Sign in

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

BF

Business First Bancshares, Inc. (BFST)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 GAAP diluted EPS was $0.51, down from $0.65 in Q3, as results absorbed a $4.8M CECL provision tied to Oakwood and higher conversion/merger costs; core diluted EPS was $0.66 (flat vs Q3) .
  • Net interest margin expanded 10 bps sequentially to 3.61% (core 3.56%), driven by reduced funding costs and disciplined loan pricing; net interest income rose to $65.7M from $56.1M .
  • Balance sheet inflected positively: deposits +$870.4M (+15.4%) and loans +$761.3M (+14.6%), with organic deposit growth of $156.8M and organic loans +$62.8M; NPL ratio improved to 0.42% .
  • Management reiterated margin expansion ambitions (low-to-mid single-digit bps per quarter), a 2025 core expense run-rate in the low-$50M/quarter, and noninterest income building toward $40–$50M in 2025; material Oakwood cost saves are not expected until post-conversion (2026) .
  • Board declared a $0.14 common dividend and $18.75 preferred dividend; TBVPS declined to $19.92 on AOCI pressure from securities fair value marks, serving as a watch point into 2025 .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded 10 bps q/q to 3.61% (core 3.56%) on lower deposit costs; core NIM ex-accretion improved to 3.56% from 3.46% .
  • Strong balance sheet growth: deposits +$870.4M and loans +$761.3M q/q, with organic deposit growth +$156.8M and organic loan growth +$62.8M; C&I loans grew $54.3M q/q .
  • Noninterest income initiatives gaining traction: customer swap revenue reached $1.3M in Q4; CFO highlighted diversified fee pipeline and upward trajectory into 2025 .
  • Credit metrics stable-to-better: NPLs/Loans fell to 0.42% (from 0.50%); ACL/Loans rose to 0.98% including Oakwood, bolstering reserve coverage .

Quote: “Solid fundamental performance led to productive growth, increasing diversification of revenue sources, healthy asset quality…point to an exciting 2025” — Jude Melville, CEO .
Quote: “Our plan is to continue to grind out low to mid single-digit margin expansion throughout the year” — CFO Gregory Robertson .

What Went Wrong

  • GAAP EPS declined to $0.51 from $0.65, with a $4.8M CECL provision for Oakwood and higher other expenses (+$7.1M) weighing on results; core EPS held at $0.66 .
  • Securities portfolio experienced $21.4M in negative fair value adjustments; AOCI declined by $16.9M, reducing TBVPS to $19.92 (from $20.60) .
  • Expense pressure: Q4 GAAP other expenses were $49.6M (+16.8% q/q), and management does not expect material Oakwood cost savings until after late-2025 conversion (benefits 2026) .
  • Noninterest-bearing deposits share dipped modestly to 20.8% of total deposits; overall cost of funds still elevated at 2.93% despite improvement .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Diluted EPS ($)$0.62 $0.65 $0.51
Core Diluted EPS ($)$0.64 $0.68 $0.66
Net Interest Income ($USD Millions)$54.0 $56.1 $65.7
Other Income ($USD Millions)$12.18 $10.77 $11.86
Net Interest Margin (%)3.45% 3.51% 3.61%
Efficiency Ratio (%)65.14% 63.45% 63.91%
KPIsQ2 2024Q3 2024Q4 2024
Loans HFI ($USD Billions)$5.16B $5.22B $5.98B
Deposits ($USD Billions)$5.56B $5.64B $6.51B
NPLs/Loans (%)0.43% 0.50% 0.42%
ACL/Loans (%)0.86% 0.86% 0.98%
NIM ex-Accretion (%)3.34% 3.46% 3.56%
Overall Cost of Funds (%)3.07% 3.07% 2.93%
Swap Fee Income ($USD Millions)$0.29 $0.94 $1.29
Q4 2024 Loans HFI Composition ($USD Millions)Amount
Commercial$1,868.7
Real Estate – Commercial$2,483.2
Construction$670.5
Residential$884.5
Consumer & Other$74.5
Total Loans HFI$5,981.4

Note: No Wall Street consensus comparisons shown due to S&P Global estimates unavailability (see Estimates Context).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core NIM trajectory2025 (quarterly)Not quantifiedLow-to-mid single-digit bps expansion per quarter New
Core expenses run-rate2025Not quantifiedLow-$50M per quarter core expenses New
Discount accretion2025Not quantified~$0.7–$0.8M per quarter; ~$3M full year New
Noninterest incomeFY 2025Not quantifiedTarget $40–$50M; bumpy progression New
Deposit beta (easing cycle)Near-term cycleNot quantified45%–55% modeled New
Borrowings optimization2025Not quantifiedOpportunity to pay down ~$50M FHLB maturities, contingent on deposit growth New
Oakwood cost synergies2025–2026Previously implied post-conversionNo material cost saves in 2025; expect benefits after late-2025 conversion (impact 2026) Maintained
Tax rate (non-GAAP modeling)Ongoing~21.129% used historicallyContinue using ~21.129% for non-GAAP reconciliations Maintained
DividendsQ4 2024$0.14 prior quarter$0.14 common; $18.75 preferred declared Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Margin expansionNIM improved to 3.45% (Q2) and 3.51% (Q3) via pricing discipline Plan for low-to-mid single-digit bps quarterly expansion; core NIM 3.56% Improving
Deposit costs/betasMoney market rates declined in Q3; deposits +$77.3M Weighted avg total deposit cost 2.81% in Q4; model betas 45–55% Easing cost
Noninterest income build (swaps/SBA/LSP)Q2 SBA/USDA gains; swaps $0.29M (Q2), $0.94M (Q3) Swaps $1.3M (Q4); 2025 target $40–$50M NI; diversified contributors Upward trajectory
Loan mix and pricingQ2/Q3 C&I growth; C&D de-risking Q4 C&I +$54.3M; construction −$31.9M; weighted avg new/renewed ~7.58% More C&I, disciplined
Credit qualityNPLs rose to 0.50% in Q3; reserve steady NPLs down to 0.42%; ACL/Loans 0.98%; NCOs 0.03% Stable/improving
Borrowings optimizationSome BTFP and FHLB dynamics in Q2/Q3 Potential ~$50M FHLB paydown in 2025; brokered deposit repricing cadence Positive optionality
Oakwood integrationDeal closed Oct 1; limited immediate synergies No material cost saves in 2025; conversion timeline; accretion outlook Post-conversion benefits

Management Commentary

  • CEO framing: diversified growth and margin discipline delivered a “solid constructive year,” with preparation toward a responsible path to ~$10B assets and stronger fee infrastructure; M&A (Oakwood, Waterstone LSP) executed without capital raises, accreting TCE/TBV/Leverage ratios .
  • CFO highlights: NIM expanded more than expected on lower deposit costs; deposit betas ~51% for late-2024 cuts; modeled betas 45–55%; discount accretion ~$0.7–$0.8M/quarter in 2025; core expenses expected low-$50M/quarter; noninterest income building, with swaps at $1.3M in Q4 .

Selected quotes:

  • “Continue to grind out low to mid single-digit margin expansion throughout the year…key is to attract and grow deposits organically.” — CFO .
  • “Ending the year between $40 and $50 [million]…noninterest income target” — CFO on 2025 fees .

Q&A Highlights

  • Margin outlook: Management targets low-to-mid single-digit bps quarterly core NIM expansion; achievable upside tied to deposit growth and sustained loan pricing discipline .
  • Loan pricing/competition: Weighted average rates on new/renewed originations ~7.58%; emphasis on relationship pricing with new tools; willing to trade growth for margin quality .
  • Fee income trajectory: 2025 noninterest income expected $40–$50M, with swaps and SBA platform contributing; quarterly cadence may be “bumpy” .
  • Borrowings/wholesale funding: Opportunity to reduce ~$50M FHLB advances in 2025 if deposits grow; brokered deposits layered with staggered maturities for repricing .
  • Repricing/renewals: ~$600M fixed-rate loans maturing next 12 months at ~6.43% expected to reprice in mid-7% range; beta dynamics favorable; focus on net growth and disciplined ALM .
  • Reserves/credit: Reserve ratio to remain around current levels; 120 bps per $100K of new loans in model; no systemic credit concerns, occasional one-offs expected .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q2–Q4 2024 were unavailable at the time of this analysis due to data access limits. As a result, we cannot show beat/miss vs Wall Street this quarter. Values would typically be retrieved from S&P Global.

Key Takeaways for Investors

  • Margin momentum is intact: sequential NIM expansion to 3.61% (core 3.56%) with modeled deposit betas of 45–55% suggests further near-term tailwind as rate cuts flow through deposits .
  • Funding mix improving: overall cost of funds fell to 2.93%; Q4 deposit growth was robust (+$870M), including $157M organic, supporting NII leverage and lower reliance on wholesale .
  • Fee diversification building: swaps reached $1.3M in Q4; management targets $40–$50M noninterest income in FY25, reducing earnings sensitivity to spread dynamics .
  • Loan growth quality over quantity: organic C&I growth (+$54.3M) with de-risking of construction portfolio (−$31.9M); ~53% of loans repricing or maturing in 12 months provide pricing discipline opportunities .
  • Watch TBV/AOCI: Securities fair value marks drove AOCI −$16.9M and TBVPS down to $19.92; monitor duration/AFS strategy and rate path .
  • Oakwood integration: near-term earnings include CECL provision/no material cost saves in 2025; benefits expected post late-2025 conversion (2026), keeping medium-term synergy optionality .
  • Capital/reserves adequate: ACL/Loans 0.98% with NPLs/Loans down to 0.42% supports credit stability into 2025, though one-off NCOs can occur .