Financial Performance - Net income for the second quarter of 2024 was $7.2 million, an increase of $4.5 million or 169.1% compared to $2.7 million in the second quarter of 2023 [95]. - Net income for the three months ended June 30, 2024, was $7.2 million, a 169.1% increase from $2.7 million for the same period in 2023 [145]. - Net income for the six months ended June 30, 2024, was $9.5 million, a 54.8% increase from $6.1 million for the same period in 2023 [146]. - Earnings per common share for the three months ended June 30, 2024, was $0.53, an increase of 178.9% from $0.19 for the same period in 2023 [145]. Asset and Loan Growth - Total assets increased by $62.8 million, or 1.8%, to $3.6 billion as of June 30, 2024, compared to December 31, 2023 [97]. - Total loans increased by $84.6 million, or 3.1%, to $2.8 billion at June 30, 2024, compared to December 31, 2023 [96]. - The average outstanding loan balance was $2,784.4 million for the six months ended June 30, 2024, compared to $2,548.4 million for the same period in 2023 [129]. Noninterest Income and Expenses - Noninterest income for the second quarter of 2024 was $15.5 million, compared to $2.8 million for the same period in 2023 [95]. - Noninterest income for the three months ended June 30, 2024, totaled $15.5 million, an increase of $12.7 million from $2.8 million for the same period in 2023, primarily due to gains on asset sales [175]. - Noninterest expense for the three months ended June 30, 2024, was $20.6 million, up from $19.7 million for the same period in 2023, reflecting increased salaries and benefits [177]. Credit Losses and Nonperforming Assets - The provision for credit losses for the second quarter of 2024 was $6.8 million, compared to $0.5 million for the same period in 2023 [95]. - Nonperforming loans increased to $62.5 million at June 30, 2024, compared to $40.5 million at December 31, 2023 [112]. - The allowance for credit losses totaled $30.3 million at June 30, 2024, down from $30.9 million at December 31, 2023, with a provision for credit losses of $9.1 million for the first six months of 2024 [103]. - Total charge-offs for the six months ended June 30, 2024, were $11.1 million, compared to $1.5 million for the same period in 2023, indicating a substantial rise in credit losses [172]. Deposits and Borrowings - Total deposits increased by $34.4 million, or 1.1%, to $3.0 billion from December 31, 2023 to June 30, 2024 [130]. - Noninterest-bearing demand deposits decreased by $35.1 million, or 7.9%, to $407.6 million at June 30, 2024 [130]. - Time deposits increased by $78.1 million, or 9.5%, to $898.8 million at June 30, 2024, primarily due to increases in consumer and business time deposits [130]. - First Guaranty had long-term borrowings from the FHLB totaling $155.0 million as of June 30, 2024 [141]. Capital Ratios and Equity - Total shareholders' equity increased to $255.1 million at June 30, 2024, up from $249.6 million at December 31, 2023, driven by a $4.3 million increase in retained earnings [144]. - The capital conservation buffer for First Guaranty was 3.28% as of June 30, 2024, exceeding the minimum requirement of 2.50% [188]. - The Bank's Tier 1 Leverage Ratio was 5.00%, down from 8.94% as of December 31, 2023 [192]. - The Common Equity Tier One Capital Ratio was 6.50% as of June 30, 2024, compared to 10.31% as of December 31, 2023 [192]. Interest Income and Margin - Net interest income for the three months ended June 30, 2024, was $21.2 million, up from $20.9 million for the same period in 2023 [150]. - Interest income increased by $9.9 million, or 22.5%, to $53.7 million for the three months ended June 30, 2024, compared to the prior year [153]. - The net interest margin for the three months ended June 30, 2024, was 2.48%, a decrease of 26 basis points from 2.74% for the same period in 2023 [150]. Securities and Investments - Investment securities decreased to $358.6 million at June 30, 2024, down $45.6 million from $404.1 million at December 31, 2023 [104]. - The available for sale securities portfolio decreased by 55.2% to $37.4 million at June 30, 2024, primarily due to the maturity of U.S. Treasury securities [106]. - The held to maturity securities portfolio was $321.2 million at June 30, 2024, representing 89.6% of the investment portfolio, up from 79.3% at December 31, 2023 [183].

Financial Performance - Net income for the first quarter of 2024 was $2.3 million, a decrease of $1.2 million or 33.4% compared to $3.5 million in 2023[93]. - Earnings per common share decreased to $0.14 from $0.27 year-over-year[93]. - Net income for the three months ended March 31, 2024, was $2.3 million, a decrease of $1.2 million, or 33.4%, from $3.5 million for the same period in 2023[144]. - Earnings per common share for the three months ended March 31, 2024, was $0.14, a decrease of 48.1% from $0.27 for the same period in 2023[144]. Asset and Loan Growth - Total assets increased by $3.0 million, reaching $3.6 billion as of March 31, 2024, compared to December 31, 2023[93]. - Total loans were $2.8 billion, an increase of $3.5 million or 0.1% from December 31, 2023[93]. - One-to four-family residential loans increased by $11.8 million during the first three months of 2024[128]. - Multifamily loans increased by $46.2 million during the first three months of 2024[128]. - Non-farm non-residential loans increased by $87.7 million during the first three months of 2024[128]. Deposit Changes - Total deposits rose by $54.8 million, or 1.8%, to $3.1 billion at March 31, 2024[93]. - Total public funds deposits increased to $1.24 billion at March 31, 2024, from $1.19 billion at December 31, 2023[138]. - Noninterest-bearing demand deposits decreased by $27.6 million, or 6.2%, to $415.1 million at March 31, 2024[129]. Credit Quality and Losses - The provision for credit losses increased to $2.3 million in the first quarter of 2024, compared to $0.3 million in the same period of 2023[93]. - Nonaccrual loans increased by $3.4 million to $28.6 million at March 31, 2024[93]. - Nonperforming assets totaled $44.5 million, or 1.25% of total assets, an increase of $2.8 million, or 6.8%, from $41.7 million, or 1.17%, at December 31, 2023[111]. - The allowance for credit losses on loans was $31.5 million, or 1.14% of total loans, and covered 72.7% of nonperforming loans as of March 31, 2024[122]. - Total charge-offs were $2.3 million for the three months ended March 31, 2024, compared to $1.0 million for the same period in 2023[158]. Interest Income and Expense - Net interest income decreased by $0.4 million, or 1.8%, to $21.9 million for the three months ended March 31, 2024, compared to $22.3 million for the same period in 2023[147]. - Interest income increased by $11.6 million, or 28.1%, to $52.9 million for the three months ended March 31, 2024, primarily due to growth in loan originations and repricing of existing loans[148]. - Interest expense increased by $12.0 million, or 63.2%, to $31.0 million for the three months ended March 31, 2024, due to higher market interest rates and increased average balance of interest-bearing liabilities[151]. - Average yield of interest-earning assets rose by 70 basis points to 6.23% for the three months ended March 31, 2024, compared to 5.53% for the same period in 2023[148]. Equity and Capital Ratios - Total shareholders' equity increased to $250.3 million at March 31, 2024, from $249.6 million at December 31, 2023[143]. - The Tier 1 Risk-based Capital Ratio for the Bank was 10.40% as of March 31, 2024, compared to 10.31% at December 31, 2023[175]. - The capital conservation buffer was 3.39% as of March 31, 2024, exceeding the minimum requirement of 2.50%[171]. Securities and Investments - Investment securities totaled $358.7 million, a decrease of $45.5 million from $404.1 million at December 31, 2023[103]. - The available for sale securities portfolio decreased by $45.7 million, or 54.8%, to $37.8 million as of March 31, 2024, primarily due to the maturity of U.S. Treasury securities[105]. - The held to maturity securities portfolio increased by $0.3 million, or 0.1%, to $320.9 million as of March 31, 2024[105]. - The held to maturity securities portfolio was $320.9 million, or 89.5% of the investment portfolio, as of March 31, 2024, compared to 79.3% at December 31, 2023[166]. Noninterest Income and Expenses - Noninterest income totaled $2.3 million for the three months ended March 31, 2024, a decrease of $0.4 million from $2.7 million for the same period in 2023[161]. - Noninterest expense decreased to $18.9 million for the three months ended March 31, 2024, from $20.2 million for the same period in 2023, representing a reduction of approximately 6.4%[162]. - The total other noninterest expense decreased to $6.8 million for the three months ended March 31, 2024, down from $8.0 million in the same period of 2023, a reduction of 15%[163]. Cash and Liquidity - Cash and cash equivalents rose to $332.1 million at March 31, 2024, compared to $286.5 million at December 31, 2023, an increase of 15.9%[166]. - Loans maturing within one year increased to $393.8 million at March 31, 2024, from $357.7 million at December 31, 2023, a growth of 10.1%[166]. - Demand deposits are $1,556,257,000, representing a significant source of funds[182].

Financial Position - As of December 31, 2023, First Guaranty Bancshares had consolidated total assets of $3.6 billion, total deposits of $3.0 billion, and total shareholders' equity of $249.6 million[18]. - Total deposits held by the company were $3.0 billion as of December 31, 2023[73]. - Public funds deposits amounted to $1.2 billion, primarily from local government entities[74]. - As of December 31, 2023, First Guaranty Bank exceeded all regulatory capital requirements and was considered well-capitalized based on FDIC guidelines[100]. - The community bank leverage ratio was temporarily lowered to 8% effective for the second quarter of 2020, transitioning back to 9% in the first quarter of 2022[99]. - Federal regulations require a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, and a total capital to risk-based assets of 8%[92]. - The maximum amount of deposit insurance for banks is $250,000 per depositor[111]. - First Guaranty Bank's ability to pay dividends is subject to restrictions under Louisiana law, requiring unimpaired surplus equal to 50% of outstanding capital stock[91]. - The bank's compliance with capital requirements is assessed not only on numeric factors but also on qualitative factors, allowing for higher capital requirements if deemed necessary[96]. - As of December 31, 2023, First Guaranty had an aggregate of $54.1 million of senior and subordinated indebtedness outstanding, which ranks senior to common and preferred stock[206]. Loan Portfolio - The loan to deposit ratio was 91.3% as of December 31, 2023, indicating a strong focus on increasing total loans as a percentage of assets[36]. - Non-farm non-residential loans totaled $1.0 billion, representing 37.9% of the total loan portfolio as of December 31, 2023[49]. - Commercial and industrial loans amounted to $335.0 million, or 12.1% of the total loan portfolio at December 31, 2023[52]. - One- to four-family residential real estate loans reached $444.9 million, accounting for 16.1% of the total loan portfolio as of December 31, 2023[55]. - Construction and land development loans comprised $399.4 million, or 14.5% of the total loan portfolio at December 31, 2023[61]. - Agricultural loans totaled $41.0 million, representing 1.5% of the total loan portfolio as of December 31, 2023[63]. - Farmland loans amounted to $32.5 million, or 1.2% of the total loan portfolio as of December 31, 2023[65]. - Commercial leases reached $285.4 million, accounting for 10.4% of the total loan portfolio as of December 31, 2023[66]. - Consumer and other loans totaled $54.5 million, or 2.0% of the total loan portfolio as of December 31, 2023[67]. - The company’s commercial term loans totaled $130.7 million, representing 39.0% of total commercial and industrial loans at December 31, 2023[52]. - As of December 31, 2023, approximately 78.8% of the secured loans in First Guaranty Bank's loan portfolio were secured by real estate and other collateral located in its market area[132]. - At December 31, 2023, First Guaranty Bank had $77.3 million, or 2.8% of its total loan portfolio, comprised of loans to businesses engaged in support or service activities for oil and gas operations[133]. - First Guaranty Bank had $55.0 million in unfunded loan commitments related to businesses in the oil and gas sector as of December 31, 2023[133]. - The allowance for credit losses is 1.13% of total loans and 76.41% of total non-performing loans, indicating potential future credit deterioration risks[144]. Growth Strategy - First Guaranty has expanded its geographic footprint through four acquisitions, enhancing stable deposits and funding for its lending business[21]. - The company opened a new branch in Vanceburg, Kentucky in January 2023, furthering its expansion into the Mideast markets[36]. - First Guaranty plans to grow its loan portfolio by targeting small and medium-sized businesses in sectors such as manufacturing, agriculture, and healthcare[37]. - The company aims for acquisitions that will be accretive to earnings and strengthen its franchise, targeting a tangible book value earn back of approximately three years[45]. - The company intends to pursue acquisitions as part of its growth strategy, which involves risks such as finding suitable candidates and maintaining asset quality[161]. - The competitive landscape for acquisition targets is challenging, potentially hindering the company's growth strategy if suitable candidates are not found[162]. Digital Services and Technology - First Guaranty continues to enhance its digital services, including an improved online banking system and mobile app, to better serve its customers[16]. - The company utilizes the nCino platform to enhance loan process management and expand digital banking services through strategic partnerships[46]. Regulatory Environment - First Guaranty Bank is subject to concentrated commercial real estate lending regulations, which require heightened risk management practices if certain concentration thresholds are met[102]. - The CARES Act provided over $2 trillion to combat COVID-19, including provisions relevant to financial institutions[91]. - The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 eased regulations for banks with less than $10 billion in assets, including exemptions from certain requirements[90]. - The FDIC finalized a rule establishing a community bank leverage ratio at 9% for institutions under $10 billion in assets, effective January 1, 2020[99]. - First Guaranty Bank is required to maintain specified ratios of capital to risk-weighted assets once it is no longer classified as a "small bank holding company" after March 31, 2024[124]. - The company is subject to extensive regulation, and any changes in laws or regulations could materially affect its financial condition and operations[182]. Legal Matters - First Guaranty settled a lawsuit in Q1 2023 for $0.6 million related to overpayment on a loan[213]. - The bank is currently involved in a lawsuit with a possible loss range of $0.0 million to $1.5 million, which it intends to vigorously defend[213]. - No accrued liability has been recorded for the ongoing lawsuit, which is still in early stages[213]. - A receivable of $0.9 million has been recorded for recovery from a claim against First Guaranty's insurer[213]. - First Guaranty believes that current legal proceedings will not have a material adverse effect on its consolidated results of operations[213]. - Management acknowledges that unfavorable outcomes in legal claims could materially affect the company during the resolution period[213]. - Legal matters are costly and may divert management's attention, potentially harming the company's reputation[213]. Income and Profitability - For the year ended December 31, 2023, net interest income totaled $84.7 million, significantly higher than the total noninterest income of $10.6 million, indicating a strong dependence on net interest income for earnings[164]. - Service charges, commissions, and fees contributed $3.4 million, or 32.2% of total noninterest income for the year ended December 31, 2023, up from $3.2 million, or 28.7% in the previous year[165]. - The company may face increased FDIC deposit insurance assessments due to special assessments imposed in 2023, which could reduce profitability[187]. Risk Factors - The company faces risks related to interest rates, as significant increases in rates during 2022 and 2023 could reduce loan demand and increase delinquencies[154]. - Liquidity is critical, with the company relying heavily on deposits; a decrease in deposit balances could adversely affect liquidity and increase funding costs[156]. - Operational risks are present, including potential failures in technology systems that could disrupt business and impair liquidity[169]. - Changes in accounting standards could materially affect how the company reports its financial condition and results of operations, posing additional risks[173]. - The company operates in a market area susceptible to hurricanes and adverse weather conditions, which could disrupt operations and increase loan losses[180]. - The rapid rise in interest rates during 2022 has led to a reduction in the fair value of securities portfolios, contributing to current market volatility[186]. Shareholder Matters - The principal shareholders own approximately 44% of the outstanding common stock as of December 31, 2023, which may lead to voting outcomes not aligned with other shareholders[194]. - The ability to declare and pay dividends is limited and subject to regulatory guidance and restrictions[195]. - Future dividends will depend on capital levels and liquidity, with the board of directors having discretion over declarations[196]. - Federal regulations require capital levels to exceed certain thresholds before dividends can be paid, particularly under Basel III guidelines[197]. - The Series A Preferred Stock dividends are non-cumulative and discretionary, meaning undeclared dividends do not accrue[202]. - The Series A Preferred Stock ranks junior to all existing and future indebtedness, impacting the payment of dividends[199]. - The Series A Preferred Stock holders have limited voting rights unless dividends are in arrears for six quarterly periods[204].

Financial Performance - Net income for Q3 2023 was $1.8 million, a decrease of $6.3 million or 78.0% compared to Q3 2022[102]. - Earnings per common share were $0.10 for Q3 2023, down from $0.70 in Q3 2022[102]. - Net interest income for Q3 2023 was $20.4 million, down from $25.4 million in Q3 2022[102]. - Noninterest income for Q3 2023 was $2.5 million, compared to $4.0 million in Q3 2022[102]. - Net income for the three months ended September 30, 2023 was $1.8 million, a decrease of $6.3 million, or 78.0%, from $8.1 million for the same period in 2022[153]. - Net interest income for the three months ended September 30, 2023 was $20.4 million, down from $25.4 million in the prior year, reflecting an increase in interest-bearing liabilities[158]. - Noninterest income totaled $8,000 thousand for the nine months ended September 30, 2023, down from $8,500 thousand for the same period in 2022, a decrease of 5.88%[185]. - Net interest income for the nine months ended September 30, 2023, was $63,659 thousand, a decrease from $76,742 thousand for the same period in 2022, reflecting a decline of 16.9%[186]. Asset and Loan Growth - Total assets increased by $266.9 million to $3.4 billion, or 8.5%, as of September 30, 2023, compared to December 31, 2022[102]. - Total loans reached $2.7 billion, an increase of $180.3 million, or 7.2%, from December 31, 2022[102]. - Net loans increased by $171.9 million, or 6.9%, to $2.7 billion as of September 30, 2023, compared to December 31, 2022[107]. - Loans maturing within one year totaled $384.8 million at September 30, 2023, while time deposits maturing within one year increased to $507.6 million from $312.9 million at December 31, 2022[192]. - Loans, including those held for sale, totaled $2,699,393,000, indicating strong lending activity[208]. Credit Quality and Allowance for Losses - The allowance for credit losses was 1.18% of total loans as of September 30, 2023, compared to 0.93% at December 31, 2022[102]. - The allowance for credit losses totaled $31.9 million at September 30, 2023, up from $23.5 million at December 31, 2022[111]. - As of September 30, 2023, the allowance for credit losses on loans was $31.9 million, representing 1.18% of total loans and covering 94.8% of nonperforming loans[132]. - A provision for credit losses of $1.5 million was made during the nine months ended September 30, 2023, compared to $2.9 million for the same period in 2022[134]. - Special mention loans rose by $21.1 million to $51.4 million at September 30, 2023, primarily due to downgrades in commercial lease and industrial loan relationships[109]. - Substandard loans increased by $49.7 million to $92.5 million at September 30, 2023, mainly due to the downgrade of a real estate secured loan relationship[110]. - Non-performing assets totaled $34.8 million, or 1.02% of total assets, as of September 30, 2023, up from $14.8 million, or 0.47%, at December 31, 2022, representing a 135.0% increase[120]. - Nonaccrual loans increased from $13.6 million at December 31, 2022, to $25.6 million at September 30, 2023, with significant concentrations in non-farm non-residential and one-to-four family loans[121]. - Loans 90 days or greater delinquent and still accruing totaled $8.1 million, an increase of $7.0 million compared to $1.1 million at December 31, 2022[122]. Deposits and Funding - Total deposits increased by $91.2 million, or 3.3%, to $2.8 billion from December 31, 2022, to September 30, 2023[138]. - Time deposits increased by $173.3 million, or 32.5%, to $706.7 million at September 30, 2023, primarily due to increases in consumer and business time deposits[138]. - Noninterest-bearing demand deposits decreased by $66.0 million, or 12.6%, to $458.4 million at September 30, 2023[138]. - The total amount of uninsured deposits was estimated at $280.0 million at September 30, 2023[141]. - Public funds deposits totaled $1.1 billion at September 30, 2023, remaining stable compared to December 31, 2022[145]. Capital and Borrowing - Total shareholders' equity increased to $238.8 million at September 30, 2023, up from $235.0 million at December 31, 2022, driven by a $9.3 million increase in surplus[152]. - The Tier 1 Risk-based Capital Ratio was 9.79% as of September 30, 2023, down from 10.31% at December 31, 2022[201]. - First Guaranty maintained a net borrowing capacity at the Federal Home Loan Bank of $207.7 million as of September 30, 2023, down from $369.5 million at December 31, 2022[193]. - Long-term borrowings from the Federal Home Loan Bank totaled $155.0 million at September 30, 2023[149]. - The capital conservation buffer was 2.72% as of September 30, 2023, exceeding the minimum requirement of 2.50%[197]. Interest Income and Expense - Interest income increased by $12.4 million, or 35.1%, to $47.6 million for the three months ended September 30, 2023, due to growth in the loan portfolio[160]. - Interest income on loans increased by $11.0 million, or 34.0%, to $43.4 million for the three months ended September 30, 2023[162]. - Interest income on loans rose by $31.4 million, or 34.8%, to $121.8 million for the nine months ended September 30, 2023, driven by a $328.3 million increase in average loan balance to $2.6 billion and a 94 basis points increase in average yield to 6.32%[165]. - Interest expense surged by $47.5 million, or 220.7%, to $69.0 million for the nine months ended September 30, 2023, due to rising market interest rates and an increase in average interest-bearing liabilities[168]. - The average rate of interest-bearing demand deposits increased to 4.05% for the nine months ended September 30, 2023, compared to 1.13% for the same period in 2022[168]. - The average rate of time deposits increased by 139 basis points to 3.28% for the nine months ended September 30, 2023[168]. Securities and Investments - Investment securities decreased by $51.0 million to $400.5 million at September 30, 2023, compared to $451.5 million at December 31, 2022[112]. - The available for sale securities portfolio decreased by $51.6 million, or 39.3%, to $79.9 million at September 30, 2023, primarily due to the maturity of U.S. Treasury securities[114]. - The available for sale securities portfolio decreased to $79.9 million, or 19.9% of the investment portfolio, from $131.5 million, or 29.1% at December 31, 2022[192]. - Securities, including FHLB stock, totaled $413,722,000, with $63,557,000 maturing within one year[208].

Financial Performance - Net income for the second quarter of 2023 was $2.7 million, a decrease of $5.4 million or 67.1% from $8.1 million in the second quarter of 2022[99]. - Earnings per common share were $0.19 for the second quarter of 2023, down from $0.70 in the same period of 2022[99]. - Net income for the six months ended June 30, 2023 was $6.1 million, a decrease of 60.9% from $15.7 million for the same period in 2022[153]. - Earnings per common share for the six months ended June 30, 2023 was $0.46, a decrease of 66.2% from $1.36 for the same period in 2022[153]. - Noninterest expense increased due to higher regulatory assessments, legal fees, and software expenses, impacting overall profitability[152]. Asset and Loan Growth - Total assets increased by $84.7 million to $3.2 billion, or 2.7%, as of June 30, 2023, compared to December 31, 2022[99]. - Total loans at June 30, 2023, were $2.6 billion, an increase of $71.6 million, or 2.8%, compared to December 31, 2022[99]. - Net loans increased by $63.2 million, or 2.5%, to $2.6 billion as of June 30, 2023, compared to December 31, 2022[105]. - Loans related to Texas markets increased by $5.6 million, or 1.7%, to $339.4 million at June 30, 2023[105]. - Loans related to new Mideast markets in Kentucky and West Virginia increased by $55.1 million, or 26.1%, to $266.1 million at June 30, 2023[105]. Credit Quality and Allowance for Losses - The allowance for credit losses was 1.23% of total loans at June 30, 2023, compared to 0.93% at December 31, 2022[99]. - The allowance for credit losses totaled $31.9 million at June 30, 2023, compared to $23.5 million at December 31, 2022[109]. - Nonaccrual loans increased by $10.3 million to $23.9 million at June 30, 2023, compared to $13.6 million at December 31, 2022[103]. - Non-performing assets totaled $25.7 million, or 0.79% of total assets, as of June 30, 2023, up from $14.8 million, or 0.47%, at December 31, 2022, representing a 73.5% increase[118]. - The company believes the allowance for credit losses is adequate to cover current expected losses in the loan portfolio given the current economic conditions[179]. Deposits and Funding - Total deposits increased by $43.6 million, or 1.6%, to $2.8 billion from December 31, 2022, to June 30, 2023[135]. - Noninterest-bearing demand deposits decreased by $58.2 million, or 11.1%, to $466.2 million at June 30, 2023[135]. - Time deposits increased by $97.1 million, or 18.2%, to $630.5 million at June 30, 2023, primarily due to increases in consumer and public fund time deposits[135]. - Total public funds deposits were $1.1 billion at June 30, 2023, down from $1.11 billion at December 31, 2022, with public funds as a percentage of total deposits decreasing to 39.8%[145]. - The total amount of uninsured deposits was estimated at $285.9 million at June 30, 2023, excluding collateralized public funds deposits[138]. Interest Income and Expense - Net interest income for the second quarter of 2023 was $20.9 million, down from $26.3 million for the same period in 2022[99]. - Interest income on loans increased by 35.2% to $78.4 million for the six months ended June 30, 2023[163]. - Interest expense for the six months ended June 30, 2023 increased by 256.9% to $41.9 million from $11.7 million in the prior year[166]. - Average yield of interest-earning assets increased by 114 basis points to 5.63% for the six months ended June 30, 2023 compared to 4.49% for the same period in 2022[161]. - The net interest margin for the three months ended June 30, 2023, was 2.74%, down from 3.72% in the same period of 2022[171]. Capital and Ratios - Total shareholders' equity increased to $238.9 million at June 30, 2023, from $235.0 million at December 31, 2022, primarily due to a $9.3 million increase in surplus[150]. - The Tier 1 Leverage Ratio was 9.29% as of June 30, 2023, exceeding the minimum requirement of 5.00%[199]. - The total risk-based capital ratio was 11.18% as of June 30, 2023, above the minimum requirement of 10.00%[199]. Interest Rate Risk Management - The management asset liability committee regularly reviews the asset-liability policies and interest rate risk position to mitigate exposure to interest rate fluctuations[202]. - Interest-sensitive assets and liabilities are monitored periodically to manage the impact of interest rate changes on net interest income[205]. - The company employs various investment strategies, including internal modeling, to manage interest rate risk effectively[202]. - The cumulative gap as a percent of earning assets was -36.2% for the three-month period[206]. - The interest sensitivity analysis indicates a liability-sensitive position with a negative cumulative gap of $(1,185,315) thousand on a one-year basis, representing -37.8% of earning assets[206].

Financial Performance - Net income for the first quarter of 2023 was $3.5 million, a decrease of $4.1 million or 54.3% from $7.6 million in the first quarter of 2022[102]. - Earnings per common share decreased to $0.27 for the first quarter of 2023 from $0.65 in the same period of 2022[102]. - Net interest income decreased by $2.7 million, or 10.8%, to $22.3 million for the three months ended March 31, 2023, compared to $25.0 million for the same period in 2022[159]. - Noninterest income totaled $2.7 million for the three months ended March 31, 2023, an increase of $0.7 million from $2.0 million for the same period in 2022[173]. - Income tax expense decreased to $1.1 million in Q1 2023 from $2.0 million in Q1 2022, reflecting a decrease in income before taxes[177]. Asset and Loan Growth - Total assets increased by $86.4 million to $3.2 billion, or 2.7%, as of March 31, 2023 compared to December 31, 2022[102]. - Total loans were $2.6 billion, an increase of $55.2 million, or 2.2%, from December 31, 2022[102]. - Net loans increased by $47.2 million, or 1.9%, to $2.5 billion as of March 31, 2023, compared to December 31, 2022[112]. - First Guaranty had $345.5 million in loans related to Texas markets, an increase of $11.6 million, or 3.5%, from $333.8 million at December 31, 2022[112]. - Loans maturing within one year totaled $378.8 million at March 31, 2023[179]. Deposit Trends - Total deposits rose to $2.9 billion, an increase of $138.8 million, or 5.1%, compared to December 31, 2022[102]. - Public funds deposits totaled $1.14 billion as of March 31, 2023, accounting for 40.0% of total deposits, compared to 40.9% in the previous year[151]. - Interest-bearing demand deposits increased by $71.1 million, or 4.9%, to $1.5 billion at March 31, 2023[140]. - Time deposits rose by $72.9 million, or 13.7%, to $606.2 million at March 31, 2023, primarily due to increases in consumer and business time deposits[140]. - The total amount of uninsured deposits was estimated at $355.0 million at March 31, 2023[143]. Credit Quality and Allowance for Losses - The allowance for credit losses was 1.22% of total loans at March 31, 2023, up from 0.93% at December 31, 2022[102]. - The allowance for credit losses totaled $31.5 million at March 31, 2023, up from $23.5 million at December 31, 2022, following the adoption of ASC 326[115]. - Non-performing assets totaled $24.6 million, or 0.76% of total assets, an increase of $9.8 million, or 66.2%, from $14.8 million, or 0.47%, at December 31, 2022[125]. - Nonaccrual loans increased from $13.6 million at December 31, 2022, to $15.7 million at March 31, 2023[126]. - A provision for loan losses of $0.3 million was made during the three months ended March 31, 2023, compared to $0.6 million for the same period in 2022[137]. Interest Income and Expense - Interest income increased due to growth in the loan portfolio, while interest expense also rose due to higher market rates[156]. - Interest income on loans increased by $10.1 million, or 36.1%, to $38.1 million for the three months ended March 31, 2023, due to an increase in both average balance and average yield of loans[162]. - Average yield on interest-earning assets increased by 115 basis points to 5.53% for the three months ended March 31, 2023, compared to 4.38% for the same period in 2022[160]. - Interest expense increased by $13.5 million, or 245.5%, to $19.0 million for the three months ended March 31, 2023, primarily due to an increase in market interest rates[163]. - Average rate of interest-bearing demand deposits rose to 3.56% for the three months ended March 31, 2023, compared to 0.70% for the same period in 2022[163]. Capital and Equity - Total shareholders' equity decreased to $228.7 million at March 31, 2023, from $235.0 million at December 31, 2022[155]. - The Bank's Tier 1 Risk-based Capital Ratio was 10.03% as of March 31, 2023, down from 10.31% at December 31, 2022[188]. - The capital conservation buffer was 2.98% as of March 31, 2023, exceeding the minimum requirement of 2.50%[184]. - The Community Bank Leverage Ratio requirement is set at 9%, and as of March 31, 2023, the Bank did not elect to follow this ratio[186]. Mergers and Expansion - First Guaranty entered into an agreement to acquire Lone Star Bank, which would result in a combined total of approximately $3.2 billion in total assets post-merger[104]. - First Guaranty plans to open a new full-service branch in Fate, Texas, as part of its organic expansion strategy[106].

Financial Performance - As of December 31, 2022, First Guaranty Bancshares had consolidated total assets of $3.2 billion, total deposits of $2.7 billion, and total shareholders' equity of $235.0 million[19]. - For the year ended December 31, 2022, net interest income totaled $100.0 million, compared to total noninterest income of $11.0 million, indicating a strong dependence on net interest income for overall earnings[164]. - Service charges, commissions, and fees contributed $3.2 million, or 28.7% of total noninterest income for the year ended December 31, 2022, reflecting the importance of service charge income to the company's revenue[165]. - The company had $80.4 million in purchased loan participations and $71.6 million in purchased loans, primarily secured by real estate, at the end of 2022[69]. - The investment securities portfolio generated $63.2 million of pre-tax income over the last five years, with a fair value of U.S. government agency securities at $195.5 million as of December 31, 2022[75][76]. Loan Portfolio - The loan to deposit ratio was 92.5% as of December 31, 2022, indicating a strong focus on increasing loans as a percentage of assets[35]. - As of December 31, 2022, the company's non-farm non-residential loans totaled $992.9 million, representing 39.3% of the total loan portfolio, with owner-occupied loans accounting for $351.0 million or 35.4% of non-farm non-residential loans[48]. - Commercial and industrial loans amounted to $385.3 million, or 15.3% of the total loan portfolio as of December 31, 2022, with commercial term loans totaling $157.5 million, representing 40.9% of commercial and industrial loans[51]. - One- to four-family residential real estate loans totaled $366.3 million, or 14.5% of the total loan portfolio as of December 31, 2022, with jumbo loans exceeding the conforming loan limit at $29.3 million[54]. - As of December 31, 2022, multifamily loans accounted for $119.8 million, or 4.7% of the total loan portfolio, with loans secured by multifamily properties typically involving greater credit risk[58]. Deposit Strategy - The deposit strategy focuses on expanding individual and business deposits while maintaining a public funds deposit program, with a 37.0% deposit market share in the Hammond MSA as of June 30, 2022[41]. - Public funds deposits amounted to $1.1 billion at the end of 2022, primarily from local government entities[73]. - As of December 31, 2022, public funds deposits accounted for $1.1 billion, or 40.9% of total deposits, highlighting the company's reliance on these funds for lending and investment activities[157]. Growth and Expansion - First Guaranty has expanded its geographic footprint through four acquisitions, enhancing its deposit base and lending capabilities[21]. - The company plans to acquire Lone Star Bank, which will extend its market presence into the Greater Houston area and along the I-10 corridor[22]. - First Guaranty opened a new branch in Vanceburg, Kentucky, in January 2023, furthering its expansion into the Mideast markets[35]. - The company plans to pursue strategic acquisitions of community banks and non-banking financial companies to supplement organic growth, with a focus on targets with quality loan portfolios[43]. Risk Management - The company emphasizes maintaining strong asset quality through disciplined credit culture and proactive measures to address challenges arising from the COVID-19 pandemic[42]. - The allowance for credit losses was 0.93% of total loans and 159.90% of total non-performing loans, indicating potential future credit deterioration risks[142]. - Non-performing assets were $14.8 million, or 0.47% of total assets, which could adversely affect net income if they increase[138]. - The company had a concentration in commercial real estate loans at 399% of total capital, subjecting it to additional regulatory scrutiny[144]. Regulatory Environment - As of December 31, 2022, First Guaranty Bank exceeded all regulatory capital requirements and was considered well-capitalized based on FDIC guidelines[99]. - Federal regulations require a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, and a total capital to risk-based assets of 8%[91]. - The Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB) with extensive powers to supervise and enforce consumer protection laws[88]. - The company is subject to extensive regulation, which could materially affect operations and financial condition[183]. Community Engagement - The company contributed over $600,000 to charitable organizations in 2022, with employees volunteering over 2,960 hours of service[81]. Technological Investments - First Guaranty has invested in technology upgrades, including the nCino loan platform and Q2 online banking products, to enhance customer service[35]. - The company faces operational risks related to its technological infrastructure, which is critical for managing transactions and compliance with regulations[168][170]. Market Conditions - Increased competition for deposits due to rising interest rates could negatively impact the company's liquidity and net interest income[154]. - Changes in interest rates can significantly affect net interest income, loan demand, and overall financial results, posing a risk to the company's operations[152][153].