First Guaranty Bancshares (NASDAQ: FGBI ) is a small regional bank based out of Louisiana. In addition to its common shares, the bank also has a preferred share issue (NASDAQ: FGBIP ). The preferred shareAbout My Writing: I am currently focused on income investing through either common shares, preferred shares, or bonds. I will occasionally break away and write about the economy at large or a special situation involving a company I've been researching in. I target two articles per week for publication on Mo ...

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) First Guaranty Bancshares, Inc. reports Q2 and YTD 2025 financial results, focusing on strategic de-risking, expense reduction, and asset quality [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) First Guaranty Bancshares, Inc. reduced non-performing assets and noninterest expenses in Q2 2025, despite a significant provision for credit losses impacting financial results - Continued its business strategy to reduce risk in the loan portfolio, decreasing non-performing assets by **$6.8 million** compared to March 31, 2025. This included a successful workout of a commercial real estate loan and the sale of an **$8.8 million** non-accrual loan in July 2025[3](index=3&type=chunk) - Recorded a substantial provision for credit losses of **$14.7 million** for Q2 2025, primarily due to specific reserves on individually evaluated loans and trends in the loan portfolio. The allowance for credit losses (ACL) grew to **2.36%** of total loans[3](index=3&type=chunk) - Successfully executed expense reduction plans, with noninterest expense declining by **$0.8 million** from Q1 2025 and **$3.3 million** from Q2 2024, achieving an annual run rate savings of approximately **$13.4 million**[3](index=3&type=chunk) - Loan balances continued to decline as part of a strategy to reduce concentration risk, particularly in commercial real estate. Total loans fell to **$2.41 billion** at June 30, 2025, down from **$2.51 billion** at March 31, 2025[3](index=3&type=chunk) [Key Financial Results (Q2 & YTD 2025)](index=1&type=section&id=Key%20Financial%20Results%20%28Q2%20%26%20YTD%202025%29) The company reported a net loss for Q2 and YTD 2025, primarily due to a substantial increase in the provision for credit losses, despite stable net interest income Net (Loss) Income and (Loss) Earnings Per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net (Loss) Income** | $(5.8) million | $7.2 million | $(12.0) million | $9.5 million | | **(Loss) Earnings Per Share** | $(0.50) | $0.53 | $(1.04) | $0.67 | Net Interest Income and Provision for Credit Losses | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | $22.2 million | $21.2 million | $44.5 million | $43.2 million | | **Provision for Credit Losses** | $14.7 million | $6.8 million | $29.3 million | $9.1 million | Key Performance Ratios | Ratio | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Return on Average Assets** | (0.60)% | 0.81% | (0.61)% | 0.54% | | **Return on Average Common Equity** | (11.66)% | 12.16% | (11.97)% | 7.66% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements for First Guaranty Bancshares, Inc. detail balance sheet shifts, income statement performance, and net interest margin trends [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets remained stable at June 30, 2025, with a strategic decrease in net loans offset by increases in cash and investment securities, while equity grew Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | $3,971,088 | $3,972,728 | $(1,640) | (0.0)% | | Net Loans | $2,353,542 | $2,658,969 | $(305,427) | (11.5)% | | Cash and cash equivalents | $714,870 | $564,208 | $150,662 | 26.7% | | Investment securities | $719,722 | $602,719 | $117,003 | 19.4% | | **Total Deposits** | $3,481,338 | $3,476,260 | $5,078 | 0.1% | | **Total Shareholders' Equity** | $264,559 | $255,049 | $9,510 | 3.7% | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) The company reported a net loss in Q2 2025, primarily driven by a substantial increase in the provision for credit losses and a sharp decline in noninterest income Selected Income Statement Data (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | $22,240 | $21,242 | $998 | 4.7% | | **Provision for credit losses** | $14,703 | $6,805 | $7,898 | 116.1% | | **Total Noninterest Income** | $2,156 | $15,526 | $(13,370) | (86.1)% | | **Total Noninterest Expense** | $17,267 | $20,609 | $(3,342) | (16.2)% | | **Net (Loss) Income** | $(5,831) | $7,201 | $(13,032) | (181.0)% | [Consolidated Average Balance Sheets and Net Interest Margin](index=8&type=section&id=Consolidated%20Average%20Balance%20Sheets%20and%20Net%20Interest%20Margin) Net interest margin compressed in Q2 2025 due to a lower yield on interest-earning assets, despite a decrease in the cost of interest-bearing liabilities Net Interest Margin Analysis | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Interest Margin** | 2.34% | 2.48% | 2.35% | 2.53% | | **Net Interest Rate Spread** | 1.72% | 1.72% | 1.73% | 1.78% | | **Yield on Interest-Earning Assets** | 5.72% | 6.25% | 5.74% | 6.24% | | **Cost of Interest-Bearing Liabilities** | 4.00% | 4.53% | 4.01% | 4.46% | [Asset Quality and Loan Portfolio Analysis](index=3&type=section&id=Asset%20Quality%20and%20Loan%20Portfolio%20Analysis) Analysis of asset quality and the loan portfolio reveals strategic shifts in composition and trends in nonperforming assets [Loan Portfolio Composition](index=10&type=section&id=Loan%20Portfolio%20Composition) The total loan portfolio strategically declined to $2.41 billion at June 30, 2025, with real estate loans comprising the majority and commercial real estate exposure actively reduced Loan Portfolio Breakdown (in thousands) | Loan Category | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sept 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Real Estate** | $1,938,927 | $2,024,317 | $2,141,373 | $2,162,372 | | **Total Non-Real Estate** | $478,424 | $495,876 | $560,707 | $616,228 | | **Total Loans** | $2,417,351 | $2,520,193 | $2,702,080 | $2,778,600 | [Nonperforming Assets (NPAs)](index=11&type=section&id=Nonperforming%20Assets%20%28NPAs%29) Nonperforming assets decreased quarter-over-quarter but remain elevated year-over-year, with improved allowance for credit losses coverage on nonaccrual loans Nonperforming Assets Trend (in thousands) | Metric | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sept 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total nonaccrual loans** | $119,179 | $133,393 | $108,529 | $65,788 | | **Total Real Estate Owned** | $7,657 | $152 | $319 | $1,160 | | **Total non-performing assets** | $127,120 | $133,932 | $120,350 | $67,025 | | **NPAs to total assets** | 3.20% | 3.50% | 3.03% | 1.71% | | **Allowance for credit losses to nonaccrual loans** | 47.80% | 32.25% | 32.08% | 50.59% | - The six largest non-performing loan relationships comprise **75%** of total non-performing loans, with significant exposures in independent living centers, multifamily complexes, and assisted living centers[4](index=4&type=chunk) [Expense Analysis](index=13&type=section&id=Expense%20Analysis) An analysis of noninterest expenses reveals key drivers behind changes in operating costs, including personnel and professional fees [Noninterest Expense Breakdown](index=13&type=section&id=Noninterest%20Expense%20Breakdown) Total noninterest expense significantly decreased in Q2 2025, primarily due to reductions in salaries, employee benefits, and legal and professional fees Other Noninterest Expense Components (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Legal and professional fees | $671 | $1,504 | $(833) | | Software expense and amortization | $1,188 | $1,367 | $(179) | | Regulatory assessment | $1,609 | $989 | $620 | | **Total other noninterest expense** | **$6,819** | **$7,622** | **$(803)** | - Salaries and employee benefits, a major component of noninterest expense, decreased to **$7.8 million** in Q2 2025 from **$10.4 million** in Q2 2024[12](index=12&type=chunk) - The number of full-time equivalent employees was reduced to **360** at June 30, 2025, down from **495** at June 30, 2024, contributing to lower personnel costs[4](index=4&type=chunk) [Dividends and Capital](index=4&type=section&id=Dividends%20and%20Capital) The company's dividend declaration and its impact on capital are detailed, reflecting strategic adjustments to enhance capital [Dividend Declaration](index=4&type=section&id=Dividend%20Declaration) First Guaranty significantly reduced its common stock dividend to $0.01 per share in Q2 2025 as a strategic move to increase capital, while maintaining preferred stock dividends Common Stock Dividend Per Share | Period | Dividend Per Share | | :--- | :--- | | **Q2 2025** | $0.01 | | **Q2 2024** | $0.16 | - The reduction in the common stock dividend was a strategic decision to increase capital, aligning with the new business strategy announced in Q3 2024[8](index=8&type=chunk) - The company paid preferred stock dividends of **$1.2 million** during the first six months of 2025, consistent with the same period in 2024[8](index=8&type=chunk) [Non-GAAP Financial Measures](index=14&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliation of GAAP to non-GAAP financial measures provides alternative insights into the company's capital adequacy, specifically tangible book value per share [Reconciliation of GAAP to Non-GAAP Measures](index=14&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Non-GAAP measures, including tangible book value per share, are reconciled, showing a decrease in tangible book value per share but a slight increase in tangible common equity to tangible assets ratio Tangible Book Value Per Share Reconciliation (in thousands, except per share data) | Metric (in thousands, except per share data) | At June 30, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total shareholders' equity (GAAP) | $264,559 | $255,049 | | Less: Preferred Stock, Goodwill, Intangibles | $(48,672) | $(49,020) | | **Tangible common equity (Non-GAAP)** | **$215,887** | **$206,029** | | Common shares outstanding | 15,120,172 | 12,504,717 | | **Book value per common share (GAAP)** | **$15.31** | **$17.75** | | **Tangible book value per common share (Non-GAAP)** | **$14.28** | **$16.48** | [Corporate Information and Forward-Looking Statements](index=4&type=section&id=Corporate%20Information%20and%20Forward-Looking%20Statements) Corporate information about First Guaranty Bancshares, Inc. is provided, alongside important disclaimers regarding forward-looking statements [About First Guaranty](index=4&type=section&id=About%20First%20Guaranty) First Guaranty Bancshares, Inc. is the holding company for First Guaranty Bank, a Louisiana-chartered institution operating 35 locations across four states - First Guaranty Bancshares, Inc. is the holding company for First Guaranty Bank, founded in **1934**[5](index=5&type=chunk) - The bank operates **35** locations throughout Louisiana, Texas, Kentucky, and West Virginia[5](index=5&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements subject to significant risks and uncertainties, with actual results potentially differing materially from expectations - The report contains forward-looking statements that are not historical facts and are subject to risks and uncertainties[6](index=6&type=chunk) - The company disclaims any obligation to publicly update forward-looking statements and warns that actual results may differ materially from expectations[6](index=6&type=chunk)

Company Performance - First Guaranty Bancshares (FGBI) reported a quarterly loss of $0.61 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.20, and compared to earnings of $0.53 per share a year ago, indicating an earnings surprise of -205.00% [1] - The company posted revenues of $24.4 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.63%, and down from $36.77 million in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - First Guaranty Bancshares shares have declined approximately 28.5% since the beginning of the year, contrasting with the S&P 500's gain of 9.7% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $25.18 million, and for the current fiscal year, it is -$0.80 on revenues of $99.82 million [7] Industry Outlook - The Zacks Industry Rank for Banks - Southeast is currently in the top 6% of over 250 Zacks industries, suggesting a favorable outlook for the industry [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis of First Guaranty Bancshares, Inc [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of First Guaranty Bancshares, Inc. and its subsidiary, First Guaranty Bank, for the periods ended June 30, 2025, and December 31, 2024. It includes the balance sheets, income statements, comprehensive income statements, shareholders' equity statements, cash flow statements, and detailed notes to these financial statements [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This table presents the consolidated financial position, detailing assets, liabilities, and shareholders' equity at specific dates Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | **Assets** | | | | | | Cash and cash equivalents | $714,870 | $564,208 | $150,662 | 26.7% | | Investment securities | $719,722 | $602,719 | $117,003 | 19.4% | | Net loans | $2,351,634 | $2,658,969 | $(307,335) | -11.6% | | Total Assets | $3,969,581 | $3,972,728 | $(3,147) | -0.1% | | **Liabilities** | | | | | | Total deposits | $3,481,338 | $3,476,260 | $5,078 | 0.1% | | Total Liabilities | $3,706,493 | $3,717,679 | $(11,186) | -0.3% | | **Shareholders' Equity** | | | | | | Total Shareholders' Equity | $263,088 | $255,049 | $8,039 | 3.1% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This table outlines the company's financial performance, including interest income, expenses, and net income for the reported periods Consolidated Statements of Income | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :----- | :----------------------------- | :----------------------------- | :----- | | Total Interest Income | $54,321 | $53,651 | $670 | $108,784 | $106,559 | $2,225 | | Total Interest Expense | $32,081 | $32,409 | $(328) | $64,321 | $63,396 | $925 | | Net Interest Income | $22,240 | $21,242 | $998 | $44,463 | $43,163 | $1,300 | | Provision for credit losses | $16,610 | $6,805 | $9,805 | $31,158 | $9,109 | $22,049 | | Net (Loss) Income | $(7,303) | $7,201 | $(14,504) | $(13,469) | $9,511 | $(22,980) | | Net (Loss) Income Available to Common Shareholders | $(7,885) | $6,619 | $(14,504) | $(14,633) | $8,347 | $(22,980) | | (Loss) Earnings Per Common Share | $(0.61) | $0.53 | $(1.14) | $(1.15) | $0.67 | $(1.82) | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This table details net income and other comprehensive income components, leading to total comprehensive income for the periods Consolidated Statements of Comprehensive Income | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :---------------------- | :------------------------------- | :------------------------------- | :----- | :----------------------------- | :----------------------------- | :----- | | Net (Loss) Income | $(7,303) | $7,201 | $(14,504) | $(13,469) | $9,511 | $(22,980) | | Other comprehensive income | $971 | $206 | $765 | $2,659 | $834 | $1,825 | | Comprehensive (Loss) Income | $(6,332) | $7,407 | $(13,739) | $(10,810) | $10,345 | $(21,155) | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) This table tracks changes in shareholders' equity, including preferred stock, common stock, surplus, retained earnings, and comprehensive income adjustments Consolidated Statements of Shareholders' Equity | Metric (in thousands) | Balance December 31, 2024 | Balance June 30, 2025 | Change | | :-------------------------------- | :------------------------ | :-------------------- | :----- | | Preferred Stock | $33,058 | $33,058 | $0 | | Common Stock | $12,505 | $15,120 | $2,615 | | Surplus | $149,389 | $167,041 | $17,652 | | Retained Earnings | $72,965 | $58,078 | $(14,887) | | Accumulated Other Comprehensive (Loss) Income | $(12,868) | $(10,209) | $2,659 | | Total Shareholders' Equity | $255,049 | $263,088 | $8,039 | - The increase in common stock and surplus was primarily due to the issuance of common stock in private placements and the conversion of subordinated debt during the **first six months of 2025**[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes cash inflows and outflows from operating, investing, and financing activities for the reported periods Consolidated Statements of Cash Flows | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :----- | | Net Cash (Used In) Provided By Operating Activities | $(12,928) | $9,895 | $(22,823) | | Net Cash Provided By (Used In) Investing Activities | $156,271 | $(35,268) | $191,539 | | Net Cash Provided By Financing Activities | $7,319 | $37,884 | $(30,565) | | Net Increase In Cash and Cash Equivalents | $150,662 | $12,511 | $138,151 | | Cash and Cash Equivalents at the End of the Period | $714,870 | $298,966 | $415,904 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the unaudited consolidated financial statements, covering accounting policies, recent pronouncements, specific asset and liability categories, fair value measurements, and segment reporting [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the accounting principles and consolidation policies used in preparing the financial statements - The financial statements are prepared in accordance with **GAAP for interim information** and include all adjustments necessary for fair presentation, which are of a normal recurring nature[17](index=17&type=chunk)[19](index=19&type=chunk) - The consolidated financial statements include First Guaranty Bancshares, Inc. and its wholly-owned subsidiary, First Guaranty Bank, with all significant intercompany balances and transactions eliminated[18](index=18&type=chunk) [Note 2. Recent Accounting Pronouncements](index=10&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) This note outlines recently issued accounting standards and their expected impact on the company's financial statements - ASU No. 2023-09, "Improvements to Tax Disclosures," effective for annual periods after December 15, 2024, is **not expected to materially affect** First Guaranty's financial statements[21](index=21&type=chunk) - ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures," effective for annual periods after December 15, 2026, is currently being evaluated for its impact on disclosures[22](index=22&type=chunk) [Note 3. Securities](index=11&type=section&id=Note%203.%20Securities) This note provides details on investment securities, including fair value, unrealized losses, and credit loss assessments Security Type | Security Type (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | Change | | :----------------------------- | :----------------------- | :--------------------------- | :----- | | Available for sale | $397,573 | $281,097 | $116,476 | | Held to maturity | $260,080 | $251,458 | $8,622 | | Total Investment Securities | $657,653 | $532,555 | $125,098 | - At June 30, 2025, **178 debt securities** had unrealized losses totaling **12.7% of their amortized cost**, with **129 of these in a continuous loss position for over 12 months**, amounting to **$63.2 million in unrealized losses**[28](index=28&type=chunk) - First Guaranty had **no charge-offs or provisions for credit losses** recognized on securities during the **six months ended June 30, 2025 and 2024**, as management intends and has the ability to hold these securities until recovery or maturity[32](index=32&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 4. Loans](index=14&type=section&id=Note%204.%20Loans) This note details the composition and credit quality of the loan portfolio, including nonaccrual loans and credit classifications Loan Category | Loan Category (in thousands) | June 30, 2025 Balance | December 31, 2024 Balance | Change | | :----------------------------- | :-------------------- | :------------------------ | :----- | | Construction & land development | $268,828 | $330,048 | $(61,220) | | 1-4 Family | $440,465 | $450,371 | $(9,906) | | Multifamily | $144,864 | $165,121 | $(20,257) | | Non-farm non-residential | $1,052,503 | $1,159,842 | $(107,339) | | Commercial and industrial | $238,144 | $257,518 | $(19,374) | | Commercial leases | $159,209 | $220,200 | $(60,991) | | Total Loans Net of Unearned Income | $2,410,505 | $2,693,780 | $(283,275) | - Nonaccrual loans increased to **$119.2 million at June 30, 2025**, from **$108.5 million at December 31, 2024**, with a significant portion in real estate categories[41](index=41&type=chunk)[39](index=39&type=chunk) Credit Quality Classification | Credit Quality Classification (in thousands) | June 30, 2025 Total Loans | December 31, 2024 Total Loans | Change | | :------------------------------------------- | :-------------------------- | :---------------------------- | :----- | | Pass | $1,953,548 | $2,390,876 | $(437,328) | | Special Mention | $186,589 | $125,658 | $60,931 | | Substandard | $276,787 | $185,112 | $91,675 | | Doubtful | $427 | $434 | $(7) | | Total Loans Before Unearned Income | $2,417,351 | $2,702,080 | $(284,729) | [Note 5. Allowance for Credit Losses on Loans](index=24&type=section&id=Note%205.%20Allowance%20for%20Credit%20Losses%20on%20Loans) This note explains the changes in the allowance for credit losses on loans, including provisions, charge-offs, and recoveries Allowance for Credit Losses | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------- | :------------------------------- | :------------------------------- | :----- | | Beginning Allowance | $34,811 | $30,926 | $3,885 | | Charge-offs | $(8,017) | $(11,052) | $3,035 | | Recoveries | $409 | $504 | $(95) | | Provision | $31,668 | $9,909 | $21,759 | | Ending Allowance | $58,871 | $30,287 | $28,574 | - The allowance for credit losses on loans increased significantly to **$58.9 million at June 30, 2025**, from **$34.8 million at December 31, 2024**, primarily due to a **$31.2 million provision for credit losses** in the first six months of 2025[48](index=48&type=chunk)[138](index=138&type=chunk) - Loan modifications to borrowers experiencing financial difficulty during the **six months ended June 30, 2025**, consisted of a **$16.6 million term extension**, with no payment defaults on modified loans within the previous 12 months[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 6. Goodwill and Other Intangible Assets](index=27&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) This note provides information on goodwill and other intangible assets, including amortization and impairment assessments - Goodwill remained stable at **$12.9 million** at June 30, 2025, and December 31, 2024, with **no impairment charges** recognized since acquisition[56](index=56&type=chunk) - Core deposit intangibles are amortized, with a **weighted-average amortization period of 3.8 years** remaining at June 30, 2025[56](index=56&type=chunk) [Note 7. Other Real Estate (ORE)](index=27&type=section&id=Note%207.%20Other%20Real%20Estate%20(ORE)) This note details the company's other real estate owned, including changes in its balance and composition ORE Category | ORE Category (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :----- | | Residential | $192 | $226 | $(34) | | Construction & land development | $7,384 | $3 | $7,381 | | Non-farm non-residential | $81 | $90 | $(9) | | Total ORE | $7,657 | $319 | $7,338 | - Other real estate owned (OREO) significantly increased to **$7.7 million at June 30, 2025**, from **$0.3 million at December 31, 2024**, primarily due to a **$7.4 million land development project**[57](index=57&type=chunk) [Note 8. Borrowings](index=27&type=section&id=Note%208.%20Borrowings) This note describes the company's borrowing activities, including debt conversions, interest payments, and covenant compliance - First Guaranty exchanged **$15.0 million of floating rate subordinated debt** for **1,981,506 shares of common stock** with a related party[58](index=58&type=chunk) - The company issued **36,060 shares of common stock** for payment-in-kind (PIK) interest on senior debt and **52,422 shares** for PIK interest on subordinated debt for the **quarter ended June 30, 2025**[61](index=61&type=chunk) - A waiver was obtained for a breach of a financial covenant (adjusted Texas Ratio exceeding 35%) under its senior debt credit agreement, effective through **March 31, 2026**, resulting in a **1% interest rate increase for Q2 2025**[60](index=60&type=chunk) [Note 9. Commitments and Contingencies](index=28&type=section&id=Note%209.%20Commitments%20and%20Contingencies) This note outlines the company's off-balance-sheet commitments and potential liabilities from legal proceedings Commitment Type | Commitment Type (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :----------------------------- | :------------ | :---------------- | :----- | | Commitments to Extend Credit | $72,011 | $134,178 | $(62,167) | | Unfunded Commitments under lines of credit | $164,845 | $186,006 | $(21,161) | | Commercial and Standby letters of credit | $13,526 | $13,576 | $(50) | - The provision for credit losses on unfunded commitments was a **reversal of $0.5 million** for the **six months ended June 30, 2025**, reducing the ACL on off-balance-sheet credit exposures to **$0.7 million**[65](index=65&type=chunk) - First Guaranty is a defendant in a lawsuit alleging fraud-related loss of funds by a customer, with a possible loss range of **$0.0 million to $1.5 million**, for which no liability has been accrued[66](index=66&type=chunk) [Note 10. Leases](index=29&type=section&id=Note%2010.%20Leases) This note provides details on the company's lease arrangements, including sale-leaseback transactions and lease assets/liabilities - First Guaranty completed a sale-leaseback transaction on **June 28, 2024**, selling three properties for **$14.7 million** and concurrently entering into **15-year absolute net lease agreements**, resulting in a **pre-tax gain of $13.3 million**[68](index=68&type=chunk)[69](index=69&type=chunk) - Operating lease ROU assets were **$11.3 million** and related operating lease liabilities were **$11.4 million** at June 30, 2025[71](index=71&type=chunk) - Operating lease expense, including short-term leases, was **$0.8 million** for the **six months ended June 30, 2025**, compared to **$0.2 million** for the same period in 2024[72](index=72&type=chunk) [Note 11. Fair Value Measurements](index=30&type=section&id=Note%2011.%20Fair%20Value%20Measurements) This note explains the methodology and hierarchy used for fair value measurements of financial instruments - Fair value measurements are categorized into a **three-level hierarchy** based on the observability of inputs, with **Level 1 for quoted prices in active markets**, **Level 2 for significant observable inputs**, and **Level 3 for significant unobservable inputs**[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) Fair Value Measurement | Fair Value Measurement (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | **Available for Sale Securities** | | | | Level 1 | $49,615 | $147,780 | | Level 2 | $342,139 | $127,222 | | Level 3 | $5,819 | $6,095 | | Total AFS Securities | $397,573 | $281,097 | | **Loans Individually Evaluated for Impairment (Level 3)** | $73,019 | $50,449 | | **Other Real Estate Owned (Level 2)** | $7,657 | $319 | [Note 12. Financial Instruments](index=32&type=section&id=Note%2012.%20Financial%20Instruments) This note provides fair value estimates for various financial instruments, comparing them to their carrying amounts - Fair value estimates are subjective and depend on assumptions like discount rates, risks, future cash flows, and market information, and may not reflect immediate settlement values[86](index=86&type=chunk)[87](index=87&type=chunk) - Fair values for investment securities are based on quoted market prices or discounted cash flow analyses, while loans are valued using net present value formulas with appropriate discount rates[90](index=90&type=chunk)[92](index=92&type=chunk) Financial Instrument | Financial Instrument (in thousands) | Carrying Amount (June 30, 2025) | Fair Value (June 30, 2025) | | :---------------------------------- | :------------------------------ | :------------------------- | | **Assets** | | | | Cash and due from banks | $714,313 | $714,313 | | Securities, available for sale | $397,573 | $397,573 | | Securities, held for maturity | $322,149 | $260,080 | | Loans, net | $2,351,634 | $2,316,332 | | **Liabilities** | | | | Deposits | $3,481,338 | $3,488,045 | | Long-term advances from FHLB | $135,000 | $136,225 | | Senior long-term debt | $14,186 | $14,266 | | Junior subordinated debentures | $29,775 | $29,775 | [Note 13. Segment Reporting](index=36&type=section&id=Note%2013.%20Segment%20Reporting) This note clarifies the company's operating segments and how financial performance is reported - First Guaranty operates as a **single operating segment**, providing banking, financial, and trust services, with the President and CEO acting as the chief operating decision maker[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on First Guaranty's financial condition and results of operations for the second quarter and six months ended June 30, 2025, compared to the prior year. It highlights key financial trends, strategic initiatives, and factors influencing performance, including loan portfolio management, credit quality, and capital actions [Overview and Forward-Looking Statements](index=37&type=section&id=Overview%20and%20Forward-Looking%20Statements) This section provides an overview of the financial discussion and highlights the nature of forward-looking statements - The discussion highlights significant factors affecting First Guaranty's financial condition and results, derived from unaudited consolidated financial statements[103](index=103&type=chunk) - The report contains forward-looking statements, subject to various factors and uncertainties, including economic conditions, competition, interest rate changes, and regulatory policies[104](index=104&type=chunk) [Second Quarter and Six Months Ended June 30, 2025, Financial Overview](index=38&type=section&id=Second%20Quarter%20and%20Six%20Months%20Ended%20June%2030,%202025,%20Financial%20Overview) This section summarizes the company's financial performance for the second quarter and six months, highlighting key trends and metrics - First Guaranty reported a **net loss of $(7.3) million for Q2 2025** and **$(13.5) million for the six months ended June 30, 2025**, a significant decrease from net income in the prior year periods, primarily driven by increased provision for credit losses[106](index=106&type=chunk) - The company continued its strategy to reduce risk in the loan portfolio, decreasing non-performing assets by **$6.8 million** and total loans by **$283.3 million (10.5%)** from December 31, 2024[106](index=106&type=chunk) Financial Overview Metrics | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Allowance for Credit Losses (ACL) | $58.9 million | $34.8 million | $24.1 million | | ACL as % of Total Loans | 2.44% | 1.29% | 1.15 pp | | Nonaccrual Loans | $119.2 million | $108.5 million | $10.7 million | | Book Value Per Common Share | $15.21 | $17.75 | $(2.54) | [Financial Condition](index=43&type=section&id=Financial%20Condition) This section details the changes in First Guaranty's balance sheet components, including assets, liabilities, and shareholders' equity, from December 31, 2024, to June 30, 2025. It covers shifts in loan portfolio composition, investment securities, nonperforming assets, allowance for credit losses, deposits, and borrowings, along with the impact on capital [Assets](index=43&type=section&id=Assets) This section details the changes in the company's asset composition, including loans, cash, and investment securities - Total assets decreased by **$3.1 million to $4.0 billion** at June 30, 2025, primarily due to a **$307.3 million decrease in net loans**, partially offset by increases in cash and cash equivalents (**$150.7 million**) and investment securities (**$117.0 million**)[110](index=110&type=chunk) [Loans](index=43&type=section&id=Loans) This section provides an in-depth analysis of the loan portfolio, including changes in balances, composition, and credit quality - Net loans decreased by **$307.3 million (11.6%) to $2.4 billion** at June 30, 2025, driven by reductions in non-farm non-residential, construction & land development, and commercial lease loans[111](index=111&type=chunk) - The loan portfolio is **80.1% secured by real estate**, with **55.3% based on a floating rate**, and **46.2% scheduled to mature within five years**[112](index=112&type=chunk) - Classified assets increased due to a **$91.7 million rise in substandard loans** and a **$60.9 million increase in special mention loans**, resulting from downgrades of various loan relationships[115](index=115&type=chunk) [Investment Securities](index=45&type=section&id=Investment%20Securities) This section details the composition and changes in the investment securities portfolio, including available-for-sale and held-to-maturity categories - Investment securities increased by **$117.0 million to $719.7 million** at June 30, 2025, with available-for-sale (AFS) securities rising by **$116.5 million (41.4%)** due to purchases of collateralized mortgage obligations and mortgage-backed securities[118](index=118&type=chunk)[120](index=120&type=chunk) - The portfolio consists primarily of U.S. Government and agency securities, with a forecasted weighted average life of approximately **7.01 years** and an effective duration of **5.24 years** at June 30, 2025[119](index=119&type=chunk)[122](index=122&type=chunk) - There were **no credit-related impairments** for AFS securities or provisions for credit losses on held-to-maturity (HTM) securities during the **six months ended June 30, 2025 or 2024**[123](index=123&type=chunk) [Nonperforming Assets](index=45&type=section&id=Nonperforming%20Assets) This section analyzes trends in nonperforming assets, including nonaccrual loans and other real estate owned Nonperforming Assets Summary | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total nonaccrual loans | $119,179 | $108,529 | $10,650 | | Loans 90 days and greater delinquent & accruing | $284 | $11,502 | $(11,218) | | Total nonperforming loans | $119,463 | $120,031 | $(568) | | Total Real Estate Owned | $7,657 | $319 | $7,338 | | Total nonperforming assets | $127,120 | $120,350 | $6,770 | | Nonperforming assets to total assets | 3.20% | 3.03% | 0.17 pp | | Nonaccrual loans to total loans | 4.94% | 4.03% | 0.91 pp | - The largest non-performing loan relationships include a **$27.5 million loan** secured by an independent living center, a **$25.9 million multifamily apartment complex loan**, and a **$15.6 million assisted living center loan**, all on nonaccrual status[130](index=130&type=chunk) - Other real estate owned (OREO) increased by **$7.3 million to $7.7 million**, primarily due to a **$7.4 million land development project** under contract for sale in Q4 2025[130](index=130&type=chunk) [Allowance for Credit Losses](index=48&type=section&id=Allowance%20for%20Credit%20Losses) This section discusses the allowance for credit losses, including changes in the provision, charge-offs, and overall coverage - The allowance for credit losses (ACL) on loans was **$58.9 million, or 2.44% of total loans**, at June 30, 2025, compared to **$34.8 million, or 1.29%**, at December 31, 2024[136](index=136&type=chunk) - A provision for credit losses of **$31.2 million** was made during the **six months ended June 30, 2025**, significantly higher than **$9.1 million** in the prior year, driven by increased reserves on individually evaluated loans and charge-offs[138](index=138&type=chunk)[185](index=185&type=chunk) - Total charge-offs for the **six months ended June 30, 2025**, were **$8.0 million**, concentrated in commercial and industrial, lease, consumer, and construction & land development loans[141](index=141&type=chunk)[185](index=185&type=chunk) [Deposits](index=51&type=section&id=Deposits) This section details the composition and changes in the company's deposit base, including interest-bearing and noninterest-bearing accounts - Total deposits increased by **$5.1 million (0.1%) to $3.5 billion** from December 31, 2024, to June 30, 2025[143](index=143&type=chunk) Deposit Type | Deposit Type (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :----- | | Noninterest-bearing demand | $442,267 | $404,056 | $38,211 | | Interest-bearing demand | $1,402,960 | $1,387,068 | $15,892 | | Savings | $247,120 | $234,444 | $12,676 | | Time | $1,388,991 | $1,450,692 | $(61,701) | | Total Deposits | $3,481,338 | $3,476,260 | $5,078 | - Public funds deposits totaled **$1.1 billion** at June 30, 2025, representing **31.8% of total deposits**, with **$514.7 million** collateralized by reciprocal deposit insurance programs[150](index=150&type=chunk)[152](index=152&type=chunk) [Borrowings](index=53&type=section&id=Borrowings) This section outlines the company's borrowing activities, including short-term and long-term debt and related changes - Short-term borrowings (repurchase agreements) increased slightly to **$7.1 million** at June 30, 2025, from **$7.0 million** at December 31, 2024[153](index=153&type=chunk) - Long-term advances from the FHLB remained at **$135.0 million**, consisting of two advances maturing in 2027[154](index=154&type=chunk) - Senior long-term debt decreased to **$14.2 million**, and subordinated debt decreased to **$29.8 million** at June 30, 2025, from **$15.2 million** and **$44.7 million**, respectively, at December 31, 2024[155](index=155&type=chunk) [Total Shareholders' Equity](index=53&type=section&id=Total%20Shareholders'%20Equity) This section explains the changes in total shareholders' equity, including contributions from stock issuance and retained earnings - Total shareholders' equity increased to **$263.1 million** at June 30, 2025, from **$255.0 million** at December 31, 2024[156](index=156&type=chunk) - The increase was driven by a **$17.7 million increase in surplus**, a **$2.7 million decrease in accumulated other comprehensive loss**, and a **$2.6 million increase in common stock**, partially offset by a **$14.9 million decrease in retained earnings** due to net loss and dividends[156](index=156&type=chunk) [Results of Operations for the Second Quarter Ended June 30, 2025 and 2024](index=54&type=section&id=Results%20of%20Operations%20for%20the%20Second%20Quarter%20Ended%20June%2030,%202025%20and%202024) This section analyzes the company's financial performance for the three and six months ended June 30, 2025, compared to the same periods in 2024, focusing on net interest income, noninterest income, noninterest expense, and income taxes [Performance Summary](index=54&type=section&id=Performance%20Summary) This section provides a high-level summary of the company's financial performance for the reported periods, focusing on net loss and earnings per share - Net loss for the **three months ended June 30, 2025, was $7.3 million**, a **$14.5 million decrease** from net income of **$7.2 million** in the prior year, primarily due to increased provision for credit losses and decreased noninterest income[157](index=157&type=chunk) - Loss per common share was **$(0.61)** for the three months and **$(1.15)** for the six months ended June 30, 2025, compared to earnings of **$0.53** and **$0.67**, respectively, in the prior year periods[157](index=157&type=chunk)[158](index=158&type=chunk) [Net Interest Income](index=55&type=section&id=Net%20Interest%20Income) This section analyzes the components of net interest income, including interest income, interest expense, and net interest margin - Net interest income increased to **$22.2 million for Q2 2025** (from **$21.2 million in Q2 2024**) and to **$44.5 million** for the **six months ended June 30, 2025** (from **$43.2 million in 2024**)[162](index=162&type=chunk)[163](index=163&type=chunk) - The net interest margin decreased by **14 basis points to 2.34% for Q2 2025** and by **18 basis points to 2.35%** for the **six months ended June 30, 2025**, compared to the prior year periods[162](index=162&type=chunk)[163](index=163&type=chunk) - The increase in net interest income was primarily due to an increase in average interest-earning assets and a decrease in the average rate of interest-bearing liabilities, partially offset by a decrease in the average yield of interest-earning assets[162](index=162&type=chunk)[163](index=163&type=chunk) [Interest Income](index=56&type=section&id=Interest%20Income) This section details the sources and changes in interest income, primarily from loans and investment securities - Total interest income increased by **$0.7 million (1.2%) to $54.3 million for Q2 2025** and by **$2.2 million (2.1%) to $108.8 million** for the **six months ended June 30, 2025**[164](index=164&type=chunk)[168](index=168&type=chunk) - Interest income on loans decreased by **$6.5 million (13.8%) for Q2 2025** and **$10.5 million (11.1%)** for the six months, due to lower average balances and yields[166](index=166&type=chunk)[170](index=170&type=chunk) - Interest income on securities increased by **$3.3 million for Q2 2025** and **$6.3 million** for the six months, driven by higher average balances and yields in the investment portfolio[165](index=165&type=chunk)[169](index=169&type=chunk) [Interest Expense](index=57&type=section&id=Interest%20Expense) This section analyzes the components and changes in interest expense, primarily from interest-bearing deposits and borrowings - Total interest expense decreased by **$0.3 million (1.0%) to $32.1 million for Q2 2025**, but increased by **$0.9 million (1.5%) to $64.3 million** for the **six months ended June 30, 2025**[172](index=172&type=chunk)[173](index=173&type=chunk) - The average rate of interest-bearing demand deposits decreased to **3.73% for Q2 2025** and **3.67%** for the six months, primarily due to repricing of public funds indexed to Treasury rates[172](index=172&type=chunk)[173](index=173&type=chunk) - The average balance of interest-bearing liabilities increased by **$342.7 million for Q2 2025** and **$376.7 million** for the six months, mainly due to growth in interest-bearing deposits[172](index=172&type=chunk)[173](index=173&type=chunk) [Average Balance Sheets, Yields and Costs](index=58&type=section&id=Average%20Balance%20Sheets,%20Yields%20and%20Costs) This section presents average balance sheet data, yields on earning assets, and costs of interest-bearing liabilities to derive net interest margin Average Balance Sheets, Yields and Costs | Metric (in thousands, except %) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Average Interest-Earning Assets | $3,808,097 | $3,449,900 | $3,820,935 | $3,432,979 | | Average Yield on Earning Assets | 5.72% | 6.25% | 5.74% | 6.24% | | Average Interest-Bearing Liabilities | $3,218,257 | $2,875,514 | $3,236,248 | $2,859,552 | | Average Rate on Liabilities | 4.00% | 4.53% | 4.01% | 4.46% | | Net Interest Rate Spread | 1.72% | 1.72% | 1.73% | 1.78% | | Net Interest Margin | 2.34% | 2.48% | 2.35% | 2.53% | [Provision for Credit Losses](index=61&type=section&id=Provision%20for%20Credit%20Losses) This section details the provision for credit losses, explaining the factors contributing to its changes - The provision for credit losses increased to **$16.6 million for Q2 2025** (from **$6.8 million in Q2 2024**) and to **$31.2 million** for the **six months ended June 30, 2025** (from **$9.1 million in 2024**)[184](index=184&type=chunk)[185](index=185&type=chunk) - The increase was primarily due to higher reserves on individually evaluated loans and charge-offs related to loan sales in Q1 2025[184](index=184&type=chunk)[185](index=185&type=chunk) - Total charge-offs were **$1.1 million for Q2 2025** and **$8.0 million** for the **six months ended June 30, 2025**, with no provision for credit losses on AFS or HTM securities[184](index=184&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk) [Noninterest Income](index=61&type=section&id=Noninterest%20Income) This section analyzes the components and changes in noninterest income, excluding interest-related revenues - Noninterest income decreased significantly to **$2.2 million for Q2 2025** (from **$15.5 million in Q2 2024**) and to **$4.5 million** for the **six months ended June 30, 2025** (from **$17.8 million in 2024**)[189](index=189&type=chunk)[190](index=190&type=chunk) - The primary driver for the decrease was the **absence of net gains on the sale of assets**, which included a **$13.2 million gain** from a sale-leaseback transaction in Q2 2024[189](index=189&type=chunk)[190](index=190&type=chunk) [Noninterest Expense](index=62&type=section&id=Noninterest%20Expense) This section details the components and changes in noninterest expense, including salaries, benefits, and professional fees - Noninterest expense decreased to **$17.3 million for Q2 2025** (from **$20.6 million in Q2 2024**) and to **$35.3 million** for the **six months ended June 30, 2025** (from **$39.5 million in 2024**)[191](index=191&type=chunk)[192](index=192&type=chunk) - The decrease was primarily due to reduced salaries and employee benefits, and lower legal and professional fees[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) Other Noninterest Expense | Other Noninterest Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Legal and professional fees | $671 | $1,504 | $1,759 | $2,477 | | Software expense and amortization | $1,188 | $1,367 | $2,404 | $2,620 | | Regulatory assessment | $1,609 | $989 | $3,153 | $1,922 | [Income Taxes](index=62&type=section&id=Income%20Taxes) This section explains the company's income tax expense or benefit and the factors influencing its effective tax rate - First Guaranty recorded an income tax benefit of **$2.2 million for Q2 2025** and **$4.0 million** for the **six months ended June 30, 2025**, compared to a provision of **$2.2 million** and **$2.8 million**, respectively, in the prior year periods[194](index=194&type=chunk)[195](index=195&type=chunk) - The shift to a tax benefit was due to a decrease in income before income taxes, with a **statutory tax rate of 21.0%** for both periods[194](index=194&type=chunk)[195](index=195&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses First Guaranty's liquidity position, including cash flows and borrowing capacities, and its capital resources, highlighting changes in shareholders' equity and compliance with regulatory capital requirements [Liquidity](index=63&type=section&id=Liquidity) This section discusses the company's liquidity position, including cash levels and available borrowing capacities - Cash and cash equivalents increased to **$714.9 million** at June 30, 2025, from **$564.2 million** at December 31, 2024[197](index=197&type=chunk) - First Guaranty maintained a net borrowing capacity of **$247.2 million** at the Federal Home Loan Bank (FHLB) and **$93.0 million** in federal funds lines of credit at correspondent banks[198](index=198&type=chunk) - The company also has a discount window line with the Federal Reserve Bank totaling **$239.6 million**, with no advances outstanding at June 30, 2025[198](index=198&type=chunk) [Capital Resources](index=63&type=section&id=Capital%20Resources) This section details the company's capital resources, focusing on changes in shareholders' equity and capital generation - Total shareholders' equity increased to **$263.1 million** at June 30, 2025, from **$255.0 million** at December 31, 2024[200](index=200&type=chunk) - The increase was primarily due to a **$17.7 million increase in surplus** and a **$2.6 million increase in common stock** from subordinated debt conversion and private placement, and a **$2.7 million decrease in accumulated other comprehensive loss**, partially offset by a **$14.9 million decrease in retained earnings**[200](index=200&type=chunk) [Regulatory Capital](index=64&type=section&id=Regulatory%20Capital) This section outlines the company's compliance with regulatory capital requirements and its 'well capitalized' status - First Guaranty and First Guaranty Bank satisfied all minimum regulatory capital requirements and were considered **'well capitalized'** at June 30, 2025[205](index=205&type=chunk) Capital Ratios | Capital Ratio | Well Capitalized Minimums | As of June 30, 2025 | As of December 31, 2024 | | :-------------------------- | :------------------------ | :------------------ | :---------------------- | | Bank Tier 1 Leverage Ratio | 5.00% | 7.65% | 7.82% | | Consolidated Tier 1 Leverage Ratio | 5.00% | 6.65% | 6.42% | | Bank Common Equity Tier One Capital Ratio | 6.50% | 11.78% | 11.00% | | Consolidated Common Equity Tier One Capital Ratio | 6.50% | 8.93% | 7.87% | - The Bank's capital conservation buffer was **5.03%** and First Guaranty's was **4.24%** at June 30, 2025, both exceeding the minimum of **2.50%**[202](index=202&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section describes First Guaranty's approach to managing market risk, particularly interest rate risk, through its asset/liability management (ALM) process. It outlines the company's interest sensitivity position and strategies to mitigate exposure to interest rate fluctuations [Asset/Liability Management and Market Risk](index=65&type=section&id=Asset/Liability%20Management%20and%20Market%20Risk) This section describes the company's strategy for managing interest rate risk through its asset/liability management process - First Guaranty's ALM process quantifies, analyzes, and controls interest rate risk (IRR) to maintain stable net interest income, overseen by management and board committees[207](index=207&type=chunk)[208](index=208&type=chunk) - The company has generally been liability-sensitive and is working to reduce this by creating a more balanced mix of rate-sensitive assets and liabilities, including purchasing amortizing mortgage-backed securities and short-term U.S. Treasury securities[209](index=209&type=chunk) Interest Sensitivity | Interest Sensitivity (in thousands, except %) | 3 Months Or Less | Over 3 Months thru 12 Months | Total One Year | Over One Year | | :------------------------------------------ | :--------------- | :--------------------------- | :------------- | :------------ | | Total Earning Assets | $1,567,470 | $450,204 | $2,017,674 | $1,789,193 | | Total Source of Funds | $1,860,844 | $698,275 | $2,559,119 | $1,247,748 | | Period Gap | $(293,374) | $(248,071) | $(541,445) | $541,445 | | Cumulative Gap | $(293,374) | $(541,445) | $(541,445) | $0 | | Cumulative Gap as a percent of earning assets | (7.7)% | (14.2)% | (14.2)% | | [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of First Guaranty's disclosure controls and internal control over financial reporting. It identifies a material weakness related to loan operations quality control and outlines the remediation steps taken [Evaluation of Disclosure Controls and Procedures](index=67&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section assesses the effectiveness of the company's disclosure controls and procedures, noting any material weaknesses - The CEO and CFO concluded that the company's disclosure controls and procedures were **not effective** as of June 30, 2025, due to a **material weakness in internal control over financial reporting**[214](index=214&type=chunk) - Despite the material weakness, management believes the consolidated financial statements fairly present the company's financial condition, results of operations, and cash flows[216](index=216&type=chunk) [Material Weakness in Internal Control Over Financial Reporting](index=67&type=section&id=Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section identifies and describes a specific material weakness in the company's internal control over financial reporting - A material weakness was identified in the company's internal control over financial reporting, specifically relating to the **timely performance of controls in the loan operations quality control review function for new loans**[217](index=217&type=chunk) [Remediation Steps and Changes in Internal Control Over Financial Reporting](index=67&type=section&id=Remediation%20Steps%20and%20Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section outlines the actions taken to remediate identified material weaknesses and other control changes - Remediation steps include **new leadership for the loan operations department**, **additional staff for quality control**, and **enhanced monitoring processes**[218](index=218&type=chunk)[219](index=219&type=chunk) - Other than the described material weakness and remediation, there were **no other material changes** in internal control over financial reporting during the last fiscal quarter[218](index=218&type=chunk) [PART II. OTHER INFORMATION](index=58&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional disclosures, including legal proceedings, risk factors, equity sales, and other required information [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) This section details the company's involvement in legal actions and management's assessment of potential financial impact - First Guaranty Bank is a defendant in a lawsuit alleging fault for a customer's loss of funds due to third-party fraud, with a possible loss range of **$0.0 million to $1.5 million**, for which no liability has been accrued[220](index=220&type=chunk) - Management believes current legal proceedings are **not expected to have a material adverse effect** on consolidated results, financial condition, or cash flows, though unfavorable outcomes could be costly[220](index=220&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) This section highlights key risks, including a newly identified material weakness, that could affect the company's operations and financial results - The company has identified a **material weakness in its internal control over financial reporting**, which could materially and adversely affect its business, financial condition, results of operations, and stock price[222](index=222&type=chunk)[223](index=223&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the issuance of equity securities not registered under the Securities Act and the application of proceeds - On **June 30, 2025**, First Guaranty issued **2,231,748 shares of common stock** for aggregate proceeds of **$15.1 million** through a private placement and the conversion of subordinated debt[228](index=228&type=chunk) - The proceeds from these transactions were used for general corporate purposes, including supporting continued growth and enhancing regulatory capital ratios[228](index=228&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms the absence of any defaults on senior securities during the reporting period - There were **no defaults upon senior securities** during the period[225](index=225&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states the inapplicability of mine safety disclosure requirements to the registrant - Mine safety disclosures are **not applicable** to the registrant[226](index=226&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) This section provides supplementary information, including further details on equity transactions and trading arrangements - On **June 30, 2025**, First Guaranty issued **2,231,748 shares of common stock** for **$15.1 million** through a private placement and debt conversion, with proceeds used for general corporate purposes and to enhance regulatory capital ratios[228](index=228&type=chunk) - No First Guaranty officer or director adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading agreement" during the **six months ended June 30, 2025**[230](index=230&type=chunk) [Item 6. Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists all supporting documents and certifications filed as exhibits to the report - The report includes various exhibits such as Restated Articles of Incorporation, Bylaws, Common Stock and Preferred Stock forms, Subordinated Notes, Exchange Agreements, and certifications by the CEO and CFO[232](index=232&type=chunk) [Signatures](index=73&type=section&id=Signatures) This section contains the official certifications by the company's principal executive and financial officers - The report is signed by Michael R. Mineer, President and Chief Executive Officer, and Eric J. Dosch, Chief Financial Officer, Secretary and Treasurer, on **August 18, 2025**[237](index=237&type=chunk)

Offering Details - Fundamental Global Inc 已向美国证券交易委员会提交 S-3 注册声明，计划分批发行高达 50 亿美元的证券 [1] Fund Allocation - 公司计划将普通股发行所得净收益的大部分用于收购以太坊 (ETH) [1] - 剩余资金将分配给营运资金、一般公司用途和运营费用 [1]

Core Viewpoint - First Guaranty Bancshares reported a significant net loss in Q2 2025, driven by credit issues and portfolio restructuring, despite modest growth in net interest income [1][5][10] Financial Performance - GAAP EPS for Q2 2025 was a loss of $0.50, missing analyst expectations by $0.30, and representing a 194.3% decline year-over-year from a profit of $0.53 in Q2 2024 [2][5] - Net income (GAAP) fell to a loss of $5.8 million from a profit of $7.2 million in Q2 2024, marking a 180.7% decrease [2][5] - Net interest income increased to $22.2 million, a 4.7% rise from $21.2 million in Q2 2024 [2][6] - Noninterest expense decreased by 16% to $17.3 million compared to Q2 2024 [2][6] Asset Quality and Risk Management - The allowance for credit losses rose to 2.36% of total loans, up from 1.29% at the end of 2024, reflecting management's concerns over troubled loans [2][7] - Non-performing loans constituted 4.96% of total loans, an increase from 4.46% at the prior year-end, with six large loan relationships accounting for 75% of the nonperforming balance [7][8] Strategic Focus - The bank is prioritizing risk control within its loan portfolio, particularly in commercial real estate, and is implementing cost management measures including staff reductions [4][8] - The bank's real estate secured loans decreased to $1.94 billion, representing 80.1% of the total portfolio, with expectations for further reductions [8] - A significant reduction in the quarterly dividend to $0.01 per share from $0.16 in Q2 2024 was made to enhance capital during restructuring efforts [10] Future Outlook - Management did not provide specific revenue or earnings guidance but indicated a continued focus on reducing commercial real estate loan exposures and plans for further asset sales [9]

Financial Data and Key Metrics Changes - The company reported a loss of $0.54 per share for the first quarter of 2025, attributed to a provision expense of $5.8 million from the sale of $70 million worth of loans due to credit deterioration [23][24] - Total provision for the quarter was $14.5 million, with net interest income before provision at $22.2 million, an increase from $21.9 million in the same quarter last year [25][24] - Noninterest income increased to $2.4 million from $2.3 million year-over-year, while noninterest expense decreased to $18 million from $18.9 million [25][24] Business Line Data and Key Metrics Changes - The management team is focusing on addressing nonperforming assets, which are concentrated in six major loans totaling approximately $105.3 million [24] - The strategy includes reducing risk-weighted assets and improving capital ratios, with the risk-weighted capital ratio improving to 12.74% as of March 2025, up from 11.28% in June 2024 [28] Market Data and Key Metrics Changes - The company has reduced construction lending commitments and is working towards a 300% concentration of commercial real estate to total capital [28] - There has been a dramatic increase in on-balance sheet liquidity, which is crucial for the bank's operations [29] Company Strategy and Development Direction - The company has implemented a change in business strategy since July 2024, focusing on reducing risk and improving capital ratios [27][28] - Cost reduction measures have achieved approximately $12 million in annualized savings compared to last year [30] - The management team is committed to addressing nonperforming assets aggressively and improving overall financial health [30][31] Management's Comments on Operating Environment and Future Outlook - The management team acknowledges the challenges faced in 2024 but expresses confidence in overcoming these issues and improving results by the end of 2025 [8][31] - The CEO emphasized the importance of direction and continuous improvement, stating that the company must not drift but actively work towards its goals [31][32] Other Important Information - The company has reduced its common stock dividend to increase capital at the bank level, reflecting a shift towards strengthening the bank's financial position [28] - The management team has fewer staff but believes they have the right personnel to move forward effectively [30] Q&A Session Summary Question: Are there any questions from virtual attendees? - There were no questions submitted by virtual attendees during the session [34] Question: Are there any questions from the room? - No questions were raised from the attendees present in the room [35]

Group 1 - First Guaranty Bancshares (FGBI) reported a quarterly loss of $0.54 per share, significantly worse than the Zacks Consensus Estimate of $0.17, marking an earnings surprise of -417.65% [1] - The company posted revenues of $24.58 million for the quarter ended March 2025, slightly exceeding the Zacks Consensus Estimate by 0.07%, and showing an increase from $24.23 million year-over-year [2] - The stock has underperformed, losing about 15.4% since the beginning of the year, compared to a decline of -3.8% for the S&P 500 [3] Group 2 - The earnings outlook for First Guaranty Bancshares is mixed, with current consensus EPS estimates at $0.20 for the coming quarter and $0.89 for the current fiscal year [7] - The Zacks Industry Rank for Banks - Southeast is in the top 20% of over 250 Zacks industries, indicating a favorable environment for the sector [8] - First National Corp. is another company in the same industry, expected to report quarterly earnings of $0.53 per share, reflecting a year-over-year change of +3.9% [9]

Financial Performance - First Guaranty recorded a net loss of $6.2 million for Q1 2025, a decrease of $8.5 million or 366.9% compared to a net income of $2.3 million in Q1 2024[3] - Net loss available to common shareholders was $(6,748), compared to net income of $1,728 in the previous year, indicating a significant downturn[11] - Cash dividends paid per common share decreased to $0.01 from $0.16, a reduction of 93.8%[11] Loan and Asset Management - Total loans decreased to $2.51 billion at March 31, 2025, down $181.0 million or 6.7% from $2.69 billion at December 31, 2024[3] - Nonaccrual loan balances increased to $133.4 million, an increase of $24.9 million compared to $108.5 million at December 31, 2024[4] - The provision for credit losses was $14.5 million for Q1 2025, compared to $2.3 million for Q1 2024, with $5.8 million related to the sale of two commercial real estate loans[3] - Total assets decreased by $143.5 million to $3.8 billion at March 31, 2025, compared to $4.0 billion at December 31, 2024[3] - The allowance for credit losses was 1.71% of total loans at March 31, 2025, up from 1.29% at December 31, 2024[3] - Non-performing loans totaled $133,780 thousand as of March 31, 2025, representing an increase of 11.5% from $120,031 thousand on December 31, 2024[18] - The ratio of non-performing assets to total loans increased to 5.33% as of March 31, 2025, up from 4.47% on December 31, 2024[18] - As of March 31, 2025, First Guaranty's total loan portfolio amounted to $2,520,193 thousand, a decrease of 6.7% from $2,702,080 thousand on December 31, 2024[16] Income and Expenses - Net interest income for Q1 2025 was $22.2 million, an increase from $21.9 million in Q1 2024[3] - The net interest margin for Q1 2025 was 2.35%, a decrease of 23 basis points from 2.58% in Q1 2024[3] - Interest income from loans decreased to $42,969, down from $46,918, a decrease of about 8.5%[11] - Net interest income after provision for credit losses dropped to $7,675, down from $19,617, a decline of approximately 60.9%[11] - Provision for credit losses increased significantly to $14,548, compared to $2,304, marking a rise of about 532.5%[11] - Total noninterest expense decreased slightly to $18,017, down from $18,934, a reduction of about 4.8%[11] Equity and Shareholder Information - Book value per common share decreased to $17.21 as of March 31, 2025, down from $17.75 at December 31, 2024[4] - Total shareholders' equity as of March 31, 2025, is $251,445,000, compared to $255,049,000 at December 31, 2024, reflecting a decrease of approximately 0.24%[23] - Tangible common equity stands at $202,599,000 as of March 31, 2025, down from $206,029,000 at December 31, 2024, indicating a decline of about 2.07%[23] - Common shares outstanding increased to 12,691,504 as of March 31, 2025, from 12,504,717 at December 31, 2024, representing an increase of approximately 1.49%[23] Operational Changes - First Guaranty closed three branches and consolidated two existing branches into one location on March 7, 2025, with no material impact on operations[4]

Financial Performance - First Guaranty recorded a net loss of $6.2 million for the three months ended March 31, 2025, compared to a net income of $2.3 million for the same period in 2024, representing a decrease of $8.5 million [107]. - Total assets decreased by $143.5 million to $3.8 billion at March 31, 2025, a decline of 3.6% from December 31, 2024, driven by decreases in investment securities and net loans [111]. - Total shareholders' equity decreased to $251.4 million at March 31, 2025, down from $255.0 million at December 31, 2024, primarily due to a net loss of $6.2 million [156]. - Net loss for the three months ended March 31, 2025 was $6.2 million, a decrease of $8.5 million from net income of $2.3 million for the same period in 2024 [157]. - Noninterest expense decreased to $18.0 million for the three months ended March 31, 2025, from $18.9 million for the same period in 2024 [176]. Loan and Credit Quality - Total loans decreased to $2.51 billion at March 31, 2025, down $181.0 million or 6.7% from December 31, 2024, continuing the strategy to reduce loan concentration risk [107]. - Nonaccrual loan balances increased to $133.4 million at March 31, 2025, an increase of $24.9 million compared to December 31, 2024, primarily concentrated in two commercial real estate loans [107]. - The provision for credit losses was $14.5 million for the first quarter of 2025, significantly higher than $2.3 million for the same period in 2024, with $5.8 million related to the sale of two commercial real estate loans [107]. - Nonperforming assets totaled $133.9 million, or 3.50% of total assets, an increase of $13.6 million, or 11.3%, from $120.4 million, or 3.03%, at December 31, 2024 [127]. - Nonaccrual loans increased from $108.5 million at December 31, 2024, to $133.4 million at March 31, 2025, with a significant portion concentrated in two commercial real estate relationships totaling $40.3 million [128]. Deposits and Funding - Total deposits decreased by $136.8 million, or 3.9%, to $3.3 billion from December 31, 2024, to March 31, 2025 [143]. - Noninterest-bearing demand deposits increased by $21.6 million, or 5.3%, to $425.6 million at March 31, 2025 [143]. - Interest-bearing demand deposits decreased by $138.4 million, or 10.0%, to $1.2 billion at March 31, 2025 [143]. - Public funds deposits totaled $928.4 million at March 31, 2025, down from $1.0 billion at December 31, 2024 [150]. - The total amount of uninsured deposits was estimated at $294.9 million at March 31, 2025 [146]. Capital and Regulatory Compliance - As of March 31, 2025, the Bank's capital conservation buffer was 4.74%, exceeding the minimum requirement of 2.50% [185]. - The Bank satisfied the minimum regulatory capital requirements and was classified as well capitalized as of March 31, 2025 [188]. - The Tier 1 Risk-based Capital Ratio for the Bank was 8.00% as of March 31, 2025, compared to 11.49% at December 31, 2024 [189]. - The total risk-based capital ratio for the Bank was 10.00% as of March 31, 2025, down from 12.74% at December 31, 2024 [189]. Interest Income and Expense - Net interest income for the three months ended March 31, 2025 was $22.2 million, slightly up from $21.9 million for the same period in 2024 [107]. - Interest income increased by $1.6 million, or 2.9%, to $54.5 million for the three months ended March 31, 2025 compared to the prior year [161]. - Interest income on loans decreased by $3.9 million, or 8.4%, to $43.0 million for the three months ended March 31, 2025 [163]. - Interest expense increased by $1.3 million, or 4.0%, to $32.2 million for the three months ended March 31, 2025 [165]. - The net interest margin was 2.35% for the three months ended March 31, 2025, down from 2.58% for the same period in 2024 [169]. Business Strategy and Operations - First Guaranty declared cash dividends of $0.01 per common share in the first quarter of 2025, a reduction from $0.16 per share in the same period of 2024, as part of a new business strategy to increase capital [109]. - First Guaranty closed three branches and consolidated two existing branches into one location on March 7, 2025, with no material impact on operations [109]. - The company modified its business plan in 2024 to reduce the liability-sensitive nature of its balance sheet [192].