Financial Performance & Capital Management - Investar Holding Corporation's regulatory common equity tier 1 capital ratio increased to 1085% at December 31, 2024, compared to 951% at December 31, 2023[19] - Book value per common share increased to $2455, or 55%, at December 31, 2024, compared to $2326 at December 31, 2023[19] - Tangible book value per common share increased to $2031, or 73%, at December 31, 2024, compared to $1892 at December 31, 2023[19] - Return on average assets increased to 088% for the fourth quarter of 2024, compared to 077% for the third quarter of 2024[24] - Core return on average assets increased to 093% for the fourth quarter of 2024, compared to 063% for the third quarter of 2024[24] Balance Sheet Optimization & Loan Portfolio - Variable-rate loans as a percentage of total loans was 32% at December 31, 2024[20, 23] - The consumer mortgage portfolio decreased $47 million, or 19%, to $2425 million at December 31, 2024, compared to $2472 million at September 30, 2024[23] - Total loans decreased $308 million, or 14%, to $213 billion at December 31, 2024, compared to $216 billion at September 30, 2024[24, 68] Expense Control & Efficiency - GAAP noninterest expense increased by $04 million, or less than 1%, to $630 million for 2024 compared to $626 million for 2023[19] - Core noninterest expense increased by $10 million, or 17%, to $628 million for 2024 compared to $618 million for 2023[19] - Efficiency ratio improved to 7100% for the fourth quarter of 2024, compared to 7561% for the third quarter of 2024[24]

Company Overview - Investar (ISTR) is headquartered in Baton Rouge and has experienced a price change of -12.3% this year [3] - The company currently pays a dividend of $0.1 per share, resulting in a dividend yield of 2.18%, which is lower than the Banks - Southeast industry's yield of 2.4% and higher than the S&P 500's yield of 1.56% [3] Dividend Performance - Investar's current annualized dividend of $0.42 has increased by 2.4% from the previous year [4] - Over the past five years, Investar has raised its dividend five times, achieving an average annual increase of 12.44% [4] - The company's current payout ratio is 20%, indicating that it pays out 20% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year, Investar anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 projected at $1.95 per share, reflecting a year-over-year growth rate of 3.17% [5] Investment Considerations - Investar is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7]

Part I [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2025 financial statements report net income of **$6.3 million**, driven by a credit loss recovery, with total assets at **$2.73 billion** [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly increased to **$2.73 billion** as of March 31, 2025, with stockholders' equity growing to **$251.7 million** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$2,729,902** | **$2,722,812** | **+0.3%** | | Cash and cash equivalents | $43,522 | $27,922 | +55.9% | | Loans, net | $2,080,196 | $2,098,363 | -0.9% | | Investment securities (AFS & HTM) | $387,996 | $373,808 | +3.8% | | **Total Liabilities** | **$2,478,165** | **$2,481,516** | **-0.1%** | | Total deposits | $2,347,357 | $2,345,944 | +0.1% | | Advances from FHLB | $60,000 | $67,215 | -10.7% | | **Total Stockholders' Equity** | **$251,737** | **$241,296** | **+4.3%** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q1 2025 rose to **$6.3 million**, primarily due to a negative provision for credit losses and increased net interest income Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $18,345 | $17,216 | +6.6% | | Provision for credit losses | $(3,596) | $(1,419) | -153.4% | | Noninterest Income | $2,011 | $2,748 | -26.8% | | Noninterest Expense | $16,238 | $15,296 | +6.2% | | **Net Income** | **$6,293** | **$4,707** | **+33.7%** | | **Diluted EPS** | **$0.63** | **$0.48** | **+31.3%** | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income significantly increased to **$11.8 million** in Q1 2025, driven by higher net income and positive other comprehensive income Comprehensive Income (in thousands) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $6,293 | $4,707 | | Other comprehensive income (loss), net of tax | $5,478 | $(3,810) | | **Total Comprehensive Income** | **$11,771** | **$897** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw **$15.7 million** net cash from investing activities, resulting in a **$15.6 million** increase in cash and equivalents to **$43.5 million** Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,478 | $7,830 | | Net cash provided by investing activities | $15,675 | $35,895 | | Net cash used in financing activities | $(4,553) | $(33,889) | | **Net change in cash and cash equivalents** | **$15,600** | **$9,836** | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail accounting policies, financial instruments, and operations, showing a loan portfolio decrease to **$2.11 billion** and strong capital ratios - The company operates as a financial holding company with **29 full-service branches** across Louisiana, Texas, and Alabama, serving individuals and small to medium-sized businesses[24](index=24&type=chunk) Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Construction and development | $149,275 | $154,553 | | 1-4 Family | $394,735 | $396,815 | | Commercial real estate | $931,868 | $944,548 | | Commercial and industrial | $510,765 | $526,928 | | Other | $16,740 | $17,664 | | **Total Loans** | **$2,106,631** | **$2,125,084** | Allowance for Credit Losses (ACL) Activity (in thousands) | Description | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Beginning Balance | $26,721 | $30,540 | | Provision for credit losses on loans | $(3,695) | $(1,411) | | Charge-offs | $(127) | $(103) | | Recoveries | $3,536 | $88 | | **Ending Balance** | **$26,435** | **$29,114** | - The negative provision for credit losses in Q1 2025 was primarily due to a **$3.3 million** recovery from a property insurance settlement related to a loan impaired by Hurricane Ida in 2021[104](index=104&type=chunk)[193](index=193&type=chunk) - The company engages in customer-related interest rate swaps, with notional amounts of **$183.3 million** in contracts with customers and an equal offsetting amount with other financial institutions as of March 31, 2025[117](index=117&type=chunk)[119](index=119&type=chunk) - Unfunded loan commitments stood at **$377.8 million** and standby letters of credit were **$7.5 million** as of March 31, 2025[166](index=166&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q1 2025 performance to a **$3.6 million** negative credit loss provision, with net interest margin expanding to **2.87%** and improved credit quality [Overview of Financial Condition and Results of Operations](index=48&type=section&id=Overview%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2025 net income was **$6.3 million** ($0.63/share), driven by a **$3.6 million** negative credit loss provision and improved net interest margin Key Performance Metrics - Q1 2025 vs Q1 2024 (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (millions) | $6.3 | $4.7 | | Diluted EPS | $0.63 | $0.48 | | Net Interest Margin | 2.87% | 2.59% | | Return on Average Assets | 0.94% | 0.68% | | Return on Average Equity | 10.31% | 8.28% | | Nonperforming loans to total loans | 0.27% | 0.26% | - The company's strategy has pivoted from growth to focusing on consistent, quality earnings by optimizing the balance sheet and originating high-quality variable-rate loans[185](index=185&type=chunk) [Discussion and Analysis of Financial Condition](index=49&type=section&id=Discussion%20and%20Analysis%20of%20Financial%20Condition) As of March 31, 2025, financial condition reflects an optimization strategy with decreased loans, increased investment securities, and stable deposits - Total loans decreased by **$18.5 million** (**0.9%**) to **$2.11 billion** at March 31, 2025, reflecting a strategy to emphasize high-margin loans[197](index=197&type=chunk) - Investment securities increased by **$14.2 million** to **$388.0 million**, while net unrealized losses in the AFS portfolio decreased from **$61.4 million** to **$54.5 million**[209](index=209&type=chunk) - Total deposits increased by **$1.4 million**, with core deposits growing by **$48.7 million** excluding brokered demand deposits runoff, and uninsured deposits at approximately **34%** of total[217](index=217&type=chunk)[219](index=219&type=chunk) - The company fully repaid all borrowings under the Bank Term Funding Program (BTFP) in Q4 2024, and total FHLB advances decreased to **$60.0 million** from **$67.2 million**[222](index=222&type=chunk)[223](index=223&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Q1 2025 net interest income rose **6.6%** to **$18.3 million**, with net interest margin expanding to **2.87%** due to lower funding costs Net Interest Margin Analysis (in millions, except average assets in billions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income (millions) | $18.3 | $17.2 | | Average Interest-Earning Assets (billions) | $2.59 | $2.67 | | Yield on Interest-Earning Assets | 5.39% | 5.38% | | Cost of Interest-Bearing Liabilities | 3.22% | 3.51% | | **Net Interest Margin** | **2.87%** | **2.59%** | - The increase in net interest margin was primarily driven by a **29 basis point** decrease in the cost of interest-bearing liabilities[235](index=235&type=chunk) - Noninterest income decreased by **26.8%** to **$2.0 million**, mainly due to a **$0.4 million** gain on the sale of a branch in the prior-year period that did not recur[242](index=242&type=chunk) - Noninterest expense increased **6.2%** to **$16.2 million**, driven by higher salaries and employee benefits from investments in personnel, particularly in Texas markets[244](index=244&type=chunk) [Risk Management](index=59&type=section&id=Risk%20Management) The company actively manages credit, interest rate, and liquidity risks, showing improved credit quality with nonperforming loans at **0.27%** and strong interest rate risk management Credit Quality Metrics (in thousands) | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Nonaccrual loans | $5,585k | $8,824k | | Nonaccrual loans to total loans | 0.27% | 0.42% | | ACL to total loans | 1.25% | 1.26% | | ACL to nonaccrual loans | 473.3% | 302.8% | - Net recoveries were **$3.4 million** in Q1 2025, primarily due to a settlement related to a loan impaired by Hurricane Ida, compared to net charge-offs of **$15,000** in Q1 2024[265](index=265&type=chunk) Interest Rate Sensitivity Analysis (as of March 31, 2025) | Rate Shock (basis points) | Estimated Change in Net Interest Income | | :--- | :--- | | +200 | -1.6% | | +100 | -0.5% | | -100 | +0.8% | | -200 | +0.9% | [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and capital, with available funding sources exceeding uninsured deposits and all capital ratios well above regulatory minimums - At March 31, 2025, the company had **$43.5 million** in cash, **$712.5 million** in available FHLB credit, and **$60.0 million** in unsecured lines of credit, providing ample liquidity[294](index=294&type=chunk) - Cash and available funding represent **102%** of the **$803.7 million** in estimated uninsured deposits as of March 31, 2025[294](index=294&type=chunk) Regulatory Capital Ratios (Investar Bank) | Ratio | March 31, 2025 | Well-Capitalized Minimum | | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 10.03% | 5.00% | | Common Equity Tier 1 Capital Ratio | 12.14% | 6.50% | | Tier 1 Capital Ratio | 12.14% | 8.00% | | Total Capital Ratio | 13.29% | 10.00% | - During Q1 2025, the company repurchased **34,992 shares** for **$0.6 million** and declared dividends of **$0.105 per share**[299](index=299&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes in market risk have occurred since December 31, 2024, beyond those discussed in the MD&A section of this report - There have been no material changes in the Company's market risk since December 31, 2024, other than those discussed in the MD&A section of this report[313](index=313&type=chunk) [Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures are effective[314](index=314&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[315](index=315&type=chunk) Part II. Other Information [Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the Annual Report, but heightened risks from changing U.S. trade and tariff policies are noted - There have been no material changes in risk factors from the Annual Report, but the company notes heightened risks from changing U.S. trade and tariff policies[317](index=317&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **34,992 shares** of its common stock under a publicly announced plan, with **460,653 shares** remaining authorized Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased Under Plan | | :--- | :--- | :--- | :--- | | Jan 2025 | 3,500 | $19.18 | 3,500 | | Feb 2025 | 19,805 | $18.82 | 19,492 | | Mar 2025 | 43,167 | $17.95 | 12,000 | | **Total** | **66,472** | **$18.27** | **34,992** | - As of March 31, 2025, **460,653 shares** remained available for repurchase under the company's stock repurchase program[321](index=321&type=chunk) [Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL data files, incorporating previously filed documents by reference Signatures

Core Viewpoint - Investar (ISTR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements [4][6]. - For the fiscal year ending December 2025, Investar is expected to earn $1.95 per share, reflecting a 3.2% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Investar has increased by 6.6%, indicating a positive trend in earnings expectations [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Investar to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yie ...

For the quarter ended March 2025, Investar (ISTR) reported revenue of $20.36 million, up 2% over the same period last year. EPS came in at $0.64, compared to $0.43 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $20.1 million, representing a surprise of +1.30%. The company delivered an EPS surprise of +82.86%, with the consensus EPS estimate being $0.35.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expect ...

Core Viewpoint - Investar (ISTR) reported quarterly earnings of $0.64 per share, significantly exceeding the Zacks Consensus Estimate of $0.35 per share, marking an earnings surprise of 82.86% [1][2] Financial Performance - The company achieved revenues of $20.36 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.30% and showing an increase from $19.96 million year-over-year [2] - Over the last four quarters, Investar has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Performance - Investar shares have declined approximately 26.2% since the beginning of the year, compared to a decline of 10.2% for the S&P 500 [3] - The current Zacks Rank for Investar is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $20.9 million, and for the current fiscal year, it is $1.65 on revenues of $85.13 million [7] - The trend of estimate revisions for Investar is mixed, which may change following the recent earnings report [6] Industry Context - The Banks - Southeast industry, to which Investar belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Investar reported net income of $6.3 million, or $0.63 per diluted common share, for Q1 2025, an increase from $6.1 million, or $0.61 per diluted common share, in Q4 2024[2] - Net income rose by 3.0% year-over-year to $6,293 million, with diluted earnings per share increasing by 3.3% to $0.63[47] - Net interest income for Q1 2025 was $18.3 million, an increase of $1.1 million, or 6.6%, compared to Q1 2024[23] - Net interest income after provision for credit losses increased to $21,941 thousand, up 20.5% from $18,184 thousand in the previous quarter[55] - Core earnings for the quarter ended March 31, 2025, were $6,354 million, slightly down from $6,463 million in the previous quarter, reflecting a decrease of 1.7%[63] Asset Quality - Nonperforming loans represented only 0.27% of total loans at March 31, 2025, down from 0.42% at December 31, 2024[9] - Nonperforming assets to total assets improved to 0.43%, down from 0.52% in the previous quarter, reflecting better asset quality[50] - Provision for credit losses significantly increased by 413.0% year-over-year to $(3,596) million, indicating a substantial rise in expected credit losses[47] - The provision for credit losses was $3,596 thousand, significantly higher than $701 thousand in the previous quarter, indicating increased risk management measures[55] Capital and Equity - Investar's regulatory common equity tier 1 capital ratio increased to 11.16% at March 31, 2025, compared to 10.84% at December 31, 2024[9] - Total stockholders' equity increased to $251.7 million at March 31, 2025, up $24.7 million compared to March 31, 2024, primarily due to net income and an increase in the fair value of available-for-sale securities[22] - Total stockholders' equity increased to $251,737 million as of March 31, 2025, up from $241,296 million in December 31, 2024, representing a growth of 6.0%[61] - Tangible common equity increased to $210,179 million as of March 31, 2025, from $199,600 million in December 31, 2024, marking a growth of 5.9%[61] Deposits and Loans - Total loans decreased by $18.5 million, or 0.9%, to $2.11 billion at March 31, 2025, compared to $2.13 billion at December 31, 2024[9] - Total deposits increased by $1.4 million, or 0.1%, to $2.35 billion at March 31, 2025, compared to $2.35 billion at December 31, 2024[9] - Total deposits as of March 31, 2025, were $2.35 billion, an increase of $139.5 million, or 6.3%, compared to $2.21 billion at March 31, 2024[19] Interest Income and Margin - The net interest margin improved by 22 basis points to 2.87% in Q1 2025, compared to 2.65% in Q4 2024[8] - The yield on interest-earning assets was 5.39% for Q1 2025, compared to 5.38% for Q4 2024, reflecting a slight increase in the yield on the loan portfolio[25] - Total interest income decreased by 3.0% year-over-year to $34,434 million, while net interest income increased by 4.9% to $18,345 million[47] Expenses - Noninterest expense for Q1 2025 was $16.2 million, an increase of $0.9 million, or 6.2%, compared to Q1 2024[33] - Total noninterest expense rose to $16,238 thousand, compared to $16,079 thousand in the previous quarter, reflecting an increase in salaries and employee benefits[55] - Noninterest income for Q1 2025 totaled $2.0 million, a decrease of $3.2 million, or 61.0%, compared to Q4 2024[30] Efficiency and Ratios - The efficiency ratio increased to 79.77%, up from 71.00% in the previous quarter, indicating a decline in operational efficiency[48] - Return on average assets improved to 0.94%, up from 0.88% in the previous quarter, showing enhanced profitability[47] - Core return on average assets for the quarter ended March 31, 2025, was 0.95%, slightly up from 0.93% in the previous quarter[63] Shareholder Actions - Investar repurchased 34,992 shares of its common stock during Q1 2025, leaving 460,653 shares authorized for repurchase[9] - The company declared cash dividends of $0.105 per common share, consistent with the previous quarter[55] Strategic Focus - The company aims to pivot from a growth strategy to a focus on consistent, quality earnings through balance sheet optimization[42] - The company is subject to various risks, including changes in economic conditions, regulatory requirements, and potential impacts from geopolitical tensions[42]

Interest Rates and Economic Impact - The Federal Reserve raised target interest rates by a cumulative 525 basis points from March 2022 to July 2023, impacting credit costs and capital availability [111]. - The cost of interest-bearing deposits increased to 3.38% in 2024 from 2.49% in 2023 and 0.42% in 2022, putting pressure on net interest margin [117]. - Inflation has remained elevated compared to the Federal Reserve's target rate of 2%, affecting borrowers' repayment abilities and increasing operating costs [125]. - Economic uncertainty and geopolitical tensions may lead to higher loan delinquencies and a decline in demand for products and services [113]. Credit Losses and Provisions - The allowance for credit losses may prove insufficient, necessitating further increases in provisions for credit losses due to the adoption of the CECL standard [127]. - An increase in nonperforming assets could adversely impact net interest income and necessitate further increases to the allowance for credit losses [120]. - The allowance for credit losses (ACL) was $26,721,000 as of December 31, 2024, reflecting management's best estimate of expected credit losses in the loan portfolio [468]. - The ACL consists of loss allocations on pools of loans with similar risk characteristics and individual loans that do not share similar risk characteristics [468]. - The Company maintains the ACL at an amount believed to be a current estimate of expected credit losses for the full life of relevant loan pools [513]. Financial Performance - Net income for 2024 was $20,252 thousand, up from $16,678 thousand in 2023, representing a growth of 21.0% [477]. - Total interest income increased to $143,865 thousand in 2024, compared to $133,201 thousand in 2023, reflecting an increase of 8.0% [477]. - Net interest income after provision for credit losses was $73,233 thousand in 2024, down from $76,520 thousand in 2023, a decrease of 4.8% [477]. - Noninterest income grew significantly to $14,205 thousand in 2024, compared to $6,538 thousand in 2023, an increase of 117.9% [477]. - Total stockholders' equity increased to $241,296 thousand in 2024 from $226,768 thousand in 2023, a growth of 6.4% [474]. Deposits and Loans - Total deposits rose to $2,345,944 thousand in 2024, up from $2,255,727 thousand in 2023, an increase of 4.0% [474]. - Approximately 75% of the total loan portfolio is secured by real estate, which poses risks if the real estate market declines [144]. - Commercial and industrial loans represented 24.8% of total loans as of December 31, 2024, reflecting an increase from 20.7% in 2022 [149]. - The company experienced a net increase in loans of $83,283,000 in 2024, compared to an increase of $41,999,000 in 2023 [488]. Regulatory and Compliance Risks - The company is subject to extensive federal and state banking regulations, which may increase operational costs and limit growth opportunities, potentially impacting profitability [174]. - The company faces risks related to compliance with anti-money laundering regulations, which could result in significant penalties and affect business operations [177]. - Regulatory scrutiny of third-party vendor relationships is increasing, which may lead to higher costs and potential enforcement actions if oversight is deemed inadequate [182]. Strategic Initiatives and Market Position - The company has shifted its near-term strategy from primarily growth to focusing on consistent, quality earnings through balance sheet optimization, which may not successfully increase profitability [133]. - The company has completed seven whole-bank acquisitions since 2011 and continues to pursue acquisition opportunities while managing growth effectively [135]. - The company faces intense competition from larger financial institutions, which may adversely affect its profitability and long-term growth [164]. - The company may face challenges from fintech innovations that could disrupt traditional banking practices, necessitating adaptation to maintain customer retention and acquisition [180]. Asset Management and Valuation - Gross unrealized losses in the AFS investment securities portfolio totaled $61.7 million at December 31, 2024, compared to $57.7 million at December 31, 2023 [118]. - The company’s investment securities portfolio may incur losses due to market conditions, including fluctuations in interest rates and credit deterioration, which could negatively impact future results of operations [167]. - The Company has not recognized any impairment charges on goodwill and other intangible assets through December 31, 2024 [529]. Operational Challenges - The company is exposed to significant fraud risks, including identity theft and account takeover, which have increased in sophistication and frequency in recent years [168]. - The company’s reliance on third-party vendors for information technology and telecommunications systems poses risks if these vendors fail to deliver services effectively [157]. - The company’s operations are concentrated in regions susceptible to natural disasters, which can disrupt business and adversely affect financial performance [154]. Internal Controls and Audit - Management's assessment of internal control over financial reporting concluded that the system is effective as of December 31, 2024 [452]. - The independent auditor expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2024 [455]. - The audit identified the ACL as a critical audit matter due to the significant judgment required in estimating credit losses [470].

Financial Performance - Investar reported net income of $6.1 million, or $0.61 per diluted common share, for Q4 2024, an increase from $5.4 million, or $0.54 per share, in Q3 2024, and $3.5 million, or $0.36 per share, in Q4 2023[2]. - Core earnings per diluted common share for Q4 2024 were $0.65, up from $0.45 in Q3 2024 and $0.39 in Q4 2023, benefiting from $3.1 million in nontaxable noninterest income from BOLI[3]. - Net income for Q4 2024 was $6.107 million, reflecting a 13.5% increase from $5.381 million in Q3 2024 and a 72.6% increase from $3.538 million in Q4 2023[46]. - Basic earnings per common share increased to $0.62 from $0.36 year-over-year, reflecting a 72.2% growth[55]. - Core basic earnings per common share for Q4 2024 were $0.66, up 46.7% from $0.45 in Q3 2024 and up 69.2% from $0.39 in Q4 2023[46]. Asset and Liability Management - Total loans decreased by $30.8 million, or 1.4%, to $2.13 billion at December 31, 2024, compared to $2.16 billion at September 30, 2024[8]. - Total assets as of December 31, 2024, were $2,763 million, a decrease of 1.2% from $2,797 million in Q3 2024 and a decrease of 1.9% from $2,817 million in Q4 2023[46]. - Total interest-earning assets decreased to $2,626,533 thousand with a net interest income of $35,505 thousand, yielding 5.38% for the three months ended December 31, 2024[58]. - Total interest-bearing liabilities amounted to $2,054,561 thousand with a net interest margin of 2.65%[58]. Deposits and Equity - Total deposits increased by $58.5 million, or 2.6%, to $2.35 billion at December 31, 2024, compared to $2.29 billion at September 30, 2024[16]. - Stockholders' equity was $241.3 million at December 31, 2024, a decrease of $4.2 million or 1.7% from September 30, 2024, but an increase of $14.5 million or 6.4% from December 31, 2023[20]. - Total deposits increased to $2,345.9 million at December 31, 2024, up $58.5 million or 2.6% from September 30, 2024, and up $90.2 million or 4.0% from December 31, 2023[18]. Income and Expenses - Net interest income for Q4 2024 totaled $17.5 million, a decrease of $0.4 million or 2.1% from Q3 2024, and a decrease of $1.0 million or 5.5% from Q4 2023[22]. - Noninterest income for Q4 2024 was $5.2 million, an increase of $1.6 million or 45.7% from Q3 2024, and an increase of $3.4 million or 194.2% from Q4 2023[29]. - Noninterest expense for Q4 2024 totaled $16.1 million, a decrease of $0.1 million or 0.6% from Q3 2024, and an increase of $0.6 million or 4.1% from Q4 2023[32]. Efficiency and Ratios - The efficiency ratio improved to 71.00% for Q4 2024, compared to 75.61% for Q3 2024, with a core efficiency ratio of 69.41%[7]. - The return on average assets increased to 0.88% in Q4 2024, up from 0.77% in Q3 2024 and 0.50% in Q4 2023[46]. - The tangible common equity ratio improved to 7.44% as of December 31, 2024, compared to 6.65% a year earlier[63]. Credit Quality - Nonperforming loans represented 0.42% of total loans at December 31, 2024, an increase from 0.19% at September 30, 2024[5]. - The allowance for credit losses was $26.7 million, or 302.8% of nonperforming loans, at December 31, 2024, down from $28.1 million at September 30, 2024[14]. - Nonperforming assets to total assets increased to 0.52% from 0.32% quarter-over-quarter, representing a 62.5% increase year-over-year[49]. Strategic Direction - The company plans to pivot from a growth strategy to a focus on consistent, quality earnings through balance sheet optimization[41].