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CST: 18/07/2019 09:05:06   

Investar Holding Corporation Announces 2018 Fourth Quarter Results

171 Days ago

BATON ROUGE, La., Jan. 28, 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 December 31, 2018. The Company reported net income of $3.3 million, or $0.34 per diluted common share, for the fourth quarter of 2018, compared to $4.0 million, or $0.41 per diluted common share, for the quarter ended September 30, 2018, and $2.3 million, or $0.25 per diluted common share, for the quarter ended December 31, 2017.

On a non-GAAP basis, core earnings per diluted common share for the fourth quarter were $0.45 compared to $0.41 for the third quarter of 2018 and $0.34 for the quarter ended December 31, 2017. Core earnings exclude certain non-operating items including, but not limited to, acquisition expense, severance, and discrete tax items (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).

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

“The board of directors and management were very pleased with Investar’s fourth quarter results. We experienced solid organic loan growth of 3.1% during the quarter and have grown loans 11.3% for the year. Deposits grew 5.1% for the quarter and 11.1% for the year. In the fourth quarter, our investments in people and infrastructure began to take hold as indicated by our quarterly and year-end results. Investar is positioned for a very constructive 2019 with good momentum going into the new year.

We continue to focus on our shareholders by increasing our dividend by 59% in 2018 and repurchasing 132,484 shares of our common stock. Investar is committed to providing long-term value to our dedicated shareholder base.

In October, we signed a definitive agreement to acquire Mainland Bank which will expand our footprint into the greater Houston area. We are excited to be a regional bank and believe this acquisition complements our strategy of increasing market share through partnerships with organizations having strong core deposit funding, solid commercial banking and credit practices, and exemplary customer service. The shareholders of Mainland Bank have approved the acquisition, and we expect to close the transaction in the first quarter of 2019. As we enter 2019, we 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.”

Fourth Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter ended December 31, 2018 totaled $20.8 million, an increase of $0.8 million, or 3.9%, compared to the quarter ended September 30, 2018, and an increase of $3.8 million, or 22.7%, compared to the quarter ended December 31, 2017.

  • Total loans increased $42.4 million, or 3.1%, to $1.40 billion at December 31, 2018, compared to $1.36 billion at September 30, 2018, and increased $142.0 million, or 11.3% compared to $1.26 billion at December 31, 2017.

  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $509.1 million at December 31, 2018, an increase of $24.4 million, or 5.0%, compared to the business lending portfolio of $484.7 million at September 30, 2018, and an increase of $101.3 million, or 24.8%, compared to the business lending portfolio of $407.8 million at December 31, 2017.

  • Total deposits increased $66.1 million, or 5.1%, to $1.36 billion at December 31, 2018, compared to $1.30 billion at September 30, 2018, and increased $136.5 million, or 11.1%, compared to $1.23 billion at December 31, 2017.

  • The Bank opened its 21st full-service branch location in our Baton Rouge market as well as a freestanding Interactive Teller Machine (ITM) in Lake Charles, Louisiana, creating additional banking opportunities for existing and potential customers.

  • The Company repurchased 61,784 and 132,484 shares of its common stock through its stock repurchase program at an average price of $24.75 and $25.37 during the quarter and year ended December 31, 2018, respectively, leaving 86,240 shares available for repurchase.

  • On October 10, 2018, the Company announced that it has entered into a definitive agreement to acquire Mainland Bank, Texas City, Texas. Pursuant to the agreement, the shareholders of Mainland Bank will be entitled to receive an aggregate of approximately 764,000 shares of Company common stock, subject to certain adjustments. It is expected that shareholders of Mainland Bank will own approximately 7.4% of the combined company following the acquisition. Mainland Bank’s shareholders approved the transaction on January 14, 2019. The transaction is expected to close in the first quarter of 2019 and is subject to customary closing conditions, including approval of bank regulatory authorities.

Loans

Total loans were $1.40 billion at December 31, 2018, an increase of $42.4 million, or 3.1%, compared to September 30, 2018, and an increase of $142.0 million, or 11.3%, compared to December 31, 2017. We experienced the majority of our loan growth in the commercial real estate and commercial and industrial portfolios for both the quarter and year ended December 31, 2018 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
    12/31/2018   9/30/2018   12/31/2017   $   %   $   %   12/31/2018   12/31/2017
Mortgage loans on real estate                                    
Construction and development   $ 157,946     $ 160,921     $ 157,667     $ (2,975 )   (1.8 )%   $ 279     0.2  %   11.3 %   12.5 %
1-4 Family   287,137     286,976     276,922     161     0.1     10,215     3.7     20.5     22.0  
Multifamily   50,501     50,770     51,283     (269 )   (0.5 )   (782 )   (1.5 )   3.6     4.1  
Farmland   21,356     20,902     23,838     454     2.2     (2,482 )   (10.4 )   1.5     1.9  
Commercial real estate                                    
Owner-occupied   298,222     291,168     272,433     7,054     2.4     25,789     9.5     21.3     21.6  
Nonowner-occupied   328,782     301,828     264,931     26,954     8.9     63,851     24.1     23.5     21.0  
Commercial and industrial   210,924     193,563     135,392     17,361     9.0     75,532     55.8     15.0     10.8  
Consumer   45,957     52,284     76,313     (6,327 )   (12.1 )   (30,356 )   (39.8 )   3.3     6.1  
Total loans   $ 1,400,825     $ 1,358,412     $ 1,258,779     $ 42,413     3.1  %   $ 142,046     11.3  %   100 %   100 %


At December 31, 2018, 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 $509.1 million, an increase of $24.4 million, or 5.0%, compared to the business lending portfolio of $484.7 million at September 30, 2018, and an increase of $101.3 million, or 24.8%, compared to the business lending portfolio of $407.8 million at December 31, 2017. The increase in the business lending portfolio is mainly attributable to the growth in commercial and industrial loans primarily resulting from increased production of our new Commercial and Industrial Division.

Consumer loans, including indirect auto loans of $30.8 million, totaled $46.0 million at December 31, 2018, a decrease of $6.3 million, or 12.1%, compared to $52.3 million, including indirect auto loans of $35.9 million, at September 30, 2018, and a decrease of $30.4 million, or 39.8%, compared to $76.3 million, including indirect auto loans of $55.9 million, at December 31, 2017. 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 $5.9 million, or 0.42% of total loans, at December 31, 2018, a decrease of $0.4 million compared to $6.3 million, or 0.47% of total loans, at September 30, 2018, and an increase of $2.2 million compared to $3.7 million, or 0.29% of total loans, at December 31, 2017. Included in nonperforming loans are loans acquired in 2017 with a balance of $3.8 million at December 31, 2018, or 64% of nonperforming loans, which is the primary reason for the increase in nonperforming loans compared to December 31, 2017.

The allowance for loan losses was $9.5 million, or 158.94% and 0.67% of nonperforming and total loans, respectively, at December 31, 2018, compared to $9.0 million, or 142.16% and 0.66%, respectively, at September 30, 2018, and $7.9 million, or 214.43% and 0.63%, respectively, at December 31, 2017.

The provision for loan losses was $0.6 million for the quarter ended December 31, 2018 compared to $0.8 million and $0.4 million for the quarters ended September 30, 2018 and December 31, 2017, respectively. The provision for loan losses is primarily attributable to loan growth during each of the quarters.

Deposits

Total deposits at December 31, 2018 were $1.36 billion, an increase of $66.1 million, or 5.1%, compared to September 30, 2018, and an increase of $136.5 million, or 11.1%, compared to December 31, 2017.

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
    12/31/2018   9/30/2018   12/31/2017   $   %   $   %   12/31/2018   12/31/2017
Noninterest-bearing demand deposits   $ 217,457     $ 214,190     $ 216,599     $ 3,267     1.5  %   $ 858     0.4  %   16.0 %   17.7 %
Interest-bearing demand deposits   295,212     245,569     208,683     49,643     20.2     86,529     41.5     21.7     17.0  
Money market deposit accounts   179,340     179,071     146,140     269     0.2     33,200     22.7     13.2     11.9  
Savings accounts   104,146     112,078     117,372     (7,932 )   (7.1 )   (13,226 )   (11.3 )   7.6     9.6  
Time deposits   565,576     544,713     536,443     20,863     3.8     29,133     5.4     41.5     43.8  
Total deposits   $ 1,361,731     $ 1,295,621     $ 1,225,237     $ 66,110     5.1  %   $ 136,494     11.1  %   100.0 %   100.0 %


Interest-bearing demand deposits increased $49.6 million, or 20.2% compared to September 30, 2018 and $86.5 million, or 41.5%, compared to December 31, 2017. Compared to September 30, 2018, approximately $15.0 million of the increase resulted from the transfer of funds from existing repurchase agreements into our new reciprocal deposit product introduced in the fourth quarter. The quarter and year to date growth in interest-bearing deposits is mainly attributable to our continued focus on relationship banking and growing our commercial relationships.

Net Interest Income

Net interest income for the fourth quarter of 2018 totaled $14.8 million, an increase of $0.4 million, or 2.9%, compared to the third quarter of 2018, and an increase of $2.0 million, or 15.5%, compared to the fourth quarter of 2017. Included in net interest income for the quarters ended December 31, 2018, September 30, 2018 and December 31, 2017 is $0.3 million, $0.6 million and $0.2 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 fourth quarter of 2018 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 fourth quarter of 2018 increased $2.7 million and $1.3 million due to increases in the volume and yield, respectively, of interest-earning assets. These increases were partially offset by increases in interest expense of $0.5 million and $1.5 million due to increases in the volume and cost, respectively, of interest-bearing liabilities compared to the fourth quarter of 2017.

The Company’s net interest margin was 3.53% for the quarter ended December 31, 2018 compared to 3.56% for the quarter ended September 30, 2018 and 3.55% for the quarter ended December 31, 2017. The yield on interest-earning assets was 4.75% for the quarter ended December 31, 2018 compared to 4.65% for the quarter ended September 30, 2018 and 4.42% for the quarter ended December 31, 2017. The decrease in net interest margin for the quarter ended December 31, 2018 compared to the quarters ended September 30, 2018 and December 31, 2017 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 and a $40,000 interest recovery in the quarter ended December 31, 2017, net interest margin would have been 3.43% for the quarter ended December 31, 2018 compared to 3.42% for the quarter ended September 30, 2018 and 3.48% for the quarter ended December 31, 2017, while the yield on interest-earning assets would have been 4.65% for the quarter ended December 31, 2018 compared to 4.51% and 4.35% for the quarters ended September 30, 2018 and December 31, 2017, respectively.

The cost of deposits increased 18 basis points to 1.32% for the quarter ended December 31, 2018 compared to 1.14% for the quarter ended September 30, 2018 and increased 40 basis points compared to 0.92% for the quarter ended December 31, 2017. The increase in the cost of deposits compared to the quarters ended September 30, 2018 and December 31, 2017 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. We also made the strategic decision to get ahead of the rising interest rate curve in future quarters and increased our deposit rates during the third quarter of 2018. We experienced significant deposit growth in both the third and fourth quarters of 2018 at these higher rates, which contributed to the increase in the cost of deposits in the fourth quarter. The overall costs of funds for the quarter ended December 31, 2018 increased 16 and 43 basis points to 1.50% compared to 1.34% and 1.07% for the quarters ended September 30, 2018 and December 31, 2017, respectively. The increase in the cost of funds at December 31, 2018 compared to September 30, 2018 and December 31, 2017 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 fourth quarter of 2018 totaled $0.8 million, a decrease of $0.4 million, or 31.3%, compared to the third quarter of 2018, and a decrease of $0.1 million, or 13.1%, compared to the fourth quarter of 2017. The decrease in noninterest income compared to the quarter ended September 30, 2018 is mainly attributable to a $0.3 million decrease in the fair value of equity securities.

The decrease in noninterest income compared to the fourth quarter of 2017 is primarily a result of a $0.3 million decrease in the fair value of equity securities and a $0.1 million decrease in servicing fees and fee income on serviced loans, partially offset by increases in service charges on deposit accounts and other operating income. Other operating income includes, among other things, various operations fees and income recognized on certain equity method investments.

Noninterest Expense

Noninterest expense for the fourth quarter of 2018 totaled $10.9 million, an increase of $0.7 million, or 6.4%, compared to the third quarter of 2018, and an increase of $1.3 million, or 13.5%, compared to the fourth quarter of 2017.

The increase in noninterest expense compared to the quarter ended September 30, 2018 is mainly attributable to the $0.6 million increase in other operating expenses. During the quarter ended December 31, 2018, a purchase agreement for a property held in other real estate owned (“OREO”) was executed, and the property was sold subsequent to the end of the quarter. A write-down of the property in the amount of $0.6 million was recorded during the quarter ended December 31, 2018 to reflect the amount of the purchase agreement less the cost to sell the property. Noninterest expense also increased due to a $0.3 million increase in acquisition expense recorded in relation to the pending acquisition of Mainland Bank, announced in October 2018. The increases in acquisition expense and other operating expenses were offset by a $0.4 million decrease in salaries and employee benefits, primarily a result of $0.3 million of severance expense recognized in the quarter ended September 30, 2018 as part of a staffing optimization plan focused on the operations of our recent acquisitions.

The increase in noninterest expense compared to the fourth quarter of 2017 is primarily attributable to the $0.8 million and $0.9 million increases in salaries and employee benefits and other operating expenses, respectively, partially offset by a $0.5 million decrease in acquisition expense. The increase in salaries and employee benefits compared to the fourth quarter of 2017 is mainly attributable to the staffing mix, including the addition of our new Commercial and Industrial Division, which includes five new lenders and related support staff. The increase in other operating expenses is primarily attributable to the $0.6 million write-down of an OREO property discussed above.

Taxes

The Company recorded income tax expense of $0.8 million for the quarter ended December 31, 2018, which equates to an effective tax rate of 19.5%, an increase from the effective tax rate of 11.3% and a decrease from the effective tax rate of 39.5% for the quarters ended September 30, 2018 and December 31, 2017, respectively. The decrease in the effective tax rate compared to the quarter ended December 31, 2017 is primarily a result of the Tax Cuts and Jobs Act, which lowered the federal corporate income tax rate to 21% from 35%, effective January 1, 2018. In addition, the income tax expense for the quarter ended December 31, 2017 includes a one-time charge of $0.3 million as a result of the revaluation of the Company’s deferred tax assets and liabilities required following the enactment of the Tax Cuts and Jobs Act. The increase in the effective tax rate compared to the quarter ended September 30, 2018 is due to a discrete tax benefit of $0.3 million recorded during the third quarter related to return-to-provision adjustments. 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 $0.35 and $0.34, respectively, for the quarter ended December 31, 2018, a decrease of $0.07 compared to basic and diluted earnings per common share of $0.42 and $0.41, respectively, for the quarter ended September 30, 2018 and an increase of $0.10 and $0.09, respectively, compared to basic and diluted earnings per common share of $0.25 for the quarter ended December 31, 2017.

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 21 full service banking offices located throughout its market. At December 31, 2018, the Company had 255 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; and
  • the satisfaction of the conditions to closing the pending acquisition of Mainland Bank 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, 2017, filed with the Securities and Exchange Commission (the “SEC”).

Additional Information for Investors and Shareholders

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed acquisition of Mainland Bank, the Company has filed a registration statement on Form S-4 with the SEC. The registration statement includes a proxy statement of Mainland Bank, and constitutes a prospectus of the Company, which Mainland Bank has provided to its shareholders. Investors and shareholders are advised to read the proxy statement/prospectus because it contains important information about the Company, the Bank, Mainland Bank and the proposed transactions.

These and other documents relating to the merger filed by the Company can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing the “Investor Relations” section of the Company’s website at www.investarbank.com. Alternatively, these documents, when available, can be obtained free of charge from the Company upon written request to: Attn: Investor Relations, Investar Holding Corporation, P.O. Box 84207, Baton Rouge, Louisiana 70884-4207, or by calling (225) 227-2222.

This press release shall not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation or an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirement of Section 10 of the Securities Act of 1933, as amended.

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
    12/31/2018   9/30/2018   12/31/2017   Linked
Quarter
  Year/Year
EARNINGS DATA                    
Total interest income   $ 19,927     $ 18,777     $ 15,967     6.1 %   24.8 %
Total interest expense   5,120     4,392     3,150     16.6     62.5  
Net interest income   14,807     14,385     12,817     2.9     15.5  
Provision for loan losses   593     785     395     (24.5 )   50.1  
Total noninterest income   836     1,217     962     (31.3 )   (13.1 )
Total noninterest expense   10,906     10,254     9,608     6.4     13.5  
Income before income taxes   4,144     4,563     3,776     (9.2 )   9.7  
Income tax expense   807     516     1,492     56.4     (45.9 )
Net income   $ 3,337     $ 4,047     $ 2,284     (17.5 )   46.1  
                     
AVERAGE BALANCE SHEET DATA                    
Total assets   $ 1,766,094     $ 1,705,733     $ 1,534,917     3.5 %   15.1 %
Total interest-earning assets   1,663,816     1,603,711     1,434,164     3.7     16.0  
Total loans   1,381,580     1,311,158     1,169,686     5.4     18.1  
Total interest-bearing deposits   1,116,734     1,045,326     957,847     6.8     16.6  
Total interest-bearing liabilities   1,350,743     1,301,248     1,171,884     3.8     15.3  
Total deposits   1,342,145     1,260,913     1,147,782     6.4     16.9  
Total stockholders’ equity   180,682     178,735     160,485     1.1     12.6  
                     
PER SHARE DATA                    
Earnings:                    
Basic earnings per common share   $ 0.35     $ 0.42     $ 0.25     (16.7 )%   40.0 %
Diluted earnings per common share   0.34     0.41     0.25     (17.1 )   36.0  
Core Earnings(1):                    
Core basic earnings per common share(1)   0.46     0.42     0.35     9.5     31.4  
Core diluted earnings per common share(1)   0.45     0.41     0.34     9.8     32.4  
Book value per common share   19.22     18.69     18.15     2.8     5.9  
Tangible book value per common share(1)   17.13     16.60     16.06     3.2     6.7  
Common shares outstanding   9,484,219     9,545,701     9,514,926     (0.6 )   (0.3 )
Weighted average common shares outstanding - basic   9,519,470     9,563,550     8,981,014     (0.5 )   6.0  
Weighted average common shares outstanding - diluted   9,623,636     9,682,880     9,052,213     (0.6 )   6.3  
                     
PERFORMANCE RATIOS                    
Return on average assets   0.75 %   0.94 %   0.59 %   (20.2 )%   27.1 %
Core return on average assets(1)   0.98     0.92     0.81     6.5     21.0  
Return on average equity   7.33     8.98     5.65     (18.4 )   29.7  
Core return on average equity(1)   9.55     8.81     7.77     8.4     22.9  
Net interest margin   3.53     3.56     3.55     (0.8 )   (0.6 )
Net interest income to average assets   3.33     3.35     3.31     (0.6 )   0.6  
Noninterest expense to average assets   2.45     2.39     2.48     2.5     (1.2 )
Efficiency ratio(2)   69.72     65.72     69.73     6.1      
Core efficiency ratio(1)   62.52     64.09     63.73     (2.4 )   (1.9 )
Dividend payout ratio   14.47     10.63     12.38     36.1     16.9  
Net charge-offs to average loans   0.01     0.02     0.01     (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
    12/31/2018   9/30/2018   12/31/2017   Linked
Quarter
  Year/Year
ASSET QUALITY RATIOS                    
Nonperforming assets to total assets       0.54 %   0.61 %   0.46 %   (11.5 )%   17.4 %
Nonperforming loans to total loans   0.42     0.47     0.29     (10.6 )   44.8  
Allowance for loan losses to total loans   0.67     0.66     0.63     1.5     6.3  
Allowance for loan losses to nonperforming loans   158.94     142.16     214.43     11.8     (25.9 )
                     
CAPITAL RATIOS                    
Investar Holding Corporation:                    
Total equity to total assets   10.20 %   10.28 %   10.64 %   (0.8 )%   (4.1 )%
Tangible equity to tangible assets(1)   9.20     9.24     9.53     (0.4 )   (3.5 )
Tier 1 leverage ratio   9.81     10.08     10.66     (2.7 )   (8.0 )
Common equity tier 1 capital ratio(2)   11.15     11.36     11.75     (1.8 )   (5.1 )
Tier 1 capital ratio(2)   11.59     11.82     12.24     (1.9 )   (5.3 )
Total capital ratio(2)   13.46     13.71     14.22     (1.8 )   (5.3 )
Investar Bank:                    
Tier 1 leverage ratio   10.72     10.98     11.63     (2.4 )   (7.8 )
Common equity tier 1 capital ratio(2)   12.67     12.88     13.35     (1.6 )   (5.1 )
Tier 1 capital ratio(2)   12.67     12.88     13.35     (1.6 )   (5.1 )
Total capital ratio(2)   13.31     13.52     13.95     (1.6 )   (4.6 )
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for December 31, 2018.


INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
             
    December 31, 2018   September 30, 2018   December 31, 2017
ASSETS            
Cash and due from banks   $ 15,922     $ 21,151     $ 19,619  
Interest-bearing balances due from other banks   1,212     3,352     10,802  
Federal funds sold   6     285      
Cash and cash equivalents   17,140     24,788     30,421  
             
Available for sale securities at fair value (amortized cost of $253,504,
$238,443, and $220,077, respectively)
  248,981     230,747     217,564  
Held to maturity securities at amortized cost (estimated fair value of
$15,805, $16,691, and $17,947, respectively)
  16,066     17,030     17,997  
Loans, net of allowance for loan losses of $9,454, $9,021, and $7,891,
respectively
  1,391,371     1,349,391     1,250,888  
Other equity securities   13,562     12,671     9,798  
Bank premises and equipment, net of accumulated depreciation of $9,898,
$9,332, and $7,825, respectively
  40,229     39,831     37,540  
Other real estate owned, net   3,611     4,227     3,837  
Accrued interest receivable   5,553     5,073     4,688  
Deferred tax asset   1,145     1,768     1,294  
Goodwill and other intangible assets, net   19,787     19,902     19,926  
Bank-owned life insurance   23,859     23,702     23,231  
Other assets   5,165     6,185     5,550  
Total assets   $ 1,786,469     $ 1,735,315     $ 1,622,734  
             
LIABILITIES            
Deposits            
Noninterest-bearing   $ 217,457     $ 214,190     $ 216,599  
Interest-bearing   1,144,274     1,081,431     1,008,638  
Total deposits   1,361,731     1,295,621     1,225,237  
Advances from Federal Home Loan Bank   206,490     208,083     166,658  
Repurchase agreements   1,999     17,931     21,935  
Subordinated debt   18,215     18,203     18,168  
Junior subordinated debt   5,845     5,832     5,792  
Accrued taxes and other liabilities   9,927     11,238     12,215  
Total liabilities   1,604,207     1,556,908     1,450,005  
             
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;
9,484,219, 9,545,701, and 9,514,926 shares outstanding, respectively
  9,484     9,546     9,515  
Surplus   130,133     131,333     131,582  
Retained earnings   45,721     42,868     33,203  
Accumulated other comprehensive loss   (3,076 )   (5,340 )   (1,571 )
Total stockholders’ equity   182,262     178,407     172,729  
  Total liabilities and stockholders’ equity   $ 1,786,469     $ 1,735,315     $ 1,622,734  


INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)
                     
    For the three months ended   For the twelve months ended
    December 31,
2018
  September 30,
2018
  December 31,
2017
  December 31,
2018
  December 31,
2017
INTEREST INCOME                    
Interest and fees on loans   $ 17,996     $ 16,905     $ 14,407     $ 66,750     $ 47,863  
Interest on investment securities   1,795     1,710     1,428     6,608     5,055  
Other interest income   136     162     132     533     428  
Total interest income   19,927     18,777     15,967     73,891     53,346  
                     
INTEREST EXPENSE                    
Interest on deposits   3,721     2,994     2,233     11,394     8,050  
Interest on borrowings   1,399     1,398     917     5,127     2,779  
Total interest expense   5,120     4,392     3,150     16,521     10,829  
Net interest income   14,807     14,385     12,817     57,370     42,517  
                     
Provision for loan losses   593     785     395     2,570     1,540  
Net interest income after provision for loan losses   14,214     13,600     12,422     54,800     40,977  
                     
NONINTEREST INCOME                    
Service charges on deposit accounts   399     368     293     1,453     767  
(Loss) Gain on sale of investment securities, net   (23 )   15     50     14     292  
Gain (loss) on sale of fixed assets, net       9     (57 )   98     127  
(Loss) gain on sale of other real estate owned, net   (20 )       (5 )   (24 )   27  
Servicing fees and fee income on serviced loans   190     232     329     963     1,482  
Interchange fees   247     239     168     932     537  
Income from bank owned life insurance   157     159     91     628     245  
Change in the fair value of equity securities   (306 )   36         (267 )    
Other operating income   192     159     93     521     338  
Total noninterest income   836     1,217     962     4,318     3,815  
Income before noninterest expense   15,050     14,817     13,384     59,118     44,792  
                     
NONINTEREST EXPENSE                    
Depreciation and amortization   682     644     556     2,553     1,865  
Salaries and employee benefits   6,280     6,646     5,486     25,469     18,681  
Occupancy   326     337     324     1,378     1,150  
Data processing   490     493     521     2,090     1,690  
Marketing   84     71     151     237     422  
Professional fees   287     281     224     1,051     950  
Acquisition expenses   341         819     1,445     1,868  
Other operating expenses   2,416     1,782     1,527     7,659     5,716  
Total noninterest expense   10,906     10,254     9,608     41,882     32,342  
Income before income tax expense   4,144     4,563     3,776     17,236     12,450  
Income tax expense   807     516     1,492     3,630     4,248  
Net income   $ 3,337     $ 4,047     $ 2,284     $ 13,606     $ 8,202  
                     
EARNINGS PER SHARE                    
Basic earnings per common share   $ 0.35     $ 0.42     $ 0.25     $ 1.41     $ 0.96  
Diluted earnings per common share   $ 0.34     $ 0.41     $ 0.25     $ 1.39     $ 0.96  
Cash dividends declared per common share   $ 0.05     $ 0.05     $ 0.03     $ 0.17     $ 0.10  


INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                                     
    For the three months ended
    December 31, 2018   September 30, 2018   December 31, 2017
    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   $ 1,381,580     $ 17,996     5.17 %   $ 1,311,158     $ 16,905     5.12 %   $ 1,169,686     $ 14,407     4.89 %
Securities:                                    
Taxable   230,170     1,592     2.74     230,299     1,506     2.60     203,011     1,221     2.39  
Tax-exempt   33,913     203     2.37     34,108     204     2.37     35,060     207     2.34  
Interest-bearing balances with banks   18,153     136     2.97     28,146     162     2.29     26,407     132     1.98  
Total interest-earning assets   1,663,816     19,927     4.75     1,603,711     18,777     4.65     1,434,164     15,967     4.42  
Cash and due from banks   18,252             16,938             22,520          
Intangible assets   19,835             19,926             15,655          
Other assets   73,415             73,722             70,254          
Allowance for loan losses   (9,224 )           (8,564 )           (7,676 )        
Total assets   $ 1,766,094             $ 1,705,733             $ 1,534,917          
                                     
Liabilities and stockholders’ equity                                    
Interest-bearing liabilities:                                    
Deposits:                                    
Interest-bearing demand deposits   $ 448,110     $ 1,162     1.03     $ 394,545     $ 823     0.83     $ 348,573     $ 608     0.69  
Savings deposits   106,492     151     0.56     117,795     140     0.47     105,896     138     0.52  
Time deposits   562,132     2,408     1.70     532,986     2,031     1.51     503,378     1,487     1.17  
Total interest-bearing deposits   1,116,734     3,721     1.32     1,045,326     2,994     1.14     957,847     2,233     0.92  
Short-term borrowings   138,443     699     2.00     157,595     727     1.83     135,126     430     1.26  
Long-term debt   95,566     700     2.91     98,327     671     2.71     78,911     487     2.45  
Total interest-bearing liabilities   1,350,743     5,120     1.50     1,301,248     4,392     1.34     1,171,884     3,150     1.07  
Noninterest-bearing deposits   225,411             215,587             189,935          
Other liabilities   9,258             10,163             12,613          
Stockholders’ equity   180,682             178,735             160,485          
Total liability and stockholders’ equity   $ 1,766,094             $ 1,705,733             $ 1,534,917          
Net interest income/net interest margin       $ 14,807     3.53 %       $ 14,385     3.56 %       $ 12,817     3.55 %


INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                         
    For the twelve months ended
    December 31, 2018   December 31, 2017
    Average
Balance
  Interest
Income/
Expense
  Yield/
Rate
  Average
Balance
  Interest
Income/
Expense
  Yield/
Rate
Assets                        
Interest-earning assets:                        
Loans   $ 1,306,264     $ 66,750     5.11 %   $ 1,013,502     $ 47,863     4.72 %
Securities:                        
Taxable   222,948     5,793     2.60     180,769     4,265     2.36  
Tax-exempt   34,159     815     2.39     32,427     790     2.44  
Interest-bearing balances with banks   24,126     533     2.21     28,524     428     1.50  
Total interest-earning assets   1,587,497     73,891     4.65     1,255,222     53,346     4.25  
Cash and due from banks   17,219             15,534          
Intangible assets   19,927             8,892          
Other assets   73,472             61,387          
Allowance for loan losses   (8,491 )           (7,368 )        
Total assets   $ 1,689,624             $ 1,333,667          
                         
Liabilities and stockholders’ equity                        
Interest-bearing liabilities:                        
Deposits:                        
Interest-bearing demand   $ 394,336     $ 3,206     0.81     $ 317,755     $ 2,223     0.70  
Savings deposits   116,544     567     0.49     78,444     446     0.57  
Time deposits   530,881     7,621     1.44     456,690     5,381     1.18  
Total interest-bearing deposits   1,041,761     11,394     1.09     852,889     8,050     0.94  
Short-term borrowings   145,090     2,511     1.73     129,109     1,430     1.11  
Long-term debt   95,692     2,616     2.73     47,922     1,349     2.81  
Total interest-bearing liabilities   1,282,543     16,521     1.29     1,029,920     10,829     1.05  
Noninterest-bearing deposits   220,068             147,856          
Other liabilities   9,817             10,782          
Stockholders’ equity   177,196             145,109          
Total liability and stockholders’ equity   $ 1,689,624             $ 1,333,667          
Net interest income/net interest margin       $ 57,370     3.61 %       $ 42,517     3.39 %


INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
    December 31, 2018   September 30, 2018   December 31, 2017
Tangible common equity            
Total stockholders’ equity   $ 182,262     $ 178,407     $ 172,729  
Adjustments:            
Goodwill   17,424     17,424     17,086  
Core deposit intangible   2,263     2,378     2,740  
Trademark intangible   100     100     100  
Tangible common equity   $ 162,475     $ 158,505     $ 152,803  
Tangible assets            
Total assets   $ 1,786,469     $ 1,735,315     $ 1,622,734  
Adjustments:            
Goodwill   17,424     17,424     17,086  
Core deposit intangible   2,263     2,378     2,740  
Trademark intangible   100     100     100  
Tangible assets   $ 1,766,682     $ 1,715,413     $ 1,602,808  
             
Common shares outstanding   9,484,219     9,545,701     9,514,926  
Tangible equity to tangible assets   9.20 %   9.24 %   9.53 %
Book value per common share   $ 19.22     $ 18.69     $ 18.15  
Tangible book value per common share   17.13     16.60     16.06  


INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
    Three months ended
    12/31/2018   9/30/2018   12/31/2017
Net interest income (a)  $ 14,807     $ 14,385     $ 12,817  
Provision for loan losses   593     785     395  
Net interest income after provision for loan losses   14,214     13,600     12,422  
             
Noninterest income (b)  836     1,217     962  
Loss (gain) on sale of investment securities, net   23     (15 )   (50 )
Loss on sale of other real estate owned, net   20         5  
(Gain) loss on sale of fixed assets, net       (9 )   57  
Change in the fair value of equity securities   306     (36 )    
Core noninterest income (d)  1,185     1,157     974  
             
Core earnings before noninterest expense   15,399     14,757     13,396  
             
Total noninterest expense (c)  10,906     10,254     9,608  
Acquisition expense   (341 )       (819 )
Severance       (293 )    
Write down of other real estate owned   (567 )        
Core noninterest expense (f)  9,998     9,961     8,789  
             
Core earnings before income tax expense   5,401     4,796     4,607  
Core income tax expense(1)   1,053     825     1,462  
Core earnings   $ 4,348     $ 3,971     $ 3,145  
             
Core basic earnings per common share   0.46     0.42     0.35  
             
Diluted earnings per common share (GAAP)   $ 0.34     $ 0.41     $ 0.25  
Loss (gain) on sale of investment securities, net            
Loss on sale of other real estate owned, net            
(Gain) loss on sale of fixed assets, net            
Change in the fair value of equity securities   0.03          
Acquisition expense   0.03         0.06  
Write down of other real estate owned   0.05          
Severance       0.03      
Discrete tax benefit related to return-to-provision adjustments       (0.03 )    
One-time charge to income tax expense           0.03  
Core diluted earnings per common share   $ 0.45     $ 0.41     $ 0.34  
             
Efficiency ratio (c) / (a+b)  69.72 %   65.72 %   69.73 %
Core efficiency ratio (f) / (a+d)  62.52 %   64.09 %   63.73 %
Core return on average assets(2)   0.98 %   0.92 %   0.81 %
Core return on average equity(2)   9.55 %   8.81 %   7.77 %
Total average assets   $ 1,766,094     $ 1,705,733     $ 1,534,917  
Total average stockholders’ equity   180,682     178,735     160,485  
             
             
(1) Core income tax expense is calculated using the effective tax rate of 19.5% for the quarter ended December 31, 2018, and effective rate of 17.2%, prior to the discrete tax benefit of $0.3 million related to return-to-provision adjustments for the quarter ended September 30, 2018, and an effective tax rate of 31.7% prior to the one-time charge of $0.3 million to tax expense as a result of the Tax Cuts and Jobs Act for the quarter ended December 31, 2017.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.
 

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