BFST delivered a solid QQ3 2024 performance characterized by meaningful margin expansion and disciplined expense management, supported by deposit growth and ongoing diversification of non-interest income. The reported GAAP net income of $17.8 million and EPS of $0.65 reflect a quarter where core profitability benefited from a 12 bp sequential core NIM improvement to 3.46% and a higher-yielding loan book despite ongoing rate pressures. Management highlighted an improving operating leverage dynamic driven by a combination of stronger loan yields and controlled expenses, with core margin dynamics further supported by relatively stable deposit costs.
A key strategic development was the October 1 closing of the Oakwood acquisition, which introduces approximately $690 million in net loans and expands BFST’s Texas footprint (bringing Texas loan balances to about 42% of total), while the Dallas/Houston exposure moves into the mid-40s as a percentage of the loan book. Management expects Oakwood to contribute incremental margin accretion and to be accretive to core profitability over time, with loan discount accretion of roughly $0.7–0.8 million per quarter including Oakwood. Non-interest income continues to diversify away from traditional spread income, with swap-related revenue contributing ~$0.9 million in Q3 and a broader run rate expected to persist albeit with quarterly variability.
Financial position remains robust: total assets near $6.89 billion, strong liquidity (cash and short-term investments around $1.13 billion), and deposits up 5.5% QoQ supported by a high-quality funding base. Near-term headwinds include a modest watch list movement linked to the rate environment and a more normal credit cycle, though management indicated limited deterioration in credit quality and notes that most watch-list items are paying as agreed. The company signaled a cautious but constructive outlook for improving NIM in a lower-for-longer rate regime and emphasized organic growth complemented by selective M&A opportunities, with a stated priority on maximizing the current footprint and leveraging Oakwood’s platform to accelerate future growth.