Core Points - Investar Holding Corporation declared a quarterly cash dividend of $0.11 per share for its common stockholders [1] - The dividend is scheduled to be paid on October 31, 2025, to shareholders of record as of September 30, 2025 [1]

Core Insights - Chemung Financial Corporation is a regional bank holding company based in New York, offering various financial services including commercial and consumer banking, wealth management, and insurance services [1] - The company faces competition from peers like C&F Financial Corporation and Enterprise Bancorp, which exhibit different efficiencies in capital utilization [1] Financial Performance - Chemung Financial's Return on Invested Capital (ROIC) is -0.52%, while its Weighted Average Cost of Capital (WACC) is 15.17%, leading to a ROIC to WACC ratio of -0.034, indicating insufficient returns to cover capital costs [2] - In comparison, Central Valley Community Bancorp and American National Bankshares Inc. have negative ROIC to WACC ratios of -0.761 and -0.009, respectively, while Investar Holding Corporation shows a high ROIC of 203.48% against a WACC of 23.00%, resulting in a ROIC to WACC ratio of 8.846, demonstrating exceptional efficiency [3][4] Industry Comparison - The analysis indicates that Chemung Financial Corporation is underperforming in capital utilization, while Investar Holding Corporation exemplifies superior efficiency [5] - The comparative analysis highlights varying efficiencies in capital utilization across the banking sector, emphasizing the importance of evaluating ROIC and WACC to assess a company's ability to generate returns relative to its cost of capital [4][5]

Company Overview - Investar (ISTR) is headquartered in Baton Rouge and operates in the Finance sector [3] - The stock has experienced a price change of 0.23% since the beginning of the year [3] Dividend Information - Investar currently pays a dividend of $0.11 per share, resulting in a dividend yield of 2% [3] - The dividend yield of the Banks - Southeast industry is 2.38%, while the S&P 500's yield is 1.49% [3] - The company's annualized dividend of $0.44 has increased by 7.3% from the previous year [4] - Over the last 5 years, Investar has raised its dividend 4 times, averaging an annual increase of 11.29% [4] - The current payout ratio is 20%, indicating that the company pays out 20% of its trailing 12-month EPS as dividends [4] Earnings Growth - The Zacks Consensus Estimate for 2025 earnings is $1.93 per share, reflecting a year-over-year growth rate of 2.12% [5] - Earnings growth appears solid for Investar in the current fiscal year [5] Investment Considerations - Investar is viewed as a compelling investment opportunity due to its strong dividend profile [6] - The stock holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [6]

Part I. [Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This section presents the company's unaudited financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents unaudited consolidated financial statements and notes on accounting policies, earnings, investments, loans, and equity [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Total Assets | $2,748,065 | $2,722,812 | | Total Liabilities | $2,492,136 | $2,481,516 | | Total Stockholders' Equity | $255,929 | $241,296 | | Loans, net | $2,079,735 | $2,098,363 | | Total Deposits | $2,338,185 | $2,345,944 | - Total assets increased by **$25.25 million (0.9%)** to **$2.75 billion** at June 30, 2025, compared to December 31, 2024[11](index=11&type=chunk) - Total stockholders' equity increased by **$14.63 million** to **$255.93 million** at June 30, 2025, from **$241.30 million** at December 31, 2024[11](index=11&type=chunk) [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) This section presents the company's financial performance, including revenues, expenses, and net income Consolidated Statements of Income Highlights (in thousands, except share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net interest income | $19,644 | $17,198 | $37,989 | $34,414 | | Provision for credit losses | $141 | $(415) | $(3,455) | $(1,834) | | Total noninterest income | $2,626 | $2,750 | $4,637 | $5,498 | | Total noninterest expense | $16,700 | $15,477 | $32,938 | $30,773 | | Net income | $4,494 | $4,057 | $10,787 | $8,764 | | Basic earnings per share | $0.46 | $0.41 | $1.10 | $0.89 | | Diluted earnings per share | $0.46 | $0.41 | $1.09 | $0.89 | - Net income increased by **10.8%** to **$4.49 million** for Q2 2025 compared to **$4.06 million** for Q2 2024, and by **23.1%** to **$10.79 million** for H1 2025 compared to **$8.76 million** for H1 2024[13](index=13&type=chunk) - Basic earnings per share increased to **$0.46** for Q2 2025 (from **$0.41** in Q2 2024) and to **$1.10** for H1 2025 (from **$0.89** in H1 2024)[13](index=13&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section reports net income and other comprehensive income components, reflecting changes in equity Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net income | $4,494 | $4,057 | $10,787 | $8,764 | | Unrealized gain (loss), AFS, net of tax | $1,253 | $(407) | $6,731 | $(4,217) | | Total other comprehensive income (loss) | $1,253 | $(104) | $6,731 | $(3,914) | | Total comprehensive income | $5,747 | $3,953 | $17,518 | $4,850 | - Total comprehensive income significantly increased to **$17.52 million** for H1 2025, up from **$4.85 million** for H1 2024, primarily driven by a **positive change** in unrealized gains on available-for-sale securities[15](index=15&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in stockholders' equity, including net income, OCI, dividends, and share repurchases Consolidated Statements of Changes in Stockholders' Equity Highlights (in thousands) | Metric | June 30, 2025 (H1) | June 30, 2024 (H1) | | :----------------------------------- | :----------------- | :----------------- | | Balance at beginning of period | $241,296 | $226,768 | | Net income | $10,787 | $8,764 | | Other comprehensive income (loss), net | $6,731 | $(3,914) | | Dividends declared | $(2,114) | $(1,965) | | Shares repurchased | $(1,283) | $(267) | | Balance at end of period | $255,929 | $230,196 | - Total stockholders' equity increased by **$14.63 million** to **$255.93 million** at June 30, 2025, from **$241.30 million** at December 31, 2024, primarily due to net income and other comprehensive income[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | | Net cash provided by operating activities | $7,656 | $10,662 | | Net cash provided by investing activities | $7,915 | $65,424 | | Net cash provided by (used in) financing activities | $11,731 | $(38,423) | | Net change in cash and cash equivalents | $27,302 | $37,663 | | Cash and cash equivalents, end of period | $55,224 | $69,672 | - Net cash provided by operating activities decreased by **28.2%** to **$7.66 million** for H1 2025 compared to **$10.66 million** for H1 2024[18](index=18&type=chunk) - Net cash provided by investing activities significantly decreased by **87.9%** to **$7.92 million** for H1 2025 compared to **$65.42 million** for H1 2024[18](index=18&type=chunk) - Net cash provided by financing activities turned **positive at $11.73 million** for H1 2025, compared to net cash used of **$38.42 million** for H1 2024, primarily due to advanced proceeds from preferred stock offering[20](index=20&type=chunk) [Notes to the Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, estimates, and specific financial statement line items [Note 1. Summary of Significant Accounting Policies](index=12&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's business operations, basis of presentation, and critical accounting policies and estimates - The Company is a financial holding company, headquartered in Baton Rouge, Louisiana, providing full banking services (excluding trust services) through Investar Bank, National Association, primarily to individuals, professionals, and small to medium-sized businesses in south Louisiana, southeast Texas, and Alabama[23](index=23&type=chunk) - The Company operates as **one reportable operating segment**, generating income principally from interest on loans and securities investments, as well as from fees for loan and deposit services[27](index=27&type=chunk) - Material estimates particularly susceptible to significant change relate to the **Allowance for Credit Losses (ACL)**, fair value of stock-based compensation awards, other-than-temporary impairments of securities, and the fair value of financial instruments and goodwill[29](index=29&type=chunk)[31](index=31&type=chunk) - FASB ASU 2023-09 (Income Tax Disclosures) became effective **January 1, 2025**, and ASU 2024-03 (Expense Disaggregation Disclosures) is effective for fiscal years beginning after **December 15, 2026**, with the Company currently evaluating its impact[33](index=33&type=chunk)[35](index=35&type=chunk) [Note 2. Earnings Per Share](index=14&type=section&id=Note%202.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share, including dilutive securities Earnings Per Share (in thousands, except share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net income allocated to common shareholders | $4,494 | $4,057 | $10,787 | $8,764 | | Basic earnings per common share | $0.46 | $0.41 | $1.10 | $0.89 | | Dilutive effect of securities | 114,043 | 74,267 | 100,101 | 58,408 | | Diluted earnings per common share | $0.46 | $0.41 | $1.09 | $0.89 | - Weighted average basic shares outstanding increased to **9,844,351** for Q2 2025 (from **9,827,903** in Q2 2024) and to **9,838,521** for H1 2025 (from **9,798,764** in H1 2024)[37](index=37&type=chunk) [Note 3. Investment Securities](index=16&type=section&id=Note%203.%20Investment%20Securities) This note provides information on the company's investment securities portfolio, including AFS and HTM classifications Investment Securities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | AFS securities at fair value | $355,708 | $331,121 | | HTM securities at amortized cost | $41,528 | $42,687 | | Gross unrealized losses (AFS) | $(53,429) | $(61,670) | | Gross unrealized losses (HTM) | $(280) | $(613) | - Total AFS securities at fair value increased by **$24.59 million** to **$355.71 million** at June 30, 2025, from **$331.12 million** at December 31, 2024[42](index=42&type=chunk) - Gross unrealized losses on AFS securities decreased by **$8.24 million** to **$(53.43) million** at June 30, 2025, from **$(61.67) million** at December 31, 2024, primarily due to changes in market interest rates[42](index=42&type=chunk)[49](index=49&type=chunk)[52](index=52&type=chunk) - Securities with a carrying value of **$40.8 million** were pledged at June 30, 2025, down from **$68.1 million** at December 31, 2024[56](index=56&type=chunk) [Note 4. Loans and Allowance for Credit Losses](index=21&type=section&id=Note%204.%20Loans%20and%20Allowance%20for%20Credit%20Losses) This note details the loan portfolio composition, nonaccrual loans, and ACL activity Loan Portfolio Composition (in thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Construction and development | $141,654 | $154,553 | | 1-4 Family | $387,796 | $396,815 | | Multifamily | $102,569 | $84,576 | | Commercial real estate | $928,191 | $944,548 | | Commercial and industrial | $531,460 | $526,928 | | Total loans | $2,106,355 | $2,125,084 | Nonaccrual Loans (in thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total Nonaccrual Loans | $7,453 | $8,824 | Allowance for Credit Losses (ACL) Activity (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Balance, beginning of period | $26,435 | $29,114 | $26,721 | $30,540 | | Provision for credit losses on loans | $172 | $(298) | $(3,523) | $(1,709) | | Charge-offs | $(131) | $(274) | $(258) | $(377) | | Recoveries | $144 | $78 | $3,680 | $166 | | Balance, end of period | $26,620 | $28,620 | $26,620 | $28,620 | - The **negative provision for credit losses** for H1 2025 was primarily due to a **$3.3 million recovery** during Q1 2025 from a property insurance settlement related to a loan impaired by Hurricane Ida in 2021[104](index=104&type=chunk) [Note 5. Stockholders' Equity](index=35&type=section&id=Note%205.%20Stockholders'%20Equity) This note provides details on changes in stockholders' equity, including accumulated other comprehensive income (loss) Accumulated Other Comprehensive (Loss) Income Activity (in thousands) | Metric | Q2 2025 Net Change | Q2 2024 Net Change | H1 2025 Net Change | H1 2024 Net Change | | :----------------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Unrealized (loss) gain, AFS, net | $1,253 | $(407) | $6,731 | $(4,217) | | Total other comprehensive income (loss) | $1,253 | $(104) | $6,731 | $(3,914) | - Accumulated other comprehensive loss decreased by **$6.73 million** to **$(41.63) million** at June 30, 2025, from **$(48.36) million** at December 31, 2024, primarily due to an increase in the fair value of AFS securities[113](index=113&type=chunk) [Note 6. Stock-Based Compensation](index=36&type=section&id=Note%206.%20Stock-Based%20Compensation) This note describes the company's stock-based compensation plans, including stock options and RSU grants - The Company's Amended and Restated 2017 Long-Term Incentive Compensation Plan has **205,635 shares** remaining available for grant at June 30, 2025[115](index=115&type=chunk) - No stock options were granted during the six months ended June 30, 2025, compared to **29,997 options granted** in H1 2024[117](index=117&type=chunk)[120](index=120&type=chunk) - Restricted Stock Unit (RSU) grants increased to **134,182 shares** in H1 2025 (from **110,886** in H1 2024). Unearned stock-based compensation for RSUs totaled approximately **$5.3 million** at June 30, 2025, expected to be recognized over a weighted-average period of **3.6 years**[124](index=124&type=chunk)[126](index=126&type=chunk) [Note 7. Derivative Financial Instruments](index=38&type=section&id=Note%207.%20Derivative%20Financial%20Instruments) This note explains the company's use of derivative financial instruments, primarily interest rate swaps - The Company enters into interest rate swaps for commercial loan customers to convert variable-rate loans to fixed-rate, economically hedging exposure with corresponding third-party swaps[129](index=129&type=chunk) - Notional amounts for interest rate swap contracts with customers and offsetting third-party contracts were **$185.6 million** at June 30, 2025, slightly down from **$186.9 million** at December 31, 2024[131](index=131&type=chunk) - Derivative assets and liabilities (interest rate swaps) were **$13.096 million** at June 30, 2025, down from **$17.195 million** at December 31, 2024[131](index=131&type=chunk) [Note 8. Fair Values of Financial Instruments](index=39&type=section&id=Note%208.%20Fair%20Values%20of%20Financial%20Instruments) This note outlines the fair value measurement hierarchy and valuation methods for financial instruments - Financial instruments are grouped into a **three-level hierarchy** based on input observability: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Fair Value of Assets Measured on a Recurring Basis (June 30, 2025, in thousands) | Asset Category | Total Fair Value | Level 1 | Level 2 | Level 3 | | :----------------------------------- | :--------------- | :------ | :------ | :------ | | Obligations of the U.S. Treasury and U.S. government agencies and corporations | $17,173 | $— | $17,173 | $— | | Obligations of state and political subdivisions | $15,750 | $— | $12,282 | $3,468 | | Corporate bonds | $25,006 | $— | $25,006 | $— | | Residential mortgage-backed securities | $233,304 | $— | $233,304 | $— | | Commercial mortgage-backed securities | $64,475 | $— | $64,475 | $— | | Equity securities at fair value | $2,570 | $2,570 | $— | $— | | Interest rate swaps - gross assets | $13,096 | $— | $13,096 | $— | | **Total assets** | **$371,374** | **$2,570** | **$365,336** | **$3,468** | - Loans individually evaluated for impairment and Other Real Estate Owned (OREO) are measured at fair value on a **nonrecurring basis**, classified as **Level 3** due to unobservable inputs like collateral discounts and estimated costs to sell[155](index=155&type=chunk)[156](index=156&type=chunk)[158](index=158&type=chunk) [Note 9. Income Taxes](index=46&type=section&id=Note%209.%20Income%20Taxes) This note details the company's income tax expense, effective tax rate, and factors causing deviations Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Income tax expense | $935 | $829 | $2,356 | $2,209 | | Effective tax rate | 17.2% | 17.0% | 17.9% | 20.1% | - The effective tax rate for Q2 2025 (**17.2%**) and H1 2025 (**17.9%**) differed from the statutory **21%** rate primarily due to tax-exempt interest income from certain loans and investment securities, and income from Bank Owned Life Insurance (BOLI)[174](index=174&type=chunk) - The Company is evaluating the impact of the recently signed One Big Beautiful Bill Act (OBBBA) but does not expect a **material impact** on its consolidated financial statements or 2025 income tax expense[174](index=174&type=chunk)[283](index=283&type=chunk) [Note 10. Commitments and Contingencies](index=46&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note discloses the company's off-balance sheet commitments, including loan commitments and letters of credit Commitments to Extend Credit (in thousands) | Commitment Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Loan commitments | $358,415 | $377,301 | | Standby letters of credit | $7,251 | $7,658 | - The reserve for unfunded loan commitments increased to **$0.1 million** at June 30, 2025, from **$42,000** at December 31, 2024[175](index=175&type=chunk) - The Company had unfunded commitments of **$0.9 million** for investments in SBIC qualified funds and other investment funds at June 30, 2025[178](index=178&type=chunk) [Note 11. Leases](index=47&type=section&id=Note%2011.%20Leases) This note provides information on the company's operating lease arrangements, including ROU assets and lease liabilities Operating Lease Information (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | Total operating lease cost (H1) | $225 | $217 | | Weighted-average remaining lease term | 5.2 years | 6.2 years | | Weighted-average discount rate | 3.4% | 3.3% | - The Company's operating lease Right-Of-Use (ROU) assets were **$2.0 million** and related operating lease liabilities were **$2.1 million** at June 30, 2025[182](index=182&type=chunk) - Future minimum lease payments under non-cancelable operating leases total **$2.238 million**, with **$457,000** due in less than one year[184](index=184&type=chunk)[354](index=354&type=chunk) [Note 12. Subsequent Events](index=48&type=section&id=Note%2012.%20Subsequent%20Events) This note discloses significant events after the balance sheet date, including a merger and preferred stock issuance - On July 1, 2025, the Company entered into an Agreement and Plan of Merger to acquire Wichita Falls Bancshares, Inc. (WFB), valued at approximately **$83.6 million**, consisting of **$7.2 million** in cash and **3,955,344 shares** of Company common stock[187](index=187&type=chunk)[188](index=188&type=chunk) - The WFB acquisition is subject to customary conditions, including shareholder and regulatory approvals, with a potential termination fee of **$3.3 million** under certain circumstances[189](index=189&type=chunk)[190](index=190&type=chunk) - On July 1, 2025, the Company completed a private placement of **32,500 shares** of Series A Preferred Stock for **$32.5 million** in gross proceeds (**$30.4 million net**), intended to support the WFB acquisition and general corporate purposes[191](index=191&type=chunk) - The Series A Preferred Stock qualifies as **additional Tier 1 capital**, carries a **6.5% annual cash dividend**, and is convertible into common stock at a rate of **47.619 shares per preferred share**, with Company redemption rights after **July 1, 2028**[192](index=192&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operating results, key trends, and risk management [Cautionary Note Regarding Forward-Looking Statements](index=50&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This note highlights that forward-looking statements involve risks and uncertainties that could cause actual results to differ - Forward-looking statements are identified by specific terminology and involve risks and uncertainties that could cause actual results to differ materially from expectations[199](index=199&type=chunk) - Key risk factors include general business and economic conditions, changes in inflation and interest rates, liquidity reductions, and inaccuracies in credit loss estimates[199](index=199&type=chunk) - Specific risks related to the pending WFB transaction include obtaining shareholder and regulatory approvals, integration difficulties, and the potential failure to realize anticipated benefits[202](index=202&type=chunk) [Critical Accounting Estimates](index=53&type=section&id=Critical%20Accounting%20Estimates) This note discusses management's significant estimates and judgments used in preparing financial statements - The preparation of consolidated financial statements requires management to make estimates and judgments that affect reported amounts of assets, liabilities, income, and expenses, with actual results potentially differing from these estimates[206](index=206&type=chunk) - There were no **material changes or developments** during the reporting period regarding methodologies for significant accounting policies or critical accounting estimates[207](index=207&type=chunk) [Company Overview](index=53&type=section&id=Company%20Overview) This section provides an overview of the company's banking services, strategic focus, and principal income and expense sources - Investar Bank, National Association, provides full banking services to individuals and small to medium-sized businesses in south Louisiana, southeast Texas, and Alabama, operating **29 full-service branches**[209](index=209&type=chunk) - The Company's strategy focuses on **consistent, quality earnings** through balance sheet optimization, originating **high-quality variable-rate loans**, and growth through acquisitions, having completed **seven whole-bank acquisitions** since 2011[210](index=210&type=chunk) - Principal income sources are interest on loans and securities, and fees; principal expenses are interest on deposits/borrowings, salaries, and operating costs. Performance is measured by **net interest margin**, **return on average assets**, and **return on average equity**[211](index=211&type=chunk) [Pending Acquisition of WFB](index=53&type=section&id=Pending%20Acquisition%20of%20WFB) This section details the definitive agreement to acquire Wichita Falls Bancshares, Inc., subject to approvals - On July 1, 2025, the Company announced a definitive agreement to acquire Wichita Falls Bancshares, Inc. (WFB), which operates First National Bank with approximately **$1.4 billion in assets** in north Texas[212](index=212&type=chunk) - The closing of the transaction is contingent upon regulatory and shareholder approvals[212](index=212&type=chunk) [Private Placement of Series A Preferred Stock](index=53&type=section&id=Private%20Placement%20of%20Series%20A%20Preferred%20Stock) This section reports on the private placement of Series A Preferred Stock, raising capital for the WFB acquisition - In connection with the WFB transaction, the Company completed a private placement of **32,500 shares** of Series A Preferred Stock on July 1, 2025, raising **$32.5 million** in gross proceeds[214](index=214&type=chunk) [Certain Events That Affect Period-over-Period Comparability](index=55&type=section&id=Certain%20Events%20That%20Affect%20Period-over-Period%20Comparability) This section outlines significant events impacting financial comparability, including interest rate changes and loan recoveries - The Federal Reserve reduced the federal funds target rate three times by **100 basis points** cumulatively to **4.25%-4.50%** in 2024, making the H1 2025 rate lower than H1 2024[215](index=215&type=chunk) - The Company utilized the Bank Term Funding Program (BTFP) in 2023-2024 due to favorable rates but repaid all borrowings by Q4 2024, with estimated uninsured deposits at **34% of total deposits** as of June 30, 2025[217](index=217&type=chunk) - Significant events include closing **one branch** in Alabama (Q1 2024), repurchasing **$8.0 million** of subordinated debt (H1 2024), redeeming **$20.0 million** of 2029 Notes (Q4 2024), and a **$3.3 million loan recovery** from a Hurricane Ida insurance settlement (Q1 2025)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Overview of Financial Condition and Results of Operations](index=56&type=section&id=Overview%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a summary of key financial highlights, including assets, net income, EPS, and capital ratios Key Financial Highlights (H1 2025 vs. H1 2024) | Metric | H1 2025 | H1 2024 | Change | | :----------------------------------- | :------ | :------ | :----- | | Total assets | $2.75 billion | $2.72 billion | +0.9% | | Net income | $10.8 million | $8.8 million | +22.7% | | Diluted EPS | $1.09 | $0.89 | +22.5% | | Net interest income | $38.0 million | $34.4 million | +10.4% | | Net interest margin | 2.95% | 2.61% | +34 bps | | Provision for credit losses | $(3.5) million | $(1.8) million | N/A | | Noninterest income | $4.6 million | $5.5 million | -15.7% | | Noninterest expense | $32.9 million | $30.8 million | +7.0% | | Nonperforming loans to total loans | 0.36% | 0.23% | +13 bps | | Return on average assets | 0.80% | 0.63% | +17 bps | | Return on average equity | 8.66% | 7.73% | +93 bps | | Book value per common share | $26.01 | N/A | N/A | | Total deposits | $2.34 billion | $2.35 billion | -0.3% | | Noninterest-bearing deposits | $448.5 million | $432.1 million | +3.8% | | Estimated uninsured deposits | 34% of total | N/A | N/A | | Total loans | $2.11 billion | $2.13 billion | -0.9% | | Accumulated other comprehensive loss | $41.6 million | $48.4 million | -13.9% | [Discussion and Analysis of Financial Condition](index=57&type=section&id=Discussion%20and%20Analysis%20of%20Financial%20Condition) This section analyzes the company's financial position, focusing on trends in loans, investments, deposits, and equity [Loans](index=57&type=section&id=Loans) This section discusses changes in the loan portfolio, including composition, growth strategies, and shifts in loan types - Total loans decreased by **$18.7 million (0.9%)** to **$2.11 billion** at June 30, 2025, primarily due to loan amortization, with a strategy to originate high-margin loans and exit higher-risk relationships[224](index=224&type=chunk) - Variable-rate loans increased to **34% of total loans** at June 30, 2025, up from **32%** at December 31, 2024[224](index=224&type=chunk) - The business lending portfolio increased by **$17.5 million (1.8%)** to **$993.6 million**, driven by organic growth and higher credit line utilization. Nonowner-occupied loans decreased by **$29.3 million (5.9%)** due to amortization and payoffs[227](index=227&type=chunk)[228](index=228&type=chunk) - The Company exited the consumer mortgage loan origination business in **Q3 2023** to transition into shorter duration, higher risk-adjusted return asset classes[230](index=230&type=chunk) [Investment Securities](index=59&type=section&id=Investment%20Securities) This section analyzes the investment securities portfolio, including changes in fair value and unrealized gains or losses - Investment securities increased by **$23.4 million (6.3%)** to **$397.2 million** at June 30, 2025, primarily due to a **$24.4 million increase** in residential mortgage-backed securities[236](index=236&type=chunk) - Net unrealized losses in the AFS investment securities portfolio decreased to **$52.9 million** at June 30, 2025, from **$61.4 million** at December 31, 2024, due to lower prevailing market interest rates[236](index=236&type=chunk) - AFS securities comprised **90%** of the total investment securities portfolio at June 30, 2025[238](index=238&type=chunk) [Deposits](index=61&type=section&id=Deposits) This section examines trends in total deposits, noninterest-bearing deposits, and estimated uninsured deposits - Total deposits decreased by **$7.8 million (0.3%)** to **$2.34 billion** at June 30, 2025. Excluding brokered demand deposits, total deposits increased by **$39.6 million (1.7%)**[243](index=243&type=chunk) - Noninterest-bearing demand deposits increased by **$16.3 million (3.8%)** to **$448.5 million** at June 30, 2025[243](index=243&type=chunk) - Estimated uninsured deposits were **$785.7 million (34% of total deposits)** at June 30, 2025, up from **$737.6 million (31%)** at December 31, 2024[245](index=245&type=chunk) - Brokered time deposits increased to **$256.1 million** at June 30, 2025, used to secure fixed-cost funding and reduce short-term borrowings[244](index=244&type=chunk) [Borrowings](index=62&type=section&id=Borrowings) This section details the company's borrowing activities, including FHLB advances, short-term borrowings, and subordinated debt - FHLB advances increased by **$2.8 million** to **$70.0 million** at June 30, 2025, with **$10.0 million short-term** and **$60.0 million long-term**[247](index=247&type=chunk) - The Company had **no outstanding borrowings** under the Bank Term Funding Program (BTFP) at June 30, 2025, having repaid all remaining borrowings in Q4 2024[248](index=248&type=chunk) Average Balances and Cost of Short-term Borrowings (in thousands) | Metric | Q2 2025 Average Balance | Q2 2024 Average Balance | Q2 2025 Cost | Q2 2024 Cost | | :----------------------------------- | :---------------------- | :---------------------- | :----------- | :----------- | | Total short-term borrowings | $32,585 | $248,189 | 3.13% | 4.68% | - Subordinated debt (2032 Notes) remained at **$16.7 million**, and junior subordinated debt was **$8.8 million** at June 30, 2025[251](index=251&type=chunk) [Stockholders' Equity](index=62&type=section&id=Stockholders'%20Equity) This section discusses changes in stockholders' equity, driven by net income, comprehensive income, dividends, and repurchases - Stockholders' equity increased by **$14.6 million** to **$255.9 million** at June 30, 2025, driven by net income and a **$6.7 million decrease** in accumulated other comprehensive loss[253](index=253&type=chunk) - The Company paid **$2.1 million** in cash dividends and repurchased **$1.3 million** of common stock (**71,057 shares**) during H1 2025[253](index=253&type=chunk) [Results of Operations](index=63&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on net interest income, noninterest income, and expense [Net Interest Income and Net Interest Margin](index=63&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) This section analyzes trends in net interest income and net interest margin, driven by interest rates and balance sheet mix - Net interest income increased by **14.2%** to **$19.6 million** for Q2 2025 (vs. Q2 2024) and by **10.4%** to **$38.0 million** for H1 2025 (vs. H1 2024), primarily due to lower interest expense from reduced short-term borrowings and decreased rates on time deposits[256](index=256&type=chunk)[265](index=265&type=chunk) - Net interest margin increased by **41 basis points** to **3.03%** for Q2 2025 (vs. Q2 2024) and by **34 basis points** to **2.95%** for H1 2025 (vs. H1 2024), driven by a decrease in the cost of interest-bearing liabilities[259](index=259&type=chunk)[268](index=268&type=chunk) - The overall yield on interest-earning assets was **flat at 5.45%** for Q2 2025 (vs. Q2 2024) and increased slightly to **5.42%** for H1 2025 (vs. **5.41%** in H1 2024), with investment portfolio yield increasing while loan portfolio yield slightly decreased[257](index=257&type=chunk)[266](index=266&type=chunk) - Interest expense decreased by **$2.9 million** for Q2 2025 and **$5.3 million** for H1 2025 (YoY), mainly due to a **$215.6 million decrease** in average short-term borrowings for Q2 and a **$200.9 million decrease** for H1[258](index=258&type=chunk)[267](index=267&type=chunk) [Noninterest Income](index=70&type=section&id=Noninterest%20Income) This section discusses the components and trends of noninterest income, including fees, gains on asset sales, and other revenue - Total noninterest income decreased by **$0.1 million (4.5%)** to **$2.6 million** for Q2 2025 (vs. Q2 2024) and by **$0.9 million (15.7%)** to **$4.6 million** for H1 2025 (vs. H1 2024)[276](index=276&type=chunk)[277](index=277&type=chunk) - The decrease was primarily due to a **$0.7 million decrease** in gain on sale of other real estate owned (related to Hurricane Ida property sale in Q2 2024) and a **$0.4 million decrease** in gain on sale of fixed assets (Q1 2024 branch closure)[276](index=276&type=chunk)[277](index=277&type=chunk) - Partially offsetting the decrease was a **$0.4 million decrease** in loss on call or sale of investment securities and **$0.3 million** in insurance proceeds for property damages in Q2 2025[276](index=276&type=chunk)[277](index=277&type=chunk) [Noninterest Expense](index=70&type=section&id=Noninterest%20Expense) This section analyzes the components and trends of noninterest expense, including salaries, operating costs, and acquisition expenses - Total noninterest expense increased by **$1.2 million (7.9%)** to **$16.7 million** for Q2 2025 (vs. Q2 2024) and by **$2.2 million (7.0%)** to **$32.9 million** for H1 2025 (vs. H1 2024)[279](index=279&type=chunk)[280](index=280&type=chunk) - Key drivers for the increase include a **$0.7 million (Q2)** and **$1.0 million (H1)** increase in salaries and employee benefits (investment in Texas markets, health insurance claims), a **decrease in gain on early extinguishment** of subordinated debt, and increased acquisition expenses related to the WFB transaction[279](index=279&type=chunk)[280](index=280&type=chunk) - Other operating expenses increased due to a **$0.3 million write-down of OREO** in Q2 2025 and increased collection/repossession expenses in H1 2025 related to the Hurricane Ida loan recovery[279](index=279&type=chunk)[280](index=280&type=chunk) [Risk Management](index=71&type=section&id=Risk%20Management) This section details the company's approach to managing key risks, including credit risk, interest rate risk, and liquidity risk [Credit Risk and the Allowance for Credit Losses](index=72&type=section&id=Credit%20Risk%20and%20the%20Allowance%20for%20Credit%20Losses) This section discusses credit risk management, loan classifications, and ACL methodology and activity - The Company uses a **ten-point risk-rating system** for commercial loans, categorizing them into Pass, Special Mention, Substandard, Doubtful, and Loss, with **no loans classified as loss or doubtful** at June 30, 2025[285](index=285&type=chunk)[286](index=286&type=chunk)[291](index=291&type=chunk) - The Allowance for Credit Losses (ACL) was **$26.6 million** at June 30, 2025, **stable** compared to December 31, 2024[289](index=289&type=chunk) - A **negative provision for credit losses of $3.5 million** for H1 2025 was primarily due to a **$3.3 million recovery** from a property insurance settlement related to a Hurricane Ida-impaired loan[290](index=290&type=chunk) - Nonaccrual loans increased to **$7.5 million (0.35% of total loans)** at June 30, 2025, from **$4.9 million (0.23%)** at June 30, 2024, primarily due to one owner-occupied commercial relationship and one 1-4 family loan[301](index=301&type=chunk) - Other Real Estate Owned (OREO) increased to **$5.6 million** at June 30, 2025, from **$5.2 million** at December 31, 2024, with **$1.0 million** in additions from commercial real estate loan transfers[313](index=313&type=chunk)[314](index=314&type=chunk) [Impact of Inflation](index=78&type=section&id=Impact%20of%20Inflation) This section analyzes the effects of inflation and changing interest rates on earnings, loan demand, and credit losses - Inflation, though generally declining since June 2022, remains above the Federal Reserve's **2% target**, leading to higher interest rates that increased earnings on interest-earning assets but also increased costs on interest-bearing liabilities[314](index=314&type=chunk) - Higher rates have constrained loan demand and may lead to increased provisions for credit losses due to potential default rate increases[314](index=314&type=chunk) - The Federal Reserve reduced the federal funds target rate by **100 basis points** to **4.25%-4.50%** from September to December 2024, which could lead to lower loan prepayments, lower rates on new loans, and lower yields on investment securities, potentially offset by lower costs of interest-bearing liabilities[315](index=315&type=chunk) [Interest Rate Risk](index=80&type=section&id=Interest%20Rate%20Risk) This section describes the company's management of interest rate risk, including simulation analysis and policy guidelines - The Company's primary market risk is **interest rate risk**, managed by the **Asset/Liability Committee (ALCO)** through an asset/liability management policy to maximize interest income while controlling risk[317](index=317&type=chunk)[318](index=318&type=chunk) - Net interest income simulation is the **primary tool** for benchmarking near-term earnings exposure, assuming static total assets[319](index=319&type=chunk) Estimated Impact on Net Interest Income from Immediate Interest Rate Changes (June 30, 2025) | Changes in Interest Rates (in basis points) | Estimated Increase/Decrease in Net Interest Income | | :---------------------------------------- | :----------------------------------------------- | | +300 | (3.3)% | | +200 | (2.4)% | | +100 | (0.9)% | | -100 | 1.2% | | -200 | 2.0% | | -300 | 2.7% | - The Bank aims to maintain net interest income at risk in an up or down **100 basis point environment** at less than **(5)%**, and was within policy guidelines at June 30, 2025[323](index=323&type=chunk) [Liquidity and Capital Resources](index=81&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity sources, funding strategies, and capital adequacy, including regulatory ratios - Core deposits funded **69% of total assets** at June 30, 2025, serving as the **most stable source of liquidity**[329](index=329&type=chunk) - Available funding from FHLB advances (**$705.0 million**) and unsecured lines of credit (**$60.0 million**) totaled **$765.0 million**, representing **104% of uninsured deposits** (**$785.7 million**) at June 30, 2025[331](index=331&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - Cash and cash equivalents at June 30, 2025, included **$17.3 million** in advanced proceeds from the Series A Preferred Stock private placement[334](index=334&type=chunk) Funding Sources and Cost (H1 2025 vs. H1 2024) | Funding Source | H1 2025 % of Total Funds | H1 2024 % of Total Funds | H1 2025 Cost of Funds | H1 2024 Cost of Funds | | :----------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | Noninterest-bearing demand deposits | 18% | 17% | —% | —% | | Interest-bearing demand deposits | 32% | 26% | 2.18% | 1.88% | | Brokered time deposits | 10% | 10% | 4.79% | 5.21% | | Time deposits | 29% | 29% | 3.88% | 4.45% | | Short-term borrowings | 2% | 10% | 3.39% | 4.67% | | Total deposits and borrowed funds | 100% | 100% | 2.61% | 2.95% | [Capital Resources](index=83&type=section&id=Capital%20Resources) This section details the company's capital sources, share repurchase programs, and compliance with regulatory capital - The Company's primary capital sources are retained earnings, capital obtained through acquisitions, and proceeds from the sale of capital stock and subordinated debt. The Series A Preferred Stock is intended to qualify as **additional Tier 1 capital**[339](index=339&type=chunk) - The Board authorized a share repurchase program, with **424,588 shares** of common stock remaining available for repurchase at June 30, 2025[341](index=341&type=chunk) Regulatory Capital Ratios (June 30, 2025, in thousands) | Capital Tier | Investar Holding Corporation Ratio | Investar Bank Ratio | Minimum for Well Capitalized Bank | | :----------------------------------- | :------------------------------- | :------------------ | :------------------------------ | | Tier 1 leverage capital | 9.64% | 10.08% | 5.00% | | Common equity tier 1 capital | 11.28% | 12.24% | 6.50% | | Tier 1 capital | 11.70% | 12.24% | 8.00% | | Total capital | 13.59% | 13.40% | 10.00% | - Both the Company and the Bank were in compliance with all regulatory capital requirements and the Bank was considered '**well-capitalized**' at June 30, 2025, and December 31, 2024[344](index=344&type=chunk) [Off-Balance Sheet Transactions and Lease Obligations](index=85&type=section&id=Off-Balance%20Sheet%20Transactions%20and%20Lease%20Obligations) This section describes off-balance sheet arrangements, including derivatives, loan commitments, and operating leases - The Company uses interest rate swap contracts for commercial loan customers, which are economically hedged with third parties and marked to market through earnings[348](index=348&type=chunk) - Unfunded loan commitments were **$358.4 million** and standby letters of credit were **$7.3 million** at June 30, 2025[350](index=350&type=chunk) - The reserve for unfunded loan commitments increased to **$0.1 million** at June 30, 2025, from **$42,000** at December 31, 2024[349](index=349&type=chunk) - The Company's primary leasing activities are operating leases for branch operations, with total future minimum lease payments of **$2.238 million** at June 30, 2025[352](index=352&type=chunk)[354](index=354&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=88&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section refers to the MD&A for market risk disclosures, noting no material changes except for trade policy risks - Market risk disclosures are provided in the '**Risk Management**' section of Item 2. MD&A[355](index=355&type=chunk) - No **material changes** in market risk since December 31, 2024, except for heightened risks related to changing U.S. trade and tariff policies[355](index=355&type=chunk) [Item 4. Controls and Procedures](index=88&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and reports no material changes in internal control - Disclosure controls and procedures were **effective** as of June 30, 2025, as concluded by the Principal Executive Officer and Principal Financial Officer[356](index=356&type=chunk) - No **material changes** in internal control over financial reporting occurred during the fiscal quarter covered by this report[357](index=357&type=chunk) Part II. [Other Information](index=89&type=section&id=Part%20II.%20Other%20Information) This section provides additional information, including updated risk factors, equity security sales, and exhibits [Item 1A. Risk Factors](index=89&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, highlighting new risks from Series A Preferred Stock and the proposed WFB merger - The Series A Preferred Stock could adversely affect liquidity, financial condition, and common stock holders due to dividend preferences, restrictions on common stock dividends/repurchases, potential dilution upon conversion, and liquidation preferences[360](index=360&type=chunk)[361](index=361&type=chunk) - The proposed merger with WFB is subject to various closing conditions, including shareholder and regulatory approvals, which may prevent or delay consummation and result in additional expenditures or termination[364](index=364&type=chunk)[365](index=365&type=chunk) - Integration of WFB's business may be difficult, costly, or time-consuming, potentially leading to lower-than-expected revenues, inability to achieve cost savings, and disruptions to ongoing business[366](index=366&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on unregistered equity sales, issuer common stock purchases, and dividend payment restrictions - The Company completed a private placement of its Series A Preferred Stock on **July 1, 2025**[367](index=367&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Be Purchased Under the Programs | | :----------------------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :----------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 53,164 | $17.11 | 29,037 | 431,616 | | May 1, 2025 - May 31, 2025 | 9,056 | $19.33 | 7,028 | 424,588 | | June 1, 2025 - June 30, 2025 | — | — | — | 424,588 | | **Total (Q2 2025)** | **62,220** | **$17.44** | **36,065** | **424,588** | - The Company's ability to pay dividends is dependent on the Bank's ability to transfer funds and is subject to various legal, regulatory, and debt agreement restrictions, including those related to the Series A Preferred Stock and junior subordinated debentures[371](index=371&type=chunk)[372](index=372&type=chunk) [Item 6. Exhibits](index=92&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including merger agreements, corporate documents, and certifications - Key exhibits include the Agreement and Plan of Merger with Wichita Falls Bancshares, Inc. (Exhibit 2.1), Composite Articles of Incorporation (Exhibit 3.1), and Specimen Series A Preferred Stock Certificate (Exhibit 4.2)[374](index=374&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) are included as required by the Sarbanes-Oxley Act[374](index=374&type=chunk)

Company Overview - Investar (ISTR) is headquartered in Baton Rouge and operates as a holding company for Investar Bank, with a current stock price change of -1.18% this year [3] - The company is currently distributing a dividend of $0.11 per share, resulting in a dividend yield of 2.03%, which is lower than the Banks - Southeast industry's yield of 2.36% and the S&P 500's yield of 1.48% [3] Dividend Performance - Investar's annualized dividend of $0.44 has increased by 7.3% from the previous year, with a historical average annual increase of 11.29% over the last five years [4] - The current payout ratio for Investar is 20%, indicating that the company pays out 20% of its trailing 12-month earnings per share as dividends [4] Earnings Outlook - The Zacks Consensus Estimate for Investar's earnings in 2025 is projected at $1.93 per share, reflecting a year-over-year earnings growth rate of 2.12% [5] - The company is expected to experience earnings expansion this fiscal year, which will influence future dividend growth [5] Investment Considerations - Investar is positioned as a compelling investment opportunity due to its strong dividend profile, despite the general trend of high-yielding stocks facing challenges during rising interest rates [6] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a stable investment outlook [6]

Core Insights - Investar (ISTR) reported revenue of $22.27 million for the quarter ended June 2025, marking an 11.6% year-over-year increase and exceeding the Zacks Consensus Estimate of $20.96 million by 6.28% [1] - The company's EPS for the same period was $0.47, up from $0.36 a year ago, representing a surprise of 17.5% compared to the consensus estimate of $0.40 [1] Financial Performance Metrics - Net Interest Margin was reported at 3%, surpassing the average estimate of 2.9% from two analysts [4] - Efficiency Ratio stood at 75%, better than the estimated 76.3% by two analysts [4] - Total Noninterest Income reached $2.63 million, exceeding the estimated $2.12 million [4] - Net Interest Income was reported at $19.64 million, compared to the average estimate of $18.86 million [4] Stock Performance - Investar's shares have returned +19.9% over the past month, outperforming the Zacks S&P 500 composite's +5.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Investar (ISTR) reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.40 per share, and showing an increase from $0.36 per share a year ago, resulting in an earnings surprise of +17.50% [1] - The company achieved revenues of $22.27 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.28% and up from $19.95 million year-over-year [2] - Investar has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The future performance of Investar's stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's price movement based on recent earnings and future expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.45 on revenues of $21.8 million, and for the current fiscal year, it is $1.93 on revenues of $84.85 million [7] Industry Context - The Banks - Southeast industry, to which Investar belongs, is currently ranked in the top 15% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Investar's stock performance [5]

Executive Summary [Second Quarter 2025 Financial Performance](index=1&type=section&id=1.1%20Second%20Quarter%202025%20Financial%20Performance) Investar Holding Corporation reported net income of $4.5 million, or $0.46 per diluted common share, for Q2 2025, representing a decrease from Q1 2025 but an increase compared to Q2 2024, with core earnings per diluted common share at $0.47 | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Net Income (GAAP) | $4.5 million | $6.3 million | $4.1 million | | Diluted EPS (GAAP) | $0.46 | $0.63 | $0.41 | | Core Diluted EPS (Non-GAAP) | $0.47 | $0.65 | $0.36 | [Strategic Initiatives and Outlook](index=1&type=section&id=1.2%20Strategic%20Initiatives%20and%20Outlook) The company's strategy focuses on consistent, quality earnings through balance sheet optimization, leading to improved net interest margin and reduced funding costs, alongside a definitive agreement to acquire Wichita Falls Bancshares, Inc. to expand into new markets - Net interest margin improved substantially to **3.03%**, a **16 basis point increase** from the previous quarter, driven by reduced funding costs and increased yield on interest-earning assets[4](index=4&type=chunk) - Investar announced a definitive agreement to acquire Wichita Falls Bancshares, Inc., which had approximately **$1.5 billion in assets** at March 31, 2025. Post-acquisition, the combined bank will have over **$4 billion in assets**[5](index=5&type=chunk) - The company repurchased **36,065 shares** of common stock and increased its quarterly dividend per share by **5%** compared to the first quarter, demonstrating a focus on shareholder value[6](index=6&type=chunk) [Second Quarter Highlights](index=1&type=section&id=1.3%20Second%20Quarter%20Highlights) Key highlights for Q2 2025 include significant improvements in net interest margin and efficiency ratio, alongside strategic growth in the business lending portfolio and variable-rate loans, strengthening capital and progressing on the Wichita Falls acquisition | Metric | Q2 2025 | Q1 2025 | Change (bps) | | :----- | :------ | :------ | :----------- | | Net Interest Margin | 3.03% | 2.87% | +16 | | Loan Portfolio Yield | 5.94% | 5.88% | +6 | | Overall Cost of Funds | 3.13% | 3.22% | -9 | | Cost of Deposits | 3.06% | 3.15% | -9 | | Efficiency Ratio | 74.99% | 79.77% | -478 | | Core Efficiency Ratio | 73.55% | 78.71% | -516 | - Business lending portfolio increased by **$32.9 million (3.4%)** to **$993.6 million** QoQ, driven by organic growth and higher utilization of credit lines[6](index=6&type=chunk)[10](index=10&type=chunk) - Variable-rate loans increased to **34%** of total loans (from **32%** in Q1 2025), with **73%** of new originations/renewals being variable-rate at a blended interest rate of **7.7%**[6](index=6&type=chunk)[7](index=7&type=chunk) | Metric | Q2 2025 | Q1 2025 | Change | | :----- | :------ | :------ | :----- | | Book Value per Common Share | $26.01 | $25.63 | +1.5% | | Tangible Book Value per Common Share | $21.80 | $21.40 | +1.9% | | Noninterest-Bearing Deposits | $448.5 million | $436.7 million | +2.7% | | Common Equity Tier 1 Capital Ratio | 11.28% | 11.16% | +1.1% | - Investar completed a private placement of **32,500 shares** of **6.5% Series A Non-Cumulative Perpetual Convertible Preferred Stock** for **$32.5 million** to support the Wichita Falls acquisition and for general corporate purposes[7](index=7&type=chunk) Balance Sheet Overview [Loans](index=3&type=section&id=2.1%20Loans) Total loans remained relatively stable QoQ at $2.11 billion but decreased by 2.8% YoY, with growth in the business lending portfolio offset by decreases in nonowner-occupied and construction and development loans due to strategic de-risking and conversions | Metric | Q2 2025 | Q1 2025 | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :----- | :------ | :------ | :------------- | :------------- | :------------- | :------------- | | Total Loans | $2.11 billion | $2.11 billion | $(0.3) million | (0.0)% | $(60.4) million | (2.8)% | | Business Lending Portfolio | $993.6 million | $960.7 million | $32.9 million | 3.4% | $32.4 million | 3.4% | | Nonowner-Occupied Loans | $466.0 million | $481.9 million | $(15.9) million | (3.3)% | $(24.0) million | (4.9)% | | Construction and Development Loans | $141.7 million | $149.3 million | $(7.6) million | (5.1)% | $(36.2) million | (20.3)% | Loan Portfolio Composition (Q2 2025) | Loan Type | Amount ($ thousands) | Percentage of Total Loans | | :----------------------- | :------------------- | :------------------------ | | Construction and development | $141,654 | 6.7% | | 1-4 Family | $387,796 | 18.4% | | Multifamily | $102,569 | 4.9% | | Farmland | $4,519 | 0.2% | | Commercial real estate (Owner occupied) | $462,182 | 22.0% | | Commercial real estate (Nonowner occupied) | $466,009 | 22.1% | | Commercial and industrial | $531,460 | 25.2% | | Consumer | $10,166 | 0.5% | | **Total loans** | **$2,106,355** | **100%** | [Credit Quality](index=3&type=section&id=2.2%20Credit%20Quality) Credit quality saw an increase in nonperforming loans QoQ and YoY, primarily due to specific commercial and family loan relationships, while the allowance for credit losses remained stable as a percentage of total loans but decreased relative to nonperforming loans, with a provision recorded in Q2 2025 | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Nonperforming Loans | $7.5 million | $5.6 million | $5.0 million | | Nonperforming Loans to Total Loans | 0.36% | 0.27% | 0.23% | | Allowance for Credit Losses | $26.6 million | $26.4 million | $28.6 million | | Allowance for Credit Losses to Nonperforming Loans | 355.9% | 473.3% | 576.4% | | Allowance for Credit Losses to Total Loans | 1.26% | 1.25% | 1.32% | | Provision for Credit Losses | $0.1 million | $(3.6) million | $(0.4) million | - The increase in nonperforming loans QoQ was primarily due to one owner-occupied commercial relationship (**$1.3 million**) and one 1-4 family loan relationship (**$0.8 million**)[13](index=13&type=chunk) - The Q2 2025 provision for credit losses was mainly due to changes in economic forecast and loan mix, while prior negative provisions were influenced by net recoveries (e.g., property insurance settlement in Q1 2025)[15](index=15&type=chunk) [Deposits](index=5&type=section&id=2.3%20Deposits) Total deposits slightly decreased QoQ but increased significantly YoY, with noninterest-bearing and interest-bearing demand deposits growing organically, while money market, savings, and time deposits declined, aligning with the strategy to optimize funding costs | Metric | Q2 2025 | Q1 2025 | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :----- | :------ | :------ | :------------- | :------------- | :------------- | :------------- | | Total Deposits | $2.34 billion | $2.35 billion | $(9.2) million | (0.4)% | $128.0 million | 5.8% | | Noninterest-Bearing Demand Deposits | $448.5 million | $436.7 million | $11.7 million | 2.7% | $11.9 million | 2.7% | | Interest-Bearing Demand Deposits | $576.5 million | $569.9 million | $6.6 million | 1.2% | $109.3 million | 23.4% | | Money Market Deposits | $221.0 million | $240.3 million | $(19.3) million | (8.0)% | $43.8 million | 24.7% | | Time Deposits | $701.5 million | $719.4 million | $(17.9) million | (2.5)% | $(49.9) million | (6.6)% | | Brokered Time Deposits | $256.1 million | $244.9 million | $11.2 million | 4.6% | $6.7 million | 2.7% | - The decrease in time deposits is primarily due to maturities of higher cost time deposits, reflecting the company's strategy to keep duration short and optimize funding costs[18](index=18&type=chunk) - Brokered time deposits, used for fixed-cost funding and reducing short-term borrowings, had a weighted average duration of approximately **four months** and a weighted average rate of **4.68%** at June 30, 2025[18](index=18&type=chunk) [Stockholders' Equity](index=5&type=section&id=2.4%20Stockholders'%20Equity) Stockholders' equity increased both QoQ and YoY, primarily driven by net income for the quarter and a decrease in accumulated other comprehensive loss due to an increase in the fair value of available-for-sale securities | Metric | Q2 2025 | Q1 2025 | QoQ Change ($) | YoY Change ($) | | :----- | :------ | :------ | :------------- | :------------- | | Stockholders' Equity | $255.9 million | $251.7 million | $4.2 million | $25.7 million | - The increase in stockholders' equity is primarily attributable to net income for the quarter and a decrease in accumulated other comprehensive loss due to an increase in the fair value of the Bank's available for sale securities portfolio[19](index=19&type=chunk) Income Statement Overview [Net Interest Income](index=6&type=section&id=3.1%20Net%20Interest%20Income) Net interest income increased significantly QoQ and YoY, primarily driven by a substantial improvement in net interest margin resulting from a decrease in the overall cost of funds and an increase in the yield on interest-earning assets | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Net Interest Income | $19.6 million | $18.3 million | $17.2 million | | QoQ Change | +$1.3 million (+7.1%) | - | - | | YoY Change | +$2.4 million (+14.2%) | - | - | | Net Interest Margin | 3.03% | 2.87% | 2.62% | | Yield on Interest-Earning Assets | 5.45% | 5.39% | 5.45% | | Overall Cost of Funds | 3.13% | 3.22% | 3.58% | | Cost of Deposits | 3.06% | 3.15% | 3.38% | | Cost of Short-Term Borrowings | 3.13% | 3.56% | 4.68% | - The **16 basis point increase** in net interest margin QoQ was driven by a **nine basis point decrease** in the overall cost of funds and a **six basis point increase** in the yield on interest-earning assets[21](index=21&type=chunk) - The decrease in the cost of deposits was primarily due to lower average balances and rates paid on time deposits and brokered time deposits[24](index=24&type=chunk) - The cost of short-term borrowings decreased significantly due to reduced utilization of short-term FHLB advances and the repayment of borrowings under the Bank Term Funding Program (BTFP)[25](index=25&type=chunk) [Noninterest Income](index=6&type=section&id=3.2%20Noninterest%20Income) Noninterest income increased QoQ but decreased YoY, with the QoQ increase mainly due to higher other operating income and an increase in the fair value of equity securities, while the YoY decrease was primarily attributable to a lower gain on sale of other real estate owned | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Total Noninterest Income | $2.6 million | $2.0 million | $2.8 million | | QoQ Change | +$0.6 million (+30.6%) | - | - | | YoY Change | $(0.1) million (-4.5%) | - | - | - QoQ increase in noninterest income was driven by a **$0.4 million increase** in other operating income (including **$0.3 million** from insurance proceeds) and a **$0.1 million increase** in the change in fair value of equity securities[29](index=29&type=chunk) - YoY decrease was primarily due to a **$0.7 million decrease** in gain on sale of other real estate owned, partially offset by a **$0.4 million decrease** in loss on call or sale of investment securities[30](index=30&type=chunk) [Noninterest Expense](index=8&type=section&id=3.3%20Noninterest%20Expense) Noninterest expense increased both QoQ and YoY, with the QoQ increase mainly due to higher salaries and employee benefits, and the YoY increase driven by higher salaries, a decrease in gain on early extinguishment of subordinated debt, and increased acquisition expenses | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Total Noninterest Expense | $16.7 million | $16.2 million | $15.5 million | | QoQ Change | +$0.5 million (+2.8%) | - | - | | YoY Change | +$1.2 million (+7.9%) | - | - | - QoQ increase in noninterest expense was primarily due to a **$0.7 million increase** in salaries and employee benefits (investment in people, incentive-based compensation, health insurance claims)[32](index=32&type=chunk) - YoY increase was driven by a **$0.7 million increase** in salaries and employee benefits, a **$0.3 million decrease** in gain on early extinguishment of subordinated debt, and a **$0.2 million increase** in acquisition expense related to the Wichita Falls transaction[33](index=33&type=chunk) [Taxes](index=8&type=section&id=3.4%20Taxes) Income tax expense for Q2 2025 was $0.9 million, resulting in an effective tax rate of 17.2%, which is slightly lower than Q1 2025 but comparable to Q2 2024 | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Income Tax Expense | $0.9 million | $1.4 million | $0.8 million | | Effective Tax Rate | 17.2% | 18.4% | 17.0% | [Earnings Per Share](index=8&type=section&id=3.5%20Earnings%20Per%20Share) Basic and diluted earnings per common share for Q2 2025 were $0.46, representing a decrease from Q1 2025 but an increase compared to Q2 2024 | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Basic EPS | $0.46 | $0.64 | $0.41 | | Diluted EPS | $0.46 | $0.63 | $0.41 | Company Information & Non-GAAP Measures [About Investar Holding Corporation](index=8&type=section&id=4.1%20About%20Investar%20Holding%20Corporation) Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services through Investar Bank, National Association, operating 29 branch locations across Louisiana, Texas, and Alabama with 337 full-time equivalent employees and total assets of $2.7 billion as of June 30, 2025 - Investar Bank operates **29 branch locations** serving Louisiana, Texas, and Alabama[36](index=36&type=chunk) | Metric | Value (as of June 30, 2025) | | :----- | :-------------------------- | | Full-time Equivalent Employees | 337 | | Total Assets | $2.7 billion | [Non-GAAP Financial Measures Explanation](index=8&type=section&id=4.2%20Non-GAAP%20Financial%20Measures%20Explanation) This section clarifies the use of non-GAAP financial measures such as 'tangible common equity,' 'core earnings,' and 'core efficiency ratio,' which management believes provide useful information for investors to understand financial results and view performance similarly to industry peers, while emphasizing they should not replace GAAP measures - Non-GAAP measures are used to provide information useful to investors in understanding Investar's financial results and to allow comparison with the financial services sector[37](index=37&type=chunk) - Examples of non-GAAP measures include tangible common equity, core earnings, core efficiency ratio, and adjusted net interest margin[37](index=37&type=chunk) - Investors are encouraged to review consolidated financial statements in their entirety and not solely rely on non-GAAP measures, as they are not standardized and may not be comparable across companies[37](index=37&type=chunk) Forward-Looking Statements & Legal Disclosures [General Forward-Looking and Cautionary Statements](index=10&type=section&id=5.1%20General%20Forward-Looking%20and%20Cautionary%20Statements) This section outlines various risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including general economic conditions, interest rate changes, execution of strategic plans, liquidity risks, credit quality, and regulatory compliance - Forward-looking statements are based on current plans, estimates, and expectations and are subject to various risks and uncertainties[39](index=39&type=chunk) - Key risk factors include business and economic conditions, changes in inflation and interest rates, ability to execute growth strategies, liquidity reduction, changes in loan/investment portfolios, and dependence on management team[39](index=39&type=chunk) - Other risks include increasing costs of regulatory compliance, geopolitical tensions, public health challenges, cyberattacks, and natural disasters[40](index=40&type=chunk)[42](index=42&type=chunk) [Forward-Looking and Cautionary Statements Relating to the Pending Wichita Falls Transaction](index=12&type=section&id=5.2%20Forward-Looking%20and%20Cautionary%20Statements%20Relating%20to%20the%20Pending%20Wichita%20Falls%20Transaction) Specific forward-looking statements regarding the Wichita Falls acquisition include potential benefits, future financial results, and timing, with associated risks including obtaining shareholder and regulatory approvals, integration challenges, realization of synergies, maintaining customer/employee relationships, and diversion of management time - Forward-looking statements for the Wichita Falls transaction cover potential benefits, future financial/operating results, and expected completion timing[41](index=41&type=chunk) - Risks include the ability to obtain requisite shareholder and governmental/regulatory approvals, potential delays or conditions, integration challenges, and the possibility that cost savings or synergies may not be fully realized[41](index=41&type=chunk) [Additional Information about the Proposed Merger and Where to Find It](index=13&type=section&id=5.3%20Additional%20Information%20about%20the%20Proposed%20Merger%20and%20Where%20to%20Find%20It) Investar will file a registration statement on Form S-4, including a joint proxy statement/prospectus, with the SEC regarding the proposed merger, and investors are urged to review these documents for important information, available free of charge on the SEC's website and Investar's investor relations section - Investar intends to file a **Form S-4**, including a joint proxy statement/prospectus, with the SEC for the proposed merger[44](index=44&type=chunk) - Investors can obtain free copies of these documents from the SEC website (http://www.sec.gov) or Investar's website (www.investarbank.com)[44](index=44&type=chunk) [Participants in the Solicitation](index=13&type=section&id=5.4%20Participants%20in%20the%20Solicitation) Investar and Wichita Falls, along with their respective directors and officers, may be considered participants in the proxy solicitation for the proposed merger, with information regarding their interests and security ownership available in SEC filings - Investar and Wichita Falls directors and officers may be deemed participants in the proxy solicitation for the merger[45](index=45&type=chunk) - Information on their ownership and interests is available in Investar's SEC filings (e.g., Form 10-K) and the merger proxy statement/prospectus[45](index=45&type=chunk) [No Offer or Solicitation](index=13&type=section&id=5.5%20No%20Offer%20or%20Solicitation) This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities of Investar, and the Series A Non-Cumulative Perpetual Convertible Preferred Stock and common stock issuable upon conversion have not been registered under the Securities Act of 1933 - The press release is not an offer to sell or a solicitation to buy Investar securities[46](index=46&type=chunk) - The Series A Preferred Stock and common stock issuable upon conversion are not registered under the Securities Act of 1933 and require registration or an exemption for offer/sale in the U.S.[46](index=46&type=chunk) Detailed Financial Data [Summary Financial Information](index=14&type=section&id=6.1%20Summary%20Financial%20Information) This section provides a consolidated summary of Investar's financial performance, including earnings data, average balance sheet figures, per share data, performance ratios, asset quality ratios, and capital ratios for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024 Key Earnings Data (QoQ & YoY Change) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | Linked Quarter Change (%) | Year/Year Change (%) | | :----------------------- | :-------- | :-------- | :-------- | :---------------------- | :------------------- | | Total interest income | $35,359 | $34,434 | $35,790 | 2.7% | (1.2)% | | Total interest expense | $15,715 | $16,089 | $18,592 | (2.3)% | (15.5)% | | Net interest income | $19,644 | $18,345 | $17,198 | 7.1% | 14.2% | | Provision for credit losses | $141 | $(3,596) | $(415) | 103.9% | 134.0% | | Total noninterest income | $2,626 | $2,011 | $2,750 | 30.6% | (4.5)% | | Total noninterest expense | $16,700 | $16,238 | $15,477 | 2.8% | 7.9% | | Net income | $4,494 | $6,293 | $4,057 | (28.6)% | 10.8% | Key Per Share Data (QoQ & YoY Change) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | Linked Quarter Change (%) | Year/Year Change (%) | | :-------------------------------- | :-------- | :-------- | :-------- | :---------------------- | :------------------- | | Basic earnings per common share | $0.46 | $0.64 | $0.41 | (28.1)% | 12.2% | | Diluted earnings per common share | $0.46 | $0.63 | $0.41 | (27.0)% | 12.2% | | Book value per common share | $26.01 | $25.63 | $23.42 | 1.5% | 11.1% | | Tangible book value per common share | $21.80 | $21.40 | $19.15 | 1.9% | 13.8% | Key Performance Ratios (QoQ & YoY Change) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | Linked Quarter Change (%) | Year/Year Change (%) | | :-------------------------- | :-------- | :-------- | :-------- | :---------------------- | :------------------- | | Return on average assets | 0.66% | 0.94% | 0.59% | (29.8)% | 11.9% | | Net interest margin | 3.03% | 2.87% | 2.62% | 5.6% | 15.6% | | Efficiency ratio | 74.99% | 79.77% | 77.59% | (6.0)% | (3.3)% | | Nonperforming loans to total loans | 0.36% | 0.27% | 0.23% | 33.3% | 56.5% | | Common equity tier 1 capital (Investar Holding Corp.) | 11.28% | 11.16% | 10.02% | 1.1% | 12.6% | [Consolidated Balance Sheets](index=16&type=section&id=6.2%20Consolidated%20Balance%20Sheets) The consolidated balance sheet provides a detailed breakdown of assets, liabilities, and stockholders' equity as of June 30, 2025, March 31, 2025, and June 30, 2024, highlighting an increase in cash and cash equivalents QoQ, stable net loans, and an increase in total stockholders' equity Consolidated Balance Sheet Highlights (Amounts in thousands) | Item | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :---------------------------------- | :------------ | :------------- | :------------ | | Cash and cash equivalents | $55,224 | $43,522 | $69,672 | | Available for sale securities | $355,708 | $345,728 | $336,616 | | Loans, net | $2,079,735 | $2,080,196 | $2,138,139 | | Total assets | $2,748,065 | $2,729,902 | $2,787,578 | | Total deposits | $2,338,185 | $2,347,357 | $2,210,202 | | Advances from Federal Home Loan Bank | $70,000 | $60,000 | $23,500 | | Borrowings under Bank Term Funding Program | $0 | $0 | $229,000 | | Total liabilities | $2,492,136 | $2,478,165 | $2,557,382 | | Total stockholders' equity | $255,929 | $251,737 | $230,196 | [Consolidated Statements of Income](index=17&type=section&id=6.3%20Consolidated%20Statements%20of%20Income) This table presents the consolidated statements of income, detailing interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expense, and net income for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024 Consolidated Statements of Income (Amounts in thousands) | Item | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :---------------------------------- | :------------ | :------------- | :------------ | | Interest and fees on loans | $31,140 | $30,552 | $32,161 | | Total interest income | $35,359 | $34,434 | $35,790 | | Interest on deposits | $14,456 | $14,640 | $14,865 | | Total interest expense | $15,715 | $16,089 | $18,592 | | Net interest income | $19,644 | $18,345 | $17,198 | | Provision for credit losses | $141 | $(3,596) | $(415) | | Total noninterest income | $2,626 | $2,011 | $2,750 | | Total noninterest expense | $16,700 | $16,238 | $15,477 | | Income before income tax expense | $5,429 | $7,714 | $4,886 | | Income tax expense | $935 | $1,421 | $829 | | Net income | $4,494 | $6,293 | $4,057 | | Diluted earnings per share | $0.46 | $0.63 | $0.41 | | Cash dividends declared per common share | $0.11 | $0.105 | $0.10 | [Consolidated Average Balance Sheet, Interest Earned and Yield Analysis](index=18&type=section&id=6.4%20Consolidated%20Average%20Balance%20Sheet,%20Interest%20Earned%20and%20Yield%20Analysis) This table provides a detailed analysis of average balance sheet items, interest earned/expensed, and corresponding yields/rates for interest-earning assets and interest-bearing liabilities, highlighting the components contributing to the net interest margin Average Balance Sheet, Interest Earned and Yield Analysis (Amounts in thousands) | Item | Average Balance (Q2 2025) | Interest Income/Expense (Q2 2025) | Yield/Rate (Q2 2025) | | :---------------------------------- | :------------------------ | :-------------------------------- | :------------------- | | Loans | $2,104,266 | $31,140 | 5.94% | | Total interest earning assets | $2,604,295 | $35,359 | 5.45% | | Interest-bearing demand deposits | $794,603 | $4,396 | 2.22% | | Time deposits | $709,855 | $6,700 | 3.79% | | Total interest bearing deposits | $1,896,474 | $14,456 | 3.06% | | Short-term borrowings | $32,585 | $254 | 3.13% | | Total interest bearing liabilities | $2,014,546 | $15,715 | 3.13% | | Net interest income/net interest margin | - | $19,644 | 3.03% | [Reconciliation of Non-GAAP Financial Measures](index=19&type=section&id=6.5%20Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including adjustments for interest recoveries and accretion in yield analysis, and calculations for tangible common equity, tangible assets, core earnings, and core efficiency ratios, clarifying the specific items excluded from GAAP metrics to arrive at core performance indicators Tangible Common Equity and Assets Reconciliation (Amounts in thousands) | Item | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :------------ | | Total stockholders' equity | $255,929 | $251,737 | $230,196 | | Less: Goodwill | $40,088 | $40,088 | $40,088 | | Less: Core deposit intangible | $1,239 | $1,370 | $1,808 | | Less: Trademark intangible | $100 | $100 | $100 | | **Tangible common equity** | **$214,502** | **$210,179** | **$188,200** | | Total assets | $2,748,065 | $2,729,902 | $2,787,578 | | Less: Goodwill | $40,088 | $40,088 | $40,088 | | Less: Core deposit intangible | $1,239 | $1,370 | $1,808 | | Less: Trademark intangible | $100 | $100 | $100 | | **Tangible assets** | **$2,706,638** | **$2,688,344** | **$2,745,582** | | Tangible equity to tangible assets | 7.93% | 7.82% | 6.85% | | Tangible book value per common share | $21.80 | $21.40 | $19.15 | Core Earnings Reconciliation (Amounts in thousands) | Item | 6/30/2025 | 3/31/2025 | 6/30/2024 | | :---------------------------------- | :-------- | :-------- | :-------- | | Net interest income (GAAP) | $19,644 | $18,345 | $17,198 | | Noninterest income (GAAP) | $2,626 | $2,011 | $2,750 | | Adjustments to noninterest income | $(240) | $73 | $(302) | | **Core noninterest income** | **$2,376** | **$2,084** | **$2,448** | | Total noninterest expense (GAAP) | $16,700 | $16,238 | $15,477 | | Adjustments to noninterest expense | $(504) | $(159) | $287 | | **Core noninterest expense** | **$16,196** | **$16,079** | **$15,764** | | **Core earnings** | **$4,706** | **$6,484** | **$3,567** | | Core diluted earnings per common share | $0.47 | $0.65 | $0.36 | | Core efficiency ratio | 73.55% | 78.71% | 80.24% | - Core earnings for Q1 2025 included a **$3.3 million recovery** from a property insurance settlement related to Hurricane Ida, which favorably impacted pre-tax net income. Excluding this, core diluted EPS for Q1 2025 would be **$0.40**[66](index=66&type=chunk)[67](index=67&type=chunk)

Acquisition and Capital - Investar entered into a definitive agreement to acquire Wichita Falls Bancshares, Inc for approximately $836 million, based on Investar's closing price of $1932 on June 30, 2025[20] - Investar completed a private placement of 32,500 shares of 65% Series A Non-Cumulative Perpetual Convertible Preferred Stock at $1,000 per share, raising $325 million in gross proceeds[20] Balance Sheet and Loan Portfolio - Total assets were $2748065 million[21,97] - Net loans totaled $2106355 million[21,62] - Total deposits reached $2338185 million[21,91] - Variable-rate loans accounted for 34% of total loans as of June 30, 2025[20,63] - The loan portfolio saw an increase in yield to 594% for the second quarter of 2025, compared to 588% in the first quarter of 2025[21,63] Financial Performance - Net interest margin improved by 16 basis points to 303% for the second quarter of 2025, up from 287% in the first quarter of 2025[21] - The efficiency ratio improved to 7499% for the second quarter of 2025, compared to 7977% for the first quarter of 2025[21] - Core efficiency ratio improved to 7355% for the second quarter of 2025, compared to 7871% for the first quarter of 2025[21] - Book value per common share increased by 15% to $2601 at June 30, 2025, compared to $2563 at March 31, 2025[21] - Tangible book value per common share increased by 19% to $2180 at June 30, 2025, compared to $2140 at March 31, 2025[21]

Core Viewpoint - Investar (ISTR) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Recent Performance and Outlook - For the fiscal year ending December 2025, Investar is expected to earn $1.99 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 21% over the past three months [8]. - The upgrade to Zacks Rank 2 positions Investar in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with a proven track record of generating significant returns, particularly for Zacks Rank 1 stocks [7][9]. - The system maintains a balanced distribution of ratings, ensuring that only the top 20% of stocks receive favorable ratings based on their earnings estimate revisions [9][10].