Investar Holding Corp
For the period ended Jun 30, 2025. Filed Aug 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 6, 2025
ISTR$27.79-0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001437749-25-015124
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0001437749-25-025103
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 140 previous paragraphs and 156 current paragraphs.
86 unchanged; 52 reworded; 11 added; 1 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 67 previous and 70 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Forward-Looking and Cautionary Statements Relating to the PendingWichita Falls Transaction
Current report
With respect to the pending WFB transaction, forward-looking statements include, but are not limited to, statements about the potential benefits of the transaction, including future financial and operating results; statements about the Company’s plans, objectives, expectations and intentions; statements about the expected timing of completion of the proposed merger; and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: (i) the ability to obtain the requisite shareholder approvals; (ii) the risk that the Company may be unable to obtain governmental and regulatory approvals required to consummate the proposed merger, or required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the merger; (iii) the risk that a condition to closing may not be satisfied; (iv) the timing to consummate the proposed merger; (v) the risk that the businesses will not be integrated successfully; (vi) the risk that the cost savings and any other synergies from the proposed merger may not be fully realized or may take longer to realize than expected; (vii) disruption from the proposed merger making it more difficult to maintain relationships with customers, employees or vendors; and (viii) the diversion of management time on merger-related issues.
Current report
Pending Acquisition of WFB
Current report
On July 1, 2025, we announced that we had entered into a definitive agreement to acquire WFB, headquartered in Wichita Falls, Texas and its wholly-owned subsidiary, First National Bank. First National Bank operates seven branches and two mortgage offices in north Texas and had approximately $1.4 billion in assets at June 30, 2025. The closing of the transaction is subject to the satisfaction of all closing conditions, including the receipt of all required regulatory and shareholder approvals. For additional information, see Note 12. Subsequent Events.
Current report
Private Placement of Series A Preferred Stock
Current report
In connection with the WFB transaction, on July 1, 2025 we completed a private placement of 32,500 shares of our newly designated Series A Preferred Stock at a price of $1,000 per share, for aggregate gross proceeds of $32.5 million. For additional information, see Note 12. Subsequent Events.
Current report
Total assets increased $25.3 million, or 0.9%, to $2.75 billion at June 30, 2025, compared to $2.72 billion at December 31, 2024. For thesix months ended June 30, 2025, net income was$10.8 million, or$1.09 per diluted common share, compared to net income of$8.8 million, or$0.89, per diluted common share for thesix months ended June 30, 2024.
Current report
Net interest margin was 2.95% for the six months ended June 30, 2025, an increase of 34 basis points from 2.61% for the six months ended June 30, 2024. The increase in net interest margin was primarily driven by a 36 basis point decrease in the cost of interest-bearing liabilities and a one basis point increasein the yield on interest-earning assets.
Current report
Three months ended June 30, 2025 vs. three months ended June 30, 2024. Total noninterest income decreased $0.1 million, or 4.5%, to$2.6 million for the three months ended June 30, 2025 compared to$2.8 million for the three months ended June 30, 2024. Thedecrease in noninterest income was primarily attributable to a $0.7 million decrease in gain on sale of other real estate owned, which was realized in second quarter 2024 on the sale of certain property related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida, partially offset by a $0.4 million decrease in loss on call or sale of investment securities, and a $0.1 million increase in other operating income. The increase in other operating income is primarily attributable to $0.3 million of insurance proceeds received in second quarter 2025 for damages to a property recorded in other real estate owned, also related to the loan relationship described above, and a $0.1 million increase in distributions from other investments, partially offset by a $0.1 million decrease in derivative fee income and a $0.1 million decrease in the change in net asset value of other investments.
Current report
On July 4, 2025, the OBBBA, which contains a broad range of tax reform provisions affecting businesses, was signed into law. Since the bill was signed after the close of the quarter, no financial statement impact was reflected in the second quarter of 2025. We are currently evaluating the impact of the OBBBA on the consolidated financial statements and do not believe it will have a material impact. While the details are still under review, we do not expect a significant impact on 2025 income tax expense.
Current report
For the six months ended June 30, 2025, additions to other real estate owned were $1.0 million, which were driven by transfers of commercial real estate loans to other real estate owned. Other real estate owned with a cost basis of $0.2 million was sold during the three andsix months ended June 30, 2025 and 2024, resulting in a gain of $29,000 for the periods. During the three and six months ended June 30, 2025, we recorded$0.3 million ofwrite-downs of other real estate owned related to a property that was part of the loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida anda former branch location based on a third-party appraisal. During the six months ended June 30, 2024, we recorded a$0.2 million write-down of other real estate owned primarily related to a former branch location based on a third-party appraisal. Other real estate owned with a cost basis of $1.1 million was sold during the three andsix months ended June 30, 2024 resulting in a gain of $0.7 million for the periods, related to the loan relationship described above.
Removed paragraphs (1)
Previous report
For thethree months ended March 31, 2025, net income was$6.3 million, or$0.63 per diluted common share, compared to net income of$4.7 million, or$0.48, per diluted common share for thethree months ended March 31, 2024. Net income increased primarily due to a negative provision for credit losses of $3.6 million in the three months ended March 31, 2025 as a result of a $3.3 million recovery of loans previously charged off following a property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida, compared to a negative provision for credit losses of$1.4 million for the comparable prior period. Also contributing to the increase in net income wasa$1.1 million increase in net interest income, whichwas a result of a$2.4 million decrease in interest expense partially offset by a$1.3 million decrease in interest income. We experienced margin expansion as our cost of funds decreased and our yield on interest-earning assets increased. There was also a$0.9 million increase in noninterest expense and a$0.7 million decrease in noninterest income. Theincrease in noninterest expense was primarily due to increases in salaries and employee benefits and other operating expenses. In addition, first quarter 2024 noninterest expense was reduced by a $0.2 million gain on early extinguishment of subordinated debt. Thedecrease in noninterest income is mainly attributable to a gain on sale or disposition of fixed assets of $0.4 million recorded during thethree months ended March 31, 2024 primarily resulting from the closure of one branch in the Alabama market, and a decrease in other operating income.
Reworded paragraphs (52)
Previous wording
This section presents management’s perspective on the consolidated financial condition and results of operations of the Company and its wholly-owned subsidiary, Investar Bank, National Association. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes thereto included herein, and the audited consolidated financial statements for the year ended December 31, 2024, including the notes thereto, and the related MD&A in the Annual Report. All cross-references to the “Notes” in this Form 10-Q refer to the Notes to Consolidated Financial Statements contained in Part I. Item 1. Financial Statements unless otherwise noted.
Current wording
This section presents management’s perspective on the consolidated financial condition and results of operations of the Company and its wholly-owned subsidiary, the Bank. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes thereto included herein, and the audited consolidated financial statements for the year ended December 31, 2024, including the notes thereto, and the related MD&A in the Annual Report. All cross-references to the “Notes” in this Form 10-Q refer to the Notes to Consolidated Financial Statements contained in Part I. Item 1. Financial Statements unless otherwise noted.
Previous wording
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. Our primary areas of operation are south Louisiana, 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. At March 31, 2025, we operated 29 full service branches comprised of 20 full service branches in Louisiana, three full service branches in Texas, and six full service branches in Alabama. The Bank commenced operations in 2006, and we completed our initial public offering in July 2014. On July 1, 2019, the Bank changed from a Louisiana state bank charter to a national bank charter and its name changed to Investar Bank, National Association.
Current wording
The Bank commenced operations in 2006, and we completed our initial public offering in July 2014. On July 1, 2019, the Bank changed from a Louisiana state bank charter to a national bank charter, and its name changed to Investar Bank, National Association. 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. Our primary areas of operation are south Louisiana, 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. At June 30, 2025, we operated 29 full service branches comprised of 20 full service branches in Louisiana, three full service branches in Texas, and six full service branches in Alabama. We opened a loan and deposit production office in our Texas market in the first quarter of 2024 and converted it to a full-service branch location in the fourth quarter of 2024. We have continued to evaluate opportunities to improve our branch network efficiency, leverage our digital initiatives, and further reduce costs. We closed one branch in our Alabama market during the first quarter of 2024.
Previous wording
During 2023, we pivoted our near-term strategy from primarily a growth strategy to primarily a focus on consistent, quality earnings through the optimization of our balance sheet. Our strategy includes a focus on originating and renewing high quality, primarily variable-rate, loans and allowing higher risk credit relationships to run off. We have kept duration short on our liabilities to provide flexibility to secure lower cost funding that was accretive to our net interest margin. Our near-term strategy includes continuing to consider acquisitions on an opportunistic basis. Our long-term strategy includes organic growth through high quality loans and growth through acquisitions, including whole-bank acquisitions, strategic branch acquisitions and asset acquisitions. We have completed seven whole-bank acquisitions since 2011 and regularly review acquisition opportunities. Our most recent whole bank acquisition was completed in April 2021. We opened a loan and deposit production office in our Texas market in the first quarter of 2024 and converted it to a full-service branch location in the fourth quarter of 2024. We have continued to evaluate opportunities to improve our branch network efficiency, leverage our digital initiatives, and further reduce costs. We closed one branch in our Alabama market during the first quarter of 2024.
Current wording
Our strategy focuses on consistent, quality earnings through the optimization of our balance sheet. Our strategy includes originating and renewing high quality, primarily variable-rate, loans and allowing higher risk credit relationships to run off. We have kept duration short on our liabilities to provide flexibility to secure lower cost funding that was accretive to our net interest margin. Our strategy also includes growth through acquisitions, including whole-bank acquisitions, strategic branch acquisitions and asset acquisitions. We have completed seven whole-bank acquisitions since 2011 and regularly review acquisition opportunities. Our most recent whole bank acquisition was completed in April 2021. On July 1, 2025, we announced that we had entered into a definitive agreement to acquire WFB. For additional information, see Note 12. Subsequent Eventsand “Pending Acquisition of WFB” below.
Previous wording
Changing Inflation andInterest*** Rates***. Inflation increased rapidly during 2021 through June 2022. After June 2022, the rate of inflation generally declined although it has remained above the Federal Reserve’s target inflation rate of 2%. In response, the Federal Reserve raised the federal funds target rate multiple times from March 2022 through July 2023. During 2023, the Federal Reserve raised the federal funds target rate four times, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September 2024, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%. Accordingly, the prevailing federal funds target rate in first quarter 2025 was 100 basis points lower than in first quarter 2024.
Current wording
Changing Inflation andInterest*** Rates***. Inflation increased rapidly during 2021 through June 2022. After June 2022, the rate of inflation generally declined although it has remained above the Federal Reserve’s target inflation rate of 2%. In response, the Federal Reserve raised the federal funds target rate multiple times from March 2022 through July 2023. During 2023, the Federal Reserve raised the federal funds target rate four times, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September 2024, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%. Accordingly, the prevailing federal funds target rate for the six months ended June 30, 2025 was 100 basis points lower than for the six months ended June 30, 2024.
Previous wording
Since the third quarter of 2021 when we recorded an impairment charge of $21.6 million related to this relationship. As of March 31, 2025, we have recorded total recoveries on the relationship of approximately $7.8 million consisting of net recoveries of $6.0 million of loans previously charged off, noninterest income from a legal settlement of $1.1 million, and a gain on sale of other real estate owned of $0.7 million. At March 31, 2025, our other real estate owned related to this relationship included two remaining properties with a total cost basis of $1.7 million, which we are actively marketing for sale. Upon sale of these properties, we will have arrived at final resolution of this loan relationship.
Current wording
We recorded an impairment charge of $21.6 million related to this relationship during the third quarter of 2021. As of June 30, 2025, we have recorded total recoveries on the relationship of approximately $7.9 million on a cumulative basis. At June 30, 2025, our other real estate owned related to this relationship included two remaining properties with a total cost basis of $1.5 million, which we are actively marketing for sale. Upon sale of these properties, we will have arrived at final resolution of this loan relationship.
Previous wording
At March 31, 2025, the Company and Bank each were in compliance with all regulatory capital requirements, and the Bank was considered “well-capitalized” under the FDIC’s prompt corrective action regulations. Other key components of our performance for thethree months ended March 31, 2025 are summarized below.
Current wording
At June 30, 2025, the Company and Bank each were in compliance with all regulatory capital requirements, and the Bank was considered “well-capitalized” under the FDIC’s prompt corrective action regulations. Key components of our performance for the six months ended June 30, 2025 are summarized below.
Previous wording
General. Loans constitute our most significant asset, comprising 77% and 78% of our total assets at March 31, 2025 and December 31, 2024, respectively. Total loans decreased $18.5 million, or 0.9%, to$2.11 billion at March 31, 2025, compared to$2.13 billion at December 31, 2024. Thedecrease in loans was primarily the result of lower utilization of credit lines and loan amortization. Given the high interest rate environment, we are emphasizing origination of high margin loans that promote long-term profitability and proactively exiting credit relationships that do not fit this strategy. Our variable-rate loans as a percentage of total loans was 32% at March 31, 2025 and December 31, 2024.
Current wording
General. Loans constitute our most significant asset, comprising 77% and 78% of our total assets at June 30, 2025 and December 31, 2024, respectively. Total loans decreased $18.7 million, or 0.9%, to$2.11 billion at June 30, 2025, compared to$2.13 billion at December 31, 2024. Thedecrease in loans was primarily the result of loan amortization. Given the high interest rate environment, we are emphasizing origination of high margin loans that promote long-term profitability and proactively exiting credit relationships that do not fit this strategy. Our variable-rate loans as a percentage of total loans increased to 34% at June 30, 2025 compared to 32% at December 31, 2024.
Previous wording
At March 31, 2025, the Company’s business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was$960.7 million, a decrease of$15.5 million, or 1.6%, compared to$976.2 million at December 31, 2024. Thedecrease in the business lending portfoliois primarily driven by reduced utilization of credit lines, particularly on commercial and industrial relationships.
Current wording
At June 30, 2025, the Company’s business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was$993.6 million, an increase of$17.5 million, or 1.8%, compared to$976.2 million at December 31, 2024. Theincrease in the business lending portfoliois primarily driven by organic growth and higher utilization of credit lines, particularly on commercial and industrial relationships.
Previous wording
Nonowner-occupied loans totaled $481.9 million at March 31, 2025, a decrease of $13.4 million, or 2.7%, compared to $495.3 million at December 31, 2024. The decrease in nonowner-occupied loans is primarily due to loan amortization and payoffs that aligned with our continued strategy to optimize and de-risk the mix of the portfolio.
Current wording
Nonowner-occupied loans totaled $466.0 million at June 30, 2025, a decrease of $29.3 million, or 5.9%, compared to $495.3 million at December 31, 2024. The decrease in nonowner-occupied loans is primarily due to loan amortization and payoffs that aligned with our continued strategy to optimize and de-risk the mix of the portfolio.
Previous wording
Construction and development loans totaled $149.3 million at March 31, 2025, a decrease of $5.3 million, or 3.4%, compared to $154.6 million at December 31, 2024. The decrease in construction and development loans is primarily due to conversions to permanent loans upon completion of construction.
Current wording
Construction and development loans totaled $141.7 million at June 30, 2025, a decrease of $12.9 million, or 8.3%, compared to $154.6 million at December 31, 2024. The decrease in construction and development loans is primarily due to conversions to permanent loans upon completion of construction.
Previous wording
During the third quarter of 2023 we exited the consumer mortgage loan origination business to transition into shorter duration, higher risk-adjusted return asset classes, in an effort to focus more on our core business and optimize profitability. The consumer mortgage portfolio was approximately$237.6 million and $242.5 million at March 31, 2025 and December 31, 2024, respectively, substantially all of which is included in the 1-4 family category. The remaining loans in the 1-4 family category consisted primarily of second mortgages, home equity loans, home equity lines of credit, and business purpose loans secured by 1-4 family residential real estate.
Current wording
During the third quarter of 2023 we exited the consumer mortgage loan origination business to transition into shorter duration, higher risk-adjusted return asset classes, in an effort to focus more on our core business and optimize profitability. The consumer mortgage portfolio was approximately $233.1 million and $242.5 million at June 30, 2025 and December 31, 2024, respectively, substantially all of which is included in the 1-4 family category. The remaining loans in the 1-4 family category consisted primarily of second mortgages, home equity loans, home equity lines of credit, and business purpose loans secured by 1-4 family residential real estate.
Previous wording
We purchase investment securities primarily to provide a source for meeting liquidity needs, with return on investment a secondary consideration. We also use investment securities as collateral for certain deposits and other types of borrowings. Investment securities represented 14% of our total assets and totaled$388.0 million at March 31, 2025, an increase of$14.2 million, or 3.8%, from$373.8 million at December 31, 2024. Theincrease in investment securities at March 31, 2025 compared to December 31, 2024 was driven primarily by a $13.3 million increase in residential mortgage-backed securities, a $1.2 million increase in corporate bonds and a $1.1 million increase in commercial mortgage-backed securities, partially offset by a $1.1 million decrease in obligations of state and political subdivisions. Net unrealized losses in our AFS investment securities portfolio decreased to $54.5 million at March 31, 2025 compared to $61.4 million at December 31, 2024 primarily due to lower prevailing market interest rates. For additional information, see Note 3. Investment Securities.
Current wording
We purchase investment securities primarily to provide a source for meeting liquidity needs, with return on investment a secondary consideration. We also use investment securities as collateral for certain deposits and other types of borrowings. Investment securities represented 14% of our total assets and totaled$397.2 million at June 30, 2025, an increase of$23.4 million, or 6.3%, from$373.8 million at December 31, 2024. Theincrease in investment securities at June 30, 2025 compared to December 31, 2024 was driven primarily by a $24.4 million increase in residential mortgage-backed securities. Net unrealized losses in our AFS investment securities portfolio decreased to $52.9 million at June 30, 2025 compared to $61.4 million at December 31, 2024 primarily due to lower prevailing market interest rates. For additional information, see Note 3. Investment Securities.
Previous wording
The investment portfolio consists of AFS and HTM securities. We do not hold any investments classified as trading. We classify debt securities as HTM if management has the positive intent and ability to hold the securities to maturity. HTM debt securities are stated at amortized cost. Securities not classified as HTM are classified as AFSand are stated at fair value. As of March 31, 2025, AFS securities comprised 89% of our total investment securities.
Current wording
The investment portfolio consists of AFS and HTM securities. We do not hold any investments classified as trading. We classify debt securities as HTM if management has the positive intent and ability to hold the securities to maturity. HTM debt securities are stated at amortized cost. Securities not classified as HTM are classified as AFSand are stated at fair value. As of June 30, 2025, AFS securities comprised 90% of our total investment securities.
Previous wording
Total deposits were$2.35 billion at March 31, 2025, an increase of$1.4 million, or 0.1%, compared to$2.35 billion at December 31, 2024. There were no brokered demand deposits at March 31, 2025, compared to $47.3 million at December 31, 2024. Total deposits, excluding $47.3 million of brokered demand deposits at December 31, 2024, increased $48.7 million, or 2.1%, to $2.35 billion at March 31, 2025, compared to $2.30 billion at December 31, 2024. We utilize brokered demand deposits when pricing is more favorable than other short-term borrowings.
Current wording
Total deposits were$2.34 billion at June 30, 2025, a decrease of$7.8 million, or 0.3%, compared to$2.35 billion at December 31, 2024. There were no brokered demand deposits at June 30, 2025, compared to $47.3 million at December 31, 2024. Total deposits, excluding $47.3 million of brokered demand deposits at December 31, 2024, increased $39.6 million, or 1.7%, to$2.34 billion at June 30, 2025, compared to $2.30 billion at December 31, 2024. We utilize brokered demand deposits when pricing is more favorable than other short-term borrowings.
Previous wording
The increase in noninterest-bearing demand deposits, interest-bearing demand deposits, money market deposits, and savings deposits at March 31, 2025 compared to December 31, 2024 is primarily the result of organic growth. The decrease in time deposits at March 31, 2025 compared to December 31, 2024 is primarily due to maturities of higher cost time deposits as a result of our strategy to keep duration short. Brokered time deposits decreased to $244.9 million at March 31, 2025 from $245.5 million at December 31, 2024. We utilize brokered time deposits with laddered maturities, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings. At March 31, 2025, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration was approximately sixmonths with a weighted average rate of 4.78%.
Current wording
The increase in noninterest-bearing demand deposits, interest-bearing demand deposits, and money market deposits at June 30, 2025 compared to December 31, 2024 is primarily the result of organic growth. We increased rates on our interest-bearing demand deposits during the second quarter of 2025 compared to the second quarter of 2024 to attract and retain lower cost deposits relative to higher-cost short-term borrowings. The decrease in time deposits at June 30, 2025 compared to December 31, 2024 is primarily due to maturities of higher cost time deposits as a result of our strategy to keep duration short and lower rates. Brokered time deposits increased to $256.1 million at June 30, 2025 from $245.5 million at December 31, 2024. We utilize brokered time deposits with laddered maturities, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings. At June 30, 2025, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration was approximately four months with a weighted average rate of 4.68%.
Previous wording
At March 31, 2025, our estimated uninsured deposits were $803.7 million, or approximately 34% of total deposits, compared to $737.6 million, or approximately 31% of our total deposits at December 31, 2024. The estimates are based on the same methodologies and assumptions used for our regulatory reporting requirements. The insured deposit data 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.
Current wording
At June 30, 2025, our estimated uninsured deposits were$785.7 million, or approximately 34% of total deposits, compared to $737.6 million, or approximately 31% of our total deposits at December 31, 2024. The estimates are based on the same methodologies and assumptions used for our regulatory reporting requirements. The insured deposit data 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.
Previous wording
We had$11.3 million of securities sold under agreements to repurchase at March 31, 2025 and $8.4 million at December 31, 2024. Our advances from the FHLB were$60.0 million at March 31, 2025, a decrease of $7.2 million, compared to FHLB advances of $67.2 million at December 31, 2024. Based on original maturities, at March 31, 2025, all of our FHLB advances were long-term, compared to $7.2 million short-term and $60.0 million long-term FHLB advances at December 31, 2024. FHLB advances are used to fund new loan and investment activity that is not funded by deposits or other borrowings.
Current wording
We had$11.0 million of securities sold under agreements to repurchase at June 30, 2025 and $8.4 million at December 31, 2024. Our advances from the FHLB were$70.0 million at June 30, 2025, an increase of $2.8 million, compared to FHLB advances of $67.2 million at December 31, 2024. Based on original maturities, at June 30, 2025, $10.0 million of our FHLB advances were short-term and $60.0 million were long-term, compared to $7.2 million short-term and $60.0 million long-term FHLB advances at December 31, 2024. FHLB advances are used to fund new loan and investment activity that is not funded by deposits or other borrowings.
Previous wording
Typically, the main source of our short-term borrowings are advances from the FHLB; however, during the three months ended March 31, 2024, our primary source of short-term borrowings were borrowings under the BTFP due to more favorable rates. 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 target rate was 5.25% to 5.50% during first quarter 2024 compared to 4.25% to 4.50% during first quarter 2025.
Current wording
Typically, the main source of our short-term borrowings are advances from the FHLB; however, during the six months ended June 30, 2024, our primary source of short-term borrowings were borrowings under the BTFP due to more favorable rates. 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 target rate was 5.25% to 5.50% during first half of 2024 compared to 4.25% to 4.50% during first half of 2025.
Previous wording
The average balances and cost of short-term borrowings for thethree months ended March 31, 2025 and 2024 are summarized in the table below (dollars in thousands).
Current wording
The average balances and cost of short-term borrowings for thesix months ended June 30, 2025 and 2024 are summarized in the table below (dollars in thousands).
Previous wording
Stockholders’ equity was$251.7 million at March 31, 2025, an increase of$10.4 million compared to December 31, 2024. The increase is primarily attributable to $6.3 million of net income for thethree months ended March 31, 2025 and a$5.5 million decrease in accumulated other comprehensive loss due to an increase in the fair value of the Bank’s AFS securities portfolio, partially offset by $1.0 million in dividends declared and $0.6 million for share repurchases.
Current wording
Stockholders’ equity was$255.9 million at June 30, 2025, an increase of$14.6 million compared to December 31, 2024. The increase is primarily attributable to $10.8 million of net income for thesix months ended June 30, 2025 and a$6.7 million decrease in accumulated other comprehensive loss due to an increase in the fair value of the Bank’s AFS securities portfolio, partially offset by $2.1 million in dividends declared and $1.3 million for share repurchases.
Previous wording
The primary factors affecting net interest margin are changes in interest rates, competition, and the shape of the interest rate yield curve. The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve increased the federal funds target rate four times during 2023, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%. Accordingly, the prevailing federal funds target rate in first quarter 2025 was 100 basis points lower than in first quarter 2024. For additional discussion, see Certain Events That Affect Period-over-Period Comparability –Changing Inflation and Interest Rates.
Current wording
The primary factors affecting net interest margin are changes in interest rates, competition, and the shape of the interest rate yield curve. The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve increased the federal funds target rate four times during 2023, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%. Accordingly, the prevailing federal funds target rate during three and six months ended June 30, 2025 was 100 basis points lower than during thethree and six months ended June 30, 2024. For additional discussion, see Certain Events That Affect Period-over-Period Comparability –Changing Inflation and Interest Rates.
Previous wording
Three months ended**March 31, 2025 vs. three months ended March 31, 2024. Net interest income increased 6.6% to$18.3 million for the three months ended March 31, 2025 compared to$17.2 million for the same period in 2024. Theincrease is primarily due to a lower average balance of short-term borrowings and a decrease in the rates paid on brokered time deposits and time deposits, partially offset by a lower average balance of, and a decrease in the yield on, loans and an increase in the average rates paid on and balance of interest-bearing demand deposits. Average short-term borrowings decreased by$186.2 million for the three months ended March 31, 2025, as we paid all remaining borrowings under the BTFP in the fourth quarter of 2024. The lower average balance of, and a decrease in rates paid on, short-term borrowings resulted in a $2.3 million decrease in interest expense compared to the same period in 2024. A lower average balance of, and a decrease in rates paid on, time deposits resulted in a $0.9 million decrease in interest expense compared to the same period in 2024. Average brokered time deposits were$252.3 million during the three months ended March 31, 2025 compared to $255.7 million during the three months ended March 31, 2024, which, combined with a decrease in rates, resulted in a $0.3 million decrease in interest expense compared to the same period in 2024. Average loans decreased by$86.6 million for the three months ended March 31, 2025 in accordance with our strategy to optimize the balance sheet, which, in addition to lower loan yields, resulted in a$1.6 million decrease in interest income on loans compared to the same period in 2024. Average interest-bearing demand deposits increased by $91.1 million, which, combined with an increase in rates, resulted in a $0.9 million increase in interest expense in the first quarter of 2025 compared to the same period in 2024. Average noninterest-bearing deposits increased by $1.9 million. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates. Our yield on interest-earning assets increased primarily due to an increase in yield on the investment securities portfolio.
Current wording
Three months ended**June 30, 2025 vs. three months ended June 30, 2024. Net interest income increased 14.2% to$19.6 million for the three months ended June 30, 2025 compared to$17.2 million for the same period in 2024. Theincrease is primarily due to a lower average balance of short-term borrowings and a decrease in the rates paid on time deposits, partially offset by a lower average balance of loans and an increase in the average balance of and rates paid on interest-bearing demand deposits. Average short-term borrowings decreased by$215.6 million for the three months ended June 30, 2025, as we paid all remaining borrowings under the BTFP in the fourth quarter of 2024. The lower average balance of, and a decrease in rates paid on, short-term borrowings resulted in a $2.6 million decrease in interest expense compared to the same period in 2024. A lower average balance of, and a decrease in rates paid on, time deposits resulted in a $1.6 million decrease in interest expense compared to the same period in 2024. Average loans decreased by$64.5 million for the three months ended June 30, 2025 in accordance with our strategy to optimize the balance sheet, which, in addition to lower loan yields, resulted in a$1.0 million decrease in interest income on loans compared to the same period in 2024. Average interest-bearing demand deposits increased by $136.0 million, which, combined with an increase in rates, resulted in a $1.3 million increase in interest expense in the second quarter of 2025 compared to the same period in 2024. Average noninterest-bearing deposits increased by $22.9 million. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates. Our yield on interest-earning assets was flat as the decrease in the yield on loans was offset by an increase in the yield on the investment securities portfolio.
Previous wording
Interest income was$34.4 million for the three months ended March 31, 2025, compared to$35.7 million for the same period in 2024. Loan interest income made up substantially all of our interest income for the three months ended March 31, 2025 and 2024, although interest on investment securities contributed 9.7% of interest income during thefirst quarter of 2025 compared to 8.6% during thefirst quarter of 2024. Of the $1.3 million decrease in interest income, a decrease in interest income of $1.1 million can be attributed to the change in the volume of interest-earnings assets anda decrease of$0.2 million can be attributed toa decrease in the yield earned on interest-earning assets. The overall yield on interest-earning assets was 5.39% and 5.38% for the three months ended March 31, 2025 and 2024, respectively. The loan portfolio yielded 5.88% and 5.89% for the three months ended March 31, 2025 and March 31, 2024, respectively, while the yield on the investment portfolio was 3.10% for the three months ended March 31, 2025 compared to 2.81% for the three months ended March 31, 2024. Theincrease in the overall yield on interest-earning assets compared to the quarter ended March 31, 2024 was primarily driven by a 29 basis point increase in the yield on the investment securities portfolio, partially offset by aone basis point decrease in the yield on the loan portfolio.
Current wording
Interest income was$35.4 million for the three months ended June 30, 2025, compared to$35.8 million for the same period in 2024. Loan interest income made up substantially all of our interest income for the three months ended June 30, 2025 and 2024, although interest on investment securities contributed 10.3% of interest income during thesecond quarter of 2025 compared to 8.3% during thesecond quarter of 2024. Of the $0.4 million decrease in interest income, a decrease in interest income of $0.7 million can be attributed primarily to the decrease in the volume of loans, partially offset byan increase of$0.3 million, which can be attributed primarily toan increase in the yield earned on investment securities. The overall yield on interest-earning assets was 5.45% for each the three months ended June 30, 2025 and 2024. The loan portfolio yielded 5.94% and 5.96% for the three months ended June 30, 2025 and June 30, 2024, respectively, while the yield on the investment portfolio was 3.22% for the three months ended June 30, 2025 compared to 2.81% for the three months ended June 30, 2024. The overall yield on interest-earning assets was flat for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 and was primarily driven by a 41 basis point increase in the yield on the investment securities portfolio, offset by atwo basis point decrease in the yield on the loan portfolio.
Previous wording
Interest expense was$16.1 million for the three months ended March 31, 2025, a decrease of$2.4 million compared to interest expense of$18.5 million for the three months ended March 31, 2024. A decrease in interest expense of$1.7 million resulted from a decrease in volume of interest-bearing liabilities, primarily short-term borrowings and time deposits, partially offset by an increase in volume of interest-bearing demand deposits. A decrease of$0.7 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits and brokered time deposits, partially offset by an increase in the cost of interest-bearing demand deposits. Average interest-bearing liabilities decreased by$94.9 million for the three months ended March 31, 2025 compared to the same period in 2024, as average short-term borrowings decreased by$186.2 million while average interest-bearing deposits increased by$82.1 million. Average long-term borrowings increased by $9.1 million primarilydue utilization of long-term FHLB advances. We reduced rates on our time deposits during the first quarter of 2025 compared to the first quarter of 2024 due to lower prevailing market interest rates. We increased rates on our interest-bearing demand deposits during the first quarter of 2025 compared to the first quarter of 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings. The cost of deposits decreased 16 basis points to 3.15% for the three months ended March 31, 2025 compared to 3.31% for the three months ended March 31, 2024 as a result of a lower average balance of, and a decrease in the cost of, time deposits and brokered time deposits, partially offset by a higher average balance of, and an increase in the cost of, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 29 basis points to 3.22% for the three months ended March 31, 2025 compared to 3.51% for the same period in 2024, primarily due to a lower average balance of, and a decrease in the cost of, short-term borrowings and a decrease in the cost of time deposits and brokered time deposits, partially offset by a higher cost and average balance of interest-bearing demand deposits.
Current wording
Interest expense was$15.7 million for the three months ended June 30, 2025, a decrease of$2.9 million compared to interest expense of$18.6 million for the three months ended June 30, 2024. A decrease in interest expense of$1.9 million resulted from a decrease in the volume of interest-bearing liabilities, primarily short-term borrowings. A decrease of$1.0 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits. Average interest-bearing liabilities decreased by$75.7 million for the three months ended June 30, 2025 compared to the same period in 2024, as average short-term borrowings decreased by$215.6 million while average interest-bearing deposits increased by$125.5 million, primarily due to increases in average interest-bearing demand deposits. We increased rates on our interest-bearing demand deposits during the second quarter of 2025 compared to the second quarter of 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings. Average time deposits decreased, as we reduced rates on our time deposits during the second quarter of 2025 compared to the second quarter of 2024 due to lower prevailing market interest rates. The cost of deposits decreased 32 basis points to 3.06% for the three months ended June 30, 2025 compared to 3.38% for the three months ended June 30, 2024 primarily as a result of a decrease in the cost of time deposits, partially offset by a higher average balance of, and an increase in the cost of, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 45 basis points to 3.13% for the three months ended June 30, 2025 compared to 3.58% for the same period in 2024, primarily due to a lower average balance of short-term borrowings and a decrease in the cost of time deposits, partially offset by a higher cost and average balance of interest-bearing demand deposits.
Previous wording
Net interest margin was 2.87% for the three months ended March 31, 2025, an increase of 28 basis points from 2.59% for the three months ended March 31, 2024. Theincrease in net interest margin was primarily driven by a 29 basis point decrease in the cost of interest-bearing liabilities, partially offset by aone basis point increase in the yield on interest-earning assets.
Current wording
Net interest margin was 3.03% for the three months ended June 30, 2025, an increase of 41 basis points from 2.62% for the three months ended June 30, 2024. Theincrease in net interest margin was primarily driven by a 45 basis point decrease in the cost of interest-bearing liabilities.
Previous wording
Three months ended March 31, 2025 vs. three months ended March 31, 2024. Total noninterest income decreased $0.7 million, or 26.8%, to$2.0 million for the three months ended March 31, 2025 compared to$2.7 million for the three months ended March 31, 2024. Thedecrease in noninterest incomewas primarily attributable to a $0.4 million decrease in gain on sale or disposition of fixed assets, a $0.2 million decrease in the change in fair value of equity securities, and a $0.2 million decrease in other operating income. During the first quarter of 2024, Investar recorded a $0.4 million gain on sale or disposition of fixed assets as a result of the closure of one branch in the Alabama market. The decrease in other operating income is primarily attributable to a $0.1 million decrease in distributions from other investments and a $0.1 million decrease in the change in net asset value of other investments.
Current wording
Six months ended**June 30, 2025 vs. six months ended June 30, 2024. Total noninterest income decreased $0.9 million, or 15.7%, to $4.6 million for thesix months ended June 30, 2025 compared to $5.5 million for thesix months ended June 30, 2024. Thedecrease in noninterest income was primarily attributable to a $0.7 million decrease in gain on sale of other real estate owned, described above, and a $0.4 million decrease in gain on sale or disposition of fixed assets, partially offset by a $0.4 million decrease in loss on call or sale of investment securities. During the first quarter of 2024, we recorded a $0.4 million gain on sale or disposition of fixed assets as a result of the closure of one branch in the Alabama market. A $0.1 million decrease in other operating income is primarily attributable to a $0.2 million decrease in the change in net asset value of other investments and a $0.2 million decrease in derivative fee income, partially offset by $0.3 million of insurance proceeds received for damages to a property recorded in other real estate owned, as described above.
Previous wording
Noninterest expense includes salaries and employee benefits and other costs associated with the conduct of our operations. Our goal is to manage our costs within the framework of our near-term operating strategy of generating consistent, quality earnings.
Current wording
Noninterest expense includes salaries and employee benefits and other costs associated with the conduct of our operations. Our goal is to manage our costs within the framework of our operating strategy of generating consistent, quality earnings.
Previous wording
Three months ended March 31, 2025 vs. three months ended March 31, 2024. Total noninterest expense was$16.2 million for the three months ended March 31, 2025, an increase of$0.9 million, or 6.2%, compared to the same period in 2024. Theincrease was primarily driven by a $0.4 million increase in salaries and employee benefits, a $0.2 million decrease in gain on early extinguishment of subordinated debt, a $0.2 million increase in professional fees, and a $0.2 million increase in other operating expense, partially offset by a $0.1 million decrease in depreciation and amortization. The increase in salaries and employee benefits is primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims. During the first quarter of 2024, Investar repurchased $1.0 million in principal amount of our 2032 Notes and recognized a gain on early extinguishment of subordinated debt of $0.2 million. The increase in other operating expense resulted from a $0.3 million increase in branch services expense, and a $0.2 million increase in collection and repossession expenses, partially offset by a $0.2 million decrease in write down of other real estate owned and a $0.1 million decrease in FDIC assessments. The increase in collection and repossession expenses was primarily due to the property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. The decrease in depreciation and amortization is primarily due to the closure of one branch location in the first quarter of 2024.
Current wording
Six months ended**June 30, 2025 vs. six months ended June 30, 2024. Total noninterest expense was $32.9 million for the six months ended June 30, 2025, an increase of $2.2 million, or 7.0%, compared to the same period in 2024. The increasewas primarily driven by a $1.0 million increase in salaries and employee benefits, a $0.5 million decrease in gain on early extinguishment of subordinated debt, a $0.3 million increase in acquisition expense, a $0.2 million increase in professional fees and a $0.2 million increase in other operating expense, partially offset by a $0.2 million decrease in depreciation and amortization. The increase in salaries and employee benefits is primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims. During the first half of 2024, we repurchased $5.0 million in principal amount of our 2029 Notes and $3.0 million in principal amount of our 2032 Notes and recognized a gain on early extinguishment of subordinated debt of $0.5 million. The increase in acquisition expense is related to the WFB transaction, discussed above. The increase in other operating expense resulted from a $0.2 million increase in branch services expense and a $0.2 million increase in collection and repossession expenses. During the first quarter of 2025, we recorded a $3.3 million recovery of loans previously charged off as a result of a property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. The increase in collection and repossession expenses was primarily due to this property insurance settlement. The decrease in depreciation and amortization is primarily due to the closure of one branch location in the first quarter of 2024.
Previous wording
Income tax expense for each of thethree months ended March 31, 2025 and 2024 was$1.4 million. The effective tax rate for thethree months ended March 31, 2025 and 2024 was 18.4% and 22.7%, respectively. During the first quarter of 2024, we surrendered approximately $8.4 million of BOLI contracts and reinvested the proceeds in higher yielding policies, which resulted in $0.3 million of income tax expense. The restructuring had an expected earn-back period of just over one year.
Current wording
Income tax expense for the three months ended June 30, 2025 and 2024 was $0.9 million and $0.8 million, respectively. The effective tax rate for the three months ended June 30, 2025 and 2024 was 17.2% and 17.0%, respectively. Income tax expense for thesix months ended June 30, 2025 and 2024 was$2.4 million and $2.2 million, respectively. The effective tax rate for thesix months ended June 30, 2025 and 2024 was 17.9% and 20.1%, respectively. During the first quarter of 2024, we surrendered approximately $8.4 million of BOLI contracts and reinvested the proceeds in higher yielding policies, which resulted in $0.3 million of income tax expense. The restructuring had an expected earn-back period of just over one year.
Previous wording
For thethree months ended March 31, 2025, the effective tax rate differed from the statutory tax rate of 21% primarily due totax-exempt interest income earned on certain loans and investment securities and income from BOLI. For thethree months ended March 31, 2024, the effective tax rate differed from the statutory tax rate of 21% primarily dueto the surrender of BOLI contracts, partially offset by tax-exempt interest income earned on certain loans and investment securities and income from BOLI.
Current wording
For the three andsix months ended June 30, 2025, and the three months ended June 30, 2024 the effective tax rate differed from the statutory tax rate of 21% primarily due totax-exempt interest income earned on certain loans and investment securities and income from BOLI. For thesix months ended June 30, 2024, the effective tax rate differed from the statutory tax rate of 21% primarily due to tax-exempt interest income earned on certain loans and investment securities and income from BOLI, partially offset by the surrender of BOLI contracts.
Previous wording
At March 31, 2025 and December 31, 2024, there were no loans classified as loss or doubtful, $29.1 million and$32.7 million, respectively, of loans classified as substandard, and$11.5 million and$7.8 million, respectively, of loans classified as special mention.
Current wording
At June 30, 2025 and December 31, 2024, there were no loans classified as loss or doubtful, $31.6 million and$32.7 million, respectively, of loans classified as substandard, and$10.4 million and$7.8 million, respectively, of loans classified as special mention.
Previous wording
Allowance for Credit Losses. We account for the ACL in accordance with ASC 326, which uses the CECL accounting methodology. The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquiredand be adjusted each period through a provision for credit losses for changes in the expected lifetime credit losses. The ACL was$26.4 million and$26.7 million at March 31, 2025 and December 31, 2024, respectively.
Current wording
Allowance for Credit Losses. We account for the ACL in accordance with ASC 326, which uses the CECL accounting methodology. The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquiredand be adjusted each period through a provision for credit losses for changes in the expected lifetime credit losses. The ACL was$26.6 million and$26.7 million at June 30, 2025 and December 31, 2024, respectively.
Previous wording
We maintain a separate ACLon unfunded loan commitments, which is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets. The ACLis generally increased by the provision for credit losses and decreased by charge-offs, net of recoveries. The negative provision for credit losses for the three months ended March 31, 2025 was primarilydue to net recoverieson one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. The negative provision for credit losses for thethree months ended March 31, 2024 was primarily due to a decrease in total loans, aging of existing loans, and, to a lesser extent, the completion of our annual CECL allowance model recalibration, which resulted in lower historical loss rates.
Current wording
We maintain a separate ACLon unfunded loan commitments, which is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets. The ACLis generally increased by the provision for credit losses and decreased by charge-offs, net of recoveries. The provision for credit losses for the three months ended June 30, 2025 was primarilydue to changes in the economic forecast and loan mix. The negative provision for credit losses for the six months ended June 30, 2025 was primarilydue toa $3.3 million recovery during the first quarter of 2025 of loans previously charged off as a result of a property insurance settlement related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. The negative provision for credit losses for thethree months ended June 30, 2024 was primarily due to a decrease in total loans and aging of existing loans. The negative provision for credit losses for thesix months ended June 30, 2024 was primarily due to a decrease in total loans, aging of existing loans, and, to a lesser extent, the completion of our annual CECL allowance model recalibration, which resulted in lower historical loss rates.
Previous wording
We complete our annual model recalibration process in the first quarter of each year. Our annual review includes peer group analysis, updates to our probability of default and loss-given default models, including prepayment and curtailment assumptions, and qualitative factor scorecard ranges, as needed. The changes resulting from the model recalibration reduced the ACL by approximately $0.5 million during each of thethree month periods ended March 31, 2025 and 2024.
Current wording
We complete our annual model recalibration process in the first quarter of each year. Our annual review includes peer group analysis, updates to our probability of default and loss-given default models, including prepayment and curtailment assumptions, and qualitative factor scorecard ranges, as needed. The changes resulting from the model recalibration reduced the ACL by approximately $0.5 million during each of thesix months ended June 30, 2025 and 2024.
Previous wording
The ACL to total loans decreased to 1.25% at March 31, 2025 compared to 1.34% at March 31, 2024, and the ACL to nonaccrual loans ratio decreased to 473.3% at March 31, 2025 compared to 515.4% at March 31, 2024. The decrease in the ACL to total loans compared to March 31, 2024 is primarilydue to a decrease in total loans, aging of existing loans and an improvement in the economic forecast. The decrease in ACL to nonaccrual loans compared to March 31, 2024 is primarily due to a decrease in the ACL. Nonaccrual loans were$5.6 million, or 0.27% of total loans, at March 31, 2025, a decrease of $64,000 compared to$5.6 million, or 0.26% of total loans, at March 31, 2024. The decrease in nonaccrual loans is primarily due to paydowns.
Current wording
The ACL to total loans decreased to 1.26% at June 30, 2025 compared to 1.32% at June 30, 2024, and the ACL to nonaccrual loans ratio decreased to 357.2% at June 30, 2025 compared to 582.7% at June 30, 2024. The decrease in the ACL to total loans compared to June 30, 2024 is primarilydue to a decrease in total loans, aging of existing loans and an improvement in the economic forecast. The decrease in ACL to nonaccrual loans compared to June 30, 2024 is primarily due to an increase in nonaccrual loans. Nonaccrual loans were$7.5 million, or 0.35% of total loans, at June 30, 2025, an increase of $2.5 million compared to$4.9 million, or 0.23% of total loans, at June 30, 2024. The increase in nonaccrual loans is primarily attributable to one owner-occupied commercial relationship totaling $1.3 million and one 1-4 family loan relationship totaling $0.8 million.
Previous wording
Charge-offs reflect the realization of losses in the portfolio that were recognized previously through the provision for credit losses on loans. Net charge-offs include recoveries of amounts previously charged off. For thethree months ended March 31, 2025, net recoveries were$3.4 million, or 0.16%, of the average loan balance for the period. Net recoveries during the three months ended March 31, 2025 were primarily theresult of a property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. Net charge-offs for the three months ended March 31, 2024 were $15,000, or less than 0.01%, of the average loan balance for the period. Netcharge-offs during thethree months ended March 31, 2024 were primarily attributable to commercial and industrial and consumer loans.
Current wording
Charge-offs reflect the realization of losses in the portfolio that were recognized previously through the provision for credit losses on loans. Net charge-offs include recoveries of amounts previously charged off. For thethree months ended June 30, 2025, net recoveries were$13,000, or less than 0.01%, of the average loan balance for the period. For thesix months ended June 30, 2025, net recoveries were $3.4 million, or 0.16%, of the average loan balance for the period. Net recoveries during the six months ended June 30, 2025 were primarily theresult of a property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. Net charge-offs for the three and six months ended June 30, 2024 were $0.2 million, or 0.01%, of the average loan balance for the period. Netcharge-offs during the three andsix months ended June 30, 2024 were primarily attributable to construction and development and 1-4 family loans.
Previous wording
Management believes the ACL at March 31, 2025 is sufficient to provide adequate protection against losses in our portfolio. However, there can be no assurance that this allowance will prove to be adequate over time to cover ultimate losses in connection with our loans. 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. We are monitoring changes and potential changes to U.S. tariff and trade policies, particularly those occurring after the end of first quarter 2025. The current environment is dynamic and uncertain. Changing U.S. tariff and trade policies could cause higher inflation, higher interest rates and slower economic growth or recession in the U.S., at least in the near term. These changes and uncertainties regarding future changes could cause deterioration in credit quality that could lead us to increase our ACL in future periods. Our results of operations and financial condition could be materially adversely affected to the extent that the allowance is insufficient to cover such changes or events.
Current wording
Management believes the ACL at June 30, 2025 is sufficient to provide adequate protection against losses in our portfolio. However, there can be no assurance that this allowance will prove to be adequate over time to cover ultimate losses in connection with our loans. This ACL may prove to be inadequate due to many factors including higher inflation and interest rates than anticipated, higher unemployment 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. We are monitoring changes and potential changes to U.S. tariff and trade policies that could have an adverse impact on inflation and economic growth, at least in the near term, and which make forecasting difficult. These factors could cause deterioration in credit quality that could lead us to increase our ACL in future periods. Our results of operations and financial condition could be materially adversely affected to the extent that the ACL is insufficient to cover such changes or events.
Previous wording
Nonperforming Assets. Nonperforming assets consist of nonperforming loans and other real estate owned. Nonperforming loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue. Loans are ordinarily placed on nonaccrual when a loan is specifically* determined to be impaired or when principal and interest is delinquent for 90 days or more. Additionally, management may elect to continue the accrual when the estimated net available value of collateral is sufficient to cover the principal balance and accrued *interest. It is our policy to discontinue the accrual of interest income on any loan for which we have reasonable doubt as to the payment of interest or principal. 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. Nonperforming loans were$5.6 million, or 0.27% of total loans, at March 31, 2025, a decrease of$3.2 million compared to$8.8 million, or 0.42% of total loans, at December 31, 2024. The decrease in nonperforming loans compared to December 31, 2024 is mainly attributable to paydowns.
Current wording
Nonperforming Assets. Nonperforming assets consist of nonperforming loans and other real estate owned. Nonperforming loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue. Loans are ordinarily placed on nonaccrual when a loan is specifically* determined to be impaired or when principal and interest is delinquent for 90 days or more. Additionally, management may elect to continue the accrual when the estimated net available value of collateral is sufficient to cover the principal balance and accrued *interest. It is our policy to discontinue the accrual of interest income on any loan for which we have reasonable doubt as to the payment of interest or principal. 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. Nonperforming loans were$7.5 million, or 0.36% of total loans, at June 30, 2025, a decrease of $1.3 million compared to $8.8 million, or 0.42% of total loans, at December 31, 2024. The decrease in nonperforming loans compared to December 31, 2024 is mainly attributable to paydowns.
Previous wording
Loan Modifications to Borrowers Experiencing Financial Difficulty.Occasionally, we modify loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension, excluding covenant waivers and modification of contingent acceleration clauses, or a combination of such concessions. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. Upon the Company’s 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. During the three months ended March 31, 2025 and 2024, we did not provide any modifications under these circumstances to borrowers experiencing financial difficulty.
Current wording
Loan Modifications to Borrowers Experiencing Financial Difficulty.Occasionally, we modify loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension, excluding covenant waivers and modification of contingent acceleration clauses, or a combination of such concessions. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. Upon the Company’s 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. During the six months ended June 30, 2025 and 2024, we did not provide any modifications under these circumstances to borrowers experiencing financial difficulty.
Previous wording
For the three months ended March 31, 2025, additions to other real estate owned were $1.0 million, which were driven by transfers of commercial real estate loans to other real estate owned. No other real estate owned was sold during thethree months ended March 31, 2025 and 2024. During the three months ended March 31, 2024, we recorded a$0.2 million write-down of other real estate owned primarily related to a former branch location based on a third-party appraisal. At March 31, 2025, approximately$1.0 million of loans secured by 1-4 family residential property were in the process of foreclosure.
Current wording
At June 30, 2025, approximately $2.2 million ofloans secured by 1-4 family residential property were in the process of foreclosure.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Branch Activity. We closed one branch in Anniston, Alabama in January 2024. In October 2024, we converted an existing loan and deposit production office in our Texas market to a full-service branch location.
Current report — wording carried from elsewhere
Six months ended**June 30, 2025 vs. six months ended June 30, 2024. Net interest income increased 10.4% to $38.0 million for the six months ended June 30, 2025 compared to $34.4 million for the same period in 2024. Theincrease is primarily due to a lower average balance of short-term borrowings and a decrease in the rates paid on time deposits, partially offset by a lower average balance of loans and an increase in the average balance of and rates paid on interest-bearing demand deposits. Average short-term borrowings decreased by $200.9 million for the six months ended June 30, 2025, as we paid all remaining borrowings under the BTFP in the fourth quarter of 2024. The lower average balance of, and a decrease in rates paid on, short-term borrowings resulted in a $4.9 million decrease in interest expense compared to the same period in 2024. A lower average balance of, and a decrease in rates paid on, time deposits resulted in a $2.6 million decrease in interest expense compared to the same period in 2024. Average loans decreased by $75.6 million for the six months ended June 30, 2025 in accordance with our strategy to optimize the balance sheet, which, in addition to lower loan yields, resulted in a $2.6 million decrease in interest income on loans compared to the same period in 2024. Average interest-bearing demand deposits increased by $113.6 million, which, combined with an increase in rates, resulted in a $2.2 million increase in interest expense in the first half of 2025 compared to the same period in 2024. Average noninterest-bearing deposits increased by $12.5 million. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates. Our yield on interest-earning assets increased primarily due to an increase in yield on the investment securities portfolio.
Current report — wording carried from elsewhere
Interest income was $69.8 million for the six months ended June 30, 2025, compared to $71.5 million for the same period in 2024. Loan interest income made up substantially all of our interest income for the six months ended June 30, 2025 and 2024, although interest on investment securities contributed 10.0% of interest income during thesecond quarter of 2025 compared to 8.4% during thesecond quarter of 2024. Of the $1.7 million decrease in interest income, a decrease in interest income of $1.8 million can be attributed to the decrease in the volume of interest-earnings assets, primarily loans. The overall yield on interest-earning assets was 5.42% and 5.41% for the six months ended June 30, 2025 and 2024, respectively. The loan portfolio yielded 5.91% and 5.93% for the six months ended June 30, 2025 and June 30, 2024, respectively, while the yield on the investment portfolio was 3.16% for the six months ended June 30, 2025 compared to 2.81% for the six months ended June 30, 2024. The increase in the overall yield on interest-earning assets compared to the quarter ended June 30, 2024 was primarily driven by a 35 basis point increase in the yield on the investment securities portfolio, partially offset by a two basis point decrease in the yield on the loan portfolio.
Current report — wording carried from elsewhere
Interest expense was $31.8 million for the six months ended June 30, 2025, a decrease of $5.3 million compared to interest expense of $37.1 million for the six months ended June 30, 2024. A decrease in interest expense of $3.6 million resulted from a decrease in volume of interest-bearing liabilities, primarily short-term borrowings, partially offset by an increase in volume of interest-bearing demand deposits. A decrease in interest expense of $1.7 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits, partially offset by an increase in the cost of interest-bearing demand deposits. Average interest-bearing liabilities decreased by $85.4 million for the six months ended June 30, 2025 compared to the same period in 2024, as average short-term borrowings decreased by $200.9 million while average interest-bearing deposits increased by $103.8 million. We reduced rates on our time deposits during thesix months ended June 30, 2025 compared to the to the same period in 2024 due to lower prevailing market interest rates. We increased rates on our interest-bearing demand deposits during thesix months ended June 30, 2025 compared to the to the same period in 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings. The cost of deposits decreased 24 basis points to 3.10% for the six months ended June 30, 2025 compared to 3.34% for the six months ended June 30, 2024 primarily as a result of a lower average balance of time deposits, partially offset by a higher average balance of, and an increase in the cost of, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 36 basis points to 3.18% for the six months ended June 30, 2025 compared to 3.54% for the same period in 2024, primarily due to a lower average balance of short-term borrowings and a decrease in the cost of time deposits, partially offset by a higher cost and average balance of interest-bearing demand deposits.
Current report — wording carried from elsewhere
Average Balances and Yields. 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 for the six months ended June 30, 2025 and 2024. Averages presented in the table below are daily averages (dollars in thousands).
Current report — wording carried from elsewhere
Three months ended June 30, 2025 vs. three months ended June 30, 2024. Total noninterest expense was$16.7 million for the three months ended June 30, 2025, an increase of$1.2 million, or 7.9%, compared to the same period in 2024. Theincrease was primarily driven by a $0.7 million increase in salaries and employee benefits, a $0.3 million decrease in gain on early extinguishment of subordinated debt, and a $0.2 million increase in acquisition expense. The increase in salaries and employee benefits is primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims. During the second quarter of 2024, we repurchased $5.0 million in principal amount of our 2029 Notes and $2.0 million in principal amount of our 2032 Notes and recognized a gain on early extinguishment of subordinated debt of $0.3 million. The increase in acquisition expense is related to the WFB transaction, discussed above. A $0.1 million increase in other operating expenses resulted primarily from a $0.3 million write down in the second quarter 2025 of other real estate owned related to the loan relationship discussed above and a former branch location.
Current report — wording carried from elsewhere
Our liquidity strategy is focused on using the least costly funds available to us in the context of our balance sheet composition and interest rate risk position. Accordingly, we target growth of noninterest-bearing deposits. Although we cannot directly control the types of deposit instruments our customers choose, we can influence those choices with the interest rates and deposit specials we offer. In recent years, the proportion of our deposits represented by noninterest-bearing deposits has declined primarily due to rising market interest rates as customers have migrated to higher yielding alternatives, although such proportion increased as of the end of second quarter 2025 as rates declined in the latter part of 2024.
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Previous report — wording carried elsewhere
Branch Closures. We closed one branch in Anniston, Alabama in January 2024.