Business First Bancshares, Inc.

Second quarter GAAP net income available to common shareholders was $22.8 million, or $0.70 per share, including a $1.2 million merger-related expense, a $545,000 gain on extinguishment of debt, and a $6,000 loss on securities sales. Excluding non-core items, core net income was $23.3 million and core EPS was $0.71. Core ROAA was 1.05% and the core efficiency ratio was 63.9%. GAAP net interest margin rose 8 bps sequentially to 3.73%, and core net interest margin increased 8 bps to 3.68%. Core non-interest expense was $58.4 million, up $3.1 million from the prior quarter, while core non-interest income was $13.4 million. Non-performing loans declined 27 bps to 1.26% of loans held for investment, and non-performing assets fell 15 bps to 1.23% of total assets. Total loans held for investment decreased $24.8 million on a linked-quarter basis, but excluding the Progressive loan sale and NPL resolutions, loans increased $96.4 million, or 5.8% annualized. Total deposits decreased $229.4 million, with interest-bearing deposits down $237.9 million and non-interest-bearing deposits up $8.5 million. The company completed an $85 million subordinated debt issuance and said the net impact was 50 bps to consolidated total risk-based capital. For the third quarter, management expects core expenses to be closer to $58 million and about $57 million in Q4; they also said they expect to redeploy liquidity from the loan sale and see high single-digit annualized loan growth in both Q3 and Q4.

Jude Melville described the quarter as an encouragingly solid one that met or exceeded the company’s recent progress plan and set up a strong second half. He emphasized normalized loan production, a healthy Houston pipeline, margin expansion, and a meaningful Louisiana growth opportunity tied to broad capital investment, especially data-center-related activity. His tone was upbeat but disciplined, repeatedly tying the opportunity set back to execution, profitability, and tangible book value creation.

Gregory Robertson focused on the financial mechanics behind the quarter: core EPS of $0.71, core ROAA of 1.05%, core efficiency of 63.9%, and margin expansion to 3.68% core. He highlighted the $85 million subordinated debt raise, the $52 million redemption of callable debt, and said the net effect added 50 bps to total risk-based capital. He also pointed to lower deposit costs, an 83% core CD retention rate, and the expectation that expenses should step down to roughly $58 million in Q3 and $57 million in Q4 as Progressive-related savings arrive.

Analysts focused on how the loan sale and balance sheet repositioning would affect average earning assets, margin, and liquidity; management said the sale should add about 4 bps to future margin and that loan pipeline growth should offset any near-term drag on earning assets. Questions also centered on deposits, with management explaining that much of the second-quarter decline was seasonal and that brokered deposits above 4% were intentionally paid down. On credit, management said more resolutions are possible in Q3 and Q4, with NPLs potentially ending the year closer to $50 million or slightly below, while the allowance is expected to be maintained around 1.20x new loan growth.