Business First Q3 Core Earnings Rise as Margin Expands

Business First Bancshares, Inc. reported stronger core earnings for the third quarter of 2026 as net interest margin expanded and both loans and deposits grew. Core net income available to common shareholders rose 22.6% from a year earlier to $26.0 million, while core diluted earnings per share increased 9.7% to $0.79.

On a GAAP basis, net income available to common shareholders was $23.2 million, up from $21.5 million in the third quarter of 2025 and $22.8 million in the prior quarter. Diluted EPS was $0.71, compared with $0.73 a year earlier and $0.70 in the second quarter.

The Baton Rouge, Louisiana-based parent of b1BANK recorded total core revenue of about $93 million, with noninterest core revenue accounting for 13.4%. Core pre-tax, pre-provision earnings increased to $36.3 million from $32.9 million in the previous quarter and $31.6 million a year earlier.

Core return on average assets was 1.17%, compared with 1.05% in the second quarter and 1.06% a year earlier. Core return on average common equity reached 10.93%, while the core efficiency ratio improved sequentially to 61.08% from 63.94%. The GAAP efficiency ratio was 64.88%.

Margin and balance-sheet growth

Net interest margin increased to 3.86% from 3.73% in the second quarter and 3.68% in the year-earlier period. Excluding acquired-loan discount accretion, a non-GAAP measure, the margin was 3.80%, up from 3.68% sequentially and 3.63% a year earlier. At September 30, the total cost of deposits was 2.24%, while the loan portfolio’s weighted average rate was 6.61%.

Loans held for investment rose by $121.4 million during the quarter to $6.78 billion, equivalent to 7.2% annualized growth. Loans increased 12.6%, or $759.8 million, from a year earlier. Construction balances provided the largest linked-quarter increase at $81 million, followed by a $64 million rise in non-owner-occupied commercial real estate. Residential, consumer and other loans declined by $28 million.

The bank highlighted production in Houston, where gross loan originations totaled $157.8 million during the quarter. Dallas-Fort Worth remained its largest lending region, accounting for 27.2% of loans held for investment, followed by North Louisiana at 24.7% and Southwest Louisiana at 22.9%.

Total deposits increased by approximately $141 million during the quarter to $7.38 billion, representing 7.7% annualized growth. Noninterest-bearing deposits made up 21.8% of the total, while money-market accounts represented 42.5%. Core deposits accounted for just under 90% of deposits, according to the presentation.

Business First said it continued to hold elevated cash balances to support liquidity, with cash equal to 6.36% of total assets at quarter-end. Available contingent liquidity totaled $4.0 billion through Federal Home Loan Bank capacity, the Federal Reserve discount window, unencumbered securities, excess cash reserves and federal funds sources.

Fee businesses and capital

The company is continuing to develop noninterest-revenue businesses through investment advisory, correspondent banking, SBA services and interest-rate hedging. Financial Services Group revenue was $4.82 million in the third quarter, up 5.9% from the prior quarter, and totaled $15.0 million for the first nine months of 2026.

Smith Shellnut Wilson had approximately $5.45 billion of assets under management at September 30. The Financial Institutions Group maintained $551 million of loan participations sold and generated $307 million of average deposits during the quarter through its bank-counterparty network. Interest-rate swap activity produced about $2.4 million of fee income from $174.6 million of client notional volume in 2026.

Total assets were $8.96 billion at quarter-end. The balance sheet includes the January 2026 acquisition of Progressive Bank, whose core conversion was completed in August, as well as the June acquisition of financial consulting firm American Planning Corporation.

Tangible book value per common share, a non-GAAP measure, rose 4.8% from a year earlier to $23.71 and was up from $23.61 in the second quarter. The preliminary common equity Tier 1 ratio was 10.29%, compared with 10.38% sequentially, while the total risk-based capital ratio was 13.55%, down from 13.77%. Tangible common equity to tangible assets was 8.72%.

Credit and rate risks

Credit indicators were mixed. The provision for credit losses declined to $1.9 million from $3.2 million a year earlier and was broadly stable with the prior quarter. Nonperforming loans represented 1.24% of loans held for investment, down slightly from 1.26% in the second quarter but above 0.82% a year earlier. Nonperforming assets were 1.22% of total assets, compared with 1.23% sequentially and 0.83% a year ago.

Net charge-offs increased to an annualized 0.08% of average quarterly loans from 0.04% in the second quarter and 0.05% a year earlier. The allowance for credit losses declined to 0.95% of loans held for investment from 1.02% sequentially and 1.03% in the prior-year period.

Commercial real estate and construction remain significant parts of the loan book. The company reported $1.58 billion of income-producing commercial real estate loans, including $539.3 million scheduled to mature over the next 12 months. Another $263.9 million of construction and development loans and $183.6 million of owner-occupied commercial real estate loans are due to mature over that period.

At quarter-end, 53.4% of loans held for investment carried floating rates, while another 14.6% consisted of fixed-rate loans maturing or repricing within 12 months. The company’s internal modeling indicated a total deposit beta of 45% to 55% in a modestly rising or declining rate environment. Management said it remained focused on core deposit growth while using wholesale funding alternatives to manage liquidity and interest costs.