FGBIP First Guaranty Bancshares Inc

First Guaranty Bancshares, Inc. ("First Guaranty") (NASDAQ: FGBI), the holding company for First Guaranty Bank, announced its key developments and unaudited financial results for the second quarter and six months ending June 30, 2024.

Key developments are as follows:

• First Guaranty is initiating changes to its business strategy. The changes include slowing the trajectory of the bank’s asset growth, further increasing the capital position, and working with leaner staff while utilizing automation and technological advances. First Guaranty has reduced staff by 71 positions. This reduction represents approximately 15% of the bank’s workforce. Each of the affected employees will receive 60 days of pay, payment for their unused vacation time, their elected healthcare coverage through September 30, 2024, and will have the opportunity to apply for open positions within the bank. First Guaranty will continue its other noninterest expense reductions previously undertaken earlier in the year.
• First Guaranty anticipates that the change to the business strategy will generate a reduction in noninterest expense of approximately $12.0 million pre-tax on an annual basis which includes the reduction in staff. The cost savings are anticipated to impact the fourth quarter of 2024 by about $2.0 million pre-tax. It is anticipated that about $3.0 million in pre-tax savings will be realized per quarter for 2025.
• First Guaranty’s Board of Directors anticipates paying a quarterly cash dividend of $0.08 per share for the third and fourth quarters of 2024.
• As previously announced, on June 28, 2024, the Bank consummated a sale-leaseback transaction relating to two stand-alone branches and a portion of the headquarters building which also contains a branch (collectively, the “Properties”). The aggregate cash purchase price was $14.7 million. The sale-leaseback transaction resulted in a pre-tax gain of approximately $13.2 million, or $10.4 million after tax. Aggregate first full year of rent expense under the Lease Agreements will be approximately $1.3 million pre-tax, or $1.0 million after tax.

Financial Highlights for the second quarter and six months ended June 30, 2024, are as follows:

• Total assets increased $62.8 million and were $3.6 billion at June 30, 2024 and December 31, 2023. Total loans at June 30, 2024 were $2.8 billion, an increase of $84.6 million, or 3.1%, compared with December 31, 2023. Total deposits were $3.0 billion at June 30, 2024, an increase of $34.4 million, or 1.1%, compared with December 31, 2023. Retained earnings were $72.3 million at June 30, 2024, an increase of $4.3 million compared to $68.0 million at December 31, 2023. Shareholders' equity was $255.1 million and $249.6 million at June 30, 2024 and December 31, 2023, respectively.
• Net income for the second quarter of 2024 and 2023 was $7.2 million and $2.7 million, respectively, an increase of $4.5 million or 169.1%. Net income for the six months ended June 30, 2024 and 2023 was $9.5 million and $6.1 million, respectively, an increase of $3.4 million or 54.8%.
• Earnings per common share were $0.53 and $0.19 for the second quarter of 2024 and 2023, respectively, and $0.67 and $0.46 for the six months ended June 30, 2024 and 2023, respectively. Total weighted average shares outstanding were 12,504,717 and 10,913,029 for the second quarter of 2024 and 2023, respectively, and 12,497,313 and 10,815,454 for the six months ended June 30, 2024 and 2023, respectively. The change in shares was due to the issuance of 44,341 and 29,293 shares of common stock under the Equity Bonus Plan during the fourth quarter of 2023 and the first quarter of 2024, respectively, and the issuance of 1,714,287 shares of common stock under private placement in 2023.
• The allowance for credit losses was 1.07% of total loans at June 30, 2024 compared to 1.13% at December 31, 2023.
• Net interest income for the second quarter of 2024 was $21.2 million compared to $20.9 million for the same period in 2023. Net interest income for the six months ended June 30, 2024 was $43.2 million compared to $43.2 million for the six months ended June 30, 2023.
• The provision for credit losses for the second quarter of 2024 was $6.8 million compared to $0.5 million for the same period in 2023. The provision for credit losses for the six months ended June 30, 2024 was $9.1 million compared to $0.9 million for the six months ended June 30, 2023.
• First Guaranty had $1.0 million of other real estate owned as of June 30, 2024 compared to $1.3 million at December 31, 2023.
• The net interest margin for the three months ended June 30, 2024 was 2.48% which was a decrease of 26 basis points from the net interest margin of 2.74% for the same period in 2023. The net interest margin for the six months ended June 30, 2024 was 2.53% which was a decrease of 33 basis points from the net interest margin of 2.86% for the same period in 2023. First Guaranty attributed the decrease in the net interest margin to the increase in market interest rates that began in 2022 and continued through 2023 that increased the cost of liabilities. Loans as a percentage of average interest earning assets decreased to 81.1% at June 30, 2024 compared to 83.6% at June 30, 2023.

Investment securities totaled $358.6 million at June 30, 2024, a decrease of $45.6 million when compared to $404.1 million at December 31, 2023. At June 30, 2024, available for sale securities, at fair value, totaled $37.4 million, a decrease of $46.1 million when compared to $83.5 million at December 31, 2023. The decrease in available for sale securities was primarily due to the maturity of low yielding Treasury securities of which the proceeds were subsequently reinvested in higher yielding loans and or cash equivalents. At June 30, 2024, held to maturity securities, at amortized cost and net of the allowance for credit losses totaled $321.2 million, an increase of $0.5 million when compared to $320.6 million at December 31, 2023. The allowance for credit losses for HTM securities was $0.1 million at June 30, 2024 and December 31, 2023.

• Total loans net of unearned income were $2.8 billion at June 30, 2024, a net increase of $84.6 million from December 31, 2023. Total loans net of unearned income are reduced by the allowance for credit losses which totaled $30.3 million at June 30, 2024 and $30.9 million at December 31, 2023, respectively.
• Nonaccrual loans increased $37.1 million to $62.3 million at June 30, 2024 compared to $25.2 million at December 31, 2023. The increase in total nonaccrual loans was concentrated primarily in one commercial real estate relationship that totaled $36.9 million. This relationship is comprised of five loans secured by real estate located in the Midwest. $13.9 million of this relationship was previously reported in 90 day plus but still accruing at December 31, 2023.
• At June 30, 2024, our largest non-performing assets were comprised of the following nonaccrual loans: (1) $36.9 million non-farm non-residential loan relationship comprised of five loans; (2) a $2.0 million loan relationship that is classified as purchased credit deteriorated; (3) a commercial lease loan that totaled $1.8 million; (4) a construction and land development loan that totaled $1.7 million; (5) a commercial lease loan that totaled $1.7 million; and (6) a $1.3 million one- to four-family loan relationship.
• First Guaranty charged off $8.8 million in loan balances during the second quarter of 2024. The details of the $8.8 million in charged-off loans were as follows:

1. First Guaranty charged off $0.5 million in consumer loans during the second quarter of 2024. The consumer loan charge offs included $0.1 million of loans secured by automobiles or equipment and $0.4 million in unsecured loans.
2. First Guaranty charged off $3.8 million on a loan relationship associated with a restaurant supply business located in Louisiana during the second quarter of 2024. This loan was secured by real estate, equipment, and inventory. This loan had a previous specific reserve of $2.5 million as of March 31, 2024. This loan had no remaining principal balance at June 30, 2024.
3. First Guaranty charged off a $1.8 million commercial and industrial loan that was originated under the Main Street Lending Program during the second quarter of 2024. The $1.8 million was the unguaranteed retained portion of the loan. This loan had a previous allocation in the reserve of $1.8 million at March 31, 2024. This loan had no remaining principal balance at June 30, 2024.
4. First Guaranty charged off $0.6 million on a real estate secured loan located in Louisiana during the second quarter of 2024. This was an acquired loan from the Union Bank acquisition and was secured by rental properties. This loan had a remaining principal balance of $0.4 million at June 30, 2024.
5. First Guaranty charged off $0.4 million on a commercial and industrial SBA loan relationship during the second quarter of 2024. This relationship had a remaining principal balance of $0.6 million at June 30, 2024.
6. First Guaranty charged off $0.3 million on a real estate secured SBA loan during the second quarter of 2024. This loan had a remaining principal balance of $0.9 million at June 30, 2024.
7. Smaller loans and overdrawn deposit accounts comprised the remaining $1.4 million of charge-offs for the second quarter of 2024.

• Return on average assets for the three months ended June 30, 2024 and 2023 was 0.81% and 0.34%, respectively. Return on average assets for the six months ended June 30, 2024 and 2023 was 0.54% and 0.39%, respectively. Return on average common equity for the three months ended June 30, 2024 and 2023 was 12.16% and 4.19%, respectively. Return on average common equity for the six months ended June 30, 2024 and 2023 was 7.66% and 4.99% respectively. Return on average assets is calculated by dividing annualized net income by average assets. Return on average common equity is calculated by dividing annualized net income by average common equity.
• Book value per common share was $17.76 as of June 30, 2024 compared to $17.36 as of December 31, 2023. The increase was due primarily to the recent issuance of new shares and changes in accumulated other comprehensive income ("AOCI"). AOCI is comprised of unrealized gains and losses on available for sale securities, including unrealized losses on available for sale securities at the time of transfer to held to maturity.
• First Guaranty's Board of Directors declared cash dividends of $0.16 per common share in the second quarter of 2024 and 2023. First Guaranty has paid 124 consecutive quarterly dividends as of June 30, 2024.
• First Guaranty paid preferred stock dividends of $1.2 million during the first six months of 2024 and 2023.

About First Guaranty Bancshares, Inc.

First Guaranty Bancshares, Inc. is the holding company for First Guaranty Bank, a Louisiana state-chartered bank. Founded in 1934, First Guaranty Bank offers a wide range of financial services and focuses on building client relationships and providing exceptional customer service. First Guaranty Bank currently operates thirty-six locations throughout Louisiana, Texas, Kentucky and West Virginia. First Guaranty’s common stock trades on the NASDAQ under the symbol FGBI. For more information, visit www.fgb.net.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact which represent our current judgement about possible future events. We believe these judgements are reasonable, but these statements are not guarantees of any future events or financial results, and our actual results may differ materially due to a variety of factors, many of which are described in our most recent Annual Report on Form 10-K and our other filings with the U.S. Securities and Exchange Commission. We caution readers not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or otherwise revise any forward-looking statements.

For full release click here.

CONTACT: ERIC DOSCH, CFO

985.375.0308