What changed in this filing

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Item 1. Business

2023-03-02 compared with 2022-03-01 · 33 added, 43 removed, 576 unchanged (12% of the section changed)

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is a financial holding company headquartered in Baton Rouge, Louisiana, and the parent company of b1BANK, formerly known as Business First Bank, a Louisiana state banking association and community-based financial institution that offers a full array of banking products and services.

We currently operate throughout the state of Louisiana, in the Dallas/Fort Worth metroplex and, upon completion of the Texas Citizens Bancorp, Inc.

(“TCBI”) merger on March 1, 2022, Houston, from a network of banking centers and loan production offices.

We currently operate throughout the state of Louisiana, in the Dallas/Fort Worth metroplex and Houston, from a network of banking centers and loan production offices.

Since our founding in 2006, our mission has not changed –

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Expanding Presence in Existing Markets .

While we maintain a strong position in almost all of our markets as one of the top two or three community banks by deposit market share, we are continually working to strengthen our presence in our existing markets.

While we maintain a strong position in almost all of our markets, we are continually working to strengthen our presence in our existing markets.

As community bankers, we know that relationships are at the heart of our business, and we are always looking to identify and recruit talented bankers within, as well as outside of, our existing markets.

Additionally, we constantly stress deposit growth to our bankers as our ability to grow our loan portfolio within our markets is limited by our ability to fund those loans.

Although many of our markets are currently serviced by only one of our banking centers, in keeping with our branch-lite model, we may consider adding more banking centers or complementary offices in strategic locations in our markets.

In keeping with our branch-lite model, we may consider adding more banking centers or complementary offices in strategic locations in our markets.

Opportunistic Market Expansion.

  We are well positioned to expand along the I-10/12 and I-20 corridors, East Texas markets to the west, and into the Jackson and Gulfport/Biloxi, Mississippi markets to the east, as well as growing our markets in the Dallas/Fort Worth metroplex and, following completion of the TCBI merger, Houston.

We believe these markets have attractive demographics and a significant concentration of small-to-midsized businesses and high net worth individuals that are historically underserved by the banking industry.

We intend to focus on growing into these markets as we identify specific opportunities to recruit talented and entrepreneurial teams of local bankers who fit our culture and banking strategy.

Prior to the expansion into the Houston market upon completion of the TCBI merger, each of our expansions into new markets to date has been accomplished organically.

Prior to the expansion into the Houston market from the TCBI merger, each of our expansions into new markets to date has been accomplished organically.

Disciplined Acquisition Strategy.

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(v) the acquisition of Smith Shellnut Wilson, LLC, which operates out of the Jackson, Mississippi area, on April 1, 2021;

and (vi) the acquisition of Texas Citizens Bancorp, Inc., which operated in Houston, on March 1, 2022, the last three of which are described in further detail below.

and (vi) the acquisition of Texas Citizens Bancorp, Inc., which operates in Houston, on March 1, 2022, the last three of which are described in further detail below.

We will carefully consider acquisition opportunities that we believe are consistent with our strategic vision and provide attractive risk-adjusted returns to our shareholders.

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(“TCBI”), the parent bank holding company for Texas Citizens Bank, National Association, headquartered in Pasadena, Texas.

As of December 31, 2021, TCBI had consolidated total assets of $547.2 million, loans of $359.1 million and deposits of $482.8 million.

The Company acquired TCBI on March 1, 2022.

As a result of the TCBI acquisition, we added six banking locations in the Houston, Texas market.

The acquisition was consummated on March 1, 2022.

As a result of the TCBI acquisition, we added six banking locations in the Houston, Texas market, and as of February 28, 2022, reported total assets of $534.2 million, loans of $349.5 million and total deposits of $477.2 million.

Our Competitive Strengths

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History of Disciplined Expansion.

Since our founding in 2006, we have grown rapidly across the state of Louisiana, into the Dallas/Fort Worth metroplex and, following completion of the TCBI merger, into Houston.

Since our founding in 2006, we have grown rapidly across the state of Louisiana, into the Dallas/Fort Worth metroplex and, into Houston.

Each of our expansions were initiated with careful identification and recruitment of local banking teams and thoughtful consideration of each market’s different industries and credit exposures.

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We believe our investments in technology will also allow us to maintain our “high tech/high touch” approach without the need for an extensive network of brick and mortar locations.

Our banking operations are currently organized into nine markets in Louisiana, which include the six largest metropolitan areas in the state, the Dallas/Fort Worth metroplex, and, upon completion of the TCBI merger on March 1, 2022, Houston, which we service through our banking centers and loan production offices.

Our banking operations are currently organized into five regions in Louisiana, which include the largest metropolitan areas in the state, the Dallas/Fort Worth metroplex, and Houston, which we service through our banking centers and loan production offices.

We will continue to look for talented teams of bankers in markets and potential acquisitions that fit our model going forward.

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Our credit approval policies provide for various levels of officer and senior management lending authority for new credits and renewals, which are based on position, capability and experience.

We approve loans under three types of authority, Matrix (which includes Executive and Directors’

Loan Committees), Incremental, and Consumer authority.

We approve loans under four types of authority, Matrix (which includes Executive and Directors’

Loan Committees), Incremental, Small Business, and Consumer authority.

With the exception of loans secured by cash deposited with us, all commercial loans require a minimum of two approvers (the banker and one other individual with higher authority).

When using the Matrix authority, senior lenders have authority up to $500,000, market presidents have authority up to $750,000, regional market presidents have authority up to $1.5 million, the chief banking officer and credit managers have authority up to $2.5 million, regional chairmen have authority up to $2.0 million and the Chief Executive Officer, Chief Financial Officer, and Chief Credit Executive each have authority up to $2.5 million.

A combination of the Chief Banking Officer and Chief Credit Officer may approve up to $5.0 million.

When using the Matrix authority, senior lenders have authority up to $500,000, market presidents have authority up to $750,000, regional market presidents have authority up to $1.5 million, the chief banking officer and regional credit managers have authority up to $2.5 million, regional chairmen have authority up to $2.0 million and the Chief Executive Officer, Chief Financial Officer, and Chief Credit Officer each have authority up to $2.5 million.

A combination of the Chief Banking Officer and Chief Credit Officer (or their assigns) may approve up to $5.0 million.

All relationships exceeding $5.0 million are approved by the Executive Loan Committee.

All loans exceeding $10.0 million are required to be approved by the Director’s Loan Committee, which is comprised of board members.

Loans may be approved using the Incremental authority when the relationship has already been approved using the Matrix authority, with senior lenders being able to approve up to $250,000, market presidents being able to approve up to $350,000, regional market presidents up to $1.0 million and higher authorities up to $1.0 million, cumulatively.

Loans may be approved using the Incremental authority when the relationship has already been approved using the Matrix authority, with senior lenders being able to approve up to $250,000, market presidents being able to approve up to $350,000, regional market presidents and higher authorities up to $1.5 million, cumulatively.

Consumer loans which present an aggregate lending exposure under $5.0 million are approved on a transactional basis by appropriate consumer lending personnel using credit underwriting software which recommends approval or decline based on Bank policy guidelines.

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Key items related to our human capital resources are described below.

As of December 31, 2021, we had 648 full-time and 18 part-time employees (total of 666 employees) located in Louisiana, Texas, Nevada (remote), Massachusetts (remote), Tennessee (remote), Mississippi, South Dakota (remote), Michigan (remote), and Virginia (remote).

As of December 31, 2022, we had 727 full-time and 21 part-time employees (total of 748 employees) located in Arkansas (remote), Kentucky (remote), Louisiana, Michigan (remote), Mississippi, Nevada (remote), South Dakota (remote), Tennessee (remote), Texas, and Virginia (remote).

Full-time equivalents (FTEs) were 742.

All of our banking centers and loan production officers are located in Louisiana and Texas, and our subsidiary registered investment advisor (RIA), Smith Shellnut Wilson, LLC, or SSW, is located in Mississippi.

Our Chief Human Resources Officer reports directly to the President and Chief Executive Officer and manages all aspects of the employee experience, including talent acquisition, diversity and inclusion, learning and development, talent management, compensation, and benefits.

All of our banking centers and loan production offices are located in Louisiana and Texas, and our subsidiary registered investment advisor (RIA), Smith Shellnut Wilson, LLC, or SSW, is located in Mississippi.

Our Chief Human Resources Officer reports directly to the Chief Administrative Officer and manages all aspects of the employee experience, including talent acquisition, diversity and inclusion, learning and development, talent management, compensation, and benefits.

The board of directors is regularly updated on our talent development and human capital management strategies.

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We have an organization-wide focus to improve recruitment and retention of women and ethnic minorities.

In 2021, we began recruiting junior year finance and accounting majors at Southern University and A&M College in Baton Rouge, a historically black university, for our Intern Insights Program and LEND Academy.

As of December 31, 2021, our U.S.

colleagues had the following attributes:

In 2022, we launched our Intern Insights Program which focuses on creating a pipeline between young diverse talent and the banking industry.

Specifically, recruiting efforts focused on junior year finance and accounting majors at Southern University and A&M College in Baton Rouge, a historically black university, for our Intern Insights Program.

Furthermore, in 2022, we implemented online exit surveys to provide feedback and help increase retention of women and ethnic minorities.

As of December 31, 2022, our colleagues had the following attributes:

505 total (67.5%)

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We strive to provide pay, benefits, and services that help meet the varying needs of our employees.

Compensation and benefits include market-competitive pay, health insurance options, a health reimbursement account (HRA), a flexible spending account (FSA), dependent care, employer-paid life insurance, voluntary life insurance, dental and vision insurance, employer-paid short-term disability, employer-paid long-term disability, employee assistance programs, employee discounts on our products, critical illness insurance, accident insurance, hospital indemnity insurance, paid time off, (including paid volunteer leave), training and professional development opportunities, and an employer-paid financial wellness program.

Effective during the quarter ended June 30, 2019, we increased our minimum wage to $13 per hour.

Compensation and benefits include market-competitive pay, health insurance options, a health reimbursement account (HRA), a flexible spending account (FSA), dependent care, employer-paid life insurance, voluntary life insurance, dental and vision insurance, employer-paid short-term disability, employer-paid long-term disability, employee assistance programs, employee discounts on our products, critical illness insurance, accident insurance, hospital indemnity insurance, pet insurance, identity and fraud protection, MetLife legal plan, paid time off, (including paid volunteer leave), training and professional development opportunities, and an employer-paid financial wellness program.

We periodically review compensation and benefits by grade level and position to ensure similar positions are paid comparatively and to ensure that we have a competitive and valuable offering to meet the well-being and needs of our employees.

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Sourcing strategies and support structures are modified to ensure that performance targets are met consistently.

We have developed programs to provide professional development skills and general awareness of banking practices through virtual learning initiatives, new technology for guided assistance, and self-paced learning courses for every employee level.

Through the establishment of The Learning Table, a bank-wide virtual “lunch and learn”

series, more than 175 employees received professional skills training.

Additionally, we leveraged new technology to ensure accurate completion of common banking and administrative transactions by designing guided onscreen walkthroughs for vendor software applications.

Employees were able to receive real-time guidance and troubleshooting assistance when using applications for the first time.

The new technology also provided ROI metrics to ensure optimal performance.

Through the in-house development of self-paced learning and electronic courses (e-courses), we were able to provide on-demand training for all 500+ employees on bank security and identify theft protection.

Additional investment was made in external training programs for executive coaching and leadership development, outside of the in-house manager and leadership development programs.

In 2022, the Talent Development team increased its volume and reach by introducing the Leading b1 program for manager development, establishing programming for the Senior Leadership Group, and rolling out a new process to place b1BANKers with External Development Programs offered by banking and community associations.

In addition to the new programs and initiatives, the Talent Development team consistently offered ongoing training for conversion, hosted external speakers at The Learning Table (their speaker series), supported by our new internship program –

Intern Insights, and upgraded our technology by switching its digital adoption platform to Apty and saving more than $30,000 annually.

Overall, the establishment of new programs and processes allowed the Talent Development team to reach all employment levels and provide comprehensive learning resources for more than 700 employees.

Our average tenure is 6.4 years of service.

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Employee turnover for 2022 was 25.3%.

In 2020, in response to the COVID-19 pandemic, 47.8% of our total employee population were able to work remotely, of which 90.2% were back office/operations personnel.

Employees whose functions required them to be physically present did not lose their hours or benefits, and no employees were furloughed or laid off due to the pandemic.

While not a direct response to COVID-19, we did not reduce salaries or any other benefits during this time to support our colleagues through the pandemic.

After the peak of the pandemic, 20.3% of employees are working remotely.

Available Information

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Financial holding companies may also engage in activities that are considered to be financial in nature, as well as those incidental or complementary to financial activities, including certain insurance underwriting activities.

Each of the Company and the Bank must each remain well capitalized and well managed and the Bank must receive a Community Reinvestment Act (“CRA”) rating of at least “satisfactory”

The Company and the Bank must each remain well capitalized and well managed and the Bank must receive a Community Reinvestment Act (“CRA”) rating of at least “satisfactory”

at its most recent examination in order for us to maintain our status as a financial holding company.

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of 2.5% above its minimum risk-based capital requirements that must be composed of common equity Tier 1 capital.

This buffer will help to ensure that banking organizations conserve capital when it is most needed, allowing them to better weather periods of economic stress.

This buffer helps to ensure that banking organizations conserve capital when it is most needed, allowing them to better weather periods of economic stress.

The buffer is measured relative to risk-weighted assets.

An institution would be subject to limitations on certain activities including payment of dividends, share repurchases and discretionary bonuses to executive officers if its capital level is below the buffered ratio.

As of December 31, 2021, the Company’s capital meets or exceeds these capital requirements on a fully phased-in basis.

As of December 31, 2022, the Company’s capital meets or exceeds these capital requirements, including the buffer.

On September 17, 2019, the FDIC and other federal bank regulatory agencies approved the community bank leverage ratio (“CBLR”) framework as part of the directive under Section 201 of the EGRRCPA.

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For the year ended December 31, 2020, the Company and Bank elected to adopt the CBLR framework.

For the year ended December 31, 2021, the Company and Bank elected to revert to the risk-weighted ratios.

For the years ended December 31, 2022 and 2021, the Company and Bank elected to revert to the risk-weighted ratios.

Imposition of Liability for Undercapitalized Subsidiaries.

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Specifically, the transition interim final rule provides that the community bank leverage ratio will be 8.0% in the second quarter through fourth quarter of calendar year 2020, 8.5% in calendar year 2021, and 9.0% thereafter.

As previously mentioned, the Company and Bank elected to adopt the CBLR framework for the year ended December 31, 2020 and elected to revert to the risk weighted ratios for the year ended December 31, 2021.

Corrective Measures for Capital Deficiencies.

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Impact of Current Laws and Regulations

The cumulative effect of these laws and regulations, while providing certain benefits, adds significantly to the cost of our operations and thus have a negative impact on our profitability.

The cumulative effect of these laws and regulations, while providing certain benefits, adds significantly to the cost of our operations and thus has a negative impact on our profitability.

There has also been a notable expansion in recent years of financial service providers that are not subject to the examination, oversight, and other rules and regulations to which we are subject.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business