Business First Bancshares, Inc. (BFST) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of Business First Bancshares, Inc. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Jude Melville, Chairman of the Board. Mr. Melville, the floor is yours.

Thank you, and good morning, ladies and gentlemen, and welcome to the 2025 Annual Meeting of Shareholders of Business First Bancshares, Inc. I'm Jude Melville, Chairman of the Board of Business First Bancshares. Now I will act as Chairman of this meeting. Being able to hear from our shareholders is important to us. Although our shareholders who are attending virtually will not be able to speak verbally during the meeting today, you'll have 2 ways to ask questions or make statements: first, when you registered to participate in the virtual meeting, you were given an opportunity to submit a question in writing. We have those questions, and we'll read them aloud and respond to them later in the meeting; second, you can submit a question in writing during this meeting through the Q&A function on this virtual meeting website. We will also use the Q&A function to receive seconds to motions to the extent not received in person in the boardroom. As with the questions submitted during the registration process, we will read and respond to appropriate questions later in the meeting. A couple of other housekeeping announcements. First, there are several documents that you may want to access during the meeting. When you registered, you should have received a copy of the agenda and rules of conduct for today's meeting. The company's proxy statement and annual report are located on your screen now, and you can click on each document to access it. We ask that in fairness to all shareholders attending this meeting, you honor the rules of conduct. Please take a moment to familiarize yourself with these rules. In accordance with the notice of this meeting that was previously delivered to all of our shareholders, I hereby call this meeting to order. There are 3 items of business on this morning's agenda. Number one, to elect 16 directors to serve on the Board of Directors of the company until the company's 2026 Annual Meeting of Shareholders or until their successors are duly elected and qualified. Number two, to approve, on a nonbinding advisory basis, the compensation of the company's NEOs (the "Say-on-Pay" proposal). And number three, to ratify the appointment of Forvis Mazars, LLP as the independent registered public accounting firm of the company for the year ending December 31, 2025. So before we proceed with the formal business of this meeting, I'd like to make a few introductions. First, I'd like to introduce to you the directors of our holding company and bank. In addition to me, all of whom have joined this meeting today, either virtually or in person. As I mentioned earlier, I'm Jude Melville, I'm Chairman, President and Chief Executive Officer of our holding company and Chairman and Chief Executive Officer of b1BANK. Also joining us are J. J. Buquet, Carol Calkins, Ricky Day; John Ducrest, Mark Folse; Bill Hall, Vernon Johnson, Andrew McLindon; Rolfe McCollister, Patrick Mockler. David Montgomery, Arthur Price; Aimee Quirk, Alex Sanchez, Zeenat Sidi, Keith Tillage, Steven White. Thank you all for being here. Next, I'd like to introduce the bank's executive officers who are attending this meeting. Greg Robertson, EVP and Chief Financial Officer; Jerry Vascocu, EVP, President, Philip Jordan, EVP and Chief Banking Officer; Keith Mansfield, EVP and Chief Operations Officer; Kathryn Manning, EVP and Chief Risk Officer, Warren McDonald, EVP and Chief Credit Officer; Saundra Strong, EVP and General Counsel and Corporate Secretary; Chad Carter, EVP, Correspondent Banking. We appreciate the hard work and dedication of all of our directors and employees. Finally, I'd like to also introduce our guests that have been invited to attend today's meeting. Ashley Ensley, Matthew Cannon, Stephen Cory with Forvis Mazars, LLP, our independent auditors. Tammie Marshall for Computershare Trust Company, our transfer agent. Following the formal part of this meeting, I will provide a brief management remarks. And at that time, there will be a Q&A session. We will now proceed with the formal business of this meeting. Saundra Strong will act as Secretary of this meeting and will announce the tabulation of the votes. Saundra Strong and Tammie Marshall of Computershare have been appointed an agreed to serve as vote inspectors for this meeting and will conduct the formal tabulation of the votes. All persons who are shareholders of record as of March 28, 2025, the record date for this meeting are entitled to vote at this meeting. Ms. Strong, the secretary of this meeting, please report on the notice of this meeting and the affidavits of mailing.

Mr. Chairman, I present to the meeting the following documents. The first is a certified list of the shareholders of the company as of the close of business on record date, an affidavit as to the mailing on or about April 9, 2025 of one, a notice of this meeting; and two, a notice of Internet availability of the proxy materials. I'm pleased to report that at least a majority of the outstanding shares of Business First Bancshares common stock are represented either in person or by proxy at this meeting. And accordingly, a quorum is present, and we are authorized to proceed with the business of this meeting.

Thanks, Saundra. Please file these materials with the minutes of the meeting. Secretary has reported the existence of a quorum at this meeting. Accordingly, we will proceed with the formal business. I now declare the polls open for voting at this 2025 Annual Meeting of Shareholders. If you wish to vote at the meeting and have not yet done so, you should do so now. If you previously submitted a proxy, and your vote has already been recorded, you do not need to vote during this meeting, unless you wish to change your vote. Polls will remain open until immediately after any discussion on today's proposal. First item on the agenda for this meeting is the election of 16 individuals to serve as directors of Business First Bancshares. Now I call on Saundra Strong, the company's General Counsel and Secretary of this meeting to identify the proposal.

Mr. Chairman, I present the following -- present to the meeting the following proposal, which is described in the proxy statement dated April 9, 2025 and is presented at this meeting by the Board of Directors. The proposal is to elect the following 16 nominees to serve as directors of Business First Bancshares for terms expiring at the 2026 Annual Meeting of Shareholders. Carol Calkins, Ricky Day, John Ducrest, Mark Folse, Bill Hall, Vernon Johnson, Rolfe McCollister, Jude Melville, Patrick Mockler; David Montgomery, Art Price, Aimee Quirk, Alex Sanchez, Zeenat Sidi, Keith Tillage and Steve White.

Thank you. The Board of Directors has recommended that these individuals be elected as directors of Business First Bancshares. Is there a motion? All right. Do I hear a second? Thank you. Is there any discussion on the proposal? Okay. There being no other nominations properly made in accordance with our bylaws, I declare the nominations close. Is there any further discussion on the proposal? Okay. There being no further discussion, I now call on Saundra Strong to identify the second proposal.

Mr. Chairman, I present to the meeting the following proposal, which is described in the proxy statement dated April 9, 2025 and is presented at the meeting by the Board of Directors. The proposal is to approve on a nonbinding advisory basis the compensation of the company's named executive officers or NEOs.

Board of Directors has recommended the approval on a nonbinding advisory basis of the compensation of the company's NEOs. Is there motion? Is there a second? Thank you. Is there any discussion on the proposal? Okay. Thank you. There being no further discussion, I'll call now on Saundra Strong to identify the third proposal.

Mr. Chairman, I present to the meeting the following proposal, which is described in the proxy statement dated April 9, 2025 and is presented at this meeting by the Board of Directors. The proposal is to ratify the appointment of Forvis Mazars, LLP as the auditor for Business First Bancshares for the year ending December 31, 2025.

Our audit committee has appointed Forvis Mazars, LLP to serve as the independent auditor of the company for the year ending December 31, 2025. The Board has recommended that the appointment be ratified by our shareholders at this meeting. Do I hear a motion that the appointment of Forvis Mazars, LLP be ratified by the shareholders? Okay. Do I hear a second? Is there any discussion on the proposal? Okay. There being no discussion, we will now proceed with voting on the proposal. Will the Secretary please identify the voting required on the proposals.

With respect to the proposal to elect directors, our directors will be elected by a majority vote. Therefore, each of the 16 nominees will be elected to our Board of Directors if they receive at least a majority of the votes cast, either in person or by proxy at this meeting. The proposal to approve on a nonbinding advisory basis, the compensation of the company's NEOs will be adopted if the votes cast in favor of the proposal exceeds the votes cast against the proposal. The ratification of Forvis Mazars, LLP as our independent auditors for the year ending December 31, 2025, requires the approval of at least a majority of the votes cast, either in person or by proxy at this meeting.

Okay. Unless there are any questions regarding the voting procedures, we will close the polls shortly. So if you wish to vote and have not done so, now it's time to vote in person or through the virtual meeting website. If you have previously voted and do not wish to change your vote, you do not need to vote at this meeting. If you have not yet voted, now is your last chance to vote in person or by using the voting function on the virtual meeting website. If there are any questions regarding the voting procedures, please use the Q&A function to ask them now. Okay. There being no further discussion of the proposals, we will now close the polls. Please vote now if you have not already voted. Unless we receive a request through the Q&A function of the virtual meeting website to extend the period for casting ballots within the next 30 seconds, we will close the voting polls. [Voting]

Okay. I will now declare the polls closed. I will now ask that our vote inspectors to complete the tabulation of the votes. Madam Secretary, have the vote inspectors completed the tabulation of voting?

Mr. Chairman, based on the voting of shareholder proxies received prior to the meeting, plus the vote inspector's calculation, proxies and ballots noted at this meeting in person, I am pleased to report the following results. The 16 individuals nominated to serve as directors of Business First Bancshares, Inc. have been duly elected. The compensation for the company's NEOs have been duly approved on a nonbinding advisory basis. And the proposal to ratify the appointment of Forvis Mazars, LLP as our auditor for 2025 has also been approved. Official voting results will be posted in a current report on Form 8-K to be filed with the SEC within 4 days of this meeting.

Thank you. Okay. Following the conclusion of the business portion of this meeting, we'll continue with a brief management report and with a question-and-answer session. I'm aware of no other business that should be brought before this meeting and hereby move that we adjourn the meeting. Do we hear a second. Thank you. I'd like to thank all of you for attending the 2025 Annual Meeting of Shareholders. I'd also like to express my appreciation to all the shareholders who submitted their proxies, but were not able to attend the meeting. The directors, officers and employees of Business First Bancshares appreciate the loyalty and confidence of all of our shareholders. Our business portion of this meeting is hereby adjourned. Okay. So I'll just offer a couple of minutes of talks or speaking. I want to point out that of our directors, we did have some turnover this year, which is healthy and right for any growing and evolving companies. So I say a special word of appreciation for J.J. Buquet, Andrew McLindon; and Kenny Smith, all of whom have rolled off under an average of 20 years of service on their b1 board or Business First board or predecessor bank board. That's a long time to commit incredibly long effort. The great news here is that it was not just a committal time, but efforts [indiscernible], but we would not be the same without 3 individuals' involvement over the past 20 years. I'd also like to welcome our newest Board member, Alex Sanchez, who I'm certain will attack that involvement with the same level of intensity and enthusiasm as the 3 members that are rolling off to and look forward to getting to know him better and working with him on our Board efforts. I also want to mention, although we have all of the exec team members are the same that are here today as have represented in the past few years, this will be -- this is the first year that Jerry Vascocu will attend serving as President of b1BANK. So I appreciate him for that effort. And I did want to mention that the team is all here because if anybody has any questions after the meeting that they'd like to ask then we have everyone represented and everyone happy to engage. 2024, I would say it was a bit of a branded out year for the bank and for the banking industry as a whole. There really was no -- I was trying to think about what prices we faced, and we've had so many at least perceived prices over the past few years. I just assumed there was one, but there really wasn't one in 2024. It was more how do we kind of navigate the different streams of recovery from past crises. And then how do we think about positioning ourselves as we continue to navigate some of the uncertainties that exists geopolitically and the economy. And in that regard, it was a very successful year. We just did some kind of back to basics banking and working on our balance sheet and working on our capabilities and product sets and some things to be proud of. We finished the year with a core profitability that was our highest ever and transitioning to a new plateau from profitability has been a long-term goal of ours. And I feel like, particularly when you see what we did in the first quarter that, that new level of profitability, while not the profitability we want to ultimately have, seems to be stable and core and good spot to be in, particularly, when you think about it as a foundation for what can come next. We continue to increase tangible book value, in particular, not only the AOCI improving over the course of the year, but our profitability led to the bulk of the increase in tangible book value. And ultimately, over the long run, improvement and growth in tangible book value will be -- and the rate of growth in tangible book value will be reflected in our value as a company. That's the main driver. So we're excited about the progress that we made there. That enabled us to also make improvement in our capital ratios. Our 2 main capital ratios, tangible capital, our TCE and then risk-based capital, both are considered to have finished the year stronger from a capital perspective than we have in probably 4 or 5 years. And I think that bodes well. Just as we continue to prepare for whatever might come our way in the next couple of years. The most important thing is being we want to navigate in a way that maximizes profitability, but the most important thing is being able to sustain ourselves through whatever might come and capital is the primary way to ensure that you can do that. I think the last thing I would just mention is that while I said earlier that we have a management team that's essentially the same that we've had for the last couple of years, what changed is the experience levels of that management team, and we've never had -- as a company, we've never had a management team that was this experienced. I think about the different events and episodes that have occurred externally over our time together, not just our time together as a bank, which has now been 19 years, but the past 7 years as being a public company. It seems as if all those cycles of things happening have been densified for the past 7 years. So certainly, we've seen our share of external crises, but we've also seen our share of internal successes relative not only to those crises surviving them, but also growing our franchise into what is now, as I think about the other banks in our footprint that our peers size-wise, there's really not somebody that I would trade places with. I don't know if Louisiana would rank among the highest places in the country from most people's minds as places to be, but it's been really good to us. And we know we're making a difference here. And when you marry that with the higher growth opportunities in Texas, I think we've put together a footprint that not only has a lot of possibilities, but also has a lot of stability. And if we can balance that possibility with stability I think we'll be very happy with the results. 2025 is already almost done with May. So we were to be talking about what's coming in 2025, we're almost halfway through. But I think it will be a lot more of the same in 2024 or hopefully just better incremental improvement is one of our guiding principles. And I think we have the chance to demonstrate that over the 4 quarters of this year. We'll continue to focus on increasing core profitability. In particular, it's not just being profitable. It's also what is our profitability composed of. How healthy is it? One of the things that we've been working on, and I think we're going to really demonstrate significant progress in 2025 is diversification of the revenue streams. So making sure that the profitability that we achieve is achieved not based on just being really good at one thing, but actually being good at a number of things, which allows you to tackle the one thing in a safer way and particularly, I'm thinking about credit risk. And I think it's important for a company such as ours over time to make sure that we have a diverse set of revenue streams so that we cannot put all the pressure on making credit decisions. We still got to make tons of credit decisions and will always be a credit-based company as bank, particularly community bank. But the more income that we can derive from other sources of fulfilling customer needs and the better decisions we can feel comfortable making on the credit spectrum. And I think we're going to see that transition this year. We've already seen it in the first quarter, significant improvement noninterest income, in particular, through the correspondent banking function that we've been developing over the past 3 years or so. And I'm excited to see that continued to contribute. We'll continue to build our capital ratios and our tangible book value. Again, that's over a multiple decades long period. And the best way to predict what the share price will be is to see what your tangible book growth has been and the rate of that growth. And so we're going to continue to focus on growing within our capital ratios, which leads to a more tangible book value per share. And then finally, we're going to -- this is a year in which we have -- actually the beginning of a couple of years in which we can focus on preparing for crossing the $10 billion threshold and which all of you know is a regulatory milestone, which your needs from a revelatory relationship change. We've historically had great relationships with our regulatory partners, and we intend to continue that even as we go over $10 billion, and I don't view $10 billion as a burden, I view it as an opportunity. The things that will make us successful from a regulatory perspective, over $10 billion will also make us a better company. And as we begin to add personnel and processes and capabilities, goal is to have them all kind of serve a dual purpose to do what we need to do to be able to report on our progress and the other is to help us achieve that progress. And I feel certain that the talent that we've already added and the talent we will continue to add, and IT investments that we've made and we'll continue to make will service, whether there's increased regulatory burden or not. So I feel excited about that. I did want to take one moment to wish our team good luck. As a part of that, getting over $10 billion, we chose to convert our core to a more expensive system with more capabilities and converting your core is something -- converting a core is something that we've done quite a few times with bank M&A, but it's different when you convert your own core. It's a big project, and we're going to do it this weekend. So I want to -- for anybody on our team that's listening, I want to wish them good luck and we'll go out and visit at least part of the team working on it, and we have an op center in Houma, it will be a significant portion. But really, it's such a big project that there will be people spread out all over our footprint in the branches at various times and accounting department and all over the footprint. So I won't be able to see everybody, but look forward to seeing progress. And excited to notch another milestone in our belt this weekend. So good luck to everybody. And then I just want to finally just thank our management team again. Again, we've never -- the management team faces the same, but who they are in terms of experience base and capability and leadership wise, continues to develop. And I am very, very proud of where we've come through the past few years and excited about where we'll go as a team in the next few years. So with that, I will end my remarks and -- again, I'd like to thank everybody for participating, and we will now conclude the 2025, actually, are there any questions? Anybody like asking any questions? Okay. Well, then we will now conclude the 2025 Annual Meeting of Shareholders. Thank you all for your participation.

This concludes today's meeting. You may now disconnect.