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Item 8. Financial Statements and Supplementary Data

2025-03-17 compared with 2024-03-15 · 239 added, 221 removed, 1321 unchanged (26% of the section changed)

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of First Guaranty Bancshares, Inc.

and Subsidiary (First Guaranty) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes collectively referred to as the financial statements.

and Subsidiary (First Guaranty) as of December 31, 2024 and 2023, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements).

We also have audited First Guaranty’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

26 unchanged sentences

Allowance for Credit Losses

As described in Notes 1, 5 and 6 to the financial statements, at December 31, 2023, First Guaranty’s total loans were $2.7 billion and the associated allowance for credit losses balance was $30.9 million.

As described in Notes 1, 5 and 6 to the financial statements, at December 31, 2024, First Guaranty’s total loans were $2.7 billion and the associated allowance for credit losses (ACL) balance was $34.8 million.

The allowance for credit losses is management’s evaluation of expected credit losses over the life of the loans in the portfolio in accordance with Accounting Standards Codification ASC 326:

Financial Instruments – Credit Losses.

The Company uses the discounted cash flow method to estimate expected losses for all of the Company’s loan segments that exhibit similar risk characteristics and loans that do not share risk characteristics are evaluated on an individual basis.

For each loan segment, the Company generates cash flow projections at the instrument level adjusting payment expectations for estimated prepayment speed, curtailments, time to recovery, probability of default and loss given default.

First Guaranty uses the discounted cash flow method to estimate expected losses for all of First Guaranty’s loan segments that exhibit similar risk characteristics and loans that do not share risk characteristics are evaluated on an individual basis.

For each loan segment, First Guaranty generates cash flow projections at the instrument level, adjusting payment expectations for estimated prepayment speed, curtailments, time to recovery, probability of default and loss given default.

Additional qualitative adjustments are applied for risk factors that are not considered within the modeling process but are relevant in assessing the expected credit losses within the loan segments.

11 unchanged sentences

The principal consideration for our determination of the critical audit matter is a high degree of subjectivity of the assumptions utilized in calculating the qualitative reserve component within the model.

Furthermore, certain inputs and assumptions lack observable data and, therefore, applying audit procedures required a higher degree of auditor judgement and subjectivity due to the nature and extent of audit evidence and effort required to address this matter.

Furthermore, certain inputs and assumptions lack observable data and, therefore, applying audit procedures requires a higher degree of auditor judgement and subjectivity due to the nature and extent of audit evidence and effort required to address this matter.

The primary procedures we performed to address the critical audit matter included:

8 unchanged sentences

• Analyzed the total qualitative factor adjustment applied to each loan segment, in comparison to changes in the Company’s quantitatively driven expected credit losses and loan segments and evaluated the appropriateness of the total qualitative factor adjustments applied in the overall allowance.

As described in Note 8 to the financial statements, First Guaranty’s goodwill totaled $12.9 million as of December 31, 2024.

Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

First Guaranty uses significant judgment and assumptions in estimating the fair value of these assets, including comparisons to peers, projections of future cash flows, discount rates, and growth rates.

Given the complexity and subjectivity involved in these estimates, auditing the impairment assessment of goodwill and intangible assets was challenging and required a high degree of auditor judgment.

Our audit procedures related to First Guaranty’s impairment assessment of goodwill and intangible assets included the following:

• We reviewed management’s use of peer data by assessing the validity and adequacy of the data.

• We evaluated the reasonableness of management’s forecasts of future cash flows by comparing them to historical performance, industry trends, and economic conditions.

• We assessed the appropriateness of the discount rates and growth rates used by management by comparing them to independent market data and industry benchmarks.

• We tested the completeness and accuracy of the underlying data used in the impairment analysis.

• We reviewed the sensitivity analyses performed by management to evaluate the impact of changes in key assumptions on the impairment conclusions.

• We evaluated the adequacy of the First Guaranty’s disclosures related to goodwill in the financial statements.

Based on these procedures, we found management’s estimates and assumptions to be reasonable and supported by the available evidence.

We have served as First Guaranty's auditor since 2022.

9 unchanged sentences

Cash and cash equivalents 564,208 286,455

Interest-earning time deposits with banks 250 —

Investment securities:

67 unchanged sentences

ATM and debit card fees 3,132 3,242

Net gains (losses) on securities — ( 17 )

Net gains on securities — —

Net gains on sale of loans 1,481 12

Net gains on sale of assets 13,306 23

Other 3,631 3,899

22 unchanged sentences

Other comprehensive income:

Unrealized gains (losses) on securities:

Unrealized holding gains (losses) arising during the period 2,872 ( 10,897 )

Reclassification adjustments for losses (gains) included in net income — 17

Change in unrealized gains (losses) on securities 2,872 ( 10,880 )

Unrealized (losses) gains on securities:

Unrealized holding gains arising during the period 115 2,872

Reclassification adjustments for (gains) included in net income — —

Change in unrealized gains on securities 115 2,872

Tax impact ( 24 ) ( 603 )

Other comprehensive income (loss) 2,269 ( 8,595 )

Other comprehensive income 91 2,269

Comprehensive Income $ 12,539 $ 11,488

10 unchanged sentences

Net income — — — 3,468 — 3,468

Cumulative effect of adoption of ASC Topic 326, net of tax — — — ( 7,900 ) — ( 7,900 )

Other comprehensive income (loss) — — — — 414 414

4 unchanged sentences

Net income — — — 2,676 — 2,676

Common stock issued in private placement, 714,287 shares

— 714 9,286 — — 10,000

Other comprehensive income (loss) — — — — ( 84 ) ( 84 )

10 unchanged sentences

Net income — — — 1,303 — 1,303

Common stock issued in private placement, 1,000,000 shares

— 1,000 9,000 — — 10,000

Common stock issued under Equity Bonus Plan, 44,341 shares

— 44 706 — — 750

Other comprehensive income — — — — 1,334 1,334

10 unchanged sentences

Net income — — — 2,310 — 2,310

Cumulative effect of adoption of ASC Topic 326, net of tax — — — ( 7,900 ) — ( 7,900 )

Common stock issued under Equity Bonus Plan, 29,293 shares

— 30 304 — — 334

Other comprehensive income — — — — 628 628

4 unchanged sentences

Net income — — — 7,201 — 7,201

Common stock issued in private placement, 714,287 shares

— 714 9,286 — — 10,000

Other comprehensive income (loss) — — — — 206 206

10 unchanged sentences

Net income — — — 1,010 — 1,010

Common stock issued in private placement, 1,000,000 shares

— 1,000 9,000 — — 10,000

Common stock issued under Equity Bonus Plan, 44,341 shares

— 44 706 — — 750

Other comprehensive income — — — — ( 1,650 ) ( 1,650 )

12 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for loan losses 3,714 3,656

Provision for credit losses 20,034 3,714

Depreciation and amortization 4,432 4,026

7 unchanged sentences

Cash Flows From Investing Activities:

Increase in interest bearing deposits ( 250 ) —

Proceeds from maturities, calls and sales of AFS securities 169,497 51,406

4 unchanged sentences

Funds invested in intangibles — ( 100 )

Net increase in loans ( 234,123 ) ( 362,543 )

Net decrease (increase) in loans 36,826 ( 234,123 )

Purchases of premises and equipment ( 3,044 ) ( 14,855 )

4 unchanged sentences

Net increase in deposits 467,166 285,302

Net (decrease) increase in federal funds purchased and short-term borrowings ( 80,145 ) 140,003

Net decrease in federal funds purchased and short-term borrowings ( 59,288 ) ( 80,145 )

Proceeds of long-term borrowings, net of costs 29,700 195,097

4 unchanged sentences

Net Cash Provided By Financing Activities 386,093 387,610

Net (Decrease) Increase In Cash and Cash Equivalents 203,236 ( 178,713 )

Net Increase In Cash and Cash Equivalents 277,753 203,236

Cash and Cash Equivalents at the Beginning of the Period 286,455 83,219

2 unchanged sentences

Acquisition of real estate in settlement of loans $ 423 $ 1,388

Transfer of securities from AFS to HTM $ — $ 176,181

Common stock issued for stock grants $ 334 $ 750

12 unchanged sentences

The Bank also maintains an investment portfolio comprised of government, government agency, corporate, and municipal securities.

The Bank has thirty-six banking facilities and forty-nine automated teller machines (ATMs) in Southeast, Southwest, Central and North Louisiana, North Central Texas, Kentucky and West Virginia.

The Bank has thirty-five banking facilities and fifty-four automated teller machines (ATMs) in Southeast, Southwest, Central and North Louisiana, North Central Texas, Kentucky and West Virginia.

Summary of significant accounting policies

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Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan and lease losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, and the valuation of investment securities.

In connection with the determination of the allowance for loan and lease losses and real estate owned, First Guaranty obtains independent appraisals for significant properties.

Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, and the valuation of investment securities.

In connection with the determination of the allowance for credit losses and real estate owned, First Guaranty obtains independent appraisals for significant properties.

Cash and cash equivalents

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The loan charge off is a reduction of the allowance for credit losses.

Troubled Debt Restructurings (TDRs)

TDRs are loans in which the borrower is experiencing financial difficulty at the time of restructuring, and the Bank has granted a concession to the borrower.

TDRs are undertaken in order to improve the likelihood of recovery on the loan and may take the form of modifications made with the stated interest rate lower than the current market rate for new debt with similar risk, other modifications to the structure of the loan that fall outside of normal underwriting policies and procedures, or in limited circumstances forgiveness of principal and / or interest.

TDRs can involve loans remaining on non-accrual, moving to nonaccrual, or continuing on accrual status, depending on the individual facts and circumstances of the borrower.

TDRs are subject to policies governing accrual and nonaccrual evaluation consistent with all other loans as discussed in the "Loans" section above.

All loans with the TDR designation are considered to be impaired, even if they are accruing.

First Guaranty's policy is to evaluate TDRs that have subsequently been restructured and returned to market terms after 6 months of performance.

The evaluation includes a review of the loan file and analysis of the credit to assess the loan terms, including interest rate to insure such terms are consistent with market terms.

The loan terms are compared to a sampling of loans with similar terms and risk characteristics, including loans originated by First Guaranty and loans lost to a competitor.

The sample provides a guide to determine market terms pursuant to ASC 310-40-50-2.

The loan is also evaluated at that time for impairment.

A loan determined to be restructured to market terms and not considered impaired will no longer be disclosed as a TDR in the years following the restructuring.

These loans will continue to be individually evaluated for impairment.

A loan determined to either be restructured to below market terms or to be impaired will remain a TDR.

The TDR requirements became inapplicable to First Guaranty upon our adoption of CECL on January 1, 2023.

Credit Quality

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Allowance for credit losses

The allowance for credit losses is established through a provision for loan losses charged to expense.

The allowance for credit losses is established through a provision for credit losses charged to expense.

Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely.

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These properties are recorded at the lower of the recorded investment in the property or its fair value less the estimated cost of disposition.

Any valuation adjustments required prior to foreclosure are charged to the allowance for loan and lease losses.

Any valuation adjustments required prior to foreclosure are charged to the allowance for credit losses.

Subsequent to foreclosure, losses on the periodic revaluation of the property are charged to current period earnings as other real estate expense or to the allowance for other real estate.

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Earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period.

In December of 2021, First Guaranty issued a pro rata, 10 % common stock dividend.

The shares issued for the stock dividend have been retrospectively factored into the calculation of earnings per share as well as cash dividends paid on common stock and represented on the face of the financial statements.

No convertible shares of First Guaranty's stock are outstanding.

Revenue Recognition

First Guaranty has identified certain recurring revenue streams (including fee income, NSF/OD charges, and ATM/ Card fee income) related to noninterest income, which are within the scope of Topic 606, Revenue from Contracts with Customers.

There are no significant judgments relating to the amount and timing of revenue recognition for revenue streams within the scope of Topic 606, Revenue from Contracts with Customer.

Due to the nature of the services First Guaranty provides to its customers, it does not incur costs to obtain contracts, and there are no material incremental costs to fulfill these contacts that should be capitalized.

There are no material contract assets or receivables as First Guaranty does not typically enter into long-term revenue contracts with customers.

Operating Segments

6 unchanged sentences

Accounting Standards Adopted in 2024

First Guaranty adopted FASB ASC Topic 326 “Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments” Update No.

2016-13 (“ASU 2016-13”).

ASU 2016-13 on January 1, 2023.

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.

Unfunded lending commitments are also within the scope of this topic.

Under prior GAAP losses were not recognized until the occurrence of the loss was probable.

CECL requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio.

The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquired, and be adjusted each period as a provision for credit losses for changes in expected lifetime credit losses.

ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the lifetime credit loss estimate.

First Guaranty developed a CECL model methodology that calculates expected credit losses over the life of the portfolio by analyzing the composition, characteristics and quality of the loan and securities portfolios, as well as prevailing economic conditions and forecasts.

First Guaranty’s CECL calculation estimates loan losses using a combination of discounted cash flow and remaining life analyses.

First Guaranty adopted ASU 2016-13 using the modified retrospective approach for all loans and off-balance sheet credit exposures measured at amortized cost, other than purchased credit deteriorated (“PCD”) financial assets.

Results for reporting periods beginning after December 31, 2022 are presented in accordance with ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

ASU 2016-13 also amended the accounting model for purchased financial assets and replaced the guidance for purchased credit impaired (“PCI”) financial assets with the concept of PCDs.

For PCD assets, the CECL estimate is recognized through the allowance for credit losses with an offset to the amortized cost basis of the PCD asset at the date of acquisition.

Subsequent changes in the allowance for credit losses for PCD assets are recognized through a provision for credit losses on loans.

First Guaranty used the prospective transition approach for PCD loans that were previously classified as PCI and accounted for under ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”).

First Guaranty determined that certain PCI assets no longer met meet the criteria of PCD assets as of the date of adoption.

First Guaranty adopted ASU 2016-13 on January 1, 2023, and recorded a one-time, cumulative effect adjustment as shown in the table below (dollars in thousands).

December 31, 2022 Impact of ASU 2016-13 Adoption January 1, 2023

Allowance for credit losses $ ( 23,518 ) $ ( 8,220 ) $ ( 31,738 )

Deferred tax asset 6,420 2,100 8,520

Remaining purchase discount on loans ( 1,120 ) 1,120 —

Reserve for unfunded loan commitments — ( 2,900 ) ( 2,900 )

Stockholders’ Equity

Retained earnings 76,351 ( 7,900 ) 68,451

In addition, ASU 2016-13 amends the accounting for credit losses on available for sale (“AFS”) securities, requiring expected credit losses on AFS securities to be recorded in an allowance for credit losses rather than as a write-down of the securities’ amortized cost.

Declines in the fair value of AFS securities that are not considered credit related are recognized in accumulated other comprehensive income.

In addition, expected credit losses on held to maturity (“HTM”) securities are required to be recorded in an allowance for credit losses rather than as a write-down of the securities’ amortized cost basis.

First Guaranty’s AFS securities portfolio was not materially impacted by the adoption of ASC 326.

A $ 100,000 allowance for HTM securities was recorded at the adoption of ASC 326.

The allowance for credit losses is measured on a pool basis when similar risk characteristics exist and is maintained at an amount which management believes is a current estimate of the expected credit losses for the full life of the relevant pool of loans and related unfunded lending commitments.

For modeling purposes, loan pools include:

Real Estate based pools for construction and land development, farmland, 1-4 family residential, multifamily, and non-farm non-residential and non-real-estate pools for agricultural, commercial and industrial, commercial leases and consumer and other.

Management periodically reassesses each pool to confirm the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary.

The loss rates computed for each pool and expected pool-level funding rates are applied to the related unfunded lending commitments to calculate an allowance for credit losses.

Loans that do not share similar risk characteristics with other loans are excluded from the loan pools and individually evaluated for impairment.

Individually evaluated loans are loans for which it is probable that all the amounts due under the contractual terms of the loan will not be collected.

FASB ASC Topic 326 “Financial Instruments – Credit Losses, Troubled Debt Restructurings and Vintage Disclosures” Update No.

2022-02 (“ASU 2022-02”).

ASU 2022-02 became effective for First Guaranty on January 1, 2023 and is applied prospectively.

ASU 2022-02 amends Topic 326 to eliminate the accounting guidance for troubled debt restructurings (“TDRs”) by creditors that have adopted ASU 2016-13 and, instead, requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan.

The amendment also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases.

The adoption of ASU 2022-02 did not have a material impact on First Guaranty’s consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

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Available for sale:

Treasuries $ 50,048 $ — $ ( 218 ) $ 49,830 $ 100,642 $ — $ ( 2,142 ) $ 98,500

Treasury $ 147,840 $ 33 $ ( 93 ) $ 147,780 $ 50,048 $ — $ ( 218 ) $ 49,830

Government Agencies — — — — — — — —

1 unchanged sentence

Municipal bonds 21,736 220 ( 339 ) 21,617 13,522 31 ( 372 ) 13,181

Collateralized mortgage obligations 32,065 — ( 446 ) 31,619 — — — —

Mortgage-backed securities 70,430 — ( 1,931 ) 68,499 5,144 — ( 144 ) 5,000

16 unchanged sentences

Subtotal 181,826 180,979

Collateralized mortgage obligations 32,065 31,619

Mortgage-backed Securities 70,430 68,499

8 unchanged sentences

Accrued interest receivable on First Guaranty's investment securities was $ 1.4 million and $ 1.8 million at December 31, 2024 and 2023, respectively, and was included in accrued interest receivable on the consolidated balance sheet.

First Guaranty had a $ 0.1 million allowance for credit losses related to the held to maturity portfolio at December 31, 2023.

The allowance for credit losses related to the held to maturity portfolio was 0.2 million and $ 0.1 million at December 31, 2024 and 2023, respectively.

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at December 31, 2024.

13 unchanged sentences

Municipal bonds 2 505 ( 4 ) 34 5,406 ( 335 ) 36 5,911 ( 339 )

Collateralized mortgage obligations 8 31,619 ( 446 ) — — — 8 31,619 ( 446 )

Mortgage-backed securities 15 65,089 ( 1,721 ) 6 3,410 ( 210 ) 21 68,499 ( 1,931 )

34 unchanged sentences

First Guaranty has the ability and intent to hold these securities until recovery, which may not be until maturity.

There were no charge-offs recognized on securities during the year ended December 31, 2024.

There was one charge-off, net of recovery, of $ 0.1 million recognized on a corporate security during the year ended December 31, 2023.

There was a $ 0.1 million provision for credit losses recognized on securities during the year ended December 31, 2023.

Gross realized gains on sales of securities were $ 0 and $ 0.1 million for the years ended December 31, 2023 and 2022, respectively.

Gross realized losses were $ 0 and $ 0.1 million for the years ended December 31, 2023 and 2022.

The tax applicable to these transactions amounted to $ 0 and $ 3,000 for 2023 and 2022, respectively.

Proceeds from sales of securities classified as available for sale amounted to $ 0 and $ 3.1 million for the years ended December 31, 2023 and 2022, respectively.

There was a $ 0.1 million provision for credit losses recognized on securities during each of the years ended December 31, 2024 and 2023.

Gross realized gains on sales of securities were $ 0 for the years ended December 31, 2024 and 2023, respectively.

Gross realized losses were $ 0 for the years ended December 31, 2024 and 2023.

The tax applicable to these transactions amounted to $ 0 for 2024 and 2023, respectively.

Proceeds from sales of securities classified as available for sale amounted to $ 0 for the years ended December 31, 2024 and 2023, respectively.

Net unrealized losses on available for sale securities included in accumulated other comprehensive income (loss) ("AOCI"), net of applicable income taxes, totaled $ 12.9 million and $ 13.0 million at December 31, 2024 and 2023.

During 2023 net gains, net of tax, reclassified out of AOCI into earnings totaled $ 0 .

During 2022 net gains, net of tax, reclassified out of AOCI into earnings totaled $ 13,000 .

During 2024 and 2023 net gains, net of tax, reclassified out of AOCI into earnings totaled $ 0 .

At December 31, 2024, First Guaranty's exposure to investment securities issuers that exceeded 10% of shareholders' equity was as follows:

5 unchanged sentences

Federal Farm Credit Bank (FFCB) 139,223 109,503

Government National Mortgage Association (Ginnie Mae-GNMA) 65,266 63,556

Total $ 483,621 $ 416,967

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Total Nonaccrual Loans $ 45,332 $ 63,197 $ 108,529

(in thousands) As of December 31, 2022

As of December 31, 2023

(in thousands) With Related Allowance Without Related Allowance Total

Construction & land development $ 530 $ — $ 530

Farmland 511 325 836

1 - 4 family 5,417 1,568 6,985

84 unchanged sentences

Total Current Period Gross Charge-offs $ 623 $ 5,297 $ 3,428 $ 4,357 $ 2,787 $ 2,099 $ — $ 18,591

The following table identifies the credit exposure of the loan portfolio, including loans acquired with deteriorated credit quality, by specific credit ratings as of the date indicated:

As of December 31, 2023

(in thousands) Pass Special Mention Substandard Doubtful Total

Term Loans by Origination Year

(in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Total

Construction & land development:

Farmland 19,722 35 5,066 — 24,823

1- 4 family 347,842 8,667 9,821 — 366,330

Multifamily 117,081 444 2,260 — 119,785

Pass $ 134,527 $ 140,068 $ 75,884 $ 3,369 $ 8,533 11,940 $ 18,907 $ 393,228

Special Mention 789 1,579 170 — 90 250 — 2,878

Substandard — 716 458 263 94 1,668 — 3,199

Doubtful — 39 91 — — — — 130

Total Construction & land development 135,316 142,402 76,603 3,632 8,717 13,858 18,907 399,435

Current period gross charge-offs — — — — — — — —

Pass 9,513 4,032 3,340 1,768 253 2,730 2,162 23,798

Special Mention — 194 — 514 — 359 — 1,067

Substandard — 251 1,369 3,877 115 653 1,355 7,620

Doubtful — — — — — — 45 45

Total Farmland 9,513 4,477 4,709 6,159 368 3,742 3,562 32,530

Current period gross charge-offs — — — — — — — —

Pass 112,636 110,978 70,599 41,766 19,542 47,374 17,215 420,110

Special Mention

1,307 2,505 749 1,544 775 997 667 8,544

Substandard 48 2,625 5,368 1,357 1,956 3,086 773 15,213

Doubtful — 122 391 — 239 159 72 983

Total 1- 4 family 113,991 116,230 77,107 44,667 22,512 51,616 18,727 444,850

Current period gross charge-offs — — — — — 964 — 964

Pass 9,945 76,217 6,121 15,131 1,877 2,311 5,110 116,712

Special Mention — — — — — 1,648 24 1,672

Substandard — — — — — 537 — 537

Doubtful — — — — — — — —

Total Multifamily 9,945 76,217 6,121 15,131 1,877 4,496 5,134 118,921

Current period gross charge-offs — — — — — — — —

Non-farm non-residential

Pass 162,234 247,182 111,054 88,039 73,797 256,032 33,907 972,245

Special Mention 708 369 1,014 388 15,846 5,191 1,525 25,041

Substandard 247 18,930 18,488 — — 6,125 4,723 48,513

Doubtful — — — 66 — — — 66

Total non-farm non-residential 163,189 266,481 130,556 88,493 89,643 267,348 40,155 1,045,865

Current period gross charge-offs — — — 138 — — — 138

Total Real Estate 431,954 605,807 295,096 158,082 123,117 341,060 86,485 2,041,601

Non-Real Estate:

Agricultural 34,827 198 4,020 — 39,045

Pass 2,555 10,406 3,142 1,336 1,532 2,378 16,259 37,608

Special Mention — 104 — 81 — — 25 210

Substandard — — 692 279 20 2,100 57 3,148

Doubtful — — — — — 42 — 42

Total Agricultural 2,555 10,510 3,834 1,696 1,552 4,520 16,341 41,008

Current period gross charge-offs — — — — — — — —

Commercial and industrial

Pass 41,105 27,800 48,097 53,585 5,613 27,634 119,886 323,720

Special Mention 63 37 4,382 146 — 53 598 5,279

Substandard 45 283 178 602 27 4,531 145 5,811

Doubtful — — — — — 162 — 162

Total Commercial and industrial 41,213 28,120 52,657 54,333 5,640 32,380 120,629 334,972

Current period gross charge-offs 29 791 133 532 — 209 — 1,694

Commercial leases

Consumer and other 45,225 1,031 1,608 — 47,864

Pass 74,456 117,566 67,615 6,087 4,428 — — 270,152

Special Mention — 11,867 1,597 — — — — 13,464

Substandard — 1,799 — — — — — 1,799

Doubtful — — — — — — — —

Total Commercial leases 74,456 131,232 69,212 6,087 4,428 — — 285,415

Current period gross charge-offs — — — — — — — —

Consumer and other loans

Pass 21,257 8,770 6,463 6,164 650 7,887 150 51,341

Special Mention 36 151 255 87 15 19 — 563

Substandard 164 1,077 790 265 86 68 — 2,450

Doubtful — — 34 79 2 16 — 131

Total Consumer and other loans 21,457 9,998 7,542 6,595 753 7,990 150 54,485

Current period gross charge-offs 598 1,126 820 359 28 44 — 2,975

Total Non-Real Estate 139,681 179,860 133,245 68,711 12,373 44,890 137,120 715,880

Pass 568,228 743,019 392,315 217,245 116,225 358,286 213,596 2,608,914

Special Mention 2,903 16,806 8,167 2,760 16,726 8,517 2,839 58,718

Substandard 504 25,681 27,343 6,643 2,298 18,768 7,053 88,290

Doubtful — 161 516 145 241 379 117 1,559

Total Loans Before Unearned Income $ 571,635 $ 785,667 $ 428,341 $ 226,793 $ 135,490 $ 385,950 $ 223,605 $ 2,757,481

1 unchanged sentence

Total Loans Net of Unearned Income $ 2,748,708

Purchased Credit Deteriorated Loans

As part of the acquisition of Union Bancshares, Inc.

on November 7, 2019 and Premier Bancshares, Inc.

on June 16, 2017, First Guaranty purchased credit impaired loans for which there was, at acquisition, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected.

The carrying amount of those loans is as follows at December 31, 2022.

(in thousands) As of December 31, 2022

Construction & land development $ 301

1- 4 family 1,311

Multifamily —

Non-farm non-residential 1,904

Total Real Estate 3,516

Non-Real Estate:

Agricultural —

Commercial and industrial 742

Commercial leases —

Consumer and other —

Total Non-Real Estate 742

Total $ 4,258

Total Current Period Gross Charge-offs $ 627 $ 1,917 $ 953 $ 1,029 $ 28 $ 1,217 $ — $ 5,771

Allowance for Credit Losses on Loans

1 unchanged sentence

For the Year Ended December 31,

(in thousands) Beginning Allowance (12/31/2022) ASC 326 Adoption Day 1 Adjustment Charge-offs Recoveries Provision Ending Allowance (12/31/2023)

(in thousands) Beginning Allowance (12/31/2023) Charge-offs Recoveries Provision Ending Allowance (12/31/2024)

Construction & land development $ 5,845 $ ( 39 ) $ 1 $ ( 1,877 ) $ 3,930

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Total Non-Real Estate 6,182 ( 8,260 ) 804 7,382 6,108

Total Loans $ 30,926 $ ( 18,591 ) $ 912 $ 21,564 $ 34,811

Unfunded lending commitments 2,810 — — ( 1,600 ) 1,210

Total $ 33,736 $ ( 18,591 ) $ 912 $ 19,964 $ 36,021

For the Year Ended December 31,

(in thousands) Beginning Allowance (12/31/2021) Charge-offs Recoveries Provision Ending Allowance (12/31/2022)

(in thousands) Beginning Allowance (12/31/2022) ASC 326 Adoption Day 1 Adjustment Charge-offs Recoveries Provision Ending Allowance (12/31/2023)

Construction & land development $ 1,232 $ 1,891 $ — $ 7 $ 2,715 $ 5,845

11 unchanged sentences

Total Non-Real Estate 10,416 1,078 ( 4,669 ) 1,045 ( 1,688 ) 6,182

Total Loans $ 23,518 $ 8,120 $ ( 5,771 ) $ 1,375 $ 3,684 $ 30,926

Unfunded lending commitments — 2,900 — — ( 90 ) 2,810

Total $ 23,518 $ 11,020 $ ( 5,771 ) $ 1,375 $ 3,594 $ 33,736

29 unchanged sentences

(in thousands) Allowance

for Impairment Allowance Individually Evaluated for Purchased Credit-Impairment Allowance

for Impairment Total Allowance

Evaluated Allowance

Evaluated Total Allowance

for Credit Losses Loans

for Impairment Loans Individually Evaluated for Purchased Credit-Impairment Loans

for Impairment Total Loans

Evaluated Loans

Evaluated Total Loans

Unearned Income

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Total Loans Net of Unearned Income $ 2,748,708

All loans individually evaluated for impairment as of December 31, 2023 were considered collateral dependent loans.

As of December 31, 2024 and 2023, First Guaranty had loans totaling $ 108.5 million and $ 25.2 million, respectively, not accruing interest.

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The average outstanding balance of nonaccrual loans in 2024 was $ 63.4 million compared to $ 22.5 million in 2023.

A loan is considered impaired when, based on current information and events, it is probable that First Guaranty will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.

Payment status, collateral value and the probability of collecting scheduled principal and interest payments when due are considered in evaluating loan impairment.

Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

The following is a summary of impaired loans, excluding loans acquired with deteriorated credit quality, by class as of the date indicated:

As of December 31, 2022

(in thousands) Recorded

Investment Unpaid

Principal Balance Related

Allowance Average

Recorded Investment Interest Income

Impaired Loans with no related allowance:

Construction & land development $ 68 $ 68 $ — $ 68 $ —

Farmland 4,240 4,240 — 4,242 51

1- 4 family 949 949 — 949 5

Multifamily — — — — —

Non-farm non-residential 1,814 1,814 — 1,817 56

Total Real Estate 7,071 7,071 — 7,076 112

Non-Real Estate:

Agricultural 2,366 2,521 — 2,366 7

Commercial and industrial 4,871 4,988 — 4,988 33

Commercial leases — — — — —

Consumer and other — — — — —

Total Non-Real Estate 7,237 7,509 — 7,354 40

Total Impaired Loans with no related allowance 14,308 14,580 — 14,430 152

Impaired Loans with an allowance recorded:

Construction & land development — — — — —

Farmland — — — — —

1- 4 family — — — — —

Multifamily — — — — —

Non-farm non-residential 2,281 2,855 666 2,279 5

Total Real Estate 2,281 2,855 666 2,279 5

Non-Real Estate:

Agricultural — — — — —

Commercial and industrial 1,048 1,048 412 1,112 35

Commercial leases 1,799 1,812 1,799 1,817 27

Consumer and other — — — — —

Total Non-Real Estate 2,847 2,860 2,211 2,929 62

Total Impaired Loans with an allowance recorded 5,128 5,715 2,877 5,208 67

Total Impaired Loans $ 19,436 $ 20,295 $ 2,877 $ 19,638 $ 219

The Bank held loans that were individually evaluated for impairment at December 31, 2024 for which the repayment, on the basis of the assessment at the reporting date, is expected to be provided substantially though the operation or sale of the collateral and the borrower is experiencing financial difficulty.

The Allowance for Credit Losses for these collateral-dependent loans is primarily based on the fair value of the underlying collateral at the reporting date.

The following describes the type of collateral that secure collateral dependent loans:

• Residential real estate loans are primarily secured by first liens on residential real estate.

• Commercial real estate loans are primarily secured by office and industrial buildings, warehouses, retail shopping facilities and various special purpose properties, including hotels and restaurants.

• Construction and land loans are primarily secured by residential and commercial properties, which are under construction and/or redevelopment, and by raw land.

• Commercial loans are primarily secured by accounts receivable, inventory and equipment.

• Agriculture loans are primarily secured by farmland and equipment.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Occasionally, the Bank modifies loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, term extension, an other-than-insignificant payment delay, interest only for a specified period of time, an interest rate reduction, or a combination of such concessions.

When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

Upon the Bank’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged-off.

Reportable modifications to borrowers experiencing financial difficulty (MEFD) during the year ended December 31, 2024 consisted of $ 3.0 million term extensions, $ 0.6 million payment delays, and $ 0 with both term extensions and payment delays.

The bank had $ 0 unfunded commitments to borrowers whose terms have been modified as a reportable MEFD as of December 31, 2024.

As of December 31, 2024, there have been no loans that were modified with in the previous 12 months for which there has been payment default during the period.

Premises and Equipment

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Goodwill totaled $ 12.9 million at December 31, 2024 and 2023.

Other intangible assets not subject to amortization totaled $ 0.1 million and $ 0 at December 31, 2023 and 2022.

Other intangible assets not subject to amortization totaled $ 0.1 million at December 31, 2024 and 2023.

The following table summarizes intangible assets subject to amortization.

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First Guaranty had $ 7.0 million in short-term borrowings outstanding at December 31, 2024 compared to $ 66.3 million outstanding at December 31, 2023.

First Guaranty has available lines of credit of $ 20.0 million, with $ 10.0 million outstanding balance at December 31, 2023.

Available lines of credit totaled $ 682.7 million at December 31, 2024 and $ 589.2 million at December 31, 2023.

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Long-term debt is summarized as follows:

Senior long-term debt with a commercial bank, priced at floating Wall Street Journal Prime less 70 basis points ( 6.80 %), totaled $ 21.9 million at December 31, 2022.

First Guaranty refinanced this note in October of 2023.

Senior long-term debt with a commercial bank, priced at floating Wall Street Journal Prime less 50 basis points (currently 8.00 %), totaled $ 39.1 million at December 31, 2023 and $ 0 at December 31, 2022.

Senior long-term debt with a commercial bank, priced at floating Wall Street Journal Prime less 50 basis points ( 7.50 % as of December 31, 2024), totaled $ 15.2 million at December 31, 2024 and $ 39.1 million at December 31, 2023.

First Guaranty refinanced this note on October 2023.

First Guaranty pays $ 1.0 million principal plus interest quarterly.

First Guaranty refinanced this note on October 2023.

This loan has a contractual maturity date of October 5, 2033.

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The Note qualifies for treatment as Tier 2 capital for regulatory capital purposes.

First Guaranty maintains one revolving line of credit.

A $ 20.0 million line of credit with an availability of $ 10.0 million at December 31, 2023.

This line of credit is secured by a pledge of 86.77 % ( 4,823,899 shares) of First Guaranty's interest in First Guaranty Bank (a wholly owned subsidiary) and is priced at 8.50 %.

Junior subordinated debt, priced at Wall Street Journal Prime plus 75 basis points ( 9.25 % as of December 31, 2024), totaled $ 29.7 million at December 31, 2024 and $ 0 at December 31, 2023.

This note was issued in March of 2024.

First Guaranty pays interest monthly.

The Note is unsecured and ranks junior in right of payment to any senior indebtedness and obligations to general and secured creditors.

The current Note is scheduled to mature on March 28, 2034.

The Note qualifies for treatment as Tier 2 capital for regulatory capital purposes.

At December 31, 2024, letters of credit issued by the FHLB totaling $ 455.7 million were outstanding and carried as off-balance sheet items, all of which expire by 2029.

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2028 — 3,180 —

2028 — 4,031 —

2030 and thereafter — — 45,000

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Capital Requirements

First Guaranty Bank is subject to various regulatory capital requirements administered by federal and state banking agencies.

First Guaranty and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies.

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions that, if undertaken, could have a direct material effect on First Guaranty's financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, First Guaranty and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.

The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets.

Management believes, as of December 31, 2023 and 2022, that the Bank met all capital adequacy requirements.

Quantitative measures established by regulation to ensure capital adequacy require First Guaranty and the Bank to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets.

Management believes, as of December 31, 2024 and 2023, that First Guaranty and the Bank met all capital adequacy requirements.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" consisting of 2.5 % of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

First Guaranty Bank's capital conservation buffer was 3.20 % at December 31, 2023.

The Bank's capital conservation buffer was 4.11 % at December 31, 2024.

First Guaranty's capital conservation buffer was 3.04 % at December 31, 2024.

As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the Federal Reserve Board has amended its small bank holding company and savings and loan holding company policy statement to provide that holding companies with consolidated assets of less than $3 billion that are (i) not engaged in significant nonbanking activities, (ii) do not conduct significant off-balance sheet activities, and (3) do not have a material amount of SEC-registered debt or equity securities, other than trust preferred securities, that contribute to an organization's complexity, are no longer subject to regulatory capital requirements, effective August 30, 2018.

On January 1, 2024, First Guaranty ceased being considered a "small bank holding company".

Accordingly, both First Guaranty and the Bank are required to maintain specified ratios of capital to risk-weighted assets.

In addition, as a result of the legislation, the federal banking agencies have developed a "Community Bank Leverage Ratio" (the ratio of a bank's Tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion.

A "qualifying community bank" that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered "well capitalized" under Prompt Corrective Action statutes.

A "qualifying community bank" that elects to be subject to this provision and exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered "well capitalized" under Prompt Corrective Action statutes.

The federal banking agencies may consider a financial institution's risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement.

The federal banking agencies set the new Community Bank Leverage Ratio at 9%.

Pursuant to the CARES Act, the federal banking agencies set the Community Bank Leverage Ratio at 8% beginning in the second quarter of 2020 through the end of 2020.

Beginning in 2021, the Community Bank Leverage Ratio increased to 8.5% for the calendar year.

Community banks will have until Jan.

1, 2022, before the Community Bank Leverage Ratio requirement will return to 9%.

A financial institution can elect to be subject to this new definition.

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The Bank has not elected to follow the Community Bank Leverage Ratio.

As of December 31, 2023, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table.

There are no conditions or events since the notification that Management believes have changed the Bank's category.

First Guaranty Bank's actual capital amounts and ratios as of December 31, 2023 and 2022 are presented in the following table.

At December 31, 2024, we satisfied the minimum regulatory capital requirements and were well capitalized within the meaning of federal regulatory requirements.

Actual Minimum Capital Requirements Minimum to be Well Capitalized

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Total Risk-based Capital:

$ 330,944 11.20 % $ 236,321 8.00 % $ 295,402 10.00 %

Bank $ 342,634 12.11 % $ 226,395 8.00 % $ 282,994 10.00 %

Consolidated $ 332,125 11.73 % $ 226,583 8.00 % $ 283,229 10.00 %

Tier 1 Capital:

$ 304,553 10.31 % $ 177,241 6.00 % $ 236,321 8.00 %

Bank $ 311,413 11.00 % $ 169,796 6.00 % $ 226,395 8.00 %

Consolidated $ 255,904 9.04 % $ 169,937 6.00 % $ 226,583 8.00 %

Tier 1 Leverage Capital:

$ 304,553 8.94 % $ 121,821 4.00 % $ 152,277 5.00 %

Bank $ 311,413 7.82 % $ 159,319 4.00 % $ 199,149 5.00 %

Consolidated $ 255,904 6.42 % $ 159,330 4.00 % $ 199,162 5.00 %

Common Equity Tier One Capital:

$ 304,553 10.31 % $ 132,931 4.50 % $ 192,011 6.50 %

Bank $ 311,413 11.00 % $ 127,347 4.50 % $ 183,946 6.50 %

Consolidated $ 255,904 7.87 % $ 127,453 4.50 % $ 184,099 6.50 %

December 31, 2023

Total Risk-based Capital:

$ 308,510 11.16 % $ 221,066 8.00 % $ 276,333 10.00 %

Bank $ 330,944 11.20 % $ 236,321 8.00 % $ 295,402 10.00 %

Consolidated N/A N/A N/A N/A N/A N/A

Tier 1 Capital:

$ 284,992 10.31 % $ 165,800 6.00 % $ 221,066 8.00 %

Bank $ 304,553 10.31 % $ 177,241 6.00 % $ 236,321 8.00 %

Consolidated N/A N/A N/A N/A N/A N/A

Tier 1 Leverage Capital:

$ 284,992 9.35 % $ 121,884 4.00 % $ 152,355 5.00 %

Bank $ 304,553 8.94 % $ 121,821 4.00 % $ 152,277 5.00 %

Consolidated N/A N/A N/A N/A N/A N/A

Common Equity Tier One Capital:

$ 284,992 10.31 % $ 124,350 4.50 % $ 179,616 6.50 %

Bank $ 304,553 10.31 % $ 132,931 4.50 % $ 192,011 6.50 %

Consolidated N/A N/A N/A N/A N/A N/A

Dividend Restrictions

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Dividends payable by the Bank in 2025 without permission will be limited to 2025 earnings plus the undistributed earnings of $ 8.1 million from 2024.

In addition, our ability to pay dividends will continue to be subject, among other things, to certain regulatory guidance and/or restrictions.

Accordingly, at January 1, 2025, $ 302.4 million of First Guaranty's equity in the net assets of the Bank was restricted.

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The 2022 Note has a ten-year term, maturing on June 21, 2032, is non-callable for the first five years , and bears interest at a floating rate based on the Prime Rate as reported by the Wall Street Journal plus 75 basis points.

During the years ended 2023 and 2022, First Guaranty paid interest of $ 1.2 million and $ 0.7 million, respectively, under the 2015 Note and the 2022 Note.

During the years ended 2023 and 2022, First Guaranty paid approximately $ 0.1 million and $ 0.1 million, respectively, for the purchase and maintenance of First Guaranty's automobiles to subsidiaries of Hood Automotive Group, of which William K.

During the years ended 2024 and 2023, First Guaranty paid interest of $ 1.4 million and $ 1.2 million, respectively, under the 2022 Note.

On March 28, 2024, First Guaranty issued a $ 30.0 million subordinated note (the "2024 Note") to Smith & Tate Investment, L.L.C., a company controlled by Edgar Ray Smith III, a director of First Guaranty.

The 2024 Note has a ten-year term, maturing on March 28, 2034, is non-callable for the first five years , and bears interest at a floating rate based on the Prime Rate as reported by the Wall Street Journal plus 75 basis points.

During the year ended 2024, First Guaranty paid interest of $ 1.9 million, under the 2024 Note.

During the years ended 2024 and 2023, First Guaranty paid approximately $ 63,000 and $ 0.1 million, respectively, for the purchase and maintenance of First Guaranty's automobiles to subsidiaries of Hood Automotive Group, of which William K.

Hood, a director of First Guaranty, is President.

During the years ended 2023 and 2022, First Guaranty paid approximately $ 0.7 million and $ 58,000 , respectively, for architectural services in relation to bank branches to Gasaway Gasaway Bankston Architects, of which bank subsidiary board member Andrew B.

During the years ended 2024 and 2023, First Guaranty paid approximately $ 9,300 and $ 0.7 million, respectively, for architectural services in relation to bank branches to Gasaway Gasaway Bankston Architects, of which bank subsidiary board member Andrew B.

Gasaway is part owner.

During the years ended 2023 and 2022, First Guaranty paid approximately $ 0.8 million and $ 0.7 million, respectively, to Centurion Insurance, an insurance brokerage agency, to bind coverage at market terms for property casualty insurance and health insurance.

During the years ended 2024 and 2023, First Guaranty paid approximately $ 0.8 million, respectively, to Centurion Insurance, an insurance brokerage agency, to bind coverage at market terms for property casualty insurance and health insurance.

First Guaranty owns a 50 % interest in Centurion and accounts for this investment under the equity method.

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Contributions to the savings plan were $ 0 and $ 80,000 in 2024 and 2023, respectively.

First Guaranty has an Employee Stock Ownership Plan ("ESOP") which was frozen in 2010.

No contributions were made to the ESOP for the years 2023 or 2022.

As of December 31, 2023, the ESOP held 1,003 shares.

First Guaranty is in the process of terminating the plan.

On May 19, 2022 the shareholders of First Guaranty adopted the First Guaranty Bank Equity Bonus Plan.

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All full time employees of First Guaranty are eligible to participate.

In May of 2024, 29,293 shares were distributed to five members of executive management.

Grant date fair market value of the shares issued was $ 333,000 .

All shares were vested on the date of issuance.

In December 31, 2023, 44,341 shares were distributed to a total of 311 employees.

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They are expensed as incurred and are included in other noninterest expense on the Consolidated Statements of Income.

Advertising expense was $ 1.0 million for 2023 and 2022.

Advertising expense was $ 0.4 million for 2024 and $ 1.0 million for 2023.

The following is a summary of the provision for income taxes included in the Consolidated Statements of Income:

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Tax exempt municipal income ( 146 ) ( 102 )

Other 107 ( 28 )

State tax expense 340 220

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Core deposit intangibles ( 622 ) ( 768 )

Unrealized gains on available for sale securities — —

Discount on purchased loans ( 118 ) ( 180 )

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First Guaranty determined that the net deferred tax asset at December 31, 2024 and 2023 was more likely than not to be realized based on an assessment of all available positive and negative evidence, and therefore no valuation allowance was recorded.

Net operating loss carryforwards for income tax purposes were $ 4.4 million as of December 31, 2023 and $ 4.8 million in 2022.

Net operating loss carryforwards for income tax purposes were $ 3.9 million and $ 4.4 million as of December 31, 2024 and 2023, respectively.

The carryforwards were acquired in 2017 in the Premier acquisition and expire from 2027 to 2034, and will be utilized subject to annual Internal Revenue Code Section 382 limitations.

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There were no losses incurred on off-balance sheet commitments in 2024 or 2023.

In accordance with ASC 326, the Bank has recorded an Allowance for Credit Losses on unfunded lending commitments of $ 1.2 million and $ 2.8 million at December 31, 2024 and 2023, respectively.

First Guaranty’s primary leasing activities relate to certain real estate leases of a portion of the main office, certain branches, and certain ATM locations.

These leases have all been designated as operating leases.

First Guaranty does not lease equipment under operating leases, and does not have leases designated as financing leases.

On June 28, 2024 First Guaranty sold three properties owned by it, two stand-alone branches and a portion of the headquarters building which also contains a branch, to a partnership owned by certain directors of First Guaranty.

The aggregate purchase price was approximately $ 14.7 million.

All of the properties are located in Louisiana.

First Guaranty concurrently entered into absolute net lease agreements with the partnership under which First Guaranty will lease each of the properties.

Each of the lease agreements has an initial term of 15 years with specified renewal options.

Annual payments due under the leases total approximately $ 1.3 million.

The sale-leaseback transaction resulted in a pre-tax gain of approximately $ 13.3 million.

First Guaranty recorded operating right-of-use ("ROU") assets and corresponding lease liabilities of $ 11.5 million and $ 11.5 million, respectively.

The discount rate was based on First Guaranty's estimated borrowing costs based on the lease term.

Information concerning First Guaranty’s leases is as follows:

December 31, 2024 Year Ended

December 31, 2023

Weighted-average lease term (in years) 14.3 4.6

Weighted-average discount rate 7.9 % 2.9 %

First Guaranty’s operating lease ROU assets were $ 11.6 million and $ 0.3 million at December 31, 2024 and December 31, 2023, respectively, and the related operating lease liabilities were $ 11.6 million and $ 0.3 million, respectively.

The ROU asset is included in Other Assets on the balance sheet, and the related operating lease liabilities are included in Other liabilities .

Operating lease expense, including short-term leases, is included in occupancy expense in the amount of $ 1.1 million and $ 0.5 million for the years ending December 31, 2024 and 2023, respectively.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Cash payment for amounts included in the measurement of lease liabilities of $ 0.8 million and $ 0.1 million were included in operating cash flows for the respective years.

The following table reports minimum lease payments under non-cancelable operating leases at December 31, 2024:

(in thousands)

Thereafter 12,797

Total lease payments 19,673

interest ( 8,034 )

Present value of lease liabilities $ 11,639

Fair Value Measurements

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Securities classified Level 3 as of December 31, 2024 includes corporate debt and municipal securities.

Impaired loans .

Loans are measured for impairment using the methods permitted by ASC Topic 310.

Fair value of impaired loans is measured by either the fair value of the collateral if the loan is collateral dependent (Level 2 or Level 3), or the present value of expected future cash flows, discounted at the loan's effective interest rate (Level 3).

Loans evaluated individually .

Fair value is measured by either the fair value of the collateral if the loan is collateral dependent (Level 2 or Level 3), or the present value of expected future cash flows, discounted at the loan's effective interest rate (Level 3).

Fair value of the collateral is determined by appraisals or by independent valuation.

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While Management believes the methodologies used are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value.

The change in Level 1 securities available for sale from December 31, 2022 to December 31, 2023 was due to a net decrease in Treasury bills of $ 48.6 million.

The change in Level 1 securities available for sale from December 31, 2023 to December 31, 2024 was due to a net increase in Treasury bills of $ 98.0 million.

There were no transfers between Level 1 and 2 securities available for sale from December 31, 2023 to December 31, 2024.

18 unchanged sentences

Significant Unobservable Inputs 50,449 8,083

Impaired loans measured at fair value $ 8,083 $ 2,251

Individually evaluated loans measured at fair value $ 50,449 $ 8,083

Fair Value Measurements Using:

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First Guaranty settled a case in the third quarter of 2021 for $ 1.1 million.

A receivable for $ 0.9 million has been recorded for recovery by a claim against First Guaranty's insurer.

A receivable for $ 0.9 million was recorded for recovery by a claim against First Guaranty's insurer.

During the second quarter of 2024, First Guaranty received $ 0.5 million of the $ 0.9 million receivable.

The remaining $ 0.4 million was written off.

In the opinion of management, neither First Guaranty nor First Guaranty Bank is currently involved in such legal proceedings, either individually or in the aggregate, that the resolution is expected to have a material adverse effect on First Guaranty’s consolidated results of operations, financial condition, or cash flows.

60 unchanged sentences

Dividends paid ( 7,455 ) ( 9,698 )

Net cash provided by financing activities 18,203 7,563

Net cash (used in) provided by financing activities ( 11,451 ) 18,203

Net (decrease) increase in cash and cash equivalents ( 6,414 ) 5,631

3 unchanged sentences

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 8. Financial Statements and Supplementary Data