Business First Bancshares Q1 2025: Unraveling Key Contradictions in Loan Growth, Non-Interest Income, and Margin Expectations

Loan growth expectations, non-interest income expectations, core margin expectations, deposit growth and strategy, and deposit pressure and margin expectations are the key contradictions discussed in Business First Bancshares' latest 2025Q1 earnings call.



Profitability and Margin Expansion:
- Business First Bancshares, Inc. reported a core net interest margin expansion of 8 basis points for the linked quarter, expanding from 3.56% to 3.64%.
- The expansion was driven by disciplined pricing on new loan production and a continued downward trend in funding costs.

Capital and Expense Management:
- The company's TCE ratio exceeded 8%, with a consolidated TRBC ratio exceeding 13%, indicating strong capital levels.
- Improved capitalization was due to retained earnings, while expense management led to better-than-expected trends, supporting efficiency ratios.

Non-interest Revenue Growth:
- Non-interest revenue contributed significantly to profitability, with strong swap fees and SBA loan gains on sales.
- Growth was driven by contributions from SBIC investments and successful SBA loan production and sales.

Credit Quality and Loan Growth:
- Total loans held for investment were relatively flat on a linked-quarter basis, with a modest negative credit migration in certain C&I relationships.
- The company maintains a strategy of focusing on profitability over loan growth, which has helped preserve credit quality amid economic uncertainties.