Business First Bancshares, Inc. Q2 2025: Discrepancies in Loan Growth and Margin Expectations

Loan growth expectations, margin expectations, core margin improvement, and margin improvement expectations are the key contradictions discussed in Business First Bancshares, Inc.'s latest 2025Q2 earnings call.



Strong Financial Performance:
- Business First Bancshares, Inc. (BFST) reported a 1% ROAA for the second quarter of 2025, maintaining its net interest margin while increasing capital levels and tangible book value by nearly 15%.
- The results reflect the bank's focus on building capital, expanding its footprint, and strategically managing its balance sheet.

Core Processing System Upgrade:
- The bank successfully executed a core processing system upgrade to the FIS large bank platform, affecting a significant conversion during Memorial Day weekend.
- This upgrade is expected to enhance processing efficiency and support future organic and inorganic growth, aligning with the bank's strategic technology investments.

Loan and Deposit Trends:
- Total loans held for investment increased by 4.5% annually, driven by C&I and CRE segments, while total deposits decreased slightly due to strategic decreases in interest-bearing deposits.
- The net interest-bearing deposit increase of 7.8% quarter-over-quarter reflects the bank's efforts to reposition its funding base and improve noninterest-bearing account growth.

Strategic Partnerships:
- The bank announced a partnership with Progressive Bank, a $750 million community bank, aimed at enhancing its asset quality and client relationships.
- This partnership aligns with Business First Bank's strategy to strengthen its asset quality and expand its geographic footprint through strategic mergers and acquisitions.

Credit Management and Provisioning:
- NPLs increased slightly, but the bank is actively managing credit risks, with 50% of NPLs expected to see resolution by year-end.
- The bank maintains focus on adequate reservasion and client communication, which has resulted in no new credit additions to the watchlist over the past two quarters.