First Guaranty Bancshares, Inc.

Previous wording

The following discussion of First Guaranty's financial condition and results of operations is intended to highlight the significant factors affecting First Guaranty's financial condition and results of operations presented in the consolidated financial statements included in this Form 10-Q. This discussion is designed to provide readers with a more comprehensive view of the operating results and financial position than would be obtained from reading the consolidated financial statements alone. Reference should be made to those statements for an understanding of the following review and analysis. The financial data at September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been derived from unaudited consolidated financial statements and include, in the opinion of management, all adjustments (consisting of normal recurring accruals and provisions) necessary to present fairly First Guaranty's financial position and results of operations for such periods.

Current wording

The following discussion of First Guaranty's financial condition and results of operations is intended to highlight the significant factors affecting First Guaranty's financial condition and results of operations presented in the consolidated financial statements included in this Form 10-Q. This discussion is designed to provide readers with a more comprehensive view of the operating results and financial position than would be obtained from reading the consolidated financial statements alone. Reference should be made to those statements for an understanding of the following review and analysis. The financial data at March 31, 2025 and for the three months ended March 31, 2025 and 2024 have been derived from unaudited consolidated financial statements and include, in the opinion of management, all adjustments (consisting of normal recurring accruals and provisions) necessary to present fairly First Guaranty's financial position and results of operations for such periods.

Previous wording

Third Quarter and Nine Months Ended September 30, 2024 Financial Overview

Current wording

Three Months Ended March 31, 2025 Financial Overview

Previous wording

First Guaranty Bancshares is a Louisiana corporation and a financial holding company headquartered in Hammond, Louisiana. Our wholly-owned subsidiary, First Guaranty Bank, a Louisiana-chartered commercial bank, provides personalized commercial banking services primarily to Louisiana and Texas customers through 35 banking facilities primarily located in the MSAs of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, Lake Charles and Alexandria, Louisiana and Dallas-Fort Worth-Arlington, Waco, Texas and Mideast markets in Kentucky and West Virginia. We emphasize personal relationships and localized decision making to ensure that products and services are matched to customer needs. We compete for business principally on the basis of personal service to customers, customer access to officers and directors and competitive interest rates and fees.

Current wording

First Guaranty Bancshares is a Louisiana corporation and a financial holding company headquartered in Hammond, Louisiana. Our wholly-owned subsidiary, First Guaranty Bank, a Louisiana-chartered commercial bank, provides personalized commercial banking services primarily to Louisiana and Texas customers through 31 banking facilities primarily located in the MSAs of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, Lake Charles and Alexandria, Louisiana and Dallas-Fort Worth-Arlington, Waco, Texas and Mideast markets in Kentucky and West Virginia. We emphasize personal relationships and localized decision making to ensure that products and services are matched to customer needs. We compete for business principally on the basis of personal service to customers, customer access to officers and directors and competitive interest rates and fees.

Previous wording

Financial highlights for the third quarter and nine months ended September 30, 2024 are as follows:

Current wording

Financial highlights for the three months ended March 31, 2025 are as follows:

Previous wording

•Total assets increased $371.2 million and were $3.9 billion at September 30, 2024 and $3.6 billion at December 31, 2023. Total loans at September 30, 2024 were $2.8 billion, an increase of $20.9 million, or 0.8%, compared with December 31, 2023. Total deposits were $3.4 billion at September 30, 2024, an increase of $420.8 million, or 14.0%, compared with December 31, 2023. Retained earnings were $72.7 million at September 30, 2024, an increase of $4.7 million compared to $68.0 million at December 31, 2023. Shareholders' equity was $256.4 million and $249.6 million at September 30, 2024 and December 31, 2023, respectively.

Current wording

•Total assets decreased $143.5 million and were $3.8 billion at March 31, 2025 and $4.0 billion at December 31, 2024. Total loans at March 31, 2025 were $2.5 billion, a decrease of $181.0 million, or 6.7%, compared with December 31, 2024. Total deposits were $3.3 billion at March 31, 2025, a decrease of $136.8 million, or 3.9%, compared with December 31, 2024. Retained earnings were $66.1 million at March 31, 2025, a decrease of $6.9 million compared to $73.0 million at December 31, 2024. Shareholders' equity was $251.4 million and $255.0 million at March 31, 2025 and December 31, 2024, respectively.

Previous wording

•Earnings per common share were $0.11 and $0.10 for the third quarter of 2024 and 2023, respectively, and $0.78 and $0.56 for the nine months ended September 30, 2024 and 2023, respectively. Total weighted average shares outstanding were 12,504,717 and 11,431,083 for the third quarter of 2024 and 2023, respectively, and 12,499,799 and 11,022,919 for the nine months ended September 30, 2024 and 2023, respectively. The change in shares was due to the issuance of 44,341 and 29,293 shares of common stock under the Equity Bonus Plan during the fourth quarter of 2023 and the first quarter of 2024, respectively, and the issuance of 1,714,287 shares of common stock under private placement in 2023.

Current wording

•Earnings per common share were $(0.54) and $0.14 for three months ended March 31, 2025 and 2024, respectively. Total weighted average shares outstanding were 12,506,792 and 12,489,910 for the three months ended March 31, 2025 and 2024, respectively. The change in shares was due to the issuance of 186,787 shares of common stock under private placement in 2025.

Previous wording

•The allowance for credit losses was $33.3 million or 1.20% of total loans at September 30, 2024 compared to $30.9 million or 1.13% at December 31, 2023.

Current wording

•The allowance for credit losses was $43.0 million or 1.71% of total loans at March 31, 2025 compared to $34.8 million or 1.29% at December 31, 2024.

Previous wording

•First Guaranty had $1.2 million of other real estate owned as of September 30, 2024 compared to $1.3 million at December 31, 2023.

Current wording

•First Guaranty had $0.2 million of other real estate owned as of March 31, 2025 compared to $0.3 million at December 31, 2024.

Previous wording

•The net interest margin for the three months ended September 30, 2024 was 2.51% which was a decrease of three basis points from the net interest margin of 2.54% for the same period in 2023. The net interest margin for the nine months ended September 30, 2024 was 2.52% which was a decrease of 23 basis points from the net interest margin of 2.75% for the same period in 2023. First Guaranty attributed the decrease in the net interest margin to the increase in market interest rates that began in 2022 and continued through 2023 that increased the cost of liabilities. Loans as a percentage of average interest earning assets decreased to 80.0% at September 30, 2024 compared to 83.2% at September 30, 2023.

Current wording

•The net interest margin for the three months ended March 31, 2025 was 2.35% which was a decrease of 23 basis points from the net interest margin of 2.58% for the same period in 2024. Loans as a percentage of average interest earning assets decreased to 68.5% at March 31, 2025 compared to 80.8% at March 31, 2024.

Previous wording

•Investment securities totaled $664.0 million at September 30, 2024, an increase of $259.9 million when compared to $404.1 million at December 31, 2023. At September 30, 2024, available for sale securities, at fair value, totaled $342.6 million, an increase of $259.1 million when compared to $83.5 million at December 31, 2023. The increase in available for sale securities was primarily due to purchase of Treasury securities. At September 30, 2024, held to maturity securities, at amortized cost and net of the allowance for credit losses totaled $321.4 million, an increase of $0.8 million when compared to $320.6 million at December 31, 2023. The allowance for credit losses for HTM securities was $0.1 million at September 30, 2024 and December 31, 2023.

Current wording

•Investment securities totaled $594.9 million at March 31, 2025, a decrease of $7.8 million when compared to $602.7 million at December 31, 2024. At March 31, 2025, available for sale securities, at fair value, totaled $273.0 million, a decrease of $8.1 million when compared to $281.1 million at December 31, 2024. The decrease in available for sale securities was primarily due to maturity of Treasury securities. At March 31, 2025, held to maturity securities, at amortized cost and net of the allowance for credit losses totaled $321.9 million, an increase of $0.3 million when compared to $321.6 million at December 31, 2024. The allowance for credit losses for HTM securities was $0.2 million at March 31, 2025 and December 31, 2024.

Previous wording

•Total loans net of unearned income were $2.8 billion at September 30, 2024, a net increase of $20.9 million from December 31, 2023. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $33.3 million at September 30, 2024 and $30.9 million at December 31, 2023, respectively.

Current wording

•Total loans net of unearned income were $2.5 billion at March 31, 2025, a net decrease of $181.0 million from December 31, 2024. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $43.0 million at March 31, 2025 and $34.8 million at December 31, 2024, respectively.

Previous wording

First Guaranty charged off $2.8 million in consumer loans during the first nine months of 2024. The consumer loan charge offs included $0.1 million in credit card loans, $1.2 million of loans secured by automobiles or equipment and $1.5 million in unsecured loans.

Current wording

First Guaranty charged off $0.4 million in consumer loans during the first quarter of 2025. The consumer loan charge offs included $0.1 million in credit card loans, $0.1 million of loans secured by automobiles or equipment, and $0.2 million in unsecured loans.

Previous wording

Smaller loans and overdrawn deposit accounts comprised the remaining $2.8 million of charge-offs for the first nine months of 2024.

Current wording

Smaller loans and overdrawn deposit accounts comprised the remaining $0.7 million of charge-offs for the first quarter of 2025.

Previous wording

•Return on average assets for the three months ended September 30, 2024 and 2023 was 0.21%, for each period. Return on average assets for the nine months ended September 30, 2024 and 2023 was 0.42% and 0.33%, respectively. Return on average common equity for the three months ended September 30, 2024 and 2023 was 2.40% and 2.27%, respectively. Return on average common equity for the nine months ended September 30, 2024 and 2023 was 5.87% and 4.06%, respectively. Return on average assets is calculated by dividing annualized net income by average assets. Return on average common equity is calculated by dividing annualized net income by average common equity.

Current wording

•Return on average assets for the three months ended March 31, 2025 and 2024 was (0.63)% and 0.26%, respectively. Return on average common equity for the three months ended March 31, 2025 and 2024 was (12.29)% and 3.17%, respectively. Return on average assets is calculated by dividing annualized net income by average assets. Return on average common equity is calculated by dividing annualized net income by average common equity.

Previous wording

•Book value per common share was $17.86 as of September 30, 2024 compared to $17.36 as of December 31, 2023. The increase was due primarily to the recent issuance of new shares and changes in accumulated other comprehensive income ("AOCI"). AOCI is comprised of unrealized gains and losses on available for sale securities, including unrealized losses on available for sale securities at the time of transfer to held to maturity.

Current wording

•Book value per common share was $17.21 as of March 31, 2025 compared to $17.75 as of December 31, 2024. The decrease was due primarily to the decrease in retained earnings and recent issuance of new shares, offset by changes in accumulated other comprehensive income ("AOCI"). AOCI is comprised of unrealized gains and losses on available for sale securities, including unrealized losses on available for sale securities at the time of transfer to held to maturity.

Previous wording

•First Guaranty's Board of Directors declared cash dividends of $0.08 and $0.16 per common share in the third quarter of 2024 and 2023. First Guaranty has paid 125 consecutive quarterly dividends as of September 30, 2024.

Current wording

•First Guaranty's Board of Directors declared cash dividends of $0.01 and $0.16 per common share in the first quarter of 2025 and 2024. The reduction in the common stock dividend payment was done in order to increase capital as part of First Guaranty’s new business strategy announced in the third quarter of 2024. First Guaranty has paid 127 consecutive quarterly dividends as of March 31, 2025.

Previous wording

•First Guaranty paid preferred stock dividends of $1.7 million during the first nine months of 2024 and 2023.

Current wording

•First Guaranty paid preferred stock dividends of $0.6 million during the first three months of 2025 and 2024.

Previous wording

Total assets at September 30, 2024 were $3.9 billion, an increase of $371.2 million, or 10.4%, from December 31, 2023. Assets increased primarily due to increases in investment securities of $259.9 million, cash and cash equivalents of $81.2 million and net loans of $18.6 million at September 30, 2024 compared to December 31, 2023.

Current wording

Total assets at March 31, 2025 were $3.8 billion, a decrease of $143.5 million, or 3.6%, from December 31, 2024. Assets decreased primarily due to decreases in investment securities of $7.8 million and net loans of $189.2 million offset by an increase in cash and cash equivalents of $54.2 million at March 31, 2025 compared to December 31, 2024.

Previous wording

Net loans increased $18.6 million, or 0.7%, to $2.7 billion at September 30, 2024 from December 31, 2023. Non-farm non-residential loan balances increased $119.7 million due to new originations. Multifamily loans increased $43.3 million primarily due to the conversion of existing construction loans to permanent financing and the origination of new loans. One-to-four family residential loans increased $27.0 million primarily due to new originations. Farmland loans increased $7.0 million primarily due to seasonal activity. Agricultural loans increased $6.5 million due to seasonal activity. Consumer and other loans decreased $8.8 million primarily due to paydowns. Commercial lease loan balances decreased $36.9 million primarily due to paydowns. First Guaranty's commercial lease portfolio generally has higher yields than commercial real estate loans but shorter average lives. Commercial and industrial loans decreased $60.5 million primarily due to paydowns. Construction and land development loans decreased $76.3 million principally due to the sale of guaranteed loans and the conversion of existing loans to permanent financing. First Guaranty had approximately 3.2% of funded and 1.8% of unfunded commitments in our loan portfolio to businesses engaged in support or service activities for oil and gas operations. First Guaranty's hotel and hospitality portfolio totaled $182.2 million at September 30, 2024. As part of the management of risks in our loan portfolio, First Guaranty had previously established an internal guidance limit of approximately $200.0 million for its hotel and hospitality portfolio. First Guaranty had $409.0 million in loans related to our Texas markets at September 30, 2024 which was an increase of $33.4 million or 8.9% from $375.7 million at December 31, 2023. First Guaranty anticipates additional growth opportunities in Texas. First Guaranty had $346.0 million in loans related to our new Mideast markets in Kentucky and West Virginia at September 30, 2024 compared to $278.1 million at December 31, 2023. Syndicated loans at September 30, 2024 were $52.3 million, of which $27.9 million were shared national credits. Syndicated loans decreased $24.4 million from $76.7 million at December 31, 2023.

Current wording

Net loans decreased $189.2 million, or 7.1%, to $2.5 billion at March 31, 2025 from December 31, 2024. Non-farm non-residential loan balances decreased $42.7 million due to paydowns. Construction and land development loans decreased $41.8 million principally due to the sale of loans and the conversion of existing loans to permanent financing. Commercial lease loan balances decreased $36.2 million primarily due to paydowns on the existing lease portfolio. First Guaranty's commercial lease portfolio generally has higher yields than commercial real estate loans but shorter average lives. Commercial and industrial loans decreased $23.0 million primarily due to paydowns. Multifamily loans decreased $20.6 million primarily due to paydowns. Farmland loans decreased $6.0 million primarily due to seasonal activity. One-to-four family residential loans decreased $6.0 million primarily due to paydowns. Agricultural loans decreased $3.1 million due to seasonal activity. Consumer and other loans decreased $2.5 million primarily due to paydowns. First Guaranty had approximately 3.3% of funded and 1.9% of unfunded commitments in our loan portfolio to businesses engaged in support or service activities for oil and gas operations. First Guaranty's hotel and hospitality portfolio totaled $176.6 million at March 31, 2025. As part of the management of risks in our loan portfolio, First Guaranty had previously established an internal guidance limit of approximately $200.0 million for its hotel and hospitality portfolio. First Guaranty had $336.2 million in loans related to our Texas markets at March 31, 2025 compared to $407.1 million at December 31, 2024. First Guaranty had $332.5 million in loans related to our Mideast markets in Kentucky and West Virginia at March 31, 2025 compared to $335.5 million at December 31, 2024. Syndicated loans at March 31, 2025 were $54.5 million, of which $27.2 million were shared national credits. Syndicated loans increased $0.7 million from $53.9 million at December 31, 2024.

Previous wording

As of September 30, 2024, 77.8% of our loan portfolio was secured by real estate. The largest portion of our loan portfolio, at 42.0% as of September 30, 2024, was non-farm non-residential loans secured by real estate. Approximately 53.9% of the loan portfolio was based on a floating rate tied to the prime rate, Secured Overnight Financing Rate ("SOFR"), or Treasury rates as of September 30, 2024. 48.9% of the loan portfolio is scheduled to mature within five years from September 30, 2024.

Current wording

As of March 31, 2025, 80.3% of our loan portfolio was secured by real estate. The largest portion of our loan portfolio, at 44.4% as of March 31, 2025, was non-farm non-residential loans secured by real estate. Approximately 55.9% of the loan portfolio was based on a floating rate tied to the prime rate, Secured Overnight Financing Rate ("SOFR"), or Treasury rates as of March 31, 2025. 47.1% of the loan portfolio is scheduled to mature within five years from March 31, 2025.

Previous wording

Commercial real estate (“CRE”) has received increased regulatory scrutiny in recent quarters due to valuation concerns associated with the increase in market interest rates and the impact of the COVID-19 pandemic. First Guaranty has utilized enhanced risk management practices for CRE concentration analysis for several years. First Guaranty Bank’s credit department conducts an annual stress test for CRE related loans that is presented to the Bank’s board of directors. The stress test analyzes the impact of changes in interest rates and cash flow on loan customers with credit exposures of $2.5 million or greater. First Guaranty generally requires personal guarantees on CRE loans. First Guaranty generally approves CRE loans with loan-to-values of 80% or less. First Guaranty also generally requires for construction related CRE loans that the borrower provides their equity contribution upfront before loan funds are advanced.

Current wording

Commercial real estate (“CRE”) has received increased regulatory scrutiny in recent quarters due to valuation concerns associated with the increase in market interest rates and the impact of the COVID-19 pandemic. First Guaranty has utilized enhanced risk management practices for CRE concentration analysis for several years. First Guaranty Bank’s credit department conducts an annual stress test for CRE related loans that is presented to the Bank’s board of directors. The stress test analyzes the impact of changes in interest rates and cash flow on loan customers with credit exposures of $2.5 million or greater. First Guaranty generally requires personal guarantees on CRE loans. First Guaranty generally approves CRE loans with loan-to-values of 80% or less. First Guaranty also generally requires for construction related CRE loans that the borrower provides their equity contribution upfront before loan funds are advanced. First Guaranty modified its business strategy in 2024 to reduce exposure to commercial real estate related loans, particularly loans secured by non-owner occupied properties and construction loans for commercial real estate. First Guaranty continued this strategy in the first quarter of 2025.

Previous wording

First Guaranty has diversified its CRE portfolio across both industries and geographic location. The following is a summary of the largest CRE related loans associated with hotel and motels, office properties, apartment complexes, healthcare related properties, and properties under construction as of September 30, 2024. First Guaranty does not finance standalone multi-story office buildings in major metropolitan areas. The largest CRE loan secured by a hotel or motel totaled $20.0 million. The property is a flagged hotel located in Texas. The largest CRE loan secured by an office related property totaled $21.4 million and is located in West Virginia. The largest CRE loan secured by an apartment complex totaled $41.5 million secured by a property located in Louisiana. First Guaranty also holds a $26.0 million loan secured by an apartment complex that is located in Texas. The largest healthcare related loan is a $32.9 million property secured by an assisted living center located in Alabama. The largest CRE loan under construction totaled $31.5 million for an apartment renovation project in Louisiana. First Guaranty also has a $29.6 million loan for land development secured by a property located in Texas.

Current wording

First Guaranty has diversified its CRE portfolio across both industries and geographic location. The following is a summary of the largest CRE related loans associated with hotel and motels, office properties, apartment complexes, healthcare related properties, and properties under construction as of March 31, 2025. First Guaranty generally does not finance standalone multi-story office buildings in major metropolitan areas. The largest CRE loan secured by a hotel or motel totaled $19.8 million. The property is a flagged hotel located in Texas. The largest CRE loan secured by an office related property totaled $24.5 million and is located in Utah. The largest CRE loan secured by an apartment complex totaled $41.1 million and is located in Louisiana. The largest healthcare related loan is a $32.9 million property secured by an assisted living center located in Alabama. This healthcare loan is in non-accrual status. The largest CRE loan under construction totaled $29.1 million for an apartment complex and is secured by a property located in Texas.

Previous wording

The increase in classified assets at September 30, 2024 as compared to December 31, 2023 was due to a $74.1 million increase in substandard loans offset by a $1.1 million decrease in doubtful loans. The increase in substandard loans was primarily the result of downgrades during the second quarter of 2024 of two related commercial loan relationships, with balances of $24.0 million and $18.2 million, from pass to substandard status, and one commercial loan relationship totaling $28.7 million downgraded during the third quarter of 2024, from special mention to substandard status. The $28.7 million commercial loan relationship was pass status at December 31, 2023. The decrease in doubtful loans was primarily the result of the payoff of a $0.4 million one-to-four family loan classified as doubtful during the first quarter of 2024. Special mention loans increased by $60.5 million in 2024. The increase in special mention loans was primarily the result of downgrades during the third quarter of 2024 of one multifamily loan totaling $26.0 million, one commercial lease loan relationship totaling $19.1 million, and one commercial real estate loan relationship totaling $8.6 million, from pass to special mention status.

Current wording

The increase in classified assets at March 31, 2025 as compared to December 31, 2024 was due to a $99.6 million increase in substandard loans. The increase in substandard loans was primarily the result of downgrades during the first quarter of 2025 of one non-farm non-residential loan relationship totaling $48.6 million, from pass to substandard status, one construction and land development loan totaling $16.8 million, from special mention to substandard, one non-farm non-residential loan relationship totaling $15.8 million, from pass to substandard, and one commercial loan relationship totaling $11.1 million, from pass to substandard. Special mention loans increased by $56.5 million in 2025. The increase in special mention loans was primarily the result of downgrade during the first quarter of 2025 of two non-farm non-residential loan relationships, with balances of $26.6 million and $20.0 million, from pass to special mention status.

Previous wording

Net loans are reduced by the allowance for credit losses which totaled $33.3 million at September 30, 2024 and $30.9 million at December 31, 2023. First Guaranty adopted ASC 326 effective January 1, 2023 and recorded a cumulative adjustment to the allowance of $7.0 million. Loan charge-offs were $13.7 million during the first nine months of 2024 and $2.0 million during the same period in 2023. Recoveries totaled $0.7 million during the first nine months of 2024 and $1.2 million during the same period in 2023. The provision for credit losses totaled $14.0 million for the first nine months of 2024 and $1.5 million for the same period in 2023. See Note 4 of the Notes to Consolidated Financial Statements for more information on loans and Note 5 for more information on the allowance for credit losses.

Current wording

Net loans are reduced by the allowance for credit losses which totaled $43.0 million at March 31, 2025 and $34.8 million at December 31, 2024. Loan charge-offs were $6.9 million during the first three months of 2025 and $2.3 million during the same period in 2024. Recoveries totaled $0.2 million during the first three months of 2025 and $0.3 million during the same period in 2024. The provision for credit losses totaled $14.5 million for the first three months of 2025 and $2.3 million for the same period in 2024. See Note 4 of the Notes to Consolidated Financial Statements for more information on loans and Note 5 for more information on the allowance for credit losses.

Previous wording

Investment securities at September 30, 2024 totaled $664.0 million, an increase of $259.9 million compared to $404.1 million at December 31, 2023. The portfolio consists of both available for sale (AFS) and held to maturity securities (HTM). The securities designated as held to maturity are agency and corporate debt securities that are part of First Guaranty’s investment strategy and public funds collateralization program. We purchase securities for our investment portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk and meet pledging requirements for public funds and borrowings.

Current wording

Investment securities at March 31, 2025 totaled $594.9 million, a decrease of $7.8 million compared to $602.7 million at December 31, 2024. The portfolio consists of both available for sale (AFS) and held to maturity securities (HTM). The securities designated as held to maturity are agency and corporate debt securities that are part of First Guaranty’s investment strategy and public funds collateralization program. We purchase securities for our investment portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk and meet pledging requirements for public funds and borrowings.

Previous wording

The securities portfolio consisted principally of U.S. Government and Government agency securities, agency mortgage-backed securities, corporate debt securities and municipal bonds. U.S. government agencies consist of FHLB, Federal Farm Credit Bank ("FFCB"), Freddie Mac and Fannie Mae obligations. Mortgage-backed securities that we purchase are issued by Freddie Mac and Fannie Mae. Management monitors the securities portfolio for both credit and interest rate risk. We generally limit the purchase of corporate securities to individual issuers to manage concentration and credit risk. Corporate securities generally have a maturity of 10 years or less. U.S. Government securities consist of U.S. Treasury securities that have maturities of less than two years. Government agency securities generally have maturities of 15 years or less. Agency mortgage-backed securities have stated final maturities of 15 to 20 years.

Current wording

The securities portfolio consisted principally of U.S. Government and Government agency securities, agency mortgage-backed securities, U.S. Government mortgage-backed securities, corporate debt securities and municipal bonds. U.S. government agencies consist of FHLB, Federal Farm Credit Bank ("FFCB"), Freddie Mac and Fannie Mae obligations. Mortgage-backed securities that we purchase are issued by Freddie Mac, Fannie Mae, or the U.S Government (GNMA). Management monitors the securities portfolio for both credit and interest rate risk. We generally limit the purchase of corporate securities to individual issuers to manage concentration and credit risk. Corporate securities generally have a maturity of 10 years or less. U.S. Government securities consist of U.S. Treasury securities that have maturities of less than two years. Government agency securities generally have maturities of 15 years or less. Agency and Government mortgage-backed securities generally stated final maturities of 15 to 20 years.

Previous wording

Our available for sale securities portfolio totaled $342.6 million at September 30, 2024, an increase of $259.1 million, or 310.4%, compared to $83.5 million at December 31, 2023. The increase was primarily due to the purchase of U.S. Treasury securities.

Current wording

Our available for sale securities portfolio totaled $273.0 million at March 31, 2025, a decrease of $8.1 million, or 2.9%, compared to $281.1 million at December 31, 2024. The decrease was primarily due to the maturity of U.S. Treasury securities.

Previous wording

Our held to maturity securities portfolio totaled $321.4 million at September 30, 2024, an increase of $0.8 million, or 0.2%, compared to $320.6 million at December 31, 2023.

Current wording

Our held to maturity securities portfolio totaled $321.9 million at March 31, 2025, an increase of $0.3 million, or 0.1%, compared to $321.6 million at December 31, 2024.

Previous wording

At September 30, 2024, $256.3 million, or 38.6%, of the securities portfolio was scheduled to mature in less than one year. $13.3 million, or 2.0%, of the securities portfolio, not including collateralized mortgage obligations and mortgage-backed securities, were scheduled to mature between one and five years. The majority of these securities were corporate bonds. $157.1 million, or 23.7%, of the securities portfolio, not including collateralized mortgage obligations and mortgage-backed securities, were scheduled to mature between five and ten years. Securities, not including collateralized mortgage obligations and mortgage-backed securities, with contractual maturity dates over 10 years totaled $182.1 million, or 27.4%, of the total securities portfolio at September 30, 2024. The average maturity of the securities portfolio is affected by call options that may be exercised by the issuer of the securities and are influenced by market interest rates. Prepayments of mortgages that collateralize mortgage-backed securities also affect the maturity of the securities portfolio. Based on internal forecasts as of September 30, 2024, management believes that the securities portfolio has a forecasted weighted average life of approximately 6.32 years based on the current interest rate environment. The portfolio had an estimated effective duration of 4.74 years at September 30, 2024.

Current wording

At March 31, 2025, $50.3 million, or 8.5%, of the securities portfolio was scheduled to mature in less than one year. $14.0 million, or 2.4%, of the securities portfolio, not including collateralized mortgage obligations and mortgage-backed securities, were scheduled to mature between one and five years. The majority of these securities were corporate bonds. $152.5 million, or 25.6%, of the securities portfolio, not including collateralized mortgage obligations and mortgage-backed securities, were scheduled to mature between five and ten years. Securities, not including collateralized mortgage obligations and mortgage-backed securities, with contractual maturity dates over 10 years totaled $182.2 million, or 30.6%, of the total securities portfolio at March 31, 2025. The average maturity of the securities portfolio is affected by call options that may be exercised by the issuer of the securities and are influenced by market interest rates. Prepayments of mortgages that collateralize mortgage-backed securities also affect the maturity of the securities portfolio. Based on internal forecasts as of March 31, 2025, management believes that the securities portfolio has a forecasted weighted average life of approximately 7.66 years based on the current interest rate environment. The portfolio had an estimated effective duration of 5.73 years at March 31, 2025.

Previous wording

There were no credit related impairment of available for sale securities during the nine months ended September 30, 2024. The allowance for credit losses for held to maturity securities was $0.1 million at September 30, 2024 and December 31, 2023.

Current wording

There were no credit related impairment of available for sale securities during the three months ended March 31, 2025 or 2024. The allowance for credit losses for held to maturity securities was $0.2 million at March 31, 2025 and December 31, 2024.

Previous wording

At September 30, 2024, nonperforming assets totaled $67.0 million, or 1.71% of total assets, compared to $41.7 million, or 1.17%, of total assets at December 31, 2023, which represented an increase of $25.3 million, or 60.6%. The increase in nonperforming assets occurred primarily due to an increase in nonaccrual loans, partially offset by a decrease in loans 90 days greater delinquent and still accruing and other real estate owned. Nonperforming loans included loans previously classified as purchase credit deteriorated following the adoption of CECL.

Current wording

At March 31, 2025, nonperforming assets totaled $133.9 million, or 3.50% of total assets, compared to $120.4 million, or 3.03%, of total assets at December 31, 2024, which represented an increase of $13.6 million, or 11.3%. The increase in nonperforming assets occurred primarily due to an increase in nonaccrual loans, partially offset by a decrease in loans 90 days greater delinquent and still accruing and other real estate owned. Nonperforming loans included loans previously classified as purchase credit deteriorated following the adoption of CECL.

Previous wording

Nonaccrual loans increased from $25.2 million at December 31, 2023 to $65.8 million at September 30, 2024. The increase in nonaccrual loans was concentrated primarily in non-farm non-residential, one-to-four family, construction and land development, commercial and industrial, commercial leases, agricultural, and farmland loans. The largest increase in nonaccrual loans was associated with one commercial real estate relationship totaling $37.0 million. Nonaccrual loans included $2.0 million in loans with a government guarantee. These are structured as net loss guarantees in which up to 90% of loss exposure is covered.

Current wording

Nonaccrual loans increased from $108.5 million at December 31, 2024 to $133.4 million at March 31, 2025. The increase in total nonaccrual loans was concentrated primarily in two commercial real estate relationships that totaled $40.3 million. Nonaccrual loans included $3.7 million in loans with a government guarantee. These are structured as net loss guarantees in which up to 90% of loss exposure is covered.

Previous wording

At September 30, 2024, loans 90 days or greater delinquent and still accruing totaled $0.1 million, a decrease of $15.2 million compared to $15.3 million at December 31, 2023. The decrease in loans 90 days or greater delinquent and still accruing was attributed to moving those loans to nonaccrual, and was concentrated primarily in non-farm non-residential, commercial and industrial, agricultural, and one-to-four family loans.

Current wording

At March 31, 2025, loans 90 days or greater delinquent and still accruing totaled $0.4 million, a decrease of $11.1 million compared to $11.5 million at December 31, 2024. The decrease in loans 90 days or greater delinquent and still accruing was attributed to moving those loans to nonaccrual, and was concentrated primarily in non-farm non-residential and construction and land development loans.

Previous wording

The allowance for credit losses on loans was $33.3 million, or 1.20% of total loans, and 50.5% of nonperforming loans at September 30, 2024.

Current wording

The allowance for credit losses on loans was $43.0 million, or 1.71% of total loans, and 32.2% of nonperforming loans at March 31, 2025.

Previous wording

A provision for credit losses of $14.0 million was made during the nine months ended September 30, 2024 and $1.5 million for the same period in 2023. The $14.0 million provision made in 2024 included a $1.3 million negative provision for credit losses related to unfunded commitments. First Guaranty's unfunded commitments declined during the first nine months of 2024 which resulted in a reduced liability. The provisions made were taken to provide for current credit losses and to maintain the allowance proportionate to risks inherent in the loan portfolio.

Current wording

A provision for credit losses of $14.5 million was made during the three months ended March 31, 2025 and $2.3 million for the same period in 2024. The $14.5 million provision made in 2025 included a $0.3 million negative provision for credit losses related to unfunded commitments. First Guaranty's unfunded commitments declined during the first three months of 2025 which resulted in a reduced liability. The provisions made were taken to provide for current credit losses and to maintain the allowance proportionate to risks inherent in the loan portfolio.

Previous wording

The loan portfolio factors in the first nine months of 2024 that primarily affected the allocation of the allowance included the following:

Current wording

The loan portfolio factors in the first three months of 2025 that primarily affected the allocation of the allowance included the following:

Previous wording

•Non-farm non-residential loans increased by $119.7 million during the first nine months of 2024. The allowance increase related to this portfolio was due to growth, charge-offs and changes in the qualitative analysis of the portfolio related to economic conditions.

Current wording

•Non-farm non-residential loans decreased by $42.7 million during the first three months of 2025. The allowance increase related to this portfolio was due to changes in the qualitative analysis of the portfolio related to economic conditions, and a $3.5 million increase in the allowance for loans individually evaluated.

Previous wording

•Commercial and industrial loans decreased during the first nine months of 2024. The allowance decrease related to this portfolio was due to charge-offs and changes in the qualitative analysis of the portfolio.

Current wording

•Commercial and industrial loans decreased $23.0 million during the first three months of 2025. The allowance increase related to this portfolio was due to changes in the qualitative analysis of the portfolio.

Previous wording

•Consumer and other loans decreased during the first nine months of 2024. The increase in the related loan loss allowance balance was due primarily to charge-offs and qualitative analysis of the portfolio.

Current wording

•Consumer and other loans decreased $2.5 million during the first three months of 2025. The decrease in the related loan loss allowance balance was due primarily to charge-offs and qualitative analysis of the portfolio.

Previous wording

First Guaranty charged off $13.7 million in loan balances during the first nine months of 2024. The details of the $13.7 million in charged-off loans were as follows:

Current wording

First Guaranty charged off $6.9 million in loan balances during the first three months of 2025. The details of the $6.9 million in charged-off loans were as follows: