Business First Bank(US:BFST)2025-10-23 22:00Financial Data and Key Metrics Changes - Third quarter GAAP net income was $21,500,000, with EPS of $0.73, including $1,600,000 in merger-related expenses and a $77,000 gain on the sale of securities [11][12] - Non-GAAP core net income was $21,200,000, with EPS of $0.72, marking a solid quarter of consistent profitability with a core ROAA of 106% [11][12] - Core efficiency ratio improved to 60.45% for the quarter [11] Business Line Data and Key Metrics Changes - Total loans held for investment decreased by $26,600,000 or 1.7% annualized on a linked quarter basis, with new loan production at $452,000,000 [12][13] - Residential loans increased by $47,600,000, while total commercial real estate (CRE) loans decreased by $71,100,000 [12][13] - Non-interest income for the third quarter was $11,700,000, with expectations for growth despite potential government shutdown impacts on SBA loan sales [20][40] Market Data and Key Metrics Changes - Total deposits increased by $87,200,000, primarily due to a net increase in interest-bearing deposits [13] - Non-interest bearing deposits represented 21% of total deposits, up from 20.3% at the end of Q1 [14] - The cost of total deposits was 2.65%, with a weighted average rate on new accounts at 3.32% [16] Company Strategy and Development Direction - The company is focused on effective expense control, executing recent acquisitions, and maintaining a stable net interest margin [10] - Plans to close the Progressive Bank transaction early in Q1 2026, with a focus on optimizing partnerships and opportunities [7][8] - The correspondent banking unit is expected to generate over $17,000,000 in revenue this year, contributing approximately $5,000,000 to net income [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 1.2 core ROA run rate by the end of Q4 2025, with steady profitability and tangible book value increases expected [10] - The operational challenges faced this year have been successfully managed, with a focus on long-term value creation [6][7] - Management noted that customer sentiment is cautiously optimistic due to the potential for falling interest rates [56] Other Important Information - The company announced a quarterly common stock dividend increase, marking the ninth consecutive year of dividend growth [23] - The ratio of non-performing loans decreased to 0.27%, while non-performing assets slightly increased to 0.83% [21] Q&A Session Summary Question: Expectations around core margin for Q4 in light of recent Fed cuts - Management expects a slight increase in margin due to deposit momentum and normalization of loan growth [26][28] Question: Evidence of loan growth rebound in Q4 - Early success in loan originations suggests a return to low to mid-single digit loan growth in Q4 [30][31] Question: Non-interest income growth expectations for Q4 - Momentum is building, but potential government shutdown may impact SBA loan sales, leading to flat quarter-over-quarter performance [39][40] Question: Future M&A plans and share repurchase opportunities - Focus remains on executing current acquisitions and organic growth, with potential for share repurchases if capital ratios allow [42][46] Question: Customer sentiment regarding future quarters - Customers are more optimistic with the prospect of falling interest rates, leading to increased forward planning [56] Question: Discussion on expenses and hiring plans - The company is maintaining disciplined expense management while being open to hiring opportunities as they arise [60][63]