Business First Bancshares, Inc.BFST
Business First Bancshares, Inc. Fair Value Disclosure
Fair Value of Financial Instruments –
Fair Value Disclosures
The Company groups its financial assets and liabilities measured at fair value in three levels. Fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
•Level 1 – Includes the most reliable sources and includes quoted prices in active markets for identical assets or liabilities.
•Level 2 – Includes observable inputs. Observable inputs include inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates) as well as inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).
•Level 3 – Includes unobservable inputs and should be used only when observable inputs are unavailable.
Recurring Basis
Fair values of investment securities available for sale were primarily measured using information from a third-party pricing service. This pricing service provides information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data from market research publications.
The fair values of mortgage loans held for sale are based on commitments on hand from investors within the secondary market for loans with similar characteristics.
The following tables present the balance of assets and liabilities measured on a recurring basis as of December 31, 2025 and 2024. The Company did not record any liabilities at fair value for which measurement of the fair value was made on a recurring basis.
| (Dollars in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Available for Sale: | |||||||||||||||||||||||
| U.S. Treasury Securities | $ | 17,278 | $ | — | $ | 17,278 | $ | — | |||||||||||||||
| U.S. Government Agency Securities | 9,874 | — | 9,874 | — | |||||||||||||||||||
| Corporate Securities | 37,062 | — | 28,541 | 8,521 | |||||||||||||||||||
| Mortgage-Backed Securities | 650,091 | — | 650,091 | — | |||||||||||||||||||
| Municipal Securities | 274,924 | — | 251,477 | 23,447 | |||||||||||||||||||
| Loans Held for Sale | 1,094 | — | 1,094 | — | |||||||||||||||||||
| Interest Rate Swaps | 8,023 | — | 8,023 | — | |||||||||||||||||||
| Total assets at fair value | $ | 998,346 | $ | — | $ | 966,378 | $ | 31,968 | |||||||||||||||
| $ | 8,023 | $ | — | $ | 8,023 | $ | — | ||||||||||||||||
| Total liabilities at fair value | $ | 8,023 | $ | — | $ | 8,023 | $ | — | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Available for Sale: | |||||||||||||||||||||||
| U.S. Treasury Securities | $ | 16,675 | $ | — | $ | 16,675 | $ | — | |||||||||||||||
| U.S. Government Agency Securities | 9,588 | — | 9,588 | — | |||||||||||||||||||
| Corporate Securities | 45,165 | — | 32,665 | 12,500 | |||||||||||||||||||
| Mortgage-Backed Securities | 537,738 | — | 537,738 | — | |||||||||||||||||||
| Municipal Securities | 284,383 | — | 259,666 | 24,717 | |||||||||||||||||||
| Loans Held for Sale | 717 | — | 717 | — | |||||||||||||||||||
| Total Assets at fair value | $ | 894,266 | $ | — | $ | 857,049 | $ | 37,217 | |||||||||||||||
The Company reviews fair value hierarchy classifications on a quarterly basis. Changes in the Company’s ability to observe inputs to the valuation may cause reclassification of certain assets or liabilities within the fair value hierarchy. The tables below provide a reconciliation for assets measured at fair value on a recurring basis using significant unobservable inputs, or Level 3 inputs, for the years ended December 31, 2025 and 2024.
| (Dollars in thousands) | Municipal Securities | Corporate Bonds | |||||||||
| Balance at December 31, 2023 | $ | 20,847 | $ | 7,968 | |||||||
| Unrealized Gains (Losses) Included in Other Comprehensive Loss | (2,339) | 782 | |||||||||
| Purchases | 9,938 | 5,000 | |||||||||
| Maturities, Prepayments, and Calls | (3,729) | (1,250) | |||||||||
| Balance at December 31, 2024 | $ | 24,717 | $ | 12,500 | |||||||
| Unrealized Gains Included in Other Comprehensive Loss | 2,458 | 21 | |||||||||
| Maturities, Prepayments, and Calls | (3,728) | — | |||||||||
| Transfers Out of Level 3 | — | (4,000) | |||||||||
| Balance at December 31, 2025 | $ | 23,447 | $ | 8,521 | |||||||
The following table provides quantitative information about significant unobservable inputs used in fair value measurements of Level 3 assets measured at fair value on a recurring basis at December 31, 2025.
| (Dollars in thousands) | Estimated Fair Value | Valuation Technique | Unobservable Inputs | Discounts | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Municipal Securities | $ | 23,447 | Present Value of Expected Future Cash Flow Model | Liquidity Premium | 1% | ||||||||||||||||||
| Corporate Securities | 8,521 | Present Value of Expected Future Cash Flow Model | Liquidity Premium | 2% | |||||||||||||||||||
Nonrecurring Basis
The Company has segregated all financial assets and liabilities that are measured at fair value on a nonrecurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Company did not record any liabilities at fair value for which measurement of the fair value was made on a nonrecurring basis.
The fair value of the impaired/individually evaluated loans is measured at the fair value of the collateral for collateral-dependent loans. Impaired loans are Level 3 assets measured using appraisals from external parties of the collateral less any prior liens and adjusted for estimated selling costs. Adjustments may be made by management based on a customized internally developed discounting matrix. Repossessed assets are initially recorded at fair value less estimated cost to sell, which is generally 10%. The fair value of repossessed assets is based on property appraisals and an analysis of similar properties available. As such, the Bank records repossessed assets as Level 3.
| (Dollars in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Impaired/Individually Evaluated Loans | $ | 14,083 | $ | — | $ | — | $ | 14,083 | |||||||||||||||
| Other Nonperforming Assets | 13,013 | — | — | 13,013 | |||||||||||||||||||
| Total | $ | 27,096 | $ | — | $ | — | $ | 27,096 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Impaired/Individually Evaluated Loans | $ | 62,138 | $ | — | $ | — | $ | 62,138 | |||||||||||||||
| Other Nonperforming Assets | 5,529 | — | — | 5,529 | |||||||||||||||||||
| Total | $ | 67,667 | $ | — | $ | — | $ | 67,667 | |||||||||||||||
Fair Value Financial Instruments
The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. In accordance with GAAP, certain financial instruments and all non-financial instruments are excluded from these disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash and Short-Term Investments – For those short-term instruments, the carrying amount is a reasonable estimate of fair value.
Securities Purchased Under Agreements to Resell - The carrying amount approximates its fair value.
Securities – Fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.
Loans – The fair value for loans is estimated using discounted cash flow analyses, with interest rates currently being offered for similar loans to borrowers with similar credit rates. Loans with similar classifications are aggregated for purposes of the calculations. The allowance for loan losses, which was used to measure the credit risk, is subtracted from loans.
Cash Value of Bank-Owned Life Insurance (“BOLI") – The carrying amount approximates its fair value.
Other Equity Securities – The carrying amount approximates its fair value.
Interest Rate Swaps - Market values are obtained from market pricing data sources available for comparable transactions in the over-the-counter derivative market.
Deposits – The fair value of demand deposits and certain money market deposits is the amount payable at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using discounted cash flow analyses, with interest rates currently offered for deposits of similar remaining maturities.
Borrowings – The fair value of FHLB advances and other long-term borrowings is estimated using the rates currently offered for advances of similar maturities. The carrying amount of short-term borrowings maturing within ninety days approximates the fair value.
Commitments to Extend Credit and Standby and Commercial Letters of Credit – The fair values of commitments to extend credit and standby and commercial letters of credit do not differ significantly from the commitment amount and are therefore omitted from this disclosure.
The estimated approximate fair values of the Bank’s financial instruments as of December 31, 2025 and 2024 are as follows:
| (Dollars in thousands) | Carrying Amount | Total Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||
| Cash and Short-Term Investments | $ | 583,568 | $ | 583,568 | $ | 583,568 | $ | — | $ | — | |||||||||||||||||||
| Securities Purchased Under Agreements to Resell | 25,587 | 25,587 | — | 25,587 | — | ||||||||||||||||||||||||
| Securities | 989,229 | 989,229 | — | 957,261 | 31,968 | ||||||||||||||||||||||||
| Loans Held for Sale | 1,094 | 1,094 | — | 1,094 | — | ||||||||||||||||||||||||
| Loans - Net | 6,135,531 | 6,116,333 | — | — | 6,116,333 | ||||||||||||||||||||||||
| Cash Value of BOLI | 120,292 | 120,292 | — | 120,292 | — | ||||||||||||||||||||||||
| Other Equity Securities | 49,342 | 49,342 | — | — | 49,342 | ||||||||||||||||||||||||
| 8,023 | 8,023 | — | 8,023 | — | |||||||||||||||||||||||||
| Total | $ | 7,912,666 | $ | 7,893,468 | $ | 583,568 | $ | 1,112,257 | $ | 6,197,643 | |||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||
| Deposits | $ | 6,698,590 | $ | 6,698,181 | $ | — | $ | — | $ | 6,698,181 | |||||||||||||||||||
| Borrowings | 551,352 | 554,309 | — | 554,309 | — | ||||||||||||||||||||||||
| Interest Rate Swaps | 8,023 | 8,023 | — | 8,023 | — | ||||||||||||||||||||||||
| Total | $ | 7,257,965 | $ | 7,260,513 | $ | — | $ | 562,332 | $ | 6,698,181 | |||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||
| Cash and Short-Term Investments | $ | 516,767 | $ | 516,767 | $ | 516,767 | $ | — | $ | — | |||||||||||||||||||
| Securities Purchased Under Agreements to Resell | 50,835 | 50,835 | — | 50,835 | — | ||||||||||||||||||||||||
| Securities | 893,549 | 893,549 | — | 856,332 | 37,217 | ||||||||||||||||||||||||
| Loans Held for Sale | 717 | 717 | — | 717 | — | ||||||||||||||||||||||||
| Loans - Net | 5,926,559 | 5,832,326 | — | — | 5,832,326 | ||||||||||||||||||||||||
| Cash Value of BOLI | 117,645 | 117,645 | — | 117,645 | — | ||||||||||||||||||||||||
| Other Equity Securities | 41,100 | 41,100 | — | — | 41,100 | ||||||||||||||||||||||||
| Total | $ | 7,547,172 | $ | 7,452,939 | $ | 516,767 | $ | 1,025,529 | $ | 5,910,643 | |||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||
| Deposits | $ | 6,511,331 | $ | 6,513,709 | $ | — | $ | — | $ | 6,513,709 | |||||||||||||||||||
| Borrowings | 483,256 | 465,834 | — | 465,834 | — | ||||||||||||||||||||||||
| Total | $ | 6,994,587 | $ | 6,979,543 | $ | — | $ | 465,834 | $ | 6,513,709 | |||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Mar 2, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 12, 2020 | |
| 2018 | Mar 22, 2019 | |
| 2017 | Mar 21, 2018 | |
| 2016 | Mar 20, 2017 | |
| 2015 | Mar 21, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.