press release

Oct. 21, 2021, 7:31 a.m. EDT

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

BATON ROUGE, La., Oct 21, 2021 (GLOBE NEWSWIRE via COMTEX) -- BATON ROUGE, La., Oct. 21, 2021 (GLOBE NEWSWIRE) -- Business First Bancshares, Inc. /zigman2/quotes/209823183/composite BFST -0.27% (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., /zigman2/quotes/209823183/composite BFST -0.27% 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 $