425: Investar Updates WFB Merger Financials, Pro Forma Released

Investar Holding Corporation filed updated financial information for its acquisition of Wichita Falls Bancshares, Inc., including pro forma combined statements.

Summary

• Investar Holding Corporation is acquiring Wichita Falls Bancshares, Inc. (WFB) in a transaction valued at approximately $101.5 million, based on Investar's closing stock price of $23.84 on November 12, 2025.
• The consideration for WFB shareholders includes $7.2 million in cash and 3,955,334 shares of Investar common stock.
• For the nine months ended September 30, 2025, WFB reported net income of $3.61 million, an increase from $3.38 million for the same period in 2024.
• WFB's basic earnings per common share for the nine months ended September 30, 2025, was $5.82, slightly down from $5.88 in the prior year.
• WFB's net interest income increased to $24.35 million for the nine months ended September 30, 2025, from $23.36 million in the prior year, with net interest margin improving to 2.45% from 2.31%.
• WFB's total assets decreased by $228 million (14.8%) to $1.31 billion at September 30, 2025, primarily due to the sale of $136.4 million in 1-4 family residential real estate loans.
• Total loans (net) for WFB decreased by $178 million (14%) to $1.08 billion, and total deposits decreased by $44 million (3.8%) to $1.11 billion, driven by strategic reduction in higher-cost wholesale deposits.
• The provision for credit losses for WFB significantly decreased to $164 thousand for the nine months ended September 30, 2025, from $1.56 million in the prior year.
• Nonperforming assets for WFB decreased to $6.36 million at September 30, 2025, from $8.13 million at December 31, 2024.
• The unaudited pro forma combined consolidated balance sheet shows total assets of $4.094 billion for the combined entity as of September 30, 2025.
• The unaudited pro forma combined consolidated statement of income for the nine months ended September 30, 2025, indicates a net income of $26.184 million and basic earnings per common share of $2.03 for the combined entity.
• The merger is expected to generate $10.585 million in goodwill and recognize a core deposit intangible of $14.3 million.

Sentiment

Score: 7

Explanation: The sentiment is generally positive due to WFB's improved net income, net interest margin, and reduced credit losses and nonperforming assets. The merger itself is presented with strategic benefits. While there are decreases in WFB's total assets, loans, and deposits, these are largely attributed to strategic balance sheet management (loan sales, reduction of high-cost deposits) rather than underlying weakness. The pro forma financials show a larger combined entity with expected synergies.

Positives

• WFB's net income increased to $3.61 million for the nine months ended September 30, 2025, from $3.38 million in the prior year.
• Net interest income for WFB improved to $24.35 million, and net interest margin expanded to 2.45% from 2.31%.
• The provision for credit losses for WFB significantly decreased to $164 thousand, indicating improved credit quality or lower expected losses.
• Nonperforming assets for WFB decreased to $6.36 million, reflecting a reduction in problem loans.
• WFB's bank subsidiary, First National Bank, remains 'well-capitalized' with strong capital ratios, including a Common Equity Tier 1 ratio of 17.27% and Total Capital ratio of 18.53% at September 30, 2025, well above regulatory minimums.
• The merger is anticipated to provide the combined company with the ability to better serve customers, reach new customers, and reduce operating expenses.

Negatives

• WFB's total assets decreased by 14.8% ($228 million) to $1.31 billion, primarily due to the sale of residential real estate loans.
• Total loans (net) for WFB decreased by 14% ($178 million) to $1.08 billion.
• Total deposits for WFB decreased by 3.8% ($44 million) to $1.11 billion, attributed to a strategic reduction in higher-cost wholesale deposits.
• WFB's basic earnings per common share slightly decreased to $5.82 from $5.88 year-over-year.
• Income tax expense for WFB increased to $806 thousand for the nine months ended September 30, 2025, compared to an income tax benefit of $2.07 million in the prior year.

Risks

• Forward-looking statements are subject to certain risks and uncertainties, and actual results may differ materially from projections.
• The final allocation of the purchase price for the merger will be determined after further valuation analyses, and final adjustments may be materially different from the unaudited pro forma adjustments presented.
• The pro forma financial statements do not include the effects of all potential cost savings or opportunities to earn additional revenue, and therefore may not fully predict future results.

Future Outlook

Management anticipates that the acquisition of Wichita Falls Bancshares, Inc. will enable the combined company to better serve its customers, reach new customers, and reduce operating expenses. The pro forma statements illustrate the potential financial characteristics of the combined entity, though they do not fully reflect all expected cost savings or revenue opportunities.

Management Comments

• John J. DAngelo, President and Chief Executive Officer, signed the report on behalf of Investar Holding Corporation.

Industry Context

The acquisition of Wichita Falls Bancshares, Inc. by Investar Holding Corporation represents a strategic consolidation within the regional banking sector. This move aligns with broader industry trends where financial institutions seek to achieve greater scale, enhance market reach, and improve operational efficiencies through mergers and acquisitions. WFB's actions, such as the sale of residential real estate loans and the strategic reduction of higher-cost deposits, reflect a proactive approach to balance sheet management and interest rate risk in a dynamic economic environment, common among community banks navigating competitive pressures and evolving regulatory landscapes.

Comparison to Industry Standards

• WFB's bank subsidiary, First National Bank, maintains capital ratios significantly above the 'well-capitalized' thresholds set by the OCC. For instance, its Common Equity Tier 1 ratio of 17.27% and Total Capital ratio of 18.53% at September 30, 2025, are substantially higher than the 6.50% and 10.00% minimums required to be well-capitalized, respectively. This indicates a very strong capital position compared to global benchmarks and peers.
• The improvement in WFB's net interest margin to 2.45% from 2.31% suggests effective asset-liability management, potentially outperforming some peers struggling with margin compression in a fluctuating interest rate environment.
• The significant reduction in WFB's provision for credit losses to $164 thousand from $1.56 million indicates strong asset quality and risk management, potentially better than industry averages for banks of similar size, especially given the general economic uncertainties.

Related Party Transactions

• Deposits from stockholders, officers, and directors of Wichita Falls Bancshares, Inc. amounted to approximately $9.317 million at September 30, 2025, and $7.335 million at December 31, 2024.

Stakeholder Impact

• Shareholders of Wichita Falls Bancshares, Inc. will receive a combination of cash and Investar common stock, providing liquidity and continued equity participation in the combined entity.
• Shareholders of Investar Holding Corporation will see an expanded company with increased assets and market reach, potentially benefiting from merger synergies and operational efficiencies.
• Customers of both institutions may experience changes in services or branch networks as operations are integrated, with management anticipating 'better service' and new customer reach.
• Employees may face integration challenges or opportunities within the larger combined organization.
• Creditors and suppliers will interact with a larger, combined entity, potentially affecting existing relationships and terms.

Next Steps

• Finalization of the purchase price allocation for the merger, including detailed valuation analyses of WFB's tangible and intangible assets and liabilities.
• Integration of WFB's operations into Investar Holding Corporation to realize expected cost savings and revenue opportunities.

Key Dates

Recommendation

The filing provides an update on the financial performance of Wichita Falls Bancshares, Inc. and pro forma financials for the combined Investar-WFB entity. WFB's individual performance shows positive trends in net income, net interest margin, and credit quality, which are favorable. The merger itself is a significant strategic move for Investar, aiming for scale and efficiency. However, this is an update to an already announced transaction, and the full impact of the merger, including the realization of synergies and integration risks, will only become clear post-closing and through subsequent reporting periods. A seasoned investor would likely 'hold' to observe the actual combined performance, integration progress, and any potential deviations from the pro forma estimates before making a more definitive investment decision.

Keywords

Investar Holding Corporation, Wichita Falls Bancshares Inc, Merger, Acquisition, SEC Filing, Financial Statements, Pro Forma, Banking, Community Bank, Financial Performance, Capital Ratios, Loan Portfolio, Deposits, Net Interest Income