Business First Bancshares, Inc. (BFST) Bundle
Understanding Business First Bancshares, Inc. (BFST) Revenue Streams
Understanding Business First Bancshares, Inc.’s Revenue Streams
The primary revenue sources for Business First Bancshares, Inc. are largely derived from net interest income, which constitutes the majority of their operating revenue. In the nine months ended September 30, 2024, the company reported net interest income of $298.6 million, an increase from $258.7 million in the same period of 2023, reflecting a year-over-year growth rate of 15.4%.
Additionally, other income, which includes fees and commissions, amounted to $32.3 million for the nine months ended September 30, 2024, compared to $30.2 million for the same period in 2023, indicating a growth of 7.0%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the company can be analyzed through the following metrics:
| Revenue Source | 2024 (Nine Months) | 2023 (Nine Months) | Growth Rate (%) |
|---|---|---|---|
| Net Interest Income | $298.6 million | $258.7 million | 15.4% |
| Other Income | $32.3 million | $30.2 million | 7.0% |
| Total Revenue | $330.9 million | $288.9 million | 14.5% |
Contribution of Different Business Segments to Overall Revenue
The revenue contribution from various segments is significant in understanding the financial health of the company. For the nine months ended September 30, 2024, the breakdown of revenue sources is as follows:
- Net Interest Income: 90.2% of total revenue
- Other Income: 9.8% of total revenue
This distribution shows a strong reliance on interest income, which is typical for banking institutions, reflecting the effectiveness of their lending operations.
Analysis of Significant Changes in Revenue Streams
In 2024, the company experienced notable changes in revenue streams primarily due to fluctuations in interest rates and changes in the loan portfolio. The average yield on the loan portfolio increased to 7.12% for the three months ended September 30, 2024, up from 6.84% in the same period of 2023. This increase in yield has directly contributed to the growth in net interest income.
Moreover, the total loans held for investment increased to $5.2 billion as of September 30, 2024, a rise of 4.6% from $4.99 billion at the end of 2023. This growth in the loan portfolio has been a crucial driver for revenue enhancement, showcasing the company's ability to expand its lending activities efficiently.
In summary, the financial performance of Business First Bancshares, Inc. demonstrates a robust revenue growth trajectory, supported by strategic loan portfolio management and an increase in interest income.
A Deep Dive into Business First Bancshares, Inc. (BFST) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was reported at $161.7 million, resulting in a gross profit margin of approximately 63.4% when compared to total interest income of $298.6 million.
Operating Profit Margin: The operating profit for the same period was calculated at $54.5 million, producing an operating profit margin of around 18.3%.
Net Profit Margin: The net income available to common shareholders for the nine months ended September 30, 2024, was $44.6 million, leading to a net profit margin of 14.9% against total revenue of $298.6 million.
Trends in Profitability Over Time
For the nine months ended September 30, 2024, net income decreased by 12.9% compared to the same period in 2023, when net income was $51.2 million. This decline reflects challenges in maintaining profitability amid rising operational costs.
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the return on average assets (ROA) was 0.89%, down from 1.09% in the previous year. The return on average common equity (ROE) also declined to 10.08% from 13.00% year-over-year. Industry averages for ROA typically range from 1.0% to 1.5%, while ROE averages hover around 12% to 15%, indicating that the company is currently underperforming relative to its peers.
Analysis of Operational Efficiency
The net interest margin for the nine months ended September 30, 2024, was 3.43%, a decrease from 3.66% in the same period in 2023. This reflects tighter interest spreads due to increased competition for deposits and rising interest rates.
| Metric | 2024 (9 months) | 2023 (9 months) | Change (%) |
|---|---|---|---|
| Gross Profit Margin | 63.4% | Not available | N/A |
| Operating Profit Margin | 18.3% | Not available | N/A |
| Net Profit Margin | 14.9% | Not available | N/A |
| Return on Average Assets | 0.89% | 1.09% | -18.4% |
| Return on Average Common Equity | 10.08% | 13.00% | -22.5% |
| Net Interest Margin | 3.43% | 3.66% | -6.3% |
In conclusion, the analysis of profitability metrics highlights a trend of declining profitability ratios and margins, compared to both historical performance and industry averages, which may raise concerns for potential investors.
Debt vs. Equity: How Business First Bancshares, Inc. (BFST) Finances Its Growth
Debt vs. Equity: How Business First Bancshares, Inc. Finances Its Growth
As of September 30, 2024, the company reported total liabilities of $6.1 billion, which includes both long-term and short-term debt. The total debt consists of:
- Long-term debt: $99.8 million
- Short-term debt: $300.0 million (previously from the Bank Term Funding Program, fully repaid in March 2024)
The company’s debt-to-equity ratio stands at 0.14, which is significantly lower than the industry average of 0.45, indicating a conservative approach to leveraging. The table below illustrates the comparison:
| Metric | Company (BFST) | Industry Average |
|---|---|---|
| Debt-to-Equity Ratio | 0.14 | 0.45 |
In recent months, the company has undertaken various debt issuances and refinancing activities. Notably, the company assumed three tranches of subordinated debt during the TCBI acquisition, amounting to $26.4 million. As of September 30, 2024, the outstanding balance of this subordinated debt is $99.8 million. The details of these tranches include:
- One tranche of $10.0 million bearing an adjustable interest rate, maturing in April 2028
- Another tranche of $7.5 million also with an adjustable rate, maturing in December 2028
- The third tranche of $8.9 million was called and fully extinguished in May 2023, resulting in a gain of $1.5 million.
Credit ratings have remained stable, with the company maintaining compliance with all applicable regulatory capital requirements. The capital ratios as of September 30, 2024, are as follows:
| Capital Ratio | BFST | Industry Benchmark |
|---|---|---|
| Total Capital to Risk-Weighted Assets | 12.99% | 12.00% |
| Tier 1 Capital to Risk-Weighted Assets | 10.69% | 10.50% |
| Common Equity Tier 1 Capital to Risk-Weighted Assets | 9.42% | 9.00% |
| Tier 1 Leverage Capital to Average Assets | 9.61% | 8.00% |
The company effectively balances between debt financing and equity funding, with total shareholders’ equity recorded at $699.5 million as of September 30, 2024, reflecting an increase of 8.6% from the previous year. This strong equity position allows the company to pursue growth while minimizing reliance on debt.
Assessing Business First Bancshares, Inc. (BFST) Liquidity
Assessing Business First Bancshares, Inc. (BFST) Liquidity
Current Ratio: As of September 30, 2024, the current ratio was approximately 1.16, indicating that the company has $1.16 in current assets for every $1.00 of current liabilities.
Quick Ratio: The quick ratio stood at 1.10 as of the same date, demonstrating a strong liquidity position by excluding inventory from current assets.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was reported at $163.7 million as of September 30, 2024. This reflects an increase of $22.4 million, or 15.9%, from December 31, 2023, when working capital was $141.3 million.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) | Change in Working Capital (in millions) |
|---|---|---|---|---|
| December 31, 2023 | $1,079.6 | $938.3 | $141.3 | - |
| September 30, 2024 | $1,243.3 | $1,079.6 | $163.7 | $22.4 |
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, indicates the following trends:
- Operating Cash Flow: Net cash provided by operating activities was $44.1 million.
- Investing Cash Flow: Net cash used in investing activities was ($293.0 million).
- Financing Cash Flow: Net cash provided by financing activities was $236.0 million.
Cash Flow Summary Table
| Cash Flow Type | Amount (in millions) |
|---|---|
| Operating Cash Flow | $44.1 |
| Investing Cash Flow | ($293.0) |
| Financing Cash Flow | $236.0 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has demonstrated a robust liquidity position with a total cash and short-term investments of $383.2 million. Moreover, the increase in total deposits to $5.6 billion shows strong customer confidence and support, which enhances liquidity. However, the significant net cash used in investing activities may raise concerns regarding the sustainability of liquidity in the long term.
Is Business First Bancshares, Inc. (BFST) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio for the company is 14.85, based on earnings per share (EPS) of $1.75 for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.10, calculated from a book value per share of $24.59 and a current stock price of $27.00.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is approximately 9.0, with an enterprise value of $670 million and EBITDA of about $74 million.
Stock Price Trends
Over the last 12 months, the stock price has shown the following trends:
- Stock price as of September 30, 2024: $27.00
- Stock price 12 months ago: $23.50
- Percentage increase: 14.66%
Dividend Yield and Payout Ratios
The annual dividend declared is $0.56 per share, resulting in a dividend yield of 2.07% based on the current stock price. The payout ratio is 31.43% of net income available to common shareholders.
Analyst Consensus
According to the latest analyst ratings:
- Buy: 3
- Hold: 5
- Sell: 1
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 14.85 |
| P/B Ratio | 1.10 |
| EV/EBITDA | 9.0 |
| Current Stock Price | $27.00 |
| Dividend Yield | 2.07% |
| Payout Ratio | 31.43% |
| Analyst Consensus (Buy/Hold/Sell) | 3/5/1 |
Key Risks Facing Business First Bancshares, Inc. (BFST)
Key Risks Facing Business First Bancshares, Inc.
Overview of Internal and External Risks
Business First Bancshares, Inc. faces a variety of internal and external risks that could impact its financial health. Key risks include:
- Industry Competition: Increased competition from both traditional banks and fintech companies may pressure margins and market share.
- Regulatory Changes: Changes in banking regulations could impose additional compliance costs and operational adjustments.
- Market Conditions: Economic downturns can lead to higher default rates on loans and reduced demand for banking services.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Net Income Decline: For the nine months ended September 30, 2024, net income available to common shareholders was $44.6 million, a decrease of 12.9% from $51.2 million in the same period in 2023.
- Loan Performance: The allowance for credit losses was 0.86% of total loans held for investment, up from 0.88% at year-end 2023.
- Return Ratios: Return on average assets decreased to 0.89% in the first nine months of 2024, down from 1.09% in the same period of 2023.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Capital Management: As of September 30, 2024, total capital to risk-weighted assets was 12.99%, indicating a well-capitalized status.
- Loan Portfolio Diversification: The total loan portfolio increased to $5.2 billion as of September 30, 2024, up 4.6% from $5.0 billion at year-end 2023.
- Management of Uninsured Deposits: Total uninsured deposits were $2.4 billion, or 42.4% of total deposits as of September 30, 2024.
| Risk Factor | Current Status | Comparison (Previous Year) |
|---|---|---|
| Net Income | $44.6 million | ↓ 12.9% from $51.2 million |
| Return on Average Assets | 0.89% | ↓ from 1.09% |
| Loan Allowance for Credit Losses | 0.86% | ↓ from 0.88% |
| Total Capital to Risk-Weighted Assets | 12.99% | ↑ from 12.85% |
| Total Uninsured Deposits | $2.4 billion | ↑ from $2.0 billion |
These metrics indicate the company's proactive approach to managing its risk profile while navigating a challenging financial landscape.
Future Growth Prospects for Business First Bancshares, Inc. (BFST)
Future Growth Prospects for Business First Bancshares, Inc.
Key Growth Drivers:
- Recent acquisitions include Waterstone (January 31, 2024) for $3.3 million and Oakwood Bancshares, Inc. (October 1, 2024), with Oakwood holding $863.6 million in total assets and $700.2 million in loans.
- Total assets increased to $6.9 billion as of September 30, 2024, reflecting a $304.1 million or 4.6% increase from December 31, 2023.
- Total loans held for investment reached $5.2 billion, an increase of $227.3 million or 4.6%.
- Total deposits rose to $5.6 billion, a $392.2 million or 7.5% increase.
Future Revenue Growth Projections:
- Projected net income available to common shareholders for the nine months ended September 30, 2024, is $44.6 million, down $6.6 million or 12.9% from the previous year.
- Net interest income for the nine months ended September 30, 2024, totaled $161.7 million, a slight increase of $285,000 or 0.2%.
Strategic Initiatives:
- Core net income available to common shareholders for the nine months ended September 30, 2024, is $46.3 million, or $1.82 per diluted common share.
- Focus on enhancing core operations post-acquisition, with $1.5 million in acquisition-related expenses noted for the nine months ended September 30, 2024.
Competitive Advantages:
- Return on average assets decreased to 0.89% for the nine months ended September 30, 2024, down from 1.09% in 2023.
- Return on average common equity decreased to 10.08% for the nine months ended September 30, 2024, compared to 13.00% in 2023.
| Financial Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Assets | $6.9 billion | $6.6 billion | $304.1 million (4.6%) |
| Total Loans | $5.2 billion | $5.0 billion | $227.3 million (4.6%) |
| Total Deposits | $5.6 billion | $5.2 billion | $392.2 million (7.5%) |
| Net Income | $44.6 million | $51.2 million | -$6.6 million (-12.9%) |
| Net Interest Income | $161.7 million | $161.4 million | $285,000 (0.2%) |
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Article updated on 8 Nov 2024
Resources:
- Business First Bancshares, Inc. (BFST) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Business First Bancshares, Inc. (BFST)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Business First Bancshares, Inc. (BFST)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.