Business First Bancshares, Inc. · NASDAQ:BFST
Business First Bancshares — FIG Partners CEO Forum (February 2019)
35 slides from Business First Bancshares's conference presentation, Feb 5, 2019
Slide 1: Business First Bancshares, Inc. - FIG Partners CEO Forum
BUSINESS FIRST BANK Go get it. Business First Bancshares, Inc. FIG Partners CEO Forum January 30-31, 2018
Slide 2: Legal Disclosure
Legal Disclosure This presentation has been prepared by Business First Bancshares, Inc. (the “Company’) solely for information purposes based on its own information, as well as information from public sources. This presentation has been prepared to assist interested parties in making their own evalu
Slide 3: Legal Disclosure (Cont'd)
Legal Disclosure (Cont'd) Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking s
Slide 4: Overview of Business First Bancshares, Inc.
Overview of Business First Bancshares, Inc.
Slide 5: Overview of Business First Bancshares, Inc.
Overview of Business First Bancshares, Inc. couded 2006; headquartered in Baton Business First Footpri Cleveland Gen Commercial bank focused on small-to-midsize Mondeo \ businesses and their owners and employees Greene Nod oS Currently operating in ten Louisiana markets and Dallas, TX Three successf
Slide 6: Commercial Focus
Commercial Focus * Small-to-midsize businesses and their owners and employees * Target $1-$10mm commercial lending relationships that are typically too small for the larger financial institutions to value but too complex for many community banks + Full suite of treasury and cash management products
Slide 7: Executive Management Team
Executive Management Team Executive team includes a mix of youth and experience which fosters an energetic and collaborative work environment Geographic diversification amongst executive management team Yearsin Year Started Jude Melville 44 14 2006 Director, President and Chief Executive Officer Gre
Slide 8: Market Presidents
Market Presidents + Business First's Market Presidents have diversified experience at a mix of large, regional and community banks * Market Presidents serve as important conduits between executive management and the local markets Market Years ‘Year Started Market President Age Banking atBE Prior Exp
Slide 9: Corporate History
Corporate History 2018: Completed $25 million private placement of subordinated 2018: Listed on NASDAQ on April 9 under 2006: 2008: 2010: Bank opened in Expanded Expanded 2015: 2017: Baton Rouge; into the into the Acquired American Expanded ‘expanded into the Lafayette Houma Gateway Financial in int
Slide 10: Current Footprint
Current Footprint J Statewide focus on urban markets * Multiple markets provide diversification of both risk and production opportunities Year # of # of Total Total © Deposits East Baton Rouge 2006 7 16 $280,962 $315,350 Shreveport 2006 1 7 201,439 111,266 Northshore 2007 1 4 116,184 53,582 Lafayett
Slide 11: Recent Financial Results — Strong FY 2017 & Record FY 2018
Recent Financial Results — Strong FY 2017 & Record FY 2018 FY 2017: Strong Organic Growth Loan growth of 20.3% Core deposit growth of $137 million, or 18.0% Core deposit growth essentially matched loan growth for 2H’17 PTPP income growth of 66.0% — Core NIM expansion of 13 bps — Operating leverage c
Slide 12: Quarterly Financial Trends
Quarterly Financial Trends For the Quarter Ended EPS Ean ‘8302018 ERI EPEInTA [3atance Sheet & Capital Toa Assets 2094898 S1678185 1649207 sueer73 s1a212e8 Gress Loans (Esch HFS) 1589 127 3 1 z8031 eed ‘re 288 Depes is areas aaeaort 1mes3 1307.73 1088533 Total Equiy ‘e0,088 2izset ‘029 73994 179836
Slide 13: Loan Portfolio
Loan Portfolio + Commercial lending is primary focus, with C&l representing 24% and Owner Occupied CRE representing 19% » Recent acquisitions have provided portfolio diversification » Energy concentration has decreased from 19.8% of total loans in Q1'15 to 8.5% in Q4'18 + Average funded loan amount
Slide 14: Detailed Loan Composition
Detailed Loan Composition * Owner - Occupied CRE makes up 56% of total CRE lending ~ C&D and Total CRE concentrations of 94.6% and 216.4%, respectively CRE Conpotion «Owner Occupied Ci Comper bd Er TSG 95% sas an 06% 377% 15.5% (CAD Parfoio ‘Ouner Ooeusied CRE Perio Income Presucing CRE Porto Beers
Slide 15: Loan Production
Loan Production » Business First loans have grown at 28.6% CAGR New & Renewed Commitments from 2014 - 2018 $1,000.0 $800 » Continued Loan Growth in FY 2018. Net organic loan growth of 12.5%. + Increased production in 2018 primarily driven by: $800.0 New lending team added in Dallas in 2017 $600 ~ Co
Slide 16: Strong Credit Performance
Strong Credit Performance Credit quality metrics have continued to improve NPLs / Gross Loans significantly since 2010 4.00% FY 2017 NCOs resulted from two previously identified, 3.56% substandard energy credits with current specific reserve 3.00% of $800k 245% — $2.7 million in charge-offs from the
Slide 17: Strong Credit Performance
Strong Credit Performance Classified Assets have decreased by 33% from $45.5 million at Q4’'10 to $30.3 million at Q4’18 Past due loans have remained low even with the acquisition of two banks and stress in the energy sector in recent years Beginning in Q4’14, as conditions in the energy sector bega
Slide 18: Energy Lending
En ergy Lending Energy loans accounted for approximately 8.5% of portfolio and 58.4% of bank-level capital as of December 31, 2018 Geographic, loan type and collateral diversification 11% of total energy lending is non-correlated (cash secured, petrochem, retail) Active monitoring of exposures Quart
Slide 19: Energy Lending — Historical Performance
Energy Lending — Historical Performance » Continued stability of Watch List as economic conditions for the energy sector shows incremental improvement Q115 415416 = 417 Q418 Upstream S$ 6205 $ 13878 $ 14,302 $ 17742 $ 12,530 Midstream 16,072 17,422 95,024 25,490 18,148, Downstream 13,279 14,248 11,7
Slide 20: Commercial Real Estate— Historical Performance
Commercial Real Estate— Historical Performance Q415 Q416 Q417 Q418 Construction - 1-4 Family Residential $ 25032 $ 20.683 $ 37.565 $ 55.485 |Other Const, Development, Vacant Land & Lots 72840 64742 105,970 155569 Total Construction 97,872 94,425 143,595 211,084 % of Total Loans 125% 11.6% 147% 138%
Slide 21: Deposit Mix
Deposit Mix * Business First's deposit gathering strategy is Deposit Mix - December focused on its commercial lending relationships ~ In Q2’46, established a relationship pricing model 60% 05% that values deposits and treasury management ~ Incentive plan for lenders tied to deposit growth added in Q
Slide 22: Yield / Rate Analysis
Yield / Rate Analysis * Balance Sheetis asset sensitive 05% 5.46% es ee 5.20% 5.15% sem) | 5.22% 532%. ~ | 497% ~~ + Stable core NIM‘) 5.00% ~~ e ~ Loan betas outpaced deposit betas sane in FY 2018 and through BFST’s beers aor [sex 405% f.07% deposit cycle (Q1 2017-04 2018) 4.00% 131% 5 og yen 2%] 3
Slide 23: Interest Rate Positioning
Interest Rate Positioning + Interestrate sensitivity as of Q4’18 indicated asset sensitivity in shockedrate scenarios. These estimates include Richland State Bank and assume a static balance sheet. Interest Rate Sensitivity 4.0% 25% 2.0% 1.2% L | 0.0% — rd -0.4% a -2.0% -1.4% -4.0% -3.0% -6.0% “4.4%
Slide 24: Securities Portfolio
Securities Portfolio + Securities portfolio increased from Q4’17 to Q4'18 to $317 million (par value) + Weighted average life of portfolio as of December 31 is 3.78 years which indicates less price volatility when compared to the 3.21 portfolio duration * As of December 31, the portfolio roll-off vo
Slide 25: Update on Minden Bancorp and Richland State Bancorp Transactions
Update on Minden Bancorp and Richland State Bancorp Transactions * Acquired Minden Bancorp, Inc. (MBL Bank) on January 1, 2018 ~ All cash transaction valued at $76.0mm ~ $323mm in total assets; 1.72% ROAA in FY 2017 — Closed transaction in under 3 months ~ System conversion completed July 15, 2018 +
Slide 26: Growth Strategy Going Forward
Growth Strategy Going Forward Identify and Recruit Talented Bankers ned Focus on Business Model Expanding Presence in Existing Markets Disciplined Acquisition Strategy » Talented commercial bankers will be the primary catalyst for future growth in existing or new markets » Bankers are attracted to B
Slide 27: Appendix
Appendix
Slide 28: Historical Financial Summary
Historical Financial Summary Forthe Year Ended Decenber 34, 2040 204 202 2013 2018 2045 206 ir 2048 Last Year of aa Tolal Assets Ses7.12 S652241—S0B1,052«SGB41BD ——««SEB4SOZ—SL07E089 —SI.t05.841 —S1az1256 $2,094.98 Gross Loans +404 550 441,855 60236 536,045 $58,206 72382 et1.131 975485 1,528 460 Dep
Slide 29: Energy Portfolio by Total Past Due — As of December 31, 2018
Energy Portfolio by Total Past Due —As of December 31, 2018 st Due Energy Loans by Category and Collateral ($ Millions) CATEGORY. Tota g's | *OfEnergy |” TotalPast “%ofenergy! Accruing - Past Due Non- Portfolio Dues | Portfolio : 30-59 60-89 | Accruals Upstream 128 9.5% 08 0.4% = a 0.8 Midstream 18.
Slide 30: Energy Portfolio by Risk Rating - As of December 31, 2018
Energy Portfolio by Risk Rating - As of December 31, 2018 Energy Loans by Risk Rating and Category ( ns) RISK RATING RRA | Upstream | Midstream ‘Downstream: Support! | NonO#& | Current Quarter pice a rectet Service Gas Total$ | %ofEnergy : Total$ {| % of Energy Icash Secured 1 of = 32 05 = 38 29% 44
Slide 31: Energy Portfolio by Risk Rating - As of December 31, 2018
Energy Portfolio by Risk Rating - As of December 31, 2018 Energy Loans by Risk Rating and Collateral ($ Millions) fommercial | Consumer | CD/ Mkt Current Quarter Previous Quarter Pes i oc RealEstate | RealEstate | Securities | Other Total$ i %ofEnergy : Total$ %ofEnergy Cash Secured 1 - = = 38 = 38
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Core Net income, RO AA, NIM _Forthe YearEnded December 31,0 2014 | 2015 | 2016 2017 2018 at Qs Core Net Income: Net income S 4033 § 4096 § 5111 S 4848 § 14091 § 3445 $ 3900 § 3638 S$ 3,108 S (862) Adustments Sale of Participation interest in Impaired Cre
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures —FiscatQuarter Pass | asis | azte [aris [asi | Tangible Common Equity / Tangible Assets: ‘Tangible Common Equity Total Shareholders’ Equity $ 260,058 $ 212,961 $ 210,629 $ 179,904 $ 179,935 Agustments Goodwill (49.488) (82.427) (32.652) (82,816) (6,824)
Slide 34: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures TT Forthe YearEndedDecember3t, P2010] 2011 orzo 2s 206 tt Tangible Common Equity / Tangible Assets: ‘Tangible Common Equity Total Shareholders’ Equity $ 59524 $ 66,269 $ 71014 $ 71,923 $ 78845 $ 112449 $ 113559 $ 179935 $ 260,068 Adjustments: Goodwill -
Slide 35: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 445 OIG G26 36 ake a7 aa tT aat7 atte 248 a8 ate Core Net Interest Margin: Net interest Income S$ 9506 S 9431 $ 9101 $ 9742 S 9318 $ 10560 S$ 1160 $ 10533 $ 11,58 $ 14500 $ 14976 S$ 15636 $ 17,117 ‘Adjustments: Loan purchase discount accretion GI) as) as
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