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 27, 2015

 

 

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.)

 

7244 Perkins Road

Baton Rouge, Louisiana 70808

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (225) 227-2222

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨        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))


Item 2.02. Results of Operations and Financial Condition.

On October 27, 2015, Investar Holding Corporation issued a press release announcing its financial results for the quarter ended September 30, 2015. A copy of the press release is furnished as exhibit 99.1 to this Current Report on Form 8-K.

The information contained in 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   

Press release of Investar Holding Corporation dated October 27, 2015 announcing financial results for the quarter ended September 30, 2015.


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 27, 2015     By:  

/s/ John J. D’Angelo

      John J. D’Angelo
      President and Chief Executive Officer


EXHIBIT INDEX

 

Exhibit
Number

  

Description of Exhibit

99.1   

Press release of Investar Holding Corporation dated October 27, 2015 announcing financial results for the quarter ended September 30, 2015.

 

Exhibit 99.1

For Immediate Release

Investar Holding Corporation Announces 2015 Third Quarter Results

BATON ROUGE, LA (October 27, 2015) – Investar Holding Corporation (NASDAQ: ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended September 30, 2015. For the quarter ended September 30, 2015, the Company reported net income of $1.8 million, or $0.26 per diluted share, compared to $1.8 million, or $0.25 per diluted share, for the quarter ended June 30, 2015, and $1.4 million, or $0.20 per diluted share, for the quarter ended September 30, 2014. This represents an increase of $0.4 million, or 28.7%, in net income for the quarter ended September 30, 2015 when compared to the same quarter in 2014.

Core earnings, a non-GAAP measure which excludes the after-tax impact of securities gains and losses, gains and losses on the sale of other real estate owned, and other identified costs recorded for the period, were $1.9 million, or $0.26 per diluted share, for the quarter ended September 30, 2015 compared to core earnings of $1.2 million, or $0.16 per diluted share, for the quarter ended September 30, 2014. See calculation of core earnings on the Reconciliation of Non-GAAP Financial Measures .

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

“We are pleased to announce another great quarter for Investar. We continue to experience solid loan growth throughout our markets. C&I loan growth remains a focus and we are pleased with the 25% year to date growth in the portfolio. We are also continuing to see the results of our efforts to grow our noninterest-bearing deposits with 35% growth year to date.

We remain aligned with our shareholders and are focused on enhancing the value of our franchise. We believe this will be achieved by transitioning the Bank to a more relationship-based model from a transaction-oriented one. We are committed to investing resources in developing and growing our small business banking strategy.”

Third Quarter Highlights

 

   

Core earnings were $1.9 million, or $0.26 per diluted share, for the quarter ended September 30, 2015 compared to $1.7 million, or $0.24 per diluted share for the quarter ended June 30, 2015, and $1.2 million, or $0.16 per diluted share, for the quarter ended September 30, 2014.

 

   

Core return on average assets and core efficiency ratio improved for the third quarter of 2015 compared to the quarters ended June 30, 2015 and September 30, 2014.

 

   

Increase in net income of $0.4 million, or 28.7%, for the third quarter of 2015 compared to the third quarter of 2014.

 

   

Total loans, excluding loans held for sale, increased $37 million, or 5.5%, from June 30, 2015 and increased $87.8 million, or 14.1% (18.8% annualized), from December 31, 2014 to $710.6 million at September 30, 2015.

 

   

Commercial and industrial loans at September 30, 2015 increased $11.2 million, or 19.8%, from June 30, 2015 and increased $13.5 million, or 24.9% (33.3% annualized), from December 31, 2014 to $67.7 million at September 30, 2015.

 

   

Nonperforming loans to total loans decreased to 0.37% at September 30, 2015 from 0.54% at December 31, 2014.

 

   

Allowance for loan losses to nonperforming and total loans increased to 226.43% and 0.83%, respectively, at September 30, 2015 compared to 138.64% and 0.74%, respectively, at December 31, 2014.

 

   

Other real estate owned decreased $1.6 million, or 56.9% from December 31, 2014.

 

   

Total noninterest-bearing deposits were $94.5 million at September 30, 2015, an increase of $8.2 million, or 9.5%, from June 30, 2015 and an increase of $24.3 million, or 34.6% (46.3% annualized), from December 31, 2014.

 

   

Repurchased 36,856 shares of stock through our current stock repurchase program at an average price of $15.51.

 

   

The dividend declared in the third quarter of 2015 increased 20.6% when compared to the dividend declared for the third quarter of 2014.

 

   

Acquired land and building for an additional branch in the New Orleans market.


Loans

Total loans were $710.6 million at September 30, 2015, an increase of $87.8 million, or 14.1%, from December 31, 2014.

The following table sets forth the composition of the Company’s loan portfolio as of the dates indicated (dollars in thousands).

 

            Percentage            Percentage     Increase/(Decrease)  
     September 30, 2015      of Portfolio     December 31, 2014      of Portfolio         Amount              Percent      

Mortgage loans on real estate

               

Construction and development

     $ 79,796           11.2  %      $ 71,350           11.4  %      $ 8,446           11.8  

1-4 Family

     154,277           21.7        137,519           22.1        16,758           12.2     

Multifamily

     24,484           3.5        17,458           2.8        7,026           40.2     

Farmland

     3,009           0.4        2,919           0.5        90           30.8     

Commercial real estate

               

Owner occupied

     132,419           18.7        119,668           19.2        12,751           10.7     

Nonowner occupied

     126,555           17.8        105,390           16.9        21,165           20.1     

Commercial and industrial

     67,671           9.5        54,187           8.7        13,484           24.9     

Consumer

     122,350           17.2        114,299           18.4        8,051           7.0     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans

     710,561           100  %      622,790           100  %      87,771           14.1  

Loans held for sale

     55,653             103,396             (47,743)          (46.2)    
  

 

 

      

 

 

      

 

 

    

 

 

 

Total gross loans

     $ 766,214             $ 726,186             $ 40,028           5.5  
  

 

 

      

 

 

      

 

 

    

 

 

 

Consumer loans, including consumer loans held for sale, totaled $175.7 million at September 30, 2015, a decrease of $38.3 million, or 17.9%, from $214 million at December 31, 2014. The decrease is mainly attributable to the $46.4 million decrease in the balance of consumer loans held for sale at September 30, 2015 when compared to December 31, 2014. Two consumer loan sales were postponed by the buyer from the fourth quarter of 2014 to the first quarter of 2015, therefore increasing the balance of consumer loans held for sale at December 31, 2014.

At September 30, 2015, the Company’s total business lending portfolio, which consists of loans secured by owner occupied commercial real estate properties and commercial and industrial loans, was $200.1 million, an increase of $26.2 million, or 15.1%, compared to the business lending portfolio of $173.9 million at December 31, 2014.

Management continues to monitor the Company’s loan portfolio for exposure, directly or indirectly, to the potential negative impacts from the decline in oil and gas prices. Less than 1% of the total loan portfolio remains directly related to the energy sector. At this time, management does not anticipate that oil and gas prices at current levels will negatively impact borrowers’ ability to service their debt.

The provision for loan loss expense was $0.4 million for the third quarter of 2015, a decrease of $0.1 million compared to the third quarter of 2014. The allowance for loan losses was $5.9 million, or 226.43% and 0.83% of nonperforming loans and total loans, respectively, at September 30, 2015, compared to $4.6 million, or 138.61% and 0.74% of nonperforming loans and total loans, respectively, at December 31, 2014. The allowance for loan losses plus the fair value marks on acquired loans was 0.93% of total loans at September 30, 2015 compared to 0.88% at December 31, 2014. Nonperforming loans to total loans improved to 0.37% at September 30, 2015 compared to 0.54% at December 31, 2014.

Deposits

Total deposits at September 30, 2015 were $730.4 million, an increase of $102.3 million, or 16.3%, from December 31, 2014. The increase in total deposits was driven primarily by an increase of $24.3 million, or 34.6%, in noninterest-bearing demand deposits, and an increase in time deposits of $43.5 million, or 14%, from December 31, 2014. The Company’s focus on relationship banking, including our deposit cross sell strategy, as well as management’s focus on growing the commercial and industrial loan portfolio and bringing in related deposits, continues to positively impact both noninterest-bearing demand deposit and NOW account growth.


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

 

            Percentage             Percentage      Increase/(Decrease)  
     September 30, 2015      of Portfolio      December 31, 2014      of Portfolio      Amount      Percent  

Noninterest-bearing demand deposits

     $ 94,533           12.9  %         $ 70,217           11.2  %         $ 24,316           34.6  %   

NOW accounts

     132,739           18.2               116,644           18.6               16,095           13.8         

Money market deposit accounts

     95,584           13.1               77,589           12.3               17,995           23.2         

Savings accounts

     53,717           7.3               53,332           8.5               385           0.7         

Time deposits

     353,861           48.5               310,336           49.4               43,525           14.0         
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     $ 730,434           100  %         $ 628,118           100  %         $ 102,316               16.3  %   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Interest Income

Net interest income for the third quarter of 2015 totaled $8 million, an increase of $0.2 million, or 2.2%, compared to the second quarter of 2015, and an increase of $1 million, or 13.6%, compared to the third quarter of 2014. The increase was a direct result of continued growth of the Company’s loan portfolio with an increase in net interest income of $1.8 million due to an increase in volume offset by a $0.8 million decrease related to a reduction in yield compared to the third quarter of 2014.

The Company’s net interest margin was 3.52% for the quarter ended September 30, 2015 compared to 3.70% for the second quarter of 2015 and 3.86% for the third quarter of 2014. The yield on interest-earning assets was 4.20% for the quarter ended September 30, 2015 compared to 4.37% for the second quarter of 2015 and 4.51% for the third quarter of 2014. The decrease in both the net interest margin and yield on interest-earning assets can be attributed to the consumer loan portfolio. The consumer loan portfolio primarily consists of indirect auto loans and has experienced margin compression related to its current originations.

The cost of deposits increased one basis point when comparing the third quarter of 2015 to the second quarter of 2015, and increased three basis points when comparing the third quarter of 2015 to the third quarter of 2014.

Noninterest Income

Noninterest income for the third quarter of 2015 totaled $2.2 million, an increase of $0.1 million, or 4.9%, compared to the second quarter of 2015, and an increase of $0.2 million, or 10.6%, compared to the third quarter of 2014. The largest component of noninterest income is the gain on sale of loans, representing 47.2% and 58.7% for the third quarters of 2015 and 2014, respectively.

The following table sets forth the composition of the Company’s gain on sale of loans for the time periods indicated (dollars in thousands).

 

  

 

 

    

 

 

 
         Q3 2015              Q2 2015              Q3 2014          Qtr/Qtr      Year/Year  
  

 

 

    

 

 

 

Gain on sale of loans

              

Consumer

     $ 705           $ 803           $ 713           -12%         -1%   

Mortgage

     318           274           433           16%         -27%   
  

 

 

    

 

 

    

 

 

       

Total

     1,023           1,077           1,146           -5%         -11%   

The increase in noninterest income from the third quarter of 2014 resulted primarily from the $0.3 million increase in both other operating income and gain on sale of investment securities, offset by a $0.4 million decrease in gain on sale of real estate owned, net. The increase in other operating income is mainly attributable to the $0.2 million increase in servicing fees, a direct result of the growth in the Company’s servicing portfolio from increased consumer loan sales.

Core noninterest income, which excludes the gains and losses on the sales of investment securities and other real estate owned, was $2 million for the third quarter of 2015, an increase of $0.1 million, or 2.9%, compared to $1.9 million for the second quarter of 2015, and an increase of $0.3 million, or 19.9%, compared to the third quarter of 2014.


Noninterest Expense

Noninterest expense for the third quarter of 2015 totaled $7 million, an increase of $0.3 million, or 5%, compared to the second quarter of 2015, and an increase of $0.7 million, or 11.1%, compared to the third quarter of 2014. The increase in noninterest expense from the third quarter of 2014 is primarily due to the $0.4 million increase in salaries and employee benefits and the $0.2 million increase in other operating expenses, both of which are mainly attributable to the continued growth of the Company including the opening of the Highland Road branch in Baton Rouge, Louisiana on August 1, 2014.

During the quarter, the Company incurred restructuring costs of approximately $0.3 million. These costs included severance of $150,000, which contributed to the $0.4 million increase in salaries and benefits discussed above, professional fees of $61,000, and other expenses of $105,000 related to the downsizing of our indirect lending platform. The downsizing can be attributed to the Company’s ongoing strategic shift to enhance franchise value by transitioning to a more relationship-based model from one that is transaction-oriented. The Company also recorded an impairment of $54,000 on its investment in a tax credit entity. Core noninterest expense, which excludes the impact of these costs, was $6.6 million for both the third and second quarters of 2015, an increase of $0.3 million, or 5.2%, compared to the third quarter of 2014.

Basic Earnings Per Share and Diluted Earnings Per Share

The Company reported both basic and diluted earnings per share of $0.26 for the three months ended September 30, 2015, an increase of $0.06 compared to basic and diluted earnings per share for the three months ended September 30, 2014.

Core basic and diluted earnings per share were $0.26 for the three months ended September 30, 2015, an increase of $0.09 and $0.10, respectively, compared to core basic earnings per share of $0.17 and core diluted earnings per share of $0.16 for the three months ended September 30, 2014.

Taxes

The Company recorded income tax expense of $0.9 million for the quarter ended September 30, 2015, which equates to an effective tax rate of 31.4%. During the third quarter, the Company recorded an additional tax credit related to its investment in a tax credit entity in December 2014 whose purpose was to invest in a Federal Historic Rehabilitation tax credit project. The Company recognized a tax credit of $72,000, reducing tax expense for the third quarter, as well as a corresponding impairment on its investment in the tax credit entity of $54,000.

About Investar Holding Corporation

Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, a state chartered bank. The Company’s primary market is South Louisiana and it currently operates 11 full service banking offices located throughout its market. At September 30, 2015, the Company had 165 full-time equivalent employees.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America, or GAAP. These measures and ratios include “tangible common equity,” “tangible assets,” “tangible equity to tangible assets,” “tangible book value per common share,” “efficiency ratio,” “core noninterest income,” “core earnings before noninterest expense,” “core noninterest expense,” “core income tax expense,” “core earnings,” “core efficiency ratio,” “core return on average assets,” “core return on average equity,” “core basic earnings per share,” and “core diluted earnings per share.” Management believes these non-GAAP financial measures provide information useful to investors in understanding the Company’s financial results, and the Company believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting the Company’s business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and the Company strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. A reconciliation of the non-GAAP financial measures disclosed in this press release to the comparable GAAP financial measures is included at the end of the financial statement tables.


Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of those words or other comparable words. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events:

 

   

business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;

   

our ability to achieve organic loan and deposit growth, and the composition of that growth;

   

changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;

   

the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;

   

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

   

changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;

   

inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;

   

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

   

concentration of credit exposure.

These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Item 1A. “Risk Factors” and Item 7. “Special Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission.

For further information contact:

Investar Holding Corporation

Chris Hufft

Chief Financial Officer

(225) 227-2215

Chris.Hufft@investarbank.com


INVESTAR HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

 

       September 30, 2015          December 31, 2014    
     (Unaudited)         

ASSETS

     

Cash and due from banks

     $ 6,595           $ 5,519     

Interest-bearing balances due from other banks

     13,058           13,493     

Federal funds sold

     223           500     
  

 

 

    

 

 

 

Cash and cash equivalents

     19,876           19,512     
     

Available for sale securities at fair value (amortized cost of $84,218 and $69,838, respectively)

     84,566           70,299     

Held to maturity securities at amortized cost (estimated fair value of $27,486 and $22,301, respectively)

     27,525           22,519     

Loans held for sale

     55,653           103,396     

Loans, net of allowance for loan losses of $5,911 and $4,630, respectively

     704,650           618,160     

Other equity securities

     4,899           5,566     

Bank premises and equipment, net of accumulated depreciation of $5,796 and $3,964, respectively

     29,916           28,538     

Other real estate owned, net

     1,178           2,735     

Accrued interest receivable

     2,560           2,435     

Deferred tax asset

     1,803           1,097     

Goodwill and other intangible assets

     3,185           3,216     

Other assets

     1,936           1,881     
  

 

 

    

 

 

 

Total assets

     $ 937,747           $ 879,354     
  

 

 

    

 

 

 
     

LIABILITIES

     

Deposits

     

Noninterest-bearing

     $ 94,533           $ 70,217     

Interest-bearing

     635,901           557,901     
  

 

 

    

 

 

 

Total deposits

     730,434           628,118     

Advances from Federal Home Loan Bank

     47,900           125,785     

Repurchase agreements

     34,648           12,293     

Note payable

     3,609           3,609     

Accrued taxes and other liabilities

     13,028           6,165     
  

 

 

    

 

 

 

Total liabilities

     829,619           775,970     
     

STOCKHOLDERS’ EQUITY

     

Preferred stock, $1.00 par value per share; 5,000,000 shares authorized

     -           -     

Common stock, $1.00 par value per share; 40,000,000 shares authorized; 7,264,261 and 7,262,085 shares outstanding, respectively

     7,305           7,264     

Treasury stock

     (630)          (23)    

Surplus

     84,588           84,213     

Retained earnings

     17,257           11,809     

Accumulated other comprehensive (loss) income

     (392)          121     
  

 

 

    

 

 

 

Total stockholders’ equity

     108,128           103,384     
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

     $ 937,747           $ 879,354     
  

 

 

    

 

 

 


INVESTAR HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share data)

(Unaudited)

 

                                                                   
     Three months ended      Nine months ended  
     September 30,      September 30,  
     2015      2014      2015      2014  
  

 

 

    

 

 

 

INTEREST INCOME

           

Interest and fees on loans

     $ 8,912           $ 7,801           $ 25,856           $ 21,595     

Interest on investment securities

     550           367           1,558           917     

Other interest income

     18           14           53           34     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest income

     9,480           8,182           27,467           22,546     
           

INTEREST EXPENSE

           

Interest on deposits

     1,358           1,084           3,849           3,137     

Interest on borrowings

     170           98           387           292     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest expense

     1,528           1,182           4,236           3,429     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

     7,952           7,000           23,231           19,117     
           

Provision for loan losses

     400           505           1,500           1,198     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for loan losses

     7,552           6,495           21,731           17,919     
           

NONINTEREST INCOME

           

Service charges on deposit accounts

     95           85           286           221     

Gain on sale of investment securities, net

     334           63           468           228     

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

     (147)          245           (141)          238     

Gain on sale of loans, net

     1,023           1,146           3,831           2,801     

Fee income on loans held for sale, net

     261           85           771           250     

Other operating income

     601           335           1,558           797     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

     2,167           1,959           6,773           4,535     
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before noninterest expense

     9,719           8,454           28,504           22,454     
           

NONINTEREST EXPENSE

           

Depreciation and amortization

     362           343           1,081           973     

Salaries and employee benefits

     4,161           3,773           12,040           10,735     

Occupancy

     217           223           655           629     

Data processing

     389           354           1,099           940     

Marketing

     35           94           155           241     

Professional fees

     271           176           770           433     

Impairment on investment in tax credit entity

     54           -           54           -     

Other operating expenses

     1,524           1,350           4,265           3,478     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expense

     7,013           6,313           20,119           17,429     
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income tax expense

     2,706           2,141           8,385           5,025     

Income tax expense

     850           699           2,766           1,637     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

     $         1,856           $         1,442           $         5,619           $         3,388     
  

 

 

    

 

 

    

 

 

    

 

 

 
           

EARNINGS PER SHARE

           

Basic earnings per share

     $ 0.26           $ 0.20           $ 0.78           $ 0.68     
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

     $ 0.26           $ 0.20           $ 0.78           $ 0.65     
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash dividends declared per common share

     $ 0.01           $ 0.01           $ 0.02           $ 0.03     
  

 

 

    

 

 

    

 

 

    

 

 

 


INVESTAR HOLDING CORPORATION

EARNINGS PER COMMON SHARE

(Amounts in thousands, except share data)

(Unaudited)

 

                                                                                                           
     Three months ended
September 30,
     Nine months ended
September 30,
 
     2015      2014      2015      2014  

Net income available to common shareholders

     $ 1,856           $ 1,442         $ 5,619           $ 3,388     

Weighted average number of common shares outstanding -

           

Used in computation of basic earnings per common share

     7,217,006           7,064,806           7,218,603           4,967,393     

Effect of dilutive securities:

           

Restricted stock

     9,326           35,251           4,812           45,649     

Stock options

     13,980           22,811           12,385           22,811     

Stock warrants

     12,269           189,601           11,284           192,184     

Weighted average number of common shares outstanding -

           
  

 

 

 

Plus effect of dilutive securities used in computation of diluted earnings per common share

     7,252,581           7,312,469           7,247,084           5,228,037     

Basic earnings per share

     $ 0.26           $ 0.20           $ 0.78           $ 0.68     
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

     $ 0.26           $ 0.20           $ 0.78           $ 0.65     
  

 

 

    

 

 

    

 

 

    

 

 

 


INVESTAR HOLDING CORPORATION

SUMMARY FINANCIAL INFORMATION

(Amounts in thousands, except share data)

(Unaudited)

 

  

 

 

    

 

 

 
           Q3 2015                  Q2 2015                  Q3 2014              Qtr/Qtr          Year/Year  
  

 

 

    

 

 

 

EARNINGS DATA

              

Total interest income

     $ 9,480           $ 9,187           $ 8,182           3.2%         15.9%   

Total interest expense

     1,528           1,407           1,182           8.6%         29.3%   
  

 

 

    

 

 

    

 

 

       

Net interest income

     7,952           7,780           7,000           2.2%         13.6%   

Provision for loan losses

     400           400           505           0.0%         -20.8%   

Total noninterest income

     2,167           2,066           1,959           4.9%         10.6%   

Total noninterest expense

     7,013           6,682           6,313           5.0%         11.1%   
  

 

 

    

 

 

    

 

 

       

Income before income taxes

     2,706           2,764           2,141           -2.1%         26.4%   

Income tax expense

     850           951           699           -10.6%         21.6%   

Net income

     $ 1,856           $ 1,813           $ 1,442           2.4%         28.7%   
              

AVERAGE BALANCE SHEET DATA

              

Total assets

     $ 944,234           $ 891,581           $ 762,330           5.9%         23.9%   

Total interest-earning assets

     895,208           842,984           719,985           6.2%         24.3%   

Total loans

     692,196           664,606           589,082           4.2%         17.5%   

Total gross loans

     777,080           729,851           619,356           6.5%         25.5%   

Total interest-bearing deposits

     634,232           617,442           523,075           2.7%         21.3%   

Total interest-bearing liabilities

     738,612           694,497           585,015           6.4%         26.3%   

Total deposits

     721,657           699,151           594,519           3.2%         21.4%   

Total shareholders’ equity

     107,795           106,583           100,068           1.1%         7.7%   
              

PER SHARE DATA

              

Earnings:

              

Basic earnings per share

     $ 0.26           $ 0.25           $ 0.20           2.4%         28.6%   

Diluted earnings per share

     0.26           0.25           0.20           2.5%         28.0%   

Core earnings:

              

Basic earnings per share (1)

     0.26           0.24           0.17           10.0%         49.6%   

Diluted earnings per share (1)

     0.26           0.24           0.16           10.0%         61.9%   

Book value per share

     14.88           14.65           14.08           1.6%         5.7%   

Tangible book value per share (1)

     14.45           14.22           13.64           1.6%         5.9%   

Common shares outstanding

         7,264,261               7,293,209               7,253,774           -0.4%         0.1%   
              

PERFORMANCE RATIOS

              

Return on average assets

     0.78%           0.82%           0.75%           -4.9%         4.0%   

Core return on average assets (1)

     0.80%           0.77%           0.64%           3.3%         24.4%   

Return on average equity

     6.83%           6.82%           5.72%           0.1%         19.4%   

Core return on average equity (1)

     7.01%           6.48%           4.90%           8.2%         43.1%   

Net interest margin

     3.52%           3.70%           3.86%           -4.9%         -8.8%   

Net interest income to average assets

     3.34%           3.50%           3.64%           -4.6%         -8.2%   

Noninterest expense to average assets

     2.95%           3.01%           3.29%           -2.0%         -10.3%   

Efficiency ratio (1)

     69.31%           67.87%           70.47%           2.1%         -1.6%   

Core efficiency ratio (1)

     66.88%           68.85%           72.97%           -2.9%         -8.3%   

Dividend payout ratio

     3.19%           3.11%           3.40%           2.6%         -6.2%   

Net chargeoffs to average loans

     0.03%           0.00%           0.04%           NA         -25.0%   


INVESTAR HOLDING CORPORATION

SUMMARY FINANCIAL INFORMATION

(Amounts in thousands, except share data)

(Unaudited)

 

  

 

 

    

 

 

 
           Q3 2015                  Q2 2015                  Q3 2014              Qtr/Qtr          Year/Year  
  

 

 

    

 

 

 

ASSET QUALITY RATIOS

              

Nonperforming assets to total assets

     0.40%         0.56%         0.56%         -28.6%         -28.6%   

Nonperforming loans to total loans

     0.37%         0.40%         0.25%         -7.5%         48.0%   

Allowance for loan losses to total loans

     0.83%         0.85%         0.74%         -2.4%         12.2%   

Allowance for loan losses to nonperforming loans

     226.43%         213.20%         296.01%         6.2%         -23.5%   
              

CAPITAL RATIOS (2)

              

Investar Holding Corporation:

              

Total equity to total assets

     11.53%         11.59%         13.03%         -0.5%         -11.5%   

Tangible equity to tangible assets

     11.23%         11.29%         12.66%         -0.5%         -11.3%   

Tier 1 leverage ratio

     11.61%         12.15%         13.52%         -4.4%         -14.1%   

Common equity tier 1 capital ratio

     12.69%         12.96%         NA            -2.1%         NA      

Tier 1 capital ratio

     13.11%         13.39%         15.76%         -2.1%         -16.8%   

Total capital ratio

     13.82%         14.10%         16.42%         -2.0%         -15.8%   

Investar Bank:

              

Tier 1 leverage ratio

     11.25%         11.72%         9.04%         -4.0%         24.4%   

Common equity tier 1 capital ratio

     12.71%         12.91%         NA            -1.5%         NA      

Tier 1 capital ratio

     12.71%         12.91%         10.53%         -1.5%         20.7%   

Total capital ratio

     13.42%         13.62%         11.20%         -1.5%         19.8%   

 

 

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

(2) Beginning January 1, 2015, the capital ratios for the Company and the Bank are calculated using the Basel III framework. Capital ratios for prior periods were calculated using the Basel I framework. The Common Equity Tier 1 (CET1) capital ratio is a new ratio introduced under the Basel III framework. Ratios are estimated for September 30, 2015.


INVESTAR HOLDING CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS

(Amounts in thousands)

(Unaudited)

 

                                                                                                     
     Three months ended September 30,  
     2015     2014  
     Average
Balance
     Interest
Income/
Expense
     Yield/Rate     Average
Balance
     Interest
Income/
Expense
     Yield/Rate  

Assets

                

Interest-earning assets:

                

Loans

     $ 777,080          $ 8,912          4.55      $ 619,356          $ 7,801          5.00 

Securities:

                

Taxable

     82,476          444          2.14         66,713          244          1.45    

Tax-exempt

     17,234          106          2.44         19,353          123          2.52    

Interest-bearing balances with banks

     18,418          18          0.39         14,563          14          0.38    
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-earning assets

     895,208          9,480          4.20         719,985          8,182          4.51    

Cash and due from banks

     5,669               6,093          

Intangible assets

     3,189               3,230          

Other assets

     46,061               37,057          

Allowance for loan losses

     (5,893)               (4,035)          
  

 

 

         

 

 

       

Total assets

     $ 944,234               $ 762,330          
  

 

 

         

 

 

       
                

Liabilities and shareholders’ equity

                

Interest-bearing liabilities:

                

Deposits:

                

Interest-bearing demand

     $ 229,919          $ 369          0.64      $ 179,226          $ 279          0.62 

Savings deposits

     53,407          91          0.68         52,973          91          0.68    

Time deposits

     350,906          898          1.02         290,876          714          0.97    
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing deposits

     634,232          1,358          0.85         523,075          1,084          0.82    

Short-term borrowings

     68,544          32          0.19         23,137          12          0.21    

Long-term debt

     35,836          138          1.53         38,803          86          0.88    
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

     738,612          1,528          0.82         585,015          1,182          0.80    

Noninterest-bearing deposits

     87,425               71,444          

Other liabilities

     10,402               5,803          

Stockholders’ equity

     107,795               100,068          
  

 

 

         

 

 

       

 

Total liability and stockholders’ equity

     $ 944,234               $ 762,330          
  

 

 

    

 

 

      

 

 

    

 

 

    

Net interest income/net interest margin

        $ 7,952          3.52         $ 7,000          3.86 
     

 

 

    

 

 

      

 

 

    

 

 

 


INVESTAR HOLDING CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS

(Amounts in thousands)

(Unaudited)

 

                                                                                                     
     Nine months ended September 30,  
     2015     2014  
     Average
Balance
     Interest
Income/
Expense
     Yield/Rate     Average
Balance
     Interest
Income/
Expense
     Yield/Rate  

Assets

                

Interest-earning assets:

                

Loans

     $ 740,652          $ 25,856          4.67      $ 576,280         $ 21,595         5.01 

Securities:

                

Taxable

     76,069          1,214          2.13         58,779         623         1.42    

Tax-exempt

     18,381          344          2.50         16,272         294         2.42    

Interest-bearing balances with banks

     17,863          53          0.40         11,833         34         0.38    
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-earning assets

     852,965          27,467          4.31         663,164         22,546         4.55    

Cash and due from banks

     5,597               5,790         

Intangible assets

     3,199               3,240         

Other assets

     45,619               35,667         

Allowance for loan losses

     (5,497)               (3,683)         
  

 

 

         

 

 

       

Total assets

     $ 901,883               $ 704,178         
  

 

 

         

 

 

       
                

Liabilities and shareholders’ equity

                

Interest-bearing liabilities:

                

Deposits:

                

Interest-bearing demand

     $ 219,018          $ 1,034          0.63      $ 168,309         $ 783         0.62 

Savings deposits

     54,158          274          0.68         52,439         269         0.69    

Time deposits

     339,129          2,541          1.00         281,822         2,085         0.99    
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing deposits

     612,305          3,849          0.84         502,570         3,137         0.83    

Short-term borrowings

     53,030          72          0.18         23,810         36         0.20    

Long-term debt

     39,213          315          1.07         37,079         256         0.92    
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

     704,548          4,236          0.80         563,459         3,429         0.81    

Noninterest-bearing deposits

     82,157               65,080         

Other liabilities

     8,736               4,157         

Stockholders’ equity

     106,442               71,482         
  

 

 

         

 

 

       

Total liability and stockholders’ equity

     $ 901,883               $ 704,178         
  

 

 

    

 

 

      

 

 

    

 

 

    

Net interest income/net interest margin

        $ 23,231          3.64         $ 19,117         3.85 
     

 

 

    

 

 

      

 

 

    

 

 

 


INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

 

                                                                                      
     September 30,      June 30,  
     2015      2014      2015  

Tangible common equity

        

Total stockholder’s equity

     $ 108,128           $ 102,165           $ 106,873     

Adjustments:

        

Goodwill

     2,684           2,684           2,684     

Core deposit intangible

     501           542           511     
  

 

 

    

 

 

    

 

 

 

Tangible common equity

     $ 104,943           $ 98,939           $ 103,678     
  

 

 

    

 

 

    

 

 

 

Tangible assets

        

Total assets

     $ 937,747           $ 784,597           $ 921,855     

Adjustments:

        

Goodwill

     2,684           2,684           2,684     

Core deposit intangible

     501           542           511     
  

 

 

    

 

 

    

 

 

 

Tangible assets

     $ 934,562           $ 781,371           $ 918,660     
  

 

 

    

 

 

    

 

 

 
        

Common shares outstanding

     7,264,261           7,253,774           7,293,209     

Tangible equity to tangible assets

     11.23%         12.66%         11.29%   

Book value per common share

     $ 14.88           $ 14.08           $ 14.65     

Tangible book value per common share

     14.45           13.64           14.22     

 


INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

 

                                                                                           
          Three months ended  
          September 30,      June 30,  
          2015      2014      2015  

Net interest income

   (a)     $ 7,952          $ 7,000          $ 7,780     

Provision for loan losses

        400           505           400     
     

 

 

    

 

 

    

 

 

 

Net interest income after provision for loan losses

        7,552           6,495           7,380     
           

Noninterest income

   (b)      2,167           1,959           2,066     

Gain on sale of investment securties

        (334)          (63)          (134)    

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

        147           (245)          (7)    
     

 

 

    

 

 

    

 

 

 

Core noninterest income

   (d)      1,980           1,651           1,925     
           

Core earnings before noninterest expense

        9,532           8,146           9,305     
           

Total noninterest expense

   (c)      7,013           6,313           6,682     

Impairment on investment in tax credit entity

        (54)          -             -       

Restructuring costs:

           

Severance

        (150)          -             -       

Legal and consulting

        (61)          -             -       

Other

        (105)          -             -       
     

 

 

    

 

 

    

 

 

 

Core noninterest expense

   (f)      6,643           6,313           6,682     
           

Core earnings before income tax expense

        2,889           1,833           2,623     

Core income tax expense (1)

        985           598           902     
     

 

 

    

 

 

    

 

 

 

Core earnings

       $ 1,904          $ 1,235          $ 1,721     
     

 

 

    

 

 

    

 

 

 
           

Core basic earnings per share

       $ 0.26          $ 0.17          $ 0.24     
           

Diluted earnings per share (GAAP)

       $ 0.26          $ 0.20          $ 0.25     

Gain on sale of investment securties

        (0.04)          (0.01)          (0.01)    

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

        0.01           (0.03)          -       

Impairment on investment in tax credit entity

        -             -             -       

Restructuring costs

        0.03           -             -       
     

 

 

    

 

 

    

 

 

 

Core diluted earnings per share

       $ 0.26          $ 0.16          $ 0.24     
     

 

 

    

 

 

    

 

 

 
           

Efficiency ratio

   (c) / (a+b)      69.31%         70.47%         67.87%   

Core efficiency ratio

   (f) / (a+d)      66.88%         72.97%         68.85%   

Core return on average assets (2)

        0.80%         0.64%         0.77%   

Core return on average equity (2)

        7.01%         4.90%         6.48%   

Total average assets

       $ 944,234          $ 762,330          $ 891,581     

Total average stockholders’ equity

        107,795           100,068           106,583     

 

 

(1) Core income tax expense is calculated using the actual effective tax rates of 34.4% and 32.6% for the three months ended June 30, 2015 and September 30, 2014, respectively. The core income tax expense for the three months ended September 30, 2015 is calculated using the core effective tax rate of 34.1%. See rate reconciliation on the following page.

(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.


INVESTAR HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except share data)

(Unaudited)

 

                                                                                           
         Three months ended  
         September 30,      June 30,  
         2015      2014      2015  

Earnings before income tax expense

   (a)    $ 2,706          $ 2,141          $ 2,764     
          

Income tax expense

       850           699           951     

Income tax credit

       72           -               -         
    

 

 

    

 

 

    

 

 

 

Adjusted income tax expense

   (b)     922           699           951     
          

Core effective tax rate (1)

   (b) / (a)     34.1%           32.6%           34.4%     

 

 

(1) Core effective tax rate is used in the calculation of core income tax expense.