BATON ROUGE, La., April 23, 2019 /PRNewswire/ -- Business First Bancshares, Inc. (NASDAQ: BFST) (Business First), parent company of Business First Bank, Baton Rouge, Louisiana, today announced its unaudited results for the quarter ended March 31, 2019, including record quarterly net income of $5.7 million, or $0.41 per diluted share, increases of $2.6 million and $0.12, respectively, from the quarter ended March 31, 2018. Core net income, which excludes noncore income and expenses, was $5.6 million, or $0.41 per diluted share, which reflects increases of $2.1 million and $0.07, respectively, from the quarter ended March 31, 2018. 

"I am very pleased with our performance to begin 2019," said Jude Melville, President and CEO. "In this challenging rate environment, our team has remained focused and disciplined on loan growth, margin and spread without sacrificing the Bank's credit quality and underwriting standards." 

"The addition of Richland State Bank to the existing Business First franchise was evident in our first quarter results, and we are excited about the value our combined franchises will continue to generate for our shareholders and customers in the future."

On April 23, 2019, Business First's board of directors declared a quarterly dividend based upon financial performance for the quarter in the amount of $0.10 per share to the common shareholders of record as of May 15, 2019, an increase of $0.02, or 25% from the prior quarter. The dividend will be paid on May 31, 2019, or as soon thereafter as practicable.

Quarterly Highlights

• Higher Shareholder Returns. Diluted earnings per share were $0.41, annualized return on average assets was 1.09%, and annualized return on average equity was 8.62%, compared to $0.28, 0.75% and 6.03%, respectively, from the quarter ended December 31, 2018. Core earnings per diluted share were $0.41, compared to $0.38 for the quarter ended December 31, 2018. As adjusted, annualized core return on average assets was 1.08% and annualized core return on average equity was 8.57%, compared to 1.03% and 8.23%, respectively, from the quarter ended December 31, 2018.
• Robust Loan Growth. Total loans held for investment at March 31, 2019, were $1.6 billion, an increase of $57.7 million compared to December 31, 2018. Annualized organic loan growth for the quarter ended March 31, 2019, was 15.1%, compared to 10.6% organic loan growth for the quarter ended December 31, 2018.
• Improved Credit Quality. Ratios of nonperforming loans compared to loans held for investment and nonperforming assets compared to total assets decreased from 0.89% and 0.74%, respectively, at December 31, 2018, to 0.84% and 0.71% at March 31, 2019.
• Healthy Net Interest Margin. Net interest margin and net interest spread were 4.01% and 3.61%, respectively, for the quarter ended March 31, 2019, compared to 4.07% and 3.70% for the quarter ended December 31, 2018. The decrease was attributed to fewer calendar days in the quarter and the subordinated debt issuance in December 2018, which increased our cost of funds and has not yet been fully deployed by Business First.

Financial Condition

March 31, 2019, Compared to December 31, 2018

Balance Sheet

As of March 31, 2019, Business First had total assets of $2.1 billion, total loans of $1.6 billion, total deposits of $1.7 billion and total shareholders' equity of $269.1 million, compared to $2.1 billion, $1.5 billion, $1.7 billion and $260.1 million, respectively, as of December 31, 2018.

Book value per common share was $20.14 at March 31, 2019, compared to $19.68 at December 31, 2018. Tangible book value per common share was $15.86 at March 31, 2019, compared to $15.34 at December 31, 2018. 

Credit Quality

Nonperforming loans as a percentage of total loans held for investment decreased from 0.89% as of December 31, 2018, to 0.84% as of March 31, 2019. Nonperforming assets as a percentage of total assets decreased from 0.74% as of December 31, 2018, to 0.71% as of March 31, 2019. 

March 31, 2019, Compared to March 31, 2018

Balance Sheet

As of March 31, 2019, Business First had total assets of $2.1 billion, total loans of $1.6 billion, total deposits of $1.7 billion and total shareholders' equity of $269.1 million, compared to $1.6 billion, $1.2 billion, $1.3 billion and $180.0 million, respectively, as of March 31, 2018.

Book value per common share was $20.14 at March 31, 2019, compared to $17.52 at March 31, 2018. Tangible book value per common share was $15.86 at March 31, 2019, compared to $13.90 at March 31, 2018.

Credit Quality

Nonperforming loans as a percentage of total loans held for investment decreased from 1.27% as of March 31, 2018, to 0.84% as of March 31, 2019. Nonperforming assets as a percentage of total assets decreased from 1.04% as of March 31, 2018, to 0.71% as of March 31, 2019. The decreases were mainly attributed to improved credit quality in relation to the size of the loan portfolio and total assets of Business First.

Results of Operations

First Quarter 2019 Compared to Fourth Quarter 2018

Net Income and Diluted Earnings Per Share

For the quarter ended March 31, 2019, net income was $5.7 million, or $0.41 per diluted share, compared to net income of $3.4 million, or $0.28 per diluted share, for the quarter ended December 31, 2018.

Core net income, which excludes noncore income and expenses, for the quarter ended March 31, 2019, was $5.6 million, or $0.41 per diluted share, compared to core net income of $4.7 million, or $0.38 per diluted share, for the quarter ended December 31, 2018. Notable noncore events impacting earnings included the incurrence of $2.1 million in noninterest expenses related to acquisition-related activities and $588,000 related to gains associated with banking center, investment and impaired loan sales for the quarter ended December 31, 2018.

Return on Assets and Equity

Return on average assets and equity, each on an annualized basis, increased to 1.09% and 8.62%, respectively, for the quarter ended March 31, 2019, compared to 0.75% and 6.03%, respectively, for the quarter ended December 31, 2018. The increases were largely due to the growth in net interest income.

As adjusted, core return on average assets and core return on average equity, each on an annualized basis, were 1.08% and 8.57%, respectively, for the quarter ended March 31, 2019, compared to 1.03% and 8.23%, respectively, for the quarter ended December 31, 2018.

Interest Income

For the quarter ended March 31, 2019, net interest income totaled $19.1 million and net interest margin and net interest spread were 4.01% and 3.61%, respectively, compared to $17.1 million, 4.07% and 3.70% for the quarter ended December 31, 2018. Net interest margin and spread were negatively impacted due to the subordinated debt issuance in December 2018, and fewer calendar days in the quarter.

Net interest margin and net interest spread (excluding loan discount accretion of $432,000) were 3.92% and 3.52%, respectively, for the quarter ended March 31, 2019, compared to 4.01% and 3.63% (excluding loan discount accretion of $283,000) for the quarter ended December 31, 2018.   

The average yield on the loan portfolio was 5.79% for the quarter ended March 31, 2019, compared to 5.72% for the quarter ended December 31, 2018. The average yield on total interest-earning assets was 5.16% for the quarter ended March 31, 2019, compared to 5.13% for the quarter ended December 31, 2018.

Interest Expense

For the quarter ended March 31, 2019, overall cost of funds (which includes noninterest-bearing deposits) increased by nine basis points compared to the quarter ended December 31, 2018. The increase was largely driven by the issuance of subordinated debt in December 2018.

Provision for Loan Losses

During the quarter ended March 31, 2019, Business First recorded a provision for loan losses of $633,000, compared to $939,000 for the quarter ended December 31, 2018. The reserve for the quarter ended December 31, 2018, was negatively impacted by a single, previously identified, impaired loan.

First Quarter 2019 Compared to First Quarter 2018

Net Income and Diluted Earnings Per Share

For the quarter ended March 31, 2019, net income was $5.7 million, or $0.41 per diluted share, compared to net income of $3.1 million, or $0.29 per diluted share, for the quarter ended March 31, 2018. The increase in net income and diluted earnings per share is attributed to the overall growth and efficiency of Business First over the past 12 months.

Core net income, which excludes noncore income and expenses, for the quarter ended March 31, 2019, was $5.6 million, or $0.41 per diluted share, compared to core net income of $3.6 million, or $0.34 per diluted share, for the quarter ended March 31, 2018. Notable noncore events impacting earnings included the incurrence of $512,000 in noninterest expenses related to acquisition-related activities for the quarter ended March 31, 2018.

Return on Assets and Equity

Return on average assets and return on average equity, each on an annualized basis, increased to 1.09% and 8.62%, respectively, for the quarter ended March 31, 2019, from 0.77% and 6.94%, respectively, for the quarter ended March 31, 2018.  

As adjusted, core return on average assets and core return on average equity, each on an annualized basis, were 1.08% and 8.57%, respectively, for the quarter ended March 31, 2019, compared to 0.88% and 7.96%, respectively, for the quarter ended March 31, 2018.  

Interest Income

For the quarter ended March 31, 2019, net interest income totaled $19.1 million and net interest margin and net interest spread were 4.01% and 3.61%, respectively, compared to $14.5 million, 3.97% and 3.75% for the quarter ended March 31, 2018.

Net interest margin and net interest spread (excluding loan discount accretion of $432,000) were 3.92% and 3.52%, respectively, for the quarter ended March 31, 2019, compared to 3.86% and 3.64% (excluding loan discount accretion of $385,000) for the quarter ended March 31, 2018. As previously mentioned, the issuance of subordinated debt in December 2018 negatively impacted the net interest margin and spread for the quarter ended March 31, 2019.

The average yield on the loan portfolio was 5.79% for the quarter ended March 31, 2019, compared to 5.32% for the quarter ended March 31, 2018. The average yield on total interest-earning assets was 5.16% for the quarter ended March 31, 2019, compared to 4.72% for the quarter ended March 31, 2018.

Interest Expense

For the quarter ended March 31, 2019, overall cost of funds (which includes noninterest-bearing deposits) increased by 45 basis points compared to the quarter ended March 31, 2018. The increase is largely attributed to an overall increase in interest rates over the past 12 months and the issuance of subordinated debt in December 2018.

Provision for Loan Losses

During the quarter ended March 31, 2019, Business First recorded a provision for loan losses of $633,000, compared to $474,000 for the quarter ended March 31, 2018.

About Business First Bancshares, Inc.

Business First Bancshares, Inc., through its banking subsidiary Business First Bank, operates 25 banking centers in markets across Louisiana and in Dallas, Texas. Business First Bank 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" or "tangible") 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 and 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. 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, or 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.

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SOURCE Business First Bancshares, Inc.