About First Guaranty Bancshares

First Guaranty Bancshares, Inc. (First Guaranty) operates as the bank holding company for First Guaranty Bank that provides personalized commercial banking services mainly to Louisiana and Texas customers. The company has banking facilities primarily located in the metropolitan statistical areas (MSAs), of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, Lake Charles, Alexandria, Dallas-Fort Worth-Arlington, Waco, Texas. First Guaranty expanded into Kentucky and West Virginia, the company’s Mideast markets, in 2021 with loan and deposit production offices in Vanceburg, Kentucky. The Vanceburg location is a branch of the bank. The company’s principal business consists of attracting deposits from the general public and local municipalities in its market areas and then investing those deposits. The company also generates funds from operations, borrowings in lending and investing in securities. The company serves the credit needs of its customer base, including commercial real estate loans, commercial and industrial loans, commercial leases, one- to four-family residential real estate loans, construction and land development loans, agricultural and farmland loans, and to a lesser extent, consumer and multifamily loans. The company also participates in certain syndicated loans, including shared national credits, with other financial institutions. The company offers a variety of deposit accounts to consumers, small businesses and municipalities, including personal and business checking and savings accounts, time deposits and money market accounts. In addition, the company offers a broad range of consumer services, including credit cards, mobile deposit capture, safe deposit boxes, official checks and automated teller machines. For its business customers the company is pleased to offer additional solutions, such as credit cards, merchant services, remote deposit capture, ACH origination, and lockbox services. First Guaranty continues to expand the company’s digital services through an enhanced online banking system (including mobile app) which includes bill pay, budgeting tools, Biller Direct, Credit Aware powered by Savvy Money, and Card Swap. For its micro and small businesses, the company offers Autobooks via its online banking channel. The company remains committed to embracing new technology and strive to offer its customers new digital offerings as they are developed. The company invests a portion of its assets in securities issued by the United States Government and its agencies, state and municipal obligations, corporate debt securities, mutual funds, and equity securities. The company also invests in mortgage-backed securities primarily issued or guaranteed by United States Government agencies or enterprises. Markets The company’s primary market areas include the Louisiana MSAs of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, Lake Charles and Alexandria along with the Texas MSAs of Dallas-Fort Worth-Arlington and Waco. Most of the company’s branches are located along the major Louisiana interstates of I-12, I-55, I-10, I-49 and I-20. The company has four branches in the Dallas-Fort Worth metropolitan area and one branch in Waco, Texas. The company has a loan production office in Lake Charles, Louisiana. In 2021, First Guaranty expanded into Kentucky and West Virginia. The company has a branch located in Vanceburg, Kentucky and a loan and deposit production office in Bridgeport, West Virginia that are not in MSAs. The company refers to this region as its Mideast market. Strategy The company desires to grow its market share along Louisiana's key interstate corridors of major interstates I-12, I-55, I-10, I-49 and I-20. The company plans to continue expanding its Texas markets in Dallas Fort-Worth-Arlington and Waco both organically and through strategic acquisitions. The company opened loan and deposit production offices in Vanceburg, Kentucky and Bridgeport, West Virginia in late 2021. The Vanceburg, Kentucky location opened as a branch in January 2023. The key elements of the company’s strategy are to continue to increase total loans as a percentage of assets; expand individual and business deposits and maintain its public funds program; maintain strong asset quality; pursue strategic acquisitions; and seek innovative partnerships. Lending Activities The company offers a broad range of loan and lease products with a variety of rates and terms throughout its market areas, including business loans to primarily small to medium-sized businesses and professionals, as well as loans to individuals. The company’s lending operations consist of the following major segments: non-farm, non-residential loans secured by real estate, commercial and industrial loans, one- to four-family residential loans, construction and land development loans, agricultural loans, farmland loans, commercial leases, consumer and other loans, and multifamily loans. Non-Farm Non-Residential Loans: Non-farm non-residential loans are an integral part of the company’s operating strategy. The company expects to continue to emphasize this business line in the future with loans to small businesses and real estate projects in its market area. The company’s non-farm non-residential loans are secured by commercial real estate generally located in its market area, which may be owner-occupied or non-owner occupied. The company may originate, participate in, or purchase real estate loans outside of its market area in order to diversify its portfolio. Permanent loans on non-farm non-residential properties are generally originated in amounts up to 85% of the appraised value of the property for owner-occupied commercial real estate properties and up to 80% of the appraised value of the property for non- owner-occupied commercial real estate properties. The company considers a number of factors in originating non-farm non-residential loans. The company evaluates the qualifications and financial condition of the borrower (including credit history), profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. The company considers the financial resources of the borrower, the borrower's experience in owning or managing similar property and the borrower's payment history with it and other financial institutions. In evaluating the property securing the loan, the factors it considers include the net operating income of the mortgaged property before debt service and depreciation, the debt service coverage ratio (the ratio of net operating income to debt service) to ensure that the borrower's net operating income together with the borrower's other sources of income is at least 125% of the annual debt service and the ratio of the loan amount to the appraised value of the mortgaged property. The company generally obtains personal guarantees from the borrower or a third party as a condition to originating commercial real estate loans. All non-farm non-residential loans are appraised by outside independent appraisers approved by the board of directors. The company’s non-farm non-residential loans are diversified by borrower and industry group, and generally secured by improved property such as hotels, office buildings, retail stores, gaming facilities, warehouses, manufacturing facilities, church buildings and other non-residential buildings. Non-farm non-residential loans are generally made at rates that adjust above the prime rate as reported in the Wall Street Journal, that mature in three to five years and with principal amortization for a period of up to 20 years. The company will also originate fixed-rate, non-farm non-residential loans that mature in three to five years with principal amortization of up to 20 years. The company has also recently developed a fully amortizing loan product that will have periodic interest rate price resets. The company’s largest concentration of non-farm non-residential loans is secured by hotels, and such loans are generally made only to hotel operators known to management. Commercial and Industrial Loans: Commercial and industrial loans (excluding syndicated loans) are generally made to small and mid-sized companies located within Louisiana and Texas. The company also participates in government programs which guarantee portions of commercial and industrial loans, such as the SBA and USDA. The company requires collateral of equipment, accounts receivable, inventory, chattel or other assets before making a commercial business loan. The company has a dedicated staff within its credit department that monitors asset-based lending and regularly conducts reviews of borrowing based certificates, aging and inventory reports, and on-site audits. The company’s commercial and industrial maximum loan to value limit is 80%. The company’s commercial term loans are generally fixed interest rate loans, indexed to the prime rate, with terms of up to five years, depending on the needs of the borrower and the useful life of the underlying collateral. Typically, the company’s commercial lines of credit are adjustable rate lines, indexed to the prime interest rate, which generally mature yearly or within three years. The company’s underwriting standards for commercial and industrial loans include a review of the applicant's tax returns, financial statements, credit history, the underlying collateral and an assessment of the applicant's ability to meet existing obligations and payments on the proposed loan based on cash flow generated by the applicant's business. The company generally obtains personal guarantees from the borrower or a third party as a condition to originating commercial and industrial loans. Over the last 15 years, the company pursued a focused program to participate in syndicated loans (loans made by a group of lenders, including it, who share or participate in a specific loan) with a larger regional financial institution as the lead lender. Syndicated loans are typically made to large businesses (which are referred to as shared national credits) or middle market companies (which do not meet the regulatory definition of shared national credits), both of which are secured by business assets or equipment, and also commercial real estate. The syndicate group for both types of loans usually consists of two to three other financial institutions. These loans are adjustable-rate loans generally tied to LIBOR. The company’s participation amounts typically range between $5.0 million and $15.0 million. The company’s focus has been to finance middle market companies whose borrowing needs typically range from $25.0 million to $75.0 million. One- to Four-Family Residential Real Estate Loans: The company originates one- to four-family residential real estate loans that are secured primarily by residential property in Louisiana and Texas. The company generally originates loans in amounts up to 95% of the lesser of the appraised value or purchase price of the mortgaged property. The company offers one- to four-family residential real estate loans with terms up to 30 years that are generally underwritten according to Fannie Mae guidelines, and it refers to loans that conform to such guidelines as conforming loans. The company generally originates fixed-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency. The company generally holds its one- to four-family residential real estate loans in its portfolio. The company also originates one- to four-family residential real estate loans secured by non-owner occupied properties, but less frequently. The company’s fixed-rate one- to four-family residential real estate loans include loans that generally amortize on a monthly basis over periods between 10 to 30 years with maturities that range from eight to 30 years. Fixed rate one- to four-family residential real estate loans often remain outstanding for significantly shorter periods than their contractual terms because borrowers have the right to refinance or prepay their loans. The company’s one- to four-family loans also include home equity lines of credit that have second mortgages. The company’s home equity products are originated in amounts, that when combined with the existing first mortgage loan, do not generally exceed 80% of the loan-to-value ratio of the subject property. All of the company’s one- to four-family residential mortgages include due on sale clauses, which are provisions giving it the right to declare a loan immediately payable if the borrower sells or otherwise transfers an interest in the property to a third party. Property appraisals on real estate securing the company’s single-family residential loans are made by state certified and licensed independent appraisers approved by the board of directors. The company also requires fire and casualty insurance on all properties securing its one- to four-family residential loans. The company also requires the borrower to obtain flood insurance where appropriate. In some instances, it charges a fee equal to a percentage of the loan amount, commonly referred to as points. Multifamily Loans: On occasion, the company will originate loans secured by multifamily real estate. The company will originate multifamily loans in amounts up to 80% of the value of the multifamily property. Nearly all of the company’s multifamily loans are secured by properties in Louisiana and Texas. The underwriting of multifamily loans follows the general guidelines for the company’s non-farm non-residential loans. Construction and Land Development Loans: The company offers loans to finance the construction of various types of commercial and residential property. Construction loans to builders generally are offered with terms of up to 24 months and interest rates are tied to the prime lending rate. These loans generally are offered as fixed or adjustable-rate loans. The company will originate residential construction loans for individual borrowers and builders, provided all necessary plans and permits have been obtained. Construction loan funds are disbursed as the project progresses. The company will originate construction loans up to 80% of the estimated completed value of the project and it will originate land development loans in amounts up to 75% of the value of the property as developed. The company will originate owner occupied one-to-four family residential construction loans up to 90% of the estimated completed value of the property. Agricultural Loans: The company is the leading lender for agricultural loans in its Southwest Louisiana market. The company’s agricultural lending includes loans to farmers for the purpose of cultivating rice, sugarcane, soybeans, timber, poultry and cattle. Agricultural loans are generally secured by crops, but may include additional collateral, such as farm equipment or vehicles. The company will originate agricultural loans in those instances where the borrower's financial strength and creditworthiness has been established. Agricultural loans generally bear higher interest rates than residential loans, but they also may involve a higher risk of default since their repayment is generally dependent on the successful operation of the borrower's business. A large number of the company’s originated agricultural loans are guaranteed by the U.S. Farm Service Agency. The company generally obtains personal guarantees from the borrower or a third party as a condition to originating agricultural loans. The underwriting standards used for agricultural loans include a determination of the borrower's ability to meet existing obligations and payments on the proposed loan from normal cash flows generated in the borrower's business. Farmland Loans: The company originates first mortgage loans secured by farmland. The company obtains personal guarantees of the borrower on all loans secured by farmland. Commercial Leases: The company has a commercial lease program that it has operated for seven years. The company works with third parties to facilitate the sourcing of lease financing opportunities. Consumer and Other Loans: The company makes various types of secured consumer loans that are collateralized by deposits, boats and automobiles, as well as unsecured consumer loans. Consumer loans generally have a fixed rate at a margin over the prime rate and have terms of three years to ten years. The company’s procedure for underwriting consumer loans includes an assessment of the applicant's credit history and ability to meet existing obligations and payments for the proposed loan, as well as an evaluation of the value of the collateral security, if any. Deposit Products Consumer and commercial deposits are attracted principally from within the company’s primary market area through the offering of a selection of deposit instruments, including noninterest-bearing and interest-bearing demand, savings accounts and time accounts. The company actively seeks to obtain public funds deposits. The company has developed a program for the retention and management of public funds deposits. These deposits are from local government entities, such as school districts, hospital districts, sheriff departments and other municipalities. The majority of these deposits are under contractual terms of up to three years. 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 the company maintains 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 the company’s public funds deposit accounts. Public funds clients received funds associated with the CARES Act during 2021 and 2022 which increased average balances. These balances from CARES Act relief funds are anticipated to decline over time. Public funds deposit accounts are collateralized by FHLB letters of credit, reciprocal deposit insurance programs, Louisiana municipal bonds and eligible government and government agency securities such as those issued by the FHLB, FFCB, Fannie Mae, and Freddie Mac. Investments The company’s investment securities consist of the U.S. Treasury obligations; the U.S. government agency obligations; mortgage-backed securities; collateralized mortgage obligations; corporate and other debt securities and municipal bonds. Supervision and Regulation The bank is a Louisiana-chartered commercial bank and is the wholly-owned subsidiary of the company, a Louisiana-chartered bank holding company. The bank's deposits are insured up to applicable limits by the FDIC. The bank is subject to extensive regulation by the Louisiana Office of Financial Institutions (the OFI), as its chartering agency, and by the FDIC, its primary federal regulator and deposit insurer. The bank is required to file reports with, and is periodically examined by, the FDIC and the OFI concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, including but not limited to, mergers with or acquisitions of other financial institutions. As a registered bank holding company, the company is regulated by the Federal Reserve Board. As a Louisiana-chartered bank, the bank is subject to the regulation and supervision of the OFI. Under Louisiana law, the bank may establish additional branch offices within Louisiana, subject to the approval of OFI. After the Dodd-Frank Act, the company can also establish additional branch offices outside of Louisiana, subject to prior regulatory approval, as long as the laws of the state where the branch is to be located would permit such expansion. Transactions between a bank and its affiliates are limited by Sections 23A and 23B of the Federal Reserve Act, applicable to FDIC-insured state nonmember banks by Section 18(j) of the Federal Deposit Insurance Act, and its implementing regulations. An affiliate of a bank is any company or entity that controls, is controlled by or is under common control with the bank. The bank is a member of the FHLB System, which consists of eleven regional FHLBs. The FHLB System provides a central credit facility primarily for member institutions as well as other entities involved in home mortgage lending. As a member of the FHLB of Dallas, the bank is required to acquire and hold a specified amount of shares of capital stock in the FHLB. As of December 31, 2022, the bank was in compliance with this requirement. Interest and other charges collected or contracted for by the bank are subject to state usury laws and federal laws concerning interest rates. First Guaranty Bank's operations are also subject to federal laws applicable to credit transactions, such as the: Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one-to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; Truth in Savings Act; and Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws. The operations of the bank also are subject to the: Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services; Check Clearing for the 21st Century Act (also known as Check 21), which gives substitute checks, such as digital check images and copies made from that image, the same legal standing as the original paper check; USA PATRIOT Act, which requires banks operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution's privacy policy and provide such customers the opportunity to "opt out" of the sharing of certain personal financial information with unaffiliated third parties. As a bank holding company, the company is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended, as administered by the Federal Reserve Board. The company is required to obtain the prior approval of the Federal Reserve Board to acquire all, or substantially all, of the assets of any bank or bank holding company. Prior Federal Reserve Board approval would be required for the company to acquire direct or indirect ownership or control of any voting securities of any bank or bank holding company if it would, directly or indirectly, own or control more than 5% of any class of voting shares of the bank or bank holding company. The company’s common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934. The Sarbanes-Oxley Act addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. As directed by the Sarbanes-Oxley Act, the company’s Chief Executive Officer and Chief Financial Officer are required to certify that its quarterly and annual reports do not contain any untrue statement of a material fact. The company has policies, procedures and systems designed to ensure compliance with these regulations. History First Guaranty Bancshares, Inc. was founded in 1934. The company was incorporated in 2003.