Document



 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________

FORM 8-K/A
___________________
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 1, 2017
 

Investar Holding Corporation
(Exact name of registrant as specified in its charter)
 

 
 
 
Louisiana
001-36522
27-1560715
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
7244 Perkins Road
Baton Rouge, Louisiana 70808
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (225) 227-2222
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ








EXPLANATORY NOTE 

This current report on Form 8-K/A is filed as an amendment to the current report on Form 8-K of Investar Holding Corporation (“Investar”) filed with the Securities and Exchange Commission (the “SEC”) on July 3, 2017 (the “Initial Report”) relating to Investar’s acquisition (“Acquisition”) of Citizens Bancshares, Inc. (“Citizens”). This current report is filed to provide, and amends the Initial Report to include, financial statements and pro forma financial information for the Acquisition that are described in parts (a) and (b) of Item 9.01 below. Except as otherwise provided in the Form 8-K/A, the Initial 8-K remains unchanged.
Item 9.01 Financial Statements and Exhibits

(a)    Financial statements of businesses acquired
(1)
The audited consolidated financial statements of Citizens Bancshares, Inc. as of December 31, 2016 and for the fiscal year ended December 31, 2016 are filed herewith as Exhibit 99.1 and are incorporated herein by reference.
(2)
The unaudited consolidated financial statements of Citizens as of June 30, 2017 and for the six months ended June 30, 2017 and 2016 are filed herewith as Exhibit 99.2 hereto.

(b)    Pro forma financial information.
The unaudited pro forma condensed financial information for Investar as of and for the six month period ended June 30, 2017 and for the year ended December 31, 2016, giving effect to the acquisition of Citizens, is attached hereto as Exhibit 99.3 and incorporated herein by reference. The unaudited pro forma condensed financial information is presented for informational purposes only and does not purport to represent what Investar’s results of operations for financial position would have been had the transactions reflected occurred on the dates indicated or to project Investar’s financial position as of any future date or Investar’s results of operations for any future period.

(d)    Exhibits
Exhibit
Number
 
Description of Exhibit
 
 
 
23.1
 
Consent of Hannis T. Bourgeois, LLP
99.1
 
Audited financial statements for Citizens Bancshares, Inc. as of and for the fiscal year ended December 31, 2016 and the accompanying notes thereto (incorporated by reference to Exhibit 99.4 of Investar’s Current Report on Form 8-K, filed with the SEC on March 15, 2017).
99.2
 
Unaudited consolidated financial statements of Citizens as of June 30, 2017 and for the six months ended June 30, 2017 and 2016.
99.3
 
Unaudited pro forma condensed financial information as of and for the six months ended June 30, 2017 and for the year ended December 31, 2016, and the accompanying notes thereto.


















EXHIBIT INDEX
Exhibit
Number
 
Description of Exhibit
 
 
 
 
 
 
 




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
INVESTAR HOLDING CORPORATION
 
 
 
 
Date: September 15, 2017
 
By:
/s/ John J. D’Angelo
 
 
 
John J. D’Angelo
 
 
 
President and Chief Executive Officer



Exhibit

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Form 8-K/A of our report dated February 17, 2017, relating to the consolidated financial statements of Citizens Bancshares, Inc., which appeared in the Current Report on Form 8-K filed with the SEC on March 15, 2017.
/s/ Hannis T. Bourgeois, LLP
Baton Rouge, LA
September 15, 2017


Exhibit


Exhibit 99.2

CITIZENS BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
 
 
June 30, 2017
 
 
 
ASSETS
 
 
Cash and due from banks
 
$
5,015

Interest-bearing balances due from other banks
 
38,550

Federal funds sold
 
1,000

Cash and cash equivalents
 
44,565

 
 
 
Available for sale securities
 
70,038

Loans
 
131,894

Less: allowance for loan losses
 
(1,972
)
Net loans
 
129,922

Bank premises and equipment
 
1,993

Other real estate owned, net
 
429

Accrued interest receivable
 
652

Deferred tax asset
 
828

Bank owned life insurance
 
801

Other assets
 
594

Total assets
 
$
249,822

 
 
 
LIABILITIES
 
 

Deposits:
 
 

Noninterest-bearing
 
$
43,255

Interest-bearing
 
168,723

Total deposits
 
211,978

Accrued interest payable
 
150

Accrued taxes and other liabilities
 
1,850

Total liabilities
 
213,978

 
 
 
STOCKHOLDERS’ EQUITY
 
 

Common stock
 
546

Surplus
 
784

Retained earnings
 
34,412

Accumulated other comprehensive loss
 
102

Total stockholders’ equity
 
35,844

Total liabilities and stockholders’ equity
 
$
249,822























CITIZENS BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
(Unaudited)
 
 
Six months ended June 30,
 
 
2017
 
2016
 
 
 
 
 
INTEREST INCOME
 
 
 
 
Interest and fees on loans
 
$
3,449

 
$
3,493

Interest on investment securities
 
556

 
581

Other interest income
 
188

 
103

Total interest income
 
4,193

 
4,177

 
 
 
 
 
INTEREST EXPENSE
 
 
 
 
Interest on deposits
 
522

 
502

Total interest expense
 
522

 
502

Net interest income
 
3,671

 
3,675

 
 
 
 
 
NONINTEREST INCOME
 
 
 
 
Service charges on deposit accounts
 
429

 
409

Other operating income
 
68

 
39

Total noninterest income
 
497

 
448

Income before noninterest expense
 
4,168

 
4,123

 
 
 
 
 
NONINTEREST EXPENSE
 
 
 
 
Salaries and employee benefits
 
2,563

 
1,518

Occupancy and equipment
 
265

 
252

Data processing
 
70

 
71

Director fees
 
91

 
65

Other operating expenses
 
680

 
510

Total noninterest expense
 
3,669

(1) 
2,416

Income before income tax expense
 
499

 
1,707

Income tax expense
 
211

 
552

Net Income
 
$
288

 
$
1,155

 
 
 
 
 
Earnings per share:
 
 
 
 
Basic earnings per share
 
$
2.64

 
$
10.57

Diluted earnings per share
 
$
2.64

 
$
10.57

Average common shares outstanding
 
 
 
 
Basic
 
109,255

 
109,255

Diluted
 
109,255

 
109,255


(1) Includes approximately $942,000 of nonrecurring costs directly related to the acquisition by Investar Holding Corporation.


Exhibit


Exhibit 99.3

Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined financial statements are based on the separate historical financial statements of Investar Holding Corporation (“Investar”) and Citizens Bancshares Inc. (“Citizens”) and are adjusted to give effect to the July 1, 2017 acquisition of Citizens.

The unaudited pro forma condensed combined balance sheet as of June 30, 2017 is presented as if the merger with Citizens and the transactions that occurred therewith had occurred on June 30, 2017. The unaudited pro forma condensed combined income statements for the year ended December 31, 2016 and the six months ended June 30, 2017 are presented as if the merger and transactions that occurred therewith had occurred on January 1, 2016. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the merger and, with respect to the income statements only, expected to have a continuing impact on consolidated results of operations.

The acquisition has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 - Business Combinations. Under the acquisition method of accounting, the total purchase consideration of the acquisition is allocated to the tangible assets and identifiable intangible assets and liabilities assumed based on their relative fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill. The purchase price allocation is preliminary because valuation of the net tangible and identifiable intangible assets is still being finalized. Accordingly, the pro forma adjustments related to the purchase price allocation and certain other adjustments are preliminary and have been made solely for the purpose of preparing the unaudited pro forma condensed combined financial statements. The estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date).

The pro forma condensed combined financial statements do not necessarily reflect what the combined companies’ financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

The unaudited pro forma condensed combined financial statements have been prepared for illustrative purposes only and are not intended to represent or be indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been achieved if Investar and Citizens had been a combined company during the period presented. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma condensed combined statement of operations does not reflect any operating efficiencies and/or cost savings that the Company may achieve with respect to the combined companies.

These unaudited pro forma condensed combined financial statements should be read in conjunction with Investar’s historical consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as well as Citizens’ historical consolidated financial statements and related notes for the year ended December 31, 2016 which are included as Exhibit 99.1 to this Current Report filed on Form 8-K/A.






INVESTAR HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEETS
As of June 30, 2017
(Amounts in thousands, except share data)
(Unaudited)
 
 
Historical
 
 
 
 
 
 
 
Investar Holding Corporation
 
Citizens Bancshares, Inc.
 
Pro Forma Adjustments
 
 
Pro Forma Combined
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
34,961

 
$
44,565

 
$
(45,800
)
(1) 
 
$
33,726

Available for sale securities
 
183,584

 
70,038

 
(141
)
(2) 
 
253,481

Held to maturity securities
 
19,460

 

 

 
 
19,460

Loans
 
932,960

 
131,894

 
(1,559
)
(3) 
 
1,063,295

Less: allowance for loan losses
 
(7,320
)
 
(1,972
)
 
1,972

(4) 
 
(7,320
)
Net loans
 
925,640

 
129,922


413



1,055,975

Other equity securities
 
7,025

 

 

 
 
7,025

Bank premises and equipment
 
31,510

 
1,993

 
1,344

(5) 
 
34,847

Other real estate owned, net
 
3,830

 
429

 

 
 
4,259

Accrued interest receivable
 
3,197

 
652

 

 
 
3,849

Deferred tax asset
 
2,343

 
828

 
(315
)
(6) 
 
2,856

Goodwill
 
2,684

 

 
7,403

(7) 
 
10,087

Other intangible assets
 
529

 

 
1,462

(8) 
 
1,991

Bank owned life insurance
 
7,297

 
801

 

 
 
8,098

Other assets
 
3,466

 
594

 

 
 
4,060

Total assets
 
$
1,225,526

 
$
249,822


$
(35,634
)


$
1,439,714

 
 
 
 
 
 
 
 
 


LIABILITIES
 
 

 
 

 
 
 
 


Deposits:
 
 

 
 
 
 
 
 


Noninterest-bearing
 
$
130,625

 
$
43,255

 
$

 
 
$
173,880

Interest-bearing
 
764,200

 
168,723

 
210

(9) 
 
933,133

Total deposits
 
894,825

 
211,978

 
210

 
 
1,107,013

Advances from Federal Home Loan Bank
 
109,285

 

 

 
 
109,285

Repurchase agreements
 
36,745

 

 

 
 
36,745

Subordinated debt, net of unamortized issuance costs
 
18,145

 

 

 
 
18,145

Junior subordinated debt
 
3,609

 

 

 
 
3,609

Accrued taxes and other liabilities
 
12,121

 
2,000

 

 
 
14,121

Total liabilities
 
1,074,730

 
213,978

 
210

 
 
1,288,918

 
 
 
 
 
 
 
 
 


STOCKHOLDERS’ EQUITY
 
 

 
 

 
 
 
 


Total stockholders’ equity
 
150,796

 
35,844

 
(35,844
)
 
 
150,796

Total liabilities and stockholders’ equity
 
$
1,225,526

 
$
249,822

 
$
(35,634
)
 
 
$
1,439,714

See accompanying notes to the unaudited pro forma condensed combined financial statements.





INVESTAR HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
For the six months ended June 30, 2017
(in thousands, except share data)
(Unaudited)
 
 
Historical
 
 
 
 
 
 
 
Investar Holding Corporation
 
Citizens Bancshares, Inc.
 
Pro Forma Adjustments
 
 
Pro Forma Combined
 
 
 
 
 
 
 
 
 
 
Interest and fee income
 
$
22,937

 
$
4,193

 
$
42

(10) 
 
$
27,172

Interest expense
 
4,775

 
522

 
(25
)
(11) 
 
5,272

Net interest income
 
18,162

 
3,671

 
67

 
 
21,900

Provision for loan losses
 
725

 

 

 
 
725

Net interest income after provision for loan losses
 
17,437

 
3,671

 
67

 
 
21,175

Noninterest income
 
1,686

 
497

 

 
 
2,183

Noninterest expense
 
13,612

 
3,669

 
(1,038
)
(12), (13), (14) 
 
16,243

Income before income tax expense
 
5,511

 
499

 
1,105

 
 
7,115

Income tax expense
 
1,724

 
211

 
387

(15) 
 
2,322

Net Income
 
$
3,787

 
$
288

 
$
718

 
 
$
4,793

 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.48

 
$
3.55

 


 
 
$
0.60

Diluted earnings per share
 
$
0.47

 
$
3.55

 


 
 
$
0.60

Average common shares outstanding
 
 
 
 
 
 
 
 
 
Basic
 
7,950,049

 
109,255

 
(109,255
)
 
 
7,950,049

Diluted
 
8,027,296

 
109,255

 
(109,255
)
 
 
8,027,296

See accompanying notes to the unaudited pro forma condensed combined financial statements.





INVESTAR HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
For the year ended December 31, 2016
(in thousands, except share data)
(Unaudited)
 
 
Historical
 
 
 
 
 
 
 
Investar Holding Corporation
 
Citizens Bancshares, Inc.
 
Pro Forma Adjustments
 
 
Pro Forma Combined
 
 
 
 
 
 
 
 
 
 
Interest and fee income
 
$
43,152

 
$
8,461

 
$
79

(10) 
 
$
51,692

Interest expense
 
8,413

 
1,013

 
(138
)
(11) 
 
9,288

Net interest income
 
34,739

 
7,448

 
217

 
 
42,404

Provision for loan losses
 
2,079

 

 

 
 
2,079

Net interest income after provision for loan losses
 
32,660

 
7,448

 
217

 
 
40,325

Noninterest income
 
5,468

 
911

 

 
 
6,379

Noninterest expense
 
26,639

 
5,183

 
284

(12), (13) 
 
32,106

Income before income tax expense
 
11,489

 
3,176

 
(67
)
 
 
14,598

Income tax expense
 
3,609

 
1,018

 
(23
)
(15) 
 
4,604

Net Income
 
$
7,880

 
$
2,158

 
$
(44
)
 
 
$
9,994

 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
1.11

 
$
19.75

 


 
 
$
1.41

Diluted earnings per share
 
$
1.10

 
$
19.75

 
 
 
 
$
1.40

Average common shares outstanding
 
 
 
 
 
 
 
 
 
Basic
 
7,107,187

 
109,255

 
(109,255
)
 
 
7,107,187

Diluted
 
7,149,834

 
109,255

 
(109,255
)
 
 
7,149,834

See accompanying notes to the unaudited pro forma condensed combined financial statements.






INVESTAR HOLDING CORPORATION
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
Effective July 1, 2017, Investar Holding Corporation (NASDAQ: ISTR) (“Investar”), the holding company for Investar Bank, completed its acquisition of Citizens Bancshares, Inc. (“Citizens”), the parent company for Citizens Bank, Ville Platte, Louisiana.
The acquisition was completed pursuant to the terms of the Agreement and Plan of Reorganization (the “Merger Agreement”), dated March 8, 2017, by and among Investar, Citizens, and Investar Acquisition Company, a Louisiana corporation and wholly-owned subsidiary of Investar (“Merger Subsidiary”). Pursuant to the Merger Agreement, the Merger Subsidiary was merged with and into Citizens, with Citizens as the surviving corporation. Immediately following the initial merger, Citizens was merged with and into Investar, with Investar as the surviving corporation and Citizens Bank was merged with and into Investar Bank, with Investar Bank surviving the merger.
Under the terms of the Merger Agreement, all of the issued and outstanding shares of Citizens common stock were converted into the right to receive an aggregate amount of cash consideration equal to $45.8 million, or approximately $419.20 in exchange for each share of Citizens common stock that was outstanding immediately prior to the effective time of the acquisition.
The unaudited pro forma condensed combined balance sheet and statements of income, including per share data, are presented after giving effect to the merger. The pro forma financial information assumes that the merger with Citizens occurred on January 1, 2016 for purposes of the unaudited pro forma condensed combined statement of income and on June 30, 2017 for the purposes of the unaudited pro forma condensed combined balance sheet and gives effect to the merger, for purposes of the unaudited pro forma condensed combined statement of income, as if it had been effective during the entire period.
The merger will be accounted for using the acquisition method of accounting; accordingly, the difference between the purchase price over the estimated fair value of the assets acquired (including identifiable intangible assets) and liabilities assumed will be recorded as goodwill.
The pro forma financial information includes estimated adjustments to record the assets and liabilities of Citizens at their respective fair values and represents management’s estimates based on available information. The pro forma adjustments included herein will likely be revised as additional information becomes available and as additional analysis is performed. The final allocation of the purchase price will be determined after completion of a final analysis to determine the fair values of Citizens’ tangible and identifiable intangible assets and liabilities as of the closing date and any differences could be material.
NOTE 2. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current valuations, estimates and assumptions that are subject to change and such change could be material.
1.
Cash consideration paid to the shareholders of Citizens.
2.
Fair value adjustment on investment securities available for sale based on quoted market prices or prices quoted for similar financial instruments.
3.
Adjustment represents the fair value adjustments of loans. The purchase accounting adjustment for the acquired loan portfolio is based on (1) current market interest rates and (2) Investar’s initial evaluation of credit deterioration identified in Citizens’ loan portfolio.
4.
Adjustment reflects elimination of Citizens historical allowance for loan losses. Purchased loans acquired in a business combination are required to be recorded at fair value and the recorded allowance of the acquired company may not be carried over.
5.
Adjustment reflects the fair value of fixed assets acquired.
6.
Deferred taxes associated with the adjustments to record the assets and liabilities of Citizens at fair value were recognized using Investar’s statutory rate of 35%.
7.
Goodwill of $7.4 million was recorded as a result of the total purchase price paid by Investar and the fair value of assets purchased exceeding the fair value of liabilities assumed.





8.
Adjustment represents the recognition of the fair value of acquired core deposit intangible. The core deposit intangible is calculated as the present value of the difference between a market participant’s cost of obtaining alternative funds and the cost to maintain the acquired deposit base.
9.
Adjustment reflects the fair value premium on time deposits which was calculated by discounting future contractual payments at a current market interest rate.
10.
Interest income on loans was adjusted to reflect the amortization of the loan premium and the accretion of the credit discount on a level-yield method over the estimated remaining terms to maturity of the loans acquired.
11.
Interest expense on deposits was adjusted to reflect the amortization of the time deposit fair value premium over the remaining life of the deposits.
12.
Represents the amortization of the core deposit intangible over an estimated useful life of ten years using the sum of the years digits method assuming the merger closed on January 1, 2016. The estimated amount of the amortization is $120,000 for the six months ended June 30, 2017 and $266,000 for the year ended December 31, 2016.
13.
Adjustment represents the additional depreciation expense related to the fair value of fixed assets acquired. The estimated amount of additional depreciation is $9,000 for the six months ended June 30. 2017 and $18,000 for the year ended December 31, 2016.
14.
Adjustment represents the elimination of historical nonrecurring transaction costs of $1,217,000 incurred during the six months ended June 30, 2017 that directly related to the Citizens acquisition.
15.
Adjustment represents the net federal tax effect of the pro forma adjustments using Investar’s statutory tax rate of 35%.
NOTE 3. PRO FORMA ALLOCATION OF PURCHASE PRICE
The following table shows the pro forma allocation of the consideration paid for Citizens’ common equity to the acquired identifiable assets and liabilities assumed and the pro forma goodwill generated from the transaction.
Purchase price:
 
Cash paid
$
45,800

 
 
Fair value of assets acquired:
 
Cash and cash equivalents
44,565

Investment securities
69,897

Net loans
130,335

Bank premises and equipment
3,337

Other intangible assets
1,462

Other assets
2,989

Total assets acquired
252,585

 
 
Fair value of liabilities acquired:
 
Deposits
212,188

Other liabilities
2,000

Total liabilities assumed
214,188

 
 
Fair value of net assets acquired
38,397

Preliminary pro forma goodwill
$
7,403