First Guaranty Bank(FGBI) - 2024 Q4 - Annual Report

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[19]. - 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, indicating a strong reliance on net interest income[163]. - The loan to deposit ratio was 77.5% at December 31, 2024, indicating a significant portion of assets invested in loans[177]. - 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[177]. - The investment securities portfolio generated $66.0 million of pre-tax income over the last five years, with a fair value of U.S. government agency securities at $202.1 million[74][75]. Market Position and Growth - The company has a deposit market share of 46.5% in the Hammond MSA as of June 30, 2024, making it the leading bank in that market[27]. - 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[21]. - The company aims to expand its market share along key interstate corridors in Louisiana and Texas while strengthening relationships in Kentucky and West Virginia[38]. - The company has supplemented its organic growth with four acquisitions, enhancing its geographic footprint and deposit base[23]. Loan Portfolio and Credit Risk - As of December 31, 2024, non-farm non-residential loans totaled $1.2 billion, representing 42.9% of the total loan portfolio[46]. - Non-performing assets totaled $120.4 million, representing 3.03% of total assets, an increase of 188.4% from the previous year[126]. - The allowance for credit losses was 1.29% of total loans and 29.00% of total non-performing loans as of December 31, 2024[139]. - The company has a concentration in commercial real estate loans at 369% of total bank capital, subjecting it to additional regulatory scrutiny[141]. - The company must provide for probable loan losses through a current period charge to the provision for credit losses[131]. Regulatory Compliance and Capital Requirements - As of December 31, 2024, First Guaranty Bank exceeded all regulatory capital requirements and was considered well-capitalized based on FDIC and Federal Reserve Board guidelines[98]. - The bank's common equity Tier 1 capital to risk-based assets ratio is required to be at least 4.5%, with a total capital to risk-based assets ratio of 8%[92]. - The bank is subject to a capital conservation buffer of 2.5% of common equity Tier 1 capital to risk-weighted assets above the minimum requirements[95]. - The company is subject to consolidated regulatory capital requirements due to total consolidated assets exceeding $3 billion, effective March 31, 2024[119]. Workforce and Community Engagement - The company has reduced its workforce by approximately 20%, or almost 100 full-time equivalent employees, by the end of 2024 compared to the end of 2023[41]. - The bank's workforce consisted of 396 full-time and 13 part-time employees as of December 31, 2024[82]. - In 2024, employees volunteered approximately 4,039 hours of service and the bank contributed over $256,000 to charitable organizations[80]. Cybersecurity and Operational Risks - The Chief Information Security Officer (CISO) is responsible for the development and implementation of the Information Security Program, with over 30 years of combined cybersecurity experience[209]. - First Guaranty has a board-approved risk appetite of "low" for cybersecurity risks, with any higher risks escalated to the board[210]. - An Incident Response Plan (IRP) has been developed and is tested annually to manage cybersecurity incidents[211]. - Third-party services are engaged for penetration testing and regular evaluations of security protocols[212]. - The company faces operational risks related to its technological infrastructure, which is critical for managing transactions and compliance with regulations[166]. Challenges and Risks - Increased competition for deposits due to rising interest rates could negatively impact liquidity and net interest income[155]. - The judicial foreclosure process may delay the resolution of non-performing loans, adversely affecting recoveries[147]. - Environmental liability risks associated with real property collateral could lead to significant remediation costs and impact financial condition[148]. - The rapid rise in interest rates during 2022 has led to increased volatility and uncertainty in the U.S. banking system, impacting liquidity and customer concentrations[185]. - The company may need to raise additional capital in the future, but market conditions could limit its ability to do so on acceptable terms, potentially impairing growth strategies[183].