What changed in this filing

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Item 1. Business

2025-03-17 compared with 2024-03-15 · 122 added, 160 removed, 874 unchanged (24% of the section changed)

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First Guaranty Bancshares, Inc.

("First Guaranty") is a Louisiana corporation, and bank holding company headquartered in Hammond, Louisiana.

("First Guaranty") is a Louisiana corporation, and financial holding company headquartered in Hammond, Louisiana.

Our wholly owned subsidiary, First Guaranty Bank (the "Bank"), a Louisiana state-chartered commercial bank, provides personalized commercial banking services mainly to Louisiana and Texas customers through 35 banking facilities primarily located in the metropolitan/micropolitan statistical areas ("MSAs"), of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, Lake Charles, Alexandria, Dallas-Fort Worth-Arlington, Waco, Texas.

First Guaranty expanded into Kentucky and West Virginia, our Mideast markets, in 2021 with loan and deposit production offices in Vanceburg, Kentucky.

The Vanceburg location is now a branch of the bank.

First Guaranty expanded into Kentucky and West Virginia, our Mideast markets, in 2021 with loan and deposit production offices.

First Guaranty now has branches in Vanceburg, Kentucky and Bridgeport, West Virginia.

Our principal business consists of attracting deposits from the general public and local municipalities in our market areas and then investing those deposits.

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We have a loan production office in Lake Charles, Louisiana.

In 2021, First Guaranty expanded into Kentucky and West Virginia.

We have a branch located in Vanceburg, Kentucky and a loan and deposit production office in Bridgeport, West Virginia that are not in MSAs.

In 2021, First Guaranty expanded into Kentucky and West Virginia, and we now have branches located in Vanceburg, Kentucky and Bridgeport, West Virginia that are not in MSAs.

We refer to this region as our Mideast market.

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First Guaranty established a loan production office in Lake Charles, LA in 2018.

Lake Charles is the fifth largest city in Louisiana.

The Lake Charles MSA had a population of approximately 241,000.

Lake Charles is the sixth largest city in Louisiana.

The Lake Charles MSA has a population of approximately 240,000.

Its major industries include petrochemical, gambling, aircraft repair, and education.

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The Union acquisition expanded First Guaranty into the Alexandria MSA with branches in Rapides and Avoyelles parishes.

Alexandria is the ninth largest city in Louisiana with a population of approximately 48,000 and is located along Interstate I-49.

Alexandria is the tenth largest city in Louisiana with a population of approximately 48,000 and is located along Interstate I-49.

The Alexandria MSA has an overall population of approximately 148,000.

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First Guaranty's branch in Vanceburg, Kentucky is located approximately 90 miles from Cincinnati, Ohio and 95 miles from Lexington, Kentucky.

First Guaranty's office in Bridgeport, West Virginia is located approximately 35 miles from Morgantown, West Virginia and 105 miles from Pittsburgh, Pennsylvania.

Our mission is to increase shareholder value while providing services for and contributing to the growth and welfare of the communities that we serve.

As home to "Fanatical Banking" our mission is to become the bank of choice for small business and consumer customers who are located in both metropolitan and rural markets.

We desire to grow our market share along Louisiana's key interstate corridors of major interstates I-12, I-55, I-10, I-49 and I-20.

We plan to continue expanding our Texas markets in Dallas Fort-Worth-Arlington and Waco both organically and through strategic acquisitions.

We opened loan and deposit production offices in Vanceburg, Kentucky and Bridgeport, West Virginia in late 2021.

The Vanceburg, Kentucky location opened as a branch in January 2023.

This mission involves not only expanding our geographical footprint but also evolving as an institution and staying relevant while offering new ways of banking.

To achieve all of this, we seek to implement the following strategies:

Continue to Increase Total Loans as a Percentage of Assets.

We plan to continue to change our asset composition by growing our loan portfolio to increase our total loans as a percentage of our assets.

Our loan to deposit ratio was 91.3% as of December 31, 2023.

The growth in our loan portfolio has broadened our customer base and reduced our exposure to fixed rate investment securities.

We have invested in the internal development of our lending department along with the select addition of experienced lenders.

We continue to upgrade our technology to efficiently handle both our loan and deposit customers.

We intend to continue to grow our loan portfolio organically by targeting small and medium-sized businesses engaged in manufacturing, agriculture, petrochemicals, real estate, healthcare and other professional services.

The recent expansion into the Mideast markets located in Kentucky and West Virginia should help us accelerate our loan portfolio growth.

Our commercial lending team is organized around our regional market areas of Louisiana, Texas, and the new Mideast markets in Kentucky and West Virginia.

A senior experienced lender leads each market team and ensures that our lenders deliver timely service to customers, meet and exceed expectations of loan approval time, and broaden customer relationships through referrals.

We are expanding upon our successful small business lending program with a new emphasis on growing our SBA, USDA and commercial leasing lending programs.

We have invested in training key personnel to focus on this market as we believe that SBA, USDA and commercial leasing loans can serve as new market opportunities for our Bank.

First Guaranty's branch in Bridgeport, West Virginia is located approximately 35 miles from Morgantown, West Virginia and 105 miles from Pittsburgh, Pennsylvania.

Our mission is to increase shareholder value while providing financial services for and contributing to the growth and welfare of the communities that we serve.

We aim to become the preferred bank for small businesses and consumers in both metropolitan and rural markets.

Our goal is to expand our market share along Louisiana's key interstate corridors, including I-12, I-55, I-10, I-49, and I-20, and to continue our growth in the Texas markets of Dallas-Fort Worth-Arlington and Waco.

Additionally, we seek to strengthen our relationships in Kentucky and West Virginia.

This mission encompasses not only expanding our geographical footprint but also transforming lives by imparting personal finance skills and staying relevant through innovative banking solutions.

First Guaranty modified its business strategy in mid-2024.

Our new business strategy focuses on controlled asset growth, measured expense reductions, expanded balance sheet risk management, and enhanced credit risk management.

Controlled Asset Growth

First Guaranty successfully grew its loan portfolio and total assets during the last several years.

We plan to moderate future growth as we manage our current loan portfolio and capital levels.

We plan to reduce our exposure to commercial real estate loans particularly construction loans and non-owner occupied loans.

We will continue to pursue residential mortgage lending, consumer lending, owner occupied commercial real estate, commercial and industrial loans, and guaranteed lending.

We will continue to be a leading agricultural lender and grow our Farm Service Agency lending.

Over the last 16 years, we have pursued a focused program to participate in syndicated loans (loans made by a group of lenders, including us, who share or participate in a specific loan, which is typically secured by business assets or equipment, and also commercial real estate) with a larger regional financial institution as the lead lender.

Our focus has been to finance middle market companies whose borrowing needs typically range from $25 million to $75 million.

Syndicated loans diversify our loan portfolio, increase our yield and mitigate interest rate risk due to the variable rate pricing structure of the loans.

We expect to continue our syndicated lending program, but our local loan originations remain our funding priority.

We intend to grow our consumer loan portfolio principally through our residential mortgage program.

We intend to leverage our existing branch network to expand our retail lending.

We have expanded our technology to make it easier for both individual and business customers to bank with us through mobile and internet banking.

Expand Individual and Business Deposits and Maintain our Public Funds Program.

Our deposit strategy is focused on continuing to expand our individual and business deposit bases while maintaining our public funds deposit program.

We will continue with our commercial leasing business.

Measured Expense Reduction

We initiated a series of cost reduction measures during the third quarter of 2024.

These included planned reduction in staffing that has resulted in approximately 20 percent, or almost 100 fewer full time equivalent employees at the end of 2024 compared to the end of 2023.

We reduced discretionary expenses such as travel, training and advertising, and director fees, and modified our health care plan.

We are working to replace external third party service providers with lower cost providers or with internally generated solutions.

We are evaluating our internal functions to create more efficiency and reduce redundant processes in order to achieve more productively with less expense.

Expanded Balance Sheet Risk Management

We increased on balance sheet liquidity during 2024 which lowered our loan to deposit ratio and improved First Guaranty's sensitivity to changes in market interest rates.

First Guaranty's balance sheet position has historically been liability sensitive which resulted in a reduction in net interest income and net interest margin during the significant rise in market interest rates in 2022 and 2023.

Our strategy during the last year has been to take measures to reduce First Guaranty's liability sensitivity position and move the balance sheet towards a more market neutral position over time.

Our deposit strategy continues to focus on expanding our individual and business deposit bases while maintaining our public funds deposit program.

During 2023 and 2024 we also expanded our use of select wholesale or brokered deposits in order to increase liquidity and manage sensitivity to market risk.

Our deposit strategy leverages off the market share dominance that we have in several of our markets, such as the Hammond MSA where we had a 46.5% deposit market share at June 30, 2024, placing us first overall.

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We will continue to concentrate on keeping many of these funds under contract as we are often the fiscal agent for these governmental agencies which helps maintain this funding.

Maintain Strong Asset Quality.

We emphasize a disciplined credit culture based on intimate market knowledge, close ties to our customers, sound underwriting standards and experienced loan officers.

First Guaranty has taken pro-active measures to address the challenging operating environment that began following the onset of the COVID-19 pandemic.

First Guaranty provided various loan relief measures as provided by the CARES Act such as loan payment deferrals and SBA Paycheck Protection loans (PPP) that were designed to assist business customers.

First Guaranty continues to monitor its loan portfolio given the ongoing economic uncertainty.

Pursue Strategic Acquisitions.

Our strategy is to supplement our organic growth by executing a targeted and disciplined acquisition strategy of community banks and non-banking financial companies as opportunities arise.

We have successfully integrated prior acquisitions as demonstrated by our acquisitions of Union Bancshares, Inc.

in 2019, Premier Bancshares, Inc.

in 2017, Greensburg Bancshares, Inc.

in 2011 and Homestead Bancorp, Inc.

Our board of directors' broad experiences across many industries assists us in expanding our business.

Our Chairman, Marshall T.

Reynolds, has more than 40 years of experience in managing the growth of commercial banks both organically and through acquisitions throughout the United States.

We believe our ability to execute an acquisition strategy has been enhanced by our internal investments in the areas of operations, compliance, finance, credit and information technology that provide us with a scalable platform for growth.

Our focus will be on targets with quality loan portfolios and a long-term deposit customer base, particularly those with high levels of consumer and retail checking accounts, low cost deposits and favorable market share.

We intend to pursue opportunities that will be accretive to earnings, result in a tangible book value earn back of approximately three years, strengthen our franchise, and ultimately enhance shareholder value.

Seek Innovative Partnerships.

We are committed to staying on top of the industry trends and continue to educate ourselves in the ways our customers want to do business.

Creating partnerships with innovative companies will allow us to stay relevant and meet the needs of our current and new customers.

We use the nCino platform to improve the management of our loan process.

The expansion of our Q2 online banking platform has given us numerous opportunities to increase our offering of digital banking services to both consumer and commercial clients through strategic partners already aligned with this service.

Enhanced Credit Risk Management

First Guaranty's non-performing assets increased during 2024.

We have taken proactive measures to address these non-performing assets and to reduce the level of non-performing assets.

We have increased our allowance for credit losses.

We expanded our internal annual loan review function and engaged additional external loan review during 2024.

We increased internal credit standards and slowed the origination of new loans.

We increased the risk weighted capital ratios during 2024 through growth in retained earnings and the allowance for credit losses, reduction in commitments for construction loans and by reducing total loan balances.

We plan to continue increasing capital and increasing the risk weighted capital ratio.

Lending Activities

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All non-farm non-residential loans are appraised by outside independent appraisers approved by the board of directors.

Our non-farm non-residential loans are diversified by borrower and industry group, and generally secured by improved property such as hotels, office buildings, healthcare facilities, retail stores, gaming facilities, warehouses, manufacturing facilities, church buildings and other non-residential buildings.

Our non-farm non-residential loans are diversified by borrower and industry group, and generally secured by improved property such as hotels, office buildings, healthcare facilities including assisted living centers, retail stores, gaming facilities, warehouses, manufacturing facilities, church buildings and other non-residential buildings.

Non-farm non-residential loans are generally made at rates that adjust at or above the prime rate as reported in the Wall Street Journal , that mature in three to five years and with principal amortization for a period of up to 20 years.

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We also participate in government programs which guarantee portions of commercial and industrial loans such as the SBA and USDA.

During 2020 and 2021, First Guaranty participated in the Paycheck Protection Program or PPP loan program.

In most cases, we require collateral of equipment, accounts receivable, inventory, chattel or other assets before making a commercial business loan.

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The syndicate group for both types of loans usually consists of two to three other financial institutions.

These loans are adjustable-rate loans generally tied to LIBOR.

These loans are adjustable-rate loans generally tied to Secured Overnight Financing Rate ("SOFR").

Our participation amounts typically range between $5.0 million and $15.0 million.

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We will originate multifamily loans in amounts up to 80% of the value of the multifamily property.

Nearly all of our multifamily loans are secured by properties in Louisiana and Texas.

Nearly all of our multifamily loans are secured by properties in Louisiana, Texas, Kentucky or West Virginia.

The underwriting of multifamily loans follows the general guidelines for our non-farm non-residential loans.

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Additionally, if the estimate of value proves to be inaccurate, we may be confronted, at or prior to the maturity of the loan, with a project having a value which is insufficient to assure full repayment.

As part of First Guaranty's change in business strategy in mid-2024, the bank is not actively pursuing to increase this business line.

We intend to reduce exposure to construction and land development lending during 2025.

Agricultural Loans.

We are the leading lender for agricultural loans in our Southwest Louisiana market.

We are a leading lender for agricultural loans in our Southwest Louisiana market.

Our agricultural lending includes loans to farmers for the purpose of cultivating rice, sugarcane, soybeans, timber, poultry and cattle.

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Commercial Leases.

We have a commercial lease program that we have operated for seven years.

We have a commercial lease program that we have operated for ten years.

We work with third parties to facilitate the sourcing of lease financing opportunities.

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This culture results in employees with passion, drive, and a deep commitment to our customers and communities.

The Bank was named the number one “Best Small Bank” in the United States for the third consecutive year by Newsweek in its “America’s Best Banks” survey.

We thank our employees for this distinction.

We strive to be socially responsible corporate citizens by supporting our communities and helping them to improve.

Our employees are actively involved, volunteering with local charitable organizations, and helping during times of need, such as in the aftermath of hurricanes and other natural disasters.

In 2023 our employees volunteered approximately 4,500 hours of service across Louisiana, in Texas, and in our newest market, the Mideast market in West Virginia and Kentucky.

In 2024 our employees volunteered approximately 4,039 hours of service across Louisiana, in Texas, and the Mideast markets in West Virginia and Kentucky.

Employees serve both in their personal time and during work hours.

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First Guaranty also provides tuition reimbursement for employees and support for continuing education and advanced certifications.

We are an Equal Opportunity Employer committed to workplace diversity, inclusion, equity, and opportunity for everyone.

We are an Equal Opportunity Employer.

At December 31, 2024, we had 396 full-time and 13 part-time employees.

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Supervision and Regulation

First Guaranty Bank is a Louisiana-chartered commercial bank and is the wholly-owned subsidiary of First Guaranty Bancshares, a Louisiana-chartered bank holding company.

First Guaranty Bank is a Louisiana-chartered commercial bank and is the wholly-owned subsidiary of First Guaranty Bancshares, a Louisiana-chartered financial holding company.

First Guaranty Bank's deposits are insured up to applicable limits by the FDIC.

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The Dodd-Frank Act significantly changed bank regulation and has affected the lending, investment, trading and operating activities of depository institutions and their holding companies.

The Dodd-Frank Act also created the Consumer Financial Protection Bureau (CFPB) with extensive powers to supervise and enforce consumer protection laws.

The Dodd-Frank Act also created the Consumer Financial Protection Bureau (the "CFPB") with extensive powers to supervise and enforce consumer protection laws.

The CFPB has broad rule-making authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit "unfair, deceptive or abusive" acts and practices.

In February 2025, the Trump administration halted the CFPB’s operations, and its employees were instructed to cease all supervision and examination activity.

As a result, the future of the CFPB and its impact on First Guaranty Bancshares and First Guaranty Bank remains uncertain.

The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018

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(i) exempting banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio;

(ii) not requiring appraisals for certain transactions valued at less than $400,000 in rural areas;

(ii) exempting appraisal requirements for certain transactions valued at less than $400,000 in rural areas;

(iii) exempting banks that originate fewer than 500 open-end and 500 closed-end mortgages from HMDA’s expanded data disclosures;

(iv) clarifying that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered-deposit regulations;

(v) raising eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets;

(v) raising eligibility for the 18-month exam cycle from banks with $1 billion in assets to banks with $3 billion in assets;

and (vi) simplifying capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio at a percentage not less than 8% and not greater than 10% that such institutions may elect to replace the general applicable risk-based capital requirements for determining well-capitalized status.

In addition, the law required the Federal Reserve Board to raise the asset threshold under its Small Bank Holding Company Policy Statement from $1 billion to $3 billion for bank or savings and loan holding companies that are exempt from consolidated capital requirements, provided that such companies meet certain other conditions such as not engaging in significant nonbanking activities.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”)

The CARES Act, which became law on March 27, 2020, provided over $2 trillion to combat the coronavirus disease (COVID-19) and stimulate the economy.

The law had several provisions relevant to financial institutions, including:

• Allowing institutions not to characterize loan modifications relating to the COVID-19 pandemic as a troubled debt restructuring and also allowing them to suspend the corresponding impairment determination for accounting purposes;

• Temporarily reducing the community bank leverage ratio alternative available to institutions of less than $10 billion of assets to 8%.

The ratio increased to 8.5% for 2021 and reverted to 9% thereafter;

• The establishment of the Paycheck Protection Program (the “PPP”), a specialized low-interest forgivable loan program funded by the U.S.

Treasury Department and administered through the SBA’s 7(a) loan guaranty program to support businesses affected by the COVID-19 pandemic;

• The ability of a borrower of a federally-backed mortgage loan (VA, FHA, USDA, Freddie Mac and Fannie Mae) experiencing financial hardship due, directly or indirectly, to the COVID-19 pandemic, to request forbearance from paying their mortgage by submitting a request to the borrower’s servicer affirming their financial hardship during the COVID-19 emergency.

Such a forbearance could be granted for up to 180 days, subject to extension for an additional 180-day period upon the request of the borrower.

During that time, no fees, penalties or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the mortgage contract could accrue on the borrower’s account.

Except for vacant or abandoned property, the servicer of a federally-backed mortgage was prohibited from taking any foreclosure action, including any eviction or sale action, for not less than the 60-day period beginning March 18, 2020, which period was subsequently extended several times by federal mortgage-backing agencies prior to its expiration in 2021.

In addition, the EGRRCPA required the Federal Reserve Board to raise the asset threshold under its Small Bank Holding Company Policy Statement from $1 billion to $3 billion for bank or savings and loan holding companies that are exempt from consolidated capital requirements, provided that such companies meet certain other conditions such as not engaging in significant nonbanking activities.

Louisiana Bank Regulation

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Under Louisiana law, First Guaranty Bank may establish additional branch offices within Louisiana, subject to the approval of OFI.

After the Dodd-Frank Act, we can also establish additional branch offices outside of Louisiana, subject to prior regulatory approval, as long as the laws of the state where the branch is to be located would permit such expansion.

After enactment of the Dodd-Frank Act, we can also establish additional branch offices outside of Louisiana, subject to prior regulatory approval, as long as the laws of the state where the branch is to be located would permit such expansion.

In addition, First Guaranty Bank is the primary source of First Guaranty's dividend payments, and its ability to pay dividends will be subject to any restrictions applicable to the Bank.

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Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.

Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions such as First Guaranty Bank, that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income ("AOCI"), up to 45% of net unrealized gains on available for sale equity securities with readily determinable fair market values.

Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions such as First Guaranty Bank, that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income ("AOCI"), up to 45% of net unrealized gains on available for sale equity securities with readily determinable fair market values.

Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

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Such institutions that meet the community bank leverage ratio and certain other qualifying criteria will automatically be deemed to be well-capitalized.

The CARES Act required that the community bank leverage ratio be temporarily lowered to 8% effective for the second quarter of 2020, and the requirement transitioned back to 9% in the first quarter of 2022.

Eligible institutions may opt into and out of the community bank ratio framework on their quarterly call report.

First Guaranty Bank did not elect to follow the community bank leverage ratio as of December 31, 2024.

At December 31, 2023, First Guaranty Bank exceeded all regulatory capital requirements and was considered to be well-capitalized based on FDIC guidelines.

At December 31, 2024, First Guaranty and the Bank exceeded all regulatory capital requirements and was considered to be well-capitalized based on FDIC and Federal Reserve Board guidelines.

Standards for Safety and Soundness.

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If a concentration is present, management must employ heightened risk management practices including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing and increasing capital requirements.

First Guaranty Bank is subject to these regulations.

First Guaranty Bank is subject to this guidance.

Business and Investment Activities.

Under federal law, all state-chartered FDIC-insured banks have been limited in their activities as principal and in their equity investments to the type and the amount authorized for national banks, notwithstanding state law.

Under federal law, all state-chartered FDIC-insured banks have been limited in their activities as principal and in their equity investments to the type and the amount of investments authorized for national banks, notwithstanding state law.

Federal law permits exceptions to these limitations.

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"Critically undercapitalized" institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after it obtains such status.

As of December 31, 2023, First Guaranty Bank was considered well-capitalized.

As of December 31, 2024, First Guaranty and the Bank were considered well-capitalized.

Transactions with Related Parties.

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That enforcement authority includes, among other things, the ability to assess civil money penalties, issue cease and desist orders and remove directors and officers.

In general, enforcement actions may be initiated in response to violations of laws and regulations and unsafe or unsound practices.

In general, enforcement actions may be initiated in response to violations of laws and regulations and unsafe or unsound banking practices.

The FDIC also has authority under federal law to appoint a conservator or receiver for an insured bank under certain circumstances.

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Management cannot predict what assessment rates will be in the future.

As a result of the bank failures during early 2023 and in an effort to strengthen public confidence in the banking system and protect depositors, regulators imposed a special assessment on banking organizations based on a banking organization’s estimated uninsured deposits as of December 31, 2022, excluding the first $5 billion in estimated uninsured deposits.

Based on our calculation, we do not expect the Bank to be impacted by this special assessment.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

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First Guaranty Bank's latest FDIC CRA rating, dated October 11, 2022, was "satisfactory."

The federal banking agencies approved additional rules in 2023, which begin to take effect on April 1, 2024, aimed at strengthening and modernizing the CRA.

Federal Reserve System.

The Federal Reserve Board regulations require banks to maintain non interest-earning reserves against their transaction accounts (primarily negotiable order of withdrawal (NOW) and regular checking accounts).

In March 2020, due to a change in its approach to monetary policy due to COVID-19, the Federal Reserve Board issued an interim rule to amend Regulation D requirements and reduce reserve requirement ratios to zero.

The Federal Reserve Board has indicated that it has no plans to re-impose reserve requirements, but may do so in the future if conditions warrant.

The federal banking agencies approved additional rules in 2023, which began to take effect on April 1, 2024, aimed at strengthening and modernizing the CRA.

First Guaranty Bank is a member of the FHLB System, which consists of eleven regional FHLBs.

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Holding Company Regulation

As a bank holding company, First Guaranty is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended, as administered by the Federal Reserve Board.

As a financial holding company, First Guaranty is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended, as administered by the Federal Reserve Board.

We are required to obtain the prior approval of the Federal Reserve Board to acquire all, or substantially all, of the assets of any bank or bank holding company.

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Bank holding companies with greater than $3 billion in total consolidated assets are subject to consolidated regulatory capital requirements.

Although we had over $3.0 billion in assets at December 31, 2023, under Federal Reserve guidance, First Guaranty will maintain its status as a “small bank holding company” until March 31, 2024 or earlier in certain circumstances.

Once we are no longer a small bank holding company, both the Bank and First Guaranty will be required to maintain specified ratios of capital to risk-weighted assets.

First Guaranty became subject to these requirements on March 31, 2024.

A bank holding company is generally required to give the Federal Reserve Board prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company's consolidated net worth.

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These regulatory policies could affect our ability to pay dividends, repurchase shares of our common stock or otherwise engage in capital distributions.

We are affected by the monetary and fiscal policies of various agencies of the United States Government, including the Federal Reserve System.

We are affected by the monetary and fiscal policies of various agencies of the United States Government, including the Federal Reserve Board.

In view of changing conditions in the national economy and in the money markets, it is impossible for management to accurately predict future changes in monetary policy or the effect of such changes on our business or financial condition.

Federal Securities Laws

First Guaranty's common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

First Guaranty is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

First Guaranty's common stock is registered with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended.

First Guaranty is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934, as amended.

Sarbanes-Oxley Act

The Sarbanes-Oxley Act addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information.

The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information.

As directed by the Sarbanes-Oxley Act, our Chief Executive Officer and Chief Financial Officer are required to certify that our quarterly and annual reports do not contain any untrue statement of a material fact.

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Risks Related to Our Lending

We have recently experienced an increase in nonperforming assets.

At December 31, 2024, our non-performing assets, which consist of non-performing loans and other real estate owned, were $120.4 million, or 3.03% of total assets, an increase of 188.4% from December 31, 2023.

Our non-performing assets adversely affect our net income in various ways:

• we record interest income only on the cash basis or cost-recovery method for nonaccrual loans and we do not record interest income for other real estate owned;

• we must provide for probable loan losses through a current period charge to the provision for credit losses;

• noninterest expense increases when we write down the value of properties in our other real estate owned portfolio to reflect changing market values;

• there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance, and maintenance fees;

• the resolution of non-performing assets requires the active involvement of management, which can distract them from more profitable activity.

Our efforts to resolve our existing and future non-performing assets may not be successful, and we may not be able to realize the current carrying value of such assets.

If additional borrowers become delinquent and do not pay their loans and we are unable to successfully manage our non-performing assets, our losses and troubled assets could increase significantly, which could have a material adverse effect on our financial condition and results of operations.

Adverse events in Louisiana and Texas, where our business is concentrated, along with our new Mideast markets in Kentucky and West Virginia could adversely affect our results of operations and future growth.

Our business, the location of our branches and the real estate used as collateral on our real estate loans are primarily concentrated in Louisiana and North Central Texas.

We anticipate continued future loan growth in our new Mideast markets located in Kentucky and West Virginia.

At December 31, 2023, approximately 78.8% of the secured loans in our loan portfolio were secured by real estate and other collateral located in our market area.

Additionally, we anticipate continued future loan growth in our Mideast markets located in Kentucky and West Virginia.

At December 31, 2024, approximately 86.3% of the secured loans in our loan portfolio were secured by real estate and other collateral located in our market areas.

As a result, we are exposed to risks associated with a lack of geographic diversification.

The occurrence of an economic downturn in Louisiana and North Central Texas, or adverse changes in laws or regulations in Louisiana and Texas could impact the credit quality of our assets, the businesses of our customers and our ability to expand our business.

The occurrence of an economic downturn in our markets, or adverse changes in laws or regulations in these markets could impact the credit quality of our assets, the businesses of our customers and our ability to expand our business.

Our success significantly depends upon the growth in population, income levels, deposits and housing in our market area.

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Consequently, any decline in the economy of our market area could have an adverse impact on our revenues and financial condition.

In particular, we may experience increased loan delinquencies, which could result in a higher provision for loan losses and increased charge-offs.

In particular, we may experience increased loan delinquencies, which could result in a higher provision for credit losses and increased charge-offs.

Any sustained period of increased non-payment, delinquencies, foreclosures or losses caused by adverse market or economic conditions in our market area could adversely affect the value of our assets, revenues, results of operations and financial condition.

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Syndicated loans may have a higher risk of loss than other loans we originate because we are not the lead lender and we have limited control over credit monitoring.

Over the last 16 years, we have pursued a focused program to participate in select syndicated loans (loans made by a group of lenders, including us, who share or participate in a specific loan) with a larger regional financial institution as the lead lender.

Our loan portfolio includes syndicated loans (loans made by a group of lenders, including us, who share or participate in a specific loan) with a larger regional financial institution as the lead lender.

Syndicated loans are typically made to large businesses (which are referred to as "shared national credits") or middle market companies (which do not meet the regulatory definition of shared national credits), both of which are secured by business assets or equipment, and commercial real estate located generally outside of our market area.

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First Guaranty's commitment typically ranges between $5.0 million to $15.0 million.

At December 31, 2023, we had $76.7 million in syndicated loans, or 2.8% of our total loan portfolio.

At December 31, 2023, we had $52.8 million in syndicated loans that were not shared national credits.

On December 21, 2017, the Federal Reserve, FDIC, and Office of Comptroller of the Currency issued a change to the definition of a Shared National Credit.

Effective January 1, 2018, the aggregate loan commitment threshold for inclusion in the Shared National Credit (SNC) program increased from $20 million to $100 million.

First Guaranty's syndicated loans that meet the revised definition at December 31, 2023 were $23.9 million.

At December 31, 2024, we had $53.9 million in syndicated loans, or 2.0% of our total loan portfolio, of which $27.6 million met the definition of shared nation credits and $26.3 million were not shared national credits.

Syndicated loans may have a higher risk of loss than other loans we originate because we rely on the lead lender to monitor the performance of the loan.

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If our underwriting of these syndicated loans is not sufficient, our non-performing loans may increase, and our earnings may decrease.

If our nonperforming assets increase, our earnings will be adversely affected.

At December 31, 2023, our non-performing assets, which consist of non-performing loans and other real estate owned, were $41.7 million, or 1.17% of total assets.

Our non-performing assets adversely affect our net income in various ways:

• we record interest income only on the cash basis or cost-recovery method for nonaccrual loans and we do not record interest income for other real estate owned;

• we must provide for probable loan losses through a current period charge to the provision for loan losses;

• noninterest expense increases when we write down the value of properties in our other real estate owned portfolio to reflect changing market values;

• there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance, and maintenance fees;

• the resolution of non-performing assets requires the active involvement of management, which can distract them from more profitable activity.

If the allowance for credit losses is not sufficient to cover actual loan losses, earnings could decrease.

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Various assumptions and judgments about the collectability of the loan portfolio are made, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of many loans.

In determining the amount of the allowance for loan and lease losses, management reviews the loans and the loss and delinquency experience and evaluates economic conditions.

In determining the amount of the allowance for credit losses, management reviews the loans and the loss and delinquency experience and evaluates economic conditions.

At December 31, 2024, our allowance for credit losses as a percentage of total loans, net of unearned income, was 1.29% and as a percentage of total non-performing loans was 29.00%.

The determination of the appropriate level of allowance is subject to judgment and requires us to make significant estimates of current credit risks and future trends, all of which are subject to material changes.

If assumptions prove to be incorrect, the allowance for loan and lease losses may not cover inherent losses in the loan portfolio at the date of the financial statements.

If assumptions prove to be incorrect, the allowance for credit losses may not cover inherent losses in the loan portfolio at the date of the financial statements.

Significant additions to the allowance would materially decrease net income.

Non-performing loans may increase and non-performing or delinquent loans may adversely affect future performance.

Non-performing loans may further increase and non-performing or delinquent loans may adversely affect future performance.

Any future credit deterioration, could require us to increase our allowance for credit losses in the future.

In addition, federal and state regulators periodically review the allowance for loan and lease losses and may require an increase in the allowance for loan and lease losses or recognize further loan charge-offs.

In addition, federal and state regulators periodically review the allowance for credit losses and may require an increase in the allowance for credit losses or recognize further loan charge-offs.

Any significant increase in our allowance for credit losses or loan charge-offs as required by these regulatory agencies could have a material adverse effect on our results of operations and financial condition.

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At December 31, 2024, $1.2 billion, or 46.2% of our total loans consisted of short-term loans, defined as loans whose payments are typically based on ten to 20-year amortization schedules but have maturities typically ranging from one to five years.

This results in our borrowers having significantly higher final payments due at maturity, known as a "balloon payment." In the event our borrowers are unable to make their balloon payments when they are due, we may incur significant losses in our loan portfolio.

This results in our borrowers having significantly higher final payments due at maturity, known as "balloon payments." In the event our borrowers are unable to make their balloon payments when they are due, we may incur significant losses in our loan portfolio.

Moreover, while the shorter maturities of our loan portfolio help us to manage our interest rate risk, they also increase the reinvestment risk associated with new loan originations.

During an economic slow-down, we might incur significant losses as our loan portfolio matures.

The level of our commercial real estate loan portfolio subjects us to additional regulatory scrutiny.

The level of concentrations in our commercial real estate loan portfolio subjects us to additional regulatory scrutiny.

The FDIC and the other federal bank regulatory agencies have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.

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A financial institution may have a concentration in commercial real estate lending if, among other factors, (i) total reported loans for construction, land acquisition and development, and other land represent 100% or more of total capital, or (ii) total reported loans secured by multifamily and non-owner occupied, non-farm, non-residential properties, loans for construction, land acquisition and development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital.

Based on these factors, we have a concentration in loans of the type described in (ii), above, or 369% of our total capital at December 31, 2023.

Based on these factors, we have a concentration in loans of the type described in (ii), above, of 369% of our total bank capital at December 31, 2024.

The purpose of the guidance is to assist banks in developing risk management practices and capital levels commensurate with the level and nature of real estate concentrations.

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Although we believe that we have administered the PPP in accordance with all applicable laws, regulations and guidance, we may be exposed to litigation risk and negative media attention related to our participation in the PPP.

If any such litigation is not resolved in in our favor, it may result in significant financial liability to us or adversely affect our reputation.

If any such litigation is not resolved in our favor, it may result in significant financial liability to us or adversely affect our reputation.

In addition, litigation can be costly, regardless of outcome.

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Changes in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes.

The Federal Reserve increased interest rates significantly during 2022 and continued to increase interest rates in 2023.

Both the pace of these increases and the resulting interest rate levels are unprecedented in recent times.

This new interest rate environment could have a number of effects on our business, which may include reduced loan demand, increased delinquencies and increased loan paydowns and payoffs.

The Federal Reserve Board increased interest rates significantly during 2022 and 2023.

As a result of this rapid increase in interest rates, unrealized losses in First Guaranty's investment securities portfolio increased dramatically and thereby negatively impacted First Guaranty's accumulated other comprehensive income.

These unrealized losses were approximately $73.8 million as of December 31, 2024 compared to $69.1 million as of December 31, 2023 and $80.9 million as of December 31, 2022.

Such losses could be realized into earnings should liquidity needs and/or business strategy necessitate the sale of securities in a loss position, which could adversely affect First Guaranty's financial condition, capital ratios, and results of operations.

Both the pace of these increases and the resulting interest rate levels are unprecedented in recent times and any future rapid changes in interest rates could have a number of effects on our business, which may include reduced loan demand, increased delinquencies and increased loan paydowns and payoffs.

Conversely, a decrease in the general level of interest rates may affect us through, among other things, increased prepayments on our loan portfolio and increased competition for deposits.

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If customers move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest income and net income.

As stated above, public funds are a sizeable portion of our deposits.

The 2023 bank failures increased awareness of the risks of uninsured deposit balances.

As discussed further below, public funds are a sizeable portion of our deposits.

Loss of a large public funds depositor at the end of a contract would negatively impact liquidity.

Other primary sources of funds consist of cash flows from operations and maturities and sales of investment securities.

Additional liquidity is provided by the ability to borrow from the FHLB or the Federal Reserve.

Additional liquidity is provided by the ability to borrow from the FHLB or the Federal Reserve Board.

We also may borrow funds from third-party lenders, such as other financial institutions.

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Public funds deposits are a significant source of funds for our lending and investment activities.

At December 31, 2023, $1.2 billion, or 39.7% of our total deposits, consisted of public funds deposits from local government entities such as school districts, hospital districts, sheriff departments and other municipalities, which are collateralized by letters of credit from the Federal Home Loan Bank ("FHLB"), investment securities, and reciprocal deposit insurance programs.

At December 31, 2024, $1.0 billion, or 30.1% of our total deposits, consisted of public funds deposits from local government entities such as school districts, hospital districts, sheriff departments and other municipalities, which are collateralized by letters of credit from the FHLB, investment securities, and reciprocal deposit insurance programs.

Given our dependence on high-average balance public funds deposits as a source of funds, our inability to retain such funds could significantly and adversely affect our liquidity.

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As discussed below, we are dependent on our operational infrastructure to help manage these risks.

In addition, we are heavily dependent on the strength and capability of our technology systems which we use both to interface with our customers and to manage our internal financial and other systems.

Our ability to develop and deliver new products that meet the needs of our existing customers and attract new ones depends on the functionality of our technology systems.

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These transactions, as well as the information technology services we provide to clients, often must adhere to client-specific guidelines, as well as legal and regulatory standards.

Due to the breadth of our client base and following the Premier and Union mergers, our geographical reach, developing and maintaining our operational systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements and technological shifts.

Due to the breadth of our client base and our geographical reach, developing and maintaining our operational systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements and technological shifts.

Our financial, accounting, data processing or other operating systems and facilities may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, such as a spike in transaction volume, cyber-attack or other unforeseen catastrophic events, which may adversely affect our ability to process these transactions or provide services.

In addition, our operations rely on the secure processing, storage and transmission of confidential and other information on our computer systems and networks.

Although we take protective measures to maintain the confidentiality, integrity and availability of information across all geographic and product lines, and endeavor to modify these protective measures as circumstances warrant, the nature of the threats continues to evolve.

Although we take protective measures to maintain the confidentiality, integrity and availability of information across all geographic markets and product lines, and endeavor to modify these protective measures as circumstances warrant, the nature of the threats to secure processing continues to evolve.

As a result, our computer systems, software and networks may be vulnerable to unauthorized access such as a business email compromise, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact.

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If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.

From time to time, the Financial Accounting Standards Board ("FASB") and the Securities and Exchange Commission change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements.

From time to time, the Financial Accounting Standards Board ("FASB") and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements.

These changes are beyond our control, can be difficult to predict and could materially affect how we report our financial condition and results of operations.

We could also be required to apply a new or revised standard retroactively, which may result in our restating our prior period financial statements.

In June 2016, the FASB issued a standard, Financial Instruments – Credit Losses , that will significantly change how banks measure and recognize credit impairment for many financial assets from an incurred loss methodology to a current expected loss model.

The current expected credit loss model will require banks to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard.

In June 2016, the FASB issued a standard, Financial Instruments – Credit Losses , that significantly changed how banks measure and recognize credit impairment for many financial assets from an incurred loss methodology to a current expected loss model.

The current expected credit loss model requires banks to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard.

First Guaranty adopted this standard effective January 1, 2023.

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Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.

For example, fixed-rate securities are generally subject to decreases in market value when interest rates rise.

For example, fixed-rate securities are generally subject to decreases in market value when interest rates rise, as we experienced in 2022 and 2023, resulting in unrealized losses of $73.8 million as of December 31, 2024.

Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual borrowers with respect to the underlying securities, and instability in the credit markets.

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Our market area in Southeast Louisiana is close to New Orleans and the Gulf of Mexico, areas which are susceptible to hurricanes, tropical storms, flooding and other natural disasters and adverse weather conditions which could result in a disruption of our operations and increases in loan losses.

In August 2021, Hurricane Ida affected several of our markets in Southeast Louisiana.

In recent years, hurricanes have affected several of our markets in Southeast Louisiana.

Similar future events could potentially cause widespread property damage, require the relocation of an unprecedented number of residents and business operations, and severely disrupt normal economic activity in our market areas, which may have an adverse effect on our operations, loan originations and deposit base.

Our Texas market was impacted by an ice storm in February 2021.

Moreover, our ability to compete effectively with financial institutions whose operations are not concentrated in areas affected by hurricanes or other adverse weather conditions or whose resources are greater than ours will depend primarily on our ability to continue normal business operations following such event.

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Our success depends significantly on the continued service and skills of our senior management team and our board of directors, particularly Marshall T.

Reynolds, our Chairman, Alton B.

Lewis Jr., our President and Chief Executive Officer and Eric J.

Reynolds, our Chairman, Michael R.

Mineer, our President and Chief Executive Officer and Eric J.

Dosch, our Chief Financial Officer.

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The Federal Reserve Board, the FDIC and the OFI, periodically examine our business, including our compliance with laws and regulations.

If, as a result of an examination, a banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate.

If, as a result of an examination, a banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations has become unsatisfactory, or that we are in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate.

These actions include the power to enjoin "unsafe or unsound" practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship.

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• compliance with such regulation may increase our costs and limit our ability to pursue business opportunities;

• market developments and the resulting economic pressure on consumers may affect consumer confidence levels and may cause increases in delinquencies and default rates, which, among other effects, could affect our charge-offs and provision for loan losses.

Competition in the industry could intensify as a result of the increasing consolidation of financial institutions in connection with the current market conditions;

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• the downgrade of the United States government's sovereign credit rating, any related rating agency action in the future, and the downgrade of the sovereign credit ratings for several European nations could negatively impact our business, financial condition and results of operations.

The rapid rise in interest rates during 2022, the resulting industry-wide reduction in the fair value of securities portfolios, and the related bank runs that led to the failures of Silicon Valley Bank and Signature Bank (New York) in March 2023, among other events, have resulted a current state of volatility and uncertainty with respect to the health of the U.S.

The rapid rise in interest rates during 2022, the resulting industry-wide reduction in the fair value of securities portfolios, and the related bank runs that led to the failures of Silicon Valley Bank and Signature Bank (New York) in March 2023, among other events, have increased volatility and uncertainty with respect to the health of the U.S.

banking system, particularly around liquidity, uninsured deposits and customer concentrations.

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On any such matter, the interests of these shareholders may not coincide with the interests of the other holders of our common stock and any such difference in interests may result in that shareholder voting its shares in a manner inconsistent with the interests of other shareholders.

Additional shares are owned by family members or associates of our principal shareholders;

the interests of these shareholders may coincide more with the interests of the principal shareholder than with the interests of the other holders of our common stock.

Our ability to declare and pay dividends is limited.

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Subject to certain exceptions, the terms of our senior debt and subordinated debt prohibit us from paying dividends on shares of our capital stock at times when we are deferring the payment of interest on such subordinated debt.

Moreover, our ability to pay dividends on our common stock is limited by the terms of our Series A Preferred Stock which provides that if we have not paid dividends on the Series A Preferred Stock for the most recently completed dividend period, then no dividend or distribution shall be declared, paid, or set aside for payment on shares of our common stock.

Moreover, our ability to pay dividends on our common stock is limited by the terms of our Series A Preferred Stock, which provide that if we have not paid dividends on the Series A Preferred Stock for the most recently completed dividend period, then no dividend or distribution shall be declared, paid, or set aside for payment on shares of our common stock.

Our principal source of funds used to pay cash dividends on our common stock will be cash we may hold from time to time as well as dividends that we receive from First Guaranty Bank.

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Shares of the Series A Preferred Stock are equity interests in First Guaranty and do not constitute indebtedness.

Accordingly, shares of the Series A Preferred Stock and the related depositary shares are and will be junior in right of payment to any existing and all future indebtedness and other non-equity claims of First Guaranty with respect to assets available to satisfy claims on us, including in a liquidation of First Guaranty.

Accordingly, shares of the Series A Preferred Stock and the depositary shares representing the Series A Preferred Stock are and will be junior in right of payment to any existing and all future indebtedness and other non-equity claims of First Guaranty with respect to assets available to satisfy claims on us, including in a liquidation of First Guaranty.

In the event of our bankruptcy, liquidation, dissolution or winding-up, our assets will be available to pay obligations on the Series A Preferred Stock and any parity stock only after all of our liabilities have been paid and any obligations we owe on any securities that rank senior to the Series A Preferred Stock then outstanding, if any, have been satisfied.

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First Guaranty is a financial holding company and conducts substantially all of our operations through our subsidiary First Guaranty Bank.

Our right to participate in any distribution of the assets of our subsidiaries upon any liquidation, reorganization, receivership or conservatorship of any subsidiary (and thus the ability of the holder of the Series A Preferred Stock and the holders of the depositary shares to benefit indirectly from such distribution) will rank junior to the prior claims of that subsidiary’s creditors.

Our right to participate in any distribution of the assets of our subsidiaries upon any liquidation, reorganization, receivership or conservatorship of any subsidiary (and thus the ability of the holders of the Series A Preferred Stock and the holders of the depositary shares to benefit indirectly from such distribution) will rank junior to the prior claims of that subsidiary’s creditors.

In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets remaining, after paying our and our subsidiaries’ liabilities, to pay amounts due on any or all of the Series A Preferred Stock and the depositary shares representing the Series A Preferred Stock then outstanding.

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An investment in our common stock or depositary shares is inherently risky for the reasons described herein and our shareholders will bear the risk of loss if the value or market price of our common stock or depositary shares is adversely affected.

Item 1B – Unresolved Staff Comments

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.

What changed 10-K

Item 1. Business