Business First Bancshares, Inc.

Hello, and welcome to Business First Bank Share Q3 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to answer a question during this time, simply press star 1 on your telephone keypad. I will now turn the conference over to Matt Seeley, Senior Vice President Director of Corporate Strategy and SP&A. Please go ahead.

Good afternoon, and thank you all for joining. Earlier today, we issued our third quarter 2023 earnings press release, a copy of which is available on our website, along with the slide presentation that we will reference during today's call. Please refer to slide three of our presentation, which includes our safe harbor disclosures regarding forward-looking statements and the use of non-GAAP financial measures. For those of you joining by phone, please note the slide presentation is available on our website at www.b1bank.com. Please also note our safe harbor statements are available on page seven of our earnings press release that was filed with the SEC today. All comments made during today's call are subject to the safe harbor statements in our slide presentation and earnings release. I'm joined this afternoon by Business First Bank Chair's President and CEO, Jude Melville, Chief Financial Officer, Greg Robertson, Chief Banking Officer, Philip Jordan, and Chief Administrative Officer, Jerry Vaskegu. After the presentation, we'll be happy to address any questions you may have. And with that, I'll turn the call over to you, Jude.

All right, thanks, Matt, and thanks, everybody, for joining us. I know it's a busy time, and we certainly appreciate you prioritizing this conversation. During the third quarter, we continued to deliver solid fundamental shareholder or unit operating performance, generating a core ROAA of 1.1% by exercising discipline around expenses and maintaining good margin stability, even as we grew organic deposits. included in our core operating results for several non-run rate items, which I'll let Greg expand on in his section. However, even adjusting for these items, we still peg our run rate EPS, ROAA, and efficiency ratio at $0.67, 1.03%, and 62.4% respectively. Our third quarter was highlighted by balance sheet management, which yielded another quarter of solid capital accretion, strong deposit generation, margin stability, expense management, and continued healthy credit quality trends, all of which put us in position to be able to increase our dividend by two cents per share for the quarter, something we've been able to do for five years in a row now. I'd like to highlight a couple of specific accomplishments. First, we've been particularly focused over the past few quarters on managing growth within our capital structure, and I'm pleased to report that our results are again accreted to TRBC, to TCE, and TBVPS, even factoring in the headwinds of additional AOCI. Not counting the impact of AOCI, we grew tangible book value per share 67 cents, an annualized rate of 20%. We slowed loan growth during the quarter to 1.7% annualized, which reflects some slowing demand and continued selectiveness on our part, as well as unusually high paydowns and payoffs. We do still expect full year 2023 loan growth of 7% to 8%. I'm most pleased to report growth in deposits of $176 million, or about 14% annualized in the quarter. And we accomplished this without causing material damage to our margin. Core NEM was down three basis points, but that factors in a gain of $455,000 on recovery from a previous charge-off, and the decision to hold an additional $150 million in excess liquidity at the cost of six basis points to the margin. Factoring out those two elements, our core margin would have been flat. even while we demonstrated continuing improvement in our loan-to-deposit ratio. Asset quality continued to improve in the third quarter, with non-performing loans as a percent of total loans declining to 0.33%, down from 0.36% in quarter two. The improvement was largely attributed to the resolution of two non-accrual loans through current period charge-offs of $2.4 million. Both loans were previously assessed for credit losses and fully reserved. I'd like to point out a few branch movements as we continue on our ongoing efforts to optimize our footprint. During the quarter, we opened our fifth Dallas-Fort Worth location with a new full-service location in McKinney, Texas. I was there recently for the ribbon cutting and our team is very excited about the opportunities as we expand further into North Texas. With locations in McKinney and Frisco, we are present in two of the three fastest growing communities in Texas. We also turned our LPO in Ruston, Louisiana, another fast growing community, into a branch and moved the branch to a more growth-oriented part of Monroe, Louisiana. Finally, we also sold our Leesville, Louisiana location, recognized a $932,000 gain on sale attributed to the divestiture. I'll note we have added a couple new slides to our deck that I think would be worth your focus and enhanced a couple others, particularly around our successful M&A track record, loan repricing opportunities, and composition of our CRE and office portfolios. What I want to particularly point you towards is found on page nine, which speaks to the consistent improvements we've made in various earnings-focused metrics over the past five years. EPS has increased by 81%, net income by 292%, while core efficiency has improved by 571 basis points. Importantly, we show tangible vote value per share after adjusting for AOCI, growing by 33%, even while we have made the investments necessary to grow overall asset size by a factor of three over that time period, through acquisitions, team liftouts, and strong organic growth. This growth is required investment, and those investments are paying off. We aren't yet where we plan to be, but we're clearly headed in the right direction. That concludes my big picture remarks. Thank you so much for your time. And I'll now turn it over to Greg for his commentary on the quarter, and then look forward to opening the call up to Q&A.