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Business First Bancshares, Inc. (BFST)·Q2 2025 Earnings Summary

Executive Summary

  • BFST delivered solid Q2 2025 results: GAAP diluted EPS of $0.70 (+$0.05 q/q), core diluted EPS of $0.66 (+$0.01 q/q), and stable NIM at 3.68%; non-GAAP margin excluding accretion held at 3.64% .
  • EPS beat Wall Street consensus by $0.06 ($0.642 consensus vs $0.70 actual); revenue was modestly above consensus ($78.94M consensus vs $79.23M actual)*. Expectation-sensitive drivers included branch-sale gain (+$3.36M) and conversion costs ($1.0M), both disclosed and adjusted in core results .
  • Credit migrated negatively: NPLs/Loans rose to 0.97% (from 0.69% in Q1); management stressed reserves and imminent resolution on key relationships, with net charge-offs at 0.01% .
  • Strategic catalysts: completed FIS core conversion; announced Progressive Bancorp acquisition (expected close early Q1’26); continued deposit cost management and noninterest income initiatives (SBA, swaps) .
  • Trading narrative catalysts: EPS beat and margin trajectory into H2 (mgmt guiding +4–6 bps for rest of year), credit resolution pace, Progressive accretion path, and disciplined deposit beta (45–55%) .

What Went Well and What Went Wrong

  • What Went Well

    • Margin resilience and deposit cost control: NIM 3.68% with overall cost of funds down 4 bps q/q; non-GAAP NIM ex. accretion flat at 3.64% despite conversion liquidity drag (~3 bps) and branch-sale replacement cost (~2 bps) .
    • Operational execution: FIS core conversion completed; “positions us for more efficient processing… and future growth,” CEO Jude Melville stated .
    • Strategic progress: Signed definitive agreement to acquire Progressive Bancorp; strengthens North Louisiana franchise and deposit profile .

  • What Went Wrong

    • Credit metrics worsened: NPLs/Loans rose 28 bps q/q to 0.97%; NPAs/Assets rose 21 bps to 0.76% as several relationships migrated to nonaccrual .
    • Funding optics: Borrowings increased $179M (+41%) on short-term FHLB advances to facilitate conversion and correspondent bank transition .
    • Noninterest income mix volatility: SBIC pass-through income was -$246k (~$500k below expectations), offset by $3.36M branch-sale gain; underscores lumpy nature of fee lines .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Diluted EPS (GAAP) ($)0.62 0.65 0.70
Core Diluted EPS ($)0.64 0.65 0.66
Net Interest & Other Income ($MM)66.19 79.21 81.50
Net Interest Income ($MM)54.01 65.98 67.04
Net Interest Margin (%)3.45 3.68 3.68
Net Interest Spread (%)2.47 2.91 2.88
Efficiency Ratio (%)65.14 63.85 62.83
ROAA (%)0.95 1.00 1.07
ROACE (%)10.94 10.48 10.87
Revenue vs EstimatesQ2 2024Q1 2025Q2 2025
Revenue Consensus Mean ($MM)62.81*77.54*78.94*
Actual Revenue ($MM)64.88*75.77*79.23*
EPS vs EstimatesQ2 2024Q1 2025Q2 2025
EPS Consensus Mean ($)0.51*0.606*0.642*
Actual EPS (GAAP diluted) ($)0.62 0.65 0.70

S&P Global disclaimer: *Values retrieved from S&P Global.

Balance/Asset Quality KPIsQ2 2024Q1 2025Q2 2025
Loans HFI ($MM)5,162.85 5,980.92 6,047.65
Deposits ($MM)5,563.67 6,458.18 6,419.65
Loan-to-Deposit (%)97.80 92.61 94.21
Borrowings ($MM, FHLB)305.21 317.35 492.95
NPLs/Loans (%)0.43 0.69 0.97
NPAs/Assets (%)0.36 0.55 0.76
ACL/Loans (%)0.86 1.01 1.02
Net Charge-offs / Avg Loans (%)0.03 0.02 0.01

Notes:

  • Q2’25 GAAP EPS includes a $3.36M gain on a branch sale (Kaplan); core EPS excludes non-core items (acquisition and conversion costs) .
  • Q2’25 noninterest income totaled $14.42M; swap fee income $0.81M; SBA gains $0.78M; branch-sale gain $3.36M; pass-through investments -$0.25M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core NIM trajectoryH2 2025“Grind out low single-digit expansion” (Q1 call) +4–6 bps improvement for remainder of year; likely flatter in Q3 and up in Q4 Clarified upward trajectory
Core Noninterest ExpenseQ3 2025 / Q4 2025Low $50MM/quarter expected (Q1 call) Q3: low $50MM run-rate; Q4: partial cost saves post Oakwood conversion Maintained with timing detail
Loan Growth (annualized per quarter)2025Low-to-mid single digits (Q1) Mid-single digits; trending toward high end of 4–6% range Slightly more constructive
Deposit BetasNear-term easing cycle45–55% achievable (Q4/Q1) 45–55% reiterated; core CD retention 96% in June Maintained
Loan Discount Accretion2025~$0.75–0.80MM/quarter ~$0.75–0.80MM/quarter Maintained
Oakwood Systems ConversionQ3–Q4 2025September 2025 (prior) September 27, 2025; partial savings in Q4 Confirmed timing
DividendsQ3 2025Common $0.14; Preferred $18.75 declared in Q1 Common $0.14; Preferred $18.75 declared July 24; payable Aug 31 Maintained

Earnings Call Themes & Trends

TopicQ4 2024 + Q1 2025 (Previous Mentions)Q2 2025 (Current)Trend
Core conversion/technologyPlanned IBS/FIS core; internal conversion in May; Oakwood in Sept; investment to prepare for ~$10B scale FIS conversion executed; “positions us for more efficient processing”; change management underway Improving
Margin pathLow/mid single-digit quarterly expansion outlook; deposit cost declines after rate cuts +4–6 bps improvement expected rest of year; Q3 flatter, Q4 up; excess liquidity drag acknowledged Constructive
Deposits/betas45–55% achievable; CD retention 83–90% 45–55% reiterated; June core CD retention 96%; leveraging brokered CDs efficiently Improving
Credit qualityIsolated migrations; added reserves; NPLs up to 0.69% in Q1 NPLs up to 0.97%; mgmt expects resolution on 3 credits, with one imminent; NCOs still very low Worsening near term, resolution expected
Noninterest incomeStrength in swaps and SBA; bumpy trajectory; SBIC contributions notable Swaps $0.81M; SBA $0.78M; SBIC -$0.25M (~$0.5M below expectations) Mixed/lumpy
Texas/Dallas positioningOakwood integration; deposit focus post conversion Texas ~40% of loans; goal to deepen deposits as conversion completes; branch optimization executed Building
Tariffs/macroUncertainty impacting pace; watch deposit/loan pricing Pipeline building; competition increasing; discipline maintained Stabilizing

Management Commentary

  • “We again posted 1% ROAA earnings. We maintained our net interest margin. We increased our capital levels, as well as increasing our tangible book value by almost 15% annualized.” — Jude Melville, CEO .
  • “GAAP… included a $3.36 million gain on a sale of a branch… and a $1 million core conversion expense. Excluding these… core EPS was $0.66.” — Greg Robertson, CFO .
  • “Our GAAP reported second quarter NIM remained unchanged… Non-GAAP core NIM also remained unchanged… lower-cost deposits divested… ~2 bps drag; excess liquidity… ~3 bps drag.” — Greg Robertson .
  • “We think we can improve margin… in the four to six basis points range for the rest of the year.” — Greg Robertson .
  • “Q2 NPLs increased… driven by a negative migration of three… relationships… we are 34% reserved on one credit, 14% reserved on the other… expect resolution in Q3/Q4.” — Greg Robertson .

Q&A Highlights

  • Excess liquidity: Management plans to carry elevated liquidity until Oakwood conversion; related to correspondent bank transition; margin drag quantified (~3 bps) .
  • Credit migration: Three relationships (total ~$23.7M) drove NPL rise; reserves in place; one imminent resolution; expect NPLs to drop as resolutions occur .
  • Expense outlook: Core noninterest expense to low $50MM in Q3; partial Oakwood cost saves in Q4 .
  • Margin trajectory: +4–6 bps improvement expected over remainder of 2025; timing subject to liquidity and repricing mix .
  • Dallas deposits: Focus after conversions; franchise critical mass achieved; deposit growth expected to follow .

Estimates Context

  • Q2 2025 EPS: Actual $0.70 vs consensus $0.642 → beat by ~$0.058*; core EPS was $0.66 (non-GAAP) .
  • Q2 2025 Revenue: Actual $79.23M vs consensus $78.94M → modest beat*; company “net interest and other income” was $81.50M, reflecting reporting definitions .
  • Q1 2025 EPS: Actual $0.65 vs consensus $0.606 → beat*; Revenue: $75.77M actual vs $77.54M consensus → modest miss* (company “net interest and other income” $79.21M) .
  • Q2 2024 EPS: Actual $0.62 vs consensus $0.51 → beat*; Revenue: $64.88M actual vs $62.81M consensus → beat*.
    S&P Global disclaimer: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings quality: Core EPS up modestly q/q despite one-time conversion costs; GAAP EPS benefited from disclosed branch-sale gain; underlying NIM stable with path to incremental improvement .
  • Credit watch: NPLs ticked up; management expects resolutions this year; NCOs remain very low (0.01%). Monitor reserve adequacy and resolution timing for de-risking catalyst .
  • Margin catalysts: Deposit beta discipline (45–55%) and repricing of fixed-rate loans support H2 NIM; excess liquidity should normalize post Oakwood conversion .
  • Deposit strategy: Mix optimization (brokered CDs vs higher-cost institutional MMAs), high CD retention (96%), and Dallas deposit focus post conversion underpin funding cost control .
  • Strategic upside: Progressive acquisition adds scale and strengthens Louisiana; integration confidence reinforced by FIS core migration .
  • Fee income trajectory: Swaps and SBA build continuing, but line-item volatility persists; long-run expectation positive as bank and correspondent offerings scale .
  • Capital and TBV: TCE/TA improved to 8.19%; TBVPS up to $21.61; common equity/assets 9.77%—supporting organic/inorganic optionality .

Appendix: Additional Relevant Press Releases

  • Promotion: Heather Roemer named EVP & CAO to lead integrations and strategic initiatives .
  • Progressive acquisition announcement (July 7, 2025): ~3.05M BFST shares to Progressive holders; expected close early Q1’26 .
  • Q2 earnings release schedule (July 3, 2025): Earnings and call timing .