25 unchanged sentences
Because noninterest-bearing sources of funds, such as noninterest-bearing deposits also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.
+Added: The decrease in net income was caused principally by a decrease in net interest income of $15.3 million and an increase in noninterest expense of $8.7 million, partially offset by a decrease in income tax expense of $4.8 million.
Changes in market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.
−Removed: Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions, conditions in domestic and foreign financial markets and in 2020 and 2021 the economic and social effects of the COVID-19 pandemic.
+Added: Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions, conditions in domestic and foreign financial markets.
Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Louisiana, Texas and our other out-of-state market areas.
−Removed: During the extended period of historically low interest rates, we continue to evaluate our investments in interest-earning assets in relation to the impact such investments have on our financial condition, results of operations and shareholders' equity.
+Added: As the economy transitioned from an extended period of historically low interest rates to a period of higher interest rates in 2022-2023, we continue to evaluate our investments in interest-earning assets in relation to the impact such investments have on our financial condition, results of operations and shareholders' equity.
Financial highlights for 2023 and 2022:
2 unchanged sentences
Total deposits were $3.0 billion at December 31, 2023, an increase of $285.3 million, or 10.5% compared with December 31, 2022.
−Removed: Retained earnings were $76.4 million at December 31, 2022, an increase of $19.7 million compared to $56.7 million at December 31, 2021.
+Added: Retained earnings were $68.0 million at December 31, 2023, a decrease of $8.4 million compared to $76.4 million at December 31, 2022.
Shareholders' equity was $249.6 million and $235.0 million at December 31, 2023 and December 31, 2022, respectively.
1 unchanged sentence
• Earnings per common share were $0.62 for the year ended December 31, 2023 and $2.48 for the year ended December 31, 2022.
−Removed: Total weighted average common shares outstanding were 10,716,796 at December 31, 2022 and December 31, 2021.
+Added: Total weighted average common shares outstanding were 11,165,303 and 10,716,796 at December 31, 2023 and December 31, 2022, respectively.
• First Guaranty participated in the SBA Paycheck Protection Program ("PPP") under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").
3 unchanged sentences
The program has been conducted in two phases which First Guaranty classifies as Round 1 loans (originated in 2020) and Round 2 loans (originated in 2021).
−Removed: As of December 31, 2022, First Guaranty had remaining Round 1 PPP loans of $2.0 million with deferred fees of $16,000 and Round 2 PPP loans of $3.9 million with deferred fees of $16,000 remaining.
−Removed: $1.3 million in PPP fees were recognized during 2022 compared to $2.0 million in PPP fees recognized in 2021.
−Removed: • The allowance for loan and lease losses was 0.93% of total loans at December 31, 2022 compared to 1.11% at December 31, 2021.
−Removed: First Guaranty attributes the decrease in the allowance as a percentage of loans to the improvement in factors related to the COVID-19 pandemic offset by growth in the loan portfolio identified risks.
−Removed: First Guaranty had acquisition related loan discounts that totaled approximately $1.1 million at December 31, 2022.
−Removed: First Guaranty had $5.9 million at December 31, 2022 of SBA guaranteed PPP loans that have no related allowance due to the 100% government guarantee in accordance with regulatory guidance.
−Removed: • The provision for loan losses totaled $3.7 million for 2022 compared to $2.1 million in 2021.
+Added: As of December 31, 2023, First Guaranty had remaining Round 1 PPP loans of $0.1 million and Round 2 PPP loans of $2.8 million.
+Added: $16,000 in PPP fees were recognized during 2023 compared to $1.3 million in PPP fees recognized in 2022.
+Added: • The allowance for credit losses was 1.13% of total loans at December 31, 2023 compared to 0.93% at December 31, 2022.
+Added: The adoption of the CECL model under ASC 326 was the main component of the increase.
+Added: • The provision for credit losses totaled $3.7 million for 2023 and 2022.
• Net interest income for 2023 was $84.7 million compared to $100.0 million for 2022.
• Noninterest income for 2023 was $10.6 million compared to $11.0 million for 2022.
−Removed: Excluding the impact of securities gains, noninterest income for 2022 improved to $11.0 million from $10.0 million for 2021.
−Removed: The increase was primarily due to higher gains on loan sales.
• The net interest margin was 2.69% for 2023 and 3.47% for 2022.
−Removed: The increase was driven by an increase in loan yields, including loan fees, which increased more than the cost of liabilities.
+Added: First Guaranty attributed the decrease in the net interest margin to the increase in market interest rates that began in 2022 and continued through the third quarter of 2023 that increased the cost of liabilities.
Loans as a percentage of average interest earning assets increased to 82.8% at December 31, 2023 compared to 79.8% at December 31, 2022.
−Removed: • Investment securities totaled $451.5 million at December 31, 2022, an increase of $87.4 million when compared to $364.2 million at December 31, 2021.
−Removed: Losses on the sale of securities were $17,000 for 2022 as compared to gains of $0.7 million for 2021.
+Added: • Investment securities totaled $404.1 million at December 31, 2023, a decrease of $47.4 million when compared to $451.5 million at December 31, 2022.
+Added: Losses on the sale of securities were $0 for 2023 as compared to $17,000 for 2022.
At December 31, 2023, available for sale securities, at fair value, totaled $83.5 million, a decrease of $48.0 million when compared to $131.5 million at December 31, 2022.
−Removed: At December 31, 2022, held to maturity securities, at amortized cost, totaled $320.1 million as compared to $153.5 million at December 31, 2021.
−Removed: During the first quarter of 2022, First Guaranty designated $165.8 million of AFS securities for HTM status.
+Added: At December 31, 2023, held to maturity securities, at amortized cost and net of the allowance for credit losses, totaled $320.6 million as compared to $320.1 million at December 31, 2022.
+Added: A provision for credit losses on HTM securities of $0.1 million was recorded in the third quarter of 2023, and the allowance for credit losses for HTM securities was $0.1 million at December 31, 2023.
• Total loans net of unearned income were $2.7 billion at December 31, 2023 compared to $2.5 billion at December 31, 2022.
−Removed: Total loans net of unearned income are reduced by the allowance for loan and lease losses which totaled $23.5 million at December 31, 2022 and $24.0 million at December 31, 2021.
−Removed: • Total impaired loans increased $4.4 million to $19.4 million at December 31, 2022 compared to $15.0 million at December 31, 2021.
−Removed: • Nonaccrual loans decreased $3.1 million to $13.6 million at December 31, 2022 compared to $16.7 million at December 31, 2021.
−Removed: • First Guaranty is a smaller reporting company and delayed the adoption of ASU 2016-13, "Financial Instruments - Credit Losses:
−Removed: Measurement of Credit Losses on Financial Instruments" ("CECL").
−Removed: First Guaranty used the incurred loss model for the calculation of its allowance for December 31, 2022.
−Removed: First Guaranty adopted ASU 2016-13 effective January 1, 2023.
+Added: Total loans net of unearned income are reduced by the allowance for credit losses which totaled $30.9 million at December 31, 2023 and $23.5 million at December 31, 2022.
+Added: First Guaranty adopted ASC 326 effective January 1, 2023 and recorded a cumulative adoption adjustment to the allowance of $7.1 million.
+Added: • Nonaccrual loans increased $11.6 million to $25.2 million at December 31, 2023 compared to $13.6 million at December 31, 2022.
+Added: • First Guaranty adopted ASU 2016-13, "Financial Instruments - Credit Losses:
+Added: Measurement of Credit Losses on Financial Instruments." (CECL) effective January 1, 2023.
+Added: The total adjustment for CECL was $10.0 million which includes $7.0 million for the ACL, $0.1 million for HTM securities, and $2.9 million for unfunded loan commitments.
+Added: The $2.9 million for unfunded loan commitments is recorded in other liabilities.
• Return on average assets was 0.28% and 0.97% for the years ended December 31, 2023 and 2022, respectively.
4 unchanged sentences
Tangible book value per common share was $16.03 as of December 31, 2023 compared to $17.23 as of December 31, 2022.
−Removed: The increase in book value was due primarily to an increase in retained earnings partially offset by changes in accumulated other comprehensive income ("AOCI").
+Added: The decrease was due primarily to a decrease in retained earnings associated with the adoption of CECL, the recent issuances 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.
−Removed: • First Guaranty's Board of Directors declared cash dividends of $0.64 per common share in 2022.
−Removed: First Guaranty also declared cash dividends of $0.64 in 2021, which was the equivalent of $0.60 per common share after adjusting for the 10% common stock dividend paid in December 2021.
+Added: • First Guaranty's Board of Directors declared cash dividends of $0.64 per common share in 2023 and 2022.
First Guaranty has paid 122 consecutive quarterly dividends on its common stock as of December 31, 2023.
−Removed: • First Guaranty paid preferred cash dividends of $2.3 million during 2022.
−Removed: The preferred stock was issued in April of 2021.
−Removed: Recent Developments
−Removed: Legal Settlement
+Added: • First Guaranty paid preferred cash dividends of $2.3 million during 2023 and 2022.
+Added: • First Guaranty issued $20.0 million of common stock through two separate private placements during 2023.
• First Guaranty was a defendant in a lawsuit alleging overpayment on a loan related to a disputed interest rate.
First Guaranty settled this lawsuit in February of 2023 for $0.6 million.
−Removed: Lone Star Acquisition
• On January 6, 2023, we entered into a definitive agreement to acquire Lone Star Bank, a Texas state-chartered bank with its main office in Houston, Texas.
−Removed: Under the terms of the agreement, we will acquire all of the issued and outstanding shares of Lone Star Bank common stock in exchange solely for shares of First Guaranty common stock through the merger of Lone Star Bank with and into First Guaranty Bank, with First Guaranty Bank surviving the merger.
−Removed: Based on December 31, 2022 financials, the combined financial institution would have approximately $3.2 billion in total assets, $2.5 billion in total loans, and $2.8 billion in total deposits following the close of the merger.
−Removed: As a result of the proposed merger, First Guaranty Bank will acquire four banking locations in Texas:
−Removed: two locations in Houston and two locations west of Houston along the I-10 corridor in Sealy and Columbus.
−Removed: Employee Stock Grant Program
−Removed: As disclosed in previous filings by First Guaranty Bancshares, Inc., for approximately 15 years First Guaranty Bank, a subsidiary of First Guaranty Bancshares, Inc.
−Removed: has utilized an “Employee Stock Grant Program” to incentivize and reward bank employees for performance.
−Removed: Each quarter, the Board of Directors of First Guaranty Bank allocates a $75,000 payment to an attorney to be used to purchase, on the open market, shares of stock with First Guaranty Bancshares, Inc.
−Removed: The attorney receives nominations which come from managers throughout the Bank for awards to employees which range from clerical through top Management.
−Removed: An average of just over 100 employees receive awards, in full ownership with no vesting nor other requirements, each quarter with an average award of approximately 37 shares per employee awarded.
−Removed: The total cost of this program per year is approximately $300,000 with total shares awarded of approximately 15,000 shares.
−Removed: In addition, the same process is utilized by First Guaranty Bancshares, Inc.
−Removed: at the conclusion of each year for the grant of stock bonuses to members of Management of First Guaranty Bank, selected by the Board of Directors of First Guaranty Bancshares, Inc.
−Removed: Those awards have averaged approximately $275,000 or 12,500 shares per year.
−Removed: The SEC has requested information concerning this practice.
−Removed: No process has been instituted;
−Removed: only, a request for information.
−Removed: First Guaranty has provided the requested information.
+Added: On July 10, 2023, First Guaranty, First Guaranty Bank, and Lone Star entered into a Mutual Termination Agreement and Release pursuant to which the parties mutually agreed to terminate the Merger Agreement.
+Added: First Guaranty estimates that total costs associated with the Lone Star acquisition was approximately $0.5 million through December 31, 2023.
+Added: • On October 5, 2023, we entered into a Loan Agreement (the “Loan Agreement”) with Summit Community Bank, Inc.
+Added: (“Lender”) pursuant to which Lender made (i) a term loan in the principal amount of $40.3 million (the “Term Loan”), and (ii) a revolving line of credit in the maximum principal amount of up to $20.0 million (the “Line of Credit,” and, together with the Term Loan, the “Loans”).
+Added: The principal sum outstanding under the Term Loan will bear interest at a rate equal to the Prime Index Rate as published by the Wall Street Journal, reset quarterly, minus 0.50% per annum, with a floor of 4.49% per annum.
+Added: The principal sum outstanding under the Line of Credit will bear interest at a rate equal to the Prime Index Rate as published by the Wall Street Journal, reset monthly, with a floor of 4.49% per annum.
+Added: The principal amount due and payable under the Term Loan will be amortized over a period of forty (40) quarters and will be in quarterly installments of principal, plus accrued interest, with the final payment equal to the then-outstanding principal balance and all accrued and unpaid interest, penalties and fees due thereon due at maturity of October 5, 2033.
+Added: Any outstanding amounts under the Line of Credit will be repaid with monthly installments of interest only, followed by a final payment equal to the then-outstanding principal balance and all accrued and unpaid interest, penalties and fees due thereon at maturity on October 5, 2024, unless renewed.
+Added: The proceeds of the Term Loan were used to repay in full all outstanding amounts under the existing indebtedness from First Horizon Bank (formerly known as First Tennessee Bank National Association).
Critical Accounting Estimates
2 unchanged sentences
We have identified the following critical accounting estimate that is critical to an understanding of our financial condition and results of operations.
−Removed: Allowance for Loan and Lease Losses.
−Removed: The allowance for loan and lease losses is established through a provision for loan losses charged to expense.
−Removed: Loans are charged against the allowance for loan and lease losses when management believes that the collectability of the principal is unlikely.
−Removed: The allowance, which is based on evaluation of the collectability of loans and prior loan loss experience, is an amount that, in the opinion of management, reflects the risks inherent in the existing loan portfolio and exists at the reporting date.
−Removed: The evaluations take into consideration a number of subjective factors including changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions that may affect a borrower's ability to pay, adequacy of loan collateral and other relevant factors.
+Added: Allowance for Credit Losses.
+Added: The allowance for credit losses is established through a provision for loan losses charged to expense.
+Added: Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely.
+Added: The allowance is based on management’s evaluation of expected credit losses over the life of the loans in the portfolio, in accordance with ASC 326.
+Added: The loan portfolio is divided into segments to evaluate expected losses.
+Added: Loans that do not share risk characteristics with a segment are evaluated individually.
+Added: Management estimates the allowance balance using available information such as past events, current conditions and reasonable forecasts.
+Added: Adjustments to historical information are made using qualitative and qualitative factors developed by management.
The following are general credit risk factors that affect our loan portfolio segments.
6 unchanged sentences
Commercial and industrial loans generally have non-real estate secured collateral which requires closer monitoring than real estate collateral.
−Removed: Although management uses available information to recognize losses on loans, because of uncertainties associated with local economic conditions, collateral values and future cash flows on impaired loans, it is reasonably possible that a material change could occur in the allowance for loan and lease losses in the near term.
−Removed: However, the amount of the change that is reasonably possible cannot be estimated.
−Removed: The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals.
−Removed: Because of changing economic conditions, the valuations determined from such estimates and appraisals may also change.
−Removed: Accordingly, we may ultimately incur losses that vary from management's current estimates.
−Removed: Adjustments to the allowance for loan and lease losses will be reported in the period such adjustments become known or can be reasonably estimated.
−Removed: All loan losses are charged to the allowance for loan and lease losses when the loss actually occurs or when the collectability of the principal is unlikely.
−Removed: Recoveries are credited to the allowance at the time of recovery.
−Removed: Loans acquired in a business combination are recorded at their estimated fair value on their purchase date with no carryover of the related allowance for loan and lease losses.
−Removed: Acquired loans are segregated between those with deteriorated credit quality at acquisition and those deemed as performing.
−Removed: To make this determination, Management considers such factors as past due status, nonaccrual status, credit risk ratings, interest rates and collateral position.
−Removed: The fair value of acquired loans deemed performing is determined by discounting cash flows, both principal and interest, for each pool at prevailing market interest rates as well as consideration of inherent potential losses.
−Removed: The difference between the fair value and principal balances due at acquisition date, the fair value discount, is accreted into income over the estimated life of each loan pool.
−Removed: The fair value is estimated using an analysis of expected cash flows to be received from the loan and may include the use of third party appraisals to assist in the calculation.
−Removed: Performing acquired loans are subsequently evaluated for any required allowance at each reporting date.
The allowance consists of specific, general, and unallocated components.
−Removed: The specific component relates to loans that are classified as doubtful, substandard, and impaired.
−Removed: For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.
−Removed: First Guaranty typically receives appraisals from independent third parties to facilitate this calculation.
+Added: The specific component relates to loans that are classified as doubtful, substandard, and individually evaluated for impairment.
+Added: For such loans that are also classified as individually evaluated for impairment, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the loan is lower than the carrying value of that loan.
The general component covers non-classified loans and special mention loans and is based on historical loss experience adjusted for qualitative factors.
−Removed: Qualitative factors include analysis of levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, loan risk ratings, trends in volume and terms of loans, changes in lending policy, credit concentrations, portfolio stress test results, national and local economic trends including the impact of COVID-19, industry conditions, and other relevant factors.
+Added: Qualitative factors include analysis of levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, loan risk ratings, trends in volume and terms of loans, changes in lending policy, credit concentrations, portfolio stress test results, national and local economic trends, industry conditions, and other relevant factors.
An unallocated component is maintained to cover uncertainties that could affect the estimate of probable losses.
−Removed: The allowance for loan and lease losses is reviewed on a monthly basis.
−Removed: The monitoring of credit risk also extends to unfunded credit commitments, such as unused commercial credit lines and letters of credit.
−Removed: A reserve is established as needed for estimates of probable losses on such commitments.
+Added: The allowance for credit losses on unfunded commitments represents expected credit losses over the contractual period for which First Guaranty is exposed to credit risk from a contractual obligation to extend credit.
+Added: No allowance is recorded if there is an unconditional right to cancel the obligation.
+Added: The allowance is reported as a component of Other Liabilities on the Consolidated Balance Sheets.
+Added: Adjustments to the allowance for unfunded commitments are included in the provision for credit losses on the Consolidated Statements of Income.
Financial Condition
Our total assets were $3.6 billion at December 31, 2023, an increase of $401.4 million, or 12.7%, from total assets of $3.2 billion at December 31, 2022.
−Removed: Assets increased primarily due to increases in net loans of $360.2 million and investment securities of $87.4 million, partially offset by a decrease in cash and cash equivalents of $178.7 million at December 31, 2022 compared to December 31, 2021.
+Added: Assets increased primarily due to increases in net loans of $222.2 million and cash and cash equivalents of $203.2 million, partially offset by a decrease in investment securities of $47.4 million at December 31, 2023 compared to December 31, 2022.
Net loans increased $222.2 million, or 8.9%, to $2.7 billion at December 31, 2023 from $2.5 billion at December 31, 2022.
+Added: Construction and land development loans increased $166.3 million principally due to advances on existing construction lines and new originations that was partially offset by the conversion of loans to permanent financing.
Non-farm non-residential loan balances increased $52.9 million primarily due to new originations.
One-to four-family loans increased $78.5 million primarily due to new originations.
−Removed: Commercial lease loan balances increased $71.6 million primarily due to new lease originations.
−Removed: First Guaranty has continued to expand its commercial lease portfolio which generally have higher yields than commercial real estate loans but shorter average lives.
−Removed: Construction and land development loans increased $58.8 million principally due to advances on existing construction lines and new originations.
−Removed: Multifamily loans increased $53.9 million primarily due to the conversion of existing construction loans to permanent financing.
+Added: Farmland loans increased $7.7 million due to increases on agricultural loan commitments.
+Added: Consumer and other loans increased $6.6 million primarily due to new originations.
Agricultural loans increased $2.0 million primarily due to seasonal activity.
−Removed: Consumer and other loans decreased $0.3 million primarily due to payoffs.
−Removed: Farmland loans decreased $7.0 million due to decreases on agricultural loan commitments.
+Added: Multifamily loans decreased $0.9 million primarily due to pay downs on the existing multifamily loan portfolio.
+Added: Commercial lease loan balances decreased $32.2 million primarily due to pay downs on the existing lease portfolio.
+Added: First Guaranty's commercial lease portfolio generally has higher yields than commercial real estate loans but shorter average lives.
Commercial and industrial loans decreased $50.3 million primarily due to payoffs.
7 unchanged sentences
First Guaranty had $375.7 million in loans related to our Texas markets at December 31, 2023 which was an increase of $41.8 million or 12.5% from $333.8 million at December 31, 2022.
−Removed: First Guaranty continues to have significant loan growth associated with its Texas branches.
−Removed: We anticipate additional growth opportunities in Texas as it contains four major cities in Austin, Dallas, Houston, and San Antonio, plus the continued growth and development of these areas is exceeding that of other areas of the country.
−Removed: First Guaranty had $210.9 million in loans related to our new Mideast markets in Kentucky and West Virginia at December 31, 2022.
+Added: First Guaranty anticipates additional growth opportunities in Texas.
+Added: First Guaranty had $278.1 million in loans related to our new Mideast markets in Kentucky and West Virginia at December 31, 2023 which was an increase of $67.2 million or 31.8% from $210.9 million at December 31, 2022.
Syndicated loans at December 31, 2023 were $76.7 million, of which $23.9 million were shared national credits.
−Removed: Syndicated loans increased $40.9 million from $47.4 million at December 31, 2021.
+Added: Syndicated loans decreased $11.6 million from $88.3 million at December 31, 2022.
As of December 31, 2023, 74.0% of our loan portfolio was secured by real estate.
The largest portion of our loan portfolio, at 37.9% as of December 31, 2023, was non-farm non-residential loans secured by real estate.
−Removed: Approximately 39.8% of the loan portfolio was based on a floating rate tied to the prime rate or LIBOR as of December 31, 2022.
+Added: As of December 31, 2023, approximately 45.8% of the loan portfolio was based on a floating rate tied to the prime rate, the Secured Overnight Financing Rate ("SOFR") or Treasury rates.
54.5% of the loan portfolio is scheduled to mature within five years from December 31, 2023.
−Removed: First Guaranty had $47.7 million in loans that were priced off of the LIBOR index rate at December 31, 2022.
−Removed: As it is anticipated that LIBOR will be discontinued after June 30, 2023, First Guaranty is reviewing its loan documents to determine alternative reference rates such as the Secured Overnight Financing Rate ("SOFR") and does not anticipate there will be a significant financial statement impact with the transition.
+Added: First Guaranty initiated a process to transfer any LIBOR indexed loans to alternative reference rates such as the prime rate or SOFR as LIBOR was discontinued for repricings after June 30, 2023.
+Added: 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.
+Added: First Guaranty has utilized enhanced risk management practices for CRE concentration analysis for several years.
+Added: 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.
+Added: The stress test analyses the impact of changes in interest rates and cash flow on loan customers with credit exposures of $2.5 million or greater.
+Added: First Guaranty generally requires personal guarantees on CRE loans.
+Added: First Guaranty generally approves CRE loans with loan-to-values of 80% or less.
+Added: First Guaranty also generally requires for construction related CRE loans that the borrower provides their equity contribution upfront before loan funds are advanced.
+Added: First Guaranty has diversified its CRE portfolio across both industries and geographic location.
+Added: 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 December 31, 2023.
+Added: The largest CRE loan secured by a hotel or motel totaled $21.1 million.
+Added: The property is a flagged hotel located in Texas.
+Added: The largest CRE loan secured by an office related property totaled $21.7 million and is located in West Virginia.
+Added: The largest CRE loan secured by an apartment complex totaled $25.9 million and is located in Texas.
+Added: The largest healthcare related loan is a $17.7 million property secured by an assisted living center located in Louisiana.
+Added: The largest CRE loan under construction totaled $37.9 million for an apartment complex and is secured by a property located in Louisiana.
Loan Portfolio Maturities .
94 unchanged sentences
We recognized $0.1 million and $0.1 million of interest income on such loans during the years ended December 31, 2023 and 2022, respectively.
−Removed: Non-performing assets were $14.8 million, or 0.47%, of total assets at December 31, 2022, compared to $20.0 million, or 0.70%, of total assets at December 31, 2021, which represented a decrease in non-performing assets of $5.2 million.
−Removed: The decrease in non-performing assets occurred primarily due to a reduction in nonaccrual loans, 90 days or greater delinquent and still accruing, other real estate owned.
−Removed: Contributing to the decrease was a sale of a $3.4 million real estate secured nonaccrual loan in the second quarter of 2022.
−Removed: This loan was previously reported as a TDR.
−Removed: A real estate secured loan in the amount of $1.7 million was returned to performing status from nonaccrual.
−Removed: A $0.5 million real estate secured loan was returned to performing status from nonaccrual.
−Removed: Both of these loans demonstrated satisfactory payment performance in order to be returned to performing status.
−Removed: First Guaranty sold smaller OREO properties during 2022 which also contributed to the reduction in non-performing assets.
−Removed: Nonaccrual loans decreased from $16.7 million at December 31, 2021 to $13.6 million at December 31, 2022.
−Removed: The decrease in nonaccrual loans was concentrated primarily in non-farm non-residential, agricultural, farmland and construction and land development loans.
+Added: Non-performing assets were $41.7 million, or 1.17%, of total assets at December 31, 2023, compared to $14.8 million, or 0.47%, of total assets at December 31, 2022, which represented an increase in non-performing assets of $26.9 million.
+Added: The increase in non-performing assets occurred primarily due to an increase in nonaccrual loans, 90 days or greater delinquent and still accruing, and other real estate owned.
+Added: Nonperforming loans included loans previously classified as purchase credit deteriorated following the adoption of CECL.
+Added: Nonaccrual loans increased from $13.6 million at December 31, 2022 to $25.2 million at December 31, 2023.
+Added: The increase in nonaccrual loans was concentrated primarily in non-farm non-residential, one- to four-family, commercial and industrial, and consumer and other loans.
Non-performing assets included $1.9 million in loans with a government guarantee, or 4.45% of non-performing assets.
These are structured as net loss guarantees in which up to 90% of loss exposure is covered.
−Removed: At December 31, 2022 loans 90 days and greater delinquent and still accruing totaled $1.1 million, a decrease of $0.1 million or 8.3% from $1.2 million at December 31, 2021.
−Removed: The decrease in loans 90 days or greater delinquent and still accruing was concentrated primarily in one-to four-family residential, non-farm non-residential and consumer and other loans.
−Removed: Other real estate owned at December 31, 2022 totaled $0.1 million, a decrease of $2.0 million from $2.1 million at December 31, 2021.
−Removed: The decrease was primarily due to a retail shopping center property with a net book value of $1.1 million being sold in October 2022.
−Removed: The sale of other smaller properties resulted in an additional reduction of $1.0 million.
−Removed: At December 31, 2022, our largest non-performing assets were comprised of the following nonaccrual loans:
+Added: At December 31, 2023 loans 90 days and greater delinquent and still accruing totaled $15.3 million, an increase of $14.1 million or 1238.6% from $1.1 million at December 31, 2022.
+Added: The increase in loans 90 days or greater delinquent and still accruing was concentrated primarily in non-farm non-residential, commercial and industrial, and agricultural loans.
+Added: Other real estate owned at December 31, 2023 totaled $1.3 million, an increase of $1.1 million from $0.1 million at December 31, 2022.
+Added: The increase was primarily due to the addition of a $0.8 million non-farm non-residential property during the first quarter of 2023.
+Added: This property was related to a loan that was on nonaccrual status at December 31, 2022.
+Added: At December 31, 2023, our largest non-performing assets were comprised of the following nonaccrual loans and 90 days or greater delinquent and still accruing loans:
+Added: (1) a non-farm non-residential loan that totaled $13.6 million;
+Added: (2) a non-farm non-residential loan that totaled $4.7 million;
+Added: (3) a $2.1 million loan relationship that is classified as purchased credit deteriorated;
(4) a commercial lease loan that totaled $1.8 million;
(5) a non-farm non-residential loan secured by a mobile home facility that totaled $1.3 million.
−Removed: (3) a non-farm nonresidential loan that totaled $1.1 million.
−Removed: This loan was originated for the sale of other real estate owned, the previously mentioned retail shopping center, and was included in nonaccrual until establishment of a satisfactory payment history by the borrower;
−Removed: (4) a non-farm non-residential loan secured by a waste treatment facility that totaled $0.9 million;
−Removed: and (5) an agricultural/farmland loan relationship that totaled $0.9 million.
−Removed: The agricultural loan is partially guaranteed by the USDA Farm Service Agency.
−Removed: Troubled Debt Restructuring.
−Removed: Another category of assets which contribute to our credit risk is troubled debt restructurings ("TDRs").
−Removed: A TDR is a loan for which a concession has been granted to the borrower due to a deterioration of the borrower's financial condition.
−Removed: Such concessions may include reduction in interest rates, deferral of interest or principal payments, principal forgiveness and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral.
−Removed: We strive to identify borrowers in financial difficulty early and work with them to modify to more affordable terms before such loan reaches nonaccrual status.
−Removed: In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest.
−Removed: TDRs that are not performing in accordance with their restructured terms and are either contractually 90 days past due or placed on nonaccrual status are reported as non-performing loans.
−Removed: Our policy provides that nonaccrual TDRs are returned to accrual status after a period of satisfactory and reasonable future payment performance under the terms of the restructuring.
−Removed: Satisfactory payment performance is generally no less than six consecutive months of timely payments and demonstrated ability to continue to repay.
−Removed: Under section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which was signed into law on March 27, 2020 and subsequently modified by later legislation, financial institutions have the option to temporarily suspend certain requirements under U.S.
−Removed: generally accepted accounting principles related to troubled debt restructurings for a limited period of time to account for the effects of COVID-19.
−Removed: This provision allows a financial institution the option to not apply the guidance on accounting for troubled debt restructurings to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) January 1, 2022 or (ii) 60 days after the end of the COVID-19 national emergency.
−Removed: The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019.
−Removed: First Guaranty elected to adopt these provisions of the CARES Act.
−Removed: At December 31, 2022, First Guaranty had one outstanding TDR which was a $1.1 million farmland loan.
−Removed: The restructuring of this loan was related to interest rate and amortization concessions.
−Removed: The TDR at December 31, 2021 was a $3.4 million non-farm non-residential loan secured by commercial real estate that was on nonaccrual.
−Removed: The restructuring of this loan was related to interest rate and amortization concessions.
−Removed: The loan was secured by a hotel facility.
−Removed: This loan was not eligible for a CARES Act modification.
−Removed: This loan was subsequently sold in the second quarter of 2022.
−Removed: The TDR requirements became inapplicable to First Guaranty upon our adoption of CECL on January 1, 2023.
Classified Assets .
18 unchanged sentences
Any material issues discovered in an external loan review are also communicated to us immediately.
−Removed: The decrease in classified assets at December 31, 2022 as compared to December 31, 2021 was due to a $10.6 million decrease in substandard loans.
−Removed: Substandard loans at December 31, 2022 consisted of $9.8 million in one- to four-family residential, $9.0 million in non-farm non-residential, $8.3 million in commercial and industrial, $5.1 million in farmland, $4.0 million in agricultural, $2.3 million in multifamily, $1.8 million in commercial leases, $0.8 million in construction and land development, and the remaining $1.6 million comprised of consumer and other loans.
−Removed: Special mention loans decreased by $108.4 million in 2022.
−Removed: The decrease in special mention loans was primarily the result of the upgrade of several loan relationships from special mention to pass status.
−Removed: The largest industry type was associated with hotel loans.
−Removed: First Guaranty had previously moved several hotel relationships to special mention following the onset of the COVID-19 pandemic.
−Removed: Allowance for Loan and Lease Losses
−Removed: The allowance for loan and lease losses is maintained to absorb potential losses in the loan portfolio.
+Added: The increase in classified assets at December 31, 2023 as compared to December 31, 2022 was due to a $45.6 million increase in substandard loans and a $1.6 million increase in doubtful loans.
+Added: The increase in substandard loans was primarily the result of the downgrade of one real estate secured loan relationship in the second quarter of 2023 with an aggregate principal balance of $36.5 million as of December 31, 2023.
+Added: The loans are secured by shopping centers.
+Added: While the loans are over collateralized based upon recent appraisals totaling $47.4 million, there is no certainty that the Bank will receive full repayment upon liquidation should that become necessary.
+Added: The increase in doubtful loans was primarily the result of the downgrade of several loan relationships from substandard to doubtful.
+Added: Special mention loans increased by $28.4 million in 2023.
+Added: The increase in special mention loans was primarily the result of the downgrade of one commercial real estate loan from pass status to special mention totaling $15.0 million and the downgrade of one commercial lease loan relationship from pass status to special mention totaling $13.0 million.
+Added: Allowance for Credit Losses
+Added: First Guaranty adopted FASB ASC Topic 326 “Financial Instruments – Credit Losses:
+Added: Measurement of Credit Losses on Financial Instruments” Update No.
+Added: 2016-13 (“ASU 2016-13”).
+Added: ASU 2016-13 on January 1, 2023.
+Added: ASU 2016-13, referred to as the Current Expected Credit Loss (“CECL”) standard, requires financial assets measured on an amortized cost basis, including loans and held-to-maturity debt securities, to be presented at an amount net of an allowance for credit losses, which reflects expected losses for the full life of the financial asset.
+Added: Unfunded lending commitments are also within the scope of this topic.
+Added: Under prior GAAP losses were not recognized until the occurrence of the loss was probable.
+Added: See Recent Accounting Pronouncements for more information on the adoption of ASC 326.
+Added: The allowance for credit losses on loans is maintained to absorb expected losses over the life of the loans in the loan portfolio.
The allowance is increased by the provision for loan losses, offset by recoveries of previously charged-off loans and is decreased by loan charge-offs.
−Removed: The provision is a charge to current expense to provide for current loan losses and to maintain the allowance commensurate with management's evaluation of the risks inherent in the loan portfolio.
+Added: The provision is a charge to current expense to provide for current expected loan losses and to maintain the allowance commensurate with management's evaluation of the risks inherent in the loan portfolio.
Various factors are taken into consideration when determining the amount of the provision and the adequacy of the allowance.
5 unchanged sentences
• charge-off and recovery practices;
−Removed: • national and local economic and business conditions including the COVID-19 pandemic;
+Added: • national and local economic and business conditions;
• nature and volume of loans;
9 unchanged sentences
The allowance consists of specific, general, and unallocated components.
−Removed: The specific component relates to loans that are classified as doubtful, substandard, and impaired.
−Removed: For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.
−Removed: Also, a specific reserve is allocated for our syndicated loans, including shared national credits.
+Added: The specific component relates to loans that are classified as doubtful, substandard, or collateral dependent.
+Added: For such loans that are also classified as collateral dependent, an allowance is established when the collateral value is lower than the carrying value of that loan.
The general component covers non-classified loans and special mention loans and is based on historical loss experience for the past three years adjusted for qualitative factors described above.
An unallocated component is maintained to cover uncertainties that could affect the estimate of probable losses.
−Removed: The allowance for loan and lease losses was $23.5 million at December 31, 2022 compared to $24.0 million at December 31, 2021.
−Removed: The balance in the allowance for loan and lease losses is principally influenced by the provision for loan losses and by net loan loss experience.
−Removed: Additions to the allowance are charged to the provision for loan losses.
+Added: The balance in the allowance for credit losses is principally influenced by the provision for loan losses, recoveries, and by net loan loss experience.
+Added: Additions to the allowance are charged to the provision for credit losses.
Losses are charged to the allowance as incurred and recoveries on losses previously charged to the allowance are credited to the allowance at the time recovery is collected.
−Removed: The table below reflects the activity in the allowance for loan and lease losses for the years indicated.
+Added: The allowance for credit losses was $30.9 million at December 31, 2023 compared to $23.5 million at December 31, 2022.
+Added: The balance in the allowance for credit losses is principally influenced by the provision for loan losses and by net loan loss experience.
+Added: Additions to the allowance are charged to the provision for credit losses.
+Added: Losses are charged to the allowance as incurred and recoveries on losses previously charged to the allowance are credited to the allowance at the time recovery is collected.
+Added: The table below reflects the activity in the allowance for credit losses for the years indicated.
+Added: As previously disclosed, the adoption of the CECL model in ASC 326 was the cause of most of the increase in the allowance.
At or For the Years Ended December 31,
1 unchanged sentence
Balance at beginning of year $ 23,518 $ 24,029
+Added: ASC 326 Adoption Day 1 Adjustment 8,120 —
Construction and land development — (65)
11 unchanged sentences
Construction and land development 7 340
−Removed: Farmland — 90
1- 4 family 93 76
17 unchanged sentences
Net loan charge-offs to provision charged to expense 119.33 % 113.98 %
−Removed: A provision for loan losses of $3.7 million was made during the year ended December 31, 2022 as compared to $2.1 million for 2021.
−Removed: The provisions made in 2022 were taken to provide for current loan losses and to maintain the allowance proportionate to risks inherent in the loan portfolio.
−Removed: First Guaranty’s incurred loan loss calculation method incorporates risk factors in the loan portfolio such as historical loss rates along with qualitative and quantitative factors.
−Removed: The composition of the loan portfolio affects the final allowance calculation.
+Added: A provision for credit losses of $3.7 million was made during each of the years ended December 31, 2023 and 2022.
+Added: The provisions made in 2023 included a $0.1 million negative provision for credit losses related to unfunded commitments and a $0.1 million provision for credit losses on HTM securities.
+Added: The provisions made were taken to provide for current credit losses and to maintain the allowance proportionate to risks inherent in the loan portfolio.
The loan portfolio factors in 2023 that primarily affected the allocation of the allowance included the following:
−Removed: • The loan portfolio risks that changed and affected the allocation of the allowance were due to changes in historical loss rates, adjustments of certain qualitative factors to take into account the current estimated impact of COVID-19 and changes in other market conditions, loan concentrations including those related to commercial real estate and loan relationships and related economic conditions on borrowers' ability to repay loans and for allocations to impaired loans within their respective categories.
+Added: • The adoption of the CECL methodology under ASU 2016-13 was the largest contributor to changes in both the size and allocation of the allowance for credit losses.
+Added: First Guaranty also made adjustments of certain qualitative factors to take into account the current estimated impact of COVID-19, changes in other market conditions, loan concentrations including those related to commercial real estate and loan relationships and related economic conditions on borrowers' ability to repay loans and for allocations to individually evaluated for impairment loans within their respective categories.
• Construction and land development loans increased during 2023 due to advances on existing construction lines of credit and new loan originations.
Several loans previously in this category moved to permanent financing and are now included in the multifamily loan category as of December 31, 2023.
−Removed: The allowance increase related to this portfolio was due to growth in the portfolio along with changes in the qualitative analysis of the portfolio related to economic conditions.
+Added: The allowance increase related to this portfolio was due to growth in the portfolio along with changes in the qualitative analysis of the portfolio and the adoption of CECL.
• One-to-four family residential loans increased during 2023.
−Removed: The allowance decrease related to this portfolio was due to changes in the qualitative analysis of the portfolio related to COVID-19 and improving economic conditions.
−Removed: • Multifamily loans increased during 2022.
−Removed: The allowance related to this portfolio decreased due to improving economic conditions.
−Removed: • Non-farm non-residential loans increased by $106.5 million during 2022.
−Removed: The allowance decrease related to this portfolio was due to the sale of an impaired loan with a specific reserve, the payoff of a substandard loan, and improved credit quality in this portfolio.
−Removed: There was growth in the portfolio along with changes in the qualitative analysis of the portfolio related to COVID-19 and historical loss rates.
−Removed: First Guaranty continues to maintain a significant allowance for hotel loans based on qualitative factors primarily related to COVID-19 and related credit ratings for hotel loans.
−Removed: Special mention loans in this category declined which also contributed to a reduction in the related allowance.
+Added: The allowance increase related to this portfolio was due to changes in the qualitative analysis of the portfolio, portfolio growth, and also the adoption of CECL.
+Added: • Multifamily loans decreased during 2023.
+Added: The allowance related to this portfolio increased due primarily to the adoption of CECL.
+Added: • Non-farm non-residential loans increased during 2023.
+Added: The allowance increase related to this portfolio was due primarily to growth in the portfolio and also to the adoption of CECL.
• Commercial and industrial loans decreased during 2023.
−Removed: The allowance decrease related to this portfolio was due to the changes in historical loss rates and changes in the qualitative analysis of the portfolio related to COVID-19 and economic conditions.
−Removed: • Commercial leases increased during 2022.
−Removed: The allowance increase related to this portfolio was due to the changes in historical loss rates and changes in the qualitative analysis of the portfolio related to COVID-19 and due to growth in the portfolio.
−Removed: Commercial leases grew during 2022 from $246.0 million at December 31, 2021 to $317.6 million at December 31, 2022.
−Removed: • First Guaranty continues to monitor the acquired loans from prior acquisitions.
−Removed: Discounts on the acquired loans were approximately $1.1 million at December 31, 2022.
+Added: The allowance increase related to this portfolio was due to the adoption of the CECL methodology.
+Added: • Commercial leases decreased during 2023.
+Added: The allowance decrease related to this portfolio was due to the reduction in this portfolio and due to changes in the qualitative analysis of the portfolio.
+Added: Commercial leases declined during 2023 from $317.6 million at December 31, 2022 to $285.4 million at December 31, 2023.
+Added: • Consumer and other loans increased during 2023.
+Added: The decrease in the related loan loss allowance balance was due primarily to qualitative analysis, charge-offs on consumer loans and the adoption of the CECL methodology.
First Guaranty charged off $5.8 million in loan balances during the year ended December 31, 2023 as compared to $6.1 million for 2022.
3 unchanged sentences
These loans were originated in the Fall of 2021 following Hurricane Ida that impacted Southeast Louisiana on August 29, 2021.
−Removed: First Guaranty charged off $0.4 million on a non-farm non-residential loan during the second quarter of 2022.
−Removed: This loan was subsequently sold in the second quarter of 2022.
−Removed: First Guaranty charged off $0.3 million on an agricultural loan during the third quarter of 2022.
+Added: First Guaranty charged off $0.8 million on a real estate secured loan in the fourth quarter of 2023.
This loan had no remaining principal balance at December 31, 2023.
−Removed: First Guaranty charged off $0.2 million on a commercial lease loan during the third quarter of 2022.
+Added: This loan was previously acquired in the 2019 Union Bancshares acquisition.
+Added: First Guaranty charged off $0.3 million on a commercial and industrial loan during the fourth quarter of 2023.
This loan had no remaining principal balance at December 31, 2023.
Smaller loans and overdrawn deposit accounts comprised the remaining $4.4 million of charge-offs for 2023.
+Added: These charge offs were concentrated in equipment, vehicle, and unsecured loans.
Allocation of Allowance for Loan and Lease Losses.
42 unchanged sentences
Investment Securities
−Removed: Investment securities at December 31, 2022 totaled $451.5 million, an increase of $87.4 million, or 24.0%, compared to $364.2 million at December 31, 2021.
+Added: Investment securities at December 31, 2023 totaled $404.1 million, a decrease of $47.4 million, or 10.5%, compared to $451.5 million at December 31, 2022.
+Added: The portfolio consists of both available for sale (AFS) and held to maturity securities (HTM).
+Added: 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.
17 unchanged sentences
Our available for sale securities portfolio totaled $83.5 million at December 31, 2023, a decrease of $48.0 million, or 36.5%, compared to $131.5 million at December 31, 2022.
−Removed: The decrease was primarily due to the transfer of AFS securities to the HTM portfolio in the first quarter of 2022 of $165.8 million that was partially offset by purchases.
−Removed: Our held to maturity securities portfolio had an amortized cost of $320.1 million at December 31, 2022, compared to $153.5 million at December 31, 2021.
−Removed: The increase was primarily due to the transfer of AFS securities to the HTM portfolio in the first quarter of 2022.
+Added: The decrease was primarily due to the maturity of U.S.
+Added: Treasury securities.
+Added: Our held to maturity securities portfolio had an amortized cost of $320.6 million, net of allowance at December 31, 2023, compared to $320.1 million at December 31, 2022.
+Added: There were no credit related impairment of available for sale securities during 2023.
+Added: An allowance for credit losses of $0.1 million for held to maturity securities was recorded upon the adoption of ASC 326.
+Added: There was one charge-off, net of recovery of $0.1 million recognized on a corporate security classed as held to maturity during 2023.
+Added: There was a provision of $0.1 million was recorded in the third quarter of 2023.
+Added: The allowance for credit losses for held to maturity securities was $0.1 million at December 31, 2023.
The following tables set forth the stated maturities and weighted average yields of our investment securities at December 31, 2023.
29 unchanged sentences
Noninterest-bearing demand deposits decreased $81.7 million, or 15.6% to $442.8 million at December 31, 2023.
−Removed: The increase in noninterest-bearing demand deposits was primarily due to growth of compensating balances associated with new loan originations, existing loan customers, and new customers as part of First Guaranty's efforts to increase lower cost deposits.
+Added: The decrease in noninterest-bearing demand deposits was primarily due to increased competition in the marketplace for interest bearing deposits.
Interest-bearing demand deposits increased $66.4 million, or 4.5%, to $1.5 billion at December 31, 2023.
The increase in interest-bearing demand deposits was primarily concentrated in public funds interest-bearing demand deposits.
−Removed: Savings deposits increased $4.1 million, or 2.0%, to $205.8 million at December 31, 2022, primarily related to increases in individual savings deposits.
−Removed: Time deposits decreased $53.3 million, or 9.1%, to $533.4 million at December 31, 2022, primarily due to decreases in consumer and business time deposits.
−Removed: As we seek to strengthen our net interest margin and improve our earnings, attracting non-interest-bearing or lower cost deposits will be a primary emphasis.
+Added: Savings deposits increased $13.2 million, or 6.4%, to $219.0 million at December 31, 2023, primarily related to increases in business and individual savings deposits.
+Added: Time deposits increased $287.4 million, or 53.9%, to $820.7 million at December 31, 2023, primarily due to increases in consumer and business time deposits along with increased brokered time deposits of approximately $175.6 million.
+Added: These new brokered time deposits had maturities of two and three years.
+Added: The proceeds from the new deposits were used to reduce short-term FHLB borrowings.
Management will continue to evaluate and update our product mix and related technology in its efforts to attract additional customers.
We currently offer a number of deposit products that are competitively priced and designed to attract and retain customers with primary emphasis on noninterest-bearing deposits and other lower cost deposits.
−Removed: The following table sets forth the distribution of deposit accounts, by account type, for the dates indicated.
−Removed: For the Years Ended December 31,
−Removed: Total Deposits 2022 2021
−Removed: (in thousands except for %) Average Balance Percent Weighted
−Removed: Average Rate Average Balance Percent Weighted
−Removed: Noninterest-bearing Demand $ 552,786 20.7 % — % $ 477,802 19.8 % — %
−Removed: Interest-bearing Demand 1,362,396 50.9 % 1.6 % 1,082,922 45.0 % 0.7 %
−Removed: Savings 212,329 7.9 % 0.4 % 191,967 8.0 % 0.1 %
−Removed: Time 546,776 20.5 % 2.0 % 655,025 27.2 % 2.0 %
−Removed: Total Deposits $ 2,674,287 100.0 % 1.2 % $ 2,407,716 100.0 % 0.8 %
−Removed: For the Years Ended December 31,
−Removed: Individual and Business Deposits 2022 2021
−Removed: (in thousands except for %) Average Balance Percent Weighted
−Removed: Average Rate Average Balance Percent Weighted
−Removed: Noninterest-bearing Demand $ 544,948 32.9 % — % $ 471,371 29.7 % — %
−Removed: Interest-bearing Demand 424,257 25.7 % 2.1 % 390,481 24.6 % 1.0 %
−Removed: Savings 170,571 10.3 % 0.1 % 154,560 9.8 % 0.1 %
−Removed: Time 514,167 31.1 % 2.0 % 569,924 35.9 % 2.2 %
−Removed: Total Individual and Business Deposits $ 1,653,943 100.0 % 1.2 % $ 1,586,336 100.0 % 1.0 %
−Removed: For the Years Ended December 31,
−Removed: Public Fund Deposits 2022 2021
−Removed: (in thousands except for %) Average Balance Percent Weighted
−Removed: Average Rate Average Balance Percent Weighted
−Removed: Noninterest-bearing Demand $ 7,838 0.8 % — % $ 6,431 0.8 % — %
−Removed: Interest-bearing Demand 938,139 91.9 % 1.3 % 692,441 84.3 % 0.5 %
−Removed: Savings 41,758 4.1 % 1.9 % 37,407 4.5 % 0.2 %
−Removed: Time 32,609 3.2 % 1.4 % 85,101 10.4 % 0.8 %
−Removed: Total Public Fund Deposits $ 1,020,344 100.0 % 1.4 % $ 821,380 100.0 % 0.5 %
−Removed: At December 31, 2022, public funds deposits totaled $1.1 billion compared to $957.9 million at December 31, 2021.
+Added: At December 31, 2023, public funds deposits totaled $1.2 billion compared to $1.1 billion at December 31, 2022.
Public funds time deposits totaled $50.9 million at December 31, 2023 compared to $32.4 million at December 31, 2022.
28 unchanged sentences
This total excludes public funds deposits that are collateralized by securities or FHLB letters of credit.
+Added: The amount of uninsured deposits including collateralized public funds deposits was estimated at $880.6 million at December 31, 2023.
The following table sets forth the maturity of certificates of deposits greater than $250,000 at December 31, 2023.
9 unchanged sentences
The short-term borrowings at December 31, 2023 were comprised of short-term Federal Home Loan Bank advances of $50.0 million, a line of credit of $20.0 million with an outstanding balance of $10.0 million and repurchase agreements of $6.3 million.
−Removed: The short-term borrowings outstanding at December 31, 2021 were comprised of repurchase agreements of $6.4 million.
+Added: The short-term borrowings outstanding at December 31, 2022 were comprised of $120.0 million of short-term Federal Home Loan Bank advances of $120.0 million, a line of credit of $20.0 million with an outstanding balance of $20.0 million and repurchase agreements of $6.4 million.
First Guaranty had available lines of credit of $20.0 million, with $10.0 million outstanding at December 31, 2023.
A net availability of $10.0 million remained.
+Added: First Guaranty had long-term borrowings from the FHLB that totaled $155.0 million at December 31, 2023.
+Added: First Guaranty converted previous short-term floating rate borrowings from the FHLB into long-term lower fixed rate borrowings in order to reduce interest expense.
+Added: First Guaranty has a $20.0 million FHLB advance that matures in the first quarter of 2025, a $100.0 million FHLB advance that matures in the second quarter of 2027, and $35.0 million FHLB advance that matures in the third quarter of 2027.
At December 31, 2023, we had $513.3 million in FHLB letters of credit outstanding obtained primarily for collateralizing public deposits compared to $388.6 million at December 31, 2022.
First Guaranty had senior long-term debt totaling $39.1 million at December 31, 2023 and $21.9 million at December 31, 2022.
−Removed: First Guaranty had a long-term FHLB advance that was acquired from the Union transaction that totaled $3.2 million at December 31, 2021.
−Removed: This advance was paid off during the first quarter of 2022.
+Added: The change in senior long-term debt occurred when First Guaranty refinanced its outstanding balance on a revolving line of credit into a long term credit facility in October 2023.
First Guaranty also had subordinated debt totaling $15.0 million at December 31, 2023 and $15.0 million at December 31, 2022.
1 unchanged sentence
Total shareholders' equity increased to $249.6 million at December 31, 2023 from $235.0 million at December 31, 2022.
−Removed: The increase in shareholders' equity was principally the result of an increase of $19.7 million in retained earnings, partially offset by an increase of $8.6 million in accumulated other comprehensive loss.
−Removed: The $19.7 million increase in retained earnings was due to net income of $28.9 million during the year ended December 31, 2022, partially offset by $6.9 million in cash dividends paid on shares of our common stock and $2.3 million in cash dividends paid on shares of our preferred stock.
−Removed: The increase in accumulated other comprehensive loss was primarily attributed to the increase in unrealized losses on available for sale securities during the year ended December 31, 2022.
+Added: The increase in shareholders' equity was principally the result of an increase of $19.0 million in surplus and a $2.3 million decrease in accumulated other comprehensive loss, partially offset by a decrease of $8.4 million in retained earnings.
+Added: The $19.0 million increase in surplus was due to common stock issued in private placements and common stock issued under the Equity Bonus Plan during 2023.
+Added: The decrease in accumulated other comprehensive loss was primarily attributed to the decrease in unrealized losses on available for sale securities during the year ended December 31, 2023.
+Added: The $8.4 million decrease in retained earnings was primarily due to the adoption of CECL which had a $7.9 million after tax reduction to retained earnings, $7.4 million in cash dividends paid on shares of our common stock and $2.3 million in cash dividends paid on shares of our preferred stock, partially offset by net income of $9.2 million during the year ended December 31, 2023.
Results of Operations
3 unchanged sentences
Year ended December 31, 2023 compared with year ended December 31, 2022.
−Removed: Net income for the year ended December 31, 2022 was $28.9 million, an increase of $1.6 million, or 5.8%, as compared to $27.3 million for the year ended December 31, 2021.
−Removed: The increase in net income of $1.6 million for the year ended December 31, 2022 was the result of several factors.
−Removed: First Guaranty experienced an increase in interest income and an increase in noninterest income.
−Removed: This was partially offset by an increase in interest expense, an increase in the provision for loan losses and an increase in noninterest expense.
−Removed: Loan interest income increased due to the growth in First Guaranty's loan portfolio, including loan fees recognized as an adjustment to yield from the origination of the SBA guaranteed PPP loans.
−Removed: Securities interest income increased due to an increase in the average balance of the investment portfolio.
−Removed: Noninterest income increased primarily due to gains on the sale of loans during the third quarter of 2022.
−Removed: Factors that partially offset the increase in net income included an increase in interest expense due to increases in volume and market interest rates.
−Removed: The increase in the provision was related to growth in the loan portfolio and due to elevated charge-offs as compared to the same period in 2021.
−Removed: Noninterest expense increased primarily due to increased personnel expenses, software expense, legal and professional fees, travel expense and capital taxes.
−Removed: Earnings per common share for the years ended December 31, 2022 was $2.48 per common share, an increase of 2.5% or $0.06 per common share from $2.42 per common share for the year ended December 31, 2021.
−Removed: Earnings per share was affected by the increase in earnings.
+Added: Net income for the year ended December 31, 2023 was $9.2 million, a decrease of $19.7 million, or 68.1%, as compared to $28.9 million for the year ended December 31, 2022.
+Added: The decrease in net income of $19.7 million for the year ended December 31, 2023 was the result of several factors.
+Added: First Guaranty experienced an increase in interest income.
+Added: This increased income was offset by an increase in interest expense, an increase in the provision for credit losses, a decrease in noninterest income, and an increase in noninterest expense.
+Added: Loan interest income increased due to the growth in First Guaranty's loan portfolio and repricing of existing loans to higher market rates, including loan fees recognized as an adjustment to yield.
+Added: Securities interest income increased due to an increase in the average yield of the investment portfolio.
+Added: Factors that offset the increase in net income included an increase in interest expense due to increases in volume and market interest rates.
+Added: The increase in the provision was related to changes within the portfolio.
+Added: Noninterest income decreased primarily due a decrease on the sale of loans.
+Added: Noninterest expense increased primarily due to increased personnel expenses, legal and professional fees, software expense, regulatory assessment, and data processing expenses.
+Added: Earnings per common share for the years ended December 31, 2023 was $0.62 per common share, a decrease of 75.0% or $1.86 per common share from $2.48 per common share for the year ended December 31, 2022.
Net Interest Income
1 unchanged sentence
Interest rate fluctuations, as well as changes in the amount and type of interest-earning assets and interest-bearing liabilities, combine to affect net interest income.
−Removed: First Guaranty’s assets and liabilities are generally most affected by changes in the Federal Funds rate, LIBOR rate, short term Treasury rates such as one month and three month Treasury bills, and longer term Treasury rates such as the U.S.
+Added: First Guaranty’s assets and liabilities are generally most affected by changes in the Federal Funds rate, SOFR rate, short term Treasury rates such as one month and three month Treasury bills, and longer term Treasury rates such as the U.S.
ten year Treasury rate.
−Removed: These rates increased in 2022 due to the impact of inflation and the Federal Reserves actions to reduce inflation by increasing interest rates.
+Added: These rates increased in 2022 and 2023 due to the impact of inflation and the Federal Reserve's actions to reduce inflation by increasing interest rates.
Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities.
7 unchanged sentences
Net interest income for the years ended December 31, 2023 and 2022 was $84.7 million and $100.0 million, respectively.
−Removed: The increase in net interest income for the year ended December 31, 2022 as compared to the prior year was primarily due to an increase in the average balance of our total interest-earning assets and an increase in the average yield of our total interest-earning assets, partially offset by an increase in the average balance of our total interest-bearing liabilities and an increase in the average rate of our total interest-bearing liabilities.
−Removed: For the year ended December 31, 2022, the average balance of our total interest-earning assets increased by $274.5 million to $2.9 billion due to increased securities balances, and strong growth in our loan portfolio.
−Removed: The average yield of our interest-earning assets increased by 45 basis points to 4.74% from 4.29% for the year ended December 31, 2021 due to an improved mix of higher yielding assets.
−Removed: For the year ended December 31, 2022, the average balance of our total interest-bearing liabilities increased by $185.0 million to $2.2 billion due to the growth in low cost deposits and the average rate of our total interest-bearing liabilities increased by 55 basis points to 1.66% from 1.11% for the year ended 2021.
+Added: The decrease in net interest income for the year ended December 31, 2023 as compared to the prior year was primarily due to an increase in the average balance of our total interest-bearing liabilities and an increase in the average rate of our total interest-bearing liabilities, partially offset by an increase in the average balance of our total interest-earning assets and an increase in the average yield of our total interest-earning assets.
+Added: For the year ended December 31, 2023, the average balance of our total interest-bearing liabilities increased by $320.8 million to $2.5 billion due to growth in interest-bearing deposits and borrowings.
+Added: The average rate of our total interest-bearing liabilities increased by 224 basis points to 3.90% from 1.66% for the year ended 2022.
The rise in market interest rates, particularly associated with Treasury rates, contributed to the increase in our liabilities cost.
−Removed: Treasury rates increased as the Federal Reserve increased rates to address rising inflation during 2022.
+Added: The primary source of the increase in liabilities cost was associated with interest bearing demand deposits for public funds that are primarily indexed to Treasury rates.
+Added: For the year ended December 31, 2023, the average balance of our total interest-earning assets increased by $267.2 million to $3.1 billion due to an improved mix of higher yielding assets.
+Added: The average yield of our interest-earning assets increased by 107 basis points to 5.81% from 4.74% for the year ended December 31, 2022 due to an improved mix of higher yielding assets.
As a result, our net interest rate spread decreased 117 basis points to 1.91% for the year ended December 31, 2023 from 3.08% for the year ended December 31, 2022.
−Removed: Our net interest margin increased three basis points to 3.47% for the year ended December 31, 2022 from 3.44% for the year ended December 31, 2021.
+Added: Our net interest margin decreased 78 basis points to 2.69% for the year ended December 31, 2023 from 3.47% for the year ended December 31, 2022.
Interest Income
1 unchanged sentence
Interest income increased $46.4 million, or 34.0%, to $183.0 million for the year ended December 31, 2023 as compared to the prior year.
−Removed: First Guaranty's loan portfolio expanded during 2022 due to growth associated with our loan originations.
+Added: First Guaranty's loan portfolio expanded during 2023 due to growth associated with our loan originations and existing loans repriced to higher market rates.
These factors contributed to the increase in interest income as the average balance of our total interest-earning assets, primarily associated with loans, increased, and the average yield of interest-earning assets increased.
1 unchanged sentence
The average yield of interest-earning assets increased by 107 basis points to 5.81% for the year ended December 31, 2023 compared to 4.74% for the year ended December 31, 2022.
−Removed: Interest income on securities increased $1.0 million to $9.3 million for the year ended December 31, 2022 as compared to the prior year primarily as a result of an increase in average balances.
−Removed: The average balance of securities increased $119.6 million to $452.2 million for the year ended December 31, 2022 from $332.6 million for the year ended December 31, 2021 primarily due to an increase in the average balance of our U.S.
+Added: Interest income on securities increased $0.4 million to $9.6 million for the year ended December 31, 2023 as compared to the prior year primarily as a result of an increase in average yield of securities.
+Added: The average yield on securities increased by 26 basis points to 2.31% for the year ended December 31, 2023 from 2.05% for the year ended December 31, 2022 due to the decrease in lower yielding Treasury securities that matured in 2023.
+Added: The average balance of securities decreased $36.7 million to $415.5 million for the year ended December 31, 2023 from $452.2 million for the year ended December 31, 2022 primarily due to a decrease in the average balance of our U.S.
Treasuries securities portfolio compared to the prior year.
−Removed: The average yield on securities decreased by 43 basis points to 2.05% for the year ended December 31, 2022 from 2.48% for the year ended December 31, 2021 due to the increase in lower yielding Treasury securities.
Interest income on loans increased $41.1 million, or 32.6%, to $167.1 million for the year ended December 31, 2023 as a result of an increase in the average balance and average yield of loans.
7 unchanged sentences
Treasury rates, contributed to the increase in rates paid on interest-bearing demand deposits.
+Added: The largest concentration of interest-bearing demand deposits is associated with public funds deposits that are primarily indexed to Treasury rates.
Treasury rates increased as the Federal Reserve increased rates to address increased inflation in the U.S.
−Removed: The average rate of time deposits decreased two basis points during the year ended December 31, 2022 to 1.95% as compared to 1.97% for the prior year.
−Removed: The decrease in the average rate of time deposits was due to First Guaranty's efforts to reprice maturing time deposits to more attractive rates.
+Added: The average rate of time deposits increased 163 basis points during the year ended December 31, 2023 to 3.58% as compared to 1.95% for the prior year.
+Added: The increase in the average rate of time deposits was due to changes in market rates.
The average balance of interest-bearing liabilities increased by $320.8 million during the year ended December 31, 2023 to $2.5 billion.
−Removed: This increase was a result of a $279.5 million increase in the average balance of interest-bearing demand deposits, a $20.4 million increase in the average balance of savings deposits, which were partially offset by a $108.2 million decrease in the average balance of time deposits and a $6.6 million decrease in the average balance of borrowings.
+Added: This increase was a result of a $86.2 million increase in the average balance of interest-bearing demand deposits, a $0.7 million increase in the average balance of savings deposits, a $122.9 million increase in the average balance of time deposits, and a $111.1 million increase in the average balance of borrowings.
Average Balances and Yields.
46 unchanged sentences
(6) Includes loan fees of $6.0 million and $7.8 million for the years ended December 31, 2023 and 2022.
−Removed: PPP loan fee income of $1.3 million and $2.0 million was recognized for the years ended December 31, 2022 and 2021, respectively.
+Added: PPP loan fee income of $16,000 and $1.3 million was recognized for the years ended December 31, 2023 and 2022, respectively.
Volume/Rate Analysis .
21 unchanged sentences
Change in net interest income $ 6,978 $ (22,315) $ (15,337)
−Removed: Provision for Loan Losses
−Removed: A provision for loan losses is a charge to income in an amount that management believes is necessary to maintain an adequate allowance for loan and lease losses.
+Added: Provision for Credit and Loan Losses
+Added: A provision for credit and loan losses is a charge to income in an amount that management believes is necessary to maintain an adequate allowance for credit losses.
+Added: The allowance for credit losses is calculated under ASC 326 and is management's evaluation of expected credit losses over the life of the loans in the portfolio.
The provision is based on management's regular evaluation of current economic conditions in our specific markets as well as regionally and nationally, changes in the character and size of the loan portfolio, underlying collateral values securing loans, and other factors which deserve recognition in estimating loan losses.
+Added: Past events, current conditions, and reasonable forecasts, along with quantitative and qualitative adjustments, are used in calculating the allowance for credit losses.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.
−Removed: We recorded a $3.7 million provision for loan losses for the year ended December 31, 2022 compared to $2.1 million for 2021.
−Removed: The allowance for loan losses at December 31, 2022 was $23.5 million or 0.93% of total loans, compared to $24.0 million or 1.11% of total loans at December 31, 2021.
+Added: We recorded a $3.7 million provision for credit losses for the year ended December 31, 2023 compared to $3.7 million for 2022.
+Added: The $3.7 million provision included a $0.1 million negative provision for credit losses related to unfunded commitments and a $0.1 million provision for credit losses on HTM securities.
Total charge-offs were $5.8 million for year ended December 31, 2023 and $6.1 million for 2022.
−Removed: We believe that the allowance is adequate to cover potential losses in the loan portfolio given the current economic conditions.
+Added: Charge-offs for 2023 were concentrated in consumer relief loans associated with Hurricane Ida, a non-farm non-residential loan, and a commercial and industrial loan.
+Added: Hurricane Ida consumer relief loans charge-offs totaled $0.3 million during 2023.
+Added: Partially offsetting these charge-offs were recoveries that totaled $1.4 million for the year ended December 31, 2023 and $1.9 million for the same period in 2022.
+Added: We believe that the allowance is adequate to cover expected losses in the loan portfolio.
+Added: Economic uncertainty may result in additional increases to the allowance for credit losses in future periods.
Noninterest Income
−Removed: Our primary sources of recurring noninterest income are customer service fees, ATM and debit card fees, loan fees, gains on the sale of loans and available for sale securities and other service fees.
+Added: Our primary sources of recurring noninterest income are customer service fees, ATM and debit card fees, loan fees, gains on the sales of loans and available for sale securities and other service fees.
Noninterest income does not include loan origination fees which are recognized over the life of the related loan as an adjustment to yield using the interest method.
−Removed: Noninterest income totaled $11.0 million for the year ended December 31, 2022, an increase of $0.2 million from $10.8 million for the year ended December 31, 2021.
−Removed: The increase was primarily due to increased gains on the sale of loans.
−Removed: First Guaranty sold a loan with a government guarantee in the third quarter of 2022.
−Removed: The loan had a principal balance of $24.7 million with a guaranteed balance of $19.8 million.
−Removed: Net securities losses were $17,000 for the year ended December 31, 2022 as compared to net securities gains of $0.7 million for 2021.
−Removed: The losses on securities sales primarily occurred as First Guaranty sold investment securities in order to fund loan growth and manage interest rate risk.
+Added: Noninterest income totaled $10.6 million for the year ended December 31, 2023, a decrease of $0.4 million from $11.0 million for the year ended December 31, 2022.
+Added: The decrease was primarily due to reduced gains on the sale of loans.
+Added: Net securities losses were $0 for the year ended December 31, 2023 as compared to net securities losses of $17,000 for 2022.
Service charges, commissions and fees totaled $3.4 million for the year ended December 31, 2023 as compared to $3.2 million for 2022.
ATM and debit card fees totaled $3.2 million for the year ended December 31, 2023 and $3.4 million for 2022.
−Removed: Net gains on the sale of loans were $1.8 million for the year ended December 31, 2022 and $0.9 million for 2021.
+Added: Net gains on the sale of loans were $12,000 for the year ended December 31, 2023 and $1.8 million for 2022.
Other noninterest income totaled $3.9 million and $2.7 million for the years ended December 31, 2023 and 2022, respectively.
3 unchanged sentences
Salaries and benefits expense totaled $40.4 million for the year ended December 31, 2023 and $36.7 million for the year ended December 31, 2022.
−Removed: The increase was primarily due to the increase in personnel expense from new hires including those in the Mideast market.
−Removed: Occupancy and equipment expense increased to $8.9 million for the year ended December 31, 2022 from $8.7 million for the year ended December 31, 2021.
+Added: The increase was primarily due to the increase in personnel expense from new hires.
+Added: Occupancy and equipment expense totaled $9.0 million for the year ended December 31, 2023 and $8.9 million for the year ended December 31, 2022.
Other noninterest expense totaled $30.2 million for the year ended December 31, 2023 and $25.4 million for 2022.
+Added: The largest increase in other noninterest expense was a $1.5 million increase in legal fees, which incluced a $0.6 million settlement payment to the SEC and legal fees related to the propesed merger with Lone Star Bank.
+Added: Regulatory assessments increased $1.1 million to $3.1 million in 2023, compared to $2.0 million in 2022.
The following table presents, for the years indicated, the major categories of other noninterest expense:
16 unchanged sentences
Total other expense $ 30,223 $ 25,374
−Removed: The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income and the amount of other non-deductible expenses.
+Added: The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income and the amount of other non-deductible expenses and the statutory tax rate.
The provision for income taxes for the years ended December 31, 2023 and 2022 was $2.7 million and $7.5 million, respectively.
−Removed: The provision for income taxes in 2022 increased as compared to 2021 due to the increase in income before income taxes.
+Added: The provision for income taxes in 2023 decreased as compared to 2022 due to the decrease in income before income taxes.
First Guaranty's statutory tax rate was 21.0% for the years ended December 31, 2023 and 2022.
6 unchanged sentences
However, other operating expenses do reflect general levels of inflation.
−Removed: The Federal Reserve increased interest rates during 2022 to address rising inflation in the U.S.
+Added: The Federal Reserve increased interest rates during 2022 and 2023 to address rising inflation in the U.S.
The impact of rising interest rates associated with inflation impacted First Guaranty's net interest income and net interest margin along with the value of its financial assets.
85 unchanged sentences
Acquisition intangibles 3,658 4,355 5,051 5,815 6,527
+Added: Other intangibles 100 — — — —
Tangible common equity $ 199,915 $ 184,678 $ 172,880 $ 159,876 $ 146,566
6 unchanged sentences
Acquisition intangibles 3,658 4,355 5,051 5,815 6,527
+Added: Other intangibles 100 — — — —
Tangible Assets $ 3,536,114 $ 3,134,092 $ 2,860,169 $ 2,454,363 $ 2,097,747
31 unchanged sentences
We maintained a net borrowing capacity at the FHLB totaling $259.6 million and $369.5 million at December 31, 2023 and December 31, 2022, respectively with $205.0 million and $120.0 million in FHLB advances outstanding at December 31, 2023 and December 31, 2022, respectively.
−Removed: The advances outstanding at December 31, 2022 were comprised of three short-term advances that were paid off in January 2023.
−Removed: The advance outstanding at December 31, 2021 was comprised of a long-term advance that totaled $3.2 million.
−Removed: First Guaranty paid off the $3.2 million long-term advance acquired from the Union acquisition in the first quarter of 2022.
+Added: The advances outstanding at December 31, 2023 were comprised of three long term advances totaling $155.0 million and two short-term advances that totaled $50.0 million.
The change in borrowing capacity with the Federal Home Loan Bank was due to changes in the value that First Guaranty receives on pledged collateral and due to First Guaranty's usage of the line.
1 unchanged sentence
At December 31, 2023, we had outstanding letters of credit from the FHLB in the amount of $513.3 million that were primarily used to collateralize public funds deposits.
−Removed: We also maintain federal funds lines of credit at various correspondent banks with borrowing capacity of $100.5 million and two revolving lines of credit totaling $26.5 million secured by a pledge of the Bank's common stock, with $20.0 million outstanding balance at December 31, 2022.
+Added: We also maintain federal funds lines of credit at various correspondent banks with borrowing capacity of $100.5 million and one revolving line of credit totaling $20.0 million secured by a pledge of the Bank's common stock, with a $10.0 million outstanding balance at December 31, 2023.
We also have a discount window line with the Federal Reserve Bank that totaled $219.1 million at December 31, 2023.
4 unchanged sentences
Total shareholders' equity increased to $249.6 million at December 31, 2023 from $235.0 million at December 31, 2022.
−Removed: The increase in shareholders' equity was principally the result of an increase of $19.7 million in retained earnings, partially offset by a decrease of $8.6 million in accumulated other comprehensive income.
−Removed: The $19.7 million increase in retained earnings was due to net income of $28.9 million during the year ended December 31, 2022, partially offset by $6.9 million in cash dividends paid on our common stock and $2.3 million in cash dividends paid on shares of our preferred stock.
−Removed: The decrease in accumulated other comprehensive income was primarily attributed to the increase in unrealized losses on available for sale securities during the year ended December 31, 2022.
+Added: The increase in shareholders' equity was principally the result of an increase of $19.0 million in surplus and a $2.3 million decrease in accumulated other comprehensive loss, partially offset by a decrease of $8.4 million in retained earnings.
+Added: The $19.0 million increase in surplus was due to common stock issued in private placements and common stock issued under the Equity Bonus Plan during 2023.
+Added: The decrease in accumulated other comprehensive loss was primarily attributed to the decrease in unrealized losses on available for sale securities during the year ended December 31, 2023.
+Added: The $8.4 million decrease in retained earnings was primarily due to the adoption of CECL which had a $7.9 million after tax reduction to retained earnings, $7.4 million in cash dividends paid on shares of our common stock and $2.3 million in cash dividends paid on shares of our preferred stock, partially offset by net income of $9.2 million during the year ended December 31, 2023.
Capital Management
41 unchanged sentences
There were no losses incurred on any commitments during the years ended December 31, 2023 and 2022.
+Added: The reserve for credit losses on unfunded commitments was $2.8 million at December 31, 2023.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.