BFST 10-K & 10-Q changes, risk factors and insider trading
Business First Bancshares, Inc. · Nasdaq · State Commercial Banks · CIK 1624322 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Removed heading “We have identified a material weakness in our internal control over financial reporting. Failure to remediate, improve and maintain the quality of internal control over financial reporting could result in material misstatements in our financial statements and could materially and adversely affect our ability to provide timely and accurate financial information about the Company, which could harm our reputation and share price.”
Largest changes
“Unsuccessful remediation efforts could result in material misstatements in, or restatements of, the Company’s financial statements, could cause the Company to fail to meet its reporting obligations and/or could cause investors to lose confidence in the Company’s reported financial information, which would adversely affect the trading price of the Company’s common stock and harm the Company’s reputation. …”see in full comparison
see in full comparisonWe necessarily collect, use and hold personal and financial information concerning individuals and businesses with which we have a banking relationship. Threats to data security, including unauthorized access, and cyber-attacks, rapidly emerge and change, exposing us to additional costs for protection or remediation and competing time constraints to secure our data in accordance with customer expectations and statutory and regulatory privacy and other requirements.It is difficult or impossible to defend against every risk being posed by changing technologies, as well as criminals intent on committing cyber-crime. Controls employed by our information technology department and our other employees and vendors could prove inadequate. In the last few years, the number of cyber incidents has drastically increased. The sophistication of these cyber incidents has also increased, and is expected to increase further, as cyber-criminals utilize artificial intelligence and related emerging technologies. Increasing sophistication of cyber-criminals and terrorists make keeping up with new threats difficult and could result in a breach.Controls employed by our information technology department and our other employees and vendors could prove inadequate.We could also experience a breach due to intentional or negligent conduct on the part of employees or other internal sources, software bugs or other technical malfunctions, or other causes. As a result of any of these threats, our customer accounts may become vulnerable to account takeover schemes or cyber-fraud. Our systems and those of our third party vendors may also become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from catastrophic events, power anomalies or outages, natural disasters, network failures, and viruses and malware. A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have an adverse effect on our business, results of operations, financial condition, and future prospects.
“A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have an adverse effect on our business, results of operations, financial condition, and future prospects.”see in full comparison
“We have identified a material weakness in our internal control over financial reporting. Failure to remediate, improve and maintain the quality of internal control over financial reporting could result in material misstatements in our financial statements and could materially and adversely affect our ability to provide timely and accurate financial information about the Company, which could harm our reputation and share price.”see in full comparison
“Management, with oversight from the Audit Committee, is committed to maintaining a strong internal control environment, and has taken, and will continue to take, actions necessary to remediate the material weakness. The identified material weakness in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. …”see in full comparison
“In January 2025, we identified control deficiencies involving the design and operation of information technology general controls (“ITGCs”) around change management segregation of duties with respect to certain information technology (“IT”) systems that support our financial reporting process, which we have outsourced to a third party service provider. …”see in full comparison
Full comparison: every changed paragraph (15)
Interest rates increased rapidly during 2022 and 2023 to levels that we have not experienced in recent history. Interest rates subsequently declined in 2024,2024 and 2025, but have not returned to pre-2022 levels. An increase or stabilization in interest rates could have a number of effects on our business, which may include reduced loan demand, increased delinquencies and increased loan paydowns and payoffs. Conversely, a decrease in the general level of interest rates may affect us through, among other things, increased prepayments on our loan portfolio and increased competition for deposits. Accordingly, changes in the level of market interest rates affect our net yield on interest-earning assets, loan origination volume, loan portfolio and our overall results. Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets.
As of December 31, 2024,2025, the fair value of our investment securities portfolio was approximately $893.5$989.2 million, which included a net unrealized loss of approximately $79.9$42.2 million. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. For example, fixed-rate securities are generally subject to decreases in market value when interest rates rise. The Federal Open Market Committee raised the target federal funds rate several times in 2022 and 2023 and reduced them threeseveral times in 2024.2024 and 2025. In addition to market interest rates, other factors that could cause adverse changes to the fair value of our securities include, but are not limited to, rating agency actions with respect to the securities, defaults by the issuer with respect to the underlying securities, and continued instability in the capital markets. Any of these factors, among others, could cause other-than-temporary impairments and realized or unrealized losses in future periods and declines in other comprehensive income, which could have an adverse effect on our business, results of operations, financial condition and future prospects. The process for determining whether impairment of a security is other-than-temporary often requires complex, subjective judgments about whether there has been a significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any collateral underlying the security, and other relevant factors.
We have identified a material weakness in our internal control over financial reporting. Failure to remediate, improve and maintain the quality of internal control over financial reporting could result in material misstatements in our financial statements and could materially and adversely affect our ability to provide timely and accurate financial information about the Company, which could harm our reputation and share price.
In January 2025, we identified control deficiencies involving the design and operation of information technology general controls (“ITGCs”) around change management segregation of duties with respect to certain information technology (“IT”) systems that support our financial reporting process, which we have outsourced to a third party service provider. Specifically, user access controls at our third party service provider lacked sufficient segregation of duties as multiple end users had the ability to both install changes into the production environment and develop application source code via permissions inherited through group membership. Management concluded that these control deficiencies constituted a material weakness in our internal control over financial reporting, as the identified deficiencies could have had a direct or indirect impact on some of our financial reporting controls that relied on certain IT system reports. For further discussion of this material weakness, see “Item 9A, Controls and Procedures.”
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management cannot be certain that other deficiencies or material weaknesses will not arise or be identified or that the Company will be able to correct and maintain adequate controls over financial processes and reporting in the future.
Management, with oversight from the Audit Committee, is committed to maintaining a strong internal control environment, and has taken, and will continue to take, actions necessary to remediate the material weakness. The identified material weakness in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. Our remediation efforts include working with our third party service provider to ensure that it has taken steps to address its user access controls that led to the change management segregation of duties deficiencies. Accordingly, we cannot provide any assurance that our remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. As we continue to evaluate operating effectiveness and monitor improvements to our internal control over financial reporting, we may take additional measures to address control deficiencies or modify our remediation efforts.
Unsuccessful remediation efforts could result in material misstatements in, or restatements of, the Company’s financial statements, could cause the Company to fail to meet its reporting obligations and/or could cause investors to lose confidence in the Company’s reported financial information, which would adversely affect the trading price of the Company’s common stock and harm the Company’s reputation. In addition, such failures could result in violations of applicable securities laws, an inability to meet Nasdaq listing requirements, a default in covenants under the Company’s credit facilities, and/or exposure to lawsuits, investigations or other legal proceedings.
We necessarily collect, use and hold personal and financial information concerning individuals and businesses with which we have a banking relationship. Threats to data security, including unauthorized access, and cyber-attacks, rapidly emerge and change, exposing us to additional costs for protection or remediation and competing time constraints to secure our data in accordance with customer expectations and statutory and regulatory privacy and other requirements.
We necessarily collect, use and hold personal and financial information concerning individuals and businesses with which we have a banking relationship. Threats to data security, including unauthorized access, and cyber-attacks, rapidly emerge and change, exposing us to additional costs for protection or remediation and competing time constraints to secure our data in accordance with customer expectations and statutory and regulatory privacy and other requirements. It is difficult or impossible to defend against every risk being posed by changing technologies, as well as criminals intent on committing cyber-crime. Controls employed by our information technology department and our other employees and vendors could prove inadequate. In the last few years, the number of cyber incidents has drastically increased. The sophistication of these cyber incidents has also increased, and is expected to increase further, as cyber-criminals utilize artificial intelligence and related emerging technologies. Increasing sophistication of cyber-criminals and terrorists make keeping up with new threats difficult and could result in a breach. Controls employed by our information technology department and our other employees and vendors could prove inadequate. We could also experience a breach due to intentional or negligent conduct on the part of employees or other internal sources, software bugs or other technical malfunctions, or other causes. As a result of any of these threats, our customer accounts may become vulnerable to account takeover schemes or cyber-fraud. Our systems and those of our third party vendors may also become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from catastrophic events, power anomalies or outages, natural disasters, network failures, and viruses and malware. A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have an adverse effect on our business, results of operations, financial condition, and future prospects.
Additionally, the cyber-resilience of banking organizations has become of increased importance to federal and state banking regulators. New or revised laws and regulations designed to address cybersecurity risks may impact our current and planned privacy, data protection and information security-related policies, the collection, use, sharing, retention and safeguarding of customer and employee information, and current or planned business activities. Compliance with current or future privacy, data protection and information security laws may result in additional compliance and technology costs, which could adversely affect our profitability.
A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have an adverse effect on our business, results of operations, financial condition, and future prospects.
Banking and other financial services companies, such as ours, rely on technology companies to provide information technology products and services necessary to support their day-to-day operations. Technology companies frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. In addition, patent holding companies seek to monetize patents they have purchased or otherwise obtained. Competitors of our vendors, or other individuals or companies, may from time to time claim to hold intellectual property sold to us by our vendors. Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.
In addition, patent holding companies seek to monetize patents they have purchased or otherwise obtained. Competitors of our vendors, or other individuals or companies, may from time to time claim to hold intellectual property sold to us by our vendors. Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.
The BoardFederal of Governors ofReserve, the Federal Reserve System (the "Federal Reserve"), the Federal Deposit Insurance Corporation (the "FDIC"),FDIC, and the Louisiana Office of Financial Institutions (the "Louisiana OFI") periodically conduct examinations of various aspects of our business, including our compliance with laws and regulations. If, as a result of an examination, a federal or state banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we or the Bank were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against us or the Bank or our respective officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance and place it into receivership or conservatorship. Any such regulatory action could have a material adverse effect on our business, results of operations, financial condition and prospects.
The deposits of the Bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments. The Bank’s regular assessments are determined by the level of its assessment base and its risk classification, which is based on its regulatory capital levels and the level of supervisory concern that it poses. Moreover, the FDIC has the unilateral power to change deposit insurance assessment rates and the manner in which deposit insurance is calculated and also to charge special assessments to FDIC-insured institutions. The FDIC utilized all of these powers during the financial2008 crisisGlobal Financial Crisis for the purpose of restoring the reserve ratios of the Deposit Insurance Fund.Fund and again in response to the high-profile bank failures that occurred in 2023. Any future special assessments, increases in assessment rates or premiums, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could materially and adversely affect our business, financial condition, and results of operations. We experienced an increase in FDIC insurance premiums in 2023 due to increased regulatory rates.
Management's Discussion & Analysis (MD&A)
New heading “Sale of Kaplan Banking Center”
New heading “Acquisition of Progressive”
Removed heading “Bank Term Funding Program (“BTFP”)”
Removed heading “Sale of Leesville Banking Center”
Removed heading “Bank Term Funding Program (“BTFP”)”
Largest changes
Core Net Income. Core net income available to common shareholders for the year ended December 31,see in full comparison20242025 was$65.8$83.5 million, or$2.49$2.83 per diluted common share, compared to core net income available to common shareholders of$66.3$65.8 million, or$2.62$2.49 per diluted common share, for the year ended December 31,2023.2024. Core net income available to common shareholders for the year ended December 31,20242025 included losses on the sale of former bank premises and equipment of $840,000, a gain on the sale of a branch of $3.4 million, a gain on the extinguishment of subordinated debt of $630,000, a one time employee retention tax credit of $2.0 million, offset with acquisition related expenses of $3.8 million and core conversion expenses of $2.5 million, compared to a CECL impact on the Oakwood acquisition of $4.8 million, acquisition related expenses of $1.6 million and core conversion expenses of$974,000, compared to an adjustment for $2.6 million in losses on sales of securities, $945,000 in a gain on the sale of our Leesville, Louisiana banking center, $1.5 million in a gain on the extinguishment of debt associated with the TCBI acquisition in 2022, which was attributed to the $8.9 million subordinated debt redemption, $236,000 in acquisition-related expenses, and a $432,000 write-down on former bank premises$974,000 for the year ended December 31,2023.2024.
Full comparison: every changed paragraph (58)
Bank Term Funding Program (“BTFP”)
On March 12, 2023, the Federal Reserve developed the BTFP, which offered loans to banks with a term of up to one year. These loans were secured by pledging participating banks’ U.S. treasuries, agency securities, agency mortgage-backed securities, and other qualifying assets. These pledged securities were valued at par for collateral purposes. The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023. These loans bore a fixed rate of 4.38% and matured on March 22, 2024, at which time we repaid them in full.
On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $907.7$967.3 million and $1.0$907.7 billionmillion as of December 31, 20242025 and 2023,2024, respectively, through the Federal Reserve discount window. The Bank has not yet drawn on either of the lines of credit as of the date of this report.
Sale of Leesville Banking Center
On August 31, 2023, we sold the Leesville banking center, located in Leesville, Louisiana, to Merchants & Farmers Bank & Trust Company headquartered in Leesville, Louisiana, in accordance with the Branch Purchase and Assumption Agreement dated May 11, 2023. We maintained the loan portfolio and transferred those loans to other nearby banking centers. The sale included total deposits of $16.3 million and a pre-tax gain of $945,000.
On October 1, 2024, we consummated the merger of Oakwood, the parent bank holding company for Oakwood Bank, with and into us,Business First, with usBusiness First continuing as the surviving corporation pursuant to the terms of the Reorganization Agreement. Immediately following the consummation of the Oakwood acquisition, Oakwood Bank merged with and into us,b1BANK, with usb1BANK surviving the merger. Pursuant to the terms of the Reorganization Agreement, upon consummation of the Oakwood acquisition, we issued 3,973,134 shares of our common stock to the former shareholders of Oakwood. As of September 30, 2024, Oakwood had $863.6 million in total assets, $700.2 million in loans and $741.3 million in total deposits.
Sale of Kaplan Banking Center
On April 4, 2025, we sold the Kaplan banking center, located in Kaplan, Louisiana, to Currency Bank headquartered in Baton Rouge, Louisiana, in accordance with the Branch Purchase and Assumption Agreement dated December 12, 2024. The sale included $50.7 million in deposits, $2.3 million in loans, and $1.4 million in fixed assets, net of depreciation. The total deposit premium paid by Currency Bank as consideration was 8.00% of the total deposits assumed at closing resulting in a gain on the sale of $3.4 million.
Acquisition of Progressive
On January 1, 2026, we consummated the merger of Progressive, the parent bank holding company for Progressive Bank, with and into Business First, with Business First continuing as the surviving corporation pursuant to the terms of the Progressive Reorganization Agreement. Immediately following consummation of the Progressive acquisition, Progressive Bank merged with and into b1BANK, with b1BANK surviving the merger. Pursuant to the terms of the Progressive Reorganization Agreement, upon consummation of the Progressive acquisition, we issued 3,192,367 shares of our common stock to the former shareholders of Progressive. As of December 31, 2025, Progressive had $773.8 million in total assets, $597.2 million in loans and $684.9 million in total deposits.
•Total assets of $7.9$8.2 billion, a $1.3$357.7 billion,million, or 19.3%,4.6%, increase from December 31, 2023.2024.
•Total deposits of $6.5$6.7 billion, a $1.3$187.3 billion,million, or 24.1%,2.9%, increase from December 31, 2023.2024.
•Net income available to common shareholders of $59.7$82.5 million, a $5.9$22.8 million, or 9.0%,38.1%, decreaseincrease from the year ended December 31, 2023.2024.
For the year ended December 31, 2024,2025, net income available to common shareholders was $82.5 million, or $2.81 per basic common share and $2.79 per diluted common share, compared to net income available to common shareholders of $59.7 million, or $2.27 per basic common share and $2.26 per diluted common share, compared to net income available to common shareholders of $65.6 million, or $2.62 per basic common share and $2.59 per diluted common share, for the year ended December 31, 2023.2024. Return to common shareholders on average assets decreasedincreased to 1.05% for the year ended December 31, 2025 from 0.86% for the year ended December 31, 2024 from 1.04% for the year ended December 31, 2023.2024. Return to common shareholders on average common equity decreasedincreased to 10.59% for the year ended December 31, 2025, as compared to 9.54% for the year ended December 31, 2024, as compared to 12.36% for the year ended December 31, 2023.2024.
For the year ended December 31, 2025, net interest income totaled $273.2 million, and net interest margin and net interest spread were 3.69% and 2.89%, respectively. For the year ended December 31, 2024, net interest income totaled $227.4 million,million and net interest margin and net interest spread were 3.48% and 2.55%, respectively. For the year ended December 31, 2023, net interest income totaled $215.1 million and net interest margin and net interest spread were 3.62% and 2.72%, respectively. The average yield on the loan portfolio was 7.03%,6.96%, for the year ended December 31, 2025, compared to 7.03% for the year ended December 31, 2024, compared to 6.65% for the year ended December 31, 2023, and the average yield on total interest-earning assets was 6.28% for the year ended December 31, 2025, compared to 6.35% for the year ended December 31, 2024, compared to 5.95% for the year ended December 31, 2023.2024. For the year ended December 31, 2024,2025, overall cost of funds (which includes noninterest-bearing deposits) increaseddecreased 5825 basis points compared to the year ended December 31, 2023.2024.
_______________________________ (1)Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
Our provision for credit losses is a charge to income in order to bring our allowance for credit losses to a level deemed appropriate by management. For a description of the factors taken into account by management in determining the allowance for credit losses see “—Financial Condition—Allowance for Credit Losses.” The provision for credit losses was $10.9$11.3 million and $4.5$10.9 million for the years ended December 31, 20242025 and 2023,2024, respectively. The higher provision during the year ended December 31, 2024 compared to 2023 relates primarily to the acquisition of Oakwood, and, to a lesser extent, increases from organic loan growth and non-performing loans.
Service charges on deposit accounts. We earn fees from our customers for deposit-related services, and these fees constitute a significant and predictable component of our noninterest income. Service charges on deposit accounts were $10.6 million for the year ended December 31, 2024, compared to $9.7 million for the 2023, an increase of $873,000, or 9.0%.
Gain on sales of loans. We had gains on sales of loans of $3.4 million in 2025, compared to $3.0 million in 2024, compared to $2.0 million in 2023, an increase of $1.0 million,$465,000, or 50.8%,15.6%, primarily due to increased SBA loan sale activity.
Gain (loss) on sales of investment securities. We had net gains on the sales of investment securities of $7,000 in 2024, compared to net losses on the sales of $2.6 million in 2023. During the fourth quarter of 2023, we sold $71.5 million in securities at a loss, with a weighted average book yield of 1.98% and reinvested the funds into high yielding investments with an average book yield of 5.17%, locking in higher yields and keeping consistent, the duration and overall portfolio weighted average life.
Gain on sales of other real estate owned. We had net gains on the sales or other real estate owned of $570,000 in 2025, compared to $89,000 in 2024, comparedan to $646,000 in 2023, a decreaseincrease of $557,000.$481,000. The majority of the gains on sale of other real estate inwas 2023due resultedto fromone theproperty salewhich of two propertiessold at a total gain of $511,000.$515,000.
Loss on sales of other assets. We had net losses on the sales of other assets of $839,000 in 2025, compared to $15,000 in 2024, a decrease of $824,000. The losses in 2025 were due to the disposals of assets that were no longer in service or retired during the year.
Gain on sale of banking center. We sold a banking center located in Leesville,Kaplan, Louisiana that resulted in a gain of $945,000$3.4 million during 2023.2025.
Gain on extinguishment of debt. We extinguished $8.9$7.0 million in subordinated debt resulting in a gain on the extinguishment of debt of $1.5 million$630,000 during 2023.2025.
Swap fee income. We had swap fee income from back-to-back interest rate swaps in the amount of $2.7$4.4 million in 2024,2025, compared to $964,000$2.7 million during 2023,2024, an increase of $1.8$1.7 million, or 184.1%.61.3%.
Other. This category includes a variety of other income producing activities, including wire transfer fees, insurance commissionsfees and credit card income. Other income increased $2.5 million,$861,000, or 53.0%,10.8%, for the year ended December 31, 2024,2025, compared to the same period in 2023.2024.
Salaries and employee benefits. Salaries and employee benefits are the largest component of noninterest expense and include payroll expense, the cost of incentive compensation, benefit plans, health insurance and payroll taxes. Salaries and employee benefits were $103.9$115.9 million for the year ended December 31, 2024,2025, an increase of $13.3$11.9 million, or 14.7%,11.5%, compared to the same period in 2023.2024. The increase was primarily due to the acquisitionsOakwood ofacquisition Waterstonein andlate Oakwood,2024, additional hires for new positions and our merit increase cycle. As of December 31, 2024,2025, we had 859831 full-time equivalent employees, compared to 761859 full-time equivalents as of December 31, 2023.2024. Salaries and employee benefits included stock-based compensation expense of $2.5$5.2 million and $4.4$2.5 million for the years ended December 31, 20242025 and 2023,2024, respectively.
Occupancy of bank premises. Occupancy of bank premises expenses were $10.9$12.9 million and $9.5$10.9 million for the years ended December 31, 20242025 and 2023,2024, respectively, an increase of $1.4$1.9 million, or 15.0%,17.7%, which is primarily due to the acquisitionOakwood of Oakwood.acquisition.
Data processing. Data processing fees were $12.0$15.8 million and $9.0$12.0 million for the years ended December 31, 20242025 and 2023,2024, respectively, an increase of $2.9$3.8 million, or 32.4%.31.8%. The increase was attributed to core conversion costs of $1.8 million, as well as the cost of utilizing two core systems until the Oakwood conversion in September 2025.
Merger and conversion related expenses. Merger and conversion related expenses for the year ended December 31, 20242025 was primarily to the acquisition of Oakwood and Progressive and for the year ended December 31, 2024 expenses were primarily due to the acquisitions of Waterstone and Oakwood in 2024.Oakwood.
Other. This category includes various operating and administrative expenses including business development expenses (i.e. travel and entertainment, donations and club dues), insurance, supplies and printing, equipment rent, and software support and maintenance. Other noninterest expense increased $235,000,$4.1 million, or 1.1%,19.0%, for the year ended December 31, 20242025 compared to the same period in 2023.2024 primarily due to a full year of Oakwood expenses.
For the year ended December 31, 2024,2025, income tax expense totaled $17.9$22.4 million, an decreaseincrease of $1.6$4.5 million, or 8.2%,25.1%, compared to $19.5$17.9 million for the same period in 2023.2024. For the years ended December 31, 20242025 and 2023,2024, our effective tax rates were 21.6%20.4% and 21.6%, respectively.
Our total assets increased $1.3$357.7 billion,million, or 19.3%,4.6%, from $6.6 billion as of December 31, 2023 to $7.9 billion as of December 31, 2024,2024 to $8.2 billion as of December 31, 2025, due primarily fromto theunrealized acquisitiongains ofin Oakwood,our securities portfolio, increases in our loan portfolio, as well as our cash and cash equivalents due to our increase in deposits.
As of December 31, 2024,2025, total loans, excluding mortgage loans held for sale, were $6.0$6.2 billion, an increase of $988.6$208.1 million or 19.8%,3.5%, compared to $5.0$6.0 billion as of December 31, 2023. The increase was primarily due to the acquisition of Oakwood.2024. Additionally, $717,000$1.1 million and $835,000$717,000 in mortgage loans were classified as loans held for sale as of December 31, 20242025 and 2023,2024, respectively.
Real Estate: Construction loans increaseddecreased $704,000,$31.4 million, or 0.1%,4.7%, to $639.1 million as of December 31, 2025, from $670.5 million as of December 31, 2024, from $669.8 million as of December 31, 2023.2024.
Commercial loans increased $509.8$53.2 million, or 37.5%,2.8%, toand remained at $1.9 billion as of December 31, 2024,2025 fromand $1.4 billion as of December 31, 2023.2024.
Consumer and other loans increaseddecreased $10.6$1.2 million, or 16.7%,1.6%, to $73.2 million as of December 31, 2025, from $74.5 million as of December 31, 2024, from $63.8 million as of December 31, 2023.2024.
We believe our conservative lending approach and focused management of nonperforming assets has resulted in sound asset quality and the timely resolution of problem assets. We had $30.5$89.7 million and $18.8$30.5 million in nonperforming assets as of December 31, 20242025 and 2023,2024, respectively. We had $25.0$76.7 million in nonperforming loans as of December 31, 20242025 compared to $17.1$25.0 million as of December 31, 2023.2024. The increase in nonperforming assets from December 31, 20232024 to December 31, 20242025 is primarily due to twoone lending relationshipsrelationship secured by residential real estate, onefour secured by commercial and construction real estate, and onefour commercial loanloans, thatand istwo unsecured.other real estate owned properties.
The following tables set forth the fair value, maturities and approximated weighted average book yield based on estimated annual income divided by the average amortized cost of the securities portfolio as of the dates indicated. The contractual maturity of a mortgage-backed security is the date at which the last underlying mortgage matures.
Total deposits as of December 31, 20242025 were $6.5$6.7 billion, an increase of $1.3$187.3 billion,million, or 24.1%,2.9%, compared to $5.2$6.5 billion as of December 31, 2023.2024. Total uninsured deposits were $2.8$2.9 billion, or 43.4%43.2% of deposits as of December 31, 20242025 compared to $2.0$2.8 billion, or 38.9%,43.4%, or total deposits as of December 31, 2023.2024. Since it is not reasonably practicable to provide a precise measure of uninsured deposits, the amounts are estimated and are based on the same methodologies and assumptions that are used for regulatory reporting requirements for the call report.
Noninterest-bearing deposits as of December 31, 20242025 were $1.4$1.3 billion compared to $1.3$1.4 billion as of December 31, 2023,2024, ana increasedecrease of $58.0$35.0 million, or 4.5%.2.6%.
Average deposits for the year ended December 31, 20242025 were $5.7$6.4 billion, an increase of $733.5$718.0 million, or 14.7%,12.6%, compared to the year ended December 31, 20232024 of $5.0$5.7 billion. The average rate paid on total interest-bearing deposits increaseddecreased over this period from 3.00% for the year ended December 31, 2023 to 3.73% for the year ended December 31, 2024.2024 to 3.29% for the year ended December 31, 2025. The increasedecrease in average rates was driven by the federal reserve raisingcontinuing to lower interest rates during the yearsyear ended December 31, 2023 and 2022.2025. In addition, the stability and the continued growth of noninterest-bearing demand accounts served to reduce the cost of deposits to 2.63% for the year ended December 31, 2025 and 2.89% for the year ended December 31, 2024 and 2.15% for the year ended December 31, 2023.2024.
FHLB advances. The FHLB allows us to borrow on a blanket floating lien status collateralized by certain securities and loans. As of December 31, 20242025 and 2023,2024, total borrowing capacity of $2.0 billion and $1.8 billion, respectively, was available under this arrangement for both periods, and $355.9$431.2 million and $211.2$355.9 million, respectively, was outstanding with a weighted average stated interest rate of 4.02% as of December 31, 2025 and 4.15% as of December 31, 2024 and 3.65% as of December 31, 2023.2024. Our current longest dated FHLB advance matures within teneight years. We utilize these borrowings to meet liquidity needs and to fund certain fixed rate loans in our portfolio.
Bank Term Funding Program (“BTFP”). On March 12, 2023, the Federal Reserve launched the BTFP, which offered loans to banks with a term of up to one year. The loans were secured by pledging participating banks’ U.S. treasuries, agency securities, agency mortgage-backed securities, and any other qualifying assets. These pledged securities were valued at par for collateral purposes. The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023. These loans bore a fixed interest rate of 4.38% and matured on March 22, 2024, at which time we repaid them in full.
The following table presents our Bank Term Funding Program borrowings at the date indicated.
On March 26, 2021, we issued $52.5 million in subordinated notes. These subordinated notes bear interest at a fixed rate of 4.25% through March 31, 2026 and a floating rate, based on a benchmark rate plus 354 basis points, thereafter through maturity in 2031. During the year ended December 31, 2025, the Company redeemed $7.0 million and recognized a $630,000 gain on the extinguishment of this debt. The balance outstanding was $45.5 million and $52.5 million at both December 31, 20242025 and 20232024, was $52.5 million.respectively. The subordinated notes are redeemable by the Company at its option beginning in 2026.
On April 1, 2021, we consummated the acquisition of SSW.Smith Shellnut Wilson, LLC (“SSW”). Under the terms of the acquisition, we issued $3.9 million in subordinated debt to the former owners of SSW. This subordinated debt bears interest at a fixed rate of 4.75% through April 1, 2026 and a floating rate, based on a benchmark rate plus 442 basis points, thereafter through maturity in 2031. The balance outstanding at both December 31, 20242025 and 20232024 was $3.9 million. The subordinated notes are redeemable by the Company at its option beginning in 2026.
On March 1, 2022, we consummated the acquisition of TCBI.Texas Citizens Bancorp, Inc. (“TCBI”). As part of the acquisition, we assumed $26.4 million in subordinated debt. Of those notes, $10.0 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly until maturity on April 11, 2028, and was callable beginning April 11, 2023, $7.5 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly, until maturity on December 13, 2028, and was callable beginning December 13, 2023, $8.9 million was called on May 1, 2023 and ceased bearing interest as of such date. This $8.9 million note was fully extinguished during the year ended December 31, 2023. As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $833,000$603,000 and $1.1 million$833,000 remaining at December 31, 20242025 and December 31, 2023,2024, respectively. We recognized $1.5 million in gains on the extinguishment of this debt during the year ended December 31, 2023.
Liquidity involves our ability to utilize funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events. For the years ended December 31, 20242025 and 2023,2024, liquidity needs were primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios. In addition, we utilize, or have available, brokered deposits, purchased funds from correspondent banks, the Federal Reserve discount window, and overnight advances from the FHLB. As of December 31, 20242025 and 2023,2024, we maintained sixfive and fivesix lines of credit, respectively, with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $160.0$145.0 million and $145.0$160.0 million as of December 31, 20242025 and 2023,2024, respectively. There were no funds under these lines of credit outstanding as of December 31, 20242025 and 2023,2024, respectively.
Total shareholders’ equity increased to $896.9 million as of December 31, 2025, compared to $799.5 million as of December 31, 2024, compared to $644.3 million as of December 31, 2023, an increase of $155.2$97.4 million, or 24.1%.12.2%. This increase was primarily due to the acquisition of Oakwood, which resulted in stock issuance of $103.8 million, net income available to common shareholders of $59.7$82.5 million, other comprehensive income of $3.6$29.7 million resulting from the after tax effect of unrealized gains in our investment securities portfolio, and offset by dividends paid on common shares of $14.9$16.8 million.
On January 23,22, 2025,2026, our board of directors declared a quarterly dividend in the amount of $18.75 per preferred share to the preferred shareholders of record as of February 15, 2025.2026. The dividend wasis paidto pay on February 28, 2025.2026, or as soon as practicable thereafter.
On January 23,22, 2025,2026, our board of directors declared a quarterly dividend based upon our financial performance for the three months ended December 31, 20242025 in the amount of $0.14$0.15 per common share to the common shareholders of record as of February 15, 2025.2026. The dividend wasis paidto pay on February 28, 2025.2026, or as soon as practicable thereafter.
Advances from the FHLB totaled approximately $355.9$431.2 million and $211.2$355.9 million at December 31, 20242025 and 2023,2024, respectively. As of December 31, 2024,2025, and 2023,2024, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.15%4.02% and 3.65%,4.15%, respectively, and mature within teneight years. At December 31, 2024,2025, $55.0$120.0 million in advances were short term with a rate of 4.38%3.62% and none$55.0 million with a rate of 4.38% at December 31, 2023.2024.
Bank Term Funding Program (“BTFP”)
On March 12, 2023, the Federal Reserve launched the BTFP, which offered loans to banks with a term of up to one year. The loans were secured by pledging participating banks’ U.S. treasuries, agency securities, agency mortgage-backed securities, and any other qualifying assets. These pledged securities were valued at par for collateral purposes. The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023. These loans bore a fixed interest rate of 4.38% and mature on March 22, 2024, at which time we repaid them in full.
The following tables summarize contractual obligations and other commitments to make future payments as of December 31, 20242025 and 20232024 (other than non-maturity deposit obligations), which consist of future cash payments associated with our contractual obligations pursuant to our FHLB advances, subordinated debt, revolving line of credit, and non-cancelable future operating leases. Payments related to leases are based on actual payments specified in underlying contracts. Advances from the FHLB totaled approximately $355.9$431.2 million and $211.2$355.9 million as of December 31, 20242025 and 2023,2024, respectively. As of December 31, 20242025 and 2023,2024, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.15%4.02% and 3.65%,4.15%, respectively, and maturing within teneight years. We participated in the BTFP in March 2023 and as of December 31, 2023, had outstanding debt of $300.0 million, at a fixed rate of 4.38% and set to mature on March 22, 2024. We repaid this debt in full at the time of maturity. The subordinated debt totaled $99.8$92.5 million and $100.0$99.8 million as of December 31, 20242025 and 2023.2024. Of this subordinated debt, $25.0 million bears interest at a fixed rate of 6.75% through December 31, 2028 and a floating rate, based on a benchmark rate plus 369 basis points, thereafter through maturity in 2033, $52.5 million of this subordinated debt bears interest at a fixed rate of 4.25% through March 31, 2026 and a floating rate, based on a benchmark rate plus 354 basis points, thereafter through maturity in 2031,2031. During the year ended December 31, 2025, $7.0 million of this debt was redeemed for a gain of $630,000. Also, $3.9 million of this subordinated debt bears interest at a fixed rate of 4.75% through April 1, 2026 and a floating rate, based on a benchmark rate plus 442 basis points, thereafter through maturity in 2031. We acquired three separate notes as part of the TCBI acquisition totaling $26.4 million. Of those notes, $10.0 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly until maturity on April 11, 2028, and callable beginning April 11, 2023, $7.5 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly, until maturity on December 13, 2028, and callable beginning December 13, 2023, $8.9 million was called on May 1, 2023 and ceased bearing interest as of such date. This $8.9 million note was fully extinguished during the year ended December 31, 2023. As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $833,000$603,000 and $1.1 million$833,000 remaining at December 31, 20242025 and December 31, 2023,2024, respectively. We recognized $1.5 million in gains on the extinguishment of this debt during the year ended December 31, 2023.
Core Net Income. Core net income available to common shareholders for the year ended December 31, 20242025 was $65.8$83.5 million, or $2.49$2.83 per diluted common share, compared to core net income available to common shareholders of $66.3$65.8 million, or $2.62$2.49 per diluted common share, for the year ended December 31, 2023.2024. Core net income available to common shareholders for the year ended December 31, 20242025 included losses on the sale of former bank premises and equipment of $840,000, a gain on the sale of a branch of $3.4 million, a gain on the extinguishment of subordinated debt of $630,000, a one time employee retention tax credit of $2.0 million, offset with acquisition related expenses of $3.8 million and core conversion expenses of $2.5 million, compared to a CECL impact on the Oakwood acquisition of $4.8 million, acquisition related expenses of $1.6 million and core conversion expenses of $974,000, compared to an adjustment for $2.6 million in losses on sales of securities, $945,000 in a gain on the sale of our Leesville, Louisiana banking center, $1.5 million in a gain on the extinguishment of debt associated with the TCBI acquisition in 2022, which was attributed to the $8.9 million subordinated debt redemption, $236,000 in acquisition-related expenses, and a $432,000 write-down on former bank premises$974,000 for the year ended December 31, 2023.2024.
_______________________________ (1)Tax rates, exclusive of certain nondeductible acquisition-related expenses and goodwill, utilized were 21.129% for both2025, 2024 and 2023. These rates approximate the marginal tax rates for the applicable periods.
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this Report, we refer you to Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC. There have been no material changes in the risk factors disclosed in our Annual Report on Form 10-K for December 31, 2025.
Full comparison: every changed paragraph (1)
In addition to the other information set forth in this Report, we refer you to Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC. There have been no material changes in the risk factors disclosed in our Annual Report on Form 10-K for December 31, 2025.
Management's Discussion & Analysis (MD&A)
New heading “Acquisition of American Planning Corporation (“APC”)”
Largest changes
The following tables summarize contractual obligations and other commitments to make future payments as ofsee in full comparisonMarchJune31,30, 2026, and December 31, 2025 (other than non-maturity deposit obligations), which consist of future cash payments associated with our contractual obligations pursuant to our FHLB advances, subordinated debt, revolving line of credit, and non-cancelable future operating leases. Payments related to leases are based on actual payments specified in underlying contracts. Advances from the FHLB totaled approximately$260.8$442.5 million and $431.2 million atMarchJune31,30, 2026 and December 31, 2025, respectively. As ofMarchJune31,30, 2026, and December 31, 2025, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of4.14%4.04% and 4.02%, respectively, and mature within ten years. Subordinated debt totaled $114.3 million and $92.5 million atbothJuneMarch 31,30, 2026 and December 31, 2025, respectively, including premium. During the second quarter of 2026, we completed an $85.0 million private placement of subordinated debt with a fixed rate of 6.50% through March 30, 2031, and a floating rate, based on a benchmark rate plus 300 basis points, thereafter through maturity in 2036. Of this subordinated debt, $25.0 million bears interest at a fixed rate of 6.75% through December 31, 2028 and a floating rate, based on a benchmark rate plus 369 basis points, thereafter through maturity in2033,2033.$52.5During the six months ended June 30, 2026, we redeemed $66.9 million in outstanding subordinated notes including the recognition of a $545,000 gain. As part of the APC acquisition, we issued $4.3 million ofthissubordinateddebtnotesbears interest atwith a fixed rate of4.25%6.50% throughMarchJune31,30,20262031, and a floating rate, based on a benchmark rate plus354300 basis points, thereafter through maturity in2031. During the three months ended March 31, 2025, $7.0 million of this debt was redeemed for a gain of $630,000. We had $3.9 million of this subordinated debt bearing interest at a fixed rate of 4.75% through April 1, 2026 and a floating rate, based on a benchmark rate plus 442 basis points, thereafter through maturity in 2031. We acquired three separate notes as part of the TCBI acquisition totaling $26.4 million. Of those notes, $10.0 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly until maturity on April 11, 2028, and callable beginning April 11, 2023, $7.5 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly, until maturity on December 13, 2028, and callable beginning December 13, 2023, and $8.9 million, which was called on May 1, 2023 and ceased bearing interest as of such date. As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $545,000 and $603,000 remaining at March 31, 2026 and December 31, 2025, respectively.2036. We acquired two additional trust preferred securities as part of the Progressive acquisition totaling $5.2 million. Of the trust preferred securities, $4.0 million bears an adjustable interest rate plus 1.45%, based on a benchmark rate, adjusting quarterly, until maturity on December 15, 2037, and $1.2 million bears an adjustable rate plus 3.58%, based on a benchmark rate, adjusting quarterly, until maturity on July 31, 2031. As part of valuing these two trust preferred securities from Progressive, we incurred a fair value adjustment of $555,000 and will amortize this over 12 years, with$544,000$532,000 remaining atMarchJune31,30, 2026.
“On June 29, 2026, we consummated the acquisition of APC, a financial consulting firm, for $6.8 million, of which $2.6 million was paid in cash and $4.3 million was paid in the form of subordinated debt. As part of the transaction, we recorded a customer intangible of $4.9 million, to be amortized over a 10-year period and $1.9 million in goodwill. The APC acquisition will expand the advisory platform of b1BANK’s subsidiary, Smith Shellnut Wilson, LLC (“SSW”).”see in full comparison
“Core net income available to common shareholders, which excludes certain income and expenses, for the six months ended June 30, 2026, was $47.4 million, or $1.45 per diluted common share, compared to core net income available to common shareholders of $38.8 million, or $1.31 per diluted common share, for the six months ended June 30, 2025. …”see in full comparison
“For the six months ended June 30, 2026, net interest income totaled $153.0 million, and net interest margin and net interest spread were 3.69% and 2.95%, respectively, compared to $133.0 million, 3.68%, and 2.90%, respectively, for the six months ended June 30, 2025. The average yield on the loan portfolio was 6.62% for the six months ended June 30, 2026, compared to 6.98% for the six months ended June 30, 2025, and the average yield on total interest-earning assets was 5.99% for the six months ended June 30, 2026, compared to 6.33% for the six months ended June 30, 2025. …”see in full comparison
“For the six months ended June 30, 2026, net income available to common shareholders was $45.0 million, or $1.38 per basic common share and $1.37 per diluted common share, compared to net income available to common shareholders of $39.9 million, or $1.36 per basic common share and $1.35 per diluted common share, for the six months ended June 30, 2025. Return on average assets, on an annualized basis, decreased to 1.02% for the six months ended June 30, 2026, from 1.04% for the six months ended June 30, 2025. …”see in full comparison
Full comparison: every changed paragraph (66)
The following discussion and analysis focuses on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2025 to MarchJune 31,30, 2026, and its results of operations for the three and six months ended MarchJune 31,30, 2026. This discussion and analysis is intended to highlight and supplement information presented elsewhere in this report and should be read in conjunction with (i) the accompanying unaudited consolidated financial statements and the notes thereto (the “Notes”) and (ii) our Annual Report on Form 10-K for the year ended December 31, 2025, including the audited consolidated financial statements and notes thereto, management’s discussion and analysis, and the risk factor disclosures contained therein. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that Business First believes are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under “Forward-Looking Statements,” “Risk Factors” and elsewhere in this report, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. Business First assumes no obligation to update any of these forward-looking statements.
We are a registered financial holding company headquartered in Baton Rouge, Louisiana. Through our wholly-owned subsidiary, b1BANK, a Louisiana state chartered bank, we provide a broad range of financial services tailored to meet the needs of small-to-midsized businesses and professionals. Since our inception in 2006, our priority has been and continues to be creating shareholder value through the establishment of an attractive commercial banking franchise in Louisiana and across our region. We consider our primary market to include the State of Louisiana, the Dallas/Fort Worth metroplex, and Houston. We currently operate out of banking centers and loan production offices across Louisiana and Texas. As of MarchJune 31,30, 2026, we had total assets of $8.9 billion, total loans of $6.7 billion, total deposits of $7.5$7.2 billion, and total shareholders’ equity of $991.2$1.0 million.billion.
On February 17, 2026, we announced a strategic partnership with Covecta, to deploy agentic AI across the bank's day to day workflows. The collaboration focuses on streamlining and automating repeatable, policy-driven activities across core deposit and loansloan operational processes, reducing manual effort and operational friction so that teams can devote more time towards higher value-adding work including analysis, exception handling and customer engagement.
On April 2, 2026, we completed an $85.0 million private placement of subordinated notes with a 6.50% fixed-to-floating rate due in 2036. The subordinated notes were issued to certain qualified institutional and accredited investors. The notes will bear interest at an annual rate of 6.50% until March 30, 2031, and then will reset quarterly to the then current three-month Secured Overnight Financing Rate plus 300 basis points. The proceeds from the sale of these subordinated notes were utilized to redeem $66.9 million in outstanding subordinated notes, to provide additional capital support to b1BANK, to support growth, to better position the Company to take advantage of strategic opportunities that may arise from time to time, to repay other existing borrowings, and for other general corporate purposes.
Acquisition of American Planning Corporation (“APC”)
On June 29, 2026, we consummated the acquisition of APC, a financial consulting firm, for $6.8 million, of which $2.6 million was paid in cash and $4.3 million was paid in the form of subordinated debt. As part of the transaction, we recorded a customer intangible of $4.9 million, to be amortized over a 10-year period and $1.9 million in goodwill. The APC acquisition will expand the advisory platform of b1BANK’s subsidiary, Smith Shellnut Wilson, LLC (“SSW”).
The financial highlights as of and for the threesix months ended MarchJune 31,30, 2026, include:
•Net income available to common shareholders of $22.2$45.0 million for the threesix months ended MarchJune 31,30, 2026, a $3.0$5.1 million, or 15.7%,12.7%, increase from the threesix months ended MarchJune 31,30, 2025. The increase was largely attributable to the acquisition of Progressive during the quarter ended March 31, 2026.
•Net interest income of $75.2$153.0 million for the threesix months ended MarchJune 31,30, 2026, an increase of $9.2$20.0 million, or 14.0%,15.0%, from the threesix months ended MarchJune 31,30, 2025. The increase was largely attributable to the acquisition of Progressive during the quarter ended March 31, 2026.
•Earnings per common share for the first threesix months of 2026 of $0.68$1.38 per basic common share and $1.37 diluted common share, compared to $0.65$1.36 per basic common share and $1.35 diluted common share for the first threesix months of 2025.
•Return on average assets of 1.01%1.02% over the first threesix months of 2026, compared to 1.00%1.04% for the first threesix months of 2025.
•Return on average common equity of 9.77%9.80% over the first threesix months of 2026, compared to 10.48%10.68% for the first threesix months of 2025.
Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026, and 2025
For the three months ended MarchJune 31,30, 2026, net income available to common shareholders was $22.2$22.8 million, or $0.68$0.70 per basic and diluted common share, compared to net income available to common shareholders of $19.2$20.8 million, or $0.65$0.70 per basic and diluted common share, for the three months ended MarchJune 31,30, 2025. Return on average assets, on an annualized basis, increaseddecreased to 1.01%1.03% for the three months ended MarchJune 31,30, 2026, from 1.00%1.07% for the three months ended MarchJune 31,30, 2025. Return on average common equity, on an annualized basis, decreased to 9.77%9.83% for the three months ended MarchJune 31,30, 2026, as compared to 10.48%10.87% for the three months ended MarchJune 31,30, 2025.
For the six months ended June 30, 2026, net income available to common shareholders was $45.0 million, or $1.38 per basic common share and $1.37 per diluted common share, compared to net income available to common shareholders of $39.9 million, or $1.36 per basic common share and $1.35 per diluted common share, for the six months ended June 30, 2025. Return on average assets, on an annualized basis, decreased to 1.02% for the six months ended June 30, 2026, from 1.04% for the six months ended June 30, 2025. Return on average common equity, on an annualized basis, decreased to 9.80% for the six months ended June 30, 2026, as compared to 10.68% for the six months ended June 30, 2025.
For the three months ended MarchJune 31,30, 2026, net interest income totaled $75.2$77.8 million, and net interest margin and net interest spread were 3.65%3.73% and 2.91%,2.99%, respectively, compared to $66.0$67.0 million, 3.68%, and 2.91%,2.88%, respectively, for the three months ended MarchJune 31,30, 2025. The average yield on the loan portfolio was 6.61%6.63% for the three months ended MarchJune 31,30, 2026, compared to 6.99%6.96% for the three months ended MarchJune 31,30, 2025, and the average yield on total interest-earning assets was 5.95%6.02% for the three months ended MarchJune 31,30, 2026, compared to 6.35%6.31% for the three months ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026, overall cost of funds (which includes noninterest-bearing deposits) decreased 3734 basis points compared to the three months ended MarchJune 31,30, 2025.
For the six months ended June 30, 2026, net interest income totaled $153.0 million, and net interest margin and net interest spread were 3.69% and 2.95%, respectively, compared to $133.0 million, 3.68%, and 2.90%, respectively, for the six months ended June 30, 2025. The average yield on the loan portfolio was 6.62% for the six months ended June 30, 2026, compared to 6.98% for the six months ended June 30, 2025, and the average yield on total interest-earning assets was 5.99% for the six months ended June 30, 2026, compared to 6.33% for the six months ended June 30, 2025. For the six months ended June 30, 2026, overall cost of funds (which includes noninterest-bearing deposits) decreased 35 basis points compared to the six months ended June 30, 2025.
The following tabletables presents,present, for the periods indicated, an analysis of net interest income by each major category of interest-earning assets and interest-bearing liabilities, the average amounts outstanding and the interest earned or paid on such amounts. The table also sets forth the average rate earned on interest-earning assets, the average rate paid on interest-bearing liabilities, and the net interest margin on average total interest-earning assets for the same periods. Interest earned on loans that are classified as nonaccrual is not recognized in income; however, the balances are reflected in average outstanding balances for the period. For the three and six months ended MarchJune 31,30, 2026, and 2025, interest income not recognized on nonaccrual loans was not material. Any nonaccrual loans have been included in the table as loans carrying a zero yield. The average total loans reflected below are net of deferred loan fees and discounts. Acquired loans were recorded at fair value at acquisition and accrete/amortize discounts and premiums as an adjustment to yield. Averages presented in the tabletables below, and throughout this report, are daily averages.
____________________________ (1)Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
(1)Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
(2)Net interest margin is equal to net interest income divided by average interest-earning assets.
The following tabletables presentspresent information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For the purposes of thisthese table,tables, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.
Our provision for credit losses is a charge to income in order to bring our allowance for credit losses to a level deemed appropriate by management. For a description of the factors taken into account by management in determining the allowance for credit losses see “—Financial Condition—Allowance for Credit Losses.” The provision for credit losses was $2.3$2.0 million for the three months ended MarchJune 31,30, 2026, and $2.8$2.2 million for the same period in 2025. For the six months ended June 30, 2026, and 2025, the provision for credit losses was $4.3 million and $5.0 million, respectively. The lower provision for the three and six months ended MarchJune 31,30, 2026, compared to the same period in 2025 is primarily the result of higher specific reserve estimates during the three and six months ended MarchJune 31,30, 2025, as compared to the three and six months ended MarchJune 31,30, 2026. The decrease was partially offset by increased reserve estimates on the pooled portfolio.
Our primary sources of noninterest income are service charges on deposit accounts, debit card and automated teller machine (“ATM”) fee income, income from bank-owned life insurance, fees and brokerage commissions, loan sales, swap fee income, and pass-through income from other investments (small business investment company (“SBIC”) partnerships and financial technology (“Fintech”) funds). The following tabletables presents,present, for the periods indicated, the major categories of noninterest income:
Total noninterest income decreased $448,000, or 3.1%, from the three months ended June 30, 2025, mainly attributable to the gain of $3.4 million from the sale of our Kaplan banking center in 2025 and a $423,000 decrease in swap fee income, compared to the three months ended June 30, 2025.
Total noninterest income increased $824,000,$376,000, or 6.2%,1.4%, from the threesix months ended MarchJune 31,30, 2025, mainly attributable to an increase in service charges on deposit accounts of $282,000,$846,000, or 9.9%,15.4%, an increase in the gain on sales of loans of $887,000, or 43.5%, an increase in debit card and ATM fee income of $448,000,$905,000, or 24.1%, an increase in swap fee income of $798,000, or 108.0%,23.7%, and the acquisition of Progressive. This is offset by the gain on the extinguishmentsale of debt related to our subordinatedKaplan debtbanking ofcenter $630,000in and higher pass-through income from other investments2025 in the quarter ended MarchJune 31,30, 2025.
Total noninterest expense increased $6.9$8.3 million, or 13.6%,16.2%, from the three months ended MarchJune 31,30, 2025, primarily attributed to thean increase in salaries and employee benefits of $3.5$4.8 million, or 12.0%,17.0%, an increase in occupancy and equipment of $1.1 million, or 15.6%, and an increase in mergeradvertising and conversion related expensespromotions of $1.1$1.5 million, or 450.8%.139.5% , which were partially offset by a reduction in data processing fees of $2.0 million, or 37.7%. The increases were largely attributable to the acquisition of Progressive.
Total noninterest expense increased $15.2 million, or 14.9%, from the six months ended June 30, 2025, primarily attributed to the increase in salaries and employee benefits of $8.3 million, or 14.4%, an increase in occupancy and equipment of $1.9 million, or 13.0%, an increase in advertising and promotions of $1.7 million, or 72.9%,and an increase in merger and conversion related expenses of $1.2 million, or 265.2%, which were partially offset by a reduction in data processing fees of $1.5 million, or 17.9%. The increases were largely attributable to the acquisition of Progressive.
For the three months ended MarchJune 31,30, 2026, income tax expense totaled $5.9$6.1 million, an increase of $656,000,$197,000, or 12.4%,3.3%, compared to $5.3$5.9 million for the same period in 2025. Our effective tax rates for the three months ended MarchJune 31,30, 2026, and 2025 were 20.1%20.2% and 20.4%,21.1%, respectively.
For the six months ended June 30, 2026, income tax expense totaled $12.1 million, an increase of $853,000, or 7.6%, compared to $11.2 million for the same period in 2025. Our effective tax rates for the six months ended June 30, 2026, and 2025 were 20.2% and 20.8%, respectively.
Our total assets increased $692.1$688.8 million, or 8.4%, from December 31, 2025, to MarchJune 31,30, 2026, primarily due to the acquisition of Progressive.
As of MarchJune 31,30, 2026, total loans, excluding mortgage loans held for sale, were $6.7 billion, a $494.8$470.0 million increase, or 8.0%,7.6%, compared to $6.2 billion as of December 31, 2025. Additionally, $480,000,$2.8 million, and $1.1 million in loans were classified as loans held for sale as of MarchJune 31,30, 2026, and December 31, 2025, respectively.
In June 2026, we sold $100.3 million in loans that were acquired from Progressive, including $55.3 million of residential mortgages and $45.0 million commercial real estate loans. As part of the sale, we will retain the servicing of these loans.
Total loans held for investment as a percentage of total deposits were 89.5%92.0% and 92.4% as of MarchJune 31,30, 2026, and December 31, 2025, respectively. Total loans held for investment as a percentage of total assets were 75.0%74.8% and 75.3% as of MarchJune 31,30, 2026, and December 31, 2025, respectively.
Real Estate: Commercial loans increased $230.3$212.7 million, or 8.8%,8.1%, to $2.8 billion as of MarchJune 31,30, 2026, from $2.6 billion as of December 31, 2025.
Real Estate: Construction loans increased $46.7$54.4 million, or 7.3%,8.5%, to $685.8$693.5 million as of MarchJune 31,30, 2026, from $639.1 million as of December 31, 2025.
Real Estate: Residential loans increased $197.2$135.0 million, or 20.9%,14.3%, to $1.1 billion as of MarchJune 31,30, 2026, from $944.1 million as of December 31, 2025.
Commercial loans increased $21.6$66.9 million, or 1.1%,3.5%, remainingto at$2.0 billion as of June 30, 2026, from $1.9 billion atas both March 31, 2026, andof December 31, 2025.
Consumer and other loans decreasedincreased $1.1$1.0 million, or 1.4%, to $72.2$74.2 million as of MarchJune 31,30, 2026, from $73.2 million as of December 31, 2025.
The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with fixed and floating interest rates in each maturity range as of the date indicated are summarized in the following tablestable:
We believe our conservative lending approach and focused management of nonperforming assets has resulted in sound asset quality and the timely resolution of problem assets. We had $123.1$109.2 million and $89.7 million in nonperforming assets as of MarchJune 31,30, 2026, and December 31, 2025, respectively. We had $102.2$84.1 million in nonperforming loans as of MarchJune 31,30, 2026, compared to $76.7 million as of December 31, 2025. The increase in nonperforming assets from December 31, 2025, to MarchJune 31,30, 2026, is primarily due to sixtwo commercial lending relationships, four of which are real estate loans and two are commercial loans.relationships. There was also a property in Texas we foreclosed on during the quarter ended March 31, 2026.
As of MarchJune 31,30, 2026, the allowance for credit losses totaled $68.8$67.8 million, or 1.03%,1.02%, of total loans held for investment. As of December 31, 2025, the allowance for credit losses totaled $58.1 million, or 0.94%, of total loans held for investment.
We use our securities portfolio to provide a source of liquidity, an appropriate return on funds invested, manage interest rate risk, meet collateral requirements, and meet regulatory capital requirements. As of MarchJune 31,30, 2026, the carrying amount of investment securities totaled $1.0 billion, an increase of $56.6$51.9 million, or 5.7%,5.2%, compared to $989.2 million as of December 31, 2025. The increase was primarily due to the acquisition of Progressive. Securities represented 11.7% and 12.0% of total assets as of MarchJune 31,30, 2026, and December 31, 2025, respectively.
All of our mortgage-backed securities are agency securities. We do not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, private label collateralized mortgage obligations, subprime, Alt-A, or second lien elements in our investment portfolio as of MarchJune 31,30, 2026.
The allowance for credit losses encompasses potential expected credit losses related to the securities portfolio. In order to develop an estimate of credit losses expected for the current securities portfolio, we perform an assessment that includes reviewing historical loss data for both our portfolio and similar types of investment securities. Additionally, our review of the securities portfolio for expected credit losses includes an evaluation of factors including the security issuer bond ratings, delinquency status, insurance or other available credit support, as well as our expectations of the forecasted economic outlook relevant to these securities. The results of the analysis are evaluated quarterly to confirm that credit loss estimates are appropriate for the securities portfolio. Based on our assessments, expected credit losses on the investment securities portfolio as of both MarchJune 31,30, 2026 and December 31, 2025, was negligible and therefore, no allowance for credit loss was recorded related to our investment securities.
As of MarchJune 31,30, 2026, and December 31, 2025, the Company held other equity securities of $40.0$51.3 million and $49.3 million, respectively, comprised mainly of FHLB stock, SBICs and Fintech fund investments.
Total deposits as of MarchJune 31,30, 2026, were $7.5$7.2 billion, an increase of $766.4$537.0 million, or 11.4%,8.0%, compared to $6.7 billion as of December 31, 2025. Total uninsured deposits were $3.5$3.4 billion, or 46.5%,46.9%, of total deposits as of MarchJune 31,30, 2026 compared to $2.9 billion, or 43.2%, of total deposits as of December 31, 2025. Since it is not reasonably practical to provide a precise measure of uninsured deposits, the amounts are estimated and are based on the same methodologies and assumptions that are used for regulatory reporting requirements for the call report.
Noninterest-bearing deposits as of MarchJune 31,30, 2026, were $1.6 billion, compared to $1.3 billion as of December 31, 2025, an increase of $253.0$261.5 million, or 19.1%.19.8%.
Average deposits for the threesix months ended MarchJune 31,30, 2026, were $7.4$7.3 billion, an increase of $974.8$900.5 million, or 15.2%,14.0%, over the full year average for the year ended December 31, 2025, of $6.4 billion. The increase was largely attributable to the impact of the acquisition of Progressive on January 1, 2026. The average rate paid on total interest-bearing deposits decreased over this period from 3.29% for the year ended December 31, 2025, to 2.95%2.92% for the threesix months ended MarchJune 31,30, 2026. In addition, noninterest-bearing demand accounts served to reduce the cost of deposits to 2.34%2.31% for the threesix months ended MarchJune 31,30, 2026, compared to 2.63% for the year ended December 31, 2025.
The ratio of average noninterest-bearing deposits to average total deposits for the threesix months ended MarchJune 31,30, 2026, and the year ended December 31, 2025, was 20.5%20.7% and 20.2%, respectively.
We maintain Federal Funds Purchased Lines of Credit Relationships with the following correspondent banks and limits as of MarchJune 31,30, 2026:
We had no outstanding balances on these lines at both MarchJune 31,30, 2026 and December 31, 2025.
Liquidity involves our ability to utilize funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events. For the threesix months ended MarchJune 31,30, 2026, and the year ended December 31, 2025, liquidity needs were primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios. In addition, we also utilize, or have available, brokered deposits, purchased funds from correspondent banks, the Federal Reserve discount window, and overnight advances from the FHLB. As of MarchJune 31,30, 2026, and December 31, 2025, we maintained five federal funds purchased lines of credit with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $145.0 million. There were no funds drawn under these lines of credit at MarchJune 31,30, 2026, and December 31, 2025. We had an additional $1.5 billion and $1.2 billion of availability through the FHLB as of MarchJune 31,30, 2026, and December 31, 2025, respectively. As of MarchJune 31,30, 2026 and December 31, 2025, we had $924.7$1.0 millionbillion and $967.3 million, respectively, of availability through the Federal Reserve Discount Window.
As of MarchJune 31,30, 2026, we had outstanding $2.0 billion in commitments to extend credit and $55.9$29.8 million in commitments associated with outstanding standby and commercial letters of credit. As of December 31, 2025, we had outstanding $1.7 billion in commitments to extend credit and $51.2 million in commitments associated with outstanding standby and commercial letters of credit. Because commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements. See “Off Balance Sheet Items” below for additional information.
As of MarchJune 31,30, 2026, and December 31, 2025 we had cash and cash equivalents, including federal funds sold and securities purchased under agreements to resell, of $708.8$701.8 million and $609.2 million, respectively. We had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature for either period.
Total shareholders’ equity increased to $991.2$1.0 millionbillion as of MarchJune 31,30, 2026, compared to $896.9 million as of December 31, 2025, an increase of $94.3$111.7 million, or 10.5%.12.5%. This increase was primarily due to the acquisition of Progressive of $83.4 million and net income of $23.6$47.7 million, offset with other comprehensive losses of $4.6$2.5 million resulting from the after-tax effect of unrealized losses in our investment securities portfolioportfolio, repurchased shares of $7.6 million and dividends paid on preferred stock and common stock of $6.2$12.5 million.
On AprilJuly 23, 2026, our Board declared a quarterly dividend in the amount of $18.75 per preferred share to the preferred shareholders of record as of MayAugust 15, 2026. The dividend is to be paid on MayAugust 29,31, 2026, or as soon as practicable thereafter.
On AprilJuly 23, 2026, our Board declared a quarterly dividend based upon our financial performance for the three months ended MarchJune 31,30, 2026, in the amount of $0.15 per common share to the common shareholders of record as of MayAugust 15, 2026. The dividend is to be paid on MayAugust 29,31, 2026, or as soon as practicable thereafter.
Capital management consists of providing equity to support current and future operations. Banking regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital relative to the amount and types of assets they hold. We are subject to regulatory capital requirements at the holding company and bank levels. As of MarchJune 31,30, 2026, and December 31, 2025, we and b1BANK were in compliance with all applicable regulatory capital requirements, and b1BANK was classified as “well-capitalized,” for purposes of prompt corrective action regulations. As we employ our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings. However, we expect to monitor and control our growth in order to remain in compliance with all applicable regulatory capital standards applicable to us.
Advances from the FHLB totaled approximately $260.8$442.5 million and $431.2 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. As of MarchJune 31,30, 2026, and December 31, 2025, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.14%4.04% and 4.02%, respectively, and mature within ten years.
BFST insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 1,500 shares, about $47.4K) and open-market sales in 15 filings (6 insiders, 16 trade dates, 164,494 shares, about $5.0M). Net open-market shares: -162,994 (purchases minus sales); net value about -$5.0M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-24 | Cummings George W. Iii |
Open-market sale | 10,000 | $31.33 | $313.3K |
| 2026-08-21 | Cummings George W. Iii |
Open-market sale | 4,200 | $31.27 | $131.3K |
| 2026-08-19 | Cummings George W. Iii |
Open-market sale | 3,235 | $31.80 | $102.9K |
| 2026-08-18 | Cummings George W. Iii |
Open-market sale | 10,000 | $31.78 | $317.8K |
| 2026-08-06 | Carter Donald Chad |
Open-market sale | 1,875 | $31.64 | $59.3K |
| 2026-08-05 | Hall William G. |
Open-market sale | 9,723 | $31.97 | $310.8K |
| 2026-08-05 | Hall William G. |
Open-market sale | 1,666 | $31.97 | $53.3K |
| 2026-08-05 | Strong Saundra |
Open-market sale | 1,000 | $31.98 | $32.0K |
| 2026-08-03 | Cummings George W. Iii |
Open-market sale | 10,000 | $31.87 | $318.7K |
| 2026-07-31 | Cummings George W. Iii |
Open-market sale | 10,000 | $31.50 | $315.0K |
| 2026-07-30 | Mansfield Keith |
Open-market sale | 4,200 | $32.08 | $134.7K |
| 2026-07-30 | Cummings George W. Iii |
Open-market sale | 10,000 | $32.08 | $320.8K |
| 2026-07-29 | Cummings George W. Iii |
Open-market sale | 10,000 | $31.88 | $318.8K |
| 2026-07-29 | Johnson Joseph Vernon |
Open-market sale | 2,000 | $31.15 | $62.3K |
| 2026-07-28 | Cummings George W. Iii |
Open-market sale | 10,000 | $31.86 | $318.6K |
| 2026-07-28 | Johnson Joseph Vernon |
Open-market sale | 10,000 | $31.75 | $317.5K |
| 2026-07-28 | Day Rick D. |
Open-market purchase | 1,500 | $31.61 | $47.4K |
| 2026-06-26 | White Steven Gerard |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Tillage Keith Alexis |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Sidi Zeenat |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Sanchez Alejandro M |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Quirk Aimee M |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Price Arthur |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Montgomery David A. Jr. |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Mockler Patrick E. |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Mccollister Rolfe H. Jr. |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Johnson Joseph Vernon |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Hall William G. |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Folse Mark P. |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Ducrest John P. |
Disposition to issuer | 1,016 | — | — |
| 2026-06-26 | Ducrest John P. |
Option exercise | 1,016 | — | — |
| 2026-06-26 | Day Rick D. |
Option exercise | 1,016 | — | — |
| 2026-06-11 | Cummings George W. Iii |
Open-market sale | 5,000 | $28.78 | $143.9K |
| 2026-06-10 | Cummings George W. Iii |
Open-market sale | 15,000 | $28.89 | $433.4K |
| 2026-06-08 | Cummings George W. Iii |
Open-market sale | 15,000 | $28.54 | $428.1K |
| 2026-05-27 | Cummings George W. Iii |
Open-market sale | 11,595 | $27.92 | $323.7K |
| 2026-05-22 | Cummings George W. Iii |
Open-market sale | 10,000 | $27.99 | $279.9K |
Well-known investors holding BFST (13F)
None of the 59 investors we track reported a position in their latest 13F.