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, 2019
 
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.)
 
 
10500 Coursey Blvd.
Baton Rouge, Louisiana 70816
 
 
(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 (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $1.00 par value per share
ISTR
The Nasdaq Global Market

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, 2019, Investar Holding Corporation issued a press release announcing its financial results for the quarter ended June 30, 2019 . A copy of the press release is furnished as exhibit 99.1 to this Current Report on Form 8-K.
The information contained in Item 2.02, including Exhibit 99.1 of 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









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, 2019
 
 
 
By:
 
/s/ John J. D’Angelo
 
 
 
 
 
 
John J. D’Angelo
 
 
 
 
 
 
President and Chief Executive Officer




Exhibit 99.1
For Immediate Release

Investar Holding Corporation Announces 2019 Second Quarter Results

BATON ROUGE, LA (July 25, 2019) – Investar Holding Corporation (NASDAQ: ISTR) (the “Company”), the holding company for Investar Bank, National Association (the “Bank”), today announced financial results for the quarter ended June 30, 2019 . The Company reported net income of $4.9 million , or $0.48 per diluted common share, for the second quarter of 2019 , compared to $3.9 million , or $0.40 per diluted common share, for the quarter ended March 31, 2019 , and $3.8 million , or $0.39 per diluted common share, for the quarter ended June 30, 2018 .

On a non-GAAP basis, core earnings per diluted common share for the second quarter were $0.47 compared to $0.46 for the first quarter of 2019 and $0.40 for the quarter ended June 30, 2018 . Core earnings exclude certain non-operating items including, but not limited to, acquisition expense and changes in the fair value of equity securities (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).

The Company’s balance sheet and statement of income as of and for the three months ended June 30, 2019 and March 31, 2019 include the impact of the Company’s acquisition of Mainland Bank (“Mainland”), which was completed on March 1, 2019. As of the acquisition date, Mainland had approximately $127.1 million in total assets, including $82.4 million in loans, and approximately $107.6 million in deposits. The assets acquired and liabilities assumed have been recorded at fair value in the Company’s consolidated balance sheet and are subject to change pending finalization of all valuations.
Investar Holding Corporation President and Chief Executive Officer John D’Angelo said:
“I am pleased to announce another successful quarter for Investar with record earnings, an improved net interest margin, and solid asset quality. This is the first quarter of operations following the acquisition of Mainland and our financial results reflect the positive impact 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.
We were also excited to announce our charter change during the quarter. We believe the national bank charter fits with our overall multi-state expansion strategy.
We continue to focus on long-term shareholder value and repurchased 197,425 shares of our common stock at an average price of $22.90 during the quarter. Our efforts remain on originating quality loans, having organically grown our portfolio by 3.2% during the second quarter, and on improving our return on assets and efficiency ratios. ”
Second Quarter Highlights
•
Net interest margin increased 6 basis points to 3.59% for the quarter ended June 30, 2019 compared to 3.53% for the quarter ended March 31, 2019 .
•
Total revenues, or interest and noninterest income, for the quarter ended June 30, 2019 totaled $24.1 million, an increase of $2.2 million, or 9.9%, compared to the quarter ended March 31, 2019 , and an increase of $4.9 million, or 25.7%, compared to the quarter ended June 30, 2018 .
•
Total loans increased $ 48.4 million , or 3.2% , to $1.54 billion at June 30, 2019 , compared to $1.49 billion at March 31, 2019 , and increased $243.0 million , or 18.7% compared to $1.30 billion at June 30, 2018 . Excluding the loans acquired in the Mainland acquisition, or $77.5 million at June 30, 2019 , total loans increased $52.0 million, or 3.7%, compared to March 31, 2019 , and increased $165.5 million, or 12.7%, compared to June 30, 2018 .
•
The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $616.0 million at June 30, 2019 , an increase of $53.4 million , or 9.5% , compared to the business lending portfolio of $562.6 million at March 31, 2019 , and an increase of $183.1 million, or 42.3% , compared to the business lending portfolio of $432.9 million at June 30, 2018 .
•
Credit quality remains strong with nonperforming loans of 0.37% of total loans at June 30, 2019 compared to 0.40% and 0.33% at March 31, 2019 and June 30, 2018 , respectively.
•
Total deposits increased $19.4 million , or 1.3% , to $1.55 billion at June 30, 2019 , compared to $1.53 billion at March 31, 2019 , and increased $321.3 million , or 26.1% , compared to $1.23 billion at June 30, 2018 . The Company acquired approximately $107.6 million in deposits from Mainland at the time of acquisition on March 1, 2019, and the remaining increase is due to organic growth.


•
On June 26, 2019, our board of directors approved an additional 300,000 shares of the Company’s common stock for repurchase under the current stock repurchase program. The Company repurchased 197,425 shares of its common stock through its stock repurchase program at an average price of $22.90 during the quarter ended June 30, 2019 , leaving 345,041 shares authorized for repurchase under the current stock repurchase plan.
•
On June 20, 2019, the Company announced that the Bank received the necessary regulatory approvals from the Office of the Comptroller of the Currency and the Louisiana Office of Financial Institutions to convert from a Louisiana state bank charter to a national bank charter. The conversion of the Bank to a national bank charter became effective on July 1, 2019, on which date the Bank’s name changed to Investar Bank, National Association.

Loans
Total loans were $1.54 billion at June 30, 2019 , an increase of $48.4 million , or 3.2% , compared to March 31, 2019 , and an increase of $243.0 million , or 18.7% , compared to June 30, 2018 . Excluding the loans acquired in the Mainland acquisition, or $77.5 million at June 30, 2019 , total loans increased $52.0 million, or 3.7%, compared to March 31, 2019 , and increased $165.5 million, or 12.7%, compared to June 30, 2018 . We experienced the majority of our loan growth in the commercial real estate and commercial and industrial portfolios for the quarter ended June 30, 2019 as we remain focused on relationship banking and growing our commercial loan portfolio.
The following table sets forth the composition of the total loan portfolio as of the dates indicated (dollars in thousands).
 
 
 
 
 
 
 
 
Linked Quarter Change
 
Year/Year Change
 
Percentage of Total Loans
 
 
6/30/2019
 
3/31/2019
 
6/30/2018
 
$
 
%
 
$
 
%
 
6/30/2019
 
6/30/2018
Mortgage loans on real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and development
 
$
167,232

 
$
171,483

 
$
165,395

 
$
(4,251
)
 
(2.5
)%
 
$
1,837

 
1.1
 %
 
10.9
%
 
12.7
%
1-4 Family
 
305,512

 
299,061

 
280,335

 
6,451

 
2.2

 
25,177

 
9.0

 
19.8

 
21.6

Multifamily
 
56,081

 
57,487

 
48,838

 
(1,406
)
 
(2.4
)
 
7,243

 
14.8

 
3.6

 
3.8

Farmland
 
25,203

 
24,457

 
20,144

 
746

 
3.1

 
5,059

 
25.1

 
1.6

 
1.5

Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
 
339,130

 
307,108

 
287,320

 
32,022

 
10.4

 
51,810

 
18.0

 
22.0

 
22.1

Nonowner-occupied
 
338,426

 
339,637

 
292,946

 
(1,211
)
 
(0.4
)
 
45,480

 
15.5

 
21.9

 
22.5

Commercial and industrial
 
276,902

 
255,476

 
145,554

 
21,426

 
8.4

 
131,348

 
90.2

 
17.9

 
11.2

Consumer
 
34,822

 
40,210

 
59,779

 
(5,388
)
 
(13.4
)
 
(24,957
)
 
(41.7
)
 
2.3

 
4.6

Total loans
 
$
1,543,308

 
$
1,494,919

 
$
1,300,311

 
$
48,389

 
3.2
 %
 
$
242,997

 
18.7
 %
 
100
%
 
100
%
At June 30, 2019 , the Company’s total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $616.0 million , an increase of $53.4 million , or 9.5% , compared to the business lending portfolio of $562.6 million at March 31, 2019 , and an increase of $183.1 million, or 42.3% , compared to the business lending portfolio of $432.9 million at June 30, 2018 . The increase in the business lending portfolio compared to March 31, 2019 and June 30, 2018 is mainly attributable to increased production of our Commercial and Industrial Division. The increase in the business lending portfolio compared to June 30, 2018 is also partly attributable loans acquired from Mainland on March 1, 2019, which included owner-occupied commercial real estate and commercial and industrial loans with a total balance of $49.6 million at June 30, 2019 .
Consumer loans, including indirect auto loans of $21.6 million, totaled $34.8 million at June 30, 2019 , a decrease of $5.4 million , or 13.4% , compared to $40.2 million , including indirect auto loans of $25.9 million, at March 31, 2019 , and a decrease of $25.0 million , or 41.7% , compared to $59.8 million , including indirect auto loans of $42.1 million, at June 30, 2018 . The decrease in consumer loans is mainly attributable to the scheduled paydowns of this portfolio and is consistent with our business strategy.
Credit Quality
Nonperforming loans were $5.7 million, or 0.37% of total loans, at June 30, 2019 , a decrease of $0.3 million compared to $6.0 million, or 0.40% of total loans, at March 31, 2019 , and an increase of $1.5 million compared to $4.2 million, or 0.33% of total loans, at June 30, 2018 .
The allowance for loan losses was $9.9 million, or 173.43% and 0.64% of nonperforming loans and total loans, respectively, at June 30, 2019 , compared to $9.6 million, or 159.93% and 0.64% , respectively, at March 31, 2019 , and $8.5 million, or 199.04% and 0.65% , respectively, at June 30, 2018 .


The provision for loan losses was $0.4 million for the quarter ended June 30, 2019 compared to $0.3 million for the quarter ended March 31, 2019 and $0.6 million for the quarter ended June 30, 2018 . The changes in the provision for loan losses compared to the quarters ended March 31, 2019 and June 30, 2018 , are primarily attributable to the changes in incremental loan growth, excluding acquired loan balances, as credit quality and other factors impacting our allowance and related provision were relatively unchanged period over period.
Deposits
Total deposits at June 30, 2019 were $1.55 billion , an increase of $19.4 million , or 1.3% , compared to March 31, 2019 , and an increase of $321.3 million , or 26.1% , compared to June 30, 2018 .

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
 
 
6/30/2019
 
3/31/2019
 
6/30/2018
 
$
 
%
 
$
 
%
 
6/30/2019
 
6/30/2018
Noninterest-bearing demand deposits
 
$
289,481

 
$
285,811

 
$
222,570

 
$
3,670

 
1.3
 %
 
$
66,911

 
30.1
 %
 
18.6
%
 
18.1
%
Interest-bearing demand deposits
 
332,754

 
333,434

 
231,987

 
(680
)
 
(0.2
)
 
100,767

 
43.4

 
21.5

 
18.8

Money market deposit accounts
 
177,209

 
188,373

 
151,510

 
(11,164
)
 
(5.9
)
 
25,699

 
17.0

 
11.4

 
12.3

Savings accounts
 
111,222

 
114,631

 
117,649

 
(3,409
)
 
(3.0
)
 
(6,427
)
 
(5.5
)
 
7.2

 
9.6

Time deposits
 
641,552

 
610,544

 
507,214

 
31,008

 
5.1

 
134,338

 
26.5

 
41.3

 
41.2

Total deposits
 
$
1,552,218

 
$
1,532,793

 
$
1,230,930

 
$
19,425

 
1.3
 %
 
$
321,288

 
26.1
 %
 
100.0
%
 
100.0
%
Interest-bearing demand deposits and time deposits increased $100.8 million and $134.3 million, respectively, compared to June 30, 2018 . These increases are mainly attributable to the increased rates offered for our interest-bearing demand deposits and time deposits to remain competitive in our markets.
Net Interest Income
Net interest income for the second quarter of 2019 totaled $16.3 million , an increase of $1.2 million , or 7.8% , compared to the first quarter of 2019 , and an increase of $2.0 million , or 14.0% , compared to the second quarter of 2018 . Included in net interest income for both the quarters ended June 30, 2019 and March 31, 2019 is $0.4 million, and for the quarter ended June 30, 2018 is $0.5 million, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarter ended June 30, 2019 are interest recoveries of $0.1 million on acquired loans.
The increase in net interest income in the second quarter of 2019 compared to the same quarter last year was primarily driven by growth in loan and securities balances and the yields earned on those balances, partially offset by an increase in interest expense as we funded the increase in interest-earning assets with increased deposits and borrowings. Interest income for the second quarter of 2019 increased $4.4 million, with $3.3 million and $1.1 million due to increases in the volume and yield, respectively, of interest-earning assets. This increase in interest income was partially offset by an increase in interest expense of $2.4 million, with $0.4 million and $2.0 million due to increases in the volume and cost, respectively, of interest-bearing liabilities compared to the second quarter of 2018 .
The Company’s net interest margin was 3.59% for the quarter ended June 30, 2019 compared to 3.53% for the quarter ended March 31, 2019 and 3.70% for the quarter ended June 30, 2018 . The yield on interest-earning assets was 4.93% for the quarter ended June 30, 2019 compared to 4.81% for the quarter ended March 31, 2019 and 4.65% for the quarter ended June 30, 2018 . The increase in the net interest margin for the quarter ended June 30, 2019 compared to the quarter ended March 31, 2019 is primarily attributable to the increase in the volume of our interest-earning assets. The decrease in net interest margin for the quarter ended June 30, 2019 compared to the quarter ended June 30, 2018 was driven by an increase in the cost of funds required to fund the increase in assets.
Exclusive of the interest income accretion from the acquisition of loans, discussed above, as well as the $0.1 million of interest recoveries in the quarter ended June 30, 2019, net interest margin was 3.49% for the quarter ended June 30, 2019 compared to 3.43% for the quarter ended March 31, 2019 and 3.56% for the quarter ended June 30, 2018 , while the yield on interest-earning assets was 4.82% for the quarter ended June 30, 2019 compared to 4.72% and 4.51% for the quarters ended March 31, 2019 and June 30, 2018 , respectively.


The cost of deposits increased 11 basis points to 1.52% for the quarter ended June 30, 2019 compared to 1.41% for the quarter ended March 31, 2019 , and increased 55 basis points compared to 0.97% for the quarter ended June 30, 2018 . The increase in the cost of deposits compared to the quarters ended March 31, 2019 and June 30, 2018 reflects the increased rates offered during the period for our interest-bearing demand deposits and time deposits to remain competitive in our markets and attract new deposits. The overall costs of funds for the quarter ended June 30, 2019 increased 8 and 48 basis points to 1.67% compared to 1.59% and 1.19% for the quarters ended March 31, 2019 and June 30, 2018 , respectively. The increase in the cost of funds at June 30, 2019 compared to March 31, 2019 and June 30, 2018 is mainly a result of an increase in the cost of deposits but is also driven by the increased cost of borrowed funds used to finance loan and investment activity.
Noninterest Income
Noninterest income for the second quarter of 2019 totaled $1.7 million , an increase of $0.5 million, or 36.0%, compared to the first quarter of 2019 , and an increase of $0.5 million, or 46.0%, compared to the second quarter of 2018 . The increase in noninterest income compared to the quarter ended March 31, 2019 is mainly attributable to a $0.3 million increase other operating income and a $0.2 million increase in the gain on sale of investment securities. Other operating income includes, among other things, various operations fees and income recognized on certain equity method investments. During the second quarter of 2019, we recognized $0.2 million in net gains on the sales of approximately $61.9 million of investment securities as we seek to better position the balance sheet for potential reductions in short term interest rates.
The increase in noninterest income compared to the second quarter of 2018 is primarily a result of a $0.1 million and $0.2 million increase in service charges on deposit accounts and other operating income, respectively, as well as a $0.2 million increase in the gain on sale of investment securities, discussed above.
Noninterest Expense
Noninterest expense for the second quarter of 2019 totaled $11.6 million , an increase of $0.3 million , or 2.2% , compared to the first quarter of 2019 , and an increase of $1.4 million , or 13.7% , compared to the second quarter of 2018 .
The increase in noninterest expense compared to the quarter ended March 31, 2019 is mainly attributable to increases resulting from the acquisition of Mainland on March 1, 2019. Increases include $0.7 million in salaries and employee benefits, $0.2 in other operating expenses, and $0.1 million in depreciation and amortization and data processing. These increases were partially offset by a $0.9 million decrease in acquisition expense.
The increase in noninterest expense compared to the second quarter of 2018 is primarily attributable to increases in depreciation and amortization, salaries and employee benefits, and other operating expenses. The increase in depreciation and amortization resulted from various projects including equipment upgrades at acquired branches and the launch of the Company’s first interactive teller machine, as well as the acquisition of Mainland, which added fixed assets of approximately $2.6 million. The increase in salaries and employee benefits compared to the second quarter of 2018 is mainly attributable to the staffing mix throughout the year, including the addition of our new Commercial and Industrial Division, which includes five new lenders and related support staff hired during the second quarter of 2018, as well as the additional staff from the Mainland acquisition. The increase in other operating expenses compared to the second quarter of 2018 is primarily driven by increased software expense and debit and credit card activity.
Included in noninterest expense for the quarter ended June 30, 2019 is approximately $0.1 million of legal expense related to the collection efforts from a borrower whose loan was acquired in 2017 and who is currently in bankruptcy. Additional expense may be incurred in future quarters until the bankruptcy proceedings are finalized.
Taxes
The Company recorded income tax expense of $1.2 million for the quarter ended June 30, 2019 , which equates to an effective tax rate of 19.8% , an increase from the effective tax rate of 19.6% and a decrease from the effective tax rate of 20.2% for the quarters ended March 31, 2019 and June 30, 2018 , respectively. Management expects the Company’s effective tax rate to approximate 20% in 2019.
Basic and Diluted Earnings Per Common Share
The Company reported basic and diluted earnings per common share of $0.49 and $0.48 , respectively, for the quarter ended June 30, 2019 , an increase of $0.09 and $0.08, respectively, compared to basic and diluted earnings per common share of $0.40 for the quarter ended March 31, 2019 , and an increase of $0.10 and $0.09, respectively, compared to basic and diluted earnings per common share of $0.39 for the quarter ended June 30, 2018 .


About Investar Holding Corporation
Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, National Association, a national bank. The Bank serves several markets across south Louisiana with 21 branches, and serves the greater Houston market in southeast Texas with three branches. At June 30, 2019 , the Company had 283 full-time equivalent employees.
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America, or GAAP. These measures and ratios include “tangible common equity,” “tangible assets,” “tangible equity to tangible assets,” “tangible book value per common share,” “core noninterest income,” “core earnings before noninterest expense,” “core noninterest expense,” “core earnings before income tax expense,” “core income tax expense,” “core earnings,” “core efficiency ratio,” “core return on average assets,” “core return on average equity,” “core basic earnings per share,” and “core diluted earnings per share.” Management believes these non-GAAP financial measures provide information useful to investors in understanding the Company’s financial results, and the Company believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting the Company’s business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and the Company strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. A reconciliation of the non-GAAP financial measures disclosed in this press release to the comparable GAAP financial measures is included at the end of the financial statement tables.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events:

•
business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;
•
our ability to achieve organic loan and deposit growth, and the composition of that growth;
•
our ability to identify and enter into agreements to combine with attractive acquisition candidates, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate acquired operations;
•
changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;
•
possible cessation or market replacement of LIBOR and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments and loans;
•
the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;
•
our dependence on our management team, and our ability to attract and retain qualified personnel;
•
changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;
•
inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;
•
the concentration of our business within our geographic areas of operation in Louisiana and Texas; and
•
concentration of credit exposure.



These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Item 1A. “Risk Factors” and in the “Special Note Regarding Forward-Looking Statements” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission.

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
 
 
6/30/2019
 
3/31/2019
 
6/30/2018
 
Linked Quarter
 
Year/Year
EARNINGS DATA
 
 
 
 
 
 
 
 
 
 
Total interest income
 
$
22,388

 
$
20,686

 
$
18,009

 
8.2
 %
 
24.3
 %
Total interest expense
 
6,057

 
5,530

 
3,689

 
9.5

 
64.2

Net interest income
 
16,331

 
15,156

 
14,320

 
7.8

 
14.0

Provision for loan losses
 
369

 
265

 
567

 
39.2

 
(34.9
)
Total noninterest income
 
1,742

 
1,281

 
1,193

 
36.0

 
46.0

Total noninterest expense
 
11,554

 
11,303

 
10,160

 
2.2

 
13.7

Income before income taxes
 
6,150

 
4,869

 
4,786

 
26.3

 
28.5

Income tax expense
 
1,216

 
952

 
966

 
27.7

 
25.9

Net income
 
$
4,934

 
$
3,917

 
$
3,820

 
26.0

 
29.2

 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,951,559

 
$
1,854,191

 
$
1,655,709

 
5.3
 %
 
17.9
 %
Total interest-earning assets
 
1,823,196

 
1,743,438

 
1,553,813

 
4.6

 
17.3

Total loans
 
1,523,004

 
1,436,798

 
1,269,894

 
6.0

 
19.9

Total interest-bearing deposits
 
1,236,324

 
1,183,568

 
1,001,037

 
4.5

 
23.5

Total interest-bearing liabilities
 
1,455,623

 
1,413,623

 
1,247,695

 
3.0

 
16.7

Total deposits
 
1,514,146

 
1,422,632

 
1,223,441

 
6.4

 
23.8

Total stockholders’ equity
 
203,911

 
189,822

 
175,801

 
7.4

 
16.0

 
 
 
 
 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.49

 
$
0.40

 
$
0.39

 
22.5
 %
 
25.6
 %
Diluted earnings per common share
 
0.48

 
0.40

 
0.39

 
20.0

 
23.1

Core Earnings (1) :
 
 
 
 
 
 
 
 
 
 
Core basic earnings per common share (1)
 
0.47

 
0.47

 
0.40

 
—

 
17.5

Core diluted earnings per common share (1)
 
0.47

 
0.46

 
0.40

 
2.2

 
17.5

Book value per common share
 
20.68

 
20.04

 
18.50

 
3.2

 
11.8

Tangible book value per common share (1)
 
18.02

 
17.36

 
16.42

 
3.8

 
9.7

Common shares outstanding
 
9,937,752

 
10,129,993

 
9,517,328

 
(1.9
)
 
4.4

Weighted average common shares outstanding - basic
 
10,008,882

 
9,675,381

 
9,588,873

 
3.4

 
4.4

Weighted average common shares outstanding - diluted
 
10,104,246

 
9,770,752

 
9,648,021

 
3.4

 
4.7

 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.01
%
 
0.86
%
 
0.93
%
 
17.4
 %
 
8.6
 %
Core return on average assets (1)
 
0.97

 
0.98

 
0.94

 
(1.0
)
 
3.2

Return on average equity
 
9.70

 
8.37

 
8.72

 
15.9

 
11.2

Core return on average equity (1)
 
9.25

 
9.62

 
8.85

 
(3.8
)
 
4.5

Net interest margin
 
3.59

 
3.53

 
3.70

 
1.7

 
(3.0
)
Net interest income to average assets
 
3.34

 
3.31

 
3.47

 
0.9

 
(3.7
)
Noninterest expense to average assets
 
2.42

 
2.47

 
2.46

 
(2.0
)
 
(1.6
)
Efficiency ratio (2)
 
63.93

 
68.76

 
65.49

 
(7.0
)
 
(2.4
)
Core efficiency ratio (1)
 
64.96

 
63.96

 
64.99

 
1.6

 
—

Dividend payout ratio
 
11.24

 
13.13

 
10.01

 
(14.4
)
 
12.3

Net charge-offs to average loans
 
0.01

 
0.01

 
0.02

 
—

 
(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
 
 
6/30/2019
 
3/31/2019
 
6/30/2018
 
Linked Quarter
 
Year/Year
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
 
0.36
%
 
0.40
%
 
0.50
%
 
(10.0
)%
 
(28.0
)%
Nonperforming loans to total loans
 
0.37

 
0.40

 
0.33

 
(7.5
)
 
12.1

Allowance for loan losses to total loans
 
0.64

 
0.64

 
0.65

 
—

 
(1.5
)
Allowance for loan losses to nonperforming loans
 
173.43

 
159.93

 
199.04

 
8.4

 
(12.9
)
 
 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
Investar Holding Corporation:
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
 
10.29
%
 
10.35
%
 
10.44
%
 
(0.6
)%
 
(1.4
)%
Tangible equity to tangible assets (1)
 
9.09

 
9.09

 
9.38

 
—

 
(3.1
)
Tier 1 leverage ratio
 
9.59

 
10.03

 
10.22

 
(4.4
)
 
(6.2
)
Common equity tier 1 capital ratio (2)
 
10.51

 
11.07

 
11.64

 
(5.1
)
 
(9.7
)
Tier 1 capital ratio (2)
 
10.90

 
11.48

 
12.11

 
(5.1
)
 
(10.0
)
Total capital ratio (2)
 
12.57

 
13.23

 
14.04

 
(5.0
)
 
(10.5
)
Investar Bank:
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage ratio
 
10.53

 
10.92

 
11.14

 
(3.6
)
 
(5.5
)
Common equity tier 1 capital ratio (2)
 
11.97

 
12.48

 
13.21

 
(4.1
)
 
(9.4
)
Tier 1 capital ratio (2)
 
11.97

 
12.48

 
13.21

 
(4.1
)
 
(9.4
)
Total capital ratio (2)
 
12.56

 
13.09

 
13.82

 
(4.0
)
 
(9.1
)
 
 
 
 
 
 
 
 
 
 
 
(1)  Non-GAAP financial measure. See reconciliation.
(2)  Estimated for June 30, 2019.



INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
ASSETS
 
 
 
 
 
 
Cash and due from banks
 
$
30,400

 
$
22,535

 
$
21,338

Interest-bearing balances due from other banks
 
33,519

 
47,506

 
13,483

Federal funds sold
 
—

 
2,362

 
10

Cash and cash equivalents
 
63,919

 
72,403

 
34,831

 
 
 
 
 
 
 
Available for sale securities at fair value (amortized cost of $252,554, $265,981, and $247,317, respectively)
 
253,985

 
264,257

 
241,587

Held to maturity securities at amortized cost (estimated fair value of $15,480, $15,816 and $17,064, respectively)
 
15,473

 
15,816

 
17,299

Loans, net of allowance for loan losses of $9,924, $9,642, and $8,451, respectively
 
1,533,384

 
1,485,277

 
1,291,860

Other equity securities
 
14,537

 
14,392

 
13,095

Bank premises and equipment, net of accumulated depreciation of $11,078, $10,513, and $8,805, respectively
 
46,097

 
45,717

 
39,253

Other real estate owned, net
 
1,529

 
1,748

 
4,225

Accrued interest receivable
 
6,880

 
6,377

 
4,842

Deferred tax asset
 
—

 
38

 
1,429

Goodwill and other intangible assets, net
 
26,409

 
27,143

 
19,952

Bank-owned life insurance
 
29,204

 
24,011

 
23,543

Other assets
 
5,224

 
4,715

 
5,555

Total assets
 
$
1,996,641

 
$
1,961,894

 
$
1,697,471

 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
Noninterest-bearing
 
$
289,481

 
$
285,811

 
$
222,570

Interest-bearing
 
1,262,736

 
1,246,982

 
1,008,360

Total deposits
 
1,552,217

 
1,532,793

 
1,230,930

Advances from Federal Home Loan Bank
 
196,600

 
185,093

 
237,075

Repurchase agreements
 
1,876

 
2,218

 
16,752

Subordinated debt
 
18,238

 
18,227

 
18,191

Junior subordinated debt
 
5,871

 
5,858

 
5,819

Accrued taxes and other liabilities
 
16,340

 
14,691

 
11,474

Total liabilities
 
1,791,142

 
1,758,880

 
1,520,241

 
 
 
 
 
 
 
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; 9,937,752, 10,129,993 and 9,581,034 shares outstanding, respectively
 
9,938

 
10,130

 
9,581

Surplus
 
140,856

 
144,813

 
132,166

Retained earnings
 
53,492

 
49,104

 
39,258

Accumulated other comprehensive loss
 
1,213

 
(1,033
)
 
(3,775
)
Total stockholders’ equity
 
205,499

 
203,014

 
177,230

   Total liabilities and stockholders’ equity
 
$
1,996,641

 
$
1,961,894

 
$
1,697,471




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

 
 
 
 
 
 
 
 
For the three months ended
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
INTEREST INCOME
 
 
 
 
 
 
Interest and fees on loans
 
$
20,233

 
$
18,544

 
$
16,223

Interest on investment securities
 
1,923

 
1,926

 
1,644

Other interest income
 
232

 
216

 
142

Total interest income
 
22,388

 
20,686

 
18,009

 
 
 
 
 
 
 
INTEREST EXPENSE
 
 
 
 
 
 
Interest on deposits
 
4,684

 
4,106

 
2,426

Interest on borrowings
 
1,373

 
1,424

 
1,263

Total interest expense
 
6,057

 
5,530

 
3,689

Net interest income
 
16,331

 
15,156

 
14,320

 
 
 
 
 
 
 
Provision for loan losses
 
369

 
265

 
567

Net interest income after provision for loan losses
 
15,962

 
14,891

 
13,753

 
 
 
 
 
 
 
NONINTEREST INCOME
 
 
 
 
 
 
Service charges on deposit accounts
 
434

 
400

 
327

Gain on sale of investment securities, net
 
227

 
2

 
22

Loss on sale of fixed assets, net
 
(11
)
 
—

 
(1
)
Gain (loss) on sale of other real estate owned, net
 
13

 
5

 
(4
)
Servicing fees and fee income on serviced loans
 
150

 
180

 
253

Interchange fees
 
291

 
240

 
255

Income from bank owned life insurance
 
170

 
152

 
161

Change in the fair value of equity securities
 
57

 
172

 
3

Other operating income
 
411

 
130

 
177

Total noninterest income
 
1,742

 
1,281

 
1,193

Income before noninterest expense
 
17,704

 
16,172

 
14,946

 
 
 
 
 
 
 
NONINTEREST EXPENSE
 
 
 
 
 
 
Depreciation and amortization
 
873

 
764

 
629

Salaries and employee benefits
 
7,077

 
6,415

 
6,495

Occupancy
 
454

 
414

 
335

Data processing
 
644

 
536

 
565

Marketing
 
68

 
51

 
44

Professional fees
 
309

 
305

 
228

Acquisition expenses
 
—

 
905

 
—

Other operating expenses
 
2,129

 
1,913

 
1,864

Total noninterest expense
 
11,554

 
11,303

 
10,160

Income before income tax expense
 
6,150

 
4,869

 
4,786

Income tax expense
 
1,216

 
952

 
966

Net income
 
$
4,934

 
$
3,917

 
$
3,820

 
 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
Basic earnings per common share
 
$
0.49

 
$
0.40

 
$
0.39

Diluted earnings per common share
 
$
0.48

 
$
0.40

 
$
0.39

Cash dividends declared per common share
 
$
0.06

 
$
0.05

 
$
0.04




INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
1,523,004

 
$
20,233

 
5.33
%
 
$
1,436,798

 
$
18,544

 
5.23
%
 
$
1,269,894

 
$
16,223

 
5.12
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
238,150

 
1,726

 
2.94

 
243,065

 
1,729

 
2.88

 
224,263

 
1,441

 
2.58

Tax-exempt
 
31,554

 
197

 
2.51

 
32,325

 
197

 
2.47

 
33,936

 
203

 
2.40

Interest-bearing balances with banks
 
30,488

 
232

 
3.05

 
31,250

 
216

 
2.80

 
25,720

 
142

 
2.20

Total interest-earning assets
 
1,823,196

 
22,388

 
4.93

 
1,743,438

 
20,686

 
4.81

 
1,553,813

 
18,009

 
4.65

Cash and due from banks
 
23,154

 
 
 
 
 
20,150

 
 
 
 
 
16,690

 
 
 
 
Intangible assets
 
26,501

 
 
 
 
 
22,301

 
 
 
 
 
20,064

 
 
 
 
Other assets
 
88,486

 
 
 
 
 
77,867

 
 
 
 
 
73,312

 
 
 
 
Allowance for loan losses
 
(9,778
)
 
 
 
 
 
(9,565
)
 
 
 
 
 
(8,170
)
 
 
 
 
Total assets
 
$
1,951,559

 
 
 
 
 
$
1,854,191

 
 
 
 
 
$
1,655,709

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 
$
504,541

 
$
1,333

 
1.06

 
$
504,123

 
$
1,353

 
1.09

 
$
372,824

 
$
641

 
0.69

Savings deposits
 
113,179

 
126

 
0.45

 
104,503

 
119

 
0.46

 
121,174

 
138

 
0.46

Time deposits
 
618,604

 
3,225

 
2.09

 
574,942

 
2,634

 
1.86

 
507,039

 
1,647

 
1.30

Total interest-bearing deposits
 
1,236,324

 
4,684

 
1.52

 
1,183,568

 
4,106

 
1.41

 
1,001,037

 
2,426

 
0.97

Short-term borrowings
 
127,196

 
685

 
2.16

 
135,894

 
733

 
2.19

 
140,595

 
579

 
1.65

Long-term debt
 
92,103

 
688

 
2.99

 
94,161

 
691

 
2.98

 
106,063

 
684

 
2.59

Total interest-bearing liabilities
 
1,455,623

 
6,057

 
1.67

 
1,413,623

 
5,530

 
1.59

 
1,247,695

 
3,689

 
1.19

Noninterest-bearing deposits
 
277,822

 
 
 
 
 
239,064

 
 
 
 
 
222,404

 
 
 
 
Other liabilities
 
14,203

 
 
 
 
 
11,682

 
 
 
 
 
9,809

 
 
 
 
Stockholders’ equity
 
203,911

 
 
 
 
 
189,822

 
 
 
 
 
175,801

 
 
 
 
Total liability and stockholders’ equity
 
$
1,951,559

 
 
 
 
 
$
1,854,191

 
 
 
 
 
$
1,655,709

 
 
 
 
Net interest income/net interest margin
 
 
 
$
16,331

 
3.59
%
 
 
 
$
15,156

 
3.53
%
 
 
 
$
14,320

 
3.70
%





INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
Tangible common equity
 
 
 
 
 
 
Total stockholders’ equity
 
$
205,499

 
$
203,014

 
$
177,230

Adjustments:
 
 
 
 
 
 
Goodwill
 
21,978

 
22,489

 
17,424

Core deposit intangible
 
4,331

 
4,554

 
2,617

Trademark intangible
 
100

 
100

 
100

Tangible common equity
 
$
179,090

 
$
175,871

 
$
157,089

Tangible assets
 
 
 
 
 
 
Total assets
 
$
1,996,641

 
$
1,961,894

 
$
1,697,471

Adjustments:
 
 
 
 
 
 
Goodwill
 
21,978

 
22,489

 
17,424

Core deposit intangible
 
4,331

 
4,554

 
2,617

Trademark intangible
 
100

 
100

 
100

Tangible assets
 
$
1,970,232

 
$
1,934,751

 
$
1,677,330

 
 
 
 
 
 
 
Common shares outstanding
 
9,937,752

 
10,129,993

 
9,517,328

Tangible equity to tangible assets
 
9.09
%
 
9.09
%
 
9.37
%
Book value per common share
 
$
20.68

 
$
20.04

 
$
18.62

Tangible book value per common share
 
18.02

 
17.36

 
16.51





INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
 
6/30/2019
 
3/31/2019
 
6/30/2018
Net interest income
(a)
$
16,331

 
$
15,156

 
$
14,320

Provision for loan losses
 
369

 
265

 
567

Net interest income after provision for loan losses
 
15,962

 
14,891

 
13,753

 
 
 
 
 
 
 
Noninterest income
(b)
1,742

 
1,281

 
1,193

Gain on sale of investment securities, net
 
(227
)
 
(2
)
 
(22
)
(Gain) loss on sale of other real estate owned, net
 
(13
)
 
(5
)
 
4

Loss on sale of fixed assets, net
 
11

 
—

 
1

Change in the fair value of equity securities
 
(57
)
 
(172
)
 
(3
)
Core noninterest income
(d)
1,456

 
1,102

 
1,173

 
 
 
 
 
 
 
Core earnings before noninterest expense
 
17,418

 
15,993

 
14,926

 
 
 
 
 
 
 
Total noninterest expense
(c)
11,554

 
11,303

 
10,160

Acquisition expense
 
—

 
(905
)
 
—

Core noninterest expense
(f)
11,554

 
10,398

 
10,071

 
 
 
 
 
 
 
Core earnings before income tax expense
 
5,864

 
5,595

 
4,855

Core income tax expense (1)
 
1,161

 
1,094

 
981

Core earnings
 
$
4,703

 
$
4,501

 
$
3,874

 
 
 
 
 
 
 
Core basic earnings per common share
 
0.47

 
0.47

 
0.41

 
 
 
 
 
 
 
Diluted earnings per common share (GAAP)
 
$
0.48

 
$
0.40

 
$
0.39

(Gain) loss on sale of investment securities, net
 
(0.01
)
 
—

 
—

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

 
—

 
—

Loss on sale of fixed assets, net
 
—

 
—

 
—

Change in the fair value of equity securities
 
—

 
(0.01
)
 
—

Acquisition expense
 
—

 
0.07

 
—

Nonroutine legal expense
 
—

 
—

 
0.01

Core diluted earnings per common share
 
$
0.47

 
$
0.46

 
$
0.40

 
 
 
 
 
 
 
Efficiency ratio
(c) / (a+b)
63.93
%
 
68.76
%
 
65.49
%
Core efficiency ratio
(f) / (a+d)
64.96
%
 
63.96
%
 
64.99
%
Core return on average assets (2)
 
0.98
%
 
0.98
%
 
0.94
%
Core return on average equity (2)
 
9.35
%
 
9.62
%
 
8.85
%
Total average assets
 
$
1,951,559

 
$
1,854,191

 
$
1,655,709

Total average stockholders’ equity
 
203,911

 
189,822

 
175,801

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Core income tax expense is calculated using the effective tax rates of 19.8%, 19.6% and 20.2% for the quarters ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.