BATON ROUGE, La., July 25, 2018 (GLOBE NEWSWIRE) -- Investar Holding Corporation (NASDAQ:ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended June 30, 2018. The Company reported record net income of $3.8 million, or $0.39 per diluted common share, for the second quarter of 2018, compared to $2.4 million, or $0.25 per diluted common share, for the quarter ended March 31, 2018, and $1.9 million, or $0.22 per diluted common share, for the quarter ended June 30, 2017.

On a non-GAAP basis, core earnings per diluted common share for the second and first quarters of 2018 were $0.40, compared to $0.22 for the quarter ended June 30, 2017, respectively. Core earnings exclude certain non-operating items including, but not limited to, acquisition expense, tax reform related re-measurement charges, and non-routine legal charges related to acquired loans (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).

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

“This was a solid quarter of positive performance for Investar. Net income has grown 98% to a record $3.8 million compared to the same quarter last year. Our net interest margin remains stable at 3.70% for the first two quarters of 2018 and our deposit mix continues to improve as we continue to grow noninterest-bearing deposits. Total loan growth was 8.4% on an annualized basis, and most of the growth came in our commercial and industrial and commercial real estate portfolios. We also experienced positive asset quality trends across the portfolio with decreases in nonperforming loans and net charge-offs and improvements in both return on assets and efficiency ratios. With both 2017 acquisitions fully integrated in the first quarter of 2018, we are continuing to focus on achieving synergies through efficient operations.

In the second quarter, we continued to expand our Investar family with the addition of five experienced lenders focused on growing our commercial business relationships. We look forward to the knowledge and experience brought to Investar by these team members.”

Second Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter ended June 30, 2018 totaled $19.2 million, an increase of $1.0 million, or 5.2%, compared to the quarter ended March 31, 2018, and an increase of $6.6 million, or 51.9%, compared to the quarter ended June 30, 2017.

  • Total loans increased $27.4 million, or 2.1% (8.4% annualized), to $1.30 billion at June 30, 2018, compared to $1.27 billion at 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 $432.9 million at June 30, 2018, an increase of $22.7 million, or 5.5%, compared to the business lending portfolio of $410.2 million at March 31, 2018, and an increase of $148.8 million, or 52.4%, compared to the business lending portfolio of $284.1 million at June 30, 2017.

  • Nonperforming loans to total loans decreased to 0.33%, compared to 0.44% at March 31, 2018.

  • Deposit mix has improved with noninterest-bearing deposits now representing 18.1% of total deposits compared to 14.6% at June 30, 2017.

  • Net interest margin remained stable at 3.70% for both quarters ended June 30, 2018 and March 31, 2018, compared to 3.28% for the quarter ended June 30, 2017.

  • Return on assets improved to 0.93% for the quarter ended June 30, 2018 compared to 0.60% for the quarter ended March 31, 2018 and 0.64% for the quarter ended June 30, 2017.

  • Efficiency ratio improved to 65.49% for the quarter ended June 30, 2018, compared to 70.74% for the quarter ended March 31, 2018 and 68.57% for the quarter ended June 30, 2017.

Loans

Total loans were $1.3 billion at June 30, 2018, an increase of $27.4 million, or 2.1%, compared to March 31, 2018, and an increase of $367.4 million, or 39.4%, compared to June 30, 2017. Compared to the first quarter of 2018, we experienced the majority of our second quarter loan growth in the commercial real estate and commercial and industrial portfolios as we remain focused on relationship banking and growing our commercial loan portfolio. Loan balances after June 30, 2017 reflect our acquisitions of Citizens Bancshares, Inc. (“Citizens”) and BOJ Bancshares, Inc. (“BOJ”) which occurred later in 2017.

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
  6/30/2018 3/31/2018 6/30/2017 $ % $ % 6/30/2018 6/30/2017
Mortgage loans on real estate                  
Construction and development $165,395  $162,337  $109,627  $3,058  1.9% $55,768  50.9% 12.7% 11.8%
1-4 Family 280,335  277,978  177,979  2,357  0.8  102,356  57.5  21.6  19.1 
Multifamily 48,838  54,504  46,109  (5,666) (10.4) 2,729  5.9  3.8  4.9 
Farmland 20,144  20,725  8,006  (581) (2.8) 12,138  151.6  1.5  0.9 
Commercial real estate                  
Owner-occupied 287,320  274,216  185,226  13,104  4.8  102,094  55.1  22.1  19.8 
Nonowner-occupied 292,946  279,939  223,297  13,007  4.6  69,649  31.2  22.5  23.9 
Commercial and industrial 145,554  135,965  98,837  9,589  7.1  46,717  47.3  11.2  10.6 
Consumer 59,779  67,286  83,879  (7,507) (11.2) (24,100) (28.7) 4.6  9.0 
Total loans $1,300,311  $1,272,950  $932,960  $27,361  2.1% $367,351  39.4% 100% 100%

At June 30, 2018, 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 $432.9 million, an increase of $22.7 million, or 5.5%, compared to the business lending portfolio of $410.2 million at March 31, 2018, and an increase of $148.8 million, or 52.4%, compared to the business lending portfolio of $284.1 million at June 30, 2017.

Construction and development loans were $165.4 million at June 30, 2018, an increase of $3.1 million, or 1.9%, compared to $162.3 million at March 31, 2018, and an increase of $55.8 million, or 50.9%, compared to $109.6 million at June 30, 2017. The increase in the construction and development portfolio at June 30, 2018 is primarily a result of organic growth in the Company’s Baton Rouge market where our lenders have great experience and long-standing relationships with local developers. At June 30, 2018, the construction and development portfolio included $22.9 million of loans acquired from Citizens and BOJ in 2017.

Consumer loans, including indirect auto loans of $42.1 million, totaled $59.8 million at June 30, 2018, a decrease of $7.5 million, or 11.2%, compared to $67.3 million, including indirect auto loans of $48.8 million, at March 31, 2018, and a decrease of $24.1 million, or 28.7%, compared to $83.9 million, including indirect auto loans of $70.8 million, at June 30, 2017. 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 $4.2 million, or 0.33% of total loans, at June 30, 2018, a decrease of $1.3 million compared to $5.5 million, or 0.44% of total loans, at March 31, 2018, and an increase of $3.0 million compared to $1.2 million, or 0.13% of total loans, at June 30, 2017. Included in nonperforming loans are loans acquired in 2017 with a balance of $2.6 million at June 30, 2018, which is the primary reason for the increase in nonperforming loans compared to June 30, 2017.

The allowance for loan losses was $8.5 million, or 199.04% and 0.65% of nonperforming and total loans, respectively, at June 30, 2018, compared to $8.1 million, or 146.78% and 0.64%, respectively, at March 31, 2018, and $7.3 million, or 627.63% and 0.78%, respectively, at June 30, 2017. As a result of the acquisitions of Citizens and BOJ in 2017, the Company is holding acquired loans that are carried net of a fair value adjustment for credit and interest rate marks and are only included in the allowance calculation to the extent that the reserve requirement exceeds the remaining fair value adjustment.

The provision for loan losses was $0.6 million for the quarters ended June 30, 2018 and March 31, 2018 and $0.4 million for the quarter ended June 30, 2017.

Deposits

Total deposits at June 30, 2018 were $1.2 billion, an increase of $4.3 million, or 0.3%, compared to March 31, 2018, and an increase of $336.1 million, or 37.6%, compared to June 30, 2017.

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
  6/30/2018 3/31/2018 6/30/2017 $ % $ % 6/30/2018 6/30/2017
Noninterest-bearing demand
deposits
 $222,570  $221,855  $130,625  $715  0.3% $91,945  70.4% 18.1% 14.6%
NOW accounts 231,987  228,269  171,244  3,718  1.6  60,743  35.5  18.8  19.1 
Money market deposit accounts 151,510  145,627  143,957  5,883  4.0  7,553  5.2  12.3  16.1 
Savings accounts 117,649  124,589  50,945  (6,940) (5.6) 66,704  130.9  9.6  5.7 
Time deposits 507,214  506,332  398,054  883  0.2  109,161  27.4  41.2  44.5 
Total deposits $1,230,931  $1,226,672  $894,825  $4,259  0.3% $336,106  37.6% 100.0% 100.0%

As we continue to focus on relationship banking and growing our commercial relationships, we continue to improve our deposit mix with growth in noninterest-bearing demand deposits and a decrease in time deposits as a percentage of total deposits.

Net Interest Income

Net interest income for the second quarter of 2018 totaled $14.3 million, an increase of $0.5 million, or 3.3%, compared to the first quarter of 2018, and an increase of $5.0 million, or 54.0%, compared to the second quarter of 2017. Included in net interest income for the quarters ended June 30, 2018 and March 31, 2018 is $0.5 million and $0.7 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarters ended June 30, 2018 and June 30, 2017 is an interest recovery of $0.2 million and $0.1 million, respectively, on acquired loans.

The increase in net interest income was primarily driven by growth in loan and securities balances partially offset by an increase in interest expense as we funded the increase in interest-earning assets with increased borrowings. Net interest income for the second quarter of 2018 increased $4.4 million and $1.8 million due to increases in the volume and yield, respectively, of interest-earning assets. These increases were slightly offset by a decrease of $1.2 million due to an increase in the volume of interest-bearing liabilities compared to the second quarter of 2017. While we did experience loan growth in the second quarter of 2018, several loans were recorded in the latter part of the quarter, and therefore, we did not recognize a full quarter of interest on these loans, but recorded a related allowance for loan losses through the provision for loan losses.

The Company’s net interest margin was 3.70% for the quarters ended June 30, 2018 and March 31, 2018 compared to 3.28% for the quarter ended June 30, 2017. The yield on interest-earning assets was 4.65% for the quarter ended June 30, 2018 compared to 4.59% for the quarter ended March 31, 2018 and 4.18% for the quarter ended June 30, 2017. The increase in net interest margin at June 30, 2018 compared to June 30, 2017 was driven by an increase in interest-earning assets and the yields earned on those assets as well as interest accretion on acquired loans, partially offset 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 $0.2 million and $0.1 million interest recoveries in the quarters ended June 30, 2018 and June 30, 2017, respectively, net interest margin would have been 3.51% for the quarter ended June 30, 2018 compared to 3.52% for the quarter ended March 31, 2018 and 3.23% for the quarter ended June 30, 2017, while the yield on interest-earning assets would have been 4.46% at June 30, 2018 compared to 4.41% and 4.13% for the quarters ended March 31, 2018 and June 30, 2017, respectively.

The cost of deposits increased six basis points to 0.97% for the quarter ended June 30, 2018 compared to 0.91% for the quarter ended March 31, 2018 and decreased one basis point compared to 0.98% at June 30, 2017. The increase in the cost of deposits compared to the quarter ended 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. The overall costs of funds for the quarter ended June 30, 2018 increased nine basis points to 1.19% compared to 1.10% for both the quarters ended March 31, 2018 and June 30, 2017. The increase in the cost of funds at June 30, 2018 compared to March 31, 2018 and June 30, 2017 is mainly a result of an increase in the cost of borrowed funds used to finance loan and investment activity.

Noninterest Income

Noninterest income for the second quarter of 2018 totaled $1.2 million, an increase of $0.1 million, or 11.3%, compared to the first quarter of 2018, and an increase of $0.4 million, or 48.9%, compared to the second quarter of 2017. The increase in noninterest income compared to the quarter ended March 31, 2018 is mainly attributable to increases in other operating income. Other operating income includes, among other things, interchange fees, various operations fees, and income recognized on certain equity method investments. The increase in noninterest income compared to the quarter ended June 30, 2017 is mainly attributable to increases in other operating income and service charges on deposit accounts.

Noninterest Expense

Noninterest expense for the second quarter of 2018 totaled $10.2 million, a decrease of $0.4 million, or 3.8%, compared to the first quarter of 2018, and an increase of $3.2 million, or 46.7%, compared to the second quarter of 2017. The decrease in noninterest expense compared to the first quarter is mainly attributable to the $1.1 million decrease in acquisition expenses that was partially offset by $0.4 million and $0.3 million increases in salaries and employee benefits and other operating expenses, respectively.

The increase in salaries and employee benefits compared to the first quarter can be attributed to the hiring of five additional lenders and their related support staff. In addition, we realized unfavorable health care claims experience resulting in approximately $140,000 in excess health care costs in the quarter that we do not anticipate in future quarters.

The increase in other operating expenses compared to the first quarter includes approximately $89,000 in non-routine legal expenses associated with acquired loans.

The increase in noninterest expense compared to the quarter ended June 30, 2017 is mainly attributable to the increases in both salaries and employee benefits and other operating expenses. The increase in salaries and employee benefits is mainly a result of the increase in employees following the Citizens and BOJ acquisitions which occurred on July 1, 2017 and December 1, 2017, respectively, as well as the addition of lenders and support staff throughout our market in 2018. Full-time equivalent employees increased by 112, or 71%, at June 30, 2018 compared to June 30, 2017.

Staffing Optimization Plan

Subsequent to the end of the second quarter, as part of a staffing optimization plan focused on the operations of our recent acquisitions, we reduced staffing resulting in annual savings of approximately $0.7 million. We expect to recognize severance costs of approximately $0.2 million in the third quarter of 2018. We continue to focus on cost containment and deploying resources in the most efficient manner.

Taxes

The Company recorded income tax expense of $1.0 million for the quarter ended June 30, 2018, which equates to an effective tax rate of 20.2%, a decrease from the effective tax rate of 35.8% and 31.3% for the quarters ended March 31, 2018 and June 30, 2017, respectively. The income tax expense for the quarter ended March 31, 2018 includes charges of $0.6 million as a result of the revaluation of the Company’s deferred tax assets and liabilities required following the enactment of the Tax Cuts and Jobs Act. Management expects the Company’s effective tax rate to approximate 20% for the remainder of 2018, mainly as a result of the Tax Cuts and Jobs Act.

Basic Earnings Per Share and Diluted Earnings Per Common Share

The Company reported both basic and diluted earnings per common share of $0.39 for the quarter ended June 30, 2018, an increase of $0.14 and $0.17 compared to basic and diluted earnings per common share of $0.25 and $0.22 for the quarters ended March 31, 2018 and June 30, 2017, respectively.

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 Company’s primary market is South Louisiana and it currently operates 20 full service banking offices located throughout its market. At June 30, 2018, the Company had 269 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;
  • changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;
  • 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
  • concentration of credit exposure.

In addition, forward-looking statements and estimates regarding the effects of the Tax Cuts and Jobs Act are based on our current interpretation of this legislation and may change as a result of additional implementation guidance, changes in assumptions, potential future refinements of or revisions to calculations and completion of the Company’s 2017 consolidated tax return.

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, 2017, 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
  6/30/2018 3/31/2018 6/30/2017 Linked Quarter Year/Year
EARNINGS DATA          
Total interest income $18,009  $17,178  $11,844  4.8% 52.1%
Total interest expense 3,689  3,320  2,542  11.1  45.1 
Net interest income 14,320  13,858  9,302  3.3  53.9 
Provision for loan losses 567  625  375  (9.3) 51.2 
Total noninterest income 1,193  1,072  801  11.3  48.9 
Total noninterest expense 10,160  10,562  6,928  (3.8) 46.7 
Income before income taxes 4,786  3,743  2,800  27.9  70.9 
Income tax expense 966  1,341  877  (28.0) 10.1 
Net income $3,820  $2,402  $1,923  59.0  98.6 
           
AVERAGE BALANCE SHEET DATA          
Total assets $1,655,709  $1,629,277  $1,198,878  1.6% 38.1%
Total interest-earning assets 1,553,813  1,518,425  1,137,752  2.3  36.6 
Total loans 1,269,894  1,261,047  914,265  0.7  38.9 
Total interest-bearing deposits 1,001,037  1,002,655  745,647  (0.2) 34.3 
Total interest-bearing liabilities 1,247,695  1,228,942  922,780  1.5  35.2 
Total deposits 1,223,441  1,219,482  862,361  0.3  41.9 
Total stockholders’ equity 175,801  173,467  149,713  1.3  17.4 
           
PER SHARE DATA          
Earnings:          
Basic earnings per share $0.39  $0.25  $0.22  56.0% 77.3%
Diluted earnings per share 0.39  0.25  0.22  56.0  77.3 
Core Earnings(1):          
Core basic earnings per share(1) 0.40  0.40  0.22    81.8 
Core diluted earnings per share(1) 0.40  0.40  0.22    81.8 
Book value per share 18.50  18.22  17.11  1.5  8.1 
Tangible book value per share(1) 16.42  16.11  16.74  1.9  (1.9)
Common shares outstanding 9,581,034  9,517,328  8,815,119  0.7  8.7 
Weighted average common shares outstanding - basic 9,588,873  9,513,332  8,685,980  0.8  10.4 
Weighted average common shares outstanding - diluted 9,648,021  9,609,603  8,780,628  0.4  9.9 
           
PERFORMANCE RATIOS          
Return on average assets 0.93% 0.60% 0.64% 55.0% 45.3%
Core return on average assets(1) 0.94  0.95  0.64  (1.1) 46.9 
Return on average equity 8.72  5.62  5.15  55.2  69.3 
Core return on average equity(1) 8.85  8.90  5.11  (0.6) 73.2 
Net interest margin 3.70  3.70  3.28    12.8 
Net interest income to average assets 3.47  3.45  3.11  0.6  11.6 
Noninterest expense to average assets 2.46  2.63  2.32  (6.5) 6.0 
Efficiency ratio(2) 65.49  70.74  68.57  (7.4) (4.5)
Core efficiency ratio(1) 64.99  63.73  68.46  2.0  (5.1)
Dividend payout ratio 10.01  13.86  9.94  (27.8) 0.7 
Net charge-offs to average loans 0.02  0.03  0.03  (33.3) (33.3)
           
(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
  6/30/2018 3/31/2018 6/30/2017 Linked
Quarter
 Year/Year
ASSET QUALITY RATIOS          
Nonperforming assets to total assets 0.50% 0.60% 0.41% (16.7)% 22.0%
Nonperforming loans to total loans 0.33  0.44  0.13  (25.0) 153.8 
Allowance for loan losses to total loans 0.65  0.64  0.78  1.6  (16.7)
Allowance for loan losses to nonperforming loans 199.04  146.78  627.63  35.6  (68.3)
           
CAPITAL RATIOS          
Investar Holding Corporation:          
Total equity to total assets 10.44% 10.55% 12.30% (1.0)% (15.1)%
Tangible equity to tangible assets(1) 9.38  9.44  12.07  (0.6) (22.3)
Tier 1 leverage ratio 10.22  10.11  12.71  1.1  (19.6)
Common equity tier 1 capital ratio(2) 11.64  11.67  14.41  (0.3) (19.2)
Tier 1 capital ratio(2) 12.11  12.16  14.75  (0.4) (17.9)
Total capital ratio(2) 14.04  14.12  17.22  (0.6) (18.5)
Investar Bank:          
Tier 1 leverage ratio 11.14  11.06  13.96  0.7  (20.2)
Common equity tier 1 capital ratio(2) 13.21  13.31  16.20  (0.8) (18.5)
Tier 1 capital ratio(2) 13.21  13.31  16.20  (0.8) (18.5)
Total capital ratio(2) 13.82  13.92  16.91  (0.7) (18.3)
           
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for June 30, 2018.


INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
       
  June 30, 2018 March 31, 2018 June 30, 2017
ASSETS      
Cash and due from banks $21,338  $13,409  $11,720 
Interest-bearing balances due from other banks 13,483  7,623  23,238 
Federal funds sold 10  70  3 
Cash and cash equivalents 34,831  21,102  34,961 
       
Available for sale securities at fair value (amortized cost of $247,317, $236,225, and $185,121, respectively) 241,587  231,448  183,584 
Held to maturity securities at amortized cost (estimated fair value of $17,064, $17,479, and $19,418, respectively) 17,299  17,727  19,460 
Loans, net of allowance for loan losses of $8,451, $8,130, and $7,320, respectively 1,291,860  1,264,820  925,640 
Other equity securities 13,095  11,573  7,025 
Bank premises and equipment, net of accumulated depreciation of $8,805, $8,300, and $7,497, respectively 39,253  38,091  31,510 
Other real estate owned, net 4,225  4,266  3,830 
Accrued interest receivable 4,842  4,707  3,197 
Deferred tax asset 1,429  1,496  2,343 
Goodwill and other intangible assets, net 19,952  20,141  3,213 
Bank-owned life insurance 23,543  23,382  7,297 
Other assets 5,555  5,435  3,466 
Total assets $1,697,471  $1,644,188  $1,225,526 
       
LIABILITIES      
Deposits      
Noninterest-bearing $222,570  $221,855  $130,625 
Interest-bearing 1,008,360  1,004,817  764,200 
Total deposits 1,230,930  1,226,672  894,825 
Advances from Federal Home Loan Bank 237,075  187,066  109,285 
Repurchase agreements 16,752  21,053  36,745 
Subordinated debt 18,191  18,180  18,145 
Junior subordinated debt 5,819  5,806  3,609 
Accrued taxes and other liabilities 11,474  11,981  12,121 
Total liabilities 1,520,241  1,470,758  1,074,730 
       
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; 9,581,034, 9,517,328, and 8,815,119 shares outstanding, respectively 9,581  9,517  8,815 
Surplus 132,166  131,179  113,246 
Retained earnings 39,258  35,829  29,644 
Accumulated other comprehensive loss (3,775) (3,095) (909)
Total stockholders’ equity 177,230  173,430  150,796 
  Total liabilities and stockholders’ equity $1,697,471  $1,644,188  $1,225,526 


INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)
           
  For the three months ended For the six months ended
  June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
INTEREST INCOME          
Interest and fees on loans $16,223  $15,626  $10,559  $31,849  $20,563 
Interest on investment securities 1,644  1,459  1,199  3,103  2,228 
Other interest income 142  93  86  235  146 
Total interest income 18,009  17,178  11,844  35,187  22,937 
           
INTEREST EXPENSE          
Interest on deposits 2,426  2,253  1,827  4,679  3,680 
Interest on borrowings 1,263  1,067  715  2,330  1,095 
Total interest expense 3,689  3,320  2,542  7,009  4,775 
Net interest income 14,320  13,858  9,302  28,178  18,162 
           
Provision for loan losses 567  625  375  1,192  725 
Net interest income after provision for loan losses 13,753  13,233  8,927  26,986  17,437 
           
NONINTEREST INCOME          
Service charges on deposit accounts 327  359  96  686  193 
Gain on sale of investment securities, net 22    109  22  215 
(Loss) gain on sale of fixed assets, net (1) 90  1  89  24 
Loss on sale of other real estate owned, net (4)   (10) (4) (5)
Servicing fees and fee income on serviced loans 253  288  378  541  801 
Other operating income 596  335  227  931  458 
Total noninterest income 1,193  1,072  801  2,265  1,686 
Income before noninterest expense 14,946  14,305  9,728  29,251  19,123 
           
NONINTEREST EXPENSE          
Depreciation and amortization 629  598  391  1,227  767 
Salaries and employee benefits 6,495  6,048  4,109  12,543  8,059 
Occupancy 335  380  245  715  509 
Data processing 565  542  355  1,107  723 
Marketing 44  38  119  82  147 
Professional fees 228  255  231  483  463 
Acquisition expenses   1,104  80  1,104  225 
Other operating expenses 1,864  1,597  1,398  3,461  2,719 
Total noninterest expense 10,160  10,562  6,928  20,722  13,612 
Income before income tax expense 4,786  3,743  2,800  8,529  5,511 
Income tax expense 966  1,341  877  2,307  1,724 
Net income $3,820  $2,402  $1,923  $6,222  $3,787 
           
EARNINGS PER SHARE          
Basic earnings per share $0.39  $0.25  $0.22  $0.64  $0.48 
Diluted earnings per share $0.39  $0.25  $0.22  $0.64  $0.47 
Cash dividends declared per common share $0.04  $0.04  $0.02  $0.08  $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, 2018 March 31, 2018 June 30, 2017
  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 $1,269,894  $16,223  5.12% $1,261,047  $15,626  5.03% $914,265  $10,559  4.63%
Securities:                  
Taxable 224,263  1,441  2.58  206,722  1,253  2.46  165,689  1,013  2.45 
Tax-exempt 33,936  203  2.40  34,688  206  2.41  29,375  186  2.54 
Interest-bearing balances with banks 25,720  142  2.20  15,968  93  2.37  28,423  86  1.21 
Total interest-earning assets 1,553,813  18,009  4.65  1,518,425  17,178  4.59  1,137,752  11,844  4.18 
Cash and due from banks 16,690      25,526      8,213     
Intangible assets 20,064      19,881      3,217     
Other assets 73,312      73,438      56,919     
Allowance for loan losses (8,170)     (7,993)     (7,223)    
Total assets $1,655,709      $1,629,277      $1,198,878     
                   
Liabilities and stockholders’ equity                  
Interest-bearing liabilities:                  
Deposits:                  
Interest-bearing demand deposits $372,824  $641  0.69  $360,903  $580  0.65  $291,902  $524  0.72 
Savings deposits 121,174  138  0.46  120,861  137  0.46  51,474  83  0.65 
Time deposits 507,039  1,647  1.30  520,891  1,536  1.20  402,271  1,220  1.22 
Total interest-bearing deposits 1,001,037  2,426  0.97  1,002,655  2,253  0.91  745,647  1,827  0.98 
Short-term borrowings 140,595  579  1.65  143,646  507  1.43  137,848  350  1.02 
Long-term debt 106,063  684  2.59  82,641  560  2.75  39,285  365  3.73 
Total interest-bearing liabilities 1,247,695  3,689  1.19  1,228,942  3,320  1.10  922,780  2,542  1.10 
Noninterest-bearing deposits 222,404      216,827      116,714     
Other liabilities 9,809      10,041      9,671     
Stockholders’ equity 175,801      173,467      149,713     
Total liability and stockholders’ equity $1,655,709      $1,629,277      $1,198,878     
Net interest income/net interest margin   $14,320  3.70%   $13,858  3.70%   $9,302  3.28%


INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
             
  For the six months ended
  June 30, 2018 June 30, 2017
  Average
Balance
 Interest
Income/
Expense
 Yield/
Rate
 Average
Balance
 Interest
Income/
Expense
 Yield/
Rate
Assets            
Interest-earning assets:            
Loans $1,265,495  $31,849  5.08% $903,466  $20,563  4.59%
Securities:            
Taxable 215,541  2,694  2.52  157,957  1,852  2.36 
Tax-exempt 34,310  409  2.41  29,955  376  2.53 
Interest-bearing balances with banks 25,118  235  1.88  26,517  146  1.12 
Total interest-earning assets 1,540,464  35,187  4.61  1,117,895  22,937  4.14 
Cash and due from banks 16,837      8,379     
Intangible assets 19,973      3,222     
Other assets 73,374      56,058     
Allowance for loan losses (8,082)     (7,174)    
Total assets $1,642,566      $1,178,380     
             
Liabilities and stockholders’ equity            
Interest-bearing liabilities:            
Deposits:            
Interest-bearing demand $366,896  $1,220  0.67  $291,878  $1,011  0.70 
Savings deposits 121,018  276  0.46  52,350  169  0.65 
Time deposits 513,927  3,183  1.25  417,635  2,500  1.21 
Total interest-bearing deposits 1,001,841  4,679  0.94  761,863  3,680  0.97 
Short-term borrowings 142,112  1,086  1.54  129,432  633  0.99 
Long-term debt 94,417  1,244  2.66  30,280  462  3.08 
Total interest-bearing liabilities 1,238,370  7,009  1.14  921,575  4,775  1.04 
Noninterest-bearing deposits 219,631      113,579     
Other liabilities 9,924      9,532     
Stockholders’ equity 174,641      133,694     
Total liability and stockholders’ equity $1,642,566      $1,178,380     
Net interest income/net interest margin   $28,178  3.69%   $18,162  3.28%


INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
       
       
  June 30, 2018 March 31, 2018 June 30, 2017
Tangible common equity      
Total stockholders’ equity $177,230  $173,430  $150,796 
Adjustments:      
Goodwill 17,358  17,424  2,684 
Core deposit intangible 2,494  2,617  429 
Trademark intangible 100  100  100 
Tangible common equity $157,278  $153,289  $147,583 
Tangible assets      
Total assets $1,697,471  $1,644,188  $1,225,526 
Adjustments:      
Goodwill 17,358  17,424  2,684 
Core deposit intangible 2,494  2,617  429 
Trademark intangible 100  100  100 
Tangible assets $1,677,519  $1,624,047  $1,222,313 
       
Common shares outstanding 9,581,034  9,517,328  8,815,119 
Tangible equity to tangible assets 9.38% 9.44% 12.07%
Book value per common share $18.50  $18.22  $17.11 
Tangible book value per common share 16.42  16.11  16.74 


INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
       
  Three months ended
  6/30/2018 3/31/2018 6/30/2017
Net interest income(a)$14,320  $13,858  $9,302 
Provision for loan losses 567  625  375 
Net interest income after provision for loan losses 13,753  13,233  8,927 
       
Noninterest income(b)1,193  1,072  801 
Gain on sale of investment securities, net (22)   (109)
Loss on sale of other real estate owned, net 4    10 
Loss (gain) on sale of fixed assets, net 1  (90) (1)
Core noninterest income(d)1,176  982  701 
       
Core earnings before noninterest expense 14,929  14,215  9,628 
       
Total noninterest expense(c)10,160  10,562  6,928 
Acquisition expense   (1,104) (80)
Non-routine legal expense (89)    
Core noninterest expense(f)10,071  9,458  6,848 
       
Core earnings before income tax expense 4,858  4,757  2,780 
Core income tax expense(1) 981  950  871 
Core earnings $3,877  $3,807  $1,909 
       
Core basic earnings per common share 0.40  0.40  0.22 
       
Diluted earnings per common share (GAAP) $0.39  $0.25  $0.22 
Gain on sale of investment securities, net     (0.01)
Gain on sale of fixed assets, net   (0.01)  
Acquisition expense   0.09  0.01 
Non-routine legal expense 0.01     
Tax reform related re-measurement charges to income tax expense   0.07   
Core diluted earnings per common share $0.40  $0.40  $0.22 
       
Efficiency ratio(c) / (a+b)65.49% 70.74% 68.57%
Core efficiency ratio(f) / (a+d)64.99% 63.73% 68.46%
Core return on average assets(2) 0.94% 0.95% 0.64%
Core return on average equity(2) 8.85% 8.90% 5.11%
Total average assets $1,655,709  $1,629,277  $1,198,878 
Total average stockholders’ equity 175,801  173,467  149,713 
       
(1) Core income tax expense is calculated using the effective tax rates of 20.2% and 31.3% for the quarters ended June 30, 2018 and June 30, 2017, respectively, and 19.98% for the quarter ended March 31, 2018, prior to the one-time charges of $0.6 million to tax expense as a result of the Tax Cuts and Jobs Act.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.