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Investar Holding Corporation Announces Record Revenues Following Second Acquisition in 2017

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BATON ROUGE, La., Jan. 25, 2018 (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, 2017. The Company reported net income of $2.3 million, or $0.25 per diluted common share, for the fourth quarter of 2017, compared to $2.1 million, or $0.24 per diluted common share, for the quarter ended September 30, 2017, and $1.8 million, or $0.26 per diluted common share, for the quarter ended December 31, 2016.

On a non-GAAP basis, core earnings per share in the fourth quarter of 2017 were $0.35 and $0.34 per basic and diluted common share, respectively (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).

On December 22, 2017, President Trump signed "H.R.1," referred to as the Tax Cuts and Jobs Act, which, among other items, reduces the federal corporate tax rate to 21% effective January 1, 2018. As a result, the Company was required to revalue its deferred tax assets and liabilities to account for the future impact of a lower corporate tax rate. The revaluation of the Company's deferred tax assets and liabilities resulted in a one-time charge to income tax expense of approximately $0.3 million, which resulted in a reduction in diluted earnings per share for the fourth quarter of 2017 of approximately $0.03. The Company's final analysis and write-down will be based on a number of factors, including completion of the Company's 2017 consolidated tax return.

The Company's balance sheet and statement of income as of and for the three and twelve months ended December 31, 2017 include the impact of the Company's acquisition of BOJ Bancshares, Inc. and its wholly-owned subsidiary, The Highlands Bank (together "BOJ"), which was completed on December 1, 2017 and the acquisition of Citizens Bancshares, Inc. and its wholly-owned subsidiary, Citizens Bank (together "Citizens"), which was completed on July 1, 2017. As of the acquisition date, BOJ operated five branch locations and had approximately $152 million in total assets, including approximately $104 million in loans, and approximately $126 million in deposits. As of the acquisition date, Citizens operated three branch locations and had approximately $250 million in total assets, including approximately $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 refinement for up to one year after the closing date of the acquisition as additional information becomes available.

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

"The fourth quarter was another exciting quarter for Investar. We completed the acquisition of BOJ Bancshares, Inc. and its wholly-owned subsidiary, The Highlands Bank, on December 1, 2017, which was our second acquisition in 2017. We expect to complete the integration of the branch and operating systems in the first quarter of 2018.

Despite the effects of the Tax Cuts and Jobs Act on the fourth quarter results, we believe the Company, as well as its shareholders, will benefit from lower corporate tax rates in 2018 and beyond. Additionally, with the completion of two acquisitions in 2017, our results are strong as we head into 2018, and we look forward to recognizing the benefits of the acquisitions in the coming year. We have built a great team of experienced members focused on growing relationships with our customers and look forward to 2018 as the opportunities to continue to grow revenues and expand our customer base remain strong."

Fourth Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter ended December 31, 2017 totaled $16.9 million, an increase of $1.3 million, or 8.5%, compared to September 30, 2017, and an increase of $5.0 million, or 41.6%, compared to December 31, 2016.

  • Total loans increased $148.3 million, or 13.4%, to $1.3 billion at December 31, 2017, compared to $1.1 billion at September 30, 2017, and increased $365.4 million, or 40.9%, compared to $893.4 million at December 31, 2016. Excluding loans acquired in the BOJ acquisition, or $100.0 million, total loans increased $48.2 million, or 4.3%, to $1.2 billion at December 31, 2017, compared to $1.1 billion at September 30, 2017. Excluding loans acquired in both the BOJ and Citizens acquisitions, or $217.5 million, total loans increased $147.9 million, or 16.6%, to $1.0 billion at December 31, 2017, compared to $893.4 million at December 31, 2016.

  • The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $407.8 million at December 31, 2017, an increase of $65.2 million, or 19.0%, compared to the business lending portfolio of $342.6 million at September 30, 2017, and an increase of $142.0 million, or 53.4%, compared to the business lending portfolio of $265.8 million at December 31, 2016.

  • Noninterest-bearing deposits increased $41.5 million, or 23.7%, to $216.6 million at December 31, 2017, compared to $175.1 million at September 30, 2017, and increased $108.2 million, or 99.8%, compared to $108.4 million at December 31, 2016. Excluding noninterest-bearing deposits acquired in the BOJ acquisition, or $34.0 million, noninterest-bearing deposits increased $7.4 million, or 4.2%, to $182.6 million at December 31, 2017 compared to $175.1 million at September 30, 2017. Excluding noninterest-bearing deposits acquired in both the BOJ and Citizens acquisitions, or $77.5 million, noninterest-bearing deposits increased $30.7 million, or 28.3%, to $139.1 million at December 31, 2017, compared to $108.4 million at December 31, 2016.

  • Net interest margin increased fifteen basis points to 3.55% for the quarter ended December 31, 2017, compared to 3.40% for the quarter ended September 30, 2017, and increased thirty-five basis points from 3.20% for the quarter ended December 31, 2016. Exclusive of interest income accretion of $0.2 million in both the quarters ended December 31, 2017 and September 30, 2017, and a $40,000 interest recovery in the quarter ended December 31, 2017, net interest margin increased fourteen basis points to 3.48% for the quarter ended December 31, 2017 compared to 3.34% for the quarter ended September 30, 2017, and increased twenty-eight basis points from 3.20% for the quarter ended December 31, 2016.

  • Cost of deposits increased one basis point to 0.92% for the quarter ended December 31, 2017, compared to 0.91% for the quarter ended September 30, 2017, but decreased six basis points compared to 0.98% for the quarter ended December 31, 2016.

  • The Company completed the acquisition of BOJ on December 1, 2017. The conversion of branch and operating systems is expected to be completed during the first quarter of 2018.

  • The Company repurchased 10,463 shares of its common stock through its stock repurchase program at an average price of $23.08 during the quarter ended December 31, 2017.

Loans

Total loans were $1.3 billion at December 31, 2017, an increase of $148.3 million, or 13.4%, compared to September 30, 2017, and an increase of $365.4 million, or 40.9%, compared to December 31, 2016. Included in total loans at December 31, 2017 is $100.0 million, or 7.9% of the total loan portfolio, of loans acquired from BOJ. Exclusive of loans acquired from BOJ, total loans at December 31, 2017 increased $48.2 million, or 4.3%, compared to $1.1 billion at September 30, 2017. Exclusive of loans acquired from BOJ and Citizens, or $217.5 million, total loans increased $147.9 million, or 16.6%, compared to December 31, 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
    12/31/2017   9/30/2017   12/31/2016   $   %   $   %   12/31/2017   12/31/2016
Mortgage loans on real estate                                    
Construction and development   $ 157,667     $ 122,501     $ 90,737     $ 35,166     28.7 %   $ 66,930     73.8 %   12.5 %   10.2 %
1-4 Family   276,922     252,003     177,205     24,919     9.9     99,717     56.3     22.0     19.8  
Multifamily   51,283     50,770     42,759     513     1.0     8,524     19.9     4.1     4.8  
Farmland   23,838     14,130     8,207     9,708     68.7     15,631     190.5     1.9     0.9  
Commercial real estate                                    
Owner-occupied   272,433     217,369     180,458     55,064     25.3     91,975     51.0     21.6     20.2  
Nonowner-occupied   264,931     245,053     200,258     19,878     8.1     64,673     32.3     21.0     22.4  
Commercial and industrial   135,392     125,230     85,377     10,162     8.1     50,015     58.6     10.8     9.6  
Consumer   76,313     83,465     108,425     (7,152 )   (8.6 )   (32,112 )   (29.6 )   6.1     12.1  
Total loans   1,258,779     1,110,521     893,426     148,258     13.4 %   365,353     40.9 %   100 %   100 %

Construction and development loans were $157.7 million at December 31, 2017, an increase of $35.2 million, or 28.7%, compared to $122.5 million at September 30, 2017, and an increase of $66.9 million, or 73.8%, compared to $90.7 million at December 31, 2016. The increase in the construction and development portfolio at December 31, 2017 compared to September 30, 2017 is partly attributable to the $21.5 million balance of these loans acquired from BOJ. The increase in this portfolio compared to December 31, 2016 is primarily a result of organic growth in the Company's Baton Rouge market where our lenders have great experience and long-standing relationships with local developers.

One-to-four family loans were $276.9 million at December 31, 2017, an increase of $24.9 million, or 9.9%, compared to $252.0 million at September 30, 2017, and an increase of $99.7 million, or 56.3%, compared to $177.2 million at December 31, 2016. The increase in the 1-4 family portfolio is primarily a result of the approximately $79.4 million balance at December 31, 2017 of 1-4 family loans acquired from both BOJ and Citizens.

Owner-occupied commercial real estate loans were $272.4 million at December 31, 2017, an increase of $55.1 million, or 25.3%, compared to $217.4 million at September 30, 2017, and an increase of $92.0 million, or 51.0%, compared to $180.5 million at December 31, 2016. The increase in the owner-occupied portfolio is primarily a result of the approximately $37.7 million of these loans acquired from both BOJ and Citizens.

At December 31, 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 $407.8 million, an increase of $65.2 million, or 19.0%, compared to the business lending portfolio of $342.6 million at September 30, 2017, and an increase of $142.0 million, or 53.4%, compared to the business lending portfolio of $265.8 million at December 31, 2016. Included in the business lending portfolio at December 31, 2017 is $71.1 million of loans acquired from BOJ and Citizens. The Company continues to focus on relationship banking and growing its commercial loan portfolio.

Consumer loans, including indirect auto loans of $55.9 million, totaled $76.3 million at December 31, 2017, a decrease of $7.2 million, or 8.6%, compared to $83.5 million, including indirect auto loans of $64.1 million, at September 30, 2017, and a decrease of $32.1 million, or 29.6%, compared to $108.4 million, including indirect auto loans of $92.1 million, at December 31, 2016. Excluding consumer loans acquired from BOJ, or $1.9 million, consumer loans decreased $9.0 million, or 10.8%, compared to September 30, 2017. Excluding consumer loans acquired from BOJ and Citizens, or $9.3 million, consumer loans decreased $41.4 million, or 38.2%, compared to December 31, 2016. The decrease in consumer loans is attributable to the scheduled paydowns of this portfolio and is consistent with our business strategy.

Credit Quality

While the Company's internal focus has been directed toward managing growth and the integration of its recent acquisitions, its commitment to credit quality remains strong. Nonperforming loans were $3.7 million, or 0.29% of total loans, at December 31, 2017, an increase of $1.5 million compared to $2.2 million, or 0.20% of total loans, at September 30, 2017, and an increase of $1.7 million compared to $2.0 million at December 31, 2016. The increase in nonperforming loans at December 31, 2017 compared to September 30, 2017 and December 31, 2016 is mainly attributable to the acquisition of $1.7 million and $0.7 million of nonperforming loans from BOJ and Citizens, respectively.

The allowance for loan losses was $7.9 million, or 214.43% and 0.63% of nonperforming and total loans, respectively, at December 31, 2017, compared to $7.6 million, or 349.64% and 0.68%, respectively, at September 30, 2017, and $7.1 million, or 356.16% and 0.79%, respectively, at December 31, 2016. As a result of the acquisitions of BOJ and Citizens, the Company is holding acquired loans that are carried net of a fair value adjustment for credit and interest rate marks and are only included in the allowance calculation to the extent that the reserve requirement exceeds the fair value adjustment.

The provision for loan losses was $0.4 million for the quarters ended December 31, 2017, September 30, 2017, and December 31, 2016.

Deposits

Total deposits at December 31, 2017 were $1.2 billion, an increase of $123.9 million, or 11.2%, compared to September 30, 2017, and an increase of $317.5 million, or 35.0%, compared to December 31, 2016. The Company acquired $126.1 million and $212.2 million in deposits from the BOJ and Citizens acquisitions, respectively. Exclusive of deposits acquired from BOJ, total deposits decreased $2.2 million, or 0.2%, compared to September 30, 2017. Exclusive of deposits acquired from BOJ and Citizens, total deposits decreased $11.2 million, or 1.2%, compared to December 31, 2016. The decrease in deposits, exclusive of acquired deposits, at December 31, 2017 compared to December 31, 2016 is primarily due to a decrease in time deposits of $62.3 million, or 13.8%, 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
    12/31/2017   9/30/2017   12/31/2016   $   %   $   %   12/31/2017   12/31/2016
Noninterest-bearing demand deposits   $ 216,599     $ 175,130     $ 108,404     $ 41,469     23.7 %   $ 108,195     99.8 %   17.7 %   11.9 %
NOW accounts   208,683     192,503     171,556     16,180     8.4     37,127     21.6     17.0     18.9  
Money market deposit accounts   146,140     147,096     123,079     (956 )   (0.6 )   23,061     18.7     11.9     13.6  
Savings accounts   117,372     103,017     52,860     14,355     13.9     64,512     122.0     9.6     5.8  
Time deposits   536,443     483,616     451,888     52,827     10.9     84,555     18.7     43.8     49.8  
Total deposits   $ 1,225,237     $ 1,101,362     $ 907,787     $ 123,875     11.2 %   $ 317,450     35.0 %   100.0 %   100.0 %

Financial Results for the Quarter Ended December 31, 2017

The financial results for the quarter ended December 31, 2017 reflect the acquisition of BOJ beginning December 1, 2017. The acquisition of BOJ added five branch locations in East and West Feliciana Parishes with total assets of approximately $152 million, total loans of $104 million, and total deposits of $126 million. During the quarter ended December 31, 2017, the Company recognized $0.8 million in expenses related to the acquisition activity during the year.

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act, which, among other items, reduces the federal corporate tax rate to 21% effective January 1, 2018. As a result, the Company was required to revalue its deferred tax assets and liabilities to account for the future impact of a lower corporate tax rate. The revaluation of the Company's deferred tax assets and liabilities resulted in a one-time charge to income tax expense of approximately $0.3 million, which caused a $0.03 reduction in diluted earnings per share for the quarter.

Net Interest Income

Net interest income for the fourth quarter of 2017 totaled $12.8 million, an increase of $1.3 million, or 11.1%, compared to the third quarter of 2017, and an increase of $4.0 million, or 46.0%, compared to the fourth quarter of 2016. Included in net interest income for the quarters ended December 31, 2017 and September 30, 2017 is $0.2 million of interest income accretion from the acquisition of loans during those quarters. 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 fourth quarter of 2017 increased $3.5 million and $1.4 million due to increases in the volume and yield, respectively, of interest-earning assets, offset slightly by decreases of $0.6 million and $0.3 million due to the increases in the volume and rate, respectively, of interest-bearing liabilities compared to the fourth quarter of 2016.

The Company's net interest margin was 3.55% for the quarter ended December 31, 2017 compared to 3.40% for the quarter ended September 30, 2017 and 3.20% for the quarter ended December 31, 2016. The yield on interest-earning assets was 4.42% for the quarter ended December 31, 2017 compared to 4.26% for the quarter ended September 30, 2017 and 4.04% for the quarter ended December 31, 2016. The increase in net interest margin at December 31, 2017 compared to both September 30, 2017 and December 31, 2016 was driven by an increase in interest-earning assets and the yields earned on those assets, and an increase in the volume of lower cost deposits, partially resulting from the acquisitions of both BOJ and Citizens. Exclusive of the interest income accretion from the acquisition of loans, discussed in the preceding paragraph, as well as a $40,000 interest recovery in the quarter ended December 31, 2017, net interest margin was 3.48% for the quarter ended December 31, 2017 compared to 3.34% for the quarter ended September 30, 2017 and 3.20% for the quarter ended December 31, 2016. The yield on interest-earning assets was 4.35% at December 31, 2017 compared to 4.20% and 4.04% for the quarters ended September 30, 2017 and December 31, 2016, respectively.

The cost of deposits increased one basis point to 0.92% for the quarter ended December 31, 2017 compared to 0.91% for the quarter ended September 30, 2017 and decreased six basis points compared to 0.98% at December 31, 2016. The decrease in the cost of deposits when compared to the quarter ended December 31, 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 December 31, 2017 increased two basis points to 1.07% compared to 1.05% for the quarter ended September 30, 2017 and increased eight basis points compared to 0.99% for the quarter ended December 31, 2016. The increase in the cost of deposits and cost of funds at December 31, 2017 compared to September 30, 2017 is mainly a result of an increase in the cost of time deposits and short term borrowings. The increase in the cost of funds at December 31, 2017 compared to December 31, 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.

Noninterest Income

Noninterest income for the fourth quarter of 2017 totaled $1.0 million, a decrease of $0.2 million, or 17.6%, compared to the third quarter of 2017, and an increase of $0.1 million, or 7.4%, compared to the fourth quarter of 2016. The decrease in noninterest income when compared to the quarter ended September 30, 2017 is due to a $0.2 million decrease in gain on sale of fixed assets.

Noninterest Expense

Noninterest expense for the fourth quarter of 2017 totaled $9.6 million, an increase of $0.5 million, or 5.3%, compared to the third quarter of 2017, and an increase of $3.0 million, or 45.5%, compared to the fourth quarter of 2016. The increase in noninterest expense compared to the quarters ended September 30, 2017 and December 31, 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 BOJ and Citizens acquisitions, 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 and the BOJ acquisition that was completed on December 1, 2017.

Basic Earnings Per Share and Diluted Earnings Per Common Share

The Company reported both basic and diluted earnings per common share of $0.25 for the quarter ended December 31, 2017, a decrease of $0.01 compared to basic and diluted earnings per common share of $0.26 for the quarter ended December 31, 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, the issuance of approximately 0.8 million common shares as consideration in the acquisition of BOJ, the $0.8 million in acquisition expenses, and the $0.3 million charge to income tax expense as a result of the Tax Cuts and Jobs Act recognized during the quarter ended December 31, 2017.

Taxes

The Company recorded income tax expense of $1.5 million for the quarter ended December 31, 2017, which equates to an effective tax rate of 39.5%, an increase from the effective tax rates of 32.6% and 31.5% for the quarters ended September 30, 2017 and December 31, 2016, respectively. 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 Company's final analysis and write-down will be based on a number of factors, including completion of the Company's 2017 consolidated tax return. Management expects the Company's effective tax rate to approximate 20% beginning in 2018, mainly as a result of the Tax Cuts and Jobs Act.

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 20 full service banking offices located throughout its market. At December 31, 2017, the Company had 258 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 ability to effectively integrate employees, customers, operations and branches from our recent acquisitions of Citizens and BOJ.

In addition, forward-looking statement and estimates regarding the effects of the Tax Cuts and Jobs Act are based on our current interpretation of this legislation and may change as a result of additional implementation guidance, changes in assumptions, potential future refinements of or revisions to calculations and completion of the Company's 2017 consolidated tax return.

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
    12/31/2017   9/30/2017   12/31/2016   Linked Quarter   Year/Year
EARNINGS DATA                    
Total interest income   $ 15,967     $ 14,442     $ 11,062     10.6 %   44.3 %
Total interest expense   3,150     2,904     2,281     8.5     38.1  
Net interest income   12,817     11,538     8,781     11.1     46.0  
Provision for loan losses   395     420     375     (6.0 )   5.3  
Total noninterest income   962     1,167     896     (17.6 )   7.4  
Total noninterest expense   9,608     9,122     6,603     5.3     45.5  
Income before income taxes   3,776     3,163     2,699     19.4     39.9  
Income tax expense   1,492     1,032     851     44.6     75.3  
Net income   $ 2,284     $ 2,131     $ 1,848     7.2     23.6  
                     
AVERAGE BALANCE SHEET DATA                    
Total assets   $ 1,534,917     $ 1,437,929     $ 1,147,835     6.7 %   33.7 %
Total interest-earning assets   1,434,164     1,346,455     1,087,645     6.5     31.9  
Total loans   1,169,686     1,073,800     889,814     8.9     31.5  
Total interest-bearing deposits   957,847     927,014     798,250     3.3     20.0  
Total interest-bearing liabilities   1,171,884     1,101,112     917,085     6.4     27.8  
Total deposits   1,147,782     1,100,226     904,310     4.3     26.9  
Total stockholders' equity   160,485     152,186     113,917     5.5     40.9  
                     
PER SHARE DATA                    
Earnings:                    
Basic earnings per share   $ 0.25     $ 0.24     $ 0.26     4.2 %   (3.8 )%
Diluted earnings per share   0.25     0.24     0.26     4.2     (3.8 )
Core Earnings(1):                    
Core basic earnings per share(1)   0.35     0.29     0.25     20.7     40.0  
Core diluted earnings per share(1)   0.34     0.29     0.25     17.2     36.0  
Book value per share   18.15     17.56     15.88     3.4     14.3  
Tangible book value per share(1)   16.06     16.04     15.42     0.1     4.2  
Common shares outstanding   9,514,926     8,704,562     7,101,851     9.3     34.0  
Weighted average common shares outstanding - basic   8,981,014     8,702,559     7,017,213     3.2     28.0  
Weighted average common shares outstanding - diluted   9,052,213     8,797,517     7,090,500     2.9     27.7  
                     
PERFORMANCE RATIOS                    
Return on average assets   0.59 %   0.59 %   0.65 %   %   (9.2 )%
Core return on average assets(1)   0.81     0.70     0.61     15.7     32.8  
Return on average equity   5.65     5.55     6.51     1.8     (13.2 )
Core return on average equity(1)   7.77     6.61     6.15     17.5     26.3  
Net interest margin   3.55     3.40     3.20     4.4     10.9  
Net interest income to average assets   3.31     3.18     3.04     4.1     8.9  
Noninterest expense to average assets   2.48     2.52     2.28     (1.6 )   8.8  
Efficiency ratio(2)   69.73     71.80     68.23     (2.9 )   2.2  
Core efficiency ratio(1)   63.73     66.49     69.11     (4.2 )   (7.8 )
Dividend payout ratio   12.38     12.26     4.65     1.0     166.2  
Net charge-offs to average loans   0.01     0.01     0.08         (87.5 )
                     
(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
    12/31/2017   9/30/2017   12/31/2016   Linked Quarter   Year/Year
ASSET QUALITY RATIOS                    
Nonperforming assets to total assets   0.46 %   0.41 %   0.52 %   12.2 %   (11.5 )%
Nonperforming loans to total loans   0.29     0.20     0.22     45.0     31.8  
Allowance for loan losses to total loans   0.63     0.68     0.79     (7.4 )   (20.3 )
Allowance for loan losses to nonperforming loans   214.43     349.64     356.16     (38.7 )   (39.8 )
                     
CAPITAL RATIOS                    
Investar Holding Corporation:                    
Total equity to total assets   10.64 %   10.35 %   9.73 %   2.8 %   9.4 %
Tangible equity to tangible assets(1)   9.53     9.54     9.48     (0.1 )   0.5  
Tier 1 leverage ratio   10.66     10.13     10.10     5.2     5.5  
Common equity tier 1 capital ratio(2)   11.71     11.97     11.40     (2.2 )   2.7  
Tier 1 capital ratio(2)   12.20     12.27     11.75     (0.6 )   3.8  
Total capital ratio(2)   14.17     14.46     12.47     (2.0 )   13.6  
Investar Bank:                    
Tier 1 leverage ratio   11.63     11.21     10.03     3.7     16.0  
Common equity tier 1 capital ratio(2)   13.31     13.58     11.67     (2.0 )   14.1  
Tier 1 capital ratio(2)   13.31     13.58     11.67     (2.0 )   14.1  
Total capital ratio(2)   13.90     14.23     12.39     (2.3 )   12.2  
                     
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for December 31, 2017


INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
             
    December 31, 2017   September 30, 2017   December 31, 2016
ASSETS            
Cash and due from banks   $ 19,619     $ 17,942     $ 9,773  
Interest-bearing balances due from other banks   10,802     30,566     19,569  
Federal funds sold           106  
Cash and cash equivalents   30,421     48,508     29,448  
             
Available for sale securities at fair value (amortized cost of $220,077, $228,980, and $166,258, respectively)   217,564     227,562     163,051  
Held to maturity securities at amortized cost (estimated fair value of $17,947, $19,311, and $19,612, respectively)   17,997     19,306     20,091  
Loans, net of allowance for loan losses of $7,891, $7,605, and $7,051, respectively   1,250,888     1,102,916     886,375  
Other equity securities   9,798     7,744     5,362  
Bank premises and equipment, net of accumulated depreciation of $7,825, $7,362, and $6,751, respectively   37,540     33,705     31,722  
Other real estate owned, net   3,837     3,830     4,065  
Accrued interest receivable   4,688     4,147     3,218  
Deferred tax asset   1,294     2,604     2,868  
Goodwill and other intangible assets, net   19,926     13,271     3,234  
Bank-owned life insurance   23,231     8,140     7,201  
Other assets   5,550     4,690     2,325  
Total assets   $ 1,622,734     $ 1,476,423     $ 1,158,960  
             
LIABILITIES            
Deposits            
Noninterest-bearing   $ 216,599     $ 175,130     $ 108,404  
Interest-bearing   1,008,638     926,232     799,383  
Total deposits   1,225,237     1,101,362     907,787  
Advances from Federal Home Loan Bank   166,658     162,700     82,803  
Repurchase agreements   21,935     24,892     39,087  
Subordinated debt   18,168     18,157      
Junior subordinated debt   5,792     3,609     3,609  
Other borrowings           1,000  
Accrued taxes and other liabilities   12,215     12,827     11,917  
Total liabilities   1,450,005     1,323,547     1,046,203  
             
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; 9,514,926, 8,704,562, and 7,101,851 shares outstanding, respectively   9,515     8,705     7,102  
Surplus   131,582     113,458     81,499  
Retained earnings   33,203     31,508     26,227  
Accumulated other comprehensive loss   (1,571 )   (795 )   (2,071 )
Total stockholders' equity   172,729     152,876     112,757  
  Total liabilities and stockholders' equity   $ 1,622,734     $ 1,476,423     $ 1,158,960  


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, 2017   September 30, 2017   December 31, 2016   December 31, 2017   December 31, 2016
INTEREST INCOME                    
Interest and fees on loans   $ 14,407     $ 12,893     $ 10,103     $ 47,863     $ 39,380  
Interest on investment securities   1,428     1,399     898     5,055     3,565  
Other interest income   132     150     61     428     207  
Total interest income   15,967     14,442     11,062     53,346     43,152  
                     
INTEREST EXPENSE                    
Interest on deposits   2,233     2,137     1,970     8,050     7,182  
Interest on borrowings   917     767     311     2,779     1,231  
Total interest expense   3,150     2,904     2,281     10,829     8,413  
Net interest income   12,817     11,538     8,781     42,517     34,739  
                     
Provision for loan losses   395     420     375     1,540     2,079  
Net interest income after provision for loan losses   12,422     11,118     8,406     40,977     32,660  
                     
NONINTEREST INCOME                    
Service charges on deposit accounts   293     281     79     767     343  
Gain on sale of investment securities, net   50     27     15     292     443  
(Loss) gain on sale of fixed assets, net   (57 )   160     14     127     1,266  
(Loss) gain on sale of other real estate owned, net   (5 )   37     2     27     13  
Gain on sale of loans, net           92         405  
Servicing fees and fee income on serviced loans   329     352     449     1,482     2,087  
Other operating income   352     310     245     1,120     911  
Total noninterest income   962     1,167     896     3,815     5,468  
Income before noninterest expense   13,384     12,285     9,302     44,792     38,128  
                     
NONINTEREST EXPENSE                    
Depreciation and amortization   556     542     383     1,865     1,493  
Salaries and employee benefits   5,486     5,136     3,901     18,681     15,609  
Occupancy   324     317     252     1,150     995  
Data processing   521     446     373     1,690     1,488  
Marketing   151     124     70     422     386  
Professional fees   224     263     295     950     1,261  
Customer reimbursements                   584  
Acquisition expenses   819     824         1,868      
Other operating expenses   1,527     1,470     1,329     5,716     4,823  
Total noninterest expense   9,608     9,122     6,603     32,342     26,639  
Income before income tax expense   3,776     3,163     2,699     12,450     11,489  
Income tax expense   1,492     1,032     851     4,248     3,609  
Net income   $ 2,284     $ 2,131     $ 1,848     $ 8,202     $ 7,880  
                     
EARNINGS PER SHARE                    
Basic earnings per share   $ 0.25     $ 0.24     $ 0.26     $ 0.96     $ 1.11  
Diluted earnings per share   $ 0.25     $ 0.24     $ 0.26     $ 0.96     $ 1.10  
Cash dividends declared per common share   $ 0.03     $ 0.03     $ 0.01     $ 0.10     $ 0.04  


INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                                     
    For the three months ended
    December 31, 2017   September 30, 2017   December 31, 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   $ 1,169,686     $ 14,407     4.89 %   $ 1,073,800     $ 12,893     4.76 %   $ 889,814     $ 10,103     4.50 %
Securities:                                    
Taxable   203,011     1,221     2.39     203,407     1,193     2.33     138,985     707     2.02  
Tax-exempt   35,060     207     2.34     34,659     206     2.36     30,898     191     2.45  
Interest-bearing balances with banks   26,407     132     1.98     34,589     150     1.72     27,948     61     0.87  
Total interest-earning assets   1,434,164     15,967     4.42     1,346,455     14,442     4.26     1,087,645     11,062     4.04  
Cash and due from banks   22,520             22,626             7,845          
Intangible assets   15,655             13,283             3,237          
Other assets   70,254             63,007             56,361          
Allowance for loan losses   (7,676 )           (7,442 )           (7,253 )        
Total assets   $ 1,534,917             $ 1,437,929             $ 1,147,835          
                                     
Liabilities and stockholders' equity                                    
Interest-bearing liabilities:                                    
Deposits:                                    
Interest-bearing demand deposits   $ 348,573     $ 608     0.69     $ 337,846     $ 604     0.71     $ 281,500     $ 485     0.68  
Savings deposits   105,896     138     0.52     102,331     139     0.54     53,219     87     0.65  
Time deposits   503,378     1,487     1.17     486,837     1,394     1.14     463,531     1,398     1.20  
Total interest-bearing deposits   957,847     2,233     0.92     927,014     2,137     0.91     798,250     1,970     0.98  
Short-term borrowings   135,126     430     1.26     122,456     367     1.19     99,169     246     0.98  
Long-term debt   78,911     487     2.45     51,642     400     3.07     19,666     65     1.31  
Total interest-bearing liabilities   1,171,884     3,150     1.07     1,101,112     2,904     1.05     917,085     2,281     0.99  
Noninterest-bearing deposits   189,935             173,212             106,060          
Other liabilities   12,613             11,419             10,773          
Stockholders' equity   160,485             152,186             113,917          
Total liability and stockholders' equity   $ 1,534,917             $ 1,437,929             $ 1,147,835          
Net interest income/net interest margin       $ 12,817     3.55 %       $ 11,538     3.40 %       $ 8,781     3.20 %


INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                         
                         
    For the twelve months ended
    December 31, 2017   December 31, 2016
    Average
Balance
  Interest
Income/
Expense
  Yield/ Rate   Average
Balance
  Interest
Income/
Expense
  Yield/ Rate
Assets                        
Interest-earning assets:                        
Loans   $ 1,013,502     $ 47,863     4.72 %   $ 862,340     $ 39,380     4.55 %
Securities:                        
Taxable   180,769     4,265     2.36     129,251     2,878     2.22  
Tax-exempt   32,427     790     2.44     27,171     687     2.52  
Interest-bearing balances with banks   28,524     428     1.50     26,196     207     0.79  
Total interest-earning assets   1,255,222     53,346     4.25     1,044,958     43,152     4.12  
Cash and due from banks   15,534             7,463          
Intangible assets   8,892             3,231          
Other assets   61,387             54,951          
Allowance for loan losses   (7,368 )           (6,891 )        
Total assets   $ 1,333,667             $ 1,103,712          
                         
Liabilities and stockholders' equity                        
Interest-bearing liabilities:                        
Deposits:                        
Interest-bearing demand   $ 317,755     $ 2,223     0.70     $ 257,888     $ 1,690     0.65  
Savings deposits   78,444     446     0.57     52,753     353     0.67  
Time deposits   456,690     5,381     1.18     439,423     5,139     1.17  
Total interest-bearing deposits   852,889     8,050     0.94     750,064     7,182     0.95  
Short-term borrowings   129,109     1,430     1.11     108,339     956     0.88  
Long-term debt   47,922     1,349     2.81     23,092     275     1.19  
Total interest-bearing liabilities   1,029,920     10,829     1.05     881,495     8,413     0.95  
Noninterest-bearing deposits   147,856             97,948          
Other liabilities   10,782             11,793          
Stockholders' equity   145,109             112,476          
Total liability and stockholders' equity   $ 1,333,667             $ 1,103,712          
Net interest income/net interest margin       $ 42,517     3.39 %       $ 34,739     3.32 %


INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
             
    December 31, 2017   September 30, 2017   December 31, 2016
Tangible common equity            
Total stockholders' equity   $ 172,729     $ 152,876     $ 112,757  
Adjustments:            
Goodwill   17,086     11,357     2,684  
Core deposit intangible   2,740     1,814     450  
Trademark intangible   100     100     100  
Tangible common equity   $ 152,803     $ 139,605     $ 109,523  
Tangible assets            
Total assets   $ 1,622,734     $ 1,476,423     $ 1,158,960  
Adjustments:            
Goodwill   17,086     11,357     2,684  
Core deposit intangible   2,740     1,814     450  
Trademark intangible   100     100     100  
Tangible assets   $ 1,602,808     $ 1,463,152     $ 1,155,726  
             
Common shares outstanding   9,514,926     8,704,562     7,101,851  
Tangible equity to tangible assets   9.53 %   9.54 %   9.48 %
Book value per common share   $ 18.15     $ 17.56     $ 15.88  
Tangible book value per common share   16.06     16.04     15.42  


INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
    Three months ended
    December 31, 2017   September 30, 2017   December 31, 2016
Net interest income (a) $ 12,817     $ 11,538     $ 8,781  
Provision for loan losses   395     420     375  
Net interest income after provision for loan losses   12,422     11,118     8,406  
             
Noninterest income (b) 962     1,167     896  
Gain on sale of investment securities, net   (50 )   (27 )   (15 )
Loss (gain) on sale of other real estate owned, net   5     (37 )   (2 )
Loss (gain) on sale of fixed assets, net   57     (160 )   (14 )
Gain on sale of loans, net           (92 )
Core noninterest income (d) 974     943     773  
             
Core earnings before noninterest expense   13,396     12,061     9,179  
             
Total noninterest expense (c) 9,608     9,122     6,603  
Acquisition expense   (819 )   (824 )    
Core noninterest expense (f) 8,789     8,298     6,603  
             
Core earnings before income tax expense   4,607     3,763     2,576  
Core income tax expense(1)   1,462     1,228     811  
Core earnings   3,145     2,535     1,765  
             
Core basic earnings per share   0.35     0.29     0.25  
             
Diluted earnings per share (GAAP)   $ 0.25     $ 0.24     $ 0.26  
Gain on sale of investment securities, net            
Loss (gain) on sale of other real estate owned, net            
Loss (gain) on sale of fixed assets, net       (0.01 )    
Gain on sale of loans, net           (0.01 )
Acquisition expense   0.06     0.06      
One-time charge to income tax expense   0.03          
Core diluted earnings per share   $ 0.34     $ 0.29     $ 0.25  
             
Efficiency ratio (c) / (a+b) 69.73 %   71.80 %   68.23 %
Core efficiency ratio (f) / (a+d) 63.73 %   66.49 %   69.11 %
Core return on average assets(2)   0.81 %   0.70 %   0.61 %
Core return on average equity(2)   7.77 %   6.61 %   6.15 %
Total average assets   $ 1,534,917     $ 1,437,929     $ 1,147,835  
Total average stockholders' equity   160,485     152,186     113,917  
             
             
(1) Core income tax expense is calculated using the actual effective tax rate prior to the one-time charge of $0.3 million to tax expense as a result of the Tax Cuts and Jobs Act of 31.7% for the quarter ended December 31, 2017, and the actual effective tax rate of 32.6%, and 31.5% for the quarters ended September 30, 2017, and December 31, 2016, respectively.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.

 

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