Financial Performance - Net income for the second quarter of 2023 was $2.7 million, a decrease of $5.4 million or 67.1% compared to $8.1 million in the second quarter of 2022[107]. - Earnings per common share were $0.19 for the second quarter of 2023, down from $0.70 for the same period in 2022[107]. - Net income for the six months ended June 30, 2023 was $6.1 million, a decrease of $9.6 million, or 60.9%, from $15.7 million for the same period in 2022[162]. - Earnings per common share for the six months ended June 30, 2023 was $0.46, a decrease of 66.2% from $1.36 for the same period in 2022[162]. Asset and Loan Growth - Total assets increased by $84.7 million to $3.2 billion, or 2.7%, as of June 30, 2023 compared to December 31, 2022[107]. - Total loans at June 30, 2023 were $2.6 billion, an increase of $71.6 million, or 2.8%, compared to December 31, 2022[107]. - Net loans increased by $63.2 million, or 2.5%, to $2.6 billion as of June 30, 2023, compared to December 31, 2022[113]. - Total earning assets amount to $3,134,929 thousand, with $2,590,666 thousand in loans and $408,577 thousand in securities[220]. Interest Income and Expense - Net interest income for the second quarter of 2023 was $20.9 million, down from $26.3 million for the same period in 2022[107]. - Interest income increased by $22.0 million, or 35.0%, to $85.1 million for the six months ended June 30, 2023 compared to the prior year[172]. - Interest expense increased by $30.1 million, or 256.9%, to $41.9 million for the six months ended June 30, 2023 from $11.7 million for the same period in 2022[177]. - Net interest margin decreased by 80 basis points to 2.86% for the six months ended June 30, 2023 from 3.66% for the same period in 2022[167]. Credit Quality and Allowance for Losses - The allowance for credit losses was 1.23% of total loans at June 30, 2023, compared to 0.93% at December 31, 2022[107]. - The allowance for credit losses totaled $31.9 million at June 30, 2023, up from $23.5 million at December 31, 2022[117]. - Non-performing assets totaled $25.7 million, or 0.79% of total assets, as of June 30, 2023, an increase of $10.9 million, or 73.5%, from December 31, 2022[127]. - Special mention loans rose by $16.5 million to $46.8 million at June 30, 2023, primarily due to the downgrade of one commercial lease loan relationship[115]. Deposits and Funding - Total deposits increased by $43.6 million, or 1.6%, to $2.8 billion from December 31, 2022, to June 30, 2023[144]. - Noninterest-bearing demand deposits decreased by $58.2 million, or 11.1%, to $466.2 million at June 30, 2023[144]. - Time deposits increased by $97.1 million, or 18.2%, to $630.5 million at June 30, 2023, primarily due to increases in consumer and public fund time deposits[144]. - Total public funds deposits were $1.1 billion at June 30, 2023, down from $1.11 billion at December 31, 2022, with public funds as a percentage of total deposits decreasing to 39.8%[155]. Capital and Equity - Total shareholders' equity rose to $238.9 million at June 30, 2023, up from $235.0 million at December 31, 2022, primarily due to a $9.3 million increase in surplus[159]. - The Tier 1 Risk-based Capital Ratio was 10.22% as of June 30, 2023, compared to 10.31% at December 31, 2022[213]. - The capital conservation buffer was 3.18% as of June 30, 2023, exceeding the minimum requirement of 2.50%[209]. Interest Rate Risk Management - The company has a liability-sensitive position with a negative cumulative gap of $(1,185,315) thousand on a one-year basis as of June 30, 2023[218]. - The management asset liability committee regularly reviews asset liability policies and interest rate risk positions to mitigate exposure[216]. - The company employs various investment strategies to manage interest rate risk, including internal modeling of asset and liability values[216]. - The board investment committee meets monthly to oversee interest rate risk management strategies[215].

Part I. Financial Information [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited Q1 2023 financial statements show total assets grew to **$3.24 billion**, but net income declined to **$3.5 million** due to increased interest expense and a **$7.9 million** CECL-related reduction in retained earnings [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased by **2.7%** to **$3.24 billion** as of March 31, 2023, driven by growth in net loans and deposits, while shareholders' equity slightly decreased due to CECL adoption Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$3,237,796** | **$3,151,347** | **+2.7%** | | Net Loans | $2,542,774 | $2,495,559 | +1.9% | | Total Deposits | $2,862,588 | $2,723,792 | +5.1% | | **Total Liabilities** | **$3,009,120** | **$2,916,356** | **+3.2%** | | **Total Shareholders' Equity** | **$228,676** | **$234,991** | **-2.7%** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Q1 2023 net income available to common shareholders significantly decreased to **$2.9 million** from **$7.0 million** year-over-year, as a **245.5%** surge in interest expense offset interest income growth, compressing net interest income Q1 2023 vs Q1 2022 Income Statement (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Total Interest Income | $41,287 | $30,479 | +35.5% | | Total Interest Expense | $18,986 | $5,496 | +245.5% | | **Net Interest Income** | **$22,301** | **$24,983** | **-10.7%** | | Provision for credit losses | $314 | $632 | -50.3% | | **Net Income** | **$3,468** | **$7,585** | **-54.3%** | | Net Income Available to Common Shareholders | $2,886 | $7,003 | -58.8% | | **Earnings Per Common Share** | **$0.27** | **$0.65** | **-58.5%** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail accounting policies, notably the January 1, 2023, CECL adoption which increased the allowance for credit losses by **$8.2 million** and reduced retained earnings by **$7.9 million**, also covering securities, loans, and litigation - The company adopted the Current Expected Credit Loss (CECL) standard on January 1, 2023, requiring estimation of lifetime expected credit losses for financial assets using a modified retrospective approach[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) Impact of ASU 2016-13 (CECL) Adoption (in thousands) | Account | Dec 31, 2022 Balance | Impact of Adoption | Jan 1, 2023 Balance | | :--- | :--- | :--- | :--- | | Allowance for credit losses | $(23,518) | $(8,220) | $(31,738) | | Deferred tax asset | $6,420 | $2,100 | $8,520 | | Reserve for unfunded loan commitments | — | $(2,900) | $(2,900) | | **Retained earnings** | **$76,351** | **$(7,900)** | **$68,451** | - As of March 31, 2023, the securities portfolio held significant unrealized losses, with held-to-maturity securities having an amortized cost of **$320.3 million** and a fair value of **$254.3 million**, though management intends and is able to hold them until maturity or recovery[34](index=34&type=chunk)[38](index=38&type=chunk) - The company is a defendant in a lawsuit alleging fault for a customer's loss due to third-party fraud, with a possible loss range of **$0.0 million to $1.5 million**, and no liability has been recorded as the case is in early stages[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **54.3%** Q1 2023 net income decline to significant net interest margin compression, driven by rising interest expense, while total assets grew **2.7%** to **$3.2 billion** and nonperforming assets increased, alongside disclosures of a pending acquisition and an SEC inquiry - Net income for Q1 2023 was **$3.5 million**, a **54.3%** decrease from Q1 2022, with earnings per common share falling to **$0.27** from **$0.65**[107](index=107&type=chunk) - The net interest margin decreased by **60 basis points** to **2.99%** in Q1 2023 from **3.59%** in Q1 2022, due to rising interest rates increasing liability costs faster than asset yields[107](index=107&type=chunk) - The company entered a definitive agreement to acquire Lone Star Bank, which would add approximately **$3.2 billion** in combined assets and four new banking locations in Texas[109](index=109&type=chunk)[110](index=110&type=chunk) - The SEC requested information regarding the company's Employee Stock Grant Program, for which the company has provided data and reserved **$0.6 million**[114](index=114&type=chunk) [Financial Condition](index=39&type=section&id=Financial%20Condition) Total assets increased by **$86.4 million** to **$3.2 billion** at March 31, 2023, driven by loan and deposit growth, while nonperforming assets significantly rose to **0.76%** of total assets, and shareholders' equity declined due to CECL and dividends Nonperforming Assets (in thousands) | Category | March 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total nonaccrual loans | $15,669 | $13,566 | | Loans 90+ days delinquent & accruing | $8,075 | $1,142 | | Total Real Estate Owned | $887 | $113 | | **Total non-performing assets** | **$24,631** | **$14,821** | | Non-performing assets to total assets | 0.76% | 0.47% | - The allowance for credit losses on loans increased to **$31.5 million**, or **1.22%** of total loans, at March 31, 2023, primarily due to the **$8.1 million** day-one adjustment from CECL adoption[107](index=107&type=chunk)[144](index=144&type=chunk) - Total deposits increased by **5.1%** to **$2.9 billion**, with significant growth in interest-bearing demand and time deposits, and uninsured deposits estimated at **$355.0 million**[145](index=145&type=chunk)[148](index=148&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Q1 2023 net income declined due to a **$2.7 million** decrease in net interest income, as a **$13.5 million** surge in interest expense outpaced the **$10.8 million** rise in interest income, while noninterest expenses also increased due to legal and personnel costs Net Interest Margin Analysis | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Average Yield on Earning Assets | 5.53% | 4.38% | | Average Rate on Interest-Bearing Liabilities | 3.24% | 1.04% | | **Net Interest Rate Spread** | **2.29%** | **3.34%** | | **Net Interest Margin** | **2.99%** | **3.59%** | - Interest expense increased by **245.5%** year-over-year to **$19.0 million**, primarily driven by higher market rates on interest-bearing demand deposits, especially public funds indexed to Treasury rates[170](index=170&type=chunk) - Noninterest expense increased to **$20.2 million** from **$16.8 million** year-over-year, driven by a **$1.0 million** rise in salaries and benefits and a **$2.4 million** increase in other expenses, including legal and professional fees[184](index=184&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed via ALM, with a March 31, 2023, interest sensitivity analysis revealing a liability-sensitive position and a negative cumulative gap of **$1.17 billion** within one year, indicating potential net interest income pressure in a rising rate environment - The company's principal market risk is interest rate risk, arising from the maturity mismatch between its longer-term assets and shorter-term liabilities[201](index=201&type=chunk) Interest Sensitivity Gap Analysis (March 31, 2023, in thousands) | Period | Earning Assets | Source of Funds | Period Gap | Cumulative Gap | | :--- | :--- | :--- | :--- | :--- | | 3 Months Or Less | $838,533 | $1,896,251 | $(1,057,718) | $(1,057,718) | | Over 3 Months thru 12 Months | $268,100 | $382,146 | $(114,046) | $(1,171,764) | | **Total One Year** | **$1,106,633** | **$2,278,397** | **$(1,171,764)** | **$(1,171,764)** | [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[208](index=208&type=chunk) Part II. Other Information [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company settled a loan overpayment lawsuit for **$0.6 million** in Q1 2023 and faces a pending fraud-related lawsuit with a potential loss range up to **$1.5 million**, though management believes current legal proceedings will not materially affect financial condition - A lawsuit alleging overpayment on a loan was settled in Q1 2023 for **$0.6 million**[210](index=210&type=chunk) - A pending lawsuit alleges bank fault in a customer's fraud-related loss, with a possible loss range of **$0.0 million to $1.5 million**, and the bank is defending without accruing a liability[210](index=210&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K were reported for the period - No material changes to risk factors were reported for the period[211](index=211&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including the merger agreement with Lone Star Bank, corporate governance documents, and various officer certifications

Financial Position - As of December 31, 2022, First Guaranty Bancshares had consolidated total assets of $3.2 billion, total deposits of $2.7 billion, and total shareholders' equity of $235.0 million[19]. - Total deposits held by the company were $2.7 billion as of December 31, 2022[75]. - Public funds deposits amounted to $1.1 billion at the end of 2022, primarily from local government entities[76]. - The investment securities portfolio generated $63.2 million of pre-tax income over the last five years, with a fair value of $195.5 million in U.S. government agency securities as of December 31, 2022[78][79]. - The carrying value of the securities portfolio was $451.5 million as of December 31, 2022, with 14.3% of total assets invested in investment securities[181]. - First Guaranty Bank exceeded all regulatory capital requirements and was considered well-capitalized based on FDIC guidelines as of December 31, 2022[104]. - The company had $20.3 million in brokered deposits, mainly in reciprocal deposit programs, as of December 31, 2022[77]. - The company is required to maintain adequate capital levels, and future capital raising may be challenging depending on market conditions[187]. Loan Portfolio - The loan to deposit ratio was 92.5% as of December 31, 2022, indicating a strong focus on increasing total loans as a percentage of assets[37]. - First Guaranty aims to grow its loan portfolio by targeting small and medium-sized businesses in sectors such as manufacturing, agriculture, and healthcare[38]. - Non-farm non-residential loans totaled $992.9 million, or 39.3% of the total loan portfolio as of December 31, 2022, with owner-occupied loans making up 35.4% of this segment[51]. - Commercial and industrial loans amounted to $385.3 million, or 15.3% of the total loan portfolio as of December 31, 2022, with commercial term loans at $157.5 million, representing 40.9% of commercial and industrial loans[54]. - One- to four-family residential real estate loans totaled $366.3 million, or 14.5% of the total loan portfolio as of December 31, 2022, with jumbo loans exceeding the conforming limit at $29.3 million[57]. - Multifamily loans accounted for $119.8 million, or 4.7% of the total loan portfolio as of December 31, 2022, with underwriting following general guidelines for non-farm non-residential loans[61]. - Agricultural loans totaled $39.0 million, representing 1.5% of the total loan portfolio as of December 31, 2022[65]. - Farmland loans amounted to $24.8 million, or 1.0% of the total loan portfolio at the end of 2022[67]. - Commercial leases reached $317.6 million, making up 12.6% of the total loan portfolio as of December 31, 2022[68]. - Consumer and other loans totaled $47.9 million, or 1.9% of the total loan portfolio at the end of 2022[69]. - As of December 31, 2022, construction and land development loans accounted for $233.1 million, or 9.2% of the total loan portfolio[63]. - Approximately 68.7% of the total loan portfolio was secured by real estate, primarily in Louisiana and North Central Texas[137]. - Approximately $47.7 million in loans were indexed to LIBOR as of December 31, 2022, highlighting exposure to the transition from LIBOR[189]. - The majority of the guaranteed loan portfolio, amounting to $5.9 million, was comprised of loans originated under the SBA PPP program as of December 31, 2022[195]. Growth and Expansion - First Guaranty expanded into Kentucky and West Virginia in 2021, with a branch in Vanceburg, Kentucky, and a loan and deposit production office in Bridgeport, West Virginia[21]. - The company is in the process of acquiring Lone Star Bank, which will expand its geographic footprint into the Greater Houston area and along the I-10 corridor[23]. - The company plans to continue expanding its Texas markets in Dallas-Fort Worth-Arlington and Waco both organically and through strategic acquisitions[37]. - The company has completed four acquisitions since its Share Exchange, enhancing its deposit base and geographic reach in key markets[22]. - The company aims to pursue strategic acquisitions of community banks and non-banking financial companies to supplement organic growth, focusing on targets with quality loan portfolios[46]. Dividend and Shareholder Value - First Guaranty has paid a quarterly dividend on its common stock for 118 consecutive quarters as of December 31, 2022, demonstrating a commitment to returning value to shareholders[21]. - The ability to pay dividends is subject to regulatory guidance and restrictions, and future dividends will depend on various factors including capital levels[202]. - Dividends on the Series A Preferred Stock are non-cumulative and discretionary, with no obligation to pay if not declared by the board[209]. - The Series A Preferred Stock ranks junior to all existing and future indebtedness, affecting the payment of dividends[206]. - Principal shareholders beneficially own approximately 40% of the outstanding common stock as of December 31, 2022[201]. Risk Management and Regulatory Environment - The company emphasizes maintaining strong asset quality through disciplined credit culture and proactive measures in response to economic challenges, including loan relief measures during the COVID-19 pandemic[44]. - The company is subject to extensive regulation, and changes in laws could materially affect operations and financial condition[185]. - The bank's ability to pay dividends is subject to restrictions under Louisiana law, requiring unimpaired surplus equal to 50% of its outstanding capital stock[95]. - The concentration in commercial real estate loans was 399% of total capital, subjecting the company to additional regulatory scrutiny[147]. - The company faces risks related to interest rates, as shifts may reduce net interest income and impact loan demand, delinquencies, and repayment rates[155]. - The company may face increased FDIC deposit insurance assessments due to recent bank failures, which could reduce profitability[191]. - The company adopted the current expected credit loss model effective January 1, 2023, which may impact how credit impairment is recognized[177]. - The company must periodically test goodwill and core deposit intangible assets for impairment, which could adversely affect financial performance[179]. - The company operates in a market area susceptible to natural disasters, which could disrupt operations and increase loan losses[183]. Operational Challenges - Liquidity is essential for operations, with a lack of liquidity potentially jeopardizing the company's financial condition and results of operations[157]. - The company relies heavily on deposits, and recent increases in interest rates have intensified competition for these deposits, which could adversely affect liquidity[157][160]. - The operational and technological infrastructure is critical for growth, and failures in these systems could lead to significant financial losses and reputational damage[172]. - The company may face challenges in maintaining and managing growth, particularly in attracting core deposits and identifying commercial lending opportunities[166]. Performance Metrics - For the year ended December 31, 2022, net interest income totaled $100.0 million, significantly higher than the total noninterest income of $11.0 million, indicating a strong dependence on net interest income for earnings[167]. - Service charges, commissions, and fees contributed $3.2 million, or 28.7% of total noninterest income for the year ended December 31, 2022, up from $2.7 million, or 26.9% in the previous year[168]. - Non-performing assets were $14.8 million, or 0.47% of total assets, adversely affecting net income and requiring management involvement for resolution[142]. - The allowance for credit losses was 0.93% of total loans and 159.90% of total non-performing loans, indicating potential for significant credit losses[145]. - Short-term loans comprised $1.6 billion, or 64.0% of total loans, increasing the risk of significant losses due to balloon payments at maturity[146]. - The assessment range for First Guaranty Bank, based on financial measures and supervisory ratings, is from 1.5 basis points to 30 basis points[116].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from __________ to __________ Commission File Number: 001-37621 FIRST GUARANTY BANCSHARES, INC. (Exact name of registrant as specified in its charter) Louisiana 26-0513559 (State ...

Financial Performance - Net income for the second quarter of 2022 was $8.1 million, an increase of $1.7 million or 26.3% compared to $6.4 million in the second quarter of 2021 [126]. - Earnings per common share were $0.70 for the second quarter of 2022, compared to $0.58 for the same period in 2021 [127]. - Net income for the six months ended June 30, 2022 was $15.7 million, an increase of $4.3 million, or 37.1%, from $11.5 million for the same period in 2021 [211]. - Earnings per common share for the six months ended June 30, 2022 was $1.36, an increase of 29.5% or $0.31 per common share from $1.05 for the same period in 2021 [211]. Asset and Loan Growth - Total assets increased by $81.2 million, or 2.8%, to $2.96 billion at June 30, 2022 compared to December 31, 2021 [125]. - Total loans at June 30, 2022 were $2.3 billion, an increase of $136.4 million, or 6.3%, compared to December 31, 2021 [125]. - Net loans increased by $136.8 million, or 6.4%, to $2.3 billion as of June 30, 2022, compared to December 31, 2021 [149]. - Non-farm non-residential loan balances increased by $76.0 million due to new originations, while multifamily loans increased by $39.6 million primarily from the conversion of existing construction loans to permanent financing [149]. Interest Income and Margin - Net interest income for the second quarter of 2022 was $26.3 million, compared to $21.4 million for the same period in 2021 [130]. - The net interest margin for the three months ended June 30, 2022 was 3.72%, an increase of 39 basis points from 3.33% for the same period in 2021 [134]. - Net interest income for the six months ended June 30, 2022 was $51.3 million, up from $41.0 million in the prior year, reflecting an increase of $10.3 million, or 25.1% [216]. - Average yield of interest-earning assets increased by 30 basis points to 4.49% for the six months ended June 30, 2022 from 4.19% for the same period in 2021 [221]. Non-Performing Assets - Total non-performing loans decreased to $11.0 million from $18.0 million, a reduction of $6.0 million, or 33.4% [162]. - Non-performing assets decreased by $7.4 million, or 36.9%, to $12.6 million, representing 0.43% of total assets as of June 30, 2022 [164]. - The allowance for loan and lease losses was $23.6 million as of June 30, 2022, compared to $24.0 million at December 31, 2021 [152]. Deposits and Equity - Total deposits increased by $63.6 million, or 2.4%, to $2.7 billion from December 31, 2021 to June 30, 2022 [191]. - Total shareholders' equity increased to $226.5 million at June 30, 2022, from $223.9 million at December 31, 2021, primarily due to an increase in retained earnings [208]. - Public funds deposits totaled $1.0 billion at June 30, 2022, up from $957.9 million at December 31, 2021, indicating a growth of 4.5% [201]. Loan Loss Provisions - A provision for loan losses of $1.4 million was made during the six months ended June 30, 2022, compared to $1.5 million for the same period in 2021 [180]. - The provision for loan losses is based on management's evaluation of economic conditions and changes in the loan portfolio [233]. - The allowance for loan losses is considered adequate to cover potential losses, although economic uncertainty may lead to future increases [236]. Interest Rate Sensitivity - The interest sensitivity gap was $(833,876,000) on a one-year basis, indicating a liability-sensitive position [266]. - A 400 basis point increase in interest rates could lead to a decrease in net interest income by 3.59% [269]. - The Bank's asset/liability management process aims to maintain stable net interest income levels under various interest rate environments [259].

Financial Performance - Net income for the first quarter of 2022 was $7.6 million, an increase of $2.6 million or 51% from $5.0 million in the first quarter of 2021[124]. - Earnings per common share increased to $0.65 for the first quarter of 2022, compared to $0.47 for the same period in 2021[124]. - Net interest income for the first quarter of 2022 was $25.0 million, up from $19.6 million in the same period of 2021[127]. - The net interest margin increased by 34 basis points to 3.59% for the three months ended March 31, 2022, compared to 3.25% for the same period in 2021[130]. - Noninterest income decreased to $2.0 million for the three months ended March 31, 2022, down from $2.3 million in the same period in 2021, primarily due to increased losses on securities sales[223]. - Noninterest expense rose to $16.8 million for the three months ended March 31, 2022, compared to $15.0 million for the same period in 2021, driven by higher salaries and benefits expenses[225]. - The provision for income taxes increased to $2.0 million for the three months ended March 31, 2022, up from $1.3 million in the same period in 2021, reflecting an increase in income before income taxes[227]. Asset and Loan Growth - Total assets increased by $32.0 million, or 1.1%, to $2.9 billion as of March 31, 2022, compared to December 31, 2021[123]. - Total loans rose by $71.8 million, or 3.3%, to $2.2 billion at March 31, 2022, compared to December 31, 2021[123]. - The average outstanding loan balance increased to $2.15 billion at March 31, 2022, compared to $1.91 billion at March 31, 2021[185]. - Investment securities increased by $88.6 million to $452.8 million at March 31, 2022, compared to $364.2 million at December 31, 2021[150]. - Held to maturity securities increased by $166.0 million, or 108.1%, to $319.6 million at March 31, 2022[153]. - As of March 31, 2022, 66.6% of the loan portfolio was secured by real estate, with non-farm non-residential loans making up 40.0% of the portfolio[146]. Loan Quality and Impairment - Total impaired loans decreased by $3.5 million to $11.5 million at March 31, 2022, compared to $15.0 million at December 31, 2021[133]. - Special mention loans decreased by $43.9 million to $94.8 million at March 31, 2022, compared to $138.7 million at December 31, 2021[147]. - Non-performing assets totaled $17.9 million, or 0.62% of total assets, a decrease from $20.0 million, or 0.70%, at December 31, 2021[160]. - Nonaccrual loans decreased from $16.7 million at December 31, 2021, to $15.1 million at March 31, 2022[161]. - Loans 90 days or greater delinquent and still accruing totaled $1.0 million, a decrease of $0.3 million compared to $1.2 million at December 31, 2021[162]. - The allowance for loan and lease losses totaled $24.1 million at March 31, 2022, with loan charge-offs of $0.8 million in Q1 2022[148]. Deposits and Funding - Total deposits increased by $27.4 million, or 1.1%, to $2.6 billion from December 31, 2021, to March 31, 2022[187]. - Noninterest-bearing demand deposits rose by $23.4 million, or 4.4%, to $556.0 million at March 31, 2022, primarily due to growth in compensating balances[187]. - Interest-bearing demand deposits increased by $23.8 million, or 1.9%, to $1.3 billion at March 31, 2022, mainly concentrated in public funds[187]. - Time deposits decreased by $23.6 million, or 4.0%, to $563.0 million at March 31, 2022, due to the transition of public funds customers to interest-bearing deposits[187]. - Public funds deposits totaled $979.5 million at March 31, 2022, compared to $957.9 million at December 31, 2021, representing an increase due to seasonal fluctuations[196]. Capital and Ratios - Total shareholders' equity decreased to $221.8 million at March 31, 2022, from $223.9 million at December 31, 2021[203]. - As of March 31, 2022, the Bank's Tier 1 Risk-based Capital Ratio was 8.00%, down from 10.40% at December 31, 2021, indicating a decrease in capital adequacy[239]. - The capital conservation buffer was 3.38% as of March 31, 2022, exceeding the minimum requirement of 2.50%[236]. Interest Income and Expense - Interest income increased by $5.1 million, or 20.3%, to $30.5 million for the three months ended March 31, 2022, compared to the prior year period[210]. - Interest expense declined due to decreases in market interest rates and a strategy to increase lower-cost deposits[205]. - The average yield of interest-earning assets rose by 18 basis points to 4.38% for the three months ended March 31, 2022, up from 4.20% in the same period of 2021[210]. - The net interest rate spread increased by 35 basis points to 3.34% for the three months ended March 31, 2022, compared to 2.99% for the same period in 2021[208]. - Interest-sensitive assets totaled $992,440,000 within the one-year time frame[248]. Risk Management - The interest sensitivity analysis indicated a liability-sensitive position with a negative cumulative gap of $(804,077,000) on a one-year basis[245]. - The company maintains exposure to interest rate fluctuations within prudent levels using various investment strategies, including internal modeling[243]. - The interest sensitivity gap reflects the difference between total interest-sensitive assets and liabilities, indicating potential risk exposure[246]. - The analysis does not factor in prepayments or interest rate floors, which could significantly alter the results[245].

Financial Performance - As of December 31, 2021, the company had consolidated total assets of $2.9 billion, total deposits of $2.6 billion, and total shareholders' equity of $223.9 million[17]. - The loan-to-deposit ratio was 83.2% as of December 31, 2021, indicating a strong focus on increasing total loans as a percentage of assets[36]. - The company has grown from $159 million in assets in 1993 to $2.9 billion in assets by the end of 2021, demonstrating significant growth over the years[19]. - The company has completed four acquisitions since its Share Exchange, which added stable deposits and expanded its geographic footprint[20]. - The company has a deposit market share of 37.5% in the Hammond MSA, placing it first overall in that market[24]. - Total deposits held by the company were $2.6 billion as of December 31, 2021, including $957.9 million in public funds deposits[77][78]. - The investment securities portfolio had a fair value of $266.7 million, with U.S. government agency securities comprising the largest share[80]. - The company generated $68.7 million of pre-tax income from its securities portfolio over the last five years, with no temporary impairments recognized for the year ended December 31, 2021[81]. - The bank had $43.9 million in brokered deposits, primarily in reciprocal deposit programs, as of December 31, 2021[79]. Loan Portfolio - As of December 31, 2021, non-farm non-residential loans totaled $886.4 million, representing 40.9% of the total loan portfolio, with owner-occupied loans at $332.2 million, or 37.5% of non-farm non-residential loans[50]. - Commercial and industrial loans amounted to $398.4 million, or 18.4% of the total loan portfolio, with commercial term loans at $157.9 million, or 39.6% of commercial and industrial loans[53]. - The company holds $288.3 million in one- to four-family residential real estate loans, accounting for 13.3% of the total loan portfolio, with jumbo loans totaling $29.1 million[57]. - Multifamily loans stood at $65.8 million, or 3.0% of the total loan portfolio, with underwriting following guidelines for non-farm non-residential loans[61]. - The total loan portfolio included $174.3 million in construction and land development loans, representing 8.1% of the total[64]. - Agricultural loans amounted to $26.7 million, or 1.2% of the total loan portfolio, with a focus on crops and secured by various collateral[66]. - Farmland loans totaled $31.8 million, accounting for 1.5% of the total loan portfolio, with terms up to five years and potential for 100% financing with guarantees[68]. - Commercial leases reached $246.0 million, representing 11.4% of the total loan portfolio, with an average size of approximately $16.0 million[69]. - Consumer and other loans totaled $48.1 million, or 2.2% of the total loan portfolio, with $23.8 million being unsecured[70]. Strategic Initiatives - The company plans to continue expanding its Texas markets in Dallas-Fort Worth-Arlington and Waco both organically and through strategic acquisitions[36]. - The company aims to grow its market share along key interstate corridors in Louisiana and expand its services to small and medium-sized businesses[36]. - The company is expanding its small business lending program, focusing on SBA, USDA, and commercial leasing loans, leveraging expertise from the acquisition of Synergy Bank[39]. - The company plans to pursue strategic acquisitions of community banks and non-banking financial companies to supplement organic growth, focusing on targets with quality loan portfolios[45]. - The bank's expansion into Kentucky and West Virginia includes loan and deposit production offices, indicating a strategic move to grow its market presence[23]. - First Guaranty Bank plans to grow its loan portfolio by targeting small and medium-sized businesses in various sectors, including agriculture and healthcare[37]. Regulatory Environment - The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 exempts banks with less than $10 billion in assets from certain regulations, including the ability-to-repay requirements for qualified residential mortgage loans[93]. - The CARES Act provided over $2 trillion to support the economy during the COVID-19 pandemic, including the establishment of the Paycheck Protection Program (PPP) to support affected businesses[95]. - As of December 31, 2021, First Guaranty Bank exceeded all regulatory capital requirements and was considered well-capitalized based on FDIC guidelines[104]. - Federal regulations require a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, and a total capital to risk-based assets of 8%[97]. - The community bank leverage ratio was temporarily reduced to 8% under the CARES Act, with plans to revert to 9% thereafter[103]. - First Guaranty Bank is subject to concentrated commercial real estate lending regulations, which require heightened risk management practices if certain concentration thresholds are met[106]. - Transactions between First Guaranty Bank and its affiliates are limited to 10% of the institution's capital stock and surplus for any one affiliate, with an aggregate limit of 20%[114]. - The bank's ability to pay dividends is subject to Louisiana law, which requires an unimpaired surplus equal to 50% of its outstanding capital stock before and after the dividend payment[96]. - The FDIC has the authority to establish higher capital requirements for individual institutions if deemed necessary based on qualitative factors[102]. - First Guaranty Bank did not elect to follow the community bank leverage ratio as of December 31, 2021[103]. Competition and Market Challenges - The bank faces intense competition in loan making and deposit attraction, particularly from larger financial institutions in its market areas[83]. - The bank's market areas face intense competition from larger financial institutions, impacting its ability to attract deposits and make loans[83]. Employee and Operational Information - The bank employed 463 full-time and 27 part-time employees as of December 31, 2021, with no collective bargaining agreements in place[86]. - The bank is required to maintain non-interest-earning reserves against transaction accounts, which were reduced to zero in March 2020 due to COVID-19[121]. - The bank is subject to consolidated regulatory capital requirements as a bank holding company, but is not currently subject to the Federal Reserve Board's consolidated capital adequacy guidelines as it does not have more than $3.0 billion in total assets[131]. - The bank's operations are subject to various federal laws, including the Truth-In-Lending Act and the Equal Credit Opportunity Act, which govern credit transactions[125]. - First Guaranty Bank has elected "financial holding company" status, allowing it to engage in a broader array of financial activities[130].

Financial Performance - Net income for the third quarter of 2021 was $7.8 million, up from $5.2 million in the same period of 2020[120]. - Earnings per common share increased to $0.74 for the third quarter of 2021 from $0.53 in the third quarter of 2020[121]. - Net income for the nine months ended September 30, 2021, was $19.2 million, contributing to an increase in retained earnings of $13.8 million[200]. - Net income for Q3 2021 was $7.8 million, a 50.3% increase from $5.2 million in Q3 2020[202]. - Net income for the nine months ended September 30, 2021 was $19.2 million, a 35.6% increase from $14.2 million in the same period of 2020[203]. Asset and Loan Growth - Total assets increased by $351.4 million, or 14.2%, to $2.8 billion at September 30, 2021 compared to December 31, 2020[119]. - Total loans increased by $229.3 million, or 12.4%, to $2.1 billion at September 30, 2021 compared to December 31, 2020[119]. - Net loans increased by $228.5 million, or 12.6%, to $2.0 billion as of September 30, 2021, compared to December 31, 2020[144]. - The loan portfolio's average outstanding balance increased to $1.999 billion at September 30, 2021, from $1.614 billion at September 30, 2020[182]. - Loans, including those held for sale, totaled $2,073,461,000, indicating strong lending activity[260]. Deposit Growth - Total deposits rose by $378.1 million, or 17.5%, to $2.5 billion at September 30, 2021 compared to December 31, 2020[119]. - Total deposits increased to $2,364.8 million as of September 30, 2021, up from $2,046.6 million at December 31, 2020, representing a growth of 15.6%[189]. - Noninterest-bearing demand deposits rose by $88.2 million, or 21.4%, to $499.6 million at September 30, 2021[184]. - Interest-bearing demand deposits increased by $385.6 million, or 44.8%, to $1.2 billion at September 30, 2021[184]. - Public funds deposits rose to $885.3 million at September 30, 2021, compared to $715.3 million at December 31, 2020, marking an increase of 23.7%[192]. Interest Income and Expense - Net interest income for the third quarter of 2021 was $23.8 million, compared to $19.0 million for the same period in 2020[125]. - Interest income for Q3 2021 increased by $4.2 million, or 16.8%, to $29.4 million compared to Q3 2020[210]. - Interest expense decreased by $0.6 million, or 9.0%, to $5.6 million for the three months ended September 30, 2021, compared to $6.1 million for the same period in 2020[217]. - For the nine months ended September 30, 2021, interest expense decreased by $3.3 million, or 16.2%, to $16.9 million from $20.1 million in the same period in 2020[218]. Noninterest Income and Expense - Noninterest income for the third quarter of 2021 was $2.1 million, down from $3.6 million in the same period of 2020[128]. - Noninterest income totaled $8.0 million for the nine months ended September 30, 2021, a decrease of $1.3 million from $9.3 million for the same period in 2020, primarily due to decreased gains on securities sales[233]. - Noninterest expense increased to $46.8 million for the nine months ended September 30, 2021, compared to $42.6 million for the same period in 2020, driven by higher salaries and benefits expenses[236]. Asset Quality - The provision for loan losses decreased to $0.3 million in the third quarter of 2021 from $1.5 million in the same period of 2020[126]. - The provision for loan losses totaled $1.8 million for the first nine months of 2021, down from $4.6 million for the same period in 2020[147]. - Non-performing assets decreased by $8.0 million, or 26.0%, to $22.9 million, representing 0.81% of total assets as of September 30, 2021[158]. - Nonaccrual loans increased from $15.6 million at December 31, 2020, to $17.8 million at September 30, 2021[159]. - Loans 90 days or greater delinquent and still accruing totaled $2.6 million, a decrease of $10.5 million compared to $13.1 million at December 31, 2020[160]. Capital and Equity - Total shareholders' equity increased to $219.1 million at September 30, 2021, up from $178.6 million at December 31, 2020, reflecting a growth of 22.7%[200]. - The Bank's Tier 1 Risk-based Capital Ratio was 8.00% as of September 30, 2021, down from 10.39% at December 31, 2020, indicating a decrease in capital adequacy[251]. - The capital conservation buffer was 3.48% as of September 30, 2021, exceeding the minimum requirement of 2.50%[248]. Securities and Investments - Investment securities totaled $380.1 million, an increase of $141.6 million from $238.5 million at December 31, 2020[149]. - The held to maturity securities portfolio was $153.3 million, or 40.3% of the investment portfolio, as of September 30, 2021, compared to $0 at December 31, 2020[242]. - The available for sale securities portfolio was $226.8 million, or 59.7% of the investment portfolio, as of September 30, 2021, down from $238.5 million at December 31, 2020[242]. Liquidity and Funding - First Guaranty maintained a net borrowing capacity at the Federal Home Loan Bank totaling $412.8 million at September 30, 2021, compared to $161.2 million at December 31, 2020[243]. - The Bank's liquidity management includes a discount window line with the Federal Reserve Bank and federal funds lines of credit with borrowing capacity of $100.5 million[243]. - Demand deposits reached $1,245,969,000, representing a significant portion of total source of funds[260].

Financial Performance - Net income for the second quarter of 2021 was $6.4 million, up from $5.2 million in the second quarter of 2020[123]. - Net income for the six months ended June 30, 2021, was $11.5 million, a 27.2% increase from $9.0 million in the same period of 2020[203]. - Earnings per common share increased to $0.64 for the second quarter of 2021 from $0.53 in the second quarter of 2020[124]. - Net interest income for the second quarter of 2021 was $21.4 million, compared to $18.8 million for the same period in 2020[128]. - Noninterest income for the second quarter of 2021 was $3.6 million, compared to $3.3 million for the same period in 2020[131]. - Net interest income for the six months ended June 30, 2021, was $41,049 thousand, up from $36,763 thousand in the same period in 2020, representing an increase of 11.9%[1]. - Noninterest income totaled $5,900 thousand for the six months ended June 30, 2021, an increase of $200 thousand from $5,800 thousand for the same period in 2020[2]. Asset and Loan Growth - Total assets increased by $272.0 million, or 11.0%, to $2.7 billion at June 30, 2021 compared to December 31, 2020[122]. - Total loans increased by $222.3 million, or 12.1%, to $2.1 billion at June 30, 2021 compared to December 31, 2020[122]. - Net loans increased by $221.3 million, or 12.2%, to $2.0 billion as of June 30, 2021, compared to December 31, 2020[144]. - Investment securities totaled $446.3 million, an increase of $207.7 million from $238.5 million at December 31, 2020[148]. - The held to maturity securities portfolio was $153.1 million, or 34.3% of the investment portfolio, as of June 30, 2021, compared to $0 at December 31, 2020[242]. Deposit Growth - Total deposits rose by $254.4 million, or 11.7%, to $2.4 billion at June 30, 2021 compared to December 31, 2020[122]. - Noninterest-bearing demand deposits rose by $71.9 million, or 17.5%, to $483.3 million at June 30, 2021, driven by economic conditions related to the CARES Act and stimulus payments[185]. - Interest-bearing demand deposits increased by $216.1 million, or 25.1%, to $1.1 billion at June 30, 2021, primarily in public funds[185]. - Public funds deposits rose to $821.9 million at June 30, 2021, compared to $715.3 million at December 31, 2020, marking an increase of 14.8%[195]. - Total deposits increased to $2,310.3 million as of June 30, 2021, up from $2,046.6 million at December 31, 2020, representing a growth of 12.9%[194]. Loan Loss Provisions and Asset Quality - The provision for loan losses decreased to $0.9 million in the second quarter of 2021 from $1.8 million in the same period of 2020[129]. - The provision for loan losses totaled $1.5 million for the first six months of 2021, down from $3.1 million for the same period in 2020[146]. - Non-performing assets decreased by $5.6 million, or 18.1%, to $25.3 million, representing 0.92% of total assets as of June 30, 2021[158]. - Nonaccrual loans decreased from $15.6 million at December 31, 2020, to $15.1 million at June 30, 2021[159]. - Loans 90 days or greater delinquent and still accruing totaled $8.2 million, a decrease of $4.9 million compared to $13.1 million at December 31, 2020[160]. Shareholder Equity and Capital Ratios - Total shareholders' equity increased to $214.3 million at June 30, 2021, from $178.6 million at December 31, 2020, reflecting a growth of 19.98%[200]. - The Tier 1 Risk-based Capital Ratio was 8.00% as of June 30, 2021, down from 10.64% at December 31, 2020, indicating a decrease in capital adequacy[252]. - The capital conservation buffer was 3.78% as of June 30, 2021, exceeding the minimum requirement of 2.50%[249]. Interest Income and Expense - Interest income on loans increased by $2.8 million, or 12.3%, to $25.2 million in Q2 2021[212]. - Interest expense decreased by $0.9 million, or 14.5%, to $5.5 million for the three months ended June 30, 2021, compared to $6.5 million for the same period in 2020[217]. - For the six months ended June 30, 2021, interest expense decreased by $2.7 million, or 19.4%, to $11.3 million from $14.0 million in the prior year[218]. - The average yield of interest-earning assets decreased by 59 basis points to 4.19% for the first half of 2021 compared to 4.78% for the same period in 2020[213]. Other Financial Metrics - The average maturity of the securities portfolio is forecasted to be approximately 7.85 years based on the current interest rate environment[152]. - The company charged off $0.8 million in loan balances during the first six months of 2021[182]. - The company maintained a net borrowing capacity at the Federal Home Loan Bank totaling $280.1 million as of June 30, 2021, an increase from $161.2 million at December 31, 2020[243]. - The cumulative gap as a percent of earning assets is (28.2)%[261]. - A gradual 400 basis point increase in interest rates would lead to a net interest income decrease of (5.73)%[263].

Financial Performance - Net income for the first quarter of 2021 was $5.0 million, up from $3.8 million in the same period of 2020[125]. - Earnings per common share were $0.52 for the first quarter of 2021, compared to $0.39 for the same period in 2020[125]. - Net income for the three months ended March 31, 2021 was $5.0 million, an increase of $1.2 million, or 31.3%, from $3.8 million for the same period in 2020[200]. - The net income for the three-month period ended March 31, 2021, was $5.0 million, partially offset by $1.6 million in cash dividends paid on common stock[229]. Asset and Loan Growth - Total assets increased by $93.6 million, or 3.8%, to $2.6 billion as of March 31, 2021, compared to December 31, 2020[124]. - Total loans rose by $122.3 million, or 6.6%, to $2.0 billion at March 31, 2021, compared to December 31, 2020[124]. - Total deposits increased by $148.4 million, or 6.8%, to $2.3 billion at March 31, 2021, compared to December 31, 2020[124]. - The average outstanding balance of loans was $1.91 billion for the three months ended March 31, 2021, compared to $1.51 billion for the same period in 2020[183]. Interest Income and Margin - Net interest income for the first quarter of 2021 was $19.6 million, compared to $17.9 million for the same period in 2020[129]. - The net interest margin decreased by 32 basis points to 3.25% for the three months ended March 31, 2021, compared to 3.57% for the same period in 2020[132]. - Interest income on loans increased by $1.3 million, or 5.7%, to $23.8 million for the three months ended March 31, 2021[207]. - Average yield of interest-earning assets decreased by 86 basis points to 4.20% for the three months ended March 31, 2021[205]. Loan Losses and Allowance - The allowance for loan losses was 1.26% of total loans at March 31, 2021, down from 1.33% at December 31, 2020[127]. - The allowance for loan losses was $24.8 million, representing 1.26% of total loans and 98.2% of nonperforming loans as of March 31, 2021[173]. - A provision for loan losses of $0.6 million was recorded for the three months ended March 31, 2021, compared to $1.2 million for the same period in 2020[175]. - Total charge-offs were $0.4 million for the three months ended March 31, 2021, compared to $0.3 million for the same period in 2020[216]. Non-Performing Assets - Non-performing assets totaled $27.2 million, or 1.06% of total assets, at March 31, 2021, down from $30.9 million, or 1.25%, at December 31, 2020, representing a decrease of $3.7 million or 12.0%[159]. - Total impaired loans increased by $1.7 million to $17.6 million at March 31, 2021, compared to $15.9 million at December 31, 2020[135]. - Nonaccrual loans increased to $16.1 million at March 31, 2021, from $15.6 million at December 31, 2020[160]. - Loans 90 days or greater delinquent and still accruing totaled $9.1 million, a decrease of $4.0 million compared to $13.1 million at December 31, 2020[161]. Deposits and Funding - Noninterest-bearing demand deposits rose by $55.3 million, or 13.4%, to $466.7 million at March 31, 2021, driven by economic conditions related to the CARES Act and stimulus payments[185]. - Interest-bearing demand deposits increased by $70.7 million, or 8.2%, to $931.1 million at March 31, 2021[185]. - Total public funds deposits increased to $767.7 million at March 31, 2021, compared to $715.3 million at December 31, 2020, reflecting seasonal fluctuations[192]. - The total amount of outstanding certificates of deposit greater than or equal to $100,000 was approximately $513.7 million as of March 31, 2021[187]. Capital and Equity - Total shareholders' equity decreased to $176.3 million at March 31, 2021 from $178.6 million at December 31, 2020, primarily due to a decrease in accumulated other comprehensive income[198]. - First Guaranty issued 34,500 shares of 6.75% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock, raising total gross proceeds of $34.5 million[230]. - The Bank's Tier 1 Risk-based Capital Ratio was 8.00% as of March 31, 2021, down from 10.33% at December 31, 2020[236]. Interest Rate Risk Management - The cumulative interest sensitivity gap was $(492,996) as of March 31, 2021, indicating a liability-sensitive position[245]. - An instantaneous increase of 400 basis points in interest rates would result in a 2.02% increase in net interest income[247]. - A gradual increase of 400 basis points in interest rates would lead to a decrease of 0.52% in net interest income[247]. - The company considers various factors, including borrower debt servicing ability, when monitoring interest rate risk exposure[247].