Core Viewpoint - Investar (ISTR) shows a significantly improving earnings outlook, making it a solid choice for investors as analysts continue to raise earnings estimates for the company [1][3]. Earnings Estimate Revisions - The trend in estimate revisions reflects growing analyst optimism regarding Investar Bank's earnings prospects, which is expected to positively influence the stock price [2]. - The current quarter's earnings estimate is projected at $0.54 per share, indicating a year-over-year decline of 16.9%, but the Zacks Consensus Estimate has increased by 13.83% over the last 30 days due to mixed revisions [6]. - For the full year, the earnings estimate stands at $2.06 per share, representing a 9.0% increase from the previous year, with a consensus estimate boost of 6.48% over the same period [7][8]. Zacks Rank and Performance - Investar currently holds a Zacks Rank 1 (Strong Buy), which is associated with a strong historical performance, as Zacks 1 Ranked stocks have averaged a 25% annual return since 2008 [3][9]. - The positive estimate revisions have led to a 5.8% increase in the stock price over the past four weeks, suggesting potential for further upside [10].

Core Insights - Investar Holding Corporation (NASDAQ: ISTR) reported strong earnings for the third quarter of 2025, with revenue of approximately $37.1 million, significantly exceeding the estimated $29.6 million [1][6] - The company's earnings per share (EPS) for the quarter was $0.54, surpassing the Zacks Consensus Estimate of $0.48 and showing improvement from $0.45 in the same quarter last year [2][6] - ISTR's net income for the third quarter was $5.7 million, an increase from $4.5 million in the previous quarter, indicating robust financial performance [2] Financial Ratios - The price-to-earnings (P/E) ratio stands at approximately 10.02, suggesting that investors are willing to pay $10.02 for every dollar of earnings [3][6] - The price-to-sales ratio is about 1.44, reflecting the amount investors are willing to pay per dollar of sales [3] - The enterprise value to sales ratio is around 1.78, and the enterprise value to operating cash flow ratio is approximately 21.21, providing insights into the company's valuation relative to its sales and cash flow generation [4] Debt and Liquidity - The debt-to-equity ratio is 0.42, indicating a moderate level of debt used to finance the company's assets relative to shareholders' equity [5][6] - A current ratio of 0.17 may suggest potential liquidity challenges in meeting short-term obligations, although the company has demonstrated strong earnings and revenue growth [5]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides a comprehensive overview of Investar Holding Corporation's strong Q3 2025 financial performance, strategic acquisition update, and key performance indicators [Third Quarter 2025 Financial Performance Overview](index=1&type=section&id=Third%20Quarter%202025%20Financial%20Performance%20Overview) Investar Holding Corporation reported strong Q3 2025 financial results, with net income rising to $5.7 million and diluted EPS at $0.54, driven by balance sheet optimization and improved net interest margin Net Income Available to Common Shareholders (in millions) | Period | Amount | | :----- | :----- | | Q3 2025 | $5.7 | | Q2 2025 | $4.5 | | Q3 2024 | $5.4 | Diluted Common Share Earnings | Period | GAAP EPS | Core EPS (Non-GAAP) | | :----- | :------- | :------------------ | | Q3 2025 | $0.54 | $0.54 | | Q2 2025 | $0.46 | $0.47 | | Q3 2024 | $0.54 | $0.45 | - Net interest margin improved substantially to **3.16%**, a **13 basis point increase** from the previous quarter, driven by growing yield on interest-earning assets and reducing funding costs[3](index=3&type=chunk)[4](index=4&type=chunk) - Total loans increased **2.1% (8.4% annualized)**, primarily variable-rate loans, originated at a blended interest rate of **7.5%**[4](index=4&type=chunk) - Repurchased **14,722 shares** of common stock during Q3 2025 at an average price of **$21.55**, which was below the tangible book value per common share of **$22.76**[5](index=5&type=chunk) [Wichita Falls Bancshares, Inc. Transaction Update](index=1&type=section&id=Wichita%20Falls%20Bancshares%2C%20Inc.%20Transaction%20Update) Investar provided an update on its definitive agreement to acquire Wichita Falls Bancshares, Inc., with OCC approval and an anticipated closing around January 1, 2026 - Investar entered into a definitive agreement to acquire Wichita Falls Bancshares, Inc. on **July 1, 2025**[5](index=5&type=chunk) - First National Bank, a subsidiary of Wichita Falls, had approximately **$1.4 billion in assets** at **June 30, 2025**[5](index=5&type=chunk) - The Office of the Comptroller of the Currency approved the merger on **October 15, 2025**[5](index=5&type=chunk) - The transaction is expected to close on or about **January 1, 2026**, subject to customary closing conditions, including shareholder and Federal Reserve approvals[5](index=5&type=chunk) [Third Quarter 2025 Key Performance Indicators](index=1&type=section&id=Third%20Quarter%202025%20Key%20Performance%20Indicators) Q3 2025 saw significant improvements in diluted EPS, return on average assets, net interest margin, and efficiency ratio, alongside solid loan and deposit growth Key Performance Indicators (QoQ Change) | Metric | Q3 2025 | Q2 2025 | Change | | :-------------------------------- | :------ | :------ | :----- | | Diluted EPS | $0.54 | $0.46 | +17.4% | | Core Diluted EPS | $0.54 | $0.47 | +14.9% | | Return on Average Assets | 0.88% | 0.66% | +33.3% | | Core Return on Average Assets | 0.89% | 0.69% | +29.0% | | Net Interest Margin | 3.16% | 3.03% | +13 bps | | Loan Portfolio Yield | 6.03% | 5.94% | +9 bps | | Overall Cost of Funds | 3.11% | 3.13% | -2 bps | | Cost of Deposits | 3.04% | 3.06% | -2 bps | | Efficiency Ratio | 68.47% | 74.99% | -8.7% | | Core Efficiency Ratio | 67.66% | 73.55% | -8.0% | - Credit quality remained solid with nonperforming loans at **0.36% of total loans** for both Q3 2025 and Q2 2025[7](index=7&type=chunk) - Total loans increased by **$44.2 million (2.1%)** to **$2.15 billion**, and total deposits increased by **$34.5 million (1.5%)** to **$2.37 billion**[7](index=7&type=chunk) - Variable-rate loans constituted **36% of total loans**, with **78% of new/renewed loans** being variable-rate at a **7.5% blended interest rate**[7](index=7&type=chunk) - Book value per common share increased to **$26.96 (3.7% QoQ)**, and tangible book value per common share increased to **$22.76 (4.4% QoQ)**[7](index=7&type=chunk) - Regulatory total capital ratio increased to **14.66% (7.9% QoQ)**[7](index=7&type=chunk) - Completed a private placement of **32,500 shares** of **6.5% Series A Non-Cumulative Perpetual Convertible Preferred Stock** for gross proceeds of **$32.5 million**, with net proceeds of **$30.4 million** intended to support the Wichita Falls acquisition and general corporate purposes[7](index=7&type=chunk) [Balance Sheet Analysis](index=3&type=section&id=Balance%20Sheet%20Analysis) This section analyzes Investar's balance sheet, focusing on trends in loans, credit quality, deposits, and stockholders' equity during the reporting period [Loans](index=3&type=section&id=Loans) Total loans increased QoQ but slightly decreased YoY, with business lending growth offset by declines in nonowner-occupied and construction loans due to portfolio optimization - Total loans were **$2.15 billion** at **September 30, 2025**, an increase of **$44.2 million (2.1%)** compared to June 30, 2025, and a decrease of **$5.3 million (0.2%)** compared to September 30, 2024[8](index=8&type=chunk) Loan Portfolio Composition (dollars in thousands) | Category | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter Change ($) | Linked Quarter Change (%) | Year/Year Change ($) | Year/Year Change (%) | % of Total (9/30/2025) | % of Total (9/30/2024) | | :----------------------- | :-------- | :-------- | :-------- | :---------------------- | :---------------------- | :------------------- | :------------------- | :---------------------- | :---------------------- | | Construction and development | $140,561 | $141,654 | $166,954 | $(1,093) | (0.8)% | $(26,393) | (15.8)% | 6.5% | 7.7% | | 1-4 Family | 382,445 | 387,796 | 403,097 | (5,351) | (1.4)% | (20,652) | (5.1)% | 17.8% | 18.7% | | Multifamily | 130,232 | 102,569 | 85,283 | 27,663 | 27.0% | 44,949 | 52.7% | 6.1% | 4.0% | | Farmland | 3,996 | 4,519 | 7,173 | (523) | (11.6)% | (3,177) | (44.3)% | 0.2% | 0.3% | | Owner occupied CRE | 462,830 | 462,182 | 467,467 | 648 | 0.1% | (4,637) | (1.0)% | 21.5% | 21.7% | | Nonowner occupied CRE | 459,711 | 466,009 | 499,274 | (6,298) | (1.4)% | (39,563) | (7.9)% | 21.4% | 23.2% | | Commercial and industrial | 560,763 | 531,460 | 515,273 | 29,303 | 5.5% | 45,490 | 8.8% | 26.1% | 23.9% | | Consumer | 9,985 | 10,166 | 11,325 | (181) | (1.8)% | (1,340) | (11.8)% | 0.4% | 0.5% | | **Total loans** | **$2,150,523** | **$2,106,355** | **$2,155,846** | **$44,168** | **2.1%** | **$(5,323)** | **(0.2)%** | **100%** | **100%** | - The total business lending portfolio increased by **$30.0 million (3.0%) QoQ** and **$40.9 million (4.2%) YoY**, primarily driven by increased loan production from the Commercial and Industrial Division[10](index=10&type=chunk) - Nonowner-occupied loans decreased by **$6.3 million (1.4%) QoQ** and **$39.6 million (7.9%) YoY**, primarily due to loan amortization and payoffs aligned with the strategy to optimize and de-risk the portfolio mix[11](index=11&type=chunk) - Construction and development loans decreased by **$1.1 million (0.8%) QoQ** and **$26.4 million (15.8%) YoY**, mainly due to payoffs and conversions to permanent loans upon completion of construction[12](index=12&type=chunk) [Credit Quality](index=3&type=section&id=Credit%20Quality) Credit quality remained solid, with nonperforming loans slightly up QoQ but significantly higher YoY, while ACL decreased and a provision for credit losses was recorded Nonperforming Loans and Allowance for Credit Losses | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | | :-------------------------------- | :-------- | :-------- | :-------- | | Nonperforming loans (in millions) | $7.7 | $7.5 | $4.1 | | Nonperforming loans (% of total) | 0.36% | 0.36% | 0.19% | | Allowance for credit losses (in millions) | $26.5 | $26.6 | $28.1 | | ACL (% of nonperforming loans) | 344.7% | 355.9% | 682.0% | | ACL (% of total loans) | 1.23% | 1.26% | 1.30% | - The increase in nonperforming loans QoQ was primarily attributable to owner-occupied commercial real estate loans (**$0.9 million**) and 1-4 family loans (**$0.3 million**), partially offset by a transfer of a **$0.7 million** 1-4 family loan to other real estate owned[13](index=13&type=chunk) - A provision for credit losses of **$0.1 million** was recorded for Q3 2025, primarily due to loan growth partially offset by changes in the economic forecast and loan mix, compared to a negative provision of **$0.9 million** in Q3 2024[15](index=15&type=chunk) [Deposits](index=5&type=section&id=Deposits) Total deposits increased QoQ and YoY, driven by organic growth in interest-bearing demand, money market, and savings, while brokered time deposits decreased - Total deposits at **September 30, 2025**, were **$2.37 billion**, an increase of **$34.5 million (1.5%) QoQ** and **$85.3 million (3.7%) YoY**[16](index=16&type=chunk) Deposit Composition (dollars in thousands) | Category | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter Change ($) | Linked Quarter Change (%) | Year/Year Change ($) | Year/Year Change (%) | % of Total (9/30/2025) | % of Total (9/30/2024) | | :----------------------- | :-------- | :-------- | :-------- | :---------------------- | :---------------------- | :------------------- | :------------------- | :---------------------- | :---------------------- | | Noninterest bearing demand | $446,361 | $448,459 | $437,734 | $(2,098) | (0.5)% | $8,627 | 2.0% | 18.8% | 19.1% | | Interest-bearing demand | 633,766 | 576,473 | 500,345 | 57,293 | 9.9% | 133,421 | 26.7% | 26.7% | 21.9% | | Money market | 237,339 | 220,961 | 196,710 | 16,378 | 7.4% | 40,629 | 20.7% | 10.0% | 8.6% | | Savings deposits | 137,514 | 134,729 | 128,241 | 2,785 | 2.1% | 9,273 | 7.2% | 5.8% | 5.6% | | Brokered time deposits | 210,822 | 256,100 | 271,684 | (45,278) | (17.7)% | (60,862) | (22.4)% | 8.9% | 11.9% | | Time deposits | 706,876 | 701,463 | 752,694 | 5,413 | 0.8% | (45,818) | (6.1)% | 29.8% | 32.9% | | **Total deposits** | **$2,372,678** | **$2,338,185** | **$2,287,408** | **$34,493** | **1.5%** | **$85,270** | **3.7%** | **100%** | **100%** | - The increase in interest-bearing demand, money market, and savings deposits was primarily due to organic growth[18](index=18&type=chunk) - Brokered time deposits decreased significantly, reflecting Investar's strategy to secure fixed-cost funding and reduce short-term borrowings, with the balance remaining below **10% of total assets**[18](index=18&type=chunk) [Stockholders' Equity](index=5&type=section&id=Stockholders%27%20Equity) Stockholders' equity substantially increased QoQ and YoY, driven by Series A Preferred Stock issuance, net income, and improved fair value of available-for-sale securities - Stockholders' equity was **$295.3 million** at **September 30, 2025**, an increase of **$39.4 million QoQ** and **$49.8 million YoY**[20](index=20&type=chunk) - The increase was primarily attributable to the issuance of the **Series A Preferred Stock** (gross proceeds of **$32.5 million**), net income for the quarter/last twelve months, and a decrease in accumulated other comprehensive loss due to an increase in the fair value of available-for-sale securities[19](index=19&type=chunk)[20](index=20&type=chunk) [Income Statement Analysis](index=6&type=section&id=Income%20Statement%20Analysis) This section analyzes Investar's income statement, focusing on net interest income, noninterest income, noninterest expense, taxes, and earnings per common share [Net Interest Income](index=6&type=section&id=Net%20Interest%20Income) Net interest income significantly increased QoQ and YoY, driven by improved net interest margin from higher asset yields and lower funding costs, especially from brokered time deposits and short-term borrowings Net Interest Income (in millions) | Period | Amount | QoQ Change (%) | YoY Change (%) | | :----- | :----- | :------------- | :------------- | | Q3 2025 | $21.2 | +7.7% | +18.5% | | Q2 2025 | $19.6 | - | - | | Q3 2024 | $17.9 | - | - | Net Interest Margin (NIM) | Period | NIM | QoQ Change (bps) | YoY Change (bps) | | :----- | :-- | :--------------- | :--------------- | | Q3 2025 | 3.16% | +13 | +49 | | Q2 2025 | 3.03% | - | - | | Q3 2024 | 2.67% | - | - | - The increase in NIM QoQ was driven by an **8 basis point increase** in the yield on interest-earning assets and a **2 basis point decrease** in the overall cost of funds, while the YoY increase was primarily due to a **50 basis point decrease** in the overall cost of funds[22](index=22&type=chunk) Yield on Interest-Earning Assets & Cost of Funds | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :-------------------------- | :------ | :------ | :------ | | Yield on interest-earning assets | 5.53% | 5.45% | 5.51% | | Overall cost of funds | 3.11% | 3.13% | 3.61% | | Cost of deposits | 3.04% | 3.06% | 3.45% | | Cost of short-term borrowings | 2.93% | 3.13% | 4.59% | - The decrease in the cost of deposits QoQ and YoY resulted primarily from lower average balances and rates paid on brokered time deposits and time deposits[25](index=25&type=chunk) - The decrease in the cost of short-term borrowings QoQ and YoY was mainly due to reduced utilization of short-term FHLB advances and the repayment of **$109.0 million** in borrowings under the Bank Term Funding Program (BTFP) in Q4 2024[26](index=26&type=chunk) [Noninterest Income](index=7&type=section&id=Noninterest%20Income) Noninterest income increased QoQ due to equity security gains and other operating income, but decreased YoY due to a prior year's legal settlement income Noninterest Income (in millions) | Period | Amount | QoQ Change (%) | YoY Change (%) | | :----- | :----- | :------------- | :------------- | | Q3 2025 | $3.0 | +13.6% | -15.8% | | Q2 2025 | $2.6 | - | - | | Q3 2024 | $3.5 | - | - | - The QoQ increase was primarily driven by a **$0.2 million increase** in the change in fair value of equity securities, a **$0.1 million increase** in gain on sale of other real estate owned, and a **$0.1 million increase** in other operating income (including **$0.4 million** from distributions from other investments)[29](index=29&type=chunk) - The YoY decrease was mainly attributable to **$1.1 million** in income from a legal settlement recorded in Q3 2024 related to a loan impaired by Hurricane Ida[30](index=30&type=chunk) [Noninterest Expense](index=8&type=section&id=Noninterest%20Expense) Noninterest expense slightly decreased QoQ due to lower operating and data processing costs, but increased YoY due to higher salaries and acquisition expenses Noninterest Expense (in millions) | Period | Amount | QoQ Change (%) | YoY Change (%) | | :----- | :----- | :------------- | :------------- | | Q3 2025 | $16.5 | -1.0% | +2.1% | | Q2 2025 | $16.7 | - | - | | Q3 2024 | $16.2 | - | - | - The QoQ decrease was primarily due to a **$0.2 million decrease** in other operating expenses (driven by lower write-down of other real estate owned) and a **$0.1 million decrease** in data processing costs due to more favorable contract terms[32](index=32&type=chunk) - The YoY increase was mainly driven by a **$0.3 million increase** in salaries and employee benefits (investment in Texas markets, health insurance claims) 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=Taxes) Income tax expense and effective tax rate increased QoQ and YoY, with Q3 2024's lower rate due to a revision for projected non-taxable income Income Tax Expense and Effective Tax Rate | Period | Income Tax Expense (in millions) | Effective Tax Rate | | :----- | :------------------------------- | :----------------- | | Q3 2025 | $1.3 | 17.3% | | Q2 2025 | $0.9 | 17.2% | | Q3 2024 | $0.8 | 12.7% | - The Q3 2024 effective tax rate reflected a revision to account for a projected increase in non-taxable income from bank-owned life insurance in Q4 2024[34](index=34&type=chunk) [Earnings Per Common Share](index=8&type=section&id=Earnings%20Per%20Common%20Share) Diluted earnings per common share increased QoQ and remained stable YoY Earnings Per Common Share | Period | Basic EPS | Diluted EPS | | :----- | :-------- | :---------- | | Q3 2025 | $0.57 | $0.54 | | Q2 2025 | $0.46 | $0.46 | | Q3 2024 | $0.55 | $0.54 | [Company Information](index=8&type=section&id=Company%20Information) This section provides an overview of Investar Holding Corporation, including its operations, geographic presence, and key financial metrics [About Investar Holding Corporation](index=8&type=section&id=About%20Investar%20Holding%20Corporation) Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides banking services through Investar Bank, N.A., operating 29 branches across three states with $2.8 billion in assets - Investar is headquartered in **Baton Rouge, Louisiana**[36](index=36&type=chunk) - Provides full banking services (excluding trust services) through its wholly-owned subsidiary, **Investar Bank, National Association**[36](index=36&type=chunk) - Operates **29 branch locations** serving Louisiana, Texas, and Alabama[36](index=36&type=chunk) - At **September 30, 2025**, the Bank had **326 full-time equivalent employees** and total assets of **$2.8 billion**[36](index=36&type=chunk) [Forward-Looking Statements & Disclosures](index=8&type=section&id=Forward-Looking%20Statements%20%26%20Disclosures) This section outlines Investar's forward-looking statements, non-GAAP financial measures, and associated risks, including those related to the pending Wichita Falls transaction [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) This section clarifies the use of non-GAAP financial measures like 'tangible common equity' and 'core earnings' for insights into performance, emphasizing they are not GAAP substitutes - The press release includes non-GAAP financial measures like 'tangible common equity,' 'core earnings,' and 'core efficiency ratio' to provide additional insights into Investar's financial results[37](index=37&type=chunk) - Management believes these measures help investors understand factors and trends affecting the business and allow for performance comparison with the financial services sector[37](index=37&type=chunk) - Non-GAAP measures should not be considered a substitute for GAAP measures and may not be comparable to similarly named measures from other companies[37](index=37&type=chunk) [Forward-Looking and Cautionary Statements](index=9&type=section&id=Forward-Looking%20and%20Cautionary%20Statements) This section outlines Investar's forward-looking statements, cautioning that actual results may differ due to risks including economic conditions, interest rates, strategic execution, and external factors - The press release contains forward-looking statements based on current plans, estimates, and expectations, which are subject to various risks and uncertainties[38](index=38&type=chunk)[39](index=39&type=chunk) - Key risk factors include business and economic conditions, changes in inflation and interest rates, ability to execute strategy, loan and deposit growth, acquisition success, liquidity, credit loss reserve accuracy, loan portfolio quality, investment portfolio changes, management team dependence, geographic concentration, and risks related to Series A Preferred Stock[39](index=39&type=chunk) - Additional factors include increasing regulatory costs, geopolitical tensions (e.g., wars in Ukraine and Israel), public health challenges, credit exposure concentration, asset quality deterioration, oil and natural gas price fluctuations, data processing failures, cyberattacks, fraud, goodwill impairment, litigation, competitive pressures, changes in laws and regulations, FDIC insurance costs, governmental policies, and adverse weather events[40](index=40&type=chunk)[42](index=42&type=chunk) - Investar does not undertake any obligation to publicly update or revise any forward-looking statement[39](index=39&type=chunk) [Forward-Looking and Cautionary Statements Relating to the Pending Wichita Falls Transaction](index=11&type=section&id=Forward-Looking%20and%20Cautionary%20Statements%20Relating%20to%20the%20Pending%20Wichita%20Falls%20Transaction) This section addresses forward-looking statements and risks for the Wichita Falls acquisition, including obtaining approvals, successful integration, synergy realization, and operational disruptions - Forward-looking statements related to the Wichita Falls transaction include potential benefits, future financial and operating results, Investar's plans, objectives, expectations, intentions, and the expected timing of completion[41](index=41&type=chunk) - Important factors that could cause actual results to differ include the ability to obtain shareholder and regulatory approvals, satisfaction of closing conditions, successful business integration, realization of cost savings and synergies, maintenance of customer/employee/vendor relationships, and diversion of management time[41](index=41&type=chunk) [Additional Information about the Proposed Merger and Where to Find It](index=12&type=section&id=Additional%20Information%20about%20the%20Proposed%20Merger%20and%20Where%20to%20Find%20It) This section guides interested parties to detailed information about the proposed merger, referencing SEC filings like the Form S-4 registration statement and joint proxy statement/prospectus - Investar filed a registration statement on **Form S-4**, including a joint proxy statement/prospectus, which was declared effective by the SEC on **September 23, 2025**[44](index=44&type=chunk) - Investors and security holders are urged to read the **Form S-4**, proxy statement/prospectus, and other relevant documents filed with the SEC for important information about the proposed merger[44](index=44&type=chunk) - Free copies of these documents are available through the SEC website (**https://www.sec.gov**) and in the 'Investors' section of Investar's website (**www.investarbank.com**)[44](index=44&type=chunk) [Participants in the Solicitation](index=12&type=section&id=Participants%20in%20the%20Solicitation) This section identifies directors and officers of Investar and Wichita Falls as potential proxy solicitation participants for the merger, directing readers to SEC filings for ownership details - Investar and Wichita Falls and their respective directors and officers may be deemed participants in the solicitation of proxies from their shareholders in connection with the proposed merger[45](index=45&type=chunk) - Information about Investar's directors and executive officers and their ownership of Investar's securities is available in Investar's SEC filings, including the definitive proxy statement/prospectus and the most recent Annual Report on Form 10-K[45](index=45&type=chunk) [No Offer or Solicitation](index=12&type=section&id=No%20Offer%20or%20Solicitation) This standard disclaimer clarifies that the press release does not constitute an offer to sell or solicit an offer to buy Investar securities - The information contained in this press release is not an offer to sell or the solicitation of an offer to buy any securities of Investar[46](index=46&type=chunk) [Contact Information](index=12&type=section&id=Contact%20Information) Contact details for Investar Holding Corporation for further information - For further information, contact **John Campbell, Executive Vice President and Chief Financial Officer**, at **(225) 227-2215** or **John.Campbell@investarbank.com**[47](index=47&type=chunk) [Financial Statements & Reconciliations](index=13&type=section&id=Financial%20Statements%20%26%20Reconciliations) This section presents Investar's summary financial information, asset quality, capital ratios, consolidated balance sheets, income statements, and non-GAAP reconciliations [Summary Financial Information](index=13&type=section&id=Summary%20Financial%20Information) This section provides a high-level overview of Investar's key financial data for Q3 2025, Q2 2025, and Q3 2024, including earnings, balance sheet, per share data, and performance ratios Earnings Data (Amounts in thousands) | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter | Year/Year | | :-------------------------------- | :-------- | :-------- | :-------- | :------------- | :-------- | | Total interest income | $37,095 | $35,359 | $36,848 | 4.9% | 0.7% | | Total interest expense | 15,942 | 15,715 | 18,992 | 1.4% | (16.1)% | | Net interest income | 21,153 | 19,644 | 17,856 | 7.7% | 18.5% | | Provision for credit losses | 139 | 141 | (945) | (1.4)% | 114.7% | | Total noninterest income | 2,984 | 2,626 | 3,544 | 13.6% | (15.8)% | | Total noninterest expense | 16,526 | 16,700 | 16,180 | (1.0)% | 2.1% | | Income before income tax expense | 7,472 | 5,429 | 6,165 | 37.6% | 21.2% | | Income tax expense | 1,293 | 935 | 784 | 38.3% | 64.9% | | Net income | 6,179 | 4,494 | 5,381 | 37.5% | 14.8% | | Preferred stock dividends declared | 528 | — | — | — | — | | Net income available to common shareholders | $5,651 | $4,494 | $5,381 | 25.7% | 5.0% | Per Common Share Data | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter | Year/Year | | :-------------------------------- | :-------- | :-------- | :-------- | :------------- | :-------- | | Basic earnings per common share | $0.57 | $0.46 | $0.55 | 23.9% | 3.6% | | Diluted earnings per common share | 0.54 | 0.46 | 0.54 | 17.4% | — | | Core basic earnings per common share | 0.58 | 0.48 | 0.45 | 20.8% | 28.9% | | Core diluted earnings per common share | 0.54 | 0.47 | 0.45 | 14.9% | 20.0% | | Book value per common share | 26.96 | 26.01 | 24.98 | 3.7% | 7.9% | | Tangible book value per common share | 22.76 | 21.80 | 20.73 | 4.4% | 9.8% | | Common shares outstanding | 9,825,883 | 9,839,848 | 9,827,622 | (0.1)% | (0.0)% | Performance Ratios | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter | Year/Year | | :-------------------------------- | :-------- | :-------- | :-------- | :------------- | :-------- | | Return on average assets | 0.88% | 0.66% | 0.77% | 33.3% | 14.3% | | Core return on average assets | 0.89% | 0.69% | 0.63% | 29.0% | 41.3% | | Return on average common equity | 8.60% | 7.07% | 8.97% | 21.6% | (4.1)% | | Core return on average common equity | 8.73% | 7.40% | 7.40% | 18.0% | 18.0% | | Net interest margin | 3.16% | 3.03% | 2.67% | 4.3% | 18.4% | | Efficiency ratio | 68.47% | 74.99% | 75.61% | (8.7)% | (9.4)% | | Core efficiency ratio | 67.66% | 73.55% | 79.33% | (8.0)% | (14.7)% | [Asset Quality and Capital Ratios](index=14&type=section&id=Asset%20Quality%20and%20Capital%20Ratios) This section presents key asset quality and regulatory capital ratios for Investar Holding Corporation and Investar Bank, highlighting trends in nonperforming assets, ACL, and capital adequacy Asset Quality Ratios | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter | Year/Year | | :-------------------------------- | :-------- | :-------- | :-------- | :------------- | :-------- | | Nonperforming assets to total assets | 0.44% | 0.48% | 0.32% | (8.3)% | 37.5% | | Nonperforming loans to total loans | 0.36% | 0.36% | 0.19% | — | 89.5% | | Allowance for credit losses to total loans | 1.23% | 1.26% | 1.30% | (2.4)% | (5.4)% | | Allowance for credit losses to nonperforming loans | 344.66% | 355.94% | 682.03% | (3.2)% | (49.5)% | Capital Ratios (Investar Holding Corporation) | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter | Year/Year | | :-------------------------------- | :-------- | :-------- | :-------- | :------------- | :-------- | | Total common equity to total assets | 9.46% | 9.31% | 8.76% | 1.6% | 8.0% | | Tangible common equity to tangible assets | 8.10% | 7.93% | 7.38% | 2.3% | 9.8% | | Tier 1 leverage capital | 10.70% | 9.64% | 8.95% | 11.0% | 19.6% | | Common equity tier 1 capital | 11.13% | 11.28% | 10.33% | (1.3)% | 7.7% | | Tier 1 capital | 12.83% | 11.70% | 10.74% | 9.7% | 19.5% | | Total capital | 14.66% | 13.59% | 13.48% | 7.9% | 8.8% | Capital Ratios (Investar Bank) | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | Linked Quarter | Year/Year | | :-------------------------------- | :-------- | :-------- | :-------- | :------------- | :-------- | | Tier 1 leverage capital | 10.88% | 10.08% | 10.06% | 7.9% | 8.2% | | Common equity tier 1 capital | 13.05% | 12.24% | 12.07% | 6.6% | 8.1% | | Tier 1 capital | 13.05% | 12.24% | 12.07% | 6.6% | 8.1% | | Total capital | 14.17% | 13.40% | 13.26% | 5.7% | 6.9% | [Consolidated Balance Sheets](index=15&type=section&id=Consolidated%20Balance%20Sheets) This section presents Investar Holding Corporation's consolidated balance sheets, detailing assets, liabilities, and stockholders' equity for Q3 2025, Q2 2025, and Q3 2024 Consolidated Balance Sheets (Amounts in thousands) | Category | 9/30/2025 | 6/30/2025 | 9/30/2024 | | :-------------------------------- | :-------- | :-------- | :-------- | | **ASSETS** | | | | | Cash and cash equivalents | $35,373 | $55,224 | $86,340 | | Available for sale securities | 370,251 | 355,708 | 350,646 | | Held to maturity securities | 47,834 | 41,528 | 18,302 | | Loans, net | 2,124,053 | 2,079,735 | 2,127,743 | | Total assets | $2,800,628 | $2,748,065 | $2,802,573 | | **LIABILITIES** | | | | | Total deposits | $2,372,678 | $2,338,185 | $2,287,408 | | Advances from Federal Home Loan Bank | 60,000 | 70,000 | 63,500 | | Borrowings under Bank Term Funding Program | — | — | 109,000 | | Total liabilities | 2,505,333 | 2,492,136 | 2,557,031 | | **STOCKHOLDERS' EQUITY** | | | | | Preferred stock | 30,353 | — | — | | Common stock | 9,826 | 9,840 | 9,828 | | Retained earnings | 146,178 | 141,608 | 127,860 | | Total stockholders' equity | 295,295 | 255,929 | 245,542 | | Total liabilities and stockholders' equity | $2,800,628 | $2,748,065 | $2,802,573 | [Consolidated Statements of Income](index=16&type=section&id=Consolidated%20Statements%20of%20Income) This section provides Investar Holding Corporation's consolidated statements of income, detailing interest income/expense, net interest income, provision for credit losses, noninterest income/expense, and net income for Q3 2025, Q2 2025, and Q3 2024 Consolidated Statements of Income (Amounts in thousands) | Category | 9/30/2025 | 6/30/2025 | 9/30/2024 | | :-------------------------------- | :-------- | :-------- | :-------- | | **INTEREST INCOME** | | | | | Interest and fees on loans | $32,563 | $31,140 | $32,764 | | Total interest income | 37,095 | 35,359 | 36,848 | | **INTEREST EXPENSE** | | | | | Interest on deposits | 14,726 | 14,456 | 15,729 | | Interest on borrowings | 1,216 | 1,259 | 3,263 | | Total interest expense | 15,942 | 15,715 | 18,992 | | Net interest income | 21,153 | 19,644 | 17,856 | | Provision for credit losses | 139 | 141 | (945) | | Net interest income after provision for credit losses | 21,014 | 19,503 | 18,801 | | **NONINTEREST INCOME** | | | | | Service charges on deposit accounts | 832 | 788 | 828 | | Income from legal settlement | — | — | 1,122 | | Total noninterest income | 2,984 | 2,626 | 3,544 | | **NONINTEREST EXPENSE** | | | | | Salaries and employee benefits | 10,302 | 10,257 | 9,982 | | Acquisition expenses | 246 | 182 | — | | Total noninterest expense | 16,526 | 16,700 | 16,180 | | Income before income tax expense | 7,472 | 5,429 | 6,165 | | Income tax expense | 1,293 | 935 | 784 | | Net income | 6,179 | 4,494 | 5,381 | | Preferred stock dividends declared | 528 | — | — | | Net income available to common shareholders | $5,651 | $4,494 | $5,381 | | **EARNINGS PER COMMON SHARE** | | | | | Basic earnings per common share | $0.57 | $0.46 | $0.55 | | Diluted earnings per common share | 0.54 | 0.46 | 0.54 | | Cash dividends declared per common share | 0.11 | 0.11 | 0.105 | [Consolidated Average Balance Sheet, Interest Earned and Yield Analysis](index=17&type=section&id=Consolidated%20Average%20Balance%20Sheet%2C%20Interest%20Earned%20and%20Yield%20Analysis) This section details Investar's average balance sheet, interest earned, and yield analysis for interest-earning assets and interest-bearing liabilities for Q3 2025, Q2 2025, and Q3 2024 Average Balance Sheet, Interest Earned and Yield Analysis (Amounts in thousands) | Category | Average Balance (9/30/2025) | Interest Income/Expense (9/30/2025) | Yield/Rate (9/30/2025) | | :-------------------------------- | :-------------------------- | :---------------------------------- | :--------------------- | | **Assets** | | | | | Loans | $2,141,280 | $32,563 | 6.03% | | Total interest earning assets | 2,659,306 | 37,095 | 5.53% | | Total assets | $2,797,338 | | | | **Liabilities** | | | | | Interest-bearing demand deposits | $836,137 | $4,802 | 2.28% | | Brokered time deposits | 242,224 | 2,842 | 4.66% | | Time deposits | 704,593 | 6,701 | 3.77% | | Total interest bearing deposits | 1,919,377 | 14,726 | 3.04% | | Short-term borrowings | 28,452 | 210 | 2.93% | | Long-term debt | 85,521 | 1,006 | 4.66% | | Total interest bearing liabilities | 2,033,350 | 15,942 | 3.11% | | Noninterest-bearing deposits | 451,029 | | | | Stockholders' equity | 291,173 | | | | Total liability and stockholders' equity | $2,797,338 | | | | Net interest income/net interest margin | | $21,153 | 3.16% | [Reconciliation of Non-GAAP Financial Measures](index=18&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of non-GAAP financial measures to GAAP, including adjustments for interest recoveries, tangible common equity, and core earnings ratios Interest Earned and Yield Analysis Adjusted for Interest Recoveries and Accretion (Amounts in thousands) | Category | Average Balance (9/30/2025) | Adjusted Interest Income (9/30/2025) | Adjusted Yield/Rate (9/30/2025) | | :-------------------------------- | :-------------------------- | :----------------------------------- | :------------------------ | | Loans | $2,141,280 | $32,563 | | | Adjustments: Interest recoveries | | 64 | | | Adjustments: Accretion | | 6 | | | Adjusted loans | 2,141,280 | 32,493 | 6.02% | | Adjusted interest earning assets | 2,659,306 | 37,025 | 5.52% | | Total interest-bearing liabilities | 2,033,350 | 15,942 | 3.11% | | Adjusted net interest income/adjusted net interest margin | | $21,083 | 3.15% | Tangible Common Equity and Tangible Assets (Amounts in thousands) | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | | :-------------------------------- | :-------- | :-------- | :-------- | | Total stockholders' equity | $295,295 | $255,929 | $245,542 | | Less: preferred stock | 30,353 | — | — | | Total common equity | 264,942 | 255,929 | 245,542 | | Less: Goodwill | 40,088 | 40,088 | 40,088 | | Less: Core deposit intangible | 1,115 | 1,239 | 1,656 | | Less: Trademark intangible | 100 | 100 | 100 | | Tangible common equity | $223,639 | $214,502 | $203,698 | | Total assets | $2,800,628 | $2,748,065 | $2,802,573 | | Less: Goodwill | 40,088 | 40,088 | 40,088 | | Less: Core deposit intangible | 1,115 | 1,239 | 1,656 | | Less: Trademark intangible | 100 | 100 | 100 | | Tangible assets | $2,759,325 | $2,706,638 | $2,760,729 | | Tangible common equity to tangible assets | 8.10% | 7.93% | 7.38% | | Book value per common share | $26.96 | $26.01 | $24.98 | | Tangible book value per common share | 22.76 | 21.80 | 20.73 | Reconciliation of Core Earnings and Ratios (Amounts in thousands) | Metric | 9/30/2025 | 6/30/2025 | 9/30/2024 | | :-------------------------------- | :-------- | :-------- | :-------- | | Net interest income | $21,153 | $19,644 | $17,856 | | Total noninterest income | 2,984 | 2,626 | 3,544 | | Adjustments to noninterest income (e.g., legal settlement, insurance proceeds) | (281) | (140) | (1,345) | | Core noninterest income | 2,704 | 2,376 | 2,203 | | Total noninterest expense | 16,526 | 16,700 | 16,180 | | Adjustments to noninterest expense (e.g., OREO write-down, acquisition expense) | (384) | (504) | (267) | | Core noninterest expense | 16,142 | 16,196 | 15,913 | | Core earnings before income tax expense | 7,576 | 5,683 | 5,091 | | Core income tax expense | 1,311 | 977 | 647 | | Core earnings | 6,265 | 4,706 | 4,444 | | Preferred stock dividends declared | 528 | — | — | | Core earnings available to common shareholders | $5,737 | $4,706 | $4,444 | | Core diluted earnings per common share | $0.54 | $0.47 | $0.45 | | Core efficiency ratio | 67.66% | 73.55% | 79.33% | | Core return on average assets | 0.89% | 0.69% | 0.63% | | Core return on average common equity | 8.73% | 7.40% | 7.40% |

NASDAQ: ISTR Q3 2025 Investor Presentation 1 Cautionary Statements (continued) Cautionary Statements Non-GAAP Financial Measures This presentation 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 common equity to tangible assets," "tangible book value per common share," "core noninterest income," "core ea ...

Financial Performance - Investar Holding Corporation reported net income available to common shareholders of $5.7 million, or $0.54 per diluted common share, for Q3 2025, an increase from $4.5 million, or $0.46 per diluted common share, in Q2 2025, and consistent with $5.4 million, or $0.54 per diluted common share, in Q3 2024 [1][6][35] - Core earnings per diluted common share for Q3 2025 were $0.54, up from $0.47 in Q2 2025 and $0.45 in Q3 2024 [2][6] - Net interest margin improved to 3.16%, a 13 basis point increase from 3.03% in Q2 2025 [3][21] Loan and Deposit Growth - Total loans increased by $44.2 million, or 2.1% (8.4% annualized), to $2.15 billion at September 30, 2025, compared to $2.11 billion at June 30, 2025 [4][6][7] - Total deposits rose by $34.5 million, or 1.5%, to $2.37 billion at September 30, 2025, compared to $2.34 billion at June 30, 2025 [14][6] Credit Quality - Nonperforming loans were $7.7 million, or 0.36% of total loans, at September 30, 2025, slightly up from $7.5 million, or 0.36%, at June 30, 2025 [11][12] - The allowance for credit losses was $26.5 million, representing 344.7% of nonperforming loans at September 30, 2025 [12] Acquisition Update - Investar announced the acquisition of Wichita Falls Bancshares, Inc., with the transaction expected to close around January 1, 2026, pending regulatory approvals [5][6] Stockholder Actions - The company repurchased 14,722 shares of common stock at an average price of $21.55 during Q3 2025, below the tangible book value per common share of $22.76 [5][6] - Stockholders' equity increased to $295.3 million at September 30, 2025, up from $255.9 million at June 30, 2025, primarily due to the issuance of Series A Preferred Stock and net income [19][18]

Company Overview - Investar (ISTR) is headquartered in Baton Rouge and operates as a holding company for Investar Bank, currently experiencing a price change of -1.91% this year [3] - The company is paying a dividend of $0.11 per share, resulting in a dividend yield of 2.04%, which is lower than the Southeast banking industry's yield of 2.41% and the S&P 500's yield of 1.52% [3] Dividend Performance - Investar's current annualized dividend of $0.44 represents a 7.3% increase from the previous year [4] - Over the past five years, the company has increased its dividend four times, achieving an average annual increase of 11.29% [4] - The current payout ratio is 20%, indicating that the company pays out 20% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for Investar's earnings in 2025 is $1.93 per share, reflecting a year-over-year earnings growth rate of 2.12% [5] - Future dividend growth is expected to depend on earnings growth and the payout ratio [4] Investment Considerations - Investar is considered a compelling investment opportunity due to its strong dividend performance, despite the general trend of high-yielding stocks struggling during periods of rising interest rates [6] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [6]

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)