10q10k10q10k.net

What changed in Business First Bancshares, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Business First Bancshares, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+371 added−367 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-01)

Top changes in Business First Bancshares, Inc.'s 2024 10-K

371 paragraphs added · 367 removed · 319 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

82 edited+7 added−12 removed225 unchanged
Biggest changeWe have historically maintained a disciplined and conservative approach to strategic acquisitions, with our acquisitions to date being (i) the acquisition of American Gateway Financial Corporation within our home market of Baton Rouge in 2015; (ii) the acquisition of Minden Bancorp, Inc. within our second oldest market, Northwest Louisiana, on January 1, 2018; (iii) the acquisition of Richland State Bancorp, Inc., which is in the Northeast Louisiana region, on December 1, 2018; (iv) the acquisition of Pedestal Bancshares, Inc., which operated in southern Louisiana, on May 1, 2020; (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 operates in Houston, on March 1, 2022, the last two of which are described in further detail below.
Biggest changeWhile we will remain focused on organic expansion, we will continue to identify and evaluate opportunities for strategic business acquisitions as they arise from time to time. 5 Table of Contents We have historically maintained a disciplined and conservative approach to strategic acquisitions, with our acquisitions to date being (i) the acquisition of American Gateway Financial Corporation within our home market of Baton Rouge in 2015; (ii) the acquisition of Minden Bancorp, Inc. within our second oldest market, Northwest Louisiana, on January 1, 2018; (iii) the acquisition of Richland State Bancorp, Inc., which is in the Northeast Louisiana region, on December 1, 2018; (iv) the acquisition of Pedestal Bancshares, Inc., which operated in southern Louisiana, on May 1, 2020; (v) the acquisition of Smith Shellnut Wilson, LLC, which operates out of the Jackson, Mississippi area, on April 1, 2021; (vi) the acquisition of Texas Citizens Bancorp, Inc., which operates in Houston, Texas, on March 1, 2022; (vii) the acquisition of Waterstone LSP, LLC, which operates in Katy, Texas, on January 31, 2024; and (viii) the acquisition of Oakwood Bancshares, Inc., which operates in the Dallas, Texas area, on October 1, 2024, the last two of which are described in further detail below.
The Federal Reserve’s jurisdiction also extends to any company that we directly or indirectly control, such as any nonbank subsidiaries and other companies in which we own a controlling investment. Financial Services Industry Reform. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act was enacted.
The Federal Reserve’s jurisdiction also extends to any company that we directly or indirectly control, such as any nonbank subsidiaries and other companies in which we own a controlling investment. Financial Services Industry Reform. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") was enacted.
These rules include a new common equity Tier 1, or CET1, capital requirement and establish criteria that instruments must meet to be considered common equity Tier 1 capital, additional Tier 1 capital or Tier 2 capital.
These rules include a new common equity Tier 1 ("CET1") capital requirement and establish criteria that instruments must meet to be considered common equity Tier 1 capital, additional Tier 1 capital or Tier 2 capital.
Federal and state laws, including the BHC Act and the Change in Bank Control Act, or CBCA, impose additional prior notice or approval requirements and ongoing regulatory requirements on any investor that seeks to acquire direct or indirect “control” of an FDIC-insured depository institution or bank holding company.
Federal and state laws, including the BHC Act and the Change in Bank Control Act (the "CBCA"), impose additional prior notice or approval requirements and ongoing regulatory requirements on any investor that seeks to acquire direct or indirect “control” of an FDIC-insured depository institution or bank holding company.
Under federal law, including the Bank Secrecy Act, or BSA, and the USA PATRIOT Act of 2001, certain financial institutions, such as the Bank, must maintain anti-money laundering programs that include established internal policies, procedures and controls; a designated BSA officer; an ongoing employee training program; and testing of the program by an independent audit function.
Under federal law, including the Bank Secrecy Act (the "BSA"), and the USA PATRIOT Act of 2001, certain financial institutions, such as the Bank, must maintain anti-money laundering programs that include established internal policies, procedures and controls; a designated BSA officer; an ongoing employee training program; and testing of the program by an independent audit function.
However, the Jumpstart our Business Startups Act of 2012, or JOBS Act, provided certain exceptions to these requirements for so long as a publicly-traded qualifies as an emerging growth company. In 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) revised certain aspects of the Dodd-Frank Act.
However, the Jumpstart our Business Startups Act of 2012 (the "JOBS Act") provided certain exceptions to these requirements for so long as a publicly-traded qualifies as an emerging growth company. In 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) revised certain aspects of the Dodd-Frank Act.
Notwithstanding the foregoing, the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, effective March 11, 2000, or the GLB Act, amended the BHC Act and eliminated the barriers to affiliations among banks, securities firms, insurance companies and other financial service providers.
Notwithstanding the foregoing, the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, effective March 11, 2000 (the "GLB Act"), amended the BHC Act and eliminated the barriers to affiliations among banks, securities firms, insurance companies and other financial service providers.
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 years ended December 31, 2023, 2022 and 2021. Corrective Measures for Capital Deficiencies.
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 years ended December 31, 2024, 2023 , 2022 and 2021. Corrective Measures for Capital Deficiencies.
As a bank holding company with respect to the Bank, the Company is also subject to regulation under the Bank Holding Company Act of 1956, or the BHC Act, and to supervision, examination and enforcement by the Federal Reserve.
As a bank holding company with respect to the Bank, the Company is also subject to regulation under the Bank Holding Company Act of 1956 (the "BHC Act") and to supervision, examination and enforcement by the Federal Reserve.
The federal banking regulators are required by the Federal Deposit Insurance Act, or FDI Act, to take “prompt corrective action” with respect to capital-deficient institutions that are FDIC-insured.
The federal banking regulators are required by the Federal Deposit Insurance Act (the "FDI Act") to take “prompt corrective action” with respect to capital-deficient institutions that are FDIC-insured.
Our Markets 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.
Our Markets Our banking operations are currently organized into three 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.
The Financial Institution Reform Recovery and Enforcement Act, or FIRREA requires federal banking agencies to make public a rating of a bank’s performance under the CRA.
The Financial Institution Reform Recovery and Enforcement Act (the "FIRREA") requires federal banking agencies to make public a rating of a bank’s performance under the CRA.
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, 2023, the Company’s capital meets or exceeds these capital requirements, including the buffer.
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, 2024, the Company’s capital meets or exceeds these capital requirements, including the buffer.
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.
Consumer loans which present an aggregate lending exposure under $10.0 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.
Our policies require rapid notification of delinquency and prompt initiation of collection actions. We maintain a list of loans, the “Watch List,” that receive additional attention if we believe there may be a potential credit risk.
Our policies require rapid notification of delinquency and prompt initiation of collection actions. We maintain a list of loans, the “Watch List”, that receive additional attention if we believe there may be a potential credit risk.
This description is not intended to describe all laws and regulations applicable to us and our subsidiaries, and the description is qualified in its entirety by reference to the full text of the statutes, regulations, policies, interpretive letters and other written guidance that are described herein. 12 Table of Contents Business First Bancshares, Inc.
This description is not intended to describe all laws and regulations applicable to us and our subsidiaries, and the description is qualified in its entirety by reference to the full text of the statutes, regulations, policies, interpretive letters and other written guidance that are described herein. Business First Bancshares, Inc.
In turn, Congress, multiple states, and federal regulators frequently issue new guidance and standards and are currently considering the enactment of additional or enhanced laws or regulations which could impose increased obligations for companies responsible for the safeguarding of nonpublic, customer and consumer information, specifically financial institutions.
In turn, Congress, multiple states, and federal regulators frequently issue new guidance and standards and are currently considering the enactment of additional or enhanced laws or 22 Table of Contents regulations which could impose increased obligations for companies responsible for the safeguarding of nonpublic, customer and consumer information, specifically financial institutions.
We believe their collaborative and cohesive approach to working relationships permeates every level of our organization, creating synergies that leave us well-positioned for future growth and helps us attract and retain other talented and entrepreneurial bankers as members of our team. 6 Table of Contents ● History of Disciplined Expansion.
We believe their collaborative and cohesive approach to working relationships permeates every level of our organization, creating synergies that leave us well-positioned for future growth and helps us attract and retain other talented and entrepreneurial bankers as members of our team. • History of Disciplined Expansion.
In 2023, our Talent Development team made significant strides in enhancing and expanding our training initiatives. Our goals were to directly benefit our clients by elevating service standards through strategic development programs.
In 2024, our Talent Development team made significant strides in enhancing and expanding our training initiatives. Our goals were to directly benefit our clients by elevating service standards through strategic development programs.
Our acquisition, construction, land development, and other land portfolio is currently over the regulatory guidance percentage threshold due to the timing of draws on several larger construction and development projects and our portfolio secured by multi-family and nonfarm nonresidential properties and loans for acquisition, construction, land development, and other land is within the percentage threshold. 18 Table of Contents Community Reinvestment Act.
Our acquisition, construction, land development, and other land portfolio is currently over the regulatory guidance percentage threshold due to the timing of draws on several larger construction and development projects and our portfolio secured by multi-family and nonfarm nonresidential properties and loans for acquisition, construction, land development, and other land is within the percentage threshold. Community Reinvestment Act.
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.
The Company and the Bank must each remain well capitalized and well managed and the Bank must receive a Community Reinvestment 13 Table of Contents 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.
The Financial Crimes Enforcement Network, or FinCEN, issued final rules under the BSA in July 2016 that clarify and strengthen the due diligence requirements for banks with regard to their customers. 19 Table of Contents The Office of Foreign Assets Control, or OFAC, administers laws and Executive Orders that prohibit U.S. entities from engaging in transactions with certain prohibited parties.
The Financial Crimes Enforcement Network ("FinCEN"), issued final rules under the BSA in July 2016 that clarify and strengthen the due diligence requirements for banks with regard to their customers. The Office of Foreign Assets Control("OFAC") administers laws and Executive Orders that prohibit U.S. entities from engaging in transactions with certain prohibited parties.
We adhere to what we believe are disciplined underwriting standards, but also remain cognizant of the need to serve the credit needs of customers in our primary market areas by offering flexible loan solutions in a responsive and timely manner.
Credit Policies and Procedures General . We adhere to what we believe are disciplined underwriting standards, but also remain cognizant of the need to serve the credit needs of customers in our primary market areas by offering flexible loan solutions in a responsive and timely manner.
In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank under a capital restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment. 14 Table of Contents In the event of a bank holding company’s bankruptcy under Chapter 11 of the U.S.
In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank under a capital restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment. In the event of a bank holding company’s bankruptcy under Chapter 11 of the U.S.
Such legislation, regulation and policies have had a significant effect on the operations and activities, financial condition, results of operations, growth plans and future prospects of commercial banks in the past and are expected to continue to do so. 21 Table of Contents
Such legislation, regulation and policies have had a significant effect on the operations and activities, financial condition, results of operations, growth plans and future prospects of commercial banks in the past and are expected to continue to do so.
This approach fostered a more dynamic, inclusive, and effective leadership style, significantly impacting our ability to exceed client expectations through superior team performance and decision-making. The enhancement of this innovative training program underscored our ongoing commitment to organizational excellence and superior client service. Our average tenure is 6.7 years of service.
This approach fostered a more dynamic, inclusive, and effective leadership style, significantly impacting our 12 Table of Contents ability to exceed client expectations through superior team performance and decision-making. The enhancement of this innovative training program underscored our ongoing commitment to organizational excellence and superior client service. Our average tenure is 6.6 years of service.
As of December 31, 2023, the Bank met the requirements to be categorized as well capitalized under the prompt corrective action framework currently in effect.
As of December 31, 2024, the Bank met the requirements to be categorized as well capitalized under the prompt corrective action framework currently in effect.
Undercapitalized institutions are also subject to growth limitations, may not accept, renew or rollover brokered deposits, and are required to submit a capital restoration plan. The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the bank’s capital.
Undercapitalized institutions are also subject to growth limitations, may not accept, renew or rollover brokered deposits, and are required to submit a capital restoration plan. The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring 17 Table of Contents the bank’s capital.
We generally charge an origination fee for our services. We typically require personal guarantees from the principal owners of the business supported by a review of the principal owners’ personal financial statements and global debt service obligations.
We 8 Table of Contents generally charge an origination fee for our services. We typically require personal guarantees from the principal owners of the business supported by a review of the principal owners’ personal financial statements and global debt service obligations.
As discussed above, in certain circumstances, the Company could also be required to guarantee the capital restoration plan of the Bank, if it became undercapitalized for purposes of the Federal Reserve’s prompt corrective action regulations.
As discussed above, in 15 Table of Contents certain circumstances, the Company could also be required to guarantee the capital restoration plan of the Bank, if it became undercapitalized for purposes of the Federal Reserve’s prompt corrective action regulations.
In 2023, we completed a second year of 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.
In 2024, we completed a third year of 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 2023, we continued the use of online exit surveys to provide feedback and help increase retention of women and ethnic minorities.
Furthermore, in 2024, we continued the use of online exit surveys to provide feedback and help increase retention of women and ethnic minorities.
In addition, its deposits are insured by the FDIC to the maximum extent permitted by law. As a result, the Bank is subject to extensive regulation, supervision and examination by the Louisiana Office of Financial Institutions and the FDIC.
In addition, its deposits are insured by the FDIC to the maximum extent permitted by law. As a result, the Bank is subject to extensive regulation, 16 Table of Contents supervision and examination by the Louisiana Office of Financial Institutions and the FDIC.
These requirements and restrictions include requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon and restrictions relating to investments and other activities of the Bank. 15 Table of Contents Capital Adequacy Requirements.
These requirements and restrictions include requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon and restrictions relating to investments and other activities of the Bank. Capital Adequacy Requirements.
Further, our emphasis on asset/liability management training allows our local banking teams to understand the importance of quality core deposit funding, which we believe is vital to our continued loan growth.
Further, our emphasis on asset/liability management training allows our local banking teams to 6 Table of Contents understand the importance of quality core deposit funding, which we believe is vital to our continued loan growth.
Although all lending involves a degree of risk, we work to mitigate these risks through conservative underwriting policies and consistent monitoring of credit quality indicators. 7 Table of Contents Commercial and Industrial Loans .
Although all lending involves a degree of risk, we work to mitigate these risks through conservative underwriting policies and consistent monitoring of credit quality indicators. Commercial and Industrial Loans .
Under the GLB Act, banks may establish financial subsidiaries and engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting as principal, insurance company portfolio investment, real estate development, real estate investment, annuity issuance and merchant banking activities.
Under the GLB Act, banks may establish financial subsidiaries and engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting as principal, insurance company portfolio investment, real estate development, real estate investment, annuity issuance and merchant banking 19 Table of Contents activities.
The Dodd-Frank Act gives the CFPB authority to supervise and examine depository institutions with more than $10.0 billion in assets for compliance with these federal consumer laws. The authority to supervise and examine depository institutions with $10.0 billion or less in assets for compliance with federal consumer laws remains largely with those institutions’ primary regulators.
The Dodd-Frank Act gives the CFPB authority to supervise and examine depository institutions with more than $10.0 billion in assets for compliance with these federal consumer laws. The 20 Table of Contents authority to supervise and examine depository institutions with $10.0 billion or less in assets for compliance with federal consumer laws remains largely with those institutions’ primary regulators.
We carefully manage the size of our workforce and reallocate resources as needed. For 2023, we managed an average of $6.6 million in loans held for investment and $6.9 million in deposits per FTE. Diversity . We have an organization-wide focus to improve recruitment and retention of women and ethnic minorities.
We carefully manage the size of our workforce and reallocate resources as needed. For 2024, we managed an average of $7.0 million in loans held for investment and $7.6 million in deposits per FTE. Diversity . We have an organization-wide focus to improve recruitment and retention of women and ethnic minorities.
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.
When using the Matrix authority, senior lenders have authority up to $500,000, market leaders have authority up to $750,000, regional market presidents have authority up to $1.5 million, the chief banking officer and regional credit officers have authority up to $2.5 million, regional chairmen have authority up to $2.0 million and the Chief Executive Officer, President, Chief Financial Officer, and Chief Credit Officer each have authority up to $2.5 million.
(3) Includes Hispanic/Latino, Black/African American, Asian, American Indian/Alaska Native, Native Hawaiian/Other Pacific Islander In addition to our continued Diversity Equity and Inclusion (“DEI”) efforts, we have emphasized merit-based promotions in an effort to promote from within, foster talent development of our best human capital resources, and increase the our organic growth. Compensation and Benefits .
(3) Includes Hispanic/Latino, Black/African American, Asian, American Indian/Alaska Native, Native Hawaiian/Other Pacific Islander In addition to our continued Diversity Equity and Inclusion (“DEI”) efforts, we have emphasized merit-based promotions to promote from within, and foster talent development of our best human capital resources. Compensation and Benefits .
As of December 31, 2023, the Board has set the “in-house” household lending limit was $60.0 million with an additional borrower “in-house” lending limit of $20.0 million as of such date. Our credit underwriters are based throughout our footprint and service all of our markets from those locations.
As of December 31, 2024, the Board set the “in-house” household lending limit at $60.0 million with an additional borrower “in-house” lending limit of $20.0 million as of such date. Our credit underwriters are based throughout our footprint and service all of our markets from those locations.
Our consumer loans, which are underwritten primarily based on the borrower’s financial condition and, in some cases, are unsecured credits, subject us to risk based on changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness or other personal hardship, and fluctuations in the value of the real estate or personal property securing the consumer loan, if any. 8 Table of Contents Credit Policies and Procedures General .
Our consumer loans, which are underwritten primarily based on the borrower’s financial condition and, in some cases, are unsecured credits, subject us to risk based on changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness or other personal hardship, and fluctuations in the value of the real estate or personal property securing the consumer loan, if any.
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. Productivity .
Our Chief Human Resources Officer reports directly to the Chief of Staff 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. 11 Table of Contents Productivity .
Further, in the event of a liquidation or other resolution of an insured depository institution, the claims of depositors and other general or subordinated creditors are entitled to a priority of payment over the claims of holders of any obligation of the institution to its shareholders, including any depository institution holding company (such as us) or any shareholder or creditor thereof. 17 Table of Contents Incentive Compensation Guidance.
Further, in the event of a liquidation or other resolution of an insured depository institution, the claims of depositors and other general or subordinated creditors are entitled to a priority of payment over the claims of holders of any obligation of the institution to its shareholders, including any depository institution holding company (such as us) or any shareholder or creditor thereof.
We also provide a full range of deposit products and services, including a variety of checking and savings accounts, certificates of deposit, money market accounts, debit cards, remote deposit capture, online banking, mobile banking, e-Statements, bank-by-mail and direct deposit services.
We offer business accounts and cash management services, including business checking and savings accounts, and treasury management services. We also provide a full range of deposit products and services, including a variety of checking and savings accounts, certificates of deposit, money market accounts, debit cards, remote deposit capture, online banking, mobile banking, e-Statements, bank-by-mail and direct deposit services.
Under the Basel III regulatory capital framework, the failure to maintain an adequate capital conservation buffer, as discussed above, may also result in dividend restrictions.
Under the Basel III 18 Table of Contents regulatory capital framework, the failure to maintain an adequate capital conservation buffer, as discussed above, may also result in dividend restrictions.
In addition, b1BANK offers our customers wealth management products, drive-through banking facilities, automated teller machines, night depository, personalized checks, credit cards, debit cards, internet banking, electronic funds transfers through ACH services, domestic and foreign wire transfers, traveler’s checks, cash management, vault services, loan and deposit sweep accounts, and lock box services.
In addition, b1BANK offers our customers wealth management products, drive-through banking facilities, automated teller machines, night depository, personalized checks, credit cards, debit cards, internet 7 Table of Contents banking, electronic funds transfers through ACH services, domestic and foreign wire transfers, traveler’s checks, cash management, vault services, loan and deposit sweep accounts, SBA products, interest-rate swaps and lock box services.
Through our wealth management line of business, we offer financial planning, retirement services and investment management by a team of seasoned advisors providing access to a wide range of certificates of deposits, mutual funds, annuities, individual retirement accounts, money market accounts and other financial products. Our private banking products and services are offered at all of our banking centers.
Through our wealth management line of business, we offer financial planning, retirement services and investment management by a team of seasoned advisors providing access to a wide range of certificates of deposits, mutual funds, annuities, individual retirement accounts, money market accounts and other financial products.
Subsidiaries Business First Bancshares, Inc. has two direct, wholly-owned subsidiaries: b1BANK, formerly known as Business First Bank, and Coastal Commerce Statutory Trust I. In addition, b1BANK has two direct, wholly-owned subsidiaries, Business First Insurance, LLC and SSW, which are indirect subsidiaries of Business First Bancshares, Inc.
Subsidiaries Business First Bancshares, Inc. has two direct, wholly-owned subsidiaries: b1BANK, formerly known as Business First Bank, and Coastal Commerce Statutory Trust I. In addition, b1BANK has four direct, wholly-owned subsidiaries, Business First Insurance, LLC, Smith Shellnut Wilson ("SSW"), Waterstone, and b1Securities, which are indirect subsidiaries of Business First Bancshares, Inc.
Other Products and Services In addition to traditional banking activities and the other products and services specified above, we provide a broad array of financial services to our customers, including debit and credit card products, treasury and cash management services, merchant services, employee and payroll benefits solutions (including payroll cards and bank-at-work benefits) automated clearing house services, lock-box services, remote deposit capture services, receivables factoring, correspondent banking services (offered by our Financial Institutions Group) and other treasury services.
Our private banking products and services are offered at all of our banking centers. 10 Table of Contents Other Products and Services In addition to traditional banking activities and the other products and services specified above, we provide a broad array of financial services to our customers, including debit and credit card products, treasury and cash management services, merchant services, employee and payroll benefits solutions (including payroll cards and bank-at-work benefits) automated clearing house services, lock-box services, remote deposit capture services, receivables factoring, correspondent banking services (offered by our Financial Institutions Group), SBA products, interest-rate swaps and other treasury services.
As of December 31, 2023, on a consolidated basis, we had total assets of $6.6 billion, total loans of $5.0 billion, total deposits of $5.2 billion and shareholders’ equity of $644.3 million. Our common stock is listed on the Nasdaq Global Select Market under the symbol “BFST”.
As of December 31, 2024, on a consolidated basis, we had total assets of $7.9 billion, total loans of $6.0 billion, total deposits of $6.5 billion and shareholders’ equity of $799.5 million. Our common stock is listed on the Nasdaq Global Select Market under the symbol “BFST”.
These programs equipped our staff with essential skills for efficient dispute handling and deepened their understanding of critical compliance areas such as CTR’s, thereby ensuring secure, compliant client transactions and maintaining client trust in us. This year also marked a notable enhancement in our Emergenetics training program.
These programs equipped our staff with essential skills for efficient dispute handling and deepened their understanding of critical compliance areas such as CTR’s, thereby ensuring secure, compliant client transactions and maintaining client trust in us. In 2024, we continued the enhancement in our Emergenetics training program.
With the exception of loans secured by cash deposited with us, all commercial loans require a minimum of two approvers (the banker and at least one other individual with higher authority).
All commercial loans require a minimum of two approvers (the banker and at least one other individual with higher authority).
The Bank is also required to own a certain amount of capital stock in the FHLB. The Bank is in compliance with the stock ownership rules with respect to such advances, commitments and letters of credit and collateral requirements with respect to home mortgage loans and similar obligations.
The Bank is in compliance with the stock ownership rules with respect to such advances, commitments and letters of credit and collateral requirements with respect to home mortgage loans and similar obligations.
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 relationships exceeding $10.0 million are required to be approved by the Director’s Loan Committee, which is comprised of board members.
A combination of the Chief Banking Officer and Chief Credit Officer (or their assigns) may approve up to $10.0 million. All relationships exceeding $10.0 million are approved by the Executive Loan Committee.
The federal banking agencies have issued comprehensive guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking. The incentive compensation guidance sets expectations for banking organizations concerning their incentive compensation arrangements and related risk-management, control and governance processes.
Incentive Compensation Guidance. The federal banking agencies have issued comprehensive guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
The aggregate liability of the holding company of an undercapitalized bank is limited to the lesser of 5.0% of the institution’s assets at the time it became undercapitalized or the amount necessary to cause the institution to be adequately capitalized.
Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy. The aggregate liability of the holding company of an undercapitalized bank is limited to the lesser of 5.0% of the institution’s assets at the time it became undercapitalized or the amount necessary to cause the institution to be adequately capitalized.
During 2023, we had 109 internal employee promotions, 138 external hires, and 14 rehired employees. Employee turnover for 2023 was 17.2%. Available Information The Company files reports and other information with the Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934, as amended.
During 2024, we had 64 internal employee promotions, 114 external hires, and 11 rehired employees. Employee turnover for 2024 was 13.3%. Available Information The Company files reports and other information with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended.
The proposal would require a covered institution to provide this notice as soon as practicable but not later than 30 days after the covered institution becomes aware that an incident involving unauthorized access to, or use of customer information has occurred or is reasonably likely to have occurred.
On May 16, 2024, the SEC adopted an amendment to Regulation S-P requiring a covered institution to provide notice as soon as practicable, but not later than 30 days after becoming aware that an incident involving unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred.
Key among these was the integration of Submittable, which is an online platform used to streamline the submission and review processes into our internal application for external learning and development programs.
Key among these was the integration of Submittable, which is an online platform used to streamline the submission and review processes into our internal application for external learning and development programs. This innovative platform revolutionized how employees applied for external development programs, streamlining our application process, and improving how managers and executives review and provide feedback on applications.
Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. In addition to applicable federal privacy regulations, the Bank is subject to certain state privacy laws. Federal Home Loan Bank ( “ FHLB ” ) System.
Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services.
As of December 31, 2023, our colleagues had the following attributes: Female Minority (3) Employees 520 total (67.5%) 166 total (21.6%) Officials and Managers (1) 113 total (58.3%) 33 total (17.0%) Executive Officers (2) 3 total (21.4%) 1 total (7.1%) (1) Based on EEO-1 job classifications. (2) Based on b1BANK’s Executive Team.
As of December 31, 2024, our colleagues had the following attributes: Female Minority (3) Employees 580 total (67.4%) 152 total (26.0%) Officials and Managers (1) 116 total (59.0%) 27 total (23.0%) Executive Officers (2) 3 total (50.0%) 0 total (0.0%) (1) Based on EEO-1 job classifications. (2) Based on b1BANK’s Executive Team.
We measure the success of our talent acquisition strategy on quality of acquisition, diversity of new colleagues and retention. Each of these metrics is tracked for all key business lines. Sourcing strategies and support structures are modified to ensure that performance targets are met consistently.
We measure the success of our talent acquisition strategy on quality of acquisition, diversity in the workplace, and the retention of our employees. Each of these metrics is tracked for all key business lines. Sourcing tools are reviewed and modified as needed to ensure that we experience continued improvement.
Our Competitive Strengths We believe the following competitive strengths differentiate us from our peers and position us for future growth: ● Sophisticated Business Lending Capabilities. Unlike traditional community banks, we specifically target business customers with complex needs that require a degree of business lending expertise that is typically found only at larger institutions.
Unlike traditional community banks, we specifically target business customers with complex needs that require a degree of business lending expertise that is typically found only at larger institutions.
We provide pay, benefits, and services that not only meet the varying needs of our employees but are in line with our equilibrium for competitive compensation.
We provide competitive pay, benefits, and services that meet the varying needs of our employees.
The capital restoration plan will not be accepted by the regulators unless each company having control of the undercapitalized institution guarantees the subsidiary’s compliance with the capital restoration plan up to a certain specified amount. Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy.
In 14 Table of Contents the event an institution becomes undercapitalized, it must submit a capital restoration plan. The capital restoration plan will not be accepted by the regulators unless each company having control of the undercapitalized institution guarantees the subsidiary’s compliance with the capital restoration plan up to a certain specified amount.
These policies influence to a significant extent the overall growth of bank loans, investments, and deposits and the interest rates charged on loans or paid on deposits.
These policies influence to a significant extent the overall growth of bank loans, investments, and deposits and the interest rates charged on loans or paid on deposits. We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans or future prospects.
We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans or future prospects. 20 Table of Contents 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 has a negative impact on our profitability.
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 has a negative impact on our profitability.
The Bank may also establish offices in other states by merging with banks or by purchasing branches of other banks in other states, subject to certain restrictions. 16 Table of Contents Restrictions on Transactions with Affiliates and Insiders.
Any new branch, whether located inside or outside of Louisiana, must also be approved by the FDIC, as the Bank’s primary federal regulator. The Bank may also establish offices in other states by merging with banks or by purchasing branches of other banks in other states, subject to certain restrictions. Restrictions on Transactions with Affiliates and Insiders.
These sessions provided targeted guidance to enhance leadership skills among managers, leading to more efficient teams and, consequently, better internal and external client interactions and service quality. Additionally, our specialized training programs, namely the “Transaction Dispute Reporting for the Frontline” and the “Mastering Currency Transaction Reports: Compliance and Best Practices,” significantly enhanced client service and compliance standards.
Additionally, our specialized training programs, namely the “Transaction Dispute Reporting for the Frontline” and the “Mastering Currency Transaction Reports: Compliance and Best Practices,” significantly enhanced client service and compliance standards.
Key items that drive our human capital resources are described below. 10 Table of Contents Structure . As of December 31, 2023, we proudly employ 751 full-time and 19 part-time employees (for a total of 770 employees).
Key items that drive our human capital resources are described below. Structure . As of December 31, 2024, we proudly employ 849 full-time and 23 part-time employees (for a total of 872 employees). Our employees reside coast to coast, with personnel located in Louisiana, Mississippi, Texas, and 10 other states with remote employees.
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. While we will remain focused on organic expansion, we will continue to identify and evaluate opportunities for strategic business acquisitions as they arise from time to time.
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.
We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute.
New regulations and statutes are regularly proposed that contain wide-ranging proposals for altering the structures, regulations and competitive relationships of financial institutions operating in the United States. We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute.
We will carefully consider acquisition opportunities that we believe are consistent with our strategic vision and provide attractive risk-adjusted returns to our shareholders. 5 Table of Contents Recent Acquisition Activity Smith Shellnut Wilson, LLC ( “ SSW ” ).
We will carefully consider acquisition opportunities that we believe are consistent with our strategic vision and provide attractive risk-adjusted returns to our shareholders. Recent Acquisition Activity Waterstone LSP, LLC ("Waterstone"). On January 31, 2024, we completed the acquisition, through b1BANK, of Waterstone, headquartered in Katy, Texas.
The FHLBs make loans (i.e., advances) to members in accordance with policies and procedures established by the FHLB and the Boards of directors of each regional FHLB. As a system member, according to currently existing policies and procedures, the Bank is entitled to borrow from the Dallas FHLB provided it posts acceptable collateral.
As a system member, according to currently existing policies and procedures, the Bank is entitled to borrow from the Dallas FHLB provided it posts acceptable collateral. The Bank is also required to own a certain amount of capital stock in the FHLB.
The FHLB system, of which the Bank is a member, consists of 11 regional FHLBs governed and regulated by the Federal Housing Finance Board, or FHFB. The FHLBs serve as reserve or credit facilities for member institutions within their assigned regions. The reserves are funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB system.
The FHLBs serve as reserve or credit facilities for member institutions within their assigned regions. The reserves are funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB system. The FHLBs make loans (i.e., advances) to members in accordance with policies and procedures established by the FHLB and the Boards of directors of each regional FHLB.
Finally, we perform stress testing on key segments of our portfolio in which we evaluate the impact of declining economic conditions on the portfolio based on previous recessionary periods.
Finally, we perform stress testing on key segments of our portfolio in which we evaluate the impact of declining economic conditions on the portfolio based on previous recessionary periods. The reporting and reviews provide management with additional information for assessing our asset quality. Deposits Our deposits serve as the primary funding source for lending, investing and other general banking purposes.
Bank regulators are required to take prompt corrective action to resolve problems associated with insured depository institutions whose capital declines below certain levels. In the event an institution becomes undercapitalized, it must submit a capital restoration plan.
We have not elected to use the CBLR framework since the year ended December 31, 2020. Imposition of Liability for Undercapitalized Subsidiaries. Bank regulators are required to take prompt corrective action to resolve problems associated with insured depository institutions whose capital declines below certain levels.
All banking centers and loan production offices are in Louisiana and Texas, and our subsidiary registered investment advisor (RIA), Smith Shellnut Wilson, LLC, or SSW, is in Mississippi.
Full-time equivalents (FTEs) as of December 31, 2024, were 859, which includes employees from the Oakwood acquisition that closed on October 1, 2024. All banking centers and loan production offices are in Louisiana and Texas, and our subsidiary registered investment advisor (RIA), SSW, is in Mississippi.

… 21 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+19 added−3 removed243 unchanged
Biggest changeWhile we have not recorded any impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of our existing goodwill or goodwill we may acquire in the future will not result in findings of impairment and related write-downs, which could adversely affect our business, financial condition and results of operations. 33 Table of Contents Risks Related to the Regulation of Our Industry We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could have an adverse effect on our business, financial condition and results of operations.
Biggest changeWhile we have not recorded any impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of our existing goodwill or goodwill we may acquire in the future will not result in findings of impairment and related write-downs, which could adversely affect our business, financial condition and results of operations.
Our acquisition activities could be material to our business and involve a number of risks, including those associated with: ● the identification of suitable candidates for acquisition; ● the diversion of management attention from the operation of our existing business to identify, evaluate and negotiate potential transactions; ● the ability to attract funding to support additional growth within acceptable risk tolerances; ● the use of inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; ● the ability to maintain asset quality; ● the adequacy of due diligence and the potential exposure to unknown or contingent liabilities related to the acquisition 27 Table of Contents ● the retention of customers and key personnel, including bankers; ● the timing and uncertainty associated with obtaining necessary regulatory approvals; ● the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations ● the ability to successfully integrate acquired businesses; and ● the maintenance of adequate regulatory capital.
Our acquisition activities could be material to our business and involve a number of risks, including those associated with: • the identification of suitable candidates for acquisition; 29 Table of Contents • the diversion of management attention from the operation of our existing business to identify, evaluate and negotiate potential transactions; • the ability to attract funding to support additional growth within acceptable risk tolerances; • the use of inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • the ability to maintain asset quality; • the adequacy of due diligence and the potential exposure to unknown or contingent liabilities related to the acquisition • the retention of customers and key personnel, including bankers; • the timing and uncertainty associated with obtaining necessary regulatory approvals; • the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations • the ability to successfully integrate acquired businesses; and • the maintenance of adequate regulatory capital.
Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise adversely affect our operations and financial condition. 37 Table of Contents Risks Associated with our Common Stock The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your common shares at the volume, prices and times desired.
Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise adversely affect our operations and financial condition. 41 Table of Contents Risks Associated with our Common Stock The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your common shares at the volume, prices and times desired.
These provisions, and the corporate and banking laws and regulations applicable to us: ● enable our board of directors to issue additional shares of authorized, but unissued capital stock; ● enable our board of directors, without shareholder approval, to issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the board; 39 Table of Contents ● enable our board of directors to increase the size of the board and fill the vacancies created by the increase; ● do not provide for cumulative voting in the election of directors; ● enable our board of directors to amend our bylaws without shareholder approval; ● require the vote of holders of at least 80% of the outstanding shares of our capital stock to modify the sections of our articles of incorporation addressing limitation of liability and indemnification of our officers and directors; ● require the request of holders of at least 25% of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders’ meeting; ● establish an advance notice procedure for director nominations and other shareholder proposals; and ● require prior regulatory application and approval of any transaction involving control of our organization.
These provisions, and the corporate and banking laws and regulations applicable to us: • enable our board of directors to issue additional shares of authorized, but unissued capital stock; • enable our board of directors, without shareholder approval, to issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the board; • enable our board of directors to increase the size of the board and fill the vacancies created by the increase; • do not provide for cumulative voting in the election of directors; • enable our board of directors to amend our bylaws without shareholder approval; • require the vote of holders of at least 80% of the outstanding shares of our capital stock to modify the sections of our articles of incorporation addressing limitation of liability and indemnification of our officers and directors; • require the request of holders of at least 25% of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders’ meeting; • establish an advance notice procedure for director nominations and other shareholder proposals; and • require prior regulatory application and approval of any transaction involving control of our organization.
Our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP, and with general practices within the financial services industry.
Our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and with general practices within the financial services industry.
The Board of Governors of the Federal Reserve System, or the Federal Reserve, the Federal Deposit Insurance Corporation, or the FDIC, and the Louisiana Office of Financial Institutions, or the Louisiana OFI, periodically conduct examinations of various aspects of our business, including our compliance with laws and regulations.
The Board of Governors of the Federal Reserve System (the "Federal Reserve"), the Federal Deposit Insurance Corporation (the "FDIC"), and the Louisiana Office of Financial Institutions (the "Louisiana OFI") periodically conduct examinations of various aspects of our business, including our compliance with laws and regulations.
Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability, and could adversely affect our business, financial condition, results of operations and prospects. 24 Table of Contents Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability, and could adversely affect our business, financial condition, results of operations and prospects. 26 Table of Contents Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Increased market volatility could have an adverse effect on the market price of our common stock, which could make it difficult to sell your common shares at the volume, prices and times desired. 38 Table of Contents Future sales or the availability for sale of substantial amounts of our common stock in the public market could adversely affect the prevailing market price of our common stock and impair our ability to raise capital through future sales of equity securities.
Increased market volatility could have an adverse effect on the market price of our common stock, which could make it difficult to sell your common shares at the volume, prices and times desired. 42 Table of Contents Future sales or the availability for sale of substantial amounts of our common stock in the public market could adversely affect the prevailing market price of our common stock and impair our ability to raise capital through future sales of equity securities.
The Financial Accounting Standards Board (“FASB”) recently issued a new credit impairment model, the Current Expected Credit Loss (“CECL”) model, which became applicable to us on January 1, 2023.
The Financial Accounting Standards Board (“FASB”) issued a new credit impairment model, the Current Expected Credit Loss (“CECL”) model, which became applicable to us on January 1, 2023.
We review goodwill for impairment at least annually, or more frequently if a triggering event occurs which indicates that the carrying value of the asset might be impaired. Our goodwill impairment test is performed annually and was completed as of October 1, 2023. The annual test did not indicate any impairment as of the testing date.
We review goodwill for impairment at least annually, or more frequently if a triggering event occurs which indicates that the carrying value of the asset might be impaired. Our goodwill impairment test is performed annually and was completed as of October 1, 2024. The annual test did not indicate any impairment as of the testing date.
Business – Supervision and Regulation – b1BANK – Capital Adequacy Requirements. ” Federal and state banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations could have an adverse effect on our business, financial condition, results of operations and prospects.
Business – Supervision and Regulation – b1BANK – Capital Adequacy Requirements. ” Federal and state banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of 37 Table of Contents such examinations could have an adverse effect on our business, financial condition, results of operations and prospects.
As of December 31, 2023, we were within the 300.0% regulatory guideline for commercial real estate, as well as the 100.0% regulatory guideline for construction, land development, and other land loans due to the timing of draws on several larger construction and development projects.
As of December 31, 2024, we were within the 300.0% regulatory guideline for commercial real estate, as well as the 100.0% regulatory guideline for construction, land development, and other land loans due to the timing of draws on several larger construction and development projects.
Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of our general unsecured creditors, including the holders of any note obligations. We are subject to commercial real estate lending guidance issued by the federal banking regulators that impacts our operations and capital requirements.
Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of our general unsecured creditors, including the holders of any note obligations. 40 Table of Contents We are subject to commercial real estate lending guidance issued by the federal banking regulators that impacts our operations and capital requirements.
Certain provisions of our articles of incorporation and bylaws, each as amended and restated, and corporate and federal banking laws, could make it more difficult for a third party to acquire control of our organization or conduct a proxy contest, even if those events were perceived by many of our shareholders as beneficial to their interests.
Certain provisions of our articles of incorporation and bylaws, each as amended and restated, and corporate and federal banking laws, could make it more difficult for a third party to acquire control of our organization or conduct a 43 Table of Contents proxy contest, even if those events were perceived by many of our shareholders as beneficial to their interests.
These changes are beyond our control, can be difficult to predict, and could materially impact how we report our financial condition and results of operations. 31 Table of Contents We have a continuing need for technological change, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology.
These changes are beyond our control, can be difficult to predict, and could materially impact how we report our financial condition and results of operations. We have a continuing need for technological change, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology.
Additionally, we may be required to hold mortgage loans that we originated for sale, increasing our exposure to interest rate risk and the value of the residential real estate that serves as collateral for the mortgage loan. New lines of business, products, product enhancements or services may subject us to additional risks.
Additionally, we may be required to hold mortgage loans that we originated for sale, increasing our exposure to interest rate risk and the value of the residential real estate that serves as collateral for the mortgage loan. 31 Table of Contents New lines of business, products, product enhancements or services may subject us to additional risks.
The federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service.
The federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with 38 Table of Contents the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service.
Business – Supervision and Regulation – b1BANK – Capital Adequacy Requirements. ” 34 Table of Contents New activities and expansion require regulatory approvals, and failure to obtain them may restrict our growth. From time to time, we may complement and expand our business by pursuing strategic acquisitions of financial institutions and other complementary businesses.
Business – Supervision and Regulation – b1BANK – Capital Adequacy Requirements. ” New activities and expansion require regulatory approvals, and failure to obtain them may restrict our growth. From time to time, we may complement and expand our business by pursuing strategic acquisitions of financial institutions and other complementary businesses.
The volume of new or modified laws and regulations has increased in recent years and, in addition, some individual municipalities have begun to enact laws that restrict loan collection activities including delaying or temporarily preventing foreclosures or forcing the modification of certain mortgages.
The volume of new or modified laws and regulations has increased in recent years and, in addition, some individual municipalities have begun to enact laws that restrict loan collection activities including delaying or temporarily preventing 39 Table of Contents foreclosures or forcing the modification of certain mortgages.
However, in the recent past, disruptions in the secondary market for residential mortgage loans have limited the market for, and liquidity of, most mortgage loans other than conforming Fannie Mae and Federal Home Loan Mortgage Corporation, or Freddie Mac, loans. The effects of these disruptions in the secondary market for residential mortgage loans may reappear.
However, in the recent past, disruptions in the secondary market for residential mortgage loans have limited the market for, and liquidity of, most mortgage loans other than conforming Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") loans. The effects of these disruptions in the secondary market for residential mortgage loans may reappear.
In addition, one or more of our employees or vendors could cause a significant operational breakdown or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our loan documentation, operations or systems.
In addition, one or more of our employees or vendors could cause a significant operational breakdown or failure, 35 Table of Contents either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our loan documentation, operations or systems.
The Bank Secrecy Act, the USA PATRIOT Act of 2001, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate.
The BSA, the USA PATRIOT Act of 2001, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate.
Certain accounting policies inherently are based to a greater extent on estimates, assumptions and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally reported.
Certain accounting policies 34 Table of Contents inherently are based to a greater extent on estimates, assumptions and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally reported.
In certain cases, we may consider entering into licensing agreements for disputed intellectual property, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur. These licenses may also significantly increase our operating expenses.
In certain cases, we may consider entering into licensing agreements for disputed intellectual property, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur. These licenses may also 36 Table of Contents significantly increase our operating expenses.
As of December 31, 2023, approximately $1.4 billion, or 27.2%, of our total loans were commercial loans to businesses. In general, these loans are collateralized by general business assets, including, among other things, accounts receivable, inventory and equipment and most are backed by a personal guaranty of the borrower or principal.
As of December 31, 2024, approximately $1.9 billion, or 31.2%, of our total loans were commercial loans to businesses. In general, these loans are collateralized by general business assets, including, among other things, accounts receivable, inventory and equipment and most are backed by a personal guaranty of the borrower or principal.
Our success, including our ability to achieve our growth and profitability goals, is dependent on the ability of our management team to execute on our long-term business strategy, which requires them to, among other things: ● attract and retain experienced and talented bankers in each of our markets; ● maintain adequate funding sources, including by continuing to attract stable, low-cost deposits; ● increase our operating efficiency and profitability; ● implement new technologies to enhance the client experience, keep pace with our competitors and improve efficiency; ● attract and maintain commercial banking relationships with well-qualified businesses, real estate developers and investors with proven track records in our market areas; ● attract sufficient loans that meet prudent credit standards, including in our commercial and industrial and owner-occupied commercial real estate loan categories; ● maintain adequate liquidity and regulatory capital and comply with applicable federal and state banking regulations; ● obtain federal and state regulatory approvals; ● manage our credit, interest rate and liquidity risk; ● develop new, and grow our existing, streams of noninterest income; ● oversee the performance of third party service providers that provide material services to our business; and ● maintain expenses in line with their current projections.
Our success is largely dependent upon our ability to successfully execute our business strategy, and failure to successfully execute our business strategy could have an adverse effect on our business, financial condition and results of operations. 24 Table of Contents Our success, including our ability to achieve our growth and profitability goals, is dependent on the ability of our management team to execute on our long-term business strategy, which requires them to, among other things: • attract and retain experienced and talented bankers in each of our markets; • maintain adequate funding sources, including by continuing to attract stable, low-cost deposits; • increase our operating efficiency and profitability; • implement new technologies to enhance the client experience, keep pace with our competitors and improve efficiency; • attract and maintain commercial banking relationships with well-qualified businesses, real estate developers and investors with proven track records in our market areas; • attract sufficient loans that meet prudent credit standards, including in our commercial and industrial and owner-occupied commercial real estate loan categories; • maintain adequate liquidity and regulatory capital and comply with applicable federal and state banking regulations; • obtain federal and state regulatory approvals; • manage our credit, interest rate and liquidity risk; • develop new, and grow our existing, streams of noninterest income; • oversee the performance of third party service providers that provide material services to our business; and • maintain expenses in line with their current projections.
Under longstanding Federal Reserve policy which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial and managerial strength to the Bank and to commit resources to support the Bank.
The Federal Reserve may require us to commit capital resources to support the Bank. Under longstanding Federal Reserve policy which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial and managerial strength to the Bank and to commit resources to support the Bank.
However, it is likely that customer and market responses would differ from those in the model, and there is no guarantee that actual results will match modeled results. Interest rates increased rapidly during 2022 and 2023 to levels that we have not experienced in recent history.
However, it is likely that customer and market responses would differ from those in the model, and there is no guarantee that actual results will match modeled results. Interest rates increased rapidly during 2022 and 2023 to levels that we have not experienced in recent history. Interest rates subsequently declined in 2024, but have not returned to pre-2022 levels.
Our business plan emphasizes relationship banking. We have benefited from strong relationships with and among our customers. As a result, our reputation is one of the most valuable components of our business.
We have benefited from strong relationships with and among our customers. As a result, our reputation is one of the most valuable components of our business.
Any such adjustments are reflected in our results of operations in the periods in which they become known. Following the testing date, management determined no triggering event had occurred through December 31, 2023. As of December 31, 2023, our goodwill totaled $88.4 million.
Any such adjustments are reflected in our results of operations in the periods in which they become known. Following the testing date, management determined no triggering event had occurred through December 31, 2024. As of December 31, 2024, our goodwill totaled $121.6 million.
This could adversely affect our liquidity, which could impair our ability to fund operations and meet obligations as they become due and could have a material adverse effect on our business, financial condition and results of operations. 26 Table of Contents Our ability to maintain our reputation is critical to the success of our business.
This could adversely affect our liquidity, which could impair our ability to fund operations and meet obligations as they become due and could have a material adverse effect on our business, financial condition and results of operations. Our ability to maintain our reputation is critical to the success of our business. Our business plan emphasizes relationship banking.
Our loan portfolio includes owner-occupied and non-owner-occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate acquisition, construction and development loans. As of December 31, 2023, approximately $2.9 billion, or 57.8% of our loan portfolio is secured by commercial and construction real estate.
Our loan portfolio includes owner-occupied and non-owner-occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate acquisition, construction and development loans. As of December 31, 2024, approximately $3.2 billion, or 52.7% of our loan portfolio is secured by commercial and construction real estate.
Any future special assessments, increases in assessment rates or premiums, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could materially and adversely affect our business, financial condition, and results of operations.
Any future special assessments, increases in assessment rates or premiums, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could materially and adversely affect our business, financial condition, and results of operations. We experienced an increase in FDIC insurance premiums in 2023 due to increased regulatory rates.
Because we have a large average loan size, if only a few of our largest borrowers become unable to repay their loan obligations as a result of economic or market conditions or personal circumstances, our nonperforming loans and our provision for credit losses could increase significantly, which could have an adverse effect on our business, financial condition and results of operations. 25 Table of Contents Our allowance for credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio, which could have a material adverse effect on our business, financial condition and results of operations.
Because we have a large average loan size, if only a few of our largest borrowers become unable to repay their loan 27 Table of Contents obligations as a result of economic or market conditions or personal circumstances, our nonperforming loans and our provision for credit losses could increase significantly, which could have an adverse effect on our business, financial condition and results of operations.
As of December 31, 2023, brokered and wholesale deposits, including reciprocal deposits, comprised 20.5% of our total deposits, and our borrowings comprised 98.6% of our total shareholders’ equity. As a result of the rise in interest rates during 2022 and 2023, these funding sources have become significantly more expensive than in past years.
As of December 31, 2024, brokered and wholesale deposits, including reciprocal deposits, comprised 18.1% of our total deposits, and our borrowings comprised 60.4% of our total shareholders’ equity. As a result of the rise in interest rates during 2022 and 2023, these funding sources have become significantly more expensive than in past years.
The market value of real estate can fluctuate significantly in a short period of time. As of December 31, 2023, approximately $3.6 billion, or 71.5%, of our total loans were comprised of loans with real estate as a primary or secondary component of collateral.
The market value of real estate can fluctuate significantly in a short period of time. As of December 31, 2024, approximately $4.0 billion, or 67.5%, of our total loans were comprised of loans with real estate as a primary or secondary component of collateral.
We expect competition to continue to intensify due to financial institution consolidation; legislative, regulatory and technological changes; and the emergence of alternative banking sources. 22 Table of Contents Our ability to compete successfully will depend on a number of factors, including, among other things: ● our ability to develop, maintain and build long-term customer relationships based on top quality service, high ethical standards and safe, sound assets; ● our scope, relevance and pricing of products and services offered to meet customer needs and demands; ● the rate at which we introduce new products and services relative to our competitors; ● customer satisfaction with our level of service; ● our ability to expand our market position; ● industry and general economic trends; and ● our ability to keep pace with technological advances and to invest in new technology.
Our ability to compete successfully will depend on a number of factors, including, among other things: • our ability to develop, maintain and build long-term customer relationships based on top quality service, high ethical standards and safe, sound assets; • our scope, relevance and pricing of products and services offered to meet customer needs and demands; • the rate at which we introduce new products and services relative to our competitors; • customer satisfaction with our level of service; • our ability to expand our market position; • industry and general economic trends; and • our ability to keep pace with technological advances and to invest in new technology.
The Federal Open Market Committee raised the target federal funds rate several times in 2022 and 2023.
The Federal Open Market Committee raised the target federal funds rate several times in 2022 and 2023 and reduced them three times in 2024.
Additionally, the allowance incorporates historical industry loss data as part of the estimate. The determination of the appropriate level of the allowance for credit losses is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes.
The determination of the appropriate level of the allowance for credit losses is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes.
If we were to lose the services of any of our bankers, including profitable bankers employed by banks that we may acquire, to a new or existing competitor or otherwise, we may not be able to retain valuable relationships and some of our customers could choose to use the services of a competitor instead of our services.
If we were to lose the services of any of our bankers, including profitable bankers employed by banks that we may acquire, to a new or existing competitor or otherwise, we may not be able to retain valuable relationships and some of our customers could choose to use the services of a competitor instead of our services. 25 Table of Contents Our growth strategy also relies on our ability to attract and retain additional profitable bankers.
As of December 31, 2023, our modeled interest sensitivity was close to neutral, but slightly asset sensitive. Should the assumptions in the model occur, we estimate our net interest income to experience a minor increase if rates rise, and a minor decrease if rates decline.
As of December 31, 2024, our modeled interest sensitivity is modestly asset sensitive. Should the assumptions in the model occur, we estimate our net interest income to experience a minor increase if rates rise, and a minor decrease if rates decline.
As of December 31, 2023, $657.5 million, or approximately 12.5%, of our total deposits consisted of deposit accounts of public bodies, such as state or local municipalities, or public funds. These types of deposits are often secured and typically fluctuate on a seasonal basis due to timing differences between tax collection and expenditures.
As of December 31, 2024, $758.2 million, or approximately 11.6%, of our total deposits consisted of deposit accounts of public bodies, such as state or local municipalities, or public funds. These types of deposits are often secured 32 Table of Contents and typically fluctuate on a seasonal basis due to timing differences between tax collection and expenditures.
Similarly, when interest-earning assets mature or reprice more quickly, or to a greater degree than interest-bearing liabilities, falling interest rates could reduce net interest income. As of December 31, 2023, 35.5% of our earning assets and 58.7% of our interest-bearing liabilities were variable rate.
Similarly, when interest-earning assets mature or reprice more quickly, or to a greater degree than interest-bearing liabilities, falling interest rates could reduce net interest income. As of December 31, 2024, 45.0% of our earning assets and 67.5% of our 30 Table of Contents interest-bearing liabilities were variable rate.
The fair value of our investment securities can fluctuate due to factors outside of our control. As of December 31, 2023, the fair value of our investment securities portfolio was approximately $879.6 million, which included a net unrealized loss of approximately $84.4 million.
The fair value of our investment securities can fluctuate due to factors outside of our control. As of December 31, 2024, the fair value of our investment securities portfolio was approximately $893.5 million, which included a net unrealized loss of approximately $79.9 million.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, or at all, which could have an adverse effect on our business, financial condition and results of operations. 23 Table of Contents Our ability to attract and retain profitable bankers is critical to the success of our business strategy, and any failure to do so could have a material adverse effect on our business, financial condition and results of operations.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, or at all, which could have an adverse effect on our business, financial condition and results of operations.
Ensuring that we have adequate disclosure controls and procedures, including internal controls over financial reporting, in place so we can produce accurate financial statements on a timely basis is costly and time-consuming and needs to be reevaluated frequently.
Ensuring that we have adequate disclosure controls and procedures, including internal controls over financial reporting, in place so we can produce accurate financial statements on a timely basis is costly and time-consuming and needs to be reevaluated frequently. As a public company, we are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act").
As of December 31, 2023, the substantial majority of the loans in our loan portfolio were made to borrowers who live and/or conduct business in our markets and the substantial majority of our secured loans were secured by collateral located in our markets.
We conduct our operations exclusively in the state of Louisiana, in the Dallas/Fort Worth metroplex and Houston. As of December 31, 2024, the substantial majority of the loans in our loan portfolio were made to borrowers who live and/or conduct business in our markets and the substantial majority of our secured loans were secured by collateral located in our markets.
If we fail to maintain capital to meet regulatory requirements, we could be subject to enforcement actions, which could have an adverse effect on our business, financial condition and results of operations. 30 Table of Contents We utilize alternative sources of funding, which may become more expensive or may not be available in the future, which could have an adverse effect on our business, financial condition and results of operations.
We utilize alternative sources of funding, which may become more expensive or may not be available in the future, which could have an adverse effect on our business, financial condition and results of operations.
Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. 28 Table of Contents The markets in which we operate are susceptible to hurricanes and other natural disasters and adverse weather, which could result in a disruption of our operations and increases in credit losses.
Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets.
As of December 31, 2023, we had $1.2 billion in unfunded credit commitments to our customers.
As of December 31, 28 Table of Contents 2024, we had $1.4 billion in unfunded credit commitments to our customers.
As a public company, we are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. Our internal controls, disclosure controls and procedures are based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met, due to certain inherent limitations.
Our internal controls, disclosure controls and procedures are based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met, due to certain inherent limitations.
Our articles of incorporation authorize us to issue up to 50,000,000 shares of common stock. As of February 20, 2024, there are 25,356,393 shares of our common stock issued and outstanding.
Our articles of incorporation authorize us to issue up to 50,000,000 shares of common stock. As of February 28, 2025, there are 29,552,358 shares of our common stock issued and outstanding.
As of December 31, 2023, our average loan size (including unfunded commitments) was approximately $415,000. Further, as of December 31, 2023, our 10 largest borrowing relationships ranged from approximately $35.4 million to $77.6 million (including unfunded commitments) and averaged approximately $4.4 million in total commitments and $3.0 million in principal balance, respectively.
As of December 31, 2024, our average loan size (including unfunded commitments) was approximately $447,000. Further, as of December 31, 2024, our 10 largest borrowing relationships ranged from approximately $23.0 million to $95.2 million (including unfunded commitments) and averaged approximately $44.6 million in total commitments.
The process for determining whether impairment of a security is other-than-temporary often requires complex, subjective judgments about whether there has been a significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any collateral underlying the security, and other relevant factors.
The process for determining whether impairment of a security is other-than-temporary often requires complex, subjective judgments about whether there has been a significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any collateral underlying the security, and other relevant factors. 33 Table of Contents If we fail to maintain an effective system of disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
The geographic concentration of our business in the state of Louisiana, in the Dallas/Fort Worth metroplex and Houston, imposes risks and may magnify the consequences of any regional or local economic downturn affecting our markets, including any downturn in the real estate sector. We conduct our operations exclusively in the state of Louisiana, in the Dallas/Fort Worth metroplex and Houston.
All of these factors could be detrimental to our business, and the interplay between these factors can be complex and unpredictable. 23 Table of Contents The geographic concentration of our business in the state of Louisiana, in the Dallas/Fort Worth metroplex and Houston, imposes risks and may magnify the consequences of any regional or local economic downturn affecting our markets, including any downturn in the real estate sector.
Our systems and those of our third party vendors may also become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from catastrophic events, power anomalies or outages, natural disasters, network failures, and viruses and malware. 32 Table of Contents A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have an adverse effect on our business, results of operations, financial condition, and future prospects.
A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have an adverse effect on our business, results of operations, financial condition, and future prospects.
Conversely, a decrease in the general level of interest rates may affect us through, among other things, increased prepayments on our loan portfolio and increased competition for deposits. Accordingly, changes in the level of market interest rates affect our net yield on interest-earning assets, loan origination volume, loan portfolio and our overall results.
Accordingly, changes in the level of market interest rates affect our net yield on interest-earning assets, loan origination volume, loan portfolio and our overall results.
In particular, many of our competitors are significantly larger with greater financial resources, and may be able to offer more attractive compensation packages and broader career opportunities. Additionally, we may incur significant expenses and expend significant time and resources on training, integration and business development before we are able to determine whether a new banker will be profitable or effective.
Additionally, we may incur significant expenses and expend significant time and resources on training, integration and business development before we are able to determine whether a new banker will be profitable or effective.
Any failure or circumvention of our controls and procedures; failure to comply with regulations related to controls and procedures could have a material adverse effect on our reputation, business, financial condition and results of operations. Our financial results depend on management ’ s selection of accounting methods and certain assumptions and estimates.
Any failure or circumvention of our controls and procedures; failure to comply with regulations related to controls and procedures could have a material adverse effect on our reputation, business, financial condition and results of operations. We have identified a material weakness in our internal control over financial reporting.
If customers move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest income and net income. 29 Table of Contents Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity and debt securities to investors.
If customers move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest income and net income.
They increase our cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans that we do make. 35 Table of Contents Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expense associated with the foreclosure process or prevent us from foreclosing at all.
They increase our cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans that we do make.
Our success is largely dependent upon our ability to successfully execute our business strategy, and failure to successfully execute our business strategy could have an adverse effect on our business, financial condition and results of operations.
Our ability to attract and retain profitable bankers is critical to the success of our business strategy, and any failure to do so could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2023, we held approximately $1.7 million in other real estate owned (“OREO”) of which $279,000 is related to former bank facilities.
As of December 31, 2024, we held approximately $5.5 million in other real estate owned (“OREO”).
The level of the allowance reflects management’s continuing evaluation of general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels and adequacy of collateral. The allowance also incorporates our current views on our current risk management practices, which may change in the future.
As of December 31, 2024, our allowance for credit losses totaled $58.5 million, which represents approximately 0.98% of our total loans held for investment. The level of the allowance reflects management’s continuing evaluation of general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels and adequacy of collateral.
Accordingly, we cannot assure you that we will be able to raise additional capital if needed or on terms acceptable to us.
Accordingly, we cannot assure you that we will be able to raise additional capital if needed or on terms acceptable to us. If we fail to maintain capital to meet regulatory requirements, we could be subject to enforcement actions, which could have an adverse effect on our business, financial condition and results of operations.
Also, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures.
Also, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures. We expect competition to continue to intensify due to financial institution consolidation; legislative, regulatory and technological changes; and the emergence of alternative banking sources.
Interest rates may increase further, or they may remain at current levels for some time. This new interest rate environment could have a number of effects on our business, which may include reduced loan demand, increased delinquencies and increased loan paydowns and payoffs.
An increase or stabilization in interest rates could have a number of effects on our business, which may include reduced loan demand, increased delinquencies and increased loan paydowns and payoffs. Conversely, a decrease in the general level of interest rates may affect us through, among other things, increased prepayments on our loan portfolio and increased competition for deposits.
Additional liquidity is provided by the ability to borrow from the Federal Reserve Bank (“FRB”) of Atlanta and the FHLB of Dallas. We also borrow funds from third-party lenders, such as other financial institutions.
Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity and debt securities to investors. Additional liquidity is provided by the ability to borrow from the Federal Reserve Bank (“FRB”) of Atlanta and the FHLB of Dallas.
Our growth strategy also relies on our ability to attract and retain additional profitable bankers. We may face difficulties in recruiting and retaining bankers of our desired caliber, including as a result of competition from other financial institutions.
We may face difficulties in recruiting and retaining bankers of our desired caliber, including as a result of competition from other financial institutions. In particular, many of our competitors are significantly larger with greater financial resources, and may be able to offer more attractive compensation packages and broader career opportunities.
We maintain an allowance for credit losses that represents management’s judgment of probable losses and risks inherent in our loan portfolio, including unfunded commitments. As of December 31, 2023, our allowance for credit losses totaled $43.7 million, which represents approximately 0.88% of our total loans held for investment.
Our allowance for credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio, which could have a material adverse effect on our business, financial condition and results of operations. We maintain an allowance for credit losses that represents management’s judgment of probable losses and risks inherent in our loan portfolio, including unfunded commitments.
Removed
All of these factors could be detrimental to our business, and the interplay between these factors can be complex and unpredictable.
Added
The allowance also incorporates our current views on our current risk management practices, which may change in the future. Additionally, the allowance incorporates historical industry loss data as part of the estimate.
Removed
If we fail to maintain an effective system of disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Added
The markets in which we operate are susceptible to hurricanes and other natural disasters and adverse weather, which could result in a disruption of our operations and increases in credit losses.
Removed
We experienced an increase in FDIC insurance premiums in 2023 due to increased regulatory rates. 36 Table of Contents The Federal Reserve may require us to commit capital resources to support the Bank.
Added
We also borrow funds from third-party lenders, such as other financial institutions.
Added
Failure to remediate, improve and maintain the quality of internal control over financial reporting could result in material misstatements in our financial statements and could materially and adversely affect our ability to provide timely and accurate financial information about the Company, which could harm our reputation and share price.
Added
In January 2025, we identified control deficiencies involving the design and operation of information technology general controls (“ITGCs”) around change management segregation of duties with respect to certain information technology (“IT”) systems that support our financial reporting process, which we have outsourced to a third party service provider.
Added
Specifically, user access controls at our third party service provider lacked sufficient segregation of duties as multiple end users had the ability to both install changes into the production environment and develop application source code via permissions inherited through group membership.
Added
Management concluded that these control deficiencies constituted a material weakness in our internal control over financial reporting, as the identified deficiencies could have had a direct or indirect impact on some of our financial reporting controls that relied on certain IT system reports.

… 12 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+2 added−0 removed9 unchanged
Biggest changeThe effectiveness of these processes is verified by independent internal and external audit functions or organizations. Independent internal and external auditors are engaged to perform Security assessments to determine the appropriateness and effectiveness of the overall Program. Supplementary self-assessments are performed as needed or as required by regulatory guidelines.
Biggest changeIndependent internal and external auditors are engaged to perform Security assessments to determine the appropriateness and effectiveness of the overall Program. Supplementary self-assessments are performed as needed or as required by regulatory guidelines. Assessment results are evaluated to determine the scope of risk on the security of the bank and are addressed in accordance with Program requirements.
Global threat intelligence is monitored for potential Security risks or vulnerabilities. These threats are analyzed for potential impact to the bank and are addressed in accordance with Program requirements. b1BANK’s Chief Information Security Officer (“CISO”) presents Security reports to the Operating Committee and Risk Committee of b1BANK’s board of directors on a quarterly basis or as needed.
These threats are analyzed for potential impact to the bank and are addressed in accordance with Program requirements. b1BANK’s Chief Information Security Officer (“CISO”) presents Security reports to the Operating Committee and Risk Committee of b1BANK’s board of directors on a quarterly basis or as needed. These reports consist of significant Security events and issues, vulnerability metrics, and material risks.
These reports consist of significant Security events and issues, vulnerability metrics, and material risks. Additional reporting representing the overall state of the Program is presented on at least an annual basis to the full board of directors, which is responsible for overseeing Security functions and associated initiatives.
Additional reporting representing the overall state of the Program is presented on at least an annual basis to the full board of directors, which is responsible for overseeing Security functions and associated initiatives.
Assessment results are evaluated to determine the scope of risk on the security of the bank and are addressed in accordance with Program requirements. Our current CISO maintains appropriate security certifications and has over 20 years of experience in an information security role. The CISO manages a group dedicated to the security of the bank.
Our current CISO maintains appropriate security certifications and has over 20 years of experience in an information security role. The CISO manages a group dedicated to the security of the bank.
These Programs focus on identifying and addressing threats to the company and its customers and contribute corporate decision-making guidance for information security, cybersecurity and risk management objectives. Defending against information security and cybersecurity (collectively, “Security”) threats demands a concentrated, collaborative approach and, as such, supplementary programs and processes have been instituted into governing Security and risk management strategies.
These Programs focus on identifying and addressing threats to the company and its customers and contribute corporate decision-making guidance for information security, cybersecurity and risk management objectives.
These groups, under the leadership of our Chief Operations Officer (“COO”), provide appropriate internal notifications of material security events and response activities to our General Counsel, Chief Risk Officer, Chief Executive Officer, and board of directors or other appropriate corporate executives. 40 Table of Contents A Vendor Management program has been developed and employed to manage potential risks for third-party service providers, suppliers and external partners who have access to our confidential information.
These groups, under the leadership of our Chief Operations Officer (“COO”), provide appropriate internal notifications of material security events and response activities to our General Counsel, Chief Risk Officer, Chief Executive Officer, and board of directors or other appropriate corporate executives.
Added
Defending against information security and cybersecurity (collectively, “Security”) threats demands a concentrated, collaborative approach and, as such, supplementary programs and processes have been instituted into governing Security and risk management strategies. 44 Table of Contents Global threat intelligence is monitored for potential Security risks or vulnerabilities.
Added
A vendor management program has been developed and employed to manage potential risks for third-party service providers, suppliers and external partners who have access to our confidential information. The effectiveness of these processes is verified by independent internal and external audit functions or organizations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+0 added−0 removed2 unchanged
Biggest changeAt this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on our combined results of operations, financial condition or cash flows.
Biggest changeWe intend to defend ourselves vigorously against any pending or future claims and litigation. 45 Table of Contents At this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on our combined results of operations, financial condition or cash flows.
Mine Safety Disclosures. Not applicable. 41 Table of Contents PART II
Mine Safety Disclosures. Not applicable. 46 Table of Contents PART II
These claims and litigation may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. We intend to defend ourselves vigorously against any pending or future claims and litigation.
These claims and litigation may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

14 edited+7 added−2 removed7 unchanged
Biggest changeThe historical stock price performance for our common stock shown on the graph below is not necessarily indicative of future stock performance. 43 Table of Contents Date BFST S&P 500 KRX 12/31/2018 $ 100.00 $ 100.00 $ 100.00 3/31/2019 101.61 113.65 109.35 6/30/2019 105.79 118.54 113.62 9/30/2019 101.84 120.55 112.87 12/31/2019 104.47 131.49 123.81 3/31/2020 56.99 105.72 73.82 6/30/2020 65.22 127.44 84.57 9/30/2020 64.16 138.81 75.90 12/31/2020 87.52 155.68 113.03 3/31/2021 103.29 165.29 146.61 6/30/2021 99.58 179.42 144.53 9/30/2021 102.01 180.47 149.17 12/31/2021 123.99 200.37 154.45 3/31/2022 107.09 191.15 151.08 6/30/2022 94.32 160.37 132.98 9/30/2022 95.83 152.54 138.21 12/31/2022 99.08 164.08 143.75 3/31/2023 77.19 176.38 117.94 6/30/2023 68.45 191.80 111.16 9/30/2023 85.76 185.52 113.81 12/31/2023 113.32 207.21 143.17 ITEM 6.
Biggest changeThe historical stock price performance for our common stock shown on the graph below is not necessarily indicative of future stock performance. 48 Table of Contents Date BFST S&P 500 KRX 12/31/2019 $ 100.00 $ 100.00 $ 100.00 3/31/2020 54.55 80.40 59.62 6/30/2020 62.43 96.92 68.30 9/30/2020 61.42 105.57 61.30 12/31/2020 83.77 118.40 91.29 3/31/2021 98.87 125.71 118.41 6/30/2021 95.32 136.46 116.73 9/30/2021 97.64 137.25 120.48 12/31/2021 118.68 152.39 124.74 3/31/2022 102.50 145.38 122.03 6/30/2022 90.28 121.97 107.40 9/30/2022 91.72 116.02 111.62 12/31/2022 94.83 124.79 116.10 3/31/2023 73.89 134.14 95.25 6/30/2023 65.52 145.87 89.78 9/30/2023 82.09 141.09 91.92 12/31/2023 108.47 157.59 115.63 3/31/2024 98.66 174.23 108.87 6/30/2024 96.97 181.69 105.92 9/30/2024 115.02 192.38 122.61 12/31/2024 115.79 197.02 130.90 ITEM 6. [RESERVED] 49 Table of Contents ITEM 7.
Business – Supervision and Regulation – Business First Bancshares, Inc. – Regulatory Restrictions on Dividends. ” Securities Authorized for Issuance under Equity Compensation Plans In 2006, our board of directors adopted the 2006 Stock Option Plan pursuant to which we were permitted to issue stock options to purchase up to 1,500,000 shares of our common stock, all of which could be issued as either incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended, or non-qualified stock options.
Business – Supervision and Regulation – Business First Bancshares, Inc. – Regulatory Restrictions on Dividends. ” Securities Authorized for Issuance under Equity Compensation Plans In 2006, our board of directors adopted the 2006 Stock Option Plan pursuant to which we were permitted to issue stock options to purchase up to 450,000 shares of our common stock, all of which could be issued as either incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended, or non-qualified stock options.
A discussion regarding significant changes in the financial condition of Business First and its subsidiaries from December 31, 2021 to December 31, 2022 and its results of operations for the year ended December 31, 2022 can be found under “
A discussion regarding significant changes in the financial condition of Business First and its subsidiaries from December 31, 2022 to December 31, 2023 and its results of operations for the year ended December 31, 2023 can be found under “
The following discussion and analysis is to focus on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2022 to December 31, 2023 and its results of operations for the year ended December 31, 2023.
The following discussion and analysis is to focus on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2023 to December 31, 2024 and its results of operations for the year ended December 31, 2024.
Stock Performance Graph The following table and graph compares the cumulative total shareholder return on our common stock to the cumulative total return of the S&P 500 Index and the KBW Nasdaq Regional Bank Index (“KRX”) for the period beginning on January 1, 2019 through December 31, 2023.
Stock Performance Graph The following table and graph compares the cumulative total shareholder return on our common stock to the cumulative total return of the S&P 500 Index and the KBW Nasdaq Regional Bank Index (“KRX”) for the period beginning on January 1, 2020 through December 31, 2024.
The following assumes $100 invested on January 1, 2019 in our common stock at the closing price of $24.23 per common share, otherwise reflects our stock and the S&P 500 and KRX values as of close of trading, and assumes the reinvestment of dividends, if any.
The following assumes $100 invested on January 1, 2020 in our common stock at the closing price of $24.93 per common share, otherwise reflects our stock and the S&P 500 and KRX values as of close of trading, and assumes the reinvestment of dividends, if any.
Although our 2006 Stock Option Plan expired on December 22, 2016 and we are no longer permitted to issue additional stock options under this plan, as of December 31, 2023, we had 120,608 outstanding and unexercised stock options that have been issued to our executive officers and key personnel and remain subject to the terms and conditions of the 2006 Stock Option Plan until they are exercised or forfeited.
Although our 2006 Stock Option Plan expired on December 22, 2016 and we are no longer permitted to issue additional stock options under this plan, as of December 31, 2024, we had outstanding and unexercised stock options to purchase up to 12,400 shares of our common stock outstanding that have been issued to our executive officers and key personnel and remain subject to the terms and conditions of the 2006 Stock Option Plan until they are exercised or forfeited.
The Plan provides for the grant of various types of equity grants and awards, including incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to eligible participants, which includes our employees, directors and consultants.
The 2017 Plan provided for the issuance of up to 500,000 shares of our common stock pursuant to various types of equity grants and awards, including incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to eligible participants, which includes our employees, directors and consultants.
Prior to that date, there was no public trading market for our common stock. As of February 20, 2024, there were 25,356,393 issued and outstanding shares of our common stock held of record by approximately 937 shareholders. We also had outstanding 120,608 options to purchase shares of our common stock issued under our equity compensation plans, as described below.
Prior to that date, there was no public trading market for our common stock. As of February 28, 2025, there were 29,552,358 issued and outstanding shares of our common stock held of record by approximately 1,040 shareholders. We also had outstanding 179,969 options to purchase shares of our common stock issued under our equity compensation plans, as described below.
The following table summarizes information as of December 31, 2023 relating to the number of securities to be issued upon the exercise of the outstanding options and warrants and their weighted-average exercise price.
As of May 23, 2024, there will be no future awards made under the 2017 Plan. The following table summarizes information as of December 31, 2024 relating to the number of securities to be issued upon the exercise of the outstanding options and warrants and their weighted-average exercise price.
Selected Financial Data. [RESERVED] ITEM 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. This discussion presents management’s analysis of our results of operations and financial condition over each of the last two most recent fiscal years.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. This discussion presents management’s analysis of our results of operations and financial condition over each of the last two most recent fiscal years. The discussion should be read in conjunction with our financial statements and the notes related thereto which appear elsewhere in this Report.
On June 29, 2017, our shareholders approved the 2017 Equity Incentive Plan, or the Plan, and the shareholders approved additional shares under the Plan during 2022.
On June 29, 2017, our shareholders approved the 2017 Equity Incentive Plan (the “2017 Plan”).
The Plan has reserved 1,043,908 shares of common stock for grant, award or issuance to eligible participants, all of which may be subject to incentive stock option treatment. As of December 31, 2023, there were 745,620 common shares issued under this Plan to our employees, directors or consultants.
In total, the 2024 Plan has reserved 852,293 shares of common stock for grant, award, or issuance to eligible participants, all of which may be subject to incentive stock option treatment.
Number of Securities to Be Issued Upon Exercise of Outstanding Options Weighted-Average Exercise Price of Outstanding Options Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans Equity compensations plans approved by security holders 120,608 $ 18.59 298,288 Equity compensation plans not approved by security holders — — — Total equity compensation plans 120,608 $ 18.59 298,288 42 Table of Contents Recent Sales of Unregistered Securities None Purchases of Equity Securities by the Issuer and Affiliated Purchasers On May 23, 2023, the Company’s board of directors approved a resolution authorizing management to repurchase shares of its common stock with an aggregate purchase price of up to $30.0 million from time to time, subject to certain limitations and conditions.
Number of Securities to Be Issued Upon Exercise of Outstanding Options Weighted-Average Exercise Price of Outstanding Options Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans Equity compensations plans approved by security holders 179,969 $ 21.77 484,664 Equity compensation plans not approved by security holders - - - Total equity compensation plans 179,969 $ 21.77 484,664 Recent Sales of Unregistered Securities None.
Removed
This 2023 stock repurchase program was effective until December 31, 2023. The 2023 stock repurchase program did not obligate the Company to repurchase any shares of its common stock. The Company did not repurchase any shares under this plan.
Added
In January 2007, our board of directors adopted an amendment to the 2006 Stock Option Plan which increased the number of available shares under the plan from 450,000 to 1,500,000.
Removed
The discussion should be read in conjunction with our financial statements and the notes related thereto which appear elsewhere in this Report.
Added
In June 2022, our shareholders approved an amendment to the 2017 Plan, which increased the number of shares of common stock issuable pursuant to equity grants and awards under the plan from 500,000 to 900,000.
Added
Additionally, the number of shares issuable under the 2017 Plan was increased by 143,908 shares as a result of the assumption of options to purchase shares of TCBI common stock that were converted into options to purchase shares of our common stock in connection with the TCBI acquisition on March 1, 2022.
Added
As of December 31, 2024, we had outstanding and unexercised stock options to purchase up to 15,485 shares of our common stock that have been issued under the 2017 Plan.
Added
On May 23, 2024, our shareholders approved the 2024 Equity Incentive Plan (the “2024 Plan”) which reserved 645,000 shares of common stock, plus any shares available for issuance under the 2017 Plan and any underlying awards outstanding under the 2017 Plan as of the effective date of the 2024 Plan that are terminated or canceled without having been exercised or are forfeited, canceled or repurchased by the Company, for grant, award or issuance to eligible participants, all of which may be subject to incentive stock option treatment.
Added
In addition, the number of shares issuable under the 2024 Plan was increased by 207,293 shares as a result of the conversion of Oakwood stock options to Company stock options in connection with the Oakwood acquisition on October 1, 2024.
Added
As of December 31, 2024, there were 160,336 shares of common stock issued under the 2024 Plan to our employees, directors or consultants, of which 152,084 shares are subject to outstanding and unexercised stock options to 47 Table of Contents purchase shares of our common stock, and 484,664 shares of common stock remain available for grant.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

144 edited+17 added−31 removed87 unchanged
Biggest changeCore net income available to common shareholders for the year ended December 31, 2023 included an adjustment for $2.5 million in losses on sales of securities, $945,000 in a gain on the sale of our Leesville, Louisiana banking center, $1.5 million in a gain on the extinguishment of debt associated with the TCBI acquisition in 2022, which was attributed to the $8.9 million subordinated debt redemption, $236,000 in acquisition-related expenses, and a $432,000 write-down on former bank premises, compared to $48,000 in losses on the sales of securities, $687,000 in insurance reimbursements from storm expenditures, the incurrence of $717,000 in losses attributed to former bank premises and equipment, $5.2 million in acquisition-related expenses and $501,000 million in hurricane repair expenses for the year ended December 31, 2022. 72 Table of Contents For the Years Ended December 31, 2023 2022 2021 (Dollars in thousands, except per share data) (Unaudited) Interest Income: Interest income $ 353,327 $ 236,114 $ 170,438 Core interest income 353,327 236,114 170,438 Interest Expense: Interest expense 138,198 36,537 16,554 Core interest expense 138,198 36,537 16,554 Provision for Credit Losses: Provision for credit losses 4,483 10,886 8,047 Core provision expense 4,483 10,886 8,047 Other Income: Other income 36,642 29,310 35,782 Losses on former bank premises and equipment - 717 1,010 (Gains) losses on sale of securities 2,565 48 (378 ) Insurance reimbursement of storm expenditures - (687 ) - Gain on sale of branch (945 ) - (492 ) Gain on extinguishment of debt (1,458 ) - - Core other income 36,804 29,388 35,922 Other Expense: Other expense 156,702 149,409 117,061 Acquisition-related expenses (2) (236 ) (5,178 ) (515 ) Write-down of former bank premises (432 ) - - Occupancy and bank premises - storm repair - (501 ) (1,556 ) Core other expense 156,034 143,730 114,990 Pre-Tax Income: Pre-tax income 90,586 68,592 64,558 Losses on former bank premises and equipment - 717 1,010 (Gains) losses on sale of securities 2,565 48 (378 ) Insurance reimbursement of storm expenditures - (687 ) - Gain on sale of branch (945 ) - (492 ) Gain on extinguishment of debt (1,458 ) - - Acquisition-related expenses (2) 236 5,178 515 Write-down of former bank premises 432 - - Occupancy and bank premises - storm repair - 501 1,556 Core pre-tax income 91,416 74,349 66,769 Provision for Income Taxes: (1) Provision for income taxes 19,543 14,337 12,422 Tax on losses on former bank premises and equipment - 151 211 Tax on (gains) losses on sale of securities 542 10 (79 ) Tax on insurance reimbursement of storm expenditures - (144 ) - Tax on gain on sale of branch (200 ) - (138 ) Tax on gain on extinguishment of debt (308 ) - - Tax on acquisition-related expenses (2) 21 942 108 Tax on write-down of former bank premises 91 - - Tax on occupancy and bank premises - storm repair - 106 326 Core provision for income taxes 19,689 15,402 12,850 Preferred Dividends Preferred dividends 5,401 1,350 - Core preferred dividends 5,401 1,350 - Net Income Available to Common Shareholders: Net income available to common shareholders 65,642 52,905 52,136 Losses on former bank premises and equipment , net of tax - 566 799 (Gains) losses on sale of securities, net of tax 2,023 38 (299 ) Insurance reimbursement of storm expenditures, net of tax - (543 ) - Gain on sale of branch, net of tax (745 ) - (354 ) Gain on extinguishment of debt, net of tax (1,150 ) - - Acquisition-related expenses (2), net of tax 215 4,236 407 Write-down of former bank premises, net of tax 341 - - Occupancy and bank premises - storm repair, net of tax - 395 1,230 Core net income available to common shareholders $ 66,326 $ 57,597 $ 53,919 Diluted Earnings Per Common Share: Diluted earnings per common share $ 2.59 $ 2.32 $ 2.53 Losses on former bank premises and equipment , net of tax - 0.02 0.04 (Gains) losses on sale of securities, net of tax 0.08 - (0.02 ) Insurance reimbursement of storm expenditures, net of tax - (0.02 ) - Gain on sale of branch, net of tax (0.03 ) - (0.02 ) Gain on extinguishment of debt, net of tax (0.04 ) - - Acquisition-related expenses (2), net of tax 0.01 0.18 0.02 Write-down of former bank premises, net of tax 0.01 - - Occupancy and bank premises - storm repair, net of tax - 0.02 0.06 Core diluted earnings per common share $ 2.62 $ 2.52 $ 2.61 (1) Tax rates, exclusive of certain nondeductible acquisition-related expenses and goodwill, utilized were 21% for both 2023 and 2022.
Biggest changeFor the Years Ended December 31, 2023 2022 2022 (Dollars in thousands, except per share data) (Unaudited) Interest Income: Interest income $ 414,764 $ 353,327 $ 236,114 Core interest income 414,764 353,327 236,114 Interest Expense: Interest expense 187,381 138,198 36,537 Core interest expense 187,381 138,198 36,537 Provision for Credit Losses: Provision for credit losses 10,873 4,483 10,886 CECL Oakwood impact (3) (4,824) - - Core provision expense 6,049 4,483 10,886 Other Income: Other income 44,193 36,642 29,310 (Gains) losses on former bank premises and equipment (50) - 717 (Gains) losses on sale of securities (7) 2,565 48 Insurance reimbursement of storm expenditures - - (687) Gain on sale of branch - (945) - Gain on extinguishment of debt - (1,458) - Core other income 44,136 36,804 29,388 Other Expense: Other expense 177,652 156,702 149,409 Acquisition-related expenses (2) (1,621) (236) (5,178) Write-down of former bank premises - (432) - Occupancy and bank premises - storm repair - - (501) Core conversion expense (974) - - Core other expense 175,057 156,034 143,730 Pre-Tax Income: Pre-tax income 83,051 90,586 68,592 CECL Oakwood impact (3) 4,824 - - (Gains) losses on former bank premises and equipment (50) - 717 (Gains) losses on sale of securities (7) 2,565 48 Insurance reimbursement of storm expenditures - - (687) Gain on sale of branch - (945) - Gain on extinguishment of debt - (1,458) - Acquisition-related expenses (2) 1,621 236 5,178 Write-down of former bank premises - 432 - Occupancy and bank premises - storm repair - - 501 Core conversion expense 974 - - Core pre-tax income 90,413 91,416 74,349 Provision for Income Taxes: (1) Provision for income taxes 17,944 19,543 14,337 Tax on CECL Oakwood impact (3) 1,019 - - Tax on (gains) losses on former bank premises and equipment (11) - 151 Tax on (gains) losses on sale of securities (1) 542 10 Tax on insurance reimbursement of storm expenditures - - (144) Tax on gain on sale of branch - (200) - Tax on gain on extinguishment of debt - (308) - Tax on acquisition-related expenses (2) 97 21 942 Tax on write-down of former bank premises - 91 - Tax on occupancy and bank premises - storm repair - - 106 Tax on core conversion expense 205 - - Core provision for income taxes 19,253 19,689 15,402 Preferred Dividends Preferred dividends 5,401 5,401 1,350 Core preferred dividends 5,401 5,401 1,350 80 Table of Contents Net Income Available to Common Shareholders: Net income available to common shareholders 59,706 65,642 52,905 CECL Oakwood impact (3), net of tax 3,805 - - (Gains) losses on former bank premises and equipment , net of tax (39) - 566 (Gains) losses on sale of securities, net of tax (6) 2,023 38 Insurance reimbursement of storm expenditures, net of tax - - (543) Gain on sale of branch, net of tax - (745) - Gain on extinguishment of debt, net of tax - (1,150) - Acquisition-related expenses (2), net of tax 1,524 215 4,236 Write-down of former bank premises, net of tax - 341 - Occupancy and bank premises - storm repair, net of tax - - 395 Core conversion expense, net of tax 769 - - Core net income available to common shareholders $ 65,759 $ 66,326 $ 57,597 Diluted Earnings Per Common Share: Diluted earnings per common share $ 2.26 $ 2.59 $ 2.32 CECL Oakwood impact (3), net of tax 0.14 - - (Gains) losses on former bank premises and equipment , net of tax - - 0.02 (Gains) losses on sale of securities, net of tax - 0.08 - Insurance reimbursement of storm expenditures, net of tax - - (0.02) Gain on sale of branch, net of tax - (0.03) - Gain on extinguishment of debt, net of tax - (0.04) - Acquisition-related expenses (2), net of tax 0.06 0.01 0.18 Write-down of former bank premises, net of tax - 0.01 - Occupancy and bank premises - storm repair, net of tax - - 0.02 Core conversion expense, net of tax 0.03 - - Core diluted earnings per common share $ 2.49 $ 2.62 $ 2.52 _______________________________ (1) Tax rates, exclusive of certain nondeductible acquisition-related expenses and goodwill, utilized were 21.129% for both 2024 and 2023 .
This subordinated debt bears interest at a fixed rate of 4.75% through April 1, 2026 and a floating rate, based on a benchmark rate plus 442 basis points, thereafter through maturity in 2031. The balance outstanding at both December 31, 2023 and 2022 was $3.9 million. The subordinated notes are redeemable by the Company at its option beginning in 2026.
This subordinated debt bears interest at a fixed rate of 4.75% through April 1, 2026 and a floating rate, based on a benchmark rate plus 442 basis points, thereafter through maturity in 2031. The balance outstanding at both December 31, 2024 and 2023 was $3.9 million. The subordinated notes are redeemable by the Company at its option beginning in 2026.
We do not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, private label collateralized mortgage obligations, subprime, Alt-A, or second lien elements in our investment portfolio as of December 31, 2023. The allowance for credit losses encompasses potential expected credit losses related to the securities portfolio for credit losses.
We do not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, private label collateralized mortgage obligations, subprime, Alt-A, or second lien elements in our investment portfolio as of December 31, 2024. The allowance for credit losses encompasses potential expected credit losses related to the securities portfolio.
These subordinated notes bear interest at a fixed rate of 4.25% through March 31, 2026 and a floating rate, based on a benchmark rate plus 354 basis points, thereafter through maturity in 2031. The balance outstanding at both December 31, 2023 and 2022 was $52.5 million. The subordinated notes are redeemable by the Company at its option beginning in 2026.
These subordinated notes bear interest at a fixed rate of 4.25% through March 31, 2026 and a floating rate, based on a benchmark rate plus 354 basis points, thereafter through maturity in 2031. The balance outstanding at both December 31, 2024 and 2023 was $52.5 million. The subordinated notes are redeemable by the Company at its option beginning in 2026.
As of December 31, 2023 and December 31, 2022, we and b1BANK were in compliance with all applicable regulatory capital requirements, and b1BANK was classified as “well-capitalized,” for purposes of prompt corrective action regulations. As we employ our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings.
As of December 31, 2024 and December 31, 2023, we and b1BANK were in compliance with all applicable regulatory capital requirements, and b1BANK was classified as “well-capitalized,” for purposes of prompt corrective action regulations. As we employ our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings.
Contractual Obligations The following tables summarize contractual obligations and other commitments to make future payments as of December 31, 2023 and 2022 (other than non-maturity deposit obligations), which consist of future cash payments associated with our contractual obligations pursuant to our FHLB advances, subordinated debt, revolving line of credit, and non-cancelable future operating leases.
Contractual Obligations The following tables summarize contractual obligations and other commitments to make future payments as of December 31, 2024 and 2023 (other than non-maturity deposit obligations), which consist of future cash payments associated with our contractual obligations pursuant to our FHLB advances, subordinated debt, revolving line of credit, and non-cancelable future operating leases.
In December 2018 we issued subordinated notes in the amount of $25.0 million. The subordinated notes bear a fixed rate of interest at 6.75% until December 31, 2028 and a floating rate thereafter through maturity in 2033. The balance outstanding at both December 31, 2023 and 2022 was $25.0 million.
In December 2018 we issued subordinated notes in the amount of $25.0 million. The subordinated notes bear a fixed rate of interest at 6.75% until December 31, 2028 and a floating rate thereafter through maturity in 2033. The balance outstanding at both December 31, 2024 and 2023 was $25.0 million.
Core deposit intangibles, deposit premiums, securities, properties, and borrowings are some of the more subjective instruments which are generally fair valued by the Company during acquisitions. Further, the determination of the useful lives as well as the appropriate amortization method of other intangible assets is also subjective.
Core deposit intangibles, deposit premiums, securities, properties, and borrowings are some of the more subjective instruments which are generally fair valued during acquisitions. Further, the determination of the useful lives as well as the appropriate amortization method of other intangible assets is also subjective.
For a description of the factors taken into account by management in determining the allowance for credit losses see “— Financial Condition — Allowance for Credit Losses .” The provision for credit losses was $4.5 million and $10.9 million for the years ended December 31, 2023 and 2022, respectively.
For a description of the factors taken into account by management in determining the allowance for credit losses see “— Financial Condition — Allowance for Credit Losses .” The provision for credit losses was $10.9 million and $4.5 million for the years ended December 31, 2024 and 2023, respectively.
In addition, we use short-term borrowings to periodically repurchase outstanding shares of our common stock and for general corporate purposes. Each of these relationships are discussed below. FHLB advances . The FHLB allows us to borrow on a blanket floating lien status collateralized by certain securities and loans.
In addition, we use short-term borrowings to periodically repurchase outstanding shares of our common stock and for general corporate purposes. Each of these relationships are discussed below. 69 Table of Contents FHLB advances . The FHLB allows us to borrow on a blanket floating lien status collateralized by certain securities and loans.
As of December 31, 2023 and 2022, we did not own securities of any one issuer for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity as of such respective dates.
As of December 31, 2024 and 2023, we did not own securities of any one issuer for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity as of such respective dates.
We recognized $1.5 million in gains on the extinguishment of this debt during the year ended December 31, 2023. 64 Table of Contents The following table presents the Subordinated Debt at the dates indicated.
We recognized $1.5 million in gains on the extinguishment of this debt during the year ended December 31, 2023. 71 Table of Contents The following table presents the Subordinated Debt at the dates indicated.
Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies.
Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP 79 Table of Contents disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies.
For additional discussion of our methodology, please refer to “— Critical Accounting Estimates — Allowance for Credit Losses. ” In connection with our review of the loan portfolio, we consider risk elements attributable to particular loan types or categories in assessing the quality of individual loans.
For additional discussion of our methodology, please refer to “— Critical Accounting Estimates — Allowance for Credit Losses. ” 63 Table of Contents In connection with our review of the loan portfolio, we consider risk elements attributable to particular loan types or categories in assessing the quality of individual loans.
BTFP (Dollars in Thousands) December 31, 2023 Amount outstanding at year-end $ 300,000 Weighted average stated interest rate at year-end 4.38 % Maximum month-end balance during the year $ 428,000 Average balance outstanding during the year $ 253,706 Weighted average interest rate during the year 4.46 % Subordinated Note Purchase Agreement ( “ Subordinated Debt ” ) .
BTFP (Dollars in Thousands) December 31, 2024 Amount outstanding at year-end $ - Weighted average stated interest rate at year-end - % Maximum month-end balance during the year $ 300,000 Average balance outstanding during the year $ 64,754 Weighted average interest rate during the year 4.31 % December 31, 2023 Amount outstanding at year-end $ 300,000 Weighted average stated interest rate at year-end 4.38 % Maximum month-end balance during the year $ 428,000 Average balance outstanding during the year $ 253,706 Weighted average interest rate during the year 4.46 % Subordinated Note Purchase Agreement ( “ Subordinated Debt ” ) .
These subordinated notes were issued for the purpose of paying off our long term advance and line of credit with FNBB, for general corporate purposes and to provide Tier 2 capital. The subordinated notes are redeemable by the Company at its option beginning in 2028. On March 26, 2021, we issued $52.5 million in subordinated notes.
These subordinated notes were issued for the purpose of paying off our long term advance and line of credit with First National Bankers' Bank ("FNBB"), for general corporate purposes and to provide Tier 2 capital. The subordinated notes are redeemable by the Company at its option beginning in 2028. On March 26, 2021, we issued $52.5 million in subordinated notes.
Real Estate: Construction loans include loans to small-to-midsized businesses to construct owner-occupied properties, loans to developers of commercial real estate investment properties and residential developments and, to a lesser extent, loans to individual clients for construction of single-family homes in our market areas.
Real Estate: Construction loans include loans to small-to-midsized businesses to construct owner-occupied properties, loans to developers of commercial real estate investment properties and residential developments and, to a lesser 58 Table of Contents extent, loans to individual clients for construction of single-family homes in our market areas.
Our current longest dated FHLB advance matures within ten years. We utilize these borrowings to meet liquidity needs and to fund certain fixed rate loans in our portfolio. 63 Table of Contents The following table presents our FHLB borrowings at the dates indicated.
Our current longest dated FHLB advance matures within ten years. We utilize these borrowings to meet liquidity needs and to fund certain fixed rate loans in our portfolio. The following table presents our FHLB borrowings at the dates indicated.
Since it is not reasonably practicable to provide a precise measure of uninsured deposits, the amounts are estimated and are based on the same methodologies and assumptions that are used for regulatory reporting requirements for the call report.
Since it is not reasonably practicable to 68 Table of Contents provide a precise measure of uninsured deposits, the amounts are estimated and are based on the same methodologies and assumptions that are used for regulatory reporting requirements for the call report.
There were no funds under these lines of credit outstanding as of December 31, 2023. 66 Table of Contents The following table illustrates, during the periods presented, the mix of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the period indicated.
There were no funds under these lines of credit outstanding as of December 31, 2024 and 2023, respectively. 73 Table of Contents The following table illustrates, during the periods presented, the mix of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the period indicated.
This $8.9 million note was fully extinguished during the year ended December 31, 2023. As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $1.1 million and $2.9 million remaining at December 31, 2023 and December 31, 2022, respectively.
This $8.9 million note was fully extinguished during the year ended December 31, 2023. As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $833,000 and $1.1 million remaining at December 31, 2024 and December 31, 2023, respectively.
This $8.9 million note was fully extinguished during the year ended December 31, 2023. As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $1.1 million and $2.9 million remaining at December 31, 2023 and December 31, 2022, respectively.
This $8.9 million note was fully extinguished during the year ended December 31, 2023. As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $833,000 and $1.1 million remaining at December 31, 2024 and December 31, 2023, respectively.
The average rate paid on total interest-bearing deposits increased over this period from 0.81% for the year ended December 31, 2022 to 3.00% for the year ended December 31, 2023. The increase in average rates was driven by the federal reserve raising interest rates during the years ended December 31, 2023 and 2022.
The average rate paid on total interest-bearing deposits increased over this period from 3.00% for the year ended December 31, 2023 to 3.73% for the year ended December 31, 2024. The increase in average rates was driven by the federal reserve raising interest rates during the years ended December 31, 2023 and 2022.
Some of the risk elements we consider include: • for Real Estate: Commercial loans, the debt service coverage ratio (income from the property in excess of operating expenses compared to loan payment requirements), operating results of the owner in the case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral, and the volatility of income, property value and future operating results typical for properties of that type; • for Real Estate: Construction loans, the perceived feasibility of the project including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, the experience and ability of the developer, and the loan to value ratio; 57 Table of Contents • for Real Estate: Residential real estate loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan to value ratio, and the age, condition and marketability of the collateral; and • for Commercial loans, the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category, and the value, nature and marketability of collateral; As of December 31, 2023, the allowance for credit losses totaled $43.7 million, or 0.88%, of total loans held for investment.
Some of the risk elements we consider include: • for Real Estate: Commercial loans, the debt service coverage ratio (income from the property in excess of operating expenses compared to loan payment requirements), operating results of the owner in the case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral, and the volatility of income, property value and future operating results typical for properties of that type; • for Real Estate: Construction loans, the perceived feasibility of the project including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, the experience and ability of the developer, and the loan to value ratio; • for Real Estate: Residential real estate loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan to value ratio, and the age, condition and marketability of the collateral; and • for Commercial loans, the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category, and the value, nature and marketability of collateral; As of December 31, 2024, the allowance for credit losses totaled $58.5 million, or 0.98%, of total loans held for investment.
The loans are secured by pledging participating banks’ U.S. treasuries, agency securities, agency mortgage-backed securities, and any other qualifying assets. These pledged securities will be valued at par for collateral purposes. The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023.
These loans were secured by pledging participating banks’ U.S. treasuries, agency securities, agency mortgage-backed securities, and other qualifying assets. These pledged securities were valued at par for collateral purposes. The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023.
We do not expect a change in the primary source or use of our funds in the foreseeable future. Our average loans increased 20.9% for the year ended December 31, 2023 compared to the same period in 2022.
We do not expect a change in the primary source or use of our funds in the foreseeable future. Our average loans increased 9.6% for the year ended December 31, 2024 compared to the same period in 2023.
As of December 31, 2023 and 2022, the Company held other equity securities of $33.9 million and $37.5 million, respectively, comprised mainly of FHLB stock, SBIC’s and financial technology (“Fintech”) fund investments. Deposits We offer a variety of deposit accounts having a wide range of interest rates and terms including demand, savings, money market and time accounts.
As of December 31, 2024 and 2023, the Company held other equity securities of $41.1 million and $33.9 million, respectively, comprised mainly of FHLB stock, SBIC’s and financial technology (“Fintech”) fund investments. Deposits We offer a variety of deposit accounts having a wide range of interest rates and terms including demand, savings, money market and time accounts.
On March 12, 2023, the Federal Reserve launched the BTFP, which offers loans to banks with a term of up to one year. The loans are secured by pledging participating banks’ U.S. treasuries, agency securities, agency mortgage-backed securities, and any other qualifying assets. These pledged securities will be valued at par for collateral purposes.
On March 12, 2023, the Federal Reserve launched the BTFP, which offered loans to banks with a term of up to one year. The loans were secured by pledging participating banks’ U.S. treasuries, agency securities, agency mortgage-backed securities, and any other qualifying assets. These pledged securities were valued at par for collateral purposes.
The following table summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated: As of December 31, 2023 2022 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity +300 (5.50 %) (5.59 %) (8.60 %) (5.55 %) +200 (3.20 %) (3.47 %) (5.90 %) (3.65 %) +100 (1.10 %) (1.39 %) (3.50 %) (1.94 %) Base - % - % - % - % -100 0.30 % 1.40 % (0.70 %) 1.76 % -200 0.50 % 2.67 % (2.30 %) 3.38 % 71 Table of Contents The results of the simulations are primarily driven by the contractual characteristics of all balance sheet instruments and customer behavior.
The following table summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated: As of December 31, 2024 2023 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity +300 8.10 % (0.70 %) (5.50 %) (5.59 %) +200 5.60 % (0.30 %) (3.20 %) (3.47 %) +100 2.90 % - % (1.10 %) (1.39 %) Base - % - % - % - % -100 (2.30 %) 0.30 % 0.30 % 1.40 % -200 (5.20 %) (1.30 %) 0.50 % 2.67 % The results of the simulations are primarily driven by the contractual characteristics of all balance sheet instruments and customer behavior.
As of December 31, 2023 and 2022, we maintained five and six lines of credit, respectively, with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $145.0 million and $154.0 million as of December 31, 2023 and 2022, respectively.
As of December 31, 2024 and 2023, we maintained six and five lines of credit, respectively, with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $160.0 million and $145.0 million as of December 31, 2024 and 2023, respectively.
On January 23, 2024, our board of directors declared a quarterly dividend based upon our financial performance for the three months ended December 31, 2023 in the amount of $0.14 per common share to the common shareholders of record as of February 15, 2024.
The dividend was paid on February 28, 2025. On January 23, 2025, our board of directors declared a quarterly dividend based upon our financial performance for the three months ended December 31, 2024 in the amount of $0.14 per common share to the common shareholders of record as of February 15, 2025. The dividend was paid on February 28, 2025.
Fed Funds Purchased (Dollars in Thousands) December 31, 2023 Amount outstanding at year-end $ - Weighted average stated interest rate at year-end 0.00 % Maximum month-end balance during the year $ 14,622 Average balance outstanding during the year $ 474 Weighted average interest rate during the year 1.96 % December 31, 2022 Amount outstanding at year-end $ 14,057 Weighted average stated interest rate at year-end 4.50 % Maximum month-end balance during the year $ 14,057 Average balance outstanding during the year $ 1,970 Weighted average interest rate during the year 1.06 % Liquidity and Capital Resources Liquidity Liquidity involves our ability to utilize funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events.
Fed Funds Purchased (Dollars in Thousands) December 31, 2024 Amount outstanding at year-end $ - Weighted average stated interest rate at year-end 0.00 % Maximum month-end balance during the year $ - Average balance outstanding during the year $ 5 Weighted average interest rate during the year 6.46 % December 31, 2023 Amount outstanding at year-end $ - Weighted average stated interest rate at year-end 0.00 % Maximum month-end balance during the year $ 14,622 Average balance outstanding during the year $ 474 Weighted average interest rate during the year 1.96 % Liquidity and Capital Resources Liquidity Liquidity involves our ability to utilize funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events.
As of December 31, 2023 and 2022, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 3.65% and 3.88%, respectively, and maturing within ten years.
As of December 31, 2024 and 2023, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.15% and 3.65%, respectively, and maturing within ten years.
For the years ended December 31, 2023 and 2022, liquidity needs were primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios. In addition, we utilize, or have available, brokered deposits, purchased funds from correspondent banks, the Bank Term Funding Program (while available), the Federal Reserve discount window, and overnight advances from the FHLB.
For the years ended December 31, 2024 and 2023, liquidity needs were primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios. In addition, we utilize, or have available, brokered deposits, purchased funds from correspondent banks, the Federal Reserve discount window, and overnight advances from the FHLB.
We participated in the BTFP in March 2023 and as of December 31, 2023, had outstanding debt of $300.0 million, at a fixed rate of 4.38% and set to mature on March 22, 2024.
We participated in the BTFP in March 2023 and as of December 31, 2023, had outstanding debt of $300.0 million, at a fixed rate of 4.38% and set to mature on March 22, 2024. We repaid this debt in full at the time of maturity.
If interest rates begin to fall, prepayments may increase, thereby shortening the estimated life of this security. The weighted average life of our investment portfolio was 4.57 years with an estimated effective duration of 3.81 years as of December 31, 2023.
If interest rates begin to fall, prepayments may increase, thereby shortening the estimated life of this security. The weighted average life of our investment portfolio was 4.63 years with an estimated effective duration of 3.79 years as of December 31, 2024.
For the Years Ended December 31, 2023 2022 Source of Funds: Deposits: Noninterest-bearing 22.3 % 28.1 % Interest-bearing 56.2 55.0 Subordinated debt (excluding trust preferred securities) 1.7 1.9 Advances from FHLB 5.2 4.9 Other borrowings 0.4 0.6 Bank Term Funding Program 4.0 - Other liabilities 0.7 0.7 Shareholders' equity 9.5 8.8 Total 100.0 % 100.0 % Uses of Funds: Loans, net of allowance for loan losses 76.0 % 72.9 % Securities available for sale 14.2 17.5 Interest-bearing deposits in other banks 2.8 2.1 Other noninterest-earning assets 7.0 7.5 Total 100.0 % 100.0 % Average noninterest-bearing deposits to average deposits 28.4 % 33.9 % Average loans to average deposits 97.6 88.4 Our primary source of funds is deposits, and our primary use of funds is loans.
For the Years Ended December 31, 2024 2023 Source of Funds: Deposits: Noninterest-bearing 18.4 % 22.3 % Interest-bearing 63.5 56.2 Subordinated debt (excluding trust preferred securities) 1.4 1.7 Advances from FHLB 4.6 5.2 Other borrowings 0.4 0.4 Bank Term Funding Program 0.9 4.0 Other liabilities 0.8 0.7 Shareholders' equity 10.0 9.5 Total 100.0 % 100.0 % Uses of Funds: Loans, net of allowance for loan losses 75.8 % 76.0 % Securities available for sale 13.2 14.2 Interest-bearing deposits in other banks 4.1 2.8 Other noninterest-earning assets 6.9 7.0 Total 100.0 % 100.0 % Average noninterest-bearing deposits to average deposits 22.5 % 28.4 % Average loans to average deposits 93.3 97.6 Our primary source of funds is deposits, and our primary use of funds is loans.
The preferred stock has a perpetual term and may not be redeemed, except under certain circumstances, under the first five years of issuance. Long Term Debt For information on our subordinated debt, please refer to “Borrowings”. FHLB Advances Advances from the FHLB totaled approximately $211.2 million and $410.1 million at December 31, 2023 and 2022, respectively.
The preferred stock has a perpetual term and may not be redeemed, except under certain circumstances, under the first five years of issuance. 75 Table of Contents Long Term Debt For information on our subordinated debt, please refer to “Borrowings”. FHLB Advances Advances from the FHLB totaled approximately $355.9 million and $211.2 million at December 31, 2024 and 2023, respectively.
Fluctuations in interest rates will ultimately impact the level of income and expense recorded on many of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities. Interest rate risk is the potential of economic losses due to interest rate changes.
We manage our sensitivity position within our established guidelines. Fluctuations in interest rates will ultimately impact the level of income and expense recorded on many of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities. Interest rate risk is the potential of economic losses due to interest rate changes.
Payments related to leases are based on actual payments specified in underlying contracts. Advances from the FHLB totaled approximately $211.2 million and $410.1 million as of December 31, 2023 and 2022, respectively.
Payments related to leases are based on actual payments specified in underlying contracts. Advances from the FHLB totaled approximately $355.9 million and $211.2 million as of December 31, 2024 and 2023, respectively.
These loans are usually repaid through refinancing, cash flow from the borrower’s ongoing operations, development of the property, or sale of the property. Real Estate: Commercial loans increased $197.5 million, or 9.8%, to $2.2 billion as of December 31, 2023, from $2.0 billion as of December 31, 2022.
These loans are usually repaid through refinancing, cash flow from the borrower’s ongoing operations, development of the property, or sale of the property. Real Estate: Commercial loans increased $265.3 million, or 12.0%, to $2.5 billion as of December 31, 2024, from $2.2 billion as of December 31, 2023.
For the Years Ended December 31, 2023 2022 2021 Amount Percent to Total Amount Percent to Total Amount Percent to Total (Dollars in thousands) Real estate: Commercial $ 17,882 40.9 % $ 14,922 38.5 % $ 10,841 36.2 % Construction 8,142 18.6 5,905 15.2 4,772 16.0 Residential 5,662 12.9 5,367 13.8 4,592 15.3 Total real estate 31,686 72.4 26,194 67.5 20,205 67.5 Commercial 11,796 27.0 11,950 30.8 9,077 30.3 Consumer and Other 256 0.6 639 1.7 654 2.2 Total allowance for credit losses $ 43,738 100.0 % $ 38,783 100.0 % $ 29,936 100.0 % Securities We use our securities portfolio to provide a source of liquidity, an appropriate return on funds invested, manage interest rate risk, meet collateral requirements, and meet regulatory capital requirements.
For the Years Ended December 31, 2024 2023 2022 Amount Percent to Total Amount Percent to Total Amount Percent to Total (Dollars in thousands) Real estate: Commercial $ 23,688 40.5 % $ 17,882 40.9 % $ 14,922 38.5 % Construction 8,473 14.5 8,142 18.6 5,905 15.2 Residential 8,394 14.3 5,662 12.9 5,367 13.8 Total real estate 40,555 69.3 31,686 72.4 26,194 67.5 Commercial 17,432 29.8 11,796 27.0 11,950 30.8 Consumer and Other 541 0.9 256 0.6 639 1.7 Total allowance for credit losses $ 58,528 100.0 % $ 43,738 100.0 % $ 38,783 100.0 % Securities We use our securities portfolio to provide a source of liquidity, an appropriate return on funds invested, manage interest rate risk, meet collateral requirements, and meet regulatory capital requirements.
Results of Operations for the Years Ended December 31, 2023 and 2022 Performance Summary For the year ended December 31, 2023, net income available to common shareholders was $65.6 million, or $2.62 per basic common share and $2.59 per diluted common share, compared to net income available to common shareholders of $52.9 million, or $2.34 per basic common share and $2.32 per diluted common share, for the year ended December 31, 2022.
Results of Operations for the Years Ended December 31, 2024 and 2023 Performance Summary For the year ended December 31, 2024, net income available to common shareholders was $59.7 million, or $2.27 per basic common share and $2.26 per diluted common share, compared to net income available to common shareholders of $65.6 million, or $2.62 per basic common share and $2.59 per diluted common share, for the year ended December 31, 2023.
Our securities portfolio had a weighted average life of 4.57 years and an effective duration of 3.81 years as of December 31, 2023 and a weighted average life of 4.88 years and an effective duration of 4.09 years as of December 31, 2022.
Our securities portfolio had a weighted average life of 4.63 years and an effective duration of 3.79 years as of December 31, 2024 and a weighted average life of 4.57 years and an effective duration of 3.81 years as of December 31, 2023.
Real estate residential loans also include multi-family residential loans originated to provide permanent financing for multi-family residential income producing properties. Repayment of these loans primarily relies on successful rental and management of the property. Real Estate: Residential loans increased $26.0 million, or 4.0%, to $682.4 million as of December 31, 2023, from $656.4 million as of December 31, 2022.
Real estate residential loans also include multi-family residential loans originated to provide permanent financing for multi-family residential income producing properties. Repayment of these loans primarily relies on successful rental and management of the property. Real Estate: Residential loans increased $202.1 million, or 29.6%, to $884.5 million as of December 31, 2024, from $682.4 million as of December 31, 2023.
As of December 31, 2023, we had outstanding $1.2 billion in commitments to extend credit and $45.2 million in commitments associated with outstanding standby and commercial letters of credit. As of December 31, 2022, we had outstanding $1.3 billion in commitments to extend credit and $45.6 million in commitments associated with outstanding standby and commercial letters of credit.
As of December 31, 2024, we had outstanding $1.4 billion in commitments to extend credit and $50.0 million in commitments associated with outstanding standby and commercial letters of credit. As of December 31, 2023, we had outstanding $1.2 billion in commitments to extend credit and $45.2 million in commitments associated with outstanding standby and commercial letters of credit.
The dividend was paid on February 28, 2024. 67 Table of Contents The declaration and payment of dividends to our shareholders, as well as the amounts thereof, are subject to the discretion of the Board and depend upon our results of operations, financial condition, capital levels, cash requirements, future prospects and other factors deemed relevant by the Board.
The declaration and payment of dividends to our shareholders, as well as the amounts thereof, are subject to the discretion of the Board and depend upon our results of operations, financial condition, capital levels, cash requirements, future prospects and other factors deemed relevant by the Board.
The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023. These loans bear a fixed interest rate of 4.38% and mature on March 22, 2024. The following table presents our Bank Term Funding Program borrowings at the date indicated.
The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023. These loans bore a fixed interest rate of 4.38% and matured on March 22, 2024, at which time we repaid them in full. 70 Table of Contents The following table presents our Bank Term Funding Program borrowings at the date indicated.
Core net income available to common shareholders for the year ended December 31, 2023 was $66.3 million, or $2.62 per diluted common share, compared to core net income available to common shareholders of $57.6 million, or $2.52 per diluted common share, for the year ended December 31, 2022.
Core net income available to common shareholders for the year ended December 31, 2024 was $65.8 million, or $2.49 per diluted common share, compared to core net income available to common shareholders of $66.3 million, or $2.62 per diluted common share, for the year ended December 31, 2023.
Financial Condition Our total assets increased $594.1 million, or 9.9%, from $6.0 billion as of December 31, 2022 to $6.6 billion as of December 31, 2023, due primarily from the increases in our loan portfolio, as well as our cash and cash equivalents due to our increase in deposits.
Financial Condition Our total assets increased $1.3 billion, or 19.3%, from $6.6 billion as of December 31, 2023 to $7.9 billion as of December 31, 2024, due primarily from the acquisition of Oakwood, increases in our loan portfolio, as well as our cash and cash equivalents due to our increase in deposits.
These rates approximate the marginal tax rates for the applicable periods. (2) Includes merger and conversion-related expenses and salary and employee benefits. 73 Table of Contents Tangible Book Value Per Common Share. Tangible book value per common share is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions.
These rates approximate the marginal tax rates for the applicable periods. (2) Includes merger and conversion-related expenses and salary and employee benefits. (3) CECL non-PCD provision/unfunded commitment expense attributable to Oakwood. Tangible Book Value Per Common Share. Tangible book value per common share is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions.
The average yield on the loan portfolio was 6.65%, for the year ended December 31, 2023, compared to 5.42% for the year ended December 31, 2022, and the average yield on total interest-earning assets was 5.95% for the year ended December 31, 2023, compared to 4.64% for the year ended December 31, 2022.
The average yield on the loan portfolio was 7.03%, for the year ended December 31, 2024, compared to 6.65% for the year ended December 31, 2023, and the average yield on total interest-earning assets was 6.35% for the year ended December 31, 2024, compared to 5.95% for the year ended December 31, 2023.
Average assets totaled $6.3 billion and $5.5 billion for the years ended December 31, 2023 and 2022, respectively.
Average assets totaled $7.0 billion and $6.3 billion for the years ended December 31, 2024 and 2023, respectively.
The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and total assets to tangible assets: As of December 31, 2023 2022 (Dollars in thousands, except per share data) (Unaudited) Tangible Common Equity Total shareholders' equity $ 644,259 $ 580,481 Preferred stock (71,930 ) (71,930 ) Total common shareholders' equity 572,329 508,551 Adjustments: Goodwill (88,391 ) (88,543 ) Core deposit and customer intangibles (11,895 ) (14,042 ) Total tangible common equity $ 472,043 $ 405,966 Tangible Assets Total Assets $ 6,584,550 $ 5,990,460 Adjustments: Goodwill (88,391 ) (88,543 ) Core deposit and customer intangibles (11,895 ) (14,042 ) Total tangible assets $ 6,484,264 $ 5,887,875 Common Equity to Total Assets 8.7 % 8.5 % Tangible Common Equity to Tangible Assets 7.3 6.9 Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and with general practices within the financial services industry.
The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and total assets to tangible assets: As of December 31, 2023 2022 (Dollars in thousands, except per share data) (Unaudited) Tangible Common Equity Total shareholders' equity $ 799,466 $ 644,259 Preferred stock (71,930) (71,930) Total common shareholders' equity 727,536 572,329 Adjustments: Goodwill (121,572) (88,391) Core deposit and customer intangibles (17,252) (11,895) Total tangible common equity $ 588,712 $ 472,043 Tangible Assets Total Assets $ 7,857,090 $ 6,584,550 Adjustments: Goodwill (121,572) (88,391) Core deposit and customer intangibles (17,252) (11,895) Total tangible assets $ 7,718,266 $ 6,484,264 Common Equity to Total Assets 9.3 % 8.7 % Tangible Common Equity to Tangible Assets 7.6 7.3 Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and with general practices within the financial services industry.
We rely primarily on competitive pricing policies, convenient locations and personalized service to attract and retain these deposits. Total deposits as of December 31, 2023 were $5.2 billion, an increase of $428.4 million, or 8.9%, compared to $4.8 billion as of December 31, 2022.
We rely primarily on competitive pricing policies, convenient locations and personalized service to attract and retain these deposits. Total deposits as of December 31, 2024 were $6.5 billion, an increase of $1.3 billion, or 24.1%, compared to $5.2 billion as of December 31, 2023.
Real Estate: Construction loans decreased $52.3 million, or 7.2%, to $669.8 million as of December 31, 2023, from $722.1 million as of December 31, 2022. Real Estate: Residential loans include first and second lien 1-4 family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences.
Real Estate: Construction loans increased $704,000, or 0.1%, to $670.5 million as of December 31, 2024, from $669.8 million as of December 31, 2023. Real Estate: Residential loans include first and second lien 1-4 family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences.
Financial Highlights The financial highlights as of and for the year ended December 31, 2023 include: • Total assets of $6.6 billion, a $594.1 million, or 9.9%, increase from December 31, 2022. • Total loans held for investment of $5.0 billion, a $386.6 million, or 8.4%, increase from December 31, 2022. • Total deposits of $5.2 billion, a $428.4 million, or 8.9%, increase from December 31, 2022. • Net income available to common shareholders of $65.6 million, a $12.8 million, or 24.1%, increase from the year ended December 31, 2022. • Net interest income of $215.1 million, a $15.6 million, or 7.8%, increase from the year ended December 31, 2022. • An allowance for credit losses of 0.88% of total loans held for investment, compared to 0.84% as of December 31, 2022, and a ratio of nonperforming loans to total loans held for investment of 0.34%, compared to 0.25% as of December 31, 2022. • Earnings per common share for the year ended December 31, 2023 of $2.62 per basic common share and $2.59 per diluted common share, compared to $2.34 per basic common share and $2.32 per diluted common share for the year ended December 31, 2022. • Return to common shareholders on average assets of 1.04% compared to 0.97% for the year ended December 31, 2022. • Return to common shareholders on average common equity of 12.36% compared to 11.59% for the year ended December 31, 2022. • Capital Ratios included Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 9.52%, 9.15%, 10.46% and 12.85%, respectively, compared to Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 9.49%, 8.68%, 10.07% and 12.75% for the year ended December 31, 2022. 46 Table of Contents • Book value per common share of $22.58, an increase of 11.5% from $20.25 at December 31, 2022.
Financial Highlights The financial highlights as of and for the year ended December 31, 2024 include: • Total assets of $7.9 billion, a $1.3 billion, or 19.3%, increase from December 31, 2023. • Total loans held for investment of $6.0 billion, a $988.6 million, or 19.8%, increase from December 31, 2023. • Total deposits of $6.5 billion, a $1.3 billion, or 24.1%, increase from December 31, 2023. • Net income available to common shareholders of $59.7 million, a $5.9 million, or 9.0%, decrease from the year ended December 31, 2023. • Net interest income of $227.4 million, a $12.3 million, or 5.7%, increase from the year ended December 31, 2023. • An allowance for credit losses of 0.98% of total loans held for investment, compared to 0.88% as of December 31, 2023, and a ratio of nonperforming loans to total loans held for investment of 0.42%, compared to 0.34% as of December 31, 2023. 51 Table of Contents • Earnings per common share for the year ended December 31, 2024 of $2.27 per basic common share and $2.26 per diluted common share, compared to $2.62 per basic common share and $2.59 per diluted common share for the year ended December 31, 2023. • Return to common shareholders on average assets of 0.86% compared to 1.04% for the year ended December 31, 2023. • Return to common shareholders on average common equity of 9.54% compared to 12.36% for the year ended December 31, 2023. • Capital Ratios included Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 9.53%, 9.44%, 10.56% and 12.75%, respectively, compared to Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 9.52%, 9.15%, 10.46% and 12.85% for the year ended December 31, 2023. • Book value per common share of $24.62, an increase of 9.0% from $22.58 at December 31, 2023.
The assessment includes reviewing historical loss data for both our portfolio and similar types of investment securities to develop an estimate for the current securities portfolio.
In order to develop an estimate of credit losses expected for the current securities portfolio, we perform an assessment that includes reviewing historical loss data for both our portfolio and similar types of investment securities.
As of December 31, 2021, the allowance for credit losses totaled $29.9 million, or 0.94%, of total loans held for investment. 58 Table of Contents The following tables present, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data: For the Years Ended December 31, 2023 2022 2021 (Dollars in thousands) Average loans outstanding $ 4,859,637 $ 4,020,436 $ 3,037,020 Gross loans held for investment outstanding end of period $ 4,992,785 $ 4,606,176 $ 3,189,608 Allowance for credit losses at beginning of period $ 38,783 $ 29,936 $ 22,336 Adoption of ASU 2016-13 5,857 - - Provision for credit losses 4,483 10,667 8,559 Charge-offs: Real Estate: Commercial 2,049 51 139 Construction 36 16 29 Residential 42 191 169 Total Real Estate 2,127 258 337 Commercial 2,813 2,139 830 Consumer and other 1,489 424 469 Total charge-offs 6,429 2,821 1,636 Recoveries: Real Estate: Commercial 26 50 99 Construction 1 25 3 Residential 18 20 39 Total Real Estate 45 95 141 Commercial 672 739 423 Consumer and other 327 167 113 Total recoveries 1,044 1,001 677 Net charge-offs 5,385 1,820 959 Allowance for credit losses at end of period $ 43,738 $ 38,783 $ 29,936 Ratio of allowance for credit losses to end of period loans held for investment 0.88 % 0.84 % 0.94 % Ratio of net charge-offs to average loans 0.11 0.05 0.03 Ratio of allowance for credit losses to nonaccrual loans 258.15 350.85 232.64 For the Years Ended December 31, 2023 2022 2021 Net Charge-offs (Recoveries) Percent of Average Loans Net Charge-offs (Recoveries) Percent of Average Loans Net Charge-offs (Recoveries) Percent of Average Loans (Dollars in thousands) Real estate: Commercial $ 2,023 0.04 % $ 1 0.00 % $ 40 0.00 % Construction 35 0.00 % (9 ) 0.00 % 26 0.00 % Residential 24 0.00 % 171 0.00 % 130 0.01 % Total Real Estate Loans 2,082 0.04 % 163 0.00 % 196 0.01 % Commercial 2,141 0.05 % 1,400 0.04 % 407 0.01 % Consumer and Other 1,162 0.02 % 257 0.01 % 356 0.01 % Total net charge-offs (recoveries) $ 5,385 0.11 % $ 1,820 0.05 % $ 959 0.03 % 59 Table of Contents Although we believe that we have established our allowance for loan losses in accordance with GAAP and that the allowance for loan losses was adequate to provide for known and estimated losses in the portfolio at all times shown above, future provisions will be subject to ongoing evaluations of the risks in our loan portfolio.
As of December 31, 2022, the allowance for credit losses totaled $38.8 million, or 0.84%, of total loans held for investment. 64 Table of Contents The following tables present, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data: For the Years Ended December 31, 2024 2023 2022 (Dollars in thousands) Average loans outstanding $ 5,327,466 $ 4,859,637 $ 4,020,436 Gross loans held for investment outstanding end of period $ 5,981,399 $ 4,992,785 $ 4,606,176 Allowance for credit losses at beginning of period $ 43,738 $ 38,783 $ 29,936 Adoption of ASU 2016-13 - 5,857 - Adjustment for Oakwood purchased credit deterioration loans 8,410 - - Provision for credit losses 10,873 4,483 10,667 Charge-offs: Real Estate: Commercial (263) 2,049 51 Construction 2,261 36 16 Residential 297 42 191 Total Real Estate 2,295 2,127 258 Commercial 986 2,813 2,139 Consumer and other 2,392 1,489 424 Total charge-offs 5,673 6,429 2,821 Recoveries: Real Estate: Commercial 86 26 50 Construction 515 1 25 Residential 14 18 20 Total Real Estate 615 45 95 Commercial 236 672 739 Consumer and other 329 327 167 Total recoveries 1,180 1,044 1,001 Net charge-offs 4,493 5,385 1,820 Allowance for credit losses at end of period $ 58,528 $ 43,738 $ 38,783 Ratio of allowance for credit losses to end of period loans held for investment 0.98 % 0.88 % 0.84 % Ratio of net charge-offs to average loans 0.08 0.11 0.05 Ratio of allowance for credit losses to nonaccrual loans 242.38 258.15 350.85 65 Table of Contents For the Years Ended December 31, 2024 2023 2022 Net Charge-offs (Recoveries) Percent of Average Loans Net Charge-offs (Recoveries) Percent of Average Loans Net Charge-offs (Recoveries) Percent of Average Loans (Dollars in thousands) Real estate: Commercial $ (349) 0.00 % $ 2,023 0.04 % $ 1 0.00 % Construction 1,746 0.03 % 35 0.00 % (9) 0.00 % Residential 283 0.00 % 24 0.00 % 171 0.00 % Total Real Estate Loans 1,680 0.03 % 2,082 0.04 % 163 0.00 % Commercial 750 0.01 % 2,141 0.05 % 1,400 0.04 % Consumer and Other 2,063 0.04 % 1,162 0.02 % 257 0.01 % Total net charge-offs (recoveries) $ 4,493 0.08 % $ 5,385 0.11 % $ 1,820 0.05 % Although we believe that we have established our allowance for loan losses in accordance with GAAP and that the allowance for loan losses was adequate to provide for known and estimated losses in the portfolio at all times shown above, future provisions will be subject to ongoing evaluations of the risks in our loan portfolio.
As of December 31, 2023, we had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature. We had cash and cash equivalents, including federal funds sold, of $377.2 million and $168.3 million as of December 31, 2023 and 2022, respectively.
As of December 31, 2024, we had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature. We had cash and cash equivalents, federal funds sold and securities purchased under agreements to resell, of $567.6 million and $377.2 million as of December 31, 2024 and 2023, respectively.
We calculate average assets, liabilities, and equity using a monthly average, and average yield/rate utilizing an actual 365 day count convention. For the year ended December 31, 2023, net interest income totaled $215.1 million, and net interest margin and net interest spread were 3.62% and 2.72%, respectively.
We calculate average assets, liabilities, and equity using a daily average, and average yield/rate utilizing an actual day count convention. For the year ended December 31, 2024, net interest income totaled $227.4 million, and net interest margin and net interest spread were 3.48% and 2.55%, respectively.
As of December 31, 2023, we had 761 full-time equivalent employees, compared to 742 full-time equivalents as of December 31, 2022. Salaries and employee benefits included stock-based compensation expense of $4.4 million and $4.0 million for the years ended December 31, 2023 and 2022, respectively. Data processing .
As of December 31, 2024, we had 859 full-time equivalent employees, compared to 761 full-time equivalents as of December 31, 2023. Salaries and employee benefits included stock-based compensation expense of $2.5 million and $4.4 million for the years ended December 31, 2024 and 2023, respectively. Occupancy of bank premises .
As of December 31, 2023 and 2022, total borrowing capacity of $1.8 billion, for both periods, was available under this arrangement and $211.2 million and $410.1 million, respectively, was outstanding with a weighted average stated interest rate of 3.65% as of December 31, 2023 and 3.88% as of December 31, 2022.
As of December 31, 2024 and 2023, total borrowing capacity of $2.0 billion and $1.8 billion, respectively, was available under this arrangement and $355.9 million and $211.2 million, respectively, was outstanding with a weighted average stated interest rate of 4.15% as of December 31, 2024 and 3.65% as of December 31, 2023.
As of December 31, 2023 2022 Amount Ratio Amount Ratio (Dollars in thousands) Business First Total capital (to risk weighted assets) $ 754,990 12.85 % $ 704,840 12.75 % Tier 1 capital (to risk weighted assets) 614,975 10.46 % 557,088 10.07 % Common Equity Tier 1 capital (to risk weighted assets) 538,045 9.15 % 480,158 8.68 % Tier 1 Leverage capital (to average assets) 614,975 9.52 % 557,088 9.49 % b1BANK Total capital (to risk weighted assets) $ 730,117 12.43 % $ 657,588 11.91 % Tier 1 capital (to risk weighted assets) 686,379 11.69 % 618,805 11.20 % Common Equity Tier 1 capital (to risk weighted assets) 686,379 11.69 % 618,805 11.20 % Tier 1 Leverage capital (to average assets) 686,379 10.63 % 618,805 10.55 % Preferred Stock On September 1, 2022, we entered into a securities purchase agreement with certain investors pursuant to which we offered and sold shares of our 7.50% fixed-to-floating rate non-cumulative perpetual preferred stock, with no par value, for an aggregate purchase price of $72.0 million.
As of December 31, 2024 2023 Amount Ratio Amount Ratio (Dollars in thousands) Business First Total capital (to risk weighted assets) $ 878,914 12.75 % $ 754,990 12.85 % Tier 1 capital (to risk weighted assets) 727,959 10.56 % 614,975 10.46 % Common Equity Tier 1 capital (to risk weighted assets) 651,029 9.44 % 538,045 9.15 % Tier 1 Leverage capital (to average assets) 727,959 9.53 % 614,975 9.52 % b1BANK Total capital (to risk weighted assets) $ 857,627 12.45 % $ 730,117 12.43 % Tier 1 capital (to risk weighted assets) 799,099 11.60 % 686,379 11.69 % Common Equity Tier 1 capital (to risk weighted assets) 799,099 11.60 % 686,379 11.69 % Tier 1 Leverage capital (to average assets) 799,099 10.47 % 686,379 10.63 % Preferred Stock On September 1, 2022, we entered into a securities purchase agreement with certain investors pursuant to which we offered and sold shares of our 7.50% fixed-to-floating rate non-cumulative perpetual preferred stock, with no par value, for an aggregate purchase price of $72.0 million.
Commercial loans increased $205.0 million, or 17.8%, to $1.4 billion as of December 31, 2023, from $1.2 billion as of December 31, 2022. 53 Table of Contents Consumer and other loans include a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans.
Commercial loans increased $509.8 million, or 37.5%, to $1.9 billion as of December 31, 2024, from $1.4 billion as of December 31, 2023. Consumer and other loans include a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans.
Additionally, $835,000 and $304,000 in mortgage loans were classified as loans held for sale as of December 31, 2023 and 2022, respectively. Total loans held for investment as a percentage of deposits were 95.1% and 95.6% as of December 31, 2023 and 2022, respectively.
Additionally, $717,000 and $835,000 in mortgage loans were classified as loans held for sale as of December 31, 2024 and 2023, respectively. 57 Table of Contents Total loans held for investment as a percentage of deposits were 91.9% and 95.1% as of December 31, 2024 and 2023, respectively.
Total uninsured deposits were $2.0 billion, or 38.9% of deposits as of December 31, 2023 compared to $1.5 billion, or 31.9%, or total deposits as of December 31, 2022.
Total uninsured deposits were $2.8 billion, or 43.4% of deposits as of December 31, 2024 compared to $2.0 billion, or 38.9%, or total deposits as of December 31, 2023.
Salaries and employee benefits were $90.6 million for the year ended December 31, 2023, an increase of $5.4 million, or 6.3%, compared to the same period in 2022. The increase was primarily due to additional hires for new positions and our merit increase cycle.
Salaries and employee benefits were $103.9 million for the year ended December 31, 2024, an increase of $13.3 million, or 14.7%, compared to the same period in 2023. The increase was primarily due to the acquisitions of Waterstone and Oakwood, additional hires for new positions and our merit increase cycle.
Return to common shareholders on average assets increased to 1.04% for the year ended December 31, 2023 from 0.97% for the year ended December 31, 2022. Return to common shareholders on average common equity increased to 12.36% for the year ended December 31, 2023, as compared to 11.59% for the year ended December 31, 2022.
Return to common shareholders on average assets decreased to 0.86% for the year ended December 31, 2024 from 1.04% for the year ended December 31, 2023. Return to common shareholders on average common equity decreased to 9.54% for the year ended December 31, 2024, as compared to 12.36% for the year ended December 31, 2023.
Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness; however, such concerns are not so pronounced that we generally expect to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits with a lower rating.
Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness; however, such concerns are not so pronounced that we generally expect to experience significant loss within the short-term.
The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and presents tangible book value per common share compared to book value per common share: As of December 31, 2023 2022 (Dollars in thousands, except per share data) (Unaudited) Tangible Common Equity Total shareholders' equity $ 644,259 $ 580,481 Preferred stock (71,930 ) (71,930 ) Total common shareholders' equity 572,329 508,551 Adjustments: Goodwill (88,391 ) (88,543 ) Core deposit and customer intangibles (11,895 ) (14,042 ) Total tangible common equity $ 472,043 $ 405,966 Common shares outstanding (1) 25,351,809 25,110,313 Book value per common shares (1) $ 22.58 $ 20.25 Tangible book value per common shares (1) 18.62 16.17 (1) Excludes the dilutive effect, if any, of 217,094 and 184,015 shares of common stock issuable upon exercise of outstanding stock options and restricted stock awards as of December 31, 2023 and 2022, respectively. 74 Table of Contents Tangible Common Equity to Tangible Assets .
The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and presents tangible book value per common share compared to book value per common share: As of December 31, 2024 2023 (Dollars in thousands, except per share data) (Unaudited) Tangible Common Equity Total shareholders' equity $ 799,466 $ 644,259 Preferred stock (71,930) (71,930) Total common shareholders' equity 727,536 572,329 Adjustments: Goodwill (121,572) (88,391) Core deposit and customer intangibles (17,252) (11,895) Total tangible common equity $ 588,712 $ 472,043 Common shares outstanding (1) 29,552,358 25,351,809 Book value per common shares (1) $ 24.62 $ 22.58 Tangible book value per common shares (1) 19.92 18.62 _______________________________ (1) Excludes the dilutive effect, if any, of 198,238 and 217,094 shares of common stock issuable upon exercise of outstanding stock options and restricted stock awards as of December 31, 2024 and 2023 , respectively. 81 Table of Contents Tangible Common Equity to Tangible Assets .
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023, as amended, which is available on the SEC ’ s website at www.sec.gov and on the Company ’ s website, www.b1bank.com. 44 Table of Contents Overview We are a registered financial holding company headquartered in Baton Rouge, Louisiana.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 1, 2024, as amended, which is available on the SEC ’ s website at www.sec.gov and on the Company ’ s website, www.b1bank.com.
FHLB Advances (Dollars in Thousands) December 31, 2023 Amount outstanding at year-end $ 211,198 Weighted average stated interest rate at year-end 3.65 % Maximum month-end balance during the year $ 517,112 Average balance outstanding during the year $ 329,726 Weighted average interest rate during the year 4.16 % December 31, 2022 Amount outstanding at year-end $ 410,100 Weighted average stated interest rate at year-end 3.88 % Maximum month-end balance during the year $ 534,059 Average balance outstanding during the year $ 271,025 Weighted average interest rate during the year 2.39 % Bank Term Funding Program ( “ BTFP ” ) .
FHLB Advances (Dollars in Thousands) December 31, 2024 Amount outstanding at year-end $ 355,875 Weighted average stated interest rate at year-end 4.15 % Maximum month-end balance during the year $ 377,048 Average balance outstanding during the year $ 317,462 Weighted average interest rate during the year 4.15 % December 31, 2023 Amount outstanding at year-end $ 211,198 Weighted average stated interest rate at year-end 3.65 % Maximum month-end balance during the year $ 517,112 Average balance outstanding during the year $ 329,726 Weighted average interest rate during the year 4.16 % Bank Term Funding Program ( “ BTFP ” ) .
Federal Reserve Bank ’ s Discount Window On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $1.0 billion as of December 31, 2023, through the Federal Reserve discount window. The Bank has not yet drawn on either of the lines of credit as of the date of this report.
Federal Reserve Bank ’ s Discount Window On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $907.7 million and $1.0 billion as of December 31, 2024 and 2023, respectively, through the Federal Reserve discount window.
As of December 31, 2023, and 2022, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 3.65% and 3.88%, respectively, and mature within ten years.
As of December 31, 2024, and 2023, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.15% and 3.65%, respectively, and mature within ten years. At December 31, 2024, $55.0 million in advances were short term with a rate of 4.38% and none at December 31, 2023.
As of December 31, 2022, the allowance for credit losses totaled $38.8 million, or 0.84%, of total loans held for investment.
As of December 31, 2023, the allowance for credit losses totaled $43.7 million, or 0.88%, of total loans held for investment.
Service charges on deposit accounts were $9.7 million for the year ended December 31, 2023, compared to $8.3 million for the 2022, an increase of $1.4 million, or 17.3%. Gain on sales of loans.
Service charges on deposit accounts were $10.6 million for the year ended December 31, 2024, compared to $9.7 million for the 2023, an increase of $873,000, or 9.0%. Gain on sales of loans.
For the Years Ended December 31, 2023 2022 2021 Average Outstanding Balance Interest Earned/Interest Paid Average Yield/Rate Average Outstanding Balance Interest Earned/Interest Paid Average Yield/Rate Average Outstanding Balance Interest Earned/Interest Paid Average Yield/Rate (Dollars in thousands) Assets Interest-earning assets: Total loans $ 4,859,637 $ 323,327 6.65 % $ 4,020,436 $ 218,032 5.42 % $ 3,037,020 $ 156,791 5.16 % Securities 898,771 20,125 2.24 956,232 16,503 1.73 870,282 13,520 1.55 Interest-bearing deposits in other banks 180,997 9,875 5.46 115,016 1,579 1.37 104,471 127 0.12 Total interest-earning assets 5,939,405 353,327 5.95 5,091,684 236,114 4.64 4,011,773 170,438 4.25 Allowance for loan losses (41,665 ) (32,093 ) (26,132 ) Noninterest-earning assets 444,140 413,917 418,029 Total assets $ 6,341,880 $ 353,327 $ 5,473,508 $ 236,114 $ 4,403,670 $ 170,438 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing deposits $ 3,566,216 $ 106,908 3.00 % $ 3,007,882 $ 24,413 0.81 % $ 2,604,825 $ 12,183 0.47 % Subordinated debt 105,369 5,323 5.05 106,054 5,108 4.82 68,183 3,526 5.17 Subordinated debt - trust preferred securities 5,000 430 8.60 5,000 247 4.94 5,000 168 3.36 Bank Term Funding Program 253,706 11,313 4.46 - - - - - - Advances from FHLB 329,726 13,702 4.16 271,025 6,479 2.39 47,325 554 1.17 First National Bankers Bank ("FNBB") Line of Credit - - - 2,500 121 4.84 - - - Other borrowings 21,825 522 2.39 23,197 169 0.73 27,182 123 0.45 Total interest-bearing liabilities 4,281,842 138,198 3.23 3,415,658 36,537 1.07 2,752,515 16,554 0.60 Noninterest-bearing liabilities: Noninterest-bearing deposits 1,412,979 1,539,938 1,196,970 Other liabilities 44,173 37,533 28,493 Total noninterest-bearing liabilities 1,457,152 1,577,471 1,225,463 Shareholders' equity: Common shareholders' equity 530,956 456,388 425,692 Preferred equity 71,930 23,991 - Total shareholders' equity 602,886 480,379 425,692 Total liabilities and shareholders' equity $ 6,341,880 $ 5,473,508 $ 4,403,670 Net interest rate spread (1) 2.72 % 3.57 % 3.65 % Net interest income $ 215,129 $ 199,577 $ 153,884 Net interest margin (2) 3.62 % 3.92 % 3.84 % Overall cost of funds 2.43 % 0.74 % 0.42 % (1) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
For the Years Ended December 31, 2024 2023 2022 Average Outstanding Balance Interest Earned/Interest Paid Average Yield/Rate Average Outstanding Balance Interest Earned/Interest Paid Average Yield/Rate Average Outstanding Balance Interest Earned/Interest Paid Average Yield/Rate (Dollars in thousands) Assets Interest-earning assets: Total loans $ 5,327,466 $ 374,555 7.03 % $ 4,859,637 $ 323,327 6.65 % $ 4,020,436 $ 218,032 5.42 % Securities 921,393 25,259 2.74 898,771 20,125 2.24 956,232 16,503 1.73 Interest-bearing deposits in other banks 287,474 14,950 5.20 180,997 9,875 5.46 115,016 1,579 1.37 Total interest-earning assets 6,536,333 414,764 6.35 5,939,405 353,327 5.95 5,091,684 236,114 4.64 Allowance for loan losses (43,931) (41,665) (32,093) Noninterest-earning assets 481,333 444,140 413,917 Total assets $ 6,973,735 $ 414,764 $ 6,341,880 $ 353,327 $ 5,473,508 $ 236,114 Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing deposits $ 4,427,233 $ 165,094 3.73 % $ 3,566,216 $ 106,908 3.00 % $ 3,007,882 $ 24,413 0.81 % Subordinated debt 99,884 5,394 5.40 105,369 5,323 5.05 106,054 5,108 4.82 Subordinated debt - trust preferred securities 5,000 447 8.94 5,000 430 8.60 5,000 247 4.94 Bank Term Funding Program 64,754 2,788 4.31 253,706 11,313 4.46 - - - Advances from FHLB 317,462 13,164 4.15 329,726 13,702 4.16 271,025 6,479 2.39 First National Bankers Bank ("FNBB") Line of Credit - - - - - - 2,500 121 4.84 Other borrowings 19,464 494 2.54 21,825 522 2.39 23,197 169 0.73 Total interest-bearing liabilities 4,933,797 187,381 3.80 4,281,842 138,198 3.23 3,415,658 36,537 1.07 Noninterest-bearing liabilities: Noninterest-bearing deposits 1,285,445 1,412,979 1,539,938 Other liabilities 56,649 44,173 37,533 Total noninterest-bearing liabilities 1,342,094 1,457,152 1,577,471 Shareholders' equity: Common shareholders' equity 625,914 530,956 456,388 Preferred equity 71,930 71,930 23,991 Total shareholders' equity 697,844 602,886 480,379 Total liabilities and shareholders' equity $ 6,973,735 $ 6,341,880 $ 5,473,508 Net interest rate spread (1) 2.55 % 2.72 % 3.57 % Net interest income $ 227,383 $ 215,129 $ 199,577 Net interest margin (2) 3.48 % 3.62 % 3.92 % Overall cost of funds 3.01 % 2.43 % 0.74 % _______________________________ (1) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
We had gains on sales of loans of $2.0 million in 2023, compared to $574,000 in 2022, an increase of $1.4 million, or 243.6%, primarily due to increased SBA loan sale activity. Loss on sales of investment securities.
We had gains on sales of loans of $3.0 million in 2024, compared to $2.0 million in 2023, an increase of $1.0 million, or 50.8%, primarily due to increased SBA loan sale activity. 55 Table of Contents Gain (loss) on sales of investment securities.
The following tables summarize our internal ratings of loans held for investment as of the dates indicated. See Note 7 of the consolidated financial statements for the presentation of loans in their credit quality categories that is in compliance with the CECL standard.
See Note 7 of the consolidated financial statements for the presentation of loans in their credit quality categories that is in compliance with the CECL standard.

… 112 more changes not shown on this page.

Other BFST 10-K year-over-year comparisons