First Guaranty Bancshares, Inc. [FGBIP] Filings

10-Q 1 fgbi-20230630.htm 10-Q fgbi-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from __________ to __________

Commission File Number: 001-37621

FIRST GUARANTY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)


Louisiana		26-0513559
(State or other jurisdiction incorporation or organization)		(I.R.S. Employer Identification Number)

400 East Thomas Street
Hammond,	Louisiana	70401
(Address of principal executive offices)		(Zip Code)

(985)		345-7685
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1 par value

FGBI

The Nasdaq Stock Market LLC

Depository Shares (each representing a 1/40th interest in a share of 6.75% Series A Fixed-Rate Non-Cumulative perpetual preferred stock)

FGBIP

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filers," "accelerated filers," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of August 8, 2023 the registrant had 11,431,083 shares of $1 par value common stock outstanding.

Table of Contents


		Page
Part I.	Financial Information	4

Item 1.	Financial Statements (unaudited)	4

	Consolidated Balance Sheets as of June 30 , 2023 and December 31, 2022	4

	Consolidated Statements of Income for the three and six months ended June 30 , 2023 and 2022	5

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2023 and 2022	6

	Consolidated Statements of Shareholders' Equity for the three and six months ended June 30, 2023 and 2022	7

	Consolidated Statements of Cash Flows for the six months ended June 30 , 2023 and 2022	8

	Notes to Unaudited Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53

Item 4.	Controls and Procedures	56

Part II.	Other Information	57

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 3.	Defaults Upon Senior Securities	57

Item 4.	Mine Safety Disclosures	57

Item 5.	Other Information	57

Item 6.	Exhibits	58

Signatures		59

-3-

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (unaudited)


(in thousands, except share data)	June 30, 2023		December 31, 2022
Assets
Cash and cash equivalents:
Cash and due from banks	$	145,773	$	82,796
Federal funds sold	455		423
Cash and cash equivalents	146,228		83,219

Investment securities:
Available for sale, at fair value	80,153		131,458
Held to maturity, at cost and net of allowance for credit losses of $100 and $0 (estimated fair value of $250,008 and $242,560 respectively)	320,523		320,068
Investment securities	400,676		451,526

Federal Home Loan Bank stock, at cost	7,901		6,528
Loans held for sale	—		—

Loans, net of unearned income	2,590,666		2,519,077
Less: allowance for credit losses	31,861		23,518
Net loans	2,558,805		2,495,559

Premises and equipment, net	60,849		58,206
Goodwill	12,900		12,900
Intangible assets, net	4,583		4,979
Other real estate, net	1,273		113
Accrued interest receivable	15,099		13,002
Other assets	27,732		25,315
Total Assets	$	3,236,046	$	3,151,347

Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing demand	$	466,172	$	524,415
Interest-bearing demand	1,448,492		1,460,259
Savings	222,296		205,760
Time	630,459		533,358
Total deposits	2,767,419		2,723,792

Short-term advances from Federal Home Loan Bank	30,000		120,000
Short-term borrowings	20,000		20,000
Repurchase agreements	7,409		6,442
Accrued interest payable	6,996		4,289
Long-term advances from Federal Home Loan Bank	120,000		—
Senior long-term debt	20,305		21,927
Junior subordinated debentures	15,000		15,000
Other liabilities	10,060		4,906
Total Liabilities	2,997,189		2,916,356

Shareholders' Equity
Preferred stock, Series A - $1,000 par value - 100,000 shares authorized
Non-cumulative perpetual; 34,500 shares issued and outstanding	33,058		33,058
Common stock, $1 par value - 100,600,000 shares authorized; 11,431,083 and 10,716,796 shares issued and outstanding	11,431		10,717
Surplus	139,379		130,093
Retained earnings	69,887		76,351
Accumulated other comprehensive (loss) income	(14,898)		(15,228)
Total Shareholders' Equity	238,857		234,991
Total Liabilities and Shareholders' Equity	$	3,236,046	$	3,151,347

See Notes to Consolidated Financial Statements

-4-

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except share data)	2023		2022		2023		2022
Interest Income:
Loans (including fees)	$	40,290	$	29,999	$	78,439	$	58,037
Deposits with other banks	1,071		261		1,822		363
Securities (including FHLB stock)	2,420		2,280		4,807		4,619
Total Interest Income	43,781		32,540		85,068		63,019

Interest Expense:
Demand deposits	15,036		2,884		28,085		5,160
Savings deposits	838		101		1,417		162
Time deposits	5,224		2,540		8,800		5,295
Borrowings	1,770		705		3,552		1,109
Total Interest Expense	22,868		6,230		41,854		11,726

Net Interest Income	20,913		26,310		43,214		51,293
Less: Provision for credit losses	548		757		862		1,389
Net Interest Income after Provision for Credit Losses	20,365		25,553		42,352		49,904

Noninterest Income:
Service charges, commissions and fees	818		773		1,603		1,550
ATM and debit card fees	828		904		1,653		1,727
Net gains (losses) on securities	—		—		—		(17)
Net gains (losses) on sale of loans	—		90		12		89
Other	1,166		760		2,248		1,140
Total Noninterest Income	2,812		2,527		5,516		4,489

Noninterest Expense:
Salaries and employee benefits	9,932		9,085		19,936		18,065
Occupancy and equipment expense	2,219		2,252		4,421		4,453
Other	7,584		6,482		15,544		12,052
Total Noninterest Expense	19,735		17,819		39,901		34,570

Income Before Income Taxes	3,442		10,261		7,967		19,823
Less: Provision for income taxes	766		2,137		1,823		4,114
Net Income	2,676		8,124		6,144		15,709
Less: Preferred stock dividends	582		582		1,164		1,164
Net Income Available to Common Shareholders	$	2,094	$	7,542	$	4,980	$	14,545

Per Common Share:
Earnings	$	0.19	$	0.70	$	0.46	$	1.36
Cash dividends paid	$	0.16	$	0.16	$	0.32	$	0.32

Weighted Average Common Shares Outstanding	10,913,029		10,716,796		10,815,454		10,716,796
See Notes to Consolidated Financial Statements

-5-

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Net Income	$	2,676	$	8,124	$	6,144	$	15,709
Other comprehensive income:
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains arising during the period	(106)		(1,320)		418		(10,736)
Reclassification adjustments for (gains) losses included in net income	—		—		—		17
Change in unrealized (losses) gains on securities	(106)		(1,320)		418		(10,719)
Tax impact	22		277		(88)		2,251
Other comprehensive (loss) income	(84)		(1,043)		330		(8,468)
Comprehensive Income	$	2,592	$	7,081	$	6,474	$	7,241
See Notes to Consolidated Financial Statements

-6-

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)


	Preferred Stock $1,000 Par		Common Stock $1 Par		Surplus		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total
(in thousands, except per share data)
Balance December 31, 2021	$	33,058	$	10,717	$	130,093	$	56,654	$	(6,633)	$	223,889
Net income	—		—		—		7,585		—		7,585
Other comprehensive income (loss)	—		—		—		—		(7,425)		(7,425)
Preferred stock dividends	—		—		—		(582)		—		(582)
Cash dividends on common stock ($0.16 per share)	—		—		—		(1,715)		—		(1,715)
Balance March 31, 2022 (unaudited)	$	33,058	$	10,717	$	130,093	$	61,942	$	(14,058)	$	221,752
Net income	$	—	$	—	$	—	$	8,124	$	—	$	8,124
Other comprehensive income (loss)	$	—	$	—	$	—	$	—	$	(1,043)	$	(1,043)
Preferred stock dividends	$	—	$	—	$	—	$	(582)	$	—	$	(582)
Cash dividends on common stock ($0.16 per share)	$	—	$	—	$	—	$	(1,715)	$	—	$	(1,715)
Balance June 30, 2022 (unaudited)	$	33,058	$	10,717	$	130,093	$	67,769	$	(15,101)	$	226,536

Balance December 31, 2022	$	33,058	$	10,717	$	130,093	$	76,351	$	(15,228)	$	234,991
Net income	—		—		—		3,468		—		3,468
Cumulative effect of adoption of ASC Topic 326, net of tax	—		—		—		(7,900)		—		(7,900)
Other comprehensive income	—		—		—		—		414		414
Preferred stock dividends	—		—		—		(582)		—		(582)
Cash dividends on common stock ($0.16 per share)	—		—		—		(1,715)		—		(1,715)
Balance March 31, 2023 (unaudited)	33,058		10,717		130,093		69,622		(14,814)		228,676
Net Income	—		—		—		2,676				2,676
Common stock issued in private placement, 714,287 shares	—		714		9,286		—		—		10,000
Other comprehensive income (loss)	—		—		—		—		(84)		(84)
Preferred stock dividends	—		—		—		(582)		—		(582)
Cash dividends on common stock ($0.16 per share)	—		—		—		(1,829)		—		(1,829)
Balance June 30, 2023 (unaudited)	$	33,058	$	11,431	$	139,379	$	69,887	$	(14,898)	$	238,857
See Notes to Consolidated Financial Statements

-7-

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Six Months Ended June 30,
(in thousands)	2023		2022
Cash Flows From Operating Activities
Net income	$	6,144	$	15,709
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	862		1,389
Depreciation and amortization	2,020		1,896
Amortization/Accretion of investments	484		810
(Gain) loss on sale/call of securities	—		17
(Gain) loss on sale of assets	(30)		(150)
Repossessed asset write downs, gains and losses on dispositions	53		128
FHLB stock dividends	(142)		(2)
Change in other assets and liabilities, net	2,322		601
Net Cash Provided By Operating Activities	11,713		20,398

Cash Flows From Investing Activities
Proceeds from maturities, calls and sales of AFS securities	50,684		3,595
Funds invested in AFS securities	—		(101,807)


Funds invested in Federal Home Loan Bank stock	(3,656)		(115)
Proceeds from sale/redemption of Federal Home Loan Bank stock	2,425		—
Net increase in loans	(72,392)		(137,850)
Purchase of premises and equipment	(4,362)		(1,328)
Proceeds from sales of premises and equipment	276		47
Proceeds from sales of other real estate owned	60		787
Net Cash Used In Investing Activities	(26,965)		(236,671)

Cash Flows From Financing Activities
Net increase in deposits	43,627		63,569
Net (decrease) increase in federal funds purchased and short-term borrowings	(89,033)		19,922
Proceeds from long-term borrowings	120,000		—
Repayment of long-term borrowings	(1,625)		(4,158)
Proceeds from issuance of common stock	10,000		—
Dividends paid on preferred stock	(1,164)		(1,164)
Dividends paid on common stock	(3,544)		(3,430)
Net Cash Provided By Financing Activities	78,261		74,739

Net Increase (Decrease) In Cash and Cash Equivalents	63,009		(141,534)
Cash and Cash Equivalents at the Beginning of the Period	83,219		261,932
Cash and Cash Equivalents at the End of the Period	$	146,228	$	120,398

Noncash Activities:
Acquisition of real estate in settlement of loans	$	1,273	$	477
Transfer of securities from AFS to HTM	$	—	$	176,181

Cash Paid During The Period:
Interest on deposits and borrowed funds	$	39,147	$	13,068
Federal income taxes	$	2,500	$	4,500
State income taxes	$	330	$	—

See Notes to the Consolidated Financial Statements.

-8-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles. The consolidated financial statements and the footnotes of First Guaranty Bancshares, Inc. ("First Guaranty") thereto should be read in conjunction with the audited consolidated financial statements and note disclosures for First Guaranty previously filed with the Securities and Exchange Commission in First Guaranty's Annual Report on Form 10-K for the year ended December 31, 2022.

The consolidated financial statements include the accounts of First Guaranty Bancshares, Inc. and its wholly owned subsidiary First Guaranty Bank (the "Bank"). All significant intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the consolidated financial statements. Those adjustments are of a normal recurring nature. The results of operations at June 30, 2023 and for the three and six month periods ended June 30, 2023 and 2022 are not necessarily indicative of the results expected for the full year or any other interim period. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, and the valuation of investment securities.

-9-

Note 2. Recent Accounting Pronouncements

Accounting Standards Adopted in 2023

First Guaranty adopted FASB ASC Topic 326 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments” Update No. 2016-13 (“ASU 2016-13”). ASU 2016-13 on January 1, 2023. ASU 2016-13, referred to as the Current Expected Credit Loss (“CECL”) standard, requires financial assets measured on an amortized cost basis, including loans and held-to-maturity debt securities, to be presented at an amount net of an allowance for credit losses, which reflects expected losses for the full life of the financial asset. Unfunded lending commitments are also within the scope of this topic. Under prior GAAP losses were not recognized until the occurrence of the loss was probable.

CECL requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquired, and be adjusted each period as a provision for credit losses for changes in expected lifetime credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the lifetime credit loss estimate. First Guaranty developed a CECL model methodology that calculates expected credit losses over the life of the portfolio by analyzing the composition, characteristics and quality of the loan and securities portfolios, as well as prevailing economic conditions and forecasts. First Guaranty’s CECL calculation estimates loan losses using a combination of discounted cash flow and remaining life analyses.

First Guaranty adopted ASU 2016-13 using the modified retrospective approach for all loans and off-balance sheet credit exposures measured at amortized cost, other than purchased credit deteriorated (“PCD”) financial assets. Results for reporting periods beginning after December 31, 2022 are presented in accordance with ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

ASU 2016-13 also amended the accounting model for purchased financial assets and replaced the guidance for purchased credit impaired (“PCI”) financial assets with the concept of PCDs. For PCD assets, the CECL estimate is recognized through the allowance for credit losses with an offset to the amortized cost basis of the PCD asset at the date of acquisition. Subsequent changes in the allowance for credit losses for PCD assets are recognized through a provision for credit losses on loans. First Guaranty used the prospective transition approach for PCD loans that were previously classified as PCI and accounted for under ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”). First Guaranty determined that certain PCI assets no longer met meet the criteria of PCD assets as of the date of adoption.

First Guaranty adopted ASU 2016-13 on January 1, 2023, and recorded a one-time, cumulative effect adjustment as shown in the table below (dollars in thousands).


	December 31, 2022		Impact of ASU 2016-13 Adoption		January 1, 2023
Assets:
Allowance for credit losses	$	(23,518)	$	(8,220)	$	(31,738)
Deferred tax asset	6,420		2,100		8,520
Remaining purchase discount on loans	(1,120)		1,120		—
Liabilities:
Reserve for unfunded loan commitments	—		(2,900)		(2,900)
Shareholders' Equity:
Retained earnings	76,351		(7,900)		68,451

In addition, ASU 2016-13 amends the accounting for credit losses on available for sale (“AFS”) securities, requiring expected credit losses on AFS securities to be recorded in an allowance for credit losses rather than as a write-down of the securities’ amortized cost. Declines in the fair value of AFS securities that are not considered credit related are recognized in accumulated other comprehensive income. In addition, expected credit losses on held to maturity (“HTM”) securities are required to be recorded in an allowance for credit losses rather than as a write-down of the securities’ amortized cost basis. First Guaranty’s AFS securities portfolio was not materially impacted by the adoption of ASC 326. A $100,000 allowance for HTM securities was recorded at the adoption of ASC 326.

The allowance for credit losses is measured on a pool basis when similar risk characteristics exist and is maintained at an amount which management believes is a current estimate of the expected credit losses for the full life of the relevant pool of loans and related unfunded lending commitments. For modeling purposes, loan pools include: Real Estate based pools for construction and land development, farmland, 1-4 family residential, multifamily, and non-farm non-residential and non-real-estate pools for agricultural, commercial and industrial, commercial leases and consumer and other. Management periodically reassesses each pool to confirm the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary. The loss rates computed for each pool and expected pool-level funding rates are applied to the related unfunded lending commitments to calculate an allowance for credit losses.

Loans that do not share similar risk characteristics with other loans are excluded from the loan pools and individually evaluated for impairment. Individually evaluated loans are loans for which it is probable that all the amounts due under the contractual terms of the loan will not be collected.

-10-

FASB ASC Topic 326 “Financial Instruments – Credit Losses, Troubled Debt Restructurings and Vintage Disclosures” Update No. 2022-02 (“ASU 2022-02”). ASU 2022-02 became effective for First Guaranty on January 1, 2023 and is applied prospectively. ASU 2022-02 amends Topic 326 to eliminate the accounting guidance for troubled debt restructurings (“TDRs”) by creditors that have adopted ASU 2016-13 and, instead, requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan. The amendment also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases. The adoption of ASU 2022-02 did not have a material impact on First Guaranty’s consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

None.

-11-

Note 3. Securities

A summary comparison of securities by type at June 30, 2023 and December 31, 2022 is shown below.


	June 30, 2023								December 31, 2022
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale:
U.S. Treasuries	$	50,319	$	—	$	(1,302)	$	49,017	$	100,642	$	—	$	(2,142)	$	98,500
U.S. Government Agencies	—		—		—		—		—		—		—		—
Corporate debt securities	16,750		—		(1,711)		15,039		16,750		—		(752)		15,998
Municipal bonds	14,097		11		(523)		13,585		14,742		31		(426)		14,347
Mortgage-backed securities	2,667		—		(155)		2,512		2,711		—		(98)		2,613
Total available for sale securities	$	83,833	$	11	$	(3,691)	$	80,153	$	134,845	$	31	$	(3,418)	$	131,458

Held to maturity:
U.S. Government Agencies	$	265,464	$	—	$	(63,178)	$	202,286	$	265,032	$	—	$	(69,503)	$	195,529
Corporate debt securities	55,159		—		(7,437)		47,722		55,036		—		(8,005)		47,031
Total held to maturity securities	$	320,623	$	—	$	(70,615)	$	250,008	$	320,068	$	—	$	(77,508)	$	242,560

The scheduled maturities of securities at June 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to calls or prepayments. Mortgage-backed securities are not due at a single maturity because of amortization and potential prepayment of the underlying mortgages. For this reason, they are presented separately in the maturity table below:


	At June 30, 2023
(in thousands)	Amortized Cost		Fair Value
Available for sale:
Due in one year or less	$	51,208	$	49,899
Due after one year through five years	2,796		2,747
Due after five years through 10 years	20,024		18,275
Over 10 years	7,138		6,720
Subtotal	81,166		77,641
Mortgage-backed securities	2,667		2,512
Total available for sale securities	$	83,833	$	80,153

Held to maturity:
Due in one year or less	$	—	$	—
Due after one year through five years	1,481		1,270
Due after five years through 10 years	116,303		98,465
Over 10 years	202,839		150,273
Total held to maturity securities	$	320,623	$	250,008

At June 30, 2023, $158.6 million of First Guaranty's securities were pledged to secure public funds deposits and borrowings. The pledged securities had a market value of $121.0 million as of June 30, 2023.

Accrued interest receivable on First Guaranty's investment securities was $1.6 million and $2.0 million at June 30, 2023 and December 31, 2022, respectively, and was included in accrued interest receivable on the consolidated balance sheet. First Guaranty had a $0.1 million allowance for credit losses related to the held to maturity portfolio.

-12-

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at June 30, 2023.


						At June 30, 2023
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
Available for sale:
U.S. Treasuries	—	$	—	$	—	3	$	49,017	$	(1,302)	3	$	49,017	$	(1,302)
Corporate debt securities	8	6,111		(806)		8	8,095		(905)		16	14,206		(1,711)
Municipal bonds	35	9,331		(262)		29	2,566		(261)		64	11,897		(523)
Mortgage-backed securities	2	2,124		(110)		4	388		(45)		6	2,512		(155)
Total available for sale securities	45	$	17,566	$	(1,178)	44	$	60,066	$	(2,513)	89	$	77,632	$	(3,691)

Held to maturity:
U.S. Government Agencies	—	$	—	$	—	29	$	202,286	$	(63,178)	29	$	202,286	$	(63,178)
Corporate debt securities	1	72		(110)		58	47,650		(7,327)		59	47,722		(7,437)
Total held to maturity securities	1	$	72	$	(110)	87	$	249,936	$	(70,505)	88	$	250,008	$	(70,615)

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at December 31, 2022.


						At December 31, 2022
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
Available for sale:
U.S. Treasuries	—	$	—	$	—	6	$	98,500	$	(2,142)	6	$	98,500	$	(2,142)
U.S. Government Agencies	—	—		—		—	—		—		—	—		—
Corporate debt securities	14	14,628		(622)		2	1,370		(130)		16	15,998		(752)
Municipal bonds	46	5,854		(394)		6	673		(32)		52	6,527		(426)
Mortgage-backed securities	3	2,608		(98)		4	5		—		7	2,613		(98)
Total available for sale securities	63	$	23,090	$	(1,114)	18	$	100,548	$	(2,304)	81	$	123,638	$	(3,418)

Held to maturity:
U.S. Government Agencies	13	$	89,695	$	(21,724)	16	$	105,834	$	(47,779)	29	$	195,529	$	(69,503)
Corporate debt securities	59	47,031		(8,005)		—	—		—		59	47,031		(8,005)
Total held to maturity securities	72	$	136,726	$	(29,729)	16	$	105,834	$	(47,779)	88	$	242,560	$	(77,508)

As of June 30, 2023, 177 of First Guaranty's debt securities had unrealized losses totaling 18.5% of the individual securities' amortized cost basis and 18.4% of First Guaranty's total amortized cost basis of the investment securities portfolio. 131 of the 177 securities had been in a continuous loss position for over 12 months at such date. The 131 securities had an aggregate amortized cost basis of $383.0 million and an unrealized loss of $73.0 million at June 30, 2023. Management has determined that the declines in the fair value of these securities was not attributed to credit losses, and no allowance for credit losses was recorded for available for sale securities at June 30, 2023.

-13-

Securities are evaluated for impairment from credit losses at least quarterly and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (i) the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the recovery of contractual principal and interest and (iv) the intent and ability of First Guaranty to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Investment securities issued by the U.S. Government and Government sponsored enterprises with unrealized losses and the amount of unrealized losses on those investment securities that are the result of changes in market interest rates will not be credit impaired. First Guaranty has the ability and intent to hold these securities until recovery, which may not be until maturity.

Corporate debt securities in a loss position consist primarily of corporate bonds issued by businesses in the financial, insurance, utility, manufacturing, industrial, consumer products and oil and gas industries. There were no securities with a credit related impairment loss at June 30, 2023. First Guaranty believes that the remaining issuers will be able to fulfill the obligations of these securities based on evaluations described above. First Guaranty has the ability and intent to hold these securities until they recover, which could be at their maturity dates.

There was no allowance for credit losses recognized on securities during the six months ended June 30, 2023 and 2022.

For securities that have indications of credit related impairment, management analyzes future expected cash flows to determine if any credit related impairment is evident. Estimated cash flows are determined using management's best estimate of future cash flows based on specific assumptions. The assumptions used to determine the cash flows were based on estimates of loss severity and credit default probabilities. Management reviews reports from credit rating agencies and public filings of issuers.

At June 30, 2023, First Guaranty's exposure to bond issuers that exceeded 10% of shareholders' equity is below:


	At June 30, 2023
(in thousands)	Amortized Cost		Fair Value

U.S. Government Treasuries (U.S.)	$	50,319	$	49,017
Federal Home Loan Bank (FHLB)	32,143		25,701
Federal Home Loan Mortgage Corporation (Freddie Mac-FHLMC)	97,504		69,834

Federal Farm Credit Bank (FFCB)	138,483		109,262
Total	$	318,449	$	253,814

-14-

Note 4. Loans

The following table summarizes the components of First Guaranty's loan portfolio as of June 30, 2023 and December 31, 2022:


	June 30, 2023				December 31, 2022
(in thousands except for %)	Balance		As % of Category		Balance		As % of Category
Real Estate:
Construction & land development	$	301,259	11.6	%	$	233,091	9.2	%
Farmland	29,398		1.1	%	24,823		1.0	%
1- 4 Family	406,148		15.6	%	366,330		14.5	%
Multifamily	121,342		4.7	%	119,785		4.7	%
Non-farm non-residential	1,025,073		39.5	%	992,929		39.3	%
Total Real Estate	1,883,220		72.5	%	1,736,958		68.7	%
Non-Real Estate:
Agricultural	47,924		1.8	%	39,045		1.5	%
Commercial and industrial (1)	338,023		13.0	%	385,279		15.3	%
Commercial leases	282,161		10.9	%	317,574		12.6	%
Consumer and other	47,771		1.8	%	47,864		1.9	%
Total Non-Real Estate	715,879		27.5	%	789,762		31.3	%
Total Loans Before Unearned Income	2,599,099		100.0	%	2,526,720		100.0	%
Unearned income	(8,433)				(7,643)
Total Loans Net of Unearned Income

First Guaranty Bancshares, Inc. [FGBIP] Filings
First Guaranty Bancshares, Inc. [FGBI] Filings
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-03-16]
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-03-16]
10-Q	[2021-11-09]
10-Q	[2021-08-09]
10-Q	[2021-05-10]
10-K	[2021-03-16]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-16]
10-Q	[2019-11-12]
10-Q	[2019-08-09]
10-Q	[2019-05-09]
10-K	[2019-03-15]
10-Q	[2018-11-09]
10-Q	[2018-08-09]
10-Q	[2018-05-10]
10-K	[2018-03-16]
10-Q	[2017-11-14]
10-Q	[2017-08-14]
10-Q	[2017-05-12]
10-K	[2017-03-30]
10-Q	[2016-11-14]
10-Q	[2016-08-15]
10-Q	[2016-05-16]
10-K	[2016-03-28]
10-Q	[2015-11-16]
10-Q	[2015-08-13]
10-Q	[2015-05-14]
10-K	[2015-03-17]
10-Q	[2014-11-14]
S-1	[2014-10-24]
10-Q	[2014-08-14]
10-Q	[2014-05-15]
10-K	[2014-03-27]
10-Q	[2013-11-08]
10-Q	[2013-08-13]
10-Q	[2013-05-13]
10-K	[2013-03-27]
10-Q	[2012-11-13]
10-Q	[2012-08-13]
10-Q	[2012-05-15]
10-K	[2012-03-29]

First Guaranty Bancshares, Inc. [FGBIP] Filings

First Guaranty Bancshares, Inc. [FGBI] Filings