Business First Bancshares, Inc., Announces Financial Results for Q2 2020

BATON ROUGE, La., July 29, 2020 (GLOBE NEWSWIRE) -- Business First Bancshares, Inc. (NASDAQ: BFST) (Business First), parent company of b1BANK, Baton Rouge, Louisiana, today announced its unaudited results for the quarter ended June 30, 2020, including net income of $2.1 million, or $0.11 per diluted share, decreases of $4.8 million and $0.39, respectively, from the quarter ended June 30, 2019. On a non-GAAP basis, core net income for the quarter ended June 30, 2020, which excludes certain income and expenses, was $7.4 million, or $0.41 per diluted share, an increase of $748,000 and decrease of $0.07, respectively, from the quarter ended June 30, 2019. Both net income and diluted earnings per share were adversely impacted for the quarter ended June 30, 2020, by additional provision for loan losses associated with the sustained pressure on the general economy caused by the COVID-19 pandemic and acquisition-related expenses.

“The second quarter was simultaneously the most challenging, and in many ways, the most rewarding period we’ve experienced as a company,” said Jude Melville, president and CEO. “We stood with our clients during an economic crisis, we consummated a transformative merger during a time of market crisis, and we took care of our people in the midst of a health crisis. I could not be prouder of our team. We’ll continue to do our part as our region’s leading community bank as we recover together in the coming months.”

On July 23, 2020, Business First’s board of directors declared a quarterly dividend based upon financial performance for the second quarter in the amount of $0.10 per share, same as the prior quarter, to the common shareholders of record as of August 15, 2020. The dividend will be paid on August 31, 2020, or as soon thereafter as practicable.

Quarterly Highlights

• Successful Acquisition and Conversion of Pedestal Bancshares Inc. Business First acquired Pedestal Bancshares Inc. (Pedestal), with approximately $1.4 billion in assets, $935.8 million in gross loans, and $1.2 billion in deposits, on May 1, 2020. The conversion of data processing was successfully completed during the weekend of May 23, 2020.
• COVID-19 Related Matters. Business First proactively assisted, and continues to assist, customers by deferring principal and/or interest payments on approximately 2,600 loans with an outstanding balance of $938.5 million as of June 30, 2020.  Approximately $223.0 million of the deferrals were interest-only as of June 30, 2020.  Additionally, Business First has funded approximately 2,800 loans with an aggregate outstanding balance of $395.4 million under the Small Business Administration (SBA) Paycheck Protection Program (PPP), of which $86.1 million were acquired in the Pedestal acquisition. Business First also recorded $5.4 million of provision expense, of which a significant portion was associated with the continued impact the COVID-19 pandemic caused on the general economy.
• Stable Credit Quality. Ratios of nonperforming loans compared to loans held for investment and nonperforming assets compared to total assets decreased from 0.57% and 0.59%, respectively, at March 31, 2020, to 0.39% and 0.49% at June 30, 2020. The decreases were attributable to the increased size of the loan portfolio, including SBA PPP loans, and total assets associated with the acquisition of Pedestal on May 1, 2020.   
• Net Interest Margin and Spread. Net interest margin and spread were negatively impacted due to the full effect of the federal funds rate cuts of 150 basis points during the month of March and lower-yielding SBA PPP loans, offset by a reduction in cost of funds, increased loan discount, deposit premium, and Federal Home Loan Bank (FHLB) premium accretion, and a higher-yielding loan portfolio due to the Pedestal acquisition, compared to the quarter ended March 31, 2020. Net interest margin and net interest spread were 3.89% and 3.59%, respectively, for the quarter ended June 30, 2020, compared to 3.93% and 3.55% for the quarter ended March 31, 2020. Excluding loan discount accretion, net interest margin and spread were 3.71% and 3.41%, respectively, for the quarter ended June 30, 2020, compared to 3.88% and 3.49% for the quarter ended March 31, 2020. 
• Loan Growth. Total loans held for investment at June 30, 2020, were $3.0 billion, an increase of $1.2 billion compared to March 31, 2020. Loan growth was significantly impacted by the acquisition of Pedestal and origination of SBA PPP loans.  Net organic loan growth, excluding the Pedestal acquisition and SBA PPP originated loans, was 3.22% annualized for the quarter ended June 30, 2020.

Financial Condition

June 30, 2020, Compared to March 31, 2020

Loans

Total loans held for investment increased by $1.2 billion compared to March 31, 2020. The increase was largely attributable to the $893.3 million in net loans acquired from Pedestal, including $86.1 million of SBA PPP loans, and $309.3 million of SBA PPP loans originated by Business First. Excluding the Pedestal acquisition and SBA PPP originations, net organic loan growth was $20.8 million for the quarter ended June 30, 2020, or 3.22% annualized.

Consistent with the quarter ended March 31, 2020, Business First’s unfunded commitments remained constant throughout the quarter ended June 30, 2020, excluding the increase attributable to the acquisition of Pedestal. Business First has not identified any unusual customer usage of unfunded commitments since the beginning of the COVID 19-panademic in March 2020.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment decreased from 0.57% as of March 31, 2020, to 0.39% as of June 30, 2020. Nonperforming assets as a percentage of total assets decreased from 0.59% as of March 31, 2020, to 0.49% as of June 30, 2020. The decreases were attributable to an increase in overall total loans held for investment and total assets from the acquisition of Pedestal during the quarter ended June 30, 2020.

Total Shareholders’ Equity

Book value per common share was $18.69 at June 30, 2020, compared to $21.58 at March 31, 2020. The decreases were attributable to the initial book value dilution caused by the acquisition of Pedestal during the quarter ended June 30, 2020.

June 30, 2020, Compared to June 30, 2019

Loans

Total loans held for investment increased by $1.4 billion compared to June 30, 2019, or 82.3%, due primarily to the acquisition of Pedestal and origination of SBA PPP loans during the quarter ended June 30, 2020.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment decreased from 0.61% as of June 30, 2019, to 0.39% as of June 30, 2020. Nonperforming assets as a percentage of total assets decreased from 0.58% as of June 30, 2019, to 0.49% as of June 30, 2020. The decreases were attributable to an increase in overall total loans held for investment and total assets from the acquisition of Pedestal during the quarter ended June 30, 2020.

Total Shareholders’ Equity

Book value per common share was $18.69 at June 30, 2020, compared to $20.77 at June 30, 2019. The decreases were attributable to the initial book value dilution caused by the acquisition of Pedestal during the quarter ended June 30, 2020.

Results of Operations

Second Quarter 2020 Compared to First Quarter 2020

Net Income and Diluted Earnings Per Share

For the quarter ended June 30, 2020, net income was $2.1 million, or $0.11 per diluted share, compared to net income of $4.5 million, or $0.34 per diluted share, for the quarter ended March 31, 2020. The decreases were largely attributable to the increase in the provision for loan losses, due to the COVID-19 pandemic’s sustained impact on the general economy, and increase in acquisition-related expenses, offset by increases in investment income from Small Business Investment Companies (SBICs) and interest income from SBA PPP loans.

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended June 30, 2020, was $7.4 million, or $0.41 per diluted share, compared to core net income of $5.0 million, or $0.37 per diluted share, for the quarter ended March 31, 2020. Notable events impacting earnings for the quarter ended June 30, 2020, included the incurrence of $6.6 million in acquisition-related expenses, compared to the incurrence of $1.2 million in acquisition-related expenses for the quarter ended March 31, 2020, and $530,000 reduction in income tax expense due to stock option exercises.

Interest Income

For the quarter ended June 30, 2020, net interest income totaled $30.9 million and net interest margin and net interest spread were 3.89% and 3.59%, respectively, compared to $20.2 million, 3.93% and 3.55% for the quarter ended March 31, 2020. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.61% for the quarter ended June 30, 2020, compared to 5.55% for the quarter ended March 31, 2020. The average yield on total interest-earning assets was 4.65% for the quarter ended June 30, 2020, compared to 5.06% for the quarter ended March 31, 2020.  

Net interest margin and net interest spread were positively impacted for the quarter ended June 30, 2020, by additional loan discount, deposit premium, and FHLB premium accretion, an overall higher-yielding loan portfolio from the Pedestal acquisition, and reduction in the overall cost of funds (which includes noninterest-bearing deposits), offset by the full impact of the federal funds rate cuts of 150 basis points during March 2020. The average loan yield (excluding SBA PPP loans) was also impacted by the same factors, excluding the impact of deposit and FHLB premium accretion and cost of funds.

The average yield on total interest-earning assets was negatively impacted for the quarter ended June 30, 2020, due to lower-yielding SBA PPP loans which were originated during the quarter.

Net interest margin and net interest spread (excluding loan discount accretion of $1.5 million) were 3.71% and 3.41%, respectively, for the quarter ended June 30, 2020, compared to 3.88% and 3.49% (excluding loan discount accretion of $290,000) for the quarter ended March 31, 2020.

Interest Expense

For the quarter ended June 30, 2020, overall cost of funds (which includes noninterest-bearing deposits) decreased by 43 basis points, from 1.20% to 0.77%, compared to the quarter ended March 31, 2020. The decrease in cost of funds was partially attributable to the accretion of deposit premium and FHLB premium associated with the Pedestal acquisition ($551,000), but largely attributable to an overall reduction in interest rates on deposit offerings and the lower-yielding deposit portfolio acquired from Pedestal.

Other Income

For the quarter ended June 30, 2020, other income was impacted by an additional $1.2 million in SBIC investment income and additional increases in other categories largely attributable to the Pedestal acquisition, compared to the quarter ended March 31, 2020.

Other Expense

For the quarter ended June 30, 2020, the increases were largely attributable to the Pedestal acquisition, compared to the quarter ended March 31, 2020.

Provision for Loan Losses

During the quarter ended June 30, 2020, Business First recorded a provision for loan losses of $5.4 million, compared to $1.4 million for the quarter ended March 31, 2020. The reserve for the quarter ended June 30, 2020, was impacted significantly by the sustained impact on the general economy of the COVID-19 pandemic.  The increase related to the COVID-19 pandemic was recorded through a qualitative adjustment. 

Return on Assets and Equity

Return on average assets and equity, each on an annualized basis, were 0.23% and 2.35%, respectively, for the quarter ended June 30, 2020, compared to 0.80% and 6.31%, respectively, for the quarter ended March 31, 2020. Both returns were significantly impacted by the provision for loan loss and acquisition-related expenses recorded for the quarter ended June 30, 2020.

Second Quarter 2020 Compared to Second Quarter 2019

Net Income and Diluted Earnings Per Share

For the quarter ended June 30, 2020, net income was $2.1 million, or $0.11 per diluted share, compared to net income of $6.8 million, or $0.50 per diluted share, for the quarter ended June 30, 2020. The decreases in net income and diluted earnings per share were largely attributable to increased provision for loan losses and additional expenses associated with the acquisition of Pedestal on May 1, 2020, offset by increases in net interest income and other income related to the acquisition of Pedestal for the quarter ended June 30, 2020.

On a non-GAAP basis, core net income, which excludes certain income and expenses, for the quarter ended June 30, 2020, was $7.4 million, or $0.41 per diluted share, compared to core net income of $6.6 million, or $0.48 per diluted share, for the quarter ended June 30, 2019. Notable events impacting earnings for the quarter ended June 30, 2020, included the incurrence of $6.6 million in acquisition-related expenses, compared to the incurrence of $436,000 in acquisition-related expenses and a $593,000 gain associated with the sale of a banking center for the quarter ended June 30, 2019.

Interest Income

For the quarter ended June 30, 2020, net interest income totaled $30.9 million and net interest margin and net interest spread were 3.89% and 3.59%, respectively, compared to $20.2 million, 4.19% and 3.75% for the quarter ended June 30, 2019. The average yield on the loan portfolio (excluding SBA PPP loans) was 5.61% for the quarter ended June 30, 2020, compared to 5.96% for the quarter ended June 30, 2019. The average yield on total interest-earning assets was 4.65% for the quarter ended June 30, 2020, compared to 5.37% for the quarter ended June 30, 2019.

Average loan yield (excluding SBA PPP loans), average yield on total interest-earning assets, net interest margin, and net interest spread were impacted for the quarter ended June 30, 2020, by the federal funds rate cuts of 225 basis points which occurred throughout the second half of 2019 and first quarter of 2020. The average yield on total interest-earning assets was also impacted by the lower-yielding SBA PPP loans originated during the quarter ended June 30, 2020.

Net interest margin and net interest spread (excluding loan discount accretion of $1.5 million) were 3.71% and 3.41%, respectively, for the quarter ended June 30, 2020, compared to 4.02% and 3.58% (excluding loan discount accretion of $826,000) for the quarter ended June 30, 2019.

Interest Expense

For the quarter ended June 30, 2020, overall cost of funds (which includes noninterest-bearing deposits) decreased by 49 basis point, from 1.26% to 0.77%, compared to the quarter ended June 30, 2019. The decrease in cost of funds was partially attributable to the accretion of deposit and FHLB premiums associated with the Pedestal acquisition ($551,000), but largely attributable to an overall reduction in interest rates on deposit offerings and the lower-yielding deposit portfolio acquired from Pedestal.

Other Income

For the quarter ended June 30, 2020, the increase was largely attributable to the acquisition of Pedestal, partially offset by the $593,000 gain on sale of a banking center during the quarter ended June 30, 2019.

Other Expense

For the quarter ended June 30, 2020, the increase was largely attributable to the acquisition of Pedestal during the quarter ended June 30, 2020.

Provision for Loan Losses

During the quarter ended June 30, 2020, Business First recorded a provision for loan losses of $5.4 million compared to $1.3 million for the quarter ended June 30, 2019. The reserve for the quarter ended June 30, 2020, was impacted significantly by the sustained impact on the general economy of the COVID-19 pandemic. 

Return on Assets and Equity

Return on average assets and return on average equity, each on an annualized basis, were 0.23% and 2.35%, respectively, for the quarter ended June 30, 2020, from 1.30% and 10.13%, respectively, for the quarter ended June 30, 2019. Both returns were significantly impacted by the provision for loan loss and acquisition-related expenses recorded for the quarter ended June 30, 2020, in addition to a lower net interest margin for the quarter ended June 30, 2020.

About Business First Bancshares, Inc.

Business First Bancshares, Inc., through its banking subsidiary b1BANK, formerly known as Business First Bank, operates 48 banking centers in markets across Louisiana and in the Dallas, Texas area. b1BANK provides commercial and personal banking, treasury management and wealth solutions services to small to midsize businesses and their owners and employees. Visit www.b1BANK.com for more information. Business First’s common stock is traded on the NASDAQ Global Select Market under the symbol “BFST.”

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures (e.g., referenced as “core”) intended to supplement, not substitute for, comparable GAAP measures. These measures typically adjust income available to common shareholders for certain significant activities or transactions that, in management’s opinion, can distort period-to-period comparisons of Business First’s performance. Transactions that are typically excluded from non-GAAP measures include realized and unrealized gains/losses on former bank premises and equipment, investment sales, impaired loan sales, acquisition-related expenses (including, but not limited to, legal costs, system conversion costs, severance and retention payments, etc.). Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided at the end of the tables below.

Special Note Regarding Forward-Looking Statements

Certain statements contained in this release may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “would,” “could,” or “intend.” We caution you not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors, including those factors specified in our Annual Report on Form 10-K and other public filings. Actual results will also be significantly impacted by the effects of the ongoing COVID-19 pandemic, including, among other effects: the impact of the public health crisis; the extent and duration of closures of businesses, including our branches, vendors and customers; the operation of financial markets; employment levels; market liquidity; the impact of various actions taken in response by the U.S. federal government, the Federal Reserve, other banking regulators, state and local governments; the adequacy of our allowance for loan losses in relation to potential losses in our loan portfolio; and the impact that all of these factors have on our borrowers, other customers, vendors and counterparties. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release.

Additional Information

For additional information on Business First, you may obtain Business First’s reports that are filed with the Securities and Exchange Commission (SEC) free of charge by using the SEC’s EDGAR service on the SEC’s website at www.sec.gov or by contacting the SEC for further information at 1-800-SEC-0330. Alternatively, these documents can be obtained free of charge from Business First by directing a request to: Business First Bancshares, Inc., 500 Laurel Street, Suite 101, Baton Rouge, Louisiana 70801, Attention: Corporate Secretary.

No Offer or Solicitation

This release does not constitute or form part of any offer to sell, or a solicitation of an offer to purchase, any securities of the Company. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Business First Bancshares, Inc.
Selected Financial Information
(Unaudited)
	June 30,			March 31,			June 30,
(Dollars in thousands)		2020			2020			2019
Balance Sheet Ratios
Loans (HFI) to Deposits		92.12%			98.26%			96.46%
Shareholders' Equity to Assets Ratio		9.75%			12.33%			12.88%
Loans Receivable Held for Investment
Commercial (1)	$	1,026,596		$	431,992		$	411,256
Real Estate:
Construction and Land		333,675			260,836			227,102
Farmland		57,498			53,900			47,245
1-4 Family Residential		495,827			295,876			278,610
Multi-Family Residential		59,213			32,859			38,698
Nonfarm Nonresidential		914,601			623,114			561,149
Total Real Estate		1,860,814			1,266,585			1,152,804
Consumer (1)		107,402			72,803			78,513
Total Loans	$	2,994,812		$	1,771,380		$	1,642,573
Allowance for Loan Losses
Balance, Beginning of Period	$	13,319		$	12,124		$	11,818
Charge-offs – Quarterly		(98	)		(194	)		(1,565	)
Recoveries – Quarterly		51			22			48
Provision for Loan Losses – Quarterly		5,443			1,367			1,302
Balance, End of Period	$	18,715		$	13,319		$	11,603
Allowance for Loan Losses to Total Loans (HFI)		0.62%			0.75%			0.71%
Net Charge-offs (Recoveries) to Average Total Loans		0.00%			0.01%			0.09%
Remaining Loan Purchase Discount	$	44,302		$	3,246		$	3,536
Nonperforming Assets
Nonperforming Loans:
Nonaccrual Loans (2)	$	11,433		$	9,301		$	9,363
Loans Past Due 90 Days or More (2)		317			834			727
Total Nonperforming Loans		11,750			10,135			10,090
Other Nonperforming Assets:
Other Real Estate Owned		7,642			3,281			2,324
Other Nonperforming Assets		179			11			6
Total Other Nonperforming Assets		7,821			3,292			2,330
Total Nonperforming Assets	$	19,571		$	13,427		$	12,420
Nonperforming Loans to Total Loans (HFI)		0.39%			0.57%			0.61%
Nonperforming Assets to Total Assets		0.49%			0.59%			0.58%
(1) Small Business Administration "SBA" Paycheck Protection Program "PPP" loans accounted for $389.9 million and $5.5 million of the Commercial and Consumer portfolios, respectively, as of June 30, 2020.
(2) Past due and nonaccrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.

Business First Bancshares, Inc.
Selected Financial Information
(Unaudited)
	Three Months Ended											Six Months Ended
	June 30,			March 31,			June 30,					June 30,			June 30,
(Dollars in thousands, except per share data)		2020			2020			2019					2020			2019
Per Share Data
Basic Earnings per Common Share	$	0.11		$	0.34		$	0.51				$	0.42		$	0.94
Diluted Earnings per Common Share		0.11			0.34			0.50					0.42			0.91
Dividends per Common Share		0.10			0.10			0.10					0.20			0.18
Book Value per Common Share		18.69			21.58			20.77					18.69			20.77
Average Common Shares Outstanding		18,108,068			13,313,154			13,361,482					15,710,611			13,324,725
Average Diluted Shares Outstanding		18,121,958			13,367,276			13,740,937					15,776,376			13,704,180
End of Period Common Shares Outstanding		20,667,237			13,067,987			13,361,482					20,667,237			13,361,482
Annualized Performance Ratios
Return on Average Assets		0.23%			0.80%			1.30%					0.46%			1.20%
Return on Average Equity		2.35%			6.31%			10.13%					4.13%			9.38%
Net Interest Margin		3.89%			3.93%			4.19%					3.91%			4.11%
Net Interest Spread		3.59%			3.55%			3.75%					3.57%			3.69%
Efficiency Ratio (1)		77.40%			72.39%			59.85%					75.44%			61.96%
Total Quarterly/Year-to-Date Average Assets	$	3,496,074		$	2,244,584		$	2,102,692				$	2,870,329		$	2,089,188
Total Quarterly/Year-to-Date Average Equity		349,634			285,338		$	270,262					317,486			266,493
Other Expenses
Salaries and Employee Benefits	$	17,621		$	9,435		$	8,756				$	27,056		$	17,308
Occupancy and Bank Premises		1,370			1,060			1,079					2,430			2,182
Depreciation and Amortization		1,073			601			633					1,674			1,261
Data Processing		1,055			652			576					1,707			1,192
FDIC Assessment Fees		272			147			248					419			398
Legal and Other Professional Fees		543			394			353					937			671
Advertising and Promotions		334			306			279					640			606
Utilities and Communications		645			317			323					962			621
Ad Valorem Shares Tax		450			375			345					825			690
Directors' Fees		100			74			125					174			330
Other Real Estate Owned Expenses and Write-Downs		51			253			72					304			99
Merger and Conversion-Related Expenses		1,726			1,148			235					2,874			(19	)
Other		2,557			1,881			1,553					4,438			3,028
Total Other Expenses	$	27,797		$	16,643		$	14,577				$	44,440		$	28,367
Other Income
Service Charges on Deposit Accounts	$	1,163		$	931		$	1,034					2,094		$	1,972
Gain on Sales of Securities		-			25			58					25			58
Debit card and ATM Fee Income		959			407			492					1,366			937
Bank-Owned Life Insurance Income		255			197			174					452			342
Gain on Sales of Loans		7			177			91					184			91
Mortgage Origination Income		126			115			98					241			188
Brokerage Commission		236			20			9					256			43
Correspondent Bank Income		32			109			17					141			225
Rental Income		15			31			165					46			329
Gain on Sale of Banking Center		-			-			593					-			593
Gain (loss) on Sales of Other Real Estate Owned		(19	)		151			5					132			(51	)
Pass-through Income from SBIC Partnerships		1,624			380			1,266					2,004			1,266
Other		598			261			217					859			537
Total Other Income	$	4,996		$	2,804		$	4,219				$	7,800		$	6,530
(1) Noninterest expense (excluding provision for loan losses) divided by noninterest income plus net interest income less gain/loss on sales of securities.

Business First Bancshares, Inc.
Consolidated Balance Sheets
(Unaudited)
	June 30,			March 31,			June 30,
(Dollars in thousands)		2020			2020			2019
Assets
Cash and Due From Banks	$	116,021		$	80,109		$	64,043
Federal Funds Sold		40,329			29,135			20,809
Securities Available for Sale, at Fair Values		583,118			275,115			294,981
Mortgage Loans Held for Sale		456			868			443
Loans and Lease Receivable		2,994,812			1,771,380			1,642,573
Allowance for Loan Losses		(18,715	)		(13,319	)		(11,603	)
Net Loans and Lease Receivable		2,976,097			1,758,061			1,630,970
Premises and Equipment, Net		63,959			29,656			27,577
Accrued Interest Receivable		33,844			7,724			7,957
Other Equity Securities		18,681			11,721			11,717
Other Real Estate Owned		7,642			3,281			2,324
Cash Value of Life Insurance		44,542			32,765			32,223
Deferred Taxes, Net		6,858			1,800			2,527
Goodwill		53,649			48,495			48,503
Core Deposit Intangible		10,389			6,471			7,139
Other Assets		5,553			2,461			2,395
Total Assets	$	3,961,138		$	2,287,662		$	2,153,608
Liabilities
Deposits:
Noninterest-Bearing	$	985,537		$	417,534		$	394,848
Interest-Bearing		2,265,485			1,385,274			1,308,054
Total Deposits		3,251,022			1,802,808			1,702,902
Securities Sold Under Agreements to Repurchase		25,391			14,728			16,096
Short-Term Borrowings		6,145			5,000			-
Long-Term Borrowings		7,797			-			-
Payroll Protection Program Liquidity Facility		107,076			-			-
Subordinated Debt		25,000			25,000			25,000
Trust Preferred Securities		5,000			-			-
Federal Home Loan Bank Borrowings		118,177			138,000			108,000
Accrued Interest Payable		3,920			1,573			1,924
Other Liabilities		25,274			18,523			22,217
Total Liabilities		3,574,802			2,005,632			1,876,139
Shareholders' Equity
Common Stock		20,667			13,068			13,361
Additional Paid-In Capital		297,606			206,966			213,823
Retained Earnings		59,850			59,859			48,087
Accumulated Other Comprehensive Income		8,213			2,137			2,198
Total Shareholders' Equity		386,336			282,030			277,469
Total Liabilities and Shareholders' Equity	$	3,961,138		$	2,287,662		$	2,153,608

Business First Bancshares, Inc.
Consolidated Statements of Income
(Unaudited)
			Three Months Ended					Six Months Ended
	June 30,		March 31,		June 30,			June 30,		June 30,
(Dollars in thousands)	2020		2020		2019			2020		2019
Interest Income:
Interest and Fees on Loans	$	34,636	$	24,143	$	23,870		$	58,779	$	46,293
Interest and Dividends on Securities		2,175		1,731		1,829			3,906		3,703
Interest on Federal Funds Sold and Due From Banks		80		142		197			222		487
Total Interest Income		36,891		26,016		25,896			62,907		50,483
Interest Expense:
Interest on Deposits		4,795		4,686		5,038			9,481		9,795
Interest on Borrowings		1,177		1,119		665			2,296		1,375
Total Interest Expense		5,972		5,805		5,703			11,777		11,170
Net Interest Income		30,919		20,211		20,193			51,130		39,313
Provision for Loan Losses		5,443		1,367		1,302			6,810		1,935
Net Interest Income After Provision for Loan Losses		25,476		18,844		18,891			44,320		37,378
Other Income:
Service Charges on Deposit Accounts		1,163		931		1,034			2,094		1,972
Gain on Sales of Securities		-		25		58			25		58
Other Income		3,833		1,848		3,127			5,681		4,500
Total Other Income		4,996		2,804		4,219			7,800		6,530
Other Expenses:
Salaries and Employee Benefits		17,621		9,435		8,756			27,056		17,308
Occupancy and Equipment Expense		2,888		1,891		1,884			4,779		3,778
Merger and Conversion-Related Expense		1,726		1,148		235			2,874		(19	)
Other Expenses		5,562		4,169		3,702			9,731		7,300
Total Other Expenses		27,797		16,643		14,577			44,440		28,367
Income Before Income Taxes		2,675		5,005		8,533			7,680		15,541
Provision for Income Taxes		623		506		1,690			1,129		3,039
Net Income	$	2,052	$	4,499	$	6,843		$	6,551	$	12,502

Business First Bancshares, Inc.
Consolidated Net Interest Margin
(Unaudited)
	Three Months Ended
	June 30, 2020								March 31, 2020								June 30, 2019
	Average								Average								Average
	Outstanding			Interest Earned /		Average			Outstanding			Interest Earned /		Average			Outstanding			Interest Earned /		Average
(Dollars in thousands)	Balance			Interest Paid		Yield / Rate			Balance			Interest Paid		Yield / Rate			Balance			Interest Paid		Yield / Rate
Assets
Interest-Earning Assets:
Total Loans (Excluding SBA PPP)	$	2,304,438		$	32,306	5.61%			$	1,740,189		$	24,143	5.55%			$	1,602,087		$	23,870	5.96%
SBA PPP Loans		321,127			2,330	2.90%				-		$	-	0.00%				-			-	0.00%
Securities Available for Sale		481,422			2,175	1.81%				286,660			1,731	2.42%				303,232			1,829	2.41%
Interest-Bearing Deposit in Other Banks		69,169			80	0.46%				28,754			142	1.98%				23,716			197	3.32%
Total Interest-Earning Assets		3,176,156			36,891	4.65%				2,055,603			26,016	5.06%				1,929,035			25,896	5.37%
Allowance for Loan Losses		(13,606	)							(12,203	)							(11,702	)
Noninterest-Earning Assets		333,524								201,184								185,359
Total Assets	$	3,496,074		$	36,891				$	2,244,584		$	26,016				$	2,102,692		$	25,896
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits	$	1,994,680		$	4,795	0.96%			$	1,342,213		$	4,686	1.40%			$	1,335,630		$	5,038	1.51%
Subordinated Debt		25,000			422	6.75%				25,000			422	6.75%				25,000			429	6.86%
Advances from Federal Home Loan Bank ("FHLB")		129,441			526	1.63%				98,323			497	2.02%				36,856			224	2.43%
Payroll Protection Program Liquidity Facility ("PPPLF")		76,902			72	0.37%				-			-	0.00%				-			-	0.00%
Other Borrowings		36,308			157	1.73%				67,125			200	1.19%				14,390			12	0.33%
Total Interest-Bearing Liabilities		2,262,331			5,972	1.06%				1,532,661			5,805	1.52%				1,411,876			5,703	1.62%
Noninterest-Bearing Liabilities:
Noninterest-Bearing Deposits	$	852,608							$	406,035							$	396,793
Other Liabilities		31,501								20,550								23,761
Total Noninterest-Bearing Liabilities		884,109								426,585								420,554
Shareholders' Equity		349,634								285,338								270,262
Total Liabilities and Shareholders' Equity	$	3,496,074							$	2,244,584							$	2,102,692
Net Interest Spread						3.59%								3.55%								3.75%
Net Interest Income				$	30,919							$	20,211							$	20,193
Net Interest Margin						3.89%								3.93%								4.19%
Overall Cost of Funds						0.77%								1.20%								1.26%
NOTE: Average outstanding balances are determined utilizing monthly averages and average yield/rate is calculated utilizing a 30/360 day count convention.

Business First Bancshares, Inc.
Consolidated Net Interest Margin
(Unaudited)
	Six Months Ended
	June 30, 2020				June 30, 2019
	Average				Average
	Outstanding	Interest Earned /	Average		Outstanding	Interest Earned /	Average
(Dollars in thousands)	Balance	Interest Paid	Yield / Rate		Balance	Interest Paid	Yield / Rate
Assets
Interest-Earning Assets:
Total Loans (Excluding SBA PPP)	$ 2,022,313	$ 56,449	5.58%		$ 1,575,988	$ 46,293	5.87%
SBA PPP Loans	160,564	2,330	2.90%		-	-	0.00%
Securities Available for Sale	384,041	3,906	2.03%		306,501	3,703	2.42%
Interest-Bearing Deposit in Other Banks	48,962	222	0.91%		31,897	487	3.05%
Total Interest-Earning Assets	2,615,879	62,907	4.81%		1,914,386	50,483	5.27%
Allowance for Loan Losses	(12,905)				(11,546)
Noninterest-Earning Assets	267,355				186,348
Total Assets	$ 2,870,329	$ 62,907			$ 2,089,188	$ 50,483
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits	$ 1,668,446	$ 9,481	1.14%		$ 1,335,522	$ 9,795	1.47%
Subordinated Debt	25,000	844	6.75%		25,000	845	6.76%
Advances from Federal Home Loan Bank ("FHLB")	113,882	1,023	1.80%		37,191	505	2.72%
Payroll Protection Program Liquidity Facility ("PPPLF")	38,451	72	0.37%		-	-	0.00%
Other Borrowings	51,717	357	1.38%		13,436	25	0.37%
Total Interest-Bearing Liabilities	1,897,496	11,777	1.24%		1,411,149	11,170	1.58%
Noninterest-Bearing Liabilities:
Noninterest-Bearing Deposits	629,321				395,304
Other Liabilities	26,026				16,242
Total Noninterest-Bearing Liabilities	655,347				411,546
Shareholders' Equity	317,486				266,493
Total Liabilities and Shareholders' Equity	$ 2,870,329				$ 2,089,188
Net Interest Spread			3.57%				3.69%
Net Interest Income		$ 51,130				$ 39,313
Net Interest Margin			3.91%				4.11%
Overall Cost of Funds			0.93%				1.24%
NOTE: Average outstanding balances are determined utilizing monthly averages and average yield/rate is calculated utilizing a 30/360 day count convention.

Business First Bancshares, Inc.
Non-GAAP Measures
(Unaudited)
	Three Months Ended										Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
(Dollars in thousands, except per share data)		2020			2020			2019				2020			2019
Interest Income:
Interest income	$	36,891		$	26,016		$	25,896			$	62,907		$	50,483
Core interest income		36,891			26,016			25,896				62,907			50,483
Interest Expense:
Interest expense		5,972			5,805			5,703				11,777			11,170
Core interest expense		5,972			5,805			5,703				11,777			11,170
Provision for Loan Losses: (b)
Provision for loan losses		5,443			1,367			1,302				6,810			1,935
Core provision expense		5,443			1,367			1,302				6,810			1,935
Other Income:
Other income		4,996			2,804			4,219				7,800			6,530
Sale of impaired credit		-			-			(91	)			-			(91	)
(Gains) losses on former bank premises and equipment		-			(126	)		-				(126	)		-
(Gains) on sale of securities		-			(25	)		(58	)			(25	)		(58	)
(Gains) on sale of banking center		-			-			(593	)			-			(593	)
Core other income		4,996			2,653			3,477				7,649			5,788
Other Expense:
Other expense		27,797			16,643			14,577				44,440			28,367
Acquisition-related expenses (2)		(6,573	)		(1,212	)		(436	)			(7,785	)		(386	)
Stock option exercises - excess taxes		-			(71	)		-				(71	)		-
Core other expense		21,224			15,360			14,141				36,584			27,981
Pre-Tax Income: (a)
Pre-tax income		2,675			5,005			8,533				7,680			15,541
Sale of impaired credit		-			-			(91	)			-			(91	)
(Gains) losses on former bank premises and equipment		-			(126	)		-				(126	)		-
(Gains) on sale of securities		-			(25	)		(58	)			(25	)		(58	)
(Gains) on sale of banking center		-			-			(593	)			-			(593	)
Acquisition-related expenses (2)		6,573			1,212			436				7,785			386
Stock option exercises - excess taxes		-			71			-				71			-
Core pre-tax income		9,248			6,137			8,227				15,385			15,185
Provision for Income Taxes: (1)
Provision for income taxes		623			506			1,690				1,129			3,039
Tax on sale of impaired credit		-			-			(19	)			-			(19	)
Tax on (gains) on former bank premises and equipment		-			(26	)		-				(26	)		-
Tax on (gains) on sale of securities		-			(5	)		(12	)			(5	)		(12	)
Tax on sale of banking center		-			-			(125	)			-			(125	)
Tax on acquisition-related expenses (2)		1,275			91			91				1,366			75
Tax on stock option exercises		-			601			-				601			-
Core provision for income taxes		1,898			1,167			1,625				3,065			2,958
Net Income:
Net income		2,052			4,499			6,843				6,551			12,502
Sale of impaired credit, net of tax		-			-			(72	)			-			(72	)
(Gains) losses on former bank premises and equipment , net of tax		-			(100	)		-				(100	)		-
(Gains) on sale of securities, net of tax		-			(20	)		(46	)			(20	)		(46	)
(Gains) on sale of banking center, net of tax		-			-			(468	)			-			(468	)
Acquisition-related expenses (2), net of tax		5,298			1,121			345				6,419			311
Stock option exercises, net of tax		-			(530	)		-				(530	)		-
Core net income	$	7,350		$	4,970		$	6,602			$	12,320		$	12,227
Pre-tax, pre-provision earnings (a+b)	$	8,118		$	6,372		$	9,835			$	14,490		$	17,476
Sale of impaired credit		-			-			(91	)			-			(91	)
(Gains) losses on former bank premises and equipment		-			(126	)		-				(126	)		-
(Gains) on sale of securities		-			(25	)		(58	)			(25	)		(58	)
(Gains) on sale of banking center		-			-			(593	)			-			(593	)
Acquisition-related expenses (2)		6,573			1,212			436				7,785			386
Stock option exercises		-			71			-				71			-
Core pre-tax, pre-provision earnings	$	14,691		$	7,504		$	9,529			$	22,195		$	17,120
Average Diluted Shares Outstanding		18,121,958			13,367,276			13,740,937				15,776,376			13,704,180
Diluted Earnings Per Share:
Diluted earnings per share	$	0.11		$	0.34		$	0.50			$	0.42		$	0.91
Sale of impaired credit, net of tax		-			-			(0.01	)			-			(0.01	)
(Gains) losses on former bank premises and equipment , net of tax		-			(0.01	)		-				(0.01	)		-
(Gains) on sale of securities, net of tax		-			(0.00	)		(0.00	)			(0.00	)		(0.00	)
(Gains) on sale of banking center		-			-			(0.04	)			-			(0.03	)
Acquisition-related expenses (2), net of tax		0.30			0.08			0.03				0.40			0.02
Stock option exercises		-			(0.04	)		-				(0.03	)		-
Core diluted earnings per share	$	0.41		$	0.37		$	0.48			$	0.78		$	0.89
Pre-tax, pre-provision profit diluted earnings per share	$	0.45		$	0.48		$	0.72			$	0.92		$	1.28
Sale of impaired credit		-			-			(0.01	)			-			(0.01	)
(Gains) losses on former bank premises and equipment		-			(0.01	)		-				(0.01	)		-
(Gains) on sale of securities		-			(0.00	)		(0.00	)			(0.00	)		(0.00	)
(Gains) on sale of banking center					-			(0.05	)			-			(0.05	)
Acquisition-related expenses (2)		0.36			0.09			0.03				0.50			0.03
Stock option exercises		-			0.00			-				0.00			-
Core pre-tax, pre-provision diluted earnings per share	$	0.81		$	0.56		$	0.69			$	1.41		$	1.25
(1) Tax rates, exclusive of certain nondeductible merger-related expenses and goodwill, utilized were 21% for 2020 and 2019. These rates approximated
the marginal tax rates.
(2) Includes merger and conversion-related expenses and salary and employee benefits.

Business First Bancshares, Inc.
Non-GAAP Measures
(Unaudited)
	Three Months Ended										Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
(Dollars in thousands, except per share data)		2020			2020			2019				2020			2019
Total Quarterly/Year-to-Date Average Assets	$	3,496,074		$	2,244,584		$	2,102,692			$	2,870,329		$	2,089,188
Total Quarterly/Year-to-Date Average Equity	$	349,634		$	285,338		$	270,262			$	317,486		$	266,493
Net Income:
Net income	$	2,052		$	4,499		$	6,843			$	6,551		$	12,502
Sale of impaired credit, net of tax		-			-			(72	)			-			(72	)
(Gains) losses on former bank premises and equipment , net of tax		-			(100	)		-				(100	)		-
(Gains) on sale of securities, net of tax		-			(20	)		(46	)			(20	)		(46	)
(Gains) on sale of banking center, net of tax		-			-			(468	)			-			(468	)
Acquisition-related expenses (2), net of tax		5,298			1,121			345				6,419			311
Stock option exercises, net of tax		-			(530	)		-				(530	)		-
Core net income	$	7,350		$	4,970		$	6,602			$	12,320		$	12,227
Return on average assets		0.23%			0.80%			1.30%				0.46%			1.20%
Core return on average assets		0.84%			0.89%			1.26%				0.86%			1.17%
Return on equity		2.35%			6.31%			10.13%				4.13%			9.38%
Core return on average equity		8.41%			6.97%			9.77%				7.76%			9.18%
Interest Income:
Interest income	$	36,891		$	26,016		$	25,896			$	62,907		$	50,483
Core interest income		36,891			26,016			25,896				62,907			50,483
Interest Expense:
Interest expense		5,972			5,805			5,703				11,777			11,170
Core interest expense		5,972			5,805			5,703				11,777			11,170
Other Income:
Other income		4,996			2,804			4,219				7,800			6,530
Sale of impaired credit		-			-			(91	)			-			(91	)
(Gains) losses on former bank premises and equipment		-			(126	)		-				(126	)		-
(Gains) on sale of securities		-			(25	)		(58	)			(25	)		(58	)
(Gains) on sale of banking center		-			-			(593	)			-			(593	)
Core other income		4,996			2,653			3,477				7,649			5,788
Other Expense:
Other expense		27,797			16,643			14,577				44,440			28,367
Acquisition-related expenses		(6,573	)		(1,212	)		(436	)			(7,785	)		(386	)
Stock option exercises - excess taxes		-			(71	)		-				(71	)		-
Core other expense	$	21,224		$	15,360		$	14,141			$	36,584		$	27,981
Efficiency Ratio:
Other expense (a)	$	27,797		$	16,643		$	14,577			$	44,440		$	28,367
Core other expense (c)	$	21,224		$	15,360		$	14,141			$	36,584		$	27,981
Net interest and other income (1) (b)	$	35,915		$	22,990		$	24,354			$	58,905		$	45,785
Core net interest and other income (1) (d)	$	35,915		$	22,864		$	23,670			$	58,779		$	45,101
Efficiency ratio (a/b)		77.40%			72.39%			59.85%				75.44%			61.96%
Core efficiency ratio (c/d)		59.10%			67.18%			59.74%				62.24%			62.04%
Total Average Interest-Earnings Assets	$	3,176,156		$	2,055,603		$	1,929,035			$	2,615,879		$	1,914,386
Net Interest Income:
Net interest income	$	30,919		$	20,211		$	20,193				51,130		$	39,313
Loan discount accretion		(1,465	)		(290	)		(826	)			(1,755	)		(1,258	)
Net interest income excluding loan discount accretion	$	29,454		$	19,921		$	19,367			$	49,375		$	38,055
Net interest margin (2)		3.89%			3.93%			4.19%				3.91%			4.11%
Net interest margin excluding loan discount accretion (2)		3.71%			3.88%			4.02%				3.78%			3.98%
Net interest spread		3.59%			3.55%			3.75%				3.57%			3.69%
Net interest spread excluding loan discount accretion		3.41%			3.49%			3.58%				3.43%			3.56%
(1) Excludes gains/losses on sales of securities.
(2) Calculated utilizing a 30/360 day count convention.

Business First Bancshares, Inc.
Non-GAAP Measures
(Unaudited)
	June 30,			March 31,			June 30,
(Dollars in thousands, except per share data)		2020			2020			2019
Total Shareholders' (Common) Equity:
Total shareholders' equity	$	386,336		$	282,030		$	277,469
Goodwill		(53,649	)		(48,495	)		(48,503	)
Core deposit intangible		(10,389	)		(6,471	)		(7,139	)
Total tangible common equity	$	322,298		$	227,064		$	221,827
Total Assets:
Total assets	$	3,961,138		$	2,287,662		$	2,153,608
Goodwill		(53,649	)		(48,495	)		(48,503	)
Core deposit intangible		(10,389	)		(6,471	)		(7,139	)
Total tangible assets	$	3,897,100		$	2,232,696		$	2,097,966
Common shares outstanding		20,667,237			13,067,987			13,361,482
Book value per common share	$	18.69		$	21.58		$	20.77
Tangible book value per common share	$	15.59		$	17.38		$	16.60
Common equity to total assets		9.75%			12.33%			12.88%
Tangible common equity to tangible assets		8.27%			10.17%			10.57%

Misty Albrecht

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