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 June 30, 2025 and for the three and six months ended June 30, 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.

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 September 30, 2025 and for the three and nine months ended September 30, 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

Second Quarter and Six Months Ended June 30, 2025, Financial Overview

Current wording

Third Quarter and Nine Months Ended September 30, 2025, Financial Overview

Previous wording

Financial highlights for the second quarter and six months ended June 30, 2025 are as follows:

Current wording

Financial highlights for the third quarter and nine months ended September 30, 2025 are as follows:

Previous wording

•Total assets decreased $3.1 million and were $4.0 billion at June 30, 2025 to December 31, 2024. Total loans at June 30, 2025 were $2.4 billion, a decrease of $283.3 million, or 10.5%, compared with December 31, 2024. Total deposits were $3.5 billion at June 30, 2025, a decrease of $5.1 million, or 0.1%, compared with December 31, 2024. Retained earnings were $58.1 million at June 30, 2025, a decrease of $14.9 million compared to $73.0 million at December 31, 2024. Shareholders' equity was $263.1 million and $255.0 million at June 30, 2025 and December 31, 2024, respectively.

Current wording

•Total assets decreased $175.4 million and were $3.8 billion at September 30, 2025 compared to December 31, 2024. Total loans at September 30, 2025 were $2.3 billion, a decrease of $414.0 million, or 15.4%, compared with December 31, 2024. Total deposits were $3.4 billion at September 30, 2025, a decrease of $121.4 million, or 3.5%, compared with December 31, 2024. Retained earnings were $12.3 million at September 30, 2025, a decrease of $60.6 million compared to $73.0 million at December 31, 2024. Shareholders' equity was $221.1 million and $255.0 million at September 30, 2025 and December 31, 2024, respectively.

Previous wording

•(Loss) earnings per common share were $(0.61) and $0.53 for the three months ended June 30, 2025 and 2024, respectively. Total weighted average shares outstanding were 12,910,785 and 12,504,717 for the three months ended June 30, 2025 and 2024, respectively. (Loss) earnings per common share were $(1.15) and $0.67 for the six months ended June 30, 2025 and 2024, respectively. Total weighted average shares outstanding were 12,709,905 and 12,497,313 for the six months ended June 30, 2025 and 2024, respectively. The change in shares was primarily due to the conversion of $15.0 million in subordinated debt for common stock and the issuance of 358,680 shares of common stock under private placement during the second quarter of 2025.

Current wording

•(Loss) earnings per common share were $(3.01) and $0.11 for the three months ended September 30, 2025 and 2024, respectively. Total weighted average shares outstanding were 15,122,702 and 12,504,717 for the three months ended September 30, 2025 and 2024, respectively. (Loss) earnings per common share were $(4.45) and $0.78 for the nine months ended September 30, 2025 and 2024, respectively. Total weighted average shares outstanding were 13,523,009 and 12,499,799 for the nine months ended September 30, 2025 and 2024, respectively. The change in shares was primarily due to the conversion into common stock of $15.0 million in subordinated debt in the second quarter and the issuance of 667,970 shares of common stock under private placement during 2025, of which 122,503 shares were issued in the third quarter. In addition, 198,754 shares were issued in 2025 as payment in kind, including 110,272 shares in the third quarter.

Previous wording

•The allowance for credit losses was $58.9 million or 2.44% of total loans at June 30, 2025 compared to $34.8 million or 1.29% at December 31, 2024.

Current wording

•The allowance for credit losses was $85.7 million or 3.76% of total loans at September 30, 2025 compared to $34.8 million or 1.29% at December 31, 2024.

Previous wording

•Net interest income for the three months ended June 30, 2025 was $22.2 million compared to $21.2 million for the three months ended June 30, 2024. Net interest income for the six months ended June 30, 2025 was $44.5 million compared to $43.2 million for the six months ended June 30, 2024.

Current wording

•Net interest income for the three months ended September 30, 2025 was $22.2 million compared to $22.7 million for the three months ended September 30, 2024. Net interest income for the nine months ended September 30, 2025 was $66.7 million compared to $65.9 million for the nine months ended September 30, 2024.

Previous wording

•Charge-offs were $1.1 million during the three months ended June 30, 2025 and $8.8 million during the same period in 2024. Recoveries totaled $0.2 million during the three months ended June 30, 2025 and $0.3 million during the same period in 2024. Charge-offs were $8.0 million during the six months ended June 30, 2025 and $11.1 million during the same period in 2024. Recoveries totaled $0.4 million during the six months ended June 30, 2025 and $0.5 million during the same period in 2024.

Current wording

•Charge-offs were $21.3 million during the three months ended September 30, 2025 and $2.6 million during the same period in 2024. Charge-offs for the third quarter of 2025 were concentrated with two commercial real estate credits. $9.4 million was charged off on an independent living center located in Louisiana. $10.4 million was charged off on an apartment complex located in Texas. Recoveries totaled $0.3 million during the three months ended September 30, 2025 and $0.2 million during the same period in 2024. Charge-offs were $29.4 million during the nine months ended September 30, 2025 and $13.7 million during the same period in 2024. Recoveries totaled $0.7 million during the nine months ended September 30, 2025 and $0.7 million during the same period in 2024.

Previous wording

•First Guaranty had $7.7 million of other real estate owned as of June 30, 2025 compared to $0.3 million at December 31, 2024. $7.4 million of other real estate owned as of June 30, 2025 is comprised of a land development project that is under contract to be sold in the fourth quarter of 2025.

Current wording

•First Guaranty had $12.1 million of other real estate owned as of September 30, 2025 compared to $0.3 million at December 31, 2024. $7.4 million of other real estate owned as of September 30, 2025 is comprised of a land development project that is under contract to be sold in the fourth quarter of 2025. First Guaranty also transferred $4.4 million of existing bank owned properties previously used as either operating branches or future branch

Previous wording

•The net interest margin for the three months ended June 30, 2025 was 2.34% which was a decrease of 14 basis points from the net interest margin of 2.48% for the same period in 2024. The net interest margin for the six months ended June 30, 2025 was 2.35% which was a decrease of 18 basis points from the net interest margin of 2.53% for the same period in 2024. Loans as a percentage of average interest earning assets decreased to 66.5% at June 30, 2025 compared to 81.1% at June 30, 2024.

Current wording

•The net interest margin for the three months ended September 30, 2025 was 2.34% which was a decrease of 17 basis points from the net interest margin of 2.51% for the same period in 2024. The net interest margin for the nine months ended September 30, 2025 was 2.35% which was a decrease of 17 basis points from the net interest margin of 2.52% for the same period in 2024. Loans as a percentage of average interest earning assets decreased to 65.1% at September 30, 2025 compared to 80.0% at September 30, 2024.

Previous wording

•Investment securities net of the allowance for credit losses totaled $719.7 million at June 30, 2025, an increase of $117.0 million when compared to $602.7 million at December 31, 2024. At June 30, 2025, available for sale securities, at fair value, totaled $397.6 million, an increase of $116.5 million when compared to $281.1 million at December 31, 2024. At June 30, 2025, held to maturity securities, at amortized cost and net of the allowance for credit losses totaled $322.1 million, an increase of $0.5 million when compared to $321.6 million at December 31, 2024. The allowance for credit losses for HTM securities was $0.2 million at June 30, 2025 and December 31, 2024.

Current wording

•Investment securities net of the allowance for credit losses totaled $696.7 million at September 30, 2025, an increase of $94.0 million when compared to $602.7 million at December 31, 2024. At September 30, 2025, available for sale securities, at fair value, totaled $374.3 million, an increase of $93.2 million when compared to $281.1 million at December 31, 2024. At September 30, 2025, held to maturity securities, at amortized cost and net of the allowance for credit losses totaled $322.4 million, an increase of $0.8 million when compared to $321.6 million at December 31, 2024. The allowance for credit losses for HTM securities was $0.2 million at September 30, 2025 and December 31, 2024.

Previous wording

•Total loans net of unearned income were $2.4 billion at June 30, 2025, a net decrease of $283.3 million from December 31, 2024. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $58.9 million at June 30, 2025 and $34.8 million at December 31, 2024, respectively.

Current wording

•Total loans net of unearned income were $2.3 billion at September 30, 2025, a net decrease of $414.0 million from December 31, 2024. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $85.7 million at September 30, 2025 and $34.8 million at December 31, 2024, respectively.

Previous wording

•Nonaccrual loans increased $10.7 million to $119.2 million at June 30, 2025 compared to $108.5 million at December 31, 2024. Nonaccrual loans decreased $14.2 million when compared to March 31, 2025.

Current wording

•Nonaccrual loans increased $5.7 million to $114.3 million at September 30, 2025 compared to $108.5 million at December 31, 2024. Nonaccrual loans decreased $4.9 million when compared to June 30, 2025. The decrease compared to June 30, 2025 was due principally to the payoff on an $8.8 million commercial real estate loan located in the Midwest and to associated charge-offs on existing nonaccrual loans that totaled $21.3 million in the quarter. The decrease was partially offset by the $17.2 million commercial lease placed into nonaccrual.

Previous wording

•At June 30, 2025, the largest 6 non-performing loan relationships comprise 75% of total non-performing loans. Additional details on the non-performing relationships are as follows:

Current wording

•At September 30, 2025, the largest 10 non-performing loan relationships comprise 77% of total non-performing loans. Additional details on these non-performing relationships are as follows:

Previous wording

•First Guaranty charged off $1.1 million in loan balances during the second quarter of 2025. The details of the $1.1 million in charged-off loans were as follows:

Current wording

•First Guaranty charged off $21.3 million in loan balances during the third quarter of 2025. The details of the $21.3 million in charged-off loans were as follows:

Previous wording

First Guaranty charged off $0.2 million in consumer loans during the second 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 $0.1 million in unsecured loans.

Current wording

•First Guaranty charged off $0.3 million in consumer loans during the third 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 $0.1 million in unsecured loans.

Previous wording

Smaller loans and overdrawn deposit accounts comprised the remaining $0.4 million of charge-offs for the second quarter of 2025.

Current wording

•Smaller loans and overdrawn deposit accounts comprised the remaining $0.3 million of charge-offs for the third quarter of 2025.

Previous wording

•Noninterest expense totaled $17.3 million for the second quarter of 2025, $18.0 million for the first quarter of 2025, $17.9 million for the fourth quarter of 2024, $19.7 million for the third quarter of 2024, and $20.6 million for the second quarter of 2024. Full time equivalent employees totaled 360 at June 30, 2025. Full time equivalent employees totaled 380 at March 31, 2025, 399 at December 31, 2024, and 495 at June 30, 2024.

Current wording

•Noninterest expense totaled $30.2 million for the third quarter of 2025 (including $12.9 million of goodwill impairment), $17.3 million for the second quarter of 2025, $18.0 million for the first quarter of 2025, $17.9 million for the fourth quarter of 2024, and $19.7 million for the third quarter of 2024.

Previous wording

•Return on average assets for the three months ended June 30, 2025 and 2024 was (0.75)% and 0.81%, respectively. Return on average assets for the six months ended June 30, 2025 and 2024 was (0.69)% and 0.54%, respectively. Return on average common equity for the three months ended June 30, 2025 and 2024 was (14.33)% and 12.16%, respectively. Return on average common equity for the six months ended June 30, 2025 and 2024 was (13.31)% and 7.66% 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 September 30, 2025 and 2024 was (4.61)% and 0.21%, respectively. Return on average assets for the nine months ended September 30, 2025 and 2024 was (2.00)% and 0.42%, respectively. Return on average common equity for the three months ended September 30, 2025 and 2024 was (78.41)% and 2.40%, respectively. Return on average common equity for the nine months ended September 30, 2025 and 2024 was (35.83)% and 5.87% 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 $15.21 as of June 30, 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, partially offset by changes in accumulated other comprehensive income ("AOCI").

Current wording

•Book value per common share was $12.25 as of September 30, 2025 compared to $17.75 as of December 31, 2024. The decrease was due primarily to the decrease in retained earnings, partially offset by 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.

Previous wording

•First Guaranty's Board of Directors declared cash dividends of $0.01 and $0.16 per common share in the second 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 128 consecutive quarterly dividends as of June 30, 2025.

Current wording

•First Guaranty's Board of Directors declared cash dividends of $0.01 and $0.08 per common share in the third quarter of 2025 and 2024. The reduction in the common stock dividend payment was done in order to preserve capital as part of First Guaranty’s new business strategy announced in the third quarter of 2024. First Guaranty has paid 129 consecutive quarterly dividends as of September 30, 2025.

Previous wording

•First Guaranty paid preferred stock dividends of $1.2 million during the first six months of 2025 and 2024.

Current wording

•First Guaranty paid preferred stock dividends of $1.7 million during the first nine months of 2025 and 2024.

Previous wording

Total assets at June 30, 2025 were $4.0 billion, a decrease of $3.1 million from December 31, 2024. Assets decreased primarily due to a decrease in net loans of $307.3 million partially offset by increases in cash and cash equivalents of $150.7 million and investment securities of $117.0 million at June 30, 2025 compared to December 31, 2024.

Current wording

Total assets at September 30, 2025 were $3.8 billion, a decrease of $175.4 million from December 31, 2024. Assets decreased primarily due to a decrease in net loans of $464.9 million partially offset by increases in cash and cash equivalents of $190.0 million and investment securities of $94.0 million at September 30, 2025 compared to December 31, 2024.

Previous wording

Net loans decreased $307.3 million, or 11.6%, to $2.4 billion at June 30, 2025 from December 31, 2024. Non-farm non-residential loan balances decreased $107.3 million due to the sale of loans and paydowns. Construction and land development loans decreased $61.2 million principally due to the sale of loans and the conversion of existing loans to permanent financing. Commercial lease loan balances decreased $61.0 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. Multifamily loans decreased $20.3 million primarily due to paydowns. Commercial and industrial loans decreased $19.4 million primarily due to paydowns. One-to-four family residential loans decreased $9.9 million primarily due to paydowns. Farmland loans decreased $3.7 million primarily due to seasonal activity. Consumer and other loans decreased $4.0 million primarily due to paydowns. Agricultural loans increased $2.1 million due to seasonal activity. First Guaranty had approximately 3.7% of funded and 1.6% 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 $164.3 million at June 30, 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 $311.1 million in loans related to our Texas markets at June 30, 2025 compared to $407.1 million at December 31, 2024. First Guaranty had $330.9 million in loans related to our Mideast markets in Kentucky and West Virginia at June 30, 2025 compared to $335.5 million at December 31, 2024. Syndicated loans at June 30, 2025 were $52.7 million, of which $24.2 million were shared national credits. Syndicated loans decreased $1.2 million from $53.9 million at December 31, 2024.

Current wording

Net loans decreased $464.9 million, or 17.5%, to $2.2 billion at September 30, 2025 from December 31, 2024. First Guaranty adopted a change in its business plan in July 2024 that focused on reducing risk in the balance sheet, including risk associated with the loan portfolio. As part of this strategy, First Guaranty has reduced loan originations, charged-off loan balances and conducted select loan sales, which have each contributed to a decline in loan balances. Non-farm non-residential loan balances decreased $156.6 million due to the sale of loans and paydowns. Construction and land development loans decreased $98.9 million principally due to the sale of loans, charge-offs, and the conversion of existing loans to permanent financing. Commercial lease loan balances decreased $85.2 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. Multifamily loans decreased $27.5 million primarily due to paydowns and charge-offs. Commercial and industrial loans decreased $30.4 million primarily due to paydowns. One-to-four family residential loans decreased $9.4 million primarily due to paydowns. Farmland loans decreased $4.3 million primarily due to seasonal activity. Consumer and other loans decreased $7.5 million primarily due to paydowns. Agricultural loans increased $4.0 million due to seasonal activity. First Guaranty had approximately 3.1% of funded and 1.5% 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 $162.4 million at September 30, 2025. First Guaranty had $270.2 million in loans related to our Texas markets at September 30, 2025 compared to $407.1 million at December 31, 2024. First Guaranty had $323.5 million in loans related to our Mideast markets in Kentucky and West Virginia at September 30, 2025 compared to $335.5 million at December 31, 2024. Syndicated loans at September 30, 2025 were $48.5 million, of which $19.8 million were shared national credits. Syndicated loans decreased $5.3 million from $53.9 million at December 31, 2024.

Previous wording

As of June 30, 2025, 80.1% of our loan portfolio was secured by real estate. The largest portion of our loan portfolio, at 43.5% as of June 30, 2025, was non-farm non-residential loans secured by real estate. Approximately 55.3% 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 June 30, 2025. 46.2% of the loan portfolio is scheduled to mature within five years from June 30, 2025.

Current wording

As of September 30, 2025, 80.7% of our loan portfolio was secured by real estate. The largest portion of our loan portfolio, at 43.9% as of September 30, 2025, was non-farm non-residential loans secured by real estate. Approximately 56.4% 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, 2025. 43.9% of the loan portfolio is scheduled to mature within five years from September 30, 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 June 30, 2025. First Guaranty generally does not finance multi-story office buildings in major metropolitan areas. The largest CRE loan secured by a hotel or motel totaled $19.7 million. The property is a flagged hotel located in Texas. The largest CRE loan secured by an office related property totaled $21.1 million and is located in West Virginia. The largest CRE loan secured by an apartment complex totaled $40.9 million and is located in Louisiana. The largest healthcare related loan is a $27.5 million property secured by an independent living center located in Louisiana. This healthcare loan is in non-accrual status. The largest CRE loan under construction totaled $32.0 million for an apartment complex and is 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 September 30, 2025. First Guaranty generally does not finance multi-story office buildings in major metropolitan areas. The largest CRE loan secured by a hotel or motel totaled $19.5 million. The property is a flagged hotel located in Texas. The largest CRE loan secured by an office related property totaled $21.1 million and is located in West Virginia. The largest CRE loan secured by an apartment complex totaled $40.7 million and is located in Louisiana. The largest healthcare related loan is a $20.6 million property secured by a hospital located in Louisiana. The largest CRE loan under construction totaled $32.0 million for an apartment complex and is secured by a property located in Texas.

Previous wording

The increase in classified assets at June 30, 2025 as compared to December 31, 2024 was due to a $91.7 million increase in substandard loans. The increase in substandard loans was primarily the result of downgrades during the first quarter of 2025 of two non-farm non-residential loan relationships totaling $15.6 million and $14.1 million, from pass to substandard status, one construction and land development loan totaling $16.1 million, from special mention to substandard, and one commercial loan relationship totaling $11.1 million, from pass to substandard. Additionally, the downgrade of one non-farm non-residential loan totaling $13.6 million, from pass to substandard, during the second quarter of 2025. Special mention loans increased by $60.9 million in 2025. The increase in special mention loans was primarily the result of downgrade of two non-farm non-residential loan relationships, with balances of $26.4 million and $19.9 million, during the first quarter of 2025, and the downgrade of one construction and land development loan relationship totaling $11.0 million, during the second quarter of 2025, all from pass to special mention status.

Current wording

The increase in classified assets at September 30, 2025 as compared to December 31, 2024 was due to a $120.4 million increase in substandard loans. The increase in substandard loans was primarily the result of downgrades during 2025. The details of the top 10 substandard loan relationships as of September 30, 2025 are listed below:

Previous wording

Net loans are reduced by the allowance for credit losses which totaled $58.9 million at June 30, 2025 and $34.8 million at December 31, 2024. Loan charge-offs were $8.0 million during the first six months of 2025 and $11.1 million during the same period in 2024. Recoveries totaled $0.4 million during the first six months of 2025 and $0.5 million during the same period in 2024. The provision for credit losses totaled $31.2 million for the first six months of 2025 and $9.1 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.

Current wording

Net loans are reduced by the allowance for credit losses which totaled $85.7 million at September 30, 2025 and $34.8 million at December 31, 2024. Loan charge-offs were $29.4 million during the first nine months of 2025 and $13.7 million during the same period in 2024. Recoveries totaled $0.7 million during the first nine months of 2025 and $0.7 million during the same period in 2024. The provision for credit losses totaled $79.1 million for the first nine months of 2025 and $14.0 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 net of the allowance for credit losses at June 30, 2025 totaled $719.7 million, an increase of $117.0 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.

Current wording

Investment securities net of the allowance for credit losses at September 30, 2025 totaled $696.7 million, an increase of $94.0 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

Our available for sale securities portfolio totaled $397.6 million at June 30, 2025, an increase of $116.5 million, or 41.4%, compared to $281.1 million at December 31, 2024. The increase was primarily due to the purchase of collateralized mortgage obligations and mortgage-backed securities. In the second quarter of 2025, First Guaranty has primarily purchased U.S. Government securities and U.S. Government mortgage-backed and collateralized mortgage obligations.

Current wording

Our available for sale securities portfolio totaled $374.3 million at September 30, 2025, an increase of $93.2 million, or 33.2%, compared to $281.1 million at December 31, 2024. The increase was primarily due to the purchase of collateralized mortgage obligations and mortgage-backed securities. In the third quarter of 2025, First Guaranty has primarily purchased U.S. Government securities and U.S. Government mortgage-backed and collateralized mortgage obligations.

Previous wording

Our held to maturity securities portfolio net of the allowance for credit losses totaled $322.1 million at June 30, 2025, an increase of $0.5 million, or 0.2%, compared to $321.6 million at December 31, 2024.

Current wording

Our held to maturity securities portfolio net of the allowance for credit losses totaled $322.4 million at September 30, 2025, an increase of $0.8 million, or 0.2%, compared to $321.6 million at December 31, 2024.

Previous wording

At June 30, 2025, $50.7 million, or 7.0%, of the securities portfolio was scheduled to mature in less than one year. $29.0 million, or 4.0%, 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. $136.5 million, or 19.0%, 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 $182.3 million, or 25.3%, of the total securities portfolio at June 30, 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 June 30, 2025, management believes that the securities portfolio has a forecasted weighted average life of approximately 7.01 years based on the current interest rate environment. The portfolio had an estimated effective duration of 5.24 years at June 30, 2025.

Current wording

At September 30, 2025, $3.6 million, or 0.5%, of the securities portfolio was scheduled to mature in less than one year. $30.5 million, or 4.4%, 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. $132.0 million, or 18.9%, 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 $182.0 million, or 26.1%, of the total securities portfolio at September 30, 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 September 30, 2025, management believes that the securities portfolio has a forecasted weighted average life of approximately 7.02 years based on the current interest rate environment. The portfolio had an estimated effective duration of 5.28 years at September 30, 2025.

Previous wording

There were no credit related impairment of available for sale securities during the six months ended June 30, 2025 or 2024. The allowance for credit losses for held to maturity securities was $0.2 million at June 30, 2025 and December 31, 2024.

Current wording

There were no credit related impairment of available for sale securities during the nine months ended September 30, 2025 or 2024. The allowance for credit losses for held to maturity securities was $0.2 million at September 30, 2025 and December 31, 2024.

Previous wording

At June 30, 2025, nonperforming assets totaled $127.1 million, or 3.20% of total assets, compared to $120.4 million, or 3.03%, of total assets at December 31, 2024, which represented an increase of $6.8 million, or 5.6%. The increase in nonperforming assets occurred primarily due to an increase in nonaccrual loans and other real estate, partially offset by a decrease in loans 90 days greater delinquent. Nonperforming loans included loans previously classified as purchase credit deteriorated following the adoption of CECL.

Current wording

At September 30, 2025, nonperforming assets totaled $126.3 million, or 3.33% of total assets, compared to $120.4 million, or 3.03%, of total assets at December 31, 2024, which represented an increase of $6.0 million, or 5.0%. The increase in nonperforming assets occurred primarily due to an increase in nonaccrual loans and other real estate, partially offset by a decrease in loans 90 days greater delinquent. Nonperforming loans included loans previously classified as purchase credit deteriorated following the adoption of CECL.

Previous wording

Nonaccrual loans increased from $108.5 million at December 31, 2024 to $119.2 million at June 30, 2025. Nonaccrual loans included $3.5 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 $114.3 million at September 30, 2025. Nonaccrual loans included $4.6 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 June 30, 2025, loans 90 days or greater delinquent and still accruing totaled $0.3 million, a decrease of $11.2 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.

Current wording

At September 30, 2025, there were no loans 90 days or greater delinquent and still accruing, 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.

Previous wording

Other real estate owned totaled $7.7 million at June 30, 2025, an increase of $7.3 million compared to $0.3 million at December 31, 2024. $7.4 million of other real estate owned as of June 30, 2025 is comprised of a land development project that is under contract to be sold in the fourth quarter of 2025.

Current wording

Other real estate owned totaled $12.1 million at September 30, 2025, an increase of $11.7 million compared to $0.3 million at December 31, 2024. $7.4 million of other real estate owned as of September 30, 2025 is comprised of a land development project that is under contract to be sold in the fourth quarter of 2025. First Guaranty also transferred $4.4 million of existing bank owned properties previously used as either operating branches or future branch development to other real estate owned. The Bank plans to sell these properties.

Previous wording

At June 30, 2025, the largest 6 non-performing loan relationships comprise 75% of total non-performing loans. Additional details on the non-performing relationships are as follows:

Current wording

At September 30, 2025, the largest 10 non-performing loans comprise 77% of total non-performing assets. Additional details on the non-performing loan relationships are as follows:

Previous wording

The allowance for credit losses on loans was $58.9 million, or 2.44% of total loans, and 49.3% of nonperforming loans at June 30, 2025.

Current wording

The allowance for credit losses on loans was $85.7 million, or 3.76% of total loans, and 75.0% of nonperforming loans at September 30, 2025.

Previous wording

A provision for credit losses of $31.2 million was made during the six months ended June 30, 2025 and $9.1 million for the same period in 2024. The $31.2 million provision made in 2025 included a $0.5 million negative provision for credit losses related to unfunded commitments. First Guaranty's unfunded commitments declined during the first six 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.

Current wording

A provision for credit losses of $79.1 million was made during the nine months ended September 30, 2025 and $14.0 million for the same period in 2024. The $79.1 million provision made in 2025 included a $0.5 million negative provision for credit losses related to unfunded commitments. First Guaranty's unfunded commitments declined during the first nine 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.