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): July 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 July 25, 2018, Investar Holding Corporation issued a press release announcing its financial results for the quarter ended June 30, 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: July 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 Second Quarter Results

BATON ROUGE, LA (July 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 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

 
882

 
0.2

 
109,160

 
27.4

 
41.2

 
44.5

Total deposits
 
$
1,230,930

 
$
1,226,672

 
$
894,825

 
$
4,258

 
0.3
 %
 
$
336,105

 
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