What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-12 compared with 2024-03-07 · 525 added, 568 removed, 1795 unchanged (38% of the section changed)

4 unchanged sentences

Baton Rouge, Louisiana

Investar Holding Corporation (the “Company”) is responsible for the preparation, integrity and fair presentation of the consolidated financial statements included in this annual report.

Investar Holding Corporation (the “Company”) is responsible for the preparation, integrity and fair presentation of the consolidated financial statements included in this Annual Report on Form 10-K.

The consolidated financial statements and notes included in this Annual Report have been prepared in conformity with accounting principles generally accepted in the United States of America and necessarily include some amounts that are based on management’s best estimates and judgments.

19 unchanged sentences

Opinion on the Internal Control Over Financial Reporting

We have audited Investar Holding Corporation’s (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have audited Investar Holding Corporation’s (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the consolidated financial statements of the Company as of December 31, 2023 and our report dated March 7, 2024 expressed an unqualified opinion.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”), the consolidated financial statements of the Company as of December 31, 2024 and our report dated March 12, 2025 expressed an unqualified opinion.

Basis for Opinion

23 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 7, 2024, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Emphasis-of-Matter

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2023, due to the adoption of Accounting Standards Codification ASC 326:

Financial Instruments – Credit Losses (“ASC 326”).

The Company adopted the new credit loss standard using the modified retrospective approach such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

Our opinion is not modified with respect to this matter.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 12, 2025, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

15 unchanged sentences

Description of the Matter

As described in Notes 1 and 3 to the financial statements, the Company’s allowance for credit losses (“ACL”) is a valuation that reflects the Company’s best estimate of expected credit losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the entire loan portfolio in accordance with Accounting Standards Codification ASC 326:

As described in Notes 1 and 3 to the financial statements, the Company’s allowance for credit losses (“ACL”) is a valuation that reflects the Company’s best estimate of expected credit losses inherent within the Company’s loan portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the loan portfolio in accordance with Accounting Standards Codification ASC 326:

Financial Instruments – Credit Losses.

1 unchanged sentence

The ACL was $26,721,000 at December 31, 2024, which consists of two components:

the loss allocations on pools of loans that share similar risk characteristics and loss allocations on individual loans that do not share similar risk characteristics with other loans and the measurement of expected credit loss for such individual loans.

the loss allocations on pools of loans that share similar risk characteristics and loss allocations on individual loans that do not share similar risk characteristics with other loans.

The Company’s measurement of expected credit losses of loans on a pool basis when the loans share similar risk characteristics is based off historical data that is adjusted, as necessary, for qualitative factors where there are differences in the historical loss data of the Company and current or projected future conditions.

22 unchanged sentences

Interest-bearing balances due from other banks

Federal funds sold

Cash and cash equivalents

4 unchanged sentences

42,687 20,472

2,125,084 2,210,619

allowance for credit losses

1 unchanged sentence

2,098,363 2,180,079

Equity securities

Equity securities at fair value

Nonmarketable equity securities

16,502 13,417

33 unchanged sentences

5,000,000 shares authorized;

none issued or outstanding

Common stock, $ 1.00 par value per share;

17 unchanged sentences

Interest and fees on loans

$ 128,498 $ 117,892 $ 93,373

Interest on investment securities

11,047 12,372 9,796

1,249 693 482

Other interest income

3,071 2,244 918

Total interest income

143,865 133,201 104,569

INTEREST EXPENSE

Interest on deposits

61,510 42,072 6,250

Interest on borrowings

12,602 16,609 8,534

Total interest expense

74,112 58,681 14,784

Net interest income

69,753 74,520 89,785

Provision for credit losses

( 3,480 ) ( 2,000 ) 2,922

Net interest income after provision for credit losses

73,233 76,520 86,863

NONINTEREST INCOME

Service charges on deposit accounts

3,241 3,090 3,090

(Loss) gain on call or sale of investment securities, net

Loss on sale or disposition of fixed assets, net

(Loss) gain on sale of other real estate owned, net

( 753 ) ( 323 ) 6

Gain (loss) on sale or disposition of fixed assets, net

427 ( 1,323 ) ( 258 )

Gain (loss) on sale of other real estate owned, net

683 ( 114 ) 9

Swap termination fee income

2 unchanged sentences

Interchange fees

1,615 1,697 2,036

Income from bank owned life insurance

4,886 1,417 1,305

Change in the fair value of equity securities

413 ( 65 ) ( 90 )

Income from legal settlement

Income from insurance proceeds

Other operating income

2,571 2,070 2,680

Total noninterest income

14,205 6,538 18,350

Income before noninterest expense

87,438 83,058 105,213

NONINTEREST EXPENSE

Depreciation and amortization

3,095 3,780 4,435

Salaries and employee benefits

38,615 37,143 34,974

2,576 2,994 2,915

Data processing

3,611 3,482 3,600

Professional fees

Loss on early extinguishment of subordinated debt

Acquisition expense

1,797 1,933 1,774

(Gain) loss on early extinguishment of subordinated debt

( 292 ) — 222

Other operating expenses

13,260 12,996 12,683

Total noninterest expense

63,032 62,630 60,865

Income before income tax expense

24,406 20,428 44,348

Income tax expense

4,154 3,750 8,639

$ 20,252 $ 16,678 $ 35,709

EARNINGS PER SHARE

Basic earnings per share

$ 2.06 $ 1.69 $ 3.54

Diluted earnings per share

2.04 1.69 3.50

Cash dividends declared per common share

0.41 0.395 0.365

See accompanying notes to the consolidated financial statements.

4 unchanged sentences

$ 20,252 $ 16,678 $ 35,709

Other comprehensive income (loss):

Other comprehensive (loss) income:

Investment securities:

Unrealized gain (loss), available for sale, net of tax expense (benefit) of $ 951 , ($ 12,993 ), and ($ 694 ), respectively

Unrealized (loss) gain, available for sale, net of tax (benefit) expense of ($ 1,026 ), $ 951 , and ($ 12,993 ), respectively

( 3,805 ) 3,510 ( 48,019 )

2 unchanged sentences

Unrealized loss, transfer from available for sale to held to maturity, net of tax benefit of $ 0 for all respective periods

— ( 1 ) ( 1 )

Derivative financial instruments:

Change in fair value of interest rate swaps designated as cash flow hedges, net of tax expense of $ 0 , $ 0 , and $ 1,151 , respectively

— 4,329 5,253

Reclassification of realized gain, interest rate swap termination, net of tax expense of $ 0 , $ 0 , and $ 1,697 , respectively

— — ( 6,380 )

Total other comprehensive income (loss)

Total other comprehensive (loss) income

( 3,210 ) 3,766 ( 50,076 )

8 unchanged sentences

Income (Loss)

Balance, December 31, 2020

Balance, January 1, 2022

$ 10,343 $ 154,932 $ 76,160 $ 1,163 $ 242,598

14 unchanged sentences

$ 9,902 $ 146,587 $ 108,206 $ ( 48,913 ) $ 215,782

Cumulative effect of adoption of ASU 2016-13, net

— — ( 4,295 ) — ( 4,295 )

Surrendered shares

3 unchanged sentences

Options exercised

10 123 — — 133

Dividends declared, $ 0.395 per share

3 unchanged sentences

— — 16,678 — 16,678

Other comprehensive loss, net

Other comprehensive income, net

— — — 3,766 3,766

1 unchanged sentence

$ 9,748 $ 145,456 $ 116,711 $ ( 45,147 ) $ 226,768

Cumulative effect of adoption of ASU 2016-13, net

— — ( 4,295 ) — ( 4,295 )

Surrendered shares

3 unchanged sentences

Options exercised

96 1,263 — — 1,359

Dividends declared, $ 0.41 per share

3 unchanged sentences

— — 20,252 — 20,252

Other comprehensive income, net

Other comprehensive loss, net

— — — ( 3,210 ) ( 3,210 )

7 unchanged sentences

Cash flows from operating activities

$ 20,252 $ 16,678 $ 35,709

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

3,095 3,780 4,435

Provision for credit losses

( 3,480 ) ( 2,000 ) 2,922

Net accretion of purchase accounting adjustments

( 32 ) ( 274 ) ( 95 )

Provision for other real estate owned

Net (accretion) amortization of securities

( 62 ) ( 62 ) 972

Loss (gain) on call or sale of investment securities, net

Loss on sale or disposition of fixed assets, net

Loss (gain) on sale of other real estate owned, net

753 323 ( 6 )

(Gain) loss on sale or disposition of fixed assets, net

( 427 ) 1,323 258

(Gain) loss on sale of other real estate owned, net

( 683 ) 114 ( 9 )

Gain on sale of loans to First Community Bank

Loss on early extinguishment of subordinated debt

(Gain) loss on early extinguishment of subordinated debt

( 292 ) — 222

FHLB stock dividend

( 194 ) ( 642 ) ( 152 )

Stock-based compensation

1,956 1,988 2,107

Deferred taxes

659 ( 350 ) ( 655 )

Net change in value of bank owned life insurance

( 1,771 ) ( 1,417 ) ( 1,305 )

Gain on bank owned life insurance death benefit proceeds

( 3,115 ) — —

Amortization of subordinated debt issuance costs

Change in the fair value of equity securities

( 413 ) 65 90

Loans held for sale:

3 unchanged sentences

Accrued interest receivable

( 57 ) ( 518 ) ( 1,394 )

376 5,772 ( 1,732 )

Accrued taxes and other liabilities

( 954 ) 1,447 695

Net cash provided by operating activities

15,927 26,247 42,748

Cash flows from investing activities

Proceeds from sales of investment securities available for sale

18,048 14,974 —

Purchases of securities available for sale

( 27,590 ) ( 107,904 ) ( 181,636 )

Purchases of securities held to maturity

( 27,000 ) ( 14,056 ) —

Proceeds from maturities, prepayments and calls of investment securities available for sale

35,576 140,712 60,173

Proceeds from maturities, prepayments and calls of investment securities held to maturity

Proceeds from redemption or sale of equity securities

Purchases of equity securities

4,779 1,879 1,933

Proceeds from redemption or sale of nonmarketable equity securities

1,872 17,429 —

Purchases of nonmarketable equity securities

( 4,763 ) ( 4,196 ) ( 10,865 )

Proceeds from redemption or sale of equity securities at fair value

Purchases of equity securities at fair value

( 1,000 ) — ( 750 )

Net decrease (increase) in loans

83,283 41,999 ( 225,090 )

Proceeds from sales of other real estate owned

Purchases of other real estate owned

2,070 1,484 6,071

Proceeds from sales of fixed assets

Purchase of loans

1,341 42 4,692

Purchases of loans

— ( 163,842 ) —

Purchases of fixed assets

( 506 ) ( 1,072 ) ( 1,056 )

Purchases of bank owned life insurance

( 10,000 ) — ( 5,000 )

Proceeds from surrender of bank owned life insurance

Proceeds from bank owned life insurance death benefits

Purchases of other investments

( 319 ) ( 617 ) ( 718 )

Distributions from investments

Cash paid for branch sale to First Community Bank, net of cash received

Cash acquired from acquisition of Cheaha Financial Group, net of cash paid

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

90,065 ( 73,490 ) ( 350,987 )

INVESTAR HOLDING CORPORATION

4 unchanged sentences

Net increase (decrease) in customer deposits

Net increase (decrease) in repurchase agreements

Net (decrease) increase in short-term FHLB advances

Net increase in borrowings under the Bank Term Funding Program

90,291 188,125 ( 38,249 )

Net (decrease) increase in repurchase agreements

( 257 ) 8,633 ( 5,783 )

Net increase (decrease) in short-term FHLB advances

7,215 ( 333,500 ) 333,500

Net (decrease) increase in borrowings under the Bank Term Funding Program

( 212,500 ) 212,500 —

Proceeds from long-term FHLB advances

Repayment of long-term FHLB advances

( 23,500 ) ( 30,000 ) ( 25,000 )

Cash dividends paid on common stock

( 3,972 ) ( 3,844 ) ( 3,552 )

Payments to repurchase common stock

( 305 ) ( 3,026 ) ( 10,540 )

Proceeds from stock options exercised

1 unchanged sentence

Extinguishment of subordinated debt

Net cash provided by (used in) financing activities

Net (decrease) increase in cash and cash equivalents

( 27,388 ) — ( 18,600 )

Net cash (used in) provided by financing activities

( 110,079 ) 38,993 251,457

Net decrease in cash and cash equivalents

( 4,087 ) ( 8,250 ) ( 56,782 )

Cash and cash equivalents, beginning of period

32,009 40,259 97,041

Cash and cash equivalents, end of period

$ 27,922 $ 32,009 $ 40,259

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash payments for:

$ 3,101 $ 2,899 $ 8,887

Interest on deposits and borrowings

74,463 56,773 14,409

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES

Transfer from loans to other real estate owned

$ 1,975 $ 3,930 $ 3,327

Transfer from bank premises and equipment to other real estate owned

424 1,425 525

See accompanying notes to the consolidated financial statements.

3 unchanged sentences

Nature of Operations

Investar Holding Corporation is a financial holding company headquartered in Baton Rouge, Louisiana, that provides, through its wholly-owned subsidiary, Investar Bank, National Association (the “Bank”), full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses throughout its markets in south Louisiana, southeast Texas and Alabama.

Investar Holding Corporation is a financial holding company headquartered in Baton Rouge, Louisiana, that provides, through its wholly-owned subsidiary, Investar Bank, National Association, full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses throughout its markets in south Louisiana, southeast Texas and Alabama.

Basis of Presentation

The consolidated financial statements of Investar Holding Corporation and its wholly-owned subsidiary, the Bank (together, the “Company”), have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and to generally accepted practices within the banking industry.

All of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Because the overall banking operations comprise substantially all of the consolidated operations, no separate segment disclosures are presented in the accompanying consolidated financial statements.

The consolidated financial statements of Investar Holding Corporation and its wholly-owned subsidiary, the Bank, have been prepared in conformity with GAAP and to generally accepted practices within the banking industry.

Prior period consolidated financial statements are reclassified whenever necessary to conform to the current period presentation.

No reclassifications of prior period balances were material to the consolidated financial statements.

Segment Reporting

The Company determined that all of its banking operations serve a similar customer base, offer similar products and services, and are managed through similar processes.

Therefore, the Company’s banking operations are aggregated into one reportable operating segment, which generates income principally from interest on loans and, to a lesser extent, securities investments, as well as from fees charged in connection with various loan and deposit services.

The CODM is the Chief Executive Officer, who for the purposes of assessing performance, making operating decisions, and allocating Company resources, regularly reviews net income as reported in the accompanying consolidated statements of income.

The level of disaggregation and amounts of significant segment income and expenses that are regularly provided to the CODM are the same as those presented in the accompanying consolidated statements of income.

Likewise, the measure of segment assets is reported on the accompanying consolidated balance sheets as total assets.

Principles of Consolidation

4 unchanged sentences

Actual results could differ from those estimates, and such differences could be material.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses.

While management uses available information to recognize credit losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, changes in conditions of our borrowers’ industries or changes in the condition of individual borrowers.

As described below under “Accounting Standards Adopted in 2023,” the Company adopted Accounting Standards Update (“ASU”) 2016 - 13 effective January 1, 2023, which changed how the Company accounts for the allowance for credit losses.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses.

Material estimates that are particularly susceptible to significant change relate to the determination of the ACL.

While management uses available information to recognize credit losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, changes in conditions of borrowers’ industries or changes in the condition of individual borrowers.

The Company adopted ASU 2016 - 13 effective January 1, 2023, which changed how the Company accounts for the ACL.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL.

Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

Because of these factors, it is reasonably possible that the allowance for credit losses may change materially in the near term.

Because of these factors, it is reasonably possible that the ACL may change materially in the near term.

However, the amount of the change that is reasonably possible cannot be estimated.

Other estimates that are susceptible to significant change in the near term relate to the allowance for off-balance sheet credit losses, the fair value of stock-based compensation awards, the determination of other-than-temporary impairments of securities, and the fair value of financial instruments and goodwill.

The COVID- 19 pandemic and, in 2022 and 2023, rising inflation and interest rates have made certain estimates more challenging, including those discussed above.

Other estimates that are susceptible to significant change in the near term relate to the allowance for off-balance sheet credit losses, the fair value of stock-based compensation awards, the determination of impairments of investment securities, and the fair value of financial instruments and goodwill.

A changing interest rate environment and elevated levels of inflation have made certain estimates more challenging, including those discussed above.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Cash and Cash Equivalents

Cash and cash equivalents include cash and amounts due from banks and federal funds sold due to the short-term nature of these items.

Investment Securities

The Company’s investments in securities are accounted for in accordance with applicable guidance contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), which requires the classification of securities into one of the following categories:

Securities to be held to maturity (“HTM”):

The Company’s investments in securities are accounted for in accordance with applicable guidance contained in the FASB ASC, which requires the classification of securities into one of the following categories:

HTM Securities:

bonds, notes, and debentures for which the Company has the positive intent and ability to hold to maturity are reported at cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity.

Securities available for sale (“AFS”):

available for sale securities consist of bonds, notes, and debentures that are available to meet the Company’s operating needs.

AFS Securities:

consist of bonds, notes, and debentures that are available to meet the Company’s operating needs.

These securities are reported at fair value.

Unrealized holding gains and losses, net of tax, on available for sale securities are reported as a net amount in other comprehensive income.

Unrealized holding gains and losses, net of tax, on AFS securities are reported as a net amount in other comprehensive income.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities.

Realized gains and losses on the sale of debt and equity securities are determined using the specific-identification method and average price method, respectively.

The Company follows FASB guidance related to the recognition and presentation of other-than-temporary impairment.

The guidance specifies that if an entity does not have the intent to sell a debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss.

When an entity does not intend to sell the security, and it is more likely than not that the entity will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income.

Realized gains and losses on the sale of debt and equity securities are determined using the specific identification method and average cost method, respectively.

The Company follows FASB guidance related to impairment of AFS securities.

For AFS securities that are in an unrealized loss position at the balance sheet date, the Company first assesses whether or not it intends to sell the security, or more likely than not will be required to sell the security, before recovery of its amortized cost basis.

If either criteria is met, the security’s amortized cost basis is written down to fair value through net income.

If neither criteria is met, the Company evaluates whether any portion of the decline in fair value is the result of credit deterioration.

If the evaluation indicates that a credit loss exists, an ACL is recorded through provisions for credit losses, limited by the amount by which the amortized cost exceeds fair value.

Any impairment not recognized in the ACL is recognized in other comprehensive income (loss).

See “Allowance for Credit Losses” below for the accounting treatment of the allowance of credit losses for AFS and HTM securities.

3 unchanged sentences

Indirect lending, which is lending initiated through third -party business partners, is largely comprised of loans made through automotive dealerships.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at the unpaid principal balance outstanding, net of purchase premiums or discounts, deferred income (net of costs), any direct principal charge-offs, and an allowance for credit losses.

Interest on loans is calculated by using the effective interest rate on daily balances of the principal amount outstanding.

3 unchanged sentences

however, management may elect to continue the accrual when the estimated net realizable value of collateral is sufficient to cover the principal balance and the accrued interest.

Any unpaid interest previously accrued on nonaccrual loans is reversed from income.

Interest income, generally, is not recognized on specific impaired loans unless the likelihood of further loss is remote.

Interest payments received on such loans are applied as a reduction of the loan principal balance.

Interest income on other nonaccrual loans is recognized only to the extent of interest payments received.

A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period of repayment performance by the borrower.

Any unpaid interest previously accrued on nonaccrual loans is reversed from incom e.

Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due.

A loan may b e returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period of repayment performance by the borrower.

INVESTAR HOLDING CORPORATION

5 unchanged sentences

Employee Retention Credit

The CARES Act provided for an Employee Retention Credit (“ERC”), which is a broad based refundable payroll tax credit that incentivized businesses to retain employees on the payroll during the COVID- 19 pandemic.

The CARES Act provided for an ERC, which was a broad based refundable payroll tax credit that incentivized businesses to retain employees on the payroll during the COVID- 19 pandemic.

The ERC is a credit against certain employment taxes of up to $ 5,000 per employee for eligible employers based on certain wages paid after March 12, 2020 through December 31, 2020.

2 unchanged sentences

The Company qualified for the ERC based on the significant adverse financial impacts of the COVID- 19 pandemic.

In the fourth quarter of 2022, Company recorded a $ 2.3 million reduction to payroll taxes related to the second quarter of 2021, and in the fourth quarter of 2021, the Company recorded a $ 1.9 million reduction to payroll taxes related to the first quarter of 2021, which are included as part of “Salaries and employee benefits” in noninter est expense on the accompanying consolidated statements of income for the years ended December 31, 2022 and 2021.

In the fourth quarter of 2022, Company recorded a $ 2.3 million reduction to payroll taxes related to the second quarter of 2021, which is included as part of “Salaries and employee benefits” in noninter est expense on the accompanying consolidated statement of income for the year ended December 31, 2022.

Allowance for Credit Losses

For reporting periods beginning on and after January 1, 2023, reflecting the adoption of ASU 2016 - 13:

The Company’s allowance for credit losses is determined using a current expected credit loss (“CECL”) model.

The allowance for credit losses represents the measurement of all expected credit losses for financial assets accounted for on an amortized cost basis.

The Company’s ACL is determined using a CECL model.

The ACL represents the measurement of all expected credit losses for financial assets accounted for on an amortized cost basis.

Expected losses at the reporting date are calculated based on historical experience, current conditions, and reasonable and supportable forecasts.

3 unchanged sentences

To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, when necessary, the model reverts back to the historical loss rates adjusted for qualitative factors related to current conditions using a four -quarter reversion period.

The allowance for credit losses is measured on a pool basis when similar risk characteristics exist and is maintained at an amount which management believes is a current estimate of the expected credit losses for the full life of the relevant pool of loans and related unfunded lending commitments.

The ACL is measured on a pool basis when similar risk characteristics exist and is maintained at an amount which management believes is a current estimate of the expected credit losses for the full life of the relevant pool of loans and related unfunded lending commitments.

For modeling purposes, loan pools include:

1 unchanged sentence

Management periodically reassesses each pool to confirm that the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary.

For each pool of loans, the Company evaluates and applies qualitative adjustments to the calculated allowance for credit losses based on several factors, including, but not limited to, changes in current and expected future economic conditions, changes in the nature and volume of the portfolio, changes in levels of concentrations, changes in the volume and severity of past due loans, changes in lending policies and personnel and changes in the competitive and regulatory environment of the banking industry.

The loss rates computed for each pool and expected pool-level funding rates are applied to the related unfunded lending commitments to calculate an allowance for credit losses.

For each pool of loans, the Company evaluates and applies qualitative adjustments to the calculated ACL based on several factors, including, but not limited to, changes in current and expected future economic conditions, changes in the nature and volume of the portfolio, changes in levels of concentrations, changes in the volume and severity of past due loans, changes in lending policies and personnel and changes in the competitive and regulatory environment of the banking industry.

The loss rates computed for each pool and expected pool-level funding rates are applied to the related unfunded lending commitments to calculate an ACL.

Loans that do not share similar risk characteristics with other loans are excluded from the loan pools and individually evaluated for impairment.

Individually evaluated loans are loans for which it is probable that all the amounts due under the contractual terms of the loan will not be collected.

The allowance for credit losses on loans that are individually evaluated is based on a comparison of the recorded investment in the loan with either the expected cash flows discounted using the loan’s original effective interest rate, observable market price for the loan or the fair value of the collateral underlying certain collateral dependent loans.

The allowance for credit losses is established after input from management as well as our risk management department and our special assets committee.

F or collateral dependent loans where the borrower is experiencing financial difficulty, which the Company evaluates independently from the loan pool, the expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, which is based on third -party appraisals.

Credits deemed uncollectible are charged to the allowance for credit losses.

Provisions for credit losses and recoveries on loans previously charged off are adjustments to the allowance for credit losses.

Expected credit losses on AFS securities are recorded in an allowance for credit losses when management does not intend to sell or believes that it is not more likely than not that they will be required to sell the securities prior to recovery of the securities’ amortized cost basis.

If management has the intent to sell or believes it is more likely than not the Company will be required to sell an impaired available for sale security before recovery of the amortized cost basis, the credit loss is recorded as a direct write-down of the amortized cost basis.

The ACL on loans that are individually evaluated is based on a comparison of the recorded investment in the loan with either the expected cash flows discounted using the loan’s original effective interest rate, observable market price for the loan or the fair value of the collateral underlying certain collateral dependent loans.

The ACL is established after input from management as well as the risk management department and the special assets committee.

Credits deemed uncollectible are charged to the ACL.

Provisions for credit losses and recoveries on loans previously charged off are adjustments to the ACL.

Expected credit losses on AFS securities are recorded in an ACL when management does not intend to sell or believes that it is not more likely than not that they will be required to sell the securities prior to recovery of the securities’ amortized cost basis.

If management has the intent to sell or believes it is more likely than not the Company will be required to sell an impaired AFS security before recovery of the amortized cost basis, the credit loss is recorded as a direct write-down of the amortized cost basis.

In evaluating AFS securities in an unrealized loss position for credit losses, the Company considers the nature of the investments, the current market price, and the current interest rate environment, among other factors.

Declines in the fair value of AFS securities that are not considered credit related are recognized in accumulated other comprehensive income.

Expected credit losses on HTM securities are recorded in an allowance for credit losses and estimated using a probability of loss model based on reasonable and supportable forecasts.

Declines in the fair value of AFS securities that are not considered credit related are recognized in accumulated other comprehensive income or loss.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Expected credit losses on HTM securities are recorded in an ACL and estimated using a probability of loss model based on reasonable and supportable forecasts.

HTM securities are evaluated on a collective basis by security type.

In evaluating HTM securities in an unrealized loss position for credit losses, the Company considers the nature of the investments, the current market price, and the current interest rate environment, among other factors.

See “Accounting Standards Adopted in 2023” below for additional information.

For reporting periods prior to January 1, 2023, prior to the adoption of ASU 2016 - 13:

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Equity Securities

Equity securities primarily consist of Federal Home Loan Bank (“FHLB”) stock and Federal Reserve Bank of Atlanta (“FRB”) stock.

Equity securities at fair value include marketable securities in corporate stocks and mutual funds which totaled $ 2.6 million and $ 1.2 million at December 31, 2024 and December 31, 2023 , respectively.

Nonmarketable equity securities primarily consist of FHLB stock and FRB stock.

Members of the FHLB and FRB are required to own a certain amount of stock based on the level of borrowings and other factors and may invest in additional amounts.

FHLB stock and FRB stock is carried at cost, is restricted as to redemption, and is periodically evaluated for impairment based on the ultimate recovery of par value.

FHLB stock and FRB stock are carried at cost, restricted as to redemption, and periodically evaluated for impairment based on the ultimate recovery of par value.

Both cash and stock dividends are reported as income.

Equity securities also include investments in our other correspondent banks including Independent Bankers Financial Corporation and First National Bankers Bank stock.

Nonmarketable equity securities also include investments in other correspondent banks including Independent Bankers Financial Corporation and First National Bankers Bank stock.

These investments are carried at cost which approximates fair value.

The balance of equity securities in our correspondent banks at December 31, 2023 and 2022 was $ 13.4 million and $ 26.0 million, respectively.

In addition, equity securities include marketable securities in corporate stocks and mutual funds which totaled $ 1.2 million at both December 31, 2023 and 2022 .

The balance of nonmarketable equity securities at December 31, 2024 and 2023 was $ 16.5 million and $ 13.4 million, respectively.

INVESTAR HOLDING CORPORATION

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Depreciation expense is computed using the straight-line method and is charged to expense over the estimated useful lives of 39 years for buildings, five to 39 years for improvements, three to seven years for furniture and equipment, and one to five years for computer equipment and software.

Costs of major additions and improvements are capitalized.

Costs of major additions and improvements, which extend the useful life of the asset, are capitalized.

Expenditures for maintenance and repairs are expensed as incurred.

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however, such leases are not significant.

The Company determines if an arrangement is a lease at inception.

Operating leases, with the exception of short-term leases, are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in “Bank premises and equipment, net” and “Accrued taxes and other liabilities”, respectively, in the accompanying consolidated balance sheets.

The Company determines if an arrangement is a lease at inception and, at that time, assesses appropriate classification of the lease as finance or operating.

Operating leases, with the exception of short-term leases, are included in operating lease ROU assets and operating lease liabilities in “Bank premises and equipment, net” and “Accrued taxes and other liabilities,” respectively, in the accompanying consolidated balance sheets.

Operating lease ROU assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The Company uses the interest rate implicit in the contract, when available, or the Company’s incremental collateralized borrowing rate with similar terms based on the information available at the commencement date in determining the present value of lease payments.

The operating lease ROU asset also includes any lease pre-payments made and excludes lease incentives.

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Other Real Estate Owned

Real estate acquired through foreclosure, or other real estate owned on the consolidated balance sheets, is initially recorded at fair value at the time of foreclosure, less estimated selling cost, and any related write down is charged to the allowance for credit losses.

Valuations are periodically performed by management and provisions for estimated losses on other real estate owned are charged to expense when fair value is determined to be less than the carrying value.

Costs relative to the development and improvement of properties are capitalized to the extent realizable, whereas ordinary upkeep disbursements are charged to expense.

Other real estate owned includes real estate acquired through foreclosure or acceptance of a deed in lieu of foreclosure and real property no longer used in the Bank’s business operations.

Real estate acquired through foreclosure is initially recorded at fair value at the time of foreclosure, less estimated selling cost, and any related write-down is charged to the ACL.

Real property no longer used in the Bank’s business operations is recorded at the lower of its net book value or fair value at the date of transfer to other real estate owned.

Valuations are periodically performed by management, a nd write-downs on other real estate owned are charged to expense through a valuation allowance wh en fair value is determined to be less than the carrying value.

Costs relative to the development and improvement of properties are capitalized to the extent realizable.

The ability of the Company to recover the carrying value of real estate is based upon future sales of the other real estate owned.

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Bank Owned Life Insurance

The Company invests in bank owned life insurance (“BOLI”) policies that provide earnings to help cover the cost of employee benefit plans.

The Company invests in BOLI policies on certain current and former officers and employees that provide earnings to partially offset the cost of employee benefit plans.

The Company is the owner and beneficiary of the life insurance policies it purchased directly on a chosen group of employees.

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Earnings accruing to the Company are derived from the general account investments of the insurance companies.

Increases in the net cash surrender value of BOLI policies and insurance proceeds received are not taxable and are recorded in noninterest income in the consolidated statements of income.

Increases in the net cash surrender value of BOLI policies and insurance proceeds received upon death are not taxable and are recorded in noninterest income in the consolidated statements of income.

INVESTAR HOLDING CORPORATION

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Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of ASC Topic 718, “ Compensation - Stock Compensation .” Under this accounting guidance, fair value is established as the measurement objective in accounting for share-based payment awards and requires the application of a fair value based measurement method in accounting for compensation costs, which is recognized over the requisite service period.

The Company accounts for stock-based compensation under the provisions of ASC Topic 718, “ Compensation - Stock Compensation .” Under this accounting guidance, share-based payment awards are measured based on the fair value of the award on the grant date and recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

The impact of forfeitures of share-based payment awards on compensation expense is recognized as forfeitures occur.

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ASC Topic 815, “ Derivatives and Hedging ,” requires that all derivatives be recognized as assets or liabilities in the balance sheet at fair value.

Derivatives executed with the same counterparty are generally subject to master netting arrangements, however, fair value amounts recognized for derivative financial instruments and fair value amounts recognized for the right/obligation to reclaim/return cash collateral are not offset for financial reporting purposes.

Derivatives executed with the same counterparty are generally subject to master netting arrangements, however, fair value amounts recognized for derivative financial instruments and fair value amounts recognized for the right or obligation to reclaim or return cash collateral are not offset for financial reporting purposes.

In the course of its business operations, the Company is exposed to certain risks, including interest rate, liquidity and credit risk.

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These methods are consistent with the Company’s approach to managing risk.

Derivative Financial Instruments, describes the derivative instruments currently used by the Company and discloses how these derivatives impact the Company’s financial position and results of operations.

The provision for income taxes is based on amounts reported in the consolidated statements of income after exclusion of nontaxable income such as interest on state and municipal securities.

Refer to Note 12.

Derivative Financial Instruments, which describes the derivative instruments currently used by the Company and discloses how these derivatives impact the Company’s financial position and results of operations.

The provision for income taxes is based on amounts reported in the consolidated statements of income after exclusion of nontaxable income such as interest income on certain loan and investment securities and income from BOLI.

Also, certain items of income and expenses are recognized in different time periods for financial statement purposes than for income tax purposes.

Thus, provisions for deferred taxes are recorded in recognition of such temporary differences.

Deferred taxes are determined utilizing a liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred taxes are determined utilizing a liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the reported amounts of existing assets and liabilities and their respective tax basis.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

INVESTAR HOLDING CORPORATION

2 unchanged sentences

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

There were no material penalties or related interest for the years ended December 31, 2024 , 2023 or 2022 .

Transfer of Financial Assets

Transfers of financial assets in which the Company has surrendered control over the transferred assets are accounted for as sales.

Control over transferred assets is deemed to be surrendered when the assets have been legally isolated from the Company, the transferee obtains the right to pledge or exchange the transferred assets with no conditions that constrain the transferee, and the Company does not maintain effective control over the transferred assets.

When a transfer is accounted for as a sale, the transferred assets are derecognized from the balance sheet and a gain or loss on sale is recognized in noninterest income in the accompanying consolidated statements of income.

Revenue Recognition

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Noninterest income is recognized on the accrual basis of accounting as services are provided or as transactions occur.

Noninterest income includes fees from deposit accounts, merchant services, automated teller machine (“ATM”) and debit card fees, servicing fees, interchange fees, and other miscellaneous services and transactions.

Noninterest income includes fees from deposit accounts, merchant services, ATM and debit card fees, servicing fees, interchange fees, and other miscellaneous services and transactions.

Earnings Per Share

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Diluted earnings per share is calculated in a manner similar to that of basic earnings per share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares (such as those resulting from the exercise of stock options and warrants) were issued during the period, computed using the treasury stock method.

Statements of Cash Flows

For purposes of the statements of cash flows, cash and cash equivalents include cash and amounts due from banks and federal funds sold due to the short-term nature of these items.

Comprehensive Income

Comprehensive income includes net income and other comprehensive income or loss, which in the case of the Company includes unrealized gains and losses on securities, changes in the fair value of interest rate swaps, and the reclassification of realized gains on AFS securities and interest rate swap terminations to net income, net of related income taxes.

Comprehensive income includes net income and other comprehensive income or loss, which in the case of the Company includes unrealized gains and losses on securities, changes in the fair value of interest rate swaps, and the reclassification of realized gains and losses on AFS securities and interest rate swap terminations to net income, net of related income taxes.

INVESTAR HOLDING CORPORATION

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Estimated credit losses are included in the determination of fair value;

therefore, an allowance for credit losses is not recorded on the acquisition date.

therefore, an ACL is not recorded on the acquisition date.

Subsequent to acquisition, acquired performing loans are evaluated using a similar allowance methodology as the legacy portfolio.

An allowance for credit losses is only recorded to the extent that the required reserves exceed the unaccreted fair value adjustment.

The Company accounts for purchased credit deteriorated (“PCD”) assets under ASC Topic 326.

The CECL estimate for PCD assets is recognized through the allowance for credit losses with an offset to the amortized cost basis of the PCD asset at the date of acquisition.

Subsequent changes in the allowance for credit losses for PCD assets are recognized through a provision for credit losses on loans.

Share Repurchases

An ACL is only recorded to the extent that the required reserves exceed the unaccreted fair value adjustment.

The Company accounts for PCD assets under ASC Topic 326.

The CECL estimate for PCD assets is recognized through the ACL with an offset to the amortized cost basis of the PCD asset at the date of acquisition.

Subsequent changes in the ACL for PCD assets are recognized through a provision for credit losses on loans.

Treasury Stock

The Louisiana Business Corporation Act does not include the concept of treasury stock.

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Notes to Consolidated Financial Statements

Reclassifications

Certain reclassifications have been made to the 2022 and 2021 financial statements to conform to the 2023 presentation.

Accounting Standards Adopted in 2024

FASB ASC Topic 326 “ Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments ” Update No.

2016 - 13 ( “ ASU 2016 - 13 ” ).

ASU 2016 - 13 became effective for the Company as a smaller reporting company on January 1, 2023.

ASU 2016 - 13, also referred to as the Current Expected Credit Loss (“CECL”) standard, requires financial assets measured on an amortized cost basis, including loans and HTM debt securities, to be presented at an amount net of an allowance for credit losses, which reflects expected losses for the full life of the financial asset.

Unfunded lending commitments are also within the scope of this topic.

See “Allowance for Credit Losses” above for additional information on the calculation of the allowance for credit losses under ASU 2016 - 13.

The Company adopted ASU 2016 - 13 using the modified retrospective approach for all loans and off-balance sheet credit exposures measured at amortized cost, other than PCD financial assets.

Results for reporting periods beginning after December 31, 2022 are presented in accordance with ASU 2016 - 13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

CECL requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio.

Under prior GAAP, credit losses were not recognized until the occurrence of the loss was probable, and entities, in general, did not attempt to estimate credit losses for the full life of financial assets.

ASU 2016 - 13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the lifetime credit loss estimate.

ASU 2016 - 13 also amended the accounting model for purchased financial assets and replaced the guidance for purchased credit impaired (“PCI”) financial assets with the concept of PCDs.

The Company used the prospective transition approach for PCD loans that were previously classified as PCI and accounted for under ASC 310 - 30, “ Loans and Debt Securities Acquired with Deteriorated Credit Quality ” (“ASC 310 - 30” ).

As permitted under ASU 2016 - 13, the Company did not reass ess whether PCI assets meet the criteria of PCD assets as of the date of adoption.

The Company adopted ASU 2016 - 13 on January 1, 2023, and recorded a one -time, cumulative effect adjustment as shown in the table below (dollars in thousands).

December 31, 2022

Impact of ASU 2016-13 Adoption

January 1, 2023

Allowance for credit losses

$ ( 24,364 ) $ ( 5,865 ) $ ( 30,229 )

Deferred tax asset

16,438 1,142 17,580

Remaining purchase discount on loans (1)

( 818 ) 422 ( 396 )

Reserve for unfunded loan commitments (2)

372 ( 6 ) 366

Stockholders’ Equity

Retained earnings

108,206 ( 4,295 ) 103,911

( 1 ) For PCD loans, formerly classified as PCI, the Company applied the guidance under CECL using the prospective transition approach.

As a result, the Company adjusted the amortized cost basis of the PCD loans to reclassify the purchase discount to the allowance for credit losses on January 1, 2023.

( 2 ) The allowance for credit losses on unfunded loan commitments is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets.

The related provision for credit losses on unfunded loan commitments is included in “Provision for credit losses” in the accompanying consolidated statements of income for the year ended December 31, 2023.

In addition, ASU 2016 - 13 amends the accounting for credit losses on available for sale (“AFS”) securities, requiring expected credit losses on AFS securities to be recorded in an allowance for credit losses rather than as a write-down of the securities’ amortized cost basis when management does not intend to sell or believes that it is not more likely than not that they will be required to sell the securities prior to recovery of the securities’ amortized cost basis.

The Company’s AFS and HTM securities portfolios were not materially impacted by the adoption of ASU 2016 - 13 due to the composition of the portfolios, which consists primarily of U.S.

Treasury and U.S.

government agencies and corporations securities and mortgage-backed securities.

Due to the nature of the investments, current market prices, and the current interest rate environment, the Company determined that the declines in the fair values of the HTM and AFS securities portfolio were not attributable to credit losses.

The Company will apply the provisions of ASU 2016 - 13 to debt securities that have an other-than-temporary impairment on a prospective basis.

Accordingly, there was no adjustment made to the amortized cost basis upon adoption.

The adoption of ASU 2016 - 13 did not have a significant impact on the Company’s regulatory capital ratios.

FASB ASC Topic 326 “ Financial Instruments – Credit Losses, Troubled Debt Restructurings and Vintage Disclosures ” Update No.

2022 - 02 ( “ ASU 2022 - 02 ” ).

ASU 2022 - 02 became effective for the Company on January 1, 2023 and is applied prospectively.

ASU 2022 - 02 amends Topic 326 to eliminate the accounting guidance for troubled debt restructurings (“TDRs”) by creditors that have adopted ASU 2016 - 13 and, instead, requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan.

The amendment also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases.

The adoption of ASU 2022 - 02 did not have a material impact on the Company’s consolidated financial statements.

FASB ASC Topic 848 “ Reference Rate Reform:

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ” Update No.

2020 - 04 ( “ ASU 2020 - 04 ” ) and FASB ASC Topic 848 “ Reference Rate Reform:

Deferral of the Sunset Date ” Update No.

FASB ASC Topic 280 “ Segment Reporting:

Improvements to Reportable Segments Disclosures ” Update No.

2023 - 07 ( “ ASU 2023 - 07 ” ).

In March 2020, the FASB issued ASU 2020 - 04, which is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

ASU 2020 - 04 became effective as of March 12, 2020 and could be adopted any time during the period of January 1, 2020 through December 31, 2022.

In December 2022, the FASB issued ASU 2022 - 06, which deferred the sunset date of ASU 2020 - 04 from December 31, 2022 to December 31, 2024.

The Company implemented a plan to transition all loans and other financial instruments, including certain indebtedness, with attributes that are either directly or indirectly influenced by LIBOR to its preferred replacement index, the Secured Overnight Financing Rate (“SOFR”).

The Company has transitioned all loans and certain indebtedness.

ASU 2023 - 07 became effective for the Company for the fiscal year ended December 31, 2024 and will be applied in interim periods beginning after December 31, 2024.

ASU 2023 - 07 requires public entities to disclose the title and position of the entity’s CODM and an explanation of how the CODM utilizes the reported measures of profit or loss to assess segment performance and allocate resources, significant segment expenses, an amount and description for other segment items, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis.

ASU 2023 - 07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met.

The adoption of ASU 2023 - 07 did not have a material impact on the Company’s consolidated financial statements.

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In October 2023, the FASB issued ASU 2023 - 06, which amends the disclosure or presentation requirements related to various topics.

The amendment is intended to align U.S.

GAAP with the SEC’s regulations.

The amendment is intended to align GAAP with the SEC’s regulations.

ASU 2023 - 06 is required to be applied prospectively, and early adoption is prohibited.

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ASU 2023 - 09 requires disclosure of additional categories of information about federal, state and foreign income taxes in the rate reconciliation table and requires companies to provide more information about the reconciling items in some categories if a quantitative threshold is met.

The adoption of ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024 and is not expected to have a material impact on the Company’s consolidated financial statements.

ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024 and is not expected to have a material impact on the Company’s consolidated financial statements.

FASB ASC Topic 220 “ Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses ” Update No.

2024 - 03 ( “ ASU 2024 - 03 ”).

In November 2024, the FASB issued ASU 2024 - 03, which requires disaggregated disclosure of income statement expenses in a tabular format in the notes of the financial statements for public business entities.

ASU 2024 - 03 is effective on a prospective basis for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption and retrospective application permitted.

The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements.

INVESTAR HOLDING CORPORATION

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$ ( 754 ) $ ( 325 ) $ —

$ ( 325 ) $ — $ ( 2 )

The amortized cost and approximate fair value of investment securities classified as HTM are summarized below as of the dates presented (dollars in thousands).

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$ 5,526 $ ( 491 ) $ 329,283 $ ( 57,207 ) $ 334,809 $ ( 57,698 )

At December 31, 2023 , 698 of the Company’s AFS debt securities had unrealized losses totaling 14.7 % of the individual securities’ amortized cost basis and 13.8 % of the Company’s total amortized cost basis of the AFS investment securities portfolio.

At December 31, 2024 , 680 of the Company’s AFS securities had unrealized losses totaling 16.7 % of the individual securities’ amortized cost basis and 15.7 % of the Company’s total amortized cost basis of the AFS investment securities portfolio.

At such date, 628 of the 680 securities had been in a continuous loss position for over 12 months.

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Notes to Consolidated Financial Statements

The amortized cost and approximate fair value of investment debt securities, by contractual maturity, are shown below as of the dates presented (dollars in thousands).

The amortized cost and approximate fair value of investment debt securities, by contractual maturity, are shown below as of December 31, 2024 (dollars in thousands).

Actual maturities may differ from contractual maturities due to mortgage-backed securities whereby borrowers may have the right to call or prepay obligations with or without call or prepayment penalties and certain callable bonds whereby the issuer has the option to call the bonds prior to contractual maturity.

Securities Available For Sale

Securities Held to Maturity

December 31, 2023

Amortized Cost

Due within one year

$ 1,034 $ 1,027 $ 960 $ 961

Due after one year through five years

28,620 27,623 2,556 2,582

Due after five years through ten years

43,634 39,971 4,647 4,621

Due after ten years

345,995 293,297 12,309 12,349

Total debt securities

$ 419,283 $ 361,918 $ 20,472 $ 20,513

Securities Available For Sale

Securities Held to Maturity

Available for Sale

Held to Maturity

December 31, 2024

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$ 392,564 $ 331,121 $ 42,687 $ 42,144

Accrued interest receivable on the Company’s investment securities was $ 1.7 million at both December 31, 2023 and December 31, 2022 , and is included in “Accrued interest receivable” on the accompanying consolidated balance sheets.

Accrued interest receivable on the Company’s investment securities was $ 1.9 million and $ 1.7 million at December 31, 2024 and December 31, 2023 , respectively, and is included in “Accrued interest receivable” on the accompanying consolidated balance sheets.

At December 31, 2024 , securities with a carrying value of $ 68.1 million were pledged to secure certain deposits, borrowings, and other liabilities, compared to $ 296.2 million in pledged securities at December 31, 2023 .

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Unearned income, or deferred fees, on loans was $ 1.0 million and $ 1.1 million at December 31, 2024 and December 31, 2023 , respectively, and is also included in the total loans balance in the table above.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

The table below provides an analysis of the aging of loans as of December 31, 2023 (dollars in thousands).

The tables below provide an analysis of the aging of loans as of December 31, 2024 and December 31, 2023 (dollars in thousands).

December 31, 2024

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$ 2,112,995 $ 5,895 $ 1,437 $ 4,757 $ 2,125,084 $ 2

The table below provides an analysis of nonaccrual loans as of December 31, 2023 and December 31, 2022 (dollars in thousands).

December 31, 2023

30 - 59 Days Past Due

60 - 89 Days Past Due

90 Days or More Past Due

> 90 Days and Accruing

Construction and development

$ 189,746 $ — $ 55 $ 570 $ 190,371 $ —

406,014 3,031 1,720 3,021 413,786 —

105,946 — — — 105,946 —

7,651 — — — 7,651 —

Commercial real estate

937,272 48 359 29 937,708 —

Total mortgage loans on real estate

1,646,629 3,079 2,134 3,620 1,655,462 —

Commercial and industrial

542,206 259 488 468 543,421 —

11,552 57 82 45 11,736 —

$ 2,200,387 $ 3,395 $ 2,704 $ 4,133 $ 2,210,619 $ —

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

The tables below provide an analysis of nonaccrual loans as of December 31, 2024 and December 31, 2023 (dollars in thousands).

December 31, 2024

3 unchanged sentences

Interest Income Recognized on Nonaccrual Loans

Total Nonaccrual Loans

Construction and development

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$ 6,130 $ 2,694 $ 8,824 $ 154

$ 3,863 $ 1,907 $ 5,770 $ 1,506 $ 9,986

( 1 ) Nonaccrual loans previously reported as of December 31, 2022 excluded $ 0.5 million of nonaccrual acquired impaired loans being accounted for under ASC 310 - 30.

The table below provides an analysis of the aging of loans as of December 31, 2022 ( dollars in thousands).

December 31, 2023

30-59 Days Past Due

60-89 Days Past Due

90 Days or More Past Due

Total Past Due & Nonaccrual

Acquired Impaired Loans

Nonaccrual with No Allowance for Credit Loss

Nonaccrual with an Allowance for Credit Loss

Total Nonaccrual Loans

Interest Income Recognized on Nonaccrual Loans

Construction and development

1 unchanged sentence

2,937 1,241 4,178 26

81,812 — — — — — — 81,812

12,601 152 62 — 62 276 — 12,877

Commercial real estate

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$ 3,863 $ 1,907 $ 5,770 $ 1,506

$ 2,088,000 $ 3,625 $ 1,346 $ 1,351 $ 9,477 $ 15,799 $ 968 $ 2,104,767

Nonaccrual and Past Due Loans

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Loans that do not share risk characteristics are excluded from the loan pools and evaluated on an individual basis, and the Company has determined to evaluate collateral dependent loans individually for impairment.

The allowance for credit losses for collateral dependent loans is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

The ACL for collateral dependent loans is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the present value of expected cash flows from the operation of the collateral.

When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell.

The Company’s collateral dependent loans include all nonaccrual loans shown in the table above at December 31, 2023 .

The Company’s collateral dependent loans include all nonaccrual loans shown in the tables above at December 31, 2024 and 2023 .

The types of collateral that secure collateral dependent loans are discussed under “Portfolio Segment Risk Factors” below.

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The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, employing experienced underwriting personnel, requiring standards for appraisers, and not making subprime loans.

In the third quarter of 2023, we exited the consumer mortgage origination business.

In the third quarter of 2023, the Company exited the consumer mortgage origination business.

Multifamily - Multifamily loans are normally made to real estate investors to support permanent financing for multifamily residential income producing properties that rely on the successful operation of the property for repayment.

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The Company attempts to limit risk by analyzing a borrower’s cash flow and collateral value on an ongoing basis.

The Company also typically requires personal guarantees from the principal owners of the property, supported by a review of their personal financial statements, as an additional means of mitigating our risk.

The Company manages risk by avoiding concentrations in any one business or industry.

Commercial real estate loans are primarily secured by office and industrial buildings, warehouses, retail shopping facilities and various special purpose commercial properties.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Commercial real estate loans are primarily secured by retail shopping facilities, office and industrial buildings, healthcare facilities, warehouses, and various special purpose commercial properties.

Commercial and Industrial - Commercial and industrial loans receive similar underwriting treatment as commercial real estate loans in that the repayment source is analyzed to determine its ability to meet cash flow coverage requirements as set forth by Bank policies.

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Refer to Note 1.

Summary of Significant Accounting Policies – Accounting Standards Adopted in 2023 for loan pools used for modeling purposes, which are aggregated into the portfolio segments shown above.

Summary of Significant Accounting Policies – Allowance for Credit Losses for loan pools used for modeling purposes, which are aggregated into the portfolio segments shown above.

Concentrations of Credit

1 unchanged sentence

The distribution of commitments to extend credit approximates the distribution of loans outstanding.

Accordingly, the ultimate collectability of a substantial portion of the loan portfolio is susceptible to changes in market conditions in these areas.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Credit Quality Indicators

3 unchanged sentences

These loans have high credit characteristics and financial strength.

The borrowers at least generate profits and cash flow that are in line with peer and industry standards and have debt service coverage ratios above loan covenants and our policy guidelines.

The borrowers at least generate profits and cash flow that are in line with peer and industry standards and have debt service coverage ratios above loan covenants and policy guidelines.

For some of these loans, a guaranty from a financially capable party mitigates characteristics of the borrower that might otherwise result in a lower grade.

10 unchanged sentences

Notes to Consolidated Financial Statements

The table below presents the Company’s loan portfolio by year of origination, category, and credit quality indicator as of December 31, 2023 (dollars in thousands).

Loans acquired are shown in the table by origination year.

The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2023 .

The tables below present the Company’s loan portfolio by year of origination, category, and credit quality indicator as of December 31, 2024 and December 31, 2023 (dollars in thousands).

Loans acquired are shown in the tables by origination year.

The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2024 and December 31, 2023 .

December 31, 2024

68 unchanged sentences

Notes to Consolidated Financial Statements

The table below presents the Company’s loan portfolio by category and credit quality indicator as of December 31, 2022 ( dollars in thousands) under the previous incurred loss methodology.

December 31, 2023

Special Mention

Revolving Loans

Construction and development

$ 51,811 $ 83,668 $ 25,169 $ 2,661 $ 935 $ 4,012 $ 17,496 $ 185,752

Special Mention

3,063 — 767 — — — — 3,830

— 293 489 — — 7 — 789

Total construction and development

$ 54,874 $ 83,961 $ 26,425 $ 2,661 $ 935 $ 4,019 $ 17,496 $ 190,371

Current-period gross charge-offs

$ — $ — $ — $ — $ — $ — $ — $ —

$ 43,047 $ 101,479 $ 85,340 $ 58,926 $ 26,836 $ 59,115 $ 33,454 $ 408,197

Special Mention

— — 477 — — — — 477

179 1,949 257 162 963 1,510 92 5,112

Total 1-4 family

$ 43,226 $ 103,428 $ 86,074 $ 59,088 $ 27,799 $ 60,625 $ 33,546 $ 413,786

Current-period gross charge-offs

$ ( 22 ) $ — $ — $ — $ ( 21 ) $ ( 3 ) $ — $ ( 46 )

$ 7,839 $ 64,932 $ 16,300 $ 5,045 $ 633 $ 6,969 $ 160 $ 101,878

Special Mention

— — — — — 4,068 — 4,068

— — — — — — — —

Total multifamily

$ 7,839 $ 64,932 $ 16,300 $ 5,045 $ 633 $ 11,037 $ 160 $ 105,946

Current-period gross charge-offs

$ — $ — $ — $ — $ — $ — $ — $ —

$ 1,762 $ 1,347 $ 727 $ 936 $ 775 $ 1,013 $ 1,015 $ 7,575

Special Mention

— — — — — — — —

— — — — — 76 — 76

Total farmland

$ 1,762 $ 1,347 $ 727 $ 936 $ 775 $ 1,089 $ 1,015 $ 7,651

Current-period gross charge-offs

$ — $ — $ — $ — $ — $ — $ — $ —

Commercial real estate

$ 76,043 $ 269,311 $ 218,780 $ 175,604 $ 82,909 $ 105,083 $ 4,731 $ 932,461

Total mortgage loans on real estate

Special Mention

— — 181 — — — — 181

— — — 1,474 172 3,233 187 5,066

Total commercial real estate

$ 76,043 $ 269,311 $ 218,961 $ 177,078 $ 83,081 $ 108,316 $ 4,918 $ 937,708

Current-period gross charge-offs

$ — $ — $ — $ — $ ( 2 ) $ ( 25 ) $ — $ ( 27 )

Commercial and industrial

$ 60,123 $ 139,543 $ 31,459 $ 14,244 $ 7,439 $ 14,290 $ 273,208 $ 540,306

Special Mention

— — — — — — 2,289 2,289

49 78 154 7 416 8 114 826

The Company had no loans that were classified as doubtful or loss at December 31, 2023 .

The Company had no loans that were classified as loss at December 31, 2022 .

Total commercial and industrial

$ 60,172 $ 139,621 $ 31,613 $ 14,251 $ 7,855 $ 14,298 $ 275,611 $ 543,421

Current-period gross charge-offs

$ — $ — $ ( 190 ) $ — $ ( 7 ) $ ( 31 ) $ ( 193 ) $ ( 421 )

$ 4,881 $ 2,303 $ 1,611 $ 734 $ 250 $ 1,130 $ 658 $ 11,567

Special Mention

— — — — — — — —

4 7 1 14 4 139 — 169

Total consumer

$ 4,885 $ 2,310 $ 1,612 $ 748 $ 254 $ 1,269 $ 658 $ 11,736

Current-period gross charge-offs

$ ( 119 ) $ ( 22 ) $ ( 10 ) $ ( 12 ) $ ( 5 ) $ ( 58 ) $ ( 22 ) $ ( 248 )

$ 245,506 $ 662,583 $ 379,386 $ 258,150 $ 119,777 $ 191,612 $ 330,722 $ 2,187,736

Special Mention

3,063 — 1,425 — — 4,068 2,289 10,845

232 2,327 901 1,657 1,555 4,973 393 12,038

$ 248,801 $ 664,910 $ 381,712 $ 259,807 $ 121,332 $ 200,653 $ 333,404 $ 2,210,619

Current-period gross charge-offs

$ ( 141 ) $ ( 22 ) $ ( 200 ) $ ( 12 ) $ ( 35 ) $ ( 117 ) $ ( 215 ) $ ( 742 )

The Company had no loans that were classified as doubtful or loss at December 31, 2024 or December 31, 2023 .

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Loan Participations and Sold Loans

Loa n participations and whole loans sold to and serviced for others are not included in the accompanying consolidated balance sheets.

The balances of the participations and whole loans sold w ere $ 25.9 million an d $ 16.9 million as of December 31, 2023 and 2022 , respectively.

Loa n participations and whole loans sold to and serviced for others are not included in the accompanying consolidated balance sheets, the balances of which w ere $ 38.2 million an d $ 25.9 million as of December 31, 2024 and 2023 , respectively.

The unpaid principal balances of these loans were approxim ately $ 175.0 million an d $ 99.8 million at December 31, 2024 and 2023 , respectively.

Loans to Related Parties

In the ordinary course of business, the Company makes loans to related parties including its executive officers, principal shareholders, directors and their immediate family members, as well as to companies in which these individuals are principal owners.

In the ordinary course of business, the Company makes loans to related parties including its executive officers, directors and their immediate family members, as well as to companies in which these individuals are principal owners.

Loans outstanding to such related party borrowers amounted to approximately $ 43.6 million and $ 46.0 million as of December 31, 2024 and December 31, 2023 , respectively.

11 unchanged sentences

Allowance for Credit Losses

The Company made the accounting policy election to exclude accrued interest receivable from the amortized cost of loans and the estimate of the allowance for credit losses.

The Company made the accounting policy election to exclude accrued interest receivable from the amortized cost of loans and the estimate of the ACL.

Accrued interest receivable on the Company’s loans was $ 12.5 million and $ 12.7 million at December 31, 2024 and December 31, 2023 , respectively, and is included in “ Accrued interest receivable ” on the accompanying consolidated balance sheets.

Refer to Note 1.

Summary of Significant Accounting Policies – Allowance for Credit Losses and – Accounting Standards Adopted in 2023 for more information on the adoption of ASU 2016 - 13.

The table below shows a summary of the activity in the allowance for credit losses for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands).

The table below shows a summary of the activity in the ACL for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands).

Balance, beginning of period

8 unchanged sentences

( 1 ) On January 1, 2023, the Company adopted ASU 2016 - 13, which introduced a new model known as CECL.

Refer to Note 1.

Summary of Significant Accounting Policies for more information on the adoption of ASU 2016 - 13.

Amounts as of December 31, 2023 reflect the impact of adopting the CECL accounting standard and the Company’s transition from a probable incurred loss methodology to the current expected credit loss methodology.

Prior period amounts represent the allowance for loan losses under the probable incurred loss methodology.

Amounts for the years ended December 31, 2024 and December 31, 2023 reflect the impact of adopting the CECL accounting standard and the Company’s transition from a probable incurred loss methodology to the current expected credit loss methodology.

Amounts for the year ended December 31, 2022 represent the allowance for loan losses under the probable incurred loss methodology.

( 2 ) For the year ended December 31, 2024 , the $ 3.5 million negative provision for credit losses on the consolidated statement of income includes a $ 3.2 million negative provision for loan losses and a $ 0.3 million negative provision for unfunded loan commitments.

For the year ended December 31, 2023 , the $ 2.0 million negative provision for credit losses on the consolidated statement of income includes a $ 2.0 million negative provision for loan losses and a $ 36,000 negative provision for unfunded loan commitments.

( 3 ) For the year ended December 31, 2021, the provision for loan losses includes a $ 21.6 million impairment recorded for one of the Company’s loan relationships as a result of Hurricane Ida.

The corresponding loan balances in the same amount were then charged off.

The following tables outline the activity in the allowance for credit losses by collateral type for the years ended December 31, 2023, 2022 and 2021 , and show both the allowance and portfolio balances for loans individually and collectively evaluated for impairment as of December 31, 2023, 2022 and 2021 (dollars in thousands).

Prior period amounts represent the allowance for loan losses under the probable incurred loss methodology.

The following tables outline the activity in the ACL by collateral type for the years ended December 31, 2024, 2023 and 2022 , and show both the allowance and portfolio balances for loans individually and collectively evaluated for impairment as of December 31, 2024, 2023 and 2022 (dollars in thousands).

Amounts for the year ended December 31, 2022 represent the allowance for loan losses under the probable incurred loss methodology.

December 31, 2024

5 unchanged sentences

$ 2,471 $ 9,129 $ 1,124 $ 2 $ 10,691 $ 6,920 $ 203 $ 30,540

ASU 2016-13 adoption impact

( 75 ) 4,712 ( 84 ) ( 99 ) 676 793 ( 58 ) 5,865

Provision for credit losses on loans

24 unchanged sentences

$ 2,555 $ 3,917 $ 999 $ 113 $ 10,718 $ 5,743 $ 319 $ 24,364

ASU 2016-13 adoption impact

( 75 ) 4,712 ( 84 ) ( 99 ) 676 793 ( 58 ) 5,865

Provision for credit losses on loans

6 unchanged sentences

212 187 — — — 114 25 538

Ending allowance balance for loans acquired with deteriorated credit quality

— — — — — — — —

Ending allowance balance for loans collectively evaluated for impairment

3 unchanged sentences

789 4,178 — — 216 468 119 5,770

Balance of loans acquired with deteriorated credit quality

— 302 — — 609 — 57 968

Balance of loans collectively evaluated for impairment

31 unchanged sentences

Loan Modifications to Borrowers Experiencing Financial Difficulty

In January 2023, the Company adopted ASU 2022 - 02, which eliminated the accounting guidance for TDRs while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

ASU 2022 - 02 became effective for the Company on January 1, 2023.

Summary of Significant Accounting Policies – Accounting Standards Adopted in 2023.

Occasionally, the Company modifies loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, term extension, an other-than-insignificant payment delay, an interest rate reduction, or a combination of such concessions.

When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

Occasionally, the Company modifies loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or a combination of such concessions.

Modifications that do not impact the contractual payments terms, such as covenant waivers, modification of a contingent acceleration clauses, and insignificant payment delays are not included in the disclosures.

When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off.

During the year ended December 31, 2024 the Company did not provide any modifications under these circumstances to borrowers experiencing financial difficulty.

During the year ended December 31, 2023 , the amount of loans that were modified to borrowers experiencing financial difficulty was immaterial.

1 unchanged sentence

Notes to Consolidated Financial Statements

The following disclosures are presented under GAAP in effect prior to the adoption of CECL that are no longer applicable or required.

The Company has included these disclosures to address the applicable prior periods.

Pre-Adoption of CECL - Impaired Loans

The Company considered a loan to be impaired when, based on current information and events, the Company determined that it was probable that it would not be able to collect all amounts due according to the loan agreement, including scheduled interest payments.

Determination of impairment was treated the same across all classes of loans.

When the Company identified a loan as impaired, it measured the impairment based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole (remaining) source of repayment for the loans was the operation or liquidation of the collateral.

In those cases when foreclosure was probable, the Company used the current fair value of the collateral, less selling costs, instead of discounted cash flows.

If the Company determined that the value of the impaired loan was less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs, and unamortized premium or discount), the Company recognized impairment through an allowance estimate or a charge-off to the allowance.

When the ultimate collectability of the total principal of an impaired loan was in doubt and the loan was on nonaccrual, all payments were applied to principal, under the cost recovery method.

When the ultimate collectability of the total principal of an impaired loan was not in doubt and the loan was on nonaccrual, contractual interest was credited to interest income when received, under the cash basis method.

The following tables contain information on the Company’s impaired loans at December 31, 2022 and 2021 .

The average recorded investment was calculated based on the month-end balances of the loans during the period reported (dollars in thousands).

As of and for the year ended December 31, 2022

Recorded Investment

Unpaid Principal Balance

Related Allowance

Average Recorded Investment

Interest Income Recognized

With no related allowance recorded:

Construction and development

$ 366 $ 375 $ — $ 300 $ 15

1,005 1,082 — 821 17

Commercial real estate

5,746 21,016 — 10,515 28

Total mortgage loans on real estate

7,179 22,543 — 11,704 60

Commercial and industrial

1,996 2,530 — 6,868 70

9,209 25,118 — 18,628 130

With related allowance recorded:

Construction and development

225 498 26 225 —

474 484 46 205 —

Commercial real estate

190 190 36 32 —

Total mortgage loans on real estate

889 1,172 108 462 —

Commercial and industrial

245 292 112 421 —

96 123 63 96 —

1,230 1,587 283 979 —

Construction and development

591 873 26 525 15

1,479 1,566 46 1,026 17

Commercial real estate

5,936 21,206 36 10,547 28

Total mortgage loans on real estate

8,068 23,715 108 12,166 60

Commercial and industrial

2,241 2,822 112 7,289 70

130 168 63 152 —

$ 10,439 $ 26,705 $ 283 $ 19,607 $ 130

As of and for the year ended December 31, 2021

Recorded Investment

Unpaid Principal Balance

Related Allowance

Average Recorded Investment

Interest Income Recognized

With no related allowance recorded:

Construction and development

$ 529 $ 812 $ — $ 731 $ 17

1,995 2,081 — 1,965 30

79 81 — 193 —

Commercial real estate

16,685 27,139 — 10,790 181

Total mortgage loans on real estate

19,288 30,113 — 13,679 228

Commercial and industrial

9,395 10,941 — 9,166 152

28,738 41,123 — 22,941 380

With related allowance recorded:

Commercial and industrial

3,926 9,618 468 1,311 24

127 164 96 146 —

4,053 9,782 564 1,457 24

Construction and development

529 812 — 731 17

1,995 2,081 — 1,965 30

79 81 — 193 —

Commercial real estate

16,685 27,139 — 10,790 181

Total mortgage loans on real estate

19,288 30,113 — 13,679 228

Commercial and industrial

13,321 20,559 468 10,477 176

182 233 96 242 —

$ 32,791 $ 50,905 $ 564 $ 24,398 $ 404

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Pre-Adoption of CECL - Troubled Debt Restructurings

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, the Company granted a concession for other than an insignificant period of time to the borrower that the Company would not otherwise consider, the related loan was classified as a TDR.

The Company strived to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before such loans reach nonaccrual status.

These modified terms included rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral.

In cases in which the Company granted the borrower new terms that provided for a reduction of either interest or principal, or otherwise included a concession, the Company identified the loan as a TDR and measured any impairment on the restructuring as previously noted for impaired loans.

During the year ended December 31, 2022 , three loans were modified as TDRs through adjustments to maturity.

There were no loans modified as TDRs during the previous twelve month period that subsequently defaulted during the year ended December 31, 2022 .

At December 31, 2022 , there were no available balances on loans classified as TDRs that the Company was committed to lend.

The table below presents the TDR pre- and post-modification outstanding recorded investments by loan category for loans modified during the year ended December 31, 2022 (amounts in thousands, except number of loans).

December 31, 2022

Troubled debt restructurings

Commercial real estate

1 $ 186 $ 186

Commercial and industrial

The following is a summary of accruing and nonaccrual TDRs and the related allowance by portfolio type at December 31, 2022 (dollars in thousands).

December 31, 2022

Construction and development

$ 219 $ — $ 219 $ —

271 127 398 —

Commercial real estate

413 804 1,217 —

Commercial and industrial

58 1,092 1,150 —

$ 961 $ 2,023 $ 2,984 $ —

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

The table below includes the average recorded investment and interest income recognized for TDRs for the years ended December 31, 2022 and 2021 .

The average recorded investment was calculated based on the month-end balances of the loans during the period reported (dollars in thousands).

Average Recorded Investment

Interest Income Recognized

December 31, 2022

Construction and development

Commercial real estate

Commercial and industrial

$ 5,479 $ 129

December 31, 2021

Construction and development

Commercial real estate

Commercial and industrial

$ 13,082 $ 368

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

OTHER REAL ESTATE OWNED

10 unchanged sentences

$ 5,218 $ 4,438

For the years ended December 31, 2023 and 2022, additions to other real estate owned of $ 2.7 million and $ 1.6 million, respectively, were related to transfers of properties related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

For the years ended December 31, 2023 and 2022 , additions to other real estate owned of $ 0.3 million and $ 1.7 million, respectively, were related to acquired loans.

For the year ended December 31, 2024 , additions to other real estate owned were primarily driven by transfers of 1 - 4 family loans to other real estate owned.

During the year ended December 31, 2024 , the Company transferred one piece of land that was previously being held for a future branch location from “B ank premises and equipment, net” to “O ther real estate owned, net” in the accompanying consolidated balance sheets , as the Company did not intend to use the property for banking operations.

During the year ended December 31, 2024 , the Company recorded a $ 0.2 million write-down of other real estate owned primarily related to a former branch location based on a third -party appraisal.

For the year ended December 31, 2023 , additions to other real estate owned of $ 2.7 million were related to transfers of properties related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida, and additions of $ 0.3 million were related to acquired loans.

During the year ended December 31, 2023 , the Company closed one branch and one stand-alone ATM and transferred the associated land and buildings from “B ank premises and equipment, net” to “O ther real estate owned, net” in the accompanying consolidated balance sheets , as the Company did not intend to use the properties for banking operations.

In 2022, the Company closed two branches, and transferred the land and building associated with one of the closed branches from “B ank premises and equipment, net” to “O ther real estate owned, net” in the accompanying consolidated balance sheets , as the Company did not intend to use the properties for banking operations;

the property was sold later in the year.

At December 31, 2024 and 2023 , approximately $ 0.1 million and $ 0.5 million, respectively, of loans secured by 1 - 4 family residential property were in the process of foreclosure.

At December 31, 2024 , other real estate owned included $ 1.7 million of foreclosed 1 - 4 family residential properties compared to none at December 31, 2023 .

INVESTAR HOLDING CORPORATION

8 unchanged sentences

Construction-in-progress

Right-of-use asset

accumulated depreciation and amortization

3 unchanged sentences

Depreciation and amortization related to bank premises and equipment charged to noninterest expense was approximately $ 2.5 million, $ 3.0 million and $ 3.5 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

During the year ended December 31, 2024 , the Company closed one branch in the Alabama market.

The Company also transferred one piece of land previously being held for a future branch location, totaling $ 0.4 million, from “B ank premises and equipment, net” to “O ther real estate owned, net” in the accompanying consolidated balance sheets.

D uring the year ended December 31, 2024 , the Company recognized a gain of $ 0.4 million included in “Gain (l oss) on sale or disposition of fixed assets, net” in the accompanying consolidated statements of income.

During the year ended December 31, 2023 , the Company completed the sale of the Alice and Victoria, Texas locations.

1 unchanged sentence

The Company also ceased operation of 13 additional ATM s during the third quarter of 2023.

During the year ended December 31, 2023 , the Company recognized a loss of $ 1.3 million included in “L oss on sale or disposition of fixed assets, net” in the accompanying consolidated statements of income.

During the year ended December 31, 2022 , the Company closed two branch locations and sold three tracts of land being held for future branch locations.

T he land and building associated with one of the closed branch locations , totaling $ 0.5 million, was reclassified from “B ank premises and equipment, net” to “O ther real estate owned, net” in the accompanying consolidated balance sheets.

During the year ended December 31, 2022 , the Company recognized a loss of $ 0.3 million included in “L oss on sale or disposition of fixed assets, net” in the accompanying consolidated statements of income.

During the year ended December 31, 2023 , the Company recognized a loss of $ 1.3 million included in “Gain (l oss) on sale or disposition of fixed assets, net” in the accompanying consolidated statements of income.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

The Company’s primary leasing activities relate to certain real estate leases entered into in support of the Company’s branch operations.

1 unchanged sentence

The Company does not lease equipment under operating leases, nor does it have leases designated as finance leases.

The Company determines if an arrangement is a lease at inception.

Operating leases, with the exception of short-term leases, are included in operating lease right-of-use (“ROU”) assets and operating lea se liabilities in “Bank premises a n d equipment, net ” and “ Accrued taxes and other liabilities ” , respectively, in the accompanying consolidated balance sheets.

Operating lease ROU assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The operating lease ROU asset also includes any lease pre-payments made and excludes lease incentives.

The Company’s lease terms may include options to extend or terminate the lease.

When it is reasonably certain that the Company will exercise an option to extend a lease, the extension is included in the lease term when calculating the present value of lease payments.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

4 unchanged sentences

Weighted average discount rate

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

At December 31, 2024 and 2023 , the Company’s operating lease ROU assets were $ 2.0 million and $ 2.1 million, respectively, and the Company’s related operating lease liabilities were $ 2.1 million and $ 2.2 million, respectively.

The Company’s operating leases have remaining terms ranging from 2 to 8 years, including extension options if the Company is reasonably certain they will be exercised.

The Company’s operating leases have remaining terms ranging from approximately one to seven years, including extension options if the Company is reasonably certain they will be exercised.

Future minimum lease payments due under non-cancelable operating leases at December 31, 2024 are presented below (dollars in thousands).

1 unchanged sentence

The Bank owns its corporate headquarters building, the first floor of which is occupied by multiple tenants.

The Bank, as lessor, also leases a portion of one of its branch locations.

The Bank, as lessor, also leases a portion of one of its branch locations and a former stand-alone ATM location.

All tenant leases are operating leases.

The Bank, as lessor, recognized rental income of $ 0.4 million, $ 0.3 million and $ 0.3 million for the years ended December 31, 2023, 2022 and 2021 , respectively.

The Bank, as lessor, recognized lease income of $ 0.4 million, $ 0.4 million and $ 0.3 million in “ Other operating income ” in the accompanying consolidated statements of income for the years ended December 31, 2024, 2023 and 2022 , respectively.

On January 27, 2023, the Bank completed the sale of certain assets, deposits and other liabilities associated with the Alice and Victoria, Texas branch locations to First Community Bank.

Upon the completion of the sale, the Bank recorded $ 0.3 million of occupancy expense to terminate the remaining contractually obligated lease payments due under non-cancelable operating leases.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

GOODWILL AND OTHER INTANGIBLE ASSETS

7 unchanged sentences

The table below shows a summary of the core deposit intangible assets as of the dates presented (dollars in thousands).

Core deposit intangibles

Gross carrying amount

5 unchanged sentences

Amortization expense for the core deposit intangible assets recorded in “Depreciation and amortization ” in the accompanying consolidated statements of income totaled approximately $ 0.6 million, $ 0.8 million, and $ 0.9 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

The estimated remaining amortization expense for the Company’s core deposit intangible assets is displayed in the table below (dollars in thousands).

The weighted average amortization period remaining for core deposit intangibles is 4.6 years.

Total $ 1,508

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

The future amortization schedule for the Company’s core deposit intangible assets is displayed in the table below (dollars in thousands).

The weighted average amortization period remaining for core deposit intangibles is 5.4 years.

Deposits consisted of the following as of the dates presented (dollars in thousands).

3 unchanged sentences

554,777 489,604

Money market deposit accounts

Money market deposits

191,548 179,366

Savings accounts

Brokered demand deposits

Savings deposits

134,879 137,606

6 unchanged sentences

The approximate scheduled maturities of time deposits, including brokered time deposits, for each of the next five years are shown below (dollars in thousands).

At December 31, 2023 and 2022 , time deposits greater than $250,000 were approximately $ 178.1 million, and $ 155.8 million, respectively.

Public fund deposits as of December 31, 2023 and 2022 totaled approximately $ 134.8 million and $ 167.5 million, respectively.

The funds were secured by securities with a fair value of approximately $ 110.1 million and $ 165.5 million as of December 31, 2023 and 2022 , respectively.

As of December 31, 2023 and 2022 , total deposits outstanding to executive officers, principal shareholders, directors and to companies in which they are principal owners amounted to approximat ely $ 20.1 million an d $ 29.9 million, respectively.

The aggregate amount of time deposits in denominations of $250,000 or more at December 31, 2024 and 2023 was approximately $ 192.1 million and $ 178.1 million, respectively.

Public funds deposits as of December 31, 2024 totaled approximately $ 194.0 million, and were secured by investment securities with a carrying value of approximately $ 19.1 million and FHLB letters of credit totaling $ 126.2 million.

Public funds deposits as of December 31, 2023 totaled approximately $ 134.8 million, and were secured by investment securities with a carrying value of approximately $ 110.1 million.

As of December 31, 2024 and 2023 , total deposits outstanding to executive officers, directors and to companies in which they are principal owners amounted to approximately $ 20.3 million and $ 20.1 million, respectively.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Company utilizes securities sold under agreements to repurchase (“repurchase agreements”) to facilitate the needs of our customers and to facilitate secured short-term funding needs.

The Company utilizes securities sold under agreements to repurchase to facilitate the needs of customers and to facilitate secured short-term funding needs.

Repurchase agreements are stated at the amount of cash received in connection with the transaction.

2 unchanged sentences

Repurchase agreements mature on a daily basis.

At December 31, 2023 , the total balance of repurchase agreements was $ 8.6 million, and were secured by investment securities with a fair value of approximately $ 9.0 million.

At December 31, 2022 , the Company had no repurchase agreements.

The weighted average interest rate on repurchase agreements was 0.13 % at December 31, 2023 .

The total balance of repurchase agreements was $ 8.4 million and $ 8.6 million at December 31, 2024 and December 31, 2023 , respectively.

These funds were secured by investment securities with carrying values of approximately $ 49.0 million and $ 9.0 million at December 31, 2024 and December 31, 2023 , respectively.

The weighted average interest rate on repurchase agreements was 0.75 % and 0.13 % at December 31, 2024 and December 31, 2023 , respectively.

The weighted average rate paid for repurchase agreements during the years ended December 31, 2024, 2023 and 2022 was 0.65 %, 0.13 % and 0.15 %, respectively.

2 unchanged sentences

SUBORDINATED DEBT SECURITIES

On April 6, 2022, the Company entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers (the “Purchasers”) under which the Company issued $ 20.0 million in aggregate principal amount of its 5.125 % Fixed-to-Floating Rate Subordinated Notes due 2032 (the “2032 Notes”) to the Purchasers at a price equal to 100% of the aggregate principal amount of the 2032 Notes.

On April 6, 2022, the Company entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers (the “Purchasers”) under which the Company issued $ 20.0 million in aggregate principal amount of its 2032 Notes to the Purchasers at a price equal to 100% of the aggregate principal amount of the 2032 Notes.

The 2032 Notes were issued under an indenture, dated April 6, 2022 ( the “Indenture”), by and among the Company and UMB Bank, National Association, as trustee.

The 2032 Notes have a stated maturity date of April 15, 2032 and will bear interest at a fixed rate of 5.125 % per year from and including April 6, 2022 to but excluding April 15, 2027 or earlier redemption date.

From April 15, 2027 to but excluding the stated maturity date or earlier redemption date, the 2032 Notes will bear interest a floating rate equal to the then current three -month term secured overnight financing rate (“SOFR”), plus 277 basis points.

The 2032 Notes have a stated maturity date of April 15, 2032 and bear interest at a fixed rate of 5.125 % per year from and including April 6, 2022 to but excluding April 15, 2027 or earlier redemption date.

As provided in the 2032 Notes, the interest rate on the 2032 Notes during the applicable floating rate period may be determined based on a rate other than three -month term SOFR.

The 2032 Notes may be redeemed, in whole or in part, on or after April 15, 2027 or, in whole but not in part, under certain other limited circumstances set forth in the Indenture.

Any redemption we made would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption.

Any redemption the Company made would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption.

Principal and interest on the 2032 Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events.

The 2032 Notes are the unsecured, subordinated obligations of the Company and rank junior in right of payment to our current and future senior indebtedness and to our obligations to our general creditors.

The 2032 Notes are the unsecured, subordinated obligations of the Company and rank junior in right of payment to current and future senior indebtedness and to obligations to its general creditors.

The 2032 Notes are intended to qualify as Tier 2 capital for regulatory purposes.

The Company used the majority of the net proceeds to redeem its 6.00 % Fixed-to-Floating Rate Subordinated Notes due 2027 (the “2027 Notes”) in June 2022 and utilized the remaining proceeds for share repurchases and for general corporate purposes.

On November 12, 2019, the Company issued and sold $ 25.0 million in aggregate principal amount of its 5.125 % Fixed-to-Floating Rate Subordinated Notes (the “2029 Notes”) due December 30, 2029.

Beginning on December 30, 2024, the Company may redeem the 2029 Notes, in whole or in part, at their principal amount plus any accrued and unpaid interest.

The 2029 Notes bear an interest rate of 5.125 % per annum until December 30, 2024, on which date the interest rate will reset quarterly to an annual interest rate equal to the then-current three -month LIBOR as calculated on each applicable date of determination, or an alternative rate determined in accordance with the terms of the 2029 Notes if the three -month LIBOR cannot be determined, plus 349.0 basis points.

The Company used the majority of the net proceeds to redeem its 2027 Notes in June 2022 and utilized the remaining proceeds for share repurchases and for general corporate purposes.

During the year ended December 31, 2024 , the Company repurchased $ 3.0 million in principal amount of the 2032 Notes.

On November 12, 2019, the Company issued and sold $ 25.0 million in aggregate principal amount of its 2029 Notes due December 30, 2029.

Beginning on December 30, 2024, the Company could redeem the 2029 Notes, in whole or in part, at their principal amount plus any accrued and unpaid interest.

The 2029 Notes bore an interest rate of 5.125 % per annum until December 30, 2024, on which date the interest rate would reset quarterly to an annual interest rate equal to the then-current three -month LIBOR as calculated on each applicable date of determination, or an alternative rate determined in accordance with the terms of the 2029 Notes if the three -month LIBOR could not be determined, plus 349.0 basis points.

During the second quarter of 2024, the Company repurchased $ 5.0 million in principal amount of the 2029 Notes, and on December 30, 2024, the Company redeemed the remaining $ 20.0 million in principal amount in full accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the December 30, 2024 redemption date.

On March 24, 2017, the Company issued and sold $ 18.6 million in aggregate principal amount of its 2027 Notes due March 30, 2027.

Beginning on March 30, 2022, the Company could redeem the 2027 Notes, in whole or in part, at their principal amount plus any accrued and unpaid interest.

The 2027 Notes had an interest rate of 6.00 % per annum until March 30, 2022, on which date the interest rate reset quarterly to an annual interest rate equal to the then-current LIBOR plus 394.5 basis points.

In June 2022, the Company redeemed the 2027 Notes in full in accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the June 30, 2022 redemption date (“Redemption Date”).

The 2027 Notes bore an interest rate of 6.00 % per annum until March 30, 2022, on which date the interest rate would reset quarterly to an annual interest rate equal to the then-current LIBOR plus 394.5 basis points.

The aggregate redemption price, excluding accrued interest, totaled $ 18.6 million.

Interest on the 2027 Notes no longer accrued on or after the Redemption Date.

The carrying value of subordinated debt was $ 16.7 million and $ 44.3 million at December 31, 2024 and 2023 , respectively.

The subordinated debt securities were recorded net of issuance costs of $ 0.7 million and $ 0.8 million at December 31, 2023 and 2022 , respectively, which are being amortized using the straight-line method over the lives of the respective securities.

The carrying value of subordinated debt includes unamortized issuance costs of $ 0.3 million and $ 0.7 million at December 31, 2024 and 2023 , respectively, which are being amortized using the straight-line method over the lives of the respective securities.

INVESTAR HOLDING CORPORATION

13 unchanged sentences

$ 67,215 $ 23,500 4.01 % 1.81 %

As of December 31, 2023 , these advances are collateralized by a blanket pledge of certain loans totaling approximately $ 975.4 million in accordance with the Advance Security and Collateral Agreement with the FHLB.

As of December 31, 2023 , the Company had an additional $ 919.5 million available under its line of credit with the FHLB.

At December 31, 2022 , the FHLB advances contractually maturing in 2033 were fixed rate, nonamortizing puttable advances.

Under the terms of these advances, the Bank sold the FHLB options to terminate the fixed rate advances at specified points in time prior to the stated maturity dates.

These advances were terminated during the year ended December 31, 2023.

As of December 31, 2024 , these advances are collateralized by a blanket pledge of certain loans totaling approximately $ 979.7 million.

The Company also maintains letters of credit from the FHLB to secure certain public funds deposits.

As of December 31, 2024 , the Company had an additional $ 733.7 million in unused borrowing capacity with the FHLB.

Borrowings Under Bank Term Funding Program

On March 12, 2023, the Federal Reserve established the Bank Term Funding Program (“BTFP”).

The BTFP is a one -year program which provides additional liquidity through borrowings with a term of up to one year secured by the pledging of certain qualifying securities and other assets, valued at par value.

On March 12, 2023, the Federal Reserve established the BTFP.

The BTFP was a one -year program which provided additional liquidity through borrowings with a term of up to one year secured by the pledging of certain qualifying securities and other assets, valued at par value.

At December 31, 2024 , the Company had no outstanding borrowings under the BTFP.

At December 31, 2023 outstanding borrowings under the BTFP were $ 212.5 million, with a weighted average rate of 4.83 %.

At December 31, 2023 , the Company’s remaining borrowing capacity under the BTFP was $ 58.5 million based on the value of securities available to be used as collateral, valued at par value as permitted under the program.

During the fourth quarter of 2023, the Company refinanced all of its borrowings under the BTFP with new loans under the BTFP with a one -year term due to more favorable rates.

During the fourth quarter of 2024, the Company repaid all outstanding borrowings under the BTFP.

Lines of Credit

23 unchanged sentences

These debentures rank junior and are subordinate in the right of payment to all other debt of the Company.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

As part of the purchase accounting adjustments made with the BOJ Bancshares Inc.

9 unchanged sentences

The total carrying values of $ 8.7 million and $ 8.6 million were allowed in the calculation of Tier I regulatory capital at December 31, 2024 and 2023 , respectively.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

DERIVATIVE FINANCIAL INSTRUMENTS

As part of its liability management, the Company has historically utilized pay-fixed interest rate swaps to manage exposure against the variability in the expected future cash flows (future interest payments) attributable to changes in the 1 -month LIBOR associated with the forecasted issuances of 1 -month fixed rate debt arising from a rollover strategy.

As part of its liability management, the Company has historically utilized pay-fixed interest rate swaps to manage exposure against the variability in the expected future cash flows (future interest payments) attributable to changes in the 1 -month SOFR associated with the forecasted issuances of 1 -month fixed rate debt arising from a rollover strategy.

To mitigate credit risk, securities were pledged to the Company by the counterparties in an amount greater than or equal to the gain position of the derivative contracts.

Conversely, securities were pledged to the counterparties by the Company in an amount greater than or equal to the loss position of the derivative contracts, if applicable.

The derivative contracts were between the Company and two counterparties.

At December 31, 2023 and December 31, 2022 , the Company had no current or forward starting interest rate swap agreements, other than interest rate swaps related to customer loans, described below.

The interest rate swaps were determined to be fully effective during the periods presented, and therefore, no amount of ineffectiveness has been included in net income.

During the year ended December 31, 2022 , the Company voluntarily terminated interest rate swap agreements with a total notional amount of $ 115.0 million in response to market conditions.

During the year ended December 31, 2021 , the Company voluntarily terminated interest rate swap agreements with a total notional amount of $ 150.0 million in response to market conditions and as a result of excess liquidity.

For years ended December 31, 2022 and December 31, 2021 unrealized gains of $ 6.4 million and $ 1.4 million, respectively, net of tax expenses of $ 1.7 million and $ 0.4 million, respectively, were reclassified from “Accumulated other comprehensive (loss) income” and recorded as “Swap termination fee income” in noninterest income in the accompanying consolidated statements of income.

For the years ended December 31, 2022 and December 31, 2021 gains of $ 4.3 million and $ 5.3 million, respectively, net of tax expenses of $ 1.2 million and $ 1.4 million, respectively, were recognized in “Other comprehensive income (loss)” in the accompanying consolidated statements of comprehensive income (loss) for the change in fair value of the interest rate swap contracts.

There were no assets or liabilities recorded in the accompanying consolidated balance sheets at December 31, 2024 or December 31, 2023 associated with the swap contracts, other than interest rate swaps related to customer loans, described below.

During the year ended December 31, 2022 , the Company voluntarily terminated interest rate swap agreements with a total notional amount of $ 115.0 million in response to market conditions.

For the year ended December 31, 2022 an unrealized gain of $ 6.4 million, net of tax expense of $ 1.7 million, was reclassified from “Accumulated other comprehensive loss” and recorded as “Swap termination fee income” in noninterest income in the accompanying consolidated statement of income.

For the year ended December 31, 2022 a gain of $ 4.3 million, net of tax expense of $ 1.2 million, was recognized in “Other comprehensive loss” in the accompanying consolidated statement of comprehensive income (loss) for the change in fair value of the interest rate swap contracts.

Customer Derivatives – Interest Rate Swaps

6 unchanged sentences

The Company did not recognize any gains or losses in other operating income resulting from fair value adjustments of these swap agreements during the years ended December 31, 2024, 2023 and 2022 .

The table below presents the notional amounts and fair values of the Company's derivative financial instruments as well as their classification on the accompanying consolidated balance sheets at December 31, 2024 and December 31, 2023 (dollars in thousands).

Derivative Assets (2)

Derivative Liabilities (2)

December 31, 2024

Interest rate swaps

$ 373,845 $ 17,195 $ 17,195

December 31, 2023

Interest rate swaps

$ 349,787 $ 17,325 $ 17,325

( 1 ) At December 31, 2024 the Company had notional amounts of $ 186.9 million in interest rate swap contracts with customers and $ 186.9 million in offsetting interest rate swap contracts with other financial institutions.

The fair value of the swap contracts consisted of gross assets of $ 17.3 million and gross liabilities of $ 17.3 million recorded in “Other assets” and “Accrued taxes and other liabilities”, respectively, in the accompanying consolidated balance sheet at December 31, 2023 .

At December 31, 2023 the Company had notional amounts of $ 174.9 million in interest rate swap contracts with customers and $ 174.9 million in offsetting interest rate swap contracts with other financial institutions.

( 2 ) Derivative assets and liabilities are reported at fair value in “Other assets” and “Accrued taxes and other liabilities,” respectively, in the accompanying consolidated balance sheets.

INVESTAR HOLDING CORPORATION

3 unchanged sentences

The Company’s Articles of Incorporation give the Company’s board of directors the authority to issue up to 5,000,000 shares of preferred stock.

At December 31, 2023 , there were no preferred shares outstanding.

At December 31, 2024 and 2023 , there were no preferred shares outstanding.

The preferred shares are considered “blank check” preferred stock.

11 unchanged sentences

In the event that the Company elects to defer interest on the debentures, it may not, with certain exceptions, declare or pay any dividends or distributions on its common stock or purchase or acquire any of its common stock.

Under the terms of the Company’s 5.125 % Fixed-to-Floating Rate Subordinated Notes due 2029, the Company may not pay a dividend if either the parent company or the Bank, both immediately prior to the declaration of the dividend and after giving effect to the payment of the dividend, would not maintain regulatory capital ratios that are at “well capitalized” levels for regulatory purposes (but with respect to the parent company, only if it is required to measure and report such ratios on a consolidated basis under applicable law).

The Company is also prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.

Under the terms of the Company’s 5.125 % Fixed-to-Floating Rate Subordinated Notes due 2032, the Company is prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.

Under the terms of the Company’s 2032 Notes, the Company is prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.

These restrictions do not, and are not expected in the future to, materially limit the Company’s ability to pay dividends to its shareholders in an amount consistent with the Company’s history of paying dividends.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Accumulated Other Comprehensive (Loss) Income

7 unchanged sentences

End of Period

Unrealized (loss) gain, available for sale, net

Unrealized (loss) gain, AFS, net

$ ( 39,627 ) $ ( 3,805 ) $ ( 43,432 ) $ ( 43,137 ) $ 3,510 $ ( 39,627 ) $ 4,882 $ ( 48,019 ) $ ( 43,137 )

Reclassification of realized (gain) loss, available for sale, net

Reclassification of realized (gain) loss, AFS, net

( 5,521 ) 595 ( 4,926 ) ( 5,777 ) 256 ( 5,521 ) ( 5,772 ) ( 5 ) ( 5,777 )

Unrealized gain (loss), transfer from available for sale to held to maturity, net

Unrealized gain (loss), transfer from AFS to HTM, net

1 — 1 1 — 1 2 ( 1 ) 1

5 unchanged sentences

$ ( 45,147 ) $ ( 3,210 ) $ ( 48,357 ) $ ( 48,913 ) $ 3,766 $ ( 45,147 ) $ 1,163 $ ( 50,076 ) $ ( 48,913 )

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

STOCK-BASED COMPENSATION

Equity Incentive Plan.

The Company’s Amended and Restated 2017 Long-Term Incentive Compensation Plan (the “Plan”) authorizes the grant of various types of equity awards, such as restricted stock, restricted stock units, stock options and stock appreciation rights to eligible participants, which include all of the Company’s employees, non-employee directors, and consultants.

The Company’s Amended and Restated 2017 Long-Term Incentive Compensation Plan (the “Plan”) authorizes the grant of various types of equity awards, such as restricted stock, RSUs, stock options and stock appreciation rights to eligible participants, which include all of the Company’s employees, non-employee directors, and consultants.

The Plan has reserved a total of 1,200,000 shares of common stock, 600,000 of which were authorized in 2021, for issuance to eligible participants pursuant to equity awards under the Plan.

The Plan is administered by the Compensation Committee of the Company’s board of directors, which determines, within the provisions of the Plan, those eligible employees to whom, and the times at which, equity awards will be granted.

The Plan is administered by the Compensation Committee of the Board, which has the authority to designate participants in the Plan, grant awards and determine the terms and conditions thereof.

The Compensation Committee, in its discretion, may delegate its authority and duties under the Plan to specified officers;

3 unchanged sentences

During the years ended December 31, 2024, 2023 and 2022 , the Company granted 29,997 , 34,497 , and 34,379 stock options, respectively, to key personnel that vest in one - fifth increments on each of the first five anniversaries of the grant date.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

The table below summarizes the Company’s stock option activity for the periods indicated.

12 unchanged sentences

( 96,000 ) 14.16

( 7,500 ) 14.00

Outstanding at December 31, 2024

3 unchanged sentences

The aggregate intrinsic value of stock options is calculated as the aggregate difference between the exercise price of the stock options and the fair market value of the Company’s common stock for those stock options having an exercise price lower than the fair market value of the Company’s common stock.

At December 31, 2023 , the shares underlying outstanding and exercisable stock options both had an intrinsic value of $ 0.1 million.

The Company uses a Black-Scholes option pricing model to estimate the fair value of stock-based awards.

At December 31, 2024 , the shares underlying outstanding and exercisable stock options had intrinsic values of $ 1.0 million and $ 0.6 million, respectively.

The Company uses a Black-Scholes option pricing model to estimate the fair value of stock options.

The Black-Scholes option pricing model incorporates various subjective assumptions, including expected term and expected volatility.

Expected volatility was determined based on the historical volatilities of the Company.

Expected volatility was determined based on the historical volatilities of the Company’s stock price.

Stock option expense of $ 0.2 million is included in “Salaries and employee benefits” in the accompanying consolidated statements of income for each of the years ended December 31, 2024, 2023 and 2022 .

10 unchanged sentences

$ 6.04 $ 4.58

Restricted Stock and Restricted Stock Units

Under the Plan, the Company may grant restricted stock, restricted stock units, and other stock-based awards to Plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement.

While restricted stock is subject to forfeiture, holders of restricted stock may exercise full voting rights and will receive all dividends paid with respect to the restricted shares.

Restricted stock units (“RSUs”) do not have voting rights and do not receive dividends or dividend equivalents.

The restricted stock and RSUs granted under the Plan are typically subject to a vesting period.

Compensation expense for restricted stock and RSUs is determined based on the market price of the Company’s common stock at the grant date and is applied to the total number of shares or units granted and is recognized on a straight-line basis over the requisite service period of generally five years for employees and two years for non-employee directors.

Upon vesting of restricted stock and RSUs, the benefit of tax deductions in excess of recognized compensation expense is reflected as an income tax benefit in the consolidated statements of income.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Historically, the Company has granted restricted stock awards to Plan participants.

Beginning in 2019, the Company granted time vested RSUs to its non-employee directors and certain officers of the Company with vesting terms ranging from two years to five years.

Restricted Stock Units

The Company grants time-vested RSUs to its non-employee directors and certain officers, with vesting terms ranging from two years to five years.

RSUs represent the right to receive shares of the Company’s common stock in the future upon vesting of the award.

RSUs do not have voting rights and do not receive dividends or dividend equivalents.

Compensation expense for RSUs is determined based on the market price of the Company’s common stock at the grant date and is applied to the total number of units granted and is recognized on a straight-line basis over the requisite service period of generally five years for employees and two years for non-employee directors.

Upon vesting of RSUs, the benefit of tax deductions in excess of recognized compensation expense is reflected as an income tax benefit in the consolidated statements of income.

The Company granted a total of 111,792 RSUs to employees and directors for the year ended December 31, 2024 .

18 unchanged sentences

323,820 $ 16.65 336,749 $ 17.37

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

The Company maintains a 401 (k) defined contribution plan (the “401 (k) Plan”), which covers employees over the age of 21 who have completed three months of credited service, as defined by the 401 (k) Plan.

2 unchanged sentences

Contributions by the Company and participants are immediately vested.

Employer matching contributions to the 401 (k) Plan for each of the years ended December 31, 2023, 2022 and 2021 were approximately $ 1.0 million, and are included in “Salaries and employee benefits” in the accompanying consolidated statements of income.

Employer matching contributions to the 401 (k) Plan for each of the years ended December 31, 2024, 2023 and 2022 were approximately $ 1.1 million, $ 1.0 million and $ 1.0 million, respectively, and are included in “Salaries and employee benefits” in the accompanying consolidated statements of income.

The 401 (k) Plan also allows for discretionary Company contributions in the form of cash or Company stock.

2 unchanged sentences

The discretionary components vest in increments of 20 % annually over a period of five years based on the employees’ years of service, beginning upon completion of two years of service (such that an employee with six years of service will be 100% vested).

The Bank has entered into Salary Continuation Agreements (“SCA”) with certain officers of the Company.

Deferred Compensation

The Bank has entered into SCAs with certain officers of the Company.

The SCAs represent unfunded, non-qualified deferred compensation arrangements under the Internal Revenue Code of 1986, as amended.

1 unchanged sentence

Each officer is also entitled to certain reduced payments following a termination of employment prior to attaining age 65 (other than a termination due to death or with cause), which payments shall be made on the same schedule mentioned above.

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

The Company maintains a deferred compensation plan for a former employee of Citizens Bank (“Citizens”), a liability assumed in the Citizens acquisition in 2017.

The Company maintains a deferred compensation plan for a former employee of Citizens Bank, a liability assumed in the Citizens Bank acquisition in 2017.

Under the deferred compensation agreement, the former employee will receive monthly payments of $ 2,000 through May of 2030.

1 unchanged sentence

The deferred compensation plan provides for payments for a period of 15 years following specified retirement dates, which range from 2018 through 2032.

On November 4, 2022, the Company ’s then-current Chief Financial Officer separated from the Company, and t he Company ’ s board of directors approved the continuation of his Split-Dollar Life Insurance Agreement following his separation date.

On November 4, 2022, the Company ’s then-current Chief Financial Officer separated from the Company, and t he Board approved the continuation of his Split-Dollar Life Insurance Agreement following his separation date.

Accordingly, in the fourth quarter of 2022, the Company recorded deferred compensation expense and associated liability of $ 0.2 million.

At December 31, 2023 and 2022 , the Company had a liabil ity of $ 5.3 million and $ 5.2 million, respectively, included in “Accrued taxes and other liabilities” on the accompanying consolidated balance sheets related to these deferred compensation plans.

At December 31, 2024 and 2023 , the Company had a liabil ity of $ 5.6 million and $ 5.3 million, re spectively, included in “Accrued taxes and other liabilities” on the accompanying consolidated balance sheets related to these deferred compensation plans.

Deferred compensation expenses related to these plans recognized for the years ended December 31, 2024, 2023 and 2022 were approximately $ 0.5 million, $ 0.2 million and $ 1.0 million, respectively, and are included in “Salaries and employee benefits” in the accompanying consolidated statements of income.

11 unchanged sentences

(Decrease) increase resulting from:

Effect of tax-exempt income

Effect of tax-exempt interest income

( 567 ) ( 533 ) ( 599 )

Acquisition costs

Historical tax credits

( 741 ) ( 297 ) ( 274 )

194 161 ( 20 )

Total income tax expense

$ 4,154 $ 3,750 $ 8,639

Effective rate

Effective tax rate

17.0 % 18.4 % 19.5 %

9 unchanged sentences

( 1,029 ) ( 1,018 )

Operating lease right-of-use asset

Operating lease ROU asset

( 428 ) ( 443 )

4 unchanged sentences

Allowance for credit losses

Unrealized loss on available for sale securities

Unrealized loss on AFS securities

13,085 12,216

Net operating loss carryforward

NOL carryforward

Deferred compensation

7 unchanged sentences

$ 17,120 $ 16,910

The Company acquired net operating loss (“NOL”) carryforwards through tax free acquisitions.

As of December 31, 2023 and December 31, 2022 , the Company’s gross NOL carryforwards were approximately $ 0.3 million and $ 0.9 million, respectively.

As of December 31, 2023 , approximately $ 4,000 and $ 0.3 million of the NOL carryforwards expire in 2033 and 2039, respectively.

All available NOL carryforwards are expected to be fully utilized by 2024, therefore the Company did not record a valuation allowance against the NOL carryforwards for the year ended December 31, 2023 .

The Company acquired NOL carryforwards through tax free acquisitions.

As of December 31, 2024 , the Company had fully utilized all NOL carryforwards.

As of December 31, 2023 , the Company’s gross NOL carryforwards were approximately $ 0.3 million.

The Company files income tax returns under U.S.

16 unchanged sentences

The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

The Company also holds Small Business Investment Company qualified funds and other investment funds that do

The Company holds SBIC qualified funds and other investment funds that do

not have a readily determinable fair value.

4 unchanged sentences

December 31, 2023 , the fair values of these investments we

re $ 3.4 million and

$ 3.8 million and

$ 3.4 million , respectively, and are included in “Other assets” in the accompanying consolidated balance sheets.

8 unchanged sentences

The following methods and assumptions were used by the Company in estimating the fair value of assets and liabilities valued on a recurring basis:

AFS Investment Securities and Exchange-Traded Equity Securities – Where quoted prices are available in an active market, the Company classifies the securities within level 1 of the valuation hierarchy.

AFS Investment Securities and Marketable Equity Securities – Where quoted prices are available in an active market, the Company classifies the securities within level 1 of the valuation hierarchy.

Securities are defined as both long and short positions.

Level 1 securities include exchange-traded equity securities.

Level 1 securities include marketable equity securities in corporate stocks and mutual funds.

If quoted market prices are not available, the Company estimates fair values using pricing models and discounted cash flows that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, and credit spreads.

33 unchanged sentences

63,259 — 63,259 —

Equity securities

Equity securities at fair value

2,593 2,593 — —

17 unchanged sentences

66,771 — 66,771 —

Equity securities

Equity securities at fair value

1,180 1,180 — —

Interest rate swaps - gross assets

17,325 — 17,325 —

$ 380,423 $ 1,180 $ 373,530 $ 5,713

Interest rate swaps - gross liabilities

$ 17,325 $ — $ 17,325 $ —

INVESTAR HOLDING CORPORATION

7 unchanged sentences

$ 5,965 $ 479 $ 6,444

Realized gains (losses) included in net income

Unrealized losses included in other comprehensive loss

Realized gain (loss) included in net income

Unrealized loss included in other comprehensive income

( 689 ) ( 16 ) ( 705 )

3 unchanged sentences

Transfers out of level 3

( 9,835 ) — ( 9,835 )

Balance at December 31, 2023

$ 5,250 $ 463 $ 5,713

Realized gains (losses) included in net income

Unrealized losses included in other comprehensive income

Realized gain (loss) included in net income

Unrealized (loss) gain included in other comprehensive loss

( 906 ) 31 ( 875 )

39 unchanged sentences

Individually evaluated loans that are not collateral dependent are evaluated based on a discounted cash flow methodology.

Credits deemed uncollectible are charged to the allowance for credit losses.

Credits deemed uncollectible are charged to the ACL.

Since not all valuation inputs are observable, these nonrecurring fair value determinations are classified as level 3.

Other Real Estate Owned – Other real estate owned consists of properties acquired through foreclosure or acceptance of a deed in lieu of foreclosure and real property no longer used in the Bank’s business operations.

Real estate acquired through foreclosure is initially recorded at fair value at the time of foreclosure, less estimated selling cost, and any related write-down is charged to the ACL.

Real property no longer used in the Bank’s business operations is recorded at the lower of its net book value or fair value at the date of transfer to other real estate owned.

Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value.

Fair value, when recorded, is determined based on appraisals by qualified licensed appraisers and adjusted for management’s estimates of costs to sell.

Accordingly, values for other real estate owned are classified as level 3.

Quantitative information about assets measured at fair value on a nonrecurring basis based on significant unobservable inputs (level 3 ) are summarized below as of the dates indicated;

10 unchanged sentences

0 % - 79 % 31 %

Other real estate owned (2)

900 Underlying collateral value, third party appraisals

Collateral discounts and discount rates

December 31, 2023

Impaired loans

Loans individually evaluated for impairment (1)

$ 1,293 Discounted cash flows, underlying collateral value

1 unchanged sentence

6 % - 100 % 29 %

( 1 ) Loans individually evaluated that were re-measured during the period had a carrying value of $ 1.8 million and $ 4.2 million at December 31, 2023 and December 31, 2022 , respectively, with related allowance for credit losses of $ 0.5 million and $ 0.2 million as of such dates.

( 1 ) Loans individually evaluated that were re-measured during the period had a carrying value of $ 2.4 million and $ 1.8 million at December 31, 2024 and December 31, 2023 , respectively, with related ACL of $ 0.2 million and $ 0.5 million as of such dates.

( 2 ) Other real estate owned that was remeasured during the period had a carrying value of $ 0.9 million at December 31, 2024 .

During the year ended December 31, 2024 , the Company recorded a $ 0.2 million write-down of other real estate owned, which is included as part of “Other operating expenses” in noninterest expense on the accompanying consolidated statement of income.

( 3 ) Weighted by relative fair value.

4 unchanged sentences

The significant methods and assumptions used by the Company to estimate the fair value of financial instruments are discussed below.

Cash and Due from Banks – For these short-term instruments, fair value is the carrying value.

Cash and due from banks is classified in level 1 of the fair value hierarchy.

Federal Funds Sold – The fair value is the carrying value.

Cash and Cash Equivalents – For these short-term instruments, the fair value is the carrying value.

The Company classifies these assets in level 1 of the fair value hierarchy.

Investment Securities and Equity Securities – The fair value measurement techniques and assumptions for AFS securities and exchange-traded equity securities is discussed earlier in the note.

The same measurement techniques and assumptions were applied to the valuation of HTM securities and other equity securities including equity in correspondent banks.

Investment Securities and Equity Securities – The fair value measurement techniques and assumptions for AFS securities and marketable equity securities is discussed earlier in the note.

The same measurement techniques and assumptions were applied to the valuation of HTM securities and nonmarketable equity securities including equity in correspondent banks.

Loans – The fair value of portfolio loans, net is determined using an exit price methodology.

5 unchanged sentences

The Company classifies these assets in level 3 of the fair value hierarchy.

Deposit Liabilities – The fair values disclosed for noninterest-bearing demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts).

Deposits – The fair values disclosed for noninterest-bearing demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts).

These noninterest-bearing deposits are classified in level 2 of the fair value hierarchy.

1 unchanged sentence

The carrying amounts of variable-rate accounts (for example interest-bearing checking, savings, and money market accounts), fixed-term money market accounts, and certificates of deposit approximate their fair values at the reporting date.

Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings – The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings approximate their fair values.

Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow analysis that applies market interest rates on comparable instruments to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings – The carrying amounts of federal funds purchased, repurchase agreements, and other short-term borrowings approximate their fair values.

The Company classifies these borrowings in level 2 of the fair value hierarchy.

9 unchanged sentences

Financial assets:

Cash and due from banks

Cash and cash equivalents

$ 27,922 $ 27,922 $ 27,922 $ — $ —

Investment securities

Investment securities - AFS

331,121 331,121 — 326,310 4,811

Equity securities

Investment securities - HTM

42,687 42,144 — 1,821 40,323

Equity securities at fair value

2,593 2,593 2,593 — —

Nonmarketable equity securities

16,502 16,502 — 16,502 —

Loans, net of allowance

7 unchanged sentences

1,913,801 1,826,868 — — 1,826,868

Borrowings under BTFP and repurchase agreements

FHLB short-term advances and repurchase agreements

15,591 15,577 — 15,577 —

7 unchanged sentences

17,195 17,195 — 17,195 —

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

December 31, 2023

2 unchanged sentences

Financial assets:

Cash and due from banks

Cash and cash equivalents

$ 32,009 $ 32,009 $ 32,009 $ — $ —

Federal funds sold

Investment securities - AFS

361,918 361,918 — 356,205 5,713

Investment securities

Investment securities - HTM

20,472 20,513 — 2,118 18,395

Equity securities

Equity securities at fair value

1,180 1,180 1,180 — —

Nonmarketable equity securities

13,417 13,417 — 13,417 —

Loans, net of allowance

2,180,079 2,020,924 — — 2,020,924

Interest rate swaps - gross assets

17,325 17,325 — 17,325 —

Financial liabilities:

3 unchanged sentences

1,806,975 1,735,562 — — 1,735,562

FHLB short-term advances

Borrowings under BTFP and repurchase agreements

221,133 221,133 — 221,133 —

5 unchanged sentences

45,000 44,544 — 44,544 —

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Interest rate swaps - gross liabilities

17,325 17,325 — 17,325 —

REGULATORY MATTERS

57 unchanged sentences

In addition to the formal statutes, regulations, and guidance, regulatory authorities also consider the adequacy of the Company’s and the Bank’s total capital in relation to its assets, deposits, risk profile, and other such items and, as a result, capital adequacy considerations could further limit the availability of dividends from the Company and the Bank.

The Company is also subject to dividend restrictions under the terms of its 2029 Notes, 2032 Notes, and junior subordinated debentures.

The Company is also subject to dividend restrictions under the terms of its 2032 Notes and junior subordinated debentures.

See “ Common Stock – Dividend Restrictions ” in Note 13.

7 unchanged sentences

Such financial instruments are recorded in the financial statements when they become payable.

The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses on loans.

At December 31, 2023 and 2022 , the reserve for unfunded loan commitments was $ 0.3 million and $ 0.4 million, respectively, and is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets.

The credit risk associated with these commitments is evaluated in a manner similar to the ACL on loans.

At December 31, 2024 and 2023 , the reserve for unfunded loan commitments was $ 42,000 and $ 0.3 million, respectively, and is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets.

Commitments to extend credit are agreements to lend money with fixed expiration dates or termination clauses.

9 unchanged sentences

Standby letters of credit

17,844 11,379

Additionally, at December 31, 2023 , the Company had unfunded commitments of $ 1.3 million for its investment in Small Business Investment Company qualified funds.

Additionally, at December 31, 2024 , the Company had unfunded commitments of $ 1.0 million for its investment in SBIC qualified funds.

The Company is obligated for certain costs associated with its insurance program for employee health.

5 unchanged sentences

On August 1, 2020, the Company entered into an employment agreement with its Chief Executive Officer.

The agreement provides that the executive shall receive a minimum annual base salary $ 510,000 , shall be eligible for annual incentive compensation up to a certain percentage of the base salary, subject to the discretion and approval of the Company’s board of directors, and shall be entitled to the payment of severance benefits upon termination under specified circumstances.

The agreement provides that the executive shall receive a minimum annual base salary of $ 510,000 , shall be eligible for annual incentive compensation up to a certain percentage of the base salary, subject to the discretion and approval of the Company’s board of directors, and shall be entitled to the payment of severance benefits upon termination under specified circumstances.

The employment agreement automatically renews for successive one -year periods unless written notice of non-renewal is given by either party to the other at least ninety ( 90 ) days prior to the expiration of the then-current term.

On August 1, 2020, the Company entered into an employment agreement with its then-current Chief Financial Officer.

The agreement provided that the executive would receive a minimum annual base salary $ 285,000 , be eligible for annual incentive compensation up to a certain percentage of the base salary, subject to the discretion and approval of the Company’s board of directors and would be entitled to the payment of severance benefits upon termination under specified circumstances.

On November 4, 2022, the Company’s then-current Chief Financial Officer separated from the Company.

The Company entered into a separation and release agreement with him, which provided that he would receive compensation and benefits due in connection with a termination due to “Disability” under the employment agreement and released the Company from any and all claims arising on or before November 4, 2022.

INVESTAR HOLDING CORPORATION

19 unchanged sentences

Deposits, regarding total deposits outstanding to these related parties.

The Company has participated in transactions with related parties for which the Company believes the terms and conditions are comparable to terms that would have been available from a third party that was unaffiliated with the Company.

The following describes transactions since January 1, 2021 , in addition to the ordinary banking relationships described above, in which the Company has participated in which one or more of its directors, executive officers, their affiliated companies, or other related persons had or will have a direct or indirect material interest.

The Company has engaged in a number of transactions with Joffrion Commercial Division, LLC (“JCD”), a commercial construction company owned and managed by Gordon H.

Joffrion, one of the Company’s directors.

For each transaction, the Company selected JCD through its public bidding process.

The Company did not make any payments to JCD during the years ended December 31, 2023 or December 31, 2022.

The Company paid JCD approximately $ 0.1 million during the year ended December 31, 2021.

INVESTAR HOLDING CORPORATION

4 unchanged sentences

Cash and due from banks

$ 840 $ 6,153

Equity securities

Equity securities at fair value

Due from bank subsidiary

30 unchanged sentences

$ 34,937 $ 3,300

Dividends on corporate stock

Change in the fair value of equity securities

( 71 ) ( 35 )

Interest income from investment in trust

3 unchanged sentences

Management fees to bank subsidiary

Loss on early extinguishment of subordinated debt

Gain on early extinguishment of subordinated debt

Other expense

Total expense

(Loss) income before income tax expense and equity in undistributed income of bank subsidiary

Income (loss) before income tax benefit and equity in undistributed earnings of bank subsidiary

31,916 ( 706 )

Equity in undistributed income of bank subsidiary

Equity in undistributed earnings of bank subsidiary

( 12,298 ) 16,552

13 unchanged sentences

Amortization of subordinated debt issuance costs and purchase accounting adjustments

Loss on early extinguishment of subordinated debt

Gain on early extinguishment of subordinated debt

Net change in:

Due from bank subsidiary

Deferred tax liability

( 529 ) ( 204 )

( 51 ) ( 84 )

Deferred tax liability

Accrued other liabilities

1 unchanged sentence

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of equity securities

Proceeds from the sale of equity securities

Purchases of equity securities at fair value

Purchases of other investments

( 165 ) ( 285 )

Net cash (used in) provided by investing activities

Net cash used in investing activities

( 1,165 ) ( 285 )

CASH FLOWS FROM FINANCING ACTIVITIES

4 unchanged sentences

Proceeds from stock options exercised

Proceeds from subordinated debt, net of issuance costs

Extinguishment of subordinated debt

1 unchanged sentence

( 31,328 ) ( 6,765 )

Net (decrease) increase in cash

Net increase (decrease) in cash

111 ( 5,313 )

1 unchanged sentence

Cash and cash equivalents, end of period

$ 840 $ 6,153

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

29 unchanged sentences

Stock options

2,238 — 15,361

Restricted stock awards

Restricted stock units

4,741 71,711 15,176

INVESTAR HOLDING CORPORATION

Notes to Consolidated Financial Statements

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data