Document
As filed with the Securities and Exchange Commission on December 17, 2018
Registration No. 333-228621
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________
INVESTAR HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
_______________________
Louisiana
6022
27-1560715
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
7244 Perkins Road
Baton Rouge, Louisiana 70808
(225) 227-2222
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
_______________________
John J. D’Angelo
President and Chief Executive Officer
Investar Holding Corporation
7244 Perkins Road
Baton Rouge, Louisiana 70808
(225) 227-2222
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_______________________
Copies to:
Stephanie E. Kalahurka, Esq.
Fenimore, Kay, Harrison & Ford LLP
1000 Walnut Street, Suite 1400
Kansas City, Missouri 64106
(512) 583-5900
(512) 583-5940 (Fax)
Larry E. Temple, Esq.
400 West 15th Street, Suite 705
Austin, Texas 78701
(512) 477-4467
(512) 477-4478 (Fax)
_______________________
Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the proposed merger described herein have been satisfied or waived.
 
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐
Accelerated filer x
Non-accelerated filer ☐

Smaller reporting company x
Emerging growth company x
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 7(a)(2)(B) of the Securities Act. x
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.



The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities, and it is not soliciting to buy these securities, in any state where the offer or sale is not permitted.
PRELIMINARY – SUBJECT TO COMPLETION, DATE D DECEMBER 17, 2018
PROXY STATEMENT / PROSPECTUS
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PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT
Dear Shareholder:
On October 10, 2018, Investar Holding Corporation, a Louisiana corporation (which we refer to as “Investar”), Investar Bank, a Louisiana state bank and wholly-owned subsidiary of Investar, and Mainland Bank, a Texas state bank, entered into an Agreement and Plan of Reorganization (which we refer to as the “merger agreement”) that provides for the acquisition of Mainland Bank by Investar. Subject to the terms and conditions of the merger agreement, Mainland Bank will merge with and into Investar Bank (which we refer to as the “merger”), with Investar Bank continuing as the surviving bank from the transaction. The merger agreement and the transactions contemplated by the merger agreement will be voted upon at a special meeting of shareholders of Mainland Bank, to be held on Monday, January 14, 2019, at 10:30 a.m., local time, at the branch office of Mainland Bank located at 400 FM 517 West in Dickinson, Texas 77539 .
At the effective time of the merger, all of the issued and outstanding shares of Mainland Bank common stock will be converted into the right to receive merger consideration consisting of an aggregate of 763,849 shares of Investar common stock (which we refer to as the “aggregate merger consideration”), which is subject to downward adjustment as described below. Each share of Mainland Bank common stock, other than shares of Mainland Bank common stock held by any shareholder of Mainland Bank who has perfected statutory dissenters’ rights in connection with the merger (which we refer to as a “dissenting shareholder”), will be exchanged for a number of shares of Investar common stock equal to the aggregate merger consideration divided by the number of outstanding shares of Mainland Bank common stock immediately prior to the effective time (which we refer to as the “per share merger consideration”). There are expected to be 251,357 outstanding shares of Mainland Bank common stock immediately prior to the effective time. As a result of the merger and assuming no adjustment to the aggregate merger consideration, holders of shares of Mainland Bank common stock are expected to receive 3.0389 shares of Investar common stock for each share of Mainland Bank common stock held immediately prior to the merger. Mainland Bank shareholders will receive cash in lieu of fractional shares.
The aggregate merger consideration is subject to a downward adjustment to the extent that the aggregate expenses of Mainland Bank calculated in accordance with the merger agreement (which we refer to as the “Mainland Bank Transaction Expenses”) exceed $1,075,000. If the Mainland Bank Transaction Expenses are more than $1,075,000, then number of shares of Investar common stock making up the aggregate merger consideration will be reduced by a number of shares of Investar common stock equal to the quotient obtained by dividing: (i) the difference between the aggregate Mainland Bank Transaction Expenses and $1,075,000 by (ii) $26.54.

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Because the aggregate merger consideration is subject to adjustment and because the market price of Investar common stock will fluctuate between the date of this proxy statement/prospectus, the date of the special meeting of shareholders of Mainland Bank and the date of completion of the merger, the exact number of shares of Investar common stock that Mainland Bank shareholders will receive for each share of Mainland Bank common stock and the value of those shares when received cannot be determined at this time. Consequently, you will not know the exact per share merger consideration to be received by Mainland Bank shareholders when you vote at the special meeting.
Investar common stock is listed on NASDAQ under the symbol “ISTR.” Based on the following closing prices of Investar common stock on NASDAQ: (i) $25.81 on October 9, 2018, the last trading day before public announcement of the merger, (ii) $24.64 on November 28, 2018, the latest practicable date before the initial filing of this registration statement, and (iii) $25.50 on December 12, 2018, the latest practicable trading day before the printing of this proxy statement/prospectus, the implied value of the per share merger consideration would be approximately $78.43, $74.88 and $77.49, respectively, assuming no downward adjustment to the aggregate merger consideration.
We urge you to obtain current market quotations for Investar common stock. There are no current market quotations for Mainland Bank common stock because Mainland Bank is a privately owned bank and its common stock is not traded on any established public trading market.
Mainland Bank will hold a special meeting of its shareholders in connection with the merger. Mainland Bank shareholders will be asked to vote to adopt the merger agreement and approve related matters as described in this proxy statement/prospectus. Approval of the merger agreement requires the affirmative vote of the holders of not less than two-thirds of the outstanding shares of Mainland Bank common stock.
Your vote is important regardless of the number of shares that you own. Whether or not you plan to attend the special meeting, please take time to vote by following the voting instructions included in the enclosed proxy card. Submitting a proxy now will not prevent you from being able to vote in person at the special meeting. The special meeting of Mainland Bank’s shareholders will be held on Monday, January 14, 2019, at 10:30 a.m., local time, at the branch office of Mainland Bank located at 400 FM 517 West in Dickinson, Texas 77539 .
Mainland Bank’s board of directors unanimously recommends that Mainland Bank shareholders vote “FOR” the approval of the merger agreement and “FOR” the other matters to be considered at the special meeting.
This proxy statement/prospectus describes the special meeting, the merger, the issuance of the Investar common stock in connection with the merger, the documents related to the merger and other related matters. Please carefully read this entire proxy statement/prospectus, including “Risk Factors,” beginning on page 18, for a discussion of the risks relating to the merger. You also can obtain information about Investar from documents that it has filed with the Securities and Exchange Commission (which we refer to as the “SEC”).
Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued in the merger or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.
The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either Investar or Mainland Bank, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
The date of this proxy statement/prospectus is December 18, 2018, and it is first being mailed or otherwise delivered to the shareholders of Mainland Bank on or about December 21, 2018.


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MAINLAND BANK
2501 Palmer Highway, Suite 100
Texas City, Texas 77590
 
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
 
To the Shareholders of Mainland Bank:
Notice is hereby given that Mainland Bank, Texas City, Texas , will hold a special meeting of its shareholders on Monday, January 14, 2019, at 10:30 a.m., local time, at the branch office of Mainland Bank located at 400 FM 517 West in Dickinson, Texas , to consider and vote upon the following matters:
a proposal to adopt the Agreement and Plan of Reorganization (which we refer to as the “merger agreement”), by and among Investar Holding Corporation (which we refer to as “Investar”), Investar Bank, and Mainland Bank, pursuant to which Mainland Bank will merge with and into Investar Bank (which we refer to as the “merger”), and approve the merger, each as more fully described in the accompanying proxy statement/prospectus (which we refer to as the “Mainland Bank merger proposal”);
a proposal to adjourn the special meeting, or any postponement thereof, to another time or place if necessary or appropriate (i) to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement, (ii) to provide to Mainland Bank shareholders any supplement or amendment to the proxy statement/prospectus or (iii) to disseminate any other information which is material to the Mainland Bank shareholders voting at the special meeting (which we refer to as the “Mainland Bank adjournment proposal”); and any other matter that may be properly submitted for a vote at the special meeting.
The proposals are described in the accompanying proxy statement/prospectus. Mainland Bank has fixed the close of business on December 10, 2018 as the record date for the special meeting (which we refer to as the “record date”). Only Mainland Bank shareholders of record as of the record date are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement of the special meeting. Approval of the Mainland Bank merger proposal requires the affirmative vote of holders of not less than two-thirds of the outstanding shares of Mainland Bank common stock. The Mainland Bank adjournment proposal will be approved if a majority of the votes cast on that proposal at the special meeting are voted in favor of such proposal.
Shareholders of Mainland Bank have the right to dissent from the merger and obtain payment in cash of the appraised fair value of their shares of Mainland Bank stock under the Texas Business Organizations Code (which we refer to as the “TBOC”). A copy of the procedural requirements for shareholders exercising dissenters’ rights is included with the accompanying proxy statement/prospectus as Annex C, and a summary of the provisions can be found under the section of the proxy statement/prospectus entitled “The Merger—Dissenters’ Rights in the Merger.”

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Mainland Bank’s board of directors has unanimously approved the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Mainland Bank and its shareholders, and unanimously recommends that Mainland Bank shareholders vote “FOR” the Mainland Bank merger proposal and “FOR” the Mainland Bank adjournment proposal.
Your vote is very important. Investar and Mainland Bank cannot complete the merger unless Mainland Bank’s shareholders adopt the merger agreement and approve the merger. Regardless of whether you plan to attend the special meeting, please vote as soon as possible. If you hold stock in your name as a shareholder of record of Mainland Bank, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.
This proxy statement/prospectus provides a detailed description of the special meeting, the Mainland Bank merger proposal, the documents related to the merger and other related matters. Investar and Mainland Bank urge you to read the proxy statement/prospectus, including any documents they refer you to, and its annexes carefully and in their entirety. We look forward with pleasure to seeing and visiting with you at the special meeting.
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Robert L. Harris
President and Chief Executive Officer


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ADDITIONAL INFORMATION
This proxy statement/prospectus references important business and financial information about Investar and Mainland Bank from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain those documents incorporated by reference in this proxy statement/prospectus by accessing the SEC’s website maintained at http://www.sec.gov, for documents regarding Investar, or by requesting copies in writing or by telephone from the appropriate company, as set forth below, for documents regarding either Investar or Mainland Bank:
Investar Holding Corporation
7244 Perkins Road
Baton Rouge, Louisiana 70808
Attention: John J. D’Angelo
Telephone: (225) 227-2222
Mainland Bank
2501 Palmer Highway, Suite 100
Texas City, Texas 77590
Attention: Debbie McGee
Telephone: (409) 948-1625
You will not be charged for any of these documents that you request. To receive timely delivery of these documents in advance of the special meeting, you must make your request no later than five business days before the special meeting.


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ABOUT THIS DOCUMENT
This document, which forms part of a registration statement on Form S-4 filed with the SEC by Investar (File No. 333- 228621), constitutes a prospectus of Investar under Section 5 of the Securities Act of 1933, as amended (which we refer to as the “Securities Act”), with respect to the shares of Investar common stock to be issued to Mainland Bank shareholders pursuant to the terms of the merger agreement. This document also constitutes a notice and proxy statement relating to the special meeting of the shareholders of Mainland Bank called for the purposes set forth herein.
You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This proxy statement/prospectus is dated December 18, 2018, and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document. Neither the mailing of this document to Mainland Bank shareholders nor the issuance by Investar of shares of Investar common stock in connection with the merger will create any implication to the contrary.
This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding Investar has been provided by Investar and information contained in this document regarding Mainland Bank has been provided by Mainland Bank.
For more details, see the section of this proxy statement/prospectus entitled “Where You Can Find More Information.”

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TABLE OF CONTENTS
 
Page

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QUESTIONS AND ANSWERS
The following are some questions that you, as a Mainland Bank shareholder, may have about the merger or the special meeting, and brief answers to those questions. Investar and Mainland Bank urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger, the special meeting or the proposals presented at that meeting. Additional important information is also contained in the annexes to this proxy statement/prospectus. For details about where you can find additional important information, please see the section of this proxy statement/prospectus entitled, “Where You Can Find More Information.”
Unless the context otherwise requires, references in this proxy statement/prospectus to “Investar” refer to Investar Holding Corporation, a Louisiana corporation, and its affiliates, including Investar Bank, a Louisiana state bank and a wholly-owned subsidiary of Investar.
Q:    What is the merger?
A:    Investar, Investar Bank and Mainland Bank entered into the merger agreement on October 10, 2018. Under the merger agreement, Mainland Bank will merge with and into Investar Bank, with Investar Bank continuing as the surviving bank from the merger. A copy of the merger agreement is included in this proxy statement/prospectus as Annex A.
The merger cannot be completed unless, among other things, the parties receive all necessary regulatory approvals to consummate the merger, and the holders of at least two thirds of the outstanding shares of Mainland Bank common stock vote in favor of the proposal to adopt the merger agreement and approve the merger.
Q:    What are the material terms of the merger?
A:    The material terms of the merger, including the consideration that Mainland Bank shareholders are entitled to receive as a result of the merger, are contained in the merger agreement, which is included in this proxy statement/prospectus as Annex A. For a summary of such terms, see the section of this proxy statement/prospectus entitled, “Summary.” For a full description of such terms, see the section of this proxy statement/prospectus entitled, “The Merger Agreement.”
Q:    Why am I receiving this proxy statement/prospectus?
A:    Investar and Mainland Bank are delivering this document to you because it is a proxy statement being used by Mainland Bank’s board of directors (which we refer to as the “Mainland Bank Board”) to solicit proxies of its shareholders entitled to vote on approval of the merger and related matters. Mainland Bank has called a special meeting of its shareholders to consider the Mainland Bank merger proposal (described below). This document serves as proxy statement for the special meeting and describes the proposals to be presented at the special meeting. It also constitutes a notice of special meeting with respect to the special meeting.
In addition, this document is a prospectus that is being delivered to Mainland Bank shareholders because Investar is offering shares of Investar common stock to Mainland Bank shareholders in connection with the merger.
This proxy statement/prospectus contains important information about the merger, the proposals being voted on at the special meeting and important information to consider in connection with an investment in Investar common stock. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending the special meeting. Your vote is important, Mainland Bank encourages you to submit your proxy as soon as possible.

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Q:    What are Mainland Bank shareholders being asked to vote on at the special meeting?
A:    Mainland Bank is soliciting proxies from its shareholders with respect to the following proposals:
The Mainland Bank Merger Proposal. Considering and voting upon the approval of the agreement and plan of reorganization, dated as of October 10, 2018, among Mainland Bank, Investar, and Investar Bank, and the transactions contemplated by the merger agreement.
The Mainland Bank Adjournment Proposal. Considering and voting upon the approval of any motion to adjourn the special meeting, or any postponement thereof, to another time or place if necessary or appropriate (i) to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement, (ii) to provide to Mainland Bank shareholders any supplement or amendment to the proxy statement/prospectus or (iii) to disseminate any other information which is material to the Mainland Bank shareholders voting at the special meeting.
Q:    How does the Mainland Bank Board recommend that I vote at the special meeting?
A:    The Mainland Bank Board unanimously recommends that you vote “FOR” the Mainland Bank merger proposal and “FOR” the Mainland Bank adjournment proposal.
Q:    When and where are the special meeting?
A:    The special meeting will be held on Monday, January 14, 2019, at 10:30 a.m., local time, at the branch office of Mainland Bank located at 400 FM 517 West in Dickinson, Texas .
Q:    What do I need to do now?
A:    After you have carefully read this proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at the special meeting. If you hold your shares in your name as a shareholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. If you hold your shares in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker. “Street name” shareholders who wish to vote in person at the special meeting will need to obtain a legal proxy from the institution that holds their shares.
Q:    What is the difference between a shareholder of record and a “street name” holder?
A:    If you are a Mainland Bank shareholder and if your shares of Mainland Bank common stock are registered directly in your name, you are considered the shareholder of record with respect to those shares of Mainland Bank common stock. On the close of business on December 10, 2018, the record date for the special meeting, Mainland Bank had 51 shareholders of record.
If your shares of Mainland Bank common stock are held in a stock brokerage account or by a bank or other nominee, the nominee is considered the record holder of those shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.” This proxy statement/prospectus and proxy card have been forwarded to you by your nominee. As the beneficial owner, you have the right to direct your nominee concerning how to vote your shares by using the voting instructions it included in the mailing or by following its instructions for voting.
Q:    If my shares of Mainland Bank common stock are held in “street name” by my bank or broker, will my bank or broker automatically vote my shares for me?
A:    No. Your bank or broker cannot vote your shares without instructions from you. You should instruct your bank or broker how to vote your shares in accordance with the instructions provided to you. Please check the voting form used by your bank or broker.

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Q:    What is a broker non-vote?
A:    A broker non-vote occurs when a broker or nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. Your broker does not have discretionary authority to vote your shares with respect to the Mainland Bank merger proposal or the Mainland Bank adjournment proposal.
Q:    How are broker non-votes and abstentions treated?
A:    Brokers, as holders of record, are permitted to vote on certain routine matters, but not on non-routine matters. A broker non-vote occurs when a broker does not have discretionary authority to vote the shares and has not received voting instructions from the beneficial owner of the shares. If you hold shares in “street name” and do not provide voting instructions to your broker, those shares will be counted as broker non-votes for all non-routine matters. It is expected that all proposals to be voted on at the special meeting are non-routine matters. Abstentions and broker non-votes will be counted for purposes of determining the presence or absence of a quorum.
Abstentions and broker non-votes by Mainland Bank shareholders will have the effect of a vote AGAINST the Mainland Bank merger proposal because the Mainland Bank merger proposal must be approved by the affirmative vote of the holders of at least two-thirds (2/3rds) of the number of shares entitled to vote. Abstentions and broker non-votes will not have the effect of a vote AGAINST the Mainland Bank adjournment proposal.
Q:    What constitutes a quorum for the special meeting?
A:    The presence (in person or by proxy) of holders of at least a majority of the voting power represented by all issued and outstanding shares of Mainland Bank common stock entitled to be voted at the special meeting constitutes a quorum for transacting business at the special meeting. All shares of Mainland Bank common stock present in person or represented by proxy, including abstentions and broker non-votes, if any, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting.
Q:    What is the vote required to approve each proposal at the special meeting?
A:    Mainland Bank Merger Proposal: The affirmative vote of not less than two-thirds (2/3rds) of the outstanding shares of Mainland Bank common stock is required to approve the Mainland Bank merger proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the Mainland Bank merger proposal, it will have the effect of a vote AGAINST the proposal.
Mainland Bank Adjournment Proposal: The affirmative vote of a majority of votes cast on the proposal at the special meeting is required to approve the Mainland Bank adjournment proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the Mainland Bank adjournment proposal, it will have no effect on the proposal.
Q:    Why is my vote important?
A:    If you do not vote, it will be more difficult for Mainland Bank to obtain the necessary quorum to hold the special meeting and to obtain approval of the proposals to be voted upon at the special meeting. In addition, your failure to vote will have the effect of a vote AGAINST the Mainland Bank merger proposal. The Mainland Bank Board unanimously recommends that you, as a Mainland Bank shareholder, vote “FOR” the Mainland Bank merger proposal.

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Q:    Can I attend the special meeting and vote my shares in person?
A:    Yes. All shareholders of Mainland Bank, including shareholders of record and shareholders who hold their shares in “street name” through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Holders of record of Mainland Bank common stock can vote in person at the special meeting. If you are not a shareholder of record, you must obtain a proxy card, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. The use of cameras, sound recording equipment, communications devices or any similar equipment during the special meeting is prohibited without Mainland Bank’s express written consent.
Q:    Can I change my vote?
A:    Yes. If you are a holder of record of Mainland Bank common stock, you may change your vote or revoke any proxy at any time before it is voted by (i) attending and voting in person at the special meeting; (ii) giving notice of revocation of the proxy at the special meeting; or (iii) delivering to the Secretary of Mainland Bank (A) a written notice of revocation or (B) a duly executed proxy card relating to the same shares, bearing a date later than the proxy card previously executed. Attendance at the special meeting by itself will not automatically revoke your proxy. A revocation or later-dated proxy received by Mainland Bank after the vote will not affect the vote. All written notices of revocation and other communications with respect to revocation or proxies should be sent to: Mainland Bank, 2501 Palmer Highway, Suite 100, Texas City, Texas 77590, Attention: Debbie McGee.
If you hold your shares of Mainland Bank common stock in “street name” through a bank or broker, you should contact your bank or broker to change your vote or revoke your proxy.
Q:    What are the expected U.S. federal income tax consequences to a holder of Mainland Bank common stock as a result of the transactions contemplated by the merger agreement?
A:    Investar and Mainland Bank intend that the merger will qualify for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). If the merger qualifies as a reorganization under Section 368(a) of the Code, a holder of Mainland Bank common stock who exchanges Mainland Bank common stock for Investar common stock generally should recognize gain (but not loss) from the exchange equal to the lesser of the cash received by such holder in exchange for fractional shares and the amount, if any, by which the cash plus the fair market value of Investar common stock received by such holder exceeds the tax basis of such holder’s Mainland Bank common stock surrendered in exchange therefor.
For further information, please see the section of this proxy statement/prospectus entitled, “Material U.S. Federal Income Tax Consequences of the Merger.” The U.S. federal income tax consequences described above may not apply to all holders of Mainland Bank common stock. Your tax consequences will depend on your individual situation. Accordingly, Investar and Mainland Bank strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.
Q:    Are Mainland Bank shareholders entitled to dissenters’ rights?
A:    Yes, Mainland Bank shareholders may exercise dissenters’ rights in connection with the merger. For further information, see “The Merger—Dissenters’ Rights in the Merger,” which discussion is qualified by the full text of the provisions of the Texas Business Organizations Code (which we refer to as the “TBOC’) relating to rights of dissent set forth in Annex C hereto.
Q:    Should I send in my Mainland Bank stock certificates now?
A:    No. Please do not send in your Mainland Bank stock certificates with your proxy. After the merger, Investar’s exchange agent, American Stock Transfer & Trust Company LLC, will send you instructions for exchanging

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Mainland Bank stock certificates for the per share merger consideration. See “The Merger Agreement—Conversion of Shares; Exchange of Certificates.”
Q:    Whom may I contact if I cannot locate my Mainland Bank stock certificate(s)?
A:    If you are unable to locate your original Mainland Bank stock certificate(s), you should contact Kyle McClellen, at (409) 948-1625 or kyle@mainlandbank.com.
Q:    When do you expect to complete the merger?
A:    Investar and Mainland Bank currently expect to complete the merger in the first quarter of 2019. However, neither Investar nor Mainland Bank can assure you of when or if the merger will be completed. Before the merger is completed, Mainland Bank must obtain the approval of Mainland Bank shareholders for the Mainland Bank merger proposal, necessary regulatory approvals must be obtained and certain other closing conditions must be satisfied.
Q:    What happens if the merger is not completed?
A:    If the merger is not completed, holders of Mainland Bank common stock will not receive any consideration for their shares in connection with the merger. Instead, Mainland Bank will remain an independent Texas state bank. In addition, if the merger agreement is terminated in certain circumstances, Mainland Bank may be required to pay a termination fee to Investar. See the section of this proxy statement/prospectus entitled “The Merger Agreement—Termination Fee,” for a complete discussion of the circumstances under which a termination fee would be required to be paid.
Q:    Whom should I call with questions?
A:    If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of Mainland Bank common stock, please contact Robert Harris at (409) 948-1625 or rharris@mainlandbank.com.


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SUMMARY
This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. Investar and Mainland Bank urge you to read carefully the entire proxy statement/prospectus, including the annexes, and the other documents to which they refer in order to fully understand the merger. A copy of the merger agreement is attached as Annex A. In addition, we incorporate by reference into this proxy statement/prospectus important business and financial information about Investar. See “Where You Can Find More Information.” Each item in this summary refers to the section of this proxy statement/prospectus on which that subject is discussed in more detail.
Information About the Companies (page 64)
Investar
Investar is a Louisiana corporation and a financial holding company headquartered in Baton Rouge, Louisiana. Through its wholly-owned subsidiary, Investar Bank, a Louisiana state chartered bank, Investar provides relationship-driven commercial banking products and services tailored to meet the needs of small to medium-sized businesses and professionals. Investar’s primary markets are Baton Rouge, New Orleans, Hammond and Lafayette, Louisiana and their surrounding metropolitan areas. Investar serves these markets from its main office located in Baton Rouge, and from nineteen additional full service branches located throughout its market areas. As of September 30, 2018, on a consolidated basis, Investar had total assets of $1.74 billion, net loans of $1.35 billion, total deposits of $1.30 billion and stockholders’ equity of $178.4 million.
Investar believes that the Louisiana and Texas banking markets present significant opportunities for growth and franchise expansion, both organically and through strategic acquisitions. Since Investar Bank was chartered in 2006, it has engaged in a number of acquisition transactions, including the acquisition of BOJ Bancshares, Inc., and its wholly-owned subsidiary, The Highlands Bank, Jackson, Louisiana and the acquisition of Citizens Bancshares, Inc., and its wholly-owned subsidiary, Citizens Bank, Ville Platte, Louisiana, in 2017.
Although the financial services industry is rapidly changing and intensely competitive, and will likely remain so, Investar believes that Investar Bank competes effectively as a local community bank. Investar benefits from the consistency of local leadership and the availability of local access and responsive customer service. Taking into consideration its competitively-priced products and services, Investar believes it is well-positioned among other financial institutions to attract individual and small to medium-sized business customers.
Investar’s principal executive offices are located at 7244 Perkins Road, Baton Rouge, Louisiana 70808, and its telephone number at that address is (225) 227-2222.  Investar’s website address is www.investarbank.com.
Investar makes its periodic reports and other information filed with, or furnished to, the SEC available free of charge through its 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 proxy statement/prospectus, the information on, or otherwise accessible through, Investar’s website is not incorporated by reference herein and does not constitute a part of this proxy statement/prospectus. Additional information about Investar and its subsidiaries is included in documents referred to in the section of this proxy statement/prospectus entitled “Where You Can Find More Information.”
Mainland Bank
Mainland Bank was chartered as a Texas state bank in 1945. Since its inception, Mainland Bank has grown organically. Mainland Bank currently operates from three banking offices, which are located in Texas City and Dickinson in Galveston County, Texas, and Houston in Harris County, Texas. Each of those locations is within the Houston metropolitan statistical area, or Greater Houston. As of September 30, 2018, Mainland Bank had total assets of approximately $140.1 million, total deposits of approximately $122.0 million, total loans (net of allowance for loan losses) of approximately $81.2 million, and total stockholders’ equity of approximately $13.0 million. Mainland Bank

6



does not file reports with the SEC. Mainland Bank does, however, voluntarily provide certain financial reports, including annual audited financial statements, to its shareholders.
Mainland Bank’s principal executive offices are located at 2501 Palmer Highway, Suite 100, Texas City, Texas 77590, and its telephone number at that address is (409) 948-1625.  Mainland Bank’s website address is www.mainlandbank.com. For additional information about Mainland Bank see the section of this proxy statement/prospectus entitled “Where You Can Find More Information.
In the Merger, Mainland Bank Shareholders Will Be Entitled To Receive Shares of Investar Common Stock (page 48)
Merger Consideration
At the effective time for the merger, all of the issued and outstanding shares of Mainland Bank common stock will be converted into the right to receive merger consideration consisting of an aggregate of 763,849 shares of Investar common stock (which we refer to as the “aggregate merger consideration”), which is subject to downward adjustment as described below. Each share of Mainland Bank common stock, other than shares of Mainland Bank common stock held by any shareholder of Mainland Bank who has perfected statutory dissenters’ rights in connection with the merger (which we refer to as a “dissenting shareholder”), will be exchanged for a number of shares of Investar common stock equal to the aggregate merger consideration divided by the number of outstanding shares of Mainland Bank common stock immediately prior to the effective time (which we refer to as the “per share merger consideration”). There are expected to be 251,357 outstanding shares of Mainland Bank common stock immediately prior to the effective time. As a result of the merger and assuming no adjustment to the aggregate merger consideration, holders of shares of Mainland Bank common stock are expected to receive 3.0389 shares of Investar common stock for each share of Mainland Bank common stock held immediately prior to the merger. Mainland Bank shareholders will receive cash in lieu of fractional shares.
As a result of the foregoing and assuming no adjustments to the aggregate merger consideration, based on the number of shares of Investar common stock and Mainland Bank common stock outstanding as of December 12, 2018, the last date before the date of this proxy statement/prospectus for which it was practicable to obtain this information, approximately 92.6% of outstanding Investar common stock following the merger will be held by shareholders who were holders of Investar common stock immediately prior to the effectiveness of the merger and approximately 7.4% of outstanding Investar common stock will be held by shareholders who were holders of Mainland Bank common stock immediately prior to the effectiveness of the merger.
The value of the aggregate merger consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value for Investar common stock. Any increase in the market price of Investar common stock will change the value of the shares of Investar common stock that Mainland Bank shareholders will be entitled to receive. Consequently, you will not know the implied value of the per share merger consideration to be paid to Mainland Bank shareholders as a result of the merger when you vote at the special meeting.
The table below sets forth the implied value of the per share merger consideration based on the closing price of Investar common stock as quoted by NASDAQ on the specified dates assuming 251,357 issued and outstanding shares of Mainland Bank common stock:
Date
 
Closing price of Investar common stock
 
Implied value of per share merger consideration(4)
 
Implied value of aggregate merger consideration
October 9, 2018(1)
 
$25.81
 
$78.43
 
$19,714,937
November 28, 2018(2)
 
$24.64
 
$74.88
 
$18,821,234
 December 12, 2018(3)
 
$25.50
 
$77.49
 
$19,478,144
______________________________
(1)
The last trading day before public announcement of the merger.

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(2)
The latest practicable trading day before the initial filing of this proxy statement/prospectus.
(3)
The latest practicable trading day before the printing of this proxy statement/prospectus.
(4)
Assumes there is no downward adjustment to the aggregate merger consideration based upon Mainland Bank’s transaction expenses. For a discussion of the possible adjustments to the aggregate merger consideration, see “The Merger Agreement—Structure of the Merger—Adjustments to Merger Consideration.”

The merger agreement contains the terms and conditions of the merger. The merger agreement is included in this proxy statement/prospectus as Annex A. All descriptions in this summary and elsewhere in this proxy statement/prospectus of the terms and conditions of the merger are qualified by reference to the merger agreement. Please read the merger agreement carefully for a more complete understanding of the merger.
Adjustments to Merger Consideration
The aggregate merger consideration is subject to a downward adjustment to the extent that the aggregate expenses of Mainland Bank calculated in accordance with the merger agreement (which we refer to as the “Mainland Bank Transaction Expenses”) exceed $1,075,000. If the Mainland Bank Transaction Expenses are more than $1,075,000, then number of shares of Investar common stock making up the aggregate merger consideration will be reduced by a number of shares of Investar common stock equal to the quotient obtained by dividing: (i) the difference between the aggregate Mainland Bank Transaction Expenses and $1,075,000 by (ii) $26.54. As of December 12, 2018, the most recent practicable date before the printing of this proxy statement/prospectus, Mainland Bank estimates that the Mainland Bank Transaction Expenses will not exceed $1,075,000, resulting in no downward adjustment to the aggregate merger consideration.
The Mainland Bank Board Unanimously Recommends that Mainland Bank Shareholders Vote “FOR” the Mainland Bank merger proposal and the Mainland Bank adjournment proposal (page 31)
The Mainland Bank Board has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Mainland Bank and its shareholders and has unanimously approved the merger agreement. The Mainland Bank Board unanimously recommends that Mainland Bank shareholders vote “FOR” the Mainland Bank merger proposal and “FOR” the Mainland Bank adjournment proposal. For the factors considered by the Mainland Bank Board in reaching its decision to approve the merger agreement, see “The Merger—Mainland Bank’s Reasons for the Merger; Recommendation of the Mainland Bank Board.
All of the directors and executive officers of Mainland Bank who own shares of its common stock have entered into a voting agreement with Investar, solely in their capacity as shareholders of Mainland Bank, pursuant to which they have agreed to vote in favor of the Mainland Bank merger proposal and in favor of any other matter required to be approved by the shareholders of Mainland Bank to facilitate the transactions contemplated by the merger agreement. For more information regarding the voting agreement, see “The Merger Agreement—Mainland Bank Director Non-Competition and Voting Agreements.”
Opinion of Mainland Bank’s Financial Advisor (page 31 and Annex B)
On October 9, 2018, Performance Trust Capital Partners, LLC (“Performance Trust”) rendered to Mainland Bank's board of directors its written opinion with respect to the fairness, from a financial point of view, to the holders of Mainland Bank's common stock, as of October 9, 2018, of the merger consideration pursuant to the merger agreement. Performance Trust’s opinion was directed to Mainland Bank's board of directors and only addressed the fairness, from a financial point of view, to the holders of Mainland Bank common stock of the merger consideration and did not address any other aspect or implication of the merger. The references to Performance Trust’s opinion in this proxy statement/prospectus are qualified in their entirety by reference to the full text of Performance Trust’s written opinion, which is included as Annex B to this proxy statement/prospectus. Performance Trust’s opinion sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Performance Trust in preparing its opinion. However, neither Performance Trust’s opinion, nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus is intended to be, and they do not constitute, advice or a recommendation to Mainland Bank's board of directors or any shareholder of Mainland Bank as to how to

8



act or vote with respect to any matter relating to the merger agreement or otherwise. Performance Trust’s opinion was furnished for the use and benefit of Mainland Bank's board of directors (in its capacity as such) in connection with its evaluation of the merger and should not be construed as creating, and Performance Trust will not be deemed to have, any fiduciary duty to Mainland Bank's board of directors, Mainland Bank, any security holder or creditor of Mainland or any other person, regardless of any prior or ongoing advice or relationships. See “The Merger - Opinion of Mainland Bank's Financial Advisor.”
Mainland Bank Will Hold its Special Meeting on January 14, 2019 (page  24 )
The special meeting will be held on Monday, January 14, 2019, at 10:30 a.m., local time, at the branch office of Mainland Bank located at 400 FM 517 West in Dickinson, Texas 77539 . At the special meeting, Mainland Bank shareholders will be asked to approve the Mainland Bank merger proposal and, if applicable, the Mainland Bank adjournment proposal.
Only holders of record of Mainland Bank common stock at the close of business on December 10, 2018, the record date, will be entitled to notice of and to vote at the special meeting. Each share of Mainland Bank common stock is entitled to one vote on each proposal to be considered at the special meeting. As of the record date, there were approximately 251,753 shares of Mainland Bank common stock entitled to vote at the special meeting. As of the record date, the directors and executive officers of Mainland Bank and their affiliates beneficially owned and were entitled to vote, in the aggregate, 103,093 shares of Mainland Bank common stock representing approximately 41.0% of the shares of Mainland Bank common stock outstanding on that date.
The Mainland Bank merger proposal will be approved if not less than two-thirds (2/3rds) of the outstanding shares of Mainland Bank common stock are voted in favor of such proposal. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the Mainland Bank merger proposal, it will have the effect of a vote AGAINST the Mainland Bank merger proposal.
The Mainland Bank adjournment proposal will be approved if a majority of the votes cast on the proposal at the special meeting are voted in favor of the proposal. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the Mainland Bank adjournment proposal, it will have no effect on the proposal.
Material U.S. Federal Income Tax Consequences of the Merger (page 75)
The obligations of Investar and Mainland Bank to complete the merger are conditioned on, among other things, the receipt by Investar and Mainland Bank of a tax opinion from Fenimore, Kay, Harrison & Ford, LLP, dated as of the closing date of the merger, to the effect that, on the basis of facts, representations and assumptions that are consistent with the facts existing at the effective time and as set forth and referred to in such opinions, the merger will qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code.
Assuming that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Code, it is anticipated that a holder of Mainland Bank common stock who exchanges Mainland Bank common stock for Investar common stock generally should recognize gain (but not loss) from the exchange equal to the lesser of the cash received by such holder in exchange for fractional shares and the amount, if any, by which the cash plus the fair market value of Investar common stock received by such holder exceeds the tax basis of such holder’s Mainland Bank common stock surrendered in exchange therefor.
For further information, please see “Material U.S. Federal Income Tax Consequences of the Merger.” The U.S. federal income tax consequences described above may not apply to all holders of Mainland Bank common stock. Your tax consequences will depend on your individual situation. Accordingly, Investar and Mainland Bank strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

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Interests of Mainland Bank’s Directors and Executive Officers in the Merger (page 42)
In considering the recommendation of the Mainland Bank Board with respect to the merger agreement, you should be aware that certain of Mainland Bank’s directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of the Mainland Bank shareholders generally. Interests of directors and executive officers that may be different from or in addition to the interests of the Mainland Bank shareholders include:
Change in Control Bonus Agreements. Mainland Bank previously entered into Change in Control Bonus Agreements with three of its executive officers - Clifton E. Lamar, Debra L. McGee, and Kyle T. McClellen. Upon consummation of the merger, these individuals would be entitled to cash payments under those agreements equal to, in the aggregate, approximately $370,000.
Indemnification and Insurance. For a period of four years following the effective time, Investar has agreed to indemnify the directors and officers of Mainland Bank against liabilities arising before the effective time to the same extent that those individuals would have been entitled to indemnification under applicable law or Mainland Bank’s constituent documents prior to the effective time. Mainland Bank has agreed to pay for tail insurance premiums for the past acts and extended reporting period insurance coverage under Mainland Bank’s current directors’ and officers’ insurance policy (or comparable coverage) for a period of four years following the merger.
Employee Benefit Plans. On or as soon as reasonably practicable following the merger, employees of Mainland Bank who continue on as employees of Investar will be entitled to participate in the Investar health and welfare benefit and similar plans on the same terms and conditions as employees of Investar. Subject to certain exceptions, these employees will receive credit for their years of service to Mainland Bank or Mainland Bank for participation, vesting and benefit accrual purposes.
These interests are discussed in more detail in the section of this proxy statement/prospectus entitled “The Merger—Interests of Mainland Bank’s Directors and Executive Officers in the Merger.” The Mainland Bank Board was aware of these interests and considered them, among other matters, in approving the merger agreement. Mainland Bank does not anticipate that any of the payments described above will impact the amount of the per share merger consideration payable to the Mainland Bank shareholders. However, the payments to be made under existing Mainland Bank employment arrangements with employees and payments for the tail insurance coverage will be considered transaction expenses under the merger agreement for purposes of determining whether there would be a corresponding downward adjustment to the aggregate merger consideration. For additional information on the potential adjustments to the aggregate merger consideration, please see “The Merger Agreement—Structure of the Merger—Adjustments to Merger Consideration.
Mainland Bank Shareholders Are Entitled To Assert Dissenters’ rights (page 43 and Annex C)
Texas law permits Mainland Bank shareholders to exercise dissenters’ rights in connection with the merger and to receive the fair value of their shares of Mainland Bank common stock in cash. To exercise dissenters’ rights, a Mainland Bank shareholder must follow certain procedures, including filing certain notices with Mainland Bank and voting his or her shares against the proposal to approve the merger agreement. The shares of Mainland Bank common stock held by a shareholder who has exercised dissenters’ rights will not be exchanged for stock consideration or cash consideration in the merger and such shareholder’s only right will be to receive the fair value of his or her shares of Mainland Bank common stock in cash. Mainland Bank shareholders who perfect their dissenters’ rights and receive cash in exchange for their shares of Mainland Bank common stock may recognize gain or loss for U.S. federal income tax purposes. A copy of the applicable statutory provisions of the TBOC is included as Annex C to this proxy statement/prospectus and a summary of the provisions can be found under the section of this proxy statement/prospectus entitled “The Merger—Dissenters’ Rights in the Merger.”

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Conditions that Must Be Satisfied or Waived for the Merger To Occur (page 59)
Currently, Mainland Bank and Investar expect to complete the merger in the first quarter of 2019. As more fully described in this proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. Investar’s and Mainland Bank’s respective obligations to complete the merger are subject to the satisfaction or waiver of the following conditions:
the approval of the merger agreement by Mainland Bank’s shareholders;
the receipt of all requisite regulatory approvals and the expiration of all statutory waiting periods in respect thereof, and such regulatory approvals remaining in full force and effect;
the absence of any order, injunction, or decree by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the completion of the merger or the other transactions contemplated by the merger agreement, and the absence of any statute, rule, regulation, order, injunction or decree enacted, entered, promulgated or enforced by any governmental entity which prohibits or makes illegal consummation of the merger or imposes any material limits on the ability of either party to consummate the merger;
the accuracy of the representations and warranties of the other party contained in the merger agreement;
the receipt by each party of all documents and instruments required to be delivered by the other party at closing;
the performance by the other party in all material respects of all obligations required to be performed by it under the merger agreement at or prior to the date on which the merger is completed; and
the absence of a “material adverse effect” (as defined in the merger agreement) with respect to the other party.
In addition, Investar’s obligations to complete the merger are subject to the satisfaction or waiver of the following conditions:
holders of shares who have exercised dissenters’ rights in the merger representing not more than 5% of the outstanding shares of Mainland Bank common stock;
the effectiveness of the registration statement of which this proxy statement/prospectus is a part with respect to the Investar common stock to be issued upon the consummation of the merger and the absence of any stop order (or proceedings for that purpose initiated or threatened and not withdrawn);
receipt by Investar of an opinion from Fenimore, Kay, Harrison & Ford, LLP to the effect that, on the basis of facts, representations and assumptions that are consistent with the facts existing at the effective time and as set forth or referred to in such opinion, the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code; and
the absence of any condition imposed as a result of obtaining the regulatory approvals required by the merger agreement that would result in, or be reasonably likely to materially and adversely diminish the economic benefit of the merger to Investar.
Neither Mainland Bank nor Investar can provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party, or that the merger will be completed.

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Termination of the Merger Agreement (page 60)
Investar and Mainland Bank can mutually agree at any time to terminate the merger agreement without completing the merger. In addition, either Investar or Mainland Bank may decide, without the consent of the other, to terminate the merger agreement if:
the merger has not been completed by June 30, 2019 (or such later date as Investar and Mainland Bank may agree) unless the failure to complete the merger by that time is due to a breach of a representation or warranty or failure to comply with an obligation in the merger agreement by the party that seeks to terminate the merger agreement;
the merger of Mainland Bank into Investar Bank is not approved by the appropriate regulatory authorities, or if the appropriate regulatory authorities have requested the withdrawal of the related application;
the other party materially breaches its representations and warranties or any covenant or agreement contained in the merger agreement and such breach has not been cured within 30 days after the terminating party gives written notice of such failure to the breaching party; or
Mainland Bank shareholders fail to approve the merger agreement.
Investar may also decide to terminate the merger agreement, without the consent of Mainland Bank, in the event that:
Mainland Bank has not held a special meeting of its shareholders to approve and adopt the merger agreement on or before the later of (i) June 30, 2019 and (ii) 30 days after this registration statement is declared effective by the SEC, or if the Mainland Bank Board fails to recommend the approval of the merger agreement to its shareholders or recommends against such approval;
any individual that has executed the related voting agreement, support agreements or releases has violated the terms thereof; or
the appropriate regulatory authorities approve the merger, but only upon restrictions or conditions on the operations of Mainland Bank or Investar which would, or could reasonably be expected to, result in a materially adverse economic or business impact to the benefits of the transaction; require any person other than Investar to be deemed a financial or bank holding company under the Bank Holding Company Act of 1956; or require a material modification of, or limitation or restriction on, the business and governance of Investar.
Mainland Bank may also terminate the merger agreement, without the consent of Investar, if the board of directors of Mainland Bank receives an unsolicited, bona fide alternative acquisition proposal and, under certain terms and conditions, determines that it is a superior proposal to that of the merger agreement and that the failure to accept such proposal would be reasonably likely to cause the board of directors to violate its fiduciary duties under applicable law. However, Investar has the right to adjust the terms and conditions of the merger agreement so that the superior proposal no longer constitutes a superior proposal.
Termination Fee (page 61)
If the merger agreement is terminated under certain circumstances, including circumstances involving an alternative acquisition proposal and changes in the recommendation of the Mainland Bank Board, Mainland Bank may be required to pay to Investar a termination fee equal to $816,000 plus all expenses incurred by Investar in connection with the proposed merger, provided that the amount of such expenses will be limited to $250,000. This termination fee could discourage other companies from seeking to acquire or merge with Mainland Bank. Termination fees are discussed in more detail in the section of this proxy statement/prospectus entitled, “The Merger Agreement—Termination Fee.”

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Regulatory Approvals Required for the Merger (page 46)
Subject to the terms of the merger agreement, both Mainland Bank and Investar have agreed to cooperate with each other and use their commercially reasonable efforts to obtain all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement. These approvals include approvals from, among others, the Federal Deposit Insurance Corporation (which we refer to as the “FDIC”) and the Louisiana Office of Financial Institutions (which we refer to as the “OFI”). Investar and Mainland Bank have submitted applications and notifications to obtain regulatory approvals from, or provide prior notice to, each required governmental authority.
Although neither Mainland Bank nor Investar knows of any reason why it cannot obtain these regulatory approvals in a timely manner, Mainland Bank and Investar cannot be certain when or if they will be obtained.
The Rights of Mainland Bank Shareholders Will Change as a Result of the Merger (page 68)
The rights of Mainland Bank shareholders will change as a result of the merger due to the fact that Investar is a Louisiana corporation formed under the laws of the state of Louisiana, and Mainland Bank is a Texas state bank chartered under the laws of the state of Texas. Mainland Bank’s shareholders rights will also change due to differences in Investar’s and Mainland Bank’s governing documents. See the section of this proxy statement/prospectus entitled “Comparison of Shareholders’ Rights,” for a description of the material differences in shareholders’ rights under each of the Investar and Mainland Bank governing documents.
Risk Factors (page 18)
You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the factors described under the section of this proxy statement/prospectus entitled “Risk Factors”.


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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF INVESTAR
The following table sets forth selected historical consolidated financial and other data (i) as of and for the nine months ended September 30, 2018 and 2017 and (ii) as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013. The selected consolidated financial data presented below have been derived from Investar’s audited financial statements, which are incorporated by reference into this proxy statement/prospectus. Selected financial data as of and for the nine months ended September 30, 2018 and 2017 have been derived from Investar’s unaudited financial statements incorporated by reference into this proxy statement/prospectus and have not been audited but, in the opinion of Investar’s management, contain all adjustments (consisting of only normal or recurring adjustments) necessary to present fairly Investar’s financial position and results of operations for such periods in accordance with generally accepted accounting principles, or GAAP. Investar’s historical results are not necessarily indicative of any future period. The performance, asset quality and capital ratios are unaudited and derived from Investar’s audited and unaudited financial statements as of and for the periods presented. Average balances have been calculated using daily averages, unless otherwise denoted. See “Where You Can Find More Information.”

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(in thousands, except share data)
As of and for the Nine Months Ended Sept 30,
 
As of and for the Years Ended Dec 31,
 
2018
 
2017
 
2017
 
2016
 
2015
 
2014
 
2013
Statements of Earnings Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
53,964

 
37,379

 
53,346

 
43,152

 
37,340

 
31,369

 
22,472

Interest expense
11,401

 
7,679

 
10,829

 
8,413

 
5,882

 
4,675

 
3,460

Net interest income
42,563

 
29,700

 
42,517

 
34,739

 
31,458

 
26,694

 
19,012

Provision for loan losses
1,977

 
1,145

 
1,540

 
2,079

 
1,865

 
1,628

 
1,026

Net interest income after provision for loan losses
40,586

 
28,555

 
40,977

 
32,660

 
29,593

 
25,066

 
17,986

Noninterest income
3,482

 
2,853

 
3,815

 
5,468

 
8,344

 
5,860

 
5,354

Noninterest expense
30,976

 
22,734

 
32,342

 
26,639

 
27,353

 
24,384

 
19,024

Income before income taxes
13,092

 
8,674

 
12,450

 
11,489

 
10,584

 
6,542

 
4,316

Income tax expense
2,823

 
2,756

 
4,248

 
3,609

 
3,511

 
1,145

 
1,148

Net income
10,269

 
5,918

 
8,202

 
7,880

 
7,073

 
5,397

 
3,168

Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
1.06

 
0.72

 
0.96

 
1.11

 
0.98

 
0.98

 
0.86

Diluted earnings per share
1.05

 
0.71

 
0.96

 
1.10

 
0.97

 
0.93

 
0.81

Book value per common share
18.69

 
17.56

 
18.15

 
15.88

 
15.05

 
14.24

 
14.06

Common shares outstanding at end of period
9,545,701

 
8,704,562

 
9,514,926

 
7,101,851

 
7,264,282

 
7,262,085

 
3,945,114

Balance Sheet Data (at period end):
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
1,735,315

 
1,476,423

 
1,622,734

 
1,158,960

 
1,031,555

 
879,354

 
634,946

Securities
247,777

 
246,868

 
235,561

 
183,142

 
139,779

 
92,818

 
62,752

Loans held for sale

 

 

 

 
80,509

 
103,396

 
5,029

Loans held for investment
1,358,412

 
1,110,521

 
1,258,779

 
893,426

 
745,441

 
622,790

 
504,095

Allowance for loan losses
9,021

 
7,605

 
7,891

 
7,051

 
6,128

 
4,630

 
3,380

Deposits
1,295,621

 
1,101,362

 
1,225,237

 
907,787

 
737,406

 
628,118

 
532,606

Stockholders’ equity
178,407

 
152,876

 
172,729

 
112,757

 
109,350

 
103,384

 
55,483

Average Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
1,663,853

 
1,265,847

 
1,333,667

 
1,103,712

 
920,267

 
734,977

 
496,685

Securities
254,757

 
204,813

 
213,196

 
156,422

 
98,593

 
79,036

 
54,642

Loans, including loans held for sale
1,280,883

 
960,868

 
1,013,502

 
862,340

 
754,056

 
601,238

 
405,997

Deposits
1,234,763

 
951,194

 
1,000,745

 
848,012

 
706,243

 
583,072

 
411,471

Stockholders’ equity
176,020

 
139,927

 
145,109

 
112,476

 
107,086

 
79,371

 
51,070

Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
0.83

 
0.62

 
0.62

 
0.71

 
0.77

 
0.73

 
0.64

Return on average common stockholders’ equity
7.80

 
5.65

 
5.65

 
6.99

 
6.60

 
6.80

 
6.10

Net interest margin
3.64

 
3.32

 
3.39

 
3.32

 
3.61

 
3.85

 
4.10

Efficiency ratio(1)
67.27

 
69.84

 
69.80

 
66.25

 
68.72

 
74.90

 
78.07

Asset Quality Ratios(2):
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
0.61

 
0.41

 
0.46

 
0.52

 
0.30

 
0.69

 
0.79

Nonperforming loans to total loans
0.47

 
0.20

 
0.29

 
0.22

 
0.32

 
0.54

 
0.30

Allowance for loan losses to total loans (excluding loans held for sale)
0.66

 
0.77

 
0.63

 
0.79

 
0.82

 
0.74

 
0.67

Allowance for loan losses to nonperforming loans(3)
142.16

 
541.62

 
214.43

 
356.16

 
254.16

 
138.61

 
227.00

Net charge-offs to average loans
0.07

 
0.06

 
0.07

 
0.14

 
0.05

 
0.07

 
0.09

Capital Ratios(2) (4):
 
 
 
 
 
 
 
 
 
 
 
 
 
Total equity to total assets
10.28

 
10.35

 
10.64

 
9.73

 
10.60

 
11.76

 
8.74

Tier 1 capital to average assets
10.08

 
10.13

 
10.66

 
10.10

 
11.39

 
12.61

 
9.53

Common equity tier 1 capital ratio
11.43

 
11.86

 
11.75

 
11.40

 
11.67

 
N/A

 
N/A

Tier 1 risk-based capital ratio
11.88

 
12.15

 
12.24

 
11.75

 
12.05

 
13.79

 
10.85

Total risk-based capital ratio
13.79

 
14.32

 
14.22

 
12.47

 
12.72

 
14.41

 
11.51

______________________________
(1)
Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
(2)
At period end, except for net charge-offs to average loans, which is for periods ended on such dates.
(3)
Nonperforming loans consist of nonaccrual loans and loans which are contractually 90 days past due on which interest continues to accrue.
(4)
Beginning January 1, 2015, the capital ratios were calculated using the Basel III framework. Capital ratios for prior periods were calculated using the Basel I framework. The Common Equity Tier 1 capital ratio is a new ratio introduced under the Basel III framework.

15



SELECTED HISTORICAL FINANCIAL DATA OF MAINLAND BANK
The following table sets forth selected historical financial data for Mainland Bank (i) as of and for the nine months ended September 30, 2018 and 2017, and (ii) as of and for the years ended December 31, 2017 and 2016. The selected historical financial data (i) as of and for the years ended December 31, 2017 and 2016 were derived from Mainland Bank's audited financial statements which are included elsewhere in this proxy statement/prospectus, and (ii) as of and for the nine months ended September 30, 2018 and 2017 were derived from Mainland Bank's unaudited financial statements, which are included elsewhere in this proxy statement/prospectus and which have not been audited but, in the opinion of Mainland Bank's management, contain all adjustments (consisting of only normal or recurring adjustments) necessary to present fairly Mainland Bank's financial position and results of operations for such periods in accordance with GAAP. The performance, asset quality and capital ratios are unaudited and derived from Mainland Bank's audited and unaudited financial statements as of and for the periods presented. 
Mainland Bank’s historical results are not necessarily indicative of the results that may be expected for any future period. See “Where You Can Find More Information.
(in thousands, except share data)
As of and for the Nine Months Ended September 30,
 
As of and for the Years Ended
December 31,
 
2018
 
2017
 
2017
 
2016
Statements of Earnings Data:
 
 
 
 
 
 
 
Interest income
$
4,344

 
$
4,434

 
$
5,926

 
$
5,711

Interest expense
195

 
215

 
276

 
274

Net interest income
4,149

 
4,219

 
5,650

 
5,437

Provision for loan losses

 
100

 
165

 
430

Net interest income after provision for loan losses
4,149

 
4,119

 
5,485

 
5,007

Noninterest income
393

 
390

 
522

 
1,767

Noninterest expense
3,036

 
3,017

 
4,041

 
3,933

Income before income taxes
1,506

 
1,492

 
1,966

 
2,841

Income tax expense
316

 

 

 

Net income
1,190

 
1,492

 
1,966

 
2,841

Per Share Data:
 
 
 
 
 
 
 
Basic earnings per common share
$
4.73

 
$
5.93

 
$
7.82

 
$
11.30

Book value per common share
51.86

 
52.36

 
51.21

 
50.31

Common shares outstanding at end of period
251,357

 
251,357

 
251,357

 
251,357

Balance Sheet Data (at period end):
 
 
 
 
 
 
 
Total assets
$
140,113

 
$
130,097

 
$
127,813

 
$
130,435

Investments
22,853

 
21,598

 
20,220

 
24,018

Loans
82,357

 
96,412

 
94,288

 
97,051

Allowance for loan losses
1,152

 
1,046

 
1,101

 
1,156

Deposits
121,959

 
112,543

 
110,083

 
112,852

Stockholders’ equity
13,035

 
13,162

 
12,873

 
12,646

Average Balance Sheet Data:
 
 
 
 
 
 
 
Total assets
$
132,889

 
$
134,595

 
$
133,999

 
$
129,958

Investments
22,929

 
23,706

 
23,032

 
19,144

Loans
89,226

 
98,399

 
98,014

 
96,447

Deposits
113,801

 
113,756

 
113,971

 
111,572


16



Stockholders’ equity
12,480

 
12,843

 
12,858

 
13,086

Performance Ratios:
 
 
 
 
 
 
 
Return on average assets
1.20
%
 
1.48
%
 
1.47
%
 
2.19
%
Return on average common stockholders’ equity
12.74

 
15.53

 
15.29

 
21.71

Net interest margin
4.63

 
4.57

 
4.63

 
4.67

Efficiency ratio(1)
66.92

 
66.03

 
65.99

 
55.43

Asset Quality Ratios(2):
 
 
 
 
 
 
 
Nonperforming assets to total loans and other real estate
1.84
%
 
1.57
%
 
1.62
%
 
1.63
%
Annualized Net charge-offs to average loans (excluding loans held for sale)
(0.08
)
 
0.28

 
0.22

 
0.40

Allowance for loan losses to period-end loans (excluding loans held for sale)
1.40

 
1.08

 
1.12

 
1.19

Allowance for loan losses to nonperforming loans(3)
1,428.22

 
1,381.90

 
1,179.80

 
796.68

Capital Ratios(2):
 
 
 
 
 
 
 
Leverage ratio
10.33
%
 
10.33
%
 
10.20
%
 
9.87
%
Average stockholders’ equity to average total assets
9.39

 
9.54

 
9.63

 
10.07

Tier 1 risk-based capital ratio
13.23

 
11.90

 
12.16

 
11.59

Total risk-based capital ratio
14.32

 
12.82

 
13.15

 
12.59

______________________________
(1)
Calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains and losses. Additionally, taxes are not part of this calculation.
(2)
At period end, except for net charge-offs to average loans and average stockholders’ equity to average total assets, which is for periods ended on such dates.
(3)
Nonperforming loans consist of nonaccrual loans, loans contractually past due 90 days or more, restructured loans and any other loan management deems to be nonperforming.

17



RISK FACTORS
An investment by Mainland Bank’s shareholders in Investar common stock as a result of the exchange of shares of Investar common stock for shares of Mainland Bank common stock in the merger involves certain risks. Certain material risks and uncertainties connected with the merger are discussed below. In addition, Investar discusses certain other material risks connected with the ownership of Investar common stock and with Investar’s business under the caption “Risk Factors” appearing in Investar’s Annual Report on Form 10-K most recently filed with the SEC and may include additional or updated disclosures of such material risks in its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that it files with the SEC after the date of this proxy statement/prospectus, each of which report is or will be incorporated by reference in this proxy statement/prospectus.
Risks Relating to the Merger
The merger may not be consummated unless important conditions are satisfied.
Investar and Mainland Bank expect the merger to close during the first quarter of 2019, but the acquisition is subject to a number of closing conditions. Satisfaction of many of these conditions is beyond Investar’s control. If these conditions are not satisfied or waived, the merger will not be completed or may be delayed and each of Investar and Mainland Bank may lose some or all of the intended benefits of the merger. Certain of the conditions that remain to be satisfied include, but are not limited to:
the continued accuracy of the representations and warranties made by the parties in the merger agreement;
the performance by each party of its respective obligations under the merger agreement;
the receipt of required regulatory approvals, including the approval of the FDIC and the OFI, without materially burdensome conditions or limitations;
the absence of any injunction, order or decree restraining, enjoining or otherwise prohibiting the merger;
the absence of any material adverse change in the financial condition, business or results of operations of Mainland Bank, Investar or Investar Bank;
receipt by Investar from Fenimore, Kay, Harrison & Ford, LLP of a federal tax opinion that the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code;
the effectiveness of the registration statement covering the shares of Investar common stock that are expected to be issued to Mainland Bank shareholders as a portion of the consideration for the merger; and
the approval by Mainland Bank’s shareholders of the merger agreement and the merger.
As a result, the merger may not close as scheduled, or at all. In addition, either Investar or Mainland Bank may terminate the merger agreement under certain circumstances. For additional information regarding the conditions to the merger, see “The Merger Agreement—Conditions to Complete the Merger.”
Because you are receiving a fixed number of shares (subject to adjustment) and the market price of the Investar common stock may fluctuate, you cannot be sure of the value of the shares of Investar common stock that you will receive.
At the time of the Mainland Bank special shareholder meeting, and prior to the closing of the merger, you will not be able to determine the value of the Investar common stock that you would receive upon completion of the merger. Changes in the market price of Investar common stock prior to completion of the merger will affect the value of the consideration that Mainland Bank shareholders will receive in the merger. Common stock price changes may result

18



from a variety of factors, including but not limited to general market and economic conditions, changes in Investar’s business, operations and prospects, and regulatory considerations. Many of these factors are beyond the control of Investar or Mainland Bank. You should obtain current market prices for Investar common stock.
Regulatory approvals may not be received, may take longer than expected or may impose conditions that Investar does not anticipate or cannot be met.
Before the merger may be completed, various approvals must be obtained from bank regulatory authorities, including the FDIC and the OFI. These regulators may impose conditions on the completion of, or require changes to the terms of, the merger. Such conditions or changes and the process of obtaining regulatory approvals or waivers could have the effect of delaying completion of the merger or of imposing additional costs or limitations on Investar following the completion of the merger. The regulatory approvals or waivers may not be received at all, may not be received in a timely fashion or may contain conditions on the completion of the merger that are burdensome, not anticipated or cannot be satisfied. If the completion of the merger is delayed, including by a delay in receipt of necessary governmental approvals, the business, financial condition and results of operations of Investar and Mainland Bank may also be materially adversely affected.
Investar may be unsuccessful in integrating the operations of the businesses it has acquired or expects to acquire in the future, including Mainland Bank.
From time to time, Investar evaluates and acquires businesses that it believes complement its existing business. The acquisition component of Investar’s growth strategy depends on the successful integration of these acquisitions. Investar faces numerous risks and challenges to the successful integration of acquired businesses, including the following:
the potential for unexpected costs, delays and challenges that may arise in integrating acquisitions into Investar’s existing business;
limitations on Investar’s ability to realize the expected cost savings and synergies from an acquisition;
challenges related to integrating acquired operations, including Investar’s ability to retain key employees and maintain relationships with significant customers and depositors;
challenges related to the integration of businesses that operate in new geographic areas, including difficulties in identifying and gaining access to customers in new markets; and
discovery of previously unknown liabilities following an acquisition associated with the acquired business.
If Investar is unable to successfully integrate the businesses it acquires, Investar’s business, financial condition and results of operations may be materially adversely affected.
The merger could result in unexpected disruptions on the combined business.
In response to the announcement of the merger, Mainland Bank’s customers may cease or reduce their business with Mainland Bank, which could negatively affect Investar’s and Mainland Bank’s combined business operations. Similarly, current or prospective employees of Investar or Mainland Bank may experience uncertainty about their future roles with the combined entity. This may adversely affect Investar’s or Mainland Bank’s ability to attract and retain key management, banking and other personnel. In addition, the diversion of the attention of Investar’s and Mainland Bank’s respective management teams away from day-to-day operations during the negotiation and pendency of the merger could have an adverse effect on the financial condition and operating results of either Investar or Mainland Bank.

19



Investar may fail to realize some or all of the anticipated benefits of the merger.
The success of the merger will depend, in part, on Investar’s ability to realize the anticipated benefits and cost savings from combining its business with Mainland Bank’s business. However, to realize these anticipated benefits and cost savings, Investar must successfully combine both businesses. If Investar is not able to achieve these objectives, the anticipated benefits and cost savings of the merger may not be realized fully, or at all, or may take longer to realize than Investar expects.
Investar will incur significant transaction and merger-related integration costs in connection with the merger.
Investar expects to incur significant costs associated with completing the merger and integrating Mainland Bank’s operations into Investar’s operations and is continuing to assess the impact of these costs. Although Investar believes that the elimination of duplicate costs, as well as the realization of other efficiencies related to the integration of Mainland Bank’s business with Investar’s business, will offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term, or at all.
Mainland Bank’s officers and directors may have interests in the merger in addition to or different from the interests that they share with you as a Mainland Bank shareholder.
Some of Mainland Bank’s executive officers participated in negotiations of the merger agreement with Investar, and the Mainland Bank Board approved the merger agreement and is recommending that Mainland Bank shareholders vote to approve the merger agreement. In considering these facts and the other information included in or incorporated by reference into this proxy statement/prospectus, you should be aware that Mainland Bank’s executive officers and directors may have economic interests in the merger that are different from or in addition to the interests that they share with you as a Mainland Bank shareholder. These interests include, as a result of the merger, the payment to, or survival of, certain benefits to which executive officers of Mainland Bank are entitled under existing benefit plans and arrangements with Mainland Bank. For further discussion of the interests of Mainland Bank’s directors and officers in the merger, see “The Merger—Interests of Mainland Bank’s Directors and Executive Officers in the Merger.”
The merger may be completed on different terms from those contained in the merger agreement.
Prior to the completion of the merger, Investar and Mainland Bank may, by mutual agreement, amend or alter the terms of the merger agreement, including with respect to, among other things, the structure of the transaction or covenants or agreements with respect to the parties’ respective operations during the pendency thereof. However, after the date of the Mainland Bank shareholder meeting, approval of Mainland Bank’s shareholders is required for any modification or amendment to the merger agreement that changes the amount or kind of consideration that Mainland Bank shareholders will receive for their shares of the Mainland Bank common stock, or for any modification that would otherwise adversely affect Mainland Bank’s shareholders. Nonetheless, any such amendments or alterations may have negative consequences to Investar.
Mainland Bank shareholders will experience a reduction in percentage ownership and voting power of their shares as a result of the merger and will have less influence on the management and policies of Investar than they had on Mainland Bank before the merger.
Mainland Bank shareholders will have a much smaller percentage ownership interest and effective voting power in Investar compared to their ownership interest and voting power in Mainland Bank prior to the merger. Consequently, Mainland Bank shareholders will have significantly less influence on the management and policies of Investar after the merger than they now have on the management and policies of Mainland Bank. If the merger is consummated and assuming no adjustments to the aggregate merger consideration, current Mainland Bank shareholders will own approximately 7.4% of the 10,262,800 shares of Investar common stock expected to be outstanding immediately after completion of the merger. Accordingly, former Mainland Bank shareholders would, as a result, be outvoted by current Investar shareholders if such current Investar shareholders voted together as a group.

20



The merger agreement limits Mainland Bank’s ability to pursue alternatives to the merger.
The merger agreement contains provisions that limit Mainland Bank’s ability to discuss competing third-party proposals to acquire all or a significant part of Mainland Bank. In addition, Mainland Bank has agreed to pay Investar a termination fee of $816,000 if the transaction is terminated because Mainland Bank decides to enter into or close another acquisition transaction. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Mainland Bank from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share price than that proposed in the merger, or might result in a potential competing acquirer proposing to pay a lower per share price to acquire Mainland Bank than it might otherwise have proposed to pay.
The opinion received by Mainland Bank Board prior to the signing of the merger agreement has not been nor will be updated to reflect changes in circumstances since the signing of the merger agreement.
The opinion rendered by Performance Trust, financial advisor to Mainland Bank, on October 9, 2018, is based upon information available to Performance Trust as of such date. This opinion has not been updated to reflect changes that may occur or may have occurred after the date on which it was delivered, including changes to the operations and prospects of Investar or Mainland Bank, changes in general market and economic conditions, or other changes. Any such changes may alter the relative value of Investar or Mainland Bank or the prices of shares of Investar common stock or Mainland Bank common stock by the time the merger is completed. The opinion does not speak as of the date the merger will be completed or as of any date other than the date of such opinion. For a description of the opinion that Mainland Bank received from its financial advisor, please see “The Merger—Opinion of Mainland Bank’s Financial Advisor.”
Investar may not be able to implement aspects of its growth strategy or new bank office facilities and other facilities may not be profitable.
Investar’s growth strategy contemplates the future expansion of its business and operations both organically and through acquisitions. Implementing these aspects of its growth strategy depends, in part, on Investar’s ability to successfully identify acquisition opportunities and strategic partners that will complement its operating philosophy and to successfully integrate their operations with Investar’s operations, as well as to generate loans and deposits within acceptable risk and expense tolerances. To successfully acquire or establish banks or banking offices, Investar must be able to correctly identify profitable or growing markets, as well as attract the necessary relationships and high caliber banking personnel to make these new banking offices profitable. In addition, Investar may not be able to identify suitable opportunities for further growth and expansion or, if it does, Investar may not be able to successfully integrate these new operations into its business.
As consolidation of the financial services industry continues, the competition for suitable acquisition candidates may increase. Investar will compete with other financial services companies for acquisition opportunities, and many of these competitors have greater financial resources than Investar does and may be able to pay more for an acquisition than Investar is able or willing to pay.
Investar can offer no assurance that it will have opportunities to acquire other financial institutions, or that it will complete the merger, or acquire or establish any new branches, or that it will be able to negotiate, finance and complete any opportunities available to it.
Additionally, Investar may not be able to organically expand into new markets that are profitable for its franchise. The costs to start up new bank branches and loan production offices in new markets and the additional costs to operate these facilities would increase Investar’s noninterest expense and may decrease its earnings. It may be difficult to adequately and profitably manage Investar’s growth through the establishment of bank branches and loan production offices in new markets. In addition, Investar can provide no assurance that its expansion into any such new markets will successfully attract enough new business to offset the expenses of their operation. If Investar is not able to do so, its earnings and stock price may be negatively impacted.

21



The success of Investar’s growth strategy depends on its ability to identify and retain individuals with experience and relationships in the markets in which Investar intends to expand.
Investar’s growth strategy contemplates that it will expand its business and operations to other markets in Louisiana and Texas. Investar intends to primarily target market areas that it believes possess attractive demographic, economic or competitive characteristics. To expand into new markets successfully, Investar must identify and retain experienced key management members with local expertise and relationships in these markets. Competition for qualified personnel in the markets in which Investar may expand may be intense, and there may be a limited number of qualified persons with knowledge of and experience in the commercial banking industry in these markets. Even if Investar identifies individuals that it believes could assist Investar in establishing a presence in a new market, Investar may be unable to recruit these individuals away from other banks or may be unable to do so at a reasonable cost. In addition, the process of identifying and recruiting individuals with the combination of skills and attributes required to carry out Investar’s strategy is often lengthy. Investar’s inability to identify, recruit and retain talented personnel to manage new offices effectively would limit its growth and could materially adversely affect its business, financial condition, results of operations and stock price.

22



SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus and the documents incorporated by reference or deemed incorporated by reference into this proxy statement/prospectus and any other written or oral statements made by Investar and Mainland Bank from time to time may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”). All statements, other than statements of historical fact, included in this proxy statement/prospectus and the documents incorporated by reference herein and therein, regarding Investar’s 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 proxy statement/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.
There are or will be important factors that could cause Investar’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the factors described under the headings “Risk Factors” in this proxy statement/prospectus and “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Investar’s most recent Annual Report on Form 10-K and in any of its Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings made with the SEC since the date of its most recent Annual Report on Form 10-K that are incorporated by reference in this proxy statement/prospectus, any of which may also cause actual results to differ materially from those described in such forward-looking statements. All forward-looking statements included in this proxy statement/prospectus, any applicable prospectus supplement or in a document incorporated by reference herein or therein speak only as of the date such document.
Except as otherwise required by applicable law, Investar and Mainland Bank disclaim any duty to update any forward-looking statements, 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.


23



THE MAINLAND BANK SPECIAL MEETING
This section contains information for Mainland Bank shareholders about the special meeting that Mainland Bank has called to allow its shareholders to consider and vote on the Mainland Bank merger proposal. Mainland Bank is mailing this proxy statement/prospectus to you, as a Mainland Bank shareholder, on or about December 21, 2018. This proxy statement/prospectus is accompanied by a notice of the special meeting and a form of proxy card that the Mainland Bank Board is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.
Date, Time and Place of the Mainland Bank Special Meeting
The special meeting of Mainland Bank shareholders will be held on Monday, January 14, 2019, at 10:30 a.m., local time, at the branch office of Mainland Bank located at 400 FM 517 West in Dickinson, Texas 77539 .
Matters to Be Considered
The Mainland Bank merger proposal. Considering and voting upon the approval of the Agreement and Plan of Reorganization, dated as of October 10, 2018, among Mainland Bank, Investar, and Investar Bank, and the transactions contemplated by that agreement; and
The Mainland Bank Adjournment Proposal. Considering and voting upon the approval of any motion to adjourn the special meeting, or any postponement thereof, to another time or place if necessary or appropriate (i) to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement, (ii) to provide to Mainland Bank shareholders any supplement or amendment to the proxy statement/prospectus or (iii) to disseminate any other information which is material to the Mainland Bank shareholders voting at the special meeting.
The merger agreement provides for the acquisition of Mainland Bank by Investar by virtue of the merger of Mainland Bank with and into Investar Bank, with Investar Bank surviving the merger. A copy of the merger agreement is included in this proxy statement/prospectus as Annex A.
If any procedural matters relating to the conduct of the special meeting are presented, the persons named as proxies will vote the shares represented by properly executed proxies in accordance with their judgment with respect to those matters.
Recommendation of the Mainland Bank Board
On October 9, 2018, the Mainland Bank Board unanimously approved the merger agreement and the transactions contemplated thereby. Based on Mainland Bank’s reasons for the merger described in the section of this proxy statement/prospectus entitled, “The Merger—Mainland Bank’s Reasons for the Merger; Recommendation of the Mainland Bank Board,” the Mainland Bank Board believes that the merger is in the best interests of the Mainland Bank shareholders.
Accordingly, the Mainland Bank Board recommends that you vote “FOR” the Mainland Bank merger proposal and “FOR” the Mainland Bank adjournment proposal.
Mainland Bank Record Date and Quorum
The Mainland Bank Board has fixed the close of business on December 10, 2018 as the record date for determining the holders of Mainland Bank common stock entitled to receive notice of and to vote at the special meeting.
As of the record date, there were approximately 251,357 shares of Mainland Bank common stock outstanding and entitled to notice of, and to vote at, the special meeting or any adjournment thereof, and such outstanding shares

24



of Mainland Bank common stock were held by 51 shareholders of record. Each whole share of Mainland Bank common stock entitles the holder to one vote at the special meeting on each proposal to be considered at the special meeting.
No business may be transacted at the special meeting unless a quorum is present. The presence (in person or by proxy) of holders of at least a majority of the outstanding shares of Mainland Bank common stock entitled to be voted at the special meeting constitutes a quorum for transacting business at the special meeting. All shares of Mainland Bank common stock present in person or represented by proxy, including abstentions and broker-non votes, if any, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting.
As of the record date, the directors and executive officers of Mainland Bank and their affiliates beneficially owned and were entitled to vote, in the aggregate, 103,093 shares of Mainland Bank common stock, representing approximately 41.0% of the shares of Mainland Bank common stock outstanding on that date. The directors and executive officers of Mainland Bank have entered into a voting agreement with Investar, solely in their capacities as shareholders of Mainland Bank, pursuant to which they have agreed to vote in favor of the transactions contemplated by the merger agreement, and Mainland Bank accordingly currently expects that all of its directors and executive officers will vote their shares of Mainland Bank common stock in favor of the Mainland Bank merger proposal and the Mainland Bank adjournment proposal. As of the record date, neither Investar nor any of its directors or executive officers beneficially held shares of Mainland Bank common stock.
Required Vote; Treatment of Abstentions; Broker Non-Votes and Failure to Vote
Mainland Bank Merger Proposal: The affirmative vote of the holders of no less than two-thirds of the outstanding shares of Mainland Bank common stock is required to approve the Mainland Bank merger proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the Mainland Bank merger proposal, it will have the effect of a vote “AGAINST” the proposal.
Mainland Bank Adjournment Proposal: The affirmative vote of a majority of votes cast on the Mainland Bank adjournment proposal at the special meeting is required to approve the Mainland Bank adjournment proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the Mainland Bank adjournment proposal, it will have no effect on the proposal.
Voting on Proxies; Incomplete Proxies
A Mainland Bank shareholder of record as of the record date may vote by proxy or in person at the special meeting. If you hold your shares of Mainland Bank common stock in your name as a Mainland Bank shareholder of record as of the record date, to submit a proxy you must complete and return the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.
When the accompanying proxy card is returned properly executed, the shares of Mainland Bank common stock represented by it will be voted at the special meeting in accordance with the instructions contained on the proxy card. If any proxy card is returned without indication as to how to vote, the shares of Mainland Bank common stock represented by the proxy card will be voted as recommended by the Mainland Bank Board.
If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker.
Every shareholder’s vote is important. Accordingly, each shareholder should sign, date and return the enclosed proxy card whether or not the shareholder plans to attend the special meeting in person. Sending in your proxy card will not prevent you from voting your shares personally at the meeting because you may revoke your proxy at any time before it is voted.

25



Shares Held in “Street Name”; Broker Non-Votes
Banks, brokers and other nominees who hold shares of Mainland Bank common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker, bank or other nominee that are represented at the special meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the broker does not have discretionary voting power on such proposal. If your broker, bank or other nominee holds your shares of Mainland Bank common stock in “street name,” your broker, bank or other nominee will vote your shares of Mainland Bank common stock only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank or other nominee with this proxy statement/prospectus.
Revocability of Proxies and Changes to a Mainland Bank Shareholder’s Vote
If you are the record holder of your shares, you may revoke any proxy given pursuant to this solicitation by the Mainland Bank Board at any time before it is voted at the special meeting by:
giving written notice to the Corporate Secretary of Mainland Bank;
executing a proxy bearing a later date and filing that proxy with the Corporate Secretary of Mainland Bank at or before the special meeting; or
attending and voting in person at the special meeting.
Attendance at the special meeting will not in and of itself constitute a revocation of a proxy.
All written notices of revocation and other communications with respect to revocation or proxies should be sent to: Mainland Bank, 2501 Palmer Highway, Suite 100, Texas City, Texas 77590, Attention: Debbie McGee.
If you hold your shares in street name with a bank or broker, you must contact such bank or broker if you wish to revoke your proxy. If you choose to send a completed proxy card bearing a later date than your original proxy card, the new proxy card must be received before the beginning of the special meeting.
Solicitation of Proxies
This proxy solicitation is made by the Mainland Bank Board. Mainland Bank is responsible for its expenses incurred in preparing, assembling, printing, and mailing this proxy statement/prospectus. Proxies will be solicited through the mail. Additionally, directors and officers of Mainland Bank intend to solicit proxies personally or by telephone or other means of communication. The directors and officers will not be additionally compensated. Mainland Bank will reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding the proxy materials to beneficial owners.
Attending the Mainland Bank Special Meeting
All Mainland Bank shareholders, including holders of record as of the record date and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Only Mainland Bank shareholders of record as of the record date can vote in person at the special meeting.
Assistance
If you have additional questions about the merger, you should contact Robert Harris at (409) 948-1625 or rharris@mainlandbank.com.

26



MAINLAND BANK PROPOSALS
Proposal No. 1-Mainland Bank Merger Proposal
Mainland Bank is asking its shareholders to adopt the merger agreement and approve the merger. Holders of Mainland Bank common stock should read this proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.
After careful consideration, the Mainland Bank Board, by a unanimous vote of all directors, approved the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interest of Mainland Bank and the shareholders of Mainland Bank. See the section of this proxy statement/prospectus entitled, “The Merger—Mainland Bank’s Reasons for the Merger; Recommendation of the Mainland Bank Board” for a more detailed discussion of the Mainland Bank Board’s recommendation.
The Mainland Bank Board recommends a vote “FOR” the Mainland Bank merger proposal.
Proposal No. 2-Mainland Bank Adjournment Proposal
The special meeting may be adjourned to another time or place, if necessary or appropriate (i) to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement, (ii) to provide to Mainland Bank shareholders any supplement or amendment to the proxy statement/prospectus or (iii) to disseminate any other information which is material to the Mainland Bank shareholders voting at the special meeting.
If, at the special meeting, the number of shares of Mainland Bank common stock present or represented and voting in favor of the Mainland Bank merger proposal is insufficient to adopt the Mainland Bank merger proposal, Mainland Bank intends to move to adjourn the special meeting in order to enable the Mainland Bank Board to solicit additional proxies for approval of the Mainland Bank merger proposal. In that event, Mainland Bank will ask its shareholders to vote upon the Mainland Bank adjournment proposal, but not the Mainland Bank merger proposal.
In this proposal, Mainland Bank is asking its shareholders to authorize the holder of any proxy solicited by the Mainland Bank Board on a discretionary basis to vote in favor of adjourning the special meeting to another time and place for the reasons described above.
The Mainland Bank Board recommends a vote “FOR” the Mainland Bank adjournment proposal.

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THE MERGER
The following discussion contains certain information about the merger. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this proxy statement/prospectus and incorporated herein by reference. Investar and Mainland Bank urge you to read carefully this entire proxy statement/prospectus, including the merger agreement attached as Annex A, for a more complete understanding of the merger.
Terms of the Merger
Each of the boards of directors of Investar and Mainland Bank has approved the merger agreement. The merger agreement provides that, subject to the terms and conditions set forth in the merger agreement, Mainland Bank will merge with and into Investar Bank, with Investar Bank surviving the merger.
If the merger is completed, subject to the terms of the merger agreement each share of Mainland Bank common stock (other than shares of Mainland Bank common stock held by Mainland Bank, Investar, Investar Bank and any dissenting shareholder) will be cancelled and converted into the right to receive the per share merger consideration, subject to possible adjustments described herein, for each share of Mainland Bank common stock they hold immediately prior to the merger.
Investar will not issue any fractional shares of Investar common stock in the merger. Mainland Bank shareholders who would otherwise be entitled to a fraction of a share of Investar common stock upon the completion of the merger will instead be entitled to receive, in lieu of the fraction of a share, an amount in cash (rounded to the nearest cent) determined by multiplying $26.54 by the fraction of a share of Investar common stock which such shareholder would otherwise be entitled to receive.
Mainland Bank’s shareholders are being asked to adopt the merger agreement. See the section of this proxy statement/prospectus entitled “The Merger Agreement” for additional and more detailed information regarding the legal documents that govern the merger, including information about the merger consideration, conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.
Background of the Merger
From time to time in recent years, the Board of Directors and management of Mainland Bank have received inquiries about the possible sale of Mainland Bank, or Mainland Bank entering into some form of strategic alliance with another financial institution. Those inquiries triggered some informal discussions at Mainland Bank about the advisability, feasibility, and benefits of continuing the operation of Mainland Bank as an independent bank compared to the advisability, feasibility, and benefits of the alternatives of a sale or strategic alliance with another financial institution. Until the last year, Mainland Bank's board of directors believed that the shareholders of Mainland Bank would be better served by their continued ownership of Mainland Bank and the continued separate operation of Mainland Bank.
However, in recent years, there have been ever increasing significant changes in the banking and financial services industries. These developments have included increased emphasis and dependence on automation, specialization of products and services, increased competition among financial institutions, and a trend toward consolidation. Moreover, Mainland Bank (like all other financial institutions) has incurred and will continue to incur substantial compliance costs in connection with new laws and regulations. Many in the banking industry believe that a bank must be of a substantial size to accommodate the substantial costs of legal and regulatory compliance and still have an adequate return on capital for shareholders. It was in that setting that Mainland Bank's board of directors has been reviewing its status during the last year.
In December, 2017, Mainland Bank received an unsolicited “expression of interest” from another financial institution to potentially acquire Mainland Bank for a combination of cash and stock of that institution. For several weeks following the above-described expression of interest, Mainland Bank’s board of directors and management continued to have discussions with the prospective buyer about a potential transaction. However, nothing ever developed

28



from that expression of interest and both that financial institution and Mainland Bank abandoned further discussions in early 2018.
In March, 2018, Mainland Bank initially contacted Performance Trust to pursue a potential sale transaction. Performance Trust is a nationally recognized investment banking firm with substantial experience in transactions relating to financial institutions. Performance Trust is continually engaged in the valuation of banks and their securities in connection with, among other things, mergers and acquisitions. Performance Trust was formally engaged by Mainland Bank on March 28, 2018.
Through Performance Trusts’ recent calling efforts on Houston area bank sales, Performance Trust knew of 43 banks with an interest in acquiring a financial institution in the Houston area. Based on the characteristics of Mainland Bank, Performance Trust contacted 19 of those financial institutions on a no-name basis to gauge their interest in Mainland Bank. A total of 15 of those 19 financial institutions had an interest in Mainland Bank based on the general characteristics of the potential target. After Mainland Bank's name was disclosed and the potential buyers did some analysis based upon public data, 11 of those banks remained interested.
Three of the 11 banks initially interested were not able to move forward because of timing considerations and three others were willing to offer little or no premium to book value. Five potential buyers submitted offers for consideration. Three of the offers were at unacceptable valuation and one included a significant portion of consideration in the form of illiquid stock.
Mainland Bank's board of directors carefully evaluated the all of the offers received and elected to continue negotiations with Investar. After receiving the initial offer from Investar, Performance Trust and Mainland Bank management negotiated two increases to Investar’s offer price, and an added $1,075,000 credit for transaction-related expenses.
Performance Trust delivered to Mainland Bank's board of directors its financial analyses, oral opinion, and written opinion, dated October 9, 2018, with respect to Mainland and the proposed merger to the effect that, as of such date and subject to the matters set forth in its opinion and more fully described in “The Merger - Opinion of Mainland Bank's Financial Advisor,” the merger consideration was fair, from a financial point of view, to Mainland Bank's shareholders.
On October 8 and 9, 2018, the boards of directors of Investar and Mainland Bank, respectively, held special meetings to further discuss and consider the merger agreement. At these meetings, each of the Mainland Bank Board and Investar Board unanimously voted to adopt the merger agreement, and the Mainland Bank Board unanimously recommended its adoption to Mainland Bank’s shareholders. On October 10, 2018, the merger agreement and the related ancillary agreements, in the forms approved by the respective boards, were executed by representatives of Mainland Bank and Investar, and Investar issued a press release announcing the proposed merger transaction.
Mainland Bank’s Reasons for the Merger; Recommendation of the Mainland Bank Board
The Mainland Bank Board believes that the merger is in the best interests of Mainland Bank and its shareholders. Accordingly, the Mainland Bank Board has approved the merger transactions and the merger agreement and has unanimously recommended that Mainland Bank’s shareholders vote “FOR” the Mainland Bank merger proposal.
In approving the merger agreement, the Mainland Bank Board engaged Performance Trust (as an independent valuation firm) to provide an opinion regarding the fairness of the merger consideration, from a financial point of view, to the holders of shares of Mainland Bank common stock. The Mainland Bank Board also consulted with its outside legal counsel as to its legal duties and the terms of the merger agreement. In arriving at its decision to approve the merger agreement, the Mainland Bank Board considered a number of factors, including the following:
The Mainland Bank Board’s belief that the merger consideration that would be received by Mainland Bank shareholders pursuant to the merger represented a fair price for the shares of common stock of Mainland Bank;

29



the Mainland Bank Board’s understanding of Mainland Bank’s business, historical, current and projected financial performance, competitive and operating environment, operations, prospects and management strengths, along with current trends in the industry in which Mainland Bank operates, including the current competitive and regulatory environment, as well as the execution risks of continuing with Mainland Bank’s current strategy in light of the foregoing;
the financial analyses delivered to Mainland Bank's board of directors and by representatives of Performance Trust, as well as the written opinion of Performance Trust rendered to Mainland Bank's board of directors on October 9, 2018 with respect to the fairness, from a financial point of view, to the holders of Mainland Bank common stock of the merger consideration;
that shareholders of Mainland Bank will receive part of the merger consideration in shares of Investar common stock, which will be registered with the SEC and listed on the NASDAQ Stock Market in connection with the merger, contrasted with the fact that there are currently restrictions upon the transfer of Mainland Bank common stock;
the treatment of the merger as a “reorganization” within the meaning of Section 368(a) of the Code with the result that the portion of Mainland Bank common stock exchanged for Investar common stock is generally tax-free, depending on each Mainland Bank shareholder’s individual circumstances;
the financial analyses, information and perspectives provided to the Mainland Bank Board by Mainland Bank’s management;
the fact that completion of the merger requires the approval of Mainland Bank’s shareholders;
the results that Mainland Bank could expect to obtain if it continued to operate independently, and the likely benefits to Mainland Bank shareholders of that course of action, as compared with the value of the merger consideration offered by Investar;
the ability of Investar to receive the requisite regulatory approvals in a timely manner;
the terms and conditions of the merger agreement, including the parties’ respective representations, warranties, covenants and other agreements and conditions to closing, including a provision that permits the Mainland Bank Board, in the exercise of its fiduciary duties, under certain conditions, to furnish information to a third party that has submitted an unsolicited proposal to acquire Mainland Bank;
that merging with a larger financial institution would provide the combined corporation the opportunity to realize economies of scale, increase efficiencies of operations and enhance the development of new products and services, potentially benefiting Mainland Bank’s shareholders that would receive Investar common stock in the merger;
that merging with an institution operating in markets outside Mainland Bank’s legacy markets allows the combined institution to have greater geographic diversification in its loan portfolio and both attract and provide better service to clients operating in both of the institutions’ legacy markets;
the requirement that Mainland Bank conduct its business in the ordinary course and the other restrictions on the conduct of Mainland Bank’s business before completion of the merger, which may delay or prevent Mainland Bank from undertaking business opportunities that may arise before completion of the merger; and
that under the merger agreement Mainland Bank could not solicit competing proposals for the acquisition of Mainland Bank.

30



The above-listed considerations are not intended to be exhaustive but include the material factors considered by the Mainland Bank Board in approving the merger and the merger agreement. In reaching its determination, the Mainland Bank Board did not assign any relative or specific weight to different factors and individual directors may have given different weight to different factors. Based upon the reasons stated above, the Mainland Bank Board believes that the merger is in the best interests of Mainland Bank and its shareholders, and, therefore, the Mainland Bank Board approved the merger agreement and the merger. Each member of the Mainland Bank Board has agreed to vote the shares of common stock of Mainland Bank over which he or she has voting authority in favor of the merger agreement and the merger It should be noted that this explanation of the Mainland Bank Board’s reasoning and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Special Cautionary Note Regarding Forward-Looking Statements.
MAINLAND BANK’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO APPROVE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT.
Opinion of Mainland Bank’s Financial Advisor
On October 9, 2018, Performance Trust rendered to Mainland Bank's board of directors its written opinion with respect to the fairness, from a financial point of view, to the holders of Mainland Bank common stock, of the merger consideration pursuant to the merger agreement.
Performance Trust’s opinion was directed to Mainland Bank’s board of directors and only addressed the fairness, from a financial point of view, to the holders of Mainland Bank common stock of the merger consideration and did not address any other aspect or implication of the merger. The references to Performance Trust’s opinion in this proxy statement/prospectus are qualified in their entirety by reference to the full text of Performance Trust’s written opinion, which is included as Annex B to this proxy statement/prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Performance Trust in preparing its opinion. However, neither Performance Trust’s opinion, nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus are intended to be, and they do not constitute, advice or a recommendation to Mainland Bank’s board or any shareholder of Mainland Bank as to how to act or vote with respect to any matter relating to the merger agreement or otherwise. Performance Trust’s opinion was furnished for the use and benefit of Mainland Bank’s board of directors (in its capacity as such) in connection with its evaluation of the merger and should not be construed as creating, and Performance Trust will not be deemed to have, any fiduciary duty to Mainland Bank’s board, Mainland Bank, any security holder or creditor of Mainland Bank or any other person, regardless of any prior or ongoing advice or relationships.
In issuing its opinion, among other things, Performance Trust:
(i)
reviewed a draft, dated October 4, 2018, of the merger agreement;
(ii)
reviewed certain publicly available business and financial information relating to Mainland Bank, Investar and its subsidiary, Investar Bank;
(iii)
reviewed certain other business, financial and operating information relating to Mainland Bank, Investar, and Investar Bank provided to Performance Trust by the management of Mainland Bank and the management of Investar, including financial forecasts for Mainland Bank for the 2018 to 2022 fiscal years ending December 31, and financial forecasts for Investar for the 2018 to 2020 fiscal years ending December 31;
(iv)
met with, either by phone or in person, certain members of the management of Mainland Bank and Investar to discuss the business and prospects of Mainland Bank and Investar and the proposed merger;

31



(v)
reviewed certain financial terms of the proposed transaction and compared certain of those terms with the publicly available financial terms of certain transactions that have recently been effected or announced;
(vi)
reviewed certain financial data of Mainland Bank and Investar, and compared that data with similar data for companies with publicly traded equity securities that Performance Trust deemed relevant;
(vii)
reviewed and compared certain financial metrics of Mainland Bank with certain financial metrics of Investar that Performance Trust deemed relevant; and
(viii)
considered such other information, financial studies, analyses and investigations and financial, economic and market criteria that Performance Trust deemed relevant.
In connection with its review, Performance Trust has not independently verified any of the foregoing information and Performance Trust has assumed and relied upon such information being complete and accurate in all material respects. With respect to the financial forecasts for Mainland Bank that Performance Trust used in its analyses, the management of Mainland Bank has advised Performance Trust, and it has assumed, that such forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Mainland Bank as to the future financial performance of Mainland Bank and Performance Trust expresses no opinion with respect to such estimates or the assumptions on which they are based. Performance Trust has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of Mainland Bank and Investar since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Performance Trust that would be material to its analyses or its opinion, and that there is no information or any facts that would make any of the information reviewed by Performance Trust incomplete or misleading. Performance Trust has also assumed, with Mainland Bank’s consent, that, in the course of obtaining any regulatory or third party consents, approvals or agreements in connection with the Merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on Mainland Bank, Investar or the contemplated benefits of the merger and that the merger will be consummated in accordance with the terms of the merger agreement without waiver, modification or amendment of any term, condition or provision thereof that would be material to Performance Trust’s analyses or its opinion. Performance Trust has assumed, with Mainland Bank’s consent, that the merger agreement, when executed by the parties thereto, conformed to the draft reviewed by Performance Trust in all respects material to its analyses.
Performance Trust’s opinion only addresses the fairness, from a financial point of view, of the merger consideration to the holders of Mainland Bank common stock in the manner set forth in the full text of its opinion, which is included as Annex B, and the opinion does not address any other aspect or implication of the merger or any agreement, arrangement or understanding entered into in connection with the merger or otherwise, including, without limitation, the amount or nature of, or any other aspect relating to, any compensation to any officers, trustees, directors or employees of any party to the merger, or class of such persons, relative to the merger consideration or otherwise.
The issuance of Performance Trust’s opinion was approved by an authorized internal committee of Performance Trust.
Performance Trust’s opinion was necessarily based upon information made available to it as of the date the opinion was delivered of October 9, 2018, and financial, economic, market and other conditions as they existed and could be evaluated on the date the opinion was delivered. Performance Trust has no obligation to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring after the date the opinion was delivered. Performance Trust’s opinion does not address the relative merits of the merger as compared to alternative transactions or strategies that might be available to Mainland Bank, nor does it address the underlying business decision of Mainland Bank or its board to approve, recommend or proceed with the merger. Furthermore, no opinion, counsel or interpretation is intended in matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, Performance Trust has relied on, with Mainland Bank’s consent, advice of the outside counsel

32



and the independent accountants of Mainland Bank, and on the assumptions of the management of Mainland Bank, as to all legal, regulatory, accounting, insurance and tax matters with respect to Mainland Bank, Investar, and the merger.
In preparing its opinion to Mainland Bank’s board, Performance Trust performed a variety of analyses, including those described below. The summary of Performance Trust’s analyses is not a complete description of the analyses underlying Performance Trust’s opinion. The preparation of a fairness opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaptation and application of those methods to the unique facts and circumstances presented. As a consequence, neither Performance Trust’s opinion nor the analyses underlying its opinion are readily susceptible to partial analysis or summary description. Performance Trust arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, analytic method or factor. Accordingly, Performance Trust believes that its analyses must be considered as a whole and that selecting portions of its analyses, analytic methods and factors, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.
In performing its analyses, Performance Trust considered business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. While the results of each analysis were taken into account in reaching its overall conclusion with respect to fairness, Performance Trust did not make separate or quantifiable judgments regarding individual analyses. The implied value reference ranges indicated by Performance Trust’s analyses are illustrative and not necessarily indicative of actual values nor predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond Mainland Bank’s control, Investar’s control, and Performance Trust’s control. Much of the information used in, and accordingly the results of, Performance Trust’s analyses are inherently subject to substantial uncertainty.
Performance Trust’s opinion and analyses were provided to Mainland Bank’s board of directors in connection with its consideration of the proposed merger and were among many factors considered by Mainland Bank’s board in evaluating the proposed merger. Neither Performance Trust’s opinion nor its analyses were determinative of the merger consideration or of the views of Mainland Bank’s board with respect to the proposed merger.
The following is a summary of the material financial analyses performed in connection with Performance Trust’s opinion rendered to Mainland Bank’s board of directors on October 9, 2018. No company or transaction used in the analyses described below is identical or directly comparable to Mainland Bank or the proposed transaction. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Performance Trust’s analyses.

33



Summary of Aggregate Merger Consideration and Implied Transaction Metrics
Performance Trust reviewed the financial terms of the proposed merger. Based on an assumption that each outstanding share of Mainland Bank common stock would be converted into the right to receive 3.0389 shares of Investar common stock, and based on Investar’s 10-day average closing stock price of $26.72 as of October 3, 2018, Performance Trust calculated an aggregate implied transaction value of approximately $20.4 million. Based upon historical financial information for Mainland Bank as of or for the last twelve months (“LTM”) ended June 30, 2018, Performance Trust calculated the implied transaction metrics listed in the table below. Note that Mainland Bank’s reported LTM earnings were adjusted to include the estimated impact of corporate tax provisions as a result of Mainland Bank’s Sub-S status during 2017.
Transaction Value / Tangible Book Value
161
%
Transaction Value / LTM Earnings
14.9x

Transaction Value / Assets
15.5
%
Core Deposit Premium
7.2
%
Selected Nationwide Transactions Analysis
Performance Trust analyzed publicly available financial information relating to selected nationwide business combinations and other transactions Performance Trust deemed relevant. Performance Trust considered transactions with publicly disclosed deal values announced between November 8, 2016 and October 4, 2018 involving targets with total assets between $100 million and $300 million, last twelve months’ return on average assets between 0.75% and 1.50%, tangible equity to tangible assets between 8.0% and 12.0%, and nonperforming assets to assets less than 2.50%. These transactions were selected because the target companies were deemed to be similar to Mainland Bank in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected transactions. Performance Trust identified a sufficient number of transactions for purposes of its analysis but may not have included all transactions that might be deemed comparable to the proposed merger. The 23 selected transactions used in this analysis included (buyer / seller - announce date):
Eagle Bancorp Montana, Inc. / Big Muddy Bancorp, Inc.- August 21, 2018
BayCom Corp / Bethlehem Financial Corporation - August 13, 2018
Richwood Bancshares, Inc. / Home City Financial Corporation - July 25, 2018
SmartFinancial, Inc. / Foothills Bancorp, Inc. - June 27, 2018
Citizens Community Bancorp, Inc. / United Bank - June 21, 2018
Merchants Bancorp / FM Bancorp, Inc. - June 13, 2018
Equity Bancshares, Inc. / City Bank and Trust Company- June 12, 2018
Ames National Corporation / Clarke County State Bank - April 19, 2018
First US Bancshares, Inc. / Peoples Bank - April 17, 2018
Guaranty Bancshares, Inc. / Westbound Bank - January 29, 2018
Equity Bancshares, Inc. / Adams Dairy Bancshares, Inc. - December 18, 2017
SmartFinancial, Inc. / Tennessee Bancshares, Inc. - December 12, 2017

34



Peoples Bancorp Inc. / ASB Financial Corp - October 24, 2017
Bank of Marin Bancorp / Bank of Napa, N.A. - July 31, 2017
Guaranty Bancorp / Castle Rock Bank Holding Co. - July 19, 2017
D2 Alliances, LLC / Grandview Bancshares, Inc. - July 03, 2017
Entegra Financial Corp. / Chattahoochee Bank of Georgia - June 27, 2017
Charter Financial Corporation / Resurgens Bancorp - June 01, 2017
Piedmont Bancorp, Inc. / Mountain Valley Bancshares, Inc. - March 17, 2017
Citizens Community Bancorp, Inc. / Wells Financial Corp. - March 17, 2017
Progress Financial Corporation / First Partners Financial, Inc. - February 14, 2017
Dickinson Financial Corp. II / Cmty. Bancshares of Kansas - December 16, 2016
Texas State Bankshares, Inc. / Blanco National Holdings, Inc. - November 29, 2016
Performance Trust reviewed financial data for the selected transactions, including transaction value to tangible book value, transaction value to LTM earnings, transaction value to total assets, and premium to core deposits, which were defined as total deposits excluding CDs greater than $100,000. Furthermore, Performance Trust applied the median, 25th percentile, and 75th percentile multiples of the selected transactions to Mainland Bank’s corresponding financial metrics as of June 30, 2018 to determine the implied aggregate deal value and then compared those implied aggregate deal values to the implied merger consideration of $20.4 million in the proposed transaction, which was based on Investar’s October 3, 2018 10-day average closing stock price of $26.72. The results of the selected transactions analysis are summarized below.
 
Proposed
Transaction
Multiples
 
Selected
Transactions
Median
 
Selected
Transactions
25th Percentile
 
Selected
Transactions
75th Percentile
Transaction Value / Tangible Book Value
161
%
 
156
%
 
145
%
 
165
%
Transaction Value / LTM Earnings
14.9x

 
15.9x

 
14.1x

 
18.7x

Transaction Value / Assets
15.5
%
 
15.1
%
 
13.2
%
 
17.4
%
Core Deposit Premium
7.2
%
 
8.9
%
 
6.5
%
 
10.5
%
 
Proposed
Considerations
($000s)
 
Implied Value Median
($000s)
 
Implied Value Low
($000s)
 
Implied Value High
($000s)
Transaction Value / Tangible Book Value
$
20,409

 
$
19,847

 
$
18,356

 
$
20,872

Transaction Value / LTM Earnings
$
20,409

 
$
21,795

 
$
19,343

 
$
25,558

Transaction Value / Assets
$
20,409

 
$
19,831

 
$
17,362

 
$
22,904

Core Deposit Premium
$
20,409

 
$
22,293

 
$
19,660

 
$
24,009

Selected Regional Transactions Analysis
Performance Trust analyzed publicly available financial information relating to selected regional business combinations and other transactions Performance Trust deemed relevant. Performance Trust considered transactions with publicly disclosed deal values announced between November 8, 2016 and October 4, 2018 involving targets headquartered in Texas, Colorado, Louisiana, New Mexico, or Oklahoma with total assets between $100 million and

35



$400 million and last twelve months’ (LTM) return on average assets above 0.75%. The selected transactions were selected because the target companies were deemed to be similar to Mainland Bank in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected transactions. Performance Trust identified a sufficient number of transactions for purposes of its analysis but may not have included all transactions that might be deemed comparable to the proposed merger. The 15 selected transactions used in this analysis included (buyer / seller - announce date):
BayCom Corp / Bethlehem Financial Corporation - August 13, 2018
Spirit of Texas Bancshares, Inc. / Comanche National Corporation - July 19, 2018
Equity Bancshares, Inc. / City Bank and Trust Company - June 12, 2018
Business First Bancshares, Inc. / Richland State Bancorp, Inc. - June 04, 2018
Guaranty Bancshares, Inc. / Westbound Bank - January 29, 2018
First Financial Bankshares, Inc. / Commercial Bancshares, Inc. - October 12, 2017
Business First Bancshares, Inc. / Minden Bancorp, Inc. - October 06, 2017
Investar Holding Corporation / BOJ Bancshares, Inc.- August 07, 2017
Triumph Bancorp, Inc. / Valley Bancorp, Inc. - July 26, 2017
Guaranty Bancorp / Castle Rock Bank Holding Co. - July 19, 2017
Equity Bancshares, Inc. / Eastman National Bancshares - July 17, 2017
Equity Bancshares, Inc. / Cache Holdings, Inc. - July 17, 2017
D2 Alliances, LLC / Grandview Bancshares, Inc. - July 03, 2017
Investar Holding Corporation / Citizens Bancshares, Inc.- March 08, 2017
Texas State Bankshares, Inc. / Blanco National Holdings, Inc. - November 29, 2016

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Performance Trust reviewed financial data for the selected transactions, including transaction value to tangible book value, transaction value to last twelve month’s (LTM) earnings, transaction value to total assets, and premium to core deposits, which were defined as total deposits excluding CDs greater than $100,000. Furthermore, Performance Trust applied the median, 25th percentile, and 75th percentile multiples of the selected transactions to Mainland Bank’s corresponding financial metrics as of June 30, 2018 to determine the implied aggregate deal value and then compared those implied aggregate deal values to the implied merger consideration of $20.4 million in the proposed transaction. The results of the selected transactions analysis are summarized below.
 
Proposed Transaction Multiples
 
Selected Transactions Median
 
Selected Transactions 25th Percentile
 
Selected Transactions 75th Percentile
Transaction Value / Tangible Book Value
161
%
 
160
%
 
146
%
 
181
%
Transaction Value / LTM Earnings
14.9x

 
17.2x

 
12.4x

 
20.1x

Transaction Value / Assets
15.5
%
 
15.5
%
 
14.4
%
 
17.7
%
Core Deposit Premium
7.2
%
 
7.3
%
 
6.5
%
 
11.6
%
 
Proposed Consideration
($000s)
 
Implied Value Median
($000s)
 
Implied Value Low
($000s)
 
Implied Value High
($000s)
Transaction Value / Tangible Book Value
$
20,409

 
$
20,267

 
$
18,554

 
$
22,965

Transaction Value / LTM Earnings
$
20,409

 
$
23,553

 
$
17,030

 
$
27,565

Transaction Value / Assets
$
20,409

 
$
20,330

 
$
18,899

 
$
23,193

Core Deposit Premium
$
20,409

 
$
20,555

 
$
19,660

 
$
25,206

Mainland Bank Selected Public Companies Analysis
Performance Trust considered certain financial information for Mainland Bank and compared it with selected companies whose equity is publicly traded that Performance Trust deemed relevant. The selected public companies listed below include banks with total assets between $100 million and $250 million, 2018 year-to-date (YTD) return on average assets between 0.75% and 1.25%, tangible equity to tangible assets between 8.0% and 13.0%, non-performing assets to assets of less than 2.50%, and a minimum 90-day average daily trading volume of 50 shares per day. Targets of announced mergers were excluded from the group. The selected companies were selected because they were deemed similar to Mainland Bank in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected companies, and all criteria were evaluated in their entirety without application of definitive qualifications or limitations to individual criteria. Performance Trust identified a sufficient number of companies for purposes of its analysis but may not have included all publicly traded companies that might be deemed comparable to Mainland Bank. The 16 selected companies used in this analysis included:
Cornerstone Community Bancorp - Red Bluff, California
Peoples Bancorp, Inc. - Chestertown, Maryland
Farmers Bank of Appomattox - Appomattox, Virginia
Northern California National Bank - Chico, California
Pinnacle Bancshares, Inc. - Jasper, Alabama
Partners Bank of California - Mission Viejo, California
blueharbor bank - Mooresville, North Carolina

37



Chino Commercial Bancorp - Chino, California
Virginia Bank Bankshares, Inc. - Danville, Virginia
Lewis & Clark Bank - Oregon City, Oregon
Edgewater Bancorp, Inc. - Saint Joseph, Michigan
Community Investors Bancorp, Inc. - Bucyrus, Ohio
Ohana Pacific Bank - Honolulu, Hawaii
Community 1st Bank - Post Falls, Idaho
Republic Bank of Arizona - Phoenix, Arizona
Empire Bancshares, Inc. - Hicksville, Ohio
Performance Trust reviewed financial data for the selected companies, including trading value to tangible book value and trading value to YTD earnings. Furthermore, Performance Trust applied the median, 25th percentile, and 75th percentile multiples of the selected companies to Mainland Bank’s corresponding financial metrics as of June 30, 2018 to determine the implied aggregate deal value and then compared those implied aggregate deal values to the implied merger consideration of $20.4 million in the proposed transaction. The analysis was based on pricing data as of October 5, 2018. Profitability metrics and price-to-earnings (P/E) multiples for publicly traded banks based on June 30, 2018 YTD financials as a result of the fourth quarter 2017 corporate tax reform and related deferred tax asset write-downs. The results of the Mainland Bank selected companies analysis are summarized below.
 
Proposed Transaction Multiples
 
Selected Companies Median
 
Selected Companies 25th Percentile
 
Selected Companies 75th Percentile
Trading Price / Tangible Book Value
161
%
 
115
%
 
99
%
 
134
%
Trading Price / 2018 YTD Earnings
14.9x

 
14.0x

 
10.2x

 
15.5x

 
Proposed Consideration
($000s)
 
Implied Value Median
($000s)
 
Implied Value Low
($000s)
 
Implied Value High
($000s)
Trading Price / Tangible Book Value
$
20,409

 
$
14,647

 
$
12,505

 
$
16,972

Trading Price / LTM Earnings
$
20,409

 
$
19,096

 
$
13,967

 
$
21,190

Dividend Discount Analysis
Performance Trust analyzed the discounted present value of Mainland Bank’s projected free cash flows to equity for the years ending December 31, 2018 through December 31, 2022 on a standalone basis. Performance Trust calculated cash flows assuming Mainland Bank would maintain an 8.00% tangible common equity to tangible assets ratio, and that it would retain sufficient earnings to maintain that ratio and dividend out any excess cash flows. This analysis was based on the financial forecasts for Mainland Bank prepared by Mainland Bank management and approved for use in this analysis by Mainland Bank management.
Performance Trust applied price to tangible book value multiples, ranging from 140% to 180%, to Mainland Bank’s projected December 31, 2022 tangible book value and price to earnings multiples, ranging from 12.0x to 16.0x, to Mainland Bank’s projected calendar year 2022 net income in order to derive a range of projected terminal values for Mainland Bank at December 31, 2022. The projected cash flows and terminal values were discounted using a rate ranging from 14.50% to 16.50%, which reflected the cost of equity capital for Mainland Bank using a discount rate build-up method based on the sum of the risk-free free rate, industry equity risk premium, size premium, and specific

38



company risk factor. Performance Trust reviewed the range of aggregate prices derived in the dividend discount analysis and compared them to the implied merger consideration of $20.4 million in the proposed transaction. The results of the dividend discount analysis are summarized below.
 
Proposed Consideration
($000s)
 
Implied Value Median
($000s)
 
Implied Value Low
($000s)
 
Implied Value High
($000s)
Terminal Value Based on TBV Multiple
$
20,409

 
$
16,072

 
$
14,220

 
$
18,071

Terminal Value Based on P/E Multiple
$
20,409

 
$
17,275

 
$
15,019

 
$
19,712

Investar Selected Public Companies Analysis
Performance Trust considered certain financial information for Investar and compared it with selected companies whose equity is publicly traded that Performance Trust deemed relevant. The selected public companies listed below include banks headquartered in Texas, Colorado, Louisiana, New Mexico, Oklahoma, or Utah with total assets between $1 billion and $5 billion. The selected companies were selected because they were deemed similar to Investar in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected companies, and all criteria were evaluated in their entirety without application of definitive qualifications or limitations to individual criteria. Performance Trust identified a sufficient number of companies for purposes of its analysis but may not have included all publicly traded companies that might be deemed comparable to Investar. The ten selected companies used in this analysis included:
Origin Bancorp, Inc. - Ruston, Louisiana
Triumph Bancorp, Inc. - Dallas, Texas
Veritex Holdings, Inc. - Dallas, Texas
CBTX, Inc. - Beaumont, Texas
Allegiance Bancshares, Inc. - Houston, Texas
People’s Utah Bancorp - American Fork, Utah
Home Bancorp, Inc. - Lafayette, Louisiana
First Guaranty Bancshares, Inc. - Hammond, Louisiana
Business First Bancshares, Inc. - Baton Rouge, Louisiana
Spirit of Texas Bancshares, Inc. - Conroe, Texas

39



Performance Trust reviewed financial data for the selected companies, including trading value to tangible book value, trading value to estimated 2018 earnings, and trading value to estimated 2019 earnings. The analysis was based on pricing data as of October 5, 2018. The 2018 and 2019 estimated earnings for the selected companies were based on consensus analyst earnings estimates as reported by S&P Global Market Intelligence. The table below indicates the selected financial data for Investar and the median, 25th percentile, and 75th percentile for the Investar selected companies peer group.
 
Investar Multiples
 
Selected Companies Median
 
Selected Companies 25th Percentile
 
Selected Companies 75th Percentile
Trading Value / Tangible Book Value
161
%
 
193
%
 
169
%
 
226
%
Trading Value / 2018E Earnings
15.8x

 
16.7x

 
14.8x

 
18.4x

Trading Value / 2019E Earnings
13.5x

 
13.1x

 
11.8x

 
15.0x

Relative Contribution Analysis
Performance Trust considered certain standalone operating and financial metrics of Mainland Bank and Investar and reviewed the relative standalone contribution of Mainland Bank and Investar to certain operating and financial metrics of the combined company. To perform this analysis, Performance Trust used balance sheet data as of June 30, 2018, net income for the six months ended June 30, 2018, projected net income for Mainland Bank for 2018 and 2019 based on the financial forecasts prepared by Mainland Bank management and projected net income for Investar for 2018 and 2019 based on consensus research analyst estimates as reported by S&P Global Market Intelligence. The relative contribution analysis did not give effect to the impact of any synergies resulting from the proposed merger.
The results of the relative contribution analysis are summarized below.
 
Contribution
 
Investar
 
Mainland Bank
Total Assets
92.8
%
 
7.2
%
Gross Loans Held for Investment
93.6
%
 
6.4
%
Total Deposits
91.6
%
 
8.4
%
Tangible Common Equity
92.5
%
 
7.5
%
June 30, 2018 YTD Net Income
90.9
%
 
9.1
%
2018E Net Income
90.9
%
 
9.1
%
2019E Net Income
92.3
%
 
7.7
%
Proposed Ownership at 3.0389 Exchange Ratio
92.6
%
 
7.4
%
Other Matters
Mainland Bank engaged Performance Trust as financial advisor in connection with the potential merger based on Performance Trust’s experience, reputation, and familiarity with Mainland Bank’s business. Performance Trust has an investment banking division and is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions. Performance Trust will receive a customary investment banking fee for its services, a significant portion of which is contingent upon consummation of the transaction. Mainland Bank has previously paid Performance Trust a $25,000 retainer and a fee of $50,000 upon delivery of its fairness opinion, which, if the merger is completed, will both be credited against Performance Trust’s investment banking fee. In addition, Mainland Bank has agreed to indemnify Performance Trust and certain related parties for certain liabilities arising out of or related to the engagement and to reimburse Performance Trust for certain expenses incurred in connection with its engagement.

40



Performance Trust is a broker-dealer engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Performance Trust and its affiliates may acquire, hold or sell, for its and its affiliates own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of Mainland Bank, Investar and certain of their affiliates as well as provide investment banking and other financial services to such companies and entities.
Investar’s Reasons for the Merger
After careful consideration, Investar’s board of directors, at a meeting held on October 8, 2018, determined that the merger agreement and the transactions contemplated thereby, including the issuance of 763,849 shares of Investar common stock, subject to the adjustments described in the merger agreement, is in the best interests of Investar and its shareholders.
In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement, Invstar’s board of directors consulted with Investar’s management and legal and financial advisors and, in reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, Investar’s board of directors considered a number of factors, including the following material factors:
each of Investar’s, Mainland Bank’s, and the combined company’s business, operations, financial condition, asset quality, earnings and prospects;
Mainland Bank’s presence in the attractive Greater Houston market;
the potential to broaden the scale of Investar’s organization and the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company, given its larger size, asset base, capital and footprint;
the anticipated pro forma impact of the merger on the combined company, including the expected positive impact on financial metrics including earnings, funding sources and capital;
the complementary nature of the cultures of the two companies, which management believes should facilitate integration and implementation of the merger;
its review and discussions with Investar’s management concerning the due diligence examination of Mainland Bank’s business;
the expectation of annual cost savings resulting from the transaction, enhancing efficiencies;
the terms of the merger agreement, including the expected tax treatment and deal protection and termination fee provisions, which it reviewed with Investar’s management and legal advisor.
Investar’s board of directors also considered the potential risks related to the merger but concluded that the anticipated benefits of the merger were likely to outweigh these risks. These potential risks include:
the possibility of encountering difficulties in achieving anticipated cost synergies and savings in the amounts estimated or in the time frame contemplated;
the possibility of encountering difficulties in successfully integrating Mainland Bank’s business, operations, and workforce with those of Investar;
certain anticipated merger related costs;
the diversion of management attention and resources from the operation of Investar’s business towards the completion of the merger;

41



the regulatory and other approvals required in connection with the merger and the risk that such regulatory approvals will not be received in a timely manner or may impose unacceptable conditions;
the merger’s effect on Investar’s regulatory capital levels; and
other risks, including those set forth in this proxy statement/prospectus under the heading “Risk Factors.
The foregoing discussion of the factors considered by Investar’s board of directors is not intended to be exhaustive, but, rather, includes the material factors considered by Investar’s board of directors. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, Investar’s board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. Investar’s board of directors considered all of these factors as a whole and overall considered the factors to be favorable to, and to support, its determination. It should be noted that this explanation of Investar’s board of director’s reasoning and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Special Cautionary Note Regarding Forward-Looking Statements.
Interests of Mainland Bank’s Directors and Executive Officers in the Merger
In considering the recommendation of the Mainland Bank Board that Mainland Bank shareholders vote in favor of the Mainland Bank merger proposal, Mainland Bank shareholders should be aware that Mainland Bank directors and executive officers may have interests in the merger that differ from, or are in addition to, their interests as shareholders of Mainland Bank. The Mainland Bank Board was aware of these interests and took them into account in its decision to approve the merger agreement and the merger. Such interests include the following items.
Change in Control Bonus Agreements. Mainland Bank previously entered into Change in Control Bonus Agreements with three of its executive officers - Clifton E. Lamar, Debra L. McGee, and Kyle T. McClellen. Upon consummation of the merger, these individuals would be entitled to cash payments under those agreements equal to, in the aggregate, approximately $370,000.
Indemnification and Insurance. For a period of four years following the effective time, Investar has agreed to indemnify the directors and officers of Mainland Bank against liabilities arising before the effective time to the same extent that those individuals would have been entitled to indemnification under applicable law or Mainland Bank’s constituent documents prior to the effective time. Mainland Bank has agreed to pay for tail insurance premiums for the past acts and extended reporting period insurance coverage under Mainland Bank’s current directors’ and officers’ insurance policy (or comparable coverage) for a period of four years following the merger.
Employee Benefit Plans.  On or as soon as reasonably practicable following the merger, employees of Mainland Bank who continue on as employees of Investar will be entitled to participate in the Investar health and welfare benefit and similar plans on the same terms and conditions as employees of Investar. Subject to certain exceptions, these employees will receive credit for their years of service to Mainland Bank or Mainland Bank for participation, vesting and benefit accrual purposes.
Mainland Bank does not anticipate that any of the payments described above will impact the amount of the per share merger consideration payable to the Mainland Bank shareholders. However, the payments to be made under existing Mainland Bank employment arrangements with employees and payments for the tail insurance coverage will be considered transaction expenses under the merger agreement for purposes of determining whether there would be a corresponding downward adjustment to the aggregate merger consideration. For additional information on the potential adjustments to the aggregate cash consideration, please see “The Merger Agreement—Structure of the Merger—Adjustments to Merger Consideration.”

42



Public Trading Markets
Investar common stock is listed for trading on NASDAQ under the symbol “ISTR.” Following the merger, shares of Investar common stock will continue to be traded on NASDAQ under the symbol “ISTR.” Investar expects to cause the shares of Investar common stock to be issued in the merger to be approved for listing on NASDAQ, subject to notice of issuance. See “Comparative Market Prices and Dividends.
Restrictions on Resale of Investar Common Stock
The shares of Investar common stock to be issued in connection with the merger will be registered under the Securities Act, and will be freely transferable, except for shares issued to any shareholder who may be deemed to be an “affiliate” of Investar for purposes of Rule 144 under the Securities Act. Persons who may be deemed to be affiliates of Investar include individuals or entities that control, are controlled by, or are under common control with Investar and may include the executive officers, directors and significant shareholders of Investar.
Dissenters’ Rights in the Merger
The following discussion is not a complete description of the law relating to dissenters’ rights available under Texas law. This description is qualified in its entirety by the full text of the relevant provision of the TBOC, which is reprinted in its entirety as Annex C to this proxy statement/prospectus. If you desire to exercise your dissenters’ rights, you should review carefully the TBOC and are urged to consult a legal advisor before electing or attempting to exercise these rights.
Holders of the common stock of Mainland Bank who are entitled to vote on the merger have a right to demand payment in cash of the “fair value” of their shares of Mainland Bank common stock. Shareholders who receive a fair value cash payment will not be entitled to receive any shares of Investar common stock or the cash consideration offered in the merger. Chapter 10, Subchapter H of the TBOC sets forth the rights of Mainland Bank’s shareholders who wish to demand fair value payments for their shares. The following is a summary of the material terms of the statutory procedures to be followed by a holder of Mainland Bank’s common stock in order to perfect dissenters’ rights under the TBOC. Shareholders who do not properly follow dissenters’ rights procedures will receive the merger consideration provided under the merger agreement if the merger is effected. A copy of Chapter 10, Subchapter H of the TBOC is attached as Annex C to this proxy statement/prospectus.
How to Exercise and Perfect Your Right to Dissent. To be eligible to exercise your right to dissent to the merger:
you must, prior to the Mainland Bank special meeting, provide Mainland Bank with a written objection to the merger that states that you intend to exercise your right to dissent if the merger agreement is approved and the merger is completed and that provides an address to which a notice of effectiveness of the merger should be delivered or mailed to you if the merger is completed;
you must vote your shares of Mainland Bank stock against approval of the Mainland Bank merger proposal at the Mainland Bank special meeting in person or by proxy;
you must, not later than the 20th day after Investar (which will be the ultimate successor to Mainland Bank) sends you notice that the merger was completed, deliver to Investar a written demand for payment of the fair value of the shares of Mainland Bank stock you own that states the number and class of shares of Mainland Bank stock you own, your estimate of the fair value of such stock and an address to which a notice relating to the dissent and appraisal procedures may be sent; and
you must, not later than the 20th day after you make your demand for payment to Investar as described above, submit your certificates representing Mainland Bank stock to Investar.

43



If you intend to exercise your right to dissent from the merger, prior to the Mainland Bank special meeting you must send the notice of objection to Mainland Bank, addressed to:
Mainland Bank
2501 Palmer Highway, Suite 100
Texas City, Texas 77590
Attention: Corporate Secretary
If you fail to send the written objection to the merger in the proper form and prior to the Mainland Bank special meeting, to vote your shares of Mainland Bank stock at the Mainland Bank special meeting against the approval of the Mainland Bank merger proposal or to submit your demand for payment in the proper form and on a timely basis, you will lose your right to dissent from the merger. If you fail to submit to Investar on a timely basis the certificates representing the shares of Mainland Bank stock after you have submitted the demand for payment as described above, Investar will have the option to terminate your right of dissent as to your shares of Mainland Bank stock. In any instance of a termination or loss of your right of dissent, you will instead receive the merger consideration as set forth in the merger agreement. If you comply with the first two items above and the merger is completed, Investar will send you a written notice advising you that the merger has been completed. Investar must deliver this notice to you within ten days after the merger is completed.
Your Demand for Payment. If the merger is completed, you have provided your written objection to the merger to Mainland Bank in a timely manner and in proper form and you have voted against the merger agreement at the Mainland Bank special meeting as described above and you desire to receive the fair value of your shares of Mainland Bank stock in cash, you must, within 20 days of the date on which Investar sends to you the notice of the effectiveness of the merger, give Investar a written demand for payment of the fair value of your shares of Mainland Bank stock. The fair value of your shares of Mainland Bank stock will be the value of the shares on the day immediately preceding the merger, excluding any appreciation or depreciation in anticipation of the merger. After the merger is completed, your written demand and any notice sent to Investar must be addressed to:
Investar Holding Corporation
10500 Coursey Blvd., 3rd Floor
Baton Rouge, Louisiana 70816
Attention: Corporate Secretary
Your written demand must include a demand for payment for your shares for which rights of dissent and appraisal are sought and must state the number of shares and class of Mainland Bank stock you own and your estimate of the fair value of your shares of Mainland Bank stock and an address to which a notice relating to the dissent and appraisal procedures may be sent. This written demand must be delivered to Investar within 20 days of the date on which Investar sends to you the notice of the effectiveness of the merger. If your written demand for payment in proper form is not received by Investar within that 20 day period, you will be bound by the merger and you will not be entitled to receive a cash payment representing the fair value of your shares of Mainland Bank stock. Instead, you will receive shares of Investar common stock and cash as the merger consideration set forth in the merger agreement.
Delivery of Stock Certificates. If you have satisfied the requirements for the exercise of your right to dissent described above, including the delivery of the written demand for payment to Investar as described above, you must, not later than the 20th day after you make your written demand for payment to Investar, submit to Investar your certificate or certificates representing the shares of Mainland Bank stock you own. You may submit those certificates with your demand for payment if you prefer. In accordance with the provisions of the TBOC, Investar will note on each such certificate that you have demanded payment of the fair value of the shares of Mainland Bank stock that were represented by such certificate under the provisions of the TBOC relating to the rights of dissenting owners. After making those notations on those certificates, Investar will return each such certificate to you at your request. If you fail to submit all of the certificates representing the shares of Mainland Bank stock for which you have exercised the right of dissent in a timely fashion, Investar will have the right to terminate your rights of dissent and appraisal with respect to all of your shares of Mainland Bank stock unless a court, for good cause shown, directs Investar not to terminate those rights.

44



Investar’s Actions Upon Receipt of Your Demand for Payment. Within 20 days after Investar receives your written demand for payment and your estimate of the fair value of your shares of Mainland Bank stock submitted as described above, Investar must send you written notice stating whether or not it accepts your estimate of the fair value of your shares.
If Investar accepts your estimate, Investar will notify you that it will pay the amount of your estimated fair value within 90 days after the effective date of the merger. Investar will make this payment to you only if you have surrendered the share certificates representing your shares of Mainland Bank stock, duly endorsed for transfer, to Investar.
If Investar does not accept your estimate, Investar will notify you of this fact and will make an offer of an alternative estimate of the fair value of your shares that it is willing to pay you within 120 days after the effective date of the merger, which you may accept within 90 days after the effective date of the merger or decline.
Payment of the Fair Value of Your Shares of Mainland Bank Stock upon Agreement of an Estimate. If you and Investar have reached an agreement on the fair value of your shares of Mainland Bank stock within 90 days after the effective date of the merger, Investar must pay you the agreed amount within 120 days after the effective date of the merger, provided that you have surrendered the share certificates representing your shares of Mainland Bank stock, duly endorsed for transfer, to Investar.
Commencement of Legal Proceedings if a Demand for Payment Remains Unsettled. If you and Investar have not reached an agreement as to the fair market value of your shares of Mainland Bank stock within 90 days after the effective date of the merger, you or Investar may, within 60 days after the expiration of the 90-day period, commence proceedings in Galveston County, Texas asking the court to determine the fair value of your shares of Mainland Bank stock. The court will determine if you have complied with the provisions of the TBOC regarding your right of dissent and if you have become entitled to receive payment for your shares of Mainland Bank stock. The court will appoint one or more qualified persons to act as appraisers to determine the fair value of your shares in the manner prescribed by the TBOC. The appraisers will determine the fair value of your shares and will report this value to the court. Once the appraisers’ report is filed with the court, you will receive a notice from the court indicating that the report has been filed. You will be responsible for obtaining a copy of the report from the court. If you or Investar objects to the report or any part of it, the court will hold a hearing to determine the fair value of your shares of Mainland Bank stock. Both you and Investar may address the court about the report. The court will determine the fair value of your shares and direct Investar to pay that amount, plus interest, which will begin to accrue 91 days after the merger is completed. The court may require you to share in the court costs relating to the matter to the extent the court deems it fair and equitable that you do so.
Rights as a Shareholder. If you have made a written demand on Investar for payment of the fair value of your shares of Mainland Bank stock, you will not thereafter be entitled to vote or exercise any other rights as a shareholder of Investar, but will only have the right to receive payment for your shares as described herein and the right to maintain an appropriate action to obtain relief on the ground that the merger would be or was fraudulent. In the absence of fraud in the transaction, your right under the dissent provisions described herein is the exclusive remedy for the recovery of the value of your shares of Mainland Bank stock or money damages with respect to the merger.
Withdrawal of Demand. If you have made a written demand on Investar for payment of the fair value of your Mainland Bank stock, you may withdraw such demand at any time before payment for your shares has been made or before a petition has been filed with a court for determination of the fair value of your shares. If you withdraw your demand or are otherwise unsuccessful in asserting your dissenters’ rights, you will be bound by the merger and you will have the same rights to receive of the merger consideration with respect to your shares of Mainland Bank stock as you would have had if you had not made a demand for payment as to those shares, as well as to participate to the appropriate extent in any dividends or distributions on the shares of Investar common stock that may have been paid to Investar shareholders after the effective date of the merger. Such rights will, however, be subject to any change in or adjustment to those shares made because of an action taken after the date your demand for payment.

45



Beneficial Owners. Persons who beneficially own shares of Mainland Bank stock that are held of record in the name of another person, such as a broker, bank, trustee or other nominee, and who desire to have the right of dissent exercised as to those shares must act promptly to cause the record holder of those shares to take the actions required under Texas law to exercise the dissenter’s rights with respect to those shares. Only the persons in whose names shares of Mainland Bank stock are registered on the share transfer records of Mainland Bank may exercise the right of dissent and appraisal discussed above.
U.S. Federal Income Tax Consequences. See the section of this proxy statement/prospectus entitled, “Material U.S. Federal Income Tax Consequences of the Merger,” for a discussion on how the federal income tax consequences of your action will change if you elect to dissent from the merger.
You should remember that if you return a signed proxy card, but fail to provide instructions as to how your shares of Mainland Bank stock are to be voted, you will be considered to have voted in favor of the merger agreement and you will not be able to assert dissenters’ rights. You should also remember that if you otherwise vote at the Mainland Bank special meeting in favor of the merger agreement, you will not be able to assert dissenters’ rights.
The foregoing summary is not intended to be a complete statement of the procedures for exercising dissenter’s rights under the TBOC and is qualified in its entirety by reference to the full text of Chapter 10, Subchapter H of the TBOC, a copy of which is attached as Annex C to this proxy statement/prospectus. Mainland Bank urges any shareholder wishing to exercise dissenters’ rights, if any, to read this summary and the TBOC provisions carefully, and to consult legal counsel before attempting to exercise dissenters’ rights. Failure to comply strictly with all of the procedures set forth in of Chapter 10, Subchapter H of the TBOC may result in the loss of your statutory dissenters’ rights.
Regulatory Approvals Required for the Merger
The completion of the merger is subject to prior receipt of certain approvals and consents required to be obtained from applicable governmental and regulatory authorities. These approvals include approvals from, among others, the FDIC and the OFI. Subject to the terms of the merger agreement, both Mainland Bank and Investar have agreed to cooperate with each other and use their commercially reasonable efforts to obtain all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement, including the merger.
The merger of Mainland Bank with and into Investar Bank requires the approval of the FDIC and the OFI. On November 14, 2018, Investar Bank and Mainland Bank filed the required application with the FDIC and the OFI, and provided a copy of that application to the Texas Department of Banking. Although neither Mainland Bank nor Investar knows of any reason why it cannot obtain the necessary regulatory approvals in a timely manner, Mainland Bank and Investar cannot be certain when or if they will be obtained.
The U.S. Department of Justice has between 15 and 30 days following approval by the FDIC to challenge the approval on antitrust grounds. While Investar and Mainland Bank do not know of any reason that the Department of Justice would challenge regulatory approval and believe that the likelihood of such action is remote, there can be no assurance that the Department of Justice will not initiate such a proceeding, or if such a proceeding is initiated, as to the result of any such challenge.
Notifications and/or applications requesting approval may be submitted to various other federal and state regulatory authorities and self-regulatory organizations.
The approval of any notice or application merely implies satisfaction of regulatory criteria for approval, and does not include review of the merger from the standpoint of the adequacy of the consideration to be received by, or fairness to, shareholders. Regulatory approval does not constitute an endorsement or recommendation of the proposed transaction.
Investar and Mainland Bank are not aware of any material governmental approvals or actions that are required prior to the parties’ completion of the merger other than those described in this proxy statement/prospectus. If any

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additional governmental approvals or actions are required, the parties presently intend to seek those approvals or actions. However, the parties cannot assure you that any of these additional approvals or actions will be obtained.


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THE MERGER AGREEMENT
The following describes certain aspects of the merger, including certain material provisions of the merger agreement. The following description of the merger agreement is subject to, and qualified in its entirety by reference to, the merger agreement, which is attached to this proxy statement/prospectus as Annex A and is incorporated by reference into this proxy statement/prospectus. We urge you to read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.
Structure of the Merger
Each of the boards of directors of Investar and Mainland Bank has approved the merger agreement. Under the merger agreement, Mainland Bank will merge with and into Investar Bank, with Investar Bank surviving the merger.
Prior to the effective time, Investar may elect to modify the method or structure of effecting the combination of Mainland Bank and Investar, so long as (i) there are no material adverse federal income tax consequences to the shareholders of Mainland Bank as a result of such modification, (ii) the consideration to be paid to Mainland Bank shareholders is not thereby changed in kind or reduced in amount solely because of such modification and (iii) such modification will not be likely to materially delay or jeopardize receipt of any required regulatory approvals.
Merger Consideration
If the merger is completed, all of the issued and outstanding shares of Mainland Bank common stock will be converted into the right to receive the aggregate merger consideration consisting of an aggregate of 763,849 shares of Investar common stock, which is subject to downward adjustment as described below. Each share of Mainland Bank common stock, other than shares of Mainland Bank common stock held by any shareholder of Mainland Bank (other than a dissenting shareholder), will be exchanged for a number of shares of Investar common stock equal to the aggregate merger consideration divided by the number of outstanding shares of Mainland Bank common stock immediately prior to the effective time. There are expected to be 251,357 outstanding shares of Mainland Bank common stock immediately prior to the effective time. As a result of the merger and assuming no adjustment to the aggregate merger consideration, holders of shares of Mainland Bank common stock are expected to receive 3.0389 shares of Investar common stock for each share of Mainland Bank common stock held immediately prior to the merger. Mainland Bank shareholders will receive cash in lieu of fractional shares as described in more detail in this proxy statement/prospectus.
As a result of the foregoing and assuming no adjustments to the aggregate merger consideration, based on the number of shares of Investar common stock and Mainland Bank common stock outstanding as of December 12, 2018, the latest practicable date prior to the printing of this proxy statement/prospectus, approximately 92.6% of outstanding Investar common stock following the merger will be held by shareholders who were holders of Investar common stock immediately prior to the effectiveness of the merger and approximately 7.4% of outstanding Investar common stock will be held by shareholders who were holders of Mainland Bank common stock immediately prior to the effectiveness of the merger.
The value of the aggregate merger consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value for Investar common stock. Consequently, you will not know the implied value of the per share merger consideration to be paid to Mainland Bank shareholders as a result of the merger when you vote at the special meeting.

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The table below sets forth the implied value of the per share merger consideration based on the closing price of Investar common stock as quoted by NASDAQ on the specified dates assuming 251,357 issued and outstanding shares of Mainland Bank common stock:
Date
Closing price of Investar common stock
 
Implied value of per share merger consideration(4)
 
Implied value of aggregate merger consideration
October 9, 2018(1)
$25.81
 
$78.43
 
$19,714,937
November 28, 2018(2)
$24.64
 
$74.88
 
$18,821,234
December 12, 2018(3)
$25.50
 
$77.49
 
$19,478,144
______________________________
(1)
The last trading day before public announcement of the merger.
(2)
The latest practicable trading day before the initial filing of this proxy statement/prospectus.
(3)
The latest practicable trading day before the printing of this proxy statement/prospectus.
(4)
Assumes there is no downward adjustment to the aggregate merger consideration based upon Mainland Bank’s aggregate transaction expenses. For a discussion of the possible adjustments to the aggregate merger consideration, see “The Merger Agreement—Structure of the Merger—Adjustments to Merger Consideration.”

Adjustments to Merger Consideration
The aggregate merger consideration is subject to a downward adjustment to the extent that the Mainland Bank Transaction Expenses exceed $1,075,000. If the Mainland Bank Transaction Expenses are more than $1,075,000, then number of shares of Investar common stock making up the aggregate merger consideration will be reduced by a number of shares of Investar common stock equal to the quotient obtained by dividing: (i) the difference between the aggregate Mainland Bank Transaction Expenses and $1,075,000 by (ii) $26.54. As of December 12, 2018, the most recent practicable date before the printing of this proxy statement/prospectus, Mainland Bank estimates that Mainland Bank’s transaction expenses will not exceed $1,075,000, resulting in no downward adjustment to the aggregate merger consideration.
Fractional Shares
Investar will not issue any fractional shares of Investar common stock in the merger. Mainland Bank shareholders who would otherwise be entitled to a fraction of a share of Investar common stock upon the completion of the merger will instead be entitled to receive, in lieu of the fraction of a share, an amount in cash (rounded to the nearest cent) determined by multiplying $26.54 by the fraction of a share of Investar common stock which such shareholder would otherwise be entitled to receive.
Governing Documents; Directors and Officers; Governance Matters
At the effective time, the articles of incorporation and bylaws of Investar Bank in effect immediately prior to the effective time will be the articles of incorporation and bylaws of the surviving bank after completion of the merger, until thereafter amended in accordance with applicable law. The directors and executive officers of Investar Bank immediately prior to the effective time shall be the directors and executive officers of the surviving bank and will hold office until their respective successors and assigns are duly elected and qualified, or their earlier death, resignation or removal. None of the current directors of Mainland Bank will continue as members of the board of directors of Investar or Investar Bank following completion of the merger.
Closing and Effective Time
The merger will be completed only if all conditions to the merger discussed in this proxy statement/prospectus and set forth in the merger agreement are either satisfied or waived. See “—Conditions to Complete the Merger.”
The merger will become effective at the date and time specified in the related certificates of merger issued by the OFI. The closing of the merger will occur on a date to be determined by Mainland Bank and Investar, that is no

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later than 15 business days after the receipt of all necessary regulatory, corporate and other approvals and the expiration of all mandatory waiting periods, unless extended by mutual agreement of the parties. It currently is anticipated that the completion of the merger will occur in the first quarter of 2019, subject to the receipt of regulatory approvals and the satisfaction of other closing conditions set forth in the merger agreement, but neither Mainland Bank nor Investar can guarantee when or if the merger will be completed.
Conversion of Shares; Exchange of Certificates
The conversion of Mainland Bank common stock into the right to receive the merger consideration will occur automatically at the effective time. After completion of the merger, the exchange agent will exchange certificates representing shares of Mainland Bank common stock for the merger consideration to be received pursuant to the terms of the merger agreement.
Letter of Transmittal
As soon as practicable after the effective time the exchange agent will mail to each holder of record of Mainland Bank common stock as of the effective time a letter of transmittal and instructions on how to surrender shares of Mainland Bank common stock in exchange for the merger consideration the holder is entitled to receive under the merger agreement.
If a certificate for Mainland Bank common stock has been lost, stolen or destroyed, the exchange agent will issue the merger consideration upon receipt of (i) an affidavit of that fact by the claimant and (ii) if required by Investar or the exchange agent, the posting of a bond in an amount as Investar may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such certificate.
After the effective time, there will be no further transfers on the stock transfer books of Mainland Bank of shares of Mainland Bank common stock that were issued and outstanding immediately prior to the effective time, other than to settle transfers of Mainland Bank common stock that occurred prior to the effective time.
Withholding
The exchange agent will be entitled to deduct and withhold from the merger consideration and any other cash amounts otherwise payable pursuant to the merger agreement to any holder of Mainland Bank common stock (including with respect to any shares of dissenting shareholders) such amounts as the exchange agent or Investar, as the case may be, is required to deduct and withhold under the Code or any provision of state, local or foreign tax law. If any such amounts are withheld and paid over to the appropriate governmental authority, these amounts will be treated for all purposes of the merger agreement as having been paid to the shareholders from whom they were withheld.
Dividends and Distributions
No dividends or other distributions declared with respect to Investar common stock will be paid to the holder of any unsurrendered certificates of Mainland Bank common stock until the holder surrenders such certificate in accordance with the merger agreement. After the surrender of a certificate in accordance with the merger agreement, the record holder thereof will be entitled to receive any such dividends or other distributions, without any interest, which had previously become payable with respect to the whole shares of Investar common stock which the shares of Mainland Bank common stock represented by such certificate have been converted into the right to receive under the merger agreement.
Representations and Warranties
The representations, warranties and covenants described below and included in the merger agreement were made only for purposes of the merger agreement and as of specific dates, are solely for the benefit of Investar and Mainland Bank, may be subject to limitations, qualifications or exceptions agreed upon by the parties, including those included in confidential disclosures made for the purposes of, among other things, allocating contractual risk between

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Investar and Mainland Bank rather than establishing matters as facts, and may be subject to standards of materiality that differ from those standards relevant to investors. You should not rely on the representations, warranties, covenants or any description thereof as characterizations of the actual state of facts or condition of Investar, Mainland Bank or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in public disclosures by Investar or Mainland Bank. The representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus and in the documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information.”
The merger agreement contains customary representations and warranties of each of Investar and Mainland Bank relating to their respective businesses. The representations and warranties in the merger agreement do not survive the effective time.
In the merger agreement, Mainland Bank has made representations and warranties on behalf of it and Mainland Bank to Investar. The more significant of these relate to (among other things):
organization, existence, and corporate power and authority;
capitalization;
authority and power to execute the merger agreement and to complete the transactions contemplated by the merger agreement;
the absence of conflicts between the merger agreement and applicable law, various documents, contracts and agreements;
consents or approvals of or filings or registrations with any governmental authority or third party necessary in connection with the consummation of the merger;
compliance with applicable laws and regulatory filings;
the accuracy and fair presentation of its financial statements and reports;
pending or threatened litigation and other proceedings;
ownership of real property and leased real property;
ownership of personal property;
the absence of certain changes and events;
the existence, performance and legal effect of certain contracts and commitments;
compliance with tax laws, payment of taxes and filing of tax returns;
the adequacy and efficacy of fidelity bonds and insurance policies;
the absence of any material adverse change;
ownership of intellectual property rights and the absence of actions for the infringement of intellectual property;
ownership of investments such as securities, including municipal bonds;

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the existence of certain loan agreements and related matters;
its loan portfolio and reserve for loan losses;
employment relations;
compliance with environmental laws;
actions taken by regulatory authorities and its ability to receive requited regulatory approval;
the sufficiency of accounting controls;
the accuracy and completeness of books and records;
compliance with law, agreements and instruments in the performance of its duties as a trustee, custodian, guardian or escrow agent;
compensation and the operation of all employee benefit plans in accordance with applicable law;
deposit accounts and the absence of “brokered” deposits;
brokers’, finders’ and financial advisors’ fees;
the lack of knowledge of any plan or intention on the part of any stockholder of Mainland Bank to make written demand for payment of the fair value of such holder’s shares of Mainland Bank stock; and
the receipt, prior to the execution of the merger agreement, of a fairness opinion from Performance Trust, stating that the aggregate merger consideration to be received by the stockholders of Mainland Bank pursuant to the merger agreement is fair, from a financial point of view, to such stockholders.
In the merger agreement, Investar has made representations and warranties on behalf of it and Investar Bank to Mainland Bank. The more significant of these relate to (among other things):
organization, existence, and corporate power and authority;
capitalization;
authority and power to execute the merger agreement and to complete the transactions contemplated by the merger agreement;
the absence of conflicts between the merger agreement and applicable law, various documents, contracts and agreements;
the consents or approvals of or filings or registrations with any governmental authority or third party necessary in connection with the consummation of the merger;
compliance with applicable laws and regulatory filings;
the accuracy and fair presentation of their financial statements and reports;
the absence of certain changes and events;
employment relations; and

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compliance with SEC filing requirements.
All representations, warranties and covenants of the parties, other than the covenants in specified sections which relate to continuing matters, terminate upon the closing of the merger.
Certain representations and warranties of Investar and Mainland Bank are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, a “material adverse effect,” when used in reference to either Mainland Bank, Investar or the surviving corporation, means any event, change, occurrence or circumstance that, individually or in the aggregate, has had or would reasonably be expected to have a material and adverse effect on the condition, assets, properties, employees, deposits, liabilities, results of operations, earnings, business or cash flows of such party, or that would prevent such party from to timely performing its obligations under the merger agreement, except for any such effects resulting from: (i) changes in laws after the date of the merger agreement; (ii) changes in GAAP or regulatory accounting principles; (iii) changes in general economic or political conditions or the securities or financial markets in the United States or Texas or Louisiana; or (iv)  any action taken by a party in accordance with the merger agreement or the transactions contemplated by the merger agreement (or the announcement thereof to third parties or the public in accordance with the terms of the merger agreement) or as required by law; provided, in the case of clauses (i), (ii), or (iii), except to the extent that any such change has had, or is reasonably likely to have, a materially disproportionate effect on such party and its subsidiaries, taken as a whole, relative to other entities in the banking industry in the United States.
Covenants and Agreements
Mainland Bank’s Conduct of Businesses Prior to the Completion of the Merger
From the date of the merger agreement until the effective time of the merger, except with the prior written consent of the other, Mainland Bank has agreed with respect to all of the following that it will use commercially reasonable efforts to:
conduct its affairs (including, without limitation, the making of or agreeing to make any loans or other extensions of credit) only in the ordinary course of business consistent with past banking practice;
except as required by prudent business practices, use commercially reasonable efforts to preserve intact its present business organizations, keep available the services of its present officers, directors, key employees and agents and preserve its relationships and goodwill with customers and advantageous business relationships;
promptly give written notice to Investar of (A) any material change in its business, operations or prospects; (B) any complaints, investigations or hearings (or communications indicating that the same may be contemplated) of any Governmental Body having jurisdiction over Mainland Bank; (C) the institution or threat of any Proceeding against Mainland Bank; or (D) any event or condition that would reasonably be expected to cause any of the representations or warranties of Mainland Bank contained in this Agreement to be untrue in any material respect or which would otherwise cause a Material Adverse Effect on Mainland Bank;
extend credit only in accordance with existing policies and promptly classify and charge off all loans and make appropriate adjustments to the allowance for loan and lease losses in accordance with the Call Report Instructions and the Uniform Retail Credit Classification and Account Management Policy;
maintain in full force and effect all insurance policies now in effect or renewals thereof and give all notices and present all claims under all insurance policies in due and timely fashion;
perform all of its obligations under all contracts, leases and documents relating to or affecting its assets, properties and business, except such obligations as Mainland Bank may in good faith reasonably dispute;

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account for all transactions and prepare all financial statements of Mainland Bank in accordance with GAAP (unless otherwise instructed by regulatory accounting principles in which instance account for such transaction in accordance with regulatory accounting principles);
timely file, subject to extension, all reports required to be filed with governmental authorities and observe and conform, in all material respects, to all applicable laws, except those being contested in good faith by appropriate proceedings; and
provide to Investar (A) a monthly loan report of Mainland Bank that includes, without limitation, a report of all new, renewed, extended, modified and paid off loans, as well as monthly past due information, and (B) a monthly deposit report of Mainland Bank.
From the date of the merger agreement and until the effective time of the merger, without the prior written consent of Investar, Mainland Bank has agreed to not:
take or fail to take any action that would cause, or would reasonably be expected to cause, the representations and warranties made by Mainland Bank to be inaccurate at the effective time or preclude Mainland Bank from making such representations and warranties at the effective time;
adjust, split, combine or reclassify any of its common stock or other capital stock;
issue or sell or obligate itself to issue or sell any shares of its capital stock or any warrants, rights or options to acquire, or any securities convertible into, any shares of its capital stock;
grant any stock appreciation rights, restricted stock, stock options or other form of incentive compensation;
(A) make or commit to make a loan in excess of $500,000, or renew, extend the maturity of, or alter any of the material terms of any specified loan set forth in the schedules to the agreement; (B) renew, extend the maturity of, or alter any of the material terms of any loan which has been classified as or, in the exercise of reasonable diligence by Mainland Bank or any governmental authority with supervisory jurisdiction over Mainland Bank, should have been classified as “substandard,” “doubtful,” “loss,” “other loans especially mentioned,” “other assets especially mentioned,” “watch,” “pass/watch” or any comparable classifications by such persons, in excess of $100,000; or (C) make or commit to make a loan to any borrower with an outstanding loan agreement, note or borrowing arrangement with Mainland Bank which has been classified as or, in the exercise of reasonable diligence by Mainland Bank or any governmental authority with supervisory jurisdiction over Mainland Bank, should have been classified as “substandard,” “doubtful,” “loss,” “other loans especially mentioned,” “other assets especially mentioned,” “watch,” “pass/watch” or any comparable classifications by such persons;
open, close or relocate any branch office, or acquire or sell or agree to acquire or sell, any branch office or any assets or deposit liabilities;
enter into, amend or terminate any material contract or agreement of Mainland Bank, merge into or consolidate with any entity, or acquire or dispose of any material amount of assets or liabilities or make any change in any of its leases, except in the ordinary course of business consistent with past practices and except for termination of certain agreements set forth in the schedules to the agreement or as otherwise provided in the agreement;
grant any retention, severance or termination payment to, or enter into any employment, consulting, noncompetition, retirement, parachute, severance or indemnification agreement with, any of its officers, directors, employees or agents, either individually or as part of a class of similarly situated persons;
make any change in the rate or timing of payment of compensation, commission, bonus or other direct or indirect remuneration payable, or pay or agree or orally promise to pay, conditionally or otherwise,

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any bonus, extra compensation, pension or severance or vacation pay or any perquisite such as automobile allowance, club membership or dues or other similar benefits, to or for the benefit of any of its shareholders, directors, officers, employees or agents, other than periodic increases in compensation consistent with past practices, and bonuses, commissions and incentives consistent with past practices to employees and officers;
hire or employ any person as a replacement for an existing position with an annual salary equal to or greater than $50,000.00 or hire or employ any person for any newly created position;
declare, set aside or pay any dividends or make any other distribution to its shareholders (including any share dividend, dividends in kind or other distribution) whether in cash, shares or other property, or directly or indirectly purchase, retire or redeem, or obligate itself to purchase, retire or redeem, any of its capital shares or other securities;
make any change in accounting methods, principles and practices, except as may be required by GAAP, regulatory accounting principles or any governmental authority;
sell, transfer, convey, mortgage, encumber or otherwise dispose of any material properties or assets or interest therein;
foreclose upon or otherwise acquire any commercial real property prior to receipt and approval by Investar of a Phase I environmental review thereof;
increase or decrease the rate of interest paid on deposit accounts, except in a manner and pursuant to policies consistent with Mainland Bank’s past banking practices;
reduce the amount of its allowance for loan and lease losses, except through charge-offs;
establish any new subsidiary or enter into any new line of business, or acquire any capital stock or other equity securities or acquire any equity or ownership interest in any bank, corporation, partnership or other entity (except through settlement of indebtedness, foreclosure, or the exercise of creditors’ remedies or in a fiduciary capacity, the ownership of which does not expose it to any liability from the business, operations or liabilities of such person);
discharge or satisfy any lien, charge or encumbrance or pay any obligation or liability, whether absolute or contingent, due or to become due, except in the ordinary course of business consistent with past practices and except for liabilities incurred in connection with the transactions contemplated hereby;
materially deviate from policies and procedures existing as of the date of the agreement with respect to (A) classification of assets, (B) the allowance for loan and lease losses or (C) accrual of interest on assets, except as otherwise required by the provisions of this Agreement, applicable law or regulation or any governmental authority;
amend or change any provision of its articles of incorporation or bylaws;
make any capital expenditure in excess of $10,000, except pursuant to commitments made prior to the date of the agreement;
excluding deposits and certificates of deposit, incur or modify any indebtedness for borrowed money, including Federal Home Loan Bank advances;
prepay any indebtedness or other similar arrangements resulting in any prepayment penalty thereunder;

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settle any lawsuit or proceeding involving payment by it of money damages or imposing any material restriction on its operations;
purchase or otherwise acquire any investment securities, other than obligations of the U.S. Department of the Treasury with a maturity of one (1) year or less;
restructure or materially change its investment securities portfolio or its interest rate risk position from that as of August 31, 2018, through sales or otherwise, or the manner in which the portfolio is classified or reported;
issue a replacement of any certificate representing its securities except upon (A) written notice to Investar, (B) presentation of a properly executed lost certificate affidavit in form reasonably satisfactory to Investar and (C) if required by Investar, the delivery of an indemnity or surety bond in the amount of the consideration payable with respect to shares of Mainland Bank common stock represented therein;
take or fail to take any action which would adversely affect or delay the ability of Mainland Bank or Investar to obtain any approvals from any regulatory agencies or other approvals required for consummation of the transactions contemplated hereby or to perform its obligations and agreements under the agreement; or
agree to do any of the foregoing.
For a complete description of such restrictions on the conduct of the business of Mainland Bank, we refer you to the merger agreement, which is attached as Annex A to this proxy statement/prospectus.
Investar’s Conduct of Businesses Prior to the Completion of the Merger
From the date of the merger agreement until the effective time of the merger, except with the prior written consent of the other, Investar has agreed with respect to all of the following that it will, and will cause its respective subsidiaries to, use commercially reasonable efforts to:
except as required by prudent business practices, use commercially reasonable efforts to preserve intact its present business organizations, keep available the services of its present officers, directors, key employees and agents and preserve its relationships and goodwill with customers and advantageous business relationships;
promptly give written notice to Mainland Bank of (A) any complaints, investigations or hearings (or communications indicating that the same may be contemplated) of any governmental authority having jurisdiction over Investar or any of its subsidiaries; or (B) any event or condition that would reasonably be expected to cause any of the representations or warranties of Investar contained in this Agreement to be untrue in any material respect or which would otherwise cause a material adverse effect on Investar or any of its subsidiaries; and
timely file, subject to extension, all reports required to be filed with governmental authorities and observe and conform, in all material respects, to all applicable laws, except those being contested in good faith by appropriate proceedings.
From the date of the merger agreement and until the effective time of the merger, without the prior written consent of Mainland Bank, Investar has agreed to not:
take or fail to take any action that would, or would reasonably be expected to, adversely affect or materially impact Investar’s ability to perform its covenants and agreements under the agreement

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take or fail to take any action that would cause, or would reasonably be expected to cause, the representations and warranties made by Investar to be inaccurate at the effective time or preclude Investar from making such representations and warranties at the effective time; or
take or fail to take any action that would, or would reasonably be expected to, adversely affect or materially impact Investar’s ability to consummate the merger.
Regulatory Matters
Investar and Mainland Bank have agreed to use their commercially reasonable efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain all permits, consents, approvals and authorizations of all third parties and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement. Investar and Mainland Bank have also agreed to furnish each other with all information reasonably necessary or advisable in connection with any statement, filing, notice or application to any governmental entity in connection with the merger, as well as to keep each other apprised of the status of matters related to the completion of the transactions contemplated by the merger agreement.
Additional Agreements
In addition to the agreements described above, the parties agreed in the merger agreement to take certain other actions, including but not limited to:
each party agreed to use commercially reasonable efforts to perform and fulfill all conditions and obligations on its part to be performed or fulfilled under the agreement and to cause the completion of the transactions contemplated hereby in accordance with the agreement;
each party agreed to use commercially reasonable efforts to assist and cooperate with the other party in filing all necessary applications and notices with, and obtaining all necessary approvals from, all governmental authorities having jurisdiction over the transaction;
each party agreed to promptly notify the other party in writing of any legal proceedings pending or, to the knowledge of such party, threatened against any party or any of its subsidiaries that might question the validity of the merger agreement or that seeks to enjoin or otherwise restrain the merger transactions;
Investar and Mainland Bank agreed to cooperate and furnish to the other all information concerning themselves, their subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the preparation of this proxy statement/prospectus, the registration statement on S-4, or any other filing, notice or application to be made or filed in connection with the merger agreement and the merger transactions and that such information would be true and correct;
Mainland Bank agreed that it would submit the merger agreement to its shareholders for approval, call a meeting of its shareholders as promptly as practicable after the Investar’s registration on Form S-4 becomes effective and generally use its commercially reasonable efforts to obtain the necessary approvals of the merger agreement and the merger by its shareholders;
Investar agreed that it will file with the SEC a Registration Statement on Form S-4 to register the shares of Investar common stock that are to be issued to shareholders of Mainland Bank in the merger and will file all documents required to have such shares included for listing on NASDAQ;
Investar and Mainland Bank agreed to jointly prepare this proxy statement/prospectus to be submitted to the shareholders of Mainland Bank in connection with its special shareholders’ meeting that is to be held for the purpose of approving the merger agreement and the merger transactions;

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Investar and Mainland Bank agreed to use their commercially reasonable efforts and to cooperate with each other in obtaining all consents, approvals, waivers or similar authorizations that are required in connection with the merger agreement and the merger transactions;
Mainland Bank agreed that on the effective date, its deposits shall be of substantially the same character, mix, type, and makeup as such deposits were as of August 31, 2018. Such deposits shall include no additional “brokered deposits” (as such term is defined in 12 C.F.R. § 337.6(a)(2)), except for such additional brokered deposits agreed to by Investar and any extensions and renewals thereof;
each party has agreed that, as soon as practicable after they become available, it will deliver or make available to the other party all unaudited monthly and quarterly financial information prepared for the internal use of management of such party and all Consolidated Reports of Condition and Income filed with respect to Investar Bank and Mainland Bank, as applicable;
Mainland Bank has agreed to make such accounting entries consistent with GAAP as Investar may reasonably request in order to conform the accounting records of Mainland Bank to the accounting policies and practices of Investar and Investar Bank;
Mainland Bank agreed to execute and deliver such instruments and take such actions as Investar reasonably requests to cause the freeze, amendment or termination of any of Mainland Bank’s employee benefit plans and Investar agreed that the employees of Mainland Bank and its subsidiaries who continue their employment after the closing of the merger will be entitled to either (i) continue participation in any continuing Mainland Bank Plans or (ii) participate as newly hired employees in the employee benefit plans and programs maintained for employees of Investar or Investar Bank, such employees will be entitled to credit for prior service with Mainland Bank, and Investar will take all necessary acts to facilitate such coverage, including, without limitation, waiving any eligibility waiting periods and pre-existing condition exclusions, to the extent allowed by Investar’s plans and applicable law and subject to the provisions set forth in the merger agreement;
Investar has agreed that all rights to indemnification and all limitations of liability existing in favor of any director or officer of Mainland Bank or Mainland Bank, determined as of the effective time of the merger, as provided in Mainland Bank’s or Mainland Bank’s constituent documents (including, without limitation, the right to the advancement of expenses, if so provided), in each case as of the date of the merger agreement, with respect to matters occurring on or prior to the effective time of the merger will survive the merger and continue in full force and effect, without any amendment thereto, for a period of four years;
Mainland Bank has agreed pay for tail insurance premiums for the past acts and extended reporting period insurance coverage under Mainland Bank’s current directors’ and officers’ insurance policy (or comparable coverage) for a period of four years following the merger; and
each party agreed that it will not issue or cause the publication of any press release or public announcement with respect to the transactions contemplated by the merger agreement without the consent of the other party except as required by applicable law.
For a complete description of all agreements of Investar and Mainland Bank in connection with the merger, we refer you to the merger agreement, which is attached Annex A to this proxy statement/prospectus.
Agreement Not to Solicit Other Offers
Mainland Bank agreed that neither it, any of its subsidiaries, nor any of their respective directors, executive officers, agents or representatives will directly or indirectly take any action to solicit, initiate, encourage or facilitate the making of any inquiries with respect to, or provide any information to, conduct any assessment of or negotiate with any other person with respect to any acquisition proposal.

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If Mainland Bank or any of its representatives receives an unsolicited bona fide acquisition proposal before the Mainland Bank shareholders have approved the merger agreement that the Mainland Bank Board has:
determined in its good faith judgment (after consultation with its financial advisors and outside legal counsel) that such acquisition proposal constitutes or is reasonably expected to result in a superior proposal;
determined in its good faith judgment (after consultation with outside legal counsel) that the failure to take such action would cause or is reasonably likely to cause it to violate its fiduciary duties under applicable law; and
obtained from such person or entity an executed confidentiality agreement,
then Mainland Bank or its representatives may furnish information to and enter into discussions and negotiations with such other party. Mainland Bank has agreed to notify Investar in writing within 48 hours after receipt of any unsolicited acquisition proposals and provide reasonable detail as to the identity of the person making such proposal and the material terms of such acquisition proposal.
Conditions to Complete the Merger
The completion of the merger transactions depends on a number of conditions being satisfied upon or prior to the closing date. These include, among others:
accuracy of each party’s representations and warranties contained in the merger agreement as of the closing date of the merger in all material respects;
performance or compliance in all material respects by each party with its respective covenants and obligations required by the merger agreement;
absence of a material adverse effect with respect to both parties;
receipt of all required consents, approvals, waivers and other assurances from non-governmental third parties;
receipt of all required governmental approvals of the merger in a manner that does not impose any non-standard conditions, restrictions or requirements that, individually or in the aggregate, would result in, or be reasonably likely to materially and adversely diminish the economic benefit of the merger to Investar;
no action having been taken, and no law or regulation having been promulgated, that would make the merger agreement or the merger illegal, invalid or unenforceable; and
approval of the merger agreement by the shareholders of Mainland Bank.
Additionally, Investar’s obligation to consummate the transaction is subject to the satisfaction of the following conditions:
holders of no more than 5% of the issued and outstanding Mainland Bank stock having demanded or being entitled to exercise dissenters’ rights under the TBOC;
each of the support agreement executed by Mainland Bank’s directors being in force and having been complied with in all material respects;
Investar’s receipt of a release, dated as of the closing date, from each director and executive officer of Mainland Bank;

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registration of the shares of Investar common stock to be issued to shareholders of Mainland Bank with the SEC and the listing of such shares on NASDAQ; and
receipt of the opinions of counsel to Investar to the effect that the merger will qualify as a reorganization under Section 368(a) of the Code.
Any condition to the completion of the merger may be waived in writing by the party to the merger agreement entitled to the benefit of such condition. A party to the merger agreement could choose to complete the merger even though a condition has not been satisfied, as long as permitted by law. We cannot be certain when or if the conditions to the merger will be satisfied or waived, or that the merger will be completed.
Termination of the Merger Agreement
Investar and Mainland Bank can mutually agree at any time to terminate the merger agreement without completing the merger. In addition, either Investar or Mainland Bank may decide, without the consent of the other, to terminate the merger agreement if:
any court of competent jurisdiction or governmental body has issued an order or taken any other action restraining or otherwise prohibiting the merger, and such order or other action is final and non-appealable;
the conditions to closing has not been met or waived by June 30, 2019 (or such later date as Investar and Mainland Bank may agree) unless the failure to complete the merger by that time is due to a breach of a representation or warranty or failure to comply with an obligation in the merger agreement by the party that seeks to terminate the merger agreement, or such party is in material breach of the agreement;
a regulatory authority disapproves the merger or requests the withdrawal of the related regulatory application;
Mainland Bank shareholders fail to approve the merger agreement, provided that Mainland Bank may only terminate in such case if the matter was presented to Mainland Bank’s shareholders for approval with the recommendation of the Mainland Bank Board;
the other party materially breaches its representations and warranties or any covenant or agreement contained in the merger agreement and such breach has not been cured within 30 days after the terminating party gives written notice of such failure to the breaching party;
or
Investar may also terminate the merger agreement without the consent of Mainland Bank if:
the appropriate regulatory authorities approve the merger, but only upon restrictions or conditions on the operations of Mainland Bank or Investar which would, or could reasonably be expected to, result in a materially adverse economic or business impact to the benefits of the transaction; require any person other than Investar to be deemed a financial or bank holding company under the Bank Holding Company Act of 1956; or require a material modification of, or limitation or restriction on, the business and governance of Investar;
Mainland Bank has not held a shareholder meeting to approve the merger on or before the later of June 30, 2019 and 30 days after the related registration statement has been declared effective by the SEC;
if Mainland Bank has breached its non-solicitation obligations contained in the merger agreement in a manner adverse to Investar, the board of Mainland Bank resolves to accept a competing acquisition proposal or the board of Mainland Bank changes its recommendation regarding the merger;

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if any individual that has signed the voting agreement, a support agreement or a release has violated the terms thereof.
Mainland Bank may also terminate the merger agreement, without the consent of Investar, if the board of directors of Mainland Bank receives an unsolicited, bona fide alternative acquisition proposal and, under certain terms and conditions, determines that it is a superior proposal to that of the merger agreement and that the failure to accept such proposal would cause the board of directors to violate its fiduciary duties under applicable law. However, Investar has the right to adjust the terms and conditions of the merger agreement so that the superior proposal no longer constitutes a superior proposal.
Effect of Termination
If the merger agreement is terminated, it will become void and have no effect, except that (i) each of Investar and Mainland Bank will remain liable for any liabilities or damages arising out of its willful and material breach of any provision of the merger agreement and (ii) designated provisions of the merger agreement will survive the termination, including those relating to payment of fees and expenses and the confidential treatment of information.
Termination Fee
In the event that the merger agreement is terminated by Mainland Bank because, prior to the approval of the merger agreement by the Mainland Bank shareholders by requisite shareholder vote, Mainland Bank has received an acquisition proposal that it deems to be a Superior Proposal (as defined in the merger agreement) and has complied with its obligations under the merger agreement with respect to such Superior Proposal, then Mainland Bank will pay Investar a termination fee equal to $816,000 plus up to $250,000 of the amount of Investar’s expenses in connection with the merger (which we collectively refer to as the “termination fee”).
In the event that the merger agreement is terminated by Investar based on the Mainland Bank Board having (i) not held the special meeting of Mainland Bank’s shareholder prior to June 30, 2019, (ii) determined to accept a superior proposal, as such term is defined in the merger agreement, (iii) recommended or endorsed an acquisition proposal, or (iv) materially breached certain obligations, including with respect to the non-solicitation of acquisition proposals or calling a meeting of its shareholders and recommending that they adopt the merger agreement, in any material respect, then Mainland Bank will pay Investar the termination fee.
In the event the merger agreement is terminated by either party and, at the time of termination (i) the special m