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 24, 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 Boulevard
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:
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 24, 2019, Investar Holding Corporation issued a press release announcing its financial results for the quarter ended March 31, 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: April 25, 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 First Quarter Results

BATON ROUGE, LA (April 24, 2019) – 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, 2019 . The Company reported net income of $3.9 million , or $0.40 per diluted common share, for the first quarter of 2019 , compared to $3.3 million , or $0.34 per diluted common share, for the quarter ended December 31, 2018 , and $2.4 million , or $0.25 per diluted common share, for the quarter ended March 31, 2018 .

On a non-GAAP basis, core earnings per diluted common share for the first quarter were $0.46 compared to $0.45 for the fourth quarter of 2018 and $0.40 for the quarter ended March 31, 2018 . Core earnings exclude certain non-operating items including, but not limited to, acquisition expense, changes in the fair value of equity securities, and discrete tax items (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 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 favorable earnings, a steady net interest margin, and solid asset quality. On March 1, 2019, we completed our acquisition of Mainland Bank. Following the acquisition, our operating teams successfully completed the operational conversion of Mainland Bank while continuing to provide outstanding service to our customers. Despite the acquisition-related costs we recognized during the quarter, our results reflect the positive effect of the acquisition on our balance sheet and income statement. We look forward to realizing the additional benefits of the acquisition going into the next quarter.
We continue to focus on long-term shareholder value and repurchased 143,774 shares of our common stock at an average price of $23.38 during the quarter. We also continue to focus on quality loans and deposits and improving our return on assets and efficiency ratios, which will assist in delivering on our commitment of growing the franchise and increasing shareholder value.”
First Quarter Highlights
•
Total revenues, or interest and noninterest income, for the quarter ended March 31, 2019 totaled $22.0 million, an increase of $1.2 million, or 5.8%, compared to the quarter ended December 31, 2018 , and an increase of $3.7 million, or 20.3%, compared to the quarter ended March 31, 2018 .
•
Total loans increased $ 94.1 million , or 6.7% , to $1.49 billion at March 31, 2019 , compared to $1.40 billion at December 31, 2018 , and increased $222.0 million , or 17.4% compared to $1.27 billion at March 31, 2018 . Excluding the loans acquired in the Mainland Bank acquisition, or $81.1 million at March 31, 2019 , total loans increased $13.0 million, or 0.9%, compared to December 31, 2018 , and increased $140.9 million, or 11.1%, compared to 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 $562.6 million at March 31, 2019 , an increase of $53.5 million, or 10.5% , compared to the business lending portfolio of $509.1 million at December 31, 2018 , and an increase of $152.4 million , or 37.2% , compared to the business lending portfolio of $410.2 million at March 31, 2018 .
•
Credit quality remains strong with nonperforming loans of 0.40% of total loans at March 31, 2019 compared to 0.42% and 0.44% at December 31, 2018 and March 31, 2018, respectively.
•
Total deposits increased $171.1 million , or 12.6% , to $1.53 billion at March 31, 2019 , compared to $1.36 billion at December 31, 2018 , and increased $306.1 million , or 25.0% , compared to $1.23 billion at March 31, 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.
•
Net interest margin remained steady at 3.53% for both of the quarters ended March 31, 2019 and December 31, 2018.
•
The Company repurchased 143,774 shares of its common stock through its stock repurchase program at an average price of $23.38 during the quarter ended March 31, 2019 , leaving 242,466 shares authorized for repurchase under its current stock repurchase plan.


•
On March 1, 2019, the Company completed the acquisition of Mainland Bank in Texas City, Texas. The conversion of branch and operating systems was also completed in March. Total consideration for the acquisition was approximately $18.6 million in the form of 763,849 shares of the Company’s common stock.


Loans
Total loans were $1.49 billion at March 31, 2019 , an increase of $94.1 million , or 6.7% , compared to December 31, 2018 , and an increase of $222.0 million , or 17.4% , compared to March 31, 2018 . Excluding the loans acquired in the Mainland Bank acquisition, or $81.1 million at March 31, 2019 , total loans increased $13.0 million, or 0.9%, compared to December 31, 2018 , and increased $140.9 million, or 11.1%, compared to March 31, 2018 . We experienced the majority of our loan growth in the commercial real estate and commercial and industrial portfolios for the quarter ended March 31, 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
 
 
3/31/2019
 
12/31/2018
 
3/31/2018
 
$
 
%
 
$
 
%
 
3/31/2019
 
3/31/2018
Mortgage loans on real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and development
 
$
171,483

 
$
157,946

 
$
162,337

 
$
13,537

 
8.6
 %
 
$
9,146

 
5.6
 %
 
11.5
%
 
12.8
%
1-4 Family
 
299,061

 
287,137

 
277,978

 
11,924

 
4.2

 
21,083

 
7.6

 
20.0

 
21.8

Multifamily
 
57,487

 
50,501

 
54,504

 
6,986

 
13.8

 
2,983

 
5.5

 
3.9

 
4.3

Farmland
 
24,457

 
21,356

 
20,725

 
3,101

 
14.5

 
3,732

 
18.0

 
1.6

 
1.6

Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
 
307,108

 
298,222

 
274,216

 
8,886

 
3.0

 
32,892

 
12.0

 
20.5

 
21.5

Nonowner-occupied
 
339,637

 
328,782

 
279,939

 
10,855

 
3.3

 
59,698

 
21.3

 
22.7

 
22.0

Commercial and industrial
 
255,476

 
210,924

 
135,965

 
44,552

 
21.1

 
119,511

 
87.9

 
17.1

 
10.7

Consumer
 
40,210

 
45,957

 
67,286

 
(5,747
)
 
(12.5
)
 
(27,076
)
 
(40.2
)
 
2.7

 
5.3

Total loans
 
$
1,494,919

 
$
1,400,825

 
$
1,272,950

 
$
94,094

 
6.7
 %
 
$
221,969

 
17.4
 %
 
100
%
 
100
%
At March 31, 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 $562.6 million , an increase of $53.5 million, or 10.5% , compared to the business lending portfolio of $509.1 million at December 31, 2018 , and an increase of $152.4 million , or 37.2% , compared to the business lending portfolio of $410.2 million at March 31, 2018 . The increase in the business lending portfolio compared to December 31, 2018 is mainly attributable to the acquisition of Mainland, which included $53.3 million in owner-occupied commercial real estate and commercial and industrial loans. The increase in the business lending portfolio compared to March 31, 2018 is mainly attributable to growth in commercial and industrial loans primarily resulting from increased production of our Commercial and Industrial Division.
Consumer loans, including indirect auto loans of $25.9 million, totaled $40.2 million at March 31, 2019 , a decrease of $5.7 million , or 12.5% , compared to $46.0 million , including indirect auto loans of $30.8 million, at December 31, 2018 , and a decrease of $27.1 million , or 40.2% , compared to $67.3 million , including indirect auto loans of $48.8 million, at March 31, 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 $6.0 million, or 0.40% of total loans, at March 31, 2019 , an increase of $0.1 million compared to $5.9 million, or 0.42% of total loans, at December 31, 2018 , and an increase of $0.5 million compared to $5.5 million, or 0.44% of total loans, at March 31, 2018 .
The allowance for loan losses was $9.6 million, or 159.93% and 0.64% of nonperforming loans and total loans, respectively, at March 31, 2019 , compared to $9.5 million, or 158.94% and 0.67% , respectively, at December 31, 2018 , and $8.1 million, or 146.78% and 0.64% , respectively, at March 31, 2018 .


The provision for loan losses was $0.3 million for the quarter ended March 31, 2019 compared to $0.6 million for both of the quarters ended December 31, 2018 and March 31, 2018 . The decrease in the provision for loan losses is primarily attributable to lower incremental loan growth, excluding acquired loan balances, in the first quarter of 2019 compared to the quarters ended December 31, 2018 and March 31, 2018 as credit quality and other factors impacting our allowance and related provision were relatively unchanged period over period.
Deposits
Total deposits at March 31, 2019 were $1.53 billion , an increase of $171.1 million , or 12.6% , compared to December 31, 2018 , and an increase of $306.1 million , or 25.0% , compared to March 31, 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.

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
 
 
3/31/2019
 
12/31/2018
 
3/31/2018
 
$
 
%
 
$
 
%
 
3/31/2019
 
3/31/2018
Noninterest-bearing demand deposits
 
$
285,811

 
$
217,457

 
$
221,855

 
$
68,354

 
31.4
%
 
$
63,956

 
28.8
 %
 
18.6
%
 
18.1
%
Interest-bearing demand deposits
 
333,434

 
295,212

 
228,269

 
38,222

 
12.9

 
105,165

 
46.1

 
21.8

 
18.6

Money market deposit accounts
 
188,373

 
179,340

 
145,627

 
9,033

 
5.0

 
42,746

 
29.4

 
12.3

 
11.9

Savings accounts
 
114,631

 
104,146

 
124,589

 
10,485

 
10.1

 
(9,958
)
 
(8.0
)
 
7.5

 
10.1

Time deposits
 
610,544

 
565,576

 
506,332

 
44,968

 
8.0

 
104,212

 
20.6

 
39.8

 
41.3

Total deposits
 
$
1,532,793

 
$
1,361,731

 
$
1,226,672

 
$
171,062

 
12.6
%
 
$
306,121

 
25.0
 %
 
100.0
%
 
100.0
%
Noninterest-bearing demand deposits increased $68.4 million, or 31.4%, compared to December 31, 2018 and $64.0 million, or 28.8%, compared to March 31, 2018 . While much of this growth is attributable to the acquisition of Mainland, noninterest-bearing deposits grew organically by approximately $12.8 million, or 5.9% compared to December 31, 2018. Excluding total deposits from our Texas branches acquired in the Mainland acquisition, or $115.5 million, at March 31, 2019, total deposits increased $55.6 million, or 4.1%, compared to December 31, 2018 and $190.6 million, or 15.5%, compared to March 31, 2018 , as we continue to focus on relationship banking and growing our commercial relationships.
Interest-bearing demand deposits and time deposits increased $105.2 million and $104.2 million, respectively, compared to March 31, 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 market in a rising interest rate environment.
Net Interest Income
Net interest income for the first quarter of 2019 totaled $15.2 million , an increase of $0.3 million , or 2.4% , compared to the fourth quarter of 2018 , and an increase of $1.3 million , or 9.4% , compared to the first quarter of 2018 . Included in net interest income for the quarters ended March 31, 2019 , December 31, 2018 and March 31, 2018 is $0.4 million, $0.3 million and $0.7 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarter ended December 31, 2018 is an interest recovery of $0.1 million on an acquired loan.
The increase in net interest income in the first 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 first quarter of 2019 increased $3.5 million, with $2.5 million and $1.0 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 $2.2 million, with $0.4 million and $1.8 million due to increases in the volume and cost, respectively, of interest-bearing liabilities compared to the first quarter of 2018 .
The Company’s net interest margin was 3.53% for both of the quarters ended March 31, 2019 and December 31, 2018 , compared to 3.70% for the quarter ended March 31, 2018 . The yield on interest-earning assets was 4.81% for the quarter ended March 31, 2019 compared to 4.75% for the quarter ended December 31, 2018 and 4.59% for the quarter ended March 31, 2018 . The decrease in net interest margin for the quarter ended March 31, 2019 compared to the quarter ended March 31, 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 a $0.1 million interest recovery in the quarter ended December 31, 2018 , net interest margin was 3.43% for both of the quarters ended March 31, 2019 and December 31, 2018 compared to 3.52% for the quarter ended March 31, 2018 , while the yield on interest-earning assets was 4.72% for the quarter ended March 31, 2019 compared to 4.65% and 4.41% for the quarters ended December 31, 2018 and March 31, 2018 , respectively.
The cost of deposits increased 9 basis points to 1.41% for the quarter ended March 31, 2019 compared to 1.32% for the quarter ended December 31, 2018 , and increased 50 basis points compared to 0.91% for the quarter ended March 31, 2018 . The increase in the cost of deposits compared to the quarters ended December 31, 2018 and 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 and attract new deposits. The overall costs of funds for the quarter ended March 31, 2019 increased 9 and 49 basis points to 1.59% compared to 1.50% and 1.10% for the quarters ended December 31, 2018 and March 31, 2018 , respectively. The increase in the cost of funds at March 31, 2019 compared to December 31, 2018 and March 31, 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 first quarter of 2019 totaled $1.3 million , an increase of $0.4 million, or 53.2%, compared to the fourth quarter of 2018 , and an increase of $0.2 million, or 19.5%, compared to the first quarter of 2018 . The increase in noninterest income compared to the quarter ended December 31, 2018 is mainly attributable to a $0.5 million increase in the fair value of equity securities.
The increase in noninterest income compared to the first quarter of 2018 is primarily a result of a $0.2 million increase in the fair value of equity securities and a $0.1 million increase in other operating income, partially offset by a $0.1 million decrease in servicing fees and fee income on serviced loans. Other operating income includes, among other things, various operations fees and income recognized on certain equity method investments.
Noninterest Expense
Noninterest expense for the first quarter of 2019 totaled $11.3 million , an increase of $0.4 million , or 3.6% , compared to the fourth quarter of 2018 , and an increase of $0.7 million , or 7.0% , compared to the first quarter of 2018 .
The increase in noninterest expense compared to the quarter ended December 31, 2018 is mainly attributable to the $0.6 million increase in acquisition expense. This increase and increases in other categories were partially offset by a $0.5 million decrease in other operating expenses. The decrease in other operating expenses was due to a $0.6 million write-down of a property held in other real estate owned that was recorded during the quarter ended December 31, 2018 to reflect the amount of a purchase agreement for the property, which was sold in January 2019.
The increase in noninterest expense compared to the first quarter of 2018 is primarily attributable to increases in depreciation and amortization, salaries and employee benefits, and other operating expenses, partially offset by a decrease in acquisition expense. 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. The increase in salaries and employee benefits compared to the first 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 in the second quarter of 2018, as well as the additional staff from the Mainland acquisition. The increase in other operating expenses compared to the first quarter of 2018 is primarily attributable to increased software expense and debit and credit card activity.
Taxes
The Company recorded income tax expense of $1.0 million for the quarter ended March 31, 2019 , which equates to an effective tax rate of 19.6% , an increase from the effective tax rate of 19.5% and a decrease from the effective tax rate of 35.8% for the quarters ended December 31, 2018 and March 31, 2018 , respectively. The decrease in the effective tax rate compared to the quarter ended March 31, 2018 is primarily a result of a one-time charge of $0.6 million recorded in the quarter ended March 31, 2018 as a result of the revaluation of the Company’s deferred tax assets and liabilities that was required following the enactment of the Tax Cuts and Jobs Act in December 2017. 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 $0.40 for the quarter ended March 31, 2019 , an increase of $0.05 and $0.06 compared to basic and diluted earnings per common share of $0.35 and $0.34, respectively, for the quarter ended December 31, 2018 and an increase of $0.15 compared to basic and diluted earnings per common share of $0.25 for the quarter ended March 31, 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, a state chartered 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 March 31, 2019 , the Company had 280 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 (the “SEC”).

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
 
 
3/31/2019
 
12/31/2018
 
3/31/2018
 
Linked Quarter
 
Year/Year
EARNINGS DATA
 
 
 
 
 
 
 
 
 
 
Total interest income
 
$
20,686

 
$
19,927

 
$
17,178

 
3.8
 %
 
20.4
 %
Total interest expense
 
5,530

 
5,120

 
3,320

 
8.0

 
66.6

Net interest income
 
15,156

 
14,807

 
13,858

 
2.4

 
9.4

Provision for loan losses
 
265

 
593

 
625

 
(55.3
)
 
(57.6
)
Total noninterest income
 
1,281

 
836

 
1,072

 
53.2

 
19.5

Total noninterest expense
 
11,303

 
10,906

 
10,562

 
3.6

 
7.0

Income before income taxes
 
4,869

 
4,144

 
3,743

 
17.5

 
30.1

Income tax expense
 
952

 
807

 
1,341

 
18.0

 
(29.0
)
Net income
 
$
3,917

 
$
3,337

 
$
2,402

 
17.4

 
63.1

 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,854,191

 
$
1,766,094

 
$
1,629,277

 
5.0
 %
 
13.8
 %
Total interest-earning assets
 
1,743,438

 
1,663,816

 
1,518,425

 
4.8

 
14.8

Total loans
 
1,436,798

 
1,381,580

 
1,261,047

 
4.0

 
13.9

Total interest-bearing deposits
 
1,183,568

 
1,116,734

 
1,002,655

 
6.0

 
18.0

Total interest-bearing liabilities
 
1,413,623

 
1,350,743

 
1,228,942

 
4.7

 
15.0

Total deposits
 
1,422,632

 
1,342,145

 
1,219,482

 
6.0

 
16.7

Total stockholders’ equity
 
189,822

 
180,682

 
173,467

 
5.1

 
9.4

 
 
 
 
 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.40

 
$
0.35

 
$
0.25

 
14.3
 %
 
60.0
 %
Diluted earnings per common share
 
0.40

 
0.34

 
0.25

 
17.6

 
60.0

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

 
0.46

 
0.40

 
2.2

 
17.5

Core diluted earnings per common share (1)
 
0.46

 
0.45

 
0.40

 
2.2

 
15.0

Book value per common share
 
20.04

 
19.22

 
18.22

 
4.3

 
10.0

Tangible book value per common share (1)
 
17.36

 
17.13

 
16.11

 
1.3

 
7.8

Common shares outstanding
 
10,129,993

 
9,484,219

 
9,517,328

 
6.8

 
6.4

Weighted average common shares outstanding - basic
 
9,675,381

 
9,519,470

 
9,513,332

 
1.6

 
1.7

Weighted average common shares outstanding - diluted
 
9,770,752

 
9,623,636

 
9,609,603

 
1.5

 
1.7

 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.86
%
 
0.75
%
 
0.60
%
 
14.7
 %
 
43.3
 %
Core return on average assets (1)
 
0.98

 
0.98

 
0.95

 
—

 
3.2

Return on average equity
 
8.37

 
7.33

 
5.62

 
14.2

 
48.9

Core return on average equity (1)
 
9.62

 
9.55

 
8.90

 
0.7

 
8.1

Net interest margin
 
3.53

 
3.53

 
3.70

 
—

 
(4.6
)
Net interest income to average assets
 
3.31

 
3.33

 
3.45

 
(0.6
)
 
(4.1
)
Noninterest expense to average assets
 
2.47

 
2.45

 
2.63

 
0.8

 
(6.1
)
Efficiency ratio (2)
 
68.76

 
69.72

 
70.74

 
(1.4
)
 
(2.8
)
Core efficiency ratio (1)
 
63.96

 
62.52

 
63.73

 
2.3

 
0.4

Dividend payout ratio
 
13.13

 
14.47

 
13.86

 
(9.3
)
 
(5.3
)
Net charge-offs to average loans
 
0.01

 
0.01

 
0.03

 
—

 
(66.7
)

 

 

 

 

 

(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
 
 
3/31/2019
 
12/31/2018
 
3/31/2018
 
Linked Quarter
 
Year/Year
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
 
0.40
%
 
0.54
%
 
0.60
%
 
(25.9
)%
 
(33.3
)%
Nonperforming loans to total loans
 
0.40

 
0.42

 
0.44

 
(4.8
)
 
(9.1
)
Allowance for loan losses to total loans
 
0.64

 
0.67

 
0.64

 
(4.5
)
 
—

Allowance for loan losses to nonperforming loans
 
159.93

 
158.94

 
146.78

 
0.6

 
9.0

 
 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
Investar Holding Corporation:
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
 
10.35
%
 
10.20
%
 
10.55
%
 
1.5
 %
 
(1.9
)%
Tangible equity to tangible assets (1)
 
9.09

 
9.20

 
9.44

 
(1.2
)
 
(3.7
)
Tier 1 leverage ratio
 
10.03

 
9.81

 
10.11

 
2.2

 
(0.8
)
Common equity tier 1 capital ratio (2)
 
11.07

 
11.15

 
11.67

 
(0.7
)
 
(5.1
)
Tier 1 capital ratio (2)
 
11.48

 
11.59

 
12.16

 
(0.9
)
 
(5.6
)
Total capital ratio (2)
 
13.23

 
13.46

 
14.12

 
(1.7
)
 
(6.3
)
Investar Bank:
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage ratio
 
10.92

 
10.72

 
11.06

 
1.9

 
(1.3
)
Common equity tier 1 capital ratio (2)
 
12.48

 
12.67

 
13.31

 
(1.5
)
 
(6.2
)
Tier 1 capital ratio (2)
 
12.48

 
12.67

 
13.31

 
(1.5
)
 
(6.2
)
Total capital ratio (2)
 
13.09

 
13.31

 
13.92

 
(1.7
)
 
(6.0
)
 
 
 
 
 
 
 
 
 
 
 
(1)  Non-GAAP financial measure. See reconciliation.
(2)  Estimated for March 31, 2019.



INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
ASSETS
 
 
 
 
 
 
Cash and due from banks
 
$
22,535

 
$
15,922

 
$
13,409

Interest-bearing balances due from other banks
 
47,506

 
1,212

 
7,623

Federal funds sold
 
2,362

 
6

 
70

Cash and cash equivalents
 
72,403

 
17,140

 
21,102

 
 
 
 
 
 
 
Available for sale securities at fair value (amortized cost of $265,981, $253,504, and $236,225, respectively)
 
264,257

 
248,981

 
231,448

Held to maturity securities at amortized cost (estimated fair value of $15,816, $15,805, and $17,479, respectively)
 
15,816

 
16,066

 
17,727

Loans, net of allowance for loan losses of $9,642, $9,454, and $8,130, respectively
 
1,485,277

 
1,391,371

 
1,264,820

Other equity securities
 
14,392

 
13,562

 
11,573

Bank premises and equipment, net of accumulated depreciation of $10,513, $9,898, and $8,300, respectively
 
45,717

 
40,229

 
38,091

Other real estate owned, net
 
1,748

 
3,611

 
4,266

Accrued interest receivable
 
6,377

 
5,553

 
4,707

Deferred tax asset
 
38

 
1,145

 
1,496

Goodwill and other intangible assets, net
 
27,143

 
19,787

 
20,141

Bank-owned life insurance
 
24,011

 
23,859

 
23,382

Other assets
 
4,715

 
5,165

 
5,435

Total assets
 
$
1,961,894

 
$
1,786,469

 
$
1,644,188

 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
Noninterest-bearing
 
$
285,811

 
$
217,457

 
$
221,855

Interest-bearing
 
1,246,982

 
1,144,274

 
1,004,817

Total deposits
 
1,532,793

 
1,361,731

 
1,226,672

Advances from Federal Home Loan Bank
 
185,093

 
206,490

 
187,066

Repurchase agreements
 
2,218

 
1,999

 
21,053

Subordinated debt
 
18,227

 
18,215

 
18,180

Junior subordinated debt
 
5,858

 
5,845

 
5,806

Accrued taxes and other liabilities
 
14,691

 
9,927

 
11,981

Total liabilities
 
1,758,880

 
1,604,207

 
1,470,758

 
 
 
 
 
 
 
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; 10,129,993, 9,484,219, and 9,517,328 shares outstanding, respectively
 
10,130

 
9,484

 
9,517

Surplus
 
144,813

 
130,133

 
131,179

Retained earnings
 
49,104

 
45,721

 
35,829

Accumulated other comprehensive loss
 
(1,033
)
 
(3,076
)
 
(3,095
)
Total stockholders’ equity
 
203,014

 
182,262

 
173,430

   Total liabilities and stockholders’ equity
 
$
1,961,894

 
$
1,786,469

 
$
1,644,188




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

 
 
 
 
 
 
 
 
For the three months ended
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
INTEREST INCOME
 
 
 
 
 
 
Interest and fees on loans
 
$
18,544

 
$
17,996

 
$
15,626

Interest on investment securities
 
1,926

 
1,795

 
1,459

Other interest income
 
216

 
136

 
93

Total interest income
 
20,686

 
19,927

 
17,178

 
 
 
 
 
 
 
INTEREST EXPENSE
 
 
 
 
 
 
Interest on deposits
 
4,106

 
3,721

 
2,253

Interest on borrowings
 
1,424

 
1,399

 
1,067

Total interest expense
 
5,530

 
5,120

 
3,320

Net interest income
 
15,156

 
14,807

 
13,858

 
 
 
 
 
 
 
Provision for loan losses
 
265

 
593

 
625

Net interest income after provision for loan losses
 
14,891

 
14,214

 
13,233

 
 
 
 
 
 
 
NONINTEREST INCOME
 
 
 
 
 
 
Service charges on deposit accounts
 
400

 
399

 
359

Gain (loss) on sale of investment securities, net
 
2

 
(23
)
 
—

Gain on sale of fixed assets, net
 
—

 
—

 
90

Gain (loss) on sale of other real estate owned, net
 
5

 
(20
)
 
—

Servicing fees and fee income on serviced loans
 
180

 
190

 
288

Interchange fees
 
240

 
247

 
191

Income from bank owned life insurance
 
152

 
157

 
151

Change in the fair value of equity securities
 
172

 
(306
)
 
—

Other operating income (loss)
 
130

 
192

 
(7
)
Total noninterest income
 
1,281

 
836

 
1,072

Income before noninterest expense
 
16,172

 
15,050

 
14,305

 
 
 
 
 
 
 
NONINTEREST EXPENSE
 
 
 
 
 
 
Depreciation and amortization
 
764

 
682

 
598

Salaries and employee benefits
 
6,415

 
6,280

 
6,048

Occupancy
 
414

 
326

 
380

Data processing
 
536

 
490

 
542

Marketing
 
51

 
84

 
38

Professional fees
 
305

 
287

 
255

Acquisition expenses
 
905

 
341

 
1,104

Other operating expenses
 
1,913

 
2,416

 
1,597

Total noninterest expense
 
11,303

 
10,906

 
10,562

Income before income tax expense
 
4,869

 
4,144

 
3,743

Income tax expense
 
952

 
807

 
1,341

Net income
 
$
3,917

 
$
3,337

 
$
2,402

 
 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
Basic earnings per common share
 
$
0.40

 
$
0.35

 
$
0.25

Diluted earnings per common share
 
$
0.40

 
$
0.34

 
$
0.25

Cash dividends declared per common share
 
$
0.05

 
$
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
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 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
 
$
1,436,798

 
$
18,544

 
5.23
%
 
$
1,381,580

 
$
17,996

 
5.17
%
 
$
1,261,047

 
$
15,626

 
5.03
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
243,065

 
1,729

 
2.88

 
230,170

 
1,592

 
2.74

 
206,722

 
1,253

 
2.46

Tax-exempt
 
32,325

 
197

 
2.47

 
33,913

 
203

 
2.37

 
34,688

 
206

 
2.41

Interest-bearing balances with banks
 
31,250

 
216

 
2.80

 
18,153

 
136

 
2.97

 
15,968

 
93

 
2.37

Total interest-earning assets
 
1,743,438

 
20,686

 
4.81

 
1,663,816

 
19,927

 
4.75

 
1,518,425

 
17,178

 
4.59

Cash and due from banks
 
20,150

 
 
 
 
 
18,252

 
 
 
 
 
25,526

 
 
 
 
Intangible assets
 
22,301

 
 
 
 
 
19,835

 
 
 
 
 
19,881

 
 
 
 
Other assets
 
77,867

 
 
 
 
 
73,415

 
 
 
 
 
73,438

 
 
 
 
Allowance for loan losses
 
(9,565
)
 
 
 
 
 
(9,224
)
 
 
 
 
 
(7,993
)
 
 
 
 
Total assets
 
$
1,854,191

 
 
 
 
 
$
1,766,094

 
 
 
 
 
$
1,629,277

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 
$
504,123

 
$
1,353

 
1.09

 
$
448,110

 
$
1,162

 
1.03

 
$
360,903

 
$
580

 
0.65

Savings deposits
 
104,503

 
119

 
0.46

 
106,492

 
151

 
0.56

 
120,861

 
137

 
0.46

Time deposits
 
574,942

 
2,634

 
1.86

 
562,132

 
2,408

 
1.70

 
520,891

 
1,536

 
1.20

Total interest-bearing deposits
 
1,183,568

 
4,106

 
1.41

 
1,116,734

 
3,721

 
1.32

 
1,002,655

 
2,253

 
0.91

Short-term borrowings
 
135,894

 
733

 
2.19

 
138,443

 
699

 
2.00

 
143,646

 
507

 
1.43

Long-term debt
 
94,161

 
691

 
2.98

 
95,566

 
700

 
2.91

 
82,641

 
560

 
2.75

Total interest-bearing liabilities
 
1,413,623

 
5,530

 
1.59

 
1,350,743

 
5,120

 
1.50

 
1,228,942

 
3,320

 
1.10

Noninterest-bearing deposits
 
239,064

 
 
 
 
 
225,411

 
 
 
 
 
216,827

 
 
 
 
Other liabilities
 
11,682

 
 
 
 
 
9,258

 
 
 
 
 
10,041

 
 
 
 
Stockholders’ equity
 
189,822

 
 
 
 
 
180,682

 
 
 
 
 
173,467

 
 
 
 
Total liability and stockholders’ equity
 
$
1,854,191

 
 
 
 
 
$
1,766,094

 
 
 
 
 
$
1,629,277

 
 
 
 
Net interest income/net interest margin
 
 
 
$
15,156

 
3.53
%
 
 
 
$
14,807

 
3.53
%
 
 
 
$
13,858

 
3.70
%





INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
Tangible common equity
 
 
 
 
 
 
Total stockholders’ equity
 
$
203,014

 
$
182,262

 
$
173,430

Adjustments:
 
 
 
 
 
 
Goodwill
 
22,489

 
17,424

 
17,424

Core deposit intangible
 
4,554

 
2,263

 
2,617

Trademark intangible
 
100

 
100

 
100

Tangible common equity
 
$
175,871

 
$
162,475

 
$
153,289

Tangible assets
 
 
 
 
 
 
Total assets
 
$
1,961,894

 
$
1,786,469

 
$
1,644,188

Adjustments:
 
 
 
 
 
 
Goodwill
 
22,489

 
17,424

 
17,424

Core deposit intangible
 
4,554

 
2,263

 
2,617

Trademark intangible
 
100

 
100

 
100

Tangible assets
 
$
1,934,751

 
$
1,766,682

 
$
1,624,047

 
 
 
 
 
 
 
Common shares outstanding
 
10,129,993

 
9,484,219

 
9,517,328

Tangible equity to tangible assets
 
9.09
%
 
9.20
%
 
9.44
%
Book value per common share
 
$
20.04

 
$
19.22

 
$
18.22

Tangible book value per common share
 
17.36

 
17.13

 
16.11





INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
 
3/31/2019
 
12/31/2018
 
3/31/2018
Net interest income
(a)
$
15,156

 
$
14,807

 
$
13,858

Provision for loan losses
 
265

 
593

 
625

Net interest income after provision for loan losses
 
14,891

 
14,214

 
13,233

 
 
 
 
 
 
 
Noninterest income
(b)
1,281

 
836

 
1,072

(Gain) loss on sale of investment securities, net
 
(2
)
 
23

 
—

(Gain) loss on sale of other real estate owned, net
 
(5
)
 
20

 
—

Gain on sale of fixed assets, net
 
—

 
—

 
(90
)
Change in the fair value of equity securities
 
(172
)
 
306

 
—

Core noninterest income
(d)
1,102

 
1,185

 
982

 
 
 
 
 
 
 
Core earnings before noninterest expense
 
15,993

 
15,399

 
14,215

 
 
 
 
 
 
 
Total noninterest expense
(c)
11,303

 
10,906

 
10,562

Acquisition expense
 
(905
)
 
(341
)
 
(1,104
)
Write down of other real estate owned
 
—

 
(567
)
 
—

Core noninterest expense
(f)
10,398

 
9,998

 
9,458

 
 
 
 
 
 
 
Core earnings before income tax expense
 
5,595

 
5,401

 
4,757

Core income tax expense (1)
 
1,094

 
1,053

 
950

Core earnings
 
$
4,501

 
$
4,348

 
$
3,807

 
 
 
 
 
 
 
Core basic earnings per common share
 
0.47

 
0.46

 
0.40

 
 
 
 
 
 
 
Diluted earnings per common share (GAAP)
 
$
0.40

 
$
0.34

 
$
0.25

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

 
—

 
—

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

 
—

 
—

Gain on sale of fixed assets, net
 
—

 
—

 
(0.01
)
Change in the fair value of equity securities
 
(0.01
)
 
0.03

 
—

Acquisition expense
 
0.07

 
0.03

 
0.09

Write down of other real estate owned
 
—

 
0.05

 
—

One-time charge to income tax expense
 
—

 
—

 
0.07

Core diluted earnings per common share
 
$
0.46

 
$
0.45

 
$
0.40

 
 
 
 
 
 
 
Efficiency ratio
(c) / (a+b)
68.76
%
 
69.72
%
 
70.74
%
Core efficiency ratio
(f) / (a+d)
63.96
%
 
62.52
%
 
63.73
%
Core return on average assets (2)
 
0.98
%
 
0.98
%
 
0.95
%
Core return on average equity (2)
 
9.62
%
 
9.55
%
 
8.90
%
Total average assets
 
$
1,854,191

 
$
1,766,094

 
$
1,629,277

Total average stockholders’ equity
 
189,822

 
180,682

 
173,467

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Core income tax expense is calculated using the effective tax rates of 19.6% and 19.5% for the quarters ended March 31, 2019 and December 31, 2018, respectively, and an effective rate of 20%, prior to the one-time charge of $0.6 million to tax expense as a result of the Tax Cuts and Jobs Act for the for the quarter ended March 31, 2018.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.