8-K: Investar Holding Corporation Announces Strategic Merger with Wichita Falls Bancshares and $32.5 Million Capital Raise

Investar Holding Corporation has entered into a definitive agreement to acquire Wichita Falls Bancshares, Inc. for approximately $83.6 million in cash and stock, simultaneously announcing a $32.5 million private placement of convertible preferred stock to support the acquisition and future growth.

Summary

• Investar Holding Corporation (Investar) will acquire Wichita Falls Bancshares, Inc. (WFB) through a merger, with Investar as the surviving company.
• Immediately following the merger, WFB's subsidiary, First National Bank (FNB), will merge into Investar Bank, National Association (Investar Bank), with Investar Bank as the surviving entity.
• WFB shareholders will receive aggregate consideration of $7.2 million in cash and 3,955,334 shares of Investar common stock.
• Based on Investar's closing stock price of $19.32 on June 30, 2025, the total transaction value is approximately $83.6 million, equating to $134.67 per share of WFB common stock.
• The merger is unanimously approved by the boards of directors of both Investar and WFB and is expected to close in the fourth quarter of 2025, subject to shareholder and regulatory approvals.
• Investar also completed a private placement of 32,500 shares of its newly designated 6.5% Series A Non-Cumulative Perpetual Convertible Preferred Stock at $1,000 per share, raising aggregate gross proceeds of $32.5 million and estimated net proceeds of approximately $30.4 million.
• The net proceeds from the private placement are intended to support the WFB acquisition and for general corporate purposes, including organic growth and other potential acquisitions.
• The Series A Preferred Stock is designed to qualify as additional Tier 1 capital for regulatory purposes.
• WFB directors and executive officers have entered into voting agreements to support the merger and certain directors have signed non-solicitation and non-competition agreements.
• The merger and bank merger are intended to qualify as a reorganization under Section 368(a) of the Internal Revenue Code for federal income tax purposes.

Sentiment

Score: 8

Explanation: The document announces a strategic merger and a significant capital raise, both of which are presented as positive developments for Investar's growth and financial strength. Management comments are highly optimistic, and the transaction is unanimously approved by both boards. While risks inherent in mergers and capital raises are acknowledged, the overall tone and substance indicate a strong, forward-looking strategic move.

Positives

• The merger represents a continued execution of Investar's multi-state expansion strategy, marking its second acquisition in Texas and first in the north Dallas market, bolstering its geographic footprint.
• The transaction is expected to provide First National Bank with additional financial strength and expanded resources as part of a larger banking enterprise.
• The combined bank will have over $4 billion in assets, leading to a larger lending capacity and enhanced services for customers.
• Experienced bank staff from First National Bank are expected to remain substantially intact, ensuring continuity of service.
• The $32.5 million private placement of Series A Preferred Stock strengthens Investar's capital base, with proceeds earmarked for the acquisition and future growth, including organic expansion and other potential acquisitions.
• The Series A Preferred Stock is intended to qualify as additional Tier 1 capital, enhancing Investar's regulatory capital position.
• The transaction is unanimously approved by both companies' boards of directors, indicating strong internal support.
• The retention bonus pool of up to $1,000,000 is designed to encourage WFB and FNB employees to remain with Investar, assisting with continuity planning.

Negatives

• WFB is subject to a termination fee of $3,300,000 under certain circumstances, such as if its board withdraws its recommendation or if it enters into a superior acquisition proposal.
• The private placement shares of Series A Preferred Stock have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption.
• Holders of Series A Preferred Stock have no voting rights, except for specific changes to the preferred stock terms or fundamental business transactions, limiting their influence on company decisions.
• The Series A Preferred Stock dividends are non-cumulative, meaning if the board does not declare a dividend for a period, holders have no right to receive it later.

Risks

• The ability to obtain the requisite shareholder approvals for the merger is a risk.
• There is a risk that Investar may be unable to obtain governmental and regulatory approvals required to consummate the proposed merger, or such approvals may be delayed or result in the imposition of burdensome conditions that could cause the parties to abandon the merger.
• A condition to closing the merger may not be satisfied.
• The timing to consummate the proposed merger could be delayed.
• There is a risk that the businesses will not be integrated successfully.
• Cost savings and any other synergies from the proposed merger may not be fully realized or may take longer to realize than expected.
• Disruption from the proposed merger could make it more difficult to maintain relationships with customers, employees, or vendors.
• The merger could lead to the diversion of management time on merger-related issues.
• The value of the Series A Preferred Stock and its underlying common stock is subject to market fluctuations and the company's performance.
• The Series A Preferred Stock is not subject to redemption at the option of the holder, limiting liquidity for investors.

Future Outlook

The proposed merger is expected to be completed in the fourth quarter of 2025, subject to customary closing conditions including shareholder and regulatory approvals. Investar anticipates that the merger will enhance strategic synergies, increase lending capacity, and expand services for customers, contributing to greater shareholder value. The net proceeds from the private placement of preferred stock are intended to support the acquisition and future organic growth, as well as other potential acquisitions.

Management Comments

• Dr. David Flack, President of Wichita Falls, stated, "The merger of First National Bank and Investar Bank brings together two banks that share a common tradition, culture and commitment to community banking. This merger will allow us to bring new products and services to our customers while keeping the same banking locations and trusted local bankers. We believe this merger creates more long-term value for our customers, communities and shareholders."
• Stan Pinkham, President & Chief Executive Officer of First National Bank, stated, "This merger provides a great opportunity to enhance strategic synergies through combined resources, and to build greater shareholder value. Aligning with Investar creates a combined bank with over $4 billion in assets, resulting in a larger lending capacity and enhanced services to our customers."
• John DAngelo, President and Chief Executive Officer of Investar, stated, "Today marks a pivotal moment in the history of Investar Bank and a defining milestone for our company. This is a water-shed moment for our bank and our shareholders. This is more than a strategic move; its a powerful alignment of values and purpose. Our partner came from humble beginnings as did Investar. Although the banks began in different geographies and times, our shared vision is representative of the gap that larger institutions left in our markets. We responded by delivering true community banking. The most attractive thing to me about this partnership is the combined company focus and commitment to excellent service where employees know their customers by name, and service is personal, not transactional. First National Bank, its employees, leadership, and the board are united with us in building something exceptional. Together, we look forward to creating an even stronger, customer-focused community bank."

Industry Context

This announcement reflects a continuing trend of consolidation within the U.S. banking sector, particularly among regional and community banks seeking to expand their geographic footprint, increase asset size, and enhance competitive positioning. Investar's acquisition of Wichita Falls Bancshares, Inc. and its First National Bank subsidiary, particularly its expansion into the north Dallas market, aligns with strategies to achieve economies of scale, diversify loan portfolios, and leverage combined resources to offer a broader range of services. The simultaneous capital raise through convertible preferred stock is a common mechanism for financial institutions to bolster regulatory capital and fund strategic growth initiatives without immediately diluting common shareholders, demonstrating a proactive approach to funding expansion in a competitive environment.

Comparison to Industry Standards

• Investar Bank and First National Bank are both stated to be 'well-capitalized and well-managed' as defined by their respective regulators (OCC and FRB), indicating strong adherence to regulatory capital standards, which is a positive benchmark in the banking industry.
• The acquisition creates a combined entity with over $4 billion in assets, positioning Investar as a larger regional player, which can lead to increased lending capacity and competitive advantages compared to smaller community banks.
• The use of convertible preferred stock to raise capital is a standard practice for financial institutions seeking to enhance Tier 1 capital, aligning with common industry financing strategies for growth and acquisitions.
• The Community Reinvestment Act (CRA) ratings of 'satisfactory or better' for both Investar Bank and FNB indicate compliance with regulatory expectations for serving their communities, a key performance indicator for community banks.

Management Changes

Corporate Governance

Legal Proceedings

• No material civil, criminal, administrative, or regulatory actions, suits, or investigations are pending or threatened against WFB or its subsidiaries, or their current/former directors/executive officers, that would challenge the validity or propriety of the merger transactions since January 1, 2021.
• No material injunction, order, judgment, decree, or regulatory restriction is imposed upon WFB or its subsidiaries, or their assets, that would apply to the Surviving Company or its affiliates upon consummation of the merger, other than those generally applicable to similar businesses.
• No material civil, criminal, administrative, or regulatory actions, suits, or investigations are pending or threatened against Investar or its subsidiaries, or their current/former directors/executive officers, that are reasonably likely to have a Material Adverse Effect on Investar or challenge the validity/propriety of the merger transactions since January 1, 2021.
• No material injunction, order, judgment, decree, or regulatory restriction is imposed upon Investar or its subsidiaries, or their assets, that would apply to the Surviving Company or its affiliates upon consummation of the merger, other than those generally applicable to similar businesses.
• Both parties agree to promptly advise the other of any actual or threatened shareholder litigation related to the merger and cooperate in defense or settlement, with WFB requiring Investar's consent for settlements involving money damages not fully covered by insurance.

Related Party Transactions

• Except for normal and customary terms of employment or service as a director, and deposits held by FNB in the Ordinary Course of Business, there are no outstanding amounts payable to or receivable from, or advances by WFB or its subsidiaries to, or WFB/subsidiaries being a creditor/debtor to, any director, executive officer, 5% or greater shareholder of WFB or its subsidiaries, or their affiliates/associates.
• All agreements between FNB and its affiliates comply with Sections 23A and 23B of the Federal Reserve Act and Regulation W of the FRB, where applicable.

Stakeholder Impact

• **Shareholders (WFB):** Will receive a combination of cash and Investar common stock, providing liquidity and continued equity participation in the combined entity. The transaction is deemed fair and in their best interests by WFB's board.
• **Shareholders (Investar):** Will experience dilution from the issuance of new common stock for the merger and the conversion of preferred stock from the capital raise, but the transaction is expected to create long-term value through strategic expansion and increased asset base.
• **Employees (WFB & FNB):** Experienced bank staff are expected to remain substantially intact, ensuring job continuity for many. A retention bonus pool of up to $1,000,000 will be established to encourage key employees to stay. Certain terminated employees will receive severance payments.
• **Customers (WFB & FNB):** Expected to benefit from additional financial strength, expanded resources, larger lending capacity, and enhanced services from the combined bank. The commitment to maintaining local bankers and banking locations aims to ensure a smooth transition and continued personal service.
• **Regulatory Authorities:** The transaction requires various regulatory approvals (SEC, Nasdaq, FRB, OCC, TDB, state securities authorities), indicating significant oversight and ensuring compliance with banking and securities laws. Both banks are currently well-capitalized and well-managed.
• **Creditors:** The agreement includes provisions for Investar to assume WFB's obligations in respect of outstanding debt, notes, guarantees, and securities, including trust preferred and subordinated debt, ensuring continuity for creditors.

Next Steps

• Investar and WFB will make all required filings to consummate the merger and bank merger.
• Investar and WFB will call, give notice of, convene, and hold shareholder meetings to obtain the necessary approvals.
• Investar will file a Registration Statement on Form S-4 with the SEC, including a joint proxy statement/prospectus, and will seek to have it declared effective.
• Investar will cause the shares of Investar Common Stock to be issued in the merger to be approved for listing on Nasdaq.
• Investar and WFB will cooperate to facilitate the integration of WFB's business with Investar's, including planning for informational systems conversion.
• Investar will file a registration statement with the SEC for the resale of the common stock issuable upon conversion of the Series A preferred stock no later than 60 days following the private placement closing, aiming for effectiveness within 120 or 150 days.
• Investar will appoint two current WFB or FNB directors to serve on the boards of Investar and Investar Bank, and nominate them for re-election at the next annual meeting.
• WFB will cause resignations of all its directors and officers and its subsidiaries' directors and officers, effective at the Effective Time.
• WFB will obtain an extended reporting period policy for D&O Insurance for six years post-merger, not exceeding 200% of current annual premiums.
• WFB will redeem and pay off any outstanding Convertible Subordinated Debt prior to or at the Effective Time, upon consent from TIB-The Independent BankersBank.
• The WFB Shareholders Agreement will be terminated.

Key Dates

Recommendation

Keywords

Merger, Acquisition, Bank Holding Company, Financial Services, Convertible Preferred Stock, Private Placement, Capital Raise, SEC Filing, Corporate Governance, Regulatory Approval, Shareholder Approval, Bank Merger, Tier 1 Capital, Strategic Expansion, Texas Banking, Louisiana Banking