Business First earnings rise as Q3 lending margin widens

Business First earnings increased modestly in the third quarter of 2026 as higher loan yields and lower funding costs lifted net interest income. The parent of b1BANK reported on October 26 that unaudited net income available to common shareholders reached $23.2 million, or $0.71 per diluted share, for the quarter ended September 30, up from $22.8 million and $0.70 in the preceding quarter.

Key Takeaways

• Net interest margin widened 13 basis points to 3.86%, supporting higher lending income.
• Non-GAAP core earnings rose to $26.0 million, while reported profit faced higher expenses.
• Loans and deposits grew, but credit indicators presented a mixed picture.

Business First earnings benefit from lower funding costs

Net interest income totaled $80.7 million, compared with $77.8 million in the second quarter. This measures interest income after funding expenses, rather than total revenue.

Loan yields increased to 6.74% from 6.63%, while the overall cost of funds declined to 2.40% from 2.44%. Business First attributed the funding improvement to reductions in brokered deposits and borrowings; core deposit costs remained flat.

Loans held for investment increased $121.4 million, or 1.82%, during the quarter. Deposits grew $141.2 million, or 1.95%, led by the Houston and Southwest Louisiana markets. The combination expanded the lending base while reducing reliance on some higher-cost funding sources.

Core profit rises faster than reported earnings

Non-GAAP core net income reached $26.0 million, or $0.79 per diluted share, compared with $23.3 million and $0.71 in the previous quarter. The company’s explanation of core earnings measures says these figures exclude certain items that management considers potentially distorting to period-to-period comparisons. They supplement, rather than replace, GAAP results.

Other expenses increased $0.9 million sequentially. Higher occupancy and equipment costs included a lease termination fee tied to aligning legacy b1BANK and Progressive corporate facilities. Merger and conversion-related expenses also increased, partially offset by reductions in several other expense categories.

Business First completed the conversion of Progressive Bank’s core systems in August 2026. Other income declined $1.5 million from the preceding quarter, mainly reflecting lower gains on loan sales and the absence of the prior quarter’s gain on debt redemption.

Credit trends remain mixed as capital returns continue

Nonperforming loans declined to 1.24% of loans held for investment from 1.26% in the second quarter. However, net charge-offs rose to eight basis points of average quarterly loans from four basis points, mainly because of one commercial relationship that had previously been fully reserved.

The allowance for credit losses represented 0.95% of loans held for investment, down from 1.02%. Business First recorded a $1.9 million credit-loss provision, compared with $2.0 million in the preceding quarter.

The company also continued its existing share-repurchase program and declared quarterly common and preferred dividends.

Next milestone

The declared common and preferred dividends are scheduled for payment on November 30, 2026, or as soon thereafter as practicable.

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