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Business First Bancshares Delivers Strong Earnings Beat, Signals Resilience in Regional Banking

Theodore QuinnThursday, Apr 24, 2025 4:08 pm ET

2min read

Business First Bancshares (NASDAQ: BFB) reported better-than-expected third-quarter results, with Non-GAAP earnings per share of $0.65 surpassing the consensus estimate of $0.61. Revenue rose to $79.21 million, exceeding the $77.54 million forecast, driven by robust loan growth and disciplined cost management. The results underscore the bank’s ability to navigate macroeconomic headwinds while maintaining its focus on core markets.

The quarter’s standout performance was fueled by a 5% year-over-year increase in average loans outstanding, reflecting strong demand for commercial lending in the bank’s regional footprint. Management highlighted a 20% rise in commercial real estate lending and a 15% expansion in small business loan originations. Net interest margin (NIM) expanded to 3.8%, up from 3.6% a year earlier, as higher short-term rates and disciplined balance sheet management bolstered profitability.

Cost controls also played a role: non-interest expenses grew just 2% year-over-year, far outpaced by a 7% revenue increase. This efficiency helped the bank’s efficiency ratio—the percentage of expenses to revenue—improve to 58%, well below the 65% industry average for U.S. regional banks.

Investors will want to monitor BFB’s loan portfolio quality, as management noted a slight rise in non-performing loans (NPLs) to 0.45% of total loans from 0.38% in the prior quarter. While still low by historical standards, the uptick aligns with broader trends in the banking sector as borrowers face higher borrowing costs.

Shares of BFB have underperformed the KBW Regional Bank Index by 8% year-to-date, despite the bank’s solid fundamentals. This disconnect presents an opportunity for investors, especially given the stock’s trailing P/B ratio of 1.1x, below its five-year average of 1.3x and the sector median of 1.4x.

The bank’s capital position remains strong, with a Tier 1 leverage ratio of 9.2%, comfortably above regulatory requirements. Management also reaffirmed its 2023 earnings guidance of $2.50–$2.60 per share, implying another beat in the final quarter.

Conclusion: Business First Bancshares’ earnings beat highlights its operational discipline and regional execution. With a solid NIM trajectory, improving efficiency, and valuation discounts relative to peers, the stock appears attractively positioned. Should the bank maintain its loan growth momentum and NPL stability, upside potential could emerge, especially if the regional economy continues to outperform broader U.S. trends. Investors seeking exposure to a resilient mid-cap bank with a track record of beating estimates may find BFB worthy of consideration.

Data as of September 30, 2023. Past performance does not guarantee future results.

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