Investar (ISTR) - 2024 Q3 - Quarterly Report

Financial Performance - For the nine months ended September 30, 2024, net income was $14.1 million, or$1.43 per diluted common share, compared to $13.1 million, or$1.33 per diluted common share for the same period in 2023, reflecting a $4.3 million increase in noninterest income[208]. - Net interest income for the nine months ended September 30, 2024 was$52.3 million, a decrease of $3.8 million, or 6.7$56.0 million for the same period in 2023[211]. - Noninterest income for the nine months ended September 30, 2024, rose by $4.3 million, or 89.0$9.0 million, driven by a $1.7 million increase in gains on the sale of fixed assets and$1.1 million from a legal settlement[266]. - Total noninterest expense for the nine months ended September 30, 2024, was $47.0 million, a decrease of$0.2 million, or 0.5%, compared to the same period in 2023[269]. - The effective tax rate for the nine months ended September 30, 2024, was 17.5%, compared to 18.4% for the same period in 2023[271]. Loan and Deposit Activity - Total deposits increased by $31.7 million, or 1.4$2.29 billion at September 30, 2024, compared to $2.26 billion at December 31, 2023[210]. - Total loans decreased by$54.8 million, or 2.5%, to $2.16 billion at September 30, 2024, compared to$2.21 billion at December 31, 2023[211]. - Loans classified as substandard increased to $28.8 million at September 30, 2024, from$12.0 million at December 31, 2023, primarily due to one loan relationship[281]. - Loan commitments increased to $439.0 million as of September 30, 2024, compared to$413.0 million at December 31, 2023[341]. - The company exited the consumer mortgage origination business in Q3 2023 due to decreased volumes and higher credit loss allowances[192]. Interest Income and Expense - Interest income was $108.4 million for the nine months ended September 30, 2024, an increase of$11.9 million from $96.5 million for the same period in 2023[257]. - Interest expense increased by$15.6 million to $56.1 million for the nine months ended September 30, 2024, compared to$40.5 million for the same period in 2023[258]. - The cost of deposits increased 114 basis points to 3.38% for the nine months ended September 30, 2024, compared to 2.24% for the same period in 2023[258]. - The yield on the loan portfolio increased to 5.96% for the nine months ended September 30, 2024, from 5.42% for the same period in 2023[257]. - The overall yield on interest-earning assets increased to 5.45% for the nine months ended September 30, 2024, from 4.94% for the same period in 2023[257]. Credit Quality - Nonperforming loans were 0.19% of total loans at September 30, 2024, compared to 0.26% at December 31, 2023, indicating improved credit quality[209]. - The allowance for credit losses was $28.1 million at September 30, 2024, down from$30.5 million at December 31, 2023[284]. - The total allowance for credit losses as a percentage of total loans was 1.30% as of September 30, 2024, down from 1.38% as of December 31, 2023[290]. - The company recorded a negative provision for credit losses of $0.4 million for the three months ended September 30, 2024, primarily due to net recoveries[285]. - Nonaccrual loans were$4.1 million, or 0.19% of total loans, at September 30, 2024, a decrease of $1.1 million from$5.3 million, or 0.25% of total loans, at September 30, 2023[293]. Capital and Liquidity - Stockholders' equity increased to $245.5 million at September 30, 2024, up by$18.8 million compared to December 31, 2023[242]. - The Bank maintained a Tier 1 leverage capital ratio of 8.95% and a total capital ratio of 13.48% as of September 30, 2024, both exceeding the well-capitalized requirements[334]. - Core deposits funded 64% of total assets at both September 30, 2024, and December 31, 2023, indicating stable liquidity sources[318]. - At September 30, 2024, the bank held $86.3 million in cash and cash equivalents, representing 111$746.6 million[326]. - The company repurchased $8.0 million in principal amount of subordinated debt during the nine months ended September 30, 2024[212]. Strategic Initiatives - The company pivoted its near-term strategy from primarily growth to focusing on consistent, quality earnings through balance sheet optimization[189]. - The company completed the sale of assets, deposits, and liabilities associated with its Alice and Victoria, Texas branch locations, totaling approximately$13.9 million in loans and $14.5 million in deposits[201]. - The company closed five branches in the last three fiscal years, including one in Alabama in Q1 2024, to improve network efficiency[191]. - The company has completed seven whole-bank acquisitions since 2011, with the most recent in April 2021[189]. - The company recorded a$0.2 million write-down of other real estate owned primarily related to a former branch location during the nine months ended September 30, 2024[301].