Final Prospectus Supplement
Table of Contents

Filed pursuant to Rule 424(b)(8)
Registration Statement No. 333-215238
Registration Statement No. 333-216851

 

 

PROSPECTUS SUPPLEMENT

(To Prospectus Dated January 10, 2017)

 

LOGO

$18,600,000

6.00% Fixed-to-Floating Rate Subordinated Notes due 2027

We are offering $18,600,000 in aggregate principal amount of our 6.00% Fixed-to-Floating Rate Subordinated Notes due 2027, which we refer to as the “Notes.” The Notes will mature on March 30, 2027. From and including the date of issuance, to but excluding March 30, 2022, the Notes will bear interest at an initial fixed rate of 6.00%, payable semi-annually in arrears on March 30 and September 30 of each year, commencing on September 30, 2017. From and including March 30, 2022 to but excluding the stated maturity date or the date of earlier redemption, the interest rate will reset quarterly to an annual interest rate equal to the then-current LIBOR plus 394.5 basis points, payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year, commencing on June 30, 2022. Notwithstanding the foregoing, in the event that the three-month LIBOR is less than zero, the three-month LIBOR will be deemed to be zero.

We may, at our option, beginning with the interest payment date of March 30, 2022 and on any interest payment date thereafter, redeem the Notes, in whole or in part. The Notes will not otherwise be redeemable by us prior to maturity unless certain events occur, as described in “Description of Notes—Redemption” in this prospectus supplement. Any redemption will be effected at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest up to but excluding the date of redemption. Any early redemption of the Notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System, or Federal Reserve, to the extent then required under applicable laws or regulations.

The Notes will be unsecured and junior in right of payment and upon our liquidation to any existing and all future “senior debt,” as defined in the indenture and described under “Description of the Notes” in this prospectus supplement. There will be no sinking fund for the Notes, and the Notes are not convertible or exchangeable. The Notes will not be listed on any securities exchange or quoted on a quotation system. Currently, there is no public trading market for the Notes.

Investing in the Notes involves risks. Before investing in the Notes, potential purchasers of the Notes should consider the information set forth in “Risk Factors” beginning on page S-16 of this prospectus supplement, and in the documents incorporated by reference in this prospectus supplement, as well as the risk factors beginning on page 4 of the accompanying base prospectus.

 

     Per Note     Total  

Price to the public

     100.00   $ 18,600,000  

Underwriting discounts(1)

     1.50   $ 279,000  

Proceeds, before expenses, to us

     98.50   $ 18,321,000  

 

(1) 

The underwriter will also be reimbursed for certain expenses in this offering. See “Underwriting” for details.

None of the Securities and Exchange Commission, any state securities commission, the Federal Deposit Insurance Corporation, the Federal Reserve, the Louisiana Office of Financial Institutions or any other regulatory authority has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus supplement or the accompanying base prospectus. Any representation to the contrary is a criminal offense.

The Notes are not deposits, savings accounts or other obligations of our bank subsidiary and are not insured or guaranteed by the FDIC or any other governmental agency.

Concurrently with this offering, and by means of a separate prospectus supplement and accompanying prospectus, we are offering 1,411,765 shares of our common stock at a price to the public of $21.25 per share. In connection with the offering, the underwriters have notified us of their intent to exercise their option to purchase an additional 211,765 shares of our common stock on the same terms. The closing of this offering is not conditioned upon the closing of the concurrent offering of common stock, and the closing of the concurrent offering of common stock is not conditioned upon the closing of this offering. We expect to close our common stock offering on March 22, 2017.

The underwriter expects to deliver the Notes to purchasers in book-entry form through the facilities of The Depository Trust Company, or DTC, and its direct participants against payment therefor on or about March 24, 2017, subject to customary closing conditions.

 

 

SANDLER O’NEILL + PARTNERS, L.P.

 

 

The date of this prospectus supplement is March 21, 2017.


Table of Contents

TABLE OF CONTENTS

Prospectus Supplement

 

ABOUT THIS PROSPECTUS SUPPLEMENT

     S-1  

WHERE YOU CAN FIND MORE INFORMATION

     S-3  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     S-3  

SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     S-4  

PROSPECTUS SUPPLEMENT SUMMARY

     S-6  

THE OFFERING

     S-10  

SUMMARY HISTORICAL CONSOLIDATED SELECTED FINANCIAL DATA

     S-14  

RISK FACTORS

     S-16  

USE OF PROCEEDS

     S-23  

RATIO OF EARNINGS TO FIXED CHARGES

     S-23  

CAPITALIZATION

     S-24  

DESCRIPTION OF THE NOTES

     S-25  

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

     S-38  

CERTAIN BENEFIT PLAN AND ERISA CONSIDERATIONS

     S-42  

UNDERWRITING

     S-44  

LEGAL MATTERS

     S-46  

EXPERTS

     S-46  

Prospectus

 

ABOUT THIS PROSPECTUS

     1  

WHERE YOU CAN FIND MORE INFORMATION

     1  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     1  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     2  

INVESTAR HOLDING CORPORATION

     3  

RISK FACTORS

     4  

USE OF PROCEEDS

     4  

RATIO OF EARNINGS TO COMBINED FIXED CHARGES

     4  

REGULATION AND SUPERVISION

     5  

DESCRIPTION OF DEBT SECURITIES

     6  

DESCRIPTION OF COMMON STOCK

     13  

DESCRIPTION OF PREFERRED STOCK

     16  

DESCRIPTION OF DEPOSITARY SHARES

     19  

DESCRIPTION OF WARRANTS

     21  

DESCRIPTION OF UNITS

     22  

PLAN OF DISTRIBUTION

     23  

LEGAL OPINIONS

     26  

EXPERTS

     26  

 

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ABOUT THIS PROSPECTUS SUPPLEMENT

Unless we state otherwise or the context otherwise requires, as used in this prospectus supplement, the terms “Investar,” “we,” “our,” and “us” refer to Investar Holding Corporation, the term “Citizens” refers to Citizens Bancshares, Inc., and the term “you” refers to a prospective investor.

This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of our Notes, including the price, the aggregate principal amount of Notes being offered and the risks of investing in this offering of our Notes. The second part is the accompanying base prospectus, which gives more general information about the securities we may offer in one or more offerings from time to time under our shelf registration statement, some of which may not apply to this offering of Notes. Generally, when we refer to the “prospectus,” we are referring to this prospectus supplement and the accompanying base prospectus combined as one document, including the documents incorporated by reference herein and therein. This prospectus supplement, the accompanying base prospectus and the documents incorporated by reference herein and therein include important information about us, the Notes being offered and other information you should know before investing. See “Where You Can Find More Information” in this prospectus.

We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus supplement or the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. To the extent that the information in the prospectus supplement differs from information in the accompanying base prospectus or any document incorporated by reference filed prior to the date of this prospectus supplement, you should rely on the information in this prospectus supplement. The information contained in this prospectus supplement or the accompanying base prospectus is only accurate and complete as of the dates shown in such documents, and any information we have incorporated by reference herein is only accurate and complete as of the date of the document incorporated by reference (or, with respect to particular information contained in such document, as of the date set forth within such document as the date as of which such particular information is provided), regardless of the time of delivery of this prospectus supplement or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since such dates.

We are offering to sell our Notes only in jurisdictions where offers and sales are permitted. The distribution of this prospectus and the offering of our Notes in certain jurisdictions may be restricted by law. This prospectus does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any Notes offered by this prospectus by any person in any jurisdiction in which it is unlawful for that person to make that offer or solicitation. Neither the underwriter nor we are making any representation to you regarding the legality of an investment in our Notes by you under applicable laws. You should consult your own legal, tax and business advisors regarding an investment in our Notes. Information in this prospectus is not legal, tax or business advice to any prospective investor.

Unless otherwise expressly stated or the context otherwise requires, all information in this prospectus assumes that the option to purchase additional shares granted to the underwriter is not exercised in whole or in part. Except as discussed under “—Recent Developments—Pending Merger with Citizens Bancshares” or as otherwise expressly stated, the discussion of Investar does not take into account the completion of our proposed merger with Citizens Bancshares.

Market Data

We obtained the statistical and other market data used in this prospectus supplement from independent industry sources and publications as well as from research reports prepared by third parties. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe that this information is reliable, we have not independently verified such information. Our internal data, estimates and forecasts are based on information obtained from trade and

 

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business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. All estimates, forecasts and assumptions are necessarily subject to a high degree of risk due to a variety of factors, including those described in the ”Risk Factors” section and elsewhere in this prospectus supplement.

Emerging Growth Company Status

We are an “emerging growth company” as defined in the JOBS Act. For as long as we remain an emerging growth company, we may take advantage of reduced reporting requirements and are relieved of certain other significant regulatory requirements that are otherwise generally applicable to public companies. As an emerging growth company,

 

    we are exempt from the requirement to obtain an attestation report from our auditors on management’s assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002;

 

    we may choose to not adopt new or revised accounting standards until they would apply to private companies;

 

    we may elect to not comply with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and our audited financial statements;

 

    we are permitted to provide reduced disclosure about our executive compensation arrangements, which means we do not have to include, among other things, a compensation discussion and analysis; and

 

    we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements.

We will continue to be an emerging growth company until the earliest to occur of the following: (1) December 31, 2019; (2) the last day of the fiscal year in which we have more than $1.0 billion in annual revenues; (3) the date on which we have more than $700 million in market value of our common stock held by non-affiliates; or (4) the date on which we have issued more than $1.0 billion in non-convertible debt over a three-year period.

We have taken advantage of the reduced disclosure relating only to executive compensation arrangements. We do not intend to take advantage of any other scaled disclosure or relief during the time that we qualify as an emerging growth company, although the JOBS Act would permit us to do so.

We have elected not to take advantage of the exemption from the auditor attestation requirement in the assessment of an emerging growth company’s internal control over financial reporting. In addition, we have decided not to opt in to the extended transition period for the adoption of new or revised accounting standards, which means that the consolidated financial statements included in this prospectus, as well as any financial statements that we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies. Our election not to take advantage of the extended transition period is irrevocable.

 

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WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements and other information with the Securities and Exchange Commission, or the SEC. Our SEC filings are available over the Internet at the SEC’s website at www.sec.gov and on our website at www.investarbank.com. Except as specifically incorporated by reference into this prospectus supplement, information on those websites is not part of this prospectus supplement. You may also read and copy any document we file by visiting the SEC’s public reference room in Washington, D.C. The SEC’s address in Washington, D.C. is 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room.

To receive a free copy of any of the documents filed with the SEC, including those incorporated by reference in this prospectus supplement (other than exhibits, unless they are specifically incorporated by reference in the documents), call or write to us as follows:

Investar Holding Corporation

7244 Perkins Road

Baton Rouge, Louisiana 70808

Attention: John J. D’Angelo

Telephone: (225) 227-2222

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to “incorporate by reference” the information we file with them, which means:

In the case of a conflict or inconsistency between information contained in this prospectus supplement and information incorporated by reference into this prospectus supplement, you should rely on the information contained in the document that was filed later.

We incorporate by reference the following documents that we have filed with the SEC:

 

    our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 9, 2017; and

 

    our Current Reports on Form 8-K filed with the SEC on March 8, 2017 and March 15, 2017 (unless stated otherwise in the applicable report, information furnished under Item 2.02 or 7.01 of our Current Reports on Form 8-K is not incorporated herein by reference).

We also incorporate by reference each of the following documents that we will file with the SEC after the date of this prospectus supplement (other than, in each case, documents or information deemed to have been furnished, and not filed in accordance with the SEC rules) until this offering is completed:

 

    reports filed under Sections 13(a) and (c) of the Exchange Act;

 

    any document filed under Section 14 of the Exchange Act; and

 

    any reports filed under Section 15(d) of the Exchange Act.

You should rely only on information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.

 

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SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement, the accompanying base prospectus and the documents incorporated by reference or deemed incorporated by reference into this prospectus supplement or the accompanying base prospectus and any other written or oral statements made by us from time to time may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act; and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements, other than statements of historical fact, included in this prospectus supplement, the accompanying base prospectus and the documents incorporated by reference herein and therein, regarding our strategy, future operations, financial position, estimated revenues and income or losses, projected costs and capital expenditures, prospects, plans and objectives of management are forward-looking statements. When used in this prospectus supplement, the accompanying base prospectus and the documents incorporated by reference herein and therein, the words “plan,” “endeavor,” “will,” “would,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are (or were when made) based on current expectations and assumptions about future events and are (or were when made) based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should understand that the following important factors could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements:

 

    business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;

 

    our ability to implement our growth strategy, including our organic growth strategy as well as potentially difficulty in identifying and consummating suitable acquisitions;

 

    our ability to consummate our proposed merger with Citizens Bancshares, Inc., or Citizens;

 

    risks related to the integration of any businesses we have acquired or expect to acquire, such as our proposed merger with Citizens, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, the time and costs associated with integrating systems, technology platforms, procedures and personnel, the need for additional capital to finance such transactions, risks associated with entering new markets and possible failures in realizing the anticipated benefits from such acquisitions;

 

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

 

    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;

 

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

 

    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 and including the potential impact on our borrowers of the August 2016 flooding in Baton Rouge and surrounding areas;

 

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

 

    the concentration of our business within our geographic areas of operation in Louisiana;

 

    concentration of credit exposure;

 

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

 

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

 

    risks associated with our limited operating history and the relatively unseasoned nature of a significant portion of our loan portfolio;

 

    the impact of litigation and other legal proceedings to which we become subject;

 

    data processing system failures and errors;

 

    competitive pressures in the consumer finance, commercial finance, retail banking and mortgage lending industries, as well as the financial resources of, and products offered by, competitors;

 

    the impact of changes in laws and regulations applicable to us, including banking, securities and tax laws and regulations and accounting standards, as well as changes in the interpretation of such laws and regulations by our regulators;

 

    changes in the scope and costs of FDIC insurance and other coverages;

 

    effective January 1, 2015 and subject to certain transition periods, changes in minimum capital requirements, adjustments to prompt corrective action thresholds, increased quality of regulatory capital, revised risk-weighting of certain assets, and implementation of a “capital conservation buffer,” included in the final rule promulgated by the Federal Reserve on July 2, 2013, to implement the so-called “Basel III” accords;

 

    governmental monetary and fiscal policies;

 

    systemic risks associated with the soundness of other financial institutions;

 

    our internal controls and procedures may not be adequate to prevent losses;

 

    cyber attacks, computer viruses or other malware that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems;

 

    hurricanes, other natural disasters and adverse weather; oil spills and other man-made disasters; acts of terrorism, an outbreak of hostilities or other international or domestic calamities, acts of God and other matters beyond our control; and

 

    other circumstances, many of which are beyond our control.

Other factors not identified above, including those described under the headings “Risk Factors” in this prospectus supplement, the accompanying base prospectus and our Annual Report on Form 10-K for the year ended December 31, 2016 and the other documents incorporated by reference into this prospectus, may also cause actual results to differ materially from those described in any forward-looking statements. Most of these factors are difficult to anticipate, are generally beyond our control and may prove to be inaccurate. You should consider these factors in connection with considering any forward-looking statements.

All forward-looking statements, expressed or implied, included in or incorporated by reference into this prospectus supplement and the accompanying base prospectus are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

We assume no obligation for updating any forward-looking statements at any time, all of which are expressly qualified by the statements in this section, to reflect new information obtained or events or circumstances that occur after the date any such forward-looking statement is made.

 

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PROSPECTUS SUPPLEMENT SUMMARY

This summary highlights some of the information contained in or incorporated by reference into this prospectus supplement and does not contain all of the information that you should consider before investing in the securities offered by this prospectus supplement. You should carefully read this entire prospectus supplement, including the section titled “Risk Factors” on page S-16, the accompanying base prospectus, and the other documents that are incorporated by reference into this prospectus, including our financial statements and the Notes to those financial statements, before making an investment decision.

Our Company

We are a Louisiana corporation and a bank holding company headquartered in Baton Rouge, Louisiana. Through our wholly-owned subsidiary, Investar Bank, a Louisiana state chartered bank, we provide relationship-driven commercial banking products and services tailored to meet the needs of small to medium-sized businesses and professionals. Our primary markets are Baton Rouge, New Orleans, Hammond and Lafayette, Louisiana, and their surrounding metropolitan areas. We serve these markets from our main office located in Baton Rouge and from nine additional full service branches located throughout our market areas. As of December 31, 2016, on a consolidated basis, we had total assets of $1.2 billion, net loans of $886.4 million, total deposits of $907.8 million, and stockholders’ equity of $112.8 million.

We believe that the Louisiana banking market presents a significant opportunity for growth and franchise expansion, both organically and through strategic acquisitions. Although the financial services industry is rapidly changing and intensely competitive, and will likely remain so, we believe that Investar Bank competes effectively as a local community bank. We benefit from the consistency of local leadership and the availability of local access and responsive customer service. Taking into consideration our competitively-priced products and services, we believe we are well-positioned among other financial institutions to attract individual and small to medium-sized business customers.

Our History and Growth

Investar Bank was chartered as a Louisiana state bank in 2006. Investar Holding Corporation was incorporated in 2013 for the purpose of becoming a registered bank holding company for the bank. In July 2014, we completed our initial public offering with the sale of 3,285,300 shares of common stock at a public offering price of $14.00 per share, generating net offering proceeds of approximately $41.7 million.

We have experienced significant growth since our inception, completing a whole-bank acquisition in each of 2011 and 2013. On March 8, 2017, we entered into a definitive agreement to acquire Citizens Bancshares, Inc., and its wholly-owned subsidiary, Citizens Bank, a Louisiana state bank headquartered in Ville Platte, Louisiana that operates through three full-service banking offices in Evangeline Parish, Louisiana. See “—Recent Developments—Pending Merger with Citizens Bancshares.” The acquisition of Citizens is subject to, among other things, the receipt of all required regulatory approvals. The following table summarizes our history of whole-bank acquisitions, two of which have been completed and one of which has been recently announced:

 

Bank Acquired

   Date
Completed
   Acquired
Assets
     Acquired
Loans
     Number of
Branches
 

South Louisiana Business Bank

   October 2011    $ 50.9      $ 31.5        1  

First Community Bank

   May 2013    $ 99.2      $ 77.5        2  

Citizens Bank (through Citizens Bancshares, Inc.)

   Pending    $ 245.4      $ 126.8        3  

 

Note: All dollar amounts are in millions. Financial information for Citizens Bank is as of December 31, 2016, and acquired loans are shown net of allowance for loan and lease losses.

 



 

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In addition to our bank acquisitions, our growth strategy has included expansion through the establishment of de novo branches in our primary market areas. In 2012, we branched de novo into the suburban New Orleans, Louisiana market by purchasing two closed branch locations of another financial institution. In 2013, we branched de novo into the Lafayette, Louisiana market. Thereafter, in August 2014, we opened our sixth branch in the Baton Rouge, Louisiana market.

Consistent with our plans for further de novo expansion of our branch network, we have completed construction of our seventh Baton Rouge market area branch location in Gonzales, Louisiana. We expect to open our proposed Gonzales branch in 2017, subject to our receipt of all necessary regulatory approvals. In September 2015, we acquired land and a building for an additional branch location in the New Orleans market area, which we also expect to open in 2017 subject to regulatory approval.

Our Competitive Strengths

We believe that we are well-positioned to create value for our shareholders, particularly as a result of our attractive markets and the following competitive strengths:

 

    Management and Technology Infrastructure in Place for Growth. Our management team has demonstrated a track record of managing growth profitably, establishing profitable de novo branches, successfully executing acquisitions, maintaining a strong credit culture and implementing a relationship-based and community service-focused approach to banking.

To more effectively manage our continued growth, our executive functions are organized in a manner typically found in much larger financial institutions. We have centralized our credit review, product development and other policymaking functions and have two regional presidents who oversee our markets. In addition, we have embraced the latest technological developments in the banking industry, which we believe allows us to better leverage our employees by enabling them to focus on developing customer relationships, expands the suite of products that we can offer to customers and allows us to compete more efficiently and effectively as we grow.

 

    Proven Ability in Acquisition Execution and Integration. Since 2011, we have successfully completed two whole-bank acquisitions, both of which we consider to have been highly strategic and value-enhancing for our franchise. We believe these acquisitions demonstrate our disciplined approach to acquisitions and our successful evaluation of the financial metrics, as well as the cultural, operational and other factors associated with the acquisitions. Moreover, we efficiently integrated the acquired operations of both of our prior acquisitions, allowing us to quickly expand our presence in the new markets. We also expect our proposed merger with Citizens to enhance shareholder value. We believe this experience makes us an attractive buyer and should position us to take advantage of acquisition opportunities in the future.

 

    Solid Credit Quality. Through disciplined underwriting procedures and management of our concentrations and credits, we have maintained our asset quality despite the economic downturn beginning in 2008, even as we have grown our franchise significantly. We proactively and decisively deal with problem credits as they are identified. At December 31, 2016, our nonperforming loans were 0.22% of total loans, while our net charge-offs were 0.14% of total average loans for the year ended December 31, 2016. In addition, our allowance for loan losses as a percentage of total nonperforming loans was 356.16%.

 

    Strong Capital Base. We have also maintained strong capital levels throughout our operating history. Since our inception, we have supplemented the capital generated by our operations through five exempt offerings and our initial public offering, raising a total of $59.0 million. At December 31, 2016, we had a common equity tier 1 capital ratio of 11.40%, a tier 1 leverage capital ratio of 10.10%, a tier 1 risk-based capital ratio of 11.75% and a total risk-based capital ratio of 12.47%.

 



 

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Our Market Area

We operate throughout our primary market in southern Louisiana, including in Baton Rouge, New Orleans, Hammond and Lafayette, Louisiana, and their surrounding metropolitan areas. If the merger with Citizens is consummated, our market area will be expanded to include Evangeline Parish, Louisiana and the surrounding areas. The following information provides a brief overview of each of our markets.

Baton Rouge. Baton Rouge is the capital of Louisiana and its second largest market by deposits. As the farthest inland deep-water port on the Mississippi River, Baton Rouge serves as a major center of commercial and industrial activity, especially for the chemical and gas industries. However, Baton Rouge’s economy has diversified, and it is now a center for research and development, renewable energy sources, transportation, construction and distribution.

New Orleans and Hammond. New Orleans is Louisiana’s largest city, both by population and by deposits. It serves as a major economic hub of the Gulf Coast region. The hospitality and tourism industries, each a significant driver of the New Orleans economy, have returned to pre-Hurricane Katrina levels. New Orleans is also a major port city. The Port of New Orleans is the fifth largest port in the United States by cargo tonnage and is fueled by the economic activity of the Mississippi River and the Gulf Coast region. The Port of New Orleans also is becoming a major port for the cruise industry. The New Orleans economy continues to become more diversified, with growing motion picture, medical and technology sectors supported by a burgeoning entrepreneurship climate.

Hammond, which is roughly an hour’s drive from both New Orleans and Baton Rouge, is the commercial hub of Tangipahoa Parish and the home of Southeastern Louisiana University. Located at the intersection of Interstates 12 and 55, Hammond has evolved from a primarily agricultural area to a major distribution hub. Wal-Mart, Home Depot and Winn Dixie, among others, have distribution centers in Hammond.

Lafayette. Lafayette is Louisiana’s third largest city and deposit market. The area has historically been driven primarily by the oil and gas industry, but healthcare now provides the most private sector jobs. Regional and parish economic growth is in expansion mode. The area healthcare industry continues its growth with the recent completion of Our Lady of Lourdes Complex and the renovation of Lafayette General Medical Center. Office and retail space continues to enjoy low vacancies as does the residential rental market.

Although we believe our markets present attractive opportunities to continue our growth, the median household income in each of our markets is below the national average, which could impact the demand for our products and services. In addition, southern Louisiana, including each of our markets, is susceptible to major hurricanes and other adverse weather events, which can result in widespread property damage and a severe impact on local economies.

Recent Developments

Pending Merger with Citizens Bancshares

On March 8, 2017, we entered into an Agreement and Plan of Reorganization with Investar Acquisition Company, our wholly-owned subsidiary, and Citizens. Subject to the terms of the merger agreement, at the effective time of the merger, we have agreed to acquire all of the issued and outstanding shares of Citizens common stock for aggregate cash consideration of $45.8 million, subject to a dollar-for-dollar downward adjustment to the extent that Citizens’ adjusted tangible shareholders’ equity is less than $33.0 million as of a date, to be determined by Citizens, that is within ten days prior to the closing of the merger. The adjusted tangible equity capital of Citizens will be calculated as the sum of Citizens’ capital stock, surplus and undivided profits, on a consolidated basis, less any goodwill and unrealized gains or losses on available-for-sale securities, and less certain merger costs and other specified items.

 



 

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The merger agreement contains customary representations and warranties and covenants by the parties, and the merger is subject to customary closing conditions, including the receipt of regulatory approvals and approval of the merger by the shareholders of Citizens. The merger agreement is subject to termination by either party under certain conditions and provides for the payment of a termination fee of $1.3 million payable by Citizens, or $674,000 payable by us, upon termination of the merger agreement under certain circumstances by the party obligated to pay the termination fee.

Since its foundation in 1975, Citizens Bank has been providing a full range of banking products and services to businesses and individuals in Evangeline Parish, Louisiana. Citizens Bank operates from its main office in Ville Platte, Louisiana and two branches located in Mamou and Pine Prairie, Louisiana. As of December 31, 2016, Citizens reported total assets of $245.2 million, net loans of $126.8 million, total deposits of $208.4 million and total stockholders’ equity of $35.7 million. For additional information regarding Citizens, please see the audited consolidated financial statements of Citizens for the years ended December 31, 2016 and 2015, which are incorporated by reference into this prospectus supplement.

We cannot assure you our proposed merger with Citizens will be completed in the anticipated time frame, or at all, or that the anticipated benefits of the merger will be realized. In addition, this offering is not conditioned on, and is expected to be consummated before, the closing of the Citizens merger. Accordingly, if you decide to purchase Notes in this offering, you should be willing to do so whether or not we complete the Citizens merger.

Concurrent Underwritten Offering

Concurrently with this offering, and by means of a separate prospectus supplement and accompanying prospectus, we are offering 1,411,765 shares of our common stock at a price to the public of $21.25 per share. In connection with the offering, the underwriters have notified us of their intent to exercise their option to purchase an additional 211,765 shares of our common stock on the same terms. The closing of this offering is not conditioned upon the closing of the concurrent offering of common stock, and the closing of the concurrent offering of common stock is not conditioned upon the closing of this offering. We expect to close our common stock offering on March 22, 2017. The foregoing description and other information regarding the underwritten offering of our common stock is included herein solely for informational purposes. Nothing in this prospectus supplement should be construed as an offer to sell, or a solicitation of an offer to buy, any of our common stock, and no part of the offering of our common stock is incorporated by reference in this prospectus supplement.

Corporate Information

Our principal executive offices are located at 7244 Perkins Road, Baton Rouge, Louisiana 70808, and our telephone number at that address is (225) 227-2222. Our website address is www.investarbank.com. We make our periodic reports and other information filed with, or furnished to, the SEC available free of charge through our website as soon as reasonably practicable after those reports and other information are electronically filed with, or furnished to, the SEC. Except as specifically incorporated by reference into this prospectus supplement, the information on, or otherwise accessible through, our website or Citizens’ website is not incorporated by reference herein and does not constitute a part of this prospectus.

 



 

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THE OFFERING

The following summary of this offering contains basic information about this offering and the terms of the Notes and is not intended to be complete. It may not contain all of the information that is important to you. For a more complete understanding of the Notes, please refer to the section of this prospectus supplement entitled “Description of the Notes.”

 

Issuer:

Investar Holding Corporation, a Louisiana corporation

 

Securities Offered:

6.00% Fixed-to-Floating Rate Subordinated Notes due 2027, which we refer to in this prospectus supplement as the “Notes.”

 

Aggregate Principal Amount:

$18,600,000

 

Stated Maturity:

The Notes will mature on March 30, 2027

 

Issue Price:

100%

 

Interest Rate:

  From and including the issue date, to but excluding March 30, 2022, at a fixed per annum rate of 6.00%

 

    From and including March 30, 2022, to but excluding the maturity date or the date of earlier redemption, at a floating rate per annum equal to the then-current three-month LIBOR (but not less than zero), determined on the determination date of the applicable interest period, plus 394.5 basis points. For any determination date, “LIBOR” means the rate as published by Bloomberg (or any successor service) at approximately 11:00 a.m., London time, two business days prior to the commencement of the relevant quarterly interest period, as the London interbank rate for U.S. dollars. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as provided in the indenture governing the Notes. We have appointed Wilmington Trust, National Association as the calculation agent for purposes of determining three-month LIBOR for each floating rate interest period.

 

Interest Payment Dates:

  Until, but not including March 30, 2022, we will pay interest on March 30 and September 30 of each year, commencing September 30, 2017

 

    From and including March 30, 2022 to March 30, 2027, but excluding the maturity date or the date of earlier redemption, we will pay interest on the Notes on March 30, June 30, September 30 and December 30 of each year, commencing June 30, 2022.

 

Day Count Convention:

Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months to but excluding March 30, 2022 and, thereafter, on the basis of the actual number of days in the relevant interest period divided by 360.

 

Record Dates:

  From March 24, 2017, to but excluding March 30, 2022, March 15 and September 15 of each year.

 



 

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    From March 30, 2022, through the maturity date or the date of earlier redemption, March 15, June 15, September 15 and December 15 of each year.

 

Optional Redemption:

We may redeem the Notes, in whole or in part, at our option, beginning with the interest payment date March 30, 2022 and on any interest payment date thereafter. Any redemption of Notes would be at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption. Any partial redemption will be made pro rata among all holders of the Notes. Any redemption of the Notes would be subject to the receipt of any required regulatory approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve. The Notes are not subject to repayment at the option of the holders.

 

Special Redemption:

We may redeem the Notes, in whole but not in part, at our option, at any time, upon the occurrence of a “Tax Event,” “Tier 2 Capital Event,” or “1940 Act Event,” as defined in the indenture and described in “Description of the Notes—Redemption” in this prospectus supplement. Any redemption of Notes would be at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption. Any partial redemption will be made pro rata among all holders of the Notes. Any redemption of the Notes would be subject to the receipt of any required regulatory approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve.

 

Form and Denomination:

Fully-registered global Notes in book-entry form in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof

 

Sinking Fund:

None

 

Further Issuances:

The Notes will be limited initially to $18,600,000 million in aggregate principal amount. However, we may, from time to time, issue an unlimited principal amount of additional Notes in the future without notice to or the consent of the holders of the Notes. Any such additional Notes would rank equally with the Notes but would have a different issue date, offering price and first interest payment date.

 

Remedies Upon Events of Default:

There is no right of acceleration in the case of a default in the payment of principal or of interest on the Notes, or in our non-performance of any other obligation under the Notes or the indenture. However, if a bankruptcy-related event of default occurs, the principal of, and accrued and unpaid interest on, the Notes would become immediately due and payable without any action of the trustee or the holders of the Notes. In the event of such acceleration of

 



 

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the maturity of the Notes, all of our obligations to holders of our senior debt would be entitled to be paid in full before any payment or distribution can be made on account of the principal of, or interest on, the Notes. Upon a default in the payment of principal of or interest on the Notes not involving a bankruptcy-related event, the trustee or, under certain circumstances, a holder would only be entitled to institute a proceeding to collect the sums then due and unpaid. See “Description of Notes—Events of Default; Acceleration of Payment; Limitation on Suits” in this prospectus supplement.

 

No Guarantee:

The Notes are not guaranteed by any of our subsidiaries, including Investar Bank. As a result, the Notes will be effectively subordinated to the liabilities of our subsidiaries, as discussed below under “Description of the Notes—Ranking.”

 

Use of Proceeds:

We expect to receive net proceeds from this offering of approximately $18.2 million, after deducting estimated expenses and underwriting discounts. We intend to use the net proceeds from this offering to fund a portion of the purchase price of the proposed merger transaction with Citizens, and for general corporate purposes, including investments in our banking subsidiary.

 

  If the merger is not consummated, we intend to use the net proceeds from this offering for general corporate purposes, potential strategic acquisitions and investments in our banking subsidiary. This offering is not conditioned on, and is expected to be completed before, the closing of the Citizens merger. See “Use of Proceeds” in this prospectus supplement.

 

Subordination; Ranking:

We will issue the notes under an Indenture, dated as of March 24, 2017, between Wilmington Trust, National Association, as trustee, and us, as issuer, as amended and supplemented by a First Supplemental Indenture dated as of the same date, between the trustee and us. We refer to the Indenture, as amended and supplemented by the First Supplemental Indenture, as the “indenture.”

 

  The Notes will be unsecured, subordinated to certain obligations and:

 

    will rank junior in right of payment and upon our liquidation to any existing and all future “senior debt,” as defined in the indenture and described under “Description of the Notes” in this prospectus supplement;

 

    will rank junior in right of payment and upon our liquidation to any existing and all future general creditors;

 

    will rank equal in right of payment and upon our liquidation with all of our future indebtedness the terms of which provide that such indebtedness ranks equally with the Notes;

 

   

will rank senior in right of payment and upon our liquidation to (1) our outstanding junior subordinated debentures underlying our

 



 

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outstanding trust preferred securities; and (2) any indebtedness the terms of which provide that such indebtedness ranks junior in right of payment to the Notes; and

 

    will be effectively subordinated to all existing and future indebtedness, deposits and other liabilities of Investar Bank and our other current and future subsidiaries.

 

  As of December 31, 2016, we had $1.1 million in senior debt, no indebtedness ranking equally with the Notes and $3.6 million of indebtedness ranking junior to the Notes.

 

Listing and Trading Markets:

We do not intend to list the Notes on any securities exchange or to have the Notes quoted on a quotation system. Currently, there is no public market for the Notes and we cannot assure you that any public market for the Notes will develop.

 

Risk Factors:

An investment in our Notes involves risks. Before making an investment decision, you should carefully the risks described under the heading “Risk Factors” beginning on page S-16 of this prospectus supplement, and in the documents incorporated by reference in this prospectus supplement, as well as the risk factors beginning on page 4 of the accompanying base prospectus.

 

Governing Law:

The Notes and the indenture will be governed by New York law.

 

Ratios of Earnings to Fixed Charges:

Please refer to the information contained under “Consolidated Ratios of Earnings to Fixed Charges” in the accompanying prospectus for a representation of such ratios for each of the last five fiscal years.

 

Concurrent Offering:

Concurrently with this offering, and by means of a separate prospectus supplement and accompanying prospectus, we are offering 1,411,765 shares of our common stock at a price to the public of $21.25 per share. In connection with the offering, the underwriters have notified us of their intent to exercise their option to purchase an additional 211,765 shares of our common stock on the same terms. The closing of this offering is not conditioned upon the closing of the concurrent offering of common stock, and the closing of the concurrent offering of common stock is not conditioned upon the closing of this offering. We expect to close our common stock offering on March 22, 2017.

 



 

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SUMMARY HISTORICAL CONSOLIDATED SELECTED FINANCIAL DATA

The following table sets forth selected historical financial information and other data as of and for each of the periods presented. We did not reorganize into a bank holding company structure until November 2013. Accordingly, the selected financial information and other data as of and for the year ended December 31, 2012 relate only to the operations of Investar Bank, while the selected financial information and other data for all other periods reflect our organization on a consolidated basis. The selected financial information for the years ended December 31, 2016, 2015, 2014 and 2013, other than the performance ratios, has been derived from our audited consolidated financial statements for such years, and the selected financial information, other than the performance ratios, for the year ended December 31, 2012 has been derived from the audited financial statements of Investar Bank. The following table should be read together with, and is qualified in its entirety by reference to, our historical financial statements and the accompanying Notes incorporated by reference herein. Our historical results for any prior period may not be indicative of results to be expected in any future period.

 

(In thousands, except share data)   As of and for the year ended December 31,  
    2016     2015     2014     2013     2012  

Financial Condition Data(1)

         

Total assets

  $ 1,158,960     $ 1,031,555     $ 879,354     $ 634,946     $ 375,446  

Total gross loans, net of allowance for loan losses

    886,375       819,822       721,556       505,744       303,019  

Allowance for loan losses

    7,051       6,128       4,630       3,380       2,722  

Investment securities

    183,142       139,779       92,818       62,752       44,326  

Goodwill and other intangible assets

    3,234       3,175       3,216       3,257       2,828  

Noninterest-bearing deposits

    108,404       90,447       70,217       72,795       37,489  

Interest-bearing deposits

    799,383       646,959       557,901       459,811       262,181  

Total deposits

    907,787       737,406       628,118       532,606       299,670  

Long-term borrowings

    12,809       11,969       25,055       34,427       26,794  

Total stockholders’ equity

  $ 112,757     $ 109,350     $ 103,384     $ 55,483     $ 43,553  

Income Statement Data

         

Interest income

  $ 43,152     $ 37,340     $ 31,369     $ 22,472     $ 14,587  

Interest expense

    8,413       5,882       4,675       3,460       2,542  

Net interest income

    34,739       31,458       26,694       19,012       12,045  

Provision for loan losses

    2,079       1,865       1,628       1,026       685  

Net interest income after provision

    32,660       29,593       25,066       17,986       11,360  

Noninterest income

    5,468       8,344       5,860       5,354       3,625  

Noninterest expense

    26,639       27,353       24,384       19,024       11,645  

Income before income taxes

    11,489       10,584       6,542       4,316       3,340  

Income tax expense

    3,609       3,511       1,145       1,148       979  

Net income

  $ 7,880     $ 7,073     $ 5,397     $ 3,168     $ 2,361  

Per Common Share Data

         

Basic earnings per share

  $ 1.11     $ 0.98     $ 0.98     $ 0.86     $ 0.79  

Diluted earnings per share

    1.10       0.97       0.93       0.81       0.71  

Dividends per share

    0.04       0.03       0.04       0.05       0.05  

Book value per share

    15.88       15.05       14.24       14.06       13.56  

Tangible book value per share(2)

    15.42       14.62       13.79       13.24       12.68  

Period end common shares outstanding

    7,101,851       7,264,282       7,262,085       3,945,114       3,210,816  

Basic weighted average common shares outstanding

    7,107,187       7,214,045       5,533,514       3,667,929       2,998,087  

Diluted weighted average common shares outstanding

    7,149,834       7,258,008       5,777,302       3,923,375       3,302,661  

Performance Ratios

         

Return on average assets

    0.71     0.77     0.73     0.64     0.74

Return on average equity

    6.99     6.60     6.80     6.10     5.90

Net interest margin

    3.32     3.61     3.85     4.10     4.04

Efficiency ratio(3)

    66.25     68.72     74.90     78.07     74.32

Net interest income to average assets

    3.14     3.42     3.63     3.83     3.77

Dividend payout ratio

    3.80     3.26     3.93     5.44     5.84

 



 

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(In thousands, except share data)   As of and for the year ended December 31,  
    2016     2015     2014     2013     2012  

Asset Quality Ratios

         

Nonperforming assets to total assets

    0.52     0.30     0.69     0.79     0.62

Nonperforming loans to total loans

    0.22     0.32     0.54     0.30     0.02

Allowance for loan losses to total loans

    0.79     0.82     0.74     0.67     0.94

Allowance for loan losses to nonperforming loans

    356.16     254.16     138.61     227.00     5,136.00

Net charge-offs to average loans

    0.14     0.05     0.07     0.09     -0.12

Capital Ratios

         

Total equity to total assets

    9.73     10.60     11.76     8.74     11.60

Tangible common equity to tangible assets(4)

    9.48     10.32     11.43     8.27     10.93

Tier 1 capital to average assets

    10.10     11.39     12.61     9.53     11.55

Common equity tier 1 capital ratio

    11.40     11.67     NA       NA       NA  

Tier 1 capital to risk-weighted assets

    11.75     12.05     13.79     10.85     13.06

Total capital to risk-weighted assets

    12.47     12.72     14.41     11.51     13.95

 

(1) The selected financial data includes the effect of the acquisitions of First Community Bank and South Louisiana Business Bank from the date of each acquisition and reflects the fair value of the assets and liabilities acquired on the date of acquisition, unless the context otherwise requires.
(2) Tangible book value per common share is a non-GAAP financial measure. Tangible book value per common share is calculated as total stockholders’ equity less goodwill and other intangible assets, divided by the number of common shares outstanding as of the balance sheet date. We believe that the most directly comparable GAAP financial measure is book value per share. See “Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference herein, for a reconciliation of tangible book value per common share to book value per share.
(3) Efficiency ratio represents noninterest expenses divided by the sum of net interest income (before provision for loan losses) and noninterest income. See “Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference herein, for more information regarding our calculation of the efficiency ratio.
(4) Tangible equity to tangible assets is a non-GAAP financial measure. Tangible equity is calculated as total stockholders’ equity less goodwill and other intangible assets, and tangible assets is calculated as total assets less goodwill and other intangible assets. We believe that the most directly comparable GAAP financial measure is total equity to total assets. See “Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference herein, for a reconciliation of the ratio of tangible equity to tangible assets to the ratio of total equity to total assets.

 



 

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RISK FACTORS

Investing in our Notes involves risks. You should carefully the following risk factors, in addition to the other information included in or incorporated by reference in this prospectus, including the risks and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, as may be supplemented by other documents incorporated by reference into this prospectus supplement or the accompanying prospectus, before making an investment decision. These risks and uncertainties are not the only ones facing us. Additional risk and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. If any of these risks or uncertainties actually occur, our business, financial condition, liquidity results of operations and prospects could be materially adversely affected. In that case, our ability to pay principal and interest on the Notes, and the value of the Notes, could decline significantly, and you could lose all or part of your investment.

Risks Related to this Offering and Ownership of the Notes

Our obligations under the Notes will be unsecured and subordinated to our existing and future senior debt.

Our obligations under the Notes will be unsecured and junior in right of payment to all of our existing and future “senior debt,” as defined in the indenture and described under “Description of the Notes” in this prospectus supplement. This means that we generally may not make any payments on the Notes if we default on a payment of senior debt and do not cure the default within the applicable grace period or if the senior debt becomes immediately due because of a default and has not yet been paid in full. In addition, in the event of our bankruptcy, liquidation or dissolution, our assets would be available to pay obligations under the Notes only after we have made all payments on all senior debt. As of December 31, 2016, at the parent company level, we had indebtedness of approximately $1.1 million ranking senior to the Notes, which consisted primarily of $1.0 million in borrowings under a secured line of credit. As of that date, we had no indebtedness ranking equally with the Notes and $3.6 million of indebtedness (consisting of our junior subordinated debentures) ranking junior to the Notes. Neither the Notes nor the indenture limit our ability to incur additional indebtedness, including indebtedness that ranks senior to or equally with the Notes. As of December 31, 2016, on an adjusted basis to give effect to the sale of the Notes offered hereby, we would have had, on a consolidated basis, approximately $23.3 million of indebtedness.

In addition, the Notes will not be secured by any of our assets. As a result, the Notes will be effectively subordinated to all of our secured indebtedness to the extent of the value of the assets securing such indebtedness. The indenture will not limit the amount of senior indebtedness and other financial obligations or secured obligations that we or our subsidiaries may incur.

The Notes are not insured or guaranteed by the FDIC.

The Notes are not bank deposits and, therefore, are not insured against loss or guaranteed by the FDIC, any other deposit insurance fund or by any other public or private entity. An investment in our Notes is subject to risks, including those described herein. As a result, if you purchase notes in the offering, you could lose some or all of your investment.

The Notes will be structurally subordinated to the debt of our subsidiaries, which will not guarantee the Notes.

The Notes will solely be parent company obligations, and will not be obligations of, or guaranteed by, Investar Bank or any of our other subsidiaries, which will have no obligation to pay any amounts due on the Notes. Because we are a holding company, our rights and the rights of our creditors, including the holders of the Notes, to participate in the assets of any subsidiary during its liquidation or reorganization will be subject to the prior claims of the subsidiary’s creditors unless we are ourselves a creditor with recognized claims against the subsidiary. Any loans that we make to Investar Bank would be subordinate in right of payment to deposits and to

 

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other indebtedness of the bank. Claims from creditors (other than us) against our subsidiaries may include long-term and medium-term debt and substantial obligations related to deposit liabilities, federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings, as well as liabilities to general creditors. Moreover, the indenture governing the Notes does not limit the ability of our subsidiaries to incur additional indebtedness in the future. Accordingly, the new Notes will be effectively subordinated to all existing and future liabilities of our subsidiaries, including the bank.

We depend on Investar Bank for cash flow, which could impact our ability to satisfy our payment obligations with respect to the Notes.

We are a bank holding company, and a separate and distinct legal entity from Investar Bank and any other subsidiaries that we may have from time to time, and the Notes are exclusively our obligations and not guaranteed by any of our subsidiaries. Because our primary asset is Investar Bank, our principal source of funds to pay our operating expenses and satisfy our obligations, including debt obligations, is dividends from the bank. However, the bank’s ability to pay dividends to us is contingent on a number of factors, including its financial condition and results of operations and federal and state laws and regulations applicable to the bank. Among other things, these laws and regulations may prohibit or limit the amount of dividends payable by the bank if the bank fails to maintain certain levels of regulatory capital. Federal and state banking authorities also have the ability to restrict the bank’s ability to pay dividends through supervisory action. Additional information about the regulatory restrictions and limitations on Investar Bank with respect to the payment of dividends is set forth in the section entitled “Business—Supervision and Regulation—Dividends” in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference into this prospectus. The bank is not obligated to pay dividends to us. If the bank is unable to pay dividends to us, we may be unable to satisfy our payment obligations with respect to the Notes.

Regulatory guidelines may restrict our ability to pay the principal of, and interest on, the Notes.

As a bank holding company, our ability to pay the principal of, and interest on, the Notes is subject to Federal Reserve guidelines regarding capital adequacy. We intend to treat the notes as “Tier 2 capital” under the Federal Reserve’s regulatory capital rules and guidelines. The Federal Reserve guidelines generally require us to review the effects of the cash payment of Tier 2 capital instruments such as the Notes on our overall financial condition. The guidelines also require that we review our net income for the current and past four quarters, and the amounts we have paid on Tier 2 capital instruments for those periods, as well as our projected rate of earnings retention. Moreover, under Federal Reserve policy, a bank holding company is required to act as a source of financial and managerial strength to each of its banking subsidiaries and commit resources to their support, including the guarantee of capital plans of an undercapitalized bank subsidiary. Such support may be required at times when a holding company may not otherwise be inclined to provide it. As a result of the foregoing, we may be unable to pay accrued interest on the Notes on one or more of the scheduled interest payment dates or at any other time or the principal of the notes at the maturity of the Notes.

If we were to be the subject of a bankruptcy proceeding under Chapter 11 of the U.S. Bankruptcy Code, the bankruptcy trustee would be deemed to have assumed and would be required to cure immediately any deficit under any commitment we have to any of the federal banking agencies to maintain the capital of Investar Bank, and any claim for breach of such obligation would generally have priority over most other unsecured claims.

The indenture governing the Notes includes limited rights of acceleration.

Payment of principal on the Notes may be accelerated only in the case of certain events of bankruptcy, receivership, insolvency, liquidation or similar proceedings involving us or Investar Bank. There is no automatic acceleration or right of acceleration in the case of default in the payment of principal of or interest on the Notes or in the performance of any of our other obligations under the Notes or the indenture governing the Notes.

 

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We have made only limited covenants in the indenture, which may not protect your investment in the event that we experience significant adverse changes in our financial condition or results of operations.

The covenants in the indenture are limited. As a result, the indenture does not protect holders of the Notes in the event of a material adverse change in our financial condition or results of operations or limit our ability to incur or assume additional indebtedness or other obligations. Additionally, the indenture does not contain any financial ratios or specified levels of liquidity to which we must adhere. Therefore, you should not consider the provisions of the indenture as a significant factor in evaluating whether we will be able to or will comply with our obligations under the Notes.

The Notes do not restrict our ability to incur additional debt, repurchase our securities or take other actions that could have a negative impact on the holders of the Notes.

We are not restricted under the terms of the Notes or the indenture from incurring additional debt, including debt that ranks senior to or equal with the Notes, selling or otherwise disposing of any of our assets, paying dividends, or repurchasing our securities. Our ability to incur additional debt and take a number of other actions that are not limited by the terms of the Notes could diminish our ability to make payments on the Notes when due.

We may redeem the Notes at our option under certain circumstances, which may limit your ability to earn interest over the full term of the Notes.

On or after March 30, 2022, we may redeem the Notes, in whole or in part, from time to time, at our option. It is more likely we will redeem the Notes after March 30, 2022 if the interest rate on the Notes is higher than that which we could obtain from one or more other forms of other borrowings. In addition, we may also redeem the Notes in whole but not in part, at any time, prior to maturity if (1) a change or prospective change in law occurs that could prevent us from deducting interest payable on the Notes for U.S. federal income tax purposes, (2) a change or prospective change in law occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes, or (3) we are, or within 90 days will be, required to register as an investment company under the Investment Company Act of 1940, as amended. If we elect to redeem the Notes, holders of the Notes will receive 100% of the principal amount of the Notes and any accrued and unpaid interest to, but excluding, the date of redemption. In that event, holders may not be able to reinvest the proceeds of the redemption in other securities with a similar level of risk and a comparable yield as the Notes. See “Description of the Notes—Redemption” in this prospectus supplement.

Investors should not assume that we will redeem the Notes on or after the date on which they become redeemable at our option, although we reserve the right to do so in the exercise of our sole discretion. Under Federal Reserve regulations, unless the Federal Reserve authorizes us in writing to do otherwise, we may not redeem the Notes unless they are replaced with other Tier 2 capital instruments or unless we can demonstrate to the satisfaction of the Federal Reserve that following redemption, we will continue to hold capital commensurate with our risk.

Changes in our credit rating could adversely affect the market price or liquidity of the Notes.

In connection with the issuance of the Notes, we obtained a rating from Kroll Bond Rating Agency, which assigned an investment grade rating of BBB- to the issue. Credit rating agencies continually revise their ratings for the companies that they follow, including us. The credit rating agencies also evaluate our industry as a whole and may change their credit ratings for us based on their overall view of our industry. We cannot be sure that credit rating agencies will maintain their initial ratings on the Notes. A negative change in our ratings could have an adverse effect on the market price or liquidity of the Notes.

 

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Our credit ratings may not reflect all risks of an investment in the Notes.

Our credit ratings are an assessment of our ability to pay our obligations as they become due. Accordingly, real or anticipated changes in our credit ratings will generally affect the trading value of the Notes. Our credit ratings, however, may not reflect the potential risks related to the market or other factors on the value of the Notes. Furthermore, because your return on the Notes depends upon factors in addition to our ability to pay our obligations, there may be no correlation between an improvement in our credit ratings and other investment risks related to the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.

If an active trading market for the Notes does not develop or is not maintained, you may be unable to sell the Notes or to sell them at a price you deem sufficient.

The Notes will be securities for which there is no established trading market. We do not intend and are not obligated to list the Notes on any securities exchange or have them quoted on a quotation system. Although we have been informed by the underwriter that it intends to make a market in the Notes after the offering is completed, the underwriter is under no obligation to do so and may cease its market-making at any time without notice. If an active trading market does not develop or is not maintained, the market price and liquidity of the Notes may be adversely affected. In that case, you may not be able to sell your Notes at a particular time or at a favorable price. Even if a trading market develops, the Notes may trade at higher or lower prices than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the number of holders of the Notes, the liquidity of the trading market, the interest of securities dealers in making a market for the Notes, the market for similar debt securities, our financial performance or prospects, or the prospects for companies in our industry generally.

The amount of interest payable on the Notes will vary on and after March 30, 2022.

As the interest rate of the Notes will be calculated based on LIBOR from March 30, 2022 through the maturity date or the date of earlier redemption and LIBOR is a floating rate, the interest rate on the Notes will vary on and after March 30, 2022. From and including the issue date to but excluding March 30, 2022, the Notes will bear interest at a fixed rate per annum of 6.00%. From and including March 30, 2022, the Notes will bear interest at a floating rate set each quarterly interest period at a per annum rate equal to the three-month LIBOR (but not less than zero) plus 394.5 basis points. The per annum interest rate that is determined two business days before the commencement of each interest period during which a floating rate applies will apply to the entire quarterly interest period following such determination date even if LIBOR increases during that period.

Floating rate notes bear additional significant risks not associated with fixed rate debt securities. These risks include fluctuation of the interest rates and the possibility that you will receive an amount of interest that is lower than expected. We have no control over a number of matters, including economic, financial, and political events, that are important in determining the existence, magnitude, and longevity of market volatility and other risks and their impact on the value of, or payments made on, the floating rate of the Notes. In recent years, interest rates have been volatile, and that volatility may be expected in the future.

Holders of the Notes will have no rights against the publishers of LIBOR.

Holders of the Notes will have no rights against the publishers of LIBOR, even though the amount they receive on each interest payment date on or after March 30, 2022 will depend upon the level of LIBOR. The publishers of LIBOR are not in any way involved in this offering and have no obligations relating to the Notes or the holders of the Notes.

 

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Risks Related to the Citizens Merger

We may face risks with respect to our current and future acquisitions.

When we attempt to expand our business in Louisiana and other states through mergers and acquisitions, such as our proposed transaction with Citizens, we seek targets that are culturally similar to us, have experienced management and possess either significant market presence or have potential for improved profitability through economies of scale or expanded services. In addition to the general risks associated with our growth plans highlighted above, acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among other things:

 

    the time and costs associated with identifying and evaluating potential acquisition and merger targets;

 

    inaccuracies in the estimates and judgments used to evaluate credit, operations, management and market risks with respect to the target institution;

 

    the time and costs of evaluating new markets, hiring experienced local management and opening new bank locations, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion;

 

    our ability to finance an acquisition and possible dilution to our existing shareholders;

 

    the diversion of our management’s attention to the negotiation of a transaction;

 

    the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations;

 

    entry into new markets where we lack experience; and

 

    risks associated with integrating the operations and personnel of the acquired business in a manner that permits growth opportunities and does not materially disrupt existing customer relationships or result in decreased revenues resulting from any loss of customers.

With respect to the risks particularly associated with the integration of an acquired business, we may encounter a number of difficulties, such as:

 

    customer loss and revenue loss;

 

    the loss of key employees;

 

    the disruption of our operations and business;

 

    our inability to maintain and increase competitive presence;

 

    possible inconsistencies in standards, control procedures and policies; and

 

    unexpected problems with costs, operations, personnel, technology and credit.

In addition to the risks posed by the integration process itself, the focus of management’s attention and effort on integration may result in a lack of sufficient management attention to other important issues, causing harm to our business. Also, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit our successful integration of an acquired business.

We expect to continue to evaluate merger and acquisition opportunities that are presented to us and conduct due diligence activities related to possible transactions with other financial institutions. As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt or equity securities may occur at any time. Historically, acquisitions of non-failed financial institutions have involved the payment of a premium over book and market values. Failure to realize the expected revenue increases, cost savings, increases in geographic or product presence or other projected benefits from an acquisition could have a material adverse effect on our business, financial condition and results of operations, which could impact our ability to service the Notes.

 

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Even if this offering is completed, our proposed merger transaction with Citizens may not be completed, which could have an adverse impact on our future business, operations and results of operations or leave us with excess capital that cannot be profitably deployed.

We expect the Citizens merger transaction to close during the third quarter of 2017, but the acquisition is subject to a number of closing conditions, including, but are not limited to:

 

    the receipt of required regulatory approvals and the approval of Citizens’ shareholders;

 

    the continued accuracy of the representations and warranties made by the parties in the merger agreement;

 

    the performance by each party of its obligations under the merger agreement;

 

    the absence of any order or decree enjoining or otherwise prohibiting the merger;

 

    the maintenance by Citizens of adjusted tangible shareholders’ equity of at least $33.0 million through the closing of the merger; and

 

    the absence of the exercise of statutory appraisal rights by the holders of more than 10% of the outstanding shares of Citizens common stock.

Many of these conditions are beyond our control. If these conditions are not satisfied or waived, the Citizens merger will not be completed. In addition, either Citizens or we may terminate the merger agreement under certain circumstances. The closing of this offering is not conditioned on, and is expected to be completed before, the closing of the Citizens merger. Accordingly, if you decide to purchase Notes in this offering, you should be willing to do so whether or not we complete the Citizens merger. If we do not complete the Citizens merger, we intend to use the net proceeds from this offering for general corporate purposes, potential strategic acquisitions and investments in our banking subsidiary to support its growth. However, we cannot assure you that we will be able to profitably deploy the proceeds from this offering if the Citizens merger is not completed. Failure to complete the Citizens merger or any delays in completing the Citizens merger could have an adverse impact on our future business, operations and results of operations and could negatively impact the value of the Notes.

Regulatory approvals for the Citizens merger may not be received, may take longer than expected or may impose conditions that we do not presently anticipate.

The Federal Reserve must approve, or waive approval of, our merger with Citizens, and the FDIC and the Louisiana Office of Financial Institutions must approve the proposed merger of the subsidiary banks. The regulatory agencies will consider, among other factors, the competitive impact of the transactions, the financial and managerial resources of each of the parties to the proposed transactions, and the convenience and needs of the communities to be served. As part of that consideration, we expect the FDIC to evaluate whether we have fully implemented certain improvements to our compliance management system that the FDIC requested, and which we agreed to implement, in connection with our most recent compliance examination. We also expect that the regulatory agencies will review issues related to the parties’ capital position, safety and soundness, and legal and regulatory compliance, including without limitation our compliance with applicable fair lending laws, in connection with their respective decisions whether to approve the proposed transaction. If we do not receive all required regulatory approvals, we will be unable to complete the merger with Citizens. In addition, if the regulatory approval process takes longer than expected or if the regulators impose conditions of their approvals that we do not presently anticipate, our business, financial condition, results of operations and prospects may be adversely effected.

Future results of the combined companies may be materially different from any pro forma financial information presented in connection with this offering.

Any pro forma financial information presented in connection with this offering would be constructed from the consolidated historical financial statements of Investar and Citizens, with certain assumptions regarding the

 

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merger and the transactions relating thereto that we believe are reasonable. However, we cannot assure you that our assumptions will prove to be accurate. Accordingly, any pro forma financial information presented in connection with this offering may not be indicative of what our financial condition would have been had we been a consolidated entity during the periods presented, or what our results of operations and financial condition will be in the future. The challenge of integrating previously independent businesses makes evaluating our business and our future financial prospects difficult. Our potential for future business success and operating profitability must be considered in light of the risks, uncertainties, expenses and difficulties typically encountered by recently combined companies.

The proposed merger transaction with Citizens could result in unexpected disruptions on the combined business.

In response to the announcement of the Citizens merger, Citizens’ customers may cease or reduce their business with Citizens, which could negatively affect our combined business operations. Similarly, current or prospective employees of Citizens or us may experience uncertainty about their future roles with the combined entity. This may adversely affect our ability to attract and retain key management, banking and other personnel. In addition, the diversion of the attention of our respective management teams away from day-to-day operations during the negotiation and pendency of the merger transactions could have an adverse effect on the financial condition and operating results of Citizens and us, and could impact our ability to service the Notes.

The proposed merger transactions with Citizens may be completed on different terms from those contained in the merger agreement.

Prior to the completion of the Citizens merger, the parties, by mutual agreement, may amend or alter the terms of the merger agreement, including with respect to, among other things, the consideration payable by us to Citizens’ shareholders or any covenants or agreements with respect to the parties’ respective operations during the pendency thereof. Any such amendments or alterations may have negative consequences to us.

Risks Relating to Our Business and Industry

For risks associated with our business and industry, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated into this prospectus supplement by reference, as the same may be updated from time to time prior to the completion of this offering by our future filings under the Exchange Act.

 

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USE OF PROCEEDS

We estimate that the net proceeds of this offering will be approximately $18.2 million, after deducting underwriting discounts and commissions and our estimated offering expenses. We intend to use the net proceeds from this offering to fund a portion of the purchase price of the proposed merger transaction with Citizens, and for general corporate purposes, including investments in our banking subsidiary. Prior to funding the Citizens merger, we may use the net proceeds of this offering to make short-term liquid investments.

This offering is not conditioned on, and is expected to be completed before, the closing of the Citizens merger transaction. If the merger with Citizens is not consummated, we intend to use the net proceeds from this offering for general corporate purposes, potential strategic acquisitions and investments in our banking subsidiary. Our management will have broad discretion in the application of the net proceeds from this offering, and investors will be relying on the judgment of our management with regard to the use of these net proceeds.

Concurrently with this offering, and by means of a separate prospectus supplement and accompanying prospectus, we are offering 1,411,765 shares of our common stock at a price to the public of $21.25 per share. In connection with the offering, the underwriters have notified us of their intent to exercise their option to purchase an additional 211,765 shares of our common stock on the same terms. The closing of this offering is not conditioned upon the closing of the concurrent offering of common stock, and the closing of the concurrent offering of common stock is not conditioned upon the closing of this offering. We expect to close our common stock offering on March 22, 2017.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth certain information concerning our consolidated ratios of earnings to fixed charges for each of the periods presented. The ratios below are calculated to show the ratio both excluding and including interest on deposits, with both ratios including interest related to our junior subordinated debentures. As of the date of this prospectus supplement, no shares of our preferred stock were issued and outstanding. The information presented below is not adjusted for the Notes offered by means of this prospectus supplement.

 

     Year Ended December 31,  
     2016      2015      2014      2013      2012  

Ratio of Earnings to Fixed Charges

              

Excluding interest on deposits

     10.33        17.75        17.27        17.86        19.45  

Including interest on deposits

     2.37        2.80        2.40        2.25        2.31  

The ratio of earnings to fixed charges is calculated in accordance with SEC requirements and computed by adding income before taxes plus fixed charges and dividing that sum by fixed charges. You should read these ratios in conjunction with other information in our Annual Report on Form 10-K for the year ended December 31, 2016, which report is incorporated by reference in this prospectus supplement.

 

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CAPITALIZATION

The following table sets forth, on a consolidated basis, our capitalization as of December 31, 2016 on (i) an actual historical basis, (ii) as adjusted to give effect to this offering, and (iii) as adjusted to give effect to this offering and the issuance of 1,623,530 shares of our common stock in connection with the concurrent offering, in each case assuming the completion of the offerings as of December 31, 2016. You should read the following table together with our consolidated financial statements and the Notes thereto incorporated by reference into this prospectus supplement and the accompanying prospectus.

 

     Actual     As Adjusted for
Note Issuance
    As Adjusted for
Note and Common
Stock Issuance
 
     (dollars in thousands)  

Long-term debt

      

Junior subordinated debt

   $ 3,609       3,609       3,609  

Other borrowings

     1,000       19,171       19,171  
  

 

 

   

 

 

   

 

 

 

Total long-term debt

     4,609       22,780       22,780  
  

 

 

   

 

 

   

 

 

 

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; 7,101,851 shares issued and outstanding

     7,102       7,102       8,726  

Surplus

     81,499       81,499       112,500  

Retained earnings

     26,227       26,227       26,227  

Accumulated other comprehensive (loss) income

     (2,071     (2,071     (2,071
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     112,757       112,757       145,382  
  

 

 

   

 

 

   

 

 

 

Total capitalization

   $ 117,366       135,537       168,162  
  

 

 

   

 

 

   

 

 

 

Capital Ratios

      

Tier 1 capital to risk-weighted assets

     11.75     11.71     14.93

Total capital to risk-weighted assets

     12.47     14.32     17.51

Tier 1 capital to average assets

     10.10     9.94     12.40

Stockholders’ equity to total assets

     9.73     9.58     12.02

 

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DESCRIPTION OF THE NOTES

We will issue the 6.00% Subordinated Notes due 2027, which we refer to as the Notes, under an Indenture, dated as of March 24, 2017, between Wilmington Trust, National Association, as trustee, and us, as issuer, as amended and supplemented by a First Supplemental Indenture dated as of the same date, between the trustee and us. We refer to the Indenture, as amended and supplemented by the First Supplemental Indenture, as the “indenture.” You may request a copy of the indenture from us as described under “Where You Can Find More Information.” We have summarized the material terms of the indenture and the Notes below, but the summary does not purport to be complete and is subject to and qualified in its entirety by reference to all of the provisions of the indenture and the Notes. The following description of the particular terms of the indenture and the Notes supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of subordinated debt in the accompanying prospectus, to which description we refer you.

We urge you to read the indenture and the Notes because they, and not this description, define your rights as a holder of the Notes.

General

The Notes issued in this offering will initially be limited to $18,600,000 in aggregate principal amount. Under the Indenture, the aggregate principal amount of Notes which may be sold and delivered in other offerings is unlimited.

The Notes will mature on March 30, 2027 (the “maturity date”). The maturity of the Notes may not be accelerated in the absence of certain events of default (as such term is defined in the Indenture). There is no right to accelerate the maturity of the Notes if we fail to pay interest or principal on the Notes or default in the performance or breach any covenant or warranty under any Note or in the indenture. See “—Events of Default; Acceleration of Payment; Limitation on Suits.”

The Notes will not be convertible into or exchangeable for any other securities or property. No sinking fund will exist for the Notes, and no sinking fund payments will be made with respect to the Notes.

As a bank holding company, our ability to make payments on the Notes will depend primarily on the receipt of dividends and other distributions from Investar Bank. There are various regulatory restrictions on the ability of Investar Bank to pay dividends or make other distributions to us. See “Risk Factors—We depend on Investar Bank for cash flow, which could impact our ability to satisfy our payment obligations with respect to the notes.” and “Risk Factors—Regulatory guidelines may restrict our ability to pay the principal of, and accrued and unpaid interest on, the Notes.” in this prospectus supplement and the information in Item 1. Business, under the heading “Regulation and Supervision,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Neither the indenture nor the Notes will contain any covenants or restrictions restricting the incurrence of debt, deposits or other liability by us or by our subsidiaries. The indenture and the Notes will not contain financial covenants and will not restrict us from paying dividends or issuing or repurchasing other securities, and will not contain any provision that would provide protection to the holders of the Notes against a sudden and dramatic decline in credit quality resulting from a merger, takeover, recapitalization or similar restructuring or any other event involving us or our subsidiaries that may adversely affect our credit quality.

When we use the term “business day,” we mean any day except a Saturday, Sunday, a legal holiday or any other day on which banking institutions in the City of New York, New York or any place of payment are authorized or obligated by law, regulation or executive order to close.

Delivery of reports, information and documents (including, without limitation, reports contemplated in this section) to the trustee is for information purposes only, and the trustee’s receipt thereof will not constitute actual

 

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or constructive notice of any information contained therein or determinable from information contained therein, including our compliance with covenants under the indenture and Notes, as to which the trustee is entitled to rely exclusively on officers’ certificates.

The Notes will not be savings accounts, deposits or other obligations of Investar Bank or any of our non-bank subsidiaries and will not be insured or guaranteed by the FDIC or any other governmental agency or public or private insurer. The Notes will solely be parent company obligations and will neither be obligations of, nor guaranteed by, any of our subsidiaries.

No recourse will be available for the payment of principal of or interest on any note, for any claim based thereon, or otherwise in respect thereof, against any incorporator, shareholder, employee, agent, officer or director, as such, past, present or future, of ours or of any successor entity.

The Notes will be issued and may be transferred only in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.

The Notes and the indenture are governed by, and will be construed in accordance with, the laws of the State of New York.

Interest

The Notes will bear interest (1) at an initial fixed rate of 6.00% per annum, payable semi-annually in arrears on March 30 and September 30 of each year (each, a “fixed rate interest payment date”), commencing on September 30, 2017, from and including the date of issuance to but excluding March 30, 2022, or earlier redemption, and (2) thereafter at a floating per annum rate equal to the then-current three-month LIBOR plus 394.5 basis points, payable quarterly in arrears on March 30, June 30, September 30 and December 30 of each year (each, a “floating rate interest payment date,” and together with the fixed rate interest payment dates, the “interest payment dates”), commencing on June 30, 2022. Notwithstanding the foregoing, if three-month LIBOR is less than zero, three-month LIBOR will be deemed to be zero.

“Three-Month LIBOR” means, for any interest period, the offered rate for deposits in U.S. dollars having a maturity of three months that appears on the display on Bloomberg Page BBAM1 (or any successor or substitute page of such service, or any successor to such service selected by us), for the purpose of displaying the London interbank rates for U.S. dollars, as of 11:00 a.m., London time, on the “reset rate determination date” related to such interest period, which means the second London Banking Day immediately preceding the first day of each applicable interest period commencing on the first floating rate interest payment date. If such rate does not appear on such page at such time, then the Calculation Agent will request the principal London office of each of four major reference banks in the London interbank market, selected by us for this purpose and whose names and contact information will be provided by us to the Calculation Agent, to provide such bank’s offered quotation to prime banks in the London interbank market for deposits in U.S. dollars with a term of three months as of 11:00 a.m., London time, on such reset rate determination date and in a principal amount equal to an amount for a single transaction in U.S. dollars in the relevant market at the relevant time as determined by us and provided to the Calculation Agent (a “Representative Amount”). If at least two such quotations are so provided, three-month LIBOR for the interest period related to such reset rate determination date will be the arithmetic mean of such quotations. If fewer than two such quotations are provided, the Calculation Agent will request each of three major banks in the City of New York selected by us for this purpose and whose names and contact information will be provided by us to the Calculation Agent, to provide such bank’s rate for loans in U.S. dollars to leading European banks with a term of three months as of approximately 11:00 a.m., New York City time, on such reset rate determination date and in a Representative Amount. If at least two such rates are so provided, three-month LIBOR for the interest period related to such reset rate determination date will be the arithmetic mean of such quotations. If fewer than two such rates are so provided, then three-month LIBOR for the interest period related to such reset rate determination date will be set to equal the three-month LIBOR for the immediately preceding

 

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interest period or, in the case of the interest period commencing on the first floating rate interest payment date, 2.055%, resulting in a coupon rate of 6.00%. All percentages used in or resulting from any calculation of three-month LIBOR will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005% rounded up to 0.00001%. Notwithstanding the foregoing, in the event that three-month LIBOR as determined in accordance with this definition is less than zero, three-month LIBOR for such interest period will be deemed to be zero.

“Calculation Agent” means Wilmington Trust, National Association, or any other successor appointed by us, acting as calculation agent.

“London Banking Day” means any day on which commercial banks are open for business (including dealings in U.S. dollars) in London.

The determination of three-month LIBOR for each applicable interest period by the Calculation Agent will (in the absence of manifest error) be final and binding. The Calculation Agent’s calculation of the amount of any interest payable after the first Reset Rate Determination Date will be maintained on file at the Calculation Agent’s principal offices.

Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months to, but excluding, March 30, 2022 and thereafter on the basis of a 360-day year and on the basis of the actual number of days elapsed. Dollar amounts resulting from that calculation will be rounded to the nearest cent, with one-half cent being rounded upward.

Interest on the Notes, subject to certain exceptions, will accrue during the applicable interest period, which is from and including the immediately preceding interest payment date in respect of which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from and including the date of issuance of the Notes to but excluding the applicable interest payment date or the stated maturity date or date of earlier redemption, if applicable. If an interest payment date or the maturity date for the Notes falls on a day that is not a business day, the interest payment or the payment of principal and interest at maturity will be paid on the next succeeding business day, but the payments made on such dates will be treated as being made on the date that the payment was first due and the holders of the Notes will not be entitled to any further interest or other payments. In the event that a floating rate interest payment date falls on a day that is not a business day, then such floating rate interest payment date will be postponed to the next succeeding business day unless such day falls in the next succeeding calendar month, in which case such floating rate interest payment date will be accelerated to the immediately preceding business day, and, in each such case, the amounts payable on such business day will include interest accrued to but excluding such business day.

From March 24, 2017 to but excluding March 30, 2022, interest on each Note will be payable to the person in whose name such Note is registered for such interest at the close of business on March 15 and September 15, immediately preceding the applicable interest payment date, whether or not such day is a business day. From March 30, 2022 through the maturity date or the date of earlier redemption, interest on each Note will be payable to the person in whose name such Note is registered for such interest at the close of business on March 15, June 15, September 15 and December 15, immediately preceding the applicable interest payment date, whether or not such day is a business day. Any such interest which is payable, but is not punctually paid or duly provided for, on any interest payment date will cease to be payable to the holder on such relevant record date by virtue of having been a holder on such date, and such defaulted interest may be paid by us to the person in whose name the Note is registered at the close of business on a special record date for the payment of defaulted interest. However, interest that is paid on the maturity date will be paid to the person to whom the principal will be payable. Interest will be payable by wire transfer in immediately available funds in U.S. dollars at the office of the principal paying agent or, at our option in the event the Notes are not represented by Global Notes (as defined below), by check mailed to the address of the person specified for payment in the preceding sentences.

 

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Ranking

The Notes will rank equally with all other unsecured subordinated indebtedness we may issue in the future under the indenture. The Notes will rank senior to $3.6 million of our outstanding junior subordinated debentures issued to First Community (LA) Statutory Trust I. As of the date of this prospectus supplement, we had no other outstanding subordinated indebtedness.

The Notes will rank junior to and will be subordinated to all of our “senior debt,” whether now outstanding, or created, assumed or incurred in the future, including all indebtedness relating to money owed to general creditors and trade creditors. The Notes will be structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries, which means that creditors of our subsidiaries (including, in the case of Investar Bank, its depositors) generally will be paid from those subsidiaries’ assets before holders of the Notes would have any claims to those assets. The indenture and the Notes do not limit the amount of senior debt, secured indebtedness, or other liabilities having priority over the Notes that we or our subsidiaries may incur.

“Senior debt” means:

 

    the principal and any premium or interest for money borrowed or purchased by us (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to us, whether or not such claim for post-petition interest is allowed in such proceedings);

 

    the principal and any premium or interest for money borrowed or purchased by another person and guaranteed by us;

 

    any deferred obligation for the payment of the purchase price of property or assets evidenced by a note or similar instrument or agreement;

 

    any obligations to general and trade creditors;

 

    any obligation arising from direct credit substitutes;

 

    any obligation associated with derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; and

 

    all obligations of the type referred to in bullets above of other persons or entities for the payment of which we are responsible or liable as obligor, guarantor or otherwise, whether or not classified as a liability on a balance sheet prepared in accordance with accounting principles generally accepted in the United States.

Senior debt does not include:

 

    any indebtedness, obligation or liability referred to in the bullets above as to which, in the instrument creating or evidencing that indebtedness, obligation or liability, it is expressly provided that the indebtedness, obligation or liability is junior to, or ranks equally in right of payment with, the Notes;

 

    the junior subordinated debentures issued to First Community (LA) Statutory Trust I and any guarantee of the Company in respect of the equity securities or other securities of First Community (LA) Statutory Trust I; or

 

    the Notes.

Notwithstanding the foregoing, and for the avoidance of doubt, if the Federal Reserve (or other competent regulatory agency or authority) promulgates any rule or issues any interpretation that defines general creditor(s), the main purpose of which is to establish criteria for determining whether the subordinated debt of a financial or bank holding company is to be included in its capital, then the term “general creditors” as used in the definition of “senior debt” in the indenture will have the meaning as described in that rule or interpretation.

 

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Upon the liquidation, dissolution, winding up, or reorganization of our organization, we must pay to the holders of all senior debt the full amounts of principal of, premium, interest and any additional amounts owing on, that senior debt before any payment is made on the Notes. If, after we have made those payments on our senior debt there are amounts available for payment on the Notes, then we may make any payment on the Notes. Because of the subordination provisions and the obligation to pay senior indebtedness described above, in the event of our insolvency, holders of the Notes may recover less ratably than holders of senior debt and our other creditors. With respect to the assets of a subsidiary of ours, such as Investar Bank, our creditors (including holders of the Notes) are structurally subordinated to the prior claims of creditors of such subsidiary, except to the extent that we may be a creditor with recognized claims against such subsidiary.

Subject to the terms of the indenture, if the trustee or any holder of any of the Notes receives any payment or distribution of our assets in contravention of the subordination provisions applicable to the Notes before all senior debt is paid in full in cash, property or securities, including by way of set-off or any such payment or distribution that may be payable or deliverable by reason of the payment of any of our other indebtedness being subordinated to the payment of the Notes, then such payment or distribution will be held in trust for the benefit of holders of senior debt or their representatives to the extent necessary to make payment in full in cash or payment satisfactory to the holders of senior debt of all unpaid senior debt.

Events of Default; Acceleration of Payment; Limitation on Suits

The Notes and indenture provide for only limited events upon which the principal of the Notes, together with accrued and unpaid interest and premium, if any, will be accelerated. These events are:

 

    we commence a voluntary case, consent to the entry of any order of relief against us in an involuntary case, consent to the appointment of a custodian for us or for all or substantially all of our property or make a general assignment for the benefit of our creditors, in each case under or within the meaning of applicable U.S. bankruptcy laws; or

 

    a court having jurisdiction over us enters an order or decree under applicable U.S. bankruptcy laws that is for relief against us in an involuntary case, appoints a custodian that is for relief against us in an involuntary bankruptcy case, appoints a custodian for us or for all or substantially all of our property, or orders the liquidation of our company, and in each case the order or decree remains unstayed and in effect for 90 days.

The Notes and indenture provide for a limited number of other events of default, which do not permit acceleration of the payment of principal of, and interest on, the Notes, including:

 

    default in the payment of any interest on, or additional amounts in respect of, the Notes when it becomes due and payable, and continuance of such default for a period of 30 days;

 

    default in the payment of the principal on the Notes when it becomes due and payable; or

 

    default in the performance or breach of any of our covenants or warranties under the indenture (other than a covenant or warranty for which the consequences of nonperformance or breach are addressed in the four bullet points above or which has been included in the indenture solely for the benefit of Notes issued thereunder other than the Notes), and the continuance of such default or breach for a period of 90 days after notice has been given to us by the trustee, or to the trustee and us by the holders of not less than 25% in principal amount of the outstanding Notes, in the manner described in the indenture.

If we default in our obligation to pay any interest on, or additional amounts with respect to, the Notes when due and payable and such default continues for a period of 30 days, or if we default in our obligation to pay the principal amount of the Notes when it becomes due and payable, then the trustee may demand that we pay to the trustee, for the benefit of the holders of the Notes, the whole amount then due and payable on the Notes for principal and interest and, to the extent that payment of such interest will be legally enforceable, interest on any

 

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overdue principal and any overdue interest at the rate or rates prescribed therefor in the Notes and, in addition thereto, such further amount as will be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the trustee, its agents and counsel.

No holder of Notes will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture, or for the appointment of a receiver or trustee, or for any other remedy under the indenture, unless:

 

    such holder has previously given written notice to the trustee of a continuing event of default with respect to the Notes;

 

    the holders of not less than 25% in principal amount of the outstanding Notes have made written request to the trustee to institute proceedings in respect of such event of default in its own name as trustee under the indenture;

 

    such holder or holders have offered to the trustee indemnity satisfactory to it against the costs, expenses, and liabilities to be incurred in complying with such request;

 

    the trustee for 60 days after its receipt of such notice, request, and offer of indemnity has failed to institute any such proceeding; and

 

    no direction inconsistent with such written request has been given to the trustee during such 60-day period by the holders of a majority in principal amount of the outstanding Notes.

In any event, the indenture provides that no one or more of such holders will have any right in any manner whatever by virtue of, or by availing of, any provision of the indenture to affect, disturb or prejudice the rights of any other of such holders of the Notes, or to obtain or to seek to obtain priority or preference over any other of such holders or to enforce any right under the indenture, except in the manner provided in the indenture and for the equal and ratable benefit of all such holders of Notes.

Redemption

We may at our option, beginning with the interest payment date of March 30, 2022 and on any interest payment date thereafter, redeem the Notes, in whole or in part, from time to time. The Notes may not otherwise be redeemed prior to maturity, except that we may also redeem the Notes at any time, including before March 30, 2022, in whole but not in part, at any time, upon the occurrence of:

 

    a “Tax Event,” which is defined in the indenture to mean the receipt by us of an opinion of tax counsel to the effect that as a result of an amendment to, or change in, applicable laws and regulations, or any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, in either case which becomes effective or is announced on or after the date of original issuance of the Notes, there is more than an insubstantial risk that the interest payable by us on the Notes is not, or within 90 days of the date of the opinion will not be, deductible by us, in whole or in part, for United States federal income tax purposes;

 

    a “Tier 2 Capital Event,” defined in the indenture to mean our good faith determination (as evidenced by a board resolution to that effect) that, as a result of any amendment to, or change in, applicable laws and regulations, or any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, in either case which becomes effective or is announced on or after the date of original issuance of the Notes, there is more than an insubstantial risk that we will not be entitled to treat the Notes then outstanding as Tier 2 capital (or its then equivalent if we were subject to such capital requirement) for purposes of capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to us; or

 

    a “1940 Act Event,” which is defined in the indenture to mean the receipt by us of an opinion of counsel to the effect that there is more than an insubstantial risk that we are, or will be required within 90 days of the date of such opinion, to register as an investment company under the Investment Company Act of 1940, as amended.

 

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Any redemption of the Notes would be at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption. Any redemption of the Notes would be subject to the receipt of any required regulatory approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve.

In the event of any redemption of the Notes, we will deliver or cause to be delivered a notice of redemption (which notice may be conditional in our discretion on one or more conditions precedent, and the redemption date may be delayed until such time as any or all of such conditions have been satisfied or revoked by us if we determine that such conditions will not be satisfied) by first-class mail, or in the event the Notes are represented by global Notes, electronically in accordance with DTC’s procedures, to each holder of Notes (with a copy to the trustee) not less than 30 nor more than 60 days prior to the redemption date.

Any partial redemption will be made in accordance with DTC’s applicable procedures among all of the holders of the Notes. If any note is to be redeemed in part only, the notice of redemption relating to such note will state it is a partial redemption and the portion of the principal amount thereof to be redeemed. A replacement note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original note. The Notes are not subject to redemption or prepayment at the option of the holders of the Notes.

Modification and Waiver

The indenture provides that we and the trustee may amend or supplement the indenture or the Notes with, or, in certain cases, without the consent of the holders of a majority in principal amount of the outstanding Notes. However, without the consent of the holder of each outstanding note affected thereby, no amendment or waiver may:

 

    reduce the rate of or extend the time for payment of interest (including default interest) on any note;

 

    reduce the principal or change the stated maturity of any note;

 

    alter the method of computation of interest;

 

    reduce the percentage in aggregate principal amount of the outstanding Notes, the consent of whose holders is required for any supplemental indenture or for any waiver provided for under the indenture;

 

    change our obligation to maintain an office or agency for payment of the Notes and the other matters specified in the indenture;

 

    impair the right to institute suit for the enforcement of any payment of principal of or interest on the Notes;

 

    modify the provisions of the indenture related to subordination of any note in a manner adverse to the holder of the note; or

 

    modify any of the provisions of the indenture relating to the execution of supplemental indentures with the consent of the holders of Notes or modify any provisions relating to the waiver of past defaults and covenants, except to increase any required percentage or to provide that other provisions of the indenture cannot be modified or waived with the consent of the holder of each outstanding note.

In addition, the holders of at least a majority in aggregate principal amount of the outstanding Notes may, on behalf of all holders of Notes, waive compliance by us with certain terms, conditions and provisions of the indenture, as well as any past default and/or the consequences of default, other than any default in the payment of principal of or interest on any note (provided that the holders of a majority in principal amount of the outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration) or any breach in respect of a covenant or provision that cannot be modified or amended without the consent of the holder of each outstanding note.

 

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In addition, we and the trustee may modify and amend the indenture without the consent of any holders of Notes for any of the following purposes:

 

    to evidence the succession of another person as obligor under the indenture and the assumption by any such successor of our covenants and obligations in the indenture and the Notes;

 

    to add to our covenants or to add additional events of default for the benefit of the holders of the Notes, to surrender any right or power conferred by the indenture upon us, or to make any change that does not adversely affect the legal rights of any holder of Notes in any material respect;

 

    to add or change any of the provisions of the indenture, but only to the extent that such addition or change will become effective only after there are no Notes entitled to the benefit of such provision outstanding;

 

    to establish the forms or terms of Notes of any series issued under the indenture;

 

    to cure any ambiguity, defect or inconsistency in the indenture;

 

    to provide for the acceptance of appointment by a successor trustee with respect to one or more series of Notes or otherwise;

 

    to comply with any requirements of the SEC in connection with the qualification of the indenture under the Trust Indenture Act of 1939, as amended;

 

    to provide for uncertificated Notes in addition to certificated Notes;

 

    to make any change that does not adversely affect the interests of any holder of Notes of any series issued under the indenture; and

 

    to comply with the rules or regulations of any securities exchange or automated quotation system, if any, on which the Notes may be listed or traded (of which none is expected at this time).

The trustee will be entitled to receive an officer’s certificate and opinion of counsel confirming that all conditions precedent are satisfied with respect to any supplemental indenture, that such supplemental indenture is authorized and permitted and that such supplemental indenture is the legal, valid and binding obligation of ours, enforceable against us in accordance with its terms.

Legal Defeasance and Covenant Defeasance

We may choose to either discharge our obligations under the indenture and the Notes in a legal defeasance or to release ourselves from certain of our covenant restrictions under the indenture and the Notes in a covenant defeasance (in each case, except for certain surviving rights of the trustee and our obligations in connection therewith). We may do so after we irrevocably deposit with the trustee, in trust, cash and/or U.S. government securities in an amount that, which through the payment of interest and principal in accordance with their terms, will provide, not later than one day before the due date of any payment of money, an amount in cash, which is sufficient in the opinion of our independent public accountants to make all payments of principal of and interest, if any, on the Notes on the dates such installments of interest or principal are due. If we choose the legal defeasance option, the holders of the Notes will not be entitled to the benefits of the indenture except for certain limited rights, including registration of transfer and exchange of Notes, replacement of lost, stolen or mutilated Notes and the right to receive payments of the principal of and interest on such Notes when such payments are due.

We may discharge our obligations under the indenture or release ourselves from covenant restrictions only if we meet certain requirements. Among other things, we must deliver to the trustee an opinion of our legal counsel to the effect that holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount, in the same manner and at the same times, as would have been the case if such deposit, defeasance

 

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and discharge had not occurred. In the case of legal defeasance only, this opinion must be based on either a ruling received from or published by the Internal Revenue Service or a change in the applicable federal income tax law. We may not have a default or event of default under the indenture or the Notes on the date of deposit or during the period ending 120 days after such deposit. The deposit may not result in a breach or violation of, or constitute a default under, the indenture or any of our agreements to which we are a party or by which we are bound.

Any defeasance of the Notes under the indenture would be subject to the receipt of any required regulatory approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve.

Satisfaction and Discharge

We may discharge our obligations under the indenture (except for certain surviving rights of the trustee and our obligations in connection therewith) if:

 

    all outstanding Notes and all other outstanding Notes issued under the indenture

 

    have been delivered for cancellation, or

 

    (1) have become due and payable, (2) will become due and payable at their stated maturity within one year, (3) are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice and redemption by the trustee or (4) are deemed paid and discharged in a legal defeasance described above, (and in the case of clauses (1), (2) and (3), we have irrevocably deposited with the trustee an amount sufficient to pay and discharge the principal of and interest on all outstanding Notes on the stated maturity date or redemption date, as the case may be);

 

    we have paid all other sums payable by us under the indenture; and

 

    we have delivered to the trustee an officer’s certificate and opinion of counsel confirming that all conditions precedent with respect to the satisfaction and discharge of the indenture have been satisfied.

Consolidation, Merger and Sale of Assets

The indenture provides that we may not consolidate with or merge into, or convey, transfer or lease our properties and assets substantially as an entirety to, any other person, unless:

 

    the successor person is a corporation, partnership or trust organized and validly existing under the laws of the United States or any state thereof or the District of Columbia and expressly assumes, by a supplemental indenture, our obligations on the Notes and under the indenture;

 

    immediately after giving effect to such transaction, and treating any indebtedness that becomes an obligation of us or our subsidiaries as a result of such transaction as having been incurred by us or such subsidiary at the time of such transaction, no event which, after notice or lapse of time or both, would become an event of default will have occurred and be continuing; and

 

    we have complied with our obligations to deliver certain documentation to the trustee, including an officers’ certificate and opinion of counsel each stating that such proposed transaction and any supplemental indenture comply with the indenture.

Further Issues

We may, from time to time, without notice to or the consent of the holders of the Notes, create and issue further Notes ranking equally with the Notes and with identical terms in all respects (or in all respects except for the date of offering, the offering price and the first interest payment date); provided that such further Notes either will be fungible with the original Notes for federal income tax purposes or will be issued under a different CUSIP number. Such further Notes will be consolidated and form a single series with the Notes.

 

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The trustee may conclusively rely upon certificates, opinions or other documents furnished to it under the indenture and will have no responsibility to confirm or investigate the accuracy of mathematical calculations or other facts stated therein. The trustee will have no responsibility for monitoring our compliance with any of our covenants under the indenture.

Paying Agent

We may appoint one or more financial institutions to act as our paying agents, at whose designated offices the Notes in non-global form may be surrendered for payment at their maturity. We call each of those offices a paying agent. We may add, replace or terminate paying agents from time to time. We may also choose to act as our own paying agent. Initially, we have appointed Wilmington Trust Company, at its office at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, as the paying agent for the Notes. We must notify you of changes in the paying agents.

Tier 2 Capital

The Notes are intended to qualify as tier 2 capital under the regulatory capital guidelines of the Federal Reserve for bank holding companies. The rules set forth specific criteria for instruments to qualify as tier 2 capital. Among other things, the Notes must:

 

    be unsecured;

 

    have a minimum original maturity of at least five years;

 

    be subordinated to in right of payment to the holders of our senior indebtedness and general creditors;

 

    not contain provisions permitting the holders of the Notes to accelerate payment of principal prior to maturity except in the event of receivership, insolvency, liquidation or similar proceedings of the issuer;

 

    be ineligible for collateral for a loan by us or Investar Bank; and

 

    be subject to redemption only after a minimum of five years following issuance, except upon the occurrence of certain special events, as described above, and, in any case, subject to the receipt of any required regulatory approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve.

In addition to the foregoing, prior to redeeming or repurchasing any Notes, or immediately thereafter, we would required to replace any amount called for redemption or repurchased with an equivalent amount of an instrument that meets the criteria for tier 2 regulatory capital or demonstrate to the satisfaction of the Federal Reserve that following such redemption or repurchase, we would continue to hold an amount of capital that is commensurate with our risk.

Clearance and Settlement

The Notes will be represented by one or more permanent global certificates, which we refer to individually as a Global Note and collectively as the Global Notes, deposited with, or on behalf of DTC and registered in the name of Cede & Co., DTC’s partnership nominee. The Notes will be available for purchase in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof in book-entry form only. So long as DTC or any successor depositary, which we refer to collectively as the depositary or its nominee is the registered owner of the Global Notes, the depositary, or such nominee, as the case may be, will be considered to be the sole owner or holder of the Notes for all purposes of the indenture. Beneficial interests in the Global Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may not elect to receive a certificate representing their Notes while the Notes are held by a depositary. Investors may elect to hold interests in the Global Notes through DTC either directly if they are participants in DTC or indirectly through organizations that are participants in DTC.

 

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The laws of some jurisdictions may require that some purchasers of securities take physical delivery of securities in definitive form. These laws may impair the ability to transfer beneficial interests in the Notes, so long as the corresponding securities are represented by Global Notes.

DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its direct participants deposit with DTC. DTC also facilitates the post-trade settlement among participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation, which, in turn, is owned by a number of direct participants of DTC and members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC and the Financial Industry Regulatory Authority. Access to the DTC system is also available to others, referred to as indirect participants, such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a direct or indirect custodial relationship with a direct participant. The rules applicable to DTC and its participants are on file with the SEC.

Purchases of securities under the DTC system must be made by or through direct participants, which will receive a credit for the securities on DTC’s records. The ownership interest of each beneficial owner of securities will be recorded on the direct or indirect participants’ records. Beneficial owners will not receive written confirmation from DTC of their purchase. Beneficial owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner entered into the transaction. Under a book-entry format, holders may experience some delay in their receipt of payments, as such payments will be forwarded by the depositary to Cede & Co., as nominee for DTC. DTC will forward the payments to its participants, who will then forward them to indirect participants or holders. Beneficial owners of securities other than DTC or its nominees will not be recognized by the relevant registrar, transfer agent, paying agent or trustee as registered holders of the securities entitled to the benefits of the indenture. Beneficial owners that are not participants will be permitted to exercise their rights only indirectly through and according to the procedures of participants and, if applicable, indirect participants.

To facilitate subsequent transfers, all securities deposited by direct participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the securities; DTC’s records reflect only the identity of the direct participants to whose accounts the securities are credited, which may or may not be the beneficial owners. The direct and indirect participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of redemption notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. If less than all of the securities of any class are being redeemed, DTC will determine the amount of the interest of each direct participant to be redeemed in accordance with its then current procedures.

DTC may discontinue providing its services as securities depositary with respect to the Notes at any time by giving reasonable notice to the issuer or its agent. Under these circumstances, in the event that a successor securities depositary is not obtained, certificates for the Notes are required to be printed and delivered. We may

 

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decide to discontinue the use of the system of book-entry-only transfers through DTC (or a successor securities depositary). In that event, certificates for the Notes will be printed and delivered to DTC.

As long as DTC or its nominee is the registered owner of the Global Notes, DTC or its nominee, as the case may be, will be considered the sole owner and holder of the Global Notes and all securities represented by these certificates for all purposes under the instruments governing the rights and obligations of holders of such securities. Except in the limited circumstances referred to above, owners of beneficial interests in Global Notes:

 

    will not be entitled to have such global security certificates or the securities represented by these certificates registered in their names;

 

    will not receive or be entitled to receive physical delivery of securities certificates in exchange for beneficial interests in global security certificates; and

 

    will not be considered to be owners or holders of the global security certificates or any securities represented by these certificates for any purpose under the instruments governing the rights and obligations of holders of such securities.

All redemption proceeds, distributions and dividend payments on the securities represented by the global Notes and all transfers and deliveries of such securities will be made to DTC or its nominee, as the case may be, as the registered holder of the securities. DTC’s practice is to credit direct participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the issuer or its agent, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of that participant and not of DTC, the depositary, the issuer, the trustee or any of their agents, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the issuer or its agent, disbursement of such payments to direct participants will be the responsibility of DTC, and disbursement of such payments to the beneficial owners will be the responsibility of direct and indirect participants.

Ownership of beneficial interests in the Global Notes will be limited to participants or persons that may hold beneficial interests through institutions that have accounts with DTC or its nominee. Ownership of beneficial interests in Global Notes will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by DTC or its nominee, with respect to participants’ interests, or any participant, with respect to interests of persons held by the participant on their behalf. Payments, transfers, deliveries, exchanges, redemptions and other matters relating to beneficial interests in Global Notes may be subject to various policies and procedures adopted by DTC from time to time. None of Investar, the trustee or any agent for any of them will have any responsibility or liability for any aspect of DTC’s or any direct or indirect participant’s records relating to, or for payments made on account of, beneficial interests in Global Notes, or for maintaining, supervising or reviewing any of DTC’s records or any direct or indirect participant’s records relating to these beneficial ownership interests.

Although DTC has agreed to the foregoing procedures in order to facilitate transfer of interests in the global Notes among participants, DTC is under no obligation to perform or continue to perform these procedures, and these procedures may be discontinued at any time. Neither Investar nor the trustee will have any responsibility for the performance by DTC or its direct participants or indirect participants under the rules and procedures governing DTC.

Because DTC can act only on behalf of direct participants, who in turn act only on behalf of direct or indirect participants, and certain banks, trust companies and other persons approved by it, the ability of a beneficial owner of securities to pledge them to persons or entities that do not participate in the DTC system may be limited due to the unavailability of physical certificates for the securities.

 

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DTC has advised us that it will take any action permitted to be taken by a registered holder of any securities under the Indenture, only at the direction of one or more participants to whose accounts with DTC the relevant securities are credited.

The information in this section concerning DTC and its book-entry system has been obtained from sources that we believe to be accurate, but we assume no responsibility for the accuracy thereof.

The Trustee

Wilmington Trust, National Association will act as trustee under the indenture. From time to time, we and one or more of our subsidiaries may maintain deposit accounts and conduct other banking transactions, including lending transactions, with the trustee in the ordinary course of business. Additionally, we maintain banking relationships with the trustee and its affiliates in the ordinary course of business. These banking relationships include the trustee serving as trustee under indentures involving certain of our trust preferred securities.

The trustee has all of the duties and responsibilities specified under the Trust Indenture Act. Other than its duties in a case of an event of default, the trustee is not obligated to exercise any of its rights or powers under the indenture at the request or direction of the holders of the Notes, unless the holders have offered to the trustee security or indemnity satisfactory to the trustee.

Notices

Any notices required to be given to the holders of the Notes will be given to the trustee. Notwithstanding any other provision of the indenture or any note, where the indenture or any note provides for notice of any event or any other communication (including any notice of redemption or repurchase) to a holder of a note (whether by mail or otherwise), that notice will be sufficiently given if given to DTC or its designee in accordance with the applicable procedures from DTC or its designee, including by electronic mail in accordance with accepted practices at DTC.

 

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a general discussion of the material U.S. federal income tax consequences relating to the purchase, ownership and disposition of the Notes. This discussion is based upon the Internal Revenue Code of 1986, as amended, or the Code, the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis.

This discussion is for general information only. Prospective purchasers of the Notes are urged to consult their own tax advisors concerning the United States federal income tax and other federal tax consequences to them of purchasing, owning and disposing of the Notes, as well as the application of state, local, non-U.S. and other tax laws.

This discussion is limited to the tax consequences with respect to Notes that are purchased by an initial holder at their original issue price for cash and that are held as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This summary does not address the tax consequences to subsequent purchasers of the Notes. The discussion does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or the U.S. federal income tax consequences applicable to special classes of taxpayers such as banks and certain other financial institutions, insurance companies, tax-exempt organizations, holders of Notes that are pass-through entities or the investors in such pass-through entities, dealers in securities or foreign currency, regulated investment companies, real estate investment trusts, U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar, traders in securities that elect a mark-to-market method of accounting, investors liable for the alternative minimum tax, controlled foreign corporations, passive foreign investment companies, U.S. expatriates, and persons holding Notes as part of a hedge, straddle, constructive sale, conversion transaction or other integrated transaction or risk reduction transaction. The discussion does not address the tax consequences of the ownership and disposition of the Notes arising under the unearned income Medicare contribution tax under the Health Care and Education Reconciliation Act of 2010, and does not address any non-income tax considerations or any state, local, non-U.S. or other tax consequences.

We intend, and by acquiring any Notes each beneficial owner of a Note will agree, to treat the Notes as indebtedness for U.S. federal income tax purposes, and this discussion assumes such treatment. Prospective purchasers of the Notes should consult their own tax advisors regarding the tax consequences if the Notes are not treated as indebtedness for U.S. federal income tax purposes. We have not sought, and will not seek, any ruling from the Internal Revenue Service with respect to the statements made and the conclusions reached in this summary, and we cannot assure you that the Internal Revenue Service will agree with such statements and conclusions, including the characterization of the Notes as indebtedness for U.S. federal income tax purposes.

As used herein, a “U.S. Holder” means a beneficial owner of a note that is, for U.S. federal income tax purposes, an individual who is a citizen or resident of the United States; a corporation (or other entity classified as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state within the United States, or the District of Columbia; an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of source; or a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) the trust validly elected to be treated as a U.S. person under applicable Treasury regulations. A Non-U.S. Holder is a beneficial owner of a note, other than an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, that is not a U.S. Holder.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes owns any of a note, the tax treatment of a partner of such partnership will generally depend upon the status of the partner and the activities of the partnership. Holders of Notes that are partnerships or partners in such partnerships should consult their own tax advisors.

 

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United States Federal Income Taxation of U.S. Holders

Payments of interest. We expect and this discussion assumes that either the issue price of the Notes will equal the stated redemption price of the Notes or the Notes will be issued with no more than a de minimis amount of original issue discount. Accordingly, stated interest on a Note will generally be taxable to a U.S. Holder as ordinary income at the time such interest is received or accrued, depending on the holder’s regular method of accounting for United States federal income tax purposes.

Disposition of the Notes. Upon the sale, exchange or other taxable disposition of a Note, a U.S. Holder will generally recognize taxable gain or loss equal to the difference between (1) the sum of all cash plus the fair market value of all other property received on such disposition (except to the extent such cash or other property is attributable to accrued but unpaid interest, which is treated as interest as described above) and (2) such holder’s adjusted tax basis in the Note. A U.S. Holder’s adjusted tax basis in a Note generally will equal the cost of the Note to such holder. Any gain or loss recognized on the disposition of a Note generally will be capital gain or loss, and will be long-term capital gain or loss if, at the time of such disposition, the U.S. Holder’s holding period for the Note is more than one year. Long-term capital gain of non-corporate U.S. Holders is generally taxed at preferential rates. The deductibility of capital losses is subject to limitations.

Backup withholding and information reporting. For each calendar year in which the Notes are outstanding, we generally are required to provide the Internal Revenue Service with certain information, including the beneficial owner’s name, address and taxpayer identification number, the aggregate amount of interest paid to that beneficial owner during the calendar year and the amount of tax withheld, if any. This obligation, however, does not apply with respect to payments to certain types of U.S. Holders, including tax-exempt organizations, provided that they establish entitlement to an exemption.

In the event that a U.S. Holder subject to the reporting requirements described above fails to provide its correct taxpayer identification number in the manner required by applicable law, or underreports its tax liability, we, our agent or paying agents, or a broker may be required to “backup” withhold at the applicable statutory rate on each payment on the Notes and on the proceeds from a sale of the Notes. The backup withholding obligation, however, does not apply with respect to payments to certain types of U.S. Holders, including tax-exempt organizations, provided that they establish entitlement to an exemption.

Backup withholding is not an additional tax and may generally be refunded or credited against the U.S. Holder’s United States federal income tax liability, provided that the required information is timely furnished to the Internal Revenue Service. U.S. Holders should consult their own tax advisors regarding their qualifications for an exemption from backup withholding, and the procedure for establishing such exemption, if applicable.

United States Federal Income Taxation of Non-U.S. Holders

Payments of interest. Subject to the discussion of backup withholding and FATCA below, payments of interest on the Notes to a Non-U.S. Holder will generally not be subject to United States federal withholding tax under the “portfolio interest exemption,” provided that:

 

    such payments are not effectively connected with the conduct of a United States trade or business, or in the case of an income tax treaty resident, a United States permanent establishment (or, in the case of an individual, a fixed base) maintained by the Non-U.S. Holder in the United States;

 

    the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote;

 

    the Non-U.S. Holder is not a controlled foreign corporation that, for United States federal income tax purposes, is related (within the meaning of Section 864(d)(4) of the Code) to us;

 

    the Non-U.S. Holder is not a bank described in Section 881(c)(3)(A) of the Code; and

 

   

either (1) the beneficial owner of the Notes certifies on IRS Form W-8BEN or W-8BEN-E (or a suitable substitute form or successor form), under penalties of perjury, that it is not a “U.S. person” (as

 

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defined in the Code) and provides its name and address, or (2) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds the Notes on behalf of the beneficial owner certifies to us or our agent, under penalties of perjury, that a properly executed IRS Form W-8BEN or W-8BEN-E (or a suitable substitute form or successor form) has been received from the beneficial owner by it or by any such financial institution between it and the beneficial owner and furnishes us with a copy thereof.

If a Non-U.S. Holder cannot satisfy the requirements of the “portfolio interest exemption,” payments of interest made to such Non-U.S. Holder will be subject to a 30% United States federal withholding tax unless the beneficial owner of the Note provides a properly executed:

 

    IRS Form W-8BEN or W-8BEN-E (or a suitable substitute form successor form) claiming, under penalties of perjury, an exemption from, or reduction in, withholding tax under an applicable income tax treaty, or

 

    IRS Form W-8ECI (or successor form) stating that interest paid on the note is not subject to withholding tax because it is effectively connected with a United States trade or business or, if certain treaties apply, it is attributable to a permanent establishment or fixed base maintained in the United States of the beneficial owner (in which case such interest will be subject to regular graduated United States tax rates as described below).

Non-U.S. Holders should consult their own tax advisors about the specific methods for satisfying these requirements. A claim for exemption will not be valid if the person receiving the applicable form has actual knowledge or reason to know that the statements on the form are false.

If interest on the note is effectively connected with a United States trade or business of the beneficial owner (and, if required by an applicable income tax treaty, attributable to a United States permanent establishment or fixed base), the Non-U.S. Holder, although exempt from the withholding tax described above, will be subject to United States federal income tax on such interest on a net income basis in the same manner as if it were a U.S. Holder. In addition, if such Non-U.S. Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (unless reduced by an applicable income tax treaty) in respect of such interest.

Disposition of the Notes. No withholding of United States federal income tax will generally be required with respect to any gain or income realized by a Non-U.S. Holder upon the sale, exchange or other disposition of a Note (except to the extent such cash or other property is attributable to accrued but unpaid interest, which is treated as interest as described above).

Except with respect to accrued and unpaid interest, a Non-U.S. Holder will not be subject to United States federal income tax on gain realized on the sale, exchange or other disposition of a Note unless the Non-U.S. Holder is an individual who is present in the United States for a period or periods aggregating 183 or more days in the taxable year of the disposition and certain other conditions are met, or such gain or income is effectively connected with a United States trade or business (and, if required by an applicable treaty, is attributable to a United States permanent establishment or fixed base). Accrued and unpaid interest realized on a sale, exchange or other disposition of a Note will be treated as discussed under “—Payments of interest.”

Backup withholding and information reporting. United States backup withholding will not apply to payments of interest on a Note or proceeds from the sale or other disposition of a note payable to a Non-U.S. Holder if the certification described in “—Payments of interest” is duly provided by such Non-U.S. Holder or the Non-U.S. Holder otherwise establishes an exemption, provided that the payor does not have actual knowledge that the holder is a U.S. person or that the conditions of any claimed exemption are not satisfied. Certain information reporting still may apply to interest payments even if an exemption from backup withholding is established. Copies of any information returns reporting interest payments and any withholding also may be made available to the tax authorities in the country in which a Non-U.S. Holder resides under the provisions of an applicable income tax treaty.

 

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Backup withholding is not an additional tax. Any amounts withheld under the backup withholding tax rules from a payment to a Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S. Holder’s United States federal income tax liability, provided that the requisite procedures are followed. Non-U.S. Holders should consult their own tax advisors regarding their particular circumstances and the availability of and procedure for establishing an exemption from backup withholding.

Foreign Account Tax Compliance

Under Sections 1471 through 1474 of the Code and the Treasury regulations and administrative guidance thereunder, commonly referred to as FATCA, U.S. federal withholding tax at a rate of 30% is imposed on U.S.-source interest on and, beginning after December 31, 2018, on sales or redemption proceeds of a note paid to (1) a “foreign financial institution” (as defined for this purpose) unless such institution is exempt from FATCA withholding pursuant to an applicable intergovernmental agreement between the jurisdiction in which it is located and the United States, enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities information regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or meets other exemptions or (2) a foreign entity that is not a financial institution, unless such entity is exempt from FATCA withholding pursuant to an applicable intergovernmental agreement between the jurisdiction in which it is located and the United States, provides the withholding agent with a certification identifying any substantial U.S. owners of the entity (as defined for this purpose) or meets other exemptions.

If FATCA withholding is imposed, a Non-U.S. Holder that is not a foreign financial institution may under certain circumstances be eligible for a refund or credit of any amounts withheld by filing certain information with the IRS. Prospective investors should consult their own tax advisors regarding the effects of FATCA on their investment in the Notes.

 

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CERTAIN BENEFIT PLAN AND ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the acquisition and holding of the Notes by an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, or ERISA) that is subject to Title I of ERISA, a plan or other arrangement subject to Section 4975 of the Internal Revenue Code, including an individual retirement account, a plan subject to provisions under applicable federal, state, local, non-U.S. or other laws or regulations that are similar to the provisions of Title I of ERISA or Section 4975 of the Internal Revenue Code (which we refer to as similar laws), and any entity whose underlying assets include “plan assets” by reason of any such employee benefit or retirement plan’s investment in such entity (each of which we refer to as a “Plan”).

General Fiduciary Matters. ERISA and the Internal Revenue Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Internal Revenue Code, or an ERISA Plan, and prohibit certain transactions involving the assets of an ERISA Plan with its fiduciaries or other interested parties. In general, under ERISA and the Internal Revenue Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan. Plans that are governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA or Section 4975(g)(3) of the Internal Revenue Code) and non-U.S. plans (as described in Section 4(b)(4) of ERISA) are not subject to the requirements of ERISA or Section 4975 of the Internal Revenue Code (but may be subject to similar prohibitions under similar laws).

In considering the acquisition, holding and, to the extent relevant, disposition of Notes with a portion of the assets of a Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Internal Revenue Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Internal Revenue Code and any other applicable similar laws.

Prohibited Transaction Issues. Section 406 of ERISA prohibits ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of Section 3(14) of ERISA, and Section 4975 of the Internal Revenue Code imposes an excise tax on certain “disqualified persons,” within the meaning of Section 4975 of the Internal Revenue Code, who engage in similar transactions, in each case unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Internal Revenue Code. In addition, a fiduciary of an ERISA Plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Internal Revenue Code. In the case of an individual retirement account, the occurrence of a prohibited transaction could cause the individual retirement account to lose its tax-exempt status.

Sandler O’Neill or we may be parties in interest or disqualified persons with respect to ERISA Plans and the purchase or holding of Notes may be characterized as an extension of credit by the purchaser or holder of Notes to us. The acquisition, holding and, to the extent relevant, disposition of the Notes by an ERISA Plan with respect to which the issuer or the underwriter (or certain of our or its affiliates) is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Internal Revenue Code, unless the investment is acquired, held and disposed of in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or PTCEs, that may apply to the acquisition and holding of the Notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds,

 

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PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers. In addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Internal Revenue Code each provides a limited exemption, commonly referred to as the “service provider exemption,” from the prohibited transaction provisions of ERISA and Section 4975 of the Internal Revenue Code for certain transactions provided that neither the issuer of the securities nor any of its affiliates (directly or indirectly) have or exercise any discretionary authority or control or render any investment advice with respect to the assets of any ERISA Plan involved in the transaction and provided further that the ERISA Plan pays no more than adequate consideration in connection with the transaction. There can be no assurance that all of the conditions of any such exemptions will be satisfied at the time that the Notes are acquired by a purchaser, or thereafter, if the facts relied upon for utilizing a prohibited transaction exemption change.

Because of the foregoing, the Notes should not be acquired, held or disposed of by any person investing “plan assets” of any Plan, unless such acquisition, holding and disposition will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code or similar violation of any applicable similar laws.

Representation. Each purchaser and holder of the Notes will be deemed to have represented and warranted that either, under ERISA or similar laws, (1) it is not a Plan and no portion of the assets used to acquire or hold the Notes constitutes assets of any Plan or (2) the acquisition, holding and disposition of a note will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code or similar violation under any applicable similar laws for which there is no applicable statutory, regulatory or administrative exemption.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries or other persons considering purchasing Notes on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Internal Revenue Code and any similar laws to such investment and whether an exemption would be applicable to the purchase and holding of the Notes. The acquisition, holding and, to the extent relevant, disposition of Notes by or to any Plan is in no respect a representation by us or any of our affiliates or representatives that such an investment meets all relevant legal requirements with respect to investments by such Plans generally or any particular plan, or that such an investment is appropriate for Plans generally or any particular Plan.

 

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UNDERWRITING

We are offering the Notes described in this prospectus supplement in an underwritten offering through Sandler O’Neill & Partners, L.P., or Sandler O’Neill. We have entered into an underwriting agreement with Sandler O’Neill with respect to the Notes being offered. Subject to the terms and conditions contained in the underwriting agreement, the underwriter has agreed to purchase, at the public offering price less the underwriting discount set forth on the cover page of this prospectus supplement, all of the Notes being offered by this prospectus supplement.

The underwriting agreement provides that the underwriter’s obligations to purchase the Notes depend on the satisfaction of the conditions contained in the underwriting agreement, including:

 

    the representations and warranties made by us are true and our agreements have been performed;

 

    there is no material adverse change in or affecting our business, financial condition, stockholders’ equity, liquidity, results of operations or prospects; and

 

    we deliver customary closing documents.

Commissions and Expenses

The Notes sold by the underwriter to the public initially will be offered at the public offering price set forth on the cover page of this prospectus supplement. The offering of the Notes by the underwriter is subject to receipt and acceptance and subject to the underwriter’s right to reject any order in whole or in part.

We expect that delivery of the Notes will be made to investors on or about March 24, 2017, which will be the third business day following the date of this prospectus supplement

The following table shows the per note and total underwriting discount that we will pay to the underwriter:

 

Per Note

     1.50

Total

   $ 279,000  

We estimate that our offering expenses, excluding the underwriting discounts, will be approximately $150,000. We have also agreed to reimburse the underwriter for certain expenses incurred by it in connection with this offering.

No Sales of Similar Securities

We have agreed, for a period from the date of the underwriting agreement through and including the closing date of the offering, not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any debt securities that are issued or guaranteed by us, without the prior written consent of the underwriters, other than the Notes.

No Public Trading Market

There is currently no public trading market for the Notes. In addition, we have not applied and do not intend to apply to list the Notes on any securities exchange or to have the Notes quoted on a quotation system. The underwriter has advised us that it intends to make a market in the Notes. However, the underwriter is not obligated to do so and may discontinue any market-making in the Notes at any time in its sole discretion. Therefore, we cannot assure you that a liquid trading market for the Notes will develop, that you will be able to

 

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sell your Notes at a particular time, or that the price you receive when you sell will be favorable. If an active trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected. If the Notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, the credit ratings for the Notes, our operating performance and financial condition, general economic conditions and other factors.

Indemnification and Contribution

We have agreed to indemnify the underwriter and its affiliates, selling agents and controlling persons against certain liabilities, including liabilities under the Securities Act. If we are unable to provide this indemnification, we will contribute to the payments the underwriter and its affiliates, selling agents and controlling persons may be required to make in respect of those liabilities.

Price Stabilization, Short Positions

In connection with this offering, the underwriter may engage in overallotment, stabilizing transactions and syndicate covering transactions in accordance with Regulation M under the Securities Exchange Act of 1934. Overallotment involves sales in excess of the offering size, which create a short position for the underwriter. Stabilizing transactions involve bids to purchase the Notes in the open market for the purpose of pegging, fixing, or maintaining the price of the Notes. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions and syndicate covering transactions may cause the price of the Notes to be higher than it would otherwise be in the absence of those transactions. If the underwriter engages in stabilizing or syndicate covering transactions, they may discontinue them at any time.

Neither we nor the underwriter makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Notes. In addition, neither we nor the underwriter makes any representation that the underwriter will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Our Relationship with the Underwriter

The underwriter and its affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. The underwriter is also serving as our financial advisor in connection with our acquisition of Citizens and will receive certain fees from us upon the closing of the acquisition. Neither this offering nor the contemplated merger transaction is conditioned upon the consummation of the other transaction.

In addition, in the ordinary course of their business activities, the underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriter and its affiliates may make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Our Notes are being offered by the underwriter, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of certain legal matters by counsel for the underwriter and other conditions.

 

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LEGAL MATTERS

The validity of the Notes offered by this prospectus supplement will be passed upon for us by Fenimore, Kay, Harrison & Ford, LLP, Austin, Texas. Certain legal matters in connection with this offering will be passed upon for the underwriter by Kilpatrick Townsend & Stockton LLP, Washington, D.C.

EXPERTS

Our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2016, and the effectiveness of our internal control over financial reporting as of December 31, 2016, have been audited by Postlethwaite & Netterville, APAC, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

The audited consolidated financial statements of Citizens Bancshares, Inc. as of and for the years ended December 31, 2016 and 2015, which are incorporated by reference into this prospectus, have been so included in reliance upon the report of Hannis T. Bourgeois, LLP, certified public accountants, appearing elsewhere in such financial statements, and upon authority of such firm as experts in accounting and auditing.

 

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PROSPECTUS

Investar Holding Corporation

Debt Securities

Common Stock

Preferred Stock

Warrants

Depositary Shares

Units

 

 

We may offer and sell from time to time, in one or more series, our unsecured debt securities, which may consist of notes, debentures, or other evidences of indebtedness; shares of our common stock; shares of our preferred stock; warrants to purchase other securities; depositary shares; or units consisting of a combination of two or more of these securities. The debt securities and preferred stock may be convertible into or exchangeable for other securities of ours. This prospectus provides you with a general description of these securities. Each time we offer any securities pursuant to this prospectus, we will provide you with a prospectus supplement and, if necessary, a pricing supplement, that will describe the specific amounts, prices and terms of the securities being offered. These supplements may also add, update or change information contained in this prospectus. To understand the terms of the securities offered, you should carefully read this prospectus with the applicable supplements, which together provide the specific terms of the securities we are offering.

Our common stock is listed on The Nasdaq Global Select Market under the symbol “ISTR.”

 

 

Investment in any securities offered by this prospectus involves risk. See “Risk Factors” on page 4 of this prospectus and the risk factors disclosed in our periodic reports filed from time to time with the Securities and Exchange Commission and in the applicable prospectus supplement or free writing prospectus accompanying this prospectus.

These securities are not deposits or obligations of a bank or savings association and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

This prospectus may be used to offer and sell securities only if accompanied by the applicable prospectus supplement for those securities.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus or the accompanying prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus is January 10, 2017.


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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS

PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT

We may provide information to you about the securities we are offering in three separate documents that progressively provide more detail:

 

   

this prospectus, which provides general information, some of which may not apply to your securities;

 

   

the accompanying prospectus supplement, which describes the terms of the securities, some of which may not apply to your securities; and

 

   

if necessary, a pricing supplement, which describes the specific terms of your securities.

If the terms of your securities vary among the pricing supplement, the prospectus supplement and the accompanying prospectus, you should rely on the information in the following order of priority:

 

   

the pricing supplement, if any;

 

   

the prospectus supplement; and

 

   

the prospectus.

We include cross-references in this prospectus and the accompanying prospectus supplement to captions in these materials where you can find further related discussions. The following Table of Contents and the Table of Contents included in the accompanying prospectus supplement provide the pages on which these captions are located.

 

 

Unless indicated in the applicable prospectus supplement, we have not taken any action that would permit us to publicly sell these securities in any jurisdiction outside the United States. If you are an investor outside the United States, you should inform yourself about, and comply with, any restrictions as to the offering of the securities and the distribution of this prospectus.


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TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS

     1  

WHERE YOU CAN FIND MORE INFORMATION

     1  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     1  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     2  

INVESTAR HOLDING CORPORATION

     3  

RISK FACTORS

     4  

USE OF PROCEEDS

     4  

RATIO OF EARNINGS TO COMBINED FIXED CHARGES

     4  

REGULATION AND SUPERVISION

     5  

DESCRIPTION OF DEBT SECURITIES

     6  

DESCRIPTION OF COMMON STOCK

     13  

DESCRIPTION OF PREFERRED STOCK

     16  

DESCRIPTION OF DEPOSITARY SHARES

     19  

DESCRIPTION OF WARRANTS

     21  

DESCRIPTION OF UNITS

     22  

PLAN OF DISTRIBUTION

     23  

LEGAL OPINIONS

     26  

EXPERTS

     26  


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ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”) utilizing a “shelf” registration process. Under this shelf registration process, we may from time to time offer and sell the debt securities, common stock, preferred stock, warrants, depositary shares or units consisting of a combination of these securities described in this prospectus in one or more offerings, up to $50.0 million. This prospectus provides you with a general description of the securities covered by it. Each time we offer any of these securities, we will provide a prospectus supplement that will contain specific information about the terms of the offer. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading “Where You Can Find More Information. 

Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus to “Investar,” “we,” “us,” “our,” “Company” or similar references mean Investar Holding Corporation. References in this prospectus to “Investar Bank” and “Bank” mean Investar Bank, the wholly-owned banking subsidiary of Investar Holding Corporation. The Bank is a Louisiana-chartered commercial bank and a non-member bank of the Board of Governors of the Federal Reserve System (“Federal Reserve”). The main office of the Bank is located in Baton Rouge, Louisiana.

WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements and other documents with the SEC. You may read and copy any document we file at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information on the public reference room. Our SEC filings are also available to you on the SEC’s Internet site at http://www.sec.gov.

This prospectus is part of a registration statement that we filed with the SEC. The registration statement contains more information than this prospectus regarding us, including certain exhibits and schedules. You can obtain a copy of the registration statement from the SEC at the address listed above or from the SEC’s Internet site

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to “incorporate by reference” information into this prospectus. This means that we can disclose important information to you by referring you to another document that we file separately with the SEC. The information incorporated by reference is considered to be a part of this prospectus, except for any information that is superseded by information that is included directly in this document or in a more recent incorporated document.

This prospectus incorporates by reference the documents listed below that we have previously filed with the SEC.

 

SEC Filings

  

Period or Date Filed (as applicable)

Annual Report on Form 10-K    Year ended December 31, 2015
Quarterly Report on Form 10-Q    Quarters ended March 31, 2016, June 30, 2016 and September 30, 2016
Current Reports on Form 8-K (in each case other than those portions furnished under Items 2.02 or 7.01 of Form 8-K)    Our Current Reports on Form 8-K filed with the SEC on February 19, 2016, May 17, 2016, May 19, 2016, June 30, 2016 and October 20, 2016
The information specifically incorporated by reference into our Annual Report on Form 10-K from our Definitive Proxy Statement on Schedule 14A    Filed with the SEC on April 18, 2016

 

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This prospectus also incorporates by reference the description of our common stock contained in our registration statement on Form 8-A, filed on June 26, 2014, including any amendment or report filed to update such description.

In addition, we also incorporate by reference all future documents that we file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of our initial registration statement relating to the securities until the completion of the distribution of the securities covered by this prospectus. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (other than Current Reports furnished under Items 2.02 or 7.01 of Form 8-K), as well as proxy statements.

The information incorporated by reference contains information about us and our financial condition and results of operation and is an important part of this prospectus.

You can obtain any of the documents incorporated by reference in this document through us, or from the SEC through the SEC’s Internet world wide web site at www.sec.gov. Documents incorporated by reference are available from us without charge, excluding any exhibits to these documents, unless the exhibit is specifically incorporated by reference as an exhibit in this prospectus. You can obtain documents incorporated by reference in this prospectus by requesting them in writing or by telephone from us at the following address:

Investar Holding Corporation

7244 Perkins Road

Baton Rouge, Louisiana 70808

Attention: John J. D’Angelo

Telephone: (225) 227-2222

In addition, we maintain a corporate web site, www.investarbank.com. On our web site, we make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such materials with, or furnish it to, the SEC. This reference to our web site is for the convenience of investors as required by the SEC and shall not be deemed to incorporate any information on the web site into this prospectus.

We have not authorized anyone to give any information or make any representation about us that is different from, or in addition to, those contained in this prospectus or in any of the materials that we have incorporated into this prospectus. If anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities offered by this document are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this document speaks only as of the date of this document unless the information specifically indicates that another date applies.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, as well as other written communications made from time to time by us and oral communications made from time to time by our authorized officers, may contain statements relating to our future results (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “intend” and “potential.” Examples of forward-looking statements include, but are not limited to, possible or assumed estimates with respect to our financial condition, expected or anticipated revenue, and results of our operations and business, including earnings growth determined using generally accepted

 

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accounting principles; origination volume in our mortgage, commercial and consumer lending businesses; competitive products and pricing; demand for loans and deposits; asset quality, loan delinquency rates and levels of non-performing assets; impairment charges with respect to investment securities; current and future capital management programs; non-interest income levels; market share; our ability to control costs and expenses; and other business operations and strategies. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the PSLRA.

We caution you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to:

 

   

the factors identified below and in this prospectus under the heading “Risk Factors;”

 

   

prevailing economic conditions, either nationally or locally in some or all areas in which we conduct business, or conditions in the banking industry;

 

   

interest rate trends, changes in interest rates, deposit flows, loan demand, real estate values and competition, which can materially affect, among other things, origination levels in our lending businesses and the level of defaults, losses and prepayments on loans we have made and make;

 

   

changes in the quality or composition of the loan or investment portfolios;

 

   

factors driving impairment charges on investments;

 

   

our ability to retain key members of management;

 

   

our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames;

 

   

our timely development of new and competitive products or services in a changing environment, and the acceptance of such products or services by customers;

 

   

operational issues and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems, on which we are highly dependent;

 

   

changes in accounting principles, policies, and guidelines;

 

   

changes in any applicable law, rule, regulation or practice with respect to tax or legal issues;

 

   

litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of other matters before regulatory agencies, whether pending or commencing in the future; and

 

   

other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services.

Additionally, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date of this prospectus. Except as may be required by applicable law or regulation, we assume no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

INVESTAR HOLDING CORPORATION

Investar Holding Corporation, headquartered in Baton Rouge, Louisiana, provides full banking services, excluding trust services, through its wholly-owned banking subsidiary, Investar Bank, a state chartered bank. The Company’s primary market is South Louisiana and it currently operates 10 full service banking offices located throughout its market. At September 30, 2016, Investar had 155 full-time equivalent employees.

 

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As of September 30, 2016, Investar had consolidated assets of $1.2 billion, consolidated deposits of $907.1 million and consolidated stockholders’ equity of $113.6 million. Shares of our common stock are traded on The Nasdaq Global Select Market under the trading symbol “ISTR.”

Our principal executive offices are located at 7244 Perkins Road, Baton Rouge, Louisiana 70808 and our telephone number is (225) 227-2222. We maintain an Internet website at www.investarbank.com. Neither this website nor the information on this website is included or incorporated into, or is a part of, this prospectus.

Additional information about us and our subsidiaries is included in documents incorporated by reference in this prospectus. See “Where You Can Find More Information” on page  1.

RISK FACTORS

An investment in our securities involves significant risks. Our business, operating results and cash flows can be impacted by a number of factors, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. You should carefully consider the risks and uncertainties and the risk factors set forth in the documents and reports filed with the SEC that are incorporated by reference into this prospectus, as well as any risks described in any applicable prospectus supplement, before you make an investment decision regarding the securities. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations.

USE OF PROCEEDS

We intend to use the net proceeds from the sale of the securities for general corporate purposes unless otherwise indicated in the applicable prospectus supplement relating to a specific issue of securities. Our general corporate purposes will likely include support for organic growth, and may also include financing possible acquisitions of branches or other financial institutions or financial service companies or diversification into other banking-related businesses.

The precise amounts and the timing of our use of the net proceeds will depend upon market conditions, our subsidiary’s funding requirements, the availability of other funds and other factors. Until we use the net proceeds from the sale of any of our securities for general corporate purposes, we will use the net proceeds for temporary investments.

RATIO OF EARNINGS TO COMBINED FIXED CHARGES

The following table sets forth our historical ratio of earnings to fixed charges and our ratio of combined fixed charges to earnings. You should read this table in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are incorporated by reference into this prospectus.

A statement setting forth details of the computation of the ratios below is included as Exhibit 12.1 to the registration statement.

 

     Nine Months  Ended
September 30,
2016
     Years Ended December 31,  
        2015      2014      2013      2012      2011  

Ratios of Earnings to Fixed Charges

                 

Excluding deposits

     10.55        17.75        17.27        17.86        19.45        12.20  

Including deposits

     2.43        2.80        2.40        2.25        2.31        1.58  

Ratios of Earnings to Combined Fixed Charges

                 

Excluding deposits

     10.55        17.75        17.27        17.86        19.45        12.20  

Including deposits

     2.43        2.80        2.40        2.25        2.31        1.58  

 

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We have computed the ratio of earnings to combined fixed charges set forth above by dividing pre-tax income before fixed charges by fixed charges dividends. Fixed charges represent interest expensed and capitalized.

REGULATION AND SUPERVISION

Our banking subsidiary, Investar Bank, is a Louisiana-chartered commercial bank and its deposit accounts are insured by the DIF of the FDIC. The Bank is a non-member bank and is a member of Federal Home Loan Bank systems. The Bank is subject to supervision, examination and regulation by the Louisiana Office of Financial Institutions (“OFI”) and the FDIC. Asset growth, deposits, reserves, investments, loans, consumer law compliance, issuance of securities, payment of dividends, establishment of banking offices, mergers and consolidations, changes in control, electronic funds transfer, management practices and other aspects of operations are subject to regulation by the appropriate federal and state supervisory authorities.

Investar Bank must file reports with the OFI and the FDIC concerning its activities and financial condition, in addition to obtaining regulatory approvals before entering into certain transactions such as mergers with, or acquisitions of, other depository institutions. Furthermore, Investar Bank is periodically examined by the OFI and the FDIC to assess compliance with various regulatory requirements, including safety and soundness considerations. This regulation and supervision establishes a comprehensive framework of activities in which Investar Bank can engage, and is intended primarily for the protection of the DIF and depositors rather than for the protection of security holders. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of loan loss allowances for regulatory purposes.

As a financial holding company, we are subject to comprehensive regulation, examination and supervision by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”), and the regulations of the Federal Reserve. The Federal Reserve also has extensive enforcement authority over bank holding companies, including, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders, and to require that a holding company divest subsidiaries (including its bank subsidiaries). In general, enforcement actions may be initiated for violations of law and regulations and unsafe or unsound practices.

Because we are a holding company, our rights and the rights of our creditors, including the holders of the debt securities and the preferred stock and common stock we are offering under this prospectus, to participate in the assets of any of our subsidiaries upon the subsidiary’s liquidation or reorganization will be subject to the prior claims of the subsidiary’s creditors, except to the extent that we may ourselves be a creditor with recognized claims against the subsidiary.

The Federal Reserve has the power to prohibit dividends by bank holding companies if their actions constitute unsafe or unsound practices. The Federal Reserve has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the Federal Reserve’s view that a bank holding company should pay cash dividends only to the extent that the company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the company’s capital needs, asset quality and overall financial condition. The Federal Reserve also indicated that it would be inappropriate for a bank holding company experiencing serious financial problems to borrow funds to pay dividends. Under the prompt corrective action regulations adopted by the Federal Reserve, the Federal Reserve may prohibit a bank holding company from paying any dividends if the holding company’s bank subsidiary is classified as “undercapitalized.”

Further, a Louisiana-chartered commercial bank may not pay dividends unless the bank has unimpaired surplus equal to 50% of its outstanding capital stock, both before and after giving effect to the dividend payment.

 

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Subject to satisfying such requirement, Investar Bank may pay dividends to us without the approval of the OFI so long as the amount of the dividend does not exceed its net profits earned during the current year combined with its retained earnings for the immediately preceding year; the OFI must approve any proposed dividend in excess of this threshold.

Under federal law, Investar Bank may not pay any dividend to us if the Bank is undercapitalized or the payment of the dividend would cause it to become undercapitalized or if the Bank has failed to pay its deposit insurance assessment. The FDIC may further restrict the payment of dividends by requiring the Bank to maintain a higher level of capital than would otherwise be required to be adequately capitalized for regulatory purposes. The FDIC has indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe banking practice, and the FDIC can order a bank to cease any such practice. Finally, it is FDIC policy that insured depository institutions generally should pay dividends only out of current operating earnings.

For a discussion of the material elements of the regulatory framework applicable to bank holding companies and their subsidiaries, and specific information relevant to us, you should refer to our Annual Report on Form 10-K for the year ended December 31, 2015, and any other subsequent reports filed by us with the SEC, which are incorporated by reference in this prospectus. A change in the statutes, regulations or regulatory policies applicable to us or our subsidiaries may have a material effect on our business.

Changes to the laws and regulations can affect the operating environment of bank holding companies and their subsidiaries in substantial and unpredictable ways. We cannot accurately predict whether those changes in laws and regulations will occur, and, if changes do occur, the ultimate effect they would have upon our or our subsidiaries’ financial condition or results of operations.

DESCRIPTION OF DEBT SECURITIES

General

The debt securities will be:

 

   

our direct unsecured general obligations; and

 

   

either senior debt securities or subordinated debt securities.

Senior debt securities will be issued under an indenture we call the “senior indenture” and subordinated debt securities will be issued under a separate indenture we call the “subordinated indenture.” Together the senior indenture and the subordinated indenture are called the “indentures,” and the senior debt securities and the subordinated debt securities are called “debt securities.”

We have not restated these indentures in their entirety in this description. We have filed the forms of the indentures as exhibits to the registration statement of which this prospectus is a part. We urge you to read the indentures, because they, and not this description, control your rights as holders of the debt securities. The following description of the indentures is not complete and is subject to, and qualified in its entirety by reference to, all the provisions in the respective indentures. In the summary below, we have included references to section numbers of the applicable indenture so that you can easily locate these provisions. Capitalized terms used in the summary have the meanings specified in the indentures.

Neither indenture limits the amount of debt securities that we may issue under the indenture from time to time in one or more series. We may in the future issue debt securities under either indenture. At the date of this prospectus, we had not issued any debt securities under either indenture.

We could in the future enter into transactions that could increase the amount of indebtedness outstanding at that time or otherwise adversely affect our capital structure or credit rating.

 

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The debt securities will be our exclusive obligations. Neither indenture requires our subsidiaries to guarantee the debt securities. As a result, the holders of debt securities will generally have a junior position to claims of all creditors and preferred stockholders of our subsidiaries.

Specific Terms of Each Series of Debt Securities in the Prospectus Supplement

A prospectus supplement and any supplemental indenture relating to any series of debt securities being offered will include specific terms relating to the offering. These terms will include some or all of the following:

 

   

the form and title of the debt securities;

 

   

whether the debt securities are senior debt securities or subordinated debt securities and the terms of subordination;

 

   

any limit on the aggregate principal amount of the debt securities;

 

   

the person to whom any interest on a debt security of the series will be paid;

 

   

the date or dates on which we must repay the principal;

 

   

the denominations in which the debt securities will be issued;

 

   

the manner in which we will determine the amount of principal of or any premium or interest on the debt securities;

 

   

the portion of the principal amount that will be payable if the maturity of the debt securities is accelerated;

 

   

the currency or currency unit in which the debt securities will be paid, if not U.S. dollars;

 

   

any right we may have to defer payments of interest by extending the dates payments are due and whether interest on those deferred amounts will be payable as well;

 

   

the place where the principal of, and premium, if any, and interest on any debt securities will be payable;

 

   

the date or dates on which the debt securities will be issued and the principal, and premium, if any, of the debt securities that will be payable;

 

   

the rate or rates, which may be fixed or variable, that the debt securities will bear interest and the interest payment dates for the debt securities;

 

   

whether we will issue the debt securities in the form of one or more global securities and, if so, the respective depositaries for the global securities and the terms of the global securities;

 

   

any mandatory or optional redemption provisions;

 

   

the terms, if any, upon which the debt securities are convertible into other securities of ours or another issuer and the terms and conditions upon which any conversion will be effected, including the initial conversion price or rate, the conversion period and any other provisions in addition to or instead of those described in this prospectus;

 

   

affirmative, negative and, with the case of our senior debt securities, financial covenants applicable with respect to the debt securities of the series;

 

   

any sinking fund or other provisions that would obligate us to repurchase or otherwise redeem the debt securities;

 

   

any deletion from, changes of or additions to the Events of Default (as defined below) or covenants;

 

   

any changes to the terms and condition upon which the debt securities can be defeased or discharged;

 

   

any restriction or other provision with respect to the transfer or exchange of the debt securities;

 

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the identity of any other trustee, paying agent and security registrar, if other than the trustee; and

 

   

any other terms of the debt securities (Section 3.01).

We will maintain in each place specified by us for payment of any series of debt securities an office or agency where debt securities of that series may be presented or surrendered for payment, where debt securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon us in respect of the debt securities of that series and the related indenture may be served (Section 10.02).

Debt securities may be issued under an indenture as original issue discount securities to be offered and sold at a substantial discount below their principal amount. Material federal income tax, accounting and other considerations applicable to any such original issue discount securities will be described in any related prospectus supplement. “Original issue discount security” means any security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof as a result of the occurrence of an event of default and the continuation thereof (Section 1.01).

Provisions Only in the Senior Indenture

Payment of the principal, premium, if any, and interest on the senior debt securities will rank equally in right of payment with all of our other unsecured senior debt.

Provisions Only in the Subordinated Indenture

Payment of the principal, premium, if any, and interest on the subordinated debt securities will be unsecured and will be subordinate and junior in priority of payment to prior payment in full of all of our senior indebtedness, including senior debt securities and other debt to the extent described in a prospectus supplement. (Section 14.01 of the subordinated indenture)

Provisions in Both Indentures

Consolidation, Merger or Asset Sale

Each indenture generally allows us to consolidate or merge with a domestic person, association or entity. They also allow us to sell, lease or transfer our property and assets substantially as an entirety to a domestic person, association or entity. If this happens, the remaining or acquiring person, association or entity must assume all of our responsibilities and liabilities under the indentures including the payment of all amounts due on the debt securities and performance of the covenants in the indentures.

However, we will only consolidate or merge with or into any other person, association or entity or sell, lease or transfer our assets substantially as an entirety according to the terms and conditions of the indentures, which include the following requirements:

 

   

the remaining or acquiring person, association or entity is organized under the laws of the United States, any state within the United States or the District of Columbia;

 

   

the remaining or acquiring person, association or entity assumes our obligations under the indentures; and

 

   

immediately after giving effect to the transaction, no Default or Event of Default, as defined below, shall have occurred and be continuing.

The remaining or acquiring person, association or entity will be substituted for us in the indentures with the same effect as if it had been an original party to the indentures. Thereafter, the successor may exercise our rights and powers under the indentures, in our name or in its own name. If we sell or transfer all or substantially all of

 

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our assets, we will be released from all our liabilities and obligations under any indenture and under the debt securities. If we lease all or substantially all of our assets, we will not be released from our obligations under the indentures. (Sections 8.01 and 8.02)

Events of Default and Remedies

In the indentures, “Default” with respect to any series of debt securities means any event that is, or after notice or lapse of time or both would become, an Event of Default.

In the indentures, Event of Default with respect to any series of debt securities means any of the following:

 

   

failure to pay the principal of or any premium on any debt security of that series when due;

 

   

failure to pay interest on any debt security of that series for 30 days;

 

   

subject to certain exceptions, failure to perform any other covenant in the indenture, other than a covenant a default in the performance of which has expressly been included in the indenture solely for the benefit of series of debt securities other than that series, that continues for 90 days after being given written notice as specified in the indenture;

 

   

our bankruptcy, insolvency or reorganization; or

 

   

any other Event of Default included in any indenture or supplemental indenture. (Section 5.01)

If an Event of Default with respect to a series of debt securities occurs and is continuing, the trustee or the holders of at least 25% in principal amount of all of the outstanding debt securities of a particular series may declare the principal of all the debt securities of that series to be due and payable. When such declaration is made, such amounts will be immediately due and payable. The holders of a majority in principal amount of the outstanding debt securities of such series may rescind such declaration and its consequences if all existing Events of Default have been cured or waived, other than nonpayment of principal or interest that has become due solely as a result of acceleration. (Section 5.02)

Holders of a series of debt securities may not enforce the indenture or the series of debt securities, except as provided in the indenture or a series of debt securities. (Section 5.07) The trustee may require indemnity satisfactory to it before it enforces the indenture or such series of debt securities. (Section 6.03) Subject to certain limitations, the holders of a majority in principal amount of the outstanding debt securities of a particular series may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power of the trustee. (Section 5.12) The trustee may withhold notice to the holders of debt securities of any default, except in the payment of principal or interest, if the board of directors, the executive committee or a trust committee of directors or responsible officers of the trustee considers such withholding of notice to be in the best interests of the holders. (Section 6.02)

An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under an indenture. Further, an Event of Default under the debt securities of any series will not necessarily constitute an event of default under our other indebtedness or vice versa.

Modification of Indentures

Under each indenture, generally we and the trustee may modify our rights and obligations and the rights of the holders with the consent of the holders of a majority in aggregate principal amount of the outstanding debt securities of any series affected by the modification, voting as one class. No modification of the principal or interest payment terms, no modification reducing the percentage required for modifications, no change in our obligation to maintain an office or agency for payment of the debt securities and no modification impairing the right to institute suit for the payment on debt securities of any series when due, is effective against any holder without its consent. (Section 9.02)

 

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In addition, we and the trustee may amend the indentures without the consent of any holder of the debt securities to make certain technical changes, such as:

 

   

curing ambiguities or correcting defects or inconsistencies;

 

   

evidencing the succession of another person to us, and the assumption by that successor of our obligations under the applicable indenture and the debt securities of any series;

 

   

providing for a successor trustee;

 

   

qualifying the indentures under the Trust Indenture Act of 1939, as amended, which we refer to in this prospectus as the “Trust Indenture Act;”

 

   

complying with the rules and regulations of any securities exchange or automated quotation system on which debt securities of any series may be listed or traded; or

 

   

adding provisions relating to a particular series of debt securities that does not materially adversely affect the interests of any holder of debt securities of any series. (Section 9.01)

Discharging Our Obligations

We may choose either to discharge our obligations on the debt securities of any series in a legal defeasance, or to release ourselves from our covenant restrictions on the debt securities of any series in a covenant defeasance. We may do so at any time on the 91st day after we deposit with the trustee sufficient cash or government securities to pay the principal, interest, any premium and any other sums due from the date of defeasance to the stated maturity date or a redemption date of the debt securities of the series. If we choose the legal defeasance option, the holders of the debt securities of the series will not be entitled to the benefits of the indenture except for registration of transfer and exchange of debt securities, replacement of lost, stolen or mutilated debt securities, conversion or exchange of debt securities, sinking fund payments and receipt of principal and interest on the original stated due dates or specified redemption dates. (Section 13.02)

We may discharge our obligations on the debt securities of any series or release ourselves from covenant restrictions only if we meet certain requirements. Among other things, we must deliver an opinion of our legal counsel that the discharge will not result in holders having to recognize taxable income or loss or subject them to different tax treatment. In the case of legal defeasance, this opinion must be based on either an IRS letter ruling or change in federal tax law. We may not have a default on the debt securities discharged on the date of deposit. The discharge may not violate any of our agreements. The discharge may not result in our becoming an investment company in violation of the Investment Company Act of 1940.

Concerning the Indenture Trustee

We will designate a trustee under the senior indenture and the subordinated indenture before the issuance of the debt securities.

Under provisions of the indentures and the Trust Indenture Act governing trustee conflicts of interest, any uncured Event of Default with respect to any series of senior or subordinated debt securities will force the trustee to resign as trustee under either the subordinated indenture or the senior indenture. Any resignation will require the appointment of a successor trustee under the applicable indenture in accordance with its terms and conditions.

The trustee may resign or be removed by us with respect to one or more series of debt securities and a successor trustee may be appointed to act with respect to any such series. The holders of a majority in aggregate principal amount of the debt securities of any series may remove the trustee with respect to the debt securities of such series. (Section 6.10)

 

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Each indenture contains certain limitations on the right of the trustee thereunder, if it becomes our creditor, to obtain payment of claims in some cases, or to realize on property received in respect of any such claim, as security or otherwise. (Section 6.13)

The trustee is required to submit an annual report to the holders of the debt securities regarding, among other things, the trustee’s eligibility to serve, the priority of the trustee’s claims regarding certain advances made by it, and any action taken by the trustee materially affecting the debt securities.

Each indenture provides that, in addition to other certificates or opinions that may be specifically required by other provisions of an indenture, every application by us for action by the trustee shall be accompanied by a certificate of our officers and an opinion of counsel, who may be our counsel, stating that, in the opinion of the signers, we have complied with all conditions precedent to the action. (Section 1.02)

Governing Law

The indentures are and the debt securities will be governed by the laws of the State of New York.

No Personal Liability of Officers, Directors, Employees or Stockholders

Our officers, directors, employees and stockholders will not have any liability for our obligations under the indentures or the debt securities. Each holder of debt securities, by accepting a debt security, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the debt securities.

Form, Denominations and Registration; Book Entry Only System

Unless otherwise indicated in a prospectus supplement, the debt securities of a series will be issued only in fully registered form, without coupons, in denominations of $1,000 or integral multiples thereof. (Section 3.02) You will not have to pay a service charge to transfer or exchange debt securities of a series, but we may require you to pay for taxes or other governmental charges due upon a transfer or exchange. (Section 3.05)

Unless otherwise indicated in a prospectus supplement, each series of debt securities will be deposited with, or on behalf of, The Depository Trust Company, or DTC, or any successor depositary, which we call a “depositary,” and will be represented by one or more global notes registered in the name of Cede & Co., as nominee of DTC. The interests of beneficial owners in the global notes will be represented through financial institutions acting on their behalf as direct or indirect participants in DTC.

Ownership of beneficial interests in a global note will be limited to persons, called participants, who have accounts with DTC or persons who hold interests through participants. Ownership of beneficial interests in the global notes will be shown on, and the transfer of these ownership interests will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants).

So long as DTC, or its nominee, is the registered owner or holder of a global note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the debt securities of that series represented by such global note for all purposes of the indenture, the debt securities of that series and applicable law. In addition, no beneficial owner of an interest in a global note will be able to transfer that interest except in accordance with DTC’s applicable procedures, in addition to those under the applicable indenture.

Payments on debt securities represented by global notes will be made to DTC or its nominee, as the registered owner thereof. Neither we, the trustee, any underwriter nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in global notes, for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any action taken or omitted to be taken by the depositary or any participant.

 

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We expect that DTC or its nominee will credit participants’ accounts on the payable date with payments in respect of a global note in amounts proportionate to their respective beneficial interest in the principal amount of such global note as shown on the records of DTC or its nominee, unless DTC has reason to believe that it will not receive payment on the payable date. We also expect that payments by participants to owners of beneficial interests in such global note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in “street name.” Such payments will be the responsibility of such participants.

Transfers between participants in DTC will be effected in accordance with DTC rules. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests in a global note to such persons may be impaired. Because DTC can only act on behalf of participants, who in turn act on behalf of others, such as securities brokers and dealers, banks and trust companies, called indirect participants, the ability of a person having a beneficial interest in a global note to pledge that interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of that interest, may be impaired by the lack of a physical certificate of that interest.

DTC will take any action permitted to be taken by a holder of debt securities of a series only at the direction of one or more participants to whose account interests in global notes are credited and only in respect of such portion of the aggregate principal amount of the debt securities of a series as to which such participant or participants has or have given such direction.

If (1) the depositary notifies us that it is unwilling or unable to continue as depositary or if the depositary ceases to be eligible under the applicable indenture and a successor depositary is not appointed by us within 90 days or (2) an Event of Default with respect to a series of debt securities shall have occurred and be continuing, the respective global notes representing the affected series of debt securities will be exchanged for debt securities in definitive form of like tenor and of an equal aggregate principal amount, in authorized denominations. Such definitive debt securities will be registered in such name or names as the depositary instructs the trustee. Such instructions will most likely be based upon directions received by the depositary from participants with respect to ownership of beneficial interests in global notes.

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC and facilitates the settlement among participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its direct participants, including those who may act as underwriters of our debt securities, and by the New York Stock Exchange, Inc., the NYSE MKT LLC and the Financial Industry Regulatory Authority. Access to the DTC system is also available to others such as indirect participants that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.

Although DTC has agreed to the foregoing procedures to facilitate transfers of interests in global notes among participants of DTC, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither we, the trustee, any underwriter nor any paying agent will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

 

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DESCRIPTION OF COMMON STOCK

The following discussion summarizes the material terms of our capital stock. This discussion does not purport to be a complete description of these rights and may not contain all of the information regarding our capital stock that is important to you. We are a Louisiana corporation, and thus the Louisiana Business Corporation Law, or LBCL, other applicable Louisiana law and our restated articles of incorporation and by-laws delineate the rights of our shareholders generally. Reference is made to the more detailed provisions of our restated articles of incorporation and by-laws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part, and applicable law.

General

Our restated articles of incorporation authorize us to issue a total of 40,000,000 shares of common stock, par value $1.00 per share, and 5,000,000 shares of preferred stock, no par value per share. No shares of preferred stock are currently outstanding. We may issue authorized but unissued shares of our capital stock in the future without shareholder approval, unless otherwise required by applicable law or the rules of any applicable securities exchange.

Common Stock

As of December 19, 2016, 7,099,283 shares of our common stock were issued and outstanding and held by approximately 606 shareholders of record. We have reserved an additional 125,932 shares for issuance in connection with stock awards granted under our Equity Incentive Plan, 474,068 have been issued in the form of stock option grants and restricted stock awards as of the date of this prospectus. Each share of our common stock is non-assessable and has the same rights, preferences and privileges as every other share of common stock.

Voting. Each share of common stock entitles the holder thereof to one vote in the election of directors and on all other matters submitted to the vote of our shareholders. Holders of our common stock are not entitled to cumulate their votes in the election of directors.

With respect to any matter other than the election of directors or a matter for which a different approval threshold is established by Louisiana law or our restated articles of incorporation (as described below), a matter submitted to the shareholders will be approved if a majority of the votes cast are in favor of such matter, at a meeting at which a quorum is present. Directors are elected by a plurality vote. Also, our restated articles of incorporation require a vote of two-thirds of the voting power present to approve (1) an amendment to the articles of incorporation, (2) a merger, consolidation or share exchange to which we are a party or the sale, lease or transfer of all or substantially all of our assets (this threshold is also the default provision in the LBCL) or (3) our dissolution.

Dividends. Subject to the legal and regulatory restrictions discussed elsewhere in this prospectus and to the rights of holders of any preferred securities that we may issue, holders of our common stock are entitled to share equally in dividends when, as, and if declared by our board of directors out of funds legally available therefor.

Liquidation. In the event of our liquidation, dissolution or winding up, holders of shares of our common stock are entitled to receive, on a pro-rata per share basis, any assets available for distribution to our shareholders after the payment of debts and liabilities and after the distribution to holders of any outstanding shares of our capital stock hereafter issued with prior rights upon liquidation.

Preemptive and other rights. Holders of our common stock do not have preemptive, conversion or redemption rights.

 

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Selected Provisions of the Louisiana Business Corporation Law and our Restated Articles of Incorporation and By-laws

Provisions with anti-takeover effects. Our restated articles of incorporation and by-laws as well as the LBCL contain certain provisions that may make it more difficult to acquire control of us by means of a tender offer, open market purchase, proxy contest or otherwise, even if shareholders may consider the proposed transaction to be in their best interests or will receive a substantial premium for their shares. These provisions, which are summarized below, are designed to encourage persons seeking to acquire control of us to negotiate with our directors. We believe that, as a general rule, the interests of our shareholders are best served if any change in control results from negotiations with our board rather than from an unsolicited proposal. As mentioned above, both the LBCL and our restated articles of incorporation require any merger, consolidation or share exchange to which we are a party or any sale of all or substantially all of our assets to be approved by a vote of at least two-thirds of the voting power present at any meeting called to approve such matter.

 

   

Authority to issue “blank check” preferred stock. As discussed above, our board of directors is authorized to issue, without further approval from our shareholders, a series of “blank check” preferred stock. This authorization may operate to provide anti-takeover protection for us because, if a merger, tender offer or other attempt to gain control of us is proposed and our board does not believe the proposed transaction is in our or our shareholders’ best interests, the board can quickly issue shares of preferred stock with rights, preferences and limitations that could make the proposed takeover attempt more difficult to complete. Such preferred stock may also be used in connection with the issuance of a shareholder rights plan, sometimes called a “poison pill.” The authorization to issue preferred stock may also benefit present management. Since a potential acquiror may be discouraged from attempting a takeover on account of the board’s ability to issue preferred stock, management may be able to retain its position more easily. Our board, however, does not intend to issue any preferred stock except on terms that it deems to be in the best interest of the Company and our shareholders.

 

   

Shareholder’s right to call a special meeting. Our by-laws provide that a shareholder (or group of shareholders) may not call a special meeting of shareholders unless such shareholder(s) owns at least 25% of our outstanding stock.

 

   

Increase in board size. Our board of directors has the power to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies so created by a majority vote of the directors present at the meeting. This may dissuade a third party from attempting to take control of us by means of a proxy contest.

 

   

Advance notice requirements. Our by-laws require a shareholder who desires to nominate a candidate for election to the board of directors or to raise new business at an annual shareholders’ meeting to provide us advance notice not earlier than 120 days and not later than 90 days prior to the first anniversary of the immediately preceding year’s annual meeting. If the date of the annual meeting is advanced by more than 30 days or delayed by more than 90 days from the anniversary date of the previous year’s meeting, to be timely a shareholder must deliver advance notice not earlier than the close of business on the 120th day prior to the annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or, if the public announcement of the date of our annual meeting is less than 100 days prior to the annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made. Any shareholder wishing to nominate a candidate for election as a director or to raise new business at an annual shareholders’ meeting must also provide detailed information about the nominee or business and satisfy certain other conditions. Because of the timing requirements and the detailed information that must be provided under our advance notice by-law, a third party may be discouraged from conducting a solicitation of proxies to elect its own slate of directors or to approve its proposal without regard to whether consideration of the nominees or proposals might be harmful or beneficial to our shareholders and us.

 

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No cumulative voting. Shareholders are not permitted to cumulate their votes in the election of directors. As a result, holders of a majority of outstanding common stock have the power to elect all of the directors standing for election, which may discourage a third party from nominating its own candidate(s) for election to our board.

 

   

By-law amendment. Our board of directors can amend our by-laws without shareholder approval. 

In addition, as noted above, we may issue authorized but unissued shares of our capital stock in the future without shareholder approval, unless otherwise required by applicable law or the rules of any applicable securities exchange. This power may enable our board of directors to sell shares of our common or preferred stock to individuals or groups whom the board perceives as friendly with management, which may make more difficult unsolicited attempts to obtain control of our organization.

Finally, the LBCL includes certain provisions applicable to Louisiana corporations, such as the Company, which may be deemed to have an anti-takeover effect or otherwise discriminate against a holder of our securities on account of such holder owning a substantial amount of our common stock. Such provisions include rights of shareholders to receive from the corporation the fair cash value of their shares of stock following a control transaction from a controlling person or group and requirements relating to certain business combinations.

Under the LBCL’s control share acquisition statutes, any person who acquires “control shares” will be able to vote such shares only if the right to vote is approved by the affirmative vote of at least a majority of both (1) all the votes entitled to be cast by shareholders and (2) all the votes entitled to be cast by shareholders excluding “interested shares.” “Control shares” are shares that would entitle the holder thereof, assuming the shares had full voting rights, to exercise voting power within any of the following ranges: (a) 20% or more but less than one-third of all voting power; (b) one-third or more but less than a majority of all voting power; or (c) a majority or more of all voting power. Any acquisition that would result in the ownership of control shares in a higher range would require an additional vote of shareholders. “Interested shares” include control shares and any shares held by an officer or employee who is also a director of the corporation. If the control shares are provided full voting rights and the acquiring person has acquired control shares representing a majority or more of all voting power, all shareholders have dissenters’ rights entitling them to receive from the corporation the “fair cash value” of their shares, which cannot be less than the highest price paid per share by the acquiring person to acquire the control shares.

The LBCL’s fair price protection statutes govern “business combinations” involving an “interested shareholder.” The LBCL defines a “business combination” generally to include the following:

 

   

any merger, consolidation or share exchange of the corporation with an “interested shareholder” or affiliate thereof;

 

   

any sale, lease, transfer or other disposition, other than in the ordinary course of business, of assets equal to 10% or more of the market value of the corporation’s outstanding stock or of the corporation’s net worth to any interested shareholder or affiliate thereof in any 12-month period;

 

   

the issuance or transfer by the corporation of equity securities of the corporation with an aggregate market value of 5% or more of the total market value of the corporation’s outstanding stock to any interested shareholder or affiliate thereof, except in certain circumstances;

 

   

the adoption of any plan or proposal for the liquidation or dissolution of the corporation in which anything other than cash will be received by an interested shareholder or affiliate thereof; or

 

   

any reclassification of the corporation’s stock or merger which increases by 5% or more the ownership interest of the interested shareholder or any affiliate of the corporation.

“Interested shareholder” includes any person who beneficially owns, directly or indirectly, 10% or more of the corporation’s outstanding voting stock, or any affiliate thereof who had such beneficial ownership during the preceding two years, excluding in each case the corporation, its subsidiaries and their benefit plans.

 

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Under the LBCL, a business combination must be approved by any vote otherwise required by law or the articles of incorporation, and by the affirmative vote of at least each of the following: (1) 80% of the total outstanding voting stock of the corporation, voting together as a single group; and (2) two-thirds of the outstanding voting stock held by persons other than the interested shareholder, voting together as a single group. However, the supermajority vote requirements are not applicable if the business combination meets certain minimum price requirements and other procedural safeguards, or if the transaction is approved by our board prior to the time that the interested shareholder first became an interested shareholder.

Action by Written Consent. Under the LBCL, unless otherwise provided in a corporation’s articles of incorporation, no action required or permitted to be taken at an annual or special meeting of shareholders may be taken by written consent in lieu of a meeting unless such written consent is signed by all shareholders. Our restated articles of incorporation do not contain a provision allowing for less than unanimous written consent. As a result, the requirement that actions taken by written consent be unanimous ensures that shareholders cannot effect a business combination or other corporate action without the knowledge and involvement of all of our shareholders.

Indemnification. Our restated articles of incorporation and by-laws provide generally that we will indemnify and hold harmless, to the fullest extent permitted by Louisiana law, our directors and officers, as well as other persons who have served as directors, officers, fiduciaries or in other representative capacities, serving at our request in connection with any actual or threatened action, proceeding or investigation, subject to limited exceptions. To the extent that indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons, we have been advised that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Finally, our ability to provide indemnification to our directors and officers is limited by federal banking laws and regulations.

Limitation of liability. Our restated articles of incorporation limit the personal liability of our directors in actions brought on our behalf or on behalf of our shareholders for monetary damages as a result of a director’s acts or omissions while acting in a capacity as a director, with certain exceptions. Our restated articles of incorporation do not eliminate or limit our right or the right of our shareholders to seek injunctive or other equitable relief not involving monetary damages.

Restrictions on Ownership

The BHCA generally would prohibit any company that is not engaged in financial activities and activities that are permissible for a bank holding company or a financial holding company from acquiring control of us. “Control” is generally defined as ownership of 25% or more of the voting stock or other exercise of a controlling influence. In addition, any existing bank holding company would need the prior approval of the Federal Reserve before acquiring 5% or more of our voting stock. The Change in Bank Control Act of 1978, as amended, prohibits a person or group of persons from acquiring control of a bank holding company unless the Federal Reserve has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as Investar could constitute acquisition of control of the bank holding company. Louisiana law generally requires the prior approval of the Commissioner before a person, group of persons, or company may acquire 25% or more of our voting stock or otherwise exercise a controlling influence over the direction of the management or policy of Investar or Investar Bank.

DESCRIPTION OF PREFERRED STOCK

General

Our restated articles of incorporation permit us to issue one or more series of preferred stock and authorize our board of directors to fix the designations, preferences and relative, participating, optional or other special

 

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rights (including voting rights), qualifications and limitations of any such series of preferred stock, without further shareholder approval. Each share of a series of preferred stock will have the same relative rights as, and be identical in all respects with, all the other shares of the same series. While the terms of preferred stock may vary from series to series, investors should assume that all shares of preferred stock that we may issue will be senior to our common stock in respect of distributions and on liquidation.

Although the creation and authorization of preferred stock does not, in and of itself, have any effect on the rights of the holders of our common stock, the issuance of one or more series of preferred stock may affect the holders of common stock in a number of respects, including the following: by subordinating our common stock to the preferred stock with respect to dividend rights, liquidation preferences and other rights, preferences, and privileges; by diluting the voting power or the earnings per share of our common stock; and by issuing common stock, upon the conversion of the preferred stock, at a price below the fair market value or original issue price of the common stock that is outstanding prior to such issuance.

The preferred stock has the terms described below unless otherwise provided in the prospectus supplement relating to a particular series of the preferred stock. You should read the prospectus supplement relating to the particular series of the preferred stock being offered for specific terms, including:

 

   

the designation and stated value per share of the preferred stock and the number of shares offered;

 

   

the amount of liquidation preference per share;

 

   

the price at which the preferred stock will be issued;

 

   

the dividend rate or method of calculation, the dates on which dividends will be payable, whether dividends will be cumulative or noncumulative and, if cumulative, the dates from which dividends will commence to accumulate;

 

   

any redemption or sinking fund provisions;

 

   

any conversion or exchange provisions;

 

   

whether we have elected to offer depositary shares as described in this prospectus under “Description of Depositary Shares”; and

 

   

any other rights, preferences, privileges, limitations and restrictions on the preferred stock.

The preferred stock will, when issued, be fully paid and nonassessable. Unless otherwise specified in the prospectus supplement, each series of the preferred stock will rank equally as to dividends and liquidation rights in all respects with each other series of preferred stock. The rights of holders of shares of each series of preferred stock will be subordinate to those of our general creditors.

As described in this prospectus under “Description of Depositary Shares,” we may, at our option, with respect to any series of the preferred stock, elect to offer fractional interests in shares of preferred stock, and provide for the issuance of depositary receipts representing depositary shares, each of which will represent a fractional interest in a share of the series of the preferred stock. The fractional interest will be specified in the prospectus supplement relating to a particular series of the preferred stock.

Rank

Any series of the preferred stock will, with respect to the priority of the payment of dividends and the priority of payments upon liquidation, winding up, and dissolution, rank:

 

   

senior to all classes of common stock and all equity securities issued by us, the terms of which specifically provide that the equity securities will rank junior to the preferred stock (the junior securities);

 

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equally with all equity securities issued by us, the terms of which specifically provide that the equity securities will rank equally with the preferred stock (the parity securities); and

 

   

junior to all equity securities issued by us, the terms of which specifically provide that the equity securities will rank senior to the preferred stock.

Dividends

Holders of the preferred stock of each series will be entitled to receive, when, as, and if declared by our board of directors, cash dividends at such rates and on such dates, if any, described in the applicable prospectus supplement. Different series of preferred stock may be entitled to dividends at different rates or based on different methods of calculation. The dividend rate may be fixed or variable or both. Dividends will be payable to the holders of record as they appear on our stock books on record dates fixed by our board of directors, as specified in the applicable prospectus supplement.

Dividends on any series of the preferred stock may be cumulative or noncumulative, as described in the applicable prospectus supplement. If our board of directors does not declare a dividend payable on a dividend payment date on any series of noncumulative preferred stock, then the holders of that noncumulative preferred stock will have no right to receive a dividend for that dividend payment date, and we will have no obligation to pay the dividend accrued for that period, whether or not dividends on that series are declared payable on any future dividend payment dates. Dividends on any series of cumulative preferred stock will accrue from the date we initially issue shares of such series or such other date specified in the applicable prospectus supplement.

No full dividends may be declared or paid or funds set apart for the payment of any dividends on any parity securities unless dividends have been paid or set apart for payment on the preferred stock. If full dividends are not paid, the preferred stock will share dividends pro rata with the parity securities. No dividends may be declared or paid or funds set apart for the payment of dividends on any junior securities unless full cumulative dividends for all dividend periods terminating on or before the date of the declaration or payment will have been paid or declared and a sum sufficient for the payment set apart for payment on the preferred stock.

Rights Upon Liquidation

If we dissolve, liquidate, or wind up our affairs, either voluntarily or involuntarily, the holders of each series of preferred stock will be entitled to receive, before any payment or distribution of assets is made to holders of junior securities, liquidating distributions in the amount described in the prospectus supplement relating to that series of the preferred stock, plus an amount equal to accrued and unpaid dividends and, if the series of the preferred stock is cumulative, for all dividend periods prior to that point in time. If the amounts payable with respect to the preferred stock of any series and any other parity securities are not paid in full, the holders of the preferred stock of that series and of the parity securities will share proportionately in the distribution of our assets in proportion to the full liquidation preferences to which they are entitled. After the holders of preferred stock and the parity securities are paid in full, they will have no right or claim to any of our remaining assets.

Because we are a bank holding company, our rights, the rights of our creditors and of our stockholders, including the holders of the preferred stock offered by this prospectus, to participate in the assets of any subsidiary upon the subsidiary’s liquidation or recapitalization may be subject to the prior claims of the subsidiary’s creditors except to the extent that we may ourselves be a creditor with recognized claims against the subsidiary.

Redemption

We may provide that a series of the preferred stock may be redeemable, in whole or in part, at our option, with prior Federal Reserve approval, if required. In addition, a series of preferred stock may be subject to

 

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mandatory redemption pursuant to a sinking fund or otherwise. The redemption provisions that may apply to a series of preferred stock, including the redemption dates and the redemption prices for that series, will be described in the applicable prospectus supplement.

In the event of partial redemptions of preferred stock, whether by mandatory or optional redemption, our board of directors will determine the method for selecting the shares to be redeemed, which may be by lot or pro rata or by any other method determined to be equitable.

On or after a redemption date, unless we default in the payment of the redemption price, dividends will cease to accrue on shares of preferred stock called for redemption. In addition, all rights of holders of the shares will terminate except for the right to receive the redemption price.

Unless otherwise specified in the applicable prospectus supplement for any series of preferred stock, if any dividends on any other series of preferred stock ranking equally as to payment of dividends and liquidation rights with such series of preferred stock are in arrears, no shares of any such series of preferred stock may be redeemed, whether by mandatory or optional redemption, unless all shares of preferred stock are redeemed, and we will not purchase any shares of such series of preferred stock. This requirement, however, will not prevent us from acquiring such shares pursuant to a purchase or exchange offer made on the same terms to holders of all such shares outstanding.

Voting Rights

Unless otherwise described in the applicable prospectus supplement, holders of the preferred stock will have no voting rights except as otherwise required by law or in our articles of incorporation.

Under regulations adopted by the Federal Reserve, if the holders of any series of the preferred stock are or become entitled to vote for the election of directors, such series may then be deemed a “class of voting stock” and a holder of 10% or more of such class of securities under certain circumstances may then be subject to regulation as a bank holding company or be deemed in control in accordance with federal law.

Exchangeability

We may provide that the holders of shares of preferred stock of any series may be required at any time or at maturity to exchange those shares for our debt securities. The applicable prospectus supplement will specify the terms of any such exchange.

DESCRIPTION OF DEPOSITARY SHARES

General

We may, at our option, elect to offer fractional shares of preferred stock, which we call depositary shares, rather than full shares of preferred stock. If we do, we will issue to the public receipts, called depositary receipts, for depositary shares, each of which will represent a fraction, to be described in the prospectus supplement, of a share of a particular series of preferred stock.

The shares of any series of preferred stock represented by depositary shares will be deposited with a depositary named in the applicable prospectus supplement. Unless otherwise provided in the applicable prospectus supplement, each owner of a depositary share will be entitled, in proportion to the applicable fractional interest in a share of preferred stock represented by the depositary share, to all the rights and preferences of the preferred stock represented by such depositary share. Those rights include dividend, voting, redemption, conversion and liquidation rights.

 

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Dividends and Other Distributions

The depositary will distribute all cash dividends or other cash distributions received in respect of the preferred stock to the record holders of depositary shares in proportion to the numbers of depositary shares owned by those holders.

If there is a distribution other than in cash, the depositary will distribute property received by it to the record holders of depositary shares, unless the depositary determines that it is not feasible to make the distribution. If this occurs, the depositary may, with our approval, sell the property and distribute the net proceeds from the sale to the holders.

Withdrawal of Stock

Unless the related depositary shares have been previously called for redemption, upon surrender of the depositary receipts at the office of the depositary, the holder of the depositary shares will be entitled to delivery, at the office of the depositary to or upon his or her order, of the number of whole shares of the preferred stock and any money or other property represented by the depositary shares. If the depositary receipts delivered by the holder evidence a number of depositary shares in excess of the number of depositary shares representing the number of whole shares of preferred stock to be withdrawn, the depositary will deliver to the holder at the same time a new depositary receipt evidencing the excess number of depositary shares. In no event will the depositary deliver fractional shares of preferred stock upon surrender of depositary receipts.

Redemption of Depositary Shares

Whenever we redeem shares of preferred stock held by the depositary, the depositary will redeem as of the same redemption date the number of depositary shares representing shares of the preferred stock so redeemed, so long as we have paid in full to the depositary the redemption price of the preferred stock to be redeemed plus an amount equal to any accumulated and unpaid dividends on the preferred stock to the date fixed for redemption. The redemption price per depositary share will be equal to the redemption price and any other amounts per share payable on the preferred stock multiplied by the fraction of a share of preferred stock represented by one depositary share. If less than all the depositary shares are to be redeemed, the depositary shares to be redeemed will be selected by lot or pro rata or by any other equitable method as may be determined by the depositary.

After the date fixed for redemption, depositary shares called for redemption will no longer be deemed to be outstanding and all rights of the holders of depositary shares will cease, except the right to receive the moneys payable upon redemption and any money or other property to which the holders of the depositary shares were entitled upon redemption upon surrender to the depositary of the depositary receipts evidencing the depositary shares.

Voting the Preferred Stock

Upon receipt of notice of any meeting at which the holders of the preferred stock are entitled to vote, the depositary will mail the information contained in the notice of meeting to the record holders of the depositary receipts relating to that preferred stock. The record date for the depositary receipts relating to the preferred stock will be the same date as the record date for the preferred stock. Each record holder of the depositary shares on the record date will be entitled to instruct the depositary as to the exercise of the voting rights pertaining to the number of shares of preferred stock represented by that holder’s depositary shares. The depositary will endeavor, insofar as practicable, to vote the number of shares of preferred stock represented by the depositary shares in accordance with those instructions, and we will agree to take all action that may be deemed necessary by the depositary to enable the depositary to do so. The depositary will not vote any shares of preferred stock except to the extent it receives specific instructions from the holders of depositary shares representing that number of shares of preferred stock.

 

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Charges of Depositary

We will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. We will pay charges of the depositary in connection with the initial deposit of the preferred stock and any redemption of the preferred stock. Holders of depositary receipts will pay other transfer and other taxes and governmental charges and such other charges as are expressly provided in the deposit agreement to be for their accounts.

Resignation and Removal of Depositary

The depositary may resign at any time by delivering to us notice of its election to do so, and we may remove the depositary at any time. Any resignation or removal of the depositary will take effect upon our appointment of a successor depositary and its acceptance of such appointment. The successor depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000.

Notices

The depositary will forward to holders of depositary receipts all notices, reports and other communications, including proxy solicitation materials received from us, which are delivered to the depositary and that we are required to furnish to the holders of the preferred stock.

Limitation of Liability

Neither we nor the depositary will be liable if either of us is prevented or delayed by law or any circumstance beyond our control in performing our obligations. Our obligations and those of the depositary will be limited to performance in good faith of our and their duties thereunder. We and the depositary will not be obligated to prosecute or defend any legal proceeding in respect of any depositary shares or preferred stock unless satisfactory indemnity is furnished. We and the depositary may rely upon written advice of counsel or accountants, on information provided by persons presenting preferred stock for deposit, holders of depositary receipts or other persons believed to be competent and on documents believed to be genuine.

DESCRIPTION OF WARRANTS

General

We may issue warrants to purchase debt securities, preferred stock, depositary shares or common stock. We may offer warrants separately or together with one or more additional warrants, debt securities, preferred stock, depositary shares or common stock, or any combination of those securities in the form of units, as described in the appropriate prospectus supplement. If we issue warrants as part of a unit, the accompanying prospectus supplement will specify whether those warrants may be separated from the other securities in the unit before the warrants’ expiration date. Below is a description of certain general terms and provisions of the warrants that we may offer. Further terms of the warrants will be described in the applicable prospectus supplement.

The applicable prospectus supplement will contain, where applicable, the following terms of and other information relating to the warrants:

 

   

the specific designation and aggregate number of, and the price at which we will issue, the warrants;

 

   

the currency or currency units in which the offering price, if any, and the exercise price are payable;

 

   

the date on which the right to exercise the warrants will begin and the date on which that right will expire or, if you may not continuously exercise the warrants throughout that period, the specific date or dates on which you may exercise the warrants;

 

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any applicable anti-dilution provisions;

 

   

any applicable redemption or call provisions;

 

   

the circumstances under which the warrant exercise price may be adjusted;

 

   

whether the warrants will be issued in fully registered form or bearer form, in definitive or global form or in any combination of these forms, although, in any case, the form of a warrant included in a unit will correspond to the form of the unit and of any security included in that unit;

 

   

any applicable material United States federal income tax consequences;

 

   

the identity of the warrant agent for the warrants and of any other depositaries, execution or paying agents, transfer agents, registrars or other agents;

 

   

the proposed listing, if any, of the warrants or any securities purchasable upon exercise of the warrants on any securities exchange;

 

   

the designation and terms of the preferred stock or common stock purchasable upon exercise of the warrants;

 

   

the designation, aggregate principal amount, currency and terms of the debt securities that may be purchased upon exercise of the warrants;

 

   

if applicable, the designation and terms of the debt securities, preferred stock, depositary shares or common stock with which the warrants are issued and the number of warrants issued with each security;

 

   

if applicable, the date from and after which the warrants and the related debt securities, preferred stock, depositary shares or common stock will be separately transferable;

 

   

the number of shares of preferred stock, the number of depositary shares or the number of shares of common stock purchasable upon exercise of a warrant and the price at which those shares may be purchased;

 

   

if applicable, the minimum or maximum amount of the warrants that may be exercised at any one time;

 

   

information with respect to book-entry procedures, if any;

 

   

whether the warrants are to be sold separately or with other securities as parts of units; and

 

   

any additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.

Outstanding Warrants

SLBB Warrants. In connection with its acquisition of South Louisiana Business Bank (“SLBB”), Investar Bank assumed outstanding warrants to purchase SLBB common stock (which were issued in connection with SLBB’s organization). The terms of these warrants were adjusted to reflect the terms of the merger agreement between Investar Bank and SLBB. There are 124,275 warrants outstanding that are exercisable at a price of $13.33 per share and expire on July 1, 2018.

DESCRIPTION OF UNITS

We may issue units comprised of two or more of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.

 

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The applicable prospectus supplement may describe:

 

   

the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;

 

   

any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units;

 

   

the terms of the unit agreement governing the units;

 

   

United States federal income tax considerations relevant to the units; and

 

   

whether the units will be issued in fully registered or global form.

The preceding description and any description of units in the applicable prospectus supplement does not purport to be complete and is subject to and is qualified in its entirety by reference to the form of unit agreement, which will be filed with the SEC in connection with the offering of such units, and, if applicable, collateral arrangements and depositary arrangements relating to such units.

PLAN OF DISTRIBUTION

We may offer and sell these securities in any one or more of the following ways:

 

   

to the public through a group of underwriters managed or co-managed by one or more underwriters, or through dealers;

 

   

through one or more agents;

 

   

directly to purchasers; or

 

   

through a combination of such methods of sale.

The distribution of the securities may be effected from time to time in one or more transactions:

 

   

at a fixed price, or prices which may be changed from time to time;

 

   

at market prices prevailing at the time of sale;

 

   

at prices related to those prevailing market prices; or

 

   

at negotiated prices.

Each time we sell securities a prospectus supplement will describe the method of distribution of the securities and any applicable restrictions.

The prospectus supplement with respect to the securities of a particular series will describe the terms of the offering of the securities, including the following:

 

   

the name or names of any agents, dealers or underwriters included in the offer and sale of the securities;

 

   

the public offering or purchase price and the proceeds we will receive from the sale of the securities;

 

   

any discounts and commissions to be allowed or paid to the agents or underwriters;

 

   

all other items constituting underwriting compensation;

 

   

any discounts and commissions to be allowed or paid to dealers; and

 

   

any exchanges on which the securities will be listed.

 

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We may agree to enter into an agreement to indemnify the agents and the several underwriters against certain civil liabilities, including liabilities under the Securities Act or to contribute to payments the agents or the underwriters may be required to make.

If so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase debt securities from us pursuant to delayed delivery contracts providing for payment and delivery on the date stated in the applicable prospectus supplement. Each contract will be for an amount not less than, and the aggregate amount of securities sold pursuant to those contracts will be equal to, the respective amounts stated in the applicable prospectus supplement. Institutions with whom the contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions, but will in all cases be subject to our approval. Delayed delivery contracts will not be subject to any conditions except that:

 

   

the purchase by an institution of the debt securities covered under that contract will not at the time of delivery be prohibited under the laws of the jurisdiction to which that institution is subject; and

 

   

if the debt securities are also being sold to underwriters acting as principals for their own account, the underwriters will have purchased those debt securities not sold for delayed delivery. The underwriters and other persons acting as our agents will not have any responsibility in respect of the validity or performance of delayed delivery contracts.

In all cases, these purchasers must be approved by us. Unless otherwise set forth in the applicable prospectus supplement, the obligations of any purchaser under any of these contracts will not be subject to any conditions except that (a) the purchase of the securities must not at the time of delivery be prohibited under the laws of any jurisdiction to which that purchaser is subject and (b) if the securities are also being sold to underwriters, we must have sold to these underwriters the securities not subject to delayed delivery. Underwriters and other agents will not have any responsibility in respect of the validity or performance of these contracts.

If underwriters or dealers are used in the sale, the securities will be acquired by the underwriters or dealers for their own account and may be resold from time to time in one or more transactions, at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, or at prices related to such prevailing market prices, or at negotiated prices. The securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more of such firms. Unless otherwise set forth in the applicable prospectus supplement, the obligations of underwriters or dealers to purchase the securities offered will be subject to certain conditions precedent and the underwriters or dealers will be obligated to purchase all the offered securities if any are purchased. Any public offering price and any discounts or concessions allowed or reallowed or paid by underwriters or dealers to other dealers may be changed from time to time.

The securities may be sold directly by us or through agents designated by us from time to time. Any agent involved in the offer or sale of the securities in respect of which this prospectus is delivered will be named, and any commissions payable by us to such agent will be set forth in, the applicable prospectus supplement. Unless otherwise indicated in the applicable prospectus supplement, any such agent will be acting on a best efforts basis for the period of its appointment.

To the extent that we make sales to or through one or more underwriters or agents in at-the-market offerings, we will do so pursuant to the terms of a distribution agreement between us and the underwriters or agents. If we engage in at-the-market sales pursuant to a distribution agreement, we will issue and sell shares of our common stock to or through one or more underwriters or agents, which may act on an agency basis or on a principal basis. During the term of any such agreement, we may sell shares on a daily basis in exchange transactions or otherwise as we agree with the underwriters or agents. The distribution agreement will provide that any shares of our common stock sold will be sold at prices related to the then prevailing market prices for

 

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our common stock. Therefore, exact figures regarding proceeds that will be raised or commissions to be paid cannot be determined at this time and will be described in a prospectus supplement. Pursuant to the terms of the distribution agreement, we also may agree to sell, and the relevant underwriters or agents may agree to solicit offers to purchase, blocks of our common stock or other securities. The terms of each such distribution agreement will be set forth in more detail in a prospectus supplement to this prospectus. If any underwriter or agent acts as principal, or broker-dealer acts as underwriter, it may engage in certain transactions that stabilize, maintain or otherwise affect the price of our securities. We will describe any such activities in the applicable prospectus supplement relating to the transaction.

Offers to purchase the securities offered by this prospectus may be solicited, and sales of the securities may be made, by us directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resales of the securities. The terms of any offer made in this manner will be included in the prospectus supplement relating to the offer.

Subject to any restrictions relating to debt securities in bearer form, any securities initially sold outside the United States may be resold in the United States through underwriters, dealers or otherwise.

Each series of securities other than common stock will be a new issue of securities with no established trading market. Any underwriters to whom offered securities are sold by us for public offering and sale may make a market in such securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time.

The anticipated date of delivery of the securities offered by this prospectus will be described in the applicable prospectus supplement relating to the offering. The securities offered by this prospectus may or may not be listed on a national securities exchange or a foreign securities exchange. No assurance can be given as to the liquidity or activity of any trading in the offered securities.

If more than 10% of the net proceeds of any offering of securities made under this prospectus will be received by Financial Industry Regulatory Authority (“FINRA”) members participating in the offering or affiliates or associated persons of such FINRA members, the offering will be conducted in accordance with FINRA Rule 5110.

We may enter into derivative or other hedging transactions with financial institutions. These financial institutions may in turn engage in sales of our common stock to hedge their position, deliver this prospectus in connection with some or all of those sales and use the shares covered by this prospectus to close out any short position created in connection with those sales. We may also sell shares of our common stock short using this prospectus and deliver our common stock covered by this prospectus to close out such short positions, or loan or pledge our common stock to financial institutions that in turn may sell the shares of our common stock using this prospectus. We may pledge or grant a security interest in some or all of our common stock covered by this prospectus to support a derivative or hedging position or other obligations and, if we default in the performance of our obligations, the pledges or secured parties may offer and sell our common stock from time to time pursuant to this prospectus.

We also may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not identified in this prospectus, will be identified in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a financial institution or other third party that in turn may

 

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sell the securities short using this prospectus. Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent offering of other securities.

Certain of the underwriters and their associates and affiliates may be customers of, have borrowing relationships with, engage in other transactions with, and/or perform services, including investment banking services, for, us or one or more of our affiliates in the ordinary course of business.

LEGAL OPINIONS

The validity of the securities offered hereby will be passed upon for us by Kilpatrick Townsend & Stockton LLP, Washington, D.C.

EXPERTS

The consolidated financial statements of Investar Holding Corporation as December 31, 2015 and 2014, and for each of the years in the three-year period ended December 31, 2015 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 have been incorporated herein, in reliance upon the reports of Postlethwaite & Netterville, APAC an independent registered public accounting firm, given on the authority of such firm as experts in accounting and auditing.

 

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$18,600,000

 

LOGO

 

6.00% Fixed-to-Floating Rate Subordinated Notes due 2027

 

 

 

Prospectus Supplement

 

 

 

SANDLER O’NEILL + PARTNERS, L.P.

 

 

March 21, 2017