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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): October 19, 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 October 19, 2023, Investar Holding Corporation (the “Company”), the holding company of Investar Bank, National Association (the “Bank”), issued a press release reporting third quarter 2023 results and posted on its website its third quarter 2023 earnings release and investor presentation. The materials contain forward-looking statements regarding the Company and include a cautionary note identifying important factors that could cause actual results to differ materially from those anticipated. Copies of the earnings release and investor presentation are furnished as Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K.
 
The information contained in Item 2.02, including Exhibit 99.1 and Exhibit 99.2 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
 
99.2   Investor presentation dated October 19, 2023
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: October 19, 2023
By:
/s/ John J. D’Angelo
   
John J. D’Angelo
   
President and Chief Executive Officer
 
 
EX-99.1 2 ex_561470.htm EXHIBIT 99.1 ex_561470.htm

Exhibit 99.1

 

For Immediate Release

 

Investar Holding Corporation Announces 2023 Third Quarter Results 

 

BATON ROUGE, LA / ACCESSWIRE / October 19, 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 September 30, 2023. Investar reported net income of $2.8 million, or $0.28 per diluted common share, for the third quarter of 2023, compared to net income of $6.5 million, or $0.67 per diluted common share, for the quarter ended June 30, 2023, and net income of $7.3 million, or $0.73 per diluted common share, for the quarter ended September 30, 2022.

 

On a non-GAAP basis, core earnings per diluted common share for the third quarter of 2023 were $0.33 compared to $0.67 for the second quarter of 2023 and $0.71 for the third quarter of 2022. Core earnings exclude certain items including, but not limited to, loss on sale or disposition of fixed assets, net, severance and loan purchase expense (refer to the Reconciliation of Non-GAAP Financial Measures tables for a reconciliation of GAAP to non-GAAP metrics).

 

Strong Credit Quality

 

Investar has increased its focus on underwriting high quality credits that are less susceptible to effects from a potential economic downturn and continues to de-risk the portfolio by proactively exiting credit relationships that do not fit this strategy. As a result, credit quality has continued to improve as nonperforming loans were only $5.6 million, or 0.27% of total loans at September 30, 2023 compared to $7.0 million, or 0.34%, at June 30, 2023

 

Loan Purchase Agreement

 

Investar entered into a loan purchase agreement to acquire commercial and industrial revolving lines of credit with an unpaid principal balance of approximately $163 million in two tranches. The purchase of the first tranche, consisting of revolving lines of credit with an unpaid principal balance of approximately $36 million, was completed in the third quarter. The purchase of the second tranche, consisting of revolving lines of credit with an unpaid principal balance of approximately $127 million, closed in the fourth quarter. The revolving lines of credit are variable-rate and short-term in nature with varying renewal terms. 

 

Exit of Consumer Mortgage Origination Business

 

In an effort to focus more on its core business and optimize profitability, Investar made the strategic decision to exit its consumer mortgage origination business. Investar will retain and continue to service the existing consumer mortgage loan portfolio. Consumer mortgage loan products are generally long-term and fixed-rate and generally require a higher relative allowance for credit losses than other loan products. Consumer mortgage volumes have decreased to historical lows due to the combination of rising housing prices and interest rates and constriction of housing supply. As a result of this decision, Investar further optimized its workforce and will continue to dedicate resources to its more profitable business lines. The consumer mortgage portfolio was approximately $264.1 million at September 30, 2023 and is included in the 1-4 family loan category.

 

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

 

“During the third quarter, we made several significant achievements towards our strategic goals. Most notably, we entered into the next phase of our digital transformation by executing on several pillars of our strategic goals.

 

As a result of our continuous efforts toward product consolidation, we agreed to acquire assets comprised wholly of variable-rate revolving lines of credit. These loans are to consumer finance lending companies that possess a history of high credit quality and provide opportunities to deepen the relationships through our expansive services including treasury management. After a thorough due diligence process, we hand-selected the loans that align with our desired credit profile. Moreover, we hired two new lenders with over 50 years of combined experience within this lending segment. The borrowers primarily consist of seasoned operating companies with tenured management teams who have experience through many economic cycles. Also, importantly, this transaction is accretive to our core financial metrics, immediately increasing expected per share returns to our stockholders. We believe these variable-rate products, combined with new loan production coming on at higher rates, will help to offset the margin pressure of higher funding costs.
 
Furthermore, as part of our strategy to optimize our balance sheet, we have made the decision to exit from the consumer mortgage origination business. The decision was based on a number of factors, including the steep decline in mortgage volumes and the negative outlook for mortgage lending coupled with our preference for shorter duration and better risk-adjusted return asset classes. We will retain and continue to provide excellent customer service to our existing mortgage customers.

 

Finally, we continue to execute on the evaluation and optimization of our physical branch and ATM footprint. As a result of our ongoing review, we ceased operation of 14 ATMs which will result in future cost savings while maintaining uninterrupted service to our valued customers. 

 

As always, we remain focused on shareholder value and returning capital to shareholders. We repurchased 52,407 shares of our common stock during the third quarter well below tangible book value at an average price of $12.89 per share.

 
We believe Investar is well-positioned for a higher-for-longer interest rate environment but also poised to benefit from a potential decrease in rates. As we look forward, we are beginning a pivot from a growth strategy to a focus on consistent, quality earnings through the optimization of our balance sheet.

 

Third Quarter Highlights

 

 

Credit quality continued to strengthen as nonperforming loans improved to 0.27% of total loans at September 30, 2023 compared to 0.34% at June 30, 2023.

 

 

Total loans increased $18.2 million, or 0.9%, to $2.10 billion at September 30, 2023, compared to $2.08 billion at June 30, 2023. Excluding the revolving lines of credit purchased in the third quarter of 2023, total loans decreased $17.6 million, or 0.8%, to $2.07 billion at September 30, 2023, compared to $2.08 billion at June 30, 2023.

 

 

The yield on the loan portfolio increased to 5.53% for the quarter ended September 30, 2023 compared to 5.44% for the quarter ended June 30, 2023.

 

 

Total revenues, or interest and noninterest income, for the quarter ended September 30, 2023 totaled $34.8 million, an increase of $0.3 million, or 1.0%, compared to the quarter ended June 30, 2023.

 

 

Total deposits increased $28.6 million, or 1.3%, to $2.21 billion at September 30, 2023, compared to $2.18 billion at June 30, 2023. Uninsured deposits were 34% of total deposits at September 30, 2023.

 

 

Investar entered into a loan purchase agreement to acquire commercial and industrial revolving lines of credit with an unpaid principal balance of approximately $163 million and total commitments of approximately $238 million in two tranches. The first and second tranches consist of unpaid principal balances of approximately $36 million and $127 million, respectively, and total commitments of $61 million and $177 million, respectively.

 

 

Investar exited its consumer mortgage origination business to focus more on its core business lines. Related severance expense was $0.1 million.

 

 

Investar converted its existing loan and deposit production office in Tuscaloosa, Alabama to a cashless branch designed to provide a dynamic and streamlined digital banking experience. This is Investar’s seventh branch in the Alabama market.

 

 

On July 19, 2023, Investar’s Board of Directors approved an additional 350,000 shares for repurchase under Investar’s stock repurchase program. Investar repurchased 52,407 shares of its common stock through the program at an average price of $12.89 during the quarter ended September 30, 2023, leaving 546,032 shares authorized for repurchase under the program at September 30, 2023.

 

 

 

Loans

 

Total loans were $2.10 billion at September 30, 2023an increase of $18.2 million, or 0.9%, compared to June 30, 2023, and an increase of $97.3 million, or 4.9%, compared to September 30, 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

   

9/30/2023

 

6/30/2023

 

9/30/2022

 

$

 

%

 

$

 

%

 

9/30/2023

 

9/30/2022

Mortgage loans on real estate

                                                                       

Construction and development

  $ 211,390     $ 197,850     $ 220,609     $ 13,540       6.8 %   $ (9,219 )     (4.2 )%     10.0 %     11.0 %

1-4 Family

    415,162       414,380       391,857       782       0.2       23,305       5.9       19.7       19.5  

Multifamily

    102,974       80,424       57,306       22,550       28.0       45,668       79.7       4.9       2.9  

Farmland

    8,259       8,434       14,202       (175 )     (2.1 )     (5,943 )     (41.8 )     0.4       0.7  

Commercial real estate

                                                                       

Owner-occupied

    440,208       441,393       445,671       (1,185 )     (0.3 )     (5,463 )     (1.2 )     20.9       22.2  

Nonowner-occupied

    501,649       530,820       464,520       (29,171 )     (5.5 )     37,129       8.0       23.9       23.2  

Commercial and industrial

    411,290       399,488       397,759       11,802       3.0       13,531       3.4       19.6       19.8  

Consumer

    12,090       12,074       13,753       16       0.1       (1,663 )     (12.1 )     0.6       0.7  

Total loans

  $ 2,103,022     $ 2,084,863     $ 2,005,677     $ 18,159       0.9 %   $ 97,345       4.9 %     100 %     100 %

 

At September 30, 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 $851.5 million, an increase of $10.6 million, or 1.3%, compared to the business lending portfolio of $840.9 million at June 30, 2023, and an increase of $8.1 million, or 1.0%, compared to the business lending portfolio of $843.4 million at September 30, 2022. The increase in the business lending portfolio compared to June 30, 2023 and September 30, 2022 is primarily driven by the purchase of commercial and industrial revolving lines of credit described above, partially offset by lower loan demand due to higher rates.

 

Nonowner-occupied loans totaled $501.6 million at September 30, 2023a decrease of $29.2 million, or 5.5%, compared to $530.8 million at June 30, 2023, and an increase of $37.1 million, or 8.0%, compared to $464.5 million at September 30, 2022. The decrease in nonowner-occupied loans compared to June 30, 2023 is primarily due to a reclassification of approximately $24.1 million nonowner-occupied loans to multifamily loans due to a change to the primary use of the property. The increase in nonowner-occupied loans compared to September 30, 2022 is due to organic growth.

 

Credit Quality

 

Nonperforming loans were $5.6 million, or 0.27% of total loans, at September 30, 2023a decrease of $1.4 million compared to $7.0 million, or 0.34% of total loans, at June 30, 2023, and a decrease of $7.5 million compared to $13.1 million, or 0.65% of total loans, at September 30, 2022. The decrease in nonperforming loans compared to June 30, 2023 is mainly attributable to paydowns. Included in nonperforming loans are acquired loans with a balance of $1.9 million at September 30, 2023, or 35% 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 $29.8 million, or 534.1% and 1.42% of nonperforming and total loans, respectively, at September 30, 2023, compared to $30.0 million, or 429.6% and 1.44% of nonperforming and total loans, respectively, at June 30, 2023, and $23.2 million, or 176.6% and 1.15% of nonperforming and total loans, respectively, at September 30, 2022

 

Investar recorded a negative provision for credit losses of $34,000 for the quarter ended September 30, 2023 compared to a negative provision for credit losses of $2.8 million and a provision for credit losses of $1.2 million for the quarters ended June 30, 2023 and September 30, 2022, respectively. The negative provision for credit losses in the quarter ended September 30, 2023 was primarily due to net recoveries. The negative provision for credit losses in the quarter ended June 30, 2023 was driven by net recoveries of $2.4 million, primarily attributable to recoveries on one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. The provision for credit losses for the quarter ended September 30, 2022 was due to organic loan growth.

 

 

 

Deposits

 

Total deposits at September 30, 2023 were $2.21 billion, an increase of $28.6 million, or 1.3%, compared to $2.18 billion at June 30, 2023, and an increase of $156.8 million, or 7.6%, compared to $2.05 billion at September 30, 2022

 

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

 

                           

Linked Quarter Change

 

Year/Year Change

 

Percentage of Total Deposits

   

9/30/2023

 

6/30/2023

 

9/30/2022

 

$

 

%

 

$

 

%

 

9/30/2023

 

9/30/2022

Noninterest-bearing demand deposits

  $ 459,519     $ 488,311     $ 590,610     $ (28,792 )     (5.9 )%   $ (131,091 )     (22.2 )%     20.8 %     28.8 %

Interest-bearing demand deposits

    482,706       514,501       624,025       (31,795 )     (6.2 )     (141,319 )     (22.6 )     21.8       30.4  

Money market deposit accounts

    186,478       158,984       251,213       27,494       17.3       (64,735 )     (25.8 )     8.4       12.2  

Savings accounts

    131,743       125,442       167,131       6,301       5.0       (35,388 )     (21.2 )     6.0       8.1  

Brokered time deposits

    197,747       153,365             44,382       28.9       197,747             9.0        

Time deposits

    751,240       740,250       419,704       10,990       1.5       331,536       79.0       34.0       20.5  

Total deposits

  $ 2,209,433     $ 2,180,853     $ 2,052,683     $ 28,580       1.3 %   $ 156,750       7.6 %     100 %     100 %

 

The increase in money market deposit accounts at September 30, 2023 compared to June 30, 2023 is primarily due to higher rates offered. The decrease in money market deposit accounts at September 30, 2023 compared to September 30, 2022 is primarily due to customers shifting into higher yielding interest-bearing deposit products as a result of rising interest rates. The increase in time deposits at September 30, 2023 compared to June 30, 2023 is primarily due to existing customer funds migrating from other deposit categories. The increase in time deposits at September 30, 2023 compared to September 30, 2022 is primarily due to organic growth and existing customer funds migrating from other deposit categories. Noninterest-bearing demand deposits and interest-bearing demand deposits decreased over the periods due to shifts by customers into higher yielding interest-bearing deposit products as a result of rising interest rates. Brokered time deposits increased to $197.7 million at September 30, 2023 from $153.4 million at June 30, 2023. Investar utilizes brokered time deposits, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings. At September 30, 2023, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration is approximately 13 months with a weighted average rate of 5.02%. 

 

Stockholders Equity 

 

Stockholders’ equity was $208.7 million at September 30, 2023a decrease of $9.6 million compared to June 30, 2023, and an increase of $3.0 million compared to September 30, 2022The decrease in stockholders’ equity compared to June 30, 2023 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, partially offset by net income for the quarter. The increase in stockholders’ equity compared to September 30, 2022 is primarily attributable to net income for the last twelve months, partially offset by 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 cumulative effect adjustment as a result of the adoption of the CECL standard, reflected in retained earnings.

 

 

 

Net Interest Income

 

Net interest income for the third quarter of 2023 totaled $17.5 million, a decrease of $0.9 million, or 5.0%, compared to the second quarter of 2023, and a decrease of $6.0 million, or 25.6%, compared to the third quarter of 2022. Total interest income was $33.2 million, $32.4 million and $27.0 million for the quarters ended September 30, 2023June 30, 2023 and September 30, 2022, respectively. Total interest expense was $15.7 million, $14.0 million and $3.5 million for the corresponding periods. Included in net interest income for the quarters ended September 30, 2023, June 30, 2023 and September 30, 2022 is $36,000$47,000, and $0.1 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for each of the quarters ended September 30, 2023 and September 30, 2022 are interest recoveries of $0.1 million. There were no interest recoveries for the quarter ended June 30, 2023.

 

Investar’s net interest margin was 2.66% for the quarter ended September 30, 2023, compared to 2.82% for the quarter ended June 30, 2023 and 3.77% for the quarter ended September 30, 2022. The decrease in net interest margin for the quarter ended September 30, 2023 compared to the quarter ended June 30, 2023 was driven by a 28 basis point increase in the overall cost of funds, partially offset by a seven basis point increase in the yield on interest-earning assets. The decrease in net interest margin for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022 was driven by a 228 basis point increase in the overall cost of funds, partially offset by a 71 basis point increase in the yield on interest-earning assets.

 

The yield on interest-earning assets was 5.05% for the quarter ended September 30, 2023, compared to 4.98% for the quarter ended June 30, 2023 and 4.34% for the quarter ended September 30, 2022. The increase in the yield on interest-earning assets compared to the quarter ended June 30, 2023 was primarily attributable to a nine basis point increase in the yield on the loan portfolio, partially offset by a 10 basis point decrease in the yield on the taxable securities portfolio. The increase in the yield on interest-earning assets compared to the quarter ended September 30, 2022 was primarily driven by a 67 basis point increase in the yield on the loan portfolio and a 38 basis point increase in the yield on the taxable securities portfolio.

 

Exclusive of the interest income accretion from the acquisition of loans, interest recoveries, and accelerated fee income recognized due to the forgiveness or pay-off of Paycheck Protection Program (“PPP”) loans, adjusted net interest margin decreased to 2.64% for the quarter ended September 30, 2023, compared to 2.82% for the quarter ended June 30, 2023, and 3.72% for the quarter ended September 30, 2022. The adjusted yield on interest-earning assets was 5.03% for the quarter ended September 30, 2023 compared to 4.97% and 4.29% for the quarters ended June 30, 2023 and September 30, 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 42 basis points to 2.73% for the quarter ended September 30, 2023 compared to 2.31% for the quarter ended June 30, 2023 and increased 237 basis points compared to 0.36% for the quarter ended September 30, 2022. The increase in the cost of deposits compared to the quarter ended June 30, 2023 resulted from both a higher average balance and an increase in rates paid on time deposits, a higher average balance of brokered time deposits, and an increase in rates paid on interest-bearing demand deposits and savings deposits. The increase in the cost of deposits compared to the quarter ended September 30, 2022 resulted from both a higher average balance and an increase in rates paid on time deposits, a higher average balance of brokered time deposits, and an increase in rates paid on interest-bearing demand deposits, partially offset by a lower average balance of interest-bearing demand deposits. 

 

The cost of short-term borrowings decreased 12 basis points to 4.97% for the quarter ended September 30, 2023 compared to 5.09% for the quarter ended June 30, 2023 and increased 257 basis points compared to 2.40% for the quarter ended September 30, 2022. Beginning in the second quarter of 2023, the Bank began utilizing the Federal Reserve’s Bank Term Funding Program (“BTFP”) to secure fixed rate funding for up to a one-year term and reduce short-term Federal Home Loan Bank (“FHLB”) advances, which are priced daily. The Bank utilized this source of funding due to its lower rate as compared to FHLB advances, the ability to prepay the obligations without penalty, and as a means to lock in funding. The decrease in the cost of short-term borrowings compared to the quarter ended June 30, 2023 resulted primarily from the reduction of short-term advances from the FHLB and the increased utilization of short-term repurchase agreements. The increase in the cost of short-term borrowings compared to the quarter ended September 30, 2022 resulted from an increase in the Federal Reserve’s federal funds rate, which drives the costs of short-term borrowings under the BTFP and short-term advances from the FHLB. 

 

The overall cost of funds for the quarter ended September 30, 2023 increased 28 basis points to 3.07% compared to 2.79% for the quarter ended June 30, 2023 and increased 228 basis points compared to 0.79% for the quarter ended September 30, 2022. The increase in the cost of funds for the quarter ended September 30, 2023 compared to the quarter ended June 30, 2023 resulted from both a higher average balance and an increase in the cost of deposits, partially offset by both a lower average balance and a decrease in the cost of short-term borrowings. The increase in the cost of funds for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022 resulted from both a higher average balance and an increase in the cost of deposits and both a higher average balance and an increase in the cost of short-term borrowings.

 

Noninterest Income

 

Noninterest income for the third quarter of 2023 totaled $1.6 million, a decrease of $0.4 million, or 20.9%, compared to the second quarter of 2023 and a decrease of $1.0 million, or 38.6%, compared to the third quarter of 2022.

 

The decrease in noninterest income compared to the quarter ended June 30, 2023 is driven by a $0.3 million increase in loss on sale or disposition of fixed assets and a $0.3 million decrease in other operating income, partially offset by a $0.1 million increase in the change in fair value of equity securities and a $0.1 million increase in service charges on deposit accounts. The decrease in other operating income is primarily attributable to a $0.2 million decrease in the change in the net asset value of other investments and a $0.1 million decrease in distributions from investments. 

 

The decrease in noninterest income compared to the quarter ended September 30, 2022 is mainly attributable to a $0.3 million increase in loss on sale or disposition of fixed assets and a $0.7 million decrease in other operating income. The decrease in other operating income is primarily attributable to a $0.4 million decrease in the change in the net asset value of other investments and a $0.3 million decrease in derivative fee income. 

 

Noninterest Expense

 

Noninterest expense for the third quarter of 2023 totaled $15.8 million, an increase of $0.5 million, or 3.5%, compared to the second quarter of 2023, and a decrease of $0.2 million, or 1.2%, compared to the third quarter of 2022

 

The increase in noninterest expense for the quarter ended September 30, 2023 compared to the quarter ended June 30, 2023 was primarily driven by a $0.1 million increase in salaries and employee benefits, a $0.2 million increase in professional fees, and a $0.2 million increase in other operating expenses. The increase in salaries and employee benefits is primarily due to severance related to Investar’s exit from its consumer mortgage origination business. Other operating expenses include, among other things, software expense, other real estate expense, FDIC assessments, bank security, and bank shares tax.

 

The decrease in noninterest expense for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022 is primarily a result of a $0.2 million decrease in depreciation and amortization and a $0.2 million decrease in occupancy, partially offset by a $0.1 million increase in salaries and employee benefits. The decreases in depreciation and amortization and occupancy are due to the sale of the Alice and Victoria, Texas branches in January 2023 and the closure of one branch location in the first quarter of 2023. The increase in salaries and employee benefits is primarily due to severance related to Investars exit from its consumer mortgage origination business.

 

 

 

Taxes

 

Investar recorded an income tax expense of $0.6 million for the quarter ended September 30, 2023, which equates to an effective tax rate of 17.4%, compared to effective tax rates of 18.7% and 18.9% for the quarters ended June 30, 2023 and September 30, 2022, respectively.

 

Basic and Diluted Earnings Per Common Share

 

Investar reported basic and diluted earnings per common share of $0.28 for the quarter ended September 30, 2023, compared to basic and diluted earnings per common share of $0.67 for the quarter ended June 30, 2023, and basic and diluted earnings per common share of $0.74 and $0.73, respectively, for the quarter ended September 30, 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 29 branch locations serving Louisiana, Texas, and Alabama. At September 30, 2023, the Bank had 328 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, and interest income accretion from the acquisition of loans. 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 disruptions in the banking industry earlier this year, potential continued higher inflation and interest rates, supply and labor constraints, the wars in Ukraine and Israel and the ongoing COVID-19 pandemic;

 

 

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;

 

 

a reduction in liquidity, including as a result of a reduction in the amount of deposits we hold or other sources of liquidity, which may continue to be adversely impacted by the disruptions in the banking industry earlier this year causing bank depositors to move uninsured deposits to other banks or alternative investments outside the banking industry;

 

 

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;

 

 

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;

 

 

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, droughts 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 wars in Ukraine and Israel 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 Part I Item 1A. “Risk Factors” and in the “Special Note Regarding Forward-Looking Statements” in Part II 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”) and in Part II Item 1A. “Risk Factors” in Investar’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023 filed with 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

   

9/30/2023

 

6/30/2023

 

9/30/2022

 

Linked Quarter

 

Year/Year

EARNINGS DATA

                                       

Total interest income

  $ 33,160     $ 32,396     $ 27,002       2.4 %     22.8 %

Total interest expense

    15,691       14,009       3,535       12.0       343.9  

Net interest income

    17,469       18,387       23,467       (5.0 )     (25.6 )

Provision for credit losses

    (34 )     (2,840 )     1,162       98.8       (102.9 )

Total noninterest income

    1,637       2,070       2,665       (20.9 )     (38.6 )

Total noninterest expense

    15,774       15,241       15,967       3.5       (1.2 )

Income before income tax expense

    3,366       8,056       9,003       (58.2 )     (62.6 )

Income tax expense

    585       1,509       1,699       (61.2 )     (65.6 )

Net income

  $ 2,781     $ 6,547     $ 7,304       (57.5 )     (61.9 )
                                         

AVERAGE BALANCE SHEET DATA

                                       

Total assets

  $ 2,736,358     $ 2,748,171     $ 2,621,611       (0.4 )%     4.4 %

Total interest-earning assets

    2,603,837       2,611,172       2,468,357       (0.3 )     5.5  

Total loans

    2,072,617       2,100,751       1,954,493       (1.3 )     6.0  

Total interest-bearing deposits

    1,707,848       1,655,506       1,456,826       3.2       17.2  

Total interest-bearing liabilities

    2,026,587       2,013,482       1,772,960       0.7       14.3  

Total deposits

    2,170,373       2,145,629       2,069,603       1.2       4.9  

Total stockholders’ equity

    220,393       221,528       226,624       (0.5 )     (2.7 )
                                         

PER SHARE DATA

                                       

Earnings:

                                       

Basic earnings per common share

  $ 0.28     $ 0.67     $ 0.74       (58.2 )%     (62.2 )%

Diluted earnings per common share

    0.28       0.67       0.73       (58.2 )     (61.6 )

Core Earnings(1):

                                       

Core basic earnings per common share(1)

    0.33       0.67       0.71       (50.7 )     (53.5 )

Core diluted earnings per common share(1)

    0.33       0.67       0.71       (50.7 )     (53.5 )

Book value per common share

    21.34       22.21       20.78       (3.9 )     2.7  

Tangible book value per common share(1)

    17.00       17.87       16.40       (4.9 )     3.7  

Common shares outstanding

    9,779,688       9,831,145       9,901,078       (0.5 )     (1.2 )

Weighted average common shares outstanding - basic

    9,814,727       9,880,721       9,965,374       (0.7 )     (1.5 )

Weighted average common shares outstanding - diluted

    9,817,607       9,881,385       10,086,249       (0.6 )     (2.7 )
                                         

PERFORMANCE RATIOS

                                       

Return on average assets

    0.40 %     0.96 %     1.11 %     (58.3 )%     (64.0 )%

Core return on average assets(1)

    0.47       0.97       1.08       (51.5 )     (56.5 )

Return on average equity

    5.01       11.85       12.79       (57.7 )     (60.8 )

Core return on average equity(1)

    5.87       11.98       12.46       (51.0 )     (52.9 )

Net interest margin

    2.66       2.82       3.77       (5.7 )     (29.4 )

Net interest income to average assets

    2.53       2.68       3.55       (5.6 )     (28.7 )

Noninterest expense to average assets

    2.29       2.22       2.42       3.2       (5.4 )

Efficiency ratio(2)

    82.56       74.50       61.10       10.8       35.1  

Core efficiency ratio(1)

    79.98       74.21       61.63       7.8       29.8  

Dividend payout ratio

    35.71       14.93       12.84       139.2       178.1  

Net recoveries to average loans

    (0.01 )     (0.11 )           (90.9 )      

 

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

(2) Efficiency ratio represents noninterest expense 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

   

9/30/2023

 

6/30/2023

 

9/30/2022

 

Linked Quarter

 

Year/Year

ASSET QUALITY RATIOS

                                       

Nonperforming assets to total assets

    0.36 %     0.40 %     0.58 %     (10.0 )%     (37.9 )%

Nonperforming loans to total loans

    0.27       0.34       0.65       (20.6 )     (58.5 )

Allowance for credit losses to total loans

    1.42       1.44       1.15       (1.4 )     23.5  

Allowance for credit losses to nonperforming loans

    534.08       429.60       176.63       24.3       202.4  
                                         

CAPITAL RATIOS

                                       

Investar Holding Corporation:

                                       

Total equity to total assets

    7.48 %     7.93 %     7.73 %     (5.7 )%     (3.2 )%

Tangible equity to tangible assets(1)

    6.05       6.48       6.20       (6.6 )     (2.4 )

Tier 1 leverage ratio

    8.53       8.45       8.48       0.9       0.6  

Common equity tier 1 capital ratio(2)

    9.40       9.86       9.65       (4.7 )     (2.6 )

Tier 1 capital ratio(2)

    9.79       10.28       10.08       (4.8 )     (2.9 )

Total capital ratio(2)

    12.87       13.49       13.15       (4.6 )     (2.1 )

Investar Bank:

                                       

Tier 1 leverage ratio

    10.05       9.96       9.84       0.9       2.1  

Common equity tier 1 capital ratio(2)

    11.53       12.11       11.70       (4.8 )     (1.5 )

Tier 1 capital ratio(2)

    11.53       12.11       11.70       (4.8 )     (1.5 )

Total capital ratio(2)

    12.78       13.36       12.77       (4.3 )     0.1  

 

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

(2) Estimated for September 30, 2023 and includes impact of commitments related to the purchase of second tranche of loans, which closed in the fourth quarter, on risk weighted assets.

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)

 

   

September 30, 2023

 

June 30, 2023

 

September 30, 2022

ASSETS

                       

Cash and due from banks

  $ 27,084     $ 34,697     $ 31,711  

Interest-bearing balances due from other banks

    36,584       31,082       4,302  

Federal funds sold

          128        

Cash and cash equivalents

    63,668       65,907       36,013  
                         

Available for sale securities at fair value (amortized cost of $481,296, $452,053, and $477,242, respectively)

    404,485       389,583       413,186  

Held to maturity securities at amortized cost (estimated fair value of $19,815, $17,913, and $8,951, respectively)

    20,044       17,812       9,373  

Loans

    2,103,022       2,084,863       2,005,677  

Less: allowance for credit losses

    (29,778 )     (30,044 )     (23,164 )

Loans, net

    2,073,244       2,054,819       1,982,513  

Equity securities

    13,334       14,938       26,629  

Bank premises and equipment, net of accumulated depreciation of $21,646, $21,886, and $21,421, respectively

    44,764       45,925       50,327  

Other real estate owned, net

    4,438       4,137       2,326  

Accrued interest receivable

    13,633       12,661       11,915  

Deferred tax asset

    20,989       17,658       16,587  

Goodwill and other intangible assets, net

    42,496       42,677       43,360  

Bank owned life insurance

    58,425       58,068       57,033  

Other assets

    30,013       29,489       12,432  

Total assets

  $ 2,789,533     $ 2,753,674     $ 2,661,694  
                         

LIABILITIES

                       

Deposits

                       

Noninterest-bearing

  $ 459,519     $ 488,311     $ 590,610  

Interest-bearing

    1,749,914       1,692,542       1,462,073  

Total deposits

    2,209,433       2,180,853       2,052,683  

Advances from Federal Home Loan Bank

    23,500       23,500       333,100  

Borrowings under Bank Term Funding Program

    235,800       235,800        

Federal funds purchased

                168  

Repurchase agreements

    13,930       5,183        

Subordinated debt, net of unamortized issuance costs

    44,296       44,272       44,201  

Junior subordinated debt

    8,602       8,574       8,484  

Accrued taxes and other liabilities

    45,255       37,135       17,358  

Total liabilities

    2,580,816       2,535,317       2,455,994  
                         

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; 9,779,688, 9,831,145, and 9,901,078 shares issued and outstanding, respectively

    9,780       9,831       9,901  

Surplus

    145,241       145,347       146,155  

Retained earnings

    114,148       112,344       100,247  

Accumulated other comprehensive loss

    (60,452 )     (49,165 )     (50,603 )

Total stockholders’ equity

    208,717       218,357       205,700  

Total liabilities and stockholders’ equity

  $ 2,789,533     $ 2,753,674     $ 2,661,694  

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share data)

(Unaudited)

 

   

For the three months ended

   

September 30, 2023

 

June 30, 2023

 

September 30, 2022

INTEREST INCOME

                       

Interest and fees on loans

  $ 28,892     $ 28,513     $ 23,924  

Interest on investment securities

                       

Taxable

    3,055       3,262       2,769  

Tax-exempt

    216       119       105  

Other interest income

    997       502       204  

Total interest income

    33,160       32,396       27,002  
                         

INTEREST EXPENSE

                       

Interest on deposits

    11,733       9,534       1,315  

Interest on borrowings

    3,958       4,475       2,220  

Total interest expense

    15,691       14,009       3,535  

Net interest income

    17,469       18,387       23,467  
                         

Provision for credit losses

    (34 )     (2,840 )     1,162  

Net interest income after provision for credit losses

    17,503       21,227       22,305  
                         

NONINTEREST INCOME

                       

Service charges on deposit accounts

    806       746       820  

Loss on sale or disposition of fixed assets, net

    (367 )     (58 )     (103 )

Gain on sale of other real estate owned, net

    23       5       50  

Servicing fees and fee income on serviced loans

    2       4       17  

Interchange fees

    399       443       511  

Income from bank owned life insurance

    357       353       341  

Change in the fair value of equity securities

    22       (107 )     (27 )

Other operating income

    395       684       1,056  

Total noninterest income

    1,637       2,070       2,665  

Income before noninterest expense

    19,140       23,297       24,970  
                         

NONINTEREST EXPENSE

                       

Depreciation and amortization

    900       919       1,087  

Salaries and employee benefits

    9,463       9,343       9,345  

Occupancy

    618       646       810  

Data processing

    888       827       861  

Marketing

    83       82       84  

Professional fees

    516       323       460  

Other operating expenses

    3,306       3,101       3,320  

Total noninterest expense

    15,774       15,241       15,967  

Income before income tax expense

    3,366       8,056       9,003  

Income tax expense

    585       1,509       1,699  

Net income

  $ 2,781     $ 6,547     $ 7,304  
                         

EARNINGS PER SHARE

                       

Basic earnings per common share

  $ 0.28     $ 0.67     $ 0.74  

Diluted earnings per common share

    0.28       0.67       0.73  

Cash dividends declared per common share

    0.10       0.10       0.095  

 

 

 

INVESTAR HOLDING CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS

(Amounts in thousands)

(Unaudited)

 

   

For the three months ended

 
   

September 30, 2023

   

June 30, 2023

   

September 30, 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

  $ 2,072,617     $ 28,892       5.53 %   $ 2,100,751     $ 28,513       5.44 %   $ 1,954,493     $ 23,924       4.86 %

Securities:

                                                                       

Taxable

    442,556       3,055       2.74       460,765       3,262       2.84       466,012       2,769       2.36  

Tax-exempt

    25,493       216       3.35       17,235       119       2.77       16,528       105       2.50  

Interest-bearing balances with banks

    63,171       997       6.26       32,421       502       6.22       31,324       204       2.58  

Total interest-earning assets

    2,603,837       33,160       5.05       2,611,172       32,396       4.98       2,468,357       27,002       4.34  

Cash and due from banks

    27,734                       30,326                       33,291                  

Intangible assets

    42,595                       42,777                       43,472                  

Other assets

    92,108                       94,467                       98,936                  

Allowance for credit losses

    (29,916 )                     (30,571 )                     (22,445 )                

Total assets

  $ 2,736,358                     $ 2,748,171                     $ 2,621,611                  
                                                                         

Liabilities and stockholders’ equity

                                                                       

Interest-bearing liabilities:

                                                                       

Deposits:

                                                                       

Interest-bearing demand deposits

  $ 668,732     $ 2,462       1.46 %   $ 683,016     $ 2,013       1.18 %   $ 887,040     $ 594       0.27 %

Savings deposits

    130,262       179       0.54       127,028       22       0.07       173,582       20       0.05  

Brokered time deposits

    159,244       1,990       4.96       151,370       1,870       4.95                    

Time deposits

    749,610       7,102       3.76       694,092       5,629       3.25       396,204       701       0.70  

Total interest-bearing deposits

    1,707,848       11,733       2.73       1,655,506       9,534       2.31       1,456,826       1,315       0.36  

Short-term borrowings

    242,363       3,039       4.97       281,651       3,572       5.09       191,210       1,156       2.40  

Long-term debt

    76,376       919       4.77       76,325       903       4.74       124,924       1,064       3.38  

Total interest-bearing liabilities

    2,026,587       15,691       3.07       2,013,482       14,009       2.79       1,772,960       3,535       0.79  

Noninterest-bearing deposits

    462,525                       490,123                       612,777                  

Other liabilities

    26,853                       23,038                       9,250                  

Stockholders’ equity

    220,393                       221,528                       226,624                  

Total liability and stockholders’ equity

  $ 2,736,358                     $ 2,748,171                     $ 2,621,611                  

Net interest income/net interest margin

          $ 17,469       2.66 %           $ 18,387       2.82 %           $ 23,467       3.77 %

 

 

 

INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

 

   

For the three months ended

 
   

September 30, 2023

   

June 30, 2023

   

September 30, 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

  $ 2,072,617     $ 28,892       5.53 %   $ 2,100,751     $ 28,513       5.44 %   $ 1,954,493     $ 23,924       4.86 %

Adjustments:

                                                                       

Accelerated fee income for forgiven or paid off PPP loans

                                                        58          

Interest recoveries

            118                                             121          

Accretion

            36                       47                       142          

Adjusted loans

    2,072,617       28,738       5.50       2,100,751       28,466       5.44       1,954,493       23,603       4.79  

Securities:

                                                                       

Taxable

    442,556       3,055       2.74       460,765       3,262       2.84       466,012       2,769       2.36  

Tax-exempt

    25,493       216       3.35       17,235       119       2.77       16,528       105       2.50  

Interest-bearing balances with banks

    63,171       997       6.26       32,421       502       6.22       31,324       204       2.58  

Adjusted interest-earning assets

    2,603,837       33,006       5.03       2,611,172       32,349       4.97       2,468,357       26,681       4.29  
                                                                         

Total interest-bearing liabilities

    2,026,587       15,691       3.07       2,013,482       14,009       2.79       1,772,960       3,535       0.79  
                                                                         

Adjusted net interest income/adjusted net interest margin

          $ 17,315       2.64 %           $ 18,340       2.82 %           $ 23,146       3.72 %

 

 

 

INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

 

   

September 30, 2023

 

June 30, 2023

 

September 30, 2022

Tangible common equity

                       

Total stockholders’ equity

  $ 208,717     $ 218,357     $ 205,700  

Adjustments:

                       

Goodwill

    40,088       40,088       40,088  

Core deposit intangible

    2,308       2,489       3,172  

Trademark intangible

    100       100       100  

Tangible common equity

  $ 166,221     $ 175,680     $ 162,340  

Tangible assets

                       

Total assets

  $ 2,789,533     $ 2,753,674     $ 2,661,694  

Adjustments:

                       

Goodwill

    40,088       40,088       40,088  

Core deposit intangible

    2,308       2,489       3,172  

Trademark intangible

    100       100       100  

Tangible assets

  $ 2,747,037     $ 2,710,997     $ 2,618,334  
                         

Common shares outstanding

    9,779,688       9,831,145       9,901,078  

Tangible equity to tangible assets

    6.05 %     6.48 %     6.20 %

Book value per common share

  $ 21.34     $ 22.21     $ 20.78  

Tangible book value per common share

    17.00       17.87       16.40  

 

 

 

INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

 

     

Three months ended

     

9/30/2023

 

6/30/2023

 

9/30/2022

Net interest income

(a)

  $ 17,469     $ 18,387     $ 23,467  

Provision for credit losses

      (34 )     (2,840 )     1,162  

Net interest income after provision for credit losses

      17,503       21,227       22,305  
                           

Noninterest income

(b)

    1,637       2,070       2,665  

Loss on sale or disposition of fixed assets, net

      367       58       103  

Gain on sale of other real estate owned, net

      (23 )     (5 )     (50 )

Change in the fair value of equity securities

      (22 )     107       27  

Change in the net asset value of other investments(1)

      105       (78 )     (305 )

Core noninterest income

(d)

    2,064       2,152       2,440  
                           

Core earnings before noninterest expense

      19,567       23,379       24,745  
                           

Total noninterest expense

(c)

    15,774       15,241       15,967  

Severance(2)

      (123 )            

Loan purchase expense(3)

      (29 )            

Core noninterest expense

(f)

    15,622       15,241       15,967  
                           

Core earnings before income tax expense

      3,945       8,138       8,778  

Core income tax expense(4)

      686       1,522       1,659  

Core earnings

    $ 3,259     $ 6,616     $ 7,119  
                           

Core basic earnings per common share

      0.33       0.67       0.71  
                           

Diluted earnings per common share (GAAP)

    $ 0.28     $ 0.67     $ 0.73  

Loss on sale or disposition of fixed assets, net

      0.03             0.01  

Gain on sale of other real estate owned, net

                   

Change in the fair value of equity securities

            0.01        

Change in the net asset value of other investments(1)

      0.01       (0.01 )     (0.03 )

Severance(2)

      0.01              

Loan purchase expense(3)

                   

Core diluted earnings per common share

    $ 0.33     $ 0.67     $ 0.71  
                           

Efficiency ratio

(c) / (a+b)

    82.56 %     74.50 %     61.10 %

Core efficiency ratio

(f) / (a+d)

    79.98       74.21       61.63  

Core return on average assets(5)

      0.47       0.97       1.08  

Core return on average equity(5)

      5.87       11.98       12.46  

Total average assets

    $ 2,736,358     $ 2,748,171     $ 2,621,611  

Total average stockholders’ equity

      220,393       221,528       226,624  

 

(1) Change in net asset value of other investments represents unrealized gains or losses on 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.

(2) Adjustments to noninterest expense directly attributable to Investars exit from its consumer mortgage origination business, consisting of salaries and employee benefits.

(3) Adjustments to noninterest expense directly attributable to the purchase of loans, consisting of professional fees for legal and consulting services.
(4) Core income tax expense is calculated using the effective tax rates of 17.4%18.7% and 18.9% for the quarters ended September 30, 2023June 30, 2023 and September 30, 2022, respectively.
(5) Core earnings used in calculation. No adjustments were made to average assets or average equity.

 

 
EX-99.2 3 ex_583338.htm EXHIBIT 99.2 ex_563145.htm

Exhibit 99.2

 

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