•	Total revenues, or interest and noninterest income, for the quarter ended December 31, 2019 totaled $25.1 million, an increase of $0.6 million, or 2.5%, compared to the quarter ended September 30, 2019, and an increase of $4.3 million, or 20.8%, compared to the quarter ended December 31, 2018.

•

Total loans increased $105.6 million, or 6.7%, to $1.69 billion at December 31, 2019, compared to $1.59 billion at September 30, 2019, and increased $291.2 million, or 20.8% compared to $1.40 billion at December 31, 2018. Excluding the loans acquired from Bank of York, or $47.4 million at December 31, 2019, total loans increased $58.2 million, or 3.7%, compared to September 30, 2019. Excluding the loans acquired from Bank of York and Mainland Bank, or $114.2 million at December 31, 2019, total loans increased $176.9 million, or 12.6% compared to December 31, 2018.

•

The business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $676.1 million at December 31, 2019, an increase of $43.7 million, or 6.9%, compared to the business lending portfolio of $632.4 million at September 30, 2019, and an increase of $167.0 million, or 32.8%, compared to the business lending portfolio of $509.1 million at December 31, 2018.

•

Total deposits increased $122.3 million, or 7.7%, to $1.71 billion at December 31, 2019, compared to $1.59 billion at September 30, 2019, and increased $346.0 million, or 25.4%, compared to $1.36 billion at December 31, 2018. The Company acquired approximately $84.8 million in deposits from Bank of York in the fourth quarter of 2019 and $107.6 million in deposits from Mainland Bank in the first quarter of 2019. Excluding the acquired balances, total deposits at December 31, 2019 increased $37.5 million, or 2.4%, compared to September 30, 2019, and increased $153.5 million, or 11.3%, compared to December 31, 2018.

•	The Bank opened two new branch locations during the fourth quarter of 2019. One branch is located in Lafayette, Louisiana and expanded the Bank's presence to five branches in the Acadiana market. The second branch opened in Westlake, Louisiana and is the Bank's first branch in the Lake Charles market.

•

On November 1, 2019, the Company completed the acquisition of Bank of York in York, Alabama. All of the issued and outstanding shares of Bank of York common stock were converted into aggregate cash merger consideration of $15.0 million. On November 1, 2019, Bank of York had approximately $101 million in assets, $46 million in loans, $85 million in total deposits, and $11 million in stockholders’ equity.

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•

On November 12, 2019, the Company completed a private placement of $25.0 million in aggregate principal amount of subordinated notes to certain qualified institutional and other accredited investors. The notes initially bear interest at 5.125% per annum from and including November 12, 2019 to but excluding December 30, 2024, with interest payable semi-annually in arrears. From and including December 30, 2024, to but excluding the maturity date or earlier redemption date, the interest rate will reset quarterly to an annual floating rate equal to the three-month LIBOR (or alternative rate determined in accordance with the terms of the notes if the three-month LIBOR cannot be determined), plus 3.490%, with interest payable quarterly in arrears. The Company may redeem the notes, in whole or in part, on or after December 30, 2024 and are not subject to redemption at the option of holders. The notes are structured to qualify as tier 2 capital for regulatory capital purposes. The Company intends to use the net proceeds of the notes offering to fund future acquisitions and for general corporate purposes, including investments in the Bank.

•

On December 20, 2019, the Company announced that it has entered into a definitive agreement (the “Agreement”) to acquire Cheaha Financial Group, Inc. (“Cheaha”), headquartered in Oxford, Alabama, and its wholly-owned subsidiary, Cheaha Bank. The terms of the Agreement provide that Cheaha shareholders will receive $80.00 in cash consideration for each of their shares of Cheaha common stock, for an aggregate value of approximately $41.1 million. At September 30, 2019, Cheaha Bank had approximately $206.7 million in assets, $117.2 million in net loans, $177.1 million in deposits and $27.5 million in stockholder’s equity. Cheaha Bank offers a full range of banking products and services to individuals and small businesses from four branch locations in Calhoun County, Alabama. The transaction is expected to close in the second quarter of 2020 and is subject to customary closing conditions, including regulatory approvals and approval by the shareholders of Cheaha.

•

In connection with the Cheaha transaction, on December 19, 2019, Investar executed a stock purchase agreement with selected institutional and other accredited investors with respect to a private placement of 1,290,323 shares of its common stock at an offering price of $23.25 per share, for aggregate gross proceeds of $30.0 million. The Company intends to use the net proceeds from the offering to support the acquisition of Cheaha and for general corporate purposes, including organic growth and other potential acquisitions.

														Linked Quarter Change							Year/Year Change							Percentage of Total Loans
		12/31/2019				9/30/2019				12/31/2018				$				%			$				%			12/31/2019			12/31/2018
Mortgage loans on real estate
Construction and development		$	197,797			$	176,674			$	157,946			$	21,123			12.0	%		$	39,851			25.2	%		11.7	%		11.3	%
1-4 Family		321,489				310,298				287,137				11,191				3.6			34,352				12.0			19.0			20.5
Multifamily		60,617				58,243				50,501				2,374				4.1			10,116				20.0			3.6			3.6
Farmland		27,780				24,629				21,356				3,151				12.8			6,424				30.1			1.6			1.5
Commercial real estate
Owner-occupied		352,324				339,240				298,222				13,084				3.9			54,102				18.1			20.8			21.3
Nonowner-occupied		378,736				353,910				328,782				24,826				7.0			49,954				15.2			22.4			23.5
Commercial and industrial		323,786				293,152				210,924				30,634				10.4			112,862				53.5			19.1			15.0
Consumer		29,446				30,196				45,957				(750		)		(2.5	)		(16,511		)		(35.9	)		1.8			3.3
Total loans		$	1,691,975			$	1,586,342			$	1,400,825			$	105,633			6.7	%		$	291,150			20.8	%		100	%		100	%

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														Linked Quarter Change							Year/Year Change							Percentage of Total Deposits
		12/31/2019				9/30/2019				12/31/2018				$				%			$				%			12/31/2019			12/31/2018
Noninterest-bearing demand deposits		$	351,905			$	291,039			$	217,457			$	60,866			20.9	%		$	134,448			61.8	%		20.6	%		16.0	%
Interest-bearing demand deposits		335,478				305,361				295,212				30,117				9.9			40,266				13.6			19.6			21.7
Money market deposit accounts		198,999				194,757				179,340				4,242				2.2			19,659				11.0			11.7			13.2
Savings accounts		115,324				110,636				104,146				4,688				4.2			11,178				10.7			6.8			7.6
Time deposits		706,000				683,564				565,576				22,436				3.3			140,424				24.8			41.3			41.5
Total deposits		$	1,707,706			$	1,585,357			$	1,361,731			$	122,349			7.7	%		$	345,975			25.4	%		100.0	%		100.0	%

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

•	our ability to achieve organic loan and deposit growth, and the composition of that growth;

•	our ability to identify and enter into agreements to combine with attractive acquisition candidates, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate acquired operations;

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

•	possible cessation or market replacement of LIBOR and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments and loans;

•	the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;

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

•	changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers;

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

•	the concentration of our business within our geographic areas of operation in Louisiana, Texas and Alabama;

•	concentration of credit exposure; and

•	the satisfaction of the conditions to closing the pending acquisition of Cheaha Bank and the ability to subsequently integrate it effectively.

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INVESTAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
		December 31, 2019				September 30, 2019				December 31, 2018
ASSETS
Cash and due from banks		$	23,769			$	26,442			$	15,922
Interest-bearing balances due from other banks		20,539				2,559				1,212
Federal funds sold		387				—				6
Cash and cash equivalents		44,695				29,001				17,140
Available for sale securities at fair value (amortized cost of $258,104, $258,811, and $253,504, respectively)		259,805				261,179				248,981
Held to maturity securities at amortized cost (estimated fair value of $14,480, $15,386, and $15,805, respectively)		14,409				15,318				16,066
Loans, net of allowance for loan losses of $10,700, $10,339, and $9,454, respectively		1,681,275				1,576,003				1,391,371
Other equity securities		19,315				18,767				13,562
Bank premises and equipment, net of accumulated depreciation of $12,432, $11,741, and $9,898, respectively		50,916				49,088				40,229
Other real estate owned, net		133				126				3,611
Accrued interest receivable		7,913				7,130				5,553
Deferred tax asset		—				—				1,145
Goodwill and other intangible assets, net		31,035				26,117				19,787
Bank-owned life insurance		32,014				29,390				23,859
Other assets		7,406				5,895				5,165
Total assets		$	2,148,916			$	2,018,014			$	1,786,469
LIABILITIES
Deposits
Noninterest-bearing		$	351,905			$	291,039			$	217,457
Interest-bearing		1,355,801				1,294,318				1,144,274
Total deposits		1,707,706				1,585,357				1,361,731
Advances from Federal Home Loan Bank		131,600				181,725				206,490
Repurchase agreements		2,995				2,143				1,999
Subordinated debt		42,826				18,250				18,215
Junior subordinated debt		5,897				5,884				5,845
Accrued taxes and other liabilities		15,916				14,198				9,927
Total liabilities		1,906,940				1,807,557				1,604,207
STOCKHOLDERS’ EQUITY
Preferred stock, no par value per share; 5,000,000 shares authorized		—				—				—
Common stock, $1.00 par value per share; 40,000,000 shares authorized; 11,228,775, 9,929,860, and 9,484,219 shares outstanding, respectively		11,229				9,930				9,484
Surplus		168,658				140,944				130,133
Retained earnings		60,198				57,547				45,721
Accumulated other comprehensive income (loss)		1,891				2,036				(3,076		)
Total stockholders’ equity		241,976				210,457				182,262
Total liabilities and stockholders’ equity		$	2,148,916			$	2,018,014			$	1,786,469

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INVESTAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share data)
(Unaudited)
		For the three months ended												For the twelve months ended
		December 31, 2019				September 30, 2019				December 31, 2018				December 31, 2019				December 31, 2018
INTEREST INCOME
Interest and fees on loans		$	21,333			$	20,844			$	17,996			$	80,954			$	66,750
Interest on investment securities		1,743				1,848				1,795				7,440				6,608
Other interest income		439				162				136				1,049				533
Total interest income		23,515				22,854				19,927				89,443				73,891
INTEREST EXPENSE
Interest on deposits		5,319				5,198				3,721				19,307				11,394
Interest on borrowings		1,231				1,290				1,399				5,318				5,127
Total interest expense		6,550				6,488				5,120				24,625				16,521
Net interest income		16,965				16,366				14,807				64,818				57,370
Provision for loan losses		736				538				593				1,908				2,570
Net interest income after provision for loan losses		16,229				15,828				14,214				62,910				54,800
NONINTEREST INCOME
Service charges on deposit accounts		544				462				399				1,840				1,453
Gain (loss) on sale of investment securities, net		33				—				(23		)		262				14
(Loss) gain on sale of fixed assets, net		—				—				—				(11		)		98
(Loss) gain on sale of other real estate owned, net		(17		)		1				(20		)		2				(24		)
Servicing fees and fee income on serviced loans		121				142				190				593				963
Interchange fees		289				294				247				1,114				932
Income from bank owned life insurance		195				186				157				703				628
Change in the fair value of equity securities		121				(9		)		(306		)		341				(267		)
Other operating income		289				542				192				1,372				521
Total noninterest income		1,575				1,618				836				6,216				4,318
Income before noninterest expense		17,804				17,446				15,050				69,126				59,118
NONINTEREST EXPENSE
Depreciation and amortization		943				882				682				3,462				2,553
Salaries and employee benefits		7,826				7,325				6,280				28,643				25,469
Occupancy		524				445				326				1,837				1,378
Data processing		505				675				490				2,360				2,090
Marketing		55				86				84				260				237
Professional fees		249				326				287				1,189				1,051
Acquisition expenses		1,008				177				341				2,090				1,445
Other operating expenses		2,519				1,766				2,416				8,327				7,659
Total noninterest expense		13,629				11,682				10,906				48,168				41,882
Income before income tax expense		4,175				5,764				4,144				20,958				17,236
Income tax expense		844				1,107				807				4,119				3,630
Net income		$	3,331			$	4,657			$	3,337			$	16,839			$	13,606
EARNINGS PER SHARE
Basic earnings per common share		$	0.33			$	0.46			$	0.35			$	1.68			$	1.41
Diluted earnings per common share		$	0.32			$	0.46			$	0.34			$	1.66			$	1.39
Cash dividends declared per common share		$	0.06			$	0.06			$	0.05			$	0.23			$	0.17

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INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
		For the three months ended
		December 31, 2019											September 30, 2019											December 31, 2018
		Average Balance				Interest Income/ Expense				Yield/ Rate			Average Balance				Interest Income/ Expense				Yield/ Rate			Average Balance				Interest Income/ Expense				Yield/ Rate
Assets
Interest-earning assets:
Loans		$	1,636,477			$	21,333			5.17	%		$	1,560,841			$	20,844			5.30	%		$	1,381,580			$	17,996			5.17	%
Securities:
Taxable		241,471				1,546				2.54			240,339				1,649				2.72			230,170				1,592				2.74
Tax-exempt		31,561				197				2.48			31,688				199				2.49			33,913				203				2.37
Interest-bearing balances with banks		46,406				439				3.75			31,350				162				2.05			18,153				136				2.97
Total interest-earning assets		1,955,915				23,515				4.77			1,864,218				22,854				4.86			1,663,816				19,927				4.75
Cash and due from banks		25,118											23,395											18,252
Intangible assets		29,313											26,233											19,835
Other assets		101,694											95,436											73,415
Allowance for loan losses		(10,478		)									(10,042		)									(9,224		)
Total assets		$	2,101,562										$	1,999,240										$	1,766,094
Liabilities and stockholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand deposits		$	524,444			$	1,264			0.96			$	507,293			$	1,358			1.06			$	448,110			$	1,162			1.03
Savings deposits		114,668				128				0.44			111,279				127				0.45			106,492				151				0.56
Time deposits		705,200				3,927				2.21			666,074				3,713				2.21			562,132				2,408				1.70
Total interest-bearing deposits		1,344,312				5,319				1.57			1,284,646				5,198				1.61			1,116,734				3,721				1.32
Short-term borrowings		74,355				306				1.63			117,345				624				2.11			138,443				699				2.00
Long-term debt		118,872				925				3.09			86,785				666				3.04			95,566				700				2.91
Total interest-bearing liabilities		1,537,539				6,550				1.69			1,488,776				6,488				1.73			1,350,743				5,120				1.50
Noninterest-bearing deposits		329,548											285,643											225,411
Other liabilities		17,042											15,864											9,258
Stockholders’ equity		217,433											208,957											180,682
Total liability and stockholders’ equity		$	2,101,562										$	1,999,240										$	1,766,094
Net interest income/net interest margin						$	16,965			3.44	%						$	16,366			3.48	%						$	14,807			3.53	%

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INVESTAR HOLDING CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST EARNED AND YIELD ANALYSIS
(Amounts in thousands)
(Unaudited)
		For the twelve months ended
		December 31, 2019											December 31, 2018
		Average Balance				Interest Income/ Expense				Yield/ Rate			Average Balance				Interest Income/ Expense				Yield/ Rate
Assets
Interest-earning assets:
Loans		$	1,539,886			$	80,954			5.26	%		$	1,306,264			$	66,750			5.11	%
Securities:
Taxable		240,751				6,650				2.76			222,948				5,793				2.60
Tax-exempt		31,780				790				2.49			34,159				815				2.39
Interest-bearing balances with banks		34,905				1,049				3.00			24,126				533				2.21
Total interest-earning assets		1,847,322				89,443				4.84			1,587,497				73,891				4.65
Cash and due from banks		22,969											17,219
Intangible assets		26,107											19,927
Other assets		90,949											73,472
Allowance for loan losses		(9,969		)									(8,491		)
Total assets		$	1,977,378										$	1,689,624
Liabilities and stockholders’ equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand		$	510,148			$	5,308			1.04			$	394,336			$	3,206			0.81
Savings deposits		110,936				501				0.45			116,544				567				0.49
Time deposits		641,630				13,498				2.10			530,881				7,621				1.44
Total interest-bearing deposits		1,262,714				19,307				1.53			1,041,761				11,394				1.09
Short-term borrowings		113,539				2,348				2.07			145,090				2,511				1.73
Long-term debt		98,017				2,970				3.03			95,692				2,616				2.73
Total interest-bearing liabilities		1,474,270				24,625				1.67			1,282,543				16,521				1.29
Noninterest-bearing deposits		283,274											220,068
Other liabilities		14,717											9,817
Stockholders’ equity		205,117											177,196
Total liability and stockholders’ equity		$	1,977,378										$	1,689,624
Net interest income/net interest margin						$	64,818			3.51	%						$	57,370			3.61	%

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INVESTAR HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except share data)
(Unaudited)
		December 31, 2019				September 30, 2019				December 31, 2018
Tangible common equity
Total stockholders’ equity		$	241,976			$	210,457			$	182,262
Adjustments:
Goodwill		26,132				21,902				17,424
Core deposit intangible		4,803				4,115				2,263
Trademark intangible		100				100				100
Tangible common equity		$	210,941			$	184,340			$	162,475
Tangible assets
Total assets		$	2,148,916			$	2,018,014			$	1,786,469
Adjustments:
Goodwill		26,132				21,902				17,424
Core deposit intangible		4,803				4,115				2,263
Trademark intangible		100				100				100
Tangible assets		$	2,117,881			$	1,991,897			$	1,766,682
Common shares outstanding		11,228,775				9,929,860				9,484,219
Tangible equity to tangible assets		9.96		%		9.25		%		9.20		%
Book value per common share		$	21.55			$	21.19			$	19.22
Tangible book value per common share		18.79				18.56				17.13

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