Business First Bancshares, Inc.

Previous wording

The following discussion and analysis focuses on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2024 to June 30, 2025, and its results of operations for the three and six months ended June 30, 2025. This discussion and analysis is intended to highlight and supplement information presented elsewhere in this reportand 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, 2024, 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.

Current wording

The following discussion and analysis focuses on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2024 to September 30, 2025, and its results of operations for the three and nine months ended September 30, 2025. This discussion and analysis is intended to highlight and supplement information presented elsewhere in this reportand 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, 2024, 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.

Previous wording

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 June 30, 2025, we had total assets of $7.9 billion, total loans of $6.0 billion, total deposits of $6.4 billion, and total shareholders’ equity of $848.4 million.

Current wording

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 September 30, 2025, we had total assets of $8.0 billion, total loans of $6.0 billion, total deposits of $6.5 billion, and total shareholders’ equity of $878.4 million.

Previous wording

On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $1.1 billion and $907.7 million as of June 30, 2025, and December 31, 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.

Current wording

On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $1.0 billion and $907.7 million as of September 30, 2025, and December 31, 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.

Previous wording

On July 7, 2025, we entered into a definitive agreement with Progressive providing for us to acquire Progressive and its wholly-owned bank subsidiary, Progressive Bank. Progressive had approximately $752.2 million of total assets, $673.0 million of deposits and $582.9 million of loans as of March 31, 2025.

Current wording

On July 7, 2025, we entered into a definitive agreement with Progressive providing for us to acquire Progressive and its wholly-owned bank subsidiary, Progressive Bank. Progressive had approximately $755.3 million of total assets, $675.1 million of deposits and $595.8 million of loans as of June 30, 2025.

Previous wording

The financial highlights as of and for the six months ended June 30, 2025, include:

Current wording

The financial highlights as of and for the nine months ended September 30, 2025, include:

Previous wording

•Total assetsof $7.9 billion, a $91.2 million, or 1.2%, increase from December 31, 2024.

Current wording

•Total assetsof $8.0 billion, a $96.8 million, or 1.2%, increase from December 31, 2024.

Previous wording

•Total loans held for investmentof $6.0 billion, a $66.3 million, or 1.1%, increase from December 31, 2024.

Current wording

•Total loans held for investmentof $6.0 billion, a $39.7 million, or 0.7%, increase from December 31, 2024.

Previous wording

•Total deposits of $6.4 billion, a $91.7 million, or 1.4%, decrease from December 31, 2024.

Current wording

•Total deposits of $6.5 billion, a $4.5 million, or 0.1%, decrease from December 31, 2024.

Previous wording

•Net income available to common shareholdersof $39.9 million for the six months ended June 30, 2025, an $11.9 million, or 42.3%, increase from the six months ended June 30, 2024. The increase was largely attributable to the acquisition of Oakwood during the quarter ended December 31, 2024.

Current wording

•Net income available to common shareholdersof $61.5 million for the nine months ended September 30, 2025, an $16.9 million, or 37.9%, increase from the nine months ended September 30, 2024. The increase was largely attributable to the acquisition of Oakwood during the quarter ended December 31, 2024.

Previous wording

•Net interest income of $133.0 million for the six months ended June 30, 2025, an increase of $27.5 million, or 26.0%, from the six months ended June 30, 2024. The increase was largely attributable to the acquisition of Oakwood during the quarter ended December 31, 2024.

Current wording

•Net interest income of $202.3 million for the nine months ended September 30, 2025, an increase of $40.6 million, or 25.1%, from the nine months ended September 30, 2024. The increase was largely attributable to the acquisition of Oakwood during the quarter ended December 31, 2024.

Previous wording

•Allowance for credit losses of 1.02% 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 0.97%, compared to 0.42% as of December 31, 2024.

Current wording

•Allowance for credit losses of 1.03% 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 0.82%, compared to 0.42% as of December 31, 2024.

Previous wording

•Earnings per common sharefor the first six months of 2025 of $1.36 per basic common share and $1.35 per diluted common share, compared to $1.11 per basic common share and $1.10 per diluted common share for the first six months of 2024.

Current wording

•Earnings per common sharefor the first nine months of 2025 of $2.09 per basic common share and $2.08 per diluted common share, compared to $1.77 per basic common share and $1.75 per diluted common share for the first nine months of 2024.

Previous wording

•Return on average assetsof 1.04% over the first six months of 2025, compared to 0.84% for the first six months of 2024.

Current wording

•Return on average assetsof 1.05% over the first nine months of 2025, compared to 0.89% for the first nine months of 2024.

Previous wording

•Return on average common equityof 10.68% over the first six months of 2025, compared to 9.73% for the first six months of 2024.

Current wording

•Return on average common equityof 10.74% over the first nine months of 2025, compared to 10.08% for the first nine months of 2024.

Previous wording

•Capital ratios for Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 9.86%, 9.88%, 10.99% and 13.07%, respectively, compared to 9.53%, 9.44%, 10.56% and 12.75% at December 31, 2024.

Current wording

•Capital ratios for Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 10.00%, 10.06%, 11.16% and 13.22%, respectively, compared to 9.53%, 9.44%, 10.56% and 12.75% at December 31, 2024.

Previous wording

•Book value per common share of $26.23, an increase of 6.5% from $24.62 at December 31, 2024.

Current wording

•Book value per common share of $27.23, an increase of 10.6% from $24.62 at December 31, 2024.

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2025, and 2024

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2025, and 2024

Previous wording

For the three months ended June 30, 2025, net income available to common shareholders was $20.8 million, or $0.70 per basic and diluted common share, compared to net income of $15.9 million, or $0.63 per basic common share and $0.62 diluted common share, for the three months ended June 30, 2024. Return on average assets, on an annualized basis, increased to 1.07% for the three months ended June 30, 2025, from 0.95% for the three months ended June 30, 2024. Return on average equity, on an annualized basis, decreased to 10.87% for the three months ended June 30, 2025, as compared to 10.94% for the three months ended June 30, 2024.

Current wording

For the three months ended September 30, 2025, net income available to common shareholders was $21.5 million, or $0.73 per basic and diluted common share, compared to net income of $16.5 million, or $0.65 per basic and diluted common share, for the three months ended September 30, 2024. Return on average assets, on an annualized basis, increased to 1.08% for the three months ended September 30, 2025, from 0.97% for the three months ended September 30, 2024. Return on average equity, on an annualized basis, increased to 10.80% for the three months ended September 30, 2025, as compared to 10.76% for the three months ended September 30, 2024.

Previous wording

For the six months ended June 30, 2025, net income available to common shareholders was $39.9 million, or $1.36 per basic common share and $1.35 per diluted common share, compared to net income of $28.1 million, or $1.11 per basic common share and $1.10 per diluted common share, for the six months ended June 30, 2024. Return on average assets, on an annualized basis, increased to 1.04% for the six months ended June 30, 2025, from 0.84% for the six months ended June 30, 2024. Return on average equity, on an annualized basis, increased to 10.68% for the six months ended June 30, 2025, as compared to 9.73% for the six months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2025, net income available to common shareholders was $61.5 million, or $2.09 per basic common share and $2.08 per diluted common share, compared to net income of $44.6 million, or $1.77 per basic common share and $1.75 per diluted common share, for the nine months ended September 30, 2024. Return on average assets, on an annualized basis, increased to 1.05% for the nine months ended September 30, 2025, from 0.89% for the nine months ended September 30, 2024. Return on average equity, on an annualized basis, increased to 10.74% for the nine months ended September 30, 2025, as compared to 10.08% for the nine months ended September 30, 2024.

Previous wording

For the three months ended June 30, 2025, net interest income totaled $67.0 million, and net interest margin and net interest spread were 3.68% and 2.88%, respectively, compared to $54.0 million, 3.45%, and 2.47%, respectively, for the three months ended June 30, 2024. The average yield on the loan portfolio was 6.96% for the three months ended June 30, 2025, compared to 7.07% for the three months ended June 30, 2024, and the average yield on total interest-earning assets was 6.31% for the three months ended June 30, 2025, compared to 6.38% for the three months ended June 30, 2024. For the three months ended June 30, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 29 basis points compared to the three months ended June 30, 2024.

Current wording

For the three months ended September 30, 2025, net interest income totaled $69.3 million, and net interest margin and net interest spread were 3.68% and 2.85%, respectively, compared to $56.1 million, 3.51%, and 2.54%, respectively, for the three months ended September 30, 2024. The average yield on the loan portfolio was 7.01% for the three months ended September 30, 2025, compared to 7.12% for the three months ended September 30, 2024, and the average yield on total interest-earning assets was 6.31% for the three months ended September 30, 2025, compared to 6.42% for the three months ended September 30, 2024. For the three months ended September 30, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 26 basis points compared to the three months ended September 30, 2024.

Previous wording

For the six months ended June 30, 2025, net interest income totaled $133.0 million, and net interest margin and net interest spread were 3.68% and 2.90%, respectively, compared to $105.5 million, 3.39%, and 2.42%, respectively, for the six months ended June 30, 2024. The average yield on the loan portfolio was 6.98% for the six months ended June 30, 2025, compared to 6.97% for the six months ended June 30, 2024, and the average yield on total interest-earning assets was 6.33% for the six months ended June 30, 2025, compared to 6.28% for the six months ended June 30, 2024. For the six months ended June 30, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 23 basis points compared to the six months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2025, net interest income totaled $202.3 million, and net interest margin and net interest spread were 3.68% and 2.88%, respectively, compared to $161.7 million, 3.43%, and 2.46%, respectively, for the nine months ended September 30, 2024. The average yield on the loan portfolio was 6.99% for the nine months ended September 30, 2025, compared to 7.02% for the nine months ended September 30, 2024, and the average yield on total interest-earning assets was 6.32% for the nine months ended September 30, 2025, compared to 6.33% for the nine months ended September 30, 2024. For the nine months ended September 30, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 24 basis points compared to the nine months ended September 30, 2024.

Previous wording

Our provision for credit losses is a charge to income in order to bring our allowance for credit losses to a level deemed appropriate by management. For a description of the factors taken into account by management in determining the allowance for credit losses see “—Financial Condition—Allowance for Credit Losses.” The provision for credit losses was $2.2 million for the three months ended June 30, 2025, and $1.3 million for the same period in 2024. For the six months ended June 30, 2025, and 2024, the provision for credit losses was $5.0 million and $2.5 million, respectively. The higher provision for the three and six months ended June 30, 2025, compared to the same period in 2024 relates primarily to deterioration in the macroeconomic forecast in the current period compared to the prior period, as well as a return to a more normalized credit environment, reflected in an increased portion of nonaccrual and past due loans, compared to the three and six months ended June 30, 2024.

Current wording

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 $3.2 million for the three months ended September 30, 2025, and $1.7 million for the same period in 2024. For the nine months ended September 30, 2025, and 2024, the provision for credit losses was $8.2 million and $4.2 million, respectively. The higher provision for the three and nine months ended September 30, 2025, compared to the same period in 2024 relates primarily to individual reserves associated with certain commercial lending relationships, as well as deterioration in the macroeconomic forecast in the current period compared to the same period in 2024. To a lesser extent, the increase is also a result of increased lending commitments and outstanding loan balances, compared to the three and nine months ended September 30, 2024.

Previous wording

Total noninterest income increased $2.2 million, or 18.4%, from the three months ended June 30, 2024. The increase is primarily due to the gain of $3.4 million from the sale of our Kaplan banking center, offset with lower gains of the sales of loans of $1.7 million compared to the three months ended June 30, 2024.

Current wording

Total noninterest income increased $897,000, or 8.3%, from the three months ended September 30, 2024. The increase is primarily due higher gains on the sales of loans of $502,000 and higher gains on the sales of other real estate owned of $486,000 compared to the three months ended September 30, 2024.

Previous wording

Total noninterest income increased $6.1 million, or 28.2%, from the six months ended June 30, 2024. The increase is primarily due to the gain of $3.4 million from the sale of our Kaplan banking center, increases in our swap fee income of $1.0 million, or 201.0%, and the gain on the extinguishment of debt related to our subordinated debt of $630,000, and the acquisition of Oakwood.

Current wording

Total noninterest income increased $7.0 million, or 21.6%, from the nine months ended September 30, 2024. The increase is primarily due to the gain of $3.4 million from the sale of our Kaplan banking center, increases in our swap fee income of $1.2 million, or 80.0%, and the gain on the extinguishment of debt related to our subordinated debt of $630,000.

Previous wording

Total noninterest expense increased $8.1 million, or 18.8%, from the three months ended June 30, 2024, primarily attributed to the increase in salaries and employee benefits of $2.8 million, or 10.9%, and an increase in data processing of $2.7 million, or 101.5%. The increases were largely attributable to the acquisition of Oakwood and our core conversion.

Current wording

Total noninterest expense increased $6.4 million, or 15.2%, from the three months ended September 30, 2024, primarily attributed to the increase in salaries and employee benefits of $2.7 million, or 11.0%, and an increase in data processing of $1.1 million, or 37.9%. The increases were largely attributable to the acquisition of Oakwood and our core conversion, respectively.

Previous wording

Total noninterest expense increased $16.2 million, or 18.9%, from the six months ended June 30, 2024, primarily attributed to the increase in salaries and employee benefits of $6.9 million, or 13.5%, an increase in occupancy of bank premises of $1.4 million, or 26.7%, and an increase in data processing of $3.3 million, or 63.9%. The increases were largely attributable to the acquisition of Oakwood and our core conversion.

Current wording

Total noninterest expense increased $22.6 million, or 17.6%, from the nine months ended September 30, 2024, primarily attributed to the increase in salaries and employee benefits of $9.6 million, or 12.7%, an increase in occupancy of bank premises of $2.1 million, or 26.6%, and an increase in data processing of $4.4 million, or 54.7%. The increases were largely attributable to the acquisition of Oakwood and our core conversion.

Previous wording

For the three months ended June 30, 2025, income tax expense totaled $5.9 million, an increase of $1.4 million, or 29.9%, compared to $4.6 million for the same period in 2024. Our effective tax rates for the three months ended June 30, 2025, and 2024 were 21.1% and 21.0%, respectively.

Current wording

For the three months ended September 30, 2025, income tax expense totaled $6.0 million, an increase of $1.1 million, or 22.2%, compared to $4.9 million for the same period in 2024. Our effective tax rates for the three months ended September 30, 2025, and 2024 were 20.9% and 21.6%, respectively.

Previous wording

For the six months ended June 30, 2025, income tax expense totaled $11.2 million, an increase of $3.0 million, or 36.6%, compared to $8.2 million for the same period in 2024. Our effective tax rates for the six months ended June 30, 2025, and 2024 were 20.8% and 21.0%, respectively.

Current wording

For the nine months ended September 30, 2025, income tax expense totaled $17.2 million, an increase of $4.1 million, or 31.2%, compared to $13.1 million for the same period in 2024. Our effective tax rates for the nine months ended September 30, 2025, and 2024 were 20.8% and 21.3%, respectively.

Previous wording

Our total assets increased $91.2 million, or 1.2%, from December 31, 2024, to June 30, 2025, primarily due to the increases in our mortgage-backed investment portfolio, unrealized gains in our investment portfolio, and increases in our loan portfolio.

Current wording

Our total assets increased $96.8 million, or 1.2%, from December 31, 2024, to September 30, 2025, primarily due to the increases in our mortgage-backed investment portfolio, unrealized gains in our investment portfolio, and increases in our loan portfolio.

Previous wording

As of June 30, 2025, total loans, excluding mortgage loans held for sale, were $6.0 billion, an increase of $66.3 million, or 1.1%, compared to $6.0 billion as of December 31, 2024. Additionally, $677,000, and $717,000 in loans were classified as loans held for sale as of June 30, 2025, and December 31, 2024, respectively.

Current wording

As of September 30, 2025, total loans, excluding mortgage loans held for sale, were $6.0 billion, an increase of $39.7 million, or 0.7%, compared to $6.0 billion as of December 31, 2024. Additionally, $433,000, and $717,000 in loans were classified as loans held for sale as of September 30, 2025, and December 31, 2024, respectively.

Previous wording

Total loans held for investment as a percentage of total deposits were 94.2% and 91.9% as of June 30, 2025, and December 31, 2024, respectively. Total loans held for investment as a percentage of total assets were 76.1% as of both June 30, 2025, and December 31, 2024, respectively.

Current wording

Total loans held for investment as a percentage of total deposits were 92.5% and 91.9% as of September 30, 2025, and December 31, 2024, respectively. Total loans held for investment as a percentage of total assets were 75.7% and 76.1% as of September 30, 2025, and December 31, 2024, respectively.

Previous wording

The following table summarizes our loan portfolio by type of loan as of the dates indicated:

Current wording

The following table summarizes our loan portfolio by type of loan as of the dates indicated. During the third quarter of 2025, we transitioned to analyzing loans based on the North American Industry Classification System ("NAICS") code, compared to our internal coding. The prior period has been restated to comply with the estimated NAICS code applicable to the loan portfolio as of December 31, 2024.

Previous wording

Real Estate: Commercial loans increased $50.5 million or 2.0%, remaining at $2.5 billion as of June 30, 2025 and December 31, 2024.

Current wording

Real Estate: Commercial loans decreased $20.6 million or 0.8%, remaining at $2.5 billion as of September 30, 2025, compared to December 31, 2024.

Previous wording

Real Estate: Construction loans decreased $70.2 million, or 10.5%, to $600.3 million as of June 30, 2025, from $670.5 million as of December 31, 2024.

Current wording

Real Estate: Construction loans decreased $31.6 million, or 4.7%, to $638.9 million as of September 30, 2025, from $670.5 million as of December 31, 2024.

Previous wording

Real Estate: Residential loans decreased $4.6 million, or 0.5%, to $879.9 million as of June 30, 2025, from $884.5 million as of December 31, 2024.

Current wording

Real Estate: Residential loans increased $42.9 million, or 4.9%, to $927.5 million as of September 30, 2025, from $884.5 million as of December 31, 2024.

Previous wording

Commercial loans increased $92.3 million, or 4.9%, to $2.0 billion as of June 30, 2025, from $1.9 billion as of December 31, 2024.

Current wording

Commercial loans increased $52.1 million, or 2.8%, remaining at $1.9 billion as of September 30, 2025, compared to December 31, 2024.

Previous wording

Consumer and other loans decreased $1.7 million, or 2.3%, to $72.7 million as of June 30, 2025, from $74.5 million as of December 31, 2024.

Current wording

Consumer and other loans decreased $3.2 million, or 4.3%, to $71.3 million as of September 30, 2025, from $74.5 million as of December 31, 2024.

Previous wording

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 $60.3 million and $30.5 million in nonperforming assets as of June 30, 2025, and December 31, 2024, respectively. We had $58.8 million in nonperforming loans as of June 30, 2025, compared to $25.0 million as of December 31, 2024. The increase in nonperforming assets from December 31, 2024, to June 30, 2025, is primarily due to three commercial lending relationships, making up 80.1% of the total increase.

Current wording

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 $66.1 million and $30.5 million in nonperforming assets as of September 30, 2025, and December 31, 2024, respectively. We had $49.3 million in nonperforming loans as of September 30, 2025, compared to $25.0 million as of December 31, 2024. The increase in nonperforming assets from December 31, 2024, to September 30, 2025, is primarily due to two commercial real estate and three commercial lending relationships, making up 67.0% of the total nonaccrual loans increase and three commercial real estate properties that were foreclosed on during the quarter, making up 129.6% of the increase in other real estate owned.

Previous wording

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.

Current wording

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.

Previous wording

As of June 30, 2025, the allowance for credit losses totaled $61.8 million, or 1.02%, 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.

Current wording

As of September 30, 2025, the allowance for credit losses totaled $61.9 million, or 1.03%, 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.