Investar (US:ISTR)2025-05-07 20:11Part I Financial Statements (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 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 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 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 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 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 businesses24 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 2021104193 - 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, 2025117119 - Unfunded loan commitments stood at $377.8 million and standby letters of credit were $7.5 million as of March 31, 2025166 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 loans185 Discussion and Analysis of Financial Condition 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 loans197 - 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 million209 - 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 total217219 - 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 million222223 Results of Operations 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 liabilities235 - 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 recur242 - Noninterest expense increased 6.2% to $16.2 million, driven by higher salaries and employee benefits from investments in personnel, particularly in Texas markets244 Risk Management 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 2024265 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 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 liquidity294 - Cash and available funding represent 102% of the $803.7 million in estimated uninsured deposits as of March 31, 2025294 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 share299 Quantitative and Qualitative Disclosures about Market Risk 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 report313 Controls and Procedures 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 effective314 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls315 Part II. Other Information Risk Factors 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 policies317 Unregistered Sales of Equity Securities and Use of Proceeds 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 program321 Exhibits 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