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Item 8. Financial Statements and Supplementary Data

2023-03-02 compared with 2022-03-01 · 476 added, 574 removed, 1973 unchanged (35% of the section changed)

9 unchanged sentences

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors

To the Shareholders, Board of Directors, and Audit Committee

Business First Bancshares, Inc.

1 unchanged sentence

We have audited the accompanying consolidated balance sheets of Business First Bancshares, Inc.

(the "Company") as of December 31, 2021 and 2020, the related consolidated statement of income, comprehensive income, shareholder’s equity, and cash flows, for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2022 expressed an unqualified opinion.

(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, shareholders’

equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control –

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2023, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Allowance for loan losses- Qualitative Factors

As described in Note 1 and Note 7 to the consolidated financial statements, the Company’s allowance for loan losses (“ALLL”) is maintained at a level which, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio.

The allowance for loan losses was $29,112,000 at December 31, 2021, which consists of two components:

the valuation allowance for loans individually evaluated for impairment (“specific reserve”), representing $2,097,000, and the valuation allowance for loans collectively evaluated for impairment (“general reserve”), representing $27,015,000.

The Company’s general reserve includes qualitative factors that compensate for additional areas of uncertainty inherent in the portfolio that are not reflected in the Company’s historical loss factors.

We identified the Company’s estimate of the qualitative factors as a critical audit matter.

The principal considerations for our determination of the qualitative factors component as a critical audit matter included the high degree of subjectivity in management’s identification and measurement of the factors.

Our primary audit procedures related to auditing management’s estimate of the qualitative factors included:

We tested the design and operating effectiveness of management’s controls over the qualitative factors within the general reserve including the accuracy of data inputs and management’s determination of the assumptions used to develop and adjust the qualitative factors for the general reserve of the allowance for loan losses.

We also performed substantive testing over the qualitative factors including testing management’s qualitative factors by evaluating the relevancy and reliability of the underlying data used to derive the qualitative factors, including comparison to internal, external and/or peer data to ensure movement in a directionally consistent manner.

Based on the underlying data and our evidence gathered, we evaluated the reasonableness of management’s conclusion on the adjustment to the factors.

We tested the accuracy of the mathematical application of the qualitative factors to adjust the historical loss experience.

We performed analytical procedures on the overall level and various components of the allowance, including historical reserves, qualitative reserves and specific reserves.

/s/ Dixon Hughes Goodman LLP

We have served as the Company's auditor since 2019.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Loan Losses

As of December 31, 2022, the Company’s loan portfolio was $4.6 billion and the associated allowance for loan losses was $38.2 million.

As described in Note 1 and Note 7 to the consolidated financial statements, the Company’s allowance for loan losses (“ALL”) is maintained at a level which, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio  

The allowance for loan losses is based upon management’s review and evaluation of the loan portfolio including relevant historical loss experience.

Each period the Company considers qualitative factors that are relevant and necessary to adjust the model.

Qualitative factors considered in the establishment of the allowance for loan losses include changes in international, national, regional and local conditions;

oil and gas trends;

nature and volume of the portfolio;

volume and severity of past due loans;

quality of the loan review system;

existence and effect of any concentrations of credit or changes in the levels of such concentrations;

effect of other external factors;

changes to lending policies and procedures, including experience, depth and ability of staff, and changes in the value of the underlying collateral.

We identified the allowance for loan losses as a critical audit matter.

The principal considerations for that determination included the high degree of judgment and subjectivity relating to management’s identification and measurement of the qualitative factors.

This required a high degree of auditor effort and significant auditor judgment in evaluating the estimated allowance for loan losses.

Our primary audit procedures performed to address this critical audit matter included:

We obtained an understanding of the Company’s process for establishing the ALL, including the identification, basis for development and related adjustments of the qualitative factor components of the ALL.

We evaluated the design and tested the operating effectiveness of controls relating to management’s determination of the ALL, including controls over:

Management’s process for identification, basis for development and related adjustments;

including reasonableness, of the qualitative factor components of the ALL.

Management’s review of reliability and accuracy of data used to calculate and estimate the various components of the ALL, including accuracy of the calculation.

We evaluated the reasonableness of management’s application of qualitative factors to the ALL, including the comparison of factors considered by management to third party or internal sources as well as evaluated the appropriateness and level of the qualitative factor adjustments.

We evaluated the mathematical accuracy of the ALL, including the mathematical application of the qualitative adjustments on the loan segments.

We assessed the reasonableness of the qualitative portion of the ALL by comparing the components of the ALL (i.e., qualitative, specific and total reserves) to those recorded by the Company’s peer institutions.

Acquisition of Texas Citizens Bancorp, Inc.

- Fair Value of Acquired Loans  

As described further in Note 1 and Note 3 to the financial statements, the Company completed the acquisition of Texas Citizens Bancorp, Inc.

(“TCBI”) on March 1, 2022.

The Company accounted for this acquisition under the purchase method of accounting.

Purchased assets and assumed liabilities are recorded at their respective acquisition date fair values, and identifiable intangible assets are recorded at fair value.

Determination of the acquisition date fair values of the assets acquired and liabilities assumed required management to make significant estimates and assumptions.

Specifically, the fair value of a loan portfolio acquired in a business combination requires greater levels of management estimates and judgment than the remainder of purchased assets or assumed liabilities.

The fair value of the acquired loans was $338 million and required management to make estimates about discount rates, prepayment rates, expected future cash flows, and other future events that are subjective and subject to change.

We identified the determination of the acquisition date fair value of acquired loans as a critical audit matter.

The principal considerations for our determination are the extent of audit effort and level of judgment involved in evaluating the reasonableness of management’s assumptions, including the need for specialized skill to assess the development and application of the discount rates, prepayment rates and credit loss assumptions used to estimate cash flows.

Our primary audit procedures performed to address this critical audit matter included:

We obtained an understanding of the Company’s process for determining the fair value of the acquired loan portfolio.

We evaluated the design and tested the operating effectiveness of controls relating to the valuation of acquired loans, including controls addressing:

Management's credit diligence performed on the acquired loan portfolio, which impacts the credit loss assumptions used in the cash flow calculations.

Management’s review of the reasonableness of the discount rates, prepayment rates and credit loss assumptions used in the estimate of the fair value of acquired loans.

Management’s review of the results of the third-party valuation of the acquired loan portfolio, including the review of the completeness and accuracy of the data inputs used as a basis for the valuation.

We evaluated the completeness and accuracy of data inputs used as a basis for the valuation of the loan portfolio.

We evaluated, with the assistance of professionals with specialized skill and knowledge, the reasonableness of management’s discount rates, prepayment rates and credit loss assumptions used in the estimate of the fair value of the acquired loans, including, for a selected sample of loans, developing an independent expectation for comparison to management’s fair value.

We tested the mathematical accuracy of the estimated fair value, including the application of the assumptions used in the calculation.

/s/ FORVIS, LLP

(Formerly Dixon Hughes Goodman LLP)

We have served as the Company’s auditor since 2019.

Fort Worth, Texas

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors

To the Shareholders, Board of Directors, and Audit Committee

Business First Bancshares, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Business First Bancshares, Inc.

(the “Company”)’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control —

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, Business First Bancshares, Inc.

maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control —

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of Business First Bancshares, Inc.

as of December 31, 2021 and 2020, and for each of the two years in the period ended December 31, 2021, and our report dated March 1, 2022, expressed an unqualified opinion on those consolidated financial statements.

Opinion on the Internal Control over Financial Reporting

We have audited Business First Bancshares Inc.’s (the “Company”) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control –

Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control –

Integrated Framework:

(2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2022 and 2021, and for each of the three years in the period ended December 31 2022, and our report dated March 2, 2023, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

2 unchanged sentences

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Definitions and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Dixon Hughes Goodman LLP

/s/ FORVIS, LLP

(Formerly Dixon Hughes Goodman LLP)

Fort Worth, Texas

March 2, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Shareholders of Business First Bancshares, Inc.

and Subsidiaries

Baton Rouge, Louisiana

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Business First Bancshares, Inc.

and Subsidiaries (the Company) as of December 31, 2019 and 2018, and the related consolidated statements of income, comprehensive income, shareholders’

equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively referred to as the financial statements).

We have also audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in 

Internal Control-Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in 

Internal Control-Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Basis for Opinion

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of a company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Respectfully submitted,

/s/ >Hannis T.

Bourgeois, LLP

Baton Rouge, Louisiana

March 4, 2020

BUSINESS FIRST BANCSHARES, INC.

2 unchanged sentences

(Dollars in thousands)

ASSETS        

Cash and Due from Banks

27 unchanged sentences

88,543  

59,894  

Core Deposit and Customer Intangible

3 unchanged sentences

$ 5,990,460  

LIABILITIES        

$ 4,726,378  

Noninterest Bearing

7 unchanged sentences

4,077,283  

Federal Funds Purchased

14,057  

Securities Sold Under Agreements to Repurchase

2 unchanged sentences

Short Term Borrowings

Long Term Borrowings

Federal Home Loan Bank Borrowings

13 unchanged sentences

Commitments and Contingencies (See Notes 19, 21 and 22)

SHAREHOLDERS' EQUITY  

Preferred Stock, No Par Value;

5,000,000 Shares Authorized;

72,010 and No Shares ($ 1,000 Liquidation Preference) Issued and Outstanding at December 31, 2022 and 2021, respectively

71,930  

Common Stock, $ 1 Par Value;

11 unchanged sentences

( 74,204 )  

10,628  

Total Shareholders' Equity

12 unchanged sentences

Interest and Fees on Loans

$ 156,791  

$ 140,459  

$ 95,433  

Interest and Dividends on Non-taxable Securities

2 unchanged sentences

Total Interest Income

170,438  

149,755  

103,467  

Interest Expense:

Interest on Deposits

12,183  

17,562  

19,753  

Interest on Borrowings

Total Interest Expense

16,554  

22,109  

23,269  

Net Interest Income

153,884  

127,646  

80,198  

Provision for Loan Losses

11,435  

Net Interest Income after Provision for Loan Losses

145,837  

116,211  

77,592  

Other Income:

Service Charges on Deposit Accounts

Gain on Sales of Securities

Gain (Loss) on Sales of Securities

Gain on Sales of Loans

10,117  

18,474  

11,474  

Total Other Income

35,782  

21,564  

10,708  

Other Expenses:

Salaries and Employee Benefits

65,825  

57,394  

35,126  

Occupancy and Equipment Expense

15,750  

11,380  

Other Expenses

35,486  

32,219  

15,694  

Total Other Expenses

117,061  

100,993  

58,448  

Income Before Income Taxes

64,558  

36,782  

29,852  

Provision for Income Taxes

12,422  

$ 52,136  

$ 29,994  

$ 23,772  

Earnings Per Share:

$ 2.54  

$ 1.65  

$ 1.79  

$ 2.53  

$ 1.64  

$ 1.74  

Preferred Stock Dividends

Net Income Available to Common Shareholders

Earnings Per Common Share:

The accompanying notes are an integral part of these financial statements.

5 unchanged sentences

Consolidated Net Income

$ 52,136  

$ 29,994  

$ 23,772  

Other Comprehensive Income (Loss):

Unrealized Gain (Loss) on AFS Investment Securities

( 14,985 )  

Unrealized Gain (Loss) on Share of Equity Method Investments

( 336 )  

Reclassification Adjustment for Gains on Sale of AFS Included in Net Income

Reclassification Adjustment for Gain (Loss) on Sale of AFS

Investment Securities Included in Net Income

Income Tax Effect

( 2,131 )  

Other Comprehensive Income (Loss)

( 11,805 )  

Consolidated Comprehensive Income

$ 40,331  

$ 38,009  

$ 29,854  

Consolidated Comprehensive Income (Loss)

The accompanying notes are an integral part of these financial statements.

19 unchanged sentences

Stock Issuance

94,097  

102,044  

Stock Based Compensation Cost

10 unchanged sentences

10,628  

409,963  

Comprehensive Income:

2 unchanged sentences

Other Comprehensive Loss

( 11,805 )  

Cash Dividends Declared, $ 0.46 Per Share

1 unchanged sentence

Stock Issuance

94,097  

102,044  

Stock Based Compensation Cost

Surrendered Shares of Stock Based Compensation

Surrendered Shares of Options Exercised

( 105 )  

14 unchanged sentences

( 73,027 )  

Cash Dividends Declared, $0.46 Per Share

Cash Dividends Declared on Preferred Stock, $ 18.75 Per Share

( 1,350 )  

Stock Issuance

Stock Based Compensation Cost

Surrendered Shares of Options Exercised

Cash Dividends Declared on Common Stock, $ 0.48 Per Share

( 10,824 )  

Preferred Stock Issuance, Net of Issuance Costs

71,930  

Stock Repurchase

71,930  

Stock Issuance, Net of Issuance Costs

98,899  

103,535  

Stock Based Compensation Cost

Surrendered Shares of Options Exercised

( 45 )  

( 1,057 )  

Balances at December 31, 2022

4 unchanged sentences

$ ( 74,204 )  

$ 580,481  

The accompanying notes are an integral part of these financial statements.

6 unchanged sentences

Consolidated Net Income

$ 52,136  

$ 29,994  

$ 23,772  

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Provision for Loan Losses

11,435  

Depreciation and Amortization

Net Accretion of Purchase Accounting Adjustments

( 7,122 )  

( 7,283 )  

Stock Based Compensation Cost

Net Amortization of Securities

Gain on Sales of Securities

( 378 )  

( 135 )  

Gain on Sale of SBA PPP Loans

( 9,179 )  

(Gain) Loss on Sales of Securities

Gain on Sale Loans

Income on Other Equity Securities

( 2,399 )  

( 2,658 )  

(Gain) Loss on Sale of Other Real Estate Owned, Net of Writedowns

( 30 )  

Increase in Cash Value of Life Insurance

( 1,396 )  

( 940 )  

Deferred Income Tax Expense (Benefit)

( 58 )  

Gain on Sale of Branch

( 492 )  

Changes in Assets and Liabilities:

(Increase) Decrease in Accrued Interest Receivable

( 10,648 )  

Increase in Other Assets

( 3,500 )  

( 2,655 )  

(Increase) Decrease in Other Assets

Increase (Decrease) in Accrued Interest Payable

( 1,145 )  

( 1,694 )  

Increase (Decrease) in Other Liabilities

Net Cash Provided by Operating Activities

56,443  

29,339  

24,418  

Cash Flows From Investing Activities:

Purchases of Securities Available for Sale

( 528,059 )  

( 233,566 )  

Proceeds from Maturities / Sales of Securities Available for Sale

29,945  

66,779  

25,984  

Proceeds from Paydowns of Securities Available for Sale

96,408  

73,890  

38,678  

Net Cash Received (Paid) in Acquisition

( 7,256 )  

106,000  

Net Cash Paid in Sale of Branch

( 13,727 )  

Purchases of Other Equity Securities

( 4,438 )  

( 681 )  

Redemption of Other Equity Securities

Purchase of Life Insurance

( 15,928 )  

Proceeds from Death Benefit of Cash Value of Life Insurance

Proceeds from Sale of SBA PPP Loans

243,607  

Net Increase in Loans

( 431,236 )  

( 384,962 )  

Net Purchases of Premises and Equipment

( 3,971 )  

( 2,970 )  

Loss on Disposal of Premises and Equipment

Proceeds from Sales of Other Real Estate

Net Increase in Federal Funds Sold

( 52,892 )  

( 112,780 )  

Net (Increase) Decrease in Federal Funds Sold

Net Cash Used in Investing Activities

( 675,354 )  

( 475,295 )  

Years Ended December 31,  

Cash Flows From Financing Activities:

Net Increase in Deposits

480,124  

658,388  

73,319  

Net Increase (Decrease) in Securities Sold Under Agreements to Repurchase

( 2,704 )  

( 48,767 )  

55,760  

Net Increase in Federal Funds Purchased

Net Advances (Repayments) on Federal Home Loan Bank Borrowings

39,022  

( 89,198 )  

38,000  

Net Proceeds (Repayments) from Short Term Borrowings

( 5,000 )  

Net Repayments from Long Term Borrowings

( 6,000 )  

( 1,797 )  

Proceeds from Issuance of Subordinated Debt

52,500  

Proceeds from Issuance of Common Stock

Proceeds from Issuance of Preferred Stock, Net of Issuance Costs

Proceeds from Issuance of Common Stock, Net of Issuance Costs

Surrendered Shares of Options Exercised

( 2,992 )  

( 4,321 )  

Repurchase of Common Stock

( 10,923 )  

( 5,799 )  

Proceeds from Exercise of Stock Warrants

Payment of Dividends on Preferred Stock

Payment of Dividends on Common Stock

( 9,436 )  

( 7,520 )  

Net Cash Provided by Financing Activities

538,155  

505,716  

161,171  

Net Increase (Decrease) in Cash and Cash Equivalents

( 80,756 )  

59,760  

Cash and Cash Equivalents at Beginning of Period

149,131  

89,371  

96,072  

Cash and Cash Equivalents at End of Period

$ 68,375  

$ 149,131  

$ 89,371  

Supplemental Disclosures for Cash Flow Information:

1 unchanged sentence

Interest on Deposits

$ 13,249  

$ 16,589  

$ 19,616  

Interest on Borrowings

$ 4,450  

$ 4,554  

$ 3,494  

Income Tax Payments

$ 15,711  

$ 5,470  

$ 5,600  

Supplemental Schedule for Noncash Investing and Financing Activities:

Change in the Unrealized Gain (Loss) on Securities Available for Sale

$ ( 14,607 )  

$ 9,918  

$ 7,698  

Change in the Unrealized Gain (Loss) on Share of Equity Method Investments

$ ( 336 )  

Change in Deferred Tax Effect on the Unrealized (Gain) Loss on Securities Available for Sale

$ 3,138  

$ ( 2,131 )  

Change in the Unrealized Gain (Loss) on Equity Securities

Change in Deferred Tax Effect on the Unrealized (Gain) Loss on Securities Available for Sale and Equity Securities

Transfer of Loans to Other Real Estate

$ 1,420  

$ 1,506  

$ 4,102  

Transfer of Other Real Estate to Premises and Equipment

$ 5,900  

Acquisitions:

Fair Value of Tangible Assets Acquired

$ 1,343  

$ 1,330,940  

Other Intangible Assets Acquired

Liabilities Assumed

1,241,834  

Net Identifiable Assets Acquired Over Liabilities Assumed

$ 5,637  

$ 93,317  

Subordinated Debt Issued as Part of Consideration of Smith Shellnut Wilson

$ 3,927  

The accompanying notes are an integral part of these financial statements.

15 unchanged sentences

Nature of Operations

The Bank operates out of full-service banking centers and loan production offices in markets across Louisiana and the Dallas/Fort Worth metroplex.

The Bank operates out of full-service banking centers and loan production offices in markets across Louisiana, the Dallas/Fort Worth, Texas metroplex, and Houston, Texas.

As a state bank, it is subject to regulation by the Office of Financial Institutions (“OFI”), State of Louisiana, and the Federal Deposit Insurance Corporation (“FDIC”), and undergoes periodic examinations by these agencies.

3 unchanged sentences

The Company issued 7,614,506 shares of its common stock to the former shareholders of Pedestal.

1, 2020, Pedestal had fair values of approximately $ 1.3 billion in total assets, $ 893.3 million in net loans, $ 1.2 billion in total deposits and $ 93.3 million in total shareholders’

At April 30, 2020, Pedestal reported $ 1.4 billion in total assets, $ 935.8 million in loans, and $ 1.2 billion in total deposits.

On March 22, 2021, the Company, through b1BANK, entered into a definitive agreement to acquire SSW, a registered investment advisor with approximately $ 3.5 billion in assets under management, specializing in managing investment portfolios for corporations, foundations and individuals.

1 unchanged sentence

At March 31, 2021, SSW reported $ 3.6 million in total assets and $ 2.3 million in total liabilities.

On March 1, 2022, the Company completed the acquisition of Texas Citizens Bancorp, Inc.

(“TCBI”), and its wholly-owned subsidiary, Texas Citizens Bank, National Association, located in Pasadena, Texas.

The company issued 2,069,532 shares of its common stock to the former shareholders of TCBI.

At February 28, 2022, TCBI reported $ 534.2 million in total assets, $ 349.5 million in loans and $ 477.2 million in deposits.

COVID- 19, a global pandemic, has adversely impacted the broad economy, including most industries and sectors. 

2 unchanged sentences

In accordance with Financial Accounting Standards Board (“FASB”) and interagency regulatory guidance issued in March 2020, loans that were modified under the terms of the Company’s COVID- 19 Deferral Assistance Program are not required to be designated as troubled debt restructurings to the extent that they meet the terms of such guidance under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The Company also elected to participate in the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) during the years ended December 31, 2021 and 2020 and the Federal Reserve’s Main Street Lending Program (“MSLP”) during the year ended December 31, 2020 to assist customers through the pandemic.

The Company also elected to participate in the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) during the years ended December 31, 2022 and 2021.

Preparation of financial statements in conformity with U.S.

1 unchanged sentence

These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future.

Critical accounting estimates that are particularly susceptible to significant change for the Company include the determination of the acquired loans and allowance for loan losses and purchase accounting adjustments (other than loans).

Critical accounting estimates that are particularly susceptible to significant change for the Company include the determination of the fair value and subsequent accounting for acquired loans and allowance for loan losses and purchase accounting adjustments (other than loans).

Other estimates include goodwill, fair value of financial instruments, investment securities and the assessment of income taxes.

36 unchanged sentences

For securities that the Company does expect to sell, or it is more likely than not that it will be required to sell prior to recovery of its amortized cost basis, both the credit and non-credit component of an OTTI are recognized in earnings.

There was no OTTI taken for the years ended December 31, 2022 and 2021.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Equity Securities

2 unchanged sentences

The FHLB stock is redeemable at par value at the discretion of the FHLB.

The Bank has invested in certain equity investments which are accounted for under the equity method of accounting.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Bank has invested in certain equity investments which are accounted for under the equity method of accounting, which are considered to be variable interest entities (“VIE”).

Loans are stated at principal amounts outstanding, adjusted for net deferred fees or costs, less the allowance for loan losses.

26 unchanged sentences

Allowance for Loan Losses

The allowance for loan losses is maintained at a level which, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio.

The allowance for loan losses is based upon management’s review and evaluation of the loan portfolio.

Factors considered in the establishment of the allowance for loan losses include management’s evaluation of specific loans;

the level and composition of classified loans;

historical loss experience;

results of examinations by regulatory agencies;

an internal asset review process;

expectations of future economic conditions and their impact on particular borrowers;

and other judgmental factors.

Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows.

Management obtains independent appraisals for significant collateral in determining collateral values.

Although management uses available information to recognize losses on loans, because of uncertainties associated with local economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that a material change could occur in the allowance for loan losses in the near term.

However, the amount of the change that is reasonably possible cannot be estimated.

The allowance for loan losses is maintained at a level which, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio. 

The allowance for loan losses is based upon management’s review and evaluation of the loan portfolio, including relevant historical loss experience. 

Specific allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. 

Management obtains independent appraisals for significant collateral in determining collateral values. 

However, the amount of the change that is reasonably possible cannot be estimated. 

Each period the Company considers qualitative factors that are relevant and necessary to adjust the model. 

Qualitative factors considered in the establishment of the allowance for loan losses include changes in international, national, regional and local conditions;

oil and gas trends;

nature and volume of the portfolio;

volume and severity of past due loans;

quality of the loan review system;

existence and effect of any concentrations of credit or changes in the levels of such concentrations;

effect of other external factors;

changes to lending policies and procedures, including experience, depth and ability of staff, and changes in the value of the underlying collateral.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans acquired in business combinations are initially recorded at fair value, which includes an estimate of credit losses expected to be realized over the remaining lives of the loans and, therefore, no corresponding allowance for loan losses is recorded for these loans at acquisition.

2 unchanged sentences

To the extent the calculated loss is greater than the remaining unaccreted discount, an allowance is recorded for such difference.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The allowance for loan losses is based on estimates of probable future losses, and ultimate losses may vary from the current estimates.

27 unchanged sentences

All servicing rights are identified by class and amortized over the remaining service life of the loan.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The provision for income taxes is based on amounts reported in the statement of income after exclusion of nontaxable income such as interest on state and municipal securities.

3 unchanged sentences

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company files a consolidated federal income tax return.

12 unchanged sentences

Statements of Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash on hand and deposits in other financial institutions.

For purposes of reporting cash flows, cash and cash equivalents include cash on hand and due from banks.

Comprehensive Income

28 unchanged sentences

Only subsequent changes in the allowance for credit losses are recorded as a credit loss expense for these assets.

The ASU also amends the current available for sale security impairment model for debt securities whereby credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses.

The ASU also amends the current impairment model for debt securities whereby estimated credit losses relating to debt securities should be recorded through an allowance for credit losses.

The amendments will be applied through a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

1 unchanged sentence

based on the most recent determination prior to October 18, 2019.

The Company met the requirements for this effective date delay and has elected to delay implementation of the standard.

The Company met the requirements for this effective date delay and elected to delay implementation of the standard.

The Company has established an implementation team and engaged third -party consultants who have jointly developed a project plan to provide implementation oversight.

The Company is in the process of developing and implementing current expected credit loss models that satisfy the requirements of ASU 2016 - 13.

The future adoption of this ASU may have a material effect on the Company’s consolidated financial statements.

Effective 

January 

1, 2023, the Company adopted ASU 2016 - 13, Financial Instrument –

Credit Losses (Topic 326 ), Measurement of Credit Losses on Financial Instruments related to the impairment of financial instruments.

This guidance, commonly referred to as Current Expected Credit Loss (“CECL”), changes impairment recognition to a model that is based on expected losses rather than incurred losses. 

CECL requires the Company to consider all available relevant information when calculating expected credit losses including information about past events, current conditions, and reasonable and supportable forecasts.

Additionally, the Accounting Standard Update requires the recognition of an allowance for credit losses for certain debt securities as well as additional disclosures.

The ASU requires adoption on a modified retrospective basis. 

The Company has completed its parallel runs comparing the historical incurred loss model to the CECL model. 

Additionally, third -party model validation of the CECL model is complete. 

The Company is in process of finalizing its new CECL internal control and governance processes. 

The Company expects that the allowance for credit losses will increase by $ 2.7 million and the liability for unfunded commitments increase by $ 3.2 million. 

This estimate of expected credit losses is based on loan balances and commitments to lend at January 1, 2023 using a one -year reasonable a supportable forecast period.

After the forecast period, the Company reverts to long-term historical loss experience to estimate losses over the remaining life.

The Company uses both internal and external credit data in estimating the expected credit losses.

The estimated increase in the allowance for credit losses and liability for unfunded commitments at adoption is primarily due to requirement that CECL estimate losses over the remaining life of the loan.

Additionally, and as discussed further in Note 3, the Company, through previous acquisitions, has acquired loans which were recorded at their fair value on the date of acquisition. 

Certain loans, which were determined to have evidence of deterioration at acquisition, were accounted for under ASC 310 - 30 (i.e.

classified as Purchase Credit Impaired or “PCI”

 The ASU introduces a new term called Purchase Credit Deteriorated (“PCD”) which replaces the PCI accounting under ASC 310 - 30.

Although the definition of PCD asset differs from that of a PCI asset under ASC 310 - 30, the ASU requires that an entity not reassess whether any existing assets meeting the definition of PCD assets at adoption on January 1, 2023. 

Instead, an entity applies the new PCD asset gross-up approach at transition to all loans that were accounted for as PCI under ASC 310 - 30 prior to the January 1, 2023 adoption date.

Any change in the allowance for credit losses for these assets as a result of adopting the CECL standard is accounted for as an adjustment to the asset’s amortized cost basis and not as a cumulative-effect adjustment to beginning retained earnings. 

The Company’s January 1, 2023 gross-up to allowance for credit losses and amortized cost related to PCD loans from previous acquisitions is estimated to be $ 4.8 million. 

After the transition to CECL, the Company will assess purchases of assets to determine if the PCD initial recognition and measurement accounting applies.

Upon adoption of the updated guidance on January 1, 2023, the Company’s impact will be recognized as a $ 1.0  million reduction to retained earnings and a $ 221,000  increase to deferred tax assets. 

As discussed in Footnote 15, the Company and b1Bank are subject to various regulatory capital requirements. 

Although the federal banking regulatory agencies have provided relief for an initial capital decrease at adoption of the CECL standard, the Company does not intend to opt into the relief as the impact of adoption will not be significant to the Company’s regulatory capital.

The adoption of this guidance did not have a material impact on the Company’s available-for-sale securities as most of this portfolio consists of U.S.

Treasuries and agency securities as well as highly rated residential agency mortgage-backed, corporate and municipal securities. 

CECL may impact future earnings, perhaps materially, due to future credit loss expectations for loans and certain commitments to lend related to factors which may include the Company’s macroeconomic forecast.

Note 2 –

9 unchanged sentences

Mergers and Acquisitions –

On May 1, 2020, the Company consummated the merger of Pedestal Bancshares, Inc.

(“Pedestal”), headquartered in Houma, Louisiana, with and into the Company, pursuant to the terms of that certain Agreement and Plan of Reorganization (the “Reorganization Agreement”), dated as of January 22, 2020, by and between the Company and Pedestal (the “Merger”).

Also on May 1, 2020, Pedestal’s wholly owned banking subsidiary, Pedestal Bank, was merged with and into b1BANK.

Pursuant to the terms of the Reorganization Agreement, upon consummation of the Merger, the Company issued 7,614,506 shares of its common stock to the former shareholders of Pedestal.

At April 30, 2020, Pedestal reported $ 1.4 billion in total assets, $ 935.8 million in loans and $ 1.2 billion in deposits.

The following table reflects the consideration paid for Pedestal’s net assets and the identifiable assets purchased and liabilities assumed at their estimated fair values as of May 1, 2020.

Cost and Allocation of Purchase Price for Pedestal Bancshares, Inc.

Texas Citizens Bancorp, Inc.

On March 1, 2022, the Company consummated the merger of Texas Citizens Bancorp, Inc.

(“TCBI”), headquartered in Pasadena, Texas, with and into the Company, pursuant to the terms of that certain Agreement and Plan of Reorganization (the “Reorganization Agreement”), dated as of October 20, 2021, by and between the Company and TCBI (the “Merger”).

Also on March 1, 2022, TCBI’s wholly owned banking subsidiary, Texas Citizens Bank, National Association, was merged with and into b1BANK.

Pursuant to the terms of the Reorganization Agreement, upon consummation of the Merger, the Company issued 2,069,532 shares of its common stock to the former shareholders of TCBI.

At February 28, 2022, TCBI reported $ 534.2 million in total assets, $ 349.5 million in loans and $ 477.2 million in deposits.

The following table reflects the consideration paid for TCBI’s net assets and the identifiable assets purchased and liabilities assumed at their fair values as of March 1, 2022.

The fair values are provisional estimates and may be adjusted for a period of up to one year from the date of acquisition if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

Cost and Allocation of Purchase Price for Texas Citizens Bancorp, Inc.

(Dollars in thousands, except per share data)

Purchase Price:

Shares Issued to Pedestal Shareholders on May 1, 2020

7,614,506  

Closing Stock Price on May 1, 2020

$ 12.96  

Shares Issued to TCBI's Shareholders on March 1, 2022

Closing Stock Price on February 28, 2022

Total Stock Issued

Other Consideration, Including Equity Awards

Total Purchase Price

$ 98,684  

Net Assets Acquired:

Cash and Cash Equivalents

$ 106,000  

Securities Available for Sale

264,517  

Loans and Leases Receivable

893,295  

Premises and Equipment, Net

35,960  

Cash Value of Life Insurance

11,522  

Core Deposit Intangible

19,809  

1,335,314  

1,177,137  

59,399  

Other Liabilities

Total Liabilities

1,241,725  

Net Assets Acquired

93,589  

Goodwill Resulting from Merger

$ 5,095  

The Company has recorded approximately $ 515,000 and $ 9.6 million of acquisition-related costs within merger and conversion-related expenses and salaries and benefits for the years ended December 31, 2021 and 2020, respectively.

The Company has recorded approximately $ 5.2 million and $ 515,000 of acquisition-related costs within merger and conversion-related expenses and salaries and benefits for the years ended December 31, 2022 and 2021, respectively.

The following is a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presented above.

18 unchanged sentences

Fair values for time deposits were estimated using a discounted cash flow analysis, that applied interest rates currently being offered to the contractual interest rates on such time deposits.

 Fair values for borrowings were based on market values and market rates provided by the FHLB.

The following unaudited supplemental pro forma information is presented to reflect estimated results assuming Pedestal was acquired as of January 1, 2020.

These unaudited pro forma results are not necessarily indicative of the operating results that the Company would have achieved had the acquisition been completed as of January 1, 2020 and should not be considered representative of future operating results.

For The Year Ended December 31,

(Dollars in thousands, except per share data)

Interest Income

$ 170,438  

$ 170,619  

Interest Expense

16,554  

24,286  

Net Interest Income

153,884  

146,333  

Provision for Loan Losses

11,435  

Net Interest Income after Provision for Loan Losses

145,837  

134,898  

Noninterest Income

35,782  

26,095  

Noninterest Expense

117,061  

105,254  

Income Before Income Taxes

64,558  

55,739  

Income Tax Expense

12,422  

10,757  

$ 52,136  

$ 44,982  

Earnings Per Common Share

$ 2.54  

$ 2.15  

$ 2.53  

$ 2.14  

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

This pro forma information combines the historical consolidated results of operations of the Company and Pedestal for the periods presented and gives effect to the following adjustments:

Fair value adjustments:

 Pro forma adjustment of $ 3.1 million for the year ended December 31, 2020 to record estimated amortization of premiums and accretion of discounts on acquired loans, borrowings, and deposits.

Pedestal ’

s provision for loan losses:

 Pro forma adjustment of $ 700,000 for the year ended December 31, 2020 to eliminate Pedestal’s provision for loan losses.

The additional provision for loan loss on new loans was deemed immaterial and not adjusted for in the pro forma information.

Noninterest Expense:

 Pro forma adjustments include adjustments for the amortization of intangible assets acquired from Pedestal.

Nonrecurring acquisition-related expenses of $ 9.6 million were removed for the year ended December 31, 2020.

Provision for Income Taxes :

Pro forma adjustments for the year ended December 31, 2020 included a tax expense adjustment of 21%, as Pedestal was an S-Corp prior to its acquisition by the Company.

 Fair values for borrowings were based on estimated market rates over the remaining terms of the subordinated debt issuances.

Pro forma tables for TCBI were impractical to include due to the cost versus benefit of including such disclosures.

Smith Shellnut Wilson, LLC

On April 1, 2021, the Company consummated the acquisition, through b1BANK, of SSW, headquartered in Ridgeland, Mississippi, pursuant to the terms of the definitive agreement dated as of March 22, 2021.

2 unchanged sentences

As part of the acquisition, the Company recorded $ 6.5 million in goodwill and $ 4.3 million in customer intangibles to be amortized over a 10 year period.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 –

Earnings per Common Share –

Basic earnings per share (“EPS”) represents income available to common shareholders divided by the weighted average number of common shares outstanding;

Basic earnings per common share (“EPS”) represents income available to common shareholders divided by the weighted average number of common shares outstanding;

no dilution for any potentially convertible shares is included in the calculation.

4 unchanged sentences

(Dollars in thousands, except per share data)

Net Income Available to Common Shares

$ 54,255  

1 unchanged sentence

$ 29,994  

Preferred Stock Dividends

Net Income Available to Common Shareholders

$ 52,905  

$ 52,136  

$ 29,994  

Weighted Average Common Shares Outstanding

18 unchanged sentences

$ 1.64  

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5 –

2 unchanged sentences

The Bank had no required reserves as of December 31, 2022 and 2021.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 –

6 unchanged sentences

$ 2,668  

$ 30,115  

Government Agencies

7 unchanged sentences

55,213  

451,725  

Municipal Securities

1 unchanged sentence

31,858  

Total Securities Available for Sale

315,535  

Total Securities Available for Sale

$ 985,599  

3 unchanged sentences

(Dollars in thousands)

Treasury Securities

$ 22,751  

$ 22,314  

Government Agencies

10 unchanged sentences

372,333  

Other Securities

Total Securities Available for Sale

2 unchanged sentences

$ 9,542  

$ 1,021,061  

BUSINESS FIRST BANCSHARES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table is a summary of securities with gross unrealized losses and fair values at December 31, 2021 and 2020, aggregated by investment category and length of time in a continued unrealized loss position.

The following tables present a summary of securities with gross unrealized losses and fair values at December 31, 2022 and 2021, aggregated by investment category and length of time in a continued unrealized loss position.

Due to the nature of these investments and current prevailing market prices, these unrealized losses are considered a temporary impairment of the securities.

6 unchanged sentences

$ 20,413  

$ 2,294  

$ 30,115  

$ 2,668  

Government Agencies

1 unchanged sentence

22,967  

47,372  

Corporate Securities

19,564  

25,949  

Mortgage-Backed Securities

2 unchanged sentences

47,740  

439,735  

55,213  

Municipal Securities

2 unchanged sentences

131,944  

21,652  

274,979  

31,858  

Total Securities Available for Sale

4 unchanged sentences

$ 818,150  

$ 95,151  

December 31, 2021

2 unchanged sentences

(Dollars in thousands)

Treasury Securities

$ 22,314  

Government Agencies

24,980  

Corporate Securities

2 unchanged sentences

18,985  

426,971  

Municipal Securities

1 unchanged sentence

10,161  

Other Securities

155,810  

Total Securities Available for Sale

1 unchanged sentence

$ 8,899  

$ 29,146  

$ 637,425  

$ 9,542  

Management evaluates securities for other than temporary impairment when economic and market conditions warrant such evaluations.

27 unchanged sentences

There were $ 57,000 , $ 215,000 and $ 158,000 realized gross losses from sales or redemptions of securities for the years ended December 31, 2022, 2021 and 2020, respectively.

Other Equity Securities

Other Equity Securities and VIEs

The Company has invested in the Federal Home Loan Bank of Dallas which is included in other equity securities and reflected at cost in these financial statements.

1 unchanged sentence

The Federal Home Loan Bank stock is pledged to secure advances from the Federal Home Loan Bank of Dallas at both December 31, 2022 and 2021.

The Company also has investments of $ 302,000 in The Independent Bankers Bank, $ 562,000 in Bankers Insurance, LLC, and $ 2.0 million in First National Bankers Bank at both December 31, 2021 and 2020.

The Company also has investments of $ 302,000 in TIB National Association, $ 562,000 in Bankers Insurance, LLC at both December 31, 2022 and 2021.

The Company also has investments in First National Banker's Bank of $ 2.2 million and $ 2.0 million and Senior Housing Crime Prevention Foundation stock of $ 501,000 and $ 502,000 at December 31, 2022 and 2021, respectively.

These investments are carried at cost, less any impairment, due to the lack of a quoted market price and a ready market for these types of investments.

Variable interest entities ("VIE") are legal entities that either do not have sufficient equity to finance their activities without the support from other parties or whose equity investors lack a controlling financial interest. 

The Company has investments in certain partnerships and limited liability entities that have been evaluated and determined to be VIEs. 

Consolidation of a VIE is appropriate if a reporting entity holds a controlling financial interest in the VIE and is the primary beneficiary. 

The Company is not the primary beneficiary and does not hold a controlling interest in the VIEs as it does not have the power to direct the activities that most significantly impact the VIEs' economic performance.

Additionally, the Bank has invested in certain Small Business Investment Companies (“SBIC”) which includes $ 1.4 million and $ 2.0 million in McLarty Capital Partners SBIC, L.P., $ 2.2 million and $ 2.0 million in McLarty Capital Partners SBIC II, L.P., $ 1.7 million and $ 1.7 million in Bluehenge Capital Secured Debt SBIC, L.P., $ 37,000 and $ 25,000 in New Louisiana Angel Fund 2, LLC, $ 1.0 million and $ 235,000 in Firmament Capital Partners, SBIC III, $ 502,000 and $ 504,000 in Senior Housing Crime Prevention Foundation stock at December 31, 2021 and 2020, respectively.

The Bank invested $ 211,000 in Pharos Capital Partners, IV-A, LP at December 31, 2021.

These investments are accounted for utilizing the equity method of accounting.

In 2021, the Company invested in four financial technology (“Fintech”) funds.

For the year ended December 31, 2021, the Company invested $ 60,000 in BankTech Ventures, LP, $ 161,000 in Jam Fintop Banktech, LP, $ 989,000 in Ledyard Capital Managers, LLC and $ 154,000 in Mendon Ventures Banktech Fund I, LP.

VIEs are legal entities that either do not have sufficient equity to finance their activities without the support from other parties or whose equity investors lack a controlling financial interest.

The Company has investments in certain partnerships and limited liability entities that have been evaluated and determined to be VIEs.

Consolidation of a VIE is appropriate if a reporting entity holds a controlling financial interest in the VIE and is the primary beneficiary.

The Company is not the primary beneficiary and does not hold a controlling interest in the VIEs as it does not have the power to direct the activities that most significantly impact the VIEs’

economic performance.

Small Business Investment Companies (“SBIC”) and financial technology (“Fintech”) funds at December 31, 2022 and 2021 are summarized below.

(Dollars in thousands)

McLarty Capital Partners SBIC, L.P.

$ 1,432  

McLarty Capital Partners SBIC II, L.P.

Firmament Capital Partners SBIC III, L.P.

Bluehenge Capital Secured Debt SBIC, L.P.

Bluehenge Capital Secured Debt SBIC II, L.P.

New Louisiana Agnel Fund 2, LLC

Pharos Capital Partners IV-A, L.P.

Valesco Fund II, LP

GP Capital Partners, LP

BankTech Ventures, LP

Jam Fintop BankTech, LP

Ledyard Capital Managers, LLC

Mendon Ventures Banktech Fund I, LP

Castle Creek Launchpad Fund I, LP

Work America Capital Fund I, LP

$ 14,242  

$ 8,005  

BUSINESS FIRST BANCSHARES, INC.

33 unchanged sentences

SBA PPP loans accounted for $ 2.8 million and $ 5.4 million of the commercial loan portfolio as of December 31, 2022 and 2021, respectively.

SBA PPP loans accounted for $ 1.6 million of the consumer loan portfolio as of December 31, 2020.

The Company had no SBA PPP outstanding balances in the consumer loan portfolio as of December 31, 2021.

The performing 1 - 4 family residential, multi-family residential, commercial real estate, and commercial loans, are pledged, under a blanket lien, as collateral securing advances from the FHLB at December 31, 2022 and 2021.

Net deferred loan origination fees were $ 13.1 million and $ 7.7 million at December 31, 2022 and 2021, respectively, and are netted in their respective loan categories above.

The majority of the fees, $ 6.2 million at December 31, 2020 were associated with SBA PPP loans.

In addition to loans issued in the normal course of business, the Company considers overdrafts on customer deposit accounts to be loans, and reclassifies overdrafts as loans in its consolidated balance sheets.

At December 31, 2021 and 2020, overdrafts of $ 2.4 million and $ 623,000 , respectively, have been reclassified to loans.

At December 31, 2022 and 2021, overdrafts of $ 2.0 million and $ 2.4 million, respectively, have been reclassified to loans.

The Bank is the lead lender on participations sold, without recourse, to other financial institutions which amounts are not included in the consolidated balance sheets.

The unpaid principal balances of mortgages and other loans serviced for others were approximately $ 461.8 million and $ 430.0 million at December 31, 2021 and 2020, respectively.

The Company has servicing rights of $ 1.4 million recorded at both December 31, 2021 and 2020, respectively.

The unpaid principal balances of mortgages and other loans serviced for others were approximately $ 683.3  million and $ 461.8 million at December 31, 2022 and 2021, respectively.

The Company has servicing rights of $ 1.7 million and $ 1.4 million recorded at December 31, 2022 and 2021, respectively, which are recorded within other assets.

The Bank grants loans and extensions of credit to individuals and a variety of businesses and corporations located in its general market areas throughout Louisiana and Texas.

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total loans held for investment at December 31, 2021 includes $ 379.0 million of loans acquired in acquisitions that were recorded at fair value as of the acquisition date.

Included in the acquired balances at December 31, 2021 were acquired impaired loans accounted for under ASC 310 - 30 with a net carrying amount of $ 51.2 million and acquired performing loans not accounted for under ASC 310 - 30 totaling $ 331.3 million with a related purchase discount of $ 3.5 million.

Total loans held for investment at December 31, 2022 includes $ 498.1  million of loans acquired in acquisitions that were recorded at fair value as of the acquisition date.

Included in the acquired balances at December 31, 2022 were acquired impaired loans accounted for under ASC 310 - 30 with a net carrying amount of $ 49.8 million and acquired performing loans not accounted for under ASC 310 - 30 totaling $ 450.0 million with a remaining purchase discount of $ 3.3 million.

Total loans held for investment at December 31, 2021 includes $ 379.0 million of loans acquired in acquisitions that were recorded at fair value as of the acquisition date.

Included in the acquired balances at December 31, 2020 were acquired impaired loans accounted for under ASC 310 - 30 with a net carrying amount of $ 64.3 million and acquired performing loans not accounted for under ASC 310 - 30 totaling $ 696.2 million with a related purchase discount of $ 9.8 million.

The following tables set forth, as of December 31, 2022 and 2021, the balance of the allowance for loan losses by portfolio segment, disaggregated by impairment methodology, which is then further segregated by amounts evaluated for impairment collectively and individually.

18 unchanged sentences

( 43 )  

10,886  

Ending Balance

5 unchanged sentences

$ 1,157  

$ 38,178  

Ending Balance:

Individually evaluated for impairment

$ 2,002  

$ 2,214  

Collectively evaluated for impairment

5 unchanged sentences

$ 1,124  

$ 35,964  

Purchased Credit Impaired

15 unchanged sentences

$ 14,707  

$ 13,821  

Collectively evaluated for impairment

12 unchanged sentences

$ 49,787  

$ 51,220  

BUSINESS FIRST BANCSHARES, INC.

17 unchanged sentences

( 469 )  

( 44 )  

Ending Balance

7 unchanged sentences

Individually evaluated for impairment

$ 1,014  

Collectively evaluated for impairment

22 unchanged sentences

$ 5,514  

$ 13,821  

Collectively evaluated for impairment

13 unchanged sentences

$ 51,220  

$ 64,260  

Portfolio Segment Risk Factors

2 unchanged sentences

The Company is also exposed to risk based on the ability of the construction loan borrower to finance the loan or sell the property upon completion of the project, which may be affected by changes in secondary market terms and criteria for permanent financing since the time that the Company funded the loan.

Farmland loans are often for investments related to agricultural businesses and may include construction of facilities.

These loans are usually repaid through permanent financing or the cashflow from the borrower’s ongoing operations.

One-to- four family residential include first and second lien 

Farmland loans are loans that can be, or are, used for agricultural purposes.

These loans are usually repaid through permanent financing, cash flow from the borrower’s ongoing operations, development of the property, or sale of the property.

One-to- four family residential loans include first and second lien 

1 - 4  family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences.

11 unchanged sentences

Any interruption or discontinuance of operating cash flows from the business, which may be influenced by events not under the control of the borrower such as economic events and changes in governmental regulations, could materially affect the ability of the borrower to repay the loan.

Consumer loans include a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans.

Consumer and other loans include a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans.

The risk is based on changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness or other personal hardship, and fluctuations in the value of the real estate or personal property securing the consumer loan, if any.

Within the commercial and consumer loans are 

100 %  government guaranteed SBA PPP loans.

These loans are separately reserved for within the Company’s allowance for loan losses.

Management further disaggregates the loan portfolio segments into classes of loans, which are based on the initial measurement of the loan, risk characteristics of the loan and the method for monitoring and assessing the credit risk of the loan.

1 unchanged sentence

Credit Quality Indicators

December 31, 2021  

December 31, 2022

Special Mention

20 unchanged sentences

1,074,417  

1,090,343  

Consumer and other

6 unchanged sentences

$ 4,606,176  

December 31, 2020  

December 31, 2021

Special Mention

7 unchanged sentences

86,063  

87,463  

1-4 family residential

10 unchanged sentences

721,385  

886,325  

Consumer and other

16 unchanged sentences

Doubtful loans have specific weaknesses that are severe enough to make collection or liquidation in full highly questionable and improbable.

As of December 31, 2021 and 2020, loan balances outstanding more than 90 days past due and still accruing interest amounted to $ 222,000 and $ 1.5 million, respectively.

As of December 31, 2022 and 2021, loan balances outstanding more than 90 days past due and still accruing interest amounted to $ 335,000 and $ 222,000 , respectively.

As of December 31, 2022 and 2021, loan balances outstanding on nonaccrual status amounted to $ 11.1 million and $ 12.9 million, respectively.

1 unchanged sentence

The following tables provide an analysis of the aging of loans and leases as of December 31, 2022 and December 

Past due and nonaccrual loan amounts exclude acquired impaired loans within pools, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.

Past due and nonaccrual loan amounts exclude acquired impaired loans, even if contractually past due or if the Company does not expect to receive payment in full, as the Company is currently accreting interest income over the expected life of the loans.

All loans greater than 90 days past due are generally placed on nonaccrual status.

11 unchanged sentences

193,587  

87,463  

1-4 family residential

50 unchanged sentences

$ 3,189,608  

$ 1,523  

BUSINESS FIRST BANCSHARES, INC.

31 unchanged sentences

$ 2,214  

$ 3,553  

With no allowance recorded:

2 unchanged sentences

$ 1,000  

$ 1,356  

$ 1,050  

1-4 family residential

9 unchanged sentences

$ 1,025  

$ 1,426  

$ 1,077  

1-4 family residential

5 unchanged sentences

$ 2,214  

$ 15,653  

BUSINESS FIRST BANCSHARES, INC.

13 unchanged sentences

$ 2,284  

$ 2,855  

With no allowance recorded:

1 unchanged sentence

Construction and land

$ 1,290  

$ 1,356  

$ 1,050  

1-4 family residential

8 unchanged sentences

Construction and land

$ 1,358  

$ 1,426  

$ 1,077  

1-4 family residential

5 unchanged sentences

$ 13,322  

$ 13,892  

BUSINESS FIRST BANCSHARES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As discussed in Note 3, the Company acquired loans with fair values of $ 893.3 million from Pedestal on May 1, 2020.

Of the total 

$893.3 million of loans acquired, $ 818.7 million were determined to have no evidence of deteriorated credit quality and are accounted for under ASC Topics 310 - 10 and 310 - 20.

The unamortized discount related to the acquired performing loans totaled $ 11.5 million at May 1, 2020.

As discussed in Note 3, the Company acquired loans with fair values of $ 338.0 million from TCBI on March 1, 2022.

Of the total $ 338.0 million of loans acquired, $ 316.5 million were determined to have no evidence of deteriorated credit quality and are accounted for under ASC Topics 310 - 10 and 310 - 20.

The unamortized discount related to the acquired performing loans totaled $ 1.7 million at March 1, 2022.

The remaining $ 21.5 million were determined to exhibit deteriorated credit quality since origination under ASC 310 - 30.

The following table presents the balances acquired on May 1, 2020 which were accounted for under ASC 310 - 30.

The following table presents the balances acquired on March 1, 2022 which were accounted for under ASC 310 - 30.

Impaired Credits

28 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company had three troubled debt restructurings that had subsequently defaulted in the aggregate amount of $ 154,000 during the year ended December 31, 2021 and one during the year ended December 31, 2020 in the amount of $ 34,000 .

The Company did not modify any loans that were categorized as trouble debt restructurings during the year ended December 31, 2021. 

During the year ended December 31, 2020, the Company modified seven loans categorized as trouble debt restructurings with aggregate outstanding balances of $ 4.0 million immediately prior to and immediately following the modifications.

Through December 31, 2021, the Company had agreed to deferrals due to the effects of the COVID- 19 pandemic on approximately 1,600 loans with an aggregate outstanding balance of $ 522.0 million, of which the majority of modifications occurred in 2020.

As of December 31, 2021, the Company had no loans with outstanding principal balances still in their pandemic-related deferral periods.

Under Section 4013 of the CARES Act, as extended by the Consolidated Appropriations Act of 2021, and based on the interpretive guidance released by the FASB and regulators, the Company determined that none of the modifications associated with the COVID- 19 pandemic were troubled debt restructurings at December 31, 2021.

Payment deferrals with an outstanding principal balance of $ 829.1 million had been granted as of December 31, 2020, due to the effects of the COVID- 19 pandemic. 

As of December 31, 2020, the Company had 121 loans with outstanding principal balances of $ 98.1 million still in their deferral periods, although $ 94.8 million were interest-only modifications to seasoned, highly rated clients.

Under Section 4013 of the CARES Act and based on the interpretive guidance released by the FASB and regulators, the Company determined that none of the modifications associated with the COVID- 19 pandemic were troubled debt restructurings at December 31, 2020.

Accrued interest receivable of $ 6.0 million and $ 8.4 million was outstanding as of December 31, 2021 and December 31, 2020, respectively, for all loan deferrals related to the COVID- 19 pandemic and Hurricanes Laura and Ida.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company had one troubled debt restructuring that subsequently defaulted during the year ended December 31, 2022 in amount of $ 1.5 million and three during the year ended December 31, 2021 in the amount of $ 154,000 .

The Company modified one loan that was categorized as a trouble debt restructuring during the year ended December 31, 2022, with a pre-modification balance of $ 3.5 million and a post-modification balance of $ 3.2 million. 

During the year ended December 31, 2021, the Company did not modify any loans that were categorized as trouble debt restructurings.

As of December 31, 2022 and 2021, our loan portfolio included loans with outstanding principal balances of $ 425.2 million and $ 522.0 million, respectively, that had previously been granted payment deferrals due to the effects of the COVID- 19 pandemic. 

As of both December 31, 2022 and 2021, the Company had no loans with outstanding principal balances still in their pandemic-related deferral periods.

Under Section 4013 of the CARES Act, as extended by the Consolidated Appropriations Act of 2021, and based on the interpretive guidance released by the FASB and the applicable banking regulators, the Company determined that none of the modifications associated with the COVID- 19 pandemic were troubled debt restructurings at both December 31, 2022 and 2021.

Accrued interest receivable of $ 5.4 million and $ 6.0 million was outstanding as of December 31, 2022 and 2021, respectively, for all loan deferrals.

Note 8 –

22 unchanged sentences

The provision for depreciation and amortization attributable to bank premises and equipment charged to operating expenses was $ 4.8 million, $ 4.2 million and $ 3.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9 - Goodwill and Other Intangible Assets –

Goodwill was recorded in acquisitions during the years ended December, 31, 2021, 2020, 2018 and 2015.

Goodwill was recorded as a result of acquisitions.

The carrying amount of goodwill as of December 31, 2022 and 2021 was $ 88.5 million and $ 59.9 million, respectively.

The increase of $ 6.0 million in goodwill was the result of the acquisition of SSW in 2021 which added $ 6.5 million, offset with $ 271,000 in adjustments from the Pedestal acquisition and the sale of the Oak Grove branch which also reduced goodwill in the amount of $ 168,000 .

The increase of $ 28.6 in goodwill was the result of the acquisition of TCBI in 2022.

In 2021, the increase of $ 6.0 million in goodwill was the result of the acquisition of SSW in 2021 which added $ 6.5 million, offset with $ 271,000 in adjustments from the Pedestal acquisition and the sale of the Oak Grove branch which also reduced goodwill in the amount of $ 168,000 .

The Company performed the required annual goodwill impairment test as of October 1, 2022.

7 unchanged sentences

$ 13,128  

Acquired in Pedestal Acquisition

Acquired in SSW Acquisition

Adjustment for Sale of Branch

( 203 )  

Acquired in TCBI Acquisition

Accumulated Amortization

3 unchanged sentences

$ 12,203  

Amortization expense on the core deposit and customer intangible assets totaled approximately $ 1.6 million, $ 1.2 million and $ 905,000 during the years ended December 31, 2021, 2020 and 2019, respectively.

Amortization expense on the core deposit and customer intangible assets totaled approximately $ 2.0 million, $ 1.6 million and $ 1.2 million during the years ended December 31, 2022, 2021 and 2020, respectively.

The following table presents the estimated aggregate amortization expense for the periods indicated:

51 unchanged sentences

The Bank had outstanding advances from the FHLB of $ 410.1 million and $ 82.0 million at December 31, 2022 and 2021, respectively, consisting of:

One fixed rate loan of $ 23.0 million at December 31, 2021 and 2020, with interest at 1.59% paid monthly.

Principal is due at maturity in June 2024.

One short term, seven -day, fixed rate loan of $ 262.0 million at December 31, 2022, with interest at 4.55 %.

Principal was due, paid and renewed, at maturity in January 2023.

One fixed rate loan of $ 875,000 at December 31, 2022, that was acquired during the TCBI acquisition, with interest at 4.88 % paid monthly.

Principal is due at maturity in April 2025.

One fixed rate loan of $ 100.0 million at December 31, 2022, with interest at 3.53 % paid monthly.

Principal is due at maturity in October 2027.

This advance has put options beginning in October 2023.

One fixed rate loan with an original principal balance of $ 60.0 million.

The loan was made in 2021 and the balance at December 31, 2021 was $ 59.0 million with interest at 0.89 %.

The loan was made in 2021 and the balance at December 31, 2022 and 2021 was $ 47.2 million and $ 59.0 million, respectively, with interest at 0.89 %.

Monthly principal and interest payments are due monthly and the loan matures in November 2026.

One fixed rate loan of $ 23.0 million at December 31, 2021, with interest at 1.59 % paid monthly.

Principal was due and paid at maturity in January 2021.

One fixed rate loan of $ 5.0 million at December 31, 2020, with interest at 2.63 % paid monthly.

Principal was due and paid at maturity in February 2021.

One fixed rate loan of $ 5.0 million at December 31, 2020, with interest at 2.90 % paid monthly.

Principal was due and paid at maturity in June 2021.

One fixed rate loan of $ 5.0 million at December 31, 2020, with interest at 2.03 % paid monthly.

Principal was due and paid at maturity in October 2021.

Principal was due at maturity in June 2024 but was paid in full in June 2022.

These advances are collateralized by the Company’s investment in FHLB stock and a blanket lien on qualifying loans in the Bank’s loan portfolio.

The blanket lien totaled approximately $ 1.8 billion at December 31, 2022 with unused availability for advances and letters of credit of approximately $ 1.3 billion.

As a result of the acquisition of Pedestal, the Company assumed the outstanding FHLB advances of Pedestal Bank.

These advances were recorded at fair value as of acquisition, which totaled $ 39.2 million, and resulted in a market value adjustment of $ 1.2 million which was accreted over the life of the respective advances as a reduction of interest expense on borrowings.

The unaccreted market value adjustment totaled $ 145,000 at December 31, 2020 and no unaccreted market value adjustment at December 31, 2021.

In December 2020, the Company extinguished $ 74.0 million in FHLB advances resulting in loss on early extinguishment of debt of $ 2.4 million, which is included in other expenses.

The Company has outstanding lines of credit with several of its correspondent banks available to assist in the management of short-term liquidity.

1 unchanged sentence

Total available lines of credit as of December 31, 2022 and 2021 were $ 154.0 million and $ 154.0 million, respectively.

There was no balance on these lines at December 31, 2021 and 2020.

The Company has a line of credit with First National Bankers Bank (“FNBB”) and is allowed to borrow on a revolving basis up to $ 5.0 million.

This line of credit, established on November 3, 2021, is secured by a pledge of and security interest in the common stock of the Bank.

The Company did not have a balance on the line of credit at December 31, 2021.

The line of credit carries a variable interest rate equal to the Wall Street Journal Prime Rate with a minimum rate of 3.50 %, and matures in November 2022.

This FNBB line was established for general corporate purposes.

The Company had a line of credit with FNBB and was allowed to borrow on a revolving basis up to $ 5.0 million.

This line of credit, established on September 12, 2016, was secured by a pledge of and security interest in the common stock of the Bank.

The Company had an outstanding balance for the full line amount of $ 5.0 million at December 31, 2020.

The line of credit carried a variable interest rate equal to the Wall Street Journal Prime Rate and matured and paid in full in January 2021.

This FNBB line was established for the purpose of repurchasing shares of the Company’s common stock from certain of its shareholders and for general corporate purposes.

The Company acquired a $ 7.0 million note payable with FNBB from Pedestal of which $ 6.0 million was outstanding at December 31, 2020.

The note was payable in annual principal installments of $ 1.0 million and was repaid in full in March 2021.

The note carried a variable interest rate equal to the Wall Street Journal Prime Rate, adjusted quarterly, with a minimum rate of 4.00 %.

Interest payments were due quarterly.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company purchased $ 14.1 million on these lines at December 31, 2022 and was not in a purchased position on these lines at December 31, 2021.

The Company had a line of credit with First National Banker’s Bank (“FNBB”) and was allowed to borrow on a revolving basis up to $ 5.0 million.

This line of credit, established on November 3, 2021, was secured by a pledge of and security interest in the common stock of the Bank and established for general corporate purposes.

The Company drew down the full amount in 2022 and did not have a balance on the line of credit at December 31, 2021.

The line of credit carried a variable interest rate equal to the Wall Street Journal Prime Rate with a minimum rate of 3.50 %, and matured in November 2022.

This FNBB line was paid in full at maturity, and was not renewed, in November, 2022.

In December 2018, the Company issued subordinated notes in the amount of $ 25.0 million.

3 unchanged sentences

The subordinated notes are redeemable by the Company at its option beginning in 2028.

In the Pedestal acquisition, the Company assumed Pedestal’s obligations of $ 5.2 million in junior subordinated debentures, which are associated with $ 5.0 million in trust preferred securities acquired from Pedestal.

In the Pedestal acquisition, the Company assumed Pedestal’s junior subordinated debentures, which are associated with $ 5.0 million in trust preferred securities acquired from Pedestal.

Interest on the junior subordinated debentures is accrued at an annual rate equal to the 3 -month LIBOR, as determined in the indenture governing the debentures, plus 3.05 %.

4 unchanged sentences

Principal and interest payments on the junior subordinated debentures are in a superior position to the liquidation rights of holders of common stock.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 26, 2021, the Company issued $ 52.5 million in subordinated debt.

6 unchanged sentences

The subordinated notes are redeemable by the Company at its option beginning in 2026.

On March 1, 2022, the Company assumed, in connection with the TCBI acquisition, three tranches of subordinated debt with an aggregate principal balance outstanding of $ 26.4 million.

One tranche in the amount of $ 10.0 million bears interest at a fixed rate of 6.25 % until April 11, 2023, at which point the notes become redeemable at the Company’s option, then will reset to a floating interest rate based on a benchmark rate plus 350 basis points, adjusting quarterly, until maturity on April 11, 2028.

Another tranche in the amount of $ 7.5 million bears a fixed rate of 6.38 % until December 13, 2023, at which point the notes become redeemable at the Company’s option, then will reset to a floating rate based on a benchmark rate plus 350 basis points, adjusting quarterly, until maturity on December 13, 2028.

The third tranche in the amount of $ 8.9 million bears an adjustable interest rate plus 595 basis points, based on a benchmark rate, until maturity on March 24, 2027.

The $ 8.9 million tranche is currently redeemable at the Company’s option.

These notes carry an aggregate $ 2.9 million fair value adjustment as of December 31, 2022.

Note 12 –

18 unchanged sentences

$ 6,788  

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The provision (credit) for federal income taxes differs from the amount computed by applying federal statutory rates to income from operations as indicated in the following analysis at December 31, 2022, 2021 and 2020:

9 unchanged sentences

( 220 )  

( 730 )  

Goodwill Write-off for Branch Sale

4 unchanged sentences

$ 6,788  

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

5 unchanged sentences

( 2,285 )  

Net Operating Loss Carryforward

Unrealized Loss on Securities

20,040  

Acquired Loans Fair Market Value Adjustment

Allowance for Loan Losses

Right of Use Asset

Lease Liability

Deferred Compensation

2 unchanged sentences

18,170  

Unrealized Gain on Securities

Lease Liability

Right of Use Asset

Core Deposit Intangible

9 unchanged sentences

The AMT credit carryforward was exhausted in 2019.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, the Company acquired certain deferred tax attributes and liabilities as a result of the 2022 TCBI acquisition, including a federal NOL carryforward of $ 8.8 million and a federal charitable contribution carryforward of $ 229,000 .

The amount of the NOL carryforward the Company is allowed to deduct against current taxable income each year is limited, and the Company may not offset more than 80% of taxable income in any year.

As of December 31, 2022, the NOL and charitable contribution carryforward was $ 8.3 million to be carried forward indefinitely until utilized.

Note 14 –

2 unchanged sentences

(Dollars in thousands)

Unrealized Gains (Losses) on AFS Securities and Equity Method Investments:

Unrealized Gains (Losses) on AFS Investment Securities and Equity Method Investments:

Balance at Beginning of Year

1 unchanged sentence

$ 10,628  

Other Comprehensive Income on AFS Securities

Other Comprehensive Income (Loss) on AFS Investment Securities

Before Reclassifications - Net of Tax

( 73,679 )  

Other Comprehensive Income on Equity Method Investments

( 266 )  

Reclassification Adjustment for Gains

Other Comprehensive Income (Loss) on Equity Method Investments

Reclassification Adjustment for Gains (Losses) on Sale of AFS Investment Securities

Realized - Net of Tax

( 38 )  

Other Comprehensive Income (Loss)

2 unchanged sentences

$ ( 74,204 )  

$ 10,628  

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 –

7 unchanged sentences

The Company paid quarterly common stock dividends totaling $ 0.48 per share and $ 0.46 per share for the years ended December 31, 2022 and 2021, respectively, based upon quarterly financial performance.

The Company paid a dividend in the fourth quarter on preferred stock of $ 18.75 per share.

Common Stock Repurchase Plan

On December 13, 2018, the Company’s board of directors approved a resolution authorizing management to repurchase shares of its common stock with an aggregate purchase price of up to $ 15.0 million from time to time, subject to certain limitations and conditions.

The stock repurchase program was effective for a period of 24 months.

The stock repurchase program did not obligate the Company to repurchase any shares of its common stock.

The Company repurchased $ 5.0 million, $ 2.5 million and $ 0 of shares for the years ended December 31, 2020, 2019 and 2018, respectively.

This plan was terminated on October 22, 2020.

On October 22, 2020, the Company’s board of directors approved a resolution authorizing management to repurchase shares of its common stock with an aggregate purchase price of up to $ 30.0 million from time to time, subject to certain limitations and conditions.

2 unchanged sentences

The Company repurchased $ 10.9 million and $ 798,000 of shares for the years ended December 31, 2021 and 2020, respectively.

Preferred Stock

On September 1, 2022, the Company entered into a securities purchase agreement with certain investors pursuant to which the Company offered and sold shares of its 7.50 % fixed-to-floating rate non-cumulative perpetual preferred stock, with no par value, for an aggregate purchase price of $ 72.0 million.

Holders of the preferred stock are entitled to receive, if, when, and as declared by the Company’s board of directors, non-cumulative cash dividends at a rate of 7.50 % per share for the first five years following issuance and thereafter at a variable rate equal to the then current 3 -month secured overnight financing rate (“SOFR”), reset quarterly, plus 470 basis points.

The preferred stock has a perpetual term and may not be redeemed, except under certain circumstances, under the first five years of issuance.

The preferred stock is non-convertible and dividends equivalent to $ 18.75 per share were paid during the year ended December 31, 2022.

Regulatory Matters

4 unchanged sentences

Prompt corrective action provisions are not applicable to bank holding companies.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios.

1 unchanged sentence

As of December 31, 2022 and 2021, each of the Company and the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action.

For the year ended December 31, 2021, each of the Company and the Bank was required to maintain minimum total capital, Tier 1 capital, risk-based common equity Tier 1, and Tier 1 leverage ratios at the levels disclosed in the table below to be categorized as well capitalized.

For the year ended December 31, 2020, the Company elected to adopt the community bank leverage ratio (“CBLR”) regulatory framework, which allows the Company and the Bank to be categorized as well capitalized based on a single capital ratio, the CBLR.

For the years ended December 31, 2022 and 2021, each of the Company and the Bank was required to maintain minimum total capital, Tier 1 capital, risk-based common equity Tier 1, and Tier 1 leverage ratios at the levels disclosed in the table below to be categorized as well capitalized.

There are no conditions or events since the most recent notification that management believes have changed the prompt corrective action category.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the Company’s (consolidated) and the Bank’s actual capital amounts and ratios at December 31, 2022 and 2021.

33 unchanged sentences

Total Capital (to Risk-Weighted Assets)

$ 478,794  

11.94 %  

$ 320,715  

8.00 %  

$ 400,894  

Tier 1 Capital (to Risk-Weighted Assets)

367,431  

9.17 %  

240,537  

6.00 %  

320,715  

Common Equity Tier 1 Capital (to Risk-Weighted Assets)

3 unchanged sentences

4.50 %  

260,581  

Tier 1 Leveraged Capital (to Average Assets)

367,431  

8.14 %  

180,604  

4.00 %  

225,755  

Capitalized Under

30 unchanged sentences

Total Capital (to Risk-Weighted Assets)

$ 468,834  

11.71 %  

$ 320,411  

8.00 %  

$ 400,514  

Tier 1 Capital (to Risk-Weighted Assets)

438,898  

10.96 %  

240,308  

6.00 %  

320,411  

Common Equity Tier 1 Capital (to Risk-Weighted Assets)

3 unchanged sentences

4.50 %  

260,334  

Tier 1 Leveraged Capital (to Average Assets)

438,898  

9.73 %  

180,453  

4.00 %  

225,566  

BUSINESS FIRST BANCSHARES, INC.

7 unchanged sentences

The Plan provides for the grant of various types of equity grants and awards, including incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to eligible participants, which includes the Company’s employees, directors and consultants.

The Plan has reserved 500,000 shares of common stock for grant, award or issuance to eligible participants, all of which may be subject to incentive stock option treatment.

During the year ended December 31, 2022, Company shareholders approved an additional 400,000 shares to be reserved for future awards under the Plan.

In addition, the number of shares issuable under the Plan were increased by 143,908 shares as a result of the assumption of options to purchase shares of TCBI common stock that were converted into options to purchase shares of Company common stock upon the TCBI acquisition on March 1, 2022.

In total, the Plan has reserved 1,043,908  shares of common stock for grant, award or issuance to eligible participants, all of which may be subject to incentive stock option treatment.

The Plan is administered by the Compensation Committee of the Company’s board of directors, which determines, within the provisions of the Plan, those eligible participants to whom, and the times at which, grants and awards will be made.

As of December 31, 2021, 275,334 awards have been granted under the Plan, and 224,666 shares of common stock remain available for grant.

As of December 31, 2022, 572,588 awards have been granted under the Plan, and 471,320  shares of common stock remain available for grant.

Restricted Stock Awards

41 unchanged sentences

During the years ended December 31, 2022, 2021 and 2020, the Company issued a total of 11,700 shares, 7,301 and 4,500 shares of common stock, respectively, to non-employee directors as compensation for their board service.

The shares were issued with weighted average grant date fair values of $ 23.35 per share for the year ended December 31, 2021, $ 14.87 per share for the year ended December 31, 2020, and $ 23.96 per shares for the year ended December 31, 2019.

The shares were issued with weighted average grant date fair values of $ 23.08 per share for the year ended December 31, 2022, $ 23.35 per share for the year ended December 31, 2021, and $ 14.87 per share for the year ended December 31, 2020.

The total stock-based compensation expense was determined based upon the market value of the Company’s common stock at the grant date applied to the total number of shares granted.

7 unchanged sentences

The 2006 Stock Option Plan expired on December 22, 2016 and the Company is no longer permitted to issue additional stock options under this plan.

Compensation expense recognized as a result of vesting was approximately $ 3,000 and $ 77,000 for the years ended December 31, 2020 and 2019, respectively.

There was no compensation expense recognized as a result of vesting for the year ended December 31, 2021.

However, the Company did grant 143,908 stock option awards under the 2017 Equity Incentive Plan to former TCBI employees in conjunction with the acquisition during the year ended December 31, 2022.

The Company used the Black-Scholes option pricing model to estimate the calculated value of the various share-based awards for the year ended December 31, 2022.

There were no share-based awards for the years ended December 31, 2021, 2020 and 2019, respectively, since the Plan expired December 22, 2016.

The following is an analysis of the activity related to the stock options:

16 unchanged sentences

( 261,753 )  

( 330,000 )  

Forfeited or Expired

1 unchanged sentence

( 10,000 )  

Outstanding Options, at End of Period

12 unchanged sentences

$ 14.67  

At December 31, 2021, options for 113,547 shares at a weighted average exercise price of $ 17.06 were vested and exercisable, and there were no nonvested options or unrecognized compensation costs related to these options which is expected to be recognized over a period of one year.

The aggregate intrinsic value of both exercisable and outstanding awards at December 31, 2021 and 2020 is $ 1.3 million and $ 2.2 million with a weighted average remaining contractual life of 3.3 years and 1.6 years, respectively.

In December 2017, option agreements for 105,250 options that were fully vested and set to expire in December 2017 were amended to extend the expiration date to January 15, 2021, with compensation cost of $ 63,000 recognized on the effective date of the amendments.

In December 2016, option agreements for 330,000 options that were fully vested and set to expire in December 2016 were amended to extend the expiration date to January 15, 2020, with compensation cost of $ 168,000 recognized on the effective date of the amendments.

Since these amendments extended the exercise period and retained the original per share exercise price, the “optionality”

was eliminated in compliance with Section 409A of the Internal Revenue Code of 1986, as amended, thereby restricting the situations in which the options can be exercised to occur upon the earlier of (i) immediately prior to the expiration date, (ii) a change in control of the Company or the Bank, (iii) the option holder’s death, (iv) the option holder becoming disabled, and (v) the option holder incurring a separation from the Company or the Bank (if the option holder is an employee of the Company or the Bank).

At December 31, 2022, options for 118,958 shares at a weighted average exercise price of $ 18.18 were vested and exercisable.

The aggregate intrinsic value of both exercisable and outstanding awards at December 31, 2022 and 2021 is $ 472,000 and $ 1.3 million with a weighted average remaining contractual life of 2.9 years and 3.3 years, respectively.

BUSINESS FIRST BANCSHARES, INC.

6 unchanged sentences

Contributions may be made by eligible employees subject to Internal Revenue Service limits.

The Bank contributes a matching contribution up to 4 % of wages which totaled $ 1.8 million, $ 1.4 million and $ 967,000 and is included in salaries and employee benefits for the years ended December 31, 2021, 2020 and 2019, respectively.

The Bank contributes a matching contribution up to 4 % of wages which totaled $ 2.3 million, $ 1.8 million and $ 1.4 million and is included in salaries and employee benefits for the years ended December 31, 2022, 2021 and 2020, respectively.

Deferred Compensation

19 unchanged sentences

(Dollars in thousands)

Business Development

Advertising and Promotions

$ 3,949  

12 unchanged sentences

11,396  

10,760  

Total Other Expenses

17 unchanged sentences

The majority of the Bank’s business activities are with customers in the Bank’s market area, which consists primarily of East and West Baton Rouge, Bossier, Caddo, St.

Tammany, Lafayette, Calcasieu, Terrebonne, Jefferson, Webster, Richland and adjacent parishes, and the Dallas / Fort Worth, Texas metroplex.

Tammany, Lafayette, Calcasieu, Terrebonne, Jefferson, Webster, Richland and adjacent parishes, the Dallas / Fort Worth, Texas metroplex, and Houston, Texas.

The majority of such customers are depositors of the Bank.

4 unchanged sentences

Within the loan portfolio, the Bank has a concentration of credits secured by real estate.

The Bank had extended credit secured by non-farm non-residential real estate totaling approximately $ 1.1 billion and $ 971.6 million, which accounted for 35.9 % and 32.5 % of total loans held for investment at December 31, 2021 and 2020, respectively.

The Bank had extended credit secured by non-farm non-residential real estate totaling approximately $ 1.8 billion and $ 1.1 billion, which accounted for 39.7 % and 35.9 % of total loans held for investment at December 31, 2022 and 2021, respectively.

Additionally, the Bank had extended credit secured by construction and land development totaling approximately $ 722.1 million and $ 548.5 million, respectively;

28 unchanged sentences

(“McLarty”), McLarty Capital Partners SBIC II, L.P.

(“McLarty II”), Bluehenge Capital Secured Debt SBIC, L.P.

(“Bluehenge”), New Louisiana Angel Fund 2, LLC (“New Louisiana”), Firmament Capital Partners SBIC III, L.P.

(“Firmament”) and Pharos Captial Partners IV-A, L.P.

(“McLarty II”), Firmament Capital Partners SBIC III, L.P.

(“Firmament”), Bluehenge Capital Secured Debt SBIC, L.P.

(“Bluehenge”), Bluehenge Capital Secured Debt SBIC II, L.P.

(“Bluehenge, II”), New Louisiana Angel Fund 2, LLC (“New Louisiana”) and Pharos Capital Partners IV-A, L.P.

(“Pharos”).

As part of the TCBI acquisition, the Bank acquired investments in and committed to invest further in Bluehenge Capital Secured Debt SBIC, L.P.

(included with prior Bluehenge investments), Valesco Fund II, LP (“Valesco”) and GP Capital Partners, LP (“GP Capital”).

Details of these commitments at December 31, 2022 are below.

5 unchanged sentences

$ 1,802  

Bluehenge, II

New Louisiana

3 unchanged sentences

Fintech Fund Commitment

In 2021, the Company has agreed to invest in certain Fintech funds.

The Company has agreed to invest in certain Fintech funds.

As part of the TCBI acquisition, the Company acquired investments in and committed to invest further in any remaining unfunded capital commitments in Work America Capital Fund I, LP and SBRE I, LLC.

During the year ended December 31, 2022, SBRE I, LLC was fully redeemed.

Details of these commitments at December 31, 2022 are below.

7 unchanged sentences

Mendon Ventures Banktech Fund I, LP

Castle Creek Launchpad Fund I, LP

Work America Capital Fund I, LP

$ 6,200  

1 unchanged sentence

$ 2,902  

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Federal Home Loan Bank Letters of Credit

1 unchanged sentence

The outstanding letters of credit as of December 31, 2022 are as follows:

Eight letters of credit totaling $ 105.1 million expire in January 2022.

Seven letters of credit totaling $ 146.5 million expire in January 2023.

One letter of credit of $ 403,000 expires in March 2023.

One letter of credit of $ 194,000 expires in April 2022.

One letter of credit of $ 519,000 expires in July 2022.

One letter of credit of $ 157,000 expires in August 2022.

Two letters of credit of $ 431,000 expire in November 2022.

Four letters of credit totaling $ 94.3 million expire in December 2022.

One letter of credit of $ 87,000 expires in May 2023.

One letter of credit of $ 197,000 expires in November 2023.

One letter of credit of $ 329,000 expires in December 2023.

One letter of credit of $ 22.8 million expires in April 2024.

BUSINESS FIRST BANCSHARES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

One letter of credit totaling $ 3.3 million expires in August 2024.

Note 23 –

2 unchanged sentences

Such loans were made on substantially the same terms as those prevailing at the time for comparable transactions with other customers.

Such loans amounted to $ 27.8 million and $ 33.2 million at December 31, 2021 and 2020, respectively.

Related party deposits totaled $ 43.8 million and $ 40.2 million as of December 31, 2021 and 2020, respectively.

Such loans amounted to $ 66.8  million and $ 27.8 million at December 31, 2022 and 2021, respectively.

Related party deposits totaled $ 58.0  million and $ 43.8 million as of December 31, 2022 and 2021, respectively.

Note 24 –

39 unchanged sentences

34,768  

Mortgage Loans Held for Sale

Servicing Rights

Loans Held for Sale

$ 891,055  

3 unchanged sentences

Available for Sale:

Treasury Securities

$ 22,314  

Government Agency Securities

12 unchanged sentences

24,090  

Other Securities

Mortgage Loans Held for Sale

Servicing Rights

Loans Held for Sale

$ 1,022,261  

15 unchanged sentences

$ 16,816  

Servicing Rights

Other Nonperforming Assets

1 unchanged sentence

$ 2,327  

$ 18,250  

December 31, 2021

2 unchanged sentences

$ 18,749  

Servicing Rights

Other Nonperforming Assets

1 unchanged sentence

$ 1,775  

$ 20,176  

BUSINESS FIRST BANCSHARES, INC.

8 unchanged sentences

Appraisal Adjustments

10 % to 100 % ( 20 %)  

10 % to 100 % ( 19 %)  

to 100 % ( 18 %) 10 %

to 100 % ( 20 %)

Fair Value Financial Instruments

44 unchanged sentences

53,768  

Mortgage Loans Held for Sale

Loans Held for Sale

4,567,998  

36 unchanged sentences

44,090  

Mortgage Loans Held for Sale

Loans Held for Sale

3,160,496  

30 unchanged sentences

In the opinion of management and counsel, the disposition or ultimate resolution of such proceedings would not have a material adverse effect on the Bank’s financial statements.

Note 26 –

Subsequent Events –

On October 20, 2021, the Company entered into a definitive agreement to acquire Texas Citizens Bancshares, Inc.

(“TCBI”), the parent bank holding company for Texas Citizens Bank, National Association, headquartered in Pasadena, Texas.

As of December 31, 2021, TCBI had consolidated total assets of $ 547.2 million, loans of $ 359.1 million and deposits of $ 482.8 million.

The Company acquired TCBI on March 1, 2022.

BUSINESS FIRST BANCSHARES, INC.

15 unchanged sentences

Fintech Funds

Income Taxes Receivable

$ 696,492  

2 unchanged sentences

Short Term Borrowings

Long Term Borrowings

Subordinated Debt

7 unchanged sentences

Shareholders' Equity:

Preferred Stock

71,930  

25,110  

20,400  

Additional Paid-in Capital

4 unchanged sentences

121,874  

Accumulated Other Comprehensive Income

( 1,177 )  

Accumulated Other Comprehensive Income (Loss)

( 74,204 )  

14 unchanged sentences

$ 13,000  

$ 24,295  

Interest Income

4 unchanged sentences

( 1,518 )  

16,222  

Income Tax Benefit

1 unchanged sentence

( 1,916 )  

Income (Loss) before Equity in Undistributed Net Income of Subsidiaries

Income Before Equity in Undistributed Net Income of Subsidiaries

18,127  

6 unchanged sentences

29,994  

Preferred Stock Dividends

Net Income Available to Common Shareholders

$ 52,905  

$ 52,136  

$ 29,994  

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data