Item 5. Market for Registrant’s Common Equity
Item 5 - Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Shares of our common stock are traded on the NASDAQ Global Market under the symbol "FGBI". As of December 31, 2020, there were approximately 1,600 holders of record of our common stock.
Our shareholders are entitled to receive dividends when, and if, declared by the Board of Directors, out of funds legally available for dividends. We have paid consecutive quarterly cash dividends on our common stock for each of the last 110 quarters dating back to the third quarter of 1993. The Board of Directors intends to continue to pay regular quarterly cash dividends. The ability to pay dividends in the future will depend on our earnings and financial condition, liquidity and capital requirements, regulatory restrictions, the general economic and regulatory climate and ability to service any equity or debt obligations senior to common stock. There are legal restrictions on the ability of First Guaranty Bank to pay cash dividends to First Guaranty Bancshares, Inc. Under federal and state law, we are required to maintain certain surplus and capital levels and may not distribute dividends in cash or in kind, if after such distribution we would fall below such levels. Specifically, an insured depository institution is prohibited from making any capital distribution to its shareholders, including by way of dividend, if after making such distribution, the depository institution fails to meet the required minimum level for any relevant capital measure including the risk-based capital adequacy and leverage standards.
Additionally, under the Louisiana Business Corporation Act, First Guaranty Bancshares, Inc. is prohibited from paying any cash dividends to shareholders if, after the payment of such dividend First Guaranty Bancshares would not be able to pay its debts as they became due in the usual course of business or its total assets would be less than its total liabilities or where net assets are less than the liquidation value of shares that have a preferential right to participate in First Guaranty Bancshares, Inc.'s assets in the event First Guaranty Bancshares, Inc. were to be liquidated.
First Guaranty Bancshares, Inc. did not repurchase any of its shares of common stock during 2020.
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Item 6 - Selected Financial Data
The following table presents consolidated selected financial data for First Guaranty. It does not purport to be complete and is qualified in its entirety by more detailed financial information and the audited consolidated financial statements contained elsewhere in this annual report.
At or For the Years Ended December 31,
(in thousands except for %) 2020 2019 2018 2017 2016
Year End Balance Sheet Data:
Investment securities $ 238,548 $ 426,516 $ 405,303 $ 501,656 $ 499,336
Federal funds sold $ 702 $ 914 $ 549 $ 823 $ 271
Loans, net of unearned income $ 1,844,135 $ 1,525,490 $ 1,225,268 $ 1,149,014 $ 948,921
Allowance for loan losses $ 24,518 $ 10,929 $ 10,776 $ 9,225 $ 11,114
Total assets $ 2,473,078 $ 2,117,216 $ 1,817,211 $ 1,750,430 $ 1,500,946
Total deposits $ 2,166,318 $ 1,853,013 $ 1,629,622 $ 1,549,286 $ 1,326,181
Borrowings $ 116,630 $ 86,747 $ 34,538 $ 52,938 $ 43,230
Shareholders' equity $ 178,591 $ 166,035 $ 147,284 $ 143,983 $ 124,349
Common shareholders' equity $ 178,591 $ 166,035 $ 147,284 $ 143,983 $ 124,349
Performance Ratios and Other Data:
Return on average assets 0.87 % 0.76 % 0.82 % 0.71 % 0.97 %
Return on average common equity 11.36 % 8.99 % 9.98 % 8.59 % 11.18 %
Return on average tangible assets (1) 0.90 % 0.78 % 0.85 % 0.73 % 0.98 %
Return on average tangible common equity (1) 13.08 % 9.68 % 10.77 % 9.15 % 11.64 %
Net interest margin 3.35 % 3.41 % 3.41 % 3.33 % 3.39 %
Average loans to average deposits 81.25 % 78.59 % 75.39 % 72.23 % 68.57 %
Efficiency ratio (2) 58.95 % 67.48 % 69.46 % 62.64 % 56.85 %
Efficiency ratio (excluding amortization of intangibles and securities transactions) (2) 68.44 % 66.77 % 66.63 % 63.38 % 60.19 %
Full time equivalent employees (year end) 429 431 346 338 293
(Footnotes follow on next page)
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At or For the Years Ended December 31,
(in thousands except for % and share data) 2020 2019 2018 2017 2016
Capital Ratios:
Average shareholders' equity to average assets 7.62 % 8.42 % 8.20 % 8.31 % 8.63 %
Average tangible equity to average tangible assets (3) 6.86 % 8.02 % 7.86 % 8.01 % 8.44 %
Common shareholders' equity to total assets 7.22 % 7.84 % 8.10 % 8.23 % 8.28 %
Tangible common equity to tangible assets (3) 6.51 % 6.99 % 7.79 % 7.87 % 8.10 %
Income Data:
Interest income $ 100,684 $ 91,643 $ 78,390 $ 67,546 $ 58,532
Interest expense $ 26,017 $ 29,966 $ 21,366 $ 14,393 $ 10,140
Net interest income $ 74,667 $ 61,677 $ 57,024 $ 53,153 $ 48,392
Provision for loan losses $ 14,877 $ 4,860 $ 1,354 $ 3,822 $ 3,705
Noninterest income (excluding securities transactions) $ 8,989 $ 8,456 $ 7,110 $ 6,943 $ 5,656
Securities (losses) gains $ 14,791 $ (157) $ (1,830) $ 1,397 $ 3,799
Noninterest expense $ 58,033 $ 47,219 $ 43,275 $ 38,521 $ 32,885
Earnings before income taxes $ 25,537 $ 17,897 $ 17,675 $ 19,150 $ 21,257
Net income $ 20,318 $ 14,241 $ 14,213 $ 11,751 $ 14,093
Net income available to common shareholders $ 20,318 $ 14,241 $ 14,213 $ 11,751 $ 14,093
Per Common Share Data:
Net earnings $ 2.09 $ 1.47 $ 1.47 $ 1.24 $ 1.53
Cash dividends paid $ 0.64 $ 0.60 $ 0.58 $ 0.54 $ 0.53
Book value $ 18.33 $ 17.04 $ 15.20 $ 14.86 $ 13.51
Tangible book value (4) $ 16.41 $ 15.05 $ 14.57 $ 14.17 $ 13.18
Dividend payout ratio 30.68 % 40.74 % 39.65 % 44.34 % 34.56 %
Weighted average number of shares outstanding 9,741,253 9,695,131 9,687,123 9,468,145 9,205,635
Number of shares outstanding 9,741,253 9,741,253 9,687,123 9,687,123 9,205,635
Asset Quality Ratios:
Non-performing assets to total assets 1.25 % 1.04 % 0.55 % 0.84 % 1.48 %
Non-performing assets to total loans 1.68 % 1.44 % 0.82 % 1.28 % 2.34 %
Non-performing loans to total loans 1.55 % 1.12 % 0.73 % 1.17 % 2.30 %
Loan loss reserve to non-performing assets 79.33 % 49.86 % 107.48 % 62.88 % 50.04 %
Net charge-offs to average loans 0.08 % 0.36 % (0.02) % 0.54 % 0.23 %
Provision for loan loss to average loans 0.89 % 0.37 % 0.12 % 0.36 % 0.42 %
Allowance for loan loss to total loans 1.33 % 0.72 % 0.88 % 0.80 % 1.17 %
(1) Tangible calculation eliminates goodwill and acquisition intangibles, principally core deposit intangibles, net of accumulated amortization, net of tax. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Historical Consolidated Financial and Other Data— Non-GAAP Financial Measures. "
(2) Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. We calculate both a GAAP and a non-GAAP efficiency ratio. The GAAP-based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Financial Data— Non-GAAP Financial Measures. "
(3) We calculate tangible common equity as total shareholders' equity less preferred stock, goodwill and acquisition intangibles, principally core deposit intangibles, net of accumulated amortization, and we calculate tangible assets as total assets less goodwill and core deposit intangibles. Tangible common equity to tangible assets is a non-GAAP financial measure, and, as we calculate tangible common equity to tangible assets, the most directly comparable GAAP financial measure is total shareholders' equity to total assets. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Historical Consolidated Financial and Other Data— Non-GAAP Financial Measures. "
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(4) We calculate tangible book value per common share as total shareholders' equity less preferred stock, goodwill and acquisition intangibles, principally core deposit intangibles, net of accumulated amortization at the end of the relevant period, divided by the outstanding number of shares of our common stock at the end of the relevant period. Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common share, the most directly comparable GAAP financial measure is book value per common share. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Financial Data— Non-GAAP Financial Measures. "
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Non-GAAP Financial Measures
Our accounting and reporting policies conform to accounting principles generally accepted in the United States, or GAAP, and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional metrics. Tangible book value per share and the ratio of tangible equity to tangible assets are not financial measures recognized under GAAP and, therefore, are considered non-GAAP financial measures.
Our management, banking regulators, many financial analysts and other investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred equity and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions. Tangible equity, tangible assets, tangible book value per share or related measures should not be considered in isolation or as a substitute for total shareholders' equity, total assets, book value per share or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate tangible equity, tangible assets, tangible book value per share and any other related measures may differ from that of other companies reporting measures with similar names.
The following table reconciles, as of the dates set forth below, shareholders' equity (on a GAAP basis) to tangible equity and total assets (on a GAAP basis) to tangible assets and calculates our tangible book value per share.
At December 31,
(in thousands except for share data and %) 2020 2019 2018 2017 2016
Tangible Common Equity
Total shareholders' equity $ 178,591 $ 166,035 $ 147,284 $ 143,983 $ 124,349
Adjustments:
Preferred — — — — —
Goodwill 12,900 12,942 3,472 3,472 1,999
Acquisition intangibles 5,815 6,527 2,704 3,249 978
Tangible common equity $ 159,876 $ 146,566 $ 141,108 $ 137,262 $ 121,372
Common shares outstanding 9,741,253 9,741,253 9,687,123 9,687,123 9,205,635
Book value per common share $ 18.33 $ 17.04 $ 15.20 $ 14.86 $ 13.51
Tangible book value per common share $ 16.41 $ 15.05 $ 14.57 $ 14.17 $ 13.18
Tangible Assets
Total Assets $ 2,473,078 $ 2,117,216 $ 1,817,211 $ 1,750,430 $ 1,500,946
Adjustments:
Goodwill 12,900 12,942 3,472 3,472 1,999
Acquisition intangibles 5,815 6,527 2,704 3,249 978
Tangible Assets $ 2,454,363 $ 2,097,747 $ 1,811,035 $ 1,743,709 $ 1,497,969
Tangible common equity to tangible assets 6.51 % 6.99 % 7.79 % 7.87 % 8.10 %
The efficiency ratio is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate the efficiency ratio by dividing noninterest expense by the sum of net interest income and noninterest income, excluding amortizations of intangibles and securities transactions. The GAAP-based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income.
The following table reconciles, as of the dates set forth below, our efficiency ratio to the GAAP-based efficiency ratio:
For the Year Ended December 31,
(in thousands except for share data and %) 2020 2019 2018 2017 2016
GAAP-based efficiency ratio 58.95 % 67.48 % 69.46 % 62.64 % 56.85 %
Noninterest expense $ 58,033 $ 47,219 $ 43,275 $ 38,521 $ 32,885
Amortization of intangibles 711 390 545 432 320
Noninterest expense, excluding amortization 57,322 46,829 42,730 38,089 32,565
Net interest income 74,667 61,677 57,024 53,153 48,392
Noninterest income 23,780 8,299 5,280 8,340 9,455
Adjustments:
Securities transactions 14,691 (157) (1,830) 1,397 3,739
Noninterest income, excluding securities transactions $ 9,089 $ 8,456 $ 7,110 $ 6,943 $ 5,716
Efficiency ratio 68.44 % 66.77 % 66.63 % 63.38 % 60.19 %
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