Investar Holding Corporation Announces 2017 Second Quarter Results

BATON ROUGE, La., July 26, 2017 (GLOBE NEWSWIRE) -- Investar Holding Corporation (NASDAQ:ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended June 30, 2017. The Company reported net income of $1.9 million, or $0.22 per diluted share for the second quarter of 2017, compared to $1.9 million, or $0.26 per diluted share for the quarter ended March 31, 2017, and $2.0 million, or $0.28 per diluted share, for the quarter ended June 30, 2016.

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

“This was another quarter of continued progress for Investar and demonstrates our commitment to creating long-term shareholder value. We continued to experience solid organic loan growth which contributed to the increase in interest income. Deposit growth remains a focus and we are very pleased with the 16% increase in noninterest-bearing deposits compared to the first quarter of 2017. Our asset quality remains strong and we continue to see opportunities for growth in our markets. We were able to open two branches during the quarter - one in the Baton Rouge market and one in the New Orleans market. We opened the New Orleans branch sooner than we had projected as we felt there were significant opportunities in the market. We continue to focus on quality loans and deposits while controlling noninterest expense and maintaining our focus on improving our return on assets and efficiency ratios.

Also, we were excited to complete the Citizens acquisition on July 1, 2017 as announced and discussed last quarter, and believe that this acquisition fits well with our strategy of expanding Investar’s footprint in Louisiana. We also believe that the acquisition further positions us to grow the franchise and increase long-term shareholder value.”

Second Quarter Highlights

  • Nonperforming loans to total loans decreased to 0.13% at June 30, 2017 compared to 0.24% at March 31, 2017 and 0.67% at June 30, 2016.
  • Noninterest-bearing deposits were $130.6 million at June 30, 2017, an increase of $18.1 million, or 16.1%, compared to March 31, 2017.
  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $284.1 million at June 30, 2017, an increase of $12.2 million, or 4.5%, compared to the business lending portfolio of $271.9 million at March 31, 2017, and an increase of $57.5 million, or 25.4%, compared to the business lending portfolio of $226.6 million at June 30, 2016.
  • Total interest income increased $0.8 million, or 6.8%, for the quarter ended June 30, 2017 compared to the quarter ended March 31, 2017, and increased $1.1 million, or 10.5%, compared to the quarter ended June 30, 2016.
  • Two de novo branches, one in each of the Baton Rouge and New Orleans markets, opened at the end of the second quarter, as well as a free-standing ATM in our Baton Rouge market, creating additional banking opportunities for our existing and potential customers.
  • The Company’s common stock had a closing trade price of $22.90 at June 30, 2017, representing 22.8% growth from a closing trade price of $18.65 at December 30, 2016.
  • Total loans increased $30.8 million, or 3.4%, to $932.9 million at June 30, 2017 compared to $902.1 million at March 31, 2017. Excluding the paydown of indirect auto loans, total loans increased $40.9 million, or 5.0%, to $862.1 million at June 30, 2017 compared to $821.2 million at March 31, 2017.

Loans

Total loans were $932.9 million at June 30, 2017, an increase of $30.8 million, or 3.4%, compared to March 31, 2017, and an increase of $115.5 million, or 14.1%, compared to June 30, 2016.

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

         Linked Quarter
Change
 Year/Year Change  Percentage of Total
Loans
  6/30/2017 3/31/2017 6/30/2016 $ % $ % 6/30/2017 6/30/2016
Mortgage loans on real estate                  
Construction and development  $109,627  $95,541  $101,080  $14,086  14.7% $8,547  8.5% 11.8% 12.4%
1-4 Family 177,979  172,148  166,778  5,831  3.4  11,201  6.7  19.1  20.4 
Multifamily 46,109  47,776  37,300  (1,667) (3.5) 8,809  23.6  4.9  4.6 
Farmland 8,006  7,994  8,343  12  0.2  (337) (4.0) 0.9  1.0 
Commercial real estate                   
Owner-occupied 185,226  181,590  151,464  3,636  2.0  33,762  22.3  19.8  18.5 
Nonowner-occupied 223,297  210,874  180,842  12,423  5.9  42,455  23.5  23.9      22.1 
Commercial and industrial 98,837  90,352  75,103  8,485  9.4  23,734  31.6      10.6  9.2 
Consumer 83,879  95,873  96,560  (11,994)   (12.5) (12,681) (13.1) 9.0  11.8 
Total loans 932,960  902,148  817,470  30,812  3.4% 115,490  14.1% 100% 100%
Loans held for sale     46,717      (46,717) (100.0)    
Total gross loans $ 932,960  $ 902,148  $ 864,187  $ 30,812  3.4% $ 68,773  8.0%    
                               

Consumer loans, including indirect auto loans of $70.8 million, totaled $83.9 million at June 30, 2017, a decrease of $12.0 million, or 12.5%, compared to $95.9 million, including indirect auto loans of $80.9 million, at March 31, 2017, and a decrease of $12.7 million, or 13.1%, compared to $96.6 million at June 30, 2016. The decrease in consumer loans when compared to the linked quarter is attributable to the scheduled paydowns of the consumer loans. Since the Bank discontinued accepting indirect auto loan applications at the end of 2015, which was the primary source of its consumer loan portfolio and consumer loans held for sale, the consumer loan portfolio is expected to decrease over time.

At June 30, 2017, 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 $284.1 million, an increase of $12.2 million, or 4.5%, compared to the business lending portfolio of $271.9 million at March 31, 2017, and an increase of $57.5 million, or 25.4%, compared to the business lending portfolio of $226.6 million at June 30, 2016. The increase in the business lending portfolio is attributable to our focus on relationship banking and growing our commercial loan portfolio.

Credit Quality

Nonperforming loans were $1.2 million, or 0.13% of total loans, at June 30, 2017, a decrease of $0.9 million, or 42.9%, compared to $2.1 million, or 0.24% of total loans, at March 31, 2017, and a decrease of $4.3 million, or 78.2%, compared to $5.5 million, or 0.67% of total loans, at June 30, 2016. The decrease in nonperforming loans compared to June 30, 2016 is mainly attributable to one $2.7 million commercial and industrial loan relationship that was not performing at June 30, 2016 but was subsequently resolved without any additional adverse impact to the financial statements.

The allowance for loan losses was $7.3 million, or 627.63% and 0.78% of nonperforming loans and total loans, respectively, at June 30, 2017, compared to $7.2 million, or 337.95% and 0.80% of nonperforming loans and total loans, respectively, at March 31, 2017, and $7.1 million, or 129.59% and 0.87% of nonperforming loans and total loans, respectively, at June 30, 2016.

The provision for loan losses was $0.4 million for both the first and second quarter of 2017, a decrease of $0.4 million compared to provision for loan losses of $0.8 million for the quarter ended June 30, 2016. The $0.8 million provision for loan losses for the quarter ended June 30, 2016 is attributable to the specific reserve recorded against the $2.7 million commercial and industrial loan relationship that was placed on nonaccrual during the quarter, discussed above.

Management continues to monitor the Company’s loan portfolio for exposure to potential negative impacts of suppressed oil and gas prices. We consider our direct exposure to the energy sector not to be significant, at less than one percent of the total loan portfolio at June 30, 2017. However, should the price of oil and gas decline further and/or remain at the current low price for an extended period, the general economic conditions in our south Louisiana markets could be negatively affected and could negatively impact borrowers’ ability to service their debt. Management continually evaluates the allowance for loan losses based on several factors, including economic conditions, and currently believes that any potential negatively affected future cash flows related to these loans would be covered by the current allowance for loan losses.

Deposits

Total deposits at June 30, 2017 were $894.8 million, an increase of $26.3 million, or 3.0%, compared to March 31, 2017, and an increase of $27.6 million, or 3.2%, compared to June 30, 2016. Noninterest-bearing demand deposits experienced the greatest percentage growth during the second quarter of 2017 with an increase of 16.1%, or $18.1 million, compared to March 31, 2017. The increase in total deposits compared to June 30, 2016 was driven by large increases in NOW accounts, money market deposit accounts and noninterest-bearing demand deposits. These increases were offset by a $58.0 million, or 12.7%, decrease in time deposits. During the third quarter of 2016, the Company began lowering its rates on time deposits in an effort to begin reducing its cost of funds and its dependency on certificates of deposit. As a result of this strategy, as time deposits mature, many have not renewed with the Bank. The decrease in time deposits is primarily a result of the withdrawal of time deposits by other financial institutions in search of higher rates.

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

         Linked Quarter
Change
 Year/Year Change Percentage of
Total Deposits
  6/30/2017 3/31/2017 6/30/2016 $ % $ % 6/30/2017 6/30/2016
Noninterest-bearing demand deposits $130,625  $112,514  $109,828  $18,111  16.1% $20,797  18.9% 14.6% 12.7%
NOW accounts 171,244  168,860  139,893  2,384  1.4  31,351  22.4  19.1  16.1 
Money market deposit accounts 143,957  124,604  108,552  19,353  15.5  35,405  32.6  16.1  12.5 
Savings accounts 50,945  52,682  52,899  (1,737) (3.3) (1,954) (3.7) 5.7  6.1 
Time deposits 398,054  409,894  456,033  (11,840) (2.9) (57,979)   (12.7) 44.5  52.6 
Total deposits $ 894,825  $ 868,554  $ 867,205  $ 26,271      3.0% $ 27,620  3.2%    100.0%    100.0%
                                 

Net Interest Income

Net interest income for the second quarter of 2017 totaled $9.3 million, an increase of $0.4 million, or 5.0%, compared to the first quarter of 2017, and an increase of $0.6 million, or 7.4%, compared to the second quarter of 2016. The increase in net interest income is mainly a result of continued growth of the Company’s loan portfolio, with an increase in net interest income of $0.9 million due to an increase in volume offset by a $0.3 million decrease related to an increase in the cost of funds compared to the second quarter of 2016. In addition, in the second quarter of 2017, the Company recognized approximately $138,000 of recoveries on an acquired loan. 

The Company’s net interest margin was 3.28% for the quarter ended June 30, 2017 compared to 3.27% for the quarter ended March 31, 2017 and 3.38% for the quarter ended June 30, 2016. The yield on interest-earning assets was 4.18% for the quarter ended June 30, 2017 compared to 4.10% for the quarter ended March 31, 2017 and 4.18% for the quarter ended June 30, 2016. Five basis points of the increase in the yield on interest-earning assets when compared to the quarter ended March 31, 2017 is attributable to the $138,000 of recoveries on an acquired loan, mentioned above.

The cost of deposits increased one basis point to 0.98% for the quarter ended June 30, 2017 compared to 0.97% for the quarter ended March 31, 2017, and increased two basis points compared to 0.96% for the quarter ended June 30, 2016. The increase in the cost of deposits when compared to the quarter ended June 30, 2016 is primarily a result of increases in the cost of time deposits and interest-bearing demand deposits. The overall costs of funds for the quarter ended June 30, 2017 increased twelve basis points to 1.10% compared to 0.98% for the quarter ended March 31, 2017 and increased fifteen basis points compared to 0.95% for the quarter ended June 30, 2016. The increase in the cost of funds is mainly attributable to the increase in long term borrowings mainly resulting from the Company’s issuance and sale, on March 24, 2017, of $18.6 million in aggregate principal amount of its 6.00% Fixed-to-Floating Rate Subordinated Notes due in 2027. The Company used the net proceeds from the debt issuance to fund a portion of the acquisition of Citizens Bancshares, Inc. and its wholly-owned subsidiary, Citizens Bank, as intended. The acquisition closed on July 1, 2017, therefore, the Company incurred a full quarter of interest expense without realizing any financial benefit of the acquisition.

Noninterest Income

Noninterest income for the second quarter of 2017 totaled $0.8 million, a decrease of $0.1 million, or 9.5%, compared to the first quarter of 2017, and a decrease of $1.5 million, or 64.5%, compared to the second quarter of 2016. The decrease in noninterest income when compared to the quarter ended June 30, 2016 is mainly attributable to the $1.3 million decrease in the gain on sale of fixed assets. The gain on sale of fixed assets recognized in the quarter ended June 30, 2016 resulted from the sale of the land and building of one of the Bank’s branch locations to a healthcare company. The decrease in noninterest income compared to the quarter ended June 30, 2016 can also be attributed to the $0.2 million decrease in servicing fees and fee income on serviced loans. As the Bank’s portfolio of serviced loans ages, and consequently decreases in principal value, the servicing fees earned will continue to decrease.

Noninterest Expense

Noninterest expense for the second quarter of 2017 totaled $6.9 million, an increase of $0.2 million, or 3.7%, compared to the first quarter of 2017, and a decrease of $0.2 million, or 2.5%, compared to the second quarter of 2016. The increase in noninterest expense compared to the first quarter of 2017 is mainly attributable to the $0.2 million increase in salaries and employee benefits. This increase is mainly attributable to additional lenders hired at the end of the first quarter of 2017. In addition, at the end of the second quarter of 2017, the Company opened two de novo branch locations which required the hiring of additional employees in addition to incurring other operating expenses. The branch openings had an estimated impact to noninterest expense for the second quarter of 2017 of approximately $0.1 million. Furthermore, the Company recorded a $0.1 million write-down of repossessed equipment which is also included in other operating expenses.

The decrease in noninterest expense compared to the second quarter of 2016 is mainly attributable to the $0.6 million decrease in customer reimbursements, which were paid to certain borrowers in the second quarter of 2016, offset by $0.2 million increases in both salaries and employee benefits and other operating expenses. The increase in other operating expenses was driven by increases in bank shares taxes and expenses related to other real estate owned, as well as the write-down of repossessed equipment mentioned above.

Basic Earnings Per Share and Diluted Earnings Per Share

The Company reported both basic and diluted earnings per share of $0.22 for the three months ended June 30, 2017, a decrease of $0.06 compared to basic and diluted earnings per share of $0.28 for the three months ended June 30, 2016. The decrease in both basic and diluted earnings per share is directly attributable to the Company’s issuance of approximately 1.6 million common shares as part of a public offering on March 22, 2017.

Taxes

The Company recorded income tax expense of $0.9 million for the quarter ended June 30, 2017, which equates to an effective tax rate of 31.3%.

About Investar Holding Corporation

Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, a state chartered bank. The Company’s primary market is South Louisiana and it currently operates 15 full service banking offices located throughout its market. At June 30, 2017, the Company had 157 full-time equivalent employees.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America, or GAAP. These measures and ratios include “tangible common equity,” “tangible assets,” “tangible equity to tangible assets,” “tangible book value per common share,” “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 Statements

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

  • business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;
  • our ability to achieve organic loan and deposit growth, and the composition of that growth;
  • changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;
  • the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;
  • our dependence on our management team, and our ability to attract and retain qualified personnel;
  • changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers and including the potential impact on our borrowers of the August 2016 flooding in Baton Rouge and surrounding areas;
  • 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;
  • concentration of credit exposure; and
  • the ability to effectively integrate employees, customers, operations and branches from our recent acquisition of Citizens.

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, 2016, filed with the Securities and Exchange Commission.


INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
           
  As of and for the three months ended
  6/30/2017 3/31/2017 6/30/2016 Linked Quarter Year/Year
EARNINGS DATA          
Total interest income $11,844  $11,093  $10,719  6.8% 10.5%
Total interest expense 2,542  2,233  2,061  13.8  23.3 
Net interest income 9,302  8,860  8,658  5.0  7.4 
Provision for loan losses 375  350  800  7.1  (53.1)
Total noninterest income 801  885  2,256  (9.5) (64.5)
Total noninterest expense 6,928  6,684  7,104  3.7  (2.5)
Income before income taxes 2,800  2,711  3,010  3.3  (7.0)
Income tax expense 877  847  1,005  3.5  (12.7)
Net income $1,923  $1,864  $2,005  3.2  (4.1)
           
AVERAGE BALANCE SHEET DATA          
Total assets $1,198,878  $1,157,654  $1,086,604  3.6% 10.3%
Total interest-earning assets 1,137,752  1,097,816  1,028,360  3.6  10.6 
Total loans 914,265  892,546  800,710  2.4  14.2 
Total gross loans 914,265  892,546  852,475  2.4  7.2 
Total interest-bearing deposits 745,647  778,262  739,678  (4.2) 0.8 
Total interest-bearing liabilities 922,780  920,360  866,386  0.3  6.5 
Total deposits 862,361  888,672  835,215  (3.0) 3.3 
Total stockholders’ equity 149,713  117,497  112,035  27.4  33.6 
           
PER SHARE DATA          
Earnings:          
Basic earnings per share $0.22  $0.26  $0.28  (15.4)% (21.4)%
Diluted earnings per share 0.22  0.26  0.28  (15.4) (21.4)
Core Earnings(1):          
Basic earnings per share(1) 0.22  0.27  0.20  (18.5) 10.0 
Diluted earnings per share(1) 0.22  0.27  0.21  (18.5) 4.8 
Book value per common share 17.11  16.85  15.63  1.5  9.5 
Tangible book value per common share(1) 16.74  16.48  15.18  1.6  10.3 
Common shares outstanding 8,815,119  8,805,810  7,214,734  0.1  22.2 
           
PERFORMANCE RATIOS          
Return on average assets 0.64% 0.65% 0.74% (1.5)% (13.5)%
Core return on average assets(1) 0.64  0.68  0.54  (5.9) 18.5 
Return on average equity 5.15  6.44  7.18  (20.0) (28.3)
Core return on average equity(1) 5.11  6.65  5.25  (23.2) (2.7)
Net interest margin 3.28  3.27  3.38  0.3  (3.0)
Net interest income to average assets 3.11  3.10  3.20  0.3  (2.8)
Noninterest expense to average assets 2.32  2.34  2.62  (0.9) (11.5)
Efficiency ratio(2) 68.57  68.59  65.09    5.3 
Core efficiency ratio(1) 68.46  67.18  68.42  1.9  0.1 
Dividend payout ratio 9.94  7.73  3.57  28.6  178.4 
Net charge-offs to average loans 0.03  0.02  0.02  50.0  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
  6/30/2017 3/31/2017 6/30/2016 Linked Quarter Year/Year
ASSET QUALITY RATIOS          
Nonperforming assets to total assets 0.41% 0.53% 0.51% (22.6)% (19.6)%
Nonperforming loans to total loans 0.13  0.24  0.67  (45.8) (80.6)
Allowance for loan losses to total loans 0.78  0.80  0.87  (2.5) (10.3)
Allowance for loan losses to nonperforming loans 627.63  337.95  129.6  85.7  384.3 
           
CAPITAL RATIOS          
Investar Holding Corporation:          
Total equity to total assets 12.30% 12.62% 10.01% (2.5)% 22.9%
Tangible equity to tangible assets(1) 12.07  12.38  9.75  (2.5) 23.8 
Tier 1 leverage ratio 12.71  12.97  10.46  (2.0) 21.5 
Common equity tier 1 capital ratio(2) 14.41  14.84  11.11  (2.9) 29.7 
Tier 1 capital ratio(2) 14.75  15.20  11.47  (3.0) 28.6 
Total capital ratio(2) 17.22  17.77  12.19  (3.1) 41.3 
Investar Bank:          
Tier 1 leverage ratio 13.96  14.23  10.26  (1.9) 36.1 
Common equity tier 1 capital ratio(2) 16.20  16.68  11.25  (2.9) 44.0 
Tier 1 capital ratio(2) 16.20  16.68  11.25  (2.9) 44.0 
Total capital ratio(2) 16.91  17.41  11.97  (2.9) 41.3 
           
           
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for June 30, 2017
 


INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
       
  June 30, 2017 March 31, 2017 June 30, 2016
ASSETS      
Cash and due from banks $11,720  $8,043  $9,958 
Interest-bearing balances due from other banks 23,238  18,600  27,175 
Federal funds sold 3    1 
Cash and cash equivalents 34,961  26,643  37,134 
       
Available for sale securities at fair value (amortized cost of $185,121, $176,363, and $149,986, respectively) 183,584  174,139  151,841 
Held to maturity securities at amortized cost (estimated fair value of $19,418, $19,422, and $25,810, respectively) 19,460  19,648  25,656 
Loans held for sale     46,717 
Loans, net of allowance for loan losses of $7,320, $7,243, and $7,091, respectively 925,640  894,905  810,379 
Other equity securities 7,025  6,320  7,371 
Bank premises and equipment, net of accumulated depreciation of $7,497, $7,117, and $6,017, respectively 31,510  31,434  30,147 
Other real estate owned, net 3,830  4,045  279 
Accrued interest receivable 3,197  3,243  2,840 
Deferred tax asset 2,343  2,601  1,459 
Goodwill and other intangible assets, net 3,213  3,224  3,254 
Bank-owned life insurance 7,297  7,248  7,101 
Other assets 3,466  2,385  2,752 
Total assets $1,225,526  $1,175,835  $1,126,930 
       
LIABILITIES      
Deposits      
Noninterest-bearing $130,625  $112,514  $109,828 
Interest-bearing 764,200  756,040  757,377 
Total deposits 894,825  868,554  867,205 
Advances from Federal Home Loan Bank 109,285  82,413  93,599 
Repurchase agreements 36,745  36,361  28,854 
Subordinated debt 18,145  18,133   
Junior subordinated debt 3,609  3,609  3,609 
Other borrowings   78   
Accrued taxes and other liabilities 12,121  18,351  20,900 
Total liabilities 1,074,730  1,027,499  1,014,167 
       
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; 8,815,119, 8,805,810, and 7,214,734 shares outstanding, respectively 8,815  8,806  7,215 
Surplus 113,246  112,927  82,854 
Retained earnings 29,644  27,916  22,507 
Accumulated other comprehensive loss (909) (1,313) 187 
Total stockholders’ equity 150,796  148,336  112,763 
  Total liabilities and stockholders’ equity $1,225,526  $1,175,835  $1,126,930 


 
INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(Unaudited)
           
  For the three months ended For the six months ended
  June 30, 2017 March 31, 2017 June 30, 2016 June 30, 2017 June 30, 2016
           
INTEREST INCOME          
Interest and fees on loans $10,559  $10,004  $9,781  $20,563  $19,266 
Interest on investment securities 1,199  1,029  891  2,228  1,747 
Other interest income 86  60  47  146  84 
Total interest income 11,844  11,093  10,719  22,937  21,097 
           
INTEREST EXPENSE          
Interest on deposits 1,827  1,853  1,763  3,680  3,278 
Interest on borrowings 715  380  298  1,095  614 
Total interest expense 2,542  2,233  2,061  4,775  3,892 
Net interest income 9,302  8,860  8,658  18,162  17,205 
           
Provision for loan losses 375  350  800  725  1,254 
Net interest income after provision for loan losses 8,927  8,510  7,858  17,437  15,951 
           
NONINTEREST INCOME          
Service charges on deposit accounts 96  97  88  193  185 
Gain on sale of investment securities, net 109  106  144  215  224 
Gain on sale of fixed assets, net 1  23  1,252  24  1,252 
(Loss) gain on sale of other real estate owned, net (10) 5  10  (5) 11 
Gain on sale of loans, net         313 
Servicing fees and fee income on serviced loans 378  423  537  801  1,128 
Other operating income 227  231  225  458  430 
Total noninterest income 801  885  2,256  1,686  3,543 
Income before noninterest expense 9,728  9,395  10,114  19,123  19,494 
           
NONINTEREST EXPENSE          
Depreciation and amortization 391  376  369  767  739 
Salaries and employee benefits 4,109  3,950  3,890  8,059  7,763 
Occupancy 245  264  242  509  478 
Data processing 355  368  367  723  741 
Marketing 119  28  102  147  214 
Professional fees 231  232  375  463  654 
Customer reimbursements     584    584 
Acquisition expenses 80  145    225   
Other operating expenses 1,398  1,321  1,175  2,719  2,315 
Total noninterest expense 6,928  6,684  7,104  13,612  13,488 
Income before income tax expense 2,800  2,711  3,010  5,511  6,006 
Income tax expense 877  847  1,005  1,724  2,011 
Net income $1,923  $1,864  $2,005  $3,787  $3,995 
           
EARNINGS PER SHARE          
Basic earnings per share $0.22  $0.26  $0.28  $0.48  $0.56 
Diluted earnings per share $0.22  $0.26  $0.28  $0.47  $0.55 
Cash dividends declared per common share $0.02  $0.02  $0.01  $0.04  $0.02 


 
INVESTAR HOLDING CORPORATION
EARNINGS PER SHARE
(Amounts in thousands, except share data)
(Unaudited)
           
  For the three months ended For the six months ended
  June 30, 2017 March 31, 2017 June 30, 2016 June 30, 2017 June 30, 2016
           
Net income $1,923  $1,864  $2,005  $3,787  $3,995 
Weighted average number of common shares outstanding used in computation of basic earnings per share 8,685,980  7,205,942  7,158,532  7,950,049  7,176,545 
Effect of dilutive securities:          
Restricted stock 27,045  20,604  15,298  20,557  12,705 
Stock options 43,640  26,838  14,715  34,478  14,752 
Stock warrants 23,963  23,485  11,231  22,212  11,249 
Weighted average number of common shares outstanding plus effect of dilutive securities used in computation of diluted earnings per share 8,780,628  7,276,869  7,199,776  8,027,296  7,215,251 
Basic earnings per share $0.22  $0.26  $0.28  $0.48  $0.56 
Diluted earnings per share $0.22  $0.26  $0.28  $0.47  $0.55 


 
INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                   
  For the three months ended
  June 30, 2017 March 31, 2017 June 30, 2016
  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 $914,265  $10,559  4.63% $892,546  $10,004  4.55% $852,475  $9,781  4.60%
Securities:                  
Taxable 165,689  1,013  2.45  150,139  839  2.27  129,126  732  2.27 
Tax-exempt 29,375  186  2.54  30,540  190  2.52  25,105  159  2.54 
Interest-bearing balances with banks 28,423  86  1.21  24,591  60  0.99  21,654  47  0.87 
Total interest-earning assets 1,137,752  11,844  4.18  1,097,816  11,093  4.10  1,028,360  10,719  4.18 
Cash and due from banks 8,213      8,546      7,647     
Intangible assets 3,217      3,227      3,258     
Other assets 56,919      55,190      54,123     
Allowance for loan losses (7,223)     (7,125)     (6,784)    
Total assets $1,198,878      $1,157,654      $1,086,604     
                   
Liabilities and stockholders’ equity                  
Interest-bearing liabilities:                  
Deposits:                  
Interest-bearing demand deposits $291,902  $524  0.72  $291,855  $488  0.68  $247,052  $393  0.64 
Savings deposits 51,474  83  0.65  53,237  86  0.66  52,728  88  0.67 
Time deposits 402,271  1,220  1.22  433,170  1,279  1.20  439,898  1,282  1.17 
Total interest-bearing deposits 745,647  1,827  0.98  778,262  1,853  0.97  739,678  1,763  0.96 
Short-term borrowings 137,848  350  1.02  120,923  282  0.95  103,274  229  0.89 
Long-term debt 39,285  365  3.73  21,175  98  1.88  23,434  69  1.18 
Total interest-bearing liabilities 922,780  2,542  1.10  920,360  2,233  0.98  866,386  2,061  0.95 
Noninterest-bearing deposits 116,714      110,410      95,537     
Other liabilities 9,671      9,387      12,646     
Stockholders’ equity 149,713      117,497      112,035     
Total liability and stockholders’ equity $1,198,878      $1,157,654      $1,086,604     
Net interest income/net interest margin   $9,302  3.28%   $8,860  3.27%   $8,658  3.38%


 
INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
             
             
  For the six months ended
  June 30, 2017 June 30, 2016
  Average
Balance
 Interest
Income/
Expense
 Yield/ Rate Average
Balance
 Interest
Income/
Expense
 Yield/ Rate
Assets            
Interest-earning assets:            
Loans $903,466  $20,563  4.59% $842,420  $19,266  4.59%
Securities:            
Taxable 157,957  1,852  2.36  121,286  1,444  2.39 
Tax-exempt 29,955  376  2.53  23,652  303  2.57 
Interest-bearing balances with banks 26,517  146  1.12  21,210  84  0.79 
Total interest-earning assets 1,117,895  22,937  4.14  1,008,568  21,097  4.20 
Cash and due from banks 8,379      7,435     
Intangible assets 3,222      3,219     
Other assets 56,058      53,123     
Allowance for loan losses (7,174)     (6,546)    
Total assets $1,178,380      $1,065,799     
             
Liabilities and stockholders’ equity            
Interest-bearing liabilities:            
Deposits:            
Interest-bearing demand $291,878  $1,011  0.70  $243,448  $773  0.64 
Savings deposits 52,350  169  0.65  52,936  177  0.67 
Time deposits 417,635  2,500  1.21  411,868  2,328  1.13 
Total interest-bearing deposits 761,863  3,680  0.97  708,252  3,278  0.93 
Short-term borrowings 129,432  633  0.99  118,056  473  0.80 
Long-term debt 30,280  462  3.08  25,050  141  1.13 
Total interest-bearing liabilities 921,575  4,775  1.04  851,358  3,892  0.92 
Noninterest-bearing deposits 113,579      91,428     
Other liabilities 9,532      11,559     
Stockholders’ equity 133,694      111,454     
Total liability and stockholders’ equity $1,178,380      $1,065,799     
Net interest income/net interest margin   $18,162  3.28%   $17,205  3.42%


 
INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
       
       
  June 30, 2017 March 31, 2017 June 30, 2016
Tangible common equity      
Total stockholders’ equity $150,796  $148,336  $112,763 
Adjustments:      
Goodwill 2,684  2,684  2,684 
Core deposit intangible 429  440  470 
Trademark intangible 100  100  100 
Tangible common equity $147,583  $145,112  $109,509 
Tangible assets      
Total assets $1,225,526  $1,175,835  $1,126,930 
Adjustments:      
Goodwill 2,684  2,684  2,684 
Core deposit intangible 429  440  470 
Trademark intangible 100  100  100 
Tangible assets $1,222,313  $1,172,611  $1,123,676 
       
Common shares outstanding 8,815,119  8,805,810  7,214,734 
Tangible equity to tangible assets 12.07% 12.38% 9.75%
Book value per common share $17.11  $16.85  $15.63 
Tangible book value per common share 16.74  16.48  15.18 
          


INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
       
  Three months ended
  June 30, 2017 March 31, 2017 June 30, 2016
Net interest income(a)$9,302  $8,860  $8,658 
Provision for loan losses 375  350  800 
Net interest income after provision for loan losses 8,927  8,510  7,858 
       
Noninterest income(b)801  885  2,256 
Gain on sale of investment securities, net (109) (106) (144)
Gain on sale of other real estate owned, net 10  (5) (10)
Gain on sale of fixed assets, net (1) (23) (1,252)
Gain on sale of loans, net      
Core noninterest income(d)701  751  850 
       
Core earnings before noninterest expense 9,628  9,261  8,708 
       
Total noninterest expense(c)6,928  6,684  7,104 
Acquisition expense (80) (145)  
Severance   (82) (15)
Customer reimbursements     (584)
Core noninterest expense(f)6,848  6,457  6,505 
       
Core earnings before income tax expense 2,780  2,804  2,203 
Core income tax expense(1) 871  876  736 
Core earnings 1,909  1,928  1,467 
       
Core basic earnings per share 0.22  0.27  0.20 
       
Diluted earnings per share (GAAP) $0.22  $0.26  $0.28 
Gain on sale of investment securities, net (0.01) (0.01) (0.01)
Loss (gain) on sale of other real estate owned, net      
Gain on sale of fixed assets, net     (0.11)
Gain on sale of loans, net      
Acquisition expense 0.01  0.01   
Severance   0.01   
Customer reimbursements $  $  0.05 
Core diluted earnings per share $0.22  $0.27  $0.21 
       
Efficiency ratio(c) / (a+b)68.57% 68.59% 65.09%
Core efficiency ratio(f) / (a+d)68.46% 67.18% 68.42%
Core return on average assets(2) 0.64% 0.68% 0.54%
Core return on average equity(2) 5.11% 6.65% 5.25%
Total average assets $1,198,878  $1,157,654  $1,086,604 
Total average stockholders’ equity 149,713  117,497  112,035 
       
       
(1) Core income tax expense is calculated using the actual effective tax rate of 31.3%, 31.2%, and 33.4% for the three months ended June 30, 2017, March 31, 2017, and June 30, 2016, respectively.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.
CONTACT: For further information contact:
Investar Holding Corporation                                                                                                                                                                                                                                                                                   
Chris Hufft
Chief Financial Officer
(225) 227-2215
Chris.Hufft@investarbank.com

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