Business First Bancshares, Inc. · NASDAQ:BFST
Business First Bancshares — Merger or Acquisition (January 2020)
42 slides from Business First Bancshares's merger presentation, Jan 22, 2020
Slide 1: Merger with Pedestal Bancshares, Inc.
BUSINESS FIRST BANCSHARES Business First Bancshares, Inc. Merger with Pedestal Bancshares, Inc. January 22, 2020
Slide 2: Legal Disclosure
Legal Disclosure Forward:Lookng statements ‘Statements inthis presentationmay not be based on hstricalfats and maybe “Yorward-lackng statements wthinthe meaning ofthe PrivateSecuitesitgation Reform ‘ct of 1995 These forward:loakng statements may be identified by reference to future period s}orby the
Slide 3: Legal Disclosure
Legal Disclosure ‘Aditona information and Where to Find This presentation doesnot constitute an offer ose thesolictation fan offer to buy any securities or asolication of any vote or approval with espectto the Proposed Transaction Noctfer of securities shallbemade exept by means ofaprospecusmeeting
Slide 4: Merger with Pedestal Bancshares, Inc.
Merger with Pedestal Bancshares, Inc. 6 BANCSHARES
Slide 5: Transaction Overview
Transaction Overview In-market transaetion adds both seale and| density Combination creates $3.5 billion in assets institution 111 in pro forma deposit market share ‘among Louisiana banks"! Strengthens Business Firsts market-level leadership Increased energy concentration mitigated bby long-term exp
Slide 6: Franchise Expansion
Franchise Expansiot History of Organic and M&A Growth 2019: ‘Openssecondfullservice location in DFW 2018: Ustedon Nasoagon April9® under ticker 2006: 2008: 2010: symbol“BFST* 2020: Bank openedin Expanded | | Expanded 2018 a Baton Rouge; intothe intothe ‘Acquired American Gateway a expandedintothe |
Slide 7: Transaction Rationale
Transaction Rationale Combination adds both scale and density Leading presence in Louisiana’s metro markets Heightened scarcity value as the only statewide community banking franchise ‘Adds banking talent to BFST organization Improved balance sheet liquidity Lowers overall deposit costs Cost savings
Slide 8: Overview of Pedestal Bancshares, Inc.
Overview of Pedestal Bancshares, Inc. + Headquartered in Houma, Louisiana (approximately 60 miles southwest of New Orleans) + $1.2 billion in assets institution operating from 22 locations in 11 parishes concentrated along|-10 + Franchise History: 1999 Coastal Commerce Bancshares founded ~ 2015 - Me
Slide 9: Pedestal Bancshares, Inc. Financial Results
Pedestal Bancshares, Inc. Financial Results + FY2016 ~2019 Average Pretax ROAA: 1.7% + FY 2016 ~2019 Average Pretax ROATCE': 17.7% + Q319 deposit cost of 0.65% vs. 1.19% for BFST fv fv fv no Preininy mie at pit some _"evans Teta aot siissess SLIT stazsyor—— si zuoaot——stzaaror PROS ‘oosue erst ter 1
Slide 10: Complementary Financial Profiles
Complementary Financial Profiles Loans / Deposits Deposit Costs‘) 100% 0% 150% bad 129% on won | 37% raed 0% eae 1.00% am 1% ml ss om = 079% i Teo% TiS 055% 050% — Em 0 ™ oan | “036% om 0.00% ze 207 ame aate arte” ate as1e aeie” arte” az19” ast9 208% 20m 187% 150% oa 100% ro) os oso | 077% one 8 rst
Slide 11: Expanding Presence in Existing Markets
Expanding Presence in Existing Markets 7 markets > $200 million in loans 7 markets > $200 million in deposits East Baton Rouge Northwest Louisiana Northshore Lafayette”) Lake Charies® Houma) INew Orleans West Baton Rouge Dallas Northeast Louisiana 2006 2006 2007 2008 2009 2010 2015 2015 2017 2018 on
Slide 12: Louisiana Deposit Market Share
Louisiana Deposit Market Share Pro forma, Business First will have the #1 deposit market share Louisiana amongst banks headquartered in the state =| = ace ace an) cosa] "a = oe = rhein So eee pe is MOSGOROA 7 a Te Be TT) TTT) i Simmcent gay 2m 2 4 maser co 2 o.e as OTE —— i Rieaonecdonys 8 fel al 3
Slide 13: Transaction Terms
Transaction Terms + $5.00 in Cash +1.745 shares of BFST per Pedestal share Cash payment to be structuredasa tax-free, return of capital distribution to Pedestal’s shareholders prior to losing ($21.8 million) ~ 7.6 million BFST shares ‘Transaction Consideration + Overall consideration mix: 90% stock
Slide 14: Due Diligence Process
Due Diligence Process Due Diligence Process Overview Credit Diligence Purchase Accounting Adjustments Corporate and Operational Due Diligence Le) BANCSHARES
Slide 15: Key Transaction Assumptions
Key Transaction Assumptions Approximately $14.4 million of annual pre-tax cost saves (“35% of NIE“) ~ 66% expected to bereaized n2H'20 with 100% thereafter $172 milion, net = $217 milion grosscredit mark 2.5% of Pedestal's12/31/19 loans,1.9x ALLL) ~ $45 millioninterastrate /liquity positwemark ~ App
Slide 16: Estimated Financial Impact
Estimated Financial Impact Pro Forma Profitability Tangible Book Ve Internal Rate of Return Pro Forma Capital‘) Pro Forma Lending Concentrations‘) 25% (fire fll year of combined operations) Initial Dilution at Close: “10% (inclusive of all deal costs) Earnback: <3 Years crossover method) > 20% (base
Slide 17: Favorable Transaction
Favorable Transaction Adds banking talent to BFST organization ~~ Highly accretive to profitability metrics and EPS 187% AM1% 174% 13.0x, 174K 19.0x. 26% 5.3% 12.0% <30 3.0 33 25 18 20 Le) BANCSHARE
Slide 18: Pro Forma Deposit Composition
Pro Forma Deposit Composition ‘Transaction provides incremental balance sheet liquidity Pedestal has no CDARS or Brokered Deposits Improves overall cost of deposits Boalees ist Bancshares ne Eeaealearstarsion
Slide 19: Pro Forma Loan Composition
Pro Forma Loan Composition Similar loan mix and eredit philosophy Attractive loan yields 1% an amy eas as >» 9s no » am aaa? & 59% tes am ee 2 sa, ase rit sean as eA 80% [comme We] (ERO TWsK asad co [arenas as) Eneinimaeed oot zr
Slide 20: Pro Forma Energy Composition
Pro Forma Energy Composition") Both Business First and Pedestal have an established history of successfully managing energy lending Business First's Chiaf Credit Executive worked in Houma for 20 years and was BFST’s former Houma market president Pedestal’: Chief Lending Officer has worked in Houma f
Slide 21: Demonstrated Experience with Energy Lending
Demonstrated Experience with Energy Lending ro forma energy exposure remains well below BFST’s peak level of20% in Q1'15 and is consistent with the concentration pror to the acquisition of [MBL Bank on January 1, 2038 + BEST FY 2015 ~ 2019 average annual energy osses:0.9% BFST FY 2015 - 2019 cumulat
Slide 22: Positioned for Upside
Positioned for Upside ROAA (20216) (%) ROAE (2021E) (9 Efficiency Ratio (2021E) (%) 200% 150% nom com 605% cm “am ~2% com | sox 150% — 1.18% 11% 117% 9.4% 9.2% 87% | = 0% 100% re 2.0% 050% mm aon 10.0% 00% o0% 0% FST PF” BEST" GutSatn”Natonaise FST PE” FST GUE Sad Nalonnae SFSTPFGFST. GUESaRn” Naton
Slide 23: Growth Strategy Going Forward
Growth Strategy Going Forward Maintain Disciplined Focus on Business Model Identifyand Recruit | ExpandingPresence in | OpportunisticNew | Disciplined Acquisition Talented Bankers Existing Markets Market Expansion Strategy * Talented commercial bankers * Incentive programstiedto _-* ‘Focused alongth
Slide 24: Q4'19 and FY2019 Results
Business First Bancshares, Inc. Q4’19 and FY2019 Results 6 BANCSHARES
Slide 25: Record Financial Results in FY 2019
Record Financial Results in FY 2019 Total Deposits Strong FY 2019 es 7103 s1a000 ‘sane $0 Annualized organicloan growth of 1.9% | suases ee a Core net income for the year is 46.4% higher 13000 sco than FY 2018 11000 sons suxo0 | sia 2000 | gyapg suomo | sous 28 = =: ja a =i il Improved efficiency ra
Slide 26: Financial Trends
Financial Trends
Slide 27: Strong Credit Performance
Strong Credit Performance Classified Assets have decreased by 42% from $45.5 million at Q4'10 t0 $26.5 million at Q4'19 + Past due loans have remained low even with the acquisition of ‘two banks and stressin the energy sectorin recent years sment with quarterly reviews ofthe Energy portfolio and ann
Slide 28: Commercial Real Estate— Historical Performance
Commercial Real Estate— Historical Performance 416 418 [Construction - 1-4 Family Residential S 5032 § S 55.485 $ 60780 lOtner Const, Development, Vacant Land & Lots 72,840 55,560) 483.401 [Total Construction 97.872 211,054 244,181 1% of Tota Loans 29% 13.8% 142% 9% of Total Bank Captal 35.0% 94.0%
Slide 29: Energy Lending
Energy Lending + Enerey loans accounted for approximately 6% of portflioand 140.4% of bank-leve eaptal ax of December 31, 2019. ENERGY PORTFOLIO BY COLLATERAL of Energy COLLATERAL Total ss | “Sonera [Accounts Recewable & Inventory 25) 2a : Barges, Crew Boats, Marine Vessels 67 6.5% + Geographic, loa
Slide 30: Yield / Rate Analysis
Yield / Rate Analysis + Stable core NIM ~ Consistent loan yields supporting stable core NIM ~ Strategic acquisitions of MBL Bank ‘and Richland State Bank have ‘strengthened loan and deposit betas © Fixed vs. Variable rate loans” = Variable rate portfolio has @2.47 year ‘weighted average maturity ® ~
Slide 31: Appendix
Appendix 6 BANCSHARES
Slide 32: Building Concentrated Pro Forma Market Share
Building Concentrated Pro Forma Market Share Baton Rouge MS: Houma. Thibodaux 1 Ftp oe 1) z esst 1 Cipmioe Fac A) Ze }Gotbeteentoe 0) B Yen {Repeats te 3 Secriney os HA Soca “ ieee fart) & Lake Charles MSA ‘Femina 7 ae flop Ouse 3 i Eoctoeranoston a) fiecettneey es : Bi oremnneet “ Toseereateste ° S
Slide 33: Historical Financial Summary
Historical Financial Summary For the Fiscal Year Ended December 31, nH Fa 0 ra i aa Tatas ssossce— sioraqee 105041 (res own (Esc HFS) ‘ous Tam Deoets irae toaate omens i Tangible Common Equty /Tangile Assets” 1152 % 995 % Tertverge nae ta os ‘alsa Be os nit eas (rt 65) Assts fons ns GossLoas (ea Hr)
Slide 34: BFST Energy Portfolio by Total Past Due — As of December 31, 2019
BFST Energy Portfolio by Total Past Due — As of December 31, 2019 Past Due Energy Loans by Category and Collateral ($ Millions) T% ofenergy | TotalPast 1% of energy, Accrung -Past Due |catecory Total's nea 5 Non-Aceruals| upstream 00 0.0% = 00 hwdstream = = = = lbownstream |supportservice TOTAL, [co
Slide 35: BFST Energy Portfolio by Risk Rating — As of December 31, 19
BFST Energy Portfolio by Risk Rating — As of December 31, 2019 Energy Loans by Risk Rating and Category ($ Millions) lasceame Cent Osa evens Go Taals Touts Kettner ss aseue is ud tox sper 2s 2s ae iccepae és rome eres ES ua az sos TOTAL PASS RATE mz rae oo ra cS Joe asap 38 ame saa Fea 33am tsa ewe
Slide 36: BFST Energy Portfolio by Risk Rating — As of December 31, 19
BFST Energy Portfolio by Risk Rating — As of December 31, 2019 Energy Loans by Risk Rating and Collateral (S Millions) aay an ‘Current ure Previous Quorter Tals :KotEoergy | Totals ot Eroay cosh secures = ue OK Supaie oo 250 ame aE 2aK laccerratie 243 ao | uae us ae Pass 3 wasn a2 Eas TOTAL PASS RAT
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures met ase dmgenee Seess Sone? $1770 s1seme steezi7 s2imost nomen $ sere mangas org wa ako aaa ten 77 negas emer Gneouastaron pe Corman oe 5 2163 te oa 8 Se Coren get esr Smits ums mms um2s ams mim $ mers mms mms ams mT Sone Len pcre cent oeston ___usy usm
Slide 38: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures were oo FiscalQuarter a A ‘Tangible Common Equity / Tangible Assets: ‘Tangible Common Equity Total Shareholders Equity $ 285,097 $ 280340 $ 277.469 $ 269,144 $ 260,058 Adjustments: Goodtwi (48,495) (48,393) (48,503) 49.534) (49,488) Core deposit and othe
Slide 39: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ___Forthe YearEnded December34, 0 a ‘Tangible Common Equity / Tangible Assets: ‘Tangible Common Eauity Total Shareholders Equity S TBH S$ 112449 $ 113659 $ 179935 $ 260058 $ 285,097 Adjustments: Good : 37) 824) 2H) 49.488) (48,498) Core deposit and other
Slide 40: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Sie 2h SSR SERIES RRR SER
Slide 41: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures _FiscalQuarter For the Year Ended December 31, Potts Taxis aris aria | aris Efficiency Ratio: Nonintrest Expense S 15203 $ eres MusS7T Ss 1379 S$ 14409 § 58448 S 50288 Core Agjustments (7) GTS) (436) 50 2432) (637) (2.686) Net Interest and Noninteest Inc
Slide 42: Reconciliation of Pedestal's Non-GAAP Financial Measures
Reconciliation of Pedestal’s Non-GAAP Financial Measures apie Postion Foweauy Tears ra Tass Ter Tae es: Goods 12889 2889 ‘2889 12909 290 ss: ot 1200 as “070 008 os Tarpbe Common Eauty a6 Tiss T8806 700 er ‘Awe Tangble Common Eauty ma soser7 ase 25798 rey Tots sass ssses6 warms vzaze 100400 vere ts:
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