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Investar Holding Corporation Announces Record Revenues Following Acquisition

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BATON ROUGE, La., Oct. 25, 2017 (GLOBE NEWSWIRE) -- Investar Holding Corporation (NASDAQ:ISTR) (the "Company"), the holding company for Investar Bank (the "Bank"), today announced financial results for the quarter ended September 30, 2017. The Company reported net income of $2.1 million, or $0.24 per diluted share for the third quarter of 2017, compared to $1.9 million, or $0.22 per diluted share for the quarter ended June 30, 2017, and $2.0 million, or $0.29 per diluted share, for the quarter ended September 30, 2016.

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

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

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

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

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

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

Third Quarter Highlights

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

Loans

Total loans were $1.1 billion at September 30, 2017, an increase of $177.6 million, or 19.0%, compared to June 30, 2017, and an increase of $263.7 million, or 31.1%, compared to September 30, 2016. Included in total loans at September 30, 2017 is $124.4 million, or 11.2% of the total loan portfolio, of loans acquired from Citizens. Exclusive of acquired loans, total loans at September 30, 2017 increased $53.2 million, or 5.7%, compared to June 30, 2017, and $139.3 million, or 16.4%, compared to September 30, 2016.

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

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

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

At September 30, 2017, the Company's total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $342.6 million, an increase of $58.5 million, or 20.6%, compared to the business lending portfolio of $284.1 million at June 30, 2017, and an increase of $92.3 million, or 36.9%, compared to the business lending portfolio of $250.3 million at September 30, 2016. Included in the business lending portfolio is $34.0 million, or 9.9% of the total portfolio, of loans acquired from Citizens. The Company continues to focus on relationship banking and growing our commercial loan portfolio.

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

Credit Quality

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

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

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

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

Deposits

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

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

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


Financial Results for the Quarter Ended September 30, 2017

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

Net Interest Income

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

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

The cost of deposits decreased seven basis points to 0.91% for the quarter ended September 30, 2017 compared to 0.98% for both the quarters ended June 30, 2017 and September 30, 2016. The decrease in the cost of deposits when compared to the quarters ended June 30, 2017 and September 30, 2016 is a result of a decrease in the cost of savings deposits and time deposits. The overall costs of funds for the quarter ended September 30, 2017 decreased five basis points to 1.05% compared to 1.10% for the quarter ended June 30, 2017 and increased seven basis points compared to 0.98% for the quarter ended September 30, 2016. The decrease in the cost of deposits and cost of funds at September 30, 2017 compared to June 30, 2017 is mainly a result of lower cost deposits and long term borrowings acquired from Citizens. The increase in the cost of funds at September 30, 2017 compared to September 30, 2016 is mainly attributable to the increase in long term borrowings resulting from the Company's issuance and sale, on March 24, 2017, of $18.6 million in aggregate principal amount of its 6.00% Fixed-to-Floating Rate Subordinated Notes due in 2027. The Company used the net proceeds from the debt issuance to fund a portion of the acquisition of Citizens Bancshares, Inc. and its wholly-owned subsidiary, Citizens Bank.

Noninterest Income

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

Noninterest Expense

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

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

Basic Earnings Per Share and Diluted Earnings Per Share

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

Taxes

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

About Investar Holding Corporation

Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, a state chartered bank. The Company's primary market is South Louisiana and it currently operates 15 full service banking offices located throughout its market. At September 30, 2017, the Company had 227 full-time equivalent employees.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America, or GAAP. These measures and ratios include "tangible common equity," "tangible assets," "tangible equity to tangible assets," "tangible book value per common share," "core noninterest income," "core earnings before noninterest expense," "core noninterest expense," "core earnings before income tax expense," "core income tax expense," "core earnings," "core efficiency ratio," "core return on average assets," "core return on average equity," "core basic earnings per share," and "core diluted earnings per share." Management believes these non-GAAP financial measures provide information useful to investors in understanding the Company's financial results, and the Company believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting the Company's business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and the Company strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. A reconciliation of the non-GAAP financial measures disclosed in this press release to the comparable GAAP financial measures is included at the end of the financial statement tables.

Forward-Looking Statements

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

  • business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;
  • our ability to achieve organic loan and deposit growth, and the composition of that growth;
  • changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;
  • the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;
  • our dependence on our management team, and our ability to attract and retain qualified personnel;
  • changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;
  • inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;
  • the concentration of our business within our geographic areas of operation in Louisiana;
  • concentration of credit exposure;
  • the ability to effectively integrate employees, customers, operations and branches from our recent acquisition of Citizens; and
  • the satisfaction of the conditions to closing the pending acquisition of BOJ Bancshares, Inc. and the ability to subsequently integrate it effectively.

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

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

INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
                     
    As of and for the three months ended
    9/30/2017   6/30/2017   9/30/2016   Linked Quarter   Year/Year
EARNINGS DATA                    
Total interest income   $ 14,442     $ 11,844     $ 10,993     21.9  %   31.4  %
Total interest expense   2,904     2,542     2,240     14.2     29.6  
Net interest income   11,538     9,302     8,753     24.0     31.8  
Provision for loan losses   420     375     450     12.0     (6.7 )
Total noninterest income   1,167     801     1,029     45.7     13.4  
Total noninterest expense   9,122     6,928     6,548     31.7     39.3  
Income before income taxes   3,163     2,800     2,784     13.0     13.6  
Income tax expense   1,032     877     747     17.7     38.2  
Net income   $ 2,131     $ 1,923     $ 2,037     10.8     4.6  
                     
AVERAGE BALANCE SHEET DATA                    
Total assets   $ 1,437,929     $ 1,198,878     $ 1,134,591     19.9  %   26.7  %
Total interest-earning assets   1,346,455     1,137,752     1,075,145     18.3     25.2  
Total loans   1,073,800     914,265     840,028     17.4     27.8  
Total gross loans   1,073,800     914,265     874,272     17.4     22.8  
Total interest-bearing deposits   927,014     745,647     784,591     24.3     18.2  
Total interest-bearing liabilities   1,101,112     922,780     905,521     19.3     21.6  
Total deposits   1,100,226     862,361     887,327     27.6     24.0  
Total stockholders' equity   152,186     149,713     113,056     1.7     34.6  
                     
PER SHARE DATA                    
Earnings:                    
Basic earnings per share   $ 0.24     $ 0.22     $ 0.29     9.1  %   (17.2 )%
Diluted earnings per share   0.24     0.22     0.29     9.1     (17.2 )
Core Earnings(1):                    
Core basic earnings per share(1)   0.29     0.22     0.27     31.8     7.4  
Core diluted earnings per share(1)   0.29     0.22     0.27     31.8     7.4  
Book value per share   17.56     17.11     15.93     2.6     10.2  
Tangible book value per share(1)   16.04     16.74     15.47     (4.2 )   3.7  
Common shares outstanding   8,704,562     8,815,119     7,131,186     (1.3 )   22.1  
                     
PERFORMANCE RATIOS                    
Return on average assets   0.59  %   0.64  %   0.71 %   (7.8 )%   (16.9 )%
Core return on average assets(1)   0.70     0.64     0.66     9.4     6.1  
Return on average equity   5.55     5.15     7.15     7.8     (22.4 )
Core return on average equity(1)   6.61     5.11     6.63     29.4     (0.3 )
Net interest margin   3.40     3.28     3.23     3.7     5.3  
Net interest income to average assets   3.18     3.11     3.06     2.3     3.9  
Noninterest expense to average assets   2.52     2.32     2.29     8.6     10.0  
Efficiency ratio(2)   71.80     68.57     66.94     4.7     7.3  
Core efficiency ratio(1)   66.49     68.46     68.37     (2.9 )   (2.7 )
Dividend payout ratio   12.26     9.94     3.81     23.3     221.8  
Net charge-offs to average loans   0.01     0.03     0.02     (66.7 )   (50.0 )
                     
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income.


 
 
INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
                     
    As of and for the three months ended
    9/30/2017   6/30/2017   9/30/2016   Linked Quarter   Year/Year
ASSET QUALITY RATIOS                    
Nonperforming assets to total assets   0.41 %   0.41 %   0.80 %   %   (48.8 )%
Nonperforming loans to total loans   0.20     0.13     1.06     53.8     (81.1 )
Allowance for loan losses to total loans,
excluding acquired loans
  0.77     0.78     0.87     (1.3 )   (11.5 )
Allowance for loan losses to nonperforming loans,
excluding acquired loans 
  541.62     627.63     82.4     (13.7 )   557.3  
                     
CAPITAL RATIOS                    
Investar Holding Corporation:                    
Total equity to total assets   10.35 %   12.30 %   9.84 %   (15.9 )%   5.2 %
Tangible equity to tangible assets(1)   9.54     12.07     9.59     (21.0 )   (0.5 )
Tier 1 leverage ratio   10.13     12.71     10.10     (20.3 )   0.3  
Common equity tier 1 capital ratio(2)   11.86     14.71     11.02     (19.4 )   7.6  
Tier 1 capital ratio(2)   12.15     15.05     11.37     (19.3 )   6.9  
Total capital ratio(2)   14.32     17.57     12.11     (18.5 )   18.2  
Investar Bank:                    
Tier 1 leverage ratio   11.20     13.96     9.94     (19.8 )   12.7  
Common equity tier 1 capital ratio(2)   13.46     16.53     11.19     (18.6 )   20.3  
Tier 1 capital ratio(2)   13.46     16.53     11.19     (18.6 )   20.3  
Total capital ratio(2)   14.10     17.26     11.93     (18.3 )   18.2  
                     
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for September 30, 2017


 
 
INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
             
    September 30, 2017     June 30, 2017    September 30, 2016
ASSETS            
Cash and due from banks   $ 17,942     $ 11,720     $ 10,172  
Interest-bearing balances due from other banks   30,566     23,238     35,811  
Federal funds sold       3     172  
Cash and cash equivalents   48,508     34,961     46,155  
             
Available for sale securities at fair value (amortized cost of $228,980,
$185,121, and $147,609, respectively)
  227,562     183,584     148,981  
Held to maturity securities at amortized cost (estimated fair value of $19,311,
$19,418, and $21,625, respectively)
  19,306     19,460     21,454  
Loans held for sale           40,553  
Loans, net of allowance for loan losses of $7,605, $7,320, and $7,383,
respectively
  1,102,916     925,640     839,445  
Other equity securities   7,744     7,025     7,388  
Bank premises and equipment, net of accumulated depreciation of $7,362,
$7,497, and $6,380, respectively
  33,705     31,510     31,835  
Other real estate owned, net   3,830     3,830     279  
Accrued interest receivable   4,147     3,197     3,081  
Deferred tax asset   2,604     2,343     1,384  
Goodwill and other intangible assets, net   13,271     3,213     3,244  
Bank-owned life insurance   8,140     7,297     7,150  
Other assets   4,690     3,466     3,256  
Total assets   $ 1,476,423     $ 1,225,526     $ 1,154,205  
             
LIABILITIES            
Deposits            
Noninterest-bearing   $ 175,130     $ 130,625     $ 112,414  
Interest-bearing   926,232     764,200     794,637  
Total deposits   1,101,362     894,825     907,051  
Advances from Federal Home Loan Bank   162,700     109,285     88,943  
Repurchase agreements   24,892     36,745     23,554  
Subordinated debt   18,157     18,145      
Junior subordinated debt   3,609     3,609     3,609  
Accrued taxes and other liabilities   12,827     12,121     17,472  
Total liabilities   1,323,547     1,074,730     1,040,629  
             
STOCKHOLDERS' EQUITY            
Preferred stock, no par value per share; 5,000,000 shares authorized            
Common stock, $1.00 par value per share; 40,000,000 shares authorized;
8,704,562, 8,815,119, and 7,131,186 shares outstanding, respectively
  8,705     8,815     7,131  
Surplus   113,458     113,246     81,827  
Retained earnings   31,508     29,644     24,465  
Accumulated other comprehensive loss   (795 )   (909 )   153  
Total stockholders' equity   152,876     150,796     113,576  
  Total liabilities and stockholders' equity   $ 1,476,423     $ 1,225,526     $ 1,154,205  


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


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


 
 
INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                                     
    For the three months ended
    September 30, 2017   June 30, 2017   September 30, 2016
    Average
Balance
  Interest
Income/
Expense
  Yield/ Rate   Average
Balance
  Interest
Income/
Expense
  Yield/ Rate   Average
Balance
  Interest
Income/
Expense
  Yield/ Rate
Assets                                    
Interest-earning assets:                                    
Loans   $ 1,073,800     $ 12,893     4.76 %   $ 914,265     $ 10,559     4.63 %   $ 874,272     $ 10,011     4.54 %
Securities:                                    
Taxable   203,407     1,193     2.33     165,689     1,013     2.45     136,047     728     2.12  
Tax-exempt   34,659     206     2.36     29,375     186     2.54     30,733     192     2.48  
Interest-bearing balances with banks   34,589     150     1.72     28,423     86     1.21     34,093     62     0.72  
Total interest-earning assets   1,346,455     14,442     4.26     1,137,752     11,844     4.18     1,075,145     10,993     4.06  
Cash and due from banks   22,626             8,213             7,138          
Intangible assets   13,283             3,217             3,248          
Other assets   63,007             56,919             56,273          
Allowance for loan losses   (7,442 )           (7,223 )           (7,213 )        
Total assets   $ 1,437,929             $ 1,198,878             $ 1,134,591          
                                     
Liabilities and stockholders' equity                                    
Interest-bearing liabilities:                                    
Deposits:                                    
Interest-bearing demand deposits   $ 337,846     $ 604     0.71     $ 291,902     $ 524     0.72     $ 262,841     $ 433     0.65  
Savings deposits   102,331     139     0.54     51,474     83     0.65     51,924     88     0.67  
Time deposits   486,837     1,394     1.14     402,271     1,220     1.22     469,826     1,413     1.19  
Total interest-bearing deposits   927,014     2,137     0.91     745,647     1,827     0.98     784,591     1,934     0.98  
Short-term borrowings   122,456     367     1.19     137,848     350     1.02     98,286     237     0.96  
Long-term debt   51,642     400     3.07     39,285     365     3.73     22,644     69     1.21  
Total interest-bearing liabilities   1,101,112     2,904     1.05     922,780     2,542     1.10     905,521     2,240     0.98  
Noninterest-bearing deposits   173,212             116,714             102,736          
Other liabilities   11,419             9,671             13,278          
Stockholders' equity   152,186             149,713             113,056          
Total liability and stockholders' equity   $ 1,437,929             $ 1,198,878             $ 1,134,591          
Net interest income/net interest margin          $ 11,538     3.40 %       $ 9,302     3.28 %       $ 8,753     3.23 %


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


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


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

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