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CST: 17/08/2019 08:46:43   

Investar Holding Corporation Announces 2019 First Quarter Results

114 Days ago

BATON ROUGE, La., April 24, 2019 (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 March 31, 2019. The Company reported net income of $3.9 million, or $0.40 per diluted common share, for the first quarter of 2019, compared to $3.3 million, or $0.34 per diluted common share, for the quarter ended December 31, 2018, and $2.4 million, or $0.25 per diluted common share, for the quarter ended March 31, 2018.

On a non-GAAP basis, core earnings per diluted common share for the first quarter were $0.46 compared to $0.45 for the fourth quarter of 2018 and $0.40 for the quarter ended March 31, 2018. Core earnings exclude certain non-operating items including, but not limited to, acquisition expense, changes in the fair value of equity securities, and discrete tax items (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 months ended March 31, 2019 include the impact of the Company’s acquisition of Mainland Bank (“Mainland”), which was completed on March 1, 2019. As of the acquisition date, Mainland had approximately $127.1 million in total assets, including $82.4 million in loans, and approximately $107.6 million in deposits. The assets acquired and liabilities assumed have been recorded at fair value in the Company’s consolidated balance sheet and are subject to change pending finalization of all valuations.

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

“I am pleased to announce another successful quarter for Investar with favorable earnings, a steady net interest margin, and solid asset quality. On March 1, 2019, we completed our acquisition of Mainland Bank. Following the acquisition, our operating teams successfully completed the operational conversion of Mainland Bank while continuing to provide outstanding service to our customers. Despite the acquisition-related costs we recognized during the quarter, our results reflect the positive effect of the acquisition on our balance sheet and income statement. We look forward to realizing the additional benefits of the acquisition going into the next quarter.

We continue to focus on long-term shareholder value and repurchased 143,774 shares of our common stock at an average price of $23.38 during the quarter. We also continue to focus on quality loans and deposits and improving our return on assets and efficiency ratios, which will assist in delivering on our commitment of growing the franchise and increasing shareholder value.”

First Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter ended March 31, 2019 totaled $22.0 million, an increase of $1.2 million, or 5.8%, compared to the quarter ended December 31, 2018, and an increase of $3.7 million, or 20.3%, compared to the quarter ended March 31, 2018.
  • Total loans increased $94.1 million, or 6.7%, to $1.49 billion at March 31, 2019, compared to $1.40 billion at December 31, 2018, and increased $222.0 million, or 17.4% compared to $1.27 billion at March 31, 2018. Excluding the loans acquired in the Mainland Bank acquisition, or $81.1 million at March 31, 2019, total loans increased $13.0 million, or 0.9%, compared to December 31, 2018, and increased $140.9 million, or 11.1%, compared to March 31, 2018.
  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $562.6 million at March 31, 2019, an increase of $53.5 million, or 10.5%, compared to the business lending portfolio of $509.1 million at December 31, 2018, and an increase of $152.4 million, or 37.2%, compared to the business lending portfolio of $410.2 million at March 31, 2018.
  • Credit quality remains strong with nonperforming loans of 0.40% of total loans at March 31, 2019 compared to 0.42% and 0.44%  at December 31, 2018 and March 31, 2018, respectively.
  • Total deposits increased $171.1 million, or 12.6%, to $1.53 billion at March 31, 2019, compared to $1.36 billion at December 31, 2018, and increased $306.1 million, or 25.0%, compared to $1.23 billion at March 31, 2018. The Company acquired approximately $107.6 million in deposits from Mainland at the time of acquisition on March 1, 2019, and the remaining increase is due to organic growth.
  • Net interest margin remained steady at 3.53% for both of the quarters ended March 31, 2019 and December 31, 2018.
  • The Company repurchased 143,774 shares of its common stock through its stock repurchase program at an average price of $23.38 during the quarter ended March 31, 2019, leaving 242,466 shares authorized for repurchase under its current stock repurchase plan.
  • On March 1, 2019, the Company completed the acquisition of Mainland Bank in Texas City, Texas. The conversion of branch and operating systems was also completed in March. Total consideration for the acquisition was approximately $18.6 million in the form of 763,849 shares of the Company’s common stock.

Loans

Total loans were $1.49 billion at March 31, 2019, an increase of $94.1 million, or 6.7%, compared to December 31, 2018, and an increase of $222.0 million, or 17.4%, compared to March 31, 2018. Excluding the loans acquired in the Mainland Bank acquisition, or $81.1 million at March 31, 2019, total loans increased $13.0 million, or 0.9%, compared to December 31, 2018, and increased $140.9 million, or 11.1%, compared to March 31, 2018. We experienced the majority of our loan growth in the commercial real estate and commercial and industrial portfolios for the quarter ended March 31, 2019 as we remain focused on relationship banking and growing our commercial loan portfolio.

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

                Linked Quarter
Change
  Year/Year Change   Percentage of Total
Loans
    3/31/2019   12/31/2018   3/31/2018   $   %   $   %   3/31/2019   3/31/2018
Mortgage loans on real estate                                    
Construction and development   $ 171,483     $ 157,946     $ 162,337     $ 13,537     8.6 %   $ 9,146     5.6 %   11.5 %   12.8 %
1-4 Family   299,061     287,137     277,978     11,924     4.2     21,083     7.6     20.0     21.8  
Multifamily   57,487     50,501     54,504     6,986     13.8     2,983     5.5     3.9     4.3  
Farmland   24,457     21,356     20,725     3,101     14.5     3,732     18.0     1.6     1.6  
Commercial real estate                                    
Owner-occupied   307,108     298,222     274,216     8,886     3.0     32,892     12.0     20.5     21.5  
Nonowner-occupied   339,637     328,782     279,939     10,855     3.3     59,698     21.3     22.7     22.0  
Commercial and industrial   255,476     210,924     135,965     44,552     21.1     119,511     87.9     17.1     10.7  
Consumer   40,210     45,957     67,286     (5,747 )   (12.5 )   (27,076 )   (40.2 )   2.7     5.3  
Total loans   $ 1,494,919     $ 1,400,825     $ 1,272,950     $ 94,094     6.7 %   $ 221,969     17.4 %   100 %   100 %

At March 31, 2019, 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 $562.6 million, an increase of $53.5 million, or 10.5%, compared to the business lending portfolio of $509.1 million at December 31, 2018, and an increase of $152.4 million, or 37.2%, compared to the business lending portfolio of $410.2 million at March 31, 2018. The increase in the business lending portfolio compared to December 31, 2018 is mainly attributable to the acquisition of Mainland, which included $53.3 million in owner-occupied commercial real estate and commercial and industrial loans. The increase in the business lending portfolio compared to March 31, 2018 is mainly attributable to growth in commercial and industrial loans primarily resulting from increased production of our Commercial and Industrial Division.

Consumer loans, including indirect auto loans of $25.9 million, totaled $40.2 million at March 31, 2019, a decrease of $5.7 million, or 12.5%, compared to $46.0 million, including indirect auto loans of $30.8 million, at December 31, 2018, and a decrease of $27.1 million, or 40.2%, compared to $67.3 million, including indirect auto loans of $48.8 million, at March 31, 2018. The decrease in consumer loans is mainly attributable to the scheduled paydowns of this portfolio and is consistent with our business strategy.

Credit Quality

Nonperforming loans were $6.0 million, or 0.40% of total loans, at March 31, 2019, an increase of $0.1 million compared to $5.9 million, or 0.42% of total loans, at December 31, 2018, and an increase of $0.5 million compared to $5.5 million, or 0.44% of total loans, at March 31, 2018.

The allowance for loan losses was $9.6 million, or 159.93% and 0.64% of nonperforming loans and total loans, respectively, at March 31, 2019, compared to $9.5 million, or 158.94% and 0.67%, respectively, at December 31, 2018, and $8.1 million, or 146.78% and 0.64%, respectively, at March 31, 2018.

The provision for loan losses was $0.3 million for the quarter ended March 31, 2019 compared to $0.6 million for both of the quarters ended December 31, 2018 and March 31, 2018. The decrease in the provision for loan losses is primarily attributable to lower incremental loan growth, excluding acquired loan balances, in the first quarter of 2019 compared to the quarters ended December 31, 2018 and March 31, 2018 as credit quality and other factors impacting our allowance and related provision were relatively unchanged period over period.

Deposits

Total deposits at March 31, 2019 were $1.53 billion, an increase of $171.1 million, or 12.6%, compared to December 31, 2018, and an increase of $306.1 million, or 25.0%, compared to March 31, 2018. The Company acquired approximately $107.6 million in deposits from Mainland at the time of acquisition on March 1, 2019, and the remaining increase is due to organic growth.

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

                Linked Quarter
Change
  Year/Year Change   Percentage of
Total Deposits
    3/31/2019   12/31/2018   3/31/2018   $   %   $   %   3/31/2019   3/31/2018
Noninterest-bearing demand deposits   $ 285,811     $ 217,457     $ 221,855     $ 68,354     31.4 %   $ 63,956     28.8 %   18.6 %   18.1 %
Interest-bearing demand deposits   333,434     295,212     228,269     38,222     12.9     105,165     46.1     21.8     18.6  
Money market deposit accounts   188,373     179,340     145,627     9,033     5.0     42,746     29.4     12.3     11.9  
Savings accounts   114,631     104,146     124,589     10,485     10.1     (9,958 )   (8.0 )   7.5     10.1  
Time deposits   610,544     565,576     506,332     44,968     8.0     104,212     20.6     39.8     41.3  
Total deposits   $ 1,532,793     $ 1,361,731     $ 1,226,672     $ 171,062     12.6 %   $ 306,121     25.0 %   100.0 %   100.0 %

Noninterest-bearing demand deposits increased $68.4 million, or 31.4%, compared to December 31, 2018 and $64.0 million, or 28.8%, compared to March 31, 2018. While much of this growth is attributable to the acquisition of Mainland, noninterest-bearing deposits grew organically by approximately $12.8 million, or 5.9% compared to December 31, 2018. Excluding total deposits from our Texas branches acquired in the Mainland acquisition, or $115.5 million, at March 31, 2019, total deposits increased $55.6 million, or 4.1%, compared to December 31, 2018 and $190.6 million, or 15.5%, compared to March 31, 2018, as we continue to focus on relationship banking and growing our commercial relationships.

Interest-bearing demand deposits and time deposits increased $105.2 million and $104.2 million, respectively, compared to March 31, 2018. These increases are mainly attributable to the increased rates offered for our interest-bearing demand deposits and time deposits to remain competitive in our market in a rising interest rate environment.

Net Interest Income

Net interest income for the first quarter of 2019 totaled $15.2 million, an increase of $0.3 million, or 2.4%, compared to the fourth quarter of 2018, and an increase of $1.3 million, or 9.4%, compared to the first quarter of 2018. Included in net interest income for the quarters ended March 31, 2019, December 31, 2018 and March 31, 2018 is $0.4 million, $0.3 million and $0.7 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarter ended December 31, 2018 is an interest recovery of $0.1 million on an acquired loan.

The increase in net interest income in the first quarter of 2019 compared to the same quarter last year was primarily driven by growth in loan and securities balances and the yields earned on those balances, partially offset by an increase in interest expense as we funded the increase in interest-earning assets with increased deposits and borrowings. Interest income for the first quarter of 2019 increased $3.5 million, with $2.5 million and $1.0 million due to increases in the volume and yield, respectively, of interest-earning assets. This increase in interest income was partially offset by an increase in interest expense of $2.2 million, with $0.4 million and $1.8 million due to increases in the volume and cost, respectively, of interest-bearing liabilities compared to the first quarter of 2018.

The Company’s net interest margin was 3.53% for both of the quarters ended March 31, 2019 and December 31, 2018, compared to 3.70% for the quarter ended March 31, 2018. The yield on interest-earning assets was 4.81% for the quarter ended March 31, 2019 compared to 4.75% for the quarter ended December 31, 2018 and 4.59% for the quarter ended March 31, 2018. The decrease in net interest margin for the quarter ended March 31, 2019 compared to the quarter ended March 31, 2018 was driven by an increase in the cost of funds required to fund the increase in assets.

Exclusive of the interest income accretion from the acquisition of loans, discussed above, as well as a $0.1 million interest recovery in the quarter ended December 31, 2018, net interest margin was 3.43% for both of the quarters ended March 31, 2019 and December 31, 2018 compared to 3.52% for the quarter ended March 31, 2018, while the yield on interest-earning assets was 4.72% for the quarter ended March 31, 2019 compared to 4.65% and 4.41% for the quarters ended December 31, 2018 and March 31, 2018, respectively.

The cost of deposits increased 9 basis points to 1.41% for the quarter ended March 31, 2019 compared to 1.32% for the quarter ended December 31, 2018, and increased 50 basis points compared to 0.91% for the quarter ended March 31, 2018. The increase in the cost of deposits compared to the quarters ended December 31, 2018 and March 31, 2018 reflects the increased rates offered for our interest-bearing demand deposits and time deposits to remain competitive in our market in a rising interest rate environment and attract new deposits. The overall costs of funds for the quarter ended March 31, 2019 increased 9 and 49 basis points to 1.59% compared to 1.50% and 1.10% for the quarters ended December 31, 2018 and March 31, 2018, respectively. The increase in the cost of funds at March 31, 2019 compared to December 31, 2018 and March 31, 2018 is mainly a result of an increase in the cost of deposits but is also driven by the increased cost of borrowed funds used to finance loan and investment activity.

Noninterest Income

Noninterest income for the first quarter of 2019 totaled $1.3 million, an increase of $0.4 million, or 53.2%, compared to the fourth quarter of 2018, and an increase of $0.2 million, or 19.5%, compared to the first quarter of 2018. The increase in noninterest income compared to the quarter ended December 31, 2018 is mainly attributable to a $0.5 million increase in the fair value of equity securities.

The increase in noninterest income compared to the first quarter of 2018 is primarily a result of a $0.2 million increase in the fair value of equity securities and a $0.1 million increase in other operating income, partially offset by a $0.1 million decrease in servicing fees and fee income on serviced loans. Other operating income includes, among other things, various operations fees and income recognized on certain equity method investments.

Noninterest Expense

Noninterest expense for the first quarter of 2019 totaled $11.3 million, an increase of $0.4 million, or 3.6%, compared to the fourth quarter of 2018, and an increase of $0.7 million, or 7.0%, compared to the first quarter of 2018.

The increase in noninterest expense compared to the quarter ended December 31, 2018 is mainly attributable to the $0.6 million increase in acquisition expense. This increase and increases in other categories were partially offset by a $0.5 million decrease in other operating expenses. The decrease in other operating expenses was due to a $0.6 million write-down of a property held in other real estate owned that was recorded during the quarter ended December 31, 2018 to reflect the amount of a purchase agreement for the property, which was sold in January 2019.

The increase in noninterest expense compared to the first quarter of 2018 is primarily attributable to increases in depreciation and amortization, salaries and employee benefits, and other operating expenses, partially offset by a decrease in acquisition expense. The increase in depreciation and amortization resulted from various projects including equipment upgrades at acquired branches and the launch of the Company’s first interactive teller machine. The increase in salaries and employee benefits compared to the first quarter of 2018 is mainly attributable to the staffing mix throughout the year, including the addition of our new Commercial and Industrial Division, which includes five new lenders and related support staff hired in the second quarter of 2018, as well as the additional staff from the Mainland acquisition. The increase in other operating expenses compared to the first quarter of 2018 is primarily attributable to increased software expense and debit and credit card activity.

Taxes

The Company recorded income tax expense of $1.0 million for the quarter ended March 31, 2019, which equates to an effective tax rate of 19.6%, an increase from the effective tax rate of 19.5% and a decrease from the effective tax rate of 35.8% for the quarters ended December 31, 2018 and March 31, 2018, respectively. The decrease in the effective tax rate compared to the quarter ended March 31, 2018 is primarily a result of a one-time charge of $0.6 million recorded in the quarter ended March 31, 2018 as a result of the revaluation of the Company’s deferred tax assets and liabilities that was required following the enactment of the Tax Cuts and Jobs Act in December 2017. Management expects the Company’s effective tax rate to approximate 20% in 2019.

Basic and Diluted Earnings Per Common Share

The Company reported basic and diluted earnings per common share of $0.40 for the quarter ended March 31, 2019, an increase of $0.05 and $0.06 compared to basic and diluted earnings per common share of $0.35 and $0.34, respectively, for the quarter ended December 31, 2018 and an increase of $0.15 compared to basic and diluted earnings per common share of $0.25 for the quarter ended March 31, 2018.

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 Bank serves several markets across south Louisiana with 21 branches, and serves the greater Houston market in southeast Texas with three branches. At March 31, 2019, the Company had 280 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;
  • our ability to identify and enter into agreements to combine with attractive acquisition candidates, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate acquired operations;
  • changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;
  • possible cessation or market replacement of LIBOR and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments and loans;
  • the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;
  • our dependence on our management team, and our ability to attract and retain qualified personnel;
  • changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;
  • inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;
  • the concentration of our business within our geographic areas of operation in Louisiana and Texas; and
  • concentration of credit exposure.

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, 2018, filed with the Securities and Exchange Commission (the “SEC”).

For further information contact:

Investar Holding Corporation    
Chris Hufft
Chief Financial Officer
(225) 227-2215
Chris.Hufft@investarbank.com

 
INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
                     
    As of and for the three months ended
    3/31/2019   12/31/2018   3/31/2018   Linked Quarter   Year/Year
EARNINGS DATA                    
Total interest income   $ 20,686     $ 19,927     $ 17,178     3.8 %   20.4 %
Total interest expense   5,530     5,120     3,320     8.0     66.6  
Net interest income   15,156     14,807     13,858     2.4     9.4  
Provision for loan losses   265     593     625     (55.3 )   (57.6 )
Total noninterest income   1,281     836     1,072     53.2     19.5  
Total noninterest expense   11,303     10,906     10,562     3.6     7.0  
Income before income taxes   4,869     4,144     3,743     17.5     30.1  
Income tax expense   952     807     1,341     18.0     (29.0 )
Net income   $ 3,917     $ 3,337     $ 2,402     17.4     63.1  
                     
AVERAGE BALANCE SHEET DATA                    
Total assets   $ 1,854,191     $ 1,766,094     $ 1,629,277     5.0 %   13.8 %
Total interest-earning assets   1,743,438     1,663,816     1,518,425     4.8     14.8  
Total loans   1,436,798     1,381,580     1,261,047     4.0     13.9  
Total interest-bearing deposits   1,183,568     1,116,734     1,002,655     6.0     18.0  
Total interest-bearing liabilities   1,413,623     1,350,743     1,228,942     4.7     15.0  
Total deposits   1,422,632     1,342,145     1,219,482     6.0     16.7  
Total stockholders’ equity   189,822     180,682     173,467     5.1     9.4  
                     
PER SHARE DATA                    
Earnings:                    
Basic earnings per common share   $ 0.40     $ 0.35     $ 0.25     14.3 %   60.0 %
Diluted earnings per common share   0.40     0.34     0.25     17.6     60.0  
Core Earnings(1):                    
Core basic earnings per common share(1)   0.47     0.46     0.40     2.2     17.5  
Core diluted earnings per common share(1)   0.46     0.45     0.40     2.2     15.0  
Book value per common share   20.04     19.22     18.22     4.3     10.0  
Tangible book value per common share(1)   17.36     17.13     16.11     1.3     7.8  
Common shares outstanding   10,129,993     9,484,219     9,517,328     6.8     6.4  
Weighted average common shares outstanding - basic   9,675,381     9,519,470     9,513,332     1.6     1.7  
Weighted average common shares outstanding - diluted   9,770,752     9,623,636     9,609,603     1.5     1.7  
                     
PERFORMANCE RATIOS                    
Return on average assets   0.86 %   0.75 %   0.60 %   14.7 %   43.3 %
Core return on average assets(1)   0.98     0.98     0.95         3.2  
Return on average equity   8.37     7.33     5.62     14.2     48.9  
Core return on average equity(1)   9.62     9.55     8.90     0.7     8.1  
Net interest margin   3.53     3.53     3.70         (4.6 )
Net interest income to average assets   3.31     3.33     3.45     (0.6 )   (4.1 )
Noninterest expense to average assets   2.47     2.45     2.63     0.8     (6.1 )
Efficiency ratio(2)   68.76     69.72     70.74     (1.4 )   (2.8 )
Core efficiency ratio(1)   63.96     62.52     63.73     2.3     0.4  
Dividend payout ratio   13.13     14.47     13.86     (9.3 )   (5.3 )
Net charge-offs to average loans   0.01     0.01     0.03         (66.7 )
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income.


 
INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
                     
    As of and for the three months ended
    3/31/2019   12/31/2018   3/31/2018   Linked Quarter   Year/Year
ASSET QUALITY RATIOS                    
Nonperforming assets to total assets   0.40 %   0.54 %   0.60 %   (25.9 )%   (33.3 )%
Nonperforming loans to total loans   0.40     0.42     0.44     (4.8 )   (9.1 )
Allowance for loan losses to total loans   0.64     0.67     0.64     (4.5 )    
Allowance for loan losses to nonperforming loans   159.93     158.94     146.78     0.6     9.0  
                     
CAPITAL RATIOS                    
Investar Holding Corporation:                    
Total equity to total assets   10.35 %   10.20 %   10.55 %   1.5 %   (1.9 )%
Tangible equity to tangible assets(1)   9.09     9.20     9.44     (1.2 )   (3.7 )
Tier 1 leverage ratio   10.03     9.81     10.11     2.2     (0.8 )
Common equity tier 1 capital ratio(2)   11.07     11.15     11.67     (0.7 )   (5.1 )
Tier 1 capital ratio(2)   11.48     11.59     12.16     (0.9 )   (5.6 )
Total capital ratio(2)   13.23     13.46     14.12     (1.7 )   (6.3 )
Investar Bank:                    
Tier 1 leverage ratio   10.92     10.72     11.06     1.9     (1.3 )
Common equity tier 1 capital ratio(2)   12.48     12.67     13.31     (1.5 )   (6.2 )
Tier 1 capital ratio(2)   12.48     12.67     13.31     (1.5 )   (6.2 )
Total capital ratio(2)   13.09     13.31     13.92     (1.7 )   (6.0 )
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for March 31, 2019.


INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
             
    March 31, 2019   December 31, 2018   March 31, 2018
ASSETS            
Cash and due from banks   $ 22,535     $ 15,922     $ 13,409  
Interest-bearing balances due from other banks   47,506     1,212     7,623  
Federal funds sold   2,362     6     70  
Cash and cash equivalents   72,403     17,140     21,102  
             
Available for sale securities at fair value (amortized cost of $265,981, $253,504, and $236,225, respectively)   264,257     248,981     231,448  
Held to maturity securities at amortized cost (estimated fair value of $15,816, $15,805, and $17,479, respectively)   15,816     16,066     17,727  
Loans, net of allowance for loan losses of $9,642, $9,454, and $8,130, respectively   1,485,277     1,391,371     1,264,820  
Other equity securities   14,392     13,562     11,573  
Bank premises and equipment, net of accumulated depreciation of $10,513, $9,898, and $8,300, respectively   45,717     40,229     38,091  
Other real estate owned, net   1,748     3,611     4,266  
Accrued interest receivable   6,377     5,553     4,707  
Deferred tax asset   38     1,145     1,496  
Goodwill and other intangible assets, net   27,143     19,787     20,141  
Bank-owned life insurance   24,011     23,859     23,382  
Other assets   4,715     5,165     5,435  
Total assets   $ 1,961,894     $ 1,786,469     $ 1,644,188  
             
LIABILITIES            
Deposits            
Noninterest-bearing   $ 285,811     $ 217,457     $ 221,855  
Interest-bearing   1,246,982     1,144,274     1,004,817  
Total deposits   1,532,793     1,361,731     1,226,672  
Advances from Federal Home Loan Bank   185,093     206,490     187,066  
Repurchase agreements   2,218     1,999     21,053  
Subordinated debt   18,227     18,215     18,180  
Junior subordinated debt   5,858     5,845     5,806  
Accrued taxes and other liabilities   14,691     9,927     11,981  
Total liabilities   1,758,880     1,604,207     1,470,758  
             
STOCKHOLDERS’ EQUITY            
Preferred stock, no par value per share; 5,000,000 shares authorized            
Common stock, $1.00 par value per share; 40,000,000 shares authorized; 10,129,993, 9,484,219, and 9,517,328 shares outstanding, respectively   10,130     9,484     9,517  
Surplus   144,813     130,133     131,179  
Retained earnings   49,104     45,721     35,829  
Accumulated other comprehensive loss   (1,033 )   (3,076 )   (3,095 )
Total stockholders’ equity   203,014     182,262     173,430  
  Total liabilities and stockholders’ equity   $ 1,961,894     $ 1,786,469     $ 1,644,188  


INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)
             
    For the three months ended
    March 31, 2019   December 31, 2018   March 31, 2018
INTEREST INCOME            
Interest and fees on loans   $ 18,544     $ 17,996     $ 15,626  
Interest on investment securities   1,926     1,795     1,459  
Other interest income   216     136     93  
Total interest income   20,686     19,927     17,178  
             
INTEREST EXPENSE            
Interest on deposits   4,106     3,721     2,253  
Interest on borrowings   1,424     1,399     1,067  
Total interest expense   5,530     5,120     3,320  
Net interest income   15,156     14,807     13,858  
             
Provision for loan losses   265     593     625  
Net interest income after provision for loan losses   14,891     14,214     13,233  
             
NONINTEREST INCOME            
Service charges on deposit accounts   400     399     359  
Gain (loss) on sale of investment securities, net   2     (23 )    
Gain on sale of fixed assets, net           90  
Gain (loss) on sale of other real estate owned, net   5     (20 )    
Servicing fees and fee income on serviced loans   180     190     288  
Interchange fees   240     247     191  
Income from bank owned life insurance   152     157     151  
Change in the fair value of equity securities   172     (306 )    
Other operating income (loss)   130     192     (7 )
Total noninterest income   1,281     836     1,072  
Income before noninterest expense   16,172     15,050     14,305  
             
NONINTEREST EXPENSE            
Depreciation and amortization   764     682     598  
Salaries and employee benefits   6,415     6,280     6,048  
Occupancy   414     326     380  
Data processing   536     490     542  
Marketing   51     84     38  
Professional fees   305     287     255  
Acquisition expenses   905     341     1,104  
Other operating expenses   1,913     2,416     1,597  
Total noninterest expense   11,303     10,906     10,562  
Income before income tax expense   4,869     4,144     3,743  
Income tax expense   952     807     1,341  
Net income   $ 3,917     $ 3,337     $ 2,402  
             
EARNINGS PER SHARE            
Basic earnings per common share   $ 0.40     $ 0.35     $ 0.25  
Diluted earnings per common share   $ 0.40     $ 0.34     $ 0.25  
Cash dividends declared per common share   $ 0.05     $ 0.05     $ 0.04  


INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                                     
    For the three months ended
    March 31, 2019   December 31, 2018   March 31, 2018
    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   $ 1,436,798     $ 18,544     5.23 %   $ 1,381,580     $ 17,996     5.17 %   $ 1,261,047     $ 15,626     5.03 %
Securities:                                    
Taxable   243,065     1,729     2.88     230,170     1,592     2.74     206,722     1,253     2.46  
Tax-exempt   32,325     197     2.47     33,913     203     2.37     34,688     206     2.41  
Interest-bearing balances with banks   31,250     216     2.80     18,153     136     2.97     15,968     93     2.37  
Total interest-earning assets   1,743,438     20,686     4.81     1,663,816     19,927     4.75     1,518,425     17,178     4.59  
Cash and due from banks   20,150             18,252             25,526          
Intangible assets   22,301             19,835             19,881          
Other assets   77,867             73,415             73,438          
Allowance for loan losses   (9,565 )           (9,224 )           (7,993 )        
Total assets   $ 1,854,191             $ 1,766,094             $ 1,629,277          
                                     
Liabilities and stockholders’ equity                                    
Interest-bearing liabilities:                                    
Deposits:                                    
Interest-bearing demand deposits   $ 504,123     $ 1,353     1.09     $ 448,110     $ 1,162     1.03     $ 360,903     $ 580     0.65  
Savings deposits   104,503     119     0.46     106,492     151     0.56     120,861     137     0.46  
Time deposits   574,942     2,634     1.86     562,132     2,408     1.70     520,891     1,536     1.20  
Total interest-bearing deposits   1,183,568     4,106     1.41     1,116,734     3,721     1.32     1,002,655     2,253     0.91  
Short-term borrowings   135,894     733     2.19     138,443     699     2.00     143,646     507     1.43  
Long-term debt   94,161     691     2.98     95,566     700     2.91     82,641     560     2.75  
Total interest-bearing liabilities   1,413,623     5,530     1.59     1,350,743     5,120     1.50     1,228,942     3,320     1.10  
Noninterest-bearing deposits   239,064             225,411             216,827          
Other liabilities   11,682             9,258             10,041          
Stockholders’ equity   189,822             180,682             173,467          
Total liability and stockholders’ equity   $ 1,854,191             $ 1,766,094             $ 1,629,277          
Net interest income/net interest margin       $ 15,156     3.53 %       $ 14,807     3.53 %       $ 13,858     3.70 %


 
INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
    March 31, 2019   December 31, 2018   March 31, 2018
Tangible common equity            
Total stockholders’ equity   $ 203,014     $ 182,262     $ 173,430  
Adjustments:            
Goodwill   22,489     17,424     17,424  
Core deposit intangible   4,554     2,263     2,617  
Trademark intangible   100     100     100  
Tangible common equity   $ 175,871     $ 162,475     $ 153,289  
Tangible assets            
Total assets   $ 1,961,894     $ 1,786,469     $ 1,644,188  
Adjustments:            
Goodwill   22,489     17,424     17,424  
Core deposit intangible   4,554     2,263     2,617  
Trademark intangible   100     100     100  
Tangible assets   $ 1,934,751     $ 1,766,682     $ 1,624,047  
             
Common shares outstanding   10,129,993     9,484,219     9,517,328  
Tangible equity to tangible assets   9.09 %   9.20 %   9.44 %
Book value per common share   $ 20.04     $ 19.22     $ 18.22  
Tangible book value per common share   17.36     17.13     16.11  


 
INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
    Three months ended
    3/31/2019   12/31/2018   3/31/2018
Net interest income (a) $ 15,156     $ 14,807     $ 13,858  
Provision for loan losses   265     593     625  
Net interest income after provision for loan losses   14,891     14,214     13,233  
             
Noninterest income (b) 1,281     836     1,072  
(Gain) loss on sale of investment securities, net   (2 )   23      
(Gain) loss on sale of other real estate owned, net   (5 )   20      
Gain on sale of fixed assets, net           (90 )
Change in the fair value of equity securities   (172 )   306      
Core noninterest income (d) 1,102     1,185     982  
             
Core earnings before noninterest expense   15,993     15,399     14,215  
             
Total noninterest expense (c) 11,303     10,906     10,562  
Acquisition expense   (905 )   (341 )   (1,104 )
Write down of other real estate owned       (567 )    
Core noninterest expense (f) 10,398     9,998     9,458  
             
Core earnings before income tax expense   5,595     5,401     4,757  
Core income tax expense(1)   1,094     1,053     950  
Core earnings   $ 4,501     $ 4,348     $ 3,807  
             
Core basic earnings per common share   0.47     0.46     0.40  
             
Diluted earnings per common share (GAAP)   $ 0.40     $ 0.34     $ 0.25  
(Gain) loss on sale of investment securities, net            
(Gain) loss on sale of other real estate owned, net            
Gain on sale of fixed assets, net           (0.01 )
Change in the fair value of equity securities   (0.01 )   0.03      
Acquisition expense   0.07     0.03     0.09  
Write down of other real estate owned       0.05      
One-time charge to income tax expense           0.07  
Core diluted earnings per common share   $ 0.46     $ 0.45     $ 0.40  
             
Efficiency ratio (c) / (a+b) 68.76 %   69.72 %   70.74 %
Core efficiency ratio (f) / (a+d) 63.96 %   62.52 %   63.73 %
Core return on average assets(2)   0.98 %   0.98 %   0.95 %
Core return on average equity(2)   9.62 %   9.55 %   8.90 %
Total average assets   $ 1,854,191     $ 1,766,094     $ 1,629,277  
Total average stockholders’ equity   189,822     180,682     173,467  
             
             
(1) Core income tax expense is calculated using the effective tax rates of 19.6% and 19.5% for the quarters ended March 31, 2019 and December 31, 2018, respectively, and an effective rate of 20%, prior to the one-time charge of $0.6 million to tax expense as a result of the Tax Cuts and Jobs Act for the for the quarter ended March 31, 2018.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.

 

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