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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 20, 2023
 

 
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)
 
Registrants 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:
 
 
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 
 
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. ☐
 

 
 

 
Item 2.02
Results of Operations and Financial Condition.
 
On April 20, 2023, Investar Holding Corporation (the “Company”), the holding company of Investar Bank, National Association (the “Bank”), issued a press release reporting first quarter 2023 results. 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
 
Exhibit Number
 
Description of Exhibit
99.1
 
104
 
The cover page of Investar Holding Corporation’s Form 8-K is formatted in Inline XBRL
 
 

 
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 21, 2023
By:
/s/ John J. D’Angelo
   
John J. D’Angelo
   
President and Chief Executive Officer
 
 
EX-99.1 2 ex_459348.htm EXHIBIT 99.1 ex_459348.htm

Exhibit 99.1

 

For Immediate Release

 

Investar Holding Corporation Announces 2023 First Quarter Results

 

BATON ROUGE, LA / ACCESSWIRE / April 20, 2023 / Investar Holding Corporation (“Investar”) (NASDAQ:ISTR), the holding company for Investar Bank, National Association (the “Bank”), today announced financial results for the quarter ended March 31, 2023. Investar reported net income of $3.8 million, or $0.38 per diluted common share, for the first quarter of 2023, compared to net income of $8.9 million, or $0.88 per diluted common share, for the quarter ended December 31, 2022, and net income of $10.1 million, or $0.97 per diluted common share, for the quarter ended March 31, 2022.

 

On a non-GAAP basis, core earnings per diluted common share for the first quarter of 2023 were $0.51 compared to $0.62 for the fourth quarter of 2022 and $0.68 for the first quarter of 2022. Core earnings exclude certain non-operating items including, but not limited to, swap termination fee income, income from insurance proceeds, loss (gain) on sale or disposition of fixed assets, net, loss (gain) on sale of other real estate owned, net, the Employee Retention Credit (“ERC”), and divestiture expense (refer to the Reconciliation of Non-GAAP Financial Measures tables for a reconciliation of GAAP to non-GAAP metrics).

 

Investar’s President and Chief Executive Officer John D’Angelo said: 

 

Investar Bank is strong and well-capitalized. We are uniquely positioned to serve our customers in our local markets through high-touch, relationship banking. Despite the tightening macroeconomic conditions and heightened market volatility, credit quality metrics improved further as nonperforming loans now represent only 0.27% of loans, and we continue to experience minimal charge-offs even as the portfolio grows and the yield improves. We believe strong credit quality is essential given the economic uncertainty in the months ahead.

 

We are continuing to strategically position our balance sheet for long-term profitability. Our cost of deposits and short-term borrowings continued to increase due to interest rate hikes by the Federal Reserve, which further compressed our margin. We proactively added $147 million of brokered time deposits with shorter maturities to lock in funding costs and reduce short-term borrowings. Uninsured deposits now represent only 32% of total deposits. We remain focused on taking the necessary steps to improve our key performance metrics. In the first quarter, we completed the sale of our two South Texas branches and consolidated a branch in our Louisiana market. We believe we did an excellent job of controlling expenses and continue to make progress towards our strategic priorities including optimization of the branch network and digital initiatives.

 

We remain focused on returning capital to shareholders. We repurchased 45,975 shares of our common stock during the first quarter and paid our 49th consecutive quarterly dividend.”

 

First Quarter Highlights

 

 

Credit quality continues to strengthen with nonperforming loans improving to 0.27% of total loans at March 31, 2023 compared to 0.54% at December 31, 2022.

 

 

Total loans increased $4.3 million, or 0.2%, to $2.11 billion at March 31, 2023, compared to $2.10 billion at December 31, 2022. Excluding loans associated with the Alice and Victoria, Texas branches sold to First Community Bank, total loans increased $18.2 million, or 0.9% (3.6% annualized), to $2.11 billion at March 31, 2023, compared to $2.09 billion at December 31, 2022.

 

 

Total deposits increased $63.3 million, or 3.0%, to $2.15 billion at March 31, 2023, compared to $2.08 billion at December 31, 2022. Uninsured deposits were 32% of total deposits at March 31, 2023 and 34% at December 31, 2022.

 

 

Investar held $31.3 million of cash and cash equivalents at March 31, 2023 and maintained $899.3 million of available funding from Federal Home Loan Bank Advances, the Federal Reserve’s Bank Term Funding Program (“BTFP”), and unsecured lines of credit with correspondent banks. Although Investar does not plan to utilize the BTFP, Investar’s borrowing capacity under the BTFP is $185.6 million based on the value of unpledged securities available to be used as collateral, valued at par value as permitted under the program. Cash and cash equivalents and available funding represent 136% of uninsured deposits at March 31, 2023.

 

 

The yield on the loan portfolio increased to 5.27% for the quarter ended March 31, 2023 compared to 5.07% for the quarter ended December 31, 2022.

 

 

Accumulated other comprehensive loss improved $4.7 million, or 9.5%, to $44.3 million for the quarter ended March 31, 2023 compared to $48.9 million for the quarter ended December 31, 2022. Available for sale securities comprised 98% of total investment securities at March 31, 2023 and December 31, 2022.

 

 

Book value per common share increased to $22.06 at March 31, 2023, or 1.2% (4.8% annualized), compared to $21.79 at December 31, 2022. Tangible book value per common share increased to $17.74 at March 31, 2023, or 1.8% (7.2% annualized), compared to $17.43 at December 31, 2022.

 

 

On January 27, 2023, the Bank completed its previously announced sale of certain assets, deposits and other liabilities associated with its Alice and Victoria, Texas branches to First Community Bank, a Texas state bank located in Corpus Christi, Texas. The Bank sold $13.9 million in loans and $14.5 million in deposits.

 

 

Investar completed the consolidation of one branch location in Louisiana in the first quarter of 2023.

 

 

Investar repurchased 45,975 shares of its common stock through its stock repurchase program during the quarter ended March 31, 2023, leaving 340,739 shares authorized for repurchase under the current stock repurchase plan.

 

 

 

Loans

 

Total loans were $2.11 billion at March 31, 2023an increase of $4.3 million, or 0.2%, compared to December 31, 2022, and an increase of $231.6 million, or 12.3%, compared to March 31, 2022.

 

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

 
   

3/31/2023

   

12/31/2022

   

3/31/2022

      $    

%

      $     %    

3/31/2023

   

3/31/2022

 

Mortgage loans on real estate

                                                                       

Construction and development

  $ 210,274     $ 201,633     $ 201,222     $ 8,641       4.3 %   $ 9,052       4.5 %     10.0 %     10.7 %

1-4 Family

    401,329       401,377       367,520       (48 )     (0.0 )     33,809       9.2       19.0       19.6  

Multifamily

    80,980       81,812       52,500       (832 )     (1.0 )     28,480       54.2       3.8       2.8  

Farmland

    10,731       12,877       18,296       (2,146 )     (16.7 )     (7,565 )     (41.3 )     0.5       1.0  

Commercial real estate

                                                                       

Owner-occupied

    433,585       445,148       436,763       (11,563 )     (2.6 )     (3,178 )     (0.7 )     20.6       23.3  

Nonowner-occupied

    533,572       513,095       471,447       20,477       4.0       62,125       13.2       25.3       25.1  

Commercial and industrial

    425,093       435,093       314,093       (10,000 )     (2.3 )     111,000       35.3       20.2       16.7  

Consumer

    13,480       13,732       15,603       (252 )     (1.8 )     (2,123 )     (13.6 )     0.6       0.8  

Total loans

  $ 2,109,044     $ 2,104,767     $ 1,877,444     $ 4,277       0.2 %   $ 231,600       12.3 %     100 %     100 %

 

At March 31, 2023, the Bank’s total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $858.7 million, a decrease of $21.6 million, or 2.4%, compared to the business lending portfolio of $880.2 million at December 31, 2022, and an increase of $107.8 million, or 14.4%, compared to the business lending portfolio of $750.9 million at March 31, 2022. The decrease in the business lending portfolio compared to December 31, 2022 is primarily driven by tighter underwriting standards and lower demand due to economic pressures. The increase in the business lending portfolio compared to March 31, 2022 is primarily driven by increased loan production by our Commercial and Industrial Division. 

 

Nonowner-occupied loans totaled $533.6 million at March 31, 2023, an increase of $20.5 million, or 4.0%, compared to $513.1 million at December 31, 2022, and an increase of $62.1 million, or 13.2%, compared to $471.4 million at March 31, 2022. The increase in nonowner-occupied loans compared to December 31, 2022 and March 31, 2022 is due to organic growth.

 

Credit Quality

 

Nonperforming loans were $5.7 million, or 0.27% of total loans, at March 31, 2023a decrease of $5.6 million compared to $11.3 million, or 0.54% of total loans, at December 31, 2022, and a decrease of $20.0 million compared to $25.7 million, or 1.37% of total loans, at March 31, 2022. The decrease in nonperforming loans compared to December 31, 2022 is mainly attributable to large paydowns on the loan relationship that was impaired as a result of Hurricane Ida in the third quarter of 2021. Included in nonperforming loans are acquired loans with a balance of $1.9 million at March 31, 2023, or 34% of nonperforming loans.

 

On January 1, 2023, Investar adopted FASB ASC Topic 326 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments” Update No. 2016-13. The ASU, referred to as the Current Expected Credit Loss (“CECL”) standard, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Upon adoption, Investar recorded a one-time, cumulative effect adjustment to increase the allowance for credit losses by $5.9 million and reduce retained earnings, net of tax, by $4.3 million.

 

The allowance for credit losses was $30.5 million, or 535.6% and 1.45% of nonperforming and total loans, respectively, at March 31, 2023, compared to $24.4 million, or 214.9% and 1.16% of nonperforming and total loans, respectively, at December 31, 2022, and $21.1 million, or 82.1% and 1.12% of nonperforming and total loans, respectively, at March 31, 2022

 

Investar recorded a provision for credit losses of $0.4 million for the quarter ended March 31, 2023 compared to a provision for credit losses of $1.3 million for the quarter ended December 31, 2022 and a negative provision for credit losses of $0.4 million for the quarter ended March 31, 2022. The decrease in the provision for credit losses compared to the quarter ended December 31, 2022 is primarily attributable to lower loan growth. The increase in the provision for credit losses compared to the quarter ended March 31, 2022 is driven by net recoveries of $0.7 million in the loan portfolio during the quarter ended March 31, 2022.

 

 

 

Deposits

 

Total deposits at March 31, 2023 were $2.15 billion, an increase of $63.3 million, or 3.0%, compared to $2.08 billion at December 31, 2022, and a decrease of $40.4 million, or 1.8%, compared to $2.19 billion at March 31, 2022. Time deposits and brokered time deposits increased, and other deposit categories decreased over the periods due to shifts into interest-bearing deposit products as a result of rising interest rates. The majority of the increase in time deposits at March 31, 2023 compared to December 31, 2022 is due to existing customer funds migrating from other deposit categories. Beginning in the fourth quarter of 2022, management utilized brokered time deposits, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings. The weighted average duration of brokered time deposits is approximately 17 months with a weighted average rate of 4.91%. 

 

The following table sets forth the composition of deposits as of the dates indicated (dollars in thousands).

 

                                                           

Percentage of

 
                           

Linked Quarter Change

   

Year/Year Change

   

Total Deposits

 
   

3/31/2023

   

12/31/2022

   

3/31/2022

   

$

   

%

   

$

   

%

   

3/31/2023

   

3/31/2022

 

Noninterest-bearing demand deposits

  $ 508,241     $ 580,741     $ 614,416     $ (72,500 )     (12.5 )%   $ (106,175 )     (17.3 )%     23.7 %     28.1 %

Interest-bearing demand deposits

    538,515       565,598       710,914       (27,083 )     (4.8 )     (172,399 )     (24.3 )     25.1       32.5  

Money market deposit accounts

    180,402       208,596       276,112       (28,194 )     (13.5 )     (95,710 )     (34.7 )     8.4       12.6  

Savings accounts

    137,336       155,176       182,532       (17,840 )     (11.5 )     (45,196 )     (24.8 )     6.4       8.4  

Brokered time deposits

    146,270       9,990             136,280       1,364.2       146,270             6.8        

Time deposits

    634,883       562,264       402,030       72,619       12.9       232,853       57.9       29.6       18.4  

Total deposits

  $ 2,145,647     $ 2,082,365     $ 2,186,004     $ 63,282       3.0 %   $ (40,357 )     (1.8 )%     100.0 %     100.0 %

 

Stockholders Equity 

 

Stockholders’ equity was $218.5 million at March 31, 2023an increase of $2.7 million, or 1.2%, compared to December 31, 2022, and a decrease of $15.2 million, or 6.5%, compared to March 31, 2022The increase in stockholders’ equity compared to December 31, 2022 is primarily attributable to a decrease in accumulated other comprehensive loss due to an increase in the fair value of the Bank’s available for sale securities portfolio and net income for the quarter, partially offset by the adoption of the CECL standard, reflected in retained earnings. The decrease in stockholders’ equity compared to March 31, 2022 is primarily attributable to an increase in accumulated other comprehensive loss due to a decrease in the fair value of the Bank’s available for sale securities portfolio and the adoption of the CECL standard, partially offset by net income for the last twelve months.

 

 

 

Net Interest Income

 

Net interest income for the first quarter of 2023 totaled $20.2 million, a decrease of $2.3 million, or 10.4%, compared to the fourth quarter of 2022, and a decrease of $1.6 million, or 7.6%, compared to the first quarter of 2022. Total interest income was $31.0 million, $29.4 million and $23.9 million for the quarters ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively. Total interest expense was $10.8 million, $6.9 million and $2.0 million for the corresponding periods. Included in net interest income for the quarters ended March 31, 2023, December 31, 2022 and March 31, 2022 is $0.1 million, $0.1 million, and $0.2 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarters ended March 31, 2023 and March 31, 2022 are interest recoveries of $0.1 million and $0.2 million, respectively. There were no interest recoveries for the quarter ended December 31, 2022.

 

Investar’s net interest margin was 3.13% for the quarter ended March 31, 2023, compared to 3.50% for the quarter ended December 31, 2022 and 3.75% for the quarter ended March 31, 2022. The decrease in net interest margin for the quarter ended March 31, 2023 compared to the quarter ended December 31, 2022 was driven by a 78 basis point increase in the overall cost of funds, partially offset by a 23 basis point increase in the yield on interest-earning assets. The decrease in net interest margin for the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022 was driven by a 175 basis point increase in the overall cost of funds, partially offset by a 70 basis point increase in the yield on interest-earning assets.

 

The yield on interest-earning assets was 4.80% for the quarter ended March 31, 2023, compared to 4.57% for the quarter ended December 31, 2022 and 4.10% for the quarter ended March 31, 2022. The increase in the yield on interest-earning assets compared to the quarter ended December 31, 2022 was primarily attributable to a 20 basis point increase in the yield on the loan portfolio. The increase in the yield on interest-earning assets compared to the quarter ended March 31, 2022 was primarily driven by a 54 basis point increase in the yield on the loan portfolio and an 87 basis point increase in the yield on the taxable securities portfolio. Prepayment penalty fees of $0.6 million were recognized as loan fees and added 12 basis points to the yield on the loan portfolio during the quarter ended March 31, 2022 as one of our large commercial loan relationships prepaid.

 

Exclusive of the interest income accretion from the acquisition of loans, interest recoveries, accelerated fee income recognized due to the forgiveness or pay-off of PPP loans, and the $0.6 million of prepayment penalty fees recognized during the first quarter of 2022, adjusted net interest margin decreased to 3.10% for the quarter ended March 31, 2023, compared to 3.49% for the quarter ended December 31, 2022, and 3.53% for the quarter ended March 31, 2022. The adjusted yield on interest-earning assets was 4.77% for the quarter ended March 31, 2023 compared to 4.56% and 3.88% for the quarters ended December 31, 2022 and March 31, 2022, respectively. Refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics.

 

The cost of deposits increased 80 basis points to 1.62% for the quarter ended March 31, 2023 compared to 0.82% for the quarter ended December 31, 2022 and increased 137 basis points compared to 0.25% for the quarter ended March 31, 2022. The increase in the cost of deposits compared to the quarters ended December 31, 2022 and March 31, 2022 resulted from both a higher average balance and an increase in rates paid on time deposits, a higher average balance on brokered time deposits, and an increase in rates paid on interest-bearing demand deposits. 

 

The cost of short-term borrowings increased 91 basis points to 4.80% for the quarter ended March 31, 2023 compared to 3.89% for the quarter ended December 31, 2022 and increased 465 basis points compared to 0.15% for the quarter ended March 31, 2022. The increase in the cost of short-term borrowings compared to the quarters ended December 31, 2022 and March 31, 2022 resulted from both a higher average balance and an increase in rates paid on short-term advances from the Federal Home Loan Bank, the cost of which is driven by the Federal Reserve’s federal funds rate.

 

The overall cost of funds for the quarter ended March 31, 2023 increased 78 basis points to 2.23% compared to 1.45% for the quarter ended December 31, 2022 and increased 175 basis points compared to 0.48% for the quarter ended March 31, 2022. The increase in the cost of funds for the quarter ended March 31, 2023 compared to the quarters ended December 31, 2022 and March 31, 2022 resulted from both an increase in the cost of deposits, and a higher average balance and increased cost of short-term borrowings.

 

Noninterest Income

 

Noninterest income for the first quarter of 2023 totaled $1.1 million, a decrease of $2.4 million, or 68.7%, compared to the fourth quarter of 2022 and a decrease of $4.8 million, or 81.7%, compared to the first quarter of 2022.

 

The decrease in noninterest income compared to the quarter ended December 31, 2022 is driven by nontaxable income from insurance proceeds of $1.4 million recorded in the fourth quarter of 2022 related to an insurance policy for the former Chief Financial Officer of Investar and the Bank and a $0.8 million increase in loss on sale or disposition of fixed assets resulting from the sale of the Alice and Victoria, Texas branches in the first quarter of 2023. The decrease in noninterest income compared to the quarter ended March 31, 2022 is mainly attributable to $3.3 million in swap termination fees recorded in the first quarter of 2022 and a loss on sale or disposition of fixed assets of $0.9 million for the quarter ended March 31, 2023, resulting from the sale of the Alice and Victoria, Texas branches, compared to a gain on sale or disposition of fixed assets of $0.4 million for the quarter ended March 31, 2022.

 

Swap termination fees of $3.3 million were recorded for the quarter ended March 31, 2022 when the Bank voluntarily terminated a number of its interest rate swap agreements in response to market conditions. The Bank had no current or forward starting interest rate swap contracts as of March 31, 2023

 

Noninterest Expense

 

Noninterest expense for the first quarter of 2023 totaled $16.2 million, an increase of $2.3 million, or 16.3%, compared to the fourth quarter of 2022, and an increase of $0.7 million, or 4.8%, compared to the first quarter of 2022

 

The increase in noninterest expense for the quarter ended March 31, 2023 compared to the quarter ended December 31, 2022 was driven by a $1.8 million increase in salaries and employee benefits and $0.7 million in expenses as a result of the sale of the Alice and Victoria, Texas branch locations. The increase in salaries and employee benefits was primarily due to a $2.3 million ERC related to the second quarter of 2021, which was recognized as a credit to payroll taxes in the quarter ended December 31, 2022, partially offset by $0.6 million in severance pursuant to a separation agreement with the former Chief Financial Officer of Investar and the Bank recorded in the fourth quarter of 2022. As a result of the sale of the Alice and Victoria, Texas branches, Investar recorded $0.4 million of occupancy expense to terminate the remaining contractually obligated lease payments, $0.1 million of salaries and employee benefits for severance, $0.1 million of professional fees for legal and consulting services, and $0.1 million of depreciation and amortization to accelerate the amortization of the remaining core deposit intangible. 

 

The increase in noninterest expense for the quarter ended March 31, 2023 compared to the quarter ended March 31, 2022 is primarily a result of $0.7 million in expenses as a result of the sale of the Alice and Victoria, Texas branch locations, discussed above, and a $0.2 million increase in salaries and employee benefits, partially offset by a $0.1 million decrease in depreciation and amortization. The increase in salaries and employee benefits compared to the first quarter of 2022 is primarily due to an increase in health insurance claims. The decrease in depreciation and amortization is primarily due to the closure of two branch locations in 2022 and the closure of the Alice and Victoria, Texas branches in January 2023.

 

 

 

Taxes

 

Investar recorded an income tax expense of $0.9 million for the quarter ended March 31, 2023, which equates to an effective tax rate of 18.7%, compared to effective tax rates of 17.5% and 20.5% for the quarters ended December 31, 2022 and March 31, 2022, respectively.

 

Basic and Diluted Earnings Per Common Share

 

Investar reported basic and diluted earnings per common share of $0.38 for the quarter ended March 31, 2023, compared to basic and diluted earnings per common share of $0.90 and $0.88, respectively, for the quarter ended December 31, 2022, and basic and diluted earnings per common share of $0.98 and $0.97, respectively, for the quarter ended March 31, 2022.

 

About Investar Holding Corporation

 

Investar, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, National Association. The Bank currently operates 28 branch locations serving Louisiana, Texas, and Alabama. At March 31, 2023, the Bank had 332 full-time equivalent employees and total assets of $2.8 billion.

 

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.” We also present certain average loan, yield, net interest income and net interest margin data adjusted to show the effects of, accelerated fee income for PPP loans, interest recoveries, interest income accretion from the acquisition of loans, and prepayment penalty fees. Management believes these non-GAAP financial measures provide information useful to investors in understanding Investar’s financial results, and Investar believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting Investar’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 Investar 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 and Cautionary Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Investar’s current views with respect to, among other things, future events and financial performance. Investar 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 Investar and its subsidiaries or on Investar’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by Investar that the future plans, estimates or expectations by Investar will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to Investar’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 Investar’s underlying assumptions prove to be incorrect, Investar’s actual results may vary materially from those indicated in these statements. Investar 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:

 

 

the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements caused by business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate, including risks and uncertainties caused by the ongoing COVID-19 pandemic, potential continued higher inflation and interest rates, supply and labor constraints, the war in Ukraine and uncertainty regarding whether the United States Congress will raise the statutory debt limit;

 

 

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, including potential continued increases in interest rates in 2023;

 

 

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 and grow acquired operations;

 

 

our adoption on January 1, 2023 of ASU 2016-13, and inaccuracy of the assumptions and estimates we make in establishing reserves for credit losses and other estimates;

 

 

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;

 

 

changes in the quality and composition of, and changes in unrealized losses in, our investment portfolio, including whether we may have to sell securities before their recovery of amortized cost basis and realize losses;

 

 

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;

 

 

cessation of the one-week and two-month U.S. dollar settings of LIBOR as of December 31, 2021 and the announced cessation of the remaining U.S. dollar LIBOR setting after June 30, 2023, and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments and loans;

 

 

our dependence on our management team, and our ability to attract and retain qualified personnel;

 

 

the concentration of our business within our geographic areas of operation in Louisiana, Texas and Alabama; 

 

 

concentration of credit exposure;

 

 

any deterioration in asset quality and higher loan charge-offs, and the time and effort necessary to resolve problem assets;

 

 

a reduction in liquidity, including as a result of a reduction in the amount of deposits we hold or other sources of liquidity;

 

 

ongoing disruptions in the oil and gas industry due to the significant fluctuations in the price of oil and natural gas;

 

 

data processing system failures and errors;

 

 

cyberattacks and other security breaches; and

 

 

hurricanes, tropical storms, tropical depressions, floods, winter storms, and other adverse weather events, all of which have affected Investar’s market areas from time to time; other natural disasters; oil spills and other man-made disasters; acts of terrorism, an outbreak or intensifying of hostilities including the war in Ukraine or other international or domestic calamities, acts of God and other matters beyond our control.

 

 

 

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 Investar’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”).

 

For further information contact:

 

Investar Holding Corporation

John Campbell

Executive Vice President and Chief Financial Officer

(225) 227-2215

John.Campbell@investarbank.com

 

 

 

INVESTAR HOLDING CORPORATION

SUMMARY FINANCIAL INFORMATION

(Amounts in thousands, except share data)

(Unaudited)

 

   

As of and for the three months ended

 
   

3/31/2023

   

12/31/2022

   

3/31/2022

   

Linked Quarter

   

Year/Year

 

EARNINGS DATA

                                       

Total interest income

  $ 30,977     $ 29,372     $ 23,867       5.5 %     29.8 %

Total interest expense

    10,804       6,853       2,046       57.7       428.1  

Net interest income

    20,173       22,519       21,821       (10.4 )     (7.6 )

Provision for credit losses

    388       1,268       (449 )     (69.4 )     186.4  

Total noninterest income

    1,076       3,441       5,866       (68.7 )     (81.7 )

Total noninterest expense

    16,175       13,913       15,433       16.3       4.8  

Income before income tax expense

    4,686       10,779       12,703       (56.5 )     (63.1 )

Income tax expense

    874       1,881       2,600       (53.5 )     (66.4 )

Net income

  $ 3,812     $ 8,898     $ 10,103       (57.2 )     (62.3 )
                                         

AVERAGE BALANCE SHEET DATA

                                       

Total assets

  $ 2,735,823     $ 2,677,604     $ 2,560,831       2.2 %     6.8 %

Total interest-earning assets

    2,615,097       2,552,448       2,358,312       2.5       10.9  

Total loans

    2,103,989       2,033,117       1,862,775       3.5       12.9  

Total interest-bearing deposits

    1,557,665       1,482,268       1,576,643       5.1       (1.2 )

Total interest-bearing liabilities

    1,961,302       1,872,870       1,712,163       4.7       14.6  

Total deposits

    2,108,168       2,072,288       2,163,199       1.7       (2.5 )

Total stockholders’ equity

    219,690       211,585       246,309       3.8       (10.8 )
                                         

PER SHARE DATA

                                       

Earnings:

                                       

Basic earnings per common share

  $ 0.38     $ 0.90     $ 0.98       (57.8 )%     (61.2 )%

Diluted earnings per common share

    0.38       0.88       0.97       (56.8 )     (60.8 )

Core Earnings(1):

                                       

Core basic earnings per common share(1)

    0.52       0.63       0.69       (17.5 )     (24.6 )

Core diluted earnings per common share(1)

    0.51       0.62       0.68       (17.7 )     (25.0 )

Book value per common share

    22.06       21.79       22.66       1.2       (2.6 )

Tangible book value per common share(1)

    17.74       17.43       18.41       1.8       (3.6 )

Common shares outstanding

    9,900,648       9,901,847       10,310,212       (0.0 )     (4.0 )

Weighted average common shares outstanding - basic

    9,908,931       9,899,192       10,335,334       0.1       (4.1 )

Weighted average common shares outstanding - diluted

    9,992,467       10,032,446       10,405,783       (0.4 )     (4.0 )
                                         

PERFORMANCE RATIOS

                                       

Return on average assets

    0.57 %     1.32 %     1.60 %     (56.8 )%     (64.4 )%

Core return on average assets(1)

    0.76       0.92       1.13       (17.4 )     (32.7 )

Return on average equity

    7.04       16.69       16.64       (57.8 )     (57.7 )

Core return on average equity(1)

    9.46       11.66       11.70       (18.9 )     (19.1 )

Net interest margin

    3.13       3.50       3.75       (10.6 )     (16.5 )

Net interest income to average assets

    2.99       3.34       3.46       (10.5 )     (13.6 )

Noninterest expense to average assets

    2.40       2.06       2.44       16.5       (1.6 )

Efficiency ratio(2)

    76.12       53.59       55.74       42.0       36.6  

Core efficiency ratio(1)

    69.89       63.35       64.51       10.3       8.3  

Dividend payout ratio

    25.00       10.56       8.67       136.7       188.4  

Net charge-offs (recoveries) to average loans

    0.01             (0.04 )           125.0  

 

(1) Non-GAAP financial measure. See reconciliation.

(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for credit losses) and noninterest income.

 

 

 

INVESTAR HOLDING CORPORATION

SUMMARY FINANCIAL INFORMATION

(Unaudited)

 

   

As of and for the three months ended

 
   

3/31/2023

   

12/31/2022

   

3/31/2022

   

Linked Quarter

   

Year/Year

 

ASSET QUALITY RATIOS

                                       

Nonperforming assets to total assets

    0.23 %     0.44 %     1.13 %     (47.7 )%     (79.6 )%

Nonperforming loans to total loans

    0.27       0.54       1.37       (50.0 )     (80.3 )

Allowance for credit losses to total loans

    1.45       1.16       1.12       25.0       29.5  

Allowance for credit losses to nonperforming loans

    535.55       214.92       82.09       149.2       552.4  
                                         

CAPITAL RATIOS

                                       

Investar Holding Corporation:

                                       

Total equity to total assets

    7.94 %     7.84 %     9.08 %     1.3 %     (12.6 )%

Tangible equity to tangible assets(1)

    6.48       6.37       7.51       1.8       (13.7 )

Tier 1 leverage ratio

    8.30       8.53       8.53       (2.7 )     (2.7 )

Common equity tier 1 capital ratio(2)

    9.64       9.79       9.76       (1.5 )     (1.2 )

Tier 1 capital ratio(2)

    10.06       10.21       10.21       (1.5 )     (1.5 )

Total capital ratio(2)

    13.24       13.25       13.29       (0.1 )     (0.4 )

Investar Bank:

                                       

Tier 1 leverage ratio

    9.72       9.89       10.03       (1.7 )     (3.1 )

Common equity tier 1 capital ratio(2)

    11.77       11.83       12.01       (0.5 )     (2.0 )

Tier 1 capital ratio(2)

    11.77       11.83       12.01       (0.5 )     (2.0 )

Total capital ratio(2)

    13.02       12.92       13.04       0.8       (0.2 )

 

(1) Non-GAAP financial measure. See reconciliation.

(2) Estimated for March 31, 2023.

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)

 

   

March 31, 2023

   

December 31, 2022

   

March 31, 2022

 

ASSETS

                       

Cash and due from banks

  $ 30,571     $ 30,056     $ 45,700  

Interest-bearing balances due from other banks

    722       10,010       45,775  

Federal funds sold

          193       130  

Cash and cash equivalents

    31,293       40,259       91,605  
                         

Available for sale securities at fair value (amortized cost of $462,332, $467,316, and $436,759, respectively)

    406,107       405,167       413,777  

Held to maturity securities at amortized cost (estimated fair value of $7,805, $7,922, and $9,900, respectively)

    8,048       8,305       9,926  

Loans

    2,109,044       2,104,767       1,877,444  

Less: allowance for credit losses

    (30,521 )     (24,364 )     (21,088 )

Loans, net

    2,078,523       2,080,403       1,856,356  

Equity securities

    24,617       27,254       17,904  

Bank premises and equipment, net of accumulated depreciation of $21,670, $22,025, and $20,016, respectively

    47,698       49,587       55,204  

Other real estate owned, net

    662       682       3,454  

Accrued interest receivable

    12,947       12,749       11,168  

Deferred tax asset

    16,434       16,438       6,600  

Goodwill and other intangible assets, net

    42,864       43,147       43,804  

Bank owned life insurance

    57,715       57,379       51,366  

Other assets

    24,761       12,437       11,544  

Total assets

  $ 2,751,669     $ 2,753,807     $ 2,572,708  
                         

LIABILITIES

                       

Deposits

                       

Noninterest-bearing

  $ 508,241     $ 580,741     $ 614,416  

Interest-bearing

    1,637,406       1,501,624       1,571,588  

Total deposits

    2,145,647       2,082,365       2,186,004  

Advances from Federal Home Loan Bank

    300,116       387,000       78,500  

Federal funds purchased

    440              

Repurchase agreements

                1,305  

Subordinated debt, net of unamortized issuance costs

    44,248       44,225       43,012  

Junior subordinated debt

    8,545       8,515       8,420  

Accrued taxes and other liabilities

    34,215       15,920       21,810  

Total liabilities

    2,533,211       2,538,025       2,339,051  
                         

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; 9,900,648, 9,901,847, and 10,310,212 shares issued and outstanding, respectively

    9,901       9,902       10,310  

Surplus

    146,027       146,587       153,531  

Retained earnings

    106,780       108,206       85,387  

Accumulated other comprehensive loss

    (44,250 )     (48,913 )     (15,571 )

Total stockholders’ equity

    218,458       215,782       233,657  

Total liabilities and stockholders’ equity

  $ 2,751,669     $ 2,753,807     $ 2,572,708  

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share data)

(Unaudited)

 

   

For the three months ended

 
   

March 31, 2023

   

December 31, 2022

   

March 31, 2022

 

INTEREST INCOME

                       

Interest and fees on loans

  $ 27,359     $ 25,958     $ 21,726  

Interest on investment securities

                       

Taxable

    3,085       2,978       1,814  

Tax-exempt

    105       108       141  

Other interest income

    428       328       186  

Total interest income

    30,977       29,372       23,867  
                         

INTEREST EXPENSE

                       

Interest on deposits

    6,221       3,052       976  

Interest on borrowings

    4,583       3,801       1,070  

Total interest expense

    10,804       6,853       2,046  

Net interest income

    20,173       22,519       21,821  
                         

Provision for credit losses

    388       1,268       (449 )

Net interest income after provision for credit losses

    19,785       21,251       22,270  
                         

NONINTEREST INCOME

                       

Service charges on deposit accounts

    740       799       667  

(Loss) gain on call or sale of investment securities, net

    (1 )           6  

(Loss) gain on sale or disposition of fixed assets, net

    (859 )     (67 )     373  

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

    (142 )     2       41  

Swap termination fee income

                3,344  

Gain on sale of loans

    75             33  

Servicing fees and fee income on serviced loans

    6       13       21  

Interchange fees

    438       492       498  

Income from bank owned life insurance

    336       346       292  

Change in the fair value of equity securities

    (4 )     12       11  

Income from insurance proceeds

          1,384        

Other operating income

    487       460       580  

Total noninterest income

    1,076       3,441       5,866  

Income before noninterest expense

    20,861       24,692       28,136  
                         

NONINTEREST EXPENSE

                       

Depreciation and amortization

    1,052       1,071       1,155  

Salaries and employee benefits

    9,334       7,545       9,021  

Occupancy

    1,024       713       641  

Data processing

    875       1,006       1,006  

Marketing

    69       74       21  

Professional fees

    633       436       379  

Other operating expenses

    3,188       3,068       3,210  

Total noninterest expense

    16,175       13,913       15,433  

Income before income tax expense

    4,686       10,779       12,703  

Income tax expense

    874       1,881       2,600  

Net income

  $ 3,812     $ 8,898     $ 10,103  
                         

EARNINGS PER SHARE

                       

Basic earnings per common share

  $ 0.38     $ 0.90     $ 0.98  

Diluted earnings per common share

    0.38       0.88       0.97  

Cash dividends declared per common share

    0.095       0.095       0.085  

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS

(Amounts in thousands)

(Unaudited)

 

   

For the three months ended

 
   

March 31, 2023

   

December 31, 2022

   

March 31, 2022

 
           

Interest

                 

Interest

                 

Interest

       
   

Average

 

Income/

         

Average

 

Income/

         

Average

 

Income/

       
   

Balance

 

Expense

 

Yield/ Rate

 

Balance

 

Expense

 

Yield/ Rate

 

Balance

 

Expense

 

Yield/ Rate

Assets

                                                                       

Interest-earning assets:

                                                                       

Loans

  $ 2,103,989     $ 27,359       5.27 %   $ 2,033,117     $ 25,958       5.07 %   $ 1,862,775     $ 21,726       4.73 %

Securities:

                                                                       

Taxable

    459,099       3,085       2.73       466,881       2,978       2.53       395,828       1,814       1.86  

Tax-exempt

    16,496       105       2.58       16,958       108       2.52       22,248       141       2.58  

Interest-bearing balances with banks

    35,513       428       4.89       35,492       328       3.67       77,461       186       0.97  

Total interest-earning assets

    2,615,097       30,977       4.80       2,552,448       29,372       4.57       2,358,312       23,867       4.10  

Cash and due from banks

    31,356                       33,363                       44,900                  

Intangible assets

    43,000                       43,262                       43,928                  

Other assets

    76,695                       71,972                       134,491                  

Allowance for credit losses

    (30,325 )                     (23,441 )                     (20,800 )                

Total assets

  $ 2,735,823                     $ 2,677,604                     $ 2,560,831                  
                                                                         

Liabilities and stockholders’ equity

                                                                       

Interest-bearing liabilities:

                                                                       

Deposits:

                                                                       

Interest-bearing demand deposits

  $ 736,083     $ 1,594       0.88 %   $ 822,871     $ 1,084       0.52 %   $ 965,574     $ 339       0.14 %

Brokered demand deposits

                                        3,188       2       0.27  

Savings deposits

    146,093       16       0.04       160,046       18       0.04       180,568       21       0.05  

Brokered time deposits

    67,088       773       4.68       326       4       4.80                    

Time deposits

    608,401       3,838       2.56       499,025       1,946       1.55       427,313       614       0.58  

Total interest-bearing deposits

    1,557,665       6,221       1.62       1,482,268       3,052       0.82       1,576,643       976       0.25  

Short-term borrowings

    301,033       3,562       4.80       284,384       2,785       3.89       5,616       2       0.15  

Long-term debt

    102,604       1,021       4.04       106,218       1,016       3.79       129,904       1,068       3.33  

Total interest-bearing liabilities

    1,961,302       10,804       2.23       1,872,870       6,853       1.45       1,712,163       2,046       0.48  

Noninterest-bearing deposits

    550,503                       590,020                       586,556                  

Other liabilities

    4,328                       3,129                       15,803                  

Stockholders’ equity

    219,690                       211,585                       246,309                  

Total liability and stockholders’ equity

  $ 2,735,823                     $ 2,677,604                     $ 2,560,831                  

Net interest income/net interest margin

          $ 20,173       3.13 %           $ 22,519       3.50 %           $ 21,821       3.75 %

 

 

 

INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

INTEREST EARNED AND YIELD ANALYSIS ADJUSTED FOR ACCELERATED PPP INCOME, INTEREST RECOVERIES, ACCRETION, AND PREPAYMENT PENALTY FEES
(Amounts in thousands)
(Unaudited)

 

   

For the three months ended

 
   

March 31, 2023

   

December 31, 2022

   

March 31, 2022

 
           

Interest

                 

Interest

                 

Interest

       
   

Average

 

Income/

         

Average

 

Income/

         

Average

 

Income/

       
   

Balance

 

Expense

 

Yield/ Rate

 

Balance

 

Expense

 

Yield/ Rate

 

Balance

 

Expense

 

Yield/ Rate

Interest-earning assets:

                                                                       

Loans

  $ 2,103,989     $ 27,359       5.27 %   $ 2,033,117     $ 25,958       5.07 %   $ 1,862,775     $ 21,726       4.73 %

Adjustments:

                                                                       

Accelerated fee income for forgiven or paid off PPP loans

                                                        337          

Interest recoveries

            141                                             203          

Accretion

            55                       66                       208          

Prepayment penalty fees

                                                        562          

Adjusted loans

    2,103,989       27,163       5.24       2,033,117       25,892       5.05       1,862,775       20,416       4.44  

Securities:

                                                                       

Taxable

    459,099       3,085       2.73       466,881       2,978       2.53       395,828       1,814       1.86  

Tax-exempt

    16,496       105       2.58       16,958       108       2.52       22,248       141       2.58  

Interest-bearing balances with banks

    35,513       428       4.89       35,492       328       3.67       77,461       186       0.97  

Adjusted interest-earning assets

    2,615,097       30,781       4.77       2,552,448       29,306       4.56       2,358,312       22,557       3.88  
                                                                         

Total interest-bearing liabilities

    1,961,302       10,804       2.23       1,872,870       6,853       1.45       1,712,163       2,046       0.48  
                                                                         

Adjusted net interest income/adjusted net interest margin

          $ 19,977       3.10 %           $ 22,453       3.49 %           $ 20,511       3.53 %

 

 

 

INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

 

   

March 31, 2023

   

December 31, 2022

   

March 31, 2022

 

Tangible common equity

                       

Total stockholders’ equity

  $ 218,458     $ 215,782     $ 233,657  

Adjustments:

                       

Goodwill

    40,088       40,088       40,088  

Core deposit intangible

    2,676       2,959       3,616  

Trademark intangible

    100       100       100  

Tangible common equity

  $ 175,594     $ 172,635     $ 189,853  

Tangible assets

                       

Total assets

  $ 2,751,669     $ 2,753,807     $ 2,572,708  

Adjustments:

                       

Goodwill

    40,088       40,088       40,088  

Core deposit intangible

    2,676       2,959       3,616  

Trademark intangible

    100       100       100  

Tangible assets

  $ 2,708,805     $ 2,710,660     $ 2,528,904  
                         

Common shares outstanding

    9,900,648       9,901,847       10,310,212  

Tangible equity to tangible assets

    6.48 %     6.37 %     7.51 %

Book value per common share

  $ 22.06     $ 21.79     $ 22.66  

Tangible book value per common share

    17.74       17.43       18.41  

 

 

 

INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

 

     

Three months ended

 
     

3/31/2023

   

12/31/2022

   

3/31/2022

 

Net interest income

(a)

  $ 20,173     $ 22,519     $ 21,821  

Provision for credit losses

      388       1,268       (449 )

Net interest income after provision for credit losses

      19,785       21,251       22,270  
                           

Noninterest income

(b)

    1,076       3,441       5,866  

Loss (gain) on call or sale of investment securities, net

      1             (6 )

Loss (gain) on sale or disposition of fixed assets, net

      859       67       (373 )

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

      142       (2 )     (41 )

Swap termination fee income

                  (3,344 )

Gain on sale of loans(1)

      (75 )            

Change in the fair value of equity securities

      4       (12 )     (11 )

Income from insurance proceeds(2)

            (1,384 )      

Change in the net asset value of other investments(3)

      33       44        

Core noninterest income

(d)

    2,040       2,154       2,091  
                           

Core earnings before noninterest expense

      21,825       23,405       24,361  
                           

Total noninterest expense

(c)

    16,175       13,913       15,433  

Severance(4)

            (624 )     (8 )

Employee retention credit, net of consulting fees(5)

            2,342        

Divestiture expense(6)

      (651 )            

Core noninterest expense

(f)

    15,524       15,631       15,425  
                           

Core earnings before income tax expense

      6,301       7,774       8,936  

Core income tax expense(7)

      1,178       1,555       1,829  

Core earnings

    $ 5,123     $ 6,219     $ 7,107  
                           

Core basic earnings per common share

      0.52       0.63       0.69  
                           

Diluted earnings per common share (GAAP)

    $ 0.38     $ 0.88     $ 0.97  

Loss (gain) on sale or disposition of fixed assets, net

      0.07       0.01       (0.03 )

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

      0.01              

Swap termination fee income

                  (0.26 )

Gain on sale of loans(1)

      (0.01 )            

Income from insurance proceeds(2)

            (0.14 )      

Severance(4)

            0.05        

Employee retention credit, net of consulting fees(5)

            (0.18 )      

Divestiture expense(6)

      0.06              

Core diluted earnings per common share

    $ 0.51     $ 0.62     $ 0.68  
                           

Efficiency ratio

(c) / (a+b)

    76.12 %     53.59 %     55.74 %

Core efficiency ratio

(f) / (a+d)

    69.89       63.35       64.51  

Core return on average assets(8)

      0.76       0.92       1.13  

Core return on average equity(8)

      9.46       11.66       11.70  

Total average assets

    $ 2,735,823     $ 2,677,604     $ 2,560,831  

Total average stockholders’ equity

      219,690       211,585       246,309  

 

(1) Adjustment to noninterest income recorded upon completion of the sale of the Alice and Victoria branches for remaining discount on loans sold.

(2) Income from insurance proceeds represents nontaxable income related to an insurance policy for the former Chief Financial Officer of Investar and the Bank.

(3) Change in net asset value of other investments represents unrealized gains or losses or Investar’s investments in Small Business Investment Companies and other investment funds and is included in other operating income in the accompanying consolidated statements of income.

(4) Severance in the fourth quarter of 2022 represents a comprehensive severance package for the former Chief Financial Officer of Investar and the Bank.
(5) ERC represents a broad based refundable payroll tax credit that incentivized businesses to retain employees on the payroll during the COVID-19 pandemic.
(6) Adjustments to noninterest expenses directly attributable to the sale of the Alice and Victoria, Texas branch locations, consisting of $0.4 million of occupancy expense to terminate the remaining contractually obligated lease payments, $0.1 million of salaries and employee benefits for severance, $0.1 million of professional fees for legal and consulting services, and $0.1 million of depreciation and amortization to accelerate the amortization of the remaining core deposit intangible.
(7) Core income tax expense is calculated using the effective tax rates of 18.7% and 20.5% for the quarters ended March 31, 2023 and March 31, 2022, respectively. Core income tax expense for the quarter ended December 31, 2022 is calculated using an effective tax rate of 20.0%, which is adjusted to account for the exclusion of the income from insurance proceeds, which is nontaxable income, from the calculation of core earnings.
(8) Core earnings used in calculation. No adjustments were made to average assets or average equity.

 

 
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