425: Investar Updates Merger Disclosures Amid Shareholder Lawsuits

Investar Holding Corporation filed supplemental disclosures for its merger with Wichita Falls Bancshares, Inc. following shareholder lawsuits challenging the original proxy statement.

Summary

• Investar Holding Corporation (Investar) is proceeding with its merger with Wichita Falls Bancshares, Inc. (WFB), initially announced on July 1, 2025.
• Shareholder lawsuits have been filed against Investar and its board, alleging negligent misrepresentation and concealment in the joint proxy statement/prospectus filed on September 12, 2025.
• Investar believes the lawsuits are without merit but is providing supplemental disclosures to avoid potential delays or adverse effects on the merger and to minimize defense expenses.
• The supplemental disclosures include updated tables for 'Comparable Company Analysis' and 'Analysis of Selected Merger Transactions' (both national and regional).
• The 'Discounted Cash Flow Analysis' section has been updated with projected net income for WFB: $7.0 million (2025), $7.7 million (2026), $8.1 million (2027), $8.4 million (2028), and $8.8 million (2029).
• Projected tangible book value for WFB is $98.1 million (2025), $106.0 million (2026), $114.2 million (2027), $122.8 million (2028), and $131.8 million (2029).
• A new table detailing the components of the discount rate, including Risk Free Rate (4.89%), Equity Risk Premium (5.00%), Industry Beta (1.00), Size Premium (3.00%), and Specific Risk (0.00%-2.00%), resulting in a discount rate range of 13.00% to 15.00%, has been added.

Sentiment

Score: 5

Explanation: The merger is progressing, which is a positive strategic move. However, the emergence of shareholder lawsuits and the necessity for supplemental disclosures introduce uncertainty, potential for delays, and increased legal costs, balancing the overall sentiment to neutral.

Positives

• Investar is proactively addressing legal challenges by providing supplemental disclosures, aiming to keep the merger on track.
• The company maintains that the shareholder lawsuits are without merit, suggesting confidence in its original disclosures.
• The merger is proceeding towards shareholder votes scheduled for October 23 and 24, 2025.

Negatives

• Shareholder lawsuits have been filed alleging negligent misrepresentation and concealment regarding the merger disclosures.
• The lawsuits seek injunctive relief to prevent the merger, rescission, or compensatory damages, and an award of plaintiffs' costs.
• The need for supplemental disclosures indicates potential deficiencies or ambiguities in the original proxy statement, regardless of legal merit.
• The lawsuits introduce uncertainty and potential for delays or increased legal and defense expenses for Investar.

Risks

• Ability to obtain requisite shareholder approvals for the merger.
• Risk that governmental and regulatory approvals may not be obtained, or may be delayed, or result in conditions that could cause the parties to abandon the merger.
• Risk that a condition to closing the merger may not be satisfied.
• Timing to consummate the proposed merger.
• Risk that the businesses will not be integrated successfully.
• Risk that 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 making it more difficult to maintain relationships with customers, employees, or vendors.
• Diversion of management time on merger-related issues.

Future Outlook

The company anticipates benefits from the proposed merger, including future financial and operating results. It expects the merger to be completed, subject to shareholder and regulatory approvals. However, it cautions that actual results could differ materially due to various risks, including integration challenges, realization of cost savings, and potential disruptions.

Management Comments

• Investar and the other defendants named in the Actions believe that the Matters are entirely without merit and that no further disclosure is required by applicable rule, statute, regulation or law beyond that contained in the Proxy Statement/Prospectus.
• Investar has determined that it will voluntarily make certain supplemental disclosures to avoid the risk that the Actions may delay or otherwise adversely affect the consummation of the merger and to minimize the expense of defending the Actions.

Industry Context

This announcement relates to an ongoing bank merger, a common strategic move in the financial services industry aimed at achieving scale, market expansion, and operational efficiencies. The supplemental disclosures, particularly the updated comparable company and transaction analyses, provide context within the banking sector's M&A landscape, reflecting typical valuation methodologies and market conditions as of June 2025. The legal challenges highlight the increasing scrutiny and potential litigation risks associated with complex corporate transactions.

Comparison to Industry Standards

• The 'Comparable Company Analysis' provides updated market data as of June 18, 2025, for 10 national publicly-traded banking organizations, comparing metrics such as Market Price/Tangible Book Value, Price/LTM EPS, Core Deposit Premium, Total Assets, Loans, TCE/TA, NPAs/TA, ROAA, and ROAE.
• The 'Analysis of Selected Merger Transactions' includes updated tables for national and regional comparable transactions as of June 18, 2025, comparing metrics like Price/TBV, Price/LTM EPS, Price/Assets, Core Deposit Premium, Total Assets, NPAs/Assets, TCE/TA, and LTM ROAA for various bank and thrift M&A deals.

Legal Proceedings

• Ryan Murphy v. Investar Holding Corporation et. al., Index No. 655863/2025 (October 1, 2025), filed in the Supreme Court of the State of New York, New York County.
• Eric Scott v. Investar Holding Corporation et. al., Index No. 655881/2025 (October 1, 2025), filed in the Supreme Court of the State of New York, New York County.
• Both lawsuits name Investar and its board of directors as defendants, alleging claims under New York law for negligent misrepresentation and concealment regarding disclosures in the Proxy Statement/Prospectus.
• The lawsuits seek injunctive relief enjoining the merger, rescission or compensatory damages if the merger is consummated, and an award of plaintiffs' costs, including attorneys' and experts' fees.
• Investar has also received demand letters from other purported stockholders alleging similar claims.

Stakeholder Impact

• Shareholders: Will vote on the merger; some have initiated lawsuits challenging the adequacy of disclosures, potentially impacting their investment decisions and rights.
• Employees, customers, and vendors: May experience disruption from the proposed merger, as noted in the forward-looking statements.
• Management: Time and resources are being diverted to address merger-related issues and legal defense.

Next Steps

• Shareholders of Wichita Falls Bancshares, Inc. will hold a special meeting on October 23, 2025, to vote on the Merger Agreement.
• Shareholders of Investar Holding Corporation will hold a special meeting on October 24, 2025, to vote on the Merger Agreement.

Key Dates

Recommendation

The merger with Wichita Falls Bancshares, Inc. is progressing, but the emergence of shareholder lawsuits challenging the proxy statement disclosures introduces a degree of uncertainty and potential for delays or increased legal costs. While management believes the claims are without merit and is providing supplemental disclosures to mitigate risks, the legal challenges warrant a cautious approach. Investors should hold to monitor the resolution of these legal matters and the successful completion and integration of the merger.

Keywords

Investar Holding Corporation, Wichita Falls Bancshares Inc., merger, acquisition, SEC filing, Form 425, shareholder lawsuit, proxy statement, financial advisor opinion, discounted cash flow, banking, financial services