Financial Performance - Net loss for Q3 2025 was $(45.0) million, a decrease of $46.9 million compared to a net income of $1.9 million in Q3 2024[110] - Return on average assets for Q3 2025 was (4.61)%, compared to 0.21% in Q3 2024, and for the nine months ended September 30, 2025, it was (2.00)%, down from 0.42% in 2024[114] - Loss per common share for the nine months ended September 30, 2025 was $(4.45), a decrease of $5.23 from $0.78 for the same period in 2024[170] - Noninterest income decreased to $6.4 million for the nine months ended September 30, 2025, down from $22.2 million in 2024, a decline of 71.1%[201] - Total shareholders' equity decreased to $221.1 million at September 30, 2025, down from $255.0 million at December 31, 2024, primarily due to a net loss of $58.5 million during the nine months ended September 30, 2025[211] Asset and Loan Management - Total assets decreased by $175.4 million to $3.8 billion as of September 30, 2025, compared to December 31, 2024[110] - Total loans decreased by $414.0 million, or 15.4%, to $2.3 billion as of September 30, 2025, compared to December 31, 2024[110] - Net loans decreased by $464.9 million, or 17.5%, to $2.2 billion as of September 30, 2025, due to a strategic focus on reducing risk in the loan portfolio[116] - Nonaccrual loans increased by $5.7 million to $114.3 million as of September 30, 2025, compared to $108.5 million at December 31, 2024[112] - Special mention loans increased by $86.5 million in 2025, primarily due to downgrades during the year[122] Credit Losses and Provisions - The provision for credit losses for Q3 2025 was $47.9 million, significantly higher than $4.9 million in Q3 2024[110] - The allowance for credit losses increased to $85.7 million, or 3.76% of total loans, compared to $34.8 million, or 1.29%, at December 31, 2024[110] - The provision for credit losses was $79.1 million for the first nine months of 2025, significantly higher than $14.0 million for the same period in 2024[126] - The allowance for credit losses on loans was $85.7 million, representing 3.76% of total loans and 75.0% of nonperforming loans as of September 30, 2025[148] Deposits and Funding - Total deposits decreased by $121.4 million, or 3.5%, to $3.4 billion as of September 30, 2025, compared to December 31, 2024[110] - Noninterest-bearing demand deposits decreased by $7.2 million, or 1.8%, to $396.9 million at September 30, 2025, primarily due to seasonal activity[155] - Public funds deposits totaled $1.1 billion at September 30, 2025, up from $1.0 billion at December 31, 2024, due to seasonal fluctuations[162] - The total amount of uninsured deposits was estimated at $264.3 million at September 30, 2025, excluding collateralized public funds deposits[158] Interest Income and Expenses - Net interest income for the three months ended September 30, 2025 was $22.2 million, a decrease from $22.7 million for the same period in 2024[174] - Interest income decreased by $3.9 million, or 6.8%, to $53.5 million for the three months ended September 30, 2025, primarily due to a $464.7 million decrease in the average balance of loans[176] - Interest expense decreased by $2.5 million or 2.6%, totaling $95.6 million for the nine months ended September 30, 2025, compared to $98.1 million for the same period in 2024[185] - The net interest margin for Q3 2025 was 2.34%, a decrease of 17 basis points from 2.51% in Q3 2024[112] Securities and Investments - Investment securities net of the allowance for credit losses reached $696.7 million at September 30, 2025, an increase of $94.0 million from $602.7 million at December 31, 2024[128] - The available for sale securities portfolio totaled $374.3 million at September 30, 2025, reflecting an increase of $93.2 million, or 33.2%, from $281.1 million at December 31, 2024[130] - The average maturity of the securities portfolio is approximately 7.02 years, with an estimated effective duration of 5.28 years as of September 30, 2025[132] Capital and Ratios - The capital conservation buffer for First Guaranty was 3.49% as of September 30, 2025, exceeding the minimum requirement of 2.50%[213] - The Tier 1 Risk-based Capital Ratio for the Bank was 11.09% as of September 30, 2025, compared to 11.00% at December 31, 2024[217] - The average interest-earning assets to interest-bearing liabilities ratio was 118.42% for the nine months ended September 30, 2025, slightly down from 119.48% in 2024[192]

Financial Performance - Net loss for Q3 2025 was $(45.0) million, a decrease of $46.9 million compared to a net income of $1.9 million in Q3 2024[3] - Return on average assets for Q3 2025 was (4.61)%, compared to 0.21% in Q3 2024, and for the nine months ended September 30, 2025, it was (2.00)% versus 0.42% in 2024[9] - Return on average common equity for Q3 2025 was (78.41)%, down from 2.40% in Q3 2024, and for the nine months ended September 30, 2025, it was (35.83)% compared to 5.87% in 2024[9] - Net (loss) income available to common shareholders for Q3 2025 was $(45,585) thousand, compared to $1,345 thousand in Q3 2024[13] - Net Loss Income available to Common Shareholders was $(45,584,000) for Q3 2025, compared to a profit of $428,000 in Q3 2024[15] Loan and Asset Management - Total loans decreased by $414.0 million, or 15.4%, to $2.3 billion as of September 30, 2025, compared to December 31, 2024[3] - Net loans decreased to $2,194,028 thousand as of September 30, 2025, from $2,658,969 thousand as of December 31, 2024[11] - Loans net of unearned income were $2,279,741,000 as of September 30, 2025, down from $2,410,505,000 in 2024, representing a decline of 5.4%[24] - The loan portfolio's real estate segment accounted for 80.7% of total loans as of September 30, 2025, compared to 79.2% in December 2024[24] Credit Losses and Provisions - The provision for credit losses for Q3 2025 was $47.9 million, significantly higher than $4.9 million in Q3 2024[3] - The allowance for credit losses increased to 3.76% of total loans at September 30, 2025, compared to 1.29% at December 31, 2024[3] - Provision for credit losses increased significantly to $47,933,000 in Q3 2025 from $6,021,000 in Q3 2024, indicating a substantial rise in expected credit losses[15] Noninterest Income and Expenses - Noninterest expense for Q3 2025 totaled $30.2 million, including a $12.9 million goodwill impairment charge[4] - Total noninterest expense increased to $30,175 thousand in Q3 2025, up from $19,706 thousand in Q3 2024[13] - Total Noninterest Income decreased to $1,860,000 in Q3 2025 from $2,500,000 in Q3 2024, reflecting a decline of 25.6%[15] Capital and Equity - As of September 30, 2025, total shareholders' equity was $221,075,000, a decrease from $255,049,000 as of December 31, 2024[33] - Tangible common equity stood at $185,478,000, down from $206,029,000 in the previous year[33] - The tangible common equity to tangible assets ratio was 4.89%, down from 5.21% in the previous year[33] - The Bank's Tier 1 leverage ratio was 6.92% as of September 30, 2025, compared to 7.82% at the end of 2024[39] - The company satisfied the minimum regulatory capital requirements and was classified as well capitalized[38] Asset Quality - Nonaccrual loans increased to $114.3 million at September 30, 2025, up from $108.5 million at December 31, 2024[4] - Non-performing assets to total loans ratio increased to 5.54%, up from 5.27% in the previous quarter[26] - Total other noninterest expense for the three months ended September 30, 2025, was $7,205,000, slightly higher than $7,070,000 in the same period last year[29] - The company reported a total of $126,315,000 in non-performing assets, a slight decrease from $127,120,000 in the previous quarter[26] Interest Income and Margin - Net interest income for Q3 2025 was $22.2 million, slightly down from $22.7 million in Q3 2024[3] - Total interest income for Q3 2025 was $53,500 thousand, a decrease from $57,427 thousand in Q3 2024[13] - The net interest margin for Q3 2025 was 2.34%, down from 2.51% in Q3 2024, reflecting a decrease in profitability from interest-earning assets[17] - The net interest margin decreased to 2.35% for the nine months ended September 30, 2025, compared to 2.52% for the same period in 2024[23]

[Executive Summary & Financial Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Financial%20Highlights) First Guaranty Bancshares reported a net loss in Q2 2025, driven by increased credit loss provisions, while actively managing its loan portfolio and expenses to strengthen capital [Overview of Q2 2025 Performance](index=1&type=section&id=1.1.%20Overview%20of%20Q2%202025%20Performance) First Guaranty Bancshares, Inc. reported a net loss for the second quarter and first six months of 2025, primarily driven by a significant increase in the provision for credit losses, despite stable net interest income and reduced noninterest expenses | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Net (Loss) Income | $(5.8) million | $7.2 million | -181.0% | | (Loss) Earnings Per Common Share | $(0.50) | $0.53 | -194.3% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Net (Loss) Income | $(12.0) million | $9.5 million | -226.1% | | (Loss) Earnings Per Common Share | $(1.04) | $0.67 | -255.2% | [Strategic Initiatives and Portfolio Management](index=1&type=section&id=1.2.%20Strategic%20Initiatives%20and%20Portfolio%20Management) The company continued its business strategy to reduce risk in the loan portfolio, successfully decreasing non-performing assets and commercial real estate loan concentrations through workouts, loan sales, and amortization - Non-performing assets were reduced by **$6.8 million** as compared to March 31, 2025, primarily through a successful workout structure associated with a commercial real estate loan[3](index=3&type=chunk) - In July 2025, First Guaranty sold an **$8.8 million** non-accrual loan secured by a shopping center[3](index=3&type=chunk) - The largest OREO property, a **$7.4 million** land development loan in Texas, is under a sales agreement with an anticipated sale in Q4 2025[3](index=3&type=chunk) [Key Financial Metrics](index=1&type=section&id=1.3.%20Key%20Financial%20Metrics) Key financial metrics indicate a decline in total assets and loans, a slight decrease in deposits, and a significant increase in the allowance for credit losses, reflecting a more conservative financial posture. Net interest margin also saw a decrease year-over-year | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total Assets | $4.0 billion | $4.0 billion | -$1.6 million | | Total Loans | $2.4 billion | $2.69 billion | -$283.3 million (-10.5%) | | Total Deposits | $3.5 billion | $3.5 billion | -$5.1 million (-0.1%) | | Shareholders' Equity | $264.6 million| $255.0 million | +$9.6 million | | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Allowance for credit losses (% of total loans) | 2.36% | 1.29% | +1.07 pp | | Net Interest Margin (3 months) | 2.34% | 2.48% (Q2 2024) | -14 bps | | Net Interest Margin (6 months) | 2.35% | 2.53% (H1 2024) | -18 bps | | Book Value Per Common Share | $15.31 | $17.75 | -$2.44 | [Loan Portfolio Trends](index=1&type=section&id=1.4.%20Loan%20Portfolio%20Trends) Loan balances continued to decline across various categories, particularly in real estate secured loans, as part of the company's strategy to reduce loan concentration risk. Unfunded commercial real estate construction commitments also saw a significant reduction | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :-------------------------------- | :------------ | :------------- | :---------------- | :----------------- | | Total Loan Balances | $2.41 billion | $2.51 billion | $2.69 billion | $2.77 billion | | Total Real Estate Secured Loans | $1.94 billion | $2.02 billion | $2.14 billion | $2.16 billion | | Unfunded CRE Construction Commitments | $35 million | $58 million | $72 million | $108 million | - The reduction in loan balances was due to participations, payoffs, write-offs, loan sales, and loan amortization, aligning with the strategy to reduce commercial real estate loan concentration risk[3](index=3&type=chunk) [Asset Quality and Credit Losses](index=1&type=section&id=1.5.%20Asset%20Quality%20and%20Credit%20Losses) The provision for credit losses increased substantially year-over-year, driven by specific reserves on individually evaluated loans and recent portfolio trends. Nonaccrual loans increased compared to year-end 2024 but decreased quarter-over-quarter, with a significant portion concentrated in a few large relationships | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Provision for Credit Losses | $14.7 million | $6.8 million | | Charge-offs | $1.1 million | $8.8 million | | Recoveries | $0.2 million | $0.3 million | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Provision for Credit Losses | $29.3 million | $9.1 million | | Charge-offs | $8.0 million | $11.1 million | | Recoveries | $0.4 million | $0.5 million | - Nonaccrual loans increased by **$10.7 million** to **$119.2 million** at June 30, 2025, compared to December 31, 2024, but decreased by **$14.2 million** compared to March 31, 2025[4](index=4&type=chunk) - The largest **6** non-performing loan relationships comprise **75%** of total non-performing loans at June 30, 2025[4](index=4&type=chunk) [Expense Management](index=1&type=section&id=1.6.%20Expense%20Management) First Guaranty continued its expense reduction plans, leading to a decline in noninterest expense both quarter-over-quarter and year-over-year, primarily due to reduced personnel expenses and professional fees | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :-------------- | :-------------- | :-------------- | | Noninterest Expense | $17.3 million | $18.0 million | $20.6 million | - The Q2 2025 noninterest expense decline of **$0.8 million** compared to Q1 2025 was primarily due to reduced personnel expense and professional fees[3](index=3&type=chunk) - Comparing Q2 2025 with Q2 2024, noninterest expense was reduced by **$3.3 million**, translating to an annual run rate savings of approximately **$13.4 million**[3](index=3&type=chunk) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Full Time Equivalent Employees | 360 | 380 | 399 | 495 | [Capital and Dividends](index=1&type=section&id=1.7.%20Capital%20and%20Dividends) Shareholders' equity saw a modest increase, influenced by the conversion of subordinated debt to common stock and a private placement. Common stock dividends were significantly reduced as part of a new business strategy to increase capital | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Shareholders' Equity | $264.6 million| $255.0 million | | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | | Common Stock Dividends Per Share | $0.01 | $0.16 | - The reduction in common stock dividend payment was implemented to increase capital as part of First Guaranty's new business strategy announced in Q3 2024[8](index=8&type=chunk) - The change in shares outstanding was primarily due to the conversion of **$15.0 million** in subordinated debt to common stock and the issuance of **358,680** shares of common stock under private placement during Q2 2025[3](index=3&type=chunk) [Company Information](index=4&type=section&id=2.%20Company%20Information) This section provides an overview of First Guaranty Bancshares, Inc., detailing its history, operational footprint, and stock listing [About First Guaranty](index=4&type=section&id=2.1.%20About%20First%20Guaranty) First Guaranty Bancshares, Inc. is the holding company for First Guaranty Bank, a Louisiana state-chartered bank established in 1934. The bank operates 35 locations across four states, focusing on client relationships and customer service - First Guaranty Bank was founded in **1934**[5](index=5&type=chunk) - The bank operates **thirty-five** locations throughout Louisiana, Texas, Kentucky, and West Virginia[5](index=5&type=chunk) - First Guaranty's common stock trades on the **NASDAQ** under the symbol **FGBI**[5](index=5&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=3.%20Consolidated%20Financial%20Statements) This section presents the company's consolidated balance sheets, income statements, and average balance sheets, detailing its financial position and performance [Consolidated Balance Sheets](index=5&type=section&id=3.1.%20Consolidated%20Balance%20Sheets) The consolidated balance sheet shows a slight decrease in total assets, primarily driven by a reduction in net loans, partially offset by an increase in cash and investment securities. Total deposits remained relatively stable, while shareholders' equity saw a modest increase | (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $714,870 | $564,208 | | Investment securities | $719,722 | $602,719 | | Loans, net of unearned income | $2,410,505 | $2,693,780 | | Less: allowance for credit losses | $56,963 | $34,811 | | Net loans | $2,353,542 | $2,658,969 | | Other real estate, net | $7,657 | $319 | | Total Assets | $3,971,088 | $3,972,728 | | Total deposits | $3,481,338 | $3,476,260 | | Junior subordinated debentures | $29,775 | $44,745 | | Total Liabilities | $3,706,529 | $3,717,679 | | Retained earnings | $59,550 | $72,965 | | Total Shareholders' Equity | $264,559 | $255,049 | [Consolidated Statements of Income](index=7&type=section&id=3.2.%20Consolidated%20Statements%20of%20Income) The company reported a net loss for both the three and six months ended June 30, 2025, primarily due to a significant increase in the provision for credit losses. This increase more than offset a slight rise in net interest income and a decrease in noninterest expense, while noninterest income saw a substantial decline year-over-year due to lower gains on asset sales | (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Interest Income | $54,321 | $53,651 | $108,784 | $106,559 | | Total Interest Expense | $32,081 | $32,409 | $64,321 | $63,396 | | Net Interest Income | $22,240 | $21,242 | $44,463 | $43,163 | | Provision for credit losses | $14,703 | $6,805 | $29,251 | $9,109 | | Total Noninterest Income | $2,156 | $15,526 | $4,510 | $17,834 | | Total Noninterest Expense | $17,267 | $20,609 | $35,284 | $39,543 | | Net (Loss) Income | $(5,831) | $7,201 | $(11,997) | $9,511 | | Net (Loss) Income Available to Common Shareholders | $(6,413) | $6,619 | $(13,161) | $8,347 | | (Loss) Earnings Per Common Share | $(0.50) | $0.53 | $(1.04) | $0.67 | [Consolidated Average Balance Sheets](index=8&type=section&id=3.3.%20Consolidated%20Average%20Balance%20Sheets) Average interest-earning assets increased, driven by higher interest-earning deposits with banks and securities, while average loans decreased. The net interest margin declined for both the three and six months ended June 30, 2025, compared to the prior year periods, reflecting changes in asset yields and liability costs | (in thousands except for %) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Average Interest-earning assets | $3,808,097 | $3,449,900 | | Average Loans, net of unearned income | $2,459,978 | $2,807,234 | | Average Interest-bearing liabilities | $3,218,257 | $2,875,514 | | Net interest income | $22,240 | $21,242 | | Net interest rate spread | 1.72 % | 1.72 % | | Net interest margin | 2.34 % | 2.48 % | | (in thousands except for %) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Average Interest-earning assets | $3,820,935 | $3,432,979 | | Average Loans, net of unearned income | $2,541,990 | $2,784,384 | | Average Interest-bearing liabilities | $3,236,248 | $2,859,552 | | Net interest income | $44,463 | $43,163 | | Net interest rate spread | 1.73 % | 1.78 % | | Net interest margin | 2.35 % | 2.53 % | [Detailed Financial Analysis](index=10&type=section&id=4.%20Detailed%20Financial%20Analysis) This section provides an in-depth analysis of the company's loan portfolio composition, nonperforming assets, and a breakdown of other noninterest expenses [Loan Portfolio Composition](index=10&type=section&id=4.1.%20Loan%20Portfolio%20Composition) The loan portfolio continued its trend of reduction, with total loans net of unearned income decreasing across all categories, particularly in real estate and commercial leases, reflecting the company's strategy to reduce concentration risk | (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 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 net of unearned income | $2,410,505 | $2,512,788 | $2,693,780 | $2,769,651 | [Nonperforming Assets](index=11&type=section&id=4.2.%20Nonperforming%20Assets) Total non-performing assets decreased quarter-over-quarter but increased significantly year-over-year, primarily driven by a rise in nonaccrual loans, particularly in multifamily and non-farm non-residential real estate categories. The allowance for credit losses to nonaccrual loans ratio improved quarter-over-quarter | (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :-------------------------------- | :------------ | :------------- | :---------------- | :----------------- | | Total nonaccrual loans | $119,179 | $133,393 | $108,529 | $65,788 | | Total non-performing loans | $119,463 | $133,780 | $120,031 | $65,865 | | Total Real Estate Owned | $7,657 | $152 | $319 | $1,160 | | Total non-performing assets | $127,120 | $133,932 | $120,350 | $67,025 | | Non-performing assets to total loans | 5.27 % | 5.33 % | 4.47 % | 2.42 % | | Non-performing assets 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 % | [Other Noninterest Expense Breakdown](index=13&type=section&id=4.3.%20Other%20Noninterest%20Expense%20Breakdown) Other noninterest expenses decreased for both the three and six months ended June 30, 2025, compared to the prior year, primarily driven by reductions in legal and professional fees, marketing, and software expenses, despite an increase in regulatory assessments | (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Legal and professional fees | $671 | $1,504 | $1,759 | $2,477 | | Marketing and public relations | $163 | $370 | $404 | $703 | | Software expense and amortization | $1,188 | $1,367 | $2,404 | $2,620 | | Regulatory assessment | $1,609 | $989 | $3,153 | $1,922 | | Total other noninterest expense | $6,819 | $7,622 | $13,755 | $14,385 | [Non-GAAP Financial Measures](index=14&type=section&id=5.%20Non-GAAP%20Financial%20Measures) This section presents non-GAAP financial measures, including tangible common equity and tangible book value per share, used to evaluate the company's capital adequacy [Tangible Common Equity Reconciliation](index=14&type=section&id=5.1.%20Tangible%20Common%20Equity%20Reconciliation) The company provides non-GAAP measures such as tangible common equity and tangible book value per share, which are utilized by management and financial analysts to assess capital adequacy by excluding preferred stock, goodwill, and other intangible assets. Tangible book value per common share decreased from December 31, 2024 - Tangible book value per share and the ratio of tangible equity to tangible assets are non-GAAP financial measures used to compare the capital adequacy of banking organizations[25](index=25&type=chunk)[26](index=26&type=chunk) | (in thousands except for share data and %) | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Total shareholders' equity | $264,559 | $255,049 | | Tangible common equity | $215,887 | $206,029 | | Common shares outstanding | 15,120,172 | 12,504,717 | | Book value per common share | $15.31 | $17.75 | | Tangible book value per common share | $14.28 | $16.48 | | Total Assets | $3,971,088 | $3,972,728 | | Tangible Assets | $3,955,474 | $3,956,766 | | Tangible common equity to tangible assets | 5.46 % | 5.21 % | [Legal Disclosures](index=4&type=section&id=6.%20Legal%20Disclosures) This section outlines legal disclaimers for forward-looking statements and clarifies that the release is not an offer or solicitation for securities [Forward Looking Statements](index=4&type=section&id=6.1.%20Forward%20Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, cautioning that such statements are not guarantees of future performance and are subject to significant risks and uncertainties, as detailed in SEC filings - Forward-looking statements are not historical facts and include words such as 'believes,' 'expects,' 'anticipates,' 'estimates,' and 'intends'[6](index=6&type=chunk) - These statements are not guarantees of future performance and are subject to significant risks and uncertainties, as referenced in the company's Form 10-K and 10-Q reports[6](index=6&type=chunk) - The company undertakes no obligation to publicly update any forward-looking statement[6](index=6&type=chunk) [No Offer or Solicitation](index=4&type=section&id=6.2.%20No%20Offer%20or%20Solicitation) This section clarifies that the release does not constitute an offer to sell or a solicitation of an offer to purchase any securities of First Guaranty, and no sale will occur in jurisdictions where it would be unlawful without proper registration - This release does not constitute or form part of any offer to sell, or a solicitation of an offer to purchase, any securities of First Guaranty[7](index=7&type=chunk) - There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification[7](index=7&type=chunk)

PART I. FINANCIAL INFORMATION This section details the company's financial statements, management's analysis, market risk, and internal control effectiveness [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and shareholders' equity Consolidated Balance Sheet Highlights (in millions) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $714.87 | $564.21 | | Investment securities | $719.72 | $602.72 | | Net loans | $2,351.63 | $2,658.97 | | Total Assets | $3,969.58 | $3,972.73 | | **Liabilities** | | | | Total deposits | $3,481.34 | $3,476.26 | | Total Liabilities | $3,706.49 | $3,717.68 | | **Shareholders' Equity** | | | | Total Shareholders' Equity | $263.09 | $255.05 | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net income Consolidated Statements of Income Highlights (in millions, except share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Interest Income | $54.32 | $53.65 | $108.78 | $106.56 | | Total Interest Expense | $32.08 | $32.41 | $64.32 | $63.40 | | Net Interest Income | $22.24 | $21.24 | $44.46 | $43.16 | | Provision for credit losses | $16.61 | $6.81 | $31.16 | $9.11 | | Total Noninterest Income | $2.16 | $15.53 | $4.51 | $17.83 | | Total Noninterest Expense | $17.27 | $20.61 | $35.28 | $39.54 | | Net (Loss) Income | $(7.30) | $7.20 | $(13.47) | $9.51 | | Net (Loss) Income Available to Common Shareholders | $(7.89) | $6.62 | $(14.63) | $8.35 | | (Loss) Earnings Per Common Share | $(0.61) | $0.53 | $(1.15) | $0.67 | | Cash dividends paid per share | $0.01 | $0.16 | $0.02 | $0.32 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section reports the total comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income Highlights (in millions) | Item | 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 | $(7.30) | $7.20 | $(13.47) | $9.51 | | Other comprehensive income | $0.97 | $0.21 | $2.66 | $0.83 | | Comprehensive (Loss) Income | $(6.33) | $7.41 | $(10.81) | $10.35 | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) This section details changes in the company's shareholders' equity over time, including preferred stock, common stock, surplus, and retained earnings Shareholders' Equity Changes (in millions) | Item | Balance December 31, 2024 | Balance June 30, 2025 | | :----------------------------------- | :------------------------ | :-------------------- | | Preferred Stock | $33.06 | $33.06 | | Common Stock | $12.51 | $15.12 | | Surplus | $149.39 | $167.04 | | Retained Earnings | $72.97 | $58.08 | | Accumulated Other Comprehensive (Loss) Income | $(12.87) | $(10.21) | | Total Shareholders' Equity | $255.05 | $263.09 | - Total Shareholders' Equity increased by **$8.0 million** from December 31, 2024, to June 30, 2025, primarily due to an increase in surplus and common stock from private placements and subordinated debt conversion, partially offset by a net loss and common stock dividends[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in millions) | Activity | 2025 | 2024 | | :----------------------------------- | :--------- | :--------- | | Net Cash (Used In) Provided By Operating Activities | $(12.93) | $9.90 | | Net Cash Provided By (Used In) Investing Activities | $156.27 | $(35.27) | | Net Cash Provided By Financing Activities | $7.32 | $37.88 | | Net Increase In Cash and Cash Equivalents | $150.66 | $12.51 | | Cash and Cash Equivalents at the End of the Period | $714.87 | $298.97 | - Noncash activities for the six months ended June 30, 2025, included the acquisition of real estate in settlement of loans (**$7.5 million**), common stock issued for debt conversion (**$15.0 million**), and common stock issued for payment-in-kind (**$0.7 million**)[16](index=16&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the unaudited consolidated financial statements [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the accounting principles and estimation methods used in preparing the unaudited financial statements - The unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, including all necessary normal recurring adjustments[17](index=17&type=chunk)[19](index=19&type=chunk) - Management's estimates, particularly for allowance for credit losses, real estate valuation, and investment securities, are susceptible to change[17](index=17&type=chunk)[19](index=19&type=chunk) [Note 2. Recent Accounting Pronouncements](index=10&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) This note discusses the impact of recently issued accounting standards 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 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 detailed information on the company's investment securities portfolio, including classification, fair value, and unrealized gains or losses Securities Portfolio (in millions) | Category | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :----------------------------------- | :----------------------- | :------------------------- | | Available for sale | $397.57 | $281.10 | | Held to maturity (estimated fair value) | $260.08 | $251.46 | | Total Investment Securities | $757.65 | $532.56 | Unrealized Losses on Securities (June 30, 2025, in millions) | Category | Gross Unrealized Losses | | :----------------------------------- | :---------------------- | | Available for sale | $(2.02) | | Held to maturity | $(62.22) | - At June 30, 2025, 178 debt securities had unrealized losses totaling **12.7%** of their amortized cost basis, with 129 securities in a continuous loss position for over 12 months[28](index=28&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - Management intends and has the ability to hold these securities until maturity or anticipated recovery, believing no credit-related impairment exists for U.S. Government and Government-sponsored enterprise securities[28](index=28&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - As of June 30, 2025, **$488.2 million** of securities were pledged to secure public funds deposits and borrowings, with a market value of **$439.1 million**[24](index=24&type=chunk) [Note 4. Loans](index=14&type=section&id=Note%204.%20Loans) This note provides a detailed breakdown of the loan portfolio, including composition, credit quality, and nonaccrual status Loan Portfolio Composition (in millions) | Loan Type | June 30, 2025 Balance | December 31, 2024 Balance | | :----------------------------------- | :---------------------- | :------------------------ | | Real Estate Loans | $1,938.93 | $2,141.37 | | Non-Real Estate Loans | $478.42 | $560.71 | | Total Loans Net of Unearned Income | $2,410.51 | $2,693.78 | Past Due Loans (June 30, 2025, in millions) | Category | 30-89 Days Past Due | 90 Days or Greater Past Due | | :----------------------------------- | :------------------ | :-------------------------- | | Total Real Estate | $6.69 | $110.04 | | Total Non-Real Estate | $1.17 | $9.43 | | Total Past Due Loans | $7.86 | $119.46 | Nonaccrual Loans (in millions) | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total Nonaccrual Loans | $119.18 | $108.53 | - The loan portfolio saw a decrease in total loans net of unearned income by **$283.3 million** from December 31, 2024, to June 30, 2025[35](index=35&type=chunk) - Real estate loans constitute **80.1%** of the portfolio, with non-farm non-residential loans being the largest segment at **43.5%**[35](index=35&type=chunk)[112](index=112&type=chunk) - Nonaccrual loans increased by **$10.7 million** to **$119.2 million** at June 30, 2025, compared to December 31, 2024[39](index=39&type=chunk)[41](index=41&type=chunk)[51](index=51&type=chunk) - Loans 90 days or greater past due and still accruing significantly decreased from **$11.5 million** to **$0.3 million** in the same period[39](index=39&type=chunk)[41](index=41&type=chunk)[51](index=51&type=chunk) [Note 5. Allowance for Credit Losses on Loans](index=24&type=section&id=Note%205.%20Allowance%20for%20Credit%20Losses%20on%20Loans) This note details the allowance for credit losses on loans, including changes, evaluation methods, and related provisions Allowance for Credit Losses (ACL) on Loans (Six Months Ended June 30, in millions) | Item | 2025 | 2024 | | :----------------------------------- | :--------- | :--------- | | Beginning Allowance | $34.81 | $30.93 | | Charge-offs | $(8.02) | $(11.05) | | Recoveries | $0.41 | $0.50 | | Provision | $31.67 | $9.91 | | Ending Allowance | $58.87 | $30.29 | ACL by Evaluation Method (June 30, 2025, in millions) | Evaluation Type | Allowance for Credit Losses | | :----------------------------------- | :-------------------------- | | Individually Evaluated | $22.23 | | Collectively Evaluated | $36.64 | | Total | $58.87 | - The allowance for credit losses increased significantly to **$58.9 million** at June 30, 2025, from **$34.8 million** at December 31, 2024, primarily driven by a **$31.7 million** provision for credit losses in the first six months of 2025[48](index=48&type=chunk)[138](index=138&type=chunk)[142](index=142&type=chunk) - This increase reflects changes in the loan portfolio's composition and credit quality, including increased reserves on individually evaluated loans[48](index=48&type=chunk)[138](index=138&type=chunk)[142](index=142&type=chunk) - All loans individually evaluated for impairment at June 30, 2025, were considered collateral-dependent loans, with the ACL based on the fair value of the underlying collateral[52](index=52&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 the company's goodwill and other intangible assets, including their carrying amounts and amortization policies Goodwill and Intangible Assets (in millions) | Asset Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Goodwill | $12.90 | $12.90 | | Intangible assets, net | $3.06 | $3.47 | | Loan servicing assets | $0.30 | $0.40 | | Core deposit intangibles (amortized) | Included in Intangible assets, net | Included in Intangible assets, net | - Goodwill remained stable at **$12.9 million**, with no impairment charges recognized[56](index=56&type=chunk) - Core deposit intangibles, amortized over a weighted-average period of **3.8 years**, reflect the value of deposit relationships from acquisitions[56](index=56&type=chunk) [Note 7. Other Real Estate (ORE)](index=27&type=section&id=Note%207.%20Other%20Real%20Estate%20%28ORE%29) This note details the company's other real estate owned (OREO), including its composition and changes over the period Other Real Estate Owned (OREO) (in millions) | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Residential | $0.19 | $0.23 | | Construction & land development | $7.38 | $0.00 | | Non-farm non-residential | $0.08 | $0.09 | | Total Net OREO | $7.66 | $0.32 | - Net Other Real Estate Owned 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 acquired by foreclosure[57](index=57&type=chunk) [Note 8. Borrowings](index=27&type=section&id=Note%208.%20Borrowings) This note provides information on the company's various borrowing arrangements, including subordinated debt, senior debt, and related terms - First Guaranty exchanged **$15.0 million** in subordinated debt for 1,981,506 shares of common stock during Q2 2025[58](index=58&type=chunk)[59](index=59&type=chunk) - Amendments to senior and subordinated debt notes allow for interest payments in cash or common stock through March 2026[58](index=58&type=chunk)[59](index=59&type=chunk) - The company issued 36,060 shares of common stock for PIK interest on senior debt and 52,422 shares for PIK interest on **$30.0 million** subordinated debt for Q2 2025[61](index=61&type=chunk) - A financial covenant breach (adjusted Texas Ratio exceeding **35%**) on senior debt at March 31, 2025, led to a **1%** interest rate increase to **8.0%** for Q2 2025, but a waiver was provided by the lender through March 31, 2026[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, such as credit extensions and letters of credit, and discusses legal contingencies Off-Balance Sheet Commitments (in millions) | Commitment Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Commitments to Extend Credit | $72.01 | $134.18 | | Unfunded Commitments under lines of credit | $164.85 | $186.01 | | Commercial and Standby letters of credit | $13.53 | $13.58 | - 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**[66](index=66&type=chunk) - No liability has been accrued, and management believes current legal proceedings will not have a material adverse effect[66](index=66&type=chunk) [Note 10. Leases](index=29&type=section&id=Note%2010.%20Leases) This note provides information on the company's lease arrangements, including operating lease assets, liabilities, and future minimum lease payments - On June 28, 2024, First Guaranty sold three properties for approximately **$14.7 million** in a sale-leaseback transaction, resulting in a pre-tax gain of **$13.3 million**[68](index=68&type=chunk)[69](index=69&type=chunk) - Concurrently, it entered into 15-year absolute net lease agreements with annual payments of approximately **$1.3 million**[68](index=68&type=chunk)[69](index=69&type=chunk) Operating Lease Information (in millions) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Operating ROU assets | $11.30 | $11.60 | | Operating lease liabilities | $11.40 | $11.60 | Minimum Lease Payments (June 30, 2025, in millions) | Year | Amount | | :----------------------------------- | :------- | | 2025 | $0.70 | | 2026 | $1.41 | | 2027 | $1.41 | | 2028 | $1.35 | | 2029 | $1.31 | | Thereafter | $12.80 | | Total Lease Payments | $18.97 | [Note 11. Fair Value Measurements](index=30&type=section&id=Note%2011.%20Fair%20Value%20Measurements) This note describes the methodologies and assumptions used to determine the fair value of financial instruments, categorized by valuation input levels Available for Sale Securities Fair Value Measurements (in millions) | Level | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Level 1 (Quoted Prices in Active Markets) | $49.62 | $147.78 | | Level 2 (Significant Other Observable Inputs) | $342.14 | $127.22 | | Level 3 (Significant Unobservable Inputs) | $5.82 | $6.10 | | Total AFS Securities | $397.57 | $281.10 | Non-Recurring Fair Value Measurements (in millions) | Item | June 30, 2025 (Level 3) | December 31, 2024 (Level 3) | | :----------------------------------- | :---------------------- | :-------------------------- | | Loans Individually Evaluated for Impairment | $73.02 | $50.45 | | Other Real Estate Owned (Level 2) | $7.66 | $0.32 | - The change in Level 1 AFS securities was a net decrease of **$98.2 million**, primarily due to a reduction in Treasury bills[82](index=82&type=chunk) - There were no transfers between Level 1, 2, or 3 for AFS securities during the period[82](index=82&type=chunk) [Note 12. Financial Instruments](index=32&type=section&id=Note%2012.%20Financial%20Instruments) This note provides information on the carrying amounts and estimated fair values of various financial instruments - Fair value estimates are subjective and based on assumptions like discount rates, future cash flows, and market information[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - They are not necessarily indicative of net realizable value or future fair values, nor do they account for premiums/discounts from ownership concentrations or tax ramifications[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) Carrying Amounts and Estimated Fair Values of Financial Instruments (June 30, 2025, in millions) | Item | Carrying Amount | Total Fair Value | | :----------------------------------- | :-------------- | :--------------- | | **Assets** | | | | Cash and due from banks | $714.31 | $714.31 | | Federal funds sold | $0.56 | $0.56 | | Securities, available for sale | $397.57 | $397.57 | | Securities, held for maturity | $322.15 | $260.08 | | Loans, net | $2,351.63 | $2,316.33 | | Accrued interest receivable | $13.31 | $13.31 | | **Liabilities** | | | | Deposits | $3,481.34 | $3,488.05 | | Repurchase agreements | $7.12 | $7.13 | | Accrued interest payable | $19.50 | $19.50 | | Long-term advances from FHLB | $135.00 | $136.23 | | Senior long-term debt | $14.19 | $14.27 | | Junior subordinated debentures | $29.78 | $29.78 | [Note 13. Segment Reporting](index=36&type=section&id=Note%2013.%20Segment%20Reporting) This note clarifies that First Guaranty operates as a single operating segment, providing banking, financial, and trust services - First Guaranty operates as a single operating segment, providing banking, financial, and trust services[102](index=102&type=chunk) - The CEO, as CODM, manages the business using consolidated net income, with interest income and expense being the most significant sources of income and expense[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%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, highlighting key factors and trends [Financial Overview](index=38&type=section&id=Financial%20Overview) This section summarizes the company's financial performance, strategic initiatives, and key financial metrics for the reported periods - First Guaranty continued its strategy to reduce loan portfolio risk, decreasing non-performing assets by **$6.8 million** in Q2 2025 and reducing commercial real estate (CRE) secured loans[106](index=106&type=chunk) - The company anticipates further reductions in CRE loans in 2025[106](index=106&type=chunk) Key Financial Highlights (in millions, except share data and percentages) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net (Loss) Income | $(7.30) | $7.20 | $(13.47) | $9.51 | | (Loss) Earnings Per Common Share | $(0.61) | $0.53 | $(1.15) | $0.67 | | Provision for Credit Losses | $16.61 | $6.81 | $31.16 | $9.11 | | Net Interest Income | $22.24 | $21.24 | $44.46 | $43.16 | | Noninterest Expense | $17.27 | $20.61 | $35.28 | $39.54 | | Net Interest Margin | 2.34% | 2.48% | 2.35% | 2.53% | Balance Sheet Highlights (in millions, except percentages) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total Assets | $3,969.58 | $3,972.73 | | Total Loans (net of unearned income) | $2,410.51 | $2,693.78 | | Allowance for Credit Losses (ACL) | $58.87 | $34.81 | | ACL as % of Total Loans | 2.44% | 1.29% | | Nonaccrual Loans | $119.18 | $108.53 | | Other Real Estate Owned | $7.66 | $0.32 | | Total Shareholders' Equity | $263.09 | $255.05 | | Book Value Per Common Share | $15.21 | $17.75 | - Noninterest expense decreased by **$3.3 million** (Q2 2025 vs Q2 2024), translating to an annual run rate savings of approximately **$13.4 million**, aligning with strategic plans[106](index=106&type=chunk)[107](index=107&type=chunk) - The company also reduced full-time equivalent employees from 495 at June 30, 2024, to 360 at June 30, 2025[106](index=106&type=chunk)[107](index=107&type=chunk) - Capital actions included issuing 1,981,506 common shares for **$15.0 million** in subordinated debt, a private placement of 161,760 common shares, and issuing 88,482 common shares for PIK interest on senior and subordinated debt[109](index=109&type=chunk) - Common stock dividends were reduced from **$0.16** to **$0.01** per share to increase capital[109](index=109&type=chunk) [Financial Condition](index=43&type=section&id=Financial%20Condition) This section analyzes the company's balance sheet components, including loans, investment securities, nonperforming assets, and capital [Loans](index=43&type=section&id=Loans) This section analyzes the loan portfolio's composition, changes, and credit quality trends - Net loans decreased by **$307.3 million** (**11.6%**) to **$2.4 billion** at June 30, 2025, from December 31, 2024, driven by reductions in non-farm non-residential, construction & land development, and commercial lease loans due to sales, paydowns, and conversions[111](index=111&type=chunk) - The loan portfolio is **80.1%** secured by real estate, with **43.5%** in non-farm non-residential loans[112](index=112&type=chunk) - Approximately **55.3%** of the portfolio is floating rate, and **46.2%** is scheduled to mature within five years[112](index=112&type=chunk) - Classified assets increased due to a **$91.7 million** rise in substandard loans, resulting from downgrades of non-farm non-residential, construction & land development, and commercial loan relationships[115](index=115&type=chunk) - Special mention loans also increased by **$60.9 million**[115](index=115&type=chunk) [Investment Securities](index=45&type=section&id=Investment%20Securities) This section reviews the investment securities portfolio, including its composition, changes, and maturity profile Investment Securities Portfolio (in millions) | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total Investment Securities (net of ACL) | $719.70 | $602.70 | | Available for Sale (AFS) | $397.60 | $281.10 | | Held to Maturity (HTM) | $322.10 | $321.60 | - The AFS portfolio increased by **$116.5 million** (**41.4%**) due to purchases of collateralized mortgage obligations and mortgage-backed securities[120](index=120&type=chunk)[121](index=121&type=chunk) - The HTM portfolio saw a slight increase of **$0.5 million** (**0.2%**)[120](index=120&type=chunk)[121](index=121&type=chunk) - At June 30, 2025, **7.0%** of the securities portfolio matures in less than one year, and the portfolio has a forecasted weighted average life of approximately **7.01 years** with an effective duration of **5.24 years**[122](index=122&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 (in millions, except percentages) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total nonaccrual loans | $119.18 | $108.53 | | Loans 90 days and greater delinquent & accruing | $0.28 | $11.50 | | Total nonperforming loans | $119.46 | $120.03 | | Total Real Estate Owned | $7.66 | $0.32 | | Total nonperforming assets | $127.12 | $120.35 | | Nonperforming assets to total assets | 3.20% | 3.03% | | Nonaccrual loans to total loans | 4.94% | 4.03% | - Total nonperforming assets increased by **$6.8 million** (**5.6%**) to **$127.1 million** at June 30, 2025, primarily due to an increase in nonaccrual loans and other real estate owned, partially offset by a decrease in 90+ day delinquent loans[127](index=127&type=chunk) - The largest 6 non-performing loan relationships comprise **75%** of total non-performing loans, including a **$27.5 million** independent living center loan and a **$25.9 million** multifamily apartment complex loan, both placed on nonaccrual in Q4 2024[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, provision amounts, and coverage ratios Allowance for Credit Losses (ACL) (in millions, except percentages) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | ACL on loans | $58.87 | $34.81 | | ACL as % of total loans | 2.44% | 1.29% | | ACL as % of nonperforming loans | 49.3% | 32.08% | Provision for Credit Losses (Six Months Ended June 30, in millions) | Year | Provision | | :----------------------------------- | :-------- | | 2025 | $31.16 | | 2024 | $9.11 | - The provision for credit losses significantly increased to **$31.2 million** for the six months ended June 30, 2025, from **$9.1 million** in the prior year, primarily due to increased reserves on individually evaluated loans and charge-offs from loan sales[138](index=138&type=chunk)[185](index=185&type=chunk) - Loan charge-offs for the first six months of 2025 totaled **$8.0 million**, concentrated in construction & land development, commercial & industrial, commercial leases, and consumer loans[141](index=141&type=chunk)[185](index=185&type=chunk) - Recoveries totaled **$0.4 million**[141](index=141&type=chunk)[185](index=185&type=chunk) [Deposits](index=51&type=section&id=Deposits) This section analyzes the company's deposit base, including composition, changes, and uninsured deposit levels Deposit Balances (in millions) | Deposit Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Noninterest-bearing demand | $442.27 | $404.06 | | Interest-bearing demand | $1,402.96 | $1,387.07 | | Savings | $247.12 | $234.44 | | Time | $1,388.99 | $1,450.69 | | Total Deposits | $3,481.34 | $3,476.26 | Public Funds Deposits (in millions, except percentages) | Public Fund Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total Public Funds | $1,106.91 | $1,046.80 | | Public Funds as % of Total Deposits | 31.8% | 30.1% | - Total deposits increased slightly by **$5.1 million** (**0.1%**) to **$3.5 billion**[143](index=143&type=chunk) - Noninterest-bearing demand deposits increased by **$38.2 million** (**9.5%**), while time deposits decreased by **$61.7 million** (**4.3%**), mainly due to brokered time deposits[143](index=143&type=chunk) - Uninsured deposits were estimated at **$263.4 million**, excluding collateralized public funds[146](index=146&type=chunk) - Including collateralized public funds, uninsured deposits totaled **$838.6 million** at June 30, 2025[146](index=146&type=chunk) [Borrowings](index=53&type=section&id=Borrowings) This section details the company's borrowing activities, including repurchase agreements, FHLB advances, and subordinated debt Borrowings (in millions) | Borrowing Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Repurchase agreements | $7.12 | $7.01 | | Long-term advances from FHLB | $135.00 | $135.00 | | Senior long-term debt | $14.19 | $15.17 | | Junior subordinated debentures | $29.78 | $44.75 | | FHLB letters of credit | $450.40 | $455.70 | - Long-term FHLB advances remained at **$135.0 million**[154](index=154&type=chunk)[155](index=155&type=chunk) - Junior subordinated debentures decreased to **$29.8 million** from **$44.7 million**, reflecting the conversion of **$15.0 million** into common stock[154](index=154&type=chunk)[155](index=155&type=chunk) [Total Shareholders' Equity](index=53&type=section&id=Total%20Shareholders%27%20Equity) This section analyzes changes in total shareholders' equity, including contributions from capital actions and impacts from net income/loss and dividends Total Shareholders' Equity (in millions) | Date | Amount | | :----------------------------------- | :----- | | June 30, 2025 | $263.09 | | December 31, 2024 | $255.05 | - Total shareholders' equity increased by **$8.0 million** to **$263.1 million**, driven by a **$17.7 million** increase in surplus and a **$2.6 million** increase in common stock from subordinated debt conversion and private placement[156](index=156&type=chunk) - This was partially offset by a **$14.9 million** decrease in retained earnings due to a 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%2C%202025%20and%202024) This section analyzes the company's financial performance for the second quarter and six months ended June 30, 2025, compared to the prior year [Performance Summary](index=54&type=section&id=Performance%20Summary) This section provides a high-level overview of the company's financial results, including net income/loss and earnings per share Performance Summary (in millions, except share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net (Loss) Income | $(7.30) | $7.20 | $(13.47) | $9.51 | | (Loss) Earnings Per Common Share | $(0.61) | $0.53 | $(1.15) | $0.67 | - Net loss for Q2 2025 was **$7.3 million**, a **$14.5 million** decrease from net income in Q2 2024, primarily due to a higher provision for credit losses and decreased noninterest income from the prior year's asset sale-leaseback gain[157](index=157&type=chunk)[158](index=158&type=chunk) - H1 2025 also saw a net loss of **$13.5 million**, a **$23.0 million** decrease[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 (in millions, except percentages) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net Interest Income | $22.24 | $21.24 | $44.46 | $43.16 | | Net Interest Rate Spread | 1.72% | 1.72% | 1.73% | 1.78% | | Net Interest Margin | 2.34% | 2.48% | 2.35% | 2.53% | - Net interest income increased for both Q2 and H1 2025, driven by growth in interest-earning assets (securities and deposits with banks) and a decrease in the average rate of interest-bearing liabilities, despite a lower average yield on interest-earning assets[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 H1 2025, primarily due to a lower yield on interest-earning deposits with banks and a decrease in the cost of liabilities from repricing public funds indexed to Treasury rates[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, including contributions from loans, deposits, and securities Interest Income Breakdown (in millions) | Source | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Loans | $41.01 | $47.55 | $83.98 | $94.47 | | Deposits with other banks | $7.51 | $3.63 | $13.51 | $7.10 | | Securities | $5.80 | $2.47 | $11.29 | $4.99 | | Total Interest Income | $54.32 | $53.65 | $108.78 | $106.56 | - Total interest income increased by **$0.7 million** (**1.2%**) for Q2 2025 and **$2.2 million** (**2.1%**) for H1 2025[164](index=164&type=chunk)[168](index=168&type=chunk) - This was driven by higher interest income from securities and deposits with other banks, which offset a decrease in loan interest income[164](index=164&type=chunk)[168](index=168&type=chunk) - Loan interest income decreased by **$6.5 million** (**13.8%**) for Q2 2025 and **$10.5 million** (**11.1%**) for H1 2025, primarily due to a decrease in average loan balances from sales and payoffs[166](index=166&type=chunk)[170](index=170&type=chunk) [Interest Expense](index=57&type=section&id=Interest%20Expense) This section analyzes the components and changes in interest expense, including costs associated with deposits and borrowings Interest Expense Breakdown (in millions) | Source | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Demand deposits | $12.71 | $17.06 | $24.91 | $34.04 | | Savings deposits | $1.34 | $1.33 | $2.60 | $2.55 | | Time deposits | $15.20 | $10.45 | $31.09 | $20.02 | | Borrowings | $2.84 | $3.58 | $5.73 | $6.79 | | Total Interest Expense | $32.08 | $32.41 | $64.32 | $63.40 | - Total interest expense decreased by **$0.3 million** (**1.0%**) for Q2 2025 but increased by **$0.9 million** (**1.5%**) for H1 2025[172](index=172&type=chunk)[173](index=173&type=chunk) - The Q2 decrease was mainly due to a lower average rate on interest-bearing deposits, particularly public funds indexed to Treasury rates, despite an increase in average interest-bearing liabilities[172](index=172&type=chunk)[173](index=173&type=chunk) - The average rate of interest-bearing demand deposits decreased from **4.52%** to **3.73%** in Q2 and from **4.47%** to **3.67%** in H1[172](index=172&type=chunk)[173](index=173&type=chunk) - The average rate of time deposits decreased from **4.74%** to **4.33%** in Q2 and from **4.64%** to **4.40%** in H1[172](index=172&type=chunk)[173](index=173&type=chunk) [Provision for Credit Losses](index=61&type=section&id=Provision%20for%20Credit%20Losses) This section analyzes the provision for credit losses, including the amounts recognized and the factors driving these provisions Provision for Credit Losses (in millions) | Period | Provision | | :----------------------------------- | :-------- | | Three months ended June 30, 2025 | $16.61 | | Three months ended June 30, 2024 | $6.81 | | Six months ended June 30, 2025 | $31.16 | | Six months ended June 30, 2024 | $9.11 | - The provision for credit losses significantly increased to **$16.6 million** for Q2 2025 and **$31.2 million** for H1 2025, primarily due to increased reserves on individually evaluated loans and charge-offs related to loan sales[184](index=184&type=chunk)[185](index=185&type=chunk) - This includes a subsequent **$1.9 million** provision after the initial press release[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 H1 2025, concentrated in commercial & industrial, lease, consumer, and construction & land development loans[184](index=184&type=chunk)[185](index=185&type=chunk) - Recoveries totaled **$0.2 million** for Q2 and **$0.4 million** for H1[184](index=184&type=chunk)[185](index=185&type=chunk) [Noninterest Income](index=61&type=section&id=Noninterest%20Income) This section analyzes the components and changes in noninterest income, including service charges, fees, and gains on asset sales Noninterest Income (in millions) | Source | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Service charges, commissions and fees | $0.83 | $0.80 | $1.68 | $1.53 | | ATM and debit card fees | $0.78 | $0.80 | $1.53 | $1.57 | | Net gains on sale of assets | $0.00 | $13.21 | $0.00 | $13.21 | | Total Noninterest Income | $2.16 | $15.53 | $4.51 | $17.83 | - Total noninterest income decreased significantly by **$13.4 million** for Q2 2025 and **$13.3 million** for H1 2025, primarily due to the absence of net gains on the sale of assets[189](index=189&type=chunk)[190](index=190&type=chunk) - This 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 analyzes the components and changes in noninterest expense, including salaries, occupancy costs, and other operating expenses Noninterest Expense (in millions) | Category | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Salaries and employee benefits | $7.84 | $10.44 | $16.28 | $20.34 | | Occupancy and equipment expense | $2.61 | $2.55 | $5.25 | $4.82 | | Other noninterest expense | $6.82 | $7.62 | $13.76 | $14.39 | | Total Noninterest Expense | $17.27 | $20.61 | $35.28 | $39.54 | - Total noninterest expense decreased by **$3.3 million** for Q2 2025 and **$4.2 million** for H1 2025, primarily driven by reduced salaries and employee benefits, and lower legal and professional fees[191](index=191&type=chunk)[192](index=192&type=chunk) Other Noninterest Expense Categories (in millions) | Category | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Legal and professional fees | $0.67 | $1.50 | $1.76 | $2.48 | | Regulatory assessment | $1.61 | $0.99 | $3.15 | $1.92 | | Software expense and amortization | $1.19 | $1.37 | $2.40 | $2.62 | [Income Taxes](index=62&type=section&id=Income%20Taxes) This section discusses the company's income tax expense or benefit and the factors influencing the effective tax rate Income Tax (Benefit) Provision (in millions) | Period | (Benefit) Provision | | :----------------------------------- | :------------------ | | Three months ended June 30, 2025 | $(2.18) | | Three months ended June 30, 2024 | $2.15 | | Six months ended June 30, 2025 | $(4.00) | | Six months ended June 30, 2024 | $2.83 | - First Guaranty recorded an income tax benefit of **$2.2 million** for Q2 2025 and **$4.0 million** for H1 2025, compared to a provision in the prior year periods, due to a decrease in income before income taxes[194](index=194&type=chunk)[195](index=195&type=chunk) - The statutory tax rate remained **21.0%**[194](index=194&type=chunk)[195](index=195&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details First Guaranty's approach to managing market risk, primarily interest rate risk (IRR), through its asset/liability management (ALM) process [Asset/Liability Management and Market Risk](index=65&type=section&id=Asset%2FLiability%20Management%20and%20Market%20Risk) This section describes the company's strategies for managing interest rate risk and maintaining a balanced mix of rate-sensitive assets and liabilities - First Guaranty's ALM process quantifies, analyzes, and controls interest rate risk (IRR) to maintain stable net interest income[207](index=207&type=chunk)[209](index=209&type=chunk) - The company aims to reduce its liability-sensitive position by creating a more balanced mix of rate-sensitive assets and liabilities[207](index=207&type=chunk)[209](index=209&type=chunk) Interest Sensitivity Analysis (June 30, 2025, in millions, except percentages) | Period | Period Gap | Cumulative Gap | | :----------------------------------- | :--------- | :------------- | | 3 Months Or Less | $(293.37) | $(293.37) | | Over 3 Months thru 12 Months | $(248.07) | $(541.45) | | Total One Year | $(541.45) | $(541.45) | | Cumulative Gap as a % of Earning Assets | | (14.2)% | - The interest sensitivity analysis at June 30, 2025, reflects a liability-sensitive position with a negative cumulative gap of **$541.4 million** on a one-year basis, indicating more liabilities are subject to repricing than assets within this timeframe[211](index=211&type=chunk)[213](index=213&type=chunk) [Item 4. Controls and Procedures](index=67&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, including identified material weaknesses and remediation efforts [Evaluation of Disclosure Controls and Procedures](index=67&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents the conclusions of management's evaluation regarding the effectiveness of the company's disclosure controls and procedures - 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 in all material respects[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 material weakness in the company's internal control over financial reporting - A material weakness was identified: the Company did not effectively perform controls on a timely basis relating to the loan operations quality control review function for all new loans originated during the period[217](index=217&type=chunk) [Remediation Steps](index=67&type=section&id=Remediation%20Steps) This section outlines the actions taken or planned by management to address the identified material weakness in internal control - Remediation steps include new leadership for the loan operations department, additional staff for the quality control function, and enhanced monitoring processes instituted by the new leadership[218](index=218&type=chunk)[219](index=219&type=chunk) [Changes in Internal Control Over Financial Reporting](index=67&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports any material changes in the company's internal control over financial reporting during the last fiscal quarter - Other than the described material weakness and remediation efforts, 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 This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) This section outlines First Guaranty's involvement in various legal proceedings in the normal course of business - 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**[220](index=220&type=chunk) - No accrued liability has been recorded[220](index=220&type=chunk) - Management believes that current legal proceedings, individually or in aggregate, are not expected to have a material adverse effect on First Guaranty's consolidated results of operations, financial condition, or cash flows[220](index=220&type=chunk) [Item 1A. Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the risk factors detailed in the company's Annual Report on Form 10-K and highlights a newly identified material weakness in internal control over financial reporting - A material weakness in internal control over financial reporting has been identified, which could lead to failure in meeting SEC reporting obligations or material misstatements, potentially affecting investor confidence 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=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the issuance of common stock through unregistered sales, including a private placement and conversions of subordinated debt - 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, an exchange agreement for subordinated debt, and amendments to promissory notes for PIK interest[228](index=228&type=chunk) - The proceeds are for general corporate purposes and to enhance regulatory capital ratios[228](index=228&type=chunk) [Item 3. Defaults Upon Senior Securities](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[225](index=225&type=chunk) [Item 4. Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to First Guaranty Bancshares, Inc - Mine Safety Disclosures are not applicable[226](index=226&type=chunk) [Item 5. Other Information](index=68&type=section&id=Item%205.%20Other%20Information) This section confirms that there is no other material information to report under this item, specifically noting no Rule 10b5-1 trading arrangements adopted or terminated by officers or directors - 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 provides a comprehensive list of exhibits filed as part of the report or incorporated by reference, including organizational documents, stock certificates, debt agreements, and certifications - The report includes various exhibits such as Restated Articles of Incorporation, Bylaws, Common and Preferred Stock forms, Subordinated Notes, Exchange Agreements, and certifications from the CEO and CFO[232](index=232&type=chunk)[233](index=233&type=chunk) [Signatures](index=73&type=section&id=Signatures) This section contains the required signatures of the President and Chief Executive Officer (Principal Executive Officer) and the Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer) of First Guaranty Bancshares, Inc., certifying the report - The report is signed by Michael R. Mineer, President and Chief Executive Officer (Principal Executive Officer), and Eric J. Dosch, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer), on August 18, 2025[237](index=237&type=chunk)

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 for Q1 2025 was $6,166 thousand compared to a net income of $2,310 thousand in Q1 2024, indicating a significant downturn[11] - Net interest income for Q1 2025 was $22.2 million, an increase from $21.9 million in Q1 2024[3] - Net interest income after provision for credit losses dropped significantly from $19,617 thousand in Q1 2024 to $7,675 thousand in Q1 2025, a decrease of approximately 60.9%[11] - 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] - The provision for credit losses increased from $2,304 thousand in Q1 2024 to $14,548 thousand in Q1 2025, reflecting a rise of over 532%[11] Loan and Asset Quality - 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] - Non-performing loans totaled $133,780 thousand as of March 31, 2025, representing 5.32% of total loans, an increase from 4.46% on December 31, 2024[18] - Total non-performing assets reached $133,932 thousand, up from $120,350 thousand on December 31, 2024, indicating a rise in asset quality concerns[18] - The net interest margin decreased from 2.58% in Q1 2024 to 2.35% in Q1 2025[14] - The company reported a net loan charge-off rate of 1.03% for the three months ended March 31, 2025, compared to 0.64% for the same period in 2024, reflecting increased credit risk[18] Capital and Equity - 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] - 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 2.36%[23] - Tangible common equity stands at $202,599,000 as of March 31, 2025, down from $206,029,000 at December 31, 2024, a decline of 2.08%[23] - The allowance for credit losses was 1.71% of total loans at March 31, 2025, up from 1.29% at December 31, 2024[3] - The allowance for credit losses to nonaccrual loans ratio was 32.25% as of March 31, 2025, compared to 32.08% on December 31, 2024, indicating stable credit loss reserves[18] Dividends and Shareholder Returns - Cash dividends declared were $0.01 per common share in Q1 2025, reduced from $0.16 in Q1 2024, as part of a new business strategy to increase capital[4] - Cash dividends paid per common share decreased from $0.16 in Q1 2024 to $0.01 in Q1 2025[11] 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 shareholders' equity decreased to $251.4 million at March 31, 2025, down from $255.0 million at December 31, 2024, primarily due to a $6.9 million decrease in retained earnings [156]. - The net loss for the three months ended March 31, 2025, was $6.2 million, with cash dividends paid amounting to $0.1 million on common stock and $0.6 million on preferred stock [183]. Loan and Asset Management - Total loans decreased by $181.0 million, or 6.7%, to $2.5 billion at March 31, 2025, compared to $2.69 billion at December 31, 2024 [107]. - Nonaccrual loan balances increased by $24.9 million to $133.4 million at March 31, 2025, with significant increases concentrated in two loans totaling $40.3 million [109]. - Net loans decreased by $189.2 million, or 7.1%, to $2.5 billion as of March 31, 2025, compared to December 31, 2024 [112]. - 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 concentration in two commercial real estate relationships totaling $40.3 million [128]. Credit Loss Provisions - 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 [107]. - The allowance for credit losses increased to $43.0 million, or 1.71% of total loans, at March 31, 2025, compared to $34.8 million, or 1.29%, at December 31, 2024 [107]. - A provision for credit losses of $14.5 million was made during the three months ended March 31, 2025, compared to $2.3 million for the same period in 2024 [138]. - Total charge-offs for the three months ended March 31, 2025, were $6.9 million, compared to $2.3 million for the same period in 2024, an increase of 200% [172]. Deposits and Funding - Total deposits decreased by $136.8 million, or 3.9%, to $3.3 billion at March 31, 2025, compared to $3.4 billion at December 31, 2024 [107]. - 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]. - Total public funds as a percentage of total deposits decreased to 27.8% at March 31, 2025, from 30.1% at December 31, 2024 [152]. Interest Income and Expenses - Net interest income increased to $22.2 million for the three months ended March 31, 2025, compared to $21.9 million for the same period in 2024, driven by an increase in the average balance of interest-earning assets [160]. - Interest income rose by $1.6 million, or 2.9%, to $54.5 million for the three months ended March 31, 2025, attributed to an increase in the average balance of interest-earning assets [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, due to a decrease in the average balance of loans [163]. - Interest expense increased by $1.3 million, or 4.0%, to $32.2 million for the three months ended March 31, 2025, primarily due to an increase in the average balance of interest-bearing liabilities [165]. Capital and Regulatory Compliance - The capital conservation buffer was 4.74% as of March 31, 2025, 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 11.49% as of December 31, 2024, and decreased to 8.00% as of March 31, 2025 [189]. Asset Composition - Total assets decreased by $143.5 million, or 3.6%, to $3.8 billion at March 31, 2025, primarily due to decreases in investment securities and net loans [111]. - Investment securities decreased by $7.8 million to $594.9 million as of March 31, 2025, from $602.7 million at December 31, 2024 [119]. - The available for sale securities portfolio decreased by $8.1 million, or 2.9%, to $273.0 million at March 31, 2025 [121]. - Approximately 80.3% of the loan portfolio was secured by real estate as of March 31, 2025 [113]. Business Strategy and Adjustments - The company modified its business plan in 2024 to reduce the liability-sensitive nature of its balance sheet [192].

Financial Performance - As of December 31, 2024, First Guaranty Bancshares had consolidated total assets of $4.0 billion, total deposits of $3.5 billion, and total shareholders' equity of $255.0 million[18]. - For the year ended December 31, 2024, net interest income was $88.4 million, significantly higher than the total noninterest income of $24.7 million[158]. - Service charges, commissions, and fees contributed $3.2 million, or 12.9% of total noninterest income for the year ended December 31, 2024, down from $3.4 million, or 32.2%, in the previous year[159]. - The loan to deposit ratio was 77.5% as of December 31, 2024, indicating a strong reliance on loans relative to deposits[171]. - The carrying value of the securities portfolio was $602.7 million as of December 31, 2024, with unrealized losses of $73.8 million due to rising interest rates[171]. Growth and Expansion - First Guaranty has grown from 6 branches and $159 million in assets in 1993 to 35 branches and $4.0 billion in assets by the end of 2024[19]. - The company has supplemented organic growth with four acquisitions since the Share Exchange, enhancing its geographic footprint and deposit stability[21]. - The company continues to focus on expanding its individual and business deposit bases while maintaining a public funds deposit program for stable funding[41]. Regulatory Compliance - As of December 31, 2024, First Guaranty Bank exceeded all regulatory capital requirements and was considered well-capitalized[94]. - The bank's total risk-based capital ratio must be at least 10.0% to be deemed "well capitalized," with a Tier 1 risk-based capital ratio of 8.0% or greater[100]. - The company is subject to consolidated regulatory capital requirements due to total consolidated assets exceeding $3 billion, effective March 31, 2024[115]. - The bank's transactions with affiliates are limited to 10% of its capital stock and surplus for any one affiliate, with an aggregate limit of 20%[103]. Loan Portfolio Composition - As of December 31, 2024, loans secured by non-farm non-residential properties totaled $1.2 billion, representing 42.9% of the total loan portfolio[44]. - Commercial and industrial loans amounted to $257.5 million, or 9.5% of the total loan portfolio, with a maximum loan-to-value limit of 80%[47]. - One- to four-family residential real estate loans totaled $450.4 million, accounting for 16.7% of the total loan portfolio[50]. - Construction and land development loans comprised $330.0 million, or 12.2% of the total loan portfolio, with plans to reduce exposure in 2025[56][58]. - Non-performing assets totaled $120.4 million, representing 3.03% of total assets, an increase of 188.4% from the previous year[122]. Risk Management - The company has developed a fully amortizing loan product that now represents the majority of new origination and renewed loans[45]. - The allowance for credit losses was 1.29% of total loans and 29.00% of total non-performing loans as of December 31, 2024[135]. - The company may need to increase its allowance for credit losses in response to future credit deterioration, which could materially affect net income[135]. - The company faces potential litigation risks related to its participation in the PPP and Main Street Lending Program, which could adversely impact its financial condition[138]. - Environmental liability risks are present due to a significant portion of the loan portfolio being secured by real property, which may incur remediation costs[144]. Capital and Funding - The company intends to continue increasing capital and risk-weighted capital ratios through retained earnings and credit loss allowances[42]. - The bank held $3.5 billion in total deposits as of December 31, 2024, including $1.0 billion in public funds deposits[69][70]. - Brokered deposits were $768.0 million, with $657.5 million in time deposits and $110.5 million in money market deposits[71]. - The ability to declare and pay dividends is limited by regulatory guidance and restrictions, with future dividends dependent on capital levels and financial performance[188]. Cybersecurity and Technology - The Information Security Program is aligned with the Federal Financial Institutions Examination Council (FFIEC) standards for cybersecurity risk management[204]. - The organization has a board-approved risk appetite of "low" for cybersecurity risks[205]. - First Guaranty has developed and implemented an Incident Response Plan (IRP) that is tested annually[206]. - The Chief Information Security Officer (CISO) reports quarterly on cybersecurity metrics and emerging risks[204]. - As of the date of this Form 10-K, there are no known cybersecurity incidents that have materially affected the organization[209]. Community Engagement - The bank's employees volunteered approximately 4,039 hours of service in 2024 and contributed over $256,000 to charitable organizations[78]. - First Guaranty Bank's latest FDIC CRA rating, dated October 11, 2022, was "satisfactory," reflecting its commitment to meet the credit needs of its community[108].

Financial Reporting - First Guaranty Bancshares, Inc. released its Fourth Quarter 2024 Report on February 5, 2025[5] - The report includes financial results for the fourth quarter of 2024, which are detailed in Exhibit 99.1[6] - The financial statements and results are not deemed "filed" under the Securities Exchange Act of 1934[5] Company Information - The company is listed on The Nasdaq Stock Market under the trading symbol FGBI for common stock and FGBIP for preferred stock[4] - The report was signed by Chief Financial Officer Eric J. Dosch, indicating official approval of the financial results[9]

Financial Performance - Net income for the third quarter of 2024 was $1.9 million, an increase of $0.2 million or 8.7% compared to $1.8 million in the same quarter of 2023[99]. - Net income for the nine months ended September 30, 2024, was $11.4 million, an increase of $3.5 million, or 44.5%, from $7.9 million for the same period in 2023[152]. - Net interest income for the three months ended September 30, 2024, was $22.7 million, an increase from $20.4 million for the same period in 2023[156]. - Net interest income for the nine months ended September 30, 2024, was $65.9 million, compared to $63.7 million for the same period in 2023[173]. - Noninterest income for the three months ended September 30, 2024, totaled $4.4 million, an increase of $1.9 million from $2.5 million for the same period in 2023, primarily due to increased gains on the sale of loans[181]. Asset and Deposit Growth - Total assets increased by $371.2 million, reaching $3.9 billion as of September 30, 2024, compared to $3.6 billion at December 31, 2023, representing a growth of 10.4%[101]. - Total deposits rose to $3.4 billion, an increase of $420.8 million or 14.0% from December 31, 2023[99]. - The investment securities portfolio totaled $664.0 million at September 30, 2024, an increase of $259.9 million from $404.1 million at December 31, 2023[109]. - Time deposits increased by $471.8 million, or 57.5%, to $1.3 billion at September 30, 2024, primarily due to increases in brokered time deposits[136]. - Time deposits maturing within one year or less totaled $773.8 million at September 30, 2024, compared to $503.7 million at December 31, 2023, showing growth in short-term funding[189]. Credit Quality and Losses - The allowance for credit losses increased to $33.3 million, or 1.20% of total loans, compared to $30.9 million, or 1.13%, at December 31, 2023[99]. - Nonperforming assets rose to $67.0 million, or 1.71% of total assets, compared to $41.7 million, or 1.17% of total assets at December 31, 2023, marking a 60.6% increase[117]. - Total charge-offs for the nine months ended September 30, 2024, were $13.7 million, compared to $2.0 million for the same period in 2023, indicating a substantial rise in loan losses[178]. - The provision for credit losses for the three months ended September 30, 2024, was $4.9 million, a significant increase from $0.6 million for the same period in 2023[177]. - Special mention loans increased by $60.5 million in 2024, primarily due to downgrades of several loan relationships[106]. Capital and Equity - Total shareholders' equity increased to $256.4 million at September 30, 2024, up from $249.6 million at December 31, 2023, driven by a $4.7 million increase in retained earnings[150]. - The cash and cash equivalents totaled $367.6 million at September 30, 2024, compared to $286.5 million at December 31, 2023, reflecting improved liquidity[189]. - The Bank's Tier 1 Risk-based Capital Ratio was 10.62% as of December 31, 2023, compared to 8.00% minimum requirement[199]. - The Bank's Tier 1 Leverage Ratio was 8.32%, down from 8.94% as of December 31, 2023[199]. - First Guaranty's capital conservation buffer was 2.79% as of September 30, 2024, also above the minimum of 2.50%[195]. Interest Income and Expense - Interest income increased by $9.8 million, or 20.6%, to $57.4 million for the three months ended September 30, 2024, compared to the prior year[158]. - Interest expense increased by $29.1 million, or 42.1%, to $98.1 million for the nine months ended September 30, 2024, from $69.0 million for the same period in 2023, primarily due to rising market interest rates and an increase in the average balance of interest-bearing liabilities[167]. - The average rate of interest-bearing demand deposits increased to 4.48% for the nine months ended September 30, 2024, compared to 4.05% for the same period in 2023[167]. - The average balance of interest-earning assets increased to $3.5 billion for the nine months ended September 30, 2024, with total interest income of $164.0 million[173]. - The average yield of interest-earning assets increased by 42 basis points to 6.34% for the three months ended September 30, 2024[158]. Loan Portfolio - Average balance of loans (excluding loans held for sale) increased by $178.7 million to $2.8 billion for the three months ended September 30, 2024[160]. - The net loan charge-offs to average loans ratio was 0.62% at September 30, 2024, compared to 0.17% at December 31, 2023[116]. - Nonaccrual loans increased significantly from $25.2 million at December 31, 2023, to $65.8 million at September 30, 2024[118]. - As of September 30, 2024, First Guaranty's largest commercial real estate (CRE) loan secured by an apartment complex totaled $41.5 million located in Louisiana[105]. - The average balance of loans, net of unearned income, increased to $2.8 billion for the nine months ended September 30, 2024, generating interest income of $144.3 million[173]. Risk Management - The period gap for interest sensitivity was $(657,330,000), indicating a liability-sensitive position[206]. - Cumulative gap as a percent of earning assets was (17.3%) as of September 30, 2024[206]. - The majority of the Bank's assets are loans secured by real estate and fixed-rate securities, which have longer maturities than liabilities[201]. - The management asset liability committee oversees interest rate risk and meets regularly to review policies and positions[201].

Financial Performance - Net income for the third quarter of 2024 was $1.9 million, an increase of $0.2 million or 8.7% compared to $1.8 million in the same quarter of 2023[3] - Earnings per common share increased to $0.11 for the third quarter of 2024, up from $0.10 in the same quarter of 2023[3] - Net income available to common shareholders for the three months ended September 30, 2024, was $1,345, up from $1,190, representing a growth of 13.0%[11] - Earnings per common share increased to $0.11 from $0.10, a rise of 10.0%[11] Asset Growth - Total assets increased by $371.2 million to $3.9 billion as of September 30, 2024, compared to $3.6 billion at December 31, 2023[3] - Total assets increased to $3,924,007, up from $3,552,772, representing a growth of 10.5%[9] - Total assets reached $3,924,007 thousand as of September 30, 2024, compared to $3,552,772 thousand a year earlier, marking a 10.5% increase[27] - Tangible assets totaled $3,907,870 thousand as of September 30, 2024, up from $3,536,114 thousand a year earlier, reflecting a growth of 10.5%[27] Deposit Growth - Total deposits rose by $420.8 million, or 14.0%, to $3.4 billion at September 30, 2024, from $3.0 billion at December 31, 2023[3] - Total deposits grew to $3,429,925, up from $3,009,094, marking a significant increase of 13.9%[9] Loan Performance - Net loans rose to $2,736,370, compared to $2,717,782, reflecting an increase of 0.7%[9] - Loans net of unearned income reached $2,769,651,000 as of September 30, 2024, compared to $2,748,708,000 at the end of 2023, indicating a growth of 0.8%[20] - The real estate loan portfolio constituted 77.8% of total loans as of September 30, 2024, with total real estate loans amounting to $2,162,372,000[20] Credit Losses - The provision for credit losses for the third quarter of 2024 was $4.9 million, significantly higher than $0.6 million for the same period in 2023[3] - Provision for credit losses increased to $4,904 for the three months ended September 30, 2024, compared to $627 in the same period of 2023, indicating a significant rise in credit loss provisions[11] - Nonaccrual loans increased by $40.6 million to $65.8 million at September 30, 2024, compared to $25.2 million at December 31, 2023[5] - Total nonaccrual loans increased to $65,788 thousand as of September 30, 2024, up from $62,325 thousand in the previous quarter, representing a 3.9% increase[22] - Non-performing assets to total loans ratio rose to 2.42% as of September 30, 2024, compared to 2.24% in the previous quarter[22] - Allowance for credit losses to nonaccrual loans ratio improved to 50.59% as of September 30, 2024, compared to 48.60% in the previous quarter[22] - Total Real Estate nonaccrual loans amounted to $56,518 thousand as of September 30, 2024, an increase from $53,043 thousand in the previous quarter, representing a 4.7% rise[22] Interest Income and Margin - Interest income for the three months ended September 30, 2024, was $57,427, an increase of 20.0% from $47,627 in the same period of 2023[11] - Net interest income after provision for credit losses was $17,794, compared to $19,818, a decrease of 10.2%[11] - The net interest margin for the three months ended September 30, 2024, was 2.51%, a decrease of 3 basis points from 2.54% in the same period of 2023[3] - The net interest margin for the three months ended September 30, 2024, was 2.51%, slightly down from 2.54% in the same period of 2023[13] - Total interest-earning assets rose to $3,489,931,000, with a net interest margin of 2.52% for the nine months ended September 30, 2024, down from 2.75% in 2023[17][19] - The company reported a net interest rate spread of 1.79% for the nine months ended September 30, 2024, down from 1.98% in the previous year[17] Equity and Dividends - Book value per common share increased to $17.86 as of September 30, 2024, compared to $17.36 as of December 31, 2023[5] - Tangible common equity increased to $207,201 thousand as of September 30, 2024, compared to $199,915 thousand a year earlier, reflecting a growth of 3.6%[27] - First Guaranty declared cash dividends of $0.08 and $0.16 per common share in the third quarter of 2024 and 2023, respectively[5] Noninterest Income and Expenses - Total noninterest income for the nine months ended September 30, 2024, was $22,239, compared to $8,005 in 2023, showing a substantial increase of 177.5%[11] - Total other noninterest expense decreased to $7,070 thousand for the three months ended September 30, 2024, down from $7,446 thousand in the same period last year, a reduction of 5.0%[23] - Regulatory assessment expenses increased to $1,182 thousand for the three months ended September 30, 2024, compared to $676 thousand in the same period last year, a significant increase of 74.6%[23]