Sign in

You're signed outSign in or to get full access.

BF

Business First Bancshares, Inc. (BFST)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid profitability and margin expansion: diluted EPS $0.65, GAAP ROAA 1.00%, GAAP NIM 3.68% (+7 bps QoQ), and efficiency ratio 63.85% .
  • EPS beat S&P Global consensus by $0.04 ($0.65 actual vs $0.606 estimate); “revenue” (S&P-defined) was a modest miss ($75.8M actual vs $77.5M estimate)*. Values retrieved from S&P Global.
  • Noninterest income remained a contribution lever (SBA gains $1.3M; swaps $0.739M), while funding costs fell (overall cost of funds down 11 bps QoQ to 2.82%), supporting margin gains .
  • Credit quality normalized with two isolated C&I credits moving to nonaccrual; NPLs/Loans rose to 0.69% and ACL/Loans to 1.01%, with $2.3M specific reserves booked .
  • Catalysts ahead: continued low-single-digit core margin “grind higher,” loan growth targeted low-to-mid single-digit QoQ, and core expenses guided to low-$50M per quarter as Oakwood conversion/IT investments progress .

What Went Well and What Went Wrong

What Went Well

  • Margin and spread expansion: GAAP NIM 3.68% (+7 bps QoQ); net interest spread 2.91% (+14 bps QoQ), driven by lower deposit costs (overall cost of funds down to 2.82%) .
  • Fee income engines: SBA loan sales produced $1.3M (+$1.0M QoQ), swaps contributed $0.739M, and equity investments added $0.751M in Q1 .
  • Capital build and TBV growth: TCE/TA rose to 8.06% and TBVPS increased to $20.84 (+4.6% QoQ), aided by earnings (≈70% of equity increase) and AOCI improvement .
    • CEO: “We increased our capital, our reserves, and our per share tangible book value at healthy rates… growth of margins in our core spread business” .

What Went Wrong

  • Credit migration: NPLs/Loans rose 27 bps QoQ to 0.69%, with two C&I relationships (≈$8.4M) driving nonaccruals; one SBA loan fully reserved; $2.3M specific reserves taken .
  • Deposit balances declined: total deposits fell $53.1M (-0.82% QoQ), largely from noninterest-bearing outflows; new account openings were strong ($379.9M), but runoff followed seasonal inflows in Q4 .
  • Core expenses up modestly: Other expenses +$1.0M QoQ (salaries/benefits +$1.4M; ≈$430k acquisition-related), with continued IT and conversion investments weighing on near-term expense run-rate .

Financial Results

Performance vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Total Revenue (Net interest + other income) ($USD Millions)$66.901 $77.565 $79.210
Net Interest Income ($USD Millions)$56.114 $65.729 $65.983
Other Income ($USD Millions)$10.774 $11.857 $13.226
Diluted EPS ($USD)$0.65 $0.51 $0.65
Net Income to Common ($USD Millions)$16.492 $15.138 $19.193
Net Interest Margin %3.51% 3.61% 3.68%
Net Interest Spread %2.54% 2.77% 2.91%
Efficiency Ratio %63.45% 63.91% 63.85%

Vs Wall Street estimates (S&P Global)

MetricEstimateActualSurprise
Diluted EPS ($USD)$0.606*$0.65 +$0.044*
Revenue ($USD Millions)$77.536*$75.767*-$1.769*

Values retrieved from S&P Global.

KPIs and balance sheet quality

KPIQ1 2024Q4 2024Q1 2025
NPLs/Total Loans (%)0.43% 0.42% 0.69%
ACL/Total Loans (%)0.88% 0.98% 1.01%
Loans/Deposits (%)91.32% 91.86% 92.61%
Tangible Book Value/Share ($)$18.61 $19.92 $20.84
Tier 1 Leverage Ratio (%)9.38% 9.53% 9.70%
Total Risk-based Capital Ratio (%)12.78% 12.75% 13.03%

Loan portfolio composition (Q1 2025)

CategoryOutstanding ($USD Billions)NPLs (%)
Commercial$1.78 0.98%
CRE – Owner-Occupied$1.05 0.34%
CRE – Non Owner-Occupied$1.30 0.61%
Construction & Land$0.634 0.78%
1–4 Family$0.582 1.11%
Total (subset shown)$5.34 0.94%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core NIM trajectory2025 (near-term)Margin expansion supported by lower funding costs noted in Q4; overall cost of funds fell 14 bps QoQ Expect low single-digit bps improvement per quarter; +1–2 bps extra if Fed cuts 25 bps Clarified/maintained
Core expenses2025Conversion-related expenses expected; synergies later in 2025 Core noninterest expense “low $50M per quarter” run-rate; increases tied to merit/IT/infrastructure; no material Oakwood savings until late 2025 Updated (more explicit run-rate)
Loan growth2025Measured growth; low-single-digit pace prior quarters Low-to-mid single-digit growth QoQ; full-year likely mid-to-low single digits given flat Q1 Maintained (quantified)
Deposit beta/retention2025Modeled deposit beta 45–55% in downward rate cycle; Core CD retention 83% (Mar) Achieved 54% down-cycle interest-bearing deposit beta in Q1; retention 83% in Mar; expect competitive pressures ahead Maintained (execution evidenced)
Loan discount accretion2025—~$0.75–$0.80M per quarter expected New
DividendsQuarterly$0.14 common declared in prior quarters $0.14 common; $18.75 preferred declared for Q1 (paid May 31, 2025 to holders of record May 15) Maintained
Tax rate (non-GAAP assumption)Ongoing~21.129% marginal tax rate used in non-GAAP reconciliations Same usage Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Margin/NIMNIM rose to 3.51% in Q3; stable cost of funds; NIM 3.61% in Q4 with cost of funds down 14 bps NIM 3.68%, core NIM +8 bps QoQ; funding cost down to 2.82% Improving
Deposits & funding costsQ3 deposits +$77M; money market rates reduced; Q4 organic deposits +$157M Deposits -$53M QoQ; new accounts $379.9M; expect flattish Q2 post branch sale Mixed; competitive pressure
Noninterest income (SBA, swaps)Swaps +$0.7M QoQ in Q3; Q4 swaps $1.3M SBA gains $1.3M; swaps $0.739M; equity pass-through $0.751M; expect slightly lower near-term run-rate vs Q1 Building, but lumpy
Credit qualityQ3 NPLs up to 0.50%; Q4 NPLs down to 0.42% NPLs up to 0.69% (two C&I relationships); $2.3M reserves; NCOs improved Normalization/regression in isolated cases
Capital/TBVTBVPS rose to $20.60 in Q3; to $19.92 in Q4 (AOCI) TBVPS $20.84; TCE/TA 8.06%; equity +$26.8M; AOCI +$10.1M Strengthening
Oakwood integration/M&AOakwood closed Oct 1; synergy timing post conversion Integration proceeding; internal core conversion in Q2 and Oakwood in September; M&A optional, focus LA/TX footprint On track; opportunistic

Management Commentary

  • CEO: “We increased our capital, our reserves, and our per share tangible book value at healthy rates, while demonstrating diversity of our revenue streams and growth of margins in our core spread business” .
  • CFO: “GAAP NIM expanded 7 bps QoQ to 3.68%, core NIM +8 bps; deposit costs fell… we expect loan discount accretion to average ~$750–$800k per quarter” .
  • CEO on credit: “We did experience modest negative credit migration… primarily due to 2 C&I relationships… we continue to feel good about the credit quality of the broader portfolio” .
  • Strategy: Focus on deposit growth in DFW post conversion; maintain pricing discipline; leverage IT tools to price full relationships and extract CRE yield appropriately .

Q&A Highlights

  • Loan growth outlook: Pipeline supports low-to-mid single-digit QoQ loan growth; full-year mid-to-low single digits given flat Q1 .
  • Margin trajectory: Expect continued low single-digit bps core margin improvement per quarter; +1–2 bps tailwind from a 25 bps Fed cut scenario .
  • Fee income run-rate: Near-term core noninterest income expected ~$11.5–$12.0M per quarter given lumpy SBIC/SBA contributions; longer-term trend upward .
  • Deposits/branch sale: Q2 deposit growth likely muted given $51M deposit sale at 8% premium closed April 4; organic momentum remains .
  • Credit watchlist/CRE: Special mention increase largely rate-stress driven; watch list ~6% of CRE loans; recent nonaccruals are C&I, not CRE .
  • Capital return: Buyback optionality considered but not near-term priority; continue building capital given opportunities/challenges ahead .

Estimates Context

  • EPS: Q1 2025 diluted EPS $0.65 beat S&P Global consensus $0.606 by $0.044*. Values retrieved from S&P Global.
  • Revenue: Q1 2025 S&P-defined revenue $75.8M missed consensus $77.5M by $1.8M*. Values retrieved from S&P Global.
  • Recent trend: Q4 2024 and Q3 2024 EPS both beat S&P consensus ($0.66 vs $0.49; $0.68 vs $0.566)* while revenue was mixed (Q4 below; Q3 in line)*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin expansion is the near-term driver: falling funding costs and disciplined loan pricing support low-single-digit bps NIM gains per quarter; any Fed cut adds 1–2 bps upside .
  • Fee income diversification is working: SBA sales and swaps provide incremental growth; expect quarter-to-quarter lumpiness but a constructive trajectory .
  • Credit normalization bears watching: two isolated C&I relationships drove NPL uptick; reserves were proactively increased; no broad deterioration signaled .
  • Capital strength and TBV growth enhance optionality: TCE/TA at 8.06% and TBVPS up 4.6% QoQ provide buffers for macro uncertainty and selective growth/M&A .
  • Deposit competition is intensifying: despite strong new accounts, balances fell; retain focus on noninterest-bearing growth and core CD retention (83% in March) .
  • Expense run-rate set in low $50Ms: continued investments in IT/infrastructure ahead of conversions; cost saves more likely late 2025 post Oakwood conversion .
  • Near-term trading: EPS beat and margin expansion are positives; watch credit headlines and deposit pricing pressure; medium-term thesis hinges on sustaining NIM improvements and fee income scale-up while conversions complete .