Business First Bancshares, Inc.

Hello, and thank you for standing by. I would like to welcome everyone to B1 Bank Business First Bank Shares Q1 2025 earnings conference call. I would now like to turn the call over to Matt Seeley, Senior Vice President, Director of Corporate Strategy and FP&A. Mr. Seeley, the floor is yours.

Good afternoon, and thank you all for joining. Earlier today, we issued our first quarter 2025 earnings press release, a copy of which is available on our website, along with the slide presentation that we'll reference during today's call. Please reference slide three of our presentation, which includes our safe harbor statements regarding forward-looking statements and the use of non-GAAP financial measures. 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 7 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 Chairman and CEO, Jude Melville, Chief Financial Officer, Greg Robertson, Chief Banking Officer, Phillip Jordan, and President of B1 Bank, Jerry Vastakiew. 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.

Great. Thanks, Matt, and good afternoon to everybody, and thank you for spending the time with us today. We know you have choices to make, and we appreciate your prioritizing our company. At a high level, we were quite pleased with the first quarter's results, most of which exceeded expectations. One of our guiding principles is centered around striving for continual incremental improvement, and we were able to demonstrate that concept in action on a number of fronts. Profitability continues to be consistent, with core ROAA exceeding 1%. Our officers are doing a good job of selectively holding the line on loan yields, with weighted average new and renewed yields of 7.71% during this quarter, while overall cost of funding continued its downward trend, leading to core net interest margin expansion of eight basis points for the length quarter. We've benefited from a continued build in capital levels, with our TCE now exceeding 8%, while our consolidated TRBC ratio exceeds 13%. While there was positive movement in our AOCI exposure, the bulk of the capital bill came through retained earnings. I'm especially proud of our continued focus on expense management, with another quarter of better-than-expected expense trends, while continuing to execute on material IT and infrastructure investments, leading to efficiency ratios continuing to move in the right direction, a trend we expect to continue. Non-interest revenue is contributing meaningfully to bottom-line profitability, with another quarter of strong swap fees and SBA loan gains on sales, as well as contributions from various SBIC investments, being the main drivers of continued growth and aggregate non-interest income. As a reminder, we closed the acquisition of Oakwood Bank in Dallas, Texas, on October 1st of last year. To date, the integration has proceeded as expected, with conversions set for September of this year. We're very pleased with the cultural fit of the former Oakwood team, the most important component of any successful acquisition. Returning to our theme of incremental improvement and expense control, I'd like to direct you to page 14 in the IP. It shows our current branch network, which we remain focused on optimizing. As a part of that ongoing process, on April 4th, we closed the sale of our Kaplan, Louisiana branch, which included the sale of approximately $51 million in deposits at a deposit premium of 8%. I do want to discuss balance sheet growth and credit as well, even though they weren't on surface level as positive as some of our other trends. We did experience modest negative credit migration during the quarter, primarily due to two C&I relationships. I'll let Greg provide more detail on these in his report. However, we continue to feel good about the credit quality of the broader portfolio, even as metrics continue to normalize. The balance sheet contracted during the quarter with loans effectively flat on a linked quarter basis, while deposits decreased 53 million. On the loan side of the equation, we continue to be biased towards net interest margin over volume, stance we believe to be prudent in today's uncertain environment, and I'm proud of our maintaining our profitability levels without relying on loan growth. So I will say we feel good about our pipeline in the second quarter. It's worth noting that paydowns and payoffs were materially higher during quarter one than we typically experience, primarily due to a handful of larger construction loans resolving. On the deposit side, recall that last quarter we experienced a large net influx of core deposits due to the seasonality around public and municipal funding. Some level of runoff was expected to occur during the first quarter, and if you were to look at Q1-25 and Q4-24 on a combined basis, total organic deposits excluding liquid would have increased 144 million, or 5.1% annualized from September 30th of 2024. All in all, it was a healthy foundational quarter to start the year. I don't know that we've had the opportunity to operate in any extended period of certainty over the course of our tenure as a public company, which began in 2018. And yet, we've consistently found a way to not only navigate the challenges our industry and country have faced, but have continued to grow and strengthen our franchise throughout these challenging times. We enter the second quarter better reserved, better capitalized, more diversified in credit exposure and revenue sources, and more experienced than any time in recent memory. I'm confident that our team is prepared to continue not only navigating the but building, improving, and indeed thriving as 2025 unfolds. I thank you again for your time, and with that, I'll turn it over to Greg.