a decrease from the effective tax rate of 35.8% for the quarters ended December 31, 2018 and March 31, 2018, respectively. The decrease in the effective tax rate compared to the quarter ended March 31, 2018 is primarily a result of a one-time charge of $0.6 million recorded in the quarter ended March 31, 2018 as a result of the revaluation of the Company’s deferred tax assets and liabilities that was required following the enactment of the Tax Cuts and Jobs Act in December 2017. 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 $0.40 for the quarter ended March 31, 2019, an increase of $0.05 and $0.06 compared to basic and diluted earnings per common share of $0.35 and $0.34, respectively, for the quarter ended December 31, 2018 and an increase of $0.15 compared to basic and diluted earnings per common share of $0.25 for the quarter ended March 31, 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, a state chartered 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 March 31, 2019, the Company had 280 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 (the “SEC”).

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

3/31/2019

12/31/2018

3/31/2018

Linked Quarter

Year/Year

EARNINGS DATA

Total interest income

$

20,686

$

19,927

$

17,178

3.8

%

20.4

%

Total interest expense

5,530

5,120

3,320

8.0

66.6

Net interest income

15,156

14,807

13,858

2.4

9.4

Provision for loan losses

265

593

625

(55.3

)

(57.6

)

Total noninterest income

1,281

836

1,072

53.2

19.5

Total noninterest expense

11,303

10,906

10,562

3.6

7.0

Income before income taxes

4,869

4,144

3,743

17.5

30.1

Income tax expense

952

807

1,341

18.0

(29.0

)

Net income

$

3,917

$

3,337

$

2,402

17.4

63.1

AVERAGE BALANCE SHEET DATA

Total assets

$

1,854,191

$

1,766,094

$

1,629,277

5.0

%

13.8

%

Total interest-earning assets

1,743,438

1,663,816

1,518,425

4.8

14.8

Total loans

1,436,798

1,381,580

1,261,047

4.0

13.9

Total interest-bearing deposits

1,183,568

1,116,734

1,002,655

6.0

18.0

Total interest-bearing liabilities

1,413,623

1,350,743

1,228,942

4.7

15.0

Total deposits

1,422,632

1,342,145

1,219,482

6.0

16.7

Total stockholders’ equity

189,822

180,682

173,467

5.1

9.4

PER SHARE DATA

Earnings:

Basic earnings per common share

$

0.40

$

0.35

$

0.25

14.3

%

60.0

%

Diluted earnings per common share

0.40

0.34

0.25

17.6

60.0

Core Earnings(1):

Core basic earnings per common share(1)

0.47

0.46

0.40

2.2

17.5

Core diluted earnings per common share(1)

0.46

0.45

0.40

2.2

15.0

Book value per common share

20.04

19.22

18.22

4.3

10.0

Tangible book value per common share(1)

17.36

17.13

16.11

1.3

7.8

Common shares outstanding

10,129,993

9,484,219

9,517,328

6.8

6.4

Weighted average common shares outstanding - basic

9,675,381

9,519,470

9,513,332

1.6

1.7

Weighted average common shares outstanding - diluted

9,770,752

9,623,636

9,609,603

1.5

1.7

PERFORMANCE RATIOS

Return on average assets

0.86

%

0.75

%

0.60

%

14.7

%

43.3

%

Core return on average assets(1)

0.98

0.98

0.95

3.2

Return on average equity

8.37

7.33

5.62

14.2

48.9

Core return on average equity(1)

9.62

9.55

8.90

0.7

8.1

Net interest margin

3.53

3.53

3.70

(4.6

)

Net interest income to average assets

3.31

3.33

3.45

(0.6

)

(4.1

)

Noninterest expense to average assets

2.47

2.45

2.63

0.8

(6.1

)

Efficiency ratio(2)

68.76

69.72

70.74

(1.4

)

(2.8

)

Core efficiency ratio(1)

63.96

62.52

63.73

2.3

0.4

Dividend payout ratio

13.13

14.47

13.86

(9.3

)

(5.3

)

Net charge-offs to average loans

0.01

0.01

0.03

(66.7

)

(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

3/31/2019

12/31/2018

3/31/2018

Linked Quarter

Year/Year

ASSET QUALITY RATIOS

Nonperforming assets to total assets

0.40

%

0.54

%

0.60

%

(25.9

)%

(33.3

)%

Nonperforming loans to total loans

0.40

0.42

0.44

(4.8

)

(9.1

)

Allowance for loan losses to total loans

0.64

0.67

0.64

(4.5

)

Allowance for loan losses to nonperforming loans

159.93

158.94

146.78

0.6

9.0

CAPITAL RATIOS

Investar Holding Corporation:

Total equity to total assets

10.35

%

10.20

%

10.55

%

1.5

%

(1.9

)%

Tangible equity to tangible assets(1)

9.09

9.20

9.44

(1.2

)

(3.7

)

Tier 1 leverage ratio

10.03

9.81

10.11

2.2

(0.8

)

Common equity tier 1 capital ratio(2)

11.07

11.15

11.67

(0.7

)

(5.1

)

Tier 1 capital ratio(2)

11.48

11.59

12.16

(0.9

)

(5.6

)

Total capital ratio(2)

13.23

13.46

14.12

(1.7

)

(6.3

)

Investar Bank:

Tier 1 leverage ratio

10.92

10.72

11.06

1.9

(1.3

)

Common equity tier 1 capital ratio(2)

12.48

12.67

13.31

(1.5

)

(6.2

)

Tier 1 capital ratio(2)

12.48

12.67

13.31

(1.5

)

(6.2

)

Total capital ratio(2)

13.09

13.31

13.92

(1.7

)

(6.0

)

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

(2) Estimated for March 31, 2019.


INVESTAR HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)

March 31, 2019

December 31, 2018

March 31, 2018

ASSETS

Cash and due from banks

$

22,535

$

15,922

$

13,409

Interest-bearing balances due from other banks

47,506

1,212

7,623

Federal funds sold

2,362

6

70

Cash and cash equivalents

72,403

17,140

21,102

Available for sale securities at fair value (amortized cost of $265,981, $253,504, and $236,225, respectively)

264,257

248,981

231,448

Held to maturity securities at amortized cost (estimated fair value of $15,816, $15,805, and $17,479, respectively)

15,816

16,066

17,727

Loans, net of allowance for loan losses of $9,642, $9,454, and $8,130, respectively

1,485,277

1,391,371

1,264,820

Other equity securities

14,392

13,562

11,573

Bank premises and equipment, net of accumulated depreciation of $10,513, $9,898, and $8,300, respectively

45,717

40,229

38,091

Other real estate owned, net

1,748

3,611

4,266

Accrued interest receivable

6,377

5,553

4,707

Deferred tax asset

38

1,145

1,496

Goodwill and other intangible assets, net

27,143

19,787

20,141

Bank-owned life insurance

24,011

23,859

23,382

Other assets

4,715

5,165

5,435

Total assets

$

1,961,894

$

1,786,469

$

1,644,188

LIABILITIES

Deposits

Noninterest-bearing

$

285,811

$

217,457

$

221,855

Interest-bearing

1,246,982

1,144,274

1,004,817

Total deposits

1,532,793

1,361,731

1,226,672

Advances from Federal Home Loan Bank

185,093

206,490

187,066

Repurchase agreements

2,218

1,999

21,053

Subordinated debt

18,227

18,215

18,180

Junior subordinated debt

5,858

5,845

5,806

Accrued taxes and other liabilities

14,691

9,927

11,981

Total liabilities

1,758,880

1,604,207

1,470,758

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; 10,129,993, 9,484,219, and 9,517,328 shares outstanding, respectively

10,130

9,484

9,517

Surplus

144,813

130,133

131,179

Retained earnings

49,104

45,721

35,829

Accumulated other comprehensive loss

(1,033

)

(3,076

)

(3,095

)

Total stockholders’ equity

203,014

182,262

173,430

Total liabilities and stockholders’ equity

$

1,961,894

$

1,786,469

$

1,644,188


INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share data)

(Unaudited)

For the three months ended

March 31, 2019

December 31, 2018

March 31, 2018

INTEREST INCOME

Interest and fees on loans

$

18,544

$

17,996

$

15,626

Interest on investment securities

1,926

1,795

1,459

Other interest income

216

136

93

Total interest income

20,686

19,927

17,178

INTEREST EXPENSE

Interest on deposits

4,106

3,721

2,253

Interest on borrowings

1,424

1,399

1,067

Total interest expense

5,530

5,120

3,320

Net interest income

15,156

14,807

13,858

Provision for loan losses

265

593

625

Net interest income after provision for loan losses

14,891

14,214

13,233

NONINTEREST INCOME

Service charges on deposit accounts

400

399

359

Gain (loss) on sale of investment securities, net

2

(23

)

Gain on sale of fixed assets, net

90

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

5

(20

)

Servicing fees and fee income on serviced loans

180

190

288

Interchange fees

240

247

191

Income from bank owned life insurance

152

157

151

Change in the fair value of equity securities

172

(306

)

Other operating income (loss)

130

192

(7

)

Total noninterest income

1,281

836

1,072

Income before noninterest expense

16,172

15,050

14,305

NONINTEREST EXPENSE

Depreciation and amortization

764

682

598

Salaries and employee benefits

6,415

6,280

6,048

Occupancy

414

326

380

Data processing

536

490

542

Marketing

51

84

38

Professional fees

305

287

255

Acquisition expenses

905

341

1,104

Other operating expenses

1,913

2,416

1,597

Total noninterest expense

11,303

10,906

10,562

Income before income tax expense

4,869

4,144

3,743

Income tax expense

952

807

1,341

Net income

$

3,917

$

3,337

$

2,402

EARNINGS PER SHARE

Basic earnings per common share

$

0.40

$

0.35

$

0.25

Diluted earnings per common share

$

0.40

$

0.34

$

0.25

Cash dividends declared per common share

$

0.05

$

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

March 31, 2019

December 31, 2018

March 31, 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

$

1,436,798

$

18,544

5.23

%

$

1,381,580

$

17,996

5.17

%

$

1,261,047

$

15,626

5.03

%

Securities:

Taxable

243,065

1,729

2.88

230,170

1,592

2.74

206,722

1,253

2.46

Tax-exempt

32,325

197

2.47

33,913

203

2.37

34,688

206

2.41

Interest-bearing balances with banks

31,250

216

2.80

18,153

136

2.97

15,968

93

2.37

Total interest-earning assets

1,743,438

20,686

4.81

1,663,816

19,927

4.75

1,518,425

17,178

4.59

Cash and due from banks

20,150

18,252

25,526

Intangible assets

22,301

19,835

19,881

Other assets

77,867

73,415

73,438

Allowance for loan losses

(9,565

)

(9,224

)

(7,993

)

Total assets

$

1,854,191

$

1,766,094

$

1,629,277

Liabilities and stockholders’ equity

Interest-bearing liabilities:

Deposits:

Interest-bearing demand deposits

$

504,123

$

1,353

1.09

$

448,110

$

1,162

1.03

$

360,903

$

580

0.65

Savings deposits

104,503

119

0.46

106,492

151

0.56

120,861

137

0.46

Time deposits

574,942

2,634

1.86

562,132

2,408

1.70

520,891

1,536

1.20

Total interest-bearing deposits

1,183,568

4,106

1.41

1,116,734

3,721

1.32

1,002,655

2,253

0.91

Short-term borrowings

135,894

733

2.19

138,443

699

2.00

143,646

507

1.43

Long-term debt

94,161

691

2.98

95,566

700

2.91

82,641

560

2.75

Total interest-bearing liabilities

1,413,623

5,530

1.59

1,350,743

5,120

1.50

1,228,942

3,320

1.10

Noninterest-bearing deposits

239,064

225,411

216,827

Other liabilities

11,682

9,258

10,041

Stockholders’ equity

189,822

180,682

173,467

Total liability and stockholders’ equity

$

1,854,191

$

1,766,094

$

1,629,277

Net interest income/net interest margin

$

15,156

3.53

%

$

14,807

3.53

%

$

13,858

3.70

%


INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

March 31, 2019

December 31, 2018

March 31, 2018

Tangible common equity

Total stockholders’ equity

$

203,014

$

182,262

$

173,430

Adjustments:

Goodwill

22,489

17,424

17,424

Core deposit intangible

4,554

2,263

2,617

Trademark intangible

100

100

100

Tangible common equity

$

175,871

$

162,475

$

153,289

Tangible assets

Total assets

$

1,961,894

$

1,786,469

$

1,644,188

Adjustments:

Goodwill

22,489

17,424

17,424

Core deposit intangible

4,554

2,263

2,617

Trademark intangible

100

100

100

Tangible assets

$

1,934,751

$

1,766,682

$

1,624,047

Common shares outstanding

10,129,993

9,484,219

9,517,328

Tangible equity to tangible assets

9.09

%

9.20

%

9.44

%

Book value per common share

$

20.04

$

19.22

$

18.22

Tangible book value per common share

17.36

17.13

16.11


INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

Three months ended

3/31/2019

12/31/2018

3/31/2018

Net interest income

(a)

$

15,156

$

14,807

$

13,858

Provision for loan losses

265

593

625

Net interest income after provision for loan losses

14,891

14,214

13,233

Noninterest income

(b)

1,281

836

1,072

(Gain) loss on sale of investment securities, net

(2

)

23

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

(5

)

20

Gain on sale of fixed assets, net

(90

)

Change in the fair value of equity securities

(172

)

306

Core noninterest income

(d)

1,102

1,185

982

Core earnings before noninterest expense

15,993

15,399

14,215

Total noninterest expense

(c)

11,303

10,906

10,562

Acquisition expense

(905

)

(341

)

(1,104

)

Write down of other real estate owned

(567

)

Core noninterest expense

(f)

10,398

9,998

9,458

Core earnings before income tax expense

5,595

5,401

4,757

Core income tax expense(1)

1,094

1,053

950

Core earnings

$

4,501

$

4,348

$

3,807

Core basic earnings per common share

0.47

0.46

0.40

Diluted earnings per common share (GAAP)

$

0.40

$

0.34

$

0.25

(Gain) loss on sale of investment securities, net

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

Gain on sale of fixed assets, net

(0.01

)

Change in the fair value of equity securities

(0.01

)

0.03

Acquisition expense

0.07

0.03

0.09

Write down of other real estate owned

0.05

One-time charge to income tax expense

0.07

Core diluted earnings per common share

$

0.46

$

0.45

$

0.40

Efficiency ratio

(c) / (a+b)

68.76

%

69.72

%

70.74

%

Core efficiency ratio

(f) / (a+d)

63.96

%

62.52

%

63.73

%

Core return on average assets(2)

0.98

%

0.98

%

0.95

%

Core return on average equity(2)

9.62

%

9.55

%

8.90

%

Total average assets

$

1,854,191

$

1,766,094

$

1,629,277

Total average stockholders’ equity

189,822

180,682

173,467

(1) Core income tax expense is calculated using the effective tax rates of 19.6% and 19.5% for the quarters ended March 31, 2019 and December 31, 2018, respectively, and an effective rate of 20%, prior to the one-time charge of $0.6 million to tax expense as a result of the Tax Cuts and Jobs Act for the for the quarter ended March 31, 2018.

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