First Guaranty Bancshares, Inc. 10-K

Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K. A discussion regarding significant changes in our financial condition from December 31, 2023 to December 31, 2024 and our results of operations for the year ended December 31, 2023 can be found under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 17, 2025, which is available on the SEC's website at www.sec.gov and First Guaranty's website, www.fgb.net This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under "Forward-Looking Statements," "Risk Factors" and elsewhere in this Annual Report on Form 10-K, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements. Overview First Guaranty Bancshares is a Louisiana corporation and a financial holding company headquartered in Hammond, Louisiana. Our wholly-owned subsidiary, First Guaranty Bank, a Louisiana-chartered commercial bank, provides personalized commercial banking services primarily to Louisiana and Texas customers through 30 banking facilities primarily located in the MSAs of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, and Alexandria, Louisiana and Dallas-Fort Worth-Arlington, Waco, Texas and Mideast markets in Kentucky and West Virginia. We emphasize personal relationships and localized decision making to ensure that products and services are matched to customer needs. We compete for business principally on the basis of personal service to customers, customer access to officers and directors and competitive interest rates and fees. Total assets were $4.1 billion at December 31, 2025 and $4.0 billion at December 31, 2024. Total deposits were $3.6 billion at December 31, 2025 and $3.5 billion at December 31, 2024. Total loans were $2.1 billion at December 31, 2025, a decrease of $624.0 million, or 23.2%, compared with $2.7 billion at December 31, 2024. Total shareholders' equity was $226.2 million and $255.0 million at December 31, 2025 and December 31, 2024, respectively. Net (loss) income was $(56.0) million and $12.4 million for the years ended December 31, 2025 and 2024, respectively. We generate most of our revenues from interest income on loans, interest income on securities, sales of securities, ATM and debit card fees and service charges, commissions and fees. We incur interest expense on deposits and other borrowed funds and noninterest expense such as salaries and employee benefits and occupancy and equipment expenses. Net interest income is the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowings which are used to fund those assets. Net interest income is our largest source of revenue. To evaluate net interest income, we measure and monitor: (1) yields on our loans and other interest-earning assets; (2) the costs of our deposits and other funding sources; (3) our net interest spread and (4) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources. The decrease in net income was the result of a decrease in net interest income of $1.5 million, an increase of $61.7 million in the provision to the credit allowance, a decrease in noninterest income of $16.3 million, and an increase in noninterest expense of $5.1 million, which was attributable to a goodwill impairment charge of $12.9 million. Changes in market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions, conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Louisiana, Texas and our other out-of-state market areas. As the economy transitioned from an extended period of historically low interest rates to a period of higher interest rates in 2022-2023, we continue to evaluate our investments in interest-earning assets in relation to the impact such investments have on our financial condition, results of operations and shareholders' equity. -40- Financial highlights for the fourth quarter and years ended December 31, 2025 and 2024: • Net (loss) income for each of the years ended December 31, 2025 and 2024 was $(56.0) million and $12.4 million, respectively, a decrease of $68.5 million. The loss in 2025 was primarily driven by the provision for credit losses and a $12.9 million goodwill impairment charge. • Total assets increased $105.6 million, or 2.7%, to $4.1 billion at December 31, 2025 when compared with December 31, 2024. Total loans at December 31, 2025 were $2.1 billion, a decrease of $624.0 million, or 23.2%, compared with December 31, 2024. Total deposits were $3.6 billion at December 31, 2025, an increase of $156.6 million, or 4.5% compared with December 31, 2024. Retained earnings were $14.1 million at December 31, 2025, a decrease of $58.9 million compared to $73.0 million at December 31, 2024. Shareholders' equity was $226.2 million and $255.0 million at December 31, 2025 and December 31, 2024, respectively. • (Loss) earnings per common share were $(4.17) for the year ended December 31, 2025 and $0.81 for the year ended December 31, 2024. Total weighted average common shares outstanding were 13,985,460 and 12,501,035 at December 31, 2025 and December 31, 2024, respectively. • The allowance for credit losses was 1.97% of total loans at December 31, 2025 compared to 1.29% at December 31, 2024. • Net interest income for 2025 was $86.9 million compared to $88.4 million for 2024. • The provision for credit losses totaled $81.7 million for 2025 and $20.0 million in 2024. • Charge-offs were $77.2 million for 2025 and $18.6 million for the same period in 2024. Recoveries totaled $0.9 million for 2025 and 2024. • Net gains on the sale of loans for the year ended December 31, 2025 was $0 compared to $1.5 million for the year ended December 31, 2024. • Noninterest expense totaled $82.2 million for the year ended December 31, 2025 (including $12.9 million of goodwill impairment) compared to $77.1 million for the year ended December 31, 2024. • First Guaranty had $35.1 million of other real estate owned as of December 31, 2025 compared to $0.3 million at December 31, 2024. The largest component of OREO consists of a $23.3 million property that was foreclosed upon in the fourth quarter of 2025. As part of the foreclosure, the bank purchased the first mortgage from a senior lender, which resulted in a net book balance of $23.3 million. First Guaranty subsequently sold a $7.0 million OREO property in January 2026. • The net interest margin was 2.28% for 2025 and 2.47% for 2024. Loans as a percentage of average interest earning assets decreased to 63.0% at December 31, 2025 compared to 77.4% at December 31, 2024. • Investment securities totaled $999.3 million at December 31, 2025, an increase of $396.5 million when compared to $602.7 million at December 31, 2024. At December 31, 2025, available for sale securities, at fair value, totaled $676.6 million, an increase of $395.5 million when compared to $281.1 million at December 31, 2024. The increase in available for sale securities was primarily due to purchases of mortgage-backed securities. At December 31, 2025, held to maturity securities, at amortized cost and net of the allowance for credit losses, totaled $322.7 million as compared to $321.6 million at December 31, 2024. The allowance for credit losses for HTM securities was $0.2 million at December 31, 2025 and December 31, 2024. • Total loans net of unearned income were $2.1 billion at December 31, 2025 a net decrease of $624.0 million from December 31, 2024. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $40.8 million at December 31, 2025 and $34.8 million at December 31, 2024, respectively. • Nonaccrual loans decreased $48.9 million to $59.6 million at December 31, 2025 compared to $108.5 million at December 31, 2024. -41- • At December 31, 2025, the largest 10 nonperforming loan relationships comprise 74% of total nonperforming assets. Additional details on the nonperforming relationships are as follows: 1. A $23.3 million loan relationship secured by an independent living center located in Louisiana; the loan was transferred to other real estate owned in the fourth quarter of 2025. 2. A $14.9 million loan relationship secured by an assisted living center located in Louisiana; the loan was placed on nonaccrual in the second quarter of 2025. Payments received on the loan in the fourth quarter of 2025 reduced the balance by $0.2 million. 3. A $8.8 million loan relationship secured by an assisted living center located in Texas; the loan was placed on nonaccrual in the third quarter of 2025. 4. A $7.0 million loan relationship secured by land located in Texas; the loan was transferred to other real estate owned in the second quarter of 2025. The property was charged off $0.4 million in the fourth quarter of 2025 and subsequently sold in January 2026. 5. A $5.7 million commercial lease loan for an automotive parts wholesaler; the loan was placed on nonaccrual and charged down $26.2 million in the fourth quarter of 2025. 6. A $5.2 million loan relationship was placed on nonaccrual during the second quarter of 2025. The loan is secured by multifamily apartment complexes located in Louisiana. 7. A $1.4 million guaranteed loan secured by livestock and farmland located in Louisiana; the loan was placed in nonaccrual in the fourth quarter of 2024. 8. A $1.3 million loan secured by commercial real estate in Texas; the loan was placed on nonaccrual during the third quarter of 2024. 9. A $1.3 million loan secured by retail real estate in Kentucky; the loan was placed on nonaccrual during the fourth quarter of 2025. 10. A $1.2 million loan secured by multiple office buildings located in West Virginia; the loan was placed on nonaccrual during the second quarter of 2025. • First Guaranty charged off $47.8 million in loan balances during the fourth quarter of 2025. The details of the charged-off loans were as follows: 1. First Guaranty charged off $0.3 million in consumer loans during the fourth quarter of 2025. The consumer loan charge offs included $0.1 million in credit card loans, $0.1 million of loans secured by automobiles or equipment, and $0.1 million in unsecured loans. 2. First Guaranty charged off $0.2 million on a multifamily loan during the fourth quarter of 2025. This relationship had no remaining principal balance as of December 31, 2025. 3. First Guaranty charged off $3.3 million on a non-farm non-residential loan during the fourth quarter of 2025. This relationship was moved into OREO in the fourth quarter. 4. First Guaranty charged off $43.4 million against the commercial lease loans to an auto parts manufacturer during the fourth quarter of 2025. This relationship had a remaining principal balance of $5.7 million as of December 31, 2025. 5. Smaller loans and overdrawn deposit accounts comprised the remaining $0.6 million of charge-offs for the fourth quarter of 2025. • Special mention loan relationships totaled $329.4 million as of December 31, 2025. • Substandard loan relationships totaled $347.5 million as of December 31, 2025. • Doubtful loan relationships totaled $9.4 million as of December 31, 2025. • Return on average assets was (1.43)% and 0.34% for the years ended December 31, 2025 and 2024, respectively. Return on average common equity was (27.05)% and 4.58% for 2025 and 2024, respectively. Return on average assets is calculated by dividing net income by average assets. Return on average common equity is calculated by dividing net income by average common equity. • Book value per common share was $12.23 as of December 31, 2025 compared to $17.75 as of December 31, 2024. Tangible book value per common share was $12.08 as of December 31, 2025 compared to $16.48 as of December 31, 2024. • First Guaranty's Board of Directors declared cash dividends of $0.04 per common share in 2025 and $0.41 per common share in 2024. First Guaranty has paid 130 consecutive quarterly dividends on its common stock as of December 31, 2025. • First Guaranty paid preferred cash dividends of $2.3 million during 2025 and 2024. -42- Recent Developments • On March 10, 2026, First Guaranty Bank entered into an agreement with Armstrong Bank, Muskogee, Oklahoma, to sell the Bank's Texas operations, consisting of five branches and related deposits, loans and certain other assets, to Armstrong Bank. The transaction is expected to consist of approximately $270 million in deposits and $110 million in loans. • On March 20, 2026, First Guaranty entered into a second amendment to its promissory note with Smith & Tate Investment, L.L.C., which further amends the promissory note originally dated October 5, 2023, as previously amended on June 4, 2025. The second amendment extends the existing waiver of quarterly principal payments from March 31, 2026 through March 31, 2028 and extends First Guaranty’s option during this period to satisfy interest payments either in cash or through the issuance of shares of the Company’s common stock, based on the closing bid price immediately preceding the interest payment date. Smith & Tate is controlled by Edgar Ray Smith, III, a director and principal shareholder of First Guaranty. • On March 20, 2026, First Guaranty entered into a second amendment to its Floating Rate Subordinated Note due March 28, 2034 with Smith & Tate, which further amended the subordinated note previously amended on June 4, 2025. The second amendment extends First Guaranty’s ability to elect to satisfy quarterly interest payments either in cash or through the issuance of shares of First Guaranty’s common stock, based on the closing bid price immediately preceding the interest payment date. Smith & Tate is controlled by Edgar Ray Smith, III, a director and principal shareholder of First Guaranty. -43- Critical Accounting Estimates Our consolidated financial statements are prepared to conform to generally accepted accounting principles in the United States and with predominant accounting practices within the banking industry. Certain critical estimates require judgment and estimates which are used in the preparation of the financial statements and accompanying notes. We have identified the following critical accounting estimate that is critical to an understanding of our financial condition and results of operations. Allowance for Credit Losses. 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. The allowance is based on management’s evaluation of expected credit losses over the life of the loans in the portfolio, in accordance with ASC 326. The loan portfolio is divided into segments to evaluate expected losses. Loans that do not share risk characteristics with a segment are evaluated individually. Management estimates the allowance balance using available information such as past events, current conditions and reasonable forecasts. Adjustments to historical information are made using quantitative and qualitative factors developed by management. The following are general credit risk factors that affect our loan portfolio segments. These factors do not encompass all risks associated with each loan category. Construction and land development loans have risks associated with interim construction prior to permanent financing and repayment risks due to the future sale of developed property. Farmland and agricultural loans have risks such as weather, government agricultural policies, fuel and fertilizer costs, and market price volatility. One- to four-family residential, multifamily, and consumer credits are strongly influenced by employment levels, consumer debt loads and the general economy. Non-farm non-residential loans include both owner-occupied real estate and non-owner occupied real estate. Common risks associated with these properties is the ability to maintain tenant leases and keep lease income at a level able to service required debt and operating expenses. Commercial and industrial loans generally have non-real estate secured collateral which requires closer monitoring than real estate collateral. The allowance consists of specific, general, and unallocated components. The specific component relates to loans that are classified as doubtful, substandard, and individually evaluated for impairment. For such loans that are also classified as individually evaluated for impairment, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the loan is lower than the carrying value of that loan. The general component covers non-classified loans and special mention loans and is based on historical loss experience adjusted for qualitative factors. Qualitative factors include analysis of levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, loan risk ratings, trends in volume and terms of loans, changes in lending policy, credit concentrations, portfolio stress test results, national and local economic trends, industry conditions, and other relevant factors. An unallocated component is maintained to cover uncertainties that could affect the estimate of probable losses. The allowance for credit losses on unfunded commitments represents expected credit losses over the contractual period for which First Guaranty is exposed to credit risk from a contractual obligation to extend credit. No allowance is recorded if there is an unconditional right to cancel the obligation. The allowance is reported as a component of Other Liabilities on the Consolidated Balance Sheets. Adjustments to the allowance for unfunded commitments are included in the provision for credit losses on the Consolidated Statements of Income. -44- Financial Condition Assets Our total assets were $4.1 billion at December 31, 2025, an increase of $105.6 million, or 2.7%, from total assets of $4.0 billion at December 31, 2024. Assets increased primarily due to increases in cash and cash equivalents of $281.5 million and investment securities of $396.5 million, partially offset by a decrease in net loans of $629.9 million at December 31, 2025 compared to December 31, 2024. Loans Net loans decreased $629.9 million, or 23.7%, to $2.0 billion at December 31, 2025 from December 31, 2024. First Guaranty adopted a change in its business plan in July 2024 that focused on reducing risk in the balance sheet, including risk associated with the loan portfolio. As part of this strategy, First Guaranty has reduced loan originations, charged-off loan balances and conducted select loan sales, which have each contributed to a decline in loan balances. Non-farm non-residential loan balances decreased $211.3 million primarily due to the sale of loans and payoffs. Construction and land development loans decreased $180.6 million principally due to the sale of loans, charge-offs, and the conversion of existing loans to permanent financing. Commercial lease loan balances decreased $144.6 million primarily due to paydowns on the existing lease portfolio and charge-offs. First Guaranty's commercial lease portfolio generally has higher yields than commercial real estate loans but shorter average lives. Commercial and industrial loans decreased $28.8 million primarily due to paydowns. One-to four-family loans decreased $21.6 million primarily due to paydowns. Multifamily loans decreased $20.9 million primarily due to paydowns and charge-offs. Consumer and other loans decreased $9.2 million primarily due to paydowns. Agricultural loans decreased $5.5 million primarily due to seasonal activity. Farmland loans decreased $3.8 million due to seasonal activity. First Guaranty had approximately 3.3% of funded and 1.7% of unfunded commitments in our loan portfolio to businesses engaged in support or service activities for oil and gas operations. First Guaranty's hotel and hospitality portfolio totaled $157.6 million at December 31, 2025. As part of the management of risks in our loan portfolio, First Guaranty had previously established an internal guidance limit of approximately $200.0 million for its hotel and hospitality portfolio. First Guaranty had $192.6 million in loans related to our Texas markets at December 31, 2025 which was a decrease of $214.4 million or 52.7% from $407.1 million at December 31, 2024. As noted above, First Guaranty has entered into an agreement to sell its Texas operations. First Guaranty had $323.1 million in loans related to our Mideast markets in Kentucky and West Virginia at December 31, 2025 which was a decrease of $12.5 million or 3.7% from $335.5 million at December 31, 2024. Syndicated loans at December 31, 2025 were $50.3 million, of which $21.1 million were shared national credits. Syndicated loans decreased $3.6 million from $53.9 million at December 31, 2024. As of December 31, 2025, 82.0% of our loan portfolio was secured by real estate. The largest portion of our loan portfolio, at 45.7% as of December 31, 2025, was non-farm non-residential loans secured by real estate. As of December 31, 2025, approximately 57.0% of the loan portfolio was based on a floating rate tied to the prime rate, SOFR or Treasury rates. 39.6% of the loan portfolio is scheduled to mature within five years from December 31, 2025. Commercial real estate (“CRE”) has received increased regulatory scrutiny in recent quarters due to valuation concerns associated with the increase in market interest rates and the impact of the COVID-19 pandemic. First Guaranty has utilized enhanced risk management practices for CRE concentration analysis for several years. First Guaranty Bank’s credit department conducts an annual stress test for CRE related loans that is presented to the Bank’s board of directors. The stress test analyzes the impact of changes in interest rates and cash flow on loan customers with credit exposures of $2.5 million or greater. First Guaranty generally requires personal guaranties on CRE loans. First Guaranty generally approves CRE loans with loan-to-values of 80% or less. First Guaranty also generally requires for construction related CRE loans that the borrower provides their equity contribution upfront before loan funds are advanced. First Guaranty modified its business strategy in 2024 to reduce exposure to commercial real estate related loans, particularly loans secured by non-owner occupied properties and construction loans for commercial real estate. First Guaranty continued this strategy in 2025. First Guaranty has diversified its CRE portfolio across both industries and geographic location. The following is a summary of the largest CRE related loans associated with hotel and motels, office properties, apartment complexes, healthcare related properties, and properties under construction as of December 31, 2025. First Guaranty generally does not finance multi-story office buildings in major metropolitan areas. The largest CRE loan secured by a hotel or motel totaled $19.4 million. The property is a flagged hotel located in Texas. The largest CRE loan secured by an office related property totaled $20.9 million and is located in West Virginia. The largest CRE loan secured by an apartment complex totaled $40.4 million and is located in Louisiana. The largest healthcare related loan is a $33.5 million property secured by an assisted living center located in Alabama. The largest CRE loan under construction totaled $16.6 million for a multipurpose CRE building and is secured by a property located in Louisiana. -45- Loan Portfolio Maturities . The following tables summarize the scheduled repayments of our loan portfolio at December 31, 2025. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Maturities are based on the final contractual payment date and do not reflect the effect of prepayments and scheduled principal amortization. December 31, 2025 (in thousands) One Year or Less More Than One Year Through Five Years More Than Five Years Through Fifteen Years After Fifteen Years Total Real Estate: Construction & land development $ 30,233 $ 37,246 $ 63,320 $ 18,694 $ 149,493 Farmland 2,905 1,300 7,841 20,114 32,160 1- 4 family 10,058 16,072 43,535 359,108 428,773 Multifamily 72,482 15,354 18,889 37,510 144,235 Non-farm non-residential 241,975 91,402 153,611 461,548 948,536 Total Real Estate 357,653 161,374 287,196 896,974 1,703,197 Non-Real Estate: Agricultural 13,308 6,425 6,929 8,582 35,244 Commercial and industrial 91,951 114,722 17,181 4,884 228,738 Commercial leases 15,445 60,172 — — 75,617 Consumer and other 18,928 10,159 3,936 — 33,023 Total Non-Real Estate 139,632 191,478 28,046 13,466 372,622 Total Loans Before Unearned Income $ 497,285 $ 352,852 $ 315,242 $ 910,440 $ 2,075,819 Less: Unearned income (6,017) Total Loans Net of Unearned Income $ 2,069,802 The following table sets forth the scheduled repayments of fixed and adjustable-rate loans at December 31, 2025 that are contractually due after December 31, 2025. Due After December 31, 2025 (in thousands) Fixed Floating Total One year or less $ 269,181 200,350 469,531 One to five years 174,719 175,338 350,057 Over five to 15 years 54,639 254,314 308,953 Over 15 years 338,713 548,984 887,697 Subtotal $ 837,252 $ 1,178,986 $ 2,016,238 Nonaccrual loans 59,581 Total $ 2,075,819 Included in floating rate loans are loans that adjust to a floating rate following an initial fixed rate period. The initial fixed rate periods are typically one, three, or five year periods. -46- Non-performing Assets Non-performing assets consist of non-performing loans and other real-estate owned. Non-performing loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue. Loans are ordinarily placed on nonaccrual status when principal and interest is delinquent for 90 days or more. However, management may elect to continue the accrual when the estimated net available value of collateral is sufficient to cover the principal balance and accrued interest. It is our policy to discontinue the accrual of interest income on any loan for which we have reasonable doubt as to the payment of interest or principal. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed. Nonaccrual loans are returned to accrual status when the financial position of the borrower indicates there is no longer any reasonable doubt as to the payment of principal or interest. Other real estate owned consists of property acquired through formal foreclosure, in-substance foreclosure or by deed in lieu of foreclosure. -47- The following table shows the principal amounts and categories of our non-performing assets at December 31, 2025 and 2024. December 31, (in thousands) 2025 2024 Nonaccrual loans: Real Estate: Construction and land development $ 9,281 $ 3,624 Farmland 2,671 2,619 1- 4 family 9,768 10,053 Multifamily 2,278 27,542 Non-farm non-residential 24,347 54,171 Total Real Estate 48,345 98,009 Non-Real Estate: Agricultural 2,172 1,992 Commercial and industrial 2,266 6,762 Commercial leases 6,640 1,533 Consumer and other 158 233 Total Non-Real Estate 11,236 10,520 Total nonaccrual loans 59,581 108,529 Loans 90 days and greater delinquent & still accruing: Real Estate: Construction and land development — 7,394 Farmland — — 1- 4 family 763 — Multifamily — — Non-farm non-residential 33 4,108 Total Real Estate 796 11,502 Non-Real Estate: Agricultural — — Commercial and industrial — — Commercial leases — — Consumer and other — — Total Non-Real Estate — — Total loans 90 days and greater delinquent & still accruing 796 11,502 Total non-performing loans $ 60,377 $ 120,031 Other real estate owned and foreclosed assets: Real Estate: Construction and land development 8,161 226 Farmland — — 1- 4 family 351 3 Multifamily — — Non-farm non-residential 26,572 90 Total Real Estate 35,084 319 Non-Real Estate: Agricultural — — Commercial and industrial — — Commercial leases — — Consumer and other — — Total Non-Real estate — — Total other real estate owned and foreclosed assets 35,084 319 Total non-performing assets $ 95,461 $ 120,350 Non-performing assets to total loans 4.61 % 4.47 % Non-performing assets to total assets 2.34 % 3.03 % Non-performing loans to total loans 2.92 % 4.46 % Nonaccrual loans to total loans 2.88 % 4.03 % Allowance for credit losses to nonaccrual loans 68.40 % 32.08 % Net loan charge-offs to average loans 3.17 % 0.64 % -48- Top 10 Nonperforming Assets December 31, 2025 (in thousands) Balance Allocated Reserve Origination Year Location Asset Description 1 Independent Living Center OREO $ 23,301 $ — 2021 Louisiana 2 Assisted Living Center 14,910 $ — 2019 Louisiana 3 Assisted Living Center 8,846 — 2023 Texas 4 Land Development OREO* 7,000 — 2022 Texas 5 Commercial Lease 5,711 — 2024 Multistate 6 Apartment Complex 5,244 857 2023 Louisiana 7 Farmland 1,450 — 2020 Louisiana 8 Commercial Real Estate 1,308 28 2017 Texas 9 Commercial Building 1,281 1,227 2020 Kentucky 10 Commercial Building 1,217 21 2023 West Virginia $ 70,268 $ 2,133 *Property was sold as of January 2026 Non-performing assets were $95.5 million, or 2.34%, of total assets at December 31, 2025, compared to $120.4 million, or 3.03%, of total assets at December 31, 2024, which represented a decrease in non-performing assets of $24.9 million. The decrease in non-performing assets occurred primarily due to a decrease in nonaccrual loans and loans 90 days greater delinquent and still accruing, partially offset by an increase in other real estate owned. Nonperforming loans included loans previously classified as purchase credit deteriorated following the adoption of CECL. Nonaccrual loans decreased from $108.5 million at December 31, 2024 to $59.6 million at December 31, 2025. The decrease in total nonaccrual loans was concentrated primarily in non-farm non-residential and multifamily loans. Non-performing assets included $4.5 million in loans with a government guarantee, or 4.73% of non-performing assets. These are structured as net loss guarantees in which up to 90% of loss exposure is covered. At December 31, 2025 loans 90 days and greater delinquent and still accruing totaled $0.8 million, a decrease of $10.7 million or 93.1% from $11.5 million at December 31, 2024. The decrease in loans 90 days or greater delinquent and still accruing was concentrated primarily in construction and land development and non-farm non-residential loans. Other real estate owned at December 31, 2025 totaled $35.1 million, an increase of $34.8 million from $0.3 million at December 31, 2024. $7.0 million of other real estate owned as of December 31, 2025 was comprised of a land development project that was subsequently sold in January 2026. First Guaranty also transferred $4.4 million of existing bank owned properties previously used as either operating branches or future branch development to other real estate owned. The Bank plans to sell these properties. At December 31, 2025, the largest 10 non-performing loan relationships comprise 74% of total non-performing loans. Additional details on the non-performing relationships are as follows: 1. A $23.3 million loan relationship secured by an independent living center located in Louisiana; the loan was transferred to other real estate owned in the fourth quarter of 2025. 2. A $14.9 million loan relationship secured by an assisted living center located in Louisiana; the loan was placed on nonaccrual in the second quarter of 2025. Payments received on the loan in the fourth quarter of 2025 reduced the balance by $0.2 million. 3. An $8.8 million loan relationship secured by an assisted living center located in Texas; the loan was placed on nonaccrual in the third quarter of 2025. 4. A $7.0 million loan relationship secured by land located in Texas; the loan was transferred to other real estate owned in the second quarter of 2025. The property was charged off $0.4 million in the fourth quarter of 2025 and subsequently sold in January 2026. 5. A $5.7 million commercial lease loan for an automotive parts wholesaler; the loan was placed on nonaccrual and charged down $26.2 million in the fourth quarter of 2025. 6. A $5.2 million loan relationship was placed on nonaccrual during the second quarter of 2025. The loan is secured by multifamily apartment complexes located in Louisiana. 7. A $1.4 million guaranteed loan secured by livestock and farmland located in Louisiana; the loan was placed in nonaccrual in the fourth quarter of 2024. 8. A $1.3 million loan secured by commercial real estate in Texas; the loan was placed on nonaccrual during the third quarter of 2024. 9. A $1.3 million loan secured by retail real estate in Kentucky; the loan was placed on nonaccrual during the fourth quarter of 2025. 10. A $1.2 million loan secured by multiple office buildings located in West Virginia; the loan was placed on nonaccrual during the second quarter of 2025. -49- Classified Assets . Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered by the FDIC to be of lesser quality, as "substandard," "doubtful" or "loss." An asset is considered "substandard" if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. "Substandard" assets include those characterized by the "distinct possibility" that the insured institution will sustain "some loss" if the deficiencies are not corrected. Assets classified as "doubtful" have all of the weaknesses inherent in those classified as "substandard," with the added characteristic that the weaknesses present make "collection or liquidation in full," on the basis of currently existing facts, conditions, and values, "highly questionable and improbable." Assets classified as "loss" are those considered "uncollectible" and of such little value that their continuance as assets without the establishment of a specific allowance for credit losses is not warranted. Assets that do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as "special mention" by our management. When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover losses that were both probable and reasonable to estimate. General allowances represent allowances which have been established to cover accrued losses associated with lending activities that were both probable and reasonable to estimate, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as "loss," it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, which may require the establishment of additional general or specific allowances. In connection with the filing of our periodic regulatory reports and in accordance with our classification of assets policy, we continuously assess the quality of our loan portfolio and we regularly review the problem loans in our loan portfolio to determine whether any loans require classification in accordance with applicable regulations. Loans are listed on the "watch list" initially because of emerging financial weaknesses even though the loan is currently performing as agreed, or delinquency status, or if the loan possesses weaknesses although currently performing. Management reviews the status of our loan portfolio delinquencies, by product types, with the full board of directors on a monthly basis. Individual classified loan relationships are discussed as warranted. If a loan deteriorates in asset quality, the classification is changed to "special mention," "substandard," "doubtful" or "loss" depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on nonaccrual status and classified "substandard." We also employ a risk grading system for our loans to help assure that we are not taking unnecessary and/or unmanageable risk. The primary objective of the loan risk grading system is to establish a method of assessing credit risk to further enable management to measure loan portfolio quality and the adequacy of the allowance for credit losses. Further, we contract with an external loan review firm to complete a credit risk assessment of the loan portfolio on a regular basis to help determine the current level and direction of our credit risk. The external loan review firm communicates the results of their findings to the Bank's audit committee. Any material issues discovered in an external loan review are also communicated to us immediately. The increase in classified assets at December 31, 2025, as compared to December 31, 2024, was due to a $162.4 million increase in substandard loans and a $9.0 million increase in doubtful loans. The increase in substandard loans was primarily the result of downgrades during the first, third, and fourth quarters of 2025. During the first quarter of 2025, a $15.4 million subdivision development loan and a $14.9 million loan secured by an assisted living center were downgraded from special mention to substandard, and a $13.6 million loan secured by a retail shopping center was downgraded from pass to substandard. During the second quarter of 2025, a $23.5 million hospital loan relationship was downgraded from pass to substandard. During the fourth quarter of 2025, a $46.3 million healthcare-related relationship, a $33.5 million loan relationship primarily secured by owner-occupied office buildings, and a $16.0 million food processing loan relationship were downgraded from pass to substandard. The increase in doubtful loans was driven by to two credit relationships. One relationship consisted of a commercial lease loan to an auto parts manufacturer with an outstanding balance of $5.7 million, which was charged down by $43.4 million in the fourth quarter of 2025. The second relationship was a $3.6 million commercial and industrial loan to a borrower in the legal industry, for which a $3.5 million specific reserve was established as of December 31, 2025. Special mention loans increased by $203.8 million in 2025. The increase in special mention loans was primarily the result of downgrades during the third and fourth quarters of 2025. The largest loan downgraded from pass to special mention in the third quarter of 2025 was a $40.4 million apartment complex loan. The largest loan downgraded from pass to special mention in the fourth quarter of 2025 was a $33.5 million loan secured by an assisted living facility. -50- Top 10 Substandard Relationships December 31, 2025 (in thousands) Balance Allocated Reserve Origination Year(s) Location Relationship Description 1 Medical Facilities $ 46,319 $ — 2008-2022 Louisiana 2 Construction Business 41,380 — 2022-2024 Louisiana & Texas 3 Owner Occupied Office Building 33,553 — 2020-2023 Utah 4 Medical Facilities 23,538 — 2020-2021 Arkansas 5 Food Processor 15,991 — 2020-2024 Ohio 6 Land Development 15,384 — 2023 Texas 7 Assisted Living Facilities 14,909 — 2019-2022 Louisiana & Texas 8 Commercial Retail Shopping Center 13,596 — 2020 Oklahoma 9 Auctioneering Business & Commercial Real Estate 12,220 — 2017-2023 Louisiana & Mississippi 10 Oil & Gas Support 11,544 — 2015-2024 Louisiana $ 228,434 $ — *Table excludes nonperforming assets Top 10 Special Mention Relationships December 31, 2025 (in thousands) Balance Allocated Reserve Origination Year(s) Location Relationship Description 1 Apartment Complex $ 40,405 $ — 2021 Louisiana 2 Apartment Complex & Hotel Property 37,564 — 2023 Florida 3 Manufacturing Company 34,005 — 2015-2024 Louisiana 4 Assisted Living Facility 33,467 — 2022 Alabama 5 Hotel Properties 20,484 — 2022 Texas 6 Owner Occupied Commercial Real Estate 20,217 — 2020 Louisiana 7 Assisted Living Facility 16,682 — 2017 Louisiana 8 Multipurpose Commercial Real Estate Building 16,574 — 2023 Louisiana 9 Warehouse Facility 15,919 — 2024 Louisiana 10 Hotel Properties 11,843 — 2022-2023 Texas $ 247,160 $ — -51- Allowance for Credit Losses 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. The allowance for credit losses on loans is maintained to absorb expected losses over the life of the loans in the loan portfolio. The allowance is increased by the provision for credit losses, offset by recoveries of previously charged-off loans and is decreased by loan charge-offs. The provision is a charge to current expense to provide for current expected loan losses and to maintain the allowance commensurate with management's evaluation of the risks inherent in the loan portfolio. Various factors are taken into consideration when determining the amount of the provision and the adequacy of the allowance. These factors include but are not limited to: • past due and non-performing assets; • specific internal analysis of loans requiring special attention; • the current level of regulatory classified and criticized assets and the associated risk factors with each; • changes in underwriting standards or lending procedures and policies; • charge-off and recovery practices; • national and local economic and business conditions; • nature and volume of loans; • overall portfolio quality, loan concentrations and portfolio stress test results; • adequacy of loan collateral; • quality of loan review system and degree of oversight by our board of directors; • competition and legal and regulatory requirements on borrowers; • examinations of the loan portfolio by federal and state regulatory agencies and examinations; and • review by our internal loan review department and independent accountants. The data collected from all sources in determining the adequacy of the allowance is evaluated on a regular basis by management with regard to current national and local economic trends, prior loss history, underlying collateral values, credit concentrations and industry risks. An estimate of potential loss on specific loans is developed in conjunction with an overall risk evaluation of the total loan portfolio. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as new information becomes available. The allowance consists of specific, general, and unallocated components. The specific component relates to loans that are classified as doubtful, substandard, or collateral dependent. For such loans that are also classified as collateral dependent, an allowance is established when the collateral value is lower than the carrying value of that loan. The general component covers non-classified loans and special mention loans and is based on historical loss experience for the past three years adjusted for qualitative factors described above. An unallocated component is maintained to cover uncertainties that could affect the estimate of probable losses. The balance in the allowance for credit losses is principally influenced by the provision for credit losses, recoveries, and by net loan loss experience. Additions to the allowance are charged to the provision for credit losses. Losses are charged to the allowance as incurred and recoveries on losses previously charged to the allowance are credited to the allowance at the time recovery is collected. The allowance for credit losses was $40.8 million at December 31, 2025 compared to $34.8 million at December 31, 2024. -52- The table below reflects the activity in the allowance for credit losses for the years indicated. At or For the Years Ended December 31, (dollars in thousands) 2025 2024 Balance at beginning of year $ 34,811 $ 30,926 Charge-offs: Real Estate: Construction and land development (5,794) (39) Farmland (68) (258) 1- 4 family (657) (1,034) Multifamily (10,670) — Non-farm non-residential (12,891) (9,000) Total Real Estate (30,080) (10,331) Non-Real Estate: Agricultural (169) (33) Commercial and industrial loans (1,339) (4,873) Commercial leases (44,207) — Consumer and other (1,383) (3,354) Total Non-Real Estate (47,098) (8,260) Total charge-offs (77,178) (18,591) Recoveries: Real Estate: Construction and land development — 1 Farmland 2 2 1- 4 family 45 12 Multifamily — — Non-farm non-residential 24 93 Total Real Estate 71 108 Non-Real Estate: Agricultural 1 18 Commercial and industrial loans 297 235 Commercial leases — — Consumer and other 514 551 Total Non-Real Estate 812 804 Total recoveries 883 912 Net charge-offs (76,295) (17,679) Provision for credit losses 82,239 21,564 Balance at end of year $ 40,755 $ 34,811 Ratios: Net loan charge-offs to average loans 3.17 % 0.64 % Net loan charge-offs to loans at end of year 3.69 % 0.66 % Allowance for credit losses to loans at end of year 1.97 % 1.29 % Net loan charge-offs to allowance for credit losses 187.20 % 50.79 % Net loan charge-offs to provision charged to expense 92.77 % 81.98 % -53- A provision for credit losses of $81.7 million was made during the year ended December 31, 2025 and $20.0 million for the same period in 2024. The provisions made in 2025 included a $0.5 million negative provision for credit losses related to unfunded commitments. First Guaranty's unfunded commitments declined during 2025 which resulted in a reduced liability. The provisions made were taken to provide for current credit losses and to maintain the allowance proportionate to risks inherent in the loan portfolio. The loan portfolio factors in 2025 that primarily affected the allocation of the allowance included the following: • Construction and land development loans decreased $180.6 million during 2025 due to the sale of loans. The allowance decrease was due primarily to charge-offs of the portfolio. • One-to-four family residential loans decreased $21.6 million during 2025. The allowance increase related to this portfolio was due to changes in the qualitative analysis of the portfolio, and a $0.4 million increase in the allowance for loan individually evaluated. • Multifamily loans decreased $20.9 million during 2025. The allowance decrease related to this portfolio was due primarily to charge-offs of the portfolio. • Non-farm non-residential loans decreased by $211.3 million during 2025. The allowance increase related to this portfolio was due to changes in the qualitative analysis of the portfolio related to economic conditions, and a $0.4 million increase in the allowance for loans individually evaluated. • Commercial and industrial loans decreased $28.8 million during 2025. The allowance increase related to this portfolio was due to changes in the qualitative analysis of the portfolio, and a $3.5 million increase in the allowance for loans individually evaluated. • Commercial leases decreased $144.6 million during 2025. The allowance decrease related to this portfolio was due primarily to charge-offs of the portfolio. • Consumer and other loans decreased $9.2 million during 2025. The decrease in the related loan loss allowance balance was due primarily to charge-offs and changes in the qualitative analysis of the portfolio. First Guaranty charged off $77.2 million in loan balances during the year ended December 31, 2025 as compared to $18.6 million for 2024. Recoveries totaled $0.9 million for the year ended December 31, 2025 and $0.9 million during 2024. The details of the $77.2 million in charged-off loans were as follows: 1. First Guaranty charged off $1.2 million in consumer loans during 2025. The consumer loan charge-offs included $0.3 million in credit card loans, $0.4 million of loans secured by automobiles or equipment, and $0.5 million in unsecured loans. 2. First Guaranty charged off $4.9 million on a construction and land development loan that was subsequently sold during the first quarter of 2025. This relationship had no remaining principal balance as of December 31, 2025. 3. First Guaranty charged off $0.9 million on a construction and land development loan that was subsequently sold during the first quarter of 2025. This relationship had no remaining principal balance as of December 31, 2025. 4. First Guaranty charged off $0.3 million on a commercial and industrial loan during the second quarter of 2025. This relationship had no remaining principal balance as of December 31, 2025. 5. First Guaranty charged off $0.2 million on a commercial lease loan relationship during the second quarter of 2025. This relationship had a remaining principal balance of $0.8 million as of December 31, 2025. 6. First Guaranty charged off $10.6 million on a multifamily loan during 2025. This relationship had no remaining principal balance as of December 31, 2025. 7. First Guaranty charged off $12.7 million on a non-farm non-residential loan relationship secured by an independent living center during 2025. This relationship was moved into OREO in the fourth quarter. 8. First Guaranty charged off $0.5 million on a commercial lease loan relationship during the third quarter of 2025. This relationship had no remaining principal balance as of December 31, 2025. 9. First Guaranty charged off $0.4 million on a one-to-four family loan relationship during the third quarter of 2025. This relationship had a remaining principal balance of $0.8 million as of December 31, 2025. 10. First Guaranty charged off $43.4 million against the commercial lease loans to an auto parts manufacturer during the fourth quarter of 2025. This relationship had a remaining principal balance of $5.7 million and was classified as doubtful as of December 31, 2025. 11. Smaller loans and overdrawn deposit accounts comprised the remaining $2.1 million of charge-offs for 2025. -54- Allocation of Allowance for Credit Losses. The following tables set forth the allowance for credit losses allocated by loan category and the percent of loans in each category to total loans at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance for losses in other categories. At December 31, 2025 2024 (dollars in thousands) Allowance for Credit Losses Percent of Allowance to Total Allowance for Credit Losses Percent of Loans in Each Category to Total Loans Allowance for Credit Losses Percent of Allowance to Total Allowance for Credit Losses Percent of Loans in Each Category to Total Loans Real Estate: Construction and land development $ 2,079 5.1 % 7.2 % $ 3,930 11.3 % 12.2 % Farmland 183 0.4 % 1.5 % 50 0.1 % 1.3 % 1- 4 family 13,340 32.7 % 20.7 % 9,243 26.6 % 16.7 % Multifamily 1,377 3.4 % 6.9 % 3,949 11.4 % 6.1 % Non-farm non-residential 12,054 29.6 % 45.7 % 11,531 33.1 % 42.9 % Non-Real Estate: Agricultural 173 0.4 % 1.7 % 204 0.6 % 1.5 % Commercial and industrial 6,271 15.4 % 11.0 % 1,994 5.7 % 9.5 % Commercial leases 1,192 2.9 % 3.7 % 1,719 4.9 % 8.2 % Consumer and other 1,007 2.5 % 1.6 % 1,337 3.8 % 1.6 % Unallocated 3,079 7.6 % — 854 2.5 % — Total Allowance $ 40,755 100.0 % 100.0 % $ 34,811 100.0 % 100.0 % The following table presents net charge-offs during the period to average loans outstanding: December 31, 2025 December 31, 2024 (in thousands except for %) Net (Charge-offs) Recoveries Average Loans Outstanding 1 Net Charge-offs During Period to Average Loans Outstanding Net (Charge-offs) Recoveries Average Loans Outstanding 1 Net Charge-offs During Period to Average Loans Outstanding Real Estate: Construction & land development $ (5,794) $ 234,442 (2.5) % $ (38) $ 334,119 — % Farmland (66) 31,518 (0.2) % (256) 37,897 (0.7) % 1- 4 Family (612) 438,657 (0.1) % (1,022) 459,045 (0.2) % Multifamily (10,670) 142,800 (7.5) % — 163,192 — % Non-farm non-residential (12,867) 1,030,353 (1.2) % (8,907) 1,155,757 (0.8) % Non-Real Estate: Agricultural (168) 40,103 (0.4) % (15) 44,887 — % Commercial and industrial (1,042) 232,118 (0.4) % (4,638) 281,462 (1.6) % Commercial leases (44,207) 138,444 (31.9) % — 247,802 — % Consumer and other (869) 36,450 (2.4) % (2,803) 46,308 (6.1) % 1 Average loans outstanding was calculated using the trailing four quarters total for loans. -55- Investment Securities Investment securities net of the allowance for credit losses at December 31, 2025 totaled $999.3 million, an increase of $396.5 million, or 65.8%, compared to $602.7 million at December 31, 2024. The portfolio consists of both available for sale (AFS) and held to maturity securities (HTM). The securities designated as held to maturity are agency and corporate debt securities that are part of First Guaranty’s investment strategy and public funds collateralization program. We purchase securities for our investment portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk and meet pledging requirements for public funds and borrowings. The securities portfolio consisted principally of U.S. Government and Government agency securities, agency mortgage-backed securities, corporate debt securities and municipal bonds. U.S. government agencies consist of FHLB, FFCB, Freddie Mac and Fannie Mae obligations. Mortgage-backed securities that we purchase are issued by Freddie Mac and Fannie Mae. Management monitors the securities portfolio for both credit and interest rate risk. We generally limit the purchase of corporate securities to individual issuers to manage concentration and credit risk. Corporate securities generally have a maturity of 10 years or less. U.S. Government securities consist of U.S. Treasury bills that have maturities of less than 30 days. Government agency securities generally have maturities of 15 years or less. Agency mortgage-backed securities have stated final maturities of 15 to 20 years. At December 31, 2025, the U.S. Government and Government agency securities and municipal bonds qualified as securities available to collateralize public funds. Securities pledged as collateral totaled $695.4 million at December 31, 2025 and $233.9 million at December 31, 2024. Our public funds deposits have a seasonal increase due to tax collections at the end of the year and the first quarter. We typically collateralize the seasonal public fund increases with short term instruments such as U.S. Treasuries or other agency backed securities. Our available for sale securities portfolio totaled $676.6 million at December 31, 2025, an increase of $395.5 million, or 140.7%, compared to $281.1 million at December 31, 2024. The increase was primarily due to the purchase of collateralized mortgage obligations and mortgage-backed securities. In the third and fourth quarter of 2025, First Guaranty has primarily purchased U.S. Government securities and U.S. Government mortgage-backed and collateralized mortgage obligations. Our held to maturity securities portfolio had an amortized cost of $322.7 million, net of allowance at December 31, 2025, compared to $321.6 million at December 31, 2024. There were no credit related impairment of available for sale securities during 2025. There were no charge-offs recorded during 2025. There was a provision of $0.1 million recorded in the fourth quarter of 2024. The allowance for credit losses for held to maturity securities was $0.2 million at December 31, 2025 and December 31, 2024. The following tables set forth the stated maturities and weighted average yields of our investment securities at December 31, 2025. At December 31, 2025 One Year or Less More than One Year through Five Years More than Five Years through Ten Years More than Ten Years (in thousands except for %) Carrying Value Weighted Average Yield Carrying Value Weighted Average Yield Carrying Value Weighted Average Yield Carrying Value Weighted Average Yield Available for sale: U.S. Treasuries $ 98,149 3.6 % $ — — % $ — — % $ — — % Corporate debt securities — — % 4,460 8.0 % 1,989 5.2 % — — % Municipal bonds 7,306 5.6 % 4,451 4.4 % 7,277 4.0 % 2,022 3.4 % Collateralized mortgage obligations — — % — — % 15,812 4.6 % 286,769 4.5 % Mortgage-backed securities — — % 1 5.4 % 7,461 4.5 % 240,895 4.6 % Total available for sale securities $ 105,455 3.7 % $ 8,912 6.2 % $ 32,539 4.5 % $ 529,686 4.5 % Held to maturity: U.S. Government Agencies $ — — % $ 19,664 1.6 % $ 87,398 2.5 % $ 160,564 2.5 % Corporate debt securities $ — — % $ 28,347 3.3 % $ 26,852 3.2 % $ — — % Total held to maturity securities $ — — % $ 48,011 2.6 % $ 114,250 2.7 % $ 160,564 2.5 % At December 31, 2025, $105.5 million, or 10.6%, of the securities portfolio was scheduled to mature in less than one year. Securities, not including mortgage-backed securities and collateralized mortgage obligations, with contractual maturity dates over 10 years totaled $162.6 million, or 16.3%, of the total portfolio at December 31, 2025. We closely monitor the investment portfolio's yield, duration, and maturity to ensure a satisfactory return. The average maturity of the securities portfolio is affected by call options that may be exercised by the issuer of the securities and are influenced by market interest rates. Prepayments of mortgages that collateralize mortgage-backed securities also affect the maturity of the securities portfolio. -56- Deposits Managing the mix and pricing the maturities of deposit liabilities is an important factor affecting our ability to maximize our net interest margin. The strategies used to manage interest-bearing deposit liabilities are designed to adjust as the interest rate environment changes. We regularly assess our funding needs, deposit pricing and interest rate outlooks. First Guaranty Bank uses reciprocal deposit insurance products for collateralization of deposits. In addition to reciprocal deposits, First Guaranty may periodically utilize one-way sell options under these networks that results in a drop in deposits and corresponding drop in cash, removing those assets and deposit liabilities from the balance sheet. Total deposits in the one-way sell network were $331.4 million at December 31, 2025. From December 31, 2024 to December 31, 2025, total deposits increased $156.6 million, or 4.5%, to $3.6 billion. Noninterest-bearing demand deposits increased $10.5 million, or 2.6% to $414.6 million at December 31, 2025. The increase in noninterest-bearing demand deposits was primarily concentrated in individual and business noninterest-bearing demand deposits. Interest-bearing demand deposits decreased $222.0 million, or 16.0%, to $1.2 billion at December 31, 2025. The decrease in interest-bearing demand deposits was primarily concentrated in public funds interest-bearing demand deposits that were in the one-way sell options of a reciprocal deposit network. Savings deposits decreased $20.5 million, or 8.7%, to $213.9 million at December 31, 2025, primarily related to decreases in public fund savings deposits. Time deposits increased $388.6 million, or 26.8%, to $1.8 billion at December 31, 2025, primarily due to increases in brokered time deposits of approximately $477.5 million. These new brokered time deposits have maturities of one to five years. Management will continue to evaluate and update our product mix and related technology in its efforts to attract additional customers. We currently offer a number of deposit products that are competitively priced and designed to attract and retain customers with primary emphasis on noninterest-bearing deposits, select time deposits and other lower cost deposits. At December 31, 2025, public funds deposits totaled $0.9 billion compared to $1.0 billion at December 31, 2024. Public funds time deposits totaled $78.7 million at December 31, 2025 compared to $78.4 million at December 31, 2024. First Guaranty has developed a program for the retention and management of public funds deposits. Since the end of 2012, First Guaranty has maintained public funds deposits in excess of $400.0 million. These deposits are from public entities such as school districts, hospital districts, sheriff departments and municipalities. The majority of these funds are under fiscal agency agreements with terms of three years or less. Deposits under fiscal agency agreements are generally stable but public entities may maintain the ability to negotiate term deposits on a specific basis including with other financial institutions. These deposits generally have stable balances as we maintain both operating accounts and time deposits for these entities. There is a seasonal component to public deposit levels associated with annual tax collections. Public funds will increase at the end of the year and during the first quarter. In addition to seasonal fluctuations, there are monthly fluctuations associated with internal payroll and short-term tax collection accounts for our public funds deposit accounts. Public funds deposit accounts are collateralized by FHLB letters of credit, by expanded reciprocal deposit insurance programs, by Louisiana municipal bonds and by eligible government and government agency securities such as those issued by the FHLB, FFCB, Fannie Mae, and Freddie Mac. First Guaranty intends to grow the proportion of its public funds portfolio that is collateralized by reciprocal deposit insurance as an alternative to pledging securities or utilizing FHLB letters of credit. First Guaranty initiated this strategy to invest these deposits more efficiently in higher yielding loans to improve the net interest margin and earnings. Total public funds collateralized by reciprocal deposit insurance programs decreased to $602.2 million at December 31, 2025 compared to $609.4 million at December 31, 2024. The following table sets forth public funds as a percent of total deposits. At December 31, (in thousands except for %) 2025 2024 Public Funds: Noninterest-bearing Demand $ 4,091 $ 4,385 Interest-bearing Demand 826,099 915,067 Savings 18,275 48,925 Time 78,722 78,420 Total Public Funds $ 927,187 $ 1,046,797 Total Deposits $ 3,632,877 $ 3,476,260 Total Public Funds as a percent of Total Deposits 25.5 % 30.1 % At December 31, 2025, the aggregate amount of outstanding certificates of deposit in amounts greater than $250,000 was approximately $174.7 million. At December 31, 2025, approximately $29.3 million of our certificates of deposit greater than $250,000 had a remaining term greater than one year. The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) was estimated at $267.4 million at December 31, 2025. This total excludes public funds deposits that are collateralized by securities or FHLB letters of credit. The amount of uninsured deposits including collateralized public funds deposits was estimated at $881.3 million at December 31, 2025. -57- The following table sets forth the maturity of certificates of deposits greater than $250,000 at December 31, 2025. (in thousands) December 31, 2025 Three months or less $ 50,808 Three to six months 37,201 Six months to one year 57,430 One to three years 17,579 More than three years 11,695 Total certificates of deposit greater than $250,000 $ 174,713 Borrowings First Guaranty maintains borrowing relationships with other financial institutions as well as the Federal Home Loan Bank on a short and long-term basis to meet liquidity needs. First Guaranty had $7.1 million in short-term borrowings outstanding at December 31, 2025 compared to $7.0 million outstanding at December 31, 2024. The short-term borrowings at December 31, 2025 and December 31, 2024 were comprised of repurchase agreements. First Guaranty had long-term borrowings from the FHLB that totaled $135.0 million at December 31, 2025 and December 31, 2024. First Guaranty converted previous short-term floating rate borrowings from the FHLB into long-term lower fixed rate borrowings in order to reduce interest expense. First Guaranty has a $100.0 million FHLB advance that matures in the second quarter of 2027, and a $35.0 million FHLB advance that matures in the third quarter of 2027. At December 31, 2025, we had $327.2 million in FHLB letters of credit outstanding obtained primarily for collateralizing public deposits compared to $455.7 million at December 31, 2024. First Guaranty had senior long-term debt totaling $14.2 million at December 31, 2025 and $15.2 million at December 31, 2024. In the quarter ended June 30, 2025, the parties amended the note to waive principal payments and permit quarterly interest payments in cash or common stock through March 31, 2026. On March 20, 2026, the parties extended the waiver of principal payments and the ability to make interest payments in cash or common stock through March 31, 2028. First Guaranty also had subordinated debt totaling $29.8 million at December 31, 2025 and $44.7 million at December 31, 2024. During the quarter ended June 30, 2025, First Guaranty entered into an amendment permitting quarterly interest to be paid in cash or common stock through March 31, 2026. On March 20, 2026, the parties extended the ability to make interest payments in cash or common stock through March 31, 2028. Shareholders' Equity Total shareholders' equity decreased to $226.2 million at December 31, 2025 from $255.0 million at December 31, 2024. The decrease in shareholders' equity was principally the result of a decrease of $58.9 million in retained earnings, partially offset by an increase of $21.2 million in surplus, a $5.6 million decrease in accumulated other comprehensive loss, and an increase of $3.3 million in common stock. The $58.9 million decrease in retained earnings was primarily due to net loss of $56.0 million during the year ended December 31, 2025, $0.6 million in cash dividends paid on shares of our common stock and $2.3 million in cash dividends paid on shares of our preferred stock. The $21.2 million increase in surplus and $3.3 million increase in common stock was primarily due to the conversion of $15.0 million in subordinated debt, the issuance of common stock through private placements during 2025, and common stock issued as payment-in-kind for interest on senior long-term and subordinated debt. The decrease in accumulated other comprehensive loss was primarily attributed to the decrease in unrealized losses on available for sale securities during the year ended December 31, 2025. -58- Results of Operations A discussion regarding significant changes in our financial condition from December 31, 2023 to December 31, 2024 and our results of operations for the year ended December 31, 2023 can be found under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 17, 2025, which is available on the SEC’s website at www.sec.gov and on our website, www.fgb.net. Performance Summary Year ended December 31, 2025 compared with year ended December 31, 2024. Net loss for the year ended December 31, 2025 was $56.0 million, a decrease of $68.5 million, as compared to $12.4 million of net income for the year ended December 31, 2024. The decrease in net income of $68.5 million for the year ended December 31, 2025 compared to the prior year was primarily the result of the provision to the credit allowance, the goodwill impairment charge, and a decrease in noninterest income. The increase in the provision for credit losses was related to changes within the portfolio, loan sales and charge-offs experienced in 2025. $43.4 million of the $81.7 million provision for the year was associated with one commercial lease relationship, as previously discussed. The decrease in noninterest income was related to the decrease of net gains on sale of assets related to the sale-leaseback transaction from the prior year. Loan interest income decreased primarily due to the decrease in First Guaranty's loan portfolio. Securities interest income increased due to an increase in the average balance and average yield of the investment portfolio. Noninterest expense increased primarily due to the goodwill impairment charge of $12.9 million. Income (loss) per common share for the year ended December 31, 2025 was $(4.17) per common share, a decrease of $4.98 per common share from net income of $0.81 per common share for the year ended December 31, 2024. Net Interest Income Our operating results depend primarily on our net interest income, which is the difference between interest income earned on interest-earning assets, including loans and securities, and interest expense incurred on interest-bearing liabilities, including deposits and other borrowed funds. Interest rate fluctuations, as well as changes in the amount and type of interest-earning assets and interest-bearing liabilities, combine to affect net interest income. First Guaranty’s assets and liabilities are generally most affected by changes in the Federal Funds rate, SOFR rate, short-term Treasury rates such as one month and three month Treasury bills, and longer term Treasury rates such as the U.S. ten year Treasury rate. Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities. There may also be a time lag in the effect of interest rate changes on assets and liabilities. It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds. A financial institution's asset and liability structure is substantially different from that of a non-financial company, in that virtually all assets and liabilities are monetary in nature. Accordingly, changes in interest rates may have a significant impact on a financial institution's performance. The impact of interest rate changes depends on the sensitivity to the change of our interest-earning assets and interest-bearing liabilities. The effects of the changing interest rate environment in recent periods and our interest sensitivity position is discussed below. Year ended December 31, 2025 compared with year ended December 31, 2024 . Net interest income for the years ended December 31, 2025 and 2024 was $86.9 million and $88.4 million, respectively. The decrease in net interest income for the year ended December 31, 2025 as compared to the prior year was primarily due to a decrease in the average yield of our total interest-earning assets and an increase in the average balance of our total interest-bearing liabilities, partially offset by an increase in the average balance of our total interest-earning assets and a decrease in the average rate of our interest-bearing liabilities. The average yield of our interest-earning assets decreased by 59 basis points to 5.59% from 6.18% for the year ended December 31, 2024 primarily due to a lower yield on interest-earning deposits with banks. For the year ended December 31, 2025, the average balance of our total interest-bearing liabilities increased by $210.0 million to $3.2 billion due to growth in interest-bearing deposits. For the year ended December 31, 2025, the average balance of our total interest-earning assets increased by $230.4 million to $3.8 billion due to growth in the securities portfolio and an increase in interest-earning deposits with banks. The average rate of our total interest-bearing liabilities decreased by 50 basis points to 3.92% from 4.42% for the year ended December 31, 2024. The primary source of the decrease in liabilities cost was associated with the repricing of interest bearing demand deposits for public funds that are primarily indexed to Treasury rates. As a result, our net interest rate spread decreased 9 basis points to 1.67% for the year ended December 31, 2025 from 1.76% for the year ended December 31, 2024. Our net interest margin decreased 19 basis points to 2.28% for the year ended December 31, 2025 from 2.47% for the year ended December 31, 2024. -59- Interest Income Year ended December 31, 2025 compared with year ended December 31, 2024 . Interest income decreased $8.4 million, or 3.8%, to $213.3 million for the year ended December 31, 2025 as compared to the prior year. The decrease in interest income was attributable to a $370.4 million decrease in the average balance of loans, along with a 27 basis point decrease in yield of loans. The average balance of our total interest-earning assets, primarily associated with securities and interest-earning deposits with banks, increased, partially offset by the decrease in the average yield of interest-earning assets. The average balance of our interest-earning assets increased $230.4 million to $3.8 billion for the year ended December 31, 2025 as compared to the prior year. The average yield of interest-earning assets decreased by 59 basis points to 5.59% for the year ended December 31, 2025 compared to 6.18% for the year ended December 31, 2024. Interest income on securities increased $11.1 million to $25.0 million for the year ended December 31, 2025 as compared to the prior year primarily as a result of an increase in average yield and average balance of securities. The average yield on securities increased by 53 basis points to 3.49% for the year ended December 31, 2025 from 2.96% for the year ended December 31, 2024 due to the increase in higher yielding securities. The average balance of securities increased $246.5 million to $716.2 million for the year ended December 31, 2025 from $469.7 million for the year ended December 31, 2024 primarily due to a increase in the average balance of our mortgage-backed securities and collateralized mortgage obligations securities portfolio compared to the prior year. Interest income on loans decreased $31.8 million, or 16.7%, to $158.6 million for the year ended December 31, 2025 as a result of a decrease in the average balance and average yield of loans. The average balance of loans (excluding loans held for sale) decreased by $370.4 million to $2.4 billion for the year ended December 31, 2025 from $2.8 billion for the year ended December 31, 2024 largely as a result of loan sales, portfolio payoffs, charge-offs and loans transferred to other real estate owned. The average yield on loans (excluding loans held for sale) decreased by 27 basis points to 6.59% for the year ended December 31, 2025 from 6.86% for the year ended December 31, 2024. Interest income on interest-earning deposits with banks increased $12.2 million to $29.6 million for the year ended December 31, 2025 as compared to the prior year period as a result of an increase in the average balance of interest-bearing deposits with banks, partially offset by a decrease in the yield on interest-earning deposits with banks. The average balance of interest-bearing deposits with banks increased $354.3 million to $693.0 million for the year ended December 31, 2025 from $338.7 million for the year ended December 31, 2024. The average yield on interest-earnings deposits with banks decreased by 86 basis points to 4.28% for the year ended December 31, 2025 from 5.14% for the year ended December 31, 2024. Interest Expense Year ended December 31, 2025 compared with year ended December 31, 2024 . Interest expense decreased $6.9 million, or 5.2%, to $126.3 million for the year ended December 31, 2025 from $133.3 million for the year ended December 31, 2024 due primarily to a decrease on the average rate of interest-bearing deposits, partially offset by an increase in the average balance of interest-bearing liabilities. The decrease in market interest rates, particularly U.S. Treasury rates, contributed to the decrease in rates paid on interest-bearing demand deposits. The largest concentration of interest-bearing demand deposits is associated with public funds deposits that are primarily indexed to Treasury rates. The average rate of interest-bearing demand deposits decreased by 74 basis points during the year ended December 31, 2025 to 3.62% as compared to 4.36% for the prior year. The average rate of time deposits decreased 41 basis points during the year ended December 31, 2025 to 4.28% as compared to 4.69% for the prior year. The decrease in the average rate of time deposits was due to changes in market rates as existing time deposits repriced. The average balance of interest-bearing liabilities increased by $210.0 million during the year ended December 31, 2025 to $3.2 billion. This increase was a result of a a $384.4 million increase in the average balance of time deposits, partially offset by a $129.0 million decrease in the average balance of interest-bearing demand deposits, a $3.5 million decrease in the average balance of savings deposits, and a $41.8 million decrease in the average balance of borrowings. Average Balances and Yields. The following table sets forth average balance sheet balances, average yields and costs, and certain other information for the years indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. Loans, net of unearned income, include loans held for sale. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense. The net interest income yield presented below is calculated by dividing net interest income by average interest-earning assets and is a measure of the efficiency of the earnings from the balance sheet activities. It is affected by changes in the difference between interest on interest-earning assets and interest-bearing liabilities and the percentage of interest-earning assets funded by interest-bearing liabilities. -60- December 31, 2025 December 31, 2024 (in thousands except for %) Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Assets Interest-earning assets: Interest-earning deposits with banks $ 693,003 $ 29,643 4.28 % $ 338,743 $ 17,399 5.14 % Securities (including FHLB stock) 716,204 25,029 3.49 % 469,679 13,925 2.96 % Federal funds sold 539 — — % 1,378 — — % Loans held for sale 846 — — % — — — % Loans, net of unearned income (5) 2,406,623 158,607 6.59 % 2,776,990 190,382 6.86 % Total interest-earning assets 3,817,215 213,279 5.59 % 3,586,790 221,706 6.18 % Noninterest-earning assets: Cash and due from banks 21,180 19,891 Premises and equipment, net 64,444 69,548 Other assets 15,951 30,785 Total Assets $ 3,918,790 $ 3,707,014 Liabilities and Shareholders' Equity Interest-bearing liabilities: Demand deposits $ 1,371,004 49,590 3.62 % $ 1,499,959 65,331 4.36 % Savings deposits 226,862 4,629 2.04 % 230,393 5,173 2.25 % Time deposits 1,432,478 61,287 4.28 % 1,048,118 49,166 4.69 % Borrowings 193,707 10,831 5.59 % 235,542 13,598 5.77 % Total interest-bearing liabilities 3,224,051 126,337 3.92 % 3,014,012 133,268 4.42 % Noninterest-bearing liabilities: Demand deposits 406,279 414,804 Other 39,694 24,084 Total Liabilities 3,670,024 3,452,900 Shareholders' Equity 248,766 254,114 Total Liabilities and Shareholders' Equity $ 3,918,790 $ 3,707,014 Net interest income $ 86,942 $ 88,438 Net interest rate spread(1) 1.67 % 1.76 % Net interest-earning assets(2) $ 593,164 $ 572,778 Net interest margin(3),(4) 2.28 % 2.47 % Average interest-earning assets to interest-bearing liabilities 118.40 % 119.00 % (1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average total interest-earning assets. (4) The tax adjusted net interest margin was 2.28% and 2.47% for the years ended December 31, 2025 and 2024. A 21% tax rate was used to calculate the effect on securities income from tax exempt securities for the years ended December 31, 2025 and 2024, respectively. (5) Includes loan fees of $4.9 million and $7.1 million for the years ended December 31, 2025 and 2024, respectively. -61- Volume/Rate Analysis . The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities for the years indicated. The table distinguishes between: (1) changes attributable to volume (changes in volume multiplied by the prior year's rate); (2) changes attributable to rate (change in rate multiplied by the prior year's volume) and (3) total increase (decrease) (the sum of the previous columns). Changes attributable to both volume and rate are allocated ratably between the volume and rate categories. For the Years Ended December 31, 2025 vs. 2024 Increase (Decrease) Due To (in thousands except for %) Volume Rate Increase/ Decrease Interest earned on: Interest-earning deposits with banks $ 15,573 $ (3,329) $ 12,244 Securities (including FHLB stock) 8,284 2,820 11,104 Federal funds sold — — — Loans held for sale — — — Loans, net of unearned income (24,630) (7,145) (31,775) Total interest income (773) (7,654) (8,427) Interest paid on: Demand deposits (5,296) (10,445) (15,741) Savings deposits (78) (466) (544) Time deposits 16,751 (4,630) 12,121 Borrowings (2,351) (416) (2,767) Total interest expense 9,026 (15,957) (6,931) Change in net interest income $ (9,799) $ 8,303 $ (1,496) Provision for Credit and Loan Losses A provision for credit losses is a charge to income in an amount that management believes is necessary to maintain an adequate allowance for credit losses. The allowance for loan losses is calculated under ASC 326 and is management's evaluation of expected credit losses over the life of the loans in the portfolio. The provision is based on management's regular evaluation of current economic conditions in our specific markets as well as regionally and nationally, changes in the character and size of the loan portfolio, underlying collateral values securing loans, and other factors which deserve recognition in estimating loan losses. Past events, current conditions, and reasonable forecasts, along with quantitative and qualitative adjustments, are used in calculating the allowance for credit losses. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. We recorded an $81.7 million provision for credit losses for the year ended December 31, 2025 compared to $20.0 million for 2024. The $81.7 million provision included a $0.5 million negative provision for credit losses related to unfunded commitments. The increase in the provision was primarily impacted by the $43.4 million reserve associated with one commercial lease relationship, as discussed above. Total charge-offs were $77.2 million for year ended December 31, 2025 and $18.6 million for 2024. Charge-offs for 2025 were concentrated in one commercial and industrial loan, one multifamily loan, one non-farm non-residential loan, a one-to-four family loan, three lease loan relationships, consumer loans and two construction and land development loans, both were subsequently sold during the first quarter of 2025. Partially offsetting these charge-offs were recoveries that totaled $0.9 million for the years ended December 31, 2025 and 2024. We believe that the allowance is adequate to cover expected losses in the loan portfolio. Economic uncertainty may result in additional increases to the allowance for credit losses in future periods. There were no provision for credit losses on AFS or HTM securities for the years ended December 31, 2025 and 2024. -62- Noninterest Income Our primary sources of recurring noninterest income are customer service fees, ATM and debit card fees, loan fees, gains on the sales of loans and available for sale securities and other service fees. Noninterest income does not include loan origination fees which are recognized over the life of the related loan as an adjustment to yield using the interest method. Noninterest income totaled $8.5 million for the year ended December 31, 2025, a decrease of $16.3 million from $24.7 million for the year ended December 31, 2024. The decrease was primarily due to decreased gains on sale of assets associated with the sale-leaseback transaction during the second quarter of 2024. Net securities gains (losses) were $0 for the year ended December 31, 2025 and 2024. Service charges, commissions and fees totaled $3.3 million for the year ended December 31, 2025 as compared to $3.2 million for 2024. ATM and debit card fees totaled $3.0 million for the year ended December 31, 2025 and $3.1 million for 2024. Net gains on the sale of loans were $0 for the year ended December 31, 2025 and $1.5 million for 2024. Other noninterest income totaled $2.8 million and $3.6 million for the years ended December 31, 2025 and 2024, respectively. Noninterest Expense Noninterest expense includes salaries and employee benefits, occupancy and equipment expense and other types of expenses. Noninterest expense totaled $82.2 million for the year ended December 31, 2025 and $77.1 million for the year ended December 31, 2024. Salaries and benefits expense totaled $30.5 million for the year ended December 31, 2025 and $38.3 million for the year ended December 31, 2024. Occupancy and equipment expense totaled $10.3 million for the year ended December 31, 2025 and $10.2 million for the year ended December 31, 2024. First Guaranty recognized a one-time non-cash impairment charge to goodwill of $12.9 million during the third quarter of 2025. Other noninterest expense totaled $28.6 million for the year ended December 31, 2025 and $28.6 million for 2024. The following table presents, for the years indicated, the major categories of other noninterest expense: (in thousands) For the Year Ended December 31, 2025 For the Year Ended December 31, 2024 Other noninterest expense: Legal and professional fees $ 3,412 $ 4,465 Data processing 1,353 1,555 ATM fees 1,674 1,668 Marketing and public relations 729 1,240 Taxes - sales, capital, and franchise 1,822 2,237 Operating supplies 200 336 Software expense and amortization 4,904 5,093 Travel and lodging 419 685 Telephone 374 424 Amortization of core deposits 696 696 Donations 224 267 Net costs from other real estate and repossessions 902 827 Regulatory assessment 6,708 4,688 Other 5,180 4,465 Total other expense $ 28,597 $ 28,646 -63- Income Taxes The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income and the amount of other non-deductible expenses and the statutory tax rate. The benefit for income taxes for the year ended December 31, 2025 was $12.5 million compared to a provision of $3.6 million for 2024. The provision for income taxes in 2025 decreased as compared to 2024 due to the decrease in income before income taxes. First Guaranty's statutory tax rate was 21.0% for the years ended December 31, 2025 and 2024. Impact of Inflation Our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K have been prepared in accordance with GAAP. These require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative value of money over time due to inflation or deflation. Unlike many industrial companies, substantially all of our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates may not necessarily move in the same direction or in the same magnitude as the prices of goods and services. However, other operating expenses do reflect general levels of inflation. The Federal Reserve increased interest rates during 2022 and 2023 to address rising inflation in the U.S. The impact of rising interest rates associated with inflation impacted First Guaranty's net interest income and net interest margin along with the value of its financial assets. Selected Financial Data The following table presents consolidated selected financial data for First Guaranty. It does not purport to be complete and is qualified in its entirety by more detailed financial information and the audited consolidated financial statements contained elsewhere in this annual report. At or For the Years Ended December 31, (in thousands except for %) 2025 2024 2023 2022 2021 Year End Balance Sheet Data: Investment securities $ 999,267 $ 602,719 $ 404,123 $ 451,526 $ 364,156 Federal funds sold $ 551 $ 430 $ 341 $ 423 $ 183 Loans, net of unearned income $ 2,069,802 $ 2,693,780 $ 2,748,708 $ 2,519,077 $ 2,159,359 Allowance for credit losses $ 40,755 $ 34,811 $ 30,926 $ 23,518 $ 24,029 Total assets $ 4,078,321 $ 3,972,728 $ 3,552,772 $ 3,151,347 $ 2,878,120 Total deposits $ 3,632,877 $ 3,476,260 $ 3,009,094 $ 2,723,792 $ 2,596,492 Borrowings $ 186,127 $ 201,923 $ 275,396 $ 183,369 $ 49,635 Shareholders' equity $ 226,218 $ 255,049 $ 249,631 $ 234,991 $ 223,889 Common shareholders' equity $ 193,160 $ 221,991 $ 216,573 $ 201,933 $ 190,831 Performance Ratios and Other Data: Return on average assets (1.43) % 0.34 % 0.28 % 0.97 % 1.01 % Return on average common equity (27.05) % 4.58 % 3.36 % 13.64 % 14.06 % Return on average tangible assets (1) (1.42) % 0.35 % 0.30 % 0.99 % 1.04 % Return on average tangible common equity (1) (28.42) % 5.21 % 3.98 % 15.31 % 15.98 % Net interest margin 2.28 % 2.47 % 2.69 % 3.47 % 3.44 % Average loans to average deposits 70.03 % 86.96 % 92.69 % 85.94 % 83.65 % Efficiency ratio (2) 86.20 % 68.16 % 83.62 % 63.94 % 63.63 % Efficiency ratio (excluding amortization of intangibles and securities transactions) (2) 85.47 % 67.54 % 82.89 % 63.30 % 63.32 % Full time equivalent employees (year end) 330 399 491 472 470 (Footnotes follow on next page) -64- At or For the Years Ended December 31, (in thousands except for % and share data) 2025 2024 2023 2022 2021 Capital Ratios: Average shareholders' equity to average assets 6.35 % 6.85 % 7.31 % 7.62 % 7.65 % Average tangible equity to average tangible assets (3) 6.05 % 6.44 % 6.82 % 7.08 % 7.02 % Common shareholders' equity to total assets 4.74 % 5.59 % 6.10 % 6.41 % 6.63 % Tangible common equity to tangible assets (3) 4.68 % 5.21 % 5.65 % 5.89 % 6.04 % Income Data: Interest income $ 213,279 $ 221,706 $ 183,009 $ 136,576 $ 111,917 Interest expense $ 126,337 $ 133,268 $ 98,304 $ 36,534 $ 22,299 Net interest income $ 86,942 $ 88,438 $ 84,705 $ 100,042 $ 89,618 Provision for credit losses $ 81,729 $ 20,034 $ 3,714 $ 3,656 $ 2,055 Noninterest income (excluding securities transactions) $ 8,476 $ 24,739 $ 10,577 $ 11,026 $ 10,046 Securities (losses) gains $ — $ — $ — $ (17) $ 714 Noninterest expense $ 82,249 $ 77,137 $ 79,672 $ 71,005 $ 63,868 Earnings (losses) before income taxes $ (68,560) $ 16,006 $ 11,896 $ 36,390 $ 34,455 Net income (loss) $ (56,022) $ 12,448 $ 9,219 $ 28,884 $ 27,297 Net income (loss) available to common shareholders $ (58,350) $ 10,119 $ 6,890 $ 26,556 $ 25,913 Per Common Share Data: Net earnings $ (4.17) $ 0.81 $ 0.62 $ 2.48 $ 2.42 Cash dividends paid $ 0.04 $ 0.41 $ 0.64 $ 0.64 $ 0.60 Book value $ 12.23 $ 17.75 $ 17.36 $ 18.84 $ 17.81 Tangible book value (4) $ 12.08 $ 16.48 $ 16.03 $ 17.23 $ 16.13 Dividend payout ratio for Common and Preferred (5.16) % 59.90 % 105.20 % 31.81 % 28.49 % Weighted average number of shares outstanding 13,985,460 12,501,035 11,165,303 10,716,796 10,716,796 Number of shares outstanding 15,793,433 12,504,717 12,475,424 10,716,796 10,716,796 Asset Quality Ratios: Non-performing assets to total assets 2.34 % 3.03 % 1.17 % 0.47 % 0.70 % Non-performing assets to total loans 4.61 % 4.47 % 1.52 % 0.59 % 0.93 % Non-performing loans to total loans 2.92 % 4.46 % 1.47 % 0.58 % 0.83 % Loan loss reserve to non-performing assets 42.69 % 28.92 % 74.12 % 158.68 % 119.95 % Net charge-offs to average loans 3.17 % 0.64 % 0.17 % 0.18 % 0.13 % Provision for credit losses to average loans 3.40 % 0.72 % 0.14 % 0.16 % 0.10 % Allowance for credit losses to total loans 1.97 % 1.29 % 1.13 % 0.93 % 1.11 % (1) Tangible calculation eliminates goodwill and acquisition intangibles, principally core deposit intangibles, net of accumulated amortization, net of tax. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Historical Consolidated Financial and Other Data— Non-GAAP Financial Measures." (2) Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. We calculate both a GAAP and a non-GAAP efficiency ratio. The GAAP-based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Financial Data— Non-GAAP Financial Measures. (3) We calculate tangible common equity as total shareholders' equity less preferred stock, goodwill and acquisition intangibles, principally core deposit intangibles, net of accumulated amortization, and we calculate tangible assets as total assets less goodwill and core deposit intangibles. Tangible common equity to tangible assets is a non-GAAP financial measure, and, as we calculate tangible common equity to tangible assets, the most directly comparable GAAP financial measure is total shareholders' equity to total assets. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Historical Consolidated Financial and Other Data— Non-GAAP Financial Measures." (4) We calculate tangible book value per common share as total shareholders' equity less preferred stock, goodwill and acquisition intangibles, principally core deposit intangibles, net of accumulated amortization at the end of the relevant period, divided by the outstanding number of shares of our common stock at the end of the relevant period. Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common share, the most directly comparable GAAP financial measure is book value per common share. See below for our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Selected Financial Data— Non-GAAP Financial Measures." -65- Non-GAAP Financial Measures Our accounting and reporting policies conform to accounting principles generally accepted in the United States, or GAAP, and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional metrics. Tangible book value per share and the ratio of tangible equity to tangible assets are not financial measures recognized under GAAP and, therefore, are considered non-GAAP financial measures. Our management, banking regulators, many financial analysts and other investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred equity and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions. Tangible equity, tangible assets, tangible book value per share or related measures should not be considered in isolation or as a substitute for total shareholders' equity, total assets, book value per share or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate tangible equity, tangible assets, tangible book value per share and any other related measures may differ from that of other companies reporting measures with similar names. The following table reconciles, as of the dates set forth below, shareholders' equity (on a GAAP basis) to tangible equity and total assets (on a GAAP basis) to tangible assets and calculates our tangible book value per share. At December 31, (in thousands except for share data and %) 2025 2024 2023 2022 2021 Tangible Common Equity Total shareholders' equity $ 226,218 $ 255,049 $ 249,631 $ 234,991 $ 223,889 Adjustments: Preferred Stock 33,058 33,058 33,058 33,058 33,058 Goodwill — 12,900 12,900 12,900 12,900 Acquisition intangibles 2,266 2,962 3,658 4,355 5,051 Other intangibles 100 100 100 — — Tangible common equity $ 190,794 $ 206,029 $ 199,915 $ 184,678 $ 172,880 Common shares outstanding 15,793,433 12,504,717 12,475,424 10,716,796 10,716,796 Book value per common share $ 12.23 $ 17.75 $ 17.36 $ 18.84 $ 17.81 Tangible book value per common share $ 12.08 $ 16.48 $ 16.03 $ 17.23 $ 16.13 Tangible Assets Total Assets $ 4,078,321 $ 3,972,728 $ 3,552,772 $ 3,151,347 $ 2,878,120 Adjustments: Goodwill — 12,900 12,900 12,900 12,900 Acquisition intangibles 2,266 2,962 3,658 4,355 5,051 Other intangibles 100 100 100 — — Tangible Assets $ 4,075,955 $ 3,956,766 $ 3,536,114 $ 3,134,092 $ 2,860,169 Tangible common equity to tangible assets 4.68 % 5.21 % 5.65 % 5.89 % 6.04 % The efficiency ratio is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate the efficiency ratio by dividing noninterest expense by the sum of net interest income and noninterest income, excluding amortizations of intangibles and securities transactions. The GAAP-based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income. Noninterest income in 2024 included the gain from the sale-leaseback transaction. The following table reconciles, as of the dates set forth below, our efficiency ratio to the GAAP-based efficiency ratio: For the Year Ended December 31, (in thousands except for share data and %) 2025 2024 2023 2022 2021 GAAP-based efficiency ratio 86.20 % 68.16 % 83.62 % 63.94 % 63.63 % Noninterest expense $ 82,249 $ 77,137 $ 79,672 $ 71,005 $ 63,868 Amortization of intangibles 696 696 696 696 764 Noninterest expense, excluding amortization 81,553 76,441 78,976 70,309 63,104 Net interest income 86,942 88,438 84,705 100,042 89,618 Noninterest income 8,476 24,739 10,577 11,009 10,760 Adjustments: Securities transactions — — — (17) 714 Noninterest income, excluding securities transactions $ 8,476 $ 24,739 $ 10,577 $ 11,026 $ 10,046 Efficiency ratio 85.47 % 67.54 % 82.89 % 63.30 % 63.32 % -66- Liquidity and Capital Resources Liquidity Liquidity refers to the ability or flexibility to manage future cash flows to meet the needs of depositors and borrowers and fund operations. Maintaining appropriate levels of liquidity allows us to have sufficient funds available to meet customer demand for loans, withdrawal of deposit balances and maturities of deposits and other liabilities. Liquid assets include cash and due from banks, interest-earning demand deposits with banks, federal funds sold and available for sale investment securities. First Guaranty's cash and cash equivalents totaled $845.7 million at December 31, 2025 compared to $564.2 million at December 31, 2024. Loans maturing within one year or less at December 31, 2025 totaled $469.5 million compared to $486.0 million at December 31, 2024. At December 31, 2025, time deposits maturing within one year or less totaled $977.0 million compared to $804.1 million at December 31, 2024. Time deposits maturing after one year through three years totaled $507.8 million at December 31, 2025 compared to $489.6 million at December 31, 2024. Time deposits maturing after three years totaled $52.2 million at December 31, 2025 compared to $157.0 million at December 31, 2024. First Guaranty's held to maturity ("HTM") investment securities portfolio at December 31, 2025 was $322.7 million or 32.3% of the investment portfolio compared to $321.6 million at December 31, 2024. First Guaranty's available for sale ("AFS") portfolio was $676.6 million, or 67.7% of the investment portfolio at December 31, 2025 compared to $281.1 million, or 46.6% at December 31, 2024. The majority of the AFS portfolio was comprised of corporate debt securities, municipal bonds, collateralized mortgage obligations and mortgage-backed securities. First Guaranty maintained a net borrowing capacity at the FHLB totaling $97.5 million and $339.2 million at December 31, 2025 and December 31, 2024, respectively with $135.0 million in FHLB advances outstanding at December 31, 2025 and December 31, 2024, respectively. The advances outstanding at December 31, 2025 and December 31, 2024 were comprised of two long term advances totaling $135.0 million. The change in borrowing capacity with the Federal Home Loan Bank was due to changes in the value that First Guaranty receives on pledged collateral and due to First Guaranty's usage of the line. First Guaranty has increasingly transitioned public funds deposits into reciprocal deposit programs for collateralization as an alternative to FHLB letters of credit. At December 31, 2025, we had outstanding letters of credit from the FHLB in the amount of $327.2 million that were primarily used to collateralize public funds deposits. We also maintain federal funds lines of credit at various correspondent banks with borrowing capacity of $93.0 million at December 31, 2025. We also have a discount window line with the Federal Reserve Bank that totaled $109.2 million at December 31, 2025. Management believes there is sufficient liquidity to satisfy current operating needs. Capital Resources First Guaranty's capital position is reflected in shareholders' equity, subject to certain adjustments for regulatory purposes. Further, our capital base allows us to take advantage of business opportunities while maintaining the level of resources we deem appropriate to address business risks inherent in daily operations. Total shareholders' equity decreased to $226.2 million at December 31, 2025 from $255.0 million at December 31, 2024. The decrease in shareholders' equity was principally the result of a decrease of $58.9 million in retained earnings, partially offset by an increase of $21.2 million in surplus, a $5.6 million decrease in accumulated other comprehensive loss, and an increase of $3.3 million in common stock. The $58.9 million decrease in retained earnings was primarily due to net loss of $56.0 million during the year ended December 31, 2025, $0.6 million in cash dividends paid on shares of our common stock and $2.3 million in cash dividends paid on shares of our preferred stock. The $21.2 million increase in surplus and the $3.3 million increase in common stock was primarily due to the conversion of $15.0 million in subordinated debt, the issuance of common stock under private placement during 2025, and common stock issued as payment-in-kind for interest on senior long-term and subordinated debt. The decrease in accumulated other comprehensive loss was primarily attributed to the decrease in unrealized losses on available for sale securities during the year ended December 31, 2025. -67- Capital Management We manage our capital to comply with our internal planning targets and regulatory capital standards administered by the Federal Reserve and the FDIC. We review capital levels on a monthly basis. We evaluate a number of capital ratios, including Tier 1 capital to total adjusted assets (the leverage ratio) and Tier 1 capital to risk-weighted assets. At December 31, 2025, First Guaranty and the Bank was classified as well-capitalized. First Guaranty's capital conservation buffer was 4.52% at December 31, 2025. The Bank's capital conservation buffer was 5.48% at December 31, 2025. The following table presents First Guaranty and the Bank's capital ratios as of the indicated dates. "Well Capitalized Minimums" At December 31, 2025 At December 31, 2024 Tier 1 Leverage Ratio Bank 5.00 % 6.90 % 7.82 % Consolidated N/A 5.93 % 6.42 % Tier 1 Risk-based Capital Ratio Bank 8.00 % 12.24 % 11.00 % Consolidated 8.00 % 10.52 % 9.04 % Total Risk-based Capital Ratio Bank 10.00 % 13.48 % 12.11 % Consolidated 10.00 % 13.12 % 11.73 % Common Equity Tier One Capital Bank 6.50 % 12.24 % 11.00 % Consolidated N/A 9.03 % 7.87 % Off-balance sheet commitments We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers and to reduce our own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby and commercial letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in our consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of the involvement in particular classes of financial instruments. The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and commercial letters of credit is represented by the contractual notional amount of those instruments. The same credit policies are used in making commitments and conditional obligations as we do for on-balance sheet instruments. Unless otherwise noted, collateral or other security is not required to support financial instruments with credit risk. The notional amounts of the financial instruments with off-balance sheet risk at December 31, 2025 and 2024 are as follows: Contract Amount (in thousands) December 31, 2025 December 31, 2024 Commitments to Extend Credit $ 70,846 $ 134,178 Unfunded Commitments under lines of credit $ 161,690 $ 186,006 Commercial and Standby letters of credit $ 18,531 $ 13,576 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on our credit evaluation of the counterpart. Collateral requirements vary but may include accounts receivable, inventory, property, plant and equipment, residential real estate and commercial properties. Unfunded commitments under lines of credit are contractually obligated by us as long as the borrower is in compliance with the terms of the loan relationship. Unfunded lines of credit are typically operating lines of credit that adjust on a regular basis as a customer requires funding. There may be seasonal variations to the usage of these lines. At December 31, 2025, the largest concentrations of unfunded commitments were lines of credit associated with construction and land development loans and commercial and industrial loans. -68- Commercial and standby letters of credit are conditional commitments to guaranty the performance of a customer to a third party. These guaranties are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The majority of these guaranties are short-term (one year or less); however, some guaranties extend for up to three years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral requirements are the same as on-balance sheet instruments and commitments to extend credit. The provision for credit losses on unfunded commitments was a reversal of $0.5 million and $1.6 million for the years ended December 31, 2025 and 2024, respectively. The ACL on off-balance-sheet credit exposures total $0.7 million at December 31, 2025 and $1.2 million at December 31, 2024 and is included in other liabilities on the accompanying consolidated balance sheets. -69-