Business First Bancshares, Inc. · NASDAQ:BFST
Business First Bancshares — Investor Presentation (October 2017)
43 slides from Business First Bancshares's investor presentation, Oct 12, 2017
Slide 1: Business First Bancshares, Inc. Investor Presentation
b BUSINESS FIRST BANK. Go get it. Business First Bancshares, Inc. Investor Presentation October 2017
Slide 2: Legal Disclosure
Legal Disclosure This presentation is confidential and does not constitute or form part of any offer to sell, or a solicitation of an offer to purchase, any securities of Business First Bancshares, Inc. (the “Company"). The information in this confidential presentation may not be reproduced or redis
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: Legal Disclosure (Cont'd)
Legal Disclosure (Cont'd) Certain of the information contained in this confidential presentation may be derived from information provided by industry sources The Company believes that such information is accurate and that the sources from which it has been obtained are reliable. The Company cannot g
Slide 5: Overview of Business First Bancshares, Inc.
Overview of Business First Bancshares, Inc. Founded in 2006; headquartered in Baton Rouge, LA Formed under the leadership of Charles E. “Buddy” Roemer Ill, a former governor of Louisiana, U.S congressman and U.S. presidential candidate Current CEO, Jude Melville, was the first employee and a foundin
Slide 6: Our Operating Philosophy Has Been Consistent Since Day One
Our Operating Philosophy Has Been Consistent Since Day 1 Recruiting and Commercial Focus} Retaining Talented Bankers * Small-to-midsize businesses and their owners and employees » Target $1-85mm, commercial lending relationships that are typically too small for the larger financial institutions to v
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 Board includes senior executives with public company experience Yearsin Year Started Jude Melville 43 12 2006 Director, President and Chief Executive Officer
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 in Year Started Market President Age Banking atBF Prior E
Slide 9: Corporate History
Corporate History 2006: Bank opened in Baton Rouge; expanded into Northwest Louisiana market 2008: Expanded into the Lafayette market 2010: Expanded into the Houma market 2016: Opened new headquarters in downtown Baton Rouge 2015: Acquired American Gateway Financial in 2017: West Baton Rouge with $3
Slide 10: Historical Financial Summary
Historical Financial Summary aaa = a Balance Sheet & Capital Total deseis S657142$652261—“$6811062 = S684.80 S54 S02—S107E.CED—SH.t05.841 $1,169,088 Gnss Loans 404560 44,656 460236 525045 558,386 772382 211,131 74.873 Deposts 542233 S41813 586228 594,176 597,252 904235 992795 972016 Total Eauity 595
Slide 11: Recent Financial Results
Recent Financial Results Acquired American Gateway on March 31, Gross Loans Total Deposits 2015, adding approximately $143 million sio000 mao — in loans and $283 million in deposits song $2528 3000.0 e747 200.9 seria Total net pretax deal charges of $2.0 e000 wna SN 4800.9 million for FY 2014-2016 r
Slide 12: YTD June 30th Financial Comparison
YTD June 30" Financial Comparison » Loan growth of 9.6% YoY ~ 14% excluding the run-off in American Gateway loans ~ YTD annualized loan growth of 15.7% * Total deposits declined 2.7% inclusive of a reduction of $21 million, or 21%, in wholesale time deposits ~ YTD annualized deposit growth of 8.4% +
Slide 13: Recent Developments — YTD August 2017 Financial Results
Recent Developments — YTD August 2017 Financial Results * YoY loan growth of 13.8% + YoY noninterest bearing deposit growth of 13.4% + YTD 8/31/17 reported net income growth of 56.8% + QTD 2017 core net income growth of 68.8%(") As of August 31 YoY % YTD% 2016 217 Growth Annualized Growth Balance Sh
Slide 14: Loan Portfolio
Loan Portfolio Top 10 relationships by current balance total $110 million, or 12.6% of outstanding gross loans ~ These 10 relationships have total commitments of $137.8 million, or 12.0% of total commitments Top 25 relationships by current balance total $227 million, or 25.9% of outstanding gross lo
Slide 15: Detailed Loan Composition
Detailed Loan Composition + Owner ~ Occupied CRE now makes up 53% of CRE lending vs. only 39% as of June 30, 2010 CRE Conpostin -inome Proucia RE Conpostion - Owner Occnlt i = 37% 47% 9% 157% aa 199% ies gy caneasis ve ang ORE Pe cute Sons ORE Pu 02 nee: pres em [ee wer am enon yo or [Dices recone t
Slide 16: Strong Credit Performance
Strong Credit Performance Credit quality metrics have improved significantly since NPLs / Gross Loans 2010 400% 3.56% Business First's ALLL / Gross Loans equaled 1.05% at 3.00% wee June 30, 2017, up from 1.01% at December 31, 2016 . — Including the remaining fair value mark of $3.2 million on 200% 1
Slide 17: Strong Credit Performance
Strong Credit Performance * Classified Assets have decreased by 55% from $45.5 million at Q4’10 to $20.7 million at Q2’17 750% 07% eo0% * Past due loans have remained low even with the acquisition of American Gateway and stress in the 50% energy sector in recent years 00% oo Sie 180% + Beginning in
Slide 18: Overview of Energy Lending
Overview of Energy Lending + Total energy loans outstanding equaled $134 million as of June 30, 2017, approximately 15% of the total loan portfolio + Geographic and loan type diversification * Active monitoring of exposures ~ Robust quarterly review instituted in early 2015 involving Executive Manag
Slide 19: Energy Lending — Historical Performance
Energy Lending — Historical Performance + 2015 — Energy Watch List increases as the economic conditions for the sector deteriorate and Business First initiates aggressive monitoring * 2016 - Stabilization of Watch List; some credit migration to Classified + 2017- Continued stability of Watch List as
Slide 20: Energy Lending — As of June 30, 2017
Energy Lending — As June 30, 2017 » No SNCs * Average loan size of $713 thousand + Weighted average maturity of energy loans is shorter than the balance of the portfolio (3.4 years vs. 4.9 years) ENERGY PORTFOLIO BY CATEGORY OUTSTANDING % of Ener: Avg$per #of Avg $ per Wid A\ BALANCE TEIGS Sei. sini
Slide 21: Energy Lending — Adjusted Exposure
Energy Lending — Adjusted Exposure Business First's categorization of energy lending captures a broad range of businesses due to regulatory guidance However, the risk of certain loan types is not directly correlated to the price of oil Excluding these loan types, Business First's energy lending decr
Slide 22: Deposit Mix
Deposit Mix * Business First's deposit gathering strategy is focused on its commercial lending relationships ~ Alll but one of the Top 25 relationships by current loan balance are depositors, totaling $41.8 million, with 100% of the Top 10 relationships being depositors ~ In Q2’46, established a rel
Slide 23: Yield / Rate Analysis
Yield / Rate Analysis J Stable core NIM‘) 6.00% 5.72% 5.45% , + Remaining loan discount from the ons — 5d) American Gateway acquisition totaled | + [497% < ili . : 4.83% $3.2 million as of June 30, 2017 5.00% | 4 pay 474 18 ~ Average maturity of the American Gateway 4.34% loans with a discount is 7.
Slide 24: Transaction Opportunity: Minden Bancorp, Inc.
Transaction Opportunity: Minden Bancorp, Inc. 6
Slide 25: Overview of Minden Bancorp (MBL Bank)
Overview of Minden Bancorp (MBL Bank) * Founded in 1910; headquartered in Minden, LA + #1 deposit market share in Webster Parish (39%) + 5-Year Financial Performance: mats Aepules — Average ROAA: 1.40% tairop Average Efficiency Ratio: 39.9% 3 teraview | girevefBe—feston_S Norre Tyler 4 — Avg. NCOs /
Slide 26: Increased Market Opportunity in Northwest Louisiana
Increased Market Opportunity in Northwest Louisiana » Business First currently operates one location in Shreveport while MBL Bank has 2 branches in the city of Minden ~ Jude Melville was born and raised in Northwest Louisiana, as was Philip Jordan, who sfill ives there 1 Capital One Financial Corp.
Slide 27: Historical Financial Summary of Minden Bancorp, Inc.
Historical Financial Summary of Minden Bancorp, Inc. Forthe Year EndedD ecermber 34 rp 2014 2012 2013 2014 2015 2016 30/2047. Balance Sheet eel Total Assets $264,598 $776,491 $288,880 $309,294 $321,536 $331,354 $222,946 Gross Loans (Excl HFS) 133,018 148,086 187,849 173,985 189,056 190,768 194,373 D
Slide 28: Pro Forma Loan Composition
Pro Forma Loan Composition Business First Bancshares, Inc MBL Bank 53% 12.8% BS 13.4% 18.7% 10.5% 27.3% 5.4% 2.6% 31.9% 24.1% 18.5% 175% 6.3% 0.3% Loans Loans Loans [iconstuctona tara 311289 128% © (ifconsrucions Land S608 134% —— [lconsincton & Land 36288 128% [is remiy 2027 105% i-sramyy e192 319%
Slide 29: Pro Forma Deposit Mix
Pro Forma Deposit Mix Dunes Fret anestares ML Bak 29.4% 2.7% 6.3% 13.6% y 25.1% 27.8% sea 19.9% nm 15.5% 23.6% 31.1% 25.1% Deposits Deposits Deposits [Blvonnierest bearing S234 251% —— [Nontterestbearna 325280 136% © [JNoniterestbearng $279,005 22% Ghvows otter 180936 155% [vow a omer 51486 19.9% vo
Slide 30: Transaction Terms
Transaction Terms + Business First Bancshares, Inc. + Minden Bancorp, Inc., bank holding company of MBL Bank + $76.1 million + 100% cash + 155% of June 30, 2017 TBV + 14.4x LTM EPS + Minden CEO Jack Byrd has been invited to join Business First’s Board + Business First has entered into a long-term em
Slide 31: Key Transaction Assumptions
Key Transaction Assumptions + 100% cash + $1.4 million of annual pre-tax cost saves (31% of Minden’s budgeted 2017 NIE) + Approximately $800 thousand realized in FY 2018 with 100% thereafter + 1.3%, or $2.65 million + Minden’s ALLL as of June 30, 2017 totaled $2.1 million Credit Review + Onsite revi
Slide 32: Pro Forma Results
Pro Forma Results + Total Assets:~$1.6 billion + Gross Loans:~$1.2 billion + Total Deposits:~$1.4 billion + Total Equity:~$180 million + Minden had $125 million in cash and securities as of June 30, 2017 versus $72 million in total borrowings and $78 million in wholesale time deposits for Business F
Slide 33: Pro Forma Results
Pro Forma Results As of June 30, 2017 Pro Forma at Closing March 31, 2018 TCE! TA Leverage Ratio Tier 1 Capital Ratio Total Risk Based Capital Ratio 9.5% 9.5% 10.0% 10.9% As of June 30, 2017 ~9% ~9% ~10% ~1% Pro Forma as of June 30, 2017 TCE! TA) Leverage Ratio Tier 1 Capital Ratio Total Risk Based
Slide 34: Pro Forma Results
Pro Forma Results Estimated 1% ROAA for the first full year of combined operations vs 0.70% for 1H'2017 Approximately 19% accretive for the 9-months ending December 31, 2018 Approximately 14% accretive for FY 2018 Approximately 10% accretive for FY 2019 Total intangibles created of approximately $26
Slide 35: Growth Strategy Going Forward
Growth Strategy Going Forward Identify and Recruit Talented Bankers ned Focus on Business Model Expanding Presence in Existing Markets Disciplined Acquisition Strategy » Talented commercial bankers will be the primary catalyst for future growth in existing or new markets » Bankers are attracted to B
Slide 36: Appendix
Appendix
Slide 37: Energy Portfolio by Risk Rating — As of June 30, 2017
Energy Portfolio by Risk Rating — As of June 30, 2017 PAST DUE ENERGY LOANS BY CATEGORY AND COLLATERAL 1. | %oF Ene: Total Past | % of Ene ‘Accruing- | PastDue Non- [CATEGORY Tetal$'s | “Pontfolio. Due $ Portfolio. 30.59 60-89 Accruals Upstream 14.2 10.6% 36 27% : - 3.6 Midstream 32.7 24.8% = = = =
Slide 38: Energy Portfolio by Risk Rating — As of June 30, 2017
Energy Portfolio by Risk Rating — As of June 30, 2017 PAST DUE ENERGY LOANS BY CATEGORY AND COLLATERAL RISK RATING RR# | Upstream Midstream Downstream SUPPOr/ ret eae Redan, Ques Senice Total$ _ %of Energy Total $ % of Energy cash Secured 1 o1 o1 34 06 42 3.2% 45 3.5% lsuperior 2 08 14 12 29 62 47%
Slide 39: Energy Portfolio by Risk Rating — As of June 30, 2017
Energy Portfolio by Risk Rating — As of June 30, 2017 PAST DUE ENERGY LOANS BY CATEGORY AND COLLATERAL ‘Commercial Consumer CD /Market ‘Current Quarter Previous Quarter RISK RATING RRE cal All Other Real Estate Real Estate Securities Total$ %of Energy Total$ %of Energy cash Secured 1 - 34 - 09 - 42
Slide 40: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ‘Sin thousands except per share data TCE/TBV forthe YearEnded December 31, 2010 2011 2012] 2013 | 2014 | 2015 2016 673072017 | 6730/2016 Tangible Common Equity / Tangible Assets: ‘Tangible Common Equity Total Shareholders’ Equity S 59,524 $ 66,269 $ 71,0
Slide 41: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ‘Sin thousands except per share data ‘Core Net income, R¢ Core Netincome: Net Income Adjustments: AGFC Acauisttion deal harass, tax effected at 34% Core Net Income Core Return on Average Assets: Net Income Core Net Income Average Assets ROAA Core ROAA Co
Slide 42: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Sin thousands O15 G25 G35 415 IG G26 SG GIT aT Core Net Interest Margin: Net interest Income S$ 6165 S 8562 § 9916 S 9506 § 9431 § 9101 § 9742 § 9318 S$ 10560 $ 11,690 Adjustments: ‘AGFC loan purchase - (600) (682) ___(679) (454) (254) (325) (330) (4,308
Slide 43: Reconciliation of Non-GAAP Financial Measures — Minden Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures — Minden Bancorp, Inc. ‘Sin thousands except per share data TCE | Forthe YearEnded Decembers, RTD 2011 [202] 20132014] 201s | 2016 6130/2017 Tangible Common Equity / Tangible Assets: Tangible Common Equity Total Shareholders’ Equity $ 39,030 $ 40,325 $ 4
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