FIRST GTY BANCSH(FGBIP) - 2025 Q2 - Quarterly Results

Executive Summary & Financial Highlights 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 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 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] - In July 2025, First Guaranty sold an $8.8 million non-accrual loan secured by a shopping center[3] - 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] Key Financial Metrics 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 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] Asset Quality and Credit Losses 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] - The largest 6 non-performing loan relationships comprise 75% of total non-performing loans at June 30, 2025[4] Expense Management 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] - 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] | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Full Time Equivalent Employees | 360 | 380 | 399 | 495 | Capital and Dividends 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] - 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] Company Information This section provides an overview of First Guaranty Bancshares, Inc., detailing its history, operational footprint, and stock listing About First Guaranty 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] - The bank operates thirty-five locations throughout Louisiana, Texas, Kentucky, and West Virginia[5] - First Guaranty's common stock trades on the NASDAQ under the symbol FGBI[5] Consolidated Financial Statements This section presents the company's consolidated balance sheets, income statements, and average balance sheets, detailing its financial position and performance Consolidated Balance Sheets 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 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 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 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 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 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 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 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 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][26] | (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 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 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] - 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] - The company undertakes no obligation to publicly update any forward-looking statement[6] No Offer or Solicitation 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] - 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]