Business First Bancshares, Inc., Announces Financial Results for Q2 2020

BATON ROUGE, La., July 29, 2020 (GLOBE NEWSWIRE) -- Business First Bancshares, Inc. (NASDAQ: BFST) (Business First), parent company of b1BANK, Baton Rouge, Louisiana, today announced its unaudited results for the quarter ended June 30, 2020, including net income of $2.1 million, or $0.11 per diluted share, decreases of $4.8 million and $0.39, respectively, from the quarter ended June 30, 2019. On a non-GAAP basis, core net income for the quarter ended June 30, 2020, which excludes certain income and expenses, was $7.4 million, or $0.41 per diluted share, an increase of $748,000 and decrease of $0.07, respectively, from the quarter ended June 30, 2019. Both net income and diluted earnings per share were adversely impacted for the quarter ended June 30, 2020, by additional provision for loan losses associated with the sustained pressure on the general economy caused by the COVID-19 pandemic and acquisition-related expenses.

“The second quarter was simultaneously the most challenging, and in many ways, the most rewarding period we’ve experienced as a company,” said Jude Melville, president and CEO. “We stood with our clients during an economic crisis, we consummated a transformative merger during a time of market crisis, and we took care of our people in the midst of a health crisis. I could not be prouder of our team. We’ll continue to do our part as our region’s leading community bank as we recover together in the coming months.”

On July 23, 2020, Business First’s board of directors declared a quarterly dividend based upon financial performance for the second quarter in the amount of $0.10 per share, same as the prior quarter, to the common shareholders of record as of August 15, 2020. The dividend will be paid on August 31, 2020, or as soon thereafter as practicable.

Quarterly Highlights

  • Successful Acquisition and Conversion of Pedestal Bancshares Inc. Business First acquired Pedestal Bancshares Inc. (Pedestal), with approximately $1.4 billion in assets, $935.8 million in gross loans, and $1.2 billion in deposits, on May 1, 2020. The conversion of data processing was successfully completed during the weekend of May 23, 2020.
  • COVID-19 Related Matters. Business First proactively assisted, and continues to assist, customers by deferring principal and/or interest payments on approximately 2,600 loans with an outstanding balance of $938.5 million as of June 30, 2020.  Approximately $223.0 million of the deferrals were interest-only as of June 30, 2020.  Additionally, Business First has funded approximately 2,800 loans with an aggregate outstanding balance of $395.4 million under the Small Business Administration (SBA) Paycheck Protection Program (PPP), of which $86.1 million were acquired in the Pedestal acquisition. Business First also recorded $5.4 million of provision expense, of which a significant portion was associated with the continued impact the COVID-19 pandemic caused on the general economy.
  • Stable Credit Quality. Ratios of nonperforming loans compared to loans held for investment and nonperforming assets compared to total assets decreased from 0.57% and 0.59%, respectively, at March 31, 2020, to 0.39% and 0.49% at June 30, 2020. The decreases were attributable to the increased size of the loan portfolio, including SBA PPP loans, and total assets associated with the acquisition of Pedestal on May 1, 2020.   
  • Net Interest Margin and Spread. Net interest margin and spread were negatively impacted due to the full effect of the federal funds rate cuts of 150 basis points during the month of March and lower-yielding SBA PPP loans, offset by a reduction in cost of funds, increased loan discount, deposit premium, and Federal Home Loan Bank (FHLB) premium accretion, and a higher-yielding loan portfolio due to the Pedestal acquisition, compared to the quarter ended March 31, 2020. Net interest margin and net interest spread were 3.89% and 3.59%, respectively, for the quarter ended June 30, 2020, compared to 3.93% and 3.55% for the quarter ended March 31, 2020. Excluding loan discount accretion, net interest margin and spread were 3.71% and 3.41%, respectively, for the quarter ended June 30, 2020, compared to 3.88% and 3.49% for the quarter ended March 31, 2020. 
  • Loan Growth. Total loans held for investment at June 30, 2020, were $3.0 billion, an increase of $1.2 billion compared to March 31, 2020. Loan growth was significantly impacted by the acquisition of Pedestal and origination of SBA PPP loans.  Net organic loan growth, excluding the Pedestal acquisition and SBA PPP originated loans, was 3.22% annualized for the quarter ended June 30, 2020.

Financial Condition

June 30, 2020, Compared to March 31, 2020

Loans

Total loans held for investment increased by $1.2 billion compared to March 31, 2020. The increase was largely attributable to the $893.3 million in net loans acquired from Pedestal, including $86.1 million of SBA PPP loans, and $309.3 million of SBA PPP loans originated by Business First. Excluding the Pedestal acquisition and SBA PPP originations, net organic loan growth was $20.8 million for the quarter ended June 30, 2020, or 3.22% annualized.

Consistent with the quarter ended March 31, 2020, Business First’s unfunded commitments remained constant throughout the quarter ended June 30, 2020, excluding the increase attributable to the acquisition of Pedestal. Business First has not identified any unusual customer usage of unfunded commitments since the beginning of the COVID 19-panademic in March 2020.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment decreased from 0.57% as of March 31, 2020, to 0.39% as of June 30, 2020. Nonperforming assets as a percentage of total assets decreased from 0.59% as of March 31, 2020, to 0.49% as of June 30, 2020. The decreases were attributable to an increase in overall total loans held for investment and total assets from the acquisition of Pedestal during the quarter ended June 30, 2020.

Total Shareholders’ Equity

Book value per common share was $18.69 at June 30, 2020, compared to $21.58 at March 31, 2020. The decreases were attributable to the initial book value dilution caused by the acquisition of Pedestal during the quarter ended June 30, 2020.

June 30, 2020, Compared to June 30, 2019

Loans

Total loans held for investment increased by $1.4 billion compared to June 30, 2019, or 82.3%, due primarily to the acquisition of Pedestal and origination of SBA PPP loans during the quarter ended June 30, 2020.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment decreased from 0.61% as of June 30, 2019, to 0.39% as of June 30, 2020. Nonperforming assets as a percentage of total assets decreased from 0.58% as of June 30, 2019, to 0.49% as of June 30, 2020. The decreases were attributable to an increase in overall total loans held for investment and total assets from the acquisition of Pedestal during the quarter ended June 30, 2020.

Total Shareholders’ Equity

Book value per common share was $18.69 at June 30, 2020, compared to $20.77 at June 30, 2019. The decreases were attributable to the initial book value dilution caused by the acquisition of Pedestal during the quarter ended June 30, 2020.

Results of Operations

Second Quarter 2020 Compared to First Quarter 2020

Net Income and Diluted Earnings Per Share

For the quarter ended June 30, 2020, net income was $2.1 million, or $0.11 per diluted share, compared to net income of $4.5 million, or $0.34 per diluted share, for the quarter ended March 31, 2020. The decreases were largely attributable to the increase in the provision for loan losses, due to the COVID-19 pandemic’s sustained impact on the general economy, and increase in acquisition-related expenses, offset by increases in investment income from Small Business Investment Companies (SBICs) and interest income from SBA PPP loans.

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended June 30, 2020, was $7.4 million, or $0.41 per diluted share, compared to core net income of $5.0 million, or $0.37 per diluted share, for the quarter ended March 31, 2020. Notable events impacting earnings for the quarter ended June 30, 2020, included the incurrence of $6.6 million in acquisition-related expenses, compared to the incurrence of $1.2 million in acquisition-related expenses for the quarter ended March 31, 2020, and $530,000 reduction in income tax expense due to stock option exercises.

Interest Income

For the quarter ended June 30, 2020, net interest income totaled $30.9 million and net interest margin and net interest spread were 3.89% and 3.59%, respectively, compared to $20.2 million, 3.93% and 3.55% for the quarter ended March 31, 2020. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.61% for the quarter ended June 30, 2020, compared to 5.55% for the quarter ended March 31, 2020. The average yield on total interest-earning assets was 4.65% for the quarter ended June 30, 2020, compared to 5.06% for the quarter ended March 31, 2020.  

Net interest margin and net interest spread were positively impacted for the quarter ended June 30, 2020, by additional loan discount, deposit premium, and FHLB premium accretion, an overall higher-yielding loan portfolio from the Pedestal acquisition, and reduction in the overall cost of funds (which includes noninterest-bearing deposits), offset by the full impact of the federal funds rate cuts of 150 basis points during March 2020. The average loan yield (excluding SBA PPP loans) was also impacted by the same factors, excluding the impact of deposit and FHLB premium accretion and cost of funds.

The average yield on total interest-earning assets was negatively impacted for the quarter ended June 30, 2020, due to lower-yielding SBA PPP loans which were originated during the quarter.

Net interest margin and net interest spread (excluding loan discount accretion of $1.5 million) were 3.71% and 3.41%, respectively, for the quarter ended June 30, 2020, compared to 3.88% and 3.49% (excluding loan discount accretion of $290,000) for the quarter ended March 31, 2020.

Interest Expense

For the quarter ended June 30, 2020, overall cost of funds (which includes noninterest-bearing deposits) decreased by 43 basis points, from 1.20% to 0.77%, compared to the quarter ended March 31, 2020. The decrease in cost of funds was partially attributable to the accretion of deposit premium and FHLB premium associated with the Pedestal acquisition ($551,000), but largely attributable to an overall reduction in interest rates on deposit offerings and the lower-yielding deposit portfolio acquired from Pedestal.

Other Income

For the quarter ended June 30, 2020, other income was impacted by an additional $1.2 million in SBIC investment income and additional increases in other categories largely attributable to the Pedestal acquisition, compared to the quarter ended March 31, 2020.

Other Expense

For the quarter ended June 30, 2020, the increases were largely attributable to the Pedestal acquisition, compared to the quarter ended March 31, 2020.

Provision for Loan Losses

During the quarter ended June 30, 2020, Business First recorded a provision for loan losses of $5.4 million, compared to $1.4 million for the quarter ended March 31, 2020. The reserve for the quarter ended June 30, 2020, was impacted significantly by the sustained impact on the general economy of the COVID-19 pandemic.  The increase related to the COVID-19 pandemic was recorded through a qualitative adjustment. 

Return on Assets and Equity

Return on average assets and equity, each on an annualized basis, were 0.23% and 2.35%, respectively, for the quarter ended June 30, 2020, compared to 0.80% and 6.31%, respectively, for the quarter ended March 31, 2020. Both returns were significantly impacted by the provision for loan loss and acquisition-related expenses recorded for the quarter ended June 30, 2020.

Second Quarter 2020 Compared to Second Quarter 2019

Net Income and Diluted Earnings Per Share

For the quarter ended June 30, 2020, net income was $2.1 million, or $0.11 per diluted share, compared to net income of $6.8 million, or $0.50 per diluted share, for the quarter ended June 30, 2020. The decreases in net income and diluted earnings per share were largely attributable to increased provision for loan losses and additional expenses associated with the acquisition of Pedestal on May 1, 2020, offset by increases in net interest income and other income related to the acquisition of Pedestal for the quarter ended June 30, 2020.

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended June 30, 2020, was $7.4 million, or $0.41 per diluted share, compared to core net income of $6.6 million, or $0.48 per diluted share, for the quarter ended June 30, 2019. Notable events impacting earnings for the quarter ended June 30, 2020, included the incurrence of $6.6 million in acquisition-related expenses, compared to the incurrence of $436,000 in acquisition-related expenses and a $593,000 gain associated with the sale of a banking center for the quarter ended June 30, 2019.

Interest Income

For the quarter ended June 30, 2020, net interest income totaled $30.9 million and net interest margin and net interest spread were 3.89% and 3.59%, respectively, compared to $20.2 million, 4.19% and 3.75% for the quarter ended June 30, 2019. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.61% for the quarter ended June 30, 2020, compared to 5.96% for the quarter ended June 30, 2019. The average yield on total interest-earning assets was 4.65% for the quarter ended June 30, 2020, compared to 5.37% for the quarter ended June 30, 2019.

Average loan yield (excluding SBA PPP loans), average yield on total interest-earning assets, net interest margin, and net interest spread were impacted for the quarter ended June 30, 2020, by the federal funds rate cuts of 225 basis points which occurred throughout the second half of 2019 and first quarter of 2020. The average yield on total interest-earning assets was also impacted by the lower-yielding SBA PPP loans originated during the quarter ended June 30, 2020.

Net interest margin and net interest spread (excluding loan discount accretion of $1.5 million) were 3.71% and 3.41%, respectively, for the quarter ended June 30, 2020, compared to 4.02% and 3.58% (excluding loan discount accretion of $826,000) for the quarter ended June 30, 2019.

Interest Expense

For the quarter ended June 30, 2020, overall cost of funds (which includes noninterest-bearing deposits) decreased by 49 basis point, from 1.26% to 0.77%, compared to the quarter ended June 30, 2019. The decrease in cost of funds was partially attributable to the accretion of deposit and FHLB premiums associated with the Pedestal acquisition ($551,000), but largely attributable to an overall reduction in interest rates on deposit offerings and the lower-yielding deposit portfolio acquired from Pedestal.

Other Income

For the quarter ended June 30, 2020, the increase was largely attributable to the acquisition of Pedestal, partially offset by the $593,000 gain on sale of a banking center during the quarter ended June 30, 2019.

Other Expense

For the quarter ended June 30, 2020, the increase was largely attributable to the acquisition of Pedestal during the quarter ended June 30, 2020.

Provision for Loan Losses

During the quarter ended June 30, 2020, Business First recorded a provision for loan losses of $5.4 million compared to $1.3 million for the quarter ended June 30, 2019. The reserve for the quarter ended June 30, 2020, was impacted significantly by the sustained impact on the general economy of the COVID-19 pandemic. 

Return on Assets and Equity

Return on average assets and return on average equity, each on an annualized basis, were 0.23% and 2.35%, respectively, for the quarter ended June 30, 2020, from 1.30% and 10.13%, respectively, for the quarter ended June 30, 2019. Both returns were significantly impacted by the provision for loan loss and acquisition-related expenses recorded for the quarter ended June 30, 2020, in addition to a lower net interest margin for the quarter ended June 30, 2020.

About Business First Bancshares, Inc.

Business First Bancshares, Inc., through its banking subsidiary b1BANK, formerly known as Business First Bank, operates 48 banking centers in markets across Louisiana and in the Dallas, Texas area. b1BANK provides commercial and personal banking, treasury management and wealth solutions services to small to midsize businesses and their owners and employees. Visit www.b1BANK.com for more information. Business First’s common stock is traded on the NASDAQ Global Select Market under the symbol “BFST.”

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures (e.g., referenced as “core”) intended to supplement, not substitute for, comparable GAAP measures. These measures typically adjust income available to common shareholders for certain significant activities or transactions that, in management’s opinion, can distort period-to-period comparisons of Business First’s performance. Transactions that are typically excluded from non-GAAP measures include realized and unrealized gains/losses on former bank premises and equipment, investment sales, impaired loan sales, acquisition-related expenses (including, but not limited to, legal costs, system conversion costs, severance and retention payments, etc.). Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided at the end of the tables below.

Special Note Regarding Forward-Looking Statements

Certain statements contained in this release may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “would,” “could,” or “intend.” We caution you not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors, including those factors specified in our Annual Report on Form 10-K and other public filings. Actual results will also be significantly impacted by the effects of the ongoing COVID-19 pandemic, including, among other effects: the impact of the public health crisis; the extent and duration of closures of businesses, including our branches, vendors and customers; the operation of financial markets; employment levels; market liquidity; the impact of various actions taken in response by the U.S. federal government, the Federal Reserve, other banking regulators, state and local governments; the adequacy of our allowance for loan losses in relation to potential losses in our loan portfolio; and the impact that all of these factors have on our borrowers, other customers, vendors and counterparties. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release.

Additional Information

For additional information on Business First, you may obtain Business First’s reports that are filed with the Securities and Exchange Commission (SEC) free of charge by using the SEC’s EDGAR service on the SEC’s website at www.sec.gov or by contacting the SEC for further information at 1-800-SEC-0330. Alternatively, these documents can be obtained free of charge from Business First by directing a request to: Business First Bancshares, Inc., 500 Laurel Street, Suite 101, Baton Rouge, Louisiana 70801, Attention: Corporate Secretary.

No Offer or Solicitation

This release does not constitute or form part of any offer to sell, or a solicitation of an offer to purchase, any securities of the Company. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

  
Business First Bancshares, Inc. 
Selected Financial Information 
(Unaudited) 
     
 June 30,March 31,June 30, 
(Dollars in thousands) 2020  2020  2019  
     
Balance Sheet Ratios    
     
Loans (HFI) to Deposits 92.12%  98.26%  96.46%  
Shareholders' Equity to Assets Ratio 9.75%  12.33%  12.88%  
     
Loans Receivable Held for Investment    
     
Commercial (1)$1,026,596 $431,992 $411,256  
Real Estate:    
Construction and Land 333,675  260,836  227,102  
Farmland 57,498  53,900  47,245  
1-4 Family Residential 495,827  295,876  278,610  
Multi-Family Residential 59,213  32,859  38,698  
Nonfarm Nonresidential 914,601  623,114  561,149  
Total Real Estate 1,860,814  1,266,585  1,152,804  
Consumer (1) 107,402  72,803  78,513  
Total Loans$2,994,812 $1,771,380 $1,642,573  
     
Allowance for Loan Losses    
     
Balance, Beginning of Period$13,319 $12,124 $11,818  
Charge-offs – Quarterly (98) (194) (1,565) 
Recoveries – Quarterly 51  22  48  
Provision for Loan Losses – Quarterly 5,443  1,367  1,302  
Balance, End of Period$18,715 $13,319 $11,603  
     
Allowance for Loan Losses to Total Loans (HFI) 0.62%  0.75%  0.71%  
Net Charge-offs (Recoveries) to Average Total Loans 0.00%  0.01%  0.09%  
     
Remaining Loan Purchase Discount$44,302 $3,246 $3,536  
     
Nonperforming Assets    
     
Nonperforming Loans:    
Nonaccrual Loans (2)$11,433 $9,301 $9,363  
Loans Past Due 90 Days or More (2) 317  834  727  
Total Nonperforming Loans 11,750  10,135  10,090  
Other Nonperforming Assets:    
Other Real Estate Owned 7,642  3,281  2,324  
Other Nonperforming Assets 179  11  6  
Total Other Nonperforming Assets 7,821  3,292  2,330  
Total Nonperforming Assets$19,571 $13,427 $12,420  
     
Nonperforming Loans to Total Loans (HFI) 0.39%  0.57%  0.61%  
Nonperforming Assets to Total Assets 0.49%  0.59%  0.58%  
     
(1) Small Business Administration "SBA" Paycheck Protection Program "PPP" loans accounted for $389.9 million and $5.5 million of the Commercial and Consumer portfolios, respectively, as of June 30, 2020.
     
(2) Past due and nonaccrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.
     


  
Business First Bancshares, Inc. 
Selected Financial Information 
(Unaudited) 
        
 Three Months Ended Six Months Ended 
 June 30,March 31,June 30, June 30,June 30, 
(Dollars in thousands, except per share data) 2020  2020  2019   2020  2019  
        
Per Share Data       
        
Basic Earnings per Common Share$0.11 $0.34 $0.51  $0.42 $0.94  
Diluted Earnings per Common Share 0.11  0.34  0.50   0.42  0.91  
Dividends per Common Share 0.10  0.10  0.10   0.20  0.18  
Book Value per Common Share 18.69  21.58  20.77   18.69  20.77  
        
        
Average Common Shares Outstanding 18,108,068  13,313,154  13,361,482   15,710,611  13,324,725  
Average Diluted Shares Outstanding 18,121,958  13,367,276  13,740,937   15,776,376  13,704,180  
End of Period Common Shares Outstanding 20,667,237  13,067,987  13,361,482   20,667,237  13,361,482  
        
        
Annualized Performance Ratios       
        
Return on Average Assets 0.23%  0.80%  1.30%   0.46%  1.20%  
Return on Average Equity 2.35%  6.31%  10.13%   4.13%  9.38%  
Net Interest Margin 3.89%  3.93%  4.19%   3.91%  4.11%  
Net Interest Spread 3.59%  3.55%  3.75%   3.57%  3.69%  
Efficiency Ratio (1) 77.40%  72.39%  59.85%   75.44%  61.96%  
        
Total Quarterly/Year-to-Date Average Assets$3,496,074 $2,244,584 $2,102,692  $2,870,329 $2,089,188  
Total Quarterly/Year-to-Date Average Equity 349,634  285,338 $270,262   317,486  266,493  
        
Other Expenses       
        
Salaries and Employee Benefits$17,621 $9,435 $8,756  $27,056 $17,308  
Occupancy and Bank Premises 1,370  1,060  1,079   2,430  2,182  
Depreciation and Amortization 1,073  601  633   1,674  1,261  
Data Processing 1,055  652  576   1,707  1,192  
FDIC Assessment Fees 272  147  248   419  398  
Legal and Other Professional Fees 543  394  353   937  671  
Advertising and Promotions 334  306  279   640  606  
Utilities and Communications 645  317  323   962  621  
Ad Valorem Shares Tax 450  375  345   825  690  
Directors' Fees 100  74  125   174  330  
Other Real Estate Owned Expenses and Write-Downs 51  253  72   304  99  
Merger and Conversion-Related Expenses 1,726  1,148  235   2,874  (19) 
Other 2,557  1,881  1,553   4,438  3,028  
Total Other Expenses$27,797 $16,643 $14,577  $44,440 $28,367  
        
Other Income       
        
Service Charges on Deposit Accounts$1,163 $931 $1,034    2,094 $1,972  
Gain on Sales of Securities -  25  58    25  58  
Debit card and ATM Fee Income 959  407  492   1,366  937  
Bank-Owned Life Insurance Income 255  197  174   452  342  
Gain on Sales of Loans 7  177  91   184  91  
Mortgage Origination Income 126  115  98   241  188  
Brokerage Commission 236  20  9   256  43  
Correspondent Bank Income 32  109  17   141  225  
Rental Income 15  31  165   46  329  
Gain on Sale of Banking Center -  -  593   -  593  
Gain (loss) on Sales of Other Real Estate Owned (19) 151  5   132  (51) 
Pass-through Income from SBIC Partnerships 1,624  380  1,266   2,004  1,266  
Other 598  261  217   859  537  
 Total Other Income$4,996 $2,804 $4,219  $7,800 $6,530  
        
(1) Noninterest expense (excluding provision for loan losses) divided by noninterest income plus net interest income less gain/loss on sales of securities.
        


  
Business First Bancshares, Inc. 
Consolidated Balance Sheets 
(Unaudited) 
     
 June 30,March 31,June 30, 
(Dollars in thousands) 2020  2020  2019  
     
Assets    
     
Cash and Due From Banks$116,021 $80,109 $64,043  
Federal Funds Sold 40,329  29,135  20,809  
Securities Available for Sale, at Fair Values 583,118  275,115  294,981  
Mortgage Loans Held for Sale 456  868  443  
Loans and Lease Receivable 2,994,812  1,771,380  1,642,573  
Allowance for Loan Losses (18,715) (13,319) (11,603) 
Net Loans and Lease Receivable 2,976,097  1,758,061  1,630,970  
Premises and Equipment, Net 63,959  29,656  27,577  
Accrued Interest Receivable 33,844  7,724  7,957  
Other Equity Securities 18,681  11,721  11,717  
Other Real Estate Owned 7,642  3,281  2,324  
Cash Value of Life Insurance 44,542  32,765  32,223  
Deferred Taxes, Net 6,858  1,800  2,527  
Goodwill 53,649  48,495  48,503  
Core Deposit Intangible 10,389  6,471  7,139  
Other Assets 5,553  2,461  2,395  
     
Total Assets$3,961,138 $2,287,662 $2,153,608  
     
     
Liabilities    
     
Deposits:    
Noninterest-Bearing$985,537 $417,534 $394,848  
Interest-Bearing 2,265,485  1,385,274  1,308,054  
Total Deposits 3,251,022  1,802,808  1,702,902  
     
Securities Sold Under Agreements to Repurchase 25,391  14,728  16,096  
Short-Term Borrowings 6,145
  5,000  -  
Long-Term Borrowings 7,797  -  -  
Payroll Protection Program Liquidity Facility 107,076  -  -  
Subordinated Debt 25,000  25,000  25,000  
Trust Preferred Securities 5,000  -  -  
Federal Home Loan Bank Borrowings 118,177  138,000  108,000  
Accrued Interest Payable 3,920  1,573  1,924  
Other Liabilities 25,274  18,523  22,217  
     
Total Liabilities 3,574,802  2,005,632  1,876,139  
     
Shareholders' Equity    
     
Common Stock 20,667  13,068  13,361  
Additional Paid-In Capital 297,606  206,966  213,823  
Retained Earnings 59,850  59,859  48,087  
Accumulated Other Comprehensive Income 8,213  2,137  2,198  
     
Total Shareholders' Equity 386,336  282,030  277,469  
     
Total Liabilities and Shareholders' Equity$3,961,138 $2,287,662 $2,153,608  
     



  
Business First Bancshares, Inc. 
Consolidated Statements of Income 
(Unaudited) 
        
  Three Months Ended Six Months Ended 
 June 30,March 31,June 30, June 30,June 30, 
(Dollars in thousands)202020202019 20202019 
        
Interest Income:       
Interest and Fees on Loans$34,636$24,143$23,870 $58,779$46,293  
Interest and Dividends on Securities 2,175 1,731 1,829  3,906 3,703  
Interest on Federal Funds Sold and Due From Banks 80 142 197  222 487  
Total Interest Income 36,891 26,016 25,896  62,907 50,483  
        
Interest Expense:       
Interest on Deposits 4,795 4,686 5,038  9,481 9,795  
Interest on Borrowings 1,177 1,119 665  2,296 1,375  
Total Interest Expense 5,972 5,805 5,703  11,777 11,170  
        
Net Interest Income 30,919 20,211 20,193  51,130 39,313  
        
Provision for Loan Losses 5,443 1,367 1,302  6,810 1,935  
        
Net Interest Income After Provision for Loan Losses 25,476 18,844 18,891  44,320 37,378  
        
Other Income:       
Service Charges on Deposit Accounts 1,163 931 1,034  2,094 1,972  
Gain on Sales of Securities - 25 58  25 58  
Other Income 3,833 1,848 3,127  5,681 4,500  
Total Other Income 4,996 2,804 4,219  7,800 6,530  
        
Other Expenses:       
Salaries and Employee Benefits 17,621 9,435 8,756  27,056 17,308  
Occupancy and Equipment Expense 2,888 1,891 1,884  4,779 3,778  
Merger and Conversion-Related Expense 1,726 1,148 235  2,874 (19) 
Other Expenses 5,562 4,169 3,702  9,731 7,300  
Total Other Expenses 27,797 16,643 14,577  44,440 28,367  
        
Income Before Income Taxes 2,675 5,005 8,533  7,680 15,541  
        
Provision for Income Taxes 623 506 1,690  1,129 3,039  
        
Net Income$2,052$4,499$6,843 $6,551$12,502  
        


  
Business First Bancshares, Inc. 
Consolidated Net Interest Margin 
(Unaudited) 
             
             
 Three Months Ended 
 June 30, 2020 March 31, 2020 June 30, 2019 
 Average   Average   Average   
 OutstandingInterest Earned /Average OutstandingInterest Earned /Average OutstandingInterest Earned /Average 
(Dollars in thousands)BalanceInterest PaidYield / Rate BalanceInterest PaidYield / Rate BalanceInterest PaidYield / Rate 
             
Assets            
             
Interest-Earning Assets:            
Total Loans (Excluding SBA PPP)$2,304,438 $32,3065.61%  $1,740,189 $24,1435.55%  $1,602,087 $23,8705.96%  
SBA PPP Loans 321,127  2,3302.90%   - $-0.00%   -  -0.00%  
Securities Available for Sale 481,422  2,1751.81%   286,660  1,7312.42%   303,232  1,8292.41%  
Interest-Bearing Deposit in Other Banks 69,169  800.46%   28,754  1421.98%   23,716  1973.32%  
Total Interest-Earning Assets 3,176,156  36,8914.65%   2,055,603  26,0165.06%   1,929,035  25,8965.37%  
Allowance for Loan Losses (13,606)    (12,203)    (11,702)   
Noninterest-Earning Assets 333,524     201,184     185,359    
Total Assets$3,496,074 $36,891  $2,244,584 $26,016  $2,102,692 $25,896  
             
             
Liabilities and Shareholders' Equity            
             
Interest-Bearing Liabilities:            
Interest-Bearing Deposits$1,994,680 $4,7950.96%  $1,342,213 $4,6861.40%  $1,335,630 $5,0381.51%  
Subordinated Debt 25,000  4226.75%   25,000  4226.75%   25,000  4296.86%  
Advances from Federal Home Loan Bank ("FHLB") 129,441  5261.63%   98,323  4972.02%   36,856  2242.43%  
Payroll Protection Program Liquidity Facility ("PPPLF") 76,902  720.37%   -  -0.00%   -  -0.00%  
Other Borrowings 36,308  1571.73%   67,125  2001.19%   14,390  120.33%  
Total Interest-Bearing Liabilities 2,262,331  5,9721.06%   1,532,661  5,8051.52%   1,411,876  5,7031.62%  
             
Noninterest-Bearing Liabilities:            
Noninterest-Bearing Deposits$852,608    $406,035    $396,793    
Other Liabilities 31,501     20,550     23,761    
Total Noninterest-Bearing Liabilities 884,109     426,585     420,554    
Shareholders' Equity 349,634     285,338     270,262    
Total Liabilities and Shareholders' Equity$3,496,074    $2,244,584    $2,102,692    
             
Net Interest Spread  3.59%    3.55%    3.75%  
Net Interest Income $30,919   $20,211   $20,193  
Net Interest Margin  3.89%    3.93%    4.19%  
             
Overall Cost of Funds  0.77%    1.20%    1.26%  
             
NOTE: Average outstanding balances are determined utilizing monthly averages and average yield/rate is calculated utilizing a 30/360 day count convention.  
             


  
Business First Bancshares, Inc. 
Consolidated Net Interest Margin 
(Unaudited) 
         
         
 Six Months Ended 
 June 30, 2020 June 30, 2019 
 Average   Average   
 OutstandingInterest Earned /Average OutstandingInterest Earned /Average 
(Dollars in thousands)BalanceInterest PaidYield / Rate BalanceInterest PaidYield / Rate 
         
Assets        
         
Interest-Earning Assets:        
Total Loans (Excluding SBA PPP)$ 2,022,313$ 56,4495.58% $ 1,575,988$ 46,2935.87% 
SBA PPP Loans160,5642,3302.90% --0.00% 
Securities Available for Sale384,0413,9062.03% 306,5013,7032.42% 
Interest-Bearing Deposit in Other Banks48,9622220.91% 31,8974873.05% 
Total Interest-Earning Assets2,615,87962,9074.81% 1,914,38650,4835.27% 
Allowance for Loan Losses(12,905)   (11,546)   
Noninterest-Earning Assets267,355   186,348   
Total Assets$ 2,870,329$ 62,907  $ 2,089,188$ 50,483  
         
         
Liabilities and Shareholders' Equity        
         
Interest-Bearing Liabilities:        
Interest-Bearing Deposits$ 1,668,446$ 9,4811.14% $ 1,335,522$ 9,7951.47% 
Subordinated Debt25,0008446.75% 25,0008456.76% 
Advances from Federal Home Loan Bank ("FHLB")113,8821,0231.80% 37,1915052.72% 
Payroll Protection Program Liquidity Facility ("PPPLF")38,451720.37% --0.00% 
Other Borrowings51,7173571.38% 13,436250.37% 
Total Interest-Bearing Liabilities1,897,49611,7771.24% 1,411,14911,1701.58% 
         
Noninterest-Bearing Liabilities:        
Noninterest-Bearing Deposits629,321   395,304   
Other Liabilities26,026   16,242   
Total Noninterest-Bearing Liabilities655,347   411,546   
Shareholders' Equity317,486   266,493   
Total Liabilities and Shareholders' Equity$ 2,870,329   $ 2,089,188   
         
Net Interest Spread  3.57%   3.69% 
Net Interest Income $ 51,130   $ 39,313  
Net Interest Margin  3.91%   4.11% 
         
Overall Cost of Funds  0.93%   1.24% 
         
NOTE: Average outstanding balances are determined utilizing monthly averages and average yield/rate is calculated utilizing a 30/360 day count convention. 
         


  
Business First Bancshares, Inc. 
Non-GAAP Measures 
(Unaudited) 
        
 Three Months Ended Six Months Ended 
 June 30,March 31,June 30, June 30,June 30, 
(Dollars in thousands, except per share data) 2020  2020  2019   2020  2019  
        
Interest Income:       
Interest income$36,891 $26,016 $25,896  $62,907 $50,483  
Core interest income 36,891  26,016  25,896   62,907  50,483  
Interest Expense:       
Interest expense 5,972  5,805  5,703   11,777  11,170  
Core interest expense 5,972  5,805  5,703   11,777  11,170  
Provision for Loan Losses: (b)       
Provision for loan losses 5,443  1,367  1,302   6,810  1,935  
Core provision expense 5,443  1,367  1,302   6,810  1,935  
Other Income:       
Other income 4,996  2,804  4,219   7,800  6,530  
Sale of impaired credit -  -  (91)  -  (91) 
(Gains) losses on former bank premises and equipment -  (126) -   (126) -  
(Gains) on sale of securities -  (25) (58)  (25) (58) 
(Gains) on sale of banking center -  -  (593)  -  (593) 
Core other income 4,996  2,653  3,477   7,649  5,788  
Other Expense:       
Other expense 27,797  16,643  14,577   44,440  28,367  
Acquisition-related expenses (2) (6,573) (1,212) (436)  (7,785) (386) 
Stock option exercises - excess taxes -  (71) -   (71) -  
Core other expense 21,224  15,360  14,141   36,584  27,981  
Pre-Tax Income: (a)       
Pre-tax income 2,675  5,005  8,533   7,680  15,541  
Sale of impaired credit -  -  (91)  -  (91) 
(Gains) losses on former bank premises and equipment -  (126) -   (126) -  
(Gains) on sale of securities -  (25) (58)  (25) (58) 
(Gains) on sale of banking center -  -  (593)  -  (593) 
Acquisition-related expenses (2) 6,573  1,212  436   7,785  386  
Stock option exercises - excess taxes -  71  -   71  -  
Core pre-tax income 9,248  6,137  8,227   15,385  15,185  
Provision for Income Taxes: (1)       
Provision for income taxes 623  506  1,690   1,129  3,039  
Tax on sale of impaired credit -  -  (19)  -  (19) 
Tax on (gains) on former bank premises and equipment -  (26) -   (26) -  
Tax on (gains) on sale of securities -  (5) (12)  (5) (12) 
Tax on sale of banking center -  -  (125)  -  (125) 
Tax on acquisition-related expenses (2) 1,275  91  91   1,366  75  
Tax on stock option exercises -  601  -   601  -  
Core provision for income taxes 1,898  1,167  1,625   3,065  2,958  
Net Income:       
Net income 2,052  4,499  6,843   6,551  12,502  
Sale of impaired credit, net of tax -  -  (72)  -  (72) 
(Gains) losses on former bank premises and equipment , net of tax -  (100) -   (100) -  
(Gains) on sale of securities, net of tax -  (20) (46)  (20) (46) 
(Gains) on sale of banking center, net of tax -  -  (468)  -  (468) 
Acquisition-related expenses (2), net of tax 5,298  1,121  345   6,419  311  
Stock option exercises, net of tax -  (530) -   (530) -  
Core net income$7,350 $4,970 $6,602  $12,320 $12,227  
        
Pre-tax, pre-provision earnings (a+b)$8,118 $6,372 $9,835  $14,490 $17,476  
Sale of impaired credit -  -  (91)  -  (91) 
(Gains) losses on former bank premises and equipment -  (126) -   (126) -  
(Gains) on sale of securities -  (25) (58)  (25) (58) 
(Gains) on sale of banking center -  -  (593)  -  (593) 
Acquisition-related expenses (2) 6,573  1,212  436   7,785  386  
Stock option exercises -  71  -   71  -  
Core pre-tax, pre-provision earnings$14,691 $7,504 $9,529  $22,195 $17,120  
        
Average Diluted Shares Outstanding 18,121,958  13,367,276  13,740,937   15,776,376  13,704,180  
        
Diluted Earnings Per Share:       
Diluted earnings per share$0.11 $0.34 $0.50  $0.42 $0.91  
Sale of impaired credit, net of tax -  -  (0.01)  -  (0.01) 
(Gains) losses on former bank premises and equipment , net of tax -  (0.01) -   (0.01) -  
(Gains) on sale of securities, net of tax -  (0.00) (0.00)  (0.00) (0.00) 
(Gains) on sale of banking center -  -  (0.04)  -  (0.03) 
Acquisition-related expenses (2), net of tax 0.30  0.08  0.03   0.40  0.02  
Stock option exercises -  (0.04) -   (0.03) -  
Core diluted earnings per share$0.41 $0.37 $0.48  $0.78 $0.89  
        
Pre-tax, pre-provision profit diluted earnings per share$0.45 $0.48 $0.72  $0.92 $1.28  
Sale of impaired credit -  -  (0.01)  -  (0.01) 
(Gains) losses on former bank premises and equipment -  (0.01) -   (0.01) -  
(Gains) on sale of securities -  (0.00) (0.00)  (0.00) (0.00) 
(Gains) on sale of banking center  -  (0.05)  -  (0.05) 
Acquisition-related expenses (2) 0.36  0.09  0.03   0.50  0.03  
Stock option exercises -  0.00  -   0.00  -  
Core pre-tax, pre-provision diluted earnings per share$0.81 $0.56 $0.69  $1.41 $1.25  
        
(1) Tax rates, exclusive of certain nondeductible merger-related expenses and goodwill, utilized were 21% for 2020 and 2019. These rates approximated  
the marginal tax rates.       
(2) Includes merger and conversion-related expenses and salary and employee benefits.     
        


  
Business First Bancshares, Inc. 
Non-GAAP Measures 
(Unaudited) 
        
 Three Months Ended Six Months Ended 
 June 30,March 31,June 30, June 30,June 30, 
(Dollars in thousands, except per share data) 2020  2020  2019   2020  2019  
        
        
Total Quarterly/Year-to-Date Average Assets$3,496,074 $2,244,584 $2,102,692  $2,870,329 $2,089,188  
Total Quarterly/Year-to-Date Average Equity$349,634 $285,338 $270,262  $317,486 $266,493  
        
Net Income:       
Net income$2,052 $4,499 $6,843  $6,551 $12,502  
Sale of impaired credit, net of tax -  -  (72)  -  (72) 
(Gains) losses on former bank premises and equipment , net of tax -  (100) -   (100) -  
(Gains) on sale of securities, net of tax -  (20) (46)  (20) (46) 
(Gains) on sale of banking center, net of tax -  -  (468)  -  (468) 
Acquisition-related expenses (2), net of tax 5,298  1,121  345   6,419  311  
Stock option exercises, net of tax -  (530) -   (530) -  
Core net income$7,350 $4,970 $6,602  $12,320 $12,227  
        
Return on average assets 0.23%  0.80%  1.30%   0.46%  1.20%  
Core return on average assets 0.84%  0.89%  1.26%   0.86%  1.17%  
Return on equity 2.35%  6.31%  10.13%   4.13%  9.38%  
Core return on average equity 8.41%  6.97%  9.77%   7.76%  9.18%  
        
Interest Income:       
Interest income$36,891 $26,016 $25,896  $62,907 $50,483  
Core interest income 36,891  26,016  25,896   62,907  50,483  
Interest Expense:       
Interest expense 5,972  5,805  5,703   11,777  11,170  
Core interest expense 5,972  5,805  5,703   11,777  11,170  
Other Income:       
Other income 4,996  2,804  4,219   7,800  6,530  
Sale of impaired credit -  -  (91)  -  (91) 
(Gains) losses on former bank premises and equipment -  (126) -   (126) -  
(Gains) on sale of securities -  (25) (58)  (25) (58) 
(Gains) on sale of banking center -  -  (593)  -  (593) 
Core other income 4,996  2,653  3,477   7,649  5,788  
Other Expense:       
Other expense 27,797  16,643  14,577   44,440  28,367  
Acquisition-related expenses (6,573) (1,212) (436)  (7,785) (386) 
Stock option exercises - excess taxes -  (71) -   (71) -  
Core other expense$21,224 $15,360 $14,141  $36,584 $27,981  
        
Efficiency Ratio:       
Other expense (a)$27,797 $16,643 $14,577  $44,440 $28,367  
Core other expense (c)$21,224 $15,360 $14,141  $36,584 $27,981  
Net interest and other income (1) (b)$35,915 $22,990 $24,354  $58,905 $45,785  
Core net interest and other income (1) (d)$35,915 $22,864 $23,670  $58,779 $45,101  
Efficiency ratio (a/b) 77.40%  72.39%  59.85%   75.44%  61.96%  
Core efficiency ratio (c/d) 59.10%  67.18%  59.74%   62.24%  62.04%  
        
Total Average Interest-Earnings Assets$3,176,156 $2,055,603 $1,929,035  $2,615,879 $1,914,386  
        
Net Interest Income:        
Net interest income$30,919 $20,211 $20,193   51,130 $39,313  
Loan discount accretion (1,465) (290) (826)  (1,755) (1,258) 
Net interest income excluding loan discount accretion$29,454 $19,921 $19,367  $49,375 $38,055  
        
Net interest margin (2) 3.89%  3.93%  4.19%   3.91%  4.11%  
Net interest margin excluding loan discount accretion (2) 3.71%  3.88%  4.02%   3.78%  3.98%  
Net interest spread 3.59%  3.55%  3.75%   3.57%  3.69%  
Net interest spread excluding loan discount accretion 3.41%  3.49%  3.58%   3.43%  3.56%  
        
(1) Excludes gains/losses on sales of securities.       
(2) Calculated utilizing a 30/360 day count convention.       
        


  
Business First Bancshares, Inc. 
Non-GAAP Measures 
(Unaudited) 
     
     
 June 30,March 31,June 30, 
(Dollars in thousands, except per share data) 2020  2020  2019  
     
Total Shareholders' (Common) Equity:    
Total shareholders' equity$386,336 $282,030 $277,469  
Goodwill (53,649) (48,495) (48,503) 
Core deposit intangible (10,389) (6,471) (7,139) 
Total tangible common equity$322,298 $227,064 $221,827  
     
     
Total Assets:    
Total assets$3,961,138 $2,287,662 $2,153,608  
Goodwill (53,649) (48,495) (48,503) 
Core deposit intangible (10,389) (6,471) (7,139) 
Total tangible assets$3,897,100 $2,232,696 $2,097,966  
     
Common shares outstanding 20,667,237  13,067,987  13,361,482  
     
Book value per common share$18.69 $21.58 $20.77  
Tangible book value per common share$15.59 $17.38 $16.60  
Common equity to total assets 9.75%  12.33%  12.88%  
Tangible common equity to tangible assets 8.27%  10.17%  10.57%  
     

Misty Albrecht

b1BANK
225.286.7879
Misty.Albrecht@b1BANK.com

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