BFST reported a robust fourth quarter of 2024, underscored by meaningful margin expansion and accelerating balance sheet growth driven by both organic activities and the Oakwood Bank acquisitions. GAAP net income was $15.1 million with a onetime CECL provision and other non-core items, while the core net income rose to $19.5 million and core EPS reached $0.66, reflecting strong operating leverage and disciplined expense management. Net interest margin (NIM) improved 10 basis points to 3.61% (GAAP) and 3.56% (core), supported by lower deposit costs (down 29 bps QoQ) and a favorable funding mix as BFST captured the tailwinds from Fed rate cuts and faster core deposit growth.
The quarter closed a year in which BFST grew loans by 58% annualized (including Oakwood), with organic growth of 4.8% (ex acquired loans) and a total deposits increase of 61.4% annualized. Organic deposit growth was driven by money market and non-interest-bearing deposits, while the bank continued to reduce CRE and C&D concentrations and diversify geographically (Texas now ~41% of loans). Management highlighted progress on non-interest income (SBA, swaps, correspondent banking) and reported that acquisitions were achieved with minimal tangible book value dilution and without additional capital. Looking into 2025, BFST targets low-to-mid single-digit NIM expansion driven by continued deposit productivity, disciplined loan pricing, and a diversified non-interest income strategy. The company also signaled ongoing investments in technology and personnel while maintaining an emphasis on liquidity and capital accretion.
Key takeaways for investors: (1) Earnings quality is improving as core profitability compounds with a higher NIM and controlled expenses; (2) The deposit franchise remains a strategic leverage point, with signs of sustainability in mix (non-interest-bearing deposits ~20.8% of total deposits) and a path to lower funding costs; (3) The Oakwood integration is progressing as planned, with limited cost savings in 2025 but higher earnings power in the mid-to-late 2020s as the franchise scales.