UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_____________________________________
FORM 10-Q
_____________________________________
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-36522
Investar Holding Corporation
(Exact name of registrant as specified in its charter)
| Louisiana | 27-1560715 | ||||
| (State or other jurisdiction of | (I.R.S. Employer |
10500 Coursey Boulevard, Baton Rouge, Louisiana 70816
(Address of principal executive offices, including zip code)
(225) 227-2222
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common stock, $1.00 par value per share | ISTR | The Nasdaq Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☒ | ||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ | ||||||||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of the issuer’s class of common stock, as of the latest practicable date, is as follows: Common stock, $1.00 par value, 10,018,834 shares outstanding as of August 1, 2022.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 31,598 | $ | 38,601 | ||||
| Interest-bearing balances due from other banks | 18,852 | 57,940 | ||||||
| Federal funds sold | 500 | 500 | ||||||
| Cash and cash equivalents | 50,950 | 97,041 | ||||||
| Available for sale securities at fair value (amortized cost of $ and $, respectively) | 421,285 | 355,509 | ||||||
| Held to maturity securities at amortized cost (estimated fair value of $ and $, respectively) | 9,701 | 10,255 | ||||||
| Loans held for sale | — | 620 | ||||||
| Loans, net of allowance for loan losses of $ and $20,859, respectively | 1,894,441 | 1,851,153 | ||||||
| Equity securities | 22,639 | 16,803 | ||||||
| Bank premises and equipment, net of accumulated depreciation of and $, respectively | 51,296 | 58,080 | ||||||
| Other real estate owned, net | 3,397 | 2,653 | ||||||
| Accrued interest receivable | 10,905 | 11,355 | ||||||
| Deferred tax asset | 11,506 | 2,239 | ||||||
| Goodwill and other intangible assets, net | 43,580 | 44,036 | ||||||
| Bank owned life insurance | 56,692 | 51,074 | ||||||
| Other assets | 14,215 | 12,385 | ||||||
| Total assets | $ | 2,590,607 | $ | 2,513,203 | ||||
| LIABILITIES | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing | $ | 615,779 | $ | 585,465 | ||||
| Interest-bearing | 1,446,891 | 1,534,801 | ||||||
| Total deposits | 2,062,670 | 2,120,266 | ||||||
| Advances from Federal Home Loan Bank | 239,800 | 78,500 | ||||||
| Repurchase agreements | 147 | 5,783 | ||||||
| Subordinated debt, net of unamortized issuance costs | 44,216 | 42,989 | ||||||
| Junior subordinated debt | 8,452 | 8,384 | ||||||
| Accrued taxes and other liabilities | 15,953 | 14,683 | ||||||
| Total liabilities | 2,371,238 | 2,270,605 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value per share; shares authorized | — | — | ||||||
| Common stock, $ par value per share; shares authorized; and shares issued and outstanding, respectively | 10,025 | 10,343 | ||||||
| Surplus | 148,230 | 154,932 | ||||||
| Retained earnings | 93,888 | 76,160 | ||||||
| Accumulated other comprehensive (loss) income | (32,774 | ) | 1,163 | |||||
| Total stockholders’ equity | 219,369 | 242,598 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,590,607 | $ | 2,513,203 | ||||
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| INTEREST INCOME | ||||||||||||||||
| Interest and fees on loans | $ | 21,765 | $ | 23,135 | $ | 43,491 | $ | 44,762 | ||||||||
| Interest on investment securities | 2,363 | 1,009 | 4,318 | 2,188 | ||||||||||||
| Other interest income | 200 | 203 | 386 | 366 | ||||||||||||
| Total interest income | 24,328 | 24,347 | 48,195 | 47,316 | ||||||||||||
| INTEREST EXPENSE | ||||||||||||||||
| Interest on deposits | 907 | 2,114 | 1,883 | 4,416 | ||||||||||||
| Interest on borrowings | 1,443 | 1,068 | 2,513 | 2,101 | ||||||||||||
| Total interest expense | 2,350 | 3,182 | 4,396 | 6,517 | ||||||||||||
| Net interest income | 21,978 | 21,165 | 43,799 | 40,799 | ||||||||||||
| Provision for loan losses | 941 | 114 | 492 | 514 | ||||||||||||
| Net interest income after provision for loan losses | 21,037 | 21,051 | 43,307 | 40,285 | ||||||||||||
| NONINTEREST INCOME | ||||||||||||||||
| Service charges on deposit accounts | 804 | 607 | 1,471 | 1,098 | ||||||||||||
| Gain on call or sale of investment securities, net | — | 1,721 | 6 | 2,321 | ||||||||||||
| Loss on sale or disposition of fixed assets, net | (461 | ) | — | (88 | ) | (2 | ) | |||||||||
| Loss on sale of other real estate owned, net | (84 | ) | (5 | ) | (43 | ) | (5 | ) | ||||||||
| Swap termination fee income | 4,733 | — | 8,077 | — | ||||||||||||
| Gain on sale of loans | 4 | 46 | 37 | 46 | ||||||||||||
| Servicing fees and fee income on serviced loans | 23 | 65 | 44 | 129 | ||||||||||||
| Interchange fees | 535 | 501 | 1,033 | 889 | ||||||||||||
| Income from bank owned life insurance | 326 | 311 | 618 | 534 | ||||||||||||
| Change in the fair value of equity securities | (86 | ) | 91 | (75 | ) | 156 | ||||||||||
| Other operating income | 584 | 745 | 1,164 | 1,281 | ||||||||||||
| Total noninterest income | 6,378 | 4,082 | 12,244 | 6,447 | ||||||||||||
| Income before noninterest expense | 27,415 | 25,133 | 55,551 | 46,732 | ||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||
| Depreciation and amortization | 1,122 | 1,278 | 2,277 | 2,484 | ||||||||||||
| Salaries and employee benefits | 9,063 | 9,916 | 18,084 | 18,611 | ||||||||||||
| Occupancy | 751 | 676 | 1,392 | 1,313 | ||||||||||||
| Data processing | 727 | 973 | 1,733 | 1,719 | ||||||||||||
| Marketing | 83 | 71 | 104 | 112 | ||||||||||||
| Professional fees | 499 | 378 | 878 | 736 | ||||||||||||
| Loss on early extinguishment of subordinated debt | 222 | — | 222 | — | ||||||||||||
| Acquisition expense | — | 1,641 | — | 2,002 | ||||||||||||
| Other operating expenses | 3,085 | 3,027 | 6,295 | 5,792 | ||||||||||||
| Total noninterest expense | 15,552 | 17,960 | 30,985 | 32,769 | ||||||||||||
| Income before income tax expense | 11,863 | 7,173 | 24,566 | 13,963 | ||||||||||||
| Income tax expense | 2,459 | 1,485 | 5,059 | 2,915 | ||||||||||||
| Net income | $ | 9,404 | $ | 5,688 | $ | 19,507 | $ | 11,048 | ||||||||
| EARNINGS PER SHARE | ||||||||||||||||
| Basic earnings per share | $ | 0.92 | $ | 0.54 | $ | 1.90 | $ | 1.05 | ||||||||
| Diluted earnings per share | 0.92 | 0.53 | 1.89 | 1.04 | ||||||||||||
| Cash dividends declared per common share | 0.09 | 0.08 | 0.175 | 0.15 | ||||||||||||
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Amounts in thousands)
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income | $ | 9,404 | $ | 5,688 | $ | 19,507 | $ | 11,048 | ||||||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Unrealized (loss) gain on investment securities: | ||||||||||||||||
| Unrealized (loss) gain, available for sale, net of tax (benefit) expense of , , and , respectively | (14,621 | ) | 988 | (31,880 | ) | (413 | ) | |||||||||
| Reclassification of realized gain, available for sale, net of tax expense of , , and , respectively | — | (1,360 | ) | (5 | ) | (1,834 | ) | |||||||||
| Unrealized loss, transfer from available for sale to held to maturity, net of tax benefit of for all respective periods | (1 | ) | — | (1 | ) | — | ||||||||||
| Fair value of derivative financial instruments: | ||||||||||||||||
| Change in fair value of interest rate swaps designated as a cash flow hedge, net of tax expense (benefit) of ,, $ and $, respectively | 1,157 | (2,035 | ) | 4,329 | 4,030 | |||||||||||
| Reclassification of realized gain, interest rate swap termination, net of tax expense of $, , $ and , respectively | (3,738 | ) | — | (6,380 | ) | — | ||||||||||
| Total other comprehensive (loss) income | (17,203 | ) | (2,407 | ) | (33,937 | ) | 1,783 | |||||||||
| Total comprehensive (loss) income | $ | (7,799 | ) | $ | 3,281 | $ | (14,430 | ) | $ | 12,831 | ||||||
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts in thousands, except share data)
(Unaudited)
| Accumulated | ||||||||||||||||||||
| Other | Total | |||||||||||||||||||
| Common | Retained | Comprehensive | Stockholders’ | |||||||||||||||||
| Stock | Surplus | Earnings | Income (Loss) | Equity | ||||||||||||||||
| Three months ended: | ||||||||||||||||||||
| June 30, 2021 | ||||||||||||||||||||
| Balance at beginning of period | $ | 10,436 | $ | 155,822 | $ | 75,998 | $ | 5,995 | $ | 248,251 | ||||||||||
| Surrendered shares | — | (6 | ) | — | — | (6 | ) | |||||||||||||
| Dividends declared, per share | — | — | (819 | ) | — | (819 | ) | |||||||||||||
| Stock-based compensation | 1 | 493 | — | — | 494 | |||||||||||||||
| Shares repurchased | (24 | ) | (462 | ) | — | — | (486 | ) | ||||||||||||
| Net income | — | — | 5,688 | — | 5,688 | |||||||||||||||
| Other comprehensive loss, net | — | — | — | (2,407 | ) | (2,407 | ) | |||||||||||||
| Balance at end of period | $ | 10,413 | $ | 155,847 | $ | 80,867 | $ | 3,588 | $ | 250,715 | ||||||||||
| June 30, 2022 | ||||||||||||||||||||
| Balance at beginning of period | $ | 10,310 | $ | 153,531 | $ | 85,387 | $ | (15,571 | ) | $ | 233,657 | |||||||||
| Surrendered shares | (5 | ) | (106 | ) | — | — | (111 | ) | ||||||||||||
| Options exercised | 7 | 91 | — | — | 98 | |||||||||||||||
| Dividends declared, per share | — | — | (903 | ) | — | (903 | ) | |||||||||||||
| Stock-based compensation | 18 | 469 | — | — | 487 | |||||||||||||||
| Shares repurchased | (305 | ) | (5,755 | ) | — | — | (6,060 | ) | ||||||||||||
| Net income | — | — | 9,404 | — | 9,404 | |||||||||||||||
| Other comprehensive loss, net | — | — | — | (17,203 | ) | (17,203 | ) | |||||||||||||
| Balance at end of period | $ | 10,025 | $ | 148,230 | $ | 93,888 | $ | (32,774 | ) | $ | 219,369 | |||||||||
See accompanying notes to the consolidated financial statements.
INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY, CONTINUED
(Amounts in thousands, except share data)
(Unaudited)
| Accumulated | ||||||||||||||||||||
| Other | Total | |||||||||||||||||||
| Common | Retained | Comprehensive | Stockholders’ | |||||||||||||||||
| Stock | Surplus | Earnings | Income (Loss) | Equity | ||||||||||||||||
| Six months ended: | ||||||||||||||||||||
| June 30, 2021 | ||||||||||||||||||||
| Balance at beginning of period | $ | 10,609 | $ | 159,485 | $ | 71,385 | $ | 1,805 | $ | 243,284 | ||||||||||
| Surrendered shares | (19 | ) | (343 | ) | — | — | (362 | ) | ||||||||||||
| Options exercised | 8 | 107 | — | — | 115 | |||||||||||||||
| Dividends declared, per share | — | — | (1,566 | ) | — | (1,566 | ) | |||||||||||||
| Stock-based compensation | 65 | 829 | — | — | 894 | |||||||||||||||
| Shares repurchased | (250 | ) | (4,231 | ) | — | — | (4,481 | ) | ||||||||||||
| Net income | — | — | 11,048 | — | 11,048 | |||||||||||||||
| Other comprehensive income, net | — | — | — | 1,783 | 1,783 | |||||||||||||||
| Balance at end of period | $ | 10,413 | $ | 155,847 | $ | 80,867 | $ | 3,588 | $ | 250,715 | ||||||||||
| June 30, 2022 | ||||||||||||||||||||
| Balance at beginning of period | $ | 10,343 | $ | 154,932 | $ | 76,160 | $ | 1,163 | $ | 242,598 | ||||||||||
| Surrendered shares | (19 | ) | (364 | ) | — | — | (383 | ) | ||||||||||||
| Options exercised | 7 | 91 | — | — | 98 | |||||||||||||||
| Dividends declared, per share | — | — | (1,779 | ) | — | (1,779 | ) | |||||||||||||
| Stock-based compensation | 76 | 793 | — | — | 869 | |||||||||||||||
| Shares repurchased | (382 | ) | (7,222 | ) | — | — | (7,604 | ) | ||||||||||||
| Net income | — | — | 19,507 | — | 19,507 | |||||||||||||||
| Other comprehensive loss, net | — | — | — | (33,937 | ) | (33,937 | ) | |||||||||||||
| Balance at end of period | $ | 10,025 | $ | 148,230 | $ | 93,888 | $ | (32,774 | ) | $ | 219,369 | |||||||||
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| Six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Net income | $ | 19,507 | $ | 11,048 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 2,277 | 2,484 | ||||||
| Provision for loan losses | 492 | 514 | ||||||
| Amortization of purchase accounting adjustments | (101 | ) | (825 | ) | ||||
| Net amortization of securities | 776 | 1,970 | ||||||
| Gain on call or sale of investment securities, net | (6 | ) | (2,321 | ) | ||||
| Loss on sale or disposition of fixed assets, net | 88 | 2 | ||||||
| Loss on sale of other real estate owned, net | 43 | 5 | ||||||
| Loss on early extinguishment of subordinated debt | 222 | — | ||||||
| FHLB stock dividend | (20 | ) | (21 | ) | ||||
| Stock-based compensation | 869 | 894 | ||||||
| Deferred taxes | (246 | ) | 390 | |||||
| Net change in value of bank owned life insurance | (618 | ) | (531 | ) | ||||
| Amortization of subordinated debt issuance costs | 57 | 46 | ||||||
| Change in the fair value of equity securities | 75 | (156 | ) | |||||
| Loans held for sale: | ||||||||
| Originations | (624 | ) | (3,660 | ) | ||||
| Proceeds from sales | 1,281 | 3,706 | ||||||
| Gain on sale of loans | (37 | ) | (46 | ) | ||||
| Net change in: | ||||||||
| Accrued interest receivable | 450 | 1,601 | ||||||
| Other assets | (3,563 | ) | (489 | ) | ||||
| Accrued taxes and other liabilities | 843 | 6,533 | ||||||
| Net cash provided by operating activities | 21,765 | 21,144 | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sales of investment securities available for sale | — | 137,803 | ||||||
| Purchases of securities available for sale | (152,573 | ) | (128,945 | ) | ||||
| Proceeds from maturities, prepayments and calls of investment securities available for sale | 35,841 | 48,653 | ||||||
| Proceeds from maturities, prepayments and calls of investment securities held to maturity | 545 | 607 | ||||||
| Proceeds from redemption or sale of equity securities | 326 | 574 | ||||||
| Purchases of equity securities | (6,216 | ) | (523 | ) | ||||
| Net (increase) decrease in loans | (35,251 | ) | 32,775 | |||||
| Proceeds from sales of other real estate owned | 1,401 | 23 | ||||||
| Purchases of other real estate owned | — | (501 | ) | |||||
| Proceeds from sales of fixed assets | 4,692 | 3 | ||||||
| Purchases of fixed assets | (615 | ) | (3,124 | ) | ||||
| Purchases of bank owned life insurance | (5,000 | ) | (8,000 | ) | ||||
| Purchase of other investments | (618 | ) | (40 | ) | ||||
| Distributions from investments | 5 | 17 | ||||||
| Cash paid for acquisition of Cheaha Financial Group, net of cash acquired | — | 8,112 | ||||||
| Net cash (used in) provided by investing activities | (157,463 | ) | 87,434 | |||||
| INVESTAR HOLDING CORPORATION |
| CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED |
| (Amounts in thousands) |
| (Unaudited) |
| Cash flows from financing activities: | ||||||||
| Net (decrease) increase in customer deposits | (57,793 | ) | 165,559 | |||||
| Net (decrease) increase in repurchase agreements | (5,636 | ) | 1,060 | |||||
| Net increase (decrease) in short-term FHLB advances | 161,300 | (38,000 | ) | |||||
| Cash dividends paid on common stock | (1,706 | ) | (1,426 | ) | ||||
| Proceeds from stock options and warrants exercised | 98 | 115 | ||||||
| Payments to repurchase common stock | (7,604 | ) | (4,481 | ) | ||||
| Proceeds from subordinated debt, net of issuance costs | 19,548 | — | ||||||
| Extinguishment of subordinated debt | (18,600 | ) | — | |||||
| Net cash provided by financing activities | 89,607 | 122,827 | ||||||
| Net change in cash and cash equivalents | (46,091 | ) | 231,405 | |||||
| Cash and cash equivalents, beginning of period | 97,041 | 35,368 | ||||||
| Cash and cash equivalents, end of period | $ | 50,950 | $ | 266,773 |
See accompanying notes to the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements of Investar Holding Corporation (the “Company”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three and six month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021, including the notes thereto, which were included as part of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 9, 2022.
Nature of Operations
The Company, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, National Association (the “Bank”), a national bank, primarily to meet the needs of individuals, professionals and small to medium-sized businesses. The Company’s primary markets are in Louisiana, Texas and Alabama. At June 30, 2022, the Company operated 21 full service branches located in Louisiana, four full service branches located in Texas and six full service branches located in Alabama, and had 335 employees.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material.
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in local economic conditions, changes in conditions of our borrowers' industries or changes in the condition of individual borrowers. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for loan losses may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.
Other estimates that are susceptible to significant change in the near term relate to the allowance for off-balance sheet credit losses, the fair value of stock-based compensation awards, the determination of other-than-temporary impairments of securities, and the fair value of financial instruments and goodwill.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Investment Securities
The Company’s investments in debt securities are accounted for in accordance with applicable guidance contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), which requires the classification of securities into one of the following categories:
| • | Securities available for sale (“AFS”): available for sale securities consist of bonds, notes, and debentures that are available to meet the Company’s operating needs. These securities are reported at fair value. |
| • | Securities to be held to maturity (“HTM”): bonds, notes, and debentures for which the Company has the positive intent and ability to hold to maturity are reported at cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity. |
Unrealized holding gains and losses, net of tax, on AFS debt securities are reported as a net amount in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Realized gains and losses on the sale of debt securities are determined using the specific-identification method.
The Company follows FASB guidance related to the recognition and presentation of other-than-temporary impairment. The guidance specifies that if an entity does not have the intent to sell a debt security and it is not more likely than not that the Company will be required to sell the security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss. When an entity does not intend to sell the security, and it is more likely than not that the entity will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.
Equity Securities
The Company is a member of the Federal Home Loan Bank (“FHLB”) system. Members of the FHLB are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, is restricted as to redemption, and is periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Equity securities also include investments in our other correspondent banks including Independent Bankers Financial Corporation and First National Bankers Bank stock. These investments are carried at cost which approximates fair value. The balance of equity securities in our correspondent banks at June 30, 2022 and December 31, 2021 was $20.5 million and $15.0 million, respectively.
In addition, equity securities include marketable securities in corporate stocks and mutual funds. The estimated fair value of equity securities totaled $2.2 million and $1.8 million at June 30, 2022 and December 31, 2021, respectively.
Loans
The Company’s loan portfolio categories include real estate, commercial and consumer loans. Real estate loans are further categorized into construction and development, 1-4 family residential, multifamily, farmland and commercial real estate loans. The consumer loan category includes loans originated through indirect lending. Indirect lending, which is lending initiated through third-party business partners, is largely comprised of loans made through automotive dealerships.
Loans for which management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off are stated at unpaid principal balances, adjusted by an allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. Loan origination fees, net of direct loan origination costs, and commitment fees, are deferred and amortized as an adjustment to yield over the life of the loan, or over the commitment period, as applicable. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are ordinarily placed on nonaccrual when a loan is specifically determined to be impaired or when principal or interest is delinquent for 90 days or more; however, management may elect to continue the accrual when the estimated net realizable value of collateral is sufficient to cover the principal balance and the accrued interest. Any unpaid interest previously accrued on nonaccrual loans is reversed from income. Interest income, generally, is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period of repayment performance by the borrower.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Company’s impaired loans include troubled debt restructurings (“TDRs”) and performing and nonperforming loans for which full payment of principal or interest is not expected. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the fair value of its collateral. If the recorded investment in the impaired loan exceeds the measure of fair value, a valuation allowance is required as a component of the allowance for loan losses. Changes to the valuation allowance are recorded as a component of the provision for loan losses.
The Company follows the FASB accounting guidance on sales of financial assets, which includes participating interests in loans. For loan participations that are structured in accordance with this guidance, the sold portions are recorded as a reduction of the loan portfolio. Loan participations that do not meet the criteria are accounted for as secured borrowings.
Loans Held for Sale
Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. For loans carried at the lower of cost or fair value, gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income, and direct loan origination costs and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan. At June 30, 2022, there were no loans held for sale, and at December 31, 2021, there were $0.6 million in loans held for sale.
Allowance for Loan Losses
The allowance for loan losses is estimated through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the loan balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance.
The allowance is an amount that management believes will be adequate to absorb probable losses inherent in the loan portfolio as of the balance sheet date based on evaluations of the collectability of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrower’s ability to pay. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Credits deemed uncollectible are charged to the allowance. Provisions for loan losses and recoveries on loans previously charged off are added to the allowance. Past due status is determined based on contractual terms.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. Based on management’s review and observations made through qualitative review, management may apply qualitative adjustments to determine loss estimates at a group and/or portfolio segment level as deemed appropriate. Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in its portfolio and portfolio segments. The Company utilizes an internally developed model that requires judgment to determine the estimation method that fits the credit risk characteristics of the loans in its portfolio and portfolio segments. Qualitative and environmental factors that may not be directly reflected in quantitative estimates include: asset quality trends, changes in loan concentrations, new products and process changes, changes and pressures from competition, changes in lending policies and underwriting practices, trends in the nature and volume of the loan portfolio, changes in experience and depth of lending staff and management and national and regional economic trends. The Company also considers third party or comparable company loss data. Changes in these factors are considered in determining changes in the allowance for loan losses. The impact of these factors on the Company’s qualitative assessment of the allowance for loan losses can change from period to period based on management’s assessment of the extent to which these factors are already reflected in historic loss rates. The uncertainty inherent in the estimation process is also considered in evaluating the allowance for loan losses.
In the ordinary course of business, the Bank enters into commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for loan losses. The reserve for unfunded lending commitments is included in accrued taxes and other liabilities in the consolidated balance sheet. The reserve for unfunded loan commitments was $0.4 million and $0.7 million at June 30, 2022 and December 31, 2021, respectively.
Acquisition Accounting
Business combinations are accounted for under the acquisition method of accounting. Purchased assets and assumed liabilities are recorded at their respective acquisition date fair values, and identifiable intangible assets are recorded at fair value. If the consideration given exceeds the fair value of the net assets received, goodwill is recognized. If the fair value of the net assets received exceeds the consideration given, a bargain purchase gain is recognized. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available.
Loans acquired in a business combination are recorded at their estimated fair value as of the acquisition date. The fair value of loans acquired is determined using a discounted cash flow model based on assumptions regarding the amount and timing of principal and interest prepayments, estimated payments, estimated default rates, estimated loss severity in the event of defaults, and current market rates. Estimated credit losses are included in the determination of fair value; therefore, an allowance for loan losses is not recorded on the acquisition date. The fair value adjustment is amortized over the life of the loan using the effective interest method, except for those loans accounted for under ASC Topic 310-30, discussed below. An allowance for acquired loans not accounted for under ASC Topic 310-30 is only recorded to the extent that the reserve requirement exceeds the remaining fair value adjustment.
The Company accounts for acquired impaired loans under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). An acquired loan is considered impaired when there is evidence of credit deterioration since origination and it is probable, at the date of acquisition, that we will be unable to collect all contractually required payments. ASC 310-30 prohibits the carryover of an allowance for loan losses for acquired impaired loans. Over the life of the acquired loans, we continually estimate the cash flows expected to be collected on individual loans or on pools of loans sharing common risk characteristics. As of the end of each fiscal quarter, we evaluate the present value of the acquired loans using the effective interest rates. For any increases in cash flows expected to be collected, we adjust the amount of accretable yield recognized on a prospective basis over the loan’s or pool’s remaining life, while we recognize a provision for loan losses in the consolidated statement of operations if the cash flows expected to be collected have decreased.
Reclassifications
Certain reclassifications have been made to the 2021 financial statements to be consistent with the 2022 presentation, if applicable.
Concentrations of Credit Risk
The Company’s loan portfolio consists of the various types of loans described in Note 5. Loans and Allowance for Loan Losses. Real estate or other assets secure most loans. The majority of loans have been made to individuals and businesses in the Company’s market of southeast Louisiana. Customers are dependent on the condition of the local economy for their livelihoods and servicing their loan obligations. The Company does not have any significant concentrations in any one industry or individual customer.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accounting Pronouncements Not Yet Adopted
FASB ASC Topic 326 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments” Update No. 2016-13. The FASB issued ASU No. 2016-13 in June 2016. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. We are currently evaluating the potential impact of ASU 2016-13 on our financial statements. In that regard, we have formed a cross-functional working group, under the direction of our Chief Financial Officer and our Chief Risk Officer. The working group is comprised of individuals from various functional areas including credit, risk management, finance and information technology. We have developed an implementation plan to include assessment of processes, portfolio segmentation, model development and validation, system requirements and the identification of data and resource needs, among other things. We have also selected a third-party vendor solution to assist us in the application of ASU 2016-13.
The adoption of ASU 2016-13 is likely to result in an increase in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU 2016-13 will necessitate that we establish an allowance for expected credit losses on debt securities. While we are currently unable to reasonably estimate the impact of adopting ASU 2016-13, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of our loan and securities portfolios, as well as the prevailing economic conditions and forecasts, as of the adoption date.
This amendment was originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In July 2019, the FASB proposed changes that would delay the effective date for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities. In October 2019, the FASB voted in favor of finalizing its proposal to delay the effective date of this standard to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2016-13 will be effective for the Company on January 1, 2023.
FASB ASC Topic 848 “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting” Update No. 2020-04. In March 2020, the FASB issued ASU 2020-04, which is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This guidance has been effective since March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements.
FASB ASC Topic 326 “Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures” Update No. 2022-02. The FASB issued ASU No. 2022-02 in March 2022. The ASU eliminates the accounting guidance for TDRs and, instead, requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan. The amendment also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases. The guidance is effective for entities that have adopted ASU 2016-13 for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. These amendments should be applied prospectively. ASU 2016-13 will be effective for the Company on January 1, 2023. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Cheaha Financial Group, Inc.
On April 1, 2021, the Company completed the acquisition of Cheaha Financial Group, Inc. (“Cheaha”) and its wholly-owned subsidiary, Cheaha Bank, in Oxford, Alabama for an aggregate cash consideration of approximately $41.1 million. After fair value adjustments, the acquisition added $240.8 million in total assets, including $120.4 million in loans, and $207.0 million in deposits. As consideration paid was in excess of the net fair value of acquired assets, the Company recorded $11.9 million of goodwill. Goodwill resulted from a combination of synergies and cost savings, and further expansion into Alabama with the addition of four branch locations.
The table below shows the allocation of the consideration paid for Cheaha's common equity to the acquired identifiable assets and liabilities assumed and the goodwill generated from the transaction (dollars in thousands).
| Purchase price: | ||||
| Cash paid | $ | 41,067 | ||
| Fair value of assets acquired: | ||||
| Cash and cash equivalents | 49,179 | |||
| Investment securities | 60,938 | |||
| Loans | 120,395 | |||
| Bank premises and equipment | 5,407 | |||
| Core deposit intangible asset | 848 | |||
| Bank owned life insurance | 3,023 | |||
| Other assets | 1,012 | |||
| Total assets acquired | 240,802 | |||
| Fair value of liabilities acquired: | ||||
| Deposits | 206,986 | |||
| Notes payable | 2,327 | |||
| Other liabilities | 2,366 | |||
| Total liabilities assumed | 211,679 | |||
| Fair value of net assets acquired | 29,123 | |||
| Goodwill | $ | 11,944 |
The fair value of net assets acquired includes a fair value adjustment to loans as of the acquisition date. The adjustment for the acquired loan portfolio is based on current market interest rates at the time of acquisition, and the Company’s initial evaluation of credit losses identified. The contractually required principal and interest payments of the loans acquired from Cheaha total $134.8 million. Loans acquired from Cheaha that are considered to be purchased credit impaired loans had a balance of $0.2 million at the time of acquisition. The contractually required principal and interest payments of these loans total $0.2 million, of which $0.1 million is not expected to be collected.
Acquisition Expense
There were no acquisition expenses recorded in the three and six months ended June 30, 2022. Acquisition related costs of $1.6 million and $2.0 million are included in acquisition expense in the accompanying consolidated statements of income for the three and six months ended June 30, 2021 and are related to the acquisition of Cheaha.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following is a summary of the information used in the computation of basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021 (in thousands, except share data).
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Earnings per common share - basic | ||||||||||||||||
| Net income | $ | 9,404 | $ | 5,688 | $ | 19,507 | $ | 11,048 | ||||||||
| Less: income allocated to participating securities | (7 | ) | (14 | ) | (23 | ) | (34 | ) | ||||||||
| Net income allocated to common shareholders | 9,397 | 5,674 | 19,484 | 11,014 | ||||||||||||
| Weighted average basic shares outstanding | 10,149,246 | 10,414,875 | 10,241,776 | 10,461,910 | ||||||||||||
| Basic earnings per common share | $ | 0.92 | $ | 0.54 | $ | 1.90 | $ | 1.05 | ||||||||
| Earnings per common share - diluted | ||||||||||||||||
| Net income allocated to common shareholders | $ | 9,397 | $ | 5,674 | $ | 19,484 | $ | 11,014 | ||||||||
| Weighted average basic shares outstanding | 10,149,246 | 10,414,875 | 10,241,776 | 10,461,910 | ||||||||||||
| Dilutive effect of securities | 84,293 | 127,032 | 70,958 | 80,254 | ||||||||||||
| Total weighted average diluted shares outstanding | 10,233,539 | 10,541,907 | 10,312,734 | 10,542,164 | ||||||||||||
| Diluted earnings per common share | $ | 0.92 | $ | 0.53 | $ | 1.89 | $ | 1.04 | ||||||||
The weighted average shares that have an antidilutive effect in the calculation of diluted earnings per common share and have been excluded from the computations above are shown below.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Stock options | — | 6,188 | — | 1,363 | ||||||||||||
| Restricted stock awards | 87 | 25 | 13 | 252 | ||||||||||||
| Restricted stock units | 3,176 | — | 45,653 | 53,756 | ||||||||||||
The amortized cost and approximate fair value of investment securities classified as AFS are summarized below as of the dates presented (dollars in thousands).
| Gross | Gross | |||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||
| Amortized Cost | Gains | Losses | Value | |||||||||||||
| June 30, 2022 | ||||||||||||||||
| Obligations of the U.S. Treasury and U.S. government agencies and corporations | $ | 27,782 | $ | 200 | $ | (248 | ) | $ | 27,734 | |||||||
| Obligations of state and political subdivisions | 19,000 | 5 | (1,885 | ) | 17,120 | |||||||||||
| Corporate bonds | 31,049 | 4 | (2,286 | ) | 28,767 | |||||||||||
| Residential mortgage-backed securities | 302,436 | 94 | (32,276 | ) | 270,254 | |||||||||||
| Commercial mortgage-backed securities | 82,506 | 264 | (5,360 | ) | 77,410 | |||||||||||
| Total | $ | 462,773 | $ | 567 | $ | (42,055 | ) | $ | 421,285 | |||||||
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| Gross | Gross | |||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||
| Amortized Cost | Gains | Losses | Value | |||||||||||||
| December 31, 2021 | ||||||||||||||||
| Obligations of the U.S. Treasury and U.S. government agencies and corporations | $ | 21,143 | $ | 152 | $ | (27 | ) | $ | 21,268 | |||||||
| Obligations of state and political subdivisions | 32,330 | 468 | (213 | ) | 32,585 | |||||||||||
| Corporate bonds | 27,777 | 235 | (345 | ) | 27,667 | |||||||||||
| Residential mortgage-backed securities | 200,696 | 711 | (1,503 | ) | 199,904 | |||||||||||
| Commercial mortgage-backed securities | 74,693 | 369 | (977 | ) | 74,085 | |||||||||||
| Total | $ | 356,639 | $ | 1,935 | $ | (3,065 | ) | $ | 355,509 | |||||||
Proceeds from sales of investment securities classified as AFS and gross gains and losses are summarized below for the periods presented (dollars in thousands).
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Proceeds from sale | $ | — | $ | 120,680 | $ | — | $ | 137,803 | ||||||||
| Gross gains | $ | — | $ | 1,721 | $ | — | $ | 2,323 | ||||||||
| Gross losses | $ | — | $ | — | $ | — | $ | (2 | ) | |||||||
The amortized cost and approximate fair value of investment securities classified as HTM are summarized below as of the dates presented (dollars in thousands).
| Gross | Gross | |||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||
| Amortized Cost | Gains | Losses | Value | |||||||||||||
| June 30, 2022 | ||||||||||||||||
| Obligations of state and political subdivisions | $ | 6,661 | $ | 11 | $ | — | $ | 6,672 | ||||||||
| Residential mortgage-backed securities | 3,040 | — | (132 | ) | 2,908 | |||||||||||
| Total | $ | 9,701 | $ | 11 | $ | (132 | ) | $ | 9,580 | |||||||
| Gross | Gross | |||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||
| Amortized Cost | Gains | Losses | Value | |||||||||||||
| December 31, 2021 | ||||||||||||||||
| Obligations of state and political subdivisions | $ | 6,910 | $ | 367 | $ | — | $ | 7,277 | ||||||||
| Residential mortgage-backed securities | 3,345 | 105 | — | 3,450 | ||||||||||||
| Total | $ | 10,255 | $ | 472 | $ | — | $ | 10,727 | ||||||||
Securities are classified in the consolidated balance sheets according to management’s intent. The Company had no securities classified as trading as of June 30, 2022 or December 31, 2021.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The approximate fair value of AFS securities and unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized below as of the dates presented (amounts in thousands, except number of securities).
| Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
| Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
| Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
| June 30, 2022 | ||||||||||||||||||||||||
| Obligations of the U.S. Treasury and U.S. government agencies and corporations | $ | 6,532 | $ | (235 | ) | $ | 1,302 | $ | (13 | ) | $ | 7,834 | $ | (248 | ) | |||||||||
| Obligations of state and political subdivisions | 15,817 | (1,818 | ) | 663 | (67 | ) | 16,480 | (1,885 | ) | |||||||||||||||
| Corporate bonds | 22,964 | (1,742 | ) | 3,456 | (544 | ) | 26,420 | (2,286 | ) | |||||||||||||||
| Residential mortgage-backed securities | 239,933 | (29,645 | ) | 17,475 | (2,631 | ) | 257,408 | (32,276 | ) | |||||||||||||||
| Commercial mortgage-backed securities | 44,560 | (4,835 | ) | 11,897 | (525 | ) | 56,457 | (5,360 | ) | |||||||||||||||
| Total | $ | 329,806 | $ | (38,275 | ) | $ | 34,793 | $ | (3,780 | ) | $ | 364,599 | $ | (42,055 | ) | |||||||||
| Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
| Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
| Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
| December 31, 2021 | ||||||||||||||||||||||||
| Obligations of the U.S. Treasury and U.S. government agencies and corporations | $ | 1,438 | $ | (25 | ) | $ | 668 | $ | (2 | ) | $ | 2,106 | $ | (27 | ) | |||||||||
| Obligations of state and political subdivisions | 10,803 | (213 | ) | — | — | 10,803 | (213 | ) | ||||||||||||||||
| Corporate bonds | 10,197 | (254 | ) | 2,409 | (91 | ) | 12,606 | (345 | ) | |||||||||||||||
| Residential mortgage-backed securities | 156,862 | (1,503 | ) | — | — | 156,862 | (1,503 | ) | ||||||||||||||||
| Commercial mortgage-backed securities | 44,055 | (941 | ) | 6,284 | (36 | ) | 50,339 | (977 | ) | |||||||||||||||
| Total | $ | 223,355 | $ | (2,936 | ) | $ | 9,361 | $ | (129 | ) | $ | 232,716 | $ | (3,065 | ) | |||||||||
The approximate fair value of HTM securities, and unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized below as of June 30, 2022 (amounts in thousands, except number of securities). There were no HTM securities in a continuous loss position as of December 31, 2021.
| Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
| Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
| Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
| June 30, 2022 | ||||||||||||||||||||||||
| Residential mortgage-backed securities | $ | 2,908 | $ | (132 | ) | $ | — | $ | — | $ | 2,908 | $ | (132 | ) | ||||||||||
| Total | $ | 2,908 | $ | (132 | ) | $ | — | $ | — | $ | 2,908 | $ | (132 | ) | ||||||||||
Unrealized losses are generally due to changes in interest rates. The Company has the intent to hold these securities either until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their amortized cost basis. Due to the nature of the investment, current market prices, and the current interest rate environment, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2022 or December 31, 2021.
The amortized cost and approximate fair value of investment debt securities, by contractual maturity, are shown below as of the dates presented (dollars in thousands). Actual maturities may differ from contractual maturities due to mortgage-backed securities whereby borrowers may have the right to call or prepay obligations with or without call or prepayment penalties and certain callable bonds whereby the issuer has the option to call the bonds prior to contractual maturity.
| Securities Available For Sale | Securities Held To Maturity | |||||||||||||||
| Amortized | Fair | Amortized | Fair | |||||||||||||
| Cost | Value | Cost | Value | |||||||||||||
| June 30, 2022 | ||||||||||||||||
| Due within one year | $ | 279 | $ | 280 | $ | 870 | $ | 872 | ||||||||
| Due after one year through five years | 27,661 | 27,268 | 1,875 | 1,879 | ||||||||||||
| Due after five years through ten years | 52,798 | 50,772 | 3,916 | 3,921 | ||||||||||||
| Due after ten years | 382,035 | 342,965 | 3,040 | 2,908 | ||||||||||||
| Total debt securities | $ | 462,773 | $ | 421,285 | $ | 9,701 | $ | 9,580 | ||||||||
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| Securities Available For Sale | Securities Held To Maturity | |||||||||||||||
| Amortized | Fair | Amortized | Fair | |||||||||||||
| Cost | Value | Cost | Value | |||||||||||||
| December 31, 2021 | ||||||||||||||||
| Due within one year | $ | 726 | $ | 726 | $ | 870 | $ | 902 | ||||||||
| Due after one year through five years | 14,189 | 14,327 | 1,875 | 2,018 | ||||||||||||
| Due after five years through ten years | 51,988 | 52,376 | 4,165 | 4,356 | ||||||||||||
| Due after ten years | 289,736 | 288,080 | 3,345 | 3,451 | ||||||||||||
| Total debt securities | $ | 356,639 | $ | 355,509 | $ | 10,255 | $ | 10,727 | ||||||||
At June 30, 2022, securities with a carrying value of $138.1 million were pledged to secure certain deposits, borrowings, and other liabilities, compared to $118.2 million in pledged securities at December 31, 2021.
NOTE 5. LOANS AND ALLOWANCE FOR LOAN LOSSES
The Company’s loan portfolio, excluding loans held for sale, consists of the following categories of loans as of the dates presented (dollars in thousands).
| June 30, 2022 | December 31, 2021 | |||||||
| Construction and development | $ | 214,543 | $ | 203,204 | ||||
| 1-4 Family | 380,028 | 364,307 | ||||||
| Multifamily | 56,491 | 59,570 | ||||||
| Farmland | 15,676 | 20,128 | ||||||
| Commercial real estate | 891,822 | 896,377 | ||||||
| Total mortgage loans on real estate | 1,558,560 | 1,543,586 | ||||||
| Commercial and industrial | 343,355 | 310,831 | ||||||
| Consumer | 14,480 | 17,595 | ||||||
| Total loans | $ | 1,916,395 | $ | 1,872,012 | ||||
Unamortized premiums and discounts on loans, included in the total loans balances above, were$1.0 million and $1.9 million at June 30, 2022 and December 31, 2021, respectively, and unearned income, or deferred fees, on loans was $1.1 millionand $1.8 million at June 30, 2022 and December 31, 2021, respectively and is also included in the total loans balance in the table above.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The table below provides an analysis of the aging of loans, excluding loans held for sale, as of the dates presented (dollars in thousands).
| June 30, 2022 | ||||||||||||||||||||||||||||||||
| Accruing | ||||||||||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Nonaccrual | Total Past Due & Nonaccrual | Acquired Impaired Loans | Total Loans | |||||||||||||||||||||||||
| Construction and development | $ | 212,991 | $ | 1,231 | $ | 54 | $ | — | $ | 267 | $ | 1,552 | $ | — | $ | 214,543 | ||||||||||||||||
| 1-4 Family | 377,160 | 1,586 | 150 | 344 | 469 | 2,549 | 319 | 380,028 | ||||||||||||||||||||||||
| Multifamily | 56,491 | — | — | — | — | — | — | 56,491 | ||||||||||||||||||||||||
| Farmland | 14,961 | — | — | — | 66 | 66 | 649 | 15,676 | ||||||||||||||||||||||||
| Commercial real estate | 879,946 | 201 | 60 | — | 10,981 | 11,242 | 634 | 891,822 | ||||||||||||||||||||||||
| Total mortgage loans on real estate | 1,541,549 | 3,018 | 264 | 344 | 11,783 | 15,409 | 1,602 | 1,558,560 | ||||||||||||||||||||||||
| Commercial and industrial | 338,440 | 1,272 | 84 | 54 | 3,505 | 4,915 | — | 343,355 | ||||||||||||||||||||||||
| Consumer | 14,164 | 95 | 1 | — | 160 | 256 | 60 | 14,480 | ||||||||||||||||||||||||
| Total loans | $ | 1,894,153 | $ | 4,385 | $ | 349 | $ | 398 | $ | 15,448 | $ | 20,580 | $ | 1,662 | $ | 1,916,395 | ||||||||||||||||
| December 31, 2021 | ||||||||||||||||||||||||||||||||
| Accruing | ||||||||||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Nonaccrual | Total Past Due & Nonaccrual | Acquired Impaired Loans | Total Loans | |||||||||||||||||||||||||
| Construction and development | $ | 202,850 | $ | 55 | $ | 11 | $ | — | $ | 288 | $ | 354 | $ | — | $ | 203,204 | ||||||||||||||||
| 1-4 Family | 360,434 | 1,933 | 182 | — | 1,410 | 3,525 | 348 | 364,307 | ||||||||||||||||||||||||
| Multifamily | 59,570 | — | — | — | — | — | — | 59,570 | ||||||||||||||||||||||||
| Farmland | 18,348 | — | — | — | 79 | 79 | 1,701 | 20,128 | ||||||||||||||||||||||||
| Commercial real estate | 881,575 | 170 | 86 | — | 13,910 | 14,166 | 636 | 896,377 | ||||||||||||||||||||||||
| Total mortgage loans on real estate | 1,522,777 | 2,158 | 279 | — | 15,687 | 18,124 | 2,685 | 1,543,586 | ||||||||||||||||||||||||
| Commercial and industrial | 295,323 | 4,044 | 57 | 53 | 11,354 | 15,508 | — | 310,831 | ||||||||||||||||||||||||
| Consumer | 17,238 | 89 | 18 | — | 186 | 293 | 64 | 17,595 | ||||||||||||||||||||||||
| Total loans | $ | 1,835,338 | $ | 6,291 | $ | 354 | $ | 53 | $ | 27,227 | $ | 33,925 | $ | 2,749 | $ | 1,872,012 | ||||||||||||||||
Nonaccrual and Past Due Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, the borrower’s debt service capacity is considered through the analysis of current financial information, if available, and/or current information with regard to the collateral position. Regulatory provisions would typically require the placement of a loan on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and payment of future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Loans Acquired with Deteriorated Credit Quality
The Company accounts for certain loans acquired as acquired impaired loans under ASC 310-30 due to evidence of credit deterioration at acquisition and the probability that the Company will be unable to collect all contractually required payments. The acquired impaired loans had no accretable yield recorded for the three and six months ended June 30, 2022 and 2021.
Portfolio Segment Risk Factors
The following describes the risk characteristics relevant to each of the Company’s loan portfolio segments.
Construction and Development - Construction and development loans are generally made for the purpose of acquisition and development of land to be improved through the construction of commercial and residential buildings. The successful repayment of these types of loans is generally dependent upon a commitment for permanent financing from the Company, or from the sale of the constructed property. These loans carry more risk than commercial or residential real estate loans due to the dynamics of construction projects, changes in interest rates, the long-term financing market, and state and local government regulations. One such risk is that loan funds are advanced upon the security of the property under construction, which is of uncertain value prior to the completion of construction. Thus, it is more difficult to evaluate accurately the total loan funds required to complete a project and to calculate related loan-to-value ratios. The Company attempts to minimize the risks associated with construction lending by limiting loan-to-value ratios as described above. In addition, as to speculative development loans, the Company generally makes such loans only to borrowers that have a positive pre-existing relationship with us. The Company manages risk by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations in any one business or industry.
1-4 Family - The 1-4 family portfolio mainly consists of residential mortgage loans to consumers to finance a primary residence. The majority of these loans are secured by properties located in the Company’s market areas and carry risks associated with the creditworthiness of the borrower and changes in the value of the collateral and loan-to-value-ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, employing experienced underwriting personnel, requiring standards for appraisers, and not making subprime loans.
Multifamily - Multifamily loans are normally made to real estate investors to support permanent financing for multifamily residential income producing properties that rely on the successful operation of the property for repayment. This management mainly involves property maintenance and collection of rents due from tenants. This type of lending carries a lower level of risk, as compared to other commercial lending. In addition, underwriting requirements for multifamily properties are stricter than for other non-owner-occupied property types. The Company manages this risk by avoiding concentrations with any particular customer.
Farmland - Farmland loans are often for land improvements related to agricultural endeavors and may include construction of new specialized facilities. These loans are usually repaid through the conversion to permanent financing, or if scheduled loan amortization begins, for the long-term benefit of the borrower’s ongoing operations. Underwriting generally involves intensive analysis of the financial strength of the borrower and guarantor, liquidation value of the subject collateral, the associated unguaranteed exposure, and any available secondary sources of repayment, with the greatest emphasis given to a borrower’s capacity to meet cash flow coverage requirements as set forth by Bank policies.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Commercial Real Estate - Commercial real estate loans are extensions of credit secured by owner occupied and non-owner occupied collateral. Underwriting generally involves intensive analysis of the financial strength of the borrower and guarantor, liquidation value of the subject collateral, the associated unguaranteed exposure, and any available secondary sources of repayment, with the greatest emphasis given to a borrower’s capacity to meet cash flow coverage requirements as set forth by Bank policies. Repayment is commonly derived from the successful ongoing operations of the property. General market conditions and economic activity may impact the performance of these types of loans, including fluctuations in the value of real estate, new job creation trends, and tenant vacancy rates. The Company attempts to limit risk by analyzing a borrower’s cash flow and collateral value on an ongoing basis. The Company also typically requires personal guarantees from the principal owners of the property, supported by a review of their personal financial statements, as an additional means of mitigating our risk. The Company manages risk by avoiding concentrations in any one business or industry.
Commercial and Industrial - Commercial and industrial loans receive similar underwriting treatment as commercial real estate loans in that the repayment source is analyzed to determine its ability to meet cash flow coverage requirements as set forth by Bank policies. Repayment of these loans generally comes from the generation of cash flow as the result of the borrower’s business operations. Commercial lending generally involves different risks from those associated with commercial real estate lending or construction lending. Although commercial loans may be collateralized by equipment or other business assets (including real estate, if available as collateral), the repayment of these types of loans depends primarily on the creditworthiness and projected cash flow of the borrower (and any guarantors). Thus, the general business conditions of the local economy and the borrower’s ability to sell its products and services, thereby generating sufficient operating revenue to repay us under the agreed upon terms and conditions, are the chief considerations when assessing the risk of a commercial loan. The liquidation of collateral, if any, is considered a secondary source of repayment because equipment and other business assets may, among other things, be obsolete or of limited resale value. The Company actively monitors certain financial measures of the borrower, including advance rate, cash flow, collateral value and other appropriate credit factors.
In the second quarter of 2020, the Bank began participating 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 and enhanced by the Paycheck Protection Program and Health Care Enhancement Act and the Paycheck Protection Program Flexibility Act of 2020 (“Flexibility 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% with deferred payments, and if originated before June 5, 2020, mature two years from origination, or if made on or after June 5, 2020, five 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 a certain time 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. In July 2020, the CARES Act was amended to extend the SBA’s authority to make commitments under the PPP, which had previously expired on June 30, 2020. The PPP resumed taking applications on July 6, 2020, and the new deadline to apply for a PPP loan ended on August 8, 2020. On December 27, 2020, the CAA, a $900 billion aid package, was enacted that renewed the PPP and allocated additional funding for new first time PPP loans under the original PPP and also authorized second draw PPP loans for certain eligible borrowers that had previously received a PPP loan. The application period for the renewed PPP lasted from January 1, 2021 to May 31, 2021. At June 30, 2022 and December 31, 2021 the Company’s loan portfolio included PPP loans with balances of $3.5 million and $23.3 million, respectively, all of which are included in commercial and industrial loans.
Consumer - Consumer loans are offered by the Company in order to provide a full range of retail financial services to its customers and include auto loans, credit cards, and other consumer installment loans. Typically, the Company evaluates the borrower’s repayment ability through a review of credit scores and an evaluation of debt to income ratios. Repayment of consumer loans depends upon key consumer economic measures and upon the borrower’s financial stability, and is more likely to be adversely affected by divorce, job loss, illness and personal hardships than repayment of other loans. A shortfall in the value of any collateral also may pose a risk of loss to the Company for these types of loans.
Credit Quality Indicators
Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The following definitions are utilized for risk ratings, which are consistent with the definitions used in supervisory guidance:
Pass - Loans not meeting the criteria below are considered pass. These loans have high credit characteristics and financial strength. The borrowers at least generate profits and cash flow that are in line with peer and industry standards and have debt service coverage ratios above loan covenants and our policy guidelines. For some of these loans, a guaranty from a financially capable party mitigates characteristics of the borrower that might otherwise result in a lower grade.
Special Mention - Loans classified as special mention possess some credit deficiencies that need to be corrected to avoid a greater risk of default in the future. For example, financial ratios relating to the borrower may have deteriorated. Often, a special mention categorization is temporary while certain factors are analyzed or matters addressed before the loan is re-categorized as either pass or substandard.
Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the borrower or the liquidation value of any collateral. If deficiencies are not addressed, it is likely that this category of loan will result in the Bank incurring a loss. Where a borrower has been unable to adjust to industry or general economic conditions, the borrower’s loan is often categorized as substandard.
Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as recorded assets is not warranted. This classification does not mean that the assets have absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off these assets.
The table below presents the Company’s loan portfolio, excluding loans held for sale, by category and credit quality indicator as of the dates presented (dollars in thousands).
| June 30, 2022 | ||||||||||||||||||||
| Special | ||||||||||||||||||||
| Pass | Mention | Substandard | Doubtful | Total | ||||||||||||||||
| Construction and development | $ | 212,141 | $ | 805 | $ | 1,597 | $ | — | $ | 214,543 | ||||||||||
| 1-4 Family | 378,473 | — | 1,555 | — | 380,028 | |||||||||||||||
| Multifamily | 56,125 | — | 366 | — | 56,491 | |||||||||||||||
| Farmland | 14,962 | — | 714 | — | 15,676 | |||||||||||||||
| Commercial real estate | 874,735 | 3,766 | 13,321 | — | 891,822 | |||||||||||||||
| Total mortgage loans on real estate | 1,536,436 | 4,571 | 17,553 | — | 1,558,560 | |||||||||||||||
| Commercial and industrial | 337,653 | 171 | 5,119 | 412 | 343,355 | |||||||||||||||
| Consumer | 14,291 | — | 189 | — | 14,480 | |||||||||||||||
| Total loans | $ | 1,888,380 | $ | 4,742 | $ | 22,861 | $ | 412 | $ | 1,916,395 | ||||||||||
| December 31, 2021 | ||||||||||||||||||||
| Special | ||||||||||||||||||||
| Pass | Mention | Substandard | Doubtful | Total | ||||||||||||||||
| Construction and development | $ | 200,788 | $ | 818 | $ | 1,598 | $ | — | $ | 203,204 | ||||||||||
| 1-4 Family | 358,062 | 38 | 6,207 | — | 364,307 | |||||||||||||||
| Multifamily | 59,113 | — | 457 | — | 59,570 | |||||||||||||||
| Farmland | 18,348 | — | 1,780 | — | 20,128 | |||||||||||||||
| Commercial real estate | 872,951 | 3,891 | 19,535 | — | 896,377 | |||||||||||||||
| Total mortgage loans on real estate | 1,509,262 | 4,747 | 29,577 | — | 1,543,586 | |||||||||||||||
| Commercial and industrial | 290,677 | 2,523 | 16,941 | 690 | 310,831 | |||||||||||||||
| Consumer | 17,269 | 19 | 307 | — | 17,595 | |||||||||||||||
| Total loans | $ | 1,817,208 | $ | 7,289 | $ | 46,825 | $ | 690 | $ | 1,872,012 | ||||||||||
The Company had no loans that were classified as loss at June 30, 2022 or December 31, 2021.
Loan Participations and Sold Loans
Loan participations and whole loans sold to and serviced for others are not included in the accompanying consolidated balance sheets. The balance of the participations and whole loans sold were $29.0 million and $33.0 million at June 30, 2022 and December 31, 2021, respectively. The unpaid principal balance of these loans was approximately$95.3 million and $91.9 million at June 30, 2022 and December 31, 2021, respectively.
Loans to Related Parties
In the ordinary course of business, the Company makes loans to related parties including its executive officers, principal stockholders, directors and their immediate family members, as well as to companies in which these individuals are principal owners. Loans outstanding to such related party borrowers amounted to approximately $95.9 million and $97.6 million as of June 30, 2022 and December 31, 2021, respectively.
INVESTAR HOLDING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The table below shows the aggregate principal balance of loans to such related parties as of the dates presented (dollars in thousands).
| June 30, 2022 | December 31, 2021 | |||||||
| Balance, beginning of period | $ | 97,606 | $ | 96,390 | ||||
| New loans/changes in relationship | 8,123 | 26,475 | ||||||
| Repayments/changes in relationship | (9,866 | ) | (25,259 | ) | ||||
| Balance, end of period | $ | 95,863 | $ | 97,606 | ||||
Allowance for Loan Losses
The table below shows a summary of the activity in the allowance for loan losses for the three and six months ended June 30, 2022 and 2021 (dollars in thousands).
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Balance, beginning of period | $ | 21,088 | $ | 20,423 | $ | 20,859 | $ | 20,363 | ||||||||
| Provision for loan losses | 941 | 114 | 492 | 514 | ||||||||||||
| Loans charged off | (131 | ) | (155 | ) | (460 | ) | (560 | ) | ||||||||
| Recoveries | 56 | 63 | 1,063 | 128 | ||||||||||||
| Balance, end of period | $ | 21,954 | $ | 20,445 | $ | 21,954 | $ | 20,445 | ||||||||
The following tables outline the activity in the allowance for loan losses by collateral type for the three and six months ended June 30, 2022 and 2021, and show both the allowance and portfolio balances for loans individually and collectively evaluated for impairment as of June 30, 2022 and 2021 (dollars in thousands).
| Three months ended June 30, 2022 | ||||||||||||||||||||||||||||||||
| Construction & | Commercial | Commercial & | ||||||||||||||||||||||||||||||
| Development | 1-4 Family | Multifamily | Farmland | Real Estate | Industrial | Consumer | Total | |||||||||||||||||||||||||
| Allowance for loan losses: | ||||||||||||||||||||||||||||||||
| Beginning balance | $ | 2,408 | $ | 3,404 | $ | 590 | $ | 342 | $ | 9,669 | $ | 4,356 | $ | 319 | $ | 21,088 | ||||||||||||||||
| Provision | 217 | 187 | 50 | (29 | ) | (37 | ) | 493 | 60 | 941 | ||||||||||||||||||||||
| Charge-offs | — | — | — | |||||||||||||||||||||||||||||