First Guaranty Bank(FGBI) - 2025 Q2 - Quarterly Results

Financial Performance Overview First Guaranty Bancshares, Inc. reports Q2 and YTD 2025 financial results, focusing on strategic de-risking, expense reduction, and asset quality Q2 2025 Financial Highlights First Guaranty Bancshares, Inc. reduced non-performing assets and noninterest expenses in Q2 2025, despite a significant provision for credit losses impacting financial results - Continued its business strategy to reduce risk in the loan portfolio, decreasing non-performing assets by $6.8 million compared to March 31, 2025. This included a successful workout of a commercial real estate loan and the sale of an $8.8 million non-accrual loan in July 2025[3] - Recorded a substantial provision for credit losses of $14.7 million for Q2 2025, primarily due to specific reserves on individually evaluated loans and trends in the loan portfolio. The allowance for credit losses (ACL) grew to 2.36% of total loans[3] - Successfully executed expense reduction plans, with noninterest expense declining by $0.8 million from Q1 2025 and $3.3 million from Q2 2024, achieving an annual run rate savings of approximately $13.4 million[3] - Loan balances continued to decline as part of a strategy to reduce concentration risk, particularly in commercial real estate. Total loans fell to $2.41 billion at June 30, 2025, down from $2.51 billion at March 31, 2025[3] Key Financial Results (Q2 & YTD 2025) The company reported a net loss for Q2 and YTD 2025, primarily due to a substantial increase in the provision for credit losses, despite stable net interest income Net (Loss) Income and (Loss) Earnings Per Share | Metric | 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 | $(5.8) million | $7.2 million | $(12.0) million | $9.5 million | | (Loss) Earnings Per Share | $(0.50) | $0.53 | $(1.04) | $0.67 | Net Interest Income and Provision for Credit Losses | Metric | 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 Interest Income | $22.2 million | $21.2 million | $44.5 million | $43.2 million | | Provision for Credit Losses | $14.7 million | $6.8 million | $29.3 million | $9.1 million | Key Performance Ratios | Ratio | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Return on Average Assets | (0.60)% | 0.81% | (0.61)% | 0.54% | | Return on Average Common Equity | (11.66)% | 12.16% | (11.97)% | 7.66% | Consolidated Financial Statements Consolidated financial statements for First Guaranty Bancshares, Inc. detail balance sheet shifts, income statement performance, and net interest margin trends Consolidated Balance Sheets Total assets remained stable at June 30, 2025, with a strategic decrease in net loans offset by increases in cash and investment securities, while equity grew Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $3,971,088 | $3,972,728 | $(1,640) | (0.0)% | | Net Loans | $2,353,542 | $2,658,969 | $(305,427) | (11.5)% | | Cash and cash equivalents | $714,870 | $564,208 | $150,662 | 26.7% | | Investment securities | $719,722 | $602,719 | $117,003 | 19.4% | | Total Deposits | $3,481,338 | $3,476,260 | $5,078 | 0.1% | | Total Shareholders' Equity | $264,559 | $255,049 | $9,510 | 3.7% | Consolidated Statements of Income The company reported a net loss in Q2 2025, primarily driven by a substantial increase in the provision for credit losses and a sharp decline in noninterest income Selected Income Statement Data (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $22,240 | $21,242 | $998 | 4.7% | | Provision for credit losses | $14,703 | $6,805 | $7,898 | 116.1% | | Total Noninterest Income | $2,156 | $15,526 | $(13,370) | (86.1)% | | Total Noninterest Expense | $17,267 | $20,609 | $(3,342) | (16.2)% | | Net (Loss) Income | $(5,831) | $7,201 | $(13,032) | (181.0)% | Consolidated Average Balance Sheets and Net Interest Margin Net interest margin compressed in Q2 2025 due to a lower yield on interest-earning assets, despite a decrease in the cost of interest-bearing liabilities Net Interest Margin Analysis | Metric | 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 Interest Margin | 2.34% | 2.48% | 2.35% | 2.53% | | Net Interest Rate Spread | 1.72% | 1.72% | 1.73% | 1.78% | | Yield on Interest-Earning Assets | 5.72% | 6.25% | 5.74% | 6.24% | | Cost of Interest-Bearing Liabilities | 4.00% | 4.53% | 4.01% | 4.46% | Asset Quality and Loan Portfolio Analysis Analysis of asset quality and the loan portfolio reveals strategic shifts in composition and trends in nonperforming assets Loan Portfolio Composition The total loan portfolio strategically declined to $2.41 billion at June 30, 2025, with real estate loans comprising the majority and commercial real estate exposure actively reduced Loan Portfolio Breakdown (in thousands) | Loan Category | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sept 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 | $2,417,351 | $2,520,193 | $2,702,080 | $2,778,600 | Nonperforming Assets (NPAs) Nonperforming assets decreased quarter-over-quarter but remain elevated year-over-year, with improved allowance for credit losses coverage on nonaccrual loans Nonperforming Assets Trend (in thousands) | Metric | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | Sept 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total nonaccrual loans | $119,179 | $133,393 | $108,529 | $65,788 | | Total Real Estate Owned | $7,657 | $152 | $319 | $1,160 | | Total non-performing assets | $127,120 | $133,932 | $120,350 | $67,025 | | NPAs to total assets | 3.20% | 3.50% | 3.03% | 1.71% | | Allowance for credit losses to nonaccrual loans | 47.80% | 32.25% | 32.08% | 50.59% | - The six largest non-performing loan relationships comprise 75% of total non-performing loans, with significant exposures in independent living centers, multifamily complexes, and assisted living centers[4] Expense Analysis An analysis of noninterest expenses reveals key drivers behind changes in operating costs, including personnel and professional fees Noninterest Expense Breakdown Total noninterest expense significantly decreased in Q2 2025, primarily due to reductions in salaries, employee benefits, and legal and professional fees Other Noninterest Expense Components (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Legal and professional fees | $671 | $1,504 | $(833) | | Software expense and amortization | $1,188 | $1,367 | $(179) | | Regulatory assessment | $1,609 | $989 | $620 | | Total other noninterest expense | $6,819 | $7,622 | $(803) | - Salaries and employee benefits, a major component of noninterest expense, decreased to $7.8 million in Q2 2025 from $10.4 million in Q2 2024[12] - The number of full-time equivalent employees was reduced to 360 at June 30, 2025, down from 495 at June 30, 2024, contributing to lower personnel costs[4] Dividends and Capital The company's dividend declaration and its impact on capital are detailed, reflecting strategic adjustments to enhance capital Dividend Declaration First Guaranty significantly reduced its common stock dividend to $0.01 per share in Q2 2025 as a strategic move to increase capital, while maintaining preferred stock dividends Common Stock Dividend Per Share | Period | Dividend Per Share | | :--- | :--- | | Q2 2025 | $0.01 | | Q2 2024 | $0.16 | - The reduction in the common stock dividend was a strategic decision to increase capital, aligning with the new business strategy announced in Q3 2024[8] - The company paid preferred stock dividends of $1.2 million during the first six months of 2025, consistent with the same period in 2024[8] Non-GAAP Financial Measures Reconciliation of GAAP to non-GAAP financial measures provides alternative insights into the company's capital adequacy, specifically tangible book value per share Reconciliation of GAAP to Non-GAAP Measures Non-GAAP measures, including tangible book value per share, are reconciled, showing a decrease in tangible book value per share but a slight increase in tangible common equity to tangible assets ratio Tangible Book Value Per Share Reconciliation (in thousands, except per share data) | Metric (in thousands, except per share data) | At June 30, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Total shareholders' equity (GAAP) | $264,559 | $255,049 | | Less: Preferred Stock, Goodwill, Intangibles | $(48,672) | $(49,020) | | Tangible common equity (Non-GAAP) | $215,887 | $206,029 | | Common shares outstanding | 15,120,172 | 12,504,717 | | Book value per common share (GAAP) | $15.31 | $17.75 | | Tangible book value per common share (Non-GAAP) | $14.28 | $16.48 | Corporate Information and Forward-Looking Statements Corporate information about First Guaranty Bancshares, Inc. is provided, alongside important disclaimers regarding forward-looking statements About First Guaranty First Guaranty Bancshares, Inc. is the holding company for First Guaranty Bank, a Louisiana-chartered institution operating 35 locations across four states - First Guaranty Bancshares, Inc. is the holding company for First Guaranty Bank, founded in 1934[5] - The bank operates 35 locations throughout Louisiana, Texas, Kentucky, and West Virginia[5] Forward-Looking Statements This report contains forward-looking statements subject to significant risks and uncertainties, with actual results potentially differing materially from expectations - The report contains forward-looking statements that are not historical facts and are subject to risks and uncertainties[6] - The company disclaims any obligation to publicly update forward-looking statements and warns that actual results may differ materially from expectations[6]