Business First Bancshares, Inc., Announces Financial Results for Q2 2025 (Form 8-K)

Business First Bancshares, Inc., Announces Financial Results for Q2 2025

Baton Rouge, La. (July 28, 2025) - Business First Bancshares, Inc. (NASDAQ: BFST) (Business First), parent company of b1BANK, today announced its unaudited results for the quarter ended June 30, 2025. Business First reported net income available to common shareholders of $20.8 million or $0.70 per diluted common share, increases of $1.6 million and $0.05, respectively, compared to the linked quarter ended March 31, 2025. On a non-GAAP basis, core net income for the quarter ended June 30, 2025, which excludes certain income and expenses, was $19.5 million or $0.66 per diluted common share, an increase of $0.2 million and $0.01, from the linked quarter.

"Between our latest partnership announcement, successful core conversion and legacy branch repositioning, this was a quarter that positions us for continued growth and development in the coming quarters and years," said Jude Melville, chairman, president and CEO of Business First Bancshares, "I'm especially proud that our team conducted these productive operational activities while continuing to post consistent earnings and healthy balance sheet growth including our tangible book value and capital levels. We look forward to converting our Oakwood franchise systems late in the third quarter and competing from a position of strength in the Dallas market as a fully integrated team."

On Thursday, July 24, 2025, Business First's board of directors declared a quarterly preferred dividend in the amount of $18.75 per share, which is the full quarterly dividend of 1.875% based on the per annum rate of 7.50%. Additionally, the board of directors declared a quarterly common dividend based upon financial performance for the second quarter in the amount of $0.14 per share of common stock. The preferred and common dividends will be paid on August 31, 2025, or as soon thereafter as practicable, to the shareholders of record as of August 15, 2025.

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Quarterly Highlights

•Sustained Core Performance. Return to common shareholders on average assets, on an annualized basis, was 1.07% for the quarter ended June 30, 2025, or 1.01% on a non-GAAP basis, compared to 1.00% or 1.01% on a non-GAAP basis for the linked quarter.

•Capital Growth. Common equity to total assets increased from 9.69% to 9.77% and tangible common equity to tangible assets increased from 8.06% to 8.19%, 1.61% or 6.47% annualized, compared to the linked quarter, driven largely by solid quarterly earnings. On a non-GAAP basis, tangible book value per common share increased to $28.61 as of June 30, 2025, a 77 basis point increase, 3.70% or 14.82% annualized, compared to the linked quarter.

•Branch Optimization. In early April, Business First sold a banking branch located in Kaplan, LA (Kaplan) resulting in a net capital injection of $3.4 million. The transaction included a sale of $50.7 million of deposits for an 8.0% purchase premium. The sale is estimated to result in $750,000 lower annual operating cost.

•Core Conversion. Business First successfully converted its core processing for loans, deposits, and the general ledger to Fidelity Information Systems ("FIS") to improve capabilities and efficiencies for future growth.

•Stable Net Interest Margin (NIM). Net interest income totaled $67.0 million and net interest margin and net interest spread were 3.68% and 2.88%, respectively, compared to $66.0 million, 3.68% and 2.91% for the linked quarter. Non-GAAP net interest margin and net interest spread (excluding loan discount accretion of $0.8 million) were 3.64% and 2.84% for the quarter ended June 30, 2025, compared to 3.64% and 2.86% (excluding loan discount accretion of $0.8 million) for the linked quarter. Net interest margin for the quarter was impacted by excess funding utilized during the core conversion (~3 basis points, "bps") and incremental funding cost associated with replacing the Kaplan deposit portfolio (~2 bps).

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•Progressive Bank Acquisition. On July 7, 2025, Business First executed a definitive agreement to acquire Progressive Bancorp, Inc. ("Progressive") and its wholly-owned bank subsidiary, Progressive Bank. As of March 31, 2025, Progressive reported total assets of $752 million, deposits of $673 million, and equity of $65 million.

Statement of Financial Condition

Loans

Loans held for investment increased $66.7 million or 1.12%, 4.48% annualized. The commercial and commercial real estates portfolios increased $98.8 million and $61.6 million, respectively, compared to the linked quarter. The construction portfolio declined $33.4 million, or 5.27% compared to the linked quarter. Texas-based loans represented approximately 40% of the overall loan portfolio as of June 30, 2025, based on unpaid principal balance.

Credit Quality

Credit quality metrics migrated upwards compared to the linked quarter. The ratio of nonperforming loans compared to loans held for investment increased 28 bps to 0.97% at June 30, 2025, while the ratio of nonperforming assets compared to total assets increased 21 bps to 0.76% compared to the linked quarter. The commercial real estate, commercial, and residential real estate portfolios encompass approximately $22.5 million, $20.8 million, and $7.5 million, respectively, of the $56.4 million nonaccrual balance at June 30, 2025.

Securities

The securities portfolio increased $5.9 million, or 0.64%, from the linked quarter, impacted by $6.4 million in positive fair value adjustments. The securities portfolio, based on estimated fair value, represented 11.83% of total assets as of June 30, 2025.

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Deposits

Deposits decreased $38.5 million or 0.60%, 2.39% annualized, for the quarter ended June 30, 2025, compared to the linked quarter. Excluding the $50.7 million in deposits transferred in the Kaplan sale, deposits increased $12.1 million or 0.19%, 0.76% annualized.

Noninterest bearing deposits increased $102.4 million or 7.83% and interest-bearing deposits decreased $140.9 million or 10.77%. The portfolio was impacted by various transactions during the quarter. The money market portfolio was affected by approximately $62.8 million of withdrawals from financial institutional accounts with a weighted average rate of 4.45%. These withdrawals were replaced with more efficient brokered certificates of deposits (CDs). The Kaplan sale accounted for reductions of approximately $41.5 million in interest bearing deposits and $9.2 million in noninterest bearing deposits. Some of the migration was mitigated through successful retail CD promotion offers which generated $43.0 million increase in the portfolio. Additionally, the noninterest bearing portfolio benefited from a short-term inflow of approximately $60 million in deposits which subsequently were withdrawn after quarter end.

Borrowings

Borrowings increased $179.0 million or 41.25%, from the linked quarter due primarily to an increase in short-term Federal Home Loan Bank advances. Additional liquidity was utilized during the quarter as Business First's main correspondent banking relationship was changed during the core conversion process, as well as borrowings for short-term deposit fluctuations.

Shareholders' Equity

Shareholders' equity increased $22.1 million or 2.68% during the quarter ended June 30, 2025. Accumulated other comprehensive income (AOCI) increased $5.1 million or 9.61%, during the quarter due to positive after-tax fair value adjustments in the securities portfolio. Book value per common share increased to $26.23 at June 30, 2025, compared to $25.51 at March 31, 2025, due to strong earnings and positive fair value adjustments. On a non-GAAP basis, tangible book value per common share increased from $20.84 at the linked quarter to $21.61 at June 30, 2025, 3.70% or 14.82% annualized.

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Results of Operations

Net Interest Income

For the quarter ended June 30, 2025, net interest income totaled $67.0 million, compared to $66.0 million from the linked quarter. Loan and interest-earning asset yields of 6.96% and 6.31%, decreased 3 and 4 bps, respectively, compared to 6.99% and 6.35% from the linked quarter. Net interest margin and net interest spread were 3.68% and 2.88% compared to 3.68% and 2.91% for the linked quarter. The overall cost of funds, which included noninterest-bearing deposits, declined 4 bps from 2.82% to 2.78% for the quarter ended June 30, 2025, despite the sale of $50.7 million in deposits associated with the Kaplan, LA banking branch sale in April (~2 bps reduction in margin). Additionally, margin was also negatively impacted by ~3 bps due to excess cash carried during the transfer of our primary correspondent banking relationship through the core conversion process.

Non-GAAP net interest income (excluding loan discount accretion of $0.8 million) totaled $66.3 million for the quarter ended June 30, 2025, compared to $65.2 million (excluding loan discount accretion of $0.8 million) for the linked quarter. Non-GAAP net interest margin and net interest spread (excluding loan discount accretion of $0.8 million) were 3.64% and 2.84%, respectively, for the quarter ended June 30, 2025, compared to 3.64% and 2.86% (excluding loan discount accretion of $0.8 million) for the linked quarter.

Provision for Credit Losses

During the quarter ended June 30, 2025, Business First recorded a provision for credit losses of $2.2 million, compared to $2.8 million from the linked quarter. The current quarter's reserve was largely impacted by an additional $1.6 million reserve on a loan transferred to nonaccrual status. At June 30, 2025, the ratio of allowance for credit losses to loans held for investment ratio was 1.02%, compared to 1.01% the linked quarter.

Other Income

For the quarter ended June 30, 2025, other income increased $1.2 million or 8.99%, compared to the linked quarter. The net increase was largely attributable to a $3.4 million gain on the Kaplan sale, offset largely by a $1.0 million reduction in equity investment income, and a $475,000 reduction in gain on sale of Small Business Administration (SBA) loans.

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Other Expenses

For the quarter ended June 30, 2025, other expenses increased $628,000 or 1.24%, compared to the linked quarter. The increase was largely attributable to a $2.1 million increase in data processing expenses, of which $1.0 million was associated with core conversion expenses, offset by a $1.2 million reduction in salaries and benefits largely due to lower incentive-based expenses.

Return on Assets and Common Equity

Return to common shareholders on average assets and common equity, each on an annualized basis, were 1.07% and 10.87% for the quarter ended June 30, 2025, compared to 1.00% and 10.48%, respectively, for the linked quarter. Non-GAAP return to common shareholders on average assets and common equity, each on an annualized basis, were 1.01% and 10.23% for the quarter ended June 30, 2025, compared to 1.01% and 10.53%, for the linked quarter.

Conference Call and Webcast

Executive management will host a conference call and webcast to discuss results on Monday, July 28, 2025, at 9:00 a.m. Central Time. Interested parties may attend the call by dialing toll-free 1-800-715-9871 (North America only), conference ID 2799880, or asking for the Business First Bancshares conference call. The live webcast can be found at https://edge.media-server.com/mmc/p/jqbmtwns. On the day of the presentation, the corresponding slide presentation will be available to view on the b1BANK website at https://www.b1bank.com/shareholder-info.

About Business First Bancshares, Inc.

Business First Bancshares, Inc., (Nasdaq: BFST) through its banking subsidiary b1BANK, has $7.9 billion in assets, $5.4 billion in assets under management through b1BANK's affiliate Smith Shellnut Wilson, LLC (SSW) (excludes $0.9 billion of b1BANK assets managed by SSW) and operates Banking Centers and Loan Production Offices in markets across Louisiana and Texas providing commercial and personal banking products and services. b1BANK is a 2024 Mastercard "Innovation Award" winner and multiyear winner of American Banker Magazine's "Best Banks to Work For." Visit b1BANK.com for more information.

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Non-GAAP Financial Measures