Business First Bancshares, Inc. (BFST)
SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1624322. Latest filing source: 0001624322-26-000018.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 465,011,000 | USD | 2025 | 2026-02-26 |
| Net income | 87,861,000 | USD | 2025 | 2026-02-26 |
| Assets | 8,214,740,000 | USD | 2025 | 2026-02-26 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001624322.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 43,418,000 | 51,601,000 | 76,195,000 | 103,467,000 | 149,755,000 | 170,438,000 | 236,114,000 | 353,327,000 | 414,764,000 | 465,011,000 |
| Net income | 5,111,000 | 4,848,000 | 14,091,000 | 23,772,000 | 30,000,000 | 52,136,000 | 54,255,000 | 71,043,000 | 65,107,000 | 87,861,000 |
| Diluted EPS | 0.70 | 0.61 | 1.22 | 1.74 | 1.64 | 2.53 | 2.32 | 2.59 | 2.26 | 2.79 |
| Operating cash flow | 8,150,000 | 7,968,000 | 19,276,000 | 24,418,000 | 29,339,000 | 56,443,000 | 69,577,000 | 90,969,000 | 61,409,000 | 92,083,000 |
| Capital expenditures | 1,390,000 | 505,000 | 919,000 | 3,959,000 | 2,970,000 | 3,971,000 | 7,781,000 | 11,648,000 | 1,562,000 | 66,000 |
| Dividends paid | 1,056,000 | 1,792,000 | 3,281,000 | 5,054,000 | 7,520,000 | 9,436,000 | 10,824,000 | 12,655,000 | 14,863,000 | 16,844,000 |
| Share buybacks | 863,000 | 33,000 | 0.00 | 2,553,000 | 5,799,000 | 10,923,000 | 0.00 | 0.00 | 0.00 | 3,731,000 |
| Assets | 1,105,841,000 | 1,321,256,000 | 2,094,896,000 | 2,273,835,000 | 4,160,360,000 | 4,726,378,000 | 5,990,460,000 | 6,584,550,000 | 7,857,090,000 | 8,214,740,000 |
| Liabilities | 992,282,000 | 1,141,321,000 | 1,834,838,000 | 1,988,738,000 | 3,750,397,000 | 4,293,010,000 | 5,409,979,000 | 5,940,291,000 | 7,057,624,000 | 7,317,857,000 |
| Stockholders' equity | 113,559,000 | 179,935,000 | 260,058,000 | 285,097,000 | 409,963,000 | 433,368,000 | 580,481,000 | 644,259,000 | 799,466,000 | 896,883,000 |
| Cash and cash equivalents | 42,173,000 | 107,591,000 | 96,072,000 | 89,371,000 | 149,131,000 | 68,375,000 | 152,740,000 | 226,110,000 | 319,098,000 | 411,175,000 |
| Free cash flow | 6,760,000 | 7,463,000 | 18,357,000 | 20,459,000 | 26,369,000 | 52,472,000 | 61,796,000 | 79,321,000 | 59,847,000 | 92,017,000 |
Ratios
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net margin | 11.77% | 9.40% | 18.49% | 22.98% | 20.03% | 30.59% | 22.98% | 20.11% | 15.70% | 18.89% |
| Return on equity | 4.50% | 2.69% | 5.42% | 8.34% | 7.32% | 12.03% | 9.35% | 11.03% | 8.14% | 9.80% |
| Return on assets | 0.46% | 0.37% | 0.67% | 1.05% | 0.72% | 1.10% | 0.91% | 1.08% | 0.83% | 1.07% |
| Liabilities / equity | 8.74 | 6.34 | 7.06 | 6.98 | 9.15 | 9.91 | 9.32 | 9.22 | 8.83 | 8.16 |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001624322.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2022-Q2 | 2022-06-30 | 0.61 | reported discrete quarter | ||
| 2022-Q3 | 2022-09-30 | 0.61 | reported discrete quarter | ||
| 2023-Q1 | 2023-03-31 | 0.54 | reported discrete quarter | ||
| 2023-Q2 | 2023-06-30 | 85,848,000 | 19,739,000 | 0.73 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 93,322,000 | 20,455,000 | 0.76 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 94,665,000 | 15,824,000 | derived Q4 = FY annual - nine-month YTD | |
| 2024-Q1 | 2024-03-31 | 96,011,000 | 13,570,000 | 0.48 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 99,870,000 | 17,206,000 | 0.62 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 102,741,000 | 17,843,000 | 0.65 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 116,142,000 | 16,488,000 | derived Q4 = FY annual - nine-month YTD | |
| 2025-Q1 | 2025-03-31 | 113,693,000 | 20,543,000 | 0.65 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 114,850,000 | 22,103,000 | 0.70 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 118,688,000 | 22,856,000 | 0.73 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 117,780,000 | 22,359,000 | derived Q4 = FY annual - nine-month YTD | |
| 2026-Q1 | 2026-03-31 | 122,494,000 | 23,564,000 | 0.68 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0001624322-26-000028.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
When we refer in this Form 10-Q to “we,” “our,” “us,” the “Company” and “Business First,” we are referring to Business First Bancshares, Inc. and its consolidated subsidiaries, including b1BANK, which we sometimes refer to as “the Bank,” unless the context indicates otherwise.
The information contained in this Form 10-Q is accurate only as of the date of this form and the dates specified herein.
All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q (this “Report”) and other periodic reports filed by the Company, and other written or oral statements made by us or on our behalf, are “forward-looking statements,” as defined by (and subject to the “safe harbor” protections under) the federal securities laws. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and the banking industry in general. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions of a future or forward-looking nature. These statements involve estimates, assumptions, and risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements.
We believe these factors include, but are not limited to, the following:
•risks related to the integration of any other acquired businesses, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, risks related to entering a new geographic market, the time and costs associated with integrating systems, technology platforms, procedures and personnel, the ability to retain key employees and maintain relationships with significant customers, the need for additional capital to finance such transactions, and possible failures in realizing the anticipated benefits from acquisitions;
•changes in the strength of the United States (“U.S.”) economy in general and the local economy in our local market areas adversely affecting our customers and their ability to transact profitable business with us, including the ability of our borrowers to repay their loans according to their terms or a change in the value of the related collateral;
•economic risks posed by our geographic concentration in Louisiana, the Dallas/Fort Worth metroplex and Houston;
•the ability to sustain and continue our organic loan and deposit growth, and manage that growth effectively;
•market declines in industries to which we have exposure, such as the volatility in oil prices and downturns in the energy industry that impact certain of our borrowers and investments that operate within, or are backed by collateral associated with, the energy industry;
•volatility and direction of interest rates and market prices, which could reduce our net interest margins, asset valuations and expense expectations;
•interest rate risk associated with our business;
•changes in the levels of loan prepayments and the resulting effects on the value of our loan portfolio;
•increased competition in the financial services industry, particularly from regional and national institutions and emerging non-bank competitors;
•increased credit risk in our assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of our total loan portfolio;
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•changes in the value of collateral securing our loans;
•deteriorating asset quality and higher loan charge-offs, and the time and effort required to resolve problem assets;
•the failure of assumptions underlying the establishment of and provisions made to our allowance for credit losses;
•changes in the availability of funds resulting in increased costs or reduced liquidity;
•our ability to maintain important deposit customer relationships and our reputation;
•a determination or downgrade in the credit quality and credit agency ratings of the securities in our securities portfolio;
•increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios;
•our ability to prudently manage our growth and execute our strategy;
•risks associated with our acquisition and de novo branching strategy;
•the loss of senior management or operating personnel and the potential inability to hire qualified personnel at reasonable compensation levels;
•legislative or regulatory developments, including changes in the laws, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters;
•government intervention in the U.S. financial system;
•changes in statutes and government regulations or their interpretations applicable to us, including changes in tax requirements and tax rates;
•natural disasters and adverse weather, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, epidemics and pandemics such as coronavirus, and other matters beyond our control; and
•other risks and uncertainties listed from time to time in our reports and documents filed with the U.S. Securities and Exchange Commission (“SEC”).
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Report. Additional information on these and other risk factors can be found in Item 1A. “Risk Factors” of this Report and in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC.
In the event that one or more events related to these, or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF BUSINESS FIRST
The following discussion and analysis focuses on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2025 to March 31, 2026, and its results of operations for the three months ended March 31, 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.
Overview
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 March 31, 2026, we had total assets of $8.9 billion, total loans of $6.7 billion, total deposits of $7.5 billion, and total shareholders’ equity of $991.2 million.
As a financial holding company operating through one reportable operating segment, community banking, we generate most of our revenues from interest income on loans, customer service and loan fees, and interest income from securities. We incur interest expense on deposits and other borrowed funds and noninterest expense, such as salaries and employee benefits and occupancy expenses. We analyze our ability to maximize income generated from interest-earning assets and expense of our liabilities through our net interest margin. Net interest margin is a ratio calculated as net interest income divided by average interest-earning assets. Net interest income is the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings, which are used to fund those assets.
Changes in the market interest rates and the interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and shareholders’ equity, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions, and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in our markets and across our region, as well as developments affecting the real estate, technology, financial services, insurance, transportation, manufacturing and energy sectors within our markets.
Other Developments
Acquisition of Progressive Bancorp, Inc. ("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 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 Reorganization Agreement, upon consummation of the Progressive acquisition, we issued 3,192,367 shares of our common stock to the former sh
[Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This discussion presents management’s analysis of our results of operations and financial condition over each of the last two most recent fiscal years. The discussion should be read in conjunction with our financial statements and the notes related thereto which appear elsewhere in this Report.
The following discussion and analysis is to focus on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2024 to December 31, 2025 and its results of operations for the year ended December 31, 2025. This discussion and analysis is intended to highlight and supplement information presented elsewhere in this Report, particularly the consolidated financial statements and related notes appearing in Item 8. 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 statement, 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. A discussion regarding significant changes in the financial condition of Business First and its subsidiaries from December 31, 2023 to December 31, 2024 and its results of operations for the year ended December 31, 2024 can be found under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 7, 2025, as amended, which is available on the SEC’s website at www.sec.gov and on the Company’s website, www.b1bank.com.
Overview
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 in markets across Louisiana and Texas. As of December 31, 2025, we had total assets of $8.2 billion, total loans of $6.2 billion, total deposits of $6.7 billion, and total shareholders’ equity of $896.9 million.
As a financial holding company operating through one reportable operating segment, community banking, we generate most of our revenues from interest income on loans, customer service and loan fees, and interest income from securities. We incur interest expense on deposits and other borrowed funds and noninterest expense, such as salaries and employee benefits and occupancy expenses. We analyze our ability to maximize income generated from interest-earning assets and expense of our liabilities through our net interest margin. Net interest margin is a ratio calculated as net interest income divided by average interest-earning assets. Net interest income is the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings, which are used to fund those assets.
Changes in the market interest rates and the interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and shareholders’ equity, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions, and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in our markets and across our region, as well as developments affecting the real estate, technology, financial services, insurance, transportation, manufacturing and energy sectors within our markets.
While we continue to prioritize organic growth, we also seek to capitalize upon other opportunities as they arise. Below is a summary of recent transactions that have contributed to our growth. For additional information about these transactions, See “Note 3 – Mergers and Acquisitions” in our audited consolidated financial statements included in Item 8 of this Report.
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Federal Reserve Bank’s Discount Window
On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $967.3 million and $907.7 million as of December 31, 2025 and 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.
Acquisition of Waterstone
On January 31, 2024, we consummated the acquisition, through b1BANK, of Waterstone, headquartered in Katy, Texas. Waterstone offers community banks and small businesses a range of SBA lending services including planning, pre-qualification, packaging, closing and disbursements, servicing, and liquidations. Upon consummation of the acquisition, we paid $3.3 million in cash to the former owners of Waterstone.
Acquisition of Oakwood
On October 1, 2024, we consummated the merger of Oakwood, the parent bank holding company for Oakwood Bank, with and into Business First, with Business 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 b1BANK, with b1BANK 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.
Financial Highlights
The financial highlights as of and for the year ended December 31, 2025 include:
•Total assets of $8.2 billion, a $357.7 million, or 4.6%, increase from December 31, 2024.
•Total loans held for investment of $6.2 billion, a $208.1 million, or 3.5%, increase from December 31, 2024.
•Total deposits of $6.7 billion, a $187.3 million, or 2.9%, increase from December 31, 2024.
•Net income available to common shareholders of $82.5 million, a $22.8 million, or 38.1%, increase from the year ended December 31, 2024.
•Net interest income of $273.2 million, a $45.8 million, or 20.1%, increase from the year ended December 31, 2024.
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•An allowance for credit losses of 0.94% of total loans held for investment, compared to 0.98% as of December 31, 2024, and a ratio of nonperforming loans to total loans held for investment of 1.24%, compared to 0.42% as of December 31, 2024.
•Earnings per common share for the year ended December 31, 2025 of $2.81 per basic common share and $2.79 per diluted common share, compared to $2.27 per basic common share and $2.26 per diluted common share for the year ended December 31, 2024.
•Return to common shareholders on average assets of 1.05% compared to 0.86% for the year ended December 31, 2024.
•Return to common shareholders on average common equity of 10.59% compared to 9.54% for the year ended December 31, 2024.
•Capital Ratios included Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 10.08%, 9.94%, 11.00% and 12.93%, respectively, compared to Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 9.53%, 9.44%, 10.56% and 12.75% for the year ended December 31, 2024.
•Book value per common share of $27.95, an increase of 13.5% from $24.62 at December 31, 2024.
Results of Operations for the Years Ended December 31, 2025 and 2024
Performance Summary
For the year ended December 31, 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, for the year ended December 31, 2024. Return to common shareholders on average assets increased to 1.05% for the year ended December 31, 2025 from 0.86% for the year ended December 31, 2024. Return to common shareholders on average common equity increased to 10.59% for the year ended December 31, 2025, as compared to 9.54% for the year ended December 31, 2024.
Net Interest Income
Our operating results depend primarily on our net interest income, calculated as the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Fluctuations in market interest rates impact the yield and rates paid on interest sensitive assets and liabilities. Changes in the amount and type of interest-earning assets and interest-bearing liabilities also impact net interest income. The variance driven by the changes in the amount and mix of interest-earning assets and interest-bearing liabilities is referred to as a “volume change.” Changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds are referred to as a “rate change.”
To evaluate net interest income, we measure and monitor (1) yields on our loans and other interest-earning assets, (2) the costs of our deposits and other funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources. We calculate average assets, liabilities, and equity using a daily average, and average yield/rate utilizing an actual day count convention.
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 and net interest margin and net interest spread were 3.48% and 2.55%, respectively. The average yield on the loan portfolio was 6.96%, for the year ended December 31, 2025, compared to 7.03% for the year ended December 31, 2024, 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. For the year ended December 31, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 25 basis points compared to the year ended December 31, 2024.
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The following table presents, 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 years ended December 31, 2025, 2024 and 2023, 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 is 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.
For the Years Ended December 31,
2025
2024
2023
(Dollars in thousands)
Average Outstanding
Balance
Interest Earned/Interest
Paid
Average Yield/Rate
Average Outstanding
Balance
Interest Earned/Interest
Paid
Average Yield/Rate
Average Outstanding
Balance
Interest Earned/Interest
Paid
Average Yield/Rate
Assets
Interest-earning assets:
Total loans
$
6,023,214
$
419,197
6.96
%
$
5,327,466
$
374,555
7.03
%
$
4,859,637
$
323,327
6.65
%
Securities
962,566
29,016
3.01
907,736
24,502
2.70
898,771
20,125
2.24
Securities purchased under agreements to resell
33,178
1,692
5.10
13,657
757
5.54
—
—
—
Interest-bearing deposits in other banks
383,504
15,106
3.94
287,474
14,950
5.20
180,997
9,875
5.46
Total interest-earning assets
7,402,462
465,011
6.28
6,536,333
414,764
6.35
5,939,405
353,327
5.95
Allowance for loan losses
(56,902)
(43,931)
(41,665)
Noninterest-earning assets
528,183
481,333
444,140
Total assets
$
7,873,743
$
465,011
$
6,973,735
$
414,764
$
6,341,880
$
353,327
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits
$
5,134,522
$
168,923
3.29
%
$
4,427,233
$
165,094
3.73
%
$
3,566,216
$
106,908
3.00
%
Subordinated debt
93,765
4,952
5.28
99,884
5,394
5.40
105,369
5,323
5.05
Subordinated debt - trust preferred securities
5,000
395
7.90
5,000
447
8.94
5,000
430
8.60
Bank Term Funding Program
—
—
—
64,754
2,788
4.31
253,706
11,313
4.46
Advances from FHLB
400,849
16,973
4.23
317,462
13,164
4.15
329,726
13,702
4.16
Other borrowings
23,337
605
2.59
19,464
494
2.54
21,825
522
2.39
Total interest-bearing liabilities
5,657,473
191,848
3.39
4,933,797
187,381
3.80
4,281,842
138,198
3.23
Noninterest-bearing liabilities:
Noninterest-bearing deposits
1,296,162
1,285,445
1,412,979
Other liabilities
69,698
56,649
44,173
Total noninterest-bearing liabilities
1,365,860
1,342,094
1,457,152
Shareholders' equity:
Common shareholders' equity
778,480
625,914
530,956
Preferred equity
71,930
71,930
71,930
Total shareholders' equity
850,410
697,844
602,886
Total liabilities and shareholders' equity
$
7,873,743
$
6,973,735
$
6,341,880
Net interest rate spread (1)
2.89
%
2.55
%
2.72
%
Net interest income
$
273,163
$
227,383
$
215,129
Net interest margin (2)
3.69
%
3.48
%
3.62
%
Overall cost of funds
2.76
%
3.01
%
2.43
%
______________________________
(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 table presents 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.
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For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.
Years Ended December 31,
2025 / 2024
2024 / 2023
Increase (Decrease) due to change in
Increase (Decrease) due to change in
(Dollars in thousands)
Volume
Rate
Total
Volume
Rate
Total
Interest-earning assets:
Total loans
$
48,422
$
(3,780)
$
44,642
$
32,891
$
18,337
$
51,228
Securities
1,644
2,870
4,514
(137)
4,514
4,377
Securities purchased under agreements to resell
996
(61)
935
757
—
757
Interest-bearing deposits in other banks
3,783
(3,627)
156
5,537
(462)
5,075
Total increase (decrease) in interest income
$
54,845
$
(4,598)
$
50,247
$
39,048
$
22,389
$
61,437
Interest-bearing liabilities:
Interest-bearing deposits
$
23,269
$
(19,440)
$
3,829
$
32,108
$
26,078
$
58,186
Subordinated debt
(323)
(119)
(442)
(296)
367
71
Subordinated debt - trust preferred securities
—
(52)
(52)
—
17
17
Bank Term Funding Program
(2,788)
-
(2,788)
(8,135)
(390)
(8,525)
Advances from FHLB
3,531
278
3,809
(509)
(29)
(538)
Other borrowings
100
11
111
(60)
32
(28)
Total increase (decrease) in interest expense
23,789
(19,322)
4,467
23,108
26,075
49,183
Increase (decrease) in net interest income
$
31,056
$
14,724
$
45,780
$
15,940
$
(3,686)
$
12,254
Provision for Credit Losses
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 $11.3 million and $10.9 million for the years ended December 31, 2025 and 2024, respectively.
Noninterest Income (“Other Income”)
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
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and financial technology (“Fintech”) funds). The following table presents, for the periods indicated, the major categories of noninterest income:
For the Years Ended December 31,
(Dollars in thousands)
2025
2024
Increase (Decrease)
Noninterest income:
Service charges on deposit accounts
$
10,704
$
10,577
$
127
Debit card and ATM fee income
7,701
7,659
42
Bank-owned life insurance income
3,151
2,875
276
Gain on sales of loans
3,438
2,973
465
Gain on sales of investment securities
64
7
57
Fees and brokerage commissions
8,180
7,844
336
Mortgage origination income
401
238
163
Gain on sales of other real estate owned
570
89
481
Loss on sales of other assets
(839)
(15)
(824)
Gain on sale of banking center
3,360
—
3,360
Gain on extinguishment of debt
630
—
630
Swap Fee Income
4,417
2,739
1,678
Pass-through income from other investments
905
1,208
(303)
Other
8,860
7,999
861
Total noninterest income
$
51,542
$
44,193
$
7,349
Noninterest income for the year ended December 31, 2025 increased $7.3 million, or 16.6%, to $51.5 million compared to noninterest income of $44.2 million for the same period in 2024. The components of noninterest income with significant fluctuations compared to the prior year period were as follows:
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, an increase of $465,000, or 15.6%, primarily due to increased SBA loan sale activity.
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, an increase of $481,000. The majority of the gains on sale of other real estate was due to one property which sold at a gain of $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 Kaplan, Louisiana that resulted in a gain of $3.4 million during 2025.
Gain on extinguishment of debt. We extinguished $7.0 million in subordinated debt resulting in a gain on the extinguishment of debt of $630,000 during 2025.
Swap fee income. We had swap fee income from back-to-back interest rate swaps in the amount of $4.4 million in 2025, compared to $2.7 million during 2024, an increase of $1.7 million, or 61.3%.
Other. This category includes a variety of other income producing activities, including wire transfer fees and credit card income. Other income increased $861,000, or 10.8%, for the year ended December 31, 2025, compared to the same period in 2024.
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Noninterest Expense (“Other Expense”)
Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing bank services. The largest component of noninterest expense is salaries and employee benefits. Noninterest expense also includes operational expenses, such as occupancy expenses, depreciation and amortization, professional and regulatory fees, including FDIC assessments, data processing expenses, and advertising and promotion expenses, among others.
The following table presents, for the periods indicated, the major categories of noninterest expense:
For the Years Ended December 31,
(Dollars in thousands)
2025
2024
Increase (Decrease)
Salaries and employee benefits
$
115,853
$
103,917
$
11,936
Non-staff expenses:
Occupancy of bank premises
12,876
10,944
1,932
Depreciation and amortization
8,313
7,540
773
Data processing
15,756
11,957
3,799
FDIC assessment fees
3,883
3,598
285
Legal and professional fees
4,566
3,756
810
Advertising and promotions
5,179
4,878
301
Utilities and communications
3,011
2,883
128
Ad valorem shares tax
4,245
4,057
188
Directors' fees
957
1,085
(128)
Other real estate owned expenses and write-downs
659
301
358
Merger and conversion related expenses
2,194
1,236
958
Other
25,586
21,500
4,086
Total noninterest expense
$
203,078
$
177,652
$
25,426
Noninterest expense for the year ended December 31, 2025 increased $25.4 million, or 14.3%, to $203.1 million compared to noninterest expense of $177.7 million for the same period in 2024. The components of noninterest expense with significant fluctuations compared to the prior year period were as follows:
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 $115.9 million for the year ended December 31, 2025, an increase of $11.9 million, or 11.5%, compared to the same period in 2024. The increase was primarily due to the Oakwood acquisition in late 2024, additional hires for new positions and our merit increase cycle. As of December 31, 2025, we had 831 full-time equivalent employees, compared to 859 full-time equivalents as of December 31, 2024. Salaries and employee benefits included stock-based compensation expense of $5.2 million and $2.5 million for the years ended December 31, 2025 and 2024, respectively.
Occupancy of bank premises. Occupancy of bank premises expenses were $12.9 million and $10.9 million for the years ended December 31, 2025 and 2024, respectively, an increase of $1.9 million, or 17.7%, which is primarily due to the Oakwood acquisition.
Data processing. Data processing fees were $15.8 million and $12.0 million for the years ended December 31, 2025 and 2024, respectively, an increase of $3.8 million, or 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, 2025 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.
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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 $4.1 million, or 19.0%, for the year ended December 31, 2025 compared to the same period in 2024 primarily due to a full year of Oakwood expenses.
Income Tax Expense
The amount of income tax expense is influenced by the amounts of our pre-tax income, tax-exempt income and other nondeductible expenses. Deferred tax assets and liabilities are reflected at currently enacted income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
For the year ended December 31, 2025, income tax expense totaled $22.4 million, an increase of $4.5 million, or 25.1%, compared to $17.9 million for the same period in 2024. For the years ended December 31, 2025 and 2024, our effective tax rates were 20.4% and 21.6%, respectively.
Financial Condition
Our total assets increased $357.7 million, or 4.6%, from $7.9 billion as of December 31, 2024 to $8.2 billion as of December 31, 2025, due primarily to unrealized gains in our securities portfolio, increases in our loan portfolio, as well as our cash and cash equivalents due to our increase in deposits.
Loan Portfolio
Our primary source of income is interest on loans to individuals, professionals and small-to-midsized businesses in our markets. Our loan portfolio consists primarily of commercial loans and real estate loans secured by commercial real estate properties located in our primary market areas. Our loan portfolio represents the highest yielding component of our earning asset base.
As of December 31, 2025, total loans, excluding mortgage loans held for sale, were $6.2 billion, an increase of $208.1 million or 3.5%, compared to $6.0 billion as of December 31, 2024. Additionally, $1.1 million and $717,000 in mortgage loans were classified as loans held for sale as of December 31, 2025 and 2024, respectively.
Total loans held for investment as a percentage of deposits were 92.4% and 91.9% as of December 31, 2025 and 2024, respectively. Total loans held for investment as a percentage of assets were 75.3% and 76.1% as of December 31, 2025 and 2024, respectively.
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The following table summarizes our loan portfolio by type of loan as of the dates indicated:
As of December 31, 2025
As of December 31, 2024
(Dollars in thousands)
Amount
Percent
Amount
Percent
Real Estate Loans:
Commercial
Real estate rental and leasing
$
1,456,484
23.5
%
$
1,565,311
26.2
%
Accommodation and food services
247,951
4.0
300,039
5.0
Other services (except public administration)
160,548
2.6
188,811
3.2
Health care and social assistance
121,850
2.0
128,958
2.2
Finance and insurance
84,592
1.4
65,284
1.1
Construction
63,931
1.0
63,596
1.1
Manufacturing
73,369
1.2
55,288
0.9
Agriculture, forestry, fishing and hunting
42,730
0.7
39,045
0.6
Transportation and warehousing
22,070
0.4
23,305
0.4
Other
337,754
5.4
53,586
0.9
Total Commercial
2,611,279
42.2
2,483,223
41.6
Construction
639,069
10.3
670,502
11.2
Residential
944,065
15.3
884,533
14.8
Total Real Estate Loans
4,194,413
67.8
4,038,258
67.6
Commercial
1,921,833
31.0
1,868,675
31.2
Consumer and Other
73,244
1.2
74,466
1.2
Total loans held for investment
$
6,189,490
100.0
%
$
5,981,399
100.0
%
As of December 31, 2025
As of December 31, 2024
(Dollars in thousands)
Amount
Percent
Amount
Percent
Commercial real estate:
Dallas Region
$
720,436
27.6
%
$
778,174
31.3
%
New Orleans Region
505,447
19.3
466,661
18.8
North Louisiana Region
454,909
17.4
440,238
17.7
Capitol Region
323,420
12.4
246,321
9.9
Houston Region
240,422
9.2
234,959
9.5
Southwest Louisiana Region
280,889
10.8
234,875
9.5
Bayou Region
85,756
3.3
81,995
3.3
Total commerical real estate loans
$
2,611,279
100.0
%
$
2,483,223
100.0
%
Real Estate: Commercial loans are extensions of credit secured by owner-occupied and non-owner-occupied collateral. Repayment is generally dependent on the successful operations of the property. General economic conditions may impact the performance of these types of loans, including fluctuations in the value of real estate, vacancy rates, and unemployment trends. Real estate commercial loans also include farmland loans that can be, or are, used for agricultural purposes. These loans are usually repaid through refinancing, cash flow from the borrower’s ongoing operations, development of the property, or sale of the property.
Real Estate: Commercial loans increased $128.1 million, or 5.2%, to $2.6 billion as of December 31, 2025, from $2.5 billion as of December 31, 2024.
Real Estate: Construction loans include loans to small-to-midsized businesses to construct owner-occupied properties, loans to developers of commercial real estate investment properties and residential developments and, to a lesser extent, loans to individual clients for construction of single-family homes in our market areas. Risks associated with these
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loans include fluctuations in the value of real estate, project completion risk and changes in market trends. We are also exposed to risk based on the ability of the construction loan borrower to finance the loan or sell the property upon completion of the project, which may be affected by changes in secondary market terms and criteria for permanent financing since the time we funded the loan.
Real Estate: Construction loans decreased $31.4 million, or 4.7%, to $639.1 million as of December 31, 2025, from $670.5 million as of December 31, 2024.
Real Estate: Residential loans include first and second lien 1-4 family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences. The Company is exposed to risk based on fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness, or other personal hardship. Real estate residential loans also include multi-family residential loans originated to provide permanent financing for multi-family residential income producing properties. Repayment of these loans primarily relies on successful rental and management of the property.
Real Estate: Residential loans increased $59.5 million, or 6.7%, to $944.1 million as of December 31, 2025, from $884.5 million as of December 31, 2024.
Commercial loans include general commercial and industrial, or C&I, loans, including commercial lines of credit, working capital loans, term loans, equipment financing, asset acquisition, expansion, and development loans, borrowing base loans, letters of credit and other loan products, primarily in the Company’s target markets that are underwritten based on the borrower’s ability to service the debt from income. Commercial loan risk is derived from the expectation that such loans generally are serviced principally from the operations of the business, and those operations may not be successful. Any interruption or discontinuance of operating cash flows from the business, which may be influenced by events not under the control of the borrower such as economic events and changes in governmental regulations, could materially affect the ability of the borrower to repay the loan.
Commercial loans increased $53.2 million, or 2.8%, and remained at $1.9 billion as of December 31, 2025 and 2024.
Consumer and other loans include a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans. The risk is based on changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness or other personal hardship, and fluctuations in the value of the real estate or personal property securing the consumer loan, if any.
Consumer and other loans decreased $1.2 million, or 1.6%, to $73.2 million as of December 31, 2025, from $74.5 million as of December 31, 2024.
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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 date indicated are summarized in the following tables:
As of December 31, 2025
(Dollars in thousands)
One Year or Less
One Through Five
Years
Five Through Fifteen Years
After Fifteen Years
Total
Real Estate Loans:
Commercial
$
495,680
$
1,565,812
$
486,341
$
63,446
$
2,611,279
Construction
245,439
314,697
59,104
19,829
639,069
Residential
196,345
447,791
160,912
139,017
944,065
Total Real Estate Loans
937,464
2,328,300
706,357
222,292
4,194,413
Commercial
873,248
842,456
200,039
6,090
1,921,833
Consumer and Other
49,561
20,483
3,053
147
73,244
Total loans held for investment
$
1,860,273
$
3,191,239
$
909,449
$
228,529
$
6,189,490
Fixed rate loans:
Real Estate Loans:
Commercial
$
283,116
$
999,397
$
248,466
$
11,145
$
1,542,124
Construction
55,596
56,813
10,423
7,985
130,817
Residential
125,470
337,489
107,238
19,724
589,921
Total Real Estate Loans
464,182
1,393,699
366,127
38,854
2,262,862
Commercial
243,915
322,419
87,980
499
654,813
Consumer and Other
39,393
15,770
2,657
147
57,967
Total fixed rate loans
$
747,490
$
1,731,888
$
456,764
$
39,500
$
2,975,642
Floating rate loans:
Real Estate Loans:
Commercial
$
212,564
$
566,415
$
237,875
$
52,301
$
1,069,155
Construction
189,843
257,884
48,681
11,844
508,252
Residential
70,875
110,302
53,674
119,293
354,144
Total Real Estate Loans
473,282
934,601
340,230
183,438
1,931,551
Commercial
629,333
520,037
112,059
5,591
1,267,020
Consumer and Other
10,168
4,713
396
-
15,277
Total floating rate loans
$
1,112,783
$
1,459,351
$
452,685
$
189,029
$
3,213,848
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As of December 31, 2024
(Dollars in thousands)
One Year or Less
One Through Five
Years
Five Through Fifteen Years
After Fifteen Years
Total
Real Estate Loans:
Commercial
$
374,129
$
1,513,009
$
513,999
$
82,086
$
2,483,223
Construction
320,732
286,326
47,195
16,249
670,502
Residential
143,804
514,596
151,262
74,871
884,533
Total Real Estate Loans
838,665
2,313,931
712,456
173,206
4,038,258
Commercial
919,905
672,153
271,632
4,985
1,868,675
Consumer and Other
44,359
26,830
3,123
154
74,466
Total loans held for investment
$
1,802,929
$
3,012,914
$
987,211
$
178,345
$
5,981,399
Fixed rate loans:
Real Estate Loans:
Commercial
$
134,809
$
1,141,096
$
349,949
$
12,854
$
1,638,708
Construction
66,241
132,702
13,892
7,454
220,289
Residential
72,174
422,430
96,826
21,189
612,619
Total Real Estate Loans
273,224
1,696,228
460,667
41,497
2,471,616
Commercial
179,506
351,913
152,841
—
684,260
Consumer and Other
35,067
21,062
2,585
154
58,868
Total fixed rate loans
$
487,797
$
2,069,203
$
616,093
$
41,651
$
3,214,744
Floating rate loans:
Real Estate Loans:
Commercial
$
239,320
$
371,913
$
164,050
$
69,232
$
844,515
Construction
254,491
153,624
33,303
8,795
450,213
Residential
71,630
92,166
54,436
53,682
271,914
Total Real Estate Loans
565,441
617,703
251,789
131,709
1,566,642
Commercial
740,399
320,240
118,791
4,985
1,184,415
Consumer and Other
9,292
5,768
538
—
15,598
Total floating rate loans
$
1,315,132
$
943,711
$
371,118
$
136,694
$
2,766,655
Nonperforming Assets
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is generally reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due, or interest may be recognized on a cash basis as long as the remaining book balance of the loan is deemed collectible. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
We have several procedures in place to assist in maintaining the overall quality of our loan portfolio. We have established underwriting guidelines to be followed by our bankers, and we also monitor our delinquency levels for any negative or adverse trends. There can be no assurance, however, that our loan portfolio will not become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.
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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 $89.7 million and $30.5 million in nonperforming assets as of December 31, 2025 and 2024, respectively. We had $76.7 million in nonperforming loans as of December 31, 2025 compared to $25.0 million as of December 31, 2024. The increase in nonperforming assets from December 31, 2024 to December 31, 2025 is primarily due to one lending relationship secured by residential real estate, four secured by commercial and construction real estate, four commercial loans, and two other real estate owned properties.
The following tables present information regarding nonperforming loans at the dates indicated:
As of December 31,
(Dollars in thousands)
2025
2024
2023
Nonaccrual loans
$
74,471
$
24,147
$
16,943
Accruing loans 90 or more days past due
2,215
860
127
Total nonperforming loans
76,686
25,007
17,070
Other nonperforming assets
—
—
—
Other real estate owned:
Commercial real estate, construction, land and land development
12,192
5,197
1,326
Residential real estate
821
332
359
Total other real estate owned
13,013
5,529
1,685
Total nonperforming assets
$
89,699
$
30,536
$
18,755
Ratio of nonperforming loans to total loans held for investment
1.24
%
0.42
%
0.34
%
Ratio of nonperforming assets to total assets
1.09
0.39
0.28
Ratio of nonaccrual loans to total loans held for investment
1.20
0.40
0.34
As of December 31,
(Dollars in thousands)
2025
2024
2023
Nonaccrual loans by category:
Real Estate Loans:
Commercial
$
36,252
$
3,621
$
3,280
Construction
4,539
5,251
3,543
Residential
10,144
7,078
7,352
Total Real Estate Loans
50,935
15,950
14,175
Commercial
23,370
8,039
2,395
Consumer and Other
166
158
373
Total
$
74,471
$
24,147
$
16,943
Potential Problem Loans
From a credit risk standpoint, we classify loans in one of four categories: pass, special mention, substandard or doubtful. Loans classified as loss are charged-off. The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. Ratings are adjusted to reflect the degree of risk and loss that is believed to be inherent in each credit. Our methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk of loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk of loss).
Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness; however, such concerns are not so pronounced that we generally expect to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits with a lower rating.
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Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses which exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.
Credits rated doubtful have all the weaknesses inherent in those rated substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
The following tables summarize our internal ratings of loans held for investment as of the dates indicated. See Note 7 of the consolidated financial statements for the presentation of loans in their credit quality categories that is in compliance with the CECL standard.
As of December 31, 2025
(Dollars in thousands)
Pass
Special Mention
Substandard
Doubtful
Total
Real Estate Loans:
Commercial
$
2,472,549
$
74,116
$
64,142
$
472
$
2,611,279
Construction
621,673
11,229
6,167
—
639,069
Residential
906,308
24,770
12,955
32
944,065
Total Real Estate Loans
4,000,530
110,115
83,264
504
4,194,413
Commercial
1,834,911
39,149
47,650
123
1,921,833
Consumer and Other
72,706
—
536
2
73,244
Total
$
5,908,147
$
149,264
$
131,450
$
629
$
6,189,490
As of December 31, 2024
(Dollars in thousands)
Pass
Special Mention
Substandard
Doubtful
Total
Real Estate Loans:
Commercial
$
2,383,439
$
75,385
$
23,548
$
851
$
2,483,223
Construction
658,364
3,436
8,702
—
670,502
Residential
871,634
3,163
9,485
251
884,533
Total Real Estate Loans
3,913,437
81,984
41,735
1,102
4,038,258
Commercial
1,828,485
25,979
13,911
300
1,868,675
Consumer and Other
74,097
—
369
—
74,466
Total
$
5,816,019
$
107,963
$
56,015
$
1,402
$
5,981,399
Allowance for Credit Losses
We maintain an allowance for credit losses, which includes both our allowance for loan losses and reserves for unfunded commitments, that represents management’s best estimate of the credit losses and risks inherent in the loan portfolio. In determining the allowance for credit losses, we estimate losses on specific loans, or groups of loans, where the probable loss can be identified and reasonably determined. The balance of the allowance for credit losses is based on internally assigned risk classifications of loans, changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical credit loss rates. For additional discussion of our methodology, please refer to “—Critical Accounting Estimates—Allowance for Credit Losses.”
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In connection with our review of the loan portfolio, we consider risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements we consider include:
•for Real Estate: Commercial loans, the debt service coverage ratio (income from the property in excess of operating expenses compared to loan payment requirements), operating results of the owner in the case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral, and the volatility of income, property value and future operating results typical for properties of that type;
•for Real Estate: Construction loans, the perceived feasibility of the project including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, the experience and ability of the developer, and the loan to value ratio;
•for Real Estate: Residential real estate loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan to value ratio, and the age, condition and marketability of the collateral; and
•for Commercial loans, the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category, and the value, nature and marketability of collateral;
As of December 31, 2025, the allowance for credit losses totaled $58.1 million, or 0.94%, of total loans held for investment. As of December 31, 2024, the allowance for credit losses totaled $58.5 million, or 0.98%, of total loans held for investment. As of December 31, 2023, the allowance for credit losses totaled $43.7 million, or 0.88%, of total loans held for investment.
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The following tables present, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data:
For the Years Ended December 31,
(Dollars in thousands)
2025
2024
2023
Average loans outstanding
$
6,023,214
$
5,327,466
$
4,859,637
Gross loans held for investment outstanding end of period
$
6,189,490
$
5,981,399
$
4,992,785
Allowance for credit losses at beginning of period
$
58,528
$
43,738
$
38,783
Adoption of ASU 2016-13
-
-
5,857
Adjustment for Oakwood purchased credit deterioration loans
-
8,410
-
Provision for credit losses
11,318
10,873
4,483
Charge-offs:
Real Estate:
Commercial
4,116
(263)
2,049
Construction
20
2,261
36
Residential
242
297
42
Total Real Estate
4,378
2,295
2,127
Commercial
6,768
986
2,813
Consumer and other
1,991
2,392
1,489
Total charge-offs
13,137
5,673
6,429
Recoveries:
Real Estate:
Commercial
30
86
26
Construction
211
515
1
Residential
33
14
18
Total Real Estate
274
615
45
Commercial
839
236
672
Consumer and other
314
329
327
Total recoveries
1,427
1,180
1,044
Net charge-offs
11,710
4,493
5,385
Allowance for credit losses at end of period
$
58,136
$
58,528
$
43,738
Ratio of allowance for credit losses to end of period loans held for investment
0.94
%
0.98
%
0.88
%
Ratio of net charge-offs to average loans
0.19
0.08
0.11
Ratio of allowance for credit losses to nonaccrual loans
78.07
242.38
258.15
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For the Years Ended December 31,
2025
2024
2023
(Dollars in thousands)
Net Charge-offs (Recoveries)
Percent of Average Loans
Net Charge-offs (Recoveries)
Percent of Average Loans
Net Charge-offs (Recoveries)
Percent of Average Loans
Real estate:
Commercial
$
4,086
0.07
%
$
(349)
0.00
%
$
2,023
0.04
%
Construction
(191)
0.00
1,746
0.03
35
0.00
Residential
209
0.00
283
0.00
24
0.00
Total Real Estate Loans
4,104
0.07
1,680
0.03
2,082
0.04
Commercial
5,929
0.10
750
0.01
2,141
0.05
Consumer and Other
1,677
0.02
2,063
0.04
1,162
0.02
Total net charge-offs (recoveries)
$
11,710
0.19
%
$
4,493
0.08
%
$
5,385
0.11
%
Although we believe that we have established our allowance for loan losses in accordance with GAAP and that the allowance for loan losses was adequate to provide for known and estimated losses in the portfolio at all times shown above, future provisions will be subject to ongoing evaluations of the risks in our loan portfolio. If we experience economic declines or if asset quality deteriorates, material additional provisions could be required.
The following table shows the allocation of the allowance for credit losses among loan categories and certain other information as of the dates indicated. The allocation of the allowance for credit losses as shown in the table should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions. The total allowance is available to absorb losses from any loan category.
For the Years Ended December 31,
2025
2024
2023
(Dollars in thousands)
Amount
Percent to Total
Amount
Percent to Total
Amount
Percent to Total
Real estate:
Commercial
$
23,806
40.9
%
$
23,688
40.5
%
$
17,882
40.9
%
Construction
4,416
7.6
8,473
14.5
8,142
18.6
Residential
7,732
13.3
8,394
14.3
5,662
12.9
Total real estate
35,954
61.8
40,555
69.3
31,686
72.4
Commercial
21,618
37.2
17,432
29.8
11,796
27.0
Consumer and Other
564
1.0
541
0.9
256
0.6
Total allowance for credit losses
$
58,136
100.0
%
$
58,528
100.0
%
$
43,738
100.0
%
Securities
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 December 31, 2025, the carrying amount of investment securities totaled $989.2 million, an increase of $95.7 million, or 10.7%, compared to $893.5 million as of December 31, 2024. Securities represented 12.0% and 11.4% of total assets as of December 31, 2025 and 2024, respectively.
Our investment portfolio consists entirely of securities classified as available for sale. As a result, the carrying values of our investment securities are adjusted for unrealized gain or loss, and any gain or loss is reported on an after-tax basis as
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a component of other comprehensive income in shareholders’ equity. The following tables summarize the amortized cost and estimated fair value of investment securities as of the dates shown:
As of December 31, 2025
(Dollars in thousands)
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
U.S. treasury securities
$
17,571
$
-
$
293
$
17,278
U.S. government agencies
10,070
-
196
9,874
Corporate bonds
38,324
377
1,639
37,062
Mortgage-backed securities
674,211
3,153
27,273
650,091
Municipal securities
291,256
536
16,868
274,924
Total
$
1,031,432
$
4,066
$
46,269
$
989,229
As of December 31, 2024
(Dollars in thousands)
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
U.S. treasury securities
$
17,631
$
-
$
956
$
16,675
U.S. government agencies
10,164
-
576
9,588
Corporate bonds
47,855
348
3,038
45,165
Mortgage-backed securities
584,321
542
47,125
537,738
Municipal securities
313,452
23
29,092
284,383
Total
$
973,423
$
913
$
80,787
$
893,549
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 December 31, 2025.
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 December 31, 2025 and 2024, was negligible and therefore, no allowance for credit loss was recorded related to our investment securities.
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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.
As of December 31, 2025
Within One Year
After One Year but Within Five Years
After Five Years but Within Ten Years
After Ten Years
Total
(Dollars in thousands)
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Total
Yield
U.S. treasury securities
$
17,278
0.80
%
$
—
—
%
$
—
—
%
$
—
—
%
$
17,278
0.80
%
U.S. government agencies
9,874
0.92
—
—
—
—
—
—
9,874
0.92
Corporate bonds
2,002
9.02
13,100
4.13
21,960
5.35
—
—
37,062
5.12
Mortgage-backed securities
4,748
1.28
57,984
2.50
202,824
3.45
384,535
3.58
650,091
3.43
Municipal securities
24,785
1.47
96,836
1.97
93,511
2.05
59,792
4.07
274,924
2.41
Total
$
58,687
1.42
%
$
167,920
2.32
%
$
318,295
3.17
%
$
444,327
3.65
%
$
989,229
3.14
%
As of December 31, 2024
Within One Year
After One Year but Within Five Years
After Five Years but Within Ten Years
After Ten Years
Total
(Dollars in thousands)
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Total
Yield
U.S. treasury securities
$
—
—
%
$
16,675
0.80
%
$
—
—
%
$
—
—
%
$
16,675
0.80
%
U.S. government agencies
—
—
9,588
0.92
—
—
—
—
9,588
0.92
Corporate bonds
—
—
6,253
5.00
38,912
4.90
—
—
45,165
4.91
Mortgage-backed securities
4,081
2.68
47,501
2.07
184,576
2.99
301,580
3.16
537,738
3.00
Municipal securities
24,577
1.44
93,150
1.76
105,409
1.96
61,247
2.97
284,383
2.07
Total
$
28,658
1.61
%
$
173,167
1.82
%
$
328,897
2.89
%
$
362,827
3.13
%
$
893,549
2.74
%
The contractual maturity of mortgage-backed securities, collateralized mortgage obligations and asset-backed securities is not a reliable indicator of their expected life because borrowers have the right to prepay their obligations at any time. Mortgage-backed securities and asset-backed securities are typically issued with stated principal amounts and are backed by pools of mortgage loans and other loans with varying maturities. The term of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay. Monthly paydowns on mortgage-backed securities tend to cause the average life of the securities to be much different than the stated contractual maturity. During a period of increasing interest rates, fixed rate mortgage-backed securities do not tend to experience heavy prepayments of principal and, consequently, the average life of this security will be lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated life of this security. The weighted average life of our investment portfolio was 4.25 years with an estimated effective duration of 3.53 years as of December 31, 2025.
As of December 31, 2025 and 2024, we did not own securities of any one issuer for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity as of such respective dates.
As of December 31, 2025 and 2024, the Company held other equity securities of $49.3 million and $41.1 million, respectively, comprised mainly of FHLB stock, SBIC’s and financial technology (“Fintech”) fund investments.
Deposits
We offer a variety of deposit accounts having a wide range of interest rates and terms including demand, savings, money market and time accounts. We rely primarily on competitive pricing policies, convenient locations and personalized service to attract and retain these deposits.
Total deposits as of December 31, 2025 were $6.7 billion, an increase of $187.3 million, or 2.9%, compared to $6.5 billion as of December 31, 2024. Total uninsured deposits were $2.9 billion, or 43.2% of deposits as of December 31, 2025 compared to $2.8 billion, or 43.4%, or total deposits as of December 31, 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.
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Noninterest-bearing deposits as of December 31, 2025 were $1.3 billion compared to $1.4 billion as of December 31, 2024, a decrease of $35.0 million, or 2.6%.
Average deposits for the year ended December 31, 2025 were $6.4 billion, an increase of $718.0 million, or 12.6%, compared to the year ended December 31, 2024 of $5.7 billion. The average rate paid on total interest-bearing deposits decreased over this period from 3.73% for the year ended December 31, 2024 to 3.29% for the year ended December 31, 2025. The decrease in average rates was driven by the federal reserve continuing to lower interest rates during the year ended December 31, 2025. In addition, the stability 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.
The following table presents the monthly average balances and weighted average rates paid on deposits for the periods indicated:
For the Years Ended December 31
2025
2024
(Dollars in thousands)
Average Balance
Average Rate
Average Balance
Average Rate
Interest-bearing demand accounts
$
807,107
2.54
%
$
611,561
3.36
%
Negotiable order of withdrawal ("NOW") accounts
303,167
2.51
402,046
2.09
Limited access money market accounts and savings
2,601,497
3.24
2,146,610
3.79
Certificates and other time deposits $250k
783,326
4.19
628,929
4.52
Certificates and other time deposits $250k
639,425
3.70
638,087
4.13
Total interest-bearing deposits
5,134,522
3.29
4,427,233
3.73
Noninterest-bearing demand accounts
1,296,162
—
1,285,445
—
Total deposits
$
6,430,684
2.63
%
$
5,712,678
2.89
%
The ratio of average noninterest-bearing deposits to average total deposits for the years ended December 31, 2025 and 2024 was 20.2% and 22.5%, respectively.
The following table sets forth the contractual maturities of certain certificates of deposit at December 31, 2025:
(Dollars in thousands)
Certificates of
Deposit More Than
$250,000
Certificates of
Deposit of
$100,000 Through
$250,000
3 months or less
$
152,621
$
146,030
More than 3 months but less than 6 months
234,330
99,296
More than 6 months but less than 12 months
264,393
132,024
12 months or more
153,384
40,759
Total
$
804,728
$
418,109
Borrowings
We utilize short-term and long-term borrowings to supplement deposits to fund our lending and investment activities. In addition, we use short-term borrowings to periodically repurchase outstanding shares of our common stock and for general corporate purposes. Each of these relationships are discussed below.
FHLB advances. The FHLB allows us to borrow on a blanket floating lien status collateralized by certain securities and loans. As of December 31, 2025 and 2024, total borrowing capacity of $2.0 billion was available under this arrangement for both periods, and $431.2 million and $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. Our current longest dated FHLB advance matures within eight years. We utilize these borrowings to meet liquidity needs and to fund certain fixed rate loans in our portfolio.
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The following table presents our FHLB borrowings at the dates indicated.
(Dollars in thousands)
FHLB Advances
December 31, 2025
Amount outstanding at year-end
$
431,200
Weighted average stated interest rate at year-end
4.02
%
Maximum month-end balance during the year
$
509,124
Average balance outstanding during the year
$
400,849
Weighted average interest rate during the year
4.23
%
December 31, 2024
Amount outstanding at year-end
$
355,875
Weighted average stated interest rate at year-end
4.15
%
Maximum month-end balance during the year
$
377,048
Average balance outstanding during the year
$
317,462
Weighted average interest rate during the year
4.15
%
Subordinated Note Purchase Agreement (“Subordinated Debt”). In December 2018 we issued subordinated notes in the amount of $25.0 million. The subordinated notes bear a fixed rate of interest at 6.75% until December 31, 2028 and a floating rate thereafter through maturity in 2033. The balance outstanding at both December 31, 2025 and 2024 was $25.0 million. These subordinated notes were issued for the purpose of paying off our long term advance and line of credit with First National Bankers' Bank ("FNBB"), for general corporate purposes and to provide Tier 2 capital. The subordinated notes are redeemable by the Company at its option beginning in 2028.
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 December 31, 2025 and 2024, respectively. The subordinated notes are redeemable by the Company at its option beginning in 2026.
On April 1, 2021, we consummated the acquisition of 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, 2025 and 2024 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 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 $603,000 and $833,000 remaining at December 31, 2025 and December 31, 2024, respectively.
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The following table presents the Subordinated Debt at the dates indicated.
(Dollars in thousands)
Subordinated Debt
December 31, 2025
Amount outstanding at year-end
$
92,530
Weighted average stated interest rate at year-end
5.54
%
Maximum month-end balance during the year
$
99,971
Average balance outstanding during the year
$
93,765
Weighted average interest rate during the year
5.28
%
December 31, 2024
Amount outstanding at year-end
$
99,760
Weighted average stated interest rate at year-end
5.69
%
Maximum month-end balance during the year
$
99,971
Average balance outstanding during the year
$
99,884
Weighted average interest rate during the year
5.40
%
Trust preferred securities. In the Pedestal acquisition, we assumed their obligations of $5.2 million in junior subordinated debentures, which are associated with $5.0 million in trust preferred securities issued by a trust. Interest on the junior subordinated debentures is accrued at an annual rate equal to the 3-month LIBOR, as determined in the agreement, plus 3.05%. Interest is payable quarterly. The agreement indenture governing the debentures allows us to defer interest payments for up to 20 consecutive quarterly periods. The trust preferred securities do not have a stated maturity date, however, they are subject to mandatory redemption on September 17, 2033, or upon earlier redemption. We have guaranteed, on a subordinated basis, distributions and other payments due on the trust preferred securities subject to the guarantee agreement and the indenture. Principal and interest payments on the junior subordinated debentures are in a superior position to the liquidation rights of holders of common stock.
Federal Funds Purchased Lines of Credit Relationships
We maintain Federal Funds Purchased Lines of Credit Relationships with the following correspondent banks and limits as of December 31, 2025:
(Dollars in thousands)
Fed Funds Purchase Limits
TIB National Association
$
45,000
PNC Bank
38,000
FNBB
35,000
First Horizon Bank
17,000
ServisFirst Bank
10,000
Total
$
145,000
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The following table represents combined Federal Funds Purchased Lines of Credit for all relationships at the dates indicated.
(Dollars in thousands)
Fed Funds Purchased
December 31, 2025
Amount outstanding at year-end
$
-
Weighted average stated interest rate at year-end
0.00
%
Maximum month-end balance during the year
$
10
Average balance outstanding during the year
$
1
Weighted average interest rate during the year
5.05
%
December 31, 2024
Amount outstanding at year-end
$
-
Weighted average stated interest rate at year-end
0.00
%
Maximum month-end balance during the year
$
-
Average balance outstanding during the year
$
5
Weighted average interest rate during the year
6.46
%
Liquidity and Capital Resources
Liquidity
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, 2025 and 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, 2025 and 2024, we maintained five and six lines of credit, respectively, with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $145.0 million and $160.0 million as of December 31, 2025 and 2024, respectively. There were no funds under these lines of credit outstanding as of December 31, 2025 and 2024, respectively.
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The following table illustrates, during the periods presented, the mix of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the period indicated. Average assets totaled $7.9 billion and $7.0 billion for the years ended December 31, 2025 and 2024, respectively.
For the Years Ended December 31,
2025
2024
Source of Funds:
Deposits:
Noninterest-bearing
16.5
%
18.4
%
Interest-bearing
65.2
63.5
Subordinated debt (excluding trust preferred securities)
1.2
1.4
Advances from FHLB
5.1
4.6
Other borrowings
0.3
0.4
Bank Term Funding Program
—
0.9
Other liabilities
0.9
0.8
Shareholders' equity
10.8
10.0
Total
100.0
%
100.0
%
Uses of Funds:
Loans, net of allowance for loan losses
75.8
%
75.8
%
Securities available for sale
12.2
13.0
Securities purchased under agreements to resell
0.4
0.2
Interest-bearing deposits in other banks
4.9
4.1
Other noninterest-earning assets
6.7
6.9
Total
100.0
%
100.0
%
Average noninterest-bearing deposits to average deposits
20.2
%
22.5
%
Average loans to average deposits
93.7
93.3
Our primary source of funds is deposits, and our primary use of funds is loans. We do not expect a change in the primary source or use of our funds in the foreseeable future. Our average loans increased 13.1% for the year ended December 31, 2025 compared to the same period in 2024. We predominantly invest excess funds in overnight deposits with the Federal Reserve, securities, interest-bearing deposits at other banks or other short-term liquid investments until needed to fund loan growth. Our securities portfolio had a weighted average life of 4.25 years and an effective duration of 3.53 years as of December 31, 2025 and a weighted average life of 4.63 years and an effective duration of 3.79 years as of December 31, 2024.
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. As of December 31, 2024, we had outstanding $1.4 billion in commitments to extend credit and $50.0 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 December 31, 2025, we had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature. We had cash and cash equivalents, federal funds sold and securities purchased under agreements to resell, of $609.2 million and $567.6 million as of December 31, 2025 and 2024, respectively.
Capital Resources
Total shareholders’ equity increased to $896.9 million as of December 31, 2025, compared to $799.5 million as of December 31, 2024, an increase of $97.4 million, or 12.2%. This increase was primarily due to net income available to common shareholders of $82.5 million, other comprehensive income of $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 $16.8 million.
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On January 22, 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, 2026. The dividend is to pay on February 28, 2026, or as soon as practicable thereafter.
On January 22, 2026, our board of directors declared a quarterly dividend based upon our financial performance for the three months ended December 31, 2025 in the amount of $0.15 per common share to the common shareholders of record as of February 15, 2026. The dividend is to pay on February 28, 2026, or as soon as practicable thereafter.
The declaration and payment of dividends to our shareholders, as well as the amounts thereof, are subject to the discretion of the Board and depend upon our results of operations, financial condition, capital levels, cash requirements, future prospects and other factors deemed relevant by the Board. As a holding company, our ability to pay dividends is largely dependent upon the receipt of dividends from our subsidiary, b1BANK. There can be no assurance that we will declare and pay any dividends to our shareholders.
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 December 31, 2025 and December 31, 2024, 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.
The following table presents the actual capital amounts and regulatory capital ratios for us and b1BANK as of the dates indicated.
As of December 31,
2025
2024
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Business First
Total capital (to risk weighted assets)
$
939,331
12.93
%
$
878,914
12.75
%
Tier 1 capital (to risk weighted assets)
799,527
11.00
%
727,959
10.56
%
Common Equity Tier 1 capital (to risk weighted assets)
722,597
9.94
%
651,029
9.44
%
Tier 1 Leverage capital (to average assets)
799,527
10.08
%
727,959
9.53
%
b1BANK
Total capital (to risk weighted assets)
$
930,600
12.82
%
$
857,627
12.45
%
Tier 1 capital (to risk weighted assets)
872,464
12.02
%
799,099
11.60
%
Common Equity Tier 1 capital (to risk weighted assets)
872,464
12.02
%
799,099
11.60
%
Tier 1 Leverage capital (to average assets)
872,464
11.01
%
799,099
10.47
%
Preferred Stock
On September 1, 2022, we entered into a securities purchase agreement with certain investors pursuant to which we offered and sold shares of our 7.50% fixed-to-floating rate non-cumulative perpetual preferred stock, with no par value, for an aggregate purchase price of $72.0 million. The preferred stock was structured to qualify as additional Tier 1 capital under applicable regulatory capital guidelines. Holders of the preferred stock will be entitled to receive, if, when, and as declared by our board of directors, non-cumulative cash dividends at a rate of 7.50% for the first five years following issuance and thereafter at a variable rate equal to the then current 3-month secured overnight financing rate (“SOFR”), reset quarterly, plus 470 basis points. The preferred stock has a perpetual term and may not be redeemed, except under certain circumstances, under the first five years of issuance.
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Table of Contents
Long Term Debt
For information on our subordinated debt, please refer to “Borrowings”.
FHLB Advances
Advances from the FHLB totaled approximately $431.2 million and $355.9 million at December 31, 2025 and 2024, respectively. As of December 31, 2025, and 2024, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.02% and 4.15%, respectively, and mature within eight years. At December 31, 2025, $120.0 million in advances were short term with a rate of 3.62% and $55.0 million with a rate of 4.38% at December 31, 2024.
Contractual Obligations
The following tables summarize contractual obligations and other commitments to make future payments as of December 31, 2025 and 2024 (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 $431.2 million and $355.9 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.02% and 4.15%, respectively, and maturing within eight years. The subordinated debt totaled $92.5 million and $99.8 million as of December 31, 2025 and 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. 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 $603,000 and $833,000 remaining at December 31, 2025 and December 31, 2024, respectively. We recognized $1.5 million in gains on the extinguishment of this debt during the year ended December 31, 2023.
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Table of Contents
As of December 31, 2025
(Dollars in thousands)
1 year or less
More than 1 year
but less than 3
years
3 years or more
but less than 5
years
5 years or more
Total
Non-cancelable future operating leases
$
5,896
$
10,510
$
7,382
$
6,383
$
30,171
Time deposits
1,170,413
227,926
9,106
—
1,407,445
Subordinated debt
—
17,500
—
74,427
91,927
Advances from FHLB
256,200
100,000
25,000
50,000
431,200
Subordinated debt - trust preferred securities
—
—
—
5,000
5,000
Securities sold under agreements to repurchase
22,622
—
—
—
22,622
Standby and commercial letters of credit
47,671
3,486
86
—
51,243
Commitments to extend credit
1,121,371
405,515
97,958
71,259
1,696,103
Total
$
2,624,173
$
764,937
$
139,532
$
207,069
$
3,735,711
As of December 31, 2024
(Dollars in thousands)
1 year or less
More than 1 year
but less than 3
years
3 years or more
but less than 5
years
5 years or more
Total
Non-cancelable future operating leases
$
5,888
$
10,864
$
8,202
$
6,844
$
31,798
Time deposits
983,140
385,363
28,410
—
1,396,913
Subordinated debt
—
—
17,500
81,427
98,927
Advances from FHLB
82,560
123,315
75,000
75,000
355,875
Subordinated debt - trust preferred securities
—
—
—
5,000
5,000
Securities sold under agreements to repurchase
22,621
—
—
—
22,621
Standby and commercial letters of credit
43,881
5,885
170
16
49,952
Commitments to extend credit
762,661
373,705
144,823
96,685
1,377,874
Total
$
1,900,751
$
899,132
$
274,105
$
264,972
$
3,338,960
Off-Balance Sheet Items
In the normal course of business, we enter into various transactions which, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby and commercial letters of credit which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.
Our commitments associated with outstanding standby and commercial letters of credit and commitments to extend credit expiring by period as of the date indicated are summarized in the tables above. Because commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.
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Table of Contents
Standby and commercial letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. In the event of nonperformance by the customer, we have rights to the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and/or marketable securities. The credit risk to us in issuing letters of credit is essentially the same as that involved in extending loan facilities to our customers.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by us, upon extension of credit, is based on management’s credit evaluation of the customer.
Interest Rate Sensitivity and Market Risk
As a financial institution, our primary component of market risk is sensitivity to movement in interest rates. Our asset and liability management policy provides management with the guidelines for effective interest rate risk management, and we have established a measurement system for monitoring our interest rate sensitivity position. We manage our sensitivity position within our established guidelines.
Fluctuations in interest rates will ultimately impact the level of income and expense recorded on many of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities. Interest rate risk is the potential of economic losses due to interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of the current fair market value of our equity. The objective of interest rate risk management is to measure the effect on net interest income and economic value of equity and to position the balance sheet to minimize the risk of losses and maximize the amount of income without taking on unnecessary earning volatility.
We seek to manage our exposure to interest rates by structuring our balance sheet in the ordinary course of business however we may enter into derivatives contracts to hedge interest rate risk if it is appropriate given our risk profile and policy guidelines. Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets.
Our exposure to interest rate risk is managed by the asset-liability committee (“ALCO”) of b1BANK, in accordance with policies approved by our board of directors. In determining the appropriate level of interest rate risk, the committee considers the impact on earnings and capital of the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors. The committee meets regularly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and market values of assets and liabilities, unrealized gains and losses, purchase and sale activities, commitments to originate loans and the maturities of investments and borrowings. Additionally, the committee reviews liquidity, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity. Management employs methodologies to manage interest rate risk which include an analysis of relationships between interest-earning assets and interest-bearing liabilities, and an interest rate shock simulation model.
We use interest rate risk simulation models and shock analysis to test the interest rate sensitivity of net interest income and fair value of equity, and the impact of changes in interest rates on other financial metrics. Contractual maturities and re-pricing opportunities of loans are incorporated into the model as are prepayment assumptions, maturity data and optionality. Deposit assumptions such as repricing betas and non-maturity balance decay rates are also incorporated into the model. Model assumptions are revised and updated on a regular basis as directed by policy, and more frequently if conditions merit. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes, as well as changes in market conditions, customer behavior, and the application and timing of various management strategies.
On at least a quarterly basis, we run simulation models to calculate potential impacts to net interest income and the economic value of equity. Specific details of the simulations are reflected in policy as directed by ALCO.
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Table of Contents
The following table summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated:
As of December 31,
2025
2024
Change in Interest Rates (Basis Points)
Percent Change in
Net Interest
Income
Percent Change in
Fair Value of
Equity
Percent Change in
Net Interest
Income
Percent Change in
Fair Value of
Equity
+300
7.81
%
(3.73
%)
8.10
%
(0.70
%)
+200
5.31
%
(2.36
%)
5.60
%
(0.30
%)
+100
2.69
%
(1.03
%)
2.90
%
-
%
Base
-
%
-
%
-
%
-
%
-100
(2.62
%)
0.89
%
(2.30
%)
0.30
%
-200
(5.09
%)
1.23
%
(5.20
%)
(1.30
%)
The results of the simulations are primarily driven by the contractual characteristics of all balance sheet instruments and customer behavior.
Impact of Inflation
Our consolidated financial statements and related notes included elsewhere in this statement have been prepared in accordance with GAAP. These require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative value of money over time due to inflation or recession.
Unlike many industrial companies, substantially all of our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates may not necessarily move in the same direction or in the same magnitude as the prices of goods and services. However, other operating expenses do reflect general levels of inflation.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to GAAP, and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional non-GAAP financial measures. We classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.
This discussion and analysis section includes certain non-GAAP financial measures (e.g., referenced as “core” or “tangible”) intended to supplement, not substitute for, comparable GAAP measures. These measures typically adjust income available to common shareholders for certain significant activities or transactions that in management’s opinion can distort period-to-period comparisons of Business First’s performance. Transactions that are typically excluded from non-GAAP measures include realized and unrealized gains/losses on former bank premises and equipment, gain/losses on sales of securities, and acquisition-related expenses (including, but not limited to, legal costs, system conversion costs, severance and retention payments, etc.). The measures also typically adjust goodwill and certain intangible assets from book value and shareholders’ equity.
Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies. You should understand how such other banking organizations calculate their financial metrics or with names similar to the non-GAAP financial measures we have discussed in this statement when comparing such non-GAAP financial measures.
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Table of Contents
Core Net Income. Core net income available to common shareholders for the year ended December 31, 2025 was $83.5 million, or $2.83 per diluted common share, compared to core net income available to common shareholders of $65.8 million, or $2.49 per diluted common share, for the year ended December 31, 2024. Core net income available to common shareholders for the year ended December 31, 2025 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 for the year ended December 31, 2024.
For the Years Ended December 31,
(Dollars in thousands, except per share data) (Unaudited)
2025
2024
2023
Interest Income:
Interest income
$
465,011
$
414,764
$
353,327
Core interest income
465,011
414,764
353,327
Interest Expense:
Interest expense
191,848
187,381
138,198
Core interest expense
191,848
187,381
138,198
Provision for Credit Losses:
Provision for credit losses
11,318
10,873
4,483
CECL Oakwood impact (3)
—
(4,824)
—
Core provision expense
11,318
6,049
4,483
Other Income:
Other income
51,542
44,193
36,642
(Gains) losses on former bank premises and equipment
840
(50)
—
(Gains) losses on sale of securities
(64)
(7)
2,565
Gain on sale of branch
(3,360)
—
(945)
Gain on extinguishment of debt
(630)
—
(1,458)
Core other income
48,328
44,136
36,804
Other Expense:
Other expense
203,078
177,652
156,702
Acquisition-related expenses (2)
(3,810)
(1,621)
(236)
Write-down of former bank premises
—
—
(432)
Core conversion expense
(2,460)
(974)
—
Employee retention tax credit
1,997
—
—
Core other expense
198,805
175,057
156,034
Pre-Tax Income:
Pre-tax income
110,309
83,051
90,586
CECL Oakwood impact (3)
—
4,824
—
(Gains) losses on former bank premises and equipment
840
(50)
—
(Gains) losses on sale of securities
(64)
(7)
2,565
Gain on sale of branch
(3,360)
—
(945)
Gain on extinguishment of debt
(630)
—
(1,458)
Acquisition-related expenses (2)
3,810
1,621
236
Write-down of former bank premises
—
—
432
Core conversion expense
2,460
974
—
Employee retention tax credit
(1,997)
—
—
Core pre-tax income
111,368
90,413
91,416
Provision for Income Taxes: (1)
Provision for income taxes
22,448
17,944
19,543
Tax on CECL Oakwood impact (3)
—
1,019
—
Tax on (gains) losses on former bank premises and equipment
177
(11)
—
Tax on (gains) losses on sale of securities
(13)
(1)
542
Tax on gain on sale of branch
(833)
—
(200)
Tax on gain on extinguishment of debt
(133)
—
(308)
Tax on acquisition-related expenses (2)
682
97
21
Tax on write-down of former bank premises
—
—
91
Tax on core conversion expense
521
205
—
Tax on employee retention tax credit
(422)
—
—
Core provision for income taxes
22,427
19,253
19,689
Preferred Dividends
Preferred dividends
5,401
5,401
5,401
Core preferred dividends
5,401
5,401
5,401
Net Income Available to Common Shareholders:
Net income available to common shareholders
82,460
59,706
65,642
CECL Oakwood impact (3), net of tax
—
3,805
—
(Gains) losses on former bank premises and equipment , net of tax
663
(39)
—
(Gains) losses on sale of securities, net of tax
(51)
(6)
2,023
Gain on sale of branch, net of tax
(2,527)
—
(745)
Gain on extinguishment of debt, net of tax
(497)
—
(1,150)
Acquisition-related expenses (2), net of tax
3,128
1,524
215
Write-down of former bank premises, net of tax
—
—
341
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Core conversion expense, net of tax
1,939
769
—
Employee retention tax credit, net of tax
(1,575)
—
—
Core net income available to common shareholders
$
83,540
$
65,759
$
66,326
Diluted Earnings Per Common Share:
Diluted earnings per common share
$
2.79
$
2.26
$
2.59
CECL Oakwood impact (3), net of tax
—
0.14
—
(Gains) losses on former bank premises and equipment , net of tax
0.02
—
—
(Gains) losses on sale of securities, net of tax
—
—
0.08
Gain on sale of branch, net of tax
(0.09)
—
(0.03)
Gain on extinguishment of debt, net of tax
(0.02)
—
(0.04)
Acquisition-related expenses (2), net of tax
0.11
0.06
0.01
Write-down of former bank premises, net of tax
—
—
0.01
Core conversion expense, net of tax
0.07
0.03
—
Employee retention tax credit, net of tax
(0.05)
—
$
—
Core diluted earnings per common share
$
2.83
$
2.49
$
2.62
_______________________________
(1)Tax rates, exclusive of certain nondeductible acquisition-related expenses and goodwill, utilized were 21.129% for 2025, 2024 and 2023. These rates approximate the marginal tax rates for the applicable periods.
(2)Includes merger and conversion-related expenses and salary and employee benefits.
(3)CECL non-PCD provision/unfunded commitment expense attributable to Oakwood.
Tangible Book Value Per Common Share. Tangible book value per common share is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate (1) tangible common equity as shareholders’ equity less preferred stock, goodwill, and core deposit and customer intangible assets, net of accumulated amortization, and (2) tangible book value per common share as tangible common equity divided by shares of common stock outstanding. The most directly comparable GAAP financial measure for tangible book value per common share is book value per common share.
The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and presents tangible book value per common share compared to book value per common share:
As of December 31,
(Dollars in thousands, except per share data) (Unaudited)
2025
2024
Tangible Common Equity
Total shareholders' equity
$
896,883
$
799,466
Preferred stock
(71,930)
(71,930)
Total common shareholders' equity
824,953
727,536
Adjustments:
Goodwill
(121,146)
(121,572)
Core deposit and customer intangibles
(14,497)
(17,252)
Total tangible common equity
$
689,310
$
588,712
Common shares outstanding (1)
29,510,668
29,552,358
Book value per common shares (1)
$
27.95
$
24.62
Tangible book value per common shares (1)
23.36
19.92
_______________________________
(1)Excludes the dilutive effect, if any, of 149,240 and 198,238 shares of common stock issuable upon exercise of outstanding stock options and restricted stock awards as of December 31, 2025 and 2024, respectively.
Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate tangible common equity, as described above, and tangible assets as total assets less goodwill, core deposit and customer intangible assets, net of accumulated amortization. The most directly comparable GAAP financial measure for tangible common equity to tangible assets is total common shareholders’ equity to total assets.
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The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and total assets to tangible assets:
As of December 31,
(Dollars in thousands, except per share data) (Unaudited)
2025
2024
Tangible Common Equity
Total shareholders' equity
$
896,883
$
799,466
Preferred stock
(71,930)
(71,930)
Total common shareholders' equity
824,953
727,536
Adjustments:
Goodwill
(121,146)
(121,572)
Core deposit and customer intangibles
(14,497)
(17,252)
Total tangible common equity
$
689,310
$
588,712
Tangible Assets
Total Assets
$
8,214,740
$
7,857,090
Adjustments:
Goodwill
(121,146)
(121,572)
Core deposit and customer intangibles
(14,497)
(17,252)
Total tangible assets
$
8,079,097
$
7,718,266
Common Equity to Total Assets
10.0
%
9.3
%
Tangible Common Equity to Tangible Assets
8.5
7.6
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and with general practices within the financial services industry. Application of these principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances. These assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.
We have identified the following critical accounting policies and estimates that, due to the difficult, subjective or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of our financial statements to those judgments and assumptions, are critical to an understanding of our financial condition and results of operations. We believe that the judgments, estimates and assumptions used in the preparation of our financial statements are appropriate.
Acquired Loans
Loans acquired in business combinations are initially recorded at fair value which includes an estimate of credit losses expected to be realized over the remaining lives of the loans. Acquired loans are accounted for based upon a determination of whether they were purchased with more-than insignificant amount of credit deterioration (“PCD” loans) or an insignificant amount of credit deterioration (“non-PCD” loans), in either case as compared to origination. The difference between the estimated fair value of the acquired loan related to non-credit deterioration is treated as an adjustment to the contractual yield and accreted into interest income over the remaining life of the loan. Acquired loans are generally valued using a discount cash flow model. The assumptions in the model included prepayment rates, default/loss given default rates, collateral values, recovery rates, and discount rates.
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Allowance for Credit Losses on Loans and Unfunded Commitments
The allowance for credit losses is established for current expected credit losses on the Company’s loan portfolio, including unfunded credit commitments. The allowance for credit losses is recorded against outstanding loan balances and unfunded credit commitments and represents an estimate of the expected losses within the portfolio at the end of the relevant reporting period.
As further discussed in the consolidated financial statements in Note 1 – Summary of Significant Accounting Policies, our policies for the allowance for credit losses were modified on January 1, 2023, to reflect the adoption of Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”) Financial Instruments – Credit Losses.
Management estimates the allowance for credit losses by considering forecast macroeconomic conditions, trends in the portfolio, credit management and underwriting practices and economic conditions affecting our operating footprint. After the forecast period, the Company reverts to long-term historical loss experience on a straight-line basis over a one-year period, adjusted for the composition of the current loan portfolio, to estimate losses over the remaining lives of the portfolio. Development of the estimate is dependent on reported peer losses.
Individual loan loss estimates are generally dependent on the fair value of collateral, as well as estimates of the cost to market and sell collateral associated with an individual loan. These estimates are sensitive specific individual collateral markets and can change significantly based on the specific collateral. To a lesser extent, individual reserve estimates reflect specific loan cash flow amounts, which are dependent on borrower specific repayment expectations.
The results of our estimated allowance for credit losses also incorporate the reserve for unfunded lending commitments. This reserve methodology is similar to the methodology for loans, however, an added estimate of the expected use of unfunded credit commitments is included in the estimate.
Overall, the allowance for credit losses is based upon management’s best estimate using available information at the time. The estimate can be significantly impacted by unexpected changes in the macroeconomic environment, borrower behavior, credit management practices or other relevant credit information.
Purchase Accounting Adjustments (other than loans)
The Company accounts for acquisitions using the acquisition method of accounting. Under this method, the Company records the assets acquired, including identified intangible assets, and liabilities assumed, at their respective fair values, which generally involves estimates based on third party valuations, such as appraisals, discounted cash flow analyses or other valuation techniques, as well as internal valuations for certain instruments. Core deposit intangibles, deposit premiums, securities, properties, and borrowings are some of the more subjective instruments which are generally fair valued during acquisitions. Further, the determination of the useful lives as well as the appropriate amortization method of other intangible assets is also subjective.