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].
FIRST GTY BANCSH(FGBIP) - 2022 Q4 - Annual Report