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Investar Holding Corporation Announces 2018 First Quarter Results

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BATON ROUGE, La., April 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 March 31, 2018. The Company reported net income of $2.4 million, or $0.25 per diluted common share, for the first quarter of 2018, compared to $2.3 million, or $0.25 per diluted common share, for the quarter ended December 31, 2017, and $1.9 million, or $0.26 per diluted common share, for the quarter ended March 31, 2017. The first quarter of 2018 includes acquisition expense of $1.1 million ($0.09 per share after-tax impact) and a $0.6 million ($0.07 per share impact) charge to income tax expense as a result of the Tax Cuts and Jobs Act. The fourth quarter of 2017 includes acquisition expense of $0.8 million ($0.06 per share after-tax impact) and a $0.3 million ($0.03 per share impact) charge to income tax expense as a result of the Tax Cuts and Jobs Act.

On a non-GAAP basis, core earnings per diluted common share in the first quarter of 2018 were $0.40 compared to $0.34 for the fourth quarter of 2017 (refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics).

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

"I am pleased to announce another successful quarter for Investar. Following the acquisition of BOJ Bancshares, Inc. and its wholly-owned subsidiary, The Highlands Bank, on December 1, 2017, our operating teams successfully completed the integration of The Highlands Bank in February 2018, while continuing to provide outstanding customer service. This is the first quarter of operations following the BOJ acquisition and, despite the acquisition-related costs recognized, our financial results reflect the positive effect of the acquisition on our balance sheet and income statement. We look forward to realizing additional benefits from the acquisition going into the next quarter.

As we look to 2018, we believe our company is solidly positioned to grow the franchise and increase shareholder value. We continue to focus on quality loans and deposits while controlling noninterest expense and maintaining our focus on improving our return on assets and efficiency ratios."

First Quarter Highlights

  • Total revenues, or interest and noninterest income, for the quarter ended March 31, 2018 totaled $18.2 million, an increase of $1.3 million, or 7.8%, compared to December 31, 2017, and an increase of $6.3 million, or 52.4%, compared to March 31, 2017.

  • Total loans increased $14.2 million, or 1.1%, to $1.27 billion at March 31, 2018, compared to $1.26 billion at December 31, 2017, and increased $370.8 million, or 41.1%, compared to $902.1 million at March 31, 2017.

  • Noninterest-bearing deposits increased $5.3 million, or 2.4%, to $221.9 million at March 31, 2018, compared to $216.6 million at December 31, 2017, and increased $109.4 million, or 97.2%, compared to $112.5 million at March 31, 2017.

  • Net interest margin increased fifteen basis points to 3.70% for the quarter ended March 31, 2018, compared to 3.55% for the quarter ended December 31, 2017, and increased forty-three basis points from 3.27% for the quarter ended March 31, 2017.

  • Cost of deposits decreased one basis point to 0.91% for the quarter ended March 31, 2018, compared to 0.92% for the quarter ended December 31, 2017, and decreased six basis points compared to 0.97% for the quarter ended March 31, 2017.

  • The Company completed the conversion of branch and operating systems associated with the BOJ Bancshares, Inc. acquisition during the quarter.

  • The Company repurchased 27,933 shares of its common stock through its stock repurchase program at an average price of $24.11 during the quarter ended March 31, 2018.

Loans

Total loans were $1.3 billion at March 31, 2018, an increase of $14.2 million, or 1.1%, compared to December 31, 2017, and an increase of $370.8 million, or 41.1%, compared to March 31, 2017.

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
    3/31/2018   12/31/2017   3/31/2017   $   %   $   %   3/31/2018   3/31/2017
Mortgage loans on real estate                                    
Construction and development   $ 162,337     $ 157,667     $ 95,541     $ 4,670     3.0 %   $ 66,796     69.9 %   12.8 %   10.6 %
1-4 Family   277,978     276,922     172,148     1,056     0.4     105,830     61.5     21.8     19.1  
Multifamily   54,504     51,283     47,776     3,221     6.3     6,728     14.1     4.3     5.3  
Farmland   20,725     23,838     7,994     (3,113 )   (13.1 )   12,731     159.3     1.6     0.9  
Commercial real estate                                    
Owner-occupied   274,216     272,433     181,590     1,783     0.7     92,626     51.0     21.5     20.1  
Nonowner-occupied   279,939     264,931     210,874     15,008     5.7     69,065     32.8     22.0     23.4  
Commercial and industrial   135,965     135,392     90,352     573     0.4     45,613     50.5     10.7     10.0  
Consumer   67,286     76,313     95,873     (9,027 )   (11.8 )   (28,587 )   (29.8 )   5.3     10.6  
Total loans   1,272,950     1,258,779     902,148     14,171     1.1 %   370,802     41.1 %   100 %   100 %
                                                       

Construction and development loans were $162.3 million at March 31, 2018, an increase of $4.7 million, or 3.0%, compared to $157.7 million at December 31, 2017, and an increase of $66.8 million, or 69.9%, compared to $95.5 million at March 31, 2017. The increase in the construction and development portfolio at March 31, 2018 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.

At March 31, 2018, the Company's total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $410.2 million, an increase of $2.4 million, or 0.6%, compared to the business lending portfolio of $407.8 million at December 31, 2017, and an increase of $138.2 million, or 50.8%, compared to the business lending portfolio of $271.9 million at March 31, 2017. The Company continues to focus on relationship banking and growing its commercial loan portfolio.

Consumer loans, including indirect auto loans of $48.8 million, totaled $67.3 million at March 31, 2018, a decrease of $9.0 million, or 11.8%, compared to $76.3 million, including indirect auto loans of $55.9 million, at December 31, 2017, and a decrease of $28.6 million, or 29.8%, compared to $95.9 million, including indirect auto loans of $80.9 million, at March 31, 2017. The decrease in consumer loans is mainly attributable to the scheduled paydowns of this portfolio and is consistent with our business strategy.

Credit Quality

Nonperforming loans were $5.5 million, or 0.44% of total loans, at March 31, 2018, an increase of $1.8 million compared to $3.7 million, or 0.29% of total loans, at December 31, 2017, and an increase of $3.4 million compared to $2.1 million, or 0.24% of total loans, at March 31, 2017. Included in nonperforming loans are loans acquired in 2017 with a balance of $3.0 million at March 31, 2018, which is the primary reason for the increase in nonperforming loans.

The allowance for loan losses was $8.1 million, or 146.78% and 0.64% of nonperforming and total loans, respectively, at March 31, 2018, compared to $7.9 million, or 214.43% and 0.63%, respectively, at December 31, 2017, and $7.2 million, or 337.95% and 0.80%, respectively, at March 31, 2017. As a result of the acquisitions of BOJ Bancshares, Inc. ("BOJ") and Citizens Bancshares, Inc. ("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 remaining fair value adjustment.

The provision for loan losses was $0.6 million for the quarter ended March 31, 2018 and $0.4 million for the quarters ended December 31, 2017 and March 31, 2017.

Deposits

Total deposits at March 31, 2018 were $1.2 billion, an increase of $1.4 million, or 0.1%, compared to December 31, 2017, and an increase of $358.1 million, or 41.2%, compared to March 31, 2017. The Company acquired approximately $125.8 million and $212.2 million in deposits from the BOJ and Citizens acquisitions, respectively at the time of acquisition.

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
    3/31/2018   12/31/2017   3/31/2017   $   %   $   %   3/31/2018   3/31/2017
Noninterest-bearing demand deposits   $ 221,855     $ 216,599     $ 112,514     $ 5,256     2.4 %   $ 109,341     97.2 %   18.1 %   13.0 %
NOW accounts   228,269     208,683     168,860     19,586     9.4     59,409     35.2     18.6     19.4  
Money market deposit accounts   145,627     146,140     124,604     (513 )   (0.4 )   21,023     16.9     11.9     14.3  
Savings accounts   124,589     117,372     52,682     7,217     6.1     71,907     136.5     10.1     6.1  
Time deposits   506,332     536,443     409,894     (30,111 )   (5.6 )   96,438     23.5     41.3     47.2  
Total deposits   $ 1,226,672     $ 1,225,237     $ 868,554     $ 1,435     0.1 %   $ 358,118     41.2 %   100.0 %   100.0 %
                                                                 

Net Interest Income

Net interest income for the first quarter of 2018 totaled $13.9 million, an increase of $1.0 million, or 8.1%, compared to the fourth quarter of 2017, and an increase of $5.0 million, or 56.4%, compared to the first quarter of 2017. Included in net interest income for the quarters ended March 31, 2018 and December 31, 2017 is $0.7 million and $0.2 million, respectively, of interest income accretion from the acquisition of loans. 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 first quarter of 2018 increased $4.4 million and $1.7 million due to increases in the volume and yield, respectively, of interest-earning assets, offset slightly by decreases of $0.8 million and $0.3 million due to the increases in the volume and rate, respectively, of interest-bearing liabilities compared to the first quarter of 2017.

The Company's net interest margin was 3.70% for the quarter ended March 31, 2018 compared to 3.55% for the quarter ended December 31, 2017 and 3.27% for the quarter ended March 31, 2017. The yield on interest-earning assets was 4.59% for the quarter ended March 31, 2018 compared to 4.42% for the quarter ended December 31, 2017 and 4.10% for the quarter ended March 31, 2017. The increase in net interest margin at March 31, 2018 compared to both December 31, 2017 and March 31, 2017 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 above, as well as a $40,000 interest recovery in the quarter ended December 31, 2017, net interest margin was 3.52% for the quarter ended March 31, 2018 compared to 3.48% for the quarter ended December 31, 2017 and 3.25% for the quarter ended March 31, 2017. The yield on interest-earning assets was 4.41% at March 31, 2018 compared to 4.35% and 4.07% for the quarters ended December 31, 2017 and March 31, 2017, respectively.

The cost of deposits decreased one basis point to 0.91% for the quarter ended March 31, 2018 compared to 0.92% for the quarter ended December 31, 2017 and decreased six basis points compared to 0.97% at March 31, 2017. The decrease in the cost of deposits when compared to the quarter ended March 31, 2017 is a result of a decrease in the cost of interest-bearing demand and savings deposits. The overall costs of funds for the quarter ended March 31, 2018 increased three basis points to 1.10% compared to 1.07% for the quarter ended December 31, 2017 and increased twelve basis points compared to 0.98% for the quarter ended March 31, 2017. The increase in the cost of funds at March 31, 2018 compared to December 31, 2017 and March 31, 2017 is mainly a result of an increase in the cost of borrowed funds used to finance loan and investment activity. The increase in the cost of funds at March 31, 2018 compared to March 31, 2017 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 first quarter of 2018 totaled $1.1 million, an increase of $0.1 million, or 11.4%, compared to the fourth quarter of 2017, and an increase of $0.2 million, or 21.1%, compared to the first quarter of 2017. The increase in noninterest income compared to the quarter ended December 31, 2017 is due to increases in service charges on deposit accounts and gain on sale of fixed assets. The increase in noninterest income compared to the quarter ended March 31, 2017 is mainly attributable to increased service charges on deposit accounts.

Noninterest Expense

Noninterest expense for the first quarter of 2018 totaled $10.6 million, an increase of $0.9 million, or 9.3%, compared to the fourth quarter of 2017, and an increase of $3.9 million, or 58.0%, compared to the first quarter of 2017. The increase in noninterest expense compared to the quarters ended December 31, 2017 and March 31, 2017 is mainly attributable to the increases in both salaries and employee benefits and acquisition expense. The increase in salaries and employee benefits is mainly 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, a Community Development Officer and Treasury Management Sales Officer in the New Orleans market, and a C&I Banking President, all occurring since the quarter ended March 31, 2017. The increase in acquisition expense is a result of the BOJ acquisition that was completed on December 1, 2017 and the operational conversion which was completed in the first quarter of 2018.

Taxes

The Company recorded income tax expense of $1.3 million for the quarter ended March 31, 2018, which equates to an effective tax rate of 35.8%, a decrease from the effective tax rate of 39.5% for the quarter ended December 31, 2017 and an increase from the effective tax rate of 31.2% for the quarter ended March 31, 2017. The income tax expense for the quarters ended March 31, 2018 and December 31, 2017 include charges of $0.6 million and $0.3 million, respectively, 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% for the remainder of 2018, mainly as a result of the Tax Cuts and Jobs Act.

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 quarters ended March 31, 2018 and December 31, 2017, a decrease of $0.01 compared to basic and diluted earnings per common share of $0.26 for the quarter ended March 31, 2017. 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 $1.1 million and $0.8 million in acquisition expense for the quarters ended March 31, 2018 and December 31, 2017, respectively, and the $0.6 million and $0.3 million charges to income tax expense as a result of the Tax Cuts and Jobs Act recognized during the quarters ended March 31, 2018 and December 31, 2017, respectively.

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 March 31, 2018, the Company had 251 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; and
  • concentration of credit exposure.

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, 2017, 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
    3/31/2018   12/31/2017   3/31/2017   Linked Quarter   Year/Year
EARNINGS DATA                    
Total interest income   $ 17,178     $ 15,967     $ 11,093     7.6 %   54.9 %
Total interest expense   3,320     3,150     2,233     5.4     48.7  
Net interest income   13,858     12,817     8,860     8.1     56.4  
Provision for loan losses   625     395     350     58.2     78.6  
Total noninterest income   1,072     962     885     11.4     21.1  
Total noninterest expense   10,562     9,608     6,684     9.9     58.0  
Income before income taxes   3,743     3,776     2,711     (0.9 )   38.1  
Income tax expense   1,341     1,492     847     (10.1 )   58.3  
Net income   $ 2,402     $ 2,284     $ 1,864     5.2     28.9  
                     
AVERAGE BALANCE SHEET DATA                    
Total assets   $ 1,629,277     $ 1,534,917     $ 1,157,654     6.1 %   40.7 %
Total interest-earning assets   1,518,425     1,434,164     1,097,816     5.9     38.3  
Total loans   1,261,047     1,169,686     892,546     7.8     41.3  
Total interest-bearing deposits   1,002,655     957,847     778,262     4.7     28.8  
Total interest-bearing liabilities   1,228,942     1,171,884     920,360     4.9     33.5  
Total deposits   1,219,482     1,147,782     888,672     6.2     37.2  
Total stockholders' equity   173,467     160,485     117,497     8.1     47.6  
                     
PER SHARE DATA                    
Earnings:                    
Basic earnings per share   $ 0.25     $ 0.25     $ 0.26     %   (3.8 )%
Diluted earnings per share   0.25     0.25     0.26         (3.8 )
Core Earnings(1):                    
Core basic earnings per share(1)   0.40     0.35     0.27     14.3     48.1  
Core diluted earnings per share(1)   0.40     0.34     0.27     17.6     48.1  
Book value per share   18.22     18.15     16.85     0.4     8.1  
Tangible book value per share(1)   16.11     16.06     16.48     0.3     (2.2 )
Common shares outstanding   9,517,328     9,514,926     8,805,810         8.1  
Weighted average common shares outstanding - basic   9,513,332     8,981,014     7,205,942     5.9     32.0  
Weighted average common shares outstanding - diluted   9,609,603     9,052,213     7,276,869     6.2     32.1  
                     
PERFORMANCE RATIOS                    
Return on average assets   0.60 %   0.59 %   0.65 %   1.7 %   (7.7 )%
Core return on average assets(1)   0.95     0.81     0.68     17.3     39.7  
Return on average equity   5.62     5.65     6.44     (0.5 )   (12.7 )
Core return on average equity(1)   8.90     7.77     6.66     14.5     33.6  
Net interest margin   3.70     3.55     3.27     4.2     13.1  
Net interest income to average assets   3.45     3.31     3.10     4.2     11.3  
Noninterest expense to average assets   2.63     2.48     2.34     6.0     12.4  
Efficiency ratio(2)   70.74     69.73     68.59     1.4     3.1  
Core efficiency ratio(1)   63.73     63.73     67.18         (5.1 )
Dividend payout ratio   13.86     12.38     7.73     12.0     79.3  
Net charge-offs to average loans   0.03     0.01     0.02     200.0     50.0  
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income.
 


 
INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)
                     
    As of and for the three months ended
    3/31/2018   12/31/2017   3/31/2017   Linked Quarter   Year/Year
ASSET QUALITY RATIOS                    
Nonperforming assets to total assets   0.60 %   0.46 %   0.53 %   30.4 %   13.2 %
Nonperforming loans to total loans   0.44     0.29     0.24     51.7     83.3  
Allowance for loan losses to total loans   0.64     0.63     0.80     1.6     (20.0 )
Allowance for loan losses to nonperforming loans   146.78     214.43     337.95     (31.5 )   (56.6 )
                     
CAPITAL RATIOS                    
Investar Holding Corporation:                    
Total equity to total assets   10.55 %   10.64 %   12.62 %   (0.8 )%   (16.4 )%
Tangible equity to tangible assets(1)   9.44     9.53     12.38     (0.9 )   (23.7 )
Tier 1 leverage ratio   10.11     10.66     12.97     (5.2 )   (22.1 )
Common equity tier 1 capital ratio(2)   11.90     11.75     14.84     1.3     (19.8 )
Tier 1 capital ratio(2)   12.40     12.24     15.20     1.3     (18.4 )
Total capital ratio(2)   14.40     14.22     17.77     1.3     (19.0 )
Investar Bank:                    
Tier 1 leverage ratio   11.06     11.63     14.23     (4.9 )   (22.3 )
Common equity tier 1 capital ratio(2)   13.57     13.35     16.68     1.6     (18.6 )
Tier 1 capital ratio(2)   13.57     13.35     16.68     1.6     (18.6 )
Total capital ratio(2)   14.19     13.95     17.41     1.7     (18.5 )
                     
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for March 31, 2018.
 


 
INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
             
    March 31, 2018   December 31, 2017   March 31, 2017
ASSETS            
Cash and due from banks   $ 13,409     $ 19,619     $ 8,043  
Interest-bearing balances due from other banks   7,623     10,802     18,600  
Federal funds sold   70          
Cash and cash equivalents   21,102     30,421     26,643  
             
Available for sale securities at fair value (amortized cost of $237,672, $220,077, and $176,363, respectively)   232,873     217,564     174,139  
Held to maturity securities at amortized cost (estimated fair value of $17,479, $17,947, and $19,422, respectively)   17,727     17,997     19,648  
Loans, net of allowance for loan losses of $8,130, $7,891, and $7,243, respectively   1,264,820     1,250,888     894,905  
Other equity securities   10,148     9,798     6,320  
Bank premises and equipment, net of accumulated depreciation of $8,300, $7,825, and $7,117, respectively   38,091     37,540     31,434  
Other real estate owned, net   4,266     3,837     4,045  
Accrued interest receivable   4,707     4,688     3,243  
Deferred tax asset   1,496     1,294     2,601  
Goodwill and other intangible assets, net   20,141     19,926     3,224  
Bank-owned life insurance   23,382     23,231     7,248  
Other assets   5,435     5,550     2,385  
Total assets   $ 1,644,188     $ 1,622,734     $ 1,175,835  
             
LIABILITIES            
Deposits            
Noninterest-bearing   $ 221,855     $ 216,599     $ 112,514  
Interest-bearing   1,004,817     1,008,638     756,040  
Total deposits   1,226,672     1,225,237     868,554  
Advances from Federal Home Loan Bank   187,066     166,658     82,413  
Repurchase agreements   21,053     21,935     36,361  
Subordinated debt   18,180     18,168     18,133  
Junior subordinated debt   5,806     5,792     3,609  
Other borrowings           78  
Accrued taxes and other liabilities   11,981     12,215     18,351  
Total liabilities   1,470,758     1,450,005     1,027,499  
             
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; 9,517,328, 9,514,926, and 8,805,810 shares outstanding, respectively   9,517     9,515     8,806  
Surplus   131,179     131,582     112,927  
Retained earnings   35,829     33,203     27,916  
Accumulated other comprehensive loss   (3,095 )   (1,571 )   (1,313 )
Total stockholders' equity   173,430     172,729     148,336  
  Total liabilities and stockholders' equity   $ 1,644,188     $ 1,622,734     $ 1,175,835  
                         


 
INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)
             
    For the three months ended
    March 31, 2018   December 31, 2017   March 31, 2017
INTEREST INCOME            
Interest and fees on loans   $ 15,626     $ 14,407     $ 10,004  
Interest on investment securities   1,459     1,428     1,029  
Other interest income   93     132     60  
Total interest income   17,178     15,967     11,093  
             
INTEREST EXPENSE            
Interest on deposits   2,253     2,233     1,853  
Interest on borrowings   1,067     917     380  
Total interest expense   3,320     3,150     2,233  
Net interest income   13,858     12,817     8,860  
             
Provision for loan losses   625     395     350  
Net interest income after provision for loan losses   13,233     12,422     8,510  
             
NONINTEREST INCOME            
Service charges on deposit accounts   359     293     97  
Gain on sale of investment securities, net       50     106  
Gain (loss) on sale of fixed assets, net   90     (57 )   23  
(Loss) gain on sale of other real estate owned, net       (5 )   5  
Servicing fees and fee income on serviced loans   288     329     423  
Other operating income   335     352     231  
Total noninterest income   1,072     962     885  
Income before noninterest expense   14,305     13,384     9,395  
             
NONINTEREST EXPENSE            
Depreciation and amortization   598     556     376  
Salaries and employee benefits   6,048     5,486     3,950  
Occupancy   380     324     264  
Data processing   542     521     368  
Marketing   38     151     28  
Professional fees   255     224     232  
Acquisition expenses   1,104     819     145  
Other operating expenses   1,597     1,527     1,321  
Total noninterest expense   10,562     9,608     6,684  
Income before income tax expense   3,743     3,776     2,711  
Income tax expense   1,341     1,492     847  
Net income   $ 2,402     $ 2,284     $ 1,864  
             
EARNINGS PER SHARE            
Basic earnings per share   $ 0.25     $ 0.25     $ 0.26  
Diluted earnings per share   $ 0.25     $ 0.25     $ 0.26  
Cash dividends declared per common share   $ 0.04     $ 0.03     $ 0.02  
                         


 
INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
                                     
    For the three months ended
    March 31, 2018   December 31, 2017   March 31, 2017
    Average
Balance
  Interest
Income/
Expense
  Yield/
Rate
  Average
Balance
  Interest
Income/
Expense
  Yield/
Rate
  Average
Balance
  Interest
Income/
Expense
  Yield/
Rate
Assets                                    
Interest-earning assets:                                    
Loans   $ 1,261,047     $ 15,626     5.03 %   $ 1,169,686     $ 14,407     4.89 %   $ 892,546     $ 10,004     4.55 %
Securities:                                    
Taxable   206,722     1,253     2.46     203,011     1,221     2.39     150,139     839     2.27  
Tax-exempt   34,688     206     2.41     35,060     207     2.34     30,540     190     2.52  
Interest-bearing balances with banks   15,968     93     2.37     26,407     132     1.98     24,591     60     0.99  
Total interest-earning assets   1,518,425     17,178     4.59     1,434,164     15,967     4.42     1,097,816     11,093     4.10  
Cash and due from banks   25,526             22,520             8,546          
Intangible assets   19,881             15,655             3,227          
Other assets   73,438             70,254             55,190          
Allowance for loan losses   (7,993 )           (7,676 )           (7,125 )        
Total assets   $ 1,629,277             $ 1,534,917             $ 1,157,654          
                                     
Liabilities and stockholders' equity                                    
Interest-bearing liabilities:                                    
Deposits:                                    
Interest-bearing demand deposits   $ 360,903     $ 580     0.65     $ 348,573     $ 608     0.69     $ 291,855     $ 488     0.68  
Savings deposits   120,861     137     0.46     105,896     138     0.52     53,237     86     0.66  
Time deposits   520,891     1,536     1.20     503,378     1,487     1.17     433,170     1,279     1.20  
Total interest-bearing deposits   1,002,655     2,253     0.91     957,847     2,233     0.92     778,262     1,853     0.97  
Short-term borrowings   143,646     507     1.43     135,126     430     1.26     120,923     282     0.95  
Long-term debt   82,641     560     2.75     78,911     487     2.45     21,175     98     1.88  
Total interest-bearing liabilities   1,228,942     3,320     1.10     1,171,884     3,150     1.07     920,360     2,233     0.98  
Noninterest-bearing deposits   216,827             189,935             110,410          
Other liabilities   10,041             12,613             9,387          
Stockholders' equity   173,467             160,485             117,497          
Total liability and stockholders' equity   $ 1,629,277             $ 1,534,917             $ 1,157,654          
Net interest income/net interest margin       $ 13,858     3.70 %       $ 12,817     3.55 %       $ 8,860     3.27 %
                                                       


 
INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
             
    March 31, 2018   December 31, 2017   March 31, 2017
Tangible common equity            
Total stockholders' equity   $ 173,430     $ 172,729     $ 148,336  
Adjustments:            
Goodwill   17,424     17,086     2,684  
Core deposit intangible   2,617     2,740     440  
Trademark intangible   100     100     100  
Tangible common equity   $ 153,289     $ 152,803     $ 145,112  
Tangible assets            
Total assets   $ 1,644,188     $ 1,622,734     $ 1,175,835  
Adjustments:            
Goodwill   17,424     17,086     2,684  
Core deposit intangible   2,617     2,740     440  
Trademark intangible   100     100     100  
Tangible assets   $ 1,624,047     $ 1,602,808     $ 1,172,611  
             
Common shares outstanding   9,517,328     9,514,926     8,805,810  
Tangible equity to tangible assets   9.44 %   9.53 %   12.38 %
Book value per common share   $ 18.22     $ 18.15     $ 16.85  
Tangible book value per common share   16.11     16.06     16.48  
                   


 
INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
             
    Three months ended
    March 31, 2018   December 31, 2017   March 31, 2017
Net interest income (a) $ 13,858     $ 12,817     $ 8,860  
Provision for loan losses   625     395     350  
Net interest income after provision for loan losses   13,233     12,422     8,510  
             
Noninterest income (b) 1,072     962     885  
Gain on sale of investment securities, net       (50 )   (106 )
Loss (gain) on sale of other real estate owned, net       5     (5 )
(Gain) loss on sale of fixed assets, net   (90 )   57     (23 )
Core noninterest income (d) 982     974     751  
             
Core earnings before noninterest expense   14,215     13,396     9,261  
             
Total noninterest expense (c) 10,562     9,608     6,684  
Acquisition expense   (1,104 )   (819 )   (145 )
Severance           (82 )
Core noninterest expense (f) 9,458     8,789     6,457  
             
Core earnings before income tax expense   4,757     4,607     2,804  
Core income tax expense(1)   950     1,462     875  
Core earnings   $ 3,807     $ 3,145     $ 1,929  
             
Core basic earnings per share   0.40     0.35     0.27  
             
Diluted earnings per share (GAAP)   $ 0.25     $ 0.25     $ 0.26  
Gain on sale of investment securities, net           (0.01 )
Loss (gain) on sale of other real estate owned, net            
(Gain) loss on sale of fixed assets, net   (0.01 )        
Acquisition expense   0.09     0.06     0.01  
Severance           0.01  
Tax reform related re-measurement charges to income tax expense   0.07     0.03      
Core diluted earnings per share   $ 0.40     $ 0.34     $ 0.27  
             
Efficiency ratio (c) / (a+b) 70.74 %   69.73 %   68.59 %
Core efficiency ratio (f) / (a+d) 63.73 %   63.73 %   67.18 %
Core return on average assets(2)   0.95 %   0.81 %   0.68 %
Core return on average equity(2)   8.90 %   7.77 %   6.66 %
Total average assets   $ 1,629,277     $ 1,534,917     $ 1,157,654  
Total average stockholders' equity   173,467     160,485     117,497  
             
(1) Core income tax expense is calculated using the effective tax rates of 19.98% and 31.7% for the quarters ended March 31, 2018 and December 31, 2017, respectively, prior to the one-time charges of $0.6 million and $0.3 million, respectively, to tax expense as a result of the Tax Cuts and Jobs Act, and the actual effective tax rate of 31.2% for the quarter ended March 31, 2017.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.
 

 

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