First Guaranty Bank(US:FGBI)2023-03-15 16:00Financial Position - 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]. - Total deposits held by the company were $2.7 billion as of December 31, 2022[75]. - Public funds deposits amounted to $1.1 billion at the end of 2022, primarily from local government entities[76]. - The investment securities portfolio generated $63.2 million of pre-tax income over the last five years, with a fair value of $195.5 million in U.S. government agency securities as of December 31, 2022[78][79]. - The carrying value of the securities portfolio was $451.5 million as of December 31, 2022, with 14.3% of total assets invested in investment securities[181]. - First Guaranty Bank exceeded all regulatory capital requirements and was considered well-capitalized based on FDIC guidelines as of December 31, 2022[104]. - The company had $20.3 million in brokered deposits, mainly in reciprocal deposit programs, as of December 31, 2022[77]. - The company is required to maintain adequate capital levels, and future capital raising may be challenging depending on market conditions[187]. Loan Portfolio - The loan to deposit ratio was 92.5% as of December 31, 2022, indicating a strong focus on increasing total loans as a percentage of assets[37]. - First Guaranty aims to grow its loan portfolio by targeting small and medium-sized businesses in sectors such as manufacturing, agriculture, and healthcare[38]. - Non-farm non-residential loans totaled $992.9 million, or 39.3% of the total loan portfolio as of December 31, 2022, with owner-occupied loans making up 35.4% of this segment[51]. - 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 at $157.5 million, representing 40.9% of commercial and industrial loans[54]. - 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 limit at $29.3 million[57]. - Multifamily loans accounted for $119.8 million, or 4.7% of the total loan portfolio as of December 31, 2022, with underwriting following general guidelines for non-farm non-residential loans[61]. - Agricultural loans totaled $39.0 million, representing 1.5% of the total loan portfolio as of December 31, 2022[65]. - Farmland loans amounted to $24.8 million, or 1.0% of the total loan portfolio at the end of 2022[67]. - Commercial leases reached $317.6 million, making up 12.6% of the total loan portfolio as of December 31, 2022[68]. - Consumer and other loans totaled $47.9 million, or 1.9% of the total loan portfolio at the end of 2022[69]. - As of December 31, 2022, construction and land development loans accounted for $233.1 million, or 9.2% of the total loan portfolio[63]. - Approximately 68.7% of the total loan portfolio was secured by real estate, primarily in Louisiana and North Central Texas[137]. - Approximately $47.7 million in loans were indexed to LIBOR as of December 31, 2022, highlighting exposure to the transition from LIBOR[189]. - The majority of the guaranteed loan portfolio, amounting to $5.9 million, was comprised of loans originated under the SBA PPP program as of December 31, 2022[195]. Growth and Expansion - First Guaranty expanded into Kentucky and West Virginia in 2021, with a branch in Vanceburg, Kentucky, and a loan and deposit production office in Bridgeport, West Virginia[21]. - The company is in the process of acquiring Lone Star Bank, which will expand its geographic footprint into the Greater Houston area and along the I-10 corridor[23]. - The company plans to continue expanding its Texas markets in Dallas-Fort Worth-Arlington and Waco both organically and through strategic acquisitions[37]. - The company has completed four acquisitions since its Share Exchange, enhancing its deposit base and geographic reach in key markets[22]. - The company aims to pursue strategic acquisitions of community banks and non-banking financial companies to supplement organic growth, focusing on targets with quality loan portfolios[46]. Dividend and Shareholder Value - First Guaranty has paid a quarterly dividend on its common stock for 118 consecutive quarters as of December 31, 2022, demonstrating a commitment to returning value to shareholders[21]. - The ability to pay dividends is subject to regulatory guidance and restrictions, and future dividends will depend on various factors including capital levels[202]. - Dividends on the Series A Preferred Stock are non-cumulative and discretionary, with no obligation to pay if not declared by the board[209]. - The Series A Preferred Stock ranks junior to all existing and future indebtedness, affecting the payment of dividends[206]. - Principal shareholders beneficially own approximately 40% of the outstanding common stock as of December 31, 2022[201]. Risk Management and Regulatory Environment - The company emphasizes maintaining strong asset quality through disciplined credit culture and proactive measures in response to economic challenges, including loan relief measures during the COVID-19 pandemic[44]. - The company is subject to extensive regulation, and changes in laws could materially affect operations and financial condition[185]. - The bank's ability to pay dividends is subject to restrictions under Louisiana law, requiring unimpaired surplus equal to 50% of its outstanding capital stock[95]. - The concentration in commercial real estate loans was 399% of total capital, subjecting the company to additional regulatory scrutiny[147]. - The company faces risks related to interest rates, as shifts may reduce net interest income and impact loan demand, delinquencies, and repayment rates[155]. - The company may face increased FDIC deposit insurance assessments due to recent bank failures, which could reduce profitability[191]. - The company adopted the current expected credit loss model effective January 1, 2023, which may impact how credit impairment is recognized[177]. - The company must periodically test goodwill and core deposit intangible assets for impairment, which could adversely affect financial performance[179]. - The company operates in a market area susceptible to natural disasters, which could disrupt operations and increase loan losses[183]. Operational Challenges - Liquidity is essential for operations, with a lack of liquidity potentially jeopardizing the company's financial condition and results of operations[157]. - The company relies heavily on deposits, and recent increases in interest rates have intensified competition for these deposits, which could adversely affect liquidity[157][160]. - The operational and technological infrastructure is critical for growth, and failures in these systems could lead to significant financial losses and reputational damage[172]. - The company may face challenges in maintaining and managing growth, particularly in attracting core deposits and identifying commercial lending opportunities[166]. Performance Metrics - For the year ended December 31, 2022, net interest income totaled $100.0 million, significantly higher than the total noninterest income of $11.0 million, indicating a strong dependence on net interest income for earnings[167]. - Service charges, commissions, and fees contributed $3.2 million, or 28.7% of total noninterest income for the year ended December 31, 2022, up from $2.7 million, or 26.9% in the previous year[168]. - Non-performing assets were $14.8 million, or 0.47% of total assets, adversely affecting net income and requiring management involvement for resolution[142]. - The allowance for credit losses was 0.93% of total loans and 159.90% of total non-performing loans, indicating potential for significant credit losses[145]. - Short-term loans comprised $1.6 billion, or 64.0% of total loans, increasing the risk of significant losses due to balloon payments at maturity[146]. - The assessment range for First Guaranty Bank, based on financial measures and supervisory ratings, is from 1.5 basis points to 30 basis points[116].