• GAAP Net Income: $15.1 million for Q4 2024.
• Non-GAAP Core Net Income: $19.5 million for Q4 2024.
• EPS (Earnings Per Share): $0.66 for Q4 2024 (Non-GAAP).
• Net Interest Margin: Expanded 10 basis points to 3.61% (GAAP) and 3.56% (Non-GAAP) in Q4 2024.
• Total Loans Held for Investment: Increased by $761.3 million or 58% annualized in Q4 2024.
• Organic Loan Growth: $62.8 million or 4.8% annualized in Q4 2024.
• Total Deposits: Increased by $870.4 million or 61.4% annualized in Q4 2024.
• Organic Deposit Growth: $156.8 million or 11.1% annualized in Q4 2024.
• Weighted Average Total Cost of Deposits: 2.81% for Q4 2024, down 13 basis points from the previous quarter.
• Non-Interest Bearing Deposits: 20.8% of total deposits as of December 31, 2024.
• Non-Interest Expense: $49.6 million (GAAP) and $48.9 million (Core) for Q4 2024.
• Non-Interest Income: $11.9 million (GAAP) and $11.8 million (Core) for Q4 2024.
• Customer Swap Business Revenue: Approximately $1.3 million in Q4 2024.

• Warning! GuruFocus has detected 5 Warning Signs with BFST.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Business First Bancshares Inc (NASDAQ:BFST) achieved a significant expansion of its net interest margin, with a nearly 30 basis point increase since the first quarter of 2024.
• The company demonstrated strong core deposit growth, improving the mix on both sides of the balance sheet and reducing CRE and C&D concentrations.
• BFST successfully completed two mergers in 2024, including the acquisition of Oakwood Bank in Dallas, without needing additional capital.
• The company maintained strong asset quality, increasing its loan loss reserve to 0.98%, excluding remaining loan discounts from previous acquisitions.
• BFST showed traction in non-interest income revenue sources, including correspondent banking and interest rate swap provisioning, contributing to a diversified income stream.

Negative Points

• The company faced a $4.8 million one-time provision related to the Oakwood acquisition, impacting GAAP net income.
• There was a decline in non-interest bearing deposits, slightly down from 21.1% to 20.8% of total deposits as of December 31, 2024.
• The fourth quarter saw an increase in non-interest expenses, partly due to the full impact of Oakwood's expense base and seasonal factors.
• BFST's net charge-offs increased in the fourth quarter, attributed to a few credit clean-ups, though considered outliers.
• The company anticipates continued increases in core expenses in the first quarter of 2025 due to further seasonality and the late 2025 conversion of Oakwood.

Q & A Highlights

Q: Can you provide insights on the core margin momentum and expectations for the next few quarters? A: Gregory Robertson, CFO, stated that they plan to continue achieving low to mid-single-digit margin expansion throughout the year, with potentially more growth at the beginning due to the full impact of the last rate cut. The focus will be on organic deposit growth and disciplined loan pricing to maintain this momentum.

Q: What are your thoughts on loan yields and competition in the market? A: Gregory Robertson, CFO, noted that the weighted average for new and renewed loans in Q4 was about 7.58%. While competition may increase, the focus remains on growing relationships and ensuring the entire relationship is priced correctly. Jude Melville, CEO, emphasized maintaining pricing discipline to create long-term value.

Q: Could you elaborate on the fee income growth and expectations for 2025? A: Gregory Robertson, CFO, mentioned that Q4's non-interest income of $11.8 million is a good run rate for 2025, with expectations to end the year between $40 million and $50 million. The focus is on building infrastructure for multiple growth opportunities, with contributions from SBA platforms and swaps.

Q: Can you discuss the strong C&I growth and competition within different regions? A: Jude Melville, CEO, explained that C&I growth has been stable, with a focus on reducing construction and CRE exposure. The strategy is to maintain a robust set of offerings and focus on holistic banking relationships. There are no ambitious hiring plans, as current capacity is deemed sufficient for growth.

Q: What is the outlook for net charge-offs and provisions in the coming year? A: Gregory Robertson, CFO, indicated that Q4 saw a slight increase due to a few credit clean-ups, but no systemic issues are present. The expectation is to continue with stable provisions, with vigilance for any one-off events. The overall portfolio health remains strong.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.