Business First Bancshares (BFST) Q2 Earnings call transcript Jul 25, 2024
AInvestFriday, Jul 26, 2024 3:40 pm ET
1min read
BFST --

In the latest earnings call, Business First Bancshares (B1B) reported a relatively positive and straightforward second quarter, highlighting a rebound in net interest margin, loan growth, and capital accretion. Despite a few lumpy opportunities that significantly impacted the quarter's results, the overall health and direction of the franchise remain strong, with the acquisition of Oakwood Bank on the horizon.

Financial Highlights and Challenges

B1B reported a GAAP net income of $15.9 million and EPS of $0.62, which included acquisition-related expenses. Excluding these non-core items, the non-GAAP core net income and EPS were $16.3 million and $0.64, respectively. The company's core earnings were boosted by $1.7 million in loan discount accretion, higher than market expectations. However, it is important to note that these results may not be easily replicated in the future.

The GAAP reported net interest margin of 3.45% was influenced by the loan discount accretion, while the core NIM, excluding accretion, was 3.34%. Loan growth was driven by the C&I portfolio, which saw a net growth of $93.4 million. However, there were reductions in the C&D and investment CRE portfolios. The company's strategy to transition its balance sheet has shown progress, with improvements in capital accretion and the composition of deposit base.

Strategic Moves and Future Outlook

B1B's strategic decision to slow loan production to manage growth through retained earnings and relieve pressure on the funding side of the balance sheet has been successful. The acquisition of Dallas-based Oakwood Bank is on track for completion in the fourth quarter, with expectations of increased profitability and a good cultural fit. The company also reported a strong second quarter across various metrics, including improved metrics essentially across the board.

Deposit Costs and Future Prospects

When asked about deposit costs, CFO Gregory Robertson provided insight into the evolving situation. While deposit costs are showing signs of easing, the increase in noninterest-bearing deposits is also a significant factor in funding cost. The company continues to focus on driving production through key commercial relationship wins, with the North Louisiana region accounting for 60% of net loan growth.

Regulatory Environment and Future Plans

The company's outlook remains positive, with plans to continue focusing on improving loan yields, managing funding pressures, and maintaining a stable margin. The acquisition of Oakwood Bank is expected to contribute significantly to the company's growth and profitability. Despite the ongoing volatility in the macroeconomic environment, B1B is well-positioned to navigate through these challenges and continue its growth trajectory.

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