NASDAQ: ISTR
FORWARD-LOOKING STATEMENTS This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to, among other www.investarbank.com things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” NASDAQ: ISTR “anticipates,” or the negative version of those words or other comparable words. Any forward-looking statements contained in this presentation are based on the historical performance of the Company and its subsidiaries or on the Company’s current plans, estimates and expectations. The inclusion of The Company encourages everyone this forward-looking information should not be regarded as a representation by the Company that the future plans, estimates or expectations by the Company will be achieved. Such forward-looking to visit the Investors Section of its statements are subject to various risks and uncertainties and assumptions relating to the Company’s website at www.investarbank.com, operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying where it has posted additional assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. The Company does not undertake any obligation to publicly update or important information such as press review any forward-looking statement, whether as a result of new information, future developments or releases and SEC filings. otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events: The Company intends to use its • business and economic conditions generally and in the financial services industry in particular, website to expedite public access to whether nationally, regionally or in the markets in which it operates; time-critical information regarding the • its ability to achieve organic loan and deposit growth, and the composition of that growth; • its ability to integrate and achieve anticipated cost savings from acquisitions; Company in advance of or in lieu of • changes (or the lack of changes) in interest rates, yield curves and interest rate spread distributing a press release or a filing relationships that affect its loan and deposit pricing; • the extent of continuing client demand for the high level of personalized service that is a key with the SEC disclosing the same element of its banking approach as well as its ability to execute its strategy generally; • The dependence on its management team, and its ability to attract and retain qualified personnel; information. • changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers; • inaccuracy of the assumptions and estimates its makes in establishing reserves for probable loan losses and other estimates; • the concentration of its business within our geographic areas of operation in Louisiana and Texas; and • concentration of credit exposure. These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Item 1A. “Risk Factors” and Item 7. “Special Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission. 2
NOTICE TO RECIPIENTS: This confidential presentation (this “Presentation”) has been prepared solely for general informational purposes by Investar Holding Corporation (together, with its wholly owned bank subsidiary Investar Bank, National Association, the “Company”), and is being furnished solely for use by prospective participants in considering participation in the proposed offering (the “Offering”) of subordinated notes by the Company (the “Securities”). No representation or warranty as to the accuracy, completeness, or fairness of such information is being made by the Company or any other person, and neither the Company nor any other person shall have any liability for any information contained herein, or for any omissions from this Presentation or any other written or oral communications transmitted to the recipient by the Company or any other person in the course of the recipient’s evaluation of the Offering. Investment in the Securities offered hereunder involves a high degree of risk and is suitable only for persons of substantial means who have no need for liquidity from this investment and who are able to bear the economic risks of the investment, including total loss. There is no public market for the Securities and no public market will develop as a result of this Offering. The Securities are not a deposit or bank account, and are not, and will not be, insured or guaranteed by the Federal Deposit Insurance Corporation (the “FDIC”) or any other federal or state government agency. Investment in the Securities has not been approved or disapproved by the Securities and Exchange Commission (the “SEC”), the Office of the Comptroller of the Currency (the “OCC”), the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System or any other federal or state regulatory authority, nor has any authority passed upon or endorsed the merits of the Offering or the accuracy or adequacy of this Presentation. Any representation to the contrary is a criminal offense. The offer to invest in the Securities and the sale thereof has not been registered under the Securities Act of 1933, as amended (the “1933 Act”), nor under any state securities act. The Securities are being offered and sold in reliance on exemptions from the registration requirements of such acts. Therefore, the Securities may not be sold or transferred absent an exemption from registration under the 1933 Act and under applicable state securities law. The Company reserves the right to withdraw or amend this Offering for any reason and to reject any subscription in whole or in part. The Company has authorized Performance Trust Capital Partners, LLC, to act as its placement agent in the Offering. The information contained herein is intended only as an outline that has been prepared to assist interested parties in making their own evaluations of the Company. It does not purport to be all-inclusive or to contain all of the information that a prospective participant may desire. Each recipient of the information and data contained herein should perform its own independent investigation and analysis of the Offering and the value of the Company. The information and data contained herein are not a substitute for a recipient’s independent evaluation and analysis. In making an investment decision, prospective participants must rely on their own examination of the Company, including the merits and risks involved. Prospective participants are urged to consult with their own legal, tax, investment and accounting advisers with respect to the consequences of an investment in the Company. In the event that any portion of this Presentation is inconsistent with or contrary to any of the terms of the form of a subordinated note purchase agreement (the “Purchase Agreement”), the Purchase Agreement shall control. You will be given the opportunity to ask questions of and receive answers from Company representatives concerning its business and the terms and conditions of the Offering, and to obtain any additional relevant information to the extent the Company possesses such information or can obtain it without unreasonable effort or expense. Except for information provided in response to such requests, the Company has not authorized any other person to give you information that is not found in this Presentation. If such unauthorized information is obtained or provided, the Company cannot and does not assume responsibility for its accuracy, credibility, or validity. The Company is not providing you with any legal, business, tax or other advice regarding an investment in the Securities. You should consult with your own advisors as needed to assist you in making your investment decision and to advise you whether you are legally permitted to purchase the Securities. 3
Terms of Proposed Subordinated Debt Offering Issuer Investar Holding Corporation (NASDAQ: ISTR) Security Subordinated Notes Kroll Bond Rating Agency BBB- Structure 5-years Fixed-to-Floating Rate Size $25.0 million Term 10 year, no-call 5 year Covenants Consistent with regulatory requirements for Tier 2 Capital Funding for any future acquisitions and general corporate purposes, including Use of Proceeds investment in the banking subsidiary Sole Placement Agent Performance Trust Capital Partners LLC Offering Type Private placement with follow-on registration rights 4
COMPANY PROFILE AS OF SEPTEMBER 30, 2019 Market Data 09/30/19 YTD Financial Highlights Shares Outstanding 9,929,860 Assets $2.0 billion Market Cap $236.3 million Net Loans $1.6 billion Price per Share $23.80 Deposits $1.6 billion Dividend Yield 0.96% Tangible Equity(1) $184.3 million Price/ Tangible Book Value 128.2% TE/TA(1) 9.25% Price/LTM EPS 14.0x Net Income $13.5 million ROAA 0.93% Core ROAA(1) 0.97% ROAE 8.99% NPAs/Assets 0.29% Net Interest Margin 3.53% Cost of Funds 1.40% (1) Non-GAAP financial measure. See non-GAAP financial measures slides. 5
SENIOR MANAGEMENT John J. D’Angelo, • Founding President and Chief Executive Officer President & CEO • New Orleans native; graduate of Louisiana State University • Prior to founding Investar, Mr. D’Angelo was president and director of Aegis Lending Corporation, a mortgage lending company with operations in 46 states and the District of Columbia • Previously, Mr. D’Angelo held various senior positions at Hibernia National Bank (the predecessor to Capital One Bank, N.A.), focusing on the East Baton Rouge Parish, Louisiana market • Current ownership of 1.9% Christopher L. Hufft, • Joined the Bank in February 2014 as Chief Accounting Officer, and assumed the Chief Financial Officer role of Chief Financial Officer in October of 2015. • Prior to joining the Bank, Mr. Hufft served for 9 years as the Vice President of Accounting at Amedisys, Inc., a publicly-traded home health and hospice company • Mr. Hufft, a licensed certified public accountant, also spent seven years in public accounting, serving both public and privately-held clients in the banking, healthcare and manufacturing sectors • B.S. Accounting – Louisiana State University Travis M. Lavergne, • Served as Executive Vice President and Chief Credit Officer since March 2013 Chief Credit Officer and Chief Risk Management Officer since joining in July 2012 • Prior to joining the Bank, Mr. Lavergne was a Senior Examiner at the Louisiana Office of Financial Institutions from September 2005 to July 2012 • B.S. Finance – Louisiana State University • M.B.A. Southeastern Louisiana University 6
INVESTAR SNAPSHOT Company overview Financial highlights • Chartered as a de novo commercial bank in June 2006 by John J. As of and for the Year Ended D’Angelo, the current President and Chief Executive Officer (dollars in millions) 2016 2017 2018 2019YTD Balance Sheet • Completed initial public offering of 3.3 million shares in July 2014, Total Assets $ 1,159 $ 1,623 $ 1,786 $ 2,018 generating net proceeds of $41.7 million Gross Loans 894 1,259 1,401 1,586 Total Deposits 908 1,225 1,362 1,585 Total Equity 113 173 182 210 • Headquartered in Baton Rouge, LA, ISTR offers a wide range of commercial banking products to meet the needs of small to Profitability medium-sized businesses ROAA 0.71 % 0.62 % 0.81 % 0.93 % Net Interest Margin 3.32 3.39 3.61 3.53 (1) • Completed acquisitions of Citizens Bancshares, Inc. (“Citizens”) on Core Efficiency Ratio 67.6 66.2 63.8 64.3 July 1, 2017, BOJ Bancshares, Inc. (“BOJ”) on December 31, Capital 2017, and Mainland Bank on March 1, 2019 TCE/TA 9.48 % 9.53 % 9.20 % 9.25 % Total Risk-Based Ratio 12.47 14.22 13.46 13.04 • ISTR currently operates 24 full service banking offices, including Asset Quality the 3 branch locations acquired from Citizens, 5 branch locations NPAs / Loans & OREO 0.67 % 0.60 % 0.68 % 0.37 % acquired from BOJ, and 3 branch locations acquired from Mainland NCOs / Avg Loans 0.14 0.07 0.08 0.02 Bank located throughout its primary markets in south Louisiana NPLs / Loans 0.22 0.29 0.42 0.36 and Texas • Experienced management team that has generated strong organic growth complemented by four successful acquisitions since 2011 • Strong capital position and disciplined credit philosophy • ISTR had 285 full-time equivalent employees as of September 30, 2019 Note: Dollars in millions, unless noted otherwise; 2019YTD as of September 30, 2019 (1) Efficiency ratio represents noninterest expense divided by the sum of net interest income (before provision for loan losses) and noninterest income 7
INVESTAR TIMELINE 2018 Opened additional branch in our Baton Rouge market 2019 2014 Acquired Completed Mainland Bank initial public $2,018 offering 2012 Entered the New $1,786 Orleans market $1,623 2006 $1,159 Chartered with $1,032 an initial capitalization $879 of $10.1 million $635 $375 $279 $209 $143 $174 $30 $66 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019 2017 2011 2013 Acquired Acquired South Entered the Citizens Louisiana Lafayette market Bancshares, Inc. Business Bank Acquired First Community Bank Acquired BOJ Bancshares, Inc. Note: Bank level data shown for 2006 through 2012 (holding company incorporated in 2013) 8
ACCOMPLISHMENTS SINCE IPO Since IPO in June 2014, Investar has experienced significant progress: Further Established in Four Key Louisiana Markets Shifted from Consumer Loans to C&I and CRE Focus Maintained High Quality Organic Loan Growth Transitioned from Transactional Banking to Relationship Banking Continued to Add Experienced Bankers in Key Areas Completed Acquisitions on July 1, 2017, December 1, 2017, and March 1, 2019 9
ATTRACTIVE MARKETS • Baton Rouge MSA • Louisiana’s second largest market by deposits and the state capital, which includes major industrial, medical, research, motion picture, and growing technology centers • Hammond MSA • Commercial hub of a large agricultural segment of Louisiana, bedroom community of New Orleans, and home to Southeastern Louisiana University • Lafayette MSA • Louisiana’s fourth largest city by population and deposits with 9.5% population growth between 2010 and 2018 • New Orleans MSA • Louisiana’s largest city by population and deposits and a hub of hospitality, healthcare, universities, and energy • Houston MSA • Texas’ largest city and one of the nation’s fastest growing MSA’s with 6.7 million metro area residents and $503 billion MSA GDP Louisiana Deposit Market Share Louisiana Market Share Opportunity ISTR, Deposits Market Investar, 4.3% 2.7% in Market Share Rank Institution Branches ($000) (%) 1 Capital One Financial Corp. 103 18,035,846 16.97 2 JPMorgan Chase & Co. 123 17,511,399 16.48 3 Hancock Whitney Corp. 131 14,716,915 13.85 All Other All Other Banks, 4 IBERIABANK Corp. 63 8,971,115 8.44 Banks, 95.7% 97.3% 5 Regions Financial Corp. 96 7,461,201 7.02 6 Origin Bancorp Inc. 21 1,811,267 1.70 7 First Guaranty Bancshares Inc. 29 1,714,901 1.61 Baton Rouge: Hammond: 8 Bus. First Bancshares Inc. 24 1,696,802 1.60 Total Deposits: $20.5 Billion Total Deposits: $2.0 Billion 9 Home Bancorp Inc. 36 1,683,916 1.58 Investar, 10 Red River Bancshares Inc. 23 1,665,842 1.57 Investar, 1.4% 0.4% 11 Gulf Coast B&TC 20 1,504,875 1.42 12 BancorpSouth Bank 28 1,468,600 1.38 13 Investar Holding Corp. 22 1,439,203 1.35 14 Pedestal Bancshares Inc. 22 1,026,451 0.97 15 Citizens National Bancshares 12 873,773 0.82 All Other All Other 16 First Trust Corp. 12 848,193 0.80 Banks, Banks, 17 CB&T Holding Corp. 3 839,965 0.79 98.6% 99.6% 18 Sabine Bancshares Inc. 49 820,455 0.77 19 One American Corp. 25 771,621 0.73 Lafayette: 20 Jeff Davis Bancshares Inc. 23 753,468 0.71 New Orleans: Total Deposits: $12.7 Billion Total For Institutions In Market 1,419 106,263,454 Total Deposits: $35.9 Billion Sources: S&P Global Market Intelligence; FDIC; Deposit market share data shown as of June 30, 2019 10
OPPORTUNISTIC ACQUISITIONS COMPLETED Branch map South Louisiana Business Bank • Announced: June 2011 • Closed: October 2011 • 1 Branch in Prairieville, LA • $31.5 million in gross loans and $38.6 million in deposits¹ First Community Bank • Announced: January 2013 • Closed: May 2013 • 2 Branches – Hammond and Mandeville, LA • $77.5 million in gross loans and $86.5 million in deposits¹ Citizens Bancshares, Inc. • Announced: March 2017 • Closed: July 2017 • Pricing: 128% of TBV, 100% cash • 3 Branches – Evangeline Parish, LA • $129.2 million in gross loans and $212.2 million in deposits¹ BOJ Bancshares, Inc. • Announced: August 2017 • Closed: December 2017 • Pricing: 132% of TBV; 80% stock, 20% cash • 5 Branches – East Baton Rouge Parish, East Feliciana Parish, and West Feliciana Parish, LA • $102.4 million in gross loans and $125.8 million in deposits¹ Mainland Bank • Announced: October 2018 • Closed: March 2019 • 3 Branches – Texas City, Houston, and Dickinson, TX • Pricing – 100% stock • $82.4 million in gross loans and $107.6 million in deposits1 (1) Based on fair values at time of closing 11
OPPORTUNISTIC ACQUISITIONS ANNOUNCED Investar Holding Corporation (24) Bank of York (2) HTH Branch Acquisition (2) HTH branches in Alice and Victoria, Texas Bank of York, York, Alabama • Announced: August 2019 • Announced: July 2019 • Target closing date in Q1 2020 • Target closing date in Q4 2019 • 2 Branches – Alice and Victoria, TX • $15 million cash • Pricing – 100% cash • 2 Branches – York and Livingston, AL and an LPO in Tuscaloosa, AL • $52 million in gross loans and $42 million in deposits1 • $46 million in gross loans and $82 million in deposits¹ (1) Based on estimates at June 30, 2019 12
HISTORICAL GROWTH Total Assets Total Loans ($ in millions) ($ in millions) $2,400 $2,100 $2,200 $1,900 $2,018 $2,000 $1,700 $1,576 $1,786 $1,800 $1,500 $1,401 $1,623 $1,259 $1,600 $1,300 $1,400 $1,100 $893 $1,200 $1,159 $900 $1,032 $745 $1,000 $700 $800 $500 2015Y 2016Y 2017Y 2018Y 2019YTD 2015Y 2016Y 2017Y 2018Y 2019YTD Total Deposits Total Equity ($ in millions) ($ in millions) $2,100 $350 $1,900 $300 $1,700 $1,585 $250 $210 $1,500 $1,362 $200 $173 $182 $1,300 $1,225 $150 $1,100 $109 $113 $908 $100 $900 $737 $50 $700 $500 $- 2015Y 2016Y 2017Y 2018Y 2019YTD 2015Y 2016Y 2017Y 2018Y 2019YTD Source: S&P Market Intelligence; GAAP financial data through September 30, 2019 13
LOAN COMPOSITION 2017 2018 Q3 2019 Increase/(Decrease) (dollars in thousands) Amount % Amount % Amount % Amount % Mortgage loans on real estate Construction and land development $ 157,667 12.5% $ 157,946 11.3% $ 176,674 11.1% $ 18,728 11.9% 1-4 Family 276,922 22.0 287,137 20.5 310,298 19.6 23,161 8.1 Multifamily 51,283 4.1 50,501 3.6 58,243 3.7 7,742 15.3 Farmland 23,838 1.9 21,356 1.5 24,629 1.6 3,273 15.3 Commercial real estate Owner-occupied 272,433 21.6 298,222 21.3 339,240 21.4 41,018 13.8 Nonowner-occupied 264,931 21.0 328,782 23.5 353,910 22.3 25,128 7.6 Commercial and industrial 135,392 10.8 210,924 15.1 293,152 18.5 82,228 39.0 Consumer 76,313 6.1 45,957 3.3 30,196 1.9 (15,761) (34.3) Total loans $ 1,258,779 100.0% $ 1,400,825 100.0% $ 1,586,342 100.0% $ 185,517 13.2% Source: S&P Market Intelligence; bank-level regulatory financial data through September 30, 2019 14
LOAN COMPOSITION September 30, 2019 Consumer 2% Construction & land development 11% C&I 18% CRE 44% Residential/Farmland 25% Total Loans: $1.6 billion YTD Yield on loans: 5.28% 50% of CRE is owner-occupied 15
LOAN COMPOSITION Business Lending Portfolio1 Health Care and Social Assistance Construction 12% 7% Other Industries less than 5% 25% Retail Trade 11% Real Estate and Rental and Leasing 14% Professional, Scientific, & Wholesale Trade Technical 12% 11% Manufacturing 8% Total Business Lending Portfolio1: $632 million (1) Business lending portfolio includes owner-occupied CRE and C&I loans as of September 30, 2019 16
ASSET QUALITY TRENDS NPAs / Total Loans and OREO NPLs / Total Loans 1.25% 1.00% 1.00% 0.80% 0.72% 0.71% 0.75% 0.62% 0.60% 0.55% 0.46% 0.46% 0.31% 0.36% 0.50% 0.37% 0.40% 0.27% 0.25% 0.20% 0.00% 0.00% 2015Y 2016Y 2017Y 2018Y 2019YTD 2015Y 2016Y 2017Y 2018Y 2019YTD NCOs / Avg. Loans Loan Loss Reserves / Total Loans 1.25% 1.50% 1.00% 1.20% 0.79% 0.75% 0.90% 0.74% 0.63% 0.67% 0.65% 0.60% 0.50% 0.30% 0.25% 0.13% 0.05% 0.07% 0.08% 0.02% 0.00% 0.00% 2015Y 2016Y 2017Y 2018Y 2019YTD 2015Y 2016Y 2017Y 2018Y 2019YTD Source: S&P Market Intelligence; bank-level regulatory financial data through September 30, 2019 17
ISTR LOAN PORTFOLIO CREDIT SUMMARY Special Special Doubtful, Pass Mention Substandard Doubtful Total Mention, 0.0% 0.2% Substandard, 0.4% Commercial Real Estate 693,007 - 143 - 693,150 1-4 Family 307,394 535 2,298 71 310,298 Consumer 29,383 200 613 - 30,196 Construction and Development 176,244 111 319 - 176,674 Commercial and Industrial 290,199 2,943 10 - 293,152 Multifamily 58,243 - - - 58,243 Pass, 99.4% Farmland 22,365 - 2,264 - 24,629 Total 1,576,835 3,789 5,647 71 1,586,342 • No special mention or substandard loans with exposure to the energy industry Note: Financial data as of September 30, 2019
DEPOSIT COMPOSITION AND GROWTH Deposit Composition ¹ ($1.6 billion) Noninterest-bearing demand deposits 19% CDs 43% Interest-bearing demand deposits 19% Money market Savings 12% 7% YTD Cost of funds: 1.66% Target: 20% of total deposits are noninterest-bearing • Treasury Management • Small Business Banking • Focus on Relationship Banking • Strategic Acquisitions (1) As of September 30, 2019 19
FINANCIAL HIGHLIGHTS Amounts in thousands, except share data Year Ended December 31, 9 Mos. Ended 2016 2017 2018 Q3 2019 YTD Financial Highlights Total Assets $ 1,158,960 $ 1,622,734 $ 1,786,469 $ 2,018,001 Gross Loans 893,846 1,258,779 1,400,825 1,586,342 Total Deposits 907,787 1,225,237 1,361,731 1,585,357 Total Stockholders' Equity 112,757 172,729 182,262 210,457 Shares Outstanding 7,101,851 9,514,926 9,484,219 9,929,860 Capital Ratios Tangible Equity / Tangible Assets(2) 9.48% 9.53% 9.20% 9.25% Tier 1 Leverage Ratio 10.10% 10.66% 9.81% 9.60% Total Capital Ratio 12.47% 14.22% 13.46% 13.04% Asset Quality Ratios NPAs / Total Assets 0.52% 0.46% 0.54% 0.29% NPLs / Loans 0.22% 0.29% 0.42% 0.36% Loan Loss Reserves / Total Loans 0.79% 0.63% 0.67% 0.65% Loan Loss Reserves / NPLs 356.2% 214.4% 158.9% 182.0% NCOs / Avg Loans 0.14% 0.07% 0.08% 0.02% Performance Ratios Net Income $ 7,880 $ 8,202 $ 13,606 $ 13,508 ROAE 6.99% 5.65% 7.68% 8.99% ROAA 0.71% 0.62% 0.81% 0.93% Core ROAA(2) 0.64% 0.69% 0.95% 0.97% Net Interest Margin 3.32% 3.39% 3.61% 3.53% Efficiency Ratio(3) 66.25% 69.80% 67.89% 65.80% Per Share Data Tangible Book Value per Share(2) $ 15.42 $ 16.06 $ 17.13 $ 18.56 Diluted Earnings per Share $ 1.10 $ 0.96 $ 1.39 $ 1.34 (1) Gross loans includes loans held for sale (2) Non-GAAP financial measure. See non-GAAP financial measures slides. (3) Efficiency ratio represents noninterest expense divided by the sum of net interest income (before provision for loan losses) and noninterest income. 20
EFFICIENCY AND PERFORMANCE METRICS A Focus on Improving Efficiency ROATCE & ROAA Core Efficiency Ratio Noninterest Expense / Avg. Assets ROATCE ROAA 90.0% 10.0% 15.0% 2.00% 75.0% 8.0% 12.0% 1.60% Noninterest ExpenseAssetsAvg. / Noninterest 68.9% 67.6% 66.2% 63.8% 64.3% 9.7% 8.9% ROAA 60.0% 6.0% 9.0% 1.20% ROATCE 7.2% 6.8% Efficiency Ratio 6.1% 0.93% 45.0% 4.0% 6.0% 0.80% 0.77% 0.81% 0.71% 0.62% 2.9% 30.0% 2.4% 2.3% 2.4% 2.4% 2.0% 3.0% 0.40% 15.0% 0.0% 0.0% 0.00% 2015Y 2016Y 2017Y 2018Y 2019YTD 2015Y 2016Y 2017Y 2018Y 2019YTD Source: S&P Market Intelligence; consolidated financial data through September 30, 2019 21
NET INTEREST MARGIN TRENDS Net Interest Income (NII) & Net Interest Margin (NIM) Key Components of NII & NIM Loan Yield Securities Yield Cost of Funds Net Interest Income NIM 6.00% 6.00% $70,000 5.11% 5.29% 5.00% 5.00% 4.65% 4.72% 4.55% $60,000 $57,370 4.00% $50,000 $47,853 4.00% $42,517 3.61% 3.61% 3.53% 3.32% 3.39% $40,000 3.00% $34,739 3.00% $31,458 2.80% $30,000 2.57% 2.37% 2.00% 2.22% 2.28% 2.00% 1.40% $20,000 1.10% 0.92% 1.00% 0.86% 1.00% 0.73% $10,000 0.00% $- 0.00% 2015Y 2016Y 2017Y 2018Y 2019YTD 2015Y 2016Y 2017Y 2018Y 2019YTD Source: S&P Market Intelligence; GAAP financial data through September 30, 2019 22
HISTORICAL CAPITAL POSITION Consolidated Bank September 30, 2019 September 30, 2019 15.00% CET1 Ratio 15.00% CET1 Ratio (1) Tier 1 Risk-Based Ratio Tier 1 Risk-Based Ratio Total Risk-Based Ratio 14.22% Tier 1 Leverage Ratio Total Risk-Based Ratio Tier 1 Leverage Ratio 13.95% 14.00% TCE / TA Ratio 14.00% 13.46% 13.35% 13.31% 13.04% 13.09% 13.00% 12.72% 13.00% 12.67% 12.47% 12.38% 12.39% 12.47% 12.24% 12.05% 12.00% 11.75% 11.75% 12.00% 11.71% 11.67% 11.59% 11.67% 11.63% 11.40% 11.32% 11.15% 11.07% 11.39% 10.93% 11.00% 11.00% 10.72% 10.66% 10.58% 10.32% 10.10% 10.03% 10.00% 9.81% 10.00% 9.60% 9.48% 9.53% 9.20% 9.25% 9.00% 9.00% 8.00% 8.00% 2015 2016 2017 2018 2019 YTD 2015 2016 2017 2018 2019 YTD Source: S&P Market Intelligence; financial data through September 30, 2019 (1) CET1 Ratio figures cannot be seen due to overlap with Tier 1 Risk-Based Ratio 23
PRO FORMA REGULATORY CAPITAL $6,500 $18,250 Note: Assumes $25 million of subordinated At September 30, 2019 debt is raised and 93% of proceeds are down- $10,442 streamed to the bank as common equity with $178,240 7% of proceeds retained at the holding company. Pro Forma $6,500 $178,240 $43,250 $10,442 Common Equity Tier 1 Capital Other Tier 1 Subordinated Debt ALLL CONSOLIDATED BANK LEVEL Investar Investar PROJECT Investar Investar Investar PROJECT Investar Actual Pro Forma (1) BOOT Pro Forma Actual Pro Forma (1) BOOT Pro Forma Pro Forma Regulatory Capital 09/30/19 09/30/19 ADJ. 09/30/19 09/30/19 09/30/19 Adj. 09/30/19 Common Equity Tier 1 Capital 182,304 178,240 – 178,240 208,214 204,150 23,250 227,400 Additional Tier 1 Capital 6,500 6,500 – 6,500 – – – – Total Tier 1 Capital $ 188,804 $ 184,740 $ 184,740 $ 208,214 $ 204,150 $ 227,400 Tier 2 Capital Instruments $ 18,250 $ 18,250 $ 25,000 $ 43,250 $ - $ - $ - $ - ALLL Includable in Tier 2 Capital 10,442 10,442 – 10,442 10,442 10,442 – 10,442 Total Tier 2 Capital 28,692 28,692 25,000 53,692 10,442 10,442 10,442 Total Capital $ 217,496 $ 213,432 $ 238,432 $ 218,656 $ 214,592 $ 237,842 Total Assets for Leverage Ratio 1,966,773 2,082,338 25,000 2,107,338 1,968,182 2,083,747 23,250 2,106,997 Total Risk-Weighted Assets 1,667,962 1,753,758 5,000 1,758,758 1,670,036 1,755,832 4,650 1,760,482 Common Equity Tier 1 Ratio 10.93% 10.16% 10.13% 12.47% 11.63% 12.92% Leverage Ratio 9.60% 8.87% 8.77% 10.58% 9.80% 10.79% Tier 1 Risk-Based Ratio 11.32% 10.53% 10.50% 12.47% 11.63% 12.92% Total Risk-Based Capital Ratio 13.04% 12.17% 13.56% 13.09% 12.22% 13.51% (1) Pro forma for pending acquisitions of Bank of York and PlainsCapital branches 24
PRO FORMA DOUBLE LEVERAGE AND INTEREST COVERAGE Pro Forma for Bank of York Acquisition, Branch Acquisitions, & Subordinated Debt Offering Annualized For the Nines ISTR Months Ended Pro Forma for Bank September 30, 2019 of York & HTH Branch ISTR ISTR Acquisitions (1) Pro Forma Bank Level Common Equity $236,267 $236,267 $236,267 Consolidated Equity $210,457 $210,457 $210,457 Double Leverage Ratio 112.3% 112.3% 112.3% Subordinated Debt Offering Net Proceeds 23,250 Pro Forma Holding Company Invesment in Bank $259,517 Double Leverage Ratio (with New Sub Debt Issuance) 123.3% Interest Coverage Deposit Interest Expense $18,651 $1,083 $19,734 Borrowings Interest Expense $5,449 $578 $6,027 Total Interest Expense $24,100 $1,661 $25,761 Pre-Tax Income (2) $22,377 $1,449 $23,826 Interest Coverage (Including Deposit Expense) 1.9x 1.9x Interest Coverage (Excluding Deposit Expense) 8.5x 8.2x New Subordinated Debt Expense (3) 1,188 1,188 Pro Forma Interest Coverage (Including Deposit Expense) 1.8x 1.8x Pro Forma Interest Coverage (Excluding Deposit Expense) 7.0x 6.9x (1) Pro forma calculations for the pending acquisitions of Bank of York & HTH Branches (2) Does not assume the recognition of new subordinated debt interest expense (3) Assumes an interest rate of 4.75% 25
INVESTMENT OPPORTUNITY 1 Management • Legacy team with proven industry expertise tied to the South Louisiana region • Continue to add experienced bankers in new and existing markets 2 Market • South Louisiana focus with complementary market expansion • New foothold in Texas provides significant room for further growth 3 Growth • Leverage existing infrastructure in core markets • Limited de novo branching • Opportunistic, disciplined acquisition strategy • Focus on relationship banking 4 Asset Quality • Loan portfolio diversity • Disciplined credit philosophy – legacy delinquencies less than 1% 5 Profitability • Expected to increase as investment in infrastructure has already been made 26
APPENDIX 27
NON-GAAP FINANCIAL MEASURES Tangible equity, tangible book value per share, and the ratio of tangible equity to tangible assets are not financial measures recognized under GAAP and, therefore, are considered non-GAAP financial measures. Company management, banking regulators, many financial analysts and other investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred equity and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions. Tangible equity, tangible assets, tangible book value per share or related measures should not be considered in isolation or as a substitute for total stockholders’ equity, total assets, book value per share or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Company calculates tangible equity, tangible assets, tangible book value per share and any other related measures may differ from that of other companies reporting measures with similar names. The following table reconciles, as of the dates set forth below, stockholders’ equity (on a GAAP basis) to tangible equity and total assets (on a GAAP basis) to tangible assets and calculates tangible book value per share. December 31, Dollar values in thousands except per share amounts 2015 2016 2017 2018 Q3 2019 Total Stockholders' Equity - GAAP $ 109,350 $ 112,757 $ 172,729 $ 182,262 $ 210,457 Adjustments Goodwill 2,684 2,684 17,086 17,424 21,902 Other Intangibles 491 550 2,840 2,363 4,215 Tangible Equity $ 106,175 $ 109,523 $ 152,803 $ 162,475 $ 184,340 Total Assets - GAAP $ 1,031,555 $ 1,158,960 $ 1,622,734 $ 1,786,469 $ 2,018,001 Adjustments Goodwill 2,684 2,684 17,086 17,424 21,902 Other Intangibles 491 550 2,840 2,363 4,215 Tangible Assets $ 1,028,380 $ 1,155,726 $ 1,602,808 $ 1,766,682 $ 1,991,884 Total Shares Outstanding Book Value Per Share $ 15.05 $ 15.88 $ 18.15 $ 19.22 $ 21.19 Effect of Adjustment (0.43) (0.46) (2.09) (2.09) (2.63) Tangible Book Value Per Share $ 14.62 $ 15.42 $ 16.06 $ 17.13 $ 18.56 Total Equity to Total Assets 10.60% 9.73% 10.64% 10.20% 10.43% Effect of Adjustment (0.28) (0.25) (1.11) (1.00) (1.17) Tangible Equity to Tangible Assets 10.32% 9.48% 9.53% 9.20% 9.25% 28
NON-GAAP FINANCIAL MEASURES December 31, YTD Dollar values in thousands except per share amounts 2015 2016 2017 2018 Q3 2019 Net interest income (x) $ 31,458 $ 34,739 $ 42,517 $ 57,370 $ 47,853 Provision for loan losses 1,865 2,079 1,540 2,570 1,172 Adjusted net interest income after provision for loan losses 29,593 32,660 40,977 54,800 46,681 Noninterest income (v) 8,344 5,468 3,815 4,318 4,641 Gain on sale of investment securities, net (489) (443) (292) (14) (229) Loss (gain) on sale of other real estate owned, net 105 (13) (27) 24 (19) Gain on sale of fixed assets, net (15) (1,266) (127) (98) 11 Change in the fair value of equity securities - - - 267 (220) Core noninterest income (y) 7,945 3,746 3,369 4,497 4,184 Noninterest expense (w) 27,353 26,639 32,342 41,882 34,539 Severance (226) (26) (82) (293) - Acquisition expense - - (1,868) (1,445) (1,082) Non-routine legal expense - - - (89) - Impairment on investment in tax credit entity (54) - - - - Customer reimbursements - (584) - - - Write down of other real estate owned - - - (567) - Core noninterest expense (z) 27,073 26,029 30,392 39,488 33,457 Core earnings before income tax expense 10,465 10,377 13,954 19,809 17,408 Core income tax expense 3,456 3,258 4,758 3,809 3,395 Core earnings $ 7,009 $ 7,119 $ 9,196 $ 16,000 $ 14,013 Efficiency ratio (w)/(x+v) 68.72% 66.25% 69.80% 67.89% 65.80% Core Efficiency ratio (z)/(x+y) 68.85% 67.63% 66.23% 63.83% 64.29% Core ROAA 0.76% 0.65% 0.69% 0.95% 0.97% 29
NON-GAAP FINANCIAL MEASURES Dollar values in thousands except per share amounts Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Net interest income (a) $ 14,385 $ 14,807 $ 15,156 $ 16,331 $ 16,366 Provision for loan losses 785 593 265 369 538 Net interest income after provision for loan losses 13,600 14,214 14,891 15,962 15,828 Noninterest income (b) 1,217 836 1,281 1,742 1,618 (Gain) loss on sale of investment securities, net (15) 23 (2) (227) - Loss (gain) on sale of other real estate owned, net - 20 (5) (13) (1) (Gain) loss on sale of fixed assets, net (9) - - 11 - Change in the fair value of equity securities (36) 306 (172) (57) 9 Core noninterest income (d) 1,157 1,185 1,102 1,456 1,626 Core earnings before noninterest expense 14,757 15,399 15,993 17,418 17,454 Noninterest expense (c) 10,254 10,906 11,303 11,554 11,682 Severance (293) - - - - Acquisition expense - (341) (905) - (177) Write down of other real estate owned - (567) - - - Core noninterest expense (e) 9,961 9,998 10,398 11,554 11,505 Core earnings before income tax expense 4,796 5,401 5,595 5,864 5,949 Core income tax expense 825 1,053 1,094 1,161 1,143 Core earnings before income tax expense $ 3,971 $ 4,348 $ 4,501 $ 4,703 $ 4,806 Core basic earnings per share 0.42 0.46 0.47 0.47 0.48 Diluted earnings per share (GAAP) $ 0.41 $ 0.34 $ 0.40 $ 0.48 $ 0.46 Gain on sale of investment securities, net - - - (0.01) - Change in the fair value of equity securities - 0.03 (0.01) - - Severance 0.03 - - - - Acquisition expense - 0.03 0.07 - 0.02 Write down of other real estate owned - 0.05 - - - Discrete tax benefit related to return-to-provision-adjustments (0.03) - - - - Core diluted earnings per share $ 0.41 $ 0.45 $ 0.46 $ 0.47 $ 0.48 Efficiency ratio (c)/(a+b) 65.72% 69.72% 68.76% 63.93% 64.96% Core efficiency ratio (e)/(a+d) 64.09% 62.52% 63.96% 64.96% 63.95% Core return on average assets 0.92% 0.98% 0.98% 0.98% 0.95% Core return on average equity 8.81% 9.55% 9.62% 9.35% 9.13% 30
INCOME STATEMENT December 31, YTD (dollars in thousands, except share data) 2015 2016 2017 2018 Q3 2019 INTEREST INCOME Interest and fees on loans $ 35,076 $ 39,380 $ 47,863 $ 66,750 $ 59,621 Interest on investment securities 2,189 3,565 5,055 6,608 5,697 Other interest income 75 207 428 533 610 TOTAL INTEREST INCOME 37,340 43,152 53,346 73,891 65,928 INTEREST EXPENSE Interest on deposits 5,250 7,182 8,050 11,394 13,988 Interest on borrowings 632 1,231 2,779 5,127 4,087 TOTAL INTEREST EXPENSE 5,882 8,413 10,829 16,521 18,075 NET INTEREST INCOME 31,458 34,739 42,517 57,370 47,853 PROVISION FOR LOAN LOSSES 1,865 2,079 1,540 2,570 1,172 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 29,593 32,660 40,977 54,800 46,681 NON-INTEREST INCOME Service charges on deposit accounts 380 343 767 1,453 1,296 Gain on sale of investment securities, net 489 443 292 14 229 Gain on sale of assets, net 4,278 1,684 154 74 (11) Servicing fees and fee income on serviced loans 2,543 2,087 1,482 963 473 Other operating income 654 911 1,120 1,814 2,654 TOTAL NON-INTEREST INCOME 8,344 5,468 3,815 4,318 4,641 INCOME BEFORE NON-INTEREST EXPENSE 37,937 38,128 44,792 59,118 51,322 NON-INTEREST EXPENSE Salaries and employee benefits 16,398 15,609 18,681 25,469 20,817 Impairment on investment in tax credit entity 54 11 - - - Operating expenses 10,901 11,019 13,661 16,413 13,722 TOTAL NON-INTEREST EXPENSE 27,353 26,639 32,342 41,882 34,539 INCOME BEFORE INCOME TAX EXPENSE 10,584 11,489 12,450 17,236 16,783 INCOME TAX EXPENSE 3,511 3,609 4,248 3,630 3,275 NET INCOME $ 7,073 $ 7,880 $ 8,202 $ 13,606 $ 13,508 Basic earnings per share $ 0.98 $ 1.11 $ 0.96 $ 1.41 $ 1.35 Diluted earnings per share $ 0.97 $ 1.10 $ 0.96 $ 1.39 $ 1.34 31