Note 3 – Mergers and Acquisitions –

After the close of business on March 31, 2015, the Company merged with American Gateway Financial Corporation (AGFC), parent bank holding company for American Gateway Bank, into which the operations of AGFC merged with the Company. Prior to the merger, AGFC was a full service bank with 10 branches located in the Baton Rouge metro region. As part of the merger, the Company issued common stock, as well as cash, for the outstanding shares of AGFC. The Company believes with this merger, it will not only increase its presence in the Baton Rouge region, but also in Louisiana statewide, by being able to offer more services to its customers. The Company also believes that the merger with AGFC will increase the Company’s core deposits and allow the opportunity to further increase the loan portfolio. Results of operations include the revenues and expenses of the acquired operations from the acquisition date forward.

The following table provides the purchase price calculation as of the merger date and the identifiable assets and liabilities assumed at their estimated fair values. The fair value measures were subject to refinement for up to one year after the merger date based on additional information that was obtained by us that existed as of the merger date. The purchase price calculation includes an accrual of the estimated additional cash consideration which will be required to be paid to the shareholders who have exercised their statutory rights of appraisal. The amount accrued at March 31, 2016 represents the Company’s estimate of the maximum additional consideration which could be paid to the shareholders exercising their statutory appraisal rights, and is based on the actual value of the AGFC merger consideration received by the former AGFC shareholders of $219.94 per AGFC share, which was comprised of $10 paid in cash and the remainder in shares of the Company’s common stock. This matter is currently in litigation, with a trial date set for late May 2016. See additional discussion at Note 8.

Cost and Allocation of Purchase Price for American Gateway Financial Corporation (AGFC):

(Dollars in thousands, except per share data)


Purchase Price:
AGFC Shares Outstanding at March 31, 2015	217,944
Gross Business First Shares Issued for AGFC Shares	2,589,174
Exchange Ratio	11.88
Less: Shares Cashed Out Under Terms of Merger	698,186
Net Business First Shares to be Issued for AGFC Shares			1,890,988
Market Value per Share of Business First Stock			17.66

Aggregate Value of Business First Stock Issued in Merger		$	33,395
Aggregate Cash Consideration Paid in Merger			1,595
Cash Paid to Shareholders Exercising Appraisal Rights through March 31, 2016 *			9,419
Accrual for Unsettled Appraisal Rights Shares *			3,448

Total Purchase Price		$	47,857

Net Assets Acquired:
Cash and Cash Equivalents		$	98,489
Securities Available for Sale			108,358
Loans and Leases Receivable			143,223
Premises and Equipment, Net			7,395
Cash Value of Life Insurance			4,326
Other Real Estate Owned			593
Core Deposit Intangible			2,762
Other Assets			6,375

Total Assets			371,521

Noninterest Bearing Deposits			80,865
Interest Bearing Deposits			202,442

Total Deposits			283,307
Borrowings			45,509
Other Liabilities			1,672

Total Liablilites			330,488
Net Assets Acquired			41,033

Goodwill Resulting from Merger		$	6,824

*	- Unsettled Appraisal Rights Shares at March 31, 2016 was 53,094.