Business First Bancshares, Inc., Announces Financial Results for Q3 2021

Rhea-AI Summary

Business First Bancshares, Inc. (BFST) reported unaudited results for Q3 2021, marking net income of $10.3 million, or $0.50 per diluted share, down from $17.4 million and $0.84 in Q2 2021. Core net income dropped to $10.9 million, which excludes certain items. Total loans increased by $211.4 million (7.4%) QoQ, with notable growth in Dallas and New Orleans. The board declared a quarterly dividend of $0.12 per share. The acquisition of Texas Citizens Bank was confirmed, strengthening regional presence.

Positive

• Total loans increased by $211.4 million (7.4%) QoQ.
• Quarterly dividend maintained at $0.12 per share.
• Successful acquisition of Texas Citizens Bancshares enhances market reach.

Negative

• Net income decreased by $7.1 million from Q2 2021.
• Core net income fell to $10.9 million, down $7.8 million from Q2 2021.
• Nonperforming loans as a percentage of total loans rose to 0.45%.

BATON ROUGE, La., Oct. 21, 2021 (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 September 30, 2021, including net income of $10.3 million, or $0.50 per diluted share, a decrease of $7.1 million and $0.34, respectively, from the prior quarter ended June 30, 2021. On a non-GAAP basis, core net income for the quarter ended September 30, 2021, which excludes certain income and expenses, was $10.9 million, or $0.53 per diluted share, a decrease of $7.8 million and $0.37, respectively, from prior quarter ended June 30, 2021. The decrease was primarily attributable to the gain on sale recognized from the SBA PPP loan portfolio sale during the quarter ended June 30, 2021.

“The investments we’ve made over the past few years continued to pay off in the third quarter,” said Jude Melville, president and CEO. “Record and diversified organic loan growth, success recruiting and retaining in a competitive jobs market and establishment of a new partnership with Texas Citizens Bank in Houston all illustrate the consistent strengthening of our brand and capacity to deliver for our partners in the region. Thank you to all of our employees and clients for sticking with us during Hurricane Ida and its aftermath. While we pray this will be the last major weather event to hit our footprint for some time to come, I am once again thankful to be part of such a resilient and supportive team.”   

On October 20, 2021, Business First’s board of directors declared a quarterly dividend based upon financial performance for the third quarter in the amount of $0.12 per share, same as the prior quarter, to the common shareholders of record as of November 15, 2021. The dividend will be paid on November 30, 2021, or as soon thereafter as practicable.

Quarterly Highlights

• Loan Growth. Total loans held for investment at September 30, 2021, were $3.1 billion, an increase of $211.4 million compared to June 30, 2021, or 7.40% for the quarter and 29.61% annualized. Excluding the decrease in Small Business Administration (SBA) Paycheck Protection Program (PPP) loans, total loans held for investment increased for the quarter ended September 30, 2021, by 8.04%, or 32.15% annualized. Loan growth in Dallas, Tx (36.0%), greater New Orleans (28.5%), and the Baton Rouge/capital region (23.3%) markets accounted for approximately 87.9% of quarterly loan growth.
• New Loan Production Office (LPO) Activity. Business First opened an LPO in New Orleans/Metairie, La. (i.e., greater New Orleans area).  
• Stock Repurchases. During the quarter ended September 30, 2021, Business First repurchased approximately 360,000 shares of its common stock at a weighted average price of $23.18 per share (including commissions), for a total cost of $8.4 million.
• Efficiency Initiatives. Business First regularly evaluates its branch network in search of optimization opportunities and closed two branches recently, one in Minden, La, during Q3 2021, and a second by sale in Oak Grove, La, on October 1, 2021. Additionally, 11 interactive teller machines (ITMs) with fully functional video call centers, providing extended client hours, were launched during Q3 2021.   
• Texas Citizens Bancorp, Inc. Acquisition. On October 20, 2021, Business First executed a definitive agreement to acquire Texas Citizens Bancshares, Inc. (“TCBI”), the parent bank holding company for Texas Citizens Bank, National Association, based in Pasadena, Texas. As of September 30, 2021, TCBI had consolidated total assets of $516.9 million, loans of $365.7 million, and deposits of $452.0 million.
  

Financial Condition

September 30, 2021, Compared to June 30, 2021

Loans

Loans held for investment increased $211.4 million, or 7.40% (29.61% annualized), for the quarter ended September 30, 2021. The increase was largely attributable to loan originations in our commercial and nonfarm, nonresidential real estate portfolios which were $62.4 million and $109.1 million, respectively. Year to date annualized loan growth was 3.34%, inclusive of SBA PPP loans. As of September 30, 2021, SBA PPP loans with an unpaid principal balance of $9.7 million remained outstanding, compared to $25.7 million as of June 30, 2021.

Excluding the net decrease in SBA PPP loans, total loans held for investment increased for the quarter ended September 30, 2021, by 8.04%, or 32.15% annualized. Year to date annualized loan growth was 18.97% excluding SBA PPP loans.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment increased from 0.40% as of June 30, 2021, to 0.45% as of September 30, 2021. Nonperforming assets as a percentage of total assets decreased from 0.42% as of June 30, 2021, to 0.37% as of September 30, 2021. The increase in the nonperforming loans ratio was largely attributable to $2.1 million increase in nonaccrual loans, mainly related to a single $1.5 million (commercial) loan.

Total Shareholders’ Equity

Book value per common share was $21.11 at September 30, 2021, compared to $20.78 at June 30, 2021. On a non-GAAP basis, tangible book value per share was $17.53 at September 30, 2021, compared to $17.24 at June 30, 2021.  

September 30, 2021, Compared to September 30, 2020

Loans

Total loans held for investment decreased by $16.2 million compared to September 30, 2020, or (0.53) %, primarily due to the forgiveness and portfolio sale of SBA PPP loans. Excluding SBA PPP loans, loans increased $371.8 million, or 13.85%.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment increased from 0.32% as of September 30, 2020, to 0.45% as of September 30, 2021. Nonperforming assets as a percentage of total assets decreased from 0.54% as of September 30, 2020, to 0.37% as of September 30, 2021. The increase in the nonperforming ratio was largely attributable to an increase in nonaccrual loans.

Total Shareholders’ Equity

Book value per common share was $21.11 at September 30, 2021, compared to $19.26 at September 30, 2020. On a non-GAAP basis, tangible book value per share was $17.53 at September 30, 2021, compared to $16.18 at September 30, 2020, an increase of 8.34%.

Results of Operations

Third Quarter 2021 Compared to Second Quarter 2021

Net Income and Diluted Earnings Per Share

For the quarter ended September 30, 2021, net income was $10.3 million, or $0.50 per diluted share, compared to net income of $17.4 million, or $0.84 per diluted share, for the quarter ended June 30, 2021. The decrease, $7.1 million and $0.34, respectively, was largely attributable to the $10.0 million gain on sale of loans recognized in the period ended June 30, 2021. The gain primarily related to a $9.2 million gain recognized upon the sale of SBA PPP loans with an outstanding principal balance of $243.6 million.

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended September 30, 2021, was $10.9 million, or $0.53 per diluted share, compared to core net income of $18.7 million, or $0.90 per diluted share, for the quarter ended June 30, 2021. Notable noncore events impacting earnings for the quarter ended September 30, 2021, included $211,000 in occupancy and bank premises expenses attributable to hurricane damages (primarily related to Ida, 2021), $145,000 in acquisition-related expenses and $392,000 in losses on sales of former premises and equipment within other income, compared to $938,000 in occupancy and bank premises expenses attributable to hurricane damage (related to Hurricanes Laura/Delta, 2020, but resolved in the current year) and a $540,000 loss on sales of former premises and equipment within other income, for the quarter ended June 30, 2021.

Interest Income

For the quarter ended September 30, 2021, net interest income totaled $37.3 million and net interest margin and net interest spread were 3.71% and 3.51%, respectively, compared to $37.9 million, 3.87% and 3.68% for the quarter ended June 30, 2021. The average yield on total interest-earning assets was 4.14% for the quarter ended September 30, 2021, compared to 4.32% for the quarter ended June 30, 2021. Net interest margin and net interest spread were largely impacted for the quarter ended September 30, 2021, by $2.2 million less in SBA PPP origination fees, or (22) basis points for each. The reduction in interest income was largely attributable to lower SBA PPP portfolio interest and fee income due to the $243.6 million portfolio sale during the quarter ended June 30, 2021, partially offset by interest and fee income due to loan growth and an additional day in the third quarter. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.11% for the quarter ended September 30, 2021, compared to 5.13% for the quarter ended June 30, 2021.

Non-GAAP net interest margin and net interest spread (excluding loan discount accretion of $1.5 million) were 3.56% and 3.36%, respectively, for the quarter ended September 30, 2021, compared to 3.71% and 3.52% (excluding loan discount accretion of $1.6 million) for the quarter ended June 30, 2021.

Interest Expense

For the quarter ended September 30, 2021, overall cost of funds (which includes noninterest-bearing deposits) decreased by one basis point, from 0.45% to 0.44%, compared to the quarter ended June 30, 2021.

Other Income

For the quarter ended September 30, 2021, other income was lower by $11.0 million. The reduction was primarily due to a $9.9 million gain on sale of loans recognized in the period ended June 30, 2021. Additionally, there was a reduction of Small Business Investment Company (SBIC) investment income of $1.2 million compared to the quarter ended June 30, 2021.

Other Expenses

For the quarter ended September 30, 2021, other expenses were lower by $1.5 million. The reduction was largely attributed to lower reserve for unfunded commitments, $586,000, and hurricane-related expenses within occupancy and bank premises, $765,000.

Provision for Loan Losses

During the quarter ended September 30, 2021, Business First recorded a provision for loan losses of $1.1 million, compared to $2.2 million for the quarter ended June 30, 2021. The decrease for the quarter ended September 30, 2021, was driven primarily by the improvement in the qualitative factors (attributed to the general economy and energy sector), offset by reserves for new loan growth.

Return on Assets and Equity

Return on average assets and equity, each on an annualized basis, were 0.95% and 9.47%, respectively, for the quarter ended September 30, 2021, compared to 1.58% and 16.57%, respectively, for the quarter ended June 30, 2021. Both returns were impacted by higher net income for the quarter ended June 30, 2021, mainly attributable to the gain on sale of the SBA PPP portfolio.

Third Quarter 2021 Compared to Third Quarter 2020

Net Income and Diluted Earnings Per Share

For the quarter ended September 30, 2021, net income was $10.3 million, or $0.50 per diluted share, compared to net income of $9.6 million, or $0.46 per diluted share, for the quarter ended September 30, 2020. The increases in net income and diluted earnings per share were largely attributable to a decrease in the provision for loan losses of $1.1 million, as increases in other income were largely offset with increases in other expenses.

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended September 30, 2021, was $10.9 million, or $0.53 per diluted share, compared to core net income of $11.0 million, or $0.53 per diluted share, for the quarter ended September 30, 2020. Notable noncore events impacting earnings for the quarter ended September 30, 2021, included $211,000 in occupancy and bank premises expenses attributable to hurricane damages (primarily related to Ida, 2021), $145,000 in acquisition-related expenses and $392,000 in losses on sales of former premises and equipment within other income, compared to $635,000 in losses on sales of former premises and equipment within other income and $1.2 million in acquisition-related expenses incurred during the quarter ended September 30, 2020.

Interest Income

For the quarter ended September 30, 2021, net interest income totaled $37.3 million and net interest margin and net interest spread were 3.71% and 3.51%, respectively, compared to $36.9 million, 4.06% and 3.81% for the quarter ended September 30, 2020. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.11% for the quarter ended September 30, 2021, compared to 5.65% for the quarter ended September 30, 2020. The increase in interest income was largely attributable to higher average balances in loans and securities, attributable to organic loan and deposit growth, offset by lower yielding new loans and securities.

Average yield on total interest-earning assets, net interest margin, and net interest spread were negatively impacted for the quarter ended September 30, 2021, by lower yielding loans and securities, offset partially by lower deposit and borrowing costs.

Non-GAAP net interest margin and net interest spread (excluding loan discount accretion of $1.5 million) were 3.56% and 3.36%, respectively, for the quarter ended September 30, 2021, compared to 3.81% and 3.56% (excluding loan discount accretion of $2.3 million) for the quarter ended September 30, 2020.

Interest Expense

For the quarter ended September 30, 2021, overall cost of funds (which includes noninterest-bearing deposits) decreased by 19 basis points, from 0.63% to 0.44%, compared to the quarter ended September 30, 2020. The decrease in cost of funds was primarily attributable to an overall reduction in interest rates on deposit offerings and reduction in Federal Home Loan Bank (FHLB) advance balances, offset by an increase in subordinated debt balances.

Other Income

For the quarter ended September 30, 2021, the increase in other income, $2.1 million, was largely attributable to the $1.1 million increase in fees and brokerage commission, related to the Smith Shellnut Wilson, LLC. (SSW) acquisition which occurred in Q2 2021, as well as modest increases in gain on disposal of other assets, $641,000, debit card and ATM fee income, $133,000, and service charges, $171,000, partially offset by more losses on the sale of other real estate owned, $(454,000), compared to the quarter ended September 30, 2020.

Other Expenses

For the quarter ended September 30, 2021, the increase in other expense, $2.6 million, was largely attributable to the increase in salary and employee benefits, $1.4 million, as well as more modest increases in various other expenses, $687,000, depreciation and amortization, $398,000, advertising and promotions, $292,000, and occupancy and bank premises, $235,000, partially offset by a reduction in merger and conversion-related expenses, $(411,000), compared to the quarter ended September 30, 2020.

Provision for Loan Losses

During the quarter ended September 30, 2021, Business First recorded a provision for loan losses of $1.1 million compared to $2.5 million for the quarter ended September 30, 2020. The reserve for the quarter ended September 30, 2020, was impacted by the estimated impact on the general economy of the COVID-19 pandemic at the time.

Return on Assets and Equity

Return on average assets and return on average equity, each on an annualized basis, were 0.95% and 9.47%, respectively, for the quarter ended September 30, 2021, from 0.98% and 9.85%, respectively, for the quarter ended September 30, 2020.

About Business First Bancshares, Inc.

Business First Bancshares, Inc., (Nasdaq: BFST) through its banking subsidiary b1BANK, has $4.4 billion in assets, $4.7 billion in assets under management through b1BANK’s affiliate Smith Shellnut Wilson, LLC (SSW) (excludes $1.0 billion of b1BANK assets managed by SSW) and operates Banking Centers and Loan Production Offices in markets across Louisiana and the Dallas, Texas area, providing commercial and personal banking products and services. Commercial banking services include commercial loans and letters of credit, working capital lines and equipment financing, and treasury management services. b1BANK was awarded #1 Best-In-State Bank, Louisiana, by Forbes and Statista, and is a three-time recipient of Baton Rouge Business Report’s “Best Places to Work in Baton Rouge.” Visit b1BANK.com for more information.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures (e.g., referenced as “core” or “tangible”) intended to supplement, not substitute for, comparable GAAP measures. “Core” 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, acquisition-related expenses (including, but not limited to, legal costs, system conversion costs, severance and retention payments, etc.). “Tangible” measures adjust common equity by subtracting goodwill, core deposit intangibles, and customer intangibles, net of accumulated amortization. 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.

This report does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the merger. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer or solicitation would be unlawful.

In connection with the merger, Business First will file with the SEC a registration statement on Form S-4 (the “Registration Statement”) that will include a proxy statement of TCBI and a prospectus of Business First (the “Proxy Statement-Prospectus”), and Business First may file with the SEC other relevant documents concerning the merger. The definitive Proxy Statement-Prospectus will be mailed to the shareholders of TCBI. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT-PROSPECTUS REGARDING THE PROPOSED TRANSACTION CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BY BUSINESS FIRST, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Free copies of the Proxy Statement-Prospectus, as well as other filings containing information about Business First, may be obtained at the SEC’s Internet site (http://www.sec.gov), when they are filed by Business First. You will also be able to obtain these documents, when they are filed, free of charge, from Business First at www.b1bank.com. Copies of the Proxy Statement-Prospectus can also be obtained, when it becomes available, free of charge, by directing a request to Business First Bancshares, Inc., 500 Laurel Street, Suite 101, Baton Rouge, LA 70801, Attention: Corporate Secretary, Telephone: 225-248-7600 or to Texas Citizens Bancshares, Inc., 4949 Fairmont Parkway, Pasadena, TX 77505, Attention: Chairman and Chief Executive Officer, Telephone: 713-948-5727.

Participants in the Solicitation

Business First, Texas Citizens Bancshares, Inc. (TCBI) and certain of their directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of TCBI in connection with the merger. Information about Business First’s directors and executive officers is available in its proxy statement for its 2021 annual meeting of shareholders, which was filed with the SEC on April 15, 2021. Information regarding all of the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement-Prospectus pertaining to the merger and other relevant materials to be filed with the SEC when they become available. Free copies of these documents may be obtained as described in the preceding paragraph.

Business First Bancshares, Inc.
Selected Financial Information
(Unaudited)
	For the Quarter Ended
	September 30,			June 30,			September 30,
(Dollars in thousands)	2021			2021			2020
Balance Sheet Ratios
Loans (HFI) to Deposits		81.37	%		76.66	%		95.25	%
Shareholders' Equity to Assets Ratio		9.77	%		9.97	%		10.07	%
Loans Receivable Held for Investment
Commercial (1)	$	723,077		$	660,691		$	1,015,173
Real Estate:
Construction and Land		464,808			454,055			334,100
Farmland		85,898			77,133			56,567
1-4 Family Residential		464,462			459,037			493,344
Multi-Family Residential		107,551			89,796			99,901
Nonfarm Nonresidential		1,111,771			1,002,707			970,197
Total Real Estate		2,234,490			2,082,728			1,954,109
Consumer and Other (1)		108,669			111,467			113,192
Total Loans (Held for Investment)	$	3,066,236		$	2,854,886		$	3,082,474
Allowance for Loan Losses
Balance, Beginning of Period	$	26,702		$	25,251		$	18,715
Charge-offs – Quarterly		(81	)		(861	)		(956	)
Recoveries – Quarterly		378			71			90
Provision for Loan Losses – Quarterly		1,147			2,241			2,491
Balance, End of Period	$	28,146		$	26,702		$	20,340
Allowance for Loan Losses to Total Loans (HFI)		0.92	%		0.94	%		0.66	%
Net Charge-offs (Recoveries) to Average Total Loans		-0.01	%		0.03	%		0.03	%
Remaining Loan Purchase Discount	$	29,390		$	30,900		$	38,207
Nonperforming Assets
Nonperforming Loans:
Nonaccrual Loans (2)	$	12,622		$	10,568		$	7,988
Loans Past Due 90 Days or More (2)		1,030			893			1,986
Total Nonperforming Loans		13,652			11,461			9,974
Other Nonperforming Assets:
Other Real Estate Owned		2,152			5,890			10,994
Other Nonperforming Assets:		675			665			414
Total Other Nonperforming Assets		2,827			6,555			11,408
Total Nonperforming Assets	$	16,479		$	18,016		$	21,382
Nonperforming Loans to Total Loans (HFI)		0.45	%		0.40	%		0.32	%
Nonperforming Assets to Total Assets		0.37	%		0.42	%		0.54	%
(1) Small Business Administration (SBA) Paycheck Protection Program (PPP) loans accounted for $9.7 million
of the commercial portfolio as of September 30, 2021.
SBA PPP loans accounted for $25.7 million of the commercial portfolio as of June 30, 2021.
SBA PPP loans accounted for $392.9 million and $4.8 million of the commercial
and consumer portfolios, respectively, as of September 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									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands, except per share data)		2021			2021			2020			2021			2020
Per Share Data
Basic Earnings per Common Share	$	0.51		$	0.84		$	0.47		$	1.95		$	0.93
Diluted Earnings per Common Share		0.50			0.84			0.46			1.94			0.93
Dividends per Common Share		0.12			0.12			0.10			0.34			0.30
Book Value per Common Share		21.11			20.78			19.26			21.11			19.26
Average Common Shares Outstanding		20,384,879			20,707,313			20,613,481			20,570,506			17,356,830
Average Diluted Shares Outstanding		20,513,838			20,827,786			20,704,444			20,692,344			17,409,821
End of Period Common Shares Outstanding		20,383,504			20,740,759			20,667,237			20,383,504			20,667,237
Annualized Performance Ratios
Return on Average Assets		0.95	%		1.58	%		0.98	%		1.23	%		0.67	%
Return on Average Equity		9.47	%		16.57	%		9.85	%		12.60	%		6.30	%
Net Interest Margin		3.71	%		3.87	%		4.06	%		3.93	%		3.97	%
Net Interest Spread		3.51	%		3.68	%		3.81	%		3.75	%		3.66	%
Efficiency Ratio (1)		67.73	%		56.20	%		65.65	%		60.69	%		71.42	%
Total Quarterly/Year-to-Date Average Assets	$	4,353,885		$	4,399,911		$	3,933,631		$	4,343,407		$	3,224,940
Total Quarterly/Year-to-Date Average Equity		435,400			420,640			390,209			423,977			341,904
Other Expenses
Salaries and Employee Benefits	$	16,791		$	16,753		$	15,430		$	48,470		$	42,486
Occupancy and Bank Premises		1,629			2,276			1,394			5,716			3,824
Depreciation and Amortization		1,720			1,686			1,322			4,999			2,996
Data Processing		1,994			2,288			1,832			6,105			3,539
FDIC Assessment Fees		581			436			594			1,526			1,013
Legal and Other Professional Fees		553			905			555			2,199			1,492
Advertising and Promotions		612			624			320			1,713			960
Utilities and Communications		678			636			789			1,889			1,751
Ad Valorem Shares Tax		675			675			673			2,050			1,498
Directors' Fees		201			194			117			583			291
Other Real Estate Owned Expenses and Write-Downs		103			178			171			660			475
Merger and Conversion-Related Expenses		145			94			556			249			3,430
Other		3,885			4,371			3,198			11,487			7,636
Total Other Expenses	$	29,567		$	31,116		$	26,951		$	87,646		$	71,391
Other Income
Service Charges on Deposit Accounts	$	1,763		$	1,683		$	1,592		$	5,013		$	3,686
Gain (Loss) on Sales of Securities		(11	)		(50	)		95			(66	)		120
Debit card and ATM Fee Income		1,532			1,777			1,399			4,645			2,765
Bank-Owned Life Insurance Income		356			355			237			1,029			689
Gain (Loss) on Sales of Loans		93			10,042			-			10,114			184
Mortgage Origination Income		227			241			123			697			364
Fees and Brokerage Commission		1,335			1,416			281			3,294			537
Correspondent Bank Income		10			123			45			276			186
Participation Fee Income		250			240			136			737			182
Gain (Loss) on Sales of Other Real Estate Owned		(558	)		(575	)		(104	)		(1,087	)		28
Gain (Loss) on Disposal of Other Assets		14			(9	)		(627	)		122			(627	)
Pass-through Income from SBIC Partnerships		405			1,602			364			2,060			2,368
Other		932			531			676			1,973			1,535
Total Other Income	$	6,348		$	17,376		$	4,217		$	28,807		$	12,017
(1) Non-GAAP: 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)
	September 30,			June 30,			September 30,
(Dollars in thousands)		2021			2021			2020
Assets
Cash and Due From Banks	$	81,361		$	130,769		$	103,894
Federal Funds Sold		4,646			232,391			8,395
Securities Available for Sale, at Fair Values		1,034,491			882,802			547,535
Mortgage Loans Held for Sale		1,498			1,834			671
Loans and Lease Receivable		3,066,236			2,854,886			3,082,474
Allowance for Loan Losses		(28,146	)		(26,702	)		(20,340	)
Net Loans and Lease Receivable		3,038,090			2,828,184			3,062,134
Premises and Equipment, Net		56,611			57,576			59,241
Accrued Interest Receivable		19,025			20,841			25,622
Other Equity Securities		15,259			14,043			15,641
Other Real Estate Owned		2,152			5,890			10,994
Cash Value of Life Insurance		59,085			60,703			44,779
Deferred Taxes, Net		5,618			4,652			5,829
Goodwill		60,062			60,062			53,627
Core Deposit and Customer Intangibles		12,835			13,271			10,061
Other Assets		14,484			10,941			6,247
Total Assets	$	4,405,217		$	4,323,959		$	3,954,670
Liabilities
Deposits
Noninterest-Bearing	$	1,201,791		$	1,175,624		$	945,485
Interest-Bearing		2,566,330			2,548,599			2,290,776
Total Deposits		3,768,121			3,724,223			3,236,261
Securities Sold Under Agreements to Repurchase		27,195			25,837			24,604
Fed Funds Purchased		16,087			-			-
Short-Term Borrowings		20			20			5,033
Long-Term Borrowings		-			-			6,000
Payroll Protection Program Liquidity Facility		-			-			107,076
Subordinated Debt		81,427			81,427			25,000
Subordinated Debt - Trust Preferred Securities		5,000			5,000			5,000
Federal Home Loan Bank Borrowings		48,002			28,023			117,950
Accrued Interest Payable		1,835			1,938			3,621
Other Liabilities		27,309			26,485			26,039
Total Liabilities		3,974,996			3,892,953			3,556,584
Shareholders' Equity
Common Stock		20,384			20,741			20,667
Additional Paid-In Capital		291,847			299,014			299,762
Retained Earnings		112,243			104,382			67,399
Accumulated Other Comprehensive Income		5,747			6,869			10,258
Total Shareholders' Equity		430,221			431,006			398,086
Total Liabilities and Shareholders' Equity	$	4,405,217		$	4,323,959		$	3,954,670

Business First Bancshares, Inc.
Consolidated Statements of Income
(Unaudited)
				Three Months Ended						Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)		2021			2021			2020			2021			2020
Interest Income:
Interest and Fees on Loans	$	37,900		$	39,135		$	39,918		$	118,454		$	98,697
Interest and Dividends on Securities		3,598			3,189			2,474			9,616			6,380
Interest on Federal Funds Sold and Due From Banks		36			27			69			77			291
Total Interest Income		41,534			42,351			42,461			128,147			105,368
Interest Expense:
Interest on Deposits		3,060			3,235			4,345			9,538			13,826
Interest on Borrowings		1,180			1,171			1,184			3,069			3,480
Total Interest Expense		4,240			4,406			5,529			12,607			17,306
Net Interest Income		37,294			37,945			36,932			115,540			88,062
Provision for Loan Losses:		1,147			2,241			2,491			6,747			9,301
Net Interest Income After Provision for Loan Losses		36,147			35,704			34,441			108,793			78,761
Other Income:
Service Charges on Deposit Accounts		1,763			1,683			1,592			5,013			3,686
Gain (Loss) on Sales of Securities		(11	)		(50	)		95			(66	)		120
Gain (Loss) on Sales of Loans		93			10,042			-			10,114			184
Other Income		4,503			5,701			2,530			13,746			8,027
Total Other Income		6,348			17,376			4,217			28,807			12,017
Other Expenses:
Salaries and Employee Benefits		16,791			16,753			15,430			48,470			42,486
Occupancy and Equipment Expense		3,912			4,264			3,228			11,893			8,007
Merger and Conversion-Related Expense		145			94			556			249			3,430
Other Expenses		8,719			10,005			7,737			27,034			17,468
Total Other Expenses		29,567			31,116			26,951			87,646			71,391
Income Before Income Taxes:		12,928			21,964			11,707			49,954			19,387
Provision for Income Taxes:		2,617			4,536			2,098			9,886			3,227
Net Income:	$	10,311		$	17,428		$	9,609		$	40,068		$	16,160

Business First Bancshares, Inc.
Consolidated Net Interest Margin
(Unaudited)
	Three Months Ended
	September 30, 2021								June 30, 2021								September 30, 2020
	Average								Average								Average
	Outstanding			Interest Earned /		Average			Outstanding			Interest Earned /		Average			Outstanding			Interest Earned /		Average
(Dollars in thousands)	Balance			Interest Paid		Yield / Rate			Balance			Interest Paid		Yield / Rate			Balance			Interest Paid		Yield / Rate
Assets
Interest-Earning Assets:
Total Loans (Excluding SBA PPP)	$	2,948,491		$	37,666	5.11	%		$	2,814,593		$	36,116	5.13	%		$	2,638,417		$	37,250	5.65	%
SBA PPP Loans		10,150			234	9.24	%			242,015		$	3,019	4.99	%			399,366			2,668	2.67	%
Securities Available for Sale		946,950			3,598	1.52	%			801,268			3,189	1.59	%			564,630			2,474	1.75	%
Interest-Bearing Deposit in Other Banks		110,472			36	0.13	%			62,693			27	0.17	%			33,970			69	0.81	%
Total Interest-Earning Assets		4,016,063			41,534	4.14	%			3,920,569			42,351	4.32	%			3,636,383			42,461	4.67	%
Allowance for Loan Losses		(27,409	)							(26,032	)							(19,329	)
Noninterest-Earning Assets		365,231								505,374								316,577
Total Assets	$	4,353,885		$	41,534				$	4,399,911		$	42,351				$	3,933,631		$	42,461
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits	$	2,566,766		$	3,060	0.48	%		$	2,615,241		$	3,235	0.49	%		$	2,262,774		$	4,345	0.77	%
Subordinated Debt		81,427			1,026	5.04	%			81,427			1,015	4.99	%			25,000			422	6.75	%
Subordinated Debt - Trust Preferred Securities		5,000			42	3.36	%			5,000			43	3.44	%			5,000			45	3.60	%
Advances from Federal Home Loan Bank (FHLB)		36,015			106	1.18	%			32,887			108	1.31	%			122,592			515	1.68	%
Paycheck Protection Program Liquidity Facility (PPPLF)		-			-	0.00	%			-			-	0.00	%			107,076			95	0.35	%
Other Borrowings		26,350			6	0.09	%			24,909			5	0.08	%			35,437			107	1.21	%
Total Interest-Bearing Liabilities		2,715,558			4,240	0.62	%			2,759,464			4,406	0.64	%			2,557,879			5,529	0.86	%
Noninterest-Bearing Liabilities:
Noninterest-Bearing Deposits	$	1,172,752							$	1,191,900							$	957,090
Other Liabilities		30,175								27,907								28,453
Total Noninterest-Bearing Liabilities		1,202,927								1,219,807								985,543
Shareholders' Equity:		435,400								420,640								390,209
Total Liabilities and Shareholders' Equity	$	4,353,885							$	4,399,911							$	3,933,631
Net Interest Spread						3.51	%							3.68	%							3.81	%
Net Interest Income				$	37,294							$	37,945							$	36,932
Net Interest Margin						3.71	%							3.87	%							4.06	%
Overall Cost of Funds						0.44	%							0.45	%							0.63	%
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)
	Nine Months Ended
	September 30, 2021				September 30, 2020
	Average				Average
	Outstanding	Interest Earned /	Average		Outstanding	Interest Earned /	Average
(Dollars in thousands)	Balance	Interest Paid	Yield / Rate		Balance	Interest Paid	Yield / Rate
Assets
Interest-Earning Assets:
Total Loans (Excluding SBA PPP)	$ 2,802,246	$ 110,320	5.25%		$ 2,227,681	$ 93,699	5.61%
SBA PPP Loans	209,041	8,134	5.19%		240,164	4,998	2.77%
Securities Available for Sale	813,231	9,616	1.58%		444,237	6,380	1.91%
Interest-Bearing Deposit in Other Banks	91,466	77	0.11%		43,965	291	0.88%
Total Interest-Earning Assets	3,915,984	128,147	4.36%		2,956,047	105,368	4.75%
Allowance for Loan Losses	(25,383)				(15,046)
Noninterest-Earning Assets	452,806				283,939
Total Assets	$ 4,343,407	$ 128,147			$ 3,224,940	$ 105,368
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits	$ 2,588,756	$ 9,538	0.49%		$ 1,866,556	$ 13,826	0.99%
Subordinated Debt	63,768	2,499	5.23%		25,000	1,266	6.75%
Subordinated Debt - Trust Preferred Securities	5,000	127	3.39%		2,778	79	3.79%
Advances from Federal Home Loan Bank (FHLB)	35,309	325	1.23%		116,785	1,538	1.76%
Paycheck Protection Program Liquidity Facility (PPPLF)	-	-	0.00%		61,326	167	0.36%
Other Borrowings	27,651	118	0.57%		45,179	430	1.27%
Total Interest-Bearing Liabilities	2,720,484	12,607	0.62%		2,117,624	17,306	1.09%
Noninterest-Bearing Liabilities:
Noninterest-Bearing Deposits	1,170,534				738,578
Other Liabilities	28,412				26,834
Total Noninterest-Bearing Liabilities	1,198,946				765,412
Shareholders' Equity	423,977				341,904
Total Liabilities and Shareholders' Equity	$ 4,343,407				$ 3,224,940
Net Interest Spread			3.75%				3.66%
Net Interest Income		$ 115,540				$ 88,062
Net Interest Margin			3.93%				3.97%
Overall Cost of Funds			0.43%				0.81%
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										Nine Months Ended
	September 30,			June 30,			September 30,				September 30,			September 30,
(Dollars in thousands, except per share data)		2021			2021			2020				2021			2020
Interest Income:
Interest income	$	41,534		$	42,351		$	42,461			$	128,147		$	105,368
Core interest income		41,534			42,351			42,461				128,147			105,368
Interest Expense:
Interest expense		4,240			4,406			5,529				12,607			17,306
Core interest expense		4,240			4,406			5,529				12,607			17,306
Provision for Loan Losses: (b)
Provision for loan losses		1,147			2,241			2,491				6,747			9,301
Core provision expense		1,147			2,241			2,491				6,747			9,301
Other Income:
Other income		6,348			17,376			4,217				28,807			12,017
(Gains) 1osses on former bank premises and equipment		392			540			635				932			509
(Gains) 1osses on sale of securities		11			50			(95	)			66			(120	)
Core other income		6,751			17,966			4,757				29,805			12,406
Other Expense:
Other expense		29,567			31,116			26,951				87,646			71,391
Acquisition-related expenses (2)		(145	)		(94	)		(1,206	)			(249	)		(8,991	)
Stock option exercises - excess taxes (founder's grants)		-			-			-				-			(71	)
Occupancy and bank premises - hurricane repair		(211	)		(938	)		-				(1,499	)		-
Core other expense		29,211			30,084			25,745		-		85,898			62,329
Pre-Tax Income: (a)
Pre-tax income		12,928			21,964			11,707				49,954			19,387
(Gains) 1osses on former bank premises and equipment		392			540			635				932			509
(Gains) 1osses on sale of securities		11			50			(95	)			66			(120	)
Acquisition-related expenses (2)		145			94			1,206				249			8,991
Stock option exercises - excess taxes (founder's grants)		-			-			-				-			71
Occupancy and bank premises - hurricane repair		211			938			-				1,499			-
Core pre-tax income		13,687			23,586			13,453				52,700			28,838
Provision for Income Taxes: (1)
Provision for income taxes		2,617			4,536			2,098				9,886			3,227
Tax on (gains) losses on former bank premises and equipment		82			113			133				195			107
Tax on (gains) losses on sale of securities		2			11			(20	)			14			(25	)
Tax on acquisition-related expenses (2)		24			20			241				46			1,607
Tax on stock option exercises (founder's grants)		-			-			-				-			601
Tax on occupancy and bank premises - hurricane repair		44			197			-				314			-
Core provision for income taxes		2,769			4,877			2,452				10,455			5,517
Net Income:
Net income		10,311			17,428			9,609				40,068			16,160
(Gains) losses on former bank premises and equipment , net of tax		310			427			502				737			402
(Gains) losses on sale of securities, net of tax		9			39			(75	)			52			(95	)
Acquisition-related expenses (2), net of tax		121			74			965				203			7,384
Stock option exercises, net of tax (founder's grants)		-			-			-				-			(530	)
Occupancy and bank premises - hurricane repair, net of tax		167			741			-				1,185			-
Core net income	$	10,918		$	18,709		$	11,001			$	42,245		$	23,321
Pre-tax, pre-provision earnings (a+b)	$	14,075		$	24,205		$	14,198			$	56,701		$	28,688
(Gains) losses on former bank premises and equipment		392			540			635				932			509
(Gains) losses on sale of securities		11			50			(95	)			66			(120	)
Acquisition-related expenses (2)		145			94			1,206				249			8,991
Stock option exercises (founder's grants)		-			-			-				-			71
Occupancy and bank premises - hurricane repair		211			938			-				1,499			-
Core pre-tax, pre-provision earnings	$	14,834		$	25,827		$	15,944			$	59,447		$	38,139
Average Diluted Shares Outstanding		20,513,838			20,827,786			20,704,444				20,692,344			17,409,821
Diluted Earnings Per Share:
Diluted earnings per share	$	0.50		$	0.84		$	0.46			$	1.94		$	0.93
(Gains) losses on former bank premises and equipment , net of tax		0.01			0.02			0.02				0.04			0.02
(Gains) losses on sale of securities, net of tax		0.00			0.00			(0.00	)			0.00			(0.01	)
Acquisition-related expenses (2), net of tax		0.01			0.00			0.05				0.01			0.43
Stock option exercises (founder's grants)		-			-			-				-			(0.03	)
Occupancy and bank premises - hurricane repair, net of tax		0.01			0.04			-				0.06			-
Core diluted earnings per share	$	0.53		$	0.90		$	0.53			$	2.05		$	1.34
Pre-tax, pre-provision profit diluted earnings per share	$	0.69		$	1.16		$	0.69			$	2.74		$	1.65
(Gains) losses on former bank premises and equipment		0.01			0.03			0.03				0.05			0.03
(Gains) losses on sale of securities		0.00			0.00			(0.01	)			0.00			(0.01	)
Acquisition-related expenses (2)		0.01			0.00			0.06				0.01			0.52
Stock option exercises (founder's grants)		-			-			-				-			0.00
Occupancy and bank premises - hurricane repair		0.01			0.05			-				0.07			-
Core pre-tax, pre-provision diluted earnings per share	$	0.72		$	1.24		$	0.77			$	2.87		$	2.19
(1) Tax rates, exclusive of certain nondeductible merger-related expenses and goodwill, utilized were 21% for 2021 and 2020. 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										Nine Months Ended
	September 30,			June 30,			September 30,				September 30,			September 30,
(Dollars in thousands, except per share data)		2021			2021			2020				2021			2020
Total Quarterly/Year-to-Date Average Assets	$	4,353,885		$	4,399,911		$	3,933,631			$	4,343,407		$	3,224,940
Total Quarterly/Year-to-Date Average Equity	$	435,400		$	420,640		$	390,209			$	423,977		$	341,904
Net Income:
Net income	$	10,311		$	17,428		$	9,609			$	40,068		$	16,160
(Gains) losses on former bank premises and equipment , net of tax		310			427			502				737			402
(Gains) losses on sale of securities, net of tax		9			39			(75	)			52			(95	)
Acquisition-related expenses (2), net of tax		121			74			965				203			7,384
Stock option exercises, net of tax (founder's grants)		-			-			-				-			(530	)
Occupancy and bank premises - hurricane repair, net of tax		167			741			-				1,185			-
Core net income	$	10,918		$	18,709		$	11,001			$	42,245		$	23,321
Return on average assets		0.95	%		1.58	%		0.98	%			1.23	%		0.67	%
Core return on average assets		1.00	%		1.70	%		1.12	%			1.30	%		0.96	%
Return on equity		9.47	%		16.57	%		9.85	%			12.60	%		6.30	%
Core return on average equity		10.03	%		17.79	%		11.28	%			13.29	%		9.09	%
Interest Income:
Interest income	$	41,534		$	42,351		$	42,461			$	128,147		$	105,368
Core interest income		41,534			42,351			42,461				128,147			105,368
Interest Expense:
Interest expense		4,240			4,406			5,529				12,607			17,306
Core interest expense		4,240			4,406			5,529				12,607			17,306
Other Income:
Other income		6,348			17,376			4,217				28,807			12,017
(Gains) losses on former bank premises and equipment		392			540			635				932			509
(Gains) losses on sale of securities		11			50			(95	)			66			(120	)
Core other income		6,751			17,966			4,757				29,805			12,406
Other Expense:
Other expense		29,567			31,116			26,951				87,646			71,391
Acquisition-related expenses		(145	)		(94	)		(1,206	)			(249	)		(8,991	)
Stock option exercises - excess taxes (founder's grants)		-			-			-				-			(71	)
Occupancy and bank premises - hurricane repair		(211	)		(938	)		-				(1,499	)		-
Core other expense	$	29,211		$	30,084		$	25,745			$	85,898		$	62,329
Efficiency Ratio:
Other expense (a)	$	29,567		$	31,116		$	26,951			$	87,646		$	71,391
Core other expense (c)	$	29,211		$	30,084		$	25,745			$	85,898		$	62,329
Net interest and other income (1) (b)	$	43,653		$	55,371		$	41,054			$	144,413		$	99,959
Core net interest and other income (1) (d)	$	44,045		$	55,911		$	41,689			$	145,345		$	100,468
Efficiency ratio (a/b)		67.73	%		56.20	%		65.65	%			60.69	%		71.42	%
Core efficiency ratio (c/d)		66.32	%		53.81	%		61.75	%			59.10	%		62.04	%
Total Average Interest-Earnings Assets	$	4,016,063		$	3,920,569		$	3,636,383			$	3,915,984		$	2,956,047
Net Interest Income:
Net interest income	$	37,294		$	37,945		$	36,932			$	115,540		$	88,062
Loan discount accretion		(1,511	)		(1,617	)		(2,270	)			(6,191	)		(4,025	)
Net interest income excluding loan discount accretion	$	35,783		$	36,328		$	34,662			$	109,349		$	84,037
Net interest margin (2)		3.71	%		3.87	%		4.06	%			3.93	%		3.97	%
Net interest margin excluding loan discount accretion (2)		3.56	%		3.71	%		3.81	%			3.72	%		3.79	%
Net interest spread		3.51	%		3.68	%		3.81	%			3.75	%		3.66	%
Net interest spread excluding loan discount accretion		3.36	%		3.52	%		3.56	%			3.53	%		3.48	%
(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)
	September 30,			June 30,			September 30,
(Dollars in thousands, except per share data)	2021			2021			2020
Total Shareholders' (Common) Equity:
Total shareholders' equity	$	430,221		$	431,006		$	398,086
Goodwill		(60,062	)		(60,062	)		(53,627	)
Core deposit and customer intangible		(12,835	)		(13,271	)		(10,061	)
Total tangible common equity	$	357,324		$	357,673		$	334,398
Total Assets:
Total assets	$	4,405,217		$	4,323,959		$	3,954,670
Goodwill		(60,062	)		(60,062	)		(53,627	)
Core deposit and customer intangible		(12,835	)		(13,271	)		(10,061	)
Total tangible assets	$	4,332,320		$	4,250,626		$	3,890,982
Common shares outstanding		20,383,504			20,740,759			20,667,237
Book value per common share	$	21.11		$	20.78		$	19.26
Tangible book value per common share	$	17.53		$	17.24		$	16.18
Common equity to total assets		9.77	%		9.97	%		10.07	%
Tangible common equity to tangible assets		8.25	%		8.41	%		8.59	%

Misty Albrecht
b1BANK
225.286.7879
Misty.Albrecht@b1BANK.com

FAQ

What are the Q3 2021 earnings for BFST?

Business First reported net income of $10.3 million, or $0.50 per diluted share for Q3 2021.

How did BFST's loan growth perform in Q3 2021?

Total loans held for investment increased by $211.4 million, or 7.4%, compared to Q2 2021.

What is the dividend declared by Business First for Q3 2021?

The board declared a quarterly dividend of $0.12 per share, the same as in the previous quarter.

What factors contributed to the decline in BFST's net income in Q3 2021?

The decline was primarily due to a $10 million gain recognized from the sale of loans in Q2 2021.

What is the impact of nonperforming loans reported by BFST?

Nonperforming loans increased to 0.45% of total loans held for investment as of September 30, 2021.