Business First Bancshares (NASDAQ:BFST) held its first-quarter earnings conference call on Monday. Below is the complete transcript from the call.
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Access the full call at https://edge.media-server.com/mmc/p/6n7xau4t/
Summary
Business First Bancshares reported one of its best first quarters, with improved earnings, strengthened capital levels, and enhanced liquidity posture.
The company completed its acquisition of Progressive Bank, adding over $700 million in assets and expanding its presence in North Louisiana.
Significant new hires, including 11 production officers, were made to support future growth, particularly in the Houston market.
Partnership with Covecta aims to leverage AI capabilities to improve efficiency and reduce future hiring needs.
Non-interest expenses were lower than anticipated, with core expenses remaining flat compared to the previous year.
The Financial Services Group contributed to non-interest income, with notable activities in interest rate swaps and SBA loan sales.
The company raised $85 million through a self-managed private placement of subordinated debt, utilizing it to redeem existing debt.
Loan growth was lower than expected due to high payoffs, but future growth is anticipated with new hires and market opportunities.
Net interest margin decreased slightly due to lower-than-expected loan discount accretion.
Overall, the company remains optimistic about future performance, reiterating full-year loan growth guidance and aiming for a 1.25 ROA by year-end.
Full Transcript
OPERATOR
Good morning and thank you for standing by. My name is John and I will be your conference operator today. At this time I would like to welcome everyone to the business Business First Bancshares’ first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press star one again. I would now like to turn the conference over to Matt Seeley, Director of Corporate Strategy. Please go ahead. Thank you.
Matt Seeley (Director of Corporate Strategy)
Good morning and thank you all for joining. Earlier today we issued our first quarter 2026 earnings press release, a copy of which is available on our website along with the slide presentation that we’ll reference during today’s call. Please refer to slide three of our presentation which includes our safe harbor statements regarding forward looking statements and the use of non GAAP financial measures. For those of you joining by phone, please note the slide presentation is available on our website at www.b1bank.com. Please also note our safe harbor statements are available on page six of our earnings press release that was filed with the SEC today. All comments made during today’s call are subject to those safe harbor statements in our slide presentation and earnings release. I’m joined this morning by Business First Bancshares CEO and Chairman Jude Melville, Chief Financial Officer Greg Robertson, Chief Banking Officer Philip Jordan and President of B1Bank Jerry Vasquez. After the presentation, we’ll be happy to address any questions you may have. And with that, I’ll turn the call over to you.
Jude Melville (CEO and Chairman)
Jude: Okay, thanks, Matt. Good morning and thank you for joining us today. We know there are plenty of things you all could be doing on a Monday morning in a world environment as complex as the one in which we find ourselves. And we appreciate you choosing to spend this time with us. This was one of, if not the best first quarters that we have had as a company. We continue to improve earnings, strengthen capital levels and improve quality of our liquidity posture while consummating our second material acquisition in the past three years and making a number of non acquisitive investments that will pay off over the course of the next few years. A highlight for the quarter was the addition of a substantial number of new teammates. As I just mentioned, we closed the progressive transaction on January 1st. In balance sheet terms, the acquisition adds over 700 million in assets in nine branches across North Louisiana deepening our footprint in an area in which we were already a market leader. Asset quality of the acquired portfolio is stellar, as is the makeup of the expanded client base. On a very promising note, since we announced the acquisition, construction on the metaverse center project in Northeast Louisiana has accelerated and been expanded, and we expect tens of billions of dollars of private investment in a region in which we are as well situated to capture the benefits as any financial institution, large or small. The morale among our former progressive teammates is high and the working partnership is off to as smooth a start as any acquisition that we’ve had the honor to participate in, which bodes well for our ability to operate as one team over the course of this year, even before conversion is executed. We also added a material number of bankers organically. In our last call I mentioned the addition of John Heine, our new market president in Houston, former market President from Veritex Bank. To date, John has attracted an additional 11 teammates, including seven production officers, the majority of which are also former Veritex bankers. Also in Houston, we are honored to add Ben Marmond to lead our corporate banking activities in Texas. Ben was a longtime banker for Iberia and then first horizons, serving in leadership capacities across South Louisiana and for the past five years as president of the FHN Financial’s Houston Market. These new partners have already begun building a pipeline of opportunities and we anticipate them contributing meaningfully to our growth in the second half of the year as we seek to take advantage of MA lead disruption in the Houston market. We announced and have begun a partnership with Covecta, a provider of agency AI capabilities. I include this in my discussion on new teammates because over time we anticipate this partnership leading to both our more efficiently leveraging the talent we have on board and to our minimizing hiring as we continue to grow. We are beginning this effort focused on our consumer workflows in which we have already identified over 300 policy rules for potential automation anticipate expanding utilization of the partnership across broader use cases throughout the bank, including deposits and credit. This effort will take time to unfold, but we are more confident with each day that the potential is actionable and will prove to be meaningful. It’s important to note that as we explore the potential of agentic AI, we remain focused on governance, validation and human oversight so that as models, policies and industry requirements change, we retain our ability to manage that evolution in a disciplined and controlled way. A very positive note for the quarter is that even as we grow the team, we remain focused on cost control with non interest expenses for the quarter lower than anticipated after accounting for the increased costs associated with the progressive current run rate. Our core expenses were essentially flat quarter over quarter as well as in comparison to last year’s first quarter. We do anticipate the cost of the new hires adding incrementally to our expense rate over the second quarter, but note that the super majority of the hires were production oriented which should lead to further operating leverage improvements As a key component of our positive earning results. We are pleased to note the contribution of our non interest income primarily through the Financial Services Group and in particular their work providing interest rate swaps and SBA loan gains on sale. As you know, we’ve been working the past three years on diversifying our revenue streams with investments in this arena in part so that we might be able to continue to produce consistent earnings even in quarters in which our spread income was not as strong as we hoped. The potential of this effect was put to test in the first quarter as loan volumes were lower than anticipated due primarily to heightened loan payoffs and pay downs. In addition to the contribution to current earnings. We utilized the Financial Services Group to successfully complete a fully self managed private placement of subordinated debt just after quarter end, raising $85 million within our cohort of correspondent banking relationships. Of the $85 million raised we utilized $67 million to redeem existing sub debt, some of which had crossed the five year mark and had already lost about $10 million in capital treatment. The successful debt raise is important in and of itself, but I’m most excited about the way in which we accomplished it, both utilizing and contributing to our growing network of community bank partners. In closing, we feel very positive about the first quarter on a number of fronts and anticipated to be the start of a solid full year. We reiterate full year loan guidance on loan growth based on our sooner than expected hiring of production officers and we continue to forecast a 1.25 ROA end of year run rate. One of our guiding principles is belief in the compounding power of incremental improvement and we see that principle in action in our first quarter results. Thank you again for being with us. And with that I’ll turn it over to Greg.
Greg Robertson (Chief Financial Officer)
Thank you Jude and good morning everyone. As always, I’ll spend a few minutes reviewing our results and we’ll discuss our updated outlook before we open up to Q and A. First quarter GAAP net income and EPS available to common shareholders was 22.2 million and included 2.2 million merger related expenses, $28,000 gain on former bank premises and $80,000 gain on sale of securities. Excluding the non core items, Non GAAP core net income and EPS available to common holders was $24,000,073 per share. From our perspective, first quarter results marked another quarter of strong financial performance generating a 1.10 core ROAA and a core efficiency ratio of 62% for the quarter. Our first quarter earnings results were highlighted by continued discipline on the expense side and a meaningful contribution from our financial services correspondent banking group. As Jude mentioned also during the quarter we completed the acquisition of North Louisiana based Progressive bank which closed on January 1st of this year and added 774 million in total assets in nine new locations. From …
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