Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________

FORM 8-K
___________________
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): April 25, 2018




Investar Holding Corporation
(Exact name of registrant as specified in its charter)


 
Louisiana
001-36522
27-1560715
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
 
7244 Perkins Road
Baton Rouge, Louisiana 70808
 
 
(Address of principal executive offices) (Zip Code)
 
 
Registrant’s telephone number, including area code: (225) 227-2222


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ





Item 2.02
Results of Operations and Financial Condition.
On April 25, 2018, Investar Holding Corporation issued a press release announcing its financial results for the quarter ended March 31, 2018. A copy of the press release is furnished as exhibit 99.1 to this Current Report on Form 8-K.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such a filing.
 
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits

Exhibit Number
 
Description of Exhibit
 
 
 
 









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
INVESTAR HOLDING CORPORATION
 
 
 
 
Date: April 26, 2018
 
 
 
By:
 
/s/ John J. D’Angelo
 
 
 
 
 
 
John J. D’Angelo
 
 
 
 
 
 
President and Chief Executive Officer




Exhibit
Exhibit 99.1
For Immediate Release

Investar Holding Corporation Announces 2018 First Quarter Results

BATON ROUGE, LA (April 25, 2018) – Investar Holding Corporation (NASDAQ: ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended March 31, 2018. The Company reported net income of $2.4 million, or $0.25 per diluted common share, for the first quarter of 2018, compared to $2.3 million, or $0.25 per diluted common share, for the quarter ended December 31, 2017, and $1.9 million, or $0.26 per diluted common share, for the quarter ended March 31, 2017. The first quarter of 2018 includes acquisition expense of $1.1 million ($0.09 per share after-tax impact) and a $0.6 million ($0.07 per share impact) charge to income tax expense as a result of the Tax Cuts and Jobs Act. The fourth quarter of 2017 includes acquisition expense of $0.8 million ($0.06 per share after-tax impact) and a $0.3 million ($0.03 per share impact) charge to income tax expense as a result of the Tax Cuts and Jobs Act.

On a non-GAAP basis, core earnings per diluted common share in the first quarter of 2018 were $0.40 compared to $0.34 for the fourth quarter of 2017 (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:
“I am pleased to announce another successful quarter for Investar. Following the acquisition of BOJ Bancshares, Inc. and its wholly-owned subsidiary, The Highlands Bank, on December 1, 2017, our operating teams successfully completed the integration of The Highlands Bank in February 2018, while continuing to provide outstanding customer service. This is the first quarter of operations following the BOJ acquisition and, despite the acquisition-related costs recognized, our financial results reflect the positive effect of the acquisition on our balance sheet and income statement. We look forward to realizing additional benefits from the acquisition going into the next quarter.
As we look to 2018, we believe our company is solidly positioned to grow the franchise and increase shareholder value. We continue to focus on quality loans and deposits while controlling noninterest expense and maintaining our focus on improving our return on assets and efficiency ratios.”
First Quarter Highlights
Total revenues, or interest and noninterest income, for the quarter ended March 31, 2018 totaled $18.2 million, an increase of $1.3 million, or 7.8%, compared to December 31, 2017, and an increase of $6.3 million, or 52.4%, compared to March 31, 2017.
Total loans increased $14.2 million, or 1.1%, to $1.27 billion at March 31, 2018, compared to $1.26 billion at December 31, 2017, and increased $370.8 million, or 41.1%, compared to $902.1 million at March 31, 2017.
Noninterest-bearing deposits increased $5.3 million, or 2.4%, to $221.9 million at March 31, 2018, compared to $216.6 million at December 31, 2017, and increased $109.4 million, or 97.2%, compared to $112.5 million at March 31, 2017.
Net interest margin increased fifteen basis points to 3.70% for the quarter ended March 31, 2018, compared to 3.55% for the quarter ended December 31, 2017, and increased forty-three basis points from 3.27% for the quarter ended March 31, 2017.
Cost of deposits decreased one basis point to 0.91% for the quarter ended March 31, 2018, compared to 0.92% for the quarter ended December 31, 2017, and decreased six basis points compared to 0.97% for the quarter ended March 31, 2017.
The Company completed the conversion of branch and operating systems associated with the BOJ Bancshares, Inc. acquisition during the quarter.
The Company repurchased 27,933 shares of its common stock through its stock repurchase program at an average price of $24.11 during the quarter ended March 31, 2018.






Loans
Total loans were $1.3 billion at March 31, 2018, an increase of $14.2 million, or 1.1%, compared to December 31, 2017, and an increase of $370.8 million, or 41.1%, compared to March 31, 2017.
The following table sets forth the composition of the Company’s loan portfolio as of the dates indicated (dollars in thousands).
 
 
 
 
 
 
 
 
Linked Quarter Change
 
Year/Year Change
 
Percentage of Total Loans
 
 
3/31/2018
 
12/31/2017
 
3/31/2017
 
$
 
%
 
$
 
%
 
3/31/2018
 
3/31/2017
Mortgage loans on real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and development
 
$
162,337

 
$
157,667

 
$
95,541

 
$
4,670

 
3.0
 %
 
$
66,796

 
69.9
 %
 
12.8
%
 
10.6
%
1-4 Family
 
277,978

 
276,922

 
172,148

 
1,056

 
0.4

 
105,830

 
61.5

 
21.8

 
19.1

Multifamily
 
54,504

 
51,283

 
47,776

 
3,221

 
6.3

 
6,728

 
14.1

 
4.3

 
5.3

Farmland
 
20,725

 
23,838

 
7,994

 
(3,113
)
 
(13.1
)
 
12,731

 
159.3

 
1.6

 
0.9

Commercial real estate
 

 

 

 

 

 

 

 

 

Owner-occupied
 
274,216

 
272,433

 
181,590

 
1,783

 
0.7

 
92,626

 
51.0

 
21.5

 
20.1

Nonowner-occupied
 
279,939

 
264,931

 
210,874

 
15,008

 
5.7

 
69,065

 
32.8

 
22.0

 
23.4

Commercial and industrial
 
135,965

 
135,392

 
90,352

 
573

 
0.4

 
45,613

 
50.5

 
10.7

 
10.0

Consumer
 
67,286

 
76,313

 
95,873

 
(9,027
)
 
(11.8
)
 
(28,587
)
 
(29.8
)
 
5.3

 
10.6

Total loans
 
1,272,950

 
1,258,779

 
902,148

 
14,171

 
1.1
 %
 
370,802

 
41.1
 %
 
100
%
 
100
%
Construction and development loans were $162.3 million at March 31, 2018, an increase of $4.7 million, or 3.0%, compared to $157.7 million at December 31, 2017, and an increase of $66.8 million, or 69.9%, compared to $95.5 million at March 31, 2017. The increase in the construction and development portfolio at March 31, 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 March 31, 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 $410.2 million, an increase of $2.4 million, or 0.6%, compared to the business lending portfolio of $407.8 million at December 31, 2017, and an increase of $138.2 million, or 50.8%, compared to the business lending portfolio of $271.9 million at March 31, 2017. The Company continues to focus on relationship banking and growing its commercial loan portfolio.
Consumer loans, including indirect auto loans of $48.8 million, totaled $67.3 million at March 31, 2018, a decrease of $9.0 million, or 11.8%, compared to $76.3 million, including indirect auto loans of $55.9 million, at December 31, 2017, and a decrease of $28.6 million, or 29.8%, compared to $95.9 million, including indirect auto loans of $80.9 million, at March 31, 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 $5.5 million, or 0.44% of total loans, at March 31, 2018, an increase of $1.8 million compared to $3.7 million, or 0.29% of total loans, at December 31, 2017, and an increase of $3.4 million compared to $2.1 million, or 0.24% of total loans, at March 31, 2017. Included in nonperforming loans are loans acquired in 2017 with a balance of $3.0 million at March 31, 2018, which is the primary reason for the increase in nonperforming loans.
The allowance for loan losses was $8.1 million, or 146.78% and 0.64% of nonperforming and total loans, respectively, at March 31, 2018, compared to $7.9 million, or 214.43% and 0.63%, respectively, at December 31, 2017, and $7.2 million, or 337.95% and 0.80%, respectively, at March 31, 2017. As a result of the acquisitions of BOJ Bancshares, Inc. (“BOJ”) and Citizens Bancshares, Inc. (“Citizens”), 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 quarter ended March 31, 2018 and $0.4 million for the quarters ended December 31, 2017 and March 31, 2017.



Deposits
Total deposits at March 31, 2018 were $1.2 billion, an increase of $1.4 million, or 0.1%, compared to December 31, 2017, and an increase of $358.1 million, or 41.2%, compared to March 31, 2017. The Company acquired approximately $125.8 million and $212.2 million in deposits from the BOJ and Citizens acquisitions, respectively at the time of acquisition.

The following table sets forth the composition of the Company’s deposits as of the dates indicated (dollars in thousands).
 
 
 
 
 
 
 
 
Linked Quarter Change
 
Year/Year Change
 
Percentage of
Total Deposits
 
 
3/31/2018
 
12/31/2017
 
3/31/2017
 
$
 
%
 
$
 
%
 
3/31/2018
 
3/31/2017
Noninterest-bearing demand deposits
 
$
221,855

 
$
216,599

 
$
112,514

 
$
5,256

 
2.4
 %
 
$
109,341

 
97.2
%
 
18.1
%
 
13.0
%
NOW accounts
 
228,269

 
208,683

 
168,860

 
19,586

 
9.4

 
59,409

 
35.2

 
18.6

 
19.4

Money market deposit accounts
 
145,627

 
146,140

 
124,604

 
(513
)
 
(0.4
)
 
21,023

 
16.9

 
11.9

 
14.3

Savings accounts
 
124,589

 
117,372

 
52,682

 
7,217

 
6.1

 
71,907

 
136.5

 
10.1

 
6.1

Time deposits
 
506,332

 
536,443

 
409,894

 
(30,111
)
 
(5.6
)
 
96,438

 
23.5

 
41.3

 
47.2

Total deposits
 
$
1,226,672

 
$
1,225,237

 
$
868,554

 
$
1,435

 
0.1
 %
 
$
358,118

 
41.2
%
 
100.0
%
 
100.0
%
Net Interest Income
Net interest income for the first quarter of 2018 totaled $13.9 million, an increase of $1.0 million, or 8.1%, compared to the fourth quarter of 2017, and an increase of $5.0 million, or 56.4%, compared to the first quarter of 2017. Included in net interest income for the quarters ended March 31, 2018 and December 31, 2017 is $0.7 million and $0.2 million, respectively, of interest income accretion from the acquisition of 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 earning assets with increased deposits and borrowings. Net interest income for the first quarter of 2018 increased $4.4 million and $1.7 million due to increases in the volume and yield, respectively, of interest-earning assets, offset slightly by decreases of $0.8 million and $0.3 million due to the increases in the volume and rate, respectively, of interest-bearing liabilities compared to the first quarter of 2017.
The Company’s net interest margin was 3.70% for the quarter ended March 31, 2018 compared to 3.55% for the quarter ended December 31, 2017 and 3.27% for the quarter ended March 31, 2017. The yield on interest-earning assets was 4.59% for the quarter ended March 31, 2018 compared to 4.42% for the quarter ended December 31, 2017 and 4.10% for the quarter ended March 31, 2017. The increase in net interest margin at March 31, 2018 compared to both December 31, 2017 and March 31, 2017 was driven by an increase in interest-earning assets and the yields earned on those assets, and an increase in the volume of lower cost deposits, partially resulting from the acquisitions of both BOJ and Citizens.
Exclusive of the interest income accretion from the acquisition of loans, discussed above, as well as a $40,000 interest recovery in the quarter ended December 31, 2017, net interest margin was 3.52% for the quarter ended March 31, 2018 compared to 3.48% for the quarter ended December 31, 2017 and 3.25% for the quarter ended March 31, 2017. The yield on interest-earning assets was 4.41% at March 31, 2018 compared to 4.35% and 4.07% for the quarters ended December 31, 2017 and March 31, 2017, respectively.
The cost of deposits decreased one basis point to 0.91% for the quarter ended March 31, 2018 compared to 0.92% for the quarter ended December 31, 2017 and decreased six basis points compared to 0.97% at March 31, 2017. The decrease in the cost of deposits when compared to the quarter ended March 31, 2017 is a result of a decrease in the cost of interest-bearing demand and savings deposits. The overall costs of funds for the quarter ended March 31, 2018 increased three basis points to 1.10% compared to 1.07% for the quarter ended December 31, 2017 and increased twelve basis points compared to 0.98% for the quarter ended March 31, 2017. The increase in the cost of funds at March 31, 2018 compared to December 31, 2017 and March 31, 2017 is mainly a result of an increase in the cost of borrowed funds used to finance loan and investment activity. The increase in the cost of funds at March 31, 2018 compared to March 31, 2017 is mainly attributable to the increase in long term borrowings resulting from the Company’s issuance and sale, on March 24, 2017, of $18.6 million in aggregate principal amount of its 6.00% Fixed-to-Floating Rate Subordinated Notes due in 2027.



Noninterest Income
Noninterest income for the first quarter of 2018 totaled $1.1 million, an increase of $0.1 million, or 11.4%, compared to the fourth quarter of 2017, and an increase of $0.2 million, or 21.1%, compared to the first quarter of 2017. The increase in noninterest income compared to the quarter ended December 31, 2017 is due to increases in service charges on deposit accounts and gain on sale of fixed assets. The increase in noninterest income compared to the quarter ended March 31, 2017 is mainly attributable to increased service charges on deposit accounts.
Noninterest Expense
Noninterest expense for the first quarter of 2018 totaled $10.6 million, an increase of $0.9 million, or 9.3%, compared to the fourth quarter of 2017, and an increase of $3.9 million, or 58.0%, compared to the first quarter of 2017. The increase in noninterest expense compared to the quarters ended December 31, 2017 and March 31, 2017 is mainly attributable to the increases in both salaries and employee benefits and acquisition expense. The increase in salaries and employee benefits is mainly a result of the increase in employees following the BOJ and Citizens acquisitions, as well as the addition of four commercial lenders in the Baton Rouge, New Orleans and Lafayette markets, a Community Development Officer and Treasury Management Sales Officer in the New Orleans market, and a C&I Banking President, all occurring since the quarter ended March 31, 2017. The increase in acquisition expense is a result of the BOJ acquisition that was completed on December 1, 2017 and the operational conversion which was completed in the first quarter of 2018.
Taxes
The Company recorded income tax expense of $1.3 million for the quarter ended March 31, 2018, which equates to an effective tax rate of 35.8%, a decrease from the effective tax rate of 39.5% for the quarter ended December 31, 2017 and an increase from the effective tax rate of 31.2% for the quarter ended March 31, 2017. The income tax expense for the quarters ended March 31, 2018 and December 31, 2017 include charges of $0.6 million and $0.3 million, respectively, 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. The Company’s final analysis and write-down will be based on a number of factors, including completion of the Company’s 2017 consolidated tax return. 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 $0.25 for the quarters ended March 31, 2018 and December 31, 2017, a decrease of $0.01 compared to basic and diluted earnings per common share of $0.26 for the quarter ended March 31, 2017. The decrease in both basic and diluted earnings per share is attributable to the Company’s issuance of approximately 1.6 million common shares as part of a public offering on March 22, 2017, the issuance of approximately 0.8 million common shares as consideration in the acquisition of BOJ, the $1.1 million and $0.8 million in acquisition expense for the quarters ended March 31, 2018 and December 31, 2017, respectively, and the $0.6 million and $0.3 million charges to income tax expense as a result of the Tax Cuts and Jobs Act recognized during the quarters ended March 31, 2018 and December 31, 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 March 31, 2018, the Company had 251 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 statement 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

 
3/31/2018
 
12/31/2017
 
3/31/2017
 
Linked Quarter
 
Year/Year
EARNINGS DATA
 
 
 
 
 
 
 
 
 
 
Total interest income
 
$
17,178

 
$
15,967

 
$
11,093

 
7.6
 %
 
54.9
 %
Total interest expense
 
3,320

 
3,150

 
2,233

 
5.4

 
48.7

Net interest income
 
13,858

 
12,817

 
8,860

 
8.1

 
56.4

Provision for loan losses
 
625

 
395

 
350

 
58.2

 
78.6

Total noninterest income
 
1,072

 
962

 
885

 
11.4

 
21.1

Total noninterest expense
 
10,562

 
9,608

 
6,684

 
9.9

 
58.0

Income before income taxes
 
3,743

 
3,776

 
2,711

 
(0.9
)
 
38.1

Income tax expense
 
1,341

 
1,492

 
847

 
(10.1
)
 
58.3

Net income
 
$
2,402

 
$
2,284

 
$
1,864

 
5.2

 
28.9

 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,629,277

 
$
1,534,917

 
$
1,157,654

 
6.1
 %
 
40.7
 %
Total interest-earning assets
 
1,518,425

 
1,434,164

 
1,097,816

 
5.9

 
38.3

Total loans
 
1,261,047

 
1,169,686

 
892,546

 
7.8

 
41.3

Total interest-bearing deposits
 
1,002,655

 
957,847

 
778,262

 
4.7

 
28.8

Total interest-bearing liabilities
 
1,228,942

 
1,171,884

 
920,360

 
4.9

 
33.5

Total deposits
 
1,219,482

 
1,147,782

 
888,672

 
6.2

 
37.2

Total stockholders’ equity
 
173,467

 
160,485

 
117,497

 
8.1

 
47.6

 
 
 
 
 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.25

 
$
0.25

 
$
0.26

 
 %
 
(3.8
)%
Diluted earnings per share
 
0.25

 
0.25

 
0.26

 

 
(3.8
)
Core Earnings(1):
 
 
 
 
 
 
 
 
 
 
Core basic earnings per share(1)
 
0.40

 
0.35

 
0.27

 
14.3

 
48.1

Core diluted earnings per share(1)
 
0.40

 
0.34

 
0.27

 
17.6

 
48.1

Book value per share
 
18.22

 
18.15

 
16.85

 
0.4

 
8.1

Tangible book value per share(1)
 
16.11

 
16.06

 
16.48

 
0.3

 
(2.2
)
Common shares outstanding
 
9,517,328

 
9,514,926

 
8,805,810

 

 
8.1

Weighted average common shares outstanding - basic
 
9,513,332

 
8,981,014

 
7,205,942

 
5.9

 
32.0

Weighted average common shares outstanding - diluted
 
9,609,603

 
9,052,213

 
7,276,869

 
6.2

 
32.1

 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.60
%
 
0.59
%
 
0.65
%
 
1.7
 %
 
(7.7
)%
Core return on average assets(1)
 
0.95

 
0.81

 
0.68

 
17.3

 
39.7

Return on average equity
 
5.62

 
5.65

 
6.44

 
(0.5
)
 
(12.7
)
Core return on average equity(1)
 
8.90

 
7.77

 
6.66

 
14.5

 
33.6

Net interest margin
 
3.70

 
3.55

 
3.27

 
4.2

 
13.1

Net interest income to average assets
 
3.45

 
3.31

 
3.10

 
4.2

 
11.3

Noninterest expense to average assets
 
2.63

 
2.48

 
2.34

 
6.0

 
12.4

Efficiency ratio(2)
 
70.74

 
69.73

 
68.59

 
1.4

 
3.1

Core efficiency ratio(1)
 
63.73

 
63.73

 
67.18

 

 
(5.1
)
Dividend payout ratio
 
13.86

 
12.38

 
7.73

 
12.0

 
79.3

Net charge-offs to average loans
 
0.03

 
0.01

 
0.02

 
200.0

 
50.0


 

 

 

 

 

(1) Non-GAAP financial measure. See reconciliation.
(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income.




INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
As of and for the three months ended
 
 
3/31/2018
 
12/31/2017
 
3/31/2017
 
Linked Quarter
 
Year/Year
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
 
0.60
%
 
0.46
%
 
0.53
%
 
30.4
 %
 
13.2
 %
Nonperforming loans to total loans
 
0.44

 
0.29

 
0.24

 
51.7

 
83.3

Allowance for loan losses to total loans
 
0.64

 
0.63

 
0.80

 
1.6

 
(20.0
)
Allowance for loan losses to nonperforming loans
 
146.78

 
214.43

 
337.95

 
(31.5
)
 
(56.6
)
 
 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
Investar Holding Corporation:
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
 
10.55
%
 
10.64
%
 
12.62
%
 
(0.8
)%
 
(16.4
)%
Tangible equity to tangible assets(1)
 
9.44

 
9.53

 
12.38

 
(0.9
)
 
(23.7
)
Tier 1 leverage ratio
 
10.11

 
10.66

 
12.97

 
(5.2
)
 
(22.1
)
Common equity tier 1 capital ratio(2)
 
11.90

 
11.75

 
14.84

 
1.3

 
(19.8
)
Tier 1 capital ratio(2)
 
12.40

 
12.24

 
15.20

 
1.3

 
(18.4
)
Total capital ratio(2)
 
14.40

 
14.22

 
17.77

 
1.3

 
(19.0
)
Investar Bank:
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage ratio
 
11.06

 
11.63

 
14.23

 
(4.9
)
 
(22.3
)
Common equity tier 1 capital ratio(2)
 
13.57

 
13.35

 
16.68

 
1.6

 
(18.6
)
Tier 1 capital ratio(2)
 
13.57

 
13.35

 
16.68

 
1.6

 
(18.6
)
Total capital ratio(2)
 
14.19

 
13.95

 
17.41

 
1.7

 
(18.5
)
 
 
 
 
 
 
 
 
 
 
 
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for March 31, 2018.




INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)

 

 

 


 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
ASSETS
 

 

 

Cash and due from banks
 
$
13,409

 
$
19,619

 
$
8,043

Interest-bearing balances due from other banks
 
7,623

 
10,802

 
18,600

Federal funds sold
 
70

 

 

Cash and cash equivalents
 
21,102

 
30,421

 
26,643


 

 

 

Available for sale securities at fair value (amortized cost of $237,672, $220,077, and $176,363, respectively)
 
232,873

 
217,564

 
174,139

Held to maturity securities at amortized cost (estimated fair value of $17,479, $17,947, and $19,422, respectively)
 
17,727

 
17,997

 
19,648

Loans, net of allowance for loan losses of $8,130, $7,891, and $7,243, respectively
 
1,264,820

 
1,250,888

 
894,905

Other equity securities
 
10,148

 
9,798

 
6,320

Bank premises and equipment, net of accumulated depreciation of $8,300, $7,825, and $7,117, respectively
 
38,091

 
37,540

 
31,434

Other real estate owned, net
 
4,266

 
3,837

 
4,045

Accrued interest receivable
 
4,707

 
4,688

 
3,243

Deferred tax asset
 
1,496

 
1,294

 
2,601

Goodwill and other intangible assets, net
 
20,141

 
19,926

 
3,224

Bank-owned life insurance
 
23,382

 
23,231

 
7,248

Other assets
 
5,435

 
5,550

 
2,385

Total assets
 
$
1,644,188

 
$
1,622,734

 
$
1,175,835


 

 

 

LIABILITIES
 

 

 

Deposits
 

 

 

Noninterest-bearing
 
$
221,855

 
$
216,599

 
$
112,514

Interest-bearing
 
1,004,817

 
1,008,638

 
756,040

Total deposits
 
1,226,672

 
1,225,237

 
868,554

Advances from Federal Home Loan Bank
 
187,066

 
166,658

 
82,413

Repurchase agreements
 
21,053

 
21,935

 
36,361

Subordinated debt
 
18,180

 
18,168

 
18,133

Junior subordinated debt
 
5,806

 
5,792

 
3,609

Other borrowings
 

 

 
78

Accrued taxes and other liabilities
 
11,981

 
12,215

 
18,351

Total liabilities
 
1,470,758

 
1,450,005

 
1,027,499


 

 

 

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; 9,517,328, 9,514,926, and 8,805,810 shares outstanding, respectively
 
9,517

 
9,515

 
8,806

Surplus
 
131,179

 
131,582

 
112,927

Retained earnings
 
35,829

 
33,203

 
27,916

Accumulated other comprehensive loss
 
(3,095
)
 
(1,571
)
 
(1,313
)
Total stockholders’ equity
 
173,430

 
172,729

 
148,336

   Total liabilities and stockholders’ equity
 
$
1,644,188

 
$
1,622,734

 
$
1,175,835





INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)

 
 
 
 
 
 
 
 
For the three months ended
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
INTEREST INCOME
 

 

 

Interest and fees on loans
 
$
15,626

 
$
14,407

 
$
10,004

Interest on investment securities
 
1,459

 
1,428

 
1,029

Other interest income
 
93

 
132

 
60

Total interest income
 
17,178

 
15,967

 
11,093

 
 

 

 

INTEREST EXPENSE
 

 

 

Interest on deposits
 
2,253

 
2,233

 
1,853

Interest on borrowings
 
1,067

 
917

 
380

Total interest expense
 
3,320

 
3,150

 
2,233

Net interest income
 
13,858

 
12,817

 
8,860

 
 

 

 

Provision for loan losses
 
625

 
395

 
350

Net interest income after provision for loan losses
 
13,233

 
12,422

 
8,510

 
 

 

 

NONINTEREST INCOME
 

 

 

Service charges on deposit accounts
 
359

 
293

 
97

Gain on sale of investment securities, net
 

 
50

 
106

Gain (loss) on sale of fixed assets, net
 
90

 
(57
)
 
23

(Loss) gain on sale of other real estate owned, net
 

 
(5
)
 
5

Servicing fees and fee income on serviced loans
 
288

 
329

 
423

Other operating income
 
335

 
352

 
231

Total noninterest income
 
1,072

 
962

 
885

Income before noninterest expense
 
14,305

 
13,384

 
9,395


 

 

 

NONINTEREST EXPENSE
 

 

 

Depreciation and amortization
 
598

 
556

 
376

Salaries and employee benefits
 
6,048

 
5,486

 
3,950

Occupancy
 
380

 
324

 
264

Data processing
 
542

 
521

 
368

Marketing
 
38

 
151

 
28

Professional fees
 
255

 
224

 
232

Acquisition expenses
 
1,104

 
819

 
145

Other operating expenses
 
1,597

 
1,527

 
1,321

Total noninterest expense
 
10,562

 
9,608

 
6,684

Income before income tax expense
 
3,743

 
3,776

 
2,711

Income tax expense
 
1,341

 
1,492

 
847

Net income
 
$
2,402

 
$
2,284

 
$
1,864


 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
Basic earnings per share
 
$
0.25

 
$
0.25

 
$
0.26

Diluted earnings per share
 
$
0.25

 
$
0.25

 
$
0.26

Cash dividends declared per common share
 
$
0.04

 
$
0.03

 
$
0.02






INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 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
 
$
1,261,047

 
$
15,626

 
5.03
%
 
$
1,169,686

 
$
14,407

 
4.89
%
 
$
892,546

 
$
10,004

 
4.55
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
206,722

 
1,253

 
2.46

 
203,011

 
1,221

 
2.39

 
150,139

 
839

 
2.27

Tax-exempt
 
34,688

 
206

 
2.41

 
35,060

 
207

 
2.34

 
30,540

 
190

 
2.52

Interest-bearing balances with banks
 
15,968

 
93

 
2.37

 
26,407

 
132

 
1.98

 
24,591

 
60

 
0.99

Total interest-earning assets
 
1,518,425

 
17,178

 
4.59

 
1,434,164

 
15,967

 
4.42

 
1,097,816

 
11,093

 
4.10

Cash and due from banks
 
25,526

 
 
 
 
 
22,520

 
 
 
 
 
8,546

 
 
 
 
Intangible assets
 
19,881

 
 
 
 
 
15,655

 
 
 
 
 
3,227

 
 
 
 
Other assets
 
73,438

 
 
 
 
 
70,254

 
 
 
 
 
55,190

 
 
 
 
Allowance for loan losses
 
(7,993
)
 
 
 
 
 
(7,676
)
 
 
 
 
 
(7,125
)
 
 
 
 
Total assets
 
$
1,629,277

 
 
 
 
 
$
1,534,917

 
 
 
 
 
$
1,157,654

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 
$
360,903

 
$
580

 
0.65

 
$
348,573

 
$
608

 
0.69

 
$
291,855

 
$
488

 
0.68

Savings deposits
 
120,861

 
137

 
0.46

 
105,896

 
138

 
0.52

 
53,237

 
86

 
0.66

Time deposits
 
520,891

 
1,536

 
1.20

 
503,378

 
1,487

 
1.17

 
433,170

 
1,279

 
1.20

Total interest-bearing deposits
 
1,002,655

 
2,253

 
0.91

 
957,847

 
2,233

 
0.92

 
778,262

 
1,853

 
0.97

Short-term borrowings
 
143,646

 
507

 
1.43

 
135,126

 
430

 
1.26

 
120,923

 
282

 
0.95

Long-term debt
 
82,641

 
560

 
2.75

 
78,911

 
487

 
2.45

 
21,175

 
98

 
1.88

Total interest-bearing liabilities
 
1,228,942

 
3,320

 
1.10

 
1,171,884

 
3,150

 
1.07

 
920,360

 
2,233

 
0.98

Noninterest-bearing deposits
 
216,827

 
 
 
 
 
189,935

 
 
 
 
 
110,410

 
 
 
 
Other liabilities
 
10,041

 
 
 
 
 
12,613

 
 
 
 
 
9,387

 
 
 
 
Stockholders’ equity
 
173,467

 
 
 
 
 
160,485

 
 
 
 
 
117,497

 
 
 
 
Total liability and stockholders’ equity
 
$
1,629,277

 
 
 
 
 
$
1,534,917

 
 
 
 
 
$
1,157,654

 
 
 
 
Net interest income/net interest margin
 
 
 
$
13,858

 
3.70
%
 
 
 
$
12,817

 
3.55
%
 
 
 
$
8,860

 
3.27
%




INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
Tangible common equity
 
 
 
 
 
 
Total stockholders’ equity
 
$
173,430

 
$
172,729

 
$
148,336

Adjustments:
 
 
 
 
 
 
Goodwill
 
17,424

 
17,086

 
2,684

Core deposit intangible
 
2,617

 
2,740

 
440

Trademark intangible
 
100

 
100

 
100

Tangible common equity
 
$
153,289

 
$
152,803

 
$
145,112

Tangible assets
 
 
 
 
 
 
Total assets
 
$
1,644,188

 
$
1,622,734

 
$
1,175,835

Adjustments:
 
 
 
 
 
 
Goodwill
 
17,424

 
17,086

 
2,684

Core deposit intangible
 
2,617

 
2,740

 
440

Trademark intangible
 
100

 
100

 
100

Tangible assets
 
$
1,624,047

 
$
1,602,808

 
$
1,172,611

 
 
 
 
 
 
 
Common shares outstanding
 
9,517,328

 
9,514,926

 
8,805,810

Tangible equity to tangible assets
 
9.44
%
 
9.53
%
 
12.38
%
Book value per common share
 
$
18.22

 
$
18.15

 
$
16.85

Tangible book value per common share
 
16.11

 
16.06

 
16.48






INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
Net interest income
(a)
$
13,858

 
$
12,817

 
$
8,860

Provision for loan losses
 
625

 
395

 
350

Net interest income after provision for loan losses
 
13,233

 
12,422

 
8,510

 
 
 
 
 
 
 
Noninterest income
(b)
1,072

 
962

 
885

Gain on sale of investment securities, net
 

 
(50
)
 
(106
)
Loss (gain) on sale of other real estate owned, net
 

 
5

 
(5
)
(Gain) loss on sale of fixed assets, net
 
(90
)
 
57

 
(23
)
Core noninterest income
(d)
982

 
974

 
751

 
 
 
 
 
 
 
Core earnings before noninterest expense
 
14,215

 
13,396

 
9,261

 
 
 
 
 
 
 
Total noninterest expense
(c)
10,562

 
9,608

 
6,684

Acquisition expense
 
(1,104
)
 
(819
)
 
(145
)
Severance
 

 

 
(82
)
Core noninterest expense
(f)
9,458

 
8,789

 
6,457

 
 
 
 
 
 
 
Core earnings before income tax expense
 
4,757

 
4,607

 
2,804

Core income tax expense(1)
 
950

 
1,462

 
875

Core earnings
 
$
3,807

 
$
3,145

 
$
1,929

 
 
 
 
 
 
 
Core basic earnings per share
 
0.40

 
0.35

 
0.27

 
 
 
 
 
 
 
Diluted earnings per share (GAAP)
 
$
0.25

 
$
0.25

 
$
0.26

Gain on sale of investment securities, net
 

 

 
(0.01
)
Loss (gain) on sale of other real estate owned, net
 

 

 

(Gain) loss on sale of fixed assets, net
 
(0.01
)
 

 

Acquisition expense
 
0.09

 
0.06

 
0.01

Severance
 

 

 
0.01

Tax reform related re-measurement charges to income tax expense
 
0.07

 
0.03

 

Core diluted earnings per share
 
$
0.40

 
$
0.34

 
$
0.27

 
 
 
 
 
 
 
Efficiency ratio
(c) / (a+b)
70.74
%
 
69.73
%
 
68.59
%
Core efficiency ratio
(f) / (a+d)
63.73
%
 
63.73
%
 
67.18
%
Core return on average assets(2)
 
0.95
%
 
0.81
%
 
0.68
%
Core return on average equity(2)
 
8.90
%
 
7.77
%
 
6.66
%
Total average assets
 
$
1,629,277

 
$
1,534,917

 
$
1,157,654

Total average stockholders’ equity
 
173,467

 
160,485

 
117,497

 
 
 
 
 
 
 
(1) Core income tax expense is calculated using the effective tax rates of 19.98% and 31.7% for the quarters ended March 31, 2018 and December 31, 2017, respectively, prior to the one-time charges of $0.6 million and $0.3 million, respectively, to tax expense as a result of the Tax Cuts and Jobs Act, and the actual effective tax rate of 31.2% for the quarter ended March 31, 2017.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.