istr-10q_20160331.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

 

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

or

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                  

Commission File Number: 001-36522

 

Investar Holding Corporation

(Exact name of registrant as specified in its charter)

 

 

Louisiana

27-1560715

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

7244 Perkins Road, Baton Rouge, Louisiana 70808

(Address of principal executive offices, including zip code)

(225) 227-2222

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x   No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

¨

Accelerated filer

x

 

 

 

 

Non-accelerated filer

o (Do not check if a smaller reporting company)

Smaller reporting company

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, is as follows: Common stock, $1.00 par value, 7,295,195 shares outstanding as of May 5, 2016.

 

 

 

 

 


TABLE OF CONTENTS

 

Special Note Regarding Forward-Looking Statements

3

 

 

 

 

Part I. Financial Information

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

4

 

 

Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015

4

 

 

Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015

5

 

 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015

6

 

 

Consolidated Statements of Changes in Stockholders’ Equity

7

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015

8

 

 

Notes to the Consolidated Financial Statements

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

44

Item 4.

 

Controls and Procedures

44

 

 

 

 

Part II. Other Information

45

 

 

 

 

Item 1A.

 

Risk Factors

45

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

45

Item 6.

 

Exhibits

46

Signatures

47

Exhibit Index

48

 

 

 

2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

When included in this Quarterly Report on Form 10-Q, or in other documents that Investar Holding Corporation (the “Company”) files with the Securities and Exchange Commission (“SEC”) or in statements made by or on behalf of the Company, words like “may,” “should,” “could,” “predict,” “potential,” “believe,” “think,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” “outlook” and similar expressions or the negative version of those words are intended to identify forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a variety of risks and uncertainties that could cause actual results to differ materially from those described therein. The Company’s forward-looking statements are based on assumptions and estimates that management believes to be reasonable in light of the information available at the time such statements are made. However, many of the matters addressed by these statements are inherently uncertain and could be affected by many factors beyond management’s control. 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.

 

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 Item 7. “Special Note Regarding Forward-Looking Statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking to update our forward-looking statements, and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law.

 

 

 

3


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

 

 

March 31, 2016

 

 

December 31, 2015

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and due from banks

$

8,808

 

 

$

6,313

 

Interest-bearing balances due from other banks

 

12,465

 

 

 

14,472

 

Federal funds sold

 

51

 

 

 

181

 

Cash and cash equivalents

 

21,324

 

 

 

20,966

 

 

 

 

 

 

 

 

 

Available for sale securities at fair value (amortized cost

   of $127,737 and $113,828, respectively)

 

128,570

 

 

 

113,371

 

Held to maturity securities at amortized cost (estimated

   fair value of $26,348 and $26,271, respectively)

 

26,249

 

 

 

26,408

 

Loans held for sale

 

50,921

 

 

 

80,509

 

Loans, net of allowance for loan losses of $6,463 and

   $6,128, respectively

 

791,159

 

 

 

739,313

 

Other equity securities

 

7,183

 

 

 

5,835

 

Bank premises and equipment, net of accumulated

   depreciation of $5,727 and $5,368, respectively

 

30,759

 

 

 

30,630

 

Other real estate owned, net

 

695

 

 

 

725

 

Accrued interest receivable

 

2,978

 

 

 

2,831

 

Deferred tax asset

 

1,934

 

 

 

1,915

 

Goodwill and other intangible assets, net

 

3,265

 

 

 

3,175

 

Other assets

 

8,492

 

 

 

5,877

 

Total assets

$

1,073,529

 

 

$

1,031,555

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Noninterest-bearing

$

95,033

 

 

$

90,447

 

Interest-bearing

 

713,665

 

 

 

646,959

 

Total deposits

 

808,698

 

 

 

737,406

 

Advances from Federal Home Loan Bank

 

103,960

 

 

 

127,497

 

Repurchase agreements

 

29,678

 

 

 

39,099

 

Junior subordinated debt

 

3,609

 

 

 

3,609

 

Accrued taxes and other liabilities

 

16,097

 

 

 

14,594

 

Total liabilities

 

962,042

 

 

 

922,205

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Preferred stock, $1.00 par value per share; 5,000,000 shares

   authorized

 

-

 

 

 

-

 

Common stock, $1.00 par value per share; 40,000,000 shares

   authorized; 7,358,231 and 7,305,213 shares issued, and

   7,296,429 and 7,264,282 shares outstanding, respectively

 

7,358

 

 

 

7,305

 

Treasury stock

 

(952

)

 

 

(634

)

Surplus

 

84,780

 

 

 

84,692

 

Retained earnings

 

20,575

 

 

 

18,650

 

Accumulated other comprehensive loss

 

(274

)

 

 

(663

)

Total stockholders’ equity

 

111,487

 

 

 

109,350

 

   Total liabilities and stockholders’ equity

$

1,073,529

 

 

$

1,031,555

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

4


INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share data)

(Unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

9,485

 

 

$

8,298

 

Interest on investment securities

 

 

856

 

 

 

485

 

Other interest income

 

 

37

 

 

 

17

 

Total interest income

 

 

10,378

 

 

 

8,800

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

Interest on deposits

 

 

1,515

 

 

 

1,192

 

Interest on borrowings

 

 

316

 

 

 

109

 

Total interest expense

 

 

1,831

 

 

 

1,301

 

Net interest income

 

 

8,547

 

 

 

7,499

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

454

 

 

 

700

 

Net interest income after provision for loan losses

 

 

8,093

 

 

 

6,799

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

97

 

 

 

94

 

Gain on sale of investment securities, net

 

 

80

 

 

 

-

 

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

 

 

1

 

 

 

(1

)

Gain on sale of loans, net

 

 

313

 

 

 

1,731

 

Fee income on loans held for sale, net

 

 

123

 

 

 

300

 

Other operating income

 

 

673

 

 

 

416

 

Total noninterest income

 

 

1,287

 

 

 

2,540

 

Income before noninterest expense

 

 

9,380

 

 

 

9,339

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

370

 

 

 

357

 

Salaries and employee benefits

 

 

3,873

 

 

 

3,908

 

Occupancy

 

 

236

 

 

 

213

 

Data processing

 

 

374

 

 

 

340

 

Marketing

 

 

112

 

 

 

58

 

Professional fees

 

 

279

 

 

 

262

 

Other operating expenses

 

 

1,140

 

 

 

1,286

 

Total noninterest expense

 

 

6,384

 

 

 

6,424

 

Income before income tax expense

 

 

2,996

 

 

 

2,915

 

Income tax expense

 

 

1,006

 

 

 

965

 

Net income

 

$

1,990

 

 

$

1,950

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.28

 

 

$

0.27

 

Diluted earnings per share

 

$

0.28

 

 

$

0.27

 

Cash dividends declared per common share

 

$

0.01

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

5


INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,990

 

 

$

1,950

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investment securities:

 

 

 

 

 

 

 

 

Unrealized gain, available for sale, net of tax

     expense of $480, and $143, respectively

 

 

891

 

 

 

278

 

Reclassification of realized gain, net of tax benefit of

     $28 and $0, respectively

 

 

(52

)

 

 

-

 

Unrealized loss, transfer from available for sale to held to maturity,

     net of tax benefit of $0 and $0, respectively

 

 

(1

)

 

 

(1

)

Fair value of derivative financial instruments:

 

 

 

 

 

 

 

 

Change in fair value of interest rate swap designated as a cash flow

      hedge, net of tax benefit of $242 and $126, respectively

 

 

(449

)

 

 

(245

)

Total other comprehensive income

 

 

389

 

 

 

32

 

Total comprehensive income

 

$

2,379

 

 

$

1,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

6


INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

Common

 

 

Treasury

 

 

 

 

 

 

Retained

 

 

Comprehensive

 

 

Stockholders

 

 

Stock

 

 

Stock

 

 

Surplus

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

Balance, December 31, 2014

$

7,264

 

 

$

(23

)

 

$

84,213

 

 

$

11,809

 

 

$

121

 

 

$

103,384

 

Surrendered shares

 

-

 

 

 

(39

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(39

)

Shares repurchased

 

-

 

 

 

(572

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(572

)

Options exercised

 

10

 

 

 

-

 

 

 

125

 

 

 

-

 

 

 

-

 

 

 

135

 

Dividends declared, $0.03 per share

 

-

 

 

 

-

 

 

 

-

 

 

 

(232

)

 

 

-

 

 

 

(232

)

Stock-based compensation

 

31

 

 

 

-

 

 

 

354

 

 

 

-

 

 

 

-

 

 

 

385

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

7,073

 

 

 

-

 

 

 

7,073

 

Other comprehensive loss, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(784

)

 

 

(784

)

Balance, December 31, 2015

$

7,305

 

 

$

(634

)

 

$

84,692

 

 

$

18,650

 

 

$

(663

)

 

$

109,350

 

Surrendered shares

 

-

 

 

 

(3

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3

)

Shares repurchased

 

-

 

 

 

(315

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(315

)

Dividends declared, $0.01 per share

 

-

 

 

 

-

 

 

 

-

 

 

 

(65

)

 

 

-

 

 

 

(65

)

Stock-based compensation

 

53

 

 

 

-

 

 

 

88

 

 

 

-

 

 

 

-

 

 

 

141

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

1,990

 

 

 

-

 

 

 

1,990

 

Other comprehensive income, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

389

 

 

 

389

 

Balance, March 31, 2016 (Unaudited)

$

7,358

 

 

$

(952

)

 

$

84,780

 

 

$

20,575

 

 

$

(274

)

 

$

111,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

7


 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited) 

 

 

 

For the three months ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

1,990

 

 

$

1,950

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

370

 

 

 

357

 

Provision for loan losses

 

 

454

 

 

 

700

 

Amortization of purchase accounting adjustments

 

 

(17

)

 

 

(70

)

Provision for other real estate owned

 

 

-

 

 

 

12

 

Net amortization of securities

 

 

230

 

 

 

251

 

Gain on sale of securities, net

 

 

(80

)

 

 

-

 

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

 

 

(1

)

 

 

1

 

FHLB stock dividend

 

 

(11

)

 

 

(3

)

Stock-based compensation

 

 

141

 

 

 

77

 

Deferred taxes

 

 

(228

)

 

 

646

 

Increase in cash surrender value of bank owned life insurance

 

 

(42

)

 

 

-

 

Other

 

 

-

 

 

 

11

 

Loans held for sale:

 

 

 

 

 

 

 

 

Originations

 

 

(495

)

 

 

(102,886

)

Proceeds from sales

 

 

23,837

 

 

 

143,699

 

Gain on sale of loans

 

 

(313

)

 

 

(1,731

)

Net change in:

 

 

 

 

 

 

 

 

Accrued interest receivable

 

 

(148

)

 

 

119

 

Other assets

 

 

927

 

 

 

152

 

Accrued taxes and other liabilities

 

 

807

 

 

 

4,082

 

Net cash provided by operating activities

 

 

27,421

 

 

 

47,367

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from sales of investment securities available for sale

 

 

3,440

 

 

 

-

 

Funds invested in securities available for sale

 

 

(19,594

)

 

 

(8,616

)

Proceeds from maturities, prepayments and calls of investment securities available for sale

 

 

2,111

 

 

 

2,462

 

Proceeds from maturities, prepayments and calls of investment securities held to maturity

 

 

143

 

 

 

143

 

Proceeds from redemption of other equity securities

 

 

-

 

 

 

5,356

 

Purchase of other equity securities

 

 

(1,338

)

 

 

(1,625

)

Net increase in loans

 

 

(45,779

)

 

 

(23,819

)

Proceeds from sales of other real estate owned

 

 

62

 

 

 

417

 

Purchases of bank premises and equipment

 

 

(489

)

 

 

(945

)

Acquisition of trademark intangible

 

 

(100

)

 

 

-

 

Purchase of bank owned life insurance

 

 

(3,500

)

 

 

-

 

Net cash used in investing activities

 

 

(65,044

)

 

 

(26,627

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net increase in customer deposits

 

 

71,317

 

 

 

70,800

 

Net (decrease) increase in repurchase agreements

 

 

(9,422

)

 

 

585

 

Net decrease in short-term FHLB advances

 

 

(21,903

)

 

 

(90,639

)

Proceeds from long-term FHLB advances

 

 

-

 

 

 

500

 

Repayment of long-term FHLB advances

 

 

(1,633

)

 

 

(781

)

Cash dividends paid on common stock

 

 

(63

)

 

 

(51

)

Payments to repurchase common stock

 

 

(315

)

 

 

-

 

Net cash provided by (used in) financing activities

 

 

37,981

 

 

 

(19,586

)

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

358

 

 

 

1,154

 

Cash and cash equivalents, beginning of period

 

 

20,966

 

 

 

19,512

 

Cash and cash equivalents, end of period

 

$

21,324

 

 

$

20,666

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

8


INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of Investar Holding Corporation (the “Company”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three month period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2015, including the notes thereto, which were included as part of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 11, 2016.

Nature of Operations

Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank (the “Bank”), a Louisiana-chartered bank. The Company’s primary market is South Louisiana. The Company currently operates 11 full service banking offices located throughout its market and had 154 employees at March 31, 2016.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for loan losses may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Other estimates that are susceptible to significant change in the near term relate to the determination of other-than-temporary impairments of securities and the fair value of financial instruments.

Reclassifications

Certain reclassifications have been made to the 2015 financial statements to be consistent with the 2016 presentation.

Concentrations of Credit Risk

The Company’s loan portfolio consists of the various types of loans described in Note 4, Loans. Real estate or other assets secure most loans. The majority of loans have been made to individuals and businesses in the Company’s market of South Louisiana. Customers are dependent on the condition of the local economy for their livelihoods and servicing their loan obligations. The Company does not have any significant concentrations in any one industry or individual customer.

 

9


INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Recent Accounting Pronouncements

 

FASB ASC Topic 718 “Compensation – Stock Compensation” Update No. 2016-09.  The Financial Accounting and Standards Board (the “FASB”) issued Update No. 2016-09 in March 2016 as part of its simplification initiative. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in the Update are effective for the Company beginning January 1, 2017. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position.

 

FASB ASC Topic 323 “Investments – Equity Method and Joint Ventures” Update No. 2016-07.  The FASB issued Update No. 2016-07 in March 2016 as part of its simplification initiative. The amendments in the Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. In addition, the amendments in this Update require that an entity that has an equity security classified as available for sale that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments in the Update are effective for the Company beginning January 1, 2017. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position.

 

FASB ASC Topic 825 “Financial Instruments - Overall” Update No. 2016-01.  The FASB issued Update No. 2016-01 in January 2016 to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The main provisions require investments in equity securities to be measured at fair value through net income, unless they qualify for a practicability exception, and require fair value changes arising from changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option to be recognized in other comprehensive income. The amendments in the Update are effective for the Company beginning January 1, 2018. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position.

 

 

NOTE 2. EARNINGS PER SHARE

The following is a summary of the information used in the computation of basic and diluted earnings per common share for the three months ended March 31, 2016 and 2015 (in thousands, except share data).

 

 

Three months ended

March 31,

 

 

2016

 

 

2015

 

 

 

 

Net income available to common shareholders

$

1,990

 

 

$

1,950

 

Weighted average number of common shares outstanding

   used in computation of basic earnings per common share

 

7,194,558

 

 

 

7,219,235

 

Effect of dilutive securities:

 

 

 

 

 

 

 

Restricted stock

 

15,353

 

 

 

12,738

 

Stock options

 

14,854

 

 

 

9,961

 

Stock warrants

 

11,267

 

 

 

8,921

 

Weighted average number of common shares outstanding

   plus effect of dilutive securities used in computation

   of diluted earnings per common share

 

7,236,032

 

 

 

7,250,855

 

Basic earnings per share

$

0.28

 

 

$

0.27

 

Diluted earnings per share

$

0.28

 

 

$

0.27

 

 

 

10


INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3. INVESTMENT SECURITIES

The amortized cost and approximate fair value of investment securities classified as available for sale are summarized below as of the dates presented (dollars in thousands).

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

March 31, 2016

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Obligations of other U.S. government agencies and corporations

 

$

31,153

 

 

$

412

 

 

$

(9

)

 

$

31,556

 

Obligations of state and political subdivisions

 

 

20,294

 

 

 

292

 

 

 

(14

)

 

 

20,572

 

Corporate bonds

 

 

15,062

 

 

 

59

 

 

 

(295

)

 

 

14,826

 

Residential mortgage-backed securities

 

 

58,729

 

 

 

553

 

 

 

(49

)

 

 

59,233

 

Commercial mortgage-backed securities

 

 

1,261

 

 

 

19

 

 

 

-

 

 

 

1,280

 

Equity securities

 

 

1,238

 

 

 

1

 

 

 

(136

)

 

 

1,103

 

Total

 

$

127,737

 

 

$

1,336

 

 

$

(503

)

 

$

128,570

 

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

December 31, 2015

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Obligations of other U.S. government agencies and corporations

 

$

26,502

 

 

$

73

 

 

$

(102

)

 

$

26,473

 

Obligations of state and political subdivisions

 

 

21,365

 

 

 

125

 

 

 

(23

)

 

 

21,467

 

Corporate bonds

 

 

15,069

 

 

 

1

 

 

 

(246

)

 

 

14,824

 

Residential mortgage-backed securities

 

 

47,703

 

 

 

72

 

 

 

(249

)

 

 

47,526

 

Commercial mortgage-backed securities

 

 

2,005

 

 

 

-

 

 

 

(16

)

 

 

1,989

 

Equity securities

 

 

1,184

 

 

 

8

 

 

 

(100

)

 

 

1,092

 

Total

 

$

113,828

 

 

$

279

 

 

$

(736

)

 

$

113,371

 

 

The amortized cost and approximate fair value of investment securities classified as held to maturity are summarized below as of the dates presented (dollars in thousands).

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

March 31, 2016

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Obligations of other U.S. government agencies and corporations

 

$

3,989

 

 

$

7

 

 

$

-