0001602658-20-000105 8-K 16 20200423 2.02 9.01 20200424 20200424 Investar Holding Corp 0001602658 6022 271560715 LA 1231 8-K 34 001-36522 20813115 10500 COURSEY BLVD THIRD FLOOR BATON ROUGE LA 70816 225-227-2222 10500 COURSEY BLVD THIRD FLOOR BATON ROUGE LA 70816 8-K 1 form8-kxq12020earningsrele.htm 8-K Document

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________

FORM 8-K
___________________
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 23, 2020
 

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)
 
 
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 (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $1.00 par value per share
ISTR
The Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02
Results of Operations and Financial Condition.
On April 23, 2020, Investar Holding Corporation (the “Company”) issued a press release reporting first quarter 2020 results and posted on its website its first quarter 2020 earnings release and earnings release presentation. The materials contain forward-looking statements regarding the Company and includes a cautionary note identifying important factors that could cause actual results to differ materially from those anticipated. A copy of the earnings release and earnings release presentation is furnished as exhibits 99.1 and 99.2 to this Current Report on Form 8-K.
The information contained in Item 2.02, including Exhibits 99.1 and 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










SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
INVESTAR HOLDING CORPORATION
 
 
 
 
Date: April 24, 2020
 
 
 
By:
 
/s/ John J. D’Angelo
 
 
 
 
 
 
John J. D’Angelo
 
 
 
 
 
 
President and Chief Executive Officer




EX-99.1 2 exhibit991-q12020earningsr.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
For Immediate Release

Investar Holding Corporation Announces 2020 First Quarter Results

BATON ROUGE, LA (April 23, 2020) – Investar Holding Corporation (NASDAQ: ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended March 31, 2020. The Company reported net income of $0.6 million, or $0.05 per diluted common share, for the first quarter of 2020, compared to $3.3 million, or $0.32 per diluted common share, for the quarter ended December 31, 2019, and $3.9 million, or $0.40 per diluted common share, for the quarter ended March 31, 2019.
On a non-GAAP basis, core earnings per diluted common share for the first quarter of 2020 were $0.15 compared to $0.39 for the fourth quarter of 2019 and $0.46 for the quarter ended March 31, 2019. Core earnings exclude certain non-operating items including, but not limited to, acquisition expense and gain or loss on the sale of investment securities, net (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).
Economic Environment
The global COVID-19 pandemic and the public health response to minimize its impact have had severe adverse and disruptive effects on economic, financial market and oil market conditions beginning in the latter part of the first quarter of 2020, which were not anticipated at the beginning of the quarter. In response to the pandemic, during March 2020, the Federal Reserve reduced the federal funds rate 150 basis points to 0 to 0.25 percent. Government-mandated closures of businesses and stay-at-home orders have caused steep increases in unemployment and decreases in consumer and business spending. As a result, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the largest economic stimulus package in the nation’s history, in an effort to lessen the impact of COVID-19 on consumers and businesses. The Bank has participated as a lender in the Small Business Administration’s (“SBA”) and U.S. Department of Treasury’s Paycheck Protection Program (“PPP”) as established by the CARES Act. The PPP was established to provide unsecured low interest rate loans to small businesses that have been impacted by the COVID-19 pandemic. The PPP loans are 100% guaranteed by the SBA. The loans have a fixed interest rate of 1%, payments of interest and principal are deferred for the first six months, and the loan matures two years from origination. PPP loans are forgiven by the SBA (which makes forgiveness payments directly to the lender) to the extent the borrower uses the proceeds of the loan for certain purposes (primarily to fund payroll costs) during the eight-week period following origination and maintains certain employee and compensation levels. Lenders receive processing fees from the SBA for originating the PPP loans which are based on a percentage of the loan amount.
Investar Holding Corporation President and Chief Executive Officer John D’Angelo said:
“In addition to disrupting the global economy, the COVID-19 pandemic is taking a significant human toll, and our hearts go out to all those affected. During this unprecedented time, we are focused on supporting our personnel, their families and our customers, and have enacted business continuity plans so that we can continue to serve our customers while protecting the well-being of our personnel. Our branches remain open and are offering drive-thru services and limited appointments with appropriate safety measures, along with our existing remote banking options. Our bankers have worked hard to formulate options for customers experiencing personal or business difficulties related to COVID-19 and are prepared to support our communities as long as they need us.
During the first quarter of 2020, we experienced decreased earnings compared to prior quarters. The most significant changes are related to the current state of the economy as a result of the COVID-19 pandemic. Statewide stay-at-home orders have been in effect since March 22, 2020 in Louisiana, and since early April in Texas and Alabama. In response to the pandemic and the recessionary market conditions, we recorded an additional $3.5 million provision for loan losses, as well as an $0.8 million decrease in the fair value of our equity securities. We continue to focus on the financial needs of our clients and are providing assistance through payment deferrals and other relief programs, including the SBA Paycheck Protection Program.
While we continue to focus on protecting the safety of our employees, customers, community and shareholders, we are taking steps to position our balance sheet in order to create opportunities for our business in this uncertain economic environment. Our capital levels remain strong, and we continue to focus on the creation of shareholder value. During the quarter, we were successful in lowering our deposit costs and continue to take steps to further reduce deposit costs and transition our deposit mix.
As a community bank, we separate ourselves from others by providing exceptional customer service. This included immediately reaching out to customers, understanding their needs, offering payment deferrals, and assisting with the Paycheck Protection Program. The low interest rate environment has let us take advantage of low rate forward-starting debt swaps as well as offer our customers fixed-to-floating rate swaps. We remain confident that we are taking the necessary steps to position our balance sheet and enhance our capital position to successfully navigate the financial disruption caused by this pandemic.



On February 21, 2020, we completed the acquisition of the Alice and Victoria, Texas branches of PlainsCapital Bank and are excited to welcome the former-PlainsCapital staff and customers to the Investar family. The acquisition of these branches helped grow our balance sheet as we acquired approximately $45.3 million in loans and $37.0 million in deposits.
Although 2020 is presenting unique challenges, we remain committed to long-term shareholder value and providing our customers with exceptional service.”
First Quarter Highlights
In response to the COVID-19 pandemic, the Bank instituted a 90-day loan deferral program for affected customers. As of March 31, 2020, the Company had placed approximately $55 million, or 3.2% of the total loan portfolio, on the deferral program. As of April 17, 2020, the Company had placed approximately $439 million on the loan deferral program. Eighty-seven percent of the total loans on the deferral program are secured by real estate with loan-to-value ratios averaging 67%.
The Bank recorded an additional $3.5 million in provision for credit losses primarily as a result of the deterioration of market conditions which have been adversely affected by the COVID-19 pandemic.
Cost of deposits decreased ten basis points to 1.47% for the quarter ended March 31, 2020 compared to 1.57% for the quarter ended December 31, 2019.
Net interest margin improved two basis points to 3.46% for the quarter ended March 31, 2020 compared to 3.44% at December 31, 2019.
On February 21, 2020, the Bank completed its previously announced acquisition and assumption of certain assets, deposits and other liabilities associated with the Alice and Victoria, Texas locations of PlainsCapital Bank, a wholly-owned subsidiary of Hilltop Holdings Inc. In connection with the acquisition, the Bank acquired approximately $45.3 million in loans and approximately $37.0 million in deposits. In addition, the Bank acquired substantially all the fixed assets at the branch locations, and assumed the leases for the branch facilities.
The Company and Bank remain well capitalized with all capital ratios above the regulatory requirements. The total risk-based capital ratio for the Company and Bank was 14.40% and 12.87%, respectively, at March 31, 2020, compared to 15.02% and 13.03%, respectively, at December 31, 2019.
The Company repurchased 326,636 shares of its common stock through its stock repurchase program at an average price of $20.34 during the quarter ended March 31, 2020, leaving 299,698 shares authorized for repurchase under the current stock repurchase plan after the board approved, on March 10, 2020, an additional 300,000 shares for repurchase.

Loans
Total loans were $1.73 billion at March 31, 2020, an increase of $37.8 million, or 2.2%, compared to December 31, 2019, and an increase of $234.9 million, or 15.7%, compared to March 31, 2019. Excluding the loans acquired from PlainsCapital Bank, or $44.5 million at March 31, 2020, total loans decreased $6.7 million, or 0.4%, compared to December 31, 2019. Excluding the loans acquired from Bank of York on November 1, 2019 and PlainsCapital Bank, or $86.2 million at March 31, 2020, total loans increased $190.4 million, or 12.7% compared to March 31, 2019.
We experienced the greatest loan growth in the commercial real estate portfolio for the quarter ended March 31, 2020 as we remain focused on relationship banking and growing our commercial loan portfolios.
At March 31, 2020, 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 $684.1 million, an increase of $7.9 million, or 1.2%, compared to the business lending portfolio of $676.1 million at December 31, 2019, and an increase of $121.5 million, or 21.6%, compared to the business lending portfolio of $562.6 million at March 31, 2019. The increase in the business lending portfolio, excluding any acquired balances, is mainly attributable to the increased production of our Commercial and Industrial Division.
Consumer loans totaled $28.2 million at March 31, 2020, a decrease of $1.3 million, or 4.3%, compared to $29.4 million at December 31, 2019, and a decrease of $12.0 million, or 29.9%, compared to $40.2 million at March 31, 2019. The decrease in consumer loans is mainly attributable to the scheduled paydowns of the indirect auto lending portfolio and is consistent with our business strategy.



The following table sets forth the composition of the total loan portfolio as of the dates indicated (dollars in thousands).
 
 
 
 
 
 
 
 
Linked Quarter Change
 
Year/Year Change
 
Percentage of Total Loans
 
 
3/31/2020
 
12/31/2019
 
3/31/2019
 
$
 
%
 
$
 
%
 
3/31/2020
 
3/31/2019
Mortgage loans on real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and development
 
$
191,597

 
$
197,797

 
$
171,483

 
$
(6,200
)
 
(3.1
)%
 
$
20,114

 
11.7
 %
 
11.1
%
 
11.5
%
1-4 Family
 
328,730

 
321,489

 
299,061

 
7,241

 
2.3

 
29,669

 
9.9

 
19.0

 
20.0

Multifamily
 
61,709

 
60,617

 
57,487

 
1,092

 
1.8

 
4,222

 
7.3

 
3.6

 
3.9

Farmland
 
29,373

 
27,780

 
24,457

 
1,593

 
5.7

 
4,916

 
20.1

 
1.7

 
1.6

Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
 
370,209

 
352,324

 
307,108

 
17,885

 
5.1

 
63,101

 
20.5

 
21.4

 
20.5

Nonowner-occupied
 
406,145

 
378,736

 
339,637

 
27,409

 
7.2

 
66,508

 
19.6

 
23.5

 
22.7

Commercial and industrial
 
313,850

 
323,786

 
255,476

 
(9,936
)
 
(3.1
)
 
58,374

 
22.8

 
18.1

 
17.1

Consumer
 
28,181

 
29,446

 
40,210

 
(1,265
)
 
(4.3
)
 
(12,029
)
 
(29.9
)
 
1.6

 
2.7

Total loans
 
$
1,729,794

 
$
1,691,975

 
$
1,494,919

 
$
37,819

 
2.2
 %
 
$
234,875

 
15.7
 %
 
100
%
 
100
%
As the COVID-19 pandemic unfolded during the first quarter, the Bank took proactive, strategic steps to reduce certain exposure in construction and development and commercial and industrial loans, particularly to borrowers in the oil and gas industry, which is reflected in the table above.
Our loan portfolio includes loans to businesses in certain industries that may be more significantly affected by the pandemic than others. These loans, including loans related to oil and gas, food services, hospitality, and entertainment, represent approximately 6% of our total loan portfolio at March 31, 2020, as shown below.
Industry
 
Percentage of Loan Portfolio
Oil and gas
 
3.2
%
Food services
 
1.8

Hospitality
 
0.4

Entertainment
 
0.6

Total
 
6.0
%
Credit Quality
Nonperforming loans were $7.6 million, or 0.44% of total loans, at March 31, 2020, an increase of $1.3 million compared to $6.3 million, or 0.37% of total loans, at December 31, 2019, and an increase of $1.6 million compared to $6.0 million, or 0.40% of total loans, at March 31, 2019. Included in nonperforming loans are acquired loans with a balance of $5.0 million at March 31, 2020, or 66% of nonperforming loans.
The allowance for loan losses was $14.2 million, or 188.4% and 0.82% of nonperforming and total loans, respectively, at March 31, 2020, compared to $10.7 million, or 171.1% and 0.63%, respectively, at December 31, 2019, and $9.6 million, or 159.9% and 0.64%, respectively, at March 31, 2019.
The provision for loan losses was $3.8 million for the quarter ended March 31, 2020 compared to $0.7 million and $0.3 million for the quarters ended December 31, 2019 and March 31, 2019, respectively. Additional provision for loan losses of $3.5 million was recorded in the first quarter of 2020 primarily as a result of the deterioration of market conditions which have been adversely affected by the COVID-19 pandemic. Although we have not yet experienced loan losses directly related to the pandemic, the Company continues to assess the impact the pandemic may have on its loan portfolio to determine the need for additional reserves.
Excluding the impact of the additional provision recorded, the changes in the provision for loan losses compared to the quarters ended December 31, 2019 and March 31, 2019, are primarily attributable to the changes in incremental loan growth, excluding acquired loan balances, as credit quality and other factors impacting our allowance and related provision were relatively unchanged period over period.



Loan Deferral Program
In response to the COVID-19 pandemic, the Company instituted a 90-day loan deferral program for customers who are impacted by the pandemic. As of March 31, 2020, the Company placed approximately $55 million, or 3.2% of the total loan portfolio, on a 90-day deferral plan. As of April 17, 2020, the Company had placed approximately $439 million on the loan deferral program, of which 87% are secured by real estate with loan-to-value ratios averaging 67%. Of the loans participating in the deferral program, 72% have deferrals of principal and interest, 14% have deferrals of principal only, and 14% have deferrals of interest only.
Deposits
Total deposits at March 31, 2020 were $1.73 billion, an increase of $21.1 million, or 1.2%, compared to December 31, 2019, and an increase of $196.0 million, or 12.8%, compared to March 31, 2019. The Company acquired approximately $37.0 million in deposits from PlainsCapital Bank in the first quarter of 2020 and $84.8 million in deposits from Bank of York in the fourth quarter of 2019. The remaining increase compared to March 31, 2019 is due to organic growth. Excluding deposits acquired from PlainsCapital Bank, deposits decreased $15.9 million, or 0.9%, compared to December 31, 2019.

The following table sets forth the composition of deposits as of the dates indicated (dollars in thousands).
 
 
 
 
 
 
 
 
Linked Quarter Change
 
Year/Year Change
 
Percentage of
Total Deposits
 
 
3/31/2020
 
12/31/2019
 
3/31/2019
 
$
 
%
 
$
 
%
 
3/31/2020
 
3/31/2019
Noninterest-bearing demand deposits
 
$
339,379

 
$
351,905

 
$
285,811

 
$
(12,526
)
 
(3.6
)%
 
$
53,568

 
18.7
%
 
19.6
%
 
18.6
%
Interest-bearing demand deposits
 
378,787

 
335,478

 
333,434

 
43,309

 
12.9

 
45,353

 
13.6

 
21.9

 
21.8

Money market deposit accounts
 
197,703

 
198,999

 
188,373

 
(1,296
)
 
(0.7
)
 
9,330

 
5.0

 
11.4

 
12.3

Savings accounts
 
118,193

 
115,324

 
114,631

 
2,869

 
2.5

 
3,562

 
3.1

 
6.9

 
7.5

Time deposits
 
694,764

 
706,000

 
610,544

 
(11,236
)
 
(1.6
)
 
84,220

 
13.8

 
40.2

 
39.8

Total deposits
 
$
1,728,826

 
$
1,707,706

 
$
1,532,793

 
$
21,120

 
1.2
 %
 
$
196,033

 
12.8
%
 
100.0
%
 
100.0
%
As the state of the economy and financial markets deteriorated during the first quarter of 2020 in response to the global pandemic, customers desired increased security of funds and transferred holdings into fully-insured checking accounts, or our Assured Checking product, shown in interest-bearing demand deposits in the table above. A portion of the increase in interest-bearing demand deposits resulted from existing customers moving funds out of noninterest-bearing demand deposit accounts.
Management also made a strategic decision to either reprice or run-off higher yielding time deposits during the first quarter, which contributed to our decreased cost of deposits compared to the quarter ended December 31, 2019.
Net Income
Net income for the quarter ended March 31, 2020 was $0.6 million, a decrease of $2.7 million, or 81.8%, compared to $3.3 million for the quarter ended December 31, 2019 and a decrease of $3.3 million, or 84.5%, compared to the quarter ended March 31, 2019. The primary drivers of the decrease in net income are related to the state of the economy and financial markets at March 31, 2020. As discussed above, an additional provision for loan losses of $3.5 million was recorded in response to the COVID-19 pandemic, and, as shown on the consolidated statement of income for the quarter ended March 31, 2020, the fair value of equity securities decreased by $0.8 million due to the condition of the financial markets.
The table below shows the Company’s income before the effects of the provision for loan losses, change in the fair value of equity securities and income tax expense.



 
 
For the quarter ended
 
 
3/31/2020
 
12/31/2019
 
3/31/2019
 
Linked Quarter
 
Year/Year
Net interest income after provision for loan losses
 
$
13,575

 
$
16,229

 
$
14,891

 
$
(2,654
)
 
$
(1,316
)
Add: Provision for loan losses
 
3,760

 
736

 
265

 
 
 
 
Noninterest income
 
1,089

 
1,575

 
1,281

 
(486
)
 
(192
)
Less: Change in fair value of equity securities
 
(826
)
 
121

 
180

 


 


Adjusted noninterest income*
 
1,915

 
1,454

 
1,101

 
461

 
814

Total noninterest expense
 
13,907

 
13,629

 
11,303

 
278

 
2,604

Income before provision for loan losses, change in the fair value of equity securities and income tax expense*
 
$
5,343

 
$
4,790

 
$
4,954

 
$
553

 
$
389

*Non-GAAP measure
Net Interest Income
Net interest income for the first quarter of 2020 totaled $17.3 million, an increase of $0.4 million, or 2.2%, compared to the fourth quarter of 2019, and an increase of $2.2 million, or 14.4%, compared to the first quarter of 2019. Included in net interest income for the quarters ended March 31, 2020, December 31, 2019 and March 31, 2019 is $0.3 million, $0.2 million and $0.4 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarters ended March 31, 2020 and December 31, 2019 are interest recoveries of $5,000 and $56,400, respectively, on acquired loans.
The Company’s net interest margin was 3.46% for the quarter ended March 31, 2020 compared to 3.44% for the quarter ended December 31, 2019 and 3.53% for the quarter ended March 31, 2019. The yield on interest-earning assets was 4.71% for the quarter ended March 31, 2020 compared to 4.77% for the quarter ended December 31, 2019 and 4.81% for the quarter ended March 31, 2019. The decrease in the yield on interest-earning assets compared to the quarter ended December 31, 2019 was driven by a $0.1 million decrease in interest accretion and lower loan yields, as well as an eight basis point decrease in the yield on investment securities.
The increase in net interest margin for the quarter ended March 31, 2020 compared to the quarter ended December 31, 2019 was driven by the improvement in our cost of funds. The decrease in net interest margin for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019 was driven by an increase in the cost of funds required to fund the increase in assets with a lower yield.
Exclusive of the interest income accretion from the acquisition of loans, discussed above, as well as interest recoveries of $5,000 and $56,400 in the quarters ended March 31, 2020 and December 31, 2019, respectively, adjusted net interest margin improved two basis points to 3.41% for the quarter ended March 31, 2020 compared to 3.39% for the quarter ended December 31, 2019, and decreased compared to 3.43% for the quarter ended March 31, 2019. The adjusted yield on interest-earning assets was 4.66% for the quarter ended March 31, 2020 compared to 4.72% for both the quarters ended December 31, 2019 and March 31, 2019, respectively.
The cost of deposits decreased ten basis points to 1.47% for the quarter ended March 31, 2020 compared to 1.57% for the quarter ended December 31, 2019 and increased six basis points compared to 1.41% for the quarter ended March 31, 2019. The decrease in the cost of deposits compared to the quarter ended December 31, 2019 reflects the decrease in rates paid for our interest-bearing demand deposits and time deposits. The increase in the cost of deposits compared to the quarter ended March 31, 2019 resulted from the increase in the volume and rates paid for time deposits.
The overall costs of funds for the quarter ended March 31, 2020 decreased seven basis points to 1.62% compared to 1.69% for the quarter ended December 31, 2019 and increased three basis points compared to 1.59% for the quarter ended March 31, 2019. The decrease in the cost of funds for the quarter ended March 31, 2020 compared to the quarter ended December 31, 2019 resulted from both lower cost of deposits and short-term borrowings. The increase in the cost of funds for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019 is mainly a result of an increase in the cost of deposits, but is also driven by the increased cost of borrowed funds, including the subordinated debt issued in November 2019, used to finance loan and investment activity.



Noninterest Income
Noninterest income for the first quarter of 2020 totaled $1.1 million, a decrease of $0.5 million, or 30.9%, compared to the quarter ended December 31, 2019 and a decrease of $0.2 million, or 15.0%, compared to the first quarter of 2019. The decrease in noninterest income compared to the quarters ended December 31, 2019 and March 31, 2019 is primarily attributable to the decrease in the fair value of equity securities offset by increases in gain on sale of investment securities and other operating income. Other operating income includes, among other things, credit card and ATM fees, derivative fee income, and income in an equity method investment. There was also an increase in service charges on deposit accounts driven by the Bank’s growth since the quarter ended March 31, 2019.
Noninterest Expense
Noninterest expense for the first quarter of 2020 totaled $13.9 million, an increase of $0.3 million, or 2.0%, compared to the fourth quarter of 2019, and an increase of $2.6 million, or 23.0%, compared to the first quarter of 2019.
The increase in noninterest expense for the quarter ended March 31, 2020 compared to the quarter ended December 31, 2019 is mainly attributable to the $0.2 million increase in data processing and the $0.1 million increases in salaries and employee benefits and professional fees. These increases were offset by a decrease in acquisition expense. The increase in data processing fees compared to the quarter ended December 31, 2019 is primarily a result of the two additional branches acquired from PlainsCapital Bank and the maintenance of two core systems as we approach the operational conversion in the second quarter of 2020 of the branches acquired from Bank of York on November 1, 2019.
The increase in noninterest expense for the first quarter of 2020 compared to the first quarter of 2019 is primarily attributable to the $1.5 million and $0.6 million increases in salaries and employee benefits and other operating expenses, respectively. The increase in salaries and employee benefits is mainly attributable to the increased number of employees as a result of our growth, both organically and through acquisition. With the acquisitions of Bank of York and the PlainsCapital Bank branches, which together added four branch locations and related staff, as well as the opening of two de novo branches in the fourth quarter of 2019, the Company had 335 full-time equivalent employees at March 31, 2020, compared to 280 at March 31, 2019. The increase in other operating expenses is also attributable to the Bank’s acquisition activity and de novo branches discussed above.
Taxes
The Company recorded income tax expense of $0.1 million for the quarter ended March 31, 2020, which equates to an effective tax rate of 19.7%, compared to effective tax rates of 20.2% and 19.6% for the quarters ended December 31, 2019 and March 31, 2019, respectively. Management expects the Company’s effective tax rate to approximate 20% in 2020.
Basic and Diluted Earnings Per Common Share
The Company reported basic and diluted earnings per common share of $0.05 for the quarter ended March 31, 2020, a decrease of $0.28 and $0.27 compared to basic and diluted earnings per common share of $0.33 and $0.32 for the quarter ended December 31, 2019, and a decrease of $0.35 compared to basic and diluted earnings per common share of $0.40 for the quarter ended March 31, 2019.
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, National Association, a national bank. The Bank currently operates 30 branch locations serving south Louisiana, southeast Texas, and southwest Alabama. At March 31, 2020, the Company had 335 full-time equivalent employees and total assets of $2.2 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.” 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 and Cautionary 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. In addition, any of the following matters related to the pandemic may impact our financial results in future periods, and such impacts may be material depending on the length and severity of the pandemic and government and societal responses to it:
borrowers may default on loans and economic conditions could deteriorate requiring further increases to the allowance for loan losses;
demand for our loans and other banking services, and related income and fees, may be reduced;
the value of collateral securing our loans may deteriorate; and
lower market interest rates will have an adverse impact on our variable rate loans and reduce our income.
Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events:
the ongoing impacts of the COVID-19 pandemic on economic conditions in general and on the Bank’s markets in particular, and on the Bank’s operations and financial results;
ongoing disruptions in the oil and gas industry due to the significant decrease in the price of oil;
business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;
our ability to achieve organic loan and deposit growth, and the composition of that growth;
our ability to identify and enter into agreements to combine with attractive acquisition candidates, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate acquired operations;
changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;
possible cessation or market replacement of LIBOR and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments and loans;
the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;
our dependence on our management team, and our ability to attract and retain qualified personnel;
changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;
inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;



the concentration of our business within our geographic areas of operation in Louisiana, Texas and Alabama;
concentration of credit exposure; and
the satisfaction of the conditions to closing the pending acquisition of Cheaha Bank and the ability to subsequently integrate it effectively.

These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Item 1A. “Risk Factors” and in the “Special Note Regarding Forward-Looking Statements” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”).
For further information contact:
Investar Holding Corporation                
Chris Hufft
Chief Financial Officer
(225) 227-2215
Chris.Hufft@investarbank.com



INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
As of and for the three months ended
 
 
3/31/2020
 
12/31/2019
 
3/31/2019
 
Linked Quarter
 
Year/Year
EARNINGS DATA
 
 
 
 
 
 
 
 
 
 
Total interest income
 
$
23,621

 
$
23,515

 
$
20,686

 
0.5
 %
 
14.2
 %
Total interest expense
 
6,286

 
6,550

 
5,530

 
(4.0
)
 
13.7

Net interest income
 
17,335

 
16,965

 
15,156

 
2.2

 
14.4

Provision for loan losses
 
3,760

 
736

 
265

 
410.9

 
1,318.9

Total noninterest income
 
1,089

 
1,575

 
1,281

 
(30.9
)
 
(15.0
)
Total noninterest expense
 
13,907

 
13,629

 
11,303

 
2.0

 
23.0

Income before income taxes
 
757

 
4,175

 
4,869

 
(81.9
)
 
(84.5
)
Income tax expense
 
149

 
844

 
952

 
(82.3
)
 
(84.3
)
Net income
 
$
608

 
$
3,331

 
$
3,917

 
(81.7
)
 
(84.5
)
 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
2,164,516

 
$
2,101,562

 
$
1,854,191

 
3.0
 %
 
16.7
 %
Total interest-earning assets
 
2,010,211

 
1,955,915

 
1,743,438

 
2.8

 
15.3

Total loans
 
1,700,006

 
1,636,477

 
1,436,798

 
3.9

 
18.3

Total interest-bearing deposits
 
1,371,633

 
1,344,312

 
1,183,568

 
2.0

 
15.9

Total interest-bearing liabilities
 
1,559,443

 
1,537,539

 
1,413,623

 
1.4

 
10.3

Total deposits
 
1,715,517

 
1,673,860

 
1,422,632

 
2.5

 
20.6

Total stockholders’ equity
 
243,614

 
217,433

 
189,822

 
12.0

 
28.3

 
 
 
 
 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.05

 
$
0.33

 
$
0.40

 
(84.8
)%
 
(87.5
)%
Diluted earnings per common share
 
0.05

 
0.32

 
0.40

 
(84.4
)
 
(87.5
)
Core Earnings(1):
 
 
 
 
 
 
 
 
 
 
Core basic earnings per common share(1)
 
0.15

 
0.40

 
0.47

 
(62.5
)
 
(68.1
)
Core diluted earnings per common share(1)
 
0.15

 
0.39

 
0.46

 
(61.5
)
 
(67.4
)
Book value per common share
 
21.32

 
21.55

 
20.04

 
(1.1
)
 
6.4

Tangible book value per common share(1)
 
18.38

 
18.79

 
17.36

 
(2.2
)
 
5.9

Common shares outstanding
 
10,940,021

 
11,228,775

 
10,129,993

 
(2.6
)
 
8.0

Weighted average common shares outstanding - basic
 
11,143,078

 
10,101,780

 
9,675,381

 
10.3

 
15.2

Weighted average common shares outstanding - diluted
 
11,211,343

 
10,219,875

 
9,770,752

 
9.7

 
14.7

 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.11
%
 
0.63
%
 
0.86
%
 
(82.5
)%
 
(87.2
)%
Core return on average assets(1)
 
0.32

 
0.76

 
0.98

 
(57.9
)
 
(67.3
)
Return on average equity
 
1.00

 
6.08

 
8.37

 
(83.6
)
 
(88.1
)
Core return on average equity(1)
 
2.82

 
7.35

 
9.62

 
(61.6
)
 
(70.7
)
Net interest margin
 
3.46

 
3.44

 
3.53

 
0.6

 
(2.0
)
Net interest income to average assets
 
3.21

 
3.20

 
3.31

 
0.3

 
(3.0
)
Noninterest expense to average assets
 
2.58

 
2.57

 
2.47

 
0.4

 
4.5

Efficiency ratio(2)
 
75.48

 
73.51

 
68.76

 
2.7

 
9.8

Core efficiency ratio(1)
 
69.05

 
68.59

 
63.96

 
0.7

 
8.0

Dividend payout ratio
 
120.00

 
18.18

 
13.13

 
560.1

 
813.9

Net charge-offs to average loans
 
0.01

 
0.02

 
0.01

 
(50.0
)
 

 
 
 
 
 
 
 
 
 
 
 
(1) Non-GAAP financial measure. See reconciliation.
(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income.




INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
As of and for the three months ended
 
 
3/31/2020
 
12/31/2019
 
3/31/2019
 
Linked Quarter
 
Year/Year
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
 
0.35
%
 
0.30
%
 
0.40
%
 
16.7
 %
 
(12.5
)%
Nonperforming loans to total loans
 
0.44

 
0.37

 
0.40

 
18.9

 
10.0

Allowance for loan losses to total loans
 
0.82

 
0.63

 
0.64

 
30.2

 
28.1

Allowance for loan losses to nonperforming loans
 
188.35

 
171.09

 
159.93

 
10.1

 
17.8

 
 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
Investar Holding Corporation:
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
 
10.61
%
 
11.26
%
 
10.35
%
 
(5.8
)%
 
2.5
 %
Tangible equity to tangible assets(1)
 
9.28

 
9.96

 
9.09

 
(6.8
)
 
2.1

Tier 1 leverage ratio
 
9.82

 
10.45

 
10.03

 
(6.0
)
 
(2.1
)
Common equity tier 1 capital ratio(2)
 
10.95

 
11.67

 
11.07

 
(6.2
)
 
(1.1
)
Tier 1 capital ratio(2)
 
11.30

 
12.03

 
11.48

 
(6.1
)
 
(1.6
)
Total capital ratio(2)
 
14.40

 
15.02

 
13.23

 
(4.1
)
 
8.8

Investar Bank:
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage ratio
 
10.52

 
10.77

 
10.92

 
(2.3
)
 
(3.7
)
Common equity tier 1 capital ratio(2)
 
12.09

 
12.43

 
12.48

 
(2.7
)
 
(3.1
)
Tier 1 capital ratio(2)
 
12.09

 
12.43

 
12.48

 
(2.7
)
 
(3.1
)
Total capital ratio(2)
 
12.87

 
13.03

 
13.09

 
(1.2
)
 
(1.7
)
 
 
 
 
 
 
 
 
 
 
 
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for March 31, 2020.




INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
ASSETS
 
 
 
 
 
 
Cash and due from banks
 
$
26,641

 
$
23,769

 
$
22,535

Interest-bearing balances due from other banks
 
11,854

 
20,539

 
47,506

Federal funds sold
 
47

 
387

 
2,362

Cash and cash equivalents
 
38,542

 
44,695

 
72,403

 
 
 
 
 
 
 
Available for sale securities at fair value (amortized cost of $274,041, $258,104, and $265,981, respectively)
 
276,281

 
259,805

 
264,257

Held to maturity securities at amortized cost (estimated fair value of $14,181, $14,480, and $15,816, respectively)
 
14,253

 
14,409

 
15,816

Loans, net of allowance for loan losses of $14,233, $10,700, and $9,642, respectively
 
1,715,561

 
1,681,275

 
1,485,277

Other equity securities
 
17,653

 
19,315

 
14,392

Bank premises and equipment, net of accumulated depreciation of $13,130, $12,432, and $10,513, respectively
 
54,573

 
50,916

 
45,717

Other real estate owned, net
 
76

 
133

 
1,748

Accrued interest receivable
 
8,765

 
7,913

 
6,377

Deferred tax asset
 
1,142

 

 
38

Goodwill and other intangible assets, net
 
32,211

 
31,035

 
27,143

Bank-owned life insurance
 
32,204

 
32,014

 
24,011

Other assets
 
8,108

 
7,406

 
4,715

Total assets
 
$
2,199,369

 
$
2,148,916

 
$
1,961,894

 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
Noninterest-bearing
 
$
339,379

 
$
351,905

 
$
285,811

Interest-bearing
 
1,389,447

 
1,355,801

 
1,246,982

Total deposits
 
1,728,826

 
1,707,706

 
1,532,793

Advances from Federal Home Loan Bank
 
167,722

 
131,600

 
185,093

Repurchase agreements
 
3,732

 
2,995

 
2,218

Subordinated debt
 
42,831

 
42,826

 
18,227

Junior subordinated debt
 
5,910

 
5,897

 
5,858

Accrued taxes and other liabilities
 
17,076

 
15,916

 
14,691

Total liabilities
 
1,966,097

 
1,906,940

 
1,758,880

 
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
Preferred stock, no par value per share; 5,000,000 shares authorized
 

 

 

Common stock, $1.00 par value per share; 40,000,000 shares authorized; 10,940,021, 11,228,775, and 10,129,993 shares outstanding, respectively
 
10,940

 
11,229

 
10,130

Surplus
 
162,380

 
168,658

 
144,813

Retained earnings
 
60,146

 
60,198

 
49,104

Accumulated other comprehensive (loss) income
 
(194
)
 
1,891

 
(1,033
)
Total stockholders’ equity
 
233,272

 
241,976

 
203,014

   Total liabilities and stockholders’ equity
 
$
2,199,369

 
$
2,148,916

 
$
1,961,894





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

 
 
 
 
 
 
 
 
For the three months ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
INTEREST INCOME
 
 
 
 
 
 
Interest and fees on loans
 
$
21,669

 
$
21,333

 
$
18,544

Interest on investment securities
 
1,695

 
1,743

 
1,926

Other interest income
 
257

 
439

 
216

Total interest income
 
23,621

 
23,515

 
20,686

 
 
 
 
 
 
 
INTEREST EXPENSE
 
 
 
 
 
 
Interest on deposits
 
5,032

 
5,319

 
4,106

Interest on borrowings
 
1,254

 
1,231

 
1,424

Total interest expense
 
6,286

 
6,550

 
5,530

Net interest income
 
17,335

 
16,965

 
15,156

 
 
 
 
 
 
 
Provision for loan losses
 
3,760

 
736

 
265

Net interest income after provision for loan losses
 
13,575

 
16,229

 
14,891

 
 
 
 
 
 
 
NONINTEREST INCOME
 
 
 
 
 
 
Service charges on deposit accounts
 
571

 
544

 
400

Gain on sale of investment securities, net
 
172

 
33

 
2

Gain (loss) on sale of other real estate owned, net
 
26

 
(17
)
 
5

Servicing fees and fee income on serviced loans
 
120

 
121

 
180

Interchange fees
 
295

 
289

 
240

Income from bank owned life insurance
 
190

 
195

 
152

Change in the fair value of equity securities
 
(826
)
 
121

 
172

Other operating income
 
541

 
289

 
130

Total noninterest income
 
1,089

 
1,575

 
1,281

Income before noninterest expense
 
14,664

 
17,804

 
16,172

 
 
 
 
 
 
 
NONINTEREST EXPENSE
 
 
 
 
 
 
Depreciation and amortization
 
1,033

 
943

 
764

Salaries and employee benefits
 
7,953

 
7,826

 
6,415

Occupancy
 
531

 
524

 
414

Data processing
 
693

 
505

 
536

Marketing
 
32

 
55

 
51

Professional fees
 
394

 
249

 
305

Acquisition expenses
 
751

 
1,008

 
905

Other operating expenses
 
2,520

 
2,519

 
1,913

Total noninterest expense
 
13,907

 
13,629

 
11,303

Income before income tax expense
 
757

 
4,175

 
4,869

Income tax expense
 
149

 
844

 
952

Net income
 
$
608

 
$
3,331

 
$
3,917

 
 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
Basic earnings per common share
 
$
0.05

 
$
0.33

 
$
0.40

Diluted earnings per common share
 
$
0.05

 
$
0.32

 
$
0.40

Cash dividends declared per common share
 
$
0.06

 
$
0.06

 
$
0.05





INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
1,700,006

 
$
21,669

 
5.11
%
 
$
1,636,477

 
$
21,333

 
5.17
%
 
$
1,436,798

 
$
18,544

 
5.23
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
249,581

 
1,510

 
2.43

 
241,471

 
1,546

 
2.54

 
243,065

 
1,729

 
2.88

Tax-exempt
 
28,258

 
185

 
2.62

 
31,561

 
197

 
2.48

 
32,325

 
197

 
2.47

Interest-bearing balances with banks
 
32,366

 
257

 
3.18

 
46,406

 
439

 
3.75

 
31,250

 
216

 
2.80

Total interest-earning assets
 
2,010,211

 
23,621

 
4.71

 
1,955,915

 
23,515

 
4.77

 
1,743,438

 
20,686

 
4.81

Cash and due from banks
 
26,560

 
 
 
 
 
25,118

 
 
 
 
 
20,150

 
 
 
 
Intangible assets
 
31,299

 
 
 
 
 
29,313

 
 
 
 
 
22,301

 
 
 
 
Other assets
 
107,190

 
 
 
 
 
101,694

 
 
 
 
 
77,867

 
 
 
 
Allowance for loan losses
 
(10,744
)
 
 
 
 
 
(10,478
)
 
 
 
 
 
(9,565
)
 
 
 
 
Total assets
 
$
2,164,516

 
 
 
 
 
$
2,101,562

 
 
 
 
 
$
1,854,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 
$
556,541

 
$
1,203

 
0.87

 
$
524,444

 
$
1,264

 
0.96

 
$
504,123

 
$
1,353

 
1.09

Savings deposits
 
117,153

 
129

 
0.44

 
114,668

 
128

 
0.44

 
104,503

 
119

 
0.46

Time deposits
 
697,939

 
3,700

 
2.13

 
705,200

 
3,927

 
2.21

 
574,942

 
2,634

 
1.86

Total interest-bearing deposits
 
1,371,633

 
5,032

 
1.47

 
1,344,312

 
5,319

 
1.57

 
1,183,568

 
4,106

 
1.41

Short-term borrowings
 
57,563

 
191

 
1.33

 
74,355

 
306

 
1.63

 
135,894

 
733

 
2.19

Long-term debt
 
130,247

 
1,063

 
3.28

 
118,872

 
925

 
3.09

 
94,161

 
691

 
2.98

Total interest-bearing liabilities
 
1,559,443

 
6,286

 
1.62

 
1,537,539

 
6,550

 
1.69

 
1,413,623

 
5,530

 
1.59

Noninterest-bearing deposits
 
343,884

 
 
 
 
 
329,548

 
 
 
 
 
239,064

 
 
 
 
Other liabilities
 
17,575

 
 
 
 
 
17,042

 
 
 
 
 
11,682

 
 
 
 
Stockholders’ equity
 
243,614

 
 
 
 
 
217,433

 
 
 
 
 
189,822

 
 
 
 
Total liability and stockholders’ equity
 
$
2,164,516

 
 
 
 
 
$
2,101,562

 
 
 
 
 
$
1,854,191

 
 
 
 
Net interest income/net interest margin
 
 
 
$
17,335

 
3.46
%
 
 
 
$
16,965

 
3.44
%
 
 
 
$
15,156

 
3.53
%


 
 
 
 
 
 
 
 
 
 
 
 
 




INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Tangible common equity
 
 
 
 
 
 
Total stockholders’ equity
 
$
233,272

 
$
241,976

 
$
203,014

Adjustments:
 
 
 
 
 
 
Goodwill
 
27,391

 
26,132

 
22,489

Core deposit intangible
 
4,720

 
4,803

 
4,554

Trademark intangible
 
100

 
100

 
100

Tangible common equity
 
$
201,061

 
$
210,941

 
$
175,871

Tangible assets
 
 
 
 
 
 
Total assets
 
$
2,199,369

 
$
2,148,916

 
$
1,961,894

Adjustments:
 
 
 
 
 
 
Goodwill
 
27,391

 
26,132

 
22,489

Core deposit intangible
 
4,720

 
4,803

 
4,554

Trademark intangible
 
100

 
100

 
100

Tangible assets
 
$
2,167,158

 
$
2,117,881

 
$
1,934,751

 
 
 
 
 
 
 
Common shares outstanding
 
10,940,021

 
11,228,775

 
10,129,993

Tangible equity to tangible assets
 
9.28
%
 
9.96
%
 
9.09
%
Book value per common share
 
$
21.32

 
$
21.55

 
$
20.04

Tangible book value per common share
 
18.38

 
18.79

 
17.36






INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
 
3/31/2020
 
12/31/2019
 
3/31/2019
Net interest income
(a)
$
17,335

 
$
16,965

 
$
15,156

Provision for loan losses
 
3,760

 
736

 
265

Net interest income after provision for loan losses
 
13,575

 
16,229

 
14,891

 
 
 
 
 
 
 
Noninterest income
(b)
1,089

 
1,575

 
1,281

Gain on sale of investment securities, net
 
(172
)
 
(33
)
 
(2
)
(Gain) loss on sale of other real estate owned, net
 
(26
)
 
17

 
(5
)
Change in the fair value of equity securities
 
826

 
(121
)
 
(172
)
Core noninterest income
(d)
1,717

 
1,438

 
1,102

 
 
 
 
 
 
 
Core earnings before noninterest expense
 
15,292

 
17,667

 
15,993

 
 
 
 
 
 
 
Total noninterest expense
(c)
13,907

 
13,629

 
11,303

Acquisition expense
 
(751
)
 
(1,007
)
 
(905
)
Core noninterest expense
(f)
13,156

 
12,622

 
10,398

 
 
 
 
 
 
 
Core earnings before income tax expense
 
2,136

 
5,045

 
5,595

Core income tax expense(1)
 
421

 
1,019

 
1,094

Core earnings
 
$
1,715

 
$
4,026

 
$
4,501

 
 
 
 
 
 
 
Core basic earnings per common share
 
0.15

 
0.40

 
0.47

 
 
 
 
 
 
 
Diluted earnings per common share (GAAP)
 
$
0.05

 
$
0.32

 
$
0.40

Gain on sale of investment securities, net
 
(0.01
)
 

 

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

 

 

Change in the fair value of equity securities
 
0.06

 
(0.01
)
 
(0.01
)
Acquisition expense
 
0.05

 
0.08

 
0.07

Core diluted earnings per common share
 
$
0.15

 
$
0.39

 
$
0.46

 
 
 
 
 
 
 
Efficiency ratio
(c) / (a+b)
75.48
%
 
73.51
%
 
68.76
%
Core efficiency ratio
(f) / (a+d)
69.05
%
 
68.59
%
 
63.96
%
Core return on average assets(2)
 
0.32
%
 
0.76
%
 
0.98
%
Core return on average equity(2)
 
2.82
%
 
7.35
%
 
9.62
%
Total average assets
 
$
2,164,516

 
$
2,101,562

 
$
1,854,191

Total average stockholders’ equity
 
243,614

 
217,433

 
189,822

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)Core income tax expense is calculated using the effective tax rates of 19.7%, 20.2% and 19.6% for the quarters ended March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.


EX-99.2 3 exhibit992-1q2020ersuppl.htm EXHIBIT 99.2 exhibit992-1q2020ersuppl
Exhibit 99.2 NASDAQ: ISTR 1Q 2020 Earnings Release Presentation April 23, 2020


 
FORWARD-LOOKING STATEMENTS This presentation may contain 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 www.investarbank.com “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 presentation are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and NASDAQ: ISTR 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, We encourage everyone to visit the 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 Investors Section of our website at 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 www.investarbank.com, where we 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 have posted additional important following, any one or more of which could materially affect the outcome of future events: information such as press releases • the ongoing impacts of the COVID-19 pandemic on economic conditions in general and on the Bank’s markets in and SEC filings. particular, and on the Bank’s operations and financial results; • ongoing disruptions in the oil and gas industry due to the significant decrease in the price of oil; • business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate; We intend to use our website to • our ability to achieve organic loan and deposit growth, and the composition of that growth; • our ability to integrate and achieve anticipated cost savings from our acquisitions; expedite public access to time-critical • changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect information regarding the Company 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 in advance of or in lieu of distributing 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; a press release or a filing with the • 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; SEC disclosing the same information. • 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, Texas and Alabama; and • concentration of credit exposure; and • the satisfaction of the conditions to closing the pending acquisition of Cheaha Bank and the ability to subsequently integrate it effectively. 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, 2019, filed with the Securities and Exchange Commission. 2


 
Capital Ratios Consolidated Bank March 31, 2020 March 31, 2020 Tangible Common Equity / Tangible Assets 9.28% Tangible Common Equity / Tangible Assets 10.30% Leverage Ratio 9.82% Leverage Ratio 10.52% Common Equity Tier 1 Ratio 10.95% Common Equity Tier 1 Ratio 12.09% Tier 1 Ratio 11.30% Tier 1 Ratio 12.09% Total Risk-Based Ratio 14.40% Total Risk-Based Ratio 12.87% $400 $350 Tangible Common Equity 24.00% Tangible Common Equity 24.00% $350 Tier 1 Capital Tier 1 Capital 21.00% $300 21.00% Total Risk-Based Capital Total Risk-Based Capital $300 TCE/ TA 18.00% TCE/ TA 18.00% $269 $266 $250 $233 $238 $224 $222 $223 $223 $250 $216 15.00% $197 15.00% $209 $200 $188 $200 $211 $201 $176 $184 $185 $174 $200 $188 $172 12.00% 12.00% 10.47