2024 Journal of Community Bank Case Studies

Southeastern Louisiana University Executive Summary

b1Bank, was established in 2006 and has grown to become the second-largest bank based in Louisiana. b1Bank not only includes a broad deposit base, but also targets mid-sized businesses—a sector often overlooked by both smaller community banks and larger institutions. This allows the bank to offer tailored financial products and ensures personal engagement through direct communication. In response to the banking sector’s challenges in 2023, b1Bank revised its liquidity management strategies to strengthen financial resilience. This included participating in the Bank Term Funding Program (BTFP) and maintaining a substantial excess cash reserve. The bank conducts annual tests on its contingency funding plan and borrowing lines to ensure all liquidity sources are readily accessible during stress periods. Additionally, b1Bank also utilizes a variety of funding sources, each with its advantages and limitations. The bank maintains an interest rate risk (IRR) management strategy close to rate neutral to swiftly adjust to rate changes. By

matching the duration of assets and liabilities and closely managing deposits, b1Bank effectively balances its interest rate exposure and responding competitively to market conditions without significant balance sheet repositioning. b1Bank�s IRR models are rigorously tested for rate shocks and cash flow variations. The bank uses both in-house Excel models and third-party systems for their IRR models. The securities portfolio is primarily composed of

ALM is the process of managing the

mismatch between a firm’s assets and liabilities to mitigate resulting financial risk.

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