8-K: Business First Bancshares Reports Solid Q4 and FY 2024 Results, Fueled by Oakwood Acquisition and Organic Growth

Business First Bancshares announces its Q4 and FY 2024 financial results, highlighting growth driven by the acquisition of Oakwood Bancshares and continued organic expansion.

Summary

• Business First Bancshares, Inc. (BFST) reported net income available to common shareholders of $15.1 million, or $0.51 per diluted common share, for Q4 2024.
• Core net income, a non-GAAP measure, was $19.5 million, or $0.66 per diluted common share.
• For the year ended December 31, 2024, net income available to common stockholders was $59.7 million, or $2.26 per diluted common share.
• Core net income for the year was $65.7 million, or $2.49 per diluted common share.
• The acquisition of Oakwood Bancshares, Inc. was completed during the quarter.
• Net interest margin (NIM) expanded to 3.61%, and the net interest spread was 2.77%.
• Excluding loan discount accretion, NIM was 3.56%, and the net interest spread was 2.72%.
• Noninterest income sources showed increasing revenue, with the customer swap business generating $1.3 million in revenue.
• Deposits increased by $870.4 million, or 15.43%, during the quarter, with organic deposit growth of $156.8 million.
• Loans held for investment increased by $761.3 million, or 14.58%, with organic loan growth of $62.8 million.
• Texas-based loans represented approximately 41% of the overall loan portfolio.
• The ratio of nonperforming loans to loans held for investment decreased to 0.42%.
• Shareholders' equity increased by $99.9 million, with $103.8 million attributed to the Oakwood acquisition.
• Book value per common share increased to $24.62.
• Tangible book value per common share decreased to $19.92 due to decreases in accumulated other comprehensive income (AOCI).

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While net income decreased, the company highlights growth in deposits and loans, successful acquisition, and expansion of NIM. The management expresses confidence in meeting future expectations.

Positives

• Net interest margin expanded, indicating improved profitability.
• Noninterest income sources are growing, diversifying revenue streams.
• Strong deposit growth, both organically and through acquisition, enhances funding base.
• Solid credit quality metrics, with a decrease in nonperforming loans.
• Successful acquisition of Oakwood Bancshares, Inc., expanding market presence.
• Organic loan growth was highlighted by a $54.3 million or 3.63% increase in the commercial and industrial (C&I) portfolio and $20.8 million or 2.80% in the residential real estate portfolio.

Negatives

• Net income available to common shareholders decreased compared to the linked quarter and prior year.
• Tangible book value per common share decreased due to negative AOCI adjustments.
• Other expenses increased due to acquisition-related costs.

Risks

• Negative fair value adjustments in the securities portfolio impacted AOCI.
• Acquisition-related expenses increased other expenses.
• The interest rate environment could impact loan and interest-earning asset yields.

Future Outlook

Management anticipates meeting and growing stakeholder expectations in 2025, driven by solid fundamental performance, increased diversification of revenue sources, healthy asset quality, successful incorporation of new team members, and expansion of the client base.

Management Comments

• Jude Melville, chairman, president and CEO of Business First Bancshares, stated that the fourth quarter of 2024 positively reflected the year as a whole.
• Melville highlighted solid fundamental performance, productive growth, increasing diversification of revenue sources, healthy asset quality, successful incorporation of new team members, and expansion of the client base.

Industry Context

The acquisition of Oakwood Bancshares aligns with the industry trend of consolidation to achieve economies of scale and expand market presence. The focus on organic growth and diversification of revenue streams reflects a strategy to navigate the evolving banking landscape and interest rate environment.

Comparison to Industry Standards

• Comparing BFST's efficiency ratio of 63.91% to peers like First Bancshares (FBMS) and FGBI, which have similar asset sizes and operate in the Gulf South region, provides a benchmark for operational effectiveness.
• BFST's ROAA of 0.78% can be compared to regional banks such as Home Bancorp (HBCP) and IBERIABANK (now First Horizon, FHN) to assess profitability relative to asset size.
• The loan-to-deposit ratio of 91.86% can be benchmarked against community banks like Origin Bancorp (OBK) and Hancock Whitney (HBHC) to evaluate liquidity management.
• BFST's TCE/TA ratio of 7.63% can be compared to banks like Renasant Corporation (RNST) and South State Corporation (SSB) to assess capital adequacy relative to tangible assets.

Stakeholder Impact

• Shareholders will receive a common dividend of $0.14 per share and a preferred dividend of $18.75 per share.
• Employees benefit from the successful incorporation of new team members and expansion of the client base.
• Customers gain access to expanded services and locations through the Oakwood acquisition.
• The company's performance impacts the communities it serves through its banking operations and social impact initiatives.

Next Steps

• Executive management will host a conference call and webcast on January 23, 2025, to discuss the results.

Key Dates

Keywords

financial results, Business First Bancshares, b1BANK, Oakwood Bancshares, acquisition, net income, deposits, loans, NIM, noninterest income, credit quality