Business First Bancshares, Inc. (NASDAQ:BFST) Q4 2022 Earnings Call Transcript

Jude Melville: Yes, Greg, what we had these two legacy originated — we had originated loans. One of them was in the timber industry. The other one is the receivables line that is a contractor and does some work, government jobs and other various things like that. On the timber loan specifically, that loan what we started seeing was potential fraud in there with multiple sources of collateral pieces. So we thought as we’re looking at it, and we’ve been talking about this loan for quite some time. We thought the prudent thing to do because it looks like a pretty long runway to settle on this thing because of the broad nature, but also just the numerous pieces of collateral we have to deal with. The right thing to do would be for us to put a reserve up now.

And then that way, we can be prudent, take our time on the collection pieces, and we think we’ll get some of that back as recovered. On the other loan, 1%. The loan size on that one is about $1.4 million. So on the other loan, and we mark that at about 80% of the loan in total. On the other loan, the receivables line, the customer is in dispute with — on the contract. And so because of that…

Gregory Robertson: On a governmental.

Jude Melville: Governmental contract, right. And there — because of that, there — we think the path to settlement on that is going to be elongated it puts the line underwater in the borrowing base coming out of trust because we have to remove that disputed contract. So we really put the reserve against that contract. Now we don’t think the contract will be total loss. So what we did was — and that’s about 50% of the total exposure of that credit. So we think over time, that will shake out, we’ll get some recovery and they’ll get paid, may not be 100%. But at this time, there’s a lot of uncertainty and it looks like a long runway on that one as well. But the bars are cooperative working with, Yes.

Graham Dick: Okay. That’s very helpful. Thanks guys.

Operator: There are no further questions at this time. I’ll now turn the call back over to the presenters for closing remarks.

Matthew Sealy: Okay. Well, we appreciate you spending with us and we felt like it was very positive fourth quarter. Many of the investments that we’ve been making over the past 2, 3 years are coming to fruition and certainly the first quarter is noisy from a seasonality standpoint, but we feel very optimistic about approaching 2023 and look forward to visiting with you all in 3 months. Thank you, all.

Operator: This concludes today’s call. We thank you for your participation. You may now disconnect.