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What changed in Investar Holding Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Investar Holding Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+691 added−723 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-07)

Top changes in Investar Holding Corp's 2024 10-K

691 paragraphs added · 723 removed · 571 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

52 edited+1 added−5 removed60 unchanged
Biggest changeGovernance The Board of Directors is responsible for oversight of risks from cybersecurity threats. Oversight of cybersecurity risk management is performed primarily by the Board of Directors and the IT Committee. The IT Committee consists of members of the Board of Directors and key members of management.
Biggest changeOf the IT Committee members who are not Board members, only our CIO and CISO are responsible for assessing and managing cybersecurity risks, and the other committee members are responsible for oversight.
In particular, our board may issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the board; • enable our board of directors to increase the size of the board and fill the vacancies created by the increase; • enable our board of directors to amend our by-laws without shareholder approval; • require advance notice for director nominations and other shareholder proposals; and • require prior regulatory application and approval of any transaction involving control of our organization.
In particular, our Board may issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the Board; • enable our Board to increase the size of the Board and fill the vacancies created by the increase; • enable our Board to amend our by-laws without shareholder approval; • require advance notice for director nominations and other shareholder proposals; and • require prior regulatory application and approval of any transaction involving control of our organization.
As a result, if our regulators conclude that we have not exercised adequate oversight and control over our third-party vendors or other ongoing third-party business relationships or that such third parties have not performed appropriately, we could be subject to enforcement actions, including civil money penalties or other administrative or judicial penalties or fines as well as requirements for customer remediation, any of which could have a material adverse effect our business, financial condition or results of operations. 25 Table of Contents Risks Related to an Investment in our Common Stock The market price of our common stock may be volatile, which may make it difficult for investors to sell their shares at the volume, prices and times desired.
As a result, if our regulators conclude that we have not exercised adequate oversight and control over our third-party vendors or other ongoing third-party business relationships or that such third parties have not performed appropriately, we could be subject to enforcement actions, including civil money penalties or other administrative or judicial penalties or fines as well as requirements for customer remediation, any of which could have a material adverse effect our business, financial condition or results of operations. 27 Table of Contents Risks Related to an Investment in our Common Stock The market price of our common stock may be volatile, which may make it difficult for investors to sell their shares at the volume, prices and times desired.
Holders of our common stock are entitled to receive only such cash dividends as our board of directors may declare out of funds legally available for the payment of dividends. We have no obligation to continue paying dividends, and we may change our dividend policy at any time without notice to our shareholders.
Holders of our common stock are entitled to receive only such cash dividends as our Board may declare out of funds legally available for the payment of dividends. We have no obligation to continue paying dividends, and we may change our dividend policy at any time without notice to our shareholders.
In addition, the ability of our board of directors to issue shares of preferred stock without any action on the part of our shareholders may impede a takeover of us and prevent a transaction perceived to be favorable to our shareholders. An investment in our common stock is not an insured deposit and is subject to risk of loss.
In addition, the ability of our Board to issue shares of preferred stock without any action on the part of our shareholders may impede a takeover of us and prevent a transaction perceived to be favorable to our shareholders. An investment in our common stock is not an insured deposit and is subject to risk of loss.
Dividend Policy The Company has paid a quarterly dividend since 2011 and intends to continue to declare dividends on a quarterly basis. The declaration of dividends is at the discretion of our board of directors and will depend on our financial performance, future prospects, regulatory requirements and other factors deemed relevant by the board of directors.
Dividend Policy The Company has paid a quarterly dividend since 2011 and intends to continue to declare dividends on a quarterly basis. The declaration of dividends is at the discretion of our Board and will depend on our financial performance, future prospects, regulatory requirements and other factors deemed relevant by the Board.
Accordingly, any declaration and payment of dividends on common stock will substantially depend upon the Bank’s earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate and other factors deemed relevant by our board of directors.
Accordingly, any declaration and payment of dividends on common stock will substantially depend upon the Bank’s earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate and other factors deemed relevant by our Board.
In addition, there are numerous laws and banking regulations that limit our and Investar Bank’s ability to pay dividends. For further discussion of the regulatory restrictions on our ability to pay dividends, see Item 1. Business – Supervision and Regulation – Dividends.
In addition, there are numerous laws and banking regulations that limit our and the Bank’s ability to pay dividends. For further discussion of the regulatory restrictions on our ability to pay dividends, see Item 1. Business – Supervision and Regulation – Dividends.
Since we are a holding company with no material business activities, our ability to pay dividends is substantially dependent upon the ability of Investar Bank to transfer funds to us in the form of dividends, loans and advances.
Since we are a holding company with no material business activities, our ability to pay dividends is substantially dependent upon the ability of the Bank to transfer funds to us in the form of dividends, loans and advances.
The deposits of Investar Bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments. We are generally unable to control the amount of premiums that we are required to pay for FDIC deposit insurance.
The deposits of the Bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments. We are generally unable to control the amount of premiums that we are required to pay for FDIC deposit insurance.
Generally, a Louisiana corporation may pay dividends to its shareholders unless, after giving effect to the dividend, either (1) the corporation would not be able to pay its debts as they come due in the usual course of business or (2) the corporations’ total assets are less than the sum of its total liabilities and the amount that would be needed, if the corporation were to be dissolved at the time of the payment of the dividend, to satisfy the preferential rights of shareholders whose preferential rights are superior to those receiving the dividend.
Generally, a Louisiana corporation may pay dividends to its shareholders unless, after giving effect to the dividend, either (1) the corporation would not be able to pay its debts as they come due in the usual course of business or (2) the corporation’s total assets are less than the sum of its total liabilities and the amount that would be needed, if the corporation were to be dissolved at the time of the payment of the dividend, to satisfy the preferential rights of shareholders whose preferential rights are superior to those receiving the dividend.
Since the Company’s primary asset is its stock of Investar Bank, we are dependent upon dividends from the Bank to pay our operating expenses, satisfy our obligations and to pay dividends on the Company’s common stock.
Since the Company’s primary asset is its stock of the Bank, we are dependent upon dividends from the Bank to pay our operating expenses, satisfy our obligations and to pay dividends on the Company’s common stock.
In the future, we may issue additional shares of common stock to raise capital for growth or as consideration in acquisition transactions or for other purposes, and such shares may be registered under the Securities Act and freely tradable or may be issued in a private placement and registered for resale under the Securities Act. 26 Table of Contents Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.
In the future, we may issue additional shares of common stock to raise capital for growth or as consideration in acquisition transactions or for other purposes, and such shares may be registered under the Securities Act and freely tradable or may be issued in a private placement and registered for resale under the Securities Act. 28 Table of Contents Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.
We are not presently party to, and none of our property is the subject of, any legal proceedings, the resolution of which we believe would have a material adverse effect on our business, financial condition, results of operations, cash flows, growth prospects or capital levels, nor were any such proceedings terminated during the fourth quarter of 2023. Item 4.
We are not presently party to, and none of our property is the subject of, any legal proceedings, the resolution of which we believe would have a material adverse effect on our business, financial condition, results of operations, cash flows, growth prospects or capital levels, nor were any such proceedings terminated during the fourth quarter of 2024. Item 4.
These provisions, and the corporate and banking laws and regulations applicable to us: • enable our board of directors to issue additional shares of authorized, but unissued capital stock.
These provisions, and the corporate and banking laws and regulations applicable to us: • enable our Board to issue additional shares of authorized, but unissued capital stock.
Any of these results could materially and adversely affect our business, financial condition, results of operations and growth prospects. 24 Table of Contents In addition, bank regulatory agencies consider the effectiveness of a financial institution’s anti-money laundering activities and other regulatory compliance matters when reviewing bank mergers and bank holding company acquisitions.
Any of these results could materially and adversely affect our business, financial condition, results of operations and growth prospects. 26 Table of Contents In addition, bank regulatory agencies consider the effectiveness of a financial institution’s anti-money laundering activities and other regulatory compliance matters when reviewing bank mergers and bank holding company acquisitions.
Our shareholders authorized our board of directors to issue up to 5,000,000 shares of preferred stock without any further action on the part of our shareholders.
Our shareholders authorized our Board to issue up to 5,000,000 shares of preferred stock without any further action on the part of our shareholders.
These restrictions do not, and are not expected in the future to, materially limit the Company’s ability to pay dividends to its shareholders in an amount consistent with the Company’s history of paying dividends. 29 Table of Contents Stock Performance Graph The above graph compares the cumulative total shareholder return on the Company’s common stock over a measurement period beginning at the market close on the last trading day of 2018, with (i) the cumulative total return on the stocks included in the Russell 3000 Index and (ii) the cumulative total return on the stocks included in the S&P United States SmallCap Banks Index, which includes banks with market capitalizations of $250 million to $1 billion.
These restrictions do not, and are not expected in the future to, materially limit the Company’s ability to pay dividends to its shareholders in an amount consistent with the Company’s history of paying dividends. 31 Table of Contents Stock Performance Graph The above graph compares the cumulative total shareholder return on the Company’s common stock over a measurement period beginning at the market close on the last trading day of 2019, with (i) the cumulative total return on the stocks included in the Russell 3000 Index and (ii) the cumulative total return on the stocks included in the S&P United States SmallCap Banks Index, which includes banks with market capitalizations of $250 million to $1 billion.
Information technology staff are generally subject to professional education, experience, and certification requirements, and receive education and mentoring from the CISO and CIO. 28 Table of Contents Item 2. Properties Our main office, which serves as our executive and operations center, is located at 10500 Coursey Boulevard in Baton Rouge, Louisiana. In addition, we operate 28 full-service branches.
Information technology staff are generally subject to professional education, experience, and certification requirements, and receive education and mentoring from the CISO and CIO. 30 Table of Contents Item 2. Properties Our main office, which serves as our executive and operations center, is located at 10500 Coursey Boulevard in Baton Rouge, Louisiana. In addition, we operate 29 full-service branches.
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. 30 Table of Contents Unregistered Sales of Equity Securities Not applicable.
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. 32 Table of Contents Unregistered Sales of Equity Securities Not applicable.
The Enterprise Risk Committee includes members of management from various departments and members of the Board of Directors and oversees the overall risk management of the Company.
The Enterprise Risk Committee includes members of management from various departments and members of the Board and oversees the overall risk management of the Company.
The performance graph assumes that the value of the investment in our common stock, the Russell 3000 Index and the S&P United States SmallCap Banks Index was $100 at December 31, 2018 and that all dividends were reinvested.
The performance graph assumes that the value of the investment in our common stock, the Russell 3000 Index and the S&P United States SmallCap Banks Index was $100 at December 31, 2019 and that all dividends were reinvested.
The policy is reviewed and approved by the Board of Directors annually. • The Enterprise Information Security Risk Assessment quantifies risk criteria utilizing the same impact measures, including financial, strategic, operational, and reputational, set forth by the Enterprise Risk Committee. The risk assessment is reviewed and approved by the B oard of Directors annually.
The policy is reviewed and approved by the Board annually. • The Enterprise Information Security Risk Assessment quantifies risk criteria utilizing the same impact measures, including financial, strategic, operational, and reputational, set forth by the Enterprise Risk Committee. The risk assessment is reviewed and approved by the B oard annually.
Each tract of land has been designated as either a future branch or stand-alone ITM location. The timing of the development of these tracts of land is uncertain. Item 3. Legal Proceedings From time to time we are party to ordinary routine litigation matters incidental to the conduct of our business.
Ea ch tract of land has been designated as either a future branch or stand-alone ITM location. The timing of the development of these tracts of land is uncertain. Item 3. Legal Proceedings From time to time we are party to ordinary routine litigation matters incidental to the conduct of our business.
These forward-looking statements include statements relating to our projected growth, anticipated future financial performance, changes in our allowance for credit losses including due to the adoption of ASU 2016-13, anticipated future credit quality and our potential ability to achieve performance and strategic goals, as well as statements relating to the anticipated effects of these factors on our business, financial condition and results of operations.
These forward-looking statements include statements relating to our projected growth, anticipated future financial performance, changes in our ACL including due to the adoption of ASU 2016-13, anticipated future credit quality and our potential ability to achieve performance and strategic goals, as well as statements relating to the anticipated effects of these factors on our business, financial condition and results of operations.
As a result, an investor may lose some or all of his or her investment in our common stock. Item 1B. Unresolved Staff Comments Not applicable. 27 Table of Contents Item 1C. Cybersecurity Risk Management and Strategy As a financial institution, we believe that the risk of cybersecurity incidents is a significant, increasing, and always evolving risk for our business.
As a result, an investor may lose some or all of his or her investment in our common stock. Item 1B. Unresolved Staff Comments None. 29 Table of Contents Item 1C. Cybersecurity Risk Management and Strategy As a financial institution, we believe that the risk of cybersecurity incidents is a significant, increasing, and always evolving risk for our business.
We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future. We also own a tract of land in each of the following Louisiana parishes: East Baton Rouge Parish; St. Mary Parish; and Ascension Parish.
We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future. We also own a tract of land in each of the following Louisiana parishe s: East Baton Rouge Parish and St. Mary Parish.
In addition, the OCC’s assessment of our compliance with the Community Reinvestment Act (“CRA”) is taken into account when evaluating any application we submit for, among other things, approval of the acquisition or establishment of a branch or other deposit facility, an office relocation, a merger or the acquisition of another financial institution.
In addition, the OCC’s assessment of our compliance with the CRA is taken into account when evaluating any application we submit for, among other things, approval of the acquisition or establishment of a branch or other deposit facility, an office relocation, a merger or the acquisition of another financial institution.
This effort includes the review of service organization controls reports, business continuity and disaster recovery efforts, insurance certificates, and other compliance related concerns when applicable. During the last three years we h ave not experienced any cybersecurity incidents that have materially affected our Company, including our business, strategy, results of operations or financial condition.
This effort includes the review of service organization controls reports, business continuity and disaster recovery efforts, insurance certificates, and other compliance related concerns when applicable. We have not experienced any cybersecurity incidents that have materially affected our Company, including our business, strategy, results of operations or financial condition.
The Enterprise Risk Committee meets as often as appropriate to perform its responsibilities, but no less than once per calendar quarter and reports findings and provides recommendations to the Board of Directors on a routine basis. • The Incident Response Plan (“IRP”) includes procedures for responding to actual or potential cybersecurity incidents, including providing timely notice to customers and our bank regulatory agencies when appropriate.
The Enterprise Risk Committee meets as often as appropriate to perform its responsibilities, but no less than once per calendar quarter and reports findings and provides recommendations to the Board on a routine basis. • The IRP includes procedures for responding to actual or potential cybersecurity incidents, including providing timely notice to customers and our bank regulatory agencies when appropriate.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This annual report on Form 10-K, both in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere, contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K, both in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere, contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.
Accordingly, we have developed and implemented processes for assessing, identifying and managing material risks from cybersecurity threats designed to comply with federal law and regulations and protect against cybersecurity threats to our business. Our program is supported by management and the Company’s Board of Directors (the “Board of Directors”).
Accordingly, we have developed and implemented processes for assessing, identifying and managing material risks from cybersecurity threats designed to comply with federal law and regulations and protect against cybersecurity threats to our business. Our program is supported by management and the Board.
While the FDIC’s special assessment in 2023 generally only applied to banks with over $5 billion in total assets, further increases in assessment rates or special assessments that apply to all banks may occur in the future, especially if there are significant financial institution failures.
In 2023, the FDIC completed a special assessment that generally only applied to banks with over $5 billion in total assets, but further increases in assessment rates or special assessments that apply to all banks may occur in the future, especially if there are significant financial institution failures.
The Company’s Information Security Program (the “Program”) is comprised of five pillars: the Information Security Policy, the Enterprise Information Security Risk Assessment, the Incident Response Plan, a formalized Security Awareness Campaign, and an enterprise monitoring and reporting program. • The Information Security Policy contains numerous distinct administrative and technical controls that govern data security for the organization and is based on the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework.
The Company’s IS Program is comprised of five pillars: the Information Security Policy, the Enterprise Information Security Risk Assessment, the Incident Response Plan, a formalized Security Awareness Campaign, and an enterprise monitoring and reporting program. • The Information Security Policy contains numerous distinct administrative and technical controls that govern data security for the organization and is based on the NIST Cybersecurity Framework.
Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Market (the “Nasdaq”) under the symbol “ISTR.” As of March 4, 2024, there were approximately 712 holders of record of our common stock including participants in security position listings.
Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “ISTR.” As of March 10, 2025, there were approximately 677 holders of record of our common stock including participants in security position listings.
The IT Committee’s primary purpose is to assist the Board of Directors in its oversight of technology and innovation strategies, plans and operations related to cybersecurity, data privacy, and third-party technology risk management.
Oversight of cybersecurity risk management is performed primarily by the Board and the IT Committee. The IT Committee’s primary purpose is to assist the Board in its oversight of technology and innovation strategies, plans and operations related to cybersecurity, data privacy, and third-party technology risk management.
We own the building, known as Investar Tower, in which our main office is located, and all of our branch offices, with the exception of two leased branch locations in Louisiana, and two leased branch locations and one loan and deposit production office in Texas.
We own the building, known as Investar Tower, in which our main office is located, and all of our branch offices, with the exception of two leased branch locations in Louisiana and three leased branch locations in Texas.
The CISO also provides the Board of Directors with an annual Information Security Program Summary Report in compliance with federal banking guidelines. The program is managed by the CISO who reports to the Chief Operations Officer and is reviewed by regulators as well as internal auditors.
The CISO also provides the Board with an annual Information Security Program Summary Report in compliance with federal banking guidelines. The IS Program is managed by the CISO who reports to the Chief Operations Officer and is reviewed by regulators as well as internal auditors. An information security analyst reports to the CISO and performs security and assurance functions daily.
Because our outstanding shares of common stock either were issued in an offering registered under the Securities Act of 1933, as amended (the “Securities Act”) or have been held for more than one year, such shares are freely tradable, except for shares held by our affiliates (approximately 6% of shares outstanding as of December 31, 2023) and 336,749 shares that represent unvested restricted shares under our incentive plan.
Because our outstanding shares of common stock either were issued in an offering registered under the Securities Act or have been held for more than one year, such shares are freely tradable, except for shares held by our affiliates (approximately 6% of shares outstanding as of December 31, 2024) and 323,820 shares that represent unvested restricted shares under our incentive plan.
The key risk indicators are presented to the Company’s Information Technology Committee (“IT Committee”) and th e Board of Directors on a monthly basis. The Program is monitored each year through various internal and external audits, as well as OCC regulatory exams.
The key risk indicators are presented to the Company’s IT Committee and th e Board on a monthly basis. The IS Program is monitored each year through various internal and external audits, as well as OCC regulatory exams.
Our 20 branches in Louisiana are located in Ascension (1), East Baton Rouge (3), West Baton Rouge (1), Jefferson (2), Lafayette (2), Livingston (1), Orleans (1), St. Tammany (1), Tangipahoa (1), East Feliciana (2), West Feliciana (1), Evangeline (3) and Calcasieu (1) Parishes.
Our 20 branches in Louisiana are located in Ascension (1), East Baton Rouge (3), West Baton Rouge (1), Jefferson (2), Lafayette (2), Livingston (1), Orleans (1), St. Tammany (1), Tangipahoa (1), East Feliciana (2), West Feliciana (1), Evangeline (3) and Calcasieu (1) Parishes. Our three branches in Texas are located in Galveston (1), Harris (1) and Montgomery (1) Counties .
Risk Factors – Risks Related to our Business – “We rely on information technology and telecommunications systems, many of which are provided by third-party vendors” and – “Cyberattacks or other security breaches could adversely affect our operations, net income or reputation,” incorporated by reference into this Item 1C.
Risk Factors – Risks Related to our Business – “We rely on information technology and telecommunications systems, many of which are provided by third-party vendors” and – “Cyberattacks or other security breaches could adversely affect our operations, net income or reputation,” incorporated by reference into this Item 1C. Governance The Board is responsible for oversight of risks from cybersecurity threats.
The Chief Information Security Officer (“CISO”) provides monthly information security reports on cybersecurity programs, policies and controls, key risk indicators and trends including responses to any cybersecurity events, and efforts to improve security. Annually, the CISO provides security training to the Board of Directors.
The CISO provides monthly information security reports to the Board and IT Committee on cybersecurity programs, policies and controls, key risk indicators and trends including responses to any cybersecurity events, and efforts to improve security. Annually, the CISO provides security training to the Board.
Item 6. [Reserved] 31 Table of Contents Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations This section presents management’s perspective on the financial condition and results of operations of Investar Holding Corporation and its wholly-owned subsidiary, Investar Bank, National Association (the “Bank,” together with Investar Holding Corporation, the “Company,” “we,” “our,” or “us”).
Item 6. [Reserved] 33 Table of Contents Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations This section presents management’s perspective on the financial condition and results of operations of Investar Holding Corporation and its wholly-owned subsidiary, Investar Bank, National Association.
Issuer Purchases of Equity Securities Period (a) Total Number of Shares (or Units) Purchased (1) (b) Average Price Paid per Share (or Unit)(2) (c ) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Be Purchased Under the Plans or Programs(3) October 1, 2023 to October 31, 2023 22,000 $ 10.67 22,000 524,032 November 1, 2023 to November 30, 2023 9,794 9.89 9,766 514,266 December 1, 2023 to December 31, 2023 — — — 514,266 31,794 $ 10.43 31,766 514,266 (1) Includes 28 shares surrendered to cover the payroll taxes due upon the vesting of restricted stock.
Issuer Purchases of Equity Securities Period (a) Total Number of Shares (or Units) Purchased (1) (b) Average Price Paid per Share (or Unit) (2) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Be Purchased Under the Plans or Programs (3) October 1, 2024 to October 31, 2024 — $ — — 495,645 November 1, 2024 to November 30, 2024 287 20.81 — 495,645 December 1, 2024 to December 31, 2024 — — — 495,645 287 $ 20.81 — 495,645 (1) Includes 287 shares surrendered to cover the payroll taxes due upon the vesting of restricted stock.
The Chief Information Officer (“CIO”) and information technology staff support the CISO in cybersecurity operations as necessary to mitigate risks to the Company's technology infrastructure. The CISO holds two cybersecurity industry leading certifications (CISSP, CCSP) and has more than 20 years of technology experience.
The CIO and information technology staff support the CISO in cybersecurity operations as necessary to mitigate risks to the Company's technology infrastructure. The CISO holds two cybersecurity industry leading certifications (Certified Information Systems Security Professional and Certified Cloud Security Professional) and has more than 20 years of technology experience.
Our two branches in Texas are located in Galveston (1) and Harris (1) Counties, and one loan and deposit production office is located in Montgomery County. Our six branches in Alabama are located in Calhoun (3), Sumter (2), and Tuscaloosa (1) Counties. We also have one stand-alone ITM in Morgan City, Louisiana.
Our six branches in Alabama are located in Calhoun (3), Sumter (2) and Tuscaloosa (1) Counties. We also have one stand-alone ITM in Morgan City, Louisiana.
(2) The average price paid per share does not include the effect of excise tax expense incurred on net stock repurchases. (3) The Company has had a stock repurchase program since 2015.
(2) The average price paid per share does not include the effect of excise tax expense incurred on net stock repurchases. (3) The Company has had a stock repurchase program since 2015. At December 31, 2024, the Company had 495,645 shares of our common stock remaining authorized for repurchase under the program.
As of December 31, 2023, we had 9,748,067 shares outstanding and 326,605 shares subject to options granted under our incentive plan.
As of December 31, 2024, we had 9,828,413 shares outstanding and 260,602 shares subject to options granted under our incentive plan.
We are also prohibited from paying dividends upon and during the continuance of any Event of Default under such notes. Under the terms of our 5.125% Fixed-to-Floating Rate Subordinated Notes due 2032, we are prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.
In addition, our existing and future debt agreements limit, or may limit, our ability to pay dividends. Under the terms of our 2032 Notes, we are prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.
We are also prohibited from paying dividends upon and during the continuance of any Event of Default under such notes. Under the terms of our 5.125% Fixed-to-Floating Rate Subordinated Notes due 2032, we are prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.
In addition, our existing and future debt agreements limit, or may limit, our ability to pay dividends. Under the terms of our 2032 Notes, we are prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.
Index 12/31/2018 6/30/2019 12/31/2019 6/30/2020 Investar Holding Corporation $ 100.00 $ 96.39 $ 97.72 $ 59.36 Russell 3000 100.00 118.71 131.02 126.47 S&P US SmallCap Banks 100.00 114.88 125.46 85.84 12/31/2020 6/30/2021 12/31/2021 6/30/2022 Investar Holding Corporation $ 68.61 $ 95.61 $ 77.51 $ 93.00 Russell 3000 158.39 182.32 199.03 157.04 S&P US SmallCap Banks 113.94 144.29 158.62 133.49 12/31/2022 6/30/2023 12/31/2023 Investar Holding Corporation $ 92.27 $ 52.68 $ 65.91 Russell 3000 160.80 186.80 202.54 S&P US SmallCap Banks 139.85 108.62 140.55 There can be no assurance that our common stock performance will continue in the future with the same or similar trends depicted in the performance graph above.
Index 12/31/2019 6/30/2020 12/31/2020 6/30/2021 Investar Holding Corporation $ 100.00 $ 68.42 $ 90.82 $ 115.01 Russell 3000 100.00 60.75 70.21 97.84 S&P US SmallCap Banks 100.00 96.52 120.89 139.15 12/31/2021 6/30/2022 12/31/2022 6/30/2023 Investar Holding Corporation $ 126.43 $ 106.40 $ 111.47 $ 86.57 Russell 3000 79.33 95.18 94.43 53.91 S&P US SmallCap Banks 151.91 119.86 122.73 142.58 12/31/2023 6/30/2024 12/31/2024 Investar Holding Corporation $ 112.03 $ 106.49 $ 132.44 Russell 3000 67.45 70.09 101.63 S&P US SmallCap Banks 154.59 175.55 191.39 There can be no assurance that our common stock performance will continue in the future with the same or similar trends depicted in the performance graph above.
Removed
In addition, our existing and future debt agreements limit, or may limit, our ability to pay dividends.
Added
The CIO has been in the information technology field for over 30 years and at various points held the following certifications: Cisco Certified Internetwork Expert, Cisco Certified Network Professional, Cisco Certified Voice Professional, Cisco Certified Design Professional, and Microsoft Certified Systems Engineer. The information security analyst has over five years of experience and holds ISC2’s “Certified in Cybersecurity” certification.
Removed
Under the terms of our 5.125% Fixed-to-Floating Rate Subordinated Notes due 2029, we may not pay a dividend if either our parent company or the Bank, both immediately prior to the declaration of the dividend and after giving effect to the payment of the dividend, would not maintain regulatory capital ratios that are as “well capitalized” levels for regulatory capital purposes.
Removed
In addition, our existing and future debt agreements limit, or may limit, our ability to pay dividends.
Removed
Under the terms of our 5.125% Fixed-to-Floating Rate Subordinated Notes due 2029, we may not pay a dividend if either our parent company or the Bank, both immediately prior to the declaration of the dividend and after giving effect to the payment of the dividend, would not maintain regulatory capital ratios that are at “well capitalized” levels for regulatory capital purposes.
Removed
On July 19, 2023, the Company announced that its board of directors authorized the repurchase of an additional 350,000 shares of the Company’s common stock under its stock repurchase plan. As of December 31, 2023, the Company had 514,266 shares remaining available under the program.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

236 edited+65 added−57 removed98 unchanged
Biggest changeOur allowance for credit losses to total loans was 1.38% at December 31, 2023. • N et interest income for the year ended December 31, 2023 was $74.5 million, a decrease of $15.3 million, or 17.0% , compared to $89.8 million for the year ended December 31, 2022 , driven primarily by an increase in the rates paid on interest-bearing liabilities, partially offset by increase s in the volume and yield earned on interest-earning assets. • We experienced pressure on our net interest margin as interest rates rose rapidly during 2022 and 2023, and we raised rates offered on deposits and incurred higher costs on our borrowings.
Biggest changeAt December 31, 2024, estimated uninsured deposits represented approximately 31% of our total deposits. • During the year ended December 31, 2024, we redeemed $20.0 million in principal amount and repurchased $8.0 million in principal amount of our subordinated debt and recorded a $0.3 million gain on extinguishment of subordinated debt. • N et interest income for the year ended December 31, 2024 was $69.8 million, a decrease of $4.8 million, or 6.4% , compared to $74.5 million for the year ended December 31, 2023 , driven primarily by an increase in the rates paid on interest-bearing liabilities, partially offset by increase s in the volume and yield earned on interest-earning assets. • For the year ended December 31, 2024 , our net interest margin was 2.63% , compared to 2.83% for the year ended December 31, 2023 • At December 31, 2024, we had no outstanding borrowings under the BTFP compared to $212.5 million at December 31, 2023 with a weighted average rate of 4.83%. • We repurchased 18,621 shares of our common stock at an average price of $16.13 per share during 2024 and repurchased 222,448 shares of our common stock at an average price of $13.47 per share during 2023.
Net interest income simulation is the Bank’s primary tool for benchmarking near term earnings exposure. Given the ALCO’s objective to understand the potential risk/volatility embedded within the current mix of assets and liabilities, standard rate scenario simulations assume total assets remain static (i.e. no growth).
Net interest income simulation is the Bank’s primary tool for benchmarking near term earnings exposure. Given the ALCO’s objective to understand the potential risk and volatility embedded within the current mix of assets and liabilities, standard rate scenario simulations assume total assets remain static (i.e. no growth).
These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events: • the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements caused by business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate; • changes in inflation, interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing; • our ability to continue to successfully execute the pivot of our near-term strategy from primarily a growth strategy to a strategy primarily focused on consistent, quality earnings through the optimization of our balance sheet, and our ability to successfully execute a long-term growth strategy; • our ability to achieve organic loan and deposit growth, and the composition of that growth; • a reduction in liquidity, including as a result of a reduction in the amount of deposits we hold or other sources of liquidity, which may be caused by, among other things, disruptions in the banking industry similar to those that occurred in early 2023 that caused bank depositors to move uninsured deposits to other banks or alternative investments outside the banking industry; • our ability to identify and enter into agreements to combine with attractive acquisition partners, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate and grow acquired operations; • our adoption on January 1, 2023 of ASU 2016-13, and inaccuracy of the assumptions and estimates we make in establishing reserves for credit losses and other estimates; • changes in the quality or composition of our loan portfolio, including adverse developments in borrower industries or in the repayment ability of individual borrowers; • changes in the quality and composition of, and changes in unrealized losses in, our investment portfolio, including whether we may have to sell securities before their recovery of amortized cost basis and realize losses; • the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally; • our dependence on our management team, and our ability to attract and retain qualified personnel; • the concentration of our business within our geographic areas of operation in Louisiana, Texas and Alabama; 32 Table of Contents • increasing costs of complying with new and potential future regulations; • new or increasing geopolitical tensions, including resulting from wars in Ukraine and Israel and surrounding areas; • the emergence or worsening of widespread public health challenges or pandemics including COVID-19; • concentration of credit exposure; • any deterioration in asset quality and higher loan charge-offs, and the time and effort necessary to resolve problem assets; • fluctuations in the price of oil and natural gas; • data processing system failures and errors; • risks associated with our digital transformation process, including increased risks of cyberattacks and other security breaches and challenges associated with addressing the increased prevalence of artificial intelligence; • risks of losses resulting from increased fraud attacks against us and others in the financial services industry; • potential impairment of our goodwill and other intangible assets; • our potential growth, including our entrance or expansion into new markets, and the need for sufficient capital to support that growth; • the impact of litigation and other legal proceedings to which we become subject; • competitive pressures in the commercial finance, retail banking, mortgage lending and consumer finance industries, as well as the financial resources of, and products offered by, competitors; • the impact of changes in laws and regulations applicable to us, including banking, securities and tax laws and regulations and accounting standards, as well as changes in the interpretation of such laws and regulations by our regulators; • changes in the scope and costs of FDIC insurance and other coverages; • governmental monetary and fiscal policies; • hurricanes, tropical storms, tropical depressions, floods, winter storms, droughts and other adverse weather events, all of which have affected our market areas from time to time; other natural disasters; oil spills and other man-made disasters; acts of terrorism; other international or domestic calamities; acts of God; and other matters beyond our control; and • other circumstances, many of which are beyond our control.
These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events: • the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements caused by business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate; • changes in inflation, interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing; • our ability to successfully execute our near-term strategy to pivot from primarily a growth strategy to a strategy primarily focused on consistent, quality earnings through the optimization of our balance sheet, and our ability to successfully execute a long-term growth strategy; • our ability to achieve organic loan and deposit growth, and the composition of that growth; • a reduction in liquidity, including as a result of a reduction in the amount of deposits we hold or other sources of liquidity, which may be caused by, among other things, disruptions in the banking industry similar to those that occurred in early 2023 that caused bank depositors to move uninsured deposits to other banks or alternative investments outside the banking industry; • our ability to identify and enter into agreements to combine with attractive acquisition candidates, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate and grow acquired operations; • our adoption on January 1, 2023 of ASU 2016-13, and inaccuracy of the assumptions and estimates we make in establishing reserves for credit losses and other estimates; • changes in the quality or composition of our loan portfolio, including adverse developments in borrower industries or in the repayment ability of individual borrowers; • changes in the quality and composition of, and changes in unrealized losses in, our investment portfolio, including whether we may have to sell securities before their recovery of amortized cost basis and realize losses; • the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally; • our dependence on our management team, and our ability to attract and retain qualified personnel; • the concentration of our business within our geographic areas of operation in Louisiana, Texas and Alabama; 34 Table of Contents • increasing costs of complying with new and potential future regulations; • new or increasing geopolitical tensions, including resulting from wars in Ukraine and Israel and surrounding areas; • the emergence or worsening of widespread public health challenges or pandemics including COVID-19; • concentration of credit exposure; • any deterioration in asset quality and higher loan charge-offs, and the time and effort necessary to resolve problem assets; • fluctuations in the price of oil and natural gas; • data processing system failures and errors; • risks associated with our digital transformation process, including increased risks of cyberattacks and other security breaches and challenges associated with addressing the increased prevalence of artificial intelligence; • risks of losses resulting from increased fraud attacks against us and others in the financial services industry; • potential impairment of our goodwill and other intangible assets; • our potential growth, including our entrance or expansion into new markets, and the need for sufficient capital to support that growth; • the impact of litigation and other legal proceedings to which we become subject; • competitive pressures in the commercial finance, retail banking, mortgage lending and consumer finance industries, as well as the financial resources of, and products offered by, competitors; • the impact of changes in laws and regulations applicable to us, including banking, securities and tax laws and regulations and accounting standards, as well as changes in the interpretation of such laws and regulations by our regulators; • changes in the scope and costs of FDIC insurance and other coverages; • governmental monetary and fiscal policies; and • hurricanes, tropical storms, tropical depressions, floods, winter storms, droughts and other adverse weather events, all of which have affected our market areas from time to time; other natural disasters; oil spills and other man-made disasters; acts of terrorism; other international or domestic calamities; acts of God; and other matters beyond our control.
The ALCO has been authorized by the board of directors to implement our asset/liability management policy, which establishes guidelines with respect to our exposure to interest rate fluctuations, liquidity, loan limits as a percentage of funding sources, exposure to correspondent banks and brokers and reliance on non-core deposits.
The ALCO has been authorized by the Board to implement our asset/liability management policy, which establishes guidelines with respect to our exposure to interest rate fluctuations, liquidity, loan limits as a percentage of funding sources, exposure to correspondent banks and brokers and reliance on non-core deposits.
In addition, credit analysts periodically review certain commercial loans to identify negative financial trends related to any one borrower, any related groups of borrowers or an industry. All loans not categorized as pass are put on an internal watch list, with quarterly reports to the board of directors.
In addition, credit analysts periodically review certain commercial loans to identify negative financial trends related to any one borrower, any related groups of borrowers or an industry. All loans not categorized as Pass are put on an internal watch list, with quarterly reports to the Board.
Beginning in the second quarter, we utilized the BTFP to secure fixed rate funding for a one-year term and reduce short-term FHLB advances, which are priced daily. We utilized this source of funding due to its lower rate and the ability to prepay the obligations without penalty.
Beginning in the second quarter of 2023, we utilized the BTFP to secure fixed rate funding for a one-year term and reduce short-term FHLB advances, which are priced daily. We utilized this source of funding due to its lower rate and the ability to prepay the obligations without penalty.
The 2032 Notes have a stated maturity date of April 15, 2032 and will bear interest at a fixed rate of 5.125% per year from and including April 6, 2022 to but excluding April 15, 2027 or earlier redemption date.
The 2032 Notes have a stated maturity date of April 15, 2032 and bear interest at a fixed rate of 5.125% per year from and including April 6, 2022 to but excluding April 15, 2027 or earlier redemption date.
We believe that higher rates resulting from inflation and related factors led to constrained loan demand during 2023. When the rate of inflation accelerates, there is an erosion of consumer and customer purchasing power.
We believe that higher rates resulting from inflation and related factors led to constrained loan demand during 2023 and 2024. When the rate of inflation accelerates, there is an erosion of consumer and customer purchasing power.
The following table sets forth average balance sheet data, including all major categories of interest-earning assets and interest-bearing liabilities, together with the interest earned or paid and the average yield or rate paid on each such category as of and for the years ended December 31, 2023, 2022 and 2021. Averages presented below are daily averages (dollars in thousands).
The following table sets forth average balance sheet data, including all major categories of interest-earning assets and interest-bearing liabilities, together with the interest earned or paid and the average yield or rate paid on each such category as of and for the years ended December 31, 2024, 2023 and 2022. Averages presented below are daily averages (dollars in thousands).
The 2027 Notes were intended to qualify as Tier 2 capital for regulatory capital purposes. In June 2022, we redeemed the 2027 Notes in full in accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the June 30, 2022 redemption date (“Redemption Date”).
The 2027 Notes were intended to qualify as Tier 2 capital for regulatory capital purposes. In June 2022, we redeemed the 2027 Notes in full in accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the June 30, 2022 redemption date.
In response to higher inflation, the Federal Reserve increased the federal funds target rate during 2022 and 2023 as discussed in Certain Events That Affect Year-over-Year Comparability – Rising Inflation and Interest Rates , which generally increased the amount we earn on our interest-earning assets but also increased the amount we pay on our interest-bearing liabilities as discussed throughout this report.
In response to higher inflation, the Federal Reserve increased the federal funds target rate during 2022 and 2023 as discussed in Certain Events That Affect Year-over-Year Comparability – Changing Inflation and Interest Rates , which generally increased the amount we earn on our interest-earning assets but also increased the amount we pay on our interest-bearing liabilities as discussed throughout this report.
Allowances for impaired loans were generally determined based on collateral values or the present value of estimated cash flows. 36 Table of Contents The determination of the appropriate level of the allowance was inherently subjective as it requires estimates that are susceptible to significant revision as more information became available.
Allowances for impaired loans were generally determined based on collateral values or the present value of estimated cash flows. 39 Table of Contents The determination of the appropriate level of the allowance was inherently subjective as it requires estimates that are susceptible to significant revision as more information became available.
The negative provision for credit losses for the year ended December 31, 2023 was primarily driven by net recoveries of $2.3 million in the loan portfolio primarily attributable to recoveries on one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.
The provision for loan losses for the year ended December 31, 2023 was primarily driven by net recoveries of $2.3 million in the loan portfolio primarily attributable to recoveries on one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.
For any increases in cash flows expected to be collected, we adjusted the amount of accretable yield recognized on a prospective basis over the loan’s or pool’s remaining life, while we recognized a provision for loan loss in the consolidated statement of operations if the cash flows expected to be collected had decreased.
For any increases in cash flows expected to be collected, we adjusted the amount of accretable yield recognized on a prospective basis over the loan’s or pool’s remaining life, while we recognized a provision for loan loss in the consolidated statement of income if the cash flows expected to be collected had decreased.
Any redemption by the Company would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption. Principal and interest on the 2029 Notes are not subject to acceleration, except upon certain bankruptcy-related events.
Any redemption by the Company would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption. Principal and interest on the 2029 Notes were not subject to acceleration, except upon certain bankruptcy-related events.
The efficiency ratio, tangible book value per share, and the ratio of tangible equity to tangible assets are not financial measures recognized under GAAP and, therefore, are considered non-GAAP financial measures. 35 Table of Contents Our management, banking regulators, financial analysts and investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred equity and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.
Tangible book value per share and the ratio of tangible equity to tangible assets are not financial measures recognized under GAAP and, therefore, are considered non-GAAP financial measures. 37 Table of Contents Our management, banking regulators, financial analysts and investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred equity and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.
We sold approximately $13.9 million in loans and $14.5 million in deposits. Exit from Consumer Mortgage Origination Busines s . In the third quarter of 2023, we made the strategic decision to exit the consumer mortgage origination business. For additional discussion, see “Overview.” Branch Closures.
We sold approximately $13.9 million in loans and $14.5 million in deposits. Exit from Consumer Mortgage Origination Busines s . In the third quarter of 2023, we made the strategic decision to exit the consumer mortgage origination business. For additional discussion, see “Overview.” Branch Activity.
The goal of our asset/liability management is for the Bank to maintain a net interest income at risk in an up or down 100 basis point environment at less than (5)%. At December 31, 2023, the Bank was within the policy guidelines for asset/liability management.
The goal of our asset/liability management is for the Bank to maintain a net interest income at risk in an up or down 100 basis point environment at less than (5)%. At December 31, 2024, the Bank was within the policy guidelines for asset/liability management.
The table below shows the carrying value of our investment securities portfolio by investment type and the percentage that such investment type comprises of our entire portfolio as of the dates indicated (dollars in thousands). December 31, 2023 2022 Balance Percentage of Portfolio Balance Percentage of Portfolio Obligations of the U.S.
The table below shows the carrying value of our investment securities portfolio by investment type and the percentage that such investment type comprises of our entire portfolio as of the dates indicated (dollars in thousands). December 31, 2024 2023 Balance Percentage of Portfolio Balance Percentage of Portfolio Obligations of the U.S.
For PCD assets, the CECL estimate is recognized through the allowance for credit losses with an offset to the amortized cost basis of the PCD asset at the date of acquisition. Subsequent changes in the allowance for credit losses for PCD assets are recognized through a provision for credit losses on loans.
For PCD assets, the CECL estimate is recognized through the ACL with an offset to the amortized cost basis of the PCD asset at the date of acquisition. Subsequent changes in the ACL for PCD assets are recognized through a provision for credit losses on loans.
The insured deposit data for 2023 and 2022 does not reflect an evaluation of all of the account ownership category distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations.
The insured deposit data for 2024 and 2023 does not reflect an evaluation of all of the account ownership category distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations.
The following table presents, by type, our funding sources, which consist of total average deposits and borrowed funds, as a percentage of total funds and the total cost of each funding source for the years ended December 31, 2023 and 2022.
The following table presents, by type, our funding sources, which consist of total average deposits and borrowed funds, as a percentage of total funds and the total cost of each funding source for the years ended December 31, 2024 and 2023.
At December 31, 2023, AFS securities comprised 95% of our total investment portfolio. We adopted ASU 2016-13 effective January 1, 2023. Due to the nature of the investments, current market prices, and the current interest rate environment, we determined that the declines in the fair values of the AFS and HTM securities portfolio were not attributable to credit losses.
At December 31, 2024, AFS securities comprised 89% of our total investment portfolio. We adopted ASU 2016-13 effective January 1, 2023. Due to the nature of the investments, current market prices, and the current interest rate environment, we determined that the declines in the fair values of the AFS and HTM securities portfolio were not attributable to credit losses.
For a detailed discussion of our net interest income and net interest margin performance for 2022 compared to 2021, see our annual report on Form 10-K for the year ended December 31, 2022, Item 7.
For a detailed discussion of our net interest income and net interest margin performance for 2023 compared to 2022, see our Annual Report on Form 10-K for the year ended December 31, 2023, Item 7.
The following tables set forth a summary of the changes in interest earned and interest paid resulting from changes in volume and rates for the year ended December 31, 2023 compared to the year ended December 31, 2022 and the year ended December 31, 2022 compared to the year ended December 31, 2021 (dollars in thousands).
The following tables set forth a summary of the changes in interest earned and interest paid resulting from changes in volume and rates for the year ended December 31, 2024 compared to the year ended December 31, 2023 and the year ended December 31, 2023 compared to the year ended December 31, 2022 (dollars in thousands).
Our portfolio and related credit risk are monitored and managed on an ongoing basis by our risk management department, the board of directors’ loan committee and the full board of directors. We utilize a ten point risk-rating system, which assigns a risk grade to each borrower based on a number of quantitative and qualitative factors associated with a loan transaction.
Our portfolio and related credit risk are monitored and managed on an ongoing basis by our risk management department, the Board’s loan committee and the full Board. We utilize a ten point risk-rating system, which assigns a risk grade to each borrower based on a number of quantitative and qualitative factors associated with a loan transaction.
Effective January 1, 2023, we adopted ASU 2022-02, “ Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ”, which eliminated the accounting guidance for troubled debt restructurings (“TDRs”).
Effective January 1, 2023, we adopted ASU 2022-02, “ Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, ” which eliminated the accounting guidance for TDRs.
The sale of securities in a loss position would cause us to record a loss on sale of investment securities in noninterest income in the period during which the securities were sold. Some securities are pledged to secure certain deposit types or short-term borrowings, such as FHLB advances and borrowings under the BTFP, which impacts their liquidity.
The sale of securities in a loss position would cause us to record a loss on sale of investment securities in noninterest income in the period during which the securities were sold. Some securities are pledged to secure certain deposit types or short-term borrowings, such as FHLB advances, which impacts their liquidity.
We measure our performance through our net interest margin, return on average assets, and return on average equity, among other metrics, while seeking to maintain appropriate regulatory leverage and risk-based capital ratios. 34 Table of Contents For certain GAAP performance measures, see “ Certain Performance Indicators ” below.
We measure our performance through our net interest margin, return on average assets, and return on average equity, among other metrics, while seeking to maintain appropriate regulatory leverage and risk-based capital ratios. 36 Table of Contents For certain GAAP performance measures, see “ Certain Performance Indicators: GAAP Financial Measures ” below.
We also monitor changes in our tangible equity, tangible assets, tangible book value per share, and our efficiency ratio, shown in the section “ Certain Performance Indicators: Non-GAAP Financial Measures ” below.
We also monitor changes in our tangible equity, tangible assets, and tangible book value per share, shown in the section “ Certain Performance Indicators: Non-GAAP Financial Measures ” below.
As a result, because these assumptions are inherently uncertain, actual results will differ from simulated results. Liquidity and Capital Resources Liquidity . Liquidity is a measure of the ability to fund loan commitments and meet deposit maturities and withdrawals in a timely and cost-effective way.
As a result, because these assumptions are inherently uncertain, actual results will differ from simulated results. 59 Table of Contents Liquidity and Capital Resources Liquidity . Liquidity is a measure of the ability to fund loan commitments and meet deposit maturities and withdrawals in a timely and cost-effective way.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Performance Summary and – Net Interest Income and Net Interest Margin –2022 vs. 2021, and – Volume/Rate Analysis . Average Balances and Yields .
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Performance Summary and – Net Interest Income and Net Interest Margin –2023 vs. 2022, and – Volume/Rate Analysis . Average Balances and Yields .
Maintaining the ability to acquire these funds as needed in a variety of markets, and within ALCO compliance targets, is essential to ensuring our liquidity. At December 31, 2023 and 2022, 64% a nd 70% of our total assets, respectively, were funded by core deposits. Our investment portfolio is another alternative for meeting our cash flow requirements.
Maintaining the ability to acquire these funds as needed in a variety of markets, and within ALCO compliance targets, is essential to ensuring our liquidity. At December 31, 2024 and 2023, 68% a nd 64% of our total assets, respectively, were funded by core deposits. Our investment portfolio is another alternative for meeting our cash flow requirements.
The following table shows scheduled maturities of time deposits in excess of the FDIC insurance limit of $250,000 at December 31, 2023 and 2022 (dollars in thousands).
The following table shows scheduled maturities of time deposits in excess of the FDIC insurance limit of $250,000 at December 31, 2024 and 2023 (dollars in thousands).
See reconciliation below. Certain Performance Indicators: Non-GAAP Financial Measures Our accounting and reporting policies conform to accounting principles generally accepted in the United States, or GAAP, and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional metrics.
Certain Performance Indicators: Non-GAAP Financial Measures Our accounting and reporting policies conform to accounting principles generally accepted in the United States, or GAAP, and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional metrics.
As of December 31, 2023 Estimated Changes in Interest Rates Increase/Decrease in (in basis points) Net Interest Income (1) +300 (7.4 )% +200 (5.4 )% +100 (2.4 )% -100 2.8 % -200 6.8 % -300 9.7 % (1) The percentage change in this column represents the projected net interest income for 12 months on a flat balance sheet in a stable interest rate environment versus the projected net interest income in the various rate scenarios.
As of December 31, 2024 Estimated Changes in Interest Rates Increase/Decrease in (in basis points) Net Interest Income (1) +300 (7.5 )% +200 (5.4 )% +100 (2.4 )% -100 2.6 % -200 4.7 % -300 6.5 % (1) The percentage change in this column represents the projected net interest income for 12 months on a flat balance sheet in a stable interest rate environment versus the projected net interest income in the various rate scenarios.
The Company may redeem the 2029 Notes, in whole or in part, on or after December 30, 2024 or, in whole but not in part, under certain limited circumstances set forth in the 2029 Notes.
The Company could redeem the 2029 Notes, in whole or in part, on or after December 30, 2024 or, in whole but not in part, under certain limited circumstances set forth in the 2029 Notes.
The following table reconciles, as of the dates set forth below, stockholders’ equity (on a GAAP basis) to tangible equity and total assets (on a GAAP basis) to tangible assets and calculates both our tangible book value per share and efficiency ratio (dollars in thousands).
The following table reconciles, as of the dates set forth below, stockholders’ equity (on a GAAP basis) to tangible equity and total assets (on a GAAP basis) to tangible assets and calculates our tangible book value per share (dollars in thousands).
We only purchase corporate bonds that are investment grade securities issued by seasoned corporations. 41 Table of Contents The table below sets forth the stated maturities and weighted average yields of our investment debt securities based on the amortized cost of our investment portfolio as of December 31, 2023 (dollars in thousands).
We only purchase corporate bonds that are investment grade securities issued by seasoned corporations. 46 Table of Contents The table below sets forth the stated maturities and weighted average yields of our investment debt securities based on the amortized cost of our investment portfolio as of December 31, 2024 (dollars in thousands).
From and including the date of issuance to, but excluding December 30, 2024, the 2029 Notes will bear interest at an initial fixed rate of 5.125% per annum, payable semi-annually in arrears.
From and including the date of issuance to, but excluding December 30, 2024, the 2029 Notes bore interest at an initial fixed rate of 5.125% per annum, payable semi-annually in arrears.
Other real estate owned with a cost basis of $1.5 million and $5.8 million was sold during the years ended December 31, 2023 and 2022, respectively, resulting in a net loss of $0.1 million and a net gain of $9,000 for the respective periods, compared to a cost basis of $0.9 million and a net loss of $5,000 for the year ended December 31, 2021.
Other real estate owned with a cost basis of $2.1 million and $1.5 million was sold during the years ended December 31, 2024 and 2023, respectively, resulting in a net gain of $0.7 million and a net loss of $0.1 million for the respective periods, compared to a cost basis of $5.8 million and a net gain of $9,000 for the year ended December 31, 2022.
From and including December 30, 2024 and thereafter, the 2029 Notes will bear interest at a floating rate equal to the then-current three-month LIBOR as calculated on each applicable date of determination, or an alternative rate determined in accordance with the terms of the 2029 Notes if the three-month LIBOR cannot be determined, plus 3.490%, payable quarterly in arrears.
From and including December 30, 2024 and thereafter, the 2029 Notes were to bear interest at a floating rate equal to the then-current three-month LIBOR as calculated on each applicable date of determination, or an alternative rate determined in accordance with the terms of the 2029 Notes if the three-month LIBOR could not be determined, plus 3.490%, payable quarterly in arrears.
Our primary areas of operation are south Louisiana (approximat ely 80% of our tota l deposits as of December 31, 2023), including Baton Rouge, New Orleans, Lafayette, Lake Charles, and their surrounding areas; southeast Texas, primarily Houston and its surrounding area and Alabama, including York and Oxford and their surrounding areas.
Our primary areas of operation are south Louisiana (approximat ely 78% of our tota l deposits as of December 31, 2024), including Baton Rouge, New Orleans, Lafayette, Lake Charles, and their surrounding areas; southeast Texas, primarily Houston and its surrounding area; and Alabama, including York and Oxford and their surrounding areas.
Repurchase agreements are contracts for the sale of securities which we own with a corresponding agreement to repurchase those securities at an agreed upon price and date. Our policies limit the use of repurchase agreements to those collateralized by certain investment securities. We had $8.6 million of repurchase agreements outstanding at December 31, 2023, and none at December 31, 2022.
Repurchase agreements are contracts for the sale of securities which we own with a corresponding agreement to repurchase those securities at an agreed upon price and date. Our policies limit the use of repurchase agreements to those collateralized by certain investment securities. We had $8.4 million and $8.6 million of repurchase agreements outstanding at December 31, 2024 and 2023, respectively.
SVB’s business strategy focused on serving the technology and venture capital sectors, and Signature Bank had significant exposure to deposits from the digital asset industry. Prior to their closure, both banks experienced sudden and rapid deposit withdrawals.
Silicon Valley Bank’s business strategy focused on serving the technology and venture capital sectors, and Signature Bank had significant exposure to deposits from the digital asset industry. Prior to their closure, both banks experienced sudden and rapid deposit withdrawals.
As discussed throughout this report, we adopted ASU 2016-13 on January 1, 2023, and recorded a one-time, cumulative effect adjustment that increased the allowance for credit losses by $5.9 million and decreased retained earnings, net of tax, by $4.3 million. Loan Purchase Agreement.
As discussed throughout this report, we adopted ASU 2016-13 on January 1, 2023, and recorded a one-time, cumulative effect adjustment that increased the ACL by $5.9 million and decreased retained earnings, net of tax, by $4.3 million. Loan Purchase Agreement.
The increase in yield on our loan portfolio was driven primarily by higher yields on commercial real estate loans and commercial and industrial loans. In addition, the yield on the investment portfolio was 2.78% for the year ended December 31, 2023 compared to 2.23% for the year ended December 31, 2022.
The increase in yield on our loan portfolio was driven primarily by higher yields on commercial real estate loans and commercial and industrial loans. In addition, the yield on the investment portfolio was 2.86% for the year ended December 31, 2024 compared to 2.78% for the year ended December 31, 2023.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Noninterest Income – 2022 vs. 2021 in our annual report on Form 10-K for the year ended December 31, 2022 . Noninterest Expense Noninterest expense includes salaries and employee benefits and other cos ts associated with the conduct of our operations.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Noninterest Income – 2023 vs. 2022 in our Annual Report on Form 10-K for the year ended December 31, 2023 . 53 Table of Contents Noninterest Expense Noninterest expense includes salaries and employee benefits and other cos ts associated with the conduct of our operations.
Occasionally, we modify loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, term extension, an other-than-insignificant payment delay, an interest rate reduction, or a combination of such concessions. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.
Occasionally, we modify loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, term extension, an other-than-insignificant payment delay, an interest rate reduction, or a combination of such concessions. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL.
Effective January 1, 2023, we adopted ASU 2016-13, which uses the CECL accounting methodology for the allowance for credit losses. Upon adoption, we recorded a one-time, cumulative effect adjustment to increase the allowance for credit losses by $5.9 million.
Effective January 1, 2023, we adopted ASU 2016-13, which uses the CECL accounting methodology for the ACL. Upon adoption, we recorded a one-time, cumulative effect adjustment to increase the ACL by $5.9 million.
The decrease in depreciation and amortization is primarily driven by the sale of the Alice and Victoria, Texas branches and the closure of one branch during the first quarter of 2023 and two branches during 2022.
The decrease in depreciation and amortization is primarily driven by the closure of one branch during the first quarter of 2024 and the sale of the Alice and Victoria, Texas branches and the closure of one branch during the first quarter of 2023.
Upon our determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off. 53 Table of Contents Other Real Estate Owned .
Upon our determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off. Other Real Estate Owned .
Consumer mortgage loan products are typically long-term and fixed-rate and generally require a higher relative allowance for credit losses than other loan products. Consumer mortgage volumes have decreased to historical lows due to the combination of rising housing prices and interest rates and constriction of housing supply.
Consumer mortgage loan products are typically long-term and fixed-rate and generally require a higher relative ACL than other loan products. Consumer mortgage volumes have decreased to historical lows due to the combination of rising housing prices and interest rates and constriction of housing supply.
The 2029 Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to the Company’s current and future senior indebtedness and to the Company’s obligations to its general creditors. The 2029 Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of the Company’s subsidiaries.
The 2029 Notes were unsecured, subordinated obligations of the Company and ranked junior in right of payment to the Company’s current and future senior indebtedness and to the Company’s obligations to its general creditors. The 2029 Notes were obligations of the Company only and were not obligations of, and were not guaranteed by, any of the Company’s subsidiaries.
Data processing decreased $0.1 million, or 3.3%, to $3.5 million for the year ended December 31, 2023 from $3.6 million for the same period in 2022. We did not complete any acquisitions, which typically drive higher data processing expenses, during the years ended December 31, 2023 and 2022.
Data processing increased $0.1 million, or 3.7%, to $3.6 million for the year ended December 31, 2024 from $3.5 million for the same period in 2023. We did not complete any acquisitions, which typically drive higher data processing expenses, during the years ended December 31, 2024 and 2023.
From April 15, 2027 to but excluding the stated maturity date or earlier redemption date, the 2032 Notes will bear interest a floating rate equal to the then current three-month term secured overnight financing rate (“SOFR”), plus 277 basis points.
From April 15, 2027 to but excluding the stated maturity date or earlier redemption date, the 2032 Notes will bear interest a floating rate equal to the then current three-month term SOFR, plus 277 basis points.
The decrease in both return on average assets and return on average equity is mainly attributable to the $19.0 million decrease in net income. 2022 vs. 2021.
The decrease in both return on average assets and return on average equity is mainly attributable to the $19.0 million decrease in net income.
This allowance may prove to be inadequate due to higher inflation and interest rates than anticipated, other unanticipated adverse changes in the economy, unanticipated effects of the current geopolitical and domestic political conflicts, a resurgence of COVID-19, or discrete events adversely affecting specific customers or industries.
This allowance may prove to be inadequate due to higher inflation and interest rates than anticipated, other unanticipated adverse changes in the economy, unanticipated effects of the current geopolitical and domestic political conflicts, a public health crisis, or discrete events adversely affecting specific customers or industries.
The yields include the effect of loan fees of $2.0 million , $3.6 million and $3.0 million for the years ended December 31, 2023, 2022 and 2021, respectively, and discounts and premiums that are amortized or accreted to interest income or expense. 46 Table of Contents Volume/Rate Analysis .
The yields include the effect of loan fees of $1.7 million , $2.0 million and $3.6 million for the years ended December 31, 2024, 2023 and 2022, respectively, and discounts and premiums that are amortized or accreted to interest income or expense. 51 Table of Contents Volume/Rate Analysis .
The risk categories, which are consistent with the definitions used in guidance promulgated by federal banking regulators are Pass (grades 1-6), Special Mention (grade 7), Substandard (grade 8), Doubtful (grade 9) and Loss (grade 10). For additional information, see Note 3.
The risk categories, which are consistent with the definitions used in guidance promulgated by federal banking regulators are Pass (grades 1-6), Special Mention (grade 7), Substandard (grade 8), Doubtful (grade 9) and Loss (grade 10). For additional information, see Note 3. Loans and Allowance for Credit Losses – Credit Quality Indicators .
Net charge-offs include recoveries of amounts previously charged off. Net recoveries for the years ended December 31, 2023 and 2022 were $2.3 million and $0.6 million, respectively, equal to 0.11% and 0.03% of the average loan balance for the respective periods. Net charge-offs for the year ended December 31, 2021 were $22.4 million, or 1.18%, of the average loan balance.
Net charge-offs include recoveries of amounts previously charged off. Net charge-offs for the year ended December 31, 2024 were $0.6 million, or 0.03% of the average loan balance. Net recoveries for the years ended December 31, 2023 and 2022 were $2.3 million and $0.6 million, respectively, equal to 0.11% and 0.03%, of the average loan balance for the respective periods.
Junior subordinated debt of $8.6 million and $8.5 million at December 31, 2023 and 2022 , respect ively, represents the junior subordinated debentures that we assumed in connection with our acquisitions of Cheaha in 2021, BOJ Bancshares, Inc. in 2017 (“BOJ”), and First Community Bank in 2013. On March 12, 2023, the Federal Reserve established the BTFP.
Junior subordinated debt of $8.7 million and $8.6 million at December 31, 2024 and 2023 , respect ively, represents the junior subordinated debentures that we assumed in connection with our acquisitions of Cheaha Financial Group Inc. in 2021, BOJ Bancshares, Inc. in 2017, and First Community Bank in 2013. On March 12, 2023, the Federal Reserve established the BTFP.
Interest on our commercial real estate loans, commercial and industrial loans, and 1-4 family residential real estate loans constituted the three largest components of our loan interest income for both of the years ended December 31, 2023 and 2022 at 84% total interest income on loans.
Interest on our commercial real estate loans, commercial and industrial loans, and 1-4 family residential real estate loans constituted the three largest components of our loan interest income for the years ended December 31, 2024 and 2023 at 85% and 84% of total interest income on loans, respectively.
For the year ended December 31, 2022, the effective tax rate differs from the statutory rate of 21% primarily due to nontaxable income from insurance proceeds and tax-exempt interest income earned on certain loans and investment securities and income from bank owned life insurance. Risk Management The primary risks associated with our operations are credit, interest rate and liquidity risk.
For the year ended December 31, 2022, the effective tax rate differs from the statutory rate of 21% primarily due to nontaxable income from insurance proceeds and tax-exempt interest income earned on certain loans and investment securities and income from BOLI. 54 Table of Contents Risk Management The primary risks associated with our operations are credit, interest rate and liquidity risk.
Our core deposits, which are deposits excluding time deposits greater than $250,000 and deposits of municipalities and other political entities, are our most stable source of liquidity to meet our cash flow needs due to the nature of the long-term relationships generally established with our customers.
Our core deposits, which are deposit s excluding brokered demand deposits, brokered time deposits, t ime deposits greater than $250,000 and deposits of municipalities and other political entities, are our most stable source of liquidity to meet our cash flow needs due to the nature of the long-term relationships generally established with our customers.
As of December 31, 2023, the federal funds target rate was 5.25% to 5.50%. 43 Table of Contents The average balances and cost of short-term borrowings for the years ended December 31, 2023, 2022 and 2021 are summarized in the table below (dollars in thousands).
As of December 31, 2024, the federal funds target rate was 4.25% to 4.50%. 48 Table of Contents The average balances and cost of short-term borrowings for the years ended December 31, 2024, 2023 and 2022 are summarized in the table below (dollars in thousands).
Investment securities generate cash flow through principal payments and maturities, and they generally have readily available markets that allow for their conversion to cash. At December 31, 2023, 95% of our investment securities portfolio was classified as AFS, and we had gross unrealized losses in our AFS investment securities portfolio of $57.7 million and gross unrealized gains of $0.3 million.
Investment securities generate cash flow through principal payments and maturities, and they generally have readily available markets that allow for their conversion to cash. At December 31, 2024, 89% of our investment securities portfolio was classified as AFS, and we had gross unrealized losses in our AFS investment securities portfolio of $61.7 million and gross unrealized gains of $0.2 million.
The rate charged for advances from the FHLB is directly tied to the Federal Reserve’s federal funds target rate. As previously discussed, the Federal Reserve raised the federal funds target rate multiple times in 2022 and 2023.
The rate charged for advances from the FHLB is directly tied to the Federal Reserve’s federal funds target rate. As previously discussed, the Federal Reserve raised the federal funds target rate multiple times in 2022 and 2023 and reduced the federal funds target rate multiple times in the second half of 2024.
Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” for further discussion. 50 Table of Contents The following table presents the allocation of the allowance for credit losses by loan category as of the dates indicated (dollars in thousands).
Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” for further discussion. 55 Table of Contents The following table presents the allocation of the ACL by loan category as of the dates indicated (dollars in thousands).
There was a $0.1 million loss on sale of other real estate owned for the year ended December 31, 2023 compared to a de minimis gain for the year ended December 31, 2022.
There was a $0.7 million gain on sale of other real estate owned for the year ended December 31, 2024 compared to a $0.1 million loss for the year ended December 31, 2023.
We regularly review existing contracts with the goal of negotiating favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume. Occupancy expense increased $0.1 million, or 2.7%, to $3.0 million for the year ended December 31, 2023 from $2.9 million for the year ended December 31, 2022.
We regularly review existing contracts with the goal of negotiating favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume. Occupancy expense decreased $0.4 million, or 14.0%, to $2.6 million for the year ended December 31, 2024 from $3.0 million for the year ended December 31, 2023.
December 31, 2023 2022 2021 Mortgage loans on real estate: Construction and development 0.11 % 0.12 % 0.12 % 1-4 Family 0.41 0.18 0.18 Multifamily 0.05 0.05 0.04 Farmland — 0.01 0.02 Commercial real estate 0.49 0.51 0.50 Commercial and industrial 0.31 0.27 0.23 Consumer 0.01 0.02 0.02 Total 1.38 % 1.16 % 1.11 % 51 Table of Contents As discussed above, the balance in the allowance for credit losses is principally influenced by the provision for credit losses and by net loan loss experience.
December 31, 2024 2023 2022 Mortgage loans on real estate: Construction and development 0.05 % 0.11 % 0.12 % 1-4 Family 0.26 0.41 0.18 Multifamily 0.06 0.05 0.05 Farmland — — 0.01 Commercial real estate 0.55 0.49 0.51 Commercial and industrial 0.33 0.31 0.27 Consumer 0.01 0.01 0.02 Total 1.26 % 1.38 % 1.16 % 56 Table of Contents As discussed above, the balance in the ACL is principally influenced by the provision for credit losses and by net loan loss experience.
Management considers the appropriateness of these critical assumptions as part of its allowance review and believes the allowance for credit loss level is appropriate based on information available through the financial statement date. Please refer to Note 3. Loans and Allowance for Credit Losses, and Note 1.
Management considers the appropriateness of these critical assumptions as part of its allowance review and believes the ACL level is appropriate based on information available through the financial statement date. Please refer to Note 3. Loans and Allowance for Credit Losses, and Note 1. Summary of Significant Accounting Policies – Allowance for Credit Losses for additional discussion.
The increase in interest expense is primarily attributable to the increase in the rates paid for interest-bearing liabilities, primarily interest-bearing deposits, and to a lesser extent the increase in the volume of interest-bearing liabilities for the year ended December 31, 2023 compared to December 31, 2022.
The increase in interest expense is primarily attributable to the increase in the rates paid on interest-bearing liabilities, primarily time deposits and interest-bearing demand deposits, and to a lesser extent the increase in the volume of interest-bearing liabilities, primarily brokered time deposits, for the year ended December 31, 2024 compared to December 31, 2023.
We qualify all of our forward-looking statements by these cautionary statements. 33 Table of Contents Overview Through our wholly-owned subsidiary Investar Bank, National Association, we provide full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses.
We qualify all of our forward-looking statements by these cautionary statements. 35 Table of Contents Overview Through the Bank, we provide full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses.
The increase in the allowance for credit losses to total loans at December 31, 2023 compared to December 31, 2022 is primarily due to the one-time, cumulative effect adjustment to increase the allowance for credit losses by $5.9 million recorded upon adoption of ASU 2016-13 on January 1, 2023.
The decrease in the ACL to total loans at December 31, 2024 compared to December 31, 2023 is primarily due to the one-time, cumulative effect adjustment to increase the ACL by $5.9 million recorded upon adoption of ASU 2016-13 on January 1, 2023.
We maintain unsecured lines of credit with FNBB and TIB totalin g $60.0 million. The se lines of credit are federal funds lines of credit and are used for overnight borrowing only. There w ere no outstandi ng balances on our unsecured lines of credit at December 31, 2023 or 2022.
We maintain unsecured lines of credit with First National Bankers Bank and The Independent Bankers Bank totalin g $60.0 million. The se lines of credit are federal funds lines of credit and are used for overnight borrowing only. There w ere no outstandi ng balances on our unsecured lines of credit at December 31, 2024 or 2023.
We may experience additional pressure on our net interest margin during 2024 if our cost of funds increases faster than the yield on our interest-earning assets. 45 Table of Contents Interest income was $133.2 million for the year ended December 31, 2023 compared to $104.6 million for the same period in 2022.
We may experience additional pressure on our net interest margin during 2025 if the yield on our interest-earning assets decreases faster than our cost of funds. 50 Table of Contents Interest income was $143.9 million for the year ended December 31, 2024 compared to $133.2 million for the same period in 2023.
Loan interest income made up substantially all of our interest income for the years ended December 31, 2023 and 2022, although interest on investment securities contributed 9.8% of interest income for the years ended December 31, 2023 and 2022.
Loan interest income made up substantially all of our interest income for the years ended December 31, 2024 and 2023, although interest on investment securities contributed 8.5% of interest income for the year ended December 31, 2024 compared to 9.8% for the year ended December 31, 2023.
For reporting periods prior to January 1, 2023, prior to the adoption of ASU 2016-13: Because the fair value measurements incorporated assumptions regarding credit risk, no allowance for loan losses related to acquired loans was recorded on the acquisition date.
Please refer to Note 1. Summary of Significant Accounting Policies – Acquisition Accounting , for additional discussion. For reporting periods prior to January 1, 2023, prior to the adoption of ASU 2016-13: Because the fair value measurements incorporated assumptions regarding credit risk, no allowance for loan losses related to acquired loans was recorded on the acquisition date.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeActual Minimum Capital Requirement to be Well Capitalized Amount Ratio Amount Ratio December 31, 2023 Investar Holding Corporation: Tier 1 capital to average assets (leverage) $ 239,095 8.35 % $ — — % Tier 1 common equity to risk-weighted assets 229,595 9.51 — — Tier 1 capital to risk-weighted assets 239,095 9.90 — — Total capital to risk-weighted assets 313,574 12.99 — — Investar Bank: Tier 1 capital to average assets (leverage) 280,687 9.81 143,085 5.00 Tier 1 common equity to risk-weighted assets 280,687 11.64 156,805 6.50 Tier 1 capital to risk-weighted assets 280,687 11.64 192,990 8.00 Total capital to risk-weighted assets 310,846 12.89 241,238 10.00 December 31, 2022 Investar Holding Corporation: Tier 1 capital to average assets (leverage) $ 231,048 8.53 % $ — — % Tier 1 common equity to risk-weighted assets 221,548 9.79 — — Tier 1 capital to risk-weighted assets 231,048 10.21 — — Total capital to risk-weighted assets 300,009 13.25 — — Investar Bank: Tier 1 capital to average assets (leverage) 267,603 9.89 135,344 5.00 Tier 1 common equity to risk-weighted assets 267,603 11.83 147,044 6.50 Tier 1 capital to risk-weighted assets 267,603 11.83 180,977 8.00 Total capital to risk-weighted assets 292,339 12.92 226,221 10.00 Off-Balance Sheet Transactions and Lease Obligations Swap Contracts.
Biggest changeActual Minimum Capital Requirement to be Well-Capitalized Amount Ratio Amount Ratio December 31, 2024 Investar Holding Corporation: Tier 1 capital to average assets (leverage) $ 258,178 9.27 % $ — — % Tier 1 common equity to risk-weighted assets 248,678 10.84 — — Tier 1 capital to risk-weighted assets 258,178 11.25 — — Total capital to risk-weighted assets 301,259 13.13 — — Investar Bank: Tier 1 capital to average assets (leverage) 269,733 9.70 139,092 5.00 Tier 1 common equity to risk-weighted assets 269,733 11.77 148,925 6.50 Tier 1 capital to risk-weighted assets 269,733 11.77 183,293 8.00 Total capital to risk-weighted assets 296,117 12.92 229,116 10.00 December 31, 2023 Investar Holding Corporation: Tier 1 capital to average assets (leverage) $ 239,095 8.35 % $ — — % Tier 1 common equity to risk-weighted assets 229,595 9.51 — — Tier 1 capital to risk-weighted assets 239,095 9.90 — — Total capital to risk-weighted assets 313,574 12.99 — — Investar Bank: Tier 1 capital to average assets (leverage) 280,687 9.81 143,085 5.00 Tier 1 common equity to risk-weighted assets 280,687 11.64 156,805 6.50 Tier 1 capital to risk-weighted assets 280,687 11.64 192,990 8.00 Total capital to risk-weighted assets 310,846 12.89 241,238 10.00 Off-Balance Sheet Transactions and Lease Obligations Swap Contracts.
At December 31, 2023 and December 31, 2022, the Company had no current or forward starting interest rate swap agreements. For additional information, see Note 12. Derivative Financial Instruments. During the year ended December 31, 2022, we voluntarily terminated our remaining interest rate swap agreements with a total notional amount of $115.0 million in response to market conditions.
At December 31, 2024 and December 31, 2023, the Company had no current or forward starting interest rate swap agreements. For additional information, see Note 12. Derivative Financial Instruments. During the year ended December 31, 2022, we voluntarily terminated our remaining interest rate swap agreements with a total notional amount of $115.0 million in response to market conditions.
As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC Topic 820, “ Fair Value Measurement. ” The Company did not recognize any gains or losses in other income resulting from fair value adjustments during the years ended December 31, 2023 , 2022 , and 2021 .
As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC Topic 820, “ Fair Value Measurement. ” The Company did not recognize any gains or losses in other income resulting from fair value adjustments during the years ended December 31, 2024 , 2023 , and 2022 .
The Bank also was considered “well-capitalized” under the OCC’s prompt corrective action regulations as of these dates. 57 Table of Contents The following table presents the actual capital amounts and regulatory capital ratios for the Company and the Bank as of the dates presented (dollars in thousands).
The Bank also was considered “well-capitalized” under the OCC’s prompt corrective action regulations as of these dates. 61 Table of Contents The following table presents the actual capital amounts and regulatory capital ratios for the Company and the Bank as of the dates presented (dollars in thousands).
The following table presents, as of December 31, 2023, contractually obligated lease payments due under non-cancelable operating leases by payment date (dollars in thousands).
The following table presents, as of December 31, 2024, contractually obligated lease payments due under non-cancelable operating leases by payment date (dollars in thousands).
For each of the years ended December 31, 2023 and 2022, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations, or cash flows currently or in the future. 59 Table of Contents Lease Obligations .
For each of the years ended December 31, 2024 and 2023, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations, or cash flows currently or in the future. 63 Table of Contents Lease Obligations .
The Company and the Bank each were in compliance with all regulatory capital requirements as of December 31, 2023, 2022 and 2021.
The Company and the Bank each were in compliance with all regulatory capital requirements as of December 31, 2024, 2023 and 2022.
The Bank historically has entered into interest rate swap contracts, some of which are forward starting, to manage exposure against the variability in the expected future cash flows (future interest payments) attributable to changes in the 1-month LIBOR associated with the forecasted issuances of 1-month fixed rate debt arising from a rollover strategy.
The Bank historically has entered into interest rate swap contracts, some of which have been forward starting, to manage exposure against the variability in the expected future cash flows (future interest payments) attributable to changes in the 1-month SOFR associated with the forecasted issuances of 1-month fixed rate debt arising from a rollover strategy.
At December 31, 2023 , we had notional amounts of $174.9 million in interest rate swap contracts with customers and $174.9 million in offsetting interest rate swap contracts with other financial institutions.
At December 31, 2024 and 2023 , we had notional amounts of $186.9 million and $174.9 million, respectively, in interest rate swap contracts with customers and $186.9 million and $174.9 million, respectively, in offsetting interest rate swap contracts with other financial institutions.
The Company will continue this process as new commitments are entered into or existing commitments are renewed. Additionally, at December 31, 2023, the Company had unfunded commitments of $1.3 million for its investment in Small Business Investment Company qualified funds.
The Company will continue this process as new commitments are entered into or existing commitments are renewed. Additionally, at December 31, 2024, the Company had unfunded commitments of $1.0 million for its investment in SBIC qualified funds.
For the years ended December 31, 2022 and December 31, 2021, a gain of $4.3 million, net of a $1.2 million tax expense, and a gain of $5.3 million, net of a $1.4 million tax expense, respectively, was recognized in “Other comprehensive income (loss)” in the accompanying consolidated statements of comprehensive (loss) income for the change in fair value of the interest rate swap contracts. 58 Table of Contents The Company also enters into interest rate swap contracts that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement.
For the year ended December 31, 2022, a gain of $4.3 million, net of a $1.2 million tax expense, was recognized in “Other comprehensive loss” in the accompanying consolidated statement of comprehensive income (loss) for the change in fair value of the interest rate swap contracts. 62 Table of Contents The Company also enters into interest rate swap contracts that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement.
Less than one year $ 381 One to three years 727 Three to five years 682 Over five years 671 Total $ 2,461 On January 27, 2023, we completed the previously announced sale of certain assets, deposits and other liabilities associated with the Alice and Victoria, Texas branch locations.
Less than one year $ 449 One to three years 805 Three to five years 742 Over five years 350 Total $ 2,346 On January 27, 2023, we completed the previously announced sale of certain assets, deposits and other liabilities associated with the Alice and Victoria, Texas branch locations.
December 31, 2023 December 31, 2022 Commitments to extend credit: Loan commitments $ 413,019 $ 333,040 Standby letters of credit 17,844 11,379 The Company closely monitors the amount of remaining future commitments to borrowers in light of prevailing economic conditions and adjusts these commitments as necessary.
December 31, 2024 December 31, 2023 Commitments to extend credit: Loan commitments $ 377,301 $ 413,019 Standby letters of credit 7,658 17,844 The Company closely monitors the amount of remaining future commitments to borrowers in light of prevailing economic conditions and adjusts these commitments as necessary.
For years ended December 31, 2022 and December 31, 2021, unrealized gains of $6.4 million and $1.4 million, respectively, net of tax expenses of $1.7 million and $0.4 million, respectively, were reclassified from “Accumulated other comprehensive (loss) income” and recorded as “Swap termination fee income” in noninterest income in the accompanying consolidated statements of income.
For the year ended December 31, 2022, an unrealized gain of $6.4 million, net of tax expense of $1.7 million, was reclassified from “Accumulated other comprehensive loss” and recorded as “Swap termination fee income” in noninterest income in the accompanying consolidated statement of income.
Loan commitments are made to meet the financing needs of our customers, while standby letters of credit commit the Bank to make payments on behalf of customers when certain specified future events occur. The credit risks associated with loan commitments and standby letters of credit are essentially the same as those involved in making loans to our customers.
The Bank enters into loan commitments and standby letters of credit in the normal course of its business. Loan commitments are made to meet the financing needs of our customers, while standby letters of credit commit the Bank to make payments on behalf of customers when certain specified future events occur.
The reserve for unfunded loan commitments is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets. At December 31, 2023 and 2022, the reserve for unfunded loan commitments was $0.3 million and $0.4 million, respectively.
The credit risk associated with these commitments is evaluated in a manner similar to the ACL. The reserve for unfunded loan commitments is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets. At December 31, 2024 and 2023, the reserve for unfunded loan commitments was $42,000 and $0.3 million, respectively.
Accordingly, our normal credit policies apply to these arrangements. Collateral (e.g., securities, receivables, inventory, equipment, etc.) is obtained based on management’s credit assessment of the customer. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses.
The credit risks associated with loan commitments and standby letters of credit are essentially the same as those involved in making loans to our customers. Accordingly, our normal credit policies apply to these arrangements. Collateral (e.g., securities, receivables, inventory, equipment, etc.) is obtained based on management’s credit assessment of the customer.
The fair value of the swap contracts consisted of gross assets of $17.3 million and gross liabilities of $17.3 million recorded in “Other assets” and “Accrued taxes and other liabilities”, respectively, in the accompanying consolidated balance sheet. Unfunded Commitments. The Bank enters into loan commitments and standby letters of credit in the normal course of its business.
At December 31, 2024 and 2023 , the fair values of the swap contracts consisted of gross assets of $17.2 million and $17.3 million, respectively, and gross liabilities of $17.2 million and $17.3 million, respectively, recorded in “Other assets” and “Accrued taxes and other liabilities,” respectively, in the accompanying consolidated balance sheets. Unfunded Commitments.
Removed
During year ended December 31, 2021, we voluntarily terminated interest rate swap agreements with a total notional amount of $150.0 million in response to market conditions and as a result of excess liquidity.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total Construction and development Pass $ 51,811 $ 83,668 $ 25,169 $ 2,661 $ 935 $ 4,012 $ 17,496 $ 185,752 Special Mention 3,063 — 767 — — — — 3,830 Substandard — 293 489 — — 7 — 789 Total construction and development $ 54,874 $ 83,961 $ 26,425 $ 2,661 $ 935 $ 4,019 $ 17,496 $ 190,371 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — 1-4 Family Pass $ 43,047 $ 101,479 $ 85,340 $ 58,926 $ 26,836 $ 59,115 $ 33,454 $ 408,197 Special Mention — — 477 — — — — 477 Substandard 179 1,949 257 162 963 1,510 92 5,112 Total 1-4 family $ 43,226 $ 103,428 $ 86,074 $ 59,088 $ 27,799 $ 60,625 $ 33,546 $ 413,786 Current-period gross charge-offs $ (22 ) $ — $ — $ — $ (21 ) $ (3 ) $ — $ (46 ) Multifamily Pass $ 7,839 $ 64,932 $ 16,300 $ 5,045 $ 633 $ 6,969 $ 160 $ 101,878 Special Mention — — — — — 4,068 — 4,068 Substandard — — — — — — — — Total multifamily $ 7,839 $ 64,932 $ 16,300 $ 5,045 $ 633 $ 11,037 $ 160 $ 105,946 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Farmland Pass $ 1,762 $ 1,347 $ 727 $ 936 $ 775 $ 1,013 $ 1,015 $ 7,575 Special Mention — — — — — — — — Substandard — — — — — 76 — 76 Total farmland $ 1,762 $ 1,347 $ 727 $ 936 $ 775 $ 1,089 $ 1,015 $ 7,651 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate Pass $ 76,043 $ 269,311 $ 218,780 $ 175,604 $ 82,909 $ 105,083 $ 4,731 $ 932,461 Special Mention — — 181 — — — — 181 Substandard — — — 1,474 172 3,233 187 5,066 Total commercial real estate $ 76,043 $ 269,311 $ 218,961 $ 177,078 $ 83,081 $ 108,316 $ 4,918 $ 937,708 Current-period gross charge-offs $ — $ — $ — $ — $ (2 ) $ (25 ) $ — $ (27 ) Commercial and industrial Pass $ 60,123 $ 139,543 $ 31,459 $ 14,244 $ 7,439 $ 14,290 $ 273,208 $ 540,306 Special Mention — — — — — — 2,289 2,289 Substandard 49 78 154 7 416 8 114 826 Total commercial and industrial $ 60,172 $ 139,621 $ 31,613 $ 14,251 $ 7,855 $ 14,298 $ 275,611 $ 543,421 Current-period gross charge-offs $ — $ — $ (190 ) $ — $ (7 ) $ (31 ) $ (193 ) $ (421 ) Consumer Pass $ 4,881 $ 2,303 $ 1,611 $ 734 $ 250 $ 1,130 $ 658 $ 11,567 Special Mention — — — — — — — — Substandard 4 7 1 14 4 139 — 169 Total consumer $ 4,885 $ 2,310 $ 1,612 $ 748 $ 254 $ 1,269 $ 658 $ 11,736 Current-period gross charge-offs $ (119 ) $ (22 ) $ (10 ) $ (12 ) $ (5 ) $ (58 ) $ (22 ) $ (248 ) Total loans Pass $ 245,506 $ 662,583 $ 379,386 $ 258,150 $ 119,777 $ 191,612 $ 330,722 $ 2,187,736 Special Mention 3,063 — 1,425 — — 4,068 2,289 10,845 Substandard 232 2,327 901 1,657 1,555 4,973 393 12,038 Total loans $ 248,801 $ 664,910 $ 381,712 $ 259,807 $ 121,332 $ 200,653 $ 333,404 $ 2,210,619 Current-period gross charge-offs $ (141 ) $ (22 ) $ (200 ) $ (12 ) $ (35 ) $ (117 ) $ (215 ) $ (742 ) 86 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The table below presents the Company’s loan portfolio by category and credit quality indicator as of December 31, 2022 ( dollars in thousands) under the previous incurred loss methodology.
Biggest changeDecember 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Loans Total Construction and development Pass $ 53,448 $ 36,560 $ 26,585 $ 3,583 $ 2,176 $ 1,754 $ 19,946 $ 144,052 Special Mention — 374 — 737 — — — 1,111 Substandard — 4,524 4,842 — 18 6 — 9,390 Total construction and development $ 53,448 $ 41,458 $ 31,427 $ 4,320 $ 2,194 $ 1,760 $ 19,946 $ 154,553 Current-period gross charge-offs $ — $ — $ (77 ) $ (72 ) $ — $ — $ — $ (149 ) 1-4 Family Pass $ 12,039 $ 38,426 $ 92,502 $ 72,848 $ 53,300 $ 70,854 $ 51,424 $ 391,393 Special Mention 61 — — — — 2 — 63 Substandard 170 352 902 931 752 2,079 173 5,359 Total 1-4 family $ 12,270 $ 38,778 $ 93,404 $ 73,779 $ 54,052 $ 72,935 $ 51,597 $ 396,815 Current-period gross charge-offs $ (86 ) $ — $ (42 ) $ — $ — $ (120 ) $ — $ (248 ) Multifamily Pass $ 1,639 $ 7,538 $ 47,070 $ 11,994 $ 3,400 $ 6,796 $ 199 $ 78,636 Special Mention — — — — — 3,940 — 3,940 Substandard — — 649 — 1,351 — — 2,000 Total multifamily $ 1,639 $ 7,538 $ 47,719 $ 11,994 $ 4,751 $ 10,736 $ 199 $ 84,576 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Farmland Pass $ 72 $ 1,605 $ 1,290 $ 633 $ 892 $ 1,508 $ 977 $ 6,977 Special Mention — — — — — — — — Substandard — — — — — — — — Total farmland $ 72 $ 1,605 $ 1,290 $ 633 $ 892 $ 1,508 $ 977 $ 6,977 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate Pass $ 51,071 $ 77,895 $ 293,519 $ 202,461 $ 159,968 $ 134,164 $ 7,993 $ 927,071 Special Mention — 251 — 1,662 162 157 — 2,232 Substandard 3,178 648 1,321 3,986 2,901 3,094 117 15,245 Total commercial real estate $ 54,249 $ 78,794 $ 294,840 $ 208,109 $ 163,031 $ 137,415 $ 8,110 $ 944,548 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial and industrial Pass $ 45,894 $ 38,599 $ 120,877 $ 24,351 $ 7,612 $ 15,842 $ 272,853 $ 526,028 Special Mention — — — — — — 418 418 Substandard 23 — 6 24 — 235 194 482 Total commercial and industrial $ 45,917 $ 38,599 $ 120,883 $ 24,375 $ 7,612 $ 16,077 $ 273,465 $ 526,928 Current-period gross charge-offs $ — $ — $ (18 ) $ — $ — $ — $ (812 ) $ (830 ) Consumer Pass $ 4,043 $ 2,602 $ 1,307 $ 824 $ 200 $ 821 $ 645 $ 10,442 Special Mention — — — — — — — — Substandard — 144 6 — 12 83 — 245 Total consumer $ 4,043 $ 2,746 $ 1,313 $ 824 $ 212 $ 904 $ 645 $ 10,687 Current-period gross charge-offs $ (87 ) $ (6 ) $ (7 ) $ (2 ) $ — $ (25 ) $ (8 ) $ (135 ) Total loans Pass $ 168,206 $ 203,225 $ 583,150 $ 316,694 $ 227,548 $ 231,739 $ 354,037 $ 2,084,599 Special Mention 61 625 — 2,399 162 4,099 418 7,764 Substandard 3,371 5,668 7,726 4,941 5,034 5,497 484 32,721 Total loans $ 171,638 $ 209,518 $ 590,876 $ 324,034 $ 232,744 $ 241,335 $ 354,939 $ 2,125,084 Current-period gross charge-offs $ (173 ) $ (6 ) $ (144 ) $ (74 ) $ — $ (145 ) $ (820 ) $ (1,362 ) 91 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total Construction and development Pass $ 51,811 $ 83,668 $ 25,169 $ 2,661 $ 935 $ 4,012 $ 17,496 $ 185,752 Special Mention 3,063 — 767 — — — — 3,830 Substandard — 293 489 — — 7 — 789 Total construction and development $ 54,874 $ 83,961 $ 26,425 $ 2,661 $ 935 $ 4,019 $ 17,496 $ 190,371 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — 1-4 Family Pass $ 43,047 $ 101,479 $ 85,340 $ 58,926 $ 26,836 $ 59,115 $ 33,454 $ 408,197 Special Mention — — 477 — — — — 477 Substandard 179 1,949 257 162 963 1,510 92 5,112 Total 1-4 family $ 43,226 $ 103,428 $ 86,074 $ 59,088 $ 27,799 $ 60,625 $ 33,546 $ 413,786 Current-period gross charge-offs $ (22 ) $ — $ — $ — $ (21 ) $ (3 ) $ — $ (46 ) Multifamily Pass $ 7,839 $ 64,932 $ 16,300 $ 5,045 $ 633 $ 6,969 $ 160 $ 101,878 Special Mention — — — — — 4,068 — 4,068 Substandard — — — — — — — — Total multifamily $ 7,839 $ 64,932 $ 16,300 $ 5,045 $ 633 $ 11,037 $ 160 $ 105,946 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Farmland Pass $ 1,762 $ 1,347 $ 727 $ 936 $ 775 $ 1,013 $ 1,015 $ 7,575 Special Mention — — — — — — — — Substandard — — — — — 76 — 76 Total farmland $ 1,762 $ 1,347 $ 727 $ 936 $ 775 $ 1,089 $ 1,015 $ 7,651 Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate Pass $ 76,043 $ 269,311 $ 218,780 $ 175,604 $ 82,909 $ 105,083 $ 4,731 $ 932,461 Special Mention — — 181 — — — — 181 Substandard — — — 1,474 172 3,233 187 5,066 Total commercial real estate $ 76,043 $ 269,311 $ 218,961 $ 177,078 $ 83,081 $ 108,316 $ 4,918 $ 937,708 Current-period gross charge-offs $ — $ — $ — $ — $ (2 ) $ (25 ) $ — $ (27 ) Commercial and industrial Pass $ 60,123 $ 139,543 $ 31,459 $ 14,244 $ 7,439 $ 14,290 $ 273,208 $ 540,306 Special Mention — — — — — — 2,289 2,289 Substandard 49 78 154 7 416 8 114 826 Total commercial and industrial $ 60,172 $ 139,621 $ 31,613 $ 14,251 $ 7,855 $ 14,298 $ 275,611 $ 543,421 Current-period gross charge-offs $ — $ — $ (190 ) $ — $ (7 ) $ (31 ) $ (193 ) $ (421 ) Consumer Pass $ 4,881 $ 2,303 $ 1,611 $ 734 $ 250 $ 1,130 $ 658 $ 11,567 Special Mention — — — — — — — — Substandard 4 7 1 14 4 139 — 169 Total consumer $ 4,885 $ 2,310 $ 1,612 $ 748 $ 254 $ 1,269 $ 658 $ 11,736 Current-period gross charge-offs $ (119 ) $ (22 ) $ (10 ) $ (12 ) $ (5 ) $ (58 ) $ (22 ) $ (248 ) Total loans Pass $ 245,506 $ 662,583 $ 379,386 $ 258,150 $ 119,777 $ 191,612 $ 330,722 $ 2,187,736 Special Mention 3,063 — 1,425 — — 4,068 2,289 10,845 Substandard 232 2,327 901 1,657 1,555 4,973 393 12,038 Total loans $ 248,801 $ 664,910 $ 381,712 $ 259,807 $ 121,332 $ 200,653 $ 333,404 $ 2,210,619 Current-period gross charge-offs $ (141 ) $ (22 ) $ (200 ) $ (12 ) $ (35 ) $ (117 ) $ (215 ) $ (742 ) The Company had no loans that were classified as doubtful or loss at December 31, 2024 or December 31, 2023 . 92 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Loan Participations and Sold Loans Loa n participations and whole loans sold to and serviced for others are not included in the accompanying consolidated balance sheets, the balances of which w ere $38.2 million an d $25.9 million as of December 31, 2024 and 2023 , respectively.
EMPLOYEE BENEFIT PLANS The Company maintains a 401 (k) defined contribution plan (the “401 (k) Plan”), which covers employees over the age of 21 who have completed three months of credited service, as defined by the 401 (k) Plan.
EMPLOYEE BENEFIT PLANS Defined Contribution Plan The Company maintains a 401 (k) defined contribution plan (the “401 (k) Plan”), which covers employees over the age of 21 who have completed three months of credited service, as defined by the 401 (k) Plan.
The agreement provides that the executive shall receive a minimum annual base salary $510,000, shall be eligible for annual incentive compensation up to a certain percentage of the base salary, subject to the discretion and approval of the Company’s board of directors, and shall be entitled to the payment of severance benefits upon termination under specified circumstances.
The agreement provides that the executive shall receive a minimum annual base salary of $510,000, shall be eligible for annual incentive compensation up to a certain percentage of the base salary, subject to the discretion and approval of the Company’s board of directors, and shall be entitled to the payment of severance benefits upon termination under specified circumstances.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Investar Holding Corporation is a financial holding company headquartered in Baton Rouge, Louisiana, that provides, through its wholly-owned subsidiary, Investar Bank, National Association (the “Bank”), full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses throughout its markets in south Louisiana, southeast Texas and Alabama.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Investar Holding Corporation is a financial holding company headquartered in Baton Rouge, Louisiana, that provides, through its wholly-owned subsidiary, Investar Bank, National Association, full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses throughout its markets in south Louisiana, southeast Texas and Alabama.
The ACL was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management including the judgment required in evaluating management's determination of the qualitative factors and the reserve assumptions for loans evaluated on an individual basis. 63 Table of Contents How we Addressed the Matter in Our Audit The primary audit procedures we performed in responses to this critical audit matter included: • Obtained an understanding of the Company's process for establishing the ACL, including determination of the qualitative factors and reserve assumptions for loans evaluated on an individual basis, and evaluated the process utilized by management to challenge the model results and determine the best estimate of the ACL as of the balance sheet date. • Evaluated the design and tested the operating effectiveness of the controls associated with the ACL process, including controls around the reliability and accuracy of data used in the model, management's review and approval of the selected qualitative factors, the reserve assumptions for loans evaluated on an individual basis, the governance of the credit loss methodology, and management's review and approval of the ACL. • Assessed reasonableness of model methodology and key modeling assumptions, as well as the appropriateness of management’s qualitative framework, and reserve assumptions for loans evaluated on an individual basis. • Performed specific substantive tests of the model utilized, qualitative factors and the reserve assumptions for loans evaluated on an individual basis.
The ACL was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management including the judgment required in evaluating management's determination of the qualitative factors and the reserve assumptions for loans evaluated on an individual basis. 67 Table of Contents How we Addressed the Matter in Our Audit The primary audit procedures we performed in responses to this critical audit matter included: • Obtained an understanding of the Company's process for establishing the ACL, including determination of the qualitative factors and reserve assumptions for loans evaluated on an individual basis, and evaluated the process utilized by management to challenge the model results and determine the best estimate of the ACL as of the balance sheet date. • Evaluated the design and tested the operating effectiveness of the controls associated with the ACL process, including controls around the reliability and accuracy of data used in the model, management's review and approval of the selected qualitative factors, the reserve assumptions for loans evaluated on an individual basis, the governance of the credit loss methodology, and management's review and approval of the ACL. • Assessed reasonableness of model methodology and key modeling assumptions, as well as the appropriateness of management’s qualitative framework, and reserve assumptions for loans evaluated on an individual basis. • Performed specific substantive tests of the model utilized, qualitative factors and the reserve assumptions for loans evaluated on an individual basis.
The borrowers at least generate profits and cash flow that are in line with peer and industry standards and have debt service coverage ratios above loan covenants and our policy guidelines. For some of these loans, a guaranty from a financially capable party mitigates characteristics of the borrower that might otherwise result in a lower grade.
The borrowers at least generate profits and cash flow that are in line with peer and industry standards and have debt service coverage ratios above loan covenants and policy guidelines. For some of these loans, a guaranty from a financially capable party mitigates characteristics of the borrower that might otherwise result in a lower grade.
The Company intends to satisfy the disclosure requirement under Item 5.05(c) of Form 8-K regarding an amendment to, or waiver from, a provision of the Company’s Code of Ethics for the Chief Executive Officer and Senior Financial Officers by posting such information on its website, at the address specified above. Item 11.
The Company intends to satisfy the disclosure requirement under Item 5.05(c) of Form 8-K regarding an amendment to, or waiver from, a provision of the Company’s Code of Ethics for the Chief Executive Officer and Senior Financial Officers by posting such information on its website, at the address specified above.
The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, employing experienced underwriting personnel, requiring standards for appraisers, and not making subprime loans. In the third quarter of 2023, we exited the consumer mortgage origination business.
The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, employing experienced underwriting personnel, requiring standards for appraisers, and not making subprime loans. In the third quarter of 2023, the Company exited the consumer mortgage origination business.
In applying hedge accounting for derivatives, the Company establishes a method for assessing the effectiveness of the hedging derivative and a measurement approach for determining the ineffective aspect of the hedge upon the inception of the hedge. These methods are consistent with the Company’s approach to managing risk. Note 12.
In applying hedge accounting for derivatives, the Company establishes a method for assessing the effectiveness of the hedging derivative and a measurement approach for determining the ineffective aspect of the hedge upon the inception of the hedge. These methods are consistent with the Company’s approach to managing risk. Refer to Note 12.
The Company also typically requires personal guarantees from the principal owners of the property, supported by a review of their personal financial statements, as an additional means of mitigating our risk. The Company manages risk by avoiding concentrations in any one business or industry.
The Company also typically requires personal guarantees from the principal owners of the property, supported by a review of their personal financial statements, as an additional means of mitigating risk. The Company manages risk by avoiding concentrations in any one business or industry.
Derivatives executed with the same counterparty are generally subject to master netting arrangements, however, fair value amounts recognized for derivative financial instruments and fair value amounts recognized for the right/obligation to reclaim/return cash collateral are not offset for financial reporting purposes.
Derivatives executed with the same counterparty are generally subject to master netting arrangements, however, fair value amounts recognized for derivative financial instruments and fair value amounts recognized for the right or obligation to reclaim or return cash collateral are not offset for financial reporting purposes.
The 2032 Notes have a stated maturity date of April 15, 2032 and will bear interest at a fixed rate of 5.125% per year from and including April 6, 2022 to but excluding April 15, 2027 or earlier redemption date.
The 2032 Notes have a stated maturity date of April 15, 2032 and bear interest at a fixed rate of 5.125% per year from and including April 6, 2022 to but excluding April 15, 2027 or earlier redemption date.
Loans to Related Parties In the ordinary course of business, the Company makes loans to related parties including its executive officers, principal shareholders, directors and their immediate family members, as well as to companies in which these individuals are principal owners.
Loans to Related Parties In the ordinary course of business, the Company makes loans to related parties including its executive officers, directors and their immediate family members, as well as to companies in which these individuals are principal owners.
Financial Statements and Supplementary Data hereof: Report of Independent Registered Public Accounting Firms (PCAOB ID: 171) Consolidated Balance Sheets as of December 31, 2023 and 2022 Consolidated Statements of Income for the Years Ended December 31, 2023, 2022 and 2021 Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2023, 2022 and 2021 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2023, 2022 and 2021 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 Notes to Consolidated Financial Statements (2) All schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements and related notes thereto.
Financial Statements and Supplementary Data hereof: Report of Independent Registered Public Accounting Firms (PCAOB ID: 171) Consolidated Balance Sheets as of December 31, 2024 and 2023 Consolidated Statements of Income for the Years Ended December 31, 2024, 2023 and 2022 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2024, 2023 and 2022 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2024, 2023 and 2022 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022 Notes to Consolidated Financial Statements (2) All schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements and related notes thereto.
Comprehensive Income Comprehensive income includes net income and other comprehensive income or loss, which in the case of the Company includes unrealized gains and losses on securities, changes in the fair value of interest rate swaps, and the reclassification of realized gains on AFS securities and interest rate swap terminations to net income, net of related income taxes. 76 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Acquisition Accounting The Company follows the FASB ASC Topic 805 , “ Business Combinations ” (“ASC 805” ) to determine the appropriate accounting treatment for an acquisition.
Comprehensive Income Comprehensive income includes net income and other comprehensive income or loss, which in the case of the Company includes unrealized gains and losses on securities, changes in the fair value of interest rate swaps, and the reclassification of realized gains and losses on AFS securities and interest rate swap terminations to net income, net of related income taxes. 81 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Acquisition Accounting The Company follows the FASB ASC Topic 805 , “ Business Combinations ” (“ASC 805” ) to determine the appropriate accounting treatment for an acquisition.
Based on this assessment, management has concluded that, as of December 31, 2023, the Company’s system of internal control over financial reporting is effective and meets the criteria of the “Internal Control – Integrated Framework.” HORNE LLP, the Company’s independent registered public accounting firm that has audited the Company’s financial statements included in this annual report, has issued an attestation report on the Company’s internal control over financial reporting which is included herein.
Based on this assessment, management has concluded that, as of December 31, 2024, the Company’s system of internal control over financial reporting is effective and meets the criteria of the “Internal Control – Integrated Framework.” HORNE LLP, the Company’s independent registered public accounting firm that has audited the Company’s financial statements included in this Annual Report, has issued an attestation report on the Company’s internal control over financial reporting which is included herein.
DERIVATIVE FINANCIAL INSTRUMENTS As part of its liability management, the Company has historically utilized pay-fixed interest rate swaps to manage exposure against the variability in the expected future cash flows (future interest payments) attributable to changes in the 1 -month LIBOR associated with the forecasted issuances of 1 -month fixed rate debt arising from a rollover strategy.
DERIVATIVE FINANCIAL INSTRUMENTS As part of its liability management, the Company has historically utilized pay-fixed interest rate swaps to manage exposure against the variability in the expected future cash flows (future interest payments) attributable to changes in the 1 -month SOFR associated with the forecasted issuances of 1 -month fixed rate debt arising from a rollover strategy.
Any balances drawn on these lines of credit mature daily. At December 31, 2023 and 2022 , the available balance on the unsecured lines of credit totaled approximately $60.0 million, with no outstanding balance reflected on the consolidated balance sheets. Junior Subordinated Debt The following table provides a summary of the Company’s junior subordinated debentures (dollars in thousands).
Any balances drawn on these lines of credit mature daily. At December 31, 2024 and 2023 , the available balance on the unsecured lines of credit totaled approximately $60.0 million, with no outstanding balance reflected on the consolidated balance sheets. Junior Subordinated Debt The following table provides a summary of the Company’s junior subordinated debentures (dollars in thousands).
Management, with the participation of the Company’s principal executive officer and principal financial officer, conducted an assessment of the effectiveness of the Company’s system of internal control over financial reporting as of December 31, 2023, based on criteria for effective internal control over financial reporting described in the “Internal Control - Integrated Framework,” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management, with the participation of the Company’s principal executive officer and principal financial officer, conducted an assessment of the effectiveness of the Company’s system of internal control over financial reporting as of December 31, 2024, based on criteria for effective internal control over financial reporting described in the “Internal Control - Integrated Framework,” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
No impairment charges have been recognized through December 31, 2023 . Core deposit intangibles representing the value of the acquired core deposit base are generally recorded in connection with business combinations involving banks and branch locations. The Company’s policy is to amortize core deposit intangibles over the estimated useful life of the deposit base.
No impairment charges have been recognized through December 31, 2024 . Core deposit intangibles representing the value of the acquired core deposit base are generally recorded in connection with business combinations involving banks and branch locations. The Company’s policy is to amortize core deposit intangibles over the estimated useful life of the deposit base.
Any redemption we made would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption. Principal and interest on the 2032 Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events.
Any redemption the Company made would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption. Principal and interest on the 2032 Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
In June 2022, the Company redeemed the 2027 Notes in full in accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the June 30, 2022 redemption date (“Redemption Date”). The aggregate redemption price, excluding accrued interest, totaled $18.6 million.
In June 2022, the Company redeemed the 2027 Notes in full in accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the June 30, 2022 redemption date. The aggregate redemption price, excluding accrued interest, totaled $18.6 million.
These derivative instruments are classified in level 2 of the fair value hierarchy. 106 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Assets and liabilities measured at fair value on a recurring basis are summarized in the table below as of the dates indicated (dollars in thousands).
These derivative instruments are classified in level 2 of the fair value hierarchy. 109 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Assets and liabilities measured at fair value on a recurring basis are summarized in the table below as of the dates indicated (dollars in thousands).
STOCK-BASED COMPENSATION Equity Incentive Plan. The Company’s Amended and Restated 2017 Long-Term Incentive Compensation Plan (the “Plan”) authorizes the grant of various types of equity awards, such as restricted stock, restricted stock units, stock options and stock appreciation rights to eligible participants, which include all of the Company’s employees, non-employee directors, and consultants.
STOCK-BASED COMPENSATION Equity Incentive Plan. The Company’s Amended and Restated 2017 Long-Term Incentive Compensation Plan (the “Plan”) authorizes the grant of various types of equity awards, such as restricted stock, RSUs, stock options and stock appreciation rights to eligible participants, which include all of the Company’s employees, non-employee directors, and consultants.
For the years ended December 31, 2023, 2022 and 2021 , there were no gains or losses included in earnings related to the change in fair value of the assets measured on a recurring basis using significant unobservable inputs held at the end of the period.
For the years ended December 31, 2024, 2023 and 2022 , there were no gains or losses included in earnings related to the change in fair value of the assets measured on a recurring basis using significant unobservable inputs held at the end of the period.
Quantitative information about assets measured at fair value on a nonrecurring basis based on significant unobservable inputs (level 3 ) are summarized below as of the dates indicated; there were no liabilities measured on a nonrecurring basis at December 31, 2023 or 2022 (dollars in thousands).
Quantitative information about assets measured at fair value on a nonrecurring basis based on significant unobservable inputs (level 3 ) are summarized below as of the dates indicated; there were no liabilities measured on a nonrecurring basis at December 31, 2024 or 2023 (dollars in thousands).
The Company classifies these assets in level 3 of the fair value hierarchy. Deposit Liabilities – The fair values disclosed for noninterest-bearing demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). These noninterest-bearing deposits are classified in level 2 of the fair value hierarchy.
The Company classifies these assets in level 3 of the fair value hierarchy. Deposits – The fair values disclosed for noninterest-bearing demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). These noninterest-bearing deposits are classified in level 2 of the fair value hierarchy.
The types of collateral that secure collateral dependent loans are discussed under “Portfolio Segment Risk Factors” below. 83 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Portfolio Segment Risk Factors The following describes the risk characteristics relevant to each of the Company’s loan portfolio segments.
The types of collateral that secure collateral dependent loans are discussed under “Portfolio Segment Risk Factors” below. 88 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Portfolio Segment Risk Factors The following describes the risk characteristics relevant to each of the Company’s loan portfolio segments.
The allowance for credit losses is measured on a pool basis when similar risk characteristics exist and is maintained at an amount which management believes is a current estimate of the expected credit losses for the full life of the relevant pool of loans and related unfunded lending commitments.
The ACL is measured on a pool basis when similar risk characteristics exist and is maintained at an amount which management believes is a current estimate of the expected credit losses for the full life of the relevant pool of loans and related unfunded lending commitments.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
Other Information Pursuant to Item 408 (a) of Regulation S-K, none of our directors or executive officers adopted, terminated, or modified a Rule 10b5 - 1 trading arrangement or a non-Rule 10b5 - 1 trading arrangement during the quarter ended December 31, 2023 . Item 9C.
Other Information Pursuant to Item 408 (a) of Regulation S-K, none of our directors or executive officers adopted, terminated, or modified a Rule 10b5 - 1 trading arrangement or a non-Rule 10b5 - 1 trading arrangement during the quarter ended December 31, 2024 . Item 9C.
There were no assets or liabilities recorded in the accompanying consolidated balance sheets at December 31, 2023 or December 31, 2022 associated with the swap contracts, other than interest rate swaps related to customer loans, described below.
There were no assets or liabilities recorded in the accompanying consolidated balance sheets at December 31, 2024 or December 31, 2023 associated with the swap contracts, other than interest rate swaps related to customer loans, described below.
The 2032 Notes are the unsecured, subordinated obligations of the Company and rank junior in right of payment to our current and future senior indebtedness and to our obligations to our general creditors. The 2032 Notes are intended to qualify as Tier 2 capital for regulatory purposes.
The 2032 Notes are the unsecured, subordinated obligations of the Company and rank junior in right of payment to current and future senior indebtedness and to obligations to its general creditors. The 2032 Notes are intended to qualify as Tier 2 capital for regulatory purposes.
STOCKHOLDERS' EQUITY Preferred Stock The Company’s Articles of Incorporation give the Company’s board of directors the authority to issue up to 5,000,000 shares of preferred stock. At December 31, 2023 , there were no preferred shares outstanding. The preferred shares are considered “blank check” preferred stock.
STOCKHOLDERS' EQUITY Preferred Stock The Company’s Articles of Incorporation give the Company’s board of directors the authority to issue up to 5,000,000 shares of preferred stock. At December 31, 2024 and 2023 , there were no preferred shares outstanding. The preferred shares are considered “blank check” preferred stock.
The following table provides quantitative information about significant unobservable inputs used in fair value measurements of level 3 assets measured at fair value on a recurring basis at December 31, 2023 and 2022 (dollars in thousands).
The following table provides quantitative information about significant unobservable inputs used in fair value measurements of level 3 assets measured at fair value on a recurring basis at December 31, 2024 and 2023 (dollars in thousands).
Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits. Short-Term Borrowings – The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings approximate their fair values.
Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow analysis that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits. Short-Term Borrowings – The carrying amounts of federal funds purchased, repurchase agreements, and other short-term borrowings approximate their fair values.
The Company did not recognize any gains or losses in other operating income resulting from fair value adjustments of these swap agreements during the years ended December 31, 2023, 2022 and 2021 .
The Company did not recognize any gains or losses in other operating income resulting from fair value adjustments of these swap agreements during the years ended December 31, 2024, 2023 and 2022 .
Derivative Financial Instruments – The fair value measurement techniques and assumptions for derivative financial instruments is discussed earlier in the note. The estimated fair values of the Company’s financial instruments at December 31, 2023 and December 31, 2022 are shown below (dollars in thousands).
Derivative Financial Instruments – The fair value measurement techniques and assumptions for derivative financial instruments is discussed earlier in the note. The estimated fair values of the Company’s financial instruments at December 31, 2024 and December 31, 2023 are shown below (dollars in thousands).
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ HORNE LLP Baton Rouge, Louisiana March 7, 2024 62 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Investar Holding Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Investar Holding Corporation (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively, referred to as the “financial statements”).
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ HORNE LLP Baton Rouge, Louisiana March 12, 2025 66 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Investar Holding Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Investar Holding Corporation (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, referred to as the “financial statements”).
Compensation expense for restricted stock and RSUs is determined based on the market price of the Company’s common stock at the grant date and is applied to the total number of shares or units granted and is recognized on a straight-line basis over the requisite service period of generally five years for employees and two years for non-employee directors.
Compensation expense for RSUs is determined based on the market price of the Company’s common stock at the grant date and is applied to the total number of units granted and is recognized on a straight-line basis over the requisite service period of generally five years for employees and two years for non-employee directors.
FASB ASC Topic 740 “Income Taxes - Improvements to Income Tax Disclosures” Update No. 2023 - 09 ( “ ASU 2023 - 09 ”). In December 2023, the FASB issued ASU 2023 - 09, which enhances the transparency and decision usefulness of income tax disclosures.
FASB ASC Topic 740 “ Income Taxes - Improvements to Income Tax Disclosures ” Update No. 2023 - 09 ( “ ASU 2023 - 09 ”). In December 2023, the FASB issued ASU 2023 - 09, which enhances the transparency and decision usefulness of income tax disclosures.
EARNINGS PER SHARE The following is a summary of the information used in the computation of basic and diluted earnings per common share for the years ended December 31, 2023, 2022 and 2021 (in thousands, except share data).
EARNINGS PER SHARE The following is a summary of the information used in the computation of basic and diluted earnings per common share for the years ended December 31, 2024, 2023 and 2022 (in thousands, except share data).
Fair Value of Assets and Liabilities Measured on a Recurring Basis The following methods and assumptions were used by the Company in estimating the fair value of assets and liabilities valued on a recurring basis: AFS Investment Securities and Exchange-Traded Equity Securities – Where quoted prices are available in an active market, the Company classifies the securities within level 1 of the valuation hierarchy.
Fair Value of Assets and Liabilities Measured on a Recurring Basis The following methods and assumptions were used by the Company in estimating the fair value of assets and liabilities valued on a recurring basis: AFS Investment Securities and Marketable Equity Securities – Where quoted prices are available in an active market, the Company classifies the securities within level 1 of the valuation hierarchy.
Financial Statements and Supplementary Data Management ’ s Report on Internal Control over Financial Reporting To the Stockholders and Board of Directors Investar Holding Corporation Baton Rouge, Louisiana Investar Holding Corporation (the “Company”) is responsible for the preparation, integrity and fair presentation of the consolidated financial statements included in this annual report.
Financial Statements and Supplementary Data Management ’ s Report on Internal Control over Financial Reporting To the Stockholders and Board of Directors Investar Holding Corporation Baton Rouge, Louisiana Investar Holding Corporation (the “Company”) is responsible for the preparation, integrity and fair presentation of the consolidated financial statements included in this Annual Report on Form 10-K.
The Company had no securities classified as trading as of December 31, 2023 or December 31, 2022 . 79 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The approximate fair value of AFS securities and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized below as of the dates presented (dollars in thousands).
The Company had no securities classified as trading as of December 31, 2024 or December 31, 2023 . 84 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The approximate fair value of AFS securities and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized below as of the dates presented (dollars in thousands).
Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) December 31, 2023 Assets: Obligations of the U.S.
Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) December 31, 2024 Assets: Obligations of the U.S.
The Company is also subject to dividend restrictions under the terms of its 2029 Notes, 2032 Notes, and junior subordinated debentures. See “ Common Stock – Dividend Restrictions ” in Note 13. Stockholders’ Equity, for more information. 112 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements NOTE 19.
The Company is also subject to dividend restrictions under the terms of its 2032 Notes and junior subordinated debentures. See “ Common Stock – Dividend Restrictions ” in Note 13. Stockholders’ Equity, for more information. 115 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements NOTE 19.
Changes in Internal Control over Financial Reporting There were no changes to internal control over financial reporting during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Changes in Internal Control over Financial Reporting There were no changes to internal control over financial reporting during the fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Increases in the net cash surrender value of BOLI policies and insurance proceeds received are not taxable and are recorded in noninterest income in the consolidated statements of income. 74 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Repurchase Agreements Securities sold under agreements to repurchase are secured borrowings treated as financing activities and are carried at the amounts at which the securities will be subsequently reacquired as specified in the respective agreements.
Increases in the net cash surrender value of BOLI policies and insurance proceeds received upon death are not taxable and are recorded in noninterest income in the consolidated statements of income. 79 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Repurchase Agreements Securities sold under agreements to repurchase are secured borrowings treated as financing activities and are carried at the amounts at which the securities will be subsequently reacquired as specified in the respective agreements.
Compensation expense related to restricted stock and RSUs included in the accompanying consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 was $1.8 million, $2.0 million and $1.6 million, respectively. The unearned compensation related to these awards is amortized to compensation expense over the vesting period.
Compensation expense related to restricted stock and RSUs included in the accompanying consolidated statements of income for the years ended December 31, 2024, 2023 and 2022 was $1.8 million, $1.8 million and $2.0 million, respectively. The unearned compensation related to these awards is amortized to compensation expense over the vesting period.
There are no conditions or events since the regulatory framework for prompt corrective action was issued that management believes have changed the Bank’s category. 111 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2023 and December 31, 2022 are presented in the tables below (dollars in thousands).
There are no conditions or events since the regulatory framework for prompt corrective action was issued that management believes have changed the Bank’s category. 114 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2024 and December 31, 2023 are presented in the tables below (dollars in thousands).
Expected credit losses on AFS securities are recorded in an allowance for credit losses when management does not intend to sell or believes that it is not more likely than not that they will be required to sell the securities prior to recovery of the securities’ amortized cost basis.
Expected credit losses on AFS securities are recorded in an ACL when management does not intend to sell or believes that it is not more likely than not that they will be required to sell the securities prior to recovery of the securities’ amortized cost basis.
Allowance for Credit Losses Description of the Matter As described in Notes 1 and 3 to the financial statements, the Company’s allowance for credit losses (“ACL”) is a valuation that reflects the Company’s best estimate of expected credit losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the entire loan portfolio in accordance with Accounting Standards Codification ASC 326: Financial Instruments – Credit Losses.
Allowance for Credit Losses Description of the Matter As described in Notes 1 and 3 to the financial statements, the Company’s allowance for credit losses (“ACL”) is a valuation that reflects the Company’s best estimate of expected credit losses inherent within the Company’s loan portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the loan portfolio in accordance with Accounting Standards Codification ASC 326: Financial Instruments – Credit Losses.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Risk Management hereof is incorporated herein by reference. 60 Table of Contents Item 8.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Risk Management hereof is incorporated herein by reference. 64 Table of Contents Item 8.
The table below shows the aggregate principal balance of loans to such related parties for the years ended December 31, 2023 and 2022 (dollars in thousands).
The table below shows the aggregate principal balance of loans to such related parties for the years ended December 31, 2024 and 2023 (dollars in thousands).
For each pool of loans, the Company evaluates and applies qualitative adjustments to the calculated allowance for credit losses based on several factors, including, but not limited to, changes in current and expected future economic conditions, changes in the nature and volume of the portfolio, changes in levels of concentrations, changes in the volume and severity of past due loans, changes in lending policies and personnel and changes in the competitive and regulatory environment of the banking industry.
For each pool of loans, the Company evaluates and applies qualitative adjustments to the calculated ACL based on several factors, including, but not limited to, changes in current and expected future economic conditions, changes in the nature and volume of the portfolio, changes in levels of concentrations, changes in the volume and severity of past due loans, changes in lending policies and personnel and changes in the competitive and regulatory environment of the banking industry.
A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period of repayment performance by the borrower. 72 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The Company follows the FASB accounting guidance on sales of financial assets, which includes participating interests in loans.
A loan may b e returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period of repayment performance by the borrower. 76 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The Company follows the FASB accounting guidance on sales of financial assets, which includes participating interests in loans.
( 2 ) Weighted by relative fair value. 109 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Financial Instruments Accounting guidance requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring or nonrecurring basis.
( 3 ) Weighted by relative fair value. 112 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements Financial Instruments Accounting guidance requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring or nonrecurring basis.
Campbell Executive Vice President and Chief Financial Officer 61 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Investar Holding Corporation Opinion on the Internal Control Over Financial Reporting We have audited Investar Holding Corporation’s (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
Campbell Executive Vice President and Chief Financial Officer 65 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Investar Holding Corporation Opinion on the Internal Control Over Financial Reporting We have audited Investar Holding Corporation’s (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.
The 2027 Notes had an interest rate of 6.00% per annum until March 30, 2022, on which date the interest rate reset quarterly to an annual interest rate equal to the then-current LIBOR plus 394.5 basis points.
The 2027 Notes bore an interest rate of 6.00% per annum until March 30, 2022, on which date the interest rate would reset quarterly to an annual interest rate equal to the then-current LIBOR plus 394.5 basis points.
At such date, 682 of the 698 securities had been in a continuous loss position for over 12 months. The approximate fair value of HTM securities, and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized below as of the dates presented (dollars in thousands).
At such date, 628 of the 680 securities had been in a continuous loss position for over 12 months. The approximate fair value of HTM securities, and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized below as of the dates presented (dollars in thousands).
INCOME TAXES Income tax expense is displayed in the table below for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands).
INCOME TAXES Income tax expense is displayed in the table below for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands).
The allowance for credit losses on loans that are individually evaluated is based on a comparison of the recorded investment in the loan with either the expected cash flows discounted using the loan’s original effective interest rate, observable market price for the loan or the fair value of the collateral underlying certain collateral dependent loans.
The ACL on loans that are individually evaluated is based on a comparison of the recorded investment in the loan with either the expected cash flows discounted using the loan’s original effective interest rate, observable market price for the loan or the fair value of the collateral underlying certain collateral dependent loans.
OTHER REAL ESTATE OWNED The table below shows the activity in other real estate owned for the years ended December 31, 2023 and 2022 (dollars in thousands).
OTHER REAL ESTATE OWNED The table below shows the activity in other real estate owned for the years ended December 31, 2024 and 2023 (dollars in thousands).
As of December 31, 2023 and 2022 , the Bank was considered well capitalized under the regulatory framework for prompt corrective action.
As of December 31, 2024 and 2023 , the Bank was considered well-capitalized under the regulatory framework for prompt corrective action.
Hufft Exhibit 10.2 to the Current Report on Form 8-K filed August 6, 2020 and incorporated herein by reference 10.4* Amended and Restated Investar Holding Corporation 2017 Long-Term Incentive Compensation Plan Exhibit 10.1 to the Current Report on Form 8-K filed May 20, 2021 and incorporated herein by reference 10.5* Salary Continuation Agreement, dated as of February 28, 2018, by and between Investar Bank and John D’Angelo Exhibit 10.1 to the Current Report on Form 8-K of the Company filed March 1, 2018 and incorporated herein by reference 10.6* Supplemental Salary Continuation Agreement, dated May 22, 2019, by and between Investar Bank and John D’Angelo Exhibit 10.1 to the Current Report on Form 8-K of the Company filed May 23, 2019 and incorporated herein by reference 10.7* Salary Continuation Agreement, dated as of February 28, 2018, by and between Investar Bank and Christopher Hufft Exhibit 10.2 to the Current Report on Form 8-K of the Company filed March 1, 2018 and incorporated herein by reference 10.8* Supplemental Salary Continuation Agreement, dated May 22, 2019, by and between Investar Bank and Christopher Hufft Exhibit 10.2 to the Current Report on Form 8-K of the Company filed May 23, 2019 and incorporated herein by reference 10.9* Separation Agreement & Release with Christopher Hufft, dated November 4, 2022 Exhibit 10.10 to the Annual Report on Form 10-K of the Company filed March 8, 2023 and incorporated herein by reference 10.10* Form of Split Dollar Agreement by and between Investar Bank and each executive entering into a Salary Continuation Agreement Exhibit 10.4 to the Current Report on Form 8-K of the Company filed March 1, 2018 and incorporated herein by reference 10.11* Form of First Amendment to Split Dollar Agreement by and between Investar Bank and each executive entering into a Supplemental Salary Continuation Agreement Exhibit 10.3 to the Current Report on Form 8-K filed May 23, 2019 and incorporated herein by reference 10.12* Investar Holding Corporation 2014 Long-Term Incentive Compensation Plan, as amended by Amendment No. 1 to Investar Holding Corporation 2014 Long Term Incentive Plan Exhibit 10.1 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and, as to Amendment No.1, Exhibit 99.2 to the Registration Statement on Form S-8 of the Company filed October 30, 2014, each of which is incorporated herein by reference 10.13* Amendment to the Split Dollar Agreement between Investar Bank and Christopher Hufft, dated November 1, 2022 Exhibit 10.13 to the Annual Report on Form 10-K of the Company filed March 8, 2023 and incorporated herein by reference 10.14* Form of Stock Option Grant Agreement Exhibit 10.2 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and incorporated herein by reference 10.15* Form of Restricted Stock Award Agreement for Employees Exhibit 10.3 to the Annual Report on Form 10-K of the Company filed March 11, 2016 and incorporated herein by reference 10.16* Form of Restricted Stock Award Agreement for Non-Employee Directors Exhibit 10.4 to the Annual Report on Form 10-K of the Company filed March 11, 2016 and incorporated herein by reference 10.17* Form of Restricted Stock Unit Agreement for Employees Exhibit 10.15 to the Annual Report on Form 10-K of the Company filed March 15, 2019 and incorporated herein by reference 10.18* Form of Restricted Stock Unit Agreement for Non-Employee Directors Exhibit 10.16 to the Annual Report on Form 10-K of the Company filed March 15, 2019 and incorporated herein by reference 10.19* Investar Holding Corporation 401(k) Plan, as restated effective January 1, 2021 Exhibit 10.20 to the Annual Report on Form 10-K of the Company filed March 10, 2021 and incorporated herein by reference 122 Table of Contents 21.1 Subsidiaries of the Registrant Exhibit 21 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and incorporated herein by reference 23.1 Consent of Horne LLP Filed herewith 31.1 Rule 13a-14(a) Certification of Principal Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 31.2 Rule 13a-14(a) Certification of Principal Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.1 Section 1350 Certification of Principal Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.2 Section 1350 Certification of Principal Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith 97.1 Investar Holding Corporation Clawback Policy Filed herewith 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 104 Cover Page Interactive Data File (embedded within the Inline XBRL Document and include in Exhibit 101) Filed herewith * Management contract or compensatory plan or arrangement.
D’Angelo Exhibit 10.1 to the Current Report on Form 8-K filed August 6, 2020 and incorporated herein by reference 10.2* Amended and Restated Investar Holding Corporation 2017 Long-Term Incentive Compensation Plan Exhibit 10.1 to the Current Report on Form 8-K filed May 20, 2021 and incorporated herein by reference 10.3* Salary Continuation Agreement, dated as of February 28, 2018, by and between Investar Bank and John D’Angelo Exhibit 10.1 to the Current Report on Form 8-K of the Company filed March 1, 2018 and incorporated herein by reference 10.4* Supplemental Salary Continuation Agreement, dated May 22, 2019, by and between Investar Bank and John D’Angelo Exhibit 10.1 to the Current Report on Form 8-K of the Company filed May 23, 2019 and incorporated herein by reference 10.5* Form of Split Dollar Agreement by and between Investar Bank and each executive entering into a Salary Continuation Agreement Exhibit 10.4 to the Current Report on Form 8-K of the Company filed March 1, 2018 and incorporated herein by reference 10.6* Form of First Amendment to Split Dollar Agreement by and between Investar Bank and each executive entering into a Supplemental Salary Continuation Agreement Exhibit 10.3 to the Current Report on Form 8-K filed May 23, 2019 and incorporated herein by reference 10.7* Investar Holding Corporation 2014 Long-Term Incentive Compensation Plan, as amended by Amendment No. 1 to Investar Holding Corporation 2014 Long Term Incentive Plan Exhibit 10.1 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and, as to Amendment No.1, Exhibit 99.2 to the Registration Statement on Form S-8 of the Company filed October 30, 2014, each of which is incorporated herein by reference 10.8* Form of Stock Option Grant Agreement under the 2014 Long-Term Incentive Compensation Plan, as amended by Amendment No. 1 to Investar Holding Corporation 2014 Long Term Incentive Plan Exhibit 10.2 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and incorporated herein by reference 10.9* Form of Stock Option Grant Agreement under the Amended and Restated 2017 Long-Term Incentive Compensation Plan Filed herewith 10.10* Form of Restricted Stock Unit Agreement for Employees Exhibit 10.15 to the Annual Report on Form 10-K of the Company filed March 15, 2019 and incorporated herein by reference 10.11* Form of Restricted Stock Unit Agreement for Non-Employee Directors Exhibit 10.16 to the Annual Report on Form 10-K of the Company filed March 15, 2019 and incorporated herein by reference 10.12* Investar Holding Corporation 401(k) Plan, as restated effective January 1, 2021 Exhibit 10.20 to the Annual Report on Form 10-K of the Company filed March 10, 2021 and incorporated herein by reference 125 Table of Contents 19.1 Investar Holding Corporation Insider Trading Policy Filed herewith 21.1 Subsidiaries of the Registrant Filed herewith 23.1 Consent of Horne LLP Filed herewith 31.1 Rule 13a-14(a) Certification of Principal Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 31.2 Rule 13a-14(a) Certification of Principal Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.1 Section 1350 Certification of Principal Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.2 Section 1350 Certification of Principal Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith 97.1 Investar Holding Corporation Clawback Policy Exhibit 97.1 to the Annual Report on Form 10-K of the Company filed March 7, 2024 and incorporated herein by reference 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 104 Cover Page Interactive Data File (embedded within the Inline XBRL Document and include in Exhibit 101) Filed herewith * Management contract or compensatory plan or arrangement.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE The Company utilizes securities sold under agreements to repurchase (“repurchase agreements”) to facilitate the needs of our customers and to facilitate secured short-term funding needs. Repurchase agreements are stated at the amount of cash received in connection with the transaction.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE The Company utilizes securities sold under agreements to repurchase to facilitate the needs of customers and to facilitate secured short-term funding needs. Repurchase agreements are stated at the amount of cash received in connection with the transaction.
At December 31, 2023 , there was $0.3 million of unrecognized compensation cost related to stock options that is expected to be recognized over a weighted average period of 3.2 years.
At December 31, 2024 , there was $0.4 million of unrecognized compensation cost related to stock options that is expected to be recognized over a weighted average period of 3.2 years.
The loss rates computed for each pool and expected pool-level funding rates are applied to the related unfunded lending commitments to calculate an allowance for credit losses. Loans that do not share similar risk characteristics with other loans are excluded from the loan pools and individually evaluated for impairment.
The loss rates computed for each pool and expected pool-level funding rates are applied to the related unfunded lending commitments to calculate an ACL. Loans that do not share similar risk characteristics with other loans are excluded from the loan pools and individually evaluated for impairment.
F or collateral dependent loans where the borrower is experiencing financial difficulty, which the Company evaluates independently from the loan pool, the expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, which is based on third -party appraisals.
F or collateral dependent loans where the borrower is experiencing financial difficulty, which the Company evaluates independently from the loan pool, the expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, which is generally ba sed on third -party appraisals.
Deferred compensation expenses related to these plans recognized for the years ended December 31, 2023 , 2022 , and 2021 were approximately $0.2 million, $1.0 million and $0.7 million, respectively, and are included in “Salaries and employee benefits” in the accompanying consolidated statements of income. NOTE 16.
Deferred compensation expenses related to these plans recognized for the years ended December 31, 2024, 2023 and 2022 were approximately $0.5 million, $0.2 million and $1.0 million, respectively, and are included in “Salaries and employee benefits” in the accompanying consolidated statements of income. NOTE 16.
The Company also holds Small Business Investment Company qualified funds and other investment funds that do not have a readily determinable fair value. In accordance with ASC 820, these investments are measured at fair value using the net asset value practical expedient and are not required to be classified in the fair value hierarchy.
The Company holds SBIC qualified funds and other investment funds that do not have a readily determinable fair value. In accordance with ASC 820, these investments are measured at fair value using the net asset value practical expedient and are not required to be classified in the fair value hierarchy.
This classification does not mean that the assets have absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off these assets. 85 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The table below presents the Company’s loan portfolio by year of origination, category, and credit quality indicator as of December 31, 2023 (dollars in thousands).
This classification does not mean that the assets have absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off these assets. 90 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The tables below present the Company’s loan portfolio by year of origination, category, and credit quality indicator as of December 31, 2024 and December 31, 2023 (dollars in thousands).
Credits deemed uncollectible are charged to the allowance for credit losses. Provisions for credit losses and recoveries on loans previously charged off are adjustments to the allowance for credit losses.
Credits deemed uncollectible are charged to the ACL. Provisions for credit losses and recoveries on loans previously charged off are adjustments to the ACL.
If management has the intent to sell or believes it is more likely than not the Company will be required to sell an impaired available for sale security before recovery of the amortized cost basis, the credit loss is recorded as a direct write-down of the amortized cost basis.
If management has the intent to sell or believes it is more likely than not the Company will be required to sell an impaired AFS security before recovery of the amortized cost basis, the credit loss is recorded as a direct write-down of the amortized cost basis.
Less than 12 Months 12 Months or More Total December 31, 2023 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Obligations of the U.S.
Less than 12 Months 12 Months or More Total December 31, 2024 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Obligations of the U.S.
Due to the nature of the investments, current market prices, and the current interest rate environment, the Company determined that these declines were not attributable to credit losses at December 31, 2023 and 2022 . 80 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The amortized cost and approximate fair value of investment debt securities, by contractual maturity, are shown below as of the dates presented (dollars in thousands).
Due to the nature of the investments, current market prices, and the current interest rate environment, the Company determined that these declines were not attributable to credit losses at December 31, 2024 and 2023 . 85 Table of Contents INVESTAR HOLDING CORPORATION Notes to Consolidated Financial Statements The amortized cost and approximate fair value of investment debt securities, by contractual maturity, are shown below as of December 31, 2024 (dollars in thousands).
Exhibit 2.1 to the Current Report on Form 8-K of the Company filed January 25, 2021 and incorporated herein by reference 3.1 Restated Articles of Incorporation of Investar Holding Corporation Exhibit 3.1 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and incorporated herein by reference 3.2 Amended and Restated By-laws of Investar Holding Corporation Exhibit 3.2 to the Registration Statement on Form S-4 of the Company filed October 10, 2017 and incorporated herein by reference 4.1 Specimen Common Stock Certificate Exhibit 4.1 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and incorporated herein by reference 4.2 Description of Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934 Exhibit 4.2 to the Annual Report on Form 10-K of the Company filed March 9, 2022 and incorporated herein by reference 4.3 Form of 5.125% Fixed to Floating Rate Subordinated Note due 2029 Exhibit 4.1 to the Current Report on Form 8-K filed November 14, 2019 and incorporated herein by reference 4.4 Indenture, dated April 6, 2022, by and among Investar Holding Corporation and UMB Bank, National Association, as trustee Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 7, 2022 and incorporated herein by reference. 4.5 Form of 5.125% Fixed-to-Floating Rate Subordinated Note due 2032 Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on April 7, 2022 and incorporated herein by reference 121 Table of Contents 10.1 Form of the Director Support Agreement, dated October 10, 2018, among Investar Holding Corporation, Mainland Bank and all of the directors of Mainland Bank parties thereto Exhibit 10.3 to the Registration Statement on Form S-4 of the Company filed November 30, 2018 and incorporated herein by reference 10.2* Employment Agreement, dated August 1, 2020 by and among Investar Holding Corporation, Investar Bank, National Association, and John J.
Exhibit 2.1 to the Current Report on Form 8-K of the Company filed January 25, 2021 and incorporated herein by reference 3.1 Restated Articles of Incorporation of Investar Holding Corporation Exhibit 3.1 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and incorporated herein by reference 3.2 Amended and Restated By-laws of Investar Holding Corporation Exhibit 3.2 to the Registration Statement on Form S-4 of the Company filed October 10, 2017 and incorporated herein by reference 4.1 Specimen Common Stock Certificate Exhibit 4.1 to the Registration Statement on Form S-1 of the Company filed May 16, 2014 and incorporated herein by reference 4.2 Description of Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934 Exhibit 4.2 to the Annual Report on Form 10-K of the Company filed March 9, 2022 and incorporated herein by reference 4.3 Form of 5.125% Fixed to Floating Rate Subordinated Note due 2029 Exhibit 4.1 to the Current Report on Form 8-K filed November 14, 2019 and incorporated herein by reference 4.4 Indenture, dated April 6, 2022, by and among Investar Holding Corporation and UMB Bank, National Association, as trustee Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 7, 2022 and incorporated herein by reference. 4.5 Form of 5.125% Fixed-to-Floating Rate Subordinated Note due 2032 Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on April 7, 2022 and incorporated herein by reference 124 Table of Contents 10.1* Employment Agreement, dated August 1, 2020 by and among Investar Holding Corporation, Investar Bank, National Association, and John J.
At December 31, 2023 and December 31, 2022 , the majority of the Company’s level 3 investments were obligations of state and political subdivisions.
At December 31, 2024 and December 31, 2023 , the majority of the Company’s level 3 investments were obligations of state and political subdivisions.

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