Investar Holding Corporation Announces 2015 Third Quarter Results

BATON ROUGE, La., Oct. 27, 2015 (GLOBE NEWSWIRE) — Investar Holding Corporation (NASDAQ:ISTR) (the “Company”), the holding company for Investar Bank (the “Bank”), today announced financial results for the quarter ended September 30, 2015. For the quarter ended September 30, 2015, the Company reported net income of $1.8 million, or $0.26 per diluted share, compared to $1.8 million, or $0.25 per  diluted  share,  for  the  quarter  ended  June 30,  2015,  and  $1.4  million,  or  $0.20  per  diluted  share,  for  the  quarter  ended September 30, 2014. This represents an increase of $0.4 million, or 28.7%, in net income for the quarter ended September 30, 2015 when compared to the same quarter in 2014.

Core earnings, a non-GAAP measure which excludes the after-tax impact of securities gains and losses, gains and losses on the sale of other real estate owned, and other identified costs recorded for the period, were $1.9 million, or $0.26 per diluted share, for the quarter ended September 30, 2015 compared to core earnings of $1.2 million, or $0.16 per diluted share, for the quarter ended September 30, 2014. See calculation of core earnings on the Reconciliation of Non-GAAP Financial Measures.

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

“We are pleased to announce another great quarter for Investar. We continue to experience solid loan growth throughout our markets. C&I loan growth remains a focus and we are pleased with the 25% year to date growth in the portfolio. We are also continuing to see the results of our efforts to grow our noninterest-bearing deposits with 35% growth year to date.

We remain aligned with our shareholders and are focused on enhancing the value of our franchise. We believe this will be achieved by transitioning the Bank to a more relationship-based model from a transaction-oriented one. We are committed to investing resources in developing and growing our small business banking strategy.”

Third Quarter Highlights

  • Core earnings were $1.9 million, or $0.26 per diluted share, for the quarter ended September 30, 2015 compared to $1.7 million, or $0.24 per diluted share for the quarter ended June 30, 2015, and $1.2 million, or $0.16 per diluted share, for the quarter ended September 30, 2014.
  • Core return on average assets and core efficiency ratio improved for the third quarter of 2015 compared to the quarters ended June 30, 2015 and September 30, 2014.
  • Increase in net income of $0.4 million, or 28.7%, for the third quarter of 2015 compared to the third quarter of 2014.
  • Total loans, excluding loans held for sale, increased $37 million, or 5.5%, from June 30, 2015 and increased $87.8 million, or 14.1% (18.8% annualized), from December 31, 2014 to $710.6 million at September 30, 2015.
  • Commercial and industrial loans at September 30, 2015 increased $11.2 million, or 19.8%, from June 30, 2015 and increased $13.5 million, or 24.9% (33.3% annualized), from December 31, 2014 to $67.7 million at September 30, 2015.
  • Nonperforming loans to total loans decreased to 0.37% at September 30, 2015 from 0.54% at December 31, 2014.
  • Allowance for loan losses to nonperforming and total loans increased to 226.43% and 0.83%, respectively, at September 30, 2015 compared to 138.64% and 0.74%, respectively, at December 31, 2014.
  • Other real estate owned decreased $1.6 million, or 56.9% from December 31, 2014.
  • Total noninterest-bearing deposits were $94.5 million at September 30, 2015, an increase of $8.2 million, or 9.5%, from June 30, 2015 and an increase of $24.3 million, or 34.6% (46.3% annualized), from December 31, 2014.
  • Repurchased 36,856 shares of stock through our current stock repurchase program at an average price of $15.51.
  • The dividend declared in the third quarter of 2015 increased 20.6% when compared to the dividend declared for the third quarter of 2014.
  • Acquired land and building for an additional branch in the New Orleans market.

Loans

Total loans were $710.6 million at September 30, 2015, an increase of $87.8 million, or 14.1%, from December 31, 2014.

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

        Percentage       Percentage   Increase/(Decrease)
  September 30, 2015   of Portfolio   December 31, 2014   of Portfolio   Amount   Percent  
 
Mortgage loans on real estate  
Construction and development   $ 79,796     11.2 %   $ 71,350     11.4 %     $ 8,446         11.8 %  
1-4 Family     154,277     21.7     137,519     22.1       16,758         12.2    
Multifamily     24,484     3.5     17,458     2.8       7,026         40.2    
Farmland     3,009     0.4     2,919     0.5       90         30.8    
Commercial real estate              
Owner occupied     132,419     18.7     119,668     19.2       12,751         10.7    
Nonowner occupied     126,555     17.8     105,390     16.9       21,165         20.1    
Commercial and industrial     67,671     9.5     54,187     8.7       13,484         24.9    
Consumer     122,350     17.2       114,299     18.4         8,051         7.0    
Total loans     710,561     100 %     622,790     100 %       87,771         14.1 %  
Loans held for sale     55,653       103,396         (47,743       (46.2 )  
Total gross loans   $ 766,214     $ 726,186       $ 40,028         5.5 %  
 

Consumer loans, including consumer loans held for sale, totaled $175.7 million at September 30, 2015, a decrease of $38.3 million, or 17.9%, from $214 million at December 31, 2014. The decrease is mainly attributable to the $46.4 million decrease in the balance of consumer loans held for sale at September 30, 2015 when compared to December 31, 2014. Two consumer loan sales were postponed by the buyer from the fourth quarter of 2014 to the first quarter of 2015, therefore increasing the balance of consumer loans held for sale at December 31, 2014.

At  September 30,  2015,  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 $200.1 million, an increase of $26.2 million, or 15.1%, compared to the business lending portfolio of $173.9 million at December 31, 2014.

Management continues to monitor the Company’s loan portfolio for exposure, directly or indirectly, to the potential negative impacts from the decline in oil and gas prices. Less than 1% of the total loan portfolio remains directly related to the energy sector. At this time, management does not anticipate that oil and gas prices at current levels will negatively impact borrowers’ ability to service their debt.

The provision for loan loss expense was $0.4 million for the third quarter of 2015, a decrease of $0.1 million compared to the third quarter of 2014. The allowance for loan losses was $5.9 million, or 226.43% and 0.83% of nonperforming loans and total loans, respectively, at September 30, 2015, compared to $4.6 million, or 138.61% and 0.74% of nonperforming loans and total loans, respectively, at December 31, 2014. The allowance for loan losses plus the fair value marks on acquired loans was 0.93% of total loans at September 30, 2015 compared to 0.88% at December 31, 2014. Nonperforming loans to total loans improved to 0.37% at September 30, 2015 compared to 0.54% at December 31, 2014.

Deposits

Total deposits at September 30, 2015 were $730.4 million, an increase of $102.3 million, or 16.3%, from December 31, 2014. The increase in total deposits was driven primarily by an increase of $24.3 million, or 34.6%, in noninterest-bearing demand deposits, and an increase in time deposits of $43.5 million, or 14%, from December 31, 2014. The Company’s focus on relationship banking, including our deposit cross sell strategy, as well as management’s focus on growing the commercial and industrial loan portfolio and bringing in related deposits, continues to positively impact both noninterest-bearing demand deposit and NOW account growth.

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

                         
        Percentage       Percentage
  Increase/(Decrease)
    September 30, 2015   of Portfolio   December 31, 2014   of Portfolio
  Amount   Percent
 
Noninterest-bearing demand deposits   $ 94,533       12.9 %   $ 70,217       11.2 %   $ 24,316       34.6 %
NOW accounts     132,739       18.2       116,644       18.6       16,095       13.8  
Money market deposit accounts     95,584       13.1       77,589       12.3       17,995       23.2  
Savings accounts     53,717       7.3       53,332       8.5       385       0.7  
Time deposits     353,861       48.5       310,336       49.4       43,525       14.0  
Total deposits   $ 730,434       100 %   $ 628,118       100 %   $ 102,316       16.3 %
 

Net Interest Income

Net interest income for the third quarter of 2015 totaled $8 million, an increase of $0.2 million, or 2.2%, compared to the second quarter of 2015, and an increase of $1 million, or 13.6%, compared to the third quarter of 2014. The increase was a direct result of continued growth of the Company’s loan portfolio with an increase in net interest income of $1.8 million due to an increase in volume offset by a $0.8 million decrease related to a reduction in yield compared to the third quarter of 2014.

The Company’s net interest margin was 3.52% for the quarter ended September 30, 2015 compared to 3.70% for the second quarter of 2015 and 3.86% for the third quarter of 2014. The yield on interest-earning assets was 4.20% for the quarter ended September 30, 2015 compared to 4.37% for the second quarter of 2015 and 4.51% for the third quarter of 2014. The decrease in both the net interest margin and yield on interest-earning assets can be attributed to the consumer loan portfolio. The consumer loan portfolio primarily consists of indirect auto loans and has experienced margin compression related to its current originations.

The cost of deposits increased one basis point when comparing the third quarter of 2015 to the second quarter of 2015, and increased three basis points when comparing the third quarter of 2015 to the third quarter of 2014.

Noninterest Income

Noninterest income for the third quarter of 2015 totaled $2.2 million, an increase of $0.1 million, or 4.9%, compared to the second quarter of 2015, and an increase of $0.2 million, or 10.6%, compared to the third quarter of 2014. The largest component of noninterest income is the gain on sale of loans, representing 47.2% and 58.7% for the third quarters of 2015 and 2014, respectively.

The following table sets forth the composition of the Company’s gain on sale of loans for the time periods indicated (dollars in thousands).

       
  Q3 2015   Q2 2015   Q3 2014   Qtr/Qtr   Year/Year
Gain on sale of loans                  
Consumer $   705     $   803     $   713       -12 %     -1 %
Mortgage     318         274         433       16 %     -27 %
Total   1,023       1,077       1,146       -5 %     -11 %

The increase in noninterest income from the third quarter of 2014 resulted primarily from the $0.3 million increase in both other operating income and gain on sale of investment securities, offset by a $0.4 million decrease in gain on sale of real estate owned, net. The increase in other operating income is mainly attributable to the $0.2 million increase in servicing fees, a direct result of the growth in the Company’s servicing portfolio from increased consumer loan sales.

Core noninterest income, which excludes the gains and losses on the sales of investment securities and other real estate owned, was $2 million for the third quarter of 2015, an increase of $0.1 million, or 2.9%, compared to $1.9 million for the second quarter of 2015, and an increase of $0.3 million, or 19.9%, compared to the third quarter of 2014.

Noninterest Expense

Noninterest expense for the third quarter of 2015 totaled $7 million, an increase of $0.3 million, or 5%, compared to the second quarter of 2015, and an increase of $0.7 million, or 11.1%, compared to the third quarter of 2014. The increase in noninterest expense from the third quarter of 2014 is primarily due to the $0.4 million increase in salaries and employee benefits and the $0.2 million increase in other operating expenses, both of which are mainly attributable to the continued growth of the Company including the opening of the Highland Road branch in Baton Rouge, Louisiana on August 1, 2014.

During the quarter, the Company incurred restructuring costs of approximately $0.3 million. These costs included severance of $150,000, which contributed to the $0.4 million increase in salaries and benefits discussed above, professional fees of $61,000, and other expenses of $105,000 related to the downsizing of our indirect lending platform. The downsizing can be attributed to the Company’s ongoing strategic shift to enhance franchise value by transitioning to a more relationship-based model from one that is transaction-oriented. The Company also recorded an impairment of $54,000 on its investment in a tax credit entity. Core noninterest expense, which excludes the impact of these costs, was $6.6 million for both the third and second quarters of 2015, an increase of $0.3 million, or 5.2%, compared to the third quarter of 2014.

Basic Earnings Per Share and Diluted Earnings Per Share

The Company reported both basic and diluted earnings per share of $0.26 for the three months ended September 30, 2015, an increase of $0.06 compared to basic and diluted earnings per share for the three months ended September 30, 2014.

Core basic and diluted earnings per share were $0.26 for the three months ended September 30, 2015, an increase of $0.09 and $0.10, respectively, compared to core basic earnings per share of $0.17 and core diluted earnings per share of $0.16 for the three months ended September 30, 2014.

Taxes

The Company recorded income tax expense of $0.9 million for the quarter ended September 30, 2015, which equates to an effective tax rate of 31.4%. During the third quarter, the Company recorded an additional tax credit related to its investment in a tax credit entity in  December  2014  whose  purpose  was  to  invest  in  a Federal  Historic Rehabilitation  tax  credit  project.  The Company recognized a tax credit of $72,000, reducing tax expense for the third quarter, as well as a corresponding impairment on its investment in the tax credit entity of $54,000.

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 11 full service banking offices located throughout its market. At September 30, 2015, the Company had 165 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,” “efficiency ratio,” “core noninterest income,” “core earnings before noninterest expense,” “core noninterest 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 review 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.

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 Item 7. “Special Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission.

INVESTAR HOLDING CORPORATION   
CONSOLIDATED BALANCE SHEETS   
(Amounts in thousands, except share data)  
   
    September 30, 2015   December 31, 2014  
    (Unaudited)      
           
ASSETS                  
Cash and due from banks   $   6,595     $   5,519    
Interest-bearing balances due from other banks     13,058       13,493    
Federal funds sold     223       500    
Cash and cash equivalents     19,876       19,512    
           
Available for sale securities at fair value (amortized cost of $84,218 and $69,838,          
respectively)     84,566       70,299    
Held to maturity securities at amortized cost (estimated fair value of $27,486 and          
$22,301, respectively)     27,525       22,519    
Loans held for sale     55,653       103,396    
Loans, net of allowance for loan losses of $5,911 and $4,630, respectively     704,650       618,160    
Other equity securities     4,899       5,566    
Bank premises and equipment, net of accumulated depreciation of $5,796 and $3,964,          
respectively     29,916       28,538    
Other real estate owned, net     1,178       2,735    
Accrued interest receivable     2,560       2,435    
Deferred tax asset     1,803       1,097    
Goodwill and other intangible assets     3,185       3,216    
Other assets     1,936       1,881    
Total assets   $    937,747     $    879,354    
           
LIABILITIES           
Deposits                      
Noninterest-bearing   $ 94,533      $ 70,217    
Interest-bearing     635,901       557,901    
Total deposits     730,434       628,118    
Advances from Federal Home Loan Bank     47,900       125,785    
Repurchase agreements     34,648       12,293    
Note payable     3,609       3,609    
Accrued taxes and other liabilities     13,028       6,165    
Total liabilities     829,619       775,970    
           
STOCKHOLDERS’ EQUITY                  
Preferred stock, $1.00 par value per share; 5,000,000 shares authorized              
Common stock, $1.00 par value per share; 40,000,000 shares authorized; 7,264,261 and                  
7,262,085 shares outstanding, respectively     7,305       7,264    
Treasury stock     (630     (23 )  
Surplus     84,588       84,213    
Retained earnings     17,257       11,809    
Accumulated other comprehensive (loss) income     (392 )     121    
Total stockholders’ equity     108,128       103,384    
Total liabilities and stockholders’ equity    $ 937,747      $ 879,354    

INVESTAR HOLDING CORPORATION  
CONSOLIDATED STATEMENTS OF OPERATIONS   
(Amounts in thousands, except share data) (Unaudited)  
   
    Three months ended   Nine months ended  
    September 30,   September 30,  
      2015       2014       2015       2014    
                   
INTEREST INCOME                  
Interest and fees on loans   $ 8,912     $ 7,801     $ 25,856     $ 21,595    
Interest on investment securities     550       367       1,558       917    
Other interest income     18       14       53       34    
Total interest income     9,480       8,182       27,467       22,546    
                   
INTEREST EXPENSE      
Interest on deposits     1,358       1,084       3,849       3,137    
Interest on borrowings     170       98       387       292    
Total interest expense     1,528       1,182       4,236       3,429    
Net interest income     7,952       7,000       23,231       19,117    
                   
Provision for loan losses     400       505       1,500       1,198    
Net interest income after provision for loan losses     7,552       6,495       21,731       17,919    
   
NONINTEREST INCOME  
Service charges on deposit accounts     95       85       286       221    
Gain on sale of investment securities, net     334       63       468       228    
(Loss) gain on sale of real estate owned, net     (147     245       (141     238    
Gain on sale of loans, net     1,023       1,146       3,831       2,801    
Fee income on loans held for sale, net     261       85       771       250    
Other operating income     601       335       1,558       797    
Total noninterest income     2,167       1,959       6,773       4,535    
Income before noninterest expense     9,719       8,454       28,504       22,454    
                   
NONINTEREST EXPENSE          
Depreciation and amortization     362       343       1,081       973    
Salaries and employee benefits     4,161       3,773       12,040       10,735    
Occupancy     217       223       655       629    
Data processing     389       354       1,099       940    
Marketing     35       94       155       241    
Professional fees     271       176       770       433    
Impairment on investment in tax credit entity     54             54          
Other operating expenses     1,524       1,350       4,265       3,478    
Total noninterest expense     7,013       6,313       20,119       17,429    
Income before income tax expense     2,706       2,141       8,385       5,025    
Income tax expense     850       699       2,766       1,637    
Net income   $ 1,856     $ 1,442     $ 5,619     $ 3,388    
                   
EARNINGS PER SHARE      
Basic earnings per share   $ 0.26     $ 0.20     $ 0.78     $ 0.68    
Diluted earnings per share   $ 0.26     $ 0.20     $ 0.78     $ 0.65    
Cash dividends declared per common share   $ 0.01     $ 0.01     $ 0.02     $ 0.03    

INVESTAR HOLDING CORPORATION
EARNINGS PER COMMON SHARE 
(Amounts in thousands, except share data) 
(Unaudited)
 
    Three months ended   Nine months ended
    September 30,   September 30,
      2015       2014       2015       2014  
                 
Net income available to common shareholders   $   1,856     $   1,442     $   5,619     $   3,388  
Weighted average number of common shares                 
outstanding –                
Used in computation of basic earnings per       7,217,006       7,064,806       7,218,603       4,967,393  
common share                
Effect of dilutive securities:                
Restricted stock     9,326       35,251       4,812       45,649  
Stock options     13,980       22,811       12,385       22,811  
Stock warrants     12,269       189,601       11,284       192,184  
Weighted average number of common shares                                
outstanding –                
Plus effect of dilutive securities used in                 
computation of diluted earnings per                 
common share     7,252,581       7,312,469       7,247,084       5,228,037  
Basic earnings per share   $   0.26     $   0.20     $   0.78     $   0.68  
Diluted earnings per share   $ 0.26     $ 0.20     $ 0.78     $ 0.65  

INVESTAR HOLDING CORPORATION 
SUMMARY FINANCIAL INFORMATION 
(Amounts in thousands, except share data) 
(Unaudited)
         
    Q3 2015   Q2 2015   Q3 2014   Qtr/Qtr   Year/Year
                     
EARNINGS DATA          
Total interest income   $ 9,480     $ 9,187     $ 8,182       3.2 %     15.9 %
Total interest expense     1,528       1,407       1,182       8.6 %     29.3 %
Net interest income     7,952       7,780       7,000       2.2 %     13.6 %
Provision for loan losses     400       400       505       0.0 %     -20.8 %
Total noninterest income     2,167       2,066       1,959       4.9 %     10.6 %
Total noninterest expense     7,013       6,682       6,313       5.0 %     11.1 %
Income before income taxes     2,706       2,764       2,141       -2.1 %     26.4 %
Income tax expense     850       951       699       -10.6 %     21.6 %
Net income   $ 1,856     $ 1,813     $ 1,442       2.4 %     28.7 %
                     
AVERAGE BALANCE SHEET DATA                    
Total assets   $ 944,234     $ 891,581     $ 762,330       5.9 %     23.9 %
Total interest-earning assets     895,208       842,984       719,985       6.2 %     24.3 %
Total loans     692,196       664,606       589,082       4.2 %     17.5 %
Total gross loans     777,080       729,851       619,356       6.5 %     25.5 %
Total interest-bearing deposits     634,232       617,442       523,075       2.7 %     21.3 %
Total interest-bearing liabilities     738,612       694,497       585,015       6.4 %     26.3 %
Total deposits     721,657       699,151       594,519       3.2 %     21.4 %
Total shareholders’ equity     107,795       106,583       100,068       1.1 %     7.7 %
                     
PER SHARE DATA                    
Earnings:                    
Basic earnings per share   $ 0.26     $ 0.25     $ 0.20       2.4 %     28.6 %
Diluted earnings per share     0.26       0.25       0.20       2.5 %     28.0 %
Core earnings:                    
Basic earnings per share(1)     0.26       0.24       0.17       10.0 %     49.6 %
Diluted earnings per share(1)     0.26       0.24       0.16       10.0 %     61.9 %
Book value per share     14.88       14.65       14.08       1.6 %     5.7 %
Tangible book value per share(1)     14.45       14.22       13.64       1.6 %     5.9 %
Common shares outstanding     7,264,261       7,293,209       7,253,774       -0.4 %     0.1 %
                     
PERFORMANCE RATIOS                    
Return on average assets     0.78 %     0.82 %     0.75 %     -4.9 %     4.0 %
Core return on average assets(1)     0.80 %     0.77 %     0.64 %     3.3 %     24.4 %
Return on average equity     6.83 %     6.82 %     5.72 %     0.1 %     19.4 %
Core return on average equity(1)     7.01 %     6.48 %     4.90 %     8.2 %     43.1 %
Net interest margin     3.52 %     3.70 %     3.86 %     -4.9 %     -8.8 %
Net interest income to average assets     3.34 %     3.50 %     3.64 %     -4.6 %     -8.2 %
Noninterest expense to average assets     2.95 %     3.01 %     3.29 %     -2.0 %     -10.3 %
Efficiency ratio (1)     69.31 %     67.87 %     70.47 %     2.1 %     -1.6 %
Core efficiency ratio (1)     66.88 %     68.85 %     72.97 %     -2.9 %     -8.3 %
Dividend payout ratio     3.19 %     3.11 %     3.40 %     2.6 %     -6.2 %
Net chargeoffs to average loans     0.03 %     0.00 %     0.04 %     NA       -25.0 %

INVESTAR HOLDING CORPORATION   
SUMMARY FINANCIAL INFORMATION   
(Amounts in thousands, except share data)  
 (Unaudited)  
                     
  Q3 2015   Q2 2015   Q3 2014   Qtr/Qtr   Year/Year
     
ASSET QUALITY RATIOS      
Nonperforming assets to total assets      0.40 %     0.56 %     0.56 %          
Nonperforming loans to total loans      0.37 %     0.40 %     0.25 %     -7.5 %     48.0 %  
Allowance for loan losses to total loans      0.83 %     0.85 %     0.74 %     -2.4 %     12.2 %  
Allowance for loan losses to nonperforming loans    226.43 %     213.20 %     296.01 %     6.2 %     23.5 %  
 
CAPITAL RATIOS(2)  
Investar Holding Corporation:  
Total equity to total assets     11.53 %     11.59 %     13.03 %     -0.5 %     -11.5 %  
Tangible equity to tangible assets     11.23 %     11.29 %     12.66 %     -0.5 %     -11.3 %  
Tier 1 leverage ratio     11.61 %     12.15 %     13.52 %     -4.4 %     -14.1 %  
Common equity tier 1 capital ratio     12.69 %     12.96 %     NA       -2.1 %     NA    
Tier 1 capital ratio     13.11 %     13.39 %     15.76 %     -2.1 %     -16.8 %  
Total capital ratio     13.82 %     14.10 %     16.42 %     -2.0 %     -15.8 %  
Investar Bank:                      
Tier 1 leverage ratio     11.25 %     11.72 %     9.04 %     -4.0 %     24.4 %  
Common equity tier 1 capital ratio     12.71 %     12.91 %     NA       -1.5 %     NA    
Tier 1 capital ratio     12.71 %     12.91 %     10.53 %     -1.5 %     20.7 %  
Total capital ratio     13.42 %     13.62 %     11.20 %     -1.5 %     19.8 %  

(1) Non-GAAP financial measures. See reconciliation.
(2) Beginning January 1, 2015, the capital ratios for the Company and the Bank are calculated using the Basel III framework. Capital ratios for prior periods were calculated using the Basel I framework. The Common Equity Tier 1 (CET1) capital ratio is a new ratio introduced under the Basel III framework. Ratios are estimated for September 30, 2015.

INVESTAR HOLDING CORPORATION  
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS   
(Amounts in thousands)  
(Unaudited)  
   
    Three months ended September 30,  
      2015       2014    
    Average
Balance
  Interest
Income/
Expense
Yield/Rate

  Average
Balance
  Interest
Income/
Expense
Yield/Rate

 
                           
Assets                
Interest-earning assets:              
Loans   $ 777,080     $ 8,912       4.55 %   $ 619,356     $ 7,801       5.00 %  
Securities:                          
Taxable     82,476       444       2.14       66,713       244       1.45    
Tax-exempt     17,234       106       2.44       19,353       123       2.52    
Interest-bearing balances with banks     18,418       18       0.39       14,563       14       0.38    
Total interest-earning assets     895,208       9,480       4.20       719,985       8,182       4.51    
Cash and due from banks     5,669               6,093            
Intangible assets     3,189               3,230            
Other assets     46,061               37,057            
Allowance for loan losses     (5,893 )             (4,035 )          
Total assets   $ 944,234             $ 762,330            
                           
Liabilities and shareholders’ equity                        
Interest-bearing liabilities:                           
Deposits:                                                  
Interest-bearing demand   $ 229,919     $ 369       0.64 %   $ 179,226     $ 279       0.62 %  
Savings deposits     53,407       91       0.68       52,973       91       0.68    
Time deposits     350,906       898       1.02       290,876       714       0.97    
Total interest-bearing deposits     634,232       1,358       0.85       523,075       1,084       0.82    
Short-term borrowings     68,544       32       0.19       23,137       12       0.21    
Long-term debt     35,836       138       1.53       38,803       86       0.88    
Total interest-bearing liabilities     738,612       1,528       0.82       585,015       1,182       0.80    
Noninterest-bearing deposits     87,425               71,444            
Other liabilities     10,402               5,803            
Stockholders’ equity     107,795               100,068            
Total liability and stockholders’ equity   $ 944,234             $ 762,330            
Net interest income/net interest margin     $   7,952       3.52 %       $   7,000       3.86 %  

INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS 
(Amounts in thousands)
(Unaudited)
 
    Three months ended September 30,
      2015       2014  
    Average
Balance
  Interest
Inco
me/
Expense
  Yield/Rate   Average
Balan
ce
  Interest
Incom
e/
Expense
  Yield/Rate
                         
                         
Assets              
Interest-earning assets:            
Loans   $ 740,652     $ 25,856       4.67 %   $ 576,280     $ 21,595       5.01 %
Securities:                        
Taxable     76,069       1,214       2.13       58,779       623       1.42  
Tax-exempt     18,381       344       2.50       16,272       294       2.42  
Interest-bearing balances with banks     17,863       53       0.40       11,833       34       0.38  
Total interest-earning assets     852,965       27,467       4.31       663,164       22,546       4.55  
Cash and due from banks     5,597               5,790          
Intangible assets     3,199               3,240          
Other assets     45,619               35,667          
Allowance for loan losses     (5,497 )             (3,683 )        
Total assets   $ 901,883             $   704,178          
                         
Liabilities and shareholders’ equity                        
Interest-bearing liabilities:                         
Deposits:                                                
Interest-bearing demand   $ 219,018     $ 1,034       0.63 %   $ 168,309     $ 783       0.62 %
Savings deposits     54,158       274       0.68       52,439       269       0.69  
Time deposits     339,129       2,541       1.00       281,822       2,085       0.99  
Total interest-bearing deposits     612,305       3,849       0.84       502,570       3,137       0.83  
Short-term borrowings     53,030       72       0.18       23,810       36       0.20  
Long-term debt     39,213       315       1.07       37,079       256       0.92  
Total interest-bearing liabilities     704,548       4,236       0.80       563,459       3,429       0.81  
Noninterest-bearing deposits     82,157               65,080          
Other liabilities     8,736               4,157          
Stockholders’ equity     106,442               71,482          
Total liability and stockholders’ equity   $ 901,883             $ 704,178          
Net interest income/net interest margin       $   23,231       3.64 %       $   19,117       3.85 %

INVESTAR HOLDING CORPORATION 
RECONCILIATION OF NON GAAP FINANCIAL MEASURES 
(Amounts in thousands, except share data)
(Unaudited)
 
    September 30,   June 30,
      2015       2014       2015  
Tangible common equity            
Total stockholder’s equity   $   108,128     $   102,165     $   106,873  
Adjustments:            
Goodwill     2,684       2,684       2,684  
Core deposit intangible     501       542       511  
Tangible common equity   $    104,943     $    98,939     $    103,678  
Tangible assets            
Total assets   $   937,747     $   784,597     $   921,855  
Adjustments:            
Goodwill     2,684       2,684       2,684  
Core deposit intangible     501       542       511  
Tangible assets   $    934,562     $    781,371     $    918,660  
             
Common shares outstanding     7,264,261       7,253,774       7,293,209  
Tangible equity to tangible assets     11.23 %     12.66 %     11.29 %
Book value per common share   $ 14.88     $ 14.08     $ 14.65  
Tangible book value per common share     14.45       13.64       14.22  

INVESTAR HOLDING CORPORATION 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 
(Amounts in thousands, except share data)
(Unaudited)
 
        Three months ended
        September 30,   June 30,
          2015       2014       2015  
                             
Net interest income   (a)   $ 7,952     $ 7,000     $ 7,780  
Provision for loan losses         400       505       400  
Net interest income after provision for loan losses         7,552       6,495       7,380  
                 
Gain on sale of investment securities         (334 )     (63 )     (134 )
Loss (gain) on sale of other real estate owned, net         147       (245 )     (7 )
Core noninterest income   (d)     1,980       1,651       1,925  
                 
Core earnings before noninterest expense       9,532       8,146       9,305  
                 
Impairment on investment in tax credit entity         (54 )            
Restructuring costs:                
Severance         (150 )            
Legal and consulting         (61 )            
Other         (105 )            
Core noninterest expense   (f)     6,643       6,313       6,682  
                 
Core income tax expense (1)         985       598       902  
Core earnings       $ 1,904     $ 1,235     $ 1,721  
                 
Core basic earnings per share     $ 0.26     $ 0.17     $ 0.24  
                 
Gain on sale of investment securities         (0.04 )     (0.01 )     (0.01 )
Loss (gain) on sale of other real estate owned, net         0.01       (0.03 )      
Impairment on investment in tax credit entity                      
Restructuring costs         0.03         –         –  
Core diluted earnings per share       $ 0.26     $ 0.16     $ 0.24  
                 
                             
Core efficiency ratio   (f) / (a+d)     66.88 %     72.97 %     68.85 %
Core return on average assets (2)         0.80 %     0.64 %     0.77 %
Core return on average equity (2)         7.01 %     4.90 %     6.48 %
Total average assets       $ 944,234     $ 762,330     $ 891,581  
Total average stockholders’ equity         107,795       100,068       106,583  

(1) Core income tax expense is calculated using the actual effective tax rates of 34.4% and 32.6% for the three months ended June 30, 2015 and September 30, 2014, respectively. The core income tax expense for the three months ended September 30, 2015 is calculated using the core effective tax rate of 34.1%. See rate reconciliation on the following page.
(2) Core earnings used in calculation. No adjustments were made to average assets or average equity.

INVESTAR HOLDING CORPORATION 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 
(Amounts in thousands, except share data)
(Unaudited)
 
        Three months ended
        September 30,   June 30,
          2015       2014       2015  
                 
Earnings before income tax expense   (a)   $ 2,706     $ 2,141     $ 2,764  
                 
Income tax credit         72         –          –   
Adjusted income tax expense   (b)     922       699       951  
                 
Core effective tax rate(1)   (b) / (a)     34.1 %     32.6 %     34.4 %
                 
CONTACT: For further information contact: 

Investar Holding Corporation
Chris Hufft
Chief Financial Officer
(225) 227-2215
Chris.Hufft@investarbank.com