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IH

Investar Holding Corp (ISTR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid core profitability with net income of $4.5M and diluted EPS of $0.46; core diluted EPS was $0.47, reflecting non-GAAP adjustments including a $0.3M OREO write-down and $0.3M insurance proceeds .
  • Net interest margin expanded 16 bps QoQ to 3.03% as funding costs fell and asset yields rose; efficiency ratio improved to 74.99% and core efficiency to 73.55% .
  • EPS and revenue topped S&P Global consensus: EPS $0.46 vs $0.38*, revenue $22.129M vs $21.150M*; strength was driven by NIM expansion and lower funding costs .
  • Strategic catalysts: announced definitive agreement to acquire Wichita Falls Bancshares (~$83.6M consideration; adding ~$1.5B assets) and completed a $32.5M 6.5% Series A preferred private placement to fund growth .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and mix optimization: “Our net interest margin improved substantially to 3.03%, a 16 basis point increase from previous quarter… we significantly reduced our funding costs while simultaneously growing the yield on interest-earning assets.” — CEO John D’Angelo .
  • Deposit remix and share accretion: Noninterest-bearing deposits grew $11.7M QoQ; book value per share rose to $26.01; the company repurchased 36,065 shares at $17.36 and raised the quarterly dividend by 5% .
  • Operating leverage: Efficiency ratio improved to 74.99% (core 73.55%), supported by higher NIM and disciplined expenses .

What Went Wrong

  • Credit metrics mixed: Nonperforming loans climbed to 0.36% of loans (from 0.27% in Q1) and allowance coverage of NPLs declined to 355.9% (from 473.3%) .
  • Earnings down QoQ: Net income fell 28.6% QoQ to $4.5M as the unusually favorable Q1 negative provision ($3.6M) normalized to a $0.1M provision .
  • Expense pressure: Salaries and benefits rose $0.7M QoQ; recorded a $0.3M write-down of OREO, partially offset by declines in FDIC assessments and collections/repo .

Financial Results

Income Statement and EPS

MetricQ4 2024Q1 2025Q2 2025
Revenue (“Income before noninterest expense”) ($USD)$20,363 $23,952 $22,129
Net Interest Income ($USD)$17,483 $18,345 $19,644
Total Noninterest Income ($USD)$5,163 $2,011 $2,626
Provision for Credit Losses ($USD)$(701) $(3,596) $141
Total Noninterest Expense ($USD)$16,079 $16,238 $16,700
Net Income ($USD)$6,107 $6,293 $4,494
Diluted EPS ($)$0.61 $0.63 $0.46
Core Diluted EPS ($)$0.65 $0.64 $0.47

Margins and Efficiency

MetricQ4 2024Q1 2025Q2 2025
Net Interest Margin (%)2.65 2.87 3.03
Yield on Interest-Earning Assets (%)5.38 5.39 5.45
Cost of Deposits (%)3.40 3.15 3.06
Cost of Funds (%)3.49 3.22 3.13
Efficiency Ratio (%)71.00 79.77 74.99
Core Efficiency Ratio (%)69.41 79.49 73.55

KPIs and Balance Sheet

KPIQ4 2024Q1 2025Q2 2025
Total Deposits ($USD)$2,345,944 $2,347,357 $2,338,185
Noninterest-Bearing Demand ($USD, % of total)$432,143; 18.4% $436,735 $448,459; 19.2%
Interest-Bearing Demand ($USD, % of total)$554,777; 23.7% $569,903 $576,473; 24.6%
Time Deposits ($USD, % of total)$739,757; 31.5% $719,386 $701,463; 30.0%
Brokered Time Deposits ($USD)$245,520 $244,935 $256,100
Loans ($USD)$2,125,084 $2,106,631 $2,106,355
Business Lending (Owner-occupied CRE + C&I) ($USD)$976.2M $960.7M $993.6M
Variable-Rate Loans (% of total)32% 32% 34%
NPLs / Total Loans (%)0.42 0.27 0.36
Allowance / Total Loans (%)1.26 1.25 1.26
CET1 Capital Ratio (Holding Co., %)10.85 11.16 11.28
Book Value per Share ($)24.55 25.63 26.01
Tangible Book Value per Share ($)20.31 21.40 21.80

Estimates vs Actuals (S&P Global)

MetricConsensusActual
EPS (Primary)$0.38*$0.46 (GAAP diluted)
Revenue ($USD)$21,150,000*$22,129,000
EPS – # of Estimates3*—
Revenue – # of Estimates2*—

Note: *Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per common shareQ2 2025$0.105 $0.11 Raised
Formal revenue/EPS/cost guidanceFY/Q3Not providedNot providedMaintained – no formal guidance
Strategic outlook (balance sheet optimization)OngoingFocus on funding mix and variable-rate origination Continued emphasis; NIM expansion and cost-of-funds reduction Maintained
M&A pipelineAnnounced—Definitive agreement to acquire Wichita Falls Bancshares (cash + 3,955,334 shares; ~$83.6M aggregate consideration based on $19.32 price) New

Earnings Call Themes & Trends

Note: Q2 2025 earnings call transcript was not available in our document set; themes below are synthesized from the earnings releases.

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Balance sheet optimization & NIMNIM stabilizing; liability-sensitive positioning NIM up 22 bps QoQ; duration kept short; deposit mix optimized NIM up to 3.03%; cost of funds down; asset yields up Improving
Funding costsCost of funds down 12 bps QoQ; BTFP repaid Cost of funds down 27 bps QoQ Cost of funds down to 3.13%; deposit costs 3.06% Improving
Variable-rate loan strategy84% of originations variable; 32% variable portfolio 69% originations variable; 32% variable portfolio 73% originations variable; 34% variable portfolio Building
Credit qualityNPLs up to 0.42%; allowance coverage dipped NPLs improved to 0.27%; negative provision NPLs up to 0.36%; small positive provision Mixed
Macro/tariffsLiability-sensitive stance amid rate cuts; deposit pricing Monitoring tariff policy volatility and inflation risks Risk disclosures note trade/tariff uncertainties and macro risks Ongoing watch
Capital actionsSub debt redemption; BTFP repayment Buyback (34,992 shrs) Buyback (36,065 shrs); dividend raised; $32.5M preferred raise Active

Management Commentary

  • “We continued to execute on our strategy of consistent, quality earnings through the optimization of our balance sheet… net interest margin improved substantially to 3.03%… reduced funding costs while growing the yield on interest-earning assets.” — John D’Angelo, President & CEO .
  • Strategic M&A: Definitive agreement to acquire Wichita Falls Bancshares (First National Bank; ~$1.5B assets), viewed as “transformational,” creating a combined bank with over $4B in assets post-close; consideration includes 3,955,334 ISTR shares and $7.2M cash .
  • Capital return and mix: Raised dividend by 5% QoQ, repurchased 36,065 shares below tangible book at $17.36, and increased noninterest-bearing deposits and interest-bearing demand balances while allowing higher-cost time deposits to run off .

Q&A Highlights

  • Transcript not available. No Q&A takeaways could be verified from primary documents.

Estimates Context

  • EPS beat: GAAP diluted EPS $0.46 vs S&P Global consensus $0.38*, driven by NIM expansion and reduced funding costs; core diluted EPS $0.47 .
  • Revenue beat: $22.129M vs consensus $21.150M*, with net interest income up 7.1% QoQ and noninterest income up 30.6% QoQ .
  • Potential estimate revisions: NIM trajectory and deposit cost declines may support upward revisions to out-quarter EPS; watch credit metrics (NPL uptick) and expense run-rate (salaries/benefits) for offset risks .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin expansion is the core driver: 16 bps QoQ NIM increase (to 3.03%) with both lower funding costs and higher earning-asset yields is a constructive trend for earnings durability .
  • Business lending momentum: Owner-occupied CRE and C&I rose $32.9M QoQ; increased variable-rate loan share (34%) improves rate neutral positioning as cycles evolve .
  • Capital actions support per-share value: Dividend raised to $0.11; ongoing buybacks below TBV are accretive; BVPS and TBVPS both increased QoQ .
  • Credit watch: NPL ratio uptick to 0.36% and lower allowance coverage of NPLs warrants monitoring; Q2 provision normalized after Q1 recovery-driven negative provision .
  • M&A catalyst: Wichita Falls Bancshares deal expands Texas footprint and scales assets to >$4B post-close; the $32.5M preferred raise provides acquisition funding flexibility .
  • Near-term trading: Positive setup from beats on EPS and revenue and visible NIM tailwinds; risk is expense creep and credit normalization; acquisition timeline/regulatory milestones could add event-driven volatility .
  • Medium-term thesis: Balance sheet optimization, deposit remix, and variable-rate loan strategy support margin resilience; inorganic growth in Texas enhances franchise value and lending capacity, contingent on integration execution .