Investar Holding Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - EARNINGS RELASE 6.30.17 - July 27, 2017

Attached files

file filename
8-K - 8-K - EARNINGS RELEASE 6.30.17 - Investar Holding Corpform8-kxq22017earningsrele.htm
Exhibit 99.1
For Immediate Release

Investar Holding Corporation Announces 2017 Second Quarter Results

BATON ROUGE, LA (July 26, 2017) – Investar Holding Corporation (NASDAQ: ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended June 30, 2017. The Company reported net income of $1.9 million, or $0.22 per diluted share for the second quarter of 2017, compared to $1.9 million, or $0.26 per diluted share for the quarter ended March 31, 2017, and $2.0 million, or $0.28 per diluted share, for the quarter ended June 30, 2016.
Investar Holding Corporation President and Chief Executive Officer John D’Angelo said:
“This was another quarter of continued progress for Investar and demonstrates our commitment to creating long-term shareholder value. We continued to experience solid organic loan growth which contributed to the increase in interest income. Deposit growth remains a focus and we are very pleased with the 16% increase in noninterest-bearing deposits compared to the first quarter of 2017. Our asset quality remains strong and we continue to see opportunities for growth in our markets. We were able to open two branches during the quarter - one in the Baton Rouge market and one in the New Orleans market. We opened the New Orleans branch sooner than we had projected as we felt there were significant opportunities in the market. 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.
Also, we were excited to complete the Citizens acquisition on July 1, 2017 as announced and discussed last quarter, and believe that this acquisition fits well with our strategy of expanding Investar’s footprint in Louisiana. We also believe that the acquisition further positions us to grow the franchise and increase long-term shareholder value.”
Second Quarter Highlights
•
Nonperforming loans to total loans decreased to 0.13% at June 30, 2017 compared to 0.24% at March 31, 2017 and 0.67% at June 30, 2016.
•
Noninterest-bearing deposits were $130.6 million at June 30, 2017, an increase of $18.1 million, or 16.1%, compared to March 31, 2017.
•
The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $284.1 million at June 30, 2017, an increase of $12.2 million, or 4.5%, compared to the business lending portfolio of $271.9 million at March 31, 2017, and an increase of $57.5 million, or 25.4%, compared to the business lending portfolio of $226.6 million at June 30, 2016.
•
Total interest income increased $0.8 million, or 6.8%, for the quarter ended June 30, 2017 compared to the quarter ended March 31, 2017, and increased $1.1 million, or 10.5%, compared to the quarter ended June 30, 2016.
•
Two de novo branches, one in each of the Baton Rouge and New Orleans markets, opened at the end of the second quarter, as well as a free-standing ATM in our Baton Rouge market, creating additional banking opportunities for our existing and potential customers.
•
The Company’s common stock had a closing trade price of $22.90 at June 30, 2017, representing 22.8% growth from a closing trade price of $18.65 at December 30, 2016.
•
Total loans increased $30.8 million, or 3.4%, to $932.9 million at June 30, 2017 compared to $902.1 million at March 31, 2017. Excluding the paydown of indirect auto loans, total loans increased $40.9 million, or 5.0%, to $862.1 million at June 30, 2017 compared to $821.2 million at March 31, 2017.



Loans
Total loans were $932.9 million at June 30, 2017, an increase of $30.8 million, or 3.4%, compared to March 31, 2017, and an increase of $115.5 million, or 14.1%, compared to June 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

 
6/30/2017
 
3/31/2017
 
6/30/2016
 
$
 
%
 
$
 
%
 
6/30/2017
 
6/30/2016
Mortgage loans on real estate
 

 

 

 

 

 

 

 

 

Construction and development
 
$
109,627

 
$
95,541

 
$
101,080

 
$
14,086

 
14.7
 %
 
$
8,547

 
8.5
 %
 
11.8
%
 
12.4
%
1-4 Family
 
177,979

 
172,148

 
166,778

 
5,831

 
3.4

 
11,201

 
6.7

 
19.1

 
20.4

Multifamily
 
46,109

 
47,776

 
37,300

 
(1,667
)
 
(3.5
)
 
8,809

 
23.6

 
4.9

 
4.6

Farmland
 
8,006

 
7,994

 
8,343

 
12

 
0.2

 
(337
)
 
(4.0
)
 
0.9

 
1.0

Commercial real estate
 

 

 

 

 

 

 

 

 

Owner-occupied
 
185,226

 
181,590

 
151,464

 
3,636

 
2.0

 
33,762

 
22.3

 
19.8

 
18.5

Nonowner-occupied
 
223,297

 
210,874

 
180,842

 
12,423

 
5.9

 
42,455

 
23.5

 
23.9

 
22.1

Commercial and industrial
 
98,837

 
90,352

 
75,103

 
8,485

 
9.4

 
23,734

 
31.6

 
10.6

 
9.2

Consumer
 
83,879

 
95,873

 
96,560

 
(11,994
)
 
(12.5
)
 
(12,681
)
 
(13.1
)
 
9.0

 
11.8

Total loans
 
932,960

 
902,148

 
817,470

 
30,812

 
3.4
 %
 
115,490

 
14.1
 %
 
100
%
 
100
%
Loans held for sale
 
—

 
—

 
46,717

 
—

 
—

 
(46,717
)
 
(100.0
)
 

 

Total gross loans
 
$
932,960

 
$
902,148

 
$
864,187

 
$
30,812

 
3.4
 %
 
$
68,773

 
8.0
 %
 

 

Consumer loans, including indirect auto loans of $70.8 million, totaled $83.9 million at June 30, 2017, a decrease of $12.0 million, or 12.5%, compared to $95.9 million, including indirect auto loans of $80.9 million, at March 31, 2017, and a decrease of $12.7 million, or 13.1%, compared to $96.6 million at June 30, 2016. The decrease in consumer loans when compared to the linked quarter is attributable to the scheduled paydowns of the consumer loans. Since the Bank discontinued accepting indirect auto loan applications at the end of 2015, which was the primary source of its consumer loan portfolio and consumer loans held for sale, the consumer loan portfolio is expected to decrease over time.
At June 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 $284.1 million, an increase of $12.2 million, or 4.5%, compared to the business lending portfolio of $271.9 million at March 31, 2017, and an increase of $57.5 million, or 25.4%, compared to the business lending portfolio of $226.6 million at June 30, 2016. The increase in the business lending portfolio is attributable to our focus on relationship banking and growing our commercial loan portfolio.
Credit Quality
Nonperforming loans were $1.2 million, or 0.13% of total loans, at June 30, 2017, a decrease of $0.9 million, or 42.9%, compared to $2.1 million, or 0.24% of total loans, at March 31, 2017, and a decrease of $4.3 million, or 78.2%, compared to $5.5 million, or 0.67% of total loans, at June 30, 2016. The decrease in nonperforming loans compared to June 30, 2016 is mainly attributable to one $2.7 million commercial and industrial loan relationship that was not performing at June 30, 2016 but was subsequently resolved without any additional adverse impact to the financial statements.
The allowance for loan losses was $7.3 million, or 627.63% and 0.78% of nonperforming loans and total loans, respectively, at June 30, 2017, compared to $7.2 million, or 337.95% and 0.80% of nonperforming loans and total loans, respectively, at March 31, 2017, and $7.1 million, or 129.59% and 0.87% of nonperforming loans and total loans, respectively, at June 30, 2016.
The provision for loan losses was $0.4 million for both the first and second quarter of 2017, a decrease of $0.4 million compared to provision for loan losses of $0.8 million for the quarter ended June 30, 2016. The $0.8 million provision for loan losses for the quarter ended June 30, 2016 is attributable to the specific reserve recorded against the $2.7 million commercial and industrial loan relationship that was placed on nonaccrual during the quarter, discussed above.


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 less than one percent of the total loan portfolio at June 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 June 30, 2017 were $894.8 million, an increase of $26.3 million, or 3.0%, compared to March 31, 2017, and an increase of $27.6 million, or 3.2%, compared to June 30, 2016. Noninterest-bearing demand deposits experienced the greatest percentage growth during the second quarter of 2017 with an increase of 16.1%, or $18.1 million, compared to March 31, 2017. The increase in total deposits compared to June 30, 2016 was driven by large increases in NOW accounts, money market deposit accounts and noninterest-bearing demand deposits. These increases were offset by a $58.0 million, or 12.7%, decrease in time deposits. During the third quarter of 2016, the Company began lowering its rates on time deposits in an effort to begin reducing its cost of funds and its dependency on certificates of deposit. As a result of this strategy, as time deposits mature, many have not renewed with the Bank. The decrease in time deposits is primarily a result of the withdrawal of time deposits by other financial institutions in search of higher rates.

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

 
6/30/2017
 
3/31/2017
 
6/30/2016
 
$
 
%
 
$
 
%
 
6/30/2017
 
6/30/2016
Noninterest-bearing demand deposits
 
$
130,625

 
$
112,514

 
$
109,828

 
$
18,111

 
16.1
 %
 
$
20,797

 
18.9
 %
 
14.6
%
 
12.7
%
NOW accounts
 
171,244

 
168,860

 
139,893

 
2,384

 
1.4

 
31,351

 
22.4

 
19.1

 
16.1

Money market deposit accounts
 
143,957

 
124,604

 
108,552

 
19,353

 
15.5

 
35,405

 
32.6

 
16.1

 
12.5

Savings accounts
 
50,945

 
52,682

 
52,899

 
(1,737
)
 
(3.3
)
 
(1,954
)
 
(3.7
)
 
5.7

 
6.1

Time deposits
 
398,054

 
409,894

 
456,033

 
(11,840
)
 
(2.9
)
 
(57,979
)
 
(12.7
)
 
44.5

 
52.6

Total deposits
 
$
894,825

 
$
868,554

 
$
867,205

 
$
26,271

 
3.0
 %
 
$
27,620

 
3.2
 %
 
100.0
%
 
100.0
%
Net Interest Income
Net interest income for the second quarter of 2017 totaled $9.3 million, an increase of $0.4 million, or 5.0%, compared to the first quarter of 2017, and an increase of $0.6 million, or 7.4%, compared to the second quarter of 2016. The increase in net interest income is mainly a result of continued growth of the Company’s loan portfolio, with an increase in net interest income of $0.9 million due to an increase in volume offset by a $0.3 million decrease related to an increase in the cost of funds compared to the second quarter of 2016. In addition, in the second quarter of 2017, the Company recognized approximately $138,000 of recoveries on an acquired loan.
The Company’s net interest margin was 3.28% for the quarter ended June 30, 2017 compared to 3.27% for the quarter ended March 31, 2017 and 3.38% for the quarter ended June 30, 2016. The yield on interest-earning assets was 4.18% for the quarter ended June 30, 2017 compared to 4.10% for the quarter ended March 31, 2017 and 4.18% for the quarter ended June 30, 2016. Five basis points of the increase in the yield on interest-earning assets when compared to the quarter ended March 31, 2017 is attributable to the $138,000 of recoveries on an acquired loan, mentioned above.
The cost of deposits increased one basis point to 0.98% for the quarter ended June 30, 2017 compared to 0.97% for the quarter ended March 31, 2017, and increased two basis points compared to 0.96% for the quarter ended June 30, 2016. The increase in the cost of deposits when compared to the quarter ended June 30, 2016 is primarily a result of increases in the cost of time deposits and interest-bearing demand deposits. The overall costs of funds for the quarter ended June 30, 2017 increased twelve basis points to 1.10% compared to 0.98% for the quarter ended March 31, 2017 and increased fifteen basis points compared to 0.95% for the quarter ended June 30, 2016. The increase in the cost of funds is mainly attributable to the increase in long term borrowings mainly 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, as intended. The acquisition closed on July 1, 2017, therefore, the Company incurred a full quarter of interest expense without realizing any financial benefit of the acquisition.


Noninterest Income
Noninterest income for the second quarter of 2017 totaled $0.8 million, a decrease of $0.1 million, or 9.5%, compared to the first quarter of 2017, and a decrease of $1.5 million, or 64.5%, compared to the second quarter of 2016. The decrease in noninterest income when compared to the quarter ended June 30, 2016 is mainly attributable to the $1.3 million decrease in the gain on sale of fixed assets. The gain on sale of fixed assets recognized in the quarter ended June 30, 2016 resulted from the sale of the land and building of one of the Bank’s branch locations to a healthcare company. The decrease in noninterest income compared to the quarter ended June 30, 2016 can also be attributed to the $0.2 million decrease in servicing fees and fee income on serviced loans. As the Bank’s portfolio of serviced loans ages, and consequently decreases in principal value, the servicing fees earned will continue to decrease.
Noninterest Expense
Noninterest expense for the second quarter of 2017 totaled $6.9 million, an increase of $0.2 million, or 3.7%, compared to the first quarter of 2017, and a decrease of $0.2 million, or 2.5%, compared to the second quarter of 2016. The increase in noninterest expense compared to the first quarter of 2017 is mainly attributable to the $0.2 million increase in salaries and employee benefits. This increase is mainly attributable to additional lenders hired at the end of the first quarter of 2017. In addition, at the end of the second quarter of 2017, the Company opened two de novo branch locations which required the hiring of additional employees in addition to incurring other operating expenses. The branch openings had an estimated impact to noninterest expense for the second quarter of 2017 of approximately $0.1 million. Furthermore, the Company recorded a $0.1 million write-down of repossessed equipment which is also included in other operating expenses.
The decrease in noninterest expense compared to the second quarter of 2016 is mainly attributable to the $0.6 million decrease in customer reimbursements, which were paid to certain borrowers in the second quarter of 2016, offset by $0.2 million increases in both salaries and employee benefits and other operating expenses. The increase in other operating expenses was driven by increases in bank shares taxes and expenses related to other real estate owned, as well as the write-down of repossessed equipment mentioned above.
Basic Earnings Per Share and Diluted Earnings Per Share
The Company reported both basic and diluted earnings per share of $0.22 for the three months ended June 30, 2017, a decrease of $0.06 compared to basic and diluted earnings per share of $0.28 for the three months ended June 30, 2016. The decrease in both basic and diluted earnings per share is directly attributable to the Company’s issuance of approximately 1.6 million common shares as part of a public offering on March 22, 2017.
Taxes
The Company recorded income tax expense of $0.9 million for the quarter ended June 30, 2017, which equates to an effective tax rate of 31.3%.
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 June 30, 2017, the Company had 157 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 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 and including the potential impact on our borrowers of the August 2016 flooding in Baton Rouge and surrounding areas;
•
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 acquisition of Citizens.

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

 
6/30/2017
 
3/31/2017
 
6/30/2016
 
Linked Quarter
 
Year/Year
EARNINGS DATA
 
 
 
 
 
 
 
 
 
 
Total interest income
 
$
11,844

 
$
11,093

 
$
10,719

 
6.8
 %
 
10.5
 %
Total interest expense
 
2,542

 
2,233

 
2,061

 
13.8

 
23.3

Net interest income
 
9,302

 
8,860

 
8,658

 
5.0

 
7.4

Provision for loan losses
 
375

 
350

 
800

 
7.1

 
(53.1
)
Total noninterest income
 
801

 
885

 
2,256

 
(9.5
)
 
(64.5
)
Total noninterest expense
 
6,928

 
6,684

 
7,104

 
3.7

 
(2.5
)
Income before income taxes
 
2,800

 
2,711

 
3,010

 
3.3

 
(7.0
)
Income tax expense
 
877

 
847

 
1,005

 
3.5

 
(12.7
)
Net income
 
$
1,923

 
$
1,864

 
$
2,005

 
3.2

 
(4.1
)
 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCE SHEET DATA
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,198,878

 
$
1,157,654

 
$
1,086,604

 
3.6
 %
 
10.3
 %
Total interest-earning assets
 
1,137,752

 
1,097,816

 
1,028,360

 
3.6

 
10.6

Total loans
 
914,265

 
892,546

 
800,710

 
2.4

 
14.2

Total gross loans
 
914,265

 
892,546

 
852,475

 
2.4

 
7.2

Total interest-bearing deposits
 
745,647

 
778,262

 
739,678

 
(4.2
)
 
0.8

Total interest-bearing liabilities
 
922,780

 
920,360

 
866,386

 
0.3

 
6.5

Total deposits
 
862,361

 
888,672

 
835,215

 
(3.0
)
 
3.3

Total stockholders’ equity
 
149,713

 
117,497

 
112,035

 
27.4

 
33.6

 
 
 
 
 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.22

 
$
0.26

 
$
0.28

 
(15.4
)%
 
(21.4
)%
Diluted earnings per share
 
0.22

 
0.26

 
0.28

 
(15.4
)
 
(21.4
)
Core Earnings(1):
 
 
 
 
 
 
 
 
 
 
Basic earnings per share(1)
 
0.22

 
0.27

 
0.20

 
(18.5
)
 
10.0

Diluted earnings per share(1)
 
0.22

 
0.27

 
0.21

 
(18.5
)
 
4.8

Book value per share
 
17.11

 
16.85

 
15.63

 
1.5

 
9.5

Tangible book value per share(1)
 
16.74

 
16.48

 
15.18

 
1.6

 
10.3

Common shares outstanding
 
8,815,119

 
8,805,810

 
7,214,734

 
0.1

 
22.2

 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.64
%
 
0.65
%
 
0.74
%
 
(1.5
)%
 
(13.5
)%
Core return on average assets(1)
 
0.64

 
0.68

 
0.54

 
(5.9
)
 
18.5

Return on average equity
 
5.15

 
6.44

 
7.18

 
(20.0
)
 
(28.3
)
Core return on average equity(1)
 
5.11

 
6.65

 
5.25

 
(23.2
)
 
(2.7
)
Net interest margin
 
3.28

 
3.27

 
3.38

 
0.3

 
(3.0
)
Net interest income to average assets
 
3.11

 
3.10

 
3.20

 
0.3

 
(2.8
)
Noninterest expense to average assets
 
2.32

 
2.34

 
2.62

 
(0.9
)
 
(11.5
)
Efficiency ratio(2)
 
68.57

 
68.59

 
65.09

 
—

 
5.3

Core efficiency ratio(1)
 
68.46

 
67.18

 
68.42

 
1.9

 
0.1

Dividend payout ratio
 
9.94

 
7.73

 
3.57

 
28.6

 
178.4

Net charge-offs to average loans
 
0.03

 
0.02

 
0.02

 
50.0

 
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
 
 
6/30/2017
 
3/31/2017
 
6/30/2016
 
Linked Quarter
 
Year/Year
ASSET QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
 
0.41
%
 
0.53
%
 
0.51
%
 
(22.6
)%
 
(19.6
)%
Nonperforming loans to total loans
 
0.13

 
0.24

 
0.67

 
(45.8
)
 
(80.6
)
Allowance for loan losses to total loans
 
0.78

 
0.80

 
0.87

 
(2.5
)
 
(10.3
)
Allowance for loan losses to nonperforming loans
 
627.63

 
337.95

 
129.6

 
85.7

 
384.3

 
 
 
 
 
 
 
 
 
 
 
CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
Investar Holding Corporation:
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
 
12.30
%
 
12.62
%
 
10.01
%
 
(2.5
)%
 
22.9
 %
Tangible equity to tangible assets(1)
 
12.07

 
12.38

 
9.75

 
(2.5
)
 
23.8

Tier 1 leverage ratio
 
12.71

 
12.97

 
10.46

 
(2.0
)
 
21.5

Common equity tier 1 capital ratio(2)
 
14.41

 
14.84

 
11.11

 
(2.9
)
 
29.7

Tier 1 capital ratio(2)
 
14.75

 
15.20

 
11.47

 
(3.0
)
 
28.6

Total capital ratio(2)
 
17.22

 
17.77

 
12.19

 
(3.1
)
 
41.3

Investar Bank:
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage ratio
 
13.96

 
14.23

 
10.26

 
(1.9
)
 
36.1

Common equity tier 1 capital ratio(2)
 
16.20

 
16.68

 
11.25

 
(2.9
)
 
44.0

Tier 1 capital ratio(2)
 
16.20

 
16.68

 
11.25

 
(2.9
)
 
44.0

Total capital ratio(2)
 
16.91

 
17.41

 
11.97

 
(2.9
)
 
41.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Non-GAAP financial measure. See reconciliation.
(2) Estimated for June 30, 2017



INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)

 

 

 


 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
ASSETS
 

 

 

Cash and due from banks
 
$
11,720

 
$
8,043

 
$
9,958

Interest-bearing balances due from other banks
 
23,238

 
18,600

 
27,175

Federal funds sold
 
3

 
—

 
1

Cash and cash equivalents
 
34,961

 
26,643

 
37,134


 

 

 

Available for sale securities at fair value (amortized cost of $185,121, $176,363, and $149,986, respectively)
 
183,584

 
174,139

 
151,841

Held to maturity securities at amortized cost (estimated fair value of $19,418, $19,422, and $25,810, respectively)
 
19,460

 
19,648

 
25,656

Loans held for sale
 
—

 
—

 
46,717

Loans, net of allowance for loan losses of $7,320, $7,243, and $7,091, respectively
 
925,640

 
894,905

 
810,379

Other equity securities
 
7,025

 
6,320

 
7,371

Bank premises and equipment, net of accumulated depreciation of $7,497, $7,117, and $6,017, respectively
 
31,510

 
31,434

 
30,147

Other real estate owned, net
 
3,830

 
4,045

 
279

Accrued interest receivable
 
3,197

 
3,243

 
2,840

Deferred tax asset
 
2,343

 
2,601

 
1,459

Goodwill and other intangible assets, net
 
3,213

 
3,224

 
3,254

Bank-owned life insurance
 
7,297

 
7,248

 
7,101

Other assets
 
3,466

 
2,385

 
2,752

Total assets
 
$
1,225,526

 
$
1,175,835

 
$
1,126,930


 

 

 

LIABILITIES
 

 

 

Deposits
 

 

 

Noninterest-bearing
 
$
130,625

 
$
112,514

 
$
109,828

Interest-bearing
 
764,200

 
756,040

 
757,377

Total deposits
 
894,825

 
868,554

 
867,205

Advances from Federal Home Loan Bank
 
109,285

 
82,413

 
93,599

Repurchase agreements
 
36,745

 
36,361

 
28,854

Subordinated debt
 
18,145

 
18,133

 
—

Junior subordinated debt
 
3,609

 
3,609

 
3,609

Other borrowings
 
—

 
78

 
—

Accrued taxes and other liabilities
 
12,121

 
18,351

 
20,900

Total liabilities
 
1,074,730

 
1,027,499

 
1,014,167


 

 

 

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; 8,815,119, 8,805,810, and 7,214,734 shares outstanding, respectively
 
8,815

 
8,806

 
7,215

Surplus
 
113,246

 
112,927

 
82,854

Retained earnings
 
29,644

 
27,916

 
22,507

Accumulated other comprehensive loss
 
(909
)
 
(1,313
)
 
187

Total stockholders’ equity
 
150,796

 
148,336

 
112,763

   Total liabilities and stockholders’ equity
 
$
1,225,526

 
$
1,175,835

 
$
1,126,930




INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(Unaudited)

 
 
 
 
 
 
 
 
 
 

 
For the three months ended
 
For the six months ended

 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
June 30, 2017
 
June 30, 2016

 

 

 

 

 

INTEREST INCOME
 

 

 

 

 

Interest and fees on loans
 
$
10,559

 
$
10,004

 
$
9,781

 
$
20,563

 
$
19,266

Interest on investment securities
 
1,199

 
1,029

 
891

 
2,228

 
1,747

Other interest income
 
86

 
60

 
47

 
146

 
84

Total interest income
 
11,844

 
11,093

 
10,719

 
22,937

 
21,097


 

 

 

 

 

INTEREST EXPENSE
 

 

 

 

 

Interest on deposits
 
1,827

 
1,853

 
1,763

 
3,680

 
3,278

Interest on borrowings
 
715

 
380

 
298

 
1,095

 
614

Total interest expense
 
2,542

 
2,233

 
2,061

 
4,775

 
3,892

Net interest income
 
9,302

 
8,860

 
8,658

 
18,162

 
17,205


 

 

 

 

 

Provision for loan losses
 
375

 
350

 
800

 
725

 
1,254

Net interest income after provision for loan losses
 
8,927

 
8,510

 
7,858

 
17,437

 
15,951


 

 

 

 

 

NONINTEREST INCOME
 

 

 

 

 

Service charges on deposit accounts
 
96

 
97

 
88

 
193

 
185

Gain on sale of investment securities, net
 
109

 
106

 
144

 
215

 
224

Gain on sale of fixed assets, net
 
1

 
23

 
1,252

 
24

 
1,252

(Loss) gain on sale of other real estate owned, net
 
(10
)
 
5

 
10

 
(5
)
 
11

Gain on sale of loans, net
 
—

 
—

 
—

 
—

 
313

Servicing fees and fee income on serviced loans
 
378

 
423

 
537

 
801

 
1,128

Other operating income
 
227

 
231

 
225

 
458

 
430

Total noninterest income
 
801

 
885

 
2,256

 
1,686

 
3,543

Income before noninterest expense
 
9,728

 
9,395

 
10,114

 
19,123

 
19,494


 

 

 

 

 

NONINTEREST EXPENSE
 

 

 

 

 

Depreciation and amortization
 
391

 
376

 
369

 
767

 
739

Salaries and employee benefits
 
4,109

 
3,950

 
3,890

 
8,059

 
7,763

Occupancy
 
245

 
264

 
242

 
509

 
478

Data processing
 
355

 
368

 
367

 
723

 
741

Marketing
 
119

 
28

 
102

 
147

 
214

Professional fees
 
231

 
232

 
375

 
463

 
654

Customer reimbursements
 
—

 
—

 
584

 
—

 
584

Acquisition expenses
 
80

 
145

 
—

 
225

 
—

Other operating expenses
 
1,398

 
1,321

 
1,175

 
2,719

 
2,315

Total noninterest expense
 
6,928

 
6,684

 
7,104

 
13,612

 
13,488

Income before income tax expense
 
2,800

 
2,711

 
3,010

 
5,511

 
6,006

Income tax expense
 
877

 
847

 
1,005

 
1,724

 
2,011

Net income
 
$
1,923

 
$
1,864

 
$
2,005

 
$
3,787

 
$
3,995


 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.22

 
$
0.26

 
$
0.28

 
$
0.48

 
$
0.56

Diluted earnings per share
 
$
0.22

 
$
0.26

 
$
0.28

 
$
0.47

 
$
0.55

Cash dividends declared per common share
 
$
0.02

 
$
0.02

 
$
0.01

 
$
0.04

 
$
0.02




INVESTAR HOLDING CORPORATION
EARNINGS PER SHARE
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
For the six months ended
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
June 30, 2017
 
June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
1,923

 
$
1,864

 
$
2,005

 
$
3,787

 
$
3,995

Weighted average number of common shares outstanding used in computation of basic earnings per share
 
8,685,980

 
7,205,942

 
7,158,532

 
7,950,049

 
7,176,545

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Restricted stock
 
27,045

 
20,604

 
15,298

 
20,557

 
12,705

Stock options
 
43,640

 
26,838

 
14,715

 
34,478

 
14,752

Stock warrants
 
23,963

 
23,485

 
11,231

 
22,212

 
11,249

Weighted average number of common shares outstanding plus effect of dilutive securities used in computation of diluted earnings per share
 
8,780,628

 
7,276,869

 
7,199,776

 
8,027,296

 
7,215,251

Basic earnings per share
 
$
0.22

 
$
0.26

 
$
0.28

 
$
0.48

 
$
0.56

Diluted earnings per share
 
$
0.22

 
$
0.26

 
$
0.28

 
$
0.47

 
$
0.55





INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
 
June 30, 2017
 
March 31, 2017
 
June 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
 
$
914,265

 
$
10,559

 
4.63
%
 
$
892,546

 
$
10,004

 
4.55
%
 
$
852,475

 
$
9,781

 
4.60
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
165,689

 
1,013

 
2.45

 
150,139

 
839

 
2.27

 
129,126

 
732

 
2.27

Tax-exempt
 
29,375

 
186

 
2.54

 
30,540

 
190

 
2.52

 
25,105

 
159

 
2.54

Interest-bearing balances with banks
 
28,423

 
86

 
1.21

 
24,591

 
60

 
0.99

 
21,654

 
47

 
0.87

Total interest-earning assets
 
1,137,752

 
11,844

 
4.18

 
1,097,816

 
11,093

 
4.10

 
1,028,360

 
10,719

 
4.18

Cash and due from banks
 
8,213

 
 
 
 
 
8,546

 
 
 
 
 
7,647

 
 
 
 
Intangible assets
 
3,217

 
 
 
 
 
3,227

 
 
 
 
 
3,258

 
 
 
 
Other assets
 
56,919

 
 
 
 
 
55,190

 
 
 
 
 
54,123

 
 
 
 
Allowance for loan losses
 
(7,223
)
 
 
 
 
 
(7,125
)
 
 
 
 
 
(6,784
)
 
 
 
 
Total assets
 
$
1,198,878

 
 
 
 
 
$
1,157,654

 
 
 
 
 
$
1,086,604

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 
$
291,902

 
$
524

 
0.72

 
$
291,855

 
$
488

 
0.68

 
$
247,052

 
$
393

 
0.64

Savings deposits
 
51,474

 
83

 
0.65

 
53,237

 
86

 
0.66

 
52,728

 
88

 
0.67

Time deposits
 
402,271

 
1,220

 
1.22

 
433,170

 
1,279

 
1.20

 
439,898

 
1,282

 
1.17

Total interest-bearing deposits
 
745,647

 
1,827

 
0.98

 
778,262

 
1,853

 
0.97

 
739,678

 
1,763

 
0.96

Short-term borrowings
 
137,848

 
350

 
1.02

 
120,923

 
282

 
0.95

 
103,274

 
229

 
0.89

Long-term debt
 
39,285

 
365

 
3.73

 
21,175

 
98

 
1.88

 
23,434

 
69

 
1.18

Total interest-bearing liabilities
 
922,780

 
2,542

 
1.10

 
920,360

 
2,233

 
0.98

 
866,386

 
2,061

 
0.95

Noninterest-bearing deposits
 
116,714

 
 
 
 
 
110,410

 
 
 
 
 
95,537

 
 
 
 
Other liabilities
 
9,671

 
 
 
 
 
9,387

 
 
 
 
 
12,646

 
 
 
 
Stockholders’ equity
 
149,713

 
 
 
 
 
117,497

 
 
 
 
 
112,035

 
 
 
 
Total liability and stockholders’ equity
 
$
1,198,878

 
 
 
 
 
$
1,157,654

 
 
 
 
 
$
1,086,604

 
 
 
 
Net interest income/net interest margin
 
 
 
$
9,302

 
3.28
%
 
 
 
$
8,860

 
3.27
%
 
 
 
$
8,658

 
3.38
%






INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the six months ended
 
 
June 30, 2017
 
June 30, 2016
 
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/ Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
903,466

 
$
20,563

 
4.59
%
 
$
842,420

 
$
19,266

 
4.59
%
Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
157,957

 
1,852

 
2.36

 
121,286

 
1,444

 
2.39

Tax-exempt
 
29,955

 
376

 
2.53

 
23,652

 
303

 
2.57

Interest-bearing balances with banks
 
26,517

 
146

 
1.12

 
21,210

 
84

 
0.79

Total interest-earning assets
 
1,117,895

 
22,937

 
4.14

 
1,008,568

 
21,097

 
4.20

Cash and due from banks
 
8,379

 
 
 
 
 
7,435

 
 
 
 
Intangible assets
 
3,222

 
 
 
 
 
3,219

 
 
 
 
Other assets
 
56,058

 
 
 
 
 
53,123

 
 
 
 
Allowance for loan losses
 
(7,174
)
 
 
 
 
 
(6,546
)
 
 
 
 
Total assets
 
$
1,178,380

 
 
 
 
 
$
1,065,799

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand
 
$
291,878

 
$
1,011

 
0.70

 
$
243,448

 
$
773

 
0.64

Savings deposits
 
52,350

 
169

 
0.65

 
52,936

 
177

 
0.67

Time deposits
 
417,635

 
2,500

 
1.21

 
411,868

 
2,328

 
1.13

Total interest-bearing deposits
 
761,863

 
3,680

 
0.97

 
708,252

 
3,278

 
0.93

Short-term borrowings
 
129,432

 
633

 
0.99

 
118,056

 
473

 
0.80

Long-term debt
 
30,280

 
462

 
3.08

 
25,050

 
141

 
1.13

Total interest-bearing liabilities
 
921,575

 
4,775

 
1.04

 
851,358

 
3,892

 
0.92

Noninterest-bearing deposits
 
113,579

 
 
 
 
 
91,428

 
 
 
 
Other liabilities
 
9,532

 
 
 
 
 
11,559

 
 
 
 
Stockholders’ equity
 
133,694

 
 
 
 
 
111,454

 
 
 
 
Total liability and stockholders’ equity
 
$
1,178,380

 
 
 
 
 
$
1,065,799

 
 
 
 
Net interest income/net interest margin
 
 
 
$
18,162

 
3.28
%
 
 
 
$
17,205

 
3.42
%



INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
Tangible common equity
 
 
 
 
 
 
Total stockholders’ equity
 
$
150,796

 
$
148,336

 
$
112,763

Adjustments:
 
 
 
 
 
 
Goodwill
 
2,684

 
2,684

 
2,684

Core deposit intangible
 
429

 
440

 
470

Trademark intangible
 
100

 
100

 
100

Tangible common equity
 
$
147,583

 
$
145,112

 
$
109,509

Tangible assets
 
 
 
 
 
 
Total assets
 
$
1,225,526

 
$
1,175,835

 
$
1,126,930

Adjustments:
 
 
 
 
 
 
Goodwill
 
2,684

 
2,684

 
2,684

Core deposit intangible
 
429

 
440

 
470

Trademark intangible
 
100

 
100

 
100

Tangible assets
 
$
1,222,313

 
$
1,172,611

 
$
1,123,676

 
 
 
 
 
 
 
Common shares outstanding
 
8,815,119

 
8,805,810

 
7,214,734

Tangible equity to tangible assets
 
12.07
%
 
12.38
%
 
9.75
%
Book value per common share
 
$
17.11

 
$
16.85

 
$
15.63

Tangible book value per common share
 
16.74

 
16.48

 
15.18





INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
Net interest income
(a)
$
9,302

 
$
8,860

 
$
8,658

Provision for loan losses
 
375

 
350

 
800

Net interest income after provision for loan losses
 
8,927

 
8,510

 
7,858

 
 
 
 
 
 
 
Noninterest income
(b)
801

 
885

 
2,256

Gain on sale of investment securities, net
 
(109
)
 
(106
)
 
(144
)
Gain on sale of other real estate owned, net
 
10

 
(5
)
 
(10
)
Gain on sale of fixed assets, net
 
(1
)
 
(23
)
 
(1,252
)
Gain on sale of loans, net
 
—

 
—

 
—

Core noninterest income
(d)
701

 
751

 
850

 
 
 
 
 
 
 
Core earnings before noninterest expense
 
9,628

 
9,261

 
8,708

 
 
 
 
 
 
 
Total noninterest expense
(c)
6,928

 
6,684

 
7,104

Acquisition expense
 
(80
)
 
(145
)
 
—

Severance
 
—

 
(82
)
 
(15
)
Customer reimbursements
 
—

 
—

 
(584
)
Core noninterest expense
(f)
6,848

 
6,457

 
6,505

 
 
 
 
 
 
 
Core earnings before income tax expense
 
2,780

 
2,804

 
2,203

Core income tax expense(1)
 
871

 
876

 
736

Core earnings
 
1,909

 
1,928

 
1,467

 
 
 
 
 
 
 
Core basic earnings per share
 
0.22

 
0.27

 
0.20

 
 
 
 
 
 
 
Diluted earnings per share (GAAP)
 
$
0.22

 
$
0.26

 
$
0.28

Gain on sale of investment securities, net
 
(0.01
)
 
(0.01
)
 
(0.01
)
Loss (gain) on sale of other real estate owned, net
 
—

 
—

 
—

Gain on sale of fixed assets, net
 
—

 
—

 
(0.11
)
Gain on sale of loans, net
 
—

 
—

 
—

Acquisition expense
 
0.01

 
0.01

 
—

Severance
 
—

 
0.01

 
—

Customer reimbursements
 
$
—

 
$
—

 
0.05

Core diluted earnings per share
 
$
0.22

 
$
0.27

 
$
0.21

 
 
 
 
 
 
 
Efficiency ratio
(c) / (a+b)
68.57
%
 
68.59
%
 
65.09
%
Core efficiency ratio
(f) / (a+d)
68.46
%
 
67.18
%
 
68.42
%
Core return on average assets(2)
 
0.64
%
 
0.68
%
 
0.54
%
Core return on average equity(2)
 
5.11
%
 
6.65
%
 
5.25
%
Total average assets
 
$
1,198,878

 
$
1,157,654

 
$
1,086,604

Total average stockholders’ equity
 
149,713

 
117,497

 
112,035

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Core income tax expense is calculated using the actual effective tax rate of 31.3%, 31.2%, and 33.4% for the three months ended June 30, 2017, March 31, 2017, and June 30, 2016, respectively.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.


Investar Holding Corp Reports