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On January 1, 2023, the Company adopted ASU 2016-13, which introduced a new model known as CECL. Upon adoption, Investar recorded a one-time, cumulative effect adjustment to increase the allowance for credit losses by $5.9 million. Derivative assets and liabilities are reported at fair value in “Other assets” and “Accrued taxes and other liabilities”, respectively, in the accompanying consolidated balance sheets. For the three months ended March 31, 2024, the $1.4 million negative provision for credit losses on the consolidated statement of income includes a $1.4 million negative provision for loan losses and a $9,000 negative provision for unfunded loan commitments. For the three months ended March 31, 2023, the $0.4 million provision for credit losses on the consolidated statement of income includes a $0.6 million provision for loan losses and a $0.2 million negative provision for unfunded loan commitments Notional amounts represent interest rate swap contracts with customers and offsetting interest rate swap contracts with other financial institutions. 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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

_____________________________________

 

FORM 10-Q

_____________________________________

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 001-36522

 

 

Investar Holding Corporation

(Exact name of registrant as specified in its charter) 

 

Louisiana

27-1560715

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

 

10500 Coursey Boulevard, Baton Rouge, Louisiana 70816

(Address of principal executive offices, including zip code)

(225) 227-2222

(Registrants telephone number, including area code)

 

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

  

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. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No ☒

 

The number of shares outstanding of the issuer’s class of common stock, as of the latest practicable date, is as follows: Common stock, $1.00 par value, 9,829,197 shares outstanding as of April 29,2024.

 

 

 
 

TABLE OF CONTENTS

 

Part I. Financial Information

 
     

Item 1.

Financial Statements (Unaudited)

4

 

Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

4

 

Consolidated Statements of Income for the three months ended March 31, 2024 and 2023

5

 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023

6

 

Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 and 2023

7

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

8

 

Notes to the Consolidated Financial Statements

10

 

Note 1. Summary of Significant Accounting Policies

10

 

Note 2. Earnings Per Share

11
 

Note 3. Investment Securities

12
 

Note 4. Loans and Allowance for Credit Losses

15
  Note 5. Borrowings Under Bank Term Funding Program 23
 

Note 6. Stockholders’ Equity

23
 

Note 7. Derivative Financial Instruments

24
 

Note 8. Fair Values of Financial Instruments

25
 

Note 9. Income Taxes

29
 

Note 10. Commitments and Contingencies

29
 

Note 11. Leases

30

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

52

Item 4.

Controls and Procedures

52
     

Part II. Other Information

 
     

Item 1A.

Risk Factors

53

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds 

53

Item 6.

Exhibits

55

Signatures

56

 

 

 

GLOSSARY OF DEFINED TERMS

 

Below is a listing of certain acronyms, abbreviations and defined terms, among others, used throughout this Quarterly Report on Form 10-Q.

 

AFS

Available For Sale

ALCO

Asset/Liability Committee

Annual Report Investar Holding Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 7, 2024

ASC

Accounting Standards Codification

ASU

Accounting Standards Update

ATM

Automated Teller Machine

Bank Investar Bank, National Association

BTFP

Bank Term Funding Program

BOLI Bank Owned Life Insurance

CECL

Current Expected Credit Loss

Company Investar Holding Corporation and its wholly-owned subsidiary the Bank (also, “we,” “our,” or “us)

FASB

Financial Accounting Standards Board

FDIC

Federal Deposit Insurance Corporation

FHLB

Federal Home Loan Bank

FRB

Federal Reserve Bank of Atlanta

GAAP

U.S. Generally Accepted Accounting Principles

HTM

Held To Maturity

ROU

Right-Of-Use

SEC

U.S. Securities and Exchange Commission

SBIC Small Business Investment Company

SOFR

Secured Overnight Financing Rate

U.S.

United States

 

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

 

  

March 31, 2024

 

December 31, 2023

  

(Unaudited)

     

ASSETS

        

Cash and due from banks

 $18,083  $28,285 

Interest-bearing balances due from other banks

  23,762   3,724 

Cash and cash equivalents

  41,845   32,009 
         

Available for sale securities at fair value (amortized cost of $415,546 and $419,283, respectively)

  353,340   361,918 

Held to maturity securities at amortized cost (estimated fair value of $18,148 and $20,513, respectively)

  17,755   20,472 

Loans

  2,180,578   2,210,619 

Less: allowance for credit losses

  (29,114)  (30,540)

Loans, net

  2,151,464   2,180,079 

Equity securities at fair value

  2,260   1,180 

Nonmarketable equity securities

  12,723   13,417 

Bank premises and equipment, net of accumulated depreciation of $20,038 and $19,476, respectively

  42,659   44,183 

Other real estate owned, net

  4,247   4,438 

Accrued interest receivable

  15,047   14,366 

Deferred tax asset

  17,779   16,910 

Goodwill and other intangible assets, net

  42,154   42,320 

Bank owned life insurance

  60,745   58,797 

Other assets

  25,688   25,066 

Total assets

 $2,787,706  $2,815,155 
         

LIABILITIES

        

Deposits:

        

Noninterest-bearing

 $435,397  $448,752 

Interest-bearing

  1,772,431   1,806,975 

Total deposits

  2,207,828   2,255,727 

Advances from Federal Home Loan Bank

  23,500   23,500 

Borrowings under Bank Term Funding Program

  229,000   212,500 

Repurchase agreements

  7,850   8,633 

Subordinated debt, net of unamortized issuance costs

  43,363   44,320 

Junior subordinated debt

  8,657   8,630 

Accrued taxes and other liabilities

  40,503   35,077 

Total liabilities

  2,560,701   2,588,387 
         

Commitments and contingencies (Note 10)

          
         

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; 9,781,946 and 9,748,067 shares issued and outstanding, respectively

  9,782   9,748 

Surplus

  145,739   145,456 

Retained earnings

  120,441   116,711 

Accumulated other comprehensive loss

  (48,957)  (45,147)

Total stockholders’ equity

  227,005   226,768 

Total liabilities and stockholders’ equity

 $2,787,706  $2,815,155 

 

See accompanying notes to the consolidated financial statements.

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share data)

(Unaudited)

 

   

Three months ended March 31,

 
   

2024

   

2023

 

INTEREST INCOME

               

Interest and fees on loans

  $ 32,135     $ 27,359  

Interest on investment securities:

               

Taxable

    2,817       3,085  

Tax-exempt

    238       105  

Other interest income

    532       428  

Total interest income

    35,722       30,977  
                 

INTEREST EXPENSE

               

Interest on deposits

    14,845       6,221  

Interest on borrowings

    3,661       4,583  

Total interest expense

    18,506       10,804  

Net interest income

    17,216       20,173  
                 

Provision for credit losses

    (1,419 )     388  

Net interest income after provision for credit losses

    18,635       19,785  
                 

NONINTEREST INCOME

               

Service charges on deposit accounts

    810       740  

Loss on call or sale of investment securities, net

          (1 )

Gain (loss) on sale or disposition of fixed assets, net

    427       (859 )

Loss on sale of other real estate owned, net

          (142 )

Gain on sale of loans

          75  

Servicing fees and fee income on serviced loans

          6  

Interchange fees

    395       438  

Income from bank owned life insurance

    388       336  

Change in the fair value of equity securities

    80       (4 )

Other operating income

    648       487  

Total noninterest income

    2,748       1,076  

Income before noninterest expense

    21,383       20,861  
                 

NONINTEREST EXPENSE

               

Depreciation and amortization

    812       1,052  

Salaries and employee benefits

    9,248       9,334  

Occupancy

    581       1,024  

Data processing

    937       875  

Marketing

    41       69  

Professional fees

    419       633  

Gain on early extinguishment of subordinated debt

    (215 )      

Other operating expenses

    3,473       3,188  

Total noninterest expense

    15,296       16,175  

Income before income tax expense

    6,087       4,686  

Income tax expense

    1,380       874  

Net income

  $ 4,707     $ 3,812  
                 

EARNINGS PER SHARE

               

Basic earnings per share

  $ 0.48     $ 0.38  

Diluted earnings per share

    0.48       0.38  

Cash dividends declared per common share

    0.10       0.095  

 

See accompanying notes to the consolidated financial statements.

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

 

  

Three months ended March 31,

 
  

2024

  

2023

 

Net income

 $4,707  $3,812 

Other comprehensive (loss) income:

        

Investment securities:

        

Unrealized (loss) gain, available for sale, net of tax (benefit) expense of ($1,031) and $1,261, respectively

  (3,810)  4,662 

Reclassification of realized loss, available for sale, net of tax benefit of $0 for all respective periods

     1 

Total other comprehensive (loss) income

  (3,810)  4,663 

Total comprehensive income

 $897  $8,475 

 

See accompanying notes to the consolidated financial statements.

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

(Amounts in thousands, except share data)

(Unaudited)

 

              

Accumulated

     
              

Other

  

Total

 
  

Common

      

Retained

  

Comprehensive

  

Stockholders’

 
  

Stock

  

Surplus

  

Earnings

  

(Loss) Income

  

Equity

 

Three months ended:

                    

March 31, 2023

                    

Balance at beginning of period

 $9,902  $146,587  $108,206  $(48,913) $215,782 

Cumulative effect of adoption of ASU 2016-13, net

        (4,295)     (4,295)

Surrendered shares

  (10)  (177)        (187)

Options exercised

  8   97         105 

Dividends declared, $0.095 per share

        (943)     (943)

Stock-based compensation

  47   386         433 

Shares repurchased

  (46)  (866)        (912)

Net income

        3,812      3,812 

Other comprehensive income, net

           4,663   4,663 

Balance at end of period

 $9,901  $146,027  $106,780  $(44,250) $218,458 
                     

March 31, 2024

                    

Balance at beginning of period

 $9,748  $145,456  $116,711  $(45,147) $226,768 

Surrendered shares

  (7)  (108)        (115)

Options exercised

  14   182         196 

Dividends declared, $0.10 per share

        (977)     (977)

Stock-based compensation

  38   371         409 

Shares repurchased

  (11)  (162)        (173)

Net income

        4,707      4,707 

Other comprehensive loss, net

           (3,810)  (3,810)

Balance at end of period

 $9,782  $145,739  $120,441  $(48,957) $227,005 

 

See accompanying notes to the consolidated financial statements.

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited) 

 

   

Three months ended March 31,

 
   

2024

   

2023

 

Net income

  $ 4,707     $ 3,812  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization

    812       1,052  

Provision for credit losses

    (1,419 )     388  

Net accretion of purchase accounting adjustments

    (25 )     (89 )

Provision for other real estate owned

    233        

Net amortization of securities

    15       45  

Loss on call or sale of investment securities, net

          1  

(Gain) loss on sale or disposition of fixed assets, net

    (427 )     859  

Loss on sale of other real estate owned, net

          142  

Gain on sale of loans to First Community Bank

          (75 )

Gain on early extinguishment of subordinated debt

    (215 )      

FHLB stock dividend

    (53 )     (186 )

Stock-based compensation

    409       433  

Deferred taxes

    163       (116 )

Net change in value of bank owned life insurance

    (388 )     (336 )

Amortization of subordinated debt issuance costs

    46       23  

Change in the fair value of equity securities

    (80 )     4  

Net change in:

               

Accrued interest receivable

    (681 )     (198 )

Other assets

    1,059       5,487  

Accrued taxes and other liabilities

    3,674       1,125  

Net cash provided by operating activities

    7,830       12,371  
                 

Cash flows from investing activities:

               

Proceeds from sales of investment securities available for sale

          2,364  

Purchases of securities available for sale

    (5,411 )     (7,632 )

Proceeds from maturities, prepayments and calls of investment securities available for sale

    9,134       10,209  

Proceeds from maturities, prepayments and calls of investment securities held to maturity

    2,716       254  

Proceeds from redemption or sale of nonmarketable equity securities

    1,683       4,000  

Purchases of nonmarketable equity securities

    (936 )     (1,182 )

Purchases of equity securities at fair value

    (1,000 )      

Net decrease (increase) in loans

    30,012       (18,671 )

Proceeds from sales of other real estate owned

          794  

Proceeds from sales of fixed assets

    1,340        

Purchases of fixed assets

    (112 )     (324 )

Proceeds from surrender of bank owned life insurance

    8,440        

Purchases of bank owned life insurance

    (10,000 )      

Purchases of other investments

    (40 )     (279 )

Distributions from investments

    69       37  

Cash paid for branch sale to First Community Bank, net of cash received

          (596 )

Net cash provided by (used in) investing activities

    35,895       (11,026 )

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Amounts in thousands)

(Unaudited)

 

Cash flows from financing activities:

               

Net (decrease) increase in customer deposits

    (47,867 )     77,883  

Net increase in federal funds purchased

          440  

Net decrease in repurchase agreements

    (783 )      

Net decrease in short-term FHLB advances

          (56,884 )

Net increase in borrowings under the Bank Term Funding Program

    16,500        

Repayment of long-term FHLB advances

          (30,000 )

Cash dividends paid on common stock

    (975 )     (943 )

Proceeds from stock options exercised

    196       105  

Payments to repurchase common stock

    (173 )     (912 )

Extinguishment of subordinated debt

    (787 )      

Net cash used in financing activities

    (33,889 )     (10,311 )

Net change in cash and cash equivalents

    9,836       (8,966 )

Cash and cash equivalents, beginning of period

    32,009       40,259  

Cash and cash equivalents, end of period

  $ 41,845     $ 31,293  
                 

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES

               

Transfer from loans to other real estate owned

  $ 42     $ 916  

 

See accompanying notes to the consolidated financial statements.

 

 

INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three month period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023, including the notes thereto, which were included as part of the Company’s Annual Report.

 

Nature of Operations

 

The Company is a financial holding company, headquartered in Baton Rouge, Louisiana that provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, National Association, a national bank, primarily to meet the needs of individuals, professionals and small to medium-sized businesses. The Company’s primary markets are in south Louisiana, southeast Texas and Alabama. At  March 31, 2024 , the Company operated 20 full service branches located in Louisiana, two full service branches located in Texas and six full service branches located in Alabama and had 323 full-time equivalent employees.
 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material.

 

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses. While management uses available information to recognize credit losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, changes in conditions of our borrowers’ industries or changes in the condition of individual borrowers. The Company adopted ASU 2016-13 effective January 1, 2023, which changed how the Company accounts for the allowance for credit losses. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for credit losses may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

 

Other estimates that are susceptible to significant change in the near term relate to the allowance for off-balance sheet credit losses, the fair value of stock-based compensation awards, the determination of other-than-temporary impairments of securities, and the fair value of financial instruments and goodwill. Rapidly changing inflation rates and rising interest rates have made certain estimates more challenging, including those discussed above.

 

Reclassifications

 

Certain reclassifications have been made to prior period balances to conform to the current period presentation.

 

10

 

INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Recent Accounting Pronouncements

 

FASB “Disclosure Improvements Update No. 2023-06 (ASU 2023-06”). In  October 2023, the FASB issued ASU 2023-06, which amends the disclosure or presentation requirements related to various topics. The amendment is intended to align GAAP with the SEC’s regulations. ASU 2023-06 is required to be applied prospectively, and early adoption is prohibited. For reporting entities subject to the SEC’s existing disclosure requirements, the effective dates of ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective. If by  June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed and will not become effective for any entities. ASU 2023-06 is not expected to have a material impact on the Company’s consolidated financial statements.

 

FASB ASC Topic 740 “Income Taxes - Improvements to Income Tax Disclosures Update No. 2023-09 (ASU 2023-09”). In  December 2023, the FASB issued ASU 2023-09, which enhances the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires disclosure of additional categories of information about federal, state and foreign income taxes in the rate reconciliation table and requires companies to provide more information about the reconciling items in some categories if a quantitative threshold is met. The adoption of ASU 2023-09 is effective for fiscal years beginning after  December 15, 2024 and is not expected to have a material impact on the Company’s consolidated financial statements.

 

 

NOTE 2. EARNINGS PER SHARE

 

The following is a summary of the information used in the computation of basic and diluted earnings per common share for the three months ended March 31, 2024 and 2023 (in thousands, except share data).

 

   

Three months ended March 31,

 
   

2024

   

2023

 

Earnings per common share – basic

               

Net income

  $ 4,707     $ 3,812  

Less: income allocated to participating securities

          (1 )

Net income allocated to common shareholders

    4,707       3,811  

Weighted average basic shares outstanding

    9,769,626       9,908,931  

Basic earnings per common share

  $ 0.48     $ 0.38  
                 

Earnings per common share – diluted

               

Net income allocated to common shareholders

  $ 4,707     $ 3,811  

Weighted average basic shares outstanding

    9,769,626       9,908,931  

Dilutive effect of securities

    97,347       83,536  

Total weighted average diluted shares outstanding

    9,866,973       9,992,467  

Diluted earnings per common share

  $ 0.48     $ 0.38  

 

The weighted average shares that have an antidilutive effect in the calculation of diluted earnings per common share and have been excluded from the computations above are shown below.

 

   

Three months ended March 31,

 
   

2024

   

2023

 

Stock options

    2,619       6,011  

Restricted stock units

    1,699       7,760  

 

11

 

INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3. INVESTMENT SECURITIES

 

Debt Securities

 

The amortized cost and approximate fair value of investment securities classified as AFS are summarized below as of the dates presented (dollars in thousands).

 

      

Gross

  

Gross

     
      

Unrealized

  

Unrealized

  

Fair

 
  

Amortized Cost

  

Gains

  

Losses

  

Value

 

March 31, 2024

                

Obligations of the U.S. Treasury and U.S. government agencies and corporations

 $19,039  $83  $(473) $18,649 

Obligations of state and political subdivisions

  17,853      (2,003)  15,850 

Corporate bonds

  29,751      (3,440)  26,311 

Residential mortgage-backed securities

  273,359   19   (47,517)  225,861 

Commercial mortgage-backed securities

  75,544   161   (9,036)  66,669 

Total

 $415,546  $263  $(62,469) $353,340 

 

      

Gross

  

Gross

     
      

Unrealized

  

Unrealized

  

Fair

 
  

Amortized Cost

  

Gains

  

Losses

  

Value

 

December 31, 2023

                

Obligations of the U.S. Treasury and U.S. government agencies and corporations

 $20,383  $100  $(440) $20,043 

Obligations of state and political subdivisions

  18,768   11   (2,076)  16,703 

Corporate bonds

  30,097      (3,741)  26,356 

Residential mortgage-backed securities

  274,950   14   (42,919)  232,045 

Commercial mortgage-backed securities

  75,085   208   (8,522)  66,771 

Total

 $419,283  $333  $(57,698) $361,918 

 

The Company calculates realized gains and losses on sales of debt securities under the specific identification method. Proceeds from sales of investment securities classified as AFS and gross gains and losses are summarized below for the periods presented (dollars in thousands).

 

  

Three months ended March 31,

 
  

2024

  

2023

 

Proceeds from sales

 $  $2,364 

Gross gains

 $  $1 

Gross losses

 $  $(2)

 

The amortized cost and approximate fair value of investment securities classified as HTM are summarized below as of the dates presented (dollars in thousands). 

 

      

Gross

  

Gross

     
      

Unrealized

  

Unrealized

  

Fair

 
  

Amortized Cost

  

Gains

  

Losses

  

Value

 

March 31, 2024

                

Obligations of state and political subdivisions

 $15,475  $634  $(5) $16,104 

Residential mortgage-backed securities

  2,280      (236)  2,044 

Total

 $17,755  $634  $(241) $18,148 

 

      

Gross

  

Gross

     
      

Unrealized

  

Unrealized

  

Fair

 
  

Amortized Cost

  

Gains

  

Losses

  

Value

 

December 31, 2023

                

Obligations of state and political subdivisions

 $18,163  $314  $(82) $18,395 

Residential mortgage-backed securities

  2,309      (191)  2,118 

Total

 $20,472  $314  $(273) $20,513 

 

Securities are classified in the consolidated balance sheets according to management’s intent. The Company had no securities classified as trading as of March 31, 2024 or December 31, 2023.

 

12

 

INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The approximate fair value of AFS securities and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized below as of the dates presented (dollars in thousands).

 

  

Less than 12 Months

  

12 Months or More

  

Total

 
      

Unrealized

      

Unrealized

      

Unrealized

 
  

Fair Value

  

Losses

  

Fair Value

  

Losses

  

Fair Value

  

Losses

 

March 31, 2024

                        

Obligations of the U.S. Treasury and U.S. government agencies and corporations

 $345  $(1) $9,839  $(472) $10,184  $(473)

Obligations of state and political subdivisions

  1,260   (7)  14,590   (1,996)  15,850   (2,003)

Corporate bonds

        26,311   (3,440)  26,311   (3,440)

Residential mortgage-backed securities

  1,356   (10)  221,708   (47,507)  223,064   (47,517)

Commercial mortgage-backed securities

  5,079   (55)  48,098   (8,981)  53,177   (9,036)

Total

 $8,040  $(73) $320,546  $(62,396) $328,586  $(62,469)

 

  

Less than 12 Months

  

12 Months or More

  

Total

 
      

Unrealized

      

Unrealized

      

Unrealized

 
  

Fair Value

  

Losses

  

Fair Value

  

Losses

  

Fair Value

  

Losses

 

December 31, 2023

                        

Obligations of the U.S. Treasury and U.S. government agencies and corporations

 $1,268  $(7) $9,284  $(433) $10,552  $(440)

Obligations of state and political subdivisions

        15,425   (2,076)  15,425   (2,076)

Corporate bonds

  468   (28)  25,888   (3,713)  26,356   (3,741)

Residential mortgage-backed securities

  2,705   (421)  228,415   (42,498)  231,120   (42,919)

Commercial mortgage-backed securities

  1,085   (35)  50,271   (8,487)  51,356   (8,522)

Total

 $5,526  $(491) $329,283  $(57,207) $334,809  $(57,698)

 

At  March 31, 2024702 of the Company’s AFS debt securities had unrealized losses totaling 16.0% of the individual securities’ amortized cost basis and 15.0% of the Company’s total amortized cost basis of the AFS investment securities portfolio. At such date, 682 of the 702 securities had been in a continuous loss position for over 12 months.

 

The approximate fair value of HTM securities, and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized below as of the dates presented (dollars in thousands).

 

  

Less than 12 Months

  

12 Months or More

  

Total

 
      

Unrealized

      

Unrealized

      

Unrealized

 
  

Fair Value

  

Losses

  

Fair Value

  

Losses

  

Fair Value

  

Losses

 

March 31, 2024

                        

Obligations of state and political subdivisions

 $  $  $3,010  $(5) $3,010  $(5)

Residential mortgage-backed securities

        2,044   (236)  2,044   (236)

Total

 $  $  $5,054  $(241) $5,054  $(241)

 

  

Less than 12 Months

  

12 Months or More

  

Total

 
      

Unrealized

      

Unrealized

      

Unrealized

 
  

Fair Value

  

Losses

  

Fair Value

  

Losses

  

Fair Value

  

Losses

 

December 31, 2023

                        

Obligations of state and political subdivisions

 $  $  $3,064  $(82) $3,064  $(82)

Residential mortgage-backed securities

        2,118   (191)  2,118   (191)

Total

 $  $  $5,182  $(273) $5,182  $(273)

 

Unrealized losses are generally due to changes in market interest rates. The Company has the intent to hold these securities either until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their amortized cost basis. Due to the nature of the investments, current market prices, and the current interest rate environment, the Company determined that these declines were not attributable to credit losses at March 31, 2024 or December 31, 2023.

 

13

 

INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The amortized cost and approximate fair value of investment debt securities, by contractual maturity, are shown below as of the dates presented (dollars in thousands). Actual maturities  may differ from contractual maturities due to mortgage-backed securities whereby borrowers  may have the right to call or prepay obligations with or without call or prepayment penalties and certain callable bonds whereby the issuer has the option to call the bonds prior to contractual maturity.

 

  

Securities Available For Sale

  

Securities Held To Maturity

 
  

Amortized

  

Fair

  

Amortized

  

Fair

 
  

Cost

  

Value

  

Cost

  

Value

 

March 31, 2024

                

Due within one year

 $3,309  $3,245  $960  $960 

Due after one year through five years

  32,640   31,642       

Due after five years through ten years

  35,533   31,929   4,515   4,586 

Due after ten years

  344,064   286,524   12,280   12,602 

Total debt securities

 $415,546  $353,340  $17,755  $18,148 

 

  

Securities Available For Sale

  

Securities Held To Maturity

 
  

Amortized

  

Fair

  

Amortized

  

Fair

 
  

Cost

  

Value

  

Cost

  

Value

 

December 31, 2023

                

Due within one year

 $1,034  $1,027  $960  $961 

Due after one year through five years

  28,620   27,623   2,556   2,582 

Due after five years through ten years

  43,634   39,971   4,647   4,621 

Due after ten years

  345,995   293,297   12,309   12,349 

Total debt securities

 $419,283  $361,918  $20,472  $20,513 

 

Accrued interest receivable on the Companys investment securities was $1.8 million and $1.7 million at  March 31, 2024 and  December 31, 2023, respectively, and is included in Accrued interest receivable on the accompanying consolidated balance sheets.

 

At March 31, 2024, securities with a carrying value of $292.3 million were pledged to secure certain deposits, borrowings, and other liabilities, compared to $296.2 million in pledged securities at December 31, 2023.

 

Equity Securities

 

Equity securities at fair value include marketable securities in corporate stocks and mutual funds and totaled $2.3 million and $1.2 million at  March 31, 2024 and  December 31, 2023, respectively.

 

Nonmarketable equity securities primarily consist of FHLB stock and FRB stock. Members of the FHLB and FRB are required to own a certain amount of stock based on the level of borrowings and other factors and  may invest in additional amounts. FHLB stock and FRB stock is carried at cost, is restricted as to redemption, and is periodically evaluated for impairment based on the ultimate recovery of par value. Both cash and stock dividends are reported as income. Nonmarketable equity securities also include investments in our other correspondent banks including Independent Bankers Financial Corporation and First National Bankers Bank stock. These investments are carried at cost which approximates fair value. The balance of nonmarketable equity securities at  March 31, 2024 and  December 31, 2023 was $12.7 million and $13.4 million, respectively.

 

14

 

INVESTAR HOLDING CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES

 

The Company’s loan portfolio consists of the following categories of loans as of the dates presented (dollars in thousands).

 

  

March 31, 2024

  

December 31, 2023

 

Construction and development

 $173,511  $190,371 

1-4 Family

  414,480   413,786