Earnings

Investar's Net Interest Margin Extends Expansion

The Tip Desk · November 8, 2026 · 4 min read

Net interest margin reached 3.73% in the third quarter as net interest income rose 0.9% to $33.8 million and diluted earnings were $0.74 a share.

Investar Holding Corporation (ISTR), the Baton Rouge holding company for Investar Bank, National Association, reported net interest margin of 3.73% for the quarter ended September 30, 2026, a six-basis-point expansion from 3.67% in the second quarter after an eight-basis-point lift in the prior period.

Net interest income rose 0.9% to $33.8 million from $33.5 million in the second quarter. Interest income accretion from acquired loans was $3.0 million, versus $2.5 million a quarter earlier. Total interest income was $53.3 million and interest expense $19.6 million.

The yield on interest-earning assets increased five basis points to 5.88% from 5.83%, which the company attributed primarily to a 61-basis-point rise in the yield on interest-bearing balances with banks and a two-basis-point rise in the loan yield. Exclusive of acquisition accretion and interest recoveries, adjusted net interest margin was 3.40%, up one basis point from 3.39%.

The overall cost of deposits ticked up one basis point to 2.20% from 2.19%, which the company said resulted from higher balances and rates on interest-bearing demand and time deposits, partly offset by lower brokered time balances and rates. The overall cost of funds was flat at 2.31%.

Net income available to common shareholders was $11.1 million, or $0.74 a diluted share, compared with $8.9 million, or $0.61 a share, in the second quarter. Core diluted earnings were $0.77 a share versus $0.75. Return on average assets was 1.21%.

Total loans were $3.07 billion at September 30, 2026, up 0.2% from $3.06 billion at June 30. Excluding loans acquired in the January 1 Wichita Falls Bancshares deal, loans rose 2.3% to $2.26 billion from $2.21 billion. The business lending portfolio of owner-occupied commercial real estate and commercial and industrial loans increased 3.1% to $1.25 billion from $1.21 billion, driven by C&I production. C&I loans rose 4.3% to $733.7 million.

Construction and development loans fell 12.7% to $228.5 million from $261.8 million on planned runoff of WFB consumer mortgage and nonowner-occupied construction loans and conversions to permanent loans. Nonowner-occupied CRE declined 3.0% to $497.1 million. Variable-rate loans were 51% of the book versus 50% at June 30. Fifty-nine percent of third-quarter originations and renewals were variable-rate at a 7.0% blended rate. On October 1, 2026, the bank purchased $65.0 million of variable-rate C&I revolving lines.

Total deposits declined 1.0% to $3.18 billion from $3.21 billion. Noninterest-bearing demand deposits rose 2.8% to $639.2 million. Time deposits fell 2.9% to $983.1 million on maturities of higher-cost time deposits. Brokered time deposits were $64.0 million, remaining below 10% of assets with a weighted-average rate of 3.93% and about five months of remaining duration.

Nonperforming loans were $21.4 million, or 0.70% of loans, up from $19.4 million, or 0.63%, at June 30, which the company attributed primarily to downgrades of ten 1-4 family relationships totaling $2.1 million and three owner-occupied CRE relationships totaling $0.8 million, partly offset by paydowns. The allowance for credit losses was $36.1 million, or 1.18% of loans, versus $36.3 million, or 1.18%, at June 30. Coverage of nonperforming loans was 169.0%. Investar recorded a $0.1 million reversal of credit losses, citing changes in the economic forecast and loan mix.

Noninterest expense fell 7.8% to $22.7 million from $24.6 million, primarily a $2.3 million drop in acquisition expense as the WFB conversion finished in the second quarter, partly offset by a $0.3 million rise in salaries and employee benefits. Noninterest income declined 1.7% to $3.0 million.

The regulatory tier 1 leverage capital ratio increased to 10.92% from 10.56%. The bank repurchased 25,113 shares at an average $29.44, leaving 275,628 shares authorized.

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