First Guaranty Bancshares, Inc. Annual Report 2017

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FY2017 Annual Report · First Guaranty Bancshares, Inc.

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Loans, Net of Unearned Income
(in millions)

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www.fgb.net

ANNUAL REPORT 2017

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MORE OPPORTUNITIES

MORE LOCATIONS

MORE CONVENIENCE

MORE TECHNOLOGY

1049205512 EXPECT MORE Table of Contents

Financial Snapshot ....................................................................................................Page 3
Expect More ...............................................................................................................Page 4
2017 Accomplishments and Highlights ..................................................................Page 6
FGBI ............................................................................................................................Page 7
Letter from the Chief Executive Officer & President, Alton B. Lewis ................Page 8
Report from the Chief Financial Officer, Eric J. Dosch ........................................Page 9
Report from Senior Vice President, Glenn A. Duhon, Sr. ...................................Page 10
Report from Area President, Dallas/Fort Worth/Waco, J. Douglas Sanders .....Page 11
First Guaranty Bank Board of Directors ................................................................Page 12
First Guaranty Bank Advisory Board .....................................................................Page 13
First Guaranty Bank Officers ...................................................................................Page 14
Performance Graphs .................................................................................................Page 15
First Guaranty Bank Banking Centers Map and ATM Locations .......................Page 19
Bossier City Grand Opening ....................................................................................Page 20
Texas Welcome ...........................................................................................................Page 21
First Guaranty Bank Departments and Banking Centers

Departments and Guaranty Square – Hammond .......................................Page 22
Abbeville ...........................................................................................................Page 30
Amite ................................................................................................................Page 30
Benton ..............................................................................................................Page 31
Bossier City ......................................................................................................Page 31
Denham Springs ..............................................................................................Page 32
Denton ..............................................................................................................Page 32
Dubach .............................................................................................................Page 33
Fort Worth ........................................................................................................Page 33
Garland .............................................................................................................Page 34
Greensburg .......................................................................................................Page 34
Guaranty West – Hammond ..........................................................................Page 35
Haynesville .......................................................................................................Page 35
Homer ...............................................................................................................Page 36
Independence ..................................................................................................Page 36
Jennings ............................................................................................................Page 37
Kentwood .........................................................................................................Page 37
Kentwood West ................................................................................................Page 38
McKinney .........................................................................................................Page 38
Montpelier ........................................................................................................Page 39
Oil City .............................................................................................................Page 39
Ponchatoula .....................................................................................................Page 40
Berryland – Ponchatoula ...............................................................................Page 40
Vivian ................................................................................................................Page 41
Waco .................................................................................................................Page 41
Walker ...............................................................................................................Page 42
Watson ..............................................................................................................Page 42
Community Impact ...................................................................................................Page 43
Earning & Dividends ................................................................................................Page 60
Banks Headquartered in Louisiana .........................................................................Page 61
Our Mission, Values and Goals ...............................................................................Page 62
Financial Table of Contents ......................................................................................Page 63
Market for Registrants Common Equity ................................................................Page 131
Corporate Information ..............................................................................................Page 132

Visit www.fgb.net for additional information.

NASDAQ Stock Ticker Symbol: FGBI

www.facebook.com/FirstGuarantyBank

twitter.com/FGBank

www.linkedin.com/company/514157

www.youtube.com/user/FirstGuarantyBank

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Financial Snapshot

First Guaranty Bancshares, Inc.

At December 31, 2017, total assets were $1.75 billion, net income was $11.75 million, earning per common share was $1.37. Return
on average assets was 0.71% and return on average common equity was 8.59%. First Guaranty Bancshares, Inc. shares are traded
at the NASDAQ Global Market Exchange and has paid quarterly dividends for 98 consecutive quarters at December 31, 2017. Our
commitment to customer service, the dedicated leadership of our Board of Directors and the hard work of our employees are among
the reasons shareholders and customers can expect more.

Book Value Growth Per One 1993 Share[1]
(per common share)

Cash Dividends on Common Stock
(In thousands)

PERFORMANCE GRAPHS

6000

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3000

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2012

2013

2014

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2016

2017

Book Value per one 1993 share has increased
from $3.70 to $43.49 since 1993.

First Guaranty has paid $66,896,000 in

Cash Dividends to common shareholders since 1993.

Dividends Per One 1993 Common Share [2]

Profile

First Guaranty Bancshares, Inc. is the
holding company of First Guaranty Bank,
which it wholly owns. The Bank is a full-
service financial institution with a major
in
presence throughout Louisiana and
northeast Texas, serving customers from 27
banking center locations. Headquartered in
Hammond, Louisiana, the Company had
349 employees as of December 31, 2017.

2.0

1.5

1.0

0.5

0.0

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2008

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2014

2015

2016

2017

[1] Book value has been adjusted for cumulative stock splits and dividend of 2.66 times since 1993.

[2] Cash dividends from the perspective of one original share of common stock from 1993 to present,

this considers the impact of stock splits and stock dividends.

EXPECT MORE Expect More

MORE FROM US

First Guaranty Bancshares, Inc., and its wholly-owned
subsidiary First Guaranty Bank, advanced its fortress balance
sheet goals and significantly improved shareholder value
throughout 2017 while continuing on that solid path today.
During the fourth quarter of 2017, First Guaranty declared and
issued a 10% stock dividend to shareholders, along with our 98th
consecutive quarterly cash dividend. Core income continues to
increase and at year end totaled $12,672,000. Total shareholders'
equity in First Guaranty Bancshares, Inc. increased by 16% in
2017 and book value per share increased from $14.86 to $16.35.
Shareholders can expect more performance and balance sheet
strength as our concentration and emphasis remains focused on
our fortress balance sheet.

2017 brought a new Banking Center in Bossier City, Louisiana
and acquisition of Synergy Bank in Texas, which added five
Texas locations in Denton, Fort Worth, Garland, McKinney and
Waco. Expect more growth as First Guaranty Bank continues
to search for additional merger and acquisition opportunities
to widen our footprint. In addition to a strong balance sheet,
customers and shareholders can trust our well-established core
values and performance focal point will remain steadfast. In this
regard, First Guaranty takes great pride in being predictable
and reliable. The Chairman, Board of Directors, Executive
Management, Officers and employees challenge themselves to
continuous improvement and are dedicated to this goal.

Customers depend on First Guaranty Bank to offer and provide
the latest in technology and financial services to satisfy their
banking needs. With First Guaranty, convenience and security
are paramount to ensure all customer transactions are safe and
secure whenever they utilize online banking, mobile banking,
apps or ATMs. Commercial and personal customers enjoy our
myriad of convenient products and services including bill pay,
mobile check deposit and e-statements.

At First Guaranty, we understand that loans are vital to customers
and that quick approval is important. The loan committee
is responsive and responsible in all its lending practices.
First Guaranty Bank offers home mortgages and consumer
and business loans including term loans, automobile loans,
real estate loans, interim construction loans, Small Business
Administration loans, agricultural and equipment loans, as well
as lines of credit and our letter of credit.

Combined with our wide range of financial products and
services, First Guaranty strives to build and enhance each
customer relationship. First Guaranty remains committed
to customer satisfaction and employees pride themselves
on offering the utmost respect and professionalism with all
customers, associates and friends. As a company, as well
as employees individually, First Guaranty gives back to the
communities we serve with active involvement in civic and
charitable organizations and events.

MORE CONCERN & PROFESSIONALISM

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. First Guaranty is strong, safe and secure. Shareholders can
expect more of the same leadership, guidance, concern and
compassion. With continued emphasis on our fortress balance
sheet, we aim to expect more core growth and outstanding
performance. The Board of Directors, Advisory Board and
Executive Management share their vision and insight with
officers and employees. Together, our determined team of
bankers work in concert to serve our customers, shareholders
and to attract new customers with a high level of service. At
First Guaranty, we greatly appreciate and depend upon our
loyal customers at all our Banking Centers throughout all
service areas.

Expect More….
Expect First Guaranty Bank.

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2017 Accomplishments and Highlights

2017 Accomplishments and Highlights

1. Grand Opening of Bossier City, Louisiana

Banking Center.

2. Acquisition of Synergy Bank and addition of

five new Texas locations.

3. Approved design for new building which will
be located across from our headquarters.

4. Paid our 98th consecutive quarterly cash

dividend.

5. Paid 10% common stock dividend to

shareholders.

6. First Guaranty contributed $412,000 to our
local communities in 2017 with 1,673 hours
of service.

7. We set a new record from $949 million in loans
to $1.149 billion loans outstanding at year end.

8. In November 2017, First Guaranty acquired
a 50% ownership in Centurion Insurance
Services, Inc. which provides First Guaranty the
ability to increase non-interest income by selling
insurance products.

9. First Guaranty Bank received approval to

open a loan production office in Lake Charles,
Louisiana. We anticipate opening this office in
the second or third quarter of 2018. The Lake
Charles MSA is projected to be one of the fastest
growing regions in Louisiana.

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FIRST GUARANTY BANK CENTER

As FGB expands geographically, we must expand in facilities, too. We
are excited to begin the building of our world class FGB Center which
will house our IT, Training, and Customer Support Departments, a new
training facility and auditorium. The FGB Center will be located across
the street from our headquarters in Hammond, LA. We are proud to be
able to expand our walls and take advantage of advanced technology
to train our team, run our systems, and serve our customers. We look
forward to inviting you in for a look once completed.

10492055122017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. FGBI – NASDAQ Trading Price by Quarter
Stock Ticker Symbol: FGBI

FGBI

$24.76

$24.49

$25.00

$21.75

$22.00

$17.05

$15.50

$14.09

$14.55

$14.77

11/5/15

12/31/15

3/31/16

6/30/16

9/30/16

12/31/16

3/31/17

6/30/17

9/29/17

12/29/17

First Guaranty Bancshares, Inc. is traded on NASDAQ exchange at ticker symbol FGBI with a record of strength.
Past performance is not indicative of future performance.

EXPECTMORERELIABLE DEPENDABLE PREDICTABLE EXPECT MORE Letter from the Chief Executive Officer & President

Dear Shareholders,

Expect More. We do expect more from ourselves and from First Guaranty Bank. Although we
had a solid 2017 with core earnings increasing by 9% over 2016 to a total of $12,672,000, with
a successful acquisition, merger and assimilation of Synergy Bank, with four more quarterly
dividends totaling $5,210,000 paid to our shareholders, with a 10% stock dividend paid to
our shareholders in December 2017, with shareholders’ equity and book value continuing to
increase, and with steady progress toward a fortress balance sheet, we not only expect more;
but, we demand more of ourselves and of First Guaranty Bank.

In 2017, our loan portfolio grew by $200 million despite selling off a $7 million student loan
portfolio acquired in the Synergy merger. Our loan interest income increased by 18.8% over
2016. Our net interest income increased by 9.8% over 2016. Our book value per common share
increased by $1.49. While our income was increasing, our non-performing assets declined by
34% from December 31, 2016 to December 31, 2017 as they dropped from $22.2 million to
$14.7 million.

2017 marked a solid year of progress toward a fortress balance sheet. 2017 marked a solid year
of progress toward enhanced shareholder value. 2017 marked a solid year of progress, building
a stronger, smarter, and more competent team throughout First Guaranty Bancshares, Inc.; but
we expect and demand more. We must continue to develop and improve our team. We must
continue to improve our service to our customers and to improve the services and products
that we offer to our customers. We must keep pace with new developments within banking
and technology to ensure that First Guaranty Bancshares, Inc. remains a viable, profitable,
and relevant factor in the banking industry. We must continue to build and diversify our loan
portfolio and loan income. We must continue to build and diversify our non-loan products
and income so as to strengthen First Guaranty Bancshares, Inc.’s ability to withstand any
changes in economic condition. As our first step in this direction, First Guaranty Bancshares,
Inc. has acquired a 50% ownership in Centurion Insurance Services, LLC of Charleston, West
Virginia, a commercial insurance brokerage firm. We must maintain control of our interest
expense and of our non-interest expense. We must continue to treat our employees fairly and
equitably. We must continue to serve and support the communities in which we live. We must
continue our progress toward a fortress balance sheet and toward enhanced shareholder value.

2017 set the stage for us to continue our progress in all of these areas and to continue to build
a stronger, better, enhanced First Guaranty Bancshares, Inc.

Sincerely,

Alton B. Lewis
Vice Chairman of the Board and Chief Executive Officer/President
FIRST GUARANTY BANCSHARES, INC.
Vice Chairman of the Board and Chief Executive Officer/President
FIRST GUARANTY BANK

Alton B. Lewis

Chief Executive Officer & President

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Eric J. Dosch

Chief Financial Officer

Report from the Chief Financial Officer

First Guaranty Bancshares, Inc. continued to gain strength in 2017. We continued our
momentum from 2016 as we completed our acquisition of Premier Bancshares, Inc. which
expanded the First Guaranty franchise into Texas. First Guaranty paid a 10% common
stock dividend in December 2017. First Guaranty purchased a 50% interest in an insurance
brokerage agency that will broaden the services that we deliver to our customers. First
Guaranty also opened a new branch in Bossier City, Louisiana which brings the total
number of bank branches to 27 between Texas and Louisiana.

Loans grew by 21.1% or $200.1 million from $948.9 million in 2016 to $1.15 billion in
2017. This growth was driven by the acquired loans from the Premier acquisition and
by our continued local loan growth. First Guaranty increased loan interest income $8.5
million in 2017. We have continued to execute our plan of growing loans as a percentage
of our balance sheet. Our loan portfolio finished December 31, 2017 at 66% of total assets,
an increase from 63% of total assets at December 31, 2016. Our average loan yield has
remained consistently above 5.0% during the last three years. The average loan yield was
5.11% for 2017 with a net interest margin of 3.33%.

Total common shareholder’s equity increased $19.6 million from $124.3 million in 2016 to
$144.0 million in 2017. Growth in shareholder’s equity was due to the Premier acquisition
and First Guaranty’s 2017 earnings. Retained earnings increased $5.5 million from $39.0
million in 2016 to $44.5 million in 2017. Our tangible common equity ratio was 7.87% at
December 31, 2017. The loan loss reserve was $9.2 million at 2017.

Earnings per common share were $1.37 in 2017. Tangible book value per share increased
7.5% from $14.50 at December 31, 2016 to $15.59 at December 31, 2017. Return on average
assets was 0.71% for 2017. The efficiency ratio was 62.64% in 2017. Return on average
common equity was 8.59% in 2017.

First Guaranty Bancshares paid a total of $5,210,000 in cash dividends to common
shareholders in 2017. The Company has paid 98 consecutive quarters of dividends as of
12/31/2017.

First Guaranty continues to build strength for the future and we have increased our common
capital. Our branch networks and markets now include the Dallas-Fort-Worth-Arlington
and Waco, Texas MSAs. First Guaranty continues to maintain a leading deposit market
share in the communities that we serve in Louisiana and we have significant opportunities
to expand our deposit franchise in Texas. Our continuing investment in the education of
our employees, planning and reporting systems has increased productivity. We believe that
the combination of these efforts will lead to a strong and profitable future for First Guaranty
Bancshares, Inc.

Sincerely,

Eric J. Dosch
Chief Financial Officer
FIRST GUARANTY BANCSHARES, INC.
Chief Financial Officer
FIRST GUARANTY BANK

EXPECT MORE Report from the Senior Vice President

The Southwest Louisiana Region of First Guaranty Bank exceeded our 2017 loan goal,
however, due to large payoffs, ended the year with less volume than 2016. Our loan goal was
set at $30 million and the Region produced $36.4 million new loans. The Jennings Banking
Center ended 2017 with $35.3 million in deposits and $25.6 million in loan volume - an
increase of $6.7 million in loans and a decline of $800,000 in deposits. First Guaranty Bank’s
Abbeville Banking Center had $82.3 million in loans and $125.1 million in deposits – a
decrease of $17.6 million in loans and an increase of $6.2 million in deposits.

First Guaranty’s Southwest Louisiana customers can expect more banking services during
2018 and 2019 with increases in loans, deposits and customer satisfaction. With several new
loans currently in the pipeline, we should see Southwest Louisiana’s loan volume increase.
We are excited to be opening our new loan production office in Lake Charles to enable a
lending presence, personal interaction with the local community and lending success.

We expect more for 2018 and 2019. We have several loans in the pipeline, plus we are in the
process of opening a loan production office in Lake Charles, which should help increase the
Southwest Louisiana Region’s loan volume.

Southwest Louisiana rice farmers produced good yields in 2017 with prices remaining the
same as most farmers managed to meet their financial obligations. Area sugarcane farmers
had excellent yields and prices allowing them to better their financial positions.

We believe that the experience and dedication of our employees, the support of our board
of directors, combined with the trust and loyalty of our customers will allow this Southwest
Louisiana Region continued success. First Guaranty Bank’s Southwest Louisiana Region
expects more growth in our market share as we expand banking services, office locations and
enhance our customer relationships.

Sincerely,

Glenn A. Duhon, Sr.
Senior Vice President/Regional Manager

FIRST GUARANTY BANK

Glenn A. Duhon, Sr.

Senior Vice President/
Regional Manager

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. J. Douglas Sanders

Area President
Dallas/Fort Worth/Waco

Report from Area President Dallas/Fort Worth/Waco

In June 2017 all of the Texas Synergy Bank employees became First Guaranty family
members and the journey has been a nonstop learning experience. We have participated in
several training classes at each level with FGB staff visiting all Texas locations and most, if
not all, Texas staff members visiting the FGB Hammond headquarters. Allowing the Texas
staff to meet the Louisiana staff to learn policies and procedures together has united our two
cultures and has enabled everyone to feel their job has now become the new normal.

Our Texas loan balance at merger date was $128.0 million and we sold $7.3 million of
student loans in August 2017. Our net loans grew to $150.8 million by the end of the year.
Our total net growth following the planned sale of the student loans was $30.1 million or
25% through the remaining six months of 2017. We also generated $300,000 in gains on sale
of loans from the SBA loan portfolio. This has improved non-interest income and should
always help this category.

We consider the Dallas-Fort Worth metropolitan area to be our trade area within which we
have many existing customers. There are over 7.1 million residents in this area and given
the projections for growth, this merger will be the perfect recipe for our lenders. Our plan
is to have all FGB lenders offering the SBA loan product in Texas as well as all 27 locations.
We have seasoned underwriters and loan closers in our McKinney office that provide
unmatched knowledge and service.

FGB Texas has four experienced commercial lenders and plans to add two additional
lenders in our Waco and Denton banking centers as soon as possible.

We anticipate 2018 to be successful now that we have the initial training completed and a
knowledgeable staff in place and ready to perform.

If you would like any additional information concerning our plan for Texas or need to discuss
any matter regarding First Guaranty Bank in Texas please do not hesitate to contact me.

Sincerely,

J. Douglas Sanders
Area President Dallas/Fort Worth/Waco
FIRST GUARANTY BANK

EXPECT MORE First Guaranty Bank
BOARD OF DIRECTORS

Back row, left to right: Bruce McAnally, Jack M. Reynolds, Morgan S. Nalty,
Marshall T. Reynolds, Alton B. Lewis, Charles Brister

Middle row, left to right: Robert H. Gabriel, Dr. Phillip E. Fincher, Gloria M. Dykes,
Nancy C. Ribas, William K. Hood, Edgar R. Smith, III

Front row, left to right: Richard W. “Dickie” Sitman, Edwin L. Hoover, Jr.,
Andrew Gasaway, Anthony J. Berner, Jr.

Pictured at left: Ann A. Smith

Pictured at right: Jack Rossi

ANTHONY J. BERNER, JR.
President, Pon Food Corporation

EDWIN L. HOOVER, JR.
President, Encore Development Corporation

CHARLES BRISTER
President, Brister’s Consulting and Rentals

GLORIA M. DYKES
Owner, Dykes Beef Farm and
Part Owner, Dykes Feed & Fertilizer, Inc.

DR. PHILLIP E. FINCHER
Retired Economics/Finance Professor
North Louisiana Advisory Board

ROBERT H. GABRIEL
President, Gabriel Building Supply Company

ANDREW GASAWAY, JR.
Secretary to the Board
President, Gasaway-Gasaway-Bankston
Architects

WILLIAM K. HOOD
Chairman, Directors Loan Committee and
Audit Committee of First Guaranty Bank
President, Hood Automotive Group

ALTON B. LEWIS
Vice Chairman of the Board and
Chief Executive Officer/President,
First Guaranty Bancshares, Inc.
Vice Chairman of the Board and
Chief Executive Officer/President
First Guaranty Bank

BRUCE McANALLY
Registered Pharmacist

MORGAN S. NALTY
Investment Banking Executive & Partner,
Johnson, Rice & Company, LLC

JACK M. REYNOLDS
Vice President, Pritchard Electric Co. and
Vice President, Trifecta Productions, LLC

MARSHALL T. REYNOLDS
Chairman of the Board,
First Guaranty Bancshares, Inc.
Chairman of the Board,
First Guaranty Bank
Chairman of the Board, Champion Industries

NANCY C. RIBAS
Owner/Manager, World Trend Properties and
University Motors

JACK ROSSI
Chairman, Audit Committee of First Guaranty
Bancshares, Inc.
CPA, consultant

RICHARD W. “DICKIE” SITMAN
Board President, Dixie Electric Membership
Corp., (Baton Rouge, Louisiana)
Board Member CoBank ACB, (Denver,
Colorado)

ANN A. SMITH
Tangipahoa Parish School Board Member
(Former President and Finance Chair)
Board of Supervisors of Southern University
System, Chairwoman,
Louisiana Office of Student Financial Advising
Board (LOSFA), Chairwoman

EDGAR R. SMITH, III
Chairman and Chief Executive Officer
Smitty’s Supply, Inc.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. First Guaranty Bank
ADVISORY BOARD

Above photo:
Thomas “Tommy” D. Crump, Jr., Gil Dowies, III,
Dr. Phillip E. Fincher, John D. Gladney, M.D.

Pictured at left: Britt L. Synco

The members of the First Guaranty Bank Advisory
Board include: Thomas D. “Tommy” Crump, Jr.,
Carrell G. “Gil” Dowies, III, Dr. Phillip E. Fincher,
John D. Gladney, M.D. and Britt L. Synco.

These adept gentlemen assist the bank
in
moving forward by sharing their breadth of
experience and providing critical insight into
essential business interests including oil and gas
production, agriculture and forestry. The Advisory
Board works with the Board of Directors and
management to develop lending and marketing
philosophies to best affect First Guaranty Bank.
With wholesale and retail expertise throughout
north Louisiana, this group examines financial
and civic activities.

EXPECT MORE First Guaranty Bank
OFFICERS

EXECUTIVE

ALTON B. LEWIS*
President and CEO
Guaranty Square

ERIC J. DOSCH*
Chief Financial Officer
Guaranty Square

Senior Vice Presidents

GLENN A. DUHON, SR.
Regional Manager

Abbeville

THOMAS F. BROTHERS
Director of Internal Audit

RONALD R. FOSHEE
Regional Manager
Denham Springs

MICHAEL F. LOFASO
Regional Manager
Ponchatoula

BRANDON C. LONG
Chief Lending Officer

J. DOUGLAS SANDERS
Area President

Dallas/Fort Worth/Waco

DESIREE B. SIMMONS
Loan Administration, Marketing &
Training

EVAN M. SINGER
Director of Mergers & Acquisitions

Regional Manager
Greensburg

J. RICHARD STARK
Operations

CHRISTY L. WELLS
Regional Manager
Hammond

Controller

ERIC M. FULLER

Vice Presidents

CHARLES L. BAGGS

ASHLEY N. BELL

BRENDA A. BRISCOE

CHERYL Q. BRUMFIELD

COLLEEN B. EBARB

RONALD W. EDMONDS

DENISE D. FLETCHER

HECTOR I. GARCIA, CIO

ADAM J. JOHNSTON

DIANNE E. KEEN

MICHAEL D. KNIGHTEN

MIKKI M. KELLEY

MICHAEL A. MOSBEY

RONALD C. PITTMAN

SCOTT B. SCHILLING

BRITTANY D. SHAW

LISA K. STOKER

RANDY S. VICKNAIR, CCO

MICHAEL A. WIGGINS

Assistant Vice Presidents

JAMES M. BAXTER

DARRELL D. BRUCHHAUS

C. GRAHAM CRUMP

LANCE S. DAVIS

HARRISON P. GILL

LUDRICK P. HIDALGO

LESLIE A. HINZMAN

SHIRLEY P. JONES

JOELLEN K. JUHASZ, BSA Officer

KEITH T. KLEIN

TRACY D. PERRY

CRAIG E. SCELFO

JOHN A. SYNCO

D. LYNN TALLEY

KRISTINA E. TERRY

Officers

REBECCA G. BROWN

KENNETH M. BYRD

LAURYN H. COBURN

VANESSA R. DREW

JEANNETTE N. ERNST

VICTOR M. GARCIA

DEV M. PATEL, Lending Officer

RAHUL R. PATEL, Lending Officer

DIANE PATTERSON

KRISTIN M. WILLIAMS

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2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.
PERFORMANCE GRAPHS

Tangible Common Equity [3]
(in thousands)

Tangible Common Equity
(in thousands)

1993

1998

2003

2008

2013

2014

2015

2016

2017

Total Assets
(in thousands)

150000

120000

90000

60000

30000

2000000

1750000

1500000

1250000

1000000

750000

500000

250000

1993

1998

2003

2008

2013

2014

2015

2016

$ 9,005

$17,376

$43,557

$61,429

$80,033

$96,531

$114,927

$121,372

2017

$137,262

Tangible Common Equity
has increased
$128.3 million since 1993.

Total Assets
(in millions)

1993

1998

2003

2008

2013

2014

2015

2016

2017

$159

$245

$485

$871

$1,436

$1,519

$1,460

$1,501

$1,750

First Guaranty Assets
have increased
1,000% since 1993.

1993

1998

2003

2008

2013

2014

2015

2016

2017

EXPECT MORE PERFORMANCE GRAPHS

Net Income
(in millions)

1993

1998

2003

2013

2014

2015

2016

2017

Total Deposits
(in millions)

1993

1998

2003

2008

2013

2014

2015

2016

2017

2000

1500

1000

500

Net Income
(in millions)

1993

1998

2003

2008

2013

2014

2015

2016

2017

$2.1

$3.7

$7.0

$5.5

$9.1

$11.2

$14.5

$14.1

$11.8

Total Deposits
(in millions)

1993

1998

2003

2008

2013

2014

2015

2016

2017

$149

$257

$376

$780

$1,303

$1,372

$1,296

$1,326

$1,549

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. PERFORMANCE GRAPHS

Loans, Net of Unearned Income
(in millions)

Loans, net of unearned income
(in millions)

1993

1998

2003

2008

2013

2014

2015

2016

2017

Investments [4]
(in millions)

1200

1000

800

600

400

200

800

700

600

500

400

300

200

100

1993

1998

2003

2008

2013

2014

2015

2016

2017

$105

$177

$381

$606

$703

$790

$842

$949

$1,149

Investments
(in millions)

1993

1998

2003

2008

2013

2014

2015

2016

2017

$30

$73

$59

$139

$635

$642

$546

$499

$502

1993

1998

2003

2008

2013

2014

2015

2016

2017

[3]Total equity less preferred equity, goodwill and acquisition intangibles, principally core deposit intangibles,

net of accumulated amortization.

[4] Available for sale securities at fair value, held to maturity at amortized cost

EXPECT MORE 23

TEXAS

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10492055122017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.
23

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LOUISIANA

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First Guaranty Bank
BANKING CENTERS

1. MAIN OFFICE

Hammond - Guaranty Square

2. Hammond - Guaranty West
3. Abbeville
4. Amite
5. Benton
6. Bossier City
7. Denham Springs
8. Dubach
9. Greensburg
10. Haynesville
11. Homer
12. Independence
13. Jennings
14. Kentwood
15. Kentwood West
16. Montpelier
17. Oil City
18. Ponchatoula
19. Ponchatoula - Berryland
20. Vivian
21. Walker
22. Watson
23. Denton
24. Fort Worth
25. Garland
26. McKinney
27. Waco

SOUTH LOUISIANA
ABBEVILLE, LA
799 West Summers Drive

AMITE, LA
100 East Oak Street
1014 West Oak Street

BEDICO, LA
Bedico Supermarket
28473 Highway 22

DENHAM SPRINGS, LA
2231 South Range Avenue

GREENSBURG, LA
6151 Hwy. 10

HAMMOND, LA
1201 West University Avenue

2111 West Thomas Street

400 East Thomas

North Oaks Medical Center:
4 Medical Center Drive

ATM LOCATIONS

North Oaks Rehabilitation
Center:
1900 South Morrison
Boulevard

INDEPENDENCE, LA
455 Railroad Avenue

JENNINGS, LA
500 North Cary

KENTWOOD, LA
723 Avenue G

LIVINGSTON, LA
(LPMC) Livingston Parish
Medical Center:
17199 Spring Ranch Rd.

LORANGER, LA
19518 Highway 40

MONTPELIER, LA
35651 Hwy. 16

PONCHATOULA, LA
500 W. Pine St.
105 Berryland Shopping
Center

ROBERT, LA
Robert’s Supermarket -
22628 Highway 190

WALKER, LA
29815 Walker Road South

WATSON, LA
33818 Hwy. 16

NORTH LOUISIANA
BENTON, LA
189 Burt Boulevard

BOSSIER CITY, LA
4221 Airline Drive

DUBACH, LA
117 East Hico Street

HAYNESVILLE, LA
10065 Highway 79

HOMER, LA
Homer Memorial Hospital
401 North 2nd Street

OIL CITY, LA
126 South Highway 1

VIVIAN, LA
102 East Louisiana Avenue

TEXAS
MCKINNEY, TX
8951 Synergy Dr, #100

WACO, TX
7600 Woodway Drive

1049205512 EXPECT MORE Bossier City Grand Opening

GRAND OPENING

Bossier City is located in northern Louisiana on I-20, approximately
15 miles from the Texas state border and 185 miles east of Dallas, Texas.
Our primary market area has a diversified economy with employment in
services, government and wholesale/retail trade constituting the basis of
the local economy, with service jobs being the largest component. The
primary areas of services include health care, casino gaming industry and
energy. Bossier Parish is also the home to the Barksdale Air Force Base,
which has 12,000 employees.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Texas Welcome

Our customers expect more. And we deliver. Not only in Louisiana,
but in Texas, too. In 2017, FGB broadened our footprint as we
embarked upon an acquisition of Synergy Bank. Over the course
of 10 months we took the time to get to know our new team
members, welcome them with open arms and educate them on
FGB. Several visits were made by managers to learn of the staffing
necessities as we worked towards continuing to meet the needs of
our Texas customer base. We learned a lot along the way which
will serve to make us better in the future.

Located along the Brazos River between Dallas and Austin, Waco,
Texas is home to Baylor University, Texas Ranger Museum, Mammoth
National Monument, and much more!

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The city of Garland where our FGB Banking Center is located is the third
largest city in Dallas county. Garland, like the entire surrounding area, is
experiencing growth in business and residents.

Denton is undergoing a downtown revitalization.

Doug Sanders says, “Fort Worth has the best museums, second to none!”

Money Magazine ranked McKinney as the #1 Best Place to live in America
(2014), based on excellent schools, beautiful natural parks, affordable and
diverse housing, employment opportunities and a vibrant downtown.

EXPECT MORE

First Guaranty Bank
DEPARTMENTS & BANKING CENTERS

GUARANTY SQUARE
(985) 345-7685
(888) 375-3093
400 East Thomas Street
Hammond, LA 70401

BSA/FRAUD:

Above, left to right: Ashleigh Duroncelet, Evan Singer,
JoEllen Juhasz, Casey Turner, Sharmaine Robertson

Pictured at right: Deborah Worthington (McKinney)

APPRAISAL REVIEW:

Back row: Amy Starkey

Middle row: Starr Bernier

Front row: Kristina Terry

CASH MANAGEMENT:

Left: Vikki Dupaquier, Right: Hannah Winget

EXPECTMORERELIABLE DEPENDABLE PREDICTABLE 2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. COLLATERAL:

Back row, left to right: Cate Mathes, Kelli Jordan,
Sue Thigpen, Paul Lee

Front row, left to right: Silvia Rodriguez, Robyn Giacone,
Lauryn Coburn

COMPLIANCE:

Left to right: Rebecca Brown, Ann Morgan, Colleen Ebarb

CREDIT:

Back row, left to right: Nic Brennan, Randy Vicknair, Adam Smith, David Spier

Middle row, left to right: Jessica Hrenyk, Nicholas Byrd, Emily Creech, Megan Dvorak

Front row, left to right: Louis Cusimano, Melanie Gottschalck, Marisa Rodrigues,
Brittany Saltzman, Colton McDaniel, Jakayla Brown

Pictured above: Keith Klein
(McKinney)

Not Pictured: Michael Wiggins

EXPECT MORE
CUSTOMER SUPPORT CENTER:

Back row, left to right: Jessica Spears, Danyelle Green, Alexander Gondolfi, Laura Ard, Pamela Stafford

Front row, left to right: Rhonda Mitchell, Davon Mitchell, Kelley Mackabee, Matt Bettencourtt, Shari Wheeler

DEPOSIT OPERATIONS:

Back row, left to right: Megan Braden, Anna Smith,
Divetta Stallworth, Glenda Saucier, Sandra Edwards,
Tammy Graves

Front row, left to right: Letitia Cox, Shirley Jones,
Lori Lloyd

EXECUTIVE:

Back row, left to right: Casie Qualls, Vanessa Drew,
Kristin Williams

Front row, left to right: Alton Lewis, Jason Wilson

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. FINANCE:

Pictured above: Charles Baggs (Waco)

Pictured at right: Back row, left to right:
Michael Moye, Donna Scamardo, Diane Patterson,
Heather Lee, Diane Lanier, Philip Qualls

Front row, left to right: Eric Fuller, Laquita Johnson,
Katherine Campbell, Chandra McKinney, Eric Dosch

Not pictured: Sharon George (McKinney)

FRONT LINE:

Back row, left to right: Linda Miller, Latoya Williams,
Craig Conners

Middle row, left to right: Jeannette Ernst, Brandi Steffek
(floater), Danielle Day (floater)

Front row, left to right: Madison Amos, Bethany Traylor,
Kelly Wall (floater)

HUMAN RESOURCES:

Back row, left to right: Chantelle Starkey, Landa Domangue

Front row, left to right: Mandi Aguillard, Mikki Kelley

EXPECT MORE Pictured above: Anthony Koernig
(McKinney)

INTERNAL AUDIT, LOAN REVIEW, & INFORMATION SECURITY:

Back row, left to right: Michelle Dionne, Lana Quinn, Michael Mosbey,
Nancy Rodriguez, Tae Anderson

Front row, left to right: Bill Worthy, Tom Brothers, Jason McKenzie

LENDING:

Back row, left to right: Evan Singer, Christy Wells, Craig Scelfo, Catherine Egnew,
Michael Knighten

Front row, left to right: Tracy Nelson, Brandon Long, Vickie Jenkins

IT:

Fourth row, left to right: Donna Turnage, Allen Daussin, Austin Grant

Third row, left to right: Barry Hay, Keith Mills, David Couvillon

MARKETING:

Second row, left to right: Moi Rodriguez, Hector Garcia

Front row, left to right: Craig Rachel, Star Lala

Left to right: Jane Wear, Desiree Simmons, April Alford, Harli Manuel

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. LOAN OPS:

Back row, left to right: Donna Hodges, Keisha Smith, Kellie Weisler, Lynn Talley, Christy Frierson,
Audrey Carter, Ariele Davis, Trinitrius Brown

Front row, left to right: Bonnie Garcia, Julie Carmo, Luke Lavergne,
Star Spriggs, Sharon Rogers

LOAN OPS (McKinney)

Back row, left to right: Sydnee Philbert,
Jenny Bae

Front row: Lisa Stoker

MORTGAGE:

Back row, left to right: Susan Fitzgerald, Kelli Perry-Bennett,
Laci Farkas, Melissa Duchmann

Front row, left to right: Amy Fabre, Mandy Lee, Amy Hopson,
Bris’ Perry

OPERATIONS:

Back row, left to right: Elisa Costanza, Betty Boney, Richard Stark, Tracey Robertson, Kendra Fairburn,
Debbie Dubuisson, Elaine Conner

Front row, left to right: Desiree Theall, Carla Cook, Brittany Harness, Christe Feimster, Kerri Gladney

Pictured at right: Shane Hughes

EXPECT MORE PURCHASING:

Back row: Joseph Ernest

Middle row: Teresa Wempren

Front row: Evan Singer

SPECIAL ASSETS:

Back row, left to right: Ronnie Pittman, Luke Hammonds

Front row, left to right: Lee Ann Sibley, Kriss Patterson

TRAINING:

Left to right: Shanon Dunn, Vikki Dupaquier, Miranda Derveloy

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Enjoying a Rare Snowstorm

EXPECT MORE ABBEVILLE BANKING CENTER
(337) 893-1777 / (800) 306-3276
799 West Summers Drive
Abbeville, LA 70510

AMITE BANKING CENTER
(985) 748-5111
100 East Oak Street
Amite, LA 70422

Back row, left to right: Glenn Duhon, Charisse Stevens-Cormier, Tanya Mernard,
Amy Broussard

Front row, left to right: Diane Frederick, Lisa Kritzer, Gretchen Meaux, April Frederick

Back row, left to right: Liz Mckinzie, Miranda Rainey, Scott Schilling, Suzette Brooks,
Jenny Sue Weedman

Front row, left to right: Blaire Holmes, Marsha Spring, Brittani Erdey

Not pictured: Stephanie Campo

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. BENTON BANKING CENTER
(318) 965-2221
189 Burt Boulevard
Benton, LA 71006

BOSSIER CITY CENTER
(318) 383-5234
4221 Airline Drive
Bossier City , LA 71111

Back row, left to right: Greg Friesen, Marcus Rounds, Dennis Crumpton

Front row, left to right: Alisha Blankenship, Monique Rochelle, Donna Cummings

Not pictured: Sidney Lewis, Erin Carr

Back row, left to right: Terboris Posey, Joedi Snipes, Adam Johnston, Hannah Winget,
Daniel Loe, Nikio Resse, Lynn Henry

Front row, left to right: Ellen Buskey, Angelena Warren, Irvin Williams, Jennifer Knapp,
Erika Taylor

EXPECT MORE DENHAM SPRINGS BANKING CENTER
(225) 791-7964
2231 South Range Avenue
Denham Springs, LA 70726

Back row, left to right: Ludrick Hidalgo, Sharon Moore, Danna Jo Erwin, Michelle Gehling,
Lisa Thompson, Kevin Foster

Front row, left to right: Kelli Perry-Bennett, Courtney Ortego, Kandace Sparacino,
Kathie Alimia

Pictured at left: Ronnie Foshee

DENTON BANKING CENTER
(940) 383-0700
2209 W University Drive
Denton , TX 76201

Back row, left to right: Leslie Hinzman, Karen Stevenson, Mahvash Becker

Front row: Brittany Fritze

Not Pictured: Sandra Whittington

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. DUBACH BANKING CENTER
(318) 777-3461
117 East Hico Street
Dubach, LA 71235

Back row, left to right: Sue Yates, Mic Baxter, Kristy Puckett

Middle row, left to right: Patty Duhart, Heather Croxton

Front row, left to right: Laurie Traylor, Diane Shoemaker

FORT WORTH BANKING CENTER
(817) 502-6611
2001 N. Handley Ederville Road
Fort Worth , TX 76118

Back row, left to right: Tiffany Alford, Indra Pant, Briana Ochoa, Matt Martinez,
Amanda Rodriguez

Front row, left to right: Kenneth Byrd, Graham Crump

Not Pictured: Doug Sanders, Brittany Shaw

EXPECT MORE GARLAND BANKING CENTER
(214) 227-4550
603 Main St, #101
Garland, TX 75040

GREENSBURG
BANKING CENTER
(225) 222-6101 / (800) 227-6101
6151 Highway 10
Greensburg, LA 70441

Back row, left to right: Brenda Briscoe

Middle row, left to right: Tracy Perry, Perla Alvizo

Front row, left to right: Mary Atterbury, Jennifer Petty, Charles Baggs

Back row, left to right: Phylicia Vernon, Kaycee Bridges, Rhonda Miller

Front row, left to right: Brianna Scott, Melissa Smith, Courtne’ Coleman

Not pictured: Harrison Gill

Pictured at left: Evan Singer

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. HAMMOND – GUARANTY WEST
BANKING CENTER
(985) 375-0371
2111 West Thomas Street
Hammond, LA 70401

Fourth row, left to right: Cheryl Brumfield, Lauren Small, Kenyatta Jackson

Third row, left to right: Chris Shaver, Janelle Heard, Ashley James

Second row, left to right: Stacy Williams, Jerika Williams, Tania Wren

Front row, left to right: Connie Miller, Karen Paille

Not Pictured: Denise Foster

HAYNESVILLE
BANKING CENTER
(318) 624-1171
10065 Highway 79
Haynesville, LA 70138

Left to right: Carla Goode, Julia Tabor, Tammy Burley

Not pictured: Aleshia Lee

EXPECT MORE HOMER BANKING CENTER
(318) 927-3000
401 North 2nd Street
Homer, LA 71040

INDEPENDENCE
BANKING CENTER
(985) 878-6777
455 West Railroad Avenue
Independence, LA 70443

Back row, left to right: John Synco, Shirley White, Courtney Williams, Debbie Spigener,
Dot Frazier, Ron Edmonds

Front row, left to right: Caroline Arnold, Candie White, Jamie Williams, Elaine Atencio,
Kitsha Ridley

Not pictured: Caree Bailey, Sara Pennington (floater)

Back row, left to right: Carmella Coslan, Tamara Neil, Cheryl Brumfield, Richard Hamilton

Front row, left to right: Karen Paille, Pam Brazil, Cherry Khurana, Devona Matthews

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. JENNINGS BANKING CENTER
(337) 824-1712
500 North Cary
Jennings, LA 70546

KENTWOOD BANKING CENTER
(985) 229-3361
301 Avenue F
Kentwood, LA 70444

Back row, left to right: Rahul Patel, Darrell Bruchhaus, Amber Leger

Front row, left to right: Trisha Patterson, Mona Fontenot

Back row, left to right: Ashlyne Richard, Lindsey George, Karen Griffin, Connie Butler

Front row, left to right: Angie Lott, Lance Davis, Nicole Brumfield, Christy Wright

Not Pictured: Lisa Rushing

EXPECT MORE KENTWOOD WEST
(985) 229-6101
723 Avenue G
Kentwood, LA 70444

MCKINNEY BANKING CENTER
(972) 562-1400
8951 Synergy Drive, #100
McKinney , TX 75070

Left to right: Christy Wright, Ruby Carter, Brittany Graham

Back row, left to right: Danielle Carter, Dacina McNabb

Front row, left to right: Victor Garcia, Deborah King

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. MONTPELIER BANKING CENTER
(225) 777-4304
35651 Highway 16
Montpelier, LA 70422

Back row, left to right: Liz Zito, Brianna Chaney

Front row, left to right: Betsy Ehret, Trella Page

OIL CITY BANKING CENTER
(318) 995-6682
126 South Highway 1
Oil City, LA 71061

Back row, left to right: Elaine Bounds, Shannon Jackson, Glenda Graham, Andie Bruno,
Emma Rolling

Front row, left to right: Mary Casey, Toni Harris

EXPECT MORE PONCHATOULA BANKING CENTER
(985) 386-2000
500 West Pine Street
Ponchatoula, LA 70454

PONCHATOULA-BERRYLAND
BANKING CENTER
(985) 386-5430
105 Berryland Shopping Center
Ponchatoula, LA 70454

Back row, left to right: Renee Stewart, Mike Lofaso, Denise Fletcher, Kristy Petit,
Brandon Wear

Front row, left to right: Aimee Gervais, Misty Chauvin, Chassidy Beauchamp, Kelly Ballex,
Anita Buckhanan

Left to right: Joede Piazza, Nicole Morgan, Tammy Carraway, Kelly Ballex

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. VIVIAN BANKING CENTER
(318) 375-3202
102 East Louisiana Avenue
Vivian, LA 71082

WACO BANKING CENTER
(254) 399-0700
7600 Woodway Drive
Waco , TX 76712

Back row, left to right: Amber Smith, Tina Gay, Brandy Moon, Stacy Thompson

Front row, left to right: Bobbie Clark, Tessie Hasha, Frances Thompson

Not pictured: Cynthia Munoz

Back row, left to right: Stephen Senn, Federico Guerrero (Waco IT Staff)

Middle row, left to right: Jacea Robinson, Valarie Moon (Floater), Pamela Lambert

Front row, left to right: Torie Montgomery, Stacy Diaz, Dianne Keen

EXPECT MORE WALKER BANKING CENTER
(225) 664-5549
29815 South Walker Drive
Walker, LA 70785

WATSON BANKING CENTER
(225) 665-0400
33818 Highway 16
Denham Springs, LA 70706

Back row, left to right: Sheila Lofton, Clint Trant, Sylvia Moore

Front row, left to right: Sara El Kadi, Robin Bonfanti, Mary Carroll

Left to right: Carrie Jarreau, Ludrick Hidalgo, Crystal Lipscomb

Not pictured: Judy Hughes, Dev Patel

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. COMMUNITY IMPACT

Community contributions are a priority budget item for First Guaranty
Bank. Listed are the institutions, organizations and associations that we
have assisted with contributions and sponsorships during 2017.

At First Guaranty Bank, our goal is to help improve the communities we
serve. In addition to monetary contributions, our employees dedicated
time, energy and effort to many of these worthy causes

Chassidy Beauchamp presented a
contribution to Hannah Henderson,
soccer team member for the PHS soccer
booster club.

Terboris Posey presented a contribution to Katie Theriot
Director of Business Development/Investor Relations at the
Bossier Parish Chamber of Commerce for the upcoming
Annual Gala.

Elaine Atencio presented a contribution
to Randy Linder, Manager, for the Homer
Golf Club.

Mary Casey presented a contribution to the DBMS Robotics
program. The money will be used to purchase three new Lego EV3
robotics kits. Left to right: Mary Casey, Autumn Lantz (front), Abbi
Clifton (back) Joseph Hinton (front) Ryder Briggs (back) Hayden
Phipps, Kwame Johnson, Mark Kapera.

Brenda Briscoe presented a contribution to Gwendolyn Daniels, Garland MLK
Events Coordinator for the NAACP Garland Unit.

First Guaranty Bank contributions for community support were $412,000 in 2017.

EXPECT MORE Community Impact

Cheryl Brumfield and Karen Paille presented a contribution to Mrs. Cheryl Santangelo, Principal,
faculty and the entire student body for Mater Dolorosa Catholic School.

Mona Fontenot presented a contribution to Vera
Abraham, Activity Coordinator, for Assist Agency.

Clint Trant presented a contribution to Kathleen
Abels with TARC.

Alton Lewis and Mike Knighten are presented with a beautiful carving from Southeastern Louisiana
University Lions Athletic Association as a thank you for our contributions.

Cheryl Brumfield presented a contribution
to Toys for Tots – Tangipahoa Parish Non-
profit Organization. Included in the photo
are left to right are: Katie Cannon, Director
for Tangipahoa Parish, Cheryl Brumfield and
Heather Howell, Independence Chamber of
Commerce President.

Elaine Atencio presented a contribution to a few members of the Claiborne Academy Golf Team for
the 9th Annual Joe Michael Golf Tournament.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Community Impact

Diane Shoemaker presented a contribution to Gail
Colvin, President of DRABO, Dubach Restoration and
Beautification Inc., for the Louisiana Chicken Festival.

Cheryl Brumfield and Stacy Williams presented a contribution to the Breast Cancer
Foundation located in Amite. Left to right front: Stacy Williams, Annie Wren, Founder and
President, Cheryl Brumfield and from left to right back: Glenda Cross, Chante Buchanan,
and Junious Buchanan.

Harrison Gill presented a contribution to Sharon Birch;
Administrator for a project at the St. Helena Parish
Nursing Home.

Amber Leger presented
a contribution to Lynn
Aube for the Jennings High
School After Grad Party.

Lance Davis presented a contribution to Robert Brister,
President of Kentwood Rotary for the annual Kentwood
Rotary Golf Tournament.

April Alford, Kristin Williams and Mackenzie Russell presented a contribution to Lisa
Lambert from the City of Hammond for the Back to School Bash.

EXPECT MORE Community Impact

Joedi Snipes and Adam Johnston presented a contribution
to Shreveport Unlimited for the Mudbug Madness to
Melanie Bacon.

Ronnie Pittman presented a contribution to Jodie Rohner from
Crime stoppers Nite Out Against Crime.

Cheryl Brumfield and Stacy Williams presented a
contribution to the Tangipahoa African American
Heritage Museum and Veterans Archives for the
upcoming Black Tie Affair. Left to right: Stacy Williams,
Delmas Dunn, President of the Tangipahoa African
American Heritage Museum and Veterans Archives,
Cheryl Brumfield.

Lee Ann Sibley presented a contribution to James Sparacello and Jill Hutchinson, both of the
Tangipahoa Parish Sheriff ’s Office, for the upcoming rodeo.

Luke Hammonds presented a contribution to Katherine
Marquette, Executive Director for Hammond Regional
Arts Center, for the upcoming Beer Fest.

Glenda Graham presented a contribution to Tammy
Hawks, Committee Chair, for Gusher Days.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Community Impact

Randy Vicknair presented a contribution to Southeastern
Louisiana University’s Financial Management Association.
Left to right: Sawyer Benson, Mason Case, Nicholas
Brennan, Mr. Randy Vicknair, Austin Polk, Shelly Romine,
Courtney Klug, Dr. Danielle Lewis, Sarah Beysselance, and
Tarez Cowsar.

Alton Lewis presents a contribution to David Lobue and Mayor Panepinto as a sponsor for
the upcoming Hammond Airshow.

Mona Fontenot presented a contribution to George Houssiere,
volunteer for Louisiana Hospice & Palliative Care.

Diane Shoemaker presented a contribution to Pam Pruden, Principal at Dubach
Elementary for the Adopt Our School program.

Adam Johnston presented a contribution to the Bossier
Chamber of Commerce President/CEO of the Chamber,
Lisa Johnson.

Cheryl Brumfield presented a contribution to Chasity Collier, Principal of Independence
High Magnet School, and Colby McDonald, Head Baseball Coach for the Independence
High Magnet School Baseball Team.

EXPECT MORE Community Impact

Mike Lofaso presented a contribution for the
Ponchatoula High School Lady Wave Volleyball to
Alexandra Falk, member of the PHS Volleyball team.

Cheryl Brumfield presented a contribution to
Chasity Collier, Principal of Independence High
Magnet School at Senior Awards Ceremony.

A contribution was presented to the North Tangi Support Group for the Kentwood Mardi Gras
Parade. Left to right: Greg Burton, President, Patsy Meyer, First Guaranty Bank, Ann Smith, First
Guaranty Bank Director, and Lance Davis, First Guaranty Bank.

Jeannette Ernst presented a contribution to Michael Pearson for the
Knights of Columbus event.

Adam Johnston presented a contribution to David M. Scruggs,
Controller-Kenyan Companies, for the Piggly Wiggly Steak
Cook-Off where the proceeds of the event go to St. Jude Children’s
Research Hospital.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Community Impact

Elaine Atencio presented a contribution to Coach Glen
Kyle for the Homer High School football team.

The main office participated in an Options gift drive. Left to right: Starr Bernier, Kristina
Terry, Emily Creech, Jaclyn Rice, Sylvia Bush, Amy Starkey.

Mic Baxter presented a contribution to Deputy Emma
Williams, Elder Service Officer and Deputy Judy
Burt, Office Manager for the Lincoln Parish Sheriff 's
Department’s Senior Expo.

April Alford and Star Lala
presented a contribution to
Richard Graves, president of
Tangi Animal Friends.

Amber Dupre presented a beach bag contribution to
Barbara Latiola for a door prize at the Jeff Davis Parish
School Board Honor's Banquet.

Jessica Hrenyk, Kristin Williams, Marisa Rodrigues, Melanie Gottschalck, and Desiree
Simmons present a contribution to Michelle Biggs, Executive Director of Alumni Relations at
Southeastern Louisiana University and Lynn Horgan, Director of Individual, Corporate and
Foundation Relations.

EXPECT MORE Community Impact

Kristin Williams presented a contribution to Mayor Panepinto, Desiree Dotey, Jacqueline Gordon, and
students around the community for the Hammond Recreation Center Computer Lab.

Cheryl Brumfield presented a contribution
and door prizes to Linda Wisinger,
Principal at Mater Dolorosa Catholic
School for the Annual Steak Dinner.

JoEllen Juhasz presented a contribution to Mark Burise, Sr. and
Silvia Hymel, both with the City of Hammond, to sponsor three city
league teams.

Rahul Patel presented a contribution to Lake Charles Racquet Club. Left to right:
Ed Neeley, Club Manager, Rahul Patel, and Bobby Walker, Head Pro.

Glenda Graham presented a contribution for the Christmas on
Caddo 2017 event to Mary Dunn, President of Christmas on
Caddo Festival.

Denise Fletcher presented
a contribution to Jack
Catalanatto for the
American Legion Post#47
Boys State Sponsorship.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Community Impact

Elaine Atencio presented
a contribution to Chris
Reed, Baseball Coach for
Summerfield.

Harrison Gill presented a contribution to Dr. Kelli Joseph with the
St. Helena Parish School Board for the children's summer camp.

Ron Edmonds presented a contribution to Tim Brown for the
Dixie Youth Baseball of Minden.

Alton Lewis and Desiree Simmons presented a contribution to Cristina Giambrone,
MS Sr. Manager for the upcoming Bike MS event.

Cheryl Brumfield and Pam Brazil presented a contribution to
the Loranger High School Volleyball Program. Left to right:
Athletic Director and Football Coach Sam Messina, Cheryl
Brumfield, Pamela Brazil, Volleyball Coach Tyra Starkey,
Principal, Mr. Torrence Joseph.

Alton Lewis presents a contribution to Michelle Gallo, general manager of The Daily
Star, Alexis Ducorbier, State Farm Insurance agent, and Phillip Monteleone, retired
state trooper for the 2018 Hammond Northshore Airshow.

EXPECT MORE Community Impact

Bernadette Kemp presented a contribution to Rob Carlisle, Chief Executive Officer and
Ginger Cangelosi, Community Outreach Director with Child Advocacy Services.

Kristin Williams presents a contribution to Mr. Ricky
Howes, President, Board Member and King Omega
IV for the upcoming Krewe of Omega events.

Cheryl Brumfield presented a contribution to Captain Roy Allbritton, Detective, for
the Town of Independence Police Department.

Elaine Atencio presented a contribution to Bill Kennedy,
Superintendent (right) and William Maddox, President, for
Claiborne Parish Schools.

Amber Leger presented a contribution
to Tayton Poole for the Bethel after
graduation party.

Lance Davis presented a contribution
to Mack Patel of Gujarati Samaj of
Mississippi, at their annual banquet.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Community Impact

JoEllen Juhasz presented a contribution to Ginger Cangelosi and Seth
Bleakley of Child Advocacy Services.

Phylicia Vernon presented a contribution to Janice M. Holland, Coordinator
for Toys for Tots.

Trisha Patterson presented a contribution to JHS Jazzer, Kaylin Wirtz.

Terboris Perry presented a contribution to Emerie Eck Gentry,
Donor Relations Manager with the Bossier Arts Council.

Denise Fletcher presented a contribution to May Stilley,
Director of the new Ponchatoula Outreach Program.

Gwen Pete presented a contribution to Lisa Achane, volunteer for The
Concern Youth Group.

EXPECT MORE Community Impact

Donna Hodges presented a contribution to
Derwin K. Miley, Captain at Hammond Fire
Department for their upcoming event.

Misty Chauvin presented a contribution to
Anthony Berner, Sr., Kiwanis member for the
2017 Ponchatoula Kiwanis Fall Festival.

Randy Vicknair and Michael Moye presented a contribution to Lynn Horgan for the SLU Foundation.

Eric Dosch presented a
contribution to Lisa Patti,
Coordinator of Chefs
Evening and Malayne Sharp,
Graduate Assistant for the
upcoming Southeastern
Louisiana University’s Chefs
Evening event.

Brandon Wear presented a contribution to Juanita Lee for the Ponchatoula
High School Marching Band.

Ronnie Pittman, Randy Vicknair, Eric Dosch presented a contribution
to Jay Artigues, Athletic Director, for Southeastern Athletics. Also in the
photo is James Dosch.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Community Impact

Casie N. Qualls presented a contribution to the Seniors at Sumner
High School who are part of the group of the Tangipahoa Parish School
Board’s Talented Theatre and Performing Arts.

Melanie Gottschalk presented a contribution to Dr. Rick Settoon accepting as
manager of the Southeastern Channel.

Denise Fletcher presented a contribution to
Katie Spratt Johnson of Ponchatoula High
School Grand Slam Boosters.

Casie N. Qualls and Jason Wilson presented a contribution check to Karen Babin, Rick Wilke and Bud
Antin with the Land Trust for Louisiana.

Craig Scelfo presented a contribution to Pat
Carpenter Bourgeois, President and CEO
of the Special Olympics Louisiana for the
Annual Trivia night.

Vanessa Drew presented a contribution to Louisiana Discovery Museum to Lauren Williams,
Coordinator of Development and Carolyn Schwebel, Education Director and Program Team.

EXPECT MORE Community Impact

Jane Wear presented a contribution for the Community Music
School sponsorship to Jivka Duke, Director of Community Music
School with Southeastern Louisiana University.

Randy Vicknair presented a contribution to Jay Johnson, Assistant Dean, for the
Southeastern Louisiana University Business week.

Casie N. Qualls presented a contribution to Carol Bruno, board
member and Dennis Crocker, Fire Chief for the Tangi Rural Fire
Protection District to purchase equipment to aid with Swift Water
rescue in the Tangipahoa area.

Taraz Cowsar accepted a plaque from the Krewe of Omega on behalf of longtime
sponsor First Guaranty Bank. In addition to sponsoring a buffet breakfast and
Chamber After Hours for the Krewe, FGB was Omega's first Deluxe Hotspot.

April Alford presented a contribution to sponsor the Summer Camp at the Hammond Recreation
Center. Bank employees volunteered at the camp and presented financial literacy lessons. Accepting on
behalf of the City of Hammond Recreation Department are Chris Mouswaswa, Recreation Supervisor,
Desiree Dotey, Director, and Mayor Pete Panepinto.

Mona Fontenot presented a contribution to
Sharon Compton with Hathaway High School for
the Safe & Sober after Prom event.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. A
Alpha Kappa Alpha Sorority –
Welcome Reception
AARP
AmeraCare Home Health and
Family Hospice
American Cancer Society
American Legion Auxiliary #47 –
Boys State and Girls State
American Legion Post #141
(Vivian) – Boys State
American Red Cross
Amite Chamber of Commerce
Amite High School – Baseball Sign
Anna’s Grace
Assist Agency
A Taste of Blanchard
Autism Speaks

B
The Baton Rouge Chapter of the
Risk Management Association
Bethel Christian School –
Graduation
The Blood Center
Bossier Arts Council – Artini
Sponsor
Bossier Chamber of Commerce –
Annual Gala Sponsor
Bossier Council on Aging
Bossier High School – Baseball
Sign Sponsor
Boys and Girls Club of Timber
Ridge
Boy Scouts of America

C
Chef Soiree
Child Advocacy Services – Button
of Bravery
Claiborne Academy – Golf
Tournament, Sports Signage and
Booster Club
Claiborne Chamber of Commerce
Claiborne Charity Inc. – Golf
Tournament Sponsor
Claiborne Christmas Committee
Claiborne Council on Aging
Claiborne 4-H Livestock Club
Claiborne Memorial Medical
Center
Claiborne Parish Academic
Banquet
Claiborne Parish Library
Claiborne Parish School Board
Claiborne Rehabilitation
Claiborne Scholastic Banquet
Claiborne Senior Apartments
Community Relief 2017

Community Impact

Concerned Youth Club
Corporation
Crimestoppers of Tangipahoa
Cystic Fibrosis Foundation –
Louisiana Chapter – Stride Walks

D
Delta Tau Delta
Denham Springs Council on Aging
Donnie Bickham Middle School –
Robotics Program
Dubach School – Adopt-A-School,
Agents for Change
Dubach Restoration and
Beautification Organization –
Chicken Festival Sponsor

E
Elton Elementary School – Positive
Behavior Program
Elton High School
Erath High School

F
Festival Acadiens Et Creole
First Baptist Church of Amite
First Baptist Church Greensburg
Herbert S. Ford Memorial Museum

G
Town of Greensburg
Gujarati Samaj of Mississippi –
Banquet Sponsor
Gusher Days

H
City of Hammond – Veterans
Breakfast, Hope Summer Camp,
Back 2 School Bash
City of Hammond Recreation
Department – Literacy Programs
& Basketball, Baseball, Softball
Sponsors
Hammond Air Show Foundation –
Chappapella Sports Package
Hammond Area Recreation
District
Hammond Chamber of Commerce
Hammond Downtown
Development District – Hot
August Night Sponsor
Hammond Firefighters Association
Hammond High Magnet School –
Softball
Hammond Police Union Local 345
Hammond Regional Arts Center
Hammond Senior Center – Tangi
Voluntary Council on Aging

Landa Domangue presented a contribution to Peggy Matheu, President of
FeLions, Peggy Hoover, Treasurer, and Jan Labbe, Secretary for the FeLions,
Salute the Lions event at Southeastern Louisiana University.

Philip Qualls presented a contribution to Roy Blackwood,
Columbia theatre director, for the Columbia Theatre.

Ronnie Pittman presented a contribution to Brian Shirey
of the Hammond Blues and BBQ.

EXPECT MORE Community Impact

Hammond Smokin’ Blues & BBQ
Hathaway High School – Prom
Lock In, Stadium Sign
Haynesville Beautification
Committee
Haynesville Lions Club
Hearts and Paws United
Homer Country Club – Golf
Tournament Sponsor
Homer Golf Club – Golf Course
Sign
Homer High School – Football
Sponsor
Town of Homer

I
Independence Chamber of
Commerce
Independence High School –
Baseball Sponsor, Graduation/
Senior Awards
Independence Police Department
Independence Police Reserve –
Police Car Contributions
Independence Sicilian Heritage
Festival
Independence Summer Baseball
Program Sponsor
Indian Bayou Community
Volunteer Fire Department
Italian Festival
Town of Independence – 4th of
July Festival

J
James Ward Elementary School
Jeff Davis Chamber of Commerce
Jeff Davis Parish School Board and
Public Schools
Jennings High School – Operation
Graduation and Jazzers
Junior Achievement

K
Kentwood Baseball/Softball
Association – Signage and
Tournament Sponsorship
Kentwood Council on Aging
Kentwood High School
Kentwood Rotary Club
Kiwanis Club of Amite
Kiwanis Club of Denham Springs
Kiwanis Club of Hammond
Kiwanis Club of Ponchatoula
Knights of Columbus
Krewe of Omega – Community
Projects
KRLQ/KWXM Radio – Dubach
Chicken Festival
Town of Kentwood – School
Supply Giveaway

L
Ladies Top 28 Tournament
Lake Area Community Tennis
Associatioin
Lake Claiborne Inc. – 4th of July
Fireworks Sponsor
Lallie Kemp Foundation
Land Trust for Southeast Louisiana
– Conservation Cup Sponsor
Lake Charles Racquet Club –
Tennis Tournament
Leadership Livingston
Leadership Tangipahoa
Lincoln Parish Sheriff – Senior
Expo Sponsor
Livingston Council on Aging
Livingston Parish Chamber of
Commerce
Livingston Parish Library
Livingston Parish School Board
Livingston Parish Sheriff ’s Office
Loranger Cheer Booster Club
Loranger High School – Softball,
Volleyball and Football Programs
and Signs; Project Graduation
Sponsor
Loranger Youth Basketball
Louisiana Bankers Association
Louisiana Bankers Education
Council
Louisiana Children’s Discovery
Center – Jazz Brunch Sponsor
and Bubble Zone Exhibit
Louisiana Falcons Baseball
Louisiana Hospice and Palliative
Care
Louisiana Jumpstart Coalition
Louisiana Marathon
Louisiana Redbud Festival
Association
LSU Ag Center – 4-H Livestock
Show Sponsor

M
Main Street Homer – Music on
Main and Revitalize Program
Maltrait Memorial Spring Bazaar
Marsh Madness
Mater Dolorosa Catholic School –
School Improvements and Steak
Dinner Fundraiser
Maurepas Council on Aging
Meaux/Nunez Volunteer Fire
Department
Minden Athletics – All Star Team
Monterey Country Club – Golf
Tournament Sponsor
Richard Murphy Hospice
Foundation

N
NAACP
National Church Residences
National Night Out – Oil City
Town Hall
Nesom Middle School
North Caddo Magnet High School
– Basketball Program
North Caddo Medical Center
Foundation – Gold Buckle
Sponsor
North Louisiana Economic
Partnership
North Tangi Support Group –
Mardi Gras Parade Sponsor
North Texas Association of
Government – Ken Byrd Golf
Tournament
North Vermilion High School

O
Oak Forest Academy – Football
Options, Inc.
Osyka Civic Club

P
Pecan Villa
Pilot Club of Denham Springs
Pine View Middle School
Ponchatoula Area Recreation
Ponchatoula Chamber of
Commerce
Ponchatoula Council on Aging
Ponchatoula High School – Softball
Field Sign, Project Graduation,
Lady Wave Volleyball/Basketball
and Senior Breakfast
PHS Band Boosters
PHS Soccer Booster Club
Ponchatoula Lions Club
Ponchatoula Youth Baseball –
Team Sponsor
City of Ponchatoula – Student
Outreach

Q
Quinn Chapel AME Church

R
Rosaryville Student Life Center
Rotary Club of Hammond
Rotary Club of Oil City

S
SHAPE (St. Helena Advocacy for
Parish Enrichment)
St. Helena Council on Aging
St. Helena Forestry Association
St. Helena Parish School Board
St. Helena Sheriff ’s Department
St. Helena/Tangipahoa Dairy Days
St. Tammany Project Christmas
Downtown Shreveport Unlimited
– Mud Bug Madness Sponsor
Chuck Silcox Animal Care &
Control Center
South Tangipahoa Parish Port
Commission
Southeast Community Health
Systems
Southeastern Louisiana
University Alumni Association –
Convocation Picnic Sponsors
Southeastern Louisiana University
Athletic Association – Salute the
Lions Sponsor, Champagne Bingo
and Sports Package
Southeastern Louisiana University
Financial Management
Association – Finance Conference
Southeastern Louisiana
University Foundation –Chef ’s
Evening Sponsor, SLU Channel
Programming, College of
Business, Community Music
School Sponsorship, Partner and
Columbia Theater for the Arts
Sponsor
Special Olympics Louisiana –
Trivia Night Sponsor
Special Olympics Texas
Springfield Council on Aging
Springfield Elementary
Summerfield High School
Sumner High School

T
TARC - Radiothon
Tangi Animal Friends
Tangi Humane Society
Tangi Parish Fair
Tangi Professional Women’s
Organization
Tangi Rural Fire Protection
Tangipahoa Master Gardner
Association
Tangipahoa Parish School System
– Talented Theatre
Tangipahoa Parish Sheriff 's Office
– Mounted Division Fundraiser
Tangipahoa African American
Heritage Museum & Veterans
Archive – Black Tie Event

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Tiger Athletic Foundation – LSU
Baseball Sponsor
TK Breast Cancer Foundation
Toys for Tots Foundation – Gold
Sponsor
Village of Tangipahoa –
Community Park Fundraiser

U
United Way of Southeast Louisiana
– Corporate Match Contribution

V
Vermilion Council on Aging
Vivian Athletic Association
Town of Vivian
Volunteers for Youth Justice

W
Vermilion Council on Aging
Vivian Athletic Association
Town of Vivian
Volunteers for Youth Justice

#
4:13 Softball

2017 FGB Volunteer Results

Total Employee Community
Service Hours Completed
1,673

t
i

mployee Volunteers
Total Number of

5
9
1

EXPECT MORE

EARNINGS & DIVIDENDS

Earnings

$2.1 million

$1.7 million

$2.1 million

$3.3 million

$3.4 million

1993

1994

1995

1996

1997

1998

1999

Total Common
Dividends Paid

Cumulative Retained
Earnings (Deficit)*

Notable Events

$ 200,000

$ 601,000

$ 815,000

$1,020,000

$1,223,000

$1,316,000

$(4,984,000)

$(3,879,070)

■ Investors purchased $3.6 million of common stock

$(2,796,000)

■ Investors purchased $337,000 of common stock

$ (774,000)

■ Three-for-two stock split

$ 1,205,000

$ 3,482,000

$ 4,473,000

■ Investors purchased $9.6 million of common stock
■ Acquired 13 branches from Bank One of Louisiana
■ Acquired First Southwest Bank

2000

$5.0 million

$1,530,000

$ 5,027,000

■ Gains from sale of acquired branches net of tax

2001

$6.0 million

$1,668,000

$ 8,638,000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

$3.5 million

$7.0 million

$8.6 million

$6.0 million

$8.4 million

$9.8 million

$5.5 million

$7.6 million

$10.0 million

$8.0 million

$1,751,000

$2,086,000

$2,752,000

$3,173,000

$3,335,000

$3,503,000

$3,558,000

$3,610,000

$10,426,000

$13,967,000

$19,771,000

$23,351,000

$28,402,000

$34,671,000

$36,626,000

$40,069,000

$45,203,000

$47,650,000

2012

$12.1 million

$4,035,000

$53,702,000

totaling $2.8 million

■ Acquired Woodlands Bancorp
■ Gains from sale of acquired branches net of tax

totaling $1.3 million

■ Four-for-three stock split

■ Acquired Homestead Bancorp

■ Acquired Greensburg Bancshares

■ 10% common stock dividend
■ Dividend rate per share remains $0.16 per quarter

2013

$9.1 million

$4,027,000

$58,102,000

■ Total loans exceeded $700 million

2014

$11.2 million

$4,027,000

$64,905,000

2015

$14.5 million

$4,247,000

$73,445,000

2016

$14.1 million

$4,870,000

$82,668,000

■ Retained earnings grew by $6.8 million
■ Total loans reached $790 million

■ 10% common stock dividend
■ Listed in NASDAQ
■ Redeemed SBLF Preferred Stock

■ Loans totaled $949 million
■ 94th consecutive quarterly dividend

■ Grand opening of Bossier City, LA Banking Center
■ Acquisition of Synergy Bank and addition of five

2017

$11.8 million

$5,210,000

$89,209,000

new Texas locations

■ 50% ownership in Centurion Insurance Services

allowing First Guaranty to sell insurance products

$177.6 million

$66,896,000

* Retained earnings has not been adjusted to consider stock splits or stock dividends. This better reflects earnings that have been retained as capital. Retained
earnings is the product of Company earnings less common and preferred dividends. The accumulated deficits in 1993 through 1996 were due to losses
incurred prior to 1993.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Banks Headquartered in Louisiana Ranked by Asset Size as of December 31, 2017

5
6
7

Iberiabank

Origin Bank

Home Bank

MidSouth Bank, National Association

First Guaranty Bank

Red River Bank

Investar Bank
Gulf Coast Bank and Trust Company

Business First Bank

Crescent Bank & Trust

First Bank and Trust

First American Bank and Trust

Citizens National Bank, N.A.

Sabine State Bank and Trust Company

JD Bank

First National Banker's Bank

First Federal Bank of Louisiana

Fidelity Bank

Resource Bank

Liberty Bank and Trust Company

The Evangeline Bank and Trust Company

United Community Bank

Progressive Bank

Concordia Bank & Trust Company

Synergy Bank

Community Bank of Louisiana

South Louisiana Bank, Houma, Louisiana

Coastal Commerce Bank

Gibsland Bank & Trust Company

Home Federal Bank

30
31 Merchants & Farmers Bank & Trust Company
Fifth District Savings Bank
32
33 Metairie Bank & Trust Company
First National Bank of Louisiana
34

BOM Bank

Gulf Coast Bank

Rayne State Bank & Trust Company

Cross Keys Bank

Community First Bank

Florida Parishes Bank

Bank of Commerce & Trust Co.

Cottonport Bank

City Savings Bank & Trust Company

43
44 MC Bank & Trust Company
Richland State Bank
45

Citizens Bank & Trust Company

Southern Heritage Bank

Farmers-Merchant Bank & Trust Company

Delta Bank

St. Landry Bank and Trust Company

Bank of Ruston

The Union Bank

City Bank & Trust Co.

First National Bank

Peoples Bank and Trust Company of Pointe Coupee Parish

First National Bank in DeRidder

The First National Bank of Jeanerette

Jonesboro State Bank

Patterson State Bank

Homeland Federal Savings Bank

Guaranty Bank & Trust Company of Delhi, Louisiana

Bank of Zachary

Lafayette

Choudrant

Lafayette

Hammond

Alexandria

Baton Rouge
New Orleans

Baton Rouge

New Orleans

Vacherie

Bossier City

Many

Jennings

Baton Rouge

Lake Charles

New Orleans

Covington

New Orleans

Ville Platte

Gonzales

Monroe

Vidalia

Houma

Mansfield

Houma

Gibsland

Shreveport

Leesville

New Orleans

Metairie

Crowley

Montgomery

Abbeville

Rayne

Saint Joseph

New Iberia

Hammond

Crowley

Cottonport

Deridder

Morgan City

Rayville

Plaquemine

Jonesville

Breaux Bridge

Vidalia

Opelousas

Ruston

Marksville

Natchitoches

Arcadia

New Roads

DeRidder

Jeanerette

Jonesboro

Patterson

Columbia

Delhi

Zachary

The Bank

Bank of Coushatta

Citizens Savings Bank

St. Landry Homestead Federal Savings Bank

Guaranty Bank and Trust Company

Tri-Parish Bank

American Bank & Trust Company

Catahoula - LaSalle Bank

Lakeside Bank

71
72 Winnsboro State Bank & Trust Company
73 Washington State Bank
74

Bank of Abbeville & Trust Company

Franklin State Bank & Trust Company

Caldwell Bank & Trust Company

76
77 Marion State Bank
78

Plaquemine Bank & Trust Company

South Lafourche Bank & Trust Company

Citizens Progressive Bank

Tensas State Bank

Bank of Winnfield & Trust Company

Commercial Capital Bank

Anthem Bank & Trust

Hibernia Bank

Exchange Bank and Trust Company, Natchitoches, Louisiana

Citizen's Bank & Trust Company of Vivian, Louisiana

First National Bank USA

Bank of St. Francisville

American Bank & Trust Company

Vermilion Bank & Trust Company

Bank of Sunset and Trust Company

Landmark Bank

Feliciana Bank & Trust Company

State Bank & Trust Company

Citizens Bank & Trust Company

Farmers State Bank & Trust Co.

97
98 Mississippi River Bank
Colfax Banking Company
99
100 Heritage Bank of St. Tammany
101 Bank of Erath
102 Eureka Homestead
103 Teche Bank & Trust Co.
104 Kaplan State Bank
105 Union Savings and Loan Association
106 Bank of Louisiana
107 Simmesport State Bank
108 Bank of Gueydan
109 Peoples Bank
110 The Bank of Commerce
111 Jackson Parish Bank
112 Hodge Bank & Trust Company
113 Beauregard FSB
114 Abbevile Building & Loan (A State-Chartered Savings Bank)
115 Commerce Community Bank
116 Rayne Building and Loan Association
117 Sicily Island State Bank
118 First National Bank of Benton
119 Progressive National Bank of DeSoto Parish
120 Basile State Bank
121 Bank of Oak Ridge
122 Mutual Savings and Loan Association
123 The Mer Rouge State Bank

Jennings

Coushatta

Bogalusa

Opelousas

New Roads

Eunice

Opelousas

Jonesville

Lake Charles

Winnsboro

Washington

Abbeville

Winnsboro

Columbia

Marion

Plaquemine

Larose

Winnsboro

Newellton

Winnfield

Delhi

Plaquemine

New Orleans

Natchitoches

Vivian

Boutte

Saint Francisville

Covington

Kaplan

Sunset

Clinton

Golden Meadow

Covington

Church Point

Belle Chasse

Colfax

Covington

Erath

Metairie

Saint Martinville

Kaplan

New Orleans

Simmesport

Gueydan

Chatham

White Castle

Jonesboro

Hodge

Deridder

Abbeville

Oak Grove

Rayne

Sicily Island

Benton

Mansfield

Basile

Oak Ridge

Metairie

Mer Rouge

EXPECT MORE Our Mission

The mission of First Guaranty Bank and First Guaranty Bancshares is
to increase shareholder value while providing financial services for and
contributing to the growth and welfare of the communities we serve.

Our Values & Goals

Customers. We believe that every customer is our most important customer.
We endeavor to provide levels of service that exceed their expectations.

Employees. We believe that our employees are our greatest asset as demonstrated
in their professionalism and dedication. We encourage open communication
and strive to cultivate an entrepreneurial environment in which our employees
feel highly responsible for the performance of the Company. We believe in an
environment where they will contribute new ideas and innovations that will help
both us and them excel.

Shareholders. We seek to enhance shareholder value by continually improving
the quality of assets, growth in earnings, return on equity and dividend payout.

Community. We strive to be a socially responsible corporate citizen by supporting
community activities and encouraging employees to be actively involved in our
communities. We are committed to the success of the communities that we serve,
the same communities our employees call home. Our goals is to participate in
making our communities better places in which to live, work and play.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Financial Table of Contents

Selected Financial Data ................................................................................................ 64

Management’s Discussion and Analysis
of Financial Condition and Results of Operation ................................................... 68

Report of Independent Registered Accounting Firm ............................................. 96

Consolidated Balance Sheets ....................................................................................... 97

Consolidated Statements of Income .......................................................................... 98

Consolidated Statements of Consolidated Income (Loss) ..................................... 99

Consolidated Statements of Shareholders’ Equity ................................................... 99

Consolidated Statements of Cash Flows ................................................................... 100

Notes to Consolidated Financial Statements ........................................................... 101

EXPECT MORE 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,

2017

2016

2015

2014

2013

(in thousands except for % and share data)

$ 501,656

$ 499,336

823

271

$ 1,149,014

$ 948,921

9,225

11,114

$ 1,750,430

$ 1,500,946

$ 1,549,286

$ 1,326,181

52,938

43,230

$ 143,983

$ 124,349

$ 546,121
582
$ 841,583
9,415
$1,459,753
$1,295,870
42,221
$ 118,224

$ 641,603

$ 634,504

210

665

$ 790,321

$ 703,166

9,105

10,355

$1,518,876

$ 1,436,441

$1,371,839

$ 1,303,099

3,255

6,288

$ 139,583

$ 123,405

$ 143,983

$ 124,349

$ 118,224

$ 100,148

83,970

0.71%

8.59%

0.73%

9.15%

3.33%

72.23%

62.64%

63.38%
338

8.31%

8.01%

8.23%

8.27%

10.35%

12.14%

10.35%

7.87%

0.97%

11.18%

0.98%

11.64%

3.39%

68.57%

56.85%

60.19%

293

8.63%

8.44%

8.28%

8.68%

10.59%

12.79%

10.59%

8.10%

0.97%

12.98%

0.99%

13.60%

3.26%

61.31%

55.11%

57.74%
277

9.88%

9.67%

8.10%

8.17%

10.85%

13.13%

10.85%

7.89%

0.77%

11.40%

0.79%

12.10%

3.11%

55.72%

62.85%

0.65%

9.31%

0.67%

9.99%

2.92%

53.58%

65.61%

62.58%

67.17%

271

278

9.24%

9.00%

6.59%

9.33%

13.16%

14.05%

N/A

6.37%

9.28%

9.02%

5.85%

9.14%

13.61%

14.71%

N/A

5.59%

Year End Balance Sheet Data:

Investment securities

Federal funds sold

Loans, net of unearned income

Allowance for loan losses

Total assets

Total deposits

Borrowings

Shareholders' equity

Common shareholders' equity

Performance Ratios and Other Data:

Return on average assets

Return on average common equity

Return on average tangible assets

Return on average tangible common equity

Net interest margin

Average loans to average deposits

Efficiency ratio(1)

Efficiency ratio (excluding amortization of intangibles and
securities transactions)(1)

Full time equivalent employees (year end)

Capital Ratios:

Average shareholders' equity to average assets

Average tangible equity to average tangible assets

Common shareholders' equity to total assets

Tier 1 leverage capital consolidated

Tier 1 capital consolidated

Total risk-based capital consolidated

Common equity tier one capital consolidated

Tangible common equity to tangible assets(2)

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Income Data:

Interest income

Interest expense

Net interest income

Provision for loan losses

Noninterest income (excluding securities transactions)

Securities gains

Noninterest expense

Earnings before income taxes

Net income

Net income available to common shareholders

Per Common Share Data: (4)

Net earnings

Cash dividends paid

Book value

Tangible book value (3)

Dividend payout ratio

67,546

14,393

53,153

3,822

6,943

1,397

38,521

19,150

11,751

1.37
0.60
16.35
15.59

58,532
10,140
48,392
3,705
5,656
3,799
32,885
21,257
14,093

14,093

1.68

0.58

14.86

14.50

56,079

8,608

47,471

3,864

5,656

3,300

31,095

21,468

14,505

14,121

1.83

0.54

14.13

13.73

53,297

9,202

44,095

1,962

5,882

295

31,594

16,716

11,224

10,830

1.42

0.53

13.16

12.68

50,886

11,134

39,752

2,520

5,907

1,571

30,987

13,723

9,146

8,433

1.11

0.53

11.03

10.52

44.34%

34.56%

30.07%

37.18%

47.75%

Weighted average number of shares outstanding

8,608,088

8,369,424

7,714,620

7,611,397

Number of shares outstanding

8,807,175

8,369,424

7,611,397

Asset Quality Ratios:

Non-performing assets to total assets

Non-performing assets to total loans

Non-performing loans to total loans

Loan loss reserve to non-performing assets

Net charge-offs to average loans

Provision for loan loss to average loans

Allowance for loan loss to total loans

0.84%

1.28%

1.17%

1.48%

2.34%

2.30%

1.51%

2.62%

2.43%

0.99%

1.90%

1.62%

1.27%

2.60%

2.12%

62.88%

50.04%

42.74%

60.74%

56.72%

0.54%

0.36%

0.80%

0.23%

0.42%

1.17%

0.44%

0.47%

1.12%

0.45%

0.27%

1.15%

0.38%

1.47%

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.”

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.”

3. 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.”

4. Historical share and per share amounts have been adjusted to reflect the ten percent stock dividend paid December 14, 2017 to shareholders of record as of

December 8, 2017.

EXPECT MORE

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.

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.

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

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.

Tangible Common Equity

Total shareholders' equity

Adjustments:

Preferred

Goodwill

Acquisition intangibles

Tangible common equity

Common shares outstanding

Book value per common share

Tangible book value per common share

Tangible Assets

Total Assets

Adjustments:

Goodwill

Acquisition intangibles

Tangible Assets

At December 31,

2017

2016

2015

2014

2013

(in thousands except for share data and %)

143,983

124,349

$ 118,224

$ 139,583

$ 123,405

3,472

1,999

3,249

978

1,999

1,298

39,435

1,999

1,618

39,435

1,999

1,938

$ 137,262

$ 121,372

$ 114,927

96,531

80,033

8,807,175

8,369,424

7,611,397

16.35

15.95

14.86

14.50

14.13

13.73

13.16

12.68

11.03

10.52

$ 1,750,430

$ 1,500,946

$ 1,459,753

$ 1,518,876

$ 1,436,441

3,472

1,999

3,249

978

1,999

1,298

1,999

1,618

1,999

1,938

$ 1,743,709

$ 1,497,969

$ 1,456,456

$1,515,259

$1,432,504

Tangible common equity to tangible assets

7.87%

8.10%

7.89%

6.37%

5.59%

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. 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.

The following table reconciles, as of the dates set forth below, our efficiency ratio to the GAAP-based efficiency ratio:

GAAP-based efficiency ratio

Noninterest expense

Amortization of intangibles

Noninterest expense, excluding amortization

Net interest income

Noninterest income

Adjustments:

Securities transactions

Noninterest income, excluding securities transactions

Efficiency ratio

For the Year Ended December 31,

2017

2016

2015

2014

2013

(in thousands except for share data and %)

62.64%

56.85%

55.11%

62.85%

65.61%

$38,521

$32,885

$31,095

$31,594

$30,987

432

320

38,089

32,565

53,153

48,392

8,340

9,455

30,775

47,471

8,956

31,274

44,095

6,177

30,667

39,752

7,478

1,397

3,739

3,125

295

1,571

$ 6,943

$ 5,716

$ 5,831

$ 5,882

$ 5,907

63.38%

60.19%

57.74%

62.58%

67.17%

Denton, Texas Horse Country

Photo credit: Denton Convention & Visitors Bureau

EXPECT MORE 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 Item 6,
“Selected Financial Data” and our audited consolidated financial
statements and the accompanying notes included elsewhere in this
Annual Report. 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, 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.

Special Note Regarding Forward-Looking Statements
Congress passed the Private Securities Litigation Act of 1995 in an
effort to encourage corporations to provide information about a
Company's anticipated future financial performance. This act provides
a safe harbor for such disclosure, which protects us from unwarranted
litigation, if actual results are different from Management expectations.
This discussion and analysis contains forward-looking statements and
reflects Management’s current views and estimates of future economic
circumstances, industry conditions, company performance and
financial results. The words “may,” “should,” “expect,” “anticipate,”
“intend,” “plan,” “continue,” “believe,” “seek,” “estimate” and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are subject to a number of factors and
uncertainties, including, changes in general economic conditions,
either nationally or in our market areas, that are worse than expected;
competition among depository and other financial institutions; inflation
and changes in the interest rate environment that reduce our margins
or reduce the fair value of financial instruments; adverse changes in
the securities markets; changes in laws or government regulations or
policies affecting financial institutions, including changes in regulatory
fees and capital requirements; our ability to enter new markets
successfully and capitalize on growth opportunities; our ability to
successfully integrate acquired entities, if any; changes in consumer
spending, borrowing and savings habits; changes in accounting policies
and practices, as may be adopted by the bank regulatory agencies, the
Financial Accounting Standards Board, the Securities and Exchange
Commission and the Public Company Accounting Oversight Board;
changes in our organization, compensation and benefit plans; changes
in our financial condition or results of operations that reduce capital
available to pay dividends; and changes in the financial condition or
future prospects of issuers of securities that we own, which could cause
our actual results and experience to differ from the anticipated results
and expectations, expressed in such forward-looking statements.

Overview
First Guaranty Bancshares is a Louisiana-chartered bank 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 27 banking facilities
primarily located in the MSAs of Hammond, Baton Rouge, Lafayette,
Shreveport-Bossier City, Dallas-Fort Worth-Arlington, and Waco. 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. First Guaranty entered the Texas markets in
2017 with the acquisition of Premier Bancshares, Inc. and its wholly
owned subsidiary, Synergy Bank.

Total assets were $1.8 billion at December 31, 2017 and $1.5 billion at
December 31, 2016. Total deposits were $1.5 billion at December 31,
2017 and $1.3 billion at December 31, 2016. Total loans were $1.1
billion at December 31, 2017, an increase of $200.1 million, or 21.1%,
compared with December 31, 2016. Common shareholders’ equity
was $144.0 million and $124.3 million at December 31, 2017 and
December 31, 2016, respectively. The growth in assets and liabilities
in 2017 as compared to 2016 was primarily due to the acquisition of
Premier in June 2017.

Net income was $11.8 million, $14.1 million and $14.5 million for
the years ended December 31, 2017, 2016 and 2015, respectively.
We generate most of our revenues from interest income on loans,
interest income on securities, sales of securities 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.

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 and 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. During the extended period of
historically low interest rates, 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.

Financial highlights for 2017 and 2016:
• During the fourth quarter of 2017, First Guaranty elected to become
a financial holding company because First Guaranty acquired a fifty
percent ownership in an insurance brokerage in November 2017.

• First Guaranty completed its merger with Premier Bancshares, Inc.
("Premier") and its wholly owned subsidiary, Synergy Bank, on June
16, 2017. First Guaranty acquired a total of $158.3 million in assets
and assumed an $137.4 million in liabilities. First Guaranty issued
397,988 shares of its common stock at a price of $25.86 and paid
$10.3 million in cash to Premier shareholders (unadjusted for the
10% stock dividend in December 2017). Total consideration was
$21.0 million. First Guaranty acquired a total of $128.0 million in

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. loans, securities of $5.9 million, cash and due from banks of $4.5
million, Fed funds sold of $2.9 million, premises of $9.5 million,
other real estate owned of $0.2 million and other assets that totaled
$2.0 million. Intangibles recorded from the transaction were a total
of $5.3 million, including goodwill of $1.5 million. Total assumed
liabilities included deposits of $127.2 million, an FHLB advance of
$9.7 million and other liabilities of $0.4 million. Expenses related to
the merger totaled $1.4 million in 2017.

• Total assets at December 31, 2017 increased $249.5 million, or
16.6%, to $1.8 billion when compared to December 31, 2016.
Total loans at December 31, 2017 were $1.1 billion, an increase
of $200.1 million, or 21.1%, compared with December 31, 2016.
Common shareholders' equity was $144.0 million and $124.3
million at December 31, 2017 and 2016, respectively.

• Net income for the years ended December 31, 2017 and 2016 was

$11.8 million and $14.1 million, respectively.

• Earnings per common share were $1.37 and $1.68 for the years
ended December 31, 2017 and 2016, respectively. Total weighted
average shares outstanding were 8,608,088 at December 31, 2017
compared to 8,369,424 at December 31, 2016. The change in
shares was due to First Guaranty's acquisition of Premier in June
2017 and the 10% common stock dividend issued in December
2017.

• Net interest income for 2017 was $53.2 million compared to $48.4

million for 2016.

• The provision for loan losses totaled $3.8 million for 2017 compared

to $3.7 million in 2016.

• The net interest margin for 2017 was 3.33%, which was a decrease
of six basis points from the net interest margin of 3.39% for 2016.
First Guaranty attributed the decrease in the net interest margin to a
rise in interest expense associated with deposits.

• Investment securities totaled $501.7 million at December 31, 2017,
an increase of $2.3 million when compared to $499.3 million at
December 31, 2016. At December 31, 2017, available for sale
securities, at fair value, totaled $381.5 million, a decrease of $15.9
million when compared to $397.5 million at December 31, 2016. At
December 31, 2017, held to maturity securities, at amortized cost,
totaled $120.1 million, an increase of $18.3 million when compared
to $101.9 million at December 31, 2016.

• Total loans net of unearned income were $1.1 billion at December
31, 2017 compared to $948.9 million at December 31, 2016.
The net loan portfolio at December 31, 2017 totaled $1.1 billion,
a net increase of $202.0 million from $937.8 million at December
31, 2016. Total loans net of unearned income are reduced by the
allowance for loan losses which totaled $9.2 million at December 31,
2017 and $11.1 million at December 31, 2016.

• Total impaired loans decreased $13.2 million to $15.6 million at
December 31, 2017 compared to $28.8 million at December 31,
2016.

• Nonaccrual loans decreased $9.1 million to $12.6 million at
December 31, 2017 compared to $21.7 million at December 31,
2016.

• The allowance for loan losses was 0.80% of loans at December 31,
2017. The allowance for loan losses as a percentage of total loans
was 0.90% prior to the inclusion of the acquired loans from Premier.

• Return on average assets was 0.71% and 0.97% for the years ended
December 31, 2017 and 2016, respectively. Return on average
common equity was 8.59% and 11.18% for 2017 and 2016,
respectively. Return on average assets is calculated by dividing
net income before preferred dividends by average assets. Return
on average common equity is calculated by dividing net income to

common shareholders by average common equity.

• Book value per common share was $16.35 as of December 31,
2017 compared to $14.86 as of December 31, 2016. Tangible book
value per common share was $15.59 as of December 31, 2017
compared to $14.50 as of December 31, 2016.

• The increase in book value was due primarily to the issuance of
shares related to the acquisition of Premier adjusted for the 10%
common stock dividend, the changes in accumulated other
comprehensive income/loss ("AOCI") and an increase in retained
earnings. AOCI is comprised of unrealized gains and losses on
available for sale securities.

• First Guaranty's Board of Directors declared and First Guaranty paid
cash dividends of $0.60 and $0.58 per common share in 2017 and
2016. First Guaranty has paid 98 consecutive quarterly dividends as
of December 31, 2017.

• On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act")
was signed into law. The Tax Act permanently lowers the federal
corporate income tax rate to 21% from the existing maximum rate of
35%, effective January 1, 2018. First Guaranty recorded a one-time
income tax expense of $0.9 million in 2017 related to the estimated
net impact from the remeasurement of deferred tax assets and
liabilities.

Application of Critical Accounting Policies
Our accounting and reporting policies conform to generally accepted
accounting principles in the United States and to predominant
accounting practices within the banking industry. Certain critical
accounting policies require judgment and estimates which are used in
the preparation of the financial statements.

Allowance for Loan Losses.

The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance
for loan losses when management believes that the collectability of the
principal is unlikely. The allowance, which is based on evaluation of the
collectability of loans and prior loan loss experience, is an amount that,
in the opinion of management, reflects the risks inherent in the existing
loan portfolio and exists at the reporting date. The evaluations take
into consideration a number of subjective factors including changes
in the nature and volume of the loan portfolio, overall portfolio quality,
review of specific problem loans, current economic conditions that
may affect a borrower’s ability to pay, adequacy of loan collateral and
other relevant factors. In addition, regulatory agencies, as an integral
part of their examination process, periodically review the estimated
losses on loans. Such agencies may require additional recognition of
losses based on their judgments about information available to them at
the time of their examination.

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, multi-family, 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.

EXPECT MORE Although management uses available information to recognize losses
on loans, because of uncertainties associated with local economic
conditions, collateral values and future cash flows on impaired loans,
it is reasonably possible that a material change could occur in the
allowance for loan losses in the near term. However, the amount of
the change that is reasonably possible cannot be estimated. The
evaluation of the adequacy of loan collateral is often based upon
estimates and appraisals. Because of changing economic conditions,
the valuations determined from such estimates and appraisals may
also change. Accordingly, we may ultimately incur losses that vary from
management’s current estimates. Adjustments to the allowance for
loan losses will be reported in the period such adjustments become
known or can be reasonably estimated. All loan losses are charged to
the allowance for loan losses when the loss actually occurs or when the
collectability of the principal is unlikely. Recoveries are credited to the
allowance at the time of recovery.

The allowance consists of specific, general, and unallocated
components. The specific component relates to loans that are
classified as doubtful, substandard, and impaired. For such loans that
are also classified as impaired, an allowance is established when the
discounted cash flows (or collateral value or observable market price)
of the impaired loan is lower than the carrying value of that loan. Also,
a specific reserve is allocated for our syndicated loans. The general
component covers non-classified loans and special mention loans and
is based on historical loss experience adjusted for qualitative factors.
An unallocated component is maintained to cover uncertainties that
could affect the estimate of probable losses.

The allowance for loan losses is reviewed on a monthly basis. The
monitoring of credit risk also extends to unfunded credit commitments,
such as unused commercial credit lines and letters of credit. A reserve
is established as needed for estimates of probable losses on such
commitments.

Other-Than-Temporary Impairment of Investment Securities.

Management evaluates securities for other-than-temporary impairment
("OTTI") at least on a quarterly basis, and more frequently when
economic or market conditions warrant such an evaluation. Declines in
the fair value of securities below their cost that are other-than-temporary
are reflected as realized losses. In estimating other-than-temporary
losses, management considers the length of time and extent that fair
value has been less than cost and the financial condition and near
term prospects of the issuer. Management also assesses whether it
intends to sell, or it is more likely than not that it will be required to sell,
a security in an unrealized loss position before recovery of its amortized
cost basis. If either of the criteria regarding intent or requirement to sell
is met, the entire difference between amortized cost and fair value is
recognized as impairment through earnings. For debt securities that
do not meet the aforementioned criteria, the amount of impairment
is split into two components as follows: 1) OTTI related to credit loss,
which must be recognized in the income statement and 2) OTTI related
to other factors, which is recognized in other comprehensive income.
The credit loss is defined as the difference between the present value
of the cash flows expected to be collected and the amortized cost basis.
For equity securities, the entire amount of impairment is recognized
through earnings.

flow analyses or other valuation techniques. The determination of the
useful lives of intangible assets is subjective, as is the appropriate
amortization method for such intangible assets. In addition, business
combinations typically result in recording goodwill.

Intangible assets are comprised of goodwill, core deposit intangibles
and mortgage servicing rights. Goodwill and intangible assets deemed
to have indefinite lives are no longer amortized, but are subject to
annual impairment tests. Our goodwill is tested for impairment on
an annual basis, or more often if events or circumstances indicate
impairment may exist. Adverse changes in the economic environment,
declining operations, or other factors could result in a decline in the
implied fair value of goodwill. If the implied fair value is less than the
carrying amount, a loss would be recognized in other noninterest
expense to reduce the carrying amount to implied fair value of goodwill.
Our goodwill impairment test includes two steps that are preceded by
a "step zero" qualitative test. The qualitative test allows management to
assess whether qualitative factors indicate that it is more likely than not
that impairment exists. If it is not more likely than not that impairment
exists, then the two step quantitative test would not be necessary. These
qualitative indicators include factors such as earnings, share price,
market conditions, etc. If the qualitative factors indicate that it is more
likely than not that impairment exists, then the two step quantitative test
would be necessary. Step one is used to identify potential impairment
and compares the estimated fair value of a reporting unit with its carrying
amount, including goodwill. If the estimated fair value of a reporting unit
exceeds its carrying amount, goodwill of the reporting unit is considered
not impaired. If the carrying amount of a reporting unit exceeds its
estimated fair value, the second step of the goodwill impairment test
is performed to measure the amount of impairment loss, if any. Step
two of the goodwill impairment test compares the implied estimated
fair value of reporting unit goodwill with the carrying amount of that
goodwill. If the carrying amount of goodwill for that reporting unit
exceeds the implied fair value of that unit's goodwill, an impairment
loss is recognized in an amount equal to the excess. First Guaranty
concluded goodwill was not impaired as of October 1, 2017. Further,
no events or changes in circumstances between October 1, 2017 and
December 31, 2017 indicated that it was more likely than not the fair
value of any reporting unit had been reduced below its carrying value.

Goodwill impairment evaluations require management to utilize
significant judgments and assumptions including, but not limited to,
the general economic environment and banking industry, reporting
unit future performance (i.e., forecasts), events or circumstances
affecting a respective reporting unit (e.g., interest rate environment),
and changes in First Guaranty's stock price, amongst other relevant
factors. Management's judgments and assumptions are based on the
best information available at the time. Results could vary in subsequent
reporting periods if conditions differ substantially from the assumptions
utilized in completing the evaluations.

Identifiable intangible assets are acquired assets that lack physical
substance but can be distinguished from goodwill because of
contractual or legal rights or because the assets are capable of being
sold or exchanged either on their own or in combination with related
contract, asset or liability. Our intangible assets primarily relate to
core deposits. Management periodically evaluates whether events or
circumstances have occurred that would result in impairment of value.

Valuation of Goodwill, Intangible Assets and Other Purchase Accounting
Adjustments.

Financial Condition

First Guaranty accounts for acquisitions in accordance with ASC
Topic No. 805, Business Combinations, which requires the use of the
acquisition method of accounting. Under this method, First Guaranty is
required to record the assets acquired, including identified intangible
assets, and liabilities assumed, at their respective fair values, which
in many instances involves estimates based on third party valuations,
such as appraisals, or internal valuations based on discounted cash
70

First Guaranty completed the acquisition of Premier Bancshares,
Inc. and its wholly owned subsidiary Synergy Bank, S.S.B. on June
16, 2017. This acquisition added five branches, an estimated $127.2
million in deposits, and an estimated $128.0 million in loans to First
Guaranty's balance sheet. The results of operations since the date of
acquisition reflect the impact of the transaction.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Assets.

Our total assets were $1.8 billion at December 31, 2017, an increase
of $249.5 million, or 16.6%, from total assets at December 31, 2016,
primarily due to the growth in our loan portfolio of $202.0 million, an
increase in cash and cash equivalents of $19.9 million and of our
investment securities portfolio of $2.3 million, a substantial portion of
which was due to the Premier acquisition.

Loans.

Net loans increased $202.0 million, or 21.5%, to $1.1 billion at
December 31, 2017 from $937.8 million at December 31, 2016.
Net loans increased during 2017 primarily due to a $123.2 million
increase in non-farm non-residential loans, a $28.4 million increase
in construction and land development loans, a $26.7 million increase
in commercial and industrial loans, a $23.5 million increase in one-
to four-family residential loans, a $4.5 million increase in farmland
loans, and a $4.4 million increase in multi-family loans, partially
offset by a $7.8 million decrease in consumer and other loans
and a $2.3 million decrease in agricultural loans. Non-farm non-
residential loan balances increased primarily due to local originations
and the acquisition of loans from Premier. Construction and land
development loans increased principally due to the funding of
unfunded commitments on various construction projects. Commercial
and industrial loans increased primarily due to acquired loans from
Premier and due to growth in First Guaranty's legacy portfolio. One-to
four-family residential loans increased primarily due to the continued
growth in local loan originations and acquired loans. Farmland loans
increased due to seasonal fundings on agricultural loan commitments.
Multi-family loans increased primarily due to acquired loans from
Premier. Consumer and other loans decreased due to the sale of the

government guaranteed student loans portfolio acquired from Premier
and paydowns on commercial leases. Agricultural loans decreased due
to seasonal fluctuations. Syndicated loans declined during 2017 from
$82.8 million at December 31, 2016 to $70.4 million at December 31,
2017. First Guaranty had approximately 2.4% of funded and 0.4% of
unfunded commitments in our loan portfolio to businesses engaged in
support or service activities for oil and gas operations. The balances in
this portfolio were not materially changed by the Premier acquisition.
There are no significant concentrations of credit to any individual
borrower.

As of December 31, 2017, 74.1% of our loan portfolio was secured
primarily or secondarily by real estate. The largest portion of our
loan portfolio, at 46.9% at December 31, 2017, was non-farm non-
residential loans secured by real estate. Approximately 40.4% of the
loan portfolio is based on a floating interest rate tied to the prime rate
or London InterBank Offered Rate, or LIBOR, at December 31, 2017.
Approximately 70.2% of the loan portfolio is scheduled to mature
within five years from December 31, 2017.

First Guaranty acquired in the Premier acquisition a portfolio of loans
comprised of loans guaranteed principally by the U.S. Small Business
Administration ("SBA") or by the U.S. Department of Agriculture
("USDA") and the unguaranteed portion of SBA and USDA loans
for which the guaranteed portion had been sold into the secondary
market. At December 31, 2017 First Guaranty's balance of SBA
and USDA loans was $38.2 million of which $13.2 million retained
the government guarantee and $25.0 million was the unguaranteed
residual balance. At December 31, 2017, First Guaranty also serviced
55 SBA and USDA loans that totaled $50.5 million. First Guaranty
receives servicing fee income on this portfolio.

Loan Portfolio Composition.

The tables below sets forth the balance of loans, excluding loans held for sale, outstanding by loan type as of the dates presented, and the
percentage of each loan type to total loans.

At December 31,

2017

2016

2015

2014

2013

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(in thousands except for %)

Real Estate:

Construction & land

development

Farmland

1- 4-Family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total Loans Before Unearned
Income

Less: Unearned income

Total Loans Net Of Unearned
Income

112,603

9.8% $ 84,239

8.9% $ 56,132

6.6% $ 52,094

6.6% $ 47,550

25,691

158,733

16,840

540,231

854,098

21,514

220,700

55,185

2.2%

21,138

2.2%

17,672

2.1%

13,539

1.7%

9,826

13.8%

135,211

14.2%

129,610

15.4%

118,181

14.9%

103,764

1.4%

12,450

1.3%

12,629

1.5%

14,323

1.8%

13,771

46.9%

417,014

43.9%

323,363

38.3%

328,400

41.5%

336,071

74.1% 670,052

70.5% 539,406

63.9% 526,537

66.5% 510,982

1.9%

23,783

2.5%

25,838

3.1%

26,278

3.3%

21,749

19.2%

193,969

20.4%

224,201

26.6%

196,339

24.8%

151,087

4.8%

63,011

6.6%

54,163

6.4%

42,991

5.4%

20,917

297,399

25.9% 280,763

29.5% 304,202

36.1% 265,608

33.5% 193,753

6.7%

1.4%

14.7%

2.0%

47.7%

72.5%

3.1%

21.4%

3.0%

27.5%

1,151,497

100.0% 950,815

100.0% 843,608

100.0% 792,145

100.0% 704,735

100.0%

(2,483)

(1,894)

(2,025)

(1,824)

(1,569)

$1,149,014

$948,921

$841,583

$790,321

$703,166

EXPECT MORE Loan Portfolio Maturities.

The following tables summarize the scheduled repayments of our loan portfolio at December 31, 2017 and 2016. 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, 2017

More Than
One Year
Through
Five Years

One Year
or Less

After Five
Years

Total

(in thousands)

Real Estate:

Construction & land development

$ 22,729

$ 71,796

$ 18,078

112,603

Farmland

1 – 4-family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

4,693

16,054

1,962

15,628

47,614

11,746

5,370

95,065

3,132

56,734

290,654

192,843

102,172

437,438

314,488

7,923

40,145

19,223

4,613

170,103

35,616

8,978

10,452

346

67,291

210,332

19,776

Total Loans Before Unearned Income

$169,463

$647,770

$334,264

Less: unearned income

Total Loans Net Of Unearned Income

25,691

158,733

16,840

540,231

854,098

21,514

220,700

55,185

297,399

1,151,497
(2,483)

$1,149,014

December 31, 2016

More Than
One Year
Through
Five Years

One Year
or Less

After Five
Years

Total

(in thousands)

Real Estate:

Construction & land development

$ 25,096

$ 49,820

9,323

84,239

Farmland

1 – 4-family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

8,833

4,584

13,476

42,778

642

8,629

7,721

78,957

3,179

53,408

258,300

105,306

101,455

364,111

204,486

9,964

22,667

19,446

4,340

163,802

43,202

9,479

7,500

363

52,077

211,344

17,342

Total Loans Before Unearned Income

$153,532

$575,455

$221,828

Less: unearned income

Total Loans Net Of Unearned Income

21,138

135,211
12,450

417,014

670,052

23,783

193,969

63,011

280,763

950,815

(1,894)

$ 948,921

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. The following table sets forth the scheduled repayments of fixed and
adjustable-rate loans at December 31, 2017 that are contractually due
after December 31, 2018.

One to five years

Five to 15 years

Over 15 years

Subtotal

Nonaccrual loans

Total

Due After December 31, 2017

(in thousands)

Fixed

Floating

Total

$390,333

$251,135

$641,468

124,215

70,273

194,488

70,366

67,881

138,247

$584,914

$389,289

$974,203

12,550

$961,653

As of December 31, 2017, $95.4 million of floating rate loans were
at their interest rate floor. At December 31, 2016, $127.7 million of
floating rate loans were at the floor rate. Nonaccrual loans have been
excluded from these totals.

Non-performing Assets.

Non-performing assets consist of non-performing loans and other real-
estate owned. Non-performing loans (including nonaccruing troubled
debt restructurings described below) 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.

TOTAL ASSETS
In Billions

TOTAL LOANS
In Millions

2.0

1.5

1.0

0.5

0.0

2013

2014

2015

2016

2017

1200

1000

800

600

400

200

2013

2014

2015

2016

2017

EXPECT MORE The following table shows the principal amounts and categories of our non-performing assets at December 31, 2017, 2016, 2015, 2014 and 2013.

2017

2016

December 31,
2015

(in thousands)

2014

2013

Nonaccrual loans:
Real Estate:
Construction and land development

Farmland

1 – 4-family

Multi-family
Non-farm non-residential
Total Real Estate
Non-Real Estate:

Agricultural

Commercial and industrial
Consumer and other
Total Non-Real Estate
Total nonaccrual loans

Loans 90 days and greater delinquent & still accruing:
Real Estate:
Construction and land development
Farmland
1 - 4-family
Multi-family
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Consumer and other
Total Non-Real Estate
Total loans 90 days and greater delinquent & still accruing
Total non-performing loans

Other real estate owned and foreclosed assets:
Real Estate:
Construction and land development
Farmland
1 – 4-family
Multi-family
Non-farm non-residential
Total Real Estate
Non-Real Estate:
Agricultural
Commercial and industrial
Consumer and other
Total Non-Real Estate
Total other real estate owned and foreclosed assets
Total non-performing assets
Non-performing assets to total loans
Non-performing assets to total assets
Non-performing loans to total loans

$ 371

$ 551

$ 558

1,953

3,758
6,147

1,496

4,826

81
6,403
12,550

-
-
-
-
-
-

105

2,242
5,014
2,753
10,665

1,958
8,070
981
11,009
21,674

34
-
145
-
-
179

117

4,538

9,045
2,934
17,192

2,628

48
171
2,847
20,039

-
19
391
-
-
410

486

153

3,819

-
4,993
9,451

832

1,907
4
2,743
12,194

-
-
599
-
-
599

130

4,248

-
7,539
11,990

526

1,946
23
2,495
14,485

-
-
414
-
-
414

41
798
-
839
839
$13,389

-
-
-
-
179
$21,853

-
-
-
-
410
$20,449

-
-
-
-
599
$12,793

-
-
-
-
414
$14,899

304
-
23
-
954
1,281

-
-
71
-
288
359

25
-
880
-
672
1,577

-
-
-
-
1,281
$14,670

-
-
-
-
359
$22,212

-
-
-
-
1,577
$22,026

127
-
1,121
-
950
2,198

-
-
-
-
2,198
$14,991

754
-
1,803
-
800
3,357

-
-
-
-
3,357
$18,256

1.28%
0.84%
1.17%

2.34%
1.48%
2.30%

2.62%
1.51%
2.43%

1.90%
0.99%
1.62%

2.60%
1.27%
2.12%

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. For the years ended December 31, 2017 and 2016, gross interest
income which would have been recorded had the non-performing
loans been current in accordance with their original terms amounted
to $1.5 million and $1.5 million, respectively. We recognized $79,000
and $0.1 million of interest income on such loans during the years
ended December 31, 2017 and 2016, respectively. For the years
ended December 31, 2017 and 2016, gross interest income which
would have been recorded had the troubled debt restructured loans
been current in accordance with their original terms amounted to $0.1
million and $0.1 million, respectively. We recognized $0.1 million and
$0.3 million of interest income on such loans during the years ended
December 31, 2017 and 2016, respectively.

Non-performing assets were $14.7 million, or 0.84%, of total assets
at December 31, 2017, compared to $22.2 million, or 1.48%, of total
assets at December 31, 2016, which represented a decrease in non-
performing assets of $7.5 million. The decrease in non-performing
assets occurred primarily as a result of a decrease in non-accrual loans
from $21.7 million at December 31, 2016 to $12.6 million at December
31, 2017. The decrease in non-accrual loans was concentrated in
multi-family loans and commercial and industrial loans. The decrease
in non-accrual loans was partially offset by an increase in loans 90
days and greater still accruing of $0.7 million. First Guaranty acquired
$0.1 million in non-accrual loans from Premier and $1.0 million in
government guaranteed student loans that were 90 day plus and
still accruing in June 2017. The student loans were sold during the
third quarter of 2017. First Guaranty acquired $0.2 million in other
real estate owned from Premier. Non-performing assets included $1.1
million, or 7.3% of non-performing assets are loans with a government
guarantee. These are structured as net loss guarantees in which up to
90% of loss exposure is covered.

At December 31, 2017 nonaccrual loans totaled $12.6 million, a
decrease of $9.1 million, or 42.1%, compared to nonaccrual loans
of $21.7 million at December 31, 2016. The decrease in nonaccrual
loans was associated with a $4.9 million multi-family loan that was
returned to accrual status after observing reasonable payment
performance over the last 24 months and a $3.2 million partial charge
off of a non-performing commercial and industrial loan. Nonaccrual
loans were concentrated in three loan relationships that totaled $8.1
million or 64.6% of nonaccrual loans at December 31, 2017.

At December 31, 2017 loans 90 days or greater delinquent and still
accruing totaled $0.8 million, an increase of $0.7 million, compared to
$0.2 million at December 31, 2016. These loans were comprised of a
$0.8 million commercial and industrial loan and a $40,000 agricultural
loan at December 31, 2017.

Other real estate owned at December 31, 2017 totaled $1.3 million, an
increase of $0.9 million from $0.4 million at December 31, 2016. The
increase in other real estate owned was primarily due to the addition of
a $0.8 million non-farm non-residential property.

At December 31, 2017, our largest non-performing assets were
comprised of the following non-accrual loans and other real estate
owned: (1) a commercial and industrial loan that totaled $4.6 million
that is a shared national credit involved in oil and gas support and
service activity with a specific reserve of $0.5 million; (2) a non-farm
non-residential loan that totaled $3.1 million; (3) an agricultural
loan that totaled $0.4 million; and (4) a $0.8 million non-farm non-
residential property. The commercial and industrial and agricultural
loans have been charged down to their estimated fair value.

Troubled Debt Restructuring.

Another category of assets which contribute to our credit risk is troubled
debt restructurings (“TDRs”). A TDR is a loan for which a concession
has been granted to the borrower due to a deterioration of the borrower’s
financial condition. Such concessions may include reduction in interest

rates, deferral of interest or principal payments, principal forgiveness
and other actions intended to minimize the economic loss and to
avoid foreclosure or repossession of the collateral. We strive to identify
borrowers in financial difficulty early and work with them to modify to
more affordable terms before such loan reaches nonaccrual status. In
evaluating whether to restructure a loan, management analyzes the
long-term financial condition of the borrower, including guarantor and
collateral support, to determine whether the proposed concessions will
increase the likelihood of repayment of principal and interest. TDRs
that are not performing in accordance with their restructured terms
and are either contractually 90 days past due or placed on nonaccrual
status are reported as non-performing loans. Our policy provides
that nonaccrual TDRs are returned to accrual status after a period
of satisfactory and reasonable future payment performance under
the terms of the restructuring. Satisfactory payment performance is
generally no less than six consecutive months of timely payments and
demonstrated ability to continue to repay.

The following is a summary of loans restructured as TDRs at December
31, 2017, 2016 and 2015:

At December 31,

2017

2016

2015

(in thousands)

TDRs:

In Compliance with Modified Terms

$2,138

$2,987

$3,431

Past Due 30 through 89 days and still
accruing

Past Due 90 days and greater and
still accruing

Nonaccrual

Restructured Loans that subsequently
defaulted

Total TDR

334

361

368

100

1,908

$2,472

$3,448

$5,707

At December 31, 2017, the outstanding balance of our troubled
debt restructurings, was $2.5 million as compared to $3.4 million at
December 31, 2016. At December 31, 2017, we had two outstanding
TDRs: (1) a $2.1 million non-farm non-residential loan secured by
commercial real estate, which was performing in accordance with
its modified terms; and (2) a $0.3 million construction and land
development loan secured by raw land that is on non-accrual. The
restructuring of these loans was related to interest rate or amortization
concessions. The decline in TDRs occurred primarily due to paydowns
on the $2.1 million TDR that is in compliance with its modified terms
and the charge off of a $0.1 million TDR that subsequently defaulted
and was placed on non-accrual.

EXPECT MORE 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 loan 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 loan 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 following table sets forth our amounts of classified loans and loans
designated as special mention at December 31, 2017, 2016 and 2015.
Classified assets totaled $54.1 million at December 31, 2017, and included
$13.4 million of non-performing loans..

At December 31,

2017

2016

2015

(in thousands)

$49,495

$41,992

$58,654

4,560

7,730

$54,055

$49,722

$58,654

$25,929

$17,705

$10,752

Classification of Loans:

Substandard

Doubtful

Total Classified Assets

Special Mention

The increase in classified assets at December 31, 2017 as compared to
December 31, 2016 was due to a $7.5 million increase in substandard
loans offset by a decrease in doubtful loans of $3.2 million. The increase in
substandard loans was due primarily to the addition of loans acquired in the
Premier acquisition with deteriorated credit quality. Substandard loans at
December 31, 2017 consisted of $17.3 million in non-farm non-residential,
$7.5 million in one- to four-family residential, $6.9 million in consumer
and other loans, $6.8 million in multi-family, $5.2 million in commercial
and industrial, $4.3 million in construction and land development, and
the remaining $1.6 million comprised of farmland and agricultural loans.
Doubtful loans decreased in 2017 by $3.2 million due to the partial charge
off on a nonperforming commercial and industrial loan. Special mention
loans increased by $8.2 million in 2017 primarily due to the downgrade of
syndicated loans.

Allowance for Loan Losses

The allowance for loan losses is maintained to absorb potential losses in the
loan portfolio. The allowance is increased by the provision for loan 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 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;

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, and impaired. For such loans that are also classified as
impaired, an allowance is established when the discounted cash flows (or
collateral value or observable market price) of the impaired loan is lower
than the carrying value of that loan. Also, a specific reserve is allocated
for our syndicated loans, including shared national credits. 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.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. The allowance for losses was $9.2 million at December 31, 2017 compared to $11.1 million at December 31, 2016.

The balance in the allowance for loan losses is principally influenced by the provision for loan losses and by net loan loss experience. Additions
to the allowance are charged to the provision for loan 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 table below reflects the activity in the allowance for
loan losses for the years indicated.

Balance at beginning of year

$ 11,114

$ 9,415

$ 9,105

$ 10,355

$ 10,342

At or For the Years Ended December 31,

2017

2016

2015

2014

2013

(dollars in thousands)

Charge-offs:

Real Estate:

Construction and land development

Farmland

1 – 4-family residential

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial loans

Consumer and other

Total Non-Real Estate

Total charge-offs

Recoveries:

Real Estate:

Construction and land development

Farmland

1 – 4-family residential

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial loans

Consumer and other

Total Non-Real Estate

Total recoveries

Net (charge-offs) recoveries

Provision for loan losses

Balance at end of year

Ratios:

(33)

(244)

(559)

(1,032)

(410)

(947)

(589)

(1,291)

(1,373)

(1,137)

(1,515)

(1,324)

(1,617)

(3,053)

(3,136)

(162)

(3,629)

(1,247)

(5,038)

(6,362)

(83)

(579)

(635)

(1,297)

(2,914)

(491)

(79)

(550)

(1,120)

(4,173)

(2)

(266)

(289)

(557)

(3,693)

260

138

223

391

651

401

466

113

146

183

442

908

150

315

151

469

619

163

118

199

318

481

(233)

(31)

(220)

(1,148)

(1,632)

(41)

(1,098)

(262)

(1,401)

(3,033)

140

207

243

319

526

(5,711)

(2,006)

(3,554)

(3,212)

(2,507)

3,822

3,705

3,864

1,962

2,520

$ 9,225

$11,114

$ 9,415

$ 9,105

$10,355

Net loan charge-offs to average loans

Net loan charge-offs to loans at end of year

Allowance for loan losses to loans at end of year

Net loan charge-offs to allowance for loan losses

Net loan charge-offs to provision charged to expense

0.54%

0.50%

0.80%

61.91%

149.42%

0.23%

0.21%

1.17%

18.05%

54.14%

0.44%

0.42%

1.12%

0.45%

0.41%

1.15%

37.75%

35.28%

91.98%

163.71%

0.38%

0.36%

1.47%

24.21%

99.48%

EXPECT MORE A provision for loan losses of $3.8 million was made during the year
ended December 31, 2017 as compared to $3.7 million for 2016. The
provisions made in 2017 were taken to provide for current loan losses
and to maintain the allowance proportionate to risks inherent in the
loan portfolio.

Total charge-offs were $6.4 million during the year ended December
31, 2017 as compared to $2.9 million for 2016. Recoveries totaled
$0.7 million for the year ended December 31, 2017 and $0.9 million
during 2016. Comparing the year ended December 31, 2017 to the
year ended December 31, 2016, the decrease in the allowance was
primarily attributed to the decrease in the specific reserve associated
with a nonperforming commercial and industrial loan. The decrease in
the specific reserve was due to a $3.2 million partial charge off related
to the credit that reduced the specific reserve to $0.5 million. There
were changes within the specific components of the allowance balance.
The primary changes were decreases in the balances associated with
commercial and industrial, construction and land development, non-
farm non-residential and one- to-four family loans. This decrease was
partially offset by an increase in multi-family loans, consumer and
other loans and agricultural loans.

The charged-off loan balances for the year ended December 31, 2017
were concentrated in five loan relationships which totaled $5.0 million,
or 77.9%, of the total charged-off amount. The details of the $5.0
million in charged-off loans were as follows:

• First Guaranty charged off $0.7 million on a non-real estate
commercial lease in the second quarter of 2017. This loan had no
remaining principal balance at December 31, 2017.

• First Guaranty charged off $0.5 million on a non-farm non-residential
real estate loan in the second quarter of 2017. This loan had no
remaining principal balance at December 31, 2017.

• First Guaranty charged off $3.2 million on a commercial and
industrial loan relationship in 2017. This relationship had a
remaining principal balance of $4.6 million with a specific reserve of
$0.5 million at December 31, 2017.

• First Guaranty charged off $0.4 million on a non-farm non-residential
real estate loan in the fourth quarter of 2017. This loan had a
remaining principal balance of $3.1 million at December 31, 2017.

• First Guaranty charged off $0.2 million on a commercial and
industrial loan in the fourth quarter of 2017. This loan had no
remaining principal balance at December 31, 2017.

• $1.4 million of charge-offs for 2017 were comprised of smaller loans

and overdrawn deposit accounts.

Allocation of Allowance for Loan Losses.

TThe following tables set forth the allowance for loan losses allocated by loan category and the percent of loans in each category to total loans at
the dates indicated. The allowance for loan 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,

2017

Allowance
for Loan
Losses

Percent of
Allowance to
Total Allowance
for Loan Losses

Percent of
Loans in Each
Category to
Total Loans

Allowance for
Loan Losses

(dollars in thousands)

2016

Percent of
Allowance to
Total Allowance
for Loan Losses

Percent of Loans in
Each Category to
Total Loans

$ 628

1,078

994

2,811

187

2,377

1,125

6.8%

0.1%

11.7%

10.8%

30.4%

2.0%

25.8%

12.2%

9.8%

2.2%

13.8%

1.4%

46.9%

1.9%

19.2%

4.8%

$ 1,232

1,204

591

3,451

3,543

972

11.1%

0.2%

10.8%

5.3%

31.0%

0.7%

31.9%

8.7%

0.2%

0.3%

8.9%

2.2%

14.2%

1.3%

43.9%

2.5%

20.4%

6.6%

Real Estate:

Construction and land development

Farmland

1 - 4-family

Multi-family

Non-farm non-residential

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Unallocated

Total Allowance

$9,225

100.0%

$11,114

100.0%

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

At December 31,

2015

2014

Allowance
for Loan
Losses

Percent of
Allowance to
Total Allowance
for Loan Losses

Percent of
Loans in Each
Category to
Total Loans

Allowance
for Loan
Losses

Percent of
Allowance to
Total Allowance
for Loan Losses

Percent of
Loans in Each
Category to
Total Loans

$ 962

1,771

557

3,298

2,527

230

10.2%

0.6%

18.8%

5.9%

35.0%

0.2%

26.9%

2.4%

(dollars in thousands)

6.6%

2.1%

15.4%

1.5%

38.3%

3.1%

26.6%

6.4%

702

7.7%

0.2%

2,131

23.4%

813

8.9%

2,713

29.8%

293

3.2%

1,797

19.8%

371

4.1%

6.6%

1.7%

14.9%

1.8%

41.5%

3.3%

24.8%

5.4%

264

2.9%

Real Estate:

Construction and land development

Farmland

1 - 4-family

Multi-family

Non-farm non-residential

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Unallocated

Total Allowance

$ 9,415

100.0%

$ 9,105

100.0%

Real Estate:

Construction and land development

Farmland

1 - 4-family

Multi-family

Non-farm non-residential

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Unallocated

Total Allowance

At December 31,

2013

Allowance
for Loan
Losses

Percent of
Allowance to Total
Allowance for
Loan Losses

Percent of
Loans in Each
Category to
Total Loans

(dollars in thousands)

$ 1,530

1,974

376

3,607

2,176

208

421

14.8%

0.2%

19.1%

3.6%

34.8%

0.4%

21.0%

2.0%

4.1%

6.7%

1.4%

14.7%

2.0%

47.7%

3.1%

21.4%

3.0%

$10,355

100.0%

EXPECT MORE

Investment Securities.

Investment securities at December 31, 2017 totaled $501.7 million,
an increase of $2.3 million, or 0.5%, compared to $499.3 million at
December 31, 2016. Our investment securities portfolio is comprised
of both available for sale securities and securities that we intend to
hold to maturity. 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. In particular, our held to maturity
securities portfolio is used as collateral for our public funds deposits.

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, Federal Farm Credit Bank (“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, 2017, the U.S Government and Government agency
securities and municipal bonds qualified as securities available to
collateralize public funds. Securities pledged as collateral totaled
$412.2 million at December 31, 2017 and $368.2 million at December
31, 2016. 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.

The following table sets forth the amortized cost and fair values of our
securities portfolio at the dates indicated.

2017

At December 31,

2016

(in thousands)

2015

Amortized
Cost

Fair Value

Amortized
Cost

Fair Value

Amortized
Cost

Fair Value

$ 19,490

$ 19,486

$ 29,994

$ 29,999

200,052

195,983

183,152

178,332

165,364

163,811

91,770

91,485

132,448

131,972

105,680

105,136

500

37,210

1,191

33,680

493

39,569

1,185

33,334

580

573

580

582

28,177

27,957

47,339

48,233

29,181

28,645

28,891

28,608

383,893

381,535

403,532

397,473

377,853

376,369

28,169

27,499

18,167

17,512

77,343

76,622

5,322

86,630

5,325

85,733

83,696

82,394

92,409

91,526

$120,121

$118,557

$101,863

$ 99,906

$169,752

$168,148

Available for sale:

U.S Treasuries

U.S. Government Agencies

Corporate debt securities

Mutual funds or other equity securities

Municipal bonds

Collateralized mortgage obligations

Mortgage-backed securities

Total available for sale securities

Held to maturity:

U.S. Government Agencies

Municipal bonds

Mortgage-backed securities

Total held to maturity securities

Our available for sale securities portfolio totaled $381.5 million at
December 31, 2017, a decrease of $15.9 million, or 4.0%, compared
to $397.5 million at December 31, 2016. The decrease was primarily
due to the sale of $112.5 million in U.S. Government agency and U.S.
Treasury securities and $36.4 million in corporate securities for which
the proceeds were used to fund loan growth. Partially offsetting this
decrease was the purchase of U.S. government agency securities used
to collateralize public funds deposits. Acquired securities from Premier
totaled $5.9 million and included $4.5 million in mortgage-backed
securities and $1.4 million in collateralized mortgage obligations.

Our held to maturity securities portfolio had an amortized cost of $120.1
million at December 31, 2017, an increase of $18.3 million, or 17.9%,
compared to $101.9 million at December 31, 2016. The increase was
primarily due to the purchase of $15.2 million in mortgage-backed
securities, $10.0 million in U.S. Government agency securities and $5.3
million in municipal securities used to collateralize public funds deposits.
Partially offsetting this increase were early payoffs of existing securities
and the continued amortization of our mortgage-backed securities.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

The following table sets forth the stated maturities and weighted average yields of our investment securities at December 31, 2017 and 2016.

At December 31, 2017

One Year or Less

Carrying
Value

Weighted
Average
Yield

More than One Year
through Five Years

More than Five Years
through Ten Years

More than Ten Years

Carrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
Yield

(in thousands except for %)

Available for sale:

U.S Treasuries

U.S. Government Agencies

Corporate and other debt securities

Mutual funds or other equity securities

Municipal bonds

Collateralized mortgage obligations

Mortgage-backed securities

$ 19,486

2,979

4,298

1.2%

1.0%

3.9%

39,014

29,437

1.6%

3.2%

141,325

2.4%

12,665

2.9%

56,711

3.7%

1,039

5.5%

493

2.1%

2,470

3.0%

8,472

3.7%

16,733

3.4%

11,894

3.9%

1,185

2.1%

1,441

2.0%

31,893

2.4%

Total available for sale securities

$29,233

1.7%

$ 76,923

2.4%

$ 216,210

2.8%

$ 59,169 2.8%

Held to maturity:

U.S. Government Agencies

Municipal bonds

Mortgage-backed securities

Total held to maturity securities

$ 4,999

1.5%

$ 18,170

2.3%

$ 5,000

3.2%

125

1.6%

315

829

2.4%

2.0%

4,882

2.6%

85,801

2.4%

$ 5,124

1.5%

$ 19,314

2.3%

$95,683 2.5%

At December 31, 2016

One Year or Less

Carrying
Value

Weighted
Average
Yield

More than One Year
through Five Years

More than Five Years
through Ten Years

More than Ten Years

Carrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
Yield

Carrying
Value

Weighted
Average
Yield

(in thousands except for %)

Available for sale:

U.S Treasuries

$ 29,994

0.4%

U.S. Government Agencies

Corporate and other debt securities

Mutual funds or other equity securities

6,454

3.8%

44,401

41,909

1.0%

4.0%

116,602

2.3%

17,329

2.8%

82,472

3.6%

1,137

5.4%

573

2.2%

Municipal bonds

Mortgage-backed securities

3,324

2.1%

6,301

2.7%

10,896

2.9%

7,436

2.9%

28,645

2.0%

Total available for sale securities

$ 39,772

1.1%

$ 92,611

2.5%

$ 209,970

2.8%

$ 55,120 2.5%

Held to maturity:

U.S. Government Agencies

Mortgage-backed securities

Total held to maturity securities

4,998

1.5%

$ 13,169

2.0%

83,696

2.1%

$ 4,998

1.5%

$ 13,169

2.0%

$83,696 2.1%

EXPECT MORE At December 31, 2017, $29.2 million, or 5.8%, of the securities portfolio
was scheduled to mature in less than one year. Securities, not including
mortgage-backed securities, with contractual maturity dates over 10
years totaled $36.0 million, or 7.2%, of the total portfolio at December
31, 2017. 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. Based on
internal forecasts at December 31, 2017, we believe that the securities
portfolio has a forecasted weighted average life of approximately 6.0
years based on the current interest rate environment. A parallel interest
rate shock of 400 basis points is forecasted to increase the weighted
average life of the portfolio to approximately 6.4 years.

At December 31, 2017, the following table identifies the issuers, and
the aggregate amortized cost and aggregate fair value of the securities
of such issuers that exceeded 10% of our total shareholders’ equity:

U.S. Treasuries

FHLB

Freddie Mac

Fannie Mae

Federal Farm Credit Bank

Total

At December 31, 2017

Amortized
Cost

Fair Value

(in thousands)

$ 19,490 $ 19,486

50,395

57,569

49,403

57,008

103,644

101,757

136,923

134,381

$368,021 $ 362,035

2000

1500

1000

500

TOTAL DEPOSITS
In Millions

2013

2014

2015

2016

2017

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. From December 31, 2016 to December
31, 2017, total deposits increased $223.1 million, or 16.8%, to $1.5
billion. Noninterest-bearing demand deposits increased $20.5 million
to $251.6 million at December 31, 2017. Interest-bearing demand
deposits increased $131.9 million to $611.7 million at December
31, 2017. Time deposits increased $63.3 million, or 12.2%, to
$581.3 million at December 31, 2017 compared to $518.0 million at
December 31, 2016. First Guaranty had $115.9 million in brokered
deposits at December 31, 2017.

As we seek to strengthen our net interest margin and improve our
earnings, attracting noninterest-bearing deposits will be a primary
emphasis. Management will continue to evaluate and update our
product mix 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.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. The following table sets forth the distribution of deposit accounts, by account type, for the dates indicated.

Total Deposits

2017

2016

2015

For the Years Ended December 31,

Average
Balance

Percent

Weighted
Average
Rate

Average
Balance

Percent

Weighted
Average
Rate

Average
Balance

Percent

Weighted
Average
Rate

(in thousands except for %)

Noninterest-bearing Demand

$ 244,949

16.7%

-% $ 221,634

17.2%

-% $ 211,584

15.9%

Interest-bearing Demand

Savings

Time

Total Deposits

539,399

36.9%

102,779

7.0%

575,666

39.4%

1.0%

0.2%

1.2%

415,410

32.3%

89,279

7.0%

558,982

43.5%

0.6%

0.1%

1.1%

401,617

30.2%

77,726

5.8%

640,134

48.1%

$ 1,462,793 100.0%

0.9% $1,285,305 100.0%

0.7% $1,331,061 100.0%

0.4%

1.1%

0.6%

Individual and Business Deposits

2017

2016

2015

For the Years Ended December 31,

Average
Balance

Percent

Weighted
Average
Rate

Average
Balance

Percent

Weighted
Average
Rate

Average
Balance

Percent

Weighted
Average
Rate

(in thousands except for %)

Noninterest-bearing Demand

$ 240,337

28.0%

-% $ 217,245

30.1%

-% $ 207,334

27.6%

187,439

21.8%

82,442

9.6%

348,656

40.6%

0.6%

0.1%

1.3%

117,221

16.2%

72,647

10.0%

316,191

43.7%

0.3%

0.1%

1.3%

112,864

15.0%

65,775

8.7%

366,244

48.7%

0.2%

0.1%

1.4%

Interest-bearing Demand

Savings

Time

Total Individual and Business
Deposits

$ 858,874 100.0%

0.7% $ 723,304 100.0%

0.6% $ 752,217 100.0%

0.7%

Public Fund Deposits

2017

2016

2015

For the Years Ended December 31,

Average
Balance

Percent

Weighted
Average
Rate

Average
Balance

Percent

Weighted
Average
Rate

Average
Balance

Percent

Weighted
Average
Rate

(in thousands except for %)

Noninterest-bearing Demand

4,612

0.8%

-% $

4,389

0.8%

-% $

4,250

0.7%

Interest-bearing Demand

Savings

Time

351,960

58.3%

20,337

3.4%

227,010

37.5%

1.2%

0.8%

1.1%

298,189

53.0%

16,632

3.0%

242,791

43.2%

0.8%

0.3%

0.8%

288,753

49.9%

11,951

2.1%

273,890

47.3%

Total Public Fund Deposits

$ 603,919 100.0%

1.2% $ 562,001 100.0%

0.8% $ 578,844 100.0%

0.4%

0.7%

0.5%

At December 31, 2017, public funds deposits totaled $640.7 million
compared to $556.9 million at December 31, 2016. The change
in balances from December 31, 2016 to December 31, 2017 was
primarily due to the timing associated with seasonal tax collections.
We have developed a program for the retention and management of
public funds deposits. Since the end of 2012, we have 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. $591.2 million, or 92% of these
accounts at December 31, 2017 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. Three of these relationships account for
approximately 40% of public fund deposits that are under fiscal agency
agreements. 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. Public funds deposit accounts are
collateralized by FHLB letters of credit, 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. We
invest the majority of these public deposits in our investment portfolio,
but have increasingly invested more public funds into loans during the
last three years.

EXPECT MORE The following table sets forth our public funds as a percent of total deposits.

Public Funds:

Noninterest-bearing Demand

Interest-bearing Demand

Savings

Time

Total Public Funds

Total Deposits

At December 31,

2017

2016

2015

(in thousands except for %)

4,828

4,114

4,906

389,788

20,539

225,591

324,356

20,116

208,330

296,416

14,667

252,688

$ 640,746

$ 556,916

$ 568,677

$1,549,286

$1,326,181

$1,295,870

Total Public Funds as a percent of Total Deposits

41.4%

42.0%

43.9%

At December 31, 2017, the aggregate amount of outstanding
certificates of deposit in amounts greater than or equal to $100,000 was
approximately $409.4 million. At December 31, 2017, approximately
$141.3 million of our certificates of deposit greater than or equal to
$100,000 had a remaining term greater than one year.

The following table sets forth the maturity of the total certificates of
deposit greater than or equal to $100,000 at December 31, 2017.

Due in one year or less

Due after one year through three years

Due after three years

Total certificates of deposit greater than or
equal to $100,000

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. Short-term borrowings totaled
$15.5 million at December 31, 2017 and $6.5 million at December
31, 2016. The short-term borrowings at December 31, 2017 were
comprised of a line of credit of $6.5 million, with no outstanding
balance and collateralized short-term borrowings from the Federal
Home Loan Bank totaling $15.5 million.

At December 31, 2017, we had $294.2 million in FHLB letters of credit
outstanding obtained primarily for collateralizing public deposits. The
increase in Federal Home Loan Bank letters of credit reflects First
Guaranty's ability to transition public funds deposits into loans.

The following table sets forth information concerning balances and
interest rates on our short-term borrowings at the dates and for the
years indicated.

December 31,
2017

(in thousands)

$ 268,078

107,414

33,920

$409,412

Balance at end of year

Maximum month-end
outstanding

Average daily outstanding

Total weighted average rate
during the year

Weighted average rate
during year

At or For the Years Ended
December 31,

2017

2016

2015

(in thousands except for %)

$15,500

$ 6,500

$ 1,800

$28,000

$ 5,833

$ 25,000

$ 8,775

$13,800

$ 4,217

1.06%

0.85%

2.12%

1.51%

0.65%

4.50%

First Guaranty Bancshares had senior long-term debt totaling $22.8
million at December 31, 2017 and $22.1 million at December 31,
2016. First Guaranty modified its existing senior long-term debt in
the second quarter of 2017. The modification increased the principal
balance to $25.0 million with new net proceeds of $3.8 million. The
existing amortization terms and rates remained the same. The $3.8
million in additional proceeds were contributed to First Guaranty Bank
for future growth.

First Guaranty also had junior subordinated debentures totaling $14.7
million at December 31, 2017 and $14.6 million at December 31,
2016.

Shareholders’ Equity

Total shareholders’ equity increased to $144.0 million at December
31, 2017 from $124.3 million at December 31, 2016. The increase
in shareholders' equity was principally the result of an $11.3 million
increase in surplus, a $5.5 million increase in retained earnings and
a decrease of $2.4 million in accumulated other comprehensive loss.
The decrease in accumulated other comprehensive loss was primarily
attributed to the decrease in unrealized losses on available for sale
securities during the year. The $11.3 million increase in surplus was
due to the issuance of common stock resulting from the Premier
acquisition and the 10% common stock dividend paid in December
2017. The $5.5 million increase in retained earnings was due to net
income of $11.8 million during the year ended December 31, 2017,
partially offset by $5.2 million in cash dividends paid on our common
stock and the reclassification to surplus for the 10% common stock
dividend.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. TOTAL NET INCOME
In Millions

TOTAL COMMON SHAREHOLDERS' EQUITY
In Millions

2013

2014

2015

2016

2017

150

120

2013

2014

2015

2016

2017

Results of Operations

Performance Summary

Year ended December 31, 2017 compared with year ended December 31,
2016. Net income for the year ended December 31, 2017 was $11.8
million, a decrease of $2.3 million, or 16.6%, from $14.1 million for
the year ended December 31, 2016. The decrease in net income of
$2.3 million for the year ended December 31, 2017 was the result of
several factors. Non-interest income declined as net gains on securities
were $2.4 million less in 2017 than in 2016. Net gains on securities
sales for the years ended December 31, 2017 and 2016 were $1.4
million and $3.8 million, respectively. Non-interest expense increased
primarily due to expenses associated with the Premier acquisition that
included $1.4 million in one-time merger related expenses, as well
as expenses associated with additional compensation, occupancy,
and other operating expenses for the new Texas markets. First
Guaranty recorded a one-time income tax expense of $0.9 million in
2017 related to the estimated net impact from the remeasurement of
deferred tax assets and liabilities due to the change in Federal tax rates
that occurred with the passage of the Tax Cuts and Jobs Act. Interest
expense increased in 2017 due changes in rates paid on demand
deposits and time deposits and due to the acquired deposits from
the Premier acquisition. Factors that partially offset these expenses
included increased loan interest income and gains on the sale of SBA
loans. Loan interest income increased due to the continued growth
in First Guaranty’s loan portfolio and due to the acquired loans from
the Premier acquisition. First Guaranty generated $0.3 million in gains
from SBA loans sales following the Premier acquisition. Earnings per
common share for the year ended December 31, 2017 was $1.37 per
common share, a decrease of 18.5% or $0.31 per common share from
$1.68 per common share for the year ended December 31, 2016 (as
adjusted for the 10% stock dividend in December 2017).

Earnings per share was affected by the change in earnings and by the
change in shares outstanding due to the Premier acquisition. Average
shares outstanding was 8,608,088 for 2017 compared to 8,369,424
for 2016.

Year ended December 31, 2016 compared with year ended December 31,
2015. Net income for the year ended December 31, 2016 was $14.1
million, a decrease of $0.4 million, or 2.8%, from $14.5 million for the
year ended December 31, 2015. Net income available to common
shareholders for the year ended December 31, 2016 was $14.1 million
which was a decrease of $28,000. The decrease in net income of $0.4
million for the year ended December 31, 2016 was primarily the result
of increased interest expense and increased noninterest expense,
partially offset by an increase in interest income and noninterest income.
Net gains on securities sales for the years ended December 31, 2016
and 2015 were $3.8 million and $3.3 million, respectively. Earnings
per common share for the year ended December 31, 2016 was $1.68
per common share, a decrease of 8.2% or $0.15 per common share
from $1.83 per common share for the year ended December 31, 2015
(as adjusted for the 10% stock dividend in December 2017).

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. Our net interest income is affected by
changes in the amount and mix of interest-earning assets and interest-
bearing 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.

EXPECT MORE 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 low interest rate environment in
recent years and our interest sensitivity position is discussed below.

Year ended December 31, 2017 compared with year ended December 31,
2016. Net interest income for the year ended December 31, 2017 and
2016 was $53.2 million and $48.4 million, respectively. The increase
in net interest income for the year ended December 31, 2017 was
primarily due to an increase in the average balance of our total interest-
earning assets and an increase in the average yield of our total interest-
earning assets, partially offset by the increase in the average balance
of our total interest-bearing liabilities and an increase in the average
rate of our total interest-bearing liabilities. The average balance of total
interest-earning assets increased by $168.4 million to $1.6 billion for
the year ended December 31, 2017 as compared to the year ended
December 31, 2016. The average yield on our total interest-earning
assets increased 13 basis points to 4.23% for the year ended December
31, 2017 compared to 4.10% for the year ended December 31, 2016.
The average balance of total interest-bearing liabilities increased by
$151.9 million to $1.3 billion for the year ended December 31, 2017
as compared to the year ended December 31, 2016. The average rate
of our total interest-bearing liabilities increased by 22 basis points to
1.14% for the year ended December 31, 2017 compared to 0.92%
for the year ended December 31, 2016. As a result, our net interest
rate spread decreased nine basis points to 3.09% for the year ended
December 31, 2017 from 3.18% for the year ended December 31,
2016, and our net interest margin decreased six basis points to 3.33%
for the year ended December 31, 2017 from 3.39% for the year ended
December 31, 2016.

Year ended December 31, 2016 compared with year ended December 31,
2015. Net interest income for the year ended December 31, 2016 and
2015 was $48.4 million and $47.5 million, respectively. The increase
in net interest income for the year ended December 31, 2016 was
primarily due to a decrease in the average balance of our total interest-
bearing liabilities and an increase in the average yield of our total
interest-earnings assets partially offset by the increase in the average
rate of our total interest-bearing liabilities and a decrease in the average
balance of our total interest-earning assets. The average balance of
total interest-bearing liabilities decreased by $18.7 million to $1.1
billion for the year ended December 31, 2016 as compared to the year
ended December 31, 2015. The average yield on our total interest-
earning assets increased 25 basis points to 4.10% for the year ended
December 31, 2016 compared to 3.85% for the year ended December
31, 2015. The average rate of our total interest-bearing liabilities
increased by 16 basis points to 0.92% for the year ended December
31, 2016 compared to 0.76% for the year ended December 31, 2015.
The average balance of total interest-earning assets decreased by
$30.2 million to $1.4 billion for the year ended December 31, 2016 as
compared to the year ended December 31, 2015. As a result, our net
interest rate spread increased nine basis points to 3.18% for the year
ended December 31, 2016 from 3.09% for the year ended December
31, 2015, and our net interest margin increased 13 basis points to
3.39% for the year ended December 31, 2016 from 3.26% for the year
ended December 31, 2015.

Interest Income

Year ended December 31, 2017 compared with year ended December 31,
2016. First Guaranty continues to transition assets from lower yielding
securities to higher yielding loans in order to increase interest income.
Interest income increased $9.0 million, or 15.4%, to $67.5 million for
the year ended December 31, 2017 from $58.5 million for the year
ended December 31, 2016 primarily as a result of a $8.5 million
increase in interest income on loans. The increase in interest income
resulted primarily from an increase in the average balance of our total
interest-earning assets along with an increase in the average yield of
interest-earning assets. The average balance of interest-earning assets
increased $168.4 million to $1.6 billion for the year ended December
31, 2017 as compared to the prior year period. The average yield
of interest-earning assets increased by 13 basis points to 4.23% for
the year ended December 31, 2017 compared to 4.10% for the year
ended December 31, 2016.

Interest income on securities increased $0.4 million, or 2.8%, to $13.3
million for the year ended December 31, 2017 primarily as a result
of an increase in the average yield on securities, partially offset by a
decrease in the average balance of securities. The average yield on
securities increased by 12 basis points to 2.60% for the year ended
December 31, 2017 compared to 2.48% for the year ended December
31, 2016 as a result of First Guaranty's plan to transition assets from
securities to loans. The average balance of securities decreased $11.7
million to $511.7 million for the year ended December 31, 2017 from
$523.4 million for the year ended December 31, 2016.

Interest income on loans increased $8.5 million, or 18.8%, to $54.0
million for the year ended December 31, 2017 as a result of an increase
in the average balance of loans, partially offset by a decrease in the
average yield on loans. The average balance of loans (excluding loans
held for sale) increased by $175.1 million to $1.1 billion for the year
ended December 31, 2017 from $881.4 million for the year ended
December 31, 2016 as a result of new loan originations, acquired
loans and loans assumed from the Premier acquisition, the majority
of which were one-to-four family residential loans, commercial leases,
commercial real estate loans and commercial and industrial loans. The
average yield on loans (excluding loans held for sale) decreased by
five basis points to 5.11% for the year ended December 31, 2017
compared to 5.16% for the year ended December 31, 2016.

Year ended December 31, 2016 compared with year ended December
31, 2015. Interest income increased $2.5 million, or 4.4%, to $58.5
million for the year ended December 31, 2016 from $56.1 million for
the year ended December 31, 2015 primarily as a result of a $3.0
million increase in interest income on loans. The increase in interest
income resulted primarily from an increase in the average yield of
interest-earning assets by 25 basis points to 4.10% for the year ended
December 31, 2016 compared to 3.85% for the year ended December
31, 2015. This increase was partially offset by a $30.2 million decrease
in the average balance of our interest-earnings assets to $1.4 billion
for the year ended December 31, 2016 as compared to the prior year.

Interest income on securities decreased $0.5 million, or 3.7%, to
$13.0 million for the year ended December 31, 2016 as a result of the
decrease in the average balance of securities, which was partially offset
by an increase in the average yield on securities. The average balance
of securities decreased $85.9 million to $523.4 million for the year
ended December 31, 2016 from $609.3 million for the year ended
December 31, 2015 as a result of First Guaranty's plan to transition
assets from securities into loans. The average yield on securities
increased by 27 basis points to 2.48% for the year ended December
31, 2016 compared to 2.21% for the year ended December 31, 2015.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Interest income on loans increased $3.0 million, or 7.0%, to $45.5
million for the year ended December 31, 2016 as a result of an
increase in the average balance of loans, partially offset by a decrease
in the average yield on loans. The average balance of loans increased
by $65.4 million to $881.4 million for the year ended December 31,
2016 from $816.0 million for the year ended December 31, 2015
as a result of new loan originations, the majority of which were one-
to-four family residential loans, the origination of commercial leases,
commercial real estate loans and commercial and industrial loans.
Partially offsetting the increase in interest income on loans was a
decrease in the average yield on loans, which decreased by five basis
points to 5.16% for the year ended December 31, 2016 compared to
5.21% for the year ended December 31, 2015 as a result of the low
interest rate environment in 2016.

Interest Expense

Year ended December 31, 2017 compared with year ended December 31,
2016. Interest expense increased $4.3 million, or 41.9%, to $14.4
million for the year ended December 31, 2017 from $10.1 million
for the year ended December 31, 2016 due primarily to an increase
in the average balance of interest-bearing deposits along with an
increase in the average rate paid on interest-bearing deposits. The
average balance of interest-bearing deposits increased by $154.2
million during the year ended December 31, 2017 to $1.2 billion due
to increases in the average balance of demand and time deposits as a
result of the Premier acquisition. The average rate of interest-bearing
demand deposits increased by 39 basis points during the year ended
December 31, 2017 to 1.02%. The increase in the average rate on
interest-bearing deposits was due to the increase in demand deposits,
primarily public funds NOW accounts and brokered money market
deposits, whose rates are contractually tied to national index rates
such as the U.S. Federal Funds rate or short term U.S. Treasury rates.

Year ended December 31, 2016 compared with year ended December 31,
2015. Interest expense increased $1.5 million, or 17.8%, to $10.1
million for the year ended December 31, 2016 from $8.6 million for
the year ended December 31, 2015 due to an increase in the average
rate on deposits partially offset by the decrease in the average balance
of deposits. Interest expense also increased due to the origination of
a senior secured loan and the issuance of junior subordinated debt
used to redeem the SBLF preferred stock at the end of 2015. The
approximate increase in interest expense due to these borrowings
was $1.4 million for the year ended December 31, 2016. The average
rate of time deposits decreased by two basis points during the year
ended December 31, 2016 to 1.07%, reflecting downward repricing
of our time deposits in the continued low interest rate environment.
The decrease was offset by an increase in the average rate of interest-
bearing demand deposits of 28 basis points during the year ended
December 31, 2016 to 0.63%. The average balance of interest-bearing
deposits decreased by $55.8 million during the year ended December
31, 2016 to $1.1 billion as a result of a $81.2 million decrease in the
average balance of time deposits that was partially offset by a $25.3
million increase in the average balance of interest-bearing demand
deposits and savings deposits.

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.

EXPECT MORE December 31, 2017

December 31, 2016

December 31, 2015

Average
Balance

Interest

Yield/
Rate

Average
Balance

Interest

Yield/
Rate

Average
Balance

Interest

Yield/
Rate

(in thousands except for %)

Assets
Interest-earning assets:
Interest-earning deposits with
banks(1)
Securities (including FHLB stock)
Federal funds sold
Loans held for sale
Loans, net of unearned income
Total interest-earning assets

23,913 $
511,728
977
1,233
1,056,519
1,594,370

178
13,325
9
69
53,965
67,546

0.74%
2.60%
0.89%
5.60%
5.11%
4.23%

Noninterest-earning assets:
Cash and due from banks
Premises and equipment, net
Other assets
Total assets

10,147
31,885
9,536
$1,645,938

69
12,968
-
-
45,495
58,532

20,857 $

523,438
256
-
881,387
1,425,938

7,915
22,306
3,800
$1,459,959

0.33%
2.48%
-%
-%
5.16%
4.10%

30,485 $
609,348
312
-
816,027
1,456,172

72
13,471
-
-
42,536
56,079

0.24%
2.21%
-%
-%
5.21%
3.85%

7,191
20,300
5,870
$1,489,533

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Demand deposits
Savings deposits
Time deposits
Borrowings
Total interest-bearing liabilities

Noninterest-bearing liabilities:
Demand deposits
Other
Total Liabilities

Shareholders' equity
Total liabilities and shareholders'
equity
Net interest income

Net interest rate spread(2)

Net interest-earning assets(3)
Net interest margin(4)(5)

Average interest-earning assets to
interest-bearing liabilities

$ 539,399
102,779
575,666
41,190
1,259,034

5,526
201
7,112
1,554
14,393

1.02%
0.20%
1.24%
3.77%
1.14%

$ 415,410
89,279
558,982
43,474
1,107,145

2,633
80
5,954
1,473
10,140

0.63%
0.09%
1.07%
3.39%
0.92%

$401,617
77,726
640,134
6,320
1,125,797

1,419
38
6,985
166
8,608

0.35%
0.05%
1.09%
2.62%
0.76%

244,949
5,138
1,509,121

136,817

$1,645,938

$ 335,336

221,634
5,144
1,333,923

126,036

$1,459,959

211,584
5,010
1,342,391

147,142

$1,489,533

$53,153

$48,392

$47,471

3.09%

3.33%

$ 318,793

3.18%

3.39%

$ 330,375

3.09%

3.26%

126.64%

128.79%

129.35%

(1) Includes Federal Reserve balances reported in cash and due from banks on the consolidated balance sheets.
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average total interest-earning assets.
(5) The tax adjusted net interest margin was 3.36%, 3.42% and 3.29% for the years ended December 31, 2017, 2016 and 2015. A 35% tax rate was used
to calculate the effect on securities income from tax exempt securities.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. 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, 2017 vs. 2016

For the Years Ended
December 31, 2016 vs. 2015

Increase (Decrease) Due To

Volume

Rate

Increase/
Decrease

Volume

Rate

Increase/
Decrease

(in thousands except for %)

Interest earned on:

Interest-earning deposits with banks

Securities (including FHLB stock)

Federal funds sold

Loans held for sale

Loans, net of unearned income

Total interest income

(294)

8,950

8,737

651

(480)

277

Interest paid on:

Demand deposits

Savings deposits

Time deposits

Borrowings

944

182

(80)

1,949

107

976

161

8,470

9,014

2,893

121

1,158

$ 109

(27) $

(3)

357

(2,023)

1,520

(503

3,377

(418)

1,327

1,126

2,959

2,453

1,164

(868)

(163)

1,245

1,214

(1,031)

1,307

1,532

Total interest expense

1,060

3,193

4,253

434

1,098

Change in net interest income

$ 7,677

$ (2,916)

$ 4,761

$ 893

$ 921

Provision for Loan Losses

A provision for loan losses is a charge to income in an amount that
management believes is necessary to maintain an adequate allowance
for loan losses. 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.
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 a $3.8 million provision for loan losses for the year ended
December 31, 2017 compared to $3.7 million for 2016. The allowance
for loan losses at December 31, 2017 was $9.2 million or 0.80% of total
loans, compared to $11.1 million or 1.17% of total loans at December
31, 2016. The increase in the provision was attributed to the additional
provisions on loans evaluated individually for impairment. Substandard
loans increased $7.5 million to $49.5 million at December 31, 2017
from $42.0 million at December 31, 2016, partially offset by a decrease
in doubtful loans of $3.2 million. The decrease in the allowance at
December 31, 2017 compared to December 31, 2016 was due to
charge-offs to estimated fair value on impaired loans which had
specific reserves allocated to them in prior years and in 2017, which
reduced the carrying value of the loans. The allowance for loan losses
as a percentage of total loans was 0.90% prior to the inclusion of the

acquired loans from Premier. The impaired loan portfolio did not suffer
additional declines in estimated fair value requiring further provisions.
We believe that the allowance is adequate to cover potential losses in
the loan portfolio given the current economic conditions, and current
expected net charge-offs and non-performing asset levels.

For the year ended December 31, 2016, the provision for loan losses
was $3.7 million, a decrease of $0.2 million from $3.9 million for 2015.
The allowance for loan losses was $11.1 million and $9.4 million at
December 31, 2016 and 2015, respectively. The primary change to
the credit quality of the loan portfolio was associated with the upgrades
of loans. The impaired loan portfolio did not suffer additional declines
in estimated fair value requiring further provisions.

Noninterest Income

Our primary sources of recurring noninterest income are customer
service fees, loan fees, gains on the sale 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.

EXPECT MORE

Noninterest income totaled $8.3 million for the year ended December
31, 2017, a decrease of $1.1 million when compared to $9.5
million for 2016. The decrease was primarily due to lower gains on
securities sales. Net securities gains were $1.4 million for the year
ended December 31, 2017 and $3.8 million for 2016. The gains on
securities sales occurred as First Guaranty sold investment securities
in order to fund loan growth. We also continued to have gains from
bonds that were called and paid off before their contractual maturity.
Service charges, commissions and fees totaled $2.6 million for the
year ended December 31, 2017 and $2.4 million for 2016. ATM and
debit card fees totaled $2.0 million for the year ended December 31,
2017 and $1.9 million for 2016. Net loan gains were $0.3 million
for the year ended December 31, 2017 as compared to $14,000 for
2016. The increase in net loan gains during the year ended December
31, 2017 were related to $0.3 million in net gains on the sale of the
guaranteed portion of SBA loans. Other noninterest income increased
by $0.7 million to $2.1 million for the year ended December 31, 2017
compared to $1.4 million for 2016.

Noninterest income totaled $9.5 million for the year ended December
31, 2016, an increase of $0.5 million when compared to $9.0
million for 2015. The increase was primarily due to higher gains on
securities sales. Net securities gains were $3.8 million for the year
ended December 31, 2016 and $3.3 million for 2015. The gains on
securities sales occurred as First Guaranty sold investment securities
in order to fund loan growth. We also continued to have gains from
bonds that were called and paid off before their contractual maturity.
Service charges, commissions and fees totaled $2.4 million for the
year ended December 31, 2016 and $2.7 million for 2015. ATM and
debit card fees totaled $1.9 million for the year ended December 31,
2016 and $1.8 million for 2015. Other noninterest income increased
by $0.3 million to $1.4 million for the year ended December 31,

2016 compared to $1.1 million for 2015. Other noninterest income
included a $0.1 million other-than-temporary impairment charge on
an investment security.

Noninterest Expense

Noninterest expense
includes salaries and employee benefits,
occupancy and equipment expense and other types of expenses.
Noninterest expense increased $5.6 million to $38.5 million for the
year ended December 31, 2017 compared to $32.9 million in 2016.
Salaries and employee benefits expense totaled $20.1 million for 2017
as compared to $16.6 million for 2016, primarily due to the increase
in personnel expense from the Premier acquisition and new hires.
Occupancy and equipment expense totaled $4.5 million for 2017 and
$4.2 million for 2016. Other noninterest expense increased by $1.8
million to $13.9 million for the year ended December 31, 2017 as
compared to 2016. The largest increase in other noninterest expense
occurred due to increased legal and professional fees associated
with the Premier acquisition. Included in other non-interest expense
were non-recurring expenses related to the acquisition of Premier of
approximately $1.4 million.

Noninterest expense
includes salaries and employee benefits,
occupancy and equipment expense and other types of expenses.
Noninterest expense increased $1.8 million to $32.9 million for the
year ended December 31, 2016 compared to $31.1 million in 2015.
Salaries and employee benefits expense totaled $16.6 million for 2016
and $15.5 million for 2015. Occupancy and equipment expense totaled
$4.2 million for 2016 and $3.8 million for 2015. Other noninterest
expense increased by $0.3 million to $12.1 million for the year ended
December 31, 2016 as compared to 2015. Included in noninterest
expense were flood related expenses of approximately $0.3 million that
occurred during the year ended December 31, 2016.

The following table presents, for the years indicated, the major categories of other noninterest expense:

December 31, 2017

December 31, 2016

December 31, 2015

(in thousands)

Other noninterest expense:

Legal and professional fees

Data processing

ATM fees

Marketing and public relations

Taxes - sales, capital and franchise

Operating supplies

Software expense and amortization

Travel and lodging

Telephone

Amortization of core deposits

Donations

Net costs from other real estate and
repossessions

Regulatory assessment

Other

Total other expense

$ 3,037

1,608

1,161

1,205

970

496

923

910

167

432

322

306

726

1,640

$13,903

$ 2,185

1,259

1,044

878

787

471

835

710

177

320

298

498

1,005

1,599

$12,066

$ 2,019

1,184

1,022

848

717

414

612

818

172

320

332

493

1,111

1,692

$11,754

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. 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. The provision for income taxes
for the years ended December 31, 2017, 2016 and 2015 was $7.4
million, $7.2 million and $7.0 million, respectively. The provision for
income taxes increased in 2017 as compared to 2016. First Guaranty
recorded a one-time income tax expense of $0.9 million as a result of
a remeasurement of its net deferred tax asset due to the enactment
of the Tax Cuts and Jobs Act ("the "Tax Act") in December 2017
which reduced the corporate federal income tax rate from 35% to
21% beginning January 1, 2018 GAAP requires that the impact of the
Tax Act must be accounted for in the period of enactment of the new
law. Our statutory tax rate was 35.0% for 2017, 2016 and 2015. First
Guaranty's statutory rate for 2018 will be 21.0%.

We maintained a net borrowing capacity at the FHLB totaling $40.1
million and $45.8 million at December 31, 2017 and December
31, 2016, respectively with $15.5 million and $6.5 million in FHLB
advances outstanding at December 31, 2017 and December 31,
2016, respectively. At December 31, 2017, we had outstanding letters
of credit from the FHLB in the amount of $294.2 million that were
primarily used to collateralize public funds deposits. We also have a
discount window line with the Federal Reserve Bank of $8.7 million,
with no outstanding balance at December 31, 2017. We also maintain
federal funds lines of credit at various correspondent banks with
borrowing capacity of $95.5 million at December 31, 2017. We have a
revolving line of credit for $6.5 million, with no outstanding balance at
December 31, 2017 secured by a pledge of the Bank's common stock.
Management believes there is sufficient liquidity to satisfy current
operating needs.

Impact of Inflation

Capital Resources

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 recession.

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.

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.

Loans maturing within one year or less at December 31, 2017 totaled
$164.7 million. At December 31, 2017, time deposits maturing
within one year or less totaled $357.7 million. First Guaranty's held to
maturity ("HTM") investment securities portfolio at December 31, 2017
was $120.1 million or 23.9% of the investment portfolio compared to
$101.9 million or 20.4% at December 31, 2016. The securities in the
HTM portfolio are used to collateralize public funds deposits and may
also be used to secure borrowings with the Federal Home Loan Bank
or Federal Reserve Bank. The agency securities in the HTM portfolio
have maturities of 10 years or less. The mortgage backed securities
have stated final maturities of 15 to 20 years at December 31, 2017.
The municipal securities in the HTM portfolio have maturities of 20
years or less. The HTM portfolio had a forecasted weighted average life
of approximately 5.9 years based on current interest rates at December
31, 2017. Management regularly monitors the size and composition of
the HTM portfolio to evaluate its effect on our liquidity. First Guaranty's
available for sale ("AFS") portfolio was $381.5 million, or 76.1% of
the investment portfolio at December 31, 2017 compared to $397.5
million, or 79.6% at December 31, 2016. The majority of the AFS
portfolio was comprised of U.S. Treasuries, U.S. Government Agencies,
mortgage backed securities, municipal bonds and investment grade
corporate bonds. We believe these securities are readily marketable
and enhance our liquidity.

Our capital position is reflected in total 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 increased to $144.0 million at December
31, 2017 from $124.3 million at December 31, 2016. The increase
in shareholders' equity was principally the result of an $11.3 million
increase in surplus, a $5.5 million increase in retained earnings and
a decrease of $2.4 million in accumulated other comprehensive
loss at December 31, 2017. 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, 2017. The $11.3 million increase in surplus was due to
the issuance of common stock resulting from the Premier acquisition
and the 10% common stock dividend paid in December 2017. The
$5.5 million increase in retained earnings was due to net income of
$11.8 million during the year ended December 31, 2017, partially
offset by $5.2 million in cash dividends paid on our common stock and
the reclassification to surplus for the 10% common stock dividend.

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, 2017, First Guaranty Bancshares and First Guaranty
Bank were classified as well-capitalized. First Guaranty Bancshares,
Inc. capital conservation buffer was 4.14% at December 31, 2017.
First Guaranty Bank’s capital conservation buffer was 5.07% at
December 31, 2017.

EXPECT MORE The following table presents our capital ratios as of the indicated dates.

"Well Capitalized
Minimums"

At December 31, 2017

"Well Capitalized
Minimums"

At December 31, 2016

Tier 1 Leverage Ratio:

Consolidated

Bank

Tier 1 Risk-based Capital Ratio:

Consolidated

Bank

Total Risk-based Capital Ratio:

Consolidated

Bank

Common Equity Tier One Capital:

Consolidated

Bank

N/A

5.00%

N/A

8.00%

N/A

10.00%

N/A

6.50%

8.27%

9.88%

10.35%

12.39%

12.14%

13.07%

10.35%

12.39%

N/A

5.00%

N/A

8.00%

N/A

10.00%

N/A

6.50%

8.68%

9.88%

10.59%

12.05%

12.79%

12.99%

10.59%

12.05%

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 its
customers and to reduce its 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 it does 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, 2017, 2016 and 2015 are as follows:

Contract Amount

December 31, 2017

December 31, 2016

December 31, 2015

Commitments to Extend Credit

Unfunded Commitments under lines of credit

Commercial and Standby letters of credit

$ 78,125

$101,344

$ 7,886

(in thousands)

$ 56,910

$128,428

$ 6,602

$ 88,081

$107,581

$ 7,486

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, 2017, the largest concentration of unfunded
commitments were lines of credit associated with commercial and
industrial loans.

Commercial and standby letters of credit are conditional commitments
to guarantee the performance of a customer to a third party. These
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing and
similar transactions. The majority of these guarantees are short-term

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

(one year or less); however, some guarantees 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.

There were no losses incurred on any commitments during the years
ended December 31, 2017, 2016 and 2015.

Contractual Obligations

The following table summarizes our fixed and determinable contractual
obligations and other funding needs by payment date at December
31, 2017. The payment amounts represent those amounts due to the
recipient and do not include any unamortized premiums or discounts
or other similar carrying amount adjustments.

Payments Due by Period:

December 31, 2017

Less Than One Year

One to Three Years

Over Three Years

Total

(in thousands)

Operating leases

Software contracts

Time deposits

Short-term borrowings

Senior long-term debt

Junior subordinated debentures

$ 39

1,271

357,687

15,500

2,941

$ 47

1,016

167,745

5,882

Total contractual obligations

$377,438

$174,690

$ 15

207

55,899

13,971

15,000

$85,092

$ 101

2,494

581,331

15,500

22,794

15,000

$637,220

Item 7A – Quantitative and Qualitative Disclosures about
Market Risk

Asset/Liability Management and Market Risk

Asset/Liability Management

Our asset/liability management process consists of quantifying,
analyzing and controlling interest rate risk to maintain reasonably stable
net interest income levels under various interest rate environments.
The principal objective of asset/liability management is to maximize net
interest income while operating within acceptable limits established for
interest rate risk and to maintain adequate levels of liquidity.

The majority of our assets and liabilities are monetary in nature.
Consequently, one of our most significant forms of market risk is interest
rate risk, which is inherent in our lending and deposit-taking activities.
Our assets, consisting primarily of loans secured by real estate and fixed
rate securities in our investment portfolio, have longer maturities than
our liabilities, consisting primarily of deposits. As a result, a principal
part of our business strategy is to manage interest rate risk and reduce
the exposure of our net interest income to changes in market interest
rates. The board of directors of First Guaranty Bank has established two
committees, the management asset liability committee and the board
investment committee, to oversee the interest rate risk inherent in our
assets and liabilities, for determining the level of risk that is appropriate
given our business strategy, operating environment, capital, liquidity
and performance objectives, and for managing this risk consistent with
the guidelines approved by the board of directors. The management
asset liability committee is comprised of senior officers of the Bank
and meets as needed to review our asset liability policies and interest

rate risk position. The board ALCO investment committee is comprised
of certain members of the board of directors of the Bank and meets
monthly. The management asset liability committee provides a monthly
report to the board ALCO investment committee.

The need for interest sensitivity gap management is most critical in
times of rapid changes in overall interest rates. We generally seek to
limit our exposure to interest rate fluctuations by maintaining a relatively
balanced mix of rate sensitive assets and liabilities on a one-year
time horizon and greater than one-year time horizon. Because of the
significant impact on net interest margin from mismatches in repricing
opportunities, we monitor the asset-liability mix periodically depending
upon the management asset liability committee’s assessment of
current business conditions and the interest rate outlook. We maintain
exposure to interest rate fluctuations within prudent levels using varying
investment strategies. These strategies include, but are not limited to,
frequent internal modeling of asset and liability values and behavior
due to changes in interest rates. We monitor cash flow forecasts closely
and evaluate the impact of both prepayments and extension risk.

The following interest sensitivity analysis is one measurement of
interest rate risk. This analysis, which we prepare quarterly, reflects the
contractual maturity characteristics of assets and liabilities over various
time periods. This analysis does not factor in prepayments or interest
rate floors on loans which may significantly change the report. This
table includes nonaccrual loans in their respective maturity periods.
The gap indicates whether more assets or liabilities are subject to
repricing over a given time period. The interest sensitivity analysis
at December 31, 2017 illustrated below reflects a liability-sensitive
position with a negative cumulative gap on a one-year basis.

EXPECT MORE December 31, 2017

Interest Sensitivity Within

Over 3
Months
thru 12
Months

3 Months
Or Less

Total One
Year

Over One
Year

Total

(in thousands)

$ 515,254

48,631

$ 563,885

$ 586,437

$ 1,150,322

24,338

823

25,589

7,246

31,584

823

25,589

472,423

504,007

823

25,589

$ 566,004

55,877

$ 621,881

$ 1,058,860

$ 1,680,741

$ 611,677

104,661

150,844

15,500

22,774

206,843

$ 611,677

104,661

357,687

15,500

22,774

223,644

14,664

330,134

$ 611,677

104,661

581,331

15,500

22,774

14,664

330,134

$ 905,456

$ 206,843

$ 1,112,299

$ 568,442

$1,680,741

$ (339,452)

$ (150,966)

$ (490,418)

$ 490,418

$ (339,452)

$ (490,418)

Earning Assets:

Loans (including loans held for sale)

Securities (including FHLB stock)

Federal Funds Sold

Other earning assets

Total earning assets

Source of Funds:

Interest-bearing accounts:

Demand deposits

Savings deposits

Time deposits

Short-term borrowings

Senior long-term debt

Junior subordinated debt

Noninterest-bearing, net

Total source of funds

Period gap

Cumulative gap

Cumulative gap as a percent of earning assets

-20.2%

-29.2%

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Net Interest Income at Risk.
Net interest income at risk measures the risk of a decline in earnings
due to changes in interest rates. The first table below presents an
analysis of our interest rate risk as measured by the estimated changes
in net interest income resulting from an instantaneous and sustained
parallel shift in the yield curve over a 12-month horizon at December
31, 2017. The second table below presents an analysis of our interest
rate risk as measured by the estimated changes in net interest income
resulting from a gradual shift in the yield curve over a 12-month period.
Shifts are measured in 100 basis point increments (+400 through -100
basis points) from base case. We do not present shifts less than 100
basis points because of the current low interest rate environment. The
base case scenario encompasses key assumptions for asset/liability
mix, loan and deposit growth, pricing, prepayment speeds, deposit
decay rates, securities portfolio cash flows and reinvestment strategy
and the market value of certain assets under the various interest rate
scenarios. The base case scenario assumes that the current interest
rate environment is held constant throughout the forecast period for
a static balance sheet and the instantaneous and gradual shocks are
performed against that yield curve.

December 31, 2017

Instantaneous Changes in Interest
Rates (basis points)

Percent Change in Net Interest
Income

+400

+300

+200

+100

Base

-100

(11.05%)

(8.19%)

(5.22%)

(2.34%)

2.15%

Gradual Changes in Interest Rates
(basis points)

Percent Change in Net Interest
Income

+400

+300

+200

+100

Base

-100

(6.47%)

(4.77%)

(3.15%)

(1.45%)

2.09%

These scenarios above are both instantaneous and gradual shocks that
assume balance sheet management will mirror the base case. Even
if interest rates change in the designated amounts, there can be no
assurance that our assets and liabilities would perform as anticipated.
Additionally, a change in the U.S. Treasury rates in the designated
amounts accompanied by a change in the shape of the U.S. Treasury
yield curve would cause significantly different changes to net interest
income than indicated above. Strategic management of our balance
sheet would be adjusted to accommodate these movements. As with
any method of measuring interest rate risk, certain shortcomings are
inherent in the methods of analysis presented above. For example,
although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in
market interest rates. Also, the interest rates on certain types of assets
and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in
market rates. Also, the ability of many borrowers to service their debt

may decrease in the event of an interest rate increase. We consider all
of these factors in monitoring exposure to interest rate risk.

We are pursuing a strategy that began in 2012 to reduce long-term
interest rate risk. The contractual maturity of the investment portfolio
was shortened and mortgage backed securities were purchased to
enhance cash flow. We were able to grow our loan portfolio while
reducing the size of the investment portfolio. New loans originated
generally were either floating rate or were fixed rate with maturities
that did not exceed five years. Securities as a percentage of average
interest-earning assets decreased from 36.7% in 2016 to 32.1% in
2017. Deposit maturities were extended and generally priced lower.
We believe that the addition of short-term securities and deploying our
capital to grow our loan portfolio will help to lower interest rate risk.

EXPECT MORE Samuel R. Lolan, CPA
Lori D. Percle, CPA
Debbie B. Taylor, CPA
Katherine H. Armentor, CPA
Robin G. Freyou, CPA

Shalee M. Landry, CPA
Trenton R. Hardy, CPA
Brittany S. Guidry, CPA

Charles E. Castaing, CPA, Retired
Roger E. Hussey, CPA, Retired

Report of Castaing, Hussey & Lolan, LLC

Independent Registered Accounting Firm

To the Shareholders and Board of Directors

First Guaranty Bancshares, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of First Guaranty Bancshares, Inc. and Subsidiaries
as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income,
shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2017,
and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the consolidated financial position of
First Guaranty Bancshares, Inc. and Subsidiaries as of December 31, 2017 and 2016, and the consolidated results
of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in
conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the American Institute of Certified Public Accountants,
First Guaranty Bancshares, Inc.’s internal control over financial reporting as of December 31, 2017, based on
criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated March 16, 2018, expressed an
unqualified opinion.

Basis for Opinion

These financial statements are the responsibility of First Guaranty Bancshares Inc.’s management. Our responsibility
is to express an opinion on First Guaranty Bancshares Inc. and Subsidiaries’ financial statements based on our
audits. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to First Guaranty Bancshares, Inc. and Subsidiaries in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as First Guaranty Bancshares Inc. and Subsidiaries’ auditor since 2001.

Castaing, Hussey & Lolan, LLC
New Iberia, Louisiana

March 16, 2018

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

Assets
Cash and cash equivalents:
Cash and due from banks
Federal funds sold
Cash and cash equivalents

Investment securities:
Available for sale, at fair value
Held to maturity, at cost (estimated fair value of $118,557 and $99,906, respectively)
Investment securities

Federal Home Loan Bank stock, at cost
Loans held for sale

Loans, net of unearned income
Less: allowance for loan losses
Net loans

Premises and equipment, net
Goodwill
Intangible assets, net
Other real estate, net
Accrued interest receivable
Other assets
Total Assets

Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing demand
Interest-bearing demand
Savings
Time
Total deposits

Short-term borrowings
Accrued interest payable
Senior long-term debt
Junior subordinated debentures
Other liabilities
Total Liabilities

December 31,
2017

December 31,
2016

(in thousands,
except share data)

37,205
823
38,028

17,840
271
18,111

381,535
120,121
501,656

2,351
1,308

1,149,014
9,225
1,139,789

38,020
3,472
4,424
1,281
7,982
12,119
$1,750,430

$ 251,617
611,677
104,661
581,331
1,549,286

15,500
2,488
22,774
14,664
1,735
1,606,447

397,473
101,863
499,336

1,816
-

948,921
11,114
937,807

23,519
1,999
1,056
359
7,039
9,904
$1,500,946

$ 231,094
479,810
97,280
517,997
1,326,181

6,500
1,931
22,100
14,630
5,255
1,376,597

Shareholders' Equity
Common stock1:
$1 par value - authorized 100,600,000 shares; issued 8,807,175 and 8,369,424 shares
Surplus
Retained earnings
Accumulated other comprehensive income (loss)
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity

8,807
92,268
44,464
(1,556)
143,983
$1,750,430

8,369
81,000
38,979
(3,999)
124,349
$1,500,946

See Notes to the Consolidated Financial Statements.
1 All share amounts have been restated to reflect the ten percent stock dividend paid December 14, 2017 to shareholders of record as of
December 8, 2017.

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31,
2016

2017

2015

Interest Income:
Loans (including fees)
Deposits with other banks
Securities (including FHLB stock)
Federal funds sold

Total Interest Income

Interest Expense:
Demand deposits
Savings deposits
Time deposits
Borrowings

Total Interest Expense

Net Interest Income
Less: Provision for loan losses

Net Interest Income after Provision for Loan Losses

Noninterest Income:
Service charges, commissions and fees
ATM and debit card fees
Net gains on securities
Net gains on sale of loans
Other

Total Noninterest Income

Noninterest Expense:
Salaries and employee benefits
Occupancy and equipment expense
Other

Total Noninterest Expense

Income Before Income Taxes
Less: Provision for income taxes

Net Income
Preferred stock dividends

Income Available to Common Shareholders

Per Common Share1:
Earnings
Cash dividends paid

Weighted Average Common Shares Outstanding

See Notes to Consolidated Financial Statements

(in thousands, except share data)

$ 54,034
178
13,325
9
67,546

$ 45,495
69
12,968
-
58,532

5,526
201
7,112
1,554
14,393

53,153
3,822
49,331

2,589
1,986
1,397
311
2,057
8,340

20,113
4,505
13,903
38,521

2,633
80
5,954
1,473
10,140

48,392
3,705
44,687

2,388
1,859
3,799
14
1,395
9,455

16,577
4,242
12,066
32,885

$42,536
72
13,471
-
56,079

1,419
38
6,985
166
8,608

47,471
3,864
43,607

2,736
1,779
3,300
4
1,137
8,956

15,496
3,845
11,754
31,095

19,150
7,399
$ 11,751
-
$ 11,751

21,257
7,164
$ 14,093
-
$ 14,093

21,468
6,963
$ 14,505
(384)
$ 14,121

$
$

1.37
0.60

$
$

1.68
0.58

$
$

1.83
0.54

8,608,088

8,369,424

7,714,620

1 All share and per share amounts have been restated to reflect the ten percent stock dividend paid December 14,
2017 to shareholders of record as of December 8, 2017.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years Ended December 31,
2016

2015

2017

Net Income
Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period
Reclassification adjustments for net gains included in net income

Reclassification of OTTI losses included in net income

Change in unrealized gains (losses) on securities
Tax impact

Other comprehensive income (loss)
Comprehensive Income

See Notes to Consolidated Financial Statements

(in thousands)

$11,751

$14,093

$14,505

5,098
(1,397)

3,701
(1,258)
2,443
$14,194

(955)
(3,799)

(4,694)
1,596
(3,098)
$10,995

1,394
(3,300)

175

(1,731)
589
(1,142)
$13,363

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Series C
Preferred
Stock
$1,000 Par

Common
Stock
$1 Par

Surplus

Treasury
Stock

Retained
Earnings

Accumulated
Other
Comprehensive
Income/ (Loss)

Total

(in thousands, except share data)

$39,435
-

$7,615
-

$69,311
-

$ (54) $23,035
14,505

$ 241
-

$139,583
14,505

-
-
(39,435)

(4)
-
-

(7)
-
-

54
-
-

(43)
-
-

-
(1,142)
-

(1,142)
(39,435)

-
-
-
-
-

758

11,696

-
-
$ 8,369
-
-

-
-
$ 81,000
-
-

-
$ -
-

-
$ 8,369
-

-
$ 81,000
-

-
-

438
-

11,268
-

-
$ -

-
$ 8,807

-
$ 92,268

-
-
-
-
-

-
-
-

-
-

(3,110)

9,344

(4,247)
(384)
$29,756
14,093
-

(4,870)

$38,979
11,751

(1,056)
-

(5,210)

$44,464

-
-
$ (901)
-
(3,098)

(4,247)
(384)
$118,224
14,093
(3,098)

-
$ (3,999)
-

(4,870)
$124,349
11,751

-
2,443

10,650
2,443

-
$(1,556)

(5,210)

$143,983

Balance December 31, 2014 (2)
Net income
Reclassification of treasury stock under the

LCBA (1)(2)

Other comprehensive income
Preferred stock redeemed, Series C
Common stock issued in initial public offering,

758,027 shares(2)

Cash dividends on common stock ($0.54 per

share)(2)

Preferred stock dividends

Balance December 31, 2015
Net income
Other comprehensive income
Cash dividends on common stock ($0.58 per
share)(2)

Balance December 31, 2016
Net income
Common stock issued in acquisition, 437,751

shares(2)

Other comprehensive income
Cash dividends on common stock ($0.60 per

share)(2)

Balance December 31, 2017

See Notes to Consolidated Financial Statements

(1) Effective January 1, 2015, companies incorporated under Louisiana law became subject to the Louisiana Business Corporation Act (which
replaces the Louisiana Business Corporation Law). Provisions of the Louisiana Business Corporation Act eliminate the concept of treasury stock
and provide that shares reacquired by a company are to be treated as authorized but unissued shares. As a result of this change in law, shares
previously classified as treasury stock were reclassified as a reduction to issued shares of common stock in the consolidated financial statements
as of June 30, 2015, reducing the stated value of common stock and retained earnings.
(2) All share and per share amounts reflect the ten percent stock dividend paid December 14, 2017 to shareholders of record as of December 8,
2017.

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash Flows From Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses
Depreciation and amortization
Amortization/Accretion of investments
Gain on sale/call of securities
Other than temporary impairment charge on securities
Gain on sale of assets
Repossessed asset writedowns and loss on disposition
FHLB stock dividends
Net decrease in loans held for sale
Change in other assets and liabilities, net
Net Cash Provided by Operating Activities

Cash Flows From Investing Activities:
Proceeds from maturities and calls of certificates of deposit
Proceeds from maturities and calls of HTM securities
Proceeds from maturities, calls and sales of AFS securities
Funds invested in HTM securities
Funds Invested in AFS securities
Proceeds from sale/redemption of Federal Home Loan Bank stock
Funds invested in Federal Home Loan Bank stock
Net increase in loans
Purchases of premises and equipment
Proceeds from sales of premises and equipment
Proceeds from sales of other real estate owned
Cash paid in excess of cash received in acquisition
Net Cash (Used In) Provided By Investing Activities

Cash Flows From Financing Activities:
Net increase (decrease) in deposits
Net (decrease) increase in federal funds purchased and short-term borrowings
Proceeds from long-term borrowings, net of costs
Repayment of long-term borrowings
Proceeds from junior subordinated debentures, net of costs
Issuance of common stock, net of costs
Redemption of preferred stock
Dividends paid
Net Cash Provided By (Used in) Financing Activities

Years Ended December 31,

2017

2016

2015

(in thousands)

11,751

14,093

$ 14,505

3,822
2,444
1,788
(1,397)

-
(361)
103
(23)
347
(6,199)
12,275

-
11,703
542,894
(30,530)
(517,185)

-
-

(80,816)
(6,814)
51
608
(2,907)
(82,996)

95,879
(700)
3,750
(3,081)
-
-
-

(5,210)
90,638

3,705
2,190
2,239
(3,799)
60
(76)
243
(6)
-
3,563
22,212

1,001
85,875
1,000,905
(18,563)
(1,024,632)
-
(875)
(109,467)
(4,109)
983
1,098
-
(67,784)

30,311
4,700
-
(3,730)
-
-
-
(4,870)
26,411

3,864
1,995
2,036
(3,300)
175
(6)
411
(4)
-
(2,461)
17,215

9,250
72,036
723,249
(48,318)
(650,698)
3,554
(2,864)
(56,000)
(4,400)
4
1,394
-
47,207

(75,969)
-
24,969
(600)
14,597
9,344
(39,435)
(4,631)
(71,725)

Net Increase (Decrease In) Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of the Period
Cash and Cash Equivalents at the End of the Period

19,917
18,111
$ 38,028

(19,161)
37,272
$ 18,111

(7,303)
44,575
$ 37,272

Noncash activities:
Loans transferred to foreclosed assets
Common stock issued in acquisition

Cash paid during the period:
Interest on deposits and borrowed funds
Income taxes

See Notes to the Consolidated Financial Statements.

100

$ 1,374
$ 10,650

$
$

123
-

$ 1,184
-
$

$
$

13,836
10,700

$
$

9,916
3,000

$ 8,898
$ 8,400

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

Note 1. Business and Summary of Significant Accounting
Policies

Business

First Guaranty Bancshares, Inc. ("First Guaranty") is a Louisiana
corporation headquartered in Hammond, LA. First Guaranty owns all
of the outstanding shares of common stock of First Guaranty Bank.
First Guaranty Bank (the “Bank”) is a Louisiana state-chartered
commercial bank that provides a diversified range of financial services
to consumers and businesses in the communities in which it operates.
These services include consumer and commercial lending, mortgage
loan origination, the issuance of credit cards and retail banking
services. The Bank also maintains an investment portfolio comprised of
government, government agency, corporate, and municipal securities.
The Bank has twenty-seven banking offices, including one drive-up
banking facility, and thirty-eight automated teller machines (ATMs) in
Southeast Louisiana, Southwest Louisiana, North Louisiana and North
Central Texas.

Summary of significant accounting policies

The accounting and reporting policies of First Guaranty conform
to generally accepted accounting principles and to predominant
accounting practices within the banking industry. The more significant
accounting and reporting policies are as follows:

Consolidation

The consolidated financial statements include the accounts of First
Guaranty Bancshares, Inc., and its wholly owned subsidiary, First
Guaranty Bank. All significant intercompany balances and transactions
have been eliminated in consolidation.

Acquisition Accounting

Acquisitions are accounted for under the purchase method of
accounting. Purchased assets, including identifiable intangibles,
and assumed liabilities are recorded at their respective acquisition
date fair values. If the fair value of net assets purchased exceeds
the consideration given, a gain on acquisition is recognized. If the
consideration given exceeds the fair value of the net assets received,
goodwill is recognized. Fair values are subject to refinement for up
to one year after the closing date of an acquisition as information
relative to closing date fair values becomes available. Purchased loans
acquired in a business combination are recorded at estimated fair
value on their purchase date with no carryover of the related allowance
for loan losses. See Acquired Loans section below for accounting policy
regarding loans acquired in a business combination.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires Management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of revenue
and expense during the reporting periods. Actual results could
differ from those estimates. Material estimates that are particularly
susceptible to significant change in the near-term relate to the
determination of the allowance for loan losses, the valuation of real
estate acquired in connection with foreclosures or in satisfaction of
loans, and the valuation of investment securities. In connection with
the determination of the allowance for loan losses and real estate
owned, First Guaranty obtains independent appraisals for significant
properties.

Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents are
defined as cash, due from banks, interest-bearing demand deposits
with banks and federal funds sold with maturities of three months or
less.

Securities

First Guaranty reviews its financial position, liquidity and future plans
in evaluating the criteria for classifying investment securities. Debt
securities that Management has the ability and intent to hold to
maturity are classified as held to maturity and carried at cost, adjusted
for amortization of premiums and accretion of discounts using
methods approximating the interest method. Securities available for
sale are stated at fair value. The unrealized difference, if any, between
amortized cost and fair value of these AFS securities is excluded from
income and is reported, net of deferred taxes, in accumulated other
comprehensive income as a part of shareholders’ equity. Details of other
comprehensive income are reported in the consolidated statements
of comprehensive income. Realized gains and losses on securities
are computed based on the specific identification method and are
reported as a separate component of other income. Amortization of
premiums and discounts is included in interest income. Discounts and
premiums related to debt securities are amortized using the effective
interest rate method.

Management evaluates securities for other-than-temporary impairment
("OTTI") at least on a quarterly basis, and more frequently when
economic or market conditions warrant such an evaluation. In
estimating other-than-temporary losses, management considers the
length of time and extent that fair value has been less than cost and the
financial condition and near term prospects of the issuer. Management
also assesses whether it intends to sell, or it is more likely than not that
it will be required to sell, a security in an unrealized loss position before
recovery of its amortized cost basis. If either of the criteria regarding
intent or requirement to sell is met, the entire difference between
amortized cost and fair value is recognized as impairment through
earnings. For debt securities that do not meet the aforementioned
criteria, the amount of impairment is split into two components as
follows: 1) OTTI related to credit loss, which must be recognized in
the income statement and 2) OTTI related to other factors, which is
recognized in other comprehensive income. The credit loss is defined
as the difference between the present value of the cash flows expected
to be collected and the amortized cost basis. For equity securities, the
entire amount of impairment is recognized through earnings.

Loans held for sale

Mortgage loans originated and intended for sale in the secondary
market are carried at the lower of cost or estimated fair value in the
aggregate. Net unrealized losses, if any, are recognized through a
valuation allowance by charges to income. Loans held for sale have
primarily been fixed rate single-family residential mortgage loans
under contract to be sold in the secondary market. In most cases,
loans in this category are sold within thirty days. Buyers generally have
recourse to return a purchased loan under limited circumstances.
Recourse conditions may include early payment default, breach
of representations or warranties and documentation deficiencies.
Mortgage loans held for sale are generally sold with the mortgage
servicing rights released. Gains or losses on sales of mortgage loans
are recognized based on the differences between the selling price and
the carrying value of the related mortgage loans sold.

Loans

Loans are stated at the principal amounts outstanding, net of unearned
income and deferred loan fees. In addition to loans issued in the
normal course of business, overdrafts on customer deposit accounts
are considered to be loans and reclassified as such. Interest income
on all classifications of loans is calculated using the simple interest
method on daily balances of the principal amount outstanding.

101

Accrual of interest is discontinued on a loan when Management
believes, after considering economic and business conditions and
collection efforts, the borrower’s financial condition is such that
reasonable doubt exists as to the full and timely collection of principal
and interest. This evaluation is made for all loans that are 90 days
or more contractually past due. When a loan is placed in nonaccrual
status, all interest previously accrued but not collected is reversed
against current period interest income. Income on such loans is then
recognized only to the extent that cash is received and where the future
collection of interest and principal is probable. Loans are returned to
accrual status when, in the judgment of Management, all principal
and interest amounts contractually due are reasonably assured to
be collected within a reasonable time frame and when the borrower
has demonstrated payment performance of cash or cash equivalents;
generally for a period of six months. All loans, except mortgage loans,
are considered past due if they are past due 30 days. Mortgage loans
are considered past due when two consecutive payments have been
missed. Loans that are past due 90-120 days and deemed uncollectible
are charged-off. The loan charge off is a reduction of the allowance for
loan losses.

Troubled Debt Restructurings (TDRs)

TDRs are loans in which the borrower is experiencing financial difficulty
at the time of restructuring, and the Bank has granted a concession to
the borrower. TDRs are undertaken in order to improve the likelihood
of recovery on the loan and may take the form of modifications made
with the stated interest rate lower than the current market rate for new
debt with similar risk, other modifications to the structure of the loan
that fall outside of normal underwriting policies and procedures, or in
limited circumstances forgiveness of principal and / or interest. TDRs
can involve loans remaining on non-accrual, moving to non-accrual,
or continuing on accrual status, depending on the individual facts and
circumstances of the borrower. TDRs are subject to policies governing
accrual and non-accrual evaluation consistent with all other loans
as discussed in the “Loans” section above. All loans with the TDR
designation are considered to be impaired, even if they are accruing.

First Guaranty's policy is to evaluate TDRs that have subsequently
been restructured and returned to market terms after 12 months of
performance. The evaluation includes a review of the loan file and
analysis of the credit to assess the loan terms, including interest
rate to insure such terms are consistent with market terms. The loan
terms are compared to a sampling of loans with similar terms and risk
characteristics, including loans originated by First Guaranty and loans
lost to a competitor. The sample provides a guide to determine market
terms pursuant to ASC 310-40-50-2. The loan is also evaluated at that
time for impairment. A loan determined to be restructured to market
terms and not considered impaired will no longer be disclosed as a
TDR in the years following the restructuring. These loans will continue
to be individually evaluated for impairment. A loan determined to either
be restructured to below market terms or to be impaired will remain
a TDR.

Credit Quality

First Guaranty's credit quality indicators are pass, special mention,
substandard, and doubtful.

Loans included in the pass category are performing loans with
satisfactory debt coverage ratios, collateral, payment history, and
documentation requirements.

Special mention loans have potential weaknesses that deserve close
attention. If left uncorrected, these potential weaknesses may result
in deterioration of the repayment prospects. Borrowers may be
experiencing adverse operating trends (declining revenues or margins)
or an ill proportioned balance sheet (e.g., increasing inventory without

102

an increase in sales, high leverage, tight liquidity). Adverse economic or
market conditions, such as interest rate increases or the entry of a new
competitor, may also support a special mention rating. Nonfinancial
reasons
litigation, an
ineffective loan agreement or other material structural weakness, and
any other significant deviation from prudent lending practices.

include management problems, pending

A substandard loan is inadequately protected by the paying capacity
of the obligor or of the collateral pledged, if any. Loans classified as
substandard have a well-defined weakness. They are characterized
by the distinct possibility that First Guaranty will sustain some loss if
the deficiencies are not corrected. These loans require more intensive
supervision. Substandard loans are generally characterized by current
or expected unprofitable operations, inadequate debt service coverage,
inadequate liquidity, or marginal capitalization. Repayment may depend
on collateral or other credit risk mitigates. For some substandard loans,
the likelihood of full collection of interest and principal may be in doubt
and interest is no longer accrued. Consumer loans that are 90 days
or more past due or that are nonaccrual are considered substandard.

Doubtful loans have the weaknesses of substandard loans with the
additional characteristic that the weaknesses make collection or
liquidation in full questionable and there is a high probability of loss
based on currently existing facts, conditions and values.

A loan is considered impaired when, based on current information
and events, it is probable that First Guaranty will be unable to collect
the scheduled payments of principal or interest when due according
to the contractual terms of the loan agreement. Factors considered
by Management in determining impairment include payment status,
collateral value and the probability of collecting scheduled principal
and interest payments when due. Loans that experience insignificant
payment delays and payment shortfalls generally are not classified
as impaired. Management determines the significance of payment
delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the
borrower, including the length of the delay, the reasons for the delay,
the borrower’s prior payment record and the amount of the shortfall in
relation to the principal and interest owed. Impairment is measured
on a loan-by-loan basis for commercial and construction loans by
either the present value of expected future cash flows discounted at
the loan’s effective interest rate, the loan’s obtainable market price or
the fair value of the collateral if the loan is collateral dependent. This
process is only applied to impaired loans or relationships in excess of
$500,000. Large groups of smaller balance homogeneous loans are
collectively evaluated for impairment. Accordingly, individual consumer
and residential loans are not separately identified for impairment
disclosures, unless such loans are the subject of a restructuring
agreement. Loans that have been restructured in a troubled debt
restructuring will continue to be evaluated individually for impairment,
including those no longer requiring disclosure.

Acquired Loans

Loans are recorded at estimated fair value on their purchase date with
no carryover of the related allowance for loan losses. Acquired loans are
segregated between those with deteriorated credit quality at acquisition
and those deemed as performing. To make this determination,
Management considers such factors as past due status, nonaccrual
status, credit risk ratings, interest rates and collateral position. The
fair value of acquired loans deemed performing is determined by
discounting cash flows, both principal and interest, for each pool at
prevailing market interest rates as well as consideration of inherent
potential losses. The difference between the fair value and principal
balances due at acquisition date, the fair value discount, is accreted
into income over the estimated life of each loan pool.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Loans acquired in a business combination are recorded at their
estimated fair value on their purchase date with no carryover of the
related allowance for loan losses. Performing acquired loans are
subsequently evaluated for any required allowance at each reporting
date. An allowance for loan losses is calculated using a similar
methodology for originated loans.

Loan fees and costs

Nonrefundable loan origination and commitment fees and direct costs
associated with originating loans are deferred and recognized over the
lives of the related loans as an adjustment to the loans' yield using the
level yield method.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance
for loan losses when Management believes that the collectability of the
principal is unlikely. The allowance, which is based on evaluation of the
collectability of loans and prior loan loss experience, is an amount that,
in the opinion of Management, reflects the risks inherent in the existing
loan portfolio and exists at the reporting date. The evaluations take
into consideration a number of subjective factors including changes
in the nature and volume of the loan portfolio, historical losses, overall
portfolio quality, review of specific problem loans, current economic
conditions that may affect a borrower’s ability to pay, adequacy of loan
collateral and other relevant factors. In addition, regulatory agencies,
as an integral part of their examination process, periodically review
the estimated losses on loans. Such agencies may require additional
recognition of losses based on their judgments about information
available to them at the time of their examination.

The following are general credit risk factors that affect First Guaranty's
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. 1-4 family, multi-family, 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.

Although Management uses available information to recognize losses
on loans, because of uncertainties associated with local economic
conditions, collateral values and future cash flows on impaired loans,
it is reasonably possible that a material change could occur in the
allowance for loan losses in the near term. However, the amount of the
change that is reasonably possible cannot be estimated. The evaluation
of the adequacy of loan collateral is often based upon estimates and
appraisals. Because of changing economic conditions, the valuations
determined from such estimates and appraisals may also change.
Accordingly, First Guaranty may ultimately incur losses that vary from
Management's current estimates. Adjustments to the allowance for
loan losses will be reported in the period such adjustments become
known or can be reasonably estimated. All loan losses are charged to
the allowance for loan losses when the loss actually occurs or when the
collectability of the principal is unlikely. Recoveries are credited to the
allowance at the time of recovery.

The allowance consists of specific, general, and unallocated
components. The specific component relates to loans that are
classified as doubtful, substandard, and impaired. For such loans
that are also classified as impaired, an allowance is established when
the discounted cash flows (or collateral value or observable market
price) of the impaired loan is lower than the carrying value of that loan.
Also, a specific reserve is allocated for syndicated loans. The general
component covers non-classified loans and special mention loans and
is based on historical loss experience adjusted for qualitative factors.
An unallocated component is maintained to cover uncertainties that
could affect the estimate of probable losses.

Goodwill and Intangible Assets

Goodwill and intangible assets deemed to have indefinite lives
are subject to annual impairment tests. First Guaranty's goodwill is
tested for impairment on an annual basis, or more often if events
or circumstances indicate that there may be impairment. Adverse
changes in the economic environment, declining operations, or other
factors could result in a decline in the implied fair value of goodwill. If
the implied fair value is less than the carrying amount, a loss would
be recognized in other non-interest expense to reduce the carrying
amount to implied fair value of goodwill. The goodwill impairment test
includes two steps that are preceded by a, “step zero”, qualitative test.
The qualitative test allows Management to assess whether qualitative
factors indicate that it is more likely than not that impairment exists. If it
is not more likely than not that impairment exists, then no impairment
exists and the two step quantitative test would not be necessary. These
qualitative indicators include factors such as earnings, share price,
market conditions, etc. If the qualitative factors indicate that it is more
likely than not that impairment exists, then the two step quantitative test
would be necessary. Step one is used to identify potential impairment
and compares the estimated fair value of a reporting unit with its
carrying amount, including goodwill. If the estimated fair value of a
reporting unit exceeds its carrying amount, goodwill of the reporting
unit is not considered impaired. If the carrying amount of a reporting
unit exceeds its estimated fair value, the second step of the goodwill
impairment test is performed to measure the amount of impairment
loss, if any. Step two of the goodwill impairment test compares the
implied estimated fair value of reporting unit goodwill with the carrying
amount of that goodwill. If the carrying amount of goodwill for that
reporting unit exceeds the implied fair value of that unit’s goodwill, an
impairment loss is recognized in an amount equal to that excess.

Identifiable intangible assets are acquired assets that lack physical
substance but can be distinguished from goodwill because of
contractual or legal rights or because the assets are capable of being
sold or exchanged either on their own or in combination with the related
contract, asset or liability. First Guaranty's intangible assets primarily
relate to core deposits. These core deposit intangibles are amortized
on a straight-line basis over terms ranging from seven to fifteen years.
Management periodically evaluates whether events or circumstances
have occurred that impair this deposit intangible.

103

Premises and equipment

Fair Value Measurements

Premises and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed for financial reporting purposes
using the straight-line method over the estimated useful lives of the
respective assets as follows:

Buildings and improvements 10-40 years

Equipment, fixtures and automobiles 3-10 years

Expenditures for renewals and betterments are capitalized and
depreciated over their estimated useful lives. Repairs, maintenance
and minor improvements are charged to operating expense as incurred.
Gains or losses on disposition, if any, are recorded as a separate line
item in noninterest income on the Statements of Income.

The fair value of a financial instrument is the current amount that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. A fair value measurement
assumes that the transaction to sell the asset or transfer the liability
occurs in the principal market for the asset or liability or, in the absence
of a principal market, the most advantageous market for the asset or
liability. Valuation techniques use certain inputs to arrive at fair value.
Inputs to valuation techniques are the assumptions that market
participants would use in pricing the asset or liability. They may be
observable or unobservable. First Guaranty uses a fair value hierarchy
for valuation inputs that gives the highest priority to quoted prices in
active markets for identical assets or liabilities and the lowest priority
to unobservable inputs. See Note 20 for a detailed description of fair
value measurements.

Other real estate

Transfers of Financial Assets

Other real estate includes properties acquired through foreclosure
or acceptance of deeds in lieu of foreclosure. These properties are
recorded at the lower of the recorded investment in the property or
its fair value less the estimated cost of disposition. Any valuation
adjustments required prior to foreclosure are charged to the allowance
for loan losses. Subsequent to foreclosure, losses on the periodic
revaluation of the property are charged to current period earnings
as other real estate expense. Costs of operating and maintaining the
properties are charged to other real estate expense as incurred. Any
subsequent gains or losses on dispositions are credited or charged to
income in the period of disposition.

Off-balance sheet financial instruments

In the ordinary course of business, First Guaranty has entered into
commitments to extend credit, including commitments under credit
card arrangements, commitments to fund commercial real estate,
construction and land development loans secured by real estate, and
performance standby letters of credit. Such financial instruments are
recorded when they are funded.

Income taxes

First Guaranty and its subsidiary file a consolidated federal income
tax return on a calendar year basis. In lieu of Louisiana state income
tax, the Bank is subject to the Louisiana bank shares tax, which is
included in noninterest expense in First Guaranty's consolidated
financial statements. With few exceptions, First Guaranty is no longer
subject to U.S. federal, state or local income tax examinations for years
before 2014. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which the deferred tax assets or liabilities are expected
to be settled or realized. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be
utilized.

Comprehensive income

Accounting principles generally require that recognized revenue,
expenses, gains and losses be included in net income. Although certain
changes in assets and liabilities, such as unrealized gains and losses
on available for sale securities, are reported as a separate component
of the equity section of the balance sheet, such items along with net
income, are components of comprehensive income. The components
of other comprehensive income and related tax effects are presented
in the Statements of Comprehensive Income.

104

Transfers of financial assets are accounted for as sales, when control
over the assets has been surrendered. Control over transferred
assets is deemed to be surrendered when (i) the assets have been
isolated from First Guaranty, (ii) the transferee obtains the right (free
of conditions that constrain it from taking advantage of that right) to
pledge or exchange the transferred assets, and (iii) First Guaranty does
not maintain effective control over the transferred assets through an
agreement to repurchase them before their maturity.

Earnings per common share

income available

to common
Earnings per share represents
shareholders divided by the weighted average number of common
shares outstanding during the period. In December of 2017, First
Guaranty issued a pro rata, 10% common stock dividend. The shares
issued for the stock dividend have been retrospectively factored into
the calculation of earnings per share as well as cash dividends paid on
common stock and represented on the face of the financial statements.
No convertible shares of First Guaranty's stock are outstanding.

Operating Segments

All of First Guaranty's operations are considered by management to
be aggregated into one reportable operating segment. While the chief
decision-makers monitor the revenue streams of the various products
and services, the identifiable segments are not material. Operations
are managed and financial performance is evaluated on a Company-
wide basis.

Reclassifications

Certain reclassifications have been made to prior year end financial
statements in order to conform to the classification adopted for
reporting in 2017.

Note 2. Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, "Leases:
Conforming Amendments Related to Leases". This ASU amends the
codification regarding leases in order to increase transparency and
comparability. The ASU requires companies to recognize lease assets
and liabilities on the balance sheet and disclose key information about
leasing arrangements. A lessee would recognize a liability to make
lease payments and a right-of-use asset representing its right to use
the leased asset for the lease term. The ASU is effective for annual and
interim periods beginning after December 15, 2018. The adoption of
this ASU is not expected to have a material effect on First Guaranty's
Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-
Credit Losses: Measurement of Credit Losses on Financial Instruments".
This ASU amends guidance on reporting credit losses for assets held
at amortized cost basis and available for sale debt securities. The ASU
amendments require the measurement of all expected credit losses

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. for financial assets held at the reporting date be based on historical
experience, current conditions, and reasonable and supportable
forecasts. The ASU requires assets held at cost basis to reflect the
company's current estimate of all expected credit losses. For available
for sale debt securities, credit losses should be presented as an
allowance rather than as a write-down. In addition, this ASU amends
the accounting for purchased financial assets with credit deterioration.
This ASU is effective for annual and interim periods beginning after
December 15, 2019. We are currently evaluating the impact of the
adoption of this guidance on the Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles -
Goodwill and Other: Simplifying the Test for Goodwill Impairment". This
ASU amends the guidance on impairment testing. The ASU eliminates
Step 2 from the goodwill impairment test. The annual, or interim,
goodwill impairment test is performed by comparing the fair value of a
reporting unit with its carrying amount. An impairment charge should
be recognized for the amount by which the carrying amount exceeds
the reporting unit's fair value; however, the loss recognized should
not exceed the total amount of goodwill allocated to that reporting
unit. In addition, income tax effects from any tax deductible goodwill
on the carrying amount of the reporting unit should be considered
when measuring the goodwill impairment loss, if applicable. The ASU
also eliminates the requirements for any reporting unit with a zero or
negative carrying amount to perform a qualitative assessment and, if it
fails that qualitative test, to perform Step 2 of the goodwill impairment
test. An entity still has the option to perform the qualitative assessment
for a reporting unit to determine if the quantitative impairment test
is necessary. This ASU is effective for annual and interim periods
beginning after December 15, 2019. We are currently evaluating the
impact of the adoption of this guidance on the Consolidated Financial
Statements.

In March 2017, the FASB issued ASU 2017-08, "Receivables-
Nonrefundable Fees and Other Costs, Premium Amortization on
Purchased Callable Debt Securities". This ASU shortens the amortization
period for certain callable debt securities held at a premium. Specifically,
this ASU requires the premium to be amortized to the earliest call date.
This ASU does not require an accounting change for securities held
at a discount, the discount continues to be amortized to maturity.
This ASU is effective for annual and interim periods beginning after
December 15, 2018. We are currently evaluating the impact of the
adoption of this guidance on the Consolidated Financial Statements.

In February 2018, the FASB issued ASU 2018-02, "Income Statement
- Reporting Comprehensive Income: Reclassification of Certain Tax
Effects from Accumulated Other Comprehensive Income". This ASU
provides an option to reclassify stranded tax effects within AOCI to
retained earnings in each period in which the effect of the change in
the U.S. federal corporate income tax rate in the Tax Cuts and Jobs
Act (or portion thereof) is recorded. This ASU requires disclosure of
a description of the accounting policy for releasing income tax effects
from AOCI; whether election is made to reclassify the stranded income
tax effects from the Tax Cuts and Jobs Act; and information about the
other income tax effects that are reclassified. This ASU is effective for
annual and interim periods beginning after December 15, 2018. We
are currently evaluating the impact of the adoption of this guidance on
the Consolidated Financial Statements.

In March 2018, the FASB issued ASU 2018-05, "Income Taxes
(Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff
Accounting Bulletin No. 118". This ASU adds SEC paragraphs pursuant
to the SEC Staff Accounting Bulletin No. 118, which expresses the view
of the staff regarding application of Topic 740, Income Taxes, in the
reporting period that includes December 22, 2017 - the date on which
the Tax Cuts and Jobs Act (H.R.1, An Act to Provide for Reconciliation
Pursuant to Titles II and V of the Concurrent Resolution on the Budget
for Fiscal Year 2018) was signed into law. This ASU is effective for
annual and interim periods beginning after December 15, 2018. We
are currently evaluating the impact of the adoption of this guidance on
the Consolidated Financial Statements.

Note 3. Merger Transaction

Effective at the close of business on June 16, 2017, First Guaranty
completed its acquisition of 100% of the outstanding shares of Premier
Bancshares, Inc., a Texas corporation ("Premier"), a single bank
holding company headquartered in McKinney, Texas and its wholly
owned subsidiary, Synergy Bank. This acquisition allows First Guaranty
to expand its presence into the North Central Texas market area. Under
terms of an agreement and plan of merger dated January 30, 2017,
First Guaranty issued 0.119 of a share of its common stock for each
share of Premier for a total of 397,988 shares at a price of $25.86
(unadjusted for the 10% stock dividend in December 2017) and paid
$10.3 million in cash for an acquisition value of approximately $21.0
million. Based on the initial preliminary valuation of the fair value of
tangible and intangible assets acquired and liabilities assumed, the
purchase price resulted in approximately $1.5 million in goodwill and
$2.7 million in core deposit intangible, none of which is deductible for
tax purposes.

The valuations of loans, premises and equipment and core deposit
intangible and other assets acquired and liabilities assumed are still
preliminary and subject to change. United States generally accepted
accounting principles ("U.S. GAAP") provides up to twelve months
following the date of acquisition in which management can finalize
the fair values of acquired assets and assumed liabilities. Material
events that occur during the measurement period will be analyzed to
determine if the new information reflected facts and circumstances
that existed on the acquisition date. The measurement period ends
as soon as First Guaranty receives the information it was seeking
about facts and circumstances that existed as of the acquisition date
or learns more information is unobtainable. The measurement period
is limited to one year from the acquisition date. Once management
has finalized the fair values of acquired assets and assumed liabilities
within this twelve month period, management considers such values
to be the "Day One Fair Values." Based on management's preliminary
valuation of the fair value of tangible and intangible assets acquired
and liabilities assumed, the purchase price for the Premier acquisition
is allocated in the table below.

Premier
Bancshares,
Inc.

(in thousands)

4,542

2,855

5,892

128,018

9,493

1,474

3,809

221

2,009

Cash and due from banks

Federal funds sold

Securities available for sale

Loans

Premises and equipment

Goodwill

Intangible assets

Other real estate

Other assets

Total assets acquired

$ 158,313

Deposits

FHLB borrowings

Other liabilities

Total liabilities assumed

Net assets acquired

127,228

9,700

431

$ 137,359

20,954

105

The fair value of net assets acquired includes fair value adjustments
to certain receivables that were not considered impaired as of the
acquisition date. The non-impaired loans excluded from the purchase
credit impairment requirements under ASC 310-30 were recorded at
an estimated fair value of $123.7 million and had gross contractual
amounts receivable of $122.9 million on the date of acquisition.
Contractual cash flows not expected to be collected are estimated at
$0.5 million.

The following pro forma information for the twelve months ended
December 31, 2017 and December 31, 2016 reflects First Guaranty's
estimated consolidated results of operations as if the acquisition of
Premier occurred at January 1, 2016, unadjusted for potential cost
savings.

Net Interest Income

Noninterest Income

Noninterest Expense

Net Income

2017

2016

(in thousands, except
share data)

$ 55,663

$53,190

8,540

42,434

10,885

11,541

39,395

13,709

Earnings per common share

$ 1.24

$ 1.56

Note 4. Cash and Due from Banks
Certain reserves are required to be maintained at the Federal Reserve
Bank. There was no reserve requirement as of December 31, 2017
and 2016. At December 31, 2017 First Guaranty had only one account
at correspondent banks, excluding the Federal Reserve Bank, that

exceeded the FDIC insurable limit of $250,000. This account was
over the insurable limit by $0.6 million. At December 31, 2016 First
Guaranty had only one account at correspondent banks, excluding
the Federal Reserve Bank, that exceeded the FDIC insurable limit of
$250,000. This account was over the insurable limit by $4,000.

Note 5. Securities
A summary comparison of securities by type at December 31, 2017 and 2016 is shown below.

December 31, 2017

December 31, 2016

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

(in thousands)

Available for sale:

U.S Treasuries

U.S. Government Agencies

Corporate debt securities

Mutual funds or other equity securities

Municipal bonds

Collateralized mortgage obligations

Mortgage-backed securities

$ 19,490

$ -

$ (4)

$ 19,486

$ 29,994

$ -

$ 29,994

200,052

91,770

500

37,210

1,191

33,680

661

2,434

(4,069)

195,983

183,152

(4,820)

178,332

(946)

91,485

132,448

1,624

(2,100)

131,972

(7)

(75)

(6)

493

580

39,569

28,177

1,185

(346)

33,334

29,181

100

(7)

573

(320)

27,957

(536)

28,645

Total available for sale securities

$ 383,893

$ 3,095

$ (5,453)

$381,535

$ 403,532

$1,724

$(7,783) $397,473

Held to maturity:

U.S. Government Agencies

Municipal bonds

Mortgage-backed securities

$ 28,169

$ -

$ (670) $ 27,499

$ 18,167

$ -

$ (655) $ 17,512

5,322

86,630

(12)

5,325

(903)

85,733

83,696

(1,302)

82,394

Total held to maturity securities

$120,121

$ 21

$(1,585)

$118,557

$101,863

$ -

$(1,957)

$99,906

106

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. The scheduled maturities of securities at December 31, 2017, by contractual maturity, are shown below. Actual maturities may differ from
contractual maturities due to call or prepayments. Mortgage-backed securities are not due at a single maturity because of amortization and
potential prepayment of the underlying mortgages. For this reason they are presented separately in the maturity table below.

Available for sale:

Due in one year or less

Due after one year through five years

Due after five years through 10 years

Over 10 years

Subtotal

Collateralized mortgage obligations

Mortgage-backed Securities

Total available for sale securities

Held to maturity:

Due in one year or less

Due after one year through five years

Due after five years through 10 years

Over 10 years

Subtotal

Mortgage-backed Securities

Total held to maturity securities

December 31, 2017

Amortized
Cost

Fair Value

(in thousands )

$ 29,215

$ 29,233

76,969

217,238

25,600

349,022

1,191

33,680

76,922

214,769

26,092

347,016

1,185

33,334

$383,893

$381,535

5,124

18,485

9,882

33,491

86,630

5,057

17,907

9,860

32,824

85,733

$120,121

$ 118,557

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses as of the dates
indicated:

At December 31, 2017

Less Than 12 Months

12 Months or More

Total

Number of
Securities Fair Value

Gross
Unrealized
Losses

Number of
Securities

Fair Value

Gross
Unrealized
Losses

Number of
Securities Fair Value

Gross
Unrealized
Losses

(in thousands)

Available for sale:

U.S. Treasuries

U.S. Government agencies

Corporate debt securities

Mutual funds or other equity

securities

Municipal bonds

Collateralized mortgage obligations

Mortgage-backed securities

Total available for sale securities

Held to maturity:

U.S. Government agencies

Municipal bonds

Mortgage-backed securities

Total held to maturity securities

132

$ 19,486

62,991

19,050

493

4,431

936

14,737

(4)

(519)

(240)

(7)

(36)

(6)

(73)

132,992

(3,550)

$ 19,486

(4)

195,983

(4,069)

22,818

(706)

126

41,868

(946)

1,079

(39)

18,313

(273)

493

5,510

936

(7)

(75)

(6)

33,050

(346)

$ 122,124

$ (885)

118

$175,202

$ (4,568)

250

$ 297,326

$ (5,453)

$ 9,925

(75)

3,191

54,186

(12)

(515)

$ 67,302

$ (602)

$ 17,574

(595)

26,852

(388)

$ 44,426

(983)

$ 27,499

3,191

81,038

(670)

(12)

(903)

$ 111,728

$ (1,585)

107

At December 31, 2016

Less Than 12 Months

12 Months or More

Total

Number of
Securities Fair Value

Gross
Unrealized
Losses

Number of
Securities Fair Value

Gross
Unrealized
Losses

Number of
Securities Fair Value

Gross
Unrealized
Losses

(in thousands)

Available for sale:

U.S. Treasuries

U.S. Government agencies

Corporate debt securities

Mutual funds or other equity

securities

Municipal bonds

Mortgage-backed securities

185

$ 10,997

178,331

(4,820)

$ -

61,669

(1,613)

6,440

(487)

211

$ 10,997

$ -

178,331

68,109

(4,820)

(2,100)

493

10,210

28,645

(7)

(320)

(536)

493

10,210

28,645

(7)

(320)

(536)

Total available for sale securities

273

$ 290,345

$ (7,296)

$ 6,440

$ (487)

299

$ 296,785

$ (7,783)

Held to maturity:

U.S. Government agencies

Mortgage-backed securities

Total held to maturity securities

$ 17,512

$ (655)

82,394

(1,302)

$ 99,906

$ (1,957)

$ 17,512

(655)

82,394

(1,302)

$ 99,906

$ (1,957)

During the years ended December 31, 2017, 2016, and 2015, First
Guaranty recorded OTTI losses on available for sale securities as
follows:

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Year Ended
December 31,
2015

(in thousands)

Total OTTI charge
realized and
unrealized

OTTI recognized in
other comprehensive
income (non-credit
component)

Net impairment losses
recognized in earnings
(credit component)

$66

$571

396

$60

$175

There were $0, $0.1 million, and $0.2 million other-than-temporary
impairment losses recognized on securities in 2017, 2016 and 2015,
respectively.

As of December 31, 2017, 322 of First Guaranty's debt securities had
unrealized losses totaling 1.7% of the individual securities’ amortized
cost basis and 1.4% of First Guaranty's total amortized cost basis of
the investment securities portfolio. 145 of the 322 securities had been
in a continuous loss position for over 12 months at such date. The 145
securities had an aggregate amortized cost basis of $225.2 million and
an unrealized loss of $5.6 million at December 31, 2017. Management
has the intent and ability to hold these debt securities until maturity or
until anticipated recovery.

Securities are evaluated for other-than-temporary impairment at least
quarterly and more frequently when economic or market conditions
warrant such evaluation. Consideration is given to (i) the length of time
and the extent to which the fair value has been less than cost, (ii)
the financial condition and near-term prospects of the issuer, (iii) the
recovery of contractual principal and interest and (iv) the intent and
ability of First Guaranty to retain its investment in the issuer for a period
of time sufficient to allow for any anticipated recovery in fair value.

Investment securities issued by the U.S. Government and Government
sponsored enterprises with unrealized losses and the amount of
unrealized losses on those investment securities that are the result
of changes in market interest rates will not be other-than-temporarily
impaired. First Guaranty has the ability and intent to hold these
securities until recovery, which may not be until maturity.

Corporate debt securities in a loss position consist primarily of
corporate bonds issued by businesses in the financial, insurance,
utility, manufacturing, industrial, consumer products and oil and gas
industries. Two issuers have other-than-temporary impairment losses
at December 31, 2017. First Guaranty believes that the remaining
issuers will be able to fulfill the obligations of these securities based
on evaluations described above. First Guaranty has the ability and
intent to hold these securities until they recover, which could be at
their maturity dates.

108

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

The following table presents a roll-forward of the amount of credit
losses on debt securities held by First Guaranty for which a portion
of OTTI was recognized in other comprehensive income for the year
ended December 31, 2017, 2016, and 2015:

Year Ended
December 31,
2017

Year Ended
December 31,
2016

Year Ended
December 31,
2015

(in thousands)

$ 60

$175

175

(175)

$ 60

$175

Beginning balance
of credit losses at
beginning of year

Other-than-temporary
impairment credit
losses on securities
not previously OTTI

Increases for
additional credit
losses on securities
previously determined
to be OTTI

Reduction for
increases in cash
flows

Reduction due to
credit impaired
securities sold or fully
settled

Ending balance of
cumulative credit
losses recognized in
earnings at end of
year

In 2017 there were no other-than-temporary impairment credit losses
on securities for which First Guaranty had previously recognized OTTI.
For securities that have indications of credit related impairment,
management analyzes future expected cash flows to determine if
any credit related impairment is evident. Estimated cash flows are
determined using management's best estimate of future cash flows
based on specific assumptions. The assumptions used to determine
the cash flows were based on estimates of loss severity and credit
default probabilities. Management reviews reports from credit rating
agencies and public filings of issuers.

In 2016 there were no other-than-temporary impairment credit losses
on securities for which First Guaranty had previously recognized
OTTI. The amount related to losses on securities with no previous
losses amounted to $0.1 million at December 31, 2016. For securities
that have indications of credit related impairment, management
analyzes future expected cash flows to determine if any credit related
impairment is evident. Estimated cash flows are determined using
management's best estimate of future cash flows based on specific
assumptions. The assumptions used to determine the cash flows were
based on estimates of loss severity and credit default probabilities.
Management reviews reports from credit rating agencies and public
filings of issuers. The credit related impairment was related to one
corporate debt security with a book balance of $0.1 million that
experienced declines in its financial performance associated with the
utilities industry. This corporate debt security had a non-credit related
impairment of approximately $6,000.

OTTI. The amount related to losses on securities with no previous
losses amounted to $0.2 million at December 31, 2015. The credit
related impairment was related to one corporate debt security with a
book balance of $0.5 million that experienced declines in its financial
performance associated with the mining industry. This corporate debt
security had a non-credit related impairment of $0.3 million. This
security was sold in 2016. A second corporate debt security had a
non-credit related impairment of $0.1 million due to the fact that the
issuer went private and liquidity in its debt securities was reduced.
Management anticipates receipt of all scheduled cash flows for this
security.

Non-credit related other-than-temporary impairment losses recognized
in other comprehensive income totaled zero in 2017, $6,000 in 2016,
and $0.4 million in 2015. The impairment losses in 2016 were related
to one available for sale corporate bond security, described above,
which had original amortized cost of $0.1 million. The impairment
losses in 2015 were related to two available for sale corporate bond
securities, described above, which had original amortized cost of $0.8
million.

At December 31, 2017 and 2016 the carrying value of pledged
securities totaled $412.2 million and $368.2 million, respectively.

First Guaranty completed its liquidation of the common stock from
a converted preferred security in the third quarter of 2015. The total
gains realized on the security were $2.7 million. Gross realized gains
on sales of securities were $1.4 million, $3.6 million and $3.3 million
(including the sale of the converted preferred security) for the years
ended December 31, 2017, 2016 and 2015, respectively. Gross
realized losses were $0.1 million, $53,000 and $0.4 million for the
years ended December 31, 2017, 2016 and 2015. The tax applicable
to these transactions amounted to $0.5 million, $1.3 million, and $1.2
million for 2017, 2016 and 2015, respectively. Proceeds from sales of
securities classified as available for sale amounted to $148.0 million,
$191.0 million and $290.0 million for the years ended December 31,
2017, 2016 and 2015, respectively.

Net unrealized losses on available for sale securities included in
accumulated other comprehensive income (loss) ("AOCI"), net of
applicable income taxes, totaled $1.6 million at December 31, 2017.
At December 31, 2016 net unrealized losses included in AOCI, net of
applicable income taxes, totaled $4.0 million. During 2017 and 2016
net gains, net of tax, reclassified out of AOCI into earnings totaled $0.9
million and $2.5 million, respectively.

At December 31, 2017, First Guaranty's exposure to investment
securities issuers that exceeded 10% of shareholders’ equity as follows:

At December 31, 2017

Amortized
Cost

Fair Value

(in thousands)

$ 19,490

$ 19,486

U.S. Treasuries

Federal Home Loan Bank (FHLB)

50,395

49,403

Federal Home Loan Mortgage
Corporation (Freddie Mac-FHLMC)

Federal National Mortgage
Association (Fannie Mae-FNMA)

Federal Farm Credit Bank (FFCB)

57,569

57,008

103,644

136,923

101,757

134,381

$368,021

$362,035

109

In 2015 there were no other-than-temporary impairment credit losses
on securities for which First Guaranty had previously recognized

Total

Note 6. Loans
The following table summarizes the components of First Guaranty's loan portfolio as of the dates indicated:

December 31,

2017

2016

Balance

As % of
Category

Balance

As % of
Category

(in thousands except for %)

112,603

25,691

9.8%

2.2%

$ 84,239

21,138

8.9%

2.2%

158,733

13.8%

135,211

14.2%

16,840

540,231

854,098

1.4%

46.9%

74.1%

12,450

417,014

670,052

1.3%

43.9%

70.5%

21,514

1.9%

23,783

2.5%

220,700

19.2%

193,969

20.4%

55,185

4.8%

63,011

6.6%

297,399

25.9%

280,763

29.5%

Real Estate:

Construction & land development

Farmland

1-4 Family

Multifamily

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total Loans Before Unearned Income

1,151,497

100.0%

950,815

100.0%

Unearned income

Total Loans Net of Unearned Income

(2,483)

$ 1,149,014

(1,894)

$948,921

The following table summarizes fixed and floating rate loans by contractual maturity, excluding nonaccrual loans, as of December 31, 2017 and
December 31, 2016 unadjusted for scheduled principal payments, prepayments, or repricing opportunities. The average life of the loan portfolio
may be substantially less than the contractual terms when these adjustments are considered.

One year or less

One to five years

Five to 15 years

Over 15 years

Subtotal

Nonaccrual loans

Total Loans Before Unearned Income

Unearned income

Total Loans Net of Unearned Income

2017

December 31,

(in thousands)

2016

Fixed

Floating

Total

Fixed

Floating

Total

$ 89,383

$ 75,361

$ 164,744

$ 97,713

$ 51,965

$149,678

390,333

124,215

70,366

251,135

70,273

67,881

641,468

194,488

138,247

352,000

115,691

53,150

206,676

558,676

46,116

161,807

5,830

58,980

$674,297

$464,650

1,138,947

$618,554

$310,587

929,141

12,550

1,151,497

(2,483)

$ 1,149,014

21,674

950,815

(1,894)

$948,921

As of December 31, 2017, $95.4 million of floating rate loans were at their interest rate floor. At December 31, 2016, $127.7 million of floating
rate loans were at the floor rate. Nonaccrual loans have been excluded from these totals.

110

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

The following tables present the age analysis of past due loans for the periods indicated:

As of December 31, 2017

30-89 Days
Past Due

90 Days or
Greater Past Due

Total Past
Due

Current

Total Loans

Recorded
Investment 90
Days Accruing

Real Estate:

Construction & land development

371

Farmland

1 - 4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total Loans Before Unearned Income

Unearned income

Total Loans Net of Unearned Income

175

1,481

1,006

2,757

239

630

463

1,332

$ 4,089

(in thousands)

466

240

$ 112,137

$ 112,603

25,451

25,691

1,953

3,434

155,299

158,733

3,758

6,147

1,537

5,624

7,242

4,764

8,904

1,776

6,254

544

8,574

16,840

535,467

845,194

16,840

540,231

854,098

19,738

21,514

214,446

220,700

54,641

55,185

288,825

297,399

$13,389

$17,478

$ 1,134,019

1,151,497

(2,483)

$ 1,149,014

As of December 31, 2016

30-89 Days
Past Due

90 Days or
Greater Past Due

Total Past
Due

Current

Total Loans

Recorded
Investment 90
Days Accruing

(in thousands)

Real Estate:

Construction & land development

$ 173

585

758

83,481

84,239

Farmland

1 - 4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

234

1,108

1,618

3,133

552

182

798

105

2,387

5,014

2,753

339

3,495

5,014

4,371

20,799

21,138

131,716

135,211

7,436

12,450

412,643

417,014

10,844

13,977

656,075

670,052

179

1,958

8,070

981

2,022

8,622

1,163

21,761

23,783

185,347

193,969

61,848

63,011

11,009

11,807

268,956

280,763

Total Loans Before Unearned Income

$3,931

$21,853

$25,784

$925,031

950,815

$179

Unearned income

Total Loans Net of Unearned Income

(1,894)

$948,921

The tables above include $12.6 million and $21.7 million of nonaccrual loans for December 31, 2017 and 2016, respectively. See the tables below
for more detail on nonaccrual loans.

111

798

839

$839

$ 34

145

The following is a summary of nonaccrual loans by class for the periods indicated:

As of December 31,

2017

2016

(in thousands)

Real Estate:

Construction & land development

371

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total Nonaccrual Loans

1,953

3,758

6,147

1,496

4,826

6,403

551

105

2,242

5,014

2,753

10,665

1,958

8,070

981

11,009

$12,550

$21,674

The following table identifies the credit exposure of the loan portfolio by specific credit ratings for the periods indicated:

As of December 31, 2017

As of December 31, 2016

Pass

Special
Mention

Sub-

standard Doubtful

Total

Pass

Special
Mention

Sub-

standard Doubtful

Total

(in thousands)

Real Estate:

Construction & land development $ 108,200 $
Farmland

25,030

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

125 $ 4,278

$112,603 $ 79,069

$ 1,162 $ 4,008

- $ 84,239

569

149,426

1,856

9,366

639

7,451

6,835

520,432

2,490

17,309

812,454

5,679

35,965

19,050

995

191,784

19,187

48,225

1,469

5,169

6,892

25,691

20,652

381

105

158,733

123,191

5,460

6,560

16,840

4,268

1,132

7,050

540,231

392,355

6,406

18,253

854,098

619,535

14,541

35,976

21,138

135,211

12,450

417,014

670,052

23,783

21,514

20,890

1,973

920

850

4,560

220,700

182,381

3,008

7,730

193,969

55,185

60,582

1,394

1,035

63,011

4,560

297,399

263,853

3,164

6,016

7,730

280,763

$4,560

1,151,497 $ 883,388

$ 17,705 $41,992

$7,730

950,815

(2,483)

$1,149,014

(1,894)

$948,921

Total Non-Real Estate

13,530
Total Loans Before Unearned Income $ 1,071,513 $ 25,929 $49,495
Unearned income

259,059

20,250

Total Loans Net of Unearned Income

112

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

Purchased Impaired Loans

As part of the acquisition of Premier Bancshares, Inc. on June 16, 2017, First Guaranty purchased credit impaired loans for which there was,
at acquisition, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required
payments would not be collected. The carrying amount of those loans is as follows at December 31, 2017.

As of December 31,
2017

(in thousands)

Real Estate:

Construction & land development

$ 1,135

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total Carrying Amount

Contractual principal balance

Carrying amount, net of allowance

2,148

3,341

1,017

$ 4,358

$ 5,436

$ 4,358

For those purchased loans disclosed above, First Guaranty did not
increase the allowance for loan losses for the year ended December
31, 2017.

Where First Guaranty can reasonably estimate the cash flows expected
to be collected on the loans, a portion of the purchase discount is
allocated to an accretable yield adjustment based upon the present
value of the future estimated cash flows versus the current carrying
value of the loan and the accretable yield portion is being recognized
as interest income over the remaining life of the loan.

Where First Guaranty cannot reasonably estimate the cash flows
expected to be collected on the loans, it has decided to account for
those loans using the cost recovery method of income recognition.
As such, no portion of a purchase discount adjustment has been

determined to meet the definition of an accretable yield adjustment
on those loans accounted for using the cost recovery method. If,
in the future, cash flows from the borrower(s) can be reasonably
estimated, a portion of the purchase discount would be allocated to an
accretable yield adjustment based upon the present value of the future
estimated cash flows versus the current carrying value of the loan and
the accretable yield portion would be recognized as interest income
over the remaining life of the loan. Until such accretable yield can
be calculated, under the cost recovery method of income recognition,
all payments will be used to reduce the carrying value of the loan and
no income will be recognized on the loan until the carrying value is
reduced to zero. Any loan accounted for under the cost recovery
method is also still included as a non-accrual loan in the amounts
presented in the table below.

The accretable yield, or income expected to be collected, on the purchased loans above is as follows at December 31, 2017.

Balance, beginning of period

Acquisition accretable yield

Accretion

Net transfers from nonaccretable difference to accretable yield

Balance, end of period

Year Ended
December
31, 2017

(in thousands)

1,195

(164)

$ 1,031

The contractually required payments of purchased impaired loans totaled $7.5 million, while the cash flow expected to be collected at acquisition
totaled $5.0 million, and the fair value of the acquired loans totaled $3.8 million.

113

Note 7. Allowance for Loan Losses
A summary of changes in the allowance for loan losses, by loan type, for the years ended December 31, 2017, 2016 and 2015 are as follows:

As of December 31,

2017

2016

Beginning
Allowance
(12/31/16)

Charge-
Offs

Recoveries Provision

Ending
Allowance
(12/31/17)

Beginning
Allowance
(12/31/15)

Charge-
Offs

(in thousands)

Recoveries Provision

Ending
Allowance
(12/31/16)

Real Estate:

Construction & land
development

$ 1,232 $

Farmland

1-4 family

Multi-family

Non-farm non-
residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and
industrial

Consumer and other

Unallocated

(33)

(1,291)

(1,324)

1,204

591

3,451

6,497

(162)

3,543

(3,629)

972

(1,247)

260

138

223

391

(14)

(185)

363

566

137

2,433

1,177

(8)

3,739

Total Non-Real Estate

4,617

(5,038)

Total

$ 11,114

$(6,362)

$651

$3,822

$ 43

$ (647)

$ 628

962 $

$ 4

$ 266

$ 1,232

1,078

994

2,811

5,516

1,771

(244)

557

401

(35)

(368)

(367)

3,298

(1,373)

1,510

6,642

(1,617)

466

1,006

1,204

591

3,451

6,497

187

(83)

113

2,377

1,125

3,709

$9,225

2,527

230

(579)

(635)

146

183

1,449

1,194

3,543

972

2,773

(1,297)

442

2,699

4,617

$ 9,415

$(2,914)

$908

$3,705

$11,114

As of December 31,

2015

Beginning
Allowance
(12/31/14)

Charge-
Offs

Ending
Allowance
(12/31/15)

Recoveries

Provision

(in thousands)

Real Estate:

Construction & land development

702

$(559)

$ 5

$ 814

962

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Unallocated

Total Non-Real Estate

Total

2,131

813

(410)

(947)

2,713

(1,137)

6,380

(3,053)

293

1,797

371

264

(491)

(79)

(550)

2,725

(1,120)

$ 9,105 $(4,173)

150

315

151

469

$619

(44 )

645

1,717

3,165

211

494

258

(264)

699

$3,864

1,771

557

3,298

6,642

2,527

230

2,773

$9,415

114

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

Negative provisions are caused by changes in the composition and credit quality of the loan portfolio. The result is an allocation of the loan loss
reserve from one category to another.

A summary of the allowance and loans individually and collectively evaluated for impairment are as follows:

As of December 31, 2017

Allowance
Individually
Evaluated for
Impairment

Allowance
Collectively
Evaluated for
Impairment

Total
Allowance
for Credit
Losses

Loans
Individually
Evaluated for
Impairment

Loans
Collectively
Evaluated for
Impairment

Total Loans
before
Unearned
Income

(in thousands)

Real Estate:

Construction & land development

$ -

$ 628

$ -

$ 112,603

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Unallocated

Total Non-Real Estate

Total

Unearned Income

Total Loans Net of Unearned Income

236

565

631

$867

1,078

994

2,575

5,280

121

1,812

1,125

3,078

$8,358

1,078

994

2,811

5,516

187

2,377

1,125

3,709

$9,225

8,990

861

5,731

25,691

158,733

16,840

531,241

845,108

20,653

214,969

55,185

25,691

158,733

16,840

540,231

854,098

21,514

220,700

55,185

6,592

290,807

297,399

$15,582

$1,135,915

1,151,497

(2,483)

$1,149,014

As of December 31, 2016

Allowance
Individually
Evaluated for
Impairment

Allowance
Collectively
Evaluated for
Impairment

Total
Allowance
for Credit
Losses

Loans
Individually
Evaluated for
Impairment

Loans
Collectively
Evaluated for
Impairment

Total Loans
before
Unearned
Income

(in thousands)

Real Estate:

Construction & land development

$ -

$1,232

$ 361

$ 83,878

$ 84,239

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Unallocated

Total Non-Real Estate

Total

Unearned Income

Total Loans Net Of Unearned Income

164

247

419

2,375

193

2,579

$2,998

1,196

427

3,204

6,078

1,168

779

2,038

$8,116

1,204

591

3,451

6,497

3,543

972

21,138

1,130

5,014

10,803

17,308

1,614

8,965

924

134,081

135,211

7,436

12,450

406,211

417,014

652,744

670,052

22,169

23,783

185,004

193,969

62,087

63,011

4,617

$11,114

11,503

269,260

280,763

$28,811

$922,004

950,815

(1,894)

$948,921

115

As of December 31, 2017, 2016 and 2015, First Guaranty had loans
totaling $12.6 million, $21.7 million and $20.0 million, respectively,
not accruing interest. As of December 31, 2017, 2016 and 2015, First
Guaranty had loans past due 90 days or more and still accruing interest
totaling $0.8 million, $0.2 million and $0.4 million, respectively. The
average outstanding balance of nonaccrual loans in 2017 was $17.3
million compared to $22.5 million in 2016 and $14.9 million in 2015.

As of December 31, 2017, First Guaranty has no outstanding
commitments to advance additional funds in connection with impaired
loans.

The following is a summary of impaired loans by class at December 31, 2017:

As of December 31, 2017

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Average
Recorded
Investment

Interest
Income
Recognized

Interest
Income
Cash Basis

(in thousands)

Impaired Loans with no related allowance:

Real Estate:

Construction & land development

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

5,771

Total Impaired Loans with no related allowance

5,771

Impaired Loans with an allowance recorded:

Real estate:

Construction & land development

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total Impaired Loans with an allowance recorded

3,219

861

5,731

6,592

9,811

3,570

920

9,062

9,982

13,552

$ -

236

565

631

867

5,933

248

279

5,933

248

279

3,555

1,117

8,121

9,238

12,793

183

135

318

127

101

228

Total Impaired Loans

$15,582

$19,323

$ 867

$ 18,726

$ 566

$ 507

116

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

The following is a summary of impaired loans by class at December 31, 2016:

As of December 31, 2016

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Average
Recorded
Investment

Interest
Income
Recognized

Interest
Income
Cash Basis

(in thousands)

Impaired Loans with no related allowance:

Real Estate:

Construction & land development

361

823

$ -

363

Farmland

1-4 family

Multifamily

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total Impaired Loans with no related allowance

Impaired Loans with an allowance recorded:

Real estate:

Construction & land development

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

863

1,196

8,501

9,430

9,725

11,449

1,603

1,742

686

685

2,289

2,427

12,014

13,876

1,044

8,949

10,356

1,377

724

2,101

12,457

267

5,014

2,302

303

5,305

2,296

7,583

7,904

164

247

419

279

5,169

2,334

7,782

8,965

9,117

2,375

9,379

238

244

193

289

9,214

9,372

2,579

9,679

196

245

293

119

175

223

235

113

Total Impaired Loans with an allowance recorded

16,797

17,276

2,998

17,461

199

192

Total Impaired Loans

$28,811

$31,152

$2,998

$29,918

$ 492

$ 427

117

Troubled Debt Restructurings

A Troubled Debt Restructuring ("TDR") is a debt restructuring in which
the creditor for economic or legal reasons related to the debtor's
financial difficulties grants a concession to the debtor that it would not
otherwise consider. The modifications to First Guaranty's TDRs were

concessions on the interest rate charged. The effect of the modifications
to First Guaranty was a reduction in interest income. These loans were
evaluated in First Guaranty's reserve for loan losses. In 2017 and
2016, there were no credit relationships that were restructured in a
troubled debt restructuring.

The following table is an age analysis of TDRs as of December 31, 2017 and December 31, 2016:

Troubled Debt Restructurings

December 31, 2017

December 31, 2016

Accruing Loans

30-89
Days Past
Due

Current

Nonaccrual

Total
TDRs

Accruing Loans

30-89
Days

Current

Past Due Nonaccrual

Total
TDRs

Real Estate:

Construction & land development

Farmland

1-4 Family

Multi-family

Non-farm non residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate

Total

(in thousands)

$ 334

2,138

2,472

2,987

334

$ 334

$ 2,472

$2,987

$361

$ 361

100

461

3,087

3,448

$461

$3,448

2,138

$ 2,138

The following table discloses TDR activity for the twelve months ended December 31, 2017.

Trouble Debt Restructured Loans Activity

Twelve Months Ended December 31, 2017

Beginning
balance
(December
31, 2016)

Charge-Offs
post-
modification

New
TDRs

Transferred
to ORE

Paydowns

Construction
to permanent
financing

Restructured
to market
terms

Other
adjustments

Ending
balance
(December
31, 2017)

(in thousands)

$ 361 $ -

$ -

$(27)

$ -

$ 334

3,087

3,448

(102)

(849)

(876)

2,138

2,472

$3,448 $ -

$(102)

$ -

$(876)

$ -

$ 2

$2,472

Real Estate:

Construction & land
development

Farmland

1-4 family

Multi-family

Non-farm non-residential

Total Real Estate

Non-Real Estate:

Agricultural

Commercial and industrial

Consumer and other

Total Non-Real Estate
Total Impaired Loans with no
related allowance

118

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

There were no commitments to lend additional funds to debtors whose terms have been modified in a troubled debt restructuring at December
31, 2017.

Note 8. Premises and Equipment
The components of premises and equipment at December 31, 2017 and 2016 are as follows:

December 31,

2017

2016

(in thousands)

Land

Bank premises

Furniture and equipment

Construction in progress

Acquired value

Less: accumulated depreciation

$ 12,875

31,469

24,305

382

69,031

31,011

$ 7,185

21,229

21,689

2,106

52,209

28,690

Net book value

$38,020

$23,519

Depreciation expense amounted to $1.8 million, $1.7 million and $1.6 million for 2017, 2016 and 2015, respectively.

Note 9. Goodwill and Other Intangible Assets
Goodwill and intangible assets deemed to have indefinite lives are no longer amortized, but are subject to impairment testing. Other intangible
assets continue to be amortized over their useful lives. Goodwill represents the purchase price over the fair value of net assets acquired from the
Homestead Bancorp in 2007 and Premier Bancshares, Inc. in 2017. No impairment charges have been recognized since acquisition. Goodwill
totaled $3.5 million and $2.0 million at December 31, 2017 and 2016, respectively.

The following table summarizes intangible assets subject to amortization.

December 31,

2017

2016

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

(in thousands)

Core deposit intangibles

Mortgage servicing rights

Total

$12,053

1,373

$13,426

$ 8,804

198

$9,002

$ 3,249

1,175

$4,424

$9,350

267

$9,617

$ 8,372

189

$ 8,561

$978

$1,056

The core deposits intangible reflect the value of deposit relationships,
including the beneficial rates, which arose from acquisitions. The
weighted-average amortization period remaining for the core deposit
intangibles is 9.7 years.

Amortization expense relating to purchase accounting intangibles
totaled $0.4 million, $0.3 million, and $0.3 million for the years ended
December 31, 2017, 2016, and 2015, respectively.

Amortization expense of the core deposit intangible assets for the
next five years is as follows:

For the Years Ended

Estimated Amortization Expense

December 31, 2018

December 31, 2019

December 31, 2020

December 31, 2021

December 31, 2022

(in thousands)

$545

$361

$293

$225

119

Note 10. Other Real Estate
Other real estate owned consists of the following:

The following schedule provides certain information about First
Guaranty's short-term borrowings for the periods indicated:

Real Estate Owned Acquired by
Foreclosure:

Residential

Construction & land development

Non-farm non-residential

Total Other Real Estate Owned and
Foreclosed Property

December 31,

2017

2016

(in thousands)

$ 23

$ 71

304

954

288

$1,281

$359

Note 11. Deposits
A schedule of maturities of all time deposits are as follows:

December 31, 2017

(in thousands)

2018

2019

2020

2021

2022 and thereafter

Total

$357,687

118,902

48,843

16,622

39,277

$581,331

The table above includes, for December 31, 2017, brokered deposits
totaling $9.8 million. The aggregate amount of jumbo time deposits,
each with a minimum denomination of $250,000 totaled $266.2 million
and $241.4 million at December 31, 2017 and 2016, respectively.

Note 12. Borrowings
Short-term borrowings are summarized as follows:

December 31,
2017

December 31,
2016

(in thousands)

Federal Home Loan Bank

advances

Line of credit

Total short-term borrowings

$15,500

$6,500

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. Short-term borrowings totaled
$15.5 million at December 31, 2017 and $6.5 million at December 31,
2016. Short-term borrowing consisted of a line of credit of $6.5 million,
with no outstanding balance at December 31, 2017 and collateralized
short-term borrowings from the Federal Home Loan Bank totaling
$15.5 million at December 31, 2017.

Available lines of credit totaled $150.8 million at December 31, 2017
and $133.7 million at December 31, 2016.

120

December 31,

2017

2016

2015

(in thousands except for %)

Outstanding at year end

$ 15,500

$ 6,500

$ 1,800

Maximum month-end

outstanding

Average daily outstanding

Weighted average rate

during the year

Weighted average rate at

year end

$28,000

$ 5,833

$25,000

$ 8,775

$13,800

$ 4,217

1.06%

0.85%

2.12%

1.51%

0.65%

4.50%

Long-term debt is summarized as follows:

Senior long-term debt with a commercial bank, priced at floating
3-month LIBOR plus 250 basis points (3.87%), totaled $22.8 million
at December 31, 2017 and $21.8 at December 31, 2016. First
Guaranty pays $735,294 principal plus interest quarterly. This loan
was originated in December 2015 and has a contractual maturity date
of December 22, 2020. This long-term debt is secured by a pledge of
85% (4,823,899 shares) of First Guaranty's interest in First Guaranty
Bank (a wholly owned subsidiary). First Guaranty modified its existing
senior long-term debt in the second quarter of 2017. The modification
increased the principal balance to $25.0 million with new net proceeds
of $3.8 million. The existing amortization terms and rates remained the
same. The $3.8 million in additional proceeds were contributed to First
Guaranty Bank for future growth.

Senior long-term debt with a commercial bank, priced at Wall Street
Journal Prime plus 75 basis points (4.75%), had no outstanding
balance at December 31, 2017 and totaled $0.3 million at December
31, 2016. First Guaranty paid $50,000 principal plus interest monthly.
This long-term debt was secured by a pledge of 13.2% (735,745
shares) of First Guaranty's interest in First Guaranty Bank (a wholly
owned subsidiary). This loan matured on May 12, 2017.

Junior subordinated debt, priced at Wall Street Journal Prime plus 75
basis points (4.00%), totaled $14.7 million at December 31, 2017 and
$14.6 million at December 31, 2016. First Guaranty pays interest
semi-annually for the Fixed Interest Rate Period and quarterly for the
Floating Interest Rate Period. The Note is unsecured and ranks junior
in right of payment to any senior indebtedness and obligations to
general and secured creditors. The Note was originated in December
2015 and is scheduled to mature on December 21, 2025. Subject to
limited exceptions, First Guaranty cannot repay the Note until after
December 21, 2020. The Note qualifies for treatment as Tier 2 capital
for regulatory capital purposes.

First Guaranty maintains a revolving line of credit for $6.5 million with
an availability of $6.5 million at December 31, 2017. This line of credit
is secured by the same collateral as the senior term loan and is priced
at 4.50%.

At December 31, 2017, letters of credit issued by the FHLB totaling
$294.2 million were outstanding and carried as off-balance sheet
items, all of which expire in 2018. At December 31, 2016, letters of
credit issued by the FHLB totaling $226.1 million were outstanding
and carried as off-balance sheet items, all of which expired in 2017.
The letters of credit are solely used for pledging towards public fund
deposits. The FHLB has a blanket lien on substantially all of the
loans in First Guaranty's portfolio which is used to secure borrowing
availability from the FHLB. First Guaranty has obtained a subordination
agreement from the FHLB on First Guaranty's farmland, agricultural,
and commercial and industrial loans. These loans are available to be
pledged for additional reserve liquidity.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. As of December 31, 2017 obligations on senior long-term debt and
junior subordinated debentures totaled $37.4 million. The scheduled
maturities are as follows:

Senior
Long-term
Debt

Junior
Subordinated
Debentures

(in thousands)

$ 2,941

2018

2019

2020

2021

2022

2023 and thereafter

Subtotal

Debt issuance costs

Total

2,941

8,089

$22,794

(20)

$22,774

15,000

$15,000

(336)

$14,664

Note 13. Capital Requirements
First Guaranty and the Bank are subject to various regulatory capital
requirements administered by federal and state banking agencies.
Failure to meet minimum capital requirements can initiate certain
mandatory and possibly additional discretionary actions that, if
undertaken, could have a direct material effect on First Guaranty's
financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, First Guaranty and
the Bank must meet specific capital guidelines that involve quantitative
measures of their assets, liabilities and certain off-balance sheet items
as calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative judgments
by the regulators about components, risk weightings and other factors.

Prompt corrective action provisions are not applicable to bank holding
companies.

Quantitative measures established by regulation to ensure capital
adequacy require First Guaranty and the Bank to maintain minimum
amounts and ratios of total and Tier 1 capital to risk-weighted assets
and of Tier 1 capital to average assets. Management believes, as of
December 31, 2017 and 2016, that First Guaranty and the Bank met
all capital adequacy requirements.

In addition to establishing the minimum regulatory capital requirements,
the regulations limit capital distributions and certain discretionary
bonus payments to management if the institution does not hold a
"capital conservation buffer" consisting of 2.5% of common equity Tier
1 capital to risk-weighted asset above the amount necessary to meet
its minimum risk-based capital requirements. The capital conservation
buffer requirement is being phased in beginning January 1, 2016 at
0.625% of risk-weighted assets and increasing each year until fully
implemented at 2.5% on January 1, 2019. For 2018, the capital
conservation buffer will be 1.875% of risk-weighted assets. First
Guaranty Bancshares, Inc. capital conservation buffer was 4.14% at
December 31, 2017. First Guaranty Bank’s capital conservation buffer
was 5.07% at December 31, 2017.

As of December 31, 2017, the most recent notification from the Federal
Deposit Insurance Corporation categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, an institution must maintain minimum
total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set
forth in the following table. There are no conditions or events since
the notification that Management believes have changed the Bank’s
category.

121

First Guaranty's and the Bank’s actual capital amounts and ratios as of December 31, 2017 and 2016 are presented in the following table.

Minimum
Capital
Requirements

Minimum to be
Well Capitalized
Under Action
Provisions

Actual

Amount Ratio

(in thousands except for %)

$164,545 12.14% $ 108,427 8.00%

N/A N/A

$176,398 13.07% $ 107,961 8.00% $134,951 10.00%

$140,320 10.35% $ 81,320 6.00%

N/A N/A

$167,173 12.39% $ 80,971 6.00% $107,961

8.00%

$140,320

8.27% $ 67,899 4.00%

N/A N/A

$167,173

9.88% $ 67,709 4.00% $ 84,636

5.00%

$140,320 10.35% $ 60,990 4.50%

N/A N/A

$167,173 12.39% $ 60,728 4.50% $ 87,718

6.50%

$151,877 12.79% $ 94,982 8.00%

N/A N/A

$153,768 12.99% $ 94,717 8.00% $118,396 10.00%

$125,763 10.59% $ 71,236 6.00%

N/A N/A

$142,654 12.05% $ 71,038 6.00% $ 94,717

8.00%

$125,763

8.68% $ 57,930 4.00%

N/A N/A

$142,654

9.88% $ 57,771 4.00% $ 72,214

5.00%

125,763 10.59% $ 53,427 4.50%

N/A N/A

142,654 12.05% $ 53,278 4.50% $ 76,958

6.50%

December 31, 2017

Total Risk-Based Capital:

Consolidated

Bank

Tier 1 Capital:

Consolidated

Bank

Tier 1 Leverage Capital:

Consolidated

Bank

Common Equity Tier One Capital:

Consolidated

Bank

December 31, 2016

Total Risk-Based Capital:

Consolidated

Bank

Tier 1 Capital:

Consolidated

Bank

Tier 1 Leverage Capital:

Consolidated

Bank

Common Equity Tier One Capital:

Consolidated

Bank

Note 14. Dividend Restrictions
The Federal Reserve Bank ("FRB") has stated that, generally, a
bank holding company should not maintain a rate of distributions
to shareholders unless its available net income has been sufficient
to fully fund the distributions, and the prospective rate of earnings
retention appears consistent with the bank holding company’s capital
needs, asset quality and overall financial condition. As a Louisiana
corporation, First Guaranty is restricted under the Louisiana corporate
law from paying dividends under certain conditions.

First Guaranty Bank may not pay dividends or distribute capital assets if
it is in default on any assessment due to the FDIC. First Guaranty Bank
is also subject to regulations that impose minimum regulatory capital

and minimum state law earnings requirements that affect the amount of
cash available for distribution. In addition, under the Louisiana Banking
Law, dividends may not be paid if it would reduce the unimpaired
surplus below 50% of outstanding capital stock in any year.

The Bank is restricted under applicable laws in the payment of dividends
to an amount equal to current year earnings plus undistributed
earnings for the immediately preceding year, unless prior permission is
received from the Commissioner of Financial Institutions for the State of
Louisiana. Dividends payable by the Bank in 2018 without permission
will be limited to 2018 earnings plus the undistributed earnings of $3.2
million from 2017.

122

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

Accordingly, at January 1, 2018, $167.6 million of First Guaranty's
equity in the net assets of the Bank was restricted. In addition,
dividends paid by the Bank to First Guaranty would be prohibited if
the effect thereof would cause the Bank’s capital to be reduced below
applicable minimum capital requirements.

Note 15. Related Party Transactions
In the normal course of business, First Guaranty and its subsidiary,
First Guaranty Bank, have loans, deposits and other transactions with
its executive officers, directors and certain business organizations and
individuals with which such persons are associated. These transactions
are completed with terms no less favorable than current market rates.
An analysis of the activity of loans made to such borrowers during the
year ended December 31, 2017 and 2016 follows:

December 31,

2017

2016

(in thousands)

$58,279

$57,816

24,639

463

$82,918

$58,279

Balance, beginning of year

Net Increase

Balance, end of year

Unfunded commitments to First Guaranty and Bank directors and
executive officers totaled $17.5 million and $24.9 million at December
31, 2017 and 2016, respectively. At December 31, 2017 First
Guaranty and the Bank had deposits from directors and executives
totaling $24.6 million. There were no participations in loans purchased
from affiliated financial institutions included in First Guaranty's loan
portfolio in 2017 or 2016.

During the years ended 2017, 2016 and 2015, First Guaranty paid
approximately $0.4 million, $0.3 million and $0.2 million, respectively,
for printing services and supplies and office furniture and equipment
to Champion Industries, Inc., of which Mr. Marshall T. Reynolds, the
Chairman of First Guaranty's Board of Directors, is President, Chief
Executive Officer, Chairman of the Board of Directors and a major
shareholder of Champion.

On December 21, 2015, First Guaranty issued a $15.0 million
subordinated note (the "Note") to Edgar Ray Smith III, a director of
First Guaranty. The Note is for a ten-year term (non-callable for first five
years) and will bear interest at a fixed annual rate of 4.0% for the first
five years of the term and then adjust to a floating rate based on the
Prime Rate as reported by the Wall Street Journal plus 75 basis points
for the period of time after the fifth year until redemption or maturity.
First Guaranty paid interest of $0.6 million in 2017 and 2016 for this
note.

During the years ended 2017, 2016 and 2015, First Guaranty paid
approximately $0.2 million, $0.3 million and $0.2 million, respectively,
for architectural services in relation to bank branches to Gasaway
Gasaway Bankston Architects, of which bank subsidiary board member
Andrew B. Gasaway is part owner.

Note 16. Employee Benefit Plans

First Guaranty has an employee savings plan to which employees,
who meet certain service requirements, may defer 1% to 20% of their
base salaries, 6% of which may be matched up to 100%, at its sole
discretion. Contributions to the savings plan were $240,000, $191,000
and $86,000 in 2017, 2016 and 2015, respectively. First Guaranty has
an Employee Stock Ownership Plan (“ESOP”) which was frozen in 2010.
No contributions were made to the ESOP for the years 2017, 2016 or
2015. As of December 31, 2017, the ESOP held 15,530 shares. First
Guaranty is in the process of terminating the plan.

Note 17. Other Expenses

The following is a summary of the significant components of other
noninterest expense:

Other noninterest expense:

Legal and professional fees

Data processing

ATM Fees

Marketing and public relations

Taxes - sales, capital and franchise

Operating supplies

Software expense and amortization

Travel and lodging

Telephone

Amortization of core deposits

Donations

Net costs from other real estate and

repossessions

Regulatory assessment

Other

December 31,

2017

2016

2015

(in thousands)

$ 3,037

$ 2,185

$ 2,019

1,608

1,161

1,205

970

496

923

910

167

432

322

306

726

1,640

1,259

1,044

1,184

1,022

878

787

471

835

710

177

320

298

848

717

414

612

818

172

320

332

498

1,005

1,599

493

1,111

1,692

Total other noninterest expense

$13,903

$12,066

$11,754

First Guaranty does not capitalize advertising costs. They are expensed
as incurred and are included in other noninterest expense on the
Consolidated Statements of Income. Advertising expense was $0.7
million, $0.6 million and $0.6 million for 2017, 2016 and 2015,
respectively.

Note 18. Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was
signed into law. The TCJA makes broad and complex changes to the
U.S. tax code that affected income tax rate in 2017. The TCJA reduces
the U.S. federal corporate income tax expense from 35% to 21%
beginning January 1, 2018 and also establishes new tax laws that will
affect 2018.

ASC 740 requires a company to record the effects of a tax law change
in the period of enactment, however, shortly after the enactment of the
TCJA, the SEC staff issued SAB 118, which allows a company to record
a provisional amount when it does not have the necessary information
available, prepared, or analyzed in reasonable detail to complete its
accounting for the change in the tax law. The measurement period
ends when the company has obtained, prepared and analyzed the
information necessary to finalize its accounting, but cannot extend
beyond one year.

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

December 31,

2017

2016

2015

(in thousands)

Current

Deferred

Total

$4,638

$8,168

$7,347

2,761

(1,004)

(384)

$7,399

$7,164

$6,963

123

The difference between income taxes computed by applying the
statutory federal income tax rate and the provision for income taxes in
the financial statements is reconciled as follows:

December 31,

2017

2016

2015

(in thousands except for %)

Statutory tax rate

35.0%

measurement of a tax position taken or expected to be taken in a
tax return. First Guaranty does not believe it has any unrecognized
tax benefits included in its consolidated financial statements. First
Guaranty has not had any settlements in the current period with taxing
authorities, nor has it recognized tax benefits as a result of a lapse of the
applicable statute of limitations. First Guaranty recognizes interest and
penalties accrued related to unrecognized tax benefits, if applicable,
in noninterest expense. During the years ended December 31, 2017,
2016 and 2015, First Guaranty did not recognize any interest or
penalties in its consolidated financial statements, nor has it recorded
an accrued liability for interest or penalty payments.

$6,703

$7,440

$7,514

Note 19. Commitments and Contingencies

Federal income taxes at statutory

rate

Tax exempt municipal income

Other (1)

Total

(254)

950

(283)

(436)

(115)

$7,399

$7,164

$6,963

(1) Included in other for the year ended December 31, 2017 is $0.9 million
related to the estimated net impact from the remeasurement of deferred
tax assets and liabilities as a result of the passage of the Tax Cuts and Jobs
Act in December 2017.

Deferred taxes are recorded based upon differences between the
financial statement and tax basis of assets and liabilities, and available
tax credit carry forwards. Temporary differences between the financial
statement and tax values of assets and liabilities give rise to deferred
taxes. The significant components of deferred taxes classified in First
Guaranty's Consolidated Balance Sheets at December 31, 2017 and
2016 are as follows:

Deferred tax assets:

Allowance for loan losses

Other real estate owned

Unrealized losses on available for sale

securities

Net operating loss

Other

Gross deferred tax assets

December 31,

2017

2016

(in thousands)

$ 1,804

$3,890

495

2,060

1,463

546

449

4,333

6,459

Deferred tax liabilities:

Depreciation and amortization

Core deposit intangibles

Unrealized gains on available for sale

securities

Other

Gross deferred tax liabilities

(1,688)

(1,480)

(662)

(342)

(566)

(376)

(2,916)

(2,198)

Net deferred tax assets

$ 1,417

$ 4,261

Net operating loss carryforwards for income tax purposes were $7.0
million as of December 31, 2017 as compared to zero in 2016. The
carryforwards were acquired in 2017 in the Premier acquisition and
expire from 2027 to 2034, and will be utilized subject to annual Internal
Revenue Code Section 382 limitations.

ASC 740-10, Income Taxes, clarifies the accounting for uncertainty in
income taxes and prescribes a recognition threshold and measurement
attribute for the consolidated financial statements recognition and

124

Off-balance sheet commitments

First Guaranty is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of
its customers and to reduce its 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 the 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. Unless otherwise
noted, collateral or other security is not required to support financial
instruments with credit risk.

Set forth below is a summary of the notional amounts of the financial
instruments with off-balance sheet risk at December 31, 2017 and
December 31, 2016.

December 31,

2017

2016

(in thousands)

Contract Amount

Commitments to Extend Credit

$ 78,125

$ 56,910

Unfunded Commitments under lines of

credit

$ 101,344

$ 128,428

Commercial and Standby letters of credit $

7,886

$ 6,602

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 Management's credit evaluation of the counterpart. Collateral
requirements vary but may include accounts receivable, inventory,
property, plant and equipment, residential real estate and commercial
properties.

Standby and commercial letters of credit are conditional commitments
to guarantee the performance of a customer to a third party. These
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing and similar
transactions. The majority of these guarantees are short-term, one year
or less; however, some guarantees 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. Collateral requirements
are the same as on-balance sheet instruments and commitments to
extend credit.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. There were no losses incurred on off-balance sheet commitments in
2017, 2016 or 2015.

Note 20. Fair Value Measurements
The fair value of a financial instrument is the current amount that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. A fair value measurement
assumes that the transaction to sell the asset or transfer the liability
occurs in the principal market for the asset or liability or, in the absence
of a principal market, the most advantageous market for the asset or
liability. Valuation techniques use certain inputs to arrive at fair value.
Inputs to valuation techniques are the assumptions that market
participants would use in pricing the asset or liability. They may be
observable or unobservable. First Guaranty uses a fair value hierarchy
for valuation inputs that gives the highest priority to quoted prices in
active markets for identical assets or liabilities and the lowest priority to
unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted market prices in active markets
for identical assets or liabilities that the reporting entity has the
ability to access at the measurement date.

Level 2 Inputs – Inputs other than quoted prices included in Level
1 that are observable for the asset or liability, either directly or
indirectly. These might include quoted prices for similar assets or
liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the asset or liability (such
as interest rates, volatilities, prepayment speeds or credit risks) or
inputs that are derived principally from or corroborated by market
data by correlation or other means.

Level 3 Inputs – Unobservable inputs for determining the fair values
of assets or liabilities that reflect an entity’s own assumptions about
the assumptions that market participants would use in pricing the
assets or liabilities.

A description of the valuation methodologies used for instruments
measured at fair value follows, as well as the classification of such
instruments within the valuation hierarchy.

Securities available for sale.
Securities are classified within Level 1 where quoted market prices
are available in an active market. Inputs include securities that have
quoted prices in active markets for identical assets. If quoted market
prices are unavailable, fair value is estimated using quoted prices of
securities with similar characteristics, at which point the securities
would be classified within Level 2 of the hierarchy. Securities classified
Level 3 as of December 31, 2017 include certain municipal bonds and
an equity security.

Impaired loans.
Loans are measured for impairment using the methods permitted by
ASC Topic 310. Fair value of impaired loans is measured by either the
fair value of the collateral if the loan is collateral dependent (Level 2 or
Level 3), or the present value of expected future cash flows, discounted
at the loan's effective interest rate (Level 3). Fair value of the collateral
is determined by appraisals or by independent valuation.

Other real estate owned.
Properties are recorded at the balance of the loan or at estimated
fair value less estimated selling costs, whichever is less, at the date
acquired. Fair values of other real estate owned ("OREO") at December
31, 2017 and 2016 are determined by sales agreement or appraisal,
and costs to sell are based on estimation per the terms and conditions
of the sales agreement or amounts commonly used in real estate
transactions. Inputs include appraisal values or recent sales activity
for similar assets in the property’s market; thus OREO measured at
fair value would be classified within either Level 2 or Level 3 of the
hierarchy.

Certain non-financial assets and non-financial liabilities are measured
at fair value on a non-recurring basis including assets and liabilities
related to reporting units measured at fair value in the testing of goodwill
impairment, as well as intangible assets and other non-financial long-
lived assets measured at fair value for impairment assessment.

The following table summarizes financial assets measured at fair value
on a recurring basis as of December 31, 2017 and 2016, segregated
by the level of the valuation inputs within the fair value hierarchy
utilized to measure fair value:

Available for Sale Securities Fair Value
Measurements Using:

Level 1:Quoted Prices in Active Markets

For Identical Assets

Level 2: Significant Other Observable

Inputs

December 31,

2017

2016

(in thousands)

$19,980

$ 30,487

355,022

347,586

Level 3: Significant Unobservable Inputs

6,533

19,400

Securities available for sale measured at
fair value

$381,535

$397,473

First Guaranty's valuation methodologies may produce a fair value
calculation that may not be indicative of net realizable value or reflective
of future fair values. While Management believes the methodologies
used are appropriate and consistent with other market participants,
the use of different methodologies or assumptions to determine the
fair value of certain financial instruments could result in a different
estimate of fair value.

The change in Level 1 securities available for sale from December 31,
2016 was due principally to a net decrease in Treasury bills of $10.5
million. The change in Level 2 and Level 3 securities available for sale
from December 31, 2016 was due principally due to the transfer of
municipal securities from Level 3 to Level 2.

The following table reconciles assets measured at fair value on a
recurring basis using unobservable inputs (Level 3):

Level 3 Changes

December 31,

2017

2016

(in thousands)

Balance, beginning of year

$19,400

$ 7,701

Total gains or losses (realized/unrealized):

Included in earnings

Included in other comprehensive income

Purchases, sales, issuances and

settlements, net

Transfers in and/or out of Level 3

Balance as of end of year

10,574

11,699

(23,495)

$ 6,533

$19,400

There were no gains or losses for the period included in earnings
attributable to the change in unrealized gains or losses relating to
assets still held as of December 31, 2017.

125

The following table measures financial assets and financial liabilities
measured at fair value on a non-recurring basis as of December 31,
2017, segregated by the level of valuation inputs within the fair value
hierarchy utilized to measure fair value:

Fair Value Measurements Using: Impaired
Loans

Level 1: Quoted Prices in Active Markets

For Identical Assets

Level 2: Significant Other Observable

Inputs

December 31,

2017

2016

(in thousands)

259

Level 3: Significant Unobservable Inputs

12,003

18,559

Impaired loans measured at fair value

$12,003

$18,818

Fair Value Measurements Using: Other
Real Estate Owned

Level 1: Quoted Prices in Active Markets

For Identical Assets

Level 2: Significant Other Observable

Inputs

Level 3: Significant Unobservable Inputs

Other real estate owned measured at fair
value

1,249

226

133

$ 1,281

359

ASC 825-10 provides First Guaranty with an option to report selected
financial assets and liabilities at fair value. The fair value option
established by this statement permits First Guaranty to choose to
measure eligible items at fair value at specified election dates and
report unrealized gains and losses on items for which the fair value
option has been elected in earnings at each reporting date subsequent
to implementation.

First Guaranty has chosen not to elect the fair value option for any
items that are not already required to be measured at fair value in
accordance with accounting principles generally accepted in the
United States.

Note 21. Financial Instruments

Fair value estimates are generally subjective in nature and are
dependent upon a number of significant assumptions associated
with each instrument or group of similar instruments, including
estimates of discount rates, risks associated with specific financial
instruments, estimates of future cash flows and relevant available
market information. Fair value information is intended to represent
an estimate of an amount at which a financial instrument could be
exchanged in a current transaction between a willing buyer and seller
engaging in an exchange transaction. However, since there are no
established trading markets for a significant portion of First Guaranty's
financial instruments, First Guaranty may not be able to immediately
settle financial instruments; as such, the fair values are not necessarily
indicative of the amounts that could be realized through immediate
settlement. In addition, the majority of the financial instruments, such
as loans and deposits, are held to maturity and are realized or paid
according to the contractual agreement with the customer.

Quoted market prices are used to estimate fair values when available.
However, due to the nature of the financial instruments, in many
instances quoted market prices are not available. Accordingly,

126

estimated fair values have been estimated based on other valuation
techniques, such as discounting estimated future cash flows using
a rate commensurate with the risks involved or other acceptable
methods. Fair values are estimated without regard to any premium or
discount that may result from concentrations of ownership of financial
instruments, possible income tax ramifications or estimated transaction
costs. The fair value estimates are subjective in nature and involve
matters of significant judgment and, therefore, cannot be determined
with precision. Fair values are also estimated at a specific point in time
and are based on interest rates and other assumptions at that date. As
events change the assumptions underlying these estimates, the fair
values of financial instruments will change.

Disclosure of fair values is not required for certain items such as lease
financing, investments accounted for under the equity method of
accounting, obligations of pension and other postretirement benefits,
premises and equipment, other real estate, prepaid expenses, the value
of long-term relationships with depositors (core deposit intangibles)
and other customer relationships, other intangible assets and income
tax assets and liabilities. Fair value estimates are presented for existing
on- and off-balance sheet financial instruments without attempting to
estimate the value of anticipated future business and the value of assets
and liabilities that are not considered financial instruments. In addition,
the tax ramifications related to the realization of the unrealized gains
and losses have not been considered in the estimates. Accordingly, the
aggregate fair value amounts presented do not purport to represent
and should not be considered representative of the underlying market
or franchise value of First Guaranty.

Because the standard permits many alternative calculation techniques
and because numerous assumptions have been used to estimate the
fair values, reasonable comparison of the fair value information with
other financial institutions' fair value information cannot necessarily be
made. The methods and assumptions used to estimate the fair values
of financial instruments are as follows:

Cash and due from banks, interest-bearing deposits with banks, federal
funds sold and federal funds purchased.

These items are generally short-term and the carrying amounts reported
in the consolidated balance sheets are a reasonable estimation of the
fair values.

Investment Securities.

Fair values are principally based on quoted market prices. If quoted
market prices are not available, fair values are based on quoted market
prices of comparable instruments or the use of discounted cash flow
analyses.

Loans Held for Sale.

Fair values of mortgage loans held for sale are based on commitments
on hand from investors or prevailing market prices. These loans are
classified within level 3 of the fair value hierarchy.

Loans, net.

Market values are computed present values using net present value
formulas. The present value is the sum of the present value of all
projected cash flows on an item at a specified discount rate. The
discount rate is set as an appropriate rate index, plus or minus an
appropriate spread. These loans are classified within level 3 of the fair
value hierarchy.

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. Impaired loans

Borrowings.

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

Accrued interest receivable.

The carrying amount of accrued interest receivable approximates its
fair value.

Deposits.

Market values are actually computed present values using net present
value formulas. The present value is the sum of the present value of
all projected cash flows on an item at a specified discount rate. The
discount rate is set as an appropriate rate index, plus or minus an
appropriate spread. Deposits are classified within level 3 of the fair
value hierarchy.

Accrued interest payable.

The carrying amount of accrued interest payable approximates its fair
value.

The carrying amount of federal funds purchased and other short-
term borrowings approximate their fair values. The fair value of First
Guaranty's long-term borrowings is computed using net present
value formulas. The present value is the sum of the present value of
all projected cash flows on an item at a specified discount rate. The
discount rate is set as an appropriate rate index, plus or minus an
appropriate spread. Borrowings are classified within level 3 of the fair
value hierarchy.

Other Unrecognized Financial Instruments.

The fair value of commitments to extend credit is estimated using the
fees charged to enter into similar legally binding agreements, taking into
account the remaining terms of the agreements and customers' credit
ratings. For fixed-rate loan commitments, fair value also considers the
difference between current levels of interest rates and the committed
rates. Noninterest-bearing deposits are held at cost. The fair values of
letters of credit are based on fees charged for similar agreements or
on estimated cost to terminate them or otherwise settle the obligations
with the counterparties at the reporting date. At December 31, 2017
and 2016 the fair value of guarantees under commercial and standby
letters of credit was not material.

The estimated fair values and carrying values of the financial instruments at December 31, 2017 and 2016 are presented in the following table:

December 31,

2017

2016

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value

(in thousands)

38,028 $

18,111 $

18,111

$ 381,535 $ 381,535 $ 397,473 $ 397,473

$ 120,121 $ 118,557 $ 101,863 $

99,906

2,351 $

1,816 $

1,816

1,308 $

1,439 $

- $

$ 1,139,789 $ 1,133,868 $ 937,807 $ 937,495

Assets

Cash and cash equivalents

Securities, available for sale

Securities, held to maturity

Federal Home Loan Bank stock

Loans held for sale

Loans, net

Accrued interest receivable

7,982 $

7,039 $

7,039

Liabilities

Deposits

Borrowings

Junior subordinated debentures

Accrued interest payable

$ 1,549,286 $ 1,549,449 $1,326,181 $1,325,972

38,274 $

38,294 $

28,600 $

28,625

14,664 $

14,324 $

14,630 $

13,909

2,488 $

1,931 $

1,931

There is no material difference between the contract amount and the estimated fair value of off-balance sheet items that are primarily comprised
of short-term unfunded loan commitments that are generally at market prices.

127

Note 22. Concentrations of Credit and Other Risks

First Guaranty monitors loan portfolio concentrations by region,
collateral type, loan type, and industry on a monthly basis and has
established maximum thresholds as a percentage of its capital to
ensure that the desired mix and diversification of its loan portfolio is
achieved. First Guaranty is compliant with the established thresholds
as of December 31, 2017. Personal, commercial and residential
loans are granted to customers, most of who reside in northern and
southern areas of Louisiana. Although First Guaranty has a diversified
loan portfolio, significant portions of the loans are collateralized by
real estate located in Tangipahoa Parish and surrounding parishes in
Southeast Louisiana. Declines in the Louisiana economy could result
in lower real estate values which could, under certain circumstances,
result in losses to First Guaranty.

The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Commercial and standby letters of
credit were granted primarily to commercial borrowers. Generally,
credit is not extended in excess of $10.0 million to any single borrower
or group of related borrowers.

Approximately 41.4% of First Guaranty's deposits are derived from local
governmental agencies at December 31, 2017. These governmental
depositing authorities are generally long-term customers. A number of
the depositing authorities are under contractual obligation to maintain
their operating funds exclusively with First Guaranty. In most cases,
First Guaranty is required to pledge securities or letters of credit
issued by the Federal Home Loan Bank to the depositing authorities
to collateralize their deposits. Under certain circumstances, the
withdrawal of all of, or a significant portion of, the deposits of one or
more of the depositing authorities may result in a temporary reduction
in liquidity, depending primarily on the maturities and/or classifications
of the securities pledged against such deposits and the ability to
replace such deposits with either new deposits or other borrowings.
Public fund deposits totaled $640.7 million at December 31, 2017.

Note 23. Litigation

First Guaranty is subject to various legal proceedings in the normal
course of its business. It is Management’s belief that the ultimate
resolution of such claims will not have a material adverse effect on
First Guaranty's financial position or results of operations.

Note 24. Condensed Parent Company Information
The following condensed financial information reflects the accounts
and transactions of First Guaranty Bancshares, Inc. for the dates
indicated:

First Guaranty Bancshares, Inc.
Condensed Balance Sheets

Assets

Cash

Investment in bank subsidiary

Investment Securities (available for sale, at

fair value)

Other assets

Total Assets

Liabilities and Shareholders' Equity

Short-term debt

Senior long-term debt

Junior subordinated debentures

Other liabilities

Total Liabilities

December 31,

2017

2016

(in thousands)

$ 5,214

$ 16,088

170,836

141,241

6,086

4,197

$182,136

$161,606

$ -

22,774

14,664

715

22,100

14,630

527

38,153

37,257

Shareholders' Equity

143,983
Total Liabilities and Shareholders' Equity $182,136

124,349

$161,606

128

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. First Guaranty Bancshares, Inc.
Condensed Statements of Income

Operating Income

Dividends received from bank subsidiary

Net gains on securities

Other income

Total operating income

Operating Expenses

Interest expense

Salaries & Benefits

Other expenses

Total operating expenses

Income before income tax benefit and increase in equity in undistributed
earnings of subsidiary

Income tax benefit (expense)

Income before increase in equity in undistributed earnings of subsidiary

Increase in equity in undistributed earnings of subsidiary

Net Income

Less preferred stock dividends

Net income available to common shareholders

December 31,

2017

2016

2015

(in thousands)

$10,622

$11,858

$ 9,843

171

160

2,652

261

10,847

12,018

12,756

1,518

495

1,147

3,160

7,687

834

8,521

3,230

1,444

200

948

192

172

766

2,592

1,130

9,426

11,626

846

(605)

10,272

11,021

3,821

3,484

11,751

14,093

14,505

(384)

$11,751

$14,093

$14,121

129

First Guaranty Bancshares, Inc.
Condensed Statements of Cash Flows

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating

activities:

December 31,

2017

2016

2015

(in thousands)

$11,751

$14,093

$14,505

Increase in equity in undistributed earnings of subsidiary

$ (3,230)

$ (3,821)

$ (3,484)

Depreciation and amortization

Gain on sale of securities

Net change in other liabilities

Net change in other assets

Net cash provided by operating activities

Cash flows from investing activities:

Proceeds from maturities, calls and sales of AFS securities

Funds invested in AFS securities

Funds invested in bank subsidiary

Cash paid in acquisition

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net decrease in short-term borrowings

Proceeds from long-term debt, net of costs

Repayment of long-term debt

Proceeds from junior subordinated debentures, net of costs

Issuance of common stock, net of costs

Redemption of preferred stock

Dividends paid

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

(54)

187

(1,306)

7,391

318

(971)

(2,652)

(28)

396

9,626

8,737

134

(3,750)

(10,108)

(13,724)

4,152

(10)

4,142

(1,800)

3,750

24,969

(3,081)

(3,730)

(1,584)

14,597

9,344

(39,435)

(5,210)

(4,870)

(4,631)

(4,541)

(10,400)

3,260

(10,874)

(774)

16,139

16,088

16,862

723

$5,214

$16,088

$16,862

130

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC.

Item 5 - Market for Registrant’s Common Equity, Related
Shareholder Matters and Issuer Purchases of Equity
Securities
Shares of our common stock are traded on the NASDAQ Global
Marketplace under the symbol "FGBI". As of December 31, 2017, there
were approximately 1,500 holders of record of our common stock.

The following table sets forth the quarterly high and low reported sales
prices for our common stock for the years ended December 31, 2017
and 2016. These reported sales prices represent trades that were
quoted on the NASDAQ.

2017

2016

Quarter Ended*: High

Low Dividend High

Low Dividend

March 31,

$ 22.00 $21.37

$ 0.16 $16.83 $15.50

$ 0.16

June 30,

$ 24.82 $24.69
September 30, $ 24.55 $24.24
December 31, $ 25.02 $24.63

$ 0.16 $ 16.15 $15.95

$ 0.16

$ 0.16 $ 16.41 $16.17

$ 0.16

$ 0.16 $ 23.93 $23.32

$ 0.16

* Data above has not been adjusted to reflect the ten percent
stock dividend paid December 14, 2017 to shareholders of
record as of December 8, 2017.

Our shareholders are entitled to receive dividends when, and if,
declared by the Board of Directors, out of funds legally available for
dividends. We have paid consecutive quarterly cash dividends on our
common stock for each of the last 98 quarters dating back to the third
quarter of 1993. The Board of Directors intends to continue to pay
regular quarterly cash dividends. The ability to pay dividends in the
future will depend on earnings and financial condition, liquidity and
capital requirements, regulatory restrictions, the general economic and
regulatory climate and ability to service any equity or debt obligations
senior to common stock. There are legal restrictions on the ability of First
Guaranty Bank to pay cash dividends to First Guaranty Bancshares,
Inc. Under federal and state law, we are required to maintain certain
surplus and capital levels and may not distribute dividends in cash
or in kind, if after such distribution we would fall below such levels.
Specifically, an insured depository institution is prohibited from making
any capital distribution to its shareholders, including by way of dividend,
if after making such distribution, the depository institution fails to meet
the required minimum level for any relevant capital measure including
the risk-based capital adequacy and leverage standards.

Additionally, under the Louisiana Business Corporation Act, First
Guaranty Bancshares, Inc. is prohibited from paying any cash dividends
to shareholders if, after the payment of such dividend First Guaranty
Bancshares would not be able to pay its debts as they became due in
the usual course of business or its total assets would be less than its
total liabilities or where net assets are less than the liquidation value
of shares that have a preferential right to participate in First Guaranty
Bancshares, Inc.’s assets in the event First Guaranty Bancshares, Inc.
were to be liquidated.

www.fgb.net

131

Corporate Information

Annual Meeting

The Annual Meeting of Shareholders will convene at

2:00 PM Central Daylight Saving Time (CDT) on

Thursday, May 17, 2018 in the Auditorium,

First Guaranty Square, 400 East Thomas Street

Hammond, Louisiana

Corporate Headquarters

First Guaranty Square

400 East Thomas Street

Hammond, Louisiana 70401-3320

Telephone: (985) 345-7685

Shareholder Services

First Guaranty Bank

Post Office Box 2009

Hammond, Louisiana 70404-2009

Contact: Vanessa R. Drew

Telephone: (985) 375-0343

Email: investorrelations@fgb.net

Certified Public Accountants

Castaing, Hussey & Lolan, LLC

New Iberia, Louisiana

Financial and General Information

Persons seeking financial or other information about the

Company are invited to contact:

Eric J. Dosch

Chief Financial Officer, Treasurer and Secretary

First Guaranty Bancshares, Inc.

Post Office Box 2009

Hammond, Louisiana 70404-2009

Telephone (985) 375-0308

Notice to Shareholders

A copy of the First Guaranty Bancshares, Inc. Annual Report

filed on Form 10-K with the U.S. Securities and Exchange

Commission can be accessed through the Company’s website at

www.fgb.net or is available without charge by writing.

132

2017 ANNUAL REPORT FIRST GUARANTY BANCSHARES, INC. P R

E D ICTAB

EXPECT

IABLE

DEPE

EXPECT

Loans, Net of Unearned Income

(in millions)

1200

1000

800

600

400

200

1993

1998

2003

2008

2013

2014

2015

2016

2017

2
0
1
7

R
S
T
G
U
A
R
A
N
T
Y

B
A
N
C
S
H
A
R
E
S

N
C

A
N
N
U
A
L

R
E
P
O
R
T

www.fgb.net

ANNUAL REPORT 2017