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Investar Holding Corporation Announces 2017 Second Quarter Results

BATON ROUGE, La., July 26, 2017 (GLOBE NEWSWIRE) -- Investar Holding Corporation (NASDAQ:ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended 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.


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 common share 17.11 16.85 15.63 1.5 9.5
Tangible book value per common 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.

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

Source:Investar Holding Corporation