Investar Holding Corporation Announces Record Revenues Following Acquisition

BATON ROUGE, La., Oct. 25, 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 September 30, 2017. The Company reported net income of $2.1 million, or $0.24 per diluted share for the third quarter of 2017, compared to $1.9 million, or $0.22 per diluted share for the quarter ended June 30, 2017, and $2.0 million, or $0.29 per diluted share, for the quarter ended September 30, 2016.

On a non-GAAP basis, core earnings per share in the third quarter of 2017 was $0.29 per basic and diluted share (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).

The Company’s balance sheet and statement of income as of and for the three and nine months ended September 30, 2017 include the impact of the Company’s acquisition of Citizens Bancshares, Inc. (“Citizens”), which was completed on July 1, 2017. As of the acquisition date, Citizens had approximately $250 million in total assets, including $130 million in loans, and approximately $212 million in deposits. The assets acquired and liabilities assumed have been recorded at fair value and are subject to change pending finalization of all valuations.

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

“The third quarter was an exciting quarter for Investar. Following the acquisition of Citizens Bancshares, Inc. and its wholly-owned subsidiary, Citizens Bank on July 1, 2017, our operating teams, including our new Investar family members from Evangeline Parish, worked diligently to successfully integrate the former Citizens Bank, while continuing to provide outstanding customer service. Working together to create synergies promptly after completing a merger is important to our earnings success. This is the first quarter of operations following the Citizens acquisition and the results reflect the positive effect of the acquisition on our balance sheet and income statement. We are pleased with the results and expect to recognize additional benefits from the acquisition going into the next quarter.

We also announced the acquisition of BOJ Bancshares, Inc., the parent company for The Highlands Bank, in Jackson, Louisiana, which we expect to be completed by the end of the fourth quarter of 2017. The acquisition of The Highlands Bank fits our strategy of expansion through extensions of our existing markets. We believe this limits integration risk and allows us to continue to build our brand in existing and surrounding markets. We also believe that the acquisition further positions us to grow the franchise and increase long-term shareholder value. Both we and The Highlands Bank are customer service-focused community banks and look forward to welcoming the customers and employees of The Highlands Bank to the Investar family.

In addition to growth by acquisition, Investar continued to bolster its teams in the third quarter with the addition of four commercial lenders in the Baton Rouge, New Orleans and Lafayette markets, as well as a Community Development Officer in the New Orleans market, and two Treasury Management Sales Officers in the New Orleans and Lafayette markets. We look forward to the knowledge and experience brought to Investar by these team members, as well as the growth in business relationships with our customers.”

Third Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter ended September 30, 2017 totaled $15.6 million, an increase of $3.0 million, or 23.4%, compared to June 30, 2017, and an increase of $3.6 million, or 29.8%, compared to September 30, 2016.
  • Total assets increased to $1.5 billion at September 30, 2017, compared to $1.2 billion at both June 30, 2017 and September 30, 2016.
  • Total loans increased $177.6 million, or 19%, to $1.1 billion at September 30, 2017, compared to $933.0 million at June 30, 2017. Excluding the loans acquired in the Citizens acquisition, or $124.4 million, total loans increased $53.2 million, or 5.7%, to $986.1 million at September 30, 2017, compared to $933.0 million at June 30, 2017.
  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $342.6 million at September 30, 2017, an increase of $58.5 million, or 20.6%, compared to the business lending portfolio of $284.1 million at June 30, 2017, and an increase of $92.3 million, or 36.9%, compared to the business lending portfolio of $250.3 million at September 30, 2016.
  • Nonperforming loans decreased to 0.20% at September 30, 2017, compared to 1.06% at September 30, 2016.
  • Total interest income increased $2.6 million, or 21.9%, for the quarter ended September 30, 2017, compared to the quarter ended June 30, 2017, and increased $3.5 million, or 31.4%, compared to the quarter ended September 30, 2016.
  • Net interest margin increased twelve basis points to 3.40% for the three months ended September 30, 2017, compared to 3.28% for the three months ended June 30, 2017, and increased seventeen basis points from 3.23% for the three months ended September 30, 2016.
  • Cost of deposits decreased seven basis points to 0.91% for the three months ended September 30, 2017, compared to 0.98% for both of the three month periods ended June 30, 2017 and September 30, 2016.
  • The Company successfully completed the conversion of branch and operating systems associated with the Citizens acquisition during the quarter.
  • The dividend payout ratio increased to 12.26% for the quarter ended September 30, 2017, compared to 9.94% for the quarter ended June 30, 2017 and 3.81% compared to the quarter ended September 30, 2016.
  • The Company repurchased 12,056 shares of its common stock through its stock repurchase program at an average price of $21.89 during the quarter ended September 30, 2017.
  • The Company announced it has entered into a definitive agreement (the “Agreement”) to acquire BOJ Bancshares, Inc. (“BOJ”) and its wholly owned subsidiary, The Highlands Bank, in Jackson, Louisiana. The agreement provides for consideration to be paid to the shareholders of BOJ in the form of cash and shares of the Company’s common stock. BOJ shareholders will be entitled to receive an aggregate amount of cash consideration equal to $3.95 million and an aggregate of 799,559 shares of the Company’s common stock, subject to certain adjustments. Assuming no adjustments to the merger consideration under the terms of the Agreement, the transaction is valued at approximately $22.78 million based upon the closing price of Investar’s common stock of $23.55 on October 17, 2017. It is expected that shareholders of BOJ will own approximately 8% of the combined company following the acquisition.

Loans

Total loans were $1.1 billion at September 30, 2017, an increase of $177.6 million, or 19.0%, compared to June 30, 2017, and an increase of $263.7 million, or 31.1%, compared to September 30, 2016. Included in total loans at September 30, 2017 is $124.4 million, or 11.2% of the total loan portfolio, of loans acquired from Citizens. Exclusive of acquired loans, total loans at September 30, 2017 increased $53.2 million, or 5.7%, compared to June 30, 2017, and $139.3 million, or 16.4%, compared to September 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
  9/30/2017 6/30/2017 9/30/2016 $ % $ % 9/30/2017 9/30/2016
Mortgage loans on real estate                  
Construction and development    $122,501  $109,627  $92,355  $12,874  11.7% $30,146  32.6% 11.0% 10.9%
1-4 Family 252,003  177,979  175,392  74,024  41.6  76,611  43.7  22.7  20.7 
Multifamily 50,770  46,109  42,560  4,661  10.1  8,210  19.3  4.6  5.0 
Farmland 14,130  8,006  8,281  6,124  76.5  5,849  70.6  1.3  1.0 
Commercial real estate                  
Owner-occupied 217,369  185,226  172,952  32,143  17.4  44,417  25.7  19.6  20.5 
Nonowner-occupied 245,053  223,297  192,270  21,756  9.7  52,783  27.5  22.0  22.7 
Commercial and industrial 125,230  98,837  77,312  26,393  26.7  47,918  62.0  11.3  9.1 
Consumer 83,465  83,879  85,706  (414) (0.5) (2,241) (2.6) 7.5  10.1 
Total loans 1,110,521  932,960  846,828  177,561  19.0% 263,693  31.1% 100% 100%
Loans held for sale     40,553      (40,553) (100.0)    
Total gross loans $1,110,521  $932,960  $887,381  $177,561  19.0% $223,140  25.1%    

One to four family loans were $252.0 million at September 30, 2017, an increase of $74.0 million, or 41.6%, compared to $178.0 million at June 30, 2017, and an increase of $76.6 million, or 43.7%, compared to September 30, 2016. The increase in the 1-4 family portfolio is primarily a result of the approximately $61.5 million 1-4 family loans acquired from Citizens.

At September 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 $342.6 million, an increase of $58.5 million, or 20.6%, compared to the business lending portfolio of $284.1 million at June 30, 2017, and an increase of $92.3 million, or 36.9%, compared to the business lending portfolio of $250.3 million at September 30, 2016. Included in the business lending portfolio is $34.0 million, or 9.9% of the total portfolio, of loans acquired from Citizens. The Company continues to focus on relationship banking and growing our commercial loan portfolio.

Consumer loans, including indirect auto loans of $64.1 million, totaled $83.5 million at September 30, 2017, a decrease of $0.4 million, or 0.5%, compared to $83.9 million, including indirect auto loans of $70.8 million, at June 30, 2017, and a decrease of $42.8 million, or 33.9%, compared to $126.3 million at September 30, 2016. Excluding the consumer loans acquired from Citizens, or $8.5 million, consumer loans decreased $8.9 million, or 10.6%, to $75.0 million at September 30, 2017. The decrease in consumer loans, excluding acquired loans, when compared to the linked quarter is attributable to the scheduled paydowns of the consumer loans.

Credit Quality

Nonperforming loans were $2.2 million, or 0.20% of total loans, at September 30, 2017, an increase of $1.0 million, or 86.5%, compared to $1.2 million, or 0.13% of total loans, at June 30, 2017, and a decrease of $6.8 million, or 75.7%, compared to $9.0 million, or 1.06% of total loans, at September 30, 2016. The increase in nonperforming loans at September 30, 2017 compared to June 30, 2017 is mainly attributable to the Citizens acquisition. The decrease in nonperforming loans compared to September 30, 2016 is mainly attributable to one $4.7 million owner-occupied commercial real estate relationship and one $2.7 million commercial and industrial loan relationship that were not performing at September 30, 2016.

Exclusive of acquired loans, the allowance for loan losses was $7.6 million, or 541.62% and 0.77% of nonperforming loans and total loans, respectively, at September 30, 2017, compared to $7.3 million, or 627.63% and 0.78% of nonperforming loans and total loans, respectively, at June 30, 2017, and $7.4 million, or 82.44% and 0.87% of nonperforming loans and total loans, respectively, at September 30, 2016. The increase in the allowance as a percentage of nonperforming loans at September 30, 2017 compared to September 30, 2016 is a result of the $6.8 million decrease in nonperforming loans discussed above. The decrease in the allowance for loan losses as a percentage of total loans at September 30, 2017 compared to September 30, 2016 is due to an overall increase in the legacy portfolio of the Company of $139.3 million, or 16.4%, while the allowance for loan losses increased $0.2 million, or 3.0%.

The provision for loan losses was $0.4 million for both the second and third quarters of 2017, a decrease of $0.1 million compared to provision for loan losses of $0.5 million for the quarter ended September 30, 2016.

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 approximately one percent of the total loan portfolio at September 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 September 30, 2017 were $1.1 billion, an increase of $206.5 million, or 23.1%, compared to June 30, 2017, and an increase of $194.3 million, or 21.4%, compared to September 30, 2016. The Company acquired $212.2 million in deposits from the Citizens acquisition. Exclusive of acquired deposits, total deposits decreased $5.6 million, or 0.6%, compared to June 30, 2017, and decreased $17.9 million, or 2.0%, compared to September 30, 2016. The decrease in deposits is primarily due to a decrease in time deposits of $8.5 million, or 2.1%, compared to June 30, 2017, and a decrease of $79.7 million, or 17%, compared to September 30, 2016, resulting from the Bank’s strategy to decrease its dependence on non-retail certificates of deposit.

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
  9/30/2017 6/30/2017 9/30/2016 $ % $ % 9/30/2017 9/30/2016
Noninterest-bearing demand
deposits
 $175,130  $130,625  $112,414  $44,505  34.1% $62,716  55.8% 15.9%  12.4%
NOW accounts 192,503  171,244  150,551  21,259  12.4  41,952  27.9  17.5  16.6 
Money market deposit accounts      147,096  143,957  123,487  3,139  2.2  23,609  19.1  13.3  13.6 
Savings accounts 103,017  50,945  51,332  52,072  102.2  51,685  100.7  9.4  5.7 
Time deposits 483,616  398,054  469,267  85,562  21.5  14,349  3.1  43.9  51.7 
Total deposits $1,101,362  $894,825  $907,051  $206,537  23.1% $194,311  21.4% 100.0% 100.0%


Financial Results for the Quarter Ended September 30, 2017

The financial results for the quarter ended September 30, 2017 reflect the acquisition of Citizens beginning July 1, 2017. The acquisition of Citizens added three branch locations in Evangeline Parish with total assets of $250 million, total loans of $130 million, and total deposits of $212 million. During the quarter ended September 30, 2017, the Company recognized $0.8 million in expenses related to the acquisition of Citizens.

Net Interest Income

Net interest income for the third quarter of 2017 totaled $11.5 million, an increase of $2.2 million, or 24.0%, compared to the second quarter of 2017, and an increase of $2.8 million, or 31.8%, compared to the third quarter of 2016. The increase in net interest income was primarily driven by growth in loan and securities balances partially offset by an increase in interest expense as we funded the increase in earning assets with increased deposits and borrowings. Net interest income for the third quarter of 2017 increased $2.7 million and $0.8 million due to increases in the volume and yield, respectively, of interest-earning assets, offset slightly by decreases of $0.4 million and $0.3 million due to the increases in the volume and rate, respectively, of interest-bearing liabilities compared to the third quarter of 2016.

The Company’s net interest margin was 3.40% for the quarter ended September 30, 2017 compared to 3.28% for the quarter ended June 30, 2017 and 3.23% for the quarter ended September 30, 2016. The yield on interest-earning assets was 4.26% for the quarter ended September 30, 2017 compared to 4.18% for the quarter ended June 30, 2017 and 4.06% for the quarter ended September 30, 2016.

The cost of deposits decreased seven basis points to 0.91% for the quarter ended September 30, 2017 compared to 0.98% for both the quarters ended June 30, 2017 and September 30, 2016. The decrease in the cost of deposits when compared to the quarters ended June 30, 2017 and September 30, 2016 is a result of a decrease in the cost of savings deposits and time deposits. The overall costs of funds for the quarter ended September 30, 2017 decreased five basis points to 1.05% compared to 1.10% for the quarter ended June 30, 2017 and increased seven basis points compared to 0.98% for the quarter ended September 30, 2016. The decrease in the cost of deposits and cost of funds at September 30, 2017 compared to June 30, 2017 is mainly a result of lower cost deposits and long term borrowings acquired from Citizens. The increase in the cost of funds at September 30, 2017 compared to September 30, 2016 is mainly attributable to the increase in long term borrowings 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.

Noninterest Income

Noninterest income for the third quarter of 2017 totaled $1.2 million, an increase of $0.4 million, or 45.7%, compared to the second quarter of 2017, and an increase of $0.1 million, or 13.4%, compared to the third quarter of 2016. The increase in noninterest income when compared to the quarter ended June 30, 2017 is due to a $0.2 million increase in both service charges on deposit accounts and gain on sale of fixed assets, offset by a $0.1 million decrease in the gain on sale of investment securities.

Noninterest Expense

Noninterest expense for the third quarter of 2017 totaled $9.1 million, an increase of $2.2 million, or 31.7%, compared to the second quarter of 2017, and an increase of $2.6 million, or 39.3%, compared to the third quarter of 2016. The increase in noninterest expense compared to the quarters ended June 30, 2017 and September 30, 2016 is mainly attributable to the increases in both salaries and employee benefits and acquisition expense. The increase in salaries and employee benefits is a result of the increase in employees following the Citizens acquisition, as well as the addition of four commercial lenders in the Baton Rouge, New Orleans and Lafayette markets, and a Community Development Officer and Treasury Management Sales Officer in the New Orleans market during the quarter ended September 30, 2017. The increase in acquisition expense was a result of the Citizens acquisition that was completed on July 1, 2017.

Noninterest expense for the third quarter of 2017 includes a full quarter of expenses of approximately $0.4 million for both de novo branches, one in each of the Baton Rouge (Gonzales) and New Orleans (Elmwood) markets, that were opened at the end of the second quarter of 2017.

Basic Earnings Per Share and Diluted Earnings Per Share

The Company reported both basic and diluted earnings per share of $0.24 for the three months ended September 30, 2017, a decrease of $0.05 compared to basic and diluted earnings per share of $0.29 for the three months ended September 30, 2016. The decrease in both basic and diluted earnings per share is attributable to the Company’s issuance of approximately 1.6 million common shares as part of a public offering on March 22, 2017, as well as the $0.8 million in acquisition expenses related to the Citizens acquisition.

Taxes

The Company recorded income tax expense of $1.0 million for the quarter ended September 30, 2017, which equates to an effective tax rate of 32.6%.

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 September 30, 2017, the Company had 227 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 income,” “core earnings before noninterest expense,” “core noninterest expense,” “core earnings before income tax expense,” “core income tax expense,” “core earnings,” “core efficiency ratio,” “core return on average assets,” “core return on average equity,” “core basic earnings per share,” and “core diluted earnings per share.” Management believes these non-GAAP financial measures provide information useful to investors in understanding the Company’s financial results, and the Company believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting the Company’s business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and the Company strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. A reconciliation of the non-GAAP financial measures disclosed in this press release to the comparable GAAP financial measures is included at the end of the financial statement tables.

Forward-Looking 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;
  • 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;
  • the ability to effectively integrate employees, customers, operations and branches from our recent acquisition of Citizens; and
  • the satisfaction of the conditions to closing the pending acquisition of BOJ Bancshares, Inc. and the ability to subsequently integrate it effectively.

These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Item 1A. “Risk Factors” and in the “Special Note Regarding Forward-Looking Statements” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission.

For further information contact:
Investar Holding Corporation
Chris Hufft
Chief Financial Officer
(225) 227-2215
Chris.Hufft@investarbank.com

INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
           
  As of and for the three months ended
  9/30/2017 6/30/2017 9/30/2016 Linked Quarter Year/Year
EARNINGS DATA          
Total interest income $14,442  $11,844  $10,993  21.9 % 31.4 %
Total interest expense 2,904  2,542  2,240  14.2  29.6 
Net interest income 11,538  9,302  8,753  24.0  31.8 
Provision for loan losses 420  375  450  12.0  (6.7)
Total noninterest income 1,167  801  1,029  45.7  13.4 
Total noninterest expense 9,122  6,928  6,548  31.7  39.3 
Income before income taxes 3,163  2,800  2,784  13.0  13.6 
Income tax expense 1,032  877  747  17.7  38.2 
Net income $2,131  $1,923  $2,037  10.8  4.6 
           
AVERAGE BALANCE SHEET DATA          
Total assets $1,437,929  $1,198,878  $1,134,591  19.9 % 26.7 %
Total interest-earning assets 1,346,455  1,137,752  1,075,145  18.3  25.2 
Total loans 1,073,800  914,265  840,028  17.4  27.8 
Total gross loans 1,073,800  914,265  874,272  17.4  22.8 
Total interest-bearing deposits 927,014  745,647  784,591  24.3  18.2 
Total interest-bearing liabilities 1,101,112  922,780  905,521  19.3  21.6 
Total deposits 1,100,226  862,361  887,327  27.6  24.0 
Total stockholders’ equity 152,186  149,713  113,056  1.7  34.6 
           
PER SHARE DATA          
Earnings:          
Basic earnings per share $0.24  $0.22  $0.29  9.1 % (17.2)%
Diluted earnings per share 0.24  0.22  0.29  9.1  (17.2)
Core Earnings(1):          
Core basic earnings per share(1) 0.29  0.22  0.27  31.8  7.4 
Core diluted earnings per share(1) 0.29  0.22  0.27  31.8  7.4 
Book value per share 17.56  17.11  15.93  2.6  10.2 
Tangible book value per share(1) 16.04  16.74  15.47  (4.2) 3.7 
Common shares outstanding 8,704,562  8,815,119  7,131,186  (1.3) 22.1 
           
PERFORMANCE RATIOS          
Return on average assets 0.59 % 0.64 % 0.71% (7.8)% (16.9)%
Core return on average assets(1) 0.70  0.64  0.66  9.4  6.1 
Return on average equity 5.55  5.15  7.15  7.8  (22.4)
Core return on average equity(1) 6.61  5.11  6.63  29.4  (0.3)
Net interest margin 3.40  3.28  3.23  3.7  5.3 
Net interest income to average assets 3.18  3.11  3.06  2.3  3.9 
Noninterest expense to average assets 2.52  2.32  2.29  8.6  10.0 
Efficiency ratio(2) 71.80  68.57  66.94  4.7  7.3 
Core efficiency ratio(1) 66.49  68.46  68.37  (2.9) (2.7)
Dividend payout ratio 12.26  9.94  3.81  23.3  221.8 
Net charge-offs to average loans 0.01  0.03  0.02  (66.7) (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
  9/30/2017 6/30/2017 9/30/2016 Linked Quarter Year/Year
ASSET QUALITY RATIOS          
Nonperforming assets to total assets 0.41% 0.41% 0.80% % (48.8)%
Nonperforming loans to total loans 0.20  0.13  1.06  53.8  (81.1)
Allowance for loan losses to total loans,
excluding acquired loans
 0.77  0.78  0.87  (1.3) (11.5)
Allowance for loan losses to nonperforming loans,
excluding acquired loans 
 541.62  627.63  82.4  (13.7) 557.3 
           
CAPITAL RATIOS          
Investar Holding Corporation:          
Total equity to total assets 10.35% 12.30% 9.84% (15.9)% 5.2%
Tangible equity to tangible assets(1) 9.54  12.07  9.59  (21.0) (0.5)
Tier 1 leverage ratio 10.13  12.71  10.10  (20.3) 0.3 
Common equity tier 1 capital ratio(2) 11.86  14.71  11.02  (19.4) 7.6 
Tier 1 capital ratio(2) 12.15  15.05  11.37  (19.3) 6.9 
Total capital ratio(2) 14.32  17.57  12.11  (18.5) 18.2 
Investar Bank:          
Tier 1 leverage ratio 11.20  13.96  9.94  (19.8) 12.7 
Common equity tier 1 capital ratio(2) 13.46  16.53  11.19  (18.6) 20.3 
Tier 1 capital ratio(2) 13.46  16.53  11.19  (18.6) 20.3 
Total capital ratio(2) 14.10  17.26  11.93  (18.3) 18.2 
           
           
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for September 30, 2017


 
 
INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
       
  September 30, 2017   June 30, 2017  September 30, 2016
ASSETS      
Cash and due from banks $17,942  $11,720  $10,172 
Interest-bearing balances due from other banks 30,566  23,238  35,811 
Federal funds sold   3  172 
Cash and cash equivalents 48,508  34,961  46,155 
       
Available for sale securities at fair value (amortized cost of $228,980,
$185,121, and $147,609, respectively)
 227,562  183,584  148,981 
Held to maturity securities at amortized cost (estimated fair value of $19,311,
$19,418, and $21,625, respectively)
 19,306  19,460  21,454 
Loans held for sale     40,553 
Loans, net of allowance for loan losses of $7,605, $7,320, and $7,383,
respectively
 1,102,916  925,640  839,445 
Other equity securities 7,744  7,025  7,388 
Bank premises and equipment, net of accumulated depreciation of $7,362,
$7,497, and $6,380, respectively
 33,705  31,510  31,835 
Other real estate owned, net 3,830  3,830  279 
Accrued interest receivable 4,147  3,197  3,081 
Deferred tax asset 2,604  2,343  1,384 
Goodwill and other intangible assets, net 13,271  3,213  3,244 
Bank-owned life insurance 8,140  7,297  7,150 
Other assets 4,690  3,466  3,256 
Total assets $1,476,423  $1,225,526  $1,154,205 
       
LIABILITIES      
Deposits      
Noninterest-bearing $175,130  $130,625  $112,414 
Interest-bearing 926,232  764,200  794,637 
Total deposits 1,101,362  894,825  907,051 
Advances from Federal Home Loan Bank 162,700  109,285  88,943 
Repurchase agreements 24,892  36,745  23,554 
Subordinated debt 18,157  18,145   
Junior subordinated debt 3,609  3,609  3,609 
Accrued taxes and other liabilities 12,827  12,121  17,472 
Total liabilities 1,323,547  1,074,730  1,040,629 
       
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;
8,704,562, 8,815,119, and 7,131,186 shares outstanding, respectively
 8,705  8,815  7,131 
Surplus 113,458  113,246  81,827 
Retained earnings 31,508  29,644  24,465 
Accumulated other comprehensive loss (795) (909) 153 
Total stockholders’ equity 152,876  150,796  113,576 
  Total liabilities and stockholders’ equity $1,476,423  $1,225,526  $1,154,205 


 
 
INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)
           
  For the three months ended For the nine months ended
  September 30,
2017
 June 30, 2017 September 30,
2016
 September 30,
2017
 September 30,
2016
INTEREST INCOME          
Interest and fees on loans $12,893  $10,559  $10,011  $33,456  $29,277 
Interest on investment securities 1,399  1,199  920  3,627  2,667 
Other interest income 150  86  62  296  146 
Total interest income 14,442  11,844  10,993  37,379  32,090 
           
INTEREST EXPENSE          
Interest on deposits 2,137  1,827  1,934  5,817  5,212 
Interest on borrowings 767  715  306  1,862  920 
Total interest expense 2,904  2,542  2,240  7,679  6,132 
Net interest income 11,538  9,302  8,753  29,700  25,958 
           
Provision for loan losses 420  375  450  1,145  1,704 
Net interest income after provision for loan losses    11,118  8,927  8,303  28,555  24,254 
           
NONINTEREST INCOME          
Service charges on deposit accounts 281  96  79  474  264 
Gain on sale of investment securities, net 27  109  204  242  428 
Gain on sale of fixed assets, net 160  1    184  1,252 
Gain (loss) on sale of other real estate owned, net 37  (10)   32  11 
Gain on sale of loans, net         313 
Servicing fees and fee income on serviced loans 352  378  510  1,153  1,638 
Other operating income 310  227  236  768  666 
Total noninterest income 1,167  801  1,029  2,853  4,572 
Income before noninterest expense 12,285  9,728  9,332  31,408  28,826 
           
NONINTEREST EXPENSE          
Depreciation and amortization 542  391  371  1,309  1,110 
Salaries and employee benefits 5,136  4,109  3,945  13,195  11,708 
Occupancy 317  245  265  826  743 
Data processing 446  355  374  1,169  1,115 
Marketing 124  119  102  271  316 
Professional fees 263  231  312  726  966 
Customer reimbursements         584 
Acquisition expenses 824  80    1,049   
Other operating expenses 1,470  1,398  1,179  4,189  3,494 
Total noninterest expense 9,122  6,928  6,548  22,734  20,036 
Income before income tax expense 3,163  2,800  2,784  8,674  8,790 
Income tax expense 1,032  877  747  2,756  2,758 
Net income $2,131  $1,923  $2,037  $5,918  $6,032 
           
EARNINGS PER SHARE          
Basic earnings per share $0.24  $0.22  $0.29  $0.72  $0.85 
Diluted earnings per share $0.24  $0.22  $0.29  $0.71  $0.84 
Cash dividends declared per common share $0.03  $0.02  $0.01  $0.07  $0.03 


 
 
INVESTAR HOLDING CORPORATION
EARNINGS PER SHARE
(Amounts in thousands, except share data)
(Unaudited)
           
  For the three months ended For the nine months ended
  September 30,
2017
 June 30, 2017 September 30,
2016
 September 30,
2017
 September 30,
2016
Net income $2,131  $1,923  $2,037  $5,918  $6,032 
Weighted average number of common shares outstanding
used in computation of basic earnings per share
 8,702,559  8,685,980  7,059,953  8,203,645  7,137,398 
Effect of dilutive securities:          
Restricted stock 27,741  27,045  15,546  18,756  8,991 
Stock options 46,632  43,640  15,369  10,572  14,920 
Stock warrants 20,585  23,963  11,575  47,022  11,360 
Weighted average number of common shares outstanding   
plus effect of dilutive securities used in computation of
diluted earnings per share
 8,797,517  8,780,628  7,102,443  8,279,995  7,172,669 
Basic earnings per share $0.24  $0.22  $0.29  $0.72  $0.85 
Diluted earnings per share $0.24  $0.22  $0.29  $0.71  $0.84 


 
 
INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                   
  For the three months ended
  September 30, 2017 June 30, 2017 September 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 $1,073,800  $12,893  4.76% $914,265  $10,559  4.63% $874,272  $10,011  4.54%
Securities:                  
Taxable 203,407  1,193  2.33  165,689  1,013  2.45  136,047  728  2.12 
Tax-exempt 34,659  206  2.36  29,375  186  2.54  30,733  192  2.48 
Interest-bearing balances with banks 34,589  150  1.72  28,423  86  1.21  34,093  62  0.72 
Total interest-earning assets 1,346,455  14,442  4.26  1,137,752  11,844  4.18  1,075,145  10,993  4.06 
Cash and due from banks 22,626      8,213      7,138     
Intangible assets 13,283      3,217      3,248     
Other assets 63,007      56,919      56,273     
Allowance for loan losses (7,442)     (7,223)     (7,213)    
Total assets $1,437,929      $1,198,878      $1,134,591     
                   
Liabilities and stockholders’ equity                  
Interest-bearing liabilities:                  
Deposits:                  
Interest-bearing demand deposits $337,846  $604  0.71  $291,902  $524  0.72  $262,841  $433  0.65 
Savings deposits 102,331  139  0.54  51,474  83  0.65  51,924  88  0.67 
Time deposits 486,837  1,394  1.14  402,271  1,220  1.22  469,826  1,413  1.19 
Total interest-bearing deposits 927,014  2,137  0.91  745,647  1,827  0.98  784,591  1,934  0.98 
Short-term borrowings 122,456  367  1.19  137,848  350  1.02  98,286  237  0.96 
Long-term debt 51,642  400  3.07  39,285  365  3.73  22,644  69  1.21 
Total interest-bearing liabilities 1,101,112  2,904  1.05  922,780  2,542  1.10  905,521  2,240  0.98 
Noninterest-bearing deposits 173,212      116,714      102,736     
Other liabilities 11,419      9,671      13,278     
Stockholders’ equity 152,186      149,713      113,056     
Total liability and stockholders’ equity $1,437,929      $1,198,878      $1,134,591     
Net interest income/net interest margin      $11,538  3.40%   $9,302  3.28%   $8,753  3.23%


 
 
INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
             
             
  For the nine months ended
  September 30, 2017 September 30, 2016
  Average
Balance
 Interest
Income/
Expense
 Yield/ Rate Average
Balance
 Interest
Income/
Expense
 Yield/ Rate
Assets            
Interest-earning assets:            
Loans $960,868  $33,456  4.66% $853,116  $29,277  4.57%
Securities:            
Taxable 173,273  3,044  2.35  125,982  2,172  2.30 
Tax-exempt 31,540  583  2.47  25,920  495  2.54 
Interest-bearing balances with banks 29,238  296  1.35  25,608  146  0.76 
Total interest-earning assets 1,194,919  37,379  4.18  1,030,626  32,090  4.15 
Cash and due from banks 13,180      7,335     
Intangible assets 6,612      3,228     
Other assets 58,401      54,478     
Allowance for loan losses (7,265)     (6,770)    
Total assets $1,265,847      $1,088,897     
             
Liabilities and stockholders’ equity            
Interest-bearing liabilities:            
Deposits:            
Interest-bearing demand $307,369  $1,616  0.70  $249,960  $1,205  0.64 
Savings deposits 69,194  308  0.60  52,596  265  0.67 
Time deposits 440,956  3,893  1.18  431,328  3,742  1.16 
Total interest-bearing deposits 817,519  5,817  0.95  733,884  5,212  0.95 
Short-term borrowings 127,081  1,000  1.05  111,418  710  0.85 
Long-term debt 37,479  862  3.08  24,243  210  1.15 
Total interest-bearing liabilities 982,079  7,679  1.05  869,545  6,132  0.94 
Noninterest-bearing deposits 133,675      95,225     
Other liabilities 10,166      12,135     
Stockholders’ equity 139,927      111,992     
Total liability and stockholders’ equity $1,265,847      $1,088,897     
Net interest income/net interest margin   $29,700  3.32%   $25,958  3.36%


 
 
INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
       
       
  September 30, 2017 June 30, 2017 September 30, 2016
Tangible common equity      
Total stockholders’ equity $152,876  $150,796  $113,576 
Adjustments:      
Goodwill 11,357  2,684  2,684 
Core deposit intangible 1,814  429  460 
Trademark intangible 100  100  100 
Tangible common equity $139,605  $147,583  $110,332 
Tangible assets      
Total assets $1,476,423  $1,225,526  $1,154,205 
Adjustments:      
Goodwill 11,357  2,684  2,684 
Core deposit intangible 1,814  429  460 
Trademark intangible 100  100  100 
Tangible assets $1,463,152  $1,222,313  $1,150,961 
       
Common shares outstanding 8,704,562  8,815,119  7,131,186 
Tangible equity to tangible assets 9.54% 12.07% 9.59%
Book value per common share $17.56  $17.11  $15.93 
Tangible book value per common share    16.04  16.74  15.47 


 
 
INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
       
  Three months ended
  September 30, 2017 June 30, 2017 September 30, 2016
Net interest income(a)$11,538  $9,302  $8,753 
Provision for loan losses 420  375  450 
Net interest income after provision for loan losses 11,118  8,927  8,303 
       
Noninterest income(b)1,167  801  1,029 
Gain on sale of investment securities, net (27) (109) (204)
(Gain) loss on sale of other real estate owned, net (37) 10   
Gain on sale of fixed assets, net (160) (1)  
Core noninterest income(d)943  701  825 
       
Core earnings before noninterest expense 12,061  9,628  9,128 
       
Total noninterest expense(c)9,122  6,928  6,548 
Acquisition expense (824) (80)  
Core noninterest expense(f)8,298  6,848  6,548 
       
Core earnings before income tax expense 3,763  2,780  2,580 
Core income tax expense(1) 1,228  871  692 
Core earnings 2,535  1,909  1,888 
       
Core basic earnings per share 0.29  0.22  0.27 
       
Diluted earnings per share (GAAP) $0.24  $0.22  $0.29 
Gain on sale of investment securities, net   (0.01) (0.02)
Loss (gain) on sale of other real estate owned, net      
Gain on sale of fixed assets, net (0.01)    
Acquisition expense 0.06  0.01   
Core diluted earnings per share $0.29  $0.22  $0.27 
       
Efficiency ratio(c) / (a+b)71.80% 68.57% 66.94%
Core efficiency ratio(f) / (a+d)66.49% 68.46% 68.37%
Core return on average assets(2) 0.70% 0.64% 0.66%
Core return on average equity(2) 6.61% 5.11% 6.63%
Total average assets $1,437,929  $1,198,878  $1,134,591 
Total average stockholders’ equity 152,186  149,713  113,056 
       
       
(1) Core income tax expense is calculated using the actual effective tax rate of 32.6%, 31.3%, and 26.8% for the three months ended September 30, 2017, June 30,
2017, and September 30, 2016, respectively.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.

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