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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.

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

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