BATON ROUGE, LA / ACCESSWIRE / October 24, 2022 / Investar Holding Corporation ("Investar") (NASDAQ:ISTR), the holding company for Investar Bank, National Association (the "Bank"), today announced financial results for the quarter ended September 30, 2022. Investar reported net income of $7.3 million, or $0.73 per diluted common share, for the third quarter of 2022, compared to net income of $9.4 million, or $0.92 per diluted common share, for the quarter ended June 30, 2022, and a net loss of $10.0 million, or $0.95 per diluted common share, for the quarter ended September 30, 2021.

On a non-GAAP basis, core earnings (loss) per diluted common share for the third quarter of 2022 were $0.71 compared to $0.62 for the second quarter of 2022 and ($1.06) for the third quarter of 2021. Core earnings (loss) exclude certain non-operating items including, but not limited to, change in the fair value of equity securities, swap termination fee income, and acquisition expense (refer to the Reconciliation of Non-GAAP Financial Measures tables for a reconciliation of GAAP to non-GAAP metrics).

Investar's President and Chief Executive Officer John D'Angelo said:

"Despite a changing economic environment, our third quarter results were impressive. Our loan portfolio grew to an all-time high of over $2.0 billion as we experienced strong loan growth of 4.7%, or 18.8% annualized, compared to the second quarter. Net interest income increased 6.8% and our net interest margin increased quarter-over-quarter. Credit quality metrics also remained strong as our nonperforming loans decreased almost $4.0 million and now represent only 0.65% of total loans compared to 0.89% in the second quarter as we continue to focus on high quality underwriting and disciplined lending. I am proud of the great progress we have made towards our performance goals. Our new leadership, branch consolidation, and digital delivery strategies are working together to improve our key performance metrics and position the Bank to operate more efficiently.

As always, we remain focused on long-term shareholder value. In September, the board of directors approved an additional 300,000 shares for repurchase. We repurchased 126,861 shares of our common stock at an average price of $21.48 during the third quarter and increased our quarterly dividend by 6% compared to the second quarter dividend."

Third Quarter Highlights

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Total loans increased $89.3 million, or 4.7%, to $2.01 billion at September 30, 2022, compared to $1.92 billion at June 30, 2022, and increased $125.0 million, or 6.6%, compared to $1.88 billion at September 30, 2021. Excluding Paycheck Protection Program ("PPP") loans, total loans increased $90.9 million, or 4.8% (19.2% annualized), to $2.00 billion at September 30, 2022, compared to $1.91 billion at June 30, 2022, and increased $165.0 million, or 9.0%, compared to $1.84 billion at September 30, 2021.

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Commercial and industrial loans increased $54.4 million, or 15.8%, to $397.8 million at September 30, 2022 compared to $343.4 million at June 30, 2022, and increased $62.8 million, or 18.7%, compared to $335.0 million at September 30, 2021. Excluding PPP loans, commercial and industrial loans increased $56.0 million, or 16.5%, to $395.9 million at September 30, 2022 compared to $339.9 million at June 30, 2022 and increased $102.7 million, or 35.0%, compared to $293.1 million at September 30, 2021.

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Credit quality continues to strengthen with nonperforming loans improving to 0.65% of total loans at September 30, 2022 compared to 0.89% and 1.75% at June 30, 2022 and September 30, 2021, respectively.

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Net interest margin increased to 3.77% for the quarter ended September 30, 2022 compared to 3.70% for the quarter ended June 30, 2022 and 3.44% for the quarter ended September 30, 2021.

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Return on average assets decreased to 1.11% for the quarter ended September 30, 2022 compared to 1.48% for the quarter ended June 30, 2022 and increased from (1.47)% for the quarter ended September 30, 2021. Core return on average assets improved to 1.08% for the quarter ended September 30, 2022 compared to 0.99% for the quarter ended June 30, 2022 and (1.63)% for the quarter ended September 30, 2021.

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Efficiency ratio increased to 61.10% for the quarter ended September 30, 2022 compared to 54.85% for the quarter ended June 30, 2022 and improved from 64.33% for the quarter ended September 30, 2021. Core efficiency ratio improved to 61.63% for the quarter ended September 30, 2022 compared to 63.21% and 67.17% for the quarters ended June 30, 2022 and September 30, 2021, respectively.

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Investar repurchased 126,861 shares of its common stock through its stock repurchase program at an average price of $21.48 during the quarter ended September 30, 2022, leaving 396,912 shares authorized for repurchase under the current stock repurchase plan after the board approved an additional 300,000 shares for repurchase in the third quarter. The Company has repurchased 508,780 shares of its common stock at an average price of $20.27 during the nine months ended September 30, 2022.

Loans

Total loans were $2.01 billion at September 30, 2022, an increase of $89.3 million, or 4.7%, compared to June 30, 2022, and an increase of $125.0 million, or 6.6%, compared to September 30, 2021.

The following table sets forth the composition of the total loan portfolio as of the dates indicated (dollars in thousands).

							Linked Quarter Change					Year/Year Change					Percentage of Total Loans
	9/30/2022		6/30/2022		9/30/2021		$			%		$			%		9/30/2022			9/30/2021
Mortgage loans on real estate
Construction and development	$	220,609	$	214,543	$	215,247	$	6,066		2.8	%	$	5,362		2.5	%		11.0	%		11.5	%
1-4 Family		391,857		380,028		362,249		11,829		3.1			29,608		8.2			19.5			19.3
Multifamily		57,306		56,491		58,972		815		1.4			(1,666	)	(2.8	)		2.9			3.1
Farmland		14,202		15,676		21,376		(1,474	)	(9.4	)		(7,174	)	(33.6	)		0.7			1.1
Commercial real estate
Owner-occupied		445,671		440,714		432,898		4,957		1.1			12,773		3.0			22.2			23.0
Nonowner-occupied		464,520		451,108		435,575		13,412		3.0			28,945		6.6			23.2			23.2
Commercial and industrial		397,759		343,355		335,008		54,404		15.8			62,751		18.7			19.8			17.8
Consumer		13,753		14,480		19,333		(727	)	(5.0	)		(5,580	)	(28.9	)		0.7			1.0
Total loans		2,005,677		1,916,395		1,880,658		89,282		4.7	%		125,019		6.6	%		100	%		100	%
Loans held for sale		-		-		300		-		-			(300	)	(100.0	)
Total gross loans	$	2,005,677	$	1,916,395	$	1,880,958	$	89,282		4.7	%	$	124,719		6.6	%

In the second quarter of 2020, the Bank began participating as a lender in the PPP as established by the CARES Act. The PPP loans are generally 100% guaranteed by the Small Business Administration ("SBA"), have an interest rate of 1%, and are eligible to be forgiven based on certain criteria, with the SBA remitting any applicable forgiveness amount to the lender. At September 30, 2022, the balance of the Bank's PPP loans, which is included in the commercial and industrial portfolio, was $1.9 million, compared to $3.5 million at June 30, 2022 and $41.9 million at September 30, 2021. At September 30, 2022, approximately 99% of the total balance of PPP loans originated have been forgiven by the SBA or paid off by the customer.

At September 30, 2022, the Bank's total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $843.4 million, an increase of $59.4 million, or 7.6%, compared to the business lending portfolio of $784.1 million at June 30, 2022, and an increase of $75.5 million, or 9.8%, compared to the business lending portfolio of $767.9 million at September 30, 2021. The increase in the business lending portfolio compared to June 30, 2022 and September 30, 2021 is primarily driven by increased loan production by our Commercial and Industrial Division, slightly offset by the forgiveness of PPP loans.

Nonowner-occupied loans totaled $464.5 million at September 30, 2022, an increase of $13.4 million, or 3.0%, compared to $451.1 million at June 30, 2022, and an increase of $28.9 million, or 6.6%, compared to $435.6 million at September 30, 2021. The increase in nonowner-occupied loans compared to June 30, 2022 and September 30, 2021 is due to organic growth.

Credit Quality

Nonperforming loans were $13.1 million, or 0.65% of total loans, at September 30, 2022, a decrease of $3.9 million compared to $17.0 million, or 0.89% of total loans, at June 30, 2022, and a decrease of $19.8 million compared to $32.9 million, or 1.75% of total loans, at September 30, 2021. The decrease in nonperforming loans compared to June 30, 2022 and September 30, 2021 is mainly attributable to large paydowns and a transfer to other real estate owned, net on one loan relationship, discussed further below. Included in nonperforming loans are acquired loans with a balance of $1.7 million at September 30, 2022, or 13% of nonperforming loans.

The allowance for loan losses was $23.2 million, or 176.6% and 1.15% of nonperforming and total loans, respectively, at September 30, 2022, compared to $22.0 million, or 128.9% and 1.15%, respectively, at June 30, 2022, and $20.6 million, or 62.4% and 1.09%, respectively, at September 30, 2021.

We recorded a provision for loan losses of $1.2 million for the quarter ended September 30, 2022 compared to a provision for loan losses of $0.9 million for the quarter ended June 30, 2022 and a provision for loan losses of $21.7 million for the quarter ended September 30, 2021. The increase in the provision for loan losses compared to the quarter ended June 30, 2022, is primarily attributable to organic loan growth. The provision for loan losses for the quarter ended September 30, 2021 includes an impairment charge of $21.6 million related to a loan relationship with related borrowers (collectively, the "Borrower") consisting of multiple loans that are secured by various types of collateral. As a result of Hurricane Ida, which made landfall in Louisiana as a category 4 hurricane on August 29, 2021, the Borrower's business operations were disrupted causing a significant reduction in value of some of the collateral supporting the loan relationship, including real estate, inventory, and equipment.

Deposits

Total deposits at September 30, 2022 were $2.05 billion, a decrease of $10.0 million, or 0.5%, compared to $2.06 billion at June 30, 2022, and a decrease of $251.0 million, or 10.9%, compared to $2.30 billion at September 30, 2021. The decrease in deposits compared to June 30, 2022 is due to increased consumer spending, as customers drew down on their existing deposit accounts. The decrease in deposits compared to September 30, 2021 is driven by management's decision to run-off higher yielding time deposits through the end of the second quarter and the elimination of brokered deposits, which the Bank has historically used to satisfy required borrowings under its interest rate swap agreements.

Beginning in 2020, the COVID-19 pandemic created a significant amount of excess liquidity in the market, and, as a result, we experienced large increases in both noninterest and interest-bearing demand deposits, and in money market deposit accounts and savings accounts during 2020 and 2021. These increases were primarily driven by reduced consumer and business spending related to the COVID-19 pandemic and increases in some PPP borrowers' deposit accounts. As anticipated, these conditions were temporary in nature as the economy has been slowly recovering from the effects of the COVID-19 pandemic.

The following table sets forth the composition of deposits as of the dates indicated (dollars in thousands).

							Linked Quarter Change				Year/Year Change				Percentage of Total Deposits
	9/30/2022		6/30/2022		9/30/2021		$		%		$		%		9/30/2022		9/30/2021
Noninterest-bearing demand deposits	$	590,610	$	615,779	$	597,452	$	(25,169)	(4.1)	%	$	(6,842)	(1.1)	%	28.8	%	25.9	%
Interest-bearing demand deposits		624,025		647,277		658,743		(23,252)	(3.6)			(34,718)	(5.3)		30.4		28.6
Brokered deposits		-		-		125,016		-	-			(125,016)	(100.0)		-		5.4
Money market deposit accounts		251,213		243,795		264,846		7,418	3.0			(13,633)	(5.1)		12.2		11.5
Savings accounts		167,131		176,760		174,953		(9,629)	(5.4)			(7,822)	(4.5)		8.1		7.6
Time deposits		419,704		379,059		482,631		40,645	10.7			(62,927)	(13.0)		20.5		21.0
Total deposits	$	2,052,683	$	2,062,670	$	2,303,641	$	(9,987)	(0.5)	%	$	(250,958)	(10.9)	%	100.0	%	100.0	%

Stockholders' Equity

Stockholders' equity was $205.7 million at September 30, 2022, a decrease of $13.7 million, or 6.2%, compared to June 30, 2022, and a decrease of $30.6 million, or 13.0%, compared to September 30, 2021. The decrease in stockholders' equity compared to June 30, 2022 and September 30, 2021 is primarily attributable to an increase in accumulated other comprehensive loss due to a decrease in the fair value of the Bank's available for sale securities portfolio.

Net Interest Income

Net interest income for the third quarter of 2022 totaled $23.5 million, an increase of $1.5 million, or 6.8%, compared to the second quarter of 2022, and an increase of $1.9 million, or 8.9%, compared to the third quarter of 2021. Included in net interest income for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021 is $0.1 million, $0.2 million, and $0.3 million, respectively, of interest income accretion from the acquisition of loans. Also included in net interest income for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021 are interest recoveries of $0.1 million, $36,000, and $0.2 million, respectively.

Investar's net interest margin was 3.77% for the quarter ended September 30, 2022, compared to 3.70% for the quarter ended June 30, 2022 and 3.44% for the quarter ended September 30, 2021. The increase in net interest margin for the quarter ended September 30, 2022 compared to the quarter ended June 30, 2022 was driven by a 25 basis point increase in the yield on interest-earning assets, partially offset by a 24 basis point increase in the cost of funds. The increase in net interest margin for the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021 was driven by a seven basis point increase in the yield on the loan portfolio and a 92 basis point increase in the yield on the securities portfolio, together resulting in a 43 basis point increase in the yield on interest-earning assets.

The yield on interest-earning assets was 4.34% for the quarter ended September 30, 2022, compared to 4.09% for the quarter ended June 30, 2022 and 3.91% for the quarter ended September 30, 2021. The increase in the yield on interest-earning assets compared to the quarter ended June 30, 2022 was primarily attributable to a 26 basis point increase in the yield on the loan portfolio and a 33 basis point increase in the yield on the taxable securities portfolio. The increase in the yield on interest-earning assets compared to the quarter ended September 30, 2021 was primarily driven by a seven basis point increase in the yield on the loan portfolio and a 101 basis point increase in the yield on the taxable securities portfolio.

Exclusive of PPP loans, which had an average balance of $2.5 million and related interest and fee income of $0.1 million for the quarter ended September 30, 2022, compared to an average balance of $7.7 million and related interest and fee income of $0.3 million for the quarter ended June 30, 2022 and an average balance of $58.5 million and related interest and fee income of $1.3 million for the quarter ended September 30, 2021, adjusted net interest margin was 3.76% for the quarter ended September 30, 2022, compared to an adjusted net interest margin of 3.65% for the quarter ended June 30, 2022 and 3.31% for the quarter ended September 30, 2021. Included in PPP interest and fee income for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021 is $0.1 million, $0.3 million, and $1.0 million, respectively, of accelerated fee income recognized due to the forgiveness or pay-off of PPP loans. Refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics.

Exclusive of the interest income accretion from the acquisition of loans, interest recoveries, and accelerated fee income recognized due to the forgiveness or pay-off of PPP loans, adjusted net interest margin increased to 3.72% for the quarter ended September 30, 2022, compared to 3.61% for the quarter ended June 30, 2022, and 3.21% for the quarter ended September 30, 2021. The adjusted yield on interest-earning assets was 4.29% for the quarter ended September 30, 2022 compared to 4.01% and 3.67% for the quarters ended June 30, 2022 and September 30, 2021, respectively. Refer to the Reconciliation of Non-GAAP Financial Measures table for a reconciliation of GAAP to non-GAAP metrics.

The cost of deposits increased 12 basis points to 0.36% for the quarter ended September 30, 2022 compared to 0.24% for the quarter ended June 30, 2022 and decreased seven basis points compared to 0.43% for the quarter ended September 30, 2021. The increase in the cost of deposits compared to the quarter ended June 30, 2022 reflects the increase in rates paid for interest-bearing demand deposits and time deposits. The decrease in the cost of deposits compared to the quarter ended September 30, 2021 primarily reflects the elimination of brokered deposits and a decrease in average balance and rates paid for time deposits. At September 30, 2022 and June 30, 2022, there was no balance of brokered deposits.

The overall cost of funds for the quarter ended September 30, 2022 increased 24 basis points to 0.79% compared to 0.55% for the quarter ended June 30, 2022 and increased 16 basis points compared to 0.63% for the quarter ended September 30, 2021. The increase in the cost of funds for the quarter ended September 30, 2022 compared to the quarters ended June 30, 2022 and September 30, 2021 resulted primarily from both a higher average balance of and an increased cost of short-term borrowings, the cost of which is driven by the Federal Reserve's federal funds rate.

Noninterest Income

Noninterest income for the third quarter of 2022 totaled $2.7 million, a decrease of $3.7 million, or 58.2%, compared to the second quarter of 2022 and a decrease of $1.2 million, or 31.9%, compared to the third quarter of 2021.

The decrease in noninterest income compared to the quarter ended June 30, 2022 was driven by a $4.7 million decrease in swap termination fees. This decrease was partially offset by a decrease in the loss on sale or disposition of fixed assets of $0.4 million and an increase in other operating income of $0.5 million. The decrease in noninterest income compared to the quarter ended September 30, 2021 is mainly attributable to a $1.8 million decrease in swap termination fees, partially offset by a $0.6 million increase in other operating income. The increase in other operating income compared to the quarters ended June 30, 2022 and September 30, 2021 is attributable to increases in derivative fee income and the change in the net asset value of other investments.

Swap termination fees of $4.7 million and $1.8 million were recorded for the quarters ended June 30, 2022 and September 30, 2021, respectively, when the Bank voluntarily terminated a number of its interest rate swap agreements in response to market conditions. The Bank had no current or forward starting interest rate swap contracts as of September 30, 2022.

Noninterest Expense

Noninterest expense for the third quarter of 2022 totaled $16.0 million, an increase of $0.4 million, or 2.7%, compared to the second quarter of 2022, and a decrease of $0.4 million, or 2.5%, compared to the third quarter of 2021.

The increase in noninterest expense for the quarter ended September 30, 2022 compared to the quarter ended June 30, 2022 was driven by a $0.3 million increase in salaries and employee benefits due to an increase in full-time equivalent employees and an increase of $0.2 million in other operating expense primarily attributable to higher FDIC assessment fees and change in the provision for unfunded loan commitments. The increases are partially offset by $0.2 million in loss on early extinguishment of subordinated debt resulting from the early redemption of our 6.00% Fixed-to-Floating Rate Subordinated Notes due 2027 recorded in the second quarter of 2022. Included in noninterest expense for the quarters ended September 30, 2022 and June 30, 2022 are collection and repossession expenses of $0.5 million and $0.4 million, respectively, related to the impaired loan relationship discussed in "Loans - Credit Quality" above.

The decrease in noninterest expense for the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021 is primarily a result of a $0.4 million decrease in salaries and employee benefits and $0.4 million in acquisition expenses related to the April 2021 acquisition of Cheaha Financial Group recorded in the third quarter of 2021, partially offset by increases in occupancy expense of $0.2 million and other operating expenses of $0.2 million, respectively. The decrease in salaries and employee benefits compared to the third quarter of 2021 is primarily due to a decrease in health insurance claims. The increase in other operating expenses is driven by an increase in collection and repossession expenses, the majority of which is related to the impaired loan relationship discussed in "Loans - Credit Quality" above.

Taxes

Investar recorded an income tax expense of $1.7 million for the quarter ended September 30, 2022, which equates to an effective tax rate of 18.9%, compared to effective tax rates of 20.7% and 21.0% for the quarters ended June 30, 2022 and September 30, 2021, respectively.

Basic and Diluted Earnings (Loss) Per Common Share

Investar reported basic and diluted earnings per common share of $0.74 and $0.73, respectively, for the quarter ended September 30, 2022, compared to basic and diluted earnings per common share of $0.92 for the quarter ended June 30, 2022, and basic and diluted loss per common share of $0.95 for the quarter ended September 30, 2021.

About Investar Holding Corporation

Investar, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, National Association. The Bank currently operates 31 branch locations serving Louisiana, Texas, and Alabama. At September 30, 2022, the Bank had 352 full-time equivalent employees and total assets of $2.7 billion.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America, or GAAP. These measures and ratios include "tangible common equity," "tangible assets," "tangible equity to tangible assets," "tangible book value per common share," "core noninterest income," "core earnings before noninterest expense," "core noninterest expense," "core earnings (loss) before income tax expense (benefit)," "core income tax expense (benefit)," "core earnings (loss)," "core efficiency ratio," "core return on average assets," "core return on average equity," "core basic earnings (loss) per share," and "core diluted earnings (loss) per share." We also present certain average loan, yield, net interest income and net interest margin data adjusted to show the effects of excluding PPP loans, accelerated fee income for PPP loans, interest recoveries, and interest income accretion from the acquisition of loans. Management believes these non-GAAP financial measures provide information useful to investors in understanding Investar's financial results, and Investar believes that its presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting Investar's business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and Investar strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. A reconciliation of the non-GAAP financial measures disclosed in this press release to the comparable GAAP financial measures is included at the end of the financial statement tables.

Forward-Looking and Cautionary Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Investar's current views with respect to, among other things, future events and financial performance. Investar generally identifies forward-looking statements by terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "could," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words.

Any forward-looking statements contained in this press release are based on the historical performance of Investar and its subsidiaries or on Investar's current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by Investar that the future plans, estimates or expectations by Investar will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to Investar's operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if Investar's underlying assumptions prove to be incorrect, Investar's actual results may vary materially from those indicated in these statements. Investar does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events:

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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 in the United States caused by the ongoing COVID-19 pandemic and war in Ukraine, including but not limited to potential continued higher inflation and supply and labor constraints, which will depend on several factors, including the scope and duration of the pandemic and the war, their continued influence on the economy and financial markets, the impact on market participants on which we rely, and actions taken by governmental authorities and other third parties in response;

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business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate, including evolving risks to economic activity and our customers posed by the COVID-19 pandemic and the war in Ukraine and government actions taken to address their impact, the potential impact of the termination of various pandemic-related government support programs, and the potential impact of legislation under consideration in Congress, which could increase government programs, spending and taxes;

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our ability to achieve organic loan and deposit growth, and the composition of that growth;

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changes (or the lack of changes) in interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing, including potential continued increases in interest rates in 2022;

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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;

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cessation of the one-week and two-month U.S. dollar settings of LIBOR as of December 31, 2021 and announced cessation of the remaining U.S. dollar LIBOR settings after June 30, 2023, and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments and loans;

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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;

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our dependence on our management team, and our ability to attract and retain qualified personnel;

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changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;

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inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;

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the concentration of our business within our geographic areas of operation in Louisiana, Texas and Alabama;

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concentration of credit exposure;

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any deterioration in asset quality and higher loan charge-offs, and the time and effort necessary to resolve problem assets;

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a reduction in liquidity, including as a result of a reduction in the amount of deposits we hold or other sources of liquidity;

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ongoing disruptions in the oil and gas industry due to the significant fluctuations in the price of oil and natural gas;

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data processing system failures and errors;

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cyberattacks and other security breaches; and

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hurricanes, tropical storms, tropical depressions, floods, winter storms, and other adverse weather events, all of which have affected the Company's market areas from time to time; other natural disasters; oil spills and other man-made disasters; acts of terrorism, an outbreak or intensifying of hostilities including the war in Ukraine or other international or domestic calamities, acts of God and other matters beyond our control.

These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Item 1A. "Risk Factors" and in the "Special Note Regarding Forward-Looking Statements" in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Investar's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the "SEC").

For further information contact:

Investar Holding Corporation
John D'Angelo
President and Chief Executive Officer
(225) 448-5461
John.Dangelo@investarbank.com

INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)

	As of and for the three months ended
	9/30/2022		6/30/2022		9/30/2021			Linked Quarter		Year/Year
EARNINGS DATA
Total interest income	$	27,002	$	24,328	$	24,473		11.0	%	10.3	%
Total interest expense		3,535		2,350		2,925		50.4		20.9
Net interest income		23,467		21,978		21,548		6.8		8.9
Provision for loan losses		1,162		941		21,713		23.5		(94.6	)
Total noninterest income		2,665		6,378		3,914		(58.2	)	(31.9	)
Total noninterest expense		15,967		15,552		16,381		2.7		(2.5	)
Income (loss) before income tax expense (benefit)		9,003		11,863		(12,632	)	(24.1	)	171.3
Income tax expense (benefit)		1,699		2,459		(2,648	)	(30.9	)	164.2
Net income (loss)	$	7,304	$	9,404	$	(9,984	)	(22.3	)	173.2

AVERAGE BALANCE SHEET DATA
Total assets	$	2,621,611	$	2,553,849	$	2,686,712		2.7	%	(2.4	)%
Total interest-earning assets		2,468,357		2,384,385		2,482,070		3.5		(0.6	)
Total loans		1,954,493		1,896,574		1,923,960		3.1		1.6
Total interest-bearing deposits		1,456,826		1,498,354		1,691,318		(2.8	)	(13.9	)
Total interest-bearing liabilities		1,772,960		1,698,613		1,830,240		4.4		(3.1	)
Total deposits		2,069,603		2,109,972		2,272,715		(1.9	)	(8.9	)
Total stockholders' equity		226,624		229,949		254,616		(1.4	)	(11.0	)

PER SHARE DATA
Earnings:
Basic earnings (loss) per common share	$	0.74	$	0.92	$	(0.95	)	(19.6	)%	177.9	%
Diluted earnings (loss) per common share		0.73		0.92		(0.95	)	(20.7	)	176.8
Core Earnings⁽¹⁾ :
Core basic earnings (loss) per common share⁽¹⁾		0.71		0.62		(1.06	)	14.5		167.0
Core diluted earnings (loss) per common share⁽¹⁾		0.71		0.62		(1.06	)	14.5		167.0
Book value per common share		20.78		21.88		22.85		(5.0	)	(9.1	)
Tangible book value per common share⁽¹⁾		16.40		17.54		18.57		(6.5	)	(11.7	)
Common shares outstanding		9,901,078		10,024,997		10,343,416		(1.2	)	(4.3	)
Weighted average common shares outstanding - basic		9,965,374		10,149,246		10,398,787		(1.8	)	(4.2	)
Weighted average common shares outstanding - diluted		10,086,249		10,233,539		10,398,787		(1.4	)	(3.0	)

PERFORMANCE RATIOS
Return on average assets		1.11		1.48		(1.47	)%	(25.0	)%	175.5	%
Core return on average assets⁽¹⁾		1.08		0.99		(1.63	)	9.1		166.3
Return on average equity		12.79		16.40		(15.56	)	(22.0	)	182.2
Core return on average equity⁽¹⁾		12.46		11.04		(17.20	)	12.9		172.4
Net interest margin		3.77		3.70		3.44		1.9		9.6
Net interest income to average assets		3.55		3.45		3.18		2.9		11.6
Noninterest expense to average assets		2.42		2.44		2.42		(0.8	)	-
Efficiency ratio⁽²⁾		61.10		54.85		64.33		11.4		(5.0	)
Core efficiency ratio⁽¹⁾		61.63		63.21		67.17		(2.5	)	(8.2	)
Dividend payout ratio		12.84		9.78		(8.42	)	31.3		252.5
Net charge-offs to average loans		-		-		1.12		-		(100.0	)

⁽¹⁾ Non-GAAP financial measure. See reconciliation

⁽²⁾ Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income.

INVESTAR HOLDING CORPORATION
SUMMARY FINANCIAL INFORMATION
(Amounts in thousands, except share data)
(Unaudited)

	As of and for the three months ended
	9/30/2022		6/30/2022		9/30/2021		Linked Quarter		Year/Year
ASSET QUALITY RATIOS
Nonperforming assets to total assets	0.58	%	0.79	%	1.25	%	(26.6	)%	(53.6	)%
Nonperforming loans to total loans	0.65		0.89		1.75		(27.0	)	(62.9	)
Allowance for loan losses to total loans	1.15		1.15		1.09		-		5.5
Allowance for loan losses to nonperforming loans	176.63		128.93		62.44		37.0		182.9

CAPITAL RATIOS
Investar Holding Corporation:
Total equity to total assets	7.73	%	8.47	%	8.77	%	(8.7	)%	(11.9	)%
Tangible equity to tangible assets⁽¹⁾	6.20		6.90		7.24		(10.2	)	(14.4	)
Tier 1 leverage ratio	8.48		8.57		7.60		(1.1	)	11.6
Common equity tier 1 capital ratio⁽²⁾	9.65		9.73		9.25		(0.8	)	4.3
Tier 1 capital ratio⁽²⁾	10.08		10.17		9.71		(0.9	)	3.8
Total capital ratio⁽²⁾	13.15		13.28		12.82		(1.0	)	2.6
Investar Bank:
Tier 1 leverage ratio	9.84		10.05		8.99		(2.1	)	9.5
Common equity tier 1 capital ratio⁽²⁾	11.70		11.94		11.50		(2.0	)	1.7
Tier 1 capital ratio⁽²⁾	11.70		11.94		11.50		(2.0	)	1.7
Total capital ratio⁽²⁾	12.77		12.98		12.53		(1.6	)	1.9

⁽¹⁾ Non-GAAP financial measure. See reconciliation.

⁽²⁾ Estimated for September 30, 2022.

INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)

	September 30, 2022			June 30, 2022			September 30, 2021
ASSETS
Cash and due from banks	$	31,711		$	31,598		$	45,404
Interest-bearing balances due from other banks		4,302			18,852			304,587
Federal funds sold		-			500			500
Cash and cash equivalents		36,013			50,950			350,491

Available for sale securities at fair value (amortized cost of $477,242, $462,773, and $274,312, respectively)		413,186			421,285			274,387
Held to maturity securities at amortized cost (estimated fair value of $8,951, $9,580, and $11,936, respectively)		9,373			9,701			11,407
Loans held for sale		-			-			300
Loans, net of allowance for loan losses of $23,164, $21,954, and $20,567, respectively		1,982,513			1,894,441			1,860,091
Other equity securities		26,629			22,639			16,783
Bank premises and equipment, net of accumulated depreciation of $21,421, $20,562, and $18,579, respectively		50,327			51,296			61,619
Other real estate owned, net		2,326			3,397			635
Accrued interest receivable		11,915			10,905			11,732
Deferred tax asset		16,587			11,506			1,493
Goodwill and other intangible assets, net		43,360			43,580			44,283
Bank-owned life insurance		57,033			56,692			50,767
Other assets		12,432			14,215			12,060
Total assets	$	2,661,694		$	2,590,607		$	2,696,048

LIABILITIES
Deposits
Noninterest-bearing	$	590,610		$	615,779		$	597,452
Interest-bearing		1,462,073			1,446,891			1,706,189
Total deposits		2,052,683			2,062,670			2,303,641
Advances from Federal Home Loan Bank		333,100			239,800			78,500
Repurchase agreements		-			147			6,580
Subordinated debt		44,201			44,216			42,966
Junior subordinated debt		8,484			8,452			8,352
Other borrowings		168			-			-
Accrued taxes and other liabilities		17,358			15,953			19,685
Total liabilities		2,455,994			2,371,238			2,459,724

STOCKHOLDERS' EQUITY
Preferred stock, no par value per share; 5,000,000 shares authorized		-			-			-
Common stock, $1.00 par value per share; 40,000,000 shares authorized; 9,901,078, 10,024,997, and 10,343,416 shares issued and outstanding, respectively		9,901			10,025			10,344
Surplus		146,155			148,230			154,527
Retained earnings		100,247			93,888			70,054
Accumulated other comprehensive (loss) income		(50,603	)		(32,774	)		1,399
Total stockholders' equity		205,700			219,369			236,324
Total liabilities and stockholders' equity	$	2,661,694		$	2,590,607		$	2,696,048

INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)

	For the three months ended
	September 30, 2022			June 30, 2022			September 30, 2021
INTEREST INCOME
Interest and fees on loans	$	23,924		$	21,765		$	23,220
Interest on investment securities		2,874			2,363			1,021
Other interest income		204			200			232
Total interest income		27,002			24,328			24,473

INTEREST EXPENSE
Interest on deposits		1,315			907			1,854
Interest on borrowings		2,220			1,443			1,071
Total interest expense		3,535			2,350			2,925
Net interest income		23,467			21,978			21,548

Provision for loan losses		1,162			941			21,713
Net interest income (loss) after provision for loan losses		22,305			21,037			(165	)

NONINTEREST INCOME
Service charges on deposit accounts		820			804			650
Loss on sale or disposition of fixed assets, net		(103	)		(461	)		-
Gain (loss) on sale of other real estate owned, net		50			(84	)		-
Swap termination fee income		-			4,733			1,835
Gain on sale of loans		-			4			73
Servicing fees and fee income on serviced loans		17			23			38
Interchange fees		511			535			504
Income from bank owned life insurance		341			326			304
Change in the fair value of equity securities		(27	)		(86	)		48
Other operating income		1,056			584			462
Total noninterest income		2,665			6,378			3,914
Income before noninterest expense		24,970			27,415			3,749

NONINTEREST EXPENSE
Depreciation and amortization		1,087			1,122			1,264
Salaries and employee benefits		9,345			9,063			9,770
Occupancy		810			751			662
Data processing		861			727			715
Marketing		84			83			57
Professional fees		460			499			382
Loss on early extinguishment of subordinated debt		-			222			-
Acquisition expenses		-			-			446
Other operating expenses		3,320			3,085			3,085
Total noninterest expense		15,967			15,552			16,381
Income (loss) before income tax expense (benefit)		9,003			11,863			(12,632	)
Income tax expense (benefit)		1,699			2,459			(2,648	)
Net income (loss)	$	7,304		$	9,404		$	(9,984	)

EARNINGS PER SHARE
Basic earnings (loss) per common share	$	0.74		$	0.92		$	(0.95	)
Diluted earnings (loss) per common share		0.73			0.92			(0.95	)
Cash dividends declared per common share		0.095			0.09			0.08

INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)

	For the three months ended
	September 30, 2022								June 30, 2022								September 30, 2021
	Average Balance			Interest Income/ Expense		Yield/ Rate			Average Balance			Interest Income/ Expense		Yield/ Rate			Average Balance			Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning assets:
Loans	$	1,954,493		$	23,924		4.86	%	$	1,896,574		$	21,765		4.60	%	$	1,923,960		$	23,220		4.79	%
Securities:
Taxable		466,012			2,769		2.36			441,313			2,234		2.03			262,751			892		1.35
Tax-exempt		16,528			105		2.50			19,331			129		2.67			18,499			129		2.76
Interest-bearing balances with banks		31,324			204		2.58			27,167			200		2.96			276,860			232		0.33
Total interest-earning assets		2,468,357			27,002		4.34			2,384,385			24,328		4.09			2,482,070			24,473		3.91
Cash and due from banks		33,291								37,232								38,511
Intangible assets		43,472								43,701								44,040
Other assets		98,936								110,185								142,608
Allowance for loan losses		(22,445	)							(21,654	)							(20,517	)
Total assets	$	2,621,611							$	2,553,849							$	2,686,712

Liabilities and stockholders' equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand deposits	$	887,040		$	594		0.27	%	$	927,853		$	393		0.17	%	$	901,146		$	599		0.26	%
Brokered deposits		-			-		-			3,956			5		0.52			112,601			264		0.93
Savings deposits		173,582			20		0.05			179,867			21		0.05			173,971			67		0.15
Time deposits		396,204			701		0.70			386,678			488		0.51			503,600			924		0.73
Total interest-bearing deposits		1,456,826			1,315		0.36			1,498,354			907		0.24			1,691,318			1,854		0.43
Short-term borrowings		191,210			1,156		2.40			51,866			149		1.15			9,136			5		0.21
Long-term debt		124,924			1,064		3.38			148,393			1,294		3.50			129,786			1,066		3.26
Total interest-bearing liabilities		1,772,960			3,535		0.79			1,698,613			2,350		0.55			1,830,240			2,925		0.63
Noninterest-bearing deposits		612,777								611,618								581,397
Other liabilities		9,250								13,669								20,459
Stockholders' equity		226,624								229,949								254,616
Total liability and stockholders' equity	$	2,621,611							$	2,553,849							$	2,686,712
Net interest income/net interest margin				$	23,467		3.77	%				$	21,978		3.70	%				$	21,548		3.44	%

INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
INTEREST EARNED AND YIELD ANALYSIS ADJUSTED FOR PPP LOANS
(Amounts in thousands)
(Unaudited)

	For the three months ended
	September 30, 2022							June 30, 2022							September 30, 2021
	Average Balance		Interest Income/ Expense		Yield/ Rate			Average Balance		Interest Income/ Expense		Yield/ Rate			Average Balance		Interest Income/ Expense		Yield/ Rate
Interest-earning assets:
Loans	$	1,954,493	$	23,924		4.86	%	$	1,896,574	$	21,765		4.60	%	$	1,923,960	$	23,220		4.79	%
Adjustments:
PPP loans		2,458		70		11.27			7,741		332		17.26			58,481		1,309		8.88
Adjusted loans		1,952,035		23,854		4.85			1,888,833		21,433		4.55			1,865,479		21,911		4.66
Securities:
Taxable		466,012		2,769		2.36			441,313		2,234		2.03			262,751		892		1.35
Tax-exempt		16,528		105		2.50			19,331		129		2.67			18,499		129		2.76
Interest-bearing balances with banks		31,324		204		2.58			27,167		200		2.96			276,860		232		0.33
Adjusted interest-earning assets		2,465,899		26,932		4.33			2,376,644		23,996		4.05			2,423,589		23,164		3.79

Total interest-bearing liabilities		1,772,960		3,535		0.79			1,698,613		2,350		0.55			1,830,240		2,925		0.63

Adjusted net interest income/adjusted net interest margin			$	23,397		3.76	%			$	21,646		3.65	%			$	20,239		3.31	%

INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
INTEREST EARNED AND YIELD ANALYSIS ADJUSTED FOR ACCELERATED PPP INCOME, INTEREST RECOVERIES, AND ACCRETION
(Amounts in thousands)
(Unaudited)

	For the three months ended
	September 30, 2022							June 30, 2022							September 30, 2021
	Average Balance		Interest Income/ Expense		Yield/ Rate			Average Balance		Interest Income/ Expense		Yield/ Rate			Average Balance		Interest Income/ Expense		Yield/ Rate
Interest-earning assets:
Loans	$	1,954,493	$	23,924		4.86	%	$	1,896,574	$	21,765		4.60	%	$	1,923,960	$	23,220		4.79	%
Adjustments:
Accelerated fee income for forgiven or paid off PPP loans				58							295							1,001
Interest recoveries				121							36							187
Accretion				142							159							298
Adjusted loans		1,954,493		23,603		4.79			1,896,574		21,275		4.50			1,923,960		21,734		4.48
Securities:
Taxable		466,012		2,769		2.36			441,313		2,234		2.03			262,751		892		1.35
Tax-exempt		16,528		105		2.50			19,331		129		2.67			18,499		129		2.76
Interest-bearing balances with banks		31,324		204		2.58			27,167		200		2.96			276,860		232		0.33
Adjusted interest-earning assets		2,468,357		26,681		4.29			2,384,385		23,838		4.01			2,482,070		22,987		3.67

Total interest-bearing liabilities		1,772,960		3,535		0.79			1,698,613		2,350		0.55			1,830,240		2,925		0.63

Adjusted net interest income/adjusted net interest margin			$	23,146		3.72	%			$	21,488		3.61	%			$	20,062		3.21	%

INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)

	September 30, 2022			June 30, 2022			September 30, 2021
Tangible common equity
Total stockholders' equity	$	205,700		$	219,369		$	236,324
Adjustments:
Goodwill		40,088			40,088			40,088
Core deposit intangible		3,172			3,392			4,095
Trademark intangible		100			100			100
Tangible common equity	$	162,340		$	175,789		$	192,041
Tangible assets
Total assets	$	2,661,694		$	2,590,607		$	2,696,048
Adjustments:
Goodwill		40,088			40,088			40,088
Core deposit intangible		3,172			3,392			4,095
Trademark intangible		100			100			100
Tangible assets	$	2,618,334		$	2,547,027		$	2,651,765

Common shares outstanding		9,901,078			10,024,997			10,343,416
Tangible equity to tangible assets		6.20	%		6.90	%		7.24	%
Book value per common share	$	20.78		$	21.88		$	22.85
Tangible book value per common share		16.40			17.54			18.57

INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)

		Three months ended
		9/30/2022			6/30/2022			9/30/2021
Net interest income	(a)	$	23,467		$	21,978		$	21,548
Provision for loan losses			1,162			941			21,713
Net interest income (loss) after provision for loan losses			22,305			21,037			(165	)

Noninterest income	(b)		2,665			6,378			3,914
Loss on sale or disposition of fixed assets, net			103			461			-
Gain (loss) on sale of other real estate owned, net			(50	)		84			-
Swap termination fee income			-			(4,733	)		(1,835	)
Change in the fair value of equity securities			27			86			(48	)
Change in the net asset value of other investments⁽¹⁾			(305	)		-			-
Core noninterest income	(d)		2,440			2,276			2,031

Core earnings before noninterest expense			24,745			23,313			1,866

Total noninterest expense	(c)		15,967			15,552			16,381
Acquisition expense			-			-			(446	)
Severance			-			-			(98	)
Loss on early extinguishment of subordinated debt			-			(222	)		-
Core noninterest expense	(f)		15,967			15,330			15,837

Core earnings (loss) before income tax expense (benefit)			8,778			7,983			(13,971	)
Core income tax expense (benefit)⁽²⁾			1,659			1,655			(2,934	)
Core earnings (loss)		$	7,119		$	6,328		$	(11,037	)

Core basic earnings (loss) per common share			0.71			0.62			(1.06	)

Diluted earnings (loss) per common share (GAAP)		$	0.73		$	0.92		$	(0.95	)
Loss on sale or disposition of fixed assets, net			0.01			0.03			-
Gain (loss) on sale of other real estate owned, net			-			0.01			-
Swap termination fee income			-			(0.37	)		(0.14	)
Change in the fair value of equity securities			-			0.01			(0.01	)
Change in the net asset value of other investments⁽¹⁾			(0.03	)		-			-
Acquisition expense			-			-			0.03
Severance			-			-			0.01
Loss on early extinguishment of subordinated debt			-			0.02			-
Core diluted earnings (loss) per common share		$	0.71		$	0.62		$	(1.06	)

Efficiency ratio	(c) / (a+b)		61.10	%		54.85	%		64.33	%
Core efficiency ratio	(f) / (a+d)		61.63			63.21			67.17
Core return on average assets⁽³⁾			1.08			0.99			(1.63	)
Core return on average equity⁽³⁾			12.46			11.04			(17.20	)
Total average assets		$	2,621,611		$	2,553,849		$	2,686,712
Total average stockholders' equity			226,624			229,949			254,616

⁽¹⁾ Change in net asset value of other investments represents unrealized gains or losses on Investar's investments in Small Business Investment Companies and other investment funds and is included in other operating income in the accompanying consolidated statements of income.

⁽²⁾ Core income tax expense (benefit) is calculated using the effective tax rates of 18.9%, 20.7% and 21.0% for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

⁽³⁾ Core earnings (loss) used in calculation. No adjustments were made to average assets or average equity.

SOURCE: Investar Holding Corporation

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