First Guaranty Bancshares, Inc.

First Guaranty Bancshares, Inc. ("First Guaranty" or "First Guaranty Bancshares") operates as a financial holding company, with its wholly-owned subsidiary, First Guaranty Bank (the "Bank"), providing commercial banking services. The Bank operates through 30 banking facilities primarily located in the metropolitan/micropolitan statistical areas ("MSAs") of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, and Alexandria, Louisiana; Dallas-Fort Worth-Arlington and Waco, Texas; Vanceburg, Kentucky; and Bridgeport, West Virginia. The company's principal business involves attracting deposits from the general public and local municipalities and investing these funds in loans and securities. First Guaranty has announced its intention to exit the Dallas-Fort Worth-Arlington and Waco, Texas markets ¹.

The core business model of First Guaranty involves generating revenue primarily from interest income on loans and investments, supplemented by noninterest income from services such as ATM and debit card fees and service charges. The company attracts deposits from consumers, small businesses, and municipalities, offering various deposit accounts including checking, savings, time deposits, and money market accounts. A significant portion of its funding comes from public funds deposits, which are actively sought and managed through fiscal agency agreements ². The company also utilizes digital services, including an enhanced online banking system and mobile app, offering features like bill pay, budgeting tools, Credit Aware, and Card Swap, and Autobooks for micro and small businesses ³.

First Guaranty offers a broad range of loan and lease products. Non-farm non-residential loans constitute the largest segment, totaling $0.9 billion ⁴ or 45.7% ⁵ of the total loan portfolio at December 31, 2025. These loans are secured by commercial real estate, with owner-occupied commercial real estate loans amounting to $341.6 million ⁶ or 36.0% ⁷ of total non-farm non-residential loans. Commercial and industrial loans represent $228.7 million ⁸ or 11.0% ⁹ of the total loan portfolio, with commercial term loans at $83.1 million ¹⁰ and commercial lines of credit at $87.1 million ¹¹. One-to-four-family residential real estate loans totaled $428.8 million ¹² or 20.7% ¹³ of the portfolio, while multifamily loans were $144.2 million ¹⁴ or 6.9% ¹⁵. Construction and land development loans amounted to $149.5 million ¹⁶ or 7.2% ¹⁷, and agricultural loans were $35.2 million ¹⁸ or 1.7% ¹⁹. Farmland loans totaled $32.2 million ²⁰ or 1.5% ²¹, and commercial leases were $75.6 million ²² or 3.7% ²³. Consumer and other loans aggregated $33.0 million ²⁴ or 1.6% ²⁵.

For the fiscal year ended December 31, 2025, First Guaranty reported total assets of $4.1 billion ²⁶, an increase of $105.6 million ²⁷ or 2.7% ²⁸ from December 31, 2024. Total deposits increased by $156.6 million ²⁹ or 4.5% ³⁰ to $3.6 billion ³¹. Total loans, net of unearned income, decreased by $624.0 million ³² or 23.2% ³³ to $2.1 billion ³⁴. The allowance for credit losses stood at $40.8 million ³⁵, representing 1.97% ³⁶ of total loans. Total shareholders' equity was $226.2 million ³⁷. The company reported a net loss of $(56.0) million ³⁸, resulting in diluted EPS of $(4.17) ³⁹. Net interest income was $86.9 million ⁴⁰, with a net interest margin of 2.28% ⁴¹. Noninterest income was $8.5 million ⁴², and noninterest expense totaled $82.2 million ⁴³, which included a $12.9 million ⁴⁴ goodwill impairment charge.

Comparing year-over-year performance, net income decreased by $68.5 million ⁴⁵ from $12.4 million ⁴⁶ in 2024 to a net loss of $(56.0) million ⁴⁷ in 2025. This decline was primarily due to an increase in the provision for credit losses to $81.7 million ⁴⁸ in 2025 from $20.0 million ⁴⁹ in 2024, and the $12.9 million ⁵⁰ goodwill impairment charge. Net interest income saw a slight decrease of $1.5 million ⁵¹ from $88.4 million ⁵² in 2024 to $86.9 million ⁵³ in 2025. Noninterest income decreased by $16.3 million ⁵⁴ from $24.7 million ⁵⁵ in 2024 to $8.5 million ⁵⁶ in 2025, largely due to reduced gains on the sale of assets from a prior year sale-leaseback transaction. Total loans decreased by $624.0 million ⁵⁷ or 23.2% ⁵⁸ from $2.7 billion ⁵⁹ in 2024 to $2.1 billion ⁶⁰ in 2025. Non-performing assets decreased by $24.9 million ⁶¹ to $95.5 million ⁶² in 2025 from $120.4 million ⁶³ in 2024.

During 2025, First Guaranty implemented a revised business strategy focusing on controlled asset growth, measured expense reductions, expanded balance sheet risk management, and enhanced credit risk management. As part of this strategy, the company reduced its loan portfolio by $624.0 million ⁶⁴, particularly construction loans and non-owner-occupied commercial real estate loans. Staffing was reduced by 21% ⁶⁵ from 399 ⁶⁶ full-time equivalent employees at the end of 2024 to 330 ⁶⁷ at the end of 2025. The company also increased on-balance sheet liquidity, lowering its loan-to-deposit ratio to 57.0% ⁶⁸ at December 31, 2025. Proactive measures were taken to address non-performing assets, which decreased by $24.9 million ⁶⁹, and the allowance for credit losses was increased to $40.8 million ⁷⁰. A significant operational development was the goodwill impairment charge of $12.9 million ⁷¹ recognized in the third quarter of 2025. Additionally, the company entered into an agreement to sell its Texas operations, consisting of five branches and related deposits and loans, to Armstrong Bank ⁷².

First Guaranty Bancshares expects to continue with its revised business strategy in 2026, which focuses on controlled asset growth, measured expense reductions, expanded balance sheet risk management, and enhanced credit risk management. The company has not provided specific revenue, margin, or EPS guidance for the upcoming period in the filing.

A major growth area for First Guaranty is the continued pursuit of residential mortgage lending, consumer lending, owner-occupied commercial real estate, commercial and industrial loans, and guaranteed lending. The company aims to remain a leading agricultural lender and grow its Farm Service Agency lending. Furthermore, it will continue with its commercial leasing business, focusing on smaller loan and lease originations to achieve greater diversification within its loan portfolio ⁷³. The company also plans to strengthen relationships in Kentucky and West Virginia, while expanding its market share along Louisiana's key interstate corridors ⁷⁴.

Operationally, First Guaranty plans to further reduce exposure to construction and land development lending during 2026 ⁷⁵. The company's strategy includes diligent pursuit of cost reductions, which began in mid-2024 and continued through 2025, including a 21% ⁷⁶ reduction in staffing from 399 ⁷⁷ full-time equivalent employees at the end of 2024 to 330 ⁷⁸ at the end of 2025. Efforts are also underway to replace external third-party service providers with lower-cost alternatives or internal solutions and to create more efficiency by reducing redundant processes ⁷⁹. The company aims to move its balance sheet towards a more market-neutral position over time by reducing its liability sensitivity ⁸⁰.

Planned capital allocation includes maintaining strong relationships with public entities through its public funds department, which provides a stable source of funding, often under fiscal agency agreements ⁸¹. The company intends to grow the proportion of its public funds portfolio collateralized by reciprocal deposit insurance as an alternative to pledging securities or utilizing FHLB letters of credit, aiming to invest these deposits more efficiently in higher-yielding loans to improve net interest margin and earnings ⁸². First Guaranty also plans to continue increasing its risk-weighted capital ratios ⁸³.

Management has explicitly flagged several structural headwinds and execution risks. The company has recently entered into an agreement to exit its Dallas-Fort Worth-Arlington and Waco, Texas markets ⁸⁴, which will impact its geographic footprint. The company's ability to pay dividends in the future will depend on earnings, financial condition, liquidity and capital requirements, regulatory restrictions, and the general economic and regulatory climate ⁸⁵. Furthermore, the company's ability to declare and pay dividends is limited by the terms of its senior and subordinated debt, which prohibit payments when interest deferrals are in effect, and by the terms of its Series A Preferred Stock, which requires preferred dividends to be paid first ⁸⁶.

First Guaranty faces several material risks, including an increased level of non-performing assets, which stood at $95.5 million ⁸⁷ or 2.34% ⁸⁸ of total assets at December 31, 2025, significantly above historical levels and peer averages. The company's business is concentrated in Louisiana, Texas, Kentucky, and West Virginia, with approximately 88.4% ⁸⁹ of secured loans backed by real estate and other collateral in these market areas, exposing it to risks from regional economic downturns or adverse changes in local laws or regulations. A significant portion of the loan portfolio, 82.0% ⁹⁰ at December 31, 2025, is secured by real estate, making the company vulnerable to downturns in the local or national real estate market. The loan portfolio also has concentrations within certain industries and borrowing relationships, with the top 20 largest borrower relationships representing approximately 29.6% ⁹¹ of the Bank's loan portfolio at December 31, 2025. The company also has a concentration in commercial real estate lending, with total reported loans secured by multifamily and non-owner-occupied, non-farm, non-residential properties, and construction, land acquisition and development loans representing 302% ⁹² of total bank capital at December 31, 2025, subjecting it to additional regulatory scrutiny. A substantial portion of the loan portfolio, 39.6% ⁹³ at December 31, 2025, consists of short-term loans with balloon payments, increasing lending risks if borrowers are unable to refinance or repay. The company is also exposed to environmental liability risks associated with real property collateral, including potential remediation costs and impacts from natural disasters like hurricanes in Southeast Louisiana.

Management's message to shareholders emphasizes a strategic shift initiated in mid-2024 and continued through 2025, focusing on controlled asset growth, measured expense reductions, expanded balance sheet risk management, and enhanced credit risk management. The company plans to continue this strategy in 2026. Key strategic priorities include reducing exposure to commercial real estate loans, particularly construction and non-owner-occupied loans, and pursuing smaller loan and lease originations for greater portfolio diversification. Management is also committed to cost reduction measures, including a 21% ⁹⁴ reduction in staffing from 399 ⁹⁵ full-time equivalent employees at the end of 2024 to 330 ⁹⁶ at the end of 2025, and optimizing third-party service providers. Furthermore, the company aims to enhance balance sheet risk management by increasing liquidity and moving towards a more market-neutral position, while also strengthening credit risk management through modified loan approval processes, increased allowance for credit losses, and expanded loan review functions.