Business First Bancshares, Inc., Announces Financial Results for Q3 2020

Rhea-AI Summary

Business First Bancshares, Inc. (BFST) reported a strong third quarter 2020 with a net income of $9.6 million ($0.46 per diluted share), up from $5.5 million ($0.40) year-over-year. Core net income reached $11.0 million ($0.53 per diluted share), driven by higher net interest income and reduced acquisition expenses following the Pedestal acquisition. Total loans grew by 81.89% year-over-year, bolstered by the SBA Paycheck Protection Program. However, the company recorded an increase in nonperforming assets as a percentage of total assets to 0.54%. A quarterly dividend of $0.10 was declared.

Positive

• Net income increased by $4.1 million year-over-year.
• Core net income rose to $11.0 million, up by $4.7 million from the previous year.
• Total loans held for investment increased by 81.89% year-over-year.
• Net interest margin improved to 4.06%, up from 3.89% in the previous quarter.
• Book value per common share increased to $19.26 from $18.69 compared to the last quarter.

Negative

• Nonperforming assets increased to 0.54% of total assets.
• Provision for loan losses recorded was $2.5 million, up from $479,000 year-over-year.

BATON ROUGE, La., Oct. 22, 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 September 30, 2020, including net income of $9.6 million, or $0.46 per diluted share, increases of $4.1 million and $0.06, respectively, from the quarter ended September 30, 2019. On a non-GAAP basis, core net income for the quarter ended September 30, 2020, which excludes certain income and expenses, was $11.0 million, or $0.53 per diluted share, an increase of $4.7 million and increase of $0.07, respectively, from the quarter ended September 30, 2019.

“In our last earning report, I said 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. “but I can now say that about the third quarter. In addition to weathering the ongoing health and related economic crises, our people were impacted over the past few weeks by landfall of not one but two hurricanes. Our performance in the quarter reflects a strength and resiliency that enables us to be there for our clients, and we are as committed as ever to continuing to be that stable resource in times of both plenty and need.”

On October 22, 2020, Business First’s board of directors declared a quarterly dividend based upon financial performance for the third quarter in the amount of $0.10 per share, same as the prior quarter, to the common shareholders of record as of November 15, 2020. The dividend will be paid on November 30, 2020, or as soon thereafter as practicable.

Also, on October 22, 2020, Business First’s board of directors terminated its existing stock repurchase program, which was set to expire December 13, 2020, and adopted a new stock repurchase program. Under the new repurchase program, Business First may repurchase shares of its common stock with an aggregate purchase price of up to $30,000,000 until the program’s expiration on December 31, 2021.

Quarterly Highlights

• COVID-19 and Hurricane Related Matters. Business First proactively assisted, and continues to assist (when prudent), clients by deferring principal and/or interest payments. Business First had 245 loans and 290 loans with outstanding principal balances of $184.3 million and $85.0 million within the deferral periods related to the COVID-19 pandemic and Hurricane Laura, respectively, as of September 30, 2020. Of loans remaining in the deferral period, 167 qualifying loans to seasoned, highly rated customers with an outstanding balance of $149.4 million were strategically converted to interest only.
  
  Additionally, Business First has funded approximately 2,800 loans with an aggregate outstanding balance of $397.7 million as of September 30, 2020, under the Small Business Administration (SBA) Paycheck Protection Program (PPP).
  

• Strong Loan Growth. Total loans held for investment at September 30, 2020, were $3.1 billion, an increase of $87.7 million compared to June 30, 2020. Net loan growth was 2.93%, or 11.71 % annualized, for the quarter ended September 30, 2020.
• Stable Credit Quality. Ratios of nonperforming loans compared to loans held for investment and nonperforming assets compared to total assets remained stable from 0.39% and 0.49%, respectively, at June 30, 2020, to 0.32% and 0.54% at September 30, 2020.
• Net Interest Margin and Spread. Net interest margin and spread increased from 3.89% and 3.59%, respectively, for the quarter ended June 30, 2020, to 4.06% and 3.81% for the quarter ended September 30, 2020. The increases were largely attributable to purchase accounting accretion (loans and deposits/borrowings), an additional day in the quarter, and repricing of time deposits upon maturity. Excluding loan discount accretion, net interest margin and spread were 3.81% and 3.56%, respectively, for the quarter ended September 30, 2020, compared to 3.71% and 3.41% for the quarter ended June 30, 2020.
  

Financial Condition

September 30, 2020, Compared to June 30, 2020

Loans

Total loans held for investment increased by $87.7 million compared to June 30, 2020. The increase was largely attributable to growth within the multi-family residential and nonfarm nonresidential commercial real estate portfolios. Net loan growth for the quarter ended September 30, 2020, was 2.93% for the quarter, or 11.71% annualized.

Business First’s unfunded commitments remained constant throughout the quarter ended September 30, 2020, after increasing during the quarter ended June 30, 2020, as a result of the acquisition of Pedestal. Business First has not identified any unusual customer usage of unfunded commitments since the beginning of the COVID-19 pandemic in March 2020.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment decreased from 0.39% as of June 30, 2020, to 0.32% as of September 30, 2020. The decrease was partially attributable to net loan charge-offs which totaled $866,000, or three basis points, for the quarter ended September 30, 2020. Nonperforming assets as a percentage of total assets increased from 0.49% as of June 30, 2020, to 0.54% as of September 30, 2020. The increase was largely attributable to the transfer of former branches of Pedestal and b1BANK to other real estate owned, part of the strategic plan of the acquisition.

Total Shareholders’ Equity

Book value per common share was $19.26 at September 30, 2020, compared to $18.69 at June 30, 2020. On a non-GAAP basis, tangible book value per share was $16.18 at September 30, 2020, compared to $15.59 at June 30, 2020.

September 30, 2020, Compared to September 30, 2019

Loans

Total loans held for investment increased by $1.4 billion compared to September 30, 2019, or 81.89%, 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 0.70% as of September 30, 2019, to 0.32% as of September 30, 2020. Nonperforming assets as a percentage of total assets decreased from 0.64% as of September 30, 2019, to 0.54% as of September 30, 2020. The decreases were largely 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, as well as a decrease in nonperforming loans, offset by an increase in other real estate owned.

Total Shareholders’ Equity

Book value per common share was $19.26 at September 30, 2020, compared to $21.12 at September 30, 2019. On a non-GAAP basis, tangible book value per share was $16.18 at September 30, 2020, compared to $16.96 at September 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

Third Quarter 2020 Compared to Second Quarter 2020

Net Income and Diluted Earnings Per Share

For the quarter ended September 30, 2020, net income was $9.6 million, or $0.46 per diluted share, compared to net income of $2.1 million, or $0.11 per diluted share, for the quarter ended June 30, 2020. The increases were largely attributable to an increase in net interest income (primarily due to a full quarter of a larger balance sheet after the Pedestal acquisition), a decrease in the provision for loan losses and lower acquisition-related expenses (which includes costs recorded within salaries and employee benefits attributed to acquisitions, such as severance, stay bonus, etc.), offset by a decrease in other income, largely attributable to a reduction in investment income from Small Business Investment Companies (SBIC).

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended September 30, 2020, was $11.0 million, or $0.53 per diluted share, compared to core net income of $7.4 million, or $0.41 per diluted share, for the quarter ended June 30, 2020. Notable noncore events impacting earnings for the quarter ended September 30, 2020, included the incurrence of $1.2 million in acquisition-related expenses and $635,000 in losses attributed to losses on former bank premises and equipment in other income, largely attributable to branches planned to be closed in contemplation of the Pedestal acquisition, compared to the incurrence of $6.6 million in acquisition-related expenses for the quarter ended June 30, 2020.

Interest Income

For the quarter ended September 30, 2020, net interest income totaled $36.9 million and net interest margin and net interest spread were 4.06% and 3.81%, respectively, compared to $30.9 million, 3.89% and 3.59% for the quarter ended June 30, 2020. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.65% for the quarter ended September 30, 2020, compared to 5.61% for the quarter ended June 30, 2020. The average yield on total interest-earning assets was 4.67% for the quarter ended September 30, 2020, compared to 4.65% for the quarter ended June 30, 2020. The increase in interest income was largely attributable to higher average balances due to the Pedestal acquisition during the quarter ended June 30, 2020.

Net interest margin and net interest spread were positively impacted for the quarter ended September 30, 2020, by additional loan discount accretion, reduction in the overall cost of funds (which includes noninterest-bearing deposits) and an additional day in the quarter, offset by yield reductions in securities and SBA PPP loans.

The average loan yield (excluding SBA PPP loans) and total interest-earning assets was also impacted by additional loan discount and an additional day in the quarter.  

Net interest margin and net interest spread (excluding loan discount accretion of $2.3 million) were 3.81% and 3.56%, respectively, for the quarter ended September 30, 2020, compared to 3.71% and 3.41% (excluding loan discount accretion of $1.5 million) for the quarter ended June 30, 2020.

Interest Expense

For the quarter ended September 30, 2020, overall cost of funds (which includes noninterest-bearing deposits) decreased by 14 basis points, from 0.77% to 0.63%, compared to the quarter ended June 30, 2020. The decrease in cost of funds was largely attributable to the repricing of time deposits upon maturity.

Other Income

For the quarter ended September 30, 2020, other income was impacted by a reduction of $1.3 million in SBIC investment income, partially offset by $869,000 increases in both the service charges on deposit accounts and debit card and ATM fee income associated with a full quarterly impact of the Pedestal accounts, as well as an insurance settlement of $390,000 within other income related to a prior charged-off loan, compared to the quarter ended June 30, 2020.

Other Expense

For the quarter ended September 30, 2020, the decreases were largely attributed to reductions in salaries and employee benefits, $2.2 million, and merger and conversion-related expenses, $1.2 million, both of which resulted from elevated expenses during the quarter ended June 30, 2020, attributable to the Pedestal acquisition, partially offset by increases in various other categories which were mainly attributable to the full quarterly impact of the Pedestal acquisition, as well as an increase in our FDIC assessments, $322,000, due to increased deposits attributable to the Pedestal acquisition and SBA PPP loan program, compared to the quarter ended June 30, 2020.

Provision for Loan Losses

During the quarter ended September 30, 2020, Business First recorded a provision for loan losses of $2.5 million, compared to $5.4 million for the quarter ended June 30, 2020. The reserve for the quarter ended September 30, 2020, was impacted by net charge-offs of $866,000, new net loan production, and the continued impact of the qualitative factors related to COVID-19.   

Return on Assets and Equity

Return on average assets and equity, each on an annualized basis, were 0.98% and 9.85%, respectively, for the quarter ended September 30, 2020, compared to 0.23% and 2.35%, respectively, for the quarter ended June 30, 2020. Both returns were significantly impacted by additional provision for loan loss and acquisition-related expenses recorded during the quarter ended June 30, 2020.

Third Quarter 2020 Compared to Third Quarter 2019

Net Income and Diluted Earnings Per Share

For the quarter ended September 30, 2020, net income was $9.6 million, or $0.46 per diluted share, compared to net income of $5.5 million, or $0.40 per diluted share, for the quarter ended September 30, 2019. The increases in net income and diluted earnings per share were largely attributable to the increases in net interest income and other income related to the acquisition of Pedestal on May 1, 2020, offset by increases in the provision for loan losses associated with the COVID-19 pandemic in 2020 and additional expenses associated with the acquisition of Pedestal on May 1, 2020.

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended September 30, 2020, was $11.0 million, or $0.53 per diluted share, compared to core net income of $6.3 million, or $0.46 per diluted share, for the quarter ended September 30, 2019. Notable noncore events impacting earnings for the quarter ended September 30, 2020, included the incurrence of $1.2 million in acquisition-related expenses and $635,000 in losses attributed to losses on former bank premises and equipment in other income, compared to the incurrence of $288,000 in acquisition-related expenses and $594,000 losses on former bank premises and equipment in other income for the quarter ended September 30, 2019.

Interest Income

For the quarter ended September 30, 2020, net interest income totaled $36.9 million and net interest margin and net interest spread were 4.06% and 3.81%, respectively, compared to $20.3 million, 4.10% and 3.66% for the quarter ended September 30, 2019. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.65% for the quarter ended September 30, 2020, compared to 5.87% for the quarter ended September 30, 2019. The average yield on total interest-earning assets was 4.67% for the quarter ended September 30, 2020, compared to 5.32% for the quarter ended September 30, 2019.   The increase in interest income was largely attributable to higher average balances due to the Pedestal acquisition and origination of SBA PPP loans during 2020.

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 September 30, 2020, by the federal funds rate cuts of 175 basis points, which occurred during the fourth quarter of 2019 through the 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 $2.3 million) were 3.81% and 3.56%, respectively, for the quarter ended September 30, 2020, compared to 3.99% and 3.55% (excluding loan discount accretion of $544,000) for the quarter ended September 30, 2019.

Interest Expense

For the quarter ended September 30, 2020, overall cost of funds (which includes noninterest-bearing deposits) decreased by 68 basis points, from 1.31% to 0.63%, compared to the quarter ended September 30, 2019. The decrease in cost of funds was partially attributable to the accretion of deposit and Federal Home Loan Bank (FHLB) premiums associated with the Pedestal acquisition, $796,000 or 11 basis points, 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 September 30, 2020, the increase was largely attributable to the acquisition of Pedestal during the quarter ended June 30, 2020.

Other Expense

For the quarter ended September 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 September 30, 2020, Business First recorded a provision for loan losses of $2.5 million compared to $479,000 for the quarter ended September 30, 2019. The reserve for the quarter ended September 30, 2020, was impacted by $866,000 in net charge-offs, higher net new loan growth and the impact of the COVID-19 pandemic on the qualitative factors within the allowance for loan and lease losses.

Return on Assets and Equity

Return on average assets and return on average equity, each on an annualized basis, were 0.98% and 9.85%, respectively, for the quarter ended September 30, 2020, from 1.02% and 7.93%, respectively, for the quarter ended September 30, 2019. Both returns were significantly impacted by the provision for loan loss and acquisition-related expenses recorded for the quarter ended September 30, 2020, in addition to a lower net interest margin for the quarter ended September 30, 2020.

About Business First Bancshares, Inc.

Business First Bancshares, Inc., through its banking subsidiary b1BANK, formerly known as Business First Bank, operates 42 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.

Misty Albrecht
b1BANK
225.286.7879
Misty.Albrecht@b1BANK.com

Business First Bancshares, Inc.
Selected Financial Information
(Unaudited)
	September 30,			June 30,			September 30,
(Dollars in thousands)	2020			2020			2019
Balance Sheet Ratios
Loans (HFI) to Deposits		95.25%			92.12%			97.77%
Shareholders' Equity to Assets Ratio		10.07%			9.75%			12.62%
Loans Receivable Held for Investment
Commercial (1)	$	1,015,173		$	1,026,596		$	415,163
Real Estate:
Construction and Land		334,100			333,675			220,524
Farmland		56,567			57,498			45,809
1-4 Family Residential		493,344			495,827			281,413
Multi-Family Residential		99,901			59,213			31,448
Nonfarm Nonresidential		970,197			914,601			620,427
Total Real Estate		1,954,109			1,860,814			1,199,621
Consumer (1)		113,192			107,402			79,943
Total Loans [Held for Investment]	$	3,082,474		$	2,994,812		$	1,694,727
Allowance for Loan Losses
Balance, Beginning of Period	$	18,715		$	13,319		$	11,603
Charge-offs – Quarterly		(956	)		(98	)		(13	)
Recoveries – Quarterly		90			51			21
Provision for Loan Losses – Quarterly		2,491			5,443			479
Balance, End of Period	$	20,340		$	18,715		$	12,090
Allowance for Loan Losses to Total Loans (HFI)		0.66%			0.62%			0.71%
Net Charge-offs (Recoveries) to Average Total Loans		0.03%			0.00%			-0.00	%
Remaining Loan Purchase Discount	$	38,207		$	44,302		$	4,848
Nonperforming Assets
Nonperforming Loans:
Nonaccrual Loans (2)	$	7,988		$	11,433		$	11,577
Loans Past Due 90 Days or More (2)		1,986			317			277
Total Nonperforming Loans		9,974			11,750			11,854
Other Nonperforming Assets:
Other Real Estate Owned		10,994			7,642			2,326
Other Nonperforming Assets:		414			179			5
Total Other Nonperforming Assets		11,408			7,821			2,331
Total Nonperforming Assets	$	21,382		$	19,571		$	14,185
Nonperforming Loans to Total Loans (HFI)		0.32%			0.39%			0.70%
Nonperforming Assets to Total Assets		0.54%			0.49%			0.64%
(1) Small Business Adminstration SBA Paycheck Protection Program PPP loans accounted for $392.9 million and $4.8 million of the Commercial and Consumer portfolios, respectively, as of September 30, 2020.
SBA 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									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands, except per share data)	2020			2020			2019			2020			2019
Per Share Data
Basic Earnings per Common Share	$	0.47		$	0.11		$	0.41		$	0.93		$	1.35
Diluted Earnings per Common Share		0.46			0.11			0.40			0.93			1.32
Dividends per Common Share		0.10			0.10			0.10			0.30			0.28
Book Value per Common Share		19.26			18.69			21.12			19.26			21.12
Average Common Shares Outstanding		20,613,481			18,108,068			13,315,351			17,356,830			13,321,566
Average Diluted Shares Outstanding		20,704,444			18,121,958			13,669,370			17,409,821			13,675,585
End of Period Common Shares Outstanding		20,667,237			20,667,237			13,274,823			20,667,237			13,274,823
Annualized Performance Ratios
Return on Average Assets		0.98%			0.23%			1.02%			0.67%			1.14%
Return on Average Equity		9.85%			2.35%			7.93%			6.30%			8.88%
Net Interest Margin		4.06%			3.89%			4.10%			3.97%			4.10%
Net Interest Spread		3.81%			3.59%			3.66%			3.67%			3.68%
Efficiency Ratio (1)		65.65%			77.40%			67.16%			71.42%			63.65%
Total Quarterly/Year-to-Date Average Assets	$	3,933,631		$	3,496,074		$	2,156,759		$	3,224,940		$	2,111,717
Total Quarterly/Year-to-Date Average Equity		390,209			349,634			278,028			341,904			270,380
Other Expenses
Salaries and Employee Benefits	$	15,430		$	17,621		$	8,793		$	42,486		$	26,101
Occupancy and Bank Premises		1,394			1,370			1,230			3,824			3,412
Depreciation and Amortization		1,322			1,073			645			2,996			1,906
Data Processing		1,832			1,055			380			3,539			1,572
FDIC Assessment Fees		594			272			(105	)		1,013			293
Legal and Other Professional Fees		555			543			346			1,492			1,017
Advertising and Promotions		320			334			544			960			1,150
Utilities and Communications		789			645			397			1,751			1,018
Ad Valorem Shares Tax		673			450			345			1,498			1,035
Directors' Fees		117			100			121			291			451
Other Real Estate Owned Expenses and Write-Downs		171			51			19			475			118
Merger and Conversion-Related Expenses		556			1,726			350			3,430			331
Other		3,198			2,557			1,813			7,636			4,841
Total Other Expenses	$	26,951		$	27,797		$	14,878		$	71,391		$	43,245
Other Income
Service Charges on Deposit Accounts	$	1,592		$	1,163		$	1,035		$	3,686		$	3,007
Gain on Sales of Securities		95			-			26			120			84
Debit card and ATM Fee Income		1,399			959			460			2,765			1,397
Bank-Owned Life Insurance Income		237			255			175			689			517
Gain on Sales of Loans		-			7			24			184			115
Mortgage Origination Income		123			126			120			364			308
Brokerage Commission		281			236			15			537			58
Correspondent Bank Income		45			32			118			186			343
Rental Income		14			15			159			60			488
Gain (loss) on Sale of Banking Center		-			-			(12	)		-			581
Gain (loss) on Sales of Other Real Estate Owned		(104	)		(19	)		78			28			27
Loss on Disposal of Other Assets		(627	)		-			(650	)		(627	)		(650	)
Pass-through Income from SBIC Partnerships		364			1,624			138			2,368			1,404
Other		798			598			236			1,657			773
Total Other Income	$	4,217		$	4,996		$	1,922		$	12,017		$	8,452
(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)
	September 30,			June 30,			September 30,
(Dollars in thousands)	2020			2020			2019
Assets
Cash and Due From Banks	$	103,894		$	116,021		$	63,356
Federal Funds Sold		8,395			40,329			43,705
Securities Available for Sale, at Fair Values		547,535			583,118			288,231
Mortgage Loans Held for Sale		671			456			256
Loans and Lease Receivable		3,082,474			2,994,812			1,694,727
Allowance for Loan Losses		(20,340	)		(18,715	)		(12,090	)
Net Loans and Lease Receivable		3,062,134			2,976,097			1,682,637
Premises and Equipment, Net		59,241			63,959			27,092
Accrued Interest Receivable		25,622			33,844			7,513
Other Equity Securities		15,641			18,681			12,697
Other Real Estate Owned		10,994			7,642			2,326
Cash Value of Life Insurance		44,779			44,542			32,398
Deferred Taxes, Net		5,829			6,858			2,674
Goodwill		53,627			53,649			48,333
Core Deposit Intangible		10,061			10,389			6,916
Other Assets		6,247			5,553			2,706
Total Assets	$	3,954,670		$	3,961,138		$	2,220,840
Liabilities
Deposits:
Noninterest-Bearing	$	945,485		$	985,537		$	406,146
Interest-Bearing		2,290,776			2,265,485			1,327,244
Total Deposits		3,236,261			3,251,022			1,733,390
Securities Sold Under Agreements to Repurchase		24,604			25,391			31,037
Short-Term Borrowings		5,033			6,145			-
Long-Term Borrowings		6,000			7,797			-
Paycheck Protection Program Liquidity Facility		107,076			107,076			-
Subordinated Debt		25,000			25,000			25,000
Subordinated Debt -Trust Preferred Securities		5,000			5,000			-
Federal Home Loan Bank Borrowings		117,950			118,177			128,000
Accrued Interest Payable		3,621			3,920			1,837
Other Liabilities		26,039			25,274			21,236
Total Liabilities		3,556,584			3,574,802			1,940,500
Shareholders' Equity
Common Stock		20,667			20,667			13,275
Additional Paid-In Capital		299,762			297,606			212,104
Retained Earnings		67,399			59,850			52,265
Accumulated Other Comprehensive Income		10,258			8,213			2,696
Total Shareholders' Equity		398,086			386,336			280,340
Total Liabilities and Shareholders' Equity	$	3,954,670		$	3,961,138		$	2,220,840

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)	2020		2020		2019			2020		2019
Interest Income:
Interest and Fees on Loans	$	39,918	$	34,636	$	24,408		$	98,697	$	70,701
Interest and Dividends on Securities		2,474		2,175		1,783			6,380		5,486
Interest on Federal Funds Sold and Due From Banks		69		80		129			291		616
Total Interest Income		42,461		36,891		26,320			105,368		76,803
Interest Expense:
Interest on Deposits		4,345		4,795		5,050			13,826		14,845
Interest on Borrowings		1,184		1,177		1,012			3,480		2,387
Total Interest Expense		5,529		5,972		6,062			17,306		17,232
Net Interest Income		36,932		30,919		20,258			88,062		59,571
Provision for Loan Losses:		2,491		5,443		479			9,301		2,414
Net Interest Income After Provision for Loan Losses		34,441		25,476		19,779			78,761		57,157
Other Income:
Service Charges on Deposit Accounts		1,592		1,163		1,035			3,686		3,007
Gain on Sales of Securities		95		-		26			120		84
Other Income		2,530		3,833		861			8,211		5,361
Total Other Income		4,217		4,996		1,922			12,017		8,452
Other Expenses:
Salaries and Employee Benefits		15,430		17,621		8,793			42,486		26,101
Occupancy and Equipment Expense		3,228		2,888		2,135			8,007		5,913
Merger and Conversion-Related Expense		556		1,726		235			3,430		331
Other Expenses		7,737		5,562		3,715			17,468		10,900
Total Other Expenses		26,951		27,797		14,878			71,391		43,245
Income Before Income Taxes:		11,707		2,675		6,823	-		19,387		22,364
Provision for Income Taxes:		2,098		623		1,312			3,227		4,351
Net Income:	$	9,609	$	2,052	$	5,511		$	16,160	$	18,013

Business First Bancshares, Inc.
Consolidated Net Interest Margin
(Unaudited)
	Three Months Ended
	September 30, 2020								June 30, 2020								September 30, 2019
	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)	$	2,638,417		$	37,250	5.65	%		$	2,304,438		$	32,306	5.61	%		$	1,664,283		$	24,408	5.87	%
SBA PPP Loans		399,366			2,668	2.67	%			321,127		$	2,330	2.90	%			-			-	0.00	%
Securities Available for Sale		564,630			2,474	1.75	%			481,422			2,175	1.81	%			297,121			1,783	2.40	%
Interest-Bearing Deposit in Other Banks		33,970			69	0.81	%			69,169			80	0.46	%			16,070			129	3.21	%
Total Interest-Earning Assets		3,636,383			42,461	4.67	%			3,176,156			36,891	4.65	%			1,977,474			26,320	5.32	%
Allowance for Loan Losses		(19,329	)							(13,606	)							(11,783	)
Noninterest-Earning Assets		316,577								333,524								191,068
Total Assets	$	3,933,631		$	42,461				$	3,496,074		$	36,891				$	2,156,759		$	26,320
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits	$	2,262,774		$	4,345	0.77	%		$	1,994,680		$	4,795	0.96	%		$	1,300,740		$	5,050	1.55	%
Subordinated Debt		25,000			422	6.75	%			25,000			422	6.75	%			25,000			422	6.75	%
Subordinated Debt - Trust Preferred Securities		5,000			45	3.60	%			3,333			34	4.08	%			-			-	0.00	%
Advances from Federal Home Loan Bank (FHLB)		122,592			515	1.68	%			129,441			526	1.63	%			105,588			560	2.12	%
Paycheck Protection Program Liquidity Facility (PPPLF)		107,076			95	0.35	%			76,902			72	0.37	%			-			-	0.00	%
Other Borrowings		35,437			107	1.21	%			32,975			123	1.49	%			23,718			30	0.51	%
Total Interest-Bearing Liabilities		2,557,879			5,529	0.86	%			2,262,331			5,972	1.06	%			1,455,046			6,062	1.67	%
Noninterest-Bearing Liabilities:
Noninterest-Bearing Deposits	$	957,090							$	852,608								398,748
Other Liabilities		28,453								31,501								24,937
Total Noninterest-Bearing Liabilities		985,543								884,109								423,685
Shareholders' Equity:		390,209								349,634								278,028
Total Liabilities and Shareholders' Equity	$	3,933,631							$	3,496,074							$	2,156,759
Net Interest Spread						3.81	%							3.59	%							3.66	%
Net Interest Income				$	36,932							$	30,919							$	20,258
Net Interest Margin						4.06	%							3.89	%							4.10	%
Overall Cost of Funds						0.63	%							0.77	%							1.31	%
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, 2020				September 30, 2019
	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)	$ 2,227,681	$ 93,699	5.61%		$ 1,605,423	$ 70,701	5.87%
SBA PPP Loans	240,164	4,998	2.77%		-	-	0.00%
Securities Available for Sale	444,237	6,380	1.91%		303,374	5,486	2.41%
Interest-Bearing Deposit in Other Banks	43,965	291	0.88%		26,621	616	3.09%
Total Interest-Earning Assets	2,956,047	105,368	4.75%		1,935,418	76,803	5.29%
Allowance for Loan Losses	(15,046)				(11,625)
Noninterest-Earning Assets	283,939				187,924
Total Assets	$ 3,224,940	$ 105,368			$ 2,111,717	$ 76,803
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits	$ 1,866,556	$ 13,826	0.99%		$ 1,323,927	$ 14,845	1.50%
Subordinated Debt	25,000	1,266	6.75%		25,000	1,267	6.76%
Subordinated Debt - Trust Preferred Securities	2,778	79	3.79%		-	-	0.00%
Advances from Federal Home Loan Bank (FHLB)	116,785	1,538	1.76%		59,990	1,065	2.37%
Paycheck Protection Program Liquidity Facility (PPPLF)	61,326	167	0.36%		-	-	0.00%
Other Borrowings	45,179	430	1.27%		16,863	55	0.43%
Total Interest-Bearing Liabilities	2,117,624	17,306	1.09%		1,425,780	17,232	1.61%
Noninterest-Bearing Liabilities:
Noninterest-Bearing Deposits	738,578				396,452
Other Liabilities	26,834				19,105
Total Noninterest-Bearing Liabilities	765,412				415,557
Shareholders' Equity:	341,904				270,380
Total Liabilities and Shareholders' Equity	$ 3,224,940				$ 2,111,717
Net Interest Spread			3.66%				3.68%
Net Interest Income		$ 88,062				$ 59,571
Net Interest Margin			3.97%				4.10%
Overall Cost of Funds			0.81%				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.
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)	2020			2020			2019				2020			2019
Interest Income:
Interest income	$	42,461		$	36,891		$	26,320			$	105,368		$	76,803
Core interest income		42,461			36,891			26,320				105,368			76,803
Interest Expense:
Interest expense		5,529			5,972			6,062				17,306			17,232
Core interest expense		5,529			5,972			6,062				17,306			17,232
Provision for Loan Losses: (b)
Provision for loan losses		2,491			5,443			479				9,301			2,414
Core provision expense		2,491			5,443			479				9,301			2,414
Other Income:
Other income		4,217			4,996			1,922				12,017			8,452
Sale of impaired credit		-			-			-				-			(91	)
(Gains) losses on former bank premises and equipment		635			-			594				509			594
(Gains) on sale of securities		(95	)		-			(26	)			(120	)		(84	)
(Gains) on sale of banking center		-			-			12				-			(581	)
Core other income		4,757			4,996			2,502				12,406			8,290
Other Expense:
Other expense		26,951			27,797			14,878				71,391			43,245
Acquisition-related expenses (2)		(1,206	)		(6,573	)		(288	)			(8,991	)		(674	)
Stock option exercises - excess taxes		-			-			-				(71	)		-
Early lease termination		-			-			(87	)			-			(87	)
Core other expense		25,745			21,224			14,503				62,329			42,484
Pre-Tax Income: (a)
Pre-tax income		11,707			2,675			6,823				19,387			22,364
Sale of impaired credit		-			-			-				-			(91	)
(Gains) losses on former bank premises and equipment		635			-			594				509			594
(Gains) on sale of securities		(95	)		-			(26	)			(120	)		(84	)
(Gains) losses on sale of banking center		-			-			12				-			(581	)
Acquisition-related expenses (2)		1,206			6,573			288				8,991			674
Stock option exercises - excess taxes		-			-			-				71			-
Early lease termination		-			-			87				-			87
Core pre-tax income		13,453			9,248			7,778				28,838			22,963
Provision for Income Taxes: (1)
Provision for income taxes		2,098			623			1,312				3,227			4,351
Tax on sale of impaired credit		-			-			-				-			(19	)
Tax on (gains) on former bank premises and equipment		133			-			125				107			125
Tax on (gains) on sale of securities		(20	)		-			(5	)			(25	)		(18	)
Tax on sale of banking center		-			-			3				-			(122	)
Tax on acquisition-related expenses (2)		241			1,275			60				1,607			135
Tax on stock option exercises		-			-			-				601			-
Tax on early lease termination		-			-			18				-			18
Core provision for income taxes		2,452			1,898			1,513				5,517			4,470
Net Income:
Net income		9,609			2,052			5,511				16,160			18,013
Sale of impaired credit, net of tax		-			-			-				-			(72	)
(Gains) losses on former bank premises and equipment, net of tax		502			-			469				402			469
(Gains) on sale of securities, net of tax		(75	)		-			(21	)			(95	)		(66	)
(Gains) losses on sale of banking center, net of tax		-			-			9				-			(459	)
Acquisition-related expenses (2), net of tax		965			5,298			228				7,384			539
Stock option exercises, net of tax		-			-			-				(530	)		-
Early lease termination, net of tax		-			-			69				-			69
Core net income	$	11,001		$	7,350		$	6,265			$	23,321		$	18,493
Pre-tax, pre-provision earnings (a+b)	$	14,198		$	8,118		$	7,302			$	28,688		$	24,778
Sale of impaired credit		-			-			-				-			(91	)
(Gains) losses on former bank premises and equipment		635			-			594				509			594
(Gains) on sale of securities		(95	)		-			(26	)			(120	)		(84	)
(Gains)/losses on sale of banking center		-			-			12				-			(581	)
Acquisition-related expenses (2)		1,206			6,573			288				8,991			674
Stock option exercises		-			-			-				71			-
Early lease termination								87							87
Core pre-tax, pre-provision earnings	$	15,944		$	14,691		$	8,257			$	38,139		$	25,377
Average Diluted Shares Outstanding		20,704,444			18,121,958			13,669,370				17,409,821			13,675,585
Diluted Earnings Per Share:
Diluted earnings per share	$	0.46		$	0.11		$	0.40			$	0.93		$	1.32
Sale of impaired credit, net of tax		-			-			-				-			(0.01	)
(Gains) losses on former bank premises and equipment , net of tax		0.02			-			0.03				0.02			0.03
(Gains) on sale of securities, net of tax		(0.00	)		-			(0.00	)			(0.01	)		(0.01	)
(Gains) losses on sale of banking center		-			-			0.00				-			(0.03	)
Acquisition-related expenses (2), net of tax		0.05			0.30			0.02				0.43			0.04
Stock option exercises		-			-			-				(0.03	)		-
Early lease termination, net of tax		-						0.01				-			0.01
Core diluted earnings per share	$	0.53		$	0.41		$	0.46			$	1.34		$	1.35
Pre-tax, pre-provision profit diluted earnings per share	$	0.69		$	0.45		$	0.53			$	1.65		$	1.81
Sale of impaired credit		-			-			-				-			(0.01	)
(Gains) losses on former bank premises and equipment		0.03			-			0.04				0.03			0.04
(Gains) on sale of securities		(0.01	)		-			(0.00	)			(0.01	)		(0.01	)
(Gains) losses on sale of banking center								0.00				-			(0.04	)
Acquisition-related expenses (2)		0.06			0.36			0.02				0.52			0.05
Stock option exercises		-			-			-				0.00			-
Early lease termination		-						0.01				-			0.01
Core pre-tax, pre-provision diluted earnings per share	$	0.77		$	0.81		$	0.60			$	2.19		$	1.86
(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										Nine Months Ended
	September 30,			June 30,			September 30,				September 30,			September 30,
(Dollars in thousands, except per share data)	2020			2020			2019				2020			2019
Total Quarterly/Year-to-Date Average Assets	$	3,933,631		$	3,496,074		$	2,156,759			$	3,224,940		$	2,111,717
Total Quarterly/Year-to-Date Average Equity	$	390,209		$	349,634		$	278,028			$	341,904		$	270,380
Net Income:
Net income	$	9,609		$	2,052		$	5,511			$	16,160		$	18,013
Sale of impaired credit, net of tax		-			-			-				-			(72	)
(Gains) losses on former bank premises and equipment , net of tax		502			-			469				402			469
(Gains) on sale of securities, net of tax		(75	)		-			(21	)			(95	)		(66	)
(Gains) losses on sale of banking center, net of tax		-			-			9				-			(459	)
Acquisition-related expenses (2), net of tax		965			5,298			228				7,384			539
Stock option exercises, net of tax		-			-			-				(530	)		-
Early lease termination, net of tax								69				-			69
Core net income	$	11,001		$	7,350		$	6,265			$	23,321		$	18,493
Return on average assets		0.98%			0.23%			1.02%				0.67%			1.14%
Core return on average assets		1.12%			0.84%			1.16%				0.96%			1.17%
Return on equity		9.85%			2.35%			7.93%				6.30%			8.88%
Core return on average equity		11.28%			8.41%			9.01%				9.09%			9.12%
Interest Income:
Interest income	$	42,461		$	36,891		$	26,320			$	105,368		$	76,803
Core interest income		42,461			36,891			26,320				105,368			76,803
Interest Expense:
Interest expense		5,529			5,972			6,062				17,306			17,232
Core interest expense		5,529			5,972			6,062				17,306			17,232
Other Income:
Other income		4,217			4,996			1,922				12,017			8,452
Sale of impaired credit		-			-			-				-			(91	)
(Gains) losses on former bank premises and equipment		635			-			594				509			594
(Gains) on sale of securities		(95	)		-			(26	)			(120	)		(84	)
(Gains) losses on sale of banking center		-			-			12				-			(581	)
Core other income		4,757			4,996			2,502				12,406			8,290
Other Expense:
Other expense		26,951			27,797			14,878				71,391			43,245
Acquisition-related expenses		(1,206	)		(6,573	)		(288	)			(8,991	)		(674	)
Stock option exercises - excess taxes		-			-			-				(71	)		-
Early lease termination								(87	)			-			(87	)
Core other expense	$	25,745		$	21,224		$	14,503			$	62,329		$	42,484
Efficiency Ratio:
Other expense (a)	$	26,951		$	27,797		$	14,878			$	71,391		$	43,245
Core other expense (c)	$	25,745		$	21,224		$	14,503			$	62,329		$	42,484
Net interest and other income (1) (b)	$	41,054		$	35,915		$	22,154			$	99,959		$	67,939
Core net interest and other income (1) (d)	$	41,689		$	35,915		$	22,760			$	100,468		$	67,861
Efficiency ratio (a/b)		65.65%			77.40%			67.16%				71.42%			63.65%
Core efficiency ratio (c/d)		61.75%			59.10%			63.72%				62.04%			62.60%
Total Average Interest-Earnings Assets	$	3,636,383		$	3,176,156		$	1,977,474			$	2,956,047		$	1,935,418
Net Interest Income:
Net interest income	$	36,932		$	30,919		$	20,258				88,062		$	59,571
Loan discount accretion		(2,270	)		(1,465	)		(544	)			(4,025	)		(1,802	)
Net interest income excluding loan discount accretion	$	34,662		$	29,454		$	19,714			$	84,037		$	57,769
Net interest margin (2)		4.06%			3.89%			4.10%				3.97%			4.10%
Net interest margin excluding loan discount accretion (2)		3.81%			3.71%			3.99%				3.79%			3.98%
Net interest spread		3.81%			3.59%			3.66%				3.66%			3.68%
Net interest spread excluding loan discount accretion		3.56%			3.41%			3.55%				3.48%			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)
	September 30,			June 30,			September 30,
(Dollars in thousands, except per share data)	2020			2020			2019
Total Shareholders' (Common) Equity:
Total shareholders' equity	$	398,086		$	386,336		$	280,340
Goodwill		(53,627	)		(53,649	)		(48,333	)
Core deposit intangible		(10,061	)		(10,389	)		(6,916	)
Total tangible common equity	$	334,398		$	322,298		$	225,091
Total Assets:
Total assets	$	3,954,670		$	3,961,138		$	2,220,840
Goodwill		(53,627	)		(53,649	)		(48,333	)
Core deposit intangible		(10,061	)		(10,389	)		(6,916	)
Total tangible assets	$	3,890,982		$	3,897,100		$	2,165,591
Common shares outstanding		20,667,237			20,667,237			13,274,823
Book value per common share	$	19.26		$	18.69		$	21.12
Tangible book value per common share	$	16.18		$	15.59		$	16.96
Common equity to total assets		10.07%			9.75%			12.62%
Tangible common equity to tangible assets		8.59%			8.27%			10.39%

FAQ

What were Business First Bancshares' earnings for Q3 2020?

Business First Bancshares reported earnings of $9.6 million, or $0.46 per diluted share, for Q3 2020.

How did the net interest margin change for BFST in Q3 2020?

The net interest margin for BFST increased to 4.06% in Q3 2020, compared to 3.89% in the previous quarter.

What is the dividend declared by BFST for Q3 2020?

BFST declared a quarterly dividend of $0.10 per share for Q3 2020.

How much did total loans increase for BFST year-over-year?

Total loans held for investment increased by 81.89% year-over-year.